1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to 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): May 22, 1996
------------
LEXINGTON CORPORATE PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
MARYLAND 1-12386 13-3717318
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
355 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 692-7260
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Pursuant to a Contribution Agreement dated as of May 22, 1996 (the
"Contribution Agreement"), Lexington Northwest Trust, a New York grantor trust
wholly owned by Lepercq Corporate Income Fund L.P. ("LCIF"), a real estate
partnership organized under the laws of the state of Delaware and a subsidiary
of Lexington Corporate Properties, Inc. (the "Registrant"), acquired a 295,000
square foot, four story office building and 600 car parking garage located in
Salt Lake City, Utah (the "Building") from Red Butte Creek Associates, a limited
partnership organized under the laws of the state of Utah ("Red Butte"), through
an exchange (the "Exchange") for LCIF partnership units (the "Units" and each a
"Unit").
The Building is leased to Northwest Pipeline Corporation (the
"Tenant") under a triple net lease which expires on September 30, 2009 and is
subject to two renewal options for a total of 19 additional years. The Exchange
will not affect the terms of the Building lease. The land on which the Building
is located (the "Property") is owned by the University of Utah, which leases the
Property to the Tenant. The Tenant subleases the Property to the Registrant for
a term which is coextensive with the building lease.
In connection with the Exchange, the Registrant effected the
following:
(i) The Registrant transferred to Red Butte an aggregate of
1,715,295 limited partnership Units in LCIF. Each Unit is exchangeable for
one share of the Registrant's Common Stock (the "Common Stock") beginning
May 22, 1998, and annually on each January 15 thereafter beginning on
January 15, 1999. The holders of the Units will be entitled to quarterly
cash distributions of $0.66 per Unit per annum, increasing to $1.08 per
Unit per annum by January 1, 1998, subject to downward adjustments based
on the annual dividend rate for shares of the Registrant's Common Stock.
The number of LCIF Units exchanged for the Building was determined based
on a valuation of the Building of $56,395,499 (determined based upon a
discounting of the after-tax cash flow at approximately 6.5%, net of the
Notes (as defined) assumed by Lexington Northwest Trust and taking into
account amounts paid to The LCP Group, L.P. ("LCP") in connection with its
management arrangements and its disposition fee).
(ii) The Registrant agreed to assume two mortgage notes to which
the Building is subject (the "Notes" and each a "Note"). The first Note
had an outstanding principal balance of $13,951,288 on March 31, 1996,
matures on October 1, 2005 and bears interest at a rate of 7.8676% per
annum. The second Note had an outstanding principal balance of $23,446,355
on March 31, 1996, matures on October 1, 2005 and bears interest at a rate
of 12.9% per annum. The second Note may be refinanced on October 1, 1997.
(iii) In addition to the Units transferred to Red Butte, the
Registrant transferred to LCP and Richard J. Rouse, a principal of LCP,
114,006 LCIF Units in exchange for LCP's contribution of its right to
receive certain management fees that
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3
would have been payable had current management arrangements remained in
effect and LCP's right to a 2% disposition fee upon the ultimate
disposition of the Building. The Registrant also transferred to LCP 9,000
shares of the Registrant's Common Stock, par value $.0001 per share, in
exchange for accrued but unpaid management fees.
Barnes Properties, Inc. and Barnshore Associates, the general
partners of Red Butte, are affiliates of the Registrant. Barnes Properties, Inc.
is a wholly-owned subsidiary of LCP, which is wholly-owned by E. Robert Roskind,
Co-Chief Executive Officer of the Registrant and Chairman of the Registrant's
Board of Directors. Barnshore Associates is partly owned by Mr. Roskind and
Richard J. Rouse, Co-Chief Executive Officer of the Registrant and Vice-Chairman
of its Board of Directors.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(a) Financial statements of properties acquired.
Red Butte Creek Associates Financial Statements for the
years ended December 31, 1995 and 1994 (audited) and for
the three month period ended March 31, 1996 (unaudited).
Notes to Financial Statements.
(b) Pro forma financial information.
Lexington Corporate Properties, Inc. and Consolidated
Subsidiaries Pro Forma Financial Statements for the year
ended December 31, 1995.
Notes to Pro Forma Financial Statements
(c) Exhibits.
2.1 Contribution Agreement, dated as of May 22, 1996, among
Red Butte Creek Associates, Lepercq Corporate Income Fund
L.P., Lex GP-1, Inc., The LCP Group, L.P., Richard J.
Rouse and Lexington Northwest Trust.*
4.1 Fourth Amended and Restated Agreement of Limited
Partnership of Lepercq Corporate Income Fund, L.P.*
20.1 Press Release by Lexington Corporate Properties, Inc.,
dated March 23, 1996.*
- ---------------------------
* Previously filed.
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4
INDEX TO FINANCIAL STATEMENTS
Sequentially
Numbered
Description Page
----------- ----
Red Butte Creek Associates Financial Statements for the years 5
ended December 31, 1995 and 1994 (audited) and for the three
month period ended March 31, 1996 (unaudited).
Notes to Financial Statements. 10
Lexington Corporate Properties, Inc. and Consolidated
Subsidiaries Pro Forma Financial Statements for the year ended
December 31, 1995. 15
Notes to Pro Forma Financial Statements
5
INDEPENDENT AUDITORS' REPORT
The Partners
Red Butte Creek Associates:
We have audited the accompanying balance sheets of Red Butte Creek Associates (a
Utah Limited Partnership) as of December 31, 1995 and 1994, and the related
statements of operations, changes in partners' deficit and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Red Butte Creek Associates as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
May 28, 1996
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RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Balance Sheets
March 31, December 31,
--------- ------------
1996 1995 1994
---- ---- ----
(unaudited)
ASSETS
Real estate, at cost (note 4):
Buildings and building improvements $ 34,912,630 $ 34,912,630 $ 34,912,630
Less accumulated depreciation 12,146,689 11,928,485 11,055,669
------------ ------------ ------------
22,765,941 22,984,145 23,856,961
------------ ------------ ------------
Deferred expenses:
Mortgage refinancing costs 342,296 342,296 342,296
Lease negotiation fee 76,000 76,000 76,000
------------ ------------ ------------
418,296 418,296 418,296
Less accumulated amortization 217,589 212,606 192,676
------------ ------------ ------------
200,707 205,690 225,620
Cash and cash equivalents 74,797 18,388 87,674
Due from lender 437,254 437,254 8,488
------------ ------------ ------------
$ 23,478,699 $ 23,645,477 $ 24,178,743
============ ============ ============
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable (note 3) $ 37,397,643 $ 37,956,078 $ 38,500,000
Accounts payable and accrued expenses 10,470 9,494 9,494
Due to affiliates (note 5) 1,049,933 1,028,683 1,028,683
------------ ------------ ------------
38,458,046 38,994,255 39,538,177
Partners' deficit (14,979,347) (15,348,778) (15,359,434)
------------ ------------ ------------
$ 23,478,699 $ 23,645,477 $ 24,178,743
============ ============ ============
See accompanying notes to financial statements.
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RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Statements of Operations
Three Months
Ended March 31, Years Ended December 31,
--------------- ------------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited)
Revenues:
Rental income (note 4) $2,091,723 $1,270,897 $5,904,421 $5,071,253
Interest income 1,430 1,089 2,486 1,434
---------- ----------- ---------- -----------
2,093,153 1,271,986 5,906,907 5,072,687
---------- ----------- ---------- -----------
Expenses:
Interest on mortgage
notes (note 3) 1,045,488 1,211,667 4,695,003 4,846,669
Depreciation 218,204 218,204 872,816 872,816
Amortization:
Mortgage refinancing costs 4,279 4,279 17,115 17,115
Lease negotiation fee 704 704 2,815 2,815
Ground rent (note 4) 50,545 50,545 202,180 189,846
Management fee (note 5) 21,250 21,250 85,000 85,000
Other 2,732 2,400 2,640 2,275
---------- ----------- ---------- -----------
1,343,202 1,509,049 5,877,569 6,016,536
---------- ----------- ---------- -----------
Net income (loss) $ 749,951 $ (237,063) $ 29,338 $ (943,849)
========== =========== ========== ===========
See accompanying notes to financial statements.
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RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Statements of Changes in Partners' Deficit
Limited Partners
--------------------------------------- General
Total Special Class A Class C Partners
----- ------- ------- ------- --------
Partners' deficit
at December 31, 1993 $ (14,380,761) $ (1,105,760) $ (11,051,389) $ (1,586,283) $ (637,329)
Cash distributions (34,824) (2,390) (28,078) (4,356) -
Net loss (943,849) (85,119) (704,579) (129,719) (24,432)
------------ ----------- ------------ ----------- --------
Partners' deficit
at December 31, 1994 (15,359,434) (1,193,269) (11,784,046) (1,720,358) (661,761)
Cash distributions (18,682) (1,323) (15,064) (2,295) -
Net income (loss) 29,338 (28,083) 74,887 (2,757) (14,709)
------------ ----------- ------------ ----------- --------
Partners' deficit
at December 31, 1995 (15,348,778) (1,222,675) (11,724,223) (1,725,410) (676,470)
Cash distributions (380,520) (23,457) (320,575) (36,488) -
Net income 749,951 36,499 613,499 96,202 3,751
------------ ----------- ------------ ----------- --------
Partners' deficit
at March 31, 1996 (unaudited) $ (14,979,347) $ (1,209,633) $ (11,431,299) $ (1,665,696) $ (672,719)
============ =========== ============ =========== ========
See accompanying notes to financial statements.
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RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Statements of Cash Flows
Three Months
Ended March 31, Years Ended December 31,
--------------- ------------------------
1996 1995 1995 1994
---- ---- ---- ----
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $ 749,951 $ (237,063) $ 29,338 $ (943,849)
----------- ----------- ----------- -----------
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation 218,204 218,204 872,816 872,816
Amortization 4,983 4,983 19,930 19,930
(Increase) decrease in due
from lender -- (197) (428,766) 11
Increase (decrease) in
accounts payable and
accrued expenses 976 -- -- (5,887)
Increase in due to affiliates 21,250 21,250 -- 68,426
----------- ----------- ----------- -----------
Total adjustments 245,413 244,240 463,980 955,296
----------- ----------- ----------- -----------
Net cash provided by
operating activities 995,364 7,177 493,318 11,447
----------- ----------- ----------- -----------
Cash flows from financing activities:
Distributions to partners (380,520) -- (18,682) (34,824)
Principal payments on
mortgage notes payable (558,435) -- (543,922) --
----------- ----------- ----------- -----------
Net cash used by
financing activities (938,955) -- (562,604) (34,824)
----------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 56,409 7,177 (69,286) (23,377)
Cash and cash equivalents at
beginning of year 18,388 87,674 87,674 111,051
----------- ----------- ----------- -----------
Cash and cash equivalents
at end of year $ 74,797 $ 94,851 $ 18,388 $ 87,674
=========== =========== =========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the
year for interest $ 1,045,488 $ 1,211,667 $ 4,695,003 $ 4,846,669
=========== =========== =========== ===========
See accompanying notes to financial statements.
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RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Notes to Financial Statements
March 31, 1996 (Unaudited),
December 31, 1995 and 1994
(1) ORGANIZATION
Red Butte Creek Associates (the "Partnership") was formed on January 15,
1980 under the Uniform Limited Partnership Act of the State of Utah for
the purposes of acquiring a leasehold interest in a parcel of land and a
partially completed structure, and developing, owning and leasing this
structure (the "Structure"). Subsequently, an addition to the Structure
(the "Addition") was planned and constructed during 1981 and 1982.
The general partners of the Partnership are Barnes Properties, Inc. and
Barnshore Associates (collectively, the "General Partners"). Barnes
Properties, Inc. is a wholly owned subsidiary of the LCP Group, L.P.
("LCP"), and its officers and directors are all employees of LCP or its
affiliates. Barnshore Associates is a partnership comprised of eight
individual partners, four of whom are employees of LCP or its affiliates.
The Partnership Agreement provides for the issuance of four Special
Limited Partnership Units (the "Special Units") and forty Class A Limited
Partnership Units (the "Class A Units"). The agreement also provides for
the issuance, in certain circumstances, of Class B and Class C Limited
Partnership Units.
The Special Units and Class A Units were sold in 1980 and 1981 for
$232,500 and $185,250 per unit, respectively. In 1981, the General
Partners agreed to construct the Addition at a cost of $5,000,000. Under
the terms of the Partnership Agreement, the Partnership exercised its
right to raise equity funds in connection with the Addition by selling
"Class C Limited Partnership Interests". In 1982, $1,540,000 of Class C
limited partnership interests were sold. Contributions consisted of cash
and non-interest-bearing promissory notes (the "Contribution Notes").
As the final completion cost of the original Structure, excluding the
Addition, exceeded $28,000,000, the Special and Class A Limited Partners
were each required to make additional capital contributions to the
Partnership of $23,125 and $11,562, respectively.
The Partnership Agreement provides that all profits, losses and cash
distributions from operations are to be allocated 90% to the Class A
Limited Partners, 9% to the Special Limited Partners and 1% to the
General Partners, except that the Class C Limited Partners are entitled
to all of the Limited Partners' share (i.e., 99%) of cash flow, profits
and losses allocable to the Addition.
The General Partners have allocated the portion of the profits or losses
and cash distributions to the Addition according to the percentage that
the total costs of the Addition bears to the entire Property cost. If the
original structure and the Addition are sold or refinanced as one
property, the net proceeds shall be allocated between the Class C Limited
Partners and the other classes of Limited Partners on the basis of the
relative fair market values of the original structure and the Addition.
(Continued)
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2
RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Notes to Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Partnership have been prepared on the
accrual basis of accounting.
AMORTIZATION OF DEFERRED EXPENSES
The mortgage refinancing costs are being amortized on a straight-line
basis over the twenty year term of the mortgage notes.
The lease negotiation fee is being amortized on a straight-line basis
from the completion of construction to the end of the 27 year lease term.
INCOME TAX
No provision has been made for income taxes since any such liability is
the liability of the individual partners.
RENTAL INCOME
In accordance with the Financial Accounting Statements Board's Statement
of Financial Accounting Standards ("SFAS") No. 13, the net lease is
accounted for as an operating lease.
CASH EQUIVALENTS
As of December 31, 1994, cash equivalents of $58,762 consisted of money
market funds. The Partnership considers all highly liquid debt and
security instruments with original maturities of three months or less to
be cash equivalents.
CASH AND DUE FROM LENDER
The Partnership's financial instruments that are exposed to
concentrations of credit risk consist of cash and due from lender. The
Partnership places its cash with high credit quality institutions. At
times such amounts may be in excess of the FDIC insurance limit.
(Continued)
12
3
RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Notes to Financial Statements
(2), CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
defines fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing
parties. The Partnership's cash, due from lender, mortgage notes payable,
due to affiliates and accounts payable and accrued expenses are carried
at cost, which approximates fair value.
USE OF ESTIMATES
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(3) MORTGAGE NOTES PAYABLE
On November 13, 1985, a refinancing of the original permanent mortgage
notes occurred. Nonrecourse permanent financing was provided by five
insurance companies. The nonrecourse permanent financing assumed by the
Partnership totaled $38,500,000 and is summarized in the following table:
Original Balance Current
Loan Amount 12/31/95 Interest Rate
----------- -------- -------------
John Hancock Mutual Life $ 14,437,500 14,196,762 7.868%
AT & T Master Pension Trust 5,013,021 4,949,858 12.90
Sun Life Assurance Company (US) 5,013,021 4,949,858 12.90
Sun Life Assurance Company 1,002,604 989,970 12.90
Minnesota Mutual Life 5,013,021 4,949,858 12.90
National Home Life Assurance Co. 5,013,021 4,949,858 12.90
John Hancock Mutual Life 3,007,812 2,969,914 12.90
------------- ----------
$ 38,500,000 37,956,078
============= ==========
Of the $38,500,000 total original loan balance, $14,437,500 payable to
John Hancock is evidenced by adjustable rate secured notes that bore
interest at 12.07% per annum through October 1, 1995 subject to
adjustment based on ten-year Treasury rates then in effect. On October 1,
1995, the interest rate was adjusted to 7.868% per annum. The rate on the
remaining balance of the mortgage notes is fixed for their 20-year term
and if any of these Notes are prepaid prior to October 1, 1997, they are
subject to a 4% prepayment penalty.
(Continued)
13
4
RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Notes to Financial Statements
(3), CONTINUED
These mortgage notes are payable in 80 quarterly installments, of which
the first 40 quarterly installments were interest only and the following
40 quarterly installments are to include equal payments of combined
principal and interest in the amount of $1,603,923. The entire unpaid
balance of the principal amount, together with accrued interest thereon,
shall be due and payable October 1, 2005. The principal payments due in
each of the next five years, are as follows:
For the year ending December 31,
1996 $ 2,324,964
1997 2,584,752
1998 2,875,257
1999 3,200,274
2000 3,564,088
Thereafter 23,406,743
-------------
$ 37,956,078
=============
(4) REAL ESTATE
ACQUISITION OF PROPERTY
On January 15, 1980 the Partnership acquired from Northwest Land Company
("NLC"), a wholly owned subsidiary of Northwest Energy Corporation
("NEC"), a leasehold interest on approximately 20 acres of land located
in the University of Utah Research Park, Salt Lake City, Utah. The land
is owned by the University of Utah and is leased by the University to NLC
under a long-term net ground lease with a remaining term of approximately
23 years and a 10 year renewal option. The buildings constructed on the
site, consisting of an office building and parking garage, are owned by
the Partnership until the expiration of the ground lease (including the
renewal option), at which time title will be transferred to the
University without compensation to the Partnership. Under the site
sublease agreement, the Partnership was originally obligated to pay to
NLC a minimum annual ground lease rental of $100,932, subject to
adjustment every three years to reflect increases in the Consumer Price
Index ("CPI"). The first such increase became effective in 1982. The most
recent increase became effective in 1994, thereby increasing the annual
rent to $202,180.
FACILITY LEASE
The property is leased under a net lease to Northwest Pipeline
Corporation ("NPC") to be used as a corporate headquarters by NEC and its
subsidiaries, including NPC. The Partnership and NPC restated and amended
their lease agreement as of January 28, 1982, whereby the Partnership
leased its interest in the Property to NPC for a period of 27 years
commencing October 1, 1982, with the option of two renewal terms of nine
and ten years.
(Continued)
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5
RED BUTTE CREEK ASSOCIATES
(A Utah Limited Partnership)
Notes to Financial Statements
(4), CONTINUED
NPC has the option to purchase the Partnership's interest in the Property
at the expiration of the basic 27 year term at a price equal to the fair
value of the Property as encumbered by the ground and facility leases.
Further, NPC has the option to purchase all building improvements at the
end of each renewal term for a price equal to the fair market value of
the Property, as encumbered by the ground and facility leases. NPC has a
right of first refusal if the Partnership wishes to sell its interest in
the Property during the lease term.
As a result of the refinancing on November 13, 1985 discussed in note 3,
the Partnership and NPC restated and amended their facility lease
agreement as of November 1, 1985.
MINIMUM FUTURE RENTALS
The estimated minimum future rentals under the facility lease and site
sublease, not taking into consideration future renewals and adjustments
to reflect increases in the CPI, as of December 31, 1995, are as follows:
Facility Lease Site Sublease Total
-------------- ------------- -----
1996 $ 8,164,712 $ 202,180 $ 8,366,892
1997 8,266,357 202,180 8,468,537
1998 8,571,292 202,180 8,773,472
1999 8,571,292 202,180 8,773,472
2000 8,571,292 202,180 8,773,472
Thereafter 65,190,853 3,588,695 68,779,548
------------ ------------ ------------
$107,335,798 $ 4,599,595 $111,935,393
============ ============ ============
(5) RELATED PARTY TRANSACTIONS
For performing all administrative functions of the Partnership, an
affiliate of a General Partner receives an annual fee of $85,000.
Commencing on the date that limited partners were admitted to the
Partnership and continuing through the original term of the facility
lease, the greater of (i) $12,400 or (ii) one-half of the Partnership's
net cash flow for any calendar year, will be applied to payment of the
management fee for such year, the amount determined under part (ii) of
this paragraph (a) not to exceed $85,000 for any year; and (b) during the
renewal terms of the facility lease the greater of (i) $12,400 or (ii)
one-half of the Partnership's net cash flow for any calendar year, will
be applied towards payment of the management fee for such year plus 4% of
any portions of the fee accrued in earlier years and then remaining
unpaid.
To the extent that the management fee is not paid in full in any year,
the unpaid portion(s) thereof shall accumulate and become a liability of
the Partnership. In the event of a sale or refinancing of the Structure,
all unpaid management fees shall be immediately due and payable in full,
and shall be paid out of the net proceeds of such sale or refinancing.
The accrued liability for unpaid management fees amounted to $1,028,683
at December 31, 1995 and 1994.
15
LEXINGTON CORPORATE PROPERTIES, INC.
AND CONSOLIDATED SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995
The following pro forma financial statements of Lexington Corporate Properties,
Inc. and Consolidated Subsidiaries ("Lexington," or the "Company") and Red Butte
Creek Associates ("Red Butte Creek," or the "Partnership") (together, the
"Consolidated Company") have been prepared by combining the historical financial
statements of the Company and the Partnership, adjusted to give effect to the
acquisition of the Partnership by the Company. The accompanying pro forma
financial statements for the Consolidated Company, consisting of a pro forma
balance sheet as of December 31, 1995 and a pro forma statement of income for
the year ended December 31, 1995, have been prepared as if the acquisition had
been consummated as of January 1, 1995.
These pro forma financial statements of the Consolidated Company must be read in
conjuction with the historical financial statements of the Company and the
Partnership. These pro forma financial statements do not purport to be
indicative of the financial position or results of operations which might have
occurred had the acquisition been consummated on January 1, 1995, or which may
be expected to occur in the future.
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LEXINGTON CORPORATE PROPERTIES, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995
|---------- Historical ----------| Pro Forma
Lexington Red Butte Creek Combined Adjustments Pro Forma
--------- --------------- -------- ----------- ---------
Assets:
Real estate, at cost:
Buildings and building
improvements $ 196,431,021 $ 34,912,630 $ 231,343,651 $ 33,798,845 (1) $ 265,142,496
Land 34,287,129 34,287,129 34,287,129
Land improvements 2,830,339 2,830,339 2,830,339
Fixtures and equipment 10,674,288 10,674,288 10,674,288
---------------------------------------------------------------------------- -------------
244,222,777 34,912,630 279,135,407 33,798,845 312,934,252
Less: accumulated depreciation (43,715,721) (11,928,485) (55,644,206) (1,236,543)(2) (56,880,749)
---------------------------------------------------------------------------- -------------
200,507,056 22,984,145 223,491,201 32,562,302 256,053,503
Cash 2,588,515 18,388 2,606,903 2,606,903
Restricted cash 3,464,554 3,464,554 3,464,554
Deferred expenses, net 3,753,553 205,690 3,959,243 3,959,243
Rent receivalbe 7,701,420 7,701,420 7,701,420
Escrow deposits 654,400 654,400 654,400
Other assets 2,376,611 437,254 2,813,865 103,500 (4) 2,917,365
Investment in partnerships 170,127 170,127 170,127
---------------------------------------------------------------------------- -------------
$ 221,216,236 $ 23,645,477 $ 244,861,713 $ 32,665,802 $ 277,527,515
============================================================================ =============
Liabilities and
Stockholders' Equity:
Mortgage notes payable $ 121,249,633 $ 37,956,078 $ 159,205,711 $ $ 159,205,711
Accrued interest payable 440,788 440,788 440,788
Accounts payable and
other liabilities 558,617 1,038,177 1,596,794 (85,000)(3) 1,511,794
Subordinated notes payable,
inluding accrued interest 1,973,241 1,973,241 1,973,241
Minority interests, net 475,846 475,846 876,556 (5) 1,352,402
---------------------------------------------------------------------------- -------------
124,698,125 38,994,255 163,692,380 791,556 164,483,936
---------------------------------------------------------------------------- -------------
Stockholders' equity 96,518,111 96,518,111 103,500 (4) 113,043,579
17,298,524 (7)
(876,556)(5)
Partners' capital (15,348,778) (15,348,778) 33,798,845 (1)
(1,236,543)(2)
85,000 (3)
(17,298,524)(7)
---------------------------------------------------------------------------- -------------
96,518,111 (15,348,778) 81,169,333 31,874,246 113,043,579
---------------------------------------------------------------------------- -------------
$ 221,216,236 $ 23,645,477 $ 244,861,713 $ 32,665,802 $ 277,527,515
============================================================================ =============
Shares outstanding 9,331,982 9,331,982 9,000 (4) 9,340,982
============================================================================ =============
See accompanying notes to pro forma financial statements.
17
LEXINGTON CORPORATE PROPERTIES, INC. AND CONSOLIDATD SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
|---------- Historical ----------| Pro Forma
Lexington Red Butte Creek Combined Adjustments Pro Forma
--------- --------------- -------- ----------- ---------
Revenues:
Rental $24,522,884 $5,904,421 $30,427,305 $ $30,427,305
Interest and other 478,878 2,486 481,364 481,364
----------------------------------------------------------------------- ---------
25,001,762 5,906,907 30,908,669 30,908,669
----------------------------------------------------------------------- ----------
Expenses:
Interest expense 10,295,176 4,695,003 14,990,179 14,990,179
Depreciation 5,817,238 872,816 6,690,054 1,236,543 (2) 7,926,597
Amortization expense 463,953 19,930 483,883 483,883
Management fees 85,000 85,000 (85,000) (3)
General and administrative 2,693,760 2,640 2,696,400 2,696,400
Property operating expenses 620,058 202,180 822,238 822,238
----------------------------------------------------------------------- -----------
19,890,185 5,877,569 25,767,754 1,151,543 26,919,297
----------------------------------------------------------------------- ----------
Income before gain on sale of
properties, proceeds from lease
termination, extraordinary item
and minority interests 5,111,577 29,338 5,140,915 (1,151,543) 3,989,372
Gain on sale of properties 1,514,400 1,514,400 1,514,400
Proceeds form lease termination 1,600,000 1,600,000 1,600,000
----------------------------------------------------------------------- ---------
Income before extraordinary item
and minority interests 8,225,977 29,338 8,255,315 (1,151,543) 7,103,772
Extraordinary item-loss on
extinguishment of debt 4,849,226 4,849,226 4,849,226
----------------------------------------------------------------------- ---------
Income before minority interests 3,376,751 29,338 3,406,089 (1,151,543) 2,254,546
Minority interests 92,751 92,751 876,556 (5) 969,307
----------------------------------------------------------------------- -----------
Net income $3,284,000 $29,338 $3,313,338 ($2,028,099) $1,285,239
======================================================================= ==========
Net income per share $0.35 (6) $0.14
============= ==========
Weighted average shares
outstanding 9,263,169 9,263,169 9,000 (4) 9,272,169
======================================================================= =========
See accompanying notes to pro forma financial statements.
18
LEXINGTON CORPORATE PROPERTIES, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995
1) Represents a step-up in basis of the Red Butte Creek building based on the
acquisition of the Red Butte Creek partnership by Lexington.
2) Represents depreciation expense on the stepped-up basis of the Red Butte
Creek building.
3) Represents the elimination of the 1995 Red Butte Creek management fee.
4) Represents consideration paid to an affiliate of Lexington in satisfaction
of accrued and unpaid management fees.
5) Represents the effect on minority interest of the issuance of partnership
units in the Red Butte Creek acquisition.
6) Represents the issuance of 9,000 shares of Lexington common stock as
consideration paid for accrued and unpaid management fees (see Note (4)).
7) Represents the elimination of Red Butte Creek partners' capital by
consolidation into stockholders' equity of Lexington.
19
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.
LEXINGTON CORPORATE PROPERTIES, INC.
By: /s/ T. WILSON EGLIN
-----------------------------------------
T. Wilson Eglin
President and Chief Operating Officer
Date: August 5, 1996
20
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
- --- ----------- ----
2.1 Contribution Agreement, dated as of May 22, 1996, --
among Red Butte Creek Associates, Lepercq Corporate
Income Fund L.P., Lex GP-1, Inc., The LCP Group,
L.P., Richard J. Rouse and Lexington Northwest
Trust.*
4.1 Fourth Amended and Restated Agreement of Limited --
Partnership of Lepercq Corporate Income Fund, L.P.*
20.1 Press Release by Lexington Corporate Properties, --
Inc., dated March 23, 1996.*
- -----------------------
* Previously filed.