EXHIBIT 99.4
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 12, 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)
1
ITEM 5. PENDING ACQUISITION OF ASSETS
Regency Realty Corporation (the "Company") announced on January 12, 1998 that it
had entered into an agreement to acquire the real estate assets of entities
comprising the Midland Group ("Midland") consisting of 21 shopping centers (the
"Midland Properties") plus a development pipeline of 12 shopping centers. Of the
21 centers to be acquired, 20 are anchored by Kroger and King Soopers, a Kroger
subsidiary. Eight of the shopping centers included in the development pipeline
will be owned through a joint venture in which the Company will own less than a
50% interest upon completion of construction.
At closing and during 1998, the Company will pay approximately $230.4 million to
acquire 21 properties and pay transaction costs through the issuance of units of
limited partnership interest valued at $26.58 per unit or cash of $47 million,
the assumption of $92.5 million of debt, and $90.9 million to pay off existing
secured real estate loans. The Company will incur additional costs to establish
reserves, pay severance, and prepay existing assumed loans. Subsequent to 1998,
the Company expects to pay approximately $12.7 million to acquire equity
interests in the development pipeline as the properties reach stabilization. The
Company may also be required to make payments aggregating $10.5 million through
the year 2000 contingent upon increases in net income from existing properties,
the development pipeline, and new properties developed or acquired in accordance
with the contribution agreement.
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.
Consummation of the acquisition is subject, among other things, to Midland
partner and other third party consents. Amounts shown above for units issued and
cash payments to Midland partners are estimated amounts that are subject to
Midland partner approval.
OTHER EVENTS
The Company, through its wholly-owned subsidiaries (together the "Company")
acquired seven shopping centers (the "Acquisition Properties") during the months
of June through December, 1997. The individual 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.
2
OTHER EVENTS (CONTINUED)
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 Acquisition Properties.
The following summarizes the Acquisition Properties:
Property Purchase Acquisition Occupancy at
Name Price Date GLA City/State Acquisition
Rivermont Station $ 13,448,000 6-30-97 90,323 Atlanta, GA 98.0%
Lovejoy Station $ 7,099,500 6-30-97 77,336 Atlanta, GA 95.0%
Tamiami Trails $ 9,560,300 7-10-97 110,867 Miami, FL 93.0%
Gardens Square $ 9,723,700 9-19-97 90,258 Miami, FL 95.0%
Kingsdale $ 17,575,000 10-10-97 267,177 Columbus, OH 95.6%
Boynton Lks Plaza $ 12,893,500 12-01-97 130,724 Boynton Bch, FL 90.0%
Pinetree Plaza $ 2,534,927 12-23-97 53,866 Jacksonville, FL 95.0%
============ ========
Total $ 72,834,927 820,551
============ ========
3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements
(a) MIDLAND PROPERTIES
Audited Statement of Revenues and Certain Expenses for the year ended
December 31, 1996.
(b) GARDENS SQUARE
Audited Statement of Revenues and Certain Expenses for the year ended
December 31, 1996.
(c) PINETREE PLAZA
Audited Statement of Revenues and Certain Expenses for the year ended
December 31, 1996.
B. Pro Forma Financial Information
(a) REGENCY REALTY CORPORATION
Pro Forma Consolidated Balance Sheet, September 30, 1997 (unaudited)
Pro Forma Consolidated Statements of Operations for the Nine Month
Period ended September 30, 1997 and the Year ended December 31, 1996
(unaudited)
C. Exhibits:
10. Material Contracts
* (a) Purchase and Sale Agreement dated May 22, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Cousins Real Estate Corporation as seller relating to
the acquisition of Rivermont Station Shopping Center.
* (b) Purchase and Sale Agreement dated May 22, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Cousins Real Estate Corporation as seller relating to
the acquisition of Lovejoy Station Shopping Center.
** (c) Purchase and Sale Agreement dated May 12, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Quantum Realty Partners, L.P. as seller relating to the
acquisition of Tamiami Trails Shopping Center.
4
** (d) Purchase and Sale Agreement dated July 9, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Miami Gardens Associates as seller relating to the
acquisition of Gardens Square Shopping Center.
** (e) Purchase and Sale Agreement dated September 19, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and TBC Kingsdale, Inc. as seller relating to the
acquisition of Kingsdale Shopping Center.
(f) Purchase and Sale Agreement dated October 1, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Boynton Lakes Plaza Partnership as seller relating to
the acquisition of Boynton Lakes Plaza Shopping Center.
(g) Purchase and Sale Agreement dated October 7, 1997, between RRC
Acquisitions, Inc., a wholly-owned subsidiary of the Company as
purchaser and Meteor Industriebeteiligungsgesellschaft mbH as seller
relating to the acquisition of Pinetree Plaza Shopping Center.
23. Consent of KPMG Peat Marwick LLP
- --------------------------
* Incorporated by reference to Form 10-Q filed August 11, 1997.
** Incorporated by reference to Form 10-Q filed November 13, 1997.
5
SIGNATURE
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)
February 4, 1998 By:/s/ J. Christian Leavitt
----------------------------------
J. Christian Leavitt
Vice President and Treasurer
6
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, 1996. 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
November 21, 1997
7
MIDLAND PROPERTIES
Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
Revenues:
Minimum rent $ 11,997,123
Percentage rent 36,037
Recoveries from tenants 1,884,462
-------------
Total revenues 13,917,622
Operating expenses:
Operating and maintenance 1,174,141
Management fees 408,614
Real estate taxes 1,144,284
General and administrative 92,343
-------------
Total expenses 2,819,382
Revenues in excess of certain expenses $ 11,098,240
=============
See accompanying notes to statement of revenues and certain expenses.
8
MIDLAND PROPERTIES
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
1. Basis of Presentation
The statement of revenues and certain expenses combines the operations of
the following 20 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 186,020
Creekside Arlington, TX 85,652
East Point Crossing Columbus, OH 81,320
Evans Crossing Evans, GA 76,580
Franklin Shopping Centers Franklin, KY 205,060
Hamilton Meadows Hamilton, OH 126,251
Lake Pine Plaza Raleigh, NC 76,490
Lake Shores Plaza Detroit, MI 85,478
North Gate Plaza Columbus, OH 85,100
Maynard Crossing Raleigh, NC 121,063
Shoppes at Mason Cincinnati, OH 80,880
St. Ann Square St. Ann, MO 82,498
Statler Square Staunton, VA 132,994
Village Center Southlake, TX 118,172
West Chester Plaza Westchester, OH 88,181
Windmiller Farms Columbus, OH 119,192
Worthington Park Centre Worthington, OH 91,192
This financial statement is prepared on the accrual basis of accounting in
conformity with generally accepted accounting principles.
Subsequent to December 31, 1996, 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.
9
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, 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, 1996, Kroger Supermarkets, an anchor
tenant in 18 of the 20 shopping centers, paid minimum rent of $6,315,460,
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, 1996, excluding tenant
reimbursements of operating expenses and excluding additional contingent
rentals based on tenants' sales volume, are as follows:
Year ending December 31, Amount
1997 $ 17,564,921
1998 18,422,107
1999 17,620,074
2000 16,369,355
2001 15,652,802
=============
10
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 $408,614
for the year ended December 31, 1996.
11
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Gardens Square Shopping Center for the year ended December 31, 1996. 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 Gardens 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 Gardens 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 Gardens Square Shopping Center for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
January 27, 1998
12
GARDENS SQUARE SHOPPING CENTER
Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
Revenues:
Minimum rent $ 934,590
Recoveries from tenants 323,245
-------------
Total revenues 1,257,835
Operating expenses:
Operating and maintenance 201,078
Management fees 50,340
Real estate taxes 137,533
General and administrative 18,589
-------------
Total expenses 407,540
Revenues in excess of certain expenses $ 850,295
=============
See accompanying notes to statement of revenues and certain expenses.
13
GARDENS SQUARE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation of
a 90,258 square foot shopping center (the "Property") located in Miami,
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, 1996, 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 various 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.
14
GARDENS SQUARE SHOPPING CENTER
Notes to Statement of Revenues and Certain Expenses
3. Operating Leases
For the year ended December 31, 1996, the following tenants paid minimum
rent which exceeded 10% of the total minimum rent earned by the Property:
Minimum
Tenant Rent Paid
Publix Supermarkets $ 263,200
Eckerd Drugs 104,544
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2011. Future minimum rent under noncancelable
operating leases as of December 31, 1996, excluding tenant reimbursements
of operating expenses and excluding additional contingent rentals based on
tenants' sales volume, are as follows:
Year ending December 31, Amount
1997 $ 984,141
1998 926,382
1999 825,996
2000 794,885
2001 594,413
=========
15
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Pinetree Plaza for the year ended December 31, 1996. 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 Pinetree Plaza
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
Pinetree Plaza 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 Pinetree Plaza for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
January 27, 1998
16
PINETREE PLAZA
Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
Revenues:
Minimum rent $ 284,892
Recoveries from tenants 51,775
-------------
Total revenues 336,667
Operating expenses:
Operating and maintenance 51,834
Management fees 16,532
Real estate taxes 37,625
General and administrative 4,817
-------------
Total expenses 110,808
Revenues in excess of certain expenses $ 225,859
=============
See accompanying notes to statement of revenues and certain expenses.
17
PINETREE PLAZA
Notes to Statement of Revenues and Certain Expenses
For the year ended December 31, 1996
1. Basis of Presentation
The statement of revenues and certain expenses relates to the operation of
a 56,566 square foot shopping center (the "Property") located in Orange
Park, Florida.
The financial statement is prepared on the accrual basis of accounting in
conformity with generally accepted accounting principles.
Subsequent to December 31, 1996, 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.
18
PINETREE PLAZA
Notes to Statement of Revenues and Certain Expenses
3. Operating Leases
For the year ended December 31, 1996, the following tenants paid minimum
rent which exceeded 10% of the total minimum rent earned by the Property:
Minimum
Tenant Rent Paid
Winn Dixie Stores, Inc. $ 120,405
Revco/Piece Goods Shops, Co. 42,330
Windsurfing Orange Park, Inc. 47,253
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2006 and including a new anchor tenant lease
signed during 1997 with Publix Supermarkets which begins in 1999. Future
minimum rent under noncancelable operating leases as of December 31, 1996,
excluding tenant reimbursements of operating expenses and excluding
additional contingent rentals based on tenants' sales volume, are as
follows:
Year ending December 31, Amount
1997 $ 295,760
1998 157,812
1999 420,936
2000 393,064
2001 396,954
=========
19
Regency Realty Corporation
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1997
(Unaudited)
(In thousands)
The following unaudited pro forma condensed consolidated balance sheet is based
upon the historical consolidated balance sheet of the Company as of September
30, 1997 as if the Company had acquired Midland and the Acquisition Properties
as of that date. The following pro forma condensed consolidated balance sheet
should be read in conjunction with the Company's annual report filed on Form 10-
K for the year ended December 31, 1996, Form 10-Q for the period ended September
30, 1997, and the pro forma consolidated statement of operations of the Company
and notes thereto included elsewhere herein.
The unaudited pro forma condensed consolidated balance sheet is not necessarily
indicative of what the actual financial position of the Company would have been
at September 30, 1997, nor does it purport to represent the future financial
position of the Company.
Regency Regency
Realty Realty
Corporation Midland Acquisition Corporation
Historical Properties Properties Pro Forma
Assets (a)
Real estate rental property, at cost $ 772,496 $ 230,400 33,004 (b) 1,035,900
Less: accumulated depreciation 37,130 - - 37,130
---------- ---------- ---------- ------------
Real estate rental property, net 735,366 230,400 33,004 998,770
---------- ---------- ---------- ------------
Construction in progress 16,211 - - 16,211
Investments in unconsolidated real estate partnerships 1,005 - - 1,005
---------- ---------- ---------- ------------
Total investments in real estate, net 752,582 230,400 33,004 1,015,986
---------- ---------- ---------- ------------
Cash and cash equivalents 14,031 - - 14,031
Accounts receivable and other assets 12,036 - - 12,036
---------- ---------- ---------- ------------
$ 778,649 $ 230,400 33,004 1,042,053
========== ========== ========== ============
Liabilities and Stockholders' Equity
Mortgage and other loans $ 236,277 $ 92,500 - 328,777
Acquisition and development line of credit 3,831 137,900 33,004 (b) 174,735
---------- ---------- ---------- ------------
Total Notes Payable 240,108 230,400 33,004 503,512
Tenant security and escrow deposits 2,226 - - 2,226
Accounts payable & other liabilities 16,002 - - 16,002
---------- ---------- ---------- ------------
Total Liabilities 258,336 230,400 33,004 521,740
---------- ---------- ---------- ------------
Minority interests in consolidated partnerships 8,504 - - 8,504
Redeemable partnership units 13,753 - - 13,753
---------- ---------- ---------- ------------
22,257 - - 22,257
---------- ---------- ---------- ------------
Stockholders' Equity
Common stock and additional paid in capital 519,540 - - 519,540
Distributions in excess of net income (21,484) - - (21,484)
---------- ---------- ---------- ------------
Total Stockholders' Equity 498,056 - - 498,056
---------- ---------- ---------- ------------
$ 778,649 $ 230,400 33,004 1,042,053
========== ========== ========== ============
See accompanying notes to pro forma condensed consolidated balance sheet.
20
Regency Realty Corporation
Notes to Pro Forma Condensed Consolidated Balance Sheet
September 30, 1997
(Unaudited)
(In thousands)
(a) At closing and during 1998, the Company will pay approximately $230.4
million to acquire 21 properties and pay transaction costs through the
issuance of units of limited partnership interest valued at $26.58 per
unit or cash of $47 million, the assumption of $92.5 million of debt,
and $90.9 million to pay off existing secured real estate loans.
Subsequent to 1998, the Company expects to pay approximately $12.7
million to acquire equity interests in the development pipeline as the
properties reach stabilization. The Company may also be required to
make payments aggregating $10.5 million through the year 2000
contingent upon increases in net income from existing properties, the
development pipeline, and new properties developed or acquired in
accordance with the contribution agreement.
(b) Represents the aggregate purchase price for Kingsdale Shopping Center,
Boynton Lakes Plaza and Pinetree Plaza. The other Acquisition
Properties (Rivermont Station, Lovejoy Station, Tamiami Trails, and
Gardens Square) were acquired prior to September 30, 1997 and are
therefore included in the Company's September 30, 1997 balance sheet.
Purchase
Price
--------------
Kingsdale Shopping Ctr 17,575
Boynton Lakes Plaza 12,894
Pinetree Plaza 2,535
--------------
$ 33,004
==============
21
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Nine Month Period ended
September 30, 1997 and the Year
ended December 31, 1996
(Unaudited)
(In thousands, except share and per share data)
The following unaudited pro forma consolidated statements of operations are
based upon the historical consolidated statements of operations for the nine
month period ended September 30, 1997 and the year ended December 31, 1996 and
are presented as if the Company had acquired Midland and the Acquisition
Properties as of January 1, 1996. Previously Reported Acquisitions represent
operating properties which the Company has acquired and reported on in two Form
8-K/A's dated June 6, 1997 and March 7, 1997. These pro forma consolidated
statements of operations should be read in conjunction with the Company's 1996
Form 10-K, and the Statement of Revenues and Certain Expenses of Midland
Properties, Garden Square and Pinetree Plaza and notes thereto included
elsewhere herein.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of what the actual results of the Company would have been
assuming the transactions had been completed as set forth above, nor does it
purport to represent the Company's results of operations in future periods.
For the Nine Month Period Ended September 30, 1997:
Regency Regency
Realty Previously Realty
Corporation Reported Midland Acquisition Pro Forma Corporation
Historical Acquisitions Properties Properties Adjustments Pro Forma
Real estate operating revenues: (a) (b) (c)
Minimum rent $ 49,925 6,659 13,093 4,898 - 74,575
Percentage rent 1,612 302 27 - - 1,941
Recoveries from tenants 11,303 1,344 1,875 1,324 - 15,846
Other recoveries and income - - 100 - - 100
Equity income of unconsolidated
partnerships 20 - - - - 20
----------- ----------- ---------- ---------- ---------- ------------
62,860 8,305 15,095 6,222 - 92,482
----------- ----------- ---------- ---------- ---------- ------------
Real estate operating expenses:
Operating and maintenance 9,967 1,142 969 1,310 - 13,388
Real estate taxes 6,049 844 1,517 758 - 9,168
----------- ----------- ---------- ---------- ---------- ------------
16,016 1,986 2,486 2,068 - 22,556
----------- ----------- ---------- ---------- ---------- ------------
Net Property Revenues 46,844 6,319 12,609 4,154 - 69,926
Third party revenues:
Leasing, brokerage and
development fees 4,804 735 - - - 5,539
Property management fees 1,484 325 - - - 1,809
----------- ----------- ---------- ---------- ---------- ------------
6,288 1,060 - - - 7,348
----------- ----------- ---------- ---------- ---------- ------------
Other expense (income):
General and administrative 7,761 683 622 - - 9,066
Depreciation & amortization 11,502 2,029 - - 3,300 (d) 16,831
Interest expense 14,749 5,035 - - 14,371 (e) 34,155
Interest income (729) (33) - - - (762)
----------- ----------- ---------- ---------- ---------- ------------
33,283 7,714 622 - 17,670 59,290
----------- ----------- ---------- ---------- ---------- ------------
Net income 19,849 (335) 11,987 4,154 (17,670) 17,984
Minority interest in consolidated
property partnerships (2,342) 1,010 - - - (1,332)
----------- ----------- ---------- ---------- ---------- ------------
Net income for common stockholders $ 17,507 675 11,987 4,154 (17,670) 16,652
=========== =========== ========== ========== ========== ============
Earnings per share (note (f)):
Primary $ 0.97 $ 0.90
=========== ============
Fully Diluted $ 0.97 $ 0.84
=========== ============
22
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Nine Month Period ended
September 30, 1997 and the Year
ended December 31, 1996
(Unaudited)
(In thousands, except share and per share data)
For the Year Ended December 31, 1996:
Regency Regency
Realty Previously Realty
Corporation Reported Midland Acquisition Pro Forma Corporation
Historical Acquisitions Properties Properties Adjustments Pro Forma
Real estate operating revenues: (a) (b) (c)
Minimum rent $ 34,706 25,564 11,997 7,088 - 79,355
Percentage rent 998 496 36 - - 1,530
Recoveries from tenants 7,729 4,994 1,884 1,879 - 16,486
Other recoveries and income - 321 - - - 321
Equity income of unconsolidated
partnerships 70 - - - - 70
----------- ----------- ---------- ----------- ----------- ------------
43,503 31,375 13,917 8,967 - 97,762
----------- ----------- ---------- ----------- ----------- ------------
Real estate operating expenses:
Operating and maintenance 7,656 9,329 1,174 1,822 - 19,981
Real estate taxes 4,409 2,875 1,144 1,032 - 9,460
----------- ----------- ---------- ----------- ----------- ------------
12,065 12,204 2,318 2,854 - 29,441
----------- ----------- ---------- ----------- ----------- ------------
Net Property Revenues 31,438 19,171 11,599 6,113 - 68,321
Third party revenues:
Leasing, brokerage and
development fees 2,852 3,576 - - - 6,428
Property management fees 592 879 - - - 1,471
----------- ----------- ---------- ----------- ----------- ------------
3,444 4,455 - - - 7,899
----------- ----------- ---------- ----------- ----------- ------------
Other expense (income):
General and administrative 6,048 2,547 501 - - 9,096
Depreciation & amortization 8,758 7,255 - - 3,891 (d) 19,904
Branch formation expenses - 108 - - - 108
Interest expense 10,777 12,259 - - 13,176 (e) 36,212
Interest income (666) - - - - (666)
----------- ----------- ---------- ----------- ----------- ------------
24,917 22,169 501 - 17,067 64,654
----------- ----------- ---------- ----------- ----------- ------------
Net income 9,965 1,457 11,098 6,113 (17,067) 11,566
Minority interest in consolidated
property partnerships - (696) - - - (696)
Preferred stock dividends (58) - - - - (58)
----------- ----------- ---------- ----------- ----------- ------------
Net income for common stockholders $ 9,907 761 11,098 6,113 (17,067) $ 10,812
=========== =========== ========== =========== =========== ============
Earnings per share (note (f)):
Primary $ 0.96 $ 0.75
=========== ============
Fully Diluted $ 0.96 $ 0.73
=========== ============
See accompanying notes to pro forma consolidated statements of operations.
23
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Nine Month Period ended
September 30, 1997 and the Year
ended December 31, 1996
(Unaudited)
(In thousands, except share and per share data)
(a) Reflects revenues and certain expenses for the Previously Reported
Acquisitions for the period from January 1, 1997 to the respective
acquisition date of the property, and for the year ended December 31,1996,
as reported in Form 8-K/A dated June 6, 1997.
(b) Reflects revenues and certain expenses for the Midland Properties for the
nine month period ended September 30, 1997 and the year ended December 31,
1996.
(c) Reflects revenues and certain expenses of the Acquisition Properties for
the period from January 1, 1997 to the respective acquisition date of the
property and for the year ended December 31, 1996.
For the period from January 1, 1997 to the Acquisition Date
Property Acquisition Minimum Percentage Recoveries Operating & Real
Name Date Rent Rent from Tenants Maintenance Estate Taxes
---- ----------- ------------- ------------- ------------- -------------- -------------
Rivermont Station 6/30/97 $ 642 - 124 98 56
Lovejoy Station 6/30/97 306 - 64 45 29
Tamiami Trails 7/10/97 508 - 163 154 66
Gardens Square 9/19/97 671 - 232 194 99
Kingsdale Shopping Ctr 10/10/97 1,334 - 300 400 221
Boynton Lakes Plaza 12/1/97 1,159 - 391 347 250
Pinetree Plaza 12/23/97 279 - 51 72 37
------------- ------------- ------------- -------------- -------------
$ 4,898 - 1,324 1,310 758
============= ============= ============= ============== =============
For the year ended December 31, 1996
Property Minimum Percentage Recoveries Operating & Real
Name Rent Rent from Tenants Maintenance Estate Taxes
---- ------------- ------------- ------------- -------------- -------------
Rivermont Station $ 1,294 - 251 199 112
Lovejoy Station 617 - 128 91 59
Tamiami Trails 970 - 311 294 127
Gardens Square 935 - 323 270 138
Kingsdale Shopping Ctr 1,720 - 387 516 285
Boynton Lakes Plaza 1,267 - 427 379 273
Pinetree Plaza 285 - 52 73 38
------------- ------------- ------------- -------------- -------------
$ 7,088 - 1,879 1,822 1,032
============= ============= ============= ============== =============
24
(d) Depreciation expense is based upon the costs allocated to the buildings
acquired estimating the useful life. 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 nine month period
ended September 30, 1997 calculation reflects depreciation expense on the
Acquisition Properties from January 1, 1997 to the respective acquisition
date of the property.
For the year ended December 31, 1996
Property Building and Year Building Annual
Name Improvements Built/Renovated Useful Life Depreciation
---- ------------- --------------- ----------- -------------
Rivermont Station 9,548 1996 39 $ 245
Lovejoy Station 5,560 1995 38 146
Tamiami Trails 7,598 1987 30 253
Garden Square 7,151 1991 34 210
Kingsdale Shopping Center 10,023 1959 27 371
Boynton Lakes Plaza 9,618 1993 36 267
Pinetree Plaza 3,057 1982 25 122
Midland Properties 180,435 Ranging from Ranging from 2,275
1986 to 1996 29 to 40
---------
Pro forma depreciation expense for the year ended December 31, 1996 $ 3,891
=========
Pro forma depreciation expense for the nine month period
ended September 30, 1997 $ 3,300
=========
(e) To reflect interest expense on the acquisition and development line of
credit required to make the property acquisitions at the average interest
rate afforded the Company (7.4%) and the assumption of $92,500 of debt at
existing rates averaging 8.2%. 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 expense for the year
ended December 31, 1996 $ 13,176
=========
Pro forma interest expense for the nine month period
ended September 30, 1997 $ 14,371
=========
25
(f) Earnings per share
December 31, September 30,
1996 1997
------------- -------------
Primary Common Shares and Per Share Calculation:
Total Primary Shares 15,380 19,956
Income from continuing operations for common stockholders 10,812 16,652
Minority Interest in RRLP 696 1,332
------------- -------------
Income for Primary Shareholders 11,508 17,984
------------- -------------
Primary earnings per share 0.75 0.90
============= =============
Fully Diluted Common Shares and Per Share Calculation:
Contingent Units as reported on in Form 8-K/A dated June 6, 1997. 1,020 1,020
------------- -------------
Total Fully Diluted Shares 16,400 20,976
------------- -------------
Required increase in income from real estate operations necessary
to earn contingent shares, less applicable depreciation on
increased purchase price. 439 (262)
Income from continuing operations before extraordinary item for
common stockholders for computation of fully diluted
------------- -------------
earnings per share 11,947 17,722
------------- -------------
Fully diluted earnings per share 0.73 0.84
============= =============
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 1st day of October, 1997, between
BOYNTON LAKES PLAZA PARTNERSHIP, a Florida general partnership ("Seller"), and
RRC ACQUISITIONS, INC., a Florida corporation, its designees, successors and
assigns ("Buyer").
Background
Buyer wishes to purchase a shopping center in the City of Boynton
Beach, County of Palm Beach, State of Florida, owned by Seller, known as Boynton
Lakes Plaza (the "Shopping Center");
Seller wishes to sell the Shopping Center to Buyer;
In consideration of the mutual agreements herein, and other good and
valuable consideration, the receipt of which is hereby acknowledged, Seller
agrees to sell and Buyer agrees to purchase the Property (as hereinafter
defined) on the following terms and conditions:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 Agreement means this instrument as it may be amended from time to
time.
1.2 Allocation Date means the close of business on the day
immediately prior to the Closing Date.
26
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1998
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-12298 59-3191743
(State or other (Commission (IRS Employer
jurisdiction File No.) Identification No.)
of incorporation)
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
N/A
(Former name or former address, if changed since last report)
==========================================================================
Item 2. Acquisition or Disposition of Assets.
General
On March 11, 1998, Regency Realty Corporation (the "Company") acquired,
through a limited partnership (the "Partnership") of which the Company is the
sole general partner, substantially all of the completed properties and third
party management assets of Midland Development Group, Inc. and certain of its
affiliates ("Midland") pursuant to a Contribution Agreement dated January 12,
1998. For additional information, see the Company's current report on Form
8-K filed with the Commission on February 4, 1998.
Item 7. Financial Statements and Exhibits.
(a) and (b) Financial Statements and Pro Forma Financial
Information
Audited statement of revenues and certain expenses for Midland for the
year ended December 31, 1996 and unaudited pro forma consolidated balance
sheet as of September 30, 1997 and unaudited pro forma consolidated
statements of operations for the nine months ended September 30, 1997 and the
year ended December 31, 1996 were included in the Company's current report on
Form 8-K filed with the Commission on February 4, 1998.
(c) Exhibits
(2) Contribution Agreement dated as of January 12, 1998, by and among
Regency Realty Corporation, Midland Development Group, Inc., the Midland
Principals and certain Midland Affiliates.
(10) Material Contracts:
(a) Second Amended and Restated Agreement of Limited Partnership of
Regency Centers, L.P., dated as of March 5, 1998, by and among
Regency Realty Corporation, as General Partner, and the Limited
Partners named therein.
(b) Registration Rights Agreement dated as of March 5, 1998, by and
among Regency Realty Corporation and the Investors named therein.
(c) Amended and Restated Redemption Agreement dated as of March 5,
1998, by and among Regency Realty Corporation and the Investors
named therein.
(d) Non-Competition Agreement dated as of March 11, 1998, by and
among Regency Centers, L.P., Regency Realty Group, Inc., Regency
Realty Corporation and Lee S. Wielansky.
(e) Lock-up letter agreement of Lee S. Wielansky dated as of March 1,
1998.
SIGNATURES
Pursuant to the requirements of the Securities 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)
March 19, 1998 By: /s/ J. Christian Leavitt
------------------------------------
J. Christian Leavitt
Vice President and Treasurer
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)
30
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:
31
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.
32
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.
33
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
34
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
35
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.
36
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.
37
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
38
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
39
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.
40
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.
41
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
42
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
43
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.
44
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.
45
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
46
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.
47
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
48
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.
49
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.
50
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.
51
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
52
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.
53
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.
54
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.
55
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.
56
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).
57
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.
58
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.
59
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
========= =========== ========== ============ ===============
60
(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.
61
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
===============
62
(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:
63
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
============ ===============
64
The Board of Directors
Regency Realty Corporation:
We consent to the use of reports incorporated by reference in the
registration statements, (No. 3-86886, No. 333-930, No. 333-2546, and No. 333-
31077) on Form S-3 and (No. 333-24971) on Form S-8, of Regency Realty
Corporation of our reports, with respect to the Statements of Revenues and
Certain Expenses for the year ended December 31, 1997, of the following
properties:
Name of Property Date of audit report
Delk Spectrum Shopping Center May 15, 1998
Bloomingdale Square May 13, 1998
Sliverlake Shopping Center June 30, 1998
Highland Square Shopping Center July 1, 1998
Midland Properties July 8, 1998
The above reports appear in the Form 8-K of Regency Realty Corporation dated
July 20, 1998.
KPMG PEAT MARWICK LLP
July 20, 1998
Jacksonville, Florida
65
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 24th day of February, 1998, between
RICARDO PINES, individually ("Pine"), PINES HIGHLAND SQUARE ASSOCIATES, LTD., a
Florida limited partnership ("Partnership"), and PINES GROUP, INC., a Florida
corporation ("PGI"), and RRC ACQUISITIONS TWO, INC., a Florida corporation, its
designees, successors and assigns ("Buyer").
Background
Buyer wishes to purchase a shopping center in the City of Jacksonville,
County of Duval, State of Florida, commonly known as Highland Square Shopping
Center (the "Shopping Center"). The Shopping Center is comprised of three
parcels, one of which ("Parcel One") is owned by Pine, another of which ("Parcel
Two") is owned by Highland Square, and the third is owned by Pine and PGI as
Tenants in Common.
Pine, Highland Square and PGI desire to sell the Shopping Center to
Buyer.
In consideration of the mutual agreements herein, and other good and
valuable consideration, the receipt of which is hereby acknowledged, Pine,
Highland Square and PGI agree to sell and Buyer agrees to purchase the Shopping
Center on the following terms and conditions:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 Agreement means this instrument as it may be amended from time to
time.
1.2 Allocation Date means the close of business on the day immediately
prior to the Closing Date.
1.3 Audit Representation Letter means the form of Audit Representation
Letter attached hereto as Exhibit .
1.4 Buyer means the party identified as Buyer on the initial page
hereof.
1.5 Closing means generally the execution and delivery of those
documents and funds necessary to effect the sale of the Property by Seller to
Buyer.
1.6 Closing Date means the date on which the Closing occurs.
1.7 Contracts means all service contracts, agreements or other
instruments to be assigned by Seller to Buyer at Closing.
1.8 Day means a calendar day, whether or not the term is capitalized.
1.9 Earnest Money Deposit means the deposit delivered by Buyer to
Escrow Agent prior to the Closing under Sections and of this Agreement, together
with the earnings thereon, if any.
66
1.10 Environmental Claim means any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Material or actual or alleged Hazardous Material Activity, (c) from
any abatement, removal, remedial, corrective, or other response action in
connection with a Hazardous Material, Environmental Law or other order of a
governmental authority or (d) from any actual or alleged damage, injury, threat,
or harm to health, safety, natural resources, or the environment.
1.11 Environmental Law means any current legal requirement in effect at
the Closing Date pertaining to (a) the protection of health, safety, and the
indoor or outdoor environment, (b) the conservation, management, protection or
use of natural resources and wildlife, (c) the protection or use of source water
and groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material or (e) pollution (including any Release to air, land, surface
water, and groundwater); and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 USC ss.ss.9601 et
seq., Solid Waste Disposal Act, as amended by the Resource Conservation Act of
1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC ss.ss.6901 et
seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 USC ss.ss.1251 et seq., Clean Air Act of 1966, as amended, 42 USC
ss.ss.7401 et seq., Toxic Substances Control Act of 1976, 15 USC ss.ss.2601 et
seq., Hazardous Materials Transportation Act, 49 USC App. ss.ss.1801,
Occupational Safety and Health Act of 1970, as amended, 29 USC ss.ss.651 et
seq., Oil Pollution Act of 1990, 33 USC ss.ss.2701 et seq., Emergency Planning
and Community Right-to-Know Act of 1986, 42 USC App. ss.ss.11001 et seq.,
National Environmental Policy Act of 1969, 42 USC ss.ss.4321 et seq., Safe
Drinking Water Act of 1974, as amended by 42 USC ss.ss.300(f) et seq., and any
similar, implementing or successor law, any amendment, rule, regulation, order
or directive, issued thereunder.
67
1.12 Escrow Agent means Chicago Deferred Exchange Corporation, 171
North Clark Street, Chicago, Illinois 60601 (Fax 312/223-3301).
1.13 Governmental Approval means any permit, license, variance,
certificate, consent, letter, clearance, closure, exemption, decision, action or
approval of a governmental authority.
1.14 Hazardous Material means any asbestos, petroleum, petroleum
product, dry cleaning solvent or chemical, biological or medical waste, "sharps"
or any other hazardous or toxic substance as defined in or regulated by any
Environmental Law in effect at the pertinent date or dates.
1.15 Hazardous Material Activity means any activity, event, or
occurrence at or prior to the Closing Date involving a Hazardous Material,
including, without limitation, the manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation, handling or corrective or response
action to any Hazardous Material.
1.16 Improvements means all buildings, structures or other improvements
situated on the Real Property.
1.17 Inspection Period means the period of time which expires at the
end of business on Wednesday, March 25, 1998. Buyer may extend the Inspection
Period for an additional fifteen days by depositing an additional $50,000 with
Escrow Agent which additional deposit shall become a part of the Earnest Money
Deposit provided for in Section hereof.
1.18 Lady's Island Publix means the free-standing Publix grocery store
and related facilities on lands located at the intersection of Sea Island
Parkway and Sam's Point Road at Lady's Island Drive, in Beaufort County, South
Carolina, owned by Buyer and leased to Publix Super Markets, Inc. ("Publix"),
commonly known as "Lady's Island Publix".
1.19 Leases means all leases and other occupancy agreements permitting
persons to lease or occupy all or a portion of the Property.
1.20 Materials means all plans, drawings, specifications, soil test
reports, environmental reports, market studies, surveys, and similar
documentation, if any, owned by or in the possession of Seller with respect to
the Property, Improvements and any proposed improvements to the Property, which
Seller may lawfully transfer to Buyer except that, as to financial and other
records, Materials shall include only photostatic copies.
68
1.21 Other Centers means the Lady's Island Publix and the Weems Road
Winn-Dixie.
1.22 Permitted Exceptions means only the following interests, liens and
encumbrances:
(a) Liens for ad valorem taxes not payable on or before Closing;
(b) Rights of tenants under Leases; and
(c) Other matters determined by Buyer to be acceptable.
1.23 Personal Property means all (a) sprinkler, plumbing, heating,
air-conditioning, electric power or lighting, incinerating, ventilating and
cooling systems, with each of their respective appurtenant furnaces, boilers,
engines, motors, dynamos, radiators, pipes, wiring and other apparatus,
equipment and fixtures, elevators, partitions, fire prevention and extinguishing
systems located in or on the Improvements, (b) all Materials, and (c) all other
personal property used in connection with the Improvements, provided the same
are now owned or are acquired by Seller prior to the Closing.
1.24 Property means collectively the Real Property, the Improvements
and the Personal Property.
1.25 Prorated means the allocation of items of expense and income
between Buyer and Seller based upon that percentage of the time period as to
which such item of expense or income relates which has expired as of the date at
which the proration is to be made.
1.26 Purchase Price means the consideration agreed to be paid by Buyer
to Seller for the purchase of the Property as set forth in Section (subject to
adjustments as provided herein).
1.27 Real Property means the lands more particularly described on
Exhibit , together with all easements, licenses, privileges, rights of way and
other appurtenances pertaining to or accruing to the benefit of such lands.
1.28 Release means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the indoor or outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Hazardous Material at or
prior to the Closing Date.
69
1.29 Rent Roll means the list of Leases attached hereto as Exhibit ,
identifying with particularity the space leased by each tenant, the term
(including extension options), square footage and applicable rent, common area
maintenance, tax and other reimbursements, security deposits and similar data.
1.30 Seller means Pine, Highland Square and PGI, collectively, except
that as to particular representations and warranties, and covenants, as they are
made with respect to any particular parcel included in the Real Property (and
the improvements thereon), or to the selling entities, as the case may be, the
particular representation, warranty or covenant shall be deemed to have been
made only by the entity which owns the particular parcel, or to the particular
entity or person, as applicable.
1.31 Seller Financial Statements means the unaudited balance sheets and
statements of income, cash flows and changes in financial positions prepared by
Seller for the Property, as of and for the two (2) calendar years next preceding
the date of this Agreement and all monthly reports of income, expense and cash
flow prepared by Seller for the Property, which shall be consistent with past
practice, for any period beginning after the latest of such calendar years, and
ending prior to Closing.
1.32 Shopping Center means the Shopping Center identified on the
initial page hereof, including the 11.56 acre unimproved parcel included in the
Real Property.
1.33 Survey means a map of a stake survey of the Real Property which
shall comply with Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, jointly established and adopted by ALTA and ACSM in 1992, and includes
items 1, 2, 3, 4, 6, 7, 8, 9, 10 and 11 of Table "A" thereof, which meets the
accuracy standards (as adopted by ALTA and ACSM and in effect on the date of the
Survey) of an urban survey, which is dated not earlier than thirty (30) days
prior to the Closing, and which is certified to Buyer, Seller, the Title
Insurance company providing Title Insurance to Buyer, and Buyer's lender, and
dated as of the date the Survey was made.
1.34 Surviving Mortgage means a Mortgage dated January 31, 1996, from
Seller to Allstate Life Insurance Company, with a principal balance of
$4,024,418.58 as of February 1, 1998, bearing interest at eight and forty-five
one-hundredths percent (8.45%) per annum and amortizing over a twenty (20) year
period which commenced February 1, 1996, and which matures on February 1, 2006
(subject to extension for an additional ten (10) years as provided in the loan
documents.
1.35 Tenant Estoppel Letter means a letter or other certificate from a
tenant certifying as to certain matters regarding such tenant's Lease, in
substantially the same form as attached hereto as Exhibit , or in the case of
national or regional "credit"
70
tenants identified as such on the Rent Roll, the form customarily used by such
tenant provided the information disclosed is acceptable to Buyer.
1.36 Title Defect means any exception in the Title Insurance Commitment
or any matter disclosed by the Survey, other than a Permitted Exception.
1.37 Title Insurance means an ALTA Form B Owners Policy of Title
Insurance for the full Purchase Price insuring marketable title in Buyer in fee
simple, subject only to the Permitted Exceptions, issued by Chicago Title
Insurance Company.
1.38 Title Insurance Commitment means a binder whereby the title
insurer agrees to issue the Title Insurance to Buyer.
1.39 Transaction Documents means this Agreement, the deed conveying the
Property, the assignment of leases, the bill of sale conveying the Personal
Property and all other documents required or appropriate in connection with the
transactions contemplated hereby.
1.40 Weems Road Winn-Dixie means the free-standing Winn-Dixie grocery
store and related facilities located at the intersection of Weems Road and U.S.
Highway 90, in Tallahassee, Leon County, Florida, owned by Buyer and leased to
Winn-Dixie Stores, Inc. ("Winn-Dixie"), commonly known as "Weems Road Winn-
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price; Payment.
(a) Purchase Price and Terms. The total Purchase Price for the
Property (subject to adjustment as provided herein) shall be $12,000,000. The
Purchase Price shall be payable by Buyer's assumption of the Surviving Mortgage,
the outstanding principal balance to reduce the Purchase Price and the balance
of the Purchase Price shall be paid in cash at Closing.
(b) Adjustments to the Purchase Price. The Purchase Price
shall be adjusted as of the Closing Date by:
(1) prorating the Closing year's real and tangible personal
property taxes as of the Allocation Date (if the amount of the current year's
property taxes are not available, such taxes will be prorated based upon the
prior year's assessment);
71
(2) prorating as of the Allocation Date cash receipts and
expenditures for the Shopping Center and other items customarily prorated in
transactions of this sort; and
(3) subtracting the amount of security deposits, prepaid rents from
tenants under the Leases, and credit balances, if any, of any tenants, and
adding any expenses prepaid by Seller. Any rents, percentage rents or tenant
reimbursements payable by tenants after the Allocation Date but applicable to
periods on or prior to the Allocation Date shall be remitted to Seller by Buyer
within thirty (30) days after receipt, less any expenses of the Property
incurred on or prior to the Allocation Date by Seller but not paid by Seller
prior to Closing and discovered by Buyer after Closing. Buyer shall have no
obligation to collect delinquencies, but should Buyer collect any delinquent
rents or other sums which cover periods prior to the Allocation Date and for
which Seller have received no proration or credit, Buyer shall remit same to
Seller within thirty (30) days after receipt, less any costs of collection.
Buyer will not interfere in Seller's efforts to collect sums due it prior to the
Closing. Seller will remit to Buyer promptly after receipt any rents, percentage
rents or tenant reimbursements received by Seller after Closing which are
attributable to periods occurring after the Allocation Date. Undesignated
receipts after Closing of either Buyer or Seller from tenants in the Shopping
Center shall be applied first to then current rents and reimbursements for such
tenant(s), then to delinquent rents and reimbursements attributable to
post-Allocation Date periods, and then to pre-Allocation Date periods.
2.2 Earnest Money Deposit. An Earnest Money Deposit in the amount of
$50,000 shall be delivered to Escrow Agent within three (3) days after the date
of execution by the last of Buyer or Seller to execute and transmit a copy of
this Agreement to the other. This Agreement may be terminated by Seller if the
Earnest Money Deposit is not received by Escrow Agent by such deadline. The
Earnest Money Deposit paid by Buyer shall be deposited by Escrow Agent in an
interest bearing account, and shall be held and disbursed by Escrow Agent as
specifically provided in this Agreement. The Earnest Money Deposit shall be
applied to the Purchase Price at the Closing.
2.3 Closing Costs.
(a) Seller shall pay:
(1) Documentary stamp and other transfer taxes imposed upon
the transactions contemplated hereby;
(2) Cost of satisfying any liens on the Property;
72
(3) Cost of title insurance and the costs, if any, of curing title
defects and recording any curative title documents;
(4) All broker's commissions, finders' fees and similar expenses
incurred by either party in connection with the sale of the Property, subject
however to Buyer's indemnity given in Section of this Agreement;
(5) Seller's attorneys' fees relating to the sale of the Property,
if any;
and
(6) One-half of the costs incurred in connection with the
assumption of the Surviving Mortgage, including assumption fees and the fees of
the lender's counsel.
(b) Buyer shall pay:
(1) Cost of Buyer's due diligence inspection;
(2) Costs of the Phase 1 environmental site assessment to be
obtained by Buyer;
(3) Cost of the Survey;
(4) One-half of the costs incurred in connection with the
assumption of the Surviving Mortgage, including assumption fees and the fees of
the lender's counsel.
(5) Cost of recording the deed; and
(6) Buyer's attorneys' fees.
3. INSPECTION PERIOD AND CLOSING
3.1 Inspection Period.
(a) Buyer agrees that it will have the Inspection Period to
physically inspect the Property, review the economic data, underwrite the
tenants and review their Leases, and to otherwise conduct its due diligence
review of the Property and all books, records and accounts of Seller related
thereto. Buyer hereby agrees to indemnify and hold Seller harmless from any
damages, liabilities or claims for property damage or personal injury arising
out of such inspection and investigation by Buyer or
73
its agents or independent contractors. Within the Inspection Period, Buyer may,
in its sole discretion and for any reason or no reason, elect to go forward with
this Agreement to closing, which election shall be made by notice to Seller
given within the Inspection Period. If such notice is not timely given, this
Agreement and all rights, duties and obligations of Buyer and Seller hereunder,
except any which expressly survive termination, shall terminate and Escrow Agent
shall forthwith return to Buyer the Earnest Money Deposit. If Buyer so elects to
go forward, the Earnest Money Deposit shall be increased by an additional
deposit of $100,000 (to be deposited with Escrow Agent no later than three (3)
business days following the end of the Inspection Period), and shall not be
refundable except upon the terms otherwise set forth herein.
(b) Seller will promptly furnish or make available to Buyer
the documents enumerated on Exhibit attached hereto. Buyer, through its
officers, employees and other authorized representatives, shall have the right
to reasonable access to the Property and all records of Seller related thereto
which are in the custody of Seller or Seller's agents, including without
limitation all Leases and Seller Financial Statements, at reasonable times
during the Inspection Period for the purpose of inspecting the Property, taking
soil and ground water samples, conducting Hazardous Materials inspections,
reviewing the books and records of Seller concerning the Property and otherwise
conducting its due diligence review of the Property. Seller shall cooperate with
and assist Buyer in making such inspections and reviews. Seller shall give Buyer
any authorizations which may be required by Buyer in order to gain access to
records or other information pertaining to the Property or the use thereof
maintained by any governmental or quasi-governmental authority or organization.
Buyer, for itself and its agents, agrees not to enter into any contract with
existing tenants without the written consent of Seller if such contract would be
binding upon Seller should this transaction fail to close. Buyer shall have the
right to have due diligence interviews and other discussions or negotiations
with tenants.
(c) Buyer, through its officers or other authorized
representatives, shall have the right to reasonable access to all Materials
(other than privileged or confidential litigation materials) for the purpose of
reviewing and copying the same.
3.2 Hazardous Material. Prior to the end of the Inspection Period
Buyer may order environmental assessments of the Property. A copy of any
assessment report, if made, shall be furnished by Buyer to Seller promptly upon
its completion. If an assessment report discloses the existence of any Hazardous
Material or any other matters concerning the environmental condition of the
Property or its environs, Buyer may notify Seller in writing, within the
Inspection Period that Buyer elects to terminate this Agreement, whereupon this
Agreement shall terminate and Escrow Agent shall return to Buyer its Earnest
Money Deposit.
74
3.3 Time and Place of Closing. Unless otherwise agreed by the
parties, the Closing shall take place at Suite 1500, 1301 Riverplace Boulevard,
Jacksonville, Florida 32207, at 10:00 A.M. on the date which is the fifteenth
(15th) day following the expiration of the Inspection Period, provided that
Buyer may designate an earlier date for Closing.
4. WARRANTIES, REPRESENTATIONS AND COVENANTS OF SELLER
Seller warrants and represents as follows as of the date of this
Agreement and as of the Closing and where indicated covenants and agrees as
follows:
4.1 Organization; Authority. Pine, Highland Square and PGI are duly
organized, validly existing and in good standing under the laws of the State of
Florida, and each has full power and authority to enter into and perform this
Agreement in accordance with its terms. The persons executing this Agreement and
other Transaction Documents have been duly authorized to do so on behalf of
Seller. Neither Pine, nor Highland Square, nor PGI is a "foreign person" under
Sections 1445 or 897 of the Internal Revenue Code, nor is this transaction
subject to any withholding under any state or federal law.
4.2 Authorization; Validity. The execution and delivery of this
Agreement by Highland Square and PGI and Seller's consummation of the
transactions contemplated by this Agreement have been duly and validly
authorized. This Agreement constitutes a legal, valid and binding agreement of
Pine, Highland Square and PGI enforceable against each in accordance with its
terms.
4.3 Title. Seller is the owner in fee simple of all of the Property,
subject only to the Permitted Exceptions.
4.4 Commissions. Seller has neither dealt with nor does it have any
knowledge of any broker or other party who has or may have any claim against
Seller, Buyer or the Property for a brokerage commission or finder's fee or like
payment arising out of or in connection with the transaction provided herein
except for Cohen and Company, Inc., and Seller agrees to indemnify Buyer from
any such claim arising by, through or under Seller.
4.5 Sale Agreements. The Property is not subject to any outstanding
agreement(s) of sale, option(s), or other right(s) of third parties to acquire
any interest therein, except for Permitted Exceptions and this Agreement.
4.6 Litigation. There is no litigation or proceeding pending, or to
the best of Seller's knowledge, threatened against Seller relating to the
Property, except a dispute
75
with Eckerd Corporation which Seller shall resolve before Closing or Seller
shall indemnify and hold Buyer harmless from any loss or damage therefrom.
4.7 Leases. There are no Leases affecting the Property, oral or
written, except as listed on the Rent Roll, and any Leases or modifications
entered into between the date of this Agreement and the Closing Date with the
consent of Buyer. Copies of the Leases, which have been delivered to Buyer or
shall be delivered to Buyer within five (5) days from the date hereof, are, to
the best knowledge of Seller, true, correct and complete copies thereof, subject
to the matters set forth on the Rent Roll. Between the date hereof and the
Closing Date, Seller will not terminate or modify existing Leases or enter into
any new Leases without the consent of Buyer. All of the Property's tenant leases
are in good standing and to the best of Seller's knowledge no defaults exist
thereunder except as noted on the Rent Roll. No rent or reimbursement has been
paid more than one (1) month in advance and no security deposit has been paid,
except as stated on the Rent Roll. No tenants under the Leases are entitled to
interest on any security deposits. No tenant under any Lease has or will be
promised any inducement, concession or consideration by Seller other than as
expressly stated in such Lease, and except as stated therein there are and will
be no side agreements between Seller and any tenant.
4.8 Financial Statements. Each of the Seller Financial Statements
delivered or to be delivered to Buyer hereunder has or will have been prepared
in accordance with the books and records of Seller and presents fairly in all
material respects the financial condition, results of operations and cash flows
for the Property as of and for the periods to which they relate. All are in
conformity with generally accepted accounting principles applied on a consistent
basis. There has been no material adverse change in the operations of the
Property or its prospects since the date of the most recent Seller Financial
Statements. Seller covenants to furnish promptly to Buyer copies of the Seller
Financial Statements together with unaudited updated monthly reports of cash
flow for interim periods beginning after December 31, 1996. Buyer and its
independent certified accountants shall be given access to Seller's books and
records at any time prior to and for one (1) month following Closing upon
reasonable advance notice in order that they may verify the financial statements
prior to Closing. Seller agrees to execute and deliver to Buyer or its
accountants the Audit Representation Letter should Buyer's accountants audit the
records of the Shopping Center.
4.9 Contracts. Except for Leases and Permitted Exceptions, there are
no management, service, maintenance, utility or other contracts or agreements
affecting the Property, oral or written, which extend beyond the Closing Date
and which would bind Buyer or encumber the Property, at Buyer's option, more
than thirty (30) days after Closing. All such Contracts are in full force and
effect in accordance with their respective terms, and all obligations of Seller
under the Contracts required to be
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performed to date have been performed in all material respects; no party to any
Contract has asserted any claim of default or offset against Seller with respect
thereto and no event has occurred or failed to occur, which would in any way
affect the validity or enforceability of any such Contract; and the copies of
the Contracts delivered to Buyer prior to the date hereof are true, correct and
complete copies thereof. Between the date hereof and the Closing, Seller
covenants to fulfill all of its obligations under all Contracts, and covenants
not to terminate or modify any such Contracts or enter into any new contractual
obligations relating to the Property without the consent of Buyer (not to be
unreasonably withheld) except such obligations as are freely terminable without
penalty by Seller upon not more than thirty (30) days' written notice.
4.10 Maintenance and Operation of Property. From and after the date
hereof and until the Closing, Seller covenants to keep and maintain and operate
the Property substantially in the manner in which it is currently being
maintained and operated and covenants not to cause or permit any waste of the
Property nor undertake any action with respect to the operation thereof outside
the ordinary course of business without Buyer's prior written consent. In
connection therewith, Seller covenants to make all necessary repairs and
replacements until the Closing so that the Property shall be of substantially
the same quality and condition at the time of Closing as on the date hereof.
Seller covenants not to remove from the Improvements or the Real Property any
article included in the Personal Property. Seller covenants to maintain such
casualty and liability insurance on the Property as it is presently being
maintained.
4.11 Permits and Zoning. To the best knowledge of Seller, there are no
material permits and licenses (collectively referred to as "Permits") required
to be issued to Seller by any governmental body, agency or department having
jurisdiction over the Property which materially affect the ownership or the use
thereof which have not been issued. The Property is properly zoned for its
present use and is not subject to any local, regional or state development
order. The use of the Property is consistent with the land use designation for
the Property under the comprehensive plan or plans applicable thereto, and all
concurrency requirements have been satisfied. There are no outstanding
assessments, impact fees or other charges related to the Property.
4.12 Rent Roll; Tenant Estoppel Letters. The Rent Roll is true and
correct in all respects. Seller agrees to use its best reasonable efforts to
obtain current Tenant Estoppel Letters acceptable to Buyer from all Tenants
under Leases, which Tenant Estoppel Letters shall confirm the matters reflected
by the Rent Roll as to the particular tenant and shall be otherwise acceptable
to Buyer in all respects.
4.13 Condemnation. Neither the whole nor any portion of the Property,
including access thereto or any easement benefitting the Property, is subject to
temporary requisition of use by any governmental authority or has been
condemned, or taken in any proceeding similar to a condemnation proceeding, nor
is there now
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pending any condemnation, expropriation, requisition or similar proceeding
against the Property or any portion thereof. Seller has received no notice nor
has any knowledge that any such proceeding is contemplated.
4.14 Governmental Matters. Seller has not entered into any commitments
or agreements with any governmental authorities or agencies affecting the
Property that have not been disclosed in writing to Buyer and Seller has
received no notices from any such governmental authorities or agencies of
uncured violations at the Property of building, fire, air pollution or zoning
codes, rules, ordinances or regulations, environmental and hazardous substances
laws, or other rules, ordinances or regulations relating to the Property. Seller
shall be responsible for the remittance of all sales tax for periods occurring
prior to the Allocation Date directly to the appropriate state department of
revenue.
4.15 Repairs. Seller has received no notice of any requirements or
recommendations by any lender, insurance companies, or governmental body or
agencies requiring or recommending any repairs or work to be done on the
Property which have not already been completed.
4.16 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated hereby will (a) require Seller to file or register
with, notify, or obtain any permit, authorization, consent, or approval of, any
governmental or regulatory authority; (b) conflict with or breach any provision
of the organizational documents of Seller; (c) violate or breach any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Seller is a party, or by which
Seller, the Property or any of Seller's material assets may be bound; or (d)
violate any order, writ, injunction, decree, judgment, statute, law or ruling of
any court or governmental authority applicable to Seller, the Property or any of
Seller's material assets.
4.17 To Seller's knowledge, the Surviving Mortgage is presently held
by Allstate Life Insurance Company and is in good standing with no defaults
existing thereunder. The principal balance outstanding as of February 1, 1998,
is $4,024,418.58, and the monthly payment of principal and interest is
$36,315.77. The interest rate is eight and forty-five one-hundredths percent
(8.45%) per annum. Seller is not required to make deposits with the holder of
the Surviving Mortgage for taxes and insurance. The transfer of the Property to
Buyer will require the consent of the holder of the Surviving Mortgage. Prior to
Closing, Seller shall use reasonable efforts to cause the holder of the
Surviving Mortgage to execute and deliver to Buyer an estoppel letter and
consent consenting to this transaction, certifying as to the foregoing
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matters and releasing Seller from the Mortgage, in form and substance
satisfactory to Buyer and Seller. Seller will maintain the Surviving Mortgage in
good standing, without default, until Closing.
4.18 Environmental Matters.
(a) Seller represents and warrants as of the date hereof and as of the
Closing that:
(1) Seller has not, and has no knowledge of any other person who
has, caused any Release, threatened Release, or disposal of any Hazardous
Material at the Property in any material quantity;
(2) The Property does not now contain and to the best of Seller's
knowledge has not contained any: (a) underground storage tank, (b) material
amounts of asbestos-containing building material, (c) landfills or dumps, (d)
more than one dry cleaning drop off facility and one coin laundry and cleaner
tenant;; or (e) hazardous waste management facility as defined pursuant to the
Resource Conservation and Recovery Act ("RCRA") or any comparable state law. The
Property is not a site on or nominated for the National Priority List
promulgated pursuant to Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or any state remedial priority list promulgated or
published pursuant to any comparable state law; and
(3) There are to the best of Seller's knowledge no conditions or
circumstances at the Property which pose a risk to the environment or the health
or safety of persons.
(b) Seller shall indemnify, hold harmless, and hereby waives any claim for
contribution against Buyer for any damages to the extent they arise from the
inaccuracy or breach of any representation or warranty by Seller in this section
of this Agreement. This indemnity shall survive Closing indefinitely.
4.19 No Untrue Statement. Neither this Agreement nor any exhibit nor
any written statement or Transaction Document furnished or to be furnished by
Seller to Buyer in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
4.20 AS-IS ACQUISITION. BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY
REPRESENTED AND WARRANTED BY SELLER IN THIS AGREEMENT, THERE HAVE BEEN NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR
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IMPLIED, UPON WHICH BUYER IS RELYING WHICH HAVE BEEN MADE BY SELLER OR UPON
SELLER'S BEHALF RELATING IN ANY WAY TO THE PROPERTY; AND THAT SUBJECT TO ANY AND
ALL CONDITIONS TO BUYER'S OBLIGATIONS DESCRIBED IN THIS AGREEMENT AND TO
SELLER'S REPRESENTATIONS AND WARRANTIES EXPRESSED IN THIS AGREEMENT, BUYER IS
ACQUIRING THE PROPERTY "AS IS". THE PROVISIONS OF THIS SECTION 4.20 SHALL
SURVIVE THE CLOSING OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT.
5. WARRANTIES, REPRESENTATIONS AND COVENANTS OF BUYER
Buyer hereby warrants and represents as of the date of this Agreement
and as of the Closing and where indicated covenants and agrees as follows:
5.1 Organization; Authority. Buyer is a corporation duly organized,
validly existing and in good standing under laws of Florida and has full power
and authority to enter into and perform this Agreement in accordance with its
terms, and the persons executing this Agreement and other Transaction Documents
on behalf of Buyer have been duly authorized to do so.
5.2 Authorization; Validity. The execution, delivery and performance
of this Agreement and the other Transaction Documents have been duly and validly
authorized by the Board of Directors of Buyer. This Agreement has been duly and
validly executed and delivered by Buyer and (assuming the valid execution and
delivery of this Agreement by Seller) constitutes a legal, valid and binding
agreement of Buyer enforceable against it in accordance with its terms.
5.3 Commissions. Buyer has neither dealt with nor does it have any
knowledge of any broker or other party who has or may have any claim against
Buyer or Seller for a brokerage commission or finder's fee or like payment
arising out of or in connection with the transaction provided herein except
Cohen and Company, Inc., whose commission shall be paid by Seller; and Buyer
agrees to indemnify Seller from any other such claim arising by, through or
under Buyer.
6. POSSESSION; RISK OF LOSS
6.1 Possession. Possession of the Property will be transferred to
Buyer at the conclusion of the Closing.
6.2 Risk of Loss. All risk of loss to the Property shall remain upon
Seller until the conclusion of the Closing. If, before the possession of the
Property has been transferred to Buyer, any material portion of the Property is
damaged by fire or other casualty and will not be restored by the Closing Date
or if any material portion of the Property is taken by eminent domain or there
is a material obstruction of access to the
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Improvements by virtue of a taking by eminent domain, Seller shall, within ten
(10) days of such damage or taking, notify Buyer thereof and Buyer shall have
the option to:
(a) terminate this Agreement upon notice to Seller given
within ten (10) business days after such notice from Seller, in which case Buyer
shall receive a return of its Earnest Money Deposit; or
(b) proceed with the purchase of the Property, in which event
Seller shall assign to Buyer all Seller's right, title and interest in all
amounts due or collected by Seller under the insurance policies or as
condemnation awards. In such event, the Purchase Price shall be reduced by the
amount of any insurance deductible to the extent it reduced the insurance
proceeds payable.
7. TITLE MATTERS
7.1 Title.
(a) Title Insurance and Survey. Prior to the end of the
Inspection Period Buyer's counsel shall order the Title Insurance Commitment and
a Survey (Seller having furnished Buyer copies of existing surveys and other
title information in its possession). Buyer will have ten (10) days from receipt
of the Title Commitment (including legible copies of all recorded exceptions
noted therein) and Survey to notify Seller in writing of any Title Defects,
encroachments or other matters not acceptable to Buyer which are not permitted
by this Agreement. Any Title Defect or other objection disclosed by the Title
Insurance Commitment (other than liens removable by the payment of money) or the
Survey which is not timely specified in Buyer's written notice to Seller of
Title Defects shall be deemed a Permitted Exception. Seller shall notify Buyer
in writing within five (5) days of Buyer's notice if Seller intends to cure any
Title Defect or other objection. If Seller elects to cure, Seller shall use
diligent efforts to cure the Title Defects and/or objections by the Closing Date
(as it may be extended). If Seller elects not to cure or if such Title Defects
and/or objections are not cured, Buyer shall have the right, in lieu of any
other remedies, to: (i) refuse to purchase the Property, terminate this
Agreement and receive a return of the Earnest Money Deposit; or (ii) waive such
Title Defects and/or objections and close the purchase of the Property subject
to such Title Defects.
(b) Miscellaneous Title Matters. If a search of the title
discloses judgments, bankruptcies or other returns against other persons having
names the same as or similar to that of Seller, Seller shall on request deliver
to Buyer an affidavit stating, if true, that such judgments, bankruptcies or the
returns are not against Seller. Seller further agrees to execute and deliver to
the Title Insurance agent at Closing such documentation, if any, as the Title
Insurance underwriter shall reasonably require to
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evidence that the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized and that there
are no mechanics' liens on the Property or parties in possession of the Property
other than tenants under Leases and Seller.
8. CONDITIONS PRECEDENT
8.1 Conditions Precedent to Buyer's Obligations. The obligations of
Buyer under this Agreement are subject to satisfaction or waiver by Buyer of
each of the following conditions or requirements on or before the Closing Date:
(a) Seller's warranties and representations under this
Agreement shall be true and correct as of the Closing Date, and Seller shall not
be in default hereunder.
(b) All obligations of Seller contained in this Agreement,
shall have been fully performed in all material respects and Seller shall not be
in default under any covenant, restriction, right-of-way or easement affecting
the Property.
(c) There shall have been no material adverse change in the
Property, its operations or future prospects, the Leases or the financial
condition of tenants leasing space in the Shopping Center.
(d) A Title Insurance Commitment in the full amount of the
Purchase Price shall have been issued and "marked down" through Closing, subject
only to Permitted Exceptions.
(e) The physical and environmental condition of the Property
shall be unchanged from the date of this Agreement, ordinary wear and tear
excepted.
(f) Seller shall have delivered to Buyer the following in form
reasonably satisfactory to Buyer:
(1) A warranty deed in proper form for recording, duly executed and
acknowledged so as to convey to Buyer the fee simple title to the Property,
subject only to the Permitted Exceptions:
(2) Originals, if available, or if not, true copies of the Leases and of
the contracts, agreements, permits and licenses, and such Materials as may be
in the possession or control of Seller;
(3) A blanket assignment to Buyer of all Leases and the contracts,
agreements, permits and licenses (to the extent assignable) as they affect
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the Property, including an indemnity against breach of such instruments by
Seller prior to the Closing Date;
(4) A bill of sale with respect to the Personal Property and Materials;
(5) A title certificate, properly endorsed by Seller, as to any items of
Property for which title certificates exist;
(6) The Survey;
(7) A current rent roll for all Leases in effect showing no changes from
the rent roll attached to this Agreement other than those set forth in the
Leases or approved in writing by Buyer;
(8) All Tenant Estoppel Letters obtained by Seller, which must include
Publix, Winn-Dixie Stores, Consolidated Stores, Family Dollar Stores and Eckerd
Drug, and eighty percent (80%) of the other tenants who have signed leases for
any portion of the Property, without any material exceptions, covenants, or
changes to the form approved by Buyer and distributed to the tenants by Seller,
the substance of which Tenant Estoppel Letters must be acceptable to Buyer in
all respects (including specifically the Eckerd Drug Tenant Estoppel Letter,
which must reflect that the dispute between Seller and Eckerd Drug has been
resolved, or Seller shall otherwise indemnify Buyer from any loss or damage
attributable thereto);
(9) A general assignment of all assignable existing warranties relating to
the Property;
(10) An owner's affidavit, non-foreign affidavits, non-tax withholding
certificates and such other documents as may reasonably be required by Buyer or
its counsel in order to effectuate the provisions of this Agreement and the
transactions contemplated herein;
(11) The originals or copies of any real and tangible personal property tax
bills for the Property for the tax year of Closing and the previous year, and,
if requested, the originals or copies of any current water, sewer and utility
bills which are in Seller's custody or control;
(12) Resolutions of Seller authorizing the transactions described herein;
(13) All keys and other means of access to the Improvements in the
possession of Seller or its agents;
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(14) Materials; and
(15) Such other documents as Buyer may reasonably request to
effect the transactions contemplated by this Agreement; and
(g) Receipt of the consent of the holder of the Surviving
Mortgage to this transaction, and the release of Seller, imposing such
conditions, if any, as are acceptable to each of Seller and Buyer.
In the event that all of the foregoing provisions of this Section are
not satisfied and Buyer elects in writing to terminate this Agreement, then the
Earnest Money Deposit shall be promptly delivered to Buyer by Escrow Agent and,
upon the making of such delivery, neither party shall have any further claim
against the other by reasons of this Agreement, except as provided in Article .
8.2 Conditions Precedent to Seller's Obligations. The obligations of
Seller under this Agreement are subject to satisfaction or waiver by Seller of
each of the following conditions or requirements on or before the Closing date:
(a) Buyer's warranties and representations under this
Agreement shall be true and correct as of the Closing Date, and Buyer shall not
be in default hereunder.
(b) All of the obligations of Buyer contained in this
Agreement shall have been fully performed by or on the date of Closing in
compliance with the terms and provisions of this Agreement.
(c) Buyer shall have delivered to Seller at or prior to the
Closing the following, which shall be reasonably satisfactory to Seller:
(1) Delivery and/or payment of the balance of the Purchase
Price in accordance with Section at Closing;
(2) Such other documents as Seller may reasonably request to
effect the transactions contemplated by this Agreement; and
(d) Receipt of the consent of the holder of the Surviving
Mortgage to this transaction, and the release of Seller, imposing such
conditions, if any, as are acceptable to each of Seller and Buyer.
8.3 Section 1031 Exchange. Buyer acknowledges that Seller may endeavor
to effect a like-kind exchange under Section 1031 of the Internal Revenue Code
of 1986, as amended (the "Code"), such that Seller can acquire the Other
Centers, or
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other properties, with the proceeds of the sale of the Shopping Center to Buyer.
Seller expressly reserves the right to assign its rights, but not it
obligations, hereunder, to a qualified intermediary including without limitation
Escrow Agent, as provided in the Internal Revenue Code and the regulations
promulgated thereunder, including without limitation Reg. 1.1031(k)-(l)(g)(4),
on or before the Closing Date. Accordingly, Buyer agrees that (i) Buyer will
cooperate with Seller to effect a tax-free exchange or exchanges in accordance
with the provisions of Section 1031 of the Code and the regulations promulgated
with respect thereto; and (ii) it is a condition of this agreement that Buyer
and Seller enter into a mutually agreeable contract pursuant to which Buyer will
agree to sell to Seller, and Seller will agree to purchase from Buyer the Other
Centers. It is not a condition that the transactions contemplated by such other
contract actually close (eg. Seller, as Buyer under said contract, may determine
during the inspection period under such other contract that Seller does not wish
to purchase the Other Centers), but only that a mutually agreeable contract for
the sale and purchase of the Other Centers by entered into by Seller and Buyer.
Seller and Buyer agree to negotiate in good faith such that a contract for the
sale and Seller shall be solely responsible for any additional fees, costs or
expenses incurred in connection with the like-kind exchange contemplated by this
paragraph. In no event shall Seller's ability or inability to effect a like-kind
exchange, as contemplated hereby, in any way relieve Seller from its obligations
and liabilities under this Agreement. Seller hereby agrees to indemnify and hold
harmless Buyer from any liability, losses or damages incurred by Buyer in
connection with or arising out of the Section 1031 like-kind exchange, including
but not limited to any tax liability. It is not Buyer's intention to effect a
Section 1031 exchange with respect to the proceeds of Buyer's sale of the Other
Centers to Seller.
In the event that all conditions precedent to Buyer's obligation to
purchase shall have been satisfied but the foregoing provisions of this Section
have not, and Seller elects in writing to terminate this Agreement, then the
Earnest Money Deposit shall be promptly delivered to Seller by Escrow Agent and,
upon the making of such delivery, neither party shall have any further claim
against the other by reasons of this Agreement, except as provided in Article .
8.4 Best Efforts. Each of the parties hereto agrees to use reasonable
best efforts to take or cause to be taken all actions necessary, proper or
advisable to consummate the transactions contemplated by this Agreement.
9. PRE-CLOSING BREACH; REMEDIES
9.1 Breach by Seller. In the event of a breach of Seller's covenants or
warranties herein and failure by Seller to cure such breach within the time
provided for
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Closing, Buyer may, at Buyer's election (i) terminate this Agreement and receive
a return of the Earnest Money Deposit, and the parties shall have no further
rights or obligations under this Agreement (except as survive termination); (ii)
enforce this Agreement by suit for specific performance; or (iii) waive such
breach and close the purchase contemplated hereby, notwithstanding such breach.
9.2 Breach by Buyer. In the event of a breach of Buyer's covenants or
warranties herein and failure of Buyer to cure such breach within the time
provided for Closing, Seller's sole remedy shall be to terminate this Agreement
and retain Buyer's Earnest Money Deposit as agreed liquidated damages for such
breach, and upon payment in full to Seller of such amounts, the parties shall
have no further rights, claims, liabilities or obligations under this Agreement
(except as survive termination).
10. MISCELLANEOUS
10.1 Disclosure. Neither party shall disclose the transactions
contemplated by this Agreement without the prior approval of the other, except
to its attorneys, accountants and other consultants, their lenders and
prospective lenders, or where disclosure is required by law.
10.2 Radon Gas. Radon is a naturally occurring radioactive gas which,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon which
exceed federal and state guidelines have been found in buildings in the state in
which the Property is located. Additional information regarding radon and radon
testing may be obtained from the county public health unit.
10.3 Entire Agreement. This Agreement, together with the exhibits
attached hereto, constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and may not be modified, amended or
otherwise changed in any manner except by a writing executed by Buyer and
Seller.
10.4 Notices. All written notices and demands of any kind which either
party may be required or may desire to serve upon the other party in connection
with this Agreement shall be served by personal delivery, certified or overnight
mail, reputable overnight courier service or facsimile (followed promptly by
hard copy) at the addresses set forth below:
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As to Seller Ricardo Pines
3301 Ponce de Leon Boulevard, Penthouse Suite
Coral Gables, Florida 33134
Facsimile: (305) 529-0002
As to Buyer: RRC Acquisitions Two, Inc.
Attention: Robert L. Miller
Suite 200, 121 West Forsyth Street
Jacksonville, Florida 32202
Facsimile: (904) 634-3428
With a copy to: Rogers, Towers, Bailey, Jones & Gay, P.A.
Attention: William E. Scheu, Esquire
1301 Riverplace Boulevard, Suite 1500
Jacksonville, Florida 32207
Facsimile: (904) 396-0663
Any notice or demand so served shall constitute proper notice hereunder upon
delivery to the United States Postal Service or to such overnight courier. A
party may change its notice address by notice given in the aforesaid manner.
10.5 Headings. The titles and headings of the various sections hereof
are intended solely for means of reference and are not intended for any purpose
whatsoever to modify, explain or place any construction on any of the provisions
of this Agreement.
10.6 Validity. If any of the provisions of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement by the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable shall not be affected thereby,
and every provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10.7 Attorneys' Fees. In the event of any litigation between the
parties hereto to enforce any of the provisions of this Agreement or any right
of either party hereto, the unsuccessful party to such litigation agrees to pay
to the successful party all costs and expenses, including reasonable attorneys'
fees, whether or not incurred in trial or on appeal, incurred therein by the
successful party, all of which may be included in and as a part of the judgment
rendered in such litigation. Any indemnity provisions herein shall include
indemnification for reasonable attorneys' fees and costs, whether or not suit be
brought and including fees and costs on appeal.
10.8 Time of Essence. Time is of the essence of this Agreement.
87
10.9 Governing Law. This Agreement shall be governed by the laws of
the state in which the Property is located, and the parties hereto agree that
any litigation between the parties hereto relating to this Agreement shall take
place (unless otherwise required by law) in a court located in the county in
which the Property is located. Each party waives its right to jurisdiction or
venue in any other location.
10.10 Successors and Assigns. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. No third parties, including any
brokers or creditors, shall be beneficiaries hereof.
10.11 Exhibits. All exhibits attached hereto are incorporated herein by
reference to the same extent as though such exhibits were included in the body
of this Agreement verbatim.
10.12 Gender; Plural; Singular; Terms. A reference in this Agreement to
any gender, masculine, feminine or neuter, shall be deemed a reference to the
other, and the singular shall be deemed to include the plural and vice versa,
unless the context otherwise requires. The terms "herein," "hereof,"
"hereunder," and other words of a similar nature mean and refer to this
Agreement as a whole and not merely to the specified section or clause in which
the respective word appears unless expressly so stated.
10.13 Further Instruments, Etc. This Agreement may be executed in
counterparts and when so executed shall be deemed executed as one agreement.
Seller and Buyer shall execute any and all documents and perform any and all
acts reasonably necessary to fully implement this Agreement.
10.14 Survival. The obligations of Seller and Buyer intended to be
performed after the Closing shall survive the closing.
10.15 No Recording. Neither this Agreement nor any notice, memorandum
or other notice or document relating hereto shall be recorded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Witnesses: RRC ACQUISITIONS TWO, INC.,
a Florida corporation
______________________________ By:___________________________________
88
Name:____________________________ Name:__________________________________
Title:_________________________________
___________________________________ Date: ___________________________, 1998
Name:_____________________________
Tax Identification No: 59-3478325
"BUYER"
PINES GROUP, INC.,
a Florida corporation
__________________________________ By:____________________________________
Name:_____________________________ Name:_______________________________
Title:______________________________
__________________________________ Date: ___________________________, 1998
Name:_____________________________
Tax Identification No:_________________
"PGI"
__________________________________ ____________________________________
Name:_____________________________ RICARDO PINES
__________________________________ Date: ___________________________, 1998
Name:_____________________________
Tax Identification No:_________________
"PINE"
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HIGHLAND SQUARE ASSOCIATES, LTD.,
a Florida limited partnership
___________________________________ By: Its General Partner
Name:_____________________________ PINES JACKSONVILLE MANAGEMENT,
INC., a Florida corporation
By: __________________________________
Its: President
___________________________________ Date: __________________________, 1998
Name:_____________________________
Tax Identification No:_________________
"HIGHLAND SQUARE"
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EXHIBIT
Audit Representation Letter
__________________________
(Acquisition Completion Date)
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KPMG Peat Marwick LLP
Suite 2700
One Independent Drive
Jacksonville, Florida 32202
Dear Sirs:
We are writing at your request to confirm our understanding that your
audit of the Statement of Revenue and Certain Expenses for Highland Square
Shopping Center for the twelve months ended ________________, was made for the
purpose of expressing an opinion as to whether the statement presents fairly, in
all material respects, the results of its operations in conformity with
generally accepted accounting principles. In connection with your audit we
confirm, to the best of our knowledge and belief, the following representations
made to you during your audit:
1. We have made available to you all financial records and related data
for the period under audit.
2. There have been no undisclosed:
a. Irregularities involving any member of management or
employees who have significant roles in the internal control structure.
b. Irregularities involving other persons that could have a
material effect on the Statement of Revenue and Certain Expenses.
c. Violations or possible violations of laws or regulations,
the effects of which should be considered for disclosure in the Statement of
Revenue and Certain Expenses.
3. There are no undisclosed:
a. Unasserted claims or assessments that our lawyers have
advised us are probable of assertion and must be disclosed in accordance with
Statement of Financial Accounting Standards No. 5 (SFAS No. 5).
92
b. Material gain or loss contingencies (including oral and
written guarantees) that are required to be accrued or disclosed by SFAS No. 5.
c. Material transactions that have not been properly recorded
in the accounting records underlying the Statement of Revenue and Certain
Expenses.
d. Material undisclosed related party transactions and related
amounts receivable or payable, including sales, purchases, loans, transfers,
leasing arrangements, and guarantees.
e. Events that have occurred subsequent to the balance sheet
date that would require adjustment to or disclosure in the Statement of Revenue
and Certain Expenses.
4. All aspects of contractual agreements that would have a material
effect on the Statement of Revenue and Certain Expenses have been complied with.
Further, we acknowledge that we are responsible for the fair
presentation of the Statements of Revenue and Certain Expenses prepared in
conformity with generally accepted accounting principles.
Very truly yours,
"Seller/Manager"
__________________________________________
Name:_____________________________________
Title:____________________________________
93
EXHIBIT
Legal Description of Real Property
94
EXHIBIT
Rent Roll
95
EXHIBIT
Form of Estoppel Letter
_____________________, 199_
RRC Acquisitions Two, Inc.
Regency Centers, Inc.
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
RE: ___________________________ (Name of Shopping Center)
Ladies and Gentlemen:
The undersigned (Tenant) has been advised you may purchase the above
Shopping Center, and we hereby confirm to you that:
1. The undersigned is the Tenant of ___________________________,
Landlord, in the above Shopping Center, and is currently in
possession and paying rent on premises known as Store No.
______________ [or Address:
___________________________________________________________],
and containing approximately _____________ square feet, under
the terms of the lease dated ______________________, which has
(not) been amended by amendment dated ________________________
(the "Lease"). There are no other written or oral agreements
between Tenant and Landlord. Tenant neither expects nor has
been promised any inducement, concession or consideration for
entering into the Lease, except as stated therein, and there
are no side agreements or understandings between Landlord and
Tenant.
2. The term of the Lease commenced on ____________________,
expiring on ___________________, with options to extend of
________________ (____) years each.
3. As of ____________________, monthly minimum rental is
$_______________ a month.
4. Tenant is required to pay its pro rata share of Common Area
Expenses and its pro rata share of the Center's real property
taxes and insurance cost. Current additional monthly payments
for expense reimbursement total $____________ per month for
common area maintenance, property insurance and real estate
taxes.
5. Tenant has given [no security deposit] [a security deposit of
$______________].
96
6. No payments by Tenant under the Lease have been made for more
than one (1) month in advance, and minimum rents and other
charges under the Lease are current.
7. All matters of an inducement nature and all obligations of the
Landlord under the Lease concerning the construction of the
Tenant's premises and development of the Shopping Center,
including without limitation, parking requirements, have been
performed by Landlord.
8. The Lease contains no first right of refusal, option to
expand, option to terminate, or exclusive business rights,
except as follows:
9. Tenant knows of no default by either Landlord or Tenant under
the Lease, and knows of no situations which, with notice or
the passage of time, or both, would constitute a default.
Tenant has no rights to off-set or defense against Landlord as
of the date hereof.
10. The undersigned has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the
Lease or the Premises except as follows:
11. Tenant has not generated, used, stored, spilled, disposed of,
or released any hazardous substances at, on or in the
Premises. "Hazardous Substances" means any flammable,
explosive, toxic, carcinogenic, mutagenic, or corrosive
substance or waste, including volatile petroleum products and
derivatives and dry cleaning solvents. To the best of Tenant's
knowledge, no asbestos or polychlorinated biphenyl ("PCB") is
located at, on or in the Premises. The term "Hazardous
Substances" does not include those materials which are
technically within the definition set forth above but which
are contained in pre-packaged office supplies, cleaning
materials or personal grooming items or other items which are
sold for consumer or commercial use and typically used in
other similar buildings or space.
The undersigned makes this statement for your benefit and protection with the
understanding that you intend to rely upon this statement in connection with
your intended purchase of the above described Premises from Landlord. The
undersigned agrees that it will, upon receipt of written notice from Landlord,
commence to pay all rents to you or to any Agent acting on your behalf.
Very truly yours,
___________________________________________
____________________________________(Tenant)
Mailing Address:
____________________________ By:________________________________________
Its:____________________________________
____________________________
97
Exhibit
Document Request List
Items Required from the Seller:
1) Property Specifications (Zoning)
2) As Built Plans & Specs (arch. and engineering)
3) Site Plan (including suite numbers)
4) Location maps
5) Aerial photographs
6) Demographics (including traffic counts)
7) Legal Description
8) Parking Information - Space count
9) Copy of All Leases (and amendments) & Lease Briefs
10) Certificates of Occupancy - All current tenants
11) Schedule of Security Deposits
12) Most recent Rent Roll (with suite #'s, rent escalations, and
option period info)
13) Sales Reports (most recent 3 Years) for tenants reporting
14) Current Rent Billings (by category, base, CAM, etc.)
15) Current Delinquency Report (with explanations for balances >
$1,000)
16) Tenant Activity Register for all Current Tenants (billings &
payments)
17) Tenant Estoppels
18) Property Operating Results - Most recent 3 Years
19) Property Capital Expenditures - Most recent 3 Years
20) Audited Financial Statements - 3 Years
21) Real Estate and other tax bills - 3 Years
22) Year to Date Financials & YTD detail general Ledger
23) Existing Service Agreements and Warranties
24) Three years loss history - reported claims
25) Most Recent Year Expense Recovery Reconciliation
26) Breakdown of CAM Pools
27) Proof Sales Tax Payments are Current
28) Appraisal (last available)
29) Seller's Budget for up-coming/current year
30) Utility Bills for last 12 months/deposits
31) Personal Property Inventory
32) Existing Title Insurance Policy
33) Available Inspection Reports (environmental, roof, structural,
etc.)
34) Summary of Tenant Contacts (with address and telephone
numbers) With local (include store#) & national addresses
35) Survey
36) Tax plat map
98
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) October 7, 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)
99
ITEM 5. OTHER INFORMATION
The factors considered by the Company in determining the price to be paid for
the shopping center included its 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 property acquired.
The following summarizes the property acquired:
Property Acquisition Acquisition Occupancy at
Name Costs Date GLA City/State Acquisition
Pike Creek $22,897,676 8-04-98 234,580 Wilmington, DE 97%
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements and Pro Forma Financial Information
A) Financial Statements:
Pike Creek
Independent Auditors' Report
Statement of Revenues and Certain Expenses
for the year ended December 31, 1997
B) Pro Forma Financial Information:
Regency Realty Corporation
Pro Forma Condensed Consolidated Balance Sheet,
June 30, 1998 (unaudited)
ProForma Condensed Statement of Operations for the six month
period ended June 30, 1998 and the year ended December 31,
1997 (unaudited)
C. Exhibits:
10. Material Contracts
(a) Purchase and Sale Agreement dated May 1, 1998, by and between
BIG VALLEY ASSOCIATES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Seller") and RRC ACQUISITIONS TWO, INC., A
Florida corporation ("Purchaser").
23. Consent of KPMG Peat Marwick LLP
100
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)
October 7, 1998 By: /s/ J. Christian Leavitt
--------------------------------
J. Christian Leavitt
Vice President and Treasurer
101
Independent Auditors' Report
The Board of Directors
Regency Realty Corporation:
We have audited the accompanying statement of revenues and certain expenses of
Pike Creek 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 Pike Creek
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 Pike Creek 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 Pike Creek Shopping Center for the year ended December
31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
September 9, 1998
102
PIKE CREEK SHOPPING CENTER
Statement of Revenues and Certain Expenses
For the year ended December 31, 1997
Revenues:
Minimum rent $ 1,979,571
Recoveries from tenants 182,438
Percentage rent 195,536
-------------
Total revenues 2,357,545
-------------
Certain operating expenses:
Operating and maintenance 134,303
Real estate taxes 140,003
Management fees 93,408
General and administrative 79,978
-------------
Total expenses 447,692
-------------
Revenues in excess of certain expenses $ 1,909,853
=============
See accompanying notes to statement of revenues and certain expenses.
103
PIKE CREEK 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 234,580 square foot shopping center (the "Property") located in
Wilmington, Delaware.
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. Use of 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.
104
PIKE CREEK SHOPPING CENTER
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
ACME Markets $ 440,000
Kmart Corporation 370,745
The Property is leased to tenants under operating leases with expiration
dates extending to the year 2011. 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 $ 1,904,402
1999 1,746,945
2000 1,566,526
2001 722,183
2002 483,116
Thereafter 3,619,066
105
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 Regency Realty Corporation
(the Company) as of June 30, 1998 as if the Company had completed the
acquisition of two additional shopping centers and completed the issuance of
$100 million senior term notes subsequent to period end. The following unaudited
pro forma consolidated statements of operations of the Company are based upon
the historical consolidated statements of operations for the six-month period
ended June 30, 1998 and the year ended December 31, 1997. These statements are
presented as if the Company had acquired all of its properties as of January 1,
1997. These unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the Company's Form 10-K as of and for the
three years ended December 31, 1997 and Form 10-Q filed for the period ended
June 30, 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 June 30, 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.
106
Regency Realty Corporation
Pro Forma Condensed Consolidated Balance Sheet
June 30, 1998
(Unaudited)
(in thousands)
Historical Adjustments Pro Forma
Assets
Real estate investments, at cost $ 1,050,352 36,243 (a) 1,086,595
Construction in progress 31,133 - 31,133
Less: accumulated depreciation 46,160 - 46,160
-------------- -------------- --------------
Real estate rental property, net 1,035,325 36,243 1,071,568
-------------- -------------- --------------
Investments in real estate partnerships 22,401 - 22,401
-------------- -------------- --------------
Net real estate investments 1,057,726 36,243 1,093,969
-------------- -------------- --------------
Cash and cash equivalents 12,733 - 12,733
Tenant receivables, net of allowance for
uncollectible accounts 10,684 - 10,684
Deferred costs, less accumulated amortization 4,497 - 4,497
Other assets 7,458 1,250 (b) 8,708
-------------- -------------- --------------
Total Assets $ 1,093,098 37,493 1,130,591
============== ============== ==============
Liabilities and Stockholders' Equity
Mortgage loans payable $ 317,796 - 317,796
Acquisition and development line of credit 89,731 (62,507) (a)(b) 27,224
Notes payable - 100,000 (b) 100,000
-------------- -------------- --------------
Total debt 407,527 37,493 445,020
Accounts payable and other liabilities 17,064 - 17,064
Tenant's security and escrow deposits 2,763 - 2,763
-------------- -------------- --------------
Total liabilities 427,354 37,493 464,847
-------------- -------------- --------------
Exchangeable preferred units 78,800 - 78,800
Exchangeable operating partnership units 26,912 - 26,912
Limited partners' interest in consolidated partnerships 7,520 - 7,520
-------------- -------------- --------------
113,232 - 113,232
Common stock and additional paid in capital 567,014 - 567,014
Distributions in excess of net income (14,502) - (14,502)
-------------- -------------- --------------
Total stockholders' equity 552,512 - 552,512
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 1,093,098 37,493 1,130,591
============== ============== ==============
See accompanying notes to pro forma condensed consolidated balance sheet.
107
Regency Realty Corporation
Notes to Pro Forma Condensed Consolidated Balance Sheet
June 30, 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 had acquired 20 of the 21 Midland shopping centers prior to June
30, 1998 containing 2.0 million square feet for approximately $167.1
million. Those shopping centers are included in the Company's June 30,
1998 balance sheet. The one remaining shopping center, Windmiller Farms,
was acquired on July 15, 1998 using funds drawn on the Line. The center
was acquired for an aggregate purchase price of $13.3 million which is
reflected in the pro forma balance sheet.
Subsequent to June 30, 1998, the Company 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 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 October-98 $ 20,571
Nashboro October-98 7,260
Crooked Creek October-98 13,471
---------------
$ 41,302
===============
In addition, the Company acquired one other shopping center for an
aggregate purchase price of $22.9 million which is reflected in the pro
forma balance sheet. The shopping center, Pike Creek Shopping Center, was
acquired on August 4, 1998 using funds drawn on the Line.
(b) Represents the proceeds from a $100 million debt offering completed July
15, 1998, less offering costs of 1.25%. At closing, the Company used the
net proceeds from the Offering ($98.8 million) for the repayment of the
balance outstanding on the Line and the remainder was used to offset the
$36.2 million borrowed on the Line for the acquisitions of Pike Creek and
Windmiller Farms. The Company has recorded $1.2 million of financing costs
as an "Other Asset" to be amortized over the term of the Notes.
108
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Six Month Period Ended June 30, 1998
and the Year Ended December 31, 1997
(Unaudited)
(In thousands, except share and per share data)
For the Six Month Period Ended June 30, 1998
Midland Acquisition Other
Historical Properties Properties Adjustments Pro Forma
Revenues:
Minimum rent $ 47,661 (d) 3,913 (e) 3,074 (697) (i) 53,951
Percentage rent 1,662 - 154 (8) (i) 1,808
Recoveries from tenants 10,639 542 716 (67) (i) 11,830
Management, leasing and brokerage fees 5,406 - - - 5,406
Equity in income of investments
in real estate partnerships 146 - - - 146
-------------- -------------- -------------- ----------- --------------
65,514 4,455 3,944 (772) 73,141
-------------- -------------- -------------- ----------- --------------
Operating expenses:
Depreciation and amortization 11,385 817 (f) 902 (f) (453) (i) 12,651
Operating and maintenance 8,472 283 333 (122) (i) 8,966
General and administrative 7,262 231 205 (25) (i) 7,673
Real estate taxes 5,788 488 484 (81) (i) 6,679
-------------- -------------- -------------- ----------- --------------
32,907 1,819 1,924 (681) 35,969
-------------- -------------- -------------- ----------- --------------
Interest expense (income):
Interest expense 12,873 2,646 (g) 2,168 (h) (3,220) (j) 14,467
Interest income (966) - - - (966)
-------------- -------------- -------------- ----------- --------------
11,907 2,646 2,168 (3,220) 13,501
-------------- -------------- -------------- ----------- --------------
Income before minority interest
and gain on sale of real
estate investments 20,700 (10) (148) 3,129 23,671
Gain on sale of real estate investments 10,746 - - (9,336) (i) 1,410
Minority interest (1,092) - (3) 202 (893)
-------------- -------------- -------------- ----------- --------------
Net income 30,354 (10) (151) (6,005) 24,188
Preferred distributions - - - (3,250) (k) (3,250)
-------------- -------------- -------------- ----------- --------------
Net income for shareholders $ 30,354 (10) (151) (9,255) 20,938
============== ============== ============== =========== ==============
Net income per share (note (l)):
Basic $ 1.11 $ 0.73
============== ==============
Diluted $ 1.06 $ 0.72
============== ==============
See accompanying notes to pro forma consolidated statements of operations.
109
Regency Realty Corporation
Pro Forma Consolidated Statements of Operations
For the Six Month Period Ended June 30, 1998
and the Year Ended December 31, 1997
(Unaudited)
(In thousands, except share and per share data)
For the Year Ended December 31, 1997
Branch Midland Acquisition Other
Historical Properties Properties Properties Adjustments Pro Forma
(c) (d) (e)
Revenues:
Minimum rent $ 70,103 3,596 16,482 17,130 (4,136) (i) 103,175
Percentage rent 2,151 167 - 495 - 2,813
Recoveries from tenants 17,052 751 2,240 3,899 (548) (i) 23,394
Management, leasing and brokerage fees 7,997 1,060 - - - 9,057
Equity in income of investments
in real estate partnerships 33 - - - - 33
------------- --------- ----------- ---------- ------------ -----------
97,336 5,574 18,722 21,524 (4,684) 138,472
------------- --------- ----------- ---------- ------------ -----------
Operating expenses:
Depreciation & amortization 16,303 972 2,994 (f) 4,340 (f) (855) (i) 23,754
Operating and maintenance 14,212 595 1,194 2,306 (1,260) (i) 17,047
General and administrative 9,964 683 1,042 1,083 (49) (i) 12,723
Real estate taxes 8,692 404 1,635 2,450 (447) (i) 12,734
------------- --------- ----------- ---------- ------------ -----------
49,171 2,654 6,865 10,179 (2,611) 66,258
------------- --------- ----------- ---------- ------------ -----------
Interest expense (income):
Interest expense 19,667 1,517 10,353 (g) 11,778 (h) (6,439) (j) 36,876
Interest income (1,000) (33) - - - (1,033)
------------- --------- ----------- ---------- ------------ -----------
18,667 1,484 10,353 11,778 (6,439) 35,843
------------- --------- ----------- ---------- ------------ -----------
Income before minority interest
and gain on sale of real
estate investments 29,498 1,436 1,504 (433) 4,366 36,371
Gain on sale of real estate investments 451 - - - (451) (i) -
Minority interest (2,547) 1,010 (38) (2) (142) (1,719)
------------- --------- ----------- ---------- ------------ -----------
Net income 27,402 2,446 1,466 (435) 3,773 34,652
Preferred distributions - - - - (6,500) (k) (6,500)
------------- --------- ----------- ---------- ------------ -----------
Net income for shareholders $ 27,402 2,446 1,466 (435) (2,727) 28,152
============= ========= =========== ========== ============ ===========
Net income per share (note (l)):
Basic $ 1.28 $ 1.32
============= ===========
Diluted $ 1.23 $ 1.23
============= ===========
See accompanying notes to pro forma consolidated statements of operations.
110
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Six Month Period
Ended June 30, 1998 and
the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(c) Reflects pro forma results of operations for the Branch Properties for
the period from January 1, 1997 to March 7, 1997 (acquisition date).
(d) 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 June 30, 1998, and for the year ended December 31,
1997.
For the period ended June 30, 1998
Property Acquisition Minimum Recoveries Operating and Real General and
Name Date Rent from Tenants Maintenance Estate Taxes Administrative
------------ ------------- -------------- -------------- -------------- --------------
Windmiller Farms 7/15/98 $ 574 $ 90 $ 34 $ 71 $ 32
Franklin Square 4/29/98 414 56 52 31 32
St. Ann Square 4/17/98 217 44 18 35 12
East Point Crossing 4/29/98 268 52 16 35 17
North Gate Plaza 4/29/98 234 33 18 27 10
Worthington Park 4/29/98 281 68 22 40 19
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 8 4
Lake Shores Plaza 3/1/98 123 10 5 16 6
Evans Crossing 3/1/98 116 4 5 8 6
Statler Square 3/1/98 164 15 13 1 8
Kernersville Plaza 3/1/98 120 4 8 8 8
Maynard Crossing 3/1/98 272 38 13 15 15
Shoppes at Mason 3/1/98 116 27 15 33 6
Lake Pine Plaza 3/1/98 152 13 10 8 9
Hamilton Meadows 3/1/98 148 42 10 15 7
------------- -------------- -------------- --------------- -----------
$ 3,913 $ 542 $ 283 $ 488 $ 231
============= ============== ============== ================ ===========
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 7/15/98 $ 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
========== ============ ============== ================ =============
111
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Six Month Period
Ended June 30, 1998 and
the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(e) Reflects revenues and certain expenses for the Acquisition Properties for
the period from January 1, 1998 to the earlier of the respective
acquisition date of the property or June 30, 1998, and for the year ended
December 31, 1997.
For the period ended June 30, 1998
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 2/11/98 214 6 53 25 24 21
Silverlake 6/3/98 346 - 60 36 36 18
Highland Square 6/17/98 516 51 86 46 79 60
Shoppes @104 6/19/98 620 - 133 72 79 28
Fleming Island 6/30/98 348 - 289 39 194 36
Pike Creek 8/4/98 982 97 90 113 69 40
------------ ----------- -------------- ------------ ------------ ---------
$ 3,074 $ 154 $ 716 $ 333 $ 484 $ 205
============ ============ ============== ============ ============ =========
For the year ended December 31, 1997
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 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
Fleming Island 6/30/98 698 - 581 79 388 72
Pike Creek 8/4/98 1,980 196 182 228 140 80
------------ ----------- ------------ --------- ------------- ---------------
$ 17,130 $ 495 $ 3,899 $ 2,306 $ 2,450 $ 1,083
============ =========== ============ ========= ============= ===============
112
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Six Month Period
Ended June 30, 1998 and
the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(f) 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 six month period ended
June 30, 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 June 30, 1998.
For the period ended June 30, 1998
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 51
Silverlake Shopping Center 7,584 1988 31 103
Highland Square 9,049 1960 20 208
Shoppes @104 6,439 1990 33 91
Fleming Island 4,773 1994 37 64
Pike Creek 18,082 1981 24 374
----------------
Acquisition Properties pro
forma depreciation adjustment $ 902
================
Midland Properties $ 131,065 Ranging from Ranging from
1986 to 1996 29 to 40 $ 817
================
For the year ended December 31, 1997
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
Hyde Park Plaza 33,734 1995 38 382
East Port Plaza 8,179 1991 34 76
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 10,023 1997 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
Fleming Island 4,773 1994 37 129
Pike Creek 18,082 1981 24 753
Acquisition Properties pro ----------------
forma depreciation adjustment $ 4,340
================
Midland Properties 131,065 Ranging from Ranging from
1986 to 1996 29 to 40 $ 2,994
================
113
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Six Month Period
Ended June 30, 1998 and
the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(g) 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 six month period ended June 30, 1998 $ 2,646
===============
Pro forma interest adjustment for
the year ended December 31, 1997 $ 10,353
===============
(h) 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 six month period ended June 30, 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 six-month period ended June 30, 1998 $ 2,168
================
Pro forma interest adjustment for
the year ended December 31, 1997 $ 11,778
================
(i) 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 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. The Company believes
that excluding the results of operations and gains related to the office
buildings sold is necessary for an understanding of the continuing
operations of the Company.
(j) To reflect (i) interest expense and loan cost amortization on the $100
million debt offering offset by (ii) the reduction of interest expense on
the Line and mortgage loans from the proceeds of the debt offering, the
issuance of the preferred units and the proceeds from the sale of the
office buildings referred to in note (i).
Pro forma interest adjustment for
the six-month period ended June 30, 1998 $ (3,220)
==================
Pro forma interest adjustment for
the year ended December 31, 1997 $ (6,439)
==================
(k) To reflect the distribution on the offering of preferred units at an
assumed annual rate of 8.125% for the six-month period ended June 30, 1998
and year ended December 31, 1997.
114
Regency Realty Corporation
Notes to Pro Forma Consolidated Statements of Operations
For the Six Month Period
Ended June 30, 1998 and
the Year ended December 31, 1997
(Unaudited)
(In thousands, except unit and per unit data)
(l) The following summarizes the calculation of basic and diluted earnings per
unit for the six-month period ended June 30, 1998 and the year ended
December 31, 1997:
For the Six For the year
Months Ended Ended
June 30, 1998 December 31, 1997
---------------- -------------------
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 24,837 17,424
================ ===================
Net income for common stockholders $ 20,938 $ 28,152
Less: dividends paid on Class B common stock 2,689 5,140
---------------- -------------------
Net income for Basic EPS $ 18,249 23,012
================ ===================
Basic EPS $ 0.73 1.32
================ ===================
Net income for Basic EPS $ 18,249 23,012
Add: minority interest of exchangeable partnership units 693 1,214
---------------- ------------------
Net income for Diluted EPS $ 18,942 24,226
================ ==================
Diluted Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding for Basic EPS 24,837 17,424
Exchangeable operating partnership units 1,135 1,243
Incremental units to be issued under common
stock options using the Treasury method 27 80
Contingent units or shares for the acquisition
of real estate 428 955
---------------- -------------------
Total Diluted Shares 26,427 19,702
================ ===================
Diluted EPS $ 0.72 $ 1.23
================ ===================
115