<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
Commission File Number 0-28340
AMERICAN TAX-EXEMPT BOND TRUST
-------------------------------
(Exact name of registrant as specified in its governing instrument)
DELAWARE 13-7033312
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's prospectus dated November 1, 1994, as filed with the
Commission pursuant to Rule 424(b) of the Securities Act of 1933, but only to
the extent expressly incorporated by reference in Parts I, II, III and IV.
Page 1 of 9
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CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K/A-1, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K/A-1 PURSUANT TO THE "SAFE HARBOR" PROVISION OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS." READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE TRUST
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER THE DATE HEREOF OR TO REFLECT
THE OCCURRENCE OF UNANTICIPATED EVENTS.
<PAGE>
Note: This amendment amends Items 1 and 13 of the Form 10K filed by the Trust on
March 29, 2000.
PART I
Item 1. Business.
GENERAL
American Tax-Exempt Bond Trust (the "Trust") was formed on December 23, 1993 as
a finite life, closed end Delaware business trust for the purpose of investing
in tax-exempt first mortgage bonds ("First Mortgage Bonds") issued by various
state or local governments or their agencies or authorities and secured by first
mortgage loans on multifamily residential apartment and retirement community
projects. The Manager to the Trust is Related AMI Associates, Inc., a Delaware
corporation ("Related AMI" or the "Manager"). The Manager manages the day to day
affairs of the Trust pursuant to the Second Amended and Restated Business Trust
Agreement (the "Trust Agreement"), dated as of September 27, 1994, among Related
AMI, as grantor, Related AMI, as Manager, Wilmington Trust Company, a Delaware
banking corporation, as trustee, and the other persons referred to herein to be
holders of beneficial interests in the Trust. See Item 10, Directors and
Executive Officers of the Trust, below.
On November 1, 1994, the Trust commenced a public offering (the "Offering") of
its shares of beneficial interest, managed by Related Equities Corporation,
pursuant to a prospectus dated November 1, 1994. The Offering terminated as of
October 15, 1996. A total of 1,460,980 shares were sold through the Offering and
as of December 31, 1999, 40,501 shares were issued through the dividend
reinvestment plan (the "Reinvestment Plan") (2,541 of which were not restricted
for use in connection with the Redemption Plan and are included in Gross
Proceeds), representing Gross Proceeds (the "Gross Proceeds") of $29,989,113
(before volume discounts of $4,244). Net proceeds from sales pursuant to the
Reinvestment Plan are required to be used first to redeem shares under the
Trust's redemption plan (the "Redemption Plan") and any remaining proceeds may
be used for additional investments or working capital reserves.
The Trust's principal investment objectives are to: (i) preserve and protect the
Trust's invested capital; (ii) provide quarterly distributions that are exempt
from Federal income taxation; and (iii) provide additional distributions in
connection with First Mortgage Bond investments from contingent interest
payments exempt from Federal income taxation. There can be no assurance that
such objectives will be achieved.
The Trust has invested the Net Proceeds in First Mortgage Bonds issued by
various state or local governments or their agencies or authorities which are
secured by first mortgages and related first mortgage loans financed by such
bonds (collectively, "Mortgage Loans") on multifamily residential apartment
projects ("Underlying Properties") owned by third-party developers and one
underlying property owned by RHA Inv., Inc. (the "Borrower"), an affiliate of
the Manager by virtue of the fact that Stephen Ross is on the Board of Trustees
of both the Borrower and the Manager and owns 40% and 67.2% of each entity,
respectively. The First Mortgage Bonds have maturities ranging from June 2006 to
August 2026, although the Trust anticipates holding the First Mortgage Bonds for
approximately 10 to 12 years and having the right to cause repayment of the
bonds at that time, unless the First Mortgage Bonds are repaid prior to maturity
(in which event the Trust may seek to reinvest the repayment proceeds through
September 2002). The Trust is also permitted to invest in other tax exempt
securities which have shorter maturities then First Mortgage Bonds ("Tax-Exempt
Securities"). However, all Tax-Exempt Securities owned by the Trust have matured
and the Trust does not anticipate making additional investments in Tax-Exempt
Securities.
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PROPOSED MERGER
On November 2, 1999, the Trust, CharterMac, and CM Holding Trust, a wholly owned
subsidiary of CharterMac ("CharterMac Sub"), entered into an Agreement and Plan
of Merger (the "Merger Agreement"), providing for the merger of the Trust (the
"Merger") with and into CharterMac Sub, with CharterMac Sub as the surviving
entity in the Merger. Pursuant to the Merger Agreement and upon the terms and
subject to the conditions and limitations therein, each issued and outstanding
share of beneficial interest in the Trust will be converted into the right to
receive 1.43112 shares of beneficial interest in CharterMac. CharterMac and the
Trust are both managed by affiliates of Related Capital Company.
Consummation of the Merger, which is expected in the second quarter of 2000, is
subject to various conditions, including approval of the Merger by the
shareholders of the Trust. Prior to such shareholders' meeting, CharterMac will
file a registration statement with the Securities and Exchange Commission
registering under the Securities Act of 1933, as amended, the CharterMac Shares
to be issued in exchange for the outstanding Trust Shares. Such CharterMac
Shares will be offered to the Trust shareholders only pursuant to a prospectus
that will also serve as a consent statement for the shareholders of the Trust.
FIRST MORTGAGE BONDS
As of December 31, 1999, the Trust has made the following investments in First
Mortgage Bonds:
<TABLE>
<CAPTION>
Original
Date of Bond
Invest- Amount and Par-
ment/ Outstanding ticipa-
Final Pre- Balance at Base tion in
Descrip Maturity pay- December Interest Cash
Property -tion date ment 31, 1999 rate flow
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reflections 336 12/1995 - Permit- $10,700,000
Apartments Apt. 12/2025 ted 9% 25%
Casselbury, Units after
FL 12/1/99
Rolling Ridge 110 8/1996 - Permit- 4,925,000
Apartments Apt. 8/2026 ted 9% 30%
Chino Hills, Units after
CA 8/1/00
Lexington 200 5/1997 - Permit- 4,900,000
Trails Apt. 5/2022 ted 9% N/A
Apartments Units after
Houston, 5/1/02
TX
Highpointe 240 9/1997 - Not 3,250,000
Apartments Apt. 6/2006 permit- --------- 9% N/A
Harrisburg, Units ted
PA
$23,775,000
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</TABLE>
All leases for the Underlying Properties are generally for periods not greater
than one to two years and no tenant occupies more than 10% of the rentable
square footage. All tenants are residential.
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<TABLE>
<CAPTION>
Property Occupancy (%) Monthly Rent Per Unit
-------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Year) 95 96 97 98 99 95 96 97 98 99
-- -- -- -- -- -- -- -- -- --
Reflections
(336 Units) 94 96 93 95 93 $528 $546 $576 $604 $631
Rolling Ridge
(110 Units) N/A 96 94 100 98 N/A $665 $698 $743 $784
Lexington
Trails
(200 Units) N/A N/A 97 96 95 N/A N/A $515 $533 $556
Highpointe
(240 Units) N/A N/A 98 89 98 N/A N/A $605 $597 $602
</TABLE>
REFLECTIONS APARTMENTS
On December 21, 1995, the Trust completed the amendment of the bond indenture
for the $10,700,000 in tax-exempt First Mortgage Bonds (the "Reflections
Bonds"). In connection with the amendment of the Reflections Bonds, the Trust
redeemed the 100% participation interest it previously acquired and now directly
owns the Reflections Bonds. The Reflections Bonds were issued by the Orange
County Florida Housing Finance Authority and are secured by a first mortgage and
mortgage loan on Reflections Apartments (the "Project" or "Reflections"), a
development consisting of 336 apartment units in Casselberry, Florida.
Reflections is owned by Casselberry-Oxford Associates, L.P. (the "Borrower").
The Reflections Bonds bear a fixed current interest rate of 9.0% which is
payable after the payment of property operating expenses and replacement reserve
deposits. If there is cash flow available after payment of these items, the
developer is entitled to a preferred return of 3.7% of monthly total revenues,
payable quarterly. If there is cash flow available after payment of the
preferred return, the Bonds call for the payment of participation interest of up
to an additional 7%, payable from 25% of the remaining cash flow. Base interest
is due in any event and participation interest is due only if cash flow is
available above such base rate and the preferred return. The Reflections Bonds
mature in 2025 and are subject to mandatory redemption, at the Trust's option,
beginning in December 2005. The principal of the Reflections Bonds is payable
upon sale or refinancing of the Project and prepayment, in whole or in part, was
prohibited until December 1999. Prepayment in whole is now permitted subject to
the payment of a premium. If prepaid during the sixth year, the premium is equal
to 5% of the principal amount of the Reflections Bonds outstanding at the time
of prepayment. Thereafter, the premium will be reduced by 1% per year through
the tenth year, when there will be no prepayment premium payable.
ROLLING RIDGE APARTMENTS
On August 2, 1996, the Trust purchased tax-exempt First Mortgage Bonds (the
"Rolling Ridge Bonds") in an aggregate principal amount of $4,925,000. The
Rolling Ridge Bonds were issued by San Bernardino County and are secured by a
deed of trust on Rolling Ridge Apartments (the "Project" or "Rolling Ridge"), a
development consisting of 110 apartment units in Chino Hills, California.
Rolling Ridge is owned and operated by Rolling Ridge L.L.C. (the "Borrower").
The Rolling Ridge Bonds bear a fixed current interest rate of 9.0% which is
payable after the payment of property operating expenses and replacement reserve
deposits. If there is cash flow available after payment of these items, the
Bonds call for the payment of participation interest of up to an additional 7%,
payable from 30% of remaining cash flow. Base interest is due in any event and
participation interest is due only if cash flow is available above such base
rate. The Rolling Ridge Bonds mature in 2026 and are subject to mandatory
redemption, at the Trust's option, beginning in August 2006. The Borrower will
be permitted two nine-month extensions. The principal of the Rolling Ridge Bonds
is payable upon sale
<PAGE>
or refinancing of the Project. Prepayment, in whole or in part, is prohibited
until August 2000. Prepayment in whole will be permitted thereafter subject to
the payment of a premium. If prepaid during the sixth year, the premium is equal
to 5% of the principal amount of the Rolling Ridge Bonds outstanding at the time
of prepayment. Thereafter, the premium will be reduced by1% per year until the
tenth year, when there will be no prepayment premium payable.
LEXINGTON TRAILS APARTMENTS
On May 7, 1997, the Trust purchased tax-exempt First Mortgage Bonds (the
"Lexington Trails Bonds") in an aggregate principal amount of $4,900,000. The
Lexington Trail Bonds were issued by The Harris County Housing Finance
Corporation and are secured by a first deed of trust and mortgage loan on
Lexington Trails Apartments (the "Project" or "Lexington Trails"), a development
consisting of 200 apartment units in Houston, Texas. Lexington Trails is owned
and operated by Lexington Trails-American Housing Foundation, Inc. The Lexington
Trails Bonds bear a fixed current rate of 9.0%. There is no participation
interest with respect to these Bonds. The Lexington Trails Bonds mature in May
2022 and are subject to mandatory redemption, at the Trust's option, beginning
in May 2007. The principal of the Lexington Trails Bonds is payable upon sale or
refinancing of the Project. Prepayment, in whole or in part, is prohibited until
May 2002. Prepayment in whole will be permitted thereafter subject to the
payment of a premium. If prepaid during the sixth year, the premium is expected
to equal 4% of the principal amount of the Lexington Trails Bonds outstanding at
the time of prepayment. Thereafter, the premium will be reduced by 1% per year
until the tenth year, when there will be no prepayment premium payable.
HIGHPOINTE APARTMENTS
The Highpointe Apartments ("Highpointe") are secured by two series of bonds. The
Multifamily Housing Revenue Bonds Series 1989 (the "Multifamily Bonds") are
owned by the Trust. The Redevelopment Authority of the County of Daupin,
Multifamily Housing Revenue Bonds, Series 1986 (the "Redevelopment Bonds") in
the principal amount of $8,900,000 are owned by CharterMac. Highpointe is owned
and operated by RHA Inv., Inc. (the "Borrower") which is an affiliate of the
Manager by virtue of the fact that Stephen Ross is on the Board of Trustees of
both the Borrower and the Manager, also owns 40% and 67.2% of each entity,
respectively.
Pursuant to an Intercreditor Agreement, the Trust has a "pari passu" first
mortgage security interest with Redevelopment Bonds. However, the Multifamily
Bonds have a priority as to the payment of interest on such bonds, a $750,000
priority on the payment of principal with respect to proceeds from any
foreclosure, liquidation, or other disposition of, or realization upon, the
property. In this context "pari passu" means the Trust will receive the first
$750,000 of net sales proceeds, then the principal of each of the bonds will be
repaid, by an equal progression of payments to each. The Multifamily Bonds bear
interest at a rate of 9% per annum and are current with respect to the payment
of the 9% interest. There is no participation interest with respect to these
Bonds. The Redevelopment Bonds currently pay interest based on the net cash flow
and are currently paying approximately 4.7% per annum. The Redevelopment Bonds
call for a fixed rate of base interest at 8.5% plus participating interest,
payable from excess cash flow after payment of such rate. Currently, the
Redevelopment Bonds pay interest based on net cash flow available after the
payment of fixed base interest payable on the Multifamily Bonds. The difference
between the pay rate and the base rate on the Redevelopment Bonds is accruing
and is payable from sales proceeds after payment of proceeds due to the Trust,
including accrued and unpaid interest, if any, the $750,000 priority principal
amount and the portion of its bond principal and that of CharterMac. The Trust's
investment in the Multifamily Bonds is not affected by the accrual of interest
under the Redevelopment Bonds since accrued interest is payable from last
available proceeds and only after the principal and interest on the Multifamily
Bonds has been paid. Upon the completion of the merger, the Borrower will be
obligated to CharterMac for both the Multifamily and Redevelopment Bonds. While
the Borrower is currently in technical default under the terms of the loan
agreement as the loan documents do not call for cash flow mortgage payments on
the Redevelopment Bonds, CharterMac has indicated it will not exercise its
rights and remedies as defined under the terms of the Redevelopment Bonds and
mortgage documents.
<PAGE>
COMPETITION
The Trust's business is affected by competition to the extent that the
underlying properties from which it derives interest and ultimately, principal
payments, and participation in cash flow may be subject to competition relating
to rental rates and amenities from comparable neighboring properties. The Trust
does not believe it competes with any other companies, due to the fact that it
is not permitted to borrow, nor does it have additional funds to invest.
Competition for the Properties in their corresponding community is as follows:
<TABLE>
<CAPTION>
Property Competition
-------- -----------
<S> <C>
Reflections 9 apartment complexes
Rolling Ridge 7 apartment complexes
Lexington Trails 263 apartment complexes
Highpointe 24 apartment complexes
</TABLE>
EMPLOYEES
The Trust does not directly employ anyone. All services are performed for the
Trust by the Manager and its Affiliates. The Manager receives compensation in
connection with such activities as set forth in Items 11 and 13. In addition,
the Trust reimburses the Manager and certain of its Affiliates for expenses
incurred in connection with the performance by their employees of services for
the Trust in accordance with the Trust Agreement.
<PAGE>
Item 13. Certain Relationships and Related Transactions.
The Trust has and will continue to have certain relationships with the Manager
and its affiliates, as discussed in Item 11 and Item 8, Note 5 to the financial
statements. However, there have been no direct financial transactions between
the Trust and the directors and officers of the Manager.
The costs incurred to related parties for the years ended December 31, 1999,
1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Special distributions (i) $ 118,875 $ 118,875 $ 94,938
Expense reimbursements (ii) 85,469 78,165 84,593
Loan serving fees (iii) 58,949 59,438 49,755
---------- ---------- ----------
$ 263,293 $ 256,478 $ 229,286
========== ========== ==========
</TABLE>
In accordance with the Trust Agreement, the Manager received or is entitled to
receive (i) special distributions calculated as a percentage of total assets
invested by the Trust, in its capacity as a general partner of the Trust; the
total amounts accrued and unpaid as of December 31, 1999 and 1998 amounted to
$314,797 and $195,922, respectively; (ii) reimbursement of certain
administrative costs incurred by the Manager or an affiliate on behalf of the
Trust; the total amounts accrued and unpaid as of December 31, 1999 and 1998
amounted to $459,368 and $373,899, respectively; (iii) loan servicing fees
calculated as a percentage of total assets invested by the Trust, the total
amounts accrued and unpaid as of December 31, 1999 and 1998 amounted to $118,386
and $59,437, respectively; (iv) a subordinated incentive fee based on the gain
on the sale of the tax-exempt First Mortgage Bonds. The Manager has continued
allowing the accrual without payment of these amounts but is under no obligation
to continue to do so. In this regard, the Manager has recently indicated that it
is no longer willing to continue to defer receipt of expenses, reimbursements
and fees it is owed.
If the merger is consummated, the Manager will waive the payment of all deferred
and unpaid fees, reimbursements and expenses due the Manager through June 30,
1999. The deferred fees, reimbursements and expenses due to the Manager totaled
$755,747 at June 30, 1999.
The Highpointe Apartments, which are located in Harrisburg, Pennsylvania, and
which property secures the Highpointe bonds owned by the Trust, are owned by RHA
Inv., Inc. (the "Borrower"), an affiliate of the Manager by virtue of the fact
that Stephen Ross is on the Board of Trustees of both the Borrower and the
Manager and owns 40% and 67.2% of each entity, respectively. Neither RHA nor the
Trust receives any compensation directly or indirectly from each other. The
Highpointe Apartments are the only underlying properties securing the Trust's
bonds which are owned by an affiliate of the Trust.
<PAGE>
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.
AMERICAN TAX-EXEMPT BOND TRUST
(Registrant)
By: RELATED AMI ASSOCIATES, INC., as Manager
Date: July 31, 2000 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President and
Principal Financial Officer
