UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): January 28,1999
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)
ONE PROGRESS PLAZA, SUITE 1500
ST. PETERSBURG, FLORIDA 33701 (727) 803-8200
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(Address of principal executive offices) (Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On or about January 25, 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
includes information previously disclosed in the Company's Form 10-K. and Form
10-Q's for the quarters ended March 31, 1998, June 30, 1998 and September 30,
1998. The following additional information is also included in the information
packet.
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
land acquisitions, 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: 296,700
% Occupied at September 30, 1998: 99%
Net Book Value at September 30, 1998: $36,144,000
*Estimated 1998 Annual Net Operating Income: $3,957,000
1997 Annual Net Operating Income: $3,636,000
Major Tenants: Florida Progress, NationsBank, Holland & Knight Law Firm, Merrill
Lynch, Raymond James & Associates, Carlton Fields Law Firm
& KPMG Peat Marwick (collectively occupy 70% of the building.)
CENTRAL STATION
Central Station is the first two floors of a Class A office building which also
contains 6 floors of parking.
Location: St. Petersburg, Florida
Year Built/Acquired: 1990/1997, Renovation completed June 1998
Rentable Square Feet: 133,279
% Occupied at September 30, 1998: 100%
Net Book Value at September 30, 1998: $8,548,000
*Estimated 1998 Annual Net Operating Income: $1,575,000
Sole Tenant: Florida Power Corporation occupies 100% of the building under a 15
year lease, which commenced June 1998.
Rent: Triple net rental rate beginning at $11.82 per rentable square foot per
year with 2.8% annual rent increases.
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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 September 30, 1998: 100%
Net Book Value at September 30, 1998: $8,696,000
*Estimated 1998 Annual Net Operating Income: $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 September 30, 1998: 100%
Net Book Value at September 30, 1998: $6,194,000
*Estimated 1998 Annual net Operating Income: $718,000
1997 Annual Net Operating Income: $696,000
Major Tenant: Raymond James & Associates occupies 86% of the building.
MCNULTY STATION
McNulty Station is a Class A office complete 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 September 30, 1998: 100%
Net Book Value at September 30, 1998: $7,292,000
*Estimated 1998 Annual Net Operating Income: $888,000
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 Fee: 79,525
% Occupied at September 30, 1998: 97%
Net Book Value at September 30, 1998: $9,811,000
*Estimated 1998 Annual Net Operating Income: $1,090,000
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.
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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 September 30, 1998: 100%
Net Book Value at September 30, 1998: $1,464,000
*Estimated 1998 Annual Net Operating Income: $469,000
1997 Annual Net Operating Income: $192,000
Sole Tenant: Andersen Consulting occupies 100% of the building
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 September 30, 1998: 100%
Net Book Value of land and buildings at September 30, 1998: $2,830,000
*Estimated 1998 Annual Net Operating Income: $451,000
CARILLON PARK
Carillon Park is one of the premier mixed-use parks on the west coast of
Florida. This 432-acre office and multi-family residential park is strategically
located in the heart of Tampa Bay, in the Gateway area of St. Petersburg. The
Park is convenient to Tampa, St Petersburg and Clearwater.
Land available for development: 73 acres of commercial zoned land entitled to
build up to 3,000,000 square feet and 50 acres of multi-family residential zoned
land entitled to build up to 1,169 apartment homes
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.
*Calculated by annualizing actual results through September 30,1998.
CASTILLE AT CARILLON
Castille at Carillon is Echelon's newest commercial office development.
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 will also be the future home of
Echelon's corporate headquarters.
Location: Carillon Park -- Tampa Bay, Florida
Estimated Completion: March 1999
Construction Costs as of September 30, 1998: $2,602,000
Rentable Square Feet: 103,900
Lease Rates: From $20.00 gross per rentable square foot
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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 will provide 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
Estimated Completion: December 1998
Construction Costs as of September 30, 1998: $5,027,000
Number of Parking Spaces: over 700
Rentable Square Feet: 9,000
Lease Rates: Retail rental space of 9,000 square feet, 100% pre-leased for
$17.50 per square foot with 2.5% annual rent increases. Parking space rental
rates from $55 to $65 per month.
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:
/bullet/ 275 units
/bullet/ 14 month construction cycle, leasing 25 units per month beginning in
the 9th month of construction
/bullet/ Target of 9-10% yield on cost, on a cash basis, assuming 75% debt on a
pro-forma basis
/bullet/ Monthly gross rents of $975 per unit
/bullet/ Stabilized occupancy at 93%
/bullet/ Annual operating expenses of $3,600 per unit
/bullet/ Net annual operating income of $2,000,000
/bullet/ Estimated capitalization rate range of 7 1/2% to 9% used to calculate
the value of a completed project
Echelon currently has a pipeline of 9 sites or target markets and the Company
expects to maintain an active pipeline of 10 to 20 sites in target markets.
Actual development will depend on real estate and capital market conditions.
Echelon's multi-family residential communities currently under construction or
development are:
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ECHELON AT BAY ISLE KEY
Echelon at Bay Isle Key is one of the most upscale apartment home
communities in the Gateway are of Tampa Bay, and is Echelon's first multi-
family community.
Community Description:
Echelon at Bay Isle Key features 369 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.
Estimated Completion: February, 1999
Apartment Homes: 369
Construction Status: Clubhouse and 10 to 14 total buildings complete as of
September 30, 1998
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 Tampa Bay. 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 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 home 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. Echelon at
The Reserve will be one of the premier apartment communities on Florida's west
coast.
Community Description: Echelon at The Reserve features 314 garden-style
apartment homes designed in a Mediterranean/Mission architectural theme. The
community will feature 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
Echelon Edge: Echelon at The Reserve is located within the Gateway Area of Tampa
Bay. Within a 2-mile radius of the community is more than 1.5 million square
feet of commercial office space with a projected employee base by the end of
1999 of over 10,000. The Gateway area is convenient to all major interstate
highways and within 10 minutes of the Tampa International Airport.
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
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.
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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 west of Interstate 285, Atlanta's adjoining
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 and spa, clubhouse with business
center and exercise facility.
Construction Start: November 1998
Apartment Homes: 256
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 early 1980's and
its superior in-fill location will help to satisfy a previously unmet demand for
apartment homes close to downtown.
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, strong regional mall and
outstanding school system.
Community Description: Echelon at Mission Ranch is a 295-unit community,
designed in Texas ranch style architecture. The community will include a
playground, car wash, laundry, fitness facility with aerobics room, resident
business center and a clubroom. Select apartments will offer direct access
garages, both attached and detached.
Construction Start: December 1998
Apartment Homes: 295
Echelon Edge: Echelon at Mission Ranch is a 23-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 of 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
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 at greater than 10% on an annualized basis.
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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 Echelons' financial assets as of September 30, 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 September 30, 1998 the Company has funded $20.9 million of these
commitments.
LEVERAGED LEASE PORTFOLIO
The Company's net investment in leveraged leases is comprised of the following
components:
BOOK VALUE
SEPTEMBER 30, 1998
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(in thousands)
Rental receivable $ 147,420
Residual value of leased assets 102,943
Less: Unearned income and deferred investment tax credits (61,458)
Delayed equity (16,370)
Deferred taxes arising from leveraged leases (154,422)
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Net investment in leveraged leases $ 18,113
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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 LEASE
The Company's direct finance and operating leases are as follows:
NET INVESTMENT
LESSEE LEASED AIRCRAFT SEPTEMBER 30, 1998
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(in thousands)
Continental Airlines 1973 DC10-30 $19,088
Southwest Airlines Company 1984-B737-300 17,245
Air Micronesia 1981 B727-200 3,270
(a subsidiary of Continental Airlines) -------
$39,603
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REAL ESTATE AND AIRCRAFT LOAN PORTFOLIO
The Company's real estate and aircraft loan portfolio is summarized as follows:
BOOK VALUE
SEPTEMBER 30, 1998
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(in thousands)
Marquardt Company $23,465
Vine Street Investors - Capital View 1 5,800
Vice Street Investors - Capital View II 5,000
Vine Street Associates - Town Square VI 4,500
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Real Estate Loans 38,765
American Fiance Group (aircraft) 288
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$39,053
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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: JANUARY 28, 1999
By: /s/ SUSAN G. JOHNSON
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Susan G. Johnson, Esquire
General Counsel and Senior Vice President
