Item 1 - Business Prospectus of IEA Marine Container Fund, dated August 27, 1979 included as part of Registration Statement on Form S-1 (No. 2-64700)
Certificate of Limited Partnership of IEA Marine Container Fund, filed as Exhibit 3.4 to the Registration Statement on Form S-1 (No. 2-64700) PART I
Item 1. Business
(a) General Development of Business
The Registrant is a California limited partnership formed on April 26, 1979 to engage in the business of leasing marine dry cargo containers to unaffiliated third-party lessees. The Registrant was initially capitalized with $100, and commenced offering its limited partnership interests to the public during the week of August 27, 1979, pursuant to its Registration Statement on Form S-1 (File No. 2-64700). The offering terminated on March 31, 1980.
The Registrant raised $8,201,600 in subscription proceeds. The following table sets forth the use of said subscription proceeds:
On June 9, 1980, the Registrant borrowed $3,693,250 to finance the purchase of additional containers. The loan was repaid on March 31, 1988.
The managing general partner of the Registrant is Cronos Capital Corp. ("CCC"), a wholly-owned subsidiary of Cronos Holdings/Investments (U.S.), Inc., a Delaware corporation. Cronos Holdings/Investments (U.S.), Inc. is a wholly-owned subsidiary of Cronos Investments B.V., a Dutch company. These and other affiliated companies are ultimately wholly-owned by The Cronos Group, a holding company registered in Luxembourg ("Holding Company") and are collectively referred to as the "Group". The activities of the container division of the Group are managed through the Group's subsidiary in the United Kingdom, Cronos Containers Limited ("the Leasing Company"). The Leasing Company manages the leasing operations of all equipment owned or managed by the Group on its own behalf or on behalf of other third-party container owners, including all other programs organized by CCC. The associate general partner is Smith Barney Shearson, Inc., a successor to The F&M Corporation.
Pursuant to the Limited Partnership Agreement of the Registrant, all authority to administer the business of the Registrant is vested in CCC. CCC has entered into a Leasing Agent Agreement whereby the Leasing Company has the responsibility for the container leasing activities of CCC's managed programs.
For information concerning the containers acquired by the Registrant, see Item 2, "Properties."
(b) Financial Information About Industry Segments
Inapplicable.
(c) Narrative Description of Business
(c)(1)(i) A marine cargo container is a reusable metal container designed for the efficient carriage of cargo with a minimum of exposure to loss from damage or theft. Containers are manufactured to conform to worldwide standards of container dimensions and container ship fittings adopted by the International Standards Organization ("ISO") in 1968. The standard container is either 20' long x 8' wide x 8'6" high (one twenty-foot equivalent unit ("TEU"), the standard unit of physical measurement in the container industry) or 40' long x 8' wide x 8'6" high (two TEU). Standardization of the construction, maintenance and handling of containers allows containers to be picked up, dropped off, stored and repaired effectively throughout the world. This standardization is the foundation on which the container industry has developed.
Standard dry cargo containers are rectangular boxes with no moving parts, other than doors, and are typically made of steel. They are constructed to carry a wide variety of cargos ranging from heavy industrial raw materials to light-weight finished goods. Specialized containers include, among others, refrigerated containers for the transport of temperature-sensitive goods and tank containers for the carriage of liquid cargo. Dry cargo containers constitute approximately 85% of the worldwide container fleet. Refrigerated and tank containers constitute approximately 7% of the worldwide container fleet, with open-tops and other specialized containers constituting the remainder.
One of the primary benefits of containerization has been the ability of the shipping industry to effectively lower freight rates due to the efficiencies created by standardized intermodal containers. Containers can be handled much more efficiently than loose cargo and are typically shipped via several modes of transportation, including truck, railway and ship. Containers require loading and unloading only once and remain sealed until arrival at the final destination, significantly reducing transport time, labor and handling costs and losses due to damage and theft. Efficient movement of containerized cargo between ship and shore reduces the amount of time that a ship must spend in port and reduces the transit time of freight moves.
The logistical advantages and reduced freight rates brought about by containerization have been a major catalyst for world trade growth during the last twenty-five years, which in turn has generated increased demand for containerization. The world container fleet has grown from an estimated 270,000 TEU in 1969 to 9,198,000 TEU at the end of 1995, and according to recent industry data, growth of containerized shipping since 1987 has generally averaged two to three times that of average GDP growth in industrialized countries.
The container leasing industry has been a significant contributor to the growth of containerization, and, in 1995, had an approximately 47% share of the total world container fleet with ocean carriers holding most of the remainder. To an ocean carrier, the primary benefits of leasing rather than owning containers are the following:
- Reduced Capital Expenditures. Leasing is an attractive option to ocean carriers because ownership of containers requires significant capital expenditures. Carriers constantly evaluate their investment strategy, with container purchasing competing directly with other expenditure requirements, such as ship purchases, ship conversions and terminal improvements. Container leasing allows ocean carriers to invest capital in assets that are more central to their business.
- Improved Asset Management. Trade flow imbalances and seasonal demands frequently leave ocean carriers with regional surpluses or shortages of containers, requiring costly repositioning of empty containers. Leasing companies help ocean carriers manage these trade imbalances by providing the inventory to service demand, reducing the costs of maintaining local inventories and minimizing repositioning expenses. By matching different carriers' container needs, leasing companies can reduce their own risks of container inventory imbalances and seasonality through a portfolio of lessees as well as variations in lease terms.
- Increased Container Fleet Flexibility. Ocean carriers benefit from the variety of lease types offered by leasing companies such as the master lease, long-term and short-term lease and direct financing lease. These various leases give ocean carriers flexibility in sizing their fleets while minimizing capital costs. For example, master lease agreements give ocean carriers the option of adjusting the size of their fleets, with the flexibility to pick-up and drop-off containers at various locations around the world.
During 1995, the Registrant's 17th year of operations, the Registrant's remaining containers were disposed. As a result of the declining cash flows from operations and sales proceeds, CCC and the Leasing Company determined that disposing of the remaining containers would be in the best interest of the limited partners. The Registrant's original fleet consisted of dry cargo containers, the most commonly used type in the shipping industry. Over 90% of the Registrant's dry cargo container fleet was constructed of all Corten(R) steel (Corten(R) roofs, walls, doors and undercarriage), a high-tensile steel yielding greater damage and corrosion resistance than mild steel.
The Registrant's containers were leased primarily to ocean-going steamship companies operating in major trade routes (see Item 1(d)). Most if not all of the Registrant's marine dry cargo containers were leased pursuant to operating leases, primarily master leases, where the containers were leased to the ocean carrier on a daily basis for any desired length of time, with the flexibility of picking up and dropping off containers at various agreed upon locations around the world and, secondarily, term leases (1-5 years) and one-way or round-trip leases.
Master lease agreements. A master lease is designed to provide greater flexibility by allowing customers to pick-up and drop-off containers where and when needed, subject to restrictions and availability, on pre-agreed terms. The commercial terms of master leases are generally negotiated annually. Master leases also define the number of containers that may be returned within each calendar month and the return locations and applicable drop-off charges. Because of the increased flexibility they offer, master leases usually command higher per-diem rates and generate more ancillary fees (including pick-up, drop-off, handling and off-hire fees) than term leases.
Term lease agreements. Term lease agreements include short-term and long-term leases. Long-term lease agreements define the number of containers to be leased, the pick-up and drop-off locations, the applicable per-diem rental rate for the duration of the lease and the early termination penalties that may apply in the event of early redelivery. Ocean carriers use long-term leases when they have a need for identified containers for a specified term. Long-term leases usually are not terminated early by the customer and provide stable and relatively predictable sources of revenue, although per-diem rates and ancillary charges are lower under long-term leases than under master lease agreements. Short-term lease agreements have a duration of less than one year and include one-way, repositioning and round-trip leases. They differ from master leases in that they define the number and the term of containers to be leased. Ocean carriers use one-way leases to manage trade imbalances (where more containerized cargo moves in one direction than another) by picking up a container in one port and dropping it off at another after one or more legs of a voyage. Except for direct financing leases, lease rates typically are highest for short-term leases.
Under these leases, customers were responsible for paying all taxes and service charges arising from container use, maintaining the containers in good and safe operating condition while on lease and paying for repairs upon redelivery, other than ordinary wear and tear. Some leases provided for a "damage protection plan" whereby lessees, for an additional payment (which may have been in the form of a higher per-diem rate), were relieved of the responsibility of paying some of the repair costs upon redelivery of the containers. The Leasing Company has historically provided this service on a limited basis to selected customers. Repairs provided under such plans were carried out by the same depots, under the same procedures, as were repairs to containers not covered by such plans. Customers also were required to insure leased containers against physical damage and loss, and against third party liability for loss, damage, bodily injury or death.
All containers were inspected and repaired when redelivered by a customer, and customers were obligated to pay for all damage repair, excluding wear and tear, according to standardized industry guidelines. Depots in major port areas performed repair and maintenance which was verified by independent surveyors or the Leasing Company's technical and operations staff.
Before any repair or refurbishment was authorized on containers in the Registrant's fleet, the Leasing Company's technical and operations staff reviewed the age, condition and type of container and its suitability for continued leasing. The Leasing Company compared the cost of such repair or refurbishment with the prevailing market resale price that was obtained for that container and made the appropriate decision whether to repair or sell the container.
The Leasing Company made payments to the Registrant based upon rentals collected from ocean carriers after deducting certain operating expenses associated with the containers, such as the base management fee payable to CCC, certain expense reimbursements to CCC, the costs of maintenance and repairs not performed by lessees, independent agent fees and expenses, depot expenses for handling, inspection and storage, and additional insurance.
The Registrant's sales and marketing operations were conducted through the Leasing Company, in the United Kingdom, with support provided by area offices and dedicated agents located in San Francisco, California; Iselin, New Jersey; Windsor, England; Hamburg; Antwerp; Auckland; Genoa; Singapore; Hong Kong; Sydney; Tokyo; Taipei; Seoul; Rio de Janeiro; and Shanghai. Each of the Leasing Company's area offices and dedicated agents is staffed with local people familiar with the customers and language of the region. The Leasing Company's marketing directors have been employed in the container industry in their respective regions for an average of 15 years, building direct personal relationships with the local ocean carriers and locally based representatives of other ocean carriers.
The Leasing Company also maintains agency relationships with over 20 independent agents around the world, who are generally paid a commission based upon the amount of revenues they generate in the region or the number of containers that are leased from their area on behalf of the Registrant. They are located in jurisdictions where the volume of the Leasing Company's business necessitates a presence in the area but is not sufficient to justify a fully-functioning Leasing Company office or dedicated agent. These agents provide marketing support to the area offices covering the region, together with limited operational support.
In addition, the Leasing Company relies on the services of over 300 independently-owned and operated depots around the world to inspect, repair, maintain and store containers while off-hire. The Leasing Company's area offices authorize all container movements into and out of the depot and supervise all repair and maintenance performed by the depot. The Leasing Company's technical staff sets the standards for repair of its owned and managed fleet throughout the world and monitors the quality of depot repair work. The depots provide a vital link to the Leasing Company's operations, as the redelivery of a container into a depot is the point at which the container is off-hired from one customer and repaired in preparation for re-leasing to the next, and the point when the Leasing Company's area offices report the container's movements onto the Leasing Company's equipment tracking system. The Leasing Company's computer system has the capability to accommodate future developments, such as allowing depots access to record directly on the system the on-hire and off-hire activity of containers delivered into the depot. It also has the capability of verifying the terms of redelivery authorized by the area offices. These functions are currently being performed by the Leasing Company's area offices.
(c)(1)(ii) Inapplicable.
(c)(1)(iii) Inapplicable.
(c)(1)(iv) Inapplicable.
(c)(1)(v) The Registrant's containers were leased globally, therefore, seasonal fluctuations were minimal. Other economic and business factors to which the transportation industry in general and the container leasing industry in particular are subject, include inflation and fluctuations in general business conditions and fluctuations in supply and demand for equipment resulting from, among other things, obsolescence, changes in the methods or economics of a particular mode of transportation or changes in governmental regulations or safety standards.
(c)(1)(vi) The Registrant established an initial working capital reserve of approximately $42,000 (0.5% of subscription proceeds raised). The Registrant has reserved the remaining cash balances at December 31, 1995 from cash distributions to its partners in order to maintain sufficient cash reserves for expenses relating to its final liquidation and subsequent dissolution. The Registrant anticipates that after the remaining net lease receivables and liabilities are collected and discharged during 1996, or as soon as practicable, the Registrant will then undertake a final distribution to its partners. The Partnership will then be dissolved.
Amounts due under master leases were calculated at the end of each month and billed approximately six to eight days thereafter. Amounts due under short-term and long-term leases were set forth in the respective lease agreements and were generally payable monthly. However, payment was normally received within 45-100 days of receipt. Past due penalties are not customarily collected from lessees, and accordingly were not generally levied by the Leasing Company against lessees of the Registrant's containers.
(c)(1)(vii) One lessee contributed approximately 19% of the Registrant's rental revenue earned during 1995. The remaining containers in the Registrant's fleet were disposed of during 1995. Accordingly, the Registrant's container operations ceased during the fourth quarter of 1995.
(c)(1)(viii) Inapplicable.
(c)(1)(ix) Inapplicable.
(c)(1)(x) Competition among container leasing companies is based upon several factors, including the location and availability of inventory, lease rates, the type, quality and condition of the containers, the quality and flexibility of the service offered and the confidence in and professional relationship with the lessor. Other factors include the speed with which a leasing company can prepare its containers for lease and the ease with which a lessee believes it can do business with a lessor or its local area office. The Leasing Company believes that it, on behalf of the Registrant, competed favorably on all of these factors.
The Leasing Company, on behalf of the Registrant, competed with various container leasing companies in the markets in which it conducted business, including Genstar Container Corp., Transamerica Leasing, Triton Container International Ltd., Trans Ocean Ltd., Textainer Corp. and others. In a series of recent consolidations, one of the major leasing companies, as well as some smaller ones, have been acquired by competitors. It is estimated that at the end of 1995, the ten largest leasing companies (including the Leasing Company) represented 94% of the global leased fleet. Genstar Container Corp. and Transamerica Leasing, the two largest container leasing companies, had approximately 50% of the worldwide leased container fleet at the end of 1995. Some of the Leasing Company's competitors have greater financial resources than the Leasing Company and may be more capable of offering lower per-diem rates on a larger fleet. In the Leasing Company's experience, however, ocean carriers will generally lease containers from more than one leasing company in order to minimize dependence on a single supplier. In addition, not all container leasing companies compete in the same market, as some supply only dry cargo containers and not specialized containers, while others offer only long-term leasing.
(c)(1)(xi) Inapplicable.
(c)(1)(xii) Inapplicable.
(c)(1)(xiii) The Registrant, as a limited partnership, is managed by CCC, the managing general partner, and accordingly does not itself have any employees. CCC has 27 employees, consisting of 5 officers, 4 other managers and 18 clerical and staff personnel.
(d) Financial Information About Foreign and Domestic Operations and Export Sales
The Registrant's business was not divided between foreign and domestic operations. The Registrant's business was the leasing of containers worldwide to ocean-going steamship companies. To this extent, the Registrant's operations were subject to the fluctuations of worldwide economic and political conditions that affected the pattern and levels of world trade.
Rental income from leases to foreign customers constituted approximately 90% of the Registrant's total rental income for the years 1995, 1994 and 1993. The Registrant believes that the profitability of, and risks associated with, leases to foreign customers were generally the same as those of leases to domestic customers. The Registrant's leases generally required all payments to be made in United States currency.
Item 2.

Item 2. Properties
The Registrant's remaining 261 twenty-foot and 64 forty-foot marine dry cargo containers were disposed of during 1995, at an average book gain of $57 per container. Of this amount, 178 containers were sold during the second quarter of 1995, pursuant to an agreement with an unrelated party. The purchase price of these 178 containers totaled $130,789, which equaled approximately 105% of the containers' net book value.
Utilization by lessees of the Registrant's containers fluctuated over time depending on the supply of and demand for containers in the Registrant's inventory locations. During 1995, utilization averaged 64%.
Item 3.

Item 3. Legal Proceedings
Inapplicable.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
PART II
Item 5.

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
(a)(1)(i) The Registrant's outstanding units of limited partnership interests are not traded on any market nor does an established public trading market exist for such purposes.
(a)(1)(ii) Inapplicable.
(a)(1)(iii) Inapplicable.
(a)(1)(iv) Inapplicable.
(a)(1)(v) Inapplicable.
(a)(2) Inapplicable.
(b) Holders
(c) Dividends
Inapplicable. For the distributions made by the Registrant to its limited partners, see Item 6, "Selected Financial Data."
Item 6.

Item 7. Management's Discussion and Analysis of Financial Condition and Result of Operations
Liquidity and Capital Resources
During the Registrant's first ten years of operations, the Registrant's primary objective was to generate cash flow from operations for distribution to its limited partners. Aside from the initial working capital reserve retained from the gross subscription proceeds (equal to approximately 0.5% of such proceeds), the Registrant relied primarily on container rental receipts to meet this objective, as well as to finance current operating needs. No credit lines are maintained to finance working capital. Commencing in 1989, the Registrant's 11th year of operations, the Registrant began focusing its attention on the disposition of its fleet in accordance with another of its original investment objectives, realizing the residual value of its containers after the expiration of their economic useful lives, estimated to be between 10 to 15 years after placement in leased service. During this phase, the Registrant began actively disposing of its container fleet, while cash proceeds from equipment disposals, in addition to cash from operations, provided the cash flow for distributions to the limited partners. The remaining 325 containers of the Registrant's fleet were disposed of during 1995. The Registrant is currently in the final phase of the liquidation and wind up stage of operations, focusing on the collection of its lease receivables, a component of net lease receivables. The Registrant anticipates that after the remaining net lease receivables and liabilities are collected and discharged during 1996, or as soon as practicable, the Registrant will undertake a final distribution to its partners and proceed to cancel the Certificate of Limited Partnership, thus terminating the Partnership. The Partnership will then be dissolved. The Registrant has reserved the remaining cash balances at December 31, 1995 from cash distributions to its partners, in order to maintain sufficient cash reserves for expenses relating to its final liquidation and subsequent dissolution.
Distributions from operations are allocated 1% to the general partners and 99% to the limited partners, until the limited partners have received a 3% cumulative quarterly return on their adjusted capital contributions. Thereafter, the distributions are allocated 50% to the general partners and 50% to the limited partners. Distributions from sales proceeds are allocated 1% to the general partners and 99% to the limited partners, as the limited partners have received cumulative distributions equal to their original capital contributions.
From inception through February 29, 1996, the Registrant has distributed $9,651,882 in cash from operations and $4,859,448 in cash from sales proceeds to its limited partners. This represents a total distribution of $14,511,330 or 177% of the Registrant's original limited partners' investment. Cash generated from sales proceeds totaled $270,981, $252,081 and $381,447 for the years ended December 31, 1995, 1994 and 1993, respectively, and represented approximately 80%, 60% and 52% of the Registrant's cash generated from operating and investing activities, respectively.
Results of Operations
1995 - 1994
During 1995, the Registrant's 17th year of operations, the remaining 325 containers in the Registrant's fleet were disposed. Accordingly, the Registrant's container operations ceased during the fourth quarter of 1995. Approximately 17% of the Registrant's 1995 net earnings were from gain on disposal of equipment, as compared to 25% for the year ended December 31, 1994.
The Registrant's net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses, from rental revenues billed by the Leasing Company from the leasing of the Registrant's containers. The Registrant's net lease revenue is directly related to the size of its fleet and the utilization and per-diem rental rates of the equipment owned by the Registrant. Net lease revenue declined by approximately 38%, when compared to 1994. Gross rental revenue and rental equipment operating expenses, components of net lease revenue, declined 46% and 51%, respectively, when compared to the prior year. These declines were primarily attributable to the disposal of the Registrant's fleet. Rental equipment operating expenses consisted of, but were not limited to, costs associated with the recovery actions against the doubtful accounts of certain lessees, including legal and container recovery expenses, as well as the provision for doubtful accounts.
The Registrant's average utilization and per-diem rental rates fluctuated throughout the year. Utilization averaged 64% during 1995, as compared to 77% during 1994. The Registrant's average per-diem rental rates during 1995 remained virtually unchanged when compared to the prior year. The Registrant's average fleet size (as measured in twenty-foot equivalent units ("TEU")) during 1995, was 210 TEU, as compared to 1994's average of 530 TEU.
During the remaining period in the wind up phase of operations, the Registrant expects to incur net losses, as certain other and general administrative expenses including investor processing, tax, legal and audit expenses, should be in excess of any other income generated by the Registrant. The Registrant has increased its cash reserves in anticipation of these expected losses.
1994 - 1993
The container leasing industry began to benefit from a global economic recovery during the latter half of 1994, experiencing an improvement in conditions that existed during 1993, including an upward trend in utilization rates, a reduction in container inventories, and a stabilization of declining per-diem rental rates during the fourth quarter of 1994. However, the age and condition of the Registrant's fleet, combined with the efforts to dispose of the remaining fleet and lower average per-diem rental rates during 1994, resulted in a reduction of net lease revenue by approximately 42%, when compared to 1993. The Registrant's average per-diem rental rates during 1994 were 4% lower than 1993 levels. Utilization averaged 77% during 1994, a decline from the average rate of 81% experienced during 1993.
The Registrant continued the disposal of its fleet during 1994, disposing of 215 twenty-foot and 52 forty-foot dry cargo containers, as compared to disposals of 391 twenty-foot and 69 forty-foot dry cargo containers during 1993. By the end of 1994, the Registrant had disposed of 93% of its original fleet. Factors such as age, condition, and geographical location influenced the amount of sales proceeds received and the related gain on container disposals. During 1994, approximately 25% of the Registrant's net earnings were from gains on disposal of equipment, as compared to 19% during the prior year.
At December 31, 1994, the Registrant's fleet was comprised of the following:
The Registrant's fleet became fully depreciated during 1993 and, accordingly, no depreciation expense was recognized during 1994. The Leasing Company made payments to the Registrant based upon rentals collected from ocean carriers after deducting certain operating expenses associated with the containers, such as the base management fee payable to the managing general partner, the costs of maintenance and repairs not performed by lessees, independent agent fees and expenses, depot expenses for handling, inspection and storage, and additional insurance. During 1994, these rental equipment direct operating expenses and base management fees declined directly as a result of the diminishing fleet size.
Item 8.

Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Partners IEA Marine Container Fund (A California Limited Partnership):
We have audited the accompanying balance sheets of IEA Marine Container Fund (A California Limited Partnership) as of December 31, 1995 and 1994, and the related statements of operations, partners' capital and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IEA Marine Container Fund (A California Limited Partnership) as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
San Francisco, California, March 15, 1996
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
The accompanying notes are an integral part of these statements.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these statements.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these statements.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these statements.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Marine Container Fund (A California Limited Partnership) (the "Partnership"), was organized under the laws of the State of California on April 26, 1979 for the purpose of owning and leasing marine dry cargo containers. The managing general partner is Cronos Capital Corp. ("CCC"); the associate general partner is Smith Barney Shearson, Inc. CCC, with its affiliate, Cronos Containers Limited (the "Leasing Company"), manages and controls the business of the Partnership.
The Partnership commenced operations on September 19, 1979, when the minimum subscription proceeds of $500,000 were obtained. The Partnership offered 20,000 units of limited partnership interest at $500 per unit, or $10,000,000. The offering terminated on March 31, 1980, at which time 16,403 limited partnership units had been purchased.
During 1995, the Partnership's 17th year of operations, the remaining containers in the Partnership's fleet were disposed. The Partnership anticipates that after the remaining net lease receivables and liabilities are collected and discharged during 1996, or as soon as practicable, the Partnership will undertake a final distribution to its partners. The Partnership will then be dissolved.
(b) Leasing Company and Leasing Agent Agreement
Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. CCC entered into a Leasing Agent Agreement whereby the Leasing Company had the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company was responsible for leasing, managing and re-leasing the Partnership's containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it dealt with. The Leasing Agent Agreement permitted the Leasing Company to use containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. Since the Leasing Agent Agreement meets the definition of an operating lease in Statement of Financial Accounting Standards (SFAS) No. 13, it has been accounted for as a lease under which the Partnership is the lessor and the Leasing Company is the lessee.
The Leasing Agent Agreement generally provided that the Leasing Company make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC. The Leasing Company leases containers to ocean carriers, generally under operating leases which are either master leases or term leases (mostly two to five years). Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations; rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Most of the Registrant's containers were leased to ocean carriers under master leases; leasing agreements with fixed payment terms are not material to the financial statements. Since there are no material minimum lease rentals, no disclosure of minimum lease rentals is provided in these financial statements.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(c) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Revenue is recorded when earned.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period.
(d) Allocation of Net Earnings and Partnership Distributions
Net earnings have been allocated between general and limited partners in accordance with the Partnership Agreement.
Actual cash distributions differ from the allocations of net earnings between the general and limited partners as presented in these financial statements. Partnership distributions are based on "distributable cash" and are paid to the general and limited partners on a quarterly basis. Cash generated from operations are allocated 1% thereof to the general partners and 99% thereof to the limited partners until the limited partners have received a 3% cumulative quarterly return on their adjusted capital contributions and thereafter 50% to the limited partners and 50% to the general partners.
Distributions of proceeds from container sales are also made quarterly; first to the limited partners until they have received cumulative distributions equal to their capital contributions; thereafter 99% to the limited partners and 1% to the general partners until the limited partners have received cumulative distributions equal to 8% per annum on their adjusted capital contributions and thereafter 75% to the limited partners and 25% to the general partners.
(e) Depreciation of Containers
Rental equipment was depreciated over a twelve-year life on a straight-line basis to its estimated salvage value.
(f) Income Taxes
The Partnership is not subject to income taxes, consequently no provision for income taxes has been made. The Partnership files an annual information tax return, prepared on the accrual basis of accounting. At December 31, 1995, the tax basis of total partners' capital was $1,157,682.
(g) Foreign Operations
The Partnership's business was not divided between foreign or domestic operations. The Partnership's business was the leasing of containers worldwide to ocean-going steamship companies and did not fit the definition of reportable foreign operations within Financial Accounting Standards Board Statement No. 14 "Financial Reporting for Segments of a Business Enterprise." Any attempt to separate "foreign" operations from "domestic" operations would have been dependent on definitions and assumptions that were so subjective as to render the information meaningless and potentially misleading.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(h) Financial Statement Presentation
The Partnership has determined that for accounting purposes the Leasing Agent Agreement has been a lease, and the receivables, payables, gross revenues and operating expenses attributable to the containers managed by the Leasing Company are, for accounting purposes, those of the Leasing Company and not of the Partnership. Consequently, the Partnership's balance sheets and statement of operations display the payments to be received by the Partnership from the Leasing Company as the Partnership's receivables and revenues.
(2) Short-term Investments
Short-term investments are carried at cost which approximates market value. Short-term investments with an original maturity of less than three months are considered cash equivalents.
(3) Net Lease Receivables Due from Leasing Company
Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, and base management fees payable to CCC and its affiliates from the rental billings payable by the Leasing Company to the Partnership under operating leases to ocean carriers for the containers owned by the Partnership. Net lease receivables at December 31, 1995 and December 31, 1994 were as follows:
(4) Damage Protection Plan
The Leasing Company offered a repair service to several lessees of the Partnership's containers, whereby the lessee paid an additional rental fee for the convenience of having the Partnership incur the repair expense for its containers damaged while on lease. This revenue was recorded when earned according to the terms of the rental contract. A reserve was established to provide for the estimated costs incurred by this service. This reserve is a component of net lease receivables due from the Leasing Company (see note 3). The Partnership was not responsible in the event repair costs exceeded predetermined limits, or for repairs that were required for damages not defined by the damage protection plan agreement.
IEA MARINE CONTAINER FUND (A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(5) Net Lease Revenue
Net lease revenue is determined by deducting direct rental equipment operating expenses and management fees to CCC from the rental revenue billed by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the years ended December 31, 1995, 1994 and 1993, was as follows:
(6) Compensation to Managing General Partner
Compensation paid by the Partnership to CCC consisted solely of base management fees. Base management fees were equal to $0.25 per day per twenty-foot and $0.43 per day per forty-foot container owned by the Partnership pursuant to Section 4.3 of the Partnership Agreement.
(7) Limited Partners' Capital
Cash distributions made to the limited partners included distributions of proceeds from equipment sales in the amount of $184,536 in 1995, $246,048 in 1994 and $430,584 in 1993. These distributions are treated as a reduction of "Adjusted Capital Contributions" as defined by the Partnership Agreement.
The limited partners' per unit share of capital at December 31, 1995, 1994 and 1993 was $15, $24 and $44, respectively. This is calculated by dividing the limited partners' capital at the end of the year by 16,403, the total number of limited partnership units.
(8) Major Lessees
One lessee contributed approximately 19% of the Partnership's rental revenue earned during 1995. No single lessee contributed more than 10% of the rental revenue earned in 1994 and 1993.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Inapplicable.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
The Registrant, as such, has no officers or directors, but is managed by CCC, the managing general partner. The officers and directors of CCC at January 31, 1996, are as follows:
DENNIS J. TIETZ Mr. Tietz, 43, as President and Chief Executive Officer, is responsible for the general management of CCC. From 1986 until August 1992, Mr. Tietz was responsible for the organization, marketing and after-market support of CCC's investment programs. Mr. Tietz is also President and a director of Cronos Securities Corp. and a director of The Cronos Group. Mr. Tietz was a regional manager for CCC, responsible for various container leasing activities in the U.S. and Europe from 1981 to 1986. Prior to joining CCC in December 1981, Mr. Tietz was employed by Trans Ocean Leasing Corporation as Regional Manager based in Houston, with responsibility for all leasing and operational activities in the U.S. Gulf.
Mr. Tietz holds a B.S. degree in Business Administration from San Jose State University and is a Registered Securities Principal with the NASD.
JOHN P. MCDONALD Mr. McDonald, 34, was elected Vice President - National Sales Manager of CCC in August 1992, with responsibility for marketing CCC's investment programs. Since 1988, Mr. McDonald had been Regional Marketing Manager for the Southwestern U.S. From 1983 to 1988, Mr. McDonald held a number of container leasing positions with CCC, the most recent of which was as Area Manager for Belgium and the Netherlands, based in Antwerp.
Mr. McDonald holds a B.S. degree in Business Administration from Bryant College, Rhode Island. Mr. McDonald is also a Vice President of Cronos Securities Corp.
ELINOR A. WEXLER Ms. Wexler, 47, was elected Vice President - Administration and Secretary of CCC in August 1992. Ms. Wexler has been employed by the General Partner since 1987, and is responsible for investor services, compliance and securities registration. From 1983 to 1987, Ms. Wexler was Manager of Investor Services for The Robert A. McNeil Corporation, a real estate syndication company, in San Mateo, California. From 1971 to 1983, Ms. Wexler held various positions, including securities trader and international research editor, with Nikko Securities Co., International, based in San Francisco.
Ms. Wexler attended the University of Oregon, Portland State University and the Hebrew University of Jerusalem, Israel. Ms. Wexler is also Vice President and Secretary of Cronos Securities Corp. and a Registered Principal with the NASD.
JOHN KALLAS Mr. Kallas, 33, was elected Vice President/Treasurer and Chief Financial Officer of CCC in December 1993 and is directly responsible for CCC's accounting operations and reporting activities. Mr. Kallas has held various accounting positions since joining CCC in 1989, including Controller, Director of Accounting and Corporate Accounting Manager. From 1985 to 1989, Mr. Kallas was an accountant with KPMG Peat Marwick, San Francisco, California.
Mr. Kallas holds a B.S. degree in Business Administration from the University of San Francisco and is a certified public accountant. Mr. Kallas is also Treasurer of Cronos Securities Corp.
LAURENCE P. SARGENT Mr. Sargent, 66, joined the Board of Directors of CCC in 1991. Mr. Sargent was a founder of Leasing Partners International ("LPI") and served as its Managing Director from 1983 until 1991. From 1977 to 1983, Mr. Sargent held a number of positions with Trans Ocean Leasing Corporation, the last of which was as a director of its refrigerated container leasing activities. From 1971 to 1977, Mr. Sargent was employed by SSI Container Corporation (later Itel Container International), ultimately serving as Vice President / Far East. Prior to that, Mr. Sargent was a Vice President of Pacific Intermountain Express, a major U.S. motor carrier, responsible for its bulk container division. Mr. Sargent holds a B.A. degree from Stanford University. Mr. Sargent also serves as a director of the Institute of International Container Lessors ("IICL"), an industry trade association. Mr. Sargent is also a director of Cronos Securities Corp.
Mr. Sargent retired as Deputy Chairman of the Group as of January 1, 1996 . He remains a director of CCC, The Cronos Group, as well as other various subsidiaries of The Cronos Group.
STEFAN M. PALATIN Mr. Palatin, 42, joined the Board of Directors of CCC in January 1993. Mr. Palatin is Chairman and CEO of The Cronos Group, and was a founder of LPI in 1983. From 1980 to 1991, Mr. Palatin was an executive director of the Contrin Group, which has provided financing to the container leasing industry, as well as other business ventures, and has sponsored limited partnerships organized in Austria. From 1977 to 1980, Mr. Palatin was a consultant to a number of companies in Austria, including Contrin. From 1973 to 1977, Mr. Palatin was a sales manager for Generali AG, the largest insurance group in Austria.
Mr. Palatin, who is based in Austria, holds a Doctorate in Business Administration from the University of Economics and World Trade in Vienna. Mr. Palatin is also a director of The Cronos Group.
A. DARRELL PONNIAH Mr. Ponniah, 46, was elected to the Board of Directors of CCC in January 1993. Mr. Ponniah is Chief Financial Officer of The Cronos Group and is based in the United Kingdom. Prior to joining Cronos in 1991, Mr. Ponniah was employed by the Barclays Bank Group and served as Chief Operating Officer of Barclays European Equipment Finance. From 1973 to 1988, Mr. Ponniah was employed by Rank Xerox, the European-based subsidiary of Xerox Corporation of the U.S.A., in a number of positions, the most recent of which was as Group Controller and Chief Financial Officer of the International Equipment Financing Division of Rank Xerox Limited.
Mr. Ponniah is an honors graduate of Manchester University in England and holds post graduate degrees in operational research from Brunel University and in Business Administration from the Manchester Business School. Mr. Ponniah is also a director of The Cronos Group and Cronos Securities Corp.
The key management personnel of the Leasing Company at January 31, 1996, were as follows:
NIGEL J. STRIBLEY Mr. Stribley, 42, has been responsible for the general management of the Leasing Company since September 1991. From 1985 to 1991, Mr. Stribley was a director of LPI, based in the United Kingdom and responsible for worldwide lease marketing and operations of refrigerated containers. From 1978 to 1985, Mr. Stribley was employed by Sea Containers Limited, London, where he was involved in refrigerated container leasing, ultimately as Manager of Refrigerated Containers with responsibility for world-wide activities. From 1975 to 1978, Mr. Stribley was employed by Sealand Containerships, Ltd., the United Kingdom subsidiary of a major U.S. container shipping company, as a management trainee and later as Operations Manager and a Container Terminal Manager.
Mr. Stribley holds a BA degree with honors from Bristol University in England. Mr. Stribley is a director of The Cronos Group.
JOHN M. FOY Mr. Foy, 50, is directly responsible for the Leasing Company's lease marketing and operations in North America, Central America, and South America, and is based in San Francisco. From 1985 to 1993, Mr. Foy was Vice President/Pacific with responsibility for dry cargo container lease marketing and operations in the Pacific Basin. From 1977 to 1985 Mr. Foy was Vice President of Marketing for Nautilus Leasing Services in San Francisco with responsibility for worldwide leasing activities. From 1974 to 1977, Mr. Foy was Regional Manager for Flexi-Van Leasing, a container lessor, with responsibility for container leasing activities in the Western United States. Mr. Foy holds a B.A. degree in Political Science from University of the Pacific, and a Bachelor of Foreign Trade from Thunderbird Graduate School of International Management.
GEOFFREY J. MORNARD Mr. Mornard, 36, is directly responsible for the Leasing Company's lease marketing and operations in Europe, the Middle East and Africa. From 1991 to 1993, Mr. Mornard was Director of Marketing for refrigerated containers in Australia and New Zealand. From 1989 to 1991, Mr. Mornard held the same position with LPI. From 1979 to 1989, Mr. Mornard was employed by Cooltainer Services, Ltd., a refrigerated container carrier company, initially as Melbourne Branch Manager, later as Sydney Branch Manager, and ultimately as Australian Trade Manager, responsible for marketing and operations of all container traffic to and from Australia.
DANNY WONG Mr. Wong, 42, is responsible for the Leasing Company's lease marketing and operations in Asia, Australia and the Indian sub-continent, and is based in Singapore. From 1991 to 1993, Mr. Wong was Vice President/Refrigerated Containers, responsible for the marketing of refrigerated containers worldwide for the Leasing Company. From 1988 to 1991, Mr. Wong was employed by LPI, as Director of Marketing for the Far East and Southeast Asia based in Singapore. From 1987 to 1988, Mr. Wong was a district manager in Singapore covering leasing activities in Southeast Asia for Gelco CTI, a major container leasing company. From 1979 to 1987, Mr. Wong was employed by Flexi-Van Leasing in Singapore as a sales manager and later as Regional Manager for Southeast Asia and the Indian sub-continent. Mr. Wong holds a Diploma in Marketing Management from the Singapore Institute of Management.
DAVID HEATHER Mr. Heather, 48, is responsible for all technical and engineering activities of the fleet managed by the Leasing Company. Mr. Heather was Technical Director for LPI, based in the United Kingdom, from 1986 to 1991. From 1980 to 1986, Mr. Heather was employed by ABC Containerline NV as Technical Manager with technical responsibility for the shipping line's fleet of dry cargo, refrigerated and other specialized container equipment. From 1974 to 1980, Mr. Heather was Technical Supervisor for ACT Services Ltd., a shipping line, with responsibility for technical activities related to refrigerated containers. Mr. Heather holds a Marine Engineering Certificate from Riversdale Marine Technical College in England.
JOHN C. KIRBY Mr. Kirby, 42, is responsible for container purchasing, contract and billing administration, container repairs and leasing-related systems, and is based in the United Kingdom. Mr. Kirby joined CCC in 1985 as European Technical Manager and advanced to Director of European Operations in 1986, a position he held with CCC, and later the Leasing Company, until his promotion to Vice President/Operations of the Leasing Company in 1992. From 1982 to 1985, Mr. Kirby was employed by CLOU Containers a container leasing company, as Technical Manager based in Hamburg, Germany. Mr. Kirby acquired a professional engineering qualification from the Mid-Essex Technical College in England.
J. GORDON STEEL Mr. Steel, 63, is directly responsible for the overall lease marketing activity for the Leasing Company's Tank Container Division. From 1990 to 1992, Mr. Steel held the position of Director/General Manager for Tiphook Container's Tank Division. From 1977 to 1990, Mr. Steel held various managerial positions, involving manufacturing and transportation of hazardous materials, with Laporte Industries and ICI, major chemical distribution companies. Mr. Steel is a qualified Chemical Engineer and attended the Associate Royal Technical College in Scotland.
Item 11.

Item 11. Executive Compensation
The Registrant paid a base management fee to the managing general partner as set forth in the table below.
The Registrant also makes quarterly distributions to its partners (general and limited) from cash generated from operations which are allocated 1% thereof to the general partners and 99% thereof to the limited partners until the limited partners have received a 3% cumulative quarterly return on their adjusted capital contributions and, thereafter, 50% to the limited partners and 50% to the general partners.
Proceeds from container sales are also made quarterly; first to the limited partners until the limited partners have received cumulative distributions equal to their capital contributions; thereafter, 99% to the limited partners and 1% to the general partners until the limited partners have received cumulative distributions equal to 8% per annum on their adjusted capital contributions and thereafter 75% to the limited partners and 25% to the general partners. (See Partnership Agreement for a complete discussion of the sharing arrangement for the sale proceeds.)
The Registrant does not pay or reimburse CCC or the associate general partner for any remuneration payable by them to their officers, directors or employees. All remuneration payable by CCC to its officers, directors and employees, and all of CCC's corporate overhead incurred in connection with the operation of the Registrant, is borne by CCC from the fees payable to it by the Registrant and from other income earned by CCC.
The following table sets forth the fees the Registrant paid (on a cash basis) to CCC and Smith Barney Shearson, Inc., the associate general partner of the Registrant, for the fiscal year 1995.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
There is no person or "group" of persons known to the management of CCC, the managing general partner of the Registrant, to be the beneficial owner of more than five percent of the outstanding units of limited partnership interests of the Registrant.
(b) Security Ownership of Management
The Registrant has no directors or officers. It is managed by CCC, the managing general partner. With the exception of Dennis J. Tietz, President and a director of CCC, no other director or officer owns any units of limited partnership interest of the Registrant. Mr. Tietz owns 5 units, representing 0.031% of the total amount of units outstanding.
(c) Changes in Control
Inapplicable.
Item 13.

Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
The Registrant's only transactions with management and other related parties during 1995 were limited to those fees paid or amounts committed to be paid (on an annual basis) to CCC, the managing general partner, and Smith Barney Shearson, Inc., the associate general partner. See Item 11, "Executive Compensation," herein.
(b) Certain Business Relationships
Inapplicable.
(c) Indebtedness of Management
Inapplicable.
(d) Transactions with Promoters
Inapplicable.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. Financial Statements
All other schedules are omitted as the information is not required or the information is included in the financial statements or notes thereto.
(a)3. Exhibits
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended December 31, 1995
- ---------- * Incorporated by reference to the Prospectus of the Registrant dated August 27, 1979, included as part of Registration Statement on Form S-1 (No. 2-64700)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (No. 2-64700)
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.
IEA MARINE CONTAINER FUND (A California Limited Partnership)
By Cronos Capital Corp. The Managing General Partner
By /s/ John Kallas ---------------------------------------------------- John Kallas Vice President/Treasurer and Chief Financial Officer Principal Accounting Officer
Date: March 28, 1996
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Cronos Capital Corp., the managing general partner of the Registrant, in the capacities and on the dates indicated:
SUPPLEMENTAL INFORMATION
The Registrant's annual report will be furnished to its limited partners on or about April 30, 1996. Copies of the annual report will be concurrently furnished to the Commission for information purposes only, and shall not be deemed to be filed with the Commission. EXHIBIT INDEX
- ---------- * Incorporated by reference to the Prospectus of the Registrant dated August 27, 1979, included as part of Registration Statement on Form S-1 (No. 2-64700)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (No. 2-64700)


ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
Western Investment Real Estate Trust ("The Trust") is a real estate investment trust ("REIT") and qualifies as such under Sections 856 and 960 of the Internal Revenue Code. The Trust was organized under the laws of the State of California in 1962 and commenced real estate operations in 1964.
In order that the Trust may continue to qualify as a real estate investment trust: (i) more than 75% of the Trust's total assets must be invested in real estate, cash, cash items or government securities, (ii) at least 75% of the Trust's gross income must be derived from real estate assets, (iii) the Trust can hold no property primarily for sale to customers in the ordinary course of business, (iv) beneficial ownership of the Trust must be held by more than 100 persons during at least 335 days of each taxable year, and (v) the Trust must distribute annually to its shareholders an amount equal to or exceeding 95% of its real estate investment trust taxable income. Under the terms of its Declaration of Trust, the Trust is permitted to invest its funds in ownership of real estate, mortgages, deeds of trust and certain financial instruments as permitted by law. Substantially all of the Trust's funds have been invested in the ownership of real estate.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The Trust is not engaged in different segments of a business nor is the Trust engaged in more than one line of business.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
The Trust, which at December 31, 1995 employed 51 people, is in the business of acquiring, managing, leasing and developing retail, commercial and industrial properties. At December 31, 1995, the Trust owned 50 retail properties, 10 commercial properties and 2 industrial properties with a combined gross leasable area of 4.8 million square feet.
The Trust has its executive office at 3450 California Street, San Francisco, California, 94118, and can be reached at (415) 929-0211. Additionally, the Trust maintains two regional offices in California.
The Trust's portfolio of 62 properties at December 31, 1995 is summarized as follows:
At December 31, 1995, occupancy for each property type is as follows:
Property Type Occupancy Rate (1) ------------- ------------------ Shopping Center and Retail 93.8% Commercial 93.1% Industrial 100.0%
Average Occupancy for All Property Types 93.9%
(1) Once a space is subject to an executed lease, the space is then included in occupied space. A space continues to be incorporated in our occupancy percentage until: (1) the related lease expires and the tenant is no longer in legal possession, or (2) the related lease is formally terminated and the tenant is no longer in legal possession.
The following table summarizes the composition of the Trust's real estate investments as of December 31, 1995 by type based on amounts invested by the Trust.
PORTFOLIO SUMMARY DECEMBER 31, 1995
The Trust owns 23 unimproved pads located within or adjacent to the property lines of its shopping centers that are available for development and leasing. Additionally, the Trust owns a total of 25 acres of undeveloped land adjacent to its North Hills and Elko Shopping Centers in Nevada.
The weighted average age of the Trust's 62 properties is 12.5 years. The weighted average age of the Trust's commercial, industrial and retail properties is 21.5 years, 15.4 years and 12.05 years, respectively. This calculation is weighted by Gross Leasable Area and is based on the original construction date of the property. As such, construction or renovation occurring subsequent to the original construction date is not reflected in this calculation.
CURRENT ECONOMIC CLIMATE
After a number of false starts in recent years, California's economy has experienced solid improvement. Additionally, many economists believe California's future is brighter. According to the Center for Continuing Study of the California Economy (Palo Alto, California), total personal income rose 7.2 percent during the first half of 1995. This, in conjunction with a 1.8 percent increase in consumer prices, produced the first substantial boost in real spending power since 1990. Some economists believe that California is once again ready to take its place as an engine of growth for the U.S. economy. California's strengths of foreign trade, entertainment and business services are producing gains in jobs, income and spending that will likely continue into 1996 and the decade ahead. While the strength of the California economic recovery is uncertain, improvement in economic conditions should help improve the Trust's operating results in 1996. Recent property acquisitions and improvements have been completely or partially funded with advances under the Trust's variable rate line of credit. If interest rates were to increase substantially the interest rate under the line of credit could approach, or exceed the yield on the property acquisitions. However, improving economic conditions, which could lead to higher interest rates, should also lead to improved occupancy and rental rates.
COMPETITION
During the past several years, volume discount retailers, such as Wal-Mart and Costco, have entered certain areas of California and Nevada where Trust community shopping center properties are located. The Trust expects that these discounters may positively or negatively affect certain of the Trust's shopping center tenants. The Trust believes that its tenants could benefit if these discounters attract additional customers to nearby Trust properties and thereby generate increased sales for Trust tenants. Conversely, the Trust's tenants could be negatively affected if discounters draw customers away from the Trust's properties. The Trust believes that to date the trend has had no significant impact on the Trust's results of operations.
The Trust competes for quality properties with other investors and engages in a continuing effort to identify desirable properties for acquisition. As the number of prospective buyers of the types of properties the Trust considers for purchase increases, the prices of such properties may increase and the yield decrease. The Trust believes it can continue to compete effectively in the current real estate environment because of its experienced staff and management team.
The Trust competes for tenants primarily on the basis of location, rental rates, services provided and the design and condition of the properties. In some of the geographic areas in which the Trust owns properties, the available supply of space for lease exceeds the demand by prospective tenants. In order to compete effectively, the Trust employs experienced property managers and leasing agents.
TENANTS
The Trust's principal shopping center and retail tenants include substantial, well-recognized businesses such as Food-4-Less, Nob Hill Foods, PayLess Drugs, Pak N Save, Raley's, Safeway, Save Mart Supermarket and Thrifty Drug. The Trust's commercial tenants include Coast Federal Bank and Fireman's Fund Insurance Company. In addition, the Trust has other major retail tenants such as Lucky Stores and J.C. Penney.
No single property investment accounted for more than 5% of total revenues in 1995. At December 31, 1995, Raley's, the Trust's most significant tenant, a supermarket and super drug retailer, was a lessee in nineteen of the Trust's properties and accounted for 20% of the Trust's 1995 total revenues. Raley's, a privately owned company, currently operates 81 stores in Northern California and Nevada. The Raley's organization has released information indicating that its sales exceeded $1.8 billion in its most recently reported fiscal year ended June 24, 1995. The Trust receives audited financial statements annually from Raley's and uses them to monitor Raley's financial position and results of operations.
The following table provides the location, size and expiration of the Raley's leases:
NOTE (1): Although Raley's no longer occupies this Fallon, Nevada, property, it guarantees the J. C. Penney and Hub leases and makes supplemental lease payments to the Trust.
MAJOR PRODUCERS OF 1995 TOTAL REVENUE
The Trust receives sales and other information on a monthly, quarterly or annual basis from its retail tenants, including Raley's, under leases which provide for such reports. The Trust uses this information to monitor the payment of percentage rents where leases so provide. The Trust recognized $559,000 and $537,000 of percentage rents during 1995 and 1994, respectively. Virtually all of the Trust's existing leases include at least one of the following provisions for payment of additional rent: (1) scheduled fixed increases, (2) percentage rent based on tenants' gross sales, or (3) CPI-based escalation clauses. The Trust endeavors to structure leases on a triple-net basis with the lessees being responsible for most operating expenses, such as real estate taxes, certain types of insurance, utilities, normal repairs and maintenance. To the extent such provisions cannot be negotiated and incorporated into a lease and in regard to vacant space, the Trust pays such expenses from current operating income. Most of the Trust's leases require the tenant to carry liability insurance coverage on their leased premises. The Trust monitors tenant compliance with insurance coverage requirements. While the Trust believes its properties are adequately insured, the Trust does not carry earthquake or flood coverage. Most of the Trust's properties are located in areas of California and Nevada where earthquakes have been known to occur. The Trust periodically considers the merits of purchasing earthquake insurance. To date the Trust has not purchased earthquake insurance because of (i) the high premiums and deductibles and (ii) the geographically diversified portfolio that reduces the likelihood of an earthquake resulting in a material loss to the Trust. Furthermore, the majority of properties in the portfolio principally comprise single-story, relatively new buildings.
TENANT LEASE EXPIRATIONS AND RENEWALS
The following table shows lease expirations for the leases in effect as of December 31, 1995, for the next ten years, assuming none of the tenants exercise renewal options:
ASSET MANAGEMENT
The Trust is a fully integrated REIT which provides full asset management services to all but two of its properties. Asset management includes property management, leasing, marketing and accounting support. Internal management provides for regular interaction between the Trust and its tenants and close supervision of properties.
The Trust directly manages 60 of its 62 properties. In order to facilitate its present and future asset management activities, the Trust maintains two branch offices which are centrally located to the properties. The offices are located at the Trust's Country Gables shopping center in Granite Bay, California and at the Victorian Walk shopping center in Fresno, California.
Internal management permits the Trust to provide value added services to its tenants. For example, the Trust's marketing staff works with the Trust's tenants on promotional and advertising activities to draw consumers to the shopping centers. These activities help the Trust attract and retain the national, regional and local retail tenants which serve the Northern California and Nevada markets. The Trust believes the cost of internal property management and leasing is generally less expensive than employing independent property management, marketing and leasing firms due to lower commissions and fees and certain economies of scale.
Two of the Trust's 62 properties are managed by independent property managers. G & W Management Co. provides management services for the property leased to Fireman's Fund Insurance Company, in Petaluma, California, for fees equal to 3.5% of gross receipts. The Trust's property is part of a larger office park which is managed by G & W Management Co. Commercial Real Estate Service (CRES) provides management services with respect to Serra Center, located in Colma, California, for fees equal to 4% of gross rents plus tenant administrative and management fees paid by the tenants attributable to the Trust's 30% interest in the center. CRES is an affiliate of the co-owner of the Serra Center and has been managing the property for approximately 20 years. Neither one of the above-named property managers are affiliated with the Trust, its trustees, officers or any shareholder owning 5% or more of the Trust's shares. Repairs and maintenance of the Trust's properties not undertaken by tenants under the terms of the Trust's triple-net leases are performed by independent contractors not affiliated with the Trust, its trustees or officers, or any shareholder owning 5% or more of the Trust's shares.
POTENTIAL ENVIRONMENTAL RISKS
Investments in real property create a potential for environmental liability on the part of the owner of such real property. If hazardous substances are discovered on or emanating from any of the Trust's properties, the Trust and/or others may be held strictly liable for all costs and liabilities relating to the clean-up of such hazardous substances.
In order to mitigate environmental risks, in 1989 the Trust adopted a policy of obtaining at least a Phase I environmental study (a preliminary site assessment which does not include environmental sampling, monitoring or laboratory analysis) on each property it seeks to acquire. From time to time, when the Trust deems it appropriate, we have acquired independent environmental analyses on properties acquired prior to 1989. Although the Trust has no knowledge that any material environmental contamination has occurred, no assurance can be given that hazardous substances are not located under any of the properties. The Trust carries no express insurance coverage for the type of environmental risk described above.
The trust assesses on an ongoing basis measures necessary to comply with environmental laws and regulations. In conducting its assessments, the Trust has identified the following matters:
OAKLAND, CALIFORNIA
During 1994, the Trust concluded the sale of its industrial property in Oakland, California. Under the terms of the sale agreement, the Trust is responsible for environmental clean-up costs that exceed the sum of (i) $658,000, and (ii) any amounts recovered by the buyer from third parties. On the basis of the current facts and circumstances, the Trust has not recorded a provision for any future environmental liability resulting from this property because the Trust believes the likelihood of incurring any liability is remote. The Trust will continue to monitor the environmental remediation activity and status of this property.
VALLEJO, CALIFORNIA
The Trust has agreed to guarantee the performance of the restoration work related to disturbance of wetlands by, and to provide certain financial accommodations to, the developer of the Trust's Park Place Shopping Center in Vallejo, California. During July 1995, the developer declared Chapter 11 bankruptcy. The Trust received an initial estimate for the wetlands restoration from an environmental consulting firm, which projected total costs of as much as $250,000. Approximately $200,000 has already been funded by the Trust.
UNDERGROUND STORAGE TANKS
The Trust, as far as it is aware, owns only three properties which presently contain underground storage tanks. The Trust has no knowledge of any leakage or contamination resulting from these tanks that will have a material impact on its financial position or results of operations. There are, however, reported low levels of soil contamination from underground storage tanks removed from the Heritage Place Shopping Center in Tulare, California, prior to its acquisition by the Trust. The prior owner has been ordered by the Tulare County environmental officials to clean up suspected soil contamination and has been approved for and received funding from the California Leaking Underground Storage Tank Fund. Should the prior owner fail to complete remediation, the Trust's exposure could be as much as $230,000 per the initial estimate by an environmental consultant. In addition, there is a potential for contamination from reported off-site leaking petroleum underground storage tanks located on properties adjacent to certain Trust properties.
The probable overall costs of these measures cannot be determined at this time due to uncertainty about the extent of environmental risks and the Trust's responsibility, the complexity of environmental laws and regulations, and the selection of alternative compliance approaches. However, the Trust is not aware of any environmental conditions that it believes will have a material impact on its financial position or results of operations.
ITEM 2.

ITEM 2. PROPERTIES.
Property information is presented on the following pages.
ITEM 2: PROPERTIES
continued on next page
ITEM 2: PROPERTIES
continued on next page
ITEM 2: PROPERTIES
continued on next page
ITEM 2: PROPERTIES
(1) Once a space is subject to an executed lease, the space is then included in occupied space. A space continues to be incorporated in our occupied percentage until: 1) the related lease expires and the tenant is no longer in legal possession, or 2) the related lease is formally terminated and the tenant is no longer in legal possession. (2) Sold in 1994. (3) Acquired in 1994. (4) Acquired in 1995. (5) Investment converted to equity ownership through a deed in lieu of foreclosure in 1993. (6) Included in Other Income.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
The Trust is involved in various legal actions arising in the normal course of business. After taking into consideration legal counsel's evaluation of such actions, management is of the opinion that their outcome will not have a material adverse effect on the Trust's financial statements.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Principal Market:
The shares of beneficial interest of the Trust, without par value, are listed on the American Stock Exchange under the symbol "WIR". The following table sets forth the high and low sales prices of the shares as reported by the American Stock Exchange:
(1) Paid March 15, 1996.
Approximate number of equity security holders:
Title of Class Number of Record Holders -------------- ------------------------- (as of December 31, 1995)
Shares of Beneficial Interest, without par value 2,428
The Trust estimates that there were over 18,000 beneficial owners of shares, including owners whose shares were held in brokerage and trust accounts.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
(1) Revenues comprise minimum rents, percentage rents, recoveries from tenants and other income.
(2) The Trust, along with most industry analysts, considers Funds From Operations (FFO) to be an appropriate supplemental measure of the operating performance of an equity REIT. Funds From Operations, as defined in 1991 by the National Association of Real Estate Investment Trusts (NAREIT), is: net income excluding gains or losses from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated joint ventures. Funds From Operations does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity.
Funds From Operations presented in the Selected Financial Data schedule is calculated in accordance with the 1991 NAREIT definition of FFO. In 1995, NAREIT interpreted its definition of Funds From Operations. The effect of the 1995 interpretation on the Trust's calculation of FFO is to require exclusion from the add-backs to net income of: (i) amortization of deferred financing costs and (ii) depreciation of personal property. When calculated in accordance with NAREIT'S 1995 interpretation, FFO would be $21,017,000, $20,084,000, $20,522,000, $20,017,000 and $22,566,000 for the year ended December 31, 1995, 1994, 1993, 1992 and 1991, respectively. The Trust will adopt the 1995 interpretation in 1996.
(3) Real estate owned reflects acquisition costs and capitalized costs of improvements before deduction of depreciation and amortization.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Trust anticipates that cash flows provided by operating activities will continue to provide adequate funds for all current principal and interest payments as well as dividend payments in accordance with REIT requirements. Cash on hand and borrowings under its existing bank line of credit, as well as other debt and equity alternatives, will provide the necessary funds to achieve future growth. The Trust has only one loan secured by one of its properties. Additionally, the Trust jointly owns two properties where a co-owner is obligated under a note that is secured by the property.
Any incurrence of additional debt by the Trust would be subject to limitations imposed by the Indenture Agreement executed in connection with the Trust's senior notes and the bank line of credit.
As of December 31, 1995, the Trust had approximately $30.8 million available under its $60 million bank line of credit. This facility, which has certain covenants (including minimum shareholders' equity, maximum ratio of debt to net worth and income coverage requirements), could be used to fund acquisitions, improvements to real estate and other cash requirements. The interest rate on the bank line of credit is either LIBOR plus 1.6% or the participating banks' reference rate, at the Trust's election. The weighted average interest rate on the bank line of credit at December 31, 1995, was 7.57%. This facility expires May 31, 1996, at which time the Trust intends to renew it.
RESULTS OF OPERATIONS
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994
Net income decreased $5 million to $10.3 million, or $0.61 per share, in 1995, from $15.3 million, or $0.92 per share, in 1994. This 33% decrease is principally due to the 1994 gains realized from the sales of real estate investments. Additionally, the decrease is due to increased interest expense, depreciation and amortization, and property operating costs, as well as decreased other income, partially offset by the absence of the 1994 provision for loss on real estate investment.
Funds From Operations (NAREIT 1991 definition) increased $969,000 to $21.5 million in 1995, an increase of more than 4% over the 1994 figure of $20.6 million. The major components of this increase are increased minimum rents, increased recoveries from tenants and the absence of a 1994 provision for environmental costs relating to the Oakland, California, property, offset in part by increased interest expense, property operating costs and decreased other income. The Trust, along with most industry analysts, considers Funds From Operations to be an appropriate supplemental measure of the operating performance of an equity REIT. Funds From Operations does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity.
Minimum rents increased $3.5 million in 1995 to $37.6 million, a 10% increase over $34.1 million in 1994. This increase resulted from (i) the Trust's seven acquisitions during 1994 and 1995, partially offset by five dispositions in 1994 and (ii) occupancy gains.
Recoveries from tenants increased by 12%, or $738,000, to $6.8 million in 1995 as compared to $6.1 million in 1994. This increase is primarily the result of the Trust's seven acquisitions and occupancy gains referred to above.
Other income decreased $1.4 million to $584,000 from the 1994 amount of $2,017,000. The contributing factors to this decrease are the absence in 1995 of (i) a $600,000 lease termination fee recorded in 1994, (ii) investment income earned in 1994 from the senior notes net proceeds prior to the use of these proceeds for several 1994 acquisitions and (iii) mortgage interest income earned on a note retired during the second quarter of 1994.
Interest expense increased $1.4 million, or 14%, in 1995 to $11.5 million from $10.1 million in 1994. This increase primarily results from increased borrowings and higher interest rates under the Trust's bank line of credit. Additionally, interest expense increased as a result of twelve months of interest on the senior notes in 1995, compared to 10-1/2 months in 1994.
Property operating costs were $8.3 million in 1995 compared to $7.4 million in 1994. This $899,000, or 12% increase from the prior year, is primarily due to the 1994 and 1995 acquisitions. Ownership of the majority of these properties commenced mid-year 1994.
Depreciation and amortization expense increased $1 million to $10.9 million for the year ended December 31, 1995, from $9.9 million in 1994. This 10% increase results from a net increase in the depreciable basis of the Trust's portfolio of real estate investments due to additions made by the Trust beginning in mid-year 1994, net of dispositions.
Income from operations was $10.3 million, or $0.61 per share, for the twelve months ended December 31, 1995, a $650,000 decrease from the comparable 1994 figure of $10.9 million, or $0.65 per share. The primary reasons for this decrease are increased interest expense, depreciation and amortization, property operating costs, and decreased other income, partially offset by increased minimum rents and increased recoveries from tenants.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1993
Net income increased $3.7 million, or 32%, to $15.3 million, or $0.92 per share, in 1994 from $11.6 million, or $0.70 per share, in 1993. This increase reflects the gains realized from the sales of real estate investments and increases achieved in revenues from the Trust's six 1994 acquisitions, offset by increased interest expense and reduced revenues due to property dispositions.
Funds From Operations decreased $282,000, or 1%, to $20.6 million from $20.9 million. The major components of this decrease are the provision for environmental costs related to the Oakland, California, property and increased interest expense partially offset by increased minimum rents.
Minimum rents increased $1.9 million to $34.1 million, a 6% increase over the 1993 total of $32.2 million. This growth reflects rental revenues from the acquisition of six properties, offset by reduced rental revenues due to the dispositions of two retail properties, a commercial building, an industrial building and a parcel of land. The 1994 acquisitions and dispositions resulted in a net increase of 324,000 square feet to the portfolio.
Other income increased $937,000 to $2,017,000 in 1994 from $1,080,000 for the comparable period in 1993. Most of this increase is due to (i) a lease termination fee of $600,000 and (ii) investment income from the senior notes proceeds earned prior to the use of these proceeds for several 1994 acquisitions.
Interest expense increased by $2.3 million in 1994 to $10.1 million from $7.8 million in 1993. This 29% increase is due to the Trust's increased borrowings to fund property acquisitions and higher interest rates. On February 24, 1994, the Trust issued $50 million of 7 7/8% senior notes due February 15, 2004. Proceeds from the sale of the senior notes were used in part to pay the outstanding balance on the previous bank line of credit of $17.6 million. The remaining proceeds were used to acquire additional properties. On May 31, 1994, the Trust obtained a two-year unsecured $60 million bank line of credit (replacing the previous $35 million bank line of credit), which the Trust has drawn upon to fund additional acquisitions.
Income from operations was $10.9 million, or $0.65 per share, for the year ended December 31, 1994, as compared to $11.6 million, or $0.70 per share, for the same period in 1993. This 6% decrease results from increased interest expense, depreciation and amortization, and property operating costs partially offset by increased minimum rents and other income.
IMPACT OF THE ECONOMY
Substantially all of the Trust's properties are leased on a triple-net basis, which reduces the Trust's exposure to increases in property operating expenses resulting from inflation. Future increases in inflation would likely increase revenues and thereby further protect the Trust from the impact of inflation. Revenue increases could be realized through CPI-based escalation of rents, percentage rents based on tenants' gross sales and inflation-adjusted base rents on new leases.
Increases in interest rates could increase the Trust's borrowing costs. As of December 31, 1995, the Trust had $29.3 million outstanding under its unsecured variable-rate bank line of credit. This amount represents approximately 20% of the Trust's total liabilities and approximately 7% of the Trust's historical cost of real estate owned.
The continuing recovery of the California economy should lead to increases in employment, personal income and retail spending. Improving economic conditions should help strengthen the Trust's operating results in 1996 as occupancy continues to increase and rental rates continue to stabilize and improve.
ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued Financial Accounting Standards (FAS) 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and FAS 123, "Accounting for Stock-Based Compensation."
The Trust has adopted FAS 121 effective January 1, 1996, and believes that adoption will not have a material impact on the Trust's 1996 financial statements. The Trust will adopt the disclosure requirements of FAS 123 in 1996, but continue to account for its stock option plan under Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," as permitted under FAS 123.
WESTERN INVESTMENT REAL ESTATE TRUST
Financial Statements
Form 10-K Item 8

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to the trustees and executive officers of the Trust is incorporated by reference to the section entitled "Trustees and Executive Officers" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 9, 1996, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is incorporated by reference to the sections entitled "Compensation of Trustees", "Compensation of Executive Officers", "Compensation Pursuant to Plans", "Trustee Emeritus Program and Death and Disability Program", "Stock Option Grants and Exercises" and "Report of Compensation Committee on Executive Compensation" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 9, 1996, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to security ownership of certain beneficial owners and management is incorporated by reference to the section entitled "Trustees and Executive Officers" of the Trust's definitive Proxy Statement in connection with the annual Meeting of Shareholders to be held May 9, 1996, which will be filed with the Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, pursuant to General Instruction G to this Form 10-K.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Trust, its employees, officers or trustees are not engaged in any related transactions with the Trust. Additionally, the Trust has never made any loans to its management.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Page ---- (a) 1. Financial Statements - Included in Item 8 Report of Independent Certified Public Accountants 21 Balance Sheets - December 31, 1995 and 1994 22 Financial Statements for the Years Ended December 31, 1995, 1994 and 1993: Statements of Income 23 Statements of Shareholders' Equity 24 Statements of Cash Flows 25 Notes to Financial Statements 26 to 34
2. Financial Statement Schedule III: Real Estate and Accumulated Depreciation 35 to 36
3. Additional Information: 1995 Building Improvement and Leasing Commission Additions (unaudited) 37
(b) 1. Reports on Form 8-K.
None.
Page ---- (c) Exhibits.
(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).
(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 Statement dated March 25, 1986, and incorporated herein by reference.
(23)* Consent of Independent Certified Public Accountants 41 __________
* Filed with this report. ** Management contract or compensatory plan or arrangement.
Consent of Independent Certified Public Accountants
The Trustees Western Investment Real Estate Trust:
We consent to incorporation by reference in the registration statement (No. 33-27016) on Form S-8 of Western Investment Real Estate Trust of our report dated January 29, 1996, relating to the balance sheets of Western Investment Real Estate Trust as of December 31, 1995 and 1994, and the related statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, and the related schedule, which report appears in the December 31, 1995, annual report on Form 10-K of Western Investment Real Estate Trust.
San Francisco, California KPMG PEAT MARWICK LLP March 21, 1996
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 there unto duly authorized.
WESTERN INVESTMENT REAL ESTATE TRUST - ------------------------------------ (Registrant)
By: s/ DENNIS D. RYAN ------------------------------------- Dennis D. Ryan Executive Vice President, Chief Financial Officer Dated: March 21, 1996 and Trustee --------------
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.
Signature Title Date - --------- ----- ----
s/ O. A. Talmage Chairman of the Board, March 21, 1996 - ------------------------------ Chief Executive -------------- O. A. Talmage Officer and Trustee
s/ William A. Talmage President, March 21, 1996 - ------------------------------ Chief Operating Officer -------------- William A. Talmage and Trustee
s/ Dennis D. Ryan Executive Vice President, March 21, 1996 - ------------------------------ Chief Financial Officer -------------- Dennis D. Ryan and Trustee
s/ Chester R. MacPhee, Jr. Trustee March 21, 1996 - ------------------------------ -------------- Chester R. MacPhee, Jr.
s/ Reginald B. Oliver Trustee March 21, 1996 - ------------------------------ -------------- Reginald B. Oliver
s/ James L. Stell Trustee March 21, 1996 - ------------------------------ -------------- James L. Stell