ITEM 1. BUSINESS
Main Place Real Estate Investment Trust (MPREIT) is an indirect subsidiary of NationsBank Corporation (the Corporation). MPREIT was established on October 29, 1996 as a Maryland real estate investment trust to consolidate the acquisition, holding and management of certain closed-end residential mortgage loans owned by certain affiliates of the Corporation. MPREIT also issues and sells mortgage-backed bonds and subordinated indebtedness and acquires, owns, holds and pledges the related mortgage notes and other assets serving as collateral in connection therewith. On November 1, 1996, Main Place Funding Corporation (MPFC) was merged with and into MPREIT, and MPREIT assumed MPFC's obligations under its mortgage-backed bonds and subordinated indebtedness.
ITEM 2.
ITEM 2. PROPERTIES
MPREIT does not own or lease any physical property.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
MPREIT has no legal actions or proceedings pending.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted in accordance with General Instruction I to Form 10-K.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
There is no public trading market for MPREIT's Class A Trust Shares (Class A common shares) or Class B Trust Shares (Class B common shares). On December 31, 1996, all of MPREIT's outstanding shares of Class A common shares were held by Main Place Holdings Corporation (MP Holdings), a wholly owned subsidiary of NationsBank, N.A. On December 31, 1996, all of the outstanding shares of MPREIT Class B common shares were held by NationsBank, N.A. During 1996 and 1995, MPFC paid aggregate cash dividends of $47.3 million and $27.7 million, respectively, on its common shares to affiliated entities. In 1996, MPREIT paid aggregate cash dividends of $139.5 million and $15 thousand, respectively, on its Class A common shares and Class B common shares.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net income for the years ended December 31, 1996 and 1995 was $193.0 million and $31.2 million, respectively. The increase in net income reflects the impact of several factors including the levels and average interest yields on the mortgage loan portfolio, the issuance of the Series 1995-1 and 1995-2 Bonds and the subordinated notes, the effects of securities market conditions, the volatility of interest rates and MPREIT's election for real estate investment trust status.
Interest income increased $289 million in 1996 when compared to 1995 due primarily to a $3.7 billion increase in average loans outstanding to $6.4 billion in 1996. The increase in average loans in 1996 was primarily due to the contribution of loans from affiliates of the Corporation. Interest expense increased $111 million in 1996 when compared to 1995 due primarily to a $2.1 billion increase in average mortgage-backed bonds outstanding. Other operating expenses increased $8.5 million to $17.6 million in 1996 compared to 1995 due primarily to higher mortgage servicing costs associated with the increase in year-to-date average loans outstanding as discussed above and a $1.0 million intercompany charge primarily for services performed in connection with the formation of the real estate investment trust.
The average yields on the mortgage loans for the years ended December 31, 1996 and 1995 were 7.53 percent and 7.34 percent, respectively. Changes in the average yield are primarily related to the mix between fixed- and adjustable-rate loans, the repricing terms of adjustable rate loans, the impact of the general level of interest rates, the levels of prepayments on mortgage loans and scheduled amortization of the portfolio as a whole. The average yield on securities available for sale was 7.08 percent for the year ended December 31, 1996.
The average interest rates on the outstanding mortgage-backed bonds for the years ended December 31, 1996 and 1995 were 5.89 percent and 6.27 percent, respectively. The average interest rates on the outstanding subordinated notes for the years ended December 31, 1996 and 1995 were 6.36 percent and 7.90 percent, respectively. To manage its interest rate risk MPREIT utilizes generic option products, primarily interest rate caps and floors. Interest rate caps and floors are agreements where, for a fee, the purchaser obtains the right to receive interest payments when a variable interest rate moves above or below a specified cap or floor rate, respectively. At December 31, 1996, MPREIT had a gross notional amount of $2.0 billion in outstanding interest rate cap and floor contracts.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are listed in the Index to Financial Statements on page 5.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting or financial disclosure.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted in accordance with General Instruction I to Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Main Place Real Estate Investment Trust ---------------------------------------
Date: February 28, 1997 /s/ Karin Hirtler-Garvey ------------------------ Karin Hirtler-Garvey Senior Vice President/ Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
MAIN PLACE REAL ESTATE INVESTMENT TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Main Place Real Estate Investment Trust
In our opinion, the accompanying balance sheets and related statements of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Main Place Real Estate Investment Trust (the Trust) at December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1996 and for the period from inception through December 31, 1994 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Charlotte, North Carolina February 28, 1997
Main Place Real Estate Investment Trust Balance Sheet (Dollars in Thousands)
See accompanying notes to financial statements.
Main Place Real Estate Investment Trust Statement of Income (Dollars in Thousands)
See accompanying notes to financial statements.
Main Place Real Estate Investment Trust Statement of Cash Flows (Dollars in Thousands)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Main Place Real Estate Investment Trust Statement of Changes in Shareholders' Equity
(Dollars in Thousands)
SEE ACCOMPANYING NOTES TO FINANCIAL STATMENTS.
MAIN PLACE REAL ESTATE INVESTMENT TRUST NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
BASIS OF PRESENTATION
Main Place Real Estate Investment Trust (MPREIT) is a wholly owned indirect subsidiary of NationsBank, N.A., which is a wholly owned indirect subsidiary of NationsBank Corporation (the Corporation). MPREIT was established on October 29, 1996 as a Maryland real estate investment trust to consolidate the acquisition, holding and management of certain closed-end residential mortgage loans owned by certain afilliates of the Corporation.
As a result of the merger of Main Place Funding Corporation (MPFC) with and into MPREIT on November 1, 1996, MPREIT issues and sells mortgage-backed bonds and subordinated indebtedness and acquires, owns, holds and pledges the related mortgage notes and other assets serving as collateral in connection therewith.
The merger between MPREIT and MPFC was accounted for as a pooling of interests of entities under common control and, accordingly, the accompanying financial statements include the results of operations and financial condition of MPFC since inception.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from these estimates. Significant estimates made by management are discussed in these footnotes as applicable. Certain prior period amounts have been reclassified to conform to current period classifications.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash items in the process of collection and amounts due from affiliated banks.
SECURITIES
Securities are classified based on management's intention on the date of purchase. Securities which management has the intent and ability to hold to maturity are classified as held for investment and reported at amortized cost. All other securities are classified as available for sale and carried at fair value with net unrealized gains and losses included in shareholders' equity.
Interest and dividends on securities, including amortization of premiums and accretion of discounts, are included in interest income. Realized gains and losses from the sales of securities are determined using the specific identification method.
LOANS
Loans are reported at their outstanding principal balances, net of any charge-offs and unamortized premiums or discounts. Discounts and premiums are amortized to income using methods that approximate the interest method.
NONPERFORMING LOANS
Residential mortgages are generally placed on nonperforming status at 120 days past due or upon inception of foreclosure proceedings. Ordinarily, interest accrued but not collected is charged off along with the principal.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is available to absorb losses inherent in the credit extension process. Credit exposures deemed to be uncollectible are charged against the allowance for credit losses. Recoveries of previously charged-off amounts are credited to the allowance for credit losses.
MPREIT's process for determining an appropriate allowance for credit losses includes management's judgment and use of estimates. The adequacy of the allowance for credit losses is reviewed regularly by management. Additions to the allowance for credit losses are made by charges to the provision for credit losses. On a quarterly basis, a comprehensive review of the adequacy of the allowance for credit losses is performed. This assessment is made in the context of historical losses, as well as existing economic conditions and performance trends within specific portfolio segments and individual concentrations of credit.
OTHER REAL ESTATE OWNED
Loans are classified as other real estate owned when MPREIT forecloses on a property or when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Other real estate owned is carried at the lower of (1) the recorded amount of the loan for which the foreclosed property previously served as collateral or (2) the fair value of the property minus estimated costs to sell. Prior to foreclosure, the recorded amount of the loan is reduced, if necessary, to the fair value, minus estimated costs to sell, of the real estate to be acquired by charging the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on the periodic revaluation of other real estate owned are credited or charged to expense. Net costs of maintaining and operating foreclosed properties are expensed as incurred.
Risk Management Instruments
Interest rate caps and floors are used to modify the interest rate characteristics of MPREIT's mortgage-backed bonds. These instruments are designated as hedges and must be effective throughout the hedge period. These instruments are accounted for on the accrual basis with revenues or expenses recognized as adjustments to interest expense on the mortgage-backed bonds. Option premiums are amortized over the option life on a straight-line basis.
INCOME TAXES
A real estate investment trust (REIT) is subject to a number of organizational and operational requirements, including the requirement that it currently distribute to beneficial holders at least 95 percent of its "real estate investment trust taxable income." For the period subsequent to November 1, 1996, MPREIT is electing to be taxed as a real estate investment trust and accordingly, no current or deferred tax expense was provided after November 1, 1996.
Prior to November 1, 1996, MPREIT did not qualify as a real estate investment trust and its operating results were included in the consolidated federal income tax return of the Corporation. The method of allocating federal income tax expense was determined under a tax allocation agreement with the Corporation. This agreement specified that income tax expense be computed for all subsidiaries on a separate company method, taking into account tax planning strategies and the tax position of the consolidated group. There were two components of income tax provision: current and deferred. Current income tax provisions approximated taxes to be paid or refunded for the applicable period. Balance sheet amounts of deferred taxes were recognized on the temporary differences between the bases of assets and liabilities as measured by tax laws and their bases as reported in the financial statements. Deferred tax expense or benefit was then recognized for the change in deferred tax liabilities or assets between periods. Recognition of deferred tax balance sheet amounts was based on management's belief that it was more likely than not that the tax benefit associated with certain temporary differences, tax operating loss carryforwards and tax credits would be realized.
NOTE 2 - SECURITIES
During 1996, MPREIT securitized $755.2 million of mortgage loans which are included in securities available for sale at December 31, 1996. Securities available for sale on December 31, 1996 consisted of the following (dollars in thousands):
GROSS GROSS UNREALIZED UNREALIZED MARKET COST GAINS LOSSES VALUE
Mortgage-backed securities $ 828,408 $ 8,542 $(12) $836,938
The expected maturities of securities available for sale on December 31, 1996 are summarized in the table below (dollars in thousands). Actual maturities may differ from contractual maturities or maturities shown below since borrowers may have the right to prepay obligations with or without prepayment penalties.
NET MARKET UNREALIZED COST VALUE GAINS
Due after one year through five years....$ 448,022 $ 450,842 $ 2,820 Due after five years through ten years... 284,785 290,284 5,499 Due after ten years ..................... 95,601 95,812 211 ------------- ------------ ---------- $ 828,408 $ 836,938 $ 8,530 ------------- ------------ ----------
NOTE 3 - LOANS
The following table presents the composition of loans on December 31 (dollars in thousands):
1996 1995 - --------------------------------------------------------------------- Residential mortgage......................$14,671,836 $4,523,744 Commercial real estate.................... 32,539 - ------------- -------------- Total loans, net of unearned income...$14,704,375 $4,523,744 ------------- --------------
Mortgage loans collateralizing mortgage-backed bonds were comprised of the following on December 31 (dollars in thousands):
1996 1995 ------------------------------------------------------- Fixed-rate ...................$ 1,473,739 $ 1,292,457 Adjustable-rate............... 2,955,181 3,231,287 ------------------------- Total mortgage loans.......$.4,428,920 $ 4,523,744 -------------------------
Transactions in the allowance for credit losses were (dollars in thousands):
1996 1995 1994 - -------------------------------------------------------------------------------- Balance on January 1.........................$ 17,805 $ 10,993 $ - Residential mortgage loans charged-off....... (15) (104) - Allowance acquired with contributed loans.... 24,606 6,916 10,993 ------------------------------------ Balance on December 31.......................$ 42,396 $ 17,805 $ 10,993 ------------------------------------
MPREIT had $28 million of nonperforming loans on December 31, 1996 and $.2 million on December 31, 1995. The increase of nonperforming loans was the result of a higher average loans balance during 1996.
Other real estate owned amounted to $.5 million on December 31, 1996 compared to $.8 million on December 31, 1995.
NOTE 4 - AFFILIATE TRANSACTIONS
In connection with the merger of MPFC into MPREIT on November 1, 1996, NationsBank, N.A., NationsBank of Texas, N.A. (NationsBank Texas) and NationsBank, N.A. (South) (NationsBank South), each wholly owned indirect subsidiaries of the Corporation, contributed an aggregate of approximately $10.9 billion of mortgage loans to MPREIT.
During 1996 and 1995, NationsBank Texas contributed $502 million and $3.4 billion, respectively, of mortgage loans to MPREIT at fair value in order to establish or maintain collateral requirements on the mortgage-backed bonds.
During 1996, NationsBank South contributed an aggregate of approximately $871 million of mortgage loans and Federal National Mortgage Association (FNMA) certificates to MPREIT at fair value in order to maintain collateral requirements on the mortgage-backed bonds.
During 1996, MPREIT distributed a dividend of certain assets with a book value of $52 million to NationsBank South and NationsBank Texas. Also, MPREIT made other capital distributions totaling $504.3 million to NationsBank Texas and NationsBank South.
MPREIT has entered into agreements with NationsBanc Mortgage Corporation, a subsidiary of NationsBank Texas, and with NationsBank, N.A. for the servicing and administration of its mortgage portfolio. Servicing fees paid to NationsBanc Mortgage Corporation approximated $16.3 million and $7.7 million for the years ended December 31, 1996 and 1995, respectively.
During 1996, MPREIT entered into an agreement with NationsBank, N.A. for advisory services. Advisory fees paid to NationsBank, N.A. were not significant in 1996.
MPREIT maintains its cash and cash equivalent accounts primarily with NationsBank Texas. At December 31, 1996, MPREIT had $214.9 million of accounts receivable from affiliates of the Corporation. These receivables are related to mortgage payments in process and generally clear within 30 days.
NOTE 5 - LONG-TERM DEBT
In September 1994, the Securities and Exchange Commission declared effective MPFC's shelf registration statement (Registration Statement) to issue up to $4 billion of Mortgage-Backed Bonds (Bonds). The obligations of MPFC under the Bonds were assumed by MPREIT pursuant to the merger of MPFC with and into MPREIT on November 1, 1996. The Bonds, which are issuable in series pursuant to separate indentures, are generally subject to the following terms. The Bonds, collateralized primarily by mortgage loans on 1-to-4 family dwellings, are obligations solely of MPREIT. The Bonds are not prepayable at the option of MPREIT, but are subject to redemption in whole or in part under certain circumstances. Under the terms of an indenture relating to each series of Bonds, MPREIT must maintain a minimum amount of eligible collateral, which is determined on a discounted basis and may consist of mortgage loans, certain U.S. agency mortgage pass-through certificates, U.S. government securities and cash held by a trustee (the Trustee). The types, characteristics and permitted amounts of eligible collateral are subject to change from time to time without the consent of the bondholders if such changes would not adversely affect the ratings assigned to the Bonds. In the event such collateral requirements are not met with respect to any series, MPREIT must provide additional or substitute mortgage loans or other acceptable collateral with respect to such series to meet the required amount of eligible collateral and/or repurchase Bonds in an amount sufficient to meet collateral requirements. If sufficient eligible collateral is not supplied and/or sufficient Bonds are not repurchased, MPEIT must redeem a portion of the outstanding Bonds of such series such that the existing amount of eligible collateral meets the collateral requirements of the indenture relating to the Bonds of such series that remain outstanding after the redemption.
On July 18, 1995, MPREIT issued $1.5 billion of Mortgage-Backed Bonds, Series 1995-1, due 1998 (Series 1995-1 Bonds), bearing interest at the one-month LIBOR plus 21 basis points with a maximum interest rate of 12 percent. On October 31, 1995, MPREIT issued $1.5 billion of Mortgage-Backed Bonds, Series 1995-2, due 2000 (Series 1995-2 Bonds), bearing interest at the three-month LIBOR plus 17 basis points. On December 31, 1996, all of the Series 1995-1 and 1995-2 Bonds were outstanding with interest rates of 5.878 percent and 5.701 percent, respectively, based on the rates in effect on December 31, 1996. On December 31, 1996, the Series 1995-1 Bonds were collateralized by mortgage loans with a book value of approximately $2.2 billion and the Series 1995-2 Bonds were collateralized by mortgage loans and FNMA certificates with an aggregate book value of approximately $2.2 billion. On January 5, 1997, the discounted value of the eligible collateral for the Series 1995-1 and 1995-2 Bonds, as computed by the Trustee, was approximately $1.7 billion and $1.8 billion, respectively, and exceeded the amount required by the terms of the related indentures by approximately $151 million and $180 million, respectively.
On December 31, 1996, $629 million was owed on a subordinated note from NationsBank South (the NationsBank South note). In addition, $444 million was owed under a subordinated note from NationsBank Texas dated November 30, 1995 (the NationsBank Texas note). The NationsBank South note bears interest at a floating rate based on 3-month LIBOR plus 14 basis points and matures on September 25, 1999. The NationsBank Texas note bears interest at 6.50 percent and matures on September 25, 2000. The notes are subordinated to all of MPREIT's senior debt, including the Bonds. MPREIT may repay amounts, from time to time, owed under the notes from funds which are not subject to the lien of any indenture relating to any senior debt. During 1996, payments in the amount of $764 million were made and additional borrowings under the notes amounted to $517 million.
Interest expense on the Series 1995-1 and 1995-2 Bonds for the years ended December 31, 1996 and 1995 was $176.6 million and $59.0 million, respectively. Interest expense on the subordinated notes for the years ended December 31, 1996 and 1995 was $81.5 million and $87.8 million, respectively.
As of February 28, 1997, MPREIT had $1.0 billion of capacity available to issue additional mortgage-backed bonds under its existing Registration Statement.
NOTE 6 - INCOME TAXES
The components of income tax expense for the years ended December 31 were (dollars in thousands):
1996 1995 1994 - -------------------------------------------------------------------------------- Current portion-expense: Federal ................... $17,367 $19,075 $1,910 State ..................... - 273 - ---------------------------------------- $17,367 $19,348 $1,910 ----------------------------------------
Deferred portion- expense (benefit): Federal ................... $ 6,232 $ (2,385) - State ..................... 138 (138) - ---------------------------------------- $ 6,370 $ (2,523) - ---------------------------------------- Total tax expense ............. $23,737 $ 16,825 $1,910 ----------------------------------------
A reconciliation of the expected federal tax expense, based on the federal statutory rate of 35 percent for 1996, 1995 and 1994, to the actual tax expense for the years ended December 31 is as follows (dollars in thousands):
1996 1995 1994 - -------------------------------------------------------------------------------- Expected federal tax expense ......... $75,849 $16,825 $1,910 Increase (decrease) in taxes resulting from: Qualified REIT income.............. (54,053) - - State tax expense, net of federal benefits ........................ 138 39 -
Other ............................. 1,803 (39) - ---------------------------------------- Total tax expense .................... $23,737 $16,825 $1,910 ----------------------------------------
Significant components of the deferred tax assets on December 31 are as follows (dollars in thousands):
1996 1995 - --------------------------------------------------------------------------- Deferred tax assets: Allowance for credit losses ......... $ - $6,232 Other ............................... - 138 ------------------------------ Net deferred tax asset ................. $ - $6,370
There were no deferred tax assets at December 31, 1996 due to MPREIT's tax status (see Note 1). Current income tax expense is determined as if MPREIT filed a separate tax return and the amount so determined is payable to or receivable from the Corporation. Current federal taxes payable to the Corporation of $23 million and $25 million are included in the balance sheet on December 31, 1996 and 1995, respectively.
NOTE 7 - FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires the disclosure of the estimated fair values of financial instruments. The fair value of an instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Quoted market prices, if available, are utilized as estimates of the fair values of financial instruments. Fair values of items for which no quoted market price is available have been derived based on management's assumptions with respect to future economic conditions, the amount and timing of future cash flows and estimated discount rates. The estimation methods for individual classifications of financial instruments are more fully described below. Different assumptions could significantly affect these estimates. Accordingly, the net realizable values could be materially different from the estimates presented below.
In addition, the estimates are only indicative of individual instruments' values and should not be considered an indication of the fair value of MPREIT.
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying value of short-term financial instruments, including cash and cash equivalents, accounts receivable from affiliates, interest receivable and amounts due from the Trustee, approximates the fair value. These financial instruments generally expose MPREIT to limited credit risk and have no stated maturities or maturities of less than 30 days.
LOANS
Fair values were estimated for the loans based on credit quality and maturity. The fair value of fixed-rate loans was estimated by discounting estimated future cash flows using the December 31 origination rate of the Corporation and its affiliates for similar loans. Contractual cash flows were adjusted for prepayments using published industry data. For variable-rate loans, the carrying amount was considered to approximate fair value as loans reprice frequently based on current market rates. Where credit deterioration has occurred, cash flows for fixed- and variable-rate loans have been reduced to incorporate estimated losses. Where quoted market prices were available, such market prices were utilized as estimates of fair value.
LONG-TERM DEBT
The fair value of the NationsBank Texas note was estimated by using the December 31 market rates on similar debt. The Series 1995-1 and Series 1995-2 Bonds and the NationsBank South note are variable rate instruments and the fair value approximates book value.
SECURITIES AVAILABLE FOR SALE
The carrying value of securities available for sale approximates the fair value.
Off-balance sheet Instruments
MPREIT uses interest rate caps and floors to manage the interest rate characteristics of its mortgage-backed bonds. At December 31, 1996, MPREIT had a gross notional amount of $2.0 billion in outstanding interest rate cap and floor contracts. The unrealized depreciation on these contracts was $.7 million as of December 31, 1996. No such contracts were outstanding prior to January 1, 1996.
The book and fair values of financial instruments for which book and fair value differed on December 31 were (dollars in thousands):
For all other financial instruments, book value approximated fair value on December 31.
INDEX TO EXHIBITS *
EXHIBIT NO. DESCRIPTION
2 (a) Stock Purchase Agreement, dated as of November 1, 1996, by and between NationsBank, N.A. and NationsBank, N.A. (South), incorporated by reference to Exhibit 2 (a) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
2 (b) Contribution Agreement, dated as of November 1, 1996, by and between NationsBank, N.A. and Main Place Holdings Corporation ("MP Holdings"), incorporated by reference to Exhibit 2 (b) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
2 (c) Agreement of Merger, dated November 1, 1996, between MP Holdings, Main Place Funding Corporation ("MPFC") and Main Place Real Estate Investment Trust ("MPREIT"), incorporated by reference to Exhibit 2 (c) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
2 (d) Stock Purchase Agreement, dated as of November 1, 1996, by and between NationsBank, N.A. and NationsBank, N.A. (South), incorporated by reference to Exhibit 2 (d) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
2 (e) Stock Purchase Agreement, dated as of November 1, 1996, by and between NationsBank, N.A. and NationsBank of Texas, N.A., incorporated by reference to Exhibit 2 (e) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
2 (f) Contribution Agreement, dated as of November 1, 1996, by and between NationsBank, N.A. and MP Holdings, incorporated by reference to Exhibit 2 (f) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
3 (a) Declaration of Trust of MPREIT, incorporated by reference to Exhibit 3 (a) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
3 (b) Bylaws of MPREIT, incorporated by reference to Exhibit 3 (b) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
4 (a) Indenture dated as of July 18, 1995 between Main Place Funding Corporation (MPFC) and First Trust National Association, pursuant to which MPFC issued Mortgage-Backed Bonds, Series 1995-1, bearing interest at the one-month LIBOR rate plus 21 basis points, due 1998, incorporated by reference to Exhibit 4.1 of MPFC's Current Report on Form 8-K dated July 18, 1995.
4 (b) Indenture dated as of October 31, 1995 between MPFC and First Trust National Association, pursuant to which MPFC issued Mortgage- Backed Bonds, Series 1995-2, bearing interest at the three-month LIBOR rate plus 17 basis points, due 2000, incorporated by reference to Exhibit 4.1 of MPFC's Current Report on Form 8-K dated October 31, 1995.
4 (c) First Supplemental Indenture dated as of November 1, 1996 to Indenture dated as of July 18, 1995 between MPFC and First Trust National Association, as Trustee, incorporated by reference to Exhibit 4 (a) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
4 (d) First Supplemental Indenture dated as of November 1, 1996 to Indenture dated as of October 31, 1995 between MPFC and First Trust National Association, as Trustee, incorporated by reference to Exhibit 4 (b) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (a) Servicing Agreement dated as of July 18, 1995 between MPFC and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10.1 of MPFC's Current Report on Form 8-K dated July 18, 1995.
10 (b) Credit Agreement dated as of July 18, 1995 among MPFC, NationsBank of Texas, N.A., and First Trust National Association, as trustee, incorporated by reference to Exhibit 10.2 of MPFC's Current Report on Form 8-K dated July 18, 1995.
10 (c) Mortgage Note Transfer and Contribution Agreement dated as of September 20, 1994 among MPFC, NationsBank of Texas, N.A., and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10.3 of MPFC's Current Report on Form 8-K dated July 18, 1995.
10 (d) Mortgage Note Transfer and Contribution Agreement dated as May 31, 1995 among MPFC, NationsBank of Texas, N.A., and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10.4 of MPFC's Current Report on Form 8-K dated July 18, 1995.
10 (e) Servicing Agreement dated as of October 31, 1995 between MPFC and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10.1 of MPFC's Current Report on Form 8-K dated October 31, 1995.
10 (f) Credit Agreement dated as of October 31, 1995 among MPFC, NationsBank of Texas, N.A. and First Trust National Association, as trustee, incorporated by reference to Exhibit 10.2 of MPFC's Current Report on Form 8-K dated October 31, 1995.
10 (g) Amended and Restated Credit Agreement dated as of October 31, 1995 among MPFC, NationsBank of Texas, N.A. and First Trust National Association, as trustee, incorporated by reference to Exhibit 10.3 of MPFC's Current Report on Form 8-K dated October 31, 1995.
10 (h) Mortgage Note Transfer and Contribution Agreement dated as of October 1,1995 among MPFC, NationsBank of Texas, N.A. and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10.4 of MPFC's Current Report on Form 8-K dated October 31, 1995.
10 (i) Subordinated Note dated November 30, 1995 between MPFC and NationsBank of Texas, N.A., incorporated by reference to Exhibit 10 (f) of MPFC's Annual Report on Form 10-K dated March 25, 1996.
10 (j) Mortgage Note Transfer and Contribution Agreement dated as of October 31, 1995 among MPFC, NationsBank of Texas, N.A. and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (a) of MPFC's Quarterly Report on Form 10-Q dated August 14, 1996.
10 (k) Mortgage Note Transfer and Contribution Agreement dated as of February 1, 1996 among MPFC, NationsBank of Texas, N.A. and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (b) of MPFC's Quarterly Report on Form 10-Q dated August 14, 1996.
10 (l) Subordinated Note dated May 20, 1996 between MPFC and NationsBank, N.A. (South), incorporated by reference to Exhibit 10 (c) of MPFC's Quarterly Report on Form 10-Q dated August 14, 1996.
10 (m) Note Assignment and Assumption Agreement dated as of May 20, 1996 between NationsBank of Texas, N.A. and NationsBank, N.A. (South), incorporated by reference to Exhibit 10 (d) of MPFC's Quarterly Report on Form 10-Q dated August 14, 1996.
10 (n) Contribution Agreement dated as of June 4, 1996 between MPFC and NationsBank, N.A. (South), incorporated by reference to Exhibit 10 (e) of MPFC's Quarterly Report on Form 10-Q dated August 14, 1996.
10 (o) Contribution Agreement dated as of September 20, 1996 between MPFC and NationsBank, N.A. (South), incorporated by reference to Exhibit 10 (a) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (p) Mortgage Loan Contribution Agreement, dated October 30, 1996, by and between NationsBank of Texas, N.A. and MPREIT, incorporated by reference to Exhibit 10 (b) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (q) Mortgage Loan Assignment, dated as of November 1, 1996, among MPREIT, NationsBank of Texas, N.A. and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (c) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (r) Mortgage Loan Contribution Agreement, dated October 30, 1996, by and between NationsBank, N.A. (South) and MPREIT, incorporated by reference to Exhibit 10 (d) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (s) Mortgage Loan Assignment, dated as of November 1, 1996, among MPREIT, NationsBank, N.A. (South) and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (e) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (t) Mortgage Loan Contribution Agreement, dated October 30, 1996, by and between NationsBank, N.A. and MPREIT, incorporated by reference to Exhibit 10 (f) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (u) Mortgage Loan Assignment, dated as of November 1, 1996, among MPREIT, NationsBank, N.A. and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (g) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (v) Assignment, as of November 1, 1996, by MPFC to MPREIT of Amended and Restated Credit Agreement dated as of October 31, 1995, incorporated by reference to Exhibit 10 (h) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (w) Consent of NationsBank of Texas, N.A., dated November 1, 1996, to assignment of Amended and Restated Credit Agreement dated as of October 31, 1995, incorporated by reference to Exhibit 10 (i) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (x) Assignment as of November 1, 1996 by MPFC to MPREIT of Credit Agreement dated as of October 31, 1995, incorporated by reference to Exhibit 10 (j) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (y) Consent of NationsBank of Texas, N.A., dated November 1, 1996, to assignment of Credit Agreement dated as of October 31, 1995, incorporated by reference to Exhibit 10 (k) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (z) Servicing Agreement, dated November 1, 1996, between MPREIT and NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (l) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (aa) Servicing Agreement, dated November 1, 1996, between MPREIT and NationsBank, N.A., incorporated by reference to Exhibit 10 (m) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (bb) Advisory Agreement, dated November 1, 1996, between MPREIT and NationsBank, N.A., incorporated by reference to Exhibit 10 (n) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
10 (cc) Contribution Agreement dated as of October 31, 1996 between MPFC and NationsBank, N.A. (South), incorporated by reference to Exhibit 10 (o) of the registrant's Quarterly Report on Form 10-Q dated November 14, 1996.
23 Consent of Price Waterhouse LLP
27 Financial Data Schedule.
* The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Commision upon request.