SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
Washington, DC 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) January 14, 1998
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-12298 59-3191743
(State or other jurisdiction Commission (IRS Employer
of incorporation) File Number) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (904)-356-7000
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
Regency Realty Corporation, through its wholly owned subsidiaries (together the
"Company") acquired five shopping centers (the "1998 Acquisition Properties"),
in addition to the Midland Properties described below, during the months of
January through June 1998. The individual or the aggregate purchase price of
these acquisitions, as provided below, did not individually exceed 10% of the
Company's total assets. The acquisitions were made pursuant to separate purchase
agreements, the sellers of which are unrelated to the Company. All of the
properties currently operate as neighborhood retail shopping centers, and will
continue as such. The purchase price of each shopping center was funded from the
Company's revolving line of credit with Wells Fargo Realty Advisors Funding,
Inc.
The factors considered by the Company in determining the price to be paid for
the shopping centers included historical and expected cash flow, nature of the
tenancies and terms of the leases in place, occupancy rates, opportunities for
alternative and new tenancies, current operating costs, physical condition and
location, and the anticipated impact on the Company's financial results. The
Company took into consideration capitalization rates at which it believes other
shopping centers have recently sold, but determined the purchase price on the
factors discussed above. No separate independent appraisals were obtained for
the properties acquired.
The following summarizes the 1998 Acquisition Properties:
Property Purchase Acquisition Occupancy at
Name Price Date GLA City/State Acquisition
Delk Spectrum $13,987,236 1-14-98 100,880 Marietta, GA 100.0%
Bloomingdale $18,096,719 2-11-98 267,935 Brandon, FL 98.0%
Silverlake $ 9,283,350 6-3-98 100,500 Erlanger, KY 91.2%
Highland Square $12,501,000 6-17-98 226,682 Jacksonville, FL 90.0%
Shoppes @ 104 $12,189,650 6-19-98 108,435 Miami, FL 94.0%
=========== ========
Total $66,057,955 804,432
=========== ========
In January 1998, the Company entered into an agreement to acquire shopping
centers from various entities comprising the Midland Group consisting of 21
shopping centers plus 11 shopping centers under development. The Company
acquired 13 of the Midland shopping centers during March 1998 containing 1.3
million square feet for approximately $111.0 million. Those shopping centers are
included in the Company's March 31, 1998 balance sheet. Subsequent to March 31,
1998, the Company has acquired or will acquire six additional shopping centers
for $56.1 million and during July and August 1998, expects to acquire an
additional three properties under development for $41.3 million. In addition,
during 1998, the Company expects to pay $4.6 million in additional costs related
to joint venture investments and other transaction costs related to acquiring
the various shopping centers from Midland, and during 1999 and 2000 expects to
pay contingent consideration of $23.0 million.
The Company previously filed Form 8-K dated January 12, 1998 that summarized the
transaction and provided 1996 audited financial statements of the Midland
Properties. The enclosed pro forma financial statements for the year ended
December 31, 1997 include the Midland shopping centers and their related audited
financial statements for the year then ended.
In June 1998, the Company, through an operating partnership in which it is the
general partner, sold $80 million of 8.125% Series A Cumulative Redeemable
Preferred Units to an institutional investor in a private placement. The
enclosed pro forma financial statements include the net proceeds from the
offering.
In December 1997, the Company sold one office building for $2.6 million and
recognized a gain on the sale of $451,000. During the first quarter of 1998, the
Company sold three office buildings and a parcel of land for $26.7 million, and
recognized a gain on the sale of $9.3 million. The enclosed pro forma financial
statements include adjustments to reflect the reversal of the revenues and
expenses from the office buildings generated during 1997 and 1998, including the
gains on the sale of the office buildings as if the sales had been completed on
January 1, 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements
(a) DELK SPECTRUM SHOPPING CENTER
Audited Statement of Revenues and Certain Expenses for the
year ended December 31, 1997.
(b) BLOOMINGDALE SQUARE
Audited Statement of Revenues and Certain Expenses for the
year ended December 31, 1997.
(c) MIDLAND PROPERTIES
Audited Statement of Revenues and Certain Expenses for the
year ended December 31, 1997.
(d) HIGHLAND SQUARE SHOPPING CENTER
Audited Statement of Revenues and Certain Expenses for the
year ended December 31, 1997.
(e) SILVERLAKE SHOPPING CENTER
Audited Statement of Revenues and Certain Expenses for the
year ended December 31, 1997.
B. Pro Forma Financial Information
(a) REGENCY REALTY CORPORATION
Pro Forma Consolidated Balance Sheet, March 31, 1998
(unaudited).
Pro Forma Consolidated Statements of Operations for the
Three-Month Period ended March 31, 1998 and the Year ended
December 31, 1997 (unaudited).
C. Exhibits:
10. Material Contracts
* (a) Contribution Agreement dated November 3, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company
as purchaser and Cobb-Powers Ferry/Southside Associates, L.P.
as seller relating to the acquisition of Delk Spectrum
Shopping Center.
* (b) Purchase and Sale Agreement dated October 7, 1997, between
RRC Acquisitions,Inc., a wholly-owned subsidiary of the
Company as purchaser and Bloomingdale Associates, Ltd. as
seller relating to the acquisition of Bloomingdale Square.
(c) Purchase and Sale Agreement dated April 4, 1998, between RRC
Acquisitions Two, Inc., a wholly-owned subsidiary of the
Company as purchaser and Silverlake Development Co., Ltd. as
seller relating to the acquisition of Silverlake Shopping
Center.
(d) Purchase and Sale Agreement dated February 24, 1998, between
RRC Acquisitions, Inc., a wholly owned subsidiary of the
Company as purchaser and Ricardo Pines, Pines Highland Square
Associates, Ltd., and Pines Group, Inc. as seller relating to
the acquisition of Highland Square Shopping Center.
(e) Purchase and Sale Agreement dated March 20, 1998, between RRC
Acquisitions Two, Inc., a wholly owned subsidiary of the
Company as purchaser and Nationwide Life Insurance Company as
seller relating to the acquisition of Shoppes @ 104.
23. Consent of KPMG Peat Marwick LLP
* Incorporated by reference to Form 10-Q filed May 15, 1998.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGENCY REALTY CORPORATION
(registrant)
July 20, 1998 By: /s/ J. Christian Leavitt
----------------------------
J. Christian Leavitt
Vice President and Treasurer
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Delk Spectrum Shopping Center for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this statement of revenues and certain expenses based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues 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 statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of Delk Spectrum
Shopping Center was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and for inclusion in a
Form 8-K of Regency Realty Corporation and excludes material amounts, described
in note 1, that would not be comparable to those resulting from the proposed
future operation of the property. The presentation is not intended to be a
complete presentation of Delk Spectrum Shopping Center revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses,
described in note 1, of Delk Spectrum Shopping Center for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
May 15, 1998
DELK SPECTRUM SHOPPING CENTER
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 1,355,213
Recoveries from tenants 144,801
Percentage rent 10,296
-------------
Total revenues 1,510,310
Operating expenses:
Real estate taxes 87,763
Operating and maintenance 57,295
Management fees 33,966
General and administrative 12,231
-------------
Total expenses 191,255
Revenues in excess of certain expenses $ 1,319,055
=============
See accompanying notes to statement of revenues and certain expenses.
DELK SPECTRUM SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation of
a 100,880 square foot shopping center (the "Property") located in
Marietta, Georgia.
The Property's financial statement is prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles.
Subsequent to December 31, 1997, the Property was acquired by Regency
Realty Corporation (RRC) in a transaction accounted for as a purchase. All
operations of the Property will be included in the consolidated financial
statements of RRC beginning at the acquisition date.
The accompanying financial statement is not representative of the actual
operations for the period presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by RRC in the proposed
future operation of the Property, have been excluded. RRC is not aware of
any material factors relating to the Property that would cause the
reported financial information not to be necessarily indicative of future
operating results. Costs not directly related to the operation of the
Property have been excluded, and consist of interest, depreciation,
professional fees, and certain other non operating expenses.
2. Related Party Transaction
During the year, management fees of $33,966 were paid to a property
manager which is a related entity of the Property. The Property pays
management fees of 2.5% of total income reported on the cash basis.
3. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
DELK SPECTRUM SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
4. Operating Leases
For the year ended December 31, 1997, the following tenants paid minimum
rent which exceeded 10% of the total minimum rent earned by the Property:
Minimum
Tenant Rent Paid
A&P Food Stores $ 431,952
Blockbuster Video 149,316
Outback Steakhouse, of Georgia - I, L.P. 136,032
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2016. Future minimum rent under noncancelable
operating leases as of December 31, 1997, excluding tenant reimbursements
of operating expenses and excluding additional contingent rentals based on
tenants' sales volume, are as follows:
Year ending December 31, Amount
1998 $ 1,322,718
1999 1,280,486
2000 1,250,745
2001 1,112,330
2002 724,383
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues 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 statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of Bloomingdale
Square was prepared for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission and for inclusion in a Form 8-K of
Regency Realty Corporation and excludes material amounts, described in note 1,
that would not be comparable to those resulting from the proposed future
operation of the property. The presentation is not intended to be a complete
presentation of Bloomingdale Square revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses,
described in note 1, of Bloomingdale Square for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
May 13, 1998
- 1 -
BLOOMINGDALE SQUARE
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 1,862,950
Recoveries from tenants 458,560
Percentage rent 42,746
-------------
Total revenues 2,364,256
Operating expenses:
Operating and maintenance 214,721
Real estate taxes 209,525
Management fees 93,803
General and administrative 90,227
-------------
Total expenses 608,276
Revenues in excess of certain expenses $ 1,755,980
=============
See accompanying notes to statement of revenues and certain expenses.
BLOOMINGDALE SQUARE
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation of
a 267,935 square foot shopping center (the "Property") located in Brandon,
Florida.
The Property's financial statement is prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles.
Subsequent to December 31, 1997, the Property was acquired by Regency
Realty Corporation (RRC) in a transaction accounted for as a purchase. All
operations of the Property will be included in the consolidated financial
statements of RRC beginning at the acquisition date.
The accompanying financial statement is not representative of the actual
operations for the period presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by RRC in the proposed
future operation of the Property, have been excluded. RRC is not aware of
any material factors relating to the Property that would cause the
reported financial information not to be necessarily indicative of future
operating results. Costs not directly related to the operation of the
Property have been excluded, and consist of interest, depreciation,
professional fees, and certain other non operating expenses.
2. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
BLOOMINGDALE SQUARE
Notes to Statement of Revenues and Certain Expenses
3. Operating Leases
For the year ended December 31, 1997, the following tenants paid minimum
rent which exceeded 10% of the total minimum rent earned by the Property:
Minimum
Tenant Rent Paid
Wal-Mart $ 405,550
Publix 208,924
Beall's Department Stores 185,250
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2006. Future minimum rent under noncancelable
operating leases as of December 31, 1997, excluding tenant reimbursements
of operating expenses and excluding additional contingent rentals based on
tenants' sales volume, are as follows:
Year ending December 31, Amount
1998 $ 1,885,581
1999 1,805,590
2000 1,580,180
2001 1,397,825
2002 1,149,187
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
the Midland Properties for the year ended December 31, 1997. This financial
statement is the responsibility of management. Our responsibility is to express
an opinion on this statement of revenues and certain expenses based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues 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 statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of the Midland
Properties was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and for inclusion in a
Form 8-K of Regency Realty Corporation and excludes material amounts, described
in note 1, that would not be comparable to those resulting from the proposed
future operation of the properties. The presentation is not intended to be a
complete presentation of the Midland Properties revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses,
described in note 1, of the Midland Properties for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
July 8, 1998
- 1 -
MIDLAND PROPERTIES
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 16,468,353
Recoveries from tenants 2,239,717
Percentage rent 14,118
----------------
Total revenues 18,722,188
Operating expenses:
Operating and maintenance 1,193,921
Management fees 554,670
Real estate taxes 1,635,129
General and administrative 486,452
----------------
Total expenses 3,870,172
Revenues in excess of certain expenses $ 14,852,016
================
See accompanying notes to statement of revenues and certain expenses.
MIDLAND PROPERTIES
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
1. Basis of Presentation
The statement of revenues and certain expenses combines the operations of
the following 19 shopping centers (Midland Properties), in which Midland
Development Group, Inc., or one of its affiliated entities, is the
general partner:
Square
Property Name Location Feet
Beckett Commons West Chester, OH 80,434
Bent Tree Plaza Raleigh, NC 79,503
Brookville Plaza Lynchburg, VA 63,664
Cherry Grove Plaza Cincinnati, OH 186,040
East Point Crossing Columbus, OH 86,520
Evans Crossing Evans, GA 76,580
Franklin Shopping Centers Franklin, KY 205,060
Hamilton Meadows Hamilton, OH 126,251
Lake Pine Plaza Raleigh, NC 87,690
Lake Shores Plaza Detroit, MI 85,478
Kernersville Plaza Kernersville, NC 72,590
North Gate Plaza Columbus, OH 85,100
Maynard Crossing Raleigh, NC 122,813
Shoppes at Mason Cincinnati, OH 80,880
St. Ann Square St. Ann, MO 82,498
Statler Square Staunton, VA 133,660
West Chester Plaza Westchester, OH 88,181
Windmiller Farms Columbus, OH 119,192
Worthington Park Centre Worthington, OH 93,092
This financial statement is prepared on the accrual basis of accounting
in conformity with generally accepted accounting principles.
Subsequent to December 31, 1997, the Midland Properties were acquired by
Regency Realty Corporation (RRC) in a transaction accounted for as a
purchase. All operations of the Midland Properties will be included in
the consolidated financial statements of RRC beginning at the acquisition
date.
MIDLAND PROPERTIES
Notes to Statement of Revenues and Certain Expenses
1. Basis of Presentation, continued
The accompanying financial statement is not representative of the actual
operations for the period presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by RRC in the proposed
future operation of the Midland Properties, have been excluded. RRC is
not aware of any material factors relating to the Midland Properties that
would cause the reported financial information not to be necessarily
indicative of future operating results. Costs not directly related to the
operation of the Midland Properties have been excluded, and consist of
interest, depreciation, professional fees, and certain other non
operating expenses.
2. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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. Operating Leases
For the year ended December 31, 1997, Kroger Supermarkets, an anchor
tenant in all 19 of the shopping centers, paid minimum rent of
$8,363,436, which exceeded 10% of the total minimum rent earned by all
the Midland Properties.
The Midland Properties are leased to tenants under operating leases with
expiration dates extending to the year 2022. Future minimum rent under
noncancelable operating leases as of December 31, 1997, excluding tenant
reimbursements of operating expenses and excluding additional contingent
rentals based on tenants' sales volume, are as follows:
Year ending December 31, Amount
1998 $ 17,280,288
1999 16,587,478
2000 15,311,669
2001 14,285,341
2002 12,150,739
MIDLAND PROPERTIES
Notes to Statement of Revenues and Certain Expenses
4. Related Party Transactions
Midland Development Group, Inc., serves as managing agent for the Midland
Properties and receives a management fee of approximately 4% of minimum
and percentage rent, as adjusted and defined, which amounted to $554,670
for the year ended December 31, 1997.
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Highland Square Shopping Center for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this statement of revenues and certain expenses based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues 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 statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of Highland Square
Shopping Center was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and for inclusion in a
Form 8-K of Regency Realty Corporation and excludes material amounts, described
in note 1, that would not be comparable to those resulting from the proposed
future operation of the property. The presentation is not intended to be a
complete presentation of Highland Square Shopping Center revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses,
described in note 1, of Highland Square Shopping Center for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
July 1, 1998
- 1 -
HIGHLAND SQUARE SHOPPING CENTER
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 1,122,221
Recoveries from tenants 187,529
Percentage rent 111,154
-------------
Total revenues 1,420,904
Operating expenses:
Real estate taxes 171,358
Operating and maintenance 98,963
General and administrative 76,051
Management fees 54,111
-------------
Total expenses 400,483
Revenues in excess of certain expenses $ 1,020,421
=============
See accompanying notes to statement of revenues and certain expenses.
HIGHLAND SQUARE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation
of a 226,682 square foot shopping center (the "Property") located in
Jacksonville, Florida.
The Property's financial statement is prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles.
Subsequent to December 31, 1997, the Property was acquired by Regency
Realty Corporation (RRC) in a transaction accounted for as a purchase.
All operations of the Property will be included in the consolidated
financial statements of RRC beginning at the acquisition date.
The accompanying financial statement is not representative of the actual
operations for the period presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by RRC in the proposed
future operation of the Property, have been excluded. RRC is not aware of
any material factors relating to the Property that would cause the
reported financial information not to be necessarily indicative of future
operating results. Costs not directly related to the operation of the
Property have been excluded, and consist of interest, depreciation,
professional fees, and certain other non operating expenses.
2. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
HIGHLAND SQUARE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
3. Operating Leases
For the year ended December 31, 1997, one tenant, Winn Dixie Stores, Inc.
paid minimum rent of $223,000 which exceeded 10% of the total minimum
rent earned by the Property.
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2014. Future minimum rent under noncancelable
operating leases as of December 31, 1997, excluding tenant reimbursements
of operating expenses and excluding additional contingent rentals based
on tenants' sales volume, are as follows:
Year ending December 31, Amount
1998 $ 1,052,126
1999 878,359
2000 659,175
2001 427,187
2002 334,822
4. Related Party Transactions
Pines Group, Inc., a related party through common general partners,
serves as managing agent for Highland Square Shopping Center and receives
a management fee of approximately 4% of total revenues which amounted to
$54,111 for the year ended December 31, 1997.
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Silverlake Shopping Center for the year ended December 31, 1997. This financial
statement is the responsibility of management. Our responsibility is to express
an opinion on this statement of revenues and certain expenses based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues 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 statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of Silverlake
Shopping Center was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and for inclusion in a
Form 8-K of Regency Realty Corporation and excludes material amounts, described
in note 1, that would not be comparable to those resulting from the proposed
future operation of the property. The presentation is not intended to be a
complete presentation of Silverlake Shopping Center revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses,
described in note 1, of Silverlake Shopping Center for the year ended December
31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
June 30, 1998
- 1 -
SILVERLAKE SHOPPING CENTER
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 819,303
Recoveries from tenants 142,294
-----------
Total revenues 961,597
Operating expenses:
Operating and maintenance 84,650
Real estate taxes 85,302
Management fees 11,043
General and administrative 31,995
-----------
Total expenses 212,990
Revenues in excess of certain expenses $ 748,607
===========
See accompanying notes to statement of revenues and certain expenses.
SILVERLAKE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation
of a 100,500 square foot shopping center (the "Property") located in
Erlanger, KY.
The Property's financial statement is prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles.
Subsequent to December 31, 1997, the Property was acquired by Regency
Realty Corporation (RRC) in a transaction accounted for as a purchase.
All operations of the Property will be included in the consolidated
financial statements of RRC beginning at the acquisition date.
The accompanying financial statement is not representative of the actual
operations for the period presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by RRC in the proposed
future operation of the Property, have been excluded. RRC is not aware of
any material factors relating to the Property that would cause the
reported financial information not to be necessarily indicative of future
operating results. Costs not directly related to the operation of the
Property have been excluded, and consist of interest, depreciation,
professional fees, and certain other non operating expenses.
2. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
SILVERLAKE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
3. Operating Leases
For the year ended December 31, 1997, one tenant, Kroger Supermarkets,
paid minimum rent of $466,104 which exceeded 10% of the total minimum
rent earned by the Property.
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2014. Future minimum rent under noncancelable
operating leases as of December 31, 1997, excluding tenant reimbursements
of operating expenses and excluding additional contingent rentals based
on tenants' sales volume, are as follows:
Year ending December 31, Amount
1998 $ 826,061
1999 711,620
2000 671,534
2001 568,221
2002 526,588
===========
4. Related Party Transactions
Oakley Properties, Inc., an affiliated entity through common general
partners, serves as the managing agent for the Property and received
management fees of $11,043 for the year ended December 31, 1997.
Regency Realty Corporation
Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated balance sheet is based
upon the historical consolidated balance sheet of the Company as of March 31,
1998 as if the Company had completed the acquisition of all the Midland
Properties and the 1998 Acquisition Properties as of that date. The following
unaudited pro forma consolidated statements of operations of the Company are
based upon the historical consolidated statements of operations for the
three-month period ended March 31, 1998 and the year ended December 31, 1997.
These statements are presented as if the Company had acquired the 1998
Acquisition Properties and 13 other properties acquired during 1997 (together
the "Acquisition Properties"), as well as the Branch Properties and the Midland
Properties as of January 1, 1997. These unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the
Company's annual report filed on Form 10-K for the year ended December 31,
1997, and Form 10-Q for the period ended March 31, 1998.
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of what the actual financial position or results of
operations of the Company would have been at March 31, 1998 or December 31,
1997 assuming the transactions had been completed as set forth above, nor does
it purport to represent the financial position or results of operations of the
Company in future periods.
Midland Other
Historical Properties Adjustments Pro Forma
(a)
Assets
Real estate investments, at cost $ 950,050 $ 56,100 $ 33,974 (b) $ 1,040,124
Construction in progress 40,765 - - 40,765
Less: accumulated depreciation 40,833 - - 40,833
------------ ------------ ------------ ------------
Real estate rental property, net 949,982 56,100 33,974 1,040,056
------------ ------------ ------------ ------------
Investments in real estate partnerships 992 - - 992
------------ ------------ ------------ ------------
Net real estate investments 950,974 56,100 33,974 1,041,048
------------ ------------ ------------ ------------
Cash and cash equivalents 16,707 - - 16,707
Tenant receivables, net of allowance for
uncollectible accounts 9,788 - - 9,788
Deferred costs, less accumulated amortization 4,532 - - 4,532
Other assets 3,981 - - 3,981
============ ============ ============ ============
Total Assets $ 985,982 $ 56,100 $ 33,974 $ 1,076,056
============ ============ ============ ============
Liabilities and Stockholders' Equity
Mortgage loans payable $ 305,531 $ 31,732 $ (25,774)(c) $ 311,489
Acquisition and development line of credit 90,231 24,368 (18,652)(b)(c) 95,947
------------ ------------ ------------ -----------
Total debt 395,762 56,100 (44,426) 407,436
Tenant's security and escrow deposits 2,562 - - 2,562
Accounts payable & other liabilities 11,911 - - 11,911
------------ ------------ ------------ ------------
Total liabilities 410,235 56,100 (44,426) 421,909
------------ ------------ ------------ ------------
Redeemable partnership units 28,106 - - 28,106
Preferred partnership units - - 78,400 (c) 78,400
Limited partners' interest in
consolidated partnerships 7,414 - - 7,414
------------ ------------ ------------ ------------
35,520 - 78,400 113,920
------------ ------------ ------------ ------------
Common stock and additional paid in capital 553,187 - - 553,187
Distributions in excess of net income (12,960) - - (12,960)
------------ ------------ ------------ ------------
Total stockholders' equity 540,227 - - 540,227
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 985,982 $ 56,100 $ 33,974 $ 1,076,056
============ ============ ============ ============
See accompanying notes to pro forma condensed consolidated balance sheet.
Regency Realty Corporation
Notes to Pro Forma Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
(In thousands)
(a) Acquisitions of Shopping Centers:
In January 1998, the Company entered into an agreement to acquire shopping
centers from various entities comprising the Midland Group consisting of 21
shopping centers plus 11 shopping centers under development. The Company
acquired 13 of the Midland shopping centers during March 1998 containing
1.3 million square feet for approximately $111.0 million. Those shopping
centers are included in the Company's March 31, 1998 balance sheet.
Subsequent to March 31, 1998, the Company has acquired or will acquire six
additional shopping centers for $56.1 million and during July and August
1998, expects to acquire an additional three properties under development
for $41.3 million. In addition, during 1998, the Company expects to pay
$4.6 million in additional costs related to joint venture investments and
other transaction costs related to acquiring the various shopping centers
from Midland, and during 1999 and 2000 expects to pay contingent
consideration of $23.0 million. The following table sets forth the
aggregate purchase price for East Point, Maxtown, Worthington, Franklin
Square, St. Ann Square and Windmiller, which have been or will be acquired
subsequent to March 31, 1998.
Purchase
Price
-------------
East Point $ 8,215
Maxtown 7,712
Worthington 10,691
Franklin Square 11,375
St. Ann Square 6,653
Windmiller 11,454
=============
$ 56,100
=============
The following table represents the properties under development which the
Company expects to acquire from Midland upon completion of construction
during 1998. These properties are not included in these pro forma condensed
consolidated financial statements.
Expected
Acquisition Purchase
Date Price
-------------- -------------
Garner Festival July-98 $ 20,571
Nashboro July-98 7,260
Crooked Creek August-98 13,471
=============
$ 41,302
=============
(b) Represents the aggregate purchase price for Silverlake Shopping Center,
Highlands Square Shopping Center and Shoppes @ 104. The other Acquisition
Properties were acquired prior to March 31, 1998 and are therefore
included in the Company's March 31, 1998 balance sheet.
Acquisition Purchase
Date Price
-------------- -------------
Silverlake Shopping Center June 3, 1998 $ 9,283
Highland Square Shopping Center June 17, 1998 12,501
Shoppes @ 104 June 19, 1998 12,190
=============
$ 33,974
=============
(c) Represents the proceeds from the offering of cumulative redeemable
preferred units completed in June 1998, less estimated offering costs of
2%. At closing, the Company used the net proceeds from the offering,
approximately $78.4 million, for the repayment of existing mortgage loans
($25.8 million) and the repayment of balances on the Line ($52.6 million).
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Three Month Period Ended March 31, 1998
and the Year Ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
For the Three Month Period Ended March 31, 1998
Midland Acquisition Other
Historical Properties Properties Adjustments Pro Forma
(e) (f)
Revenues:
Minimum rent $ 22,255 $ 3,332 $ 1,064 $ (697) (j) $ 25,954
Percentage rent 1,103 - 32 (8) (j) 1,127
Recoveries from tenants 4,821 410 208 (67) (j) 5,372
Management, leasing and brokerage fees 2,504 - - - 2,504
Equity in income of investments in
real estate partnerships 1 - - - 1
------- ------- ------- -------- -------
30,684 3,742 1,304 (772) 34,958
------- ------- ------- -------- -------
Operating expenses:
Depreciation & amortization 5,456 676 (g) 280 (g) (453) (j) 5,959
Operating and maintenance 4,116 228 109 (122) (j) 4,331
General and administrative 3,433 180 81 (25) (j) 3,669
Real estate taxes 2,789 385 131 (81) (j) 3,224
------- ------- ------- -------- -------
15,794 1,469 601 (681) 17,183
------- ------- ------- -------- -------
Interest expense (income):
Interest expense 5,215 2,058 (h) 712 (i) (1,799) (k) 6,186
Interest income (335) - - - (335)
------- ------- ------- -------- -------
4,880 2,058 712 (1,799) 5,851
------- ------- ------- -------- -------
Income before minority interest
and gain on sale of real
estate investments 10,010 215 (9) 1,708 11,924
Gain on sale of real estate investments 10,237 - - (9,336) (j) 901
Minority interest (691) (9) - 4 (696)
------- ------- ------- -------- -------
Net income 19,556 206 (9) (7,624) 12,129
------- ------- ------- -------- -------
Preferred distributions - - (1,625) (l) (1,625)
------- ------- ------- -------- -------
Net income for common stockholders $ 19,556 $ 206 $ (9) $ (9,249) $ 10,504
======== ======= ======== ========= ========
Net income per share (note (m)):
Basic $ 0.74 $ 0.37
======== =========
Diluted $ 0.69 $ 0.37
======== =========
See accompanying notes to pro forma consolidated statements of operations.
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Three Month Period Ended March 31, 1998
and the Year Ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
For the Year Ended December 31, 1997
Branch Midland Acquisition Other
Historical Properties Properties Properties Adjustments Pro Forma
(d) (e) (f)
Revenues:
Minimum rent $ 70,103 $ 3,596 16,482 14,452 (4,136) (j) $ 100,497
Percentage rent 2,151 167 0 299 - 2,617
Recoveries from tenants 16,601 751 2,240 3,136 (548) (j) 22,180
Management, leasing and brokerage fees 8,448 1,060 0 0 - 9,508
Equity in income of investments
in real estate partnerships 33 - 0 0 - 33
------------ ------------ ------------ ----------- ---------- ----------
97,336 5,574 18,722 17,887 (4,684) 134,835
------------ ------------ ------------ ----------- ---------- ----------
Operating expenses:
Depreciation & amortization 16,303 972 2,994 (g) 3,458 (g) (855) (j) 22,872
Operating and maintenance 14,213 595 1,194 1,999 (1,260) (j) 16,741
General and administrative 9,964 683 1,042 931 (49) (j) 12,571
Real estate taxes 8,692 404 1,635 1,922 (447) (j) 12,206
------------ ------------ ------------ ----------- ---------- ----------
49,172 2,654 6,865 8,310 (2,611) 64,390
------------ ------------ ------------ ----------- ---------- ----------
Interest expense (income):
Interest expense 19,667 1,517 10,353 (h) 9,765 (i) (7,196) (k) 34,106
Interest income (1,000) (33) 0 0 - (1,033)
------------ ------------ ------------ ----------- ---------- ----------
18,667 1,484 10,353 9,765 (7,196) 33,073
------------ ------------ ------------ ----------- ---------- ----------
Income before minority interest
and gain on sale of real
estate investments 29,497 1,436 1,504 (188) 5,123 37,372
Gain on sale of real estate investments 451 - 0 0 (451) (j) -
Minority interest (2,547) 1,010 (38) 5 52 (1,518)
------------ ------------ ------------ ----------- ---------- ----------
Net income 27,401 2,446 1,466 (183) 4,724 35,854
Preferred distributions - - 0 0 (6,500) (l) (6,500)
============ ============ ============ =========== ========== ==========
Net income for common stockholders $ 27,401 $ 2,446 1,466 (183) $ (1,776) $ 29,354
============ ============ ============ =========== ========== ==========
Net income per share (note (m)):
Basic $ 1.28 1.39
============ =========
Diluted $ 1.23 1.28
============ =========
See accompanying notes to pro forma consolidated statements of operations.
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Three Month Period Ended March 31,
1998 and the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(d) Reflects pro forma results of operations for the Branch Properties for the
period from January 1, 1997 to March 7, 1997 (acquisition date).
(e) Reflects revenues and certain expenses for the Midland Properties for the
period from January 1, 1998 to the earlier of the respective acquisition
date of the property or March 31, 1998 and for the year ended December 31,
1997.
For the period from January 1, 1998 to the Acquisition Date
Property Acquisition Minimum Recoveries Operating and Real General and
Name Date Rent from Tenants Maintenance Estate Taxes Administrative
--------- --------- -------------- ------------- ------------- ---------------
Windmiller Farms Jul-98 $ 289 $ 45 $ 17 $ 36 $ 16
Franklin Square 4/29/98 303 19 27 25 13
St. Ann Square 4/17/98 184 3 17 - 5
East Point Crossing 4/29/98 223 19 15 46 8
North Gate Plaza 4/29/98 181 51 12 46 22
Worthington Park 4/29/98 227 74 17 61 7
Beckett Commons 3/1/98 113 7 6 14 4
Cherry Grove Plaza 3/1/98 239 11 13 22 21
Bent Tree Plaza 3/1/98 137 11 7 59 8
West Chester Plaza 3/1/98 130 12 13 42 7
Brookville Plaza 3/1/98 95 5 5 - 4
Lake Shores Plaza 3/1/98 123 10 5 - 6
Evans Crossing 3/1/98 116 4 5 - 6
Statler Square 3/1/98 164 15 13 1 8
Kernersville Plaza 3/1/98 120 4 8 - 8
Maynard Crossing 3/1/98 272 38 13 - 15
Shoppes at Mason 3/1/98 116 27 15 33 6
Lake Pine Plaza 3/1/98 152 13 10 - 9
Hamilton Meadows 3/1/98 148 42 10 - 7
========= =========== ========== ============ ===============
$ 3,332 $ 410 $ 228 $ 385 $ 180
========= =========== ========== ============ ===============
For the year ended December 31, 1997
Property Acquisition Minimum Recoveries Operating and Real General and
Name Date Rent from Tenants Maintenance Estate Taxes Administrative
--------- --------- ------------------------------------------- ---------------
Windmiller Farms Jul-98 $ 1,157 $ 181 $ 69 $ 143 $ 64
Franklin Square 4/29/98 1,270 171 158 94 98
St. Ann Square 4/17/98 741 149 60 119 42
East Point Crossing 4/29/98 821 159 50 107 51
North Gate Plaza 4/29/98 718 100 56 84 32
Worthington Park 4/29/98 862 208 67 124 59
Beckett Commons 3/1/98 687 140 38 83 47
Cherry Grove Plaza 3/1/98 1,445 175 85 131 105
Bent Tree Plaza 3/1/98 786 130 64 59 48
West Chester Plaza 3/1/98 807 70 72 84 45
Brookville Plaza 3/1/98 571 42 34 50 30
Lake Shores Plaza 3/1/98 759 156 55 96 32
Evans Crossing 3/1/98 613 84 34 50 33
Statler Square 3/1/98 913 76 43 54 60
Kernersville Plaza 3/1/98 605 58 29 51 33
Maynard Crossing 3/1/98 1,367 133 78 95 104
Shoppes at Mason 3/1/98 644 56 61 65 38
Lake Pine Plaza 3/1/98 827 93 54 51 46
Hamilton Meadows 3/1/98 889 59 87 95 75
========= =========== ========== ============ ===============
$ 16,482 $ 2,240 $ 1,194 $ 1,635 $ 1,042
========= =========== ========== ============ ===============
(f) Reflects revenue and certain expenses of the Acquisition Properties for
the periods from January 1, 1998 and 1997 to the respective acquisition
date of the property.
For the period from January 1, 1998 to the Acquisition Date
Property Acquisition Minimum Percentage Recoveries Operating and Real General and
Name Date Rent Rent from Tenants Maintenance Estate Taxes Administrative
---- --------- --------- ----------- ------------ ------------- --------------- -----------
Delk Spectrum 1/14/98 $ 48 $ - $ 5 $ 2 $ 3 2
Bloomingdale Square 2/11/98 209 5 52 24 23 21
Silverlake 6/3/98 202 - 35 21 21 11
Highland Square 6/17/98 277 27 46 24 42 32
Shoppes @104 6/19/98 328 - 70 38 42 15
========= =========== ========== ============ =============== ===========
$ 1,064 $ 32 $ 208 $ 109 $ 131 81
========= =========== ========== ============ =============== ===========
For the period from January 1, 1997 to the Acquisition Date
Property Acquisition Minimum Percentage Recoveries Operating and Real General and
Name Date Rent Rent from Tenants Maintenance Estate Taxes Administrative
---- --------- --------- ----------- -------------- ------------ --------------- -----------
Oakley Plaza 3/14/97 $ 142 $ - $ 14 $ 13 $ 13 $ 8
Mariner's Village 3/25/97 185 6 37 45 33 7
Carmel Commons 3/28/97 297 11 63 38 35 22
Mainstreet Square 4/15/97 193 - 34 42 30 15
East Port Plaza 4/25/97 543 - 107 96 65 33
Hyde Park Plaza 6/6/97 1,702 118 339 144 265 84
Rivermont Station 6/30/97 642 - 124 65 56 34
Lovejoy Station 6/30/97 306 - 63 36 29 9
Tamiami Trails 7/10/97 508 - 163 124 66 30
Garden Square 9/19/97 671 - 232 144 99 50
Kingsdale S.C. 10/10/97 1,334 - 300 325 221 75
Boynton Lakes Plaza 12/1/97 1,159 - 391 267 250 80
Pinetree Plaza 12/23/97 279 - 51 50 37 21
Delk Spectrum 1/14/98 1,355 10 145 57 88 46
Bloomingdale Square 2/11/98 1,863 43 459 215 209 184
Silverlake 6/3/98 819 - 142 85 85 43
Highland Square 6/17/98 1,122 111 187 99 171 130
Shoppes @104 6/19/98 1,332 - 285 154 170 60
========= =========== ========== ============ =============== ===========
$ 14,452 $ 299 $ 3,136 $ 1,999 $ 1,922 $ 931
========= =========== ========== ============ =============== ===========
(g) Depreciation expense is based on the estimated useful life of the
properties acquired. For properties under construction, depreciation
expense is calculated from the date the property is placed in service
through the end of the period. In addition, the three month period ended
March 31, 1998 and year ended December 31, 1997 calculations reflect
depreciation expense on the properties from January 1, 1997 to the earlier
of the respective acquisition date of the property or March 31, 1998.
For the period from January 1, 1998 to the Acquisition Date
Property Building and Year Building Depreciation
Name Improvements Built/Renovated Useful Life Adjustment
------------- -------------- ------------ ---------------
Delk Spectrum $ 10,417 1991 34 $ 11
Bloomingdale Square 13,189 1987 30 49
Silverlake Shopping Center 7,584 1988 31 60
Highland Square 9,049 1960 20 112
Shoppes @104 6,439 1990 33 48
===============
Acquisition Properties pro forma
depreciation adjustment $ 280
===============
Midland Properties $ 131,065 Ranging from Ranging from
1986 to 1996 29 to 40 $ 676
===============
For the period from January 1, 1997 to the Acquisition Date
Property Building and Year Building Depreciation
Name Improvements Built/Renovated Useful Life Adjustment
------------- ---------------- ---------- ---------------
Oakley Plaza $ 6,428 1988 31 $ 41
Mariner's Village 5,979 1986 29 47
Carmel Commons 9,335 1979 22 101
Mainstreet Square 4,581 1988 31 43
East Port Plaza 8,179 1991 34 76
Hyde Park Plaza 33,734 1995 38 382
Rivermont Station 9,548 1996 39 121
Lovejoy Station 5,560 1995 38 73
Tamiami Trails 7,598 1987 30 133
Garden Square 7,151 1991 34 151
Kingsdale Shopping Center 10,023 1959 27 288
Boynton Lakes Plaza 9,618 1993 36 244
Pinetree Plaza 3,057 1982 25 120
Delk Spectrum 10,417 1991 34 306
Bloomingdale Square 13,189 1987 30 440
Silverlake Shopping Center 7,584 1988 31 245
Highlands Square 9,049 1960 20 452
Shoppes @104 6,439 1990 33 195
===============
Acquisition Properties pro forma
depreciation adjustment $ 3,458
===============
Midland Properties $131,065 Ranging from Ranging from
1986 to 1996 29 to 40 $ 2,994
===============
(h) To reflect interest expense on the Line required to complete the
acquisition of the Midland Properties at the average interest rate afforded
the Company (6.525%) and the assumption of $97.0 million of debt. For
properties under construction, interest expense is calculated from the date
the property is placed in service through the end of the period.
Pro forma interest adjustment for the
three month period ended March 31, 1998 $ 2,058
===============
Pro forma interest adjustment for the
year ended December 31, 1997 $ 10,353
===============
(i) To reflect interest expense on the Line required to complete the
acquisition of the Acquisition Properties at the average interest rate
afforded the Company (6.525%). The three month period ended March 31, 1998
and year ended December 31, 1997 calculation reflects interest expense on
the properties from January 1, 1997 to the respective acquisition date of
the property.
Pro forma interest adjustment for the
three month period ended March 31, 1998 $ 712
==============
Pro forma interest adjustment for the
year ended December 31, 1997 $ 9,765
==============
(j) In December, 1997, the Company sold one office building for $2.6 million
and recognized a gain on the sale of $451,000. During the first quarter of
1998, the Company sold three office buildings and a parcel of land for
$26.7 million, and recognized a gain on the sale of $9.3 million. The
adjustments to the pro forma statements of operations reflects the reversal
of the revenues and expenses from the office buildings generated during
1997 and 1998, including the gains on the sale of the office buildings as
if the sales had been completed on January 1, 1997.
(k) To reflect the reduction of interest expense on the Line and mortgage loans
from the proceeds of the issuance of the preferred units and the proceeds
from the sale of the office buildings.
Pro forma interest adjustment for the
three-month period ended March 31, 1998 $ (1,799)
===============
Pro forma interest adjustment for the
year ended December 31, 1997 $ (7,196)
===============
(l) To reflect the distribution on the offering of preferred units at an
assumed annual rate of 8.125% for the three-month period ended March
31, 1998 and year ended December 31, 1997.
(m) The following summarizes the calculation of basic and diluted earnings per
share for the three-month period ended March 31, 1998 and the
year ended December 31, 1997:
For the Three For the year
Months Ended Ended
March 31, 1998 December 31, 1997
--------------- ----------------
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 24,727 17,424
============ ===============
Net income for common stockholders $ 10,503 $ 29,354
Less: dividends paid on Class B common stock 1,344 5,140
============ ===============
Net income for Basic EPS $ 9,159 24,214
============ ===============
Basic earnings per share $ 0.37 1.39
============ ===============
Diluted Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding for Basic EPS 24,727 17,424
Redeemable operating partnership units - 1,243
Incremental shares to be issued under common
stock options using the Treasury method 54 80
Contingent units or shares for the acquisition
of real estate - 955
------------ ---------------
Total Diluted Shares 24,781 19,702
------------ ---------------
Net income for Basic EPS 9,159 24,214
Add: minority interest of redeemable partnership units - 1,013
============ ===============
Net income for Diluted EPS 9,159 25,227
============ ===============
Diluted EPS $ 0.37 $ 1.28
============ ===============