-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SPFinG9HSP0lkvz8D+XiGuQOK4jjpPp1GOnJB1RaDWQ8TGZ0zT5L+o3xnUZD15Yi oEbKKZbQUpLis+4h8lbUGA== 0000912057-96-016502.txt : 19960808 0000912057-96-016502.hdr.sgml : 19960808 ACCESSION NUMBER: 0000912057-96-016502 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960807 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN INVESTMENT REAL ESTATE TRUST CENTRAL INDEX KEY: 0000106135 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 946100058 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08723 FILM NUMBER: 96605131 BUSINESS ADDRESS: STREET 1: 3450 CALIFORNIA ST CITY: SAN FRANCISCO STATE: CA ZIP: 94118 BUSINESS PHONE: 4159290211 10-Q 1 10-Q 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 ACTION OF 1934 For the Quarter ended JUNE 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-2809 WESTERN INVESTMENT REAL ESTATE TRUST ------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-6100058 - ------------------------------ ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3450 CALIFORNIA STREET, SAN FRANCISCO, CA 94118 - ----------------------------------------- ------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 929-0211 ------------------------------ 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 issuer's classes of common stock, as of the end of the period covered by this report. Shares of Beneficial Interest, No Par Value - 17,134,099 shares as of June 30, 1996 1 WESTERN INVESTMENT REAL ESTATE TRUST INDEX TO 10-Q PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (unaudited) Balance Sheets - June 30, 1996 and December 31, 1995 3 Statements of Income - Three and six months ended June 30, 1996 and 1995 4 Statements of Shareholders' Equity - Six months ended June 30, 1996 and year ended December 31, 1995 5 Statements of Cash Flows - Six months ended June 30, 1996 6 and 1995 Notes to Financial Statements 7 - 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 14 PART II. OTHER INFORMATION 15 - 16 SIGNATURE 17 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements WESTERN INVESTMENT REAL ESTATE TRUST Balance Sheets (Unaudited)
ASSETS June 30, December 31, 1996 1995 --------------------------- (In thousands) Real estate investments: Real estate owned .............................. $399,053 $395,800 Less accumulated depreciation and amortization.. (66,427) (61,249) --------- -------- Net real estate investments.................... 332,626 334,551 Cash and cash equivalents.......................... 691 657 Accounts receivable and other assets............... 6,641 6,868 Deferred long-term debt issuance costs, net........ 2,321 2,495 -------- -------- $342,279 $344,571 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Bank line of credit................................ $ 30,025 $ 29,250 Convertible debentures............................. 61,364 63,433 Senior notes, net.................................. 49,889 49,882 Real estate loan payable........................... 1,257 1,294 -------- -------- 142,535 143,859 Interest payable................................... 1,489 1,641 Prepaid rents and security deposits................ 1,170 1,320 Other liabilities.................................. 1,138 952 -------- -------- Total liabilities................................ 146,332 147,772 -------- -------- Shareholders' equity: Shares of beneficial interest, no par value, unlimited share authorization. Issued and outstanding: June 30, 1996 - 17,134,099 shares; December 31, 1995 - 16,972,496 shares........... 242,002 240,034 Accumulated dividends in excess of net income.... (46,055) (43,235) --------- --------- Commitments and contingencies (Note E) Total shareholders' equity....................... 195,947 196,799 -------- -------- $342,279 $344,571 -------- -------- -------- --------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 3 WESTERN INVESTMENT REAL ESTATE TRUST Statements of Income (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- (In thousands, except share and per share data) REVENUES: Minimum rents................................... $9,597 $9,396 $19,136 $18,376 Percentage rents................................ 186 128 340 266 Recoveries from tenants......................... 2,029 1,973 3,312 3,156 Other income.................................... 214 92 409 281 ------ ------ ------ ------ Total revenues.................................... 12,026 11,589 23,197 22,079 ------ ------ ------ ------ ------ ------ ------ ------ EXPENSES: Interest..................................... 2,817 2,924 5,660 5,823 Property operating costs..................... 2,445 2,336 4,039 3,947 Depreciation and amortization................ 2,820 2,715 5,567 5,396 Other operating expenses..................... 646 711 1,339 1,417 General and administrative................... 461 473 939 905 ------ ------ ------ ------ Total expenses................................. 9,189 9,159 17,544 17,488 ------ ------ ------ ------ Income from operations....................... 2,837 2,430 5,653 4,591 ------ ------ ------ ------ Gains on sales of real estate investments...... 1,032 -- 1,032 -- ------ ------ ------ ------ Net income................................... $3,869 $2,430 $6,685 $4,591 ------ ------ ------ ------ Per share data: Income from operations....................... $0.167 $0.145 $0.333 $0.274 ------ ------ ------ ------ Gains on sales of real estate investments.... $0.061 $ -- $0.061 $ -- ------ ------ ------ ------ Net income................................... $0.228 $0.145 $0.394 $0.274 ------ ------ ------ ------ Cash dividends paid.......................... $ 0.28 $ 0.28 $ 0.56 $ 0.56 ------ ------ ------ ------ Weighted average number of shares outstanding.................................. 16,972,496 16,771,742 16,972,496 16,757,419 ---------- ---------- ---------- ----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 4 WESTERN INVESTMENT REAL ESTATE TRUST Statements of Shareholders' Equity (Unaudited) Six Months Ended June 30, 1996 and Year Ended December 31, 1995 (In thousands, except share data)
Accumulated Shares of Dividends Total Beneficial Interest in Excess Share- ------------------- of Net Holders' Number Amount Income Equity ------ ----- ------ ------- BALANCE, JANUARY 1, 1995.............. 16,734,532 $237,341 $(34,657) $202,684 Net proceeds from issuance of shares.. 43,575 514 -- 514 Debenture redemptions................. 194,389 2,179 -- 2,179 Net income............................ -- -- 10,304 10,304 Cash dividends paid................... -- -- (18,882) (18,882) ---------- --------- -------- ------- BALANCE, DECEMBER 31, 1995............ 16,972,496 240,034 (43,235) 196,799 Debenture redemptions................. 161,603 1,968 -- 1,968 Net income............................ -- -- 6,685 6,685 Cash dividends paid................... -- -- (9,505) (9,505) ---------- --------- --------- --------- BALANCE, JUNE 30, 1996................ 17,134,099 $242,002 $(46,055) $195,947 ---------- --------- --------- --------- ---------- --------- --------- ---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 5 WESTERN INVESTMENT REAL ESTATE TRUST Statements of Cash Flows (Unaudited)
Six Months Ended June 30, ---------------- 1996 1995 --------- --------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................ $ 6,685 $ 4,591 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 5,567 5,396 Amortization of deferred debt issuance costs............ 190 198 Gains on sales of real estate investments............... (1,032) -- Decrease in accounts receivable and other assets........ 527 570 Increase in deferred rent receivable.................... (320) (493) Decrease in interest payable............................ (152) (20) Increase in prepaid rents and security deposits and other liabilities.................................. 15 123 --------- --------- Net cash provided by operating activities............... 11,480 10,365 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of real estate investments............ 1,262 -- Acquisitions of real estate investments................... -- (3,357) Improvements of real estate investments: Build-to-suit developments.............................. (3,222) (281) New leases.............................................. (739) (1,063) General................................................. (71) (139) Recovery of investment in direct financing leases......... 131 114 --------- --------- Net cash used in investing activities................... (2,639) (4,726) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances on bank line of credit........................... 21,368 20,200 Principal payments on bank line of credit................. (20,593) (16,845) Principal payments on real estate loan payable............ (37) (33) Redemption of convertible debentures...................... (40) -- Net proceeds from issuance of shares...................... -- 335 --------- --------- Cash dividends paid....................................... (9,505) (9,382) --------- --------- Net cash used in financing activities................... (8,807) (5,725) --------- --------- Net increase (decrease) in cash and cash equivalents.... 34 (86) Cash and cash equivalents, at the beginning of the period... $ 657 $ 648 --------- --------- --------- --------- Cash and cash equivalents, at the end of the period......... $ 691 $ 562 --------- --------- --------- --------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest.................. $ 5,712 $ 5,646 --------- --------- --------- ---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 6 WESTERN INVESTMENT REAL ESTATE TRUST Notes to Financial Statements June 30, 1996 (Unaudited) Note A: BASIS OF PRESENTATION The financial statements included in this report have been prepared pursuant to the rules of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules. Interim results are not necessarily indicative of results for a full year. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the Trust's latest annual report on Form 10-K. When necessary, reclassifications have been made to prior period balances to conform to current period presentation. Note B: REAL ESTATE INVESTMENTS At June 30, 1996, the Trust owned 60 income producing properties, totaling 4.8 million leasable square feet. Included in this total are four properties which are being held for sale and total 83,000 leasable square feet with a combined net book value of $1.7 million. In April, 1996 the Trust sold its Redwood City, California property (a restaurant) for $733,000. The Trust recognized a gain on sale of approximately $560,000. In June, 1996 the Trust sold its Santa Rosa, California, property (a convenience store) for $725,000. The Trust recognized a gain on sale of approximately $470,000. The proceeds from the above two sales were used to partially pay down the bank line of credit. 7 Occupancy percentages for the Trust's portfolio as of June 30, 1996, December 31, 1995 and June 30, 1995 are as follows: June 30, 1996 December 31, 1995 June 30, 1995 ------------- ----------------- ------------- Retail 93.3% 93.8% 92.9% Commercial 98.2% 93.1% 93.1% Industrial 100.0% 100.0% 100.0% Overall Occupancy 93.6% 93.9% 93.1%
Note C: CAPITAL EXPENDITURES It is the Trust's practice to capitalize certain costs which exceed $4,000 and are associated with improvement and rental of real estate investments. Capitalized costs include third party leasing commissions, tenant improvements and common area improvements. Capital expenditures for the three and six months ended June 30, 1996 and 1995 are as follows: Quarter Ended Six Months Ended June 30, June 30, --------------- ---------------- 1996 1995 1996 1995 --------------- ---------------- (In thousands) "Build to Suit" capital improvements................. $1,728 $ 72 $3,222 $ 281 Capitalized costs incurred in connection with leasing previously UNLEASED space.. 9 15 53 32 Capitalized costs incurred in connection with leasing previously LEASED space............... 350 368 686 1,031 Capitalized costs which relate to improvements to common areas ...................... 69 46 71 139 ------ ------ ------ ------ Total Capitalized expenditures....................... $2,156 $ 501 $4,032 $1,483 ------ ------ ------ ------ ------ ------ ------ ------ Improvements......................................... $2,101 327 3,914 $1,235 Leasing commissions.................................. 55 174 118 248 ------ ------ ------ ------ Total Capitalized expenditures....................... $2,156 $ 501 $4,032 $1,483 ------ ------ ------ ------ ------ ------ ------ ------
The Trust's in-house leasing department costs, including related legal and accounting costs, are expensed as incurred. 8 Leasing commissions and tenant improvement costs incurred during the three months ended June 30, 1996, relate entirely to new leases in the shopping center and retail portion of the Trust's portfolio, and consist of the following: CAPITALIZED EXPENDITURES ASSOCIATED WITH NEW LEASES PER PER AGGREGATE SQUARE AGGREGATE SQUARE AMOUNT FOOT AMOUNT FOOT --------- ------ --------- ----- SHOPPING CENTERS Tenant Leasing & RETAIL Improvements $344,865 $9.74 Commissions $ 27,244 $2.31 PROPERTIES
Note D: DEFERRED RENTAL RECEIVABLE The Trust recognizes income from deferred rental receivable in accordance with FAS 13. Deferred rental receivable recognized as income was $165,000 and $319,000 for the quarter ended June 30, 1996 and 1995, respectively. Deferred rental receivable recognized as income for the six-month period ended June 30, 1996 and 1995 was $320,000 and $493,000, respectively. Note E: CONVERTIBLE DEBENTURES On June 30, 1996, $2,029,000 of the Trust's convertible debentures were redeemed in accordance with the limited mandatory redemption provisions of the convertible debentures. The Trust elected to exchange these debentures for 161,603 shares of beneficial interest. Net of the convertible debentures deferred issuance costs of $61,000, shareholders' equity increased by $1,968,000 as a result of the redemptions. During the quarter ended June 30, 1995, $1,985,000 of the Trust's convertible debentures were redeemed in accordance with the limited mandatory redemption provisions of the convertible debentures. The Trust elected to exchange these debentures for 172,077 shares of beneficial interest. Net of the convertible debentures deferred issuance costs of $66,000, shareholders' equity increased by $1,919,000 as a result of the redemptions. 9 Note F: DIVIDEND REINVESTMENT PLAN During the quarter ended June 30, 1996, in accordance with the Trust's Dividend Reinvestment Plan, $188,000 in dividends and shareholders' additional cash payments were used to purchase shares in the open market for the participating shareholders. During the quarter ended June 30, 1995, in accordance with the Trust's Dividend Reinvestment Plan, the Trust received $169,000 in dividends and shareholders' additional cash payments and issued 14,471 shares of beneficial interest. Note G: FUNDS FROM OPERATIONS The Trust considers Funds From Operations to be an alternate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Yet, since real estate values have historically risen or fallen with market conditions, the Trust, along with most industry investors, have considered presentations of operating results for real estate companies that use historical cost accounting to be less than fully informative. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds From Operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of property. Funds From Operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered a substitute for net income as an indicator of the Trust's operating performance or for cash flows as a measure of liquidity. Funds From Operations, calculated in accordance with NAREIT's 1995 guidelines, for the three months and six months ended June 30, 1996 and 1995, respectively, is as follows: THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, JUNE 30, ------- ------- 1996 1995 1996 1995 ----------------- ------------------ Net Income $ 3,869 $ 2,430 $ 6,685 $ 4,591 Less: Gains on sales of real estate investments (1,032) -- (1,032) -- Plus: Real property depreciation 2,463 2,444 4,932 4,872 Amortization of tenant improvement costs 249 140 421 282 Amortization of leasing commissions costs 83 96 162 165 ------- ------- ------- ------- Funds From Operations $ 5,632 $ 5,110 $11,168 $ 9,910 ------- ------- ------- ------- ------- ------- ------- -------
10 Note H: RECENT DEVELOPMENTS On August 1, 1996, the Trust paid the remaining balance outstanding on the Trust's only borrowing secured by real estate. The real estate loan carried a 9.63% fixed interest rate, was secured by the shopping center located in Coalinga, California and had an outstanding balance of $1.3 million. The Trust incurred a prepayment fee of $25,000 and the payoff was funded by an advance on the bank line of credit. The weighted average interest rate on the variable rate bank line of credit as of June 30, 1996 was 7.24%. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements in Management's Discussion and Analysis of Financial Condition and Results of Operations constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such "forward-looking" statements are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Trust to be materially different from any future results, performance, or achievements expressed or implied by such "forward-looking" statements. LIQUIDITY AND CAPITAL RESOURCES The Trust anticipates that cash flows provided by operations and other sources available to the Trust will continue to provide adequate funds for all current principal and interest payments as well as dividend payments in accordance with REIT qualification requirements. Cash on hand, borrowings under the existing bank line of credit, as well as other debt and equity alternatives, will provide the necessary funds to achieve future growth. As of June 30, 1996, the Trust had only one loan secured by one of its properties. This loan was paid off on August 1, 1996 (see Note H: RECENT DEVELOPMENTS). Additionally, the Trust has an interest in two properties where the co-owner is obligated under a note that is secured by the property. The Trust's indenture executed in connection with the Trust's senior notes and bank line of credit contain certain covenants (including minimum shareholders' equity, maximum ratio of debt to net worth and income coverage requirements) which impose certain limitations on the incurrence of debt and other restrictions. On April 26, 1996, the Trust obtained a two-year unsecured $45 million bank line of credit which replaces its previous $60 million facility. The Trust elected to lower the commitment amount on the bank line of credit from $60 million to $45 million in order to avoid paying a commitment fee on the portion of the line of credit the Trust does not intend to use. The $45 million facility can be used to fund acquisitions and other cash requirements. The interest rate under the facility is either LIBOR plus 1.6% or the participating banks' reference rate, at the Trust's election. The bank line of credit expires May 31, 1998, at which time the Trust intends to replace or renew it. The weighted average interest rate on June 30, 1996 and 1995 was 7.24% and 7.89%, respectively. As of June 30, 1996, the Trust had commitments under several new leases which call for approximately $1.7 million in future real estate improvements and leasing commissions. These expenditures will be paid from operating cash flows and borrowings under the line of credit. 12 FUNDS FROM OPERATIONS The Trust considers Funds From Operations to be an alternate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Yet, since real estate values have historically risen or fallen with market conditions, the Trust, along with most industry investors, have considered presentations of operating results for real estate companies that use historical cost accounting to be less than fully informative. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds From Operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of property. Funds From Operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered a substitute for net income as an indicator of the Trust's operating performance or for cash flows as a measure of liquidity. Funds From Operations (1995 NAREIT definition) increased $522,000, or 10%, to $5,632,000 for the three months ended June 30, 1996, from $5,110,000 for the comparable period in 1995. The major components of this increase are increased minimum rents and other income and decreased interest expense. For the six-month period ended June 30, 1996, Funds From Operations increased $1,258,000, or 13%, to $11,168,000, from $9,910,000 for the comparable period in 1995. Increased minimum rents and other income as well as decreased interest expense comprise the major factors for this FFO growth. RESULTS OF OPERATIONS COMPARISON OF QUARTER ENDED JUNE 30, 1996 AND 1995 Net income increased $1,439,000, or 59%, to $3,869,000 or $0.23 per share, from $2,430,000 or $0.15 per share for the comparable period in 1995. The major component of this increase is the gain on the sale of two properties during the second quarter. Other significant components are increased minimum rents and other income and decreased interest expense, partially offset by increased depreciation and amortization. Minimum rents increased $201,000 or 2%, to $9,597,000 for the three months ended June 30, 1996, from $9,396,000 for the comparable period in 1995. This increase results from increased revenue under existing leases and increased occupancy both in the commercial and retail/shopping center portfolios. 13 Other income increased $122,000 to $214,000 for the quarter ended June 30, 1996, from $92,000 a year earlier. This increase primarily reflects termination fees received from tenants in four retail spaces. To date, the Trust has entered into new leases for three of the four spaces. Interest expense decreased 4% to $2,817,000 for the quarter ended June 30, 1996 from $2,924,000 for the three-month period ended June 30, 1995. This $107,000 decrease results from lower interest rates charged on the Trust's variable rate bank line of credit and lower balances on the Trust's convertible debentures, offset by higher outstanding balances under the bank line of credit. Depreciation and amortization increased $105,000 during the quarter ended June 30, 1996 to $2,820,000, a 4% increase over the 1995 figure of $2,715,000. This increase results primarily from increased capitalized expenditures for tenant improvements due, in large part, from new leases. COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND 1995 Net income increased $2,094,000, or 46%, to $6,685,000, or $0.39 per share, from $4,591,000, or $0.27 per share, for the comparable period in 1995. The gains recorded on the sale of two properties comprises approximately one-half, or $0.06 per share, of this increased net income. Other factors include increased minimum rents, other income and decreased interest expense, partially offset by increased depreciation and amortization. Minimum rents increased 4%, or $760,000, to $19,136,000 for the six months ended June 30, 1996, as compared with $18,376,000 recorded a year earlier. Similar to the second quarter's results, increased minimum rents reflect increased revenue under existing leases and increased occupancy in both the commercial and retail/shopping center portfolios. Other income increased $128,000 from $281,000 for the six-month period ending June 30, 1995 to $409,000 for the same period in 1996. This increase primarily reflects termination fees received from tenants in seven retail spaces. To date, the Trust has entered into new leases for three of the seven spaces. Interest expense decreased $163,000 from the six-month period ending June 30, 1995 of $5,823,000 to $5,660,000 in the comparable 1996 period. The main factors in this 3% decrease are lower interest rates charged on the Trust's variable rate bank line of credit and lower outstanding balances on the Trust's convertible debentures, partially offset by higher outstanding balances under the bank line of credit for the six-month period ending June 30, 1996 as compared with the six-month period ending June 30, 1995. Depreciation and amortization for the six months ending June 30, 1996 was $5,567,000, a 3% or $171,000 increase over 1995's comparable period figure of $5,396,000. This increase results primarily from increased capitalized expenditures for tenant improvements due, in large part, from new leases. 14 PART II. OTHER INFORMATION Items 1 through 3. None Item 4. Submission of Matters to a Vote of Security Holders At the regular Annual Meeting of Shareholders of Western Investment Real Estate Trust, held on May 9, 1996, the following were submitted to a vote of security holders: (a) The election of the following trustees to serve for a term of three years expiring at the conclusion of the 1999 annual meeting of shareholders: James L. Stell, O. A. Talmage and William A. Talmage. James L. Stell: Approved - 15,344,205 shares were voted in favor and 271,651 shares withheld authority to vote. O. A. Talmage: Approved - 15,256,039 shares were voted in favor and 359,817 shares withheld authority to vote. William A. Talmage: Approved - 15,262,555 shares were voted in favor and 353,301 shares withheld authority to vote. (b) Ratification of the appointment of KPMG Peat Marwick LLP, independent certified public accountants, as the Trust's auditors for the year ending December 31, 1996. Approved - 15,468,745 shares were voted in favor. 52,595 shares were voted against, and 94,516 shares abstained from voting. Item 5. None Item 6. Exhibits and reports on Form 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) (3) Declaration of Trust, as amended (filed as Exhibit 3.1 to Registration Statement on Form S-3 No. 33-22893 and incorporated herein by reference). (4.1) Form of Indenture relating to the 8% Convertible Debentures (filed as Exhibit 4.1 to Registration Statement on Form S-3 No. 33-22893 and incorporated herein by reference). 15 (4.2) Form of Indenture relating to the Senior Notes (filed as Exhibit 4.1 to Registration Statement on Form S-3 No. 33-71270 and incorporated herein by reference). (4.3) Form of Senior Notes (filed as Exhibit 4.2 to Registration Statement on Form S-3 No. 33-71270 and incorporated herein by reference). (10.1)* Trust's Nonqualified Stock Option Plan (filed as Exhibit 4.2 to Registration Statement on Form S-8 No. 33-27016 and incorporated herein by reference). (10.2)* Trust's Trustee Emeritus Plan (filed as an Exhibit to Proxy dated Statement dated March 25, 1986 and incorporated herein by reference). (b) Reports on Form 8-K. None. * Management contract or compensatory plan or arrangement. 16 SIGNATURE 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. WESTERN INVESTMENT REAL ESTATE TRUST ------------------------------------ (Registrant) By: /s/ Dennis D. Ryan --------------------------------- Dennis D. Ryan Executive Vice President, Chief Financial Officer and Trustee Dated: August 7, 1996 -------------------------- 17 EX-27 2 EXHIBIT 27 -FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND BALANCE SHEET AT JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 691 0 0 0 0 0 399053 66427 342279 0 142535 0 0 242002 (46055) 342279 0 23197 0 5378 6506 0 5660 6685 0 6685 0 0 0 6685 0.39 0.39 AMOUNT INSIGNIFICANT BALANCE SHEET IS NOT CLASSIFIED AMOUNT REPRESENTS ACCUMULATED DIVIDENDS IN EXCESS OF NET INCOME AMOUNT COMPRISED OF PROPERTY OPERATING COST ($4,039) AND OTHER OPERATING EXPENSES ($1,339) AMOUNT COMPRISED OF DEPRECIATION EXPENSE ($5,567) AND GENERAL AND ADMINISTRATIVE EXPENSE ($939) EXERCISE OF THE OUTSTANDING STOCK OPTIONS WOULD NOT HAVE MATERIAL EFFECT ON EARNINGS PER SHARE
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