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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 1996 Commission file number 1-14280
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
HOST FUNDING, INC.
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(Exact name of Registrant as specified in its charter)
Maryland 52-1907962
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1025 Prospect, Suite 350, La Jolla, CA 92037
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 456-6070
--------------
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 the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
The number of outstanding shares of the Registrant's Class A Common Stock was
1,192,049, Class B Common Stock 140,000, and Class C Common Stock 140,000 as of
September 30, 1996.
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TABLE OF CONTENTS
Item Number Page
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PART I
1. Financial Statements 1
2. Managements Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II
1. Legal Proceedings 19
2. Changes in Securities 19
3. Defaults Upon Senior Securities 19
4. Submission of Matters to a Vote of Security Holders 19
5. Other Information 19
6. Exhibits and Reports on Form 8-K 19
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements of Host Funding, Inc.,
a Maryland corporation (the "Registrant"), have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions for Form 10-Q. Accordingly, these statements do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management of the Registrant, all adjustments necessary for a fair presentation
have been included. The financial statements presented herein have been
prepared in accordance with the accounting policies described in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1995
and should be read in accordance therewith. The results of operations for the
nine month period ended September 30, 1996 are not necessarily indicative of
the results to be expected for the full year.
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HOST FUNDING, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
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<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
------
LAND, PROPERTY AND EQUIPMENT - AT COST:
Building and improvements $ 12,644,239 $ 1,813,261
Furnishings and equipment 1,952,233 285,929
Less accumulated depreciation (262,005) (103,663)
------------ ------------
14,334,467 1,995,527
Land 4,808,047 642,287
------------ ------------
Land, property and equipment - net 19,142,514 2,637,814
CASH 515,497 500
RESTRICTED CASH 160,722 --
RENT RECEIVABLE - CROSSROADS 212,005 --
DUE FROM RELATED PARTIES 35,094 35,234
LONG-TERM ADVANCES TO CROSSROADS 150,000 --
LOAN FEES - Net 665,439 --
OTHER ASSETS - Net 115,598 21,146
------------ ------------
TOTAL $ 20,996,869 $ 2,694,694
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY(DEFICIT)
---------------------------------------------
LIABILITIES:
LONG-TERM DEBT $ -- $ 4,155,321
NOTES PAYABLE 15,500,000 75,244
ACCOUNTS PAYABLE 24,482 --
ACCRUED INTEREST -- 40,963
ACCRUED PROPERTY TAXES 152,837 --
ACCOUNTS PAYABLE - STOCK ISSUANCE COSTS 2,478 325,000
DEFERRED INCOME TAXES -- 163,000
------------ ------------
Total liabilities 15,679,797 4,759,528
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY(DEFICIT):
Class A Common stock, $.01 par value; authorized
50,000,000 shares; issued and outstanding 1,234,049 shares 12,340 1
Class B Common stock, $.01 par value; authorized
4,000,000 shares; issued and outstanding 140,000 shares 1,400 --
Class C Common stock, $.01 par value; authorized
4,000,000 shares; issued and outstanding 140,000 shares 1,400 --
Additional Paid in Capital 7,499,016 --
Accumulated Deficit (115,117) (259,160)
Less: Related party note receivable (1,805,675) (1,805,675)
Less: Unearned directors' compensation (276,292) --
------------ ------------
Total shareholders' equity(deficit) 5,317,072 (2,064,834)
------------ ------------
TOTAL $ 20,996,869 $ 2,694,694
============ ============
</TABLE>
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HOST FUNDING, INC
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Lease revenue - related party $ -- $ 311,820 $ 200,512 $ 596,214
Lease revenue - Crossroads 446,914 -- 728,386 --
Interest income - related parties 57,895 36,362 160,045 90,532
Interest income 3,482 -- 6,509 --
F,F & E reserve income - related party -- -- 77,941 --
---------- ---------- ---------- ----------
Total revenue 508,291 348,182 1,173,393 686,746
---------- ---------- ---------- ----------
EXPENSES:
Interest expense 171,531 105,660 332,357 209,808
Depreciation and amortization 61,386 37,033 158,592 74,066
Administrative expenses - related party -- 180,000 224,000 360,000
Administrative expenses - other 89,304 -- 162,459 --
Advisory fees - related party 7,500 -- 13,583 --
Property taxes 31,387 -- 71,403 --
Amortization of unearned directors' compensation 13,500 -- 23,708 --
---------- ---------- ---------- ----------
Total expenses 374,608 322,693 986,102 643,874
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 133,683 25,489 187,291 42,872
PROVISION FOR INCOME TAXES -- 6,373 -- 10,718
---------- ---------- ---------- ----------
NET INCOME $ 133,683 $ 19,116 $ 187,291 $ 32,154
========== ========== ========== ==========
NET INCOME PER SHARE $ 0.09 $ 0.03 $ 0.16 $ 0.05
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,472,049 690,000 1,152,379 690,000
========== ========== ========== ==========
</TABLE>
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HOST FUNDING, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
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<TABLE>
<CAPTION>
Class A Class B Class C Additional
Common Common Common Paid in
Stock Stock Stock Capital
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<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ 1 $ -- $ -- $ --
COMMON STOCK ISSUED IN STOCK OFFERING 5,000 -- -- 4,495,000
COMMON STOCK ISSUED PURSUANT TO
MISSION BAY ACQUISITION AGREEMENT 2,520 -- -- 2,517,970
COMMON STOCK ISSUED TO PARTNERS
OF AAG 4,099 1,400 1,400 (6,899)
COMMON STOCK ISSUED TO INDEPENDENT
DIRECTORS 300 -- -- 299,700
COMMON STOCK ISSUED FOR ACQUIRED
PROPERTIES ACQUISITION FEE 420 -- -- 338,205
RECLASS OF STOCK ISSUANCE COSTS
AGAINST ADDITIONAL PAID IN CAPITAL -- -- -- (64,943)
INCREASE IN STOCK ISSUANCE COSTS -- -- -- (80,017)
AMORTIZATION OF UNEARNED DIRECTORS
COMPENSATION -- -- -- --
ELIMINATION OF DEFERRED INCOME
TAXES FROM CONVERSION TO REIT -- -- -- --
DIVIDENDS -- -- -- --
NET INCOME -- -- -- --
-------- -------- -------- -----------
BALANCE, September 30, 1996 $ 12,340 $ 1,400 $ 1,400 $ 7,499,016
======== ======== ======== ===========
Retained
Earnings Related Unearned Total
Accumulated Party Note Directors' Shareholders'
Deficit) Receivable Compensaton Equity(Deficit)
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<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ (259,160) $(1,805,675) $ -- $(2,064,834)
COMMON STOCK ISSUED IN STOCK OFFERING -- -- -- 4,500,000
COMMON STOCK ISSUED PURSUANT TO
MISSION BAY ACQUISITION AGREEMENT -- -- -- 2,520,490
COMMON STOCK ISSUED TO PARTNERS
OF AAG -- -- -- 0
COMMON STOCK ISSUED TO INDEPENDENT
DIRECTORS -- -- (300,000) 0
COMMON STOCK ISSUED FOR ACQUIRED
PROPERTIES ACQUISITION FEE -- -- -- 338,625
RECLASS OF STOCK ISSUANCE COSTS
AGAINST ADDITIONAL PAID IN CAPITAL 64,943 -- -- 0
INCREASE IN STOCK ISSUANCE COSTS -- -- -- (80,017)
AMORTIZATION OF UNEARNED DIRECTORS
COMPENSATION -- -- 23,708 23,708
ELIMINATION OF DEFERRED INCOME
TAXES FROM CONVERSION TO REIT 163,000 -- -- 163,000
DIVIDENDS (271,191) -- -- (271,191)
NET INCOME 187,291 -- -- 187,291
----------- ----------- ----------- -----------
BALANCE, September 30, 1996 $ (115,117) $(1,805,675) $ (276,292) $ 5,317,072
=========== =========== =========== ===========
</TABLE>
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HOST FUNDING, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
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1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 187,291 $ 32,154
Adjustments to reconcile net income to net cash:
provided by operating activities
Depreciation and amortization 158,592 74,066
Amortization of loan fees 48,873 --
Amortization of unearned directors' compensation 23,708 --
Changes in operating assets and liabilities:
Rent receivable - related party -- (408,088)
Rent receivable - Crossroads (212,005) --
Interest receivable - related party -- (90,532)
Due from related party 140 --
Accounts payable and accrued expenses 136,356 331,085
Income taxes payable -- 10,718
----------------------------
Net cash provided by operating activities 342,955 (50,597)
----------------------------
INVESTING ACTIVITIES:
Acquisition of land, property and equipment (13,803,927) --
Restricted cash (160,722)
Long-term advances to Crossroads (150,000) --
Other assets (115,848) --
----------------------------
Net cash used in investing activities (14,230,497) 0
----------------------------
FINANCING ACTIVITIES:
Borrowings on long-term debt 15,500,000 100,000
Proceeds from common stock issued in Stock Offering 4,500,000 --
Payments on long-term debt and notes payable (4,230,565) (49,403)
Stock issuance costs (402,539) --
Payment of loan fees (693,166)
Dividends paid (271,191) --
----------------------------
Net cash provided by financing activities 14,402,539 50,597
----------------------------
NET CHANGE IN CASH 514,997 0
CASH AT BEGINNING OF PERIOD 500 0
----------------------------
CASH AT END OF PERIOD $ 515,497 $ 0
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for interest $ 352,174 $ 138,723
============================
Cash paid during the period for income taxes $ 0 $ 0
============================
</TABLE>
(Continued)
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HOST FUNDING, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
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1996 1995
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<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION (Continued)
Non-cash investing activities:
Contribution of net assets and liabilities for common stock
and accumulated deficit
Land, property and equipment $ -- $ 2,741,477
Loan commitment fees -- 28,582
Related party note receivable -- 1,805,675
Long-term debt -- (4,215,676)
Common Stock -- (1)
--------------------------
0 360,057
--------------------------
Less: Liabilities and accumulated deficit resulting from
the contribution of net assets and liabilities
Accounts payable stock issuance costs -- (500,000)
Reduction in accounts payable stock issuance costs -- 75,000
Deferred income taxes -- (166,000)
Accumulated deficit -- 305,943
Reduction in stock issuance costs -- (75,000)
--------------------------
0 (360,057)
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
Common stock issued pursuant to Mission Bay
Acquisition Agreement
Land, property and equipment $(2,520,490) $ --
Class A common stock 2,520 --
Additional paid in capital 2,517,970 --
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
Common stock issued to partners of AAG
Class A common stock $ 4,099 $ --
Class B common stock 1,400 --
Class C common stock 1,400 --
Additional paid in capital (6,899) --
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
Common stock issued to independent directors
Class A common stock $ 300 $ --
Additional paid in capital 299,700 --
Unearned directors' compensation (300,000) --
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
Reclass of deferred income taxes and stock issuance
costs due to Stock Offering
Deferred income taxes $ (163,000) $ --
Additional paid in capital (64,943) --
Retained earnings 227,943 --
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
Common stock issued for Acquired Properties
Acquisition Fee
Class A common stock $ 420 $ --
Additional paid in capital 338,205 --
Land, property and equipment (338,625) --
--------------------------
Net non-cash investing activity $ 0 $ 0
==========================
</TABLE>
(Concluded)
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RECENT DEVELOPMENTS
On September 5, 1996, Host Funding, Inc. (the "Registrant" or
"Company" or "Host Funding") formed CrossHost, Inc., a Maryland corporation
("CrossHost"), as a wholly-owned, special purpose subsidiary of the Registrant.
CrossHost was formed at the request of CS First Boston Mortgage Capital Corp.
("First Boston") as a condition to First Boston providing an acquisition and
credit facility (the "Loan Facility") to CrossHost in the amount of
$15,500,000. A significant portion of the proceeds from the Loan Facility was
used by CrossHost to acquire three Sleep Inn Hotels located in Destin,
Sarasota, and Tallahassee, Florida from Capital Circle Hotel Company ("Capital
Circle") and one Sleep Inn Hotel located in Ocean Springs, Mississippi from
Ocean Springs Hotel Company ("Ocean Springs") (collectively, the "Acquired
Properties"). The effective closing dates for the purchase of the Acquired
Properties from Capital Circle and Ocean Springs were September 13, 1996 and
September 19, 1996, respectively. Effective as of the closing dates of the
respective Acquired Properties, CrossHost also (i) leased each of the Acquired
Properties to Crossroads Hospitality Tenant Company, L.L.C., a Delaware limited
liability company ("Crossroads"), by separate Lease Agreements (the "Acquired
Property Leases") and (ii) entered into a Master Agreement with Crossroads and
Crossroads Hospitality Company, L.L.C., a Delaware limited liability company
("Crossroads Hospitality") (a subsidiary of Interstate Hotels, Inc, a Delaware
Corporation, and parent company of Crossroads), relating to the Acquired
Property Leases. None of Capital Circle, Ocean Springs, Crossroads, or
Crossroads Hospitality is an affiliate of the Registrant or CrossHost.
The Acquired Properties were acquired pursuant to the terms of a
Post-Formation Acquisition Agreement
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dated April 22, 1996, amended by a First Amendment to Post-Formation
Acquisition Agreement dated June 12, 1996 (as amended, the "Acquisition
Agreement") by and between the Registrant and HMR Capital, LLC (f\k\a Host
Acquisition Group, LLC) (the "Acquisition Company"). The Acquisition Company
is an affiliate of Mr. Michael S. McNulty, a director and president of each of
the Registrant and CrossHost, and Mr. Ian Gardner-Smith, a director and officer
of CrossHost. Under the terms of the Acquisition Agreement, the Acquisition
Company is responsible for the management, coordination, and supervision of the
Registrant's acquisition of additional hotel properties. The Acquisition
Company sought out the Acquired Properties and negotiated the terms of the
acquisition. Management and the board of directors of each of the Registrant
and CrossHost (including all independent directors) approved the purchase of
the Acquired Properties.
Pursuant to the terms of the Acquisition Agreement, the Acquisition
Company is entitled to receive an acquisition fee of up to 6% of the gross
purchase price of the Acquired Properties plus reimbursement of certain
expenses (the "Acquired Properties Acquisition Fee"). The Acquired Properties
Acquisition Fee is payable in cash or, at the option of the Acquisition
Company, in the Class A Common Stock of the Registrant. The Registrant and the
Acquisition Company agreed that the Acquired Properties Acquisition Fee earned
by the Acquisition Company relating to the Acquired Properties was 42,000
shares of the Class A Common Stock of the Registrant valued at $10 per share
and payable as of September 19, 1996 (the Ocean Springs closing date). The
shares of Class A Common Stock received by the Acquisition Company in payment
of the Acquired Properties Acquisition Fee will be restricted securities under
the Securities Act of 1933 and subject to the resale provisions of Rule 144
promulgated under the Act. The last traded price of the stock of the
Registrant on the American Stock Exchange on September 19, 1996 was $8.0625 per
share. The Registrant has recorded the Acquired Properties Acquisition Fee on
the Acquired Properties at the fair market value of the Class A Common Stock on
September 19, 1996. The Acquired Properties Acquisition Fee (based upon a
value of $10 and $8.0625
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per share or $420,000 and $338,625, respectively) represents approximately 3.2%
and 2.5%, respectively, of the gross purchase price totaling $13,285,000
excluding closing expenses of the Acquired Properties.
As a further condition to obtaining the Loan Facility, First Boston
required the Registrant to transfer to CrossHost the five Super 8 hotel
properties owned by the Registrant. The five hotels represent all of the
hotels owned by the Registrant and are located in Somerset, Kentucky; Rock
Falls, Illinois; San Diego, California; Miner, Missouri; and Poplar Bluff,
Missouri (collectively, the "Transferred Properties"). Simultaneously with the
acquisition of the Acquired Properties located in Florida by CrossHost, the
Registrant deeded the Transferred Properties to CrossHost in a tax free
reorganization. In addition, the Registrant assigned to CrossHost the Lease
Agreements and related Master Agreement pertaining to each of the Transferred
Properties.
The Registrant makes reference to Forms 8-K and 8-KA filed on September 30,
1996 and November 8, 1996 respectively, which include additional information
with regard to the transactions described above and which should be read in
accordance herewith.
The Company declared a cash dividend of $0.2375 per share to
stockholders of record November 1, 1996, payable November 15, 1996.
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RESULTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995:
The Company did not acquire any assets until April 1, 1995. On that
date the four Super 8 hotels located in Miner, Missouri; Poplar Bluff,
Missouri; Rock Falls, Illinois; and Somerset, Kentucky were acquired by the
Company which are collectively referred to as the "Initial Hotels". Further,
on April 22, 1996, the Company completed an initial public stock offering of
500,000 common shares that raised net cash proceeds totaling $4,500,000 (the
"Stock Offering"), and the Registrant acquired the assets of Mission Bay Super
8, Ltd., a California limited partnership ("Mission Bay"), the owner of a 117
room Super 8 Motel (the "Acquisition Hotel") located in San Diego, California,
pursuant to an asset acquisition agreement. In addition, as described above,
on September 13, 1996 and September 19, 1996 the Registrant completed the
transaction resulting in the acquisition of the Acquired Properties.
Therefore, comparisons of results of operations to the corresponding period of
the previous year cannot be made.
Occupancy and average room rates of 80% and $37.01 for the four
Initial Hotels for the nine months ended September 30, 1996, occupancy and
average room rates of 73% and $47.85 for the Acquisition Hotel (Mission Bay)
from April 22 to September 30, 1996 and occupancy and average room rates of 56%
and $42.75 for the four Acquired Properties for the period September 14 to 30,
1996 resulted in total sales including room of approximately $2,290,000, which
generated lease revenues of $200,512 due from Inn Fund, LLC, a Delaware limited
liability Company ("Inn Fund\Old Lessee") and $728,386 due from Crossroads for
the nine months ended September 30, 1996.
Interest income from a note received from All American Group, Ltd., a
Delaware limited partnership ("AAG"), the principal shareholder of the
Registrant, (the "Related Party Note"), which is included in Interest income -
related parties, totaled $150,768 for the nine months ended September 30, 1996,
which interest rate was at 10% until April 22, 1996, at which time it changed
to 12% pursuant to the terms of the note. Interest income
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<PAGE> 13
from the notes with the independent directors, which income is included in
Interest income - related parties, totaled $9,277 for the period ending
September 30, 1996.
Based upon an accounting of Furniture, Fixtures and Equipment reserve
expenditures made by Inn Fund\Old Lessee to April 22, 1996, Inn Fund\Old Lessee
owed $77,941 to Host Funding, which has been included in revenue. This amount
has been offset against an approximately equal net amount owed by Host Funding
to affiliates of Mr. Guy E. Hatfield, a director and affiliate of the Company
and member of Inn Fund\Old Lessee, through April 22, 1996.
Interest expense incurred for the period January 1 to September 30,
1996 was a result of interest expense and loan fee amortization expense on
long and short-term debt and notes payable resulting from the acquisition of
the Initial Hotels in April 1995 and the execution of the Loan Facility in
September 1996. In April 1996, long-term debt and notes payable for three of
the Initial Hotels were paid off from proceeds from the Stock Offering in the
amount of $3,190,000. On September 13, 1996, the Registrant borrowed
$15,500,000 from the Loan Facility and paid off the remaining Initial Hotels
debt of approximately $980,000 (see Recent Developments and Liquidity and
Capital Resources). Interest expense for the nine months ended September 30,
1996 totaled $332,357, including $48,873 of loan fee amortization.
Depreciation expense, which is included in depreciation and
amortization, is calculated based upon the original historical cost of the
Initial Hotels and the acquisition value of the Acquisition Hotel (Mission Bay)
and the Acquired Properties over their estimated useful lives, totaled $158,342
for the nine months ended September 30, 1996. Franchise fee amortization,
which is included in depreciation and amortization, is calculated based upon
the original cost amortized over the life of the franchise agreement, which
totaled $250 for the nine months
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<PAGE> 14
ended September 30, 1996.
Administrative expenses - related party totaling $60,000 per month,
including $44,000 for April 1996, were due under a consulting agreement (the
"Related Party Consulting Agreement") to AAG. The Related Party Consulting
Agreement was terminated upon consummation of the Stock Offering on April 22,
1996. These fees are non-recurring.
Administrative expenditures - other for the nine months ended
September 30, 1996 include the 1995 audit fees of approximately $21,000,
regular legal and accounting fees, which amounts are greater that will be
expected in future quarters due to start-up costs, totaling approximately
$79,000, stock transfer fees totaling approximately $25,000, and other
administrative expenses totaling approximately $37,000. Of these expenditures,
approximately $60,000 are non-recurring administrative expenses on an
annualized basis.
Advisory fees - related party are due under an Advisory Agreement with
Host Funding Advisors, Inc., a Delaware corporation ( the "Advisor") entered
into upon the close of the Stock Offering. In consideration for such services,
Host Funding will compensate the Advisor in the amount of $30,000 per year.
Effective January 1, 1996, the Company became responsible for property
taxes under the Percentage Leases for the Initial Hotels. In addition, the
Registrant is responsible for property taxes on the Acquisition Hotel and the
Acquired Properties. Property tax expense, based upon local taxing
authorities' assessment of the values of the Registrants real and personal
property owned times the statutory rates in effect in the respective tax
districts, totaled $71,403 for the nine months ended September 30, 1996.
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Amortization of unearned directors' compensation has been calculated
based upon the terms of the independent directors notes.
Net income per share and weighted average shares outstanding have been
calculated based upon the daily average of the number of shares outstanding
upon completion of the Stock Offering, the Mission Bay acquisition and those
shares issued to the independent directors which date was April 22, 1996, plus
the shares issued to the Acquisition Company on September 19, 1996 added to the
AAG shares outstanding upon completion of the Stock Offering, which shares of
AAG are considered to have been outstanding from the date of formation of Host
Funding.
LIQUIDITY AND CAPITAL RESOURCES
As described above in Recent Developments, CrossHost entered into a
Loan Facility with First Boston in the amount of $15,500,000 on September 13,
1996. CrossHost immediately borrowed the entire funds available under the Loan
Facility. The Loan Facility is payable interest only, monthly, at the LIBOR
Rate plus 304.5 basis points (LIBOR Rate was 5.44% as of September 30, 1996),
with a maturity date of October 1, 1997 at which time all unpaid interest plus
principal are due. In addition, the Loan Facility, as a result of an
engineering inspection, requires certain immediate capital expenditures that
have been reserved from loan proceeds. Further, the Loan Facility requires
escrows to be reserved for property taxes and capital expenditures.
From the proceeds of the Loan Facility, CrossHost paid approximately
$9,730,000 in cash to Capital Circle and approximately $3,555,000 in cash to
Ocean Springs as consideration for the Acquired Properties plus
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<PAGE> 16
closing expenses on the Acquired Properties in the approximate amount of
$229,000. In addition, CrossHost used approximately $980,000 of the loan
proceeds to pay in full the mortgage relating to the hotel property located in
Rock Falls, Illinois. Further, proceeds from the Loan Facility were used by
the Registrant and CrossHost for loan origination costs and other expenses
relating to the acquisition of the Acquired Properties and the financing of the
Transferred Properties in the approximate amount totaling $693,000, including
related party loan fees of $232,500 and expense reimbursements of $20,000,
which amount will be amortized over the term of the Loan Facility. In
addition, CrossHost used approximately $60,000 of proceeds from the Loan
Facility to acquire a ten (10) year Sleep Inn franchise with Choice Hotels,
Inc, a nationally recognized hotel franchisor. Additional proceeds for the
Loan Facility were escrowed in restricted cash accounts required under the Loan
Facility to be used to pay property taxes in the approximate amount of $99,000
and for capital improvements in the approximate amount of $62,000. The
remaining proceeds from the Loan Facility in the approximate amount of $92,000
are expected to be used for long-term advances due Crossroads under the
Acquired Property Leases (see below) or capital expenditures relating to the
Acquired Properties and the Transferred Properties or for working capital
purposes. The Loan Facility is secured by liens on substantially all of the
assets of CrossHost, including the Acquired Properties and the Transferred
Properties.
The term each of of the Acquired Property Leases is for a period of
fifteen (15) years from the date of acquisition of each property (the
"Commencement Date"). The Acquired Properties Leases have combined total
annual base rentals of $1,417,500, plus percentage rentals ranging from 30% to
35% of year to date revenues less varying breakeven thresholds adjusted
annually by defined percentages for each hotel. Rentals due CrossHost from
Crossroads from the Commencement Date of the Acquired Property Leases until
December 31, 1996 require only defined base rents. During the first four years
after the Commencement Date, Crossroads will be entitled to accumulate a credit
of 50% of base rent paid in excess of hotel cash flow, if any, as defined in
the
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<PAGE> 17
Acquired Property Leases, for each of the Acquired Properties which may be
applied towards future percentage rentals that may be due (the "Negative Base
Rent"). Should no future percentage rental be due under the Acquired Property
Leases during the lease terms, the Negative Base Rent will expire. No Negative
Base Rent credit was outstanding as of September 30, 1996. The Acquired
Property Leases generally require Crossroads to pay all operating expenses of
the properties, including maintenance and insurance, while CrossHost is
responsible for property taxes. In addition, CrossHost is required to set
aside in a replacement reserve an amount equal to 4% of gross room revenue
during years one (1) to four (4) and 6% of gross room revenue during years five
(5) and thereafter, to be used for capital expenditures which generally must be
jointly approved by CrossHost and Crossroads. Further, should CrossHost decide
to sell any of the properties leased to Crossroads under the Acquired Property
Leases, Crossroads will be provided a 30 day right of first refusal to purchase
such property at the price offered CrossHost by the third party. If Crossroads
elects not to exercise its right of first refusal to acquire the properties and
should CrossHost elect to terminate the lease, upon the consent of CrossHost,
Crossroads and the buyer, Crossroads may be entitled to some portion of the
sale proceeds based on a formula as provided in the applicable Acquired
Property Lease. In Addition, CrossHost is required to provide a long-term
advance of $30,000 per Acquired Property to Crossroads, subject to proration
adjustments, to be used for working capital purposes which is due back to
CrossHost at the end of the term of each Acquired Property Lease. As of
September 30, 1996 CrossHost had not funded the long-term advances required
under the Acquired Property Leases.
As described in Recent Developments, the Transferred Properties lease agreements
with Crossroads were transferred to CrossHost on September 13, 1996 and amended
on October 1, 1996 (the "Amended Transferred Property Leases"). The Amended
Transferred Property Leases annual base rentals, effective after December 31,
1996, were increased $183,700 to $1,213,800. The annual base rentals are
subject to possible additional increases annually beginning in
-15-
<PAGE> 18
calendar year 1998 and thereafter throughout the term of the Amended Transferred
Property Leases based upon increases in average room rates, as defined in the
Amended Transferred Property Leases, while percentage rentals due remained
unchanged. Concurrent with the change in base rent due for each Amended
Transferred Property Lease, the requirement for Crossroads to set aside in a
replacement reserve $125 per room, per quarter, increased annually by inflation
factors, was terminated. CrossHost is now required, under the Amended
Transferred Property Leases effective October 1, 1996, to fund into a
replacement reserve an amount equal to six percent (6%) of gross room revenue
for the proceeding month, which amount to be expended for capital expenditures
will require joint approval of CrossHost and Crossroads. All remaining
significant terms of the Amended Transferred Property Leases remained the same,
except as described above.
The Registrant has no committed additional sources of external
liquidity available, therefore the Company will rely on its internal cash flow
to meet its liquidity needs. The Company's principal source of cash to meet
its cash requirements, including distributions to Shareholders, is its share of
the Company's cash flow from the Percentage Leases and interest income from the
Related Party Note. Although, the obligations of Crossroads, as lessee, under
the Percentage Leases are guaranteed in part by Crossroads Hospitality, the
ability of Crossroads to make lease payments under the Percentage Leases, and
therefore the Company's liquidity, including its ability to make distributions
to shareholders, is dependent on the ability of Crossroads to generate
sufficient cash flow from the Hotels.
The Company has expended $402,539 of stock issuance costs through
September 30, 1996 as a result of the completion of the Stock Offering and
acquisition of Mission Bay. Included on the balance sheet in Accounts payable
- -stock issuance costs are an additional $2,478. Prior to the completion of
the Stock Offering and Mission Bay acquisition, the Company had expended
$100,000. Therefore, the stock issuance costs to
-16-
<PAGE> 19
complete the Stock Offering and Mission Bay acquisition totaled approximately
$505,000, or approximately $80,000 more than originally contemplated.
Other than debt service on the Loan Facility, the capital expenditures
required under the Transferred or Acquired Properties leases with Crossroads or
capital expenditures required under the Loan Facility, property taxes on the
Registrants hotels,the long-term advances due Crossroads under the Acquired
Property Leases, and the Internal Revenue Service tax requirements (the "Code")
to make distributions to shareholders to maintain the Company's REIT status,
the Company is not aware of any demands, commitments, events or uncertainties
that will result or are likely to result in a change in the Company's
liquidity.
The Company intends to make additional investments in hotel properties and may
incur indebtedness to make such investments or to meet distribution
requirements imposed on a REIT under the Code to the extent that working
capital and cash flow from the Company's investments are insufficient to make
such distributions. The Company will invest in additional hotel properties
only as suitable opportunities arise, and the Company will not undertake
investments unless adequate sources of financing are available. Based upon
REIT distribution requirements, the Company expects that future investments in
hotel properties will be financed, in whole or in part, with common stock,
proceeds from additional issuances of common stock, or from the issuance of
other debt or equity securities. The Company in the future may seek to obtain
a line of credit or a permanent credit facility, negotiate additional credit
facilities, or issue corporate debt instruments, all in compliance with its
charter restrictions. Any debt incurred or issued by the Company may be
secured or unsecured, long-term or short-term, charge a fixed or variable
interest rate and may be subject to such other terms as the Board of Directors
of the Company deems prudent.
-17-
<PAGE> 20
INFLATION
Operators of hotels, in general, possess the ability to adjust room
rates quickly. Competitive pressures may, however, limit the ability of the
lessee to raise room rates in the face of inflation.
SEASONALITY
The Registrant's hotel operations are generally seasonal in nature
based upon geographic locations. This seasonality can be expected to cause
fluctuations in the Company's quarterly lease revenue to the extent that is
receives Percentage Rent. It is presently anticipated that the Company's cash
flow from operation of the hotels is sufficient to enable it to make
distributions at the estimated initial rate. To the extent that cash flow form
operations is insufficient during any quarter, due to temporary or seasonal
fluctuations in lease revenue, the Company expects to utilize other cash on
hand or borrowings to make such distributions. No assurance can be given,
however, that the Company will make distributions in the future at the
initially estimated rate, or at all.
-18-
<PAGE> 21
PART II-OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit Number Description
- -------------- -----------
3.1 Amended and Restated Charter of the Registrant (incorporated
by reference to Exhibit 3.1 to Registrant's Amendment No. 8 to
Form S-11 effective April 17, 1996).
3.2 Amended and Restated By-Laws of the Registrant (incorporated
by reference to Exhibit 3.2 to Registrant's Amendment No. 8 to
Form S-11 effective April 17, 1996).
4.1 Form of Share Certificate (incorporated by reference to
Exhibit 4.1 to Registrant's Amendment No. 8 to Form S-11
effective April 17, 1996).
10.1 Contract of Purchase and Sale dated effective as of May 24,
1996 by and between Capital Circle Hotel Company, as Seller,
and Host Funding, Inc. as Purchaser (incorporated by reference
to Exhibit 10.1 to Registrant's Form 10-Q filed August 14,
1996).
10.2 Amendment to Contract of Purchase and Sale dated effective as
of July 3, 1996 by and between Capital Circle Hotel Company,
as Seller, and Host Funding, Inc., as Purchaser (incorporated
by reference to Exhibit to 10.2 to Registrant's Form 10-Q
filed August 14, 1996).
10.3 Second Amendment to Contract of Purchase and Sale dated
effective as of August 14, 1996 by and between Capital Circle
Hotel Company, as Seller, and Host Funding, Inc., as Purchaser
(incorporated by reference to Exhibit 10.3 to Registrant's
Form 8-K filed September 30, 1996).
10.4 Third Amendment to Contract of Purchase and Sale dated
effective as of September 5, 1996 by and between Capital
Circle Hotel Company, as Seller, and Host Funding, Inc., as
Purchaser (incorporated by reference to Exhibit 10.4 to
Registrant's Form 8-K filed September 30, 1996).
10.5 Contract of Purchase and Sale dated effective as of May 24,
1996 by and between Ocean Springs Hotel Company, as Seller,
and Host Funding, Inc., as Purchaser (incorporated by
reference to Exhibit 10.3 to Registrant's Form 10-Q filed
August 14, 1996).
10.6 Amendment to Contract of Purchase and Sale dated effective as
of July 3,1996 by and between Ocean Springs Hotel Company, as
Seller, and Host Funding, Inc., as Purchaser (incorporated by
reference to Exhibit 10.4 to Registrant's Form 10-Q filed
August 14, 1996).
10.7 Second Amendment to Contract of Purchase and Sale dated
effective as of August 14, 1996 by and between Ocean Springs
Hotel Company, as Seller,
-19-
<PAGE> 22
and Host Funding, Inc., as Purchaser (incorporated by
reference to Exhibit 10.7 to Registrant's Form 8-K filed
September 30, 1996).
10.8 Third Amendment to Contract of Purchase and Sale dated
effective as of September 5, 1996 by and between Ocean Springs
Hotel Company, as Seller, and Host Funding, Inc., as Purchaser
(incorporated by reference to Exhibit 10.8 filed September 30,
1996).
10.9 Assignment of Contract of Purchase and Sale dated effective as
of September 13, 1996 by and between Host Funding, Inc., as
Assignor, and CrossHost, Inc., as Assignee (Capital Circle)
(incorporated by reference to Exhibit 10.9 to Registrant's
Form 8-K filed on September 30, 1996).
10.10 Assignment of Contract of Purchase and Sale dated effective as
of September 13, 1996 by and between Host Funding, Inc., as
Assignor, and CrossHost, Inc., as Assignee (Ocean Springs)
(incorporated by reference to Exhibit 10.10 to Registrant's
Form 8-K filed on September 30, 1996).
10.11 Promissory Note dated September 13, 1996 from CrossHost, Inc.,
as Maker, and CS First Boston Mortgage Capital Corp., as
Payee (incorporated by reference to Exhibit 10.11 to
Registrant's Form 8-K filed on September 30, 1996).
10.12 Mortgage and Security Agreement dated as of September 13, 1996
by and between CrossHost, Inc., as Mortgagor, and CS First
Boston Mortgage Capital Corp., as Mortgagee (Destin,
Florida). Mortgagor executed a separate Mortgage Agreement for
each of the other Acquired Properties and the Transferred
Properties located in the States of Florida, Kentucky and
Illinois. The Mortgage Agreements are substantially similar
except for the remedy provisions required under the laws of
the state in which the hotel property is located in the event
of a default by the Mortgagor (incorporated by reference to
Exhibit 10.12 to Registrant's Form 8-K filed on September 30,
1996).
10.13 Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing dated as of September 13, 1996
by and between CrossHost, Inc., as Grantor, and CS First
Boston Mortgage Capital Corp., as Beneficiary (Ocean Springs,
Mississippi). Grantor executed a separate Deed of Trust for
each of the Transferred Properties located in the States of
California and Missouri. The Deeds of Trust are substantially
similar except for the remedy provisions required under the
laws of the state in which the hotel property is located in
the event of a default by the Grantor (incorporated by
reference to Exhibit 10.13 to Registrant's Form 8-K filed on
September 30, 1996).
-20-
<PAGE> 23
10.14 Lease Agreement dated September 6, 1996 by and between
CrossHost, Inc., as Lessor, and Crossroads Hospitality Tenant
Company, L.L.C., as Lessee (Ocean Springs, Mississippi).
Lessor entered into a similar Lease Agreement for each of the
Acquired Properties located in the State of
Florida.(incorporated by reference to Exhibit 10.14 to
Registrant's Form 8-K filed on September 30, 1996).
10.15 Exhibits to Lease Agreement dated September 6, 1996 by and
between CrossHost, Inc., as Lessor, and Crossroads
Hospitality Tenant Company, L.L.C., as Lessee (Destin,
Florida) (incorporated by reference to Exhibit 10.15 to
Registrant's Form 8-K filed on September 30, 1996)
10.16 Exhibits to Lease Agreement dated September 6, 1996 by and
between Cross Host, Inc., as Lessor, and Crossroads
Hospitality Tenant Company, L.L.C., as Lessee (Sarasota,
Florida) (incorporated by reference to Exhibit 10.16 to
Registrant's Form 8-K filed on September 30, 1996).
10.17 Exhibits to Lease Agreement dated September 6, 1996 by and
between CrossHost, Inc., as Lessor, and Crossroads
Hospitality Tenant Company, L.L.C., as Lessee (Tallahassee,
Florida) (incorporated by reference to Exhibit 10.17 to
Registrant's Form 8-K filed on September 30, 1996).
10.18 Master Agreement dated September 13, 1996 by and among
CrossHost, Inc. and Crossroads Hospitality Tenant Company,
L.L.C., and Crossroads Hospitality Company, L.L.C.
(incorporated by reference to Exhibit 10.18 to Registrant's
Form 8-K filed on September 30, 1996).
10.19 Form of Percentage Leases (Super 8 Hotels) (incorporated by
reference to Exhibit 10.1 to Registrant's Amendment No. 8 to
Form S-11 effective April 17, 1996) (incorporated by
reference to Exhibit 10.19 to Registrant's Form 8-K file on
September 30, 1996).
10.20 Assignment and Assumption of Lease Agreement dated as of
September 30, 1996 by and between Host Funding, Inc., as
Assignor, and CrossHost, Inc., as Assignee (Rock Falls,
Illinois). An identical Assignment and Assumption Agreement
was executed by Assignor and Assignee for each of the
Transferred Properties (incorporated by reference to Exhibit
10.20 to Registrant's Form 8-K filed on September 30, 1996).
10.21 Master Agreement dated as of April 1, 1996 by and among Host
Funding, Inc. and Crossroads Hospitality Tenant Company,
L.L.C., and Crossroads Hospitality Company, L.L.C. (Super 8
Hotels) (incorporated by reference to Exhibit 10.2 to
Registrant's Amendment No. 8 to Form S-11 effective April 17,
1996).
10.22 Assignment and Assumption of Master Agreement dated as of
September 13, 1996 by and between Host Funding, Inc., as
Assignor, and CrossHost, Inc., as Assignee (Super 8 Hotels)
(incorporated by reference to Exhibit 10.22 to Registrant's
Form 8-K filed on September 30, 1996).
10.23 Post-Formation Acquisition Agreement dated April 22, 1996 by
and between Host Funding, Inc. and Host Acquisition Group,
LLC(incorporated by reference to Exhibit 10.10 to Registrant's
Amendment No.8 to Form S-11 effective April 17, 1996).
10.24 First Amendment to Post-Formation Acquisition Agreement dated
Effective June 12, 1996 by and between Host Funding, Inc. and
Host Acquisition Group, LLC (incorporated by reference to
Exhibit 10.8 to Registrant's Form 10-Q filed August 14,
1996).
10.25 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Poplar Bluff, Missouri) (incorporated by
reference to Exhibit 10.1 to Registrant's Form 8-K/A filed November
8, 1996.
10.26 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (RockFalls, Illinois) (incorporated by
reference to Exhibit 10.2 to Registrant's Form 8-K/A filed November
8, 1996.
10.27 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Somerset, Kentucky) (incorporated by
reference to Exhibit 10.3 to Registrant's Form 8-K/A filed November
8, 1996.
10.28 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Miner, Missouri) (incorporated by reference
to Exhibit 10.4 to Registrant's Form 8-K/A filed November 8, 1996.
10.29 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (San Diego, California) (incorporated by
reference to Exhibit 10.5 to Registrant's Form 8-K/A filed November
8, 1996.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
The Registrant filed Reports on Form 8-K and Form 8K\A on September 30, 1996
and November 8, 1996, respectively. The Reports related to (i) the acquisition
by CrossHost, Inc., a wholly-owned subsidiary of the Registrant ("CrossHost"),
of four Sleep Inn hotel properties located in the states of Florida and
Mississippi (the "Acquired Properties") and (ii) the transfer of five Super 8
Hotels owned by the Registrant to CrossHost in a tax-free exchange. The
Registrant did not file any financial statements in connection with the Form 8-K
filing. The Registrant filed the financial statements of the Acquired Properties
required by Rule 3-14 of Regulation S-X and the pro forma condensed financial
statements of the Registrant in accordance with Article 11 of Regulation S-X in
connection with the 8K-A filing.
-21-
<PAGE> 24
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 and in the capacity as the Registrant's
Chief Financial and Accounting Officer.
Dated: November 12, 1996 HOST FUNDING, INC.
/s/ Michael S. McNulty
--------------------------------------
By: Michael S. McNulty
Its: President
Chief Executive Officer
Chief Financial and Accounting
Officer
-22-
<PAGE> 25
INDEX TO EXHIBITS
3.1 Amended and Restated Charter of the Registrant (incorporated by
reference to Exhibit 3.1 to Registrant's Amendment No. 8 to Form S-11
effective April 17, 1996).
3.2 Amended and Restated By-Laws of the Registrant (incorporated by
reference to Exhibit 3.2 to Registrant's Amendment No. 8 to Form S-11
effective April 17, 1996).
4.1 Form of Share Certificate (incorporated by reference to Exhibit 4.1 to
Registrant's Amendment No. 8 to Form S-11 effective April 17, 1996).
10.1 Contract of Purchase and Sale dated effective as of May 24, 1996 by and
between Capital Circle Hotel Company, as Seller, and Host Funding, Inc.
as Purchaser (incorporated by reference to Exhibit 10.1 to Registrant's
Form 10-Q filed August 14, 1996).
10.2 Amendment to Contract of Purchase and Sale dated effective as of July
3, 1996 by and between Capital Circle Hotel Company, as Seller, and
Host Funding, Inc., as Purchaser (incorporated by reference to Exhibit
to 10.2 to Registrant's Form 10-Q filed August 14, 1996).
10.3 Second Amendment to Contract of Purchase and Sale dated effective as of
August 14, 1996 by and between Capital Circle Hotel Company, as Seller,
and Host Funding, Inc., as Purchaser (incorporated by reference to
Exhibit 10.3 to Registrant's Form 8-K filed September 30, 1996).
10.4 Third Amendment to Contract of Purchase and Sale dated effective as of
September 5, 1996 by and between Capital Circle Hotel Company, as
Seller, and Host Funding, Inc., as Purchaser (incorporated by reference
to Exhibit 10.4 to Registrant's Form 8-K filed September 30, 1996).
10.5 Contract of Purchase and Sale dated effective as of May 24, 1996 by and
between Ocean Springs Hotel Company, as Seller, and Host Funding,
Inc., as Purchaser (incorporated by reference to Exhibit 10.3 to
Registrant's Form 10-Q filed August 14, 1996).
10.6 Amendment to Contract of Purchase and Sale dated effective as of July
3, 1996 by and between Ocean Springs Hotel Company, as Seller, and
Host Funding, Inc., as Purchaser (incorporated by reference to Exhibit
10.4 to Registrant's Form 10-Q filed August 14, 1996).
10.7 Second Amendment to Contract of Purchase and Sale dated effective as of
August 14, 1996 by and between Ocean Springs Hotel Company, as Seller,
<PAGE> 26
and Host Funding, Inc., as Purchaser (incorporated by reference to
Exhibit 10.7 to Registrant's Form 8-K filed September 30, 1996).
10.8 Third Amendment to Contract of Purchase and Sale dated effective as of
September 5, 1996 by and between Ocean Springs Hotel Company, as
Seller, and Host Funding, Inc., as Purchaser (incorporated by reference
to Exhibit 10.8 filed September 30, 1996).
10.9 Assignment of Contract of Purchase and Sale dated effective as of
September 13, 1996 by and between Host Funding, Inc., as Assignor, and
CrossHost, Inc., as Assignee (Capital Circle)(incorporated by reference
to Exhibit 10.9 to Registrant's Form 8-K filed on September 30, 1996).
10.10 Assignment of Contract of Purchase and Sale dated effective as of
September 13, 1996 by and between Host Funding, Inc., as Assignor, and
CrossHost, Inc., as Assignee (Ocean Springs)(incorporated by reference
to Exhibit 10.10 to Registrant's Form 8-K filed on September 30,
1996).
10.11 Promissory Note dated September 13, 1996 from CrossHost, Inc., as
Maker, and CS First Boston Mortgage Capital Corp., as Payee
(incorporated by reference to Exhibit 10.11 to Registrant's Form 8-K
filed on September 30, 1996).
10.12 Mortgage and Security Agreement dated as of September 13, 1996 by and
between CrossHost, Inc., as Mortgagor, and CS First Boston Mortgage
Capital Corp., as Mortgagee (Destin, Florida). Mortgagor executed a
separate Mortgage Agreement for each of the other Acquired Properties
and the Transferred Properties located in the States of Florida,
Kentucky and Illinois. The Mortgage Agreements are substantially
similar except for the remedy provisions required under the laws of
the state in which the hotel property is located in the event of a
default by the Mortgagor (incorporated by reference to Exhibit 10.12
to Registrant's Form 8-K filed on September 30, 1996).
10.13 Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing dated as of September 13, 1996 by and between CrossHost,
Inc., as Grantor, and CS First Boston Mortgage Capital Corp., as
Beneficiary (Ocean Springs, Mississippi). Grantor executed a separate
Deed of Trust for each of the Transferred Properties located in the
States of California and Missouri.The Deeds of Trust are substantially
similar except for the remedy provisions required under the laws of
the state in which the hotel property is located in the event of a
default by the Grantor(incorporated by reference to Exhibit 10.13 to
Registrant's Form 8-K filed on September 30, 1996).
<PAGE> 27
10.14 Lease Agreement dated September 6, 1996 by and between CrossHost, Inc.,
as Lessor, and Crossroads Hospitality Tenant Company,L.L.C., as Lessee
(Ocean Springs, Mississippi). Lessor entered into a similar Lease
Agreement for each of the Acquired Properties located in the State of
Florida.(incorporated by reference to Exhibit 10.14 to Registrant's
Form 8-K filed on September 30, 1996).
10.15 Exhibits to Lease Agreement dated September 6, 1996 by and between
CrossHost, Inc., as Lessor, and Crossroads Hospitality Tenant Company,
L.L.C., as Lessee (Destin, Florida) (incorporated by reference to
Exhibit 10.15 to Registrant's Form 8-K filed on September 30, 1996).
10.16 Exhibits to Lease Agreement dated September 6, 1996 by and between
Cross Host, Inc., as Lessor, and Crossroads Hospitality Tenant Company,
L.L.C., as Lessee (Sarasota, Florida) (incorporated by reference to
Exhibit 10.16 to Registrant's Form 8-K filed on September 30, 1996).
10.17 Exhibits to Lease Agreement dated September 6, 1996 by and between
CrossHost, Inc., as Lessor, and Crossroads Hospitality Tenant Company,
L.L.C., as Lessee (Tallahassee, Florida) (incorporated by reference to
Exhibit 10.17 to Registrant's Form 8-K filed on September 30, 1996).
10.18 Master Agreement dated September 13, 1996 by and among CrossHost, Inc.
and Crossroads Hospitality Tenant Company, L.L.C., and Crossroads
Hospitality Company, L.L.C.(incorporated by reference to Exhibit 10.18
to Registrant's Form 8-K filed on September 30, 1996).
10.19 Form of Percentage Leases (Super 8 Hotels) (incorporated by reference
to Exhibit 10.1 to Registrant's Amendment No. 8 to Form S-11 effective
April 17, 1996) (incorporated by reference to Exhibit 10.19 to
Registrant's Form 8-K file on September 30, 1996).
10.20 Assignment and Assumption of Lease Agreement dated as of September 30,
1996 by and between Host Funding, Inc., as Assignor, and CrossHost,
Inc., as Assignee (Rock Falls, Illinois). An identical Assignment and
Assumption Agreement was executed by Assignor and Assignee for each of
the Transferred Properties (incorporated by reference to Exhibit 10.20
to Registrant's Form 8-K filed on September 30, 1996).
10.21 Master Agreement dated as of April 1, 1996 by and among Host Funding,
Inc. and Crossroads Hospitality Tenant Company, L.L.C., and Crossroads
Hospitality Company, L.L.C. (Super 8 Hotels) (incorporated by reference
to Exhibit 10.2 to Registrant's Amendment No. 8 to Form S-11 effective
April 17, 1996).
10.22 Assignment and Assumption of Master Agreement dated as of September
13, 1996 by and between Host Funding, Inc., as Assignor, and CrossHost,
Inc., as Assignee (Super 8 Hotels) (incorporated by reference to
Exhibit 10.22 to Registrant's Form 8-K filed on September 30, 1996).
<PAGE> 28
10.23 Post-Formation Acquisition Agreement dated April 22, 1996 by and
between Host Funding, Inc. and Host Acquisition Group, LLC
(incorporated by reference to Exhibit 10.10 to Registrant's
Amendment No.8 to Form S-11 effective April 17, 1996).
10.24 First Amendment to Post-Formation Acquisition Agreement dated
Effective June 12, 1996 by and between Host Funding, Inc. and Host
Acquisition Group, LLC (incorporated by reference to Exhibit 10.8 to
Registrant's Form 10-Q filed August 14, 1996).
10.25 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Poplar Bluff, Missouri) (incorporated by
reference to Exhibit 10.1 to Registrant's Form 8-K/A filed November
8, 1996.
10.26 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (RockFalls, Illinois) (incorporated by
reference to Exhibit 10.2 to Registrant's Form 8-K/A filed November
8, 1996.
10.27 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Somerset, Kentucky) (incorporated by
reference to Exhibit 10.3 to Registrant's Form 8-K/A filed November
8, 1996.
10.28 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (Miner, Missouri) (incorporated by reference
to Exhibit 10.4 to Registrant's Form 8-K/A filed November 8, 1996.
10.29 First Amendment to Lease Agreement dated effective as of October 1,
1996 by and between Host Funding, Inc. and Crossroads Hospitality
Tenant Company, L.L.C. (San Diego, California) (incorporated by
reference to Exhibit 10.5 to Registrant's Form 8-K/A filed November
8, 1996.
27. Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 515,497
<SECURITIES> 0
<RECEIVABLES> 212,005
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 762,596
<PP&E> 19,404,519
<DEPRECIATION> (262,005)
<TOTAL-ASSETS> 20,996,869
<CURRENT-LIABILITIES> 15,679,797
<BONDS> 0
0
0
<COMMON> 15,140
<OTHER-SE> 5,301,932
<TOTAL-LIABILITY-AND-EQUITY> 20,996,869
<SALES> 0
<TOTAL-REVENUES> 1,173,393
<CGS> 0
<TOTAL-COSTS> 630,037
<OTHER-EXPENSES> 23,708
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 332,357
<INCOME-PRETAX> 187,291
<INCOME-TAX> 0
<INCOME-CONTINUING> 187,291
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,291
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
