1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 1-8815
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EQK REALTY INVESTORS I
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(Exact name of Registrant as specified in its Charter)
Massachusetts 23-2320360
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5775 Peachtree Dunwoody Road, Suite 200D, Atlanta, GA 30342
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(Address of principal executive offices) (Zip code)
(404) 303-6100
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(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING
FIVE YEARS:
Indicate by checkmark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: 9,264,344 Shares as of May 13,
1996. -----------------------------
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EQK REALTY INVESTORS I
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1996
INDEX
PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Balance Sheets as of March 31, 1996 3
and December 31, 1995
Statements of Operations for the three 4
months ended March 31, 1996 and
March 31, 1995
Statements of Cash Flows for the three 5
months ended March 31, 1996 and
March 31, 1995
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
PART II - OTHER INFORMATION
Items 1 through 6. 15
SIGNATURES 16
2
3
EQK REALTY INVESTORS I
BALANCE SHEETS
(In thousands, except share data)
MARCH 31, DECEMBER 31,
1996 1995
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ASSETS
Investment in Harrisburg East Mall held for sale, at lower of cost
or net realizable value: $ 52,043 $ 52,033
Less accumulated depreciation 13,960 13,446
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38,083 38,587
Cash and cash equivalents:
Cash Management Agreement 1,867 2,972
Other 839 --
Accounts receivable and other assets 6,684 6,650
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TOTAL ASSETS $ 47,473 $ 48,209
======== =========
LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY
Liabilities:
Mortgage note payable $ 44,045 $ 44,125
Term loan payable to bank 1,587 1,587
Accounts payable and other liabilities (including amounts due
affiliates of $2,574 and $ 2,765, respectively) 3,567 4,030
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49,199 49,742
Deficit in Shareholders' Equity:
Shares of beneficial interest, without par value: 10,055,555
shares authorized, 9,264,344 shares issued and outstanding 135,875 135,875
Accumulated deficit (137,601) (137,408)
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(1,726) (1,533)
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TOTAL LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY $ 47,473 $ 48,209
========= =========
See accompanying Notes to Financial Statements
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EQK REALTY INVESTORS I
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
THREE MONTHS ENDED MARCH 31,
1996 1995
----------------------------
Revenues from rental operations $1,714 $ 3,966
Operating expenses, net of tenant
reimbursements (including property management
fees earned by an affiliate of $84 and $74,
respectively) 314 1,451
Depreciation and amortization 624 1,229
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Income from rental operations 776 1,286
Other income (192) --
Interest expense 981 2,144
Other expenses, net of interest income
(including portfolio management fees earned by
an affiliate of $62 and $102, respectively) 180 270
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Net loss $ (193) $(1,128)
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Net loss per share $(0.02) $ (0.12)
====== =======
See accompanying Notes to Financial Statements
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EQK REALTY INVESTORS I
STATEMENTS OF CASH FLOWS
(In thoudands)
THREE MONTHS ENDED MARCH 31,
1996 1995
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (193) $(1,128)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 624 1,229
Amortization of debt discount -- 106
Inputed and deferred interest 79 405
Changes in assets and liabilities:
Increase (decrease) in accounts
payable and other liabilities (542) 357
(Increase) decrease in accounts receivable
and other assets (144) 31
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Net cash provided by (used in) operating activies (176) 1,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate investments (10) (1,976)
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CASH FLOW FROM FINANCING ACTIVITIES:
Repayments of mortgage debt (80) (2)
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Decrease in cash and cash equivalents (266) (978)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,972 4,701
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $2,706 $ 3,723
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Supplemental disclosure of cash flow information:
Interest paid $ 984 $ 1,675
====== =======
See accompanying Notes to Financial Statement
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EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF BUSINESS
EQK Realty Investors I, a Massachusetts business trust (the
"Trust"), was formed pursuant to a Declaration of Trust dated
October 8, 1984 to acquire certain income-producing real estate
investments. Commencing with the period beginning April 1, 1985,
the Trust qualified for and elected real estate investment trust
("REIT") status under the provisions of the Internal Revenue
Code.
At March 31, 1996, the Trust's remaining real estate investment
is Harrisburg East Mall ("Harrisburg" or the "Mall"), a regional
shopping center located in Harrisburg, Pennsylvania. On December
8, 1995, the Trust sold its interest in Castleton Park
("Castleton"), an office park located in Indianapolis, Indiana.
During 1993, the Trust sold its two remaining office buildings
within its office complex located in Atlanta, Georgia, formerly
known as Peachtree-Dunwoody Pavilion ("Peachtree"). Prior to
1993, the Trust sold two office buildings at Castleton (1991) and
five office buildings at Peachtree (1992).
The Declaration of Trust established the Trust as a finite life
REIT with an investment holding period of up to 12 years, after
which it is required to dispose of its assets in an orderly
fashion within two years. The Trust's management is currently
pursuing the sale of Harrisburg.
NOTE 2: BASIS OF PRESENTATION
The financial statements have been prepared by the Trust, without
audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although the Trust believes that the disclosures
are adequate to make the information presented not misleading.
The financial statements should be read in conjunction with the
audited financial statements and related notes thereto included
in the Annual Report on Form 10-K for the year ended December 31,
1995.
In the opinion of the Trust, all adjustments, which include only
normal recurring adjustments necessary to present fairly its
financial position as of March 31, 1996, its results of
operations for the three months ended March 31, 1996 and 1995 and
its cash flows for the three months ended March 31, 1996 and
1995, have been included in the accompanying unaudited financial
statements.
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EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS
NOTE 2: BASIS OF PRESENTATION (CONTINUED)
Net loss per share for the three months ended March 31, 1996 and
1995 have been computed on the basis of the 9,264,344 shares
outstanding during the periods. Stock warrants held by the
Trust's mortgage lender are considered common stock equivalents
for purposes of the calculation of net loss per share. However,
the warrants have not been included in the calculation of net
loss per share for the periods presented since the effect of such
calculation would be antidilutive.
NOTE 3: CASH MANAGEMENT AGREEMENT
In connection with the Trust's mortgage agreement, the Trust
entered into a Cash Management Agreement with the mortgage lender
and assigned all lease and rent receipts to the lender as
additional collateral. Pursuant to this agreement, a third-party
escrow agent has been appointed to receive all rental payments
from tenants and to fund monthly operating expenses in accordance
with a budget approved by the lender. As of March 31, 1996, a
balance of $202,000 was held by the third-party escrow agent in
accordance with the Cash Management Agreement. The agreement
also provides for the establishment of a capital reserve account,
which is maintained by the escrow agent. Disbursements from this
account, which is funded each month with any excess operating
cash flow, are limited to capital expenditures approved by the
lender. As of March 31, 1996 the balance of the capital reserve
account was $1,665,000.
NOTE 4: ADVISORY AND MANAGEMENT AGREEMENTS
The Trust has entered into an agreement with Equitable Realty
Portfolio Management, Inc., a wholly owned subsidiary of
Equitable Real Estate Investment Management, Inc. ("Equitable
Real Estate"), to act as its "Advisor". The Advisor makes
recommendations to the Trust concerning investments,
administration and day-to-day operations.
Under the terms of the advisory agreement, as amended in December
1989, the Advisor receives a management fee that is based upon
the average daily per share price of the Trust's shares plus the
average daily balance of outstanding mortgage indebtedness. Such
fee is calculated using a factor of 42.5 basis points (0.425%)
and generally has been payable monthly without subordination. In
connection with the one year extension of its existing mortgage
debt in December 1995, the Advisor agreed to a partial deferral
of payment of its 1996 fee. Whereas the fee will continue to be
computed as described, payments to the Advisor will be limited to
$37,500 per quarter. Accrued but unpaid amounts will be eligible
for payment upon the repayment of the mortgage note. For the
three months ended March
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EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS
NOTE 4: ADVISORY AND MANAGEMENT AGREEMENTS (CONTINUED)
31, 1996 and 1995, portfolio management fees amounted to $62,000
and $102,000, respectively.
As part of the 1989 amendment to the advisory agreement, the
Advisor forgave one-half, or $2,720,000, of the total amount of
fees previously deferred pursuant to subordination provisions of
the original advisory agreement. The remaining deferred fees are
to be paid upon the disposition of Harrisburg. For financial
reporting purposes, the deferred balance is being discounted at
the rate of 13% per year from December 1, 1996. As of March 31,
1996, the discounted liability for deferred management fees was
$2,497,000.
The Trust has also entered into an agreement with Compass Retail, Inc.
("Compass"), an affiliate of Equitable Real Estate for the
on-site management of Harrisburg. Castleton Park was managed by an
unaffiliated third-party management company up until the time of its
sale.
Management fees paid to Compass are generally based upon a
percentage of rents and certain other charges. Such fees and
commissions are comparable to those charged by unaffiliated
third-party management companies providing comparable services.
For the three months ended March 31, 1996 and 1995, management
fee expense attributable to services rendered by Compass was
$84,000 and $74,000, respectively.
NOTE 5: COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS
Resolution of Anchor Department Store Vacancy
On May 13, 1996, the Trust and May Department Stores Company
("May Company") executed a lease agreement that provides for the
opening of a Lord & Taylor department store (a division of May
Company) in the anchor space previously occupied by John Wanamaker.
The John Wanamaker location at Harrisburg has been closed since
October 1995 following Woodard & Lothrop's (the owner of John
Wanamaker) sale of certain department stores in this retail chain to
May Company pursuant to an August 1995 bankruptcy court auction.
Given its existing presence at Harrisburg through its recently-opened
Hecht's department store, May Company initially pursued an assignment
of this leasehold interest to other retail operators before deciding
instead to open a Lord & Taylor department store in this location.
The execution of such lease agreement has resulted in, among other
things, the termination of the legal proceedings initiated by the
Trust against the May Company in March 1996 following May Company's
failure to open or cause another retail operator to open for business
once the John Wanamaker store closed, which was a violation of a
continuous operating covenant contained in its lease agreement.
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EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS
NOTE 5: COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS
(CONTINUED)
The new lease agreement with May Company has an initial term of nine
years (October 31, 2005), with three renewal options of ten years each.
The new lease agreement has a longer committed lease term than the John
Wanamaker lease agreement, which stipulated an initial lease term
expiration date of October 31, 1999. The financial terms are
comparable to those contained in the John Wanamaker lease, although
minimum rent payments during the first three years of the lease are
anticipated to be approximately $75,000 less per annum. Due to
certain rent offsets that John Wanamaker would have otherwise been
entitled to, the revenue stream after the third lease year is
anticipated to be more favorable to the Trust. In connection with the
execution of this lease agreement, the Trust received approval from May
Company on behalf of its Hecht's and Lord & Taylor stores to certain
modifications to the Mall's site plan which will give the Trust
flexibility in future development planning. The opening of a Lord &
Taylor store is expected to have a positive impact to lease space
to new tenants and to renew leases with existing tenants.
The Trust anticipates that Lord & Taylor will open its newly renovated
store in November 1996. Until the Lord & Taylor store opens, certain
tenants will be permitted to pay, pursuant to co-tenancy provisions
provided for in their leases, percentage rent in lieu of fixed minimum
rentals. Based on the current sales volumes of these tenants, the
reduction in rental revenues from amounts that otherwise would have been
earned is estimated to be approximately $115,000 per quarter.
Debt Maturities
The Trust's mortgage note and term loan mature on December 15, 1996 in
the aggregate principal amount of $45,381,000. Management continues to
pursue the sale of Harrisburg as a means of repaying its outstanding
debt balances. Given that the Trust may hold its investment in
Harrisburg beyond 1996, Management has continued to explore its
external financing alternatives, including the refinancing of its debt
with its existing lenders in anticipation of the mortgage and term loan
maturities. Based on its current assessment of the credit markets,
Management believes that it can refinance its existing debt if
necessary, and that such new facility will be in place on or before the
maturity date of the existing debt. However, if the Trust is unable to
refinance or replace the existing debt at commercially reasonable terms
or at all, Management's plans with respect to the sale of Harrisburg
will be accelerated to satisfy its debt obligations.
Other Income
In March 1996, the Trust was notified by the Fulton County (Georgia) Tax
Commissioner's office of a reduction in the assessed value of the
real estate underlying Peachtree Dunwoody Pavilion for tax years
1991 and 1992. As previously disclosed in Note 1, the Trust
completed the sale of Peachtree Dunwoody Pavilion during the
period 1992-1993. Such reduction in assessed value resulted in a
refund of previously paid real estate taxes in the amount of
$192,000 which the Trust recognized as other income during the first
quarter and subsequently received in April 1996.
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EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial statements and
notes that appear on pages 3-9.
FINANCIAL CONDITION
CAPITAL RESOURCES
Background
As of March 31, 1996, the Trust's remaining real estate investment is
Harrisburg East Mall ("Harrisburg"), a regional shopping center located in
Harrisburg, Pennsylvania. During the period 1992 to 1995, the Trust completed
the disposition of its two other real estate investments. Castleton Park
("Castleton"), an office park in Indianapolis, Indiana was sold in December
1995, and Peachtree Dunwoody Pavilion was sold in three separate
transactions during 1992 and 1993. Consistent with the requirements of its
charter, the Trust intends to dispose of its remaining real estate investment,
Harrisburg, prior to March 1999. The precise timing of disposition is
dependent upon the prevailing conditions in the relevant real estate market and
is predicated on the ability of the Trust to extend or refinance its mortgage
debt that matures on December 15, 1996 (see discussion below).
Harrisburg Anchor Tenant Status
On May 13, 1996, the Trust and May Department Stores Company ("May
Company") executed a lease agreement that provided for the opening of a Lord &
Taylor department store (a division of May Company) in the anchor space
previously occupied by John Wanamaker. The John Wanamaker location at
Harrisburg has been closed since October 1995 following Woodward & Lothrop's
(the owner of John Wanamaker) sale of certain department stores in this retail
chain to May Company pursuant to an August 1995 bankruptcy court auction.
Given its existing presence at Harrisburg through its recently-opened Hecht's
department store, May Company initially pursued an assignment of this leasehold
interest to other retail operators before deciding instead to open a Lord &
Taylor department store in this location. The execution of such lease
agreement has resulted in, among other things, the termination of the legal
proceedings initiated by the Trust against the May Company in March 1996
following May Company's failure to open or cause another retail operator to
open for business once the John Wanamaker store closed, which was a violation
of a continuous operating covenant contained in its lease agreement.
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EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The new lease agreement with May Company has an initial term of nine years
(October 31, 2005), with three renewal options of ten years each. The new
lease agreement has a longer committed lease term than the John Wanamaker lease
agreement, which stipulated an initial lease term expiration date of October
31, 1999. The financial terms are comparable to those contained in the John
Wanamaker lease, although minimum rent payments during the first three years of
the lease are anticipated to be approximately $75,000 less per annum. Due to
certain rent offsets that John Wanamaker would have otherwise been entitled to,
the revenue stream after the third lease year is anticipated to be more
favorable to the Trust. In connection with the execution of this lease
agreement, the Trust received approval from May Company on behalf of its Hecht's
and Lord & Taylor stores to certain modifications to the Mall's site plan which
will give the Trust flexibility in future development planning. The opening of
a Lord & Taylor store is expected to have a positive impact to lease space to
new tenants and to renew leases with existing tenants.
The Trust anticipates that Lord & Taylor will open its newly renovated store in
November 1996. Until the Lord & Taylor store opens, certain tenants will be
permitted to pay, pursuant to co-tenancy provisions provided for in their
leases, percentage rent in lieu of fixed minimum rentals. Based on the current
sales volumes of these tenants, the reduction in rental revenues from amounts
that otherwise would have been earned is estimated to be approximately $115,000
per quarter.
Debt Maturities
The Trust's mortgage note and term loan mature on December 15, 1996 in
the aggregate principal amount of $45,381,000. Management continues to
pursue the sale of Harrisburg as a means of repaying its outstanding debt
balances. Given that the Trust may hold its investment in Harrisburg
beyond 1996, Management has continued to explore its external financing
alternatives, including the refinancing of its debt with its existing lenders
in anticipation of the mortgage and term loan maturities. Based on its current
assessment of the credit markets, Management believes that it can refinance its
existing debt if necessary, and that such new facility will be in place on or
before the maturity date of the existing debt. However, if the Trust is unable
to refinance or replace the existing debt at commercially reasonable terms or
at all, Management's plans with respect to the sale of Harrisburg will be
accelerated to satisfy its debt obligations.
LIQUIDITY
The Trust's cash flows from operating activities declined $1,176,000 during the
three months ended March 31, 1996 as compared to the three months ended March
31, 1995. This decline was primarily attributable to the December 1995 sale of
Castleton, as Castleton provided $1,648,000 in operating cash flows during the
first quarter of 1995. Also contributing to a decline was the Trust's
repayment of a $300,000 loan to its Advisor. The proceeds of this loan had
been used to fund an escrow deposit
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EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
that was released by the lender in connection with the December 1995
debt extension. This decline was partially offset by an increase in Harrisburg's
revenues of $208,000 as discussed below, and a decrease in interest paid of
$691,000 following the partial repayment of mortgage debt in December 1995 with
the proceeds from the sale of Castleton.
As a result of the difficult economic climate facing retailers across the
country, the parent companies of certain national tenants have had to give
consideration to, and in certain situations have had to implement, plans of
reorganization, including filing for protection under the U.S. Bankruptcy Code.
Certain of these tenants lease space at Harrisburg. Based on (i) the
bankruptcy filings of certain national retailers, (ii) unanticipated closings
of other financially-troubled retailers, and (iii) rent relief requests from
certain other tenants, Management believes that approximately $250,000 in
minimum rents earned in 1995 may not be achieved in 1996 (in addition to the
previously discussed decline in minimum rents due to the exercise of co-tenancy
provisions by certain tenants). The Trust has received lease termination fees
in certain situations that will partially offset this anticipated decline in
minimum rents. Further, approximately $160,000 of the $250,000 minimum rent
shortfalls relate to short term rent relief agreements with tenants that
will terminate once the new Lord & Taylor store opens as scheduled
in November 1996. Management will continue to counter the negative trends
associated with the current retail economic climate with aggressive leasing
and marketing programs.
Cash flows used in investing activities during the three months ended March 31,
1996 and 1995 amounted to $10,000 and $1,976,000, respectively. The 1996
results reflect modest capital additions at Harrisburg while the 1995 results
reflect expenditures related to the outparcel building redevelopment and a
tenant allowance at Harrisburg, in addition to routine capital expenditures at
both Harrisburg and Castleton. The Trust anticipates capital expenditure
requirements of approximately $900,000 for the remainder of 1996 for tenant
alterations, roof repairs, parking lot overlays, and routine capital additions,
although certain of these exenditures may be deferred into future periods at
Management's discretion.
During both the quarterly periods ended March 31, 1996 and 1995, cash flows
used in financing activities were limited to principal payments on the Trust's
debt. Pursuant to the terms of the mortgage debt extensions executed in
December 1995, the Trust is required to make principal payments on both the
mortgage note and the term loan in 1996, while 1995 scheduled principal
payments were required for the term loan only.
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EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Trust's liquidity requirements for the remainder of 1996 will also include
principal and interest payments of approximately $3,166,000 pursuant to the
existing loan agreements prior to such debt maturities in December 1996.
The Trust's cash management agreement stipulates that all rental payments from
tenants are to be made directly to a third party escrow agent who also funds
monthly operating expenses in accordance with a budget approved by the lender.
The Trust believes that its cash flow for 1996 will be sufficient to fund its
various operating requirements, including budgeted capital expenditures and
monthly principal and interest payments, although its discretion with respect
to cash flow will be limited by the terms of the cash management
agreement. Management believes that the Trust's current cash reserves, coupled
with additional cash flow projected to be generated from operations, will
permit the Trust to meet its operating, capital and debt service requirements.
RESULTS OF OPERATIONS
For the three months ended March 31, 1996, the Trust reported a net loss of
$193,000 ($.02 per share) compared to a net loss of $1,128,000 ($.12 per share)
for the three months ended March 31, 1995.
The Trust's revenues for the three months ended March 31, 1996 and 1995 were
$1,714,000 and $3,966,000, respectively. The decline in revenues was primarily
due to the December 1995 sale of Castleton, as Castleton generated $2,460,000
in revenues for the first quarter of 1995. The decline was partially offset by
an increase in Harrisburg's rental revenues in the first quarter of 1996 due to
the receipt of $206,000 in lease termination fees.
The Trust's expenses for the three months ended March 31, 1996 and 1995 were
$314,000 and $1,451,000, respectively. The decline in expenses was also
primarily due to the December 1995 sale of Castleton, as Castleton incurred
$1,150,000 in expenses in the first quarter of 1995. There was no significant
fluctuation in Harrisburg's expenses between the first quarters of 1996 and
1995.
Interest expense decreased for the first quarter of 1996 by $1,163,000 from the
first quarter of 1995
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EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
due primarily to the mortgage debt reduction following the sale of Castleton.
Total debt outstanding at March 31, 1996 was $45,631,000 as compared to
$80,471,000 at March 31, 1995. Also, reductions in interest rates for both the
mortgage note and term loan, as previously discussed, resulted in lower
interest expense of approximately $164,000 as compared to interest charges
which would have been incurred at interest rates in effect in 1995.
In March 1996, the Trust was notified by the Fulton County (Georgia) Tax
Commissioner's office of a reduction in the assessed value of the real estate
underlying Peachtree Dunwoody Pavilion for tax years 1991 and 1992. As
previously discussed, the Trust completed the sale of Peachtree Dunwoody
Pavilion during the period 1992-1993. Such reduction in assessed value resulted
in a refund of previously paid real estate taxes in the amount of $192,000,
which the Trust recognized as other income during the first quarter and
subsequently received in April 1996.
Other expenses consist of portfolio management fees, other costs related to the
operation of the Trust, and interest income earned on cash balances. The
decrease in other expenses of $90,000 for the quarter ended March 31, 1996 is
attributable to a decrease in advisory fees of $40,000 and to decreases in
certain recurring expenses of the Trust.
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EQK REALTY INVESTORS I
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
On March 22, 1996, the Trust filed complaints of ejectment (eviction)
and monetary damages in the local jurisdiction against May Department
Stores Company ("May Company") to gain control of the department store
space formerly occupied by John Wanamaker. May Company had earlier
acquired the leasehold interest in the John Wanamaker store at
Harrisburg East Mall from John Wanamaker's owner, Woodward & Lothrop,
in an August 1995 bankruptcy court action. Following this sale, the
John Wanamaker store at Harrisburg East Mall closed in October 1995.
May Company's failure to cause the store to reopen (with either one of
its department store divisions or with another retail operator)
represented a violation of a continuous operating covenant contained
in the lease agreement.
On May 13, 1996, the Trust and May Company executed a lease agreement
that provides for the opening of a Lord & Taylor department store (a
division of May Company) in this vacant anchor department store space.
The execution of such lease agreement with May Company has resulted
in the termination of these legal proceedings.
ITEM 2. Changes in Securities.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information.
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2. None
4. None
10. None
11. See Note 2 to the Financial Statements.
15. Not Applicable
18. Not Applicable
19. None
22. None
23. Not Applicable
24. None
27. Included in EDGAR transmission only.
(b) Reports on Form 8-K.
None
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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 thereunto duly authorized.
Date: May 13, 1996 EQK REALTY INVESTORS I
By: /s/Gregory R. Greenfield
-----------------------------
Gregory R. Greenfield
Executive Vice President and Treasurer
(Principal Financial Officer)
By: /s/William G. Brown, Jr.
-----------------------------
William G. Brown, Jr.
Vice President and Controller
(Principal Accounting Officer)
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