Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Item 102 -- Description of Property

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1. Give the location of the principal plants and other property of the small business issuer and describe the condition of the property. If the small business issuer does not have complete ownership of the property, for example, others also own the property or there is a mortgage or lien on the property, describe the limitations on the ownership.
   
   

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   Instructions to Item 102(a).
   
   
   1. Small business issuers engaged in significant mining operations also should provide the information in Guide 7 (Item 801(g) and Item 802(g) of this chapter).
      
      
   2. Small business issuers engaged in oil and gas producing activities also should provide the information in Guide 2 (Item 801(b) and Item 802(b) of this chapter).
      
      
   3. Small business issuers engaged in real estate activities should, in addition to Guide 5 (Item 801(e) of this chapter) provide responses to the following Items:

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2. Investment Policies. Describe the policy of the small business issuer with respect to each of the following types of investments. State whether there are any limitations on the percentage of assets which may be invested in any one investment, or type of investment, and indicate whether such policy may be changed without a vote of security holders. State whether it is the small business issuer's policy to acquire assets primarily for possible capital gain or primarily for income.
   
   
   1. Investments in real estate or interests in real estate. Indicate the types of real estate in which the small business issuer may invest, for example, office or apartment buildings, shopping centers, industrial or commercial properties, special purpose buildings and undeveloped acreage, and the geographic area(s) of these properties. Briefly describe the method, or proposed method, of operating and financing these properties. Indicate any limitations on the number or amount of mortgages which may be placed on any one piece of property.
      
      
   2. Investments in real estate mortgages. Indicate the types of mortgages, for example, first or second mortgages, and the types of properties subject to mortgages in which the small business issuer intends to invest, for example, single family dwellings, apartment buildings, office buildings, unimproved land, and the nature of any guarantees or insurance. Describe each type of mortgage activity in which the small business issuer intends to engage such as originating, servicing and warehousing, and the portfolio turnover policy.
      
      
   3. Securities of or interests in persons primarily engaged in real estate activities. Indicate the types of securities in which the small business issuer may invest, for example, common stock, interest in real estate investment trusts, partnership interests. Indicate the primary activities of persons in which the small business issuer will invest, such as mortgage sales, investments in developed or undeveloped properties and state the investment policies of such persons.
   
   
   
3. Description of Real Estate and Operating Data. This information shall be furnished separately for each property the book value of which amounts to ten percent or more of the total assets of the small business issuer and its consolidated subsidiaries for the last fiscal year. With respect to other properties, the information shall be given by such classes or groups and in such detail as will reasonably convey the information required.
   
   
   1. Describe the general character and location of all materially important properties held or intended to be acquired by or leased to the small business issuer and describe the present or proposed use of such properties and their suitability and adequacy for such use. Properties not yet acquired shall be identified as such.
      
      
   2. State the nature of the small business issuer's title to, or other interest in such properties and the nature and amount of all material mortgages, liens or encumbrances against such properties. Disclose the current principal amount of each material encumbrance, interest and amortization provisions, prepayment provisions, maturity date and the balance due at maturity assuming no prepayments.
      
      
   3. Outline briefly the principal terms of any lease of any of such properties or any option or contract to purchase or sell any of such properties.
      
      
   4. Outline briefly any proposed program for the renovation, improvement or development of such properties, including the estimated cost thereof and the method of financing to be used. If there are no present plans for the improvement or development of any unimproved or undeveloped property, so state and indicate the purpose for which the property is to be held or acquired.
      
      
   5. Describe the general competitive conditions to which the properties are or may be subject.
      
      
   6. Include a statement as to whether, in the opinion of the management of the small business issuer, the properties are adequately covered by insurance.
      
      
   7. With respect to each improved property which is separately described, provide the following in addition to the above:
      
      
      1. Occupancy rate;
         
         
      2. Number of tenants occupying ten percent or more of the rentable square footage and principal nature of business of each such tenant and the principal provisions of each of their leases;
         
         
      3. Principal business, occupations and professions carried on in, or from the building;
         
         
      4. The average effective annual rental per square foot or unit;
         
         
      5. Schedule of the lease expirations for each of the ten years starting with the year in which the registration statement is filed, stating:
         
         
         1. the number of tenants whose leases will expire,
            
            
         2. the total area in square feet covered by such leases,
            
            
         3. the annual rental represented by such leases, and
            
            
         4. the percentage of gross annual rental represented by such leases;
         
         
         
      6. Each of the properties and components thereof upon which depreciation is taken, setting forth the:
         
         
         
         1. federal tax basis,
            
            
         2. rate,
            
            
         3. method; and
            
            
         4. life claimed with respect to such property or component thereof for purposes of depreciation;
         
         
         
      7. The realty tax rate, annual realty taxes and estimated taxes on any proposed improvements.
         
         

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      Instruction: If the small business issuer has a number of properties, the information may be given in tabular form.

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