<PAGE> 1
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, 1999
or
[ ] 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 0-23256
JAMESON INNS, INC.
(Exact name of registrant as specified in its Articles)
-------------------------------
Georgia 58-2079583
(State or other jurisdiction (I.R.S. Employer)
of incorporation) Identification No.)
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1604
(Address of principal executive offices including zip codes)
(770) 901-9020
(Registrant's telephone number, including area code)
-------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
-------------------------------
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date - Common Stock, $.10 Par Value
- - 11,026,236 shares outstanding as of November 5, 1999.
1
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998......................................... 3
Condensed Consolidated Statements of Operations for the Three and
Nine Month Periods Ended September 30, 1999 and 1998
(unaudited)............................................................... 4
Condensed Consolidated Statements of Stockholders' Equity for the
Nine Month Period Ended September 30, 1999 (unaudited) and the
Year Ended December 31, 1998.............................................. 5
Condensed Consolidated Statements of Cash Flows for the Nine
Month Periods Ended September 30, 1999 and 1998 (unaudited)............... 6
Notes to Condensed Consolidated Financial Statements (unaudited).......... 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................. 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................. 19
SIGNATURES................................................................ 20
EXHIBITS
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
JAMESON INNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1999 1998
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Property and equipment $ 305,481,524 $ 168,880,042
Less: accumulated depreciation (21,783,088) (16,754,843)
-------------- --------------
283,698,436 152,125,199
Cash 897,061 500,377
Restricted cash 1,471,284 --
Lease revenue receivable 5,239,245 2,289,753
Deferred finance costs, net 2,061,583 1,110,336
Hotel limited partnership 1,122,906 --
Other assets 876,884 303,497
-------------- --------------
$ 295,367,399 $ 156,329,162
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $ 148,331,320 $ 53,697,435
Accounts payable and accrued expenses 692,320 199,730
Accounts payable to affiliates 2,199,226 2,087,106
Accrued interest payable 1,217,327 350,436
Accrued property taxes 2,514,958 432,168
Preferred stock dividends payable 1,694,595 693,750
-------------- --------------
156,649,746 57,460,625
Stockholders' equity:
Preferred stock, $1 par value,
1,272,727 shares (1,200,000 in 1998) of
9.25% Series A Cumulative Preferred
Stock issued and outstanding 1,272,727 1,200,000
Preferred stock, $1 par value,
2,256,000 shares (0 in 1998) of $1.70
Series S Cumulative Convertible
Preferred Stock issued and outstanding 2,256,000 --
Common stock, $.10 par value,
40,000,000 shares authorized,
11,008,821 shares (9,895,810 in
1998) issued and outstanding 1,100,882 989,581
Additional paid-in capital 135,115,035 97,705,947
Retained deficit (1,026,991) (1,026,991)
-------------- --------------
Total stockholders' equity 138,717,653 98,868,537
-------------- --------------
$ 295,367,399 $ 156,329,162
============== ==============
</TABLE>
See accompanying notes.
3
<PAGE> 4
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Lease revenue $ 11,379,166 $ 5,032,808 $ 25,576,268 $ 13,628,090
Expenses:
Property tax expense 700,101 241,918 1,661,400 672,866
Insurance expense 205,760 124,004 489,163 352,183
Depreciation 3,324,688 1,420,901 7,230,560 4,080,148
General and administrative expenses 303,884 172,723 750,106 461,203
Loss on disposal of furniture and equipment 218,839 89,656 480,244 357,116
Loss on impairment of real estate -- -- -- 2,507,000
------------ ----------- ------------ ------------
Total expenses 4,753,272 2,049,202 10,611,473 8,430,516
------------ ----------- ------------ ------------
Income from operations 6,625,894 2,983,606 14,964,795 5,197,574
Other income (expenses):
Equity in income of hotel limited
partnership 54,058 -- 79,506 --
Interest expense, net of capitalized amounts (2,696,324) (377,040) (5,621,351) (1,059,253)
------------ ----------- ------------ ------------
Income before extraordinary loss 3,983,628 2,606,566 9,422,950 4,138,321
Extraordinary loss - early extinguishment of debt -- 27,901 -- 133,951
------------ ----------- ------------ ------------
Net income 3,983,628 2,578,665 9,422,950 4,004,370
Less cumulative preferred stock dividends 1,694,596 693,750 3,692,653 1,494,300
------------ ----------- ------------ ------------
Net income attributable to
Common stockholders $ 2,289,032 $ 1,884,915 $ 5,730,297 $ 2,510,070
============ =========== ============ ============
Per common share:
Income before extraordinary loss:
Basic $ 0.21 $ 0.20 $ 0.55 $ 0.27
Diluted $ 0.21 $ 0.19 $ 0.54 $ 0.27
Net income:
Basic $ 0.21 $ 0.19 $ 0.55 $ 0.26
Diluted $ 0.21 $ 0.19 $ 0.54 $ 0.25
Dividends paid on common stock $ 0.245 $ 0.24 $ 0.725 $ 0.70
</TABLE>
See accompanying notes.
4
<PAGE> 5
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED PREFERRED
STOCK STOCK COMMON CONTRIBUTED RETAINED STOCKHOLDERS'
SERIES A SERIES S STOCK CAPITAL DEFICIT EQUITY
----------- ----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 -- -- $ 977,408 $ 75,210,464 $(1,026,991) $ 75,160,881
Issuance of preferred and
common stock, net of offering
expense $ 1,200,000 -- 4,253 27,839,002 -- 29,043,255
Exercise of stock options -- -- 5,930 353,089 -- 359,019
Vesting of restricted stock
grant -- -- 1,990 60,442 -- 62,432
Common stock dividends -- -- -- (3,784,845) (5,457,255) (9,242,100)
Preferred stock dividends -- -- -- (1,972,205) (215,845) (2,188,050)
Net income -- -- -- -- 5,673,100 5,673,100
----------- ----------- ----------- ------------ ----------- ------------
Balance at December 31, 1998 $ 1,200,000 -- $ 989,581 $ 97,705,947 $(1,026,991) $ 98,868,537
Issuance of preferred and
common stock net of offering
expense $ 72,727 $ 2,256,000 $ 109,504 $ 38,975,930 -- $ 41,414,161
Exercise of stock options -- -- 1,501 100,302 -- 101,803
Vesting of restricted stock
grant -- -- 296 50,508 -- 50,804
Common stock dividends -- -- -- (1,023,901) $(6,424,048) (7,447,949)
Preferred stock dividends -- -- -- (693,751) (2,998,902) (3,692,653)
Net income -- -- -- -- 9,422,950 9,422,950
----------- ----------- ----------- ------------ ----------- ------------
Balance at September 30, 1999
(unaudited) $ 1,272,727 $ 2,256,000 $ 1,100,882 $135,115,035 $(1,026,991) $138,717,653
=========== =========== =========== ============ =========== ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30
---------------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 9,422,950 $ 4,004,370
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary item -- 133,951
Depreciation and amortization 7,388,446 4,162,601
Loss on disposal of furniture and equipment 480,244 357,116
Loss on impairment of property -- 2,507,000
Equity in income of hotel limited partnership (79,506) --
Changes in assets and liabilities, net of acquisitions,
increasing (decreasing) cash:
Lease revenue receivable (2,699,492) (575,577)
Restricted cash (87,210) --
Prepaid expenses and other assets (573,387) (398,162)
Accounts payable and accrued expenses 1,215,855 (49,175)
Accounts payable to affiliates (139,433) 135,491
Accrued interest 236,890 60,795
Accrued property taxes 670,994 366,415
-------------- --------------
Net cash provided by operating activities 15,836,351 10,704,825
INVESTING ACTIVITIES
Acquisition of Signature and billboards, net of
cash acquired 3,821 --
Proceeds from disposition of property and equipment 1,441,586 --
Additions to property and equipment (29,851,094) (38,568,036)
-------------- --------------
Net cash used in investing activities (28,405,687) (38,568,036)
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock -- 28,527,933
Common stock dividends paid (7,447,949) (7,675,639)
Preferred stock dividends paid (3,692,653) --
Proceeds from issuance of common stock 411,056 446,637
Proceeds from exercise of stock options 101,803 325,539
Proceeds from mortgage notes payable 50,502,188 36,544,609
Payments of deferred finance costs (1,109,133) (399,712)
Payments on mortgage notes payable (25,799,292) (29,795,228)
-------------- --------------
Net cash provided by financing activities 12,966,020 27,974,139
-------------- --------------
Net increase in cash 396,684 110,928
Cash at beginning of period 500,377 338,581
-------------- --------------
Cash at end of period $ 897,061 $ 449,509
============== ==============
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Non-cash acquisition of property and equipment $ 37,914,215 --
============== ==============
Issuance of stock in connection with acquisitions $ 41,053,908 --
============== ==============
</TABLE>
See accompanying notes.
6
<PAGE> 7
JAMESON INNS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BUSINESS AND BASIS OF FINANCIAL STATEMENTS
Jameson Inns, Inc. (the "Company") is a self-administered real estate
investment trust ("REIT") headquartered in Atlanta which develops and owns
limited service hotel properties ("Inns") operating in the southeastern United
States under the trademark "The Jameson Inn (R)." In addition, as a result of
the acquisition of Signature Inns, Inc. in May, 1999 the Company now owns Inns
in the Midwest operating under the name "Signature Inn (R)". At September 30,
1999, the Company had a total of 113 Jameson Inns either in operation or under
development, including 86 operating Jameson Inns (4,147 available rooms), 23
Inns under development, and contracts to acquire 4 parcels of land on which
additional Inns are expected to be constructed. In addition, the Company owns
25 operating Signature Inns (2,978 available rooms) and owns a 40% interest as
a general partner in another Signature Inn (81 rooms).
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. The condensed consolidated balance
sheet at December 31, 1998, has been derived from the audited consolidated
financial statements at that date. Operating results for the periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999, or any other interim period. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the annual report on Form 10-K for the year ended
December 31, 1998.
2. MERGER WITH SIGNATURE INNS, INC.
On May 7, 1999, the Company completed its merger with Signature Inns, Inc.
("Signature"). In the merger, the Company acquired 25 Signature Inns located in
six Midwestern states and a 40% interest in a partnership which owns one
Signature Inn. Immediately prior to the merger, the Signature operating assets
were sold to, and the liabilities pertaining to the operations of the Signature
Inns were assumed by, Jameson Hospitality, LLC (see Lessee). In connection with
the merger, the Company entered into a new master lease with Jameson
Hospitality covering the 25 wholly-owned Signature Inns. The new master lease
has terms which are similar to the terms of the master leases covering the
Jameson Inns and extends to 2012.
In the merger, holders of Signature common stock received one half of a share
of Jameson common stock and $1.22 in cash for each share of Signature common
stock. In addition, Signature paid a special $0.28 dividend on each share of
Signature common stock immediately prior to the consummation of the merger.
Holders of Signature Series A Preferred Stock received one share of Jameson
Series S Preferred Stock for each share of Signature Series A Preferred Stock.
In the merger, the Company assumed all of the outstanding indebtedness of
Signature, except for $2.1 million which was repaid at closing with additional
borrowings under the Company's line of credit. As of May 7, 1999, the debt
assumed totaled $67.1 million and was secured by mortgages on twenty-four of
the Signature Inns.
The purchase price of Signature approximated $46.3 million, consisting of $2.6
million in cash, the issuance of 1,051,846 shares of Jameson Common Stock (at
$9.125 per share), 2,256,000 shares of Jameson Series S Preferred Stock (at
$13.375 per share), and merger related costs of approximately $4.0 million. The
purchase price has been allocated to the fair value of the net assets acquired
as follows:
7
<PAGE> 8
<TABLE>
<S> <C>
Cash $ 6,721,951
Restricted cash 1,384,074
Hotel limited partnership 1,079,675
Property and equipment 108,332,245
Amount due from affiliates 398,447
Accounts payable and accrued expenses (277,580)
Accrued interest payable (630,001)
Accrued property taxes (1,411,796)
Mortgage notes payable (69,231,797)
-------------
Total purchase price $ 46,365,218
=============
</TABLE>
The merger was accounted for as a purchase of Signature by Jameson. The
historical results of Jameson include the effects of the merger beginning May
7, 1999. The following presents the unaudited pro forma results of operations
as if the purchase and all related transactions were consummated on July 1 of
the respective period for the three-month periods ended September 30, and
January 1 of the respective period for the nine month periods ended September
30. Such information reflects the allocation of the purchase price.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
---------------------------- -----------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
PRO FORMA:
Lease revenues $ 11,379,166 $10,366,162 $ 30,534,542 $ 26,900,101
Income before extraordinary items 3,983,628 4,640,039 9,269,121 7,587,503
Extraordinary items -- (27,901) -- (133,951)
------------ ----------- ------------ ------------
Net income 3,983,628 4,612,138 9,269,121 7,453,552
Preferred stock dividends 1,694,596 1,652,550 5,041,741 4,370,700
------------ ----------- ------------ ------------
Net income attributable to
common stockholders $ 2,289,032 $ 2,959,588 $ 4,227,380 $ 3,082,852
============ =========== ============ ============
PRO FORMA EARNINGS PER SHARE:
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary items $ .21 $ .28 $ .39 $ .27
Extraordinary items -- (.01) -- --
------------ ----------- ------------ ------------
Net income $ .21 $ .27 $ .39 $ .27
============ =========== ============ ============
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary items $ .21 $ .29 $ .38 $ .29
Extraordinary items -- -- -- (.01)
------------ ----------- ------------ ------------
Net income $ .21 $ .29 $ .38 $ .28
============ =========== ============ ============
</TABLE>
3. ACQUISITION OF OUTDOOR ADVERTISING ASSETS OF JAMESON HOSPITALITY, LLC
On April 2, 1999, the Company completed the acquisition of the outdoor
advertising assets and certain operations of Jameson Hospitality, LLC ("JH").
These assets consist of approximately 100 roadside billboards on which
advertising for the Company's hotel properties and, in certain instances, other
services or products for third parties, is placed. These billboards were leased
to JH and continue to be used for the same type of advertising. Consideration
of $2,381,000 paid to JH consisted of (i) 72,727 newly issued shares of the
Company's Series A Preferred Stock (at $17.625 per share), (ii) $400,000 in
cash, and (iii) the assumption of indebtedness of approximately $700,000 which
is secured by mortgages on the billboards and the revenues generated therefrom.
8
<PAGE> 9
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
---------------------------- -----------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
NUMERATOR:
Income before extraordinary
Loss $ 3,983,628 $ 2,606,566 $ 9,422,950 $ 4,138,321
Extraordinary loss -- (27,901) -- (133,951)
------------ ----------- ------------ ------------
Net income 3,983,628 2,578,665 9,422,950 4,004,370
Less: Cumulative preferred stock
Dividends (1,694,596) (693,750) (3,692,653) (1,494,300)
------------ ----------- ------------ ------------
Numerator for basic and diluted
earnings per share-income
available to common
stockholders $ 2,289,032 $ 1,884,915 $ 5,730,297 $ 2,510,070
============ =========== ============ ============
DENOMINATOR:
Weighted average shares
Outstanding 11,000,612 9,850,021 10,489,085 9,826,003
Less: Unvested restricted shares
of common stock (87,031) (63,776) (85,854) (64,128)
------------ ----------- ------------ ------------
Denominator for basic earnings
per share 10,913,581 9,786,245 10,403,231 9,761,875
Plus: Effect of dilutive securities
Employee and director stock
Options 57,251 82,955 52,305 105,807
Unvested restricted shares of
common stock 69,566 47,349 71,071 43,861
------------ ----------- ------------ ------------
Total potential dilutive common
Shares 126,817 130,304 123,376 149,668
------------ ----------- ------------ ------------
Denominator for diluted earnings
per share-adjusted weighted
average shares and assumed
conversions 11,040,398 9,916,549 10,526,607 9,911,543
============ =========== ============ ============
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
FOR THE THREE MONTH FOR THE NINE MONTH PERIOD
PERIOD ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
--------------------------------------------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary loss
(net of cumulative preferred stock
dividends) $ .21 $ .20 $ .55 $ .27
Extraordinary loss -- $ (.01) -- $ (.01)
------------ ----------- ------------ ------------
Net income per common share
(net of cumulative preferred stock
dividends) $ .21 $ .19 $ .55 $ .26
============ =========== ============ ============
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary loss (net of
cumulative preferred stock dividends) $ .21 $ .19 $ .54 $ .27
Extraordinary loss -- -- $ (.02)
------------ ----------- ------------ ------------
Net income per common share (net of
cumulative preferred stock dividends) $ .21 $ .19 $ .54 $ .25
============ =========== ============ ============
</TABLE>
Options to purchase 515,833 and 530,833 shares of Common Stock for the three
months ended September 30, 1999 and 1998 and options to purchase 610,001 and
505,000 shares of Common Stock for the nine months ended September 30, 1999 and
1998 were outstanding but were not included in the computation of diluted
earnings per share because, the effect would be antidilutive.
Preferred Stock Series S is convertible into 2,346,240 and -0- shares of common
stock for the three months ended September 30, 1999 and 1998 and the nine
months ended September 30, 1999 and 1998 but were not included in the
computation of diluted earnings per share because the effect would be
antidilutive.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Jameson Inns,
Inc. condensed consolidated financial statements and notes thereto appearing
elsewhere in this quarterly report.
The Company's primary source of revenue is rent payments by "JH" under master
leases (the "Leases") covering all of the operating Jameson Inns and the
twenty-five Signature Inns beginning May 7, 1999. The expenses of the Company
consist of property taxes, insurance, corporate overhead, interest on mortgage
debt and depreciation of the Inns. The Leases provide for the payment of base
rent and percentage rent. For the quarter ended September 30, 1999, base rent
and percentage rent in the aggregate amount of $11.38 million was earned by the
Company. The principal determinant of percentage rent is JH's Room Revenues of
the Inns, as defined by the Leases. Therefore, management believes that a
review of the historical performance of the operations of the operating Inns,
particularly with respect to occupancy, average daily rate ("ADR") and revenue
per available room ("REVPAR") is appropriate for understanding revenue from the
Leases.
The following table shows certain historical financial and other information
for the periods indicated.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
-------------------------------- -----------------------------
1999 1998 1999 1998
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Occupancy rate 65.20% 64.27% 63.42% 64.63%
ADR $ 57.74 $ 51.74 $ 55.84 $ 49.94
REVPAR $ 37.65 $ 33.25 $ 35.41 $ 32.28
Guest room revenues (000's) $ 24,401 $ 10,492 $ 54,247 $ 28,394
Other inn revenues (000's) $ 716 $ 216 $ 1,553 $ 602
Room nights available 648,211 315,528 1,531,744 879,670
Room nights occupied 422,609 202,790 971,488 568,531
Operating Inns (at period end) 111 78
Rooms available (at period end) 7,125 3,614
</TABLE>
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1999 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1998.
Revenue from the Leases for the Company for the three month period ended
September 30, 1999, increased 128% to $11.4 million as compared to $5.0 million
for the same period in 1998. The increase was due to the increase in JH's Room
Revenues which was primarily a result of the following factors:
- - The number of room nights available increased from 315,528 in 1998 to
648,211 in 1999, or 105%, during the period of June, 1, 1998 through
September 30, 1999 due to the opening of 18 new Jameson Inns (totaling
777 rooms), 13 expansions of existing Jameson Inns (adding 244 rooms),
the addition of the Signature Inns (2,978 additional rooms) on May 7,
1999, offset by the sale of the Milledgeville property (100 rooms) in
July, 1999.
- - ADR increased 12% from $51.74 in the third quarter of 1998 to $57.74 in
the same period in 1999.
- - The occupancy rate increased from 64.27% during the third quarter of
1998 to 65.20% during the third quarter of 1999.
11
<PAGE> 12
As a result of the above three factors, third quarter Room Revenues rose 135%
from $10.7 million for the third quarter of 1998 to $25.1 million in the third
quarter of 1999. Same Inn Room Revenues in the third quarter of 1999 versus the
third quarter of 1998 grew to $10.7 million from $10.3 million, or 4%. The same
Inn growth is due to an increase in ADR from $51.68 to $52.98 for these Inns,
an increase in room nights available (due to expansions of certain of these
Inns) from 307,978 to 308,300, and an increase in the occupancy rate from
64.77% to 65.42% for these Inns for the third quarter of 1999 compared to the
same period in 1998.
General and administrative expense includes overhead charges for management,
accounting and legal services for the corporate home office. General and
administrative expense for the three months ended September 30, 1999, was
$303,884, as compared to $172,723 for the three months ended September 30,
1998. The 1999 expense is greater than 1998 due to more time spent in 1999 by
shared employees on the Company's business matters as compared to other related
entities. Much of this increased time and personnel related to the merger with
Signature.
Property taxes and insurance expense totaled $905,861 for the three month
period ended September 30, 1999, compared with $365,922 for the same period in
1998. The increase is attributable to the increase in number of Jameson Inns,
the expansion of existing Jameson Inns and the Signature Inns acquired on May
7, 1999.
Interest expense increased from $377,040 for the three-month period ended
September 30, 1998, to $2,696,324 for the same period ended September 30, 1999,
due to the greater amounts of average principal indebtedness outstanding in the
third quarter of 1999 and the $67.1 million of mortgage indebtedness assumed
with the acquisition of Signature. Interest expense amounts exclude interest
capitalized in the cost of new Inn development.
Depreciation expense increased from $1,420,901 to $3,324,688 for the three
month periods ended September 30, 1998 and 1999, respectively, due to an
increase in the number of operating Jameson Inns, the expansion of existing
Inns and the Signature Inns acquired on May 7, 1999.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998.
Revenue from the Leases for the Company for the nine month period ended
September 30, 1999, increased 88% to $25.6 million as compared to $13.6 million
for the same period in 1998. The increase was due to the increase in JH's Room
Revenues.
- - The number of room nights available increased from 879,670 in 1998 to
1,531,744 in 1999, or 74%, during the period of January 1, 1998 through
September 30, 1999, due to the opening of 25 new Jameson Inns (totaling
1,056 rooms), 15 expansions of existing Jameson Inns (adding 279 rooms),
the addition of the Signature Inns (2,978 additional rooms) on May 7,
1999 offset by the sale of the Milledgeville property (100 rooms) in
July, 1999.
- - ADR increased 12% from $49.94 in the first nine months of 1998 to $55.84
in the same period in 1999.
- - The occupancy rate decreased from 64.63% during the first nine months of
1998 to 63.43% during the first nine months of 1999. The decrease in
overall occupancy of Jameson Inns is attributable primarily to (a) the
expansion of certain high occupancy Jameson Inns which then experienced
lower occupancy rates because of the additional rooms available, (b) the
opening of new Jameson Inns which typically require several months of
operations before realizing higher occupancy rates and (c) additional
competition in certain markets.
As a result of the above three factors, Room Revenues rose 93% from $29.0
million for the first nine months of 1998 to $56 million in the first nine
months of 1999. Same Inn Room Revenues in the first nine months of 1999 versus
the same period in 1998 grew to $31 million from $28.3 million, or 10%. The
same Inn growth is due to an increase in ADR from $50.02 to $52.60 for these
Inns, an increase in room nights available (due to expansions of certain of
these Inns) from 872,120 to 931,070, offset by a decrease in the occupancy rate
from 64.81% to 63.28% for these Inns for the first nine months of 1999 compared
to the same period in 1998.
12
<PAGE> 13
General and administrative expense includes overhead charges for management,
accounting and legal services for the corporate home office. General and
administrative expense for the nine months ended September 30, 1999, was
$750,106, as compared to $461,203 for the nine months ended September 30, 1998.
The 1999 expense is greater than 1998 due to more time spent in 1999 by shared
employees on the Company's business matters as compared to other related
entities. Much of this increased time and personnel related to the Signature
Inns merger.
Property taxes and insurance expense totaled $2,150,563 for the nine month
period ended September 30, 1999, compared with $1,025,049 for the same period
in 1998. The increase is attributable to the increase in number of Jameson
Inns, the expansion of existing Jameson Inns and the Signature Inns acquired on
May 7, 1999.
Interest expense increased from $1,059,253 for the nine month period ended
September 30, 1998, to $5,621,351 for the same period ended September 30, 1999,
due to the greater amounts of average principal indebtedness outstanding during
1999 and the $67.1 million of mortgage indebtedness assumed with the
acquisition of Signature. Interest expense amounts exclude interest capitalized
in the cost of new Inn development.
Depreciation expense increased from $4,080,148 to $7,230,560 for the nine month
periods ended September 30, 1998 and 1999, respectively, due to an increase in
the number of operating Jameson Inns, the expansion of existing Inns and the
Signature Inns acquired on May 7, 1999.
FUNDS FROM OPERATIONS ("FFO")
The Company notes that industry analysts and investors use funds from
operations as another tool to evaluate and compare equity REITs. The Company
also believes it is meaningful as an indicator of net income excluding most
non-cash items and provides information about the Company's cash available for
distributions, debt service and capital expenditures. The Company follows the
March 1995 interpretation of the National Association of Real Estate Investment
Trusts ("NAREIT") definition of funds from operations ("Funds from Operations")
which is calculated (in the Company's case) as net income plus depreciation,
loss on disposal of furniture and equipment, loss on impairment of real estate
and extraordinary items, if applicable. Other non-cash expenses such as
amortization and stock option expense have not been added back in Funds from
Operations. Funds from Operations does not represent cash flow from operating
activities in accordance with generally accepted accounting principles ("GAAP")
and is not indicative of cash available to fund all of the Company's cash
needs. Funds from Operations should not be considered as an alternative to net
income or any other GAAP measure as an indicator of performance and should not
be considered as an alternative to cash flows as a measure of liquidity. In
addition, the Company's Funds from Operations may not be comparable to other
companies' Funds from Operations due to differing methods of calculating Funds
from Operations and varying interpretations of the NAREIT definition.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------------- --------------------------------
1999 1998 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net income attributable to
Common stockholders $ 2,289,032 $ 1,884,915 $ 5,730,297 $ 2,510,070
Depreciation 3,324,688 1,420,901 7,230,560 4,080,148
FFO adjustment for equity
share of hotel partnership 8,939 -- 14,700 --
Extraordinary loss -- 27,901 -- 133,951
Loss on disposal of furniture
and equipment 218,839 89,656 480,244 357,116
Loss on impairment of property -- -- -- 2,507,000
----------- ----------- ------------ ------------
Funds from Operations $ 5,841,498 $ 3,423,373 $ 13,455,801 $ 9,588,285
=========== =========== ============ ============
</TABLE>
13
<PAGE> 14
As described elsewhere in this Form 10-Q, including in note 2 to the condensed
consolidated statements, the Company merged with Signature Inns, Inc. on May 7,
1999. The following presents the unaudited pro forma funds from operations as
if the purchases and all related transactions were consummated on July 1 of the
respective period for the three month periods ended September 30 and January 1
of the respective period for the nine month periods ended September 30:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
--------------------------------- --------------------------------
1999 1998 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
PRO FORMA:
Net income attributable to
common stockholders $ 2,289,032 $ 2,959,588 $ 4,227,379 $ 3,082,852
Depreciation 3,324,688 2,776,456 9,139,998 8,146,813
FFO adjustment for equity
share of hotel partnership 8,939 15,619 28,583 46,857
Extraordinary loss -- 27,901 -- 133,951
Loss on disposal of furniture
and equipment 218,839 89,656 480,244 357,116
Loss on impairment of property -- -- -- 2,507,000
----------- ----------- ------------ ------------
Funds from Operations $ 5,841,498 $ 5,869,220 $ 13,876,204 $ 14,274,589
=========== =========== ============ ============
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to continue to develop additional Inns and to expand
existing Inns, as suitable opportunities arise. The Company will not undertake
such investments, however, unless adequate sources of financing are available.
Since its election to be taxed as a REIT, the company has financed and
currently intends to continue financing the construction of new Inns entirely
with bank borrowings. Management believes that it can continue to finance new
hotels and expansions with these construction and long-term mortgage loans. At
September 30, 1999, the Company had approximately $148 million in outstanding
debt and had two operating Jameson Inns and one operating Signature Inn which
were debt free and could be used as collateral should it require additional
borrowing capacity.
The Company has a $33.7 million line of credit (the "Line"). The Company uses
the Line to finance part or all of the development costs of new Inns if there
is no construction loan in place. Borrowings under the Line are secured by
mortgages on 41 of the Jameson Inns. Interest-only payments are due monthly
until the balance under the Line converts to a term loan. After the
interest-only period, which extends for up to three years, borrowings under the
Line convert to term loans and payments of interest and principal are due
monthly. Principal under each of the term loans is generally amortized over a
15-year period, but is payable in full at various dates beginning in 2003
through 2007 for term loans outstanding at September 30, 1999. Loans made under
the Line bear interest at rates initially ranging from 8.50% to 9.0%, which are
adjustable annually to equal a major lender's prime rate plus 0.25%, 0.375% or
0.50%. The minimum annual interest rate payable under the Line is 7% and the
maximum is 13%. At September 30, 1999, the Company had borrowed $18.4 million
under the Line and had remaining availability of $27.8 million. The annual
interest rates at September 30, 1999, ranged from 8.0% to 9.0%.
Historically, the Company has employed construction and long term mortgage
financing to fund the balance of construction costs not funded under the Line.
For each new Jameson Inn to be built, Jameson generally obtains a construction
loan of $1.1 to $3.0 million depending on the size of the Jameson Inn to be
built. After an 18-month interest-only period, each construction loan converts
to a long-term mortgage financing upon completion of the Jameson Inn without
any further action by Jameson, amortized over 10 to 15 years and payable in
full seven years from inception. The interest rate on each of such loans is
adjusted annually to rates ranging from the prime rate then prevailing to prime
plus 0.50%. As of September 30, 1999, the construction loans were secured by
mortgages on 19 of the Jameson Inns under development.
14
<PAGE> 15
As of September 30, 1999, Jameson had a total of 23 Jameson Inns under various
stages of development with total construction costs, excluding land and closing
costs, expected to total $70.7 million of which 16.5 million has been expended
when the projects are complete. For 19 of these properties, the Company had
obtained commitments for construction loans totaling $41.7 million.
Since the Company presently intends to rely primarily on borrowings for
construction and permanent financing of new Jameson Inns and Signature Inns and
the expansion of existing properties, the lack of sufficient financing on
favorable terms and conditions could prevent or significantly deter Jameson
from constructing new hotels or expanding existing hotels. The availability of
such financing depends on a number of factors over which we have no control,
including general economic conditions, the economic and competitive
environments of the communities in which our Inns are located and the level and
stability of long term interest rates. The Company is also considering possible
additional long-term debt or equity financing that would be available to fund
our ongoing development activities.
As with most real estate environments, investments in Inns are relatively
illiquid and this illiquidity is further increased by the location of many of
our Inns in small communities. As a result, our ability to sell or otherwise
dispose of any Inn to provide liquidity will be very limited.
YEAR 2000
As the year 2000 approaches, a critical business issue has emerged regarding
how existing application software programs and operating systems can
accommodate this date value. Many existing application software products in the
marketplace were designed to accommodate only two-digit date entries. Beginning
in the year 2000, these systems and products will need to be able to accept
four-digit entries to distinguish years beginning with 2000 from prior years.
As a result, computer systems and software used by many companies may need to
be upgraded to comply with such "Year 2000" requirements. Jameson and Jameson
Hospitality have completed an assessment of their computer and other operating
systems to identify those which could be affected by the "Year 2000" issue. The
assessment included the review of corporate and hotel applications, hardware,
and software (information technology or "IT"), and non-IT areas such as
microprocessors and embedded chips. Jameson and Jameson Hospitality established
a time line for assuring compliance and are monitoring progress toward that
end. On-going testing of existing systems, to determine compliance, will be
completed by November 1999. We anticipate that systems that are determined to
be non-compliant will be repaired or replaced by November 1999. The remediation
phase includes modification to, or replacement of, software, and hardware or
microprocessors.
Estimated total costs, excluding internal costs, to complete compliance for
both companies are $100,000. Approximately $55,000 has been expended by Jameson
Hospitality as of September 30, 1999, for Year 2000 remediation. Neither
Jameson nor Jameson Hospitality tracks the internal costs incurred for the Year
2000 project (principally the payroll and related costs for our information
systems group). The costs of the project have been and will continue to be
funded through operating cash flows of the companies.
Jameson and Jameson Hospitality rely on third party consultants and suppliers
for a variety of their corporate and hotel operations. The ability of third
parties to adequately address their Year 2000 issues is outside of our control.
There can be no assurance that the failure of Jameson and Jameson Hospitality,
or such third parties, to adequately address their respective Year 2000 issues
will not have a material adverse effect on our future financial condition or
results of operations.
Jameson and Jameson Hospitality believe they have an effective program in place
which will resolve the Year 2000 issue in a timely manner. Year 2000 risks
include failure to obtain successful testing of hardware/software, failed
attempts to obtain vendor compliance, and failure on the part of suppliers and
service providers. Jameson and Jameson Hospitality believe that under most
reasonably likely worst case scenarios hotel operations could be disrupted, a
reduction in hotel occupancy could occur due to lost reservations, or corporate
financial functions could be impaired. Such an event would cause certain
processes to revert to manual systems and could have a material adverse impact
on Jameson and Jameson Hospitality's operating results and financial position.
15
<PAGE> 16
Jameson and Jameson Hospitality maintain contingency plans in its normal course
of business designed to be deployed in the event of various potential business
interruptions. Contingency plans to address Year 2000 risks have been fully
developed. Contingency plans will be implemented between December 1 and
December 31, 1999, for systems that cannot be feasibly repaired or replaced.
FORWARD-LOOKING STATEMENTS
There are a number of statements in this report which address activities,
events or developments which the Company expects or anticipates will or may
occur in the future, including such things as the Company's expansion plans,
including construction of new Inns and expansion of existing Inns, availability
of debt financing and capital, payment of quarterly dividends, expected Year
2000 compliance and other matters. These statements are based on certain
assumptions and analyses made by the Company in the light of its experience and
its perception of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate under the
circumstances. However, whether actual results and developments will conform to
the Company's expectations and predictions is subject to a number of risks and
uncertainties, including (1) the Company's ability to (a) secure construction
and permanent financing to finance such development on terms and conditions
favorable to the Company, (b) assimilate the Signature Inns operations,
properties, and staff, (c) assess accurately the market demand for new Inns and
expansions of existing Inns, (d) identify and purchase new sites which meet its
various criteria, including reasonable land prices, (e) contract for the
construction of new Inns and expansions of existing Inns in a manner which
produces Inns consistent with its present quality and standards at a reasonable
cost and without significant delays, (f) provide ongoing renovation and
refurbishment of the Inns sufficient to maintain consistent quality among the
Inns, and (g) manage its business in a cost-effective manner given the increase
in the number of Inns; (2) JH's willingness and ability to manage the Inns
profitably; (3) general economic, market and business conditions, particularly
those in the lodging industry generally and in the geographic markets where the
Inns are located; (4) the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; (5) the availability of qualified
managers and employees necessary for the Company's planned growth; (6) changes
in laws or regulations and (7) other factors, most of which are beyond the
control of the Company. Consequently, all of the forward-looking statements
made in this report are qualified by these cautionary statements and there can
be no assurance that the actual results of developments anticipated by the
Company will be realized, or even if substantially realized, that they will
have the expected consequences to or effects on the Company or its business or
operations.
THE LESSEE - JAMESON HOSPITALITY, LLC
The Company seeks to enhance Lease revenue by working in a collaborative manner
with JH, lessee of the Inns. JH is wholly-owned by Thomas W. Kitchin, chairman
and chief executive officer of the Company, and his wife. Presently, JH also
has an exclusive relationship with the Company in that JH does not manage any
hotel properties other than the Inns. The Company believes this exclusive
relationship ensures that the Company's and JH's interests are well-aligned.
While the Company does not control the operations of JH or the day-to-day
operation of the Inns, the two companies work together to enhance both
occupancy and ADR. The Leases' formula allows the Company to benefit from
increases in Room Revenues, regardless of the mix between occupancy and ADR.
16
<PAGE> 17
The following table summarizes the unaudited financial results of JH, including
the operating results of the Signature Inns beginning May 7, 1999.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
-------------------------------- -------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Room Revenues as defined
by the Leases $ 25,111,024 $ 10,708,195 $ 55,761,998 $ 28,996,302
Construction and other revenues 8,471,364 10,824,936 22,107,317 27,209,831
------------- ------------- ------------- -------------
Total revenues 33,582,388 21,533,131 77,869,315 56,206,133
Inn operating expenses 12,651,473 5,612,616 27,371,712 15,081,095
Cost of construction and other
revenues 9,246,102 9,901,093 22,994,659 25,486,517
Advertising 973,646 606,508 2,214,629 1,772,318
Lease expense to Jameson
Inns, Inc. 11,218,189 5,032,808 25,259,371 13,628,090
------------- ------------- ------------- -------------
Total expenses 34,089,410 21,153,025 77,840,371 55,968,020
------------- ------------- ------------- -------------
Net income (loss) $ (507,022) $ 380,106 $ 28,944 $ 238,113
============= ============= ============= =============
</TABLE>
The following presents the unaudited pro forma results of operations of JH as
if the purchases and all related transactions were consummated on July 1 of the
respective period for the three month periods ended September 30 and January 1
of the respective period for the nine month periods ended September 30:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
-------------------------------- -------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PRO FORMA:
Room Revenues as defined
by the Leases $ 25,111,024 $ 23,176,881 $ 68,863,463 $ 62,062,106
Construction and other
revenues 8,471,364 10,824,936 22,156,284 27,209,831
------------- ------------- ------------- -------------
Total revenues 33,582,388 34,001,817 91,019,747 89,271,937
Inn operating expenses 12,651,473 11,973,260 35,654,079 32,410,004
Cost of construction and other
revenues 9,246,102 9,901,093 22,994,659 25,486,517
Advertising 973,646 928,560 2,858,228 3,074,674
Lease expense to Jameson,
Inns, Inc. 11,218,189 10,366,162 30,217,645 26,900,101
------------- ------------- ------------- -------------
Total expenses 34,089,410 33,169,075 91,724,611 87,871,296
------------- ------------- ------------- -------------
Net income (loss) $ (507,022) $ 832,742 $ (704,864) $ 1,400,641
============= ============= ============= =============
</TABLE>
17
<PAGE> 18
DISTRIBUTIONS TO STOCKHOLDERS
The table below sets forth, for the periods indicated, the cash distributions
declared per share since January 1, 1998.
<TABLE>
<CAPTION>
Series A Series S
Common Stock Preferred Stock Preferred Stock
------------ --------------- ---------------
<S> <C> <C> <C>
First Quarter, 1998 $ 0.23 $ 0.089(2)
Second Quarter, 1998 0.24 0.5781
Third Quarter, 1998 0.24 0.5781
Fourth Quarter, 1998 0.24 0.5781
First Quarter, 1999 0.24 0.5781
Second Quarter, 1999 0.245 0.5781 $0.252(4)
Third Quarter, 1999 0.245(1) 0.5781(3) $0.425(5)
</TABLE>
(1) On October 24, 1999 the Company declared this dividend, which is payable
on November 19, 1999 to shareholders of record on November 4, 1999.
(2) On April 20, 1998, the Company declared a dividend of $.089 per share
for the 9.25% Series A Cumulative Preferred Stock for the period March
18 to March 31, 1998. The dividend was paid on May 1, 1998 to
shareholders of record on March 31, 1998.
(3) On September 20, 1999, the Company declared this dividend, which was
paid on October 20, 1999, to shareholders of record on September 30,
1999.
(4) The $1.70 Series S Cumulative Convertible Preferred Stock was issued on
May 7, 1999 by the Company as a part of the merger with Signature Inns,
Inc. On June 22, 1999, the Company declared this dividend, which was
paid on July 20, 1999 to shareholders of record on July 2, 1999.
(5) On September 20, 1999, the Company declared this dividend, which was
paid on October 20, 1999, to shareholders of record in September 30,
1999.
18
<PAGE> 19
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company filed no Form 8-K filings during the three months ended
September 30, 1999.
EXHIBITS
27.1 Financial Data Schedule (for SEC use only)
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Jameson Inns, Inc. (Registrant)
Dated: November 11, 1999 By: /s/ Craig R. Kitchin
-----------------------------------
Craig R. Kitchin, President and
Chief Financial Officer
(Principal Financial Officer)
Dated: November 11, 1999 By: /s/ Martin D. Brew
-----------------------------------
Martin D. Brew,
Corporate Controller
(Chief Accounting Officer)
20
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page
- ------ ----
<S> <C>
27.1 Financial Data Schedule (for SEC use only)..........................................
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JAMESON INNS, INC. FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 897,061
<SECURITIES> 0
<RECEIVABLES> 5,239,245
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,668,963
<PP&E> 305,481,524
<DEPRECIATION> (21,783,088)
<TOTAL-ASSETS> 295,367,399
<CURRENT-LIABILITIES> 8,318,426
<BONDS> 148,331,320
2,256,000
1,272,727
<COMMON> 1,100,882
<OTHER-SE> 134,088,044
<TOTAL-LIABILITY-AND-EQUITY> 295,367,399
<SALES> 25,576,268
<TOTAL-REVENUES> 25,576,268
<CGS> 2,150,563
<TOTAL-COSTS> 2,150,563
<OTHER-EXPENSES> 1,230,350
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,621,351
<INCOME-PRETAX> 9,422,950
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,422,950
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,422,950
<EPS-BASIC> .55
<EPS-DILUTED> .54
</TABLE>
