As filed with the Securities and Exchange Commission on
February 28, 1997
File No. 333-2572
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO.1
FORM S-11
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
American Asset Advisers Trust, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland 6501 76-0410050
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classifica- Identification
formation) tion Code Number) Number)
Suite 824
8 Greenway Plaza
Houston, Texas 77046
(713) 850-1400
(Address, including zip code, and telephone number, including area
code of registrant's principal executive offices)
Suite 824 H. Kerr Taylor
8 Greenway Plaza Suite 824
Houston, Texas 77046 8 Greenway Plaza
(Address of registrant's Houston, TX 77046
intended principal place of (713) 850-1400
business) (Name, address,
including zip code
and telephone
number, of agent
for service)
Copies to:
Judith D. Fryer, Esq.
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel
153 East 53rd Street
New York, New York 10022
Approximate date of commencement of proposed sale to the public:
June 18, 1996
Sticker to SUPPLEMENT NO. 2
Supplement No. 2 dated February 28, 1997, which supersedes all prior
supplements, contains updated information to the Prospectus dated
June 18, 1996, consisting primarily of the following: (i) Updated
Prior Performance Information through December 31, 1996, including a prior
performance summary; (ii) Updated Prior Performance Tables through
December 31, 1996; (iii) Updated Suitability for Ohio residents; (iv) Updated
Selected Financial Data through December 31, 1996; (v) Updated Management's
Discussion and Analysis of Financial Condition and Results of Operations
through December 31, 1996; (vi) Updated Property acquisition information
through December 31, 1996; (vii) Updated Management information; and (viii)
Audited Financial Statements for the years ended December 31, 1996, 1995 and
1994.
The Company commenced its offering of Shares of Common Stock on June 18,
1996. As of February 25, 1997, the Company had received contributions
aggregating $2,822,312 in Gross Proceeds (275,348 Shares). The Company is
in the process of registering shares of Common Stock for issuance upon the
exercise of the outstanding warrants. Such warrants are exercisable at $9
per share between March 17, 1997 and March 16, 1998.
SUPPLEMENT NO. 2
AMERICAN ASSET ADVISERS TRUST, INC.
SUPPLEMENT NO. 2 DATED FEBRUARY 28, 1997
TO PROSPECTUS DATED JUNE 18, 1996
THIS SUPPLEMENT SUPERSEDES SUPPLEMENT NO. 1
ATTENTION PROSPECTIVE INVESTORS
The following information should be read carefully and considered
in connection with your review of the Prospectus, the receipt of
which must precede or accompany this Supplement.
STATUS OF THE OFFERING
The Company commenced its offering of Shares of Common Stock on
June 18, 1996. As of February 25, 1997, the Company had received
contributions aggregating $2,822,312 in Gross Proceeds (275,348
Shares). The Company is in the process of registering shares of
Common Stock for issuance upon the exercise of the outstanding
warrants. Such warrants are exercisable at $9 per share between
March 17, 1997 and March 16, 1998.
1. SUMMARY OF OFFERING
Prior Performance
American Asset Advisers Realty Corporation ("AAA") and its
affiliates have sponsored a number of public and private real
estate limited partnerships. Seven private partnerships raised
$6,660,000 from 283 investors between 1985 and 1990. These
partnerships purchased 14 properties with no debt, either
directly or through joint ventures, and leased them to tenants
who were responsible for paying all or nearly all of the
properties' operating costs. Three publicly registered
partnerships raised $23,905,319 between 1990 and 1996 from 1,350
investors and purchased 15 properties, either directly or through
joint ventures. The properties were acquired on the same basic
terms as those acquired by the private partnerships (i.e. no debt
and tenant is responsible for operating costs). The publicly
registered partnerships have more restrictive investment
objectives than those of the Company. As of the date of this
Prospectus, all properties acquired by these public and private
partnerships are currently 100% leased and are leased at the
current market rate. Moreover, as of the date of this
Prospectus, no such AAA-sponsored limited partnership has ever
failed to make a quarterly distribution, and the amounts of the
distributions of such AAA-sponsored public limited partnerships
and many such AAA-sponsored private limited partnerships which
acquire investments on an all-cash basis have increased as such
programs mature. See "PRIOR PERFORMANCE TABLES" for details.
2. SUITABILITY
ATTENTION OHIO RESIDENTS: By executing the Order Form you are
representing to the Company that you are not and will not in the
future invest more than ten percent (10%) of your total net worth
in the Company's common stock.
3. SELECTED FINANCIAL DATA
1996 1995 1994 1993(1)
Operating revenue $ 924,788 $ 495,137 $ 121,642 $ -
Net income (loss) $ 542,807 $ 163,446 $ 79,545 $ (1,325)
Per share data:
Net income (loss) $ .50 $ .24 $ .32 $ (.07)
Income before
depreciation,
amortization and
special
compensation (2) $ .64 $ .66 $ .51 $ .005
Distributions $ .71 $ .64 $ .35 $ .005
Total assets $14,126,834 $8,970,623 $ 5,109,739 $197,615
Long-term
obligations $ 0 $ 0 $ 0 $ 0
2
(1) Represents the period from August 17, 1993, to December
31, 1993.
(2) This per share amount reflects the Company's operating
profit before deductions for depreciation, amortization
and special compensation. The special compensation
authorized in 1995 for the president (See "Management's
Discussion and Analysis of Financial Condition and
Results of Operations") has not yet been paid.
Although the special compensation is now payable, the
president has not requested payment. At the time of
such request, payment will be made in cash or shares,
depending upon the availability of cash for such
payment, at the discretion of the Board of Directors.
4. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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 on a net-lease basis to tenants
having a minimum net worth of $40 million and to hold the
properties with the expectation of equity appreciation producing
a steadily rising income stream for its Shareholders.
Liquidity and Capital Resources
The initial issuance of 20,001 shares of stock for $200,010 was
to AAA. On March 17, 1994, the Company commenced an offering of
2,000,000 Shares of Common Stock, together with 1,000,000
Warrants (collectively "Securities"). Until the completion of the
offering in March 1996, the Securities were offered on the basis
of two (2) Shares of Common Stock and one (1) Warrant for a total
purchase price of $20.00. The Shares and Warrants are separately
transferable by an investor. The Company is in the process of
registering shares of Common Stock for issuance upon the exercise
of the outstanding warrants. Each Warrant entitles the holder to
purchase one Share for $9.00 during the period which is between
March 17, 1997 and March 16, 1998. As of December 31, 1996,
504,126 warrants were outstanding. The offering period for the
initial public offering terminated on March 15, 1996 with gross
proceeds totaling $10,082,520 (1,008,252 shares). On June 18,
1996, the Company offered up to $29,250,000 (2,853,659 shares) of
additional shares of its common stock. The offering will
terminate June 17, 1998, unless terminated earlier. As of
December 31, 1996, gross proceeds had been received for
$1,810,886 (176,672 shares) in this second offering bringing the
total gross proceeds to $12,093,416 (1,204,925 shares).
The Company has an investment strategy of acquiring properties
and leasing them under net-leases to corporations having a
minimum net worth of $40 million, which strategy minimizes the
Company's operating expenses. The Company believes that the
leases will continue to generate cash flow in excess of operating
3
expenses. Due to low operating expenses and ongoing cash flow,
the Company does not believe that large working capital reserves
are necessary at this time. In addition, because all leases of
the Company's Properties are and are intended to continue to be
on a net-lease basis, it is not anticipated that a large reserve
for maintenance and repairs will be necessary. The Company
intends to distribute a significant portion of its funds from
operations unless it becomes necessary to maintain additional
reserves.
On August 22, 1995, the Board of Directors approved a special
compensation payment for the president in the amount of $150,000
for services provided from August 1993 through August 1995. The
president 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 in the
amount of $150,000, the payment of which could not be demanded
prior to the earlier of July 15, 1996 or the receipt of
$10,000,000 from the Company's initial public offering. The note
is payable in cash or shares 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 judgement, 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 in March 1996, the
Company had raised in excess of $10,000,000. Although the
president 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 the president demands payment. In consideration that
no payment has been demanded by the president for the special
compensation payment, the Board of Directors approved at its
August 1, 1996 meeting the payment of interest to the president
on the outstanding note at an annual rate of 8%. This interest
payment will be paid in cash or in stock. As of December 31, 1996,
$5,000 of interest has been accrued related to this note. Should the
note and interest be paid in cash, such payment would reduce the funds
from operations available for distribution and, therefore, would
decrease the distributions to shareholders.
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.
As of December 31, 1996, the Company had acquired four Properties
directly and four Properties through joint ventures with related
parties and had invested $8,602,293, including certain
acquisition expenses related to the Company's investment in these
properties. These expenditures resulted in a corresponding
decrease in the Company's liquidity. On December 11, 1996, the
Company entered into an agreement for the purchase of a property
to be constructed in Baton Rouge, Louisiana. The purchase price
4
for the property totals approximately $2,670,000 and will be paid
with funds raised from the public offering and through a joint
venture with a related party. The Company's interest in the
joint venture is 51%.
Until Properties are acquired by the Company, proceeds are held
in short-term, highly liquid investments which the Company
believes to have appropriate safety of principal. This investment
strategy has allowed, and continues to allow, high liquidity to
facilitate the Company's use of these funds to acquire properties
at such time as properties suitable for acquisition are located.
At December 31, 1996, the Company's cash and cash equivalents
totaled $1,616,311.
The Company made cash distributions to the Shareholders during
each quarter of 1996 and 1995 and during the last three quarters
of 1994, distributing a total of $737,277, $419,085, and
$126,235, respectively, for each such fiscal year to the
investors.
Inflation has had very little effect on income from operations.
Management expects that increases in store sales volumes due to
inflation as well as increases in the Consumer Price Index
(C.P.I.), may contribute to capital appreciation of the Company
Properties. These factors, however, also may have an adverse
impact on the operating margins of the tenants of the Properties.
Results of Operations
Years Ended December 31, 1996 and 1995:
During 1996, the Company acquired three Properties at an
aggregate price of $3,037,951 and also received $3,346,249 in net
proceeds from the public offering. Both of these factors
contributed to an increase in total revenues to $1,062,316 in
1996 from $623,084 in 1995. $429,651 of this increase came from
rental activities and the remaining $9,581 came from interest
income. Income from rental activities included income from the
three new acquisitions in 1996 and also included a full year of
income from two Properties which were acquired in the third
quarter of 1995. Interest income resulted from earnings on the
Company's short-term money market investments.
The Company's operating expenses decreased from $367,260 in 1995
to $302,857 in 1996 primarily from a decrease in 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.
Years Ended December 31, 1995 and 1994:
During 1995, the Company acquired its fourth and fifth Properties
at an aggregate price of $2,716,768 and also received $3,022,733
in net proceeds from the initial public offering. Both of these
factors contributed to an increase in total revenues to $623,084
in 1995 from $159,206 in 1994. $373,495 of this increase came
5
from rental activities and the remaining $90,383 came from
interest income. Income from rental activities included income
from the two new acquisitions in 1995 and also included a full
year of income from three Properties which were acquired
throughout the last seven months of 1994. Each of the three
Properties acquired in 1994 contributed more than 15% of the
Company's total rental income in 1995. Interest income included
$41,040 of interest received on a short-term construction loan in
addition to the income earned on the Company's short-term money
market investments.
Corresponding to the increase in revenues, expenses also
increased in 1995 by $295,966. This is attributable to an
overall increase in the administrative expenses of the Company as
1995 was the first full year of operation. In addition, the
$150,000 of compensation discussed in preceding paragraphs is
reflected in 1995 operating results.
5. PROPERTIES
The Company has completed the purchase of three additional
properties which are summarized as follows:
Total Actual
Name of Property Purchase Price Leasable Annual Percent
and Location of Property(1) Sq. Ft. Rent(2) Vacant
Just for Feet (3)
Tucson, Arizona $1,809,612 19,550 $197,719 0%
Bank United (3)
The Woodlands,
Texas 255,000 3,685 27,569 0%
Bank United
Houston, Texas 827,580 3,685 88,965 0%
(1) Purchase price represents the pro rata purchase price of the
Properties and does not include other Acquisition Fees and
Acquisition Expenses.
(2) The figures set forth in this column represent current
actual rent on the Properties (or, in those cases in which
the Company holds interests in the Properties through joint
ventures, the Company's share, as a joint venture partner,
of current actual rent on such Properties). Actual rent is
subject to successive increases over the original and
renewal terms of the leases on the Properties.
(3) The Company owns an interest in this Property through a
joint-venture with Affiliates.
6
Just for Feet, Inc., Tucson, Arizona
Final terms of the acquisition of the Just for Feet property
after completion of the property are as follows:
Description. On January 19, 1996, the Company entered into a
contract to purchase fee simple title to real estate and
improvements located at 4775 Oracle Road, Tucson, Arizona. The
closing of the purchase of the Property was completed on
September 11, 1996 by the Joint Venture (the "Joint Venture")
comprised of affiliates AAA Net Realty Fund XI, Ltd. and AAA Net
Realty Fund X, Ltd. and the Company. The Property is located on
a tract of land consisting of 2.936 acres. The improvements
consist of a free-standing masonry building containing
approximately 15,349 square feet on the first floor and
approximately 4,200 square feet on the mezzanine level.
The Property was acquired subject to a net lease with Just For
Feet, Inc., an Alabama corporation ("JFFI"), which will operate a
retail store on the Property which sells athletic footwear and
apparel and related items. With respect to JFFI, as reported by
its management, consolidated revenues totaled $119,819,000 and
$56,363,000 for the years ended January 31, 1996 and January 31,
1995, respectively. JFFI recorded consolidated net earnings of
$9,722,000 and $3,218,100 for the years ended January 31, 1996
and January 31, 1995, respectively. Current assets of JFFI at
January 31, 1996 exceeded current liabilities by $108,303,500,
and total assets at such date exceeded total liabilities by
$149,269,800.
Lease Information. The original term of the lease, which began
on September 11, 1996, is for twenty years. The tenant has the
option to renew the lease for two additional terms of five years
each.
The Company's share of the base annual minimum rent during the
first five years of the original term of the lease is $197,719.
The Company's share of the base annual minimum rent is $217,475
during the second five years of the original term of the lease,
$239,223 during the third five years of the original term of the
lease, and $263,200 during the last five years of the original
term of the lease. During the two renewal terms of the lease,
the Company's share of the base annual rent will be $289,489 and
$318,486, respectively. In addition to the base annual rent, the
tenant pays all real estate taxes and utility charges on the
Property and is required, at its sole expense, to keep and
maintain the improvements in good repair and appearance, except
for ordinary wear and tear, and make all structural and
nonstructural repairs of every kind which may be required to keep
the improvements in good condition, repair and appearance.
Terms of Acquisition. The Joint Venture acquired the Property
for $3,486,728 which was paid in cash. The Company owns a 51.9%
interest in the Joint Venture, AAA Net Realty Fund XI, Ltd. owns
a 29.85% interest and AAA Net Realty Fund X, Ltd. owns an 18.25%
interest.
Competitive Conditions. The Property is located within
7
approximately 150 yards of the entrance of the Oracle Mall, a
regional shopping mall in Tucson, Arizona, and near a Home Depot.
A substantial number of national retailers, including Payless
Shoes and Converse, fast food restaurants and department stores
operate stores in the Oracle Mall.
Bank United, The Woodlands, Texas
Description. On September 23, 1996 the Joint Venture (the "Joint
Venture") comprised of affiliate AAA Net Realty Fund XI, Ltd. and
the Company acquired fee simple title to real estate located at
Grogan's Mill Road and Buckthorne Place, The Woodlands, Texas.
The Property consists of undeveloped land of approximately 1.7223
acres on which the tenant will construct a branch bank containing
approximately 3,685 square feet.
The Property was acquired subject to a ground lease with Bank
United, a Federal Savings Bank. With respect to Bank United, as
reported by its management, consolidated net income totaled
$134.2 million and $62.7 million for the years ended September
30, 1996 and 1995, respectively. Bank United reported
consolidated total assets of $11 billion and consolidated
stockholders' equity of $794 million as of September 30, 1996 and
$12 billion of assets and $795 million of stockholders' equity as
of September 30, 1995.
Lease Information. The primary term of the lease is fifteen
years. The lease began on September 23, 1996 and expires on
September 30, 2011. The tenant has the option to renew the lease
for one additional term of five years. The Company's share of
the base annual rent during the first five years of the original
term of the lease is $27,569, during the second five years is
$30,326 and during the final five year term is $33,358. The
Company's share of the rent during the renewal term is $36,694.
In addition to the base rent, the tenant pays all real estate
taxes and utilities on the Property. The tenant is also
required, at its sole expense, to keep and maintain the
improvements in good repair and appearance, except for ordinary
wear and tear and make all structural and nonstructural repairs
of every kind which may be required to keep the improvements in
good condition, repair and appearance.
Terms of Acquisition. The Joint Venture acquired the Property
for a price of $500,000 which was paid in cash. The Company owns
a 51% interest in the Joint Venture and AAA Net Realty Fund XI,
Ltd. owns a 49% interest.
Competitive Conditions. There are no branch banks in the
immediate vicinity of the Property.
Bank United, Houston, Texas
Description. On December 11, 1996, the Company purchased fee
simple title to real estate located at Westheimer and Rogerdale,
Houston, Texas. The Property is a tract of undeveloped land
containing approximately 42,440 square feet on which the tenant
8
will construct a branch bank containing approximately 3,685
square feet.
The Property was acquired subject to a ground lease with Bank
United, a Federal Savings Bank. Financial information with
respect to Bank United is discussed with the preceding Property.
Lease Information. The primary term of the lease is fifteen
years. The lease began on December 11, 1996 and expires on
December 30, 2011. The tenant has the option to renew the lease
for one additional term of five years. The base annual rent
during the first five years of the original term of the lease is
$88,965, during the second five years is $97,861 and during the
final five year term is $107,647. The rent during the renewal
term is $118,412. In addition to the base rent, the tenant pays
all real estate taxes and utilities on the Property. The tenant
is also required, at its sole expense, to keep and maintain the
improvements in good repair and appearance, except for ordinary
wear and tear and make all structural and nonstructural repairs
of every kind which may be required to keep the improvements in
good condition, repair and appearance.
Terms of Acquisition. The Company acquired its interest in the
Property for $827,580 which was paid in cash.
Competitive Conditions. There are no branch banks in the
immediate vicinity of the Property.
Just For Feet, Baton Rouge, Louisiana
Description. On December 11, 1996, the Company entered into a
contract to purchase fee simple title to real estate and
improvements located at the intersection of Promenade Avenue and
Cortana Place, Baton Rouge, Louisiana. On February 11, 1997, the
Company entered into a Joint Venture (the "Joint Venture") with
an affiliate, AAA Net Realty Fund XI, Ltd. The Property is
located on a tract of land consisting of 1.735 acres on which
there is being constructed a Just For Feet Shoe Store. When
construction is completed, the improvements will consist of a
free-standing masonry building containing approximately 15,675
square feet on the first floor and approximately 4,900 square
feet on the mezzanine level.
The Property will be acquired subject to a lease with Just For
Feet, Inc., an Alabama corporation ("JFFI"), which will operate a
retail store on the Property which sells athletic footwear and
apparel and related items. With respect to JFFI, as reported by
its management, consolidated revenues totaled $119,819,000 and
$56,363,000 for the years ended January 31, 1996 and January 31,
1995, respectively. JFFI recorded consolidated net earnings of
$9,722,000 and $3,218,100 for the years ended January 31, 1996
and January 31, 1995, respectively. Current assets of JFFI at
January 31, 1996 exceeded current liabilities by $108,303,500,
and total assets at such date exceeded total liabilities by
$149,269,800.
Lease Information. The original term of the lease, which will
begin on approximately May 15, 1997, is for fifteen years. The
tenant has the option to renew the lease for two additional terms
of five years each.
9
The Company's share of the base annual minimum rent during the
first five years of the original term of the lease is
approximately $145,841. The actual rent cannot be established
until the improvements are completed and the square footage on
the first floor of the building is calculated. The base annual
minimum rent will be increased at the beginning of the sixth and
eleventh lease years by three times the percentage increase in
the Consumer Price Index for all Urban Consumers, U.S. City
Average, during the previous five years, limited to ten percent
each time. During the two renewal terms of the lease, the rent
will be increased using the same formula used in the sixth and
eleventh years of the lease. In addition to the base annual
rent, the tenant pays all real estate taxes and utility charges
on the Property. The Company is required to maintain and repair
the foundation, structural systems (including roof structure,
roof covering, load bearing walls and floor slabs), building
exterior and masonry walls. The Company is also required to
repair any latent defects which are discovered during a one year
period following the time the improvements are turned over to the
tenant. The tenant is required to maintain and repair everything
that the Company is not.
Terms of Acquisition. The Joint Venture intends to acquired the
Property for approximately $2,670,000. The Company owns a 51%
interest in the Joint Venture and AAA Net Realty Fund XI, Ltd.
owns a 49% interest.
Competitive Conditions. There are no retail athletic shoe stores
in the immediate vicinity of the Property.
PRO-FORMA FINANCIAL INFORMATION
The following table presents unaudited pro-forma consolidated
balance sheet for the Company giving effect to the acquisition of
the Just For Feet, Baton Rouge, Louisiana property as of December
31, 1996. Pro-forma consolidated results of operations are not
included as of December 31, 1996 as the building has not been
completed.
10
PRO-FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
Historical Pro-Forma
Costs Adjustments (1) Total
Cash $ 1,616,311 $ (1,375,317) (2) $ 240,994
Property and
Net Investment
In Direct
Financing
Leases 12,102,195 2,830,200 (2) 14,932,395
Other Assets 408,328 (68,085) (2) 340,243
Total Assets 14,126,834 1,386,798 15,513,632
Liabilities 201,285 -- 201,285
Minority
Interest 3,631,847 1,386,798 (2) 5,018,645
Shareholders'
Equity 10,293,702 -- 10,293,702
Total
Liabilities
and
Shareholders'
Equity $ 14,126,834 $ 1,386,798 $ 15,513,632
(1) Adjustments are reflected as if the Just For Feet property
discussed in (2) below was completed on December 31, 1996.
(2) Includes total property acquisition costs of $2,830,200, the
minority partner's share of $1,386,798, acquisition costs
paid to affiliates of $68,085 and the Company's portion of
acquisition costs of $1,375,317.
6. MANAGEMENT
Directors and Executive Officers of the Company
The Company has appointed a new officer, L. Larry Mangum as of
September 19, 1996. Mr. Mangum assumes the offices of Vice
President and Treasurer. The Treasurer position was previously
held by the president.
Background and Experience
11
L. Larry Mangum. L. Larry Mangum, 31, will serve as Vice
President and Treasurer of the Company. Mr. Mangum is the Vice
President of Finance of AAA. Mr. Mangum is responsible for the
financial accounting and reporting relating to the AAA-sponsored
partnerships and their properties. He previously worked for
American General Corporation, a national insurance company, from
1991-1996 as part of a team responsible for supervising their
reporting activities. Mr. Mangum received a B.B.A. degree in
accounting from Stephen F. Austin State University and
subsequently earned the CPA designation.
7. PRIOR PERFORMANCE TABLES
The Prior Performance Tables showing updated information as of
December 31, 1996 concerning prior partnerships sponsored by
affiliates follow.
12
PRIOR PERFORMANCE TABLES
The information in this section shows certain relevant summary
information concerning prior partnerships sponsored by Affiliates
(the "Prior Programs") which had investment objectives similar to
the Company.
The investment objectives of these prior programs, which are
substantially the same as those of the Company, generally include
preservation of capital, the potential for increased income and
protection against inflation, potential for capital appreciation
and partially tax-sheltered cash distributions.
INVESTORS SHOULD NOT CONSTRUE INCLUSION OF THE FOLLOWING TABLES
AS IMPLYING, IN ANY MANNER, THAT THE COMPANY WILL HAVE RESULTS
COMPARABLE TO THOSE REFLECTED IN SUCH TABLES. DISTRIBUTABLE CASH
FLOW, FEDERAL INCOME TAX DEDUCTIONS OR OTHER FACTORS COULD BE
SUBSTANTIALLY DIFFERENT. INVESTORS SHOULD NOTE THAT, BY
ACQUIRING SHARES IN THE COMPANY, THEY WILL NOT BE ACQUIRING ANY
INTEREST IN ANY PRIOR PROGRAMS.
DESCRIPTION OF TABLES
The following Tables are included herein:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to Sponsor
Table III - Operating Results of Prior Programs
Table VI - Acquisitions of Properties by Programs
All information contained in Tables I, II, III and VI is as of
December 31, 1996. The following is a brief description of the
Tables:
TABLE I - EXPERIENCE IN RAISING AND INVESTING FUNDS
Table I presents information on a percentage basis showing the
experience of the General Partners and Affiliates in raising and
investing funds for the Prior Programs, the offerings of which
closed in the three year period ended December 31, 1996.
The Table sets forth information on the offering expenses
incurred and amounts available for investment expressed as a
percentage of dollars raised. The Table also shows the date the
offering commenced and the time required to raise funds for
investment.
P-1
TABLE II - COMPENSATION TO SPONSOR
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to the General Partners or
Affiliates of the Prior Programs.
The Table indicates the total offering proceeds and the portion
of such offering proceeds paid to the General Partners and
Affiliates in connection with the Prior Programs, the offerings
of which closed in the three year period ended December 31, 1996.
The Table also shows the amounts paid to the General Partners and
Affiliates from cash generated from operations on a cumulative
basis commencing with inception and ending December 31, 1996.
TABLE III - OPERATING RESULTS OF PRIOR PROGRAMS
Table III presents a summary of operating results of the Prior
Programs, the offerings of which closed in the five year period
ended December 31, 1996.
TABLE IV - RESULTS OF COMPLETED PROGRAMS
Table IV is omitted from this section because none of the General
Partners or Affiliates have been involved in completed programs
which had investment objectives similar to those of the Company.
TABLE V - SALES OR DISPOSALS OF PROPERTIES
Table V is omitted from this section because there have been no
property sales or disposals from any of the Prior Programs.
TABLE VI - ACQUISITIONS OF PROPERTIES BY PROGRAMS
Table VI, which is included in Part II to this Post-Effective Amendment,
provides certain information pertaining to properties acquired during the
past three years by the Prior Programs.
PRIOR PROGRAMS
Information in this section pertains to the following programs:
AAA Net Realty Fund Goodyear, Ltd. - "AAA Goodyear"
AAA Net Realty Fund IX, Ltd. - "AAA Net Realty IX"
AAA Net Realty Fund X, Ltd. - "AAA Net Realty X"
AAA Net Realty Fund XI, Ltd. - "AAA Net Realty XI"
P-2
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(Unaudited)
AAA NET AAA NET
REALTY REALTY
FUND X FUND XI
Dollar Amount Offered $20,000,000 $20,000,000
Dollar Amount Raised $11,453,610 $7,061,200
Less Offering Expenses:
Selling Commissions
and Discounts 8.0% 8.0%
Organizational Expenses (1) 2.6% 4.2%
Marketing Support & Due Diligence 2.5% 2.5%
Reserve for Operations 1.0% 1.0%
Percent Available for
Investment 88.4% 84.3%
Acquisition Costs
Cash Down Payment 77.4% 40.9%
Acquisition Fees (2) 3.8% 2.0%
Other 0.0% 0.0%
Total Acquisition Costs 81.2% 42.9%
Percent Leveraged 0.0% 0.0%
Date Offering Began 9-17-92 10-27-94
Length of Offering (in months) 24 24
Months to Invest 90% of
Amount Available for
Investment (Measured from
Beginning of Offering) 28 N/A
(1) Organizational expenses include legal, accounting, printing, escrow,
filing, recording and other related expenses associated with the
formation and original organization of the Partnership and also
included fees paid to affiliates.
(2) Acquisition fees include fees paid to the general partner.
P-3
TABLE II
COMPENSATION TO SPONSOR
(Unaudited)
FEES PAID
WITHIN LAST 3
AAA NET AAA NET YEARS FOR
REALTY REALTY ALL OTHER
FUND X FUND XI PROGRAMS (1)
Date Offering Commenced 9-17-92 10-27-94 1985-1990
Dollar Amount Raised $11,453,610 $7,061,200 $12,150,500
Amount paid to sponsor from
proceeds of offering:
Underwriting fees $0 $0 $0
Acquisition fees $436,046 $141,321 $0
Real estate commissions $0 $0 $0
Advisory Fees $0 $0 $0
Reimbursement for
organizational expense $54,602 $190,545 $0
Other $0 $0 $0
Dollar amount of cash
generated from operations
before deducting payments
to sponsor $2,574,522 $417,858 $3,298,276
Amount paid to sponsor from
operations:
Property management fee $0 $0 $0
Reimbursements $150,179 $17,832 $144,900
Leasing Commissions $0 $0 $0
Other (General Partner
Distributions) $10,350 $2,040 $29,456
Dollar amount of property sales
and refinancing before
deducting payments to sponsor
-cash N/A N/A N/A
-notes N/A N/A N/A
Amount paid to sponsor from
property sales and
refinancing:
Real Estate Commissions N/A N/A N/A
Incentive fees N/A N/A N/A
Other (identify & quantify) N/A N/A N/A
(1) Represents information for eight private programs sponsored between 1985
and 1990.
P-4
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
AAA NET REALTY GOODYEAR (1) (2)
(Unaudited)
<CAPTION>
1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Revenues $2,586 $85,490 $107,333 $107,376 $107,443 $107,438 $107,347
Profit on sale of properties $0 $0 $0 $0 $0 $0 $0
Less: Operating expenses (4) $59 $12,933 $5,945 $6,016 $4,942 $3,994 $4,840
Interest expense $0 $0 $0 $0 $0 $0 $0
Depreciation and $1,572 $27,918 $36,372 $36,372 $36,372 $34,801 $22,872
amortization
Net Income - GAAP Basis $955 $44,639 $65,016 $64,988 $66,129 $68,643 $79,635
Taxable Income
-from operations $955 $44,639 $65,016 $64,988 $66,129 $68,643 $79,635
-from gain on sale $0 $0 $0 $0 $0 $0 $0
Cash generated $1,767 $65,762 $86,959 (8) $101,278 $102,480 $118,026 $91,054 (8)
-from operations (5)
Cash generated from sales $0 $0 $0 $0 $0 $0 $0
Cash generated from refinancing $0 $0 $0 $0 $0 $0 $0
Cash generated from operations,
sales and refinancing $1,767 $65,762 $86,959 $101,278 $102,480 $118,026 $91,054
Less: Cash distributions to
investors (3)
-from operating cash flow $0 $59,180 $101,388 $100,392 $100,392 $100,392 $100,392
-from cash flow from prior
period $0 $0 $589 $0 $0 $0 $0
-from sales and refinancing $0 $0 $0 $0 $0 $0 $0
-from return of capital $0 $105,910 (7) $0 $0 $0 $0 $0
Cash generated (deficiency) after
cash distributions to investors $1,767 ($99,328) ($15,018)(8) $886 $2,088 $17,634 ($9,338)(8)
Less: Cash distributions to
general partner $0 $452 $960 $880 $960 $960 $960
Cash generated (deficiency) after
cash distributions $1,767 ($99,780) ($15,978) $6 $1,128 $16,674 ($10,298)
Special items (not including
sales and refinancing):
Limited partners'
capital contributions $385,000 $950,000 $0 $0 $0 $0 $0
General partner's
capital contributions $0 $0 $0 $0 $0 $0 $0
Organization and syndication
costs ($57,750) ($116,550) $0 $0 $0 $0 $0
Property acquisitions ($9,000) ($1,020,260) $0 $0 $0 $0 $0
Cash generated (deficiency)
after cash distributions and
special items $320,017 ($286,590) ($15,978) $6 $1,128 $16,674 ($10,298)
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED (7)
Federal Income Tax Results (6)
Ordinary income (loss)
-from operations $2.48 $33.43 $52.90 $52.87 $53.80 $55.85 $64.80
-from recapture $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Capital gain (loss) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cash distributions to
Investors (6)
Source (on GAAP Basis)
-Investment income from
current period $0.00 $33.43 $52.90 (8) $52.87 $53.80 $55.85 $64.80 (8)
-Investment income from prior
period $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Return of capital (10) $0.00 $90.23 (7) $30.07 $28.81 $27.88 $25.83 $16.88
Source (on Cash Basis)
-Sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Refinancing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Operations $0.00 $44.33 $82.50 (8) $81.68 $81.68 $81.68 $81.68 (8)
-Cash flow from prior period $0.00 $0.00 $0.47 $0.00 $0.00 $0.00 $0.00
-Return of capital $0.00 $79.33 (7) $0.00 $0.00 $0.00 $0.00 $0.00
Amount (in percentage terms)
remaining invested in program
properties at the end of the
last year reported in the Table
(original total acquisition cost
of properties retained divided
by original total acquisition
cost of all properties in N/A 100% 100% 100% 100% 100% 100%
program)
SEE NOTES TO TABLES
P-5
</TABLE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
AAA NET REALTY FUND IX (1) (2)
(Unaudited)
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Gross Revenues $141,719 $373,681 $491,922 $496,362 $500,716 $499,602
Profit on sale of properties $0 $0 $0 $0 $0 $0
Less: Operating expenses (4) $50,197 $53,020 $37,189 $37,597 $39,746 $31,822
Interest expense $0 $0 $0 $0 $0 $0
Depreciation and
amortization $85,112 $213,492 $254,899 $255,250 $255,250 $197,605
Net Income - GAAP Basis $6,410 $107,169 $199,834 $203,515 $205,720 $270,175
Taxable Income
-from operations $54,461 $212,675 $313,034 $316,715 $318,920 $343,020
-from gain on sale $0 $0 $0 $0 $0 $0
Cash generated from operations (5) $91,760 $325,702 $436,033 $487,354 $465,241 $460,245
Cash generated from sales $0 $0 $0 $0 $0 $0
Cash generated from refinancing $0 $0 $0 $0 $0 $0
Cash generated from operations,
sales and refinancing $91,760 $325,702 $436,033 $487,354 $465,241 $460,245
Less: Cash distributions to
investors (3)
-from operating cash flow $80,614 $318,949 $436,033 $452,802 $458,193 $458,462
-from cash flow from prior period $0 $0 $11,378 $0 $0 $0
-from sales and refinancing $0 $0 $0 $0 $0 $0
-from return of capital $0 $0 $0 $0 $0 $0
Cash generated (deficiency) after
cash distributions to investors $11,146 $6,753 ($11,378) $34,552 $7,048 $1,783
Less: Cash distributions to
general partner $814 $3,000 $3,000 $3,000 $3,000 $3,000
Cash generated (deficiency) after
cash distributions $10,332 $3,753 ($14,378) $31,552 $4,048 ($1,217)
Special items (not including
sales and refinancing):
Limited partners' capital
contribution $3,661,500 $1,729,000 $0 $0 $0 $0
General partner's capital
contribution $1,000 $0 $0 $0 $0 $0
Organization and syndication
costs ($549,225) ($259,354) $0 $0 $0 $0
Property acquisitions ($2,710,544) ($1,601,769) ($124,556) $0 $0 $0
Cash generated (deficiency)
after cash distributions and
special items $413,063 ($128,370) ($138,934) $31,552 $4,048 ($1,217)
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED
Federal Income Tax Results: (6)
Ordinary income (loss)
-from operations $14.87 $39.45 $58.07 $58.75 $59.16 $63.63
-from recapture $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Capital gain (lo $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cash distributions to
Investors (6)
Source (on GAAP Basis)
-Investment income from current
period $14.87 $39.45 $58.07 $58.75 $59.16 $63.63
-Investment income from prior
period $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Return of capital (10) $7.15 $19.72 $24.93 $25.25 $25.84 $21.42
Source (on Cash Basis)
-Sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Refinancing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Operations $22.02 $59.17 $83.00 $84.00 $85.00 $85.05
-Cash flow from prior period $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
-Return of capital $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Amount (in percentage terms)
remaining invested in program
properties at the end of the
last year reported in the Table
(original total acquisition cost 100% 100% 100 % 100% 100% 100%
of properties retained divided
by original total acquisition
cost of all properties in
program)
SEE NOTES TO TABLES
P-6
</TABLE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
AAA NET REALTY FUND X (1) (2) (11)
(Unaudited)
<CAPTION>
1993 1994 1995 1996
<S> <C> <C> <C> <C>
Gross Revenues $182,358 $666,798 $1,043,148 $1,050,106
Profit on sale of properties $0 $0 $0 $0
Less: Operating expenses (4) $13,430 $48,868 $94,818 $95,233
Interest expense $0 $0 $0 $0
Depreciation and
amortization $59,563 $145,271 $216,557 $217,661
Net Income - GAAP Basis $109,365 $472,659 $731,773 $737,212
Taxable Income
-from operations $109,365 $460,870 $681,850 $683,504
-from gain on sale $0 $0 $0 $0
Cash generated from operations (5) $199,482 $537,731 $972,758 $913,854
Cash generated from sales $0 $0 $0 $0
Cash generated from refinancing $0 $0 $0 $0
Cash generated from operations,
sales and refinancing $199,482 $537,731 $972,758 $913,854
Less: Cash distributions to
investors (3)
-from operating cash flow $116,054 $515,254 $879,065 $913,854
-from cash flow from prior
period $0 $0 $0 $3,007
-from sales and refinancing $0 $0 $0 $0
-from return of capital $0 $0 $0 $0
Cash generated (deficiency) after
cash distributions to investors $83,428 $22,477 $93,693 $3,007
Less: Cash distributions to
general partner $0 $2,650 $4,100 $3,600
Cash generated (deficiency) after
cash distributions $83,428 $19,827 $89,593 $6,607
Special items (not including
sales and refinancing):
Limited partners' capital
contributions $6,468,550 $4,985,060 $0 $0
General partner's capital
contributions $944 (9) $0 $0 $0
Organization and syndication
costs ($970,283) ($532,346) $0 $0
Property acquisitions ($3,113,096) ($4,781,519) ($1,425,353) ($624,732)
Cash generated (deficiency)
after cash distributions and
special items $2,469,543 ($308,978) ($1,335,760) ($631,339)
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED
Federal Income Tax Results (6)
Ordinary income (loss)
-from operations $16.91 $40.24 $59.53 $59.68
-from recapture $0.00 $0.00 $0.00 $0.00
Capital gain (loss) $0.00 $0.00 $0.00 $0.00
Cash distributions to
Investors (6)
Source (on GAAP Basis)
-Investment income from current
period $16.91 $40.24 $59.53 $59.68
-Investment income from prior
period $0.00 $0.00 $0.00 $0.00
-Return of capital (10) $1.03 $4.75 $17.22 $20.37
Source (on Cash Basis)
-Sales $0.00 $0.00 $0.00 $0.00
-Refinancing $0.00 $0.00 $0.00 $0.00
-Operations $17.94 $44.99 $76.75 $80.05
-Cash flow from prior period $0.00 $0.00 $0.00 $0.00
-Return of capital $0.00 $0.00 $0.00 $0.00
Amount (in percentage terms)
remaining invested in program
properties at the end of the
last year reported in the Table N/A N/A N/A 100%
(original total acquisition cost
of properties retained divided
by original total acquisition
cost of all properties in
program)
SEE NOTES TO TABLES
P-7
</TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
AAA NET REALTY FUND XI, LTD. (1) (2)
(Unaudited)
1995 1996
Gross Revenues $124,158 $341,383
Profit on sale of properties $0 $0
Less: Operating expenses (4) $20,790 $46,964
Interest expense $0 $0
Depreciation and amortization $26,058 $62,400
Net Income - GAAP Basis $77,310 $232,019
Taxable Income
-from operations $76,054 $212,043
-from gain on sale $0 $0
Cash generated from operations (5) $124,038 $275,988
Cash generated from sales $0 $0
Cash generated from refinancing $0 $0
Cash generated from operations,
sales and refinancing $124,038 $275,988
Less: Cash dividends to investors
-from operating cash flow $61,863 $275,433
-from cash flow from prior period $0 $0
-from sales and refinancing $0 $0
-from return of capital $0 $0
Cash generated (deficiency) after
cash dividends to investors $62,175 $555
Less: Cash distributions to
general partner $0 $2,040
Cash generated (deficiency) after
cash distributions $62,175 ($1,485)
Special items (not including
sales and refinancing):
Limited partners' capital contributions $3,828,490 $3,232,719
General partner's capital contributions $1,000 $0
Organization and syndication costs ($574,629) ($466,425)
Property acquisitions ($1,674,307) ($1,391,663)
Cash generated (deficiency) after cash
distributions and special items $1,642,729 $1,373,146
TAX AND DISTRIBUTION DATA PER $1,000 INVESTED
Federal Income Tax Results (6)
Ordinary income (loss)
-from operations $19.86 $30.02
-from recapture $0.00 $0.00
Capital gain (loss) $0.00 $0.00
Cash distributions to Investors (6)
Source (on GAAP Basis)
-Investment income from current period $16.16 $30.02
-Investment income from prior period $0.00 $0.00
-Return of capital (10) $0.00 $8.98
Source (on Cash Basis)
-Sales $0.00 $0.00
-Refinancing $0.00 $0.00
-Operations $16.16 $39.00
-Cash flow from prior period $0.00 $0.00
-Return of capital $0.00 $0.00
Amount (in percentage terms)
remaining invested in program
properties at the end of the last
year reported in the Table
(original total acquisition cost
of properties retained divided N/A N/A
by original total acquisition
cost of all properties in
program)
SEE NOTES TO TABLES
P-8
NOTES TO TABLE III
( 1) Taxable income is reflected on the cash basis for AAA
Goodyear and on the accrual basis for AAA Net Realty
Funds IX, X and XI. There are no significant
differences between income as reflected on the cash
basis for AAA Goodyear and income as would be
reflected on a GAAP basis.
( 2) Amortization of organizational costs is computed over a
period of 60 months. Depreciation of commercial real
property is determined on the straight-line method over
estimated useful lives ranging from 31.5 to 39 years.
( 3) Cash distributions to investors represents the amount
actually disbursed in each year to the limited
partners.
( 4) Operating expenses include management fees paid to
affiliates for such services as accounting, property
supervision, etc.
( 5) Cash generated from operations includes net income plus
depreciation and amortization plus any decreases in
accounts receivable and accrued rental income or
increases in accounts payable and minus any increases
in accounts receivable and accrued rental income or
decreases in accounts payable.
( 6) Tax and distribution data per $1,000 invested was
computed based on the number of units subscribed at
each year-end except for AAA Goodyear which is
discussed in Note (7) below. Contributions to
Programs IX, X and XI were $1,000 per unit. AAA Net
Realty IX had 3,661 units outstanding at December 31,
1991 and 5,390.5 units outstanding thereafter. AAA Net
Realty X had 6,468.55 units outstanding at December 31,
1993 and 11,453.61 units thereafter. AAA Net Realty XI
had 3,828.49 units outstanding at December 31, 1995 and
7,061.21 units thereafter.
( 7) After the final property was acquired by AAA Net Realty
Goodyear, funds remained in excess of the required
working capital reserve. $105,910, 7.9% of the
original funds raised, was returned to the
investors in the fall of 1991. Tax and Distribution
Data per $1,000 invested has been computed based upon a
net investment of $1,229,090 after this return of
capital.
( 8) In December 1992, a property tax payment was made from
the working capital reserve for which reimbursement was
received in January 1993. The source of distributions
for both years is reflected as operations. In December
1996, a similar property tax payment was made which was
reimbursed in January 1997. The source of
distributions for 1996 is also reflected as being
completely from operations.
( 9) The general partners' contribution consists of $1,000
from 1992 reduced by bank charges incurred before the
Partnership was formed.
(10) The amount of cash distributions paid to investors is
primarily determined by the operating profit before
depreciation and amortization deductions. The sources
of distributions from investment income in the Table is
net income after all deductions. Investment income
from the current period represents net income for the
year after all deductions. Investment income
from a prior period represents previously undistributed
net income from earlier years. The distributions shown
as a return of capital are generally the portion
attributable to depreciation and amortization.
(11) AAA Net Realty Fund X, Ltd. has been advised that it
has a contingent liability to investors who acquired
units after December 31, 1993 as a result of not
maintaining current information in the prospectus and
supplement. The maximum possible amount of this
contingent liability is approximately $5.5 million.
P-9
8. EXPERTS
The consolidated balance sheets of American Asset Advisers Trust,
Inc. as of December 31, 1996 and 1995 and the related
consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended
December 31, 1996 included in this Supplement have been audited
by Deloitte & Touche, LLP, independent auditors, as stated in
their report appearing herein, and have been so included in
reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
9. FINANCIAL STATEMENTS
The financial statements for the Company as of December 31, 1996
follow.
13
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995
AND 1994
AMERICAN ASSET ADVISERS TRUST, INC.
F-1
AMERICAN ASSET ADVISERS TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report F-3
Consolidated Balance Sheets, December 31, 1996 F-4
and 1995
Consolidated Statements of Operations for the Years F-5
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity F-6
for the Years Ended December 31, 1996, 1995
and 1994
Consolidated Statements of Cash Flows for the Years F-7 to F-8
Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements for the F-9 to F-14
Years Ended December 31, 1996, 1995 and 1994
F-2
INDEPENDENT AUDITORS' REPORT
American Asset Advisers Trust, Inc.
We have audited the accompanying consolidated balance sheets of
American Asset Advisers Trust, Inc. (the "Company") as of
December 31, 1996 and 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
February 14, 1997
F-3
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS 1996 1995
CASH AND CASH EQUIVALENTS $ 1,616,311 $ 1,564,961
ACCOUNTS RECEIVABLE 5,119 -
PROPERTY:
Escrow deposits 75,000 -
Land 4,634,941 2,152,103
Buildings 4,435,713 4,436,074
9,145,654 6,588,177
Accumulated depreciation (195,256) ( 81,512)
TOTAL PROPERTY 8,950,398 6,506,665
NET INVESTMENT IN DIRECT
FINANCING LEASES 3,151,797 582,753
OTHER ASSETS:
Prepaid acquisition costs 74,336 77,761
Prepaid issuance costs 101,399 -
Accrued rental income 74,625 23,845
Organization costs, net of
accumulated amortization
of $160,919 and $99,130,
respectively 152,849 214,638
TOTAL OTHER ASSETS 403,209 316,244
TOTAL ASSETS $ 14,126,834 $ 8,970,623
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 36,235 $ 67,481
Compensation payable 150,000 150,000
Security deposit 15,050 15,050
TOTAL LIABILITIES 201,285 232,531
MINORITY INTEREST 3,631,847 1,596,169
SHAREHOLDERS' EQUITY
Common stock, $.01 par
value, 25,000,000 shares
authorized, 1,204,925 and
827,876 shares issued and
outstanding, respectively 12,049 8,279
Additional paid-in capital 10,780,847 7,438,368
Accumulated distributions
in excess of earnings (499,194) (304,724)
TOTAL SHAREHOLDERS' EQUITY 10,293,702 7,141,923
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 14,126,834 $ 8,970,623
See Notes to Consolidated Financial Statements
F-4
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
REVENUES
RENTAL INCOME FROM
OPERATING LEASES $ 780,768 $ 434,563 $ 93,552
EARNED INCOME FROM
DIRECT FINANCING LEASES 144,020 60,574 28,090
INTEREST INCOME 137,528 127,947 37,564
TOTAL REVENUES 1,062,316 623,084 159,206
EXPENSES
ADMINISTRATIVE 37,910 - 2,954
AMORTIZATION 61,789 61,470 35,265
COMPENSATION - 150,000 -
DEPRECIATION 113,744 66,966 14,546
DIRECTORS' FEES 15,000 16,500 10,500
INTEREST 5,000 - -
LEGAL AND PROFESSIONAL
FEES 41,060 49,863 5,531
PRINTING 4,089 7,835 -
OTHER 24,265 14,626 2,498
TOTAL EXPENSES 302,857 367,260 71,294
INCOME BEFORE MINORITY
INTEREST IN NET INCOME OF
CONSOLIDATED JOINT VENTURES 759,459 255,824 87,912
MINORITY INTEREST IN NET
INCOME OF CONSOLIDATED
JOINT VENTURES (216,652) (92,378) (8,367)
NET INCOME $ 542,807 $ 163,446 $ 79,545
NET INCOME PER SHARE:
PRIMARY $ .51 $ .24 $ .32
FULLY DILUTED $ .50
WEIGHTED AVERAGE COMMON
& COMMON EQUIVALENT
SHARES:
PRIMARY 1,066,353 672,794 251,768
FULLY DILUTED 1,329,494
See Notes to Consolidated Financial Statements
F-5
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Accumulated
Additional Distributions
Common Paid-In In Excess of
Stock -Capital Earnings Total
Balance at
December 31,1993 $ 200 $ 199,810 $ (2,395) $ 197,615
Issuance of
common stock 4,709 4,704,495 - 4,709,204
Issuance costs - (485,300) - (485,300)
Distributions
($.35 per share) - - (126,235) (126,235)
Net income - - 79,545 79,545
Balance at
December 31, 1994 4,909 4,419,005 (49,085) 4,374,829
Issuance of
common stock 3,370 3,366,175 - 3,369,545
Issuance costs - (346,812) - (346,812)
Distributions
($.64 per share) - - (419,085) (419,085)
Net income - - 163,446 163,446
Balance at
December 31, 1995 8,279 7,438,368 (304,724) 7,141,923
Issuance of
common stock 3,770 3,810,883 - 3,814,653
Issuance costs - (468,404) - (468,404)
Distributions
($.71 per share) - - (737,277) (737,277)
Net income - - 542,807 542,807
Balance at
December 31,1996 $12,049 $10,780,847 $(499,194) $10,293,702
See Notes to Consolidated Financial Statements
F-6
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 542,807 $ 163,446 $ 79,545
Adjustments to reconcile
net income to net cash
flows from operating
activities:
Amortization 61,789 61,470 35,265
Depreciation 113,744 66,966 14,546
Increase in minority
interest 216,652 92,378 8,367
Decrease (increase)
in accounts receivable (5,119) 69 (69)
Increase (decrease)
in accounts payable (31,246) 66,058 1,423
Increase in compensation
payable - 150,000 -
Increase in security
deposits - 15,050 -
Cash receipts from direct
financing lease in excess
of income recognized 1,017 2,980 100
Increase in escrow
deposits (38,250) - -
Increase in accrued
rental income (50,780) (23,845) -
Increase in
organization costs - (20,355) (234,595)
NET CASH FLOWS PROVIDED
BY (USED IN) OPERATING
ACTIVITIES 810,614 574,217 (95,418)
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisitions of real
estate:
Accounted for under the
operating lease method (1,695,146) (2,715,431) (2,262,667)
Accounted for under the
direct financing lease
method (1,342,805) (1,337) (584,496)
Change in prepaid
acquisition costs 3,425 (77,084) (677)
NET CASH FLOWS USED
IN INVESTING
ACTIVITIES (3,034,526) (2,793,852) (2,847,840)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance
of common stock, net 3,346,249 3,022,733 4,223,904
Prepaid issuance costs (101,399) - -
Distributions paid to
shareholders (737,277) (419,085) (126,235)
Distributions to
minority interest
partners (232,311) (104,639) (10,016)
NET CASH FLOWS PROVIDED
BY FINANCING ACTIVITIES 2,275,262 2,499,009 4,087,653
NET INCREASE IN CASH
& CASH EQUIVALENTS 51,350 279,374 1,144,395
CASH & CASH EQUIVALENTS,
beginning of period 1,564,961 1,285,587 141,192
CASH & CASH EQUIVALENTS,
end of period $1,616,311 $1,564,961 $1,285,587
See Notes to Consolidated Financial Statements
F-7
AMERICAN ASSET ADVISERS TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
SUPPLEMENTAL SCHEDULE
OF NON-CASH FINANCING
ACTIVITIES:
Escrow deposit
contributed by partner
of the consolidated
joint ventures $ 36,750 $ - $ -
Minority owners share
of real estate
acquired:
Accounted for under
the operating lease
method $ 787,331 $ 874,943 $ 735,136
Accounted for under
the direct financing
lease method 1,227,256 - -
Total minority owners
share of real estate
acquired $2,014,587 $ 874,943 $ 735,136
See notes to Consolidated Financial Statements.
F-8
AMERICAN ASSET ADVISERS TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
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 ("AAA"). Commencing
March 17, 1994, the Company offered up to 2,000,000 additional
shares of common stock together with 1,000,000 warrants. The
Company is in the process of registering shares of common stock
for issuance upon the exercise of the outstanding warrants. The
warrants are exercisable at $9 per share between March 17, 1997
and March 16, 1998. As of December 31, 1996, 504,126 warrants
were outstanding. The offering period of the initial public
offering terminated on March 15, 1996 with 1,008,252 shares being
issued. 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, unless terminated earlier. As of
December 31, 1996, 176,672 shares in this second offering were
issued, bringing the total shares issued and outstanding to
1,204,925 shares.
The Company was formed to acquire commercial and industrial real
estate properties using invested and borrowed funds. The
selection, acquisition and supervision of the operation of the
properties is managed by AAA, a related party.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of
American Asset Advisers Trust, Inc. and its four controlled joint
ventures with related parties.
BASIS OF ACCOUNTING
The financial records of the Company are maintained on the
accrual basis of accounting whereby revenues are recognized when
earned and expenses are recorded when incurred.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
Cash and cash equivalents consist of demand deposits at
commercial banks and money market funds.
REAL ESTATE
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 lease method or the direct financing lease method.
Under the operating lease method, the properties are recorded at
cost. Rental income is recognized ratably over the life of the
lease and depreciation is charged based upon the estimated useful
life of the property. Under the direct financing lease method,
properties are recorded at their net investment (see Note 3).
Unearned income is deferred and amortized to income over the life
of the lease so as to produce a constant periodic rate of return.
F-9
The Company's lease agreements do not provide for contingent
rentals.
The Company obtains an appraisal on each property prior to a
property's acquisition and also performs an annual valuation
update to evaluate potential impairment for each property for
which an appraisal is older than twelve months. This valuation
is based on capitalization of income for each property, a review
of current market conditions and any significant events or
factors which would indicate a potential impairment to the value
of a property.
DEPRECIATION
Buildings are depreciated using the straight-line method over an
estimated useful life of 39 years.
ORGANIZATION COSTS
Organization costs incurred in the formation of the Company are
amortized on a straight-line basis over five years.
STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
No cash was paid for interest during 1996, 1995 or 1994.
FEDERAL INCOME TAXES
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.
NET INCOME PER SHARE
The number of shares used in primary net income per share
calculations are based on the weighted average number of shares
of common stock outstanding. The number of shares used in the
fully diluted net income per share calculations are based on the
weighted average number of shares of common stock outstanding and
the assumption that the warrants were exercised using the
treasury stock method.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company believes the carrying value of financial instruments
consisting of cash, cash equivalents, accounts receivable and
liabilities approximates their fair value.
F-10
2. OPERATING LEASES
A summary of minimum future rentals, exclusive of any renewals,
under noncancellable operating leases in existence at December
31, 1996 is as follows:
1997 $ 932,543
1998 $ 936,961
1999 $ 963,178
2000 $ 988,006
2001 $ 997,043
2002-2016 $ 6,469,568
3. NET INVESTMENT IN DIRECT FINANCING LEASES
The Company's net investment in its direct financing leases at
December 31, 1996 and 1995 included:
1996 1995
Minimum lease payments
receivable $ 7,441,043 $ 1,383,086
Unguaranteed residual value 1,557,904 289,209
Less: Unearned income 5,847,150 1,089,542
$ 3,151,797 $ 582,753
A summary of minimum future rentals, exclusive of any renewals,
under the noncancellable direct financing leases are summarized
as follows:
1997 $ 330,229
1998 $ 330,229
1999 $ 333,165
2000 $ 336,590
2001 $ 343,251
2002-2016 $ 5,767,559
4. MINORITY INTEREST
On September 23, 1996, the Company formed a joint venture, AAA
Joint Venture 96-2, with AAA Net Realty Fund XI, Ltd., an
affiliated partnership. The joint venture was formed for the
purpose of acquiring 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%. The minority interest is
49%.
On April 5, 1996, the Company formed a joint venture, AAA Joint
Venture 96-1, 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 property was purchased on
September 11, 1996 after construction was completed. The
Company's interest in the joint venture is 51.9%. The minority
interest is 48.1%.
On September 12, 1995, the Company formed a joint venture, AAA
Joint Venture 95-2, with AAA Net Realty Fund XI, Ltd., an
affiliated partnership, for the purpose of acquiring a property
in Wichita, Kansas on lease to Blockbuster Music Retail, Inc.
The Company's interest in the joint venture is 51%. The minority
interest is 49%.
F-11
On October 27, 1994, the Company formed a joint venture, AAA
Joint Venture 94-1, with AAA Net Realty Fund X, Ltd., an
affiliated partnership, for the purpose of acquiring a property
in Independence, Missouri on lease to Blockbuster Music Retail,
Inc. The Company's interest in the joint venture is 54.84%. The
minority interest is 45.16%.
5. MAJOR TENANTS
The Company's operations are all related to the acquisition and
leasing of commercial real estate properties. The following
schedule summarizes rental income by lessee for 1996, 1995 and
1994 under both operating lease and direct financing lease
methods of accounting:
1996 1995 1994
Tandy Corporation
(Mesquite, Texas) $ 108,900 $ 108,903 $ 59,290
America's Favorite
Chicken Company
(Smyrna, Georgia) $ 91,875* $ 94,118 $ 40,173
Blockbuster Music
Retail, Inc.
(Independence, Missouri
and Wichita, Kansas) $ 377,901 $ 238,906 $ 22,179
OneCare Health
Industries, Inc.
(Houston, Texas) $ 201,638 $ 53,210 $ -
Just For Feet, Inc.
(Tucson, Arizona) $ 123,244 $ - $ -
Bank United
(The Woodlands, Texas
and Houston, Texas) $ 21,230 $ - $ -
Total $ 924,788 $ 495,137 $ 121,642
*Decrease resulted from recognition of earned income under the
direct financing lease method of accounting. Rental payments
received remained unchanged from 1995.
6. FEDERAL INCOME TAXES
The differences between net income for financial reporting
purposes and taxable income before distribution deductions relate
primarily to temporary differences and to certain organization
costs which are amortized for financial reporting purposes only.
For income tax purposes, distributions paid to shareholders
consist of ordinary income, capital gains and return of capital
as follows:
1996 1995 1994
Ordinary Income $ 545,967 $ 342,210 $ 105,456
Capital gains - - -
Return of capital 191,310 76,875 20,779
$ 737,277 $ 419,085 $ 126,235
7. RELATED PARTY TRANSACTIONS
20,001 Shares of the Company's stock are owned by AAA. The
common stock of AAA is wholly owned by the president and director
of the Company. In addition, the Company has entered into an
Omnibus Services Agreement with AAA whereby AAA provides property
acquisition, leasing, administrative and management services for
the Company. $37,910 and $2,954 were incurred and paid to AAA
during 1996 and 1994, respectively, for such services.
F-12
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. The costs to organize the Company
have been capitalized as Organization Costs. For the year ended
December 31, 1994, $58,110 in reimbursements had been incurred
and paid to AAA. In addition, $98,494 and $64,848 of costs were
incurred by AAA in 1996 and 1995, respectively, in connection
with the issuance and marketing of the Company's stock. These
costs are reflected as issuance costs. $9,256 of these costs were
owed to AAA at December 31, 1995.
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. Acquisition fees of
$222,785, $232,378 and $131,077 were incurred and paid to AAA
during 1996, 1995 and 1994, respectively.
On August 22, 1995, the Board of Directors approved a special
compensation payment for the president 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 $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 1995
Board meeting. As of the termination of the initial public
offering in March 1996, the Company had sold in excess of
$10,000,000. Although the president 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 the president demands payment.
In consideration that no payment has been demanded by the
president for the special compensation payment, the Board of
Directors approved at its August 1, 1996 meeting the payment of
interest to the president at an annual rate of 8%. This interest
payment will be paid in cash or in stock. As of December 31,
1996, $5,000 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.
In accordance with the terms of the Company's public offering, up
to 15% of the gross offering proceeds will be used to pay
aggregate selling commissions and other issuance costs incurred
by the Company. Any excess costs incurred by the Company are the
obligation of AAA. At December 31, 1996, $101,399 of such costs
had been incurred by the Company in excess of the amount allowed
from the offering proceeds. AAA's obligation to fund such costs
is dependent upon future proceeds from the public offering.
See Note 4 for joint venture agreements with related parties.
F-13
8. PROPERTY ACQUISITIONS IN 1996
On December 11, 1996, the Company purchased real estate located
in Houston, Texas for $849,462. The property is a tract of
undeveloped land on which the tenant, Bank United, intends to
construct a branch bank. The lease agreement is for fifteen
years, however the tenant has the option to renew the lease for
one additional term of five years. The lease has provisions for
an escalation in the rent after the fifth and tenth years of the
lease. The Company recorded $5,119 of rental income from Bank
United for 1996.
On December 11, 1996, the Company entered into an agreement with
SCC Baton Rouge JFF, Ltd. for the purchase of a property to be
constructed in Baton Rouge, Louisiana. The property will be
acquired subject to a lease with Just For Feet, Inc. The
purchase price for the property will total approximately
$2,670,000 and will be paid with funds raised from the Company's
stock offering (See Note 1) and through a joint venture with a
related party.
On September 23, 1996, the Company purchased a 51% interest in
real estate located in The Woodlands, Texas through a joint
venture with a related party for the purchase price of $270,300.
The property is a tract of undeveloped land on which the tenant,
Bank United, will construct a branch bank. The lease agreement
extends for fifteen years, however the tenant has the option to
renew the lease for one additional term of five years. The lease
has provisions for an escalation in the rent after the fifth and
tenth years of the lease. The Company recorded $16,111 of rental
income from Bank United for 1996.
On September 11, 1996, the Company acquired a 51.9% interest in
a newly constructed property on lease to Just For Feet, Inc.
through a joint venture with two related parties for the purchase
price of $1,918,189. The lease agreement extends for twenty
years, however the tenant has the option to renew the lease for
two additional terms of five years each. The lease has
provisions for an escalation in the rent after the fifth, tenth,
and fifteenth years of the lease. The Company recorded $123,244
of income from Just For Feet for 1996.
As no buildings had previously been constructed on any of the
properties acquired by the Company during 1996, the rental income
received by the Company from these properties represents the
initial results of operations. Consequently, no pro-forma
information is presented.
F-14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 35 Financial Statements and Exhibits
(a) Financial Statements
Included in Supplement No. 2:
Audited Financial Statements and related Notes thereto of
Registrant, American Asset Advisers Trust, Inc., as of and for
the years ended December 31, 1996, 1995 and 1994.
All other statements and schedules are omitted as
inapplicable.
(b) Exhibits
Exhibit No. Description
23 Consent of Deloitte & Touche LLP,
Independent Public Accountants
II-1
<TABLE>
TABLE VI
ACQUISITIONS OF PROPERTIES BY PROGRAMS
Summarized as follows is certain information pertaining to the properties
acquired within the three years ended December 31, 1996 by prior programs
with investment objectives similar to those of the Company.
<CAPTION>
GROSS MORTGAGE PRICE
TYPE LEASABLE DATE FINANCING CASH &
PROPERTY/ OF SPACE OF AT DOWN ACQ. OTHER TOTAL
PROGRAM LOCATION* PROPERTY (Approx.)** PURCHASE PURCHASE PAYMENT FEE EXPENSES PRICE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AAA Net TGI Friday's/
Realty Fund Texas Restaurant 9,200 Sq Ft 12/93 $0 $1,548,657 $1,548,657 $0 $1,548,657
X, Ltd.
Goodyear Tire
& Rubber Co/ Automotive
Texas Store 5,200 Sq Ft 3/94 $0 $538,945 $538,945 $0 $538,945
America's
Favorite
Chicken Co/
Georgia Restaurant 2,588 Sq Ft 7/94 $0 $881,334 $881,334 $0 $881,334
Computer City
Super Center/ Retail
Minnesota Outlet 15,000 Sq Ft 8/94 $0 $2,528,214 $2,528,214 $0 $2,528,214
Blockbuster
Music Store/ Retail
Missouri Store 15,158 Sq Ft 11/94 $0 $735,136 $735,136 $0 $735,136
OneCare Health
Industries/ Medical
Texas Facility 14,760 Sq Ft 1/95 $0 $1,477,838 $1,477,838 $0 $1,477,838
Just For Feet/ Retail
Arizona Store 19,400 Sq Ft 9/96 $0 $662,216 $662,216 $0 $662,216
AAA Net Blockbuster
Realty Fund Music Store/ Retail
XI, Ltd. Kansas Outlet 14,047 Sq Ft 9/95 $0 $874,943 $874,943 $0 $874,943
Blockbuster
Video Store/ Retail
Oklahoma Outlet 6,500 Sq Ft 12/95 $0 $789,871 $789,871 $0 $789,871
Just For Feet/ Retail
Arizona Store 19,400 Sq Ft. 9/96 $0 $1,090,912 $1,090,912 $0 $1,090,912
Bank United/ Financial
Texas Institution 3,685 Sq Ft 9/96 $0 $261,393 $261,393 $0 $261,393
<FN>
* All properties are under lease to parent companies.
** Certain of these properties have been acquired by a joint venture
of two or three programs. Gross leasable space includes the full
approximate square footage of each property while the total price
reflects only each program's share of acquisition costs.
</FN>
II-2
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds
to believe that it meets all the requirement for filing a Form S-11
and has duly caused this Post-Effective Amendment No. 1 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Houston,
State of Texas, on the 28th day of February, 1997.
American Asset Advisers Trust, Inc.
/s/ H. Kerr Taylor
H. Kerr Taylor, President
/s/ H. Kerr Taylor
H. Kerr Taylor, Chief Financial Officer
/s/ L. Larry Mangum
L. Larry Mangum, Vice President and
Treasurer (Principal Accounting Officer)
Date: February 28, 1997
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the
following people on behalf of the Registrant and in the
capacities and on the dates indicated.
/s/ H. Kerr Taylor February 28, 1997
H. KERR TAYLOR Date
President, Chairman of the Board
(Chief Executive Officer and Chief
Financial Officer) and Director
/s/ Robert S. Cartwright, Jr. February 28, 1997
ROBERT S. CARTWRIGHT, JR., Director Date
/s/ George A. McCanse, Jr. February 28, 1997
GEORGE A. McCANSE, JR., Director Date
II-3
Exhibit No. 23
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to
Registration Statement No. 333-2572 of American Asset Advisers
Trust, Inc. on Form S-11 of our report dated February 14, 1997
appearing in Supplement No. 2 to the Prospectus, which is a part
of such Registration Statement, and to the reference to us under
the heading "Experts" in such Supplement.
DELOITTE & TOUCHE LLP
Houston, Texas
February 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,616,311
<SECURITIES> 0
<RECEIVABLES> 5,119
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,621,430
<PP&E> 9,145,654
<DEPRECIATION> 195,256
<TOTAL-ASSETS> 14,126,834
<CURRENT-LIABILITIES> 186,235
<BONDS> 0
0
0
<COMMON> 12,049
<OTHER-SE> 10,281,653
<TOTAL-LIABILITY-AND-EQUITY> 14,126,834
<SALES> 924,788
<TOTAL-REVENUES> 1,062,316
<CGS> 0
<TOTAL-COSTS> 302,857
<OTHER-EXPENSES> 216,652
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 542,807
<INCOME-TAX> 0
<INCOME-CONTINUING> 542,807
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 542,807
<EPS-PRIMARY> .51
<EPS-DILUTED> .50
