-----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, Kht6zeMZPfuVd+Piv8X/NkITO+qR5O8PS1Wm4PNftzb+Xq7TleFVzGygYQ5uE0AC 7YJlZiNYh4spTPmbPDGd4w== 0000936392-97-000303.txt : 19970311 0000936392-97-000303.hdr.sgml : 19970311 ACCESSION NUMBER: 0000936392-97-000303 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970310 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12244 FILM NUMBER: 97553803 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-K 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Under Sections 13 Or 15(d) Of The Securities Exchange Act of 1934 For The Fiscal Year Ended: DECEMBER 31, 1996 Commission File Number: 1-12244 EXCEL REALTY TRUST, INC. (Exact name of registrant, as specified in its charter) MARYLAND 33-0160389 - -------------------------------------- ------------------------------------ (State of incorporation) (IRS Employer Identification Number) 16955 VIA DEL CAMPO, SUITE 110, SAN DIEGO, CALIFORNIA 92127 (Address of principal executive offices) Registrant's telephone number: (619) 485-9400 Securities Registered Pursuant To Section 12(b) Of The Act:
Title of Each Class Name of Each Exchange on which Registered ------------------- ----------------------------------------- Common Stock, $0.01 par value per share New York Stock Exchange 8 1/2% Series A Cumulative Convertible Preferred Stock New York Stock Exchange
Securities Registered Pursuant to Section 12(g) Of The Act: None Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ___. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the Registrant's shares of common stock held by non-affiliates was $444,450,916 as of March 7, 1997 based on the $25.875 closing price on the NYSE on such date. Indicate the number of shares outstanding of each of the Registrant's class of common stock, as of the latest practical date:
Class Outstanding at March 7, 1997 - --------------------------------------- ---------------------------- Common Stock, $0.01 par value per share 18,315,224
Documents incorporated by reference: Portions of the Proxy Statement for the 1997 Annual Meeting of the stockholders of the Registrant to be filed subsequently with the Commission are incorporated by reference into Part III of this report. 2 PART I ITEM 1. BUSINESS General. Excel Realty Trust, Inc. (the "Company") was formed 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, 1996, the Company owned 112 operating properties located in 27 states as outlined in Item 2. The Company has elected to be taxed as a REIT for federal income tax purposes commencing with its taxable year ended December 31, 1987, and believes that, commencing with such taxable year, it has been organized and has operated in conformity with the requirements for qualification as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). Although the Company believes that it will continue to operate in such a manner, no assurance can be given that the Company will continue to qualify as a REIT. In order to maintain its qualification as a REIT, among other things, the Company must distribute at least 95% of its real estate investment trust taxable income and meet certain tests regarding the nature of its income and assets. 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, to preserve the Company's status as a REIT, ownership of the capital stock of the Company, actually 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. As of March 7, 1997, the Company employed 108 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 properties where a substantial portion of gross leasable area ("GLA") is subject to long-term net leases to national or regional retail 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, 1996, the Company owned (i) 42 Shopping Centers which accounted for approximately 67% of the Company's scheduled annualized base rent ("ABR") at December 31, 1996; (ii) 67 Single Tenant Properties which accounted for approximately 32% of the Company's ABR at December 31, 1996; and (iii) 3 Commercial Properties which accounted for approximately 1% of the Company's ABR at December 31, 1996. These 112 properties total approximately 8.2 million square feet of GLA, of which the Shopping Centers, Single Tenant Properties, and Commercial Properties comprise approximately 65%, 34%, and 1%, respectively. Additionally, the Company has one property held for disposition related to an undeveloped shopping mall in Arizona. 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 2 3 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. The Company's primary objective is 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. The Company seeks to achieve this objective by (i) aggressively managing its 112 existing operating properties, (ii) continuing to acquire well-located neighborhood and community shopping centers with tenants that have a national or regional presence and an established credit quality, (iii) disposing of mature properties to continually update its core property portfolio, and (iv) continuing to maintain a strong and flexible financial position to facilitate growth. 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. The Company follows a schedule of regular physical maintenance with a view toward tenant expansion, renovations and refurbishing to preserve and increase the value of its properties. In addition to the employees at the Company's San Diego, California headquarters, the Company employs approximately 16 property management personnel at its seven field offices in Phoenix, Arizona; Orlando, Florida; Atlanta, Georgia; Lexington, Kentucky; Raleigh, North Carolina; Chattanooga, Tennessee; and Salt Lake City, Utah. Each of the Company's field offices is responsible for managing the leasing, property management and maintenance of the Company's properties in its region. The Company also employs a team of approximately eight people at its Salt Lake City, Utah office whose efforts are dedicated solely to acquisitions and dispositions of the Company's properties. 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 tenants that have a national or regional presence and an established credit quality and that the Company believes will have the ability to make timely lease payments over the term of the lease. When acquiring properties, however, primary emphasis is placed on the quality of the location and comparable market rents as opposed to a particular tenant. 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. Acquisitions through Partnerships - The Company may from time to time enter into joint venture partnership arrangements with certain entities for the purchase and management of properties. The Company may also 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 the Company's 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 1995, Excel Realty Partners, L.P. ("ERP"), a Delaware limited partnership, was formed to facilitate these transactions. 3 4 Joint Venture Development - The Company may from time to time finance properties under development, provided that the developer of each such property has previously obtained all necessary entitlements allowing completion of the property and has identified anchor tenants. Under this financing method, the Company purchases the undeveloped property and leases such property back to the developer or makes a subordinated loan to the developer, and upon completion, the Company has the option to purchase the development. In 1996, the Company loaned $12.3 million to a joint venture partnership under a loan commitment related to a development retail project in Orlando, Florida, and in 1997, an additional $5.3 was advanced. In January 1997, the joint venture obtained a construction loan and $9.0 million was repaid to the Company. The Company has agreed to guarantee $30 million of the construction loan which is expected to total $80 million. Disposition of Properties - The Company continually analyzes each asset in its portfolio and identifies those properties which can be sold or exchanged (to the extent consistent with REIT qualification requirements) for optimal sales prices (or exchange values) given prevailing market conditions and the particular characteristics of each property. Through this strategy, the Company seeks to continually update its core property portfolio by disposing of properties which have limited appreciation potential and redeploy capital into newer properties or properties where its aggressive management techniques may maximize property values. The Company engages from time to time in like-kind property exchanges (i.e., Code Section 1031 exchanges) which allow the Company to dispose of properties and redeploy proceeds in a tax efficient manner. The Company 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). 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. 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 incurrance of additional indebtedness through secured or unsecured borrowings, and the reinvestment of proceeds from the disposition of assets. The Company's financing strategy is to maintain a strong and flexible financial position by (i) maintaining a prudent level of leverage, (ii) maintaining a large pool of unencumbered properties, (iii) managing its variable rate exposure, (iv) amortizing existing mortgages over the term of the leases for such mortgaged properties, and (v) maintaining a conservative distribution payout ratio. The Company may seek variable rate financing from time to time if such financing appears advantageous in light of then-prevailing market conditions. In such case, the Company will consider hedging against interest rate risk through interest rate protection agreements, interest rate swaps or other means. 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. 4 5 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. 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 and 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 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 Leases Wal-Mart Stores, Inc. ("Wal-Mart") is the Company's largest tenant in terms of both GLA and ABR. Wal-Mart is the nation's largest retailer and operates approximately 2,000 discount department stores and over 400 warehouse clubs. Wal-Mart is listed on the New York Stock Exchange (the "NYSE") and, as of December 31, 1996, 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"). Of the 18 stores which Wal-Mart currently leases from the Company, 12 were less than five years old as of December 31, 1996. Kmart Corporation ("Kmart") is the Company's second largest tenant in terms of both GLA and ABR. 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 has announced plans to eliminate a significant number of jobs and close certain of its existing stores. Kmart's credit ratings as of December 31, 1996 were B2 and B+ according to Moody's and Standard and Poor's, respectively. Kmart has closed five single tenant stores that were leased from the Company. The Company negotiated receipt of lease termination fees with respect to all five of these properties, three of which were subsequently sold in 1995 and 1996. The Company is currently in the process of re-leasing or selling the other two properties. Of the 17 stores which Kmart currently leases from the Company, eight were less than five years old as of December 31, 1996. 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, and/or the properties would be re-leased at rental rates which would not cause a material loss of revenue for the Company. However, the Company cannot fully predict the effect on the Company of material deterioration in Kmart's financial position. Wal-Mart and Kmart are publicly traded companies and financial and other information regarding these tenants is on file with the Securities and Exchange Commission (the "Commission"). 5 6 The table below sets forth information concerning the five largest tenants of the Company and its subsidiaries at December 31, 1996:
SCHEDULED PERCENT OF PERCENT OF ABR AS A COMPANY COMPANY TOTAL PERCENT OF NUMBER TOTAL GLA TOTAL GLA SCHEDULED SCHEDULED COMPANY 1996 TENANT OF LEASES UNDER LEASES UNDER LEASES ABR ABR TOTAL REVENUES - ------ --------- ------------ ------------ --------------- -------------- -------------- (IN THOUSANDS) (IN THOUSANDS) Wal-Mart 18 1,543 18.9% $ 6,618 12.9% 10.4% Kmart 17 1,368 16.8% 6,409 12.5% 10.0% Kroger 14 504 6.2% 3,242 6.3% 5.1% Lucky 15 484 5.9% 2,796 5.5% 4.4% Food Lion 11 303 3.7% 2,002 3.9% 3.1% --- ------- ------- -------- ------- ------- 75 4,202 51.5% $ 21,067 41.1% 33.0% === ====== ====== ======= ====== ======
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 During 1996 the Company issued 4,715,000 shares of Common Stock through two public offerings and in February 1997, the Company issued 4,600,000 shares of 8 1/2% Series A Cumulative Convertible Preferred Stock. See Item 7 ("Management's Discussion and Analysis of Financial Condition and Results of Operations") for further discussion. During 1996, the Company purchased seven Shopping Centers for a total purchase price of approximately $93.2 million and sold four Single Tenant Properties for net sales proceeds of $4.7 million. Included in the acquisitions was the purchase of the Valley Fair Mall, a 608,000 square foot shopping center located in West Valley City (Salt Lake City), Utah for approximately $35.0 million in December 1996. In April 1995, the Company formed ERP to own and manage certain real estate properties. The Company is a 1% partner and the sole general partner of ERP. The Company has initially contributed cash for a 1% equity position in the partnership. The limited partners are entitled to receive annual distributions on their partnership equity (approximately $0.6 million based upon units held at December 31, 1996), after which the Company is entitled to receive 99% of all remaining income and gains before depreciation, if any. Through 1996, twelve real estate properties have been contributed to ERP and at December 31, 1996, ERP had net real estate of approximately $80.0 million. In April 1995, the Company formed ERT Development Corporation ("EDV"), a Delaware Corporation, of which the Company owns 100% of the outstanding preferred shares. 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 6 7 for capital gains and/or receive fee income. At December 31, 1996, the Company had notes receivable outstanding to EDV of $39.8 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 leases to creditworthy national or regional tenants. ITEM 2. PROPERTIES General. At December 31, 1996, the Company and its subsidiaries owned 112 operating properties in 27 states, principally in the southwestern, midwestern and southeastern United States. Additionally, the Company owns one real estate property located in Arizona which is held for disposition and not included in the schedule on the next page. Rental revenue and operating expense reimbursements accounted for approximately 83.1% of the Company's total revenues for the year ended December 31, 1996. The Company's management believes that the average base rent per square foot of the Company's existing leases are generally lower than the prevailing market rate base rents for new leases in the geographical regions where the Company operates, reflecting the potential for growth as leases renew. At December 31, 1996, the Company's operating properties consisted of 67 Single Tenant Properties, 42 Shopping Centers and three Commercial Properties. The distribution of the consolidated GLA and scheduled consolidated ABR of the Company and its subsidiaries as of December 31, 1996 is as follows: 7 8
PERCENT OF NUMBER OF TOTAL GLA PERCENT OF SCHEDULED SCHEDULED STATE PROPERTIES (SQUARE FEET) TOTAL GLA ABR ABR - ----- ---------- -------------- --------- -------------- ---------- (IN THOUSANDS) (IN THOUSANDS) Alabama 3 94 1.2% $ 531 1.0% Arizona 11 934 11.5% 7,491 14.6% Arkansas 2 105 1.3% 529 1.0% California 2 35 0.4% 638 1.3% Colorado 3 157 1.9% 628 1.2% Florida 6 543 6.7% 3,426 6.7% Georgia 7 566 6.9% 4,160 8.1% Illinois 9 397 4.9% 2,596 5.1% Indiana 13 490 6.0% 2,728 5.3% Iowa 3 104 1.3% 563 1.1% Kentucky 4 613 7.5% 3,701 7.2% Louisiana 1 41 0.5% 229 0.5% Michigan 3 108 1.3% 556 1.1% Minnesota 2 12 0.1% 185 0.4% Missouri 4 189 2.3% 1,117 2.2% Nebraska 3 71 0.9% 429 0.8% New Jersey 1 56 0.7% 272 0.5% North Carolina 12 1,382 17.0% 8,280 16.2% Ohio 4 444 5.4% 2,205 4.3% Oklahoma 1 46 0.6% 280 0.6% Pennsylvania 3 180 2.2% 1,156 2.3% South Carolina 3 148 1.8% 1,151 2.2% Tennessee 3 297 3.6% 1,820 3.5% Texas 6 301 3.7% 1,861 3.6% Utah 1 588 7.2% 3,399 6.6% Virginia 1 193 2.4% 1,126 2.2% Wisconsin 1 59 0.7% 218 0.4% --- -------- -------- --------- -------- TOTALS 112 8,153 100.0% $ 51,275 100.0% === ====== ====== ======= ======
The Shopping Centers At December 31, 1996, the Company and its subsidiaries owned 42 Shopping Centers. The Shopping Centers accounted for approximately 65% of the Company's GLA and approximately 67% of the Company's ABR at December 31, 1996. The Shopping Centers ranged in size from approximately 30,000 to 608,000 square feet. The Company intends to maintain its policy of acquiring shopping centers for long-term investment. The Company maintains an aggressive leasing program to enhance the income potential of each property. It also follows a schedule of regular physical maintenance with a view toward tenant expansion, renovations and refurbishing to preserve and increase the value of its properties. Renovations include upgrading of existing facades, updating signage, resurfacing parking lots and improving parking lot and exterior building lighting. The majority of the Shopping Centers are anchored by one or more national or regional retailers. The remaining space is generally subject to shorter-term net leases to smaller tenants. A substantial portion of the Company's income from Shopping Centers consists of rent received under long-term leases. Most of these leases provide for payment of fixed base rentals monthly in advance and for the payment by tenants 8 9 of their pro-rata share of real estate taxes, insurance, utilities and common area maintenance of the shopping center. In general, the Company's Shopping Center leases require the Company to make roof and structural repairs as needed. However, certain of the tenant leases place that responsibility on the tenant. The Company's standard small store lease provides for roof repairs and exterior repairs to be reimbursed by the tenant as part of the common area maintenance. The Single Tenant Properties At December 31, 1996, the Company and its subsidiaries owned 67 Single Tenant Properties under long-term net leases to national or regional tenants. The GLA of these properties ranged in size from approximately 3,000 square feet to 126,000 square feet and accounted for approximately 34% of the Company's total GLA. At December 31, 1996, the Single Tenant Properties accounted for approximately 32% of the Company's ABR. With few exceptions, the tenants are required to pay all operating expenses including roof and structural repairs. The Commercial Properties At December 31, 1996, approximately 1% of the total GLA owned by the Company and its subsidiaries was attributable to the 3 Commercial Properties under long-term leases to single tenants or groups of tenants. These properties accounted for approximately 1% of the ABR of the Company and its subsidiaries at December 31, 1996 and the GLA ranged in size from approximately 8,700 square feet to the 21,560 square foot office building which is the headquarters of the Company. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any legal proceedings other than various claims and lawsuits arising in the normal course of its business which, in the opinion of the Company's management, are not individually or in the aggregate material to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 9 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is listed on the NYSE under the symbol "XEL". As of March 7, 1997 there were approximately 1,520 record holders of the Company's common stock, plus those who hold their shares in street name. The Company has paid regular distributions since its commencement of operations in 1987 and intends to pay regular quarterly distributions in the future. Payment of distributions depends upon a number of factors (including primarily the Company's cash flow) and there can be no assurance that distributions will be paid. The following table sets forth the high and low sales price as reported by the NYSE composite tape and the distributions declared each calendar quarter during 1996 and 1995 with respect to the Company's common stock:
DISTRIBUTIONS HIGH LOW DECLARED -------- ------- ------------ 1995: First quarter $ 19.125 $ 16.375 $ 0.430 Second quarter 20.750 18.125 0.000 [a] Third quarter 20.125 19.000 0.445 Fourth quarter 21.125 18.250 0.445 1996: First quarter $ 20.875 $ 19.125 $ 0.445 Second quarter 21.250 18.000 0.445 Third quarter 22.500 19.500 0.460 Fourth quarter 25.375 21.500 0.460
[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 February 1997, the Company issued 4.6 million shares of 8 1/2% Series A Cumulative Convertible Preferred Stock (the "Preferred Shares") at $25 per share. The Preferred Shares are listed on the NYSE under the symbol "XELPrA." 10 11 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
YEAR ENDED DECEMBER 31 ------------------------------------------------------------------------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE INFORMATION) INCOME STATEMENT DATA - --------------------- Total revenue $63,135 $59,370 $42,259 $23,082 $6,029 Total expenses 37,562 44,861 28,355 20,250 5,575 Income before real estate impairment and sales 25,573 14,509 13,904 2,832 454 Real estate impairment and sales (1,777) 3,683 (108) 399 - Net income 23,796 18,192 13,796 3,231 454 Per share data: Net income $ 1.62 $ 1.51 $ 1.27 $ 0.55 $ 0.41 Distributions 1.81 1.32 [a] 1.71 1.42 1.14 Weighted average number of shares 14,539 12,084 10,883 5,878 1,110 BALANCE SHEET DATA - ------------------ Net real estate $457,502 $372,016 $349,255 $273,362 $112,971 Total assets 558,628 428,307 375,100 290,226 116,621 Mortgages payable 157,716 123,813 201,157 113,487 89,442 Notes payable 81,032 86,984 15 6,575 1,102 Stockholders' equity 312,654 208,678 163,898 161,962 22,312 - -----------
[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. 11 12 ITEM 7. MANAGEMENT'S 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. Historical results and percentage relationships set forth in the Consolidated Statements of Income contained in the Consolidated Financial Statements, including trends which might appear, should not be taken as indicative of future operations. Comparison of the year ended December 31, 1996 to the year ended December 31, 1995 Rental revenue and expense reimbursements decreased $2.7 million, or 5% to $52.5 million in the year ended December 31, 1996, as compared to $55.2 million for the year ended December 31, 1995. This decrease primarily relates to the sale of an office building in December 1995 which accounted for $3.0 million of revenue in 1995. The proceeds from this sale were used to purchase three shopping centers in 1996 that were being master leased as of January 1, 1995 and part of the Company's 1995 operations. The Company purchased four other shopping centers in 1996 (three in December) which accounted for $0.6 million in revenues. Although property expenses decreased slightly as mentioned below, expense reimbursements increased by $0.8 million. The primary reason for this variance is the sale of the office building. In 1995, the office building accounted for $1.6 million in total expenses of which it only recovered $0.2 million in reimbursements. Interest income increased $3.5 million, or 109% to $6.7 million in the year ended December 31, 1996 from $3.2 in the year ended December 31, 1995. This increase is primarily related to additional notes receivable issued during the year. The Company's outstanding notes receivable were $83.7 million at December 31, 1996 compared with $22.9 million outstanding at December 31, 1995, an increase of $60.8 million. Of this amount, $27.1 million related to loans made to ERT Development Corporation ("EDV") to facilitate the development of various development projects, $11.9 million related to loans made to Excel Realty Partners, L.P., ("ERP") primarily to facilitate cash requirements for seven properties contributed to ERP in 1996, $9.5 million was loaned to a Canadian company to facilitate the purchase and redevelopment of a mixed- use commercial building in Toronto, Canada and $12.3 million related to loans made to other various development companies. The Company's equity in earnings from affiliates increased $1.2 million in the year ended December 31, 1996 when compared with the year ended December 31, 1995. The increase primarily relates to the Company's investment in ERP which was formed in 1995. In 1996, seven properties were contributed to ERP. In addition, a full year of operations was recognized on the five properties that were contributed in the fourth quarter of 1995. The Company had other income which increased $1.8 million from $0.9 million in the year ended December 31, 1995 to $2.7 million in the year ended December 31, 1996. In 1996, $2.4 million in development and other fees were recognized from EDV compared with $0.4 in 1995. Interest expense decreased $3.0 million to $19.5 million in the year ended December 31, 1996 from $22.5 million in 1995. The higher interest expense in 1995 related to $3.7 million of loan costs written-off compared to none in 1996. This was primarily related to the repayment of debt related to the Company's Real Estate Mortgage Investment Conduit (the "REMIC"). Excluding loan cost write-offs, interest expense increased $1.1 million in 1996 which primarily related to the increase in mortgage debt from properties purchased in 1996. Mortgages payable outstanding at December 31, 1996 was $157.7 million compared with $123.8 million outstanding at December 31, 1995. Depreciation and amortization expenses increased $0.6 million or 8% in 1996 when compared with 1995. This is due to an overall increase in the Company's depreciable real estate, and a full year's operations on 12 13 the properties purchased in 1995. The Company's buildings at December 31, 1996 totaled $310.0 million compared to $251.0 million at December 31, 1995. Other property expenses decreased $0.4 million or 13% to $2.8 million in the year ended December 31, 1996 from $3.2 million in the year ended December 31, 1995. This decrease was primarily the result of the sale of the office building in December 1995, as mentioned above, which accounted for $0.7 million of other property expenses in 1995. The properties acquired during 1996 that were not previously under master leases, accounted for approximately $0.1 million of other property expenses in 1996. Master lease expenses, which were $4.7 million in the year ended December 31, 1995, decreased to $0.4 million in 1996. In 1996, the three properties under master leases were purchased in the first quarter of 1996 and the master leases were terminated. During 1995, eleven properties were under master leases for at least part of the year. General and Administrative expenses decreased to approximately 4.5% of total revenues in 1996 from 4.8% of total revenues in 1995. The Company recognized a net loss on real estate sales of $0.9 million in 1996 compared with a net gain of $3.7 million in 1995. The loss in 1996 primarily was a result of a dark building that was sold in 1996. The Company had received a lease termination fee and, subsequent to termination of the lease, sold the building. In 1995 the Company's net gain was primarily associated with the sale of the office building. The impairment of real estate in 1996 relates to another dark building which the Company wrote down by $0.8 million to its estimated fair value. Net income increased $5.6 million, or 31%, to $23.8 million in 1996 ($1.62 per share) from $18.2 million ($1.51 per share) in 1995. In the third quarter of 1996, the Company increased the quarterly distributions per share to $0.46 from $0.445. Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS No. 123") is effective for all companies in 1996. The Company has adopted the disclosure-only provisions of FAS No. 123. Accordingly, the adoption of this standard did not affect the Company's results of operations, financial position, or liquidity. For further discussion, refer to Note 7 to the Financial Statements, "Capital Stock". Comparison of year ended December 31, 1995 to year ended December 31, 1994. Rental income increased $12.7 million, or 33% to $51.5 million in the year ended December 31, 1995, as compared to $38.8 million for the year ended December 31, 1994. On January 1, 1995, the Company entered into master lease agreements to manage eleven shopping centers. During the year seven of those properties were purchased and the operations on all eleven properties were included in the Company's Consolidated Statement of Income for the full year. These properties accounted for $9.0 million of revenue in 1995. Furthermore, the Company experienced a full year of operations on 19 properties acquired during 1994 and almost a full year of operations on an office building sold in December 1995. Additionally, approximately $3.9 million of lease termination fees were recognized as base rents in 1995 compared to $1.0 million in 1994. Two of the four properties for which the Company received lease termination fees in 1995 were sold. Expense reimbursements increased $1.6 million related to the increase in property related expenses as noted below. Interest income increased $2.0 million and other income increased $0.8 million for a combined increase of 225% from 1994, primarily related to additional cash invested and loans made to EDV and other development companies. The Company had $22.9 million in notes receivable outstanding at December 31, 1995 compared to $9.0 million outstanding at December 31, 1994. Interest expense increased from $14.2 million in 1994 to $22.5 million 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 the REMIC. Total loan costs written-off in 1995 which 13 14 primarily related to the REMIC debt were $3.7 million. Additionally, the Company wrote-down its interest rate protection agreement by $0.8 million. Loan costs written off in 1994 and charged to interest expense were $0.1 million. Finally, overall mortgages and notes payable increased. At December 31, 1995, mortgages and notes payable of $210.8 million were $9.6 million greater than the debt of $201.1 million outstanding at December 31, 1994. Depreciation and amortization expense was approximately $6.9 million in both 1995 and 1994. However depreciation expense was $0.8 million more in 1995 than in 1994. 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 1995. Amortization expense decreased by $0.8 million in 1995 due to a management contract which was fully amortized in 1994. Property taxes, repairs and maintenance, other property expenses and master lease expenses increased $7.9 million, or 171%, to $12.6 million in 1995 from $4.7 million in 1994. These expenses increased as a percentage of total revenue to 21% in 1995 from 11% in 1994, primarily due to the master lease expenses. Master lease expenses accounted for $4.7 million and other expenses related to the master leased properties accounted for $1.1 million. General and administrative expenses increased by $0.2 million 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 $0.7 million of reimbursements by EDV which commenced operations in 1995. Netted against this decrease in 1995 was an accrual for an estimated state tax liability of $0.4 million. In the prior year, the Company made a $0.1 million accrual. The Company recognized a net gain of $3.7 million on real estate sales in 1995 compared to a net loss of $0.1 million in 1994. The gain was primarily associated with the sale of an office building in December 1995. Net income increased $4.4 million, or 32%, to $18.2 million ($1.51 per share) in 1995 from $13.8 million ($1.27 per share) in 1994. Quarterly distributions per share increased from $0.43 to $0.445 in the third quarter of 1995. 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 growth. In order to continue to expand and develop its portfolio of properties and other investments, the Company intends to finance future acquisitions and growth through 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's financing strategy is to maintain a strong and flexible financial position by (i) maintaining a prudent level of leverage, (ii) maintaining a large pool of unencumbered properties, (iii) managing its variable rate exposure, (iv) amortizing existing mortgages over the term of the leases for such mortgaged properties, and (v) maintaining a conservative distribution payout ratio. The Company may seek variable rate financing from time to time if such financing appears advantageous in light of then-prevailing market conditions. In such case, the Company will consider hedging against interest rate risk through interest rate protection agreements, interest rate swaps or other means. 14 15 In May 1995, the Company filed with the Commission a $250 million shelf registration statement which was increased in 1997 by $20 million. This registration statement was filed for the purpose of issuing debt securities, preferred stock, depositary shares, common stock or warrants. The Company has issued from the shelf the following securities:
PRICE PER SHARE NET PROCEEDS --------------- ------------ May 1995 2,140,000 shares of Common Stock $20.125 $ 40,500,000 June 1996 1,725,000 shares of Common Stock $20.625 $ 33,819,000 December 1996 2,990,000 shares of Common Stock $22.875 $ 65,645,000 February 1997 4,600,000 shares of 8 1/2% Series A $25.000 $111,550,000 Cumulative Convertible Preferred Stock
The proceeds from these offerings were used to acquire properties, make loans to ERP to facilitate the contribution of properties by third parties, make loans to EDV and third party developers to facilitate the development of properties, to repay debt and for general corporate purposes. The Company's 8 1/2% Series A Cumulative Convertible Preferred Stock (the "Preferred Shares") have an annual distribution of $2.125 per share payable quarterly. The Preferred Shares are convertible by the holder at any time into shares of the Company's common stock at a conversion price of $26.06 per share. On or after February 5, 2002, the Preferred Shares are redeemable by the Company at $25.00 per share in either shares of common stock or cash at the Company's election. The Preferred Shares rank senior to the Company's common stock with respect to the payment of dividends and amounts payable upon liquidation, dissolution or winding down of the Company. In December 1995, the Company obtained a two-year unsecured revolving credit facility for up to $150 million through December 1997 from a group 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. At December 31, 1996, $67.0 million was outstanding under the Credit Facility and in February 1997, this amount was repaid with proceeds from the Company's preferred stock offering. The total amount available under the Credit Facility based upon covenants at December 31, 1996 was approximately $119 million. The Credit Facility carries an interest rate of LIBOR plus 1.75% (7.3% at December 31, 1996). The Company has an interest rate protection agreement which limits $50.0 million of the outstanding balance on the Credit Facility to 10%. The Company also has a $4.0 million line of credit of which $3.9 million was outstanding at December 31, 1996 and repaid in 1997. In April 1995, the Company formed a Delaware limited partnership, ERP, to own and manage certain real estate properties. Through 1996, 12 real estate properties have been contributed to ERP and at December 31, 1996, ERP's net real estate was approximately $80.0 million and mortgages payable were $54.5 million. Cash requirements (in excess of cash from operations) needed to facilitate these property acquisitions of approximately $17.9 million were loaned to ERP by the Company. It is anticipated that additional cash requirements to facilitate future growth would be principally loaned to ERP by the Company. At December 31, 1996, $3.5 million of ERP's mortgage debt was guaranteed by the Company. In 1996, the Company loaned $12.3 million to a joint venture partnership under a loan commitment related to a retail development retail project in Orlando, Florida, and in 1997, an additional $5.3 was advanced. In January 1997, the joint venture obtained a construction loan and $9.0 million was repaid to the Company. The Company has agreed to guarantee $30 million of the construction loan which is expected to total $80 million. 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 15 16 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. The Company calculates funds from operations ("FFO") as net income before gain or loss on real estate sales (net of gain or loss on sales of undepreciated property), plus depreciation on real estate, amortization, amortized leasing commission costs and loan costs written off. FFO does not represent cash flows from operations as defined by generally accepted accounting principles, and 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):
1996 1995 1994 ---- ---- ---- Net income $ 23,796 $ 18,192 $ 13,796 Depreciation: Buildings 7,025 6,313 5,685 Tenant improvements 329 531 353 From equity investments 9 1 - Amortization (1): Leasing commissions 189 724 166 Management contract - - 766 Organization costs 4 4 2 Loan costs written off (sale of loan rate cap) (415) 4,453 88 (Gain) loss on sale/impairment of buildings 2,130 (3,682) 108 ------- ------- -------- Funds from operations (2) $ 33,067 $ 26,536 $ 20,964 ======== ======== ======== Other Information: Leasing commissions paid $ 461 $ 335 $ 329 Tenant improvements paid 338 741 1,095 Building improvements paid 683 716 459
(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 part of other operating expenses in the Consolidated Statements of Income. (2) Beginning in 1996, the Company revised its definition of FFO to exclude the amortization of loan costs and depreciation of furniture, equipment and vehicles as add-back items. Under the previous definition, FFO was $27,861 and $21,869 for the years ended December 31, 1995 and 1994, respectively. 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 16 17 to current market rates. This belief is based upon an analysis of relevant market conditions, including a 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. CERTAIN CAUTIONARY STATEMENTS Certain statements in this Form 10-K may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, the following risks: Economic Performance and Value of Centers Dependent on Many Factors. Real property investments are subject to varying degrees of risk. The economic performance and values of real estate can be affected by many factors, including changes in the national, regional and local economic climates, local conditions such as an oversupply of space or a reduction in demand for real estate in the area, the attractiveness of the properties to tenants, competition from other available space, the ability of the owner to provide adequate maintenance and insurance and increased operating costs. In recent years, there has been a proliferation of new retailers and a growing consumer preference for value- oriented shopping alternatives that have, among other factors, heightened competitive pressures. In certain areas of the country, there may also be an oversupply of retail space. As a consequence, many companies in all sectors of the retailing industry have encountered significant financial difficulties. A substantial portion of the Company's income is derived from rental revenues from retailers in neighborhood and community shopping centers. Accordingly, no assurance can be given that the Company's financial results will not be adversely affected by these developments in the retail industry. Dependence on Rental Income from Real Property. Since substantially all of the Company's income is derived from rental income from real property, the Company's income and funds for distribution would be adversely affected if a significant number of the Company's tenants were unable to meet their obligations to the Company or if the Company were unable to lease a significant amount of space in its properties on economically favorable lease terms. There can be no assurance that any tenant whose lease expires in the future will renew such lease or that the Company will be able to re-lease space on economically advantageous terms. Illiquidity of Real Estate Investments. Equity real estate investments are relatively illiquid and therefore tend to limit the ability of the Company to vary its portfolio promptly in response to changes in economic or other conditions. In addition, mortgage payments and, to the extent the properties are not subject to triple net 17 18 leases, certain significant expenditures such as real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investment. Should such events occur, the Company's income and funds for distribution would be adversely affected. A portion of the Company's properties are mortgaged to secure payment of indebtedness, and if the Company were unable to meet its mortgage payments, a loss could be sustained as a result of foreclosure on such properties by the mortgagee. Risk of Bankruptcy of Major Tenants. The bankruptcy or insolvency of a major tenant or a number of smaller tenants may have an adverse impact on the properties affected and on the income produced by such properties. Under bankruptcy law, a tenant has the option of assuming (continuing) or rejecting (terminating) any unexpired lease. If the tenant assumes its lease with the Company, the tenant must cure all defaults under the lease and provide the Company with adequate assurance of its future performance under the lease. If the tenant rejects the lease, the Company's claim for breach of the lease would (absent collateral securing the claim) be treated as a general unsecured claim. The amount of the claim would be capped at the amount owed for unpaid pre-petition lease payments unrelated to the rejection, plus the greater of one years' lease payments or 15% of the remaining lease payments payable under the lease (but not to exceed the amount of three years' lease payments). Environmental Risks. Under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or may have arranged for the disposal or treatment of hazardous or toxic substances and, therefore, may become liable for the costs of removal or remediation of certain hazardous substances released on or in its property or disposed of by it, as well as certain other potential costs which could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). Such liability may be imposed whether or not the Company knew of, or was responsible for, the presence of such hazardous or toxic substances. Reliance on Major Tenants. As of December 31, 1996, the Company's two largest tenants were Wal-Mart Stores, Inc. and Kmart Corporation which accounted for approximately 12.9% and 12.5%, respectively, of the Company's annualized base rental income as of such date. The financial position of the Company and its ability to make distributions may be adversely affected by financial difficulties experienced by either of such tenants, or any other major tenant of the Company, including a bankruptcy, insolvency or general downturn in business of any such tenant, or in the event any such tenant does not renew its leases as they expire. Control by Directors and Executive Officers. As of December 31, 1996, directors and executive officers of the Company beneficially owned approximately 10.68% of the Company's common stock. Accordingly, such persons should continue to have substantial influence over the Company and on the outcome of matters submitted to the Company's stockholders for approval. 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants on accounting and financial disclosure. ITEMS 10 THROUGH 13 Incorporated by reference to the Company's Proxy Statement for its 1997 annual meeting of stockholders to be filed subsequently hereto. 18 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements and Financial Statement Schedules: (1) Report of Independent Accountants Page F-2 (2) Financial Statements (i) Consolidated Balance Sheets; December 31, 1996 and 1995 Page F-3 (ii) Consolidated Statements of Income; Years Ended December 31, 1996, 1995 and 1994 Page F-4 (iii)Consolidated Statements of Changes In Stockholders' Equity; Years Ended December 31, 1996, 1995 and 1994 Page F-5 (iv) Consolidated Statements of Cash Flows; Years Ended December 31, 1996, 1995, and 1994 Page F-6 (v) Notes to Consolidated Financial Statements Page F-7 (3) Financial Statement Schedules (i) Schedule II; Valuation and Qualifying Accounts; Years Ended December 31, 1996, 1995 and 1994 Page F-19 (ii) Schedule III; Real Estate and Accumulated Depreciation; December 31, 1996 Page F-20
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements and notes thereto. (b) Reports on Form 8-K filed during the quarter ended December 31, 1996 and in 1997 prior to this filing: A Current Report on Form 8-K, dated December 16, 1996, was filed with the Commission regarding the Company's Underwriting Agreement dated December 12, 1996 between the Company and Prudential Securities Incorporated. A Current Report on Form 8-K, dated January 17, 1997, as amended January 22, 1997, was filed with the Commission regarding the Company's purchase of the Valley Fair Mall, a shopping center located in West Valley City (Salt Lake City), Utah. A Current Report on Form 8-K, dated February 7, 1997 was filed with the Commission regarding the Company's Underwriting Agreement dated January 30, 1997 between the Company and Furman Selz LLC, Terms Agreement dated January 30, 1997 between the Company and Furman Selz LLC, and Articles Supplementary classifying 4,600,000 shares of preferred stock as 8 1/2% Series A Cumulative Convertible Preferred Stock. (c) Exhibits: Refer to Exhibit Index as follows. 19 20 EXHIBIT INDEX 1.1 Underwriting Agreement dated June 26, 1996 between Excel Realty Trust, Inc. (the "Company") and Smith Barney Inc. (4) Exhibit 1.01 1.2 Terms Agreement dated June 26, 1996 between the Company and Smith Barney Inc. (4) Exhibit 1.02 1.3 Underwriting Agreement dated December 12, 1996 between the Company and Prudential Securities Incorporated. (5) Exhibit 1.01 1.4 Underwriting Agreement dated January 30, 1997 between the Company and Furman Selz LLC (6) Exhibit 1.01 1.5 Terms Agreement dated January 30, 1997 between the Company and Furman Selz LLC. (6) Exhibit 1.02 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 Articles Supplementary classifying 4,600,000 shares of preferred stock as 8 1/2% Series A Cumulative Convertible Preferred Stock. (6) Exhibit 4.01 10.1 General Partnership Agreement of Horne & Excel Properties, a Tennessee general partnership, dated as of October 13, 1992, by and between Horne and Excel California (also known as the "Company"). (1) Exhibit 10.2A 10.2 General Partnership Agreement of Horne & Excel Properties (Chapman), a Tennessee general partnership, dated as of December 30, 1992, by and between Horne and the Company. (1) Exhibit 10.2B 10.3 Employment Contract, dated as of April 1, 1993, by and between the Company and Gary Sabin, an individual. (1) Exhibit 10.8 10.4 Employment Contract, dated as of April 1, 1993, by and between the Company and Richard Muir, an individual. (1) Exhibit 10.8A 10.5 Employment Contract, dated as of April 1, 1993, by and between the Company and Graham Bullick, an individual. (1) Exhibit 10.9 10.6 Employment Contract, dated as of April 1, 1993, by and between the Company and Ronald Sabin an individual. (1) Exhibit 10.9A 10.7 1993 Stock Option Plan of the Company, as amended. (7) Exhibit B 10.8 Form of Incentive Stock Option Agreement under the Company's 1993 Stock Option Plan. (1) Exhibit 10.11 10.9 Form of Non-Qualified Stock Option Agreement under the Company's 1993 Stock Option Plan. (1) Exhibit 10.12 10.10 401(k) Retirement Plan of the Company. (1) Exhibit 10.13 10.11 Form of Common Stock Purchase Option, dated as of November 1, 1992 by and between the Company and each of seven directors thereof. (1) Exhibit 10.27 10.12 Form of Common Stock Purchase Option, dated as of March 15, 1993, by and between the Company and each of the seven directors thereof. (1) Exhibit 10.28 10.13 Form of 1993 Executive Officer Common Stock Purchase Option, dated as of April 1, 1993 by and between the Company and each of six executive officers thereof. (1) Exhibit 10.29 20 21 10.14 Agreement of Limited Partnership of EH Properties, L.P., ("EH Properties"), a Delaware limited partnership, dated as of March 25, 1994, by and between the Company, as general partner, and Horne, as limited partner. (2) Exhibit 10.37 10.15 Partnership Contribution Closing Agreement dated as of March 28, 1994, by and between Horne, the Company, and EH Properties. (2) Exhibit 10.38 10.16 1994 Director's Stock Plan of the Company, as amended. (7) Exhibit A 10.17 Form of Stock Option Agreement under the 1994 Director's Stock Plan of the Company. (2) Exhibit 10.40 10.18 Master Agreement, dated as of January 1, 1995, by and among the Company and the limited partnerships named therein (the "Tricor Partnerships"). (2) Exhibit 10.45 10.19 Closing Memorandum, dated as of January 20, 1995, by and among the Company and the Tricor Partnerships. (2) Exhibit 10.46 10.20 Agreement, dated as of January 20, 1995, by and among the Company and the Tricor Partnerships. (2) Exhibit 10.47 10.21 Agreement of Limited Partnership of Excel Realty Partners, L.P., a Delaware limited partnership ("ERP"). (3) 10.22 Contribution Agreement by and between each of the partnerships named therein and ERP. (3) 10.23 Credit Agreement Among the Company, as Borrower, and the First National Bank of Boston ) ("FNBB"), Wells Fargo Bank, N.A., First Interstate Bank of California, Dresdner Bank AG, and NBD Bank, BHF-Bank Akteingesellschaft, Signet Bank, as Lenders, and the FNBB, as Agent dated December 27, 1995. (3) 11.1 Computation of Per Common Share Earnings (8) 21.1 Subsidiaries of the Company. (3) 27.1 Financial data schedules. (8) ________________________________ (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 13, 1995 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 5, 1996, as amended, in which this exhibit bore the same number, unless otherwise indicated. (4) Incorporated by reference from the Company's report on Form 8-K dated July 2, 1996 in which this exhibit bore the same number, unless otherwise indicated. (5) Incorporated by reference from the Company's report on Form 8-K dated December 16, 1996 in which this exhibit bore the same number, unless otherwise indicated. (6) Incorporated by reference from the Company's report on Form 8-K dated February 7, 1997 in which this exhibit bore the same number, unless otherwise indicated. (7) Incorporated by reference from the Company's proxy statement dated April 1, 1996 relating to the 1996 annual meeting of stockholders of the Company, in which this exhibit bore the same number, unless otherwise indicated. (8) Filed herewith. 21 22 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 thereunto duly authorized. EXCEL REALTY TRUST, INC. DATE: March 7, 1997 By: /s/ Gary B. Sabin ------------------------------------ GARY B. SABIN President and Chief Executive Officer DATE: March 7, 1997 By: /s/ David A. Lund ------------------------------------ DAVID A. LUND Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Gary B. Sabin March 7, 1997 - ------------------------------------- --------------------------- GARY B. SABIN, Director, Date President, Chief Executive Officer and Chairman of the Board /s/ Richard B. Muir March 7, 1997 - ------------------------------------- --------------------------- RICHARD B. MUIR, Director Date and Executive Vice President /s/ Boyd A. Lindquist March 7, 1997 - ------------------------------------- --------------------------- BOYD A. LINDQUIST, Director Date /s/ D. Charles Marston March 7, 1997 - ------------------------------------- --------------------------- D. CHARLES MARSTON, Director Date /s/ Robert E. Parsons, Jr. March 7, 1997 - ------------------------------------- --------------------------- ROBERT E. PARSONS, JR., Director Date /s/ Bruce A. Staller March 7, 1997 - ------------------------------------- --------------------------- BRUCE A. STALLER, Director Date /s/ John H. Wilmot March 7, 1997 - ------------------------------------- --------------------------- JOHN H. WILMOT, Director Date
22 23 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, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3 Consolidated Statements of Income Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-4 Consolidated Statements of Changes in Stockholders' Equity Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-5 Consolidated Statements of Cash Flows Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-6 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . F-7 2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES: Schedule II - Valuation and Qualifying Accounts Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . F-19 Schedule III - Real Estate and Accumulated Depreciation December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20
F-1 24 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. 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, 1996 and 1995 and the consolidated results of operations and their cash flows for each of the three years in the period ended December 31, 1996, 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 January 31, 1997 F-2 25 CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND 1995 (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1996 1995 ------------- ------------ ASSETS Real estate: Land $ 156,060 $ 122,394 Buildings 310,031 251,012 Accumulated depreciation (21,976) (14,909) Real estate held for sale 13,387 13,519 ---------- ---------- Net real estate 457,502 372,016 Cash 5,038 9,812 Escrow and other cash deposits 625 14,890 Accounts receivable, less allowance for bad debts of $1,608 and $726 in 1996 and 1995, respectively 6,133 2,156 Notes receivable from affiliates 57,716 18,561 Notes receivable - other 26,026 4,289 Loan acquisition costs 1,775 2,662 Other 3,813 3,921 --------- ---------- $ 558,628 $ 428,307 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgages payable $ 157,716 $ 123,813 Notes payable 81,032 86,984 Accounts payable and accrued liabilities 4,738 4,806 Deferred rental income 2,023 2,760 Other 465 1,266 ---------- ---------- Total liabilities 245,974 219,629 -------- -------- 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, 18,231,089 and 13,171,353 shares issued and outstanding in 1996 and 1995, respectively 182 132 Additional paid-in capital 324,229 218,531 Accumulated distributions in excess of net income (11,757) (9,985) --------- --------- Total stockholders' equity 312,654 208,678 --------- -------- $ 558,628 $ 428,307 ======== ========
The accompanying notes are an integral part of the financial statements. F-3 26 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1996 1995 1994 ----------- ------------ ----------- Revenues: Rental revenue $ 47,892 $ 51,453 $ 38,800 Expense reimbursements 4,589 3,776 2,214 Interest 6,731 3,150 1,191 Equity in earnings of affiliates 1,254 93 - Other 2,669 898 54 --------- --------- --------- Total revenue 63,135 59,370 42,259 -------- -------- -------- Expenses: Interest 19,450 22,458 14,190 Depreciation and amortization 7,487 6,933 6,887 Property taxes 2,765 2,877 1,822 Repairs and maintenance 1,865 1,861 1,007 Other property expenses 2,797 3,230 1,838 Master lease 351 4,681 - General and administrative 2,847 2,821 2,611 --------- --------- -------- Total expenses 37,562 44,861 28,355 -------- -------- ------- Income before real estate impairment and sales 25,573 14,509 13,904 Impairment of real estate (844) - - Gain (loss) on sale of real estate (933) 3,683 (108) ---------- -------- --------- Net income $ 23,796 $ 18,192 $ 13,796 ======= ======== ======= Net income per common share $1.62 $1.51 $1.27 ==== ==== ====
The accompanying notes are an integral part of the financial statements. F-4 27 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME ACCUMULAATED 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, 1994 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 - - - 14,509 3,683 18,192 Distributions declared - - - (12,581) (3,683) (16,264) ------------ ----------- ------------- --------- --------- -------- Balance at December 31, 1995 13,171,353 132 218,531 ( 9,985) - 208,678 Issuance of new shares of common stock 5,059,736 50 110,543 - - 110,593 Selling expenses - - (4,845) - - (4,845) Net income - - - 23,796 - 23,796 Distributions declared - - - (25,568) - (25,568) ------------ ----------- ------------- --------- ----------- -------- Balance at December 31, 1996 18,231,089 $ 182 $ 324,229 $ (11,757) $ - $ 312,654 ========== ========= ========= ======= =========== ========
The accompanying notes are an integral part of the financial statements. F-5 28 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (IN THOUSANDS)
1996 1995 1994 ---------- ---------- ---------- Cash flows from operating activities: Net income $ 23,796 $ 18,192 $ 13,796 Adjustments to reconcile net income to net cash provided by operations: Depreciation 7,482 6,929 6,119 Impairment of real estate 844 - - Amortization of loan costs, leasing commissions and other 1,235 6,421 1,853 Equity in earnings of affiliates (1,254) (93) - Provision for bad debts 1,008 445 67 (Gain) loss on sale of real estate 933 (3,683) 108 Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable (1,642) (1,157) 2,353 Other (2,612) (1,750) (380) Increase (decrease) in liabilities: Accounts payable and accrued liabilities (1,084) 2,213 (10) Other (626) 1,378 746 --------- -------- --------- Net cash provided by operating activities 28,080 28,895 24,652 -------- -------- ------- Cash flows from investing activities: Advances for notes receivable (78,224) (36,881) (11,154) Real estate acquisitions and building improvements (39,731) (26,281) (55,399) Proceeds from real estate sales 4,741 29,397 4,244 Principal payments on notes receivable 2,335 23,130 5,999 Escrow and other deposits collected 17,876 4,751 5,717 Escrow and other deposits paid (3,595) (17,146) (8,020) Other 398 (5,395) (259) ---------- --------- ---------- Net cash used in investing activities (96,200) (28,425) (58,872) -------- -------- -------- Cash flows from financing activities: Issuance of common stock 105,911 44,451 891 Principal payments of mortgages and notes payable (84,032) (118,516) (52,569) Proceeds from mortgages and notes payable 71,256 105,253 109,574 Distributions paid (25,568) (20,949) (18,240) Selling and offering costs (4,845) (2,812) (36) Loan costs paid (129) (2,216) (5,909) Other 753 - (736) --------- ----------- ---------- Net cash provided by financing activities 63,346 5,211 32,975 ------- -------- -------- Net increase (decrease) in cash (4,774) 5,681 (1,245) Cash at beginning of year 9,812 4,131 5,376 -------- -------- --------- Cash at end of year $ 5,038 $ 9,812 $ 4,131 ======== ======== ========
The accompanying notes are an integral part of the financial statements. F-6 29 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 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 AND INVESTMENTS The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and all majority- owned partnerships. All significant intercompany balances and accounts have been eliminated in consolidation. The equity method of accounting is used for its investments in partnerships of which the Company owns less than 50%, but is able to exercise influence over the partnerships' operations. These investments include Excel Realty Partners, L.P. ("ERP"), a Delaware limited partnership. The Company also uses the equity method to account for its investment in ERT Development Corporation ("EDV"), a Delaware corporation. The investments were initially recorded at cost and subsequently adjusted for net income (loss) and contributions paid and distributions received (see Note 4). 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. 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. The Company assesses whether there has been a permanent impairment in the value of its real estate by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include a lessee's ability to pay rent under the terms of the lease. If a property is leased at a significantly lower rent, the Company may recognize a permanent impairment loss if the income stream is not sufficient to recover its investment. Such losses have been determined as the difference between the carrying value and the fair value of the property and included in the Consolidated Statements of Income. F-7 30 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: DEFERRED LEASING AND LOAN ACQUISITION COSTS Costs incurred in obtaining tenant leases and long-term financing are amortized to other property expense and interest expense, respectively, on the straight-line method over the terms of the related leases or debt agreements. REVENUE RECOGNITION Base rental revenue is recognized on the straight-line basis, which averages minimum rents over the terms of the leases. 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 and are included on the Consolidated Statements of Income in rental income. 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. Revenue recognition of fees received for lease terminations are deferred 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. 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, warrants and other convertible securities which would have a dilutive effect. The weighted average shares outstanding for the years ended December 31, 1996, 1995 and 1994 were 14,538,999, 12,084,305 and 10,882,728, respectively. 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, 1995 and 1994 in order to conform with the current period's presentation. F-8 31 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. REAL ESTATE: ACQUISITIONS In 1996, the Company acquired three shopping centers in North Carolina, two shopping centers in Georgia, one shopping center in Arizona and a shopping center in Utah. The total cost of the properties was $93,190,000 of which the Company assumed $43,332,000 in mortgage debt. Also in 1996, seven properties were contributed by third parties to ERP (see Note 4). In 1995, the Company acquired seven shopping centers in North Carolina, 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 by third parties to ERP. SALES The Company sold four single-tenant properties in 1996. The net sale price of these properties totaled $4,741,000 and the Company recognized a $933,000 net loss. 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. A net gain of $3,683,000 was recognized on these sales. The sale of the office building accounted for $16,310,000 of the total sales and resulted in a gain of $4,960,000. The Company received lease termination fees totaling $1,300,000 and $4,883,000 in 1996 and 1995, respectively. From these fees, $2,773,000 and $2,552,000 were recognized as revenue in 1996 and 1995, respectively. At December 31, 1996 and 1995, $859,000 and $2,331,000 of lease termination fees remained as deferred rental income, respectively. IMPAIRMENT OF REAL ESTATE In accordance with FASB Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," the Company has written down the value of a dark single-tenant property by $844,000 to its estimated fair value. Another property was written down in the second quarter of 1996 by $1,246,000 but was reclassified as part of the net loss on sale of real estate when it was sold in the third quarter of 1996. REAL ESTATE HELD FOR SALE The Company has one property held for sale related to a property in Arizona. Depreciation expense is no longer being charged to the property and costs to hold the property until sale are being capitalized. In preparation for the sale of this property, the Company terminated a master lease to an unaffiliated developer in 1995. As part of the termination agreement, the Company paid $5,000,000 in exchange for the lessee's equity participation rights in the property, which was capitalized as part of the asset held for sale. F-9 32 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. REAL ESTATE, CONTINUED: MASTER LEASE AND OPTION AGREEMENT In 1995, the Company entered into master lease and option agreements with respect to eleven shopping centers. Under the master leases, the Company received all cash flow in excess of the master lease expense which included lease payments to the lessor and interest payments from debt service. All of the rental revenue and related operating expenses of these properties have been included in the Company's Consolidated Statements of Income. In 1996 and 1995, the Company purchased ten of the properties under the option agreements and terminated the master lease and purchase option on the one remaining property. Upon purchase of these properties, the master leases were canceled. 3. NOTES RECEIVABLE: The Company had the following notes receivable at December 31, 1996 and 1995:
1996 1995 --------- ---------- (IN THOUSANDS) Notes from EDV, interest at 14% per annum, collateralized by EDV assets. Due on demand. $ 39,786 $ 12,611 Notes from ERP, interest at 12% per annum, collateralized by real estate. Due on demand. 17,930 5,950 Notes from development companies, monthly interest from 10% - 20% per annum. Maturity dates vary depending upon the completion or sale of certain properties. 15,763 3,500 Note from a development company, interest at 25% per annum, payable in Canadian dollars. Due May 2003. 9,504 - Other 759 789 --------- -------- Total $ 83,742 $ 22,850 ======= =======
Interest and principal payments from EDV are primarily received upon the completion of development projects. Interest receivable from EDV was $879,000 and $914,000 at December 31, 1996 and 1995, respectively. Interest and principal payments from ERP are received on a monthly basis or as excess cash is available. Interest receivable from ERP was $201,000 and $135,000 at December 31, 1996 and 1995, respectively. In 1996, the Company made a loan in the amount of $13,000,000 Canadian dollars ($9,504,000 U.S. dollars at December 31, 1996) to a Canadian company which used the proceeds to acquire a 50% joint venture interest in a mixed-use commercial building known as "Atrium on Bay" in Toronto, Canada. The loan is collateralized by the Canadian company's interest in the building. The loan bears interest at 25% per annum and matures in seven years. The Company has reserved $601,000 against the interest receivable and the 1996 interest income pending future leasing activity. The net interest receivable at December 31, 1996 is $938,000. F-10 33 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 3. NOTES RECEIVABLE, CONTINUED: Also in 1996, the Company loaned $12,345,000 to a joint venture partnership under a loan commitment related to a development retail project in Florida, and in 1997, an additional $5,316,000 was advanced. In January 1997, the joint venture obtained a construction loan and $9,000,000 was repaid to the Company. The Company has agreed to guarantee up to $30,000,000 of the construction loan which is expected to total $80,000,000. 4. INVESTMENTS: EXCEL REALTY PARTNERS, L.P. In April 1995, ERP was formed to own and manage certain real estate properties. The Company is a 1% partner and the sole general partner of ERP. The Company is entitled to receive 99% of all net income and gains before depreciation, if any, after the limited partners receive their stipulated distributions. Through December 31, 1996, twelve properties have been contributed to ERP in exchange for limited partnership units (which may be converted to Company common shares at stipulated prices) and cash. Cash requirements to facilitate these transactions were obtained through borrowings from the Company and general partner contributions. Summary unaudited financial information for ERP is as follows:
YEAR ENDED DECEMBER 31, -------------------------- 1996 1995 ---------- ---------- (IN THOUSANDS) BALANCE SHEETS Net real estate assets $ 80,000 $ 28,500 Other assets 1,000 500 ------- -------- Total assets $ 81,000 $ 29,000 ====== ====== Mortgages payable $ 54,500 $ 18,000 Notes payable to Excel Realty Trust, Inc. 18,000 6,000 Other liabilities 1,500 300 ------- ------- Total liabilities 74,000 24,300 ------ ------ General partners' equity 1,200 100 Limited partners' equity 5,800 4,600 ------- ------- Total partners' equity 7,000 4,700 ------- ------- Total liabilities and partners' equity $ 81,000 $ 29,000 ====== ======
YEAR ENDED DECEMBER 31, -------------------------- 1996 1995 ---------- ---------- STATEMENTS OF INCOME Total revenues $ 7,000 $ 700 Property expenses including depreciation (2,200) (200) Mortgage interest expense (2,900) (300) Interest expense to Excel Realty Trust, Inc. (1,300) (100) ------ ---- Net income $ 600 $ 100 ======= ====
F-11 34 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 4. INVESTMENTS, CONTINUED: Annual distributions approximate $560,000 based on the limited partner units held at December 31, 1996. The Company's investment in the partnership at December 31, 1996 and 1995 was $1,221,000 and $139,000, respectively which is included in other assets on the Consolidated Balance Sheets. At December 31, 1996, ERP mortgage debt of $3,500,000 was guaranteed by the Company. ERT DEVELOPMENT CORPORATION In April 1995, EDV was organized to acquire, develop, hold and sell real estate in the short-term for capital gains and/or receive fee income. The Company owns 100% of the outstanding preferred shares of EDV. The preferred shares receive 95% of the dividends, if any, from EDV. Cash requirements to facilitate EDV's transactions have primarily been obtained through borrowings from the Company. Summary unaudited financial information for EDV is as follows:
DECEMBER 31, ----------------------- 1996 1995 ---------- ----------- (IN THOUSANDS) BALANCE SHEETS Notes receivable from developers, interest at 10% to 12% $ 39,000 $ 13,000 Other assets 2,500 800 ------- ------- Total assets $ 41,500 $ 13,800 ====== ====== Notes payable to Excel Realty Trust, Inc. $ 39,800 $ 12,600 Other liabilities 1,500 1,000 ------- ------ Total liabilities 41,300 13,600 Total stockholders' equity 200 200 -------- -------- Total liabilities and stockholders' equity $ 41,500 $ 13,800 ====== ======
TWELVE MONTH PERIOD ENDED DECEMBER 31, -------------------------- 1996 1995 ---------- ----------- (IN THOUSANDS) STATEMENTS OF INCOME Total revenues $ 6,500 $ 2,900 Interest expense to Excel Realty Trust, Inc. (2,500) (1,700) Development and other fees paid to Excel Realty Trust, Inc. (2,400) (350) Other expenses (1,700) (600) ------ ------ Net income (loss) $ (100) $ 250 ======= ======
In December 1996, EDV obtained a $8,500,000 line of credit from a financial institution at an interest rate of 8.92%. There is $0 outstanding at December 31, 1996. The Company is committed to advance EDV up to $1,000,000 in additional advances in conjunction with existing credit agreements with EDV at December 31, 1996. The Company's investment in EDV at December 31, 1996 and 1995 was $191,000 and $950, respectively, which is included in other assets on the Consolidated Balance Sheets. F-12 35 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 5. MORTGAGES PAYABLE: The Company had the following mortgages payable at December 31, 1996 and 1995:
1996 1995 ------------- ------------- (IN THOUSANDS) Mortgage notes at 6.86% to 10%, payable in installments through 2018 (monthly payments at December 31, 1996 of $1,153), collateralized by real estate and an assignment of rents: Insurance companies $ 87,530 $ 67,356 Banks 41,656 23,602 Bonds 28,530 29,907 Other - 2,948 ---------- -------- Total mortgages payable $157,716 $123,813 ======= =======
The principal payments required to be made on mortgages payable are as follows (in thousands):
YEAR ------ 1997 $ 3,824 1998 5,137 1999 13,036 2000 11,036 2001 31,071 Thereafter 93,612 -------- $157,716 ========
Mortgages of $58,202,000 are fully amortizing with the final monthly payments to be made between the years 2004 and 2018. F-13 36 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 6. NOTES PAYABLE: The Company had the following notes payable at December 31, 1996 and 1995:
1996 1995 --------- --------- (IN THOUSANDS) Unsecured credit agreement of $150,000, interest at LIBOR + 1.75% (7.3% at December 31, 1996) $ 67,000 $ 82,800 Term loan payable to a financial institution, interest at LIBOR + 1.75%, secured by certain notes receivable 10,000 - Line of credit of $4,000 payable to a financial institution, interest at the lender's base rate plus 1.25%, secured by certain notes receivable (8.75% at December 31, 1996) 3,923 3,184 Other 109 1,000 -------- --------- Total notes payable $ 81,032 $ 86,984 ======= =======
In December 1995, the Company received a two-year revolving credit facility of up to $150,000,000 in unsecured advances through December 1997, from a group of six banks. The actual amount available to the Company (approximately $119,000,000 at December 31, 1996 excluding amounts borrowed) 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. In 1996, the Company purchased an interest rate protection agreement which limits $50,000,000 of the outstanding balance on the unsecured credit agreement to 10%. The Company also has a $4,000,000 line of credit with a financial institution. In February 1997, the outstanding amounts under both credit facilities as well as a $10,000,000 term loan, were repaid with proceeds from a stock offering (see Note 7). In 1995, the Company wrote-off loan costs related to a securitized mortgage financing ("REMIC") and a former bank line and wrote down the value of a former interest rate protection agreement. Total amounts written-off in 1995 amounted to $4,453,000 which was charged to interest expense. F-14 37 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 7. CAPITAL STOCK: EQUITY OFFERINGS 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 1996 and 1995, the Company issued from the shelf, the following common stock offerings:
NUMBER OF SHARE NET DATE SHARES PRICE PROCEEDS ---- ------------ ------- --------- May 1995 2,140,000 $20.125 $40,500,000 June 1996 1,725,000 $20.625 $33,819,000 December 1996 2,990,000 $22.875 $65,645,000
In 1997, the Company also issued 4,600,000 shares of 8 1/2% Series A Cumulative Convertible Preferred Stock at $25.00 per share (the "Preferred Shares"). The Preferred Shares are entitled to an annual distribution of $2.125 per share and carry an eight percent conversion premium. Net proceeds of approximately $111,550,000 were used to repay the Company's revolving line of credit and other debt (see Note 6) and for general corporate purposes. DISTRIBUTIONS In 1996, distributions of $0.445, $0.445, $0.46 and $0.46 were declared for each of the four quarters, respectively. 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. Distributions of $0.415, $0.43, $0.43 and $0.43 per share were declared for the four quarters in 1994, respectively. For the years ended December 31 1996, 1995 and 1994, approximately 9%, 28% and 14%, respectively, of the distributions received by shareholders were considered to be a return of capital for tax purposes. 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 which was amended in 1996. In May 1994, the Company adopted the Directors 1994 Stock Option Plan (the "1994 Stock Plan") for directors options which was also amended in 1996. 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 1,450,000 shares and the aggregate number of shares issuable upon exercise of options under the 1994 Stock Plan may not exceed 240,000 shares. F-15 38 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 7. CAPITAL STOCK, CONTINUED: Stock option and warrant activity is summarized below:
WEIGHTED AVERAGE OPTIONS/ EXERCISE PRICE WARRANTS PER SHARE -------- --------- Outstanding at January 1, 1994 591,919 $19.30 Granted - 1994 14,000 $20.13 Exercised - 1994 (3,332) $13.92 Granted - 1995 148,250 $18.92 Exercised or expired - 1995 (106,453) $17.24 Granted - 1996 525,900 $21.96 Exercised - 1996 (31,332) $18.05 ----------- -------- Outstanding December 31, 1996 1,138,952 $20.73 ========= ========
The options and warrants expire at various dates through May 2006. Of the options and warrants, 958,314 were issued to officers, directors or affiliates of the Company. At December 31, 1996, options for 485,850 and 191,000 shares were available for granting under the 1993 Stock Plan and 1994 Stock Plan, respectively. Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS No. 123") is effective for all companies in 1996. FAS No. 123 requires either the recording or disclosure of compensation cost for stock-based employee compensation plans at fair value. The Company has adopted the disclosure-only provisions of FAS No. 123. Accordingly, no compensation costs has been recognized in 1996. Had compensation cost for the Company's two stock option plans been recognized based on the fair value at the grant date for awards consistent with the provisions of FAS No. 123, the Company's net income in 1996 would have been reduced by $576,000, from $23,796,000 ($1.62 per share) to $23,220,000 ($1.60 per share). In 1995, net income would have been reduced by $340,000, from $18,192,000 ($1.51 per share) to $17,852,000 ($1.48 per share) and in 1994, net income would have been reduced by $242,000, from $13,796,000 ($1.27 per share) to $13,554,000 ($1.25 per share). For purposes of calculating compensation cost, 213,000 options granted in 1996 were included in 1995 compensation cost and 131,250 options granted in 1995 were included in 1994 compensation cost. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 1996: dividend yield of 8.03%; expected volatility of 18.95%; risk-free interest rate of 5.9% to 6.9%; and expected lives of 4 to 8 years. F-16 39 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 7. CAPITAL STOCK, CONTINUED: 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. 8. 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, 1996 and 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 consolidated balance sheets at December 31, 1996 and 1995 approximates the fair values for cash, accounts receivable and payable, notes receivable and variable-rate debt and that the market value of its real estate held for sale exceeds the carrying value. The Company estimates that the fair values of its fixed-rate mortgage debt at December 31, 1996 and 1995 is approximately $155,000,000 and $107,000,000, respectively compared to carrying values of $153,000,000 and $116,000,000 on the Company's books. In 1996, the Company's largest and second largest tenant's base rents each accounted for approximately 10% of the Company's total revenues. The Company's next three largest tenants account for approximately 13% in total of the Company's revenues. At December 31, 1996, the Company owned 112 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 41% of the Company's scheduled annual base rents are derived from these four states. 9. STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE (IN THOUSANDS): The amounts paid for interest during the years ended December 31, 1996, 1995 and 1994 were $18,116, $16,507 and $13,236, respectively. In 1996, the Company exchanged $2,947 in common stock to repay mortgage debt. The amount paid for real estate acquired without the use of cash in 1996, 1995, and 1994 are summarized below:
1996 1995 1994 -------- --------- --------- Mortgage notes payable assumed $ 43,673 $ 22,888 $ 24,106 Common stock issued 1,684 1,213 6,626 Other assets received and payables assumed (284) (104) 154 ------- ------- ------- Net real estate acquired without cash $ 45,073 $23,997 $ 30,886 ====== ====== ======
F-17 40 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 10. 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 generally 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 at December 31, 1996 and subject to noncancelable operating leases is as follows (in thousands):
YEAR ----- 1997 $ 47,854 1998 45,406 1999 41,896 2000 39,148 2001 36,070 Thereafter 288,214
11. RETIREMENT PLAN: The Company has a 401(k) retirement plan (the "401(k) Plan") covering most of the officers and employees of the Company. The 401(k) Plan permits participants to contribute, until termination of employment with the Company, up to a maximum of 15% of their compensation to the 401(k) Plan. In addition, contributions of participants are matched by the Company in an amount equal to 50% of the participant's contribution in Company stock (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, 1996, 1995 and 1994, the Company incurred costs of $77,000, $46,000 and $32,000, respectively, in connection with the 401(k) Plan. 12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED): Summarized quarterly financial data for 1996 and 1995 is as follows (in thousands except per share amounts):
TOTAL NET INCOME REVENUES NET INCOME PER SHARE -------- ---------- --------- 1995: First quarter $ 13,889 $ 3,917 $ 0.36 Second quarter 13,755 3,693 0.33 Third quarter 15,359 5,534 0.43 Fourth quarter 16,367 5,048 0.39 1996: First quarter $ 15,122 $ 5,858 $ 0.44 Second quarter 15,075 4,094 0.31 Third quarter 15,906 6,899 0.45 Fourth quarter 17,032 6,945 0.42
F-18 41 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (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, 1996 $ 726 $ 1,008 $ 126 $ 1,608 ==== ====== ==== ====== Year ended December 31, 1995 $ 318 $ 445 $ 37 $ 726 ==== ====== ==== ====== Year ended December 31, 1994 $ 280 $ 67 $ 29 $ 318 ==== ======= ==== ======
ADDITIONS --------- NETTED BALANCE AT AGAINST BALANCE AT BEGINNING INTEREST END OF DESCRIPTION OF YEAR INCOME DEDUCTIONS YEAR ----------- ------------ ------ ---------- ---- Allowance against interest receivable: Year ended December 31, 1996 $ - $ 601 $ - $ 601 ======== ====== ======== ====== Year ended December 31, 1995 $ - $ - $ - $ - ======== ======== ======== ======== Year ended December 31, 1994 $ - $ - $ - $ - ======== ======== ======== ========
F-19 42 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (IN THOUSANDS)
NET 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] ----------- ------------- ---- ------------ ---- ------------- ---- ------------- ------ Sony Building Burbank, CA $ - $ 2,610 $ 2,610 $ - $ - $ 2,610 $ 2,610 $ 5,220 Genetrix Building Scottsdale, AZ - 666 1,434 - - 666 1,434 2,100 Shopping Center Mesa, AZ - 2,394 3,132 (14) 234 2,380 3,366 5,746 Office Building Stillwater, MN 390 175 525 - 35 175 560 735 Kinder Care #1182 Kalamazoo, MI - 170 397 - - 170 397 567 Shopping Center Phoenix, AZ - 7,312 8,995 - 986 7,312 9,981 17,293 Shopping Center Norton, VA - 1,559 7,711 316 164 1,875 7,875 9,750 Shopping Center Perry, GA 7,335 2,025 8,075 (9) 470 2,016 8,545 10,561 Shopping Center Leesburg, FL - 1,436 4,584 30 704 1,466 5,288 6,754 Shopping Center (50%) Knoxville, TN 3,175 527 3,817 - 11 527 3,828 4,355 Wal-Mart Building Berlin, WI 1,712 680 1,586 - - 680 1,586 2,266 Wal-Mart Building Decatur, IN 2,547 1,011 2,359 - - 1,011 2,359 3,370 Wal-Mart Building Big Rapids, MI 2,486 1,052 2,455 (10) - 1,042 2,455 3,497
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Sony Building Burbank, CA 470 1988 1989-90 40 years Genetrix Building Scottsdale, AZ 217 1971 1990 40 years Shopping Center Mesa, AZ 577 1970 1990 40 years Office Building Stillwater, MN 74 1985 1991 40 years Kinder Care #1182 Kalamazoo, MI 58 1990 1991 40 years Shopping Center Phoenix, AZ 1,554 1988 1991-92 40 years Shopping Center Norton, VA 819 1989 1992 40 years Shopping Center Perry, GA 864 1992 1992 40 years Shopping Center Leesburg, FL 683 1986 1992 40 years Shopping Center (50%) Knoxville, TN 389 1990 1992 40 years Wal-Mart Building Berlin, WI 160 1992 1992 40 years Wal-Mart Building Decatur, IN 238 1992 1992 40 years Wal-Mart Building Big Rapids, MI 248 1992 1992 40 years
F-20 43 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (IN THOUSANDS)
NET 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 Wyomissing, PA 5,004 2,118 4,942 - - 2,118 4,942 7,060 Wal-Mart Building Brighton, CO 2,526 1,069 2,494 - - 1,069 2,494 3,563 Wal-Mart Bldg. and outparcels Temple, TX 4,637 1,963 4,580 35 - 1,998 4,580 6,578 Wal-Mart Building Wabash, IN 2,758 1,167 2,724 - - 1,167 2,724 3,891 Mtn. Jacks #210303 Dearborn Heights, MI - 378 1,134 73 135 451 1,269 1,720 Autoworks #125 Hastings, NE - 105 332 24 45 129 377 506 Autoworks #138 Grand Island, NE - 189 421 24 44 213 465 678 Kinder Care #125 Indianapolis, IN - 63 146 9 18 72 164 236 Kinder Care #126 Indianapolis, IN - 63 146 9 18 72 164 236 Kinder Care #577 High Ridge, MO - 60 238 13 26 73 264 337 Kinder Care #162 Fenton, MO - 59 235 13 25 72 260 332 Kinder Care #128 Indianapolis, IN - 90 211 14 25 104 236 340 Kinder Care #134 Indianapolis, IN - 90 211 14 25 104 236 340
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Wal-Mart Building 499 1992 1992 40 years Wyomissing, PA Wal-Mart Building 252 1992 1992 40 years Brighton, CO Wal-Mart Bldg. and 463 1992 1992 40 years outparcels Temple, TX Wal-Mart Building 275 1992 1992 40 years Wabash, IN Mtn. Jacks #210303 116 1980 1992 40 years Dearborn Heights, MI Autoworks #125 34 1988 1992 40 years Hastings, NE Autoworks #138 43 1988 1992 40 years Grand Island, NE Kinder Care #125 15 1975 1992 40 years Indianapolis, IN Kinder Care #126 15 1976 1992 40 years Indianapolis, IN Kinder Care #577 24 1980 1992 40 years High Ridge, MO Kinder Care #162 24 1977 1992 40 years Fenton, MO Kinder Care #128 22 1976 1992 40 years Indianapolis, IN Kinder Care #134 22 1976 1992 40 years Indianapolis, IN
F-21 44 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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 #132 Ft. Wayne, IN - 63 146 9 18 72 164 236 DHG Houston, TX - 74 110 - - 74 110 184 DHG Houston, TX - 103 155 - - 103 155 258 Egghead Software Maplewood, MN - 172 258 - - 172 258 430 United Artists Pueblo, CO - 247 576 37 70 284 646 930 Lowes Building Terre Haute, IN 3,818 1,325 3,446 530 - 1,855 3,446 5,301 Wal-Mart Building Orland Hills, IL 6,471 2,631 6,140 - - 2,631 6,140 8,771 Kmart Building Durango, CO - 698 1,297 - - 698 1,297 1,995 Kmart Building Albany, GA - 1,033 1,918 - - 1,033 1,918 2,951 Kmart Building DeSoto, TX - 951 1,767 - 152 951 1,919 2,870 Kmart Building Omaha, NE - 924 1,715 - - 924 1,715 2,639 Kmart Building Pine Bluff, AR - 892 1,656 - - 892 1,656 2,548 Kmart Building Somerville, NJ - 836 1,553 - 4 836 1,557 2,393
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Kinder Care #132 Ft. Wayne, IN 15 1976 1992 40 years DHG Houston, TX 11 1985 1992 40 years DHG Houston, TX 16 1985 1992 40 years Egghead Software Maplewood, MN 26 1987 1992 40 years United Artists Pueblo, CO 59 1977 1992 40 years Lowes Building Terre Haute, IN 305 1993 1992/1993 40 years Wal-Mart Building Orland Hills, IL 582 1992 1993 40 years Kmart Building Durango, CO 109 1982 1993 40 years Kmart Building Albany, GA 162 1981 1993 40 years Kmart Building DeSoto, TX 188 1980 1993 40 years Kmart Building Omaha, NE 145 1981 1993 40 years Kmart Building Pine Bluff, AR 140 1981 1993 40 years Kmart Building Somerville, NJ 131 1982 1993 40 years
F-22 45 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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 Springfield, MO - 1,293 2,401 - - 1,293 2,401 3,694 Kmart Building St. Charles, MO - 936 1,738 (296) (366) 640 1,372 2,012 Kmart Building Waverly, OH - 414 768 - 8 414 776 1,190 Kash N'Karry Building Brandon, FL - 698 1,295 - - 698 1,295 1,993 Kroger Building Clearfield, PA - 731 1,357 - - 731 1,357 2,088 Kroger Building East Albany, GA - 639 1,186 - - 639 1,186 1,825 Kroger Building James Island, SC - 722 1,340 - - 722 1,340 2,062 Safeway Building Missouri City, TX - 790 1,466 - - 790 1,466 2,256 Kroger Building Muscle Shoals, AL - 817 1,517 - - 817 1,517 2,334 Kroger Building Ottawa, IL - 902 1,674 - - 902 1,674 2,576 Kroger Building Scottsboro, AL - 703 1,305 - - 703 1,305 2,008 Payless Drug Building Yuma, AZ - 389 723 - - 389 723 1,112 Lucky Building Phoenix, AZ - 471 875 - - 471 875 1,346
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Kmart Building Springfield, MO 203 1982 1993 40 years Kmart Building St. Charles, MO 212 1981 1993 40 years Kmart Building Waverly, OH 68 1981 1993 40 years Kash N'Karry Building Brandon, FL 109 1982 1993 40 years Kroger Building Clearfield, PA 114 1982 1993 40 years Kroger Building East Albany, GA 100 1982 1993 40 years Kroger Building James Island, SC 113 1982 1993 40 years Safeway Building Missouri City, TX 124 1982 1993 40 years Kroger Building Muscle Shoals, AL 128 1982 1993 40 years Kroger Building Ottawa, IL 141 1982 1993 40 years Kroger Building Scottsboro, AL 110 1981 1993 40 years Payless Drug Building Yuma, AZ 61 1980 1993 40 years Lucky Building Phoenix, AZ 65 1981 1993 40 years
F-23 46 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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 Coralville, IA - 558 1,037 - - 558 1,037 1,595 Lucky Building Decatur, IL - 588 1,093 - - 588 1,093 1,681 Lucky Building Dubuque, IA - 744 1,382 - - 744 1,382 2,126 Lucky Building Hobart, IN - 617 1,145 - - 617 1,145 1,762 Lucky Building Mesa, AZ - 435 809 - - 435 809 1,244 Lucky Building Michigan City, IN - 511 948 - - 511 948 1,459 Lucky Building Moline, IL - 735 1,365 - - 735 1,365 2,100 Lucky Building New Lenox, IL - 908 1,686 - - 908 1,686 2,594 Lucky Building Peoria, IL - 673 1,249 - - 673 1,249 1,922 Kroger Building Pittsburgh, PA - 862 1,601 - - 862 1,601 2,463 Lucky Building Springfield, IL - 582 1,081 - - 582 1,081 1,663 Lucky Building Sterling, IL - 744 1,382 - - 744 1,382 2,126 Lucky Building Tucson, AZ - 364 676 - - 364 676 1,040
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Coralville, IA 87 1981 1993 40 years Lucky Building Decatur, IL 92 1983 1993 40 years Lucky Building Dubuque, IA 117 1980 1993 40 years Lucky Building Hobart, IN 97 1983 1993 40 years Lucky Building Mesa, AZ 68 1982 1993 40 years Lucky Building Michigan City, IN 80 1983 1993 40 years Lucky Building Moline, IL 115 1981 1993 40 years Lucky Building New Lenox, IL 142 1982 1993 40 years Lucky Building Peoria, IL 105 1983 1993 40 years Kroger Building Pittsburgh, PA 135 1982 1993 40 years Lucky Building Springfield, IL 91 1982 1993 40 years Lucky Building Sterling, IL 117 1980 1993 40 years Lucky Building Tucson, AZ 57 1983 1993 40 years
F-24 47 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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 Waterloo, IL - 670 1,243 - - 670 1,243 1,913 Safeway Building Muskogee, OK - 906 1,683 - - 906 1,683 2,589 Safeway Building Sherwood, AR - 778 1,445 - - 778 1,445 2,223 Safeway Building West Monroe, LA - 739 1,373 - - 739 1,373 2,112 Rite Aid Building East Albany, GA - 176 328 - - 176 328 504 Super X Building Muscle Shoals, AL - 195 363 - - 195 363 558 Shopping Center Elizabethtown, KY 5,081 1,888 4,981 - 23 1,888 5,004 6,892 Shopping Center Glasgow, KY 4,643 629 5,555 - 24 629 5,579 6,208 Shopping Center Deland, FL 8,523 3,469 8,125 64 141 3,533 8,266 11,799 Shopping Center Irving, TX 3,109 1,655 3,074 - 6 1,655 3,080 4,735 Shopping Center Ashland, OH - 2,689 4,994 35 163 2,724 5,157 7,881 Shopping Center Covington, GA - 3,188 5,921 - 90 3,188 6,011 9,199 Kmart Building Atlantic, IA - 564 1,048 - - 564 1,048 1,612
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Kroeger Building 105 1982 1993 40 years Waterloo, IL Safeway Building Muskogee, OK 142 1981 1993 40 years Safeway Building Sherwood, AR 122 1981 1993 40 years Safeway Building West Monroe, LA 116 1981 1993 40 years Rite Aid Building East Albany, GA 28 1982 1993 40 years Super X Building Muscle Shoals, AL 31 1982 1993 40 years Shopping Center Elizabethtown, KY 493 1992 1993 40 years Shopping Center Glasgow, KY 538 1992 1993 40 years Shopping Center Deland, FL 731 1993 1993 40 years Shopping Center Irving, TX 254 1987 1993 40 years Shopping Center Ashland, OH 448 1990 1993 40 years Shopping Center Covington, GA 470 1991 1993 40 years Kmart Building Atlantic, IA 78 1980 1994 40 years
F-25 48 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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] ----------- ------------- ---- ------------ ---- ------------- ---- ------------- ------ Kash N' Karry Building Homosassa Springs, FL - 378 702 - - 378 702 1,080 Shopping Center Brooksville, FL - 1,779 3,305 154 394 1,933 3,699 5,632 Shopping Center Celina, OH - 1,552 2,882 155 292 1,707 3,174 4,881 Shopping Center Albemarle, NC 2,556 984 1,827 125 249 1,109 2,076 3,185 Shopping Center Marion, IN - 656 1,219 61 115 717 1,334 2,051 Shopping Center Warsaw, IN - 568 1,056 110 204 678 1,260 1,938 Shopping Center Terre Haute, IN 3,151 1,618 3,013 181 337 1,799 3,350 5,149 Office Building San Diego, CA 1,863 753 1,762 - 15 753 1,777 2,530 Shopping Center Hilton Head, SC 4,344 2,431 4,515 - 14 2,431 4,529 6,960 Shopping Center Lake Wales, FL - 2,028 3,767 - - 2,028 3,767 5,795 Shopping Center Versailles, KY 8,048 3,882 7,209 - 85 3,882 7,294 11,176 Shopping Center Mesa, AZ - 1,300 2,415 - 268 1,300 2,683 3,983 Shopping Center London, KY 5,310 3,351 6,223 - 18 3,351 6,241 9,592
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Kash N' Karry Building Homosassa Springs, FL 52 1982 1994 40 years Shopping Center Brooksville, FL 277 1987 1994 40 years Shopping Center Celina, OH 221 1990 1994 40 years Shopping Center Albemarle, NC 144 1988 1994 40 years Shopping Center Marion, IN 92 1989 1994 40 years Shopping Center Warsaw, IN 84 1989 1994 40 years Shopping Center Terre Haute, IN 233 1989 1994 40 years Office Building San Diego, CA 132 1988 1994 40 years Shopping Center Hilton Head, SC 320 1994 1994 40 years Shopping Center Lake Wales, FL 247 1994 1994 40 years Shopping Center Versailles, KY 498 1994 1994 40 years Shopping Center Mesa, AZ 256 1981 1994 40 years Shopping Center London, KY 422 1994 1994 40 years
F-26 49 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET 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] ----------- ------------- ---- ------------ ---- ------------- ---- ------------- ------ Q-Club Building Scottsdale, AZ - 1,822 3,385 - - 1,822 3,385 5,207 Q-Club Building Phoenix, AZ - 1,813 3,366 (137) - 1,676 3,366 5,042 Lowe's Building Middletown, OH 4,151 2,187 4,061 - - 2,187 4,061 6,248 Shopping Center Kannapolis, NC 2,209 1,035 1,924 69 127 1,104 2,051 3,155 Shopping Center Asheboro, NC 4,011 2,109 3,917 139 256 2,248 4,173 6,421 Shopping Center Kernersville, NC 2,594 1,096 2,036 - - 1,096 2,036 3,132 Shopping Center Roxboro, NC - 1,842 3,421 - 5 1,842 3,426 5,268 Shopping Center Siler City, NC 5,375 2,330 4,328 - - 2,330 4,328 6,658 Shopping Center Wadesboro, NC - 2,264 4,205 - - 2,264 4,205 6,469 Shopping Center Jonesville, NC 1,887 824 1,531 - 1 824 1,532 2,356 Shopping Center and outparcels Kinston, NC - 2,871 5,331 320 - 3,191 5,331 8,522 Shopping Center Hilton Head, SC 2,500 1,157 2,149 - - 1,157 2,149 3,306 Shopping Center Hendersonville, TN 2,483 1,325 2,461 - 21 1,325 2,482 3,807
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Q-Club Building Scottsdale, AZ 202 1994 1994 40 years Q-Club Building Phoenix, AZ 220 1994 1994 40 years Lowe's Building Middletown, OH 292 1993 1994 40 years Shopping Center Kannapolis, NC 104 1992 1994 40 years Shopping Center Asheboro, NC 174 1988 1995 40 years Shopping Center Kernersville, NC 78 1988 1995 40 years Shopping Center Roxboro, NC 132 1989 1995 40 years Shopping Center Siler City, NC 167 1988 1995 40 years Shopping Center Wadesboro, NC 145 1988 1995 40 years Shopping Center Jonesville, NC 59 1988 1995 40 years Shopping Center and outparcels Kinston, NC 195 1991 1995 40 years Shopping Center Hilton Head, SC 65 1989 1995 40 years Shopping Center Hendersonville, TN 70 1989 1995 40 years
F-27 50 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS)
NET COST CAPITALIZED (SOLD) SUBSEQUENT TO GROSS AMOUNT AT WHICH INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- ------------------- ---------------------------- BUILIDING AND BUILIDING AND BUILIDING AND TOTAL DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a] ----------- ------------- ---- ------------ ---- ------------- ---- ------------- ------ Shopping Center Manchester, TN - 807 1,499 273 507 1,080 2,006 3,086 Shopping Center Williamsburg, NC 6,094 2,990 5,553 - 13 2,990 5,566 8,556 Shopping Center Atlanta, GA - 954 1,771 - - 954 1,771 2,725 Shopping Center Oxford, NC 5,784 2,863 5,318 - 2 2,863 5,320 8,183 Shopping Center and outparcels Statesville, NC 9,865 5,821 10,810 1,325 899 7,146 11,709 18,855 Shopping Center Statesboro, GA 3,361 1,694 3,145 - - 1,694 3,145 4,839 Shopping Mall West Valley, UT 17,915 12,933 24,018 - - 12,933 24,018 36,951 Shopping Center and outparcels Tucson, AZ - 5,996 9,324 - - 5,996 9,324 15,320 --------- --------- --------- --------- --------- --------- ---------- --------- $ 157,716 $ 152,365 $ 302,911 $ 3,696 $ 7,120 $ 156,060 $ 310,031 $ 466,091 ======== ======== ======== ======= ======= ======== ======== ========
LIFE ON WHICH DEPRECIATION IN LATEST ACCUMULATED INCOME DEPRECIATION DATE OF DATE STATEMENTS [b] CONSTRUCTION ACQUIRED IS COMPUTED* ------------ ------------ -------- ----------- Shopping Center Manchester, TN 45 1990 1995 40 years Shopping Center Williamsburg, NC 134 1991 1996 40 years Shopping Center Atlanta, GA 39 1995 1996 40 years Shopping Center Oxford, NC 117 1991 1996 40 years Shopping Center and outparcels Statesville, NC 238 1991 1996 40 years Shopping Center Statesboro, GA 36 1994 1996 40 years Shopping Mall West Valley, UT 25 1970 1996 40 years Shopping Center and outparcels Tucson, AZ 10 1995/96 1996 40 years ----------- $ 21,976 ===========
Listing does not include one real estate property held for sale in Scottsdale, AZ. The net carrying cost of this property is $13,387. * Tenant improvements and other costs capitalized subsequent to acquisition are depreciated over 2 - 40 years. F-28 51 EXCEL REALTY TRUST, INC. AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1996 (IN THOUSANDS) [a] Reconciliation of total real estate carrying value for the past three years is as follows:
1996 1995 1994 ---- ---- ---- Balance at beginning of year $ 386,925 $ 359,459 $ 277,412 Acquisitions 93,190 47,583 84,926 Improvements and other additions 6,206 7,473 1,554 Cost of property sold (5,999) (27,590) (4,433) Impairment of real estate (844) - - ----------- -------------- -------------- Balance at end of year $ 479,478 $ 386,925 $ 359,459 ======== ======== ======== Total cost for federal income tax purposes at the end of each year $ 476,266 $ 386,062 $ 276,642 ======== ======== ========
[b] Reconciliation of accumulated depreciation for the past three years is as follows:
1996 1995 1994 ---- ---- ---- Balance at beginning of year $ 14,909 $ 10,228 $ 4,270 Depreciation expense 7,354 6,845 6,038 Deletions - property sold (287) (1,918) (80) Reclass to real estate held for sale - (246) - ---------- --------- --------- Balance at end of year $ 21,976 $ 14,909 $ 10,228 ======= ======= =======
F-29 EX-11.1 2 EXHIBIT 11.1 1 Exhibit 11.1 COMPUTATION OF PER COMMON SHARE EARNINGS
1996 1995 1994 ------------ ------------ ------------ Earnings Per Share - Primary: - ----------------------------- Weighted average of common shares outstanding: 14,311,752 12,031,043 10,876,620 Common share equivalents; options and warrants: 51,765 53,262 6,108 Common share equivalents; Excel Realty Partners, L.P. units: 175,482 - - ---------- ---------- ---------- Weighted average of common shares and common share equivalents outstanding: 14,538,999 12,084,305 10,882,728 ========== ========== ========== Net Income: $ 23,796,000 $ 18,192,000 $ 13,792,000 Adjustments to net income for common share equivalents: (285,000) - - ------------ ------------ ------------ Adjusted net income for earnings per share calculation: $ 23,511,000 $ 18,192,000 $ 13,792,000 ============ ============ ============ Earnings per share $ 1.62 $ 1.51 $ 1.27 ==== ==== ====
Note: The fully dilutive calculation for earnings per share is not significantly different from the primary calculation above. EX-27.1 3 EXHIBIT 27.1
5 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 5,038,000 0 7,741,000 (1,608,000) 0 0 479,478,000 (21,976,000) 558,628,000 0 238,748,000 0 0 324,411,000 (11,757,000) 558,628,000 0 63,135,000 0 37,562,000 1,777,000 1,008,000 19,450,000 23,796,000 0 23,796,000 0 0 0 23,796,000 1.62 1.59
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