SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):December 12, 2002
NEW PLAN EXCEL REALTY TRUST, INC.
(Exact name of Company as specified in its charter)
| Maryland (State or other jurisdiction of incorporation) | 1-12244 (Commission File Number) | 33-0160389 (IRS Employer Identification Number) |
1120 Avenue of the Americas, 12th Floor New York, New York (Address of principal executive offices) | 10036 (Zip Code) |
Company's telephone number, including area code:
(212) 869-3000
Not applicable
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
On December 12, 2002, New Plan Excel Realty Trust, Inc. (the "Company") closed on 57 community and neighborhood shopping centers from Equity Investment Group ("EIG"), a private retail focused REIT. The acquisition of one additional shopping center from EIG is expected to close in January 2003.
The aggregate purchase price for the acquisition was approximately $437 million, consisting of the assumption of approximately $149 million of outstanding indebtedness, the issuance of approximately $25 million of units in a partnership controlled by the Company and approximately $263 million in cash. The cash component of the acquisition was financed with proceeds from the sale of four factory outlet centers to Chelsea Property Group, which closed on December 19, 2002 and generated gross proceeds of approximately $193 million, and through borrowings under the Company's existing credit facility with Fleet National Bank as lead agent.
Item 7. Financial Statements and Exhibits
The financial statements and other information required pursuant to Rule 3-14 of Regulation S-X are included herein. See the financial statements andpro forma financial information attached hereto.
Thepro forma financial statements required pursuant to Article 11 of Regulation S-X are included herein. See the financial statements andpro forma financial information attached hereto.
The following exhibits are filed as part of this report:
| 2.1 | Purchase Agreement, dated as of October 17, 2002, by and between the Company and EIG Realty, Inc. | ||
2.2 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and between the Company and EIG Realty, Inc. | ||
2.3 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and between the Company and EIG Realty, Inc. | ||
2.4 | Purchase Agreement, dated as of October 17, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC and RIG Hilltop Plaza, LLC. | ||
2.5 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC, RIG Hilltop Plaza, LLC and RIG Normandy Square, LLC. | ||
2.6 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC, RIG Hilltop Plaza, LLC and RIG Normandy Square, LLC. | ||
2.7 | Purchase Agreement, dated as of October 17, 2002, by and between the Company and EIG Operating Partnership, L.P. | ||
2.8 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and between the Company and EIG Operating Partnership, L.P. | ||
2
2.9 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. | ||
2.10 | Contribution Agreement, dated as of October 17, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | ||
2.11 | First Amendment to Contribution Agreement, dated as of November 6, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | ||
2.12 | Second Amendment to Contribution Agreement, dated as of December 9, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | ||
2.13 | Closing Day Amendment to Contribution Agreement, dated as of December 12, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | ||
4.1 | Registration Rights Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. | ||
4.2 | Registration Rights Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. |
3
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEW PLAN EXCEL REALTY TRUST, INC. | ||
| Date: December 27, 2002 | By: | /s/ STEVEN F. SIEGEL Steven F. Siegel Executive Vice President, General Counsel and Secretary |
4
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
September 30, 2002
(unaudited, in thousands)
| | Historical(a) | EIG Acquisition(b) | Factory Outlet Disposition(c) | Pro Forma | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||||||||
| Real estate: | ||||||||||||||||
| Land | $ | 731,480 | $ | 136,416 | (b1) | $ | (11,137 | )(c1) | $ | 856,759 | ||||||
| Building and improvements | 2,599,462 | 318,304 | (b1) | (127,776 | )(c1) | 2,789,990 | ||||||||||
| Accumulated depreciation and amortization | (310,113 | ) | — | 28,249 | (c1) | (281,864 | ) | |||||||||
| Net real estate | 3,020,829 | 454,720 | (110,664 | ) | 3,364,885 | |||||||||||
| Real estate held for sale | 44,743 | — | — | 44,743 | ||||||||||||
| Cash and cash equivalents | 6,384 | 1,030 | (b2) | — | 7,414 | |||||||||||
| Restricted cash | 13,126 | — | — | 13,126 | ||||||||||||
| Marketable securities | 2,098 | — | — | 2,098 | ||||||||||||
| Receivables: | ||||||||||||||||
| Trade, less allowance for doubtful accounts of $14,874 | 46,408 | — | — | 46,408 | ||||||||||||
| Other, net | 18,965 | — | — | 18,965 | ||||||||||||
| Mortgages and notes receivable | 2,939 | — | — | 2,939 | ||||||||||||
| Prepaid expenses and deferred charges | 24,480 | — | — | 24,480 | ||||||||||||
| Investment in/advances to unconsolidated ventures | 53,518 | — | — | 53,518 | ||||||||||||
| Other assets | 21,663 | — | — | 21,663 | ||||||||||||
| Total assets | $ | 3,255,153 | $ | 455,750 | $ | (110,664 | ) | $ | 3,600,239 | |||||||
| LIABILITES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Mortgages payable, including unamortized premium of $5,059 | $ | 504,743 | $ | 163,372 | (b3) | $ | — | $ | 668,115 | |||||||
| Notes payable, net of unamortized discount of $2,325 | 783,873 | — | — | 783,873 | ||||||||||||
| Credit facilities | 185,000 | 265,788 | (b1) | (193,000 | )(c2) | 257,788 | ||||||||||
| Capital leases | 28,961 | — | — | 28,961 | ||||||||||||
| Other liabilities | 152,786 | — | — | 152,786 | ||||||||||||
| Tenant security deposits | 8,213 | 1,030 | (b2) | — | 9,243 | |||||||||||
| Total liabilities | 1,663,576 | 430,190 | (193,000 | ) | 1,900,766 | |||||||||||
| Minority interest in consolidated partnership | 13,966 | 25,560 | (b1) | — | 39,526 | |||||||||||
| Commitments and contingencies | — | — | — | — | ||||||||||||
Stockholders' equity: | ||||||||||||||||
| Preferred stock | 8 | — | — | 8 | ||||||||||||
| Common stock | 968 | — | — | 968 | ||||||||||||
| Additional paid-in capital | 1,825,654 | — | — | 1,825,654 | ||||||||||||
| Accumulated other comprehensive loss | (979 | ) | — | — | (979 | ) | ||||||||||
| Accumulated distribution in excess of net income | (248,040 | ) | — | 82,336 | (c3) | (165,704 | ) | |||||||||
| Total stockholders' equity | $ | 1,577,611 | — | 82,336 | $ | 1,659,947 | ||||||||||
| Total liabilities and stockholders' equity | $ | 3,255,153 | $ | 455,750 | $ | (110,664 | ) | $ | 3,600,239 | |||||||
F-1
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Notes to Pro Forma Consolidated Balance Sheet
September 30, 2002
(unaudited, in thousands, except per share amounts)
Presentation
The preceding pro forma consolidated balance sheet as of September 30, 2002 presents the historical amounts for New Plan Excel Realty Trust, Inc. and its subsidiaries (collectively the "Company"), adjusted for the effects of (i) the acquisition by the Company of 58 community and neighborhood shopping centers from Equity Investment Group (the "EIG Acquisition"), and (ii) the disposition by the Company of four of its factory outlet properties (the "Factory Outlet Disposition"), as if such transactions had occurred on September 30, 2002.
The pro forma consolidated balance sheet should be read in conjunction with the pro forma consolidated statement of operations of the Company and the historical financial statements and notes thereto of the Company presented in the Company's Form 10-Q for the quarter ended September 30, 2002.
The pro forma consolidated balance sheet is unaudited and is not necessarily indicative of what the actual financial position of the Company would have been had the transactions described above actually occurred on September 30, 2002, nor does it purport to represent the future financial position of the Company.
Notes and Management Assumptions
| Cash | $ | 261,788 | |||
| Assumed debt | 163,372 | ||||
| Partnership units issued | 25,560 | (1) | |||
| Estimated transaction-related costs | 4,000 | ||||
| Total | $ | 454,720 | |||
The cash component and estimated transaction-related costs of the EIG Acquisition were financed through a draw on the Company's existing credit facilities.
F-2
F-3
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2002
(unaudited, in thousands, except per share amounts)
| | | | | | Pro Forma Adjustments | | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Historical(a) | Factory Outlet Historical(b) | EIG Acquisition Historical(c) | Center America Historical(d) | EIG Acquisition(e) | Center America Acquisition(f) | Other(g) | Pro Forma | |||||||||||||||||||
| Rental revenues: | |||||||||||||||||||||||||||
| Rental income | $ | 247,209 | $ | (17,601 | ) | $ | 37,521 | $ | 12,212 | $ | — | $ | 124 | (f1) | $ | — | $ | 279,465 | |||||||||
| Percentage rents | 6,212 | (1,166 | ) | — | 144 | — | — | — | 5,190 | ||||||||||||||||||
| Expense reimbursements | 57,553 | (3,269 | ) | 7,846 | 2,887 | — | — | — | 65,017 | ||||||||||||||||||
| Total rental revenues | 310,974 | (22,036 | ) | 45,367 | 15,243 | — | 124 | — | 349,672 | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||
| Operating costs | 53,426 | (5,202 | ) | 7,582 | 1,442 | — | — | — | 57,248 | ||||||||||||||||||
| Real estate and other taxes | 34,984 | (1,103 | ) | 5,115 | 2,028 | — | — | — | 41,024 | ||||||||||||||||||
| Interest | 68,371 | — | — | 824 | 7,658 | (e1) | 2,640 | (f2) | 5,488 | (g1) | 84,981 | ||||||||||||||||
| Depreciation and amortization | 52,143 | (2,805 | ) | — | — | 5,788 | (e2) | 2,177 | (f3) | — | 57,303 | ||||||||||||||||
| Provision for doubtful accounts | 7,093 | (255 | ) | — | 789 | — | — | — | 7,627 | ||||||||||||||||||
| General and administrative | 13,329 | (9 | ) | 788 | 582 | — | — | — | 14,690 | ||||||||||||||||||
| Total expenses | 229,346 | (9,374 | ) | 13,485 | 5,665 | 13,446 | 4,817 | 5,488 | 262,873 | ||||||||||||||||||
| Income before real estate sales, impairment of real estate, minority interest and other income and expenses | 81,628 | (12,662 | ) | 31,882 | 9,578 | (13,446 | ) | (4,693 | ) | (5,488 | ) | 86,799 | |||||||||||||||
| Other income and expenses: | |||||||||||||||||||||||||||
| Interest, dividend and other income | 8,792 | (3 | ) | — | — | — | — | — | 8,789 | ||||||||||||||||||
| Equity participation in ERT | — | — | — | — | — | — | — | — | |||||||||||||||||||
| Equity in income of unconsolidated ventures | 3,733 | — | — | — | — | (28 | )(f3) | — | 3,705 | ||||||||||||||||||
| Foreign currency loss | (13 | ) | — | — | — | — | — | — | (13 | ) | |||||||||||||||||
| Gain on sale of real estate | 371 | — | — | — | — | — | — | 371 | |||||||||||||||||||
| Impairment of real estate | (1,750 | ) | — | — | — | — | — | — | (1,750 | ) | |||||||||||||||||
| Minority interest in income of consolidated partnership | (418 | ) | — | — | — | (776 | )(e3) | — | — | (1,194 | ) | ||||||||||||||||
| Income from continuing operations | $ | 92,343 | $ | (12,665 | ) | $ | 31,882 | $ | 9,578 | $ | (14,222 | ) | $ | (4,721 | ) | $ | (5,488 | ) | $ | 96,707 | |||||||
| Income from continuing operations per common share | |||||||||||||||||||||||||||
| Basic | $ | 0.88 | $ | 0.92 | |||||||||||||||||||||||
| Diluted | $ | 0.87 | $ | 0.90 | |||||||||||||||||||||||
Average shares outstanding—basic | 94,519 | 95,227 | (g3) | ||||||||||||||||||||||||
| Average shares outstanding—diluted | 96,123 | 98,213 | (g3) | ||||||||||||||||||||||||
F-4
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2001
(unaudited, in thousands, except per share amounts)
| | | | | | Pro Forma Adjustments | | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Historical(a) | Factory Outlet Historical(b) | EIG Acquisition Historical(c) | Center America Historical(d) | EIG Acquisition (e) | Center America Acquisition(f) | Other (g) | Pro Forma | |||||||||||||||||||
| Rental revenues: | |||||||||||||||||||||||||||
| Rental income | $ | 270,244 | $ | (22,992 | ) | 46,693 | $ | 68,956 | $ | — | $ | 163 | (f1) | $ | — | $ | 363,064 | ||||||||||
| Percentage rents | 7,139 | (1,763 | ) | — | 1,150 | — | — | — | 6,526 | ||||||||||||||||||
| Expense reimbursements | 61,026 | (4,457 | ) | 10,388 | 18,233 | — | — | — | 85,190 | ||||||||||||||||||
| Total rental revenues | 338,409 | (29,212 | ) | 57,081 | 88,339 | — | 163 | — | 454,780 | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||
| Operating costs | 56,698 | (6,324 | ) | 8,598 | 12,631 | — | — | — | 71,603 | ||||||||||||||||||
| Real estate and other taxes | 35,424 | (1,430 | ) | 6,322 | 12,319 | — | — | — | 52,635 | ||||||||||||||||||
| Interest | 78,779 | — | — | — | 10,211 | (e1) | 15,838 | (f2) | 9,244 | (g1) | 114,072 | ||||||||||||||||
| Depreciation and amortization | 57,615 | (3,870 | ) | — | — | 7,718 | (e2) | 13,064 | (f3) | — | 74,527 | ||||||||||||||||
| Provision for doubtful accounts | 6,453 | (671 | ) | — | 1,527 | — | — | — | 7,309 | ||||||||||||||||||
| Severance costs | 896 | — | — | — | — | — | — | 896 | |||||||||||||||||||
| General and administrative | 10,318 | (13 | ) | 1,424 | 5,213 | — | — | — | 16,942 | ||||||||||||||||||
| Total expenses | 246,183 | (12,308 | ) | 16,344 | 31,690 | 17,929 | 28,902 | 9,244 | 337,984 | ||||||||||||||||||
| Income before real estate sales, impairment of real estate, minority interest and other income and expenses | 92,226 | (16,904 | ) | 40,737 | 56,649 | (17,929 | ) | (28,739 | ) | (9,244 | ) | 116,796 | |||||||||||||||
| Other income and expenses: | |||||||||||||||||||||||||||
| Interest, dividend and other income | 13,990 | (14 | ) | — | 3,309 | — | — | — | 17,285 | ||||||||||||||||||
| Equity participation in ERT | (4,313 | ) | — | — | — | — | — | 2,501 | (g2) | (1,812 | ) | ||||||||||||||||
| Equity in income of unconsolidated ventures | 985 | — | — | 62 | — | (166 | )(f3) | — | 881 | ||||||||||||||||||
| Foreign currency loss | (560 | ) | — | — | — | — | — | — | (560 | ) | |||||||||||||||||
| Gain on sale of real estate | 1,610 | (245 | ) | — | — | — | — | — | 1,365 | ||||||||||||||||||
| Impairment of real estate | (13,107 | ) | — | — | — | — | — | — | (13,107 | ) | |||||||||||||||||
| Minority interest in income of consolidated partnership | (848 | ) | — | — | (273 | ) | (1,015 | )(e3) | — | — | (2,136 | ) | |||||||||||||||
| Income from continuing operations | $ | 89,983 | $ | (17,163 | ) | $ | 40,737 | $ | 59,747 | $ | (18,944 | ) | $ | (28,905 | ) | $ | (6,743 | ) | $ | 118,712 | |||||||
| Income from continuing operations per common share | |||||||||||||||||||||||||||
| Basic | $ | 0.77 | $ | 1.02 | |||||||||||||||||||||||
| Diluted | $ | 0.77 | $ | 0.99 | |||||||||||||||||||||||
| Average shares outstanding—basic | 87,241 | 94,141 | (g3) | ||||||||||||||||||||||||
| Average shares outstanding—diluted | 88,799 | 97,081 | (g3) | ||||||||||||||||||||||||
F-5
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Notes to Pro Forma Consolidated Statements of Operations
Nine Months Ended September 30, 2002 and Year Ended December 31, 2001
(unaudited, in thousands, except per share amounts)
Presentation
The preceding pro forma consolidated statements of operations for the nine months ended September 30, 2002 and for the year ended December 31, 2001 present the historical amounts for New Plan Excel Realty Trust, Inc. and its subsidiaries (collectively the "Company"), adjusted for the effects of (i) the acquisition by the Company of 58 community and neighborhood shopping centers from Equity Investment Group ("EIG Acquisition"), (ii) the disposition by the Company of four of its factory outlet properties ("Factory Outlet Disposition"), (iii) the acquisition of 92 community and neighborhood shopping centers and equity investment from CenterAmerica Property Trust, L.P. on March 1, 2002 (the "CenterAmerica Acquisition"), and (iv) other adjustments, including the public offering of 6,900,000 shares of common stock of the Company (the "Stock Offering") completed on January 29, 2002, the offering of $250 million of 5.875% senior unsecured notes (the "Bond Offering") completed on June 11, 2002, and the disposition by the Company of its garden apartment portfolio (the "Apartment Disposition") completed on September 21, 2001, as if such transactions had occurred on January 1, 2001.
Notes and Management Assumptions
| | Nine months ended September 30, 2002 | Year ended December 31, 2001 | ||||
|---|---|---|---|---|---|---|
| Interest expense—mortgage debt assumed (interest rate of 6.25%) | $ | 7,658 | $ | 10,211 | ||
F-6
Mortgage debt assumed in connection with the EIG Acquisition is summarized as follows (in thousands):
| Description | Principal Amount | Interest Rate | Due Date | ||||
|---|---|---|---|---|---|---|---|
| 27 Properties | $ | 163,372 | 6.25 | % | 3/1/06 - 2/1/28 | ||
| | Nine months ended September 30, 2002 | Year ended December 31, 2001 | ||||
|---|---|---|---|---|---|---|
| Interest expense—mortgage debt assumed | $ | 2,640 | $ | 15,838 | ||
Mortgage debt assumed in connection with the CenterAmerica Acquisition is summarized as follows (in thousands):
| Description | Principal Amount | Interest Rate | Due Date | ||||
|---|---|---|---|---|---|---|---|
| REMIC—Floating | $ | 110,500 | LIBOR + 150 bp | 07/02/03 | |||
| Merchants Park/The Crossing at Fry Road | 21,414 | 7.81 | % | 07/01/04 | |||
| 41 Properties (REMIC) | 156,616 | 6.67 | % | 06/01/08 | |||
F-7
Orlando Loan. This results in pro forma interest expense savings for ERT of $2,501 for the six months ended June 30, 2001 (ERT was consolidated with the Company effective as of July 1, 2001), which results in an increase of $2,501 in the Company's participation in ERT during the year ended December 31, 2001.
| | Nine months ended September 30, 2002 | Year ended December 31, 2001 | ||
|---|---|---|---|---|
| Basic: | ||||
| Historical basic weighted average common shares outstanding | 94,519 | 87,241 | ||
| Effect of pro forma adjustment for shares issued in Stock Offering | 708 | 6,900 | ||
| Pro forma basic weighted average common shares outstanding | 95,227 | 94,141 | ||
| Diluted: | ||||
| Historical diluted weighted average common shares outstanding | 96,123 | 88,799 | ||
| Effect of pro forma adjustment for shares issued in Stock Offering | 708 | 6,900 | ||
| Effect of pro forma adjustment for units issued in EIG Acquisition | 1,382 | 1,382 | ||
| Pro forma diluted weighted average common shares outstanding | 98,213 | 97,081 | ||
F-8
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
Estimated Twelve-Month Pro Forma Statement of
Taxable Income and Operating Funds Available (unaudited)
The following unaudited statement is a pro forma estimate for the twelve month period ended September 30, 2002 of taxable income and funds available from operations of the Company. The pro forma statement is based on the Company's historical operating results for the twelve-months ended September 30, 2002, adjusted for the acquisition by the Company of 58 community and neighborhood shopping centers from Equity Investment Group, (ii) the disposition by the Company of four of its factory outlet properties, (iii) the acquisition of 92 community and neighborhood shopping centers and equity investment from CenterAmerica Property Trust, L.P. on March 1, 2002, and (iv) other adjustments, including the public offering of 6,900,000 shares of common stock of the Company completed on January 29, 2002, the offering of $250 million of 5.875% senior unsecured notes completed on June 11, 2002, and the disposition by the Company of its garden apartment portfolio completed on September 21, 2001. This statement does not purport to forecast actual operating results for any period in the future.
This statement should be read in conjunction with the historical financial statements and notes thereto of the Company presented in the Company's Form 10-Q for the quarter ended September 30, 2002 and the pro forma financial statements and notes thereto of the Company presented elsewhere in this filing.
| Estimate of Taxable Income (in thousands): | ||||
| Company pro forma income before minority interest for the twelve-month period ended September 30, 2002 | $ | 110,740 | ||
| Net adjustment for tax basis revenue and expense recognition, exclusive of depreciation and amortization(1) | (112 | ) | ||
| Estimated tax deprecation and amortization adjustment(2) | (713 | ) | ||
| Pro forma taxable income before allocation to minority interest and dividends deduction | 109,915 | |||
| Estimated allocation to minority interest | (1,640 | ) | ||
| Estimated dividends deduction(3) | (179,465 | ) | ||
| Pro forma taxable income | $ | (71,190 | ) | |
| Estimated operating funds available (in thousands): | ||||
| Pro forma taxable income before allocation to minority interest and dividends deduction | $ | 109,915 | ||
| Add: pro forma depreciation and amortization | 73,304 | |||
| Estimated operating funds available(4) | $ | 183,219 | ||
F-9
| Dividends | Div per share | Pro forma o/s | Total div | |||||
|---|---|---|---|---|---|---|---|---|
| Common | $ | 1.65 | 95,081 | $ | 156,884 | |||
| Preferred A | $ | 2.125 | 1,481 | 3,147 | ||||
| Preferred B | $ | 2.15625 | 6,300 | 13,584 | ||||
| Preferred D | $ | 3.90 | 1,500 | 5,850 | ||||
| $ | 179,465 | |||||||
F-10
Certain Properties of the EIG Realty Portfolio
Combined Statements of Revenue and Expenses
Year ended December 31, 2001 and Nine Months Ended September 30, 2002 (Unaudited)
Contents
| Report of Independent Auditors | F-12 | |
Financial Statements: | ||
| Combined Statements of Revenue and Certain Expenses | F-13 | |
| Notes to Combined Statements of Revenue and Certain Expenses | F-14 |
F-11
Report of Independent Auditors
Board of Directors
EIG Realty, Inc.
We have audited the accompanying combined statement of revenue and certain expenses of Certain Properties of the EIG Realty Portfolio for the year ended December 31, 2001. This combined statement is the responsibility of EIG Realty, Inc.'s management. Our responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement of revenue and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement of revenue and certain expenses. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the requirements with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of New Plan Excel Realty Trust, Inc. as described in Note 1 and is not intended to be a complete presentation of the EIG Realty Portfolio's revenue and expenses.
In our opinion, the combined statement of revenue and certain expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 2 of Certain Properties of the EIG Realty Portfolio for the year ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
December 2, 2002
Indianapolis, Indiana
F-12
Portfolio of Certain Properties of EIG Realty, Inc. and Affiliate
Combined Statements of Revenue and Certain Expenses
| | Year Ending December 31, 2001 | Nine Months Ending September 30, 2002 | ||||
|---|---|---|---|---|---|---|
| | | (Unaudited) | ||||
| Revenue | ||||||
| Rental income | $ | 46,536,934 | $ | 37,432,025 | ||
| Recoveries | 10,387,743 | 7,846,272 | ||||
| Miscellaneous income | 155,724 | 88,847 | ||||
| Total revenue | 57,080,401 | 45,367,144 | ||||
Operating expenses | ||||||
| Property taxes | 6,321,820 | 5,115,366 | ||||
| Insurance | 622,597 | 1,025,821 | ||||
| Repairs and maintenance | 4,474,415 | 3,707,777 | ||||
| Utilities | 1,295,165 | 937,401 | ||||
| Management fees | 2,206,195 | 1,911,424 | ||||
| Other general and administrative | 1,423,979 | 787,705 | ||||
| Total expenses | 16,344,171 | 13,485,494 | ||||
| Revenue in excess of certain expenses | $ | 40,736,230 | $ | 31,881,650 | ||
See accompanying notes.
F-13
Certain Properties of the EIG Realty Portfolio
Notes to Combined Statements of Revenue and Certain Expenses
Year Ended December 31, 2001 and
Nine Months Ended September 30, 2002 (Unaudited)
1. Business and Basis of Presentation
Business
The accompanying combined statements of revenue and certain expenses relate to operations of fifty-four commercial retail shopping centers held by EIG Realty Inc. and four properties owned by an Affiliate of EIG Realty Inc. ("the EIG Realty Portfolio"). The EIG Realty Portfolio is expected to be acquired by New Plan Excel Realty Trust, Inc. ("New Plan Excel").
Basis of Presentation
Three EIG Realty Portfolio properties were acquired by the EIG Realty Portfolio during 2001 and one property was acquired in 2002; accordingly, the combined statements of revenue and certain expenses include the revenue and certain expenses commencing with their acquisition date.
The accompanying statements of revenue and certain expenses for the year ended December 31, 2001 and the nine months ending September 30, 2002 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. The statements of revenue and certain expenses are not representative of the actual operations of the properties for the period presented nor are they indicative of future operations as certain expenses, consisting of interest expense, depreciation, and amortization, which may not be comparable to expenses expected to be incurred by New Plan Excel in future operations of the properties, have been excluded.
The accompanying unaudited combined statement of revenues and certain expenses for the nine months ended September 30, 2002 has been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. In the opinion of management, all adjustments, consisting only of recurring accruals, considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for a full fiscal year.
The EIG Realty Portfolio consists of the following properties:
| | Property | Location | ||
|---|---|---|---|---|
| 1 | Conway Towne Center | Conway, Arkansas | ||
| 2 | Arvada Plaza | Arvarda, Colorado | ||
| 3 | Aurora Plaza | Aurora, Colorado | ||
| 4 | Sun Plaza | Fort Walton Beach, Florida | ||
| 5 | Holly Hill Shopping Center | Holly Hill, Florida | ||
| 6 | Normandy Square | Jacksonville, Florida (Acquired May, 2002) | ||
| 7 | Plaza 66 | Kenneth City, Florida | ||
| 8 | New Port Richey Center | New Port Richey, Florida | ||
| 9 | Pensacola Square | Pensacola, Florida | ||
| 10 | Skyway Plaza | St. Petersburg, Florida |
F-14
| 11 | Tarpon Mall | Tarpon Springs, Florida | ||
| 12 | Northeast Plaza | Atlanta, Georgia | ||
| 13 | North Leg Plaza | Augusta, Georgia | ||
| 14 | Covered Bridge | Clayton, Georgia | ||
| 15 | Merchants Crossing | Newnan, Georgia | ||
| 16 | Village Mart | Aurora, Illinois | ||
| 17 | Festival Center | Bradley, Illinois | ||
| 18 | Pershing Plaza | Decatur, Illinois | ||
| 19 | Freeport Plaza | Freeport, Illinois | ||
| 20 | Olympia Corners | Olympia Fields, Illinois | ||
| 21 | Elkhart Plaza West | Elkhart, Indiana | ||
| 22 | Elkhart Market Centre | Goshen, Indiana | ||
| 23 | Marwood Plaza | Indianapolis, Indiana | ||
| 24 | Westlane Shopping Center | Indianapolis, Indiana | ||
| 25 | Knox Plaza | Vincennes, Indiana | ||
| 26 | Florence Plaza | Florence, Kentucky | ||
| 27 | Towne Square North | Owensboro, Kentucky | ||
| 28 | Karam Shopping Center | Lafayette, Louisiana | ||
| 29 | Desiard Plaza | Monroe, Louisiana | ||
| 30 | Points West | Brockton, Massachusetts | ||
| 31 | Holyoke Shopping Center | Holyoke, Massachusetts | ||
| 32 | Green Acres | Saginaw, Michigan | ||
| 33 | University IV | Spring Lake Park, Minnesota | ||
| 34 | Macon Plaza | Franklin, North Carolina | ||
| 35 | Parkway Plaza | Winston-Salem, North Carolina | ||
| 36 | Sunshine Square | Medford, New York | ||
| 37 | Springbrook Plaza | Canton, Ohio | ||
| 38 | Hillcrest Square | Cincinnati, Ohio | ||
| 39 | Karl Plaza | Columbus, Ohio | ||
| 40 | The Vineyards | Eastlake, Ohio | ||
| 41 | Napoleon Center | Napoleon, Ohio | ||
| 42 | Alexis Park | Toledo, Ohio | ||
| 43 | Glengary Shopping Center | Westerville, Ohio | ||
| 44 | Bristol Plaza | Bristol, Pennsylvania | ||
| 45 | Hunt River Commons | North Kinstown, Rhode Island (Acquired October, 2001) | ||
| 46 | South Park | Aiken, South Carolina | ||
| 47 | Lexington Town Square | Lexington, South Carolina | ||
| 48 | Festival Centre | North Charleston, South Carolina | ||
| 49 | Chapman Square | Knoxville, Tennessee | ||
| 50 | Northshore Plaza | Portland, Texas |
F-15
| 51 | Jefferson Green | Newport News, Virginia | ||
| 52 | Cross Pointe Marketplace | Richmond, Virginia | ||
| 53 | Tuckernuck Square | Richmond, Virginia | ||
| 54 | Hilltop Plaza | Virginia Beach, Virginia (Acquired January, 2001) | ||
| 55 | Packard Plaza | Cudahy, Wisconsin | ||
| 56 | Northridge Plaza | Milwaukee, Wisconsin | ||
| 57 | Paradise Pavilion | West Bend, Wisconsin (Acquired December 2001) | ||
| 58 | Cheyenne Plaza | Cheyenne, Wyoming |
2. Significant Accounting Policies
Revenue Recognition
Rental income is recognized on a straight-line basis over the terms of the respective lease agreements. Certain tenants are also required to pay overage rents based on sales above a stated base amount during the lease year. Overage rents are recognized as revenues based on actual reported sales for each tenant less the applicable stated base amount.
Recoveries
Certain operating expenses, including real estate taxes and utilities, incurred in the operation of the investment properties are reimbursable by the tenants. The reimbursable amounts (expense recoveries) not fixed by the lease are either adjusted periodically on a prospective basis or adjusted annually based on actual expenses incurred. Reimbursements are recognized as revenue in the period in which the applicable costs are incurred. Miscellaneous income consists primarily of short-term rentals in the retail properties.
Tenant credit losses are provided when they become known.
Use of Estimates
The preparation of the combined statements of revenue and certain expenses in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3. Tenant Leases
The EIG Realty Portfolio leases retail space to tenants under noncancelable lease agreements with terms ranging from 1 to 25 years. The leases generally provide for fixed annual minimum rents, contingent rents based on sales volume and reimbursement of certain operating expenses. Contingent rents based on sales volume, approximated $763,000 for the year ended December 31, 2001 and $548,000 (unaudited) for the nine months ended September 30, 2002 for the Properties. Approximate
F-16
annual future minimum rental commitments to be received from executed operating leases as of December 31, 2001, exclusive of tenant reimbursements and contingent rentals, are as follows:
| Year ending December 31, | ||||
| 2002 | $ | 46,703,759 | ||
| 2003 | 44,147,297 | |||
| 2004 | 39,436,802 | |||
| 2005 | 34,393,591 | |||
| 2006 | 29,117,332 | |||
| Thereafter | 143,213,243 | |||
| $ | 337,012,024 | |||
4. Related Party Transactions
The EIG Realty Portfolio is charged a management fee of 4% of gross revenues by a wholly owned subsidiary of EIG Realty, Inc., related to the leasing, billing, collection of rent, and preparation of financial data.
F-17
| Exhibit | Document | |
|---|---|---|
| 2.1 | Purchase Agreement, dated as of October 17, 2002, by and between the Company and EIG Realty, Inc. | |
2.2 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and between the Company and EIG Realty, Inc. | |
2.3 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and between the Company and EIG Realty, Inc. | |
2.4 | Purchase Agreement, dated as of October 17, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC and RIG Hilltop Plaza, LLC. | |
2.5 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC, RIG Hilltop Plaza, LLC and RIG Normandy Square, LLC. | |
2.6 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and among the Company, RIG Hunt River Commons, LLC, RIG Paradise Pavilion, LLC, RIG Hilltop Plaza, LLC and RIG Normandy Square, LLC. | |
2.7 | Purchase Agreement, dated as of October 17, 2002, by and between the Company and EIG Operating Partnership, L.P. | |
2.8 | First Amendment to Purchase Agreement, dated as of November 6, 2002, by and between the Company and EIG Operating Partnership, L.P. | |
2.9 | Closing Day Amendment to Purchase Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. | |
2.10 | Contribution Agreement, dated as of October 17, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | |
2.11 | First Amendment to Contribution Agreement, dated as of November 6, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | |
2.12 | Second Amendment to Contribution Agreement, dated as of December 9, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | |
2.13 | Closing Day Amendment to Contribution Agreement, dated as of December 12, 2002, by and between Excel Realty Partners, L.P. and EIG Operating Partnership, L.P. | |
4.1 | Registration Rights Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. | |
4.2 | Registration Rights Agreement, dated as of December 12, 2002, by and between the Company and EIG Operating Partnership, L.P. |
