-----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, DkyRLjNQY/m90FgP6VZNEqlMcm9VaaIXm/owotvjBYZSh/Q3FoHzXkPMwf2qN5s7 3pppAjmcf3uUAjwy84kmvg== 0000950144-95-002700.txt : 19951002 0000950144-95-002700.hdr.sgml : 19951002 ACCESSION NUMBER: 0000950144-95-002700 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950928 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IRT PROPERTY CO CENTRAL INDEX KEY: 0000311099 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 581366611 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-07859 FILM NUMBER: 95576829 BUSINESS ADDRESS: STREET 1: 200 GALLERIA PKWY STE 1400 CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4049554406 MAIL ADDRESS: STREET 1: 200 GALLERIA PKWY STREET 2: STE 1400 CITY: ATLANTA STATE: GA ZIP: 30339 10-K405/A 1 FORM 10-K/A ANNUAL REPORT OF IRT PROPERTY COMPANY 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 (X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1994 ------------------------------ 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 1-7859 - -------------------------------------------------------------------------------- IRT PROPERTY COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Georgia 58-1366611 - --------------------------------------- -------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 200 Galleria Parkway, Suite 1400 Atlanta, Georgia 30339 - ---------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (404) 955-4406 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ------------------------ Shares of Common Stock New York Stock Exchange $1 Par Value Securities registered pursuant to Section 12(g) of the Act: None 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 ----- 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 --- --- Based upon the assumption that directors and executive officers of the registrant are not affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at February 6, 1995 was $254,207,470. Presuming that such directors and executive officers are affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at February 6, 1995 was $250,694,487. 25,420,747 shares of Common Stock, $1 Par Value, outstanding at February 6, 1995. DOCUMENTS INCORPORATED BY REFERENCE The information called for by Part III (Items 10, 11, 12 and 13) is incorporated by reference to the registrant's definitive proxy statement to be filed pursuant to Regulation 14A. 2 AMENDMENT NO. 1 The undersigned registrant hereby amends Items 1, 2, 5, 6, 7, 8 and 14 and restates in its entirety its Form 10-K405 for the fiscal year ended December 31, 1994. PART I Item 1. Business. General Development of Business. IRT Property Company (the "Company"), founded in 1969, is a self-administered and self-managed equity real estate investment trust which invests primarily in neighborhood and community shopping centers which are located in the Southeastern United States and are anchored by supermarkets, drug stores and/or discount variety stores. IRT Property Company was incorporated under the laws of Georgia in June 1979. It was organized in order to accommodate a merger of Investors Realty Trust, a Tennessee business trust organized in 1969, and Summit Properties, an Ohio business trust organized in 1965. That merger was accomplished effective June 20, 1979, and the Company then succeeded to all of the assets and liabilities of both trusts. The Company and its predecessor, Investors Realty Trust, have each elected since their inceptions to be treated as "Real Estate Investment Trusts" ("REITs") under the Internal Revenue Code (the "Code"). The Company intends to continue such election, although it is not required to do so. For the special provisions applicable to REITs, reference is made to Sections 856-860 of the Code, as amended. The Company has two wholly-owned subsidiaries. IRT Management Company ("IRTMC") was formed in 1990. The only business conducted thus far by IRTMC has been the purchase of a portion of the Company's 2% convertible subordinated debentures, although it may engage in other activities in the future. VW Mall, Inc. ("VWM") was formed in July 1994. Upon its formation, VWM purchased the land underlying Valley West Mall and now holds 100% of the Company's interest in this investment. Financial Information and Description of Business. The Company's sole business is the ownership of real estate investments which consist principally of equity investments in income-producing properties, with primary emphasis on neighborhood and community shopping centers in the Southeastern United States. The Company's investment portfolio also includes some apartment, industrial and other properties, and to a lesser extent various purchase-money mortgages taken back on the sales of former equity investments. In addition, the Company has authority to make other types of equity and mortgage investments in real estate. The Company considers its investment activity to consist of a single industry segment. 1 3 For a description of the Company's individual investments and of material developments during the year regarding these investments and the Company as a whole, reference is made to Items 2 and 7 hereof. For financial information about the Company's 1987 and 1993 debenture offerings, reference is made to Items 6 and 7 and to Note 7 to the consolidated financial statements. For information regarding the Company's 1992 and 1993 common stock offerings, reference is made to Item 7 and to Note 2 to the consolidated financial statements. Readers are also urged to review the Company's Annual Report to Shareholders for the year ended December 31, 1994. In making new real estate investments, the Company intends to continue to place primary emphasis on obtaining equity interests in well-located income-producing properties, principally shopping centers in the Southeastern United States, with attractive yields and potential for increases in income and capital appreciation. The Company will also from time to time consider the disposition or exchange of existing investments in order to improve its investment portfolio or increase its funds from operations. Existing investments are continuously reviewed by Company management, and appropriate programs to renovate and modernize properties are designed and implemented in order to improve leasing arrangements, thereby increasing funds from operations and property values. The Company's investment and portfolio management philosophy is designed to implement its overall objective of maximizing funds from operations and distributions to shareholders. The Company directly provides property management and leasing services for all but fourteen of its operating properties. Self-management enables the Company to emphasize and more closely control leasing and property management. Internal property management also provides the Company opportunities for operating efficiencies by enabling it to acquire additional properties without proportionate increases in property management expenses. The Company's property management program is implemented by on-site property managers and property management and leasing professionals located in offices in Atlanta, Charlotte and Orlando. The results of the Company's operations depend upon the performance of its existing investment portfolio, the availability of suitable opportunities for new investments and the yields then available on such investments. Such yields will vary with the type of investment involved, the condition of the financial and real estate markets, the nature and geographic location of the investment, competition and other factors. The performance of a real estate investment company is strongly influenced by the cycles of the real estate industry. As financial intermediaries providing equity funds for real estate projects, real estate investment companies are generally subject to the same market and economic forces as other real estate investors. 2 4 Competitive Conditions. In seeking new investment opportunities, the Company competes with other real estate investors, including pension funds, foreign investors, real estate partnerships, and other domestic real estate companies. On properties presently owned by the Company or in which it has investments, the Company and its tenants and borrowers compete with other owners of like properties for tenants and/or customers depending on the nature of the investment. Management believes that the Company is well positioned to compete effectively for new investments and tenants. For any borrowed funds that may be used in new investment activity, the Company would be in competition with other borrowers, particularly real estate borrowers. For a description of the Company's mortgage debt, reference is made to Table V in Item 2 hereof, to Item 7 and to Note 6 to the consolidated financial statements included as a part of this report. For a description of the Company's 7.3% convertible subordinated debentures, reference is made to Item 7 and to Note 7 to the consolidated financial statements. For a description of the Company's 5-year $50,000,000 revolving term loan, reference is made to Item 7 and to Note 8 to the consolidated financial statements. Regulation. Investments in real property create a potential for environmental liability on the part of the owner of or any mortgage lender on such real property. If hazardous substances are discovered on or emanating from any of the Company's properties, the owner or operator of the property (including the Company) may be held strictly liable for all costs and liabilities relating to such hazardous substances. In 1989, the Company adopted a policy of obtaining a Phase I environmental study on each property it seeks to acquire. The Company's Charlotte, North Carolina industrial facility is among the sites appearing on the Comprehensive Environmental Response, Compensation and Liability Act List ("CERCLIS") maintained by the United States Environmental Protection Agency ("EPA"). The CERCLIS list contains sites which have possible environmental contamination. The EPA regularly requests that state environmental agencies conduct screening site investigations ("SSI") at various sites appearing on the CERCLIS list. At the request of the EPA, the North Carolina Department of Environment, Health, and Natural Resources ("DEHNR") conducted an SSI at this facility on May 28, 1991. Following receipt of results of such SSI, the DEHNR advised the Company that it would not recommend further action to the EPA with respect to this facility. There can be no assurance that the EPA or DEHNR will not require remediation action, but based on information presently available to the Company, the Company believes the costs of any such remediation would not have a material adverse effect on the Company's results of operations, financial position or liquidity. 3 5 The Charlotte industrial facility contained underground petroleum and used oil storage tanks ("USTs") believed to have been owned by the previous owner of this property. The Company had the USTs removed in December 1993 and was notified on March 2, 1994 by the DEHNR that certain investigative, corrective and/or remedial actions ("Corrective Actions") must be performed by the Company to, among other things, determine the level of soil and/or groundwater contamination due to suspected leakage from some of the USTs. Depending upon the results of the investigation phase of the Corrective Action work, which has not been completed at this time, the Company may be required to remediate impacted soil and/or groundwater. In November 1994, the Company (through its environmental consultant) submitted to DEHNR a Comprehensive Site Assessment ("CSA") report covering the results of investigation work to date. The CSA report confirmed the presence of petroleum product-related substances in soil and groundwater at levels that exceed applicable standards, and the Company has begun removing free phase liquids from a well on the property. DEHNR has reviewed the CSA report and has asked the Company to undertake further investigation work. Based upon consultation with a professional engineering firm, any additional investigation costs to be incurred by the Company should be less than $20,000. Based on the engineering firm's estimates, soil remediation, if required, should cost between $30,000 and $142,000, and groundwater remediation, if required, should cost between $20,000 to be spent over three years to $435,000 to be spent over ten years. These estimates are based on information available at this time and may vary depending upon the results of phases of the Corrective Action work. At this time it is not clear that the Company is responsible for taking Corrective Action, and some of the costs of Corrective Action are reimbursable under the North Carolina Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund. Based on the information presently available, the Company believes the costs of any such Corrective Action would not have a material adverse effect on the Company's results of operations, financial position or liquidity. During its soil and groundwater investigation at the Bluebonnet Village Shopping Center in Baton Rouge, Louisiana, the Company's environmental consultant discovered concentrations of various chemicals in a single groundwater monitoring well that exceeded the maximum contaminant levels under the Federal Safe Drinking Water Act. The Company has notified the Louisiana Department of Environmental Quality-Groundwater Protection Division ("LDEQ-GWPD") of such discovery. The Company has been advised that the groundwater impact appears to be very localized, since six other groundwater monitoring wells placed around the initial well did not exhibit any impact. There can be no assurance that the LDEQ-GWPD will not require remediation, but based on information presently available to the Company and discussions with the Company's environmental consultant, the Company believes the cost of any such remediation would not have a material adverse effect on the Company's results of operations, financial position or liquidity. 4 6 There is potential for contamination from reported off-site leaking petroleum USTs at the following Company properties: Gulf Gate Plaza Shopping Center, Naples, Florida; Thomasville Commons, Thomasville, North Carolina; Wesley Chapel Crossing, Decatur, Georgia; and Chestnut Square, Brevard, North Carolina. In addition, there are reported low levels of contamination from leaking USTs formerly located at the Company's Venice Plaza Shopping Center, Venice, Florida. Kash n' Karry Food Stores, Inc., the Florida food division of Lucky Stores, Inc., formerly operated such USTs at Venice Plaza Shopping Center. The Company is not the owner or operator of any such USTs described above. No investigative or corrective action concerning such leaking USTs and contamination has been suggested or required of the Company by any federal, state or local agency or any other party. Based on information presently available to the Company, the Company believes that the off-site landowners and UST operators, or Kash n' Karry Food Stores, Inc. and/or Lucky Stores, Inc. in the case of Venice Plaza Shopping Center, are responsible for investigation and cleanup of any such leaking USTs and contamination. Accordingly, the Company believes that the cost of any such investigation and cleanup would not have a material adverse effect on the Company's results of operations, financial position or liquidity. The Company has not commissioned independent environmental analyses with respect to properties acquired prior to 1989, except as required pursuant to its secured revolving term loan. Phase I environmental site assessments (which generally did not include environmental sampling, monitoring or laboratory analysis) were implemented by the Company with respect to those properties which the Company acquired from 1989 to the present, prior to the acquisition of such properties. No assurance can be given that hazardous substances are not located on any of the properties. However, the Company has no reason to believe that any environmental contamination has occurred nor any violation of any applicable environmental law, statute, regulation or ordinance exists that would have a material adverse effect on the Company's results of operations or financial position. The Company presently carries no insurance coverage for the types of environmental risks described above. Employees. The Company presently employs 54 persons, 14 of whom are on-site management, maintenance and security personnel at four of the Company's real estate investments. Item 2. Properties. The following tables and notes thereto describe the properties in which the Company had investments at December 31, 1994, as well as the mortgage indebtedness to which the Company's investments were subject. Reference is made to Note 3 to the consolidated financial statements included as a part of this report for information on minimum base rentals on noncancellable operating leases for the next five years and thereafter. 5 7 I. EQUITY INVESTMENTS (LAND & BUILDINGS) The Company had a fee or leasehold interest in land and improvements thereon as follows:
Percent Cost to Depreciated Property Property Date Area or Leased Year Company Cost FFO Net Income Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2) ----------- -------- ------------ -------- --------- -------- -------- -------- -------- SHOPPING CENTERS Abbeville Plaza 4/86 59,525 sq. ft. 22% 1970 $ 516,598 $ 346,828 $ 8,638 $ (11,707) Abbeville, SC Ambassador Row 12/94 193,982 sq. ft. 97% 1980 & 9,696,440 9,692,767 26,871 23,198 Lafayette, LA 1991 Ambassador Row Courtyard 12/94 156,283 sq. ft. 90% 1986 & 11,597,751 11,592,826 32,148 27,223 Lafayette, LA 1991 Asheville Plaza 4/86 49,800 sq. ft. 100% 1967 405,287 305,915 95,751 84,555 Asheville, NC Bluebonnet Village 12/94 89,879 sq. ft. 100% 1983 8,050,589 8,046,074 22,226 17,711 Baton Rouge, LA The Boulevard 12/94 68,012 sq. ft. 92% 1976 & 3,793,337 3,791,458 10,506 8,627 Lafayette, LA 1994 Carolina Place 5/89 36,560 sq. ft. 100% 1989 2,351,494 2,073,454 221,953 171,613 Hartsville, SC Centre Pointe Plaza 12/92 & 163,642 sq. ft. 100% 1989 & 9,122,188 8,719,372 849,298 640,087 Smithfield, NC 12/93 1993 Chadwick Square 1/92 31,700 sq. ft. 100% 1985 1,456,727 1,370,697 210,255 93,842 Hendersonville, NC Chelsea Place 7/93 81,144 sq. ft. 100% 1992 6,937,585 6,735,232 762,029 623,273 New Port Richey, FL Chester Plaza 4/86 & 71,443 sq. ft. 66% 1967 & 2,199,971 1,859,970 215,263 131,402 Chester, SC 2/92 1992 Chestnut Square 1/92 39,640 sq. ft. 96% 1985 1,416,987 1,333,647 230,141 92,555 Brevard, NC Colony Square 2/88 50,000 sq. ft. 100% 1987 2,922,695 2,431,894 258,820 165,034 Fitzgerald, GA Commerce Crossing 12/92 100,668 sq. ft. 100% 1988 4,467,493 4,261,477 390,130 288,212 Commerce, GA Countryside Shops 6/94 173,161 sq. ft. 100% 1986,1988 16,642,378 16,505,458 826,737 689,817 Cooper City, FL & 1991 The Crossing 12/94 113,989 sq. ft. 93% 1988 & 4,495,652 4,492,411 12,438 9,197 Slidell, LA 1993 Delchamps Plaza 4/88 66,857 sq. ft. 100% 1987 4,506,247 3,807,211 441,991 26,883 Pascagoula, MS Douglas Commons 8/92 97,027 sq. ft. 95% 1988 8,574,939 8,207,193 795,830 19,779 Douglasville, GA
6 8 I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
Percent Cost to Depreciated Property Property Date Area or Leased Year Company Cost FFO Net Income Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2) ----------- -------- ------------ -------- --------- -------- -------- -------- -------- SHOPPING CENTERS, continued Eden Centre 11/94 56,355 sq. ft. 100% 1991 $ 3,527,217 $ 3,515,129 $ 67,733 $ 55,645 Eden, NC Elmwood Oaks 1/92 130,284 sq. ft. 100% 1989 11,125,788 10,641,730 1,183,295 141,579 Harahan, LA First Street Station 8/94 52,230 sq. ft. 95% 1989 3,034,670 3,011,092 101,526 77,948 Albemarle, NC Forest Hills Centre 8/90 65,360 sq. ft. 100% 1990 5,060,366 4,655,920 501,968 397,532 Wilson, NC Forrest Gallery 12/92 214,450 sq. ft. 98% 1987 12,271,062 11,766,795 1,006,373 755,691 Tullahoma, TN Ft. Walton Beach Plaza 7/86 48,248 sq. ft. 96% 1986 2,647,943 2,120,419 222,688 37,182 Ft. Walton Beach, FL Gaffney Plaza 4/86 27,828 sq. ft. 0% 1964 & 405,917 199,750 (8,462) (35,165) Gaffney, SC 1974 The Galleria 8/86 & 81,544 sq. ft. 99% 1986 & 7,535,769 6,390,531 517,356 328,786 Wrightsville Beach, NC 12/87 1990 Gulf Gate Plaza 6/79 171,549 sq. ft. 94% 1969 & 4,269,794 2,238,531 635,173 389,702 Naples, FL 1974 Harris Teeter 6/88 & 36,535 sq. ft. 100% 1981 & 2,600,657 2,115,957 295,744 218,704 Lexington, VA 6/89 1989 Heritage Walk 6/93 159,362 sq. ft. 100% 1991 & 8,754,552 8,441,696 912,112 713,476 Milledgeville, GA 1992 Hoffner Plaza 6/79 39,370 sq. ft. 23% 1972 1,137,117 450,002 25,417 (5,039) Orlando, FL Lancaster Plaza 4/86 77,400 sq. ft. 100% 1971 1,163,909 798,801 146,539 106,073 Lancaster, SC Lancaster Shopping Center 8/86 & 29,047 sq. ft. 100% 1963 & 1,595,667 1,284,623 167,046 125,656 Lancaster, SC 12/87 1987 Lawrence Commons 8/92 52,295 sq. ft. 100% 1987 3,451,728 3,287,392 362,656 33,362 Lawrenceburg, TN Litchfield Landing 8/86 42,201 sq. ft. 91% 1984 2,620,314 2,162,625 310,889 253,453 North Litchfield, SC Macland Pointe 1/93 79,699 sq. ft. 100% 1992 & 6,113,405 5,883,586 723,849 295,333 Marietta, GA 1993 Masonova Plaza 6/79 157,955 sq. ft. 44% 1969 3,030,852 1,272,199 62,996 (118,517) Daytona Beach, FL Millervillage Shopping Center 12/94 94,559 sq. ft. 95% 1983 & 7,588,527 7,583,813 21,022 16,308 Baton Rouge, LA 1992
7 9 I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
Percent Cost to Depreciated Property Property Date Area or Leased Year Company Cost FFO Net Income Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2) ----------- -------- ------------ -------- --------- -------- -------- -------- -------- SHOPPING CENTERS,continued New Smyrna Beach Regional 8/92 118,451 sq. ft. 92% 1987 $10,290,171 $ 9,902,345 $ 887,533 $726,414 New Smyrna Beach, FL North River Village Center 12/92 & 177,128 sq. ft. 100% 1988 & 10,110,385 9,856,134 1,122,145 941,553 Ellenton, FL 12/93 1993 North Village Center (3) 8/86 60,356 sq. ft. 98% 1984 3,281,879 2,752,298 374,401 32,194 North Myrtle Beach, SC Old Kings Commons 5/88 84,759 sq. ft. 100% 1988 6,082,206 5,309,410 546,671 421,477 Palm Coast, FL Palm Gardens 6/79 52,670 sq. ft. 100% 1970 2,022,412 1,380,990 269,168 145,322 Largo, FL Parkmore Plaza 12/92 159,067 sq. ft. 100% 1986 & 8,260,407 7,933,854 880,370 717,628 Milton, FL 1992 Paulding Commons 8/92 192,391 sq. ft. 96% 1991 12,950,114 12,308,452 1,213,866 265,050 Dallas, GA Pensacola Plaza 7/86 56,098 sq. ft. 100% 1985 2,644,578 1,930,963 203,387 (18,689) Pensacola, FL Pinhook Plaza 12/94 190,371 sq. ft. 97% 1979 & 11,072,604 11,066,940 9,602 3,938 Lafayette, LA 1992 Plaza Acadienne (4) 12/94 105,419 sq. ft. 96% 1980 2,917,925 2,915,975 1,225 (725) Eunice, LA Plaza North 8/92 47,240 sq. ft. 95% 1986 2,459,244 2,350,692 259,933 214,988 Hendersonville, NC Providence Square 12/71 85,390 sq. ft. 93% 1973 4,196,728 2,035,700 422,149 248,303 Charlotte, NC Riverview Shopping Center 3/72 130,058 sq. ft. 83% 1973 6,003,033 4,484,369 245,639 138,253 Durham, NC Scottsville Square 8/92 38,450 sq. ft. 90% 1986 2,438,204 2,330,493 275,356 230,759 Bowling Green, KY Seven Hills 7/93 64,890 sq. ft. 99% 1991 4,894,767 4,786,249 488,156 43,244 Spring Hill, FL Shelby Plaza (4) 4/86 103,000 sq. ft. 73% 1972 1,103,226 749,952 102,200 43,530 Shelby, NC Sherwood South 12/94 77,107 sq. ft. 100% 1972, 1988 1,984,695 1,983,280 5,468 4,053 Baton Rouge, LA & 1992 Siegen Village 12/94 115,762 sq. ft. 96% 1988 6,677,883 6,676,952 18,512 17,581 Baton Rouge, LA Smyrna Village 8/92 83,334 sq. ft. 98% 1992 5,842,566 5,549,157 601,592 151,181 Smyrna, TN
8 10 I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
Percent Cost to Depreciated Property Property Date Area or Leased Year Company Cost FFO Net Income Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2) ----------- -------- ------------ -------- --------- -------- -------- -------- -------- SHOPPING CENTERS,continued Smyth Valley Crossing 12/92 126,841 sq. ft. 98% 1989 $ 6,994,084 $ 6,723,640 $ 645,416 $ 507,008 Marion, VA South Beach Regional 8/92 289,319 sq. ft. 99% 1990 & 21,809,241 20,743,151 2,170,734 503,267 Jacksonville Beach, FL 1991 Spalding Village 8/92 235,318 sq. ft. 97% 1989 15,317,546 14,561,899 1,449,424 (32,865) Griffin, GA Stadium Plaza 8/92 70,475 sq. ft. 99% 1988 4,458,526 4,299,171 424,977 (7,541) Phenix City, AL Stanley Market Place 1/92 40,364 sq. ft. 100% 1980 & 1,800,935 1,684,035 221,527 181,447 Stanley, NC 1991 Taylorsville Shopping Center 8/86 & 48,537 sq. ft. 89% 1982 & 2,612,159 2,152,674 261,673 182,456 Taylorsville, NC 12/88 1988 Thomasville Commons 8/92 148,754 sq. ft. 100% 1991 7,172,961 6,794,952 785,572 83,240 Thomasville, NC Union Plaza 4/86 41,350 sq. ft. 100% 1967 227,751 132,284 37,372 23,127 Union, SC University Center 12/89 56,180 sq. ft. 91% 1989 3,937,447 3,533,127 365,009 285,070 Greenville, NC Valley West Mall (5) 3/86 478,180 sq. ft. 75% 1973 10,207,598 5,806,112 649,017 (173,703) Glendale, AZ Venice Plaza (3) 6/79 144,850 sq. ft. 93% 1971 & 2,803,349 1,462,651 449,113 296,209 Venice, FL 1979 Village at Northshore 12/94 144,373 sq. ft. 96% 1988 & 8,262,533 8,258,362 6,675 2,504 Slidell, LA 1993 Waterlick Plaza 10/89 98,694 sq. ft. 96% 1973 & 6,254,924 5,566,602 675,247 533,387 Lynchburg, VA 1988 Watson Central 12/92 & 227,730 sq. ft. 99% 1989 & 13,024,297 12,493,109 1,294,662 1,011,765 Warner Robins, GA 10/93 1993 Wesley Chapel Crossing 12/92 170,792 sq. ft. 100% 1989 10,893,715 10,536,908 971,881 794,690 Decatur, GA West Gate Plaza 6/74 & 64,378 sq. ft. 97% 1974 2,357,547 1,743,170 61,995 (4,373) Mobile, AL 1/85 Westgate Square 6/94 104,904 sq. ft. 92% 1984 & 9,078,855 8,993,361 439,278 353,784 Sunrise, FL 1988 West Towne Square 3/90 89,596 sq. ft. 87% 1988 5,988,565 5,318,834 457,451 315,439 Rome, GA
9 11 I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
Percent Cost to Depreciated Property Property Date Area or Leased Year Company Cost FFO Net Income Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2) ----------- -------- ------------ -------- --------- -------- -------- -------- -------- SHOPPING CENTERS,continued Willowdaile Shopping Center 8/86 & 120,815 sq. ft. 97% 1986 $ 8,573,127 $ 7,120,527 $ 1,082,249 $ 856,339 Durham, NC 12/87 Winnsboro Plaza 4/86 36,000 sq. ft. 83% 1973 614,550 441,969 54,671 30,587 Winnsboro, SC --------- ------------------------------------------------- 7,938,974 sq. ft. 434,712,349 398,065,218 33,098,261 16,956,901 ========= ------------------------------------------------- APARTMENTS Whitehall Kent Apartments 6/79 188 units 97% 1968 3,555,285 1,568,735 703,901 651,471 Kent, OH ------------------------------------------------- INDUSTRIAL PROPERTIES Industrial Buildings 6/79 109,810 sq. ft. 91% 1956 & 2,963,840 321,348 308,884 301,114 Charlotte, NC 1963 Plasti-Kote 6/79 41,000 sq. ft. 100% 1961 & 482,939 81,390 97,376 97,376 Medina, OH 1966 --------- ------------------------------------------------- 150,810 sq. ft. 3,446,779 402,738 406,260 398,490 ========= ------------------------------------------------- $441,714,413 $400,036,691 $34,208,422 $18,006,862 =================================================
NOTES: (1) Property FFO represents cash flows from operating activities before interest expense excluding changes in accrued assets and liabilities for the fiscal year ended December 31, 1994 or from the date of acquisition (if acquired in 1994) through December 31, 1994. Property FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles as an indicator of operating performance; or to cash flows from operating, investing, or financing activities as a measure of liquidity. Property FFO is presented as an additional measure in valuing and analyzing the underlying real estate investments. (2) Property Net Income represents net income of the property calculated in accordance with generally accepted accounting principles, excluding any allocation of general and administrative expenses of the Company. (3) The Company owns a 54.5% interest in North Village Center and a 75% interest in Venice Plaza Shopping Center, which are consolidated for financial reporting purposes and minority interests recorded. (4) Subject to gound leases expiring in 1997 for Shelby Plaza and 1998 and 2008 for Plaza Acadienne. The Company has an option to purchase the land at Shelby Plaza for $265,000 in 1997. (5) Annual cash flow for 1994 includes $72,261 of percentage rentals. 10 12 II. EQUITY INVESTMENTS (DIRECT FINANCING LEASES) The Company also had a fee interest in land and improvements thereon in the following properties occupied by tenants under leases which are treated as direct financing leases:
Percent Cost to Property Property Date Leased Year Company FFO Net Income Description Acquired Square Feet 12/31/94 Completed 12/31/94 1994 (1) 1994 (2) ----------- -------- ----------- -------- --------- -------- -------- -------- OFFICE The Old Phoenix National Bank (3) 12/84 73,074 sq. ft. 100% Various $2,192,763 $ 313,049 $ 287,628 Medina County, OH ======= ---------------------------------- SHOPPING CENTERS Wal-Mart Stores, Inc. (4) 6/85 54,223 sq. ft. 100% 1985 1,345,539 194,111 164,748 Mathews, LA Wal-Mart Stores, Inc. (4) 6/85 64,890 sq. ft. 100% 1985 1,714,478 264,381 226,894 Fremont, NE Wal-Mart Stores, Inc. (4) 6/85 & 83,249 sq. ft. 100% 1985 2,543,578 419,778 364,967 Kearney, NE 1/91 Wal-Mart Stores, Inc. (4) 7/85 53,571 sq. ft. 100% 1985 1,499,522 241,891 209,201 Marble Falls, TX ------- ---------------------------------- 255,933 sq. ft. 7,103,117 1,120,161 965,810 ======= ---------------------------------- $9,295,880 $1,433,210 $1,253,438 ==================================
NOTES: (1) Property FFO represents cash flows from operating activities before expense excluding changes in accrued assets and liabilities for the fiscal year ended December 31, 1994 or from the date of acquisition (if acquired in 1994) through December 31, 1994. Property FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles as an indicator of operating performance; or to cash flows from operating, investing or financing activities as a measure of liquidity. Property FFO is presented as an additional measure in valuing and analyzing the underlying real estate investments. (2) Property Net Income represents net income of the property calculated in accordance with generally accepted accounting principles, excluding any allocation of general and administrative expenses of the Company. (3) This investment represents ten banking facilities leased to The Old Phoenix National Bank at an annual rental of $313,049. The leases expire March 2013 with no purchase or renewal options. (4) These four retail facilities are leased to Wal-Mart Stores, Inc. at a total annual rental of $827,925 plus percentage rentals of 1% of gross sales in excess of fourth year sales. The leases expire January 2011, with five 5-year renewal options. There are no purchase options. Percentage rentals totaling $292,236 were received during the fiscal year ended December 31, 1994. 11 13 III. EQUITY INVESTMENTS (LAND PURCHASE-LEASEBACKS) The Company owned land under the following properties, all of which are net leased back to lessees on terms summarized below. The improvements on such properties are owned by others but will revert to the Company at the end of the lease terms unless the purchase options of the lessees, as referred to below, are exercised. The interest of the Company in all properties is subordinate to first mortgage loans to the lessees, aggregating $1,294,687 as of December 31, 1994.
Lease Cost to Property Property Date Land Area Year Expiration Company FFO Net Income Description Acquired In Acres Improvements Completed Date 12/31/94 1994 (1) 1994 (2) ----------- -------- -------- ------------ --------- ---- -------- -------- -------- SHOPPING CENTERS Lawrence County Shopping Center 5/71 13.62 135,605 sq. ft. 1971 2069 (3) $435,994 $ 67,200 $ 67,200 Sybene, OH Grand Marche Shopping Center 9/72 11.38 200,585 sq. ft. 1969 2012 250,500 56,228 (4) 56,228 Lafayette, LA Manatee County Shopping Center 5/71 16.00 120,500 sq. ft. 1971 2069 (3) 241,798 30,000 30,000 Bradenton, FL ------- -------------------------------- 456,690 sq. ft. $928,292 $153,428 $153,428 ======= ================================
NOTES: (1) Property FFO represents cash flows from operating activities before interest expense excluding changes in accrued assets and liabilities for the fiscal year ended December 31, 1994 or from the date of acquisition (if acquired in 1994) through December 31, 1994. Property FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles as an indicator of operating performance; or to cash flows from operating, investing or financing activities as a measure of liquidity. Property FFO is presented as an additional measure in valuing and analyzing the underlying real estate investments. (2) Property Net Income represents net income of the property calculated in accordance with generally accepted accounting principles, excluding any allocation of general and administrative expenses of the Company. (3) Each lessee has a repurchase option exercisable at a specified price (in each case higher than the cost to the Company of its investment) which increases annually by a fixed amount. (4) Includes percentage rentals of $28,728. 12 14 IV. MORTGAGE LOAN INVESTMENTS The Company had mortgage loans receivable on the following properties:
|------Security------| Principal Stated Type of Land Area Outstanding Maturity Interest Location Loan In Acres Improvements 12/31/94 Date Rate -------- ---- -------- ------------ -------- ---- ---- Walton Plaza Shopping Center 1st Mortgage 5.53 43,460 sq. ft. $3,245,122 8/98 (1) 10.25% Augusta, GA Spanish Quarter Apartments Wrap-Around 15.00 276 units 5,194,228 9/01 (2) (2) Montgomery, AL Mortgage Mill Creek Club Condominiums 1st Mortgage --- 4 units 40,504 2006- (3) 8.63% - Nashville, TN Participation 2007 12.38% Cypress Chase "A" Condominiums 1st Mortgage 2.00 recreational 145,369 5/09 (4) 10.00% Lauderdale Lakes, FL ---------- 8,625,223 Less interest discounts and negative goodwill (333,080) ---------- $8,292,143 ==========
(1) Monthly payments of $29,670 of principal and interest at an annual rate of 10.25%, with a balloon payment at maturity August 1, 1998. (2) Modified effective December 1, 1994 to extend the term for 3 years to September 1, 2001 and to reduce the cash interest rate from 10% to 9.5% prospectively, requiring monthly payments of $45,382 of principal and interest for the remaining term, with a balloon payment at maturity. Additional interest at an annual rate of 1% accrues for the periods September 1, 1984 through August 31, 1989 and September 1, 1991 through August 31, 2001 and is payable at maturity or on sale of the property. In addition, the Company has agreed to fund additional principal of up to $260,000 under this mortgage to make certain capital improvements. This wrap-around mortgage is subject to two first mortgages having an aggregate balance of $1,134,260 as of December 31, 1994. See Table V. Mortgage Indebtedness for a summary of the terms of the first mortgages. (3) Principal outstanding December 31, 1994 represents the Company's 46.154% participation in the total loan outstanding of $87,758. (4) Monthly payments include principal and interest of $1,590. 13 15 V. MORTGAGE INDEBTEDNESS Indebtedness of the Company secured by its investments (not including mortgage debt owed by lessees of its land purchase-leaseback investments) was as follows:
Principal Balance Annual Investment 12/31/94 Maturity Date Interest Rate Constant Payment ---------- -------- ------------- ------------- ---------------- Pensacola Plaza $ 1,750,000 2/06/95 (7) 7.640% (3) $ 133,700 (1) Pensacola, FL Venice Plaza 108,339 (2) 8/01/95 9.500% 168,776 Venice, FL Chadwick Square 863,497 11/01/95 (4) 13.875% 126,900 Hendersonville, NC Ft. Walton Beach Plaza 1,773,737 12/30/95 7.640% (3) 135,514 (1) Ft. Walton Beach, FL Elmwood Oaks 9,000,000 2/01/96 9.750% 877,500 (1) Harahan, LA Douglas Commons 6,314,134 3/01/96 (4) 9.780% 659,281 Douglasville, GA Spalding Village 12,413,464 4/01/96 (4) 9.375% 1,272,576 Griffin, GA Chestnut Square 1,059,548 5/01/96 (4) 13.875% 155,100 Brevard, NC Lawrence Commons 2,772,496 8/01/96 (4) 9.375% 291,944 Lawrenceburg, TN Spanish Quarter Apartments Phase I 227,306 9/20/96 8.500% 140,244 Montgomery, AL Phase II 906,954 7/15/02 8.250% 162,360 Stadium Plaza 3,850,000 11/01/96 9.500% 365,750 (1) Phenix City, AL Seven Hills 3,800,000 2/01/97 9.750% 370,500 (1) Spring Hill, FL Delchamps Plaza 3,277,511 8/01/97 (4) 9.375% 349,335 Pascagoula, MS Paulding Commons 8,818,984 8/01/97 (4) 7.600% 762,561 Dallas, GA (5) Smyrna Village 4,213,514 8/01/97 (4) 7.600% 364,335 Smyrna, TN (5) South Beach Regional 15,569,828 8/01/97 (4) 7.600% 1,396,598 Jacksonville Beach, FL (5) Pinhook Plaza Phase I 1,949,996 1/01/00 (4) 9.875% 250,320 Lafayette, LA Phase II 2,049,065 1/01/00 (4) 9.875% 258,504 Phase III 3,586,106 1/01/00 (4) 9.875% 407,979 Macland Pointe 3,896,820 2/01/00 (4) 7.750% 362,558 Marietta, GA Plaza Acadienne 2,457,481 7/01/00 (4) 10.250% 317,420 Eunice, LA
14 16 V. MORTGAGE INDEBTEDNESS. continued
Principal Balance Annual Investment 12/31/94 Maturity Date Interest Rate Constant Payment ---------- -------- ------------- ------------- ---------------- Thomasville Commons $ 5,626,354 6/1/02 (4) 9.625% $ 583,303 Thomasville, NC North Village Center 2,891,504 (2) 3/15/09 8.125% 343,171 North Myrtle Beach, SC Village at Northshore 5,837,763 7/01/13 9.000% 647,803 Slidell, LA ------------ ----------- 105,014,401 $10,904,032 =========== Interest Premium (6) 92,683 ------------ $105,107,084 ============
NOTES: (1) Interest only. Entire principal due at maturity. (2) Although the Company is a partner or joint venturer in these investments, 100% of the mortgage notes payable is recorded for financial reporting purposes. (3) Adjustable quarterly. (4) Balloon payment at maturity. (5) The Company has the option to extend for two additional years. (6) For financial reporting purposes, mortgage indebtedness is valued assuming current interest rates at the dates of acquisition. (7) Extended to May 1, 1995 on the same terms pending possible refinancing by the lender or repayment. 15 17 Rental Properties. On June 30, 1994, the Company purchased two shopping centers located in Cooper City and Sunrise, Florida for a total purchase price of approximately $25,350,000 cash. Countryside Shops in Cooper City, Florida contains 173,161 square feet and is anchored by Publix and J. Byrons. Westgate Square in Sunrise, Florida contains 104,904 square feet and is anchored by Winn-Dixie. On August 3, 1994, the Company acquired the land underlying Valley West Mall in Glendale, Arizona for $1,500,000 cash and terminated the ground lease, extinguishing approximately $204,000 of ground lease payments. The purchase was made as part of a restructuring of this investment which included the purchase of the underlying debt described under "Mortgage Indebtedness" below. On August 31, 1994, the Company purchased First Street Station Shopping Center in Albemarle, North Carolina for approximately $3,010,000 cash. This center contains 52,230 square feet of retail space and is anchored by Harris Teeter. On November 1, 1994, the Company purchased Eden Centre in Eden, North Carolina for approximately $3,513,000 cash. This center contains 56,355 square feet and is anchored by Food Lion. On December 21, 1994, the Company acquired eleven shopping centers in Baton Rouge, Eunice, Lafayette and Slidell, Louisiana from a Massachusetts limited partnership and various related or affiliated Louisiana partnerships. The total purchase price was approximately $75,842,000 consisting of $59,962,000 cash and $15,880,000 of existing first mortgage financing to which three of the centers are subject. These centers contain approximately 1,350,000 square feet of retail space and are anchored by such tenants as Kmart, Delchamps, Albertsons, K & B Drugs, Marshalls and Service Merchandise. This acquisition was part of a package of thirteen centers, two of which closed January 6, 1995. See "Subsequent Events" below. During 1994, the Company completed construction of a 4,800 square foot expansion of its Forest Hills Shopping Center in Wilson, North Carolina for a total cost of approximately $262,000. Also, the Company completed a 10,553 square foot expansion of its department store anchor at South Beach Regional in Jacksonville, Florida for a total cost of approximately $506,000, $97,000 of which was funded during 1993. Additionally, the Company funded approximately $7,000 in initial expenditures on three additional potential tenant expansions. During 1994, the Company completed the redevelopment of its Riverview Shopping Center in Durham, North Carolina. This redevelopment included the demolition of approximately 40,000 square feet and the construction of a new 54,000 square foot store for a new grocery tenant. The cost of this redevelopment and 16 18 renovation of the existing center totaled approximately $3,015,000, $7,000 of which was funded during 1993. Also, the Company funded approximately $661,000 for a redevelopment project at its West Gate Plaza Shopping Center in Mobile, Alabama which commenced in late 1994 and is expected to be completed in 1995. The total cost of this redevelopment is expected to be approximately $2,750,000 and includes the demolition of approximately 35,000 square feet and the construction of a new 44,000 square foot store for a new grocery tenant. Mortgage Investments. During April, 1994, the borrower under the Spanish Quarter Apartments wrap-around mortgage loan filed Chapter 11 bankruptcy. In December, 1994, the Bankruptcy Court approved the plan of reorganization which amended the mortgage loan effective December 1, 1994 to extend the term for 3 years to September 1, 2001 and to reduce the cash interest rate from 10% to 9.5% prospectively. Additional interest at an annual rate of 1% continues to accrue through the remainder of the term. In addition, the Company has agreed to fund additional principal of up to $260,000 under this mortgage for capital improvements to the property. Mortgage Indebtedness. On June 28, 1994, the Company purchased the 9.5% mortgage note payable secured by Valley West Mall in Glendale, Arizona for $4,500,000. The mortgage note payable had an outstanding principal balance of $8,248,095, which resulted in an extraordinary gain on extinguishment of this indebtedness of $3,748,095 for both financial reporting and tax purposes. Subsequent Events. On January 6, 1995, the Company acquired two additional centers in Slidell and Galliano, Louisiana. The total purchase price was approximately $6,658,000, consisting of approximately $4,275,000 cash over first mortgage financing on one of the centers of approximately $2,383,000. Country Club Plaza in Slidell, Louisiana contains 64,786 square feet and Tarpon Heights Plaza in Galliano, Louisiana contains 56,605 square feet. Both centers are anchored by Delchamps. These two centers were part of a package of thirteen centers, eleven of which were acquired December 21, 1994. The February 6, 1995 maturity of the mortgage indebtedness secured by Pensacola Plaza, has been extended to May 1, 1995 on the same terms pending possible refinancing by the lender or repayment. 17 19 Item 3. Legal Proceedings. There are no material pending legal proceedings of which the Company is aware involving the Company or its properties. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. 18 20 PART II Item 5. Market for the Registrant's Common Equity and Related Security Holder Matters. a) The following table shows the high and low sale prices for the Company's common stock, as reported on the New York Stock Exchange for the periods indicated.
High Low ---- --- 1993 ---- First Quarter $15.50 $11.63 Second Quarter 15.13 12.00 Third Quarter 14.13 11.00 Fourth Quarter 12.88 10.38 1994 ---- First Quarter 11.75 10.38 Second Quarter 10.75 9.75 Third Quarter 10.50 8.75 Fourth Quarter 10.38 9.00
b) Approximate number of Equity Security Holders.
Approximate Number of Record Title of Class Holders at February 6, 1995 -------------- ---------------------------- Shares of Common Stock 4,000 $1 Par Value
c) IRT Property Company paid quarterly cash dividends during the years 1993 and 1994 as follows:
Cash Dividends Paid ------------------- 1993 ---- First Quarter $ .21 Second Quarter .21 Third Quarter .21 Fourth Quarter .21 1994 ---- First Quarter .21 Second Quarter .21 Third Quarter .21 Fourth Quarter .21
IRT has paid 68 consecutive quarterly dividends. The current annualized dividend rate is $.84. The Company does not foresee any restrictions upon its ability to continue its dividend payment policy of distributing at least the 95% of its otherwise taxable ordinary income required for qualification as a REIT. 19 21 Item 6: Selected Consolidated Financial Data The following table sets forth selected consolidated financial data for the Company and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.
December 31, December 31, December 31, December 31, December 31, As of or for the years ended 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Gross revenues $ 49,202,144 $ 45,062,911 $ 34,006,687 $ 28,686,196 $ 29,808,804 ============ ============ ============ ============ ============ Earnings from operations $ 12,788,923 $ 11,772,265 $ 7,441,692 $ 6,261,200 $ 6,656,881 Gain (loss) on real estate investments (3,825,418) 4,556,511 3,547,071 1,134,475 4,001,561 ------------ ------------ ------------ ------------ ------------ Earnings before extraordinary items 8,963,505 16,328,776 10,988,763 7,395,675 10,658,442 Extraordinary items: Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811) - - Gain on purchase of debentures - - - 17,400 1,058,802 ------------ ------------ ------------ ------------ ------------ Net earnings $ 12,711,600 $ 14,888,298 $ 10,973,952 $ 7,413,075 $ 11,717,244 ============ ============ ============ ============ ============ Per share: Earnings before extraordinary items $ .35 $ .72 $ .74 $ .59 $ .88 Extraordinary items .15 (.06) - - .09 ----- ----- ----- ----- ----- Net earnings $ .50 $ .66 $ .74 $ .59 $ .97 ===== ===== ===== ===== ===== Dividends paid $ .84 $ .84 $ .81 $ .80 $1.07 ===== ===== ===== ===== ===== Federal income tax status of dividends paid to shareholders: Ordinary income $ .72 $ .39 $ .39 $ .55 $ .52 Capital gain .04 .45 .42 .13 .55 Return of capital .08 - - .12 - ------------ ------------ ------------ ------------ ------------ $ .84 $ .84 $ .81 $ .80 $1.07 ============ ============ ============ ============ ============ Weighted average number of shares outstanding 25,349,303 22,457,131 14,896,369 12,633,644 12,038,407 ============ ============ ============ ============ ============ Total assets $428,579,355 $402,319,125 $297,590,922 $184,627,532 $185,593,048 ============ ============ ============ ============ ============ Indebtedness: Mortgage notes payable $105,107,084 $ 98,878,505 $115,379,078 $ 72,865,897 $ 75,855,354 7.3% convertible subordinated debentures 86,250,000 86,250,000 - - - 2.0% convertible subordinated debentures - - 5,730,000 5,730,000 11,465,000 Indebtedness to bank 26,000,000 - 1,200,100 7,000,000 9,540,000 ------------ ------------ ------------ ------------ ------------ $217,357,084 $185,128,505 $122,309,178 $ 85,595,897 $ 96,860,354 ============ ============ ============ ============ ============ Shareholders' equity $203,038,464 $210,335,167 $168,574,002 $ 93,610,551 $ 82,200,090 ============ ============ ============ ============ ============ Other Data: Funds From Operations (1) $ 21,615,588 $ 19,825,901 $ 13,847,999 $ 11,865,950 $ 12,238,142 Net Cash Flows from (used in) - Operating Activities $ 22,511,731 $ 19,116,142 $ 14,274,651 $ 10,195,538 $12,950,891 Investing Activities ($99,052,456) ($16,990,558) ($55,114,524) ($4,206,753) ($10,385,497) Financing Activities ($247,587) $ 76,370,567 $ 40,247,232 ($5,837,312) ($24,019,935)
(1) Funds from operations is defined as net cash flows from operating activities before changes in accrued assets and liabilities. Management believes funds from operations should be considered along with, but not as an alternative to, net income as defined by generally accepted accounting principles as a measure of the Company's operating performance. Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. 20 22 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Changes in Financial Condition. During 1994, the Company utilized funds of: a) $108,408,000 for the acquisition of fifteen shopping center investments, consisting of cash of $92,528,000 and mortgage debt of $15,880,000 secured by four of the centers, b) $4,347,000 to fund expansion or redevelopment costs of seven existing investments, c) $1,500,000 for the purchase of the land underlying Valley West Mall, extinguishing approximately $204,000 of annual ground lease payments, d) $4,500,000 to purchase the $8,248,000 mortgage note payable secured by Valley West Mall, extinguishing approximately $1,076,000 of annual debt service payments (see Note 10). These transactions were funded with the remaining proceeds from the 1993 public offerings and $26,000,000 of borrowings under the Company's revolving term loan. During 1993, the Company completed concurrent public offerings of 4,127,580 shares of its common stock at $11.25 per share and $86,250,000 of 7.3% convertible subordinated debentures for net proceeds of approximately $126,330,000. Also during 1993, the Company received approximately $7,779,000 on the sale of an apartment investment, two parcels of land and a third parcel of land with the buildings thereon. In addition, the Company received net proceeds of approximately $4,130,000 from the repayment of two mortgage loan investments. The Company utilized funds of: a) $26,329,000 for the acquisition of four shopping center investments, consisting of cash of $18,529,000 and mortgage debt of $7,800,000 secured by two of the centers, b) $9,168,000 to purchase or fund expansions of six of its real estate investments, c) $22,816,000 to repay eleven mortgage notes payable, and d) $8,308,500 of principal and premium to redeem the remainder of the Company's 2% convertible subordinated debentures. 21 23 A portion of proceeds made available by the offerings in 1993 were used temporarily to reduce bank indebtedness. The remaining funds were temporarily invested in short-term money market instruments, pending the acquisition of shopping center investments. Changes in Results of Operations. The $3,074,000 increase in income from rental properties during 1994 was due to approximately $4,646,000 of income earned from the 19 shopping centers acquired during 1993 and 1994 and the recent property expansions purchased or funded by the Company. This was partially offset by $1,332,000 less income earned from the investments sold during 1993 and 1994 as well as approximately $240,000 less income due to the ongoing redevelopment of two shopping center investments. Similarly, the $10,823,000 increase in income from rental properties during 1993 was primarily due to approximately $15,952,000 of income earned from the 27 shopping centers acquired during 1992 and 1993, partially offset by $5,010,000 less income earned from the 23 Ingles centers sold in October 1992 and the apartment investment sold in October 1993 and by $119,000 of bankruptcy claim settlements received from Revco in June 1992. The percentage leased of the Company's shopping center investments remained stable at 93% at December 31, 1992, 1993 and 1994. The average occupancy of the Company's Ohio apartment investment decreased from 92% in 1992 to 89% in 1993 but increased to 92% in 1994. Percentage rentals received from shopping center investments, excluding percentage rentals received from the four Wal-Mart investments classified as direct financing leases, totaled $823,000 in 1992, $755,000 in 1993 and $470,000 in 1994. Included in these percentage rentals were $54,000 received from the Ingles centers in 1992. During 1993 and 1992, three of the Company's mortgage loan investments were repaid in full. These loan repayments resulted in decreased interest income of $421,000 in 1994 and $433,000 in 1993. The decreases were more than offset by increases in interest earned on short-term investments of approximately $1,541,000 and $635,000 in 1994 and 1993, respectively. The increases in interest on direct financing leases in both 1994 and 1993 were primarily due to receipt of percentage rentals from the four Wal-Mart investments, which were approximately $292,000, $219,000 and $123,000 during 1994, 1993 and 1992, respectively. The increases in operating expenses of rental properties and depreciation during 1994 and 1993 were primarily due to property acquisitions and dispositions during the three-year period. The Company acquired 15 shopping center investments in 1994, four in 1993 and 23 in 1992. The additional operating expenses and depreciation related to these centers was partially offset by the sale of an apartment investment in October 1993 and the 23 Ingles 22 24 centers in October 1992. Depreciation also increased in 1994 due to four property expansions purchased or funded during 1993. The 1993 and 1992 acquisitions also resulted in increased interest expense on mortgages in 1994 and 1993. These increases were fully offset in 1994 and partially offset in 1993 by the repayment of eleven mortgage notes payable during 1993 aggregating $22,816,000 of principal with interest rates ranging from 7% to 13.625%. The 1994 increase was further offset by the refinancing of one mortgage note payable in February 1994 which reduced the interest rate from 12.625% to 8.125% and the purchase of the 9.5% mortgage secured by Valley West Mall in June 1994. The 1993 increase was further offset by the 1992 sale of the 23 Ingles centers and the prepayment of a $444,000 mortgage note payable. The $3,764,000 and $2,027,000 increases in interest on debentures during 1994 and 1993, respectively, were primarily due to the 7.3% debentures issued in August 1993. The 1993 increase was partially offset by a decrease in interest expense on the 2% debentures totaling $182,000 which resulted from the redemption of the remaining $5,730,000 of debentures on August 1, 1993 in accordance with the debenture agreement. Similarly, the issuance of the 7.3% debentures resulted in an increase in amortization of debt cost of $234,000 and $142,000 during 1994 and 1993, respectively. The Company had average borrowings under its revolving term loan of $789,000 and $6,494,000 during 1994 and 1993, respectively, which resulted in decreased interest on bank debt during 1994. The interest rate on this facility is, at the option of the Company, either prime or 1.25% over adjusted LIBOR. Interest on indebtedness to bank decreased $164,000 during 1993 due to lower average borrowings at slightly higher average rates. The increase in general and administrative expenses in 1994 was primarily due to the costs of increased administrative and property management personnel as well as increased shareholder relations costs and professional services. The amount of gains recognized on sales of investments have fluctuated and in the future may continue to fluctuate depending upon sales activity in any given year. During 1994, the Company recognized gains on sales of properties of approximately $257,000. This gain was more than offset by $4,125,000 of reductions in carrying values of certain investments, primarily Valley West Mall. During 1993 and 1992, the Company recognized gains on sales of properties of approximately $4,557,000 and $7,112,000, respectively. The gains on sales during 1992 were offset by the initial reduction in carrying value of Valley West Mall of $3,565,000. These adjustments to carrying value were a result of the Company's quarterly evaluations of its individual investments based on current and forecasted net operating income of the 23 25 investment, competition resulting from new properties in the market place and other changes in the local economy. The development of a new mall which would directly compete with Valley West Mall was announced in 1992, and in November 1992, one of the anchor tenants at Valley West gave notice to terminate its lease effective November 1993. Based on this lease termination and the predicted impact of the new mall when opened on the tenants of Valley West, the Company determined that a permanent impairment of $3,565,000 had occurred and reflected such writedown in its financial statements during the fourth quarter of 1992. The new mall opened for business in October 1993, the terminating tenant ceased operations in November 1993, and another anchor tenant changed its business to an outlet concept. After a concerted leasing effort which commenced in 1992, review of tenant sales reductions since the opening of the new mall, meetings with the City and potential purchasers of the center, and restructuring of the Company's ownership in this investment, including prepayment of the mortgage and negotiations with the land lessor concerning a joint venture or the ultimate purchase of the underlying land, the Company determined that a further permanent impairment of the value of this mall had developed. An additional indicator of value was the discount received by the Company in the prepayment of the underlying mortgage debt in June 1994. Accordingly, the Company recorded an additional writedown of this investment in June 1994. During 1994, the Company recognized an extraordinary gain of approximately $3,748,000 on the purchase of the 9.5% mortgage note payable secured by Valley West Mall. The mortgage had an outstanding balance of $8,248,000 and was purchased for $4,500,000. During 1993, the Company recognized extraordinary losses of approximately $1,440,000 on the prepayment of nine mortgage notes payable totaling $21,896,000 with interest rates ranging from 9.3% to 13.625%. This extraordinary loss included $186,000 of unamortized net interest discounts and $1,254,000 of prepayment penalties. During 1992, the Company recognized extraordinary losses of approximately $15,000 on the prepayment of a 10% mortgage note payable totaling $444,000 and the prepayment of LIBOR advances under the revolving term loan totaling $15,000,000. Funds From Operations. Funds from operations is defined as net cash flows from operating activities before changes in accrued assets and liabilities. Funds from operations totaled $21,615,588, $19,825,901 and $13,847,999 for the years ended December 31, 1994, 1993 and 1992, respectively. Management believes funds from operations should be considered along with, but not as an alternative to, net income as defined by generally accepted accounting principles as a measure of the Company's operating performance. Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. 24 26 During 1994 and 1993, the Company had an average of approximately $57,000,000 and $25,000,000, respectively, of the proceeds of the August 1993 equity and debenture offerings invested in short-term money market investments earning an average interest rate of approximately 4.2% and 3.4%, respectively. This resulted in temporary dilution in funds from operations. This temporary dilution ceased when the remaining cash was invested in higher-yielding real estate investments on December 21, 1994. In addition, funds from operations for 1994, 1993 and 1992 did not include rental income received through the rental guarantees related to major portfolio acquisitions completed in July and December 1992. Rental income covered by the guarantees for 17 centers totaled approximately $510,000 and $838,000 for 1994 and 1993, respectively. For 1992, rental income covered by guarantees for 10 centers totaled approximately $450,000 but encompassed only five months of the year. These rental guarantees were reflected in the initial purchase prices of these centers rather than as current operating results. Liquidity and Capital Resources. In 1994 and 1993, the Company's dividends, mortgage amortization payments and capital improvements were funded primarily by funds from operations and also through supplemental funding from mortgage financing, available cash investments, bank borrowings and other sources. The Company believes that funds from operations will be sufficient to pay dividends and to make mortgage amortization payments and fund necessary capital improvements. Other planned activities, including property acquisitions, certain capital improvement programs, and debt repayments are expected to be funded to the extent necessary by bank borrowings, mortgage financing, periodic sales or exchanges of existing properties and public or private offerings of stock or debt. For a description of the Company's mortgage debt, reference is made to Table V in Item 2 hereof and to Note 6 to the consolidated financial statements included as a part of this report. For a description of commitments and contingencies, reference is made to Note 15 to the consolidated financial statements included as a part of this report. On August 31, 1993, the Company completed concurrent public offerings of 4,127,580 shares of its common stock and $86,250,000 of 7.3% convertible subordinated debentures for net proceeds aggregating approximately $126,330,000. On October 29, 1992, the Company completed a public offering of 5,750,000 shares of its common stock at $11 per share for net proceeds of approximately $59,520,000. The Company used the proceeds from these offerings to acquire new shopping center investments, to improve existing investments and temporarily to reduce bank debt. 25 27 On November 1, 1990, the Company obtained a $25,000,000 secured revolving term loan maturing November 1, 1995. On July 31, 1992, the loan agreement was modified to increase the commitment from $25,000,000 to $50,000,000 and to extend the maturity from November 1, 1995 to August 1, 1997. The interest rate on this loan is either prime or 1.25% over adjusted LIBOR, at the option of the Company. The Company may borrow, repay and/or reborrow under this loan at any time. As of December 31, 1994, the borrowings under this credit facility totaled $26,000,000. As of December 31, 1993, the Company had no amounts outstanding under this loan. For additional information on this revolving term loan, reference is made to Note 8 to the consolidated financial statements. The Company's 7.3% convertible subordinated debentures are convertible into common stock of the Company at any time prior to maturity at $11.25 per share, subject to adjustments in certain events. As of December 31, 1994 and 1993, the entire issue of $86,250,000 of debentures was outstanding. On August 1, 1993, the Company's 2% convertible subordinated debentures were redeemed in full at a premium of 45% over par. For additional information on the debentures, reference is made to Note 7 to the consolidated financial statements. The Company's Dividend Reinvestment Plan allows shareholders to elect to reinvest all or a portion of their distributions in newly issued shares of the Company at 95% of the market price of the shares. During 1994, 1993 and 1992, the Company received net proceeds under this plan of $938,000, $1,249,000 and $996,000, respectively. For additional information on the Dividend Reinvestment Plan, reference is made to Note 11 to the consolidated financial statements. Inflationary and Economic Factors. The effects of inflation upon the Company's results of operations and investment portfolio are varied. From the standpoint of revenues, inflation has the dual effect of both increasing the tenant revenues upon which percentage rentals are based and allowing increased fixed rentals as rental rates rise generally to reflect higher construction costs on new properties. This positive effect is partially offset by increasing operating expenses, but usually not to the extent of the increases in revenues. Environmental Factors. On March 2, 1994, the Company was advised by the North Carolina Department of Environment, Health and Natural Resources that certain Corrective Actions must be performed at the Company's Charlotte, North Carolina industrial facility. During its soil and groundwater investigation at the Bluebonnet Village Shopping Center in Baton Rouge, Louisiana, the Company's environmental consultant discovered concentrations of various chemicals in a single groundwater monitoring well that exceeded the maximum contaminant levels under the Federal Safe Drinking Water Act. The Company has notified the Louisiana Department of 26 28 Environmental Quality-Groundwater Protection Division ("LDEQ-GWPD") of such discovery. For additional information, see "Regulation" under Item 1 and Note 16 to the consolidated financial statements included as a part of this Report. Based on the information presently available, the Company believes the costs of any corrective action would not have a material adverse effect on the Company's results of operations, financial position or liquidity. 27 29 Item 8. Financial Statements and Supplementary Data. IRT PROPERTY COMPANY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page ---- Report of Independent Public Accountants 29 Consolidated Balance Sheets - December 31, 1994 and 1993 30 Consolidated Statements of Earnings - For the Years Ended December 31, 1994 1993 and 1992 31 Consolidated Statements of Changes in Shareholders' Equity - For the Years Ended December 31, 1994, 1993 and 1992 32 Consolidated Statements of Cash Flows - For the Years Ended December 31, 1994, 1993 and 1992 33 Notes to Consolidated Financial Statements - December 31, 1994, 1993 and 1992 35
Schedules:
Schedule Number - -------- XI Real Estate and Accumulated Depreciation 50 XII Mortgage Loans on Real Estate 62
Note: All other schedules are omitted since they are not required, are not applicable or the required information is set forth in the consolidated financial statements or the notes thereto. 28 30 Report of Independent Public Accountants To The Shareholders of IRT Property Company: We have audited the accompanying consolidated balance sheets of IRT PROPERTY COMPANY (a Georgia corporation) and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of earnings, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IRT Property Company and subsidiary as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to consolidated financial statements are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia January 24, 1995 29 31 IRT PROPERTY COMPANY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1994 AND 1993
1994 1993 ------------ ------------- ASSETS Real estate investments: Rental properties $442,642,705 $331,012,764 Accumulated depreciation (41,677,722) (33,463,530) ----------- ----------- 400,964,983 297,549,234 Net investment in direct financing leases 9,295,880 9,461,899 Mortgage loans, net 8,292,143 8,392,959 ----------- ----------- Net real estate investments 418,553,006 315,404,092 Cash and cash equivalents 1,841,388 78,629,700 Accrued interest receivable 544,712 895,556 Prepaid expenses and other assets 7,640,249 7,389,777 ----------- ----------- $428,579,355 $402,319,125 =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable plus net interest premium of $92,683 in 1994 and $163,244 in 1993 $105,107,084 $ 98,878,505 7.3% convertible subordinated debentures due August 15, 2003 86,250,000 86,250,000 Indebtedness to bank 26,000,000 - Accrued interest on debentures 2,378,583 2,116,240 Accrued expenses and other liabilities 4,726,224 3,617,213 Deferred income taxes 1,079,000 1,122,000 ----------- ----------- Total liabilities 225,540,891 191,983,958 ----------- ----------- Commitments and Contingencies (Note 15) Shareholders' Equity: Common stock, $1 par value, authorized 75,000,000 shares; 25,420,747 shares issued and outstanding in 1994 and 25,288,624 shares in 1993 25,420,747 25,288,624 Additional paid-in capital 197,937,465 196,793,150 Cumulative distributions in excess of net earnings (20,319,748) (11,746,607) ----------- ----------- Total shareholders' equity 203,038,464 210,335,167 ----------- ----------- $428,579,355 $402,319,125 =========== ===========
The accompanying notes are an integral part of these consolidated balance sheets. 30 32 IRT PROPERTY COMPANY CONSOLIDATED STATEMENTS OF EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992 ---- ---- ---- Revenues: Income from rental properties $44,681,220 $41,607,391 $30,784,664 Interest, including $2,388,308 in 1994, $846,938 in 1993 and $211,572 3,267,486 2,257,405 2,103,209 in 1992 on cash equivalents 1,253,438 1,198,115 1,118,814 ---------- ---------- ---------- Interest on direct financing leases 49,202,144 45,062,911 34,006,687 ---------- ---------- ---------- Expenses: Operating expenses of rental properties 10,318,596 10,022,610 7,541,256 Interest on mortgages 8,191,240 10,269,423 9,693,316 Interest on debentures 6,202,025 2,438,114 524,842 Interest on indebtedness to bank 159,603 384,687 577,303 Depreciation 8,214,192 7,668,797 6,201,949 Amortization of debt costs 446,454 212,421 70,156 General & administrative 2,881,111 2,294,594 1,956,173 ---------- ---------- ---------- 36,413,221 33,290,646 26,564,995 ---------- ---------- ---------- Earnings before gain (loss) on real estate investment 12,788,923 11,772,265 7,441,692 ---------- ---------- ---------- Gain (loss) on real estate investments: Gain on sales of properties 300,036 4,556,511 7,112,382 Valuation loss (4,125,454) - (3,565,311) ---------- ---------- ---------- (3,825,418) 4,556,511 3,547,071 ---------- ---------- ---------- Earnings before extraordinary item 8,963,505 16,328,776 10,988,763 Extraordinary item - Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811) ---------- ---------- ---------- Net earnings $12,711,600 $14,888,298 $10,973,952 ========== ========== ========== Per Share: Earnings before extraordinary item $ 0.35 $ 0.72 $ 0.74 Extraordinary item 0.15 (0.06) - ----- ----- ----- Net earnings $ 0.50 $ 0.66 $ 0.74 ===== ===== ===== Weighted average number of shares outstanding 25,349,303 22,457,131 14,896,369 ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 31 33 IRT PROPERTY COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Cumulative Additional Distributions Total Common Paid-In in Excess of Shareholders' Stock Capital Net Earnings Equity ------ ------------ ------------- ------------- Balance at December 31, 1991 $13,667,993 $ 86,508,218 $ (6,565,660) $ 93,610,551 Net earnings - - 10,973,952 10,973,952 Cash dividends declared - - (12,469,411) (12,469,411) Issuance of shares under Dividend Reinvestment Plan, net 102,092 893,873 - 995,965 Exercise of Incentive Stock Options 25,090 151,075 - 176,165 Issuance of shares for the acquisition of properties 1,471,395 14,295,294 - 15,766,689 Issuance of common stock, net 5,750,000 53,770,091 - 59,520,091 ---------- ----------- ----------- ----------- Balance at December 31, 1992 21,016,570 155,618,551 (8,061,119) 168,574,002 Net earnings - - 14,888,298 14,888,298 Cash dividends declared - - (18,573,786) (18,573,786) Issuance of shares under Dividend Reinvestment Plan, net 109,807 1,138,821 - 1,248,628 Exercise of Incentive Stock Options 5,689 30,891 - 36,580 Issuance of shares for the acquisition of properties 28,978 350,997 - 379,975 Issuance of common stock, net 4,127,580 39,653,890 - 43,781,470 ---------- ----------- ----------- ----------- Balance at December 31, 1993 25,288,624 196,793,150 (11,746,607) 210,335,167 Net earnings - - 12,711,600 12,711,600 Cash dividends declared - - (21,284,741) (21,284,741) Issuance of shares under Dividend Reinvestment Plan, net 99,477 838,273 - 937,750 Exercise of Incentive Stock Options 1,010 2,131 - 3,141 Issuance of shares for the acquisition of properties 31,636 303,911 - 335,547 ---------- ----------- ----------- ---------- Balance at December 31, 1994 $25,420,747 $197,937,465 $(20,319,748) $203,038,464 ========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 32 34 IRT PROPERTY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992 ---- ---- ---- Cash flows from operating activities: Net earnings $12,711,600 $ 14,888,298 $ 10,973,952 Adjustments to reconcile earnings to net cash flows from operating activities: Depreciation 8,214,192 7,668,797 6,201,949 Gain (loss) on real estate investments 3,825,418 (4,556,511) (3,547,071) Extraordinary loss (gain) (3,748,095) 1,440,478 14,811 Amortization of debt costs 446,454 212,421 70,156 Recovery of investment in direct financing leases 166,019 172,418 134,202 ----------- ---------- ----------- Changes in accrued assets and 21,615,588 19,825,901 13,847,999 liabilities: Increase (decrease) in accrued interest on debentures - 7.3% interest payable 262,343 2,084,302 - 2.0% interest payable - (9,550) - Accrued premium on 2.0% debentures - (2,291,542) 410,242 Increase in interest receivable, prepaid expenses and other assets (592,782) (785,054) (808,244) Increase in accrued expenses and other liabilities 1,226,582 292,085 824,654 ----------- ----------- ----------- Net cash flows from operating activities 22,511,731 19,116,142 14,274,651 ----------- ----------- ----------- Cash flows from (used in) investing activities: Proceeds from sales of properties, net 562,070 7,779,046 15,248,873 Additions to real estate investments, net - Acquisitions, expansions and renovations (98,461,982) (27,697,142) (75,214,688) Improvements (1,253,360) (1,208,045) (1,873,666) Collections of mortgage loans, net 100,816 4,135,583 6,724,957 ----------- ----------- ----------- Net cash flows used in investing activities (99,052,456) (16,990,558) (55,114,524) ----------- ----------- ----------- Cash flows from (used in) financing activities: Cash dividends paid, net (20,346,991) (17,325,158) (11,473,446) Issuance of common stock, net - 43,781,470 59,520,091 Exercise of Incentive Stock Options 3,141 36,580 176,165 Issuance of 7.3% convertible subordinated debentures, net - 82,548,826 - Redemption of 2.0% convertible subordinated debentures - (5,730,000) - Amortization of mortgage notes payable, net (1,273,737) (1,484,658) (1,716,794) Repayment of mortgage notes payable (8,378,095) (22,815,915) (444,073) Increase (decrease) in bank indebtedness, net 26,000,000 (1,200,100) (5,799,900) Extraordinary item - Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811) ----------- ----------- ----------- Net cash flows from (used in) financing activities (247,587) 76,370,567 40,247,232 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (76,788,312) 78,496,151 (592,641) Cash and cash equivalents at beginning of year 78,629,700 133,549 726,190 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 1,841,388 $78,629,700 $ 133,549 =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 33 35 IRT PROPERTY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992 ---- ---- ---- Supplemental disclosures of cash flow information: ------------------------------------- Cash paid during the year for interest related to: Mortgage notes payable $ 8,082,615 $10,428,907 $ 9,564,518 Convertible subordinated debentures - 7.3% interest 6,033,906 - - 2.0% interest - 57,404 114,600 Premiums on 2.0% debentures - 2,578,500 - Indebtedness to bank 153,941 457,816 662,421 ----------- ---------- ----------- Total cash paid during the year for interest $ 14,270,462 $13,522,627 $ 10,341,539 =========== ========== =========== Supplemental schedule of noncash investing and financing activities: ----------------------------------- Acquisitions: Cost of acquisitions, expansions and renovations $114,677,940 $35,877,117 $176,283,071 Additions to mortgage notes payable - Assumed (15,880,411) (7,800,000) (56,001,694) Acquired - - (29,300,000) Issuance of common stock (335,547) (379,975) (15,766,689) ----------- ---------- ----------- Cash paid for acquisitions, expansions and renovations of real estate investments $ 98,461,982 $27,697,142 $ 75,214,688 =========== ========== =========== Dispositions: Fair values of assets sold $ 562,070 $ 7,779,046 $ 55,876,519 Repayment of mortgage notes payable - - (40,627,646) ----------- ---------- ----------- Proceeds from sales of properties, net $ 562,070 $ 7,779,046 $ 15,248,873 =========== ========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 34 36 IRT PROPERTY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994, 1993 and 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Consolidation- The accompanying consolidated financial statements include the accounts of IRT Property Company and its wholly-owned subsidiaries, IRT Management Company and VW Mall, Inc., (collectively, the "Company"). Intercompany transactions and balances have been eliminated in consolidation. Income Taxes- The Company has in past years elected to qualify, and intends to continue such election, to be taxed as a "Real Estate Investment Trust" ("REIT") under Sections 856-860 of the Internal Revenue Code, as amended. In general terms, under such Code provisions a trust or corporation which, in any taxable year, meets certain requirements and distributes to its shareholders at least 95% of its taxable income will not be subject to Federal income tax to the extent of the income which it distributes. The Company computes taxable income on a basis different from that used for financial reporting purposes due to differences in the estimated useful lives used to compute depreciation, timing differences in the recognition of loan commitment fees, and certain interest discounts which are not recognized for tax purposes. The Company also reports certain gains on sales of properties on the installment basis for tax purposes. Income Recognition- The Company follows the policy of suspending the accrual of income on any investments where interest or rental payments are delinquent 60 days or more. Percentage rental income is recorded upon collection. Gains from the sale of real estate are deferred until such time as minimum down payment and loan amortization requirements are met in conformity with the provisions of Statement of Financial Accounting Standards No. 66. Interest discounts are imputed on financed sales when the contractual interest rates are less than prevailing market rates at the time of sale. 35 37 Depreciation- The Company provides depreciation on buildings and other improvements on the straight-line basis over their estimated useful lives. Such lives are from 14 to 40 years for buildings and 6 years for improvements. Maintenance and repairs are charged to expense as incurred, while significant improvements are capitalized. The profit or loss on assets retired or otherwise disposed of is credited or charged to operations and the cost and related accumulated depreciation are removed from the asset and accumulated depreciation accounts. Valuation Loss- The need for any allowance for possible losses or reductions in carrying values applicable to the Company's investments is evaluated by management by means of quarterly reviews of the portfolio on an individual investment basis considering such factors as current and projected net operating income and other market factors. Rental properties are carried at the lower of depreciated cost or net realizable value. Cash Equivalents - The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Earnings Per Share- Earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding. The effect on earnings per share assuming conversion of the 2% and the 7.3% convertible subordinated debentures would be anti-dilutive. Exercise of the outstanding stock options would not have a material dilutive effect on earnings per share. Reclassification of Prior Year Amounts- Certain items on the consolidated statements of earnings have been reclassified to conform with the 1994 presentation. 2. PUBLIC OFFERINGS: On August 31, 1993, the Company completed concurrent public offerings of 4,127,580 shares of its common stock at $11.25 per share and $86,250,000 of 7.3% convertible subordinated debentures due August 15, 2003. Net proceeds 36 38 from these offerings totaled approximately $126,330,000. For more information regarding the convertible debentures, see Note 7. On October 29, 1992, the Company completed a public offering of 5,750,000 shares of its common stock at $11 per share. Net proceeds from this offering totaled approximately $59,520,000. 3. RENTAL PROPERTIES: Rental properties are comprised of the following:
December 31, ------------------------------- 1994 1993 ---- ---- Land covered by purchase- leaseback agreements $ 928,292 $ 928,292 Land related to buildings and improvements 97,129,292 61,094,813 Buildings & improvements 344,585,121 268,989,659 ----------- ----------- $442,642,705 $331,012,764 =========== ===========
Upon expiration of the leases for land covered by purchase-leaseback agreements, all improvements on the land will become the property of the Company. At December 31, 1994, land covered by purchase-leaseback agreements having an aggregate cost of $928,292 is subordinate to first mortgage liens of $1,294,687 which are on both land and improvements but are not obligations of the Company. In addition, various lessees of properties, which have an aggregate cost of $677,792 at December 31, 1994, have the option, subject to certain conditions, to repurchase the land. Such option prices are for amounts greater than the Company's carrying value of the related land. In 1986 the Company purchased 24 community and neighborhood shopping centers in North Carolina and Georgia, each of which is anchored by an Ingles supermarket, and leased back these centers to Ingles Markets, Incorporated. During the year ended December 31, 1991, the Company sold its Ingles shopping center in Brevard, North Carolina. The remaining 23 centers were sold by the Company on October 1, 1992 (see Note 9). Rental income from these leases totaled $4,764,074 in 1992. 37 39 Minimum base rentals on noncancellable operating leases for the Company's shopping center, industrial and land purchase-leaseback investments for the next five years and thereafter are as follows:
Year Amount ---- ------ 1995 $ 46,190,336 1996 42,522,193 1997 37,469,755 1998 33,592,108 1999 30,961,321 Thereafter 277,970,128 ----------- $468,705,841 ============
4. NET INVESTMENT IN DIRECT FINANCING LEASES: Four retail facilities are leased to Wal-Mart Stores, Inc. at a total annual rental of $827,925 plus percentage rentals of 1% of gross sales in excess of the tenant's actual sales for its fiscal year ended January 31, 1990. Rental income from these leases totaled $1,120,161 (including $292,236 of percentage rentals) in 1994, $1,046,737 (including $218,812 of percentage rentals) in 1993 and $951,176 (including $123,251 of percentage rentals) in 1992. The Company acquired ten branch bank buildings in a 1984 merger. These facilities are leased to The Old Phoenix National Bank at a total annual rental of $313,049. The Company is to receive minimum lease payments of $1,140,974 per year during 1995 through 1999 and a total of $13,324,064 thereafter through the remaining lease terms. The estimated residual values of the leased properties included in net investment in direct financing leases totaled $644,872 as of December 31, 1994 and 1993. 38 40 5. MORTGAGE LOANS: The Company's investments in mortgage loans, all of which are secured by real estate investments, are summarized by type of loan at December 31, 1994 and 1993, as follows:
1994 1993 ----------------------------- --------------------------- Number Amount Number Amount of Loans Outstanding of Loans Outstanding -------- ----------- -------- ----------- First mortgages 2 $3,390,491 2 $3,444,689 Mortgage participation 1 40,504 1 42,402 Wrap-around mortgage 1 5,194,228 1 5,246,024 - --------- - --------- 4 8,625,223 4 8,733,115 Less-Interest discounts and negative goodwill - (333,080) - (340,156) - --------- - -------- Mortgage loans, net 4 $8,292,143 4 $8,392,959 = ========= = =========
During April, 1994, the borrower under the Spanish Quarter Apartments wrap-around mortgage loan filed Chapter 11 bankruptcy. In December, 1994, the Bankruptcy Court approved the plan of reorganization which amended the loan effective December 1, 1994 to extend the term for 3 years to September 1, 2001 and to reduce the cash interest rate from 10% to 9.5% prospectively. Additional interest at an annual rate of 1% continues to accrue through the remainder of the term. In addition, the Company has agreed to fund additional principal of up to $260,000 under this mortgage for capital improvements. In accordance with SFAS No. 15, the Company will realize total proceeds in excess of the carrying value of the indebtedness at the time of the restructuring. 39 41 Annual principal payments applicable to mortgage loan investments in the next five years and thereafter are as follows:
Year Amount ---- ------ 1995 $ 83,509 1996 92,226 1997 101,833 1998 3,242,361 1999 87,157 Thereafter 4,685,057 --------- $8,292,143 =========
Based on current rates at which similar loans would be made, the estimated fair value of mortgage loans was approximately $8,576,000 and $9,094,000 at December 31, 1994 and 1993, respectively. 6. MORTGAGE NOTES PAYABLE: Mortgage notes payable are collateralized by various real estate investments having a net carrying value of approximately $136,934,847 as of December 31, 1994. These notes have stated interest rates ranging from 7.6% to 13.875% and are due in monthly installments with maturity dates ranging from 1995 to 2013. During 1994, the Company purchased for $4,500,000 the mortgage note payable secured by Valley West Mall which had a balance outstanding of approximately $8,248,000. During 1993, the Company paid in full eleven mortgage notes payable aggregating approximately $22,816,000. See also Note 10 where some of these prepayments resulted in extraordinary gains and losses. Principal amortization and balloon payments applicable to mortgage notes payable in the next five years and thereafter are as follows:
BALLOON YEAR AMORTIZATION PAYMENTS TOTAL ---- ------------ -------- ----- 1995 $ 1,558,825 $ 4,380,346 $ 5,939,171 1996 1,332,011 35,130,347 36,462,358 1997 1,056,758 34,648,703 35,705,461 1998 876,293 - 876,293 1999 958,888 - 958,888 Thereafter 7,953,731 17,211,182 25,164,913 ---------- ---------- ----------- $13,736,506 $91,370,578 $105,107,084 ========== ========== ===========
40 42 Based on the borrowing rates currently available to the Company for mortgages with similar terms and maturities, the estimated fair value of mortgage notes payable was approximately $102,098,000 and $100,161,000 at December 31, 1994 and 1993, respectively. 7. CONVERTIBLE SUBORDINATED DEBENTURES: Pursuant to the terms of the debentures, the Company redeemed $5,530,000 of its 2% convertible subordinated debentures on August 1, 1991 at a premium to par of 27% and the remaining $5,730,000 of this issue on August 1, 1993 at a premium to par of 45%. The premium paid by the Company totaled $2,578,500 and $1,493,100 on August 1, 1993 and 1991, respectively. Effective August 31, 1993, the Company issued $86,250,000 of 7.3% convertible subordinated debentures due August 15, 2003. Interest on the debentures is payable semi-annually on February 15 and August 15. The debentures are convertible at any time prior to maturity into common stock of the Company at $11.25 per share, subject to adjustment in certain events. Accordingly, 7,666,666 authorized but unissued common shares have been reserved for possible issuance. The Company has the option to redeem the debentures at par at any time after August 15, 1996. Costs associated with the issuance of the debentures were approximately $3,701,000 and are being amortized over the life of the debentures. Based on the closing market price at year end the estimated fair value of the 7.3% debentures was approximately $79,350,000 and $86,681,250 at December 31, 1994 and 1993, respectively. 8. INDEBTEDNESS TO BANK: On November 1, 1990, the Company obtained from a financial institution a $25,000,000 revolving term loan maturing November 1, 1995. On July 31, 1992, the Company amended and restated this revolving term loan to increase the lender's commitment to a maximum of $50,000,000 ($38,520,000 at December 31, 1994, based on existing collateral) and extend the maturity to August 1, 1997. The interest rate is, at the option of the Company, either a) prime, fluctuating daily, or b) 1.25% over the adjusted London Interbank Offered Rates ("LIBOR"), set for periods of one, two, three, or six months at the option of the Company. Prepayments may be made with no fee at any time on prime rate advances and at the maturity of LIBOR advances. The Company pays a fee of 0.25% per annum of the aggregate unused portion of the commitment. As of December 31, 1994, the Company had $26,000,000 outstanding under this loan at an effective interest rate of 41 43 8.125%. As of December 31, 1993, the Company had no amounts outstanding under this loan. The loan agreement contains restrictive covenants pertaining to net worth, the ratio of debt to equity and interest coverage. As of December 31, 1994, the Company was in compliance with all covenants. The term loan is secured by various investments of the Company having a net carrying value of approximately $46,621,000 as of December 31, 1994. 9. DEFERRED INCOME TAXES, GAIN ON SALES AND VALUATION LOSS: During 1984, the Company recognized a gain on sale for financial reporting purposes, net of a deferred tax provision of $1,122,000, which reflected the timing differences arising from the Company's election to recognize the gain on this property sale on the installment basis for tax purposes. Installment gains are recognized for tax purposes based on the principal payments received in each year under the purchase-money financing taken back on the sales. The purchase-money financing on this sale commenced principal amortization in 1987 based on a 25-year amortization period, with a balloon payment in 2001. The Company had a deferred tax liability related to this sale of $1,079,000 and $1,122,000 at December 31, 1994 and 1993, respectively. Should the Company elect to distribute the taxable installment gain recognized in future years to its shareholders as capital gain distributions, the reversal of this previously recorded tax liability would be reflected in income for financial reporting purposes in the periods in which the distributions are elected. During 1994, the Company sold two parcels of land for gains totaling approximately $257,000. During 1993, the Company sold an apartment investment, two parcels of land and a third parcel of land with the buildings thereon for a total gain of approximately $4,557,000. During 1992, the Company sold twenty-three (23) Ingles shopping centers for a total gain of $6,929,000 and a parcel of land for a gain of $183,000. Installment sale treatment for tax purposes was either not elected by the Company or not available. The Company elected to distribute the gains to shareholders. Accordingly, no current or deferred tax provisions were required on these gains. In 1994, the Company recorded approximately $4,125,000 of reductions in the carrying values of certain investments, primarily Valley West Mall due to permanent impairments in the values of the investments. In addition, in December 1992 the Company recorded a $3,565,000 reduction in the carrying value of Valley West Mall. These adjustments to carrying value were a result of the Company's quarterly evaluations of its individual investments based on current and forecasted net operating income of the investment, competition resulting from 42 44 new properties in the market place and other changes in the local economy. For tax purposes, the Company will not be able to claim these deductions until the actual disposition of the properties. 10. EXTRAORDINARY ITEM: During 1994, the Company purchased the 9.5% mortgage note payable secured by Valley West Mall in Glendale, Arizona for $4,500,000. The mortgage note payable had an outstanding principal balance of $8,248,000 at the time of purchase, which resulted in an extraordinary gain on extinguishment of this indebtedness of $3,748,000 for both financial reporting and tax purposes. During 1993, the Company prepaid in full nine mortgage notes payable totaling approximately $21,896,000 with interest rates ranging from 9.3% to 13.625% for financial reporting purposes. The Company recognized an extraordinary loss on these prepayments of approximately $1,440,000, representing $186,000 of unamortized net interest discounts and $1,254,000 of prepayment penalties. During 1992, the Company prepaid in full a 10% mortgage note payable totaling approximately $444,000. Additionally, the Company prepaid LIBOR advances under the revolving term loan totaling $15,000,000 from its public offering proceeds. The Company recognized extraordinary losses on these prepayments of approximately $15,000. 11. CASH DISTRIBUTIONS AND DIVIDEND REINVESTMENT PLAN: The taxability of per share distributions paid to shareholders during the years ended December 31, 1994, 1993 and 1992 was as follows:
1994 1993 1992 ---- ---- ---- Ordinary income $.72 $ .39 $ .39 Capital gains .04 .45 .42 Return of capital .08 - - --- ---- ---- $.84 $ .84 $ .81 === ==== ====
In addition, the 5% discount received upon purchase of shares under the Dividend Reinvestment Plan is taxable as ordinary income to the participant. In 1984, the Company implemented a Dividend Reinvestment Plan (the "Plan") under which shareholders of the Company may elect to reinvest all or a portion of their dividends in the purchase of newly issued shares of the Company. The price of shares so purchased is 95% of the average high and low sales prices of the Company's common stock on the applicable dividend payment date. During 1994, 1993 and 1992, shares 43 45 issued under the Plan totaled 99,477, 109,807 and 102,092, respectively, and dividends totaling $937,750, $1,248,628 and $995,965, respectively, were reinvested to purchase these shares. 12. STOCK OPTIONS: Effective May 8, 1989, the Company adopted and its shareholders approved the 1989 Stock Option Plan (the "1989 Plan"). In May 1993, the shareholders approved a 750,000 share increase in the number of shares authorized to be granted under the 1989 Plan. The 1989 Plan, which expires on May 8, 1999, replaces the prior Key Employee Stock Option Plan (the "Prior Plan"), except that options granted under the Prior Plan and unexercised as of the date of the 1989 Plan shall remain in full force and effect. The 1989 Plan includes provisions for a) the granting of both Incentive Stock Options ("ISOs") (as defined in Section 422A of the Internal Revenue Code) and nonqualified options to officers and employees and b) the automatic granting of nonqualified options for 1,250 shares to each non-employee director upon the election and each annual re-election of each non-employee director. Under the terms of the 1989 Plan, the option price shall be no less than the fair market value of the optioned shares at the date of grant. Details of the stock option activity during 1994, 1993 and 1992 are as follows:
Number of Shares ---------------- Option Price Employees Directors Per Share --------- --------- ------------ Options outstanding, December 31, 1991 116,515 30,000 $7.63-$15.10 Granted, 1992 53,000 - $ 9.25 Granted, 1992 - 7,500 $10.00 Exercised, 1992 (29,700) - $ 7.63 Expired unexercised, 1992 (9,800) - $7.63-$12.50 ------ ------ Options outstanding, December 31, 1992 130,015 37,500 $7.63-$15.10 Granted, 1993 56,000 - $12.00 Granted, 1993 - 8,750 $13.38 Exercised, 1993 (1,800) (6,250) $7.63-$10.25 Expired unexercised, 1993 (3,000) - $ 9.25 ------- ------ Options outstanding, December 31, 1993 181,215 40,000 $7.63-$15.10 Granted, 1994 66,000 - $10.75 Granted, 1994 - 7,500 $10.63 Exercised, 1994 (6,210) - $7.63-$10.24 Expired unexercised, 1994 (16,350) - $9.25-$15.10 ------- ------ Options outstanding, December 31, 1994 224,655 47,500 $7.63-$15.10 ======= ======
There are currently ISOs outstanding on 305,155 shares (including 43,437 shares granted under the Prior Plan), non- 44 46 qualified options outstanding on 47,500 shares, and 711,550 unoptioned shares remaining in the 1989 Plan after the granting of ISOs for 80,500 additional shares at $10.13 per share on January 3, 1995. 13. EMPLOYEE RETIREMENT BENEFITS: During 1980 the Board of Directors approved and adopted a pension program for the employees of the Company. The program included a noncontributory pension plan for all employees of the Company, under which the Company accrued and funded pension costs each year equal to 12% of employees' salaries. Effective June 30, 1990, the Board of Directors of the Company elected to terminate the pension plan. Upon termination of the pension plan, the Board of Directors determined that it would be appropriate to substitute in lieu thereof a program of year-end cash payments to certain employees of the Company. This program was instituted in 1990. Under this program, participants receive a year-end cash payment from the Company, the amount of which is based upon each participant's length of service with the Company. Each participant who has been employed by the Company for more than five years will receive a year-end cash payment equal to 12% of his or her salary. Each participant with less than five years will receive year-end cash payments in graduated amounts designed to produce a cumulative 12% payment after completion of five years of service. The Company accrued approximately $168,000, $154,000 and $99,000 under this program in 1994, 1993 and 1992, respectively. Certain employees whose time in service with the Company was significantly greater than that of the remaining employees were provided with employment contracts during 1980. These employment contracts call for annual payments to each of these employees equal to 12% of the employee's salary in the event the Company's pension plan is terminated and deferred compensation amounts to be paid at retirement. The Company accrued approximately $23,000 for these contracts in 1994, $21,000 in 1993, and $19,000 in 1992. The Company currently has no postretirement or postemployment benefits, and therefore Statements of Financial Accounting Standards Nos. 106 and 112 have no effect on the Company. 14. TRANSACTIONS WITH RELATED PARTIES: Ewing Southeast Realty, Inc., of which a member of the Board of Directors of the Company is a minority shareholder, received an $86,576 brokerage commission from the seller of one of the investments acquired by the Company during 1993 and 45 47 a $50,000 brokerage commission from the seller of three of the investments acquired by the Company during 1992. The former Chairman of the Executive Committee of the Company, who is also a member of the Board of Directors, received consulting fees included in general and administrative expenses for the years ended December 31, 1994, 1993 and 1992 totaling approximately $2,000, $24,000 and $24,000, respectively. This consulting arrangement was discontinued in January 1994. The holdback shares and dividend equivalents related thereto on the Sofran Centers were issued or paid to entities which were directly or indirectly owned or controlled by Norman Zavalkoff, a director of the Company from August 14, 1992 to January 27, 1994, and nine other investors. (See Note 15). 15. COMMITMENTS AND CONTINGENCIES: During 1992, the Company purchased 17 shopping centers (the "Sofran Centers" and the "Dreyfus Centers") which have certain rental guaranties from the sellers. At the time of the purchases, 290,762 shares of the Company's common stock (representing approximately $3,003,000 of the purchase prices) were retained as "holdback shares." The Company may be required to issue all or a portion of the holdback shares at various dates over the holdback periods if certain occupancy levels on a portfolio basis or on agreed-upon spaces are achieved by the end of the respective periods. The Sofran holdback, which expires January 1995, contained a total of 169,290 shares. For the period August 1, 1992 through December 31, 1993, the number of shares available to the sellers was reduced by 110,540 shares and the Company issued 9,182 shares to the sellers, leaving a balance of 49,568 holdback shares. The Dreyfus holdback, which expires December 1995, contained a total of 121,472 shares. For the period December 23, 1992 through September 30, 1994, the number of shares available to the sellers was reduced by 31,714 shares and the Company issued 56,297 shares to the sellers, leaving a balance of 33,461 holdback shares. The shares issued represented additional cost of acquisition for financial reporting purposes. In addition, during the holdback periods, the sellers are entitled to amounts equivalent to dividends on the holdback shares until such time as their right to receive such holdback shares may be extinguished. The Company paid dividend equivalents of $41,637 and $100,466 during 1994 and 1993, respectively, to 46 48 the sellers of the Sofran Centers. Also, the Company paid dividend equivalents of $45,700 and $87,697 during 1994 and 1993, respectively, to the sellers of the Dreyfus Centers. These payments are considered part of the cost of acquisition on the respective payment dates. Additionally, the seller of one of the Dreyfus Centers pledged 115,343 of its IRT Property Company shares to the Company as collateral for a guarantee of rents payable by one of the anchor tenants which had filed bankruptcy. For the period December 23, 1992 through September 30, 1994, 24,388 shares held as collateral were released to the seller and 4,865 shares were retired, leaving a balance of 86,090 shares. In December 1993, the Company entered into a contract for the redevelopment of one of its shopping center investments. The cost to the Company will be approximately $2,750,000 of which approximately $661,000 has been incurred through December 31, 1994. 16. ENVIRONMENTAL INVESTIGATIONS: The Company's Charlotte, North Carolina industrial facility contained underground petroleum and used oil storage tanks ("USTs") believed to have been owned by the previous owner of this property. The Company had the USTs removed in December 1993 and was notified on March 2, 1994 by the North Carolina Department of Environment, Health, and Natural Resources that certain investigative, corrective and/or remedial actions ("Corrective Actions") must be performed by the Company to, among other things, determine the level of soil and/or groundwater contamination due to suspected leakage from some of the USTs. Depending upon the results of the investigation phase of the Corrective Action work, which has not been completed at this time, the Company may be required to remediate impacted soil and/or groundwater. At this time it is not clear that the Company is responsible for taking Corrective Action, and some of the costs of Corrective Action are reimbursable under the North Carolina Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund for leaking USTs. Based on the information presently available, the Company believes the costs of any such Corrective Action would not have a material adverse effect on the Company's results of operations, financial position or liquidity. During its soil and groundwater investigation at the Bluebonnet Village Shopping Center in Baton Rouge, Louisiana, the Company's environmental consultant discovered concentrations of various chemicals in a single groundwater monitoring well that exceeded the maximum contaminant levels under the Federal Safe Drinking Water Act. The Company has notified the Louisiana Department of Environmental Quality- 47 49 Groundwater Protection Division ("LDEQ-GWPD") of such discovery. The Company has been advised that the groundwater impact appears to be very localized, since six other groundwater monitoring wells placed around the initial well did not exhibit any impact. There can be no assurance that the LDEQ-GWPD will not require remediation, but based on information presently available to the Company and discussions with the Company's environmental consultant, the Company believes the cost of any such remediation would not have a material adverse effect on the Company's results of operations, financial position or liquidity. 17. SUBSEQUENT EVENT: On January 6, 1995, the Company acquired two shopping centers in Slidell and Galliano, Louisiana. The total purchase price was approximately $6,658,000, of which approximately $2,383,000 was represented by mortgage debt to which one of the centers is subject. The balance of the purchase price of approximately $4,275,000 was paid in cash. 48 50 18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED): The following is a summary of the unaudited quarterly financial information for the years ended December 31, 1994 and 1993.
1994 ------------------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- Revenues $12,038,799 $11,755,214 $12,306,661 $13,101,470 ========== ========== ========== ========== Earnings before gain (loss) on real estate investments $ 3,131,931 $ 2,888,770 $ 3,150,599 $ 3,617,623 ---------- ---------- ---------- ---------- Gain (loss) on real estate investments: Gain on sales of properties - - 257,036 43,000 Valuation loss - (3,685,454) - (440,000) ---------- ---------- ---------- ---------- - (3,685,454) 257,036 (397,000) ---------- ---------- ---------- ---------- Earnings before extraordinary item 3,131,931 (796,684) 3,407,635 3,220,623 Extraordinary item - 3,748,095 - - ---------- ---------- ---------- ---------- Net earnings $ 3,131,931 $ 2,951,411 $ 3,407,635 $ 3,220,623 ========== ========== ========== ========== Per Share: Earnings before extraordinary item $ .12 $(.03) $ .13 $ .13 Extraordinary item - .15 - - ---- ---- ---- ---- Net earnings $ .12 $ .12 $ .13 $ .13 ==== ==== ==== ====
1993 ------------------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- Revenues $10,944,354 $10,918,865 $11,656,376 $11,543,316 ========== ========== ========== ========== Earnings before gain (loss) on real estate investments $ 3,082,723 $ 2,898,059 $ 3,052,075 $ 2,739,408 Gain on sales of properties, net - - 306,625 4,249,886 ---------- ---------- ---------- ---------- Earnings before extraordinary item 3,082,723 2,898,059 3,358,700 6,989,294 Extraordinary item - - (1,440,478) - ---------- ---------- ---------- ---------- Net earnings $3,082,723 $ 2,898,059 $ 1,918,222 $ 6,989,294 ========= ========== ========== ========== Per Share: Earnings before extraordinary item $ .15 $ .14 $ .15 $ .28 Extraordinary item - - (.06) - ---- ---- ---- ---- Net earnings $ .15 $ .14 $ .09 $ .28 ==== ==== ==== ====
49 51 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Abbeville Plaza Abbeville, SC Land $ - $ 48,066 $ - $ 48,066 $ - Buildings 458,062 10,470 468,532 169,770 Ambassador Row Lafayette, LA Land - 2,451,860 - 2,451,860 - Buildings 7,244,580 - 7,244,580 3,673 Ambassador Row Courtyard Lafayette, LA Land - 2,899,438 - 2,899,438 - Buildings 8,698,313 - 8,698,313 4,925 Asheville Plaza Asheville, NC Land - 52,710 15,000 67,710 - Buildings 335,717 1,860 337,577 99,372 Bluebonnet Village Baton Rouge, LA Land - 2,540,594 - 2,540,594 - Buildings 5,509,995 - 5,509,995 4,515 The Boulevard Lafayette, LA Land - 948,334 - 948,334 - Buildings 2,845,003 - 2,845,003 1,879 Carolina Place Hartsville, SC Land - 345,000 - 345,000 - Buildings 2,006,494 - 2,006,494 278,040 Centre Pointe Plaza Smithfield, NC Land - 980,857 12,583 993,440 - Buildings 7,981,826 146,922 8,128,748 402,816 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Abbeville Plaza Abbeville, SC Land 30 April, 1986 1970 Buildings Ambassador Row Lafayette, LA Land 40 December, 1994 1980 & Buildings 1991 Ambassador Row Courtyard Lafayette, LA Land 40 December, 1994 1986 & Buildings 1991 Asheville Plaza Asheville, NC Land 30 April, 1986 1967 Buildings Bluebonnet Village Baton Rouge, LA Land 40 December, 1994 1983 Buildings The Boulevard Lafayette, LA Land 40 December, 1994 1976 & Buildings 1994 Carolina Place Hartsville, SC Land 40 May, 1989 1989 Buildings Centre Pointe Plaza Smithfield, NC Land 40 December, 1992 1989 & Buildings 1993
50 52 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Chadwick Square Hendersonville, NC Land $ 863,497 $ 276,778 $ - $ 276,778 $ - Buildings 1,179,949 - 1,179,949 86,030 Chelsea Place New Port Richey, FL Land - 1,387,517 - 1,387,517 - Buildings 5,550,068 - 5,550,068 202,353 Chester Plaza Chester, SC Land - 68,649 143,504 212,153 - Buildings 414,117 1,573,701 1,987,818 340,001 Chestnut Square Brevard, NC Land 1,059,548 295,984 - 295,984 - Buildings 1,113,464 7,539 1,121,003 83,340 Colony Square Fitzgerald, GA Land - 272,833 - 272,833 - Buildings 2,455,826 194,036 2,649,862 490,801 Commerce Crossing Commerce, GA Land - 378,089 889 378,978 - Buildings 4,072,946 15,569 4,088,515 206,016 Countryside Shops Cooper City, FL Land - 5,675,614 - 5,675,614 - Buildings 10,954,065 12,699 10,966,764 136,920 The Crossing Slidell, LA Land - 1,282,036 - 1,282,036 - Buildings 3,213,616 - 3,213,616 3,241 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Chadwick Square Hendersonville, NC Land 40 January, 1992 1985 Buildings Chelsea Place New Port Richey, FL Land 40 July, 1993 1992 Buildings Chester Plaza Chester, SC Land 30 April, 1986 1967 & Buildings 1992 Chestnut Square Brevard, NC Land 40 January, 1992 1985 Buildings Colony Square Fitzgerald, GA Land 40 February, 1988 1987 Buildings Commerce Crossing Commerce, GA Land 40 December, 1992 1988 Buildings Countryside Shops Cooper City, FL Land 40 June, 1994 1986, 1988 Buildings & 1991 The Crossing Slidell, LA Land 40 December, 1994 1988 & Buildings 1993
51 53 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Delchamps Plaza Pascagoula, MS Land $ 3,277,511 $ 359,000 $ - $ 359,000 $ - Buildings 4,130,247 17,000 4,147,247 699,036 Douglas Commons Douglasville, GA Land 6,314,134 2,543,385 2,951 2,546,336 - Buildings 5,958,475 70,128 6,028,603 367,746 Eden Centre Eden, NC Land - 625,901 - 625,901 - Buildings 2,901,316 - 2,901,316 12,088 Elmwood Oaks Harahan, LA Land 9,000,000 4,558,654 - 4,558,654 - Buildings 6,560,014 7,120 6,567,134 484,058 First Street Station Albemarle, NC Land - 202,578 - 202,578 - Buildings 2,832,092 - 2,832,092 23,578 Forest Hills Centre Wilson, NC Land - 869,981 - 869,981 - Buildings 3,644,541 545,844 4,190,385 404,446 Forrest Gallery Tullahoma, TN Land - 2,124,023 10,639 2,134,662 - Buildings 9,917,627 218,773 10,136,400 504,267 Ft. Walton Beach Plaza Ft. Walton Beach, FL Land 1,773,737 787,583 - 787,583 - Buildings 1,860,360 - 1,860,360 527,524 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Delchamps Plaza Pascagoula, MS Land 40 April, 1988 1987 Buildings Douglas Commons Douglasville, GA Land 40 August, 1992 1988 Buildings Eden Centre Eden, NC Land 40 November, 1994 1991 Buildings Elmwood Oaks Harahan, LA Land 40 January, 1992 1989 Buildings First Street Station Albemarle, NC Land 40 August, 1994 1989 Buildings Forest Hills Centre Wilson, NC Land 40 August, 1990 1990 Buildings Forrest Gallery Tullahoma, TN Land 40 December, 1992 1987 Buildings Ft. Walton Beach Plaza Ft. Walton Beach, FL Land 30 July, 1986 1988 Buildings
52 54 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Gaffney Plaza Gaffney, SC Land $ - $ 66,527 $ - $ 66,527 $ - Buildings 270,567 68,823 339,390 206,167 The Galleria Wrightsville Beach, NC Land - 1,069,672 - 1,069,672 - Buildings 5,222,517 1,243,580 6,466,097 1,145,238 Gulf Gate Plaza Naples, FL Land - 277,562 - 277,562 - Buildings 1,857,532 2,134,700 3,992,232 2,031,263 Harris Teeter Lexington, VA Land - 312,105 - 312,105 - Buildings 1,638,552 650,000 2,288,552 484,700 Heritage Walk Milledgeville, GA Land - 810,292 - 810,292 - Buildings 7,944,260 - 7,944,260 312,856 Hoffner Plaza Orlando, FL Land - 185,293 - 185,293 - Buildings 476,469 475,355 951,824 687,115 Lancaster Plaza Lancaster, SC Land - 120,790 - 120,790 - Buildings 743,852 299,267 1,043,119 365,108 Lancaster Shopping Center Lancaster, SC Land - 338,355 - 338,355 - Buildings 1,227,552 29,760 1,257,312 311,044 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Gaffney Plaza Gaffney, SC Land 30 April, 1986 1964 & Buildings 1974 The Galleria Wrightsville Beach, NC Land 40 August, 1986 & 1986 & Buildings December, 1987 1990 Gulf Gate Plaza Naples, FL Land 28 June, 1979 1969 & Buildings 1974 Harris Teeter Lexington, VA Land 30 June, 1988 & 1981 & Buildings June, 1989 1989 Heritage Walk Milledgeville, GA Land 40 June,1993 1991 & Buildings 1992 Hoffner Plaza Orlando, FL Land 28 June, 1979 1972 Buildings Lancaster Plaza Lancaster, SC Land 30 April, 1986 1971 Buildings Lancaster Shopping Center Lancaster, SC Land 30 August, 1986 & 1963 & Buildings December, 1987 1987
53 55 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Lawrence Commons Lawrenceburg, TN Land $ 2,772,496 $ 715,653 $ 829 $ 716,482 $ - Buildings 2,719,190 16,056 2,735,246 164,336 Litchfield Landing North Litchfield, SC Land - 475,000 - 475,000 - Buildings 2,118,429 26,885 2,145,314 457,689 Macland Pointe Marietta, GA Land 3,896,820 1,252,098 - 1,252,098 - Buildings 4,317,234 544,073 4,861,307 229,819 Masonova Plaza Daytona Beach, FL Land - 296,643 - 296,643 - Buildings 1,680,977 1,053,232 2,734,209 1,758,653 Millervillage Shopping Center Baton Rouge, LA Land - 1,926,535 - 1,926,535 - Buildings 5,661,992 - 5,661,992 4,714 New Smyrna Beach Regional New Smyrna Beach, FL Land - 3,704,368 6,757 3,711,125 - Buildings 6,402,297 176,749 6,579,046 387,826 North River Village Ellenton, FL Land - 2,949,031 - 2,949,031 - Buildings 7,150,403 10,951 7,161,354 254,251 North Village Center North Myrtle Beach, SC Land 2,891,504 483,400 - 483,400 - Buildings 2,785,154 13,325 2,798,479 529,581 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Lawrence Commons Lawrenceburg, TN Land 40 August, 1992 1987 Buildings Litchfield Landing North Litchfield, SC Land 40 August, 1986 1984 Buildings Macland Pointe Marietta, GA Land 40 January, 1993 1992 & Buildings 1993 Masonova Plaza Daytona Beach, FL Land 25 June, 1979 1969 Buildings Millervillage Shopping Center Baton Rouge, LA Land 40 December, 1994 1983 & Buildings 1992 New Smyrna Beach Regional New Smyrna Beach, FL Land 40 August, 1992 1987 Buildings North River Village Ellenton, FL Land 40 December, 1992 & 1988 & Buildings December, 1993 1993 North Village Center North Myrtle Beach, SC Land 37 August, 1986 1984 Buildings
54 56 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Old Kings Commons Palm Coast, FL Land $ - $ 1,491,458 $ - $ 1,491,458 $ - Buildings 4,474,372 116,376 4,590,748 772,796 Palm Gardens Largo, FL Land - 98,279 - 98,279 - Buildings 657,716 1,266,417 1,924,133 641,422 Parkmore Plaza Milton, FL Land - 1,789,806 8,141 1,797,947 - Buildings 6,419,777 42,683 6,462,460 326,553 Paulding Commons Dallas, GA Land 8,818,984 2,312,372 2,687 2,315,059 - Buildings 10,606,781 28,274 10,635,055 641,662 Pensacola Plaza Pensacola, FL Land 1,750,000 130,688 - 130,688 - Buildings 2,392,249 121,642 2,513,890 713,615 Pinhook Plaza Lafayette, LA Land 7,585,167 2,768,151 - 2,768,151 - Buildings 8,304,453 - 8,304,453 5,664 Plaza Acadienne Eunice, LA Land 2,457,481 - - - - Buildings 2,917,925 - 2,917,925 1,950 Plaza North Hendersonville, NC Land - 657,797 770 658,567 - Buildings 1,795,992 4,685 1,800,677 108,552 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Old Kings Commons Palm Coast, FL Land 40 May, 1988 1988 Buildings Palm Gardens Largo, FL Land 26 June, 1979 1970 & Buildings 1993 Parkmore Plaza Milton, FL Land 40 December, 1992 1986 & Buildings 1992 Paulding Commons Dallas, GA Land 40 August, 1992 1991 Buildings Pensacola Plaza Pensacola, FL Land 30 July, 1986 1985 Buildings Pinhook Plaza Lafayette, LA Land 40 December, 1994 1979 & Buildings 1992 Plaza Acadienne Eunice, LA Land 40 December, 1994 1980 Buildings Plaza North Hendersonville, NC Land 40 August, 1992 1986 Buildings
55 57 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Providence Square Charlotte, NC Land $ - $ 450,000 $ 300 $ 450,300 $ - Buildings 1,895,606 1,850,822 3,746,428 2,161,028 Riverview Shopping Center Durham, NC Land - 400,000 322 400,322 - Buildings 1,476,500 4,126,211 5,602,711 1,518,664 Scottsville Square Bowling Green, KY Land - 653,010 765 653,775 - Buildings 1,782,340 2,089 1,784,429 107,711 Seven Hills Spring Hill, FL Land 3,800,000 1,903,090 - 1,903,090 - Buildings 2,976,628 15,049 2,991,677 108,518 Shelby Plaza Shelby, NC Land - - - - - Buildings 937,483 165,743 1,103,226 353,274 Sherwood South Baton Rouge, LA Land - 496,174 - 496,174 - Buildings 1,488,521 - 1,488,521 1,415 Siegen Village Baton Rouge, LA Land - 2,375,168 - 2,375,168 - Buildings 4,302,715 - 4,302,715 931 Smyrna Village Smyrna, TN Land 4,213,514 968,358 20,601 988,959 - Buildings 4,743,708 109,899 4,853,607 293,409 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Providence Square Charlotte, NC Land 35 December, 1971 1973 Buildings Riverview Shopping Center Durham, NC Land 35 March, 1972 1973 Buildings Scottsville Square Bowling Green, KY Land 40 August, 1992 1986 Buildings Seven Hills Spring Hill, FL Land 40 July, 1993 1991 Buildings Shelby Plaza Shelby, NC Land 30 April, 1986 1972 Buildings Sherwood South Baton Rouge, LA Land 40 December, 1994 1972, 1988 Buildings & 1992 Siegen Village Baton Rouge, LA Land 40 December, 1994 1988 Buildings Smyrna Village Smyrna, TN Land 40 August, 1992 1992 Buildings
56 58 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Smyth Valley Crossing Marion, VA Land $ - $ 1,687,013 $ 6,523 $ 1,693,536 $ - Buildings 5,211,299 89,249 5,300,548 270,444 South Beach Regional Jacksonville Beach, FL Land 15,569,828 3,972,815 19,710 3,992,525 - Buildings 17,115,106 701,610 17,816,716 1,066,090 Spalding Village Griffin, GA Land 12,413,464 2,813,854 3,281 2,817,135 - Buildings 12,470,446 29,965 12,500,411 755,647 Stadium Plaza Phenix City, AL Land 3,850,000 1,828,942 2,130 1,831,072 - Buildings 2,614,155 13,299 2,627,454 159,355 Stanley Market Place Stanley, NC Land - 198,103 - 198,103 - Buildings 1,602,832 - 1,602,832 116,900 Taylorsville Shopping Center Taylorsville, NC Land - 89,689 - 89,689 - Buildings 1,443,704 1,078,766 2,522,470 459,485 Thomasville Commons Thomasville, NC Land 5,626,354 963,333 - 963,333 - Buildings 6,183,052 26,576 6,209,628 378,009 Union Plaza Union, SC Land - 18,154 - 18,154 - Buildings 140,468 69,129 209,597 95,467 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Smyth Valley Crossing Marion, VA Land 40 December, 1992 1989 Buildings South Beach Regional Jacksonville Beach, FL Land 40 August, 1992 1990 & Buildings 1991 Spalding Village Griffin, GA Land 40 August, 1992 1989 Buildings Stadium Plaza Phenix City, AL Land 40 August, 1992 1988 Buildings Stanley Market Place Stanley, NC Land 35 January, 1992 1980 & Buildings 1991 Taylorsville Shopping Center Taylorsville, NC Land 40 August, 1986 & 1982 & Buildings December, 1988 1988 Thomasville Commons Thomasville, NC Land 40 August, 1992 1991 Buildings Union Plaza Union, SC Land 30 April, 1986 1967 Buildings
57 59 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ University Center Greenville, NC Land $ - $ 750,000 $ - $ 750,000 $ - Buildings 3,159,065 28,382 3,187,447 404,320 Valley West Mall Glendale, AZ Land - 1,500,000 - 1,500,000 - Buildings 5,801,772 2,905,826 8,707,598 4,401,486 Venice Plaza Venice, FL Land 108,339 333,127 - 333,127 - Buildings 1,887,721 582,501 2,470,222 1,340,698 Village at Northshore Slidell, LA Land 5,837,763 2,065,633 - 2,065,633 - Buildings 6,196,900 - 6,196,900 4,171 Waterlick Plaza Lynchburg, VA Land - 1,071,000 - 1,071,000 - Buildings 5,091,222 92,702 5,183,924 688,322 Watson Central Warner Robins, GA Land - 1,640,541 12,478 1,653,019 - Buildings 11,288,357 82,921 11,371,278 531,188 Wesley Chapel Crossing Decatur, GA Land - 3,822,875 9,154 3,832,029 - Buildings 7,020,873 40,812 7,061,686 356,807 West Gate Plaza Mobile, AL Land - 475,270 - 475,270 - Buildings 1,401,087 481,190 1,882,277 614,377 Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- University Center Greenville, NC Land 40 December, 1989 1989 Buildings Valley West Mall Glendale, AZ Land 30 March, 1986 1973 Buildings Venice Plaza Venice, FL Land 27 June, 1979 1971 & Buildings 1979 Village at Northshore Slidell, LA Land 40 December, 1994 1988 & Buildings 1993 Waterlick Plaza Lynchburg, VA Land 40 October, 1989 1973 & Buildings 1988 Watson Central Warner Robins, GA Land 40 December, 1992 & 1989 & Buildings October, 1993 1993 Wesley Chapel Crossing Decatur, GA Land 40 December, 1992 1989 Buildings West Gate Plaza Mobile, AL Land 25 June, 1974 & 1974 Buildings January, 1985
58 60 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Westgate Square Sunrise, FL Land $ - $ 2,238,886 $ - $ 2,238,886 $ - Buildings 6,839,969 - 6,839,969 85,494 West Towne Square Rome, GA Land - 324,800 - 324,800 - Buildings 5,580,776 82,989 5,663,765 669,731 Willowdaile Shopping Center Durham, NC Land - 936,977 - 936,977 - Buildings 7,351,612 284,538 7,636,150 1,452,600 Winnsboro Plaza Winnsboro, SC Land - 60,574 - 60,574 - Buildings 463,641 90,335 553,976 172,581 Whitehall Kent Apartments Kent, OH Land - 136,404 117,938 254,342 - Buildings 2,136,996 1,163,947 3,300,943 1,986,550 Industrial Buildings Charlotte, NC - Industrial Land - 143,160 178,188 321,348 - Buildings 2,170,057 472,435 2,642,492 2,642,492 Plasti-Kote Medina, OH - Industrial Land - 81,390 - 81,390 - Buildings 346,979 54,570 401,549 401,549 Lawrence County Shopping Center Sybene, OH Land - 435,994 - 435,994 - Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Westgate Square Sunrise, FL Land 40 June, 1994 1984 & Buildings 1988 West Towne Square Rome, GA Land 40 April, 1990 1988 Buildings Willowdaile Shopping Center Durham, NC Land 40 August, 1986 & 1986 Buildings December, 1987 Winnsboro Plaza Winnsboro, SC Land 30 April, 1986 1973 Buildings Whitehall Kent Apartments Kent, OH Land 29 June, 1979 1968 Buildings Industrial Buildings Charlotte, NC - Industrial Land 14 June, 1979 1956 & Buildings 1963 Plasti-Kote Medina, OH - Industrial Land 14 June, 1979 1961 & Buildings 1966 Lawrence County Shopping Center Sybene, OH Land May, 1971 1971
59 61 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994
Costs Gross Amount Accumulated Initial Capitalized at Which Depreciation Cost to Subsequent to Carried at at Close Description Encumbrances Company Acquisition Close of Year of Year ----------- ------------ ------- ----------- ------------- ------------ Grand Marche Shopping Center Lafayette, LA Land $ - $ 250,000 $ 500 $ 250,500 $ - Manatee County Shopping Center Bradenton, FL Land - 241,798 - 241,798 - ------------ ------------ ----------- ------------- ------------ $103,880,141 $416,280,016 $26,362,689 $ 442,642,705 $ 41,677,722 ============ ============ =========== ============= ============ Estimated Useful Life of Buildings Date Year Description (Years) Acquired Completed ----------- ---------- -------- --------- Grand Marche Shopping Center Lafayette, LA Land September, 1972 1969 Manatee County Shopping Center Bradenton, FL Land May, 1971 1971
60 62 IRT PROPERTY COMPANY SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1994 NOTE: Real estate activity is summarized as follows:
Year Ended December 31, -------------------------------------------- 1994 1993 1992 ---- ---- ---- RENTAL PROPERTIES: Cost - Balance at beginning of year $331,012,764 $300,285,526 $184,018,854 Acquisitions and improvements 115,813,729 37,157,578 178,208,499 Retirements - - - Reduction in carrying value (3,878,754) - (3,565,311) ------------ ------------ ------------ 442,947,739 337,443,104 358,662,042 Cost of properties sold (305,034) (6,430,340) (58,376,516) ------------ ------------ ------------ Balance at end of year $442,642,705 $331,012,764 $300,285,526 ============ ============ ============ Accumulated depreciation - Balance at beginning of year $ 33,463,530 $ 29,002,538 $ 32,412,968 Depreciation 8,214,192 7,668,797 6,201,949 Retirements - - - ------------ ------------ ------------ 41,677,722 36,671,335 38,614,917 Accumulated depreciation related to rental properties sold - (3,207,805) (9,612,379) ------------ ------------ ------------ Balance at end of year $ 41,677,722 $ 33,463,530 $ 29,002,538 ============ ============ ============
61 63 IRT PROPERTY COMPANY SCHEDULE XII MORTGAGE LOANS ON REAL ESTATE December 31, 1994
Final Periodic Type of Type of Interest Maturity Payment Location of Property Loan Property Rate Date Terms Prior Liens - -------------------- ---- -------- ---- ---- ----- ----------- (See Notes) (See Notes) Augusta, GA First Mortgage Shopping Center 10.25% August, 1998 (1) $ - Lauderdale Lakes, FL First Mortgage Condominiums 10.00% May, 2009 (2) - Nashville, TN First Mortgage Condominiums 8.63% - 2006-2007 (2) - Participation 12.38% Montgomery, AL Wrap-Around Apartments (3) September, 2001 (3) - -------- - Less interest discounts and negative goodwill - -------- $ - Principal Face Amount Amount of and Carrying Loans Subject Amount of Principal Location of Property Mortgages or Interest - -------------------- --------- ------------- Augusta, GA $3,245,122 - Lauderdale Lakes, FL 145,369 - Nashville, TN 40,504 - Montgomery, AL 5,194,228 - ---------- 8,625,223 (333,080) ---------- $8,292,143 ==========
NOTES: (1) Monthly payments of principal and interest at an annual rate of 10.25%, with a balloon payment at maturity August 1, 1998. (2) Monthly payments include principal and interest. (3) Modified effective, December 1, 1994 to extend the term for 3 years to September 1, 2001 and to reduce the cash interest rate from 10% to 9.5% prospectively, requiring monthly payments of $45,382 of principal and interest for the remaining term, with a balloon payment at maturity. Additional interest at an annual rate of 1% accrues for the periods September 1,1984 through August 31, 1989 and September 1,1991 through August 31, 2001 and is payable at maturity or on sale of the property. In addition, the Company has agreed to fund additional principal of up to $260,000 under this mortgage to make certain capital improvements. This wrap-around mortgage is subject to two first mortgages having an aggregate balance of $1,134,260 as of December 31, 1994. 62 64 IRT PROPERTY COMPANY SCHEDULE XII MORTGAGE LOANS ON REAL ESTATE December 31, 1994 Mortgage loan activity is summarized as follows:
Year Ended December 31, ---------------------------------------- 1994 1993 1992 ---- ---- ---- Balance at beginning of year $8,392,959 $12,528,542 $19,253,499 New mortgage loans - - - Additions to mortgage loans - - - Amortization of interest discounts, negative goodwill and commitment fees 7,076 93,801 398,370 Collections of principal (107,892) (4,229,384) (7,123,327) ---------- ----------- ----------- Balance at end of year $8,292,143 $ 8,392,959 $12,528,542 ========== =========== ===========
63 65 Item 9. Disagreements on Accounting and Financial Disclosure. Not applicable. 64 66 PART III The information called for by Part III (Items 10, 11, 12, and 13) is incorporated herein by reference to the Company's definitive proxy statement to be filed pursuant to Regulation 14A, pursuant to General Instruction G(3) to the Report of Form 10-K. 65 67 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. Financial Statements and Schedules. Included in Part II of this Report are the following: Report of Independent Public Accountants Consolidated Balance Sheets at December 31, 1994 and 1993 Consolidated Statements of Earnings for the Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements Schedule XI - Real Estate and Accumulated Depreciation Schedule XII - Mortgage Loans on Real Estate Exhibits. --------- (3)(a) The Company's Articles of Incorporation, as amended, were filed as Exhibit 4.1 to the Company's Registration Statement on Form S-3 (No. 33-65604) dated July 6, 1993, to which reference is hereby made. (3)(b) The Company's By-Laws, including amendment to Article VII of the By-Laws, were filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 (No. 33-65604) dated July 6, 1993, to which reference is hereby made. (4)(a) The Indenture dated August 15, 1993 between the Company and Trust Company Bank, as Trustee, relating to the 7.3% Convertible Subordinated Debentures due August 15, 2003 was filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1993, to which reference is hereby made. (4)(b) The form of 7.3% Convertible Subordinated Debenture was included in (4)(a) above. 66 68 (10)(a) The Deferred Compensation Agreement between the Company and Donald W. MacLeod was filed as an exhibit to the Company's Registration Statement on Form S-2 (No. 2-88716) dated January 4, 1984, to which reference is hereby made. (10)(b) The Company's 1989 Stock Option Plan was filed as an exhibit to the Company's Form 8-K dated March 22, 1989, to which reference is hereby made. (10)(c) Amendment No. 1 to the Company's 1989 Stock Option Plan was filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1993, to which reference is hereby made. (10)(d) The Company's Key Employee Stock Option Plan was filed as an exhibit to the Company's Registration Statement on Form S-2 (No. 2-88716) dated January 4, 1984, to which reference is hereby made. (10)(e) The Company's amended and restated revolving term loan agreement dated July 31, 1992 was filed as Exhibit (10)(e) to the Company's Form 10-K for the year ended December 31, 1992, to which reference is hereby made. The Company's revolving term loan agreement dated November 1, 1990 was filed as Exhibit (10)(e) to the Company's Form 10-K for the year ended December 31, 1990, to which reference is hereby made. (10)(f) The Real Property Purchase Agreement and first amendment thereto dated June 23, 1992 relative to the Company's acquisition of the ten Sofran Centers was filed as an exhibit to the Company's report on Form 8-K dated August 12, 1992 (date of event reported, July 31, 1992), to which reference is hereby made. (10)(g) Form of Agreement for the Sale and Purchase of Property dated October 30, 1992 and the letter amendment thereto dated November 19, 1992 relative to the Company's acquisition of the seven Dreyfus Centers was filed as an exhibit to the Company's report on Form 8-K dated January 6, 1993 (date of event reported, December 23, 1992), to which reference is hereby made. (10)(h) The letter agreement dated December 23, 1992 between the IBM Retirement Plan Trust Fund and its seven wholly-owned subsidiaries and the Company was filed as an exhibit to the Company's report on Form 8-K dated January 6, 1993 (date of event reported, December 23, 1992), to which reference is hereby made. 67 69 (10)(i) The letter agreement dated July 29, 1993 between the IBM Retirement Plan Trust Fund and its seven wholly-owned subsidiaries and the Company was filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1993, to which reference is hereby made. (21) The Company has two subsidiaries, IRT Management Company ("IRTMC") and VW Mall, Inc. ("VWM"), Georgia corporations which are wholly owned by the Company. IRTMC was formed in 1990 and VWM in 1994. (23)* Consent of Arthur Andersen & Co. to the incorporation of their report included in this Form 10-K in the Company's previously filed Registration Statements File Nos. 33-65604, 33-66780, 33-51238, 33-59938, 33-64628 and 33-64741. (23)(a) Consent of Arthur Andersen & Co. to the incorporation of their report included in this Form 10-K/A Amendment No. 1 in the Company's previously filed Registration Statements File Nos. 33-65604, 33-66780, 33-51238, 33-59938, 33-64628 and 33-64741. (27)* Financial Data Schedule (for S.E.C. use only) * Previously filed. Reports on Form 8-K. The Company filed a Current Report on Form 8-K dated January 5, 1995 (date of event reported, December 21, 1994), as amended under Form 8-K/A dated January 20, 1995, reporting under Items 2 and 7, the acquisition of thirteen centers, eleven as of December 21, 1994 and two as of January 6, 1995, which Form 8-K as amended is incorporated herein by reference. 68 70 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. February 21, 1995 IRT PROPERTY COMPANY By:/s/ Donald W. MacLeod ---------------------------- Donald W. MacLeod Chairman and President 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/ Donald W. MacLeod Chairman of the February 21, 1995 - ---------------------------- Board, President and Donald W. MacLeod Director (Principal Executive Officer) /s/ Mary M. Thomas Executive Vice February 21, 1995 - ---------------------------- President, Chief Mary M. Thomas Financial Officer and Director (Principal Financial & Accounting Officer) /s/ Homer B. Gibbs, Jr. Director February 21, 1995 - ---------------------------- Homer B. Gibbs, Jr. /s/ Samuel W. Kendrick Director February 21, 1995 - ---------------------------- Samuel W. Kendrick /s/ Thomas H. McAuley Director February 21, 1995 - ---------------------------- Thomas H. McAuley /s/ Bruce A. Morrice Director February 21, 1995 - ---------------------------- Bruce A. Morrice /s/ James H. Nobil Director February 21, 1995 - ---------------------------- James H. Nobil /s/ Louis P. Wolfort Director February 21, 1995 - ---------------------------- Louis P. Wolfort 69 71 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended and restated Form 10-K/A Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized. IRT PROPERTY COMPANY Date: September 28, 1995 By:/s/Mary M. Thomas ------------------ --------------------------------- Mary M. Thomas Executive Vice President & Chief Financial Officer 70 EX-23.(A) 2 CONSENT OF INDEPENDENT ACCOUNTS 1 EXHIBIT (23)(a) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- IRT Property Company: As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K/A Amendment No. 1 into the Company's previously filed Registration Statements File Nos. 33-65604, 33-66780, 33-51238, 33-59938, 33-64628 and 33-64741. ARTHUR ANDERSEN LLP Atlanta, Georgia September 28, 1995 -----END PRIVACY-ENHANCED MESSAGE-----