UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 2003
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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 __________________
COMMISSION FILE NUMBER 0-27562
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ATLANTIC REALTY TRUST
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(Exact name of Registrant as specified in its charter)
Maryland 13-3849655
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State or other jurisdiction of (IRS Employer
Incorporation or organization Identification No.)
747 Third Avenue, New York, NY 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-702-8561
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Shares of Beneficial Interest, NASDAQ SmallCap Market
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$0.01 Par Value Per Share
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Securities registered pursuant to Section 12(g)of the Act:
None
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Title of class
Indicate by check mark 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[]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No[X]
Aggregate market value of the Shares of Beneficial Interest held by
non-affiliates of the registrant as of June 30, 2003: approximately $22,865,934.
Approximately 3,561,553 Shares of Beneficial Interest of the Registrant
were outstanding as of March 2, 2004.
TABLE OF CONTENTS
Page
PART I.....................................................................................................1
Item 1. Business....................................................................................1
Item 2. Properties..................................................................................7
Item 3. Legal Proceedings...........................................................................7
Item 4. Submission of Matters to a Vote of Security Holders.........................................7
PART II....................................................................................................7
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.......................7
Item 6. Selected Financial Data.....................................................................8
Item 7. Management's Discussion and Analysis of Financial Condition and Liquidation Activities......9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..................................9
Item 8. Financial Statements and Supplementary Data................................................10
Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure.......10
Item 9A. Controls and Procedures....................................................................10
PART III..................................................................................................11
Item 10. Directors and Executive Officers of the Registrant........................................11
Item 11. Executive Compensation....................................................................14
Item 12. Security Ownership of Certain Beneficial Owners and Management............................16
Item 13. Certain Relationships and Related Transactions............................................17
Item 14. Principal Accountant Fees and Services....................................................17
PART IV...................................................................................................17
Item 15. Exhibits, Financial Statement Schedules, and Reports On Form 8-K..........................17
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, WITHOUT LIMITATION, THOSE STATEMENTS RELATING TO THE "RPS
TRUST ISSUES" AND THE "TRUST AUDIT" DISCUSSED IN ITEM 1 OF THIS ANNUAL REPORT ON
FORM 10-K, STATEMENTS SET FORTH IN THE SECTION CAPTIONED "RISK FACTORS" IN THE
TRUST'S REGISTRATION STATEMENT ON FORM 10 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MARCH 28, 1996 (FILE NO. 0-27562) AND STATEMENTS IN THE
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" OF THIS ANNUAL REPORT ON FORM 10-K. READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF
THE DATE HEREOF. THE TRUST UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER
THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
PART I
ITEM 1. BUSINESS.
Atlantic Realty Trust, a Maryland real estate investment trust (together
with its subsidiary, the "Trust"), was organized pursuant to a Declaration of
Trust dated July 27, 1995 (as amended, the "Declaration of Trust"). The
principal office of the Trust is located at 747 Third Avenue, New York, New York
10017.
The Trust commenced operations on May 10, 1996 as a result of a spinoff
(the "Spin-Off Transaction") from RPS Realty Trust ("RPS"). The Spin-Off
Transaction was consummated in order to permit RPS to complete an acquisition
(the "Ramco Acquisition") of assets from Ramco Gershenson, Inc. and its
affiliates ("Ramco"), which permitted RPS to become an equity shopping center
real estate investment trust (a "REIT"). RPS undertook the Spin-Off Transaction
because Ramco was unwilling to consummate the Ramco Acquisition if the assets
that were contributed by RPS to the Trust (the "Trust Assets") remained in RPS.
Pursuant to the Spin-Off Transaction, the board of trustees of RPS approved a
distribution of one common share of beneficial interest (the "Shares") of the
Trust for every eight shares of beneficial interest of RPS (the "Distribution").
Under the provisions of its Declaration of Trust, the Trust was to
continue for a period of 18 months from May 10, 1996, during which time it was
to reduce to cash or cash equivalents the Trust Assets and either (i) make a
liquidating distribution to its shareholders or (ii) agree to merge or combine
operations with another real estate entity, in either case, as soon as
practicable following the Distribution and within such 18-month period. Such
18-month period was subject to extension if (i) the Trust had not achieved its
objective and the holders of at least two-thirds of the outstanding Shares
approved the extension of such date or (ii) a contingent tax liability relating
to RPS that has been assumed by the Trust had not been satisfactorily resolved.
Because the RPS Tax Issues and the Trust Audit (each as defined below) have not
yet been satisfactorily resolved, the Trust has continued its business past such
18-month period. The Trust cannot currently estimate the timing of the future
satisfactory resolution of the Trust Audit. Accordingly, the Trust will continue
until there is a final determination of this issue. Upon obtaining a
satisfactory resolution to the Trust Audit and liquidating the Trust's remaining
assets, any liquidating distribution effected by the Trust would be subject to
the satisfaction of the Trust's liabilities to its creditors. In the event that
at the end of this period, the Trust is unable to achieve its business
objectives, the members (the "Trustees") of the Trust's board of trustees (the
"Board of Trustees") will appoint an independent third party to liquidate the
Trust's remaining assets.
As a result of the Spin-Off Transaction, the Trust acquired the Trust
Assets. The Trust Assets which have not been disposed of by the Trust are
described below under "-- Description of Trust Assets." The Trust's principal
investment objective is to maximize shareholder value from the reduction of the
Trust Assets to cash or cash equivalents. As part of its plan to liquidate the
Trust Assets to cash or cash equivalents, the Trust intends, among other things,
and subject to the Internal Revenue Service's ("IRS") consideration of the
appeals filed, by RPS and the Trust in connection with the examination reports
issued by the IRS in connection with their audits of RPS and the Trust (as more
fully described below under "-- Tax Contingency") to continue to: (i)
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contact strategic buyers of the Trust's remaining asset (the Hylan Plaza
Shopping Center, located in Staten Island, New York (the "Hylan Center"))
regarding possible sales transactions and (ii) list the Hylan Center for sale
with qualified real estate brokers. No assurance can be given, however, that
such objective will be achieved. The Trust expects to continue to invest the net
proceeds from sales of the Trust Assets in short-term or temporary investments,
such as certificates of deposit, pass-through mortgage-backed certificates,
mortgage participation certificates and mortgaged-backed securities (or similar
investment products), all or some of which investments may be guaranteed by
Ginnie Mae, Fannie Mae or Freddie Mac. Unless otherwise approved by the
shareholders, the Trust does not expect that it will make new permanent
investments or raise additional capital. In addition, the Trust does not expect
to acquire additional mortgage loans or properties.
In addition, the Trust may explore the possibility of merging or entering
into a business combination with another real estate entity. The Trust expects
that it will pursue such a transaction only if it represents an attractive
alternative to the distribution to shareholders of the net proceeds from the
orderly liquidation of the Trust Assets, as described above. The merger
candidates that may be available to the Trust may be limited as a result of the
amount of cash and the nature of the assets which the Trust will hold.
Accordingly, there can be no assurance that the Trust will successfully merge or
combine operations with another real estate entity. Because the Trust has
adopted a policy not to re-invest sales proceeds in additional mortgage loans on
real estate (except to the extent necessary to satisfy applicable REIT
requirements), a merger or other business combination involving the Trust and
another real estate entity may constitute a "roll-up transaction" under
applicable securities laws. In such case, the Trust would be required to comply
with the heightened disclosure rules as well as special rules relating to the
proxy solicitation process and the listing of the securities of the surviving
company on any exchange or the inclusion for quotation of such securities on the
Nasdaq Small Cap Market. Application of the roll-up rules to a company merger or
business combination could delay, defer or prevent such a transaction from
occurring.
The Trust was organized for the purpose of qualifying as a REIT under
sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code").
The Trust will elect to qualify as a REIT for the year ended December 31, 2003
and intends to operate so as to continue to qualify as a REIT.
As of December 31, 2003, the Trust had six employees.
DESCRIPTION OF TRUST ASSETS
As of December 31, 2003, the Trust owned and operated one real property,
the Hylan Center and held short-term investments in the principal amount of
approximately $22,500,000, consisting primarily of a certificate of deposit at a
major New York bank.
REAL PROPERTY INVESTMENT
THE HYLAN PLAZA SHOPPING CENTER. At December 31, 2003, the Trust held an
equity investment in one property, the Hylan Center. The Hylan Center is a
one-story community shopping center located in Staten Island, New York which was
acquired by the Trust in April,
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1996. The Hylan Center contains approximately 359,000 square feet of leasable
space approximately 99% of which was leased and occupied as of December 31,
2003. Major tenants (i.e., tenants who accounted for 10% or more of the leasable
space as of December 31, 2003) include K-Mart Corp., a department store chain
("K-Mart"), Pathmark Stores, Inc. ("Pathmark"), and the Toys "R" Us -- NY
L.L.C., a retail toy store chain ("Toys "R" Us"). These three tenants lease
approximately 104,000, 60,000 and 42,000 square feet, respectively, which
constitutes 29%, 17% and 12%, respectively, of the total leasable space. The
K-Mart lease expires in January 2007 and provides for annual base rental
payments of approximately $235,000; the Pathmark lease expires in January 2007
and provides for annual base rental payments of approximately $579,000; and the
Toys "R" Us lease expires in October 2005 and provides for annual base rental
payments of approximately $90,000. The K-Mart lease contains two 5-year tenant
renewal options; the Pathmark lease contains six 5-year tenant renewal options;
and the Toys "R" Us lease contains one 10-year tenant renewal option. Leases for
approximately 35,000 square feet are due to expire on or prior to December 31,
2004. The approximate base rental revenue as of December 31, 2003 was
approximately $4,422,000. The average base rental revenue per leased square foot
as of December 31, 2003 was $12.33, excluding percentage rent and similar
provisions. The Trust believes the property is adequately covered by insurance.
As of December 31, 2003, the estimated net realizable value of the Hylan Center
was approximately $44,144,000, including estimated cash flows using a
disposition period of 9 months. Realized values may differ depending on actual
disposition results and time periods.
Under various federal, state, and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. In connection with the ownership, operation and
management of the Hylan Center, the Trust may be potentially liable for removal
or remediation costs, as well as certain other related costs, including
governmental fines and injuries to persons and property. Certain environmental
laws and common law principles could also be used to impose liability for
release of an exposure to hazardous substances, including asbestos-containing
materials ("ACMs") into the air, and third parties may seek recovery from owners
or operators of real properties for personal injury or property damage
associated with exposure to released hazardous substances, including ACMs. As
the owner of the Hylan Center, the Trust may be potentially liable for any such
costs.
QUALIFICATION AS A REIT
The Trust intends to qualify as a REIT for federal income tax purposes.
If the Trust so qualifies, amounts paid by the Trust as distributions to its
shareholders will not be subject to corporate income taxes. For any year in
which the Trust does not meet the requirements for electing to be taxed as a
REIT, it will be taxed as a corporation.
The requirements for qualification as a REIT are contained in Sections
856-860 of the Code and the regulations promulgated thereunder. The following
discussion is a brief summary of some of those requirements. Such requirements
include certain provisions relating to the nature of a REIT's assets, the
sources of its income, the ownership of its stock, and the distribution of its
income. Among other things, at the end of each fiscal quarter, at least 75% of
3
the value of the total assets of the Company must consist of real estate assets
(including interests in mortgage loans secured by real property and interests in
other REITs, as well as cash, cash items and government securities) (the "75%
Asset Test"). There are also certain limitations on the amount of other types of
securities which can be held by a REIT. Additionally, at least 75% of the gross
income of the Company for the taxable year must be derived from certain sources,
which include "rents from real property," and interest secured by mortgages on
real property. An additional 20% of the gross income of the Company must be
derived from these same sources or from dividends, interest from any source, or
gains from the sale or other disposition of stock or securities or any
combination of the foregoing.
The Trust may invest the proceeds derived from the sale or other
disposition of the Trust Assets in pass-through, mortgage-backed certificates,
mortgage participation certificates and mortgage-backed securities, all or some
of which instruments may be guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac.
Such instruments produce qualifying income for REIT qualification purposes and
also satisfy the requirements of the 75% Asset Test. A REIT is also required to
distribute at least 90% of its REIT Taxable Income (as defined in the Code) to
its shareholders.
TAX CONTINGENCY
During the third quarter of 1994, RPS held more than 25% of the value of
its gross assets in overnight Treasury Bill reverse repurchase transactions
which the IRS may view as non-qualifying assets for the purposes of satisfying
an asset qualification test applicable to REITs, based on a Revenue Ruling
published in 1977 (the "Asset Issue"). RPS requested that the IRS enter into a
closing agreement with RPS that the Asset Issue would not impact RPS' status as
a REIT. The IRS declined such request. In February 1995, the IRS initiated an
examination of the 1991-1995 income tax returns of RPS (the "RPS Audit" and,
together with the Asset Issue, the "RPS Tax Issues"). Based on developments in
the law which occurred since 1977, RPS' tax counsel at that time, Battle Fowler
LLP, rendered an opinion that RPS' investment in Treasury Bill repurchase
obligations would not adversely affect its REIT status. However, such opinion is
not binding upon the IRS.
In connection with the Spin-Off Transaction, the Trust assumed all tax
liability arising out of the RPS Tax Issues (other than liability that relates
to events occurring or actions taken by RPS following the date of the Spin-Off
Transaction) pursuant to a tax agreement, dated May 10, 1996, by and between RPS
and the Trust (the "Tax Agreement"). Such agreement provides that RPS (now named
Ramco-Gershenson Properties Trust), under the direction of four trustees, three
of whom are also trustees of the Trust (the "Continuing Trustees") and not the
Trust, will control, conduct and effect the settlement of any tax claims against
RPS relating to the RPS Tax Issues. Accordingly, the Trust did not have any
control as to the timing of the resolution or disposition of any such claims.
In December 2003, Ramco-Gershenson Properties Trust and the Internal
Revenue Service entered into a closing agreement ("Closing Agreement") with
respect to all of the issues raised by the Internal Revenue Service in
connection with RPS Audit. As a condition of the Closing Agreement,
Ramco-Gershenson Properties Trust was obligated to pay deficiency dividends
(under Code Sec. 860) with respect to its 1992 and 1993 taxable year in amounts
not less than $1,386,503 with respect to the 1992 taxable year and $809,010 with
respect to the 1993
4
taxable year. In addition, Ramco-Gershenson Properties Trust is obligated to pay
a deficiency in its income taxes with respect to the period covered by the RPS
Audit equal to $770,258, plus interest calculated at the statutory rate on the
amount of the deficiency and the amount of the deficiency dividends. The
aggregate amount of the deficiency dividends, income tax deficiency and interest
on these amounts is approximately $7,400,000. Although the Closing Agreement
provides that the election of Ramco-Gershenson Properties Trust to be taxed as a
"real estate investment trust" was terminated with respect to its 1994 and 1995
taxable years, it also provides that Ramco-Gershenson Properties Trust will be
treated as having reelected to be taxed as a "real estate investment trust" with
respect to its taxable year beginning January 1, 1996 and that the termination
of its election to be taxed as a "real estate investment trust" will not
prohibit it or any successor entity (which includes the Trust) from electing to
be taxed as a "real estate investment trust" on or after January 1, 1996.
The Trust remains obligated under the Tax Agreement to assume certain
liabilities relating to the RPS Tax Issues. The Trust established a special
committee (the "Special Committee regarding RPS Tax Issues") comprised of the
two Trustees who are not Continuing Trustees or otherwise affiliated with
Ramco-Gershenson Properties Trust to act on behalf of the Trust in evaluating
the position of the Trust with respect to the RPS Tax Issues and to represent
the Trust with respect to any claims asserted by Ramco-Gershenson Properties
Trust for contribution arising out of the Closing Agreement. On January 21,
2004, the Trust contributed $2,200,091 in respect of the deficiency dividend
required to be paid pursuant to the Closing Agreement. The Trust will be
obligated to make additional payments with respect to the RPS Tax Issues and the
Closing Agreement as a result of its obligations under the Tax Agreement. In the
event the Trust is presented with further requests or claims for payment or
reimbursement arising in connection with the RPS Tax Issues and the Closing
Agreement, the Special Committee regarding RPS Tax Issues will evaluate the
Trust's further obligations at the time of its receipt of any such claim or
request.
On February 21, 2003, the IRS issued an examination report to the Trust
with respect to the 1996 and 1997 taxable years of the Trust ("Trust Audit").
This examination report proposes to disallow all of the loss deductions claimed
by the Trust upon the disposition of Trust Assets during that period. In
addition, the examination report proposes to increase the REIT taxable income of
the Trust during 1996 and 1997 on account of two items reported on the Trust's
tax returns for which the Trust did not claim any taxable loss or deduction.
Counsel to the Trust has advised that the examination report contains numerous
errors of fact with respect to the operations of the Trust and that the legal
conclusions in the examination report are not consistent with the applicable
provisions of the Code and the income tax regulations. The Trust timely filed an
administrative appeals (the "Trust Protest") challenging the adjustments
proposed in the examination report.
Apart from transferring the responsibility of the Trust's appeal of the
examination report to the IRS appeals office having jurisdiction for this case,
no action has yet been taken by the IRS with respect to the Trust's Protest to
the disallowances proposed in the examination report issued to the Trust.
5
FIRST UNION PROPOSAL
On January 12, 2004, First Union Real Estate Equity and Mortgage
Investments, an Ohio business trust ("First Union"), and Michael L. Ashner, the
Chief Executive Officer of First Union (together with First Union, the "First
Union Group"), filed a Statement of Beneficial Ownership on Schedule 13D (the
"Schedule 13D") pursuant to which the First Union Group reported, among other
things, that it had made a formal proposal to the Trust to merge the Trust with
and into First Union or one of its subsidiaries (the "First Union Proposal").
The First Union Proposal contemplates that each share of beneficial
interest in the Trust (a "Trust Share") would receive aggregate consideration of
$16.25 per Trust Share. Such amount would be payable, at the election of each
shareholder of the Trust (a "Trust Shareholder"), in cash or in exchange for
First Union's Series A cumulative convertible redeemable preferred shares of
beneficial interest (the "First Union Preferred Shares") at a rate of 0.65 First
Union Preferred Shares per Trust Share. In the event that Trust Shareholders
holding more than 1,901,760 Trust Shares in the aggregate elect to receive First
Union Preferred Shares, such Trust Shareholders would receive (i) a number of
First Union Preferred Shares equal to (a) 0.65 multiplied by (b) a fraction, the
numerator of which is 1,901,760 and the denominator of which is the total number
of Trust Shares to be exchanged for First Union Preferred Shares and (ii) cash
equal to (x) $16.25 multiplied by (y) a fraction, the numerator of which is the
number of Trust Shares to be exchanged for First Union Preferred Shares less
1,901,760 and the denominator of which is the number of Trust Shares to be
exchanged for First Union Preferred Shares. The consideration payable would be
subject to upward or downward adjustment based on the Trust's projected
post-closing net cash balance, information obtained through First Union's due
diligence process and any stock splits, issuances, repurchases,
reclassifications and other transactions affecting the value of the Trust.
On January 13, 2004, the Board of Trustees of the Trust (the "Board")
held a meeting to discuss the First Union Proposal and the process it would
undertake to evaluate it. The Board resolved to form a special committee of
disinterested directors consisting of Messrs. Glickman, Blank and Pashcow (the
"Special Committee") to consider any bona fide offer or acquisition proposal
made for the Trust and to ensure that all reasonable steps are taken to maximize
shareholder value while having regard to the Trust's existing contractual
obligations. Among other things, the Board instructed the Special Committee to
(i) review, negotiate and make recommendations to the Board with respect to the
First Union Proposal, (ii) conduct such other investigation of the First Union
Proposal, First Union and the Trust as may be necessary to determine whether the
First Union Proposal is in the best interests of Trust Shareholders and (iii)
investigate other strategic alternatives available to the Trust.
On January 26, 2004, the Special Committee held an organizational meeting
and commenced its evaluation of the First Union Proposal as directed by the
Board. In addition, the Special Committee has retained an independent real
estate brokerage firm to conduct a valuation of the Trust's sole asset, the
Hylan Shopping Center located in Staten Island, New York. In connection with the
valuation process that has commenced with respect to the Hylan Shopping Center,
management expects the valuation of the property will be higher than the current
valuation of approximately $44.1 million (based on an appraisal dated October 8,
2002) included in the Trust's Consolidated Statements of Assets in Liquidation.
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As of the date of this filing, the Special Committee has made no
determination as to whether the Trust will or should engage in a transaction of
the type contemplated by the First Union Proposal, whether on the terms of the
First Union Proposal or otherwise, and there can be no assurance that the Trust
will accept any acquisition proposal or that any such proposal, if accepted,
will result in the consummation of a transaction.
SEGMENT INFORMATION
The Trust considers its business to include one industry segment,
investment in real estate.
ITEM 2. PROPERTIES.
The Trust leases approximately 4,100 square feet of office space at 747
Third Avenue, New York, New York at an annual base rent of approximately
$264,000. This lease will expire on October 31, 2004. In addition, the Trust
owns and operates the Hylan Center property described under Item 1.
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings other than ordinary
routine litigation incidental to the business (including without limitation,
foreclosure proceedings), against or involving the Trust or its properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Trust did not submit any matter to a vote of its shareholders during
the fourth quarter of 2003.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET INFORMATION
The Shares of the Trust have been included for quotation on the Nasdaq
SmallCap Market under the symbol ATLRS. Set forth below is the range of high and
low bid prices for the shares for each of the quarters during the years ended
December 31, 2002 and 2001.
HIGH LOW
---- ---
First Quarter 2002 $8.70 $7.89
Second Quarter 2002 $9.40 $8.03
Third Quarter 2002 $11.40 $9.25
Fourth Quarter 2002 $11.05 $9.38
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First Quarter 2003 $11.10 $9.75
Second Quarter 2003 $12.61 $9.75
Third Quarter 2003 $14.00 $10.81
Fourth Quarter 2003 $16.94 $11.99
(B) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
Approximate Number
of Record Holders
Title of Class (As of March 2, 2004)
- -------------- ---------------------
Shares of beneficial interest, $.01 par value 2,071
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(C) DIVIDEND INFORMATION
Under the Code, a REIT must meet certain qualifications including a
requirement that it distribute annually to its shareholders at least 90% of its
REIT Taxable Income. The Trust has continued the cash distribution policy of the
predecessor programs by making quarterly distributions to its shareholders in
amounts such that annual distributions equal 100% of REIT Taxable Income,
thereby complying with the distribution requirements of the federal income tax
laws applicable to REITs. See "Qualification as a REIT" in Item 1 above.
The Trust paid distributions of $.46, $.62 and $.76 per share for the
years ended December 31, 2003, 2002 and 2001 respectively. Such distributions
represent ordinary income for income tax purposes.
ITEM 6. SELECTED FINANCIAL DATA.
The following tables set forth certain selected historical information
for the Trust. The financial information should be read in conjunction with the
financial statements and notes thereto included herein.
ATLANTIC REALTY TRUST 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
------------ ------------ ------------ ------------ ------------
Statement of Net Assets
In Liquidation:
Total Assets $ 67,607,443 $ 66,876,929 $ 63,286,177 $ 62,691,522 $ 61,826,132
Total Liabilities $ 12,547,752 $ 4,971,363 $ 5,430,048 $ 4,545,181 $ 4,394,443
Net Assets in Liquidation $ 55,059,691 $ 61,905,566 $ 57,856,129 $ 58,146,371 $ 57,431,689
Statement of Changes in
Net Assets in Liquidation:
Increase (Decrease)
Distributions Paid (1,638,314) (2,208,163) (2,706,780) (3,062,936) (997,235)
Adjustments to Reflect Liquidation
Basis of Accounting (5,207,561) 6,257,600 2,416,538 3,777,618 2,217,035
Net Change in Net Assets in Liquidation $ (6,845,875) $ 4,049,437 $ (290,242) $ 714,682 $ 1,219,800
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
LIQUIDATION ACTIVITIES.
CAPITAL RESOURCES AND LIQUIDITY -- ATLANTIC REALTY TRUST
The Trust's primary objective has been to liquidate its assets in an
eighteen-month period from the date of the Spin-Off Transaction while realizing
the maximum values for such assets; however because the RPS Tax Issues had not
been settled within such time and the Trust Audit has not been satisfactorily
resolved, the Trust has continued its business beyond such period. Although the
Trust considers its assumptions and estimates as to the values and timing of
such liquidations to be reasonable, the period of time to liquidate the assets
and distribute the proceeds of such assets is subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the Trust's control. There can be no assurance that the net values
ultimately realized and costs actually incurred for such assets will not
materially differ from the Trust's estimate. The Trust does not intend to make
new loans or actively engage in either the mortgage lending or the property
acquisition business.
The Trust believes that cash and cash equivalents on hand, proceeds
generated by the real estate property that it owns and operates (the Hylan
Center) and proceeds from the eventual sale of such property will be sufficient
to support the Trust and meet its obligations. As of December 31, 2003, the
Trust had approximately $23,198,000 in cash and short-term investments.
The Trust expects that, unless it is sold or merges with another entity,
it will liquidate upon resolution of the RPS Tax Issues, the Trust Audit and any
resolution of any liabilities relating thereto under the Tax Agreement.
RESULTS OF OPERATIONS
PERIOD FROM JANUARY 1, 2001 TO DECEMBER 31, 2001, JANUARY 1, 2002 TO DECEMBER
31, 2002 AND JANUARY 1, 2003 TO DECEMBER 31, 2003.
As a result of the spin-off transaction, the Trust has adopted the
liquidation basis of accounting. The liquidation basis of accounting is
appropriate when liquidation appears imminent and the Trust is no longer viewed
as a going concern. The Trust's income or loss is included in the adjustments to
reflect liquidation basis of accounting. Net income for the years ended December
31, 2003, 2002 and 2001 was approximately $1,580,000, $2,187,000 and $2,701,000
respectively. The decrease in net assets in liquidation during 2003 is primarily
due to the Trust's accrual of a liability of approximately $7,400,000 to
Ramco-Gershenson Properties Trust with regard to the settlement of the RPS Tax
Issues, including obligations arising from the Closing Agreement.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As of December 31, 2003, the Trust has approximately $23,198,000 of cash
and short term investments. The earnings from these assets are affected by
changes in market interest rates over which the Trust has no control. Although
changes in market interest rates may significantly
9
affect the earnings on these assets the impact in changes in rates on the
Trust's net assets in liquidation is not expected to be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See pages F-1 through F-10, which are included herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
As of the end of period covered by this Annual Report on Form 10-K, the
Company carried out an evaluation, under the supervision of and with the
participation of the Company's management, including the Company's President and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934. Based upon
that evaluation, the President and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective (i) to ensure that
material information relating to the Trust is communicated to them on a timely
basis, and (ii) to accomplish the purposes for which they were designed. There
were no material changes made in the Company's internal controls over financial
reporting that occurred during the quarter ended December 31, 2003 that has
materially affected, or are reasonably likely to materially affect the Trust's
internal control over financial reporting.
10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Trust has adopted a Code of Ethics that applies to the Trust's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. Any person
wishing to receive a copy of The Code of Ethics may be request a copy by
contacting the Trust and providing a name and address where such copy may be
sent.
The Board of Trustees is composed of six Trustees, each of whom will
serve until the respective successors are elected and qualified.
The Trustees and executive officers of the Trust are as follows:
NAME AGE OFFICES AND POSITIONS
- ---- --- ---------------------
Joel M. Pashcow* 61 Chairman and President of the Trust
effective as of February 29, 1996. He has
been a member of the Bar of the State of New
York since 1968. Chairman of RPS from
inception (December 1988) through May 1996.
He is a graduate of Cornell University and
the Harvard Law School. Mr. Pashcow is also
a trustee of Ramco-Gershenson Properties
Trust and Chairman of its Executive
Committee (formerly named RPS Realty Trust).
Edwin J. Glickman 71 Consultant in real estate financings. Until
May, 30, 2003, Mr. Glickman had served as
Executive Vice President of Capital Lease
Funding Corp., a company engaged in
commercial real estate lending, since
January 1995. Prior to that, Mr. Glickman
was President of the Glickman Organization,
Inc. ("Glickman") from January 1992 to
December 1994. Glickman conducted real
estate investment consulting services and
real estate financial services, including
mortgage brokerage, arranging joint ventures
and equity financing. Prior to that, Mr.
Glickman was Chairman of the Executive
Committee of Schoenfeld Glickman Maloy Inc.
from May 1989, which is a company that
conducted real estate financial services,
including mortgage brokerage, arranging
joint ventures and equity financing. Also
served successively as Executive Vice
President, President and Vice Chairman of
Sybedon Corporation from 1977 to 1993, which
is a company that conducted real estate
financial services, including mortgage
brokerage, arranging
11
NAME AGE OFFICES AND POSITIONS
- ---- --- ---------------------
joint ventures and equity financing. In all
positions, Mr. Glickman has been engaged in
real estate financial services, including
mortgage brokerage, arranging joint ventures
and equity financing.
Stephen R. Blank* 58 Senior Fellow, Finance of the Urban Land
Institute ("ULI"). Mr. Blank is also a
director of West Coast Hospitality
Corporation, a New York Stock
Exchange-listed corporation and BNP
Residential Trust, Inc., an American Stock
Exchange-listed REIT. Prior to joining the
ULI in December of 1998, Mr. Blank was a
Managing Director, Real Estate Investment
Banking of CIBC Oppenheimer Corp.
("Oppenheimer") since November 1, 1993.
Prior to joining Oppenheimer, Mr. Blank was
a Managing Director, Real Estate Corporate
Finance, of Cushman & Wakefield, Inc. for
four years. Prior to that, Mr. Blank was
associated for ten years with Kidder,
Peabody & Co. Incorporated as a Managing
Director of the firm's Real Estate Group.
Mr. Blank graduated from Syracuse University
in 1967 and was awarded a Masters Degree in
Business Administration (Finance
Concentration) by Adelphi University in
1971. He is a member of the Urban Land
Institute and the American Society of Real
Estate Counselors. Since September 1998, Mr.
Blank has been an adjunct professor in the
Real Estate Executive MBA Program at
Columbia University Graduate School of
Business. He has lectured before the
Practicing Law Institute, the New York
University Real Estate Institute, the Urban
Land Institute and the International Council
of Shopping Centers. Mr. Blank is also a
trustee of Ramco-Gershenson Properties Trust
(formerly named RPS Realty Trust).
Edward Blumenfeld 63 A principal of Blumenfeld Development Group,
Ltd., a real estate development firm
principally engaged in the development of
commercial properties since 1978.
Arthur H. Goldberg* 61 Managing Director of Corporation Solutions
Group since January 2000. President of
Manhattan Associates, LLC, a merchant and
investment banking firm from February 1994
to December 1999. Prior to that, Mr.
Goldberg was Chairman of Reich & Company,
Inc., (formerly Vantage Services, Inc.), a
securities brokerage and investment
brokerage firm, from January 1990 to
December 1993. Mr. Goldberg
12
NAME AGE OFFICES AND POSITIONS
- ---- --- ---------------------
was employed by Integrated Resources, Inc.
from its inception in December 1968, as
President and Chief Operating Officer from
May 1973 and as Chief Executive Officer from
February 1989 until January 1990. On
February 13, 1990, Integrated Resources,
Inc. filed a voluntary petition for
reorganization under Chapter 11 of the
United States Bankruptcy Code. Mr. Goldberg
has been a member of the Bar of the State of
New York since 1967. He is a graduate of New
York University School of Commerce and its
School of Law. Trustee of RPS since 1988.
Mr. Goldberg is also a trustee of
Ramco-Gershenson Properties Trust (formerly
named RPS Realty Trust).
William A. Rosoff 60 Vice-Chairman of the Board of Directors of
Advanta Corporation, a financial services
company, since January 1996 and President of
Advanta Corporation since October 1999.
Prior thereto, Mr. Rosoff was associated
with the law firm of Wolf, Block, Schorr and
Solis-Cohen since 1969, a partner since
1975. Mr. Rosoff is a past chairman of that
firm's Executive Committee and is a past
chairman of its tax department. Mr. Rosoff
served on the Legal Activities Policy Board
of Tax Analysts, the Advisory Board for
Warren, Gorham and Lamont's Journal of
Partnership Taxation, and has served on the
Tax Advisory Boards of Commerce Clearing
House and Little, Brown and Company. Mr.
Rosoff also serves on the Advisory Group for
the American Law Institute. He is a fellow
of the American College of Tax Counsel. Mr.
Rosoff earned a B.S. degree with honors from
Temple University in 1964, and earned an
L.L.B. magna cum laude from the University
of Pennsylvania Law School in 1967.
13
NAME AGE OFFICES AND POSITIONS
- ---- --- ---------------------
Edwin R. Frankel 58 Since the inception of the Trust in May
1996, Mr. Frankel has served as its
Executive Vice President, Chief Financial
Officer, Secretary and Principal Financial
and Accounting Officer. From 1988 to 1992,
Mr. Frankel served as Vice President and
Chief Financial Officer of RPS and from 1992
to 1996 as Senior Vice President, Chief
Financial Officer and Treasurer of RPS.
- -----------------------------
* Designates status as a Continuing Trustee.
COMMITTEES OF THE BOARD OF TRUSTEES
The Audit Committee of the Board of Trustees (the "Audit Committee"),
established on October 22, 1997, consists of three Trustees, Messrs. Blumenfeld
, Goldberg and Glickman. The Audit Committee meets with management and the
Trust's independent accountants to determine the adequacy of internal controls
and other financial reporting matters. On February 10, 2000, Mr. Glickman was
appointed as a third member of the Audit Committee in order for the Trust to be
in compliance with new regulations promulgated by the Securities and Exchange
Commission and the NASDAQ Stock Market regarding the size, duties and
responsibilities of audit committees of public companies. The Board of Trustees
has determined that Mr. Glickman qualifies as an "audit committee financial
expert" for purposes of Item 401(h) of SEC Regulation S-K, by virtue of his
service as Vice President of Capital Lease Funding, the Glickman Organization,
Inc. and as otherwise set forth in the table above. In all such positions, Mr.
Glickman has been engaged in real estate financial services, including mortgage
brokerage, arranging joint ventures and equity financing.
The Disposition Committee of the Board of Trustees (the "Disposition
Committee"), established in July 1996, consists of three Trustees, Messrs.
Blumenfeld, Glickman and Blank. The Disposition Committee works with management
in connection with the orderly disposition of the Trust's assets.
A Special Committee of the Board of Trustees (the "Special Committee")
established January 13, 2004, consists of three Trustees Messrs. Messrs.
Glickman, Blank and Pashcow. The Special Committee was to consider any bona fide
offer or acquisition proposal made for the Trust and to ensure that all
reasonable steps are taken to maximize shareholder value while having regard to
the Trust's existing contractual obligations.
The Special Committee regarding RPS Tax Issues, established April 17,
2003 consists of two Trustees, Messrs. Blumenfeld and Glickman. The Special
Committee regarding RPS Tax Issues is charged with the responsibility to act on
behalf of the Trust in evaluating the position of the Trust with respect to the
RPS Tax Issues and to represent the Trust with respect to any claims asserted by
RPS for contribution arising out of the Closing Agreement.
14
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE OFFICERS
Mr. Pashcow receives no cash compensation for serving as an executive
officer of the Trust. Mr. Frankel receives compensation of approximately
$178,000 per annum pursuant to an employment contract entered into between the
Trust and Mr. Frankel on June 11, 1998, as more fully described below.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- ----------------------
Name and Restricted Securities Payout
Principal Other Annual Stock Underlying LTIP
Position Year Salary($) Bonus($) Compensation($) Awards($) Options/SARs($) Payouts($)
- ------------------------ ------ ---------- --------- ---------------- ------------ ---------------- -----------
Edwin R. Frankel*
Executive Vice 2001 170,317 11,200*
President, Chief 2002 175,638 15,250 13,900*
Financial Officer 2003 180,907 15,250 14,400*
and
Secretary
Stanley Rappoport
2001 119,616
2002 124,423
2003 127,885 75,000
- ----------------
* Includes approximately $1,000 in imputed interest under the Frankel Note
(as defined below).
The Trust had no compensation committee, however all of the Trustees
participated in deliberations of the Trustees concerning executive officer
compensation.
On June 11, 1998, the Trust entered into an employment agreement with Mr.
Frankel (the "Frankel Employment Agreement"), which provided Mr. Frankel with a
base salary of $158,000 (as adjusted from time to time, the "Base Salary") per
annum. The term of the Frankel Employment Agreement is from June 11, 1998 until
the date of a "change of control" of the Trust (as defined in the Frankel
Employment Agreement) unless earlier terminated by either Mr. Frankel or the
Trust upon written notice. The Frankel Employment Agreement also provides that
Mr. Frankel will be entitled to a one-time payment upon the liquidation of the
Trust or a change in control of 150% of Mr. Frankel's Base Salary as in effect
at such time. In addition, the Frankel Employment Agreement provides for a loan
from the Trust to Mr. Frankel in the principal amount of $37,500, which loan is
evidenced by a promissory note, dated June 11, 1998, made by Mr. Frankel in
favor of the Trust (the "Frankel Note"). The Frankel Note will be canceled upon
the occurrence of certain conditions, including a Change of Control or
liquidation of the Trust. In January, 2000, the Frankel Employment Agreement was
amended to additionally provide that Mr. Frankel's estate or designated
beneficiary will be entitled to receive a one time payment of 150% of his Base
Salary as in effect at the time of his demise.
15
In connection with his employment with the Trust, Mr. Rappoport received
a bonus plan that provided as follows: (i) for the period 1996, and ending July
31, 2003, Mr. Rappoport will receive an aggregate total $100,000, such sum to be
earned on a monthly pro rata basis over that period and the first $75,000 of
such earned amount was paid on September 1, 2003 with the balance of such earned
amount up to an additional $25,000 shall be payable on January 1, 2004, (ii) for
the period beginning August 1, 2003 and ending December 31, 2003, Mr. Rappoport
will earn, to the extent he remains employed by the Trust, an aggregate of
$25,000 in addition to his then current salary, such sum to be earned on a
monthly pro rata basis over that period an to the extent earned, the $25,000
shall be payable the earlier of June 30, 2004 and the liquidation date of the
Trust; and (iii) for the period beginning January 1, 2004 and ending June 30,
2004, Mr. Rappoport will earn, to the extent he remains employed by the Trust,
an aggregate total of $15,000 in addition to his then current salary, such sum
to be earned on a monthly pro rata basis over that period and to the extent
earned, shall be payable the earlier of June 30, 2004 or the liquidation date of
the Trust.
TRUSTEES
The Trustees do not receive any compensation for serving as trustees and
likewise will not receive any compensation for attending meetings or for serving
on any committees of the Board of Trustees; however, Trustees will receive
reimbursement of travel and other expenses and other out-of-pocket disbursements
incurred in connection with attending any meetings.
During the years ended 2003, 2002 and 2001, respectively, Messrs. Edwin
Glickman and Edward Blumenfeld each earned fees of $25,000 in connection with
services they provided to the Trust as Members of the Disposition Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 11, 2004, each of the following persons were known by the
Trust to be the beneficial owners of more than five percent of the Shares of the
Trust.
16
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------------- ---------------- --------- -----
Shares of beneficial interest First Union Real Estate 347,000(1) 9.75%
$.01 par value Equity and Mortgage Investments
7 Bulfinch Place
Suite 500
Boston, MA 02114
Shares of beneficial interest High Rise Capital Management 504,088(2) 14.2%
$.01 par value 535 Madison Avenue
26th Floor
New York, NY 10022
Shares of beneficial interest Kimco Realty Corporation 1,068,037(3) 30.0%
$.01 par value 3333 New Hyde Park Rd.
New Hyde Park, NY 11042
- ------------------
(1) Based upon Schedule 13G/A filing with the Securities and Exchange
Commission, filed on January 15, 2004.
(2) Based upon Schedule 13G filing with the Securities and Exchange Commission,
filed on January 7, 2004.
(3) Based upon Schedule 13D/A filing with the Securities and Exchange
Commission filed February 4, 2003.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Set forth below is information as to the Shares beneficially owned as of
March 1, 2004 by each of the Trustees, each of the executive officers included
in the Summary Compensation Table set forth in Item 11 and all Trustees and
executive officers as a group, based on information furnished by each Trustee
and executive officer.
Name of Trustee/ Shares Owned
Executive Officer Beneficially(1) Percent of Class
- ----------------- --------------- ----------------
Joel M. Pashcow 94,154(2) 2.64%
Arthur H. Goldberg 24,487(3) *
William A. Rosoff 125 *
Stephen R. Blank 987(4) *
Edward Blumenfeld 125 *
Edwin J. Glickman 10,531 *
Edwin R. Frankel 0 *
All Trustees and Executive Officers as a group (7 persons) 130,409 3.66%
- ---------------------
* Less than 1% of class.
(1) All amounts are directly owned unless stated otherwise.
17
(2) Includes 25,890 shares held in an IRA account for the benefit of Mr.
Pashcow, a retirement savings plan, a pension and profit sharing account
and a money purchase plan, 47,662 shares owned by an irrevocable trust of
which Mr. Pashcow is a trustee, an irrevocable trust for his daughter and a
foundation of which Mr. Pashcow is trustee (for all of which trusts Mr.
Pashcow has shared voting and investment powers). Mr. Pashcow disclaims
beneficial ownership of the Shares owned by the foundation and each of the
trusts.
(3) Includes 19,563 shares owned by Mr. Goldberg's wife, 1,875 shares owned by
trusts for his daughters and 3,050 shares owned by a pension trust. Mr.
Goldberg disclaims beneficial ownership of the shares owned by his wife and
the trusts for his daughters.
(4) Includes 712 shares owned by trusts for Mr. Blank's daughters and 275
shares held in an IRA account for the benefit of Mr. Blank. Mr. Blank
disclaims beneficial ownership of the shares owned by the trusts for his
daughters.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information relating to Principal Accountant fees and services will be
contained in a definitive Proxy Statement under the caption "Principal
Accountant Fees and Services" which the Registrant will file with the Securities
and Exchange Commission pursuant to Regulation 14A under the Securities Exchange
Act of 1934 not later than 120 days after December 31, 2003, and such
information is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Financial Statements, Schedules and Exhibits
(a)(1) Financial Statements
See pages F-1 through F-10, which are included herein.
(a)(2) Financial Statement Schedules
All schedules have been omitted because they are inapplicable, not
required, or the information is included in the financial statements
or notes thereto.
(a)(3) Exhibits
The exhibits listed in the Exhibit Index immediately preceding the
exhibits are filed as a part of this Annual Report on Form 10-K.
(b) No Current Reports on Form 8-K were filed by the Company during the
last quarter of the period covered by this report.
18
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Consolidated Financial Statements-- Atlantic Realty Trust and Subsidiary
(Liquidation Basis of Accounting)
Independent Auditors' Report...............................................................F-2
Consolidated Statements of Net Assets in Liquidation as of December 31, 2003 and 2002......F-3
Consolidated Statements of Changes in Net Assets in Liquidation for the Years Ended
December 31, 2003, 2002 and 2001................................................F-4
Notes to Consolidated Financial Statements..............................................F-5-10
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
Atlantic Realty Trust
We have audited the accompanying consolidated statements of net assets in
liquidation of Atlantic Realty Trust and subsidiary (the "Trust") as of December
31, 2003 and 2002, and the related consolidated statements of changes in net
assets in liquidation for each of the three years in the period ended December
31, 2003. These consolidated financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
As discussed in Note 1 to the consolidated financial statements, the Trust was
formed for the purpose of liquidating the mortgage loan portfolio and certain
other assets and liabilities which were transferred to the Trust from RPS Realty
Trust on May 1, 1996 and liquidating and distributing capital to the Trust's
shareholders. As a result, the Trust adopted the liquidation basis of
accounting, effective May 10, 1996.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the net assets in liquidation of Atlantic Realty Trust and
subsidiary as of December 31, 2003 and 2002 and the changes in their net assets
in liquidation for each of the three years in the period ended December 31, 2003
in conformity with accounting principles generally accepted in the United States
of America on the basis described in the preceding paragraph.
As discussed in Notes 1 and 6 to the consolidated financial statements, because
of the inherent uncertainty of valuation when an entity is in liquidation, the
amounts ultimately realized from assets disposed and costs incurred to settle
liabilities may differ materially from amounts presented in the accompanying
consolidated financial statements.
/s/ DELOITTE & TOUCHE LLP
------------------------
March 10, 2004
New York, New York
F-2
ATLANTIC REALTY TRUST AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS OF ACCOUNTING)
December 31, December 31,
2003 2002
----------- -----------
ASSETS:
Investment in real estate .................. $44,144,250 $43,929,250
Cash and short-term investments ............ 23,198,093 22,677,679
Other assets ............................... 265,100 270,000
----------- -----------
Total assets .................. 67,607,443 66,876,929
----------- -----------
LIABILITIES:
Estimated costs of liquidation ............. 12,547,752 4,971,363
----------- -----------
Net assets in liquidation .................. $55,059,691 $61,905,566
=========== ===========
See notes to consolidated financial statements.
F-3
ATLANTIC REALTY TRUST AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS OF ACCOUNTING)
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2001
------------------ ------------------ ------------------
Net assets in liquidation, beginning
of period ......................................... $ 61,905,566 $ 57,856,129 $ 58,146,371
Distributions paid ...................................... (1,638,314) (2,208,163) (2,706,780)
Adjustments to reflect liquidation
basis of accounting ............................... (5,207,561) 6,257,600 2,416,538
------------ ------------ ------------
Net assets in liquidation,
end of period ..................................... $ 55,059,691 $ 61,905,566 $ 57,856,129
============ ============ ============
See notes to consolidated financial statements.
F-4
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Atlantic Realty Trust, a Maryland real estate investment trust (the
"Trust"), was formed on July 27, 1995 for the purpose of liquidating its
interests in real properties, its mortgage loan portfolio and certain other
assets and liabilities which were transferred to the Trust from Ramco-Gershenson
Properties Trust (formerly named RPS Realty Trust) ("RPS") on May 10, 1996 (the
"Spin-Off Transaction"). The Trust had no operations from the date of formation
to the date of the Spin-Off Transaction. The Trust adopted the liquidation basis
of accounting as of the date of the Spin-Off Transaction based on its intention
to liquidate its assets or merge or combine operations with another real estate
entity within eighteen months from the date of the Spin-Off Transaction. The
Trust intends to conduct its operations with the intent of meeting the
requirements applicable to a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"). As a result, the Trust will have no current or deferred income tax
liabilities.
Liquidation Basis of Accounting -- As a result of the Spin-Off
Transaction, the Trust has adopted the liquidation basis of accounting. The
liquidation basis of accounting is appropriate when liquidation appears imminent
and the Trust is no longer viewed as a going concern. Under this method of
accounting, assets are stated at their estimated net realizable values and
liabilities are stated at the anticipated settlement amounts.
The valuations presented in the accompanying Consolidated Statements of
Net Assets in Liquidation represent the estimates at the dates shown, based on
current facts and circumstances, of the estimated net realizable value of the
assets and estimated costs of liquidating the Trust. In determining the net
realizable values of the assets, the Trust considered each asset's ability to
generate future cash flows, offers to purchase received from third parties, if
any, and other general market information. Such information was considered in
conjunction with operating the Trust's plan for disposition of assets. The
estimated costs of liquidation represent the estimated cost of operating the
Trust through its anticipated termination. These costs primarily include
payroll, consulting and related costs, rent, shareholder relations, legal and
auditing. Changes in these costs during the periods presented are reflected in
the adjustments to reflect liquidation basis of accounting. Computations of net
realizable value necessitate the use of certain assumptions and estimates.
Future events, including economic conditions that relate to real estate markets
in general, may differ from those assumed or estimated at the time such
computations are made. Because of inherent uncertainty of valuation when an
entity is in liquidation, the amounts ultimately realized from assets disposed
and costs incurred to settle liabilities may materially differ from amounts
presented.
Pursuant to the terms of the Trust's Amended and Restated Declaration of
Trust, the Trust was to continue for a period of 18 months from the date of the
Spin-Off Transaction, subject to, among certain other things, satisfactory
resolution of the RPS Tax Issues (as such term is defined in footnote 6).
Because the RPS Tax Issues have not yet been satisfactorily resolved, the Trust
has continued its business past that date. The Trust cannot currently estimate
F-5
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
the timing of the future satisfactory resolution of the RPS Tax Issues.
Accordingly, the Trust will continue until there is a final determination of
these issues.
CONSOLIDATION -- The consolidated financial statements include the
accounts of the Trust and its wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.
2. INVESTMENT IN REAL ESTATE
ESTIMATED NET REALIZED VALUE(A)(B)
PROPERTY LOCATION DECEMBER 31, DECEMBER 31,
2003 2002
----------------- ----------------
Hylan Shopping Center Staten Island, NY $44,144,250 $43,929,250
- --------------
(a) Includes estimated cash flows using a disposition period of nine months.
Realized values may differ depending on actual disposition results and time
periods.
(b) The operations of the Trust and the Hylan Shopping Center for the years
ended December 31, 2003 and December 31, 2002 are as follows:
2003 2002
---------- ----------
Rental income ................................ $4,579,713 $4,310,090
Expense reimbursements ....................... 2,194,211 2,000,635
Interest from short-term investments ......... 267,868 312,168
Other ........................................ 3,004 5,837
---------- ----------
7,044,796 6,628,730
---------- ----------
Operating property expenses .................. 2,989,906 2,433,994
Depreciation ................................. 348,831 292,981
General and administrative ................... 2,125,909 1,714,304
---------- ----------
5,464,646 4,441,279
---------- ----------
Net income ................................... $1,580,150 $2,187,451
========== ==========
3. SHARES OUTSTANDING
The weighted average number of common shares outstanding for each of the
periods ended December 31, 2003, 2002, and 2001 was 3,561,553.
4. CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments at December 31, 2003 and 2002, consist
primarily of certificates of deposit at a major New York bank of $22,500,000 and
$22,150,000, respectively, purchased with original maturities of three months or
less, bearing interest at a fixed rate of 1.09% and 1.05%, respectively.
F-6
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
5. OTHER ASSETS
Other assets include the estimated interest income from the Trust's
short-term investments.
6. INCOME TAXES
During the third quarter of 1994, RPS held more than 25% of the value of
its gross assets in overnight Treasury Bill reverse repurchase transactions
which the IRS may view as non-qualifying assets for the purposes of satisfying
an asset qualification test applicable to REITs, based on a Revenue Ruling
published in 1977 (the "Asset Issue"). RPS requested that the IRS enter into a
closing agreement with RPS that the Asset Issue would not impact RPS' status as
a REIT. The IRS declined such request. In February 1995, the IRS initiated an
examination of the 1991-1995 income tax returns of RPS (the "RPS Audit" and,
together with the Asset Issue, the "RPS Tax Issues"). Based on developments in
the law which occurred since 1977, RPS' tax counsel at that time, Battle Fowler
LLP, rendered an opinion that RPS' investment in Treasury Bill repurchase
obligations would not adversely affect its REIT status. However, such opinion is
not binding upon the IRS.
In connection with the Spin-Off Transaction, the Trust assumed all tax
liability arising out of the RPS Tax Issues (other than liability that relates
to events occurring or actions taken by RPS following the date of the Spin-Off
Transaction) pursuant to a tax agreement, dated May 10, 1996, by and between RPS
and the Trust (the "Tax Agreement"). Such agreement provides that RPS (now named
Ramco-Gershenson Properties Trust), under the direction of four trustees, three
of whom are also trustees of the Trust (the "Continuing Trustees") and not the
Trust, will control, conduct and effect the settlement of any tax claims against
RPS relating to the RPS Tax Issues. Accordingly, the Trust did not have any
control as to the timing of the resolution or disposition of any such claims.
In December 2003, Ramco-Gershenson Properties Trust and the Internal
Revenue Service entered into a Closing Agreement with respect to all of the
issues raised by the Internal Revenue Service in connection with RPS Audit. As a
condition of the Closing Agreement, Ramco-Gershenson Properties Trust was
obligated to pay deficiency dividends (under Code Sec. 860) with respect to its
1992 and 1993 taxable year in amounts not less than $1,386,503 with respect to
the 1992 taxable year and $809,010 with respect to the 1993 taxable year. In
addition, Ramco-Gershenson Properties Trust is obligated to pay a deficiency in
its income taxes with respect to the period covered by the RPS Audit equal to
$770,258, plus interest calculated at the statutory rate on the amount of the
deficiency and the amount of the deficiency dividends. The aggregate amount of
the deficiency dividends, income tax deficiency and interest on these amounts is
approximately $7,400,000, and because the Trust is required by the Tax Agreement
to reimburse Ramco-Gershenson Properties Trust for these items, they are
included in the estimated cost of liquidation as of December 31, 2003. Although
the Closing Agreement provides that the election of Ramco-Gershenson Properties
Trust to be taxed as a "real estate investment trust" was terminated with
respect to its 1994 and 1995 taxable years, it also provides
F-7
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
that Ramco-Gershenson Properties Trust will be treated as having reelected to be
taxed as a "real estate investment trust" with respect to its taxable year
beginning January 1, 1996 and that the termination of its election to be taxed
as a "real estate investment trust" will not prohibit it or any successor entity
(which includes the Trust) from electing to be taxed as a "real estate
investment trust" on or after January 1, 1996.
The Trust remains obligated under the Tax Agreement to assume certain
liabilities relating to the RPS Tax Issues. The Trust established a special
committee (the "Special Committee regarding RPS Tax Issues") comprised of the
two Trustees who are not Continuing Trustees or otherwise affiliated with
Ramco-Gershenson Properties Trust to act on behalf of the Trust in evaluating
the position of the Trust with respect to the RPS Tax Issues and to represent
the Trust with respect to any claims asserted by Ramco-Gershenson Properties
Trust for contribution arising out of the Closing Agreement. On January 21,
2004, the Trust contributed $2,200,091 in respect of the deficiency dividend
required to be paid pursuant to the Closing Agreement. The Trust will be
obligated to make additional payments with respect to the RPS Tax Issues and the
Closing Agreement as a result of its obligations under the Tax Agreement. In the
event the Trust is presented with further requests or claims for payment or
reimbursement arising in connection with the RPS Tax Issues and the Closing
Agreement, the Special Committee regarding RPS Tax Issues will evaluate the
Trust's further obligations at the time of its receipt of any such claim or
request.
On February 21, 2003, the IRS issued an examination report to the Trust
with respect to the 1996 and 1997 taxable years of the Trust. This examination
report proposes to disallow all of the loss deductions claimed by the Trust upon
the disposition of Trust Assets during that period. In addition, the examination
report proposes to increase the REIT taxable income of the Trust during 1996 and
1997 on account of two items reported on the Trust's tax returns for which the
Trust did not claim any taxable loss or deduction. Counsel to the Trust has
advised that the examination report contains numerous errors of fact with
respect to the operations of the Trust and that the legal conclusions in the
examination report are not consistent with the applicable provisions of the Code
and the income tax regulations. The Trust timely filed an administrative appeals
(the "Trust Protest") challenging the adjustments proposed in the examination
report.
Apart from transferring the responsibility of the Trust's appeal of the
examination report to the IRS appeals office having jurisdiction for this case,
no action has yet been taken by the IRS with respect to the Trust's Protest to
the disallowances proposed in the examination report issued to the Trust. The
outcome of the Trust Protest is uncertain and the impact of the resolution could
be material to the financial statements.
7. DIVIDENDS/DISTRIBUTIONS TO SHAREHOLDERS
Under the Internal Revenue Code, a REIT must meet certain qualifications,
including a requirement that it distribute annually to its shareholders at least
90 percent of its REIT taxable income. The Trust's policy is to distribute to
shareholders all taxable income. Dividend distributions for the years ended
December 31, 2003, 2002 and 2001 are summarized as follows:
F-8
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
RECORD DATE DISTRIBUTION PAYMENT
----------- ------------ -------
December 18, 2003 $.46 per share December 29, 2003
December 15, 2002 $.62 per share December 27, 2002
December 14, 2001 $.76 per share December 27, 2001
The distributions listed in the table above represent ordinary income for income
tax purposes.
8. COMMITMENTS
The Trust leases approximately 4,100 square feet of office space at 747
Third Avenue, New York, New York at an annual base rent of approximately
$264,000. This lease will expire on October 31, 2004.
9. SUBSEQUENT EVENTS
On January 12, 2004, First Union Real Estate Equity and Mortgage
Investments, an Ohio business trust ("First Union"), and Michael L. Ashner, the
Chief Executive Officer of First Union (together with First Union, the "First
Union Group"), filed a Statement of Beneficial Ownership on Schedule 13D (the
"Schedule 13D") pursuant to which the First Union Group reported, among other
things, that it had made a formal proposal to the Trust to merge the Trust with
and into First Union or one of its subsidiaries (the "First Union Proposal").
The First Union Proposal contemplates that each share of beneficial
interest in the Trust (a "Trust Share") would receive aggregate consideration of
$16.25 per Trust Share. Such amount would be payable, at the election of each
shareholder of the Trust (a "Trust Shareholder"), in cash or in exchange for
First Union's Series A cumulative convertible redeemable preferred shares of
beneficial interest (the "First Union Preferred Shares") at a rate of 0.65 First
Union Preferred Shares per Trust Share. In the event that Trust Shareholders
holding more than 1,901,760 Trust Shares in the aggregate elect to receive First
Union Preferred Shares, such Trust Shareholders would receive (i) a number of
First Union Preferred Shares equal to (a) 0.65 multiplied by (b) a fraction, the
numerator of which is 1,901,760 and the denominator of which is the total number
of Trust Shares to be exchanged for First Union Preferred Shares and (ii) cash
equal to (x) $16.25 multiplied by (y) a fraction, the numerator of which is the
number of Trust Shares to be exchanged for First Union Preferred Shares less
1,901,760 and the denominator of which is the number of Trust Shares to be
exchanged for First Union Preferred Shares. The consideration payable would be
subject to upward or downward adjustment based on the Trust's projected
post-closing net cash balance, information obtained through First
F-9
ATLANTIC REALTY TRUST AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS OF ACCOUNTING)
Union's due diligence process and any stock splits, issuances, repurchases,
reclassifications and other transactions affecting the value of the Trust.
On January 13, 2004, the Board of Trustees of the Trust (the "Board")
held a meeting to discuss the First Union Proposal and the process it would
undertake to evaluate it. The Board resolved to form a special committee of
disinterested directors consisting of Messrs. Glickman, Blank and Pashcow (the
"Special Committee") to consider any bona fide offer or acquisition proposal
made for the Trust and to ensure that all reasonable steps are taken to maximize
shareholder value while having regard to the Trust's existing contractual
obligations. Among other things, the Board instructed the Special Committee to
(i) review, negotiate and make recommendations to the Board with respect to the
First Union Proposal, (ii) conduct such other investigation of the First Union
Proposal, First Union and the Trust as may be necessary to determine whether the
First Union Proposal is in the best interests of Trust Shareholders and (iii)
investigate other strategic alternatives available to the Trust.
On January 26, 2004, the Special Committee held an organizational meeting
and commenced its evaluation of the First Union Proposal as directed by the
Board. In addition, the Special Committee has retained an independent real
estate brokerage firm to conduct a valuation of the Trust's sole asset, the
Hylan Shopping Center located in Staten Island, New York. In connection with the
valuation process that has commenced with respect to the Hylan Shopping Center,
management expects the valuation of the property to be higher than the current
valuation of approximately $44.1 million (based on an appraisal dated October 8,
2002) included in the Trust's Consolidated Statements of Net Assets in
Liquidation.
As of the date of this filing, the Special Committee has made no
determination as to whether the Trust will or should engage in a transaction of
the type contemplated by the First Union Proposal, whether on the terms of the
First Union Proposal or otherwise, and there can be no assurance that the Trust
will accept any acquisition proposal or that any such proposal, if accepted,
will result in the consummation of a transaction.
F-10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 23rd day of
March, 2004.
ATLANTIC REALTY TRUST
Date: March 23, 2004 By: Joel M. Pashcow
---------------------------------
Name: Joel M. Pashcow
Title: President and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Joel M. Pashcow
- ---------------------
Joel M. Pashcow President and Chairman of March 23, 2004
the Board
/s/ Edwin R. Frankel
- ---------------------
Edwin R. Frankel Executive Vice President, March 23, 2004
Chief Financial Officer,
Secretary and Principal
Financial and Accounting
Officer
/s/ Edwin J. Glickman
- ---------------------
Edwin J. Glickman Trustee March 23, 2004
/s/ Stephen R. Blank
- ---------------------
Stephen R. Blank Trustee March 23, 2004
/s/ Edward Blumenfeld
- ---------------------
Edward Blumenfeld Trustee March 23, 2004
/s/ Arthur H. Goldberg
- ---------------------
Arthur H. Goldberg Trustee March 23, 2004
/s/ William A. Rosoff
- ---------------------
William A. Rosoff Trustee March 23, 2004
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report on Form 10-K.
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Declaration of Trust of the Trust
(Incorporated by reference to the Trust's definitive
registration statement on Form 10, dated March 28,
1996, File No. 0-27562, Exhibit 3.1).
3.2 Amended and Restated By-Laws of the Trust (Incorporated
by reference to the Trust's definitive registration
statement on Form 10, dated March 28, 1996, File No.
0-27562, Exhibit 3.2).
3.3 First Amendment to Amended and Restated Declaration of
Trust of the Trust (Incorporated by reference to the
Trust's definitive registration statement on Form 10,
dated March 28, 1996, File No. 0-27562, Exhibit 3.3).
4.1 Form of Share Certificate (Incorporated by reference to
the Trust's definitive registration statement on Form
10, dated March 28, 1996, File No. 0-27562, Exhibit
4.1).
10.1 Lease Agreement, dated as of January 16, 1997, by and
between Sage Realty Corporation, as the lessor, and the
Trust, as the lessee (Incorporated by reference to the
Trust's annual report on Form 10-K for the year ended
December 31, 1996, File No. 0-27562, Exhibit 10.1).
10.2 Form of Assignment, Assumption and Indemnification
Agreement between RPS Realty Trust and the Trust
(Incorporated by reference to the Trust's definitive
registration statement on Form 10, dated March 28,
1997, File No. 0-27562, Exhibit 10.1).
10.3 Form of Tax Agreement between RPS Realty Trust and the
Trust (Incorporated by reference to the Trust's
definitive registration statement on Form 10, dated
March 28, 1996, File No. 0-27562, Exhibit 10.2).
10.4 Form of Information Statement (Incorporated by
reference to the Trust's definitive registration
statement on Form 10, dated March 28, 1996, File No.
0-27562, Exhibit 20.1).
10.5 Employment Agreement, dated as of June 11, 1998, by and
between the Trust and Edwin R. Frankel (Incorporated by
reference to the Trust's quarterly report on Form 10-Q
for the three months ended June 30, 1998, File No.
0-27562, Exhibit 10.1).
10.6 Amendment to Employment Agreement, dated as of January
29, 2000, by and between the Trust and Edwin R. Frankel
(Incorporated by reference to the
Trust's annual report on Form 10-K, for the year ended
December 31, 2000, File No. 0-27562, Exhibit 10.6).
10.7 Amended and Restated Standstill Agreement, dated as of
July 21, 2000, by and among Atlantic Realty Trust, on
the one hand, and Kimco Realty Corporation, Kimco
Realty Services, Inc. and Milton Cooper, on the other
hand.
10.8 Second Amended and Restated Standstill Agreement, dated
as of January 31, 2003, by and among Atlantic Realty
Trust, on the one hand, and Kimco Realty Corporation,
Kimco Realty Services, Inc. and Milton Cooper, on the
other hand.
10.9 Standstill Agreement, dated as of January 27, 2004, by
and among Atlantic Realty Trust, on the one hand, and
High Rise Capital Management, L.P., High Rise Capital
Advisors, L.L.C., Bridge Realty Advisors, L.L.C.,
Zankel Management GP, L.L.C., Cedar Bridge Realty Fund,
L.P., Cedar Bridge Institutional Fund, L.P., a Delaware
limited partnership Arthur Zankel and David O'Connor on
the other hand.*
21.1 Subsidiary of the Registrant (incorporated by reference
to the Trust Annual Report on 10-K, for the year ended
December 31, 1999, File No. 0-27562, Exhibit 21.1).
* Filed as an exhibit to Form 8-K filed January 27, 2004, File No. 0-27562.
CERTIFICATION BY EDWIN R. FRANKEL PURSUANT TO
SECURITIES EXCHANGE ACT RULE 13a-14
I, Edwin R. Frankel, certify that:
1. I have reviewed this annual report on Form 10-K of Atlantic Realty Trust;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure control and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15(d)-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report based on such evaluation; and
c) disclosed in this annual report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a) all significant deficiencies and material weakness in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 23, 2004 /s/Edwin R. Frankel
-----------------------------------
Name: Edwin R. Frankel
Title Executive Vice President,
Chief Financial Officer
and Secretary
(Principal Financial and
Accounting Officer)
CERTIFICATION BY JOEL M. PASHCOW PURSUANT TO
SECURITIES EXCHANGE ACT RULE 13a-14
I, Joel M. Pashcow, certify that:
1. I have reviewed this annual report on Form 10-K of Atlantic Realty Trust;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure control and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15(d)-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report based on such evaluation; and
c) disclosed in this annual report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
5. The registrant's other certifying officers and I have disclosed, based on
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a) all significant deficiencies and material weakness in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 23, 2004 /s/Joel M. Pashcow
--------------------------------------
Name: Joel M. Pashcow
Title: Chairman and President
(Principal Executive Officer)
Exhibit 99.1
To Atlantic Realty Trust
Report on Form 10-K
December 31, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Chairman and President of Atlantic Realty Trust (the
"Company"), hereby certifies, to the best of my knowledge, that the Form 10-K of
the Company for the fiscal year ended December 31, 2003 (the "Periodic Report")
accompanying this certification fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78(d))
and that the information contained in the Periodic Report fairly represents, in
all material respects, the financial condition and results of operations of the
Company. The foregoing certification is incorporated solely for purposes of
complying with the provisions of Section 906 of the Sarbanes-Oxley Act and is
not intended to be used for any other purpose.
Date: March 23, 2004 /s/Joel M. Pashcow
-------------------------------------
Name: Joel M. Pashcow
Title: Chairman and President
(Principal Executive Officer)
Exhibit 99.2
To Atlantic Realty Trust
Report on Form 10-K
December 31, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Executive Vice President, Chief Financial Officer and Secretary
of Atlantic Realty Trust (the "Company"), hereby certifies, to the best of my
knowledge, that the Form 10-K of the Company for the fiscal year ended December
31, 2003 (the "Periodic Report") accompanying this certification fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78(d)) and that the information contained in the
Periodic Report fairly represents, in all material respects, the financial
condition and results of operations of the Company. The foregoing certification
is incorporated solely for purposes of complying with the provisions of Section
906 of the Sarbanes-Oxley Act and is not intended to be used for any other
purpose
Date: March 23, 2004 /s/Edwin R. Frankel
-----------------------------------
Name: Edwin R. Frankel
Title Executive Vice President,
Chief Financial Officer
and Secretary
(Principal Financial and
Accounting Officer)