1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 1997
LEXINGTON CORPORATE PROPERTIES, INC.
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(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 5. Other Events
On November 12, 1997, the Registrant and certain of its affiliates entered
into a Purchase Agreement with Bear, Stearns & Co. Inc. and McDonald & Company
Securities, Inc., as representatives of the underwriters named therein,
providing for the issuance and sale of up to 2,875,000 shares of Common Stock,
par value $0.0001, of the Registrant in a public offering. The public offering
is expected to be consummated on or about November 18, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following tables of unaudited pro forma consolidated financial data of
the Company have been prepared from the historical consolidated financial
statements of the Company, as adjusted to give effect to the Pro Forma
Adjustments as if such Pro Forma Adjustments had occurred on January 1, 1996 and
were carried forward through June 30, 1997 for the operating data and on June
30, 1997 for the balance sheet data. The unaudited pro forma financial data does
not purport to be indicative of what the results of the Company would have been
had the transactions been completed on the dates assumed, nor is such financial
data necessarily indicative of the results of operations of the Company that may
exist in the future. The unaudited pro forma financial data must be read in
conjunction with the Notes thereto and with the historical Consolidated
Financial Statements and the related Notes incorporated by reference in the
accompanying Prospectus.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(FOR THE YEAR ENDED DECEMBER 31, 1996)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
COMPANY OTHER
HISTORICAL OFFERING(1) ADJUSTMENTS(2) PRO FORMA
---------- ------------- ---------------- ---------
Revenues:
Rental.............................................. $ 31,244 $ -- $ 16,724 $47,968
Interest and other.................................. 431 39 470
------- ------- ------- -------
Total revenues.............................. 31,675 -- 16,763 48,438
Expenses:
Interest expense.................................... 12,818 (2,368) 4,647 15,097
Depreciation........................................ 7,627 -- 4,106 11,733
Amortization of deferred expenses................... 619 -- 31 650
Property operating expenses......................... 686 -- -- 686
General and administrative expenses................. 3,125 -- 3,125
Other expenses...................................... 644 -- -- 644
------- ------- ------- -------
Total expenses.............................. 25,519 (2,368) 8,784 31,935
------- ------- ------- -------
Income before minority interests...................... 6,156 2,368 7,979 16,503
Minority interests.................................... 690 -- 1,134(3) 1,824
------- ------- ------- -------
Income from continuing operations (before gain on sale
of properties and extraordinary items)(4)........... $ 5,466 $ 2,368 $ 6,845 $14,679
======= ======= ======= =======
Per share data:(5)
Income from continuing operations
Primary............................................. $ 0.58 $ -- $ -- $ 0.89
Fully diluted....................................... 0.58 -- -- 0.87
Weighted average common shares outstanding
Primary............................................. 9,393 2,500 4,937 16,830
Fully diluted....................................... 9,393 2,500 7,562 19,455
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NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(FOR THE YEAR ENDED DECEMBER 31, 1996)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) This column reflects the issuance of 2,500,000 shares of Common Stock at
$14.25 per share net of offering costs and the effect of reducing actual
interest expense on debt that will be repaid with the proceeds from the
Offering.
(2) This column reflects (i) the addition of historical results of operations
for the period from January 1 to the respective acquisition dates for the
Properties acquired by the Company during 1996 and for a 12-month period for
Properties acquired since January 1, 1997 and for the CRIT Acquisition; (ii)
the elimination of the results of operations of the Ross Stores Newark
Property and the Stratus Property as if the sales had taken place on January
1, 1996, (iii) the Salt Lake City Refinancing and (iv) the June Offering of
3,220,000 shares of Common Stock and the application of the net proceeds
therefrom. The results of operations for properties acquired during 1996,
from their respective acquisition dates through December 31, 1996 are
included in the Company's historical 1996 consolidated statement of income.
The results of operations consist principally of rental revenue, interest
expense and depreciation expense.
Rental revenue in these pro forma financial statements (both historical and
pro forma) is generated from leases that are "net leases," under which the
tenant is responsible for substantially all costs of real estate taxes,
insurance and ordinary maintenance. Pro forma rental income represents
straight-line rent as provided by GAAP, calculated as the difference between
the cash rent paid under the lease and the average rent due over the
noncancellable term of the lease.
The depreciable life for all depreciation adjustments is 40 years.
Applicable pro forma interest expense adjustments are calculated based on
annual interest rates on the respective debt as of the applicable
acquisition, disposition or refinancing date. The pro forma reduction of
interest expense represents only the actual interest incurred on debt that
has been or will be repaid.
ANNUALIZED
RENTAL INTEREST INTEREST DEPRECIATION
REVENUE RATE EXPENSE EXPENSE
------- ----------- ------- ------------
CRIT Acquisition.......................................... $ 3,557 8.875-9.500% $ 1,408 $ 922
Acquisition of LP Properties(*)........................... 2,595 (*) 962 840
Acquisition of Salt Lake City Property.................... 3,264 11.040% 424 824
Acquisition of Exel Pennsylvania Properties............... 2,949 8.000% 2,000 601
Acquisition of Bull Property.............................. 1,023 7.960% 521 226
Acquisition of Lockheed Property.......................... 1,671 7.1875% 395 344
Acquisition of Ryder Property............................. 1,009 7.1875% 665 206
Acquisition of FirstPlus Property......................... 3,544 7.1875% 1,653 779
Sale of Ross Stores Newark Property....................... (3,242) 8.100% (2,015) (726)
Sale of Stratus Property.................................. (2,254) 10.180% (1,082) (473)
June Offering............................................. -- 6.880% (1,511) --
Other activities.......................................... 2,608 (**) 1,227 563
------- ------- ------
$16,724 $ 4,647 $4,106
======= ======= ======
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* The LP Properties consist of four properties leased to Toys "R" Us and
the property leased to Liberty House, Inc. The annualized interest rates
on the debt incurred to finance the Toys "R" Us properties was 12.625%
prior to prepayment and 10.250% with respect to the Liberty House
property.
** The interest rates of the debt on the other acquisitions range from
6.875% to 8.500%.
(3) This amount represents the minority interest in the net income of LCIF due
to the issuance of OP Units in the acquisition of the Salt Lake City
Property, the acquisition of the LP Properties and the acquisition of the
Exel Pennsylvania Properties.
(4) The following items are not included in the pro forma statement of income
for the year ended December 31, 1996:
Prepayment Premium-Salt Lake City Refinancing........................................... $(1,824)
Prepayment Premium-Ross Stores Newark Property debt repayment........................... (773)
Prepayment Premium-Stratus Property debt repayment...................................... (1,862)
Gain on sale of Stratus Property........................................................ 2,850
Pro forma loss on sale of Ross Stores Newark Property................................... (910)
(5) Primary income from continuing operations per share is computed by dividing
income from continuing operations (reduced by preferred dividends) by the
weighted average number of common and diluted common equivalent shares
outstanding during the period. Fully diluted income from continuing
operations per share amounts are similarly computed but include the effect,
when dilutive, of the Company's other potentially dilutive securities. Fully
dilutive income from continuing operations is reduced by preferred dividends
and is increased by minority interests resulting from the assumed conversion
of the OP Units. The Convertible Preferred Stock and Exchangeable Notes are
excluded from the pro forma computations due to their anti-dilutive effect
during the period. The additional number of shares of Common Stock from an
assumed conversion of the Convertible Preferred Stock would have been
1,325,000 for the 1996 pro forma period and none for the 1996 historical
period.
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UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(FOR THE SIX MONTHS ENDED AND AS OF JUNE 30, 1997)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
COMPANY OTHER PRO
HISTORICAL OFFERING(1) ADJUSTMENTS(2) FORMA
-------- ----------- -------------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT:
Revenues:
Rental....................................... $ 20,178 $ -- $ 3,641 $ 23,819
Interest and other........................... 284 -- 15 299
-------- -------- -------- --------
Total Revenues....................... 20,462 -- 3,656 24,118
Expenses:
Interest expense............................. 8,583 (1,149) 244 7,678
Depreciation................................. 5,075 -- 862 5,937
Amortization of deferred expenses............ 415 -- (38) 377
Property operating expenses.................. 403 -- -- 403
General and administrative expenses.......... 1,844 -- -- 1,844
Other expenses............................... 167 -- -- 167
-------- -------- -------- --------
Total Expenses....................... 16,487 (1,149) 1,068 16,406
-------- -------- -------- --------
Income before minority interests............... 3,975 1,149 2,588 7,712
Minority interests............................. 305 -- 564(3) 869
-------- -------- -------- --------
Income from continuing operations.............. $ 3,670 $ 1,149 $ 2,024 $ 6,843
======== ======== ======== ========
Per share data:(4)
Income from continuing operations
Primary...................................... $ 0.31 $ -- $ -- $ 0.37
Fully diluted................................ 0.27 -- -- 0.36
Weighted average common shares outstanding
Primary...................................... 10,056 2,500 4,397 16,953
Fully diluted................................ 12,507 2,500 4,601 19,608
BALANCE SHEET (AT END OF PERIOD):(5)
Real estate at cost.......................... $377,793 $ -- $ 49,019 $426,812
Less: accumulated depreciation............... 56,418 -- (10,597) 45,821
-------- -------- -------- --------
Real estate, net............................. 321,375 -- 59,616 380,991
Other assets................................. 32,014 703 (10,615) 22,102
-------- -------- -------- --------
Total assets......................... $353,389 $ 703 $ 49,001 $403,093
======== ======== ======== ========
Mortgage loans payable (including accrued
interest)................................. $176,568 $ (32,250) $ 24,502 $168,820
Other liabilities............................ 8,064 -- 1,007 9,071
Minority interest............................ 27,928 -- -- 27,928
-------- -------- -------- --------
Total liabilities............................ 212,560 (32,250) 25,509 205,819
Stockholders' equity:
Convertible preferred..................... -- -- -- --
Common stock.............................. 1 1 2
Additional paid in capital................ 188,950 32,953 23,549 245,452
Accumulated distributions in excess of net
income.................................. (48,122) -- (58) (48,180)
-------- -------- -------- --------
Total Stockholders' equity.............. 140,829 32,953 23,492 197,274
-------- -------- -------- --------
Total liabilities and Stockholders'
equity............................. $353,389 $ 703 $ 49,001 $403,093
======== ======== ======== ========
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NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(FOR THE SIX MONTHS ENDED AND AS OF JUNE 30, 1997)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) This column reflects the issuance of 2,500,000 shares of Common Stock at
$14.25 per share net of offering costs and the effect of reducing actual
interest expense on debt that will be repaid with the proceeds from the
Offering.
(2) These amounts reflect (i) the addition of historical results of operations
for the period from January 1 to the respective acquisition dates for the
Properties acquired by the Company during 1997 and for a 6-month period for
the Ryder and CRIT Acquisitions, (ii) the elimination of the results of
operations of the Ross Stores Newark Property and Stratus Property as if the
sales had taken place on January 1, 1996, (iii) the Salt Lake City
Refinancing and (iv) the June Offering of 3,220,000 shares of Common Stock
and the application of the proceeds therefrom. The results of operations for
Properties acquired during 1997, from their respective acquisition dates
through June 30, 1997, are included in the Company's historical June 30,
1997 consolidated statement of income. The results of operations consist
principally of rental revenue, interest expense and depreciation expense.
Rental revenue in these financial statements (both historical and pro forma)
is generated from leases that are "net leases," under which the tenant is
responsible for substantially all costs of real estate taxes, insurance and
ordinary maintenance. Pro forma rental income represents straight-line rent
as provided by GAAP, calculated as the difference between the cash rent paid
under the lease and the average rent due over the non-cancelable term of the
lease.
The depreciable life for all real property additions is 40 years. Applicable
pro forma interest expense adjustments are calculated based on annual
interest rates on the respective debt as of the applicable acquisition,
disposal or refinancing date.
RENTAL ANNUALIZED INTEREST DEPRECIATION
REVENUE INTEREST RATE EXPENSE EXPENSE
------- --------------- ------- ------------
CRIT Acquisition............................................. $ 1,790 8.875 - 9.500% $ 701 $ 488
Acquisition of Exel Pennsylvania Properties.................. 648 8.000% 433 130
Acquisition of Bull Property................................. 514 7.960% 261 113
Acquisition of Lockheed Property............................. 836 7.125% 196 172
Acquisition of Ryder Property................................ 501 7.125% 330 103
Acquisition of FirstPlus Property............................ 1,782 7.125% 819 390
Sale of Ross Stores Newark Property.......................... (1,628) 8.100% (1,602) (363)
Sale of Stratus Property..................................... (1,127) 10.180% (520) (237)
Other activities............................................. 325 ** (974) 66
------ ----- -----
$ 3,641 $ 244 $ 862
====== ===== =====
The pro forma interest expense adjustment includes (i) the impact of the
Salt Lake City Refinancing, (ii) repayment of the Credit Facility with
proceeds from the sale of the Ross Stores Newark Property and with proceeds
from the June Offering and (iii) the impact of interest on acquisitions and
other debt repayments described above as if they had occurred on January 1,
1996. The pro forma reduction of interest expense represents only the actual
interest expense incurred on debt that has been or will be repaid.
** The interest rates related to other activities range from 6.875% to 12.900%.
(3) This amount represents the minority interest in the net income of LCIF due
to the issuance of OP Units in connection with the acquisition of the
Company's Salt Lake City Property and the Exel Pennsylvania Properties
Acquisition.
(4) Primary income from continuing operations per share is computed by dividing
income from continuing operations (reduced by preferred dividends) by the
weighted average number of common and diluted common equivalent shares
outstanding during the period. Fully diluted income from continuing
operations per share amounts are similarly computed but include the effect,
when dilutive, of the Company's other potentially dilutive securities. Fully
dilutive income from continuing operations is reduced by preferred dividends
and is increased by minority interests resulting from the assumed conversion
of the OP Units. The Company's Convertible Preferred Stock and Exchangeable
Notes are excluded from the pro forma computations due to their
anti-dilutive effect during the period. The additional number of shares of
Common Stock from an assumed conversion of the Convertible Preferred Stock
would have been 1,325,000 for the 1997 pro forma period and 948,447 for the
1997 historical period.
(5) June 1997 Pro Forma Balance Sheet adjustments:
ACCUMULATED
REAL MORTGAGE ADDITIONAL DISTRIBUTIONS IN
ESTATE ACCUMULATED OTHER LOANS OTHER PAID-IN EXCESS OF
AT COST DEPRECIATION ASSETS PAYABLE LIABILITIES CAPITAL NET INCOME
-------- ------------ -------- -------- ----------- ---------- ----------------
CRIT Acquisition.................... $ 33,124 $ -- $ 395 $ 15,369 $ -- $ 18,150 $ --
Acquisition of Bull Property........ 10,905 -- (3,355) 6,543 1,007 -- --
Acquisition of Lockheed Property.... 15,500 -- (10,000) 5,500 -- -- --
Acquisition of Ryder Property....... 9,250 -- -- 9,250 -- -- --
Acquisition of FirstPlus Property... 32,560 -- (9,560) 23,000 -- -- --
Sale of Ross Stores Newark
Property.......................... (30,844) (7,065) (2,556) (25,048) -- -- (1,287)
Sale of Stratus Property............ (21,476) (3,532) 9,061 (10,112) -- -- 1,229
June Offering....................... -- -- 5,400 -- -- 5,399 --
------- -------- -------- ------- ------ ------- ------
$ 49,019 $(10,597) $(10,615) $ 24,502 $ 1,007 $ 23,549 $ 58
======= ======== ======== ======= ====== ======= ======
The pro forma adjustments for the CRIT Acquisition are based on the issuance
of 1,286 shares of Common Stock at $14.125 per share.
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Item 7. Exhibits
(c) 1.1 Purchase Agreement dated November 12, 1997 among the Registrant,
Lepercq Corporate Income Fund L.P., Lepercq Corporate Income Fund II
L.P., LXP I, L.P., and LXP II, L.P., and Bear, Stearns & Co. Inc.
and McDonald & Company Securities, Inc., (on their own behalf and as
Representatives of the several underwriters named therein).
1.2 Pricing Agreement dated November 12, 1997 among the Registrant,
Lepercq Corporate Income Fund L.P., Lepercq Corporate Income Fund II
L.P., LXP I L.P., and LXP II, L.P., and Bear, Stearns & Co. Inc. (on
their own behalf and as Representatives of the several underwriters
named therein).
5 Opinion of Paul, Hastings, Janofsky & Walker LLP dated November 12,
1997 (including the consent of such firm).
8 Opinion of Paul, Hastings, Janofsky & Walker LLP as to tax matters
(including the consent of such firm).
23.1 Consent of Ernst & Young LLP related to Registration Statement on Form
S-3 (Registration No. 333-3688).
23.2 Consent of KPMG Peat Marwick related to Registration Statement on Form
S-3 (Registration No. 333-3688).
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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: November 13, 1997
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Exhibit Index
1.1 Purchase Agreement dated November 12, 1997 among the Registrant,
Lepercq Corporate Income Fund L.P., Lepercq Corporate Income Fund II
L.P., LXP I, L.P., and LXP II, L.P., and Bear, Stearns & Co. Inc. and
McDonald & Company Securities, Inc., (on their own behalf and as
Representatives of the several underwriters named therein).
1.2 Pricing Agreement dated November 12, 1997 among the Registrant, Lepercq
Corporate Income Fund L.P., Lepercq Corporate Income Fund II L.P., LXP
I L.P., and LXP II, L.P., and Bear, Stearns & Co. Inc. and McDonald &
Company Securities, Inc. (on their own behalf and as Representatives
of the several underwriters named herein).
5 Opinion of Paul, Hastings, Janofsky & Walker LLP dated November 12,
1997 (including the consent of such firm).
8 Opinion of Paul, Hastings, Janofsky & Walker LLP as to tax matters
(including the consent of such firm).
23.1 Consent of Ernst & Young LLP related to Registration Statement on Form
S-3 (Registration No. 333-3688).
23.2 Consent of KPMG Peat Marwick related to Registration Statement on Form
S-3 (Registration No. 333-3688).