UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 33-70654
AMERICAN ASSET ADVISERS TRUST, INC.
MARYLAND CORPORATION IRS IDENTIFICATION NO.
76-0410050
8 GREENWAY PLAZA, SUITE 824 HOUSTON, TX 77046
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTION H (1) (a) AND (b) OF FORM 10-Q AND IS, THEREFORE,
FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
ASSETS
<S> <C> <C>
CASH & CASH EQUIVALENTS $ 1,761,033 $ 1,564,961
PROPERTY:
Land 3,785,097 2,152,103
Buildings 4,435,713 4,436,074
8,220,810 6,588,177
Accumulated depreciation (166,878) (81,512)
TOTAL PROPERTY 8,053,932 6,506,665
NET INVESTMENT IN DIRECT FINANCING LEASE 3,154,999 582,753
OTHER ASSETS:
Acquisition costs 94,998 77,761
Accrued rental income 58,164 23,845
Organization costs, net of accumulated
amortization of $146,705 and $99,130,
respectively 379,941 214,638
TOTAL OTHER ASSETS 533,103 316,244
TOTAL ASSETS 13,503,067 8,970,623
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable 63,860 67,481
Compensation payable 150,000 150,000
Security deposit 15,050 15,050
TOTAL LIABILITIES 228,910 232,531
MINORITY INTEREST 3,597,249 1,596,169
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 25,000,000
shares authorized, 1,123,785 and 827,876
shares issued and outstanding, respectively 11,238 8,279
Additional paid-in capital 10,109,280 7,438,368
Accumulated distributions in excess of earnings (443,610) (304,724)
TOTAL SHAREHOLDERS' EQUITY 9,676,908 7,141,923
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,503,067 $ 8,970,623
See Notes to Consolidated Financial Statements.
2
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AMERICAN ASSET ADVISERS TRUST, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(Unaudited)
<CAPTION>
Quarter Year to Date
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Rental income from operating leases $ 185,242 $ 90,280 $ 547,704 $ 246,057
Earned income from direct financing leases 33,143 18,590 61,001 46,678
Interest income 40,034 46,749 112,563 113,456
TOTAL REVENUES 258,419 155,619 721,268 406,191
EXPENSES
Administrative 8,544 0 25,632 0
Amortization 16,681 15,447 47,575 46,023
Compensation 0 150,000 0 150,000
Depreciation 28,459 14,313 85,366 38,528
Directors' fees 3,000 4,500 10,500 13,500
Filing fees 0 200 375 1,260
Interest 2,000 0 2,000 0
Legal & professional fees 12,514 19,148 27,289 38,259
Printing 47 2,140 4,051 6,397
Travel 0 0 885 1,330
Other 3,038 386 5,961 2,317
TOTAL EXPENSES 74,283 206,134 209,634 297,614
INCOME BEFORE MINORITY INTEREST IN
NET INCOME OF CONSOLIDATED JOINT VENTURE 184,136 (50,515) 511,634 108,577
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED JOINT VENTURE (45,739) (19,905) (120,422) (51,811)
NET INCOME (LOSS) $ 138,397 $ (70,420) $ 391,212 $ 56,766
NET INCOME (LOSS) PER SHARE:
Primary $ 0.13 $ (0.10) $ 0.38 $ 0.09
Fully Diluted $ 0.12 $ $ 0.37 $
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Primary 1,081,306 706,417 1,028,815 632,763
Fully Diluted 1,383,782 1,331,291
See Notes to Consolidated Financial Statements.
3
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AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Accumulated
Additional Distributions
Common Paid in in Excess of
Stock Capital Earnings Total
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ 8,279 $ 7,438,368 $ (304,724) $ 7,141,923
Issuance of common stock 2,004 2,001,764 2,003,768
Issuance costs (202,498) (202,498)
Distributions (162,724) (162,724)
Net income 117,436 117,436
Balance at March 31, 1996 10,283 9,237,634 (350,012) 8,897,905
Issuance costs (3,891) (3,891)
Distributions (180,921) (180,921)
Net income 135,379 135,379
Balance at June 30, 1996 10,283 9,233,743 (395,554) 8,848,472
Issuance of common stock 955 978,254 979,209
Issuance costs (102,717) (102,717)
Distributions (186,453) (186,453)
Net income 138,397 138,397
Balance at September 30, 1996 $ 11,238 $ 10,109,280 $ (443,610) $ 9,676,908
See Notes to Consolidated Financial Statements.
4
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AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(Unaudited)
<CAPTION>
Quarter Year to Date
1996 1995 1996 1995
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 138,397 $ (70,420) $ 391,212 $ 56,766
Adjustments to reconcile net income
to net cash flows from operating activities:
Amortization 16,681 15,447 47,575 46,023
Depreciation 28,459 14,313 85,366 38,528
Decrease in accounts receivable 3,700 10,103 0 69
Increase (decrease) in accounts payable 45,557 10,836 (3,621) 13,634
Increase in compensation payable 0 150,000 0 150,000
Increase in security deposit 0 15,050 0 15,050
Cash receipts from direct financing leases
in excess of (less than) income recognized (3,661) 966 (2,185) 2,212
Decrease in escrow deposits, net of minority
interest partners 51,900 75,000 0 0
Increase in accrued rental income (11,916) (5,294) (34,319) (5,294)
Increase in organization costs (31,033) 0 (212,878) (15,530)
Increase in minority interest 45,739 19,905 120,422 51,811
NET CASH FLOWS FROM OPERATING ACTIVITIES 283,823 235,906 391,572 353,269
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate:
Accounted for under the operating method (845,272) (2,699,820) (845,272) (2,716,767)
Accounted for under the direct financing method (1,342,805) 0 (1,342,805) 0
Acquisition costs 67,151 110,363 (17,237) (37,275)
NET CASH FLOWS FROM INVESTING ACTIVITIES (2,120,926) (2,589,457) (2,205,314) (2,754,042)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock, net of
issuance costs 876,492 835,346 2,673,871 2,259,773
Decrease in short-term notes receivable 0 793,456 0 0
Distributions paid to shareholders (186,453) (107,803) (530,098) (289,609)
Distributions to minority interest partners (49,403) (23,857) (133,959) (62,361)
NET CASH FLOWS FROM FINANCING ACTIVITIES 640,636 1,497,142 2,009,814 1,907,803
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,196,467) (856,409) 196,072 (492,970)
CASH and CASH EQUIVALENTS at beginning
of period 2,957,500 1,649,026 1,564,961 1,285,587
CASH and CASH EQUIVALENTS at end of
period $ 1,761,033 $ 792,617 $ 1,761,033 $ 792,617
See Notes to Consolidated Financial Statements.
5
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AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(Unaudited)
<CAPTION>
Quarter Year to Date
1996 1995 1996 1995
<S> <C> <C> <C> <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Real estate contributed by partners of the
consolidated joint ventures $ 2,014,617 $ 0 $ 2,014,617 $ 0
See Notes to Consolidated Financial Statements.
6
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AMERICAN ASSET ADVISERS TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,1996 AND
SEPTEMBER 30,1995
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Asset Advisers Trust, Inc. ("the Company") was
incorporated on August 17, 1993 as a Maryland corporation. The
initial issuance of 20,001 shares of stock for $200,010 was to
American Asset Advisers Realty Corporation. Commencing March 17,
1994, the Company offered up to 2,000,000 additional shares of
common stock together with 1,000,000 warrants. The warrants are
exercisable at $9 per share between April 1997 and April 1998.
The offering period terminated on March 15, 1996 with
subscriptions having been received for 1,028,253 shares. On June
18, 1996 the Company offered up to 2,853,659 additional shares of
its common stock. The offering will terminate June 17, 1998. As
of September 30, 1996, subscriptions had been received for 95,532
shares in this second offering bringing the total shares issued
and outstanding to 1,123,785 shares.
The Company was formed with the intention to qualify and to
operate as a real estate investment trust under federal tax laws.
The Company will acquire commercial and industrial properties
using invested and borrowed funds. The selection, acquisition
and supervision of the operation of properties is managed by
American Asset Advisers Realty Corporation, ("AAA"), a related
party.
The consolidated financial statements include the accounts of
American Asset Advisers Trust, Inc. and its majority interest in
three joint ventures.
The financial records of the Company are maintained on the
accrual basis of accounting whereby revenues are recognized when
earned and expenses are reflected when incurred. Rental income
is recorded ratably over the life of the lease.
For purposes of the statement of cash flows the Company considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. There has been no
cash paid for income taxes or interest during 1996 or 1995.
Real estate is leased to others on a net lease basis whereby all
operating expenses related to the properties including property
taxes, insurance and common area maintenance are the
responsibility of the tenant. The leases are accounted for under
the operating method or the direct financing method.
Under the operating method, the properties are recorded at cost.
Rental income is recognized ratably over the life of the lease
and depreciation is charged as incurred.
Under the direct financing method, properties are recorded at
their net investment. Unearned income is deferred and amortized
to income over the life of the lease so as to produce a constant
periodic rate of return.
7
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Buildings are depreciated using the straight-line method over an
estimated useful life of 39 years.
Organization costs incurred in the formation of the Company are
amortized on a straight-line basis over five years.
Syndication costs incurred in the raising of capital through the
sale of common stock is treated as a reduction of shareholders
equity.
The Company is qualified as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, and is,
therefore, not subject to Federal income taxes provided it meets
all conditions specified by the Internal Revenue Code for
retaining its REIT status, including the requirement that at
least 95% of its real estate investment trust taxable income is
distributed by March 15 of the following year.
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and do
not include all of the disclosures required by generally accepted
accounting principles. The financial statements reflect all
normal and recurring adjustments which are, in the opinion of
management, necessary to present a fair statement of results for
the three and nine month periods ended September 30, 1996 and
September 30, 1995.
The financial statements of American Asset Advisers Trust, Inc.
contained herein should be read in conjunction with the financial
statements included in the Company's annual report on Form
10-K for the year ended December 31, 1995.
2. RELATED PARTY TRANSACTIONS
20,001 shares of the Company's stock are owned by American Asset
Advisers Realty Corporation ("AAA"). The common stock of AAA is
wholly owned by H. Kerr Taylor, President and Director of the
Company. In addition, the Company has entered into an Omnibus
Services Agreement with AAA whereby AAA provides acquisition,
leasing, administrative and management services for the Company.
For the three and nine months ended September 30, 1996, $8,544
and $25,632 were paid to AAA for administrative services. No
such fees were paid to AAA during the nine months ended September
30, 1995 for administrative services.
Certain costs have been incurred by AAA in connection with the
organization and syndication of the Company. Reimbursement of
these costs become obligations of the Company in accordance with
the terms of the offering. $23,390 and $78,050 of costs were
incurred by AAA for the three and nine months ended September 30,
1996 in connection with the issuance and marketing of the
Company's stock. $16,181 and $41,405 of costs were incurred by
AAA for the three and nine months ended September 30, 1995 in
connection with the issuance and marketing of the Company's
stock. These costs are reflected as syndication costs.
Acquisition fees, including real estate commissions, finders
fees, consulting fees and any other non-recurring fees incurred
in connection with locating, evaluating and selecting properties
and structuring and negotiating the acquisition of properties are
included in the basis of the properties. $47,064 and $129,748 of
acquisition fees were incurred and paid to AAA for the three and
nine months ended September 30, 1996. $73,446 and $195,865 of
acquisition fees were incurred and paid to AAA for the three and
nine months ended September 30, 1995.
8
<PAGE>
On August 22, 1995, the Board of Directors approved a special
compensation payment plan for H. Kerr Taylor in the amount of
$150,000 for services provided from August 1993 through August
1995. In connection therewith, the Company executed a demand
note payable at the earlier of July 15, 1996 or the receipt of
subscriptions of $10,000,000 from the Company's stock offering.
The note shall be payable in cash or stock depending on the
availability of cash for such payment. No compensation
arrangements were considered by the Board prior to this time
because the Company had not raised sufficient funds through its
stock offering, as determined by the judgment of the Board,
considered necessary for any compensation to be granted. The
compensation had not been accrued prior to August 22, 1995
because its payment was uncertain and the level of compensation
had not been determined until the August 22, 1995 Board meeting.
As of the termination of the initial public offering, the Company
had sold in excess of $10,000,000. Although Mr. Taylor can
demand payment on the note, such demand has not been made. The
decision regarding the nature of the payment, whether in stock or
cash, will be made by the Board of Directors at the time Mr.
Taylor demands payment. In consideration that no payment has
been demanded by Mr. Taylor for the special compensation payment,
the Board of Directors approved at its August 1, 1996 meeting the
payment of interest to Mr. Taylor at an annual rate of 8%. This
interest payment will be paid at the end of six months in cash or
in stock. As of September 30, 1996, $2,000 of interest has been
accrued related to this note.
No decisions as yet have been made with respect to any additional
compensation for any period after August 1995. The Board of
Directors commissioned an external study with respect to the
amount and type of compensation which could be paid in the future
to officers and/or directors, as well as the contingencies and
performance standards on which compensation will be determined.
The compensation portion of the study has been completed and will
be considered at such time as the Board determines in the future
to consider a new compensation arrangement. Accordingly, the
financial statements do not include any accruals for compensation
subsequent to August 1995.
On September 23, 1996, the Company entered into a joint venture
with AAA Net Realty XI, Ltd., an affiliated entity. The joint
venture was formed for the purchase of a parcel of land in The
Woodlands, Texas upon which the tenant, Bank United, will
construct a branch bank building at its cost. At the termination
of the lease the improvements will be owned by the joint venture.
The Company s interest in the joint venture is 51%.
On April 5, 1996, the Company entered into a joint venture with
AAA Net Realty Fund XI, Ltd. and AAA Net Realty Fund X, Ltd.,
affiliated partnerships, for the purchase of a property which is
being operated as a Just For Feet retail store in Tucson,
Arizona. The Company's interest in the joint venture is 51.9%.
The property was purchased on September 11, 1996 after the
construction was completed.
On September 12, 1995, the Company entered into a joint venture
agreement with AAA Net Realty Fund XI, Ltd. for the purchase of a
property which is being operated as a Blockbuster Music Store in
Wichita, Kansas. The Company's interest in the joint venture is
51%.
9
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3. MAJOR TENANTS
The following schedule summarizes total rental income by lessee
for the three and nine months ended September 30, 1996 and
September 30, 1995:
Quarter Year to Date
1996 1995 1996 1995
Tandy Corporation $27,225 $27,306 $ 81,675 $ 81,756
America's Favorite Chicken Co. 23,027 27,027 68,929 71,180
Blockbuster Music Retail, Inc. 94,575 52,029 283,725 137,291
One Care Health Industries, Inc. 50,409 2,508 151,227 2,508
Just For Feet, Inc. 22,536 - 22,536 -
Bank United 613 - 613 -
4.EARNINGS PER SHARE
The number of shares used in the calculation of primary earnings
per share for the three and nine months ended September 30, 1996
and September 30, 1995 are based on the weighted average number
of shares of common stock outstanding and, if dilutive, common
stock equivalents (stock warrants) of the Company using the
modified treasury stock method.
The number of shares used in the calculation of fully diluted
earnings per share for the three and nine months ended September
30, 1996 and September 30, 1995 are based on the weighted average
number of shares of common stock outstanding and the number of
shares of common stock issued through the exercise of the
Company's stock warrants using the modified treasury stock
method.
The calculation of fully diluted earnings per share for the three
and nine months ended September 30, 1995 proved to be anti-dilutive.
Consequently, fully diluted earnings per share is not presented for
these periods.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
American Asset Advisers Trust, Inc. ("the Company") was organized
on August 17, 1993 to acquire, either directly or through joint
venture arrangements, undeveloped, newly constructed and existing
net-lease real estate that is located primarily on corner or out-
parcel locations in strong commercial corridors, to lease to
tenants having a minimum net worth of $40 million on a net-lease
basis, to hold the properties with the expectation of equity
appreciation producing a steadily rising income stream for its
shareholders.
LIQUIDITY AND CAPITAL RESOURCES
The Company was organized August 17, 1993 with the intention to
qualify and to operate as a real estate investment trust under
federal tax laws. Commencing March 17, 1994, the Company offered
up to 2,000,000 additional shares of common stock together with
1,000,000 warrants. The offering period terminated on March 15,
1996 with subscriptions having been received for 1,028,253
shares. On June 18, 1996 the Company began a new offering of
2,853,659 shares of its common stock. The offering will
terminate on June 17, 1998. As of September 30, 1996,
subscriptions had been received for 95,532 shares in this second
offering bringing the total shares issued and outstanding to
1,123,785 shares.
On August 22, 1995, the Board of Directors approved a special
compensation payment for Mr. Taylor in the amount of $150,000.
Mr. Taylor has received no other compensation from the Company
for serving as its President. In connection with the special
compensation payment, the Company executed a demand note payable
at the earlier of July 15, 1996 or the receipt of $10,000,000
from the Company's stock offering. The note shall be payable in
cash or stock depending on the availability of cash for such
payment. No compensation arrangements were considered by the
Directors prior to August 22, 1995, because in their judgment,
the Company had not raised sufficient funds to award such
compensation. The compensation had not been accrued prior to
August 22, 1995 because its payment was uncertain and the level
of compensation had not been determined until the August 1995
meeting of the Board of Directors. As of the termination of the
initial public offering, the Company had sold in excess of
$10,000,000. Although Mr. Taylor can demand payment on the note,
such demand has not been made. The decision regarding the nature
of the payment, whether in stock or cash, will be made by the
Board of Directors at the time Mr. Taylor demands payment. In
consideration that no payment has been demanded by Mr. Taylor for
the special compensation payment, the Board of Directors approved
at its August 1, 1996 meeting the payment of interest to
Mr.Taylor at an annual rate of 8%. This interest payment will be
paid at the end of six months in cash or in stock. Should the
note and interest be paid in cash, such payment would reduce the
funds from operations available for distribution and, therefore,
would decrease distributions to shareholders.
On September 23, 1996, the Company entered into a joint venture
with AAA Net Realty XI, Ltd., an affiliated entity, for the
purpose of acquiring property in The Woodlands, Texas upon which
a branch bank building will be constructed. The Company's
interest in the joint venture is 51% and the Company's share of
the purchase price for the property was $260,587 plus $9,713
in acquisition fees paid to affiliates.
11
<PAGE>
On April 5, 1996, the Company entered into a joint venture with
AAA Net Realty Fund XI, Ltd. and AAA Net Realty Fund X, Ltd.,
affiliated partnerships, for the purpose of acquiring a property
which is being operated as a Just For Feet retail store in
Tucson, Arizona. The Company's interest in the joint venture is
51.9% and the Company's share of the purchase price for the
property was $1,815,329 plus $102,860 in acquisition fees paid to
affiliates.
RESULTS OF OPERATIONS
Revenues for the three months ended September 30, 1996 were
comprised of $218,385 from the Company's real estate operations
and $40,034 from interest income. This represented an increase
of $109,515 in rental income over the three months ended
September 30, 1995 and a decrease of $6,715 in interest income.
The Company owned five properties for the entire third quarter of
1996 and the sixth and seventh properties were acquired in
September of 1996 while four properties were owned for the entire
third quarter of 1995 and the fifth property was acquired in
September of 1995. The Company's operating expenses decreased
from $206,134 for the third quarter of 1995 to $74,283 for the
third quarter of 1996 primarily from executive compensation of
$150,000 for the period from August 1993 through August 1995.
See Note 2 for additional information. The Company recorded net
income of $138,397 for the three months ended September 30, 1996
as compared to a net loss of $70,420 for the three months ended
September 30, 1995.
For the nine months ended September 30, 1996, the Company's total
revenues of $721,268 were comprised of $608,705 from real estate
operations and $112,563 from interest income. The Company owned
five properties for the entire first nine months of 1996 and the
sixth and seventh properties were acquired in September of 1996
while three properties were owned for the entire first nine
months of 1995 and the fourth and fifth properties were acquired
in the third quarter of 1995. The Company's operating expenses
decreased from $297,614 for the first nine months of 1995 to
$209,634 for the first nine months of 1996 primarily from
executive compensation of $150,000 discussed above partially
offset by an increase in administrative expenses and depreciation
which resulted from the overall increase in the activity of the
Company. The Company recorded net income of $391,212 for the
nine months ended September 30, 1996 as compared to $56,766 for
the nine months ended September 30, 1995.
Revenues increased from $55,067 to $155,619 for the third quarter
of 1995 as compared to the third quarter of 1994. The Company's
real estate operations generated income of $108,870 from three
properties owned for the entire third quarter of 1995 and two
additional properties were acquired in September 1995 while
$44,799 was earned during the same period in 1994 from one
property which was acquired in June of 1994 and a second property
which was acquired in August of 1994. Interest income also
increased from $10,268 to $46,749 primarily because the Company
received interest on a construction loan for most of the quarter
in addition to the interest earned on invested funds. The
Company's operating expenses for the third quarter increased
$180,643 over those of the third quarter of 1994 primarily from
executive compensation of $150,000 discussed above and from an
increase in other administrative expenses and depreciation which
resulted from the overall increase in the activity of the
Company.
12
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For the nine months ended September 30, 1995, the Company's real
estate income was $292,735 compared to $49,639 for the nine
months ended September 30, 1994. The Company received rental
income throughout 1995 from three properties and part of
September from two additional properties while the Company's
first two properties were acquired in June and August of 1994.
Interest income for the nine months ended September 30, 1995
totaled $113,456 compared to $20,154 for the nine months ended
September 30, 1994. Proceeds from the Company's common stock
offering were not disbursed from the escrow account until May 9,
1994. Consequently, no significant interest income was earned by
the Company until that time. The Company's operating expenses,
excluding depreciation and amortization, increased approximately
$201,000 primarily from $150,000 of executive compensation
discussed above and from an increase in professional fees. The
Company recorded net income of $56,766 and $30,161 for the nine
months ended September 30, 1995 and September 30, 1994,
respectively.
13
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
Report on Form 8-K:
Form 8-K-A was filed on July 30, 1996 to amend Form 8-K filed
November 28, 1994 to report the acquisition of a property through
a joint venture with two affiliates on lease to BlockBuster Music
Retail, Inc. which is being operated as a BlockBuster Music
Store.
Form 8-K-A was filed on July 30, 1996 to amend Form 8-K filed
August 3, 1994 to report the acquisition of a property on lease
to America s Favorite Chicken Company which is being operated as
a Church s Chicken restaurant.
Form 8-K-A was filed on July 30, 1996 to amend Form 8-K filed
June 27, 1994 to report the acquisition of a property on lease to
Tandy Corporation which is being operated as a Radio Shack store.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
American Asset Advisers Trust, Inc.
(Registrant)
November 14, 1996 H. Kerr Taylor
Date H. Kerr Taylor, President
November 14, 1996 H. Kerr Taylor
Date H. Kerr Taylor, Chief Financial Officer
15
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EXHIBIT 11
AMERICAN ASSET ADVISERS TRUST, INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<CAPTION>
Quarter Year to Date
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of shares of
common stock outstanding 1,081,306 706,417 1,028,815 632,763
Additional shares assuming exercise of
stock warrants (1) 0 0 0 0
Total weighted average common and
common equivalent shares outstanding 1,081,306 706,417 1,028,815 632,763
Net income (loss) $ 138,397 $ (70,420) $ 391,212 $ 56,766
Earnings per common and common
equivalent share $ 0.13 $ (0.10) $ 0.38 $ 0.09
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of shares of
common stock outstanding 1,081,306 706,417 1,028,815 632,763
Additional shares assuming exercise of
stock warrants 279,369 208,972 279,369 186,122
Total weighted average common and
common equivalent shares outstanding 1,360,675 915,389 1,308,184 818,885
Net income (2) $ 167,710 $ (43,643) $ 489,842 $ 133,239
Earnings per common and common
equivalent share $ 0.12 $ (0.05) $ 0.37 $ 0.16
(1) Not applicable in 1996 or 1995 as computations of primary earnings per share exclude common
stock equivalents for any period in which their inclusion would increase the income per share amount
otherwise computed.
(2) Includes adjustment for additional interest income from assumed net proceeds from exercise of
warrants using Modified Treasury Stock Method as follows:
Quarter Year to Date
1996 1995 1996 1995
$ 29,313 $ 26,774 $ 98,630 $ 76,473
16
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,761,033
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,761,033
<PP&E> 8,220,810
<DEPRECIATION> 166,878
<TOTAL-ASSETS> 13,503,067
<CURRENT-LIABILITIES> 213,860
<BONDS> 0
0
0
<COMMON> 11,238
<OTHER-SE> 9,665,670
<TOTAL-LIABILITY-AND-EQUITY> 13,503,067
<SALES> 608,705
<TOTAL-REVENUES> 721,268
<CGS> 0
<TOTAL-COSTS> 209,634
<OTHER-EXPENSES> 120,422
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 391,212
<INCOME-TAX> 0
<INCOME-CONTINUING> 391,212
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 391,212
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
</TABLE>
