UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO 001-12211
Date of report (Date of earliest event reported): JUNE 30, 1999
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ECHELON INTERNATIONAL CORPORATION
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(Exact name of Registrant as specified in its charter)
FLORIDA 59-2554218
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(State of incorporation) (I.R.S. Employer
Identification Number)
450 CARILLON PARKWAY, SUITE 200
ST. PETERSBURG, FLORIDA 33716 (727) 803-8200
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(Address of principal executive offices) (Registrant's telephone number)
<PAGE>
ITEM 5. OTHER EVENTS.
On or about June 30, 1999, Echelon International Corporation ("Echelon" or the
"Company") mailed an information packet to provide information about the Company
to the investment community. The content of the information packet is a printed
brochure which includes the following information.
COMMERCIAL DEVELOPMENT
During the next five years, Echelon plans to hold its core commercial properties
totaling approximately 1.2 million square feet. Echelon currently plans to
expand its commercial real estate portfolio by developing or acquiring 750,000
to 1,200,000 square feet of commercial office space. A substantial amount of
this space will be developed on Echelon's existing land inventory in the Tampa
Bay area of Florida, with the balance being developed or acquired, with initial
emphasis on the state of Florida and subsequently through acquisitions in target
markets in the southeast and southwest United States. Actual development will
depend on real estate and capital market conditions.
Echelon's significant commercial properties follow:
NATIONSBANK TOWER
NationsBank Tower is the newest Class A office building in the center of
downtown St. Petersburg. The copper roof atop its 26 elegant floors can be
seen from miles away.
Location: St. Petersburg, Florida
Year Built: 1990
Rentable Square Feet: 296,693
% Occupied at December 31, 1998: 100%
Net Book Value at December 31, 1998: $35,052,000
1998 Annual Net Operating Income: $3,915,000
1997 Annual Net Operating Income: $3,636,000
Major Tenants: Florida Progress, NationsBank, Holland & Knight (law firm),
Merrill Lynch et al, Raymond James & Associates, Carlton Fields (law firm) &
KPMG LLP (collectively occupy 71% of the building).
CENTRAL STATION
Central Station is the first two floors of a Class A office building and two
floors of approximately 380 parking spaces.
Location: St. Petersburg, Florida
Year Built/Acquired: 1990/1997, Build-out completed June 1998
Rentable Square Feet: 133,279 (excludes parking)
% Occupied at December 31, 1998: 100%
Net Book Value at December 31, 1998: $7,918,000
1998 Annual Net Operating Income: $1,013,000 (partial year)
(If annualized-$1,575,000)
Sole Tenant: Florida Power Corporation occupies 100% of the building under a
15 year lease, which commenced May 1998.
Rent: triple net rental rate beginning at $11.82 per rentable square foot
per year with 2.8% annual rent increases.
<PAGE>
BAYBORO STATION
Bayboro Station is a waterfront Class A office building that was previously a
power plant. The building was completely renovated in 1998.
Location: St. Petersburg, Florida
Year Acquired: 1984 / Renovation completed April 1998
Rentable Square Feet: 80,991
% Occupied at December 31, 1998: 100%
Net Book Value at December 31, 1998: $8,505,000
1998 Annual Net Operating Income: $539,000 (partial year) (If
annualized-$850,000)
Sole Tenant: Florida Power Corporation occupies 100% of the building under a 10
year lease, which commenced April 1998.
Rent: triple net rental rate beginning at $10.50 per rentable square foot per
year with 2.8% annual rent increases.
100 CARILLON
100 Carillon is a three story Class A office building located in Carillon Park.
Location: St. Petersburg, Florida
Year Built: 1987
Rentable Square Feet: 79,749
% Occupied at December 31, 1998: 100%
Net Book Value at December 31, 1998: $6,140,000
1998 Annual Net Operating Income: $712,000
1997 Annual Net Operating Income: $696,000
Major Tenant: Raymond James Financial, Inc. occupies 86% of the building.
MCNULTY STATION
McNulty Station is a Class A office complex comprised of five buildings ranging
from two to five stories all of which were part of a
historic renovation completed in 1985.
Location: St. Petersburg, Florida
Year Acquired: 1983 / Renovated 1985
Rentable Square Feet: 93,152
% Occupied at December 31, 1998: 99%
Net Book Value at December 31, 1998: $6,729,000
1998 Annual Net Operating Income: $976,000
1997 Annual Net Operating Income: $854,000
Major Tenant: Andersen Consulting occupies 81% of the buildings.
HIGHPOINT CENTER
Highpoint Center is a 15-story Class A office building ideally located two
blocks from the State Capitol building.
Location: Tallahassee, Florida
Year Built: 1990
Rentable Square Feet: 79,525
% Occupied at December 31, 1998: 97%
Net Book Value at December 31, 1998: $9,662,000
1998 Annual Net Operating Income: $1,105,000
1997 Annual Net Operating Income: $1,125,000
Major Tenants: Katz Kutter (law firm) and Huey Guilday (law firm) collectively
occupy 68% of the building.
<PAGE>
3RD & 3RD BUILDING
The 3rd & 3rd Building is a three-story office building located at the corner
of 3rd Avenue and 3rd Street in downtown St. Petersburg.
Location: St. Petersburg, Florida
Year Built/Acquired: 1984/1993/Renovated 1997
Rentable Square Feet: 32,607
% Occupied at December 31, 1998: 100%
Net Book Value at December 31, 1998: $1,826,000
1998 Annual Net Operating Income: $427,000
1997 Annual Net Operating Income: $192,000
Sole Tenant: Andersen Consulting occupies 100% of the building.
CARILLON PARK
Carillon Park is one of the premier mixed-use parks on the west coast of
Florida. This 432-gross acre office, retail and multi-family residential park is
strategically located in the heart of Tampa Bay, in the Gateway area of St.
Petersburg. Carillon Park is convenient to Tampa, St. Petersburg and Clearwater.
Carillon Park is home to many of Tampa Bay's largest and most prestigious
employers including Raymond James & Associates, Franklin Templeton, Aegon
Western Reserve, Allstate, Xerox, and many others.
Land available for development: 73 acres of commercial zoned land entitled to
build up to 3,000,000 square feet and 36 acres of multi-family residential zoned
land entitled to build up to 855 apartment homes.
THE HARBORAGE MARINA AT BAYBORO
The Harborage Marina at Bayboro is a full service marina offering 235 wet slips
and 425 high & dry slips, as well as marina repairs
and service, marine parts sales and a marine supply store.
Location: St. Petersburg, Florida
Year Acquired: 1984/wet slips constructed: 1986
% Occupied at December 31, 1998: 100%
Net Book Value of land and buildings at December 31, 1998: $2,863,000
1998 Annual Net Operating Income: $281,000
PROGRESS CENTER LOCATED WITHIN THE ECHELON BUSINESS & TECHNOLOGY PARK
Progress Center is an office/research facility located in Alachua/Gainesville,
Florida. Progress Center facility includes three buildings, each of which is
comprised of approximately 40% office space and 60% laboratory space.
Echelon owns approximately 140 developable acres, of a total of 200 acres of
land within the Echelon Business & Technology Park, for which all infrastructure
is in place.
Location: Alachua/Gainesville, Florida
Year Land & Facility Acquired: 1984
Rentable Square Feet of Facility: 102,386
Land Available for Development by Echelon: 140 acres
% of Facility Occupied at December 31, 1998: 93%
Net Book Value of Facility at December 31, 1998: $4,553,000
Net Book Value of Land at December 31, 1998: $792,000
1998 Net Operating Income Of Facility: $224,000
Major Tenants of Facility: Regeneration Technologies, CuraGen Corporation and
US Biomaterials collectively occupy 72% of the facility.
<PAGE>
THE NEW MCNULTY
The New McNulty is an eight-story parking garage containing more than 700
parking spaces and 9,000 square feet of ground floor retail space. This
building provides parking for the tenants of several of Echelon's downtown
St. Petersburg buildings. The brick facade and ground floor retail space
complement the existing McNulty Station. This exciting new development also
has potential for the construction of four additional floors of office space.
Location: St. Petersburg, Florida
Construction Completion: December 1998
Net Book Value at December 31, 1998: $8,959,000
Number of Parking Spaces: over 700
Rentable Square Feet: 9,000 (retail only)
Lease Rates: Retail rental space of 9,000 square feet, 100% leased for
$17.50 per rentable square foot with 2.5% annual rent increases. Parking
space rental rates from $55 to $65 per month.
CASTILLE AT CARILLON
Castille at Carillon, Echelon's newest commercial office development, is
strategically located in Tampa Bay's premier mixed-use office park, Carillon
Park. This state-of-the-art Class A office building embodies the elegance and
intimacy of European architecture. Castille at Carillon has leading edge office
space technology providing the latest "work smart" features, amenities and ample
covered parking. This new development is also the new home of Echelon's
corporate headquarters.
Location: Carillon Park - St. Petersburg, Florida
Estimated Completion: June 1999
Construction Costs as of December 31, 1998: $8,400,000
Rentable Square Feet: 103,900
Lease Rates: From $20.00 gross per rentable square foot
MULTI-FAMILY RESIDENTIAL DEVELOPMENT
Echelon considers its multi-family residential development as the primary driver
of the Company's growth over the next five years. The general parameters for a
typical Echelon multi-family development include the following assumptions:
o 275 units
o 14 month construction cycle,leasing 25 units per month beginning in the 9th
month of construction
o Target of 9-10% yield on cost, on a cash basis, assuming
75% debt on a pro-forma basis
o Monthly gross rents of $975 per unit
o Stabilized occupancy at 93%
o Annual operating expenses of $3,600 per unit
o Net annual operating income of $2,000,000
o Estimated capitalization rate range of 7 1/2% to 9% used to calculate the
value of a completed project
<PAGE>
As of March 31, 1999 the Company had eleven multi-family communities under
construction or development and three sites under contract. Echelon expects to
maintain an active pipeline of 10 to 20 sites in target markets. Echelon is
aggressively seeking joint venture partnerships, merchant build and presale
opportunities. Actual development will depend on real estate and capital market
conditions.
Echelon's multi-family residential communities currently in operation or under
construction or development are:
ECHELON AT BAY ISLE KEY
Echelon at Bay Isle Key is one of the most upscale apartment home communities in
the Gateway area of St. Petersburg, Florida, and is Echelon's first completed
multi-family community.
Community Description: Echelon at Bay Isle Key features 369 Coastal Savannah
styled 1, 2 and 3 bedroom garden-style apartment homes, with more than 10%
featuring direct access garages. Other amenities include state-of-the-art
business and conference center, pool and fitness facilities, tennis court,
jogging trail, and concierge services.
Completed: February 1999
Apartment Homes: 369
Percentage Leased at March 31, 1999: 93%
Construction Costs as of December 31, 1998: $22,205,000
Echelon Edge: Echelon at Bay Isle Key is ideally located at the geographic
crossroads for Tampa, St. Petersburg and Clearwater, known as the Gateway area
of St. Petersburg. This is the first multi-family construction in the Gateway
area since early 1994. The Tampa Bay area is one of the fastest growing markets
in the country and has been ranked 1st by Southern Business & Development in
corporate relocations, with Pinellas County receiving the majority of the new
business. The Gateway area is convenient to all major interstate highways and
within 10 minutes of the Tampa International Airport.
ECHELON AT THE RESERVE
Echelon at The Reserve is the most upscale apartment community in the Gateway
area. The community is located within Carillon Park at the intersection of
Interstate 275 and Ulmerton Road. Carillon Park is a premier 432 acre mixed-use
park that is home to many of Tampa Bay's largest companies.
Community Description: Echelon at the Reserve features 314 garden-style
apartment homes designed in a Mediterranean/Mission architectural theme. The
community features 1, 2 and 3 bedroom units with select apartments offering
private ground entrances, island kitchens and attached full size direct access
garages. Central amenities include a swimming pool and spa, business center,
exercise facility and concierge. Estimated Completion: End of 1999 Apartment
Homes: 314
Construction Status: Clubhouse and 5 of 22 buildings complete as of
March 31, 1999.
Construction Costs as of December 31, 1998: $14,737,000
Echelon Edge: Echelon at The Reserve is located within the Gateway Area of
St. Petersburg, Florida. The Gateway area is convenient to all major interstate
highways and within 10 minutes of the Tampa International Airport.
<PAGE>
ECHELON AT WOODLAND PARK
Echelon at Woodland Park is located in Tulsa, Oklahoma at the intersection
of 71st Street and US Highway 169. The 71st Street corridor is the primary
avenue of eastward expansion and is home to the newest and largest mall in
Tulsa.
Community Description: Echelon at Woodland Park is a 232 unit community
consisting of 2 and 3-story buildings that form three distinct courtyards.
Select apartments within the community will include either attached or detached
garages. Other amenities include a clubhouse, pool area, business center and
exercise facility.
Construction Start: September 1998
Apartment Homes: 232
Construction Costs as of December 31, 1998: $3,054,000.
Echelon Edge: Echelon at Woodland Park is part of a 59-acre mixed-use Planned
Unit Development, providing tenants with access to one of Tulsa's best school
districts as well as proximity to several new single family home developments.
The Planned Unit Development includes a 16-screen theater with Tulsa's first
IMAX theater, retail, restaurants and banking facilities. Other potential
adjacent developments include hotels, a convention center, office buildings,
additional retail and a new school.
ECHELON AT NORTHLAKE
Echelon at Northlake is located in the upscale, mature submarket of Atlanta,
Georgia known as Northlake. The community is just off LaVista Road in DeKalb
County and is a quarter mile inside Interstate 285, Atlanta's perimeter highway.
Community Description: Echelon at Northlake is an upscale community of 256
apartment homes in 8 buildings, designed with an American Colonial style
architecture, with select apartments offering direct access garages. Other
amenities include a resort style swimming pool, clubhouse with business center
and exercise facility.
Construction Start: November 1998
Apartment Homes: 256
Construction Costs as of December 31, 1998: $6,186,000.
Echelon Edge: Echelon at Northlake is an 8.56 acre site situated between
Northlake Mall and Northlake Parkway Office Park created through an assemblage
of 17 single family tracts of land. The Northlake area consists of 10.5 million
square feet of office space and over 3 million square feet of retail space,
including the 1 million square foot Northlake Mall. Echelon at Northlake is the
first multi-family construction in the Northlake area since the late 1980's and
its superior in-fill location will help to satisfy a previously unmet demand for
apartment homes inside the perimeter.
<PAGE>
ECHELON AT MISSION RANCH
Echelon at Mission Ranch is located in Mesquite, Texas on U.S. Highway 80.
Mesquite is a suburban community in the Dallas/Ft. Worth Metropolitan area.
Mesquite is known for its strong sense of community, regional mall and
outstanding school system.
Community Description: Echelon at Mission Ranch is a 295-unit community,
designed in Texas Hill Country style architecture. The community will include a
playground, car wash, laundry, fitness facility with aerobics room, resident
business center, pool and a clubroom. Select apartments will offer, both
attached and detached garages.
Construction Start: December 1998
Apartment Homes: 295
Construction Costs as of December 31, 1998: $2,425,000
Echelon Edge: Echelon at Mission Ranch is located on a 17-acre site.
Echelon controls the adjoining 6-acres to the north containing 21
single-family lots and an 8.1 acre commercial tract to the east. The
single-family neighborhood to the north has some of the highest incomes and home
values in the area. To the west is a large neighborhood shopping development,
and to the east is developable commercial land.
ECHELON AT MEMORIAL CREEK
Echelon at Memorial Creek is located in Tulsa, Oklahoma at the intersection of
the Creek Turnpike and South Memorial. The community is adjacent to new,
single-family homes and major retail developments.
Community Description: Echelon at Memorial Creek is an upscale community of 292
one, two and three bedroom apartment homes designed utilizing a "hill country"
style architecture. Most of the apartment homes will enjoy a nature view of
either trees, creek or pond. Other amenities include a clubhouse, resort-style
swimming pool, state of the art business and conference center and fitness
facilities. Select apartments offer direct access garages.
Construction Start: December 1998
Apartment Homes: 292
Construction Costs as of December 31, 1998: $2,754,000
Echelon Edge: Echelon at Memorial Creek is located along the primary artery for
southern expansion in Tulsa. This 292-unit community capitalizes on the views of
100-year old Pecan trees and is close to the extensively used regional trail
system. Echelon at Memorial Creek will be the premier apartment home community
in Tulsa with extraordinary amenities. Rent level increases in the Tulsa market
lead the nation by more than 10% on an annualized basis.
<PAGE>
ECHELON'S FINANCIAL ASSETS
Echelon owns and manages a portfolio of financial assets consisting primarily of
lease aircraft and collateralized financings of commercial real estate and
aircraft. Echelon is continuing to withdraw from the aircraft and real estate
lending business to focus on its core real estate operations.
The following summarizes Echelon's financial assets as of December 31, 1998.
AFFORDABLE HOUSING TAX CREDITS
During 1996 and 1997, Echelon signed commitments to purchase $25.8 million
of affordable housing tax credits. The expected weighted-average after-tax
internal rate of return on these investments is approximately 12%.
As of December 31, 1998, the Company has funded $22.9 million of these
commitments. The remaining $2.9 million of commitments will be funded by
December 31, 1999.
LEVERAGED LEASE PORTFOLIO
The Company's net investment in leveraged leases is comprised of the following
components:
BOOK VALUE
DECEMBER 31, 1998
(in thousands)
Rental receivable $ 146,680
Estimated residual value of leased assets 102,943
Less: Unearned income and deferred investment tax credits (60,528)
Delayed equity (16,779)
Deferred taxes arising from leveraged leases (152,833)
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Net investment in leveraged leases $ 19,483
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Upon lease maturity, Echelon will either sell or hold and release the underlying
aircraft or other asset, depending upon which option is determined to provide
the greatest risk-adjusted return.
DIRECT FINANCE AND OPERATING LEASES
The Company's direct finance and operating leases are as follows:
NET INVESTMENT
LESSEE LEASED AIRCRAFT DECEMBER 31, 1998
(in thousands)
Continental Airlines 1973 DC10-30 $17,668
Southwest Airlines Company 1984 B737-300 16,605
Air Micronesia 1981 B727-200 3,000
(a subsidiary of Continental Airlines) -------
$37,273
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<PAGE>
REAL ESTATE AND AIRCRAFT LOAN PORTFOLIO
The Company's real estate and aircraft loan portfolio is summarized as follows:
BOOK VALUE
DECEMBER 31, 1998
(in thousands)
Marquardt Company $ 23,465
Vine Street Investors - Capital View I 5,800
Vine Street Investors - Capital View II 5,000
Vine Street Associates - Town Square VI 4,500
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Total Real Estate Loans 38,765
American Finance Group (aircraft) 233
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$ 38,998
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Certain statements contained in this document regarding other than historical
facts are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and are intended to be covered by the
safe harbor created thereby. Such statements, including those concerning
Echelon's expected sources and uses of funds and capital expenditures and its
business strategy including its plans to gradually withdraw from the aircraft
and real estate lending business and focus on its core real estate operations,
involve risks and uncertainties.
Where the Company expresses an expectation or belief as to future events, such
expectation or belief is expressed in good faith and is believed to have a
reasonable basis. However, such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. Important factors that could cause actual strategies and the timing
and expected results thereof to differ materially
from such forward-looking statements ("cautionary statements") include, but are
not limited to those factors identified under "CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING STATEMENTS" in the Company's 1998 Annual Report. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.
All subsequent written and oral forward-looking statements attributable to the
Company or to persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements. The Company disclaims any intent or
obligation to update publicly any forward-looking statements set forth in this
press release, whether as a result of new information, future events or
otherwise.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ECHELON INTERNATIONAL CORPORATION
Date: July 1, 1999
By: /s/ SUSAN G, JOHNSON, ESQUIRE
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Susan G. Johnson, Esquire
General Counsel & Senior Vice President
