-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BiaKcIQ+QYSPJMYdXK8ISZBnANTqvQ08nRs1MoO2aYf5afwtgDQ//febr7D8UUkn CuCwCRl+AXFCb6IfuZkdkA== 0000018934-96-000001.txt : 19960329 0000018934-96-000001.hdr.sgml : 19960329 ACCESSION NUMBER: 0000018934-96-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CV REIT INC CENTRAL INDEX KEY: 0000018934 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 590950354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08073 FILM NUMBER: 96539689 BUSINESS ADDRESS: STREET 1: 100 CENTURY BLVD CITY: WEST PALM BEACH STATE: FL ZIP: 33417 BUSINESS PHONE: 4076403157 MAIL ADDRESS: STREET 1: 100 CENTURY BOULEVARD CITY: WEST PALM BEACH STATE: FL ZIP: 33417 FORMER COMPANY: FORMER CONFORMED NAME: CENVILL INVESTORS INC DATE OF NAME CHANGE: 19900515 FORMER COMPANY: FORMER CONFORMED NAME: CENVILL COMMUNITIES INC DATE OF NAME CHANGE: 19810812 10-K 1 FORM 10-K 12/31/95 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------- FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 OR ______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _______________ to ______________ Commission File Number: 1-8073 CV REIT, INC. (Exact name of the registrant as specified in its charter) Delaware 59-0950354 (State of Incorporation) (I.R.S. Employer Identification No.) 100 Century Boulevard, West Palm Beach, Florida 33417 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 407-640-3155 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common stock, par value New York Stock Exchange $.01 per share Securities registered pursuant to Section 12(g) of the Act: None 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 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 ] This report contains a total of 48 pages. 2 AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF THE REGISTRANT Common Stock, par value $.01 per share ("Common Stock"), was the only class of voting stock of the Registrant outstanding on December 31, 1995. Based on the last sale price of the Common Stock on the New York Stock Exchange as reported by the consolidated transaction reporting system on January 31, 1996 ($11.25), the aggregate market value of the 6,225,007 shares of the Common Stock held by persons other than officers, directors and persons known to the Registrant to be the beneficial owner (as that term is defined under the rules of the Securities and Exchange Commission) of more than five percent of the Common Stock on that date was approximately $70 million. By the foregoing statements, the Registrant does not intend to imply that any of these officers, directors or beneficial owners are affiliates of the Registrant or that the aggregate market value, as computed pursuant to rules of the Securities and Exchange Commission, is in any way indicative of the amount which could be obtained for such shares of Common Stock. APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 14(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___ (APPLICABLE ONLY TO CORPORATE REGISTRANTS) Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 7,966,621 shares of Common Stock, par value $.01 per share, were outstanding as of February 29, 1996. DOCUMENTS INCORPORATED BY REFERENCE Definitive Proxy Statement of CV Reit, Inc. for the 1996 Annual Meeting of Stockholders (incorporated in Part III) 3 PART I Item 1. Business General CV Reit, Inc. (hereinafter, together with its subsidiaries, the "Company" or "Registrant") has operated as a real estate investment trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code since January 1, 1982. The Company has invested in a portfolio of real estate interests consisting primarily of real estate mortgage notes. A REIT must be a calendar year unincorporated trust, association or corporation with certain attributes including the following: * At no time during the last half of its taxable year may more than 50% in value of its outstanding stock be owned directly or indirectly by or for five or fewer individuals. Certain rules regarding constructive ownership and attribution of stock apply for purposes of this test. * Gross income tests must be met: a) at least 75% must be from specified types of real property related income, b) at least 95% must be from such real property related and other specified investment income, and c) less than 30% must be from short term capital gains from stocks, etc., "prohibited transactions" or gain from the sale or disposition of real property (other than by involuntary conversion or disposition of mortgage foreclosure property) held less than four years. * At the close of each quarter of the tax year, at least 75% of the value of its total assets must be in real estate assets (including real estate mortgage loans), government securities, and cash and cash items. Not more than 25% of the value of its total assets may be invested in securities other than government securities and real estate assets. It may not invest more than 5% of the value of the total assets of the trust in the securities of any nongovernmental issuer (other than securities qualifying as real estate assets), and, with certain exceptions, may not own more than 10% of the out-standing voting securities of any nongovernmental issuer. 4 A Company which qualifies as a REIT may, if it distributes at least 95% of its ordinary taxable income for a taxable year, deduct dividends paid to stockholders with respect to such taxable year from taxable income. The Company intends to operate in such a manner that it will continue to qualify as a REIT. In any year in which it so qualifies, the Company itself will not be taxed under the Code on income distributed to its stockholders attributable to that year. The primary objective of the Company is to provide income for distribution to its stockholders. The Company considers appropriate investments in real estate or interests in real estate and real estate mortgages, and securities or interests in persons engaged in real estate activities. The Company intends to maintain the percentages of its assets in various types of investments necessary to continue to qualify as a REIT. The Company may borrow money and issue additional debt securities, preferred stock, or other equity securities, including securities senior to its Common Stock, in connection with the acquisition of future investments, or to otherwise finance its operations. Recent Developments On December 8, 1995, the Company entered into a Letter of Intent with WCI Communities L.P. ("WCI"), a private real estate partnership, which involved a proposed series of transactions pursuant to which present holders of the Company's common stock would receive, in a tax-free exchange, a new class of preferred stock and the Company would issue new common stock to WCI and/or its designees. On March 26, 1996, the Letter of Intent was terminated and the parties were released from all obligations in connection therewith. Real Estate Mortgage Notes At December 31, 1995, total assets of the Company were $120 million, including $100 million in real estate mortgage notes, $4.9 million in real estate acquired by foreclosure (net of allowance for losses), $6.1 million of income producing real estate (primarily partnership interests in three self-storage warehouses, a motel and an office building) and $7.6 million in cash and cash equivalents. The Company's principal investments in real estate mortgage notes are described in detail herein and are summarized as follows (in thousands): 5 December 31, ------------------ 1995 1994 -------- -------- Long Term Recreation Notes (the "Recreation Notes") $68,243 $69,096 Hilcoast Development Corp. ("Hilcoast"): Lines of Credit 15,570 7,870 Other 8,039 6,297 Century Plaza Note (1) 6,282 6,285 First mortgage notes, maturing through 1998, with interest ranging from 8.9% to 11.5%, collateralized primarily by real property in Palm Beach and Broward Counties, Florida 1,785 3,143 -------- -------- 99,919 92,691 Less allowance for losses (38) (62) -------- -------- Totals (2) $99,881 $92,629 ======== ======== _________ (1) The Century Plaza Note was not repaid on its December 31, 1994 maturity date. See Legal Proceedings - Century Plaza for a discussion of litigation in connection with the Century Plaza Note. (2) As of December 31, 1995, other than the Century Plaza Note, none of the above real estate mortgage notes were delinquent. Recreation Notes At December 31, 1995, the Recreation Notes consisted of $25 million due from Hilcoast (the "Hilcoast Recreation Note" - see Relationship Between the Company and Hilcoast), collateralized by a first mortgage on certain residential and commercial real estate at the Century Village at Pembroke Pines, Florida adult condominium project ("Pembroke Century Village"), including the recreation facilities at that project (the "Pembroke Recreation Facilities"), and $43.2 million, collateralized by first mortgages on the recreation facilities at the three previously completed Century Village communities, including $11.4 million due from H. Irwin Levy (the "Levy Note"), a principal stockholder and former Chairman of the Board of the Company and a principal stockholder, Chairman of the Board and Chief Executive Officer of Hilcoast. The Hilcoast Recreation Note bears interest at prime (8.50% at December 31, 1995) plus 3%, but in any event not less than 9% nor more than 11%, matures on July 31, 1998, and currently requires monthly interest payments only. Upon the earlier to occur of 6 delivery of the last condominium apartment at the Pembroke Century Village or July 31, 1998, the Hilcoast Recreation Note is scheduled to be converted to an 11%, fixed rate, 25 year, $25 million, self- amortizing loan providing for equal monthly payments of principal and interest in the aggregate amount of $2.9 million per annum. This note may not be prepaid by Hilcoast without a prepayment penalty and will be collateralized by a first mortgage on the Pembroke Recreation Facilities. The remaining Recreation Notes generally arose from the Company's sale of the recreation facilities at the Century Village adult condominium communities in West Palm Beach and Deerfield Beach, Florida to unrelated parties in January 1982 and in Boca Raton, Florida to Mr. Levy in December 1981. The terms of Mr. Levy's acquisition of the recreation facilities, including the terms and security of the Levy Note, were substantially the same as the terms of the sales (negotiated independently) of the other two recreation facilities. These notes principally consist of 30 year non-recourse notes maturing in 2012, with interest rates averaging 13% (13.25% in the case of the Levy Note). Equal monthly self- amortizing installments of principal and interest in the aggregate amount of $6.5 million per annum are required, including $1.7 million from Mr. Levy. The Levy Note may not be prepaid; prepayments on the other Recreation Notes generally are not permitted until 2007. Since 1990, companies owned by Mr. Levy and certain members of his family have leased, managed and operated the recreation facilities at the Century Villages in West Palm Beach, Deerfield Beach and Boca Raton, which are collateral for these notes. The Recreation Notes, excluding the Hilcoast Recreation Note, are pledged as collateral for Collateralized Mortgage Obligations ("CMO's") issued by the Company which, as of December 31, 1995, had an outstanding balance of $37.1 million (net of $950,000 unamortized discount based on an effective interest rate of 8.84%). See Management's Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources for a description of the CMO's. The Hilcoast Recreation Note is pledged as collateral for a $4 million promissory note to a bank, consisting of a $2.5 million line of credit through June 30, 1996 which, as of December 31, 1995, had no outstanding balance, and a $1.5 million Letter of Credit issued by that bank for the benefit of Hilcoast. Hilcoast Lines of Credit Lines of credit to Hilcoast (the "Lines of Credit" - see Relationship Between the Company and Hilcoast) consist of revolving 7 construction loan commitments which as of December 31, 1995, aggregated $17 million (including $4 million approved on August 11, 1995) of which $15.6 million was outstanding on that date. The Lines of Credit are collateralized by certain residential and commercial real estate at the Pembroke Century Village; bear interest, payable monthly, ranging from prime plus 3% (but in any event not less than 9% nor more than 11%) to 12.5%; mature gradually from November 1996 through July 1998; provide for unused commitment fees ranging from .9% to 1.8% per annum; and, require specific release prices, principally based on sales of condominium apartments at the Pembroke Century Village, to be applied as permanent reductions of amounts available under the Lines of Credit. Other Other real estate mortgage notes due from Hilcoast amounted to $8 million as of December 31, 1995 and included $5 million which arose effective March 31, 1995, in connection with the redemption by Hilcoast of the $5 million Hilcoast Preferred Stock owned by the Company. As consideration, Hilcoast issued a $5 million note, payable July 31, 1998, with interest at 10%, collateralized by the Pembroke Recreation Facilities. The remaining mortgage notes due from Hilcoast mature variously through July 31, 1998 and bear interest, ranging from prime plus 1.5% to 12%. Real Estate Acquired by Foreclosure Real estate acquired by foreclosure, which consists of various properties acquired by foreclosure or deed in lieu thereof and held for resale, is summarized as follow (in thousands): December 31, ----------------- 1995 1994 Commercial: ------- ------- Broward County, Florida: Nine acre site in Dania $ 5,000 $ 5,000 29 acre site in Miramar 2,595 2,563 Other - 600 ------- ------- Total commercial 7,595 8,163 Residential 381 306 ------- ------- 7,976 8,469 Less allowance for losses (3,069) (3,469) ------- ------- Totals $ 4,907 $ 5,000 ======= ======= 8 Real Estate and Investments in Real Estate Partnerships The Company's real estate equities are located in southeast Florida and are summarized as follows (in thousands): December 31, ----------------- 1995 1994 ------- ------- Days Inn motel $ 4,054 $ 3,654 Administration Building 959 764 Other 79 82 ------- ------- 5,092 4,500 Less accumulated depreciation (2,202) (2,074) ------- ------- 2,890 2,426 45%-50% investments in self-storage warehouse partnerships 3,218 3,263 ------- ------- Totals $ 6,108 $ 5,689 ======= ======= Motel The Company owns a 154-room Days Inn motel, located near the entrance to Century Village at West Palm Beach, Florida. The motel is leased to a corporation controlled by Alan Shulman, the Chairman of the Board of the Company. The lease, as amended, provided for annual rental through the expiration of the lease term on August 31, 1999, equal to a minimum of $300,000, plus 30% of gross room revenues in excess of $1.2 million. In February 1995, the Company and the lessee agreed to adjust the annual rental to a minimum of $330,000, plus 30% of gross room revenues in excess of $1.3 million. In connection therewith, the Company agreed to make certain capital improvements to the motel, which amounted to $400,000. The lease also provides for the lessee to pay all operating costs of the motel, including real estate taxes and insurance, and to pay to the Company 50% of certain amounts received by the lessee from the concessionaire who operates the food and beverage facilities at the motel. Administration Building The Company owns a two-story office building containing approximately 25,000 square feet (the "Administration Building"), located within the Century Village at West Palm Beach community, a 9 portion of which is occupied by the Company as its corporate headquarters. On May 10, 1995, the Company leased approximately 15,000 square feet to an unrelated party for provision of physician and medically related services for five years, with five additional five-year options, at an initial annual rent of $10 per square foot on a triple net basis plus annual increases of 3%-4%. The Company leases approximately 3,000 square feet on a month to month basis to a company owned by Mr. Levy and a member of his family at a monthly rental of approximately $2,500, plus an allocation of utility expenses. The Company also leased approximately 3,800 square feet to Hilcoast on a month to month basis at a monthly rental of approximately $3,400 until July 1995 at which time Hilcoast substantially vacated this space. Self-Storage Warehouses The Company, through three wholly-owned subsidiaries, has 45%-50% general and limited partnership interests in three partnerships whose principal assets consist of self-storage warehouses, two in Dade County and one in Palm Beach County, Florida with an aggregate of approximately 3,000 units, managed by independent parties. The Company's partners in these partnerships are Felix Granados, Sr. and certain members of his family. The subsidiaries have no financial obligation with respect to such partnerships except, under state law, as general partners. The subsidiaries receive monthly distributions from each of the partnerships based on cash flows. Industry Factors The results of operations of the Company depend upon the availability of suitable opportunities for investment and reinvestment of its funds and on the yields available from time to time on mortgage and other real estate investments, which in turn depend to a large extent on the type of investment involved, prevailing interest rates, the nature and geographical location of the property, competition and other factors, none of which can be predicted with certainty. The Company competes for acceptable investments with financial institutions, including banks, insurance companies, savings and loan associations, pension funds, and other real estate investment trusts which have investment objectives similar to those of the Company and some of which may have greater financial resources than the Company. The Company is not aware of statistics which would allow it to determine its position with respect to all of its competitors in the real estate investment industry. Historically, the Company has invested in real estate and mortgages in real estate projects located primarily in the State of Florida. Although certain fundamental aspects of the Florida 10 market, including economic development opportunities and an attractive climate and quality of life, have contributed to Florida's significant population and economic growth, the Florida economy, in general, and the Florida real estate market, specifically, are cyclical. The Company's mortgage notes receivable are collateralized by land and improvements in certain residential and commercial projects. The competitive environment for those projects and the Company's real estate acquired by foreclosure may affect the future income of the Company, and the Company may not be immune from the risks connected with these projects. Potential competition to the Company's motel and self-storage warehouse partnerships comes from similar facilities in the immediate surrounding area. Therefore, the operations of these properties could be adversely affected by the building of additional motels and self-storage warehouses in those areas. Relationship Between the Company and Hilcoast On July 31, 1992, Hilcoast, an affiliate of the Company on that date, acquired certain assets from a previous borrower of the Company, pursuant to approval by the Bankruptcy Court of the Southern District of Florida in connection with Chapter 11 proceedings filed by that borrower. The assets were acquired by Hilcoast subject to the borrower's indebtedness to the Company, consisting of a term loan in the amount of $41.7 million which as of December 31, 1995 had an outstanding balance of $25 million (see Real Estate Mortgage Notes - Recreation Notes) and certain lines of credit (see Real Estate Mortgage Notes - Hilcoast - Lines of Credit). On July 31, 1992, H. Irwin Levy resigned as Chairman of the Board of the Company, Joseph D. Weingard resigned as a director, Michael S. Rubin resigned as Vice President-Real Estate Management and Jack Jaiven resigned as Vice President and Treasurer of the Company. Those individuals were elected to the following positions with Hilcoast: H. Irwin Levy-Chairman of the Board and Chief Executive Officer; Joseph D. Weingard, Director; Michael S. Rubin, President, Chief Operating Officer and Director; and Jack Jaiven, Executive Vice President, Chief Financial Officer and Director. Effective July 31, 1992, the Company and Hilcoast entered into a consulting and advisory agreement under which Hilcoast provides certain investment advisory, consulting and administrative services to the Company, excluding matters related to Hilcoast's loans from the Company. The agreement, which originally expired on July 31, 1994, has been extended to July 31, 1996 and provides for the payment of $10,000 per month to Hilcoast, plus reimbursement for 11 all out of pocket expenses. The agreement may be terminated by Hilcoast upon 180 days notice and by the Company upon 30 days notice. During 1995, the Company paid $120,000 to Hilcoast under this agreement, plus expense reimbursement. During 1995, Hilcoast leased certain office space at the Company's Administration Building (see Real Estate and Investments in Real Estate Partnerships - Administration Building). Employees On December 31, 1995, the Company employed 4 full-time persons. Item 2. Properties See Item 1. Business - Real Estate and Investments in Real Estate Partnerships. Item 3. Legal Proceedings TGI Development, Inc. ("TGI") On October 9, 1989, TGI filed a complaint in the Circuit Court of Palm Beach County against the Company, H. Irwin Levy and certain unrelated parties alleging misrepresentations by the defendants in connection with TGI's purchase and development of land from a previous borrower of the Company. The complaint, as subsequently amended, consisted of counts of common law fraud and breach of contract and sought compensatory damages of approximately $2 million in addition to punitive damages. On October 3, 1990, the Company filed a counterclaim against TGI in connection with an $800,000 promissory note from TGI to the Company. On February 9, 1994, the Circuit Court granted a Final Judgment in favor of the Company, which dismissed TGI's claim of common law fraud against the Company and struck its punitive damage claim. In accordance with an agreement between the parties, on August 23, 1994, the Court dismissed the breach of contract claim with prejudice and entered a judgment in the amount of $1.1 million in favor of the Company on the aforementioned counterclaim. The Company agreed not to execute that judgment until completion of TGI's appeal of the Final Judgment on its claim for compensatory damages. On January 3, 1996, the Fourth District Court of Appeals reversed the Final Judgment. The Company has appealed this reversal to the Florida Supreme Court. If the appeal is not successful, the case will be 12 remanded to the Circuit Court. Although the Company believes it has substantial defenses, the ultimate outcome of this litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon final adjudication has been made in the accompanying financial statements. In management's opinion, the final outcome of this litigation will not have a material adverse effect on the Company's financial condition. Century Plaza In December 1989, the Company sold its 85,000 square feet Century Plaza Shopping Center ("Century Plaza") in Deerfield Beach, Florida to Century Plaza Investments, Inc., an unrelated party (the "Buyer"), for $8 million, consisting of $1.6 million cash and a $6.4 million first mortgage note due on December 31, 1994 (the "Century Plaza Note"). On December 5, 1994, the Buyer filed a Complaint, as amended, in the Circuit Court of Broward County, Florida, against the Company seeking a judicial declaration as to the Buyer's obligation to provide parking areas to members of a religious institution located adjacent to Century Plaza. The basis for the Complaint is that the Company failed to advise the Buyer that in 1978, a former officer of the Company had allegedly consented to a limited number of parking spaces to be allocated by the City of Deerfield Beach to the religious institution. Should the Court determine that the institution has parking rights, the Buyer seeks recision of the original sales agreement and the Century Plaza Note which has an outstanding balance of approximately $6.3 million, restoration of amounts paid by the Buyer to the Company pursuant to the sales agreement, plus interest thereon, and reconveyance of Century Plaza to the Company. The Century Plaza Note was not paid on its December 31, 1994 maturity date and the Company instituted foreclosure proceedings. The Buyer has been remitting monthly interest payments to the Company since maturity. In February 1996, the Company and the Buyer reached an agreement in principle, whereby the Company agreed to reacquire Century Plaza for an amount equal to $1.1 million in excess of the outstanding balance of the Century Plaza Note, subject to due diligence and certain other conditions. The Company believes that the proposed purchase price represents an amount which is not in excess of fair value. In the event the proposed purchase transaction is not completed, the Company believes it has substantial defenses to the Complaint; however, the final outcome of this litigation cannot be determined. In management's opinion, the ultimate decision in this matter will not have a material adverse effect on the Company's financial condition. 13 Other The Company is subject to various claims and complaints relative to its business activities. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for Registrant's Common Stock and Related Security Holders Matters The Common Stock of the Company is listed for trading on the New York Stock Exchange under the symbol CVI. The following table sets forth the high and low sales prices per share and the dividends per share declared by the Company on the Common Stock, for each quarter during the past two years. Market Price Range ------------------- Dividends High Low Declared ---- --- ------------ 1995 First Quarter 9-1/2 8-7/8 $ .27 Second Quarter 9-7/8 8-7/8 .27 Third Quarter 9-3/4 8-7/8 .27 Fourth Quarter 11-1/4 9-3/8 .27 ----- $1.08 ===== 1994 First Quarter 11-1/2 9 $ .27 Second Quarter 10-7/8 9-1/4 .27 Third Quarter 9-5/8 8-3/4 .27 Fourth Quarter 9-5/8 8-3/8 .27 ----- $1.08 ===== 14 As of February 29, 1996, the Company had 7,966,621 shares of Common Stock outstanding and 2,073 holders of record of such stock. The Company expects to continue to qualify as a REIT. A corporation which qualifies as a REIT may deduct from taxable income dividends paid to stockholders. The Company's policy is to distribute approximately 100% of its taxable ordinary income. Item 6. Selected Financial Data (in millions, except per share data) Year Ended December 31, -------------------------------------- 1995 1994 1993 1992 1991 ------ ------ ------ ------ ------ Total revenues $13.4 $13.9 $15.4 $15.1 $20.3 ====== ====== ====== ====== ====== Income before income taxes $8.4 $6.3 $11.3 $13.0 $5.4 ====== ====== ====== ====== ====== Net income $9.4 $6.3 $9.5 $9.9 $3.4 ====== ====== ====== ====== ====== Net income per common share $1.18 $0.79 $1.29 $1.38 $0.47 ====== ====== ====== ====== ====== Dividends declared per share: Cash $1.08 $1.08 $1.00 $0.45 $0.75 Hilcoast Development Corp. Common Stock - - - 0.19(1) - ------ ------ ------ ------ ------ $1.08 $1.08 $1.00 $0.64 $0.75 ====== ====== ====== ====== ====== At Year End: Total assets $120.0 $122.8 $163.2 $160.0 $177.7 ====== ====== ====== ====== ====== Borrowings $37.1 $38.9 $77.2 $83.5 $109.2 ====== ====== ====== ====== ====== Stockholders' equity: Total $73.2 $72.4 $74.7 $66.0 $60.5 ====== ====== ====== ====== ====== Per common share $9.19 $9.09 $9.38 $9.14 $8.37 ====== ====== ====== ====== ====== 15 ________ (1) Based on 75 cents per share market price of Hilcoast Development Corp. ("Hilcoast") Common Stock on October 19, 1992. The distribution was based upon one share of Hilcoast Common Stock for each four shares of the Company's Common Stock owned. Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations 1995 Compared to 1994 Funds From Operations The Company's Funds From Operations generally consists of net income, excluding the reversal of previously recorded losses, gains or losses on the sales of GNMA certificates and real estate, and income tax benefit, plus depreciation of real property (including the Company's share of depreciation in connection with its equity in earnings of unconsolidated partnerships.) For the year ended December 31, 1995, Funds From Operations was $8.7 million compared to $8.4 million for 1994. The increase in Funds From Operations reflects a reduction in general and administrative expenses and higher rental income received from the Days Inn motel and the Administration Building. In addition, although there was a $386,000 reduction in net interest income in 1995 resulting from the sale in April 1994 of the Company's leveraged GNMA certificate portfolio, this reduction was offset by an increase in interest income earned on the Company's variable rate mortgage notes receivable, primarily due to increases in the prime rate. Net Income For the year ended December 31, 1995, net income was $9.4 million or $1.18 per share compared to $6.3 million or $.79 per share for the same period in 1994. The 1995 net income includes a $1 million deferred income tax benefit. The 1994 period includes a $2.4 million loss on the aforementioned sale of the Company's GNMA certificate portfolio and a $.6 million reversal of previously recorded losses. 16 1994 Compared to 1993 Funds From Operations For the year ended December 31, 1994, Funds From Operations amounted to $8.4 million compared to $7.3 million during 1993. The $1.1 million (15%) increase in Funds From Operations was principally attributable to a $.6 million reduction in operating, general and administrative expenses and a $.4 million increase in net interest income. The decrease in operating, general and administrative expenses was primarily due to the elimination of costs incurred in connection with operating residential real estate acquired by foreclosure, sold during 1993, and reduced legal fees. The improved net interest income includes an approximate $1.1 million reduction in interest expense due to the retirement in November 1993 of the $14.7 million outstanding balance of the Company's senior subordinated notes. The funds used to retire the notes included approximately $6.7 million generated from the issuance of 748,000 additional shares of Common Stock in connection with the October 1993 Rights Offering and a $7.5 million bank loan (which loan was repaid by March 1994). The higher net interest income also reflects an approximate $.4 million increase in interest income on the Company's variable rate mortgage notes receivable due to the rise in the prime rate during 1994, offset by a $1 million reduction in net interest income from the sale of the Company's leveraged GNMA certificate portfolio. Net Income During 1994, the Company incurred a $2.4 million loss on the sale of its GNMA certificate portfolio and recognized as income a $.6 million reversal of previously recorded losses. In 1993, the Company recognized a $1.1 million gain on the sale of GNMA certificates and a $2.9 million reversal of previously recorded losses. In addition, the Company's 1993 results included a deferred income tax expense of $1.8 million. As a result, net income in 1994 was $6.3 million or $.79 per share compared to $9.5 million or $1.29 per share in 1993. 17 Liquidity and Capital Resources At December 31, 1995, total assets were $120 million, including $100 million in real estate mortgages notes. Approximately $68.2 million of the real estate mortgage notes are collateralized by recreation facilities under long-term leases with unit owners at approximately 28,700 apartments at Century Village adult condominium communities at Pembroke Pines, West Palm Beach, Deerfield Beach and Boca Raton, Florida, and generally provide for self-amortizing, equal monthly installment payments through 2028 (the "Recreation Notes" - see Note 2(b) to Consolidated Financial Statements). The operations of these facilities historically have been profitable and, in the Company's opinion, are not likely to be affected by adverse economic conditions. The remaining $31.8 million of real estate mortgage notes are collateralized by residential and commercial real estate, generally in southeast Florida, including $23.6 million due from Hilcoast, principally collateralized by first mortgages on certain real estate at the Century Village at Pembroke Pines adult condominium community in Broward County, Florida (the "Pembroke Century Village" - see Note 2(c) to Consolidated Financial Statements). At December 31, 1995, 6,647 units had been sold and delivered at the planned 7,780 unit Pembroke Century Village and the backlog of units under contract for future delivery was 237 units with a sales value of $18.2 million. Collections on the Company's real estate mortgage notes may be affected by the future success of the projects which collateralize these notes, which may, in turn, be affected by conditions in the housing and commercial real estate markets. Operating funds are currently generated from interest income on mortgage notes and rentals from income producing properties, including distributions from self-storage warehouse partnerships. Dividend payments to stockholders, in accordance with the provisions of the Internal Revenue Code, limit the Company from utilizing significant amounts of income-generated funds for investment purposes. Since its qualification as a REIT and until 1990, monies received from the repayment of existing mortgage notes and borrowings were generally reinvested in new and existing mortgage notes and other real estate related investments, including loans to developers for the purpose of acquiring, developing or constructing real estate. In the past several years, the Company's only new loan commitments have been in connection with its existing borrowers. During 1995, the Company's only new loan commitments consisted of a $4 million increase to the Hilcoast Lines of Credit; $4.7 million of short-term investments in notes due by Hilcoast to unrelated third parties, which were substantially repaid as of year 18 end; and, $5 million which arose in connection with the redemption by Hilcoast of the $5 million Preferred Stock owned by the Company (see Note 2(c) to Consolidated Financial Statements). The Company has generally reinvested its other available funds in high quality short-term corporate and government securities. The Company expects to pursue this strategy while it continues to evaluate alternative real estate investments. At December 31, 1995, commitments on outstanding real estate loans consisted of $1.4 million under the Hilcoast Lines of Credit. The Company expects to be able to meet these commitments with internally generated funds, including existing cash balances. There are currently no material commitments for capital expenditures. During 1995 and 1994, the Company declared cash dividends of $1.08 per share, aggregating $8.6 million which approximates the Company's Funds From Operations. At December 31, 1995, the outstanding balance of the Company's Collateralized Mortgage Obligations (the "CMO's") amounted to $37.1 million (net of unamortized discount of $950,000 based on an effective interest rate of 8.84%). The CMO's are collateralized by $43.2 million of the Recreation Notes and require self-amortizing principal and interest payments through March 2007. During the term of the CMO's, the Company's scheduled annual debt service requirement approximates $5.2 million compared to annual principal and interest payments scheduled to be received under the related mortgage notes receivable of $6.5 million. Inflation As of December 31, 1995, the Company had no variable interest rate borrowings; however, the Company's interest-sensitive mortgage notes receivable amounted to $38 million. Of this amount, the interest rate on $34 million is limited to the lower of 11% or prime + 3%. As of December 31, 1995, the interest rate on those notes had reached the 11% ceiling; accordingly, in the event of inflation, even if such inflation is accompanied by rising interest rates, the effect on the Company's results of operations is not expected to be material. 19 Item 8. Financial Statements and Supplementary Data Table of Contents to Consolidated Financial Statements Page ---- Report of Independent Certified Public Accountants 20 Consolidated Financial Statements: Balance Sheets - December 31, 1995 and 1994 21 Statements of Income - Years Ended December 31, 1995, 1994 and 1993 22 Statements of Stockholders' Equity - Years Ended December 31, 1995, 1994 and 1993 23 Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993 24 Notes to Consolidated Financial Statements 25-37 Consolidated Financial Statements Schedules: Schedule IV - Mortgage Loans on Real Estate 38 Schedules, other than that listed above, are omitted because of the conditions under which they are required, or because the information required therein is set forth in the consolidated financial statements or the notes thereto. 20 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of CV Reit, Inc. West Palm Beach, Florida We have audited the accompanying consolidated balance sheets of CV Reit, Inc. and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. We have also audited the schedule listed in the accompanying index. These financial statements and the schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CV Reit, Inc. and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein. West Palm Beach, Florida BDO SEIDMAN, LLP February 20, 1996 21 CV REIT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, ------------------- ASSETS 1995 1994 ------ -------- -------- Investments (Notes 2, 3, 4 and 5): Real estate mortgage notes: Long Term Recreation Notes $ 68,243 $ 69,096 Other 31,676 23,595 -------- -------- 99,919 92,691 Real estate acquired by foreclosure 7,976 8,469 Less allowance for losses (3,107) (3,531) Real estate and investments in real estate partnerships, net of accumulated depreciation 6,108 5,689 Investment in Hilcoast Development Corp. Preferred Stock - 5,000 -------- -------- Total investments 110,896 108,318 Cash and cash equivalents (includes $884 and $868 restricted) 7,633 9,998 Short-term investments - 2,920 Other 1,492 1,546 -------- -------- $120,021 $122,782 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities and other credits: Collateralized Mortgage Obligations (Note 3) $ 37,074 $ 38,908 Accounts payable, accruals and other liabilities 192 861 Dividends payable 2,407 2,418 Deferred income taxes (Note 6) 7,162 8,179 -------- -------- Total liabilities and other credits 46,835 50,366 -------- -------- Commitments and contingencies (Notes 2, 3, 4 and 9) Stockholders' equity: Common stock, $.01 par-shares authorized 10,000,000; outstanding 7,966,621 80 80 Additional paid-in capital 18,490 18,490 Retained earnings 54,616 53,846 -------- -------- Total stockholders' equity 73,186 72,416 -------- -------- $120,021 $122,782 ======== ======== See accompanying notes to consolidated financial statements. 22 CV REIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) Year Ended December 31, --------------------------------- 1995 1994 1993 Revenues: --------- --------- --------- Interest, substantially from mortgage notes, and dividends (Notes 2, 5 and 8) $ 12,231 $ 12,796 $ 14,433 Rent, income from real estate partnerships and other 1,194 1,091 984 --------- --------- --------- 13,425 13,887 15,417 --------- --------- --------- Expenses: Interest (Note 3) 3,434 4,156 6,038 Operating, general and administrative 1,496 1,615 2,228 Depreciation 138 161 133 --------- --------- --------- 5,068 5,932 8,399 --------- --------- --------- 8,357 7,955 7,018 Gain on sales of real estate - 130 285 Gain (loss) on sales of GNMA certificates (Note 2(g)) - (2,392) 1,138 Reversal of provision for losses (Note 2(e)) - 630 2,857 --------- --------- --------- Income before income tax (benefit) expense 8,357 6,323 11,298 Income tax (benefit) expense (Note 6) (1,017) - 1,786 --------- --------- --------- Net income $ 9,374 $ 6,323 $ 9,512 ========= ========= ========= Net income per common share (Note 1) $ 1.18 $ .79 $ 1.29 ========= ========= ========= Dividends declared per common share $ 1.08 $ 1.08 $ 1.00 ========= ========= ========= Average common shares outstanding 7,966,621 7,966,621 7,378,479 ========= ========= ========= See accompanying notes to consolidated financial statements. 23 CV REIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (dollars in thousands) Additional Common Paid-in Retained Stock Capital Earnings ------ ---------- -------- Balance at December 31, 1992 $72 $11,862 $54,020 Issuance of 747,988 shares of Common Stock in connection with Rights Offering 8 6,628 - Net income for the year - - 9,512 Cash dividends declared - - (7,406) ------ -------- -------- Balance at December 31, 1993 80 18,490 56,126 Net income for the year - - 6,323 Cash dividends declared - - (8,603) ------ --------- -------- Balance at December 31, 1994 80 18,490 53,846 Net income for the year - - 9,374 Cash dividends declared - - (8,604) ------ --------- -------- Balance at December 31, 1995 $80 $18,490 $54,616 ====== ========= ======== See accompanying notes to consolidated financial statements. 24 CV REIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, --------------------------- 1995 1994 1993 ------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,374 $ 6,323 $ 9,512 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation 138 161 133 Equity in depreciation of real estate partnerships 178 179 179 Gain on sales of real estate - (130) (285) Deferred income tax (benefit) expens (1,017) - 1,786 Reversal of provision for losses - (630) (2,857) Loss (gain) on sales of GNMA certifiates - 2,392 (1,138) ------- ------- ------- 8,673 8,295 7,330 Changes in operating assets and liabilities: Decrease in other assets 38 87 244 Decrease in accounts payable, accruals and other liabilities (669) (40) (939) ------- ------- ------- Net cash provided by operating activities 8,042 8,342 6,635 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in real estate mortgage notes (23,068) (21,469) (25,046) Collections on real estate mortgage notes 20,661 33,436 26,907 Maturity (purchase) of GNMA certificates and short-term investments 2,920 (2,920) (26,412) Sale of GNMA certificates - 32,412 19,479 Return of principal of GNMA certificates - 977 2,292 Proceeds from sales of real estate - 1,030 4,224 Other (471) (132) (192) ------- ------- ------- Net cash provided by investing activities 42 43,334 1,252 ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 500 3,150 31,477 Repayments of borrowings (2,334) (41,443) (37,787) Cash dividends paid (8,615) (8,435) (7,212) Increase in restricted cash (16) (46) (56) Proceeds from issuance of Common Stock - - 6,636 ------- ------- ------- Net cash used in financing activities (10,465) (46,774) (6,942) ------- ------- ------- Net (decrease) increase in unrestricted cash and cash equivalents (2,381) 4,902 945 Unrestricted cash and cash equivalents at beginning of the period 9,130 4,228 3,283 ------- ------- ------- Unrestricted cash and cash equivalents at end of the period $ 6,749 $ 9,130 $ 4,228 ======= ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 3,436 $ 4,307 $ 6,256 ======= ======= ======= Supplemental schedule of non-cash investing and financing activities: Increase in real estate mortgage notes in connection with redemption of the Company's investment in Hilcoast Development Corp. Preferred Stock (Note 2(c)) $ 5,000 $ - $ - ======= ======= ======= See accompanying notes to consolidated financial statements. 25 CV REIT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies Business CV Reit, Inc. is a real estate investment trust ("REIT") principally engaged in investing in real estate mortgage notes. Principles of Consolidation The consolidated financial statements include the accounts of CV Reit, Inc. and all subsidiaries ("the Company"). Certain subsidiaries own 45%-50% interests in partnerships, which are accounted for on the equity method. Significant intercompany accounts and transactions have been eliminated in consolidation. Real Estate Mortgage Notes, Real Estate Acquired By Foreclosure, and Allowance For Losses Mortgage notes are carried at the lower of cost or estimated net realizable value. Accrual of interest is discontinued on mortgage notes when management believes, after considering economic and business conditions and collection efforts, that timely collection is doubtful. Real estate acquired by foreclosure, which consists of various properties acquired through foreclosure or deed in lieu thereof and held for resale, is carried at the lower of cost (fair value at date of acquisition) or fair value less selling costs. Carrying costs and subsequent declines in net realizable value are charged to operations as incurred. The allowance for losses is established through a provision charged to operations based upon an evaluation by management of the loan portfolio and real estate acquired by foreclosure. In evaluating possible losses, management takes into consideration appropriate information which may include the borrower's cash flow projections, historical operating results and financial strength, pending sales, adverse conditions that may affect the borrower's ability to repay, appraisals and current economic conditions. 26 New Accounting Pronouncements In 1993, the FASB issued SFAS No. 114, which was amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan". This statement addresses the accounting by creditors for impairment of certain loans and requires that certain impaired loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, observable market price, or the fair value of the collateral, if the loan is collateral dependent. The Company adopted SFAS No. 114 and SFAS No. 118 effective January 1, 1995. Adoption of the standards did not have a material impact on the Company's financial position or results of operations. In 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to evaluate long-lived assets for impairment based on the undiscounted future cash flows of the asset. If a long-lived asset is identified as impaired, the value of the asset must be reduced to its fair value. The Company's real estate, including its income producing properties, would be considered long-lived assets under this pronouncement. This statement is effective for fiscal years beginning after December 15, 1995. Accordingly, the Company plans to adopt this statement in 1996. Adoption is not expected to have a material adverse affect on the Company's financial position or results of operations. Dividends and Income Taxes The Company has elected to qualify as a REIT under the provisions of Section 856-860 of the Internal Revenue Code. As a REIT, the Company is required to distribute at least 95% of its ordinary taxable income to stockholders and may deduct such distributions from taxable income. A REIT is not required to distribute capital gain income but to the extent it does not, it must pay the applicable capital gain income tax unless it has ordinary losses to offset such capital gain income. The federal income tax characteristics of dividends paid by the Company, reported to stockholders in January of the subsequent year, consisted of: 1995 1994 1993 Ordinary income 65.6% 80.2% 88.2% Capital gain distribution 34.4% 19.8% 11.8% 27 The Company accounts for income taxes based upon SFAS No.109 "Accounting for Income Taxes", which requires, among other things, a liability approach to calculating deferred income taxes. Real Estate and Investments in Real Estate Partnerships ("Real Estate") Real Estate, recorded at cost, consists primarily of a motel, subject to an operating lease, and partnership interests in self-storage warehouses. In the event that the net carrying amount exceeds estimated net realizable value, a provision is made to reduce the net carrying amount accordingly. Depreciation is provided over the estimated useful lives of the assets on the straight-line method. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Net Income Per Common Share Net income per common share is based on the weighted average number of common shares outstanding during each year. Statements of Cash Flows For financial statement purposes, the Company considers all highly liquid investments with initial maturities of three months or less to be cash equivalents. Reclassification Certain 1994 and 1993 amounts have been reclassified to conform to the 1995 financial statement presentation. 28 (2) Investments (a) Investments in real estate mortgage notes, substantially all of which are collateralized by real estate located in southeast Florida, consist of (in thousands): December 31, ------------------ 1995 1994 Long Term Recreation Notes (the ------- ------- "Recreation Notes") (Note 2(b)) $68,243 $69,096 Hilcoast Development Corp. ("Hilcoast") (Note 2(c)): Lines of Credit 15,570 7,870 Other 8,039 6,297 First mortgage notes, maturing through 1998, with interest ranging primarily from 8.9% to 11.5%, collateralized primarily by real property in Palm Beach and Broward Counties, Florida: Residential 1,785 3,143 Commercial (Note 4(b)) 6,282 6,285 ------- ------- 99,919 92,691 Less allowance for losses (38) (62) ------- ------- Totals $99,881 $92,629 ======= ======= Interest Sensitivity -------------------- Fixed Variable Rate Rate ------- ------- Maturity of real estate mortgage notes at December 31, 1995: One year or less $10,735 $10,235 $ 500 After one year through five years 27,471 15,311 12,160 After five years 61,713 61,713 - ------- ------- ------- Totals $99,919 $87,259 $12,660 ======= ======= ======= (b) At December 31, 1995, the Recreation Notes consisted of $25 million due from Hilcoast (the "Hilcoast Recreation Note"), collateralized by a first mortgage on certain residential and commercial real estate at the Century Village at Pembroke Pines, Florida adult condominium project (the "Pembroke Century Village"), 29 including the recreation facilities at that project (the "Pembroke Recreation Facilities") and $43.2 million, collateralized by first mortgages on the recreation facilities at the three previously completed Century Village communities (Note 5). The Hilcoast Recreation Note bears interest at prime (8.50% at December 31, 1995) plus 3%, but in any event not less than 9% nor more than 11%, matures on July 31, 1998, and currently requires monthly interest payments only. Upon the earlier to occur of delivery of the last condominium apartment at the Pembroke Century Village or July 31, 1998, the Hilcoast Recreation Note is scheduled to be converted to an 11%, fixed rate, 25 year, $25 million, self- amortizing loan providing for equal monthly payments of principal and interest. This note may not be prepaid by Hilcoast without a prepayment penalty and will be collateralized by a first mortgage on the Pembroke Recreation Facilities. The remaining Recreation Notes principally provide for self-amortizing equal monthly principal and interest payments due through 2012, with interest rates averaging 13%, and contain certain prepayment prohibitions (Notes 3(a) and 5). (c) Hilcoast Lines of credit to Hilcoast consist of revolving construction loan commitments which as of December 31, 1995, aggregated $17 million (including $4 million approved on August 11, 1995) of which $15.6 million was outstanding on that date. The Lines of Credit are collateralized by certain residential and commercial real estate at the Pembroke Century Village; bear interest, payable monthly, ranging from prime plus 3% (but in any event not less than 9% nor more than 11%) to 12.5%; mature gradually from November 1996 through July 1998; provide for unused commitment fees ranging from .9% to 1.8% per annum; and, require specific release prices, principally based on sales of condominium apartments at the Pembroke Century Village, to be applied as permanent reductions of amounts available under the Lines of Credit. Other real estate mortgage notes due from Hilcoast amounted to $8 million as of December 31, 1995 and included $5 million which arose effective March 31, 1995, in connection with the redemption by Hilcoast of the $5 million Hilcoast Preferred Stock owned by the Company. As consideration, Hilcoast issued a $5 million note, payable July 31, 1998, with interest at 10%, collateralized by the Pembroke Recreation Facilities. The remaining mortgage notes due from Hilcoast mature variously through July 31, 1998 and bear interest, ranging from prime plus 1.5% to 12%. (d) Real estate acquired by foreclosure consists of (in thousands): 30 December 31, -------------------- 1995 1994 Commercial: ------- ------- Broward County, Florida: Nine acre site in Dania $5,000 $5,000 29 acre site in Miramar 2,595 2,563 Other - 600 ------ ------ Total commercial 7,595 8,163 Residential 381 306 ------ ------ 7,976 8,469 Less allowance for losses (3,069) (3,469) ------ ------ Totals $4,907 $5,000 ====== ====== (e) Changes in the allowance for losses follow (in thousands): 1995 1994 1993 ------ ------ ------ Balance, beginning of year $3,531 $5,119 $8,593 Reversal of allowance for losses - (630) (2,857) Charge-offs (424) (1,158) (806) Recoveries - 200 189 ------ ------ ------ Balance, end of year $3,107 $3,531 $5,119 ====== ====== ====== (f) Real estate and investments in real estate partnerships are located in southeast Florida and consist of (in thousands): December 31, ------------------- 1995 1994 ------ ------ Days Inn motel $4,054 $3,654 Administration Building 959 764 Other 79 82 ------ ------ 5,092 4,500 Less accumulated depreciation (2,202) (2,074) ------ ------ 2,890 2,426 45%-50% investments in self-storage warehouse partnerships 3,218 3,263 ------ ------ Totals $6,108 $5,689 ====== ====== 31 (g) During 1994 and 1993, the Company sold GNMA certificates with an aggregate book value of $34.8 million and $18.5 million, respectively, and recognized a loss of $2.4 million in 1994 and a gain of $1.1 million in 1993. (3) Borrowings (a) The Collateralized Mortgage Obligations ("CMO's") amounted to $37.1 million at December 31, 1995 and $38.9 million at December 31, 1994 (net of unamortized discounts of $950,000 in 1995 and $1.1 million in 1994, based on an effective interest rate of 8.84%), are collateralized by the Recreation Notes, excluding the Hilcoast Recreation Note (Note 2(b)), require quarterly self-amortizing principal and interest payments and mature on March 15, 2007. (b) Maturities of borrowings are as follows (in thousands): 1996 $ 2,009 1997 2,200 1998 2,408 1999 2,633 2000 2,877 Thereafter 24,947 ------- $37,074 ======= (4) Commitments and Contingencies (a) TGI Development, Inc. ("TGI") On October 9, 1989, TGI filed a complaint in the Circuit Court of Palm Beach County against the Company, H. Irwin Levy and certain unrelated parties alleging misrepresentations by the defendants in connection with TGI's purchase and development of land from a previous borrower of the Company. The complaint, as subsequently amended, consisted of counts of common law fraud and breach of contract and sought compensatory damages of approximately $2 million in addition to punitive damages. On October 3, 1990, the Company filed a counterclaim against TGI in connection with an $800,000 promissory note from TGI to the Company. On February 9, 1994, the Circuit Court granted a Final Judgment in favor of the Company, which dismissed TGI's claim of common law fraud against the Company and struck its punitive damage claim. In accordance with an agreement between the parties, on August 23, 1994, the Court dismissed the breach of contract claim with prejudice and entered a judgment in the amount of $1.1 million in favor of the Company on the aforementioned counterclaim. The Company agreed not to execute that judgment until completion of TGI's appeal of the 32 Final Judgment on its claim for compensatory damages. On January 3, 1996, the Fourth District Court of Appeals reversed the Final Judgment. The Company has appealed this reversal to the Florida Supreme Court. If the appeal is not successful, the case will be remanded to the Circuit Court. Although the Company believes it has substantial defenses, the ultimate outcome of this litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon final adjudication has been made in the accompanying financial statements. In management's opinion, the final outcome of this litigation will not have a material adverse effect on the Company's financial condition. (b) Century Plaza In December 1989, the Company sold its 85,000 square feet Century Plaza Shopping Center ("Century Plaza") in Deerfield Beach, Florida to Century Plaza Investments, Inc., an unrelated party (the "Buyer"), for $8 million, consisting of $1.6 million cash and a $6.4 million first mortgage note due on December 31, 1994 (the "Century Plaza Note"). On December 5, 1994, the Buyer filed a Complaint, as amended, in the Circuit Court of Broward County, Florida, against the Company seeking a judicial declaration as to the Buyer's obligation to provide parking areas to members of a religious institution located adjacent to Century Plaza. The basis for the Complaint is that the Company failed to advise the Buyer that in 1978, a former officer of the Company had allegedly consented to a limited number of parking spaces to be allocated by the City of Deerfield Beach to the religious institution. Should the Court determine that the institution has parking rights, the Buyer seeks recision of the original sales agreement and the Century Plaza Note which has an outstanding balance of approximately $6.3 million, restoration of amounts paid by the Buyer to the Company pursuant to the sales agreement, plus interest thereon, and reconveyance of Century Plaza to the Company. The Century Plaza Note was not paid on its December 31, 1994 maturity date and the Company instituted foreclosure proceedings. The Buyer has been remitting monthly interest payments to the Company since maturity. In February 1996, the Company and the Buyer reached an agreement in principle, whereby the Company agreed to reacquire Century Plaza for an amount equal to $1.1 million in excess of the outstanding balance of the Century Plaza Note, subject to due diligence and certain other conditions. The Company believes that the proposed purchase price represents an amount which is not in excess of fair value. In the event the proposed purchase transaction is not completed, the Company believes it has substantial defenses to the Complaint; however, the final outcome of this litigation cannot be determined. In management's opinion, the ultimate decision in this matter will not have a material adverse effect on the Company's financial condition. 33 (c) Other The Company is subject to various claims and complaints relative to its business activities. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position. (5) Related Party Transactions Hilcoast On July 31, 1992, Hilcoast, an affiliate of the Company on that date, acquired certain assets from a previous borrower of the Company, pursuant to approval by the Bankruptcy Court of the Southern District of Florida in connection with Chapter 11 proceedings filed by that borrower. The assets were acquired by Hilcoast subject to the borrower's indebtedness to the Company, consisting of a term loan in the amount of $41.7 million which as of December 31, 1995 had an outstanding balance of $25 million (Note 2(b)) and certain lines of credit (Note 2(c)) On July 31, 1992, H. Irwin Levy resigned as Chairman of the Board of the Company, Joseph D. Weingard resigned as a director, Michael S. Rubin resigned as Vice President-Real Estate Management and Jack Jaiven resigned as Vice President and Treasurer of the Company. Those individuals were elected to the following positions with Hilcoast: H. Irwin Levy, Chairman of the Board and Chief Executive Officer; Joseph D. Weingard, Director; Michael S. Rubin, President, Chief Operating Officer and Director; and Jack Jaiven, Executive Vice President, Chief Financial Officer and Director. Effective July 31, 1992, the Company and Hilcoast entered into a consulting and advisory agreement under which Hilcoast provides certain investment advisory, consulting and administrative services to the Company, excluding matters related to Hilcoast's loans from the Company. The agreement, which originally expired on July 31, 1994, has been extended to July 31, 1996, and provides for the payment of $10,000 per month to Hilcoast, plus reimbursement for all out of pocket expenses. The agreement may be terminated by Hilcoast upon 180 days notice and by the Company upon 30 days notice. During 1995, the Company paid $120,000 to Hilcoast under this agreement, plus expense reimbursement. Recreation Notes Mr. Levy owns the recreation facilities at the Century Village in Boca Raton, acquired from the Company in 1981, which is collateral for one of the Company's Recreation Notes (Note 2(b)), issued in connection with the acquisition, in the original principal 34 amount of $12.6 million. The note bears interest at 13.25%, requires self-amortizing equal monthly payments of principal and interest in the aggregate amount of $1.7 million per annum through 2012 and may not be prepaid. At December 31, 1995, the outstanding balance on the note was $11.4 million. In 1995, the Company recognized interest income of $1.5 million and in 1994 and 1993, $1.6 million, respectively, per annum on this note. Since 1990, companies owned by Mr. Levy and certain members of his family lease, manage and operate the recreation facilities at the Century Villages in West Palm Beach, Deerfield Beach and Boca Raton, which are collateral for $43.2 million of the Company's Recreation Notes (Note 2(b)). Days Inn The Company owns a 154-room Days Inn motel, located near the entrance to Century Village at West Palm Beach, Florida. The motel is leased to a corporation controlled by Alan Shulman, the Chairman of the Board of the Company. The lease, as amended, provided for annual rental through the expiration of the lease term on August 31, 1999, equal to a minimum of $300,000, plus 30% of gross room revenues in excess of $1.2 million. In February 1995, the Company and the lessee agreed to adjust the annual rental to a minimum of $330,000, plus 30% of gross room revenues in excess of $1.3 million. In connection therewith, the Company agreed to make certain capital improvements to the motel, which amounted to $400,000. The lease also provides for the lessee to pay all operating costs of the motel, including real estate taxes and insurance, and to pay to the Company 50% of certain amounts received by the lessee from the concessionaire who operates the food and beverage facilities at the motel. In 1995, 1994 and 1993, the Company recognized rent income of $472,000, $343,000 and $310,000, respectively, under the lease. Administration Building The Company leases approximately 3,000 square feet of its Administration Building, located within the Century Village at West Palm Beach community, on a month to month basis to a company owned by Mr. Levy and a member of his family at a monthly rental of approximately $2,500, plus an allocation of utility expenses. The Company also leased approximately 3,800 square feet to Hilcoast on a month to month basis at a monthly rental of approximately $3,400 until July 1995 at which time Hilcoast substantially vacated this space. 35 (6) Income Tax (Benefit) Expense (a) Total deferred income tax (benefit) expense differs from the amount computed by applying the statutory federal income tax rate to income before income taxes for the following reasons (in thousands): 1995 1994 1993 ------ ------ ------ Tax expense computed at statutory rate $2,841 $2,150 $3,841 State income tax (benefit) expense, net of federal effect (86) (32) 203 Dividends paid deduction (3,644) (2,453) (2,258) Other (128) 335 - ------ ------ ------ Totals ($1,017) $ - $1,786 ====== ====== ====== (b) The components of the net deferred tax liability are as follows (in thousands): December 31, ----------------- 1995 1994 Deferred tax liabilities: ------- ------- Gains on the sales of recreation facilities reported on the install- ment method for tax purposes $14,106 $14,352 Basis differential on certain notes receivable - 865 Other 470 423 ------- ------- Total deferred tax liabilities 14,576 15,640 ------- ------- Deferred tax assets: Differences in reporting the provision for losses 1,169 1,329 Net operating loss carryforwards for tax purposes 6,065 6,065 Other 180 67 ------- ------- Total deferred tax assets 7,414 7,461 ------- ------- Net deferred tax liability $ 7,162 $ 8,179 ======= ======= (c) As of December 31, 1995, the Company has aggregate net operating loss carryforwards for tax purposes of approximately $16.1 million, expiring $7.1 million in 2007 and $9.0 million in 2006. 36 (7) Major Customers During 1995, interest income from four borrowers provided 38% (Hilcoast), 17%, 14% and 12% (H. Irwin Levy), respectively, of total revenues. During 1994, interest income from four borrowers provided 32% (Hilcoast), 16%, 14% and 11% (H. Irwin Levy), respectively, of total revenues. During 1993, interest income from four borrowers provided 26% (Hilcoast), 15%, 13% and 10% (H. Irwin Levy), respectively, of total revenues. See Note 2 regarding concentration of credit risk. (8) Financial Instruments with Off-Balance-Sheet Risk The Company is a party to financial instruments with off- balance-sheet risk in the normal course of business to meet the financing needs of its customers, including commitments to extend credit and standby letters of credit to guarantee the contractual performance of certain borrowers to third parties. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement and the exposure to credit loss the Company has in particular classes of financial instruments. The Company uses the same credit policies and has the same credit risk in making commitments and conditional obligations as it does for on-balance-sheet instruments. At December 31, 1995, financial instruments whose contract amounts represent credit risk consisted of $1.4 million of commitments to extend credit and $.6 million standby letters of credit. Commitments to extend credit are agreements to lend to a borrower as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. (9) Fair Value of Financial Instruments The estimated fair values of the Company's financial instruments as of December 31, 1995 are as follows: Carrying Fair Amount Value -------- -------- Real estate mortgage notes $99,919 $125,063 Cash and cash equivalents 7,633 7,633 CMO's (37,074) (39,445) 37 Real estate mortgage notes - Except for the Recreation Notes (Note 2(b)), the Company's real estate mortgage notes principally consist of variable rate loans or loans which mature within three years, and have carrying amounts that approximate fair value. The fair value of the fixed rate, Long Term Recreation Notes is estimated by discounting the future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. CMO's - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of the Company's long-term, fixed rate CMO's. (10) Selected Quarterly Financial Data (Unaudited) Selected quarterly financial data follows (in thousands, except per share data): Quarter Ended ----------------------------------------- Mar. 31, Jun. 30, Sept.30, Dec. 31, 1995 Revenues $3,321 $3,318 $3,338 $3,448 Net income 2,037 2,037 2,136 3,164 Per common share .26 .26 .27 .40 1994 Revenues $3,848 $3,367 $3,365 $3,307 Net income (loss) 2,127 (397)(1) 2,240 2,354 Per common share .27 (.05)(1) .28 .30 __________ (1) During the quarter ended June 30, 1994, the Company sold its GNMA certificates and recognized a loss of $2.4 million. 38 CV REIT, INC. AND SUBSIDIARIES SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, 1995 ============================================= (dollars in thousands) Principal amount of
Carrying loans subject Final Face amount of to delinquent Interest maturity Prior amount of mortgages principal or Description Rate date Periodic payment terms liens mortgages (a) interest - -------------------------------- ---------- --------- ------------------------ ------- ----------- ---------- -------------- Permanent - Recreation Facilities (1st mortgages, except where noted): Century Village at Boca Raton, FL 13.25% 12/31/11 Level principal and interest due monthly -- $12,533 $11,435 $ -- Century Village at West Palm Beach, FL 13.50% 01/15/12 Level principal and interest due monthly -- 18,342 16,736 -- Century Village at Deerfield Beach, FL (2nd mortgage) 13.25% 01/15/12 Level principal and interest due monthly N/A 13,235 12,112 -- Century Village at Deerfield Beach, FL 8.84% 03/01/07 Level principal and interest due monthly -- 3,485 2,960 -- Century Village at Pembroke Pines, FL Prime + 3% (c) (c) -- 25,000 25,000 -- (Minimum 9%, Maximum 11%) ------- ------- 68,243 -- ------- ------- Residential Construction and Development: Condominium project (1st mortgage) in Pembroke Pines, FL (d) 07/31/98 Interest monthly, principal at maturity -- 18,750 17,199 -- Recreation facilities at Century Village at Pembroke Pines, FL (2nd mortgage) 10% 07/31/98 Interest quarterly, principal at maturity N/A 5,000 5,000 -- Residential project in Deland, FL Prime + 3% 12/31/97 Interest monthly, (1st mortgage) (Minimum 9%, Maximum 11%) principal at maturity -- 2,100 1,410 -- Aggregate of mortgage loans which individually do not exceed 3% 8.9% to 11.5% Various -- 1,785 -- thru 12/98 ------- ------- 25,394 -- ------- ------- 1st Mortgage on shopping center in Deerfield Beach, FL N/A 12/31/94 (e) -- 6,400 6,282 6,282 ------- ------- $99,919(b) $ 6,282 ======= ======= - ---------- (a) The tax carrying value of the notes is approximately $62 million. 1995 1994 1993 (b) The changes in the carrying amounts are summarizd as followings: -------- -------- -------- Balance, beginning of period $92,691 $105,863 $107,935 Advances on new mortgage loans 24,493 21,469 25,046 Collections of principal (17,086) (33,236) (26,718) Foreclosures (171) (321) -- Charge-offs (8) (1,084) (400) -------- -------- -------- Balance, end of period $99,919 $92,691 $105,863 ======== ======== ======== (d) Ranging from prime plus 3% (minimum 9%, maximum 11%) to 12.5%. (e) See Note 4(b) to Consolidated Financial Statements.
39 Item 9. Disagreement on Accounting and Financial Disclosure None PART III Information in response to Items 10, 11, 12 and 13 is not included in this Report, since the Registrant anticipates filing a definitive proxy statement for its next annual meeting of stockholders prior to May 1, 1995. Such definitive proxy statement is incorporated by reference herein. 40 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) (1) List of Consolidated Financial Statements: Report of Independent Certified Public Accountants Consolidated Balance Sheets - December 31, 1995 and 1994 Consolidated Statements of Income - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Stockholders' Equity - Years Ended December 31, 1995, 1994, and 1993 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements (2) List of Consolidated Financial Statements Schedules: Schedule IV - Mortgage Loans on Real Estate (3) List of Exhibits: (3)(i) Amended Certificate of Incorporation of CV Reit, Inc., filed with Secretary of State of Delaware on June 17, 1991. (Incorporated by reference to Exhibit (3)(i) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1991.) (3)(ii) By-laws of CV Reit, Inc. (Incorporated by reference to Exhibit (3)(ii) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1990.) (10)(i) Agreement between Cenvill Investors, Inc. and H. Irwin Levy, dated December 31, 1981. (Incorporated by reference to Exhibit (2)(i) to the current report on Form 8-K filed by the Company to report event of December 31, 1981.) 41 (10)(ii) Agreement of Lease between Cenvill Investors, Inc. and B.R.F., Inc., dated December 30, 1981. (Incorporated by reference to Exhibit (2) (ii) to the current report on Form 8-K filed by the Company to report event of December 31, 1981.) (10)(iii) Agreement dated January 15, 1982, between Century Village, Inc. and Benenson Capital Company. (Incorporated by reference to Exhibit (2)(i) to the current report on Form 8-K filed by Cenvill Investors, Inc. (File No. 0-03427) to report event of January 15, 1982.) (10)(iv) Agreement dated January 15, 1982, between Century Village East, Inc. and CVRF Deerfield Limited. (Incorporated by reference to exhibit (2) (ii) to the current report on Form 8-K filed by Cenvill Investors, Inc. (File No. 0-03427) to report event of January 15, 1982.) (10)(v) Lease dated as of November 8, 1988 between Cenvill Investors, Inc. and Century Inn Operating Corp. (Incorporated by reference to Exhibit (10) (xiii) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1988.) (10)(vi) Revolving Credit and Term Loan Agreement dated July 3, 1990 between Cenvill Development Corp. and CV Reit, Inc. (Incorporated by reference to Exhibit (10)(xvi) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1990.) (10)(vii) Loan Agreement among CV Reit, Inc. and Cenvill Development Corp. and various subsidiaries, dated June 6, 1991. (Incorporated by reference to Exhibit (10)(xiv) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1991.) (10)(viii) Indenture for Collateralized Mortgage Obligations, dated as of December 30, 1991 between Recreation Mortgages, Inc. (Issuer) and Bankers Trust Company (Trustee). (Incorporated by reference to Exhibit (10)(xvi) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1991.) 42 (10)(ix) Agreement to Use Best Reasonable Efforts to Obtain Construction Financing, dated as of September 17, 1992, between CV Reit, Inc. and Hilcoast Development Corp. (Incorporated by reference to Exhibit (10)(v) to Amendment No. 1 to the Form S-1 Registration Statement of Hilcoast Development Corp. (File No. 33-51388) filed with the Commission on October 1, 1992.) (10)(x) Restated Loan Agreement, dated July 31, 1992, between CV Reit, Inc. and Cenvill Development Corp. and certain subsidiaries and affiliates thereof. (Incorporated by reference to Exhibit (10)(xi) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1992.) (10)(xi) Proposal for the Acquisition of Certain Assets, dated June 19, 1992, by and among CV Reit, Inc., Cenvill Development Corp. and certain subsidiaries and affiliates thereof. (Incorporated by reference to Exhibit (10)(xiv) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1992.) (10)(xii) Order granting Motion of Debtor's [sic] for Approval of Sale of Assets dated July 17, 1992. (Incorporated by reference to Exhibit (10)(xv) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1992.) (10)(xiii) Stock Purchase Agreement, dated as of August 5, 1992, between CV Reit, Inc. and Hilcoast Development Corp. (Incorporated by reference to Exhibit (10)(xvii) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1992.) (10)(xiv) Consulting and Advisory Agreement, dated July 31, 1992, between CV Reit, Inc. and Hilcoast Development Corp. (Incorporated by reference to Exhibit (10)(xviii) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1992.) (10)(xv) Loan Agreement, Security Agreement and Collateral Assignment of Loans, Notes, Mortgages and Security Documents with Ohio Savings Bank dated October 26, 1993. (Incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1993.) 43 (10)(xvi) $1.3 million Promissory Note, dated August 27, 1993, between CV Reit, Inc. and NewCen Communities, Inc. (Incorporated by reference to Exhibit (10)(xx) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1993.) (10)(xvii) $3.0 million Promissory Note and Side Letter, dated September 30, 1993, between CV Reit, Inc. and NewCen Communities, Inc. (Incorporated by reference to Exhibit (10)(xxi) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1993.) (10)(xviii) First Amendment to Loan Agreement, Security Agreement and Collateral Assignment of Loans, Notes, Mortgages and Security Documents with Ohio Savings Bank dated February 25, 1994. (Incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1994.) (10)(xix) $2.5 million Future Advance Promissory Note, dated September 15, 1994 from NewCen Communities, Inc. (a subsidiary of Hilcoast Development Corp.) to CV Reit, Inc., Notice and Agreement of Future Advance and Side Letters between CV Reit, Inc. and NewCen Communities, Inc. (Incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1994.) (10)(xx) Letter, dated February 5, 1995, from Hilcoast Development Corp. to CV Reit, Inc. in connection with $3.0 million Promissory Note. (Incorporated by reference to Exhibit 10(xxiii) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1994.) (10)(xxi) Letter, dated February 6, 1995, from CV Reit, Inc. to NewCen Communities, Inc. in connection with $3.0 million Promissory Note. (Incorporated by reference to Exhibit 10(xxiv) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1994.) 44 (10)(xxii) Letter, dated February 5, 1995, from Hilcoast Development Corp. to CV Reit, Inc. in connection with $2.5 million Future Advance Promissory Note. (Incorporated by reference to Exhibit 10(xxv) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1994.) (10)(xxiii) Letter, dated February 6, 1995, from CV Reit, Inc. to NewCen Communities, Inc. in connection with $2.5 million Future Advance Promissory Note. (Incorporated by reference to Exhibit 10(xxvi) to the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1994.) (10)(xxiv) Agreement dated February 17, 1995, between CV Reit, Inc., NewCen Communities, Inc. and Hilcoast Development Corp. (Incorporated by reference to Exhibit 10(i) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxv) $5.0 million Promissory Note, dated March 31, 1995, from C.V.P. Community Center, Inc. to Hilcoast Development Corp. (Incorporated by reference to Exhibit 10(ii) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxvi) Allonge dated March 31, 1995, which assigns the $5.0 million Promissory Note, dated March 31, 1995, from Hilcoast Development Corp. to CV Reit, Inc. (Incorporated by reference to Exhibit 10(iii) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxvii) Loan Agreement between C.V.P. Community Center, Inc. and Lloyds Bank PLC-Miami Agency (N/K/A The Daiwa Bank, Ltd.), dated November 5, 1986. (Filed under cover Form SE). (Incorporated by reference to Exhibit 10(iv) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxviii) First Amendment to Loan Agreement, dated June 6, 1991, between C.V.P. Community Center, Inc. and The Daiwa Bank, Ltd. (Filed under cover Form SE). (Incorporated by reference to Exhibit 10(v) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) 45 (10)(xxix) $10.0 million Promissory Note, dated November 5, 1986, from C.V.P. Community Center, Inc. to Lloyds Bank PLC. (Incorporated by reference to Exhibit 10(vi) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxx) Absolute Assignment of Mortgages, Promissory Note and Other Security Documents dated March 17, 1995 from The Daiwa Bank, Ltd. to CV Reit, Inc. (Incorporated by reference to Exhibit 10(vii) to the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995.) (10)(xxxi) $4.0 million Promissory Note dated August 11, 1995, from NewCen Communities, Inc. (a subsidiary of Hilcoast Development Corp.) to CV Reit, Inc. and Side Letters between CV Reit, Inc. and NewCen Communities, Inc. (Incorporated by reference to Exhibit 10(i) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) (10)(xxxii) Letter, dated August 11, 1995, from Hilcoast Development Corp. to CV Reit, Inc. in connection with $3.0 million Promissory Note. (Incorporated by reference to Exhibit 10(ii) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) (10)(xxxiii) Letter, dated August 11, 1995, from CV Reit, Inc. to Hilcoast Development Corp. in connection with $3.0 million Promissory Note. (Incorporated by reference to Exhibit 10(iii) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) (10)(xxxiv) Letter, dated August 11, 1995, from Hilcoast Development Corp. to CV Reit, Inc. in connection with $2.5 million Promissory Note. (Incorporated by reference to Exhibit 10(iv) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) (10)(xxxv) Letter, dated August 11, 1995, from CV Reit, Inc. to Hilcoast Development Corp. in connection with $2.5 million Promissory Note. (Incorporated by reference to Exhibit 10(v) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) 46 (10)(xxxvi) Letter Agreements, dated July 11, 1994 and August 3, 1995, between CV Reit, Inc. and Hilcoast Advisory Services, Inc. extending the Consulting and Advisory Agreement to July 31, 1995 and July 31, 1996, respectively. (Incorporated by reference to Exhibit 10(vi) to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 1995.) (11) Statement regarding computation of per share earnings. Omitted; computation can be clearly determined from material contained in the report. (22) Subsidiaries of the Company. (27) Financial Data Schedule (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended December 31, 1995. 47 SIGNATURES Pursuant to the requirements of Section 13 and 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. CV REIT, INC. /s/ Elaine Kahant By:__________________________________ Elaine Kahant, Vice President and Treasurer Dated: March 25, 1996 48 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. /s/ Alan L. Shulman March 25, 1996 ________________________________ Alan L. Shulman, Chairman of the Board of Directors /s/ Alvin Wilensky March 25, 1996 _________________________________ Alvin Wilensky, President and Director (Principal Executive Officer) /s/ Elaine Kahant March 25, 1996 _________________________________ Elaine Kahant, Vice President, and Treasurer (Principal Financial Officer and Principal Accounting Officer) /s/ Mac Gache March 25, 1996 _________________________________ Mac Gache, Director /s/ Stanley Brenner March 25, 1996 _________________________________ Stanley Brenner, Director /s/ Allyn Levy March 25, 1996 _________________________________ Allyn Levy, Director EX-21 2 SUBSIDIARIES OF COMPANY EXHIBIT 21 CV REIT, INC. AND SUBSIDIARIES Subsidiaries of the Company State of Date of Name Incorporation Incorporation D.X. Properties, Inc. Florida November 27, 1989 CV Warehouse 75, Inc. Florida June 6, 1990 CV Warehouse 76, Inc. Florida June 6, 1990 CV Warehouse 78, Inc. Florida June 6, 1990 GRX Corp. Florida November 16, 1990 Recreation Mortgages, Inc. Delaware December 23, 1991 W.X. Properties, Inc. Florida January 10, 1992 CX Properties, Inc. California January 15, 1992 LRX Properties, Inc. Florida March 19, 1993 Boca Mortgage Funding, Inc. Florida March 19, 1993 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1995 DEC-31-1995 7,633 0 99,919 3,107 0 0 16,286 2,202 120,021 0 37,074 0 0 80 73,106 120,021 0 13,425 0 0 1,496 0 3,434 8,357 (1,017) 9,374 0 0 0 9,374 1.18 1.18 Includes $884 restricted.
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