AMERICAN REALTY TRUST ANNOUNCES RECOVERY PLAN
AMERICAN REALTY TRUST ANNOUNCES RECOVERY PLAN NEW YORK, Dec. 20 /PRNewswire/ -- American Realty Trust, Inc.
(NYSE: ARB) today announced its strategy for recovery to profitability and restoration of its capital base by the end of 1992.
The first step in improving the company's capital base was achieved today. American Realty secured financing that will allow it to pay off its $28.3 million line of credit owed to First City--Texas. American Realty received a $4 million line of credit from the company's advisor, National Realty Advisors, Inc., as well as financing from several other sources. The refinancing allows American Realty to take advantage of a discount offered by First City--Texas of approximately $8 million in exchange for paying off the debt and settling any claims. The line of credit had been extended through mutual agreement. As a result of the financial progress noted above, the company believes it has taken the necessary steps to satisfy the concerns that American Realty's auditor, BDO Seidman of Dallas, expressed in its opinion on the company's 1990 financial statements. The auditor's concerns were related to American Realty's ability to continue as a going concern. American Realty also achieved two other steps towards reestablishment of its liquidity. American Realty extended for one year its $12.1 million line of credit from the National Bank of Canada with a principal paydown of $500,000 by Dec. 18, 1991. The company also satisfied a $3.8 million obligation through the transfer of ownership of the Porticos Apartments in Fox Point, Wisconsin. An independent appraiser recently valued American Realty's equity interest in this property at $3.8 million. Additional strength for the company's recovery will come from three recent management decisions. First, liquidity will be enhanced through the elimination of the costly litigation with Southmark, with whom the company settled in October 1991. Secondly, the board of directors of American Realty voted to allow the company's qualification as a real estate investment trust to lapse. By lifting the stringent investment restrictions associated with maintaining REIT status, management believes American Realty will be able to take advantage of opportunities for investment income and real estate trading activities not available to REITs. Lastly, American Realty announced it had negotiated a reduction in the advisory fees it pays National Realty Advisors, Inc. by 50 percent. The reduction was effective Oct. 1, 1991, and will continue until American Realty records cumulative income of $2 per share in four consecutive quarters. "The strategy we have implemented results in an immediate increase in liquidity and positions American Realty to meet all of its financial obligations," said a spokesperson for the company. "We expect within 12 months the company will be able to resume active participation in the real estate market and begin the process of rebuilding value for its shareholders." -0- 12/20/91 /CONTACT: Jean Krone Bono of American Realty Trust, 214-692-4800/ (ARB) CO: American Realty Trust, Inc. ST: New York IN: FIN SU:
KD -- NY073 -- 4487 12/20/91 15:57 EST
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|Date:||Dec 20, 1991|
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