-----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, N7FfTZ9RF05cPsKjUqAf3Tf4GbpaV/TMFf0oizJNEIn08THQhESuSUaNChDsZ7KP wmk3Pbsxq5q2sq9hn6MahQ== 0000936392-96-000152.txt : 19960509 0000936392-96-000152.hdr.sgml : 19960509 ACCESSION NUMBER: 0000936392-96-000152 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXCEL REALTY TRUST INC CENTRAL INDEX KEY: 0000798288 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 330160389 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-12244 FILM NUMBER: 96558047 BUSINESS ADDRESS: STREET 1: 16955 VIA DEL CAMPO STE 110 CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6194859400 MAIL ADDRESS: STREET 1: 16955 VIA DEL CAMPO SUITE 110 CITY: SAN DIEGO STATE: CA ZIP: 92127 FORMER COMPANY: FORMER CONFORMED NAME: EXCEL REALTY ADVISORS INC DATE OF NAME CHANGE: 19900514 FORMER COMPANY: FORMER CONFORMED NAME: INVESTORS REALTY TRUST INC DATE OF NAME CHANGE: 19890612 10-K405/A 1 EXCEL REALTY TRUST,INC. -- AM.#1 TO FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------------- FORM 10-K/A AMENDMENT NO. 1 Annual Report Under Sections 13 Or 15(d) Of The Securities Exchange Act of 1934 - ------------------------------------------------------------------------------- For The Fiscal Year Ended Commission File Number: DECEMBER 31, 1995 1-12244 EXCEL REALTY TRUST, INC. (Exact Name of Registrant, As Specified In Its Charter) MARYLAND 33-0160389 (State Or Other Jurisdiction Of (IRS Employer Identification Number) Incorporation Or Organization) 16955 VIA DEL CAMPO, SUITE 110, SAN DIEGO, CALIFORNIA 92127 (Address Of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (619) 485-9400 2 EXCEL REALTY TRUST, INC. PART I ITEM 1. BUSINESS General. Excel Realty Trust, Inc. (the "Company") was incorporated under the laws of California in 1985 and reincorporated as a Maryland corporation in 1993. The Company is a self-administered, self-managed equity real estate investment trust ("REIT") which owns and manages neighborhood and community shopping centers and other retail and commercial properties primarily leased on a long-term basis to major retail companies. The terms of such leases typically provide that the tenant is responsible for costs and expenses associated with the ongoing maintenance of the property. The majority of the single tenant property leases also require that tenants pay for structural repairs and maintenance. At December 31, 1995, the Company owned 109 operating properties and managed 3 additional operating properties under master lease agreements. The 112 properties are located in 27 states as outlined in Item 2. The Company has operated and intends to operate in a manner to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986. In order to maintain qualification as a REIT, the Company must distribute at least 95% of its real estate investment trust taxable income and meet certain other asset and income tests. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to the stockholders. Additionally, ownership of the shares of common stock of the Company, directly or constructively, by any single person is limited, by the Company, to 9.8% of the total number of outstanding shares, subject to certain exceptions. Any purported ownership in excess of such limit will be void ab initio. As of March 7, 1996, the Company employed 53 persons. Its executive offices are located at 16955 Via Del Campo, Suite 110, San Diego, California 92127 and its telephone number is (619) 485-9400. Properties The Company emphasizes investments in retail and commercial properties where a substantial majority of gross leasable area ("GLA") is subject to long-term net leases to national or regional tenants. The properties consist of three primary types: (i) multi-tenant retail properties (the "Shopping Centers"); (ii) single tenant net leased retail properties (the "Single Tenant Properties"); and (iii) commercial properties and office buildings (the "Commercial Properties"). At December 31, 1995, the Company and its subsidiaries owned (i) 38 Shopping Centers (three of which were master leased) which accounted for approximately 61% of the Company's scheduled annualized base rent ("ABR") at December 31, 1995; (ii) 71 Single Tenant Properties which accounted for approximately 38% of the Company's ABR at December 31, 1995; and (iii) 3 Commercial Properties which accounted for approximately 1% of the Company's ABR at December 31, 1995. These 112 properties total approximately 7.4 million square feet of GLA, of which the Shopping Centers, Single Tenant Properties, and Commercial Properties comprise approximately 60%, 39%, and 1% respectively. During 1995, the Company purchased 10 properties for a total purchase price of approximately $48 million. All ten properties were Shopping Centers. At December 31, 1995, the Company operated an additional three Shopping Centers under master lease agreements. These three properties were purchased and the master lease agreements terminated in January and February of 1996. Also during 1995, the Company sold nine Single Tenant Properties and one Commercial Property for net sales proceeds of $29 million. 2 3 Strategy and Philosophy The following is a brief discussion of the Company's current strategies and policies concerning acquisitions, management, dispositions, investments, finances and operations, and certain support practices. The Company may, however, from time to time, alter or change one or more of these strategies or its policies in these areas. There can be no assurance that the Company's strategies will be successful. In general, the Company's policies and strategies are determined by the Board of Directors and implemented by its executive officers. Certain policies and objectives of the Company are subject to restrictions set forth in the Company's bylaws which may not be altered without the majority vote of the directors, including the Independent Directors, and by the Company's shareholders. The Company's objectives are to acquire, own, and manage a portfolio of commercial retail properties that will provide cash for quarterly distributions to stockholders, while protecting investor capital and providing potential for capital appreciation. Aggressive Management - The Company aggressively manages its properties, with an emphasis on maintaining high occupancy rates and a strong base of nationally recognized anchor tenants. In addition, the Company emphasizes monitoring of the physical condition of the properties and the financial condition of the tenants. Over time, the Company will seek to increase cash flow and portfolio value primarily through contractual rent increases during the terms of its leases, reletting of existing space at higher rents, expansion of existing properties and the minimization of overhead and operating costs. Acquisition of Properties - The Company intends to continue its portfolio focus on retail properties with predictable cash flow and growth potential. The Company seeks to expand its portfolio by acquiring well-located neighborhood and community shopping centers and other retail properties with comparable rents. In addition, the Company seeks to acquire properties with tenants that have a national or regional presence and an established credit quality. The Company intends to continue to concentrate its property acquisitions in the southwestern and southeastern United States, where a majority of its current properties are located. Management believes that such emphasis will allow the Company to utilize its current property management and maintenance personnel in these areas. The Company may, however, acquire properties in other areas of the United States. Additionally, the Company intends to continue to evaluate its property type mix and may purchase from time to time other properties that the Company believes will meet its objectives. Such properties may include power centers, which are anchored by multiple major retail tenants, or other types of properties which management believes will meet the Company's objectives. Occasionally, the Company may acquire certain "opportunity" properties which may be either retail or non-retail, but are well located and present significant appreciation potential when combined with the Company's aggressive style of management. These are typically properties which are purchased at a great discount to their replacement cost. Acquisitions through Partnerships - The Company may from time to time acquire properties from unaffiliated property owners by forming partnerships and exchanging limited partnership units in such partnerships for the property owners' equity in the acquired properties. Such partnership units are generally exchangeable for shares of common stock under certain circumstances. The Company believes that this acquisition method may permit the Company to acquire properties at attractive prices from property owners wishing to enter into tax deferred transactions. In 1994, the Company acquired six properties through a single partnership using the foregoing structure. In 1995, the Company formed a second partnership, Excel Realty Partners, L.P. ("ERP"), a Delaware limited partnership, to facilitate the acquisition of five properties and additional potential acquisitions in the southeastern United States (see "Recent Developments"). 3 4 Ground Lease Developments - The Company may from time to time finance properties under development. In such circumstances, the Company generally requires that the developer of such property has previously obtained (i) all necessary entitlements allowing completion of the property, and (ii) signed leases from the principal tenant(s) who will occupy the property. Under this financing method, the Company purchases the undeveloped property and leases such property back to the developer, and upon completion, the Company has the option to purchase the development. The Company believes that this method of financing may give the Company opportunities to purchase developed properties at capitalization rates slightly above those which might otherwise be available after completion of development. Disposition of Properties - The Company continually analyzes each asset in its portfolio and identifies those properties which can be sold (to the extent consistent with REIT qualification requirements) for optimal sales prices given prevailing market conditions and the particular characteristics of each property. Through this strategy, the Company seeks to continually update its core property portfolio and redeploy capital into newer properties or properties where its aggressive management techniques may maximize property values. The Company, however, holds its properties for investment and the production of rental income and not for sale to customers or other buyers in the ordinary course of the Company's business. If the Company were treated as holding properties for sale to customers in the ordinary course of its business, it would be subject to tax equal to 100% of its gain from each property sold (with no offset allowed for properties sold at a loss). In addition, if the gain recognized in any taxable year from certain asset dispositions were to exceed specified limits, such gain could cause the disqualification of the Company as a REIT. The Company intends to take appropriate measures before entering into any binding agreement to dispose of an asset to determine that such disposition will not result in the imposition of such tax on the Company and will not result in the disqualification of the Company as a REIT. Financing - The Company intends to finance future acquisitions with the most advantageous sources of capital available to the Company at the time, which may include the sale of common stock, preferred stock or debt securities through public offerings or private placements, the incurrence of additional indebtedness through secured or unsecured borrowings, and the reinvestment of proceeds from the disposition of assets. The Company may acquire properties subject to seller financing, existing loans secured by mortgages, deeds of trust or similar liens. The Company may obtain mortgage financing for properties it acquires and refinance its existing properties. (See "Recent Developments" for financing transactions completed in 1995). Environmental Matters Under various federal, state and local laws, ordinances and regulations, an owner of real estate generally is liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as related costs of investigation and property damage. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's ability to sell or lease a property or to borrow using such real estate as collateral. Other federal and state laws require the removal or encapsulation of asbestos-containing material in poor condition in the event of remodeling or renovation. Other statutes may require the removal of underground storage tanks that are out of service or out of compliance. Noncompliance with these and other environmental, health or safety requirements may result in the need to cease or alter operations at a property, which could affect the financial reliability of the property. The Company seeks to protect itself from environmental liabilities associated with properties it acquires in a number of ways. As part of its internal due diligence process, the Company undertakes environmental site assessments prior to purchasing a property. The Company will normally not purchase a property in the event these assessments reveal potential environmental liabilities. The Company may however, evaluate the risks and attempt to quantify the potential costs associated with such liabilities, and then make a determination of whether to acquire the property. 4 5 If the Company chooses to acquire the property, it will typically require the prospective seller/tenant to agree to remediate any environmental problems and may obtain a letter of credit or other security to provide adequate assurance to the Company that sufficient funds will be available to complete the work. The Company will continue to obtain environmental reports on all properties it seeks to acquire. Moreover, to protect itself against environmental liabilities that were not discovered during its pre-purchase investigations as well as those that were disclosed, the Company, in the purchase agreement and/or lease, will typically require the seller/tenant to indemnify the Company against any and all environmental liabilities arising from the property acquired. Substantially all of the Company's properties have been subject to environmental reports (which typically involve inspection without soil sampling or ground water analysis) by independent environmental consultants. The environmental reports have not revealed any material environmental liability, except for the presence of certain asbestos-containing material at the Mesa, Arizona, Kmart property. Although the asbestos discovered is thought to present no immediate health hazard, its removal (at an estimated cost of $300,000 to $600,000) would likely be required prior to commencing any improvements on the property. The terms of the lease for such property require the tenant to assume the cost of any required environmental remediation, including the removal of asbestos. The Company is not aware of any other material environmental liability with respect to any of its properties. No assurance can be given that the environmental studies that were performed at the properties would disclose all environmental liabilities thereon, that any prior owner thereof did not create a material environmental condition not known to the Company or that a material environmental condition does not otherwise exist with respect to any of its properties. Principal Tenants Wal-Mart Stores, Inc. ("Wal-Mart") is the Company's largest tenant in terms of both GLA and base rental revenues. Wal-Mart is the nation's largest retailer and operates over 2,000 discount department stores, over 400 warehouse clubs and four hypermarkets. Wal-Mart is listed on the New York Stock Exchange and as of December 31, 1995, had credit ratings of AA from Standard and Poor's Corporation ("Standard and Poor's") and Aa2 from Moody's Investor Services, Inc. ("Moody's"). Kmart Corporation ("Kmart") is the Company's second largest tenant in terms of both GLA and base rental revenues. Kmart's principal business is general merchandise retailing through a chain of discount department stores. It is one of the world's largest retailers based on sales volume. Kmart has experienced flat or declining earnings in recent periods, and had announced plans to eliminate a significant number of jobs and close certain of its existing stores. In January 1996, Moody's lowered its rating on Kmart's long-term debt to Ba2. Standard and Poor's rating on Kmart's long-term debt at December 31, 1995 was BB. Kmart has closed five stores that were leased from the Company. The Company negotiated receipt of lease termination fees on four of these properties, two of which were subsequently sold. The Company is currently in the process of re-leasing or selling the other two properties. Kmart has continued to make its lease payments on the fifth closed property. Should Kmart in the future announce additional store closures, the Company believes Kmart would continue its lease payments for the term of the leases unless a lease termination fee is negotiated, or the properties would be released at equal or greater rents. Wal-Mart and Kmart are publicly traded companies and financial and other information regarding these tenants is on file with the Commission. 5 6 The table below sets forth information concerning the five largest tenants of the Company and its subsidiaries at December 31, 1995:
Percent of Percent of Company Company Total Number Total GLA Total GLA Scheduled Scheduled Tenant Leases Under Lease Under Leases ABR ABR - ------ ------ ----------- ------------ --- --- (in thousands) (in thousands) Wal-Mart 18 1,543 20.9% $ 6,618 14.7% Kmart 17 1,373 18.6% 6,501 14.5% Kroger 14 504 6.8% 3,242 7.2% Lucky 15 484 6.6% 2,796 6.2% Food Lion 11 299 4.1% 1,669 3.7% --- ------ ----- ------- ------ 75 4,203 57.0% $ 20,826 46.3% === ====== ====== ======= ======
Certain leases related to the tenants in the table have either been subleased or the leases relating thereto have been assigned to such party. Nevertheless, the original tenant under the lease remains responsible for payment of all rents and all other obligations due under such lease. An assignment of the lease would not affect the terms of the lease. Generally, all subtenants are currently required to pay the same rent to the tenant as the tenant is required to pay to the Company and have been subleased for a term that is approximately the same as the remaining term of the lease. In the event that the subtenant defaults under the sublease and vacates the property, or in the event that the term of the sublease expires earlier than the term of the lease, the property could remain unoccupied until a new subtenant is located. In any event, the original tenant will remain responsible for payment of all rents and all other obligations due under the lease for the full remaining term of the lease. Recent Developments In May 1995, the Company filed with the Securities and Exchange Commission a $250 million shelf registration statement. This registration statement was filed for the purpose of issuing debt securities, preferred stock, depositary shares, common stock or warrants. Subsequently in 1995, the Company issued from the shelf, 2.14 million shares of common stock in a publicly underwritten offering at a price of $20.125 per share. Net proceeds of approximately $40.5 million from the offering were used to repay debt, purchase properties, and make loans to facilitate the development of certain properties. In December 1995, the Company received a two-year unsecured revolving credit facility up to $150 million through December 1997 from a consortium of six banks (the "Credit Facility"). The actual amount available to the Company is dependent on certain covenants such as the value of unencumbered assets and the ratio of earnings before interest, depreciation, and amortization to fixed charges. Upon obtaining the Credit Facility, the Company borrowed $82.8 million, primarily to repay existing secured debt on 52 properties.. With the Company's unsecured real estate base at December 31, 1995, the Company had an additional $16 million available under the Credit Facility. The Credit Facility carries an interest rate of LIBOR plus 1.75% (7.5% at December 31, 1995). In January 1995, the Company entered into master lease and option agreements with respect to 11 shopping centers, containing approximately 1.4 million square feet of GLA, located in North Carolina. The master leases required the payment equal to eight percent of the lessor/sellers equity and gave the Company all management and operating responsibilities for the shopping centers. Under the master leases, the Company received all cash flow, if any, in excess of the master lease payments. The option agreements gave the Company the option to purchase the properties. In 1995, the Company purchased seven of the properties under the option agreements. The Company terminated the master lease and purchase option on one 6 7 property on December 31, 1995. In January and February of 1996, the Company purchased the three remaining properties. In April 1995, the Company formed a Delaware limited partnership, Excel Realty Partners, L.P. ("ERP") to own and manage certain real estate properties. The Company is a 1% partner and the sole general partner of ERP. In May 1995, ERP entered into an agreement for certain unaffiliated entities to contribute to the partnership several shopping centers located in the southeastern United States. The Company anticipates that a minimum of 13 properties will be contributed to ERP under this agreement. The contributing partners will receive partnership units which will be exchangeable into common shares of the Company at prices of $21.50 and $20.70 per share. The units priced at $21.50 will be exchangeable anytime after one year from closing and adjust to the existing market price, but exchange on a basis of one partnership unit for one common share of the Company. The units priced at $20.70 are exchangeable anytime after two years and do not adjust to the prevailing market price of the common stock. As part of the agreement, after the partners receive annual per unit distributions of $1.72 for the $21.50 units and $1.78 for the $20.70 units, the Company will be entitled to receive 99% of all remaining income and gains, if any. The Company is committed to make loans to ERP to pay partner distributions in the event ERP is unable to. In 1995, ERP's cash flows were sufficient to make the limited partner distributions. The Company has initially contributed cash for a 1% equity position in the partnership. In 1995, five real estate properties with a value of $28.5 million subject to outstanding mortgages of $18 million, were contributed to ERP for limited partnership units and cash. During 1995, the Company loaned ERP approximately $6 million to help facilitate these transactions. At December 31, 1995, the Company is committed to advance ERP an additional $2 million under existing credit agreements and may advance additional amounts in the future. The approximate value of the 8 additional properties scheduled to be contributed to the partnership is $57 million of which ERP would assume approximately $40 million of indebtedness and pay $17 million in a combination of cash and units. It is anticipated that the cash requirements would be principally loaned to ERP by the Company. There is no assurance that all or any of such properties will be contributed. In February 1996, one additional property was contributed to ERP. The Company primarily used existing cash deposits to make advances to ERP of approximately $1.5 million to facilitate this transaction. In April 1995, ERT Development Corporation ("EDV"), a Delaware Corporation, was organized. The Company owns 100% of the outstanding preferred shares of EDV. The preferred shares receive 95% of the dividends, if any, from EDV. EDV was formed to acquire, develop, hold, and sell real estate in the short-term for capital gains and/or receive fee income. At December 31, 1995, the Company had notes receivable outstanding to EDV of $12.6 million to facilitate certain transactions. The Company is currently in the process of evaluating other potential property acquisitions and financing alternatives. The Company intends to continue to emphasize the acquisition of shopping centers and other retail properties under long-term lease to creditworthy national or regional tenants. 7 8 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA YEAR ENDED DECEMBER 31 -------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE INFORMATION) INCOME STATEMENT DATA Total revenue $ 55,229 $ 41,014 $ 22,525 $ 5,827 $ 2,472 Operating and G&A expenses 15,470 7,278 5,049 2,749 882 Depreciation and amortization 6,933 6,887 4,186 608 280 Net operating income 32,826 26,849 13,290 2,470 1,310 Interest expense 22,458 14,190 9,360 2,218 1,340 Net income 18,192 13,796 3,232 454 65 Per share data: Net income $ 1.51 $ 1.27 $ 0.55 $ 0.41 $ 0.11 Distributions 1.32[a] 1.71 1.42 1.14 1.02 Weighted average number of shares 12,084 10,883 5,878 1,110 615 BALANCE SHEET DATA Net real estate $372,016 $349,255 $273,362 $112,971 $ 22,890 Total assets 428,307 375,100 290,226 116,621 24,768 Mortgages payable 123,813 201,157 113,487 89,442 14,582 Notes payable 86,984 15 6,575 1,102 16 Stockholders' equity 208,678 163,898 161,962 22,312 9,649
- ----------- [a] In April 1995, the Company adopted a policy of declaring distributions to stockholders of record on the first day of the succeeding quarter, instead of the last day of the current quarter. The payment date of 15 days following each quarter remained unchanged. In 1996, a distribution of $0.445 per share was declared on January 1 and paid on January 15. Had the Company not changed its distribution declaration date, the distributions would have been $1.77 in 1995. 8 9 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto. Comparison of year ended December 31, 1995 to year ended December 31, 1994. On January 1, 1995, the Company entered into master lease and option agreements to manage and/or purchase eleven shopping centers in North Carolina (the "North Carolina Properties"). During 1995, seven of these properties were purchased. Furthermore, the Company experienced a full year of operations on the 19 income producing properties acquired during 1994 and almost a full year of operations on one property sold in December 1995. In addition, the Company sold a total of nine single tenant properties and one office building in 1995. Total revenue increased $14,215,000 or 35%, to $55,229,000 in 1995 from $41,014,000 in 1994 due to the acquisitions mentioned above. The North Carolina Properties accounted for $9,041,000 of this revenue. Additionally, approximately $3,855,000 of lease termination fees were recognized as base rents in 1995 compared to $988,000 in 1994. Two of the four properties the Company received lease termination fees for in 1995 were sold. The Company is in the process of selling or re-leasing the other two properties and is recognizing the fees as base rents over the estimated time the Company will take to sell or re-lease these properties at comparable rents. Expense reimbursements increased $1,562,000 related to the increase in property related expenses as noted below. Total operating expenses increased $8,192,000, or 113%, to $15,470,000 in 1995 from $7,278,000 in 1994. Operating expenses increased as a percentage of total revenue to 28% in 1995 from 17% in 1994, primarily due to the master lease expenses. Master lease expenses accounted for $4,681,000 and other expenses related to the North Carolina Properties accounted for $1,141,000. General and administrative expenses increased by $210,000 but decreased as a percentage of total revenue from 6% in 1994 to 5% in 1995. General and administrative expenses in 1995 did not include $655,000 which were paid by EDV which commenced operations in 1995. Netted against this decrease in 1995 was an accrual for an estimated state tax liability of $380,000. In the prior year, the Company made an $80,000 accrual. Interest expense increased from $14,190,000 in 1994 to $22,458,000 in 1995, or 58%. The increase is primarily attributable to additional outstanding debt and loan costs written-off during 1995. In December 1995, upon obtaining a new credit facility, the Company repaid its securitized mortgage financing known as a Real Estate Mortgage Investment Conduit ( the "REMIC") and a former bank line. The Company wrote-off loan costs of $2,806,000 related to the REMIC debt, and $254,000 related to the former bank line. Total loan costs written-off in 1995 including other REMIC debt repayments during the year amounted to $3,663,000. Additionally, the Company wrote-down its interest rate protection agreement by $790,000. Loan costs written off in 1994 and charged to interest expense in 1994 were $88,000. Finally, overall mortgages and notes payable increased. At December 31, 1995, mortgage and notes payable of $210,797,000 were $9,625,000 greater than the debt of $201,172,000 outstanding at December 31, 1994. Depreciation expense for 1995 was $6,929,000 compared to $6,119,000 in 1994, or a 13% increase. The increase is primarily due to a full period of depreciation in 1995 on properties acquired in 1994, and the ten Shopping Centers acquired in 1995 which had greater carrying values than the properties sold during the year. Amortization expense decreased by $764,000 in 1995 due to a management contract which was fully amortized in 1994. 9 10 Interest and other income increased $2,896,000 or 233% from 1994 primarily related to additional cash invested and loans made to Excel Development Corporation and other development companies. The Company had $22,850,000 in notes receivable outstanding at December 31, 1995 compared to $9,099,000 outstanding at December 31, 1994. The Company recognized a net gain of $3,683,000 on real estate sales in 1995 compared to a net loss of $108,000 in 1994. The gain was primarily associated with the sale of an office building in Arizona. Net income increased $4,396,000, or 32%, to $18,192,000 ($1.51 per share) in 1995 from $13,796,000 ($1.27 per share) in 1994. Quarterly distributions per share increased from $0.43 to $0.445 in the third quarter of 1995. Comparison of year ended December 31, 1994 to year ended December 31, 1993. During 1994, the Company acquired 19 income producing properties. Additionally, the Company experienced a full year of operations on the 59 properties acquired in 1993 of which 54 were acquired in the second half of the year. Also, during 1993, the Company acquired all of the assets and liabilities of Excel Realty Advisors, Inc. ("ERA"), an affiliate of the Company, and terminated the advisory contract between ERA and the Company. Total revenue increased $18,489,000 or 82%, to $41,014,000 in 1994 from $22,525,000 in 1993. The increase was due to the increase in the Company's property portfolio as mentioned above. Lease termination fees of $988,000 were recognized as rental income in 1994. No lease termination fees were recognized as income in 1993. Total operating expenses increased $2,229,000, or 44%, to $7,278,000 in 1994 from $5,049,000 in 1993. Total operating expenses as a percentage of total revenue decreased from 22% in 1993 to 17% in 1994. This was primarily due to efficiencies gained in operations from the increase in the Company's portfolio. Included in the increase were general and administrative expenses of $709,000 which decreased as a percentage of total revenue from 8% to 6%. This decrease was also due to operational efficiencies gained from the increase in the property portfolio. Of the increase in general and administrative expenses, approximately $572,000 was attributable to salaries and wages. This increase was primarily due to the payment and accrual of 1993 and 1994 bonuses to the executive officers of the Company, and the hiring of additional personnel needed to manage the Company's growth. The increase in other property expenses was directly related to the increased property portfolio. Interest expense increased 52% from $9,360,000 in 1993 to $14,190,000 in 1994. The increase was primarily due to new mortgage debt incurred in 1994. Total mortgage debt at December 31, 1994 was $201,157,000 or $87,670,000 higher than the mortgage debt of $113,487,000 at December 31, 1993. The REMIC notes during the year averaged approximately 5.6% while the mortgage debt which was replaced of approximately $39,800,000 carried interest at 6.5% to 10.25%. Depreciation and amortization expense increased $2,701,000 due to the new properties acquired during 1994 and the recognition of a full year's depreciation on the 59 properties acquired during 1993. The acquisition costs of ERA, totaled approximately $1,655,000 and were charged to expense in 1993. Net income increased $10,564,000, or 327%, to $13,796,000 ($1.27 per share) in 1994 from $3,232,000 ($0.55 per share) in 1993. Distributions per share increased from $1.42 in 1993 to $1.71 in 1994. 10 11 LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations has been the principal source of capital to fund the Company's ongoing operations. The Company's issuance of common shares, use of the Company's credit facilities, and long-term mortgage financing have been the principal sources of capital required to fund its property acquisitions. In order to continue to expand and develop its portfolio of properties, the Company may seek to obtain funds through additional equity offerings or debt financing in a manner consistent with its intention to operate with what it believes to be an appropriate debt level with respect to prudent interest coverage ratios. In April 1995, the Company increased its quarterly distributions from $0.43 per share to $0.445 per share. The Company anticipates that adequate cash will be available to fund its operating and administrative expenses, continuing debt service obligations and payment of distributions in both the short and long-term. During the year, property acquisitions were primarily funded through property sales and the proceeds from an equity offering. In May 1995, the Company filed with the Securities and Exchange Commission a $250,000,000 shelf registration statement. This registration statement was filed for the purpose of issuing debt securities, preferred stock, depositary shares, common stock or warrants for general corporate purposes. In 1995, the company issued from the shelf 2,140,000 shares of common stock in a publicly underwritten offering at a price of $20.125 per share. Net proceeds of approximately $40,500,000 from the offering were used to repay an existing loan agreement, purchase properties, and make loans to ERT Development Corporation (see below) and other development companies for the purpose of taking advantage of short-term development opportunities. In December 1995, the Company received a two-year unsecured revolving credit facility for up to $150,000,000 through December 1997 from a consortium of six banks (the "Credit Facility"). The actual amount available to the Company is dependent on certain covenants such as the value of unencumbered assets and the ratio of earnings before interest, depreciation, and amortization to fixed charges. Upon obtaining the Credit Facility, the Company borrowed $82,800,000. The proceeds were used primarily to repay the outstanding REMIC debt of $76,000,000, to repay a former bank line, and to pay loan costs. With the Company's unsecured real estate base at December 31, 1995, the Company had an additional $16,000,000 available under the Credit Facility. The Credit Facility carries an interest rate of LIBOR plus 1.75% (7.5% at December 31, 1995), while the REMIC carried interest rates of LIBOR + 0.6% to 0.8%, plus a servicing fee of 0.1865%. Although the REMIC debt carried lower interest rates than the Credit Facility, the Company believes that other capital resources may become accessible at lower costs with the increase in the Company's unsecured real estate portfolio. The Company also has a $4,000,000 line of credit due September 1996 and an unsecured $1,000,000 revolving bank line. The amounts from these facilities were primarily used to loan funds to ERT Development Corporation (see results of operations). Approximately $800,000 in total is available under these two facilities at December 31, 1995. During the year, the Company also used other former loan agreements to make loans to ERP (see below) and fund other operating costs. In April 1995, the Company formed a Delaware limited partnership, Excel Realty Partners, L.P. ("ERP") to own and manage certain real estate properties. At December 31, 1995, the Company is committed to advance ERP an additional $2,000,000 under existing credit agreements and may advance additional amounts in the future. Also, the Company is committed to make loans to ERP to pay partner distributions in the event ERP is unable to. The approximate value of eight properties scheduled to be contributed to ERP in 1996 under existing agreements is $57,000,000 of which ERP would assume approximately $40,000,000 of indebtedness and pay $17,000,000 in a combination of cash and partnership units. It is anticipated that the cash requirements would be principally loaned to ERP by the Company. There is no assurance that all or any of the eight properties will be contributed to ERP. In 1996, the Company loaned $2,000,000 to a developer and is committed to loan an additional $12,000,000 related to a development project in Florida. 11 12 The Company has elected REIT status for federal income tax purposes and must distribute at least 95% of its taxable income to its stockholders in order to avoid income taxes. Although the Company receives most of its rental payments on a monthly basis, it intends to make quarterly distribution payments. Amounts accumulated for distributions will be invested by the Company in short-term marketable instruments including deposits at commercial banks, money market accounts, certificates of deposit, U.S. government securities or other liquid investments (including GNMA, FNMA, and FHLMC mortgage-backed securities) as the Board of Directors deems appropriate. With $9,812,000 in cash and net accounts receivable of $2,156,000 at December 31, 1995, the Company had sufficient funds available to cover current accounts payable and accrued liabilities of $4,806,000 and the January 1996 stockholders' distribution payment of $5,861,000. The Company used escrow and other cash deposits it had at December 31, 1995 to fund its four acquisitions made in January and February 1996. The cash position of the Company at December 31, 1995 increased by a net $5,681,000 when compared to December 31, 1994. Cash provided by operations amounted to $28,895,000, primarily related to net income of $18,192,000, and depreciation and amortization of $13,350,000 which did not require the use of cash, less the net gain on real estate sales of $3,683,000. Amortization expenses included loan costs written-off and a write-down of an interest rate protection agreement which both totaled $4,200,000. Expenses included in net income which had not yet been paid due to the increase in accounts payable of $2,213,000 and other liabilities of $1,378,000 also added to the cash position of the Company. This was offset by increases in accounts receivable of $1,121,000 and other assets of $1,843,000. These increases in current assets and liabilities are primarily the result of the Company's growth in operations. Net cash used in investing activities amounted to $28,425,000. During 1995, $36,881,000 was used to make loans to EDV ($23,315,000), ERP ($5,950,000) and other development companies, $26,281,000 was used for real estate acquisitions, and $17,146,000 were paid in escrow and other cash deposits of which $10,657,000 relates to proceeds from the sale of an office building and $4,000,000 relates to deposits on the North Carolina Properties the Company purchased in 1995 and 1996. These escrow deposits are not listed as cash on the balance sheet but are deposits which will be available to the Company in 1996 for property acquisitions. Receipts of cash from investing activities include $29,397,000 obtained from the sale of ten properties in 1995, $23,130,000 received from payments on notes receivable, and $4,751,000 in deposits collected. Cash provided by financing activities amounted to $5,211,000. The net increase is primarily due to the Company's offering of common stock as previously described. Total cash received from stock issued was $44,451,000 less stock selling and offering costs of $2,812,000. Additionally the Company received from its credit facility $82,800,000 of which $76,000,000 was used to repay existing mortgage debt. Total proceeds from notes payable amounted to $105,253,000 and repayments on mortgage and notes payable totaled $118,516,000. The Company also paid distributions of $20,949,000 in 1995. 12 13 The Company calculates funds from operations ("FFO") as net income plus depreciation, amortization, amortized loan and leasing commission costs and loan costs written off, before gains or losses on real estate sales. FFO does not represent cash flows from operations as defined by generally accepted accounting principles nor may not be comparable to other similarly titled measures of other REITs. The Company believes however, that to facilitate a clear understanding of its operating results, FFO should be examined in conjunction with its net income as reductions for certain items are not meaningful in evaluating income-producing real estate, which historically has not depreciated. The following information is included to show the items included in the Company's FFO for the past three years (in thousands except per share amounts):
1995 1994 1993 ---- ---- ---- Net income $ 18,192 $ 13,796 $ 3,232 Depreciation: Buildings 6,314 5,685 3,157 Tenant improvements 531 353 213 Amortization (1): Leasing commissions 724 166 157 Management contract -- 766 766 Organization costs 4 2 -- Loan costs written off 4,453 88 110 Buy out of advisory contract -- -- 1,655 (Gain) loss on sale of buildings (3,682) 108 (399) -------- -------- -------- Funds from operations - revised definition (2) 26,536 20,964 8,891 Loan cost amortization 1,240 824 117 Depreciation on furniture, equipment and vehicles 85 81 50 -------- -------- -------- Funds from operations $ 27,861 $ 21,869 $ 9,058 ======== ======== ======== Other Information: Leasing commissions paid $ 335 $ 329 $ 228 Tenant improvements paid 741 1,095 796 Building improvements paid 716 459 631
(1) Only amortization of the management contract and organizational costs are shown as amortization expense in the Consolidated Statements of Income. The management contract was fully amortized in 1994. Loan cost amortization and loan costs written-off are classified as interest expense and leasing commission amortization is classified as other operating expenses in the Consolidated Statements of Income. (2) Beginning in 1996, the Company will revise its definition of FFO to exclude the amortization of loan costs and depreciation of furniture, equipment and vehicles as add-back items. ECONOMIC CONDITIONS The majority of the Company's leases contain provisions deemed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive percentage rents which generally increase as prices rise, and/or escalation clauses which are typically related to increases in the consumer price index or similar inflation indices. In addition, the Company believes that many of its existing lease rates are below current market levels for comparable space and that upon renewal or re-rental such rates may be increased to current market rates. This belief is based upon an analysis of relevant market conditions, including a 13 14 comparison of comparable market rental rates, and upon the fact that many of such leases have been in place for a number of years and may not contain escalation clauses sufficient to match the increase in market rental rates over such time. Most of the Company's leases require the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. In addition, the Company periodically evaluates its exposure to interest rate fluctuations, and may enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating rate loans. Many regions of the United States, including regions in which the Company owns property, may experience economic recessions. Such recessions, or other adverse changes in general or local economic conditions, could result in the inability of some existing tenants of the Company to meet their lease obligations and could otherwise adversely affect the Company's ability to attract or retain tenants. The Company's shopping centers are typically anchored by discount department stores, supermarkets and drug stores which usually offer day-to-day necessities rather than high priced luxury items. These types of tenants, in the experience of the Company, generally continue to maintain their volume of sales despite a slowdown in economic conditions. RECENT ACCOUNTING PRONOUNCEMENTS In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 121 ("FAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which becomes effective for fiscal years beginning after December 15, 1995. FAS 121 establishes standards for determining when impairment losses on long-lived assets have occurred and how impairment losses should be measured. The Company intends to adopt FAS 121 in 1996. The financial statement impact of adopting FAS 121 is not expected to be material. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial statements required by this item appear with an Index to Financial Statements and Schedules, starting on page F-1 of this report. 14 15 Exhibit Index 3.1 Articles of Incorporation of Excel Realty Trust, Inc., a Maryland corporation (the "Company"), as amended. (1) 3.2 Bylaws of the Company. (1) 4.1 Trust and Servicing Agreement, dated as of March 1, 1994, by and among Excel Credit Corporation ("ECC"), EQ Services ("EQ"), and State Street Bank and Trust Company, as Trustee ("Trustee"), with respect to the Commercial Mortgage Pass-Through Certificates, Series 1994-1, of ECC. (3) 4.2 Indenture, dated as of March 1, 1994 by and among Excel Mortgage Funding Corporation ("EMFC"), Wilmington Trust Company, as Trustee (the "Indenture Trustee"), and EQ, with respect to the Collateralized Floating Rate Notes due 2001 of EMFC (the "EMFC Notes"). (3) 4.3 Form of Mortgages entered into between Excel Mortgage Funding Corporation and the Indenture Trustee, with respect to the EMFC Notes. (3) 4.4 Interest Rate Cap Agreement, dated as of March 1, 1994, by and between ECC, Trustee, and Deutsche Bank AG - New York (the "Cap Provider") . (3) 4.5 Interest Rate Cap Agreement, dated as of March 1, 1994, by and between ECC, Trustee, and the CAP provider. (3) 10.1 Amended Option and Contract for Purchase of Real Estate, dated as of September 11, 1992, by and between Excel California and Horne Properties, Inc., a Tennessee corporation ("Horne"). (1) 10.2 General Partnership Agreement of Horne & Excel Properties, a Tennessee general partnership, dated as of October 13, 1992, by and between Horne and Excel California. (1) Exhibit 10.2A 10.3 General Partnership Agreement of Horne & Excel Properties (Chapman), a Tennessee general partnership, dated as of December 30, 1992, by and between Horne and Excel California. (1) Exhibit 10.2B 10.4 Employment Contract, dated as of April 1, 1993, by and between Excel California and Gary Sabin, an individual. (1) Exhibit 10.8 10.5 Employment Contract, dated as of April 1, 1993, by and between Excel California and Richard Muir, an individual. (1) Exhibit 10.8A 10.6 Employment Contract, dated as of April 1, 1993, by and between Excel California and Graham Bullick, an individual. (1) Exhibit 10.9 10.7 Employment Contract, dated as of April 1, 1993, by and between Excel California and Ronald Sabin an individual. (1) Exhibit 10.9A 10.8 1993 Stock Option Plan of the Company. (1) Exhibit 10.10 10.9 Form of Incentive Stock Option Agreement under the Company's 1993 Stock Option Plan. (1) Exhibit 10.11 15 16 10.10 Form of Non-Qualified Stock Option Agreement under the Company's 1993 Stock Option Plan. (1) Exhibit 10.12 10.11 401(k) Retirement Plan of the Company. (1) Exhibit 10.13 10.12 Form of Common Stock Purchase Option, dated as of March 15, 1993 by and between Excel California and each of seven directors thereof. (1) Exhibit 10.27 10.13 Form of Common Stock Purchase Option, dated as of March 15, 1993, by and between Excel California and each of the seven directors thereof. (1) Exhibit 10.28 10.14 Form of 1993 Executive Officer Common Stock Purchase Option, dated as of April 1, 1993 by and between Excel California and each of six executive officers thereof. (1) Exhibit 10.29 10.15 Assignment of Beneficial Interest Under Existing Leases, Deed of Trust, Collateral Assignment of Leases and Rent, and Other Loan Documents between BG Development Corporation ('BG") and the Company, dated September 29, 1993. (2) Exhibit 10.30 10.16 Master Lease between Excel Realty Trust, Inc. as landlord, and BG Development Corporation ("BG") as tenant, dated September 29, 1993. (2) Exhibit 10.31 10.17 Side Letter Agreement between Excel Realty Trust, Inc. and BG. (2) Exhibit 10.32 10.18 Term Loan Agreement among EMFC, the Company, and Casco Northern Bank, N.A. dated December 29, 1993. (2) Exhibit 10.33 10.19 Property Management Agreement, dated as of March 17, 1994, by and between the Company and EMFC. (2) Exhibit 10.34 10.20 Agreement of Limited Partnership of EH Properties, L.P., a Delaware limited partnership, dated as of March 25, 1994, by and between the Company, as general partner, and Horne, as limited partner. (3) Exhibit 10.37 10.21 Partnership Contribution Closing Agreement dated as of March 28, 1994, by and between Horne, the Company, and EH Properties, L.P., a Delaware limited partnership. (3) Exhibit 10.38 10.22 1994 Director's Stock Plan of the Company. (3) Exhibit 10.39 10.23 Form of Stock Option Agreement under the 1994 Director's Stock Plan of the Company. (3) Exhibit 10.40 10.24 Loan Agreement, dated as of December 29, 1994, by and among the Company and the First National Bank of Boston ("FNBB"). (3) Exhibit 10.41 10.25 Note, dated as of December 29, 1994, executed by the Company in favor of FNBB. (3) Exhibit 10.42 10.26 Unconditional Guaranty of Payment and Performance, dated as of December 29, 1994, executed by EH Properties, L.P. in favor of FNBB. (3) Exhibit 10.43 10.27 Collateral Assignment of Partnership Interests, dated as of December 29, 1994, executed by the Company in favor of FNBB. (3) Exhibit 10.44 16 17 10.28 Master Agreement, dated as of January 1, 1995, by and among the Company and the limited partnerships named therein (the "Tricor Partnerships"). (3) Exhibit 10.45 10.29 Closing Memorandum, dated as of January 20, 1995, by and among the Company and the Tricor Partnerships. (3) Exhibit 10.46 10.30 Agreement, dated as of January 20, 1995, by and among the Company and the Tricor Partnerships. (3) Exhibit 10.47 10.31 Loan modification agreement dated as of December 1994, by and amount the Company and B.G. (3) Exhibit 10.48 10.32 Agreement of Limited Partnership of Excel Realty Partners, L.P., a Delaware limited partnership ("ERP"). (4) 10.33 Contribution Agreement by and between each of the partnerships named therein and ERP. (4) 10.34 Credit Agreement Among the Company, as Borrower, and the First National Bank of Boston, Wells Fargo Bank, N.A., First Interstate Bank of California, Dresdner Bank AG, and NBD Bank, as Lenders, and the First National Bank of Boston, as Agent dated December 27, 1995. (4) 21.1 Subsidiaries of the Registrant. (4) 23.1 Consent of Coopers and Lybrand L.L.P. (5) 27.1 Financial data schedules. (4) - ---------------- (1) Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 33-063160, filed with the Commission on May 21, 1993, as amended, in which this exhibit bore the same number, unless otherwise indicated. (2) Incorporated by reference from the Company's report on Form 10-K dated March 30, 1994 in which this exhibit bore the same number, unless otherwise indicated. (3) Incorporated by reference from the Company's report on Form 10-K dated March 13, 1995 in which this exhibit bore the same number, unless otherwise indicated. (4) Previously filed on Form 10-K dated, March 7, 1996. (5) Filed herewith. 17 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. EXCEL REALTY TRUST, INC. DATED: May 8, 1996 By: /s/ David A. Lund ---------------------- DAVID A. LUND Chief Financial Officer 18 19 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ----------
PAGE ---- 1. CONSOLIDATED FINANCIAL STATEMENTS: Report of Independent Accountants...................................................................F-2 Consolidated Balance Sheets December 31, 1995 and 1994.......................................................................F-3 Consolidated Statements of Income Years Ended December 31, 1995, 1994 and 1993.....................................................F-4 Consolidated Statements of Changes in Stockholders' Equity Years Ended December 31, 1995, 1994 and 1993.....................................................F-5 Consolidated Statements of Cash Flows Years Ended December 31, 1995, 1994 and 1993.....................................................F-6 Notes to Consolidated Financial Statements..........................................................F-7 2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES: Schedule II - Valuation and Qualifying Accounts Years Ended December 31, 1995, 1994 and 1993....................................................F-19 Schedule III - Real Estate and Accumulated Depreciation December 31, 1995...............................................................................F-20
F-1 20 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Excel Realty Trust, Inc. We have audited the consolidated financial statements and the financial statement schedules of Excel Realty Trust, Inc. and subsidiaries as listed in the index on page F-1 of this Form 10-K/A. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Excel Realty Trust, Inc. and subsidiaries as of December 31, 1995 and 1994 and the consolidated results of operations and their cash flows for the each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND, L.L.P. San Diego, California February 5, 1996 F-2 21 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994 (IN THOUSANDS, EXCEPT SHARE AMOUNTS) ----------
1995 1994 --------- --------- ASSETS Real estate: Land $ 122,394 $ 115,614 Buildings 251,012 243,869 Less accumulated depreciation (14,909) (10,228) Real estate held for sale 13,519 -- --------- --------- Net real estate 372,016 349,255 Cash 9,812 4,131 Escrow and other cash deposits 14,890 2,494 Accounts receivable, less allowance for bad debts of $726 and $318 in 1995 and 1994, respectively 2,156 1,443 Notes receivable from affiliates 18,561 -- Notes receivable - other 4,289 9,099 Loan acquisition costs 2,662 5,060 Other assets 3,921 3,618 --------- --------- $ 428,307 $ 375,100 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgages payable $ 123,813 $ 201,157 Notes payable 86,984 15 Accounts payable and accrued liabilities 4,806 2,683 Distributions payable -- 4,685 Deferred rental income 2,760 1,713 Other liabilities 1,266 949 --------- --------- Total liabilities 219,629 211,202 --------- --------- Commitments and contingencies -- -- Stockholders' equity: Preferred stock, $.01 par value, 10,000,000 shares authorized -- -- Common stock, $.01 par value, 100,000,000 shares authorized, 13,171,352 and 10,883,570 shares issued and outstanding in 1995 and 1994, respectively 132 109 Additional paid-in capital 218,531 175,702 Accumulated distributions in excess of net income (9,985) (11,913) --------- --------- Total stockholders' equity 208,678 163,898 --------- --------- $ 428,307 $ 375,100 ========= =========
The accompanying notes are an integral part of the financial statements. F-3 22 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ----------
1995 1994 1993 -------- -------- -------- Revenue: Base rent $ 51,160 $ 38,603 $ 20,736 Percentage rent 293 197 519 Expense reimbursements 3,776 2,214 1,270 -------- -------- -------- Total revenue 55,229 41,014 22,525 -------- -------- -------- Operating expenses: Master lease 4,681 -- -- Property taxes 2,877 1,822 1,199 General and administrative expenses 2,821 2,611 1,902 Repairs and maintenance 1,861 1,007 621 Utilities 923 752 577 Other property expenses 2,307 1,086 750 Depreciation and amortization 6,933 6,887 4,186 -------- -------- -------- Total operating expenses 22,403 14,165 9,235 -------- -------- -------- Operating income 32,826 26,849 13,290 Other income (expense): Interest expense (22,458) (14,190) (9,360) Interest and other income 4,141 1,245 558 Buy out of advisory contract -- -- (1,655) -------- -------- -------- Income before real estate sales 14,509 13,904 2,833 Gain (loss) on sale of real estate 3,683 (108) 399 -------- -------- -------- Net income $ 18,192 $ 13,796 $ 3,232 ======== ======== ======== Net income per common share $ 1.51 $ 1.27 $ 0.55 ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-4 23 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 (IN THOUSANDS, EXCEPT NUMBER OF SHARE AMOUNTS) ----------
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME ACCUMULATED COMMON STOCK ADDITIONAL OTHER THAN UNDISTRIBUTED TOTAL ---------------------- PAID-IN GAIN ON SALE GAIN ON SALE STOCKHOLDERS' NUMBER AMOUNT CAPITAL OF PROPERTIES OF PROPERTIES EQUITY ------ ------ ------- ------------- ------------- ------ Balance at January 1, 1993 1,798,739 $ 23,439 $ -- $ (1,127) $ -- $ 22,312 Change in par value of common stock -- (23,421) 23,421 -- -- -- Common stock no longer subject to repurchase 64,438 1 966 -- -- 967 Issuance of new shares of common stock 8,606,128 86 155,630 -- -- 155,716 Redemption of common stock (3,662) -- (61) -- -- (61) Selling expenses -- -- (10,994) -- -- (10,994) Net income -- -- -- 2,833 399 3,232 Distributions declared -- -- -- (8,811) (399) (9,210) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1993 10,465,643 105 168,962 (7,105) -- 161,962 Issuance of new shares of common stock 462,927 5 7,476 -- -- 7,481 Repurchase of common stock (45,000) (1) (736) -- -- (737) Net income -- -- -- 13,796 -- 13,796 Distributions declared -- -- -- (18,604) -- (18,604) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1994 10,883,570 109 175,702 (11,913) -- 163,898 Issuance of new shares of common stock 2,287,783 23 45,641 -- -- 45,664 Selling expenses -- -- (2,812) -- -- (2,812) Net income -- -- -- 18,192 3,683 21,875 Distributions declared -- -- -- (16,264) (3,683) (19,947) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1995 13,171,353 $ 132 $ 218,531 $ (9,985) $ -- $ 208,678 =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements. F-5 24 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 (IN THOUSANDS) ----------
1995 1994 1993 --------- --------- --------- Cash flows from operating activities: Net income $ 18,192 $ 13,796 $ 3,232 Adjustments to reconcile net income to net cash provided by operations: Depreciation 6,929 6,119 3,420 Amortization of loan costs and leasing commissions 6,417 1,085 386 Amortization 4 768 766 (Gain) loss on sale of real estate (3,683) 108 (399) Provision for bad debts, net of accounts written off 409 19 250 Buy out of advisory contract -- -- 1,655 Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable (1,121) 2,401 (3,351) Other assets (1,843) (380) (261) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 2,213 (10) 492 Other liabilities 1,378 746 73 --------- --------- --------- Net cash provided by operating activities 28,895 24,652 6,263 --------- --------- --------- Cash flows from investing activities: Advances for notes receivable (36,881) (11,154) (3,710) Proceeds from real estate sales 29,397 4,244 966 Real estate acquisitions and building improvements (26,281) (55,399) (109,315) Principal payments on notes receivable 23,130 5,999 1,269 Escrow and other deposits paid (17,146) (8,020) (201) Escrow and other deposits collected 4,751 5,717 1,131 Other (5,395) (259) (745) --------- --------- --------- Net cash used in investing activities (28,425) (58,872) (110,605) --------- --------- --------- Cash flows from financing activities: Principal payments of mortgages and notes payable (118,516) (52,569) (31,667) Proceeds from mortgages and notes payable 105,253 109,574 14,953 Issuance of common stock 44,451 891 143,965 Distributions paid (20,949) (18,240) (5,046) Selling and offering costs (2,812) (36) (10,994) Loan costs paid (2,216) (5,909) (1,869) Repurchase and redemption of common stock -- (736) (61) --------- --------- --------- Net cash provided by financing activities 5,211 32,975 109,281 --------- --------- --------- Net increase (decrease) in cash 5,681 (1,245) 4,939 Cash at beginning of year 4,131 5,376 437 --------- --------- --------- Cash at end of year $ 9,812 $ 4,131 $ 5,376 ========= ========= =========
The accompanying notes are an integral part of the financial statements. F-6 25 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION Excel Realty Trust, Inc. (the "Company") was formed in the State of California in 1985 and reincorporated as a Maryland corporation in 1993. The Company is in the business of purchasing and operating commercial real estate. The Company is operated as a self-administered, self-managed real estate investment trust (REIT). PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Excel Mortgage Funding Corporation, Excel Credit Corporation, Excel Realty Trust - NC, Excel Realty Trust - TX, Excel Realty - NE, Inc., Excel Realty Trust - ST, Inc., and Excel Realty - PA, Inc. Intercompany accounts and transactions have been eliminated. INVESTMENTS The equity method of accounting is used for investments in partnerships which the Company owns less than 50% but is able to exercise significant influence over the partnership's operations. These investments are recorded initially at cost and subsequently adjusted for net equity in income (loss) and cash contributions and distributions. The cost method of accounting is used for the Company's investment in ERT Development Corporation ("EDV") (see Note 8). Under this method, the Company recognizes income from distributions received from net accumulated earnings of the investee, if any. INCOME TAXES The Company has elected to be treated as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. Under these provisions, the Company and its subsidiaries will not be subject to federal income tax if 95% of its real estate investment trust taxable income (before distributions paid deduction) is distributed to shareholders and certain gross income, asset diversification, share ownership and disclosure requirements are met. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements. RECENT ACCOUNTING PRONOUNCEMENT In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 121 ("FAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long Lived Assets to Be Disposed Of," which becomes effective for fiscal years beginning after December 15, 1995. The financial statement impact of adopting FAS 121 is not expected to be material. Continued F-7 26 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: REAL ESTATE Land, buildings and building improvements are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of 40 years for buildings and 2 to 40 years for building improvements. Expenditures for maintenance and repairs are charged to expense as incurred and significant renovations are capitalized. LEASE TERMINATION FEES Revenue recognition of fees received for lease terminations are deferred as deferred rental income and amortized using the straight line method over the estimated time to re-lease the related property at comparable rents, or until the property is sold, whichever comes first. DEFERRED LEASING AND LOAN ACQUISITION COSTS Costs incurred in obtaining tenant leases and long-term financing are amortized to leasing commission expense and interest expense, respectively, on the straight-line method over the terms of the related leases or debt agreements. REVENUE RECOGNITION Base rental income attributable to leases is recorded when due from tenants. Certain of the leases provide for additional rental revenue by way of percentage rents to be paid based upon the level of sales achieved by the lessee. These percentage rents are recorded on the accrual basis. The leases also typically provide for tenant reimbursement of common area maintenance and other operating expenses which are included in the accompanying Consolidated Statements of Income as expense reimbursements. NET INCOME PER COMMON SHARE Net income per common share is based upon the weighted average number of common shares and common share equivalents outstanding during each period. Common share equivalents included in the computation represent shares issuable upon assumed exercise of common stock options and warrants which would have a dilutive effect. The weighted average shares outstanding for the years ended December 31, 1995, 1994, and 1993 were 12,084,305, 10,882,728 and 5,877,500 respectively. Continued F-8 27 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain reclassifications have been made to the consolidated financial statements for the years ended December 31, 1994 and 1993 in order to conform with the current period's presentation. In July 1993, the Company reincorporated in the State of Maryland and effected a one-for-three reverse stock split. The 1993 share information has been changed to give effect to the reverse stock split. 2. REGISTRATION STATEMENT: In May 1995, the Company filed with the Securities and Exchange Commission a $250,000,000 shelf registration statement. This registration statement was filed for the purpose of issuing debt securities, preferred stock, depositary shares, common stock or warrants for general corporate purposes. In 1995, the Company issued from the shelf 2,140,000 shares of common stock in a publicly underwritten offering at a price of $20.125 per share. Net proceeds of approximately $40,500,000 from the offering were used to repay debt, purchase properties, and to make loans to EDV to facilitate the development of certain properties (see Note 8 and 16). 3. REAL ESTATE ACQUISITIONS: In 1995, the Company acquired, in separate transactions, seven shopping centers in North Carolina (see Note 6), two shopping centers in Tennessee, and one shopping center in South Carolina. The total cost of the ten properties was approximately $47,583,000 of which the Company assumed $22,888,000 in mortgage debt. Also in 1995, five properties were contributed to Excel Realty Partners, L.P. (see Note 8). In 1994, the Company purchased six shopping centers, six single tenant buildings, and one office building. The total cost of the 13 properties was approximately $62,565,000 of which the Company assumed $17,498,000 in mortgage debt. Additionally in 1994, the Company contributed $14,753,000 for a 93.16% general partnership interest in E.H. Properties, L.P., a Delaware limited partnership. The partnership owns six shopping centers valued at $22,226,000. In 1995, the limited partner converted a portion of its equity interest into common stock of the Company at $22.25 per share. At December 31, 1995, the Company owned 94.17% of the partnership. Continued F-9 28 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 4. SALES OF REAL ESTATE PROPERTIES: In 1995, the Company sold nine single tenant properties and one office building. The net sales prices of the ten properties totaled $29,397,000. Of this amount, the net sales price of the office building was $16,310,000 which resulted in a gain of $4,960,000. In 1995, a net gain of $3,683,000 was recognized on all real estate sales. In 1994, five single tenant properties and a parcel of land were sold for $4,232,000. A net loss of $108,000 was recognized on these sales. On the above properties, lease termination fees totaling $2,419,000 and $988,000 were received from tenants and recognized as revenue in 1995 and 1994, respectively, prior to the sale of certain of the properties. 5. REAL ESTATE HELD FOR SALE In preparation for the sale of an undeveloped shopping mall in Arizona, the Company terminated a master lease to an unaffiliated developer on August 1, 1995. As part of the termination agreement, the Company paid the lessee $5,000,000 which was capitalized as part of the asset held for sale. The property, net of accumulated depreciation, was reclassified to real estate held for sale on the Company's Consolidated Balance Sheet. Depreciation expense is no longer being charged to the property and costs to hold the property until sale are being capitalized. 6. MASTER LEASE AND OPTION AGREEMENT: In January 1995, the Company entered into master lease and option agreements with respect to eleven shopping centers in North Carolina. The master leases required the payment equal to eight percent of the lessor/sellers equity in the properties and gave the Company all management and operating responsibilities for the shopping centers. Under the master leases, the Company received all cash flow in excess of the master lease expense. The master lease expense included master lease and interest payments from debt service which totaled $4,681,000. Accordingly, all of the rent revenue and related operating expenses of these properties have been consolidated in the Company's consolidated financial statements. The option agreements gave the Company the option to purchase the properties. In 1995, the Company purchased seven of the properties (see Note 3). The Company terminated the master lease and purchase option on one property on December 31, 1995. In January and February of 1996, the Company purchased the three remaining properties for approximately $32,000,000 assuming mortgage debt of approximately $22,000,000. Upon purchase of these properties, the Company received funds of $3,225,000 it had on deposit in an escrow account related to the option agreements and the remaining master leases were canceled. Continued F-10 29 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 7. NOTES RECEIVABLE (IN THOUSANDS): The Company had the following notes receivable at December 31, 1995 and 1994:
1995 1994 ------- ------- Notes from affiliates, interest on 12-14% per annum, collateralized by real estate. Due on demand (see Note 8 and 16) $18,561 $ -- Notes from development companies, monthly interest from 10% - 14% per annum. Maturity dates vary depending on the completion or sale of certain properties 3,500 8,306 Other 789 793 ------- ------- Total $22,850 $ 9,099 ======= =======
8. INVESTMENTS: In April 1995, Excel Realty Partners, L.P. ("ERP"), a Delaware Limited partnership, was formed to own and manage certain real estate properties. The Company is a 1% partner and the sole general partner of ERP. In May 1995, ERP entered into an agreement for certain unaffiliated entities to contribute to the partnership shopping centers in the southeastern United States. The Company anticipates that a minimum of 13 properties will be contributed to ERP under this agreement. In 1995, five real estate properties with a value of $28,500,000, with outstanding mortgages of $20,700,000, were contributed to ERP for limited partnership units valued at $4,500,000 and cash of approximately $3,300,000. ERP also repaid $2,700,000 of mortgages payable on the properties at the time two of the properties were contributed. The cash used in the transactions was funded by the Company in exchange for notes from ERP and general partnership contributions to ERP. The Company is entitled to receive 99% of all earnings, if any, after the limited partners receive their distributions. Annual distributions approximate $400,000 based on the limited partner units held at December 31, 1995. The partnership had net income in 1995 of $84,000. At December 31, 1995, the partnership had total assets of $29,079,000 and total liabilities of $24,367,000 including mortgage debt of $17,954,000. The Company's 1% investment in the partnership at December 31, 1995 was $139,000 (see Note 16) which is included in other assets on the Consolidated Balance Sheet. In April 1995, EDV, a Delaware Corporation, was organized. The Company owns 100% of the outstanding preferred shares of EDV. The preferred shares receive 95% of the dividends, if any, from EDV. EDV was formed to acquire, develop, hold, and sell real estate in the short-term for capital gains and/or receive fee income (see Note 16). Continued F-11 30 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 9. MORTGAGES PAYABLE, (IN THOUSANDS): The Company had the following mortgages payable at December 31, 1995 and 1994:
1995 1994 -------- -------- Mortgage notes at 6.86% to 10%, payable in installments through 2018 (monthly payments at December 31, 1995 of $1,153), collateralized by real estate and an assignment of rents: Pass through certificates/bonds: Public $ -- $ 96,486 Private 29,907 31,187 Insurance companies 67,356 68,622 Banks 23,602 1,914 Other 2,948 2,948 -------- -------- Total mortgages payable $123,813 $201,157 ======== ========
The principal payments required to be made on mortgages payable are as follows:
YEAR ---- 1996 $ 6,493 1997 3,522 1998 6,149 1999 21,625 2000 8,916 Thereafter 77,108 -------- $123,813 ========
Mortgages of $55,903 are fully amortizing with the final monthly payments to be made between the years 2004 and 2018. In March 1994, the Company's wholly-owned subsidiary, Excel Mortgage Funding Corporation ("EMFC"), and EMFC's wholly-owned subsidiary, Excel Credit Corporation ("ECC"), completed a securitized mortgage financing known as a Real Estate Mortgage Investment Conduit (a "REMIC"). Pursuant to this transaction, ECC issued and sold publicly, in an underwritten offering, $100,000 aggregate principal amount of its Commercial Mortgage Pass-Through Certificates. The Certificates were originally collateralized by 65 retail commercial properties. In December 1995, the REMIC was repaid with advances from the Company's credit facility (see Note 10). Continued F-12 31 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 10. NOTES PAYABLE (IN THOUSANDS): The Company had the following notes payable at December 31, 1995 and 1994:
1995 1994 ---- ---- Unsecured credit agreement of $150,000, interest at LIBOR + 1.75% (7.5% at December 31, 1995) $82,800 $ -- Line of credit of $4,000 payable to a financial institution, interest at the lender's base rate plus 1.25% (8.91% at December 31, 1995) 3,184 -- Unsecured revolving line of credit of $1,000, interest at 9.5% 1,000 -- Other -- 15 ------- ------- Total notes payable $86,984 $ 15 ======= =======
In December 1995, the Company received a two-year revolving credit facility up to $150,000 in unsecured advances through December 1997, from a group of six banks. The actual amount available to the Company is dependent on certain covenants such as the value of unencumbered assets and the ratio of earnings before interest, depreciation, and amortization to fixed charges. The principal amount outstanding is due in December 1997. Upon obtaining the credit facility, the Company borrowed $82,800. The Company used the proceeds primarily to repay the outstanding REMIC debt of $76,000 (see Note 9), repay a former bank line of $5,100, and pay loan costs. The Company wrote-off loan costs of $2,806 related to the REMIC debt and $254 related to a former bank line. Total loan costs written-off in 1995, including other REMIC debt repayments during the year and the write-down of the interest rate protection agreement (see Note 12), amounted to $4,453 which were charged to interest expense. The Company also has a $4,000 line of credit due September 1996 that is collateralized by certain notes receivable, and an unsecured $1,000 revolving bank line. 11. COMMITMENTS AND CONTINGENCIES As part of an agreement with an unaffiliated developer to contribute certain properties to ERP for limited partnership units and cash (see Note 8), the limited partners are guaranteed distributions as defined by the contribution agreement. The Company is obligated to make advances to ERP to pay the distributions in the event ERP is unable to make these payments. In 1995, ERP's cash flows were sufficient to make the limited partner distributions. At December 31, 1995, ERP mortgage debt of $8,150,000 was guaranteed by the Company. Also, the Company is committed to advance ERP up to $2,000,000 in additional advances in conjunction with existing credit agreements with ERP. Continued F-13 32 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 12. FINANCIAL INSTRUMENTS AND CREDIT RISK: Financial instruments which potentially subject the Company to concentrations of risk consist principally of cash, accounts receivable and notes receivable. The following fair value disclosure was determined by the Company, using available market information and discounted cash flow analyses as of December 31, 1995. However, considerable judgement is necessary to interpret market data and to develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize upon disposition. The use of different estimation methodologies may have a material effect on the estimated fair value amounts. The Company believes that the carrying values reflected in the balance sheet at December 31, 1995 approximates the fair values for cash, accounts receivables and payables, notes receivable, and variable-rate debt. The Company believes the market value of its real estate held for sale exceeds the carrying value at December 31, 1995. At December 31, 1995, the carrying value of the interest rate protection agreements were written down to the estimated fair market value. The write down of $803,000 was charged to interest expense. The Company estimates that the fair values of its fixed-rate mortgage debt at December 31, 1995 is approximately $107 million which is $9 million lower than the historical carrying value of approximately $116 million. At December 31, 1995, the Company's largest and second largest tenants each account for approximately 15% of the Company's scheduled annual base rental revenue ("ABR"). The Company's next three largest tenants account for approximately 18% in total, of the Company's ABR. At December 31, 1995, the Company owned or master leased 113 properties located in 27 states. There were 13 properties in Indiana, 12 properties in North Carolina, 11 properties in Arizona, and 9 properties in Illinois. Approximately 42% of the Company's ABR are derived from these four states. 13. DISTRIBUTIONS: In April 1995, the Company adopted a policy of declaring distributions to stockholders of record on the first day of the succeeding quarter, instead of the last day of the current quarter. The payment date of 15 days following each quarter remained unchanged. As such, in 1995, distributions of $0.43 per share were declared on March 31 and paid on April 15 and distributions of $0.445 per share were declared on July 1 and October 1 and paid on July 15 and October 15 respectively. In 1996, distributions of $0.445 per share or $5,861,000 were declared on January 1 and paid on January 15. Distributions of $0.415, $0.43, $0.43 and $0.43 per share were declared for the four quarters in 1994, respectively and distributions of $0.315, $0.315, $0.37 and $0.415 per share were declared for the four quarters in 1993, respectively. For the years ended December 31 1995, 1994, and 1993, approximately 27%, 14% and 29%, respectively, of the distributions received by shareholders were considered to be a return of capital for tax purposes. Continued F-14 33 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 14. STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE (IN THOUSANDS): The amounts paid for interest during the years ended December 31, 1995, 1994 and 1993 were $16,507, $13,236 and $9,040 respectively. The Company acquired real estate properties and interests in partnerships, without the use of cash, for the years ended December 31, 1995, 1994, and 1993 as summarized below:
1995 1994 1993 -------- -------- -------- Mortgage notes payable assumed $ 22,888 $ 24,106 $ 48,810 Common stock issued 1,213 6,626 6,221 Other assets received and payables assumed (104) 154 651 -------- -------- -------- Net real estate acquired without cash $ 23,997 $ 30,886 $ 55,682 ======== ======== ========
15. MINIMUM FUTURE RENTALS: The Company leases its shopping centers and single-tenant buildings to tenants under noncancelable operating leases generally requiring the tenant to pay a minimum rent adjusted by either (i) fixed increases, (ii) a percentage of gross sales, or (iii) a CPI index. The leases either (i) require the tenant to pay all expenses of operating the property such as insurance, property taxes, and structural repairs and maintenance, or (ii) require the tenant to reimburse the Company for the tenant's share of real estate taxes and other common area maintenance expenses. Minimum future rental revenue for the next five years for the commercial real estate owned (or master leased) at December 31, 1995 and subject to noncancelable operating leases is as follows (in thousands):
YEAR ---- 1996 $ 43,061 1997 41,103 1998 38,726 1999 36,162 2000 and thereafter 338,242
Continued F-15 34 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 16. RELATED PARTY TRANSACTIONS: Notes receivable at December 31, 1995 included $12,611,000 and $5,950,000 from EDV and ERP respectively (see Note 7). Total interest income recognized in 1995 from EDV and ERP amounted to $1,628,000 and $135,000, respectively. Also in 1995, the Company recognized as income, $344,000 in development fees from EDV. In April 1993, the Company terminated its management contract with its real estate manager, Excel Management Corporation ("EMC"), and issued 110,000 shares of its common stock to Excel Interfinancial Corporation ("EIC"), the parent of EMC, in consideration for such termination. The amount paid in connection with the termination of the management contract was capitalized as an "other asset" and was amortized over an 18-month period, ending in September 1994. 17. OPTIONS AND WARRANTS: The Company has adopted the 1993 Stock Option Plan (the "1993 Stock Plan") for executive officers and other key employees of the Company and its subsidiaries. In May 1994, the Company also adopted the Directors 1994 Stock Option Plan (the "1994 Stock Plan") for directors options. Options may be granted under the 1993 Stock Plan for a period through 2003 and under the 1994 Stock Plan through the year 2004. Options under these plans are exercisable for 10 years from the date of grant. The exercise price of stock options may not be less than 100% of the fair market value of the stock on the date of grant. The aggregate number of shares issuable upon exercise of options under the 1993 Stock Plan may not exceed the greater of (a) 500,000 shares or (b) 5% of the outstanding shares minus 300,000 shares, but in no event exceeding 700,000 shares. The aggregate number of shares issuable upon exercise of options under the 1994 Stock Plan may not exceed 240,000 shares. Continued F-16 35 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 17. OPTIONS AND WARRANTS, CONTINUED:
Stock option and warrant activity is summarized below: EXERCISE PRICE SHARES PER SHARE ------ --------- Outstanding at January 1, 1993 11,662 $13.92 Stock options granted - 1993 11,662 $13.92 Stock options granted - 1993 325,000 $19.75 Stock options exercised - 1993 (9,996) $13.92 Warrants issued - 1993 253,591 $15.00 - $18.15 Stock options granted - 1994 14,000 $20.13 Stock options exercised - 1994 (3,332) $13.92 Stock options granted - 1995 3,000 $16.38 Stock options granted - 1995 14,000 $19.63 Stock options granted - 1995 131,250 $19.25 Warrants expired - 1995 (18,028) $18.15 Warrants exercised - 1995 (87,585) $15.00 - $18.15 ------- --------------- Outstanding December 31, 1995 645,224 $13.92 - $20.25 ======= ===============
At December 31, 1995, options were exercisable as follows: 9,996 shares at $13.92 per share, 17,000 shares at $16.38 per share, 131,250 shares at $19.25 per share, 300,000 shares at $19.75 per share and 14,000 shares at $20.13 per share. Warrants exercisable at December 31, 1995 were 20,840 at $15.00 per share, 5,750 at $18.00 per share, and 121,388 at $20.25 per share. The options and warrants expire at various dates through May 2005. Of the options and warrants, 472,246 were issued to officers, directors or affiliates of the Company. Options for 365,750 shares are available for granting under the 1993 Stock Plan at December 31, 1995. 18. DISTRIBUTION REINVESTMENT PLAN: The Company has adopted a distribution reinvestment plan (the "Plan"). Shares purchased under the Plan will be, at the Company's discretion, either newly issued shares of the Company, shares purchased in the open market or a combination of the foregoing. Distributions may be invested in newly issued shares at a 5% discount from the average closing price for the five trading days prior to the distribution pay date or in shares purchased in the open market without brokerage commissions or service charges. Continued F-17 36 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 19. 401(K) PLAN: In 1993, the Company established and implemented a 401(k) retirement plan (the "401(k) Plan") covering substantially all of the officers and employees of the Company. The 401(k) Plan permits participants to defer, until termination of employment with the Company, up to a maximum of 15% of their compensation. In addition, contributions of participants are matched by the Company in an amount equal to 50% of the participant's contribution (up to a maximum of 3% of such person's compensation) plus an annual discretionary contribution, to be determined by the Board of Directors, based upon the performance of the Company. For the years ended December 31, 1995, 1994 and 1993, the Company incurred costs of $46,000, $32,000 and $27,000, respectively, in connection with the 401(k) Plan. 20. SUBSEQUENT EVENTS In January 1996, the Company acquired, for cash, a real estate property in Georgia for approximately $2,700,000. Additionally, the Company purchased three properties in North Carolina which were previously master leased (see Note 6). 21. QUARTERLY FINANCIAL DATA (UNAUDITED): Summarized quarterly financial data for the periods ended December 31, 1995 and 1994 is as follows (in thousands except per share amounts):
NET INCOME REVENUES NET INCOME PER SHARE -------- ---------- --------- 1995: December 31 $ 15,301 $ 5,048 $ 0.39 September 30 13,521 5,534 0.43 June 30 12,981 3,693 0.33 March 31 13,426 3,917 0.36 1994: December 31 $ 11,095 $ 3,501 $ 0.32 September 30 10,648 3,537 0.33 June 30 10,144 3,514 0.32 March 31 9,127 3,244 0.30
F-18 37 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (IN THOUSANDS) ----------
ADDITIONS DEDUCTIONS --------- ---------- ACCOUNTS BALANCE AT CHARGED TO RECEIVABLE BALANCE AT BEGINNING BAD DEBT WRITTEN END OF DESCRIPTION OF YEAR EXPENSE OFF YEAR ----------- ------- ------- --- ---- Allowance for bad debts: Year ended December 31, 1995 $ 318 $ 445 $ 37 $ 726 ===== ===== ===== ===== Year ended December 31, 1994 $ 280 $ 67 $ 29 $ 318 ===== ===== ===== ===== Year ended December 31, 1993 $ 128 $ 250 $ 98 $ 280 ===== ===== ===== =====
F-19 38 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Office Building $ -- $ 2,610 $ 2,610 $ -- $ -- $ 2,610 $ 2,610 $ 5,220 Burbank, CA Genetrix Building -- 666 1,434 -- -- 666 1,434 2,100 Scottsdale, AZ Shopping Center -- 2,394 3,132 (14) 210 2,380 3,342 5,722 Mesa, AZ Office Building 424 175 525 -- 2 175 527 702 Stillwater, MN Kinder Care #1182 -- 170 397 -- -- 170 397 567 Kalamazoo, MI Shopping Center -- 7,312 8,995 -- 961 7,312 9,956 17,268 Phoenix, AZ Shopping Center -- 1,559 7,711 315 140 1,874 7,851 9,725 Norton, VA Shopping Center 7,514 2,025 8,075 -- 469 2,025 8,544 10,569 Perry, GA Shopping Center -- 1,436 4,584 30 650 1,466 5,234 6,700 Leesburg, FL Shopping Center (50%) 3,293 527 3,817 -- 4 527 3,821 4,348 Knoxville, TN Wal-Mart Building 1,776 680 1,586 -- -- 680 1,586 2,266 Berlin, WI Wal-Mart Building 2,641 1,011 2,359 -- -- 1,011 2,359 3,370 Decatur, IN Wal-Mart Building 2,620 1,052 2,455 (10) -- 1,042 2,455 3,497 Big Rapids, MI
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Office Building $ 405 1988 1989-90 40 years Burbank, CA Genetrix Building 181 1971 1990 40 years Scottsdale, AZ Shopping Center 471 1970 1990 40 years Mesa, AZ Office Building 59 1985 1991 40 years Stillwater, MN Kinder Care #1182 48 1990 1991 40 years Kalamazoo, MI Shopping Center 1,194 1988 1991-92 40 years Phoenix, AZ Shopping Center 598 1989 1992 40 years Norton, VA Shopping Center 645 1992 1992 40 years Perry, GA Shopping Center 451 1986 1992 40 years Leesburg, FL Shopping Center (50%) 291 1990 1992 40 years Knoxville, TN Wal-Mart Building 120 1992 1992 40 years Berlin, WI Wal-Mart Building 179 1992 1992 40 years Decatur, IN Wal-Mart Building 187 1992 1992 40 years Big Rapids, MI
F-20 39 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Wal-Mart Building 5,276 2,118 4,942 -- - 2,118 4,942 7,060 Wyomissing, PA Wal-Mart Building 2,663 1,069 2,494 -- - 1,069 2,494 3,563 Brighton, CO Wal-Mart Bldg and outparcel 4,888 1,963 4,580 30 - 1,993 4,580 6,573 Temple, TX Wal-Mart Building 2,908 1,167 2,724 -- - 1,167 2,724 3,891 Wabash, IN Mtn. Jacks #210310 -- 303 708 -- - 303 708 1,011 Mentor, OH Mtn. Jacks #210303 [1] 378 1,134 -- - 378 1,134 1,512 Dearborn Heights, MI Autoworks #125 [1] 105 332 -- - 105 332 437 Hastings, NE Autoworks #138 [1] 189 421 -- - 189 421 610 Grand Island, NE Kinder Care #125 [1] 63 146 -- - 63 146 209 Indianapolis, IN Kinder Care #126 [1] 63 146 -- - 63 146 209 Indianapolis, IN Kinder Care #577 [1] 60 238 -- - 60 238 298 High Ridge, MO Kinder Care #162 [1] 59 235 -- - 59 235 294 Fenton, MO
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Wal-Mart Building 376 1992 1992 40 years Wyomissing, PA Wal-Mart Building 190 1992 1992 40 years Brighton, CO Wal-Mart Bldg and outparcel 348 1992 1992 40 years Temple, TX Wal-Mart Building 207 1992 1992 40 years Wabash, IN Mtn. Jacks #210310 60 1974 1992 40 years Mentor, OH Mtn. Jacks #210303 86 1980 1992 40 years Dearborn Heights, MI Autoworks #125 25 1988 1992 40 years Hastings, NE Autoworks #138 32 1988 1992 40 years Grand Island, NE Kinder Care #125 11 1975 1992 40 years Indianapolis, IN Kinder Care #126 11 1976 1992 40 years Indianapolis, IN Kinder Care #577 18 1980 1992 40 years High Ridge, MO Kinder Care #162 18 1977 1992 40 years Fenton, MO
F-21 40 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Kinder Care #128 -- 90 211 -- -- 90 211 301 Indianapolis, IN Kinder Care #134 -- 90 211 -- -- 90 211 301 Indianapolis, IN Kinder Care #132 [1] 63 146 -- -- 63 146 209 Ft. Wayne, IN Kinder Care #1075 (61.36%) -- 212 495 -- -- 212 495 707 Ventura, CA DHG -- 74 110 -- -- 74 110 184 Houston, TX DHG -- 103 155 -- -- 103 155 258 Houston, TX Egghead Software -- 172 258 -- -- 172 258 430 Maplewood, MN United Artists -- 247 576 -- -- 247 576 823 Pueblo, CO Lowes Building 3,876 1,325 3,446 530 -- 1,855 3,446 5,301 Terra Haute, IN Wal-Mart Building 6,712 2,631 6,140 -- -- 2,631 6,140 8,771 Orland Hills, IL Kmart Building -- 698 1,297 -- -- 698 1,297 1,995 Durango, CO Kmart Building -- 1,033 1,918 -- -- 1,033 1,918 2,951 Albany, GA Kmart Building -- 951 1,767 -- 152 951 1,919 2,870 DeSoto, TX
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Kinder Care #128 16 1976 1992 40 years Indianapolis, IN Kinder Care #134 16 1976 1992 40 years Indianapolis, IN Kinder Care #132 11 1976 1992 40 years Ft. Wayne, IN Kinder Care #1075 (61.36%) 38 1989 1992 40 years Ventura, CA DHG 8 1985 1992 40 years Houston, TX DHG 12 1985 1992 40 years Houston, TX Egghead Software 20 1987 1992 40 years Maplewood, MN United Artists 44 1977 1992 40 years Pueblo, CO Lowes Building 219 1993 1992/1993 40 years Terra Haute, IN Wal-Mart Building 429 1992 1993 40 years Orland Hills, IL Kmart Building 77 1982 1993 40 years Durango, CO Kmart Building 114 1981 1993 40 years Albany, GA Kmart Building 124 1980 1993 40 years DeSoto, TX
F-22 41 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Kmart Building - 912 1,693 - 19 912 1,712 2,624 Fargo, ND Kmart Building - 924 1,715 - -- 924 1,715 2,639 Omaha, NE Kmart Building - 892 1,656 - -- 892 1,656 2,548 Pine Bluff, AR Kmart Building - 836 1,553 - -- 836 1,553 2,389 Somerville, NJ Kmart Building - 1,293 2,401 - -- 1,293 2,401 3,694 Springfield, MO Kmart Building - 936 1,738 - 182 936 1,920 2,856 St. Charles, MO Kmart Building - 414 768 - 8 414 776 1,190 Waverly, OH Lucky Building - 698 1,295 - -- 698 1,295 1,993 Brandon, FL Kroger Building - 731 1,357 - -- 731 1,357 2,088 Clearfield, PA Kroger Building - 639 1,186 - -- 639 1,186 1,825 East Albany, GA Kroger Building - 722 1,340 - -- 722 1,340 2,062 James Island, SC Safeway Building - 790 1,466 - -- 790 1,466 2,256 Missouri City, TX Kroger Building - 817 1,517 - -- 817 1,517 2,334 Muscle Shoals, AL
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Kmart Building 105 1982 1993 40 years Fargo, ND Kmart Building 102 1981 1993 40 years Omaha, NE Kmart Building 98 1981 1993 40 years Pine Bluff, AR Kmart Building 92 1982 1993 40 years Somerville, NJ Kmart Building 143 1982 1993 40 years Springfield, MO Kmart Building 140 1981 1993 40 years St. Charles, MO Kmart Building 46 1981 1993 40 years Waverly, OH Lucky Building 77 1982 1993 40 years Brandon, FL Kroger Building 81 1982 1993 40 years Clearfield, PA Kroger Building 70 1982 1993 40 years East Albany, GA Kroger Building 80 1982 1993 40 years James Island, SC Safeway Building 87 1982 1993 40 years Missouri City, TX Kroger Building 90 1982 1993 40 years Muscle Shoals, AL
F-23 42 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Kroger Building - 902 1,674 - - 902 1,674 2,576 Ottawa, IL Kroger Building - 703 1,305 - - 703 1,305 2,008 Scottsboro, AL Ben Franklin Building - 511 949 - - 511 949 1,460 Tucson, AZ Payless Drug Building - 389 723 - - 389 723 1,112 Yuma, AZ Lucky Building - 471 875 - - 471 875 1,346 Phoenix, AZ Lucky Building - 558 1,037 - - 558 1,037 1,595 Coralville, IA Lucky Building - 588 1,093 - - 588 1,093 1,681 Decatur, IL Lucky Building - 744 1,382 - - 744 1,382 2,126 Dubuque, IA Lucky Building - 617 1,145 - - 617 1,145 1,762 Hobart, IN Lucky Building - 435 809 - - 435 809 1,244 Mesa, AZ Lucky Building - 511 948 - - 511 948 1,459 Michigan City, IN Lucky Building - 735 1,365 - - 735 1,365 2,100 Moline, IL Lucky Building - 908 1,686 - - 908 1,686 2,594 New Lenox, IL
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Kroger Building 100 1982 1993 40 years Ottawa, IL Kroger Building 77 1981 1993 40 years Scottsboro, AL Ben Franklin Building 56 1984 1993 40 years Tucson, AZ Payless Drug Building 43 1980 1993 40 years Yuma, AZ Lucky Building 43 1981 1993 40 years Phoenix, AZ Lucky Building 62 1981 1993 40 years Coralville, IA Lucky Building 65 1983 1993 40 years Decatur, IL Lucky Building 82 1980 1993 40 years Dubuque, IA Lucky Building 68 1983 1993 40 years Hobart, IN Lucky Building 48 1982 1993 40 years Mesa, AZ Lucky Building 56 1983 1993 40 years Michigan City, IN Lucky Building 81 1981 1993 40 years Moline, IL Lucky Building 100 1982 1993 40 years New Lenox, IL
F-24 43 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Lucky Building - 673 1,249 - - 673 1,249 1,922 Peoria, IL Kroger Building - 862 1,601 - - 862 1,601 2,463 Pittsburgh, PA Lucky Building - 582 1,081 - - 582 1,081 1,663 Springfield, IL Lucky Building - 744 1,382 - - 744 1,382 2,126 Sterling, IL Lucky Building - 364 676 - - 364 676 1,040 Tucson, AZ Kroger Building - 670 1,243 - - 670 1,243 1,913 Waterloo, IL Safeway Building - 906 1,683 - - 906 1,683 2,589 Muskogee, OK Safeway Building - 778 1,445 - - 778 1,445 2,223 Sherwood, AR Safeway Building - 739 1,373 - - 739 1,373 2,112 West Monroe, LA Rite Aid Building - 176 328 - - 176 328 504 East Albany, GA Super X Building - 195 363 - - 195 363 558 Muscle Shoals, AL Shopping Center 5,157 1,888 4,981 - 23 1,888 5,004 6,892 Elizabethtown, KY Shopping Center 4,717 629 5,555 - 24 629 5,579 6,208 Glasgow, KY
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Lucky Building 74 1983 1993 40 years Peoria, IL Kroger Building 95 1982 1993 40 years Pittsburgh, PA Lucky Building 64 1982 1993 40 years Springfield, IL Lucky Building 82 1980 1993 40 years Sterling, IL Lucky Building 40 1983 1993 40 years Tucson, AZ Kroger Building 74 1982 1993 40 years Waterloo, IL Safeway Building 100 1981 1993 40 years Muskogee, OK Safeway Building 86 1981 1993 40 years Sherwood, AR Safeway Building 82 1981 1993 40 years West Monroe, LA Rite Aid Building 19 1982 1993 40 years East Albany, GA Super X Building 22 1982 1993 40 years Muscle Shoals, AL Shopping Center 360 1992 1993 40 years Elizabethtown, KY Shopping Center 391 1992 1993 40 years Glasgow, KY
F-25 44 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Shopping Center 8,743 3,469 8,125 - - 3,469 8,125 11,594 Deland, FL Shopping Center 3,209 1,655 3,074 - 6 1,655 3,080 4,735 Irving, TX Shopping Center - 2,689 4,994 35 144 2,724 5,138 7,862 Ashland, OH Shopping Center - 3,188 5,921 - 23 3,188 5,944 9,132 Covington, GA Kmart Building - 564 1,048 - - 564 1,048 1,612 Atlantic, IA Kash N' Karry Building - 378 702 - - 378 702 1,080 Homosassa Springs, FL Shopping Center (94.17%) - 1,779 3,305 44 159 1,823 3,464 5,287 Brooksville, FL Shopping Center (94.17%) - 1,552 2,882 58 113 1,610 2,995 4,605 Celina, OH Shopping Center (94.17%) 2,455 984 1,827 62 118 1,046 1,945 2,991 Albemarle, NC Shopping Center (94.17%) - 656 1,219 21 40 677 1,259 1,936 Marion, IN Shopping Center (94.17%) - 568 1,056 71 133 639 1,189 1,828 Warsaw, IN Shopping Center (94.17%) 3,060 1,618 3,013 80 148 1,698 3,161 4,859 Terre Haute, IN Office Building 1,889 753 1,762 - 5 753 1,767 2,520 San Diego, CA
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Shopping Center 521 1993 1993 40 years Deland, FL Shopping Center 177 1987 1993 40 years Irving, TX Shopping Center 294 1990 1993 40 years Ashland, OH Shopping Center 304 1991 1993 40 years Covington, GA Kmart Building 51 1980 1994 40 years Atlantic, IA Kash N' Karry Building 34 1982 1994 40 years Homosassa Springs, FL Shopping Center (94.17%) 156 1987 1994 40 years Brooksville, FL Shopping Center (94.17%) 132 1990 1994 40 years Celina, OH Shopping Center (94.17%) 84 1988 1994 40 years Albemarle, NC Shopping Center (94.17%) 56 1989 1994 40 years Marion, IN Shopping Center (94.17%) 50 1989 1994 40 years Warsaw, IN Shopping Center (94.17%) 139 1989 1994 40 years Terre Haute, IN Office Building 87 1988 1994 40 years San Diego, CA
F-26 45 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Shopping Center 4,398 2,431 4,515 - 14 2,431 4,529 6,960 Hilton Head, SC Shopping Center - 2,028 3,767 - - 2,028 3,767 5,795 Lake Wales, FL Shopping Center 8,165 3,882 7,209 - 6 3,882 7,215 11,097 Versailles, KY Shopping Center - 1,300 2,415 - 257 1,300 2,672 3,972 Mesa, AZ Shopping Center 5,389 3,351 6,223 - 18 3,351 6,241 9,592 London, KY Q-Club Building - 1,822 3,385 - - 1,822 3,385 5,207 Scottsdale, AZ Q-Club Building - 1,813 3,366 - - 1,813 3,366 5,179 Phoenix, AZ Lowe's Building 4,265 2,187 4,061 - - 2,187 4,061 6,248 Middletown, OH Shopping Center 2,265 1,035 1,924 69 127 1,104 2,051 3,155 Kannapolis, NC Shopping Center 4,107 2,109 3,917 - - 2,109 3,917 6,026 Asheboro, NC Shopping Center 2,634 1,100 2,043 - - 1,100 2,043 3,143 Kernersville, NC Shopping Center 3,363 1,846 3,429 - - 1,846 3,429 5,275 Roxboro, NC Shopping Center 5,462 2,335 4,337 - - 2,335 4,337 6,672 Siler City, NC
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Shopping Center 204 1994 1994 40 years Hilton Head, SC Shopping Center 153 1994 1994 40 years Lake Wales, FL Shopping Center 308 1994 1994 40 years Versailles, KY Shopping Center 136 1981 1994 40 years Mesa, AZ Shopping Center 263 1994 1994 40 years London, KY Q-Club Building 117 1994 1994 40 years Scottsdale, AZ Q-Club Building 136 1994 1994 40 years Phoenix, AZ Lowe's Building 190 1993 1994 40 years Middletown, OH Shopping Center 53 1992 1994 40 years Kannapolis, NC Shopping Center 69 1988 1995 40 years Asheboro, NC Shopping Center 27 1988 1995 40 years Kernersville, NC Shopping Center 47 1989 1995 40 years Roxboro, NC Shopping Center 59 1988 1995 40 years Siler City, NC
F-27 46 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ----------
COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- --------------------- ------------------------------ BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------ ---- ------------ ---- ------------- ---- ------------ ------- Shopping Center -- 2,267 4,211 -- -- 2,267 4,211 6,478 Wadesboro, NC Shopping Center 1,916 824 1,531 -- -- 824 1,531 2,355 Jonesville, NC Shopping Center -- 2,876 5,341 -- -- 2,876 5,341 8,217 Kinston, NC Shopping Center 2,500 1,157 2,149 -- -- 1,157 2,149 3,306 Hilton Head, SC Shopping Center 2,580 1,325 2,461 -- -- 1,325 2,461 3,786 Hendersonville, TN Shopping Center -- 807 1,499 -- -- 807 1,499 2,306 Manchester, TN All encompassing mortgage debt on properties marked [1] above 2,948 -- -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- --------- --------- $123,813 $121,073 $246,857 $ 1,321 $ 4,155 $122,394 $ 251,012 $ 373,406 ======== ======== ======== ======== ======== ======== ========= =========
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED* ----------- ------------ ------------- -------- ------------ Shopping Center 39 1988 1995 40 years Wadesboro, NC Shopping Center 21 1988 1995 40 years Jonesville, NC Shopping Center 61 1991 1995 40 years Kinston, NC Shopping Center 11 1989 1995 40 years Hilton Head, SC Shopping Center 8 1989 1995 40 years Hendersonville, TN Shopping Center 2 1990 1995 40 years Manchester, TN All encompassing mortgage debt on properties marked [1] above -- --------- $ 14,909 =========
Listing does not include one real estate property held for sale in Scottsdale, AZ. The net carrying cost of this property is $8,519. * Tenant improvements and other costs capitalized subsequent to acquisition are depreciated over 2 - 40 years. F-28 47 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (IN THOUSANDS) ---------- [a] Reconciliation of total real estate carrying value for the past three years is as follows:
1995 1994 1993 ---- ---- ---- Balance at beginning of year $ 359,459 $ 277,412 $ 113,639 Acquisitions 47,583 84,926 163,768 Improvements and other additions 2,473 1,554 1,427 Cost of property sold (27,590) (4,433) (1,422) --------- --------- --------- Balance at end of year $ 381,925 $ 359,459 $ 277,412 ========= ========= ========= Total cost for federal income tax purposes at the end of each year (difference is from tax free exchanges) $ 381,062 $ 358,689 $ 276,642 ========= ========= =========
[b] Reconciliation of accumulated depreciation for the past three years is as follows:
1995 1994 1993 ---- ---- ---- Balance at beginning of year $ 10,228 $ 4,270 $ 998 Depreciation expense 6,845 6,038 3,369 Deletions - property sold (1,918) (80) (97) Reclass to real estate held for sale (246) -- -- -------- -------- -------- Balance at end of year $ 14,909 $ 10,228 $ 4,270 ======== ======== ========
F-29 EX-23.1 2 CONSENT OF COOPERS & LYBRAND L.L.P. 1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Registration Statement of Excel Realty Trust, Inc. and subsidiaries on Form S-8 (File No. 33-84982) of our report dated February 5, 1996 on our audits of the consolidated financial statements and financial statement schedules of Excel Realty Trust, Inc. and subsidiaries as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995, which report is included in this Annual Report on Form 10-K/A. Coopers & Lybrand L.L.P. San Diego, California May 7, 1996 -----END PRIVACY-ENHANCED MESSAGE-----