SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 1-12917
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WELLSFORD REAL PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Maryland 13-3926898
-------- ----------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
535 Madison Avenue, New York, NY 10022
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(Address of principal executive offices)
(Zip Code)
(212) 838-3400
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
The number of the Registrant's share of common stock outstanding was 8,297,281
as of October 31, 2000 (including 169,903 shares of class A-1 common stock).
-1-
<PAGE>
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TABLE OF CONTENTS
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Page
Number
------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000 (unaudited)
and December 31, 1999 .............................................3
Consolidated Statements of Income (unaudited) for the Three and Nine
Months Ended September 30, 2000 and 1999...........................4
Consolidated Statements of Cash Flows (unaudited) for the Nine
Months Ended September 30, 2000 and 1999...........................5
Notes to Consolidated Financial Statements (unaudited).............6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................19
Item 3. Quantitative and Qualitative Disclosures About Market Risk........27
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings.................................................28
Item 6. Exhibits and Reports on Form 8-K..................................28
Signatures..................................................................29
-2-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate assets, at cost:
Land ............................................................. $ 18,813,000 $ 18,813,000
Buildings and improvements ....................................... 118,300,929 116,605,231
------------- -------------
137,113,929 135,418,231
Less, accumulated depreciation ................................... (9,548,335) (6,584,328)
------------- -------------
127,565,594 128,833,903
Construction in progress ......................................... 36,633,468 30,747,867
------------- -------------
164,199,062 159,581,770
Notes receivable .................................................... 45,319,324 37,259,587
Investment in joint ventures ........................................ 119,406,028 114,390,298
------------- -------------
Total real estate assets ............................................ 328,924,414 311,231,655
Cash and cash equivalents ........................................... 22,692,286 34,739,866
Restricted cash ..................................................... 8,511,901 8,467,092
Prepaid and other assets ............................................ 11,123,430 11,892,713
------------- -------------
Total assets ........................................................ $ 371,252,031 $ 366,331,326
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable ........................................... $ 118,648,464 $ 119,314,929
Credit facility .................................................. -- --
Accrued expenses and other liabilities ........................... 12,744,217 13,891,212
------------- -------------
Total liabilities ................................................... 131,392,681 133,206,141
------------- -------------
Company-obligated, mandatorily redeemable, convertible preferred
securities of WRP Convertible Trust I, holding solely 8.25% junior
subordinated debentures of Wellsford Real Properties, Inc.
("Convertible Trust Preferred Securities") ....................... 25,000,000 --
Minority interest ................................................... 3,442,838 3,433,972
Commitments and contingencies
Shareholders' equity:
Series A 8% convertible redeemable preferred stock, $.01 par value
per share, 2,000,000 shares authorized,
no shares issued and outstanding .............................. -- --
Common stock, 98,825,000 shares authorized $.02 par value per
share - 8,126,368 and 9,441,247 shares, issued
and outstanding ............................................... 162,527 188,825
Class A-1 common stock, 175,000 shares authorized $.02
par value per share - 169,903 shares, issued and outstanding .. 3,398 3,398
Paid in capital in excess of par value ........................... 194,583,986 215,674,726
Retained earnings ................................................ 22,408,408 20,246,075
Deferred compensation ............................................ (1,181,673) (1,861,677)
Treasury stock, 208,587 and 208,587 shares ....................... (4,560,134) (4,560,134)
------------- -------------
Total shareholders' equity .......................................... 211,416,512 229,691,213
------------- -------------
Total liabilities and shareholders' equity .......................... $ 371,252,031 $ 366,331,326
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-3-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Rental income ............................... $ 4,706,509 $ 4,622,491 $ 13,696,091 $ 13,436,403
Interest income ............................. 1,677,951 2,251,046 4,584,140 9,969,015
------------ ------------ ------------ ------------
Total revenue ............................ 6,384,460 6,873,537 18,280,231 23,405,418
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance .......... 1,140,135 1,013,422 3,093,300 2,833,292
Real estate taxes ........................... 404,890 419,942 1,243,179 1,234,098
Depreciation and amortization ............... 1,401,481 1,180,366 3,541,307 3,573,827
Property management ......................... 188,211 170,930 575,388 503,821
Interest .................................... 1,684,988 2,366,635 5,039,998 7,389,805
General and administrative .................. 1,776,437 1,951,272 4,988,412 4,361,021
------------ ------------ ------------ ------------
Total expenses ........................... 6,596,142 7,102,567 18,481,584 19,895,864
------------ ------------ ------------ ------------
Income from joint ventures ..................... 1,551,955 3,160,343 3,617,628 6,082,656
------------ ------------ ------------ ------------
Income before minority interest, income taxes
and accrued distributions and amortization
of costs on Convertible Trust Preferred
Securities ............................... 1,340,273 2,931,313 3,416,275 9,592,210
Minority interest .............................. (8,338) (43,405) (17,435) (60,843)
------------ ------------ ------------ ------------
Income before taxes and accrued distributions
and amortization of costs on Convertible
Trust Preferred Securities ............... 1,331,935 2,887,908 3,398,840 9,531,367
Income tax expense ............................. 283,000 702,000 673,000 2,296,000
------------ ------------ ------------ ------------
Income before accrued distributions and
amortization of costs on Convertible
Trust Preferred Securities ............... 1,048,935 2,185,908 2,725,840 7,235,367
Accrued distributions and amortization of
costs on Convertible Trust Preferred
Securities, net of income tax benefit of
$172,000 and $282,000, respectively ...... 352,507 -- 563,507 --
------------ ------------ ------------ ------------
Net income ..................................... $ 696,428 $ 2,185,908 $ 2,162,333 $ 7,235,367
============ ============ ============ ============
Net income per common share, basic ............. $ 0.08 $ 0.21 $ 0.25 $ 0.70
============ ============ ============ ============
Net income per common share, diluted ........... $ 0.08 $ 0.21 $ 0.25 $ 0.70
============ ============ ============ ============
Weighted average number of common shares
outstanding, basic ....................... 8,296,507 10,348,695 8,572,253 10,368,433
============ ============ ============ ============
Weighted average number of common shares
outstanding, diluted ..................... 8,313,555 10,361,505 8,576,090 10,382,605
============ ============ ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-4-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 2,162,333 $ 7,235,367
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ........................... 3,547,085 3,581,276
Amortization of deferred compensation ................... 680,004 625,842
Undistributed joint venture income ...................... -- (3,417,873)
Distributions in excess of joint venture income ......... 26,933 --
Undistributed minority interest ......................... 17,435 60,843
Shares issued for director compensation ................. 60,000 --
Changes in assets and liabilities:
Restricted cash ...................................... (44,809) (82,997)
Prepaid expenses and other assets .................... (150,563) (4,618,934)
Accrued expenses and other liabilities ............... 253,006 (2,055,483)
------------ ------------
Net cash provided by operating activities ............... 6,551,424 1,328,041
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate assets ............................. (8,981,298) (15,660,276)
Investments in joint ventures:
Capital contributions .................................... (6,775,787) (7,741,692)
Returns of capital ....................................... 2,584,517 3,231,591
Investments in notes receivable ............................... (23,633,000) (41,270,501)
Repayments of notes receivable ................................ 15,582,263 72,964,680
Proceeds from sale of real estate asset ....................... -- 7,238,329
------------ ------------
Net cash (used in) provided by investing activities ...... (21,223,305) 18,762,131
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Convertible Trust Preferred Securities ............ 25,000,000 --
Deferred financing costs ...................................... (523,627) --
Proceeds from credit facilities ............................... -- 35,000,000
Repayment of credit facilities ................................ -- (42,250,000)
Repayment of mortgage notes payable ........................... (666,465) (649,226)
Distributions to minority interest ............................ (8,569) (1,498)
Costs incurred for reverse stock split ........................ (44,364) --
Repurchases of common shares .................................. (21,132,674) --
------------ ------------
Net cash provided by (used in) financing activities ..... 2,624,301 (7,900,724)
------------ ------------
Net (decrease) increase in cash and cash equivalents ............. (12,047,580) 12,189,448
Cash and cash equivalents, beginning of period ................... 34,739,866 10,122,037
------------ ------------
Cash and cash equivalents, end of period ......................... $ 22,692,286 $ 22,311,485
============ ============
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest, including amounts
capitalized of $1,590,948 and $758,216, respectively ....... $ 6,403,655 $ 8,492,862
============ ============
Cash paid during the period for income taxes, net of income tax
refunds .................................................... $ 34,582 $ 3,292,841
============ ============
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Notes receivable contributed for joint venture interest ....... $ 24,218,113
============
Warrants issued in connection with joint venture activities ... $ 480,892
============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-5-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. REVERSE STOCK SPLIT
On June 9, 2000, the Company's shareholders approved a reverse stock
split whereby every two outstanding shares of common stock and class
A-1 common stock were converted into one share of outstanding common
stock and class A-1 common stock. The par value of both classes of
stock increased from $0.01 per share to $0.02 per share and the number
of authorized shares was halved from 197,650,000 to 98,825,000 for
common shares and from 350,000 to 175,000 for class A-1 common shares.
The reverse split was effective for trading beginning June 12, 2000.
Resulting fractional shares were redeemed in cash.
All share and per share amounts in the financial statements and the
notes there to have been adjusted for the impact of the split, for all
periods presented.
2. ORGANIZATION AND BUSINESS
Wellsford Real Properties, Inc. and subsidiaries (collectively the
"Company"), was formed on January 8, 1997, as a corporate subsidiary of
Wellsford Residential Property Trust (the "Trust"). The Trust was
formed in 1992 as the successor to Wellsford Group Inc. (and
affiliates), which was formed in 1986. On May 30, 1997, the Trust
merged (the "Merger") with Equity Residential Properties Trust ("EQR").
Immediately prior to the Merger, the Trust contributed certain of its
assets to the Company and the Company assumed certain liabilities of
the Trust. Immediately after the contribution of assets to the Company
and immediately prior to the Merger, the Trust distributed to its
common shareholders all the outstanding shares of the Company owned by
the Trust (the "Spin-off"). On June 2, 1997, the Company sold 6,000,000
shares of its common stock in a private placement (the "Private
Placement") to a group of institutional investors at $20.60 per share,
the Company's then book value per share.
The Company is a real estate merchant banking firm headquartered in New
York City which acquires, develops, finances and operates real
properties and organizes and invests in private and public real estate
companies. The Company has established three strategic business units
("SBUs") within which it executes its business plan: (i) commercial
property operations which are currently held in the Company's
subsidiary, Wellsford Commercial Properties Trust ("WCPT"), through its
ownership interest in Wellsford/Whitehall Group, L.L.C.
("Wellsford/Whitehall"); (ii) debt and other equity activities; and
(iii) property development and land operations. The Company
periodically reassesses its commitment to and level of activities in
each of its SBUs. See Note 4 for additional information regarding the
Company's industry segments.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND FINANCIAL STATEMENT PRESENTATION. The
accompanying consolidated financial statements include the accounts of
Wellsford Real Properties, Inc. and its majority-owned and controlled
subsidiaries. Investments in entities where the Company does not have a
controlling interest are accounted for under the equity method of
accounting. These investments are initially recorded at cost and are
subsequently adjusted for the Company's proportionate share of the
investment's income (loss), additional contributions or distributions.
All significant intercompany accounts and transactions among Wellsford
Real Properties, Inc. and its subsidiaries have been eliminated in
consolidation.
The accompanying consolidated financial statements include the assets
and liabilities contributed to and assumed by the Company from the
Trust, from the time such assets and liabilities were acquired or
incurred, respectively, by the Trust. Such financial statements have
been prepared using the historical basis of the assets and liabilities
and the historical results of operations related to the Company's
assets and liabilities.
-6-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The accompanying consolidated financial statements and notes of the
Company have been prepared in accordance with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information
and footnote disclosures normally included in financial statements
prepared under generally accepted accounting principles have been
condensed or omitted pursuant to such rules. In the opinion of
management, all adjustments considered necessary for a fair
presentation of the Company's financial position, results of operations
and cash flows have been included and are of a normal and recurring
nature. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1999, as filed with the Securities and Exchange
Commission. The results of operations for the three and nine month
periods ended September 30, 2000 and cash flows for the nine month
period ended September 30, 2000, are not necessarily indicative of a
full year's results.
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 and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
RECLASSIFICATION. Amounts in certain accounts have been reclassified to
conform to the current period presentation.
-7-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
4. SEGMENT INFORMATION
The Company's operations are organized into three SBUs. The following
table presents condensed balance sheet and operating data for these
SBUs:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
COMMERCIAL DEBT AND DEVELOPMENT
PROPERTY EQUITY AND LAND
INVESTMENTS INVESTMENTS INVESTMENTS OTHER* CONSOLIDATED
----------- ----------- ----------- ------ ------------
SEPTEMBER 30, 2000
------------------
<S> <C> <C> <C> <C> <C>
Real estate, net ............... $ -- $ 39,084 $125,115 $ -- $164,199
Notes receivable ............... -- 45,319 -- -- 45,319
Investment in joint ventures ... 81,801 37,605 -- -- 119,406
Cash and cash equivalents ...... 91 4,987 173 17,441 22,692
Restricted cash and other assets -- 7,686 1,490 10,460 19,636
-------- -------- -------- -------- --------
Total assets ................... $ 81,892 $134,681 $126,778 $ 27,901 $371,252
======== ======== ======== ======== ========
Mortgage notes payable ......... $ -- $ 28,000 $ 90,648 $ -- $118,648
Accrued expenses and other
liabilities ................. -- 1,251 2,022 9,471 12,744
Convertible Trust Preferred
Securities .................. -- -- -- 25,000 25,000
Minority interest .............. 37 -- 3,406 -- 3,443
Equity ......................... 81,855 105,430 30,702 (6,570) 211,417
-------- -------- -------- -------- --------
Total liabilities and equity ... $ 81,892 $134,681 $126,778 $ 27,901 $371,252
======== ======== ======== ======== ========
DECEMBER 31, 1999
-----------------
Real estate, net ............... $ -- $ 38,103 $121,479 $ -- $159,582
Notes receivable ............... -- 37,260 -- -- 37,260
Investment in joint ventures ... 79,688 34,702 -- -- 114,390
Cash and cash equivalents ...... 67 28,694 172 5,807 34,740
Restricted cash and other assets -- 8,142 1,881 10,336 20,359
-------- -------- -------- -------- --------
Total assets ................... $ 79,755 $146,901 $123,532 $ 16,143 $366,331
======== ======== ======== ======== ========
Mortgage notes payable ......... $ -- $ 28,000 $ 91,315 $ -- $119,315
Accrued expenses and other
liabilities ................. -- 1,908 1,396 10,587 13,891
Minority interest .............. 46 -- 3,388 -- 3,434
Equity ......................... 79,709 116,993 27,433 5,556 229,691
-------- -------- -------- -------- --------
Total liabilities and equity ... $ 79,755 $146,901 $123,532 $ 16,143 $366,331
======== ======== ======== ======== ========
----------
<FN>
*Includes corporate cash, other assets, accrued expenses and other
liabilities that have not been allocated to the operating segments.
</FN>
</TABLE>
-8-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
COMMERCIAL DEBT AND DEVELOPMENT
PROPERTY EQUITY AND LAND
INVESTMENTS INVESTMENTS INVESTMENTS OTHER* CONSOLIDATED
----------- ----------- ----------- ------ ------------
FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000
------------------------
<S> <C> <C> <C> <C> <C>
Rental income ................. $ -- $ 1,536 $ 3,170 $ -- $ 4,706
Interest income ............... -- 1,109 -- 569 1,678
-------- -------- -------- -------- --------
Total income .................. -- 2,645 3,170 569 6,384
-------- -------- -------- -------- --------
Operating expenses ............ -- 690 1,043 -- 1,733
Depreciation and amortization . 178 448 751 25 1,402
Interest ...................... -- 766 1,377 (458) 1,685
General and administrative .... -- 257 -- 1,519 1,776
-------- -------- -------- -------- --------
178 2,161 3,171 1,086 6,596
-------- -------- -------- -------- --------
Income from joint ventures .... 1,062 490 -- -- 1,552
Minority interest ............. -- -- (8) -- (8)
-------- -------- -------- -------- --------
Income (loss) before taxes and
accrued distributions and
amortization of costs on
Convertible Trust Preferred
Securities ................. $ 884 $ 974 $ (9) $ (517) $ 1,332
======== ======== ======== ======== ========
FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1999
------------------------
Rental income ................. $ -- $ 1,425 $ 3,197 $ -- $ 4,622
Interest income ............... -- 2,344 -- (93) 2,251
-------- -------- -------- -------- --------
Total income .................. -- 3,769 3,197 (93) 6,873
-------- -------- -------- -------- --------
Operating expenses ............ -- 655 949 -- 1,604
Depreciation and amortization . 68 283 749 80 1,180
Interest ...................... -- 1,139 1,188 40 2,367
General and administrative .... -- 260 -- 1,691 1,951
-------- -------- -------- -------- --------
68 2,337 2,886 1,811 7,102
-------- -------- -------- -------- --------
Income from joint ventures .... 2,222 938 -- -- 3,160
Minority interest ............. -- -- (43) -- (43)
-------- -------- -------- -------- --------
Income (loss) before taxes and
accrued distributions and
amortization of costs on
Convertible Trust Preferred
Securities ................. $ 2,154 $ 2,370 $ 268 $ (1,904) $ 2,888
======== ======== ======== ======== ========
----------
<FN>
*Includes general and administrative expenses, interest income and
interest expense that have not been allocated to the operating
segments.
</FN>
</TABLE>
-9-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
COMMERCIAL DEBT AND DEVELOPMENT
PROPERTY EQUITY AND LAND
INVESTMENTS INVESTMENTS INVESTMENTS OTHER* CONSOLIDATED
----------- ----------- ----------- ------ ------------
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000
------------------------
<S> <C> <C> <C> <C> <C>
Rental income ................. $ -- $ 4,613 $ 9,083 $ -- $ 13,696
Interest income ............... -- 3,591 -- 993 4,584
-------- -------- -------- -------- --------
Total income .................. -- 8,204 9,083 993 18,280
-------- -------- -------- -------- --------
Operating expenses ............ -- 1,944 2,968 -- 4,912
Depreciation and amortization . 269 938 2,252 82 3,541
Interest ...................... -- 2,117 3,803 (880) 5,040
General and administrative .... -- 761 -- 4,228 4,989
-------- -------- -------- -------- --------
269 5,760 9,023 3,430 18,482
-------- -------- -------- -------- --------
Income from joint ventures .... 2,109 1,509 -- -- 3,618
Minority interest ............. -- -- (17) -- (17)
-------- -------- -------- -------- --------
Income (loss) before taxes and
accrued distributions and
amortization of costs on
Convertible Trust Preferred
Securities ................. $ 1,840 $ 3,953 $ 43 $ (2,437) $ 3,399
======== ======== ======== ======== ========
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999
------------------------
Rental income ................. $ -- $ 4,258 $ 9,178 $ -- $ 13,436
Interest income ............... -- 9,489 -- 480 9,969
-------- -------- -------- -------- --------
Total income .................. -- 13,747 9,178 480 23,405
-------- -------- -------- -------- --------
Operating expenses ............ -- 1,888 2,683 -- 4,571
Depreciation and amortization . 291 881 2,249 153 3,574
Interest ...................... -- 3,548 3,677 165 7,390
General and administrative .... -- 602 -- 3,759 4,361
-------- -------- -------- -------- --------
291 6,919 8,609 4,077 19,896
Income from joint ventures .... 4,131 1,952 -- -- 6,083
Minority interest ............. -- (2) (59) -- (61)
-------- -------- -------- -------- --------
Income (loss) before taxes and
accrued distributions and
amortization of costs on
Convertible Trust Preferred
Securities ................. $ 3,840 $ 8,778 $ 510 $ (3,597) $ 9,531
======== ======== ======== ======== ========
----------
<FN>
*Includes general and administrative expenses, interest income and
interest expense that have not been allocated to the operating
segments.
</FN>
</TABLE>
-10-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
COMMERCIAL PROPERTY OPERATIONS--WELLSFORD/WHITEHALL
---------------------------------------------------
The Company's commercial property operations segment consists of
Wellsford/Whitehall, which is accounted for on the equity method. In
August 1997, the Company, in a joint venture with WHWEL Real Estate
Limited Partnership, an affiliate of The Goldman Sachs Group Inc.
("Goldman Sachs"), formed a private real estate operating company,
Wellsford/Whitehall. The Company had a 40.8% interest in
Wellsford/Whitehall at September 30, 2000.
On October 25, 2000, the Company, through its subsidiary WCPT and
affiliates of Goldman Sachs ("Whitehall"), which are both members of
Wellsford/Whitehall, entered into a Memorandum of Understanding ("MOU")
which outlines modifications to be made to the existing agreements
pertaining to Wellsford/Whitehall. The MOU is not binding and is
subject to the execution of definitive agreements (see Note 9
-Subsequent Events).
The following table presents condensed balance sheet and operating data
for the Wellsford/Whitehall segment:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
CONDENSED BALANCE SHEET DATA 2000 1999
---------------------------- ---- ----
<S> <C> <C>
Real estate, net........................ $ 591,962 $ 551,152
Cash and cash equivalents............... 7,224 8,468
Total assets............................ 616,322 572,279
Mortgage notes payable.................. 134,086 110,831
Credit facility......................... 244,250 238,661
Preferred equity........................ 18,323 19,000
Common equity........................... 191,075 181,740
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------- --- -------------
CONDENSED OPERATING DATA 2000 1999 2000 1999
------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental income (A)....................... $ 21,325 $ 18,771 $ 61,126 $ 54,929
Operating expenses...................... 7,275 7,410 20,788 20,216
Depreciation and amortization........... 3,301 3,036 9,719 8,530
Interest................................ 6,463 6,132 19,402 18,636
Total expenses.......................... 19,002 18,253 55,991 52,493
Gain on sale of investments............. 401 4,942 401 7,446
Income before distributions............. 2,877 5,625 5,954 10,228
----------
<FN>
(A) Includes lease cancellation income of $2,056 and $33 for the three months
ended September 30, 2000 and 1999, respectively and $2,887 and $145 for the
nine months ended September 30, 2000 and 1999, respectively. Also includes
$557, $333, $971 and $858 of income resulting from the straight-lining of
tenant rents for the respective periods.
</FN>
</TABLE>
As of September 30, 2000, Wellsford/Whitehall owned 43 office
properties totaling approximately 5,324,000 square feet (including
approximately 1,895,000 square feet under renovation), primarily
located in New Jersey, Massachusetts and Maryland.
-11-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
During the nine months ended September 30, 2000, Wellsford/Whitehall
completed the following transactions:
<TABLE>
<CAPTION>
(COST, SALES PRICE AND GAIN AMOUNTS IN MILLIONS)
PURCHASES:
COST PER
GROSS LEASABLE NUMBER OF SQUARE
MONTH TYPE LOCATION SQUARE FEET PROPERTIES COST FOOT
----- ---- -------- ----------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
May ................. Office/Flex Hanover, NJ 148,000 1 $ 8.1 $ 55
September ........... Office/Flex Cedar Knolls, NJ 80,000 1 3.7 46
September ........... Office Dedham, MA 150,000 1 6.2 41
------- - ------- -------
Total purchases 378,000 3 $ 18.0 $ 47
======= = ======= =======
SALE:
SALES PRICE
GROSS LEASABLE NUMBER SALES PER
MONTH LOCATION SQUARE FEET OF PROPERTIES PRICE SQUARE FOOT GAIN
----- -------- ----------- ------------- ----- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
August .............. Columbia, MD 38,000 1 $ 4.9 $ 128 $ 0.4
====== = ======= ======== ======
</TABLE>
In March 2000, Wellsford/Whitehall obtained a $23,500,000 loan from
Principal Capital Management, L.L.C. for the rehabilitation of Gateway
Tower, a 236,000 square foot, nine-story office building located at 401
North Washington Street, Rockville, Maryland. The non-recourse loan is
secured by a first mortgage on the property, has a term of three years,
plus two six-month extensions at Wellsford/Whitehall's option and bears
interest at LIBOR + 3.50% per annum.
In connection with the May 2000 purchase of a 148,000 square foot
property in Hanover, New Jersey, $4,000,000 of financing was provided
by the seller at a fixed annual rate of 10.00% for one year. The
financing is secured by a first mortgage on the property.
In September 2000, Wellsford/Whitehall obtained a $8,150,000
rehabilitation loan from Provident Bank of which $4,250,000 was drawn
upon at September 30, 2000. The non-recourse loan, which is secured by
the leasehold interest in the 144,000 square foot Oakland Ridge office
park, a four building office complex located in Columbia, Maryland, has
a term of 2.5 years, plus one twelve-month extension at
Wellsford/Whitehall's option and bears interest at LIBOR + 2.00% per
annum, which is capitalized into the loan.
The Company has made temporary advances to Wellsford/Whitehall. At
September 30, 2000, the balance of the advances which bear interest at
LIBOR + 5.00% per annum amounted to approximately $12,317,000 and are
included in Notes Receivable in the accompanying consolidated balance
sheet of the Company.
In July 1998, Wellsford/Whitehall modified the Wellsford/Whitehall Bank
Facility. Under the new terms, $300,000,000 represents a senior secured
credit facility bearing interest at LIBOR + 1.65% per annum and
$75,000,000 represents a second mezzanine facility bearing interest at
LIBOR + 3.20% per annum. As of September 30, 2000, approximately
$244,250,000 was outstanding under the Wellsford/Whitehall Bank
Facility (approximately $181,728,000 of which was under the senior
facility). At March 31, 2000, the ability to draw on this facility
expired. Wellsford/Whitehall has notified the lenders that it is
exercising its right under the terms of the agreements to have both
facilities extended for one year to mature on December 15, 2001. Such
extensions are dependent upon Wellsford/Whitehall meeting certain
increased financial covenants and obtaining appraisals on the
properties collateralizing such loans to support the necessary
collateral value, all of which is provided for in the respective loan
agreements. The Wellsford/Whitehall Bank Facility also limits the
amount of distributions to members.
-12-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
DEBT AND EQUITY ACTIVITIES--WELLSFORD CAPITAL
---------------------------------------------
At September 30, 2000, the Company had approximately $73,308,000 of
debt related investments, consisting of approximately $45,319,000 of
direct debt investments which bore interest at an average yield of
approximately 11.74% per annum and had an average remaining term to
maturity of approximately 5.3 years and $27,988,000 in Second Holding
Company, LLC, formerly Belford Capital Holdings, L.L.C. ("Second
Holding"), a company which was organized to invest in debt instruments.
The Company also had approximately $9,617,000 of venture capital
investments of which approximately $6,575,000 was in a real estate
related e-commerce company with the remainder invested in other real
estate-related ventures. In addition, the Company owned and operated
seven commercial properties, one of which is in California and six of
which are located in the Northeastern United States (Value Property
Trust--"VLP") totaling approximately 597,000 square feet with a
depreciated book value of approximately $39,100,000.
The Company had an approximate 51.1% non-controlling interest in Second
Holding at September 30, 2000. The following table presents condensed
balance sheet and operating data for Second Holding:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
CONDENSED BALANCE SHEET DATA 2000 1999
---------------------------- ---- ----
<S> <C> <C>
Cash and cash equivalents............... $ 160,095 $ --
Investments............................. 39,715 40,143
Investment in Reis...................... -- 6,500
Total assets............................ 200,476 60,870
Long term debt.......................... 145,618 --
Total equity............................ 54,237 60,639
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
CONDENSED OPERATING DATA 2000 1999 2000 1999
------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest revenue........................ $ 1,204 $ 984 $ 3,276 $ 2,215
Interest from Reis...................... -- 126 169 374
----------- ----------- ----------- -----------
Total revenue........................... 1,204 1,110 3,445 2,589
----------- ----------- ----------- -----------
Interest expense........................ 206 -- 206 --
Fees and other.......................... 235 207 691 581
----------- ----------- ----------- -----------
Total expenses.......................... 441 207 897 581
----------- ----------- ----------- -----------
Net income.............................. $ 763 $ 903 $ 2,548 $ 2,008
=========== =========== =========== ===========
</TABLE>
During September 2000, an affiliate of Second Holding privately placed
a ten-year $150,000,000 junior subordinated bond issue. The bonds were
issued at an effective annual interest rate of LIBOR + 0.90%. Proceeds
from the issuance will be used to make investments in debt instruments.
-13-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
REIS REPORTS, INC. ("REIS")
The Company's aggregate investment in Reis at September 30, 2000 is
approximately $6,575,000 or 22% of Reis' equity on an as converted
basis. A portion of the investment is held directly by the Company and
the remainder is held by Reis Capital Holdings, LLC ("Reis Capital"), a
company which was organized to hold this investment. The Company has an
approximate 51.1% non-controlling interest in Reis Capital at September
30, 2000. The following table details the components of the Company's
and Reis Capital's investments in Reis.
<TABLE>
<CAPTION>
INVESTMENTS IN REIS BY:
-----------------------
THE COMPANY REIS CAPITAL
----------- ------------
<S> <C> <C>
April 2000 investments:
Direct investment in 8% Series C
Convertible Preferred Shares
("Series C Preferred") (A) ........ $2,022,000 $ --
---------- ----------
Indirect investments:
Series C Preferred (B) ......... 766,000 1,500,000
Series C Preferred (C) ......... 466,000 913,000
---------- ----------
1,232,000 2,413,000
---------- ----------
Total April 2000 investments ............ 3,254,000 2,413,000
---------- ----------
Prior investments: (C)
8% Series A Preferred Shares (D) 2,555,000 5,000,000
8% Series B Preferred Shares (E) 766,000 1,500,000
---------- ----------
3,321,000 6,500,000
---------- ----------
Total investments at September 30, 2000 . $6,575,000 $8,913,000
========== ==========
----------
<FN>
(A) Issued 15,000 shares at $100 per share; convertible into common shares at
$4.00 per share.
(B) Capital commitment made in 1999 and funded in April 2000.
(C) Notes receivable and accrued interest through April 2000, held by Belford
Capital, were converted into equity and were distributed to Reis Capital at
that time.
(D) Issued 50,000 shares at $100 per share; convertible into common shares at
$1.76 per share.
(E) Issued 15,000 shares at $100 per share; convertible into common shares at
$3.00 per share.
</FN>
</TABLE>
At the time of the investments noted above, the management of Reis
offered certain persons the opportunity to make an individual
investment in Reis, including, but not limited to, certain directors
and officers of the Company, or their affiliates, by issuing $410,000
of Series C Preferred in April 2000. The investments of the Company's
officers and directors together with shares of common stock previously
held by the Company's Chairman represent approximately 3.5% of Reis'
equity, on an as converted basis upon completion of the aforementioned
investments. Additionally, a company controlled by the Chairman of EQR
purchased a 4.5% interest on that date. The president of EQR is a
director of the Company. The Company's Chairman is the brother of the
President of Reis. The Company's President was appointed to the board
of directors of Reis during the third quarter of 2000. The Chairman,
President and those other directors investing directly in Reis have and
will continue to recuse themselves from any investment decisions made
by the Company pertaining to Reis.
One of the Company's other joint venture investments uses the services
of Reis in making investment decisions. The joint venture incurred fees
of $270,000 in connection with such services for each of the nine
months ended September 30, 2000 and 1999.
-14-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
SEGMENT INFORMATION (CONTINUED)
DEVELOPMENT AND LAND OPERATIONS--WELLSFORD DEVELOPMENT
------------------------------------------------------
At September 30, 2000, the Company had an 80% interest in Palomino
Park, a five phase, 1,800 unit multifamily residential development in a
suburb of Denver, Colorado ("Palomino Park"). Two phases containing 760
units are completed and operational. One 264 unit phase ("Silver Mesa")
is being converted to a condominium project where the Company will sell
individual units. The Company is currently marketing for sale 128 of
the units, pending the finalization of conversion financing, while the
remaining 136 units (79% occupied at September 30, 2000) are being
rented until the first condominium section of units are substantially
sold out. Additionally, there is a 424 unit phase under construction
which is expected to be completed in the fourth quarter of 2001 and the
remaining approximate 352 unit final phase is being prepared for
development.
The Company also owned a 344 unit operational multifamily residential
development in Tucson, Arizona ("Sonterra"). In July 2000, the Company
entered into an agreement to sell Sonterra for approximately
$22,550,000, with the buyer assuming the outstanding debt balance of
approximately $16,000,000, which encumbers the property. The net book
value of land, building and improvements was approximately $18,700,000
at September 30, 2000, of which $3,075,000 was land. The Company
expects the transaction to close during the fourth quarter of 2000 and
expects to realize a gain of approximately $3,200,000.
5. FINANCING ARRANGEMENTS
In May 2000, the Company privately placed with a subsidiary of EQR
1,000,000 8.25% Convertible Trust Preferred Securities, representing
beneficial interests in the assets of WRP Convertible Trust I, a
Delaware statutory business trust which is a consolidated subsidiary of
the Company ("WRP Trust I"), with an aggregate liquidation amount of
$25,000,000 (the "Convertible Trust Preferred Securities"). WRP Trust I
also issued 31,000 8.25% Convertible Trust Common Securities to the
Company, representing beneficial interests in the assets of WRP Trust
I, with an aggregate liquidation amount of $775,000. The proceeds from
both transactions were used by WRP Trust I to purchase $25,775,000 of
the Company's 8.25% Convertible Junior Subordinated Debentures
("Convertible Debentures"), which mature on May 4, 2022. The net
proceeds from the sale of the Convertible Debentures, after transaction
costs, will be used by the Company for general corporate purposes. The
transactions between WRP Trust I and the Company are eliminated in the
consolidated financial statements of the Company.
The Convertible Trust Preferred Securities are convertible into
1,123,696 common shares at $22.248 per share and are redeemable in
whole or in part by the Company on or after May 30, 2002. EQR can
require redemption on or after May 30, 2012 unless the Company
exercises one of its two five-year extensions, subject to an interest
adjustment to the then prevailing market rates if higher than 8.25% per
annum. The redemption rights are subject to certain other terms and
conditions contained in the related agreements. In connection with this
issuance, the Company simultaneously terminated the $50,000,000 secured
loan facility from Fleet National Bank and Morgan Guaranty Trust
Company of New York (the "WRP Bank Facility").
In May 2000, the Company exchanged the 169,903 shares of class A common
stock held by EQR for a like number of shares of the Company's class
A-1 common stock. The class A-1 common stock's par value is $0.02 per
share and has rights substantially similar to the class A common stock.
All prior obligations of EQR to acquire 1,000,000 shares of the
Company's Series A 8% Convertible Redeemable Preferred Stock, $25 par
value, have been terminated.
-15-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
FINANCING ARRANGEMENTS (CONTINUED)
In June 2000, the Company modified the terms of the Wellsford Finance
Facility and reduced the maximum borrowing amount to $20,000,000. The
Wellsford Finance Facility which is secured by the 277 Park Loan of
$25,000,000, bears interest at LIBOR + 2.75% per annum and matures in
January 2002. The Company paid an origination fee of $75,000 and is
obligated to pay a fee equal to 0.25% per annum on the average daily
amount of the unused portion of the facility until maturity. As of
September 30, 2000, there was no outstanding balance under the
Wellsford Finance Facility. This facility provides for the Company to
meet certain financial operating and balance sheet covenants.
In June 2000, the Company obtained a five-year AAA rated letter of
credit from Commerzbank AG to secure $14,755,000 of tax-exempt bonds
for Palomino Park. This letter of credit replaced an expiring letter of
credit. The Company will incur an annual fee of approximately $142,000
related to this enhancement and paid an origination fee of
approximately $158,000 upon closing. The letter of credit agreement
provides for the Company to meet certain financial operating and
balance sheet covenants. An affiliate of EQR has made its own credit
available to Commerzbank AG in the form of a guaranty. On November 1,
2000, in conjunction with the conversion of Silver Mesa to a
condominium project, the Company made a repayment of $2,075,000 of bond
principal.
6. SHAREHOLDERS' EQUITY
In February 2000, the Company repurchased 1,286,816 shares of its
outstanding common stock from an institutional investor for
approximately $20,589,000 or $16.00 per common share.
In April 2000, the Company's Board of Directors authorized the
repurchase of up to 1,000,000 additional shares of its outstanding
common stock. The Company intends to repurchase the shares from time to
time by means of open market purchases depending on availability of
shares, the Company's cash position and the price per share. No minimum
number or value of shares to be repurchased has been fixed. Pursuant to
this program, 29,837 shares had been repurchased at an average price of
$16.25 per share as of September 30, 2000.
The Company did not declare or distribute any dividends for the nine
months ended September 30, 2000 and 1999.
7. INCOME TAXES
The income tax provision for the three and nine months ended September
30, 2000 and 1999 reflects the reduction in the valuation allowance
attributable to the utilization of available net operating loss
carryforwards.
8. EARNINGS PER SHARE
Basic earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period,
including class A-1 common shares. Diluted earnings per common share
are based upon the increased number of common shares that would be
outstanding assuming the exercise of dilutive common share options and
warrants.
-16-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
EARNINGS PER SHARE (CONTINUED)
The following tables detail the computation of earnings per share,
basic and diluted:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
-------------
2000 1999
---- ----
<S> <C> <C>
Numerator for net income per common share, basic and diluted $ 696,428 $ 2,185,908
=========== ===========
Denominator:
Denominator for net income per common share, basic--
weighted average common shares ..................... 8,296,507 10,348,695
Effect of dilutive securities:
Employee stock options ............................. 17,048 12,810
Convertible Trust Preferred Securities ............. -- --
Warrants ........................................... -- --
----------- -----------
Denominator for net income per common share, diluted--
weighted average common shares ..................... 8,313,555 10,361,505
=========== ===========
Net income per common share, basic ......................... $ 0.08 $ 0.21
=========== ===========
Net income per common share, diluted ....................... $ 0.08 $ 0.21
=========== ===========
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-------------
2000 1999
---- ----
<S> <C> <C>
Numerator for net income per common share, basic and diluted $ 2,162,333 $ 7,235,367
=========== ===========
Denominator:
Denominator for net income per common share, basic--
weighted average common shares ..................... 8,572,253 10,368,433
Effect of dilutive securities:
Employee stock options ............................. 3,837 14,172
Convertible Trust Preferred Securities ............. -- --
Warrants ........................................... -- --
----------- -----------
Denominator for net income per common share, diluted--
weighted average common shares ..................... 8,576,090 10,382,605
=========== ===========
Net income per common share, basic ......................... $ 0.25 $ 0.70
=========== ===========
Net income per common share, diluted ....................... $ 0.25 $ 0.70
=========== ===========
</TABLE>
-17-
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
9. SUBSEQUENT EVENTS
FORDHAM TOWER LOAN
On October 3, 2000, the Company and Prudential Real Estate Investors
provided an aggregate of $34,000,000 of mezzanine financing for the
construction of Fordham Tower, a 50 story, 244 unit, luxury condominium
apartment project to be built on Chicago's near northside. The Company
fully funded its share of the loan for $3,400,000. The loan, which
matures in October 2003, bears interest at a fixed rate of 10.50% per
annum with provisions for additional interest and fees to the Company,
based upon certain levels of returns on the project and is secured by a
lien on equity interests in the borrower.
WELLSFORD/WHITEHALL
On October 25, 2000, the Company, through its subsidiary WCPT and
Whitehall, which are both members of Wellsford/Whitehall, entered into
a MOU which outlines modifications to be made to the existing
agreements pertaining to Wellsford/Whitehall. The MOU is not binding
and is subject to the execution of definitive agreements. The MOU
provides for the Company to fund up to its committed capital balance
($10,988,000 as of September 30, 2000) to complete the rehabilitation
of certain assets already owned by the venture and will provide
$4,000,000 of a possible $10,000,000 of additional financing, if
needed ($6,000,000 would be provided by Whitehall). Generally, no
additional acquisitions will be made. While retaining all of the
existing economic interests in Wellsford/Whitehall, the Company will
transfer its role as managing member of Wellsford/Whitehall to an
affiliate of Whitehall and will no longer receive a $600,000 annual
management fee after December 31, 2000. However, the Company will
receive additional compensation on asset dispositions and acquisitions
on certain future Whitehall purchases. The Company's employees who
presently staff Wellsford/Whitehall (approximately 35 people) would
become employees of a Whitehall affiliate. The 2,128,099 warrants
previously issued to Whitehall to purchase the Company's stock at
$24.20 per share would be cancelled.
-18-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
Capitalized terms used herein which are not defined elsewhere in this
Quarterly Report on Form 10-Q shall have the meanings ascribed to them
in the Company's annual report on Form 10-K for the year ended December
31, 1999, as filed with the Securities and Exchange Commission.
BUSINESS
The Company is a real estate merchant banking firm headquartered in New
York City which acquires, develops, finances and operates real
properties and organizes and invests in private and public real estate
companies. The Company has established three Strategic Business Units
("SBUs") within which it intends to execute its business plan: (i)
commercial property operations which are held in the Company's
subsidiary, Wellsford/Whitehall; (ii) debt and other equity activities;
and (iii) property development and land operations. The Company
periodically reassesses its commitment to and level of activities in
each of its SBUs.
COMMERCIAL PROPERTY OPERATIONS - WELLSFORD/WHITEHALL
The Company seeks to acquire commercial properties and create value
through adaptive reuse. The Company believes that appropriate
well-located commercial properties which are currently underperforming,
can be acquired on advantageous terms and repositioned with the
expectation of achieving enhanced returns which are greater than
returns which could be achieved by acquiring stabilized properties. The
markets that the Company operates in are New Jersey and the Boston,
Baltimore and Washington, D.C. metropolitan areas.
The Company's commercial property operations segment currently consists
of Wellsford/Whitehall, which is accounted for on the equity method. In
August 1997, the Company, in a joint venture with WHWEL Real Estate
Limited Partnership ("Whitehall"), an affiliate of The Goldman Sachs
Group Inc., formed a private real estate operating company,
Wellsford/Whitehall. The Company had a 40.8% interest in
Wellsford/Whitehall at September 30, 2000.
As of September 30, 2000, Wellsford/Whitehall owned 43 office
properties totaling approximately 5,324,000 square feet (including
approximately 1,895,000 square feet under renovation), primarily
located in New Jersey, Massachusetts and Maryland.
Wellsford/Whitehall leased 803,000 square feet in the nine months ended
September 30, 2000 including significant single tenant leases at Morris
Technology Center and at 117 Kendrick Street as detailed below. The
other two leases detailed below are for tenants which took possession
of previously unoccupied significant space in 2000.
<TABLE>
<CAPTION>
LEASABLE PERCENTAGE LEASE BASE RENT
SQUARE OF COMMENCEMENT LEASE PER
PROPERTY FEET BUILDING DATE EXPIRATION SQUARE FOOT
-------- ---- -------- ---- ---------- -----------
<S> <C> <C> <C> <C> <C>
201 University Avenue, Westwood, MA ........ 82,000 100% January 2000 December 2009 $ 15.00(A)
Mountain Heights Center #2, Berkeley Hts, NJ 115,000 100% January 2000 August 2010 28.95
Morris Technology Center, Parsippany, NJ ... 257,000 100% February 2001 January 2016 28.76
117 Kendrick Street, Needham, MA ........... 120,000 57%(B) December 2000 February 2011 31.00
----------
<FN>
(A) Triple net rent.
(B) Building is 95% leased including this lease at September 30, 2000.
</FN>
</TABLE>
-19-
<PAGE>
DEBT AND EQUITY ACTIVITIES - WELLSFORD CAPITAL
The Company originates, or invests in, real estate related senior,
junior or otherwise subordinated debt instruments, which may be
unsecured or secured by liens on real estate, interests therein or the
economic benefits thereof, and which have the potential for high yields
or returns more characteristic of equity ownership. These investments
may include debt that is acquired at a discount, mezzanine financing,
commercial mortgage-backed securities, secured and unsecured lines of
credit, distressed loans, and loans previously made by foreign and
other financial institutions. The Company believes that there are
opportunities to acquire real estate debt, especially in the low or
below investment grade tranches, at significant returns as a result of
inefficiencies in pricing, while utilizing management's real estate
expertise to analyze the underlying properties and thereby effectively
minimizing risk.
At September 30, 2000, the Company had approximately $73,308,000 of
debt related investments, consisting of approximately $45,319,000 of
direct debt investments which bore interest at an average yield of
approximately 11.74% per annum and had an average remaining term to
maturity of approximately 5.3 years and $27,988,000 in Second Holding
Company, LLC, formerly Belford Capital Holdings, L.L.C. ("Second
Holding"), a company which was organized to invest in debt instruments.
The Company also had approximately $9,617,000 of venture capital
investments of which approximately $6,575,000 was in a real estate
related e-commerce company with the remainder invested in other real
estate-related ventures. In addition, the Company owned and operated
seven commercial properties, one of which is in California and six of
which are located in the Northeastern United States (Value Property
Trust--"VLP") totaling approximately 597,000 square feet with a
depreciated book value of approximately $39,100,000.
PROPERTY DEVELOPMENT AND LAND OPERATIONS - WELLSFORD DEVELOPMENT
The Company engages in selective development activities as
opportunities arise and when justified by expected returns. The Company
believes that by pursuing selective development activities, it can
achieve returns which are greater than returns which could be achieved
by acquiring stabilized properties. Certain development activities may
be conducted in joint ventures with local developers who may bear the
substantial portion of the economic risks associated with the
construction, development and initial rent-up of properties. As part of
its strategy, the Company may seek to issue tax-exempt bond financing,
authorized by local governmental authorities, which generally bears
interest at rates substantially below rates available from conventional
financing.
At September 30, 2000, the Company had an 80% interest in Palomino
Park, a five phase, 1,800 unit multifamily residential development in a
suburb of Denver, Colorado ("Palomino Park"). Two phases containing 760
units are completed and operational. One 264 unit phase ("Silver Mesa")
is being converted to a condominium project where the Company will sell
individual units. The Company is currently marketing for sale 128 of
the units, pending the finalization of conversion financing, while the
remaining 136 units (79% occupied at September 30, 2000) are being
rented until the first condominium section of units are substantially
sold out. Additionally, there is a 424 unit phase under construction
which is expected to be completed in the fourth quarter of 2001 and the
remaining approximate 352 unit final phase is being prepared for
development.
The Company also owned a 344 unit operational multifamily residential
development in Tucson, Arizona ("Sonterra"). In July 2000, the Company
entered into an agreement to sell Sonterra for approximately
$22,550,000, with the buyer assuming the outstanding debt balance of
approximately $16,000,000, which encumbers the property. The net book
value of land, building and improvements was approximately $18,700,000
at September 30, 2000, of which $3,075,000 was land. The Company
expects the transaction to close during the fourth quarter of 2000 and
expects to realize a gain of approximately $3,200,000.
-20-
<PAGE>
SEGMENT INFORMATION
The following table provides occupancy rates at each specified date by
SBU:
<TABLE>
<CAPTION>
COMMERCIAL PROPERTY DEBT AND EQUITY DEVELOPMENT AND
OPERATIONS* INVESTMENTS** LAND INVESTMENTS
----------- ------------- ----------------
<S> <C> <C> <C>
September 30, 2000......... 89% 79% 97%
June 30, 2000.............. 93% 77% 90%
December 31, 1999.......... 92% 76% 89%
September 30, 1999......... 95% 75% 97%
June 30, 1999.............. 91% 75% 98%
December 31, 1998.......... 92% 80% 92%
----------
<FN>
* Excludes properties under renovation.
** Occupancy rates for the seven VLP assets held in this SBU.
</FN>
</TABLE>
See Note 4 of the Company's unaudited consolidated financial statements
for quarterly financial information regarding the Company's industry
segments.
FUTURE INVESTMENTS
The Company may in the future make equity investments in entities which
engage in real estate related businesses and activities or businesses
that service the real estate industry. Some of the entities in which
the Company may invest may be start-up companies or companies in need
of additional capital. The Company may also manage and lease properties
owned by it or in which it has an equity or debt investment.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1999.
Rental income increased by $84,000. This increase is primarily the
result of retenanting of space at higher rental rates and an increase
in occupancy on the VLP properties owned and operated by the Wellsford
Capital SBU, partially offset by lower occupancy at the Company's
residential properties in suburban Denver, Colorado.
Interest income decreased by $573,000. This decrease is primarily the
result of decreased lending activity by the Wellsford Capital SBU
starting in the second half of 1999 and continuing in 2000 with loans
being repaid in part or in full during 1999 and 2000 ($1,337,000)
offset by loans which generated income in the current period which were
not outstanding for the full three months in the prior period
($448,000) and an increase in income on cash and cash equivalents from
higher interest rates and greater outstanding balances in the
comparable period during 2000 ($345,000).
Property operating and maintenance expenses increased by $127,000. This
increase is primarily due to increases in advertising and promotion,
payroll and repairs and maintenance at the Company's consolidated
properties.
Depreciation and amortization expense increased by $221,000. This
increase is primarily due to increased amortization associated with the
Company's joint venture investments including a write-down of $145,000
attributable to one of the two principals leaving Creamer Vitale
Wellsford L.L.C. ("CVW") to pursue other employment and the subsequent
wind-down of the venture.
21
<PAGE>
Interest expense decreased by $682,000. This decrease is primarily due
to credit facility balances outstanding during the period in 1999 with
none outstanding during the period in 2000 ($551,000) and by an
increase in capitalized interest of $244,000 in 2000. Such amounts were
offset by an increase in expense on the Company's variable rate debt
due to increases in the underlying base rates ($143,000).
General and administrative expenses decreased by $175,000. This
decrease is primarily the result of an increased bonus accrual during
the 1999 quarter.
Income from joint ventures decreased by $1,608,000. This decrease is
primarily due to (i) a decrease in gains on sale of properties by
Wellsford/Whitehall from 1999 to 2000 of $2,181,000, (ii) a decrease in
the Company's proportionate share of income from CVW as a result of the
prepayment of an investment in 1999, previously held by this venture,
with no corresponding income in the current period ($275,000) and (iii)
a decrease in income from the Liberty Hampshire/Second Holding Joint
Venture investments ($173,000), offset by an increase in the Company's
proportionate share of recurring income from Wellsford/Whitehall
($1,019,000).
The income tax provision decreased by $419,000. This is primarily the
result of a reduction in income before taxes of $1,556,000 and lower
effective state and local rates, partially offset by losses at certain
subsidiaries without benefit at the state and local tax level as well
as taxes based upon net worth for such subsidiaries.
Accrued distributions and amortization of costs on Convertible Trust
Preferred Securities, which were issued in May 2000, was $353,000 for
the three months ended September 30, 2000, which includes three months
of accrued distributions of $516,000 and the amortization of issuance
costs of $9,000, partially offset by the income tax benefit of
$172,000.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1999.
Rental income increased by $260,000. This increase is primarily the
result of retenanting of space at higher rental rates and an increase
in occupancy on the VLP properties owned and operated by the Wellsford
Capital SBU, offset by lower occupancy at the Company's residential
properties in suburban Denver, Colorado.
Interest income decreased by $5,385,000. This decrease is primarily the
result of (i) decreased lending activity by the Wellsford Capital SBU
starting in the second half of 1999 and continuing in 2000 with loans
being repaid in part or in full during 1999 and 2000 ($6,109,000) and
(ii) investments contributed to Second Holding in March 1999
($580,000), offset by loans which generated income in the current
period which did not exist in the prior period ($1,038,000) and an
increase in income on cash and cash equivalents from higher interest
rates and greater outstanding balances in 2000 ($229,000).
Property operating and maintenance expenses increased by $260,000. This
increase is primarily due to increases in advertising and promotion,
payroll and repairs and maintenance at the Company's residential
properties.
Depreciation and amortization expense decreased by $33,000. This
decrease is primarily due to increased amortization associated with the
Wellsford/Whitehall joint venture in 1999 from the sale of properties
of $268,000, partially offset by (i) increased amortization of $145,000
attributable to one of the two principals leaving CVW to pursue other
employment and the subsequent wind-down of the venture and (ii)
additional depreciation of $73,000 from the amortization of tenant
improvements put into service in the current year on the VLP assets.
Interest expense decreased by $2,350,000. This decrease is primarily
due to credit facility balances outstanding during the period in 1999
with none outstanding during the period in 2000 ($1,819,000) and an
22
<PAGE>
increase in capitalized interest of $832,000, partially offset by an
increase in expense on the Company's variable rate debt due to
increases in the underlying base rates ($359,000).
General and administrative expenses increased by $627,000. This
increase is primarily the result of salary costs related to additional
employees in Wellsford Capital, the addition of the chief accounting
officer position in the latter part of 1999, additional amortization
from deferred compensation arrangements and additional professional
fees.
Income from joint ventures decreased by $2,465,000. This decrease is
primarily due to (i) a decrease in gains on sale of properties by
Wellsford/Whitehall from 1999 to 2000 of $3,376,000 and a decrease in
the Company's proportionate share of income from CVW as a result of the
prepayment of an investment in 1999, previously held by this venture,
with no corresponding income in the current period ($640,000), offset
by an increase in the Company's proportionate share of recurring income
from Wellsford/Whitehall ($1,354,000) and the Liberty Hampshire/Second
Holding Joint Venture investments ($197,000).
The income tax provision decreased by $1,623,000. This is primarily the
result of a reduction in income before taxes of $6,133,000 and lower
effective state and local rates, partially offset by losses at certain
subsidiaries without benefit at the state and local tax level as well
as taxes based upon net worth for such subsidiaries.
Accrued distributions and amortization of costs on Convertible Trust
Preferred Securities was $564,000 for the nine months ended September
30, 2000, which includes expenses incurred from their issuance in May
2000, including accrued distributions of $831,000 and the amortization
of issuance costs of $15,000, partially offset by the income tax
benefit of $282,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to meet its short-term liquidity requirements
generally through its existing working capital and cash flow provided
by operations. The Company considers its ability to generate cash to be
adequate and expects it to continue to be adequate to meet operating
requirements both in the short and long terms.
The Company expects to meet its long-term liquidity requirements such
as maturing mortgages, financing acquisitions and development,
financing capital improvements and joint venture capital requirements
by borrowings, through the use of available cash, sales of properties,
the issuance of additional debt and possibly the offering of equity
securities.
STOCK REPURCHASE PROGRAM
In April 2000, the Company's Board of Directors authorized the
repurchase of up to 1,000,000 additional shares of its outstanding
common stock. The Company intends to repurchase the shares from time to
time by means of open market purchases depending on availability of
shares, the Company's cash position and the price per share. No minimum
number or value of shares to be repurchased has been fixed. Pursuant to
this program, 29,837 shares had been repurchased at an average price of
$16.25 per share as of September 30, 2000.
LETTER OF CREDIT
In June 2000, the Company obtained a five-year AAA rated letter of
credit from Commerzbank AG to secure $14,755,000 of tax-exempt bonds
for Palomino Park. This letter of credit replaced an expiring letter
of credit. The Company will incur an annual fee of approximately
$142,000 related to this enhancement and paid an origination fee of
approximately $158,000 upon closing. The letter of credit agreement
provides for the Company to meet certain financial operating and
balance sheet covenants. An affiliate of EQR has made its own credit
available to Commerzbank AG in the form of a guarnatee. On November 1,
23
<PAGE>
2000, in conjunction with the conversion of Silver Mesa to a
condominium project, the Company made a repayment of $2,075,000 of
bond principal.
FORDHAM TOWER LOAN
On October 3, 2000, the Company and Prudential Real Estate Investors
provided an aggregate of $34,000,000 of mezzanine financing for the
construction of Fordham Tower, a 50 story, 244 unit, luxury condominium
apartment project to be built on Chicago's near northside. The Company
fully funded its share of the loan for $3,400,000. The loan, which
matures in October 2003, bears interest at a fixed rate of 10.50% per
annum with provisions for additional interest and fees to the Company,
based upon certain levels of returns on the project and is secured by a
lien on equity interests of the borrower.
CAPITAL COMMITMENTS
At September 30, 2000, the Company had certain discretionary and
contractual capital commitments. Draws under the Safeguard Credit
Facility require additional collateral to be made available to the
Company which is subject to the Company's approval. Capital calls
related to investments to be made by the Company's joint ventures are
also generally subject to the Company's approval of such investments.
The Company may make additional equity investments subject to Board of
Directors approval if deemed prudent to do so to protect or enhance its
existing investment. At September 30, 2000, capital commitments are as
follows:
COMMITMENT AMOUNT
---------- ------
Safeguard Credit Facility................ $ 17,100,000
Wellsford/Whitehall equity.............. 10,988,000(A)
Clairborne Prudential equity............. 13,608,000(B)
----------
(A) Includes an aggregate of $2,519,000 funded subsequent to September 30, 2000
through November 2, 2000. Excludes $4,000,000 of additional fundings
committed to as a provision in the MOU.
(B) Includes $3,400,000 funded on October 3, 2000 for the Fordham Tower Loan.
RESOURCES
In June 2000, the Company modified the terms of the Wellsford Finance
Facility and reduced the maximum borrowing amount to $20,000,000, which
is secured by the 277 Park Loan of $25,000,000. The Wellsford Finance
Facility bears interest at LIBOR + 2.75% per annum and matures in
January 2002. The Company is obligated to pay a fee equal to 0.25% per
annum on the average daily amount of the unused portion of the facility
until maturity. As of September 30, 2000, there was no outstanding
balance under the Wellsford Finance Facility. The facility provides for
the Company to meet certain financial operating and balance sheet
covenants.
In July 1998, Wellsford/Whitehall modified the Wellsford/Whitehall Bank
Facility. Under the new terms, $300,000,000 represents a senior secured
credit facility bearing interest at LIBOR + 1.65% per annum and
$75,000,000 represents a second mezzanine facility bearing interest at
LIBOR + 3.20% per annum. As of September 30, 2000, approximately
$244,250,000 was outstanding under the Wellsford/Whitehall Bank
Facility (approximately $181,728,000 of which was under the senior
facility). At March 31, 2000, the ability to draw on this facility
expired. Wellsford/Whitehall has notified the lenders that it is
exercising its right under the terms of the agreements to have both
facilities extended for one year to mature on December 15, 2001. Such
extensions are dependent upon Wellsford/Whitehall meeting certain
increased financial covenants and obtaining appraisals on the
properties collateralizing such loans to support the necessary
24
<PAGE>
collateral value, all of which is provided for in the respective loan
agreements. The Wellsford/Whitehall Bank Facility also limits the
amount of distributions to members.
Wellsford/Whitehall expects to meet its liquidity requirements, such as
financing additional renovations to its properties and acquisitions of
new properties, with operating cash flow from its properties, proceeds
from financings of unencumbered properties, proceeds from any asset
sales and equity contributions from the principal owners of
Wellsford/Whitehall. At September 30, 2000, the Company's unfunded
capital commitment is approximately $10,988,000 and the Whitehall
unfunded capital commitment is approximately $58,061,000.
CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000.
Cash flow provided by operating activities of $6,551,000 primarily
consists of net income of $2,162,000 plus (i) depreciation and
amortization of $3,547,000, (ii) amortization of deferred compensation
of $680,000, (iii) a decrease in accrued expenses and other liabilities
of $253,000, (iv) shares issued for director compensation of $60,000
and (v) distributions in excess of joint venture income of $27,000,
partially offset by a decrease in prepaid expenses and other assets of
$151,000 and a decrease in restricted cash of $45,000.
Cash flow used in investing activities of $21,223,000 consists of
additional investments in (i) real estate assets of $8,981,000, (ii)
notes receivable of $23,633,000 and (iii) capital contributions to
joint ventures of $6,776,000, offset by repayments of notes receivable
of $15,582,000 and returns of capital from joint ventures of
$2,585,000.
Cash flow provided by financing activities of $2,624,000 primarily
consists of the issuance of $25,000,000 of Convertible Trust Preferred
Securities, substantially offset by (i) the repurchase of common shares
of $21,133,000, (ii) principal payments of mortgage notes payable of
$666,000 and (iii) deferred financing costs principally associated with
the issuance of the Convertible Trust Preferred Securities of $524,000.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999.
Cash flow provided by operating activities of $1,328,000 primarily
consists of net income of $7,235,000 plus (i) depreciation and
amortization of $3,581,000 and (ii) amortization of deferred
compensation of $626,000, offset by undistributed joint venture income
of $3,418,000, increases in restricted cash of $83,000 and prepaid and
other assets of $4,619,000 and a decrease in accrued expenses and other
liabilities of $2,055,000.
Cash flow provided by investing activities of $18,762,000 consists of
(i) repayments of notes receivable of $72,965,000, (ii) proceeds from
the sale of a real estate asset of $7,238,000 and (iii) return of
capital from joint ventures of $3,232,000, offset by additional
investments in (i) notes receivable of $41,271,000, (ii) real estate
assets of $15,660,000 and (iii) capital contributions to joint ventures
of $7,742,000.
Cash flow used in financing activities of $7,901,000 primarily consists
of (i) repayment of credit facilities of $42,250,000 and (ii) repayment
of mortgage notes payable of $649,000, offset by borrowings from credit
facilities of $35,000,000.
25
<PAGE>
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Form 10-Q, together with other statements and information
publicly disseminated by the Company, contains certain 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, performance or achievements of the Company or industry
results to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following, some of which are discussed in greater detail in the "Risk
Factors" section of the Company's registration statement on Form S-11
(file No. 333-32445) filed with the Securities and Exchange Commission
("SEC") on July 30, 1997, as may be amended, which is incorporated
herein by reference: general and local economic and business
conditions, which will, among other factors, affect demand for
commercial and residential properties, availability and credit
worthiness of prospective tenants, lease rents and the availability
and cost of financing; ability to find suitable investments;
competition; risks of real estate acquisition, development,
construction and renovation including construction delays and cost
overruns; ability to comply with zoning and other laws; vacancies at
commercial and multifamily properties; dependence on rental income
from real property; adverse consequences of debt financing including,
without limitation, the necessity of future financings to repay debt
obligations; risks of investments in debt instruments, including
possible payment defaults and reductions in the value of collateral;
risks of subordinate loans; risks of leverage; risks associated with
equity investments in and with third parties; availability and cost of
financing; interest rate risk; demand by prospective buyers of
condominium units and commercial properties; defaults by prospective
buyers of condominium units and commercial properties; inability to
realize gains from the real estate portfolio; failure to execute
definitive agreements with Whitehall; illiquidity of real estate
investments; environmental risks; and other risks listed from time to
time in the Company's reports filed with the SEC. Therefore, actual
results could differ materially from those projected in such
statements.
26
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's primary market risk exposure is to changes in interest
rates. The Company manages this risk by offsetting its investments and
financing exposures as well as by strategically timing and structuring
its transactions. The following table presents the effect of a 1.00%
increase in the base rates on all variable rate notes receivable and
debt and its impact on annual net income:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
EFFECT OF 1%
BALANCE AT INCREASE IN BASE
SEPTEMBER 30, RATE ON INCOME
2000 (EXPENSE)
---- ---------
<S> <C> <C>
Consolidated assets and liabilities:
Notes receivable:
Variable rate ............................ $ 20,319 $ 203
Fixed rate ............................... 25,000 --
--------- ---------
$ 45,319 203
========= ---------
Mortgage notes payable:
Variable rate ............................ $ 42,755 (428)
Fixed rate ............................... 75,893 --
--------- ---------
$ 118,648 (428)
========= ---------
Convertible Trust Preferred Securities:
Fixed rate ............................... $ 25,000 --
========= ---------
Proportionate share of assets and liabilities
from investments in joint ventures:
Notes receivable:
Variable rate ............................ $ 13,646 136
Fixed rate ............................... 6,644 --
--------- ---------
$ 20,290 136
========= ---------
Debt:
Variable rate ............................ $ 81,517 (815)
Variable rate, with LIBOR cap at 7.50% (A) 122,400 (1,077)
Fixed rate ............................... 32,095 --
--------- ---------
$ 236,012 (1,892)
========= ---------
Net decrease in annual income, before income
tax benefit ................................. (1,981)
Income tax benefit ............................. 792
---------
Net decrease in annual net income .............. $ (1,189)
=========
Per share, basic and diluted ................... $ (0.14)
=========
----------
<FN>
(A) In May 2000, Wellsford/Whitehall entered into an interest rate protection
agreement which caps LIBOR at 7.50% on $300,000,000 until March 15, 2001
and is reduced to $200,000,000 for the period March 16, 2001 to May 15,
2001. Calculation assumes exposure of 0.88% on the Company's proportionate
share of $300,000,000 based on LIBOR of 6.62% at September 30, 2000.
</FN>
</TABLE>
27
<PAGE>
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS.
Neither the Company nor Wellsford/Whitehall are
presently defendants in any material litigation nor,
to the Company's knowledge, is any material
litigation threatened against the Company or its
other equity investments.
ITEM 2: CHANGES IN SECURITIES.
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5: OTHER INFORMATION.
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits filed with this Form 10-Q:
10.102 Letter Agreement dated September 30, 2000, between
Wellsford Real Properties, Inc. and Creamer Vitale
Wellsford L.L.C. relating to the sale and subsequent
assignment of SX Advisors, LLC's interest in Creamer
Vitale Wellsford L.L.C. to Wellsford Real Properties,
Inc.;
10.103 Assignment of Membership Interest, dated as of
October 1, 2000, between SX Advisors, LLC and
Wellsford Fordham Tower, L.L.C., whereby SX Advisors,
LLC assigned its interest in Creamer Vitale Wellsford
L.L.C. to Wellsford Real Properties, Inc.;
10.104 Memorandum of Understanding, dated October 25, 2000,
among Wellsford Real Properties, Inc., Wellsford
Commercial Properties Trust, WHWEL Real Estate
Limited Partnership, WXI/WWG Realty, L.L.C. and
W/W Group Holdings, L.L.C., relating to
Wellsford/Whitehall Group, L.L.C.;
27.1 Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K.
During the quarter ended September 30, 2000,
Wellsford Real Properties, Inc. filed the following
reports on Form 8-K:
None.
28
<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 thereunto duly authorized.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
-----------------------------------------------
Jeffrey H. Lynford
Chairman of the Board, Chief Financial Officer
/s/ James J. Burns
-----------------------------------------------
James J. Burns
Senior Vice President, Chief Accounting Officer
Dated: November 3, 2000
29
<PAGE>
