<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
---------------------
<TABLE>
<S> <C>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-12792
SUMMIT PROPERTIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 56-1857807
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
212 S. TRYON STREET, SUITE 500, CHARLOTTE, NORTH CAROLINA 28281
(Address of principal executive offices -- zip code)
(704) 334-9905
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. /X/ Yes / / No
---------------------
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 practicable date.
21,630,862 SHARES OUTSTANDING AS OF AUGUST 8, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SUMMIT PROPERTIES INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
3
Consolidated Balance Sheets as of June 30, 1996 (Unaudited) and
December 31, 1995..................................................
4
Consolidated Statements of Earnings for the three months and six
months ended June 30, 1996 and 1995 (Unaudited)....................
5
Consolidated Statement of Stockholders' Equity (Unaudited)...........
6
Consolidated Statements of Cash Flows for the six months ended June
30, 1996 and 1995 (Unaudited)......................................
7
Notes to Consolidated Financial Statements...........................
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 9
RESULTS OF OPERATIONS..............................................
PART II OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.................. 20
ITEM 6 EXHIBITS INDEX AND REPORTS ON FORM 8-K............................... 20
SIGNATURES........................................................................ 21
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate assets:
Land and land improvements........................................ $ 97,167 $ 90,336
Buildings and improvements........................................ 440,500 399,057
Furniture, fixtures and equipment................................. 39,777 36,336
----------- ------------
577,444 525,729
Less: accumulated depreciation.................................... (76,009) (67,884)
----------- ------------
Operating real estate assets.............................. 501,435 457,845
Construction in progress.......................................... 71,839 59,300
Investment in real estate joint venture........................... -- 1,235
----------- ------------
Net real estate assets.................................... 573,274 518,380
Cash and cash equivalents........................................... 3,141 2,881
Restricted cash..................................................... 4,556 4,188
Deferred financing costs, net....................................... 5,132 5,398
Other assets........................................................ 3,981 2,405
----------- ------------
Total assets........................................................ $ 590,084 $533,252
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes, bonds and other loans payable..................... $ 354,083 $297,010
Accrued interest payable.......................................... 1,112 903
Accounts payable and accrued expenses............................. 11,701 7,850
Dividends and distributions payable............................... 7,984 7,699
Security deposits and prepaid rents............................... 3,118 2,651
----------- ------------
Total liabilities......................................... 377,998 316,113
----------- ------------
Commitments
Minority interest................................................... 41,180 41,685
----------- ------------
Stockholders' equity:
Common stock, $.01 par value -- 100,000,000 authorized, 16,574,300
and 16,500,789 shares issued and outstanding in 1996 and 1995,
respectively................................................... 166 165
Additional paid-in capital........................................ 249,425 247,064
Accumulated deficit............................................... (77,735) (71,775)
Unamortized restricted stock compensation......................... (950) --
----------- ------------
Total stockholders' equity................................ 170,906 175,454
----------- ------------
Total liabilities and stockholders' equity.......................... $ 590,084 $533,252
========= ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental.................................. $ 21,764 $ 16,848 $ 41,954 $ 31,852
Other property income................... 1,154 808 2,168 1,520
Interest................................ 79 126 155 215
Other income............................ 65 90 215 176
---------- ---------- ---------- ----------
Total revenues.................. 23,062 17,872 44,492 33,763
---------- ---------- ---------- ----------
Expenses:
Property operating and maintenance:
Personnel............................ 2,119 1,550 4,124 2,944
Advertising and promotion............ 295 148 581 289
Utilities............................ 1,001 823 1,980 1,554
Building repairs and maintenance..... 1,884 1,486 3,434 2,699
Real estate taxes and insurance...... 2,309 1,682 4,486 3,212
Depreciation and amortization........ 4,437 3,605 8,567 6,854
Property supervision................. 552 434 1,056 825
Other operating expenses............. 630 511 1,253 1,025
---------- ---------- ---------- ----------
13,227 10,239 25,481 19,402
Interest................................ 4,905 3,746 9,054 7,296
General and administrative.............. 656 489 1,281 892
Loss (income) in equity investments:
Summit Management Company............ (71) 70 95 41
Real estate joint venture............ -- (17) (1) (17)
---------- ---------- ---------- ----------
Total expenses.................. 18,717 14,527 35,910 27,614
---------- ---------- ---------- ----------
Income before minority interest of
unitholders in Operating Partnership and
extraordinary items..................... 4,345 3,345 8,582 6,149
Minority interest of unitholders in
Operating Partnership................... (850) (635) (1,678) (1,093)
---------- ---------- ---------- ----------
Income before extraordinary items......... 3,495 2,710 6,904 5,056
Extraordinary items, net of minority
interest of unitholders in Operating
Partnership............................. -- (63) -- (63)
---------- ---------- ---------- ----------
Net income................................ $ 3,495 $ 2,647 $ 6,904 $ 4,993
========= ========= ========= =========
Per share data:
Income before extraordinary items....... $ 0.21 $ 0.20 $ 0.42 $ 0.39
========= ========= ========= =========
Net income.............................. $ 0.21 $ 0.19 $ 0.42 $ 0.38
========= ========= ========= =========
Dividends declared...................... $ 0.39 $ 0.38 $ 0.78 $ 0.76
========= ========= ========= =========
Weighted average shares................. 16,594,560 13,661,434 16,592,638 13,052,887
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
UNAMORTIZED
ADDITIONAL RESTRICTED
COMMON PAID IN ACCUMULATED STOCK
STOCK CAPITAL DEFICIT COMPENSATION TOTAL
------ ---------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995................ $165 $ 247,064 $ (71,775) $ 0 $175,454
Dividends............................... -- -- (12,864) -- (12,864)
Proceeds from Dividend Reinvestment
Plan................................. -- 289 -- -- 289
Conversion of units to shares........... -- 83 -- -- 83
Issue of restricted stock grants........ 1 1,045 -- (1,046) 0
Amortization of restricted stock
grants............................... -- -- -- 96 96
Costs of shelf registrations............ -- (138) -- -- (138)
Adjustment for minority interest in
operating partnership................ -- 1,082 -- -- 1,082
Net income.............................. -- -- 6,904 -- 6,904
------ ---------- ----------- ------------ --------
Balance, June 30, 1996.................... $166 $ 249,425 $ (77,735) $ (950) $170,906
====== ======== ========= ========== ========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 6,904 $ 4,993
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary items............................................. -- 63
Loss on equity method investments............................... 94 24
Depreciation and amortization................................... 9,075 7,271
Increase in restricted cash..................................... (200) (1,870)
Increase in other assets........................................ (1,492) (2,957)
Increase in accrued interest payable............................ 127 102
Increase in accounts payable and accrued expenses............... 2,657 2,552
Increase in security deposits and prepaid rents................. 467 113
Increase in minority interest of unitholders in Operating
Partnership.................................................... 1,678 1,093
-------- --------
Net cash provided by operating activities.................. 19,310 11,384
-------- --------
Cash flows from investing activities:
Construction of real estate assets and land acquisitions, net of
payables........................................................ (34,497) (15,466)
Capitalized interest............................................... (1,927) (1,340)
Recurring capital expenditures..................................... (1,403) (1,136)
Non-recurring capital expenditures................................. (1,839) (343)
Purchase of Communities............................................ (6,360) (4,983)
-------- --------
Net cash used in investing activities...................... (46,026) (23,268)
-------- --------
Cash flows from financing activities:
Debt proceeds...................................................... 44,442 30,630
Debt repayments.................................................... (1,716) (68,083)
Dividends and distributions to unitholders......................... (15,726) (11,070)
Payments of financing costs........................................ (175) (195)
Offering proceeds, net of underwriters discount and offering
costs........................................................... -- 66,044
Proceeds from Dividend Reinvestment Plan........................... 289 --
Costs of shelf registrations....................................... (138) --
-------- --------
Net cash provided by financing activities.................. 26,976 17,326
-------- --------
Net increase in cash and cash equivalents:........................... 260 5,442
Cash and cash equivalents, beginning of period....................... 2,881 1,181
-------- --------
Cash and cash equivalents, end of period............................. $ 3,141 $ 6,623
======== ========
Supplemental disclosure of cash flow information -- Cash paid for
interest, net of capitalized interest.............................. $ 8,390 $ 6,652
======== ========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
SUMMIT PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
management of Summit Properties Inc., (the "Company") in accordance with
generally accepted accounting principles for interim financial information and
in conformity with the rules and regulations of the Securities and Exchange
Commission. 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
only of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the six months
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the full year. These financial statements should be read in
conjunction with the Company's December 31, 1995 audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K.
2. RESTRICTED STOCK
In January, 1996 the Company granted 56,046 shares of restricted stock to
employees under the Company's 1994 Stock Option and Incentive Plan. The market
value of the restricted stock grants totaled $1.1 million, which has been
recorded as unamortized restricted stock compensation and is shown as a separate
component of stockholders' equity. Unearned compensation is being amortized to
expense over the five year vesting period.
3. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the six months ended June
30, 1996 and 1995 are as follows:
A. The Company issued 106,330 Units of interest in Summit Properties
Partnership, L.P. (the "Operating Partnership"), valued at $2.1 million at
issuance, for the purchase of land during the six months ended June 30,
1996.
B. The Company accrued a dividend and distribution payable in the
amount of $8.0 million and $7.7 million at June 30, 1996 and 1995,
respectively.
C. During the six months ended June 30, 1996, the Company issued
53,646 shares (net of 2,400 shares issued but subsequently retired) of
restricted stock valued at $1.0 million.
D. The Company purchased 13 apartment communities (the "Crosland
Acquisition Communities") in the second quarter of 1995 by assuming debt,
issuing approximately 1.5 million Operating Partnership Units, assuming
certain liabilities and current assets, and the payment of cash. The
recording of the purchase is summarized as follows (in thousands):
<TABLE>
<S> <C>
Fixed assets...................................................... $ 82,837
Restricted cash................................................... 1,427
Other assets...................................................... 93
Debt assumed...................................................... (52,576)
Current liabilities assumed....................................... (996)
Minority interest................................................. 388
Value of units issued............................................. (26,190)
--------
Net cash paid........................................... $ 4,983
========
</TABLE>
E. On April 1, 1996, the Company acquired its joint venture partner's
interest in the Summit Plantation (formerly Plantation Cove) apartment
community. The Company paid $6.4 million in cash for
7
<PAGE> 8
SUMMIT PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the remaining 75% interest in this joint venture, which is now owned
entirely by the Company. The recording of the purchase is summarized as
follows (in thousands):
<TABLE>
<S> <C>
Fixed assets...................................................... $ 21,913
Current assets.................................................... 202
Deferred charges.................................................. 95
Debt assumed...................................................... (14,347)
Current liabilities assumed....................................... (288)
Equity investment................................................. (1,215)
--------
Net cash paid........................................... $ 6,360
========
</TABLE>
4. SUBSEQUENT EVENTS
On August 7, 1996, the Company completed the sale of an additional five
million shares of Common Stock at $18 per share. The net proceeds of $85 million
were used to repay the Company's outstanding credit facility and development
loans and to fund current development projects.
In August, 1996, the Company completed a private placement for $31.0
million of unsecured debt financing consisting of a $15.0 million unsecured note
with a four year term and a $16.0 million unsecured note with a six year term,
which bear interest at 7.71% and 7.95%, respectively. The proceeds of the
unsecured debt financing were utilized to repay certain development loans.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q contains forward-looking statements including, without
limitation, statements relating to development activities of the Company, within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although the Company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, the Company's actual results and performance of
development communities could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include general economic conditions, local real estate conditions, construction
delays due to unavailability of materials, weather conditions or other delays
and those factors discussed in the section entitled "Certain Factors Affecting
the Performance of Development Communities" on page 16 of this Form 10-Q.
OVERVIEW
The following discussion should be read in conjunction with the
Consolidated Financial Statements of Summit Properties Inc. and the Notes
thereto appearing elsewhere herein.
As of June 30, 1996, there were 20,604,354 units outstanding of the
Operating Partnership, of which 16,574,300, or 80.4% were owned by the Company
and 4,030,054, or 19.6% were owned by other partners (including certain officers
and directors).
HISTORICAL RESULTS OF OPERATIONS
The Company's net income is generated primarily from operations of its
apartment communities. The changes in operating results from period to period
reflect changes in existing community performance and increases in the number of
apartment homes due to development and acquisition of new communities. Where
appropriate, comparisons are made on a "stabilized Communities," "acquisition
Communities" and "Communities in lease-up" basis in order to adjust for changes
in the number of apartment homes. A Community is deemed to be "stabilized" when
it has attained a physical occupancy level of at least 93% or when construction
has been completed for one year. The thirteen Crosland Acquisition Communities
acquired in 1995 and Summit Plantation acquired April 1, 1996, are considered
acquisition Communities in the following comparisons. Six Communities were in
lease-up in 1996.
Results of Operations for the Three Months and Six Months Ended June 30, 1996
and 1995
For the three and six months ended June 30, 1996, income before minority
interest and extraordinary items increased $1.0 million and $2.4 million,
respectively, to $4.3 million and $8.6 million, respectively, from the three and
six months ended June 30, 1995.
9
<PAGE> 10
OPERATING PERFORMANCE OF THE COMPANY'S PORTFOLIO OF COMMUNITIES
The operating performance of the Communities is summarized below (dollars
in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
1996 1995 % CHANGE 1996 1995 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Property revenues:
Stabilized Communities(1)... $16,634 $16,026 3.8% $33,129 $31,742 4.4%
Acquisition
Communities(2)........... 4,393 1,630 169.5% 7,976 1,630 389.3%
Development Communities(3).. 1,891 -- 100.0% 3,017 -- 100.0%
------- ------- ------- -------
Total property revenues....... 22,918 17,656 29.8% 44,122 33,372 32.2%
------- ------- ------- -------
Property operating and
maintenance expense(4):
Stabilized Communities...... 6,356 5,982 6.3% 12,544 11,896 5.4%
Acquisition Communities..... 1,672 652 156.4% 3,085 652 373.2%
Development Communities..... 762 -- 100.0% 1,285 -- 100.0%
------- ------- ------- -------
Total property operating and
maintenance expense......... 8,790 6,634 32.5% 16,914 12,548 34.8%
------- ------- ------- -------
Property operating income..... $14,128 $11,022 28.2% $27,208 $20,824 30.7%
======= ======= ======= =======
Apartment homes, end of
period(5)................... 12,140 10,086 20.4% 12,140 10,086 20.4%
======= ======= ======= =======
</TABLE>
- ---------------
(1) Communities which reached stabilization prior to January 1, 1995.
(2) Crosland Acquisition Communities acquired in the second quarter of 1995 and
Summit Plantation acquired April 1, 1996.
(3) Six Communities in the construction, development or lease-up stage during
1996. As of June 30, 1996, three Communities had been completed including
two which were completed in the second quarter of 1996.
(4) Before real estate depreciation and amortization expense.
(5) Includes apartment homes in communities still under construction but which
have begun leasing.
10
<PAGE> 11
OPERATING PERFORMANCE OF THE COMPANY'S STABILIZED COMMUNITIES
The operating performance of the 32 Communities, containing 8,061 apartment
homes, stabilized during the entire period for the three and six months ended
June 30, 1996 and 1995 is summarized below (dollars in thousands except average
monthly rental revenue):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
1996 1995 % CHANGE 1996 1995 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Property revenues:
Rental............................ $15,773 $15,245 3.5% $31,446 $30,249 4.0%
Other............................. 861 781 10.2% 1,683 1,493 12.7%
------- ------- ------- -------
Total property revenues............. 16,634 16,026 3.8% 33,129 31,742 4.4%
------- ------- ------- -------
Property operating and maintenance
expense(1):
Personnel......................... 1,505 1,364 10.3% 3,006 2,758 9.0%
Advertising and promotion......... 167 134 24.6% 309 275 12.4%
Utilities......................... 764 756 1.1% 1,515 1,487 1.9%
Building repairs and
maintenance.................... 1,429 1,351 5.8% 2,669 2,563 4.1%
Real estate taxes and insurance... 1,656 1,527 8.4% 3,336 3,058 9.1%
Property supervision.............. 415 395 5.1% 824 786 4.8%
Other operating expense........... 420 455 (7.7%) 885 969 (8.7%)
------- ------- ------- -------
Total property operating and
maintenance expense............... 6,356 5,982 6.3% 12,544 11,896 5.4%
------- ------- ------- -------
Property operating income........... $10,278 $10,044 2.3% $20,585 $19,846 3.7%
======= ======= ======= =======
Average physical occupancy(2)....... 92.6% 94.0% (1.5%) 92.8% 93.7% (1.0%)
======= ======= ======= =======
Average monthly rental revenue(3)... $ 711 $ 683 4.2% $ 710 $ 680 4.4%
======= ======= ======= =======
</TABLE>
- ---------------
(1) Before real estate depreciation and amortization expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
Communities, expressed as a percentage. Average physical occupancy has been
calculated using the average of the midweek occupancy that existed during
each week of the period.
(3) Represents the average monthly net rental revenue per occupied apartment
home.
The increase in rental revenue from stabilized Communities for the second
quarter of 1996 was primarily the result of increases in average monthly net
rental revenue per occupied apartment home of 4.2%, offset by a 1.5% decrease in
occupancy levels as compared with second quarter of 1995. Property operating and
maintenance expense increases were due primarily to an increase in property and
casualty insurance premiums ($54,000 or 34.7% and $114,000 or 37.1% for the
three and six months ended, respectively), an increase in property taxes
($75,000 or 5.5% and $165,000 or 6.0% for the three and six months ended,
respectively) and higher personnel costs. The Company expects property operating
and maintenance expense increases to moderate over the third and fourth quarters
compared to the comparable period in 1995.
OPERATING PERFORMANCE OF THE COMPANY'S ACQUISITIONS
Acquisition Communities consist of the Crosland Acquisition Communities
(2,025 apartment homes) and Summit Plantation (262 apartment homes). The
Crosland Acquisition Communities were acquired May 16, 1995, except Summit East
Ridge which was acquired June 22, 1995. Summit Plantation was
11
<PAGE> 12
acquired April 1, 1996. The operations of these Communities are summarized as
follows (dollars in thousands except average monthly rental revenue):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Property revenues:
Rental revenues............................... $4,235 $1,603 $7,710 $1,603
Other property revenue........................ 158 27 266 27
------ ------ ------ ------
Total property revenues......................... 4,393 1,630 7,976 1,630
------ ------ ------ ------
Property operating and maintenance expense(1)... 1,672 652 3,085 652
------ ------ ------ ------
Property operating income....................... $2,721 $ 978 $4,891 $ 978
====== ====== ====== ======
Average physical occupancy(2)................... 93.8% 97.0% 93.9% 97.0%
====== ====== ====== ======
Average monthly rental revenue(3)............... $ 669 $ 582 $ 664 $ 582
====== ====== ====== ======
Number of apartment homes....................... 2,287 2,025 2,287 2,025
====== ====== ====== ======
</TABLE>
- ---------------
(1) Before real estate depreciation and amortization expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
communities, expressed as a percentage. Average physical occupancy has been
calculated using the average of the midweek occupancy that existed during
each week of the period.
(3) Represents the average monthly net rental revenue per occupied apartment
home.
The Crosland Acquisition Communities continued its trend of
quarter-to-quarter increases in property operating income. Property operating
income has increased 7.4% since the third quarter of 1995 (the first full
quarter of operations under the Company's management). Occupancy during the
three and six months ended June 30, 1996 was 93.8% and 93.9%, respectively. The
decrease in average occupancy from the same period in 1995 reflects the
Company's strategy of maximizing the economic return from its Communities by
optimizing the trade-off between increasing rental rates and maintaining high
occupancy levels. Consistent with this strategy, average monthly rental revenues
have increased 7.4% while occupancy rates have decreased since the third quarter
of 1995. Additionally, the unleveraged yield on an annualized basis for the six
months ended June 30, 1996 on the investment improved to 10.7% from 10.0% in the
third quarter of 1995 on an annualized basis.
OPERATING PERFORMANCE OF THE COMPANY'S COMMUNITIES IN LEASE-UP
The Company had six Communities with a total of 1,792 apartment homes,
which commenced rental operations, but were not stabilized for the entire second
quarter. In order to evaluate the impact of developments and lease-ups on the
Company's operations, the amount of interest expensed on Communities in
development and lease-up is presented. The Company had no Communities in
lease-up during the six months ended June 30, 1996. The results of operations of
the six Communities in development and lease-up for the
12
<PAGE> 13
last three quarters, including interest expense during construction and
lease-up, are summarized as follows (dollars in thousands except average monthly
rental revenue):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
JUNE 30, MARCH 31, DECEMBER 31,
1996 1996 1995
-------- --------- ------------
<S> <C> <C> <C>
Property revenues:
Rental revenues...................................... $1,756 $ 1,042 $511
Other property revenues.............................. 135 84 48
-------- --------- ------
Total property revenues................................ 1,891 1,126 559
Property operating and maintenance expense(1).......... 762 523 160
-------- --------- ------
Property operating income.............................. 1,129 603 399
Interest expense....................................... 999 662 416
-------- --------- ------
Property income (loss) after interest expense.......... $ 130 $ (59) $(17)
====== ======= ==========
Average monthly rental revenue(2)...................... $ 876 $ 889 $832
====== ======= ==========
Number of apartment homes completed.................... 1,178 870 576
====== ======= ==========
Number of apartment homes leased....................... 1,041 681 364
====== ======= ==========
Number of apartment homes occupied..................... 895 539 291
====== ======= ==========
</TABLE>
- ---------------
(1) Before real estate depreciation, amortization and interest expense.
(2) Represents the average monthly net rental revenue per occupied apartment
home.
One of these Communities, Summit Aventura, with 379 apartment homes, was
completed in the fourth quarter of 1995 and was 90.0% leased on June 30, 1996.
Two of these Communities, Summit Hill II and Summit Green, were completed in the
second quarter of 1996 and were 98.1% and 74.0% leased on June 30, 1996,
respectively. These three Communities represent a total investment of $60.1
million.
The remaining three lease-up Communities are still under construction, with
completion anticipated in the third quarter of 1996 and first quarter of 1997.
As of June 30, 1996, the Company had leased: 60.8%, or 191 of the 314 apartment
homes, at Summit River Crossing, which opened in December, 1995; 19.3%, or 68 of
the 352 apartment homes at Summit on the River, which opened in May 1996; and
6.7%, or 16 of the 240 apartment homes at Summit Fairways, which opened in July
1996. These three Communities will represent a total investment upon completion
of $60.8 million.
13
<PAGE> 14
OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY
The operating performance of Summit Management Company (the "Management
Company") and its wholly-owned subsidiary, Summit Apartment Builders Inc., is
summarized below (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Property management revenue..................... $1,166 $1,360 $2,298 $2,675
Construction company income..................... 112 9 176 94
Other management company income................. 33 23 59 83
------ ------ ------ ------
Total revenue................................. 1,311 1,392 2,533 2,852
Property management expenses:
Operating..................................... 997 1,150 2,149 2,288
Depreciation.................................. 28 30 56 60
Amortization.................................. 69 69 138 137
Interest...................................... 75 75 150 150
Income taxes.................................. -- 15 -- 15
------ ------ ------ ------
Total property management expenses............ 1,169 1,339 2,493 2,650
Construction company expenses................... 71 123 135 243
------ ------ ------ ------
Total expenses................................ 1,240 1,462 2,628 2,893
------ ------ ------ ------
Net income (loss) of Summit Management Company.. $ 71 $ (70) $ (95) $ (41)
====== ====== ====== ======
</TABLE>
The decrease in property management revenue was the result of a reduction
in the average number of communities managed for third parties during 1996
compared to 1995, offset by higher revenues for managing the Company's
Communities. Total third party apartment homes managed for third parties was
7,925 and 12,039 at June 30, 1996 and 1995, respectively. The decrease was
primarily due to the termination of the Management Company's contract to manage
a portfolio of 4,050 apartment homes effective October 1, 1995. This contract
was terminated as a result of the owner's decision to provide its own property
management of these apartment homes.
Property management fees include $568,000 and $906,000 of fees from third
parties for the three months ended June 30, 1996 and 1995, respectively, and
$1.1 million and $1.8 million of fees from third parties for the six months
ended June 30, 1996 and 1995, respectively.
OTHER INCOME AND EXPENSES
Interest expense increased $1.8 million or 24.1% to $9.1 million for the
six months ended June 30, 1996, from $7.3 million for the same period in 1995,
primarily due to interest on debt related to the 1995 acquired communities and
interest on development projects, offset by the Company's repayment of debt in
connection with a public offering of four million shares of Common Stock in June
1995 (the "1995 Offering"). The 1995 Offering resulted in net proceeds of
approximately $66 million.
General and administrative expense increased from 1995 to 1996 primarily
due to increased compensation costs. The increase in compensation cost was
primarily due to the cost of the Company's restricted stock grants and cost of
the Company's employee stock purchase plan. As a percentage of revenues, general
and administrative cost was 2.8% and 2.9% for the three and six months ended
June 30, 1996, respectively, compared to 2.7% and 2.6% for same periods in 1995,
respectively.
The extraordinary item in the six months ended June 30, 1995, net of
minority interest, resulted from write-off of deferred financing costs in
conjunction with mortgage debt repayment.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities increased from
$11.4 million for the six months ended June 30, 1995 to $19.3 million for the
same period in 1996, primarily due to a $6.4 million increase in property
operating income and a $1.7 million lower increase in restricted cash due to the
Company no longer escrowing certain property taxes, offset by a $1.8 increase in
interest expense in 1996 compared to 1995. The increase in interest expense was
small relative to the increase in property operating income due to the
retirement of debt with the proceeds from the 1995 Offering in June 1995. Net
cash used in investing activities increased from $23.2 million for the six
months ended June 30, 1995 to $46.0 million for the same period in 1996 due to
the increase in development of new properties, higher capital expenditures on
existing properties and an increase in acquisition of new properties. Net cash
provided by financing activities increased from $17.3 million for the six months
ended June 30, 1995 to $27.0 million for the same period in 1996 primarily due
to an increase in debt proceeds offset by higher dividends and distributions to
unitholders. In addition, in 1995 proceeds from the 1995 Offering of $66.0
million were used to repay debt.
The Company's outstanding indebtedness at June 30, 1996 totaled $354.1
million. This amount includes approximately $195.0 million in fixed rate
conventional mortgages, $54.5 million of variable rate tax-exempt bonds, $9.4
million of tax exempt fixed rate loans, $76.9 million in development loans and
borrowings of $18.3 million under the Company's $50 million Credit Facility.
On August 7, 1996, the Company completed the sale of an additional five
million shares of common stock with net proceeds of $85 million. In addition,
the Company obtained $31.0 million of unsecured debt financing consisting of a
$15.0 million unsecured note with a four year term and a $16.0 million unsecured
note with a six year term, which bear interest at 7.71% and 7.95%, respectively,
in August 1996. The proceeds of the issuance of common stock and the unsecured
debt financing were utilized to fully repay the Company's line of credit and
development loans and will be used to fund current development. Total debt
repaid was $97.2 million with approximately $19 million available to fund
current development.
The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under the Credit
Facility. The Company believes that its net cash provided by operations will be
adequate to meet its operating requirements and to satisfy applicable REIT
dividend payment requirements in both the short-term and in the long-term.
Improvements and renovations at existing Communities are expected to be funded
from property operations. The Company has a commitment for a $60 million
unsecured credit facility to replace its existing Credit Facility which expires
February 15, 1997. In addition, the Company is negotiating with its lenders to
expand the Credit Facility to up to $180 million.
The Company expects to meet its long-term liquidity requirements, such as
future developments, debt maturities, acquisitions, renovations and other
non-recurring capital improvements, through the issuance of long-term secured
and unsecured debt securities and additional equity securities of the Company,
or in connection with the acquisition of land or improved property in exchange
for units of the Operating Partnership.
15
<PAGE> 16
The following table sets forth certain information regarding debt financing
as of June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
INTEREST PRINCIPAL OUTSTANDING
RATE AS OF -----------------------
JUNE 30, MATURITY JUNE 30, DECEMBER 31,
COMMUNITIES 1996 DATE 1996 1995
------------------------------------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C>
FIXED RATE DEBT
MORTGAGE LOAN(1)................... 5.88% 02/15/01 $124,180 $125,000
MORTGAGE LOAN(1)................... 7.71% 12/15/05 29,860 30,000
MORTGAGE LOAN(2)................... 8.00% 09/01/05 8,676 8,712
MORTGAGE NOTES
Summit Hollow I................. 8.00% 11/01/18 2,306 2,326
Summit Hollow II................ 7.75% 01/01/29 2,597 2,607
Summit Creekside................ 8.00% 06/01/22 2,895 2,914
Summit Old Town................. 8.00% 09/01/20 3,120 3,143
Summit Eastchester.............. 8.00% 05/01/21 3,899 3,925
Summit Foxcroft................. 8.00% 04/01/20 2,817 2,844
Summit Oak...................... 7.75% 12/01/23 2,600 2,615
Summit Sherwood................. 7.88% 03/01/29 3,341 3,353
Summit Radbourne................ 9.80% 03/01/02 8,722 8,758
TAX EXEMPT MORTGAGE NOTES
Summit Crossing................. 6.95% 11/01/25 4,238 4,261
Summit at East Ridge............ 7.25% 12/01/26 5,182 5,207
-------- ------------
Total Fixed Rate Debt...... 204,433 205,665
-------- ------------
VARIABLE RATE DEBT
CREDIT FACILITY(3)(4)........... LIBOR + 100 02/15/97 18,343 4,396
TAX EXEMPT BONDS
Summit Belmont.................. 4.95% 04/01/07 11,850 11,900
Summit Hampton.................. 4.95% 06/01/07 12,700 12,800
Summit Pike Creek............... 4.95% 08/15/20 13,378 13,545
Summit Gateway.................. 4.95% 07/01/07 7,700 7,700
Summit Stony Point.............. 4.95% 04/01/29 8,825 8,895
DEVELOPMENT LOANS(4)
Summit Aventura................. LIBOR + 160 12/31/98 8,714 8,766
Summit River Crossing........... LIBOR + 110 06/30/99 12,348 6,183
Summit Hill II.................. LIBOR + 95 11/15/99 8,466 6,079
Summit Plantation............... LIBOR + 110 06/30/98 14,302 --
Summit Green.................... LIBOR + 95 12/21/99 12,918 8,488
Summit Fairways................. LIBOR + 110 06/30/00 7,145 719
Summit on the River............. LIBOR + 125 08/10/00 8,580 1,874
Summit Russett.................. LIBOR + 125 06/29/99 4,381 --
-------- ------------
TOTAL VARIABLE RATE DEBT...... 149,650 91,345
-------- ------------
TOTAL OUTSTANDING
INDEBTEDNESS............. $354,083 $297,010
======== ==========
</TABLE>
- ---------------
(1) Mortgage Loans secured by fifteen communities.
(2) Mortgage Loan secured by two communities.
(3) Credit Facility secured by seven communities.
(4) Development loans and Credit Facility were fully repaid subsequent to June
30, 1996 with proceeds from issuance of common stock and unsecured debt
financing.
16
<PAGE> 17
DEVELOPMENT ACTIVITY
The Company's developments in process at June 30, 1996 are summarized as
follows (dollars in thousands):
<TABLE>
<CAPTION>
TOTAL ESTIMATED
ESTIMATED COST COST TO
PROJECT UNITS COSTS TO DATE COMPLETE
-------------------------------------------------- ----- --------- ------- ---------
<S> <C> <C> <C> <C>
Summit River Crossing -- Indianapolis, IN......... 314 $ 19,200 $17,104 $ 2,096
Summit Russett -- Laurel, MD...................... 314 22,100 9,986 12,114
Summit on the River -- Atlanta, GA................ 352 23,900 15,094 8,806
Summit Fairways -- Orlando, FL.................... 240 17,720 13,240 4,480
Summit Ballantyne I -- Charlotte, NC.............. 246 16,800 1,930 14,870
Summit Stonefield -- Yardley, PA.................. 216 18,370 4,798 13,572
Summit Lake I -- Raleigh, NC...................... 302 19,700 2,590 17,110
Summit Sedgebrook I -- Charlotte, NC.............. 248 15,640 1,638 14,002
Other development and construction costs.......... -- -- 5,459 --
----- --------- ------- ---------
TOTAL................................... 2,232 $ 153,430 $71,839 $87,050
===== ======== ======= =======
</TABLE>
Certain Factors Affecting the Performance of Development Communities
As a result of the improved economic conditions and the demand for
apartment homes of comparable quality in its markets, the Company believes that
the operating prospects of the communities currently under development remain
favorable. As with any development project, there are uncertainties and risks
associated with the development of the communities described above. While the
Company has prepared development budgets and has estimated completion and
stabilization target dates based on what it believes are reasonable assumptions
in light of current conditions, there can be no assurance that actual costs will
not exceed current budgets or that the Company will not experience construction
delays due to the unavailability of materials, weather conditions or other
events. Other development risks include the possibility of incurring additional
cost or liability resulting from defects in construction materials and the
possibility that financing may not be available on favorable terms, or at all,
to pursue or complete development activities. Similarly, market conditions at
the time these communities become available for leasing will affect the rental
rates that may be charged and the period of time necessary to achieve
stabilization, which could make one or more of the development communities
unprofitable or result in achieving stabilization later than currently
anticipated. In addition, the Company is conducting feasibility and other
pre-development work for seven new communities. The Company could abandon the
development of any one or more of these potential communities in the event that
it determines that market conditions do not support development, financing is
not available on favorable terms or other circumstances prevent development.
Similarly, there can be no assurance that if the Company does pursue one or more
of these potential communities that it will be able to complete construction
within the currently estimated development budgets or that construction can be
started at the time currently anticipated.
CAPITALIZATION OF FIXED ASSETS AND PROPERTY IMPROVEMENTS
The Company has established a policy of capitalizing those expenditures
relating to acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset. All
expenditures necessary to maintain a Community in ordinary operating condition
(including replacement carpets) are expensed as incurred.
17
<PAGE> 18
Capitalized expenditures for the six months ended June 30, 1996 and 1995
are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30,
----------------------
1996 1995
------- --------
<S> <C> <C>
Acquisition of new Communities(1)............................. $21,913 $ 82,837
Construction of new Communities(2)............................ 37,617 15,466
Capitalized interest.......................................... 1,927 1,340
Non-recurring capital expenditures:
Construction of garages..................................... 720 --
Access gates................................................ 65 --
New signage................................................. 52 --
Water meters................................................ 173 --
Washer/dryer units.......................................... 58 --
Major improvements.......................................... 758 --
Improvements at acquisition................................. -- 343
Other....................................................... 13 --
------- --------
Total non-recurring................................. 1,839 343
------- --------
Recurring capital expenditures:
Exterior painting........................................... 465 438
Other....................................................... 938 698
------- --------
Total recurring..................................... 1,403 1,136
------- --------
$64,699 $101,122
======= ========
</TABLE>
- ---------------
(1) Includes assumption of $14.4 million and $52.6 million of debt in 1996 and
1995, respectively. In addition, includes conversion of equity investment
of $1.2 million into fixed assets in conjunction with the purchase of
Summit Plantation in 1996 and the issuance of 1.5 million Operating
Partnership Units with a value of $26.2 million in 1995.
(2) Includes issuance of $2.1 million of units in the Operating Partnership for
the acquisition of land in 1996.
Development of new Communities was funded primarily by development loans
and borrowing under the Credit Facility. Other additions and improvements were
funded primarily by Community operations and the Credit Facility.
INFLATION
Substantially all of the leases at the Communities are for a term of one
year or less, which, coupled with the relatively high occupancy rates, may
enable the Company to seek increased rents upon renewal of existing leases or
commencement of new leases. The Company's policy is to permit residents to
terminate leases upon 60 days' written notice and payment of two months' rent as
compensation for early termination. The short-term nature of these leases
generally serves to reduce the risk to the Company of the adverse effect of
inflation.
FUNDS FROM OPERATIONS
The Company generally considers Funds from Operations to be an appropriate
measure of performance of an equity REIT. Funds from Operations is defined by
the National Association of Real Estate Investment Trusts (NAREIT) as income
(loss) before minority interest of holders of Units in the Operating
Partnership, and excluding gains or losses from sales of assets or debt
restructuring, plus certain non-cash items, primarily real estate depreciation,
and after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for all periods consisted only of real estate depreciation. Funds
Available for Distribution is defined as Funds from Operations less recurring
capital expenditures funded by operations. Funds from Operations and Funds
Available for Distribution should not be considered as an alternative to net
income (determined in accordance with generally accepted accounting principles),
as an indication of the Company's financial
18
<PAGE> 19
performance, or to cash flow from operating activities (determined in accordance
with generally accepted accounting principles) as a measure of liquidity.
Funds from Operations and Funds Available for Distribution are calculated
as follows (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income.......................... $ 3,495 $ 2,647 $ 6,904 $ 4,993
Minority Interest of Unitholders in
Operating Partnership............. 850 635 1,678 1,093
Extraordinary items................. -- 63 -- 63
Depreciation
Operating Communities............. 4,428 3,576 8,549 6,794
Summit Plantation................. -- 13 33 13
----------- ----------- ----------- -----------
Funds from Operations............... 8,773 6,934 17,164 12,956
Recurring capital expenditures...... (842) (715) (1,403) (1,136)
----------- ----------- ----------- -----------
Funds Available for Distribution.... $ 7,913 $ 6,219 $ 15,761 $ 11,820
========== ========== ========== ==========
Weighted average shares
outstanding....................... 16,594,560 13,661,434 16,592,638 13,052,887
========== ========== ========== ==========
Weighted average shares and units
outstanding....................... 20,624,614 16,821,561 20,618,684 15,843,323
========== ========== ========== ==========
</TABLE>
The above Funds from Operations calculations reflect changes required by
NAREIT for fiscal years beginning in 1996. The primary effect of the changes on
the Company's calculation of Funds from Operations was that amortization of
financing cost is no longer added back in arriving at Funds from Operations.
Funds from Operations under the previous calculation method would have been $9.0
million and $7.2 million for the three months ended June 30, 1996 and 1995,
respectively and would have been $17.7 million and $13.6 million for the six
months ended June 30, 1996 and 1995, respectively.
19
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On May 4, 1996, the Company held its 1996 Annual Meeting of Stockholders
(the "Annual Meeting"). At the Annual Meeting, Stockholders of the Company were
asked to consider proposals (the "Proposals") to (i) elect two Class II
Directors of the Company to serve until the 1999 annual meeting of stockholders
or until their successors are duly elected and qualified, and (ii) approve the
Summit Properties Inc. 1996 Non-Qualified Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan").
With respect to the election of Directors, Nelson Schwab III and John
Crosland, Jr. were nominated to serve as Class II Directors of the Company until
the 1999 annual meeting; the other Directors of the Company whose terms of
office as directors continued after the Annual Meeting are as follows: James H.
Hance, Jr. (Class I Director), Henry H. Fishkind (Class I Director), William B.
McGuire, Jr. (Class III Director) and William F. Paulsen (Class III Director).
With respect to the Proposals, the stockholders of the Company voted at the
Annual Meeting as hereinafter described. By a vote of 9.2 million votes of
Common Stock in favor of Nelson Schwab III and John Crosland, Jr., in excess of
a majority of the eligible votes, with no votes against each of Messrs. Schwab
and Crosland, respectively, each of Nelson Schwab III and John Crosland, Jr. was
elected as a Class II Director of the Company.
With regard to the approval of the Employee Stock Purchase Plan, 9.1
million votes of Common Stock in favor of the approval, in excess of a majority
of the eligible votes, with 130,159 votes against the approval and 37,565 votes
abstaining, the Employee Stock Purchase Plan was approved.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule (for SEC use only).
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUMMIT PROPERTIES INC.
<TABLE>
<S> <C>
August 9, 1996 /s/ MICHAEL L. SCHWARZ
- --------------------------------------------- ---------------------------------------------
(Date) Michael L. Schwarz,
Executive Vice President and
Chief Financial Officer
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SUMMIT PROPERTIES FOR THE 6 MONTHS ENDED JUNE 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 3,141
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,669
<PP&E> 649,283
<DEPRECIATION> 76,009
<TOTAL-ASSETS> 590,084
<CURRENT-LIABILITIES> 23,915
<BONDS> 354,083
0
0
<COMMON> 166
<OTHER-SE> 211,920
<TOTAL-LIABILITY-AND-EQUITY> 590,084
<SALES> 44,122
<TOTAL-REVENUES> 44,492
<CGS> 0
<TOTAL-COSTS> 17,008
<OTHER-EXPENSES> 9,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,054
<INCOME-PRETAX> 8,582
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,582
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
