FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1997
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
---------------
EQUITY ONE, INC.
(Exact Name of Registrant as Specified in its Governing Instruments)
---------------
777 17TH STREET, PENTHOUSE
MIAMI BEACH, FLORIDA 33139
(305) 538-5488
(Address of Principal Executive Offices)
---------------
CHAIM KATZMAN
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
EQUITY ONE, INC.
777 17TH STREET, PENTHOUSE
MIAMI BEACH, FLORIDA 33139
(305) 538-5488
(Name and Address of Agent for Service)
---------------
WITH COPIES TO:
<TABLE>
<CAPTION>
<S> <C> <C>
GARY EPSTEIN, ESQ. JUDITH D. FRYER, ESQ. THOMAS W. DOBSON, ESQ.
GREENBERG TRAURIG HOFFMAN GREENBERG TRAURIG HOFFMAN LATHAM & WATKINS
LIPOFF ROSEN & QUENTEL, P.A. LIPOFF ROSEN & QUENTEL, A 633 WEST FIFTH STREET, SUITE 4000
1221 BRICKELL AVENUE PARTNERSHIP OF LOS ANGELES, CALIFORNIA 90071-2007
MIAMI, FLORIDA 33131 PROFESSIONAL CORPORATIONS (213) 485-1234
(305) 579-0500 153 EAST 53RD STREET
NEW YORK, NEW YORK 10021
(212) 801-9200
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</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]_________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED(1) PER UNIT(2) PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value................. 5,405,000 Shares $14.75 $79,723,750.00 $24,158.71
====================================================================================================================================
</TABLE>
(1) Includes 705,000 shares of Common Stock which may be purchased by the
Underwriters pursuant to an over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
[LOGO] SUBJECT TO COMPLETION, DATED AUGUST 20, 1997
4,700,000 SHARES
EQUITY ONE, INC.
COMMON STOCK
$1.00 PAR VALUE
---------------
Equity One, Inc., a Maryland corporation (together with its subsidiaries, the
"Company"), is a self-administered, self-managed real estate investment trust
("REIT") that principally acquires, renovates, develops and manages community
and neighborhood shopping centers anchored by national and regional supermarket
chains. The Company's portfolio consists of 15 shopping centers, two mixed use
(office/retail) properties, one office building and one mini-warehouse facility.
These properties are located in Florida and Texas and contain an aggregate of
approximately 2.0 million square feet of gross leasable area. The Company also
owns 10.0 acres of land in Southwest Dade County, Florida on which it intends to
develop a 100,000 square foot neighborhood shopping center, and has agreed to
acquire a community shopping center in North Dade County, Florida which, after a
comprehensive redevelopment, will contain approximately 300,000 square feet of
gross leasable area. In addition, the Company owns an aggregate of approximately
13.0 acres of land adjacent to certain of the Company's existing properties and
recently agreed to acquire 4.4 acres of vacant land proximate to the Company's
10.0 acres of land in Southwest Dade County, Florida, primarily all of which is
intended for retail development.
All of the shares of Common Stock, $1.00 par value ("Common Stock"), of the
Company offered hereby (the "Offering") are being sold by the Company and will
represent approximately 40.0% of all shares of Common Stock outstanding after
consummation of the Offering. Upon consummation of the Offering, the Company's
existing stockholders will retain approximately 60.0% of the Common Stock. See
"Principal Stockholders." To assist the Company in meeting its qualifications as
a REIT for federal income tax purposes, ownership by any person is limited to
5.0% of the then outstanding Common Stock. Prior to the Offering there has been
no public market for the Common Stock. It is anticipated that the initial public
offering price will be $14.75 per share of Common Stock. For information
relating to the factors considered in determining the initial public offering
price, see "Underwriting". Application will be made for listing of the Company's
Common Stock on the New York Stock Exchange ("NYSE") under the symbol "EQY". See
"Glossary" beginning on page 91 for definitions of certain terms used in this
Prospectus.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 13.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
<PAGE>
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share............................. $ $ $
Total(2).............................. $ $ $
</TABLE>
(1) Before deduction of expenses payable by the Company estimated at $________.
(2) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 705,000
additional shares to cover over-allotments of shares. If the option is
exercised in full, the total Price to Public will be $______, Underwriting
Discounts and Commissions will be $_______ and Proceeds to Company will be
$__________.
The Common Stock is offered by the several Underwriters when, as and if
issued by the Company, delivered to and accepted by the Underwriters, and
subject to their right to reject orders in whole or in part. It is expected that
the Common Stock will be ready for delivery on or about _______________, 1997,
against payment therefor in immediately available funds.
Credit Suisse First Boston
Prospectus Dated _______________, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS,
SYNDICATE SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING".
[PHOTOGRAPHS OF CERTAIN SUPERMARKET CENTERS]
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
UNLESS OTHERWISE INDICATED, (I) THE "COMPANY" REFERS TO THE BUSINESS AND
PROPERTY OF EQUITY ONE, INC. AND ITS CONSOLIDATED SUBSIDIARIES, (II) THE
INFORMATION SET FORTH IN THIS PROSPECTUS GIVES EFFECT TO THE TWO-FOR-ONE STOCK
SPLIT THAT OCCURRED ON JULY 15, 1997 AND ASSUMES THAT THE UNDERWRITERS'
OVER-ALLOTMENT OPTION IS NOT EXERCISED AND (III) ALL REFERENCES TO SQUARE
FOOTAGE REFER TO GROSS LEASABLE AREA ("GLA"), AND PERCENTAGES OF GLA AND SQUARE
FOOTAGE ARE APPROXIMATE. SEE "GLOSSARY" BEGINNING ON PAGE ____ FOR THE
DEFINITIONS OF CERTAIN TERMS USED IN THIS PROSPECTUS, INCLUDING CAPITALIZED
TERMS USED HEREIN WITHOUT DEFINITION.
THE COMPANY
The Company is a self-administered, self-managed REIT that principally
acquires, renovates, develops and manages Community and Neighborhood Shopping
Centers anchored by national and regional supermarket chains ("Supermarket
Centers"). The Company's portfolio consists of 14 Supermarket Centers, one drug
store anchored Neighborhood Shopping Center, two mixed-use (office/retail)
properties, one office building and one mini-warehouse facility (collectively,
the "Existing Properties"). The Existing Properties are located primarily in the
Dade County (Miami), Orlando and Jacksonville metropolitan areas of Florida, and
in Texas, and contain an aggregate of 2.0 million square feet of GLA which, as
of June 30, 1997, were 93.0% leased. The Company also owns 10.0 acres of land in
Southwest Dade County, Florida ("Coral Way") on which it intends to develop a
100,000 square foot Supermarket Center, and has agreed to acquire a Community
Shopping Center in Northeast Dade County, Florida which will be comprehensively
redeveloped into a 300,000 square foot Supermarket Center ("Sky Lake"). In
addition, the Company owns an aggregate of approximately 13.0 acres of land
adjacent to certain of the Existing Properties and recently agreed to purchase
4.4 acres of vacant land proximate to Coral Way, primarily all of which is
intended for retail development.
Supermarket Centers are anchored by national and regional supermarkets
such as Winn-Dixie (the fourth largest supermarket chain in the country), Publix
(the largest supermarket chain in Florida), Albertsons (the sixth largest
supermarket chain in the country) and Kroger (the largest supermarket chain in
the country). Other Anchor Tenants of the Company's Supermarket Centers include
national retailers such as K-Mart, Best Buy, Walgreen's and Eckerd. The Company
believes that supermarkets and other Anchor Tenants offering daily necessity
items generate regular consumer traffic and enhance the performance and
stability of a center. As of June 30, 1997, the Company's supermarket Anchor
Tenants contributed in excess of 24.0% of the Company's aggregate annualized
minimum rents and occupied approximately 31.0% of GLA. In addition, these
tenants have leases with an average of 11 years remaining on their terms.
The Company was formed in 1992 to acquire Supermarket Centers in high
growth, densely populated areas throughout the Southeast generating stable cash
flows and long-term value. The Company selects properties for acquisition or
development which have, or are suitable for, supermarket and other Anchor
Tenants, and are adaptable over time for expansion, renovation and
redevelopment. In order to take advantage of property management operating
efficiencies and present attractive leasing opportunities to tenants who seek
multiple locations in an area, the Company also targets properties proximate to
its other properties. All properties must be well located and have visibility,
open air designs, ease of entry and exit and ample parking. Further, the Company
acquires both Performing Supermarket Centers, which typically are well
maintained, substantially fully leased and appropriately tenanted, and
Underperforming Supermarket Centers which meet the Company's turnaround
criteria. In acquiring Performing Supermarket Centers, the Company seeks
attractive and sustainable rates of return, and in acquiring Underperforming
Centers, the Company requires opportunities to increase revenues primarily
through renovation and retenanting.
The Company believes that its seasoned management team possesses the
experience and expertise necessary to identify, acquire, renovate, develop and
manage additional Supermarket Centers. The Company's principal senior executives
and property managers average 15 years experience in the real estate industry
and have acquired and managed all the Existing Properties. Management believes
that it has cultivated strong relationships with supermarkets and other
2
<PAGE>
Anchor Tenants which, in combination with its in-depth knowledge of the
Company's primary markets, has contributed substantially to the Company's
success in identifying, acquiring and operating its properties.
Since its formation, the Company has experienced sustained growth in
its real estate portfolio, revenues and funds from operations ("FFO"). From
January 1, 1994 to June 30, 1997, the Company increased total assets and GLA to
$120.9 million and 2.0 million square feet, respectively, from $28.5 million and
600,000 square feet, respectively. For the year ended December 31, 1996, total
revenues and FFO increased to $16.7 million and $6.1 million, respectively, from
$2.1 million and $300,000, respectively, for the year ended December 31, 1993.
Similarly, total revenues and FFO increased to $9.7 million and $3.9 million,
respectively, for the six months ended June 30, 1997 from $8.0 million and $2.8
million, respectively, for the six months ended June 30, 1996.
The following charts illustrate the increase in the Company's total
revenues and FFO for the three years ended December 31, 1996 and for the six
months ended June 30, 1996 as compared to June 30, 1997:
TOTAL REVENUES
(IN THOUSANDS)
12/31/94 12/31/95 12/31/96 6/30/96 6/30/97
- -------- -------- -------- ------- -------
$6,198 $11,348 $16,714 $8,042 $9,673
PERIOD ENDED
FUNDS FROM OPERATIONS
(IN THOUSANDS)
12/31/94 12/31/95 12/31/96 6/30/96 6/30/97
- -------- -------- -------- ------- -------
$1,038 $3,973 $6,136 $2,815 $3,867
PERIOD ENDED
3
<PAGE>
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See
"Risk Factors" beginning on page 13 for a description of certain factors
relevant to an investment in the Common Stock, including:
/Bullet/ The Company's reliance on specific Anchor Tenants such as
Winn-Dixie and Publix, on tenants in the supermarket business and
on Anchor Tenants generally.
/bullet/ General real estate investment and financing risks, such as
tenant vacancies and bankruptcies, the effect of local economic
and other conditions on property values, the ability of the
properties to generate income sufficient to meet operating
expenses and competition in seeking properties for acquisition,
land for development and tenants for properties.
/bullet/ Concentration of properties in Florida.
/bullet/ Risks relating to construction and development, such as obtaining
necessary governmental and other approvals, cost overruns,
lease-up and failure of the properties to perform as expected.
/bullet/ Inexperience of the Company in construction and development.
/bullet/ Taxation of the Company as a regular corporation if it fails to
continue to qualify as a REIT.
/bullet/ Dependence on key personnel who may also participate in other
businesses.
/bullet/ Control by management and affiliates who will beneficially own
approximately 60.0% of the outstanding Common Stock and whose
shares are subject to voting and other agreements regarding
control of the Company.
/bullet/ Distributions to stockholders affected by many factors.
/bullet/ Potential liability for unknown or future environmental
liabilities on present or future properties.
/bullet/ Risks associated with borrowing, including: (i) the possible
inability to obtain new financing at favorable rates and the fact
that the Company has not yet obtained a commitment for its
Acquisition Line of Credit, (ii) the required refinancing of
mortgage indebtedness of approximately $64.9 million at maturity
dates ranging from May 1999 to February 2015, (iii) the
possibility that indebtedness might be refinanced on less
favorable terms, (iv) the absence of limitations on the amount of
indebtedness that the Company may incur, (v) that interest rates
might increase on any variable rate or refinanced indebtedness and
(vi) that the Company's leverage may limit its ability to grow
through additional debt financing.
/bullet/ The ability of the Company's Board of Directors to change the
Company's investment, financing and other policies without
stockholder approval and the requirement that certain actions must
be approved by a supermajority of stockholders.
/bullet/ Broad discretion by management in the use of approximately 8.0% of
the net proceeds of the Offering, for which no specific use has
been designated.
4
<PAGE>
BUSINESS AND GROWTH STRATEGIES
The Company intends to maximize total return to stockholders by
increasing cash flow per share and maximizing the value of its real estate
portfolio. The Company believes it can achieve this objective primarily through
the acquisition, renovation, development and management of Supermarket Centers
and other properties which meet the Company's investment criteria. The Company
also believes it has certain competitive advantages which enhance its ability to
capitalize on acquisition opportunities, including: (i) management's significant
local market experience and expertise; (ii) the Company's long-standing
relationship with real estate brokers, tenants and institutional and other real
estate owners in its current target markets; (iii) a streamlined acquisition
process; (iv) access to capital; and (v) the ability to offer cash and tax
advantaged structures to sellers. The Company's principal business and growth
strategies include:
/bullet/ ACQUISITION OF PERFORMING SUPERMARKET CENTERS. The Company intends
to acquire Performing Supermarket Centers that offer attractive
and sustainable rates of return in areas throughout the Southeast
having demographic characteristics similar to those of its present
markets. The Company will target Performing Supermarket Centers
which offer attractive and sustainable rates of return and are
adaptable to expansion, renovation and redevelopment, and, in
order to maximize property management efficiencies, are located
proximate to other Company Supermarket Centers or to one another.
In entering new markets, the Company considers its ability to
increase and concentrate holdings in order to achieve economies of
scale.
/bullet/ ACQUISITION OF UNDERPERFORMING SUPERMARKET CENTERS. The Company
intends to acquire Underperforming Supermarket Centers that meet
the Company's turnaround criteria, which includes having the
potential to increase revenues and operating cash flows through
renovation and retenanting. Underperforming Supermarket Centers
are typically undercapitalized, poorly managed and/or poorly
maintained and may require significant capital improvements. The
Company's turnaround criteria requires attractive location and
market demographics, availability on attractive terms, and
willingness of supermarket and other Anchor Tenants to commit to
lease space. The Company believes that its in-depth market
knowledge, strong relationships with supermarkets and other Anchor
Tenants and its capabilities in renovation and redevelopment, are
particularly integral to its ability to acquire and reposition
Underperforming Supermarket Centers.
/bullet/ REDEVELOPMENT AND DEVELOPMENT OF SUPERMARKET CENTERS. The Company
will redevelop existing and develop new Supermarket Centers with
characteristics similar to those of the Company's Supermarket
Centers. The Company will consider development only if the overall
economics of developing a property are more favorable than
acquiring or acquiring and redeveloping a Supermarket Center in
the same geographic area. The Company owns or has entered into
agreements to acquire Underperforming Supermarket Centers and
vacant land suitable for these purposes. See
"-Properties-Redevelopment and Development Properties", "Use of
Proceeds" and "Risk Factors-Risks of Construction and
Development".
/bullet/ INCREASING REVENUES AND INCREASING OPERATING MARGINS. The Company
will continue to seek to improve the financial performance of its
portfolio by increasing revenues (through increased occupancy
and/or rental rates), maintaining high tenant retention rates
(i.e., the percentage of tenants who renew their leases upon
expiration), replacing certain existing tenants with more
creditworthy tenants and aggressively managing operating expenses.
In addition, most of the Company's lease agreements provide for
percentage rents, indexed rent increases (based on CPI or other
criteria) and/or scheduled rent escalations. See
"Business-Business and Growth Strategies".
MARKET DATA
The Company has concentrated its activity in the Dade County (Miami),
Orlando and Jacksonville metropolitan areas of Florida. These areas provide the
Company with attractive demographic and competitive retail conditions. The
Company believes that population and employment growth are the primary demand
generators for retail properties and that retail sales are further enhanced by
Florida's sizable tourist and seasonal population. The population of the Miami
metropolitan area grew 2.8% from 1992 to 1997 while retail sales grew 13.5%
during the same period. Additionally, population is projected to grow by 1.7%
between 1998 and 2001, while retail sales are projected to grow by 3.1% during
the same period. The population in the Orlando metropolitan area grew 16.6% from
1992 to 1997, while retail sales grew 28.5% during the same period.
Additionally, population is projected to grow by 9.9% between 1998 and 2001,
while retail sales are projected to grow by 11.1% during the same period.
Population in the Jacksonville area grew 5.6% from 1992 to 1997 while retail
sales grew 16.2% during the same period. Additionally, population is projected
to grow by 3.0% between 1998 and 2001, while retail sales are projected to grow
by 4.2% during the same period. The foregoing information is derived from data
provided by the United States Department of Commerce.
5
<PAGE>
PROPERTIES
EXISTING PROPERTIES
The Existing Properties, consisting primarily of Supermarket Centers,
contain an aggregate of 2.0 million square feet of GLA. All of the Company's
Supermarket Centers were developed after 1982. Management believes that the
location and quality of its Existing Properties have enabled the Company to
develop and retain an attractive and diverse tenant base. As of June 30, 1997,
the Existing Properties were 93.0% leased to approximately 360 tenants (not
including 535 tenants of the Company's mini-storage facility). With the
exception of Winn-Dixie, which represented approximately 12.0% of aggregate
annualized minimum tenant rents as of June 30, 1997, no tenant accounted for
more than 4.3% of such tenant rent. The following table provides a brief
description of each of the Existing Properties:
<TABLE>
<CAPTION>
AVERAGE
NET NET OPERATING MINIMUM
GLA OPERATING INCOME FOR RENT PER PERCENT
(SQ. FT.) INCOME FOR THE YEAR SQ. FT. LEASED
AT SIX MONTHS ENDED AS OF PERCENT AT
DATE JUNE 30, ENDED JUNE DECEMBER 31, JUNE 30, LEASED AT JUNE 30,
PROPERTY ACQUIRED 1997 30, 1997 1996 1997 ACQUISITION 1997 KEY TENANTS
- -------- -------- --------- ---------- -------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NORTH FLORIDA
Atlantic Village June 1995 100,559 $374,172 $731,461 $7.73 100% 98% Publix,
Shopping Center Walgreen's(1),
Atlantic Beach, FL Blockbuster Music
Commonwealth February 71,021 $210,939 $460,541 $6.83 100% 95% Winn-Dixie
Shopping Center 1994
Jacksonville, FL
Fort Caroline January 74,546 $228,201 $472,879 $6.93 83% 96% Winn-Dixie,
Trading 1994 Eckerd, McDonalds
Post(2)
Jacksonville, FL
Monument Pointe January 75,328 $190,985(3) N/A $5.93 94% 94% Winn-Dixie,
Shopping Center 1997 Eckerd
Jacksonville, FL
Oak Hill Shopping December 78,492 $229,012 $448,219 $6.53 96% 100% Publix,
Center 1995 Walgreen's,
Jacksonville, FL Blockbuster Video
Mandarin May 1994 52,880 $96,680 $208,239 $5.58 98% 95% --
Mini-Storage
Jacksonville, FL
CENTRAL FLORIDA
East Bay Plaza July 1993 85,426 $152,716 $230,077 $6.89 48% 83% Scotty's,
Shopping Center Hollywood Video,
Largo, FL Albertsons(4)
Eustis Square October 126,791 $349,246 $703,518 $6.89 95% 92% Publix, Bealls,
Shopping 1993 Walgreen's
Center
Eustis, FL
Forest Edge December 68,631 $182,190 N/A $6.70 100% 99% Winn-Dixie,
Shopping 1996 Auto Zone
Center
Orlando, FL
Lake Mary Shopping November 288,450 $1,447,409 $2,787,759 $10.98 97% 100% K-Mart,
Centre 1995 Albertsons,
Lake Mary, FL General Cinema
SOUTH FLORIDA
Bird Ludlum August 192,477 $1,167,993 $2,223,722 $12.68 96% 100% Winn-Dixie,
Shopping 1994 Eckerd,
Center Blockbuster
Miami, FL Video,
Plaza Del Rey December 50,146 $283,981 $572,143 $11.95 82% 98% Navarro
Shopping Center 1992
Miami, FL
Pointe Royale July 1995 199,068 $477,851 $1,080,640 $5.59 96% 99% Winn-Dixie,
Shopping Center Best Buy,
Miami, FL Eckerd(5)
Pointe Royale July 1995 18,000 -- -- -- -- -- --
Office
Building
Miami, FL
<PAGE>
AVERAGE
NET NET OPERATING MINIMUM
GLA OPERATING INCOME FOR RENT PER PERCENT
(SQ. FT.) INCOME FOR THE YEAR SQ. FT. LEASED
AT SIX MONTHS ENDED AS OF PERCENT AT
DATE JUNE 30, ENDED JUNE DECEMBER 31, JUNE 30, LEASED AT JUNE 30,
PROPERTY ACQUIRED 1997 30, 1997 1996 1997 ACQUISITION 1997 KEY TENANTS
- -------- -------- --------- ---------- -------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
West Lake Plaza November 100,747 $412,268 $129,984(6) $9.67 96% 99% Winn-Dixie,
Shopping Center 1996 Eckerd(5),
Miami, FL Burger King
Diana Building February 18,707 $41,234 $1,266(6) $14.13 0% 60% Fat Tuesday's
West Palm Beach, FL 1995
Equity One Office April 28,980 $145,545 $259,373 $10.94 0% 100% City of Miami
Building 1992 Beach Parking
Miami Beach, FL Department
TEXAS
DALLAS AREA
Parker Towne Centre December 205,792 $217,069 $407,766 $5.23 40% 60% Minyards,
Plano, TX 1993 Blockbuster Video
HOUSTON AREA
Four Corners January 115,178 $427,255 $775,874 $9.03 76% 94% Kroger, Eckerd,
Shopping 1993 -------- ---------- ----------- ------ ---- ---- Wendy's
Center
Tomball, TX
TOTAL/WEIGHTED
AVERAGE 1,951,219 $6,634,746 $11,493,461 $8.25 84% 93%
========= ========== =========== ====== ==== ====
</TABLE>
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(1) Walgreen's has advised the Company that it will be vacating the site,
but is expected to continue to make lease payments.
(2) Since its acquisition in 1994, Winn-Dixie's occupied space has been
increased by an aggregate of approximately 10,000 square feet.
(3) Represents NOI for the five months ended June 30, 1997.
(4) Albertsons is located on property contiguous to the Company's property
which is not owned by the Company. Accordingly, Albertsons does not pay base
rent or make payments to the Company for common area maintenance and similar
charges at this location.
(5) Eckerd has vacated the leased space but has, to date, continued to make
lease payments.
(6) Represents NOI for the two months ended December 31, 1996.
See "Business--Existing Properties", "--Tenant Diversification", "-Lease
Expirations", and "--Additional Information Concerning the Existing Properties".
7
<PAGE>
REDEVELOPMENT AND DEVELOPMENT PROPERTIES
SKY LAKE. The Company recently entered into an agreement to purchase
Sky Lake for approximately $11.85 million. Sky Lake is located in the North
Miami Beach, Florida area. Approximately 160,000 residents with household
incomes averaging approximately $50,000 are located within a three mile radius
of Skylake. Following the acquisition of Sky Lake, the Company will commence a
comprehensive redevelopment program to create a Supermarket Center containing
approximately 300,000 square foot of GLA. The Company expects that the
redevelopment will cost approximately $18.0 million and will occur in several
phases which are expected to be completed by March 31, 1999. The Company has
entered into a non-binding letter of intent with Albertsons for the lease of
approximately 60,000 square feet of GLA at Sky Lake. During the redevelopment,
the Company expects to receive certain rent revenue from tenants who will
continue operations during the redevelopment process.
CORAL WAY. The Company recently acquired 10.0 acres of vacant land at
Coral Way for approximately $1.5 million for the development of a 100,000 square
foot Supermarket Center. Coral Way is located in a newly rezoned high growth
area of Southwest Dade County, Florida. The Company expects to complete
development of Coral Way by December 1999, and anticipates that the costs of
development will approximate $10.0 million. In addition, the Company has agreed
to acquire 4.4 acres of land proximate to Coral Way for future development
contingent upon, among other things, the rezoning of such property for
commercial use.
LAND FOR DEVELOPMENT. The Company owns approximately 13.0 acres of land
adjacent to certain of the Existing Properties which it intends to develop as
retail space. The Company expects to commence construction on approximately 5.0
acres adjacent to its Lake Mary Supermarket Center and 0.5 acres adjacent to its
Commonwealth Supermarket Center, within three months following the Offering. The
Company expects to complete these projects by December, 1998, at a cost of
approximately $3.0 million and $450,000, respectively.
There can be no assurance that Sky Lake, Coral Way or any other
acquisition, redevelopment or development project will be consummated or, if
consummated, will be successful. See "Business--Redevelopment and Development
Properties", "Policies with Respect to Certain Activities--Development Policies"
and "Use of Proceeds".
DISTRIBUTIONS
In general, qualification as a REIT requires the annual distribution to
stockholders of at least 95% of the REIT's taxable income. Following the
consummation of the Offering, the Company intends to continue to pay regular
quarterly dividends to its stockholders. The Company anticipates that the first
dividend to stockholders purchasing Common Stock in the Offering will be paid
with respect to the quarterly period ended December 31, 1997, based upon $_____
per share for a full quarter (which if annualized, would be $_____ per share or
an annual distribution rate of _____%) based on the estimated initial public
offering price of the Common Stock of $14.75. The Company does not intend to
reduce the expected dividend per share if the Underwriters' over-allotment
option is exercised in full. The Company has established its initial dividend
based on information and certain assumptions described herein. See "Distribution
Policy". The Company intends to maintain its initial distribution rate for the
first 12 months following the Offering, unless actual results of operations,
economic conditions or other factors differ from the assumptions used in its
estimate, and to review the dividend rate on a quarterly basis.
The Company intends to distribute annually approximately __% of its
Cash Available for Distribution, although its initial distributions will
approximate __% of Cash Available for Distribution. In general, distributions by
the Company to the extent of its current or accumulated earnings and profits,
other than capital gain dividends, will be taxable to stockholders as ordinary
income for federal income tax purposes. The Company anticipates that
approximately _____% of the distributions intended to be paid by the Company for
the 12-month period following the consummation of the Offering will represent a
return of capital for federal income tax purposes. For a discussion of the tax
treatment of distributions to stockholders, see "Federal Income Tax
Considerations-Taxation of U.S. Stockholders".
8
<PAGE>
CREDIT FACILITIES
The Company is in the process of obtaining a line of credit of up to
$50.0 million to finance the acquisition and development of new properties and
for other general corporate purposes (the "Acquisition Line of Credit"), to be
secured by certain of the Company's unencumbered Existing Properties and other
properties acquired by the Company. The Company expects that the Acquisition
Line of Credit will bear a variable rate of interest and be due within three
years.
The Company has a line of credit from City National Bank in the amount
of $2.5 million which expires in May 1998 and is collateralized by the Equity
One Office Building. At June 30, 1997, no amount was outstanding under this line
of credit. Additionally, in connection with the Company's acquisition of Lake
Mary in 1995, the Company obtained a $1.5 million letter of credit from Barnett
Bank in order to guarantee certain payment obligations. At June 30, 1997, no
amount was drawn under this letter of credit. The Company anticipates that these
credit facilities will remain outstanding following consummation of the Offering
and the Acquisition Line of Credit. See "Management Discussion and Analysis of
Financial Condition and Results of Operation--Liquidity and Capital Resources".
FINANCING POLICIES
Subject to economic conditions, the Company intends to maintain a
policy limiting its total indebtedness to 50.0% of its total market
capitalization. Such objective may be altered without the consent of the
Company's stockholders, and the Company's organizational documents do not limit
the amount of indebtedness that the Company may incur. Upon application of the
estimated net proceeds of the Offering set forth herein, total debt will
constitute approximately 25.0% of the Company's total market capitalization. In
addition, at June 30, 1997, the Company had outstanding mortgage indebtedness of
$64.9 million, all of which bears interest at fixed rates with a weighted
average annualized rate of approximately 8.3%. The Company intends to utilize
various sources of capital, including the proceeds of the Offering, the
Acquisition Line of Credit, other credit facilities, mortgage indebtedness, the
issuance of debt or equity securities in public or private capital markets when
appropriate, and reserves, for future acquisitions, capital improvements and
development activities. See "Policies with Respect to Certain Matters--Financing
Policies"; "Business--Indebtedness"; and Note 5 of Notes to Consolidated
Financial Statements.
RESTRICTIONS ON OWNERSHIP OF COMMON STOCK
Due to limitations on the concentration of ownership of stock of a REIT
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), the
Articles of Amendment and Restatement of the Company (the "Charter") prohibits
any stockholder from actually or constructively owning more than 5.0% in value
or number of the outstanding shares of Common Stock, whichever is more
restrictive (the "Ownership Limit"), except that the Board of Directors has
waived the Ownership Limit with respect to Gazit (1995), Globe Reit, Dan
Overseas and M.G.N., affiliates of the Company. See "Risk Factors-Certain
Potential Anti-Takeover Provisions" and "Description of Capital
Stock-Restrictions on Ownership and Transfer of Common Stock".
9
<PAGE>
TAX STATUS OF THE COMPANY
The Company elected to be taxed as a REIT under Sections 856 through
860 of the Code, commencing with its taxable year ending December 31, 1995, and
believes that it has met and will continue to meet the requirements for
qualification as a REIT. To maintain REIT status, an entity must meet a number
of organizational and operational requirements, including a requirement that it
currently distribute at least 95.0% of its taxable income to its stockholders.
See "Federal Income Tax Considerations--Taxation of the Company-Annual
Distribution Requirements". As a REIT, the Company generally will not be subject
to federal income tax on net income it distributes currently to its
stockholders. If the Company fails to qualify as a REIT in any taxable year, it
will be subject to federal income tax at regular corporate rates which would
adversely affect its FFO and its ability to make expected distributions to its
stockholders and could preclude the Company from qualifying as a REIT for
subsequent taxable years. See "Federal Income Tax Considerations" and "Risk
Factors-Adverse Consequences of Failure to Qualify as a REIT". Even if the
Company qualifies for taxation as a REIT, the Company may be subject to certain
federal, state and local taxes on its income and property.
COMPANY INFORMATION
The Company was incorporated under the laws of the State of Maryland in
1992. The Company's principal executive offices are located at 777 17th Street,
Penthouse, Miami Beach, Florida 33139, and its telephone number is (305)
538-5488.
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Issuer............................................................... Equity One, Inc.
Offering............................................................. 4,700,000 shares(1)
Shares outstanding after the Offering................................ 11,608,130 shares(1)(2)
Use of Proceeds...................................................... The net proceeds will be used for
the Acquisition and Development of
the Redevelopment/ Development
Properties, the Renovation of
Existing Properties, the repayment
of the Mortgage Indebtedness, and
for working capital and general
corporate purposes. See "Use of Proceeds".
Risks of Offering.................................................... See "Risk Factors", beginning on page 13.
Proposed NYSE symbol................................................. "EQY"
</TABLE>
- -------------------------
(1) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting".
(2) Does not include an aggregate of (i) 1,000,000 shares of Common Stock
reserved for issuance upon exercise of stock options granted under the
Company's 1995 Stock Option Plan (the "1995 Plan"), pursuant to which
options to purchase 614,000 shares of Common Stock have been granted, (ii)
580,288 shares of Common Stock reserved for issuance to an affiliate of the
Company pursuant to a stock purchase agreement, and (iii) 1,306,124 shares
of Common Stock reserved for issuance upon exercise of outstanding Series C
Warrants. See "Management--Stock Option Plan" and "Certain Transactions".
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
The summary consolidated financial data and balance sheet data set
forth below have been derived from the consolidated financial statements of the
Company, including the consolidated financial statements for the years ended
December 31, 1994, 1995 and 1996 and for the six months ended June 30, 1996 and
1997 contained elsewhere herein. The consolidated financial statements as of and
for the years ended December 31, 1992, 1993, 1994, 1995 and 1996 have been
audited by Deloitte & Touche LLP, independent auditors. The income statement
data for the six months ended June 30, 1996 and 1997 and the balance sheet data
as of June 30, 1997 have been derived from unaudited interim consolidated
financial statements contained elsewhere herein, which in the opinion of
management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the information set forth
therein. Results for the six months ended June 30, 1997 are not necessarily
indicative of the results for the entire year. The data set forth below should
be read in conjunction with the financial statements and related notes, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
The unaudited pro forma consolidated balance sheet data as of June 30,
1997 set forth below is presented as if the Offering and the application of the
net proceeds of the Offering all had occurred on June 30, 1997. The unaudited
pro forma consolidated statement of operations data for the six months ended
June 30, 1997 and the year ended December 31, 1996 are presented as if the
Offering and the application of the net proceeds of the Offering (and the
acquisitions of West Lake, Forrest Edge and Monument Pointe) all had occurred on
January 1, 1996. See "Use of Proceeds". The pro forma consolidated financial
data should be read in conjunction with the Company's pro forma consolidated
financial statements and related notes and historical consolidated financial
statements and related notes included elsewhere in this Prospectus.
Because the preponderance of proceeds are allocated to acquisition,
development, redevelopment and renovation projects which, for pro forma
statement of operations purposes, do not generate any revenue or expense, pro
forma results of operations reflect only the repayment of mortgage notes payable
and omit any revenue or expense from other proceeds uses (except for historical
revenue and expense attributable to Sky Lake which will continue during the
redevelopment process). Accordingly, the pro forma consolidated financial
statements do not purport to represent the Company's financial position as of
June 30, 1997 or the results of operations for the six months ended June 30,
1997 or for the year ended December 31, 1996 that would actually have occurred
had the Offering (and the acquisitions listed above) and the application of the
net proceeds of the Offering all been completed on June 30, 1997 or at the
beginning of the periods presented, or to project the Company's financial
position or results of operations as of any future date or for any future
period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------------- ---------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
--------- ----------------- --------- --------------------------------------------
1997 1997 1996 1996 1996 1995 1994 1993 1992
--------- ----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................. $10,113 $9,673 $8,042 $19,600 $16,714 $11,348 $6,198 $2,070 $666
Operating Expenses............. 2,800 2,743 2,341 5,467 4,832 3,293 2,236 665 252
Depreciation and amortization.. 1,239 1,178 1,010 2,413 2,067 1,496 996 298 107
Interest....................... 2,635 2,939 2,648 5,481 5,380 3,498 2,099 734 301
General and administrative
expenses.................... 316 241 213 665 515 549 504 324 167
------- ------ ------ ------- ------- ------- ------ ------ -----
Total expenses.............. 6,990 7,101 6,212 14,026 12,794 8,836 5,835 2,021 827
------- ------ ------ ------- ------- ------- ------ ------ -----
Net Income..................... $3,123 $2,572 $1,830 $5,574 $3,920 $2,512 $233(2) $49 ($161)
======= ====== ====== ======= ======= ======= ====== ====== =====
Net earnings per share(1)...... $0.27 $0.37 $0.34 $0.52 $0.65 $0.51 $0.07
======= ====== ====== ======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31,
------------------------- --------------------------------------------
PRO FORMA(3) HISTORICAL 1996 1995 1994 1993 1992
----------- ---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total rental properties, before
accumulated depreciation.... $162,166 $112,406 $106,706 $92,770 $52,047 $22,491 $4,784
Total assets................... 175,560 120,873 111,822 94,470 63,644 28,526 7,439
Mortgage notes payable......... 55,909 64,916 66,831 60,583 32,690 15,543 3,222
Total liabilities.............. 58,372 67,379 68,727 64,331 33,846 15,922 3,388
Stockholders' equity........... 117,188 53,494 43,095 29,139 28,798 12,604 4,051
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------------- ---------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
--------- ----------------- --------- --------------------------------------------
1997 1997 1996 1996 1996 1995 1994 1993 1992
--------- ----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations(4)....... $4,520 $3,867 $ 2,815 $8,233 $6,136 $3,973 $1,308 $347 $(54)
Cash flows from:
Operating activities........ -- 3,492 3,980 -- 6,680 3,469 2,433 (289) (46)
Investing activities........ -- (6,766) (3,495) -- (18,277) (37,211) (29,755) (20,414) (1,995)
Financing activities........ -- 5,881 7,013 -- 12,778 27,441 32,726 20,671 3,728
Gross leasable areas (square
feet) (at end of period).... -- 1,951 1,670 -- 1,807 1,670 1,003 583 50
Occupancy (at end of period)... -- 93% 89% -- 91% 90% 80% 60% 92%
</TABLE>
- -------------------------
(1) Based on the weighted average number of shares outstanding.
(2) Represents net income after income tax expense of $130,000.
(3) Adjusted to reflect the sale of 4,700,000 shares of Common Stock offered
by the Company at an estimated initial public offering price of $14.75
per share and the application of the estimated net proceeds therefrom.
(4) The Company considers Funds from Operations ("FFO") to be an appropriate
measure of the performance of an equity REIT. In March 1995, the National
Association of Real Estate Investment Trusts ("NAREIT") adopted the NAREIT
White Paper on FFO (the "NAREIT White Paper") which provided additional
guidance on the calculation of FFO. FFO is defined by NAREIT as net income
(computed in accordance with generally accepted accounting principles
("GAAP")), excluding gains (or losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of deferred financing costs) and after adjustments for
unconsolidated partnerships and joint ventures. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. In addition,
FFO should not be considered an alternative to net income as an indicator
of the Company's operating performance or as an alternative to cash flow as
a measure of liquidity or of the Company's ability to make distributions,
nor is it comparable to cash flows provided by operating activities
determined in accordance with GAAP. The Company computes FFO in accordance
with the NAREIT White Paper, which may differ from the methodology for
calculating FFO utilized by other equity REITs, and, accordingly, may not
be comparable to other REITs' FFO and does not represent amounts available
for distributions because of certain capital expenditures, scheduled
mortgage loan principal payments and other items. See "Distribution
Policy".
12
<PAGE>
RISK FACTORS
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE
RISKS DESCRIBED BELOW. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
SPECIFIC FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN THE COMMON STOCK OFFERED HEREBY.
THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WHICH
REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS, INCLUDING, BUT NOT LIMITED TO,
STATEMENTS CONCERNING INDUSTRY PERFORMANCE, THE COMPANY'S OPERATIONS,
PERFORMANCE, FINANCIAL CONDITION, PLANS, GROWTH AND STRATEGIES. FOR THIS
PURPOSE, ANY STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, WORDS SUCH AS "MAY", "WILL", "EXPECT",
"ANTICIPATE", "INTEND", "COULD", "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE OR
OTHER VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND
ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT
FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THIS "RISK FACTORS" SECTION AND
ELSEWHERE IN THIS PROSPECTUS.
SIGNIFICANT RELIANCE ON CERTAIN TENANTS
RELIANCE ON WINN-DIXIE, PUBLIX AND OTHER ANCHOR TENANTS
As of June 30, 1997, 16.0% and 6.0% of the aggregate GLA owned by the
Company was leased to Winn-Dixie and Publix, respectively, and these leases
represented 11.0% and 3.0%, respectively, of the aggregate annualized minimum
rental revenues from the Existing Properties. The Company's financial condition,
results of operations, liquidity and FFO and its ability to make distributions
to stockholders could be adversely affected in the event of the bankruptcy or
insolvency of, or a downturn in the business of, Winn-Dixie, Publix or any other
Anchor Tenant, or in the event that any of such tenants is unable to pay its
rent as it becomes due or does not renew its lease as it expires or renews at
lower rental rates.
Tenants may seek the protection of the bankruptcy laws, which could
result in the rejection and termination of their leases, or a continuation of
their leases on less advantageous terms, thereby causing a reduction in the cash
flow available for distribution by the Company. Such reduction could be material
if an Anchor Tenant files for bankruptcy protection. No assurance can be given
that any Anchor Tenants will not file for bankruptcy protection in the future,
or if they file, that they will affirm their leases and continue to make rental
payments in a timely manner.
RELIANCE ON ANCHOR TENANTS GENERALLY
Shopping centers generally rely on Anchor Tenants to attract customers
to the centers. Vacated Anchor Tenant space reduces rental revenues if not
re-rented promptly at the same rental rates and, even when the tenant continues
to make rental payments, tends to adversely affect the entire shopping center
because of the loss of the departed Anchor Tenant's power to draw customers to
the center. No assurances can be given that existing Anchor Tenants will renew
their leases as they expire or will not vacate their space prior to expiration.
The closing of one or more stores occupied by Anchor Tenants or lease
terminations by one or more Anchor Tenants could adversely affect that property
and result in lease terminations or rent reductions by other tenants whose
leases may permit termination or rent reduction in such circumstances. Each of
these developments could adversely affect the Company's FFO and its ability to
make expected distributions to stockholders. In three instances, drug store
Anchor Tenants have vacated their leased space or indicated their intention to
do so, although they continue to make lease payments to the Company. See
"Reliance on Tenants in Certain Industries" and "Business--Additional
Information Concerning the Existing Properties".
13
<PAGE>
RELIANCE ON TENANTS IN CERTAIN INDUSTRIES
As of June 30, 1997, 31.0% and 6.0% of the aggregate GLA owned by the
Company was leased to Anchor Tenants who are supermarkets and drugstores,
respectively, and these leases represented 24.0% and 6.0%, respectively, of the
aggregate annualized minimum rental revenues from the Existing Properties. The
Company could be adversely affected by having a tenant base concentrated in
these or other industries in the event that there is an economic downturn in
these industries or if there is a change in the manner in which these industries
conduct business. For example, it has recently become more common for drugstores
to seek to rent freestanding structures instead of space within shopping
centers. During the last year, before the expiration of its leases, Eckerd, a
drugstore chain Anchor Tenant, vacated the premises of two sites which it leased
from the Company, and on which it continues to make rental payments, in favor of
nearby free standing structures. Eckerd presently leases and continues to occupy
3.0% of the aggregate GLA owned by the Company representing approximately 3.0%
of the aggregate annualized minimum rental revenues from Existing Properties.
Walgreen's, another drugstore chain Anchor Tenant, has advised the Company that
it will be vacating its leased space in Atlantic Village.
GENERAL RISKS RELATING TO REAL ESTATE INVESTMENTS
VALUE OF REAL ESTATE DEPENDENT ON NUMEROUS FACTORS
Real estate values are affected by a number of factors, including
changes in the general economic climate, local conditions (such as an
over-supply of space or a reduction in demand for real estate in an area), the
quality and policies of management, competition from other properties, the
ability of the owner to provide adequate maintenance and insurance, and variable
operating costs. Shopping centers, in particular, may be affected by changing
perceptions of retailers or shoppers of the safety, convenience and
attractiveness of the shopping center. Real estate values are also affected by
such factors as government regulations, interest rate levels, the availability
of financing and potential liability under and changes in environmental, zoning,
tax and other laws. Because substantially all of the Company's income and FFO
will be derived from rental income from real property, the Company's FFO and its
ability to make expected distributions to stockholders would be adversely
affected if a significant number of the Company's tenants were unable to meet
their obligations to the Company, or if the Company were unable to lease a
significant amount of space in its properties on economically favorable terms.
In the event of a default by a tenant, the Company may experience delays in
enforcing, and incur substantial costs to enforce, its rights as landlord. As a
result of the above, or other factors, including the cyclical nature of real
estate markets, the value of the Company's properties could decrease.
DIFFICULTIES AND COSTS ASSOCIATED WITH RENTING UNLEASED SPACE AND SPACE TO BE
VACATED IN FUTURE YEARS
The ability of the Company to rent unleased or vacated space will be
affected by many factors, including covenants found in certain leases with
tenants restricting the use of other space at a property. Of the leases for the
Existing Properties, leases covering 153,955 square feet, 134,148 square feet
and 166,975 square feet (representing 8.0%, 7.0% and 9.0%, respectively, of the
GLA), will expire in 1998, 1999 and 2000, respectively. No Anchor Tenant leases
expire before 2004. If the Company is able to re-let vacated space, there is no
assurance that rental rates will be equal to or in excess of current rental
rates. In addition, the Company may incur substantial costs in obtaining new
tenants, including Leasing Commissions, and the cost of making Tenant
Improvements or repairs required by a new tenant.
COMPETITION FROM NUMEROUS SOURCES
There are numerous commercial developers, real estate companies and
other owners of real estate in the areas in which the Existing Properties are
located that compete with the Company in seeking land for development,
properties for acquisition, financing and tenants. Many of such competitors have
substantially greater resources than the Company. The Company has determined
that competitive factors have made it less likely that the Company will be able
to achieve its growth objectives exclusively through acquisitions and that it
will need to
14
<PAGE>
develop or redevelop properties to achieve these objectives. There can be no
assurance that it will be able to do so successfully. In addition, retailers at
the Existing Properties face increasing competition from outlet malls, discount
shopping clubs, direct mail and telemarketing sales. There can be no assurance
that the Company will be able to acquire suitable properties and tenants for its
properties in the future or that such properties will be profitable.
MARKET ILLIQUIDITY
Equity real estate investments are relatively illiquid and therefore
tend to limit the ability of the Company to vary its portfolio promptly in
response to changes in economic or other conditions. The Existing Properties are
primarily Supermarket Centers. The Company has no present intention to vary the
types of real estate in its portfolio.
FIXED COSTS
Certain significant expenditures associated with properties (such as
mortgage payments, real estate taxes and maintenance costs) are generally not
reduced when circumstances cause a reduction in income from the property. Should
such circumstances occur, they would adversely affect the Company's ability to
pay distributions to stockholders. The Company may be unable to increase
revenues to the same extent that its fixed costs increase.
LIMITED GEOGRAPHIC DIVERSIFICATION AND EXPERIENCE OUTSIDE TARGET MARKETS
The Existing Properties consist exclusively of properties located in
Florida and Texas. Approximately 83.0% of the Existing Properties (based on GLA)
are located in Florida. The Company's performance may therefore be linked to
economic conditions and especially the market for Supermarket Centers in
Florida. A decline in the economy in this market may adversely affect the
Company's financial condition, results of operations, liquidity and FFO, and its
ability to make expected distributions to stockholders.
Although the Company is seeking additional properties and sites in its
primary markets, it will also seek to locate properties in other areas with
similar demographic characteristics throughout the Southeast. In seeking
investment opportunities in other areas of the Southeast, the Company will not
initially possess the same level of familiarity as it possesses with respect to
its current markets, which could adversely affect its ability to acquire,
develop, manage or lease properties in new markets.
RISKS OF CONSTRUCTION AND DEVELOPMENT
INEXPERIENCE IN CONSTRUCTION AND DEVELOPMENT
Until recently, the Company's growth strategy has focused primarily on
the acquisition and renovation of existing Supermarket Centers. In light of
changing market conditions, the Company plans to develop vacant land and
redevelop certain of its Existing Properties. See "Summary-Business and Growth
Strategies", "--Redevelopment and Development Properties" and "Use of Proceeds".
The Company has not developed any new Supermarket Centers, although its
management has experience in development activities and has undertaken and
completed renovation, expansion and redevelopment projects with respect to
certain of the Existing Properties. The Company has recently hired a licensed
architect and general contractor to head its development department and is in
the process of retaining at least one additional full-time employee to support
its construction and development personnel. See "Management". The Company's
relative inexperience in these activities may make it more difficult for it to
construct, develop and redevelop Supermarket Centers successfully.
UNCERTAINTY AS TO PROFITABILITY
The Company intends to pursue construction and development activities
as opportunities arise. Such activities may include expanding and/or renovating
properties or developing new sites. See "Business-Business and
15
<PAGE>
Growth Strategies". Expansion, renovation and development projects generally
require expenditures of capital, as well as various government and other
approvals, which the Company may not be able to obtain, or may only obtain after
delay and at substantial costs. While policies with respect to expansion,
renovation and development activities are intended to limit some of the risks
otherwise associated with such activities, such as initiating construction after
securing commitments from Anchor Tenants, the Company will nevertheless incur
certain risks, including the risks that: construction costs of a property may
exceed original estimates, possibly making the property uneconomical; occupancy
rates and rents at a newly completed property may not be sufficient to make the
property profitable; financing may not be available on favorable terms for
development of a property; and construction and lease-up may not be completed on
schedule, resulting in increased debt service expense and construction costs.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
Although the Company's management believes that it has operated so as
to qualify as a REIT under the Code since its REIT election in 1995, no
assurance can be given that the Company has qualified or will remain qualified
as a REIT. In addition, no assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not
significantly change the tax laws with respect to qualification as a REIT or the
federal income tax consequences of such qualification. Qualification as a REIT
involves the application of highly technical and complex Code provisions for
which there are only limited judicial and administrative interpretations. The
determination of various factual matters and circumstances not entirely within
the Company's control may affect the Company's ability to qualify as a REIT. For
example, in order to qualify as a REIT, at least 95.0% of the Company's gross
income in any year must be derived from qualifying sources and the Company must
make distributions to stockholders aggregating annually at least 95.0% of its
REIT taxable income (excluding capital gains). The Company intends to make
distributions to its stockholders to comply with the distribution provisions of
the Code. Although the Company anticipates that its cash flows from operating
activities and FFO will be sufficient to enable it to pay its operating expenses
and meet distribution requirements, no assurances can be given in this regard.
If the Company were to fail to qualify as a REIT in any taxable year,
the Company would be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates, and
would not be allowed a deduction in computing its taxable income for amounts
distributed to its stockholders. Moreover, unless entitled to relief under
certain statutory provisions, the Company also would be ineligible for
qualification as a REIT for the four taxable years following the year during
which qualification was lost. Such disqualification would reduce the net
earnings of the Company available for investment or distribution to its
stockholders due to the additional tax liability of the Company for the years
involved. See "Federal Income Tax Considerations--Failure to Qualify for
Taxation as a REIT".
DEPENDENCE ON KEY PERSONNEL; POSSIBLE CONFLICTS OF INTEREST
The Company's ability to execute its acquisition and growth strategy
successfully depends to a significant degree upon the continued contributions of
Chaim Katzman, the Company's Chairman of the Board, President and Chief
Executive Officer, and Doron Valero, the Company's Executive Vice President and
Chief Operating Officer. Pursuant to Mr. Katzman's employment agreement with the
Company, Mr. Katzman is required to devote only so much of his business time,
attention, skill and efforts as shall be required for the faithful performance
of his duties. Presently, his significant other activities consist primarily of
serving as the President and Chief Executive Officer of Gazit, a public company
whose securities are traded on the TASE and whose primary activity is its
substantial investment in the Company. Accordingly, although he may have other
interests in the future, Mr. Katzman's primary outside activities are presently
focused on the Company. Mr. Katzman currently also invests in and serves as the
non-executive chairman of the board of real estate companies whose holdings
include commercial properties in Canada and Israel. Additionally, although Mr.
Katzman presently resides in the United States, Mr. Katzman is not required
under his employment agreement to reside and perform his duties within the
United States. Mr. Valero currently serves as the President and director of
several entities which own apartment properties in Miami Beach, Florida. The
loss of the services of either Mr. Katzman or Mr. Valero could have a material
adverse effect on the
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Company's income, FFO, and ability of the Company to make expected distributions
to stockholders. Neither Mr. Katzman nor Mr. Valero is a citizen of the United
States. Although Mr. Katzman and Mr. Valero each have resident alien cards,
there can be no assurance that changes in the immigration laws or policies of
the Immigration and Naturalization Service will permit each of Mr. Katzman and
Mr. Valero to remain in the country or continue to work in the United States.
SIGNIFICANT CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND THEIR AFFILIATES
Following the consummation of the Offering, directors and executive
officers of the Company and their affiliates will beneficially own 59.9% of the
outstanding Common Stock (56.1% if the over-allotment granted to the
Underwriters is exercised in full). Certain stockholders of the Company have
entered into agreements to control the Company. Such stockholders directly and
indirectly own and/or control an aggregate of 96.5% of the issued and
outstanding Common Stock of the Company before giving effect to the Offering.
The agreements provide that, in all matters affecting the Company (other than
the election of directors) the parties to the agreements will vote all of their
shares as they may agree, or if they cannot agree, will vote against any such
proposal to which they cannot agree. With respect to the election of directors,
the parties have granted an irrevocable power of attorney to Globe Reit, which
is an affiliate of Mr. Katzman and of Messrs. Makavy and Wulkan, directors of
the Company. Globe Reit has the power under an irrevocable power of attorney
(the "Irrevocable Proxy") to vote all of the shares of Common Stock owned by the
stockholders who are parties to the Irrevocable Proxy for the election of
directors through May, 2001, with, effectively, one-half of the directors
designated by each of Gazit and Danbar Resources, and if there is an additional
director, such director shall be designated by agreement. Pursuant to this
agreement, the parties to the agreement may be deemed a "group" within the
meaning of Section 13(d) of the Exchange Act and may direct the business and
affairs of the Company. See "Principal Stockholders" and "Certain Transactions".
DISTRIBUTIONS TO STOCKHOLDERS AFFECTED BY MANY FACTORS
The Code requires a REIT to distribute to its stockholders 95.0% of its
taxable income (excluding capital gains). Subject to this requirement,
distributions by the Company will be dependent on a number of other factors,
including the Company's financial condition, reinvestment of funds in
properties, capital expenditures, cash flow invested in the construction and
development of properties which are not yet income producing, the annual
distribution requirements under the REIT provisions of the Code and other
factors. If the Company incurs additional indebtedness in the future, it will
require additional funds to service such indebtedness and as a result, amounts
available to make distributions may decrease.
Distributions by the Company to its stockholders will be based
principally on Cash Available for Distribution from its Existing Properties and
properties acquired in the future. Increases in base rent under Existing
Property leases or the payment of rent in connection with future acquisitions
will increase the Company's Cash Available for Distribution to stockholders.
However, in the event of a default or a lease termination by a lessee, there
could be a decrease or cessation of rental payments and thereby a decrease in
Cash Available for Distribution. If Cash Available for Distribution generated by
the Company's assets for any period is less than the Company's estimate, or if
such Cash Available for Distribution decreases in future periods from expected
levels, the Company's ability to make the expected distributions would be
adversely affected. Any such failure to make expected distributions could result
in a decrease in the market price of the Common Stock.
ESTIMATED INITIAL CASH AVAILABLE FOR DISTRIBUTION MAY NOT BE SUFFICIENT TO MAKE
DISTRIBUTIONS AT EXPECTED LEVELS
The Company's proposed initial annual distributions following
consummation of the Offering represent ____% of the Company's estimated initial
Cash Available for Distribution for the 12 months ending June 30, 1998. In the
event that the Company is not able to pay its estimated initial annual
distribution of $____ per share to stockholders out of Cash Available for
Distribution as calculated under "Distribution Policy" below, the Company could
be required to fund distributions from working capital, to draw down under
available lines of credit to provide funds for such distribution, or to reduce
the amount of such distribution. Pending investment of the net proceeds and the
production of income
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therefrom or in the event the Underwriters' over-allotment option is exercised,
the Company's ability to pay such distribution out of Cash Available for
Distribution may be further adversely affected.
GOVERNMENT REGULATION
POTENTIAL ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate may be required to investigate
and clean up hazardous or toxic substances or petroleum product releases at such
property and may be held liable to a governmental entity or to third parties for
property damage and for investigation and clean-up costs incurred by such
parties in connection with contamination. The cost of investigation, remediation
or removal of such substances may be substantial, and the presence of such
substances, or the failure to properly remediate such substances, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral. In connection with the ownership (direct or indirect),
operation, management and development of real properties, the Company is
generally considered an owner or operator of such properties or as having
arranged for the disposal or treatment of hazardous or toxic substances and,
therefore, potentially liable for removal or remediation costs, as well as
certain other related costs, including governmental fines and damages for
injuries to persons and property. Although the Company obtained Phase I or
similar environmental audits (which involve general inspections without soil
sampling or groundwater analysis) completed by independent environmental
consultants when it acquired all but two of the Existing Properties, six of the
Existing Properties have environmental assessments that were conducted more than
four years ago and two Existing Properties do not currently have environmental
assessments. These assessments are currently being performed or updated.
The Company believes that the environmental studies conducted to date
have not revealed significant environmental liabilities that would have a
material adverse effect on the Company's financial condition, results of
operations, liquidity and FFO; however, no assurances can be given that
environmental studies obtained by the Company reveal all environmental
liabilities, that any prior owner of land or a property owned or acquired by the
Company did not create any material environmental condition not known to the
Company, or that a material environmental condition does not otherwise exist (or
may not exist in the future). Tenants at the shopping centers and other
properties owned and operated by the Company include plant-on-premises dry
cleaners, gasoline service stations and tire centers, photo development firms
and other retailers which use hazardous substances in their businesses. Although
leases with such tenants contain provisions intended to minimize the
environmental risks and to shift the financial risks to the tenants, there is no
assurance that the Company will not incur liability in this regard. A limited
monitoring program with respect to groundwater testing has been implemented at
Plaza Del Rey based on questions raised by environmental studies conducted at
the time of purchase. While this site is not regarded by management as a
significant environmental risk, if a material environmental condition does in
fact exist (or exists in the future) at this or other properties, it could have
a significant adverse impact upon the Company's financial condition, results of
operations, liquidity and FFO.
In connection with the Company's acquisition of Sky Lake, a Phase II
Environmental Site Assessment dated July 15, 1997 has revealed the existence of
perchloroethylene at levels above regulatory limits caused by a dry cleaning
business operated on the premises. The Company has learned that this site is
included in the Florida Dry Cleaners State Program. As a condition to the
Company's purchase of the property, the seller has agreed to pay all remediation
costs, which environmental consultants have estimated will approximate $250,000.
At the closing, $500,000 will be placed into an escrow account to pay for the
remediation. Based on the remediation cost estimates, the guarantee of the
seller to pay for the cleanup and the establishment of the escrow account, the
Company has concluded that the property will not pose a material liability to
the Company. See "Business--Environmental Matters".
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GOVERNMENT ENTITLEMENTS
In developing a project, the Company must obtain the approval of
numerous government authorities regulating such matters as permitted land uses
and levels of density, the installation of utility services such as water and
waste disposal and the dedication of acreage for open space, parks, schools and
other community purposes. Several authorities in Florida have imposed impact
fees as a means of defraying the cost of providing certain governmental services
to developing areas and the amount of these fees has increased significantly
during recent years. Other Florida laws require the use of specific construction
materials which reduce the need for energy-consuming heating and cooling
systems. In addition, Broward and Palm Beach counties, adjacent to Dade County,
have attempted to impose restrictive zoning and density requirements in order to
limit the number of persons who live and work within their boundaries. As a
result of Hurricane Andrew, which struck Southern Florida in August 1992, Dade
and Broward counties in Florida enacted more stringent building codes which have
increased costs of construction. The State of Florida has also, at times,
declared moratoriums on the issuance of building permits and imposed other
restrictions in areas where the infrastructure does not reach minimum standards.
Other states and localities in which the Company seeks to develop projects may
have similar or other government regulations. There is no assurance that these
and other restrictions will not adversely affect the Company in the future.
The ability of the Company to obtain necessary approvals and permits
for projects is often beyond the Company's control, and could restrict or
prevent the development of otherwise desirable property. The period of time
necessary to obtain permits and approvals increases the carrying costs of
unimproved property acquired for the purpose of development and construction. In
addition, the continued effectiveness of permits already granted is subject to
factors such as changes in policies, rules and regulations and their
interpretation and application.
Certain employees of the Company are required to maintain certain real
estate and mortgage brokers licenses in order for the Company to manage
properties and receive certain commissions. Changes in the requirements for
maintaining these licenses or failure of such employees to qualify for such
licenses could have an adverse affect on the Company.
AMERICANS WITH DISABILITIES ACT COMPLIANCE
Under the ADA, places of public accommodation or commercial facilities
are required to meet certain federal requirements related to access and use by
disabled persons. These requirements became effective after January 1, 1991.
Although management of the Company believes that the Existing Properties are
substantially in compliance with the present requirements of the ADA, the
Company may incur additional costs in connection with such compliance in the
future. Also, a number of additional federal, state and local laws and
regulations exist that may require modifications to the Company's properties, or
affect certain future renovations thereof, with respect to access by disabled
persons. Non-compliance with the ADA could result in the imposition of fines, an
award of damages to private litigants, or an order to correct any non-complying
feature. Under certain of the Company's leases, the tenant is responsible for
ensuring that the property complies with all laws and regulations, including the
ADA. Notwithstanding the foregoing, the Company may be required to make
substantial capital expenditures to comply with this law. In addition,
provisions of the ADA may impose limitations or restrictions on the completion
of certain renovations and thus may limit the overall returns on the Company's
investments.
RISK OF BORROWING; NO LIMITATION ON DEBT
The Company will be subject to the risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest, and the risk that
indebtedness on its properties will not be refinanced at maturity or that the
terms of such refinancing will not be as favorable as the terms of such
indebtedness. Most of the Company's existing mortgage indebtedness has an
amortization schedule which results in substantial payments being due at
maturity. See "Business--Indebtedness" and Note 5 of Notes to Consolidated
Financial Statements.
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The Company's Acquisition Line of Credit is expected to bear a variable
rate of interest and be due within three years (similar to its existing lines of
credit). Changes in interest rates on the Acquisition Line of Credit are
unlikely to correspond with changes in rental rates, and the Company has no
present intention to (but may) purchase hedge agreements against interest rate
fluctuations. There can be no assurance that the Company will be able to obtain
the Acquisition Line of Credit. See "--Effect of Market Interest Rates on Price
of Common Stock and Value of Real Estate", "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Business--Indebtedness".
If the Company were unable to refinance its indebtedness on acceptable
terms, or at all, the Company might be forced to dispose of one or more of its
properties upon disadvantageous terms, which might result in losses to the
Company and might adversely affect the cash available for distribution. If
prevailing interest rates or other factors at the time of refinancing result in
higher interest rates on refinancings, the Company's interest expense would
increase, without a corresponding increase in its rental rates, which would
adversely affect the Company's cash flow and its ability to pay expected
distributions to stockholders. Further, if one of the Company's properties is
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, or is in default under the related mortgage or deed of trust,
such property could be transferred to the mortgagee, or the mortgagee could
foreclose upon the property, appoint a receiver and receive an assignment of
rents and leases or pursue other remedies, all with a consequent loss of income
and asset value to the Company. Foreclosure could also create taxable income
without accompanying cash proceeds, thereby hindering the Company's ability to
meet the REIT distribution requirements under the Code.
Upon consummation of the Offering, the debt to total market
capitalization ratio of the Company will be approximately 25.0%. The Board of
Directors has adopted a policy to limit the Company's indebtedness to
approximately 50.0% of its total market capitalization (I.E., the market value
of the issued and outstanding shares of Common Stock, plus total debt), but the
organizational documents of the Company do not contain any limitation on the
amount or percentage of indebtedness that the Company may incur. The Board of
Directors, without the vote of the Company's stockholders, could alter or
eliminate its current policy on borrowing at any time at its discretion. If this
policy were changed, the Company could become more highly leveraged, resulting
in an increase in debt service costs that could adversely affect the Company's
FFO and its ability to make expected distributions to its stockholders and an
increased risk of default on the Company's obligations.
BROAD DISCRETION IN USE OF PROCEEDS
The Company will have broad discretion as to the application of a
significant portion of net proceeds of the Offering that have been designated as
working capital to be used for future unidentified acquisition and development
activities, operations or for other corporate purposes. This amount would be
increased to the extent the Underwriters' over-allotment is exercised, or to the
extent any proposed use of proceeds requires less funds or becomes
impracticable, and would be decreased to the extent any of such proposed uses
would require more funds than is currently forecast. An investor will not have
the opportunity to evaluate the economic, financial and other relevant
information which will be utilized by the Company in determining the application
of such proceeds and will be dependent on management's determination how to
deploy successfully these proceeds. See "Use of Proceeds".
CHANGES IN INVESTMENT AND FINANCING POLICIES WITHOUT STOCKHOLDER APPROVAL
The Company's Board of Directors determines the Company's investment
and financing policies and its policies with respect to certain other
activities, including its debt capitalization, growth, distributions, REIT
status, and investment and operating policies. The Board of Directors has no
present intention to amend or revise these policies. However, the Board of
Directors may do so at any time without a vote of the Company's stockholders. A
change in these policies could adversely affect the Company's financial
condition, results of operations, cash flows and the amounts distributed to
holders of Common Stock.
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EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK AND VALUE OF REAL
ESTATE
The market price of the Common Stock will be affected by the annual
distribution rate on the shares of Common Stock. Increasing market interest
rates may lead prospective purchasers of the Common Stock to seek a higher
annual distribution rate from their investments. Such an increase in market
expectations or requirements would be likely to affect the market price of the
Common Stock adversely. Likewise, increases in interest rates may have the
affect of depressing the value (including the collateral value) of retail
properties such as the Existing Properties.
DILUTION
Purchasers of the Common Stock offered hereby will experience immediate
and significant dilution of $4.79 per share ($4.51 per share if the
Underwriters' over-allotment option is exercised in full) in the net tangible
book value of their shares. See "Dilution".
ABSENCE OF PUBLIC MARKET; STOCK PRICE NOT BASED ON PROPERTY VALUATION; POSSIBLE
FLUCTUATIONS OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common
Stock. Although the Company will apply for listing of its Common Stock on the
New York Stock Exchange, there can be no assurance that an active trading market
for the Common Stock will develop or that, if developed, it will be sustained.
In connection with the Offering, neither the Company nor the Underwriters have
obtained appraisals or other valuations of the Existing Properties. The initial
public offering price of the Common Stock will be determined by negotiation
among the Underwriters and the Company and may not reflect the fair market value
of the Company's Existing Properties. The Offering price may not be indicative
of the market price for the Common Stock after the Offering. The market price of
the Common Stock could be subject to significant fluctuations in response to the
Company's operating results and other factors. In addition, the stock market in
recent years has experienced extreme price and volume fluctuations that often
have been unrelated or disproportionate to the operating performance of
individual companies. Such fluctuations, and general economic and market
conditions, may adversely affect the market price of the Common Stock. See
"Selected Consolidated Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Underwriting".
ADVERSE EFFECT OF UNINSURED LOSS
The Company believes that it carries comprehensive liability, fire,
flood, extended coverage and rental loss insurance with respect to its
properties with policy specifications and insured limits customarily carried for
similar properties. The Company believes that the insurance currently carried on
the Existing Properties is adequate and in accordance with industry standards.
There are, however, certain types of losses (such as from hurricanes) which may
be uninsurable, or the cost of insuring against such losses may not be
economically justifiable. Should an uninsured loss occur, the Company could lose
both its invested capital in and anticipated revenues from the property, and
would continue to be obligated to repay any recourse mortgage indebtedness on
the property. This risk may be intensified by the fact that the Company's
Existing Properties are clustered in certain target markets, making it likely
that a natural disaster in any such market could affect a number of the Existing
Properties.
TECHNICAL DEFAULTS
Certain of the mortgages on the Existing Properties contain
prohibitions on transfers of ownership interests in the mortgagor without the
prior written consent of the lenders, which provisions may have been violated by
previous issuances of Common Stock and may be violated by the Offering. A
violation could serve as a basis for the lenders to accelerate amounts due under
the related mortgages. The Company is currently in the process of obtaining a
clarification, amendment or consent from each of the various lenders under such
mortgages. The outstanding amounts under the mortgages on the affected Existing
Properties covered by such restrictions on transfer total approximately $11.0
million. In the event that the requested assurances or consents are not obtained
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and the mortgage holders declare defaults under the mortgage documents, the
Company will either prepay the mortgages from the net proceeds from the
Offering, or reserve the capacity to prepay the mortgages under the Acquisition
Line of Credit.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of Common Stock in the public
market, or the availability of such shares for future sale, could impair the
Company's ability to raise capital through an offering of securities and may
adversely affect the then-prevailing market prices. See "Shares Eligible for
Future Sale". The holders of substantially all of the outstanding Common Stock
have agreed not to sell any shares of Common Stock for 180 days from the date of
this Prospectus without the prior written consent of Credit Suisse First Boston.
See "Underwriting". Following such 180-day period, approximately 5,300,000
shares held by current stockholders will be available for sale under Rule 144 of
the Act. Additionally, shares of Common Stock have been reserved for issuance
under the Company's 1995 Plan, under which options to purchase 614,000 shares of
Common Stock are issued and outstanding. The Company intends to register under
the Act all 1,000,000 eligible shares reserved for issuance under the 1995 Plan.
See "Management--Stock Option Plan". Shares covered by such registration will,
when issued, be eligible for resale in the public market, subject to Rule 144
limitations applicable to affiliates. Pursuant to certain registration rights
agreements among the Company and certain current stockholders, the Company has
granted various registration rights to such stockholders who have waived such
rights with respect to the Offering. See "Certain Transactions".
CERTAIN POTENTIAL ANTI-TAKEOVER PROVISIONS
PROVISIONS OF MARYLAND LAW; CHARTER PROVISIONS
Certain provisions of the Maryland General Corporation Law, as amended
(the "MGCL") and of the Company's Charter and Bylaws may have the effect of
discouraging or preventing a change in control of the Company or the removal of
existing management and, as a result, may prevent the stockholders of the
Company from receiving a substantial premium for their shares over then-current
market prices.
BUSINESS COMBINATIONS. Under the MGCL, certain "business combinations"
(including a merger, consolidation, share exchange, or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and any person who beneficially owns
ten percent or more of the voting power of the corporation's shares or an
affiliate of the corporation who, at any time within the two-year period prior
to the date in question, was the beneficial owner of ten percent or more of the
voting power of the then outstanding voting stock of the corporation (an
"Interested Stockholder") or an affiliate thereof are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. These provisions of the MGCL do not apply, however, to
business combinations that are approved or exempted by the Board of Directors
prior to the time that the Interested Stockholder becomes an Interested
Stockholder. Each of Gazit (1995), Globe Reit, Dan Overseas and M.G.N.
beneficially owns more than ten percent of the Company's voting shares and
would, therefore, be subject to the business combination provision of the MGCL.
CONTROL SHARE ACQUISITIONS. The MGCL provides that "control shares" of
a Maryland corporation acquired in a "control share acquisition" have no voting
rights except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter, excluding shares of stock owned by the
acquirer, by officers or by directors who are employees of the corporation.
"Control shares" are voting shares of stock which, if aggregated with all other
such shares of stock previously acquired by such person, or in respect of which
such person is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquirer to exercise
voting power in electing directors within one of the following ranges of voting
power: (i) one-fifth or more but less than one-third, (ii) one-third or more but
less than a majority, or (iii) a majority of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained
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stockholder approval. A "control share acquisition" means the acquisition of
control shares subject to certain restrictions.
The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction, or to acquisitions approved or exempted by the charter or
bylaws of a corporation. The Bylaws of the Company contain a provision exempting
from the control share acquisition statute any and all acquisitions by any
person of the Company's shares of Common Stock. Such provision of the Bylaws may
be amended by the Board of Directors without stockholder approval. There can be
no assurance that such provision will not be amended or eliminated at any time
in the future. As a result of the Company's decision to opt out of the "control
share acquisition" provisions of the MGCL, stockholders who acquire a
substantial block of Common Stock are not precluded from exercising full voting
rights with respect to their shares on all matters without first obtaining the
approval of other stockholders entitled to vote. This may have the effect of
making it easier for any such control share stockholder to effect a business
combination with the Company. However, no assurance can be given that any such
business combination would be consummated or, if consummated, would result in a
purchase of shares of Common Stock from any stockholder at a premium.
In addition, certain provisions of the Company's Charter and Bylaws
summarized in the following paragraphs may be deemed to have anti-takeover
effects and may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by
stockholders. See "Description of Capital Stock -- Anti-Takeover Effect of
Certain Provisions of Maryland Law and the Company's Charter and Bylaws".
CLASSIFICATION OF THE BOARD OF DIRECTORS. The Company's Board of
Directors is divided into three classes with staggered three-year terms. The
initial terms of the first, second and third classes will expire in 1998, 1999
and 2000, respectively. Beginning in 1998, directors of each class will be
chosen for three-year terms upon the expiration of their current terms and each
year one class of directors will be elected by the stockholders. The staggered
terms of directors may also have the effect of deterring certain potential
acquisitions of the Company because control of the Company's Board of Directors
could not be obtained at a single annual meeting of stockholders.
REMOVAL OF DIRECTORS. The Charter provides that a director or the
entire board of directors may be removed only for cause (as defined in the
Charter) by the affirmative vote of at least 66-2/3% of the votes entitled to be
cast in the election of directors. This provision, when coupled with the
provision in the Charter authorizing the Board of Directors to fill vacant
directorships, precludes stockholders from removing incumbent directors except
upon the existence of cause for removal and filling the vacancies created by
such removal with their own nominees.
OWNERSHIP LIMIT. The Charter includes limitations on the actual or
constructive ownership of outstanding Common Stock by any single stockholder to
5.0% in value of the outstanding Common Stock or number of shares, whichever is
less, in order to protect the Company against the loss of REIT status due to the
concentration of ownership among its stockholders. The Board of Directors has
waived such Ownership Limit with respect to certain of its affiliates, Gazit
(1995), Globe Reit, Dan Overseas, and M.G.N.
PREFERRED SHARES. The Charter authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval (unless otherwise
required by the rules of any stock exchange on which the Common Stock is then
traded), to issue preferred stock with dividend, liquidation, conversion, voting
or other rights which could adversely affect the voting power or other rights of
the holders of the Common Stock. In the event of such issuance, the preferred
stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company.
Although the Company has no present intention to issue any shares of its
preferred stock, there can be no assurance that the Company will not do so in
the future.
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SPECIAL MEETINGS. The Bylaws provide that special meetings of
stockholders may be called only by the President, Chief Executive Officer, or
Chairman of the Board of Directors or upon the written demand of the holders of
not less than 50.0% of the votes entitled to be cast at a special meeting.
SUPERMAJORITY PROVISIONS. The affirmative vote of 66-2/3% of the votes
represented at a meeting of stockholders duly called and at which a quorum is
present is required to, among other things, amend the Charter or Bylaws. Under
the MGCL, a Maryland corporation generally cannot dissolve, amend its charter,
merge, sell all or substantially all of its assets, engage in a share exchange
or engage in similar transactions outside of the ordinary course of business
unless approved by the affirmative vote of stockholders holding at least
two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but no less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation's Charter.
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of shares
of Common Stock offered hereby, based upon an assumed initial public offering
price of $14.75 per share and after deducting the underwriting discounts and
commissions and estimated Offering expenses, are estimated to be approximately
$64.0 million ($73.6 million if the Underwriters' over-allotment option is
exercised in full).
The Company intends to use the net proceeds from the Offering as
follows:
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF NET
APPLICATION OF PROCEEDS DOLLAR AMOUNT PROCEEDS
- ------------------------------------------------------------------------- ------------- -----------------
<S> <C> <C>
Proposed retail property acquisitions and development(1)............... $43,360,000 68%
Renovation of and development at Existing Properties(2)................ 6,400,000 10
Repayment of indebtedness(3)........................................... 9,007,000 14
Working capital and general corporate purposes(4)...................... 5,045,000 8
----------- ---
Total......................................................... $63,812,000 100%
=========== ===
</TABLE>
- -------------------------
(1) Represents (i) $11.85 million to acquire, and approximately $18.0 million
to renovate and/or develop retail space, at Sky Lake, (ii) $1.1 million to
acquire, and approximately $2.5 million to develop, 4.4 acres of vacant
land in Miami which the Company has under contract and (iii) approximately
$10.0 million in development costs for development of Coral Way
(collectively, the "Acquisition and Development of the Redevelopment/
Development Properties").
(2) Includes (i) approximately $850,000 to renovate Atlantic Village, (ii)
approximately $1.75 million for Commonwealth, of which $1.3 million will be
used to expand retail space leased by Winn-Dixie and $450,000 will be used
to renovate and develop a pad site containing approximately 6,000 square
feet of GLA, (iii) approximately $3.0 million to develop approximately
50,000 square feet of additional GLA at Lake Mary and (iv) approximately
$800,000 to renovate the 18,000 square foot office building at Pointe
Royale (collectively the "Renovation of Existing Properties").
(3) Represents the repayment of approximately (i) $3.0 million outstanding
under a mortgage loan related to Four Corners obtained in 1993, which
accrues interest at an annual rate of 9.49% and is due and payable in
January, 2003, (ii) $2.0 million outstanding under the mortgage loan
related to Forest Edge obtained in 1996, which accrues interest at an
annual rate of 8.25% and is due and payable in October 2002 and (iii) $4.0
million outstanding under a mortgage loan related to Atlantic Village
obtained in 1995 which accrues interest at an annual rate of 8.15% and is
due and payable in July, 2002 (collectively, the "Mortgage Indebtedness").
(4) This amount may increase to the extent the Underwriters' over-allotment is
exercised, or to the extent any proposed application of proceeds requires
less funds or becomes impracticable, and could be decreased to the extent
that proposed uses require more funds than currently forecast.
Proceeds not immediately required for the purposes described above will
be invested by the Company in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments or investment grade preferred stock of other publicly traded REITs.
<PAGE>
DISTRIBUTION POLICY
Subsequent to the Offering, the Company intends to make regular
quarterly distributions to the holders of its Common Stock. The first dividend,
for the period commencing upon the consummation of the Offering and ending
December 31, 1997, is anticipated to be in an amount approximately equivalent to
a quarterly distribution of $______ per share (which, if annualized, would equal
$_____ per share), or an annual yield of _____% based on an assumed initial
public offering price per share of $14.75. The Company does not intend to reduce
the expected distribution per share if the Underwriters' over-allotment option
is exercised. Although the Company currently expects to distribute approximately
_____% of its estimated Cash Available for Distribution for the 12 months
following the consummation of the Offering, such distribution amount could
change if actual results from operations, economic conditions or other factors
differ significantly from the assumptions used by the Company in calculating
estimated Cash Available for Distribution.
While the Company believes that its estimate of Cash Available for
Distribution constitutes a reasonable basis for setting the initial distribution
rate, such estimate is made solely for the purpose of setting the initial
distribution rate and is not intended to be a projection or forecast of the
Company's results of operations or of its liquidity. The actual return that the
Company will realize will be affected by a number of factors, including the
revenue received from its Properties, the operating expenses of the Company, the
interest expense incurred on its borrowings, the ability of tenants to meet
their obligations, general leasing activity and unanticipated capital
expenditures. See "Risk Factors-General Risks Related to Real Estate
Investments".
The following table illustrates the adjustments made by the Company to
its pro forma FFO for the 12 month period ended June 30, 1997 in order to
calculate estimated Cash Available for Distribution for the 12 month period
ending July 31, 1998:
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Pro forma net income for the year ended December 31, 1996....................................... $ 5,574
Plus: Pro forma net income for the six months ended June 30, 1997............................... 3,123
Less: Pro forma net income for the six months ended June 30, 1996............................... (2,672)
Plus: Pro forma depreciation for the 12 months ended June 30, 1997(1)........................... 2,774
-------
Pro forma FFO for the 12 months ended June 30, 1997............................................. 8,799
-------
Adjustments:
Net increase in contractual rental income for months in effect(3)............................ 316
Net increase from new leases(4).............................................................. 1,471
Net effect of lease expirations, assuming no renewals(5)..................................... (748)
Net increase from reduced interest expense(6)................................................ 347
Interest income on excess cash from proceeds of Offering(7).................................. 2,033
Plus: Non-recurring items(2)................................................................. 419
-------
Pro forma FFO for the 12 months ended July 31, 1998............................................. 12,637
Non-real estate amortization(8)................................................................. 139
-------
Estimated adjusted pro forma cash flows from operating activities for the 12
months ended July 31, 1998................................................................... 12,776
Estimated capital expenditures(9)............................................................... (100)
Scheduled debt principal payments(10)........................................................... (1,466)
-------
Estimated Cash Available for Distribution for the 12 months ended July 31, 1998................. $11,210
=======
Total estimated initial distributions........................................................... $
=======
Estimated initial annual distributions per share................................................ $
=======
Payout ratio based on estimated cash available for distributions................................ %
=======
</TABLE>
<PAGE>
- -------------------------
(1) Pro forma depreciation of $2,578 for the year ended December 31, 1996
plus $1,371 for the period ended June 30, 1997 less $1,175 for the period
ended June 30, 1996.
(2) Includes prepayment fees and amortization of loan costs associated
with repayment of mortgage notes payable.
(3) This adjustment gives effect to the net increase in rental revenues
for contractual rental increases for the 12 month period ending July 31,
1998.
(4) Gives effect to the net increase in rental revenues attributable to
leases in effect on June 30, 1997, which were not in effect for the full
12 month period from July 1, 1996 to June 30, 1997 and from new fully
executed leases commencing on or after July 1, 1997.
(5) This adjustment gives effect to the net decrease in rental revenues
for the 12 month period ending July 31, 1998 attributable to leases
expiring subsequent to July 1, 1996, assuming no renewals.
(6) Represents the incremental increase in FFO attributable to a net
decrease in interest expense, calculated in accordance with GAAP, from
the pro forma 12 months ended June 30, 1997 to the 12 months ending July
31, 1998 from loans repaid during the twelve months ended June 30, 1997.
(7) Represents estimated interest earned at 5% on working capital cash
reserves.
(8) Represents the amortization of financing costs for the 12 months
ending July 31, 1998.
(9) Assumes non-development related capital expenditures of $0.05 per square
feet of GLA.
(10) Calculations based on pro forma debt outstanding for the 12 months ending
July 31, 1998 and the principal payments related to such indebtedness.
In order to qualify to be taxed as a REIT, the Company must make annual
distributions to stockholders of at least 95.0% of its REIT taxable income
(determined without regard to the dividends received deduction and by excluding
any net capital gains). See "Federal Income Tax Considerations--Taxation of the
Company--Annual Distribution Requirements". The Company anticipates that its
estimated Cash Available for Distribution will exceed its REIT taxable income
due to non-cash expenses, primarily depreciation and amortization, to be
incurred by the Company. It is possible, however, that the Company from time to
time, may not have sufficient cash or other liquid assets to meet these
distribution requirements due to timing differences between (i) the actual
receipt of income and actual payment of deductible expenses and (ii) the
inclusion of such income and deduction of such expenses in arriving at taxable
income of the Company. In the event that such timing differences occur, in order
to meet the distribution requirements, the Company may find it necessary to
arrange for short-term, or possibly long-term, borrowings or to pay dividends in
the form of taxable stock dividends. Distributions by the Company to the extent
of its current and accumulated earnings and profits for federal income tax
purposes, other than capital gain dividends, will be taxable to stockholders as
ordinary dividend income. Capital gain distributions generally will be treated
as long-term capital gains. Distributions in excess of earnings and profits
generally will be treated as non-taxable return of capital to the extent of each
stockholder's basis in his or her Common Stock and thereafter as taxable gain.
The non-taxable distributions will reduce each stockholders' tax basis in the
Common Stock and, therefore, the gain (or loss) recognized on the sale of such
Common Stock or upon liquidation of the Company will be increased (or decreased)
accordingly. For a discussion of the tax treatment of distributions to holders
of Common Stock, see "Federal Income Tax Considerations-Taxation of U.S.
Stockholders" and "--Taxation of Non-U.S. Stockholders".
Financing activities such as repayment or refinancing of loans also may
affect the Company's assets and liabilities and the amount of Cash Available for
Distribution for future periods. Management will seek to control the timing and
nature of investing and financing activities in order to maximize the Company's
return on invested capital.
Future distributions by the Company will be subject to the requirements
of the MGCL and the annual distribution requirements under the REIT provisions
of the Code (see "Federal Income Tax Considerations--Taxation of the
Company--Annual Distribution Requirements") and will depend on the actual cash
flow of the Company, its financial condition, its capital requirements, and such
other factors as the Board of Directors deems relevant. There can be no
assurance that any distributions will be made or that the expected level of
distributions
27
<PAGE>
will be maintained by the Company. See "Risk Factors-General Risks Related to
Real Estate Investments" and "Distribution to Stockholders Affected by Many
Factors". If revenues generated by the Company's properties in future periods
decrease materially from current levels, the Company's ability to make expected
distributions would be materially adversely affected, which could result in a
decrease in the market price of the shares of Common Stock.
The Company may in the future implement a distribution reinvestment
program under which holders of shares of Common Stock may elect automatically to
reinvest distributions in additional shares of Common Stock. The Company may,
from time to time, repurchase shares of Common Stock in the open market for
purposes of fulfilling its obligations under this distribution reinvestment
program, if adopted, or may elect to issue additional shares of Common Stock. If
the Company adopts a distribution reinvestment program, it will solicit
participation in the program after the Offering by means of a separate
prospectus, and a purchase of shares of Common Stock in the Offering does not
entitle any investor to participate in any such program. There can be no
assurance that the Company will adopt such a program, and consequently, the
probable date of adoption or number of shares of Common Stock that would be
available under such program cannot be determined at this time.
28
<PAGE>
DILUTION
The net tangible book value of the Company's Common Stock as of June
30, 1997 was $51.8 million, or approximately $7.50 per share. Net tangible book
value per share is determined by dividing net tangible book value (tangible
assets less liabilities) of the Company by 6,908,130 shares of Common Stock
outstanding (including common stock equivalents).
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
Offering and the pro forma net tangible book value per share of Common Stock
immediately after consummation of the Offering. After giving effect to the sale
by the Company of 4,700,000 shares of Common Stock in the Offering at an assumed
initial public offering price of $14.75 per share, and the application of the
estimated net proceeds therefrom, the pro forma net tangible book value of the
Company as of June 30, 1997 would have been $115.6 million, or $9.96 per share.
This would represent an immediate increase in net tangible book value of $2.46
per share to the existing stockholders and an immediate dilution in net tangible
book value of $4.79 per share to purchasers of Common Stock in the Offering, as
illustrated in the following table.
<TABLE>
<CAPTION>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock(1)................... $14.75
Net tangible book value at June 30, 1997........................................ $7.50
------
Increase per share attributable to new investors................................ $2.46
------
Pro forma net tangible book value after the Offering(2).............................. $9.96
------
Net tangible book dilution per share to new investors(2)(3)(4)(5).................... $4.79
=====
</TABLE>
- --------------------
(1) Before deducting the underwriting discounts and commissions and estimated
expenses of the Offering.
(2) If the Underwriters exercise their over-allotment option in full, the
pro forma net tangible book value per share would be $10.24 and dilution of
net tangible book value per share to new investors would be $4.51.
(3) Does not give effect to the issuance of shares of Common Stock issuable
upon exercise of stock options granted under the Company's 1995 Plan,
pursuant to which options to purchase 614,000 shares of Common Stock at
exercise prices ranging from $8.25 to $12.375 per share have been issued
and are outstanding as of the date of the Offering. If exercised, these
options would result in a decrease in dilution to new investors of $0.10
per share. See "Management--Stock Option Plan".
(4) Does not give effect to the issuance of up to 1,306,124 shares of Common
Stock pursuant to exercise of the Series C Warrants at an exercise price of
$8.25 per share. If exercised, these warrants would result in additional
dilution to new investors of $0.17 per share.
(5) Does not give effect to the issuance of 580,288 shares of Common Stock at a
price of $12.71 per share reserved for issuance to an affiliate of the
Company pursuant to a stock purchase agreement. If purchased, these shares
would result in a decrease in dilution to new investors of $0.14 per share.
See "Certain Transactions".
29
<PAGE>
The following table sets forth as of June 30, 1997, the difference
between the existing stockholders and the purchasers of shares in the Offering
with respect to the number of shares purchased from the Company, the total
consideration paid and the average price per share paid at the assumed initial
offering price of $14.75 per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders......................... 6,908,130(1) 59.5%(2) $ 53,494 43.6% $ 7.74
New investors................................. 4,700,000 40.5 69,325 56.4 14.75
---------- ------ --------- -----
Total............................... 11,608,130 100.0% $122,819 100.0%
========== ====== ========= =====
- --------------------
</TABLE>
(1) Does not include (i) 705,000 shares of Common Stock reserved for issuance
upon exercise of the Underwriters' over-allotment option, (ii) 614,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding options under the 1995 Plan, (iii) 386,000 shares of Common
Stock reserved for issuance upon the exercise of options available for
future grant under the 1995 Plan, (iv) 580,288 shares of Common Stock
reserved for issuance to an affiliate pursuant to a stock purchase
agreement, and (v) 1,306,124 shares of Common Stock reserved for issuance
upon exercise of the Series C Warrants. See "Management--Stock Option
Plan", "Certain Transactions", "Description of Capital Stock" and
"Underwriting" and Note 9 of Notes to Financial Statements.
(2) If the Underwriters exercise their over-allotment option in full, the
Company's existing stockholders will own 56.1% of the shares of Common
Stock outstanding upon consummation of the Offering. See "Principal
Stockholders".
30
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
June 30, 1997 and as adjusted for the sale of the 4,700,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $14.75 per
share) and the application of the estimated net proceeds therefrom. See "Use of
Proceeds".
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED
------ -----------
(In thousands)
<S> <C> <C>
Mortgage notes payable...................................................... $64,916 $55,909
Stockholders' equity:
Preferred stock, $1.00 par value; 5,000,000 shares authorized; no shares
issued and outstanding............................................. - -
Common Stock, $1.00 par value; 40,000,000 shares authorized; 6,908,130
shares issued and outstanding; 11,608,130 shares issued and
outstanding, as adjusted (1)....................................... 6,908 11,608
Additional paid-in capital............................................. 48,111 107,223
Notes receivable from stock sales...................................... (1,525) (1,525)
Retained earnings (deficit)............................................ -- (118)
-------- --------
Total stockholders' equity......................................... $53,494 $117,188
======== ========
</TABLE>
- -----------------
(1) Does not include (i) 705,000 shares of Common Stock reserved for issuance
upon exercise of the Underwriters' over-allotment option, (ii) 614,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding options under the 1995 Plan, (iii) 386,000 shares of Common
Stock reserved for issuance upon the exercise of options available for
future grant of options under the 1995 Plan, (iv) 580,288 shares of
Common Stock reserved for issuance to an affiliate pursuant to a stock
purchase agreement, and (v) 1,306,124 shares of Common Stock reserved for
issuance upon exercise of the Series C Warrants. See "Management--Stock
Option Plan", "Certain Transactions", "Description of Capital Stock" and
"Underwriting".
31
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial data and balance sheet data set
forth below have been derived from the consolidated financial statements of the
Company, including the consolidated financial statements for the years ended
December 31, 1994, 1995 and 1996 and for the six months ended June 30, 1996 and
1997 contained elsewhere herein. The consolidated financial statements as of and
for the years ended December 31, 1992, 1993, 1994, 1995 and 1996 have been
audited by Deloitte & Touche LLP, independent auditors. The income statement
data for the six months ended June 30, 1996 and 1997 and the balance sheet data
as of June 30, 1997 have been derived from unaudited interim consolidated
financial statements contained elsewhere herein, which in the opinion of
management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the information set forth
therein. Results for the six months ended June 30, 1997 are not necessarily
indicative of the results for the entire year. The data set forth below should
be read in conjunction with the financial statements and related notes, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
The unaudited pro forma consolidated balance sheet data as of June 30,
1997 set forth below is presented as if the Offering and the application of the
net proceeds of the Offering all had occurred on June 30, 1997. The unaudited
pro forma consolidated statement of operations data for the six months ended
June 30, 1997 and the year ended December 31, 1996 are presented as if the
Offering and the application of the net proceeds of the Offering (and the
acquisitions of West Lake, Forrest Edge and Monument Pointe) all had occurred on
January 1, 1996. See "Use of Proceeds". The pro forma consolidated financial
data should be read in conjunction with the Company's pro forma consolidated
financial statements and related notes and historical consolidated financial
statements and related notes included elsewhere in this Prospectus.
Because the preponderance of proceeds are allocated to acquisition,
development, redevelopment and renovation projects which, for pro forma
statement of operations purposes, do not generate any revenue or expense, pro
forma results of operations reflect only the repayment of mortgage notes payable
and omit any revenue or expense from other proceeds uses (except for historical
revenue and expense attributable to Sky Lake which will continue during the
redevelopment process). Accordingly, the pro forma consolidated financial
statements do not purport to represent the Company's financial position as of
June 30, 1997 or the results of operations for the six months ended June 30,
1997 or for the year ended December 31, 1996 that would actually have occurred
had the Offering (and the acquisitions listed above) and the application of the
net proceeds of the Offering all been completed on June 30, 1997 or at the
beginning of the periods presented, or to project the Company's financial
position or results of operations as of any future date or for any future
period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------------ ----------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
------- ----------------- ------- ----------------------------------------------
1997 1997 1996 1996 1996 1995 1994 1993 1992
------- ------ ------ ------- ------- ------- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................. $10,113 $9,673 $8,042 $19,600 $16,714 $11,348 $6,198 $2,070 $666
Operating Expenses............. 2,800 2,743 2,341 5,467 4,832 3,293 2,236 665 252
Depreciation and amortization.. 1,239 1,178 1,010 2,413 2,067 1,496 996 298 107
Interest....................... 2,635 2,939 2,648 5,481 5,380 3,498 2,099 734 301
General and administrative
expenses.................... 316 241 213 665 515 549 504 324 167
------- ------ ------ ------- ------- ------- ------ ------ ----
Total expenses.............. 6,990 7,101 6,212 14,026 12,794 8,836 5,835 2,021 827
------- ------ ------ ------- ------- ------- ------ ------ ----
Net Income..................... $3,123 $2,572 $1,830 $5,574 $3,920 $2,512 $233(2) $49 ($161)
======= ====== ====== ======= ======= ======= ====== ====== ====
Net earnings per share(1)...... $0.27 $0.37 $0.34 $0.52 $0.65 $0.51 $0.07
======= ====== ====== ======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31,
----------------------- ------------------------------------------------
PRO FORMA(3) HISTORICAL 1996 1995 1994 1993 1992
-------- -------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total rental properties, before
accumulated depreciation.... $162,166 $112,406 $106,706 $92,770 $52,047 $22,491 $4,784
Total assets................... 175,560 120,873 111,822 94,470 63,644 28,526 7,439
Mortgage notes payable......... 55,909 64,916 66,831 60,583 32,690 15,543 3,222
Total liabilities.............. 58,372 67,379 68,727 64,331 33,846 15,922 3,388
Stockholders' equity........... 117,188 53,494 43,095 29,139 28,798 12,604 4,051
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
----------------------------- ---------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
---------- ---------------- --------- ---------------------------------------------
1997 1997 1996 1996 1996 1995 1994 1993 1992
---------- ------ ------- ------ ------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations(4)....... $4,520 $3,867 $ 2,815 $8,233 $6,136 $3,973 $1,308 $347 $(54)
Cash flows from:
Operating activities........ -- 3,492 3,980 -- 6,680 3,469 2,433 (289) (46)
Investing activities........ -- (6,766) (3,495) -- (18,277) (37,211) (29,755) (20,414) (1,995)
Financing activities........ -- 5,881 7,013 -- 12,778 27,441 32,726 20,671 3,728
Gross leasable areas (square --
feet) (at end of period).... -- 1,951 1,670 -- 1,807 1,670 1,003 583 50
Occupancy (at end of period)... -- 93% 89% -- 91% 90% 80% 60% 92%
</TABLE>
- -------------------------
(1) Based on the weighted average number of shares outstanding.
(2) Represents net income after income tax expense of $130,000.
(3) Adjusted to reflect the sale of 4,700,000 shares of Common Stock offered by
the Company at an estimated initial public offering price of $14.75 per
share and the application of the estimated net proceeds therefrom.
(4) The Company considers FFO to be an appropriate measure of the performance of
an equity REIT. In March 1995, NAREIT adopted the NAREIT White Paper which
provided additional guidance on the calculation of FFO. FFO is defined by
NAREIT as net income (computed in accordance with generally GAAP), excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate related depreciation and amortization (excluding amortization of
deferred financing costs) and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not necessarily
indicative of cash available to fund cash needs. In addition, FFO should not
be considered an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
liquidity or of the Company's ability to make distributions, nor is it
comparable to cash flows provided by operating activities determined in
accordance with GAAP. The Company computes FFO in accordance with the NAREIT
White Paper, which may differ from the methodology for calculating FFO
utilized by other equity REITs, and, accordingly, may not be comparable to
other REITs' FFO and does not represent amounts available for distributions
because of certain capital expenditures, scheduled mortgage loan principal
payments and other items. See "Distribution Policy".
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with "Selected Consolidated Financial Data" and the Company's Consolidated
Financial Statements, and the notes thereto, appearing elsewhere in this
Prospectus.
The Company receives income primarily from rental revenue (including
recoveries from tenants) from the Existing Properties. As a result of the
Company's acquisition and redevelopment programs, the financial data shows
increases in total revenue from year to year, largely attributable to the
acquisitions of properties placed into operation during the year and the benefit
of a full period of rental and other revenue for properties acquired or placed
into operation in the preceding year.
The following table sets forth as of June 30, 1997 and 1996 and as of
December 31, 1996, 1995 and 1994, respectively, information regarding the
components of the Company's revenues and expenses as a percentage of total
revenues:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- -----------------------------------
1997 1996 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Minimum rent............................ 75.09% 77.37% 75.55% 73.44% 74.15%
Percentage rent......................... 0.71% 1.13% 0.92% 1.15% 1.24%
Recoveries from tenants................. 18.72% 18.81% 18.50% 17.99% 16.94%
Other income............................ 5.48% 2.69% 5.03% 7.42% 7.67%
------ ------ ------ ------ ------
Total Revenues.......................... 100.00% 100.00% 100.00% 100.00% 100.00%
------ ------ ------ ------ ------
Operating expenses...................... 28.36% 29.11% 28.91% 29.02% 36.08%
Depreciation and amortization........... 12.18% 12.56% 12.37% 13.18% 16.07%
Interest................................ 30.38% 32.93% 32.19% 30.82% 33.87%
General and administrative expenses..... 2.49% 2.65% 3.08% 4.84% 8.13%
------ ------ ------ ------ ------
Total costs and expenses................ 73.41% 77.25% 76.55% 77.86% 94.15%
------ ------ ------ ------ ------
Net income.............................. 26.59% 22.75% 23.45% 22.14% 3.76%
====== ====== ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Total revenues increased by approximately $1.7 million, or 21.3%, to
$9.7 million for the six months ended June 30, 1997 from $8.0 million for the
comparable period of 1996. The increase resulted primarily from the acquisition
of West Lake in November 1996, Forest Edge in December 1996 and Monument Pointe
in January 1997.
Operating expenses increased by approximately $400,000, or 17.4%, to
$2.7 million for the six months ended June 30, 1997 from $2.3 million for the
comparable period of 1996, as a result of operations at West Lake, Forest Edge
and Monument Pointe. However, for such periods, operating expenses as a percent
of revenues decreased to 28.4% from 29.1% due to operating efficiencies based,
in part, on owning more properties and in concentrated areas.
Depreciation and amortization expense increased by approximately
$200,000, or 20.0%, to $1.2 million for the six months ended June 30, 1997 from
$1.0 million for the comparable period of 1996 primarily as a result of an
increase in depreciable assets resulting from the Company's purchase of West
Lake, Forest Edge and Monument Pointe.
34
<PAGE>
Interest expense increased by approximately $300,000, or 11.5%, to $2.9
million for the six months ended June 30, 1997 from $2.6 million for the
comparable period of 1996 primarily as a result of increased mortgage
indebtedness incurred by the Company in connection with its purchase of West
Lake, Forest Edge and Monument Pointe.
General and administrative expenses increased by approximately $28,000,
or 13.1%, to $241,000 for the six months ended June 30, 1997 from $213,000 for
the comparable period of 1996, primarily as a result of the increase in the
Company's portfolio of Supermarket Centers. However, for such periods, general
and administrative expenses as a percent of revenues decreased to approximately
2.5% from approximately 2.7% due to operating efficiencies based in part on
owning more properties in a concentrated area.
As a result of the foregoing, net income increased approximately by
$800,000, or 44.4%, to $2.6 million in the six months ended June 30, 1997, from
$1.8 million in the comparable period of 1996, and FFO increased by $1.1
million, or 39.3%, to $3.9 million in the six months ended June 30, 1997 from
$2.8 million in the comparable period of 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Total revenues increased $5.4 million, or 46.5%, in 1996 to $16.7
million from $11.3 million in 1995 due to the first full year of operations for
Atlantic Village, Oak Hill, Lake Mary and Pointe Royale, and the acquisition of
West Lake in November 1996.
Operating expenses increased by approximately $1.5 million, or 45.5%,
to $4.8 million in 1996 from $3.3 million in 1995, primarily as a result of a
full year of operations for Atlantic Village, Oak Hill, Lake Mary and Pointe
Royale, as well as the Company's acquisition of West Lake. However, for such
periods, operating expenses as a percent of revenues remained essentially flat
at 29.0%.
Depreciation and amortization expense increased by approximately
$600,000, or 42.9%, to $2.0 million in 1996 from $1.4 million in 1995, primarily
due to an increase in depreciable assets resulting from the Company's purchase
of Atlantic Village, Oak Hill, Lake Mary and Pointe Royale and from capital
expenditures incurred by the Company in connection with tenant improvements at
each of such properties.
Interest expense increased by approximately $1.9 million, or 54.3%, to
$5.4 million in 1996 from $3.5 million in 1995, primarily as a result of
increased mortgage indebtedness incurred by the Company in connection with the
purchase of Atlantic Village, Oak Hill, Lake Mary and Pointe Royale in 1995 and
the acquisition of the West Lake in November 1996.
General and administrative expenses decreased by approximately $34,000,
or 6.2%, to $515,000 in 1996 from $549,000 in 1995, primarily as a result of a
decrease in legal and accounting fees incurred in connection with the Company's
REIT status election, which election was effective as of January 1, 1995.
However, for such periods, general and administrative expenses as a percent of
revenues decreased to approximately 3.1% from approximately 4.8% due to
operating efficiencies based in part on owning more properties in a concentrated
area.
As a result of the foregoing, net income increased by $1.4 million, or
56%, to $3.9 million in 1996 from $2.5 million in 1995, and FFO increased by
$2.1 million, or 52.5%, to $6.1 million in 1996 from $4.0 million in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Total revenues increased $5.1 million, or 82.3%, in 1995 to $11.3
million from $6.2 million in 1994 due to the first full year of operations for
Commonwealth, Fort Caroline, Bird Ludlum and Mandarin and the acquisitions of
Atlantic Village, Oak Hill, Lake Mary and Pointe Royale during 1995.
Operating expenses increased by approximately $1.1 million, or 50.0%,
to $3.3 million in 1995 from $2.2 million in 1994, reflecting a full year of
operations for Commonwealth, Fort Caroline, Bird Ludlum and Mandarin acquired
during 1994, as well as the acquisition of Atlantic Village, Oak Hill, Lake Mary
and Pointe Royale in
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<PAGE>
1995. However, for such periods, operating expenses as a percent of revenues
decreased to approximately 29.0% from approximately 36.1% due to operating
efficiencies based, in part, on owning more properties and in concentrated
areas.
Depreciation and amortization expense increased by approximately
$500,000, or 55.6%, to $1.4 million in l995 from $900,000 in 1994 primarily due
to the Company's purchase of Commonwealth, Fort Caroline, Bird Ludlum and
Mandarin, as well as the acquisition of Atlantic Village, Oak Hill, Lake Mary
and Pointe Royale in 1995, and from capital expenditures incurred by the Company
in connection with tenant improvements at certain of these properties.
Interest expense increased by approximately $1.4 million, or 66.7%, to
$3.5 million in 1995 from $2.1 million in 1994 as a result of increased mortgage
indebtedness incurred by the Company in connection with the purchase of
Commonwealth, Fort Caroline, Bird Ludlum and Mandarin in 1994, as well as the
acquisition of Atlantic Village, Oak Hill, Lake Mary and Pointe Royale in 1995.
General and administrative expenses increased by approximately $45,000,
or 8.9%, to $549,000 in 1995 from $504,000 in 1994 as a result of an increase in
legal and accounting fees incurred in connection with the Company's REIT status
election. However, for such periods, general and administrative expenses as a
percent of revenues decreased to approximately 4.8% from approximately 8.1% due
to operating efficiencies based, in part, on owning more properties in a
concentrated area.
As a result of the foregoing, the Company's net income increased by
approximately $2.3 million, or 987%, to $2.5 million in 1995 from $233,000 in
1994, and FFO increased by approximately $2.7 million, or 207.7%, to $4.0
million from $1.3 million for the same periods.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the principal sources of funding for the Company's
operations, including the renovation, expansion, development and acquisition of
shopping centers, have been operating cash flows, the issuance of equity
securities and mortgage loans.
From 1992 to the present, the Company raised proceeds from the private
placement of Common Stock and warrants and it used such proceeds to acquire the
Existing Properties, purchasing approximately $4.7 million of real property in
1992, approximately $17.2 million in 1993, approximately $29.0 million in 1994,
approximately $39.6 million in 1995, approximately $11.0 million in 1996 and
approximately $3.7 million in the first six months of 1997. Management recently
determined that in seeking to significantly expand its investment portfolio, the
Company would have greater flexibility if it had access to both public and
private capital markets and, accordingly, decided to publicly offer the Common
Stock pursuant to the Offering.
As of June 30, 1997, the Company had total indebtedness of
approximately $64.9 million, all of which is related to mortgage indebtedness
collateralized by 14 of the Existing Properties. All of the existing debt is
fixed rate debt. None of the existing mortgages is subject to cross default
provisions of mortgages on other properties or is cross collateralized. However,
in connection with the Company's acquisition of Lake Mary, the Company has
provided a $1.5 million letter of credit to secure certain obligations, which
letter of credit is collateralized by its West Palm Beach property.
The Company has obtained a line of credit from City National Bank in
the amount of $2.5 million which expires in May 1998 and is collateralized by
the Equity One Office Building. At June 30, 1997, no amount was outstanding
under this line of credit. Additionally, in connection with the Company's
acquisition of Lake Mary in 1995, the Company obtained a $1.5 million letter of
credit from Barnett Bank in order to guarantee certain development obligations.
At June 30, 1997, no amount was drawn under this letter of credit. The Company
anticipates that each of these credit facilities will remain outstanding
following consummation of the Offering and the Acquisition Line of Credit.
36
<PAGE>
The Company is in the process of obtaining the Acquisition Line of
Credit to be secured by certain of the Company's unencumbered Existing
Properties and other properties acquired by the Company. There can be no
assurance that the Company will be able to obtain the Acquisition Line of
Credit. The Company expects that the Acquisition Line of Credit will bear
interest at a variable rate and be due within three years.
The Company's principal demands for cash are expected to be acquisition
and development activities, maintenance, repair and tenant improvements related
to the Existing Properties, debt service and repayment obligations and
distributions to its stockholders. In order to qualify as a REIT for federal
income tax purposes, the Company is required to pay dividends to its
stockholders of at least 95.0% of its net taxable income. See "Federal Income
Tax Considerations". The Company intends to pay these dividends from operating
cash flows which are expected to increase due to future purchases and reduction
in debt service resulting from the repayment of certain of the Company's
mortgage indebtedness with the proceeds of the Offering, and anticipated future
growth in rental revenues.
The Company anticipates that the cash reserves and the cash flow
available after the consummation of the Offering, together with the estimated
net proceeds from the Offering, will be adequate to meet the capital and
liquidity needs of the Company for at least 12 months.
For a discussion of certain contingencies which could affect the
Company's liquidity and capital resources, see "Risk Factors-Significant
Reliance on Certain Tenants", "-General Risks Relating to Real Estate
Investments", "-Adverse Consequences of Failure to Qualify as a REIT",
"Government Regulation", "-Technical Defaults" and "Risk of Borrowing; No
Limitation on Debt".
IMPACT OF ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT ADOPTED
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("Statement No. 128"), which establishes standards for computing and presenting
earnings per share ("EPS") and applies to entities with publicly held common
stock. Statement No. 128 simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, "Earnings Per Share", and makes
them comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS.
In February 1997, SFAS No. 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL
STRUCTURE was issued. SFAS No. 129, which applies to all entities that have
issued securities, requires in summary form, the pertinent rights and privileges
of the various securities outstanding. Examples of information that shall be
disclosed are dividends and liquidation preferences, participation rights, call
prices and dates, conversion or exercise prices or rates and pertinent dates,
sinking-fund requirements, unusual voting rights, and significant terms of
contracts to issue additional shares. SFAS No. 129 is effective for financial
statements issued for periods ending after December 15, 1997.
INFLATION
Most of the Company's leases contain provisions designed to mitigate
the adverse impact of inflation. Such provisions include clauses enabling the
Company to receive percentage rents based on a tenant's gross sales above
predetermined levels, which rents generally increase as prices rise, or
escalation clauses which are typically related to increases in the CPI or
similar inflation indices. Most of the Company's leases require the tenant to
pay its share of operating expenses, including common area maintenance, real
estate taxes and insurance, thereby reducing the Company's exposure to increases
in costs and operating expenses resulting from inflation.
37
<PAGE>
BUSINESS
GENERAL
The Company is a self-administered, self-managed REIT that principally
acquires, renovates, develops and manages Community and Neighborhood Shopping
Centers anchored by national and regional supermarket chains ("Supermarket
Centers"). The Company's portfolio consists of 14 Supermarket Centers anchored
by supermarkets, one drug store anchored Neighborhood Shopping Center, two
mixed-use (office/retail) properties, one office building and one mini-warehouse
facility (collectively, the "Existing Properties"). The Existing Properties are
located primarily in the Dade County (Miami), Orlando and Jacksonville
metropolitan areas of Florida, and in Texas and contain an aggregate of 2.0
million square feet of GLA which, as of June 30, 1997, were 93.0% leased. The
Company also owns Coral Way on which it intends to develop a 100,000 square foot
Supermarket Center, and has agreed to acquire Sky Lake which will be
comprehensively redeveloped into a 300,000 square foot Supermarket Center. In
addition, the Company owns an aggregate of approximately 13.0 acres of land
adjacent to certain of the Existing Properties and recently agreed to acquire
4.4 acres of vacant land proximate to Coral Way, primarily all of which is
intended for retail development.
Supermarket Centers are anchored by national and regional supermarkets
such as Winn-Dixie (the fourth largest supermarket chain in the country), Publix
(the largest supermarket chain in Florida), Albertsons (the sixth largest
supermarket chain in the country) and Kroger (the largest supermarket chain in
the country). Other Anchor Tenants of the Company's Supermarket Centers include
national retailers such as K-Mart, Best Buy, Walgreen's and Eckerd. The Company
believes that supermarkets and other Anchor Tenants offering daily necessity
items generate regular consumer traffic and enhance the performance and
stability of a center. As of June 30, 1997, the Company's supermarket Anchor
Tenants contributed in excess of 24.0% of the Company's aggregate annualized
minimum rents and occupied approximately 31.0% of GLA. In addition, these
tenants have leases with an average of at least 11 years remaining on their
terms.
The Company was formed in 1992 to acquire Supermarket Centers in high
growth, densely populated areas throughout the Southeast generating stable cash
flows and long-term value. The Company selects properties for acquisition or
development which have, or are suitable for, supermarket and other Anchor
Tenants, and are adaptable over time for expansion, renovation and
redevelopment. In order to take advantage of property management operating
efficiencies and present attractive leasing opportunities to tenants who seek
multiple locations in an area, the Company also targets properties proximate to
its other properties. All properties must be well located and have visibility,
open air designs, ease of entry and exit and ample parking. Further, the Company
acquires both Performing Supermarket Centers, which typically are well
maintained, substantially fully leased and appropriately tenanted, and
Underperforming Supermarket Centers which meet the Company's turnaround
criteria. In acquiring Performing Supermarket Centers, the Company seeks
attractive and sustainable rates of return, and in acquiring Underperforming
Centers, the Company requires opportunities to increase revenues primarily
through renovation and retenanting.
The Company believes that its seasoned management team possesses the
experience and expertise necessary to identify, acquire, renovate, develop and
manage additional Supermarket Centers. The Company's principal senior executives
and property managers average 15 years experience in the real estate industry
and have acquired and managed all the Existing Properties. Management believes
that it has cultivated strong relationships with supermarkets and other Anchor
Tenants which, in combination with its in-depth knowledge of the Company's
primary markets, has contributed substantially to the Company's success in
identifying, acquiring and operating its properties.
Since its formation, the Company has experienced sustained growth in
its real estate portfolio, revenues and FFO. From January 1, 1994 to June 30,
1997, the Company increased total assets and GLA to $120.9 million and 2.0
million square feet, respectively, from $28.5 million and 600,000 square feet,
respectively. For the year ended December 31, 1996, total revenues and FFO
increased to $16.7 million and $6.1 million, respectively, from $2.1 million and
$300,000, respectively, for the year ended December 31, 1993. Similarly, total
revenues and FFO increased to $9.7 million and $3.9 million, respectively, for
the six months ended June 30, 1997 from $8.0 million and $2.8 million,
respectively, for the six months ended June 30, 1996.
38
<PAGE>
BUSINESS AND GROWTH STRATEGIES
GENERAL. The Company intends to maximize total return to stockholders
by increasing cash flow per share and maximizing the value of its real estate
portfolio. The Company believes it can achieve this objective primarily through
the acquisition, renovation, development and management of Supermarket Centers
and other properties which meet the Company's investment criteria. The Company
also believes it has certain competitive advantages which enhance its ability to
capitalize on acquisition opportunities, including: (i) management's significant
local market experience and expertise; (ii) the Company's long-standing
relationship with real estate brokers, tenants and institutional and other real
estate owners in its current target markets; (iii) a streamlined acquisition
process; (iv) access to capital; and (v) the ability to offer cash and tax
advantaged structures to sellers.
The Company intends to maintain significant flexibility with respect to
the form of its acquisition transactions, using cash available from operations
or lines of credit for sellers who seek immediate liquidity, as well as
tax-advantaged partnership structures to attract tax-motivated sellers. Such
structures may include entering into joint ventures or other types of
co-ownership with the sellers, whether in the form of limited partnership,
limited liability companies, or otherwise, with the Company expected to acquire
the controlling interests in such ventures. The sellers may be offered interests
in the ventures which are convertible or exchangeable for shares of Common Stock
or otherwise allow the seller to participate in the financial condition of the
Company. The Company may in the future acquire all or substantially all of the
securities of other REITs or similar entities when such investments would be
consistent with the Company's investment objectives.
The Company's principal business and growth strategies are as follows:
ACQUISITION OF PERFORMING SUPERMARKET CENTERS. The Company intends to
acquire Performing Supermarket Centers that offer attractive and sustainable
rates of return throughout the Southeast having demographic characteristics
similar to those of its present markets. The Company will target Performing
Supermarket Centers which offer attractive and sustainable rates of return and
are adaptable to expansion, renovation and redevelopment, and, in order to
maximize property management efficiencies, are located proximate to other
Company Supermarket Centers or to one another. The Company will seek Supermarket
Centers offering daily necessities and value-oriented merchandise, and have high
visibility, open-air designs, ease of entry and exit and ample parking. Given
the Company's relationship with certain Anchor Tenants, particularly
supermarkets, and its operational expertise, the Company anticipates that it
will be able to enhance the performance of properties satisfying its acquisition
criteria.
The Company has developed an integrated methodology for sourcing and
completing acquisitions, with legal and operational analyses efficiently
coordinated by in-house employees. The Company believes it has superior access
to potential acquisition opportunities by virtue of its relationships with
brokers, tenants, financial institutions, development agencies, contractors, and
others involved in the real estate market. Additionally, the Company believes
that as institutional investors in real estate become less willing to own and
manage significant real estate assets and more comfortable with indirect
investments, such institutions will become significant sellers of properties and
the Company will be an attractive purchaser in its target markets. The Company
conducts its review procedures with the full participation of the Company's
senior officers, which, combined with the Company's access to capital and
knowledge of existing markets, allows the Company to make expedited
determinations and consummate transactions quickly.
When evaluating potential acquisitions and development projects, the
Company considers such factors as (i) economic, demographic, and regulatory and
zoning conditions in the property's local and regional market; (ii) the
location, construction quality, and design of the property; (iii) the current
and projected cash flow of the property and the potential to increase cash flow;
(iv) Anchor Tenants' and other tenants' gross sales per square foot measured
against industry standards; (v) the potential for capital appreciation of the
property; (vi) the terms of tenant leases, including the relationship between
the property's current rents and market rents and the ability to increase rents
upon lease rollover; (vii) the occupancy and demand by tenants for properties of
a similar type in the market area; (viii) the potential to complete a strategic
renovation, expansion, or retenanting of the property; (ix) the property's
current expense structure and the potential to increase operating margins; (x)
the ability of the Company to
39
<PAGE>
subsequently sell or refinance the property; and (xi) competition from
comparable retail properties in the market area.
ACQUISITION OF UNDERPERFORMING SUPERMARKET CENTERS. The Company intends
to acquire Underperforming Supermarket Centers that meet the Company's
turnaround criteria, which includes having the potential to increase revenues
and operating cash flows through renovation and retenanting. Underperforming
Supermarket Centers are typically undercapitalized, poorly managed and/or poorly
maintained and may require significant capital improvements. The Company's
turnaround criteria requires attractive location and market demographics,
availability on attractive terms, and willingness of supermarket and other
Anchor Tenants to commit to lease space. The Company believes that its in-depth
market knowledge and its strong relationships with supermarkets and other Anchor
Tenants, and its capabilities in renovation and redevelopment, are particularly
integral to its ability to acquire and reposition Underperforming Supermarket
Centers.
The Company considers similar factors to those applied in the
acquisition of performing shopping centers and will complete such acquisitions
only upon completion of a careful due diligence process, including an in-depth
study of the reasons for the center's failure to perform, the community
demographics, the costs of renovation or redevelopment, and the willingness of
acceptable Anchor Tenants and other tenants to commit to the site. Similarly,
the Company believes that its competitive advantage is enhanced by its ability
to conduct an efficient due diligence investigation and to commit to and fund an
acquisition that is structured so as to meet the requirements of a seller with
respect to receiving cash or tax deferred benefits. In addition, the Company's
relationships with Anchor Tenants, who are familiar with the Company's
commitment to quality construction, maintenance and operations, will aid it in
obtaining preleasing expressions of interest before the decision to acquire the
property is made.
Several examples of the Company's ability to enhance Underperforming
Supermarket Centers include East Bay, Four Corners, Fort Caroline and Parker
Towne. East Bay, which was acquired in July 1993 at a 48.0% occupancy rate, was
83.0% occupied at June 30, 1997; Four Corners, which was acquired in January
1993 at a 76.0% occupancy rate, was 94.0% occupied at June 30, 1997; Fort
Caroline, which was acquired in January 1994 at a 83.0% occupancy rate, included
an additional 7,200 square feet of developed GLA and was 96.0% occupied at June
30, 1997; and Parker Towne, which was acquired in December 1993 at a 40.0%
occupancy rate, was 60.0% occupied at June 30, 1997.
In addition, the acquisition of Underperforming Supermarket Centers
frequently provides the Company with an opportunity to buy adjacent undeveloped
land whose value is depressed by proximity to the underperforming Supermarket
Center and can be enhanced by the Company's rehabilitation program.
REDEVELOPMENT AND DEVELOPMENT OF SUPERMARKET CENTERS. The Company will
redevelop existing and develop new Supermarket Centers with characteristics
similar to those of the Company's existing Supermarket Centers. The Company will
consider development only if the overall economics of developing a property are
more favorable than acquiring a shopping center in the same geographic area.
Although the Company previously concentrated on the acquisition of
existing Supermarket Centers, the Company believes that, as a result of changing
market conditions, development and redevelopment will provide significant growth
opportunities in the future. Accordingly, it may acquire or option parcels of
land in its target markets which are likely to be subject to increased
development. In connection with its development activities, the Company has
recently hired a licensed architect and general contractor to head its
development department and is in the process of retaining at least one
additional full-time employee to support its construction and development
personnel. Although management of the Company has experience, through the
Company and other ventures, and has expanded and significantly renovated
Existing Properties, the Company has not previously undertaken construction of
new developments. See "Risk Factors--Risks of Construction and Development".
INCREASING REVENUES AND IMPROVING OPERATING MARGINS. The Company will
continue to seek to improve the financial performance of its portfolio by
increasing revenues (through increased occupancy and/or rental rates),
maintaining high tenant retention rates (i.e., the percentage of tenants who
renew their leases upon expiration), replacing certain existing tenants with
more creditworthy tenants, and aggressively managing operating expenses. In
addition, most of the Company's lease agreements provide for percentage rents,
indexed rent increases based on
40
<PAGE>
CPI or other criteria or have scheduled rent escalations. The Company believes
that substantially all its properties are in desirable locations that are
experiencing rising rents, low vacancy rates, and increased demand, allowing the
Company to renew leases, or relet, space under expired leases, at favorable
rents.
The Company has developed strong relationships with its Anchor Tenants
by continually striving to promote tenant satisfaction by anticipating and
responding to their requirements. A number of the Company's Anchor Tenants have
evidenced this satisfaction by expanding their leased space within the Company's
properties. For example, in Commonwealth, the Company will invest $1.3 million
to expand Winn-Dixie's space by 12,000 square feet, and in return Winn-Dixie (i)
will increase its annual minimum rent by approximately $144,000, starting July
1998 and (ii) extend its lease for an additional 20-year period. See "Use of
Proceeds." In addition, the Company seeks to increase operating results through
the strategic renovation and/or expansion of properties which are typically
adaptable for varied tenant layouts and can be reconfigured to accommodate new
tenants or the changing space needs of existing tenants.
OTHER ACQUISITIONS. The Company may from time to time acquire or
develop, on a highly selective basis, other types of income-producing commercial
properties in markets in which the Company has significant expertise and which
present superior return opportunities. An example of such opportunistic
acquisitions is the Equity One Office Building in Miami Beach, Florida. The
office building was purchased in April 1992 when it was unoccupied and as of
June 30, 1997 was 100% occupied and generating annualized revenue of $317,000,
as well as providing the Company's 3,000 square foot executive offices rent
free. The Company also owns an additional 0.5 acres of land adjacent to this
office building which it plans to develop in the future.
MARKET DATA
The Company has concentrated its activity in the Dade County (Miami),
Orlando and Jacksonville metropolitan areas of Florida. These areas provide the
Company with attractive demographic and competitive retail conditions. The
Company believes that population and employment growth are the primary demand
generators for retail properties and that retail sales are further enhanced by
Florida's sizable tourist and seasonal population. The population of the Miami
Metropolitan area grew 2.8% from 1992 to 1997 while retail sales grew 13.5%
during the same period. Additionally, population is projected to grow by 1.7%
between 1998 and 2001, while retail sales are projected to grow by 3.1% during
the same period. The population in the Orlando metropolitan area grew 16.6% from
1992 to 1997, while retail sales grew 28.5% during the same period.
Additionally, population is projected to grow by 9.9% between 1998 and 2001,
while retail sales are projected to grow by 11.1% during the same period.
Population in the Jacksonville area grew 5.6% from 1992 to 1997 while retail
sales grew 16.2% during the same period. Additionally, population is projected
to grow by 3.0% between 1998 and 2001, while retail sales are projected to grow
by 4.2% during the same period. The foregoing information is derived from data
provided by the United States Department of Commerce.
EXISTING PROPERTIES
The Existing Properties' portfolio consists primarily of Supermarket
Centers and contains an aggregate of approximately 2.0 million square feet of
GLA. As of June 30, 1997, the Existing Properties were 93.0% leased to
approximately 360 tenants (not including 535 tenants of the mini-warehouse
facility). With the exception of Winn-Dixie, which represents approximately
12.0% of aggregate annualized minimum tenant rents as of June 30, 1997, no
Anchor Tenant accounts for more than 4.3% of such tenant rent. All the
Supermarket Centers were developed after 1982. See "Policies with Respect to
Certain Activities--Investment Policies".
The following table sets forth certain information relating to the
Existing Properties as of June 30, 1997. All references to net rent per square
foot are calculated without giving effect to vacant space, unless otherwise
specified.
41
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<TABLE>
<CAPTION>
TOTAL NET
NET OPERATING OPERATING AVERAGE AVERAGE
NUMBER INCOME FOR THE INCOME FOR MINIMUM MINIMUM
OF YEAR ENDED THE SIX BASE RENT BASE RENT
DATE ACQUIRED GLA TENANTS DECEMBER 31, MONTHS ENDED (ANCHORS) (LOCALS)
(UNITS) 1996 JUNE 30, 1997
------------- --- ------- ------------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NORTH FLORIDA
Atlantic Village Shopping June 30, 1995 100,559 24 $731,461 $ 374,172 $4.50 $9.93
Center
Atlantic Beach, FL
Commonwealth Shopping Center February 28, 71,021 14 $460,541 $ 210,939 $6.10 $7.79
Jacksonville, FL 1994
Fort Caroline Trading Post January 21, 74,546 10 $472,879 $ 228,201 $6.40 $7.86
Jacksonville, FL 1994
Monument Pointe Shopping January 31, 75,328 12 N/A $ 190,985(3) $4.67 $8.48
Center 1997
Jacksonville, FL
Oak Hill Village Shopping December 7, 78,492 19 $448,219 $ 229,012 $4.50 $8.61
Center 1995
Jacksonville, FL
Mandarin Mini-Storage May 10, 1994 52,880 535 $208,239 $ 96,680 $-0- $5.59
Jacksonville, FL
CENTRAL FLORIDA
East Bay Plaza July 23, 1993 85,426 20 $230,077 $ 152,716 $4.69 $8.81
Largo, FL
Eustis Square Shopping October 22, 126,791 22 $703,519 $ 349,246 $5.13 $9.44
Center 1993
Eustis, FL
Forest Edge Shopping Center December 31, 68,631 12 $ 182,190 $6.01 $7.83
Orlando, FL 1996
Lake Mary Shopping Centre November 9, 288,450 53 $2,787,759 $1,447,409 $9.17 $14.24
Lake Mary, FL 1995
SOUTH FLORIDA
Bird Ludlum Shopping Center August 11, 192,477 48 $2,223,722 $1,167,993 $9.00 $13.78
Miami, FL 1994
Plaza Del Rey Shopping December 1992 50,146 20 $572,143 $283,981 $-0- $11.95
Center
Miami, FL
Pointe Royale Shopping July 27, 1995 199,068 20 $1,080,640 $477,851 $3.62 $10.02
Center
Miami, FL
Pointe Royale Office July 27, 1995 18,000(5) 0 -- -- -- --
Building
Miami, FL
West Lake Plaza Shopping November 6, 100,747 25 $129,984(6) $412,268 $7.79 $11.55
Center 1996
Miami, FL
Diana Building February 15, 18,707 5 $1,266(6) $ 41,234 $-0- $14.13
W. Palm Beach, FL 1995
Equity One Office Building April 10, 28,980 10 $259,373 $145,545 $-0- $12.20
Miami Beach, FL 1992
TEXAS
Four Corners Shopping Center January 22, 115,178 25 $775,874 $427,255 $3.60 $7.42
Tomball, TX 1993
Parker Tower Centre December 9, 205,792 18 $407,766 $217,069 $8.20 $9.63
Plano, TX 1993 --------- --- ----------- ---------- ----- -----
Total/Weighted Average 1,951,219 892 $11,493,462 $6,634,746 $5.96 $9.96
INITIAL PERCENT
ACQUISITION & LEASED AT KEY TENANTS
REDEVELOPMENT JUNE 30, LEASE EXPIRATION
COSTS 1997 DATES
------------- --------- --------------
NORTH FLORIDA
Atlantic Village Shopping $5,950,000 98% Publix (2004),
Center Walgreen's (2019)(1)(2)
Atlantic Beach, FL
Commonwealth Shopping Center $3,650,000 95% Winn-Dixie (2017)
Jacksonville, FL
Fort Caroline Trading Post $3,705,000 96% Winn-Dixie (2015),
Jacksonville, FL Eckerd (2004)
Monument Pointe Shopping $3,731,000 94% Winn-Dixie (2005),
Center Eckerd (2005)
Jacksonville, FL
Oak Hill Village Shopping $3,450,000 100% Publix (2005),
Center Walgreen's (2019)(2)
Jacksonville, FL
Mandarin Mini-Storage $1,810,000 95%
Jacksonville, FL
CENTRAL FLORIDA
East Bay Plaza $1,610,000 83% Scottys (2001),
Largo, FL Albertsons(4),
Hollywood
Video (2007)
Eustis Square Shopping $7,249,000 92% Publix (2004),
Center Bealls (2005),
Eustis, FL Walgreen's (2024)(2)
Forest Edge Shopping Center $3,100,000 99% Winn-Dixie (2007),
Orlando, FL AutoZone (2006)
Lake Mary Shopping Centre $20,850,000 100% K-Mart (2013),
Lake Mary, FL Albertsons (2012),
General
Cinema (2010)
SOUTH FLORIDA
Bird Ludlum Shopping Center $21,801,000 100% Winn-Dixie (2007),
Miami, FL Eckerd (2007),
Vision
Works (2008)
Plaza Del Rey Shopping $3,831,000 98% Navarro (2001)
Center
Miami, FL
Pointe Royale Shopping $8,725,000 99% Best Buy (2010),
Center Winn-Dixie (2011),
Miami, FL Eckerd (2007)
Pointe Royale Office -- --
Building
Miami, FL
West Lake Plaza Shopping $7,930,000 99% Winn-Dixie (2016),
Center Eckerd (2004)
Miami, FL
Diana Building $1,514,000 60% Fat
W. Palm Beach, FL Tuesday's (2001)
Equity One Office Building $1,748,000 100% City of Miami
Miami Beach, FL Beach (1998),
Renal
Dialysis (2000)
TEXAS
Four Corners Shopping Center $4,750,000 94% Kroger (2005),
Tomball, TX Eckerd (2004)
Parker Tower Centre $4,157,000 60% Minyards (2011)
Plano, TX ------------ ----
Total/Weighted Average $109,561,000 93%
============ ===
</TABLE>
(1) Walgreen's has advised the Company that it will be vacating this site,
but is expected to continue to make lease payments.
(2) Pursuant to its lease agreement, Walgreen's may terminate the lease in
2004.
(3) Represents NOI for the five months ended June 30, 1997.
(4) Albertsons is located on property contiguous to the Company's property
not owned by the Company. Accordingly, Albertsons does not pay base
rent or make payments to the Company for common area maintenance and
similar charges at this location.
(5) Represents GLA following redevelopment. See "Use of Proceeds".
(6) Represents NOI for the two months ended December 31, 1996.
42
<PAGE>
REDEVELOPMENT AND DEVELOPMENT PROPERTIES
SKY LAKE. The Company recently entered into an agreement to purchase
Sky Lake for approximately $11.85 million. Sky Lake is located in the North
Miami Beach, Florida area. Approximately 160,000 residents with household
incomes averaging approximately $50,000 are located within a three mile radius
of the property. Following the acquisition of Skylake, the Company will commence
a comprehensive redevelopment program to create a Supermarket Center containing
approximately 300,000 square foot of GLA. The Company expects that the
redevelopment will cost approximately $18.0 million and will occur in several
phases which are expected to be completed by March 31, 1999. The Company has
entered into a non-binding letter of intent with Albertsons for the lease of
approximately 60,000 square feet of GLA at Sky Lake. During the redevelopment,
the Company expects to receive certain rent revenue from tenants who will
continue operations during the redevelopment process.
CORAL WAY. The Company recently acquired 10.0 acres of vacant land at
Coral Way for approximately $1.5 million for the development of a 100,000 square
foot Supermarket Center. Coral Way is located in a newly rezoned high growth
area of Southwest Dade County, Florida. The Company expects to complete
development of Coral Way by December 1999, and anticipates that the costs of
development will approximate $10.0 million. In addition, the Company has agreed
to acquire 4.4 acres of land proximate to Coral Way for future development
contingent upon, among other things, the rezoning of such property for
commercial use.
LAND FOR DEVELOPMENT. The Company owns approximately 13.0 acres of land
adjacent to certain of the Existing Properties which it intends to develop as
retail space. The Company expects to commence construction on approximately 5.0
acres adjacent to its Lake Mary Supermarket Center and 0.5 acres adjacent to its
Commonwealth Supermarket Center within three months following the Offering. The
Company expects to complete these projects by December, 1998, at a cost of
approximately $3.0 million and $450,000, respectively.
The following chart provides additional information with respect to
Redevelopment and Development Properties.
<TABLE>
<CAPTION>
NUMBER OF DEVELOPABLE CURRENT
PROPERTY LOCATION ACREAGE PARCELS SQUARE FEET ZONING
-------- -------- -------- -------- ----------- ------
<S> <C> <C> <C> <C>
ADJACENT TO EXISTING PROPERTIES
Commonwealth Jacksonville, FL 0.50 1 6,000 Retail
Fort Caroline Jacksonville, FL 0.50 1 7,000 Retail
Oak Hill Village Jacksonville, FL 0.25 1 6,000 Retail
Lake Mary Lake Mary, FL 5.00 1 70,000 Retail
Bird Ludlum Miami, FL 6.20 1 150 Units Residential
Equity One Office Building Miami Beach, FL 0.50 2 50,000 Office
----- --- ---------
Total - Adjacent to Existing Properties 12.95 7 139,000 (1)
----- --- -------
REDEVELOPMENT/ DEVELOPMENT PROPERTIES
Sky Lake(2) NE Dade County, FL 24.00 1 285,000 Retail
Sky Lake(2) NE Dade County, FL 1.50 2 15,000 Retail
Coral Way SW Dade County, FL 10.00 1 100,000 Retail
Vacant Land(2) SW Dade County, FL 4.40 2 40,000 Retail
------ --- --------
Total - Redevelopment/Development 39.90 6 440,000
------ --- --------
Total 52.85 13 579,000
===== == =======
</TABLE>
(1) For a discussion of the properties, see "Additional Information
Concerning the Existing Properties".
(2) Under contract to purchase.
43
<PAGE>
There can be no assurance that Sky Lake, Coral Way or any other
acquisition, redevelopment or development project will be consummated or, if
consummated, will be successful. See "Policies with Respect to Certain
Activities--Development Policies" and "Use of Proceeds".
TENANT DIVERSIFICATION
The following table sets forth the GLA of the Existing Properties
leased to Anchor Tenants and other tenants as of June 30, 1997.
<TABLE>
<CAPTION>
ANCHOR TENANTS OTHER TENANTS TOTAL
-------------- ------------- -----
<S> <C> <C> <C>
Existing Properties (sq. ft.)............................. 1,039,044 752,707 1,791,751
Percentage of Total Leased GLA............................ 57.99% 42.01% 100.00%
</TABLE>
The following table sets forth as of June 30, 1997, information
regarding the leases with the Company's largest tenants based upon annualized
minimum rents of at least $250,000:
<TABLE>
<CAPTION>
PERCENT OF
GLA NUMBER ANNUALIZED AGGREGATE
TENANT (SQ. FT.) OF STORES MINIMUM RENTS ANNUALIZED MINIMUM
RENTS
<S> <C> <C> <C> <C>
Winn-Dixie................. 308,864 7 $1,886,286 12.52%
General Cinemas............ 35,712 1 633,888 4.21
Albertsons................. 63,139 1 568,251 3.77
Eckerd(1).................. 59,700 6 514,142 3.41
K-Mart..................... 86,479 1 497,254 3.30
Publix..................... 118,110 3 567,080 3.76
Kroger..................... 45,528 1 373,330 2.48
Best Buy................... 91,472 1 365,888 2.43
Blockbuster Video.......... 23,609 4 309,503 2.05
Walgreen's(2).............. 34,996 3 265,720 1.76
Minyard's.................. 70,550 1 253,980 1.69
-------- --- ------------ ------
Total................. 938,159 29 $6,235,322 41.38%
======= == ========== =====
</TABLE>
(1) Includes two stores where the tenant has vacated the premises but has,
to date, continued to pay rent pursuant to its lease with the Company.
(2) Includes a store which Walgreen's has advised the Company that it
intends to vacate but will continue to pay rent pursuant to its lease.
44
<PAGE>
LEASE EXPIRATIONS
The following table sets forth the anticipated lease expirations of the
Company's tenants (excluding renewal options and the mini-storage facility) from
July 1, 1997 through June 30, 2007 and thereafter.
<TABLE>
<CAPTION>
PERCENT OF AVERAGE
AGGREGATE ANNUAL
NUMBER OF GLA PERCENT OF ANNUALIZED ANNUALIZED MINIMUM RENT
JUNE 30, LEASES (SQ. FT.) TOTAL GLA MINIMUM RENT MINIMUM RENT PER SQ. FT.
- -------- --------- --------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998.................. 71 153,955 8.88% $1,808,628 12.24% $11.75
1999.................. 71 134,148 7.74 1,496,282 10.13 11.15
2000.................. 81 166,975 9.63 1,737,637 11.76 10.41
2001.................. 46 147,612 8.52 1,293,669 8.76 8.76
2002.................. 33 74,376 4.29 977,403 6.62 13.14
2003.................. 11 33,835 1.95 332,507 2.25 9.83
2004(1)............... 5 54,857 3.17 292,917 1.98 5.34
2005.................. 10 237,662 13.71 1,310,551 8.87 5.51
2006.................. 2 50,878 2.94 442,880 3.00 8.70
2007.................. 5 21,299 1.23 268,950 1.82 12.63
THEREAFTER............ 22 657,450 37.94 4,812,047 32.57 7.32
---- ---------- ------- ------------- ------- -------
Total/Average......... 357 1,733,047 100.00% $14,773,471 100.00% $ 8.52
=== ========= ====== =========== ====== ======
</TABLE>
(1) Does not include three lease agreements with Walgreen's expiring in the
years 2019, 2019 and 2024, respectively, which Walgreen's may terminate
in 2004.
Historically, the Company has not incurred substantial costs associated
with Tenant Improvements relating to lease expirations or renewals.
Additionally, because leasing activities are performed in-house, the Company has
not historically incurred substantial costs associated with Leasing Commissions.
No assurance can be given that such expenses will not increase in the future.
ADDITIONAL INFORMATION CONCERNING THE EXISTING PROPERTIES
As of December 31, 1996, two of the Supermarket Centers, Bird Ludlum
and Lake Mary, either had a book value equal to or greater than 10.0% of the
total assets of the Company or gross revenues which accounted for more than
10.0% of the Company's aggregate gross revenues. Set forth below is additional
information with respect to each of such properties.
BIRD LUDLUM. Bird Ludlum is a 192,477 square foot Supermarket Center
occupied by 48 tenants which is located at the intersection of Bird Road and
Ludlum Road in Miami, Florida. Traffic count at the Bird Ludlum center averages
approximately 85,000 vehicles per day. The property is located approximately one
mile east of the Palmetto Expressway, a major Miami roadway. Bird Ludlum is
located in a densely populated trade area of Miami with a population of over
155,000 within a three mile radius and an average household income of $51,000
per year. This property includes five out-parcel buildings, and has attracted a
full range of national and regional chain store tenants including Winn-Dixie,
Eckerd, Blockbuster, Radio Shack and Little Ceasars. Outparcel buildings are
occupied by Visionworks, McDonalds, Dairy Queen, Jiffy Lube and Barnett Bank.
In 1996, the Company purchased 7.4 acres of vacant land adjacent to
Bird Ludlum for a purchase price of $1.1 million. During early 1997, the Company
utilized approximately 1.2 acres of this land to build a parking lot for 150
automobiles.
45
<PAGE>
Winn-Dixie, the only tenant which occupies more than 10.0% of the GLA
at Bird Ludlum, occupies 44,400 square feet of GLA under a lease which expires
in December 2007 and contains five renewal options of five years each. The
annual minimum rent payable by Winn-Dixie under this lease is $399,600. For the
years ended June 30, 1994, 1995 and 1996, Winn-Dixie reported sales of $22.3
million, $22.3 million and $23.6 million, respectively.
The following table sets forth a schedule of lease expirations at Bird
Ludlum, assuming none of the tenants exercise renewal options.
<TABLE>
<CAPTION>
PERCENT OF AVERAGE
AGGREGATE ANNUAL
NUMBER OF GLA PERCENT OF ANNUALIZED ANNUALIZED MINIMUM RENT
YEAR LEASES (SQ. FT.) TOTAL GLA MINIMUM RENT MINIMUM RENT PER SQ. FT.
- ---- --------- --------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1998 11 40,435 21.01% $620,627 25.44% $15.35
1999 12 30,540 15.87 375,859 15.40 12.31
2000 9 25,194 13.09 293,710 12.04 11.66
2001 3 10,300 5.35 81,687 3.35 7.93
2002 4 5,775 3.00 113,241 4.64 19.61
2003 5 15,195 7.89 200,813 8.23 13.22
2004 0 0 0.00 0 0.00 0.00
2005 0 0 0.00 0 0.00 0.00
2006 0 0 0.00 0 0.00 0.00
2007 0 0 0.00 0 0.00 0.00
THEREAFTER 4 65,038 33.79 754,085 30.90 11.59
--- -------- ------- ------------ ------- -------
Total/Average 48 192,477 100.00% $2,440,022 100.00% $12.68
== ======= ====== ========== ====== ======
</TABLE>
The average annual rental income per square foot of GLA at Bird Ludlum
for the years ended December 1994, 1995 and 1996 was $18.61, $17.31 and $16.89,
respectively, and as of June 30, 1997 was $16.87.
At the time of its acquisition by the Company, Bird Ludlum was 96.0%
leased. For the three years ended December 31, 1994, 1995 and 1996 and the six
months ended June 30, 1997, the percentage of Bird Ludlum that was leased was
100.0%, 99.0%, 100.0% and 100.0%, respectively.
Depreciation (for tax purposes) on Bird Ludlum is taken as follows: (i)
approximately $14.2 million of the basis is being depreciated on a straight line
basis over 40 years, and (ii) $1.3 million of the basis uses a 15-year
Accelerated Cost Recovery System ("ACRS") depreciation. Depreciation for book
purposes is calculated on a straight-line basis over 40 years.
LAKE MARY. Lake Mary is a 288,450 square foot Supermarket Center
occupied by 53 tenants which is located at the southeast corner of Lake Mary
Boulevard and Lake Emma Road in Lake Mary, Seminole County, Florida, in the
Orlando metropolitan area. The property was originally constructed during 1987
and 1988. Certain improvements and additions were made to Lake Mary in 1990.
Lake Mary, which is situated on a 47.0 acre parcel, has attracted a full range
of national and regional chain store tenants including K-Mart, Albertsons,
General Cinema, Chilis, Burger King, Einsteins Bagels, Carvel Ice Cream, Radio
Shack, Little Ceasars and H&R Block.
Three tenants, K-Mart, Albertsons and General Cinemas, each occupy in
excess of 10.0% of the GLA at Lake Mary. K-Mart occupies 86,479 square feet of
GLA under a lease which expires in August, 2013. The annual minimum rent is
$497,254. For the years ended December 31, 1994, 1995 and 1996, K-Mart reported
sales of $7.5 million, $7.7 million and $8.2 million, respectively. Management
of the Company believes that this K-Mart is an underperforming store. The prior
owner and current lender on the property has agreed to guarantee the rent due
46
<PAGE>
from K-Mart (including recoveries), for a period of three years from any time
that K-Mart ceases making rental payments. Albertsons occupies 63,139 square
feet of GLA under a lease which expires in June 2012 and has four renewal
options of five years each. The annual minimum rent under the Albertsons lease
is $568,251, increasing to $599,820 in June 2002 and $631,390 in June 2007. For
the years ended December 31, 1994, 1995 and 1996, Albertsons reported sales of
$23.8 million, $25.6 million and $27.5 million, respectively. General Cinemas
occupies 35,712 square feet of GLA under a lease which expires in June, 2010.
The annual minimum rent is $633,888. The Company plans to allocate $3.0 million
from the proceeds of the Offering to develop 50,000 square feet of additional
space at Lake Mary.
The following table sets forth a schedule of lease expirations at Lake
Mary, assuming none of the tenants exercise renewal options:
<TABLE>
<CAPTION>
PERCENT OF AVERAGE
AGGREGATE ANNUAL
NUMBER OF GLA PERCENT OF ANNUALIZED ANNUALIZED MINIMUM RENT
YEAR LEASES (SQ. FT.) TOTAL GLA MINIMUM RENT MINIMUM RENT PER SQ. FT.
- ---- ---------- --------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1998 8 10,835 3.79% $159,314 5.03% $14.70
1999 12 19,049 6.65 260,719 8.23 13.69
2000 10 18,025 6.30 230,497 7.28 12.79
2001 5 11,960 4.18 143,326 4.52 11.98
2002 11 25,916 9.05 356,864 11.26 13.77
2003 0 0 0.00 0 0.00 0.00
2004 1 1,332 0.46 19,154 0.61 14.38
2005 0 0 0.00 0 0.00 0.00
2006 0 0 0.00 0 0.00 0.00
2007 1 3,909 1.37 113,986 3.60 29.16
THEREAFTER 5 195,229 68.20 1,884,197 59.47 9.65
--- ------- ------- ----------- ------- --------
Total/Average 53 286,255 100.00% $3,168,057 100.00% $11.07
== ======= ====== ========== ====== ======
</TABLE>
The average rental income per square foot of GLA at Lake Mary for the
years ended December 1995 and 1996 was $12.30, and as of June 30, 1997 was
$12.73.
At the time of its acquisition by the Company, Lake Mary was 97.0%
leased. For the two years ended December 31, 1995 and 1996 and the six months
ended June 30, 1997, the percentage of Lake Mary that was leased was 97.0%,
100.0% and 100.0%, respectively.
Depreciation (for tax purposes) on Lake Mary is taken as follows: (i)
approximately $11.3 million of the basis is being depreciated on a straight line
basis over 40 years, and (ii) $2.0 million of the basis uses a 15-year ACRS
depreciation. Depreciation for book purposes is calculated on a straight-line
basis over 40 years.
Set forth below is additional information with respect to each of the
Company's other Existing Properties:
ATLANTIC VILLAGE. Atlantic Village is a 100,559 square foot Supermarket
Center occupied by 24 tenants which is located in Atlantic Beach, Florida (in
the Jacksonville metropolitan area). Atlantic Village is situated on 14.0 acres
and is anchored by Publix and Walgreen's. For the year ended December 31, 1996,
Publix reported sales of $19.9 million. The Company will invest $850,000 to
remodel the property and in return, Publix will renew its lease for another 10
years starting October 1998. Walgreen's has advised the Company that it will be
vacating this site, but is expected to continue to make lease payments.
COMMONWEALTH. Commonwealth is a 71,021 square foot Supermarket Center
occupied by 14 tenants which is located in Jacksonville, Florida. Commonwealth
is situated on 12.8 acres and is anchored by Winn-Dixie. For the year ended June
30, 1996, Winn-Dixie reported sales of $12.4 million. The Company will invest
$1.3
47
<PAGE>
million to expand Winn-Dixie's space by 12,000 square feet and in return
Winn-Dixie (i) will increase its monthly minimum rent by approximately $12,000,
starting July 1998 and (ii) extend its lease for an additional 20-year period.
Additionally, the Company intends to build 6,000 square feet of retail space on
an existing out-parcel to accommodate an existing tenant at a cost of
approximately $450,000.
FORT CAROLINE. Fort Caroline is a 74,546 square foot Supermarket Center
occupied by 10 tenants which is located in Jacksonville, Florida. Fort Caroline
is situated on 9.6 acres and is anchored by Winn-Dixie and Eckerd Drugs. For the
year ended June 30, 1996, Winn-Dixie reported sales of $13.8 million. During
1994 and 1995 the Company expanded Winn-Dixie's occupied space by an aggregate
of approximately 7,200 square feet, and Winn-Dixie agreed to extend its lease
for an additional 20-year period.
MONUMENT POINTE. Monument Pointe is a 75,328 square foot Supermarket
Center occupied by 12 tenants located in Jacksonville, Florida. Monument Pointe
is situated on 7.3 acres and is anchored by Winn-Dixie and Eckerd. For the year
ended June 30, 1996, Winn-Dixie reported sales of $15.5 million.
OAK HILL. Oak Hill is a 78,492 square foot Supermarket Center occupied
by 19 tenants located in Jacksonville, Florida. Oak Hill is situated on 11.7
acres and is anchored by Publix and Walgreen's. For the year ended December 31,
1996, Publix reported sales of $12.9 million.
EAST BAY. East Bay is a 85,426 square foot Supermarket Center occupied
by 20 tenants located in Largo, Florida (in the Tampa metropolitan area). East
Bay is situated on 10.3 acres and is anchored by Albertsons, Scotty's and
Hollywood Video. Albertsons is located on property contiguous to the Company's
property which is not owned by the Company. The Company recently signed a 10
year lease with Hollywood Avenue with an annual minimum rent of $102,000.
EUSTIS SQUARE. Eustis Square is a 126,791 square foot Supermarket
Center occupied by 22 tenants located in Eustis, Florida. Eustis Square is
situated on 13.5 acres and is anchored by Publix, Bell's and Walgreen's. For the
year ended December 31, 1996, Publix reported sales of $12.5 million.
FOREST EDGE. Forest Edge is a 68,631 square foot Supermarket Center
occupied by 12 tenants located in Orlando, Florida. Forest Edge is situated on
8.2 acres and is anchored by Winn-Dixie and AutoZone. For the year ended June
30, 1996, Winn-Dixie reported sales of $12.5 million.
PLAZA DEL REY. Plaza Del Rey is a 50,146 square foot shopping center
occupied by 20 tenants located in Southwest Dade County, Florida. Plaza Del Rey
is situated on 4.6 acres and is anchored by Navarro's. For the year ended
December 31, 1996, Navarro's reported sales of $8.9 million.
POINTE ROYALE. Pointe Royale is a 199,068 square foot Supermarket
Center occupied by 20 tenants located in Cutler Ridge, Dade County, Florida.
Pointe Royale is situated on 14.5 acres and is anchored by Best Buy and
Winn-Dixie. For the year ended June 30, 1996, Winn-Dixie reported sales of $16.9
million. The Company intends to invest $800,000 during 1998 to renovate a
currently vacant 18,000 square foot office building situated on the property.
Eckerd has vacated its leased space but has, to date, continued to pay rent
pursuant to its lease with the Company.
WEST LAKE. West Lake is a 100,747 square foot Supermarket Center
occupied by 25 tenants located in Kendall Lakes, Dade County, Florida. West Lake
is situated on 8.8 acres and is anchored by Winn-Dixie, Eckerd and Burger King.
Eckerd has vacated the leased space but has, to date, continued to pay rent
pursuant to its lease with the Company. For the year ended June 30, 1996,
Winn-Dixie reported sales of $10.2 million.
FOUR CORNERS. Four Corners is a 115,178 square foot Supermarket Center
occupied by 25 tenants located in Tomball, Texas (Houston metropolitan area).
Four Corners is situated on 12.0 acres and is anchored by Kroger and Eckerd. For
the year ended December 31, 1996, Kroger reported sales of $22.1 million.
48
<PAGE>
PARKER TOWNE. Parker Towne is a 205,792 square foot Supermarket Center
occupied by 18 tenants located in Plano, Texas (Dallas metropolitan area).
Parker Towne is situated on 19.2 acres and is anchored by Minyard's and
Blockbuster Video. For the year ended December 31, 1996, Minyard's reported
sales of $23.1 million.
EQUITY ONE OFFICE BUILDING. The Equity One Office Building is a 28,980
square foot mixed use (office/retail) property occupied by 10 tenants, including
the Company's corporate offices located in Miami Beach, Florida The property is
located on one of four parcels, which, in the aggregate, total 1.2 acres. This
property was purchased in 1992 and was completely redeveloped by the Company.
The property is adjacent to the Miami Beach City Hall and proximate to the Miami
Beach Convention Center.
DIANA BUILDING. The Diana building is a 18,707 square foot mixed use
(office/retail) property currently occupied by five tenants located in West Palm
Beach, Florida. This property was purchased in 1995 and was completely
redeveloped by the Company.
MANDARIN MINI-STORAGE. Mandarin is a 52,880 square foot mini-storage
warehouse occupied by 535 tenants located in Jacksonville, Florida. The property
is situated on 2.8 acres.
INDEBTEDNESS
The following table sets forth certain information regarding mortgage
indebtedness of the Company related to the Existing Properties as of June 30,
1997:
<TABLE>
<CAPTION>
BALANCE DUE
INTEREST FACE PROJECTED ANNUAL AT
RATE AMOUNT INTEREST PAYMENTS MATURITY DATE MATURITY(2)
-------- -------- ----------------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NORTH FLORIDA
Atlantic Village(1)................ 8.15% $3,988 $321 July 2002 $3,294
Fort Caroline...................... 9.35% 2,393 221 March 2002 2,078
Monument Pointe.................... 10.06% 2,731 273 June 2001 2,564
Oak Hill........................... 7.625% 2,415 182 February 2006 1,703
Mandarin Mini-Storage.............. 6.375% 1,219 77 May 1999 1,172
CENTRAL FLORIDA
East Bay........................... 8.25% 916 75 August 2000 859
Eustis Square...................... 9.00% 5,399 480 July 2002 4,322
Forest Edge(1)..................... 8.25% 2,031 165 October 2002 1,597
Lake Mary.......................... 7.85% 12,956 1,007 December 2010 5,569
SOUTH FLORIDA
Bird Ludlum........................ 7.68% 13,281 1,007 February 2015 0
Plaza Del Rey...................... 8.125% 2,961 260 September 2011 0
Pointe Royale...................... 7.95% 5,746 451 July 2010 2,502
West Lake Plaza.................... 7.875% 5,892 459 June 2006 4,157
TEXAS
Four Corners(1).................... 9.49% 2,988 283 February 2003 2,785
</TABLE>
- ------------------
(1) The Company intends to retire the mortgages on each of these
properties, except Forest Edge, from the net proceeds of the Offering
immediately following consummation of the Offering. The Company intends
to retire the mortgage on Forest Edge from net proceeds on or about
April 1, 1998.
(2) With respect to the mortgage indebtedness to be repaid from the
proceeds of the Offering, the loan on Atlantic Village does not have
any prepayment penalty. Forest Edge and Four Corners loans have
prepayment penalties of 1.0% and 2.0% of the outstanding principal,
respectively. The prepayment penalty associated with Lake Mary mortgage
indebtedness is the greater of 1.0% of the outstanding principal
balance or the present value differences in interest rates at the time
of prepayment. The prepayment penalty associated with Bird Ludlum
mortgage indebtedness in the greater of 1.0% of the outstanding
principal balance or the present value differences in interest rates at
the time of prepayment.
49
<PAGE>
PROPERTY MANAGEMENT, LEASING AND RELATED SERVICE BUSINESS
The Company's property management and substantially all of its leasing
activities, operating and administrative functions (including leasing, legal,
construction, data processing, maintenance, finance and accounting) are
administered or coordinated by Company personnel. On-site functions such as
maintenance, landscaping, sweeping, plumbing and electrical are subcontracted
out at each location and, to the extent permitted by their respective leases,
the cost of these functions is passed on to the tenants. Personnel from the
Company's corporate headquarters conduct regular inspections of each property
and maintain frequent contact with major tenants.
The Company maintains an active leasing and maintenance program that,
combined with the quality and locations of the properties, has made the Existing
Properties attractive to tenants. The Company intends to continue to hold the
properties for long-term investment and, accordingly, places a strong emphasis
on quality construction and an on-going program of regular maintenance. The
properties are designed to require minimal capital improvements.
The Company's management information systems provides operating data
necessary to make informed business decisions on a timely basis. These systems
allow instant access to store availability, lease data, tenants' sales history,
cash flow budgets and forecasts and enable the Company to maximize cash flow
from operations and closely monitor corporate expenses.
In addition to managing the Existing Properties, the Company provides
management and leasing services to certain third party owned properties.
Services are provided to third-party owners pursuant to contracts that are of
varying lengths of time and which generally provide for management fees of up to
4.0% of monthly base rent property receipts. The management contracts are
typically cancelable upon 30 days' notice or upon certain events, including the
sale of the property. Leasing fees typically range from $2 to $3 per square
foot. During the year ended December 31, 1996 and the six months ended June 30,
1997, the Company earned management fees of $229,995 and $159,135, respectively,
in connection with its management of third party owned properties. At present,
the Company has no plans to expand these activities.
COMPETITION
There are numerous commercial developers, real estate companies and
other owners of real estate in the areas in which the Existing Properties are
located that compete with the Company in seeking land for development,
properties for acquisition, financing and tenants. Many of such competitors have
substantially greater resources than the Company. All of the Company's
Supermarket Centers are located in developed areas that include other
Supermarket Centers. The number of retail properties in a particular area could
materially adversely affect the Company's ability to lease vacant space and
maintain the rents charged at the Supermarket Centers or at any newly acquired
property or properties. One shopping center constructed less than two years ago
stands within a two-mile radius of Bird Ludlum. In addition, several smaller and
older strip centers are located along Bird Road in Miami. Lake Mary is located
on a retail thoroughfare which includes direct and proximate competition from a
free-standing Home Depot, a Target store and two shopping centers anchored by
Winn-Dixie and Publix, respectively. West Lake and Four Corners each competes
with nearby shopping centers anchored by supermarkets. Pointe Royale is located
within proximity to Cutler Ridge Mall and a Publix-anchored shopping center.
Free-standing retailers such as Circuit City and Toys R' Us within one mile of
Pointe Royale compete directly with tenants in such Supermarket Center. In
addition, there are several strip shopping centers in the vicinity. The
Company's other properties are subject to similar competition. Certain of the
Company's competitors may possess greater resources than the Company and may
have management with more experience than the Company's management. See "Risk
Factors--Competition from Numerous Sources".
REGULATIONS AND INSURANCE
REGULATIONS. Retail properties are subject to various laws, ordinances
and regulations. The Company believes that each of the Existing Properties
maintains all material operating permits and approvals necessary to be
50
<PAGE>
maintained by the Company. For a discussion of the ADA and government approvals
regarding land uses, levels of density, and utility services, among others, see
"Risk Factors--Government Regulation-Government Entitlements", "--Americans
with Disabilities Act Compliance" and "--Adverse Effect of Uninsured Loss".
INSURANCE. Under their leases, the Company's tenants are generally
responsible for providing adequate insurance on the property they lease. The
Company believes the Existing Properties are covered by adequate fire, flood and
property insurance provided by reputable companies. However, certain of the
Existing Properties are not covered by disaster insurance with respect to
certain hazards (such as hurricanes) for which coverage is not available or
available only at rates which, in the opinion of the Company, are prohibitive.
ENVIRONMENTAL MATTERS
Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate may be required to investigate
and clean up hazardous or toxic substances or petroleum product releases at such
property and may be held liable to a governmental entity or to third parties for
property damage and for investigation and clean-up costs incurred by such
parties in connection with contamination. Many such laws, including the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"),
typically impose such liability without regard for whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances and the
liability under such laws has been interpreted to be joint and several unless
divisible and there is a reasonable basis for allocation of responsibility. The
cost of investigation, remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
rent such property or to borrow using such property as collateral. Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Some environmental laws create a lien on a contaminated
site in favor of the government for damages and costs it incurs in connection
with the contamination. The owner of a contaminated site also may be subject to
common law claims by third parties based on damages and costs resulting from
environmental contamination emanating from such site. In connection with the
ownership (direct or indirect), operation, management and development of real
properties, the Company is generally considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous or
toxic substances and, therefore, potentially liable for removal or remediation
costs, as well as certain other related costs, including governmental fines and
injuries to persons and property.
Certain federal, state and local laws, regulations and ordinances also
govern the removal, encapsulation or disturbance of asbestos-containing
materials ("ACMs") when such materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a building. Such laws may
impose liability for release of ACMs and may permit third parties to seek
recovery from owners or operators of such properties for personal injury
associated with ACMs. Some of the environmental site assessments conducted at
the Existing Properties to date indicate that a number of the Existing
Properties contain ACMs. The Company is not aware, however, of any ACMs at the
properties that are friable or in otherwise poor condition. Assessments for
these properties are being conducted at this time.
Although the Company obtained Phase I or similar environmental audits
(which involved a general inspection without soil sampling or groundwater
analysis) by independent environmental consultants when it acquired all but two
of the Existing Properties, six of the Existing Properties have environmental
assessments that were conducted more than four years ago and one existing
Property does not currently have an environmental assessment. These assessments
are currently being performed or updated by the Company.
The environmental studies conducted to date have not revealed any
significant environmental liability that would have a material adverse effect on
the Company's business, results of operations and liquidity; tenants at the
Existing Properties include plant-on-premises dry cleaners, gasoline service
stations and tire centers, photo development firms and other retailers which use
hazardous substances in their businesses. Although leases with such tenants
contain provisions intended to minimize environmental risks and to shift the
financial risks to the tenants,
51
<PAGE>
there is no assurance that the Company will not incur liability in this regard.
A limited monitoring program with respect to a groundwater testing program has
been implemented at Plaza Del Rey based on questions raised by environmental
studies conducted at the time of purchase. While this site is not regarded by
management as a significant environmental risk, if a material environmental
condition does in fact exist (or exists in the future) at this or other
properties, it could have a significant adverse impact upon the Company's
financial condition, results of operations and liquidity. No assurance can be
given that the environmental studies that were performed at the properties would
disclose all environmental liabilities thereon, that any prior owner thereof did
not create a material environmental condition not known to the Company or that a
material environmental condition does not otherwise exist as to any of the
Existing Properties.
In connection with the Company's acquisition of Sky Lake, a Phase II
Environmental Site Assessment dated July 15, 1997 has revealed the existence of
perchloroethylene at levels above regulatory limits caused by a dry cleaning
business operated on the premises. The Company has learned that the site is
included in the Florida Dry Cleaners State Program, and as a condition to the
Company's purchase of the property, the seller has agreed to pay all remediation
costs, which environmental consultants have estimated to be approximately
$250,000. In addition, $500,000 will be placed into an escrow account at closing
to pay for the remediation. Based on the remediation cost estimates, guarantees
by the seller to pay for the cleanup and the establishment of the escrow
account, the Company has concluded that the property will not pose a material
environmental liability when acquired.
EMPLOYEES
At June 30, 1997, the Company had 18 full-time employees. The Company's
employees are not represented by a collective bargaining group, and the Company
considers its relations with its employees to be good.
LEGAL PROCEEDINGS
Neither the Company nor the Existing Properties are presently subject
to any material litigation. Additionally, to the Company's knowledge, there is
no litigation threatened against the Company or the Existing Properties, other
than routine litigation and administrative proceedings arising in the ordinary
course of business, which collectively are not expected to have a material
adverse effect on the business, financial condition, results of operations or
cash flows of the Company.
52
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Board of Directors currently consists of eight members,
including three members who are independent directors. Pursuant to the Charter,
the Board of Directors is divided into three classes of directors and directors
serve until the election and qualification of their successor. The initial terms
of the first, second and third classes will expire in 1998, 1999 and 2000,
respectively. Beginning in 1998, directors of each class will be chosen for
three-year terms upon the expiration of their current terms and each year one
class of directors will be elected by stockholders. The Company believes that
classification of the Board of Directors will help to assure the continuity and
stability of the Company's business strategies and policies as determined by the
Board of Directors. Holders of shares of Common Stock will have no right to
cumulative voting in the election of directors. Consequently, at each annual
meeting of stockholders, the holders of a majority of the shares of Common Stock
will be able to elect all of the successors of the class of directors whose
terms expire at that meeting. Subject to rights granted pursuant to any
employment agreements, officers of the Company serve at the pleasure of the
Board of Directors.
Certain stockholders of the Company have entered into agreements to
control the Company. Such stockholders directly and indirectly own and/or
control an aggregate of 96.5% of the issued and outstanding Common Stock of the
Company before giving effect to the Offering. Upon consummation of the Offering,
such stockholders will own and/or control an aggregate of 59.5% of the
outstanding Common Stock (56.1% if the over-allotment granted to the
Underwriters is exercised in full). The agreements provide that, in all matters
affecting the Company (other than the election of directors) the parties to the
agreements will vote all of their shares as they may agree, or if they cannot
agree, will vote against any proposal to which they cannot agree. With respect
to the election of directors, the parties have granted an Irrevocable Proxy to
Globe Reit, which is an affiliate of Mr. Katzman and of Messrs. Makavy and
Wulkan, directors of the Company. Globe Reit has the power under the Irrevocable
Proxy to vote all of the shares of the Common Stock of the stockholders who are
parties to the Irrevocable Proxy for the election of directors through May 2001,
with, effectively, one-half of the directors designated by each of Gazit and
Danbar Resources, and if there is an additional director, such director shall be
designated by agreement. As a result of this agreement, the parties to the
agreement may be deemed a "group" within the meaning of Section 13(d) of the
Exchange Act and may direct the business and affairs of the Company. See
"Principal Stockholders" and "Certain Transactions".
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
<TABLE>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY TERM EXPIRES
---- --- ------------------------- ------------
<S> <C>
Chaim Katzman......................... 47 Chairman of the Board, President, Chief
Executive Officer and Director
Doron Valero.......................... 40 Executive Vice President, Chief
Operating Officer and Director
David Bookman......................... 41 Vice President, Chief Financial Officer N/A
and Treasurer
Alan Marcus........................... 40 Vice President, General Counsel and N/A
Secretary
Noam Ben-Ozer......................... 33 Director
Eli Makavy............................ 49 Director
Shaiy Pilpel.......................... 47 Director
Shulamit Rosen-Katzman................ 34 Director
David Wulkan.......................... 44 Director
Yuval Yanai........................... 45 Director
</TABLE>
53
<PAGE>
CHAIM KATZMAN has served as President, Chairman of the Board and Chief
Executive Officer and a director of the Company since its formation in 1992, and
has been involved in the purchase, development and management of commercial and
residential real estate in the United States since 1980. Mr. Katzman received an
L.L.B. from Tel Aviv University Law School in 1973. In 1991, Mr. Katzman
purchased the controlling interest of Gazit. Mr. Katzman has served as Chairman
of the Board and Chief Executive Officer of Gazit since May 1991 and remains its
largest stockholder and has served as a director of Globe Reit since 1994. A
licensed real estate broker in Florida, Mr. Katzman is a member of NAREIT and
the ICSC.
DORON VALERO has served as Executive Vice President, Chief Operating
Officer and a director of the Company since 1994. Mr. Valero manages the
Company's portfolio of properties and is responsible for, among other things,
acquisitions and leasing properties. Prior to joining the Company, from 1990 to
1993, Mr. Valero served as President and Chief Executive Officer of Global Fund
Investment, Inc., a real estate investment and management company. A licensed
mortgage broker in Florida, Mr. Valero is a member of NAREIT and ICSC. Mr.
Valero received a B.S.E. from Nova University in 1986.
DAVID N. BOOKMAN has served as the Company's Chief Financial Officer,
Vice President and Treasurer since July 1997. From December 1995 to July 1997,
Mr. Bookman served as the Company's Controller. From 1987 to 1995, Mr. Bookman
was a manager with Kenneth Leventhal & Co. Mr. Bookman has been a licensed
certified public accountant in the States of New York and Florida since 1985.
Mr. Bookman received his B.B.A. from Pace University in 1982.
ALAN J. MARCUS will become Vice President, General Counsel and
Secretary of the Company upon consummation of the Offering. Mr. Marcus has been
a member of the Florida Bar since 1984 and has maintained private practice in
Dade County, Florida since 1986. Mr. Marcus' practice has concentrated on real
estate and corporate matters. He is also an adjunct professor at Florida
International University. Mr. Marcus has represented Global Realty & Management,
Inc., the property management subsidiary of the Company, since 1990 and the
Company since 1993. Mr. Marcus received a B.S. from the University of Miami in
1978 and a J.D. and L.L.M. (Taxation) from the University of Miami in 1983 and
1984, respectively.
NOAM BEN-OZER has been a director of this Company since 1996. Mr.
Ben-Ozer obtained an M.B.A. from Harvard University in 1994, and has served as a
consultant for Bain & Company since 1994. From 1993 to 1994 Mr. Ben-Ozer served
as an outside consultant to Lemout & Hauspie Speech Products. Mr. Ben-Ozer is a
certified public accountant in Israel.
ELI MAKAVY has served as a director of the Company since 1996. Mr.
Makavy currently serves as Chairman of the Board and Chief Executive of Danbar,
as well as Chairman of the Board of Danbar Resources. Mr. Makavy also serves on
the board of directors of Globe Reit and D.C.L. Technologies Ltd., an Israeli
company whose securities are publicly traded on TASE.
DR. SHAIY PILPEL has served as a director of the Company since 1996.
Dr. Pilpel heads the trading operation at Wexford Management, an investment
firm. From 1995 to 1996, Dr. Pilpel was a managing director of Canadian Imperial
Bank of Commerce where he headed the Mortgage Arbitrage and Quantitative
Strategies proprietary trading group, and prior thereto, a portfolio manager for
Steinhardt Partners. Dr. Pilpel received a B.S. in mathematics and B.A. in
philosophy from Tel Aviv University, a M.Sc. in mathematics from the Hebrew
University in Jerusalem, a Ph.D. in Statistics from the University of California
at Berkeley and a M.B.A. from Columbia University.
DR. SHULAMIT ROZEN-KATZMAN has served as a director of the Company
since 1992. Dr. Rozen-Katzman has been a board certified pediatrician since
1992, and currently is an attending physician at Jackson Memorial Hospital in
Miami, Florida. Dr. Rozen-Katzman has served as a director of Gazit since 1991
and currently serves as its Vice Chairman. Dr. Rozen-Katzman is the wife of
Chaim Katzman. Dr. Rozen-Katzman received her medical degree from Tel Aviv
University School of Medicine.
54
<PAGE>
DAVID WULKAN has served as a director of the Company since 1996. Mr.
Wulkan served as a member of the board of directors of Danbar Resources,
Chairman of the Board of Danbar Technologies Ltd., an Israeli company whose
securities are publicly traded on TASE, a board member and executive of Danbar,
and a Board member of each of Globe Reit and Data Automatization Ltd, an Israeli
publicly traded company whose securities are publicly traded on TASE. Mr. Wulkan
holds a B.A. Degree in Economics & Accounting and an M.B.A. from Tel Aviv
University. Mr. Wulkan is a certified public accountant in Israel.
YUVAL YANAI has served as a director of the Company since 1996 and has
been the Vice President, Finance and Chief Financial Officer of Elscint Ltd.
(Israel) since August 1991. Previously, he was senior consultant and head of the
economics department of Control Data Corporation (Israel), Tel Aviv. Mr. Yanai
is Chairman of the Board of Elscint Espana S.A. (Spain) and Productos Medico
Hospitalares Elscint Ltd. (Brazil). Mr. Yanai is a director of Elscint Inc.
(USA), Elscint France S.A. (France), Elscint GmbH (Germany) and Elgems Ltd.
(Israel). Mr. Yanai holds a B.A. in accounting and economics from Tel Aviv
University.
KEY EMPLOYEE
RAFAEL EGUILIOR, 44, was recently hired to serve as the Company's head
of development. Mr. Eguilior has served as the President of CCS Design Group,
Inc., an architectural design firm in Miami, Florida since 1996. From 1994 to
1996, Mr. Eguilior was the principal architect in the design firm bearing his
name. From 1992 to 1994, Mr. Eguilior was a principal architect with the Nichols
Partnership, Inc., of Coral Gables, Florida. Mr. Eguilior has worked with the
Company in connection with the construction and remodeling of West Lake, and has
performed site plan analyses for the Company with respect to various properties.
Mr. Eguilior has been a licensed architect and certified general contractor in
the State of Florida since 1982 and 1987, respectively. Mr. Eguilior received a
B.A. in Architecture from the University of Miami in 1979.
DIRECTORS' COMPENSATION
The Company intends to pay its non-employee directors annual
compensation of $___for their services. In addition, non-employee directors will
receive a fee of $1,000 for each Board of Directors meeting or committee meeting
attended in person, plus reimbursement for reasonable expenses incurred in
attending the meetings. Non-employee directors will receive an additional fee of
$250 for each telephonic meeting attended. Officers of the Company who are
directors, and the two current directors who receive consulting fees, will not
be paid any directors' fees. Non-employee directors will receive, upon initial
election to the Board of Directors and annually thereafter, options to purchase
2,000 shares of Common Stock. These options will become exercisable over two
years.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has maintained an Executive Committee and Audit
and Review Committee since 1996. The Executive Committee is authorized to
perform all functions which may be delegated by the Board of Directors,
provided, however, that the Executive Committee can only act based on a
unanimous vote and that the Executive Committee may only approve acquisitions of
property similar to the Company's portfolio requiring an initial equity
investment of up to $15.0 million and acquisitions of vacant land having an
initial equity investment of up to $5.0 million in the aggregate. The Executive
Committee is comprised of Chaim Katzman, Doron Valero and Eli Makavy. The Audit
and Review Committee is comprised of Shaiy Pilpel, Noam Ben-Ozer and Yuval
Yanai, each of whom is a non-employee director of the Company. The Audit and
Review Committee's functions include recommending to the Board the engagement of
the Company's independent certified public accountants, reviewing with such
accountants the plan and results of their audit of the Company's financial
statements and determining the independence of such accountants.
In connection with the Offering, the Company has authorized the
formation of a Compensation Committee, whose members include Messrs. Pilpel,
Ben-Ozer and Yanai. The Compensation Committee will make recommendations with
respect to compensation of officers and key employees, including the granting of
options under the 1995 Plan.
55
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company,
for services rendered during the year ended December 31, 1996, to the Company's
Chief Executive Officer and to the Company's Executive Vice President and Chief
Operating Officer (collectively, the "Named Officers"). No other employee of the
Company received compensation equal to or exceeding $100,000 during such year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- -------------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION UNDERLYING OPTIONS
--------------------------- ------ ----- ------------ ------------------
<S> <C> <C> <C> <C>
Chaim Katzman.................................
Chairman of the Board, President, Chief $240,000 -- (1) 200,000(2)
Executive Officer, Treasurer and Secretary
Doron Valero.................................. $180,000 $50,000 (1) 150,000(2)
Vice President and Chief Operating Officer
</TABLE>
- -------------------------
(1) The aggregate amount of perquisites and other personal benefits
provided to such Named Officer is less than 10% of the total annual
salary and bonus of such officer.
(2) Represents options granted under the 1995 Plan.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Chaim Katzman,
Chairman of the Board, President and Chief Executive Officer of the Company, and
Doron Valero, Executive Vice President and Chief Operating Officer, each of
which expires on December 31, 2003 (the "Employment Agreements"). Each of the
Employment Agreements is automatically renewable for an additional 7 year term
unless either party gives written notice of an intent not to renew. Pursuant to
the Employment Agreements, Messrs. Katzman and Valero receive annual base
salaries of $240,000 and $180,000, respectively, which base salary is increased
annually by the greater of 6% or the rate of increase of the CPI for the year
immediately preceding each anniversary of the agreements. In addition, the
Employment Agreements provide that Messrs. Katzman and Valero may receive a
bonus as determined by the Company's Board of Directors, in its sole discretion.
Pursuant to Mr. Katzman's Employment Agreement, Mr. Katzman is required to
devote only so much of his time, attention, skill and efforts as shall be
required for the faithful performance of his duties. In addition, Mr. Katzman is
not required to reside and/or perform his duties within the United States.
Pursuant to the Employment Agreements, in the event the executives are
terminated by the Company without Cause (as defined in the Employment
Agreements), the executives shall receive all base compensation due under the
remaining term of such agreements. Mr. Katzman's Employment Agreement provides
that upon termination without Cause (as defined) or upon the occurrence of a
change in control, Mr. Katzman shall receive (i) all compensation due under the
balance of the term of his employment agreement, (ii) a severance payment equal
to two years of his current salary, (iii) vesting of all stock options granted
to him, (iv) payment of legal fees and expenses incurred as a result of
termination or change in control, and (v) a "put" option to tender all of his
shares of stock in the Company at a specified price. If the "put" option is
exercised, the Company must purchase all his shares of Common Stock at a price
per share equal to (i) if the Common Stock is then listed and traded on a
securities exchange, the average closing price over the forty-five trading days
immediately preceding the date the stock is tendered or (ii) if the Common Stock
is not then listed and traded on a securities exchange, the price per share used
in a similar third party arms' length sale of Common Stock during the six-month
period immediately preceding the tender. If the purchase price cannot be
determined in accordance with (i) and (ii) above, the price per share shall be
determined by an acceptable arbitrator in accordance with the rules of
commercial arbitration, or in the event the parties cannot agree on an
arbitrator, an arbitrator appointed by the American Arbitration Association.
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<PAGE>
The executive officers each hold options to purchase Common Stock
granted under the Company's 1995 Plan. The Employment Agreements provide that,
to the extent not already exercisable, such options will become immediately
exercisable if the executive's employment is terminated for any reason other
than Cause or voluntary resignation. Each of the executives is prohibited from
competing with the Company for the duration of their respective Employment
Agreements and, if terminated for Cause or upon voluntary resignation, for a
period of one year thereafter, without the prior written consent of the
Company's Board of Directors. During the term of Mr. Katzman's Employment
Agreement and thereafter, Mr. Katzman is authorized to engage in any other
business or businesses not in competition with the Company in the United States,
which may include non-commercial real estate acquisitions, development and
management, provided that his involvement in such business does not adversely
affect the performance of his duties under the Employment Agreement or
detrimentally affect the Company's business and affairs. Mr. Katzman may engage
in any business outside the United States, including the development of
commercial real property. Mr. Katzman and companies affiliated with Mr. Katzman
currently invest in commercial and retail properties in Canada and Israel.
Pursuant to the terms of each of Messrs. Katzman's and Valero's
Employment Agreements, such executives were granted registration rights with
respect to the shares of Common Stock issuable to such executives under options
granted pursuant to such employment agreements. Each of the executives has
waived such registration rights in connection with the Offering. See "Certain
Transactions".
STOCK OPTION PLAN
In December, 1995, the Company adopted the 1995 Stock Option Plan (the
"1995 Plan"), pursuant to which 1,000,000 shares of Common Stock are currently
reserved for issuance upon exercise of options. The 1995 Plan is designed as a
means to retain and motivate key employees, officers and directors. The
Company's Compensation Committee, or in the absence thereof, the Board of
Directors, administers and interprets the 1995 Plan and is authorized to grant
options thereunder to all eligible employees of the Company, including executive
officers and directors (whether or not they are employees) of the Company or
affiliated companies. Options granted under the 1995 Plan are on such terms and
at such prices as determined by the Compensation Committee, except that the per
share exercise price of incentive stock options cannot be less than the fair
market value of the Common Stock on the date of grant. Each option is
exercisable after the period or periods specified in the option agreement but no
option may be exercisable after the expiration of ten years from the date of
grant except for reload options, as provided under the 1995 Plan. The 1995 Plan
will terminate on December 31, 2006, unless sooner terminated by the Company's
Board of Directors. Options granted to an individual who owns (or is deemed to
own) at least 10% of the total combined voting power of all classes of stock of
the Company or its subsidiary must have an exercise price of at least 110% of
the fair market value of the of the Common Stock on the date of grant, and a
term of no more than five years. The 1995 Plan also authorizes the Company to
make or guarantee loans to optionees to enable them to exercise their options.
Such loans must (i) provide for recourse to the optionee, (ii) bear interest at
a rate not less than the prime rate of interest, and (iii) be secured by the
shares of Common Stock purchased. The Board of Directors has the authority to
amend or terminate the 1995 Plan, provided that no such amendment may impair the
rights of the holder of any outstanding option without the written consent of
such holder, and provided further that certain amendments of the 1995 Plan are
subject to shareholder approval. At the date of consummation of the Offering,
options to purchase an aggregate of 614,000 shares of Common Stock will be
outstanding under the 1995 Plan at an exercise price ranging from $8.25 to
$12.375 per share, of which options to purchase 160,500 shares are currently
exercisable, options to purchase 352,500 shares are exercisable on December 31,
1999 and options to purchase 101,000 shares are exercisable on December 31,
2000. The exercise price of all options granted under the 1995 Plan were
determined by the Company's Board of Directors and were equal to the fair market
value of the Common Stock as of the date of grant. At the date of consummation
of the Offering, 386,000 shares of Common Stock will be available for future
grants under the 1995 Plan.
The following table sets forth certain information with respect to
options granted under the 1995 Plan to the Named Officers for the year ended
December 31, 1996, and represents all options granted by the Company to such
Named Officers for the period. In accordance with rules of the Commission, the
table also describes the hypothetical gains that would exist for the respective
options based on assumed rates of annual compounded stock appreciation of 5% and
10% from the date of grant to the end of the option term. These hypothetical
gains are
57
<PAGE>
based on assumed rates of appreciation and, therefore, the actual gains, if any,
on stock option exercises are dependent on, among other things, the future
performance of the Common Stock, overall stock market conditions, and the Named
Officer's continued employment with the Company. As a result, the amounts
reflected in this table may not necessarily be achieved.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ --------------------------
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF ANNUAL RATES OF
UNDERLYING TOTAL STOCK PRICE APPRECIATION
OPTIONS OPTIONS FOR OPTION TERM
GRANTED GRANTED TO EXERCISE EXPIRATION ------------------------------
NAME (#) EMPLOYEES IN PRICE DATE
FISCAL YEAR ($/SH) 5%($) 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Chaim Katzman............. 200,000 44.4% $12.375(1) 12/31/05 $1,364,537(2) $3,360,920(2)
Chairman of the Board,
President and Chief
Executive Officer
Doron Valero.............. 150,000 33.3% $12.375(1) 12/31/05 $1,023,390(2) $2,520,690(2)
Executive Vice
President and Chief
Operating Officer
- -------------------------
</TABLE>
(1) Pursuant to the terms of each of Mr. Katzman's and Mr. Valero's
Employment Agreements, the option exercise price is subject to downward
adjustment to the extent that dividends declared and paid by the
Company in each year subsequent to 1995 exceed dividends declared and
paid by the Company in the year ended December 31, 1995.
(2) Does not take into account the effect of the downward adjustment to the
option exercise price described in note (1) above.
<PAGE>
CERTAIN TRANSACTIONS
INVESTMENT AGREEMENT
During 1996, the Company entered into an agreement with Globe Reit, an
affiliate of the Company, pursuant to which Globe Reit, through its wholly owned
subsidiary M.G.N., agreed to purchase an aggregate of 2.0 million shares of
Common Stock for $24.75 million over a period of 30 months. As set forth in the
agreement, the per share purchase price increases at an annual rate of 9.7% and
decreases by amounts paid as dividends by the Company. The agreement also
provided for the purchase by Globe Reit of 400,000 Series C Warrants for the
purchase price of $1.76 million. Chaim Katzman, the Company's Chairman of the
Board, President and Chief Executive Officer, and Eli Makavy and David Wulkan,
directors of the Company, directly and indirectly share the power to control
Globe Reit. See "Management--Directors and Executive Officers" and "Principal
Stockholders". As of the date hereof, Globe Reit had purchased an aggregate of
approximately 1,400,000 shares of Common Stock and is required to purchase the
additional 580,288 shares of Common Stock by August 1998.
The agreement further provides that each of the Company, Globe Reit,
Dan Overseas and Gazit are also required to grant each other loans for amounts
up to $3.0 million, which amounts must be repaid within six months. Interest on
such loans shall be payable at the prevailing rate of interest at Bank Leumi
le-Israel B.M. at such time. Certain of the shares of the stock of the Company
owned by a borrower under such loan shall be pledged as collateral for the
repayment of any loan under the agreement.
During December 1995, the Company borrowed $2.2 million from Gazit,
Globe Reit and Dan Overseas for the purposes of making distributions, which
amount was repaid in full in June 1996. No loan amount is outstanding as of the
date of the Offering. This borrowing arrangement will be terminated upon
consummation of the Offering.
AGREEMENT AMONG STOCKHOLDERS
Certain stockholders of the Company have entered into agreements to
control the Company. Such stockholders directly and indirectly own and/or
control an aggregate of 96.5% of the issued and outstanding Common Stock of the
Company before giving effect to the Offering. The agreements provide that, in
all matters affecting the Company (other than the election of directors) the
parties to the agreements will vote all of their shares as they may agree, or if
they cannot agree, will vote against any such proposal to which they cannot
agree. With respect to the election of directors of the Company, the parties
have granted an Irrevocable Proxy to Globe Reit, which is an affiliate of Mr.
Katzman and of Messrs. Makavy and Wulkan, directors of the Company. Globe Reit
has the power under the Irrevocable Proxy to vote all of the shares of Common
Stock of the stockholders who are parties to the Irrevocable Proxy for the
election of directors of the Company through May, 2001, with, effectively,
one-half of the directors designated by each of Gazit and Danbar Resources, and
if there is an additional director, such director shall be designated by
agreement. Pursuant to this agreement, the parties to the agreement may be
deemed a "group" within the meaning of Section 13(d) of the Exchange Act and may
direct the business and affairs of the Company. See "Principal Stockholders" and
"Certain Transactions".
ACQUISITION OF GLOBAL REALTY & MANAGEMENT, INC.
In January 1994, the Company acquired all of the outstanding capital
stock of Global Management from Doron Valero, the Company's Executive Vice
President and Chief Operating Officer, in exchange for 144,000 shares of Common
Stock and warrants to purchase an aggregate of 48,000 shares of Common Stock at
an exercise price of $8.25 per share. Such warrants were exercised by Mr. Valero
in December 1996.
LOANS TO EXECUTIVE OFFICERS
In June 1996, the Company made a loan to Chaim Katzman, the Company's
Chairman of the Board, President and Chief Executive Officer, in the principal
amount of $1,128,750, bearing interest at an annual rate of 6.86%. The funds
advanced to Mr. Katzman were used to exercise certain warrants to purchase an
aggregate of 215,000 shares of Common Stock. Interest on the loan is payable
annually beginning on January 5, 1997. This loan
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<PAGE>
is secured by the shares of Common Stock acquired by Mr. Katzman through
exercise of the warrants and matures on June 16, 2003, at which time the entire
principal balance is due and payable. At June 30, 1997, $1,128,750 was
outstanding under this loan.
In December 1996, the Company made a loan to Doron Valero, the
Company's Executive Vice President and Chief Operating Officer, in the principal
amount of $396,000, bearing interest at an annual rate of 5.25%. The funds
advanced to Mr. Valero were used to exercise certain warrants to purchase an
aggregate of 48,000 shares of Common Stock. Interest on the loan is payable
annually on January 5. The loan is secured by the shares of Common Stock
acquired by Mr. Valero through exercise of the warrants and matures on June 16,
2003, at which time the entire principal balance is due and payable. At June 30,
1997, $396,000 was outstanding under this loan.
CONSULTING AGREEMENTS
In January 1996, the Company entered into consulting agreements with
each of Eli Makavy and David Wulkan, directors of the Company, pursuant to which
Messrs. Makavy and Wulkan provide the Company with financial and other advice,
assistance and support on an as-needed basis. In consideration for services
rendered under the consulting agreements, Messrs. Makavy and Wulkan receive a
quarterly consulting fee of $7,500, which amount is increased annually at the
greater of 6.0% or the increase in the CPI. Pursuant to the consulting
agreements, each of Messrs. Makavy and Wulkan are eligible to receive options
under the 1995 Plan. As of June 30, 1997, the Company had paid an aggregate of
$61,800 to each of Messrs. Makavy and Wulkan under such consulting agreements
for the two year period ended December 31, 1997. In addition, each of Messrs.
Makavy and Wulkan have received an aggregate of 50,000 options to purchase
Common Stock at an exercise price of $12.375 per share. Pursuant to the terms of
each of Mr. Wulkan's and Mr. Makavy's consulting agreements, the option price is
subject to downward adjustment to the extent that dividends declared and paid by
the Company in each year subsequent to 1995 exceed dividends declared and paid
by the Company in the year ended December 31, 1995.
MANAGED PROPERTIES
Several apartment properties in which Mr. Valero has an ownership
interest or serves as an officer or director are managed by the Company. Each of
these management agreements represents arms-length contractual agreements, and
generate an average of $4,800 in management fees per year per property. Mr.
Valero is an officer and director of several corporations which own certain
apartment complexes managed by the Company. Mr. Valero receives no additional
compensation in connection with these management agreements.
REGISTRATION RIGHTS
Pursuant to the terms of each of Messrs. Katzman's and Valero's
Employment Agreements, such executives were granted registration rights
(collectively, "Registration Rights") with respect to the shares of Common Stock
issuable to such executives under options granted pursuant to such employment
agreements. Each of the executives has waived such Registration Rights in
connection with the Offering.
Pursuant to the terms of the Series C Warrants, the holders of the
Series C Warrants were granted Registration Rights for the shares of Common
Stock issuable upon the exercise of such warrants. The holders of the Series C
Warrants have waived such Registration Rights in connection with the Offering.
Pursuant to a registration rights agreement, the Company has granted
both demand and piggyback Registration Rights to each of Chaim Katzman, Gazit
(1995), Dan Overseas, Globe Reit, Eli Makavy, Doron Valero and David Wulkan with
respect to the shares of Common Stock purchased by them (the "Registration
Rights Agreement"). Each of the parties to the Registration Rights Agreement has
waived its registration rights in connection with the Offering.
60
<PAGE>
USE AGREEMENT
In 1994 and 1995, the Company paid Gazit a user fee of $172,000 and
$150,000, respectively, for the use of Gazit's facilities and equipment for the
conduct of the Company's business affairs, as well as for Mr. Katzman's services
to the Company.
SERVICE AGREEMENT
On January 1, 1996, the Company and Gazit have entered into an
agreement whereby Chaim Katzman, or any employee of Gazit or its affiliates, may
use the Company's facilities, equipment, supplies and personnel to conduct
Gazit's and Mr. Katzman's business affairs for a quarterly user fee of $2,500.
OTHER
The Company paid legal fees in the approximate amount of $88,529,
$95,160 and $84,340 during the years ended December 31, 1994, 1995, and 1996,
respectively, to the Law Office of Alan J. Marcus. Mr. Marcus will become
General Counsel and Secretary of the Company following consummation of the
Offering.
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
The following is a discussion of certain investment, financing,
conflicts of interest, redevelopment and development and other policies of the
Company. These policies have been determined by the Company's Board of Directors
and generally may be amended or revised from time to time by the Board of
Directors without a vote of the stockholders.
INVESTMENT POLICIES
INVESTMENTS IN REAL ESTATE. The Company's investment objective is to
maximize total return to stockholders by increasing cash flow per share and
maximizing the value of its properties primarily through the acquisition,
development, renovation and management of Supermarket Centers. See
"Business--Business and Growth Strategies".
Although the Company intends to principally acquire or develop
Supermarket Centers, it may develop other types of properties such as office
buildings or multifamily residential projects. In addition, although the Company
presently intends to acquire and develop properties in various locations in the
Southeast with demographic characteristics similar to its present markets, its
future acquisitions and development activities may not be limited to any
geographic area. There is also no limit on the percentage of the Company's
assets which may be invested in one property.
Pending disbursements for investment as described herein, the Company
may invest its funds in deposits at commercial banks, money market accounts,
certificates of deposit, government securities or other liquid investments
(including GNMA, FNMA, FHLMC mortgage-backed securities and capital stock of
publicly traded REITs) as the Board of Directors deems appropriate. The Company
intends to make investments in such a way that it will continue to qualify as a
REIT and not be treated as an investment company under the Investment Company
Act of 1940.
While to date the Company has emphasized equity real estate
investments, it may, in its discretion, invest in mortgages and other real
estate and related interests. Subject to the percentage ownership limitations
and gross income tests necessary for REIT qualification, the Company also may
invest in securities of entities engaged in real estate activities or securities
of other issuers, including for the purpose of exercising control over such
entities. As of June 30, 1997, the Company held approximately 1% of the
outstanding capital stock of Sizeler Property Investors Inc., a publicly held
REIT. See "Federal Income Tax Considerations--Taxation of the Company". The
Company
61
<PAGE>
may acquire all or substantially all of the securities or assets of other REITs
or similar entities where such investments would be consistent with the
Company's investment policies.
INVESTMENTS IN REAL ESTATE THROUGH OTHER ENTITIES. The Company also may
participate with other entities in property ownership, through joint ventures or
other types of co-ownership. Although the Company would likely seek to acquire
the controlling interest in such entities, it is not required to do so. To date,
the Company has not participated in property ownership with other entities. The
Company will not enter into a joint venture or partnership to make an investment
that would not otherwise meet its investment policies.
FINANCING POLICIES
The Company intends to finance future acquisitions with the most
advantageous sources of capital available at the time, which may include
additional equity offerings, debt financing, retention of cash flow subject to
provisions in the Code or a combination of these methods.
The Company's policy is to maintain a ratio of total indebtedness to
total market capitalization of approximately 50.0% or less. Upon completion of
the Offering, assuming an initial offering price of $14.75, and use of the net
proceeds contemplated thereby, the ratio of the Company's total indebtedness to
total market capitalization will be approximately 25.0%. Such policy may be
altered without the consent of the Company's stockholders. The Company may, from
time to time re-evaluate its borrowing policies in light of then current
economic conditions, relative costs of debt and equity capital, the market value
of its properties, growth and acquisition opportunities and other factors.
Because there is no limit on the Company's ratio of debt-to-total market
capitalization, the Company may modify its borrowing policy and may increase or
decrease its ratio of debt-to-total market capitalization as, when and if the
Company deems it appropriate. Borrowings may be unsecured or may be secured by
any or all of the Existing Properties or additional properties and may have full
or limited recourse to all or any assets of the Company and may contain
cross-default or cross-collateralization provisions.
The Company may acquire properties subject to seller financing,
existing loans secured by mortgages, deeds of trust or similar liens. The
Company does not have a policy limiting the number or amount of mortgages that
may be placed on any particular property, but mortgage financing instruments
usually limit additional liens on such properties.
The Company may incur indebtedness for purposes other than the
acquisition or development of properties when it deems it advisable to do so.
For example, the Company may borrow for working capital purposes or to make
capital improvements. In addition, the Company may borrow to meet the REIT
taxable income distribution requirements under the Code if the Company has
taxable income without receipt of cash sufficient to meet these distribution
requirements. The Company's financing strategy may be reviewed from time to time
and changed by the Board of Directors without a vote of the stockholders.
CONFLICTS OF INTEREST POLICIES
The Company has adopted certain policies designed to reduce potential
conflicts of interest. In general, the Company will not engage in any
transaction with any director, officer or affiliate thereof involving the
purchase or sale of property unless such transaction is approved by a majority
vote (or in certain cases by a unanimous vote) of the disinterested directors
(including a majority of independent directors) as being fair, competitive, and
commercially reasonable and no less favorable to the Company than similar
transactions between unaffiliated parties under the same circumstances.
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<PAGE>
Chaim Katzman, the Company's Chairman of the Board, President and Chief
Executive Officer, and Doron Valero, the Company's Executive Vice President and
Chief Operating Officer, are subject to certain conflict of interest
restrictions as set forth in their employment agreements with the Company. See
"Management--Employment Agreements". Each of Messrs. Katzman and Valero are
involved in other business activities, including real estate activities. Certain
of the Company's independent directors generally may engage in real estate
transactions which may be of the type conducted by the Company, but it is not
anticipated that such transactions will have any material effect upon the
Company's operations.
REDEVELOPMENT AND DEVELOPMENT POLICIES
The Company may invest in properties under development or vacant land
upon which development will occur and may redevelop existing properties. See
"Business-Business and Growth Strategies". Although historically the Company has
not commenced the construction in any redevelopment or development projects
without obtaining a commitment from an Anchor Tenant, it is not obligated to do
so.
POLICIES WITH RESPECT TO OTHER ACTIVITIES
The Company has authority to offer shares of Common Stock and preferred
stock or other securities and to repurchase or otherwise reacquire its shares of
Common Stock and preferred stock or any other securities and may engage in such
activities in the future.
The Company has no outstanding loans to other entities or persons,
including its officers and directors, except for outstanding loans to Chaim
Katzman and Doron Valero in connection with their acquisition of Common Stock.
The Company may in the future make loans to other persons with the approval of
the independent directors.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements which have been certified by its
independent public accountants, and quarterly reports containing unaudited
summary financial information for each of the first three quarters of each
fiscal year.
The Company's policies with respect to all of the above activities may
be reviewed and modified from time to time by the Company's Board of Directors
without a vote of the stockholders.
<PAGE>
PRINCIPAL STOCKHOLDERS
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<PAGE>
Certain stockholders of the Company have entered into agreements to
control the Company. In particular, pursuant to an Investment Contract, dated as
of May 21, 1996, among Dan Overseas, Gazit (1995), as successor-in-interest to
Gazit Holdings Inc., Globe Reit and the Company (the "Investment Contract"), and
a Shareholders Agreement, dated May 21, 1996, between Gazit and Danbar Resources
(the "Shareholders Agreement," and together with the Investment Contract shall
be referred to collectively as the "Control Agreements"), Globe Reit has been
granted an Irrevocable Proxy to vote all the shares of Common Stock owned by the
stockholders who are parties to the Control Agreements (collectively, the
"Affiliated Group") for the election of directors of the Company through May
2001, with , effectively, one-half of the directors designated by each of Gazit
and Danbar Resources, and if there is an additional director, such director
shall be designated by agreement. Chaim Katzman, the Company's Chairman of the
Board, President and Chief Executive Officer, has agreed that his shares of
Common Stock would be bound by the terms of the Control Agreements and the
Irrevocable Proxy. With respect to all other matters, the Control Agreements
provide that the parties to the Affiliated Group will vote all of their shares
as they may agree, or if they cannot agree, will vote against any such proposal.
Pursuant to the Control Agreements, the Affiliated Group may be deemed
to beneficially own, for purposes of the Exchange Act, all shares of Common
Stock beneficially owned by any member of the Affiliated Group (including shares
of Common Stock which may be acquired within 60 days upon the exercise of
options or warrants or pursuant to contract) or 8,623,959 shares of Common Stock
at June 30, 1997, constituting 97.2% of the outstanding Common Stock at June 30,
1997 (63.6% following consummation of the Offering). The table set forth below
does not give effect to such beneficial ownership by any member of the
Affiliated Group.
By virtue of his offices, direct and indirect share ownership and
voting arrangement regarding Gazit, Mr. Katzman may be deemed to control Gazit
(and Gazit to control Globe Reit and the Company). Each of Messrs. Makavy and
Wulkan by virtue of his office and direct and indirect share ownership of Danbar
may be deemed to control Danbar (and Danbar to control Danbar Resources, Globe
Reit and the Company). As a result, Mr. Katzman may be deemed to beneficially
own the Common Stock owned by Gazit (1995) and Globe Reit, and each of Messrs.
Makavy and Wulkan to beneficially own the Common Stock owned by Dan Overseas and
Globe Reit. The table set forth below does not give effect to such beneficial
ownership of each of Gazit and Danbar Resources of Globe Reit.
Subject to the foregoing, the following table sets forth certain
information concerning the beneficial ownership of the Common Stock as of June
30, 1997, and as adjusted to reflect the sale of 4,700,000 shares of Common
Stock by the Company by (i) each person known by the Company to be the
beneficial owner of more than 5.0% of the outstanding Common Stock, (ii) each
director of the Company, (iii) each of the Named Officers and (iv) all executive
officers and directors of the Company as a group.
65
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES OWNED
------------------------
BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OFFERING OFFERING
--------------------------------------- -------------------- -------- --------
<S> <C> <C> <C> <C>
Affiliated Group(2)............................ 8,623,959 97.2% 63.6%
Globe Reit Investments, Ltd.(3)................ 3,460,001 47.4% 28.8%
Gazit (1995), Inc.(4).......................... 3,072,592 41.2% 25.3%
Dan Overseas, Ltd.(5).......................... 1,663,032 23.1% 14.0%
M.G.N. (USA), Inc.(6).......................... 1,819,712 24.9% 15.2%
Chaim Katzman(7)............................... 3,475,926 46.0% 28.3%
Doron Valero(8)................................ 307,500 4.4% 2.6%
Eli Makavy(9).................................. 1,675,532 23.2% 14.1%
David Wulkan(10)............................... 1,675,532 23.2% 14.1%
Shaiy Pilpel................................... -- -- --
Yuval Yanai.................................... -- -- --
Shulamit Katzman(11)........................... -- -- --
Noam Ben Ozer.................................. -- -- --
All executive officers and directors of the
Company as a group (8 persons) (12).......... 5,471,458 69.4% 43.5%
- -------------------------
</TABLE>
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such persons within 60 days from the date of this
Prospectus upon the exercise of options and warrants or purchasable
pursuant to an executory contract to acquire Common Stock. Each
beneficial owner's percentage ownership is determined by assuming that
options and warrants and shars purchasable under an executory contract
that are held by such person (but not those held by any other person)
and that are exercisable or purchasable within 60 days from the date of
this Prospectus have been exercised or purchased. For purposes of this
table, a beneficial owner of securities includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares (i) voting power
which includes the power to vote, or direct the voting of, such
security and/or (ii) investment power which includes the power to
dispose, or to direct the disposition of, such security.
(2) See Notes (3), (4), (5), (6), (7), (9) and (10) below.
(3) Includes (i) 580,288 shares of Common Stock purchasable under an
executory agreement to purchase Common Stock, (ii) 1,420,953 shares of
Common Stock beneficially owned by M.G.N. and (iii) 398,760 shares of
Common Stock issuable upon the exercise of presently exercisable
warrants to purchase Common Stock owned by M.G.N. Does not give effect
to the Control Agreements.
(4) Includes 542,136 shares of Common Stock issuable upon the exercise of
presently exercisable warrants to purchase Common Stock. Does not give
effect to the Control Agreements.
(5) Includes 293,430 shares of Common Stock issuable upon the exercise of
presently exercisable warrants to purchase Common Stock. Does not give
effect to the Control Agreements.
(6) Includes 398,760 shares of Common Stock issuable upon the exercise of
presently exercisable warrants to purchase Common Stock. Does not give
effect to the Control Agreements.
(7) Includes (i) 2,530,456 shares of Common Stock beneficially owned by
Gazit (1995) which Mr. Katzman may be deemed to control, (ii) 542,136
shares of Common Stock issuable upon the exercise of presently
exercisable warrants to purchase Common Stock owned by Gazit (1995),
(iii) 50,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Katzman under the 1995 Plan, which options are
currently exercisable and (iv) 62,344 shares of Common Stock issuable
to Mr. Katzman as custodian for his minor children upon the exercise of
presently exercisable warrants to purchase Common Stock. Does not
include 150,000 shares of Common Stock issuable upon exercise of
options granted to Mr. Katzman under the 1995 Plan, which options are
not currently exercisable. Does not give effect to the Control
Agreements.
(8) Includes (i) 67,500 shares of Common Stock issuable upon the exercise
of options granted to Mr. Valero under the 1995 Plan, which options are
currently exercisable and (ii) 48,000 shares of Common Stock issuable
upon the exercise of presently exercisable warrants to purchase Common
Stock. Does not include 112,500 shares of Common Stock issuable upon
the exercise of options granted to Mr. Valero under the 1995 Plan,
which options are not currently exercisable.
(9) Includes (i) 1,369,602 shares of Common Stock beneficially owned by Dan
Overseas which Mr. Makavy may be deemed to control, (ii) 293,430 shares
of Common Stock issuable upon the exercise of presently exercisable
warrants to purchase Common Stock owned by Dan Overseas and (iii)
12,500 shares of Common Stock issuable upon the exercise of options
granted to Mr. Makavy under the 1995 Plan, which options are currently
exercisable. Does not include 37,500 shares of Common Stock issuable
upon the exercise of options granted to Mr. Makavy under the 1995 Plan,
which options are not currently exercisable. Does not give effect to
the Control Agreements.
(10) Includes (i) 1,369,602 shares of Common Stock beneficially owned by Dan
Overseas which Mr. Wulkan may be deemed control, (ii) 293,430 shares of
Common Stock issuable upon presently exercisable warrants to purchase
Common Stock owned by Dan Overseas and (iii) 12,500 shares of Common
Stock issuable upon the exercise of options granted to Mr. Wulkan under
the 1995 Plan, which options are currently exercisable. Does not
include 37,500 shares of Common Stock issuable upon the exercise of
options to granted to Mr. Wulkan under the 1995 Plan, which options are
not currently exercisable. Does not give effect to the Control
Agreements.
(11) Shulamit Rozen-Katzman is the wife of Chaim Katzman, the Company's
Chairman of the Board, President and Chief Executive Officer. Does not
include shares of Common Stock owned by Chaim Katzman. See Note (7)
above.
(12) See footnotes (7)-(10) above.
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DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $1.00 par value, and 5,000,000 shares of preferred stock, $1.00
par value. As of June 30, 1997, 6,908,130 shares of Common Stock and no shares
of preferred stock were issued and outstanding. Under Maryland law, stockholders
generally are not liable for the corporation's debts or obligations. The
following summary of the terms of the capital stock of the Company does not
purport to be complete and is subject to and qualified in its entirety by
reference to the MGCL and to the Company's Charter and the Company's Bylaws.
COMMON STOCK
Each outstanding share of Common Stock will entitle the holder to one
vote on all matters presented to stockholders for a vote, including the election
of directors, and, except as otherwise required by law and except as provided in
any resolution adopted by the Board of Directors with respect to any other class
or series of stock establishing the designation, powers, preferences and
relative, participating, optional or other special rights and powers of such
series, the holders of such shares will possess the exclusive voting power,
subject to the provisions of the Company's Charter regarding the ownership of
shares of Common Stock in excess of the Aggregate Stock Ownership Limit, or such
other limit as provided in the Company's Charter or as otherwise permitted by
the Board of Directors described below. Holders of shares of Common Stock will
have no preference, conversion, exchange, sinking fund, redemption or appraisal
rights and have no preemptive rights to subscribe for any securities of the
Company or cumulative voting rights in the election of directors. All shares of
Common Stock to be issued and outstanding following the consummation of the
Offering will be duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Subject to the preferential rights of any other
shares or series of stock and to the provisions of the Charter regarding
ownership of shares of Common Stock in excess of the Aggregate Stock Ownership
Limit, or such other limit as provided by the Company's Charter or as otherwise
permitted by the Board of Directors described below, distributions may be paid
to the holders of shares of Common Stock if and when authorized and declared by
the Board of Directors of the Company out of funds legally available therefor.
The Company intends to make quarterly distributions, beginning with
distributions for the portion of the quarter from the consummation of the
Offering through December 31, 1997. See "Distribution Policy".
If the Company is liquidated, subject to the right of any holders of
Preferred Stock to receive preferential distributions, each outstanding share of
Common Stock will be entitled to participate pro rata in the assets remaining
after payment of, or adequate provision for, all known debts and liabilities of
the Company.
Subject to the provisions of the Charter regarding the ownership of
shares of Common Stock in excess of the Aggregate Stock Ownership Limit, or such
other limit as provided in the Company's Charter or as otherwise permitted by
the Board of Directors described below, all shares of Common Stock will have
equal distribution, liquidation and voting rights, and will have no preferences
or exchange rights. See "-Restrictions on Ownership and Transfer of Common
Stock".
Under the MGCL, a Maryland corporation generally cannot dissolve, amend
its charter, merge, sell all or substantially all of its assets, engage in a
share exchange or engage in similar transactions outside of the ordinary course
of business unless approved by the affirmative vote of stockholders holding at
least two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but no less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation's Charter. The phrase
"substantially all of the assets" is not defined in the MGCL and is, therefore,
subject to interpretation by courts applying Maryland law in the context of the
facts and circumstances of any particular case. The Charter of the Company
provides that such actions need be approved by stockholders holding at least
two-thirds of the shares entitled to vote on the matter.
The Charter authorizes the Board of Directors to reclassify any
unissued shares of Common Stock into other classes or series of classes of stock
and to establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership,
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<PAGE>
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption for each such class or series.
PREFERRED STOCK
The Charter authorizes the Board of Directors to classify any unissued
shares of preferred stock and to reclassify any previously classified but
unissued shares of any series, as authorized by the Board of Directors. Prior to
issuance of shares of each series, the Board is required by the MGCL and the
Charter to set, subject to the provisions of the Charter regarding the
restrictions on transfer of stock, the terms, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
such series. Thus, the Board of Directors could authorize the issuance of shares
of preferred stock with terms and conditions which could have the effect of
delaying, deferring or preventing a transaction or a change in control of the
Company that might involve a premium price for holders of Common Stock or
otherwise be in their best interest. As of the date hereof, no shares of
preferred stock are outstanding and the Company has no present plans to issue
any preferred stock.
WARRANTS
As of June 30, 1997, Series C Warrants to purchase an aggregate of
1,306,124 shares of Common Stock at an exercise price of $8.25 per share were
issued and outstanding. These warrants are freely transferable and are
exercisable by the holders thereof through the close of business on December 31,
1999. Series C Warrants to purchase 1,296,670 shares of Common Stock have been
issued to Gazit (1995), Dan Overseas, M.G.N. and Chaim Katzman, as custodian for
his minor children. The Series C Warrants provide for certain registration
rights which have been waived by each of the holders of the outstanding Series C
Warrants in connection with the Offering.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF COMMON STOCK
For the Company to qualify as a REIT under the Code, not more than
50.0% in value of the issued and outstanding capital stock may be owned,
actually or constructively, by five or fewer individuals (as defined in the Code
to include certain entities) during the last half of a taxable year and the
capital stock must be beneficially owned by 100 or more persons during at least
335 days of a taxable year of 12 months (or during a proportionate part of a
shorter taxable year). In addition, rent from Related Party Tenants (as defined
below under "Federal Income Tax Considerations Taxation of the Company-Income
Tests") is not qualifying income for purposes of the gross income tests of the
Code. See "Federal Income Tax Considerations-Taxation of the
Company-Requirements for Qualification".
Because the Board of Directors believes it is essential for the Company
to qualify as a REIT, the Board of Directors has adopted provisions in the
Company's Charter restricting the acquisition and ownership of shares of the
Company's capital stock. Subject to certain exceptions specified in the
Company's Charter, no holder may own, either actually or constructively under
the applicable attribution rules of the Code, more than the Aggregate Stock
Ownership Limit or more than the Common Stock Ownership Limit.
If, as a result of a purported acquisition (actual or constructive) of
capital stock, any person (a "Prohibited Transferee") would acquire, either
actually or constructively under the applicable attribution rules of the Code,
shares of capital stock in excess of an applicable ownership restriction, such
shares will be automatically transferred to a trust for the benefit of a
charitable beneficiary, and the Prohibited Transferee shall not acquire any
rights in such shares. Such automatic transfer shall be deemed to be effective
as of the close of business on the business day prior to the purported
acquisition by the Prohibited Transferee. The Prohibited Transferee shall not
benefit economically from ownership of any shares of stock held in trust, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares of stock held in trust. While such stock is
held in trust, the trustee shall have all voting rights with respect to the
shares, and all dividends or distributions paid on such stock will be paid to
the trustee of the trust for the benefit of the charitable beneficiary (any
dividend or distribution paid on shares of capital stock prior to the discovery
by the Company that such shares have been automatically
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transferred to the trust shall, upon demand, be paid over to the trustee for the
benefit of the charitable beneficiary). The Prohibited Transferee shall have no
voting rights with respect to shares of stock held in the trust and, subject to
Maryland law, effective as of the date that such shares of stock have been
transferred to the trust, the trustee shall have the authority (at the trustee's
sole discretion) (i) to rescind as void any vote cast by a Prohibited Transferee
prior to the discovery by the Company that such shares have been transferred to
the Trust and (ii) to recast such vote in accordance with the desires of the
trustee acting for the benefit of the charitable beneficiary. However, if the
Company has already taken irreversible corporate action, then the trustee shall
not have the authority to rescind and recast such vote. Within 20 days of
receiving notice from the Company of the transfer of shares to the trust, the
trustee of the trust is required to sell the shares held in the trust to a
person designated by the trustee who may own such shares without violating the
ownership restrictions (a "Permitted Holder"). Upon such sale, the interest of
the charitable beneficiary in the shares sold shall terminate and the price paid
for the shares by the Permitted Holder shall be distributed to the Prohibited
Transferee to the extent of the lesser of (i) the price paid by the Prohibited
Transferee for the shares or, in the case of a transfer of shares to a trust
resulting from an event other than an actual acquisition of shares by a
Prohibited Transferee, the fair market value, on the date of transfer to the
trust, of the shares so transferred or (ii) the fair market value of the shares
on the date of transfer by the trustee to the Permitted Holder. Any proceeds in
excess of this amount shall be paid to the charitable beneficiary. If, prior to
the discovery by the Company that shares of stock have been transferred to the
trust, such shares are sold by a Prohibited Transferee, then (i) such shares
shall be deemed to have been sold on behalf of the trust and (ii) to the extent
that the Prohibited Transferee received an amount for such shares that exceeds
the amount that such Prohibited Transferee was entitled to receive pursuant to
the aforementioned requirement, such excess shall be paid to the Trustee upon
demand.
Shares of capital stock transferred to a trustee shall be deemed to be
offered for sale to the Company, or its designee, at a price per share equal to
the lesser of (i) the price per share in the transaction that resulted in such
transfer to the trust (or, in case of a devise or gift, the fair market value on
the date of such devise or gift) or (ii) the fair market value on the date the
Company, or its designee, accepts such offer. The Company shall have the right
to accept such offer until the Trustee has sold the shares of stock held in the
Trust. Upon such a sale to the Company, the interest of the charitable
beneficiary in the shares sold shall terminate and the Trustee shall distribute
the net proceeds of the sale to the Prohibited Transferee.
If shares of capital stock which would cause the Company to be
beneficially owned by less than 100 persons are issued or transferred to any
person, such issuance or transfer shall be null and void to the intended
transferee, and the intended transferee would acquire no rights to such stock.
In addition to any of the foregoing ownership limits, the Company's
Charter provides that no holder may own, either actually or constructively under
the applicable attribution rules of the Code, any shares of any class of the
Company's capital stock if such ownership or acquisition (i) would cause more
than 50.0% in value of the Company's outstanding capital stock to be owned,
either actually or constructively under the applicable attribution rules of the
Code, by five or fewer individuals (as defined in the Code to include certain
entities), (ii) would result in the Company's capital stock being beneficially
owned by less than 100 persons (determined without reference to any rules of
attribution), or (iii) would otherwise result in the Company failing to qualify
as a REIT. Acquisition or ownership (actual or constructive) of the Company's
capital stock in violation of these restrictions will result in automatic
transfer of such stock to a trust for the benefit of a charitable beneficiary,
automatic repurchase of the violative shares by the Company, or the violative
transfer will be deemed void AB INITIO, as described above.
The Board of Directors may, but in no event will be required to, exempt
a stockholder from the Aggregate Stock Ownership Limit and the Common Stock
Ownership Limit, as the case may be, if it determines that such ownership will
not jeopardize the Company's status as a REIT and the Board of Directors
otherwise decides such action would be in the best interests of the Company. As
a condition to such waiver, the Board of Directors may require an opinion of
counsel satisfactory to it and/or undertakings or representations from the
applicant with respect to preserving the REIT status of the Company. The Company
has exempted Gazit (1995), Globe Reit, Dan Overseas and M.G.N. from the Common
Stock Ownership Limit and the Aggregate Stock Ownership Limit.
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If the Board of Directors shall at any time determine in good faith
that a person intends to acquire or own, has attempted to acquire or own, or may
acquire or own capital stock of the Company in violation of the above described
limits, the Board of Directors shall take such action as it deems advisable to
refuse to give effect or to prevent such ownership or acquisition, including but
not limited to causing the Company to repurchase stock, refusing to give effect
to such ownership or acquisition on the books of the Company, or instituting
proceedings to enjoin such ownership or acquisition.
The constructive ownership rules are complex and may cause Common Stock
owned actually or constructively by a group of related individuals and/or
entities to be constructively owned by one individual or entity. As a result,
the acquisition of less than 5% of the outstanding Common Stock by an individual
or entity could cause that individual or entity (or another individual or
entity) to constructively own Common Stock in excess of the limits described
above, and thus subject such stock to the Common Stock Ownership Limit, or the
Aggregate Stock Ownership Limit.
All certificates representing shares of the Company's capital stock
bear a legend referring to the restrictions described above.
All persons who own more than 5.0% (or such lower percentage as
required by the Code or the Treasury Regulations promulgated thereunder) of all
classes or series of the Company's stock, including the Company's Common Stock,
must file annually with the Company a report containing information regarding
their ownership of such shares, as set forth in the Treasury Regulations. Each
such owner shall provide to the Company such additional information as the
Company may request in order to determine the effect, if any, of such beneficial
ownership or the Company's status as a REIT and to ensure compliance with the
Aggregate Stock Ownership Limit. In addition, each stockholder shall upon demand
be required to disclose to the Company in writing such information with respect
to the actual and constructive ownership of shares as the Board of Directors
deems necessary to comply with the provisions of the Code applicable to a REIT
or to comply with the requirements of any taxing authority or governmental
agency.
These ownership limitations could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of shares
of Common Stock might receive a premium for their shares over the then
prevailing market price or which such holders might believe to be otherwise in
their best interest.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF MARYLAND LAW, AND THE COMPANY'S
CHARTER AND BYLAWS
The following paragraphs summarize certain provisions of the MGCL and
the Company's Charter and Bylaws. The summary does not purport to be complete
and is subject to and qualified in its entirety by reference to Maryland law and
to the Company's Charter and Bylaws, copies of which have been filed as exhibits
to the registration statement of which this Prospectus is a part. See
"Additional Information".
PROVISIONS OF MARYLAND LAW; CHARTER PROVISIONS
Certain provisions of the MGCL and of the Company's Charter and Bylaws
may have the effect of discouraging or preventing a change in control of the
Company or the removal of existing management and, as a result, may prevent the
stockholders of the Company from receiving a substantial premium for their
shares over then-current market prices.
BUSINESS COMBINATIONS. Under the MGCL, certain "business combinations"
(including a merger, consolidation, share exchange, or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and any person who beneficially owns
ten percent or more of the voting power of the corporation's shares or an
affiliate of the corporation who, at any time within the two-year period prior
to the date in question, was the beneficial owner of ten percent or more of the
voting power of the then outstanding voting stock of the corporation (an
"Interested Stockholder") or an affiliate thereof are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. Thereafter, any such
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business combination must be recommended by the board of directors of such
corporation and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding shares of voting stock of
the corporation and (b) two-thirds of the votes entitled to be cast by holders
of voting stock of the corporation other than shares held by the Interested
Stockholder with whom (or with whose affiliate) the business combination is to
be effected, unless, among other conditions, the corporation's common
stockholders receive a minimum price (as defined in the MGCL) for their shares
and the consideration is received in cash or in the same form as previously paid
by the Interested Stockholder for its shares. These provisions of the MGCL do
not apply, however, to business combinations that are approved or exempted by
the board of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder. Each of Globe Reit, Gazit (1995),
M.G.N. and Dan Overseas beneficially own more than 10.0% of the Company's voting
shares and would, therefore, be subject to the business combination provision of
the MGCL.
CONTROL SHARE ACQUISITIONS. The MGCL provides that "control shares" of
a Maryland corporation acquired in a "control share acquisition" have no voting
rights except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter, excluding shares of stock owned by the
acquiror, by officers or by directors who are employees of the corporation.
"Control shares" are voting shares of stock which, if aggregated with all other
such shares of stock previously acquired by such person, or in respect of which
such person is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquiror to exercise
voting power in electing directors within one of the following ranges of voting
power: (i) one-fifth or more but less than one-third, (ii) one-third or more but
less than a majority, or (iii) a majority of all voting power. Control shares do
not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A "control share acquisition"
means the acquisition of control shares subject to certain restrictions.
The control share acquisition statute does not apply to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction, or to acquisitions approved or exempted by the charter or
bylaws of a corporation. The Bylaws of the Company contain a provision exempting
from the control share acquisition statute any and all acquisitions by any
person of the Company's shares of Common Stock. Such provision of the Bylaws may
be amended without stockholder approval. There can be no assurance that such
provision will not be amended or eliminated at any time in the future. As a
result of the Company's decision to opt out of the "control share acquisition"
provisions of the MGCL, stockholders who acquire a substantial block of Common
Stock are not precluded from exercising full voting rights with respect to their
shares on all matters without first obtaining the approval of other stockholders
entitled to vote. This may have the effect of making it easier for any such
control share stockholder to effect a business combination with the Company.
However, no assurance can be given that any such business combination would be
consummated or, if consummated, would result in a purchase of shares of Common
Stock from any stockholder at a premium.
A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the Board of Directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the corporation
may redeem any or all of the control shares (except those for which voting
rights previously have been approved) for fair value determined, without regard
to the absence of voting rights for control shares, as of the date of the last
control share acquisition by the acquiror or of any meeting of stockholders at
which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.
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In addition, certain provisions of the Company's Charter and Bylaws
summarized in the following paragraphs may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by
stockholders.
CLASSIFICATION OF THE BOARD OF DIRECTORS. The Company's Charter
provides that the number of directors of the Company may be established by the
Bylaws but may not be fewer than the minimum number required by the MGCL (under
which most circumstances is three directors). Any vacancy may be filled, at any
regular meeting or at any special meeting called for that purpose, by a majority
of the remaining directors. Pursuant to the Charter, the Company's Board of
Directors are divided into three classes. As the term of each class expires, the
directors in that class will be elected for a term of three years. The
affirmative vote of a majority of the votes represented at a meeting of
stockholders duly called shall be required to elect a director. The Company
believes that the classification of the Board of Directors will help to assure
the continuity and stability of the Company's business strategies and policies
as determined by the Board of Directors. Holders of Common Stock will have no
right to cumulative voting for the election of directors. Consequently, at each
annual meeting of stockholders, the holders of a majority of shares of Common
Stock will be able to elect all of the successors of the class of directors
whose terms expire at that meeting.
The classified director provision could have the effect of making the
replacement of incumbent directors more time consuming and difficult, and could
discourage a third-party from making a tender officer or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its stockholders. At least until the annual meeting at which
the three Class C directors are to be elected, may a change in the majority of
the Board of Directors be effected. Thus, the classified board provision could
increase the likelihood that incumbent directors will retain their positions.
REMOVAL OF DIRECTORS. The Charter provides that a director or the
entire Board of Directors may be removed only for Cause (as defined in the
Charter) and by the affirmative vote of at least 66-2/3% of the votes entitled
to be cast in the election of directors. This provision, when coupled with the
provision in the Charter authorizing the Board of Directors to fill vacant
directorships, precludes stockholders from removing incumbent directors except
for Cause and filling the vacancies created by such removal with their own
nominees.
SPECIAL MEETINGS. The Bylaws provide that special meetings of
stockholders may be called only by the President, Chief Executive Officer, or
Chairman of the Board of Directors or upon the written demand of the holders of
not less than 50.0% of the votes entitled to be cast at a special meeting.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
Common Stock and preferred stock are available for future issuance without
stockholder approval. If issued, these additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued Common Stock and preferred stock may enable
the Board of Directors to issue shares to persons friendly to current management
which could render more difficult or discourage an attempt to obtain control of
the Company by means of a proxy contest, tender offer, merger or otherwise, and
thereby protect the continuity of the Company's management.
SUPERMAJORITY PROVISIONS. The affirmative vote of 66-2/3% of the votes
represented at a meeting of stockholders duly called and at which a quorum is
present is required to, among other things, amend the Charter or Bylaws. Under
the MGCL, a Maryland corporation generally cannot dissolve, amend its charter,
merge, sell all or substantially all of its assets, engage in a share exchange
or engage in similar transactions outside of the ordinary course of business
unless approved by the affirmative vote of stockholders holding at least
two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but no less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation's Charter.
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ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
The Bylaws of the Company provide that (a) with respect to an annual
meeting of stockholders, nominations of persons for election to the Board of
Directors and the proposal of business to be considered by stockholders may be
made only (i) pursuant to the Company's notice of the meeting, (ii) by the Board
of Directors or (iii) by a stockholder who is entitled to vote at the meeting
and has complied with the advance notice procedures set forth in the Bylaws and
(b) with respect to special meetings of stockholders, only the business
specified in the Company's notice of meeting may be brought before the meeting
of stockholders and nominations of persons for election to the Board of
Directors may be made only (i) pursuant to the Company's notice of the meeting,
(ii) by the Board of Directors or (iii) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by a stockholder who
is entitled to vote at the meeting and has complied with the advance notice
provisions set forth in the Bylaws.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each
member of the Board of Directors (each, an "Indemnified Director"). The
indemnification agreements require, among other things, that the Company
indemnify to the fullest extent permitted by law and advance to the Indemnified
Director all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under the indemnification
agreements, the Company must also indemnify and advance all expenses incurred by
an Indemnified Director seeking to enforce his rights under the indemnification
agreements and may cover executive officers and directors under the Company's
directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides greater assurance to directors and executive
officers that indemnification will be available, because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides.
The Bylaws of the Company obligate the Company to the maximum extent
permitted by Maryland law, to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer who is made a party to the proceeding by reason of
his service in that capacity or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise
and who is made a party to the proceeding by reason of his service in that
capacity. The Charter and Bylaws also permit the Company to indemnify and
advance expenses to any person who served a predecessor of the Company in any of
the capacities described above and to any employee or agent of the Company or a
predecessor of the Company.
The MGCL requires a corporation (unless its Charter provides otherwise,
which the Company's Charter does not) to indemnify a director or officer who has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the director or officer actually received an improper personal
benefit in money, property or services or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, a Maryland corporation may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. In
addition, the MGCL requires the Company, as a condition to advancing expenses,
to obtain (a) a written affirmation by the director or officer of his good faith
belief that he has met the standard of conduct necessary for indemnification by
the Company as authorized by the Bylaws and (b) a written statement by or on his
behalf to repay the amount paid or reimbursed by the Company if it shall
ultimately be determined that the standard of conduct was not met. The
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termination of any proceeding by conviction, or upon a plea of nolo contendere
or its equivalent, or an entry of any order of probation prior to judgment,
creates a rebuttable presumption that the director or officer did not meet the
requisite standard of conduct required for indemnification to be permitted.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar of the Common Stock will be American
Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALES
Upon consummation of the Offering, the Company will have 11,608,130
shares of Common Stock outstanding (12,313,130 shares if the over-allotment
option is exercised in full). Of those shares, the 4,700,000 shares sold in the
Offering (5,405,000 shares if the over-allotment option is exercised in full)
will be freely transferable without restriction or registration under the Act,
unless purchased by persons deemed to be "affiliates" of the Company (as that
term is defined under the Act). The remaining 6,908,130 shares of Common Stock
to be outstanding immediately following the Offering ("restricted shares") may
only be sold in the public market if such shares are registered under the Act or
sold in accordance with Rule 144 promulgated under the Act.
In general, under Rule 144 a person (or persons whose shares are
aggregated) including an affiliate, who has beneficially owned his shares for
one year, may sell in the open market within any three-month period a number of
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of the Company's Common Stock (approximately 116,081 shares immediately after
the Offering, 123,131 if the over-allotment option is exercised in full) or (ii)
the average weekly trading volume in the Common Stock in the over-the-counter
market during the four calendar weeks preceding such sale. Sales under Rule 144
are also subject to certain limitations on the manner of sale, notice
requirements and availability of current public information about the Company. A
person (or persons whose shares are aggregated) who is deemed not to have been
an "affiliate" of the Company at any time during the 90 days preceding a sale by
such person and who has beneficially owned his shares for at least two years,
may sell such shares in the public market under Rule 144(k) without regard to
the volume limitations, manner of sale provisions, notice requirements or
availability of current information referred to above. Restricted shares
properly sold in reliance upon Rule 144 are thereafter freely tradeable without
restrictions or registration under the Act, unless thereafter held by an
"affiliate" of the Company.
The holders of substantially all of the outstanding Common Stock have
agreed not to sell any shares of Common Stock for 180 days from the date of this
Prospectus without the prior written consent of Credit Suisse First Boston. See
"Underwriting". Following such 180-day period, approximately 5,300,000 shares
held by current stockholders will be available for sale under Rule 144 of the
Act. Additionally, shares of Common Stock have been reserved for issuance under
the Company's 1995 Plan, under which options to purchase 614,000 shares of
Common Stock are issued and outstanding. The Company intends to register under
the Act all 1,000,000 eligible shares issued or reserved for issuance under the
1995 Plan. See "Management--Stock Option Plan". Shares covered by such
registration will, when issued, be eligible for resale in the public market,
subject to Rule 144 limitations applicable to affiliates. Pursuant to certain
registration rights agreements among the Company and certain current
stockholders, the Company has granted various registration rights to such
stockholders who have waived such rights with respect to the Offering. See
"Certain Transactions".
Prior to the Offering, there has been no trading market for the Common
Stock. No prediction can be made as to the effect, if any, that future sales of
shares pursuant to Rule 144 or otherwise will have on the market price
prevailing from time to time. Sales of substantial amounts of the Common Stock
in the public market following the Offering could adversely affect the then
prevailing market price.
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FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material federal income tax considerations
regarding the Company and the Common Stock being registered by the Company is
based on current law. The information set forth below, to the extent that it
constitutes matters of law, summaries of legal matters or legal conclusions, is
the opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A., tax
counsel to the Company, as to the material federal income tax considerations
relevant to purchasers of the Common Stock. This discussion does not purport to
deal with all aspects of taxation that may be relevant to a particular
stockholder in light of his or her personal investment or tax circumstances, or
to certain types of stockholders subject to special treatment under the federal
income tax laws (including insurance companies, financial institutions,
broker-dealers, tax-exempt organizations, foreign corporations or persons who
are not citizens or residents of the United States, except to the extent
discussed under the headings "Taxation of Tax-Exempt Stockholders" and "Taxation
of Non-U.S. Stockholders").
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OR HER OWN TAX
ADVISER REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF A SHARE OF COMMON STOCK, INCLUDING THE FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE
AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
GENERAL
The Company has elected to be taxed as a REIT under sections 856
through 860 of the Code, commencing with its taxable year ending December 31,
1995. The Company believes that it has been organized and has operated in a
manner that qualifies it to be taxed under the code as a REIT commencing with
that taxable year. The Company intends to continue to operate in that manner. No
assurance, however, can be given that the manner in which the Company has
operated or will operate qualified or will qualify the Company to be taxed as a
REIT.
The sections of the Code that govern the federal income tax treatment
of a REIT and its stockholders are highly technical and complex. The following
discussion sets forth the material aspects of those sections. This summary is
qualified in its entirety by the applicable Code provisions, the rules and
regulations promulgated thereunder, and the administrative and judicial
interpretations thereof.
In the opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A., commencing with the Company's taxable year ending December 31, 1995, the
Company has been organized in conformity with the requirements for qualification
as a REIT, and its proposed method of operation has enabled and will enable the
Company to meet the requirements for continued qualification and taxation under
the Code as a REIT. It must be emphasized that this opinion is based on various
factual assumptions relating to the organization and operation of the Company
and is conditioned upon certain representations as to factual matters made by
the Company. In addition, this opinion is based upon the factual representations
of the Company concerning its business and properties as set forth in this
Prospectus and assumes that actions described in this Prospectus have been
completed as described. Moreover, qualification and taxation as a REIT depend
upon the Company's ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests imposed by the Code, discussed below, the results of which have not been
and will not be reviewed by Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A. Accordingly, no assurance can be given that the actual results of the
Company's operations for any particular taxable year will satisfy those
requirements. Further, the anticipated income tax treatment described in this
Prospectus could be changed, perhaps retroactively, by legislative or
administrative action at any time. See "-Failure to Qualify".
If the Company qualifies for taxation as a REIT, it generally will not
be subject to federal corporate income tax on its net income that is distributed
currently to stockholders. This treatment substantially eliminates the double
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taxation at the corporate and stockholder levels that generally results from
investment in a corporation. The Company, however, nevertheless will be subject
to federal income tax as follows. First, the Company will be taxed at regular
corporate rates on any undistributed REIT taxable income, including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the alternative minimum tax on its items of tax
preference. Third, if the Company (i) has net income from the sale or other
disposition of foreclosure property (defined generally as a property acquired by
the Company through foreclosure or otherwise after a default on a loan secured
by the property or on a lease of the property) that is held primarily for sale
to customers in the ordinary course of business or (ii) has other nonqualifying
income from foreclosure property, the Company will be subject to tax at the
highest corporate rate on that income. Fourth, if the Company has net income
from prohibited transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business, other than foreclosure property), that income will be
subject to tax at a 100% rate. Fifth, if the Company should fail to satisfy the
75% gross income test or the 95% gross income test (discussed below) but
nonetheless has maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to tax at a 100% rate on an
amount equal to (a) the gross income attributable to the greater of the amount
by which the Company fails the 75% or 95% test multiplied by (b) a fraction
intended to reflect the Company's profitability. Sixth, if the Company should
fail to distribute during any calendar year at least the sum of (i) 85% of its
REIT ordinary income for the year, (ii) 95% of its REIT capital gain net income
for the year, and (iii) has any undistributed taxable income from prior periods,
the Company would be subject to a 4% excise tax on the excess of the required
distribution over the amount actually distributed. Seventh, if the Company
acquires an asset from a C corporation (I.E., generally a corporation subject to
full corporate level tax) in a transaction in which the basis of the Company in
the asset is determined by reference to the basis of the C corporation in the
asset (a "Built-In Gain Asset"), and if the Company recognizes gain on a
disposition of the asset during the ten-year period beginning on the date the
Company acquired the asset (the "Recognition Period"), the Company, pursuant to
Treasury regulations yet to be issued, will pay tax at the highest regular
corporate tax rate on the lesser of (i) the excess of the fair market value of
the asset over the basis of the Company in the asset on the date the Company
acquired the asset (the "Built-In Gain") and (ii) the gain recognized by the
Company. The Company has elected pursuant to Notice 88-19 to be subject to the
rules similar to the rules of section 1374 of the Code on net Built-In Gains.
This election was adopted for the tax year ending December 31, 1995 and is being
filed with the Company's Form 1120 for the tax year ended December 31, 1996.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association (1) that
is managed by one or more trustees or directors; (2) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (3) that would be taxable as a domestic corporation but for
sections 856 through 859 of the Code; (4) that is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(5) the beneficial ownership of which is held by 100 or more persons; (6) during
the last half of whose taxable year not more than 50% in value of the
outstanding stock of which is owned, directly or constructively, by five
or fewer individuals (as defined in the Code to include certain entities); and
(7) that meets certain other tests, described below, regarding the nature of its
income and assets. The Code provides that conditions (1) through (4) must be met
during the entire taxable year and that condition (5) must be met during at
least 335 days of a taxable year of twelve months or during a proportionate part
of a taxable year of less than twelve months. Conditions (5) and (6) do not
apply until after the first taxable year for which an election is made to be
taxed as a REIT. For purposes of conditions (5) and (6), pension funds and
certain other tax-exempt entities are treated as individuals, subject to a
"look-through" exception in the case of condition (6).
The Company has satisfied condition (5) and believes that it has issued
sufficient shares to allow it to satisfy condition (6). In addition, the
Company's Charter provides for restrictions regarding ownership and transfer of
shares, which restrictions are intended to assist the Company in continuing to
satisfy the share ownership requirements described in (5) and (6) above. Those
ownership and transfer restrictions are described in "Description of Capital
Stock-Restrictions on Ownership and Transfer of Common Stock". Those
restrictions may not ensure that the Company in all cases will be able to
satisfy the share ownership requirements described above. If the Company fails
to satisfy those share ownership requirements, the Company's status as a REIT
will terminate. See "-Failure to Qualify". Pursuant to the Taxpayer Relief Act
of 1997, enacted August 5, 1997, starting with a
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REIT's first taxable year that begins after August 5, 1997, a REIT that complies
with Treasury regulations for ascertaining the ownership of its shares and that
does not know or, exercising reasonable diligence would not have known, whether
it failed condition (6) will be treated as meeting condition (6).
In addition, a corporation may not elect to become a REIT unless its
taxable year is a calendar year. The Company has and will continue to have a
calendar taxable year.
OWNERSHIP OF SUBSIDIARIES
Section 856(i) of the Code provides that a corporation that is a
qualified REIT subsidiary (defined as any corporation if 100 percent of whose
stock is held by the REIT at all times during the period the corporation is in
existence) shall not be treated as a separate corporation, and all assets,
liabilities and items of income, deduction and credit of a qualified REIT
subsidiary shall be treated as assets, liabilities and those items (as the case
may be) of the REIT. The Company believes that each of its subsidiaries
qualifies as a qualified REIT subsidiary within the meaning of the Code. Thus,
in applying the requirements described herein, the Company's subsidiaries are
ignored, and all assets, liabilities and items of income, deduction and credit
of those subsidiaries are treated as assets, liabilities and items of income,
deduction and credit of the Company. Pursuant to the Taxpayer Relief Act of
1997, starting with a REIT's first taxable year that begins after August 5,
1997, a corporation can qualify as a qualified REIT subsidiary even though there
was a period of time during which the REIT did not own 100 percent of its stock,
in which case the corporation will be treated as liquidated and reincorporated
by the REIT.
INCOME TESTS
To maintain qualification as a REIT, the Company each year must satisfy
three gross income requirements. First, at least 75% of the Company's gross
income (excluding gross income from prohibited transactions) must be derived
directly or indirectly from investments relating to real property or mortgages
on real property (including rents from real property and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
at least 95% of the Company's gross income (excluding gross income from
prohibited transactions) must be derived from such real property investments,
dividends, interest and gain from the sale or disposition of stock or securities
(or from any combination of the foregoing). Third, gain derived from the sale or
other disposition of stock or securities held for less than one year, property
in a prohibited transaction and real property held for less than four years
(apart from involuntary conversions and sales of foreclosure property) must
represent less than 30% of the Company's gross income (including gross income
from prohibited transactions). Pursuant to the Taxpayer Relief Act of 1997, the
third gross income requirement is eliminated, starting with a REIT's first
taxable year that begins after August 5, 1997.
Rents received by the Company will qualify as rents from real property
in satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from rents from real property solely
by reason of being based on a fixed percentage or percentages of receipts or
sales. Second, rents received from a tenant will not qualify as rents from real
property in satisfying the gross income tests if the REIT, or an actual or
constructive owner of 10% or more of the REIT, actually or constructively owns
10% or more of the tenant (a "Related Party Tenant"). Third, if rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, the
portion of the rent attributable to the personal property will not qualify as
rents from real property. Finally, for rents received to qualify as rents from
real property, the REIT generally must not operate or manage the property or
furnish or render services to the tenants of such property, other than through
an independent contractor from whom the REIT derives no revenue. The REIT,
however, may perform directly certain services that are usually or customarily
rendered in connection with the rental of space for occupancy only and are not
otherwise considered rendered to the occupant of the property. Moreover,
pursuant to the Taxpayer Relief Act of 1997, starting with a REIT's first
taxable year that begins after August 5, 1997, income derived by a REIT from
services provided to tenants or from managing or operating a property will be
treated as rent from real property provided the
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income does not exceed one percent of the REIT's gross income from the property.
The Company has not and will not (i) charge rent for any property that is based
in whole or in part on the income or profits of any person (except by reason of
being based on a percentage of receipts or sales, as described above), (ii) rent
any property to a Related Party Tenant (unless the Board of Directors determines
in its discretion that the rent received from the Related Party Tenant is not
material and will not jeopardize the Company's status as a REIT), (iii) derive
rental income attributable to personal property (other than personal property
leased in connection with the lease of real property, the amount of which is
less than 15% of the total rent received under the lease) or (iv) perform
services considered to be rendered to the occupant of the property (unless the
income from those services qualifies as rent from real property pursuant to the
Taxpayer Relief Act of 1997) other than through an independent contractor from
whom the Company derives no revenue. The Company believes that the aggregate
amount of any nonqualifying income in any taxable year has not exceeded and will
not exceed the limit on nonqualifying income under the gross income tests.
If the Company fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it nevertheless may qualify as a REIT for
that year if it is entitled to relief under certain provisions of the Code.
Those relief provisions generally will be available if the Company's failure to
meet the gross income tests was due to reasonable cause and not willful neglect,
the Company attaches a schedule of the sources of its income to its federal
income tax return, and any incorrect information on the schedule is not due to
fraud with intent to evade tax. It is not possible, however, to state whether in
all circumstances the Company would be entitled to the benefit of those relief
provisions. For example, if the Company fails to satisfy the gross income tests
because nonqualifying income that the Company intentionally receives exceeds the
limits on that income, the IRS could conclude that the Company's failure to
satisfy the gross income tests was not due to reasonable cause. If those relief
provisions are inapplicable to a particular set of circumstances involving the
Company, the Company will not qualify as a REIT. As discussed above in
"-Taxation of the Company-General", even if those relief provisions apply, a tax
would be imposed with respect to the net nonqualifying income. No similar
mitigation provision provides relief if the Company fails the 30% gross income
test. In that case, the Company would cease to qualify as a REIT. As noted
above, however, that test no longer will apply to the Company starting January
1, 1998.
Any gain realized by the Company on the sale of any property held as
inventory or other property held primarily for sale to customers in the ordinary
course of business will be treated as income from a prohibited transaction that
is subject to a penalty tax at a 100% rate. This prohibited transaction income
also may have an adverse effect upon the Company's ability to satisfy the gross
income tests for qualification as a REIT. Under existing law, whether property
is held as inventory or primarily for sale to customers in the ordinary course
of a trade or business is a question of fact that depends on all the facts and
circumstances with respect to the particular transaction. The Company intends to
hold the Existing Properties for investment with a view to long-term
appreciation, to engage in the business of developing, owning and operating the
Existing Properties and acquiring, developing, owning and operating other
properties and to make occasional sales of the Existing Properties consistent
with the Company's investment objectives. There can be no assurance, however,
that the IRS might not contend that one or more of those sales is subject to the
100% penalty tax.
ASSET TESTS
The Company must satisfy three tests relating to the nature of its
assets at the close of each quarter of its taxable year. First, at least 75% of
the value of the Company's total assets must be represented by real estate
assets, cash, cash items and government securities (including stock or debt
instruments held for not more than one year purchased with the proceeds of an
offering by the Company of stock or debt with a term of at least five years).
Second, not more than 25% of the Company's total assets may be represented by
securities other than those qualifying for the 75% asset class. Third, of the
investments included in the 25% asset class, the value of any one issuer's
securities owned by the Company may not exceed 5% of the value of the Company's
total assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities.
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After initially meeting the asset tests at the close of any quarter,
the Company will not lose its status as a REIT for failure to satisfy those
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close of
that quarter. The Company has maintained and will continue to maintain adequate
records of the value of its assets to ensure compliance with the asset tests and
within the 30 days after the close of any quarter will take those actions that
may be required to cure any noncompliance. If the Company fails to cure
noncompliance with the asset tests within that time period, the Company will
cease to qualify as a REIT.
ANNUAL DISTRIBUTION REQUIREMENTS
To qualify as a REIT, the Company is required to distribute dividends
to its stockholders (other than capital gain dividends) in an amount at least
equal to (A) the sum of (i) 95% of the Company's REIT taxable income (computed
without regard to the dividends paid deduction and the Company's net capital
gain) and (ii) 95% of any after tax net income from foreclosure property minus
(B) the sum of certain items of noncash income in excess of 5% of the Company's
REIT taxable income. In addition, if the Company disposes of any Built-In Gain
Asset during its Recognition Period, the Company will be required to distribute
at least 95% of any Built-in Gain, after tax, recognized on the disposition of
that asset pursuant to Treasury regulations that have not yet been promulgated.
Those distributions must be paid in the taxable year to which they relate or in
the following taxable year if declared before the Company timely files its tax
return for that year and if paid on or before the first regular dividend payment
after declaration. Those distributions are taxable to holders of Common Stock
(other than tax-exempt entities, as discussed below) in the year paid even
though they relate to a prior year for purposes of the Company's 95%
distribution requirement. To the extent the Company does not distribute all of
its net capital gain or distributes at least 95% but less than all of its REIT
taxable income, as adjusted, it will be subject to tax thereon at regular
corporate tax rates. The Company has made and intends to make timely
distributions sufficient to satisfy these annual distribution requirements.
It is expected that the Company's REIT taxable income will be less than
its cash flow due to the allowance of depreciation and other noncash charges in
computing REIT taxable income. Accordingly, the Company anticipates that it
generally will have sufficient cash or liquid assets to enable it to satisfy the
distribution requirements described above. It is possible, however, that the
Company, from time to time, may not have sufficient cash or other liquid assets
to meet those distribution requirements due to timing differences between (i)
the actual receipt of income and actual payment of deductible expenses and (ii)
the inclusion of the income and deduction of the expenses in arriving at taxable
income of the Company. If timing differences occur, the Company, in order to
meet the distribution requirements, may find it necessary to arrange for
short-term, or possibly long-term, borrowings or to pay dividends in the form of
taxable stock dividends.
Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirements for a year by paying a deficiency
dividend to stockholders in a later year. A deficiency dividend may be included
in the Company's deduction for dividends paid for the earlier year. Thus, the
Company may be able to avoid paying tax on amounts that can be deducted as
deficiency dividends. The Company, however, will be required to pay interest
with respect to tax eliminated through a deficiency dividend.
Furthermore, if the Company should fail to distribute during any
calendar year at least the sum of (i) 85% of its REIT ordinary income for the
year, (ii) 95% of its REIT capital gain income for the year and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of that required distribution over the amounts
actually distributed.
FAILURE TO QUALIFY FOR TAXATION AS A REIT
If the Company fails to qualify for taxation as a REIT in any taxable
year, and if the relief provisions do not apply, the Company will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which the
Company fails to qualify as a REIT will not be deductible by the Company (nor be
required to be made). As a result, the Company's failure to qualify as a REIT
would reduce the cash available for distribution by the Company to its
stockholders. In addition,
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if the Company fails to qualify as a REIT, all distributions to stockholders
will be taxable to them as ordinary income to the extent of the Company's
current and accumulated earnings and profits, although, subject to certain
limitations, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, the
Company also will be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification is lost. It is not possible
to state whether the Company in all circumstances would be entitled to statutory
relief from disqualification as a REIT.
TAXATION OF U.S. STOCKHOLDERS
As used herein, the term "U.S. Stockholder" means a holder of shares of
Common Stock who, for U.S. federal income tax purposes, is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any state
therein or the District of Columbia, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or (iv) is a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
fiduciaries have the authority to control all substantial decisions of the
trust.
As long as the Company qualifies as a REIT, distributions made by the
Company out of its current or accumulated earnings and profits (and not
designated as a capital gain dividend) will constitute dividends taxable to its
taxable U.S. Stockholders as ordinary income. Those distributions will not be
eligible for the dividends received deduction in the case of U.S. Stockholders
that are corporations.
Distributions by the Company that are designated by the Company
properly as capital gain dividends, to the extent they do not exceed the
Company's actual net capital gain for the taxable year, will constitute
long-term capital gains to a U.S. Stockholder without regard to the period for
which the U.S. Stockholder has held his shares of Common Stock. A U.S.
Stockholder that is a corporation, however, may be required to treat up to 20%
of certain capital gain dividends as ordinary income.
Pursuant to the Taxpayer Relief Act of 1997, starting with a REIT's
first taxable year that begins after August 5, 1997, a REIT may elect to retain
and pay income tax on net long-term capital gains that it receives during a
taxable year. If a REIT makes this election, its stockholders are required to
include in their income as long-term capital gain their proportionate share of
the undistributed long-term capital gains so designated by the REIT. A
stockholder will be treated as having paid his or her share of the tax paid by
the REIT in respect of long-term capital gains so designated by the REIT, for
which the stockholder will be entitled to a credit or refund. In addition, the
stockholder's basis in his or her REIT shares will be increased by the amount of
the REIT's designated undistributed long-term capital gains that are included in
the stockholder's long-term capital gains, reduced by the stockholder's
proportionate share of tax paid by the REIT on those gains that the stockholder
is treated as having paid. The earnings and profits of the REIT will be reduced,
and the earnings and profits of any corporate stockholder of the REIT will be
increased, to take into account amounts designated by the REIT pursuant to this
rule. A REIT must pay its tax on its designated long-term capital gains within
30 days of the close of any taxable year in which it designates long-term
capital gains pursuant to this rule, and it must mail a written notice of its
designation to its stockholders within 60 days of the close of the taxable year.
Distributions by the Company that exceed the Company's current and
accumulated earnings and profits and that are not designated as capital gain
dividends will be treated by a U.S. Stockholder first as tax free reductions of
his tax basis in his shares of Common Stock to the extent thereof and thereafter
as capital gains (provided he holds those shares as capital assets). Dividends
declared by the Company in October, November or December of any year and payable
to a stockholder of record on a specified date in any of those months shall be
treated as both paid by the Company and received by the stockholder on December
31 of that year, provided the dividend actually is paid by the Company on or
before January 31 of the following year. A stockholder may not include in his
own income tax return any net operating loss or capital loss of the Company.
Distributions made by the Company and gain arising from the sale or exchange by
a U.S. Stockholder of shares of Common Stock will not be treated as passive
activity income, and, as a result, a U.S. Stockholder generally will not be able
to apply any "passive losses"
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against that income or gain. Distributions by the Company, to the extent they do
not constitute a return of basis, generally will be treated as investment income
for purposes of computing the investment income limitation. Gain arising from
the sale or other disposition of Common Stock, however, will not be treated as
investment income unless the U.S. Stockholder elects to reduce the amount of his
total net capital gain eligible for preferential capital gains tax rates by the
amount of that gain with respect to that Common Stock.
Upon any sale or other disposition of Common Stock, a U.S. Stockholder
will recognize gain or loss for federal income tax purposes in an amount equal
to the difference between (i) the amount of cash and the fair market value of
any property received on the sale or other disposition and (ii) the holder's
adjusted tax basis in the Common Stock. That gain or loss will be capital gain
or loss if the Common Stock has been held by the U.S. Stockholder as a capital
asset and will be long-term gain or loss if the share has been held for more
than one year. In general, any loss recognized by a U.S. Stockholder upon the
sale or other disposition of Common Stock that has been held for six months or
less (after applying certain holding period rules) will be treated as a
long-term capital loss to the extent of distributions received by the U.S.
Stockholder from the Company that were required to be treated as long-term
capital gains.
BACKUP WITHHOLDING
The Company will report to its U.S. Stockholders and to the IRS the
amount of dividends paid during each calendar year and the amount of tax
withheld, if any. Under the backup withholding rules, a U.S. stockholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
unless the U.S. Stockholder (a) is a corporation or comes within certain other
exempt categories and, when required, demonstrates that fact or (b) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A U.S. Stockholder that does not provide the Company with his
correct taxpayer identification number also may be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
U.S. Stockholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions to any stockholders
who fail to certify their non-foreign status to the Company. See "--Taxation of
Non-U.S. Stockholders".
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The IRS has ruled that amounts distributed as dividends by a qualified
REIT do not constitute unrelated business taxable income ("UBTI") when received
by a tax-exempt entity. Based on that ruling, provided a tax-exempt stockholder
(with certain exceptions described below) has not held its Common Stock as "debt
financed property" within the meaning of the Code and the Common Stock is not
otherwise used in a trade or business, dividends from the Company will not be
UBTI. Similarly, income from the sale of Common Stock will not constitute UBTI
unless the tax-exempt stockholder has held the Common Stock as "debt financed
property" within the meaning of the Code or has used the Common Stock in a trade
or business.
For a tax-exempt stockholder that is a social club, voluntary employee
benefit association, supplemental unemployment benefit trust or qualified group
legal services plan exempt from federal income taxation under Code section
501(c)(7), (c)(9), (c)(17) or (c)(20), respectively, income from an investment
in the Company will constitute UBTI unless the organization is able properly to
deduct amounts set aside or placed in reserve for certain purposes so as to
offset the income generated by its investment in the Company. Those prospective
investors should consult their own tax advisers concerning these "set aside" and
reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by
a pension-held REIT shall be treated as UBTI as to any trust that (1) is
described in section 401(a) of the Code, (2) is tax-exempt under section 501(a)
of the Code and (3) holds more than 10% by value of the interests in the REIT.
Tax-exempt pension funds that are described in section 401(a) of the Code are
referred to below as qualified trusts. A REIT is a pension-held REIT if (1) it
would not have qualified as a REIT but for the fact that section 856(h)(3) of
the Code provides that
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stock owned by a qualified trust shall be treated, for purposes of requirement
(5) of the requirements for qualification as a REIT (see "Taxation of the
Company Requirements for Qualification"), as owned by the beneficiaries of the
trust (rather than by the trust itself), and (2) either (a) at least one
qualified trust holds more than 25% by value of the interests in the REIT, or
(b) one or more qualified trusts, each of which owns more than 10% by value of
the interests in the REIT, hold in the aggregate more than 50% by value of the
interests in the REIT. The percentage of any REIT dividend treated as UBTI is
equal to the ratio of (i) the UBTI earned by the REIT (treating the REIT as if
it were a qualified trust and therefore subject to tax on UBTI) to (ii) the
total gross income of the REIT. A DE MINIMIS exception applies when the
percentage is less than 5% for any year. The provisions requiring qualified
trusts to treat a portion of REIT distributions as UBTI will not apply if the
REIT is able to satisfy requirement (5) of the requirements for qualification as
a REIT without relying upon the look-through exception with respect to qualified
trusts. As a result of certain limitations on the transfer and ownership of
Common Stock contained in the Charter, the Company is not and does not expect to
be classified as a pension held REIT.
TAXATION OF NON-U.S. STOCKHOLDERS
The rules governing U.S. federal income taxation of the ownership and
disposition of Common Stock by persons that are, for purposes of such taxation,
nonresident alien individuals, foreign corporations, foreign partnerships or
foreign estates or trusts (collectively, "Non-U.S. Stockholders") are complex,
and no attempt is made herein to provide more than a brief summary of the rules.
Accordingly, the discussion does not address all aspects of U.S. federal income
taxation and does not address state, local or foreign tax consequences that may
be relevant to a Non-U.S. Stockholder in light of his particular circumstances.
In addition, this discussion is based on current law, which is subject to
change, and assumes that the Company qualifies for taxation as a REIT.
Prospective Non-U.S. Stockholders should consult their own tax advisers to
determine the impact of federal, state, local and foreign tax laws, including
any reporting requirements, with regard to an investment in Common Stock.
DISTRIBUTIONS
A distribution by the Company to a Non-U.S. Stockholder which is
neither attributable to gain from a sale or exchange by the Company of a U.S.
real property interest nor designated by the Company as a capital gain dividend
will be treated as a dividend to the extent it is paid out of current or
accumulated earnings and profits of the Company. A dividend will be subject to
withholding of U.S. federal income tax imposed on the gross amount thereof at
the rate of 30% or any lower rate that may be specified by an applicable income
tax treaty, unless the dividend is effectively connected with the conduct of
trade or business by the Non-U.S. Stockholder within the United States or, if an
income tax treaty applies, is attributable to a U.S. permanent establishment of
the Non-U.S. Stockholder. A dividend received by a Non-U.S. Stockholder which is
effectively connected with a U.S. trade or business or is attributable to a U.S.
permanent establishment will be subject to tax at graduated rates on net income
in generally the same manner as a dividend received by a U.S. Stockholder is
taxed and is not subject to U.S. withholding tax. A dividend received by a
Non-U.S. Stockholder that is a corporation also may be subject to an additional
branch profits tax at a 30% rate or a lower rate that may be specified by an
applicable income tax treaty.
Pursuant to current Treasury regulations, dividends paid to an address
in a country outside the United States generally are presumed to be paid to a
resident of that country for purposes of determining the applicability of U.S.
withholding tax and the applicability of a tax treaty. Under proposed Treasury
regulations not currently in effect, however, a Non-U.S. Stockholder who wishes
to claim the benefit of an applicable treaty would be required to satisfy
certain certification and other requirements. Under certain treaties, lower
withholding rates generally applicable to dividends do not apply to dividends
from a REIT. Certain certification and disclosure requirements must be satisfied
to qualify for the exemption from U.S. withholding tax for income effectively
connected with a U.S. trade or business or attributable to a U.S. permanent
establishment.
Distributions in excess of current or accumulated earnings and profits
of the Company will not be taxable to a Non-U.S. Stockholder to the extent they
do not exceed the adjusted basis of the stockholder's Common Stock but rather
will reduce the adjusted basis of that Common Stock. To the extent those
distributions exceed the
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adjusted basis of a Non-U.S. Stockholder's Common Stock, they will be treated as
gain from the sale or exchange of his Common Stock, the tax treatment of which
is described below. If it cannot be determined at the time a distribution is
made whether or not that distribution will exceed current and accumulated
earnings and profits, the distribution generally will be treated as a dividend
for withholding tax purposes. However, amounts thus withheld are generally
refundable by the IRS if it subsequently is determined that the distribution in
fact exceeded current and accumulated earnings and profits of the Company.
A distribution to a Non-U.S. Stockholder that is designated by the
Company at the time of distribution as a capital gains dividend (and not arising
from the disposition of a United States real property interest) generally will
not be subject to U.S. federal income tax unless (i) income in respect of the
Common Stock is effectively connected with a U.S. trade or business of the
Non-U.S. Stockholder (or, if an income tax treaty applies, is attributable to a
U.S. permanent establishment of the Non-U.S. Stockholder), in which case the
Non-U.S. Stockholder will be subject to the same tax consequences as a U.S.
Stockholder with respect to that distribution (except that a Non-U.S.
Stockholder that is a foreign corporation also may be subject to the U.S. branch
profits tax, as discussed above), or (ii) the Non-U.S. Stockholder is a
nonresident alien individual who is present in the United States for 183 days or
more during the taxable year and has a "tax home" in the United States, in which
case the nonresident alien individual will be subject to a 30% tax on his net
capital gains.
A distribution to a Non-U.S. Stockholder that is attributable to gain
from a sale or exchange by the Company of a United States real property interest
will be treated as income effectively connected with a U.S. trade or business of
the Non-U.S. Stockholder. The Non-U.S. Stockholder thus generally would be taxed
at the same graduated tax rates applicable to a U.S. Stockholder (subject to a
special alternative minimum tax in the case of a nonresident alien individual).
A distribution by the Company is deemed to be designated as a capital gain
dividend to the maximum extent it may be so designated, and tax in an amount
equal to 35% of that amount must be withheld from the portion of the
distribution paid to a Non-U.S. Stockholder. In addition, in the hands of a
Non-U.S. Stockholder that is a corporation, the gain may be subject to the U.S.
branch profits tax, as discussed above. In general, in determining whether a
stockholder is a U.S. Stockholder not subject to withholding tax, the Company or
other withholding agent may rely on an IRS Form W-9 or on a certificate of
non-foreign status containing information specified by Treasury regulations,
provided the Company or other withholding agent does not have actual knowledge
to the contrary. The amount of any tax withheld is creditable against the
Non-U.S. Stockholder's U.S. federal income tax liability, and any amount of tax
withheld in excess of that tax liability may be refunded provided an appropriate
claim for refund is filed with the IRS.
SALE OF COMMON STOCK
A Non-U.S. Stockholder will not be subject to U.S. federal income tax
on gain recognized on a sale or other taxable disposition of Common Stock which
is not effectively connected with a U.S. trade or business of the Non-U.S.
Stockholder unless the Common Stock constitutes a United States real property
interest, in which case section 897 of the Code will treat the gain as if it
were effectively connected income and thus subject to U.S. federal income tax at
graduated rates on net income. The Common Stock would not constitute a United
States real property interest if the Company is a domestically-controlled REIT.
A REIT is domestically controlled if at all times during a specified testing
period less than 50% in value of its stock is held directly or indirectly by
Non-U.S. Stockholders. The Company believes that it currently is not a
domestically-controlled REIT. Even if the Company is not a
domestically-controlled REIT, so long as the Common Stock is regularly traded on
an established securities market, gain recognized on a sale or exchange of
Common Stock by a Non-U.S. Stockholder will not be subject to U.S. federal
income tax pursuant to section 897 of the Code unless that Non-U.S. Stockholder
owns (or, during a specified prior period, owned) more than 5% of the Common
Stock (after applying certain constructive ownership rules). Notwithstanding the
foregoing, gain from the sale or exchange of Common Stock not otherwise subject
to section 897 of the Code will be taxable to a Non-U.S. Stockholder if either
(i) the gain is effectively connected with a U.S. trade or business of the
Non-U.S. Stockholder (or, if an income tax treaty applies, is attributable to a
U.S. permanent establishment of the Non-U.S. Stockholder), in which case the
Non-U.S. Stockholder generally will be subject to the same tax treatment as a
U.S. Stockholder with respect to that gain (subject possibly to a special
alternative minimum tax in the case of a nonresident alien individual), and a
Non-U.S. Stockholder that is a foreign corporation also may be subject to a U.S.
branch profits tax, as discussed above, or (ii) the Non-U.S. Stockholder is a
nonresident alien individual who is present in the United States for at least
183 days during the taxable year and who has a "tax home" in the United States.
In the latter case, the nonresident alien will be subject to a 30% U.S.
withholding tax on his or her net capital gains. If any gain on a sale or other
disposition of Common
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Stock would be subject to taxation under section 897 of the Code, the purchaser
generally would be required to withhold and remit to the IRS tax in an amount
equal to 10% of the purchase price.
BACKUP WITHHOLDING OF TAX AND INFORMATION REPORTING
Backup withholding of tax (which generally is a withholding tax imposed
at the rate of 31% on certain payments to persons that fail to furnish
identifying information under the U.S. information reporting requirements) and
information reporting generally will not apply to distributions paid to Non-U.S.
Stockholders outside the United States that are treated as (i) dividends subject
to the 30% (or lower treaty rate) withholding tax discussed above, (ii) capital
gain dividends or (iii) distributions attributable to gain from the sale or
exchange by the Company of U.S. real property interests. As a general matter,
backup withholding and information reporting will not apply to a payment of the
proceeds of a sale of Common Stock by or through a foreign office of a foreign
broker. Information reporting (but not backup withholding) will apply, however,
to a payment of the proceeds of a sale of Common Stock by a foreign office of a
broker that (a) is a United States person, (b) derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States or (c) is a "controlled foreign corporation" (generally, a foreign
corporation controlled by certain U.S. stockholders) for U.S. tax purposes,
unless the broker has documentary evidence in its records that the holder is a
Non-U.S. Stockholder and certain other conditions are met, or the Non-U.S.
Stockholder otherwise establishes an exemption. Payment of the proceeds of sale
of Common Stock to or through a U.S. office of a broker is subject to both
backup withholding and information reporting unless the stockholder certifies
under penalties of perjury that he is a Non-U.S. Stockholder or otherwise
establishes an exemption. A Non-U.S. Stockholder may obtain a refund of any
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS.
The U.S. Treasury recently has issued proposed regulations regarding
the withholding and information reporting rules discussed above. In general, the
proposed regulations do not alter the substantive withholding and information
reporting requirements but unify current certification procedures and forms and
clarify and modify reliance standards. If finalized in their current form, the
proposed regulations generally would be effective for payments made after
December 31, 1997, subject to certain transition rules.
OTHER TAX CONSEQUENCES
The Company and its stockholders may be subject to taxation in various
state or local jurisdictions, including those in which it or they transact
business or reside. The state and local tax treatment of the Company and its
stockholders may not conform to the federal income tax consequences discussed
above. Consequently, prospective stockholders should consult their own tax
advisers regarding the effect of state and local tax laws on an investment in
the Company.
ERISA CONSIDERATIONS
The following is a summary of material considerations arising under the
Employment Retirement Income Security Act of 1974 ("ERISA") and the Code that
may be relevant to a prospective purchaser (including with respect to the
discussion contained in "Plan Assets Issue", to a prospective purchaser that is
not an employee benefit plan, another tax-qualified retirement plan, an
individual retirement account or an individual retirement annuity ("IRAs")).
This discussion does not propose to deal with all aspects of ERISA or the Code
or, to the extent not preempted, state law that may be relevant to particular
employee benefit plan shareholders (including plans subject to Title I of ERISA,
other employee benefit plans and IRAs subject to the prohibited transaction
provisions of the Code, and governmental plans and church plans that are exempt
from ERISA and prohibited transaction provisions of the Code but that may be
subject to state law requirements) in light of their particular circumstances.
THE FOLLOWING IS INTENDED TO BE A SUMMARY ONLY AND IS NOT A SUBSTITUTE
FOR CAREFUL PLANNING WITH A PROFESSIONAL. A FIDUCIARY MAKING THE DECISION TO
INVEST IN SHARES OF COMMON STOCK ON BEHALF OF A PROSPECTIVE PURCHASER WHICH IS A
PLAN
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SUBJECT TO ERISA, A TAX-QUALIFIED RETIREMENT PLAN, AN IRA OR OTHER EMPLOYEE
BENEFIT PLAN (COLLECTIVELY "PLANS") IS ADVISED TO CONSULT ITS OWN LEGAL ADVISOR
REGARDING THE SPECIFIC CONSIDERATIONS ARISING UNDER ERISA, THE CODE AND (TO THE
EXTENT NOT PREEMPTED) STATE LAW WITH RESPECT TO THE PURCHASE, OWNERSHIP OR SALE
OF SHARES OF COMMON STOCK BY SUCH PLAN OR IRA. A fiduciary should also consider
the entire discussion under the heading "Federal Income Tax Considerations", as
material contained therein is relevant to any decision by an employee benefit
plan, tax-qualified retirement plan or IRA to purchase the Common Stock.
FIDUCIARY CONSIDERATIONS
Each fiduciary of a Plan subject to ERISA should carefully consider
whether an investment in shares of Common Stock is consistent with its fiduciary
responsibilities under ERISA. In particular, to the extent a Plan is subject to
ERISA, the fiduciary requirements of Part 4 of Title I of ERISA require (i) the
Plan's investments to be prudent and in the best interests of the Plan, its
participants and beneficiaries, (ii) the Plan's Investments to be diversified in
order to reduce the risk of large losses, unless under the circumstances it is
clearly prudent not to do so and (iii) the Plan's investments to be authorized
under ERISA and the terms of the governing documents of the Plan. In determining
whether an investment in shares of Common Stock is prudent for purposes of
ERISA, the appropriate fiduciary of a Plan should consider all of the facts and
circumstances, including, without limitation, whether the investment is
reasonably designed, as a part of the Plan's portfolio for which the fiduciary
has investment responsibility, to meet the objectives of the Plan, taking into
consideration the risk of loss and opportunity for gain (or other return) from
the investment, the diversification cash flow and funding requirements of the
Plan, and the liquidity and current return of the Plan's portfolio. A fiduciary
should also take into account the nature of the Company's business, the
management of the Company and the length of the Company's operating history and
other matters described under "Risk Factors".
In addition, provisions of ERISA and the Code prohibit certain
transactions in Plan assets that involve persons who have specified
relationships with a Plan. The consequences of such prohibited transactions
include excise taxes, disqualification of IRAs and other liabilities.
PLAN ASSETS ISSUE
A prohibited transaction may occur if the assets of the Company are
deemed to be Plan assets. In certain circumstances where a Plan holds an
interest in an entity, the assets of the entity are deemed to be Plan assets
(the "look-through rule"). Under such circumstances, any person that exercises
authority or control with respect to the management or disposition of such
assets is a Plan fiduciary. Plan assets are not defined in ERISA or the Code,
but the United States Department of Labor has issued regulations, effective
March 13, 1987 (the "Regulations"), that outline the circumstances under which a
Plan's interest in an entity will be subject to the look-through rule.
The Regulations apply only to the purchase by a Plan of an "equity
interest" in an entity, such as common stock of a REIT. However, the Regulations
provide an exception to the look-through rule for equity interests that are
"publicly-offered securities".
Under the Regulations, a "publicly-offered security" is a security that
is (i) freely transferable, (ii) part of a class of securities that is widely
held and (iii) either (a) part of a class of securities that is registered under
section 12(b) or 12(g) of the Exchange Act or (b) sold to a Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or such
longer period as may be allowed by the Commission) after the end of the fiscal
year of the issuer during which the offering of such securities to the public
occurred. Whether a security is considered "freely transferable" depends on the
facts and circumstances of each case. Generally, if the security is part of an
offering in which the minimum investment is $10,000 or less, any restriction on
or prohibition against any transfer or assignment of such security for the
purposes of preventing a termination or reclassification of the entity for
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federal or state tax purposes will not of itself prevent the security from being
considered freely transferable. A class of securities is considered
"widely-held" only if it is a class of securities that is owned by 100 or more
investors independent of the issuer and of one another.
The Company anticipates that the Common Stock will meet the criteria of
the publicly-offered securities exception to the look-through rule. First, the
Company anticipates that the Common Stock will be considered to be freely
transferable, as the minimum investment will be less than $10,000 and the only
restrictions upon its transfer are those required under federal income tax laws
to maintain the Company's status as a REIT. Second, the Company believes that
the Common Stock will be held by l00 or more investors and that at least 100 or
more of these Investors will be independent of the Company and of one another.
Third, the Common Stock will be part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act and
will be registered under the Exchange Act within 120 days after the end of the
fiscal year of the Company during which the offering of such securities to the
public occurs. Accordingly, the Company believes that if a Plan purchases the
Common Stock, the Company's assets should not be deemed to be Plan assets and,
therefore, that any person who exercises authority or control with respect to
the Company's assets should not be a Plan fiduciary.
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UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated __________, 1997 (the "Underwriting Agreement"),
the Underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston Corporation is acting as representative (the "Representative"), have
severally but not jointly agreed to purchase from the Company the following
respective numbers of shares of Common Stock:
NUMBER
UNDERWRITER OF SHARES
----------- ---------
Credit Suisse First Boston Corporation................
Total....................................... 4,700,000
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Common Stock
offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides that,
in the event of a default by an Underwriter, in certain circumstances, the
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of this Prospectus, to purchase
up to 705,000 additional shares at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares of Common
Stock as it was obligated to purchase pursuant to the Underwriting Agreement.
The Company has been advised by the Representative that the
Underwriters propose to offer the shares of Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus and,
through the Representative, to certain dealers at such price less a concession
of $_____ per share, and the Underwriters and such dealers may allow a discount
of $______ per share on sales to certain other dealers. After the initial public
offering, the public offering price and concession and discount to dealers may
be changed by the Representative.
The Representative has informed the Company that it does not expect
discretionary sales by the Underwriters to exceed 5.0% of the number of shares
being offered hereby.
The Company and its officers, directors and holders of substantially
all of the outstanding shares of Common Stock have agreed that they will not
offer, sell, contract to sell, announce their intention to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any additional shares of Common Stock or securities convertible or
exchangeable into or exercisable for any shares of Common Stock without the
prior written consent of Credit Suisse First Boston Corporation for a period of
180 days after the date of this Prospectus.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriters may be required to make in respect thereof.
Application will be made to list the Common Stock on the New York Stock
Exchange.
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Prior to the Offering, there has been no public market for the Common
Stock. The initial price to the public for the shares of Common Stock has been
negotiated among the Company and the Representative. Such initial price is based
on, among other things in addition to prevailing market conditions, the
Company's financial and operating history and condition, its prospects and the
prospects for its industry in general, the management of the Company and the
market prices for securities of companies in businesses similar to that of the
Company. See "Risk Factors-Absence of Public Market; Stock Price Not Based on
Property Valuation; Possible Fluctuations of Stock Price".
The Representative, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
Over-allotment involves syndicate sales in excess of the Offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Common Stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the Representative
to reclaim a selling concession from a syndicate member when the Common Stock
originally sold by such syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the
Common Stock to be higher than it would otherwise be in the absence of such
transactions. These transactions may be effected on the New York Stock Exchange
or otherwise and, if commenced, may be discontinued at any time.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Common Stock are affected. Accordingly, any resale of the Common
stock in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Common Stock.
REPRESENTATION OF PURCHASERS
Each purchaser of Common stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHT OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers may rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's directors and officers as well as the experts
named herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada upon
the Company or such persons. All or a substantial portion of the assets of the
Company and such persons may
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be located outside of Canada and, as a result, it may not be possible to satisfy
a judgment against the Company or such persons in Canada or to enforce a
judgment obtained in Canadian courts against the Company or such persons outside
of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Common Stock to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Common Stock acquired by such purchaser pursuant to the Offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #95/17, a copy of which may be obtained from the Company. Only
one such report must be filed in respect of Common stock acquired on the same
date and under the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Common Stock should consult their own legal and
tax advisers with respect to the tax consequences of an investment in the Common
Stock in their particular circumstances and with respect to the eligibility of
the shares for investment by the purchaser under relevant Canadian legislation.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be
passed upon for the Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A., Miami, Florida. In addition, the description of federal income tax
consequences contained in this Prospectus entitled "Federal Income Tax
Considerations" is based upon the opinion of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, P.A., Miami, Florida. Certain legal matters related to the
Offering will be passed upon for the Underwriters by Latham & Watkins, Los
Angeles, California. Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A. and
Latham & Watkins will rely upon the opinion of Ballard Spahr Andrews &
Ingersoll, Baltimore, Maryland, as to certain matters relating to Maryland law.
EXPERTS
The financial statements of the Company as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996
included in this prospectus and the related financial statement schedule
included elsewhere in the registration statement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports appearing herein
and elsewhere in the registration statement, and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The statement of revenues and certain expenses of West Lake for the
year ended December 31, 1996 included in this prospectus has been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and elsewhere in the registration statement, and have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
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ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-11 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act, with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement. For further information with respect to
the Company and the Common Stock offered hereby, reference is hereby made to
such Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. Copies of the Registration Statement may be
obtained from the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission at Seven
World Trade Center, New York, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, upon payment of the fees prescribed by the
Commission, or may be examined without charge at the offices of the Commission.
In addition, copies of the Registration Statement and related documents may be
obtained through the Commission's Internet address at http://www.sec.gov.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements which have been certified by its
independent public accountants, and quarterly reports containing unaudited
summary financial information for each of the first three quarters of each
fiscal year.
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GLOSSARY
Unless the context otherwise requires, the following capitalized terms
shall have the meanings set forth below for the purposes of this Prospectus:
"ACQUISITION AND DEVELOPMENT OF THE REDEVELOPMENT/DEVELOPMENT
PROPERTIES" means the acquisition and development of those properties referred
to in footnote (1) under the table "Use of Proceeds".
"ACQUISITION LINE OF CREDIT" means a $50.0 million line of credit to be
secured by unencumbered Existing Properties and other properties of the Company.
"ACRS" means the accelerated cost recovery system depreciation.
"ADA" means the Americans with Disabilities Act, enacted on July 26,
1990.
"AGGREGATE STOCK OWNERSHIP LIMIT" means not more than five percent (in
value or in number of shares, whichever is more restrictive) of the aggregate of
the outstanding shares of all classes or series of stock of the Company,
including, without limitation, Common Stock and Preferred Stock.
"ANCHOR TENANT" means a tenant that, due to size, reputation or other
factors, is particularly responsible for drawing other tenants and shoppers to a
shopping center.
"ATLANTIC VILLAGE" means the Atlantic Village Shopping Center,
comprising 100,559 of GLA, located in Atlantic Beach, Florida.
"BASE RENT" means gross rent excluding payments by tenants on account
of real estate taxes, operating expenses, utility expenses and percentage rent.
"BIRD LUDLUM" means the Bird Ludlum Shopping Center, comprising 192,477
square feet of GLA located in Miami, Florida.
"BYLAWS" means the bylaws of the Company.
"CASH AVAILABLE FOR DISTRIBUTION" means FFO as adjusted for capital
expenditures and scheduled principal payments.
"CHARTER" means the articles of amendment and restatement of the
Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means shares of the Company's common stock, par value
$1.00 per share.
"COMMON STOCK OWNERSHIP LIMIT" means not more than five percent (in
value or in number of shares, whichever is more restrictive) of the aggregate of
the outstanding shares of Common Stock of the Company.
"COMMONWEALTH" means the Commonwealth Shopping Center, comprising
71,021 square feet of GLA located in Jacksonville, Florida.
"COMMUNITY SHOPPING CENTER" means a shopping center containing 100,000
to 300,000 square feet of GLA.
"COMPANY" means Equity One, Inc., a Maryland corporation.
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"CORAL WAY" means 10 acres of real property located in Southwest Dade
County, Florida upon which the Company intends to develop a 100,000 square foot
Supermarket Center.
"CPI" means the Consumer Price Index.
"DANBAR" means Danbar, Ltd., an Israeli corporation whose securities
are publicly traded on TASE.
"DANBAR RESOURCES" means Danbar Resources, Ltd., an Israeli corporation
whose securities are publicly traded on TASE, a subsidiary of Danbar.
"DAN OVERSEAS" means Dan Overseas, Ltd., a Jersey corporation and
wholly-owned subsidiary of Danbar Resources.
"DIANA BUILDING" means the 18,707 square feet mixed use office/retail
property located in West Palm Beach, Florida.
"EAST BAY" means East Bay Plaza comprising 85,426 square feet of GLA
located in Largo, Florida.
"EMPLOYMENT AGREEMENTS" mean, collectively, the employment agreements
by and between the Company and each of Chaim Katzman and Doron Valero, each of
which expire on December 31, 2003.
"EQUITY ONE OFFICE BUILDING" means the Equity One Office Building
comprising 28,980 square feet of mixed-use office/retail property, including the
Company's corporate offices located in Miami Beach, Florida.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"EUSTIS SQUARE" means the Eustis Square Shopping Center comprising
126,791 square feet of GLA located in Eustis, Florida.
"EXCESS SHARES" means those shares, the number of which is in excess of
the Ownership Limit or such other limit.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING PROPERTIES" means the 14 rental properties, two mixed used
(office/retail) properties, one office building and one mini-warehouse facility
owned by the Company at the time of the Offering.
"FFO" means Funds From Operations.
"FIRPTA" means the Foreign Investment in Real Property Tax Act of 1980.
"FOREST EDGE" means the Forest Edge Shopping Center comprising 68,631
square feet of GLA located in Orlando, Florida.
"FORT CAROLINE" means the Fort Caroline Trading Post comprising 74,546
of GLA located in Jacksonville, Florida.
"FOUR CORNERS" means the Four Corners Shopping Center comprising
115,178 square feet of GLA located in Tomball, Texas, in the Houston
metropolitan area.
"FUNDS FROM OPERATIONS" means, as defined by NAREIT, net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization (excluding amortization of deferred financing costs).
"GAAP" means generally accepted accounting principles.
92
<PAGE>
"GAZIT (1995)" means Gazit (1995), Inc., a Nevada corporation, a wholly
owned subsidiary of Gazit and successor in interest to Gazit Holdings, Inc..
"GAZIT" means Gazit Inc., a Panamanian corporation whose securities are
publicly traded on TASE.
"GLA" means gross leasable area.
"GLOBAL REALTY" means Global Realty & Management, Inc., a wholly owned
subsidiary of the Company, which performs property management services for the
Company's properties.
"GLOBE REIT" means Globe Reit Investments, Ltd., an Israeli corporation
(formerly known as M.G.N. Oil and Gas Resources, Ltd.) whose securities are
publicly traded on TASE.
"ICSC" means the International Counsel of Shopping Centers.
"INTERESTED STOCKHOLDER" means, for purposes of the MGCL, any person
who beneficially owns ten percent or more of the voting power of the Company's
shares or an affiliate of the corporation who, at any time within a two year
period prior to a specified date, was the beneficial owner of ten percent or
more of the voting power of the then outstanding voting stock of the Company.
"IRREVOCABLE PROXY" means the irrevocable proxy granted to Globe Reit
by Dan Overseas, Gazit (1995) and Mr. Chaim Katzman to vote through May 2001 all
of the shares of Common Stock now owned or hereafter acquired by Dan Overseas,
Gazit (1995) and Mr. Katzman for the purposes of electing directors of the
Company.
"IRS" means the Internal Revenue Service.
"LEASING COMMISSIONS" means brokerage commission fees paid by the
Company in connection with new leases or lease renewals.
"LIBOR" means London Interbank Offered Rate published by the WALL
STREET JOURNAL.
"M.G.N". means M.G.N. (USA), Inc., a Nevada corporation and wholly
owned subsidiary of Globe Reit.
"MANDARIN" means the Mandarin Mini-Storage warehouse comprising 52,880
square feet of GLA located in Jacksonville, Florida.
"MGCL" means the Maryland General Corporation Law, as amended.
"MONUMENT POINTE" means the Monument Pointe Shopping Center comprising
75,328 square feet of GLA located in Jacksonville, Florida.
"MORTGAGE INDEBTEDNESS" means that mortgage indebtedness referred to in
footnote (3) under the table "Use of Proceeds".
"NAMED OFFICERS" means, collectively, the Company's Chief Executive
Officer, and the Company's Executive Vice President and Chief Operating Officer.
"NAREIT" means the National Association of Real Estate Investment
Trusts.
"NAREIT WHITE PAPER" means the White Paper on FFO approved by the Board
of Governors of the NAREIT in March of 1995.
"NEIGHBORHOOD SHOPPING CENTER" means a shopping center containing less
than 100,000 square feet of GLA.
93
<PAGE>
"1995 PLAN" means the 1995 Stock Option Plan adopted by the Company in
December, 1995.
"Net Operating Income" or "NOI" means net operating income determined
by subtracting operating and general administrative expenses directly related to
the property from total revenues.
"NYSE" means the New York Stock Exchange, Inc.
"OAK HILL" means the Oak Hill Village Shopping Center comprising 78,492
square feet of GLA located in Jacksonville, Florida.
"OFFERING" means the offering of shares of Common Stock of the Company
pursuant to and as described in this Prospectus.
"OWNERSHIP LIMIT" means the restriction contained in the Company's
Charter providing that, subject to certain exceptions, no holder may own, or be
deemed to own by virtue of the constructive ownership provisions of the Code,
more than 5% (by number or value, whichever is more restrictive) of the
outstanding shares of Common Stock.
"PARKER TOWNE" means the Parker Towne Centre comprising 205,792 of GLA
located in Plano, Texas, in the Dallas metropolitan area.
"PERFORMING SUPERMARKET CENTER" means Neighborhood and Community
Shopping Centers with tenants occupying 85% or more of GLA and which are well
maintained, substantially fully leased and maintain an appropriate mix of Anchor
Tenants and other tenants.
"PERMITTED HOLDER" means a person who may own shares of stock of the
Company without violating the ownership restrictions of the Charter.
"PLAZA DEL REY" means the Plaza Del Rey Shopping Center comprising
50,146 square feet of GLA located in Southwest Dade County, Florida.
"POINTE ROYALE" means the Pointe Royale Shopping Center comprising
199,068 of GLA located in Cutler Ridge, Dade County, Florida.
"PROHIBITED OWNER" means a person or entity holding record title to
shares in excess of the Ownership Limit.
"PROHIBITED TRANSFEREE" means any person to which any transfer of
Common Stock of the Company would result in the person violating the Ownership
Limit.
"REGISTRABLE SHARES" means those shares of stock of the Company granted
Registration Rights.
"REGISTRATION RIGHTS AGREEMENT" means the registration right agreement
by and among the Company and each of Chaim Katzman, Gazit (1995), Dan Overseas,
Globe Reit, Eli Makavy, Doron Valero and David Wulkan with respect to each of
their Registrable Shares.
"REGISTRATION RIGHTS" mean those registration rights granted to certain
stockholders pursuant to the Registration Rights Agreement, the Employment
Agreements, and the Series C Warrants.
"REIT" means a real estate investment trust as defined in Section 856
of the Code which meets the requirements for qualification as a REIT described
in Sections 856 through 860 of the Code.
"RELATED PARTY TENANT" means a tenant actually or constructively owned
10% or more by the REIT or an owner of 10% or more of the REIT.
94
<PAGE>
"RENOVATION OF EXISTING PROPERTIES" means the renovation and
development of those properties referred to in footnote (2) under the table "Use
of Proceeds".
"REPRESENTATIVE" shall mean Credit Suisse First Boston Corporation, as
representative for the Underwriters.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES C WARRANTS" means the warrants to purchase up to 1,400,000
shares of Common Stock of the Company at an exercise price of $8.25 exercisable
through December 31, 1999.
"SKY LAKE" means the property known as Sky Lake Mall in North Dade
County, Florida, which the Company has agreed to acquire which, after a
comprehensive redevelopment, will contain approximately 300,000 square feet of
GLA.
"STATEMENT NO. 128" means the Statement of Financial Accounting
Standards No. 128, "Earnings Per Share", issued by the Financial Accounting
Standards Board in February 1997.
"STOCK INCENTIVE PLAN" means the 1995 Stock Incentive Plan of the
Company.
"SUPERMARKET CENTERS" means Community and Neighborhood Shopping Centers
anchored by supermarkets.
"TASE" means the Tel Aviv Stock Exchange.
"TENANT IMPROVEMENTS" means capital costs incurred by the Company for
leasehold improvements including costs for items such as heating, ventilation
and air conditioning, plumbing, electrical upgrades, interior walls, wall
finishes, ceiling treatment and floor coverings.
"TREASURY REGULATIONS" means regulations of the U.S. Department of the
Treasury under the Code.
"UBTI" means unrelated business taxable income.
"UNDERPERFORMING SUPERMARKET CENTER" means Neighborhood and Community
Shopping Centers which are not Performing Supermarket Centers.
"UNDERWRITERS" means Credit Suisse First Boston Corporation, and those
parties named in the Underwriting Agreement as underwriters of the Offering.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement between the
Company and the Representative relating to the purchase of the Common Stock
offered hereby.
"WEST LAKE" means the West Lake Plaza Shopping Center comprising
100,747 of GLA located in Kendall Lakes, Dade County, Florida.
95
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
PAGE
<S> <C>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA (UNAUDITED):
Pro Forma Consolidated Financial Statements F-2
Pro Forma Consolidated Balance Sheet as of June 30, 1997 F-3
Pro Forma Consolidated Statement of Operations for the six months ended June 30, 1997 F-4
Pro Forma Consolidated Statement of Operations for the year ended December 31, 1996 F-5
Notes to the Pro Forma Consolidated Financial Statements F-6
HISTORICAL:
Condensed Consolidated Balance Sheets as of June 30, 1997(Unaudited) and
December 31, 1996 F-8
Unaudited Condensed Consolidated Statements of Operations for the six months ended
June 30, 1997 and 1996 F-9
Unaudited Condensed Consolidated Statements of Stockholders' Equity for the six months
ended June 30, 1997 and 1996 F-10
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 F-11
Notes to Unaudited Condensed Consolidated Financial Statements F-12
Independent Auditors' Report F-14
Consolidated Balance Sheets as of December 31, 1996 and 1995 F-15
Consolidated Statements of Operations for the years ended December 31, 1996, 1995
and 1994 F-16
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995
and 1994 F-17
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995
and 1994 F-18
Notes to Consolidated Financial Statements F-19
WEST LAKE PLAZA SHOPPING CENTER - 1996 ACQUISITION PROPERTY
Independent Auditors' Report F-30
Statement of Revenues and Certain Expenses for the year ended December 31, 1996
and the six months ended June 30, 1997 (Unaudited) F-31
Notes to Statement of Revenues and Certain Expenses F-32
</TABLE>
F-1
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated balance sheet as of June 30, 1997
is presented as if the Offering and the application of the net proceeds of the
Offering all had occurred on June 30, 1997. The pro forma consolidated
statements of operations for the six months ended June 30, 1997 and the year
ended December 31, 1996 are presented as if the Offering and the application of
the net proceeds (and the acquisition of West Lake, Forest Edge and Monument),
all had occurred on January 1, 1996.
The pro forma consolidated financial statements should be read
in conjunction with and are based upon the historical consolidated financial
statements of Equity One, Inc. and Subsidiaries, including the notes thereto,
included elsewhere in the Prospectus. Because the preponderance of proceeds are
allocated to acquisition, development, redevelopment and renovation projects
which, for pro forma statement of operations purposes, do not generate any
revenue or expense, pro forma results of operations reflect only the repayment
of mortgage notes payable and omit any revenue or expense from other proceeds
uses (except for historical revenue and expense attributable to Sky Lake which
will continue during the redevelopment process). Accordingly, the pro forma
consolidated financial statements do not purport to represent the Company's
financial position as of June 30, 1997 or the results of operations for the six
months ended June 30, 1997 or for the year ended December 31, 1996 that would
actually have occurred had the Offering (and the acquisitions listed above) and
the application of the net proceeds of the Offering all been completed on June
30, 1997 or at the beginning of the periods presented, or to project the
Company's financial position or results of operations as of any future date or
for any future period.
F-2
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(Amounts in thousands)
(Unaudited)
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(1) FORMA
---------- ----------- --------
<S> <C> <C> <C>
ASSETS
Rental Properties:
Land $30,961 $11,860 A $42,821
Building and improvements 81,445 37,900 A 119,345
-------------------------------------
112,406 49,760 162,166
Less accumulated depreciation (6,003) (6,003)
-------------------------------------
Rental properties, net 106,403 49,760 156,163
Cash and cash equivalents 4,558 5,045 B 9,603
Accounts and other receivables, net 824 824
Securities available for sale 5,589 5,589
Deposits 1,403 1,403
Prepaid and other assets 1,210 1,210
Deferred financing costs, net 886 (118)C 768
-------------------------------------
Total assets $120,873 $54,687 $175,560
=====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $64,916 ($9,007)D $55,909
Tenants' security deposits 708 708
Accounts payable and accrued expenses 1,679 1,679
Deferred rental income 76 76
-------------------------------------
Total liabilities 67,379 (9,007) 58,372
-------------------------------------
Stockholders' equity:
Common stock 6,908 4,700 E 11,608
Additional paid-in capital 48,111 59,112 E 107,223
Notes receivable from stock sales (1,525) (1,525)
Retained (deficit) 0 (118)C (118)
-------------------------------------
Total stockholders' equity 53,494 63,694 117,188
-------------------------------------
Total liabilities and stockholders' equity $120,873 $54,687 $175,560
=====================================
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
F-3
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Amounts in thousands, except per share amounts)
(Unaudited)
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(2) FORMA
---------- ----------- --------
Revenues:
Rental income $9,361 $440 F $9,801
Investment revenue 312 312
--------------------------------------
Total revenues 9,673 440 10,113
--------------------------------------
Costs and expenses:
Operating expenses 2,743 57 F 2,800
Depreciation and amortization 1,178 61 F 1,239
Interest 2,939 (304)G 2,635
General and administrative expenses 241 75 H 316
--------------------------------------
Total costs and expenses 7,101 (111) 6,990
--------------------------------------
Net income $2,572 $551 $3,123
======================================
Net earnings per share (I) $0.27
==========
Weighted average number of shares of
common stock outstanding 11,649
==========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
F-4
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Amounts in thousands, except per share amounts)
(Unaudited)
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(2) FORMA
---------- ----------- --------
Revenues:
Rental income $16,337 $2,886 F $19,223
Investment revenue 377 377
-------------------------------------
Total revenues 16,714 2,886 19,600
-------------------------------------
Costs and expenses:
Operating expenses 4,832 635 F 5,467
Depreciation and amortization 2,067 346 F 2,413
Interest 5,380 101 G 5,481
General and administrative expenses 515 150 H 665
-------------------------------------
Total costs and expenses 12,794 1,232 14,026
-------------------------------------
Net income $3,920 $1,654 $5,574
=====================================
Net earnings per share (I) $0.52
=========
Weighted average number of shares
of common stock outstanding 10,623
=========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
F-5
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
1. ADJUSTMENTS TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma adjustments to the Pro Forma Consolidated Balance Sheet as of June
30, 1997 are as follows:
<TABLE>
<S> <C>
(A) Reflects the cost of the proposed retail property acquisitions and the cost
of the renovation and development of the Existing Properties
Purchase price of Sky Lake (not yet acquired) $11,850
Development costs of Sky Lake 18,000
Development costs of Coral Way 10,000
Purchase price of 4.4 acres of vacant land proximate to Coral Way (not yet acquired) 1,010
Development costs of 4.4 acres of vacant land 2,500
Atlantic Village Shopping Center renovation costs 850
Commonwealth Shopping Center renovation costs 1,750
Lake Mary Centre development costs 3,000
Point Royale office building renovation costs 800
----------
Total proposed retail property acquisitions and renovation and development
of Existing Properties $49,760
==========
The cost of the proposed retail property acquisitions and renovations and
development of Existing Properties will be allocated as follows:
Land $11,860
Buildings and improvements 37,900
----------
$49,760
==========
(B) The adjustment to pro forma cash and cash equivalents was determined as
follows:
Net proceeds from the Offering after underwriting discount and
estimated issuance costs of $5,453 $63,872
Repayment of mortgage notes payable including $60 of
additional loan fees (9,067)
Purchase of proposed retail property acquisitions and costs of
renovation and development of Existing Properties (49,760)
----------
Net increase in cash and cash equivalents $5,045
==========
(C) Reflects the write-off of loan costs relating to repayment of
mortgage notes payable $118
==========
(D) Reflects the repayment of mortgage notes payable of $9,067,
net of $60 of additional loan fees $9,007
==========
F-6
<PAGE>
(E) Reflects the sale of 4,700 shares of common stock in the Offering
Proceeds from the Offering $69,325
Costs associated with the Offering (5,453)
Additional loan fees resulting from the early repayment of mortgage
notes payable (60)
----------
Net proceeds after expenses and loan fees $63,812
==========
Par value of common stock to be issued in the Offering $4,700
Additional paid-in capital from the net proceeds of the Offering 59,112
----------
$63,812
==========
</TABLE>
2. Adjustments to the Pro Forma Consolidated Statements of Operations
The pro forma adjustments to the Pro Forma Consolidated Statements of
Operations for the six months ended June 30, 1997 and the year ended December
31, 1996 are as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1997 DECEMBER 31, 1996
---------------------------------
<S> <C> <C>
(F) Reflects the pro forma net effect of a full year of operations of West Lake,
Sky Lake, Forest Edge and Monument Pointe shopping centers
Rental income $440 $2,886
Operating expenses (57) (635)
Depreciation and amortization (61) (346)
---------------------------------
$322 $1,905
=================================
(G) Reflects the effect on interest expense as a result of the following:
Pro forma net effect of a full year of operations of West Lake, Sky Lake,
Forest Edge and Monument Pointe shopping centers $37 $851
Increase in interest expense from prepayment penalties 60 60
Decrease in interest expense, including the amortization of deferred
financing costs, resulting from the repayment of mortgage notes payable (401) (810)
---------------------------------
($304) $101
=================================
(H) Reflects the increase in general and administrative expenses for the
incremental costs of operating as a public REIT $75 $150
=================================
(I) Pro forma net earnings per share is based upon the following weighted
average shares outstanding:
Common stock outstanding (weighted average) 6,949 5,923
Common stock to be issued in the Offering 4,700 4,700
---------------------------------
11,649 10,623
=================================
</TABLE>
F-7
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
JUNE 30, DECEMBER 31,
1997 1996
---- ----
ASSETS (Unaudited)
Rental Properties:
Land $30,961 $28,094
Building and improvements 81,445 78,612
------------------------
112,406 106,706
Less accumulated depreciation (6,003) (4,849)
------------------------
Rental properties, net 106,403 101,857
Cash and cash equivalents 4,558 1,951
Accounts and other receivables, net 824 800
Securities available for sale 5,589 4,528
Deposits 1,403 510
Prepaid and other assets 1,210 1,165
Deferred financing costs, net 886 1,011
------------------------
Total assets $120,873 $111,822
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $64,916 $66,831
Tenants' security deposits 708 694
Accounts payable and accrued expenses 1,679 950
Deferred rental income 76 252
------------------------
Total liabilities 67,379 68,727
------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock $1.00 par value, 5,000 shares
authorized but unissued
Common stock $1.00 par value, 40,000 shares
authorized; 6,908 and 5,768 shares
issued and outstanding, respectively 6,908 5,768
Additional paid-in capital 48,111 38,852
Notes receivable from stock sales (1,525) (1,525)
------------------------
Total stockholders' equity 53,494 43,095
------------------------
Total liabilities and stockholders' equity $120,873 $111,822
========================
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
F-8
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
FOR THE SIX MONTHS
ENDED
JUNE 30,
---------------------
1997 1996
---- ----
Revenues:
Rental income $9,361 $8,000
Investment revenue 312 42
---------------------
Total revenues 9,673 8,042
---------------------
Costs and expenses:
Operating expenses 2,743 2,341
Depreciation and amortization 1,178 1,010
Interest 2,939 2,648
General and administrative expenses 241 213
---------------------
Total costs and expenses 7,101 6,212
---------------------
Net income $2,572 $1,830
=====================
Net earnings per share (Restated, see Note 1) $0.37 $0.34
=====================
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Amounts in thousands)
NOTES TOTAL
ADDITIONAL RECEIVABLE STOCK-
COMMON PAID-IN FROM RETAINED HOLDERS'
STOCK CAPITAL STOCK SALES EARNINGS EQUITY
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE
JANUARY 1, 1996 $4,374 $24,765 $29,139
Net income $1,830 1,830
Issuance of common stock 1,014 11,782 12,796
Dividends paid (1,775) (1,775)
Notes receivable from stock sales ($1,129) (1,129)
-------------------------------------------------------------------
BALANCE
JUNE 30, 1996 (Unaudited) $5,388 $36,547 ($1,129) $55 $40,861
===================================================================
BALANCE
JANUARY 1, 1997 $5,768 $38,852 ($1,525) $43,095
Net income $2,572 2,572
Issuance of common stock 1,140 9,467 10,607
Dividends paid (208) (2,572) (2,780)
-------------------------------------------------------------------
BALANCE
JUNE 30, 1997 (Unaudited) $6,908 $48,111 ($1,525) $0 $53,494
===================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
F-10
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED JUNE 30,
1997 1996
(UNAUDITED)
OPERATING ACTIVITIES:
Net income $2,572 $1,830
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 1,335 1,067
Provision for losses on accounts
receivable 23
Loss (gain) on sales of securities 5 (3)
Changes in assets and liabilities:
Accounts and other receivables (47) 342
Deposits (892) (593)
Prepaid and other assets (63) (47)
Accounts payable and accrued
expenses 729 1,349
Tenants' security deposits 13 30
Deferred rental income (176) (34)
Due from related parties (7) 39
----- -----
Net cash provided by operating
activities 3,492 3,980
----- -----
INVESTING ACTIVITIES:
Acquisition of rental property (5,204) (1,193)
Acquisition of building improvements (496) (1,168)
Purchases of securities (3,950) (1,199)
Sales and prepayments of securities 2,884 65
------ ------
Net cash used in investing activities (6,766) (3,495)
------ ------
FINANCING ACTIVITIES:
Due to stockholders (2,130)
Repayments of mortgage notes payable (18,063) (629)
Borrowings under mortgage notes payable 16,148
Stock subscription and issuance 10,607 11,667
Cash dividends paid to stockholders (2,780) (1,775)
Deferred financing costs (31) (120)
------ ------
Net cash provided by financing
activities 5,881 7,013
------ ------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,607 7,498
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,951 770
------ ------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $4,558 $8,268
====== ======
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $2,755 $2,523
====== ======
Common stock issued for notes
receivable $1,129
======
The accompanying notes are an integral part of these unaudited condensed
financial statements.
F-11
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of the Company should
be read in conjunction with the audited consolidated financial statements
included elsewhere herein. Accordingly, certain disclosures accompanying the
annual consolidated financial statements prepared in accordance with generally
accepted accounting principles are omitted. In the opinion of management, all
adjustments, consisting solely of normal recurring adjustments, necessary for
fair presentation of the condensed consolidated financial statements have been
included. The current period's results of operations are not necessarily
indicative of results which ultimately may be achieved for the year.
The condensed consolidated financial statements include the accounts of the
Company's wholly-owned subsidiaries. All intercompany balances have been
eliminated.
NEW ACCOUNTING PRONOUNCEMENTS - In February 1997, SFAS No. 128, EARNINGS PER
SHARE was issued. SFAS No. 128, which supersedes APB Opinion No. 15, requires a
dual presentation of basic and diluted earnings per share on the face of the
income statement. Basic earnings per share excludes dilution and is computed by
dividing income or loss attributable to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted earnings per share is computed similarly
to fully diluted earnings per share under APB Opinion No. 15. SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods; earlier application is not permitted. When
adopted, all prior-periods earnings per share data are required to be restated.
In February 1997, SFAS No. 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL
STRUCTURE was issued. SFAS No. 129, which applies to all entities that have
issued securities, requires in summary form, the pertinent rights and privileges
of the various securities outstanding. Examples of information that shall be
disclosed are dividends and liquidation preferences, participation rights, call
prices and dates, conversion or exercise prices or rates and pertinent dates,
sinking-fund requirements, unusual voting rights, and significant terms of
contracts to issue additional shares. SFAS No. 129 is effective for financial
statements issued for periods ending after December 15, 1997.
F-12
<PAGE>
NET EARNINGS PER SHARE - Net earnings per share is calculated by dividing net
earnings by the weighted average number of common shares and common share
equivalents outstanding during the six month period. The weighted average number
of shares outstanding and used in the calculation of net earnings per share was
restated for the subsequent stock split, see Note 2, and was 6,949,107 and
5,412,144 in 1997 and 1996, respectively.
2. SUBSEQUENT EVENT
On July 15, 1997, the Company's Board of Directors declared and paid a
two-for-one split of the Company's common stock in the form of a 100% stock
dividend to stockholders on July 15, 1997. A total of 3,454,065 shares of common
stock were issued in connection with the split. The stated par value of each
share was not changed from $1.00. A total of $3,454,065 was reclassified from
the Company's additional paid in capital account to the Company's common stock
account. All share and per share amounts have been restated to retroactively
reflect the stock split.
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Equity One, Inc.:
We have audited the accompanying consolidated balance sheets of Equity One, Inc.
and subsidiaries (the "Company") as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of Equity
One, Inc. and subsidiaries as of December 31, 1996 and 1995 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
Deloitte and Touche LLP
Miami, Florida
February 15, 1997
(July 15, 1997 as to Note 10)
F-14
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS 1996 1995
---- ----
Rental properties:
Land $ 28,094 $ 23,358
Buildings and improvements 78,612 69,412
---------- ----------
106,706 92,770
Less accumulated depreciation 4,849 2,832
---------- ----------
Rental properties, net 101,857 89,938
Cash and cash equivalents 1,951 770
Accounts and other receivables, net 800 922
Securities available for sale 4,528 160
Deposits 510 623
Prepaid and other assets 1,165 1,120
Deferred financing costs, net 1,011 937
---------- ----------
Total assets $ 111,822 $ 94,470
========== ==========
LIABILITIES, COMMON STOCK ISSUED WITH PUT OPTION
AND STOCKHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable $ 66,831 $ 60,583
Due to stockholders 2,216
Tenants' security deposits 694 552
Accounts payable and accrued expenses 950 917
Deferred rental income 252 63
---------- ----------
Total liabilities 68,727 64,331
---------- ----------
COMMON STOCK ISSUED WITH PUT OPTION - 144,000 SHARES -0- 1,000
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value - 5,000,000 shares
authorized but unissued
Common stock, $1 par value - 40,000,000 shares
authorized; 5,768,418 and 4,517,558 shares
issued and outstanding for 1996 and 1995,
respectively 5,768 4,374
Additional paid-in capital 38,852 24,765
Notes receivable from stock sales (1,525) -0-
---------- ----------
Total stockholders' equity 43,095 29,139
---------- ----------
Total liabilities and stockholders' equity $ 111,822 $ 94,470
========== ==========
See accompanying notes to the consolidated financial statements.
F-15
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
RENTAL INCOME $ 16,337 $ 10,792 $ 6,125
-------- -------- --------
INVESTMENT REVENUE:
Interest 239 497 166
Dividends 111 23 42
Realized gain (loss) on securities, net 27 36 (135)
-------- -------- --------
Total investment revenue 377 556 73
-------- -------- --------
COSTS AND EXPENSES:
Operating expenses 4,832 3,293 2,236
Depreciation and amortization 2,067 1,496 996
Interest 5,380 3,498 2,099
General and administrative expenses 515 549 504
-------- -------- --------
Total costs and expenses 12,794 8,836 5,835
-------- -------- --------
INCOME BEFORE INCOME TAXES 3,920 2,512 363
INCOME TAXES 130
-------- -------- --------
NET INCOME $ 3,920 $ 2,512 $ 233
======== ======== ========
NET EARNINGS PER SHARE (Restated, see Note 1) $ 0.65 $ 0.51 $ 0.07
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-16
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
NET NOTES RETAINED TOTAL
ADDITIONAL UNREALIZED RECEIVABLE EARNINGS STOCK-
COMMON PAID-IN HOLDING LOSS FROM (ACCUMULATED HOLDERS'
STOCK CAPITAL ON SECURITIES STOCK SALES DEFICIT) EQUITY
----- ------- ------------- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1993 $ 2,546 $ 10,276 $ (71) $ (147) $ 12,604
Issuance of common stock 1,764 14,154 15,918
Net income 233 233
Change in net unrealized
holding loss on securities
available for sale 43 43
--------- -------- -------- -------- --------
BALANCE,
DECEMBER 31, 1994 4,310 24,430 (28) 86 28,798
Issuance of common stock 64 559 623
Net income 2,512 2,512
Dividends paid (224) (2,598) (2,822)
Change in net unrealized
holding loss on securities
available for sale 28 28
--------- -------- -------- -------- --------
BALANCE,
DECEMBER 31, 1995 4,374 24,765 29,139
Issuance of common stock 1,250 13,490 14,740
Conversion of common
stock issued with
put option to equity 144 856 1,000
Net income 3,920 3,920
Dividends paid (259) (3,920) (4,179)
Notes receivable from
stock sales $ (1,525) (1,525)
--------- -------- -------- -------- -------- --------
BALANCE,
DECEMBER 31, 1996 $ 5,768 $ 38,852 $ 0 $ (1,525) $ 0 $ 43,095
========= ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-17
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (IN THOUSANDS)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,920 $ 2,512 $ 233
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,282 1,578 1,049
(Gain) loss on sales of securities (27) (36) 135
Changes in assets and liabilities (net of acquisition):
Accounts and other receivables 122 (651) 489
Deposits 113 (262) (194)
Prepaid and other assets (112) (75) (7)
Accounts payable and accrued expenses 67 250 370
Income tax liability (34) (35) 70
Tenants' security deposits 142 219 225
Deferred rental income 189 (57) 114
Due to related party 0 0 (2)
Due from related party 18 26 (49)
-------- -------- --------
Net cash provided by operating activities 6,680 3,469 2,433
-------- -------- --------
INVESTING ACTIVITIES:
Acquisition of rental property (13,936) (40,722) (29,556)
Purchases of securities (7,029) (3,601) (3,540)
Proceeds from sales and principal payments on securities 2,688 6,812 2,696
Change in deposits for acquisition of rental property 0 0 220
Repayment of notes receivable 0 300 425
-------- -------- --------
Net cash used in investing activities (18,277) (37,211) (29,755)
-------- -------- --------
FINANCING ACTIVITIES:
Due to stockholders (2,216) 2,216 0
Repayments of mortgate notes payable (4,352) (729) (452)
Borrowings under mortgage notes 10,599 28,620 17,599
Deferred financing costs (289) (467) (339)
Stock subscription and issuance 13,215 623 15,918
Cash dividends paid to stockholders (4,179) (2,822) 0
-------- -------- --------
Net cash provided by financing activities 12,778 27,441 32,726
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,181 (6,301) 5,404
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 770 7,071 1,667
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,951 $ 770 $ 7,071
======== ======== ========
SUPPLEMENTAL SCHEDULE OF CASH
AND NONCASH ITEMS:
ACQUISITION:
Other receivables $ 8
Other assets 992
--------
Common stock issued with put option $ 1,000
========
Conversion of common stock issued
with put option to equity $ 1,000
========
Cash paid for interest $ 4,752 $ 3,513 $ 1,956
======== ======== ========
Cash paid for income taxes $ 36 $ 60
======== ========
Common stock issued for notes receivable $ 1,525
========
Change in unrealized depreciation in securities
available for sale $ 28 $ 43
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-18
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - Equity One, Inc. (the "Company") was incorporated in Maryland on
June 15, 1992, as a wholly-owned subsidiary of Gazit Holdings, Inc. During
1996, Gazit Holdings, Inc. transferred all of its stock ownership to Gazit
(1995), Inc. ("Gazit") ( See Note 6). During 1996 and 1995, additional
shares of stock were issued to both affiliated and unaffiliated entities,
reducing Gazit's holdings in the Company to approximately 37% and 45% as
of December 31, 1996 and 1995, respectively.
Effective January 1, 1994 the Company acquired Global Realty and
Management, Inc. ("Global"), the property manager for four of the
Company's properties at the time of acquisition respresenting
approximately 30% of Global's revenues. The acquisition was accounted for
as a purchase. The outstanding common stock of Global was exchanged for
144,000 shares of the Company's common stock and 48,000 Class B warrants
to purchase the Company's common stock at $8.25 per share through December
31, 1996. The Class B warrants were issued to all common stockholders on
a pro rata basis based on their percentage of common stock owned. The
former stockholder of Global was granted an option to "put" his newly
acquired Company stock to the Company for $1,000 for a five-year period.
During 1996, the Company canceled the put option in exchange for a similar
put option to be issued by certain stockholders of the Company. On
December 30, 1996, the former stockholder of Global exercised the 48,000
Class B warrants to purchase the Company's common stock at $8.25 per
share. The Company provided a $396 loan for a six year period for the
purpose of exercising the Class B warrants held by the former stockholder.
The loan bears interest at 5.25% per year. The loan has been offset
against stockholders' equity. Additionally, the Company entered into an
employment agreement with the former stockholder for a period of 7 years
with an option to extend the agreement for another 7 years. The former
stockholder is entitled to remuneration of $180 per year, effective
January 1, 1996 and options to purchase 150,000 shares in the Company at
an exercise price of $12.38 per share under the Company's 1995 Stock
Option Plan (the "Plan").
The Company currently owns and operates fourteen retail properties and two
mixed use (office/retail) properties and one mini-warehouse located in
Florida and Texas, comprising approximately 87% and 13% of the total
rentable square footage, respectively. In addition, Winn-Dixie Stores
Inc., and Publix Supermarkets Inc., rent approximately 16% and 7%, 10% and
7%, and 13% and 4% of the total rentable square footage, for 1996, 1995
and 1994, respectively.
BASIS OF CONSOLIDATION - The consolidated financial statements include the
accounts of Equity One, Inc. and its wholly-owned subsidiaries
(collectively the "Company"): Florida Del Rey Holdings II, Inc., Gazit
(Meridian), Inc., Four Corners Equity Corp., Equity One (Beta), Inc.,
Equity One (Eustis Square), Inc., Equity One (Parker Towne Center), Inc.,
Global Realty and Management, Inc., Equity One (Commonwealth), Inc.,
Equity One (Alpha), Inc., Equity One (Mandarin), Inc., Equity One
(Atlantic Village), Inc., Equity One (Epsilon), Inc., Equity One (Point
Royal), Inc., Equity One (Lake Mary), Inc., Equity One (Olive), Inc.,
Equity One (West Lake), Inc., Equity One (Forest Edge), Inc., Equity One
(Oak Hill), Inc., and Equity One (Delta), Inc. All subsidiaries
hereinafter are referred to as "the Consolidated Companies." All
intercompany balances and transactions have been eliminated.
F-19
<PAGE>
CASH AND CASH EQUIVALENTS - For purposes of the statements of cash flows,
the Company considers certificates of deposit with an initial maturity of
three months or less to be cash equivalents. Cash and cash equivalents
consist of the following as of December 31, 1996 and 1995:
1996 1995
---- ----
Cash $1,828 $ 770
Certificates of deposit 123
------ -----
Total $1,951 $ 770
====== =====
INVESTMENT SECURITIES - Investment securities are accounted for under
Statement of Financial Accounting Standards ("SFAS") No. 115, ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES, which the Company
adopted during 1993. Under SFAS No. 115, investment securities must be
classified and accounted for under the following conditions:
TRADING ACCOUNT SECURITIES - Trading account securities are held in
anticipation of short-term sales or market movements. Trading account
securities are stated at fair value. Gains or losses on the sale of
trading account securities, as well as unrealized fair value
adjustments, are included in operating income.
SECURITIES AVAILABLE FOR SALE - Securities to be held for unspecified
periods of time including securities that management intends to use as
part of its asset/liability strategy, or that may be sold in response
to changes in interest rates, changes in prepayment risk, or other
similar factors, are classified as available for sale and are carried
at fair value. Unrealized gains or losses are reported as a net amount
in a separate component of stockholders' equity until realized. As of
December 31, 1996 and 1995, all of the Company's securities are
classified as securities available for sale.
SECURITIES HELD TO MATURITY - Securities that management has a positive
intent and the ability to hold to maturity are carried at cost,
adjusted for amortization of premiums and accretion of discounts over
the life of the securities using a method which approximates the level
yield method.
DEPOSITS - Deposits are comprised of funds held by various institutions
for future payments of taxes and insurance, utility and other service
deposits.
RENTAL PROPERTY - Rental property is stated at cost. Major renewals and
betterments are capitalized. Maintenance, repairs and minor renewals are
charged to operating expense as incurred. Depreciation is provided for
using the straight-line method over the estimated useful lives of the
assets which range from 5 to 40 years, except for building improvements
related to leasehold improvements which are depreciated over the lesser of
the assets' useful lives or the terms of the related leases.
LONG-LIVED ASSETS - In accordance with Financial Accounting Standards No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF (SFAS No. 121), long-lived assets, such as
property, certain identifiable intangibles, and goodwill related to those
assets to be held and used are to be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amounts of
an asset may not be recoverable. There were no assets considered impaired
under the provision of the Statement.
DEFERRED FINANCING COSTS - Deferred financing costs consist of loan
origination and other fees directly related to the rental property
financing with third parties. The fees are being amortized using the
straight-line method over the term of the notes, ranging from 5 to 30
years.
F-20
<PAGE>
RENTAL INCOME - Rental income is recognized on a straight-line basis over
the terms of the respective leases and is comprised of minimum rentals,
contingent rentals and the pass-through of certain expenses. Contingent
rentals are generally received from tenants based on their gross sales.
For the years ended December 31, 1996, 1995 and 1994, contingent rentals
recognized by the Company were approximately $153, $87 and $80,
respectively.
INCOME TAXES -There is no provision for income tax expense for the year
ended December 31, 1996 and 1995, as a result of the Company changing to
real estate investment trust ("REIT") status, effective January 1, 1995.
The Company is not taxed on its taxable operating income if it distributes
such income to stockholders in conformity with the requirements of the
Internal Revenue Code and meets certain other requirements. Company
management is of the opinion that they are complying with the requirements
of REIT status and hence starting from January 1, 1995 the Company is a
REIT for income tax purposes. The Company intends to continue to meet such
requirements and distribute any of its future taxable operating income in
conformity with such requirements. Distributed capital gains on sales of
real estate are not subject to tax; however, undistributed capital gains
are taxed as capital gain.
PERVASIVENESS OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities 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 period. Actual
results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS - In October 1995, SFAS No. 123, ACCOUNTING
FOR STOCK-BASED COMPENSATION, was issued. SFAS No. 123, encourages, but
does not require a fair value based method of accounting for employee
stock options or similar equity instruments. Entities which elect not to
adopt the fair value method of accounting are required to make pro-forma
disclosures of net income and earnings per share as if the fair value
method were adopted. The company has not adopted the fair value method and
therefore continues to apply the intrinsic method of measuring stock based
compensation under APB 25. There was no effect upon not adopting the fair
value method.
In February 1997, SFAS No. 128, EARNINGS PER SHARE was issued. SFAS No.
128, which supersedes APB Opinion No. 15, requires a dual presentation of
basic and diluted earnings per share on the face of the income statement.
Basic earnings per share excludes dilution and is computed by dividing
income or loss attributable to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted earnings per share is computed
similarly to fully diluted earnings per share under APB Opinion 15. SFAS
No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods; earlier application is
not permitted. When adopted, all prior-period earnings per share data are
required to be restated but are not expected to differ materially from the
historical amounts.
In February 1997, SFAS No. 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL
STRUCTURE was issued. SFAS No. 129, which applies to all entities that
have issued securities, requires in summary form, the pertinent rights and
privileges of the various securities outstanding. Examples of information
that shall be disclosed are dividends and liquidation preferences,
participation rights, call prices and dates, conversion or exercise prices
or rates and pertinent dates, sinking-fund requirements, unusual voting
rights, and significant terms of contracts to issue additional shares.
SFAS No. 129 is effective for financial statements issued for periods
ending after December 15, 1997.
F-21
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair values of
financial instruments have been determined by the Company using available
market information and appropriate valuation methods in accordance with
Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company has used the following
market assumptions and/or estimation methods:
CASH AND CASH EQUIVALENTS, ACCOUNTS AND OTHER RECEIVABLES AND ACCOUNTS
PAYABLE - The carrying amounts reported in the consolidated balance
sheets are reasonable estimates of fair value due to their short term
nature.
INVESTMENT SECURITIES - Fair values are based on quoted market prices,
dealer quotes, and independent pricing services. The carrying value
approximates fair value due to the nature of the investments due to
their short-term nature.
MORTGAGE NOTES PAYABLE - The estimated fair value at December 31, 1996
and 1995 was $63,016 and $57,065, respectively, calculated based on the
net present value of payments over the term of the notes using
estimated market rates for similar notes payable.
INTEREST RATE CAP AGREEMENTS - The fair value is based on dealer quotes
and generally represents an estimate of the amount the Company would be
paid to terminate the agreement at the reporting date. The fair value
at December 31, 1996 and 1995 was $6 and $0, respectively.
The fair value estimates presented herein are based on information
available to management as of the reporting dates. Although management is
not aware of any factors that would significantly affect the estimated
fair value amounts, such amounts have not been comprehensively revalued
for purposes of these financial statements since that date and, therefore,
current estimates of fair value may differ significantly from the amounts
presented herein.
NET EARNINGS PER SHARE - Net earnings per share is calculated by dividing
net earnings by the weighted average number of common shares and common
stock equivalents outstanding during each year. The weighted average
number of shares outstanding and used in the calculation were restated for
the subsequent stock split, see Note 10, and were 5,923,250, 5,375,580 and
3,453,792 in 1996, 1995 and 1994, respectively.
2. SECURITIES AVAILABLE FOR SALE
As of December 31, 1996 and 1995, there were no material differences
between amortized cost and fair value. For the years ended December 31,
1996, 1995 and 1994, the Company had gross securities sales of $2,411,
$6,776 and $2,831 resulting in gross realized gains of $32, $52 and $26
and gross realized losses of $5, $16 and $161, respectively.
At December 31, 1996 and 1995, debt securities, mortgage-backed securities
and U.S. government obligations all mature within five years. Actual
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
F-22
<PAGE>
3. ACCOUNTS AND OTHER RECEIVABLES
Composition in the consolidated balance sheets: 1996 1995
---- ----
Tenants $ 746 $ 907
Accrued interest receivable - institutions 38
Employee loans and advances 16 15
------ -----
Total $ 800 $ 922
====== =====
The accounts receivable balances do not include a valuation allowance as
the Company has historically had minor charge-offs.
4. RENTAL PROPERTY
Composition in the consolidated balance sheets:
<TABLE>
<CAPTION>
LAND,
BUILDINGS
AND BUILDING
COST EQUIPMENT IMPROVEMENTS TOTAL
--------- ------------ -----
<S> <C> <C> <C>
Balance at beginning of year $ 90,595 $2,175 $92,770
Additions in the reporting year 12,381 1,555 13,936
--------- -------- --------
Balance at end of year 102,976 3,730 106,706
--------- -------- --------
ACCUMULATED DEPRECIATION
Balance at beginning of year (2,622) (210) (2,832)
Depreciation for the year (1,854) (163) (2,017)
--------- -------- --------
Balance at end of year (4,476) (373) (4,849)
--------- -------- --------
Undepreciated balance
as of December 31, 1996 $ 98,500 $ 3,357 $101,857
========= ======== ========
Undepreciated balance
as of December 31, 1995 $ 87,973 $ 1,965 $ 89,938
========= ======== ========
</TABLE>
Substantially all of the Company's rental property serves as collateral to
non-recourse mortgages payable totaling $66,831 and $60,583 as of December
31, 1996 and 1995, respectively (See Note 5).
Assets are depreciated on a straight-line basis over their estimated
useful lives, as follows:
Buildings 33 to 40 years
Building/leasehold improvements 5 to 40 years
Furniture and equipment 5 to 7 years
F-23
<PAGE>
5. MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following:
1996 1995
---- ----
Mortgage payable, 8.125%, payable in monthly
installments of $29 including interest,
unpaid balance due August 31, 2011,
collateralized by rental property
(Financed through an Insurance Company) $ 3,015 $ 3,036
Mortgage payable, 9.49%, payable in monthly
installments of $26 including interest,
unpaid balance due March 1, 2003,
collateralized by rental property
(Financed through an Insurance Company) 3,001 3,026
Mortgage payable, 8.25%, payable in monthly
installments of $8 including interest,
unpaid balance due August 1, 2000,
collaterized by rental property
(Financed through an Insurance Company) 924 939
Mortgage payable, 9%, payable in monthly
installments of $55 including interest,
unpaid balance due July 1, 2002,
collaterized by rental property
(Financed through an Insurance Company) 5,482 5,638
Mortgage payable, 8.5%, interest only payable
monthly through January 1, 1996 with monthly
installments of $21 including interest
commencing January 1, 1996, unpaid balance due
September 30, 1998, collateralized by rental
property (Financed through an Insurance Company) 2,351 2,400
Mortgage payable, 7.75% through August 1,
1997, at which time the rate will adjust,
payable in monthly installments of $115
including interest, at which time the remaining
principal is payable unless the lender extends the
loan. Under the terms of the note, the lender shall
not declare the note to be due and payable provided
that the Company has satisfied all of the lender's
conditions as set forth in the note agreement.
Under the terms of the note, the lender has the
option to extend the loan for two three-year
periods at an interest rate to be determined
by the lender. Interest at this rate plus principal
payments amortizing the remaining balance over a
17 and 14 year period at each of the option dates,
respectively, are payable monthly and any remaining
principal due on August 1, 2003. The Company has
entered into a cap agreement to hedge its interest
rate risk as discussed below. The loan is
collateralized by rental property. (Financed
through an Insurance Company) 13,221 13,561
F-24
<PAGE>
1996 1995
---- ----
Mortgage payable, 8.75%, payable in monthly
installments of $19 including interest,
unpaid balance due June 30, 2000,
collaterized by rental property
(Financed through a Bank) $ 2,247 $ 2,277
Mortgage payable, 6.375%, payable in monthly
installments of $8 including interest,
unpaid balance due May 10, 1999,
collaterized by rental property
(Financed through an Insurance Company) 1,227 1,244
Mortgage payable, 8.15%, payable in monthly
installments of $37 including interest,
unpaid balance due July 1, 2002,
collaterized by rental property
(Financed through an Insurance Company) 4,044 4,150
Mortgage payable, 7.625%, payable in monthly
installments of $20 including interest,
unpaid balance due January 1, 2006,
collaterized by rental property
(Financed through an Insurance Company) 2,445 2,500
Mortgage payable, 9.35%, payable in monthly
installments of $23 including interest,
unpaid balance due March 1, 2002,
collaterized by rental property
(Financed through an Insurance Company) 2,419 2,467
Mortgage payable, 7.95%, payable in monthly
installments of $50 including interest,
unpaid balance due July 15, 2010,
collaterized by rental property
(Financed through an Insurance Company) 5,816 5,946
Mortgage payable, 7.85%, payable in monthly
installments of $111 including interest,
unpaid balance due December 1, 2010,
collaterized by rental property
(Financed through an Insurance Company) 13,109 13,399
Mortgage payable, 8.25%, payable in monthly
installments of $19 including interest,
unpaid balance due October 1, 2002,
collaterized by rental property
(Financed through an Insurance Company) 2,058
F-25
<PAGE>
Mortgage payable, 7.875%, through July 1, 2006
payable in monthly installments of $46 including
interest, at which time the lender will adjust the
rate of interest equal to the sum of "Moody's" "A"
corporate bond index daily rate plus .375%, rounded
to the next highest one-eighth percentage rate. An
additional disbursement of $480 will be made by the
lender after certain conditions and terms are met,
including but not limited to the construction of a
restaurant, at which time the monthly installment
will increase to $50. The unpaid balance is due
June 30, 2016, collateralized by rental property
(Financed through an Insurance Company) 5,472
------- -------
Total $66,831 $60,583
======= =======
Principal maturities of the mortgage notes payable as of December 31, 1996
are as follows:
YEAR ENDING
DECEMBER 31,
------------
1997 $ 1,655
1998 4,037
1999 3,057
2000 4,951
2001 3,118
Thereafter 50,013
--------
Total $ 66,831
========
As of December 31, 1996 and 1995, the Company had outstanding an off
balance sheet interest rate cap on a variable rate obligation, which
protects the Company from rising interest rates. This cap has a notional
amount of $13,000.
On February 14, 1997, the Company refinanced the mortgage note payable of
7.75% with a principal balance of $13,221 as of December 31, 1996,
referred to above. The principal amount received was $13,400. The new loan
bears an interest rate of 7.68% per year. The monthly installments are
$115 including interest. The new loan is repayable in periodic
installments and matures in 2015.
6. RELATED PARTY TRANSACTIONS
An affiliated entity, Gazit U.S.A., Inc., has provided the Company with
office space, office services and certain management and consulting
services for which the Company pays a management fee. For the years ended
December 31, 1995 and 1994 such fee totaled $150 and $172 respectively,
and is included in general and administrative expenses in the accompanying
consolidated statements of operations.
F-26
<PAGE>
The Company provides an affiliated entity, Gazit U.S.A., Inc., with office
space, office services and certain management and consulting services for
which the Company receives a management fee. For the year ended December
31, 1996, such fees totaled $10 and is included as an offset to general
and administrative expenses in the accompanying consolidated statements of
operations.
As of December 31, 1995, the Company had notes payable of $2,200 to three
of its stockholders bearing interest at 10%, payable on demand. Interest
expense related to these notes for the years ended December 31. 1996 and
1995 was $96 and $16, respectively. These notes were repaid in June, 1996.
7. INCOME TAXES
There is no income tax provision for 1996 and 1995 due to the Company's
change to real estate investment trust status (See Note 1).
As of December 31, 1996 and 1995, the Company had a capital loss
carryforward of $72 and $99, respectively.
8. FUTURE MINIMUM RENTAL INCOME, COMMITMENTS AND CONTINGENCIES
Future minimum rental income under noncancelable leases approximates the
following as of December 31, 1996:
YEAR ENDING
DECEMBER 31,
------------
1997 $ 13,334
1998 11,609
1999 10,234
2000 8,848
2001 7,780
Thereafter 54,170
--------
Total $105,975
========
During 1996, the Company obtained a line of credit of $2,500 secured by
rental property.
During 1996, the Company pledged a letter of credit for $1,500 as
additional security on one of its properties. The letter of credit is
collateralized by securities held by the Company at December 31, 1996.
The Company is subject to litigation in the normal course of business,
none of which, in the opinion of management, will have a material adverse
effect on the financial condition, results of operations or cash flows of
the Company.
F-27
<PAGE>
9. STOCKHOLDERS' EQUITY
As of December 31, 1996 and 1995, the Company has authority to issue
45,000,000 shares, of which 40,000,000 are shares of common stock and
5,000,000 are shares of preferred stock. The Company had Class A and B
warrants issued and outstanding to purchase 735,000 and 1,141,734 shares
of the Company's common stock as of December 31, 1995. Each Class A
warrant is exercisable at $5.25 per share and expires on December 31,
1998. Each Class B warrant was exercisable at $8.25 per share.
On December 30, 1996, 235,610 Class B warrants were exercised at $8.25 per
share and the remaining 906,124 warrants exchanged proportionately for
1,340,000 Class C warrants. The Company authorized the issuance of up to
1,400,000 Class C warrants at an exercise price of $8.25 per share and
expire on December 31, 1999. As of December 31, 1996, the Company has
1,306,124 Class C warrants issued and outstanding.
The composition of the number of shares of issued and outstanding common
stock is as follows:
1996 1995
---- ----
Common Stock 5,768 4,374
Common stock issued with put option (Note 1) 144
------ -----
Total shares issued and outstanding 5,768 4,518
====== =====
During 1996, the Company paid cash dividends of $.75, $.40 and $.45 on
June 18, September 30, and December 31, respectively, to all stockholders
of record on those dates. Gross dividends paid were $4,179 for the year
ended December 31, 1996.
During 1995, the Company paid cash dividends of $.50, $.25 and $.50 on
June 28, September 27, and December 28, respectively, to all stockholders
of record on those dates. Gross dividends paid were $2,822 for the year
ended December 31, 1995.
During 1996, two officers exercised stock options for promissory notes.
These notes are full recourse promissory notes bearing interest at 5.25%
and 6.86%, respectively, and are collateralized by the stock issued upon
exercise of the stock options. Interest is payable annually and principal
is due on December 30, 2002 and June 16, 2003, respectively. The notes
have been reflected in the financial statements as a reduction of
stockholders' equity.
An officer's Employment Agreement provides that if his employment is
terminated for any reason other than Cause, or in the event of a Change in
Control (as defined in the Employment Agreement), the officer shall be
granted a "put" option giving him the right to tender all of his shares of
Common Stock to the Company for purchase at a price per share equal to (i)
if the Common Stock is then listed and traded on a securities exchange,
the average closing price over the forty-five trading days immediately
preceding the date the stock is tendered or (ii) if the Common Stock is
not then listed and traded on a securities exchange, the price per share
used in a similar third party arms' length sale of Common Stock during the
six-month period immediately preceding the tender. If the purchase price
cannot be determined in accordance with (i) and (ii) above, the price per
share shall be determined by an acceptable arbitrator in accordance with
the rules of commercial arbitration, or in the event the parties cannot
agree on an arbitrator, an arbitrator appointed by the American
Arbitration Association.
F-28
<PAGE>
10. SUBSEQUENT EVENT
On July 15, 1997, the Company's Board of Directors declared and paid a
two-for-one split of the Company's Common Stock in the form of a 100%
stock dividend to stockholders on July 15, 1997. A total of 3,454,065
shares of common stock were issued in connection with the split. The
stated par value of each share was not changed from $1.00. A total of
$3,454,065 was reclassified from the Company's additional paid in capital
account to the Company's common stock account. All share and per share
amounts have been restated to retroactively reflect the stock split.
11. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
FIRST SECOND THIRD FOURTH
----- ------ ----- ------
1996
Total revenue $ 4,030 $4,012 $4,240 $4,432
Net income 907 923 1,138 952
Net earnings per share $ 0.18 $ 0.19 $ 0.19 $ 0.09
1995
Total revenue $ 2,271 $2,527 $3,065 $3,485
Net income 517 586 713 696
Net earnings per share $ 0.11 $ 0.12 $ 0.16 $ 0.12
Quarterly computations of per share amounts which have been restated for
the subsequent stock split, see Note 10, are made independently.
Therefore, the sum of the per share amounts for the quarters may not agree
with the per share amounts for the year.
F-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Equity One (West Lake), Inc.:
We have audited the statement of revenues and certain expenses of West Lake
Plaza Shopping Center (the "Property") for the year ended December 31, 1996.
This financial statement is the responsibility of the Property's management. Our
responsibility is to express an opinion on the financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form S-11 of Equity One,
Inc.). Material amounts, described in Note 1 to the statement of revenues and
certain expenses, that would not be comparable to those resulting from future
operations of the acquired property are excluded, and the statement is not
intended to be a complete presentation of the acquired property's revenues and
expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of West Lake Plaza
Shopping Center for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
Deloitte and Touche LLP
Miami, Florida
July 22, 1997
F-30
<PAGE>
WEST LAKE PLAZA SHOPPING CENTER
STATEMENT OF REVENUES AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
SIX MONTHS IN THE
PERIOD ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
(UNAUDITED)
REVENUES:
Rental income $ 454,541 $ 919,712
Recoverable expenses 131,777 212,044
Other income 2,272
----------- -----------
Total revenues 588,590 1,131,756
----------- -----------
CERTAIN EXPENSES:
Property operating 66,337 127,121
Real estate taxes 67,824 136,380
Insurance 15,048 31,164
----------- -----------
Total certain expenses 149,209 294,665
----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 439,381 $ 837,091
=========== ===========
See notes to the statement of revenues and certain expenses.
F-31
<PAGE>
WEST LAKE PLAZA SHOPPING CENTER
NOTES TO THE STATEMENT OF REVENUES AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
West Lake Plaza Shopping Center ("West Lake" or the "Property"), located
in Miami, Florida, was acquired by Equity One, (West Lake), Inc. (the
"Company") on November 6, 1996. The statement of revenues and certain
expenses includes information related to the operations of the Property
for the period from January 1, 1996 through November 5, 1996 as recorded
by the previous owner, Real Equities Limited Partnership II, and for the
period from November 6, 1996 through December 31, 1996 as recorded by
Equity One (West Lake), Inc.
The accompanying historical financial statement information is presented
in conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statement is not representative of the actual
operations for the year ended December 31, 1996 as certain expenses, which
may not be comparable to the expenses expected to be incurred in the
future operations of the acquired property, have been excluded. Expenses
excluded consist of interest, income taxes, depreciation and amortization,
and other costs not directly related to the future operations of the
acquired property.
The statement of revenues and certain expenses for the six month period
ended June 30, 1997 has not been audited. In the opinion of management,
all adjustments consisting solely of normal recurring adjustments
necessary for the fair presentation of the statement of revenues and
certain expenses for the interim period have been included. The current
period's results of operations are not necessarily indicative of results
which ultimately may be achieved for the year.
MANAGEMENT'S USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RENTAL INCOME - Rental income is recognized on a straight-line basis over
the terms of the related leases.
PROPERTY OPERATING EXPENSES - Property operating expenses consist
primarily of utilities, repairs and maintenance, security and safety,
cleaning, and other administrative expenses.
MANAGEMENT FEES - For the period ended November 5, 1996, the Property was
managed by Real Equities Limited Parternship II for a property management
fee paid monthly based on an annual rate of 4% of total rental income. For
the period from November 6, 1996 through December 31, 1996, the Property
was managed by Global Realty and Management, Inc. for a property
management fee paid monthly based on an annual rate of 4% of total base
rents collected.
F-32
<PAGE>
2. OPERATING LEASES
Operating revenue is principally obtained from tenant rentals under
noncancelable operating lease agreements. The future minimum rentals under
noncancelable operating lease agreements as of December 31, 1996 are as
follows:
DECEMBER 31 AMOUNT
1997 $ 819,117
1998 696,251
1999 610,681
2000 549,950
2001 533,106
Thereafter 6,004,968
-----------
Total $ 9,214,073
===========
* * * * * *
F-33
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Equity One, Inc.:
We have audited the accompanying consolidated balance sheets of Equity One, Inc.
and subsidiaries (the "Company") as of December 31, 1996 and 1995, and for each
of the three years in the period ended December 31, 1996, and have issued our
report thereon dated February 15, 1997 (July 15, 1997 as to Note 10). Our
audits also included the financial statement schedule, listed in Item 16. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audit. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
Deloitte & Touche LLP
Miami, Florida
February 15, 1997
S-1
<PAGE>
<TABLE>
<CAPTION>
Schedule III
EQUITY ONE, INC. AND SUBSIDIARIES
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(dollars in thousands)
CAPITALIZED GROSS AMOUNTS AT
INITIAL COST SUBSEQUENT WHICH CARRIED AT
BUILDINGS & TO ACQUISITION- THE CLOSE OF THE PERIOD
PROPERTY LOCATION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS
-------- -------- ------------ ---- ------------ ------------ ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NORTH FLORIDA
Atlantic Village Shopping Center Atlantic Beach, FL $4,044 $1,190 $4,760 $18 $1,190 $4,778
Commonwealth Shopping Center Jacksonville, FL 2,247 730 2,920 730 2,920
Fort Caroline Trading Post Jacksonville, FL 2,419 738 2,432 535 738 2,967
Mandarin Mini-Storage Jacksonville, FL 1,227 362 1,448 5 362 1,453
Oak Hill Village Shopping Center Jacksonville, FL 2,445 690 2,760 37 690 2,797
CENTRAL FLORIDA
East Bay Plaza Largo, FL 924 314 1,296 241 314 1,537
Eustis Square Shopping Center Eustis, FL 5,482 1,450 5,799 23 1,450 5,822
Forest Edge Shopping Center Orlando, FL 2,058 1,250 1,850 1,250 1,850
Lake Mary Centre Lake Mary, FL 13,109 6,972 13,878 30 6,972 13,908
SOUTH FLORIDA
Bird Ludlam Shopping Center Miami, FL 13,221 4,080 16,318 1,403 5,425 16,375
Diana Building W. Palm Beach, FL 0 123 493 898 123 1,391
Equity One Office Building Miami Beach, FL 0 579 423 746 579 1,169
Plaza Del Rey Shopping Center Miami, FL 3,015 740 2,961 130 740 3,091
Point Royale Shopping Center Miami, FL 5,816 3,720 5,005 106 3,720 5,111
West Lakes Plaza Miami, FL 5,472 2,141 5,789 65 2,141 5,854
TEXAS
Four Corners Shopping Center Tomball,TX 3,001 950 3,800 278 950 4,078
Parker Towne Centre Plano, TX 2,351 720 2,881 556 720 3,437
------- ------- ------- ------ ------- -------
TOTAL $66,831 $26,749 $74,813 $5,071 $28,094 $78,538
======= ======= ======= ====== ======= =======
<CAPTION>
ACCUMULATED DATE DEPRECIABLE
PROPERTY TOTAL DEPRECIATION ACQUIRED LIVES
-------- ----- ------------ -------- -----
<S> <C> <C> <C> <C>
NORTH FLORIDA
Atlantic Village Shopping Center $5,968 $179 JUNE 30, 1995 40
Commonwealth Shopping Center $3,650 207 FEBRUARY 28, 1994 40
Fort Caroline Trading Post $3,705 205 JANUARY 24, 1994 40
Mandarin Mini-Storage $1,815 96 MAY 10, 1994 40
Oak Hill Village Shopping Center $3,487 76 DECEMBER 7, 1995 40
CENTRAL FLORIDA
East Bay Plaza $1,851 186 JULY 27, 1993 30
Eustis Square Shopping Center $7,272 627 OCTOBER 22, 1993 30
Forest Edge Shopping Center $3,100 0 DECEMBER 31, 1996 40
Lake Mary Centre $20,880 406 NOVEMBER 9, 1995 40
SOUTH FLORIDA
Bird Ludlam Shopping Center $21,800 994 AUGUST 11, 1994 40
Diana Building $1,514 25 FEBRUARY 15, 1995 40
Equity One Office Building $1,748 84 APRIL 10, 1992 40
Plaza Del Rey Shopping Center $3,831 605 AUGUST 22, 1991 30
Point Royale Shopping Center $8,831 182 JULY 27, 1995 40
West Lakes Plaza $7,995 22 NOVEMBER 6, 1996 40
TEXAS
Four Corners Shopping Center $5,028 601 JANUARY 22, 1993 30
Parker Towne Centre $4,157 320 DECEMBER 9, 1993 30
-------- ------
TOTAL $106,632 $4,815
======== ======
</TABLE>
S-2
<PAGE>
==================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary...................................2
Risk Factors........................................13
Use of Proceeds.....................................25
Distribution Policy.................................26
Dilution............................................29
Capitalization......................................31
Selected Consolidated Financial Data................32
Management's Discussion and Analysis of Financial
Condition and Results of Operations..............34
Business............................................38
Management..........................................53
Certain Transactions................................59
Policies with Respect to Certain Activities.........61
Principal Stockholders..............................64
Description of Capital Stock........................67
Shares Eligible for Future Sale.....................74
Federal Income Tax Considerations...................75
ERISA Considerations................................84
Underwriting........................................87
Notice to Canadian Residents........................88
Legal Matters.......................................89
Experts.............................................89
Additional Information..............................90
Glossary............................................91
Index to Financial Statements.......................F-1
---------------
UNTIL __________, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
EQUITY ONE, INC.
___________ SHARES
COMMON STOCK
[LOGO]
--------------------
PROSPECTUS
--------------------
CREDIT SUISSE FIRST BOSTON
________________ __, 1997
==================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses payable by the Registrant in
connection with the Offering described in this registration statement (other
than underwriting discounts and commissions) will be as follows:
Securities and Exchange Commission registration fee.. $ 24,158.71
NASD filing fee...................................... 8,472.37
New York Stock Exchange listing fee.................. 107,700.00
Printing and engraving expenses ..................... 100,000.00
Accounting fees and expenses......................... 100,000.00
Legal fees and expenses.............................. 200,000.00
Fees and expenses (including legal fees) for
qualifications under state securities laws 5,000.00
Registrar and Transfer Agent's fees and expenses..... 5,000.00
Miscellaneous........................................ 49,668.92
---------------
Total $ 600,000.00
===============
- --------------------
All amounts except the Securities and Exchange Commission registration fee, the
NASD filing fee and the NYSE listing fee are estimated.
ITEM 32. SALES TO SPECIAL PARTIES.
The following table sets forth the persons to whom the Company sold
Common Stock within the last six months at prices varying from the proposed
Offering price. Share amounts and purchase prices have been adjusted for the
two-for-one stock split effected by the Company on July 15, 1997.
<TABLE>
<CAPTION>
DATE PURCHASER PURCHASE PURCHASE PRICE PRICE PER SHARE
---- --------- -------- -------------- ---------------
<S> <C> <C> <C>
05/09/97 Globe Reit Investments, Ltd.......... 522,404 Shares $6,692,000 $12.81
05/21/97 Globe Reit Investments, Ltd.......... 35,034 Shares $450,000 $12.84
06/17/97 Globe Reit Investments, Ltd.......... 38,670 Shares $500,003 $12.93
06/17/97 Gazit (1995), Inc.................... 400,000 Shares $2,050,000 $5.125(1)
06/17/97 Dan Overseas, Ltd.................... 120,000 Shares $615,000 $5.125(1)
06/19/97 Globe Reit Investments, Ltd.......... 23,604 Shares $300,006 $12.71
<FN>
- -------------------------
(1) Represents the exercise of Outstanding Series A Warrants, which warrants
were issued by the Company in early 1993.
</FN>
</TABLE>
II-1
<PAGE>
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.
(A) Set forth below is information relating to certain sales of an
aggregate of 3,098,676 shares of Common Stock within the last three years.
<TABLE>
<CAPTION>
DATE OF SALE PURCHASER SHARES PURCHASED PURCHASE PRICE
------------ --------- ---------------- --------------
<S> <C> <C> <C>
09/29/94 Dan Overseas, Ltd.................... 10,260 Shares $85,000
10/03/94 Gazit Holdings, Inc.................. 255,556 Shares $2,300,000
10/03/94 Dan Overseas, Ltd.................... 138,148 Shares $1,243,332
11/07/94 Globe Reit Investments, Ltd.......... 300,000 Shares $2,775,000
11/25/94 Globe Reit Investments, Ltd.......... 430,000 Shares $4,017,060
12/07/94 Globe Reit Investments, Ltd.......... 266,668 Shares $2,500,000
06/28/95 Globe Reit Investments, Ltd.......... 63,332 Shares $622,505
06/10/96 Chaim Katzman........................ 215,000 Shares(1) $1,128,750
07/05/96 Globe Reit Investments, Ltd.(2)...... 800,000 Shares $11,668,125
05/09/97 Globe Reit Investments, Ltd.(2)...... 522,404 Shares $6,692,000
05/21/97 Globe Reit Investments, Ltd.(2)...... 35,034 Shares $450,000
06/17/97 Globe Reit Investments, Ltd.(2)...... 38,670 Shares $500,003
06/19/97 Globe Reit Investments, Ltd.(2)...... 23,604 Shares $300,000
<FN>
- -------------------------
(1) Represents the exercise of Series A Warrants granted to Mr. Katzman in
the beginning of 1993.
(2) Represents sales pursuant to the investment agreement between the Company
and Globe Reit Investments, Ltd. dated May 21, 1996.
</FN>
</TABLE>
The aforementioned issuances and sales were made in reliance upon the
exemption from registration provisions of the Act afforded by Section 4(2)
thereof, as transactions by an issuer not involving a public offering.
(B) On December 30, 1996, the Company issued an aggregate of 235,500
shares of Common Stock upon the exercise of outstanding Series B Warrants (the
"Series B Warrants"). The Series B Warrants were issued by the Company in June
1994.
PURCHASER SHARES PURCHASED AGGREGATE PURCHASE PRICE
--------- ---------------- ------------------------
Gazit (1995), Inc................. 101,516 Shares $837,507
Dan Overseas, Ltd................. 54,984 Shares $453,618
Globe Reit Investments, Ltd....... 1,240 Shares $10,320
Doron Valero...................... 48,000 Shares $396,000
Chaim Katzman..................... 25,980 Shares $214,417
Saul Rickman...................... 870 Shares $8,002
Martin Klein...................... 2,910 Shares $24,007
The aforementioned issuances and sales were made in reliance upon the
exemption from registration provisions of the Act afforded by Section 4(2)
thereof, as transactions by an issuer not involving a public offering.
II-2
<PAGE>
(C) On December 30, 1996, the Company issued Series C Warrants in
exchange for outstanding Series B Warrants on a pro rata basis. Series C
Warrants to purchase an aggregate of 1,306,124 shares of Common Stock were
issued in connection with this exchange. The Series C Warrants are exercisable
at an exercise price of $8.25 per share, the exercise price of the Series B
Warrants and expire on December 31, 1999. The Series C Warrants were issued as
follows:
STOCKHOLDER SHARES SUBJECT TO WARRANTS
----------- --------------------------
Gazit (1995), Inc................................. 542,136 Shares
Dan Overseas, Ltd................................. 293,430 Shares
M.G.N. (USA) Inc.................................. 398,760 Shares
Chaim Katzman..................................... 62,344 Shares
Saul Rickman...................................... 2,364 Shares
Martin Klein...................................... 7,090 Shares
The aforementioned issuances were made in reliance upon the exemption
from registration provisions of the Act afforded by Section 4(2) thereof, as
transactions by an issuer not involving a public offering.
(D) On June 17, 1997, the Company issued an aggregate of 520,000 shares
of Common Stock upon the exercise of outstanding Series A Warrants. The Series A
Warrants were issued by the Company in the beginning of 1993. The Common Stock
was issued as follows:
STOCKHOLDER SHARES PURCHASED AGGREGATE PURCHASE PRICE
----------- ---------------- ------------------------
Gazit (1995), Inc. 400,000 Shares $2,050,000
Dan Overseas, Ltd. 120,000 Shares $615,000
The aforementioned issuances were made in reliance upon the exemption
from registration provisions of the Act afforded by Section 4(2) thereof, as
transactions by an issuer not involving a public offering.
ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law (the "MGCL") permits a Maryland
corporation to include in its Charter a provision eliminating the liability of
its directors and officers to the corporation and its stockholders for money
damages except for liability resulting from (a) actual receipt of an improper
benefit or profit in money, property or services or (b) active and deliberate
dishonesty established by a final judgment as being material to the cause of
action. The Charter of the Company contains such a provision which limits such
liability to the maximum extent permitted by the MGCL. This provision does not
limit the ability of the Company or its stockholders to obtain other relief,
such as an injunction or rescission.
The Bylaws of the Company obligate it to the maximum extent permitted
by Maryland law to indemnify and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any present or former
director or officer who is made a party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer,
II-3
<PAGE>
partner or trustee of such corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise and who is made a party to the
proceeding by reason of his service in that capacity. The Charter and Bylaws
also permit the Company to indemnify and advance expenses to any person who
served a predecessor of the Company in any of the capacities described above and
to any employee or agent of the Company or a predecessor of the Company.
The MGCL requires a corporation (unless its Charter provides otherwise,
which the Company's Charter does not) to indemnify a director or officer who has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the director or officer actually received an improper personal
benefit in money, property or services or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, under the MGCL, a Maryland corporation may
not indemnify for an adverse judgment in a suit by or in the right of the
corporation. In addition, the MGCL permits a corporation to advance reasonable
expenses to a director or officer upon the Company's receipt of (a) a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the Company and (b) a
written statement by or on his behalf to repay the amount paid or reimbursed by
the Company if it shall ultimately be determined that the standard of conduct
was not met. The termination of any proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or an entry of any order of probation prior
to judgment, creates a rebuttable presumption that the director or officer did
not meet the requisite standard of conduct required for indemnification to be
permitted.
It is the position of the Commission that indemnification of directors
and officers for liabilities arising under the Securities Act is against public
policy and is unenforceable pursuant to Section 14 of the Securities Act.
ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
Not Applicable.
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS SCHEDULES.
(a) Financial Statements.
PRO FORMA (UNAUDITED)
Pro Forma Consolidated Financial Statements
Pro Forma Consolidated Balance Sheet as of June 30, 1997
Pro Forma Consolidated Statement of Operations for the six
months ended June 30, 1997
Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1996
Notes to the Pro Forma Consolidated Financial Statements
II-4
<PAGE>
HISTORICAL:
Unaudited Condensed Consolidated Balance Sheets as of June 30,
1997 (Unaudited) and December 31, 1996
Unaudited Condensed Consolidated Statements of Operations for
the six months ended June 30, 1997 and 1996
Unaudited Condensed Consolidated Statements of Stockholders'
Equity for the six months ended June 30, 1997 and 1996
Unaudited Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 1997 and 1996
Notes to Unaudited Condensed Consolidated Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
WEST LAKE PLAZA SHOPPING CENTER - 1996 ACQUISITION PROPERTY:
Independent Auditor's Report
Statement of Revenues and Certain Expenses for the year ended
December 31, 1996 and the six months ended June 30, 1997
(unaudited)
Notes to Statement of Revenues and Certain Expenses
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1.1 Proposed form of Underwriting Agreement *
3.1 The Company's Charter, as amended *
3.2 The Company's Bylaws, as amended *
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as to the validity of the
Common Stock being registered *
8.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A. as to tax matters *
10.1 Form of Indemnification Agreement.*
10.2 Employment Agreement, dated as of January 1, 1996 by and between the Company and Chaim Katzman.*
10.3 Employment Agreement, dated as of January 1, 1996 by and between the Company and Doron Valero.*
10.4 The Company's 1995 Stock Option Plan, as amended *
10.5 Form of Stock Option Agreement.*
10.6 Registration Rights Agreement, dated as of January 1, 1996 by and among the Company, Chaim Katzman,
Gazit Holdings, Inc., Dan Overseas Ltd., Globe Reit Investments, Ltd., Eli Makavy, Doron Valero and
David Wulkan.*
10.7 Stock Pledge Agreement, dated June 17, 1996, by and between Chaim Katzman and the Company.*
10.8 Promissory Note, in the amount of $1,128,750 from Chaim Katzman, payable to the Company.*
10.9 Stock Pledge Agreement, dated December 30, 1996, by and between Doron Valero and the Company.*
10.10 Promissory Note, in the amount of $396,000 from Doron Valero payable to the Company.*
10.11 Consulting Agreement, dated as of January 1, 1996 by and between the Company and Eli Makavy.*
10.12 Consulting Agreement, dated as of January 1, 1996 by and between the Company and David Voolkan.*
10.13 Investment Agreement, dated May 21, 1996 by and between Globe Reit Investments, Ltd., Dan Overseas,
Ltd., Gazit Holdings, Inc. and the Company.*
10.14 Shareholders Agreement, dated May 21, 1996 by and between Gazit Inc. and Danbar Resources, Ltd.*
10.15 Use Agreement, regarding use of facilities, by and between Gazit (1995), Inc. and the Company, dated
January 1, 1996.
10.16 Pledge Agreement, dated November 9, 1995 among Equity One, (Lake Mary) Inc. and The Mutual Life
Insurance Company of New York.*
10.17 Note Secured by First Real Estate Lien, dated November 9, 1995 in the amount of $13,422,500 from
Equity One (Lake Mary) Inc. in favor of The Mutual Life Insurance Company of New York.
10.18 Purchase and Sale Agreement, dated October 24, 1995 by and between 1740 Ventures, Inc. and Equity
One (Lake Mary), Inc.
10.19 Florida Real Estate Mortgage and Security Agreement, dated November 9, 1995 by and between Equity
One (Lake Mary) Inc. and The Mutual Life Insurance Company of New York.
II-5
<PAGE>
10.20 Agreement for Purchase and Sale, dated June 12, 1997 by and between Equity One (Gamma) Inc. and
Isidoro Lerman, Trustee.
10.21 Contract for Sale and Purchase, dated March 31, 1997 by and among Equity One (Gamma) Inc., Angel
Pena and Hermilio Concepcion.
10.22 Property Management Agreement dated as of January 1, 1996 by and between the Company and Global
Realty & Management, Inc.
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (to be included in its opinion
to be filed as Exhibit 5.1) *
23.2 Consents of Deloitte & Touche LLP
23.3 Consent of Ballard Spahr Andrews & Ingersoll*
24.1 Reference is made to the Signatures section of this Registration Statement for the Power of Attorney
contained therein
27.1 Financial Data Schedule
<FN>
- ------------------------
* To be filed by amendment.
</FN>
</TABLE>
II-6
<PAGE>
(c) Financial Statement Schedules:
Independent Auditors' Report
Schedule III - Real Estate Investments and Accumulated
Depreciation for the year ended December 31, 1996
All other schedules have been omitted either because they are not applicable or
because the required information has been disclosed in the financial statements
and related notes included in the prospectus.
ITEM 37. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registration of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of a registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the registration statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on August 19, 1997.
EQUITY ONE, INC.
By: /s/ CHAIM KATZMAN
------------------------------------------------------------
Chaim Katzman
Chairman of the Board, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Chaim Katzman and Doron Valero,
his true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this registration statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CHAIM KATZMAN Chairman of the Board, President August 19, 1997
- ------------------------------------------- and Chief Executive Officer
Chaim Katzman (principal executive officer)
/s/ DAVID BOOKMAN Vice President, Chief Financial August 19, 1997
- ------------------------------------------- Officer and Treasurer
David Bookman (principal accounting officer)
/s/ DORON VALERO Executive Vice President, Chief August 19, 1997
- ------------------------------------------- Operating Officer and Director
Doron Valero
Director August , 1997
- -------------------------------------------
Noam Ben Ozer
/s/ ELI MAKAVY Director August 19, 1997
- -------------------------------------------
Eli Makavy
/s/ DR. SHAIY PILPEL Director August 11, 1997
- -------------------------------------------
Dr. Shaiy Pilpel
/s/ DR. SHULAMIT ROZEN-KATZMAN Director August 19, 1997
- -------------------------------------------
Dr. Shulamit Rozen-Katzman
/s/ DAVID WULKAN Director August 19, 1997
- -------------------------------------------
David Wulkan
Director August , 1997
- -------------------------------------------
Yuval Yanai
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<S> <C>
10.15 Use Agreement, regarding use of facilities, by and between Gazit (1995), Inc. and the Company, dated
January 1, 1996.
10.17 Note Secured by First Real Estate Lien, dated November 9, 1995 in the amount of $13,422,500 from
Equity One (Lake Mary) Inc. in favor of The Mutual Life Insurance Company of New York.
10.18 Purchase and Sale Agreement, dated October 24, 1995 by and between 1740 Ventures, Inc. and Equity
One (Lake Mary), Inc.
10.19 Florida Real Estate Mortgage and Security Agreement, dated November 9, 1995 by and between Equity
One (Lake Mary) Inc. and The Mutual Life Insurance Company of New York.
10.20 Agreement for Purchase and Sale, dated June 12, 1997 by and between Equity One (Gamma) Inc. and
Isidoro Lerman, Trustee.
10.21 Contract for Sale and Purchase, dated March 31, 1997 by and among Equity One (Gamma) Inc., Angel
Pena and Hermilio Concepcion.
10.22 Property Management Agreement dated as of January 1, 1996 by and between the Company and Global Realty
& Management, Inc.
23.2 Consents of Deloitte & Touche LLP
</TABLE>
EXHIBIT 10.15
AGREEMENT
THIS AGREEMENT is made as of this 1st day of January, 1996, by GAZIT
U.S.A., INC. ("Gazit") and EQUITY ONE, INC. ("Equity One").
W I T N E S S E T H :
WHEREAS, Equity One has agreed to permit Chaim Katzman, or any of
Gazit's employees, to use Equity One's facilities, equipment, supplies and
personnel to conduct Gazit's and Katzman's business affairs, particularly as
they may relate to Gazit; and
WHEREAS, Gazit has agreed to reimburse Equity One for Gazit's and
Katzman's use of Equity One's facilities and personnel.
NOW, THEREFORE, in consideration of the foregoing recitals, which the
parties hereto acknowledge and agree are true and correct, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Commencing on January 1, 1996, and on the first day of every
calendar quarter thereafter, Gazit hereby agrees to pay to Equity One the sum of
$2,500.00 for Gazit's and Katzman's use of Equity One's facilities, equipment
(including fax machines, telephones, and long distance tolls), supplies and
personnel for the conduct of Gazit's business affairs not related to Equity One.
2. Gazit's permitted use provided herein and Equity One's obligation
herein may terminate upon the termination of the Employment Agreement between
Katzman and Equity One, regardless of the basis for termination, and upon not
less than 30 days' prior written notice by Equity One to Gazit.
3. Any party may, at its discretion, waive in writing any or all of the
conditions herein contained to which its obligations hereunder are subject,
provided that neither failure nor delay on the part of a party to exercise any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any singular or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
4. If any provision of this Agreement should be determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable, then that
determination shall not affect or impair the validity, legality, or
enforceability of any of the remaining
<PAGE>
provisions contained herein.
5. If any legal proceeding is brought by a party to this Agreement to
enforce its provisions, or to seek remedy for any breach hereof, then the
prevailing party shall be entitled to receive its reasonable attorneys' fees and
disbursements incurred in connection with such legal proceeding, including fees
and expenses incurred in any appellate proceedings, from the non-prevailing
party.
6. Time is of the essence with respect to the terms and provisions of
this Agreement.
7. This Agreement shall be governed in accordance with the laws of the
State of Florida and venue for any claim hereunder shall be in any court of
competent jurisdiction sitting in Dade County, Florida.
8. Gazit may assign its rights, duties and obligations to and other of
its affiliates, upon written notice to Equity One.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above written.
EQUITY ONE, INC.
By: /s/ CHAIM KATMAN
-------------------------
Name: Chaim Katzman
----------------------
Title:
----------------------
GAZIT U.S.A., INC.
By: /s/ CHAIM KATMAN
-------------------------
Name: Chaim Katzman
----------------------
Title:
----------------------
/s/ CHAIM KATZMAN
--------------------------
CHAIM KATZMAN
EXHIBIT 10.16
PLEDGE AGREEMENT
AGREEMENT made this 9th day of November, 1995 between and among EQUITY
ONE (LAKE MARY) INC., a Florida corporation, having its principal office at 777
- - 17th Street PENTHOUSE, Miami Beach, Florida 33139 (the "Borrower") and THE
MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a New York corporation, having its
principal office at 1740 Broadway, New York, New York 10019 (the "Lender").
W I T N E S S E T H:
WHEREAS, in connection with the sale of that certain real property
located in Seminole County, Florida commonly known as Lake Mary Centre (the
"Property") from 1740 Ventures, Inc. (the "Seller"), a subsidiary of Lender to
the Borrower, Lender has agreed to provide a first mortgage loan in the amount
of $13,422,500.00 (the "Loan"); and
WHEREAS, in connection with the sale of the Property and as a
condition of the making of the Loan, Borrower has agreed to pledge to the Lender
an irrevocable letter of credit in the amount of One Million Five Hundred
Thousand and no/100 ($1,500,000.00) Dollars the proceeds of which shall be
pledged as additional security for Borrower's obligation to: (i) perform certain
tenant improvement work for the space currently occupied by General Cinema (the
"Tenant Improvement Pledge"); and (ii) perform capital improvements to the
Phase IV land (the "Capital Improvement Pledge") the legal description for the
Phase IV land is attached hereto on EXHIBIT A; and
WHEREAS, Borrower and Lender desire to set forth their understanding
with respect to the terms and conditions pursuant to which the letter of credit
may be released either in whole or in part.
NOW, THEREFORE, in consideration of the Lender granting to the Borrower
the Loan secured by the aforesaid Property and for other good and valuable
consideration, the Lender and the Borrower agree as follows:
1. Borrower has this date provided Lender with an unconditional
irrevocable letter of credit (the "Letter of Credit") in the
amount of One Million Five Hundred Thousand and No/100
($1,500,000.00) Dollars issued by THE CHASE MANHATTAN BANK,
N.A. in favor of the Lender and having an initial expiration
date no sooner than December 1, 1996. A copy of the Letter of
Credit is attached hereto as EXHIBIT B. The Letter of Credit
shall be pledged for a term of seven (7) years beginning as of
the date set forth above and shall be automatically renewed
annually. All expenses incurred relating to the issuance and
maintenance of the Letter of Credit shall be paid by the
Borrower. At all times during the term of this pledge, the
Letter of Credit must be in form and content and issued by a
bank whose senior debt
<PAGE>
is rated either A- by Standard & Poors (S&P) or A3 by Moody's
and which bank is acceptable to Lender. The Letter of Credit
must not require any documentation to be drawn upon and must
contain an explicit waiver by the issuing bank of any
statutory, UCP or other rights to delay or defer payment upon
demand, including but not limited to, a waiver of such rights
as are set forth in Article 5, Section 5-112(1)(a) and (b) of
the Uniform Commercial Code and Article 15-c of the Uniform
Customs Publication Number 400.
2. From the proceeds of the Letter of Credit the sum of Five
Hundred Thousand and No/100 ($500,000.00) shall be allocated
to the Tenant Improvement Pledge. The term of the Tenant
Improvement Pledge shall be for seven (7) years from the date
hereof. Proceeds will be used for the purpose of performing
tenant improvement work within the General Cinema Space which
work may include improvements to the sound system; visual
system; seating; the concession area; the exterior; the
facade; the marquee; and interior cosmetics. Lender
acknowledges that General Cinema may seek rental concessions
of up to One Hundred Thousand and No/100 ($100,000.00) Dollars
annually over the term of the existing General Cinema lease
which concessions are approved by Lender provided that the
proceeds of the Letter of Credit allocated to the Tenant
Improvement Pledge are used in accordance with this Agreement
to perform the tenant improvement work described above in the
space currently occupied by General Cinema. Borrower hereby
agrees to keep Lender apprised of its negotiations with
General Cinema which communications shall be directed to Mr.
John Beeland; ARES Realty Capital, Inc., 5775-E Glenridge
Drive, Suite 100, Atlanta, Georgia 30328, Telephone: (404)
256-5775. The proceeds allocated to the Tenant Improvement
Pledge will be made available to the Borrower provided that:
(i) the improvements to the General Cinema space are
approved by Lender in its reasonable discretion and
further provided that the Loan is not in default
beyond any applicable notice and cure period;
(ii) the Lender will authorize release of the proceeds
from the Letter of Credit provided that it
simultaneously receives a substitute letter of credit
that meets the requirements set forth in paragraph 1
above in a reduced amount taking into account the
amount approved by the Lender for release;
(iii) disbursements may be made in one lump sum after the
work has been completed or in increments, as work
progresses, but if in increments the letter of credit
shall be reduced in amounts of not less than
$25,000.00 and not more than once per month;
2
<PAGE>
(iv) prior to the reduction or release of the Letter of
Credit, Borrower shall provide Lender with
appropriate lien waivers; title date down endorsement
and such other documentation as Lender may request to
evidence that no mechanics and/or materialmens liens
have been filed against the Property and that the
work has been performed in a good and workmanlike
manner; and
(v) if such proceeds allocated to the Tenant Improvement
Pledge from the Letter of Credit have not reduced to
a zero balance at the end of such seven (7) year
period, the Lender shall have the right without
notice to Borrower to draw on the Letter of Credit
and deliver the proceeds thereof to the Seller as an
addition to the "Base Purchase Price" (as defined in
that certain Purchase and Sale Agreement dated
October 24, 1995) it being acknowledged by the
Borrower that said sum is an inducement for the
Seller to sell the Property and to agree to this
Tenant Improvement Pledge and said sum if paid to
Seller shall not be deemed a penalty.
3. From the proceeds of the Letter of Credit the sum of one
million and no/100 ($1,000,000.00) dollars will be allocated
to the Capital Improvement Pledge. Proceeds shall be utilized
for development costs to the Phase IV land which costs may
include: soft costs; construction costs; and tenant
improvement work to the Phase IV land (hereinafter the
"Capital Improvements"). The term of the Capital Improvement
Pledge shall be for five (5) years from the date hereof.
Proceeds from the Letter of Credit will be made available to
Borrower or on behalf of Borrower for Capital Improvements on
the Phase IV land provided that:
(i) such improvements are approved by Lender in its
reasonable discretion and the Loan is not in default
beyond any notice and cure period;
(ii) Lender will authorize release of the proceeds from
the Letter of Credit provided that it simultaneously
receives a substitute Letter of Credit that meets the
requirements set forth in paragraph 1 above in a
reduced amount taking into account the amount
approved by the Lender for release;
(iii) disbursements may be made in whole or in part but if
in part, in increments of not less than $25,000.00
per month and not more than once per month;
(iv) prior to reduction of the Letter of Credit, Borrower
shall provide Lender with appropriate lien waivers,
title date down and such other documentation as
Lender may request to evidence that no mechanics
3
<PAGE>
liens have been filed against the Property and that
the work has been performed in a good and
workmanlike manner; and
(v) if the Capital Improvement Pledge has not been
reduced to a zero balance at the end of such five
(5) year period, or if the Loan is in default at any
time beyond the applicable notice and cure period,
the Lender shall have the right without notice to
Borrower to draw upon the Letter of Credit and to
apply the proceeds of the Capital Improvement Pledge
to reduction of the principal balance of the Loan
which reduction shall be made without payment of any
prepayment premium.
4. In connection with the disbursal of proceeds from the Letter
of Credit, Borrower shall submit supporting documentation
together with its request for disbursal so as to allow ten
(10) business days for the processing of such request. Lender
shall have the right to approve in its reasonable discretion
all work performed in connection with the Tenant Improvement
Pledge and the Capital Improvement Pledge. In the event Lender
determines, in its sole judgment, to make an inspection of
such work, the Borrower shall pay a fee for such inspection to
ARES, Inc., in the amount that is reasonable and customarily
charged by engineers and architects in the area where the
Property is located. In the alternative, Lender may designate
a local engineer or architect acceptable to Lender, to make
such inspections, in which case all reasonable fees, costs and
expenses of such engineer or architect shall be paid for by
the Borrower. No proceeds from the Letter of Credit shall be
released until all funds required to be paid hereunder have
been paid in full.
5. Prior to final disbursal of proceeds from the Tenant
Improvement Pledge and the Capital Improvement Pledge, Lender
shall be provided with tenant estoppel statements current as
of the date of the requested disbursal which certify that the
respective lease(s) for the tenant occupying the General
Cinema Space or the tenant(s) occupying the Phase IV land are
in full force and effect on the terms specified in such lease
and that all requirements to be performed on the Borrower's
part as landlord have been duly performed.
6. This Agreement cannot be orally modified, discharged, or
terminated.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be signed as of the day and year first written above.
(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
4
<PAGE>
AS TO BORROWER:
EQUITY ONE (LAKE MARY) INC.,
WITNESS: a Florida corporation
/s/ ALAN MARCUS By: /s/ DORON VALERO
------------------------------------- -------------------------------
Doron Valero
Print Name: Alan Marcus Vice President
-------------------------
/s/ CATHY P. HUME
-------------------------------------
Print Name: Cathy P. Hume
-------------------------
AS TO LENDER:
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK,
WITNESS: a New York corporation
/s/ GAIL B. MCKNIGHT By: /s/ BRUCE C. FERNALD
------------------------------------- ------------------------------
Bruce Fernald
Print Name: Gail B. McKnight Vice President-Real Estate
-------------------------
/s/ E.S. MCCLAY
-------------------------------------
Print Name: E.S. McClay
-------------------------
5
<PAGE>
EXHIBIT A
PHASE IV
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet to the
POINT OF BEGINNING; thence continue along said Easterly line of a 10 foot wide
additional Right of Way the following two (2) courses and distances: North 00
degrees 10 minutes 40 seconds East, 64.18 feet to the point of curvature of a
curve, concave Easterly, having a radius of 894.93 feet; thence run 376.02 feet
along the arc of said curve, thru a central angle of 24 degrees 04 minutes 26
seconds to a point; thence departing said Right of Way and from a tangent
bearing of South 24 degrees 15 minutes 06 seconds West, run South 76 degrees 18
minutes 30 seconds East, 33.26 feet to a point of curvature of a curve, concave
Northerly, having a radius of 266.00 feet; thence run 185.70 feet along the arc
of said curve, thru a central angle of 40 degrees 00 minutes 00 seconds to the
point of tangency thereof; thence North 63 degrees 41 minutes 30 seconds East,
47.86 feet; thence North 77 degrees 51 minutes 57 seconds East, 81.08 feet;
thence South 89 degrees 36 minutes 38 seconds East, 110.77 feet; thence South 00
degrees 23 minutes 22 seconds west, 270.38 feet; thence South 89 degrees so
minutes 52 seconds East, 35.00 feet; thence South 00 degrees 23 minutes 22
seconds West, 126.52 feet; thence North 89 degrees 32 minutes 23 seconds West,
5.31 feet; thence South 00 degrees 27 minutes 37 seconds West, 124.84 feet;
thence North 89 degrees 50 minutes 52 seconds West, 404.53 feet to the point of
curvature of a curve, concave northerly, having a radius of 150.00 feet and a
central angle of 27 degrees 32 minutes 22 seconds; thence run 72.10 feet along
the arc of said curve to a point of reverse curvature of a curve, having a
radius of 150.00 feet and a central angle of 21 degrees 46 minutes 55 seconds;
thence run 57.03 feet along the arc of said curve to a point of reverse
curvature of a curve, having a radius of 50.00 feet and a central angle of 28
degrees 35 minutes 14 seconds; thence run 24.95 feet along the arc of said curve
to the POINT OF BEGINNING.
AND .
Area between Phase 2 and Phase 4:
Continued
<PAGE>
LEGAL DESCRIPTION CONTINUED
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along 6aid
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet; thence
continue along said Easterly line of a 10 foot wide additional Right of Way the
following two (2) courses and distances: North 0 degrees 10 minutes 40 seconds
East 64.18 feet to the point of curvature of a curve, concave Easterly, having a
radius of 894.93 feet; thence run 376.02 feet along the arc of said curve, thru
a central angle of 24 degrees 04 minutes 26 seconds to a point; thence departing
said Right of Way and from a tangent bearing of South 24 degrees 15 minutes 06
seconds West, run South 76 degrees 18 minutes 30 seconds East, 33.26 feet to the
point of curvature of a curve, concave Northerly, having a radius of 266.00
feet; thence run 185.70 feet along the arc of said curve, thru a central angle
of 40 degrees 00 minutes 00 seconds to the point of tangency thereof, thence
North 63 degrees 41 minutes 30 seconds East, 47.86 feet; thence North 77 degrees
51 minutes S7 seconds East, 81.08 feet; thence South 89 degrees 36 minutes 38
seconds East, 110.77 feet; thence South 00 degrees 23 minutes 22 seconds West,
270.38 feet; thence South 89 degrees 50 minutes 52 seconds East, 35.00 feet;
thence South 00 degrees 23 minutes 22 seconds West, 126.52 feet for the POINT OF
BEGINNING; thence continue South 00 degrees 23 minutes 22 seconds West, 124.81
feet; thence North 89 degrees 50 minutes 52 seconds West, 5.47 feet; thence
North 00 degrees 27 minutes 37 seconds East, 124.84 feet; thence South 89
degrees 32 minutes 23 seconds East, 5.31 feet to the POINT OF BEGINNING.
ALSO BEING DESCRIBED AS FOLLOWS:
PHASE IV (Including area between Phase 2 and Phase 4)
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
west, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road, formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet to the
POINT OF BEGINNING; thence continue along said Easterly line of a 10 foot wide
additional Right of Way the following two (2) courses and distances; North 00
degrees 10 minutes 40 seconds East,
Continued
<PAGE>
LEGAL DESCRIPTION CONTINUED
64.18 feet to the point of curvature of a curve, concave Easterly, having a
radius of 894.93 feet; thence run 376.02 feet along the arc of said curve, thru
a central angle of 24 degrees 04 minutes 26 seconds to a point; thence departing
said Right of Way and from a tangent bearing of South 24 degrees 15 minutes 06
seconds West, run South 76 degrees 18 minutes 30 second6 East, 33.26 feet to a
point of curvature of a curve, concave Northerly, having a radius of 266.00
feet; thence run 185.70 feet along the arc of said curve, thru a central angle
of 40 degrees 00 minutes 00 seconds to the point of tangency thereof; thence
North 63 degrees 41 minutes 30 seconds East, 47.86 feet; thence North 77 degrees
51 minutes 57 6econds East, 81.08 feet; thence South 89 degrees 36 minutes 38
seconds East, 110.77 feet; thence South 00 degrees 23 minutes 22 seconds West,
270.38 feet; thence South 89 degrees 50 minutes 52 seconds East, 35.00 feet;
thence South 00 degrees 23 minutes 22 seconds West 251.33 feet; thence North 89
degrees 50 minutes 52 seconds West, 410.00 feet to the point of curvature of a
curve, concave Northerly, having a radius of 150.00 feet and a central angle of
27 degrees 32 minutes 22 seconds; thence run 72.10 feet along the arc of said
curve to a point of reverse curvature of a curve, having a radius of 150.00 feet
and a central angle of 21 degrees 46 minutes 55 seconds; thence run S7.03 feet
along the arc of said curve to a point of reverse curvature of a curve, having a
radius of 50.00 feet and a central angle of 28 degrees 35 minutes 14 seconds;
thence run 24.95 feet along the arc of said curve to the POINT OF BEGINNING.
<PAGE>
NORTH AMERICAN TRADE OPERATIONS
4 Chase Metrotech Center - 8th Floor
Brooklyn, NY 11245
PAGE 1 PN080577
EXHIBIT B
CONFIRMED IRREVOCABLE STRAIGHT CREDIT NO.PN080577
NOVEMBER 8 1995
BENEFICIARY:
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK (BENEFICIARY)
1740 BROADWAY
NEW YORK, NEW YORK 10019
C/O ARES REALTY CAPITAL, INC.
5775-E GLENRIDGE DRIVE, SUITE 100
ATTN: SENIOR VICE PRESIDENT, ARES REALTY CAPITAL
GENTLEMEN:
WE ARE INSTRUCTED BY:
UNITED MIZRAHI BANK LTD
TEL AVIV, ISRAEL
TO ADVISE YOU THAT THEY HAVE OPENED THEIR IRREVOCABLE LETTER OF CREDIT IN YOUR
FAVOR FOR THE ACCOUNT OF:
UNITED MIZRAHI BANK LTD.,
ACTING ONE BEHALF OF
EQUITY ONE INC. (BORROWER)
UNDER THEIR CREDIT NUMBER G/1069
FOR A SUM NOT EXCEEDING A TOTAL OF ONE MILLION FIVE HUNDRED THOUSAND U.S.
DOLLARS AND NO CENTS ($1,500,000.00)
AVAILABLE BY YOUR DRAFTS AT SIGHT DRAWN ON THE CHASE MANHATTAN BANK, N.A., 4
CHASE METROTECH CENTER, 8TH FLOOR, BROOKLYN, NEW YORK 11245.
ALL DRAFTS DRAWN HEREUNDER MUST BE MARKED: "DRAWN UNDER UNITED MIZRAHI BANK LTD.
IRREVOCABLE LETTER OF CREDIT NO. G/1069 AND THE CHASE MANHATTAN BANK, N.A.
CONFORMATION NUMBER PN080577". PLEASE MENTION THESE NUMBERS IN ALL
CORRESPONDENCE. ALL DRAFTS DRAWN MUST BE ENDORSED ON THE REVERSE HEREOF FOR THE
AMOUNTS PAID UNDER THIS LETTER OF CREDIT.
THE ABOVE MENTIONED CORRESPONDENT ENGAGES WITH YOU THAT ALL DRAWINGS DRAWN UNDER
AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL DULY HONORED ON DELIVERY OF
DOCUMENTS AS SPECIFIED IF PRESENTED AT
<PAGE>
NORTH AMERICAN TRADE OPERATIONS
4 Chase Metrotech Center - 8th Floor
Brooklyn, NY 11245
PAGE 2 PN080577
THIS OFFICE 4 CHASE METROTECH CENTER, BROOKLYN, NEW YORK 11245 ATTN: STANDBY
LETTER OF CREDIT DEPT-8TH FLOOR BEFORE THE CLOSE OF BUSINESS ON NOVEMBER 30,
1996.
THE ISSUING BANK HEREBY AGREES WITH THE DRAWERS, ENDORSERS, AND BONA FIDE
HOLDERS OF ALL DRAFT(S) DRAWN ON AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT
THAT SUCH DRAFT WILL BE DULY HONORED UPON PRESENTATION TO THE DRAWEE AND THAT
ANY STATUTORY, UCP, OR OTHER RIGHTS TO DELAY HONOR OF SIGHT DRAFT(S) INCLUDING
SUCH RIGHTS UNDER ARTICLE 5, SECTION 5112 (I)(A) AND (B) OF THE UNIFORM
COMMERCIAL CODE, ARE HEREBY SPECIFICALLY WAIVED.
THE ISSUING BANK FURTHER AGREES, UPON THE PRESENTATION OF SUCH DRAFT TO THE
DRAWEE, TO HONOR SUCH DRAFT THE SAME DAY IF DOCUMENTS ARE RECEIVED BY THE DRAWEE
BY 12:00 NOON ON THAT BUSINESS DAY. IF DOCUMENT ARE RECEIVED BY THE DRAWEE AFTER
12:00 NOON PAYMENT WILL BE MADE ON THE NEXT BUSINESS DAY. THE AMOUNT OF THE
DRAFT MAY BE PAID, BY OFFICIAL BANK OR CASHIER'S CHECK, TO THE MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK ("MONY") OR, AT MONY'S SOLE OPTION BY WIRING
FEDERAL FUNDS IN THE AMOUNT OF THE DRAFT INTO SUCH ACCOUNT(S) AS MONY MAY
SPECIFICALLY DIRECT, IN WRITING.
ALL NOTICES AND OTHER WRITING DIRECTED TO THE MUTUAL LIFE INSUANCE COMPANY OF
NEW YORK SHALL BE SENT TO ARES REALTY CAPITAL, INC. 5775-E GLENRIDGE DRIVE,
SUITE 100/ATLANTA, GEORGIA 30328, ATTN: SENIOR VICE PRESIDENT, ARES REALTY
CAPITAL WITH A COPY TO THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK. THE
UNDERTAKING OF THE ISSUING BANK WILL REMAIN IN FORCE AT ALL TIMES FOR A PERIOD
OF 15 (FIFTEEN) DAYS BEYOND THE EXPIRY DATE OF THEIR LETTER OF CREDIT NO. 6/1069
IN FAVOR OF THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK AND ANY EVENTUAL
EXTENSION(S) THEREON. IT IS THE PREROGATIVE OF THE CHASE MANHATTAN BANK, N.A. TO
WITHHOLD THE GRANTING OF ITS CONFIRMATION TO SUCH EVENTUAL EXTENSIONS THAT MAY
BE ISSUED BY UNITED MIZRAHI BANK LTD. IN FUTURE.
WE CONFIRM THIS CREDIT AND THEREBY UNDERTAKE THAT ALL DRAFTS DRAWN UNDER AND IN
COMPLIANCE WITH THE TERMS SPECIFIED SHALL BE DULY HONORED BY US.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500.
VERY TRULY YOURS,
/s/ ILLEGIBLE
---------------------------------
AUTHORIZED SIGNATURE
PLEASE PRESENT ORIGINAL LETTER OF CREDIT AND RELEVANT AMENDMENTS AT THE TIME OF
PRESENTATION OF DOCUMENTS.
<PAGE>
NORTH AMERICAN TRADE OPERATIONS
4 Chase Metrotech Center - 8th Floor
Brooklyn, NY 11245
PAGE 3 PN080577
THE CHASE MANHATTAN BANK, N.A.
4 CHASE METROTECH CENTER
BROOKLYN, NEW YORK 11245
ATTN: STANDBY LETTER OF CREDIT DEPT-8TH FLOOR
TELEPHONE: (718) 242-4437
******************************************************************************
TO ASSIST US IN EXPEDITING YOUR TRANSACTIONS, PLEASE PROVIDE THE
CHASE LETTER OF CREDIT REFERENCE NUMBER AND DEPARTMENT'S NAME ON
THE OUTSIDE OF ENVELOPES/COURIER RECEIPT LABEL WHEN FORWARDING
DOCUMENTS.
******************************************************************************
"This is an exact copy which we issued/advised today in accordance with your
instruction(s). Prompt notice to us is required if you do not agree that our
action was in accordance with your instruction(s)."
EXHIBIT 10.17
NOTE SECURED BY
FIRST REAL ESTATE LIEN
$13,422,500.00 Tampa, Florida
November 9, 1995
FOR VALUE RECEIVED, the undersigned, EQUITY ONE (LAKE MARY) INC., a
Florida corporation, (hereinafter the "Maker" or "Borrower") promises to pay,
without grace, to the order of THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a
New York corporation, (hereinafter called "Holder"), at the office of Holder at
1740 Broadway, New York, New York 10019, or such other place or places as the
Holder hereof from time to time may designate in writing, the principal sum of
THIRTEEN MILLION FOUR HUNDRED TWENTY-TWO THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($13,422,500.00), lawful money of the United States, with interest in
like lawful money, from the date hereof, at the rate of seven and eighty-five
hundredths (7.85%) percent per annum, on the unpaid balance, payable in monthly
installments of ONE HUNDRED ELEVEN THOUSAND TWENTY-ONE AND 39/100 DOLLARS
($111,021.39) each, applied first to interest, with the balance to principal
(twenty-year schedule [.0993 constant]), one such payment to become due and
payable on the first day of each month hereafter ensuing, commencing January 1,
1996, and continuing until December 1, 2010. The entire remaining principal
balance, together with all accrued but unpaid interest and any other sums
advanced by Holder, if any, shall be due and payable, in full, on December 1,
2010. A partial payment of interest only, from the date of this Note, at the
annual rate of seven and eighty-five hundredths (7.85%) percent through November
30, 1995, shall be paid on December 1, 1995.
The undersigned expressly intends simultaneously with the execution of
this Note Secured by First Real Estate Lien to execute a Florida Real Estate
Mortgage and Security Agreement; an Assignment of Lessor's Interest in Leases;
Uniform Commercial Code Financing Statements; and such other loan documents as
may be required by Holder, said documents (being collectively referred to as the
"Loan Documents") being intended to evidence and secure the indebtedness
hereunder. Upon the execution of all of said Loan Documents, all payments of
interest, of principal but not limited to all sums due and payable hereunder,
shall be paid in accordance with the provisions of said Loan Documents in the
stated principal sum of $13,422,500.00.
DOCUMENTARY STAMPS AND INTANGIBLE TAXES HAVE BEEN PAID IN ACCORDANCE WITH
FLORIDA LAW AND AFFIXED TO THE MORTGAGE SECURING THIS NOTE.
<PAGE>
This Note may not be prepaid in whole or in part, except as herein
expressly provided. Notwithstanding the foregoing, payment of this Note
following a declaration of maturity based upon default in the payment of
principal and/or any interest and/or based upon a default in the due observance
of performance of any covenant, agreement, or condition contained herein or in
the Loan Documents securing this Note shall be deemed a prepayment. Any such
prepayment, to the extent permitted by law, shall require payment in addition to
the "Loan Balance" (as defined below) of a prepayment premium calculated
pursuant to the prepayment formula set forth in (1) and (2) below. Commencing on
or after January 1, 1996, but subject to the remaining provisions of this Note,
Maker may prepay the Loan Balance in full but not in part on any regularly
scheduled payment date upon at least thirty (30) days' prior written notice to
Holder (the "Prepayment Notice") and upon payment of a prepayment premium (the
"Premium") equal to the greater of:
(1) An amount calculated as of a date (the "Calculation Date") ten
(10) business days prior to the scheduled date of prepayment (the
"Prepayment Date") equal to the sum of the present values, each
as discounted at the "Monthly Discount Rate" (as defined below)
of the "Monthly Income Loss" (as defined below) for each month
between the Prepayment Date and the scheduled maturity date (the
"Maturity Date" for the purposes hereof is December 1, 2010); or
(2) One (1.00%) percent of the outstanding Loan Balance.
In the event Maker prepays the Loan Balance during the last four
(4) months prior to the Maturity Date, no Premium will be due and
payable.
The following definitions shall apply to the above:
The "Monthly Income Loss" for each month between the Prepayment
Date and the scheduled Maturity Date of this Note shall be an
amount equal to:
(a) The product of:
(i) the difference (provided the difference shall in no event be
less than zero) obtained by subtracting from seven and
eighty five hundredths (7.85%) percent the "Discount Rate"
(as defined below); times
(ii) the unpaid principal amount;
DIVIDED BY
(b) Twelve (12)
The "Monthly Discount Rate" shall be equal to the Discount Rate
(as defined below) divided by 12.
2
<PAGE>
The "Discount Rate" shall be equal to the current yield rate on
the U.S. Treasury note maturing closest in time to the Maturity
Date of this Note as such yield is reported in The Wall Street
Journal or similar publication on the Calculation Date. (Should
more than one (1) U.S. Treasury note be so reported as maturing
closest in time to the scheduled maturity date of this Note, then
the note having the current yield rate which differs least from
seven and eighty five hundredths (7.85%) percent shall be used in
the calculations). For the purposes hereof the "Loan Balance"
shall mean the entire principal amount, any unpaid interest and
all other sums then due under this Note, the Mortgage and any
other sum due under any other document securing this Note.
Any notice of prepayment given hereunder may not be withdrawn within
fifteen (15) days prior to the Prepayment Date without Holder's consent in its
sole discretion. No more than one (1) Prepayment Notice may be given within any
thirty (30)-day period. Holder shall not be obligated to actually reinvest the
amount prepaid in any such U. S. Treasury Note as a condition precedent to
receiving the prepayment premium as calculated hereinabove.
The above-described Premiums are to be interpreted in the manner that
will render them fully enforceable. It is the intent of the parties hereto that
said prepayment provisions are to be interpreted so that they are fully
enforceable. Any portion of any of the said prepayment premium provisions which
are deemed unlawful or unenforceable by a court of competent jurisdiction shall
be deemed stricken or otherwise changed, so as to cause the prepayment premium
provisions, as revised, to be enforceable to the fullest extent permitted by
law.
If default be made in the payment of any principal and/or interest
herein provided for, or of any installment of interest when due, or any other
sums payable pursuant to the terms of this Note or the Loan Documents when due,
or subject to the applicable notice and cure periods provided in the Mortgage,
if any, and if default be made in the performance of any covenant or agreement,
whether concerned with the payment of money or otherwise, contained in the Loan
Documents securing this Note at the time when performance is required by such
Loan Documents which remains uncured beyond the applicable notice and cure
period, if any, then or at any time thereafter at the option of the Holder of
this Note, the whole of the principal sum then remaining unpaid hereunder
together with all interest accrued thereon, and all other sums owing hereunder
or under the Loan Documents securing this Note, shall immediately become due and
payable without further notice, and the lien given to secure the payment of this
Note may be foreclosed. From and after the maturity of this Note either
according to its terms or as the result of a declaration of maturity made by the
Holder hereof, or from and after the due date for payment of any interest or
principal and/or from and after the due date for the performance of such
covenants or conditions set forth herein or any other Loan Documents,
irrespective of any declaration of maturity, the entire principal remaining
unpaid hereunder and all accrued but
3
<PAGE>
unpaid interest shall, at the option of the Holder of this Note, bear an
augmented annual interest rate ("Augmented Rate") equal to fifteen percent (15%)
per annum or the highest lawful rate, whichever is the lesser, provided that to
the extent permitted by law there shall be no automatic reduction to the highest
lawful rate as to any maker hereof barred by law from availing itself in any
action or proceeding of the defense of usury, or any maker barred or exempted
from the operation of any law limiting the amount of interest that may be paid
for the loan or use of money, or in the event this transaction, because of its
amount or purpose or for any reason, is exempt from the operation of any statute
limiting the amount of interest that may be paid for the loan or use of money.
Failure to exercise such option, or any other rights the Holder may in the event
of any such default be entitled to, shall not constitute a waiver of the right
to exercise such option or any other rights in the event of any subsequent
default, whether of the same or different nature.
This Note is secured by a Florida Real Estate Mortgage and Security
Agreement executed by EQUITY ONE (LAKE MARY) INC. dated November 9, 1995, in
favor of the Holder hereof therein encumbering property located in the County of
Seminole, State of Florida, to be recorded in the Public Records of Seminole
County, Florida.
If this Note is placed in the hands of any attorney for collection or
is collected through any legal proceeding, the undersigned promises to pay (in
addition to costs and disbursements otherwise allowed), to the extent permitted
by law, a reasonable attorney's fee including fees incurred for appellate
procedures.
In the event the interest provisions hereof or any exactions provided
for herein or in the Loan Documents securing this Note or any other document
related to the loan this Note evidences or any other instrument(s) securing this
Note shall result for any reason at any time during the life of the loan in an
effective rate of interest which transcends the limits of the usury or any other
law applicable to the loan evidenced hereby, all sums in excess of the amount
permitted by applicable law, shall be applied to the extent permitted by law
upon principal immediately upon receipt of such monies by the Holder hereof,
with the same force and effect as though the Maker had specifically designated
such extra sums to be so applied to principal and the Holder hereof had agreed
to accept such extra payment(s) as a premium-free payment. In no event shall any
agreed to or actual exaction as consideration for this loan transcend the limits
imposed or provided by the law applicable to this transaction or the makers
hereof in the jurisdiction in which the land is located for the use or detention
of money or for forbearance in seeking its collection.
The undersigned and all endorsers, guarantors, if any, and all persons
liable or to become liable on this Note waive presentment, protest and demand,
notice of protest, demand and dishonor and nonpayment of this Note, and consent
to any and all renewals and extensions in the time of payment hereof, and agree,
further, that at any time and from time to time without notice, the terms of
payment herein may be modified or the security described in the Loan Documents
released in whole or in part, or increased, changed or exchanged by agreement
between the Holder hereof and any owner of the premises affected
4
<PAGE>
by the Loan Documents, without in anywise affecting the liability of any party
to this instrument or any person liable or to become liable with respect to any
indebtedness evidenced hereby. The right to plead any and all statutes of
limitations as a defense to any demand on this Note, or any guaranty hereof, or
any agreement to pay the same, or any demand secured by the Loan Documents, or
any and all obligations or liabilities arising out of or in connection with this
Note or in the Loan Documents is expressly waived by each and every of the
undersigned, endorsers and guarantors to the fullest extent permitted by law.
The liability of Maker for payment of the indebtedness evidenced by
this Note, and Holder's recourse therefor, shall be limited to the real and
personal property and other collateral pledged to secure this Note (collectively
referred to in this paragraph as the "Property"). The foregoing limitation of
Maker's liability shall not apply, however, to any loss, damage or expense,
including reasonable attorney's fees, suffered by the Holder of this Note as a
result of: (a) Maker's default of any of the covenants and obligations contained
in the Loan Documents including, without limitation, those relating to (i)
insuring, operating, managing, repairing and reconstructing the Property, (ii)
payment of taxes and assessments, (iii) compliance with applicable laws and
regulations, (iv) executing and maintaining in force space leases in the
Property without modification except as approved in writing by Holder, (v)
restrictions on subsequent transfers of the Property or ownership interests in
Maker or in any entity that constitutes, either directly or indirectly, the
Maker, (vi) defense of actions and claims affecting the Property, including
mechanic's liens, (vii) Maker's indemnification of Holder against the presence
of hazardous substances, including asbestos, in or on the Property, as set forth
in the Certificate Regarding Hazardous Substances executed relative to this
transaction, or otherwise, and (viii) any special obligations of or
indemnifications from Maker agreed to in the Loan Documents; (b) any intentional
or willful fraud or misrepresentation, or negligent acts or omissions, by any
party executing this Note or a Loan Document (other than Holder) or any
successor or permitted assign thereof; (c) any misapplication of any proceeds
(i) paid under any insurance policies; or, (ii) realized from awards from
condemnation or the exercise of the power of eminent domain or taking in lieu
thereof, both arising from any of the real and personal property securing this
Note; or, (d) any misapplication of the gross proceeds from the real and
personal property securing this Note, which misapplication shall be deemed to
have occurred in the event any of such gross proceeds are not first applied to
costs of operating the Property including, but not limited to, payment of this
Note.
No single or partial exercise of any power hereunder, under the Loan
Documents, or under any other agreement given as security for this Note or
pertaining hereto shall preclude any other and further exercise thereof or the
exercise of any other power. The Holder hereof shall at all times have the right
to proceed against any portion of the security held herefor in such order and in
such manner as the Holder hereof may deem fit, without waiving any rights with
respect to any other security. No delay or omission on the part of the Holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other right under this Note.
5
<PAGE>
Maker and Holder intend and understand that no documentary excise taxes
or intangible taxes will be payable on this note or the indebtedness evidenced
hereby, but Maker agrees to pay, and hereby indemnifies and holds harmless
Holder from and against, any such taxes that may be required to be paid hereon.
This Note shall be governed, interpreted, construed and regulated by
the laws of the State of Florida.
IN WITNESS WHEREOF, Maker has executed and delivered this note as of
the date first above written.
EQUITY ONE (LAKE MARY) INC.,
a Florida corporation
WITNESSES:
/s/ ALAN MARCUS By: /s/ DORON VALERO
- ---------------------------------- ------------------------------------
Print Name: Alan Marcus Print Name: Doron Valero
Title: Vice President
/s/ CATHY P. HUME
- ---------------------------------
Cathy P. Hume
6
EXHIBIT 10.18
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into
effective as of the 24th day of October, 1995 (the "Effective Date"), by and
between 1740 VENTURES, INC., a New York corporation ("Seller"), and EQUITY ONE
(LAKE MARY) INC. ("Purchaser").
RECITALS
A. Seller is the owner of the Property (as defined below).
B. Upon satisfaction of, and subject to, the terms and conditions set forth in
this Agreement, Seller has agreed to sell the Property to Purchaser, and
Purchaser has agreed to purchase the Property from Seller.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller
hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF PROPERTY.
Subject to the terms and conditions contained in this Agreement, Seller agrees
to sell, assign, convey, and transfer to Purchaser all Seller's right, title and
interest in and to the following (collectively referred to herein as the
"Property"), and Purchaser hereby agrees to purchase and assume the same:
(a) LAND. Fee simple title, subject only to the Permitted Exceptions (as
defined below), to that certain parcel of land containing approximately
46.96 acres located in Lake Mary, County of Seminole, State of Florida
(Land"), more particularly described in EXHIBIT A attached hereto and
incorporated herein.
(b) IMPROVEMENTS. All fixtures and improvements located on the Land
including an approximately 288,450 square foot retail shopping center with
paved on-site parking for approximately 1,488 automobiles.
(c) PERSONALITY. To the best of Seller's knowledge, all personal property of
Seller either located on or in the Land or the Improvements or stored by
Seller off-site in a mini- storage warehouse which personal property is used
or useful in connection with the operation or maintenance of the Land and/or
Improvements (together the "Personalty") is more particularly described in
EXHIBIT B attached hereto and incorporated herein. To the best of Seller's
knowledge, attached as Exhibit B-1 is a list of personal property leased to
Smokey's Bar-B-Que and attached as Exhibit B-2 is a list of personal
property in the space formerly occupied by Ma's Kitchen.
(d) APPURTENANCES. All rights, privileges and easements appurtenant to the
Land, excluding water, water rights and water stock, but including without
limitation all minerals, oil, gas and other hydrocarbon substances on or
under the Land, all development rights and air rights relating to the Land
and any and all easements, rights-of-way and other appurtenances used in
connection with the beneficial use and enjoyment of the Land (together the
"Appurtenances").
(e) LEASES. All leases, subleases, licenses, concessions, and other forms of
agreement, granting to any party or parties the right of use or occupancy of
any portion of the Property, and all renewals, modifications, amendments,
guarantees, and other agreements affecting the same (together the "Leases").
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(f) AWARDS. All right, title and interest to any unpaid awards for damages
to the Property resulting from any taking in eminent domain or by reason of
change of grade of any street accruing after execution of this Agreement by
Purchaser.
(g) INTANGIBLE PROPERTY Except the name of the Seller or affiliated
entities, all of the interest of Seller in any intangible property now or
hereafter owned by Seller and used or designed for use in connection with
the Property and any contract or lease rights, licenses, permits,
certificates of occupancy, franchises, agreements, utility contracts,
unexpired claims, warranties, guaranties and sureties belonging to Seller or
other rights relating to the ownership, development, construction, design,
use and operation of the Land and/or Improvements (together "Intangible
Property"), so long as and to the extent that said Intangible Property may
be transferred or assigned.
SECTION 2. EARNEST MONEY: ESCROW OPENING DATE.
Concurrently with its execution of this Agreement, Purchaser shall deliver a
deposit to Lawyers Title Insurance Corporation of Tampa, Florida ("Escrow
Agent"), in the form of a cashier's check made payable to Escrow Agent or a wire
transfer to Escrow Agent's account, in the amount of FIVE HUNDRED THOUSAND AND
NO/100 ($500,000.00) DOLLARS, (together with all interest accrued thereon, is
collectively referred to herein as the "Earnest Money"). Escrow Agent shall
retain possession of the Earnest Money until delivery or return thereof is
permitted or required under this Agreement. The Earnest Money shall be deposited
in an interest bearing account with the interest thereon to be disbursed with
the Earnest Money in accordance with the provisions hereof.
Purchaser understands, acknowledges and agrees that the Earnest Money is
non-refundable, except as specifically provided below, and has been fully earned
by Seller. The Earnest Money shall be refundable to Purchaser only upon the
specific terms and conditions expressly set forth in this Agreement, and in all
other circumstances, the Earnest Money shall be delivered to Seller. The Earnest
Money shall be credited against the Base Purchase Price (as defined below) at
the close of escrow.
SECTION 3. BASE PURCHASE PRICE/PURCHASE MONEY MORTGAGEE.
The "Base Purchase Price" for the Property shall be TWENTY MILLION SIX HUNDRED
FIFTY THOUSAND AND NO/100 ($20,650,000.00) DOLLARS, payable pursuant to the
terms and conditions contained in this Agreement, but subject to proration as
provided below. The Base Purchase Price shall be in the form of cash from the
Purchaser in the amount of $7,227,500.00, and a purchase money mortgage from
Seller or one of the companies affiliated with Seller (for the purposes hereof,
the "Lender"), which purchase money mortgage shall not exceed $13,422,500.00;
with interest at 7.85% per annum; fifteen (15) year term; twenty (20) year
amortization schedule. The form of the documents evidencing such purchase money
mortgage shall be in form and content acceptable to the Lender utilizing the
Lender's standard form of loan documents.
Simultaneously with Closing, Purchaser shall pledge to the Lender an irrevocable
letter of credit in the amount of one million five hundred thousand and no/100
($1,500,000 00) dollars which must be in form and content and issued by a bank
whose senior debt is rated either A- by Standard & Poors (S&P) or A3 by Moody's
and which bank is acceptable to Seller's counsel, and must not require any
documentation to be valued upon. The letter of credit must contain an explicit
waiver by the issuing bank of any statutory, UCP or other rights to delay or
defer payment upon demand, including but not limited to, a waiver of such rights
as are set forth in Article 5, Section 5-112(1)(a) and (b) of the Uniform
Commercial Code and Article 15-e of the Uniform Customs Publication Number 400
The letter of credit is to have an expiration date of no sooner than November 1,
1996 and shall be automatically renewed annually for seven (7) years. The
proceeds of the letter of credit shall be pledged as additional security for
Purchaser's obligation to: (i) perform certain tenant improvement work for the
space currently occupied by General Cinema (the "Tenant Improvement Pledge");
and (ii) perform capital improvements to the Phase IV land (the "Capital
improvement Pledge") From the proceeds of the letter of credit the sum of five
hundred thousand and no/100 ($500,000.00) dollars will be allocated to the
Tenant Improvement Pledge and the sum of one million and no/100 ($1,000,000.00)
dollars will be allocated to the Capital Improvement Pledge. With respect to the
Tenant Improvement Pledge, proceeds will be used solely for the purposes of
performing tenant improvement work within the General Cinema Space which work
may include Improvements to the sound system; the visual system; seating; the
concession area; the exterior facade; the marquee; and interior cosmetics. The
proceeds allocated to the Tenant Improvement Pledge will be made
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available to the Purchaser that: (i) the improvements are approved by Lender in
its reasonable discretion and further provided that the loan is not in default
beyond any applicable notice and cure period; (ii) the Lender will authorize
release of the proceeds from the letter of credit provided that it
simultaneously receives a substitute letter of credit in a reduced amount taking
into account the amount approved by the Lender for release; (iii) disbursement
may be made in one lump sum after the work has been completed or in increments,
as work progresses, but if in increments the letter of credit shall be reduced
in amounts of not less than $25,000.00 and not more than once per month; (iv)
prior to reduction of the letter of credit, Purchaser shall provide Lender with
appropriate lien waivers, title date down endorsement and such other
documentation as the Lender may request to evidence that no mechanics and/or
materialmens liens have been filed against the Property and that the work has
been performed in a good and workmanlike manner; and (v) if such proceeds of the
letter of credit have not been utilized to perform the tenant improvement work
to the General Cinema Space at the end of such seven (7) year period or if the
loan is in default at any time beyond the applicable notice and cure period, the
Lender shall have the right to value on the letter of credit and deliver the
proceeds to the Seller as an addition to the Base Purchase Price it being
acknowledged by the Purchaser that said sum is an inducement for the Seller to
enter into this Agreement and consent to the arrangement with respect to the
establishment of the Tenant Improvement Pledge and such sum it paid to Seller
shall not be deemed a penalty.
With respect to the $1,000,000.00 proceeds of the letter of credit allocated to
the Capital Improvement Pledge, said sums may be utilized for development costs,
soft costs; construction costs; and tenant improvement work on the Phase IV
land. The term of the Capital Improvement Pledge shall be for five (5) years
from the date of Closing and utilized by Purchaser or on behalf of Purchaser to
perform capital improvements to the Phase IV land. Proceeds from the letter of
credit will be made available to the Purchaser or on behalf of Purchaser for
capital improvements on the Phase IV land provided that: (i) such improvements
are approved by Lender in its reasonable discretion and the loan is not in
default beyond any notice and cure period; (ii) the Lender will authorize
release of the proceeds from the letter of credit provided that it
simultaneously receives a substitute letter of credit in a reduced amount taking
into account the amount approved by the Lender for release; (iii) disbursements
may be made in whole or in part but if in part, in increments of not less than
$25,000.00 per month not more than once per month; (iv) prior to reduction of
the letter of credit, Purchaser shall provide Lender with appropriate lien
waivers, title date down and such other documentation as Lender may request to
evidence that no mechanics liens have been filed against the Property and that
the work has been performed in a good and workmanlike Man and (v) if the Capital
Improvement Pledge has not been reduced to a zero balance at the end of such
five (5) year period, or if the loan is in default at any then beyond the
applicable notice and cure period, the Lender shall have the right to value upon
the letter of credit and apply the proceeds of the Capital Improvement Pledge to
reduction of the principal balance of the loan which reduction shall be made
without any prepayment penalty. It is hereby understood that the proceeds for
the letter of credit shall be contributed by the purchaser above the cash
contribution of $7,227,500.00.
SECTION 4. PURCHASE PRICE PRORATIONS.
The following items shall be prorated as of the Closing Date and such prorations
shall be reflected on the settlement statements prepared by Seller and Purchaser
on the Closing Date and shall serve to adjust the Base Purchase Price. Such
prorations shall be made on the basis of a 365-day year, as of 12.01 a.m. on the
Closing Date, as defined below.
(a) REVENUES. All rentals, receipts and other revenues from the Property
which have been actually received by Seller and which are allocable to the
period from and after 12:01 a.m. on the Closing Date shall be credited to
Purchaser. Purchaser shall be entitled to collect all rentals, receipts and
other revenues from, the Property which are delinquent as of the Closing
Date or due on or after the Closing Date. All rentals, receipts, and other
revenues from the Property collected by Purchaser shall be credited first to
currently due rental charges, then to delinquent rental charges due
Purchaser for the period from and after Closing and thereafter to delinquent
rental charges in the order of their maturity, oldest first. Any such
delinquent rentals, receipts, and other revenues from the Property which
relate in whole or in part to any period prior to the Closing Date shall be
remitted by Purchaser to Seller (net of Seller's proportionate share of any
reasonable collection expenses actually incurred by Purchaser) when
collected by Purchaser; provided that Purchaser shall have no obligation
hereunder to collect any delinquent rentals on behalf of Seller; provided
further that Seller shall have the right to pursue all remedies available to
it in law or in equity to collect any such delinquent rentals or related
rental obligations but only to the extent that the rights of
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Purchaser under the affected lease(s) are not adversely affected and further
provided that such rent is owed by a tenant who is no longer a tenant at the
Property. The provisions of this subparagraph (a) shall survive Closing.
(b) PROPERTY TAXES. All real property taxes on the Property for the year in
which the Closing Date falls ("Closing Year") shall be prorated between
Seller and Purchaser as of the Closing Date on the basis of the most recent
assessment and millage rate. All real property taxes for all years prior to
the Closing Year shall be paid by Seller.
(c) PERSONAL PROPERTY Taxes. All personal property taxes on the Property for
the year in which the Closing Date falls on the basis of the most recent
assessment. All personal property taxes for all years prior to the Closing
Year shall be paid by Seller.
(d) ASSESSMENTS. All assessments, special assessments and other like charges
imposed against the Property, or any part thereof, by reason of roadways,
utility lines, streets, alleys or other improvements in existence, under
construction or planned as of the Closing Date shall be prorated to such
date. All such assessments, special assessments and other charges affecting
the Property payable after the Closing Date shall be the sole responsibility
of Purchaser.
(e) SECURITY DEPOSITS. All security and other deposits, including any
accrued interest thereon if such interest is required to be remitted to
tenants pursuant to their respective Leases, held by Seller on the Closing
Date on behalf of any tenants under any Leases shall be credited to
Purchaser.
(f) PROPERTY EXPENSES. Prepaid water, sewer, and other utility and common
property expenses allocable to the period from and after the Closing Date
shall be credited to Seller. Accrued but unpaid water, sewer, and other
utility and common property expenses allocable for the period prior to the
Closing Date shall be credited to Purchaser.
(g) SURVIVING CONTRACTS. Prepaid charges in connection with any service
contracts that survive Closing (the "Surviving Contracts") which Purchaser
elects to assume, and any licenses or permits issued in connection with the
Property allocable to the period from and after the Closing Date shall be
credited to Seller. Accrued but unpaid charges in connection with such
Surviving Contracts, licenses or permits allocable to the period prior to
the Closing Date shall be credited to Purchaser and Purchaser shall assume
the obligation to pay such charges.
The foregoing prorations shall be made as of the Closing Date based on the best
information and estimates available and approved by the parties at the time. If
any of the prorations described in this Section 4 cannot be calculated
accurately on the Closing Date; then the same shall be calculated as soon as
reasonably possible thereafter and either party owing the other party a sum of
money based on such subsequent prorations shall promptly pay said sum to the
other party. A final closing adjustment shall be made by Purchaser and Seller
within one hundred twenty (120) days after the Closing Date, and to the extent
that any additional payment or repayment is indicated by the final closing
adjustment, the payment or repayment shall be made within thirty (30) days after
the final adjustment is made. If either party owing funds to the other after the
Closing Date pursuant to this Section does not remit them within thirty (30)
days after demand therefor (which demand shall also include invoices or other
appropriate documentation in support thereof), such funds shall thereafter bear
interest at a "Default Rate" equal to five percent (5%) above the highest rate
as announced from time to time by Chase Manhattan Bank, N.A. at its principal
office in New York City as its "prime rate," as the same shall fluctuate from
day to day, or, if lesser, the maximum rate permitted by law.
SECTION 5. CONDITIONS PRECEDENT TO CLOSING.
(a) The closing of the purchase of the Property on the Closing Date (the
"Closing") and Purchaser's obligation to acquire the Property shall, in
addition to any other conditions set forth herein, be conditional and
contingent upon satisfaction, or waiver by Purchaser, of each and all of the
below listed conditions (collectively the "Purchaser's Conditions"):
(i) CLOSING DOCUMENTS. Seller shall have tendered into escrow with
Escrow Agent all Closing Documents (as defined below).
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(ii) COMPLIANCE WITH AGREEMENTS. Seller shall have substantially
performed and complied with all of its covenants and conditions
contained in this Agreement, and no event shall have occurred which if
it continued uncured would, with the passage of time or notice or
both, constitute a default under this Agreement.
(iii) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Seller contained in or made pursuant to this
Agreement shall be confirmed as true and correct to the best of
Seller's actual knowledge, information and belief, as of the Closing
Date.
(iv) TITLE INSURANCE. On the Closing Date, Title Company (as defined
below) shall be unconditionally committed to issue to Purchaser at
Seller's expense an ALTA standard coverage Owner's policy of Title
Insurance (ALTA Owner's Policy Form B-1970 [Rev. 10-17-70 and
10-17-84]) (the "Title Policy") in the amount of the Base Purchase
Price, insuring Purchaser's title to the Property, subject only to the
Permitted Exceptions (as defined below) and the standard printed
exclusions to title in an ALTA standard, or if applicable, extended
coverage owner's policy of title insurance. Any extended coverage and
endorsements to the standard title policy requested by Purchaser and
available under Florida law shall be paid for by the Purchaser. In the
event that Title Company is unable or unwilling to issue the owner's
title policy subject only to the Permitted Exceptions and such
standard exceptions and Purchaser elects not to proceed with the
closing of this transaction, Purchaser's sole remedy shall be to
declare this Agreement as terminated. Notwithstanding the foregoing,
Seller agrees that it will not cause any matters to affect title to
the Property which would constitute further exceptions under the Title
Policy other than those set forth on EXHIBIT C captioned "Permitted
Encumbrances". Seller agrees to cooperate with the Title Company to
deliver such documentation as the Title Company may reasonably request
so as to assure that there are no additional encumbrances other than
as set forth on Exhibit C; provided, however, that in the event Seller
is unable or unwilling to deliver title as set forth on Exhibit C,
Purchaser may, at its option, either (i) accept such title as Seller
is able to convey without a reduction of the Base Purchase Price or
any credit or allowance against the same and without any other
liability on the part of the Seller or (ii) reject such title by
notice to Seller in which event the Earnest Money will be refunded to
Purchaser and upon making such refund, this Agreement shall wholly
cease and terminate and neither party shall have any claim against the
other by reason of this Agreement except as otherwise expressly
provided to the contrary herein.
(b) Purchaser acknowledges that it has completed its "due diligence"
investigation of the Property and has reviewed and approved all documents
and information it deemed necessary to evaluate the condition and status of
the Property, including but not limited to the following:
(i) A current title commitment dated July 21, 1995, Case No.
2-9501267, issued by Lawyers Title Insurance Corporation through its
agent Hill, Ward & Henderson, P.A. (the "Title Company") showing (i)
the status of title to and all interests in the Property; (ii) all
encumbrances, restrictions and other matters affecting title to the
Property; and, (iii) an accurate legal description of the Property,
together with copies of all documents listed in the commitment as
affecting title to the Property. Seller and Purchaser agree that
those matters affecting title to the Property which are approved by
Purchaser as exceptions to the title which will be insured under the
Title Policy are set forth in Exhibit C attached hereto and
incorporated herein which shall be deemed to be the "Permitted
Exceptions" for the purposes of this Agreement.
(ii) A survey dated November 1, 1991, Job No. 963.6, as revised July
25, 1994, prepared by Ganung & Associates, Inc., showing the
boundaries of the Property and location of all Improvements.
(iii) A copy of all Leases and service contracts, if any, in effect
regarding the Project.
(iv) A current Rent Roll attached hereto as EXHIBIT D and incorporated
herein, showing as of the Effective Date hereof the identity of the
tenants under the Leases, the premises they occupy, the Lease term
and expiration date of each
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Lease, the monthly rents under the Leases, and any effective rental
concession under the Leases.
(v) A schedule of the Personality which to Seller knowledge is
complete and which will be subject to this sale, which is attached
hereto and incorporated herein as EXHIBIT B, EXHIBIT B-1 and EXHIBIT
B-2.
(vi) The last available real estate tax bills for the Property.
(vii) Architectural, construction and any other drawings,
renderings, plans and specifications for building, construction and
associated materials.
(viii) Soils or boring reports, hydrological studies, engineering
studies, percolation tests or data, environmental reports, septic
permits, traffic studies, grading or erosion permits or other
permits issued by the State Department of Natural Resources or other
governmental authority in connection with the Property.
(ix) Operating statements for the Property for year-end 1993 and
1994, and monthly operating statements for calendar year 1995
through July 10, 1995.
(x) All other pertinent information and documents determined
necessary by Purchaser to evaluate the status and condition of the
Property.
SECTION 6. CLOSING DOCUMENTS.
On the Closing Date, or as soon thereafter as reasonably possible, Seller shall
deliver, or cause to be delivered, to Escrow Agent the following fully executed
documents and/or items, acknowledged where appropriate, and in form and
substance reasonably satisfactory to Purchaser (together referred to herein as
the "Closing Documents"):
(a) DEED. A Special Warranty Deed ("Deed") in recordable form conveying good
and insurable fee simple title to the Land and the Improvements to
Purchaser, pursuant to the legal description derived from the deed(s) into
Seller, subject to the Permitted Exceptions and all matters which an
accurate survey of the Property or a physical inspection of the Property
would disclose and all such other title matters approved by Purchaser.
(b) QUIT CLAIM DEED. A duly executed quit Claim Deed ("Quit Claim Deed") in
recordable form, conveying to Purchaser the Land, the Improvements, and the
Appurtenances pursuant to the survey legal description.
(c) QUIT CLAIM BILL OF SALE AND ASSIGNMENT OF INTANGIBLE PROPERTY. A duly
executed Quit Claim Bill of Sale and Assignment of Intangible Property
pursuant to which Seller transfers, sells and assigns to Purchaser all
Seller's interest in the Personalty.
(d) ASSIGNMENT AND ASSUMPTION OF LEASES. An Assignment and Assumption of
Leases assigning to Purchaser all of Seller's interest in all Leases
together with an assumption thereof by Purchaser. All original Leases in
Seller's possession will be delivered to Purchaser immediately after the
Closing.
(e) ASSIGNMENT OF SURVIVING CONTRACTS. To the extent Purchaser elects to
assume the same, an Assignment of Surviving Contracts assigning to Purchaser
without representation as to assignability by Seller, all of Seller's
interest in all written or oral service, maintenance, construction, parking,
brokerage, leasing commission, advertising, employment, operating or other
contracts, arrangements or agreements affecting the Property, including, but
not limited to, any management agreements, and any agreements pursuant to
which goods, services, supplies or any other items whatsoever are furnished
and/or to be furnished in connection with the Property, or the repair,
maintenance or operation of the Property or any portion or component thereof
("Surviving Contracts"), together with the originals of all Surviving
Contracts if available to Seller.
(f) CERTIFICATE OF NON-FOREIGN STATUS FOR ENTITY. A Certificate of
Non-Foreign Status for an Entity duly executed by Seller certify that for
purposes of Section 1445 of the Internal Revenue Code that Seller is not a
foreign corporation, foreign partnership, foreign trust or foreign estate.
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(g) AFFIDAVIT OF TITLE. An Affidavit of Title duly executed by an officer of
Seller setting forth, to the best of such officer's knowledge the correct
state of title to the property.
(h) CLOSING MEMORANDUM. Closing Memorandum acceptable to Seller and
Purchaser setting forth the agreement between the parties to readjust the
prorations in the event the prorations cannot be calculated accurately on
the Closing Date.
(i) CLOSING STATEMENT. Closing Statement acceptable to Seller and Purchaser
setting forth the prorations as of the Closing Date.
(j) RENT ROLL. An updated Rent Roll certified as of a date not earlier than
ten (10) business days prior to the Closing Date as being true and correct
by Seller.
(k) OTHER DOCUMENTS. All other documents affecting title to or possession of
the Property as may reasonably be requested by Title Company and necessary
to transfer or assign the same to Purchaser as provided herein.
(l) TENANT ESTOPPEL STATEMENTS. Seller shall make reasonable efforts to
obtain and to deliver to Purchaser estoppel letters substantially in the
form of EXHIBIT E ("Tenant Estoppel") from all anchor tenants (which for the
purposes hereof shall mean K-Mart; Albertson's and General Cinema) and from
eighty (80%) percent of the remaining tenants at the Property. It is hereby
acknowledged by Purchaser that the anchor tenants and any other tenant with
national recognition may not sign the form attached as EXHIBIT E but may
instead substitute its own form which form Purchaser agrees to not
unreasonably withhold its consent. Except with the respect to the anchor
tenants, in the event Seller is unable to obtain an estoppel statement from
a tenant, Purchaser shall accept a certificate of Seller certifying, to the
best of Seller's actual knowledge, those matters included in the form of the
Tenant Estoppel.
Purchaser shall execute and acknowledge the assignment documents tendered by
Seller, as assignor, with respect to Leases, Surviving Contracts, and any
other assignment documents requiring execution by Purchaser. In connection
with such assignments, Purchaser shall assume the obligations for such
matters from and after the Closing Date.
SECTION 7. CLOSING
(a) CLOSING DATE. The Closing Date shall be on a business day as agreed to
by Seller and Purchaser on or before October 31, 1995, unless this date is
mutually extended in writing by Seller and Purchaser. Notwithstanding the
foregoing Seller shall have the unilateral right to extend the Closing Date
for a period of thirty (30) days in the event Purchaser has raised any
objections to the status of title to the Property or Seller's performance of
its obligations hereunder. If such objections have not or cannot be cured
prior to the extended closing date, Purchaser shall have the option of
either (a) proceeding with the Closing notwithstanding Purchaser's
objections or (b) terminating this Agreement by written notice to Seller in
which case the Earnest Money shall be returned to Purchaser.
(b) TIME AND PLACE. The Closing shall take place on the Closing Date at the
offices of Hill, Ward & Henderson, P.A., 101 East Kennedy Boulevard, Suite
3700, Tampa, Florida 33602.
(c) PAYMENT OF PURCHASE PRICE. Purchaser shall deliver to Escrow Agent on
the Closing Date good and immediately available funds in the amount of the
Base Purchase Price as adjusted pursuant to Section 4 of this Agreement
which shall be disbursed to Seller. The Earnest Money shall be disbursed to
Seller as partial payment of the Base Purchase Price.
(d) POSSESSION. Possession of the Property shall be delivered to Purchaser
on the Closing Date, subject only to the rights of tenants under the Leases
and possessory rights of other parties contained in the Permitted Exceptions
or known to Purchaser.
(e) CLOSING COSTS. Seller shall pay at Closing the premium for the Owner's
and Lender's Title Policy excluding, however, any additional premium needed
to pay for any extended coverage and endorsements required by Purchaser but
including any extended coverage endorsements such as the "Form 9"
endorsement if required by the Lender. Seller shall also pay the cost of
rectifying the survey prepared by Ganung & Associates last issued July 25,
1994. Seller and Purchaser shall each pay one-half of the closing costs
including any recording and transfer fees and escrow fees. In connection
with the financing provided by Seller's affiliates,
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Purchaser shall pay the costs associated with any intangible and/or mortgage
taxes and recording charges. Seller's affiliate will not charge in
connection with such financing any origination, commitment or processing
fees. Seller and Purchaser shall each be responsible for paying their
respective attorney fees and costs, however, Purchaser shall be given a
credit at Closing for $15,000.00 toward its attorney's fees.
(f) Brokerage Commissions. The parties shall pay any brokerage commissions
due as provided in Section 15 below.
SECTION 8. LEASES.
(a) SCHEDULE OF LEASES. The Rent Roll attached hereto as EXHIBIT D and
incorporated herein by this reference correctly shows as of the Effective
Date hereof a schedule of the Leases in effect on the Property which are the
subject of this Agreement; provided, however, that pursuant to subsection 8
(c) below the identity and status of the Leases may change after the
Effective Date as otherwise stated in the updated Rent Roll, if same is
required to be furnished to Purchaser as part of the Closing Documents as
provided in Section 6. above.
(b) ASSIGNMENT AND ASSUMPTION AGREEMENT. On the Closing Date, Seller shall
assign to Purchaser, and Purchaser shall assume, all of Seller's rights and
obligations under the Leases.
(c) LIMITATION ON LEASING. Seller shall not modify any of the Leases or
enter into any new Leases after the date of this Agreement without the prior
written consent of Purchaser, which shall not be unreasonably withheld. Such
consent shall be conclusively presumed to be granted ten (10) business days
after a copy of such proposed new lease or Lease modification is delivered
to Purchaser, unless Purchaser objects in writing listing the specific
reasons for such objection within such ten-day period.
SECTION 9. WARRANTIES AND REPRESENTATIONS OF SELLER.
Seller represents and warrants to the best of its actual knowledge, information
and belief, and covenants and agrees as follows for the benefit of Purchaser and
Purchaser's successors and assigns. Seller shall not have any liability if as of
the Closing Date any of the representations, warranties, or covenants set forth
below shall not be true if Purchaser has knowledge of such facts prior to the
Closing Date and proceeds to close notwithstanding such facts. Seller shall be
entitled to state in writing prior to Closing exceptions to the below listed
representations, warranties, and covenants, in which case Purchaser may (i)
terminate this Agreement if such exceptions are not reasonably acceptable and
the Earnest Money shall be returned to Purchaser or (ii) elect to close this
transaction notwithstanding such exceptions.
(a) STATUS OF AND EXECUTION BY SELLER. Seller is now and on the Closing Date
will be: (i) in good standing and validly existing as a New York
corporation, and (ii) duly authorized, qualified, and licensed to do all
things required of it under or in connection with this Agreement. All
agreements, instruments, and documents herein provided to be executed or to
be caused to be executed by Seller will be duly executed by and binding upon
Seller.
(b) COMPLIANCE WITH AGREEMENT. On the Closing Date, Seller will have
substantially complied with all of its obligations under this Agreement,
unless such compliance has been waived in writing by Purchaser.
(c) NON-FOREIGN STATUS. Seller is not a "foreign person" as defined in and
Purchaser shall not be required to withhold any portion of the Base Purchase
Price pursuant to Internal Revenue Code Section 1445.
(d) LITIGATION. Seller has not received notice that any actions, suits, or
proceedings of any kind are pending or threatened against or affecting
Seller in any court of law or in equity or before or by any governmental
department, commission, board, bureau, agency, or instrumentality which
might materially adversely affect the ability of Seller to timely perform
its obligations under this Agreement.
The truth and correctness of all of the foregoing representations and warranties
shall be a condition precedent to any obligation of Purchaser to purchase the
Property, which condition is intended solely for the benefit of Purchaser, and
Purchaser shall have the right at its sole election to waive any such condition
and proceed with the purchase or, in the alternative, to terminate this
Agreement. Seller acknowledges that execution of this Agreement by Purchaser has
been made, and the purchase by
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<PAGE>
Purchaser of the Property will have been made, in material reliance by Purchaser
on such representations and warranties.
SECTION 10. WARRANTIES AND REPRESENTATIONS OF PURCHASER.
Purchaser hereby warrants and represents the following to Seller, each of which
is true and correct as of the date of this Agreement and shall be true and
correct on the Closing Date. Purchaser acknowledges that the execution of this
Agreement by Seller has been made, and the sale by Seller of the Property will
have been made, in material reliance by Seller on such representations and
warranties:
(a) STATUS OF AND EXECUTION BY PURCHASER. Purchaser is now and on the
Closing Date will be: (i) if Purchaser is not a natural person, duly formed
and validly existing under the laws of the state of Florida; (ii) authorized
under the laws of the State of Florida to conduct business and to acquire
the Property; and, (iii) duly authorized to do all things required of it
under or in connection with this Agreement.
(b) NO VIOLATIONS. This Agreement and all agreements, instruments and
documents herein provided to be executed or to be caused to be executed by
Purchaser are (or will be) duly executed by and binding upon Purchaser, and
do not and will not violate any provision of any agreement, law, regulation
or judicial order to which Purchaser is a party or by which it is bound that
would impair Purchaser's ability to perform its obligations under this
Agreement.
SECTION 11. NATURE AND SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in this Agreement shall survive the
close of escrow and the recordation of the Deed. Any liability of Seller arising
in connection with the representations and warranties contained in this
Agreement in Section 9 (b) and (d), however, shall terminate ninety (90) days
from the Closing Date.
SECTION 12. CONDITION OF PROPERTY.
Purchaser acknowledges that Seller is scaling, and Purchaser shall accept the
Property in an "AS IS" and "WHERE IS" condition without warranty or
representation by Seller relating to the condition of the Property. Purchaser
acknowledges that it is a sophisticated real estate investor who has had open
access and sufficient time to review all information, documents, agreements,
studies and texts relating to the Property and that it has conducted or will
conduct a complete and thorough inspection, analysis and evaluation of the
Property, including but not limited to environmental issues, if any, and has
conducted such tests and has received and reviewed such information as it
required in the course of its investigation. Purchaser is fully aware of the
condition of the Property as well as all facts, circumstances and information
which may affect the use and operation of the Property, and has relied on its
own due diligence investigation in determining to purchase the Property.
Upon the Closing, Purchaser, on behalf of itself, its officers, directors and
its and their respective successors, shall, and by the execution of this
Agreement, hereby does, forever release Seller, its officers, directors, agents
and employees, and its and their respective successors, of and from any and all
claims, demands, obligations, costs, loss or damage, causes of action and
liability, whether known or unknown, arising out of or in any way connected with
the condition of the Property, including without limitation, the environmental
and structural condition of the Property. Purchaser shall, upon the Closing,
and, by the execution of this Agreement, hereby does, forever release Seller of
and from any environmental claims and causes of action existing now or hereafter
created or enacted, whether at common law or by federal, state, county, or
municipal law or ordinance. Purchaser agrees never to commence, aid in any way,
or prosecute against Seller, its officers, directors, agents and employees and
its and their respective successors, any action or other proceeding based upon
any claims, demands, causes of action, obligations, damages or liabilities
covered in this Section 12.
Purchaser expressly waives any rights or benefits available to it with respect
to the matters for which Purchaser has released Seller pursuant to this Section
12 under any provision of applicable law which generally provides that a general
release does not extend to claims which the releasing party does not know or
suspect to exist in his favor at the is agreed to, which, if known to such
releasing party, would materially affect a settlement. Purchaser, by the
execution of this Agreement,
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<PAGE>
acknowledges that it fully understands the foregoing, and with this
understanding, nonetheless elects to and does assume all risk for claims known
or unknown, described in this Section 12.
SECTION 13. CASUALTY OR CONDEMNATION.
If prior to the Closing Date, twenty-five percent (25%) or more of the gross
leasable area of Property shall be destroyed or substantially damaged, or shall
become the subject of any proceedings, judicial, administrative, or otherwise,
with respect to a twenty-five percent(25%) or more taking of the gross leasable
area of the Property by eminent domain, condemnation or otherwise, Seller
shall promptly notify Purchaser thereof and Purchaser, at its option, may within
fifteen (15) days after receipt of such notice elect to terminate this Agreement
by giving Seller written notice thereof in which event the parties hereto shall
be relieved and released of and from any further duties, obligations, rights, or
liabilities hereunder and the Earnest Money shall be returned to Purchaser. If
the Closing Date is within the aforesaid fifteen (15) day period, then the
Closing shall be extended to the next business day following the end of said
fifteen (15) day period. If (a) less than twenty-five percent (25%) of the gross
leasable area of the Property is destroyed or substantially damaged or subject
to taking, or (b) Purchaser elects to complete the transactions contemplated
herein as provided above, this Agreement shall remain in full force and effect
and the purchase contemplated herein, less any portion of the Property taken by
eminent domain or condemnation, shall be consummated with no further adjustment
or modification and at the Closing Seller shall assign, transfer, and set over
to Purchaser all the right, title, and interest of Seller in and to any
insurance proceeds resulting from any casualty (and shall pay to Purchaser the
amount of any deductible under such casualty policy) or any awards that have
been or may thereafter be made for any taking or condemnation.
SECTION 14. DEFAULT AND REMEDIES.
(a) PURCHASER'S DEFAULT. IF PURCHASER IS IN DEFAULT OF THIS AGREEMENT PRIOR
TO THE CLOSING AND SELLER ELECTS TO TERMINATE THIS AGREEMENT DUE TO
PURCHASER'S DEFAULT, THE EARNEST MONEY AND ALL OTHER PAYMENTS AND THINGS OF
VALUE DELIVERED BY PURCHASER SHALL BE FORFEITED BY PURCHASER AND RETAINED ON
BEHALF OF SELLER, AND BOTH PARTIES SHALL THEREAFTER BE RELEASED FROM ALL
FURTHER OBLIGATIONS UNDER THIS AGREEMENT.
PURCHASER AND SELLER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT OR
IMPOSSIBLE TO DETERMINE IN THE EVENT OF PURCHASER'S FAILURE TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THAT THE EARNEST MONEY AND SUCH OTHER
THINGS OF VALUE ARE A REASONABLE ESTIMATE OF SUCH DAMAGES. THE EARNEST MONEY
AND SUCH OTHER PAYMENTS AND THINGS OF VALUE SHALL, THEREFORE, BE LIQUIDATED
DAMAGES TO SELLER AND RETENTION THEREOF SHALL BE SELLER'S SOLE AND EXCLUSIVE
REMEDY FOR PURCHASER'S FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT IN THE EVENT SELLER ELECTS TO TERMINATE THIS AGREEMENT. SELLER
EXPRESSLY WAIVES THE REMEDIES OF SPECIFIC PERFORMANCE AND ADDITIONAL
DAMAGES.
- ------------------- -----------------------
SELLER'S INITIALS PURCHASER'S INITIALS
(b) SELLER'S DEFAULT. If Seller is in default of or has breached any
covenant contained in this Agreement, Purchaser may elect:
(i) To treat this Agreement as terminated, in which case the Earnest
Money and all interest earned thereon and all other payments and
things of value received from, it shall be returned to Purchaser;
or,
(ii) To treat this Agreement as being in full force and effect and,
except as specifically otherwise provided in this Agreement,
Purchaser shall have the right to an action for specific
performance.
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<PAGE>
Purchaser's remedies shall be cumulative with and in addition to all
other rights and remedies provided Purchaser at law or in equity.
SECTION 15. BROKERAGE COMMISSIONS.
Each party hereto warrants and represents that neither party has incurred any
liability for the payment of any brokerage fee or commission in connection with
the transaction contemplated in this Agreement, except in the case of Purchaser,
Purchaser has utilized the services of Jose Fernandez Realty; Global Realty
Management, Inc.; and Tom Singer Realty (collectively "Purchaser's Broker")
which commission shall be paid by Purchaser. Seller and Purchaser each agrees to
and hereby does indemnify, protect, defend, and hold the other harmless against
and with respect to any obligation, liability, or claim of liability, based in
any way on any agreements, arrangements or understandings claimed to have been
made or actually made by the indemnifying party, with any third party
relative to sales commissions and/or fees arising out of this Agreement or the
sale and purchase contemplated by this Agreement. Purchaser agrees to be
responsible for and to pay any and all commissions due Purchaser's Broker. The
indemnification contained herein shall, without limitation, survive the
termination of this Agreement and the Closing.
SECTION 16. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement supersedes all prior discussions,
agreements and understandings between Seller and Purchaser and constitutes
the entire agreement between Seller and Purchaser with respect to the
transaction herein contemplated. This Agreement may be amended or modified
only by a written instrument executed by Seller and Purchaser.
(b) WAIVER. Each party hereto may waive any breach by the other party of any
of the provisions contained in this Agreement or any default by such other
party in the observance or performance of any covenant or condition required
to be observed or performed by it contained herein; PROVIDED ALWAYS that
such waiver or waivers shall be in writing, shall not be construed as a
continuing waiver, and shall not extend to or be taken in any manner
whatsoever to affect any subsequent breach, act or omission or default or
affect each party's rights resulting therefrom. No waiver will be implied
from any delay or failure by either party to take action on account of any
default by the other party. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for performance
of any other obligations or acts.
(c) FURTHER ASSURANCES. Each party hereto shall do such further acts and
execute and deliver such further agreements and assurances as the other
party may reasonably require to give full effect and meaning to this
Agreement.
(d) NOTICES. All written notices expressly provided hereunder to be given by
Seller or Purchaser shall be in writing and shall be served either (i) by
"certified mail -- return receipt requested" deposited in the United States
mail, with postage thereon fully prepaid or (ii) prepaid "overnight
delivery" courier service with return receipt provided, and addressed to the
party so to be served at its address provided below or at such other street
address (but not post office box) of which the party to be served shall have
notified, in writing, the person giving such notice. Service of any such
notice or demand so made shall be deemed complete on the day of actual
delivery as shown by the addressee's receipt certification or the expiration
of the third day after the date of sending, whichever is earlier in time.
TO SELLER:
1740 Ventures, Inc.
c/o ARES, Inc.
5775-E Glenridge Drive, Suite 100
Atlanta, Georgia 30328
Attention: Vice President
(CONTINUED ON THE FOLLOWING PAGE)
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<PAGE>
With copies to:
The Mutual Life Insurance Company of New York
5775-E Glenridge Drive, Suite 100
Atlanta, Georgia 30328
Attention: Kevin M. Walsh, Esq.
Hill, Ward & Henderson, P.A.
101 East Kennedy Boulevard, Suite 3700
Tampa, Florida 33602
Attention: Thomas Black, Esq.
TO PURCHASER:
Equity One (Lake Mary) Inc.
777 17th Street- PENTHOUSE
Miami, Florida 33139
Attention: Doron Valero, Vice President
with copies to:
Alan J. Marcus, Esq.
Aventura Corporate Center
20803 Biscayne Boulevard, Suite 301
North Miami Beach, Florida 33180
(e) SUCCESSORS AND ASSIGNS: SURVIVAL. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective
successors, heirs, administrators and assigns, provided, however, that
Purchaser may not assign this Agreement without the written consent of
Seller.
(f) GOVERNING LAW AND VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida and the venue
shall be in the County of Seminole.
(g) NO THIRD PARTIES BENEFITTED. The parties do not intend to confer any
benefit on any person, firm, or corporation other than the parties to this
Agreement, except as and to the extent otherwise expressly provided herein.
(h) ENFORCEMENT. In the event either party hereto fails to perform any of
its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement,
the defaulting party or the party not prevailing in such dispute, as the
case may be, shall pay any and all costs and expenses incurred by the other
party in enforcing or establishing its rights hereunder, including, without
limitation, court costs and reasonable attorneys' fees.
(i) CONSTRUCTION. The section titles or captions in this Agreement are for
convenience only and shall not be deemed to be part of this Agreement. All
pronouns and any variations of pronouns shall be deemed to refer to the
masculine, feminine, or neuter, singular or plural, as the identity of the
parties may require. Whenever the terms referred to herein are singular, the
same shall be deemed to mean the plural, as the context indicates, and vice
versa. This Agreement shall not be construed as if it had been prepared only
by Purchaser or Seller but rather as if both Purchaser and Seller had
prepared the same. If any term, covenant, condition, or provision of this
Agreement or the application thereof to any person or circumstance shall, at
any time or to any extent, be invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this Agreement shall be
valid and shall be enforced to the fullest extent permitted by law.
(j) TIME OF ESSENCE. Time is of the essence of this Agreement and each and
every term and provision hereof.
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<PAGE>
(k) CONFIDENTIALITY. Purchaser covenants and agrees that all information
provided to it by Seller in connection with the Property or resulting from
Purchaser's inspections of the Property and review of relevant materials
will be held in, STRICT confidence by it, its agents and employees until
this transaction is closed and that it will return, all such information to
Seller in the event the transaction contemplated by this Agreement is not
consummated. Purchaser further agrees to indemnify and hold Seller harmless
from and against any and all claims or damages, including reasonable
attorneys' fees, resulting from Purchaser's breach of the covenant contained
herein unless Purchaser is required by court order or by law to disclose
such information. The indemnification contained herein shall, without
limitation, survive the termination of this Agreement and the Closing.
(1) CONSENTS AND APPROVALS. Both Seller and Purchaser represent and warrant
to the other that each have obtained all requisite consents and approvals,
whether required by internal operating procedures or otherwise, for entering
into this Agreement and closing the transaction contemplated hereby.
(m) COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be an original, but all of which shall constitute one
and the same instrument.
(n) EXHIBITS. All of the following Exhibits referenced in this Agreement are
attached hereto and incorporated as part of this Agreement and shall have
the same meaning as if they were incorporated fully within the text of this
Agreement:
EXHIBIT A Legal Description
EXHIBIT B Schedule of Personalty
EXHIBIT C Permitted Exceptions
EXHIBIT D Rent Roll
EXHIBIT E Tenant Estoppel Statement
(o) INDEMNIFICATION REGARDING PURCHASER'S INVESTIGATION. Purchaser hereby
indemnifies, protects, defends and holds Seller harmless for any actions,
causes of action, claims, proceedings, demands, costs, damages, fees,
expenses, and/or liabilities, suffered or incurred by or asserted against
Seller which arise out of or are in any way related to any of the
investigations conducted by Purchaser relative to the transaction
contemplated by this Agreement except to the extent that same are caused by
or arise out of actions of the Seller or its agents or representatives and
to the extent the Property shall be damaged by Purchaser, with no fault of
Seller during Purchaser's investigation, then, in the event this Agreement
is terminated, Purchaser agrees to repair that damage to the extent
reasonably practicable to substantially the same condition as existed prior
to the time the damage occurred. Notwithstanding anything contained above,
Purchaser's indemnity does not extend to any Seller liability or enforcement
action resulting from Purchaser's discovery of defects or other problems
with respect to the Property and Seller for itself, its employees, agents,
representatives, and contractors hereby expressly releases Purchaser from
any liability with regard thereto. These indemnifications and other
agreements shall survive closing, notwithstanding any other provision to the
contrary herein and any termination of this Agreement.
(SlGNATURES APPEAR ON THE FOLLOWING PAGE)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
AS TO SELLER:
WITNESS: 1740 VENTURES, INC.
a New York corporation
- ------------------------------- /s/ BRUCE C. FERNALD
--------------------------
Print Name:-------------------- By: Bruce C. Fernald
Vice President
- -------------------------------
Print Name: -------------------
WITNESS: AS TO PURCHASER:
EQUITY ONE (LAKE MARY) INC.,
a Florida Corporation
- -------------------------------
/s/ DORON VALERO
Print Name:-------------------- By:-----------------------
- ------------------------------- Print Name: DORON VALERO
Title: VICE PRESIDENT
Print Name:--------------------
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<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
[SEE ATTACHED]
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
PHASE I
Part of the Northeast Quarter of the Northwest Quarter and a part of the West
389.50 feet of the North Three-Quarters of the Northeast Quarter of Section 18,
Township 20 South, Range 30 East, Seminole County, Florida described as follows:
Commence at the Northwest corner of Greenwood Lakes Unit 2, as recorded in Plat
book 22, Pages 2 and 3, Public Records of Seminole County, Florida; thence South
89 degrees 51 minutes 59 seconds East, along the North line of said Unit 2, a
distance of 389.50 feet to the East Line of the West 389.50 feet of the North
Three-Quarters of the Northeast Quarter of said Section 18; thence North 00
degrees 11 minutes 30 seconds East, along the East line thereof, 651.47 feet for
the POINT OF BEGINNING; thence North 89 degrees 36 minutes 38 seconds West,
175.00 feet; thence North 00 degrees 23 minutes 22 seconds East, 196.46 feet to
the point of curvature of a curve, concave Southwesterly, having a radius of
15.00 feet and the central angle of 90 degrees 00 minutes 00 seconds; thence run
23.56 feet along the arc of said curve to the point of tangency thereof; thence
North 89 degrees 36 minutes 38 seconds West, 67.30 feet; thence North 00 degrees
23 minutes 22 seconds East, 275.25 feet to a point of curvature of a curve,
concave Southwesterly, having a radius of 100.00 feet and a central angle of 36
degrees 00 minutes 00 seconds; thence run 62.83 feet along the arc of the said
curve to the point of tangency thereof; thence North 35 degrees 36 minutes 38
seconds West, 228.49 feet; thence North 00 degrees 15 minutes 15 seconds East,
215.00 feet to the South Right of Way line of Lake Mary Boulevard an 80 foot
wide Right of Way; fence along said Right of Way line (lying 40 feet South of
and parallel with the North line of said Section 18) the following two (2)
courses and distances, South 89 degrees 44 minutes 45 seconds East, 382.17 feet;
thence South 89 degrees 40 minutes 18 seconds East, 389.50 feet; thence South 00
degrees 11 minutes 30 seconds West, 1307.46 feet to the POINT OF BEGINNING.
PHASE II
Part of the Northeast Quarter of the Northwest Quarter and a part of the West
389.50 feet of the North Three-Quarters of the Northeast Quarter of Section 18,
Township 20 South, Range 30 East, Seminole County, Florida, described as
follows:
BEGIN at the Southeast corner of the Northeast Quarter of the Northwest Quarter
of Said Section 18; thence run North 89 degrees 50 minutes 52 seconds West,
along the South line of the Northeast Quarter of the Northwest Quarter of
Section 18, a distance of 1237.15 feet to the Easterly line of a ten foot wide
additional Right of Way as recorded in Official Records Book 1776, page 1293 for
Lake Emma Road formerly a 100 foot wide Right of Way as per Official Records
Book 1217, page 413 all being in the Public Records
Continued
<PAGE>
Exhibit "A" continued
Page 2
of Seminole County, Florida; thence run North 00 degrees 10 minutes 40 seconds
East, along said Easterly line of the 10 foot wide additional Right of Way 82.70
feet to the point of curvature of a curve, concave Northeasterly, having a
radius of 50.00 feet and a central angle of 28 degrees 35 minutes 14 seconds;
thence from a tangent bearing of South 84 degrees 05 minutes 25 seconds East,
run along the arc of said curve 24.95 feet to a point of reverse curvature of a
curve, having a radius of 150.00 feet and a central angle of 21 degrees 46
minutes 55 seconds; thence run 57.03 feet along the arc of said curve to a point
of reverse curvature of a curve, having a radius of 150.00 feet and a central
angle of 27 degrees 32 minutes 22 seconds; thence run 72.10 feet along the arc
of said curve to the point of tangency thereof; thence South 89 degrees 50
minutes 52 seconds East, 410.00 feet; thence North 00 degrees 23 minutes 22
seconds East, 251.33 feet; thence North 89 degrees 50 minute 52 seconds West,
35.00 feet; thence North 00 degrees 23 minutes 22 seconds East, 270.38 feet;
thence South 89 degrees 36 minutes 38 seconds East, 550.00 feet to the point of
curvature of a curve, concave Southwesterly, having a radius of 15.00 feet and a
central angle of 90 degrees 00 minutes 00 seconds; thence run 23.56 feet along
the arc of said curve to the point of tangency thereof; thence South 00 degrees
23 minutes 22 seconds West, 196.46 feet; thence South 89 degrees 36 minutes 38
seconds East, 363.73 feet; thence South 00 degrees 11 minutes 30 seconds West,
360.80 feet; thence South 89 degrees 36 minutes 38 seconds East, 175.00 feet to
a point on the East line of the West 389.50 feet of the North Three-Quarters of
the Northeast Quarter of said Section 18; thence run South 00 degrees 11 minutes
30 seconds West, along said line 651.47 feet to a point on the Northerly
boundary line of Greenwood Lakes Unit 2, as Recorded in Plat Book 22, Pages 2
and 3; thence run North 89 degrees 51 minutes 59 seconds West, along said
Northerly boundary line of Greenwood Lake Unit 2, a distance of 389.50 feet to
the Northwest corner thereof; said point also lying on the West line of the
Northeast Quarter of said Section 18; thence run along said West line North 00
degrees 11 minutes 30 seconds East 665.71 feet to the POINT OF BEGINNING.
PHASE III
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in
Continued
<PAGE>
EXHIBIT "A" continued
Page 3
Official Records Book 1776, Page 1293 for Lake Emma Road formerly a 100 foot
wide Right of Way as per official Records Book 1217, Page 413, all being in the
Public Records of Seminole County, Florida; thence run North 00 degrees 10
minutes 40 seconds East, along said Easterly line of the 10 foot wide additional
Right of Way, 146.88 feet to a point of curvature of a curve, concave Easterly,
having a radius of 894.93 feet; thence run 376.02 feet along the arc of said
curve through a central angle of 24 degrees 04 minutes 26 seconds for the POINT
OF BEGINNING; thence continue 15.82 feet along the arc of said curve thru a
central angle of 01 degrees 00 minutes 46 seconds to the point of tangency;
thence run North 25 degrees 15 minutes 52 seconds east, 408.64 feet; thence run
South 89 degrees 44 minutes 45 seconds East, 347.51 feet; thence South 35
degrees 36 minutes 38 seconds East, 228.49 feet to the point of curvature of a
curve, concave Southwesterly, having a radius of 100.00 feet and a central angle
of 36 degrees 00 minutes 00 seconds; thence run 62.83 feet along the arc of said
curve to the point of tangency thereof; thence South 00 degrees 23 minutes 22
seconds West, 275.25 feet; thence North 89 seconds West, 81.08 feet; thence
South 63 degrees 41 minutes 30 seconds West, 47.86 feet; to a point of curvature
of a curve, concave Northerly, having a radius of 266.00 feet; thence run 185.70
feet along the arc of said curve, thru a central angle of 40 degrees 00 minutes
00 seconds to the point of tangency thereof; thence North 76 degrees 18 minutes
30 seconds West, 33.26 feet for the POINT OF BEGINNING.
TOGETHER WITH:
Beneficial interests under that certain Declaration of Reciprocal Easements
dated November 13, 1967, recorded in Official Records Book 1906, Page 797,
Public Records of Seminole County, Florida, and that certain Supplemental
Declaration of Reciprocal Easements dated August 18, 1988, recorded in Official
Records Book 1988, Page 1502, Public Records of Seminole County, Florida.
PHASE IV
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said
Continued
<PAGE>
Exhibit "A" continued
Page 4
Section 18; thence run North 89 degrees 50 minutes 52 seconds West, along the
South line of the Northeast Quarter of the Northwest Quarter of Said Section 18,
a distance of 1237.15 feet to the Easterly line of a 10 foot wide additional
Right of Way as recorded in Official Records Book 1776, Page 1293 for Lake Emma
Road formerly a 100 foot wide Right of Way as per Official Records Book 1217,
page 413, all being in the Public Records of Seminole County, Florida; thence
run North 00 degrees 10 minutes 40 seconds East, along said Easterly line of the
10 foot wide additional Right of Way, 82.70 feet to the POINT OF BEGINNING;
thence continue along said Easterly line of a 10 foot wide additional Right of
Way the following two (2) courses and distances: North 00 degrees 10 minutes 40
seconds East 64.18 feet to the point of curvature of a curve, concave Easterly,
having a radius of 894.93 feet; thence run 376.02 feet along the arc of said
curve , thru a central angle of 24 degrees 04 minutes 26 seconds to a point;
thence departing said Right of Way and from a tangent bearing of South 24
degrees 15 minutes 06 seconds West, run South 76 degrees 18 minutes 30 seconds
East, 33.26 feet to a point of curvature of a curve, concave Northerly, having a
radius of 226.00 feet; thence run 185.70 feet along the arc of said curve thru a
central angle of 40 degrees 00 minutes 00 seconds to the point of tangency
thereof; thence North 63 degrees 41 minutes 30 seconds East, 47.86 feet; thence
North 77 degrees 51 minutes 57 seconds east, 81.08 feet; thence South 89 degrees
32 minutes 38 seconds East, 110.77 feet; thence South 00 degrees 23 minutes 22
seconds West, 270.38 feet; thence South 89 degrees 50 minutes 52 seconds East,
35.00 feet; thence South 00 degrees 23 minutes 22 seconds West, 126.52 feet;
thence North 89 degrees 32 minutes 23 seconds West, 5.31 feet; thence South 00
degrees 27 minutes 37 seconds West, 124.84 feet; thence North 89 degrees 50
minutes 52 seconds West, 404.53 feet to the point of curvature of a curve,
concave Northerly, having a radius of 150.00 feet and a central angle of 27
degrees 32 minutes 22 seconds; thence run 72.10 feet along the arc of said curve
to a point of reverse curvature of a curve, having a radius of 150.00 feet and a
central angle of 21 degrees 46 minutes 55 seconds; thence run 57.03 feet along
the arc of said curve to a point of reverse curvature of a curve, having a
radius of 50.00 feet and a central angle of 28 degrees 35 minutes 14 seconds;
thence run 24.95 feet along the arc of said curve to the POINT OF BEGINNING.
TOGETHER WITH:
Beneficial interests under that certain Declaration of Reciprocal Easements
dated November 13, 1987, recorded in Official Records Book 1906, Page 797.
Public Records of Seminole County, Florida, and that certain Supplemental
Declaration of Reciprocal Easements dated August 18, 1988, recorded in Official
Records Book 1988, page 1502, Public Records of
Continued
<PAGE>
Exhibit "A" continued
Page 5
Seminole County, Florida.
PARCEL A:
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the intersection of the West line of the Northeast Quarter of said
Section 18 with the existing South Right of Way line of Lake Mary Boulevard (an
existing 80 foot Right of Way); thence North 89 degrees 44 minutes 45 seconds
West, along said Right of Way line 382.17 feet; thence South 00 degrees 15
minutes 15 seconds West, 25.01 feet to a point on the proposed Southerly Right
of Way line of the aforementioned Lake Mary Boulevard, said point also being the
POINT OF BEGINNING ; thence continue South 00 degrees 15 minutes 15 seconds
West, 244.99 feet; thence North 89 degrees 44 minutes 45 seconds West, 249.74
feet to a point on the West line of the East Half of the Northeast Quarter of
the Northeast Quarter of said Section 18; thence North 00 degrees 11 minutes 04
seconds East, along said West line, 265.49 feet to a point on a curve, concave
Southwesterly, having a radius of 4902.92 feet; thence from a tangent bearing of
South 86 degrees 08 minutes 17 seconds East, run 158.97 feet long the arc of
said curve, thru a central angle of 01 degrees 51 minutes 28 seconds to a point
of reverse curvature of a curve, a concave Northeasterly, having a radius of
5040.92 feet; thence run 91,94 feet along the arc, thru a central angle of 01
degrees 02 minutes 42 seconds to the POINT OF BEGINNING.
<PAGE>
EXHIBIT B
SCHEDULE OF PERSONALTY
Christmas Decorations - garland, wreath
Split Blocks
Tiles for Roof
Pavers
1 Small Blower
1 Large Blower
Janitors Cart - Miscellaneous cleaning items
Miscellaneous tools
Pressure cleaner
Plastic Utility truck - 96 gallons
Folding platform cart
2 Ladders
Barricades, cones
Water hoses
21 Trash Cans
3 Bicycle Racks
Well pump
Sofa
Matching Side Chairs
Cocktail Table
7 Desks
9 Chairs
<PAGE>
EXHIBIT B-1
LIST OF PERSONAL PROPERTY
IN SMOKEY'S BAR-B-Q
40 Chairs
11 Tables
1 High chair
3 Neon signs w/trim
1 Tac cash register model MA-1400
1 Tranz 330 credit card machine (incomplete)
1 True 2 door ss small refrigerator w/ss table top
1 True 2 door ss large freezer
1 Small fiberglass sink w/fixture
1 One compartment ss sink w/fixture
1 Three compartment ss sink w/fixture
1 Table ss w/can opener & shelf
1 Bunn Pour-O-Matic coffee maker
1 Garland 4 burner stove w/oven
1 Pitco deep fryer Frislator model 35C
1 Hoshizakl cube star icemaker model KM-250BAB
1 Walk in Thermo Kool (large)
1 Mop bucket (rolling)
1 Eureka upright vacuum cleaner
1 File cabinet 2 drawer
1 Cafeteria style tile topped counter w/brass rails w/(2) Atlas Metal Ind.
coolers
5 Trash cans (plastic)
MISCELLANEOUS
Napkin & straw dispensers, ss baking sheets, styrofoam trays, plastic drink
tops, utensils, trays & bins, paper bags, ss bowls, large pots, pictures, and 4
artificial plant baskets.
<PAGE>
EXHIBIT B-2
LIST OF PERSONAL PROPERTY
IN SPACE FORMERLY OCCUPIED BY MA'S KITCHEN
1 Metro Wire Rack/Shelf
1 SS Condiment Rack
1 Eagle SS Hand Sink
Lot Smallwares and other items. Pots, Pans, Storage Containers, Bus Trays,
Serving Trays, SS Inserts, SS Cooking Sheets, Pitchers, Plates, Bowls,
Cups, Saucers, Knives, Forks, Spoons, Napkin Holders, Bud Vases, Salt and
Pepper Shakers.
1 SS Work Table
Size 60" x 30"
Under table storage
1 SS 3 compartment sink
SS Right Drain
SS Left Drain
Faucets
1 SS Wall Shelf
Size 68" x 16"
1 Mop Sink
1 White/Westinghouse Upright Freezer
Model #FU 211J
Approx. 21 cubic feet
Vinyl Front
Volts 115
Ht. 60
Ph. 1
1 SS Equipment Station (Low)
Size 56" x 26"
Under Counter SS Storage
1 Silverking Under Counter
Double Drawer Refrigerator
Self Contained
Volts 115
Hz. 60
Ph. 1
1 SS Refrigerated Sar
Size 4 ft.
SS
Cutting Board Ins
Refrigerated Under
1 Eagle Full Pan Warmer
Counter Top
SS
Volts 115
Hz. 60
Ph. 1
Controls
<PAGE>
Exhibit B-2 continued -
Page 2
1 Univex SS Slicer
Model #7512
Ser. #43551
Blade Size 12"
Volts 115
Hz. 60
Ph. 1
1 S.S. 3 Door Upright Reach In Cooler
Self Contained
Volts 115
Hz. 60
Ph. 1
1 Metro Wire Rack/Shelving
1 S.S. Work Table
Roll-a-round
60" X 30"
Under Counter Storage
1 Cutting Board (60" X 30")
1 Amana Micro Wave Oven
1 Gas Hot Water Heater
1 4 Burner Stove-Oven
Combination (Garland)
Controls
Natural Gas
1 S.S. Hood System
Size 10 Ft. Overall
Fire System Complete
Exhaust Fan
Makeup Air
Filter System
S.S. Backwall Panels
Lighting
Controls, Etc.
1 Cecilware Gas Fryer
Model #GF-28
Natural Gas
28 lb. Capacity
Input B.T.U.45,000
S.S.
Counter Top
Two Basket
1 Garland Flat Grill
Natural Gas
Size 36"X18"
<PAGE>
Exhibit B-2 continued -
Page 3
1 McCray Glass Front Refrigerated
Deli Display Case
Model #SC-CDS-32F-6
Ser. #87-36454
Size 6 Ft.
S.S.
Self Contained
Volts 115
Hz. 60
Ph.1
1 Perlick Draft Beer Cooler
Two Head
S.S. Top
Self Contained
Two Keg Refrigerated Storage
Volts 115
Hz. 60
Ph. 1
60 Black Vinyl-Metal Stack Chairs
4 Maple Wood Armed Captain Chairs
11 Mica Top Single Pedestal (21/2' square) Dining Room Tables
9 Mica Top Single Pedestal (2' square) Dining Room Tables
7 Automatic Ceiling Fans
Four Bladed-White Color
1 Schmidt Glass Front Refrigerated
Pastry Display Case
Model #SHR-15
Size 5 Ft.
Self Contained
Volts 115
Hz. 60
Ph. 1
1 Mica Top Dining Table (3' d.a. round)
Note: 1 Coca Cola reach-in refrigerator case (upright), plus cola tanks and
machine (owned by beverage distributor) are in space but not part of equipment
package.
<PAGE>
EXHIBIT C
PERMITTED EXCEPTIONS
This policy does not insure against loss or damage by reason of the following:
1. Taxes for the year 1995 and any taxes and assessments levied or
assessed subsequent to the effective date hereof, not yet due and
payable and taxes or assessments which are not shown as existing, liens
by public records.
2. Rights or claims of parties in possession not shown in the Public
Records, as tenants only under unrecorded leases, with no option to
purchase.
3. Easement recorded in Official Records Book 1783, Page 1, Public
Records of Seminole County, Florida.
4. Easement recorded in Official Records Book 1830, Page 1078, Public
Records of Seminole County, Florida.
5. Easement recorded in Official Records Book 1875, Page 105, Public
Records of Seminole County, Florida.
6. Easement recorded in Official Records Book 1906, Page 797;
Supplemental Declaration of Reciprocal Easements recorded in Official
Records Book 1988, Page 1502, Public Records of Seminole County,
Florida.
7. Easement recorded in Official Records Book 1944, Page 1090, Public
Records of Seminole County, Florida.
8. Easement recorded in Official Records Book 1964, Page 228, Public
Records of Seminole County, Florida.
9. Easement recorded in Official Records Book 2001, Page 1141, Public
Records of Seminole County, Florida.
10. Easement recorded in Official Records Book 2010, Page 127, Public
Records of Seminole County, Florida.
11. Easement recorded in Official Records Book 2153, Page 1129, Public
Records of Seminole County, Florida.
12. Cross Access Agreement and Grant of Easement recorded in Official
Records Book 1796, Page 1315, Public Records of Seminole County,
Florida.
13. Resolution recorded in Official Records Book 1936, Page 1406,
Public Records of Seminole County.
14. Development Order adopted on December 3, 1985, notice of which is
recorded in Official Records Book 1699, page 922; as amended in
Official Records Book 1720, Page 835; Official Records Book 1767, Page
1320; Official Records Book 2157, Page 330; and in Official Records
Book 2740; Page 572 re-recorded in Official Records Book 2766, Page
1566, Public Records of Seminole County, Florida.
15. Rights of the County of Seminole arising out of that certain
Warranty Deed from Lake Mary Centre, Ltd., a Florida limited
partnership, recorded in Official Records Book 1875, Page 113 Public
Records of Seminole County, Florida.
16. Rights of the County of Seminole arising out of those certain Bill
of Sales recorded in Official Records Book 1875, Page 109; Official
Records Book 2009, Page 43; and Official Records Book 2157, Page 398,
Public Records of Seminole County, Florida.
1
<PAGE>
Exhibit C continued -
17. Easement recorded in Official Records Book 2222, Page 589, Public
Records of Seminole County, Florida.
18. Easement recorded in Official Records Book 2249, Page 816, Public
Records of Seminole County, Florida.
19. Easement recorded in Official Records Book 2010, Page 130, Public
Records of Seminole County, Florida.
20. The following matters of survey as shown on that certain survey by
Ganung & Associates, Inc., dated November 1, 1991, Job No. 963.6, as
revised July 25, 1994 are as follows:
A. Encroachments into easement area as set forth in that certain
easement recorded in Official Records Book 1830, Page 1078; and that
certain easement recorded in official Records Book 1875, Page 105, of
the Public Records of Seminole County, Florida.
1. Retaining wall
2. Fence
3. Block wall
4. 6 foot chain link fence
5. 7.9 foot concrete walk and driving range tees
B. Encroachments into easement area as set forth in that certain
Distribution Easement recorded in Official Records Book 1944, Page
1090, Public Records of Seminole County, Florida are as follows:
1. Fence
2. Retaining wall
C. Encroachments into easement area as set forth in that certain
Traffic Signal Pole Easement recorded in Official Records Book 1964,
Page 228, Public Records of Seminole County, Florida are as follows:
1. Numerous guy wires
D. Encroachments into easement area as set forth in that certain
Utility Easement recorded in Official Records Book 2001, Page 1141,
Public Records of Seminole County, Florida are as follows:
1. Two signs
2. Traffic island
E. Encroachments into easement area as set forth in that certain
Easement recorded in Official Records Book 2153, Page 1129, Public
Records of Seminole County, Florida are as follows:
1. Light pole
2. Dumpster pad with 5 foot wall
3. Sanitary manhole
4. Transformer pad
F. Encroachments into easement area as set forth in that certain
Distribution Easement recorded in Official Records Book 2100, Page 774;
and that certain Distribution Easement recorded in Official Records
Book 2100, Page 756, Public Records of Seminole County, Florida are as
follows:
2
<PAGE>
Exhibit C continued -
1. 8 inch sanitary lines
2. Sanitary manhole
3. Light pole
4. Dumpster pad with 5 foot wall
G. Encroachments into easement area as set forth in that certain
Distribution Easement recorded in Official Records Book 2249, Page 816,
Public Records of Seminole County, Florida are as follows:
1. Fence
H. Encroachments into easement area as set forth in that certain Cross
Access Easement and Grant of Easement recorded in Official Records Book
1796, Page 1315, Public Records of Seminole County, Florida are as
follows:
1. Traffic islands
2. Numerous drainage, sanitary and water main lines
3. Drain inlet grate
4. Light and power poles
5. Dumpster pad with brick wall
6. Underground junction box
7. 5 foot by 5 foot concrete pad for telephone equipment
8. Two water meters
21. Ground Lease dated April 8, 1988 by and between Lake Mary Centre,
Ltd., and NCNB National Bank of Florida; Memorandum of said Lease is
recorded in Official Records Book 1964, Page 620, re-recorded in
Official Records Book 1984, Page 392, Public Records of Seminole
County, Florida. Non-Disturbance and Attornment Agreement was recorded
in Official Records Book 1964, Page 624.
22. Lease dated September 12, 1988 by and between Lake Mary Centre.,
Ltd., and General Cinema Corporation, memorandum of said lease is
recorded in Official Records Book 2010, Page 375, Public Records of
Seminole County, Florida. Non-Disturbance and Attornment Agreement was
recorded in Official Records Book 2020, Page 54; and Assignment and
Assumption of Lease recorded in official Records Book 2724, Page 271;
and in Official Records Book 2724, Page 276.
23. Lease dated January 6, 1988 by and between Lake Mary Centre., Ltd.,
and K Mart Corporation, memorandum of said lease is recorded in
Official Records Book 1950, Page 925, Public Records of Seminole
County, Florida. Subordination, Non-Disturbance and Attornment
Agreement was recorded in Official Records Book 1988, Page 1529.
24. That certain unrecorded lease dated May 21, 1986 by and between
Lake Mary Centre., Ltd., and Davgar Restaurants Inc., and all
encumbrances. Non-Disturbance and Attornment Agreement was recorded in
Official Records Book 2031, Page 978.
25. Distribution Easements recorded in Official Records Book 1893, Page
1187, Official Records Book 2100, page 774; and Official Records Book
2100, Page 756.
26. Lease Agreement dated October 3, 1989 by and between Lake Mary
Centre., Ltd., and Chili's Inc., memorandum of said lease is recorded
in Official Records Book 2120, Page 432; Subordination, Attornment and
Non-Disturbance and Attornment Agreement was recorded in Official
Records Book 2133, Page 1316, Public Records of Seminole County,
Florida.
27. Unrecorded lease dated August 8, 1991 and Assignment of Lease and
Collateral Assignment of Lease recorded in Official Records Book 2502,
Page 241; Collateral Assignment of Sublease recorded in Official
Records Book 2502, Page 227; and Assignment of Loan Documents recorded
in Official Records Book 2532, Page 798.
3
<PAGE>
Exhibit C continued -
28. Notice Pursuant to Florida Statutes Chapter 713.10 recorded in
Official Records Book 2917, page 437.
29. Memorandum of Lease by and between 1740 Ventures, Inc. and
Progressive Bagel Concepts, Inc. (tenant) dated September 6, 1995,
recorded September 24, 1995 in official Records Book 2970, page 1491.
4
<PAGE>
EXHIBIT D
RENT ROLL
LAKE MARY CENTRE
CURRENT TENANT LEASE SUMMARY
JULY 1995
<TABLE>
<CAPTION>
LEASE COMMENCE
TENANT SPACE SQ. FT. -MENT DATE
<S> <C> <C> <C>
Albertson's 63,139 6-3-87
An English Garden T-1 750 1-1-92
Beach Scene G-3 1,880 5-1-88
Bell Tel Federal Credit Union A-2 1,300 11-20-92
Book Rack T-4 1,000 2-15-94
Carvel Ice Cream D-4 1,332 11-15-91
Clothes Horse Too H-1 1,543 7-1-93
Daniel & Wohlwender Realty E-4 2,000 9-1-92
Debbie's Health Food E-3 2,000 10-1-90
Designer Pool Supplies H-3 2,000 4-1-89
Fannie May Candies D-2/3 1,275 7-1-87
Framing Creations G-7 1,375 4-15-95
Furniture Design R-2/3 2,128 9-15-93
Galleria Italian Ristorante A-1 1,950 5-1-92
General Cinema Theatre 35,712 5-25-90
Great Clips T-10 1,500 9-15-90
H & R Block F-2 1,300 12-1-92
Hardy & Callaway 2nd Floor 4,000 12-19-94
(subject to 90 days notice to vacate
from termination of Management)
The Inkwell S-2 1,350 6-1-95
Kenpo Martial Arts J-1 2,000 6-1-92
(tenant vacated - lease expires 10/15/95)
K-Mart 86,479 8-18-88
Kumquat Tree Chinese Restaurant F-6/7 2,600 6-1-87
Lake Emma Animal Hospital K-2/3 2,600 9-12-89
Lake Mary Centre Driving Range 8-1-91
At Retention Pond
Lake Mary Jewelry G-1 813 8-1-88
Lake Mary Shoe Repair/Leather Depot T-3 750 1-5-90
Little Caesar's Pizza F-3 1,300 5-4-87
Matt Arena Studio S-1 3,655 4-1-92
Movie Gallery T-7/8/9 4,750 6-1-95
Mr. Print C-IA 860 3-10-89
New England Clam Box G-2 2,020 1-1-92
(month-to-month tenant)
Osaka Japanese Steakhouse R-1 3,330 10-1-89
(month-to-month tenant)
Play It Again Sports H-4 2,000 7-1-93
Progressive Bagel Concepts, Inc. C-3/D-1 2,600 1-4-96
<PAGE>
Exhibit D continued -
Page 2 LEASE COMMENCE-
LEASE COMMENCE
TENANT SPACE SQ. FT. -MENT DATE
<S> <C> <C> <C>
Pyle & Associates C-2 1,300 10-1-87
Quality Images One Hour Photo F-1 1,300 6-12-87
Radio Shack G-6 2,590 11-10-90
Salon Vienna II F-4 1,300 6-1-87
Seminole County Sheriff's Station G-5 1,295 4-30-93
Siegel's Clothing J-2/3 4,288 8-1-88
Smokey's Bar-B-Q T-11 1,500 4-15-94
Sue's Hallmark E-l/2 2,400 6-1-87
Super Dollar H-2 1,600 7-10-93
The Silk Touch F-5 1,300 8-1-94
The Eyes Have It Optical B-1 1,100 12-18-91
Thirsty Whale Too/Sports Academy T-5/6 2,750 12-15-89
Totally Laser K-1 1,300 4-1-94
Town N' Country Dry Cleaners E-5 1,488 7-1-87
Transformations International A-3 1,300 1-1-91
Video Game Masters S-3 1,150 7-1-94
Yogurt Cay T-2 750 2-1-90
OUTPARCELS
Burger King (Build to Suit) 3,909 5-1-87
Chili's (Ground Lease) 5,999 7-30-90
Nations Bank (Ground Lease) 3,900 9-1-88
</TABLE>
<PAGE>
EXHIBIT E
TENANT ESTOPPEL STATEMENT
RE: Lease Dated: Amended:
Landlord:
Tenant:
Premises:
As Tenant under the above-referenced Lease, the undersigned hereby
acknowledges for the benefit of Equity One (Lake Mary) Inc. which has acquired
or is about to acquire the property in which the Premises is located, and The
Mutual Life Insurance Company of New York which has or is about to provide a
first mortgage loan to be secured by the property in which the Premises is
located, the truth and accuracy of the following statements pertaining to the
Lease:
1. Tenant has accepted, is satisfied with, and is in full possession of
said Premises, including all improvements, additions, and alterations
thereto required to be made by Landlord under the Lease.
2. The Lease is in full force and effect, and Tenant is paying the full
rent stipulated in the Lease with no offsets, defenses, or claims.
3. Landlord is not presently in default under any of the terms,
covenants, or provisions of the Lease.
4. Landlord has satisfactorily complied with all of the requirements
and conditions precedent to the commencement of the term of the Lease
as specified in the Lease.
5. The fixed annual rent under the Lease is $____, and no monies have
been paid to Landlord in advance of the due date set forth in the Lease
described above, except ___________. The minimum monthly rent is $
________ and the monthly charge for common area maintenance is $____.
The last monthly was made for the month of _______________.
6. The Lease is for a term of ____ years, and Tenant has been in
occupancy and paying rent since the term commenced on ___________. The
Lease terminates on______________.
7. No monetary or other considerations, including but not limited to
rental concessions by Landlord, tenant improvements in excess of
building standard, or Landlord's assumption of prior lease obligations
of Tenant, have been granted to Tenant by Landlord for entering into
the Lease, except ________.
8. The Tenant has not been and is not presently in default under any of
the terms, covenants, or provisions of the Lease.
9. The Tenant has delivered to the Landlord a security deposit in the
amount of $___________.
10. Tenant acknowledges for the benefit of Equity One (Lake Mary) Inc.
and The Mutual Life Insurance Company of New York that: (a) there have
been no modifications or amendments to the Lease other than herein
specifically stated, (b) it has no notice of a prior assignment,
hypothecation, or pledge of rents or of the Lease, (c) the Lease
represents the entire agreement between Landlord and Tenant, (d) no
prepayment or reduction of rent and no modification, termination, or
acceptance of surrender of the Lease will be valid as to Equity One
(Lake Mary) Inc. and The Mutual Life Insurance Company of New York
without the consent of said Equity One (Lake Mary) Inc. and The Mutual
Life Insurance Company of New York, and (e) notice of the proposed
assignment of Landlord's interest in the Lease may be given it by
certified or registered mail, return receipt requested, at the Premises
or as otherwise directed below.
<PAGE>
Exhibit E continued -
Page 2
TENANT:
By:___________________
Its:__________________
Date:_________________
Address to which notices are
to be sent to Tenant if other
than to the Premises:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
<PAGE>
ADDENDUM TO PURCHASE AND SALE AGREEMENT (THE "ADDENDUM") DATED
EFFECTIVE AS OF OCTOBER 24, 1995 BY AND BETWEEN 1740 VENTURES, INC.
("SELLER") AND EQUITY ONE (LAKE MARY) INC. ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into that certain Purchase and
Sale Agreement (the "Agreement") dated effective as of the 24 day of October,
1995 pursuant to which Seller agreed to sell and Purchaser agreed to purchase
that certain real property commonly known as Lake Mary Centre; and
WHEREAS, the parties wish to add language to the Agreement to: permit
Seller to extend the Closing Date in the event it is unable to obtain tenant
estoppels from the anchor tenants as required in Section 6 captioned CLOSING
DOCUMENTS, subparagraph (l); to add additional language to Section 3 captioned
BASE PURCHASE PRICE/PURCHASE MONEY MORTGAGE; and to add new Section 3a.
captioned K-MART CONTINGENCY which additions are set forth herein.
NOW, THEREFORE, in consideration of the Property and the terms and
conditions set forth herein, Seller and Purchaser agree as follows:
1. Capitalized terms set forth herein shall have the same meaning as
set forth in the Agreement.
2. Section 6 captioned CLOSING DOCUMENTS is modified by adding the
following to the end of subparagraph (l):
"In the event Seller is unable to obtain an estoppel from any of
the anchor tenants three (3) business days prior to the Closing
Date, Seller shall have the right to extend the Closing Date
thirty (30) days but in no event later than November 30, 1995.
3. Section 3 captioned BASE PURCHASE PRICE/PURCHASE MONEY MORTGAGE
is modified by adding the following new paragraph at the end
thereof:
"The initial disbursal on the loan as set forth above shall not
exceed $13,422,500.00. The Purchaser may qualify for an
additional disbursal of the loan after completion of the
improvements to the Phase IV land to the extent of the lesser of
sixty (60%) percent of the actual construction cost of the
capital improvements to the Phase IV land OR sixty (60%) percent
of the fair market value of the capital improvements as
determined by an MAI appraiser selected by the Lender and
<PAGE>
paid for by the Borrower provided that: (i) the loan is not in
default beyond expiration of any applicable notice and/or cure
period; (ii) the Purchaser has contributed not less than one
million and no/100 ($1,000,000.00) dollars to the capital
improvements which sum may come from the proceeds of the letter
of credit for the Capital Improvement Pledge; (iii) Purchaser
complies with local code and building requirements including
obtaining all necessary building permits and Lender approves
construction of the improvements which will not be unreasonably
withheld. As to construction of the improvements, Purchaser
agrees that the quality of the materials used and the design
thereof shall be consistent with the remaining portions of the
Property; (iv) the Lender has received and approved in its
reasonable discretion the tenant, the use and the form, terms
and conditions of the proposed lease for the tenant that is to
occupy the majority of the Phase IV land, but in no event shall
such tenant occupy improvements of less than 25,000 square
feet. Provided that the Purchaser qualifies for the additional
disbursement, Purchaser acknowledges that all costs associated
with the disbursal of additional sums of the loan shall be paid
for by the Purchaser including but not limited to the Lender's
legal fees; cost of endorsing the Lender's title policy; cost of
updating the survey to show as-built the improvements to the
Phase IV land; the cost of all intangible and/or mortgage taxes
and recording charges. The sums disbursed in connection with the
additional disbursement shall mature simultaneously with the
initial disbursal of the $13,422,500.00. Interest and payment
terms for the additional disbursal shall be subject to the
Lender's then applicable underwriting requirements. In the event
Lender is not making loans secured by real estate at the time
Purchaser requests the additional disbursal, the interest rate
and the payment terms shall be subject to then applicable market
conditions taking into account U.S. Treasury Spreads and such
factors as the loan to value ratio; the location and age of the
Property; and the then current leasing conditions. All terms and
conditions of the additional disbursal and the form of the
documents evidencing and securing the same shall be subject to
the review and approval of the Lender. Lender shall act in good
faith and make a reasonable effort to provide the funding
described herein. If Lender does not make the additional
disbursement, Purchaser shall have the option to seek financing
from a third party and shall pay down the principal balance on
the loan by the sum of five hundred thousand and no/100
($500,000.00) dollars without payment of any prepayment premium
and to have the Phase IV land released from Lender's security.
In connection with such release, Purchaser shall pay for
Lender's reasonable expenses for legal fees, title charges and
recording charges in connection with the partial release.
Purchaser shall also provide
2
<PAGE>
Lender with a copy of the as-built survey for Phase IV upon
completion of the improvements. Purchaser agrees that
notwithstanding the release of the Phase IV land, that any
improvements thereon shall not be used for a use that is
inconsistent or in conflict with any use restrictions set forth
in the remaining leases for the Property nor shall such
improvements be used for any illegal or immoral purpose
including but not limited to use as an adult entertainment
establishments, adult bookstore, pawn shop, massage parlor, for
the sale of military artifacts, or for a health club, it being
the intention that the Property maintain a family oriented use.
4. New Section 3(a) captioned K-MART CONTINGENCY will be added as
follows:
[See Exhibit A attached hereto and made a part hereof for the
K-Mart Contingency.]
5. Facsimile copies of this Addendum shall be deemed an original;
provided that Seller and Purchaser agree to exchange original copies
within a reasonable time after exchanging facsimiles.
Except as set forth herein, the terms and conditions set forth in the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Addendum as of the date first written above.
AS TO SELLER:
WITNESS: 1740 VENTURES, INC.
a New York corporation
/S/ E. S. MCCLAY /s/ Bruce C. Fernald
Print Name:----------------- By: --------------------
E. S. MCCLAY Bruce C. Fernald
Vice President
/S/ CINDY MAYNE
Print Name:-----------------
CINDY MAYNE
(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)
3
<PAGE>
AS TO PURCHASER:
WITNESS: EQUITY ONE (LAKE MARY) INC.,
a Florida corporation
- ------------------------------
/S/ DORON VALERO
Print Name:------------------- By:--------------------------
DORON VALERO
- ------------------------------ Print Name:------------------
Print Name:------------------- Title: VICE PRESIDENT
4
<PAGE>
EXHIBIT A
K-MART CONTINGENCY
In the event K-Mart files or a third party has filed against K-Mart
any petition or application for relief, extension, moratorium, or reorganization
under any bankruptcy, insolvency or debtor's relief law or law where under
K-Mart is making an assignment for the benefit or creditors, or entering into
any such trust or arrangements or becoming a party to any receivership
proceeding including but not limited to the filing of a Petition for Relief
under the United States Bankruptcy Code (or any successor or replacement
Statutes or Rules of Regulations relating thereto) and K-Mart has rejected that
cetain Lease dated January 8, 1988 (hereinafter referred to as the "K-Mart Lease
") (hereinafter such event shall be referred to as the K-Mart Event") Seller
and/or Lender (sometimes hereinafter referred to as "Seller/Lender") will
provide to the purchaser, on a monthly basis, a cash payment in an amount equal
to what K-Mart would have paid under the forms of the Lease for "Annual Minimum
Rental" (as defined in the Lease) and pass throughs for common area maintenance,
insurance and real estate taxes but excluding any amount for additional rent
based upon gross sales (hereinafter such cash payment shall be referred to as
the "K-Mart Payment").
For all purposes hereunder, the obligation to pay the K-Mart Payment
is limited by the following qualifications: (i) the obligation shall expire at
12:01 a.m. on the day that is three (3) years from the date of Closing unless a
K-Mart Event has occurred within such three (3) year period and the Lease is
rejected within the three (3) years of Closing in which event said obligation
will run for three (3) years from the date the Lease is rejected; (ii) the loan
from the Lender is not in default beyond expiration of any notice; and (iii)
Purchaser complies with the terms set forth below.
If the K-Mart lease is rejected as a result of the occurrence of the
K-Mart Event, Purchaser agrees to: (i) pursue collection of pre and post
Petition rental obligations due under the K-Mart Lease;
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(ii) make diligent efforts to regain possession of the K-Mart premises; (iii)
diligently attempt to relet the K-Mart premises at the then current market terms
and report to Seller/Lender on a monthly basis Purchaser's leasing activity with
respect to the K-Mart premises; (iv) grant Seller/Lender the authority to
procure a suitable replacement tenant (hereinafter "Replacement Tenant") and to
consider in good faith any tenant presented to Purchaser by Seller/Lender.
It is the intention of the parties that the Seller/Lender be
credited against its obligations hereunder for any sums collected by the
Purchaser from K-Mart or its Replacement Tenant.
For purposes of this Agreement, a national tenant with a net worth
of $150,000,000.00 who will execute a lease for a term of at least ten (10)
years at a minimum annual rental, including percentage rentals, plus all pass
throughs (the total of such payments shall be hereinafter referred to as
"Replacement Tenant Payments") greater than or equal to the K-Mart Payment shall
not be subject to approval by either Purchaser or Seller/Lender. A Lease for any
Replacement Tenant that does not meet the above standards shall require
reasonable approval of the Purchaser. A Replacement Tenant shall not be a tenant
who shall use the premises for any illegal or immoral purpose, including but not
limited to use as an adult entertainment establishment; adult book store; pawn
shop; massage parlor; for the sale of military artifacts, or for a health club,
it being the intention that Lake Mary Center maintain a family oriented use.
It is hereby agreed and understood by the parties hereto that it is
in the best interest of each to mitigate damages in the event a K-Mart Events
occurs and the Lease is rejected.
For any lease signed during the period when Seller's obligation
under the K-Mart Event is in effect Seller/Lender will pay the difference
between the Replacement Tenant Payment and the K-Mart Payment. In the event the
Replacement Tenant Payment is in excess of the K-Mart Payment, same
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<PAGE>
shall be defined as Excess Income and be distributed as follows:
1. In the event either the Purchaser or Seller/Lender, or both,
shall expend monies for tenant improvements in order to obtain a
Replacement Tenant, the party (or parties expending such sum for
tenant improvement shall have a priority right to receive, prorata,
all of the Excess income paid by the Replacement Tenant until such
time that said party has recovered all of the out-of pocket costs
for tenant improvements plus interest, compounded annually on the
unpaid balance, at a rate of 1.5% over the yield of U.S. Treasury
Bonds that have a maturity based on the time remaining on the
earlier of the expiration on the Replacement Tenant Lease or the
K-Mart Lease (hereinafter said amount shall be referred to as
"Replacement Tenant Reimbursement"). The yield shall be locked on
the date of the signing of the Lease for Replacement Tenant. For
purposes of this Agreement, Tenant improvement shall include any
free rent or other rental concession given to the Replacement
Tenant. Notwithstanding the foregoing, all Tenant improvements shall
be paid by Seller up to an amount not to exceed Seller/Lender's
total liability under this Contingency Agreement taking into account
any other monies expended by Seller/Lender as required herein. The
Seller/Lender shall have the option to pay such amount for Tenant
improvements in one lump sum or in payments equal to the monthly
K-Mart Payment together with interest compounded annually on the
unpaid balance, at a rate of 1.5% over the yield of US. Treasury
Bonds that have a maturity based on the time remaining on the
earlier of the expiration on the Replacement Tenant Lease or the
K-Mart Lease until Seller/Lender shall have paid the entire
obligation for Tenant
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<PAGE>
improvement. Payment of interest shall not increase the
Seller/Lender's obligation to be greater than the total obligation
under the K-Mart Event.
2. Upon full payment of the Replacement Tenant Reimbursement,
Seller/Lender and Purchaser will share on a fifty/fifty basis such
Excess Income until such time that Seller/Lender is reimbursed for
all sums expended under this K-Mart Contingency (excluding Tenant
Improvement) together with interest compounded annually on the
unpaid balance, at a rate of l.5% over the yield of U.S. Treasury
Bonds that have a maturity based on the time remaining on the
earlier of the expiration on the Replacement Tenant Lease or the
K-Mart Lease.
3. Once the Seller/Lender has been reimbursed for all such sums, the
Seller/Lender shall not be entitled to any additional Excess Income
distributions.
4. In the event that there are any funds unrepaid as Replacement
Tenant Reimbursement or any other sums expended under this K-Mart
Contingency, and the Replacement Tenant extends its leases, by
option or otherwise, the remaining balance unrepaid, if any, shall
be paid as set forth in Paragraph 1 and 2, above, respectively.
However, the interest rate of 1.5% over the yield of U.S. Treasury
Bonds that have a maturity based on the time of said lease
extension.
In the event of a sale of the subject property, and the purchase
price exceeds the original cost plus all capital improvements made to the
Property by the Purchaser including those costs represented by that certain
Pledge Agreement dated on even date herewith concerning the General Cinema space
and Phase IV Development, and such excess is directly attributable to the Excess
Income generated by the Replacement Tenant, then such excess (hereinafter
"Excess Sales Proceeds") sales shall be
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<PAGE>
distributed as follows:
1. In the event the Replacement Tenant Reimbursement is still due to
the party who advanced the costs of tenant improvements for the
Replacement Tenant, said party shall be reimbursed for any
outstanding balance; and
2. The balance of the Excess Sales Proceeds, if any, shall then be
distributed fifty (50%) percent to the Purchaser and fifty (50%)
percent to the Seller/Lender until such time as the Seller/Lender
shall be completely reimbursed for any and all amounts advanced
under the K-Mart Contingency plus interest for such advanced funds
compounded annually on the unpaid balance, at a ratio of 1.5% over
the yield of U.S. Treasury Bonds that have a maturity based on a
term commencing with the date of such advancement and terminating on
August 31, 2013; and
3. Once the reimbursements as set forth in Paragraphs 1 & 2 have
been made, the Seller/Lender shall not be entitled to any additional
distribution from the Excess Sales Proceeds and the balance of the
Excess Sales Proceeds, if any, shall then be distributed to the
Purchaser.
Notwithstanding the terms and conditions set forth above, it is
hereby understood that the right and obligations set forth herein are intended
to run solely to the benefit of the Seller/Lender or its affiliated companies
and Purchaser or its affiliated companies and the rights and obligations herein
shall not be assignable to a third party not a party to this Agreement except,
with respect to the Purchaser, this Agreement may inure to the benefit of a
wholly owned subsidiary of Equity One, Inc.
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<PAGE>
Notwithstanding anything contained herein to the contrary, the
Seller/Lender shall not be entitled to share in any Excess Income or Excess Sale
Proceeds if a Lease for the Replacement Tenant is not executed within the period
of this Contingency Agreement or the Seller/Lender has not advanced any sums
pursuant to this K-Mart Event.
Any sums payable from Seller/Lender to Purchaser shall be deemed
to be a reimbursement for loss of income.
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EXHIBIT 10.19
OFFICIAL RECORDS
BOOK PAGE
2992 0137
SEMINOLE CO. FL.
[LANDSCAPED]
Record and Return to:
Kevin M. Walsh, Esq.
The Mutual Life Insurance
Company of New York
c/o ARES Realty Capital, Inc.
5775-E Glenridge Drive, Suite 100
Atlanta, GA 30328
FLORIDA REAL ESTATE
MORTGAGE AND SECURITY AGREEMENT
THIS FLORIDA REAL ESTATE MORTGAGE AND SECURITY AGREEMENT (hereinafter
called "Mortgage") is made and entered into this 9th day of November, 1995 by
and between EQUITY ONE (LAKE MARY) INC., a Florida corporation (hereinafter
called "MORTGAGOR"), which Mortgagor maintains offices at Penthouse, 777 17th
Street, Miami Beach, Florida 33139, and THE MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK, a New York corporation, with offices at 1740 Broadway, New York, New York
10019, (hereinafter called "Mortgagee");
W I T N E S S E T H :
WHEREAS, Mortgagor is justly and lawfully indebted to Mortgagee in the
sum of THIRTEEN MILLION FOUR HUNDRED TWENTY-TWO THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($13,422,500.00), evidenced by that certain Note Secured By First Real
Estate Lien (hereinafter called the "Note"), executed by Mortgagor, bearing the
same date as this instrument, to be paid according to its terms, the final
payment of which is due and payable on December 1, 2010.
Mortgagor covenants, represents and agrees there is now due and owing
on the Note secured by this Mortgage, without offset or defense, the principal
sum of $13,422,500.00, with interest which is a first lien of $13,422,500.00.
NOW, THEREFORE, to secure the payment of the aforesaid indebtedness,
and such future or additional advances as may be made by the Mortgagee, at its
option, to the Mortgagor, or its successor(s) in title, for any purpose,
provided that all those advances are to be made within twenty (20) years from
the date of this Mortgage, or within such lesser period of time as may be
provided hereafter by law as a prerequisite for the sufficiency of actual notice
or record notice of the optional future or additional advances as against the
rights of creditors or subsequent purchasers for valuable consideration; the
total amount of indebtedness secured by this Mortgage may decrease or increase
from time to time, but the total unpaid balance so secured at any one time shall
not exceed the maximum principal amount of TWENTY-SIX MILLION EIGHT HUNDRED
FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($26,845,000.00), plus interest, and any
disbursements made for
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OFFICIAL RECORDS
BOOK PAGE
2992 0138
SEMINOLE CO. FL.
[LANDSCAPED]
the payment of ad valorem real estate taxes, levies or insurance on the property
covered by the lien of this Mortgage with interest on those disbursements; the
Mortgagor hereby grants, bargains, sells, conveys, assigns, transfers,
mortgages, pledges, delivers, sets over, warrants and confirms to the Mortgagee:
ALL those certain lots, pieces, or parcels of land with the buildings
and improvements now and/or hereafter situate thereon, commonly known as Lake
Mary Centre, lying and being in Seminole County, Florida (hereinafter
collectively called the "Property"), the legal description of which is set forth
on Exhibit A attached hereto and by this reference made a part hereof with the
same force and effect as though the contents of said Exhibit A were set forth
herein at length.
TOGETHER WITH all and singular the tenements, hereditaments, easements,
including that certain Declaration of Reciprocal Easements dated November 13,
1987 and recorded in Official Records Book 1906, page 797, of the Public Records
of Seminole County, Florida, and that certain Supplemental Declaration of
Reciprocal Easements dated August 18, 1988 and recorded in Official Records Book
1988, Page 1502, of the Public Records of Seminole County, Florida, riparian and
other rights thereunto now or hereafter belonging or in anywise appertaining;
and the rights, if any, in all adjacent roads, ways, streams and alleys; and the
reversion or reversions, remainder and remainders, rents, issues and profits
thereof; and also all the estate, right, title, interest, property, claim and
demand whatsoever of the Mortgagor of, in and to the same and of, in and to
every part and parcel thereof.
TOGETHER WITH all machinery, apparatus, equipment, fittings, fixtures,
furniture and furnishings, which furniture and fixtures shall be free of liens
prior to the lien of this instrument, whether actually or constructively
attached to said Property, including all trade, domestic and ornamental
fixtures, and articles of property of every kind and nature whatsoever
(hereinafter collectively called "Equipment"), now or hereafter owned by
Mortgagor and located in, upon or under said Property or any part thereof and
used or useable in connection with any present or future operation of said
Property, including, but not limiting the generality of the foregoing, all
heating, air conditioning, air cooling, sprinkling, freezing, lighting, electric
distribution, laundry and incinerating apparatus, fixtures, conduits and
attachments, and dynamo and generating equipment; engines, pipes, pumps, tanks,
motors, switchboards, lifting stations, plumbing and plumbing fixtures; lifting,
cleaning, fire prevention, fire extinguishing, refrigerating, ventilating,
sewage processing and communications apparatus; boilers, ranges, furnaces, oil
burners or units thereof; appliances, carpeting, underpadding, vacuum cleaning
systems; elevators, escalators; shades, awnings, screens, blinds, storm doors
and windows; all of which foregoing items set forth in this paragraph are hereby
declared to be part of the real estate and covered by this Mortgage; together
also with all additions thereto and replacements thereof (Mortgagor hereby
agreeing with respect to all additions and replacements, to execute and deliver
from time to time such further instruments as may be requested by Mortgagee to
confirm their inclusion herein.)
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OFFICIAL RECORDS
BOOK PAGE
2992 0139
SEMINOLE CO. FL.
[LANDSCAPED]
TOGETHER WITH (a) any and all awards or payments, including interest
thereon and the right to receive the same, growing out of or as a result of any
exercise of the right of eminent domain, including the taking of said Property
or payment for alteration of the grade of any street upon which said Property
abuts, or any other injury to, taking of, or decrease in the value of, said
Property to the extent of all amounts which may be owing the indebtedness
secured by this Mortgage at the date of receipt of any such award or payment by
Mortgagee, and the reasonable attorney's fees, costs and disbursements incurred
by Mortgagee in connection with the collection of such award or payment; (b) any
unearned premiums on any hazard, casualty, liability, or other insurance policy
carried by Mortgagor for the benefit of Mortgagee and/or the Property; and (c)
Mortgagor's rights under any and all contracts, permits, licenses, plans or
intangibles now or hereafter dealing with, affecting or concerning the Property,
including, but not limited to, all contracts of Mortgagor for or related to the
construction of improvements on or upon the Property, and all of Mortgagor's
rights arising from or growing out of such contracts, including performance
and/or materialmen's bonds and any other related choses-in-action.
TOGETHER WITH (a) all of Mortgagor's rights further to encumber said
Property for debt except by such encumbrance which by its actual terms and
specifically expressed intent shall be and at all times remain subject and
subordinate to (i) any and all tenancies in existence when such encumbrance
becomes effective, and (ii) any tenancies thereafter created; Mortgagor hereby
(i) representing as a special inducement to Mortgagee to make this loan, that as
of the date hereof there are no encumbrances to secure debt junior to this
Mortgage, and (ii) covenanting that there are to be none as of the date hereof
or the date when this Mortgage is recorded; and (b) all of Mortgagor's rights to
enter into any lease or lease agreement which would create any tenancy that is
or may become subordinate in any respect to any mortgage other than this
Mortgage.
TO HAVE AND TO HOLD the above-described and granted Property,
Equipment, appurtenances and rights, all of which are collectively referred to
herein as the "Premises" unto the Mortgagee in fee simple forever.
PROVIDED, HOWEVER, that these presents are upon the condition that if
the Mortgagor shall pay or cause to be paid to the Mortgagee the principal and
all interest payable in respect to the Note or any future advance made hereunder
at the time and in the manner stipulated therein and herein, all without any
deduction or credit for taxes or other similar charges paid by the Mortgagor,
and shall keep, perform and observe all and singular the covenants and promises
in the Note, and/or future advance agreement, and any renewal, extension or
modification thereof, and in this Mortgage expressed to be kept, performed and
observed by and on the part of the Mortgagor, all without delay, then this
Mortgage, and all the interests and rights hereby granted, bargained, sold,
conveyed, assigned, transferred, mortgaged, pledged, delivered, set over,
warranted and confirmed, shall cease, terminate and be void, but shall otherwise
remain in full force and effect.
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OFFICIAL RECORDS
BOOK PAGE
2992 0140
SEMINOLE CO. FL.
[LANDSCAPED]
Mortgagor covenants and warrants that Mortgagor has good and marketable
title to the Premises and is lawfully seized and possessed of the Premises in
fee simple and has good right to sell and convey the same; that the Premises are
unencumbered except as may be herein expressly provided except for those
encumbrances which appear as exceptions title within the updated title
commitment, dated November __, 1995, from Lawyers Title Insurance Company,
Commitment Number 2-9501267A; that the Mortgage, when properly recorded, shall
be a first lien on the Premises, and that Mortgagor will forever warrant and
defend the Premises unto the Mortgagee against the lawful claims and demands of
all persons whomsoever and shall make such further assurances to perfect fee
simple title to the Premises in the Mortgagee as reasonably may be required. The
Mortgagor further covenants and agrees with the Mortgagee as follows:
1. The Mortgagor will pay all sums due Mortgagee at the time and in the
manner provided under the Note, this Mortgage or any instrument evidencing a
future advance or any other instrument evidencing and/or securing the
indebtedness secured hereby. Prepayment shall only be permitted under the terms
concerning prepayment set forth in the Note.
2. Mortgagor will pay, when due and payable, all taxes, assessments
(general or special) and other charges levied on, or assessed, placed or made
against the Premises, this instrument, and/or the Note, and/or any interest of
the Mortgagee in the Premises, and/or the obligations secured hereby or
reflected herein, and deliver to Mortgagee receipts showing payment in full of
the same at least thirty (30) days before the last day upon which such taxes or
assessments may be paid without the imposition of interest or other late charge
or penalty. Mortgagee shall not enforce this Paragraph 2 so long as Mortgagor is
not in default under this Mortgage (including, without limitation Paragraph 3)
or under the Note which it secures. Nothing herein contained shall require
Mortgagor to pay Mortgagee's income taxes.
3. Mortgagor shall pay to Mortgagee in advance, together with, and in
addition to, the payments of principal and/or interest payable under the terms
of the Note or any instrument covering any future advance or any modification of
either or both of them, on the required monthly installment paying dates, an
amount sufficient, as estimated by Mortgagee, to provide Mortgagee with funds to
pay said taxes, assessments and other charges next due thirty (30) days prior to
the date when the same are due (as modified by the provisions of Paragraph 8
below). In no event shall Mortgagee be liable for any interest on any amount
paid to it as herein required. Mortgagor will furnish to Mortgagee, thirty (30)
days before the date on which the same shall become due, an official statement
of the amount of said taxes and assessments next due and Mortgagee shall pay
said charges, but only if sufficient funds remain in the impound account. An
official receipt therefor shall be conclusive evidence of such payment and of
the validity of any such charge. In the event that the Mortgagee elects to pay
any such taxes or assessments, notwithstanding that there
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OFFICIAL RECORDS
BOOK PAGE
2992 0141
SEMINOLE CO. FL.
[LANDSCAPED]
are insufficient funds in the account, the amount advanced in excess of such
amount shall become immediately due and payable to Mortgagee and shall become
part of the secured indebtedness and bear interest at the rate of interest set
forth in the Note from the date of such advancement unless such advance has been
made after there has been a default as herein defined in which event interest
shall be charged at the Augmented Rate (as defined in the Note). In the event of
any default hereunder, Mortgagee may, at its option, apply such impounds so held
by it on account of the indebtedness in such order of priority as the Mortgagee
may deem appropriate. The amount of existing credit hereunder at the time of any
transfer of the title to the Premises shall, without any specific assignment
thereof, inure to the benefit of the successor/owner of the Premises. Upon
payment in full of the secured indebtedness, the amount of any unused credit
shall be paid over to the owner of record as of the date of such full payment.
4. (a) The Mortgagor will keep the buildings on the Premises and the
Equipment insured by policies, in form approved by Mortgagee, for the benefit of
Mortgagee, with companies approved by Mortgagee, against loss or damage by fire,
lightning, windstorm, vandalism, malicious mischief, hail, explosion, collapse,
riot, riot attending a strike, civil commotion, aircraft, vehicles, flood and
smoke and (as, when and to the extent insurance against war risk is obtainable
from the United States of America or any agency thereof) against war risks, and
maintain rent coverage and broad form extended coverage, all in amounts approved
by Mortgagee (but in no event lower than the greater of the amount of the
subject indebtedness and the replacement cost of the Premises); that on blanket
policies an Agreed Amount Endorsement shall be provided; that regardless of the
types or amounts of insurance required and approved by the Mortgagee, the
Mortgagor will assign and deliver to the Mortgagee all policies of insurance or
certified copies of such policies together with certificates of insurance which
insure against any loss or damage to the Premises, as collateral and further
security for the payment of the money secured by this Mortgage, with loss
payable to the Mortgagee pursuant to an acceptable mortgagee clause, without
contribution, satisfactory to the Mortgagee; that if the Mortgagor defaults in
so insuring the Premises or in so assigning and delivering the policies, the
Mortgagee may, at the option of the Mortgagee, effect such insurance from year
to year and pay the premiums therefor, and that the Mortgagor will reimburse the
Mortgagee for any premiums so paid, with interest at the Augmented Rate (as
defined in the Note) from time of such payment, on demand, and the same shall be
secured by this Mortgage; that if the Mortgagee by reason of such insurance
receives any money for loss or damage, such amount may, at the option of the
Mortgagee, be retained and applied by the Mortgagee toward the payment of the
indebtedness, or be paid over wholly or in part to the Mortgagor for the repair
of said buildings or for the erection of new buildings in their place, or for
any other purpose or object satisfactory to the Mortgagee, but the Mortgagee
shall not be obligated to see to the proper application of any amount paid over
to the Mortgagor; (b) that not less than thirty (30) days prior to the
expiration dates of each policy required of the Mortgagor pursuant to this
paragraph, the Mortgagor will deliver to the Mortgagee a renewal policy or
policies marked "premium paid" or accompanied by other evidence of payment
satisfactory to the Mortgagee; (c) that in the event of a foreclosure of this
Mortgage the purchaser of the
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OFFICIAL RECORDS
BOOK PAGE
2992 0142
SEMINOLE CO. FL.
[LANDSCAPED]
Premises shall succeed to all the rights of the Mortgagor, including any right
to unearned premiums, in and to all policies of insurance assigned and delivered
to the Mortgagee pursuant to the provisions of this paragraph) and (d) in
addition to the foregoing, Mortgagor shall obtain and carry, or cause to be
obtained and carried, for the benefit of itself, its tenant(s) and Mortgagee,
commercial general liability insurance in which the Mortgagor, its tenant(s) and
Mortgagee are named as additional insureds with initial limits of not less than
Three Million and No/100 Dollars ($3,000,000.00) or such greater or, different
limits as Mortgagee may reasonably require with such companies, on such terms in
such form and for such periods as Mortgagee shall from time to time approve.
Such policy shall also be endorsed to cover the liability of the Mortgagor and
its tenant(s) with respect to damages arising from any loss or damage sustained
by any person while on the Premises. Evidence of the payment of premiums for
each policy, satisfactory to Mortgagee, shall be timely deposited with Mortgagee
and each such policy shall be noncancellable without at least thirty (30) days'
advance written notice to Mortgagee and Mortgagee shall receive the replacement
or renewal policy from the Mortgagor at least thirty (30) days prior to the
expiration of any expiring policy. In addition to all of the above, in the event
the subject Premises is within a flood zone, Mortgagor shall obtain Flood
Insurance on the subject property and improvements, to be issued by a company
acceptable to Mortgagee, with such policy and coverage and in such amount as
shall be acceptable to Mortgagee.
5. No building or other property now or hereafter covered by the lien
of this Mortgage shall be removed, demolished or materially altered or enlarged,
nor shall any new building be constructed without the prior written consent of
the Mortgagee, except that the Mortgagor shall have the right, without such
consent, to remove and dispose of, free from the lien of this Mortgage, such
Equipment as from time to time may become worn out or obsolete provided that
simultaneously with or prior to such removal any such Equipment shall be
replaced with other equipment of a value at least equal to that of the replaced
Equipment and free from any title retention or other security agreement or other
encumbrance, and by such removal and replacement, the Mortgagor shall be deemed
to have subjected such new Equipment to the lien of this Mortgage. All buildings
and other improvements which comprise a portion of the Premises shall be
maintained in tenantable condition and free of structural deficiency.
6. The Mortgagor will maintain and operate, and do everything necessary
to maintain and operate, the Premises in good condition and repair and in a
first-class manner, and will not commit or suffer any waste of the Premises, and
will comply with, or cause to be complied with, all statutes, ordinances and
requirements of any governmental authority having jurisdiction over the Premises
or its use; that the Mortgagor will promptly pay all utility fees for service
provided to the Premises; that the Mortgagor will promptly repair, restore,
replace or rebuild any part of the Premises now or hereafter subject to the lien
of this Mortgage which may be damaged or destroyed by any casualty whatsoever or
which may be affected by any proceeding of the character referred to in
Paragraph 24 below; that the Mortgagor will complete and pay for, within a
reasonable time, any structure at any time
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OFFICIAL RECORDS
BOOK PAGE
2992 0143
SEMINOLE CO. FL.
[LANDSCAPED]
in the process of construction on the Property; and that the Mortgagor will not
initiate, join in or consent to any change in any private restrictive covenant,
zoning ordinance, easement, or other public or private restrictions, limiting or
defining the uses which may be made of the Property or any part thereof.
7. The Mortgagee and any persons authorized by the Mortgagee shall have
the right to enter and inspect the Premises at all reasonable times; and that
if, at any time after default by the Mortgagor in the performance of any of the
terms, material covenants or provisions of this Mortgage or the Note, the
management or maintenance of the Premises shall be determined by the Mortgagee
in the exercise of reasonable business judgment to be unsatisfactory, the
Mortgagor shall employ, for the duration of such default and at Mortgagor's sole
expense, as managing agent of the Premises, any person from time to time
designated by the Mortgagee.
8. Mortgagor shall faithfully perform the covenants of Mortgagor as
lessor or lessee under any present and future leases (including without
limitation all ground leases and all space leases) affecting all or any portion
of the Premises, and neither do nor neglect to do, nor permit to be done,
anything which may cause the termination of said leases, or any of them, except
with the prior written consent duly issued by the Mortgagee, or which may
diminish or impair their value, or the rents provided for therein, or the
interest of Mortgagor or Mortgagee therein or thereunder. All such leases are to
be subordinate to or superior, at Mortgagee's option, to the lien of this
instrument. No such ]ease shall be subordinate to any lien or charge other than
the lien of this instrument, or depend in any manner upon property not subject
to the lien of this instrument. Mortgagor, without first obtaining the written
consent of Mortgagee thereto, shall not (a) assign the rents, or any part
thereof, from the Premises, (b) enter into any lease of the Premises or any
portion thereof, (c) consent to the cancellation or surrender of any lease of
the Premises, or any part thereof, now existing or hereafter to be made, (d)
modify any such lease so as to shorten the unexpired term thereof, or so as to
decrease the amount of the rent payable thereunder and/or (e) allow any such
lease to be subordinate to a lien or charge other than the lien held by
Mortgagee pursuant to this Mortgage and the other documents evidencing and/or
securing the indebtedness secured hereby and/or (f) collect any rent more than
two (2) months in advance of the due date thereof. Mortgagor shall procure and
deliver to the Mortgagee at any time within thirty (30) days after notice and
demand, estoppel letters or certificates from tenants in possession of the
Premises, or any part thereof, as required by, and in form and substance
satisfactory to Mortgagee in the exercise of its reasonable discretion unless a
given lease dictates that a different form be used, and deliver to Mortgagee a
recorded assignment of all the lessor's interest in said leases, in form and
substance satisfactory to Mortgagee (in addition to the assignment hereunder),
and proof of due service of a copy of said assignment on each lessee, either
personally or by prepaid certified mail, return receipt requested. This
assignment is a present and complete assignment from the Mortgagor to Mortgagee
and is not merely the granting of the security interest. The parties hereto
further intend that the rents (and any payments made in lieu
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of rents) be absolutely assigned, so that such rents and other payments are no
longer the property of the Mortgagor during the term of this instrument and do
not constitute any of the assets of any estate of the Mortgagor as defined by 11
USC /section/541 of the Bankruptcy Code and that such rents and other payment
will not constitute collateral, cash, or otherwise, of the Mortgagor. The
Mortgagor waives any rights of set-off against the said lessees or any of them.
No lease shall be dependent for any purpose on any property other than
that which secures this Mortgage nor shall any lease include, in the description
of demised premises, by reference or otherwise, any property other than that
which secures this Mortgage Except as set forth above, no lease shall be deemed
acceptable to Mortgagee unless and until express written approval thereof is
given by Mortgagee.
Notwithstanding anything contained herein to the contrary, Mortgagor
shall be permitted without first obtaining Mortgagees prior written consent to
enter into leases for tenants occupying 5,000 square feet or less provided that
such lease is on a standard form approved by Mortgagee and the economic terms of
such lease meet then current market standards. Further, Mortgagor shall be
permitted to make modifications to leases and to consent to lease assignments
and sublets or to terminate leases if the tenant is in monetary default
thereunder without obtaining Mortgagee's prior written consent, provided such
modification and/or lease assignment or sublet pertains to a tenant leasing less
than 5,000 square feet. Mortgagor shall submit to Mortgagee a standard lease
form for review and approval. All other changes or lease modifications will
require Mortgagee's consent in each instance.
Notwithstanding anything contained herein to the contrary, Mortgagee
acknowledges that K-Mart is separately assessed for its share of real estate
taxes and assessments and shall be permitted to pay its share of the real estate
taxes and assessments directly to Seminole County and any other applicable and
the appropriate taxing authority so that no monthly deposit will be collected
for K-Mart. As to the out parcels currently occupied by Chili's; Burger King;
and NationsBank; Mortgagee also acknowledges that said out parcel tenants are
also separately assessed for real estate taxes and assessments and may pay their
taxes directly to Seminole County or other applicable or appropriate taxing
authority and no monthly tax escrow will be collected for such tenants provided
such out parcel tenants remain as tenants at the Premises and that such out
parcel tenants maintain substantially the same financial strength in the future
as they have as of the date hereof as evidenced in the annual report for each
respective out parcel tenant copies of which shall be obtained upon the issuance
thereof and forwarded by Mortgager to Mortgagee. If there is a change in the
financial strength of an out parcel tenant as evidenced in its annual report,
Mortgagor agrees that as to that out parcel tenant that Mortgagee will require
the collection of a monthly tax escrow. Mortgagor agrees that in the event it
receives the tax bills for any tenant within the Premises that pays its tax bill
directly to Seminole County or other applicable and appropriate taxing authority
that Mortgagor will forward copies of the tax bill to the respective tenant so
as to assure timely payment of such tax bill. Provided that Mortgagee has
sufficient sums on deposit to pay the real estate taxes and assessments for
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which Mortgagee has collected an escrow, Mortgagee will endeavor to pay such
real estate taxes and assessments in November of each year so as to take
advantage of the discount currently offered for early payment.
9. Mortgagor shall execute and deliver (and pay the costs of
preparation and recording thereof) to Mortgagee and to any subsequent holder
hereof, from time to time upon demand, any further instrument or instruments,
including, but not limited to mortgages, security agreements, financing
statements, assignments and renewal and substitution notes, so as to reaffirm,
to correct and to perfect the evidence of the obligation hereby secured and the
legal security title of Mortgagee to all or any part of the Premises intended to
be hereby mortgaged, whether now mortgaged, later substituted for, or acquired
subsequent to the date of this Mortgage and extensions or modifications hereof.
10. The Mortgagor and Mortgagee, upon request from each other
respectively, made either personally or by mail, shall certify, by a writing
duly acknowledged to the other, or to any proposed assignee of this Mortgage,
the amount of principal and interest then owing on this Mortgage and whether any
offsets or defenses exist against the mortgage debt within six (6) days in case
the request is made personally, or within ten (10) days after the receipt of
such request in case the request is made by mail.
11. Mortgagor shall provide to Mortgagee quarterly together with the
operating statements set forth below, a current rent roll for the Premises in
form and substance satisfactory to Lender. Each such rent roll shall be
certified by a principal in the ownership of the Premises and shall contain, at
a minimum, each of the following: tenant's name; suite number or space number
(as applicable); the exact number of Net Rentable Square Feet; the rental rate,
the exact description of all renewal options; a specific description of all
additional rents being paid (i.e., CAM; insurance, taxes; etc.); and a statement
indicating whether or not the specific tenant is actually in occupancy and is
actually paying rent as stated in said rent roll. Mortgagor shall provide to
Mortgagee quarterly operating statements (to include current cash flow and
up-to-date payables and receivables) for the Premises, all to be in form and
content satisfactory to Mortgagee, and all to be received by Mortgagee by the
fifteenth (l5th) day of the following months (i.e., respectively, April 15; July
15; October 15; and January 15). The first such items shall be due January 15,
1996, for the period from the date hereof through December 31, 1995. All such
operating statements must be prepared by a duly qualified independent certified
accountant and certified by Mortgagor showing, in detail, all such income and
expenses since the last such quarterly operating statement. Mortgagor shall
deliver to Mortgagee within ninety (90) days after the close of each fiscal year
of Mortgagor, in form and detail satisfactory to the Mortgagee, (i) an annual
audited financial statement on the Mortgagor and the parent company of the
Mortgagor, Equity One, Inc.; (ii) a statement in such reasonable detail as
Mortgagee may request, certified by the affidavit of a principal in the
ownership of the Property, of the leases relating to the Premises, and (iii) a
statement in such reasonable detail as Mortgagee may request, certified by a
certified public accountant acceptable to Mortgagee, or by Mortgagor's
accountant but only if, supported by the affidavit of a principal in the
ownership of the Property, of the income from and expenses of the
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following: (a) the conduct of any business on the Premises, (b) the operation of
the Premises, or (c) the leasing of the Premises, or any part thereof, for the
previous fiscal year, and, on demand, Mortgagor shall furnish to Mortgagee
copies of any executed leases and convenient facilities for the audit and
verification of any such statement. All information (operating statements, rent
rolls, etc.) required to be furnished to Mortgagee pursuant to this instrument
shall be addressed as follows: The Mutual Life Insurance Company of New York,
c/o ARES Realty Capital, Inc., Suite 100, 5775-E Glenridge Drive, Atlanta,
Georgia 30328, Attention: Mr. John Beeland. Mortgagor represents that its tax
year ends December 31st. All such information, including without limitation, the
annual and the quarterly materials required hereunder, shall only include the
information concerning the Premises and not information concerning any property
not included within the Premises.
12. All rents, issues and profits of the mortgaged Premises and the
right, title and interest of the Mortgagor in and under all leases now or
hereafter affecting said Premises are hereby assigned and transferred to the
Mortgagee. So long as no default shall exist in compliance with any requirement
hereof or of any other instrument at any time executed with respect to this
Mortgage, the Mortgagor may collect assigned rents and profits for not more than
two (2) months in advance of the due date thereof, but upon the occurrence of
any such default, or at such later time as the Mortgagee in its sole discretion
may fix by written notice, all right of the Mortgagor to collect or receive
rents or profits shall wholly terminate.
13. There shall be no construction on the property covered by this
Mortgage (other than repairs and maintenance in the ordinary course of business)
without the prior written approval and consent of Mortgagee after the submission
of plans and specifications for such construction to Mortgagee.
14. The whole of the principal sum and the interest secured hereby
shall become due at the option of the Mortgagee and the Mortgagee shall have all
the rights accorded Mortgagee by law and hereunder to enforce this Mortgage and
the Note secured hereby: (a) after default in the payment of any installment of
principal and/or of interest under the Note; or (b) thirty (30) days after
written notice for the default in the payment of any tax, water rate or
assessment after the same becomes due; or (c) after default after thirty (30)
days' notice and demand either in assigning and delivering the policies of
insurance herein described or referred to or in reimbursing the Mortgagee for
premiums paid on such insurance as herein provided; or (d) after default for
thirty (30) days after a request for furnishing a statement of the amount due on
the Mortgage and whether any offsets or defenses exist to the payment of all
indebtedness secured hereby; or (e) after default for thirty (30) days after
notice and demand in the payment of any installment of any assessment for local
improvements which may now or hereafter affect the Premises and may be or become
payable in installments; or (f) after default for thirty (30) days after notice
and demand in the repayment of any sum advanced by Mortgagee in accordance with
the terms hereof to protect the security hereof; or (g) upon the actual or
threatened waste, removal or demolition of, or material alteration to or
enlargement of any building or other improvement on the Premises or upon the
commencement of unpermitted construction of
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any new building(s) on any part of the Premises; or (h) thirty (30) days after
written notice for failure to keep in force the insurance required by Paragraph
4 above; or (i) upon additional assignment, in whole or in part, by the
Mortgagor of the whole or any part of the rents, income or profits arising from
the Premises without the prior written consent of the Mortgagee; or (j) after
default for thirty (30) days after notice and demand in the remove of any
Federal tax lien on the Premises; or (k) after default for thirty (30) days
after notice from Mortgagee to Mortgagor in the observance or performance of any
other covenant(s) or agreement(s) of the Mortgagor hereunder; or (l) upon the
election by the Mortgagee to accelerate the maturity of said principal sum
pursuant to the provisions of any other instrument which may be held by the
Mortgagee as additional security for the Note; or (m) after failure to comply
within thirty (30) days with a requirement or order or notice of violation of a
law or ordinance issued by any political subdivision or governmental department
claiming jurisdiction over the Premises or any operation conducted on the
Premises, or in the case of a noncompliance which cannot be cured or complied
with within said period, in the event that the Mortgagor does not commence to
comply with said orders or notices within said period and shall not thereafter
diligently pursue such cure to completion (notwithstanding the foregoing,
Mortgagor shall be permitted to contest such law or ordinance on reasonable
grounds provided the priority of this Mortgage shall not thereby be impaired; or
(n) upon the issuance of any order by the State of Florida, or any
instrumentality thereof, any administrative board thereof or any department
thereof, declaring unlawful or suspending the current operation of the Premises
or any material portion thereof; or (o) upon the filing of or against the
Mortgagor (including the filing of or against any general partner comprising
Mortgagor) of any petition or application for relief, extension, moratorium or
reorganization under any bankruptcy, insolvency or debtor's relief law or law
"hereunder the Mortgagor (or any general partner comprising Mortgagor) is making
an assignment for the benefit of creditors, or entering into any such trust, or
mortgage arrangement or becoming a party to any receivership proceeding; or (p)
should any representation, warranty, or covenant made by Mortgagor or any other
authorized representative of Mortgagor in any other instrument or document
executed in connection with this Mortgage, or in any certificate, agreement,
affidavit or statement contemplated by, or made or delivered pursuant to, or in
connection with, any such documents, prove to have been materially incorrect or
materially misleading; or (q) in the event of a further encumbrancing for debt,
or transfer of the Premises or a change in management in violation of any term
of this Mortgage without the prior explicit written consent of the Mortgagee. No
consent or waiver expressed or implied by Mortgagee to or of any default by
Mortgagor hereunder shall be construed as a consent or waiver to or of any
further default of the same or any other term, covenant, condition or provision
hereof, or of or under any of the obligations secured hereby; and no consent or
waiver shall be deemed or construed to exist by reason of any course of conduct
or in any other manner whatsoever except by a writing duly executed by the
Mortgagee and then only to the single occasion to which such writing is
addressed.
15. Any notice which any parties hereto may desire or be required to
give to the other party shall be in writing and shall be forwarded either by
certified mail return receipt requested or by overnight courier service. In the
event transmittal is made by certified mail, notice shall be deemed given three
(3) business days after such notice was deposited with
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the U.S. Postal Service. In the event transmittal is made by overnight courier
service, notice shall be deemed made the following business day after such
notice was deposited with the overnight courier service. The designated place of
notice set forth below may be changed from time to time by the parties hereto by
written notice of such change. Notices required hereunder shall be addressed as
follows:
To Mortgagee: THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
Glenpointe Marketing and Operations Center/MONY
500 Frank W. Burr Boulevard, M.D. 73-21
Teaneck, NJ 07666
with copies to:
The Mutual Life Insurance Company of New York
c/o ARES Realty Capital, Inc.
Suite 100
5775-E Glenridge Drive
Atlanta, GA 30328
Attention: Vice President - Real Estate
To Mortgagor: EQUITY ONE (LAKE MARY) INC.
Penthouse
777 17th Street
Miami Beach, Florida 33139
Attention: Mr. Doron Valero, Vice President
16. In the event of any default in the performance of any of the
Mortgagor's covenants or agreements herein, and after applicable notice and cure
period, if any, the Mortgagee may, upon written notice to Mortgagor and at the
option of the Mortgagee, perform the same and the cost thereof, with interest at
the Augmented Rate set forth in the Note, shall immediately be due from the
Mortgagor to the Mortgagee and secured by this Mortgage.
17. The Mortgagee, in any action to foreclose this Mortgage, or upon
the actual waste to any part of the Premises, shall be at liberty to apply for
the appointment of a receiver of the rents and profits of the Premises with
notice to Mortgagor, and shall be entitled to the appointment of such a receiver
as a matter of right, without consideration of the value of the Premises as
security for the amounts due the Mortgagee, or the solvency of any person liable
for the payment of such amounts.
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18. In the event of the passage after the date of this Mortgage of any
Federal, state or local law, deducting from the value of real property for the
purposes of taxation any lien thereon, or changing in any way the laws for the
taxation of mortgages or debts secured by mortgages for Federal, state or local
purposes, or the manner of the collection of any such taxes, and imposing a tax,
either directly or indirectly, on this Mortgage or the Note, the holder of this
Mortgage and of the debt which it secures shall have the right to declare the
principal sum and the interest due, without payment of a prepayment penalty, on
a date to be specified by not less than one hundred eighty (180) days written
notice to be given to the Mortgagor by the Mortgagee, provided, however, that
such election shall be ineffective if the Mortgagor is permitted by law to pay
the whole of such tax in addition to all other payments required hereunder and
if the Mortgagor, prior to such specified date does not pay such tax and agrees
to pay any such tax when thereafter levied or assessed against the Premises, and
such agreement shall constitute a modification of this Mortgage.
19. If at any time the State of Florida shall determine that the
intangible tax paid in connection with this Mortgage is insufficient and/or that
the documentary stamps affixed to the Note or hereto are insufficient and that
additional intangible tax should be paid and/or that additional stamps should
thereafter be affixed, the Mortgagor shall pay for the same, together with any
interest or penalties imposed in connection with such determination, and the
amount of money needed to pay for such tax, stamps and penalties shall, until
such tax is paid and stamps are purchased and affixed by Mortgagor, be a portion
of the indebtedness secured by this Mortgage and bear interest from the date of
such determination at the Augmented Rate (as defined in the Note).
20. If the Mortgagee shall incur or expend any sums, including
reasonable attorney's fees, whether in connection with any action, proceeding or
appeal, or not, to sustain the lien of this Mortgage or its priority or any
other action, proceeding or appeal, or to protect or enforce any of its rights
hereunder, or to recover any indebtedness hereby secured, or for any title
examination or title insurance policy relating to the title of the Premises, all
such sums shall on notice and demand be immediately paid by the Mortgagor,
together with interest thereon at the said Augmented Rate and shall be a lien on
the Premises, prior to any right or title to, interest in, or claim upon, the
Premises subordinate to the lien of this Mortgage, and shall be deemed to be
secured by this Mortgage and evidenced by the Note; and that in any action or
proceeding to foreclose this Mortgage, or to recover or collect the debt secured
hereby, the provisions of the law respecting the recovery of costs,
disbursements and allowances shall prevail unaffected by this covenant.
21. When and if Mortgagor and Mortgagee shall respectively become the
Debtor and Secured Party in any Uniform Commercial Code Financing Statement
affecting property either referred to or described herein, or in any way
connected with the use and enjoyment of the Premises and located thereon, this
Mortgage shall be deemed the Security Agreement as defined in said Uniform
Commercial Code, and the remedies for any violation of the
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covenants, terms and conditions of the agreements herein contained shall be as
prescribed (i) herein, or (ii) by general law, or (iii) as to such part of the
security which is also reflected in said Financing Statement by the specific
statutory provisions now or hereafter; enacted and specified in the Uniform
Commercial Code, all at Mortgagee's sole election Mortgagor and Mortgagee agree
that the filing of such a Financing Statement in the records normally having to
do with personal property shall never be construed as in anywise derogating from
or impairing this declaration, and it is the hereby stated intention of the
parties hereto, that everything used in connection with the production of income
from the, Premises and/or which is described or reflected in this Mortgage is,
and at all times and for DC, all purposes and in all proceedings, both legal and
equitable, shall be regarded as part of the real estate irrespective of whether
(i) any such item is physically attached to the improvements, (ii) serial
numbers are used for the better identification of certain equipment items
capable of being thus identified in a recital contained herein or in a list
filed with the Mortgagee, (iii) any such item is referred to or reflected in any
such Financing Statement so filed at any time.
Similarly, the mention in any such Financing Statement of (a) the
rights in or the proceeds of any fire and/or hazard insurance policy, or (b) any
award in eminent domain proceedings for a taking or for loss of value, or (c)
the debtor's interest as lessor in any present or future lease or rights to
income growing out of the use and/or occupancy of the property mortgaged hereby,
whether pursuant to lease or otherwise, shall never be construed as in anywise
altering any of the rights of Mortgagee as determined by this instrument or
impugning the priority of the Mortgagee's interest granted hereby or by any
other recorded document, but such mention in the Financing Statement is declared
to be for the protection of the Mortgagee in the event any court or judge shall
at any time hold with respect to (a), (b), or (c) that notice of Mortgagee's
priority of interest to be effective against a particular class of persons,
including but not limited to the Federal government and any subdivisions or
entity of the Federal government, must be filed in the Commercial Code records.
22. If, from any circumstances whatever, fulfillment of any provision
of this Mortgage, the Note which it secures or any other instrument securing or
evidencing the loan secured hereby shall transcend the limit of validity
prescribed by the usury statute or any other law of the State of Florida, then
IPSO FACTO the obligation to be fulfilled shall be reduced to the limit of such
validity so that in no event shall any exaction be possible under this Mortgage,
the Note which it secures or such other instrument that is in excess of the
limit of such validity, but such obligation shall be fulfilled to the limit of
such validity. And in no event shall the Mortgagor, its heirs, representatives,
successors or assigns, be bound to pay for the use or detention of the money
loaned and secured hereby, or the Mortgagee's forbearance in collecting same,
interest, or payments in the nature of interest of more than the maximum rate
lawfully collectible in accordance with the applicable laws of the State of
Florida; the right to demand any such excess shall be and is hereby waived. The
provision of this paragraph shall control every other provision of this
Mortgage, the Note which it secures and any other undertaking, agreement or
document evidencing, supporting
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or securing the loan secured hereby. Mortgagor and Mortgagee intend that all of
the provisions hereof shall be valid and enforceable as specifically set forth.
Any judicial determination that any provision hereof shall not be valid or
enforceable as specifically set forth shall not result in such provision being
declared invalid but same shall be deemed modified in such manner so as to
result in the same being valid and enforceable to the maximum extent permitted
by law. As to any portion that is actually determined by a competent court
having jurisdiction to be invalid, it is the intention of the Mortgagor and the
Mortgagee that the remainder of the document (or if applicable), clause,
paragraph, or article shall be enforced as written and the declaration of
invalidity shall apply only to then clause, paragraph or article in question.
23. Mortgagee shall have the right to mature the indebtedness and
foreclose this Mortgage if, without the prior written consent of the Mortgagee,
(a) the Premises, or any portion thereof, shall in any manner be transferred, or
(b) any stock, beneficial interest or partnership interest of any corporation,
trust or partnership comprising Mortgagor shall be transferred, assigned,
pledged, hypothecated, mortgaged or encumbered, or additional partners are added
to any partnership comprising Mortgagor, if any, or (c) if any such corporation,
trust or partnership is dissolved or terminated, by operation of law or
voluntarily. All transfers shall be subject to Mortgagee's prior written
consent, which consent shall be at Mortgagee's sole discretion and may be
conditioned upon payment of a reasonable fee and an increase in the rate of
interest or a change in other terms and conditions hereof and of the Note to
reflect the then current market conditions.
In case of any sale or transfer under this Mortgage by virtue of
judicial proceedings or otherwise, the Premises may be sold in one parcel and as
an entirety or in such parcels, manner and order as the Mortgagee in its sole
discretion may elect.
Notwithstanding the foregoing, upon not less than thirty (30) days
prior written notice, Mortgagee will allow a one (1) time transfer of the
ownership of the Premises by sale, transfer or conveyance provided that the
transferee assumes the obligations of Mortgagor under this Mortgage and the Note
secured hereby, provided further that such assignee is Equity One, Inc. or a
wholly-owned subsidiary thereof and if to a wholly-owned subsidiary of Equity
One, Inc., such entity must be a single asset entity. Mortgagor shall pay all of
Mortgagees expenses relating to such assignment including but not limited to
attorneys fees; title charges; and recording charges. In connection with a
transfer or assignment to Equity One, Inc. or a wholly-owned subsidiary thereof,
Mortgagee shall not charge a commitment fee or change the rate of interest set
forth in the Note.
24. Notwithstanding any taking by eminent domain, alteration of the
grade of any street or other injury to or decrease in value of the Premises by
any public or quasi-public authority or corporation, the Mortgagor shall
continue to pay interest on the entire principal sum secured hereby until any
such award or payment shall have been actually received by the Mortgagee, and
applied against the debt secured hereby, and such award of payment may, at the
option of the Mortgagee, be retained and applied by the Mortgagee toward
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payment of the monies secured by this Mortgage, or be paid over wholly or in
part to the Mortgagor for the purpose of altering, restoring or rebuilding any
part of the Premises which may have been altered, damaged or destroyed as a
result of any such taking, alteration of grade, or other injury to the Premises,
or for any other purpose or object satisfactory to the Mortgagee.
25. Any payment made in accordance with the terms of this Mortgage by
any person at any time liable for the payment of the whole or any part of the
sums now or hereafter secured by this Mortgage, or by any subsequent owner of
the Premises, or by any other person whose interest in the Premises might be
prejudiced in the event of a failure to make such payment, or by any
stockholder, officer or director of a corporation which at any time may be
liable for such payment or may own or have such an interest in the Premises,
shall be deemed, as between the Mortgagee and all persons who at any time may be
liable as aforesaid or may own the Premises, to have been made on behalf of all
such persons.
26. Acceptance by the Mortgagee of any payment which is less than full
payment of all amounts due and payable at the time of such payment, even if made
by one other than the obligor, shall not constitute a waiver of the Mortgagee's
right to exercise its option to declare the whole of the principal sum then
remaining unpaid, together with all accrued interest thereon, immediately due
and payable without notice except as otherwise provided herein, or any other
rights of the Mortgagee except and as to the extent otherwise provided by law.
27. Mortgagor consents to any and all renewals and extensions in the
time of payment of the secured indebtedness, and agrees further that, at any
time and from time to time without notice (a) the terms of payment provided for
in the Note may be modified or (b) the security described in this Mortgage
released (in whole or in part) or increased, changed or exchanged by agreement
between the Mortgagee and any owner of the Premises affected by this Mortgage
without in anywise affecting the liability of any party to the Note, or any
person liable or to become liable with respect to the secured indebtedness.
Mortgagor agrees that no sale of the Premises, no forbearance on the part of the
Mortgagee and no extensions, whether oral or in writing, of the time for the
payment of the whole or any part of the obligations hereby secured, or any other
indulgence given by Mortgagee, shall operate to relieve or, in any manner,
affect the original liability of the Mortgagor or the priority of this Mortgage
or to limit, prejudice or impair any right of the Mortgagee, notice of any such
extension, indulgence and forbearance being likewise waived by Mortgagor and all
those claiming by, through and under the Mortgagor.
28. Mortgagor shall not grant any lien or mortgage on the Premises or
any part thereof junior to this Mortgage without first obtaining the Mortgagee's
prior written consent, which consent Mortgagee may grant, withhold or condition
in its sole discretion;
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and if the Mortgagor shall, with the duly issued prior written consent of
Mortgagee, grant any lien or mortgage on the Premises junior to this Mortgage,
such junior lien or mortgage shall be subject to, in addition to all tenancies
now or hereafter affecting the Premises, all such renewals and extensions,
modifications, releases, increases, increase in interest rate, future advances,
changes or exchanges, without the joinder or consent of such junior lien
holder or mortgage holder, and without any obligation on Mortgagee's part to
give notice of any kind thereto. Notwithstanding the foregoing, Mortgagor
will not suffer or permit any act or omission whereby any of the
Premises or any of the Equipment shall become subject to any attachment,
judgment, lien, charge or other encumbrances whatsoever or whereby any of the
security represented by this Mortgage shall be impaired or threatened
Mortgagor will not directly or indirectly do anything or take any action which
might prejudice any of the rights, titles or interests of Mortgagee in or to
any of the Premises and/or impose or create any direct or indirect
obligation or liability on the part of the Mortgagee with respect to any of
the Premises.
29. The rights of the Mortgagee arising hereunder or allowed or
permitted Mortgagee by law shall be separate, distinct and cumulative, and the
selection of one remedy shall not preclude the selection of another or other
remedies until Mortgagee shall have recovered all sums due it, together with the
appropriate interest thereon and all costs of collections, including attorney's
fees and appellate attorney's fees.
30. Wherever used in this Mortgage, unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
the word "Mortgagor" shall mean "Mortgagor and/or any subsequent owner or owners
of the Premises," the word "Mortgagee" shall mean "Mortgagee or any subsequent
holder or holders of this Mortgage," the word "Note" shall mean "Note of even
date herewith secured by this Mortgage, and any additional notes hereafter to be
issued secured by this Mortgage pursuant to the future advance provision
hereof;" the word "person" shall mean "an individual, corporation, partnership
or unincorporated association, joint stock corporation and joint venture," and
pronouns of any gender shall include the other genders, and either the singular
or plural shall include the other. If the Mortgagor consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several.
31. This Mortgage cannot be changed except by an agreement in writing
signed by the party against whom enforcement of the change is sought.
32. Mortgagor agrees that if at any time any of the buildings or the
improvements or the Equipment now or hereafter located on or in the Premises be
unprotected or unguarded, or the Premises be allowed to remain vacant or
deserted for more than one day, Mortgagee may, at its option, employ watchmen
for the Premises and expend any monies deemed by it necessary to protect the
Premises and the building and improvements thereon
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and the personal property therein from waste, vandalism and other hazards,
depredation or injury, and the amount of any monies expended for such purpose
with interest at the augmented rate set forth in the Note shall be secured
hereby, and payment of sums so expended shall be due and payable by Mortgagor to
Mortgagee on demand and shall be added to the indebtedness and be secured by
this Mortgage.
33. The operation of the Premises shall at all times during the term
hereof be under the supervision and management of competent management personnel
satisfactory to Mortgagee pursuant to a management contract satisfactory to
Mortgagee. Mortgagee approves Global Realty and Management, Inc. ("Global
Realty") as the initial property manager. Mortgagor shall provide Mortgagee with
a copy of the management agreement with Global Realty. In Mortgagee's sole
discretion, the management agreement shall be subordinated and collaterally
assigned to Mortgagee, pursuant to an agreement satisfactory in form and content
to Mortgagee. In addition, the property manager shall execute a consent, if
required by Mortgagee, whereby the property manager consents to the
subordination and collateral assignment of the property management contract. In
the event of any change in the management or termination or modification of the
management contract without Mortgagee's prior written approval, Mortgagee may at
its sole option declare the principal sum and the interest secured hereby
immediately due and payable. Under no circumstances may any change in management
of the Premises or the management contract take place without the prior written
approval of Mortgagee. Notwithstanding the foregoing, Mortgagee will not
unreasonably withhold its consent to a change in management provided that such
replacement has not less than five (5) years management experience managing not
less than one (1) million square feet of retail space.
34. The Premises described in Exhibit A hereto shall contain at all
times during the term hereof not less than one thousand four hundred
eighty-eight (1,488) on-site paved parking spaces which may be provided on the
various phases of Lake Mary Centre by cross access easements in form and content
acceptable to Mortgagee and which spaces must be suitable for standard sized
United States manufactured automobiles or such additional parking spaces as are
necessary from time to time to meet the minimum parking requirements of all
leases for space in the Property as well as all applicable zoning and other
governmental ordinances and regulations.
35. ERISA. Mortgagor covenants, represents and warrants that (i) no
assets of any employee benefit plan, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), as now or hereafter amended,
will be used in the satisfaction, exercise or performance of any of the
obligations, rights or transactions specified or contemplated herein or in the
Note or in any of the other loan documents; (ii) the Premises does not now, and
will not, constitute an asset of any such employee benefit plan; and (iii)
notwithstanding any other provisions of this Mortgage, Mortgagor will not sell,
convey or transfer the Premises to any person or entity which at the time of
such
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[LANDSCAPED]
transfer does not satisfy the representations set forth in clauses (i) and (ii)
above, regardless of whether any of the above described conditions arises by
operation of law or otherwise.
36. VIOLATION OF ERISA. Without limitation on the rights and remedies
of Mortgagee arising under this Mortgage, in the event that Mortgagor or any
subsequent owner of the Premises or any part thereof shall at any time sell,
convey or transfer or attempt to sell, convey or transfer the Premises or any
part thereof in violation of the provisions of Paragraph 35 of this Mortgage,
then Mortgagee shall, in addition to any other rights and remedies it may have
at law or in equity or under this Mortgage, be entitled to a decree or order
restraining and enjoining such sale, conveyance or transfer, and Mortgagor or
such subsequent owner shall not plead in defense thereof that there would be an
adequate remedy at law (it being hereby expressly acknowledged and agreed that
damages at law would be an inadequate remedy for breach or threatened breach of
the provisions of Paragraph 35 of this Mortgage).
37. Mortgagor acknowledges and agrees to look solely to the actual
assets of the Mortgagee for redress in the event of any suit at law or claim
based upon, growing out of or arising out of the subject indebtedness and any
transactions related thereto. Further, Mortgagor agrees that in no event shall
any of the officers or trustees of the Mortgagee, whether actual parties to this
or any other instrument evidencing or securing the subject indebtedness, or
otherwise, or any shareholders of the Mortgagee, have a personal responsibility
or obligation pursuant hereto or to any of the other documents or securing the
subject indebtedness. The Mortgagor agrees that any suits at law or claims based
upon, growing out or arising out of the subject indebtedness or any of the
documents evidencing or securing same will, if directed against such officers
and/or trustees of the Mortgagee, be directed against them solely in their
representative capacities with respect to the Mortgagee.
38. No material or substantial change or modification to the structure
or accessibility of the Premises or any part thereof shall be permitted without
the prior written consent of the Mortgagee.
39. Mortgagor agrees to indemnify, protect, defend and hold Mortgagee
harmless as to any expenses relating to the loan transaction underlying this
instrument Mortgagee might be liable for including, without limitation, all
brokerage fees, leasing commissions, all survey, title insurance, appraisal and
credit report costs, escrow fees, attorneys' fees and mortgage recording fees
and/or documentary transfer taxes, if any.
40. If at any time during the term of the Note, Mortgagor requests that
Mortgagee take any action to accommodate the Mortgagor, with regard to the
Premises or any portion thereof or with regard to the documents evidencing or
securing the subject loan, and the
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accomplishment thereof require the services of any professional, and Mortgagee
incurs expenses as a result thereof, Mortgagor will pay Mortgagee all reasonable
fees and costs of such professionals within thirty (30) days of receipt of a
statement therefor.
41. The liability of Mortgagor for payment of the indebtedness
evidenced by the Note, and Mortgagee's recourse therefor, shall be limited to
the real and personal property and other collateral pledged to secure the Note
(collectively referred to herein as the "Premises"). The foregoing limitation of
Mortgagee's liability shall not apply, however, any loss, damage or expense,
including reasonable attorney's fees, suffered by the Mortgagee as a result of:
(a) Mortgagor's default of any of the covenants and obligations contained in
this Mortgage and the "Loan Documents" as defined in the Note, including,
without limitation, those relating to (i) insuring, operating, managing,
repairing and reconstructing the Premises, (ii) payment of taxes and
assessments, (iii) compliance with applicable laws and regulations, (iv)
executing and maintaining in force space leases in the Premises without
modification except as approved in writing by Mortgagee, (v) restrictions on
subsequent transfers of the Premises or ownership interests in Mortgagor or in
any entity that constitutes, either directly or indirectly, the Mortgagor, (vi)
defense of actions and claims affecting the Premises, including mechanic's
liens, (vii) Mortgagor's indemnification of Mortgagee against the presence of
hazardous substances, including asbestos, in or on the Premises, as set forth in
the Certificate Regarding Hazardous Substances executed relative to this
transaction, or otherwise, and (viii) any special obligations of or
indemnifications from Mortgagor agreed to in the "Loan Documents"; (b) any
intentional or willful fraud or misrepresentation, or negligent acts or
omissions, by any party executing the Note or a "Loan Document" (other than
Mortgagee) or any successor or permitted assign thereof; (c) any misapplication
of any proceeds (i) paid under any insurance policies; or, (ii) realized from
awards from condemnation or the exercise of the power of eminent domain or
taking in lieu thereof, both arising from any of the real and personal property
securing the Note; or, (d) any misapplication of the gross proceeds from the
real and personal property securing the Note, which misapplication shall be
deemed to have occurred in the event any of such gross proceeds are not first
applied to costs of operating the Premises including, but not limited to,
payment of the Note.
42. Mortgagor hereby authorizes Mortgagee to fully investigate the
creditworthiness of the Mortgagor and the principal individuals, partnerships,
or corporate entities comprising Mortgagor, the scope of which investigation
shall be in Mortgagee's sole discretion and may be performed by a third party.
Such rights of investigation shall continue until the indebtedness secured
hereby has been paid in full.
43. Mortgagee reserves the right to publicize the making of the loan
secured by this Mortgage, including identifying such things as the name of the
Mortgagor, the loan amount, the type and location of the Premises, and such
other information as Mortgagee deems noteworthy.
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SEMINOLE CO. FL.
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44. As set forth in paragraphs 4 and 24 hereof, in the event of a
casualty loss or taking by eminent domain, Mortgagee shall have the option of
applying the casualty loss insurance proceeds or condemnation award
(collectively the "Proceeds") towards repair and restoration of the Property or
towards paydown of the outstanding balance of the Note. Notwithstanding the
provisions in paragraphs 4 and 24 hereof, Mortgagee agrees that it shall not
exercise its option to apply the Proceeds as a credit upon any portion of the
outstanding balance of the Note, but shall make such Proceeds available for
repair and restoration of the Property, subject to the procedures and safeguards
set forth below, if and only if all of the following conditions are
simultaneously satisfied at such time as the Proceeds are received by Mortgagee:
(a) There is no default by Mortgagor under any of the documents
evidencing or securing the Note;
(b) The dollar amount of the cost of repair or restoration does not
exceed $1,000,000.00;
(c) The damage occurs prior to the first day of the last full "Loan
Year" (as "Loan Year" is defined in the Note);
(d) Repair and restoration completion in Mortgagee's sole judgment is
possible prior to maturity of the Note; and
(e) In the event of taking by eminent domain which results in the
taking of parking spaces, Mortgagor shall so repair, restore or
obtain substitution parking so that at all times there is on-site
paved parking spaces suitable for standard-sized United States
manufactured automobiles to meet the minimum parking requirements
of all leases for space in the Property as well as all applicable
zoning and other governmental ordinances and regulations.
With any repair or restoration of the Property or any portion thereof,
the improvements shall be so restored or rebuilt as to be of at least equal
value and substantially the same character as prior to such damage or
destruction.
In the event Mortgagor is to be reimbursed out of the Proceeds, such
Proceeds shall be made available, from time to time, upon Mortgagee being
furnished with evidence satisfactory to Mortgagee as to each of the following:
the estimated cost of completion; architect's certificates; waivers of lien;
contractors' sworn statements; title policy datedown endorsements; all other
evidence of cost and of payments as Mortgagee may reasonably require; and all
plans and specifications for such rebuilding or restoration as Mortgagee may
reasonably require. No payment made prior to the final completion of the work
shall exceed ninety (90.00%) percent of the value of the work performed, from
time to time, and at all times the undisbursed balance of said proceeds
remaining in the hands of Mortgagee shall be at least sufficient to pay for the
cost of completion of the work free and clear of
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liens. Upon the completion of the work and payment in full therefor, or upon any
failure on the part of the Mortgagor promptly to commence or continue the work,
or at any time upon request by the Mortgagor, Mortgagee may, at its sole
discretion, apply the amount of any such Proceeds then or thereafter in the
hands of Mortgagee to the payment of any indebtedness secured by this Mortgage;
provided, however, that nothing herein contained shall prevent Mortgagee from
applying at any time the whole or any part of the Proceeds to the curing of any
default under the Note, this Mortgage or any other document evidencing and/or
securing the Note.
45. If the Mortgagor tenders a payment under the Note subsequent to the
occurrence of any circumstances described in Paragraph 14 of this Mortgage, same
may be received by the Mortgagee and may be used for any of the following
purposes, in such order and amounts as Mortgagee may determine in its sole
discretion to pay down the outstanding indebtedness: (a) to be applied to all
amounts then due under this Mortgage and the indebtedness secured hereby
(including without limitation, any prepayment premiums, tax escrows, and any
other escrows related to the indebtedness secured hereby which are deficient)
other than interest and principal; (b) to be applied against all accrued but
unpaid interest; and/or (c) to principal reduction, even though Mortgagee has
declared Mortgagor to be in default hereunder and even though the Mortgagee has
accelerated the subject indebtedness. Any such receipt and application of funds
shall in no way be deemed to cure default or to constitute a waiver of any of
the rights and remedies of Mortgagee. Further, Mortgagee shall not be obligated,
if it has already sent out any notices of default or acceleration, to send
another default and/or acceleration notice unless required by applicable law, it
being understood and agreed by the parties hereto that any previous notice of
default and/or acceleration shall remain in full force and effect even upon such
receipt and application of funds. The parties hereto acknowledge and agree that
such receipt of money shall be deemed as the Mortgagee's attempt to mitigate the
damages of the Mortgagor and not be deemed as any reinstatement of the
indebtedness secured hereby, or an accord and satisfaction, or as any waiver of
Mortgagee's rights whatsoever.
This Mortgage shall bind and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF, EQUITY ONE (LAKE MARY) INC., has caused this
Florida Real Estate Mortgage and Security Agreement to be executed as of the day
and year first above written.
(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
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AS TO MORTGAGOR:
WITNESSES: EQUITY ONE (LAKE MARY) INC.,
a Florida corporation
- ---------------------------------- By:
-------------------------------------
Print Name: Doron Valero
----------------------- Vice President
/s/ CATHY P. HUME
- ---------------------------------- [AFFIX CORPORATE SEAL]
Print Name: CATHY P. HUME
Address:
Equity One (Lake Mary) Inc.
Penthouse
777 17th Street
Miami Beach, Florida 33139
STATE OF FLORIDA )
) SS:
COUNTY OF HILLSBOROUGH )
The foregoing instrument was acknowledged before me
this 9th day of November, 1995 by DORON VALERO, Vice President of EQUITY ONE
(LAKE MARY) INC., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced Florida Drivers License as
identification.
My Commission Expires: /S/ CATHY P. HUME
-----------------------------
Notary Public
-----------------------------
_____________________ CATHY P. HUME
Print Name
[Notarial Seal]
CATHY P. HUME
MY COMMISSION
EXPIRES: OCTOBER 17, 1996
Bonded Thru Notary Public Underwriters
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2992 0160
SEMINOLE CO. FL.
[LANDSCAPED]
PHASE I
Part of the Northeast Quarter of the Northwest Quarter and a part of the West
389.50 feet of the North Three-Quarters of the Northeast Quarter of Section 18,
Township 20 South, Range 30 East, Seminole County, Florida, described as
follows:
Commence at the Northwest corner of Greenwood Lane Unit 2, as recorded in Plat
Book 22, Pages 2 and 3, Public Records of Seminole County, Florida; thence South
89 degrees 1 minutes 59 seconds East, along the North line of said Unit 2, a
distance of 389.50 feet to the East line of the West 389.50 feet of the North
Three-Quarters of the Northeast Quarter of said Section 18; thence North 00
degrees 11 minutes 30 seconds East, along the East line thereof, 651.47 feet for
the POINT OF BEGINNING; thence North 89 degrees 36 minutes 38 seconds West,
175.00 feet; thence North 00 degrees 11 minutes 30 seconds East, (parallel with
the East line of the West 389.50 feet of the North Three-Quarters of the
Northeast Quarter of said Section 18): 360.80 feet; thence North 89 degrees 36
minutes 38 seconds West, 363.73 feet; thence North 00 degrees 23 minutes 22
seconds East, 196.46 feet to the point of curvature of a curve, concave
Southwesterly, having a radius of 15.00 feet and a central angle of 90 degrees
00 minutes 00 seconds; thence run 23.56 feel along the arc of said curve to the
point of tangency thereof; thence run 23.56 feet along the arc of said curve to
the point of tangency thereof; thence North 89 degrees 36 minutes 38 seconds
West, 67.30 feet; thence North 00 degrees 23 minutes 22 seconds East, 275.25
feet to a point of curvature of a curve, concave Southwesterly, having a radius
of 100.00 feet and a central angle of 36 degrees 00 minutes 00 seconds; thence
run 62.83 feel along the arc of said curve to the point of tangency thereof;
thence North 35 degrees 36 minutes 38 seconds West, 228.49 feet; thence North 00
degrees 15 minutes 15 seconds East, 215.00 feet to the South Right of Way line
of Lake Mary Boulevard an 80 foot wide Right of Way, thence along said Right of
Way line (lying 40 feet South of an parallel with the North line of said Section
18) the following two (2) courses and distances, South 89 degrees 44 minutes 45
seconds East, 382.17 feet; thence South 89 degrees 40 minutes 18 seconds East,
389.50 feet; thence South 00 degrees 11 minutes 30 seconds West, 1307.46 feet to
the POINT OF BEGINNING.
LESS AND EXCEPT
(Deed for Lake Mary Boulevard in O.R. 1992, Page 1102) as follows:
That parcel of land lying in Section 18, Township 20 South, Range 30 East,
Seminole County, Florida; more particularly described as follows:
Commence at the North One-Quarter (1/4) corner of said Section 18; thence South
00 degrees 21 minutes 41 seconds east, 40.00 feet along the East line of the
West One-Half (W1/2) of said Section 18 to a point on the existing southerly
right of way
Continued
<PAGE>
OFFICIAL RECORDS
BOOK PAGE
2992 0161
SEMINOLE CO. FL.
[LANDSCAPED]
LEGAL DESCRIPTION CONTINUED
line of Lake Mary Boulevard, having a width of 80 feet, and the POINT OF
BEGINNING; thence North 89 degrees 48 minutes 27 seconds East, 389.50 feet along
said existing right-of-way line; thence South 00 degrees 21 minutes 41 seconds
East, 40.00 feet to a point on the proposed right-of-way to a point on a
non-tangent curve (radial line through said point bears South 00 degrees 17
minutes 21 seconds West), said point also being on the East line of the West
One-Half (W1/2) of said Section 18; thence Westerly along said curve concave to
the North, having a radius of 5040.92 feet, a central angle of 05 degrees 23
minutes 37 seconds, an arc distance of 474.53 to a point of reverse curvature;
thence Westerly along said curve concave to the South, having a radius of
4902.92 feet, a central angle of 01 degrees 51 minutes 29 seconds, an arc
distance of 159.01 feet; thence North 00 degrees 31 minutes 02 seconds West;
5.31 feet to a point on the existing southerly right-of-way line of Lake Mary
Boulevard; thence North 89 degrees 42 minutes 45 seconds East, 632.31 feet along
said existing right-of-way line to the POINT OF BEGINNING.
NOTE: Radial bearing in legal of South 00 degrees 17 minutes 21 seconds West is
incorrect. Sketch provided with the legal in Official Records indicated a
bearing of North 00 degrees 17 minutes 21 seconds West which allows for closure
of the legal.
PHASE II
Part of the Northeast Quarter of the Northwest Quarter and a part of the West
389.50 feet of the North three-Quarters of the Northeast Quarter of Section 18,
Township 20 South, Range 30 East, Seminole County, Florida, described as
follows:
Begin at the Southeast corner of the Northeast Quarter of the Northwest Quarter
of said Section 18; thence run North 89 degrees 50 minutes 52 seconds West;
along the South line of the Northeast Quarter of the Northwest Quarter of said
Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot wide
additional Right of Way as recorded in Official Records Book 1776, Page 1293 for
Lake Emma Road formerly a 100 foot wide Right of Way as Per Official Records
Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way 82.70 feet to the
point of curvature of a curve, concave Northeasterly, having a radius of 50.00
feet and a central angle of 28 degrees 35 minutes 14 seconds; thence from a
tangent bearing of South 84 degrees 05 minutes 25 seconds East, run along the
arc of said curve 24.95 feet to a point of reverse curvature of a curve, having
a radius of 150.00 feet and a central angle of 21 degrees 46 minutes 55 seconds;
thence run 57.03 feel along the arc of said curve to a point of reverse
curvature of a curve, having a radius of 150.00 feet and a central angle of 27
degrees 32 minutes 22 seconds; thence run 72.10 feet along the arc of said curve
to the point of tangency thereof; thence South 89 degrees 50 minutes 52 seconds
East, 410.00 feet; thence North 00 degrees 23 minutes 22 seconds East, 251.33
feet; thence North 89 degrees 50 minutes 52 seconds west; 35.00 feet; thence
North 00 degrees 23 minutes 22 seconds East, 270.38 feet; thence South 89
degrees 36 minutes 38 seconds East, 550.00 feet to the point of curvature of a
curve, concave Southwesterly, having a radius of 15.00 feet and a central angle
of 90 degrees 00 minutes 00 seconds; thence run 23.56 feel along the
Continued
<PAGE>
OFFICIAL RECORDS
BOOK PAGE
2992 0162
SEMINOLE CO. FL.
[LANDSCAPED]
LEGAL DESCRIPTION CONTINUED
arc of said curve to the point of tangency thereof; thence South 00 degrees 23
minutes 22 seconds West, 196.46 feet; thence South 89 degrees 36 minutes 38
seconds East, 363.73 feet; thence South 00 degrees 11 minutes 30 seconds West,
360.80 feet; thence South 89 degrees 36 minutes 38 seconds East, 175.00 feet to
a point on the East line of the West 389.50 feet of the North Three-Quarters of
the Northeast Quarter of said Section 18; thence run South 00 degrees 11 minutes
30 seconds West, along said line 651.47 feet to a point on the Northerly
boundary line of Greenwood Lakes Unit 2, as recorded in Plat book 22, Pages 2
and 3; thence run North 89 degrees 51 minutes 59 seconds West, along said
Northerly boundary line of Greenwood Lakes Unit 2, a distance of 389.50 feet to
the Northwest corner thereof; said point also lying on the West line of the
Northeast Quarter of said Section 18; thence run along said West line North 00
degrees 11 minutes 30 seconds East, 665.71 feet to the POINT OF BEGINNING.
PHASE III
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 146.88 feet to a
point of curvature of a curve, concave Easterly, having a radius of 894.93
feet; thence run 376.02 feet along the arc of said curve thru a central angle of
24 degrees 04 minutes 26 seconds for the POINT OF BEGINNING; thence continue
15.82 feet along the arc of said curve thru a central angle of 01 degrees 00
minutes 46 seconds to the point of tangency; thence run North 25 degrees 15
minutes 52 seconds East, 408.64 feet; thence run South 89 degrees 44 minutes 45
seconds East, 347.51 feet; thence North 00 degrees 11 minutes 04 seconds East,
130.00 feet; thence run south 89 degrees 44 minutes 45 seconds East, 249.74
Feet; thence North 00 degrees 15 minutes 15 seconds East, 55.00 feet; thence
South 35 degrees 36 minutes 38 seconds East, 228.49 feet to the point of
curvature of a curve, concave Southwesterly, having radius of 100.00 feet along
the arc of said curve to the point of tangency thereof; thence South 00 degrees
23 minutes 22 seconds West, 275.25 feet; thence North 89 degrees 36 minutes 38
seconds West, 593.47 feet; thence South 77 degrees 51 minutes 57 seconds West,
81.08 feet; thence south 63 degrees 41 minutes 30 seconds West, 47.86 feet to a
point of curvature of a curve, concave Northerly, having a radius of 266.00
feet; thence run 185.70 feet along the arc of said curve, thru a central angle
of 40 degrees 00 minutes 00 seconds to the point of tangency thereof; thence
North 76 degrees 18 minutes 30 seconds West, 33.26 feet for the POINT OF
BEGINNING.
And
Continued
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OFFICIAL RECORDS
BOOK PAGE
2992 0163
SEMINOLE CO. FL.
[LANDSCAPED]
LEGAL DESCRIPTION CONTINUED
PARCEL A:
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the intersection of the West line of the Northeast Quarter of said
Section 18 with the existing South Right of Way line of Lake Mary Boulevard (an
existing 80 foot Right of Way); thence South 00 degrees 15 minutes 15 seconds
West; 25.01 feet to a point on the proposed Southerly Right of way line of the
aforementioned Lake Mary Boulevard, said point also being the POINT OF
BEGINNING; thence continue South 00 degrees 15 minutes 15 seconds west, 244.99
feet; thence North 89 degrees 44 minutes 45 seconds West, 249.74 feet to a point
on the West line of the East Half of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence North 00 degrees 11 minutes 04 seconds East,
along said West line, 265.49 feet to a point on a curve, concave Southwesterly,
having a radius of 490292 feet; thence from a tangent bearing of South 86
degrees 08 minutes 17 seconds East, run 158.97 feet along the arc of said curve,
thru a central angle of 01 degrees 51 minutes 28 seconds to a point of reverse
curvature of a curve, concave Northeasterly, having a radius of 5040.92 feet;
thence run 91.94 feet along the arc, thru a central angle of 01 degrees 02
minutes 42 seconds to the POINT OF BEGINNING.
<PAGE>
OFFICIAL RECORDS
BOOK PAGE
2992 0164
SEMINOLE CO. FL.
[LANDSCAPED]
PHASE IV
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 898 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet to the
POINT OF BEGINNING; thence continue along said Easterly line of a 10 foot wide
additional Right of Way the following two (2) courses and distance: North 00
degrees 10 minutes 40 seconds East, 64.18 feet to the point of curvature of a
curve, concave Easterly, having a radius of 894.93 feet; thence run 376.02 feet
along the arc of said curve, thru a central angle of 24 degrees 04 minutes 26
seconds to a point; thence departing said Right of Way and from a tangent
bearing of South 24 degrees 15 minutes 06 seconds West, run South 76 degrees 18
minutes 30 seconds East, 33.26 feet to a point of curvature of a curve, concave
Northerly, having a radius of 266.00 feet; thence run 185.70 feet along the arc
of said curve, thru a central angle of 40 degrees 00 minutes 00 seconds to the
point of tangency thereof; thence 63 degrees 41 minutes 30 seconds East, 47.86
feet; thence North 77 degrees 51 minutes 57 seconds East, 81.08 feet; thence
South 89 degrees 36 minutes 38 seconds East, 110.77 feet; thence South 00
degrees 23 minutes 22 seconds West, 270.38 feet; thence South 89 degrees 50
minutes 52 seconds East, 35.00 feet; thence South 00 degrees 23 minutes 22
seconds West, 126.52 feet; thence North 89 degrees 32 minutes 23 seconds West,
5.31 feet; thence South 00 degrees 27 minutes 37 seconds West, 124.84 feet;
thence North 89 degrees 50 minutes 52 seconds West, 404.53 feet to the point of
curvature of a curve, concave northerly, having a radius of 150.00 feet and a
central angle of 27 degrees 32 minutes 22 seconds; thence run 72.10 feet along
the arc of said curve to a point of reverse curvature of a curve, having a
radius of 150.00 feet and central angle of 21 degrees 46 minutes 55 seconds;
thence run 57.03 feet along the arc of said curve to a point of reverse
curvature of a curve, having a radius of 50.00 feet and a central angle of 28
degrees 35 minutes 14 seconds; thence run 24.95 feet along the arc of said curve
to the POINT OF BEGINNING.
AND
Area between phase 2 and Phase 4:
Continued
<PAGE>
OFFICIAL RECORDS
BOOK PAGE
2992 0165
SEMINOLE CO. FL.
[LANDSCAPED]
LEGAL DESCRIPTION CONTINUED
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet; thence
continue along said Easterly line of a 10 foot wide additional Right of Way the
following two (2) courses and distances: North 0 degrees 10 minutes 40 seconds
East 64.18 feet to the point of curvature of a curve, concave Easterly, having a
radius of 894.93 feet; thence run 376.02 feet along the arc of said curve, thru
a central angle of 24 degrees 04 minutes 26 seconds to a point; thence departing
said Right of Way and from a tangent bearing of South 24 degrees 15 minutes 06
seconds West, run South 76 degrees 18 minutes 30 seconds East, 33.26 feet to the
point of curvature of a curve, concave Northerly, having a radius of 266.00
feet; thence run 185.70 feet along the arc of said curve, thru a central angle
of 40 degrees 00 minutes 00 seconds to the point of tangency thereof, thence
North 63 degrees 41 minutes 30 seconds East, 47.86 feet; thence North 77 degrees
51 minutes 57 seconds East, 81.08 feet; thence South 89 degrees 36 minutes 38
seconds East, 110.77 feet; thence South 00 degrees 23 minutes 22 seconds West,
270.38 feet; thence South 89 degrees 50 minutes 52 seconds East, 35.00 feet;
thence South 00 degrees 23 minutes 22 seconds West, 126.52 feet for the POINT OF
BEGINNING; thence continue South 00 degrees 23 minutes 22 seconds West, 124.81
feet; thence North 89 degrees 50 minutes 52 seconds West , 5.47 feet; thence
North 00 degrees 27 minutes 37 seconds East, 12484 feet; thence South 89 degrees
32 minutes 23 seconds East, 5.31 feet to the POINT OF BEGINNING.
ALSO BEING DESCRIBED AS FOLLOWS:
PHASE IV (Including area between Phase 2 and Phase 4)
Part of the Northeast Quarter of the Northwest Quarter of Section 18, Township
20 South, Range 30 East, Seminole County, Florida, being described as follows:
Commence at the Southeast corner of the Northeast Quarter of the Northwest
Quarter of said Section 18; thence run North 89 degrees 50 minutes 52 seconds
West, along the South line of the Northeast Quarter of the Northwest Quarter of
said Section 18, a distance of 1237.15 feet to the Easterly line of a 10 foot
wide additional Right of Way as recorded in Official Records Book 1776, Page
1293 for Lake Emma Road, formerly a 100 foot wide Right of Way as per Official
Records Book 1217, Page 413, all being in the Public Records of Seminole County,
Florida; thence run North 00 degrees 10 minutes 40 seconds East, along said
Easterly line of the 10 foot wide additional Right of Way, 82.70 feet to the
POINT OF BEGINNING; thence continue along said Easterly line of the 10 foot wide
additional Right of Way the following two (2) courses and distances; North 00
degrees 10 minutes 40 seconds East,
Continued
<PAGE>
OFFICIAL RECORDS
BOOK PAGE
2992 0166
SEMINOLE CO. FL.
[LANDSCAPED]
LEGAL DESCRIPTION CONTINUED
64.18 feet to the point of curvature of a curve, concave Easterly, having a
radius of 894.93 feet; thence run 376.02 feet along the arc of said curve, thru
a central angle of 24 degrees 04 minutes 26 seconds to a point; thence departing
said Right of Way and from a tangent bearing of South 24 degrees 15 minutes 06
seconds West, run South 76 degrees 18 minutes 30 seconds East, 33.26 feet to a
point of curvature of a curve, concave Northerly, having a radius of 266.00
feet; thence run 185.70 feet along the arc of said curve, thru a central angle
of 40 degrees 00 minutes 00 seconds to the point of tangency thereof; thence
North 63 degrees 41 minutes 30 seconds East, 47.86 feet; thence North 77 degrees
51 minutes 57 seconds East, 81.08 feet; thence South 89 degrees 36 minutes 38
seconds East, 110.77 feet; thence South 00 degrees 23 minutes 22 seconds West,
270.38 feet; thence South 89 degrees 50 minutes 52 seconds East, 35.00 feet;
thence South 00 degrees 23 minutes 22 seconds West 251.33 feet; thence North 89
degrees 50 minutes 52 seconds West, 410.00 feet to the point of curvature of a
curve, concave Northerly, having a radius of 150.00 feet and a central angle of
27 degrees 32 minutes 22 seconds; thence run 72.10 feet along the arc of said
curve to a point of reverse curvature of a curve, having a radius of 150.00 feet
and a central angle of 21 degrees 46 m minutes 55 seconds; thence run 57.03 feet
along the arc of said curve to a point of reverse curvature of a curve, having a
radius of 50.00 feet and a central angle of 28 degrees 35 minutes 14 seconds;
thence run 24.95 feet along the arc of said curve to the POINT OF BEGINNING.
ALL TOGETHER WITH:
Beneficial interests under that certain Declaration of Reciprocal Easements
dated November 13, 1987, recorded in Official Records Book 1906, Page 797,
Public Records of Seminole County, Florida, and that certain Supplemental
Declaration of Reciprocal Easements dated August 18, 1988, recorded in Official
Records Book 1988, page 1502, Public Records of Seminole County, Florida.
EXHIBIT 10.20
AGREEMENT FOR PURCHASE AND SALE
DATE: JUNE 12, 1997
NAME OF BUYER: EQUITY ONE (GAMMA) INC. AND/OR PERMITTED ASSIGNS
ADDRESS OF BUYER: 777 17TH STREET: PENTHOUSE
CITY: MIAMI BEACH STATE: FLORIDA ZIP: 33139
TELEPHONE: 305-672-1234 FACSIMILE: 305-672-6606
NAME OF SELLER: ISIDORO LERMAN, TRUSTEE
ADDRESS OF SELLER: C/O DAVID FELDMAN, ESQUIRE, 407 LINCOLN ROAD
CITY: MIAMI BEACH STATE: FLORIDA ZIP: 33139
TELEPHONE: 305-534-4721 FACSIMILE: 305-532-7015
1. DESCRIPTION OF PROPERTY: Seller ("Seller") agrees to sell land the
above named Buyer ("Buyer") agrees to purchase, under the terms and conditions
set forth in this Agreement, all right, title and interest of the Seller in and
to the following:
A. The parcel of real property, known as SKY LAKE MALL, located in
Miami, Dade County, Florida and more fully described below, and any improvements
situated on such parcel, together with any and all easements, covenants and
other rights appurtenant to such parcels and owned by Seller, consisting of
approximately 25 acres and approximately 320,000 square feet of improvements
(hereinafter the "Real Property"):
See Exhibit A attached hereto
B. Intangible Property (collectively "Intangible Property") consisting
of (i) any and all Leases and Contracts in effect on the Closing Date and (ii)
any and all transferable licenses, permits, licenses, certificates of
occupancy, and other approval in effect at the Closing Date and necessary for
the current use and operation of the real property or the personal property,
(iv) any and all transferable warranties, architectural or engineering plans and
specifications and tests and studies, development rights that are in possession
exist as of the Closing Date and relate to the Real or Personal Property.
C. All furniture, furnishings, fixtures, equipment and other tangible
personal property that is affixed to an/or located at the Real Property which
is owned by Seller on the Closing Date and used in connection with the
management, operation or repair of the Real Property excluding all tangible
personal property owned by tenants of the Real Property (collectively "Personal
Property").
[LETTERHEAD]
<PAGE>
D. Real Property, Personal Property and Intangible Property may
sometimes be herein collectively referred to as the "Property".
2. PURCHASE PRICE: The total purchase price of the Property is
$11,500,000.00 (U.S.) payable as follows:
A. Initial deposit to be paid
upon execution to
Alan J. Marcus, Esquire
Trust Account $ 100,000.00
--------------
B. Additional Deposit due within
2 days after Inception Period $ 300,000.00
--------------
C. Total Deposit: $ 400,000.00
--------------
D. Wire transfer of funds
required at closing: $11,100,000.00
--------------
TOTAL PURCHASE PRICE $11,500,000.00
--------------
The deposits to be paid by Buyer shall be held ALAN J. MARCUS, Esquire,
and shall be refundable to Buyer only as set forth herein and as set forth in
the Escrow Agreement executed in connection herewith.
3. ACCEPTANCE: If this offer is not executed by and delivered to all
parties on or before 5:00 p.m., June 12, 1997, this offer shall be deemed
withdrawn and null and void.
4. FACSIMILE; EFFECTIVE DATE: Facsimile copies of this Agreement, signed
and initialed in counterpart, shall be considered for all purposes, including
delivery, as originals. The Effective Date of this Agreement will be (a) the
date when the last one of Buyer and Seller has signed this offer, or (b) if
changes in this offer (after signature) have been made and initialed by the
parties, the date when the last one of Buyer or Seller has initiated those
changes.
5. INSPECTIONS AND CONDITION OF PROPERTY:
A. Buyer shall have thirty (3) days from the Effective Date to
complete its due diligence inspection of the Real Property (the "Inspection
Period"). To assist Buyer with this
2
[LETTERHEAD]
<PAGE>
inspection, Seller shall make available at Sky Lake Mall office, within two (2)
days of the Effective Date, to Buyer copies of all available leases, contracts,
agreements, licenses, permits, surveys, environmental reports, roof reports,
building inspection reports and other reports in Seller's possession
concerning the condition of the Property, as well as utility bills, year to
date income and expense statements, sales reports for the anchor tenants for the
current year and past three years; any other sales reports from any tenant
required to report for the current year and past three years, etc. concerning
the Real and Personal Property. During the Inspection Period, Buyer may conduct
such inspections, at Buyer's sole expense, as Buyer may deem necessary to
ascertain the physical condition of the Real Property. In the event the Real or
Personal Property is not acceptable to Buyer for any reason, Buyer shall provide
written notice of same to Seller, at Seller's address, prior to the expiration
of the Inspection Period. In such event, this Agreement shall be terminated and
of no further force and effect and Buyer and Seller shall be released of all
obligations hereunder and Buyer shall be refunded all deposits without further
notice. Failure of Buyer to deliver notice to Seller as required herein shall
constitute waiver of Buyer's right to give such notice and shall be deemed
acceptance of the Real and Personal Property by Buyer. Buyer shall confirm the
size and dimensions of the real property and improvements thereon, Buyer shall
(i) complete its inspection Period; (ii) not disturb or interfere with the
operation, management or use of the Project by Seller, Seller's agents, any
tenant of the Project or by any such tenant's customers, invitee or guests; and
(iii) not damage or affect the physical structure of the Property. Buyer shall
be responsible for any and all losses, damages, charges and other costs
associated with such inspections and studies, and Buyer covenants and agrees to
return the Property to the same condition as existed prior to such inspections
and studies. Buyer agrees not to allow any liens to arise against the Property
as a result of such inspections and studies and agrees to indemnify and hold
Seller harmless from and against any and all claims, charges, actions, costs,
suits, damages, injuries, or other liabilities which arise, either directly or
indirectly, from Buyer's or its agent's or employee's entry onto the Property
prior to Closing.
B. Buyer acknowledges that Buyer is purchasing the Property in "AS IS,
WHERE IS" Condition and Buyer further acknowledges that Seller has made no
warranties or representations, express or implied, in respect to the real and
personal property except as set forth in Paragraph 8 and further, Buyer has been
given the opportunity and has made an independent investigation of the Property.
6. CLOSING:
A. The closing for delivery of the deed and payment of the balance of
the purchase price shall take place at Seller's attorney's office at a mutually
agreeable time thirty (30) days from the expiration of the Inspection Period,
unless extended by any provision herein. If such date occurs other than on a
business day, the Closing Date shall be extended to the next business day.
B. Possession of the Property shall be transferred by Seller to Buyer
simultaneously with the closing of title.
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[LETTERHEAD]
<PAGE>
7. FINANCING
This is an All-Cash transaction.
8. SELLER'S REPRESENTATIONS AND WARRANTIES:
Seller represents and warrants to Buyer that as of the Effective Date:
(a) the person executing this Agreement on behalf of Seller is duly and
expressly authorized to do so;
(b) the Seller has full right and authority to enter into this
Agreement;
(c) that this Agreement constitutes a valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms;
(d) that the conveyance contemplated herein does not and will not
violate any Partnership Agreements or restrictions;
(e) that Seller is in good standing under the laws of the jurisdiction
and is qualified to do business in the State of Florida;
(f) the Seller has not received any notices from any governmental
agency that it is in violation of the Americans with Disabilities Act; and
(g) Seller represents and warrants that it has no knowledge of any
material condition that adversely affects the Real Property.
9. BUYER'S REPRESENTATIONS AND WARRANTIES: Buyer represents and warrants
to Seller that the following are true, accurate and complete as of the Effective
Date:
(a) Buyer is duly organized Corporation, validly existing and in good
standing, and authorized to do business within the State of Florida.
(b) Each of the persons executing this Agreement on behalf of Buyer is
duly authorized to do so. Buyer has full right and authority to enter into
this Agreement and to contemplate the transaction contemplated herein. This
Agreement constitutes a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
(c) There are no actions, suits, claims or other matters pending, or,
to the Buyer's best knowledge and belief, contemplated or threatened against
Buyer that could affect Buyer's ability to perform its obligations under this
Agreement.
4
[LETTERHEAD]
<PAGE>
(d) Buyer has sufficient funds and worthy credit available to
consummate the Closing of the transaction described in this Agreement.
10. LIMITATIONS ON FUTURE LEASES AND RENTALS: Subsequent to the Effective
Date, Seller shall not, without Buyer's prior written consent, enter into any
leases or contracts except for (i) contracts to be completed or that are to
terminate at or before closing, or (ii) service contracts that are terminable on
not less than 30 days notice. Buyer shall have five (5) days to approve any
proposed leases. In the event Buyer does not provide written consent to the
proposed lease of contract, Buyer's silence shall be deemed a refusal to
consent to said lease or contract.
11. CONDITION OF PROPERTY AT CLOSING: Seller shall be obligated to maintain
the Property in the same condition as of the Effective Date, reasonable wear and
tear excepted. Seller shall be obligated to repair and correct any deficiencies
in the condition of the Property occuring subsequent to the Effective Date
hereof, subject to Paragraph 14, herein.
12. CONDITIONS PRECEDENT TO CLOSING
A. CONDITIONS PRECEDENT FOR BUYER: The obligation of Buyer to purchase
the Property from Seller under this Agreement is, subject to the satisfaction,
at Closing, of each of the following:
(i) The representations and warranties made by Seller in this Agreement
shall be true, accurate and complete in all material respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties were made on and as of such date.
(ii) Seller shall have performed all covenants and obligations required
by this Agreement to be performed by Seller on or before Closing.
(iii) Title to the property shall conform with the requirements of
Paragraph 17 herein and Buyer shall have received a written Commitment for
Title Insurance, as described in Paragraph 17, indicating that an owner's title
insurance policy in accordance with the provisions of Paragraph 17 will be
issued after the date of Closing and compliance with any requirements contained
therein. At Closing, said Commitment shall be "marked up" indicating
satisfaction of all requirements set forth in said Commitment and deleting all
standard exceptions; i.e. to wit, GAP, mechanics and or other liens,
encroachments, and easements, etc.; chapter 159 liens and assessments; liens or
assessments not shown in the public records; and or any exception thereby
seeking to impose any lien, assessment, and or other encumbrance against the
Property. Nothing contained herein shall limit, modify, and/or otherwise effect
Seller's obligation to deliver to Buyer, in any event, and at Seller's expense,
upon Closing, good, marketable and insurable title to the Property.
(iv) Seller shall furnish a written estoppel letter from each tenant or
Affidavit executed by Seller as set forth in Paragraph 18 of this Agreement.
5
[LETTERHEAD]
<PAGE>
(v) All Leases for all of the tenants which occupy the Property shall be
in good standing and effective and that each tenant of the Property shall be
operating at the Property and in full compliance with its lease obligations. In
the event that prior to Closing, any of the tenants of the Property have
vacated their premises or on in default or breach of their lease obligations or
have provided notice of any kind to that effect, Buyer may (i) terminate this
Agreement, whereby Buyer shall be reimbursed its deposit and Buyer shall be
released of all obligations hereunder.
B. CONDITIONS PRECEDENT FOR SELLER: The obligation of Seller to sell the
Property to Buyer under this Agreement is, subject to the satisfaction, at
closing, of each of the following:
(i) The representations and warranties made by Buyer in this
Agreement shall be true, accurate and complete in all material respects on and
as of the Closing Date with the same force and effect as if such representations
and warranties were made on and as of such date.
(ii) Buyer shall have performed all covenants and obligations
required by this Agreement to be performed by Buyer on or before Closing.
13. CLOSING; DELIVERIES AT CLOSING: The closing of the transaction
contemplated in this Agreement ("Closing") shall take place on the date set
forth in Paragraph 6 of this Agreement.
A. At the time of Closing, Seller shall deliver to Buyer the following
items:
1. Warranty Deed.
2. Bill of Sale with respect to any Personal Property included in
the sale;
3. Mechanics' Lien Affidavit.
4. "GAP" Affidavit.
5. Assignment of Leases, Rents and Security Deposits;
6. Assignment of Contracts, if any;
7. Title evidence as set forth in Paragraph 17.
8. Appropriate authorizations of the Seller, if necessary; and
9. Such other documents as may be reasonably required in order to
carry out the purchase and sale.
B. At the time of closing, Buyer shall deliver or cause to be delivered
to Seller
6
[LETTERHEAD]
<PAGE>
the following items:
1. The earnest Deposit to be credited against Purchase Price;
2. A corporate resolution and an incumbency certificate to
evidence Buyer's capacity and authority to consummate Closing, a
certified copy of Buyer's Article of Incorporation and bylaws,
including all amendments thereto; and if Buyer is a corporation,
a current Certificate of Good Standing in state in which Buyer is
incorporated;
3. Acceptance of Assignment of Contracts;
4. Acceptance of the Assignment of Leases, Rents and Security
Deposits;
5. The balance of the Purchase Price and such other funds necessary
to pay all Closing and other costs and adjustments to be paid by
Buyer under this Agreement (to be delivered by wire transfer).
C. Each party agrees to execute and deliver at Closing a settlement
statement setting forth the charges, adjustments and credits to each party and
to execute and deliver such other documents and take such actions as either
party or the Escrow Agent might reasonably request to consummate the transaction
herein contemplated.
D. At Closing, the Escrow Agent shall (a) disburse all funds, then (b)
record, among the appropriate Public Records, all documents to be recorded, and
then (c) deliver all original documents and copies thereof, to the appropriate
parties.
14. RISK OF LOSS: Risk of loss prior to closing shall be borne by Seller.
A. If between the time of execution of this Agreement and the time of
closing, the Property is damaged by fire or other casualty the following shall
apply, at Buyer's option;
1. Upon receipt of applicable insurance proceeds, Seller shall have
the obligation to repair or replace the damaged improvements built upon the
Real Property. If Buyer requires, Seller shall make such repairs or replacements
and this Agreement shall continue in full force and effect and the Seller shall
be entitled to extend the closing for a reasonable additional period of time so
as to enable Seller to complete such repairs or replacements; or
2. Buyer may notify Seller that Buyer would rather that Seller not
repair or replace any such loss or damage and Seller shall assign all right to
and in any and all proceeds received from insurance or in satisfaction of any
claims or actions in connection with such loss or damage and upon such
assignment Buyer shall close without any purchase price reduction.
7
[LETTERHEAD]
<PAGE>
3. In the event the cost of repairs is in excess of $250,000.00,
Seller or Buyer shall have the right to cancel this Agreement in which event,
this Agreement shall be deemed canceled and of no further force or effect.
Buyer shall be refunded its deposit monies, without further notice, and the
parties shall be released and discharged of all claims and obligations
hereunder.
B. CONDEMNATION
In the event that all or any substantial portion of the Real Property
is condemned or taken by eminent domain prior to Closing, Buyer may, at its
option, either: (i) terminate this Agreement by written notice thereof to
Seller within ten (10) days after Seller notifies Buyer of the condemnation and
receive an immediate refund of the Deposit, and all interest accrued thereon or
(ii) proceed to close the transaction contemplated herein pursuant to the terms
hereof, in which event Seller shall deliver to Buyer at the Closing any proceeds
actually received by Seller attributable to the Real Property from such
condemnation or eminent domain proceeding, net of any costs associated with
such condemnation or eminent domain proceeding, or an assignment of Seller's
rights against the condemning authority, and there shall be no reduction in the
purchase price. In the event Buyer fails to timely deliver written notice of
termination as described in (i) above, Buyer shall be deemed to have elected to
proceed in accordance with (ii) above.
15. EXPENSES OF CLOSING:
A. Seller shall pay the following costs incurred in this sale:
(i) Seller's attorneys fees and costs;
(ii) the cost of recording any releases or corrective title
instruments.
(iii) all documentary stamp taxes and surtax on the deed that will
be due as a result of the completion of the sale; and
(iv) the costs of delivery of the Evidence of Title, as required
in Paragraph 17B, herein.
B. Buyer shall pay the following costs incurred in this sale:
(i) Buyer's attorney's fees and costs;
(ii) the costs of recording the deed of conveyance; and
(iii) the cost of Title Insurance.
8
[LETTERHEAD]
<PAGE>
16. PRORATIONS AND CREDITS
A. PRORATIONS: Current real estate taxes, based on the latest tax bill
then available; personal property taxes and assessments, rents, maintenance
fees and other similar customarily proratable items shall be prorated as of the
Closing Date with Buyer being responsible for and being credited with those on
the day of Closing. Buyer shall receive a credit for any rent that is past due
for the month in which the Closing occurs. Upon receipt by Buyer of such rent,
Buyer shall remit same to Seller. Buyer shall also receive a credit for any
rents that have accured for the month in which Closing occurs, but are unpaid.
Upon collection of such rent, the Buyer shall disburse same to Seller within 10
days of receipt. The provisions of the Paragraph are intended to survive
Closing. Buyer shall not be obligated to institute any collection proceedings to
collect any rents that accrued prior to the Closing Date.
B. CREDITS: Buyer shall be credited with the amount of any prepaid
rents paid to Seller by tenants of the Property for periods subsequent to the
Closing date and with the amount of any security deposits for tenants of the
Property.
17. TITLE REQUIREMENTS:
A. Title to the property shall be insurable and shall be conveyed from
Seller to Buyer free and clear of all encumbrances except the Permitted
Exceptions which are set forth as Exhibit "A" and to the extent not set forth
on Exhibit "A".
1. Covenants, conditions, restrictions, limitations, reservations,
dedications, agreements, and easements of record (including but not limited to,
water, sewer, gas, electric and other utility agreements) at the time of
closing, provided that they do not contain provisions for reversion or
forfeiture of title in the event of violation and do not substantially impair
the use of the property for its customary purposes.
2. General and special taxes and assessments for current and subsequent
years.
3. Regulatory laws and ordinances of all appropriate governmental
authorities including but not limited to zoning restrictions.
4. Rights of parties in possession.
B. Within 15 days of the Effective Date, Buyer shall obtain, at a cost
to Seller not to exceed $350.00, evidence of title consisting of a Commitment to
issue Title Insurance from either Commonwealth Land Title or Attorney's Title
Insurance Fund, along with copies of all title exceptions for Buyer to review.
Buyer shall have 15 days from receipt of the Evidence of Title to review same.
If any exceptions render the Property unacceptable for Buyer's use, Buyer shall
advise Seller of same and the provisions of Section 17.E shall apply. Buyer
shall, through its attorney,
9
[LETTERHEAD]
<PAGE>
cause said title insurance to be issued and Buyer shall be responsible for all
costs relating to the issuance of the Owners Policy.
All exceptions for which the Buyer does not object shall be considered to
be Permitted Exceptions and shall be deemed acceptable by Buyer.
C. Except for the Permitted Exceptions, Seller shall be obligated to
deliver the property free and clear of any and all encroachments, overlaps,
boundary line disputes and other matters disclosed by a certified survey other
than those set forth in the survey referenced herein. In the event the survey
shows any such encroachment or that the improvements presumed to be located on
the real property in fact encroach on setback lines, easements, or lands of
others, or violate any restrictions of record, covenant or applicable government
regulation, same shall be treated as a title defect which renders title
unmarketable.
D. As a further requirement of title, at closing (i) the Title
Insurance Commitment shall be marked to indicate satisfaction of all
requirements set forth necessary in order to deliver insurable and marketable
title and (ii) the standard printed exceptions contained in American Land Title
Association Standard Form B Owners' Title Insurance Policy customarily issued
shall be deleted; i.e. to wit, parties in possession, GAP, mechanics and or
other liens, encroachments, and easements, etc.; chapter 159 liens and
assessments; liens or assessments not shown in the public records; and or any
exception thereby seeking to impose any lien, assessment, and or other
encumbrance against the Property. Nothing contained herein, shall limit, modify,
and/or otherwise effect Seller's obligation to deliver to Buyer, in any event,
and at Seller's expense, upon Closing, good, marketable and insurable title to
the Property. In the event any exception referenced herein cannot be deleted,
same shall be treated as a title defect.
E. If the title is not insurable at the time of Closing, Seller shall
have 30 days following the date for Closing within which to remedy such defect
and shall use diligent effort to cure such defect, including the obligation to
institute litigation to effect such cure, or pay any amounts which are
liquidated, within 30 days of said notice. If Seller shall fail to cure such
defect within said 30 day period, Buyer shall have the option of either
accepting the title as it is or demanding a refund of the Buyer's deposit. Buyer
may also allow such additional time as may be deemed necessary, in the
discretion of the Buyer, for Seller to cure such defect. Upon any such refund,
this Agreement shall thereupon be terminated and both parties shall be relieved
of further liabilities hereunder.
18. TENANT ESTOPPEL LETTERS: Seller shall deliver to Buyer, within 10 days
of Closing, an estoppel certificate (hereinafter the "Estoppel Certificate")
signed by each of the tenants of the Property indicating the amount of rent
paid, the date last paid, the amount of security deposits, any prepaid rents,
etc. Buyer shall, within five (5) days of the Effective Date, supply such form
acceptable to Buyer for Seller's use. Buyer's obligation to close shall be
subject to (1) receipt of such Estoppel Letters and (2) said Estoppel Letters
being consistent with the terms and conditions of the Leases of the tenants and
shall confirm that the Lease of said tenant is in good standing. Alternatively,
Seller may provide an Affidavit attesting to the items contained in the Estoppel
10
[LETTERHEAD]
<PAGE>
Certificate concerning all tenants except: Nations Bank, South Broward Hospital
Group, First Union Bank, McDonalds, Lox Haven, Humana, Garden Dry Cleaners,
Bingo, Goodwill, Morrisions, Skylake Beauty Shop, Drs. DeStefano & Zimmerman,
and Skylake Washbowl.
19. ASSIGNMENT: This Agreement may be assigned to a controlled affiliate of
the Buyer without the consent of Seller. Buyer may elect to change the name or
the Corporate Purchaser and upon such change, shall notify Seller and which
shall be effective upon delivery of notice of the assignment and assumption of
the Agreement, such change to be made within 3 days prior to Closing.
20. DEFAULT: Should Buyer fail to purchase on the date on which title is to
close in accordance with this Agreement, or fail to perform any of Buyer's other
obligations under this Agreement and such default is not cured within 10 days
after written notice to Buyer, Seller may, at Seller's option, cancel this
Agreement by written notice to Buyer. In such event, Buyer's deposits and all
other sums paid to Seller (including any interest earned thereon) shall be
retained by Seller as liquidated and agreed damages for Buyer's default, and
this Agreement shall terminate. Seller has removed the Property from the market
and has incurred indirect expenses relative to sales, advertising and the like,
and Buyer recognizes that no other method could determine the precise damage
resulting and retention of all sums then paid as liquidated and agreed damages
shall be Seller's sole remedy in the event of Buyer's default. If this
Agreement is so canceled, Seller may sell the Property to any third party as
though this Agreement had never been made (without any obligation to account to
Buyer for any part of the proceeds of such sale). Should Seller default under
this Agreement or fail to perform any of Seller's other obligations under this
Agreement and such default is not cured within 10 days after written notice to
Seller, Buyer's sole and exclusive remedy shall to to (i) obtain a refund of all
deposits made, whereupon this Agreement shall terminate and neither party shall
have any liability to the other, or (ii) bring an action for specific
performance, without waiving Buyer's right to damages incurred as a result of
Seller's breach.
21. ESCROW AGENT: The Escrow Agent shall hold the deposit funds and perform
such duties as set forth in the Escrow Agreement attached hereto, consistent
with the provisions of this Agreement.
22. MISCELLANEOUS PROVISIONS:
A. All written notices and demands provided under this Agreement shall
be hand delivered or sent via certified or registered mail, return receipt
requested, or by Federal Express or other air carrier service. All notices and
demands shall be deemed properly addressed if addressed as follows and if
mailed, shall be deemed given upon being deposited in the United States mail,
postage prepaid:
11
[LETTERHEAD]
<PAGE>
TO SELLER: TO BUYER:
David Feldman, Esq. c/o Alan J. Marcus, Esquire
407 Lincoln Road, Suite 701 20803 Biscayne Blvd.; Suite 301
Miami Beach, FL 33139 Aventura, FL 33180
TEL: (305)534-4721 TEL: (305) 937-1800
FAX: (305) 532-7015 FAX: (305) 937-1857
B. This Agreement supersedes and any all prior understandings and
agreements between Seller, its agents and representatives and Buyer. It is
mutually understood and agreed that this Agreement represents the entire
understanding between Buyer and Seller. No representations or inducements made
prior to the signing of this Agreement, which are not expressly included in this
Agreement or imposed by law, shall be of any force or effect.
C. Neither this Agreement nor a memorandum thereof shall be recorded in
the office of the Clerk in any Circuit Court of the State of Florida, or in any
other Public Records of the State of Florida. Any recording of same by Buyer
shall be considered a breach of this Agreement.
D. The acceptance of the deed by Buyer at the closing of this
transaction shall be acknowledgment by Buyer of the full performance by Seller
of all of its agreements and responsibilities hereunder, and no performance of
any agreement, obligation, responsibility or representation of Seller shall
survive the closing of this transaction, except those specifically provided for
by statute and those specifically stated in this Agreement to survive the
closing.
E. Time shall be of the essence with regard to performance pursuant to
this Agreement.
F. Any disputes arising in connection with this Agreement shall be
settled according to Florida law and venue for any action in connection with
this Agreement shall be in Dade County, Florida.
G. No modification of this Agreement shall be valid unless in writing
and signed by both parties.
H. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument which may be sufficiently evidenced by one such
counterpart.
I. Should any part, clause, provision or condition of this Agreement be
held to be void, invalid or inoperative, the parties agree that such invalidity
shall not affect any other part, clause, provision or condition thereof, and
that the remainder of this Agreement shall be effective as though such void
part, clause, provision, or condition had not been contained herein.
J. In the event of any litigation arising from this Agreement the
prevailing party
12
[LETTERHEAD]
<PAGE>
shall be entitled to recover attorneys fees and costs incurred therewith.
23. BROKER: Buyer acknowledges that Buyer is and shall be responsible to
pay a commission ("Commission") to Blank Real Estate Company one (1%) percent.
Buyer is and shall be responsible to pay a commission ("Commission") to Global
Realty and Pointe Realty, Inc., for services performed in finding a Buyer ready,
willing and able to purchase the Property pursuant to this Agreement. Said fee
is payable by Buyer at time of closing. Seller agrees to indemnify Buyer and
hold Buyer harmless for any and all claims concerning Commissions that may arise
in favor of any person claiming by, through or under Seller. Buyer agrees to
indemnify Seller and hold Seller's harmless for any and all claims concerning
Commissions that may arise in favor if any person claiming by, through or under
Buyer.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
SELLER:
By:/s/ ISIDORO LERMAN Executed by Seller on June 12, 1997
---------------------------
ISIDORO LERMAN, TRUSTEE
BUYER:
EQUITY ONE (GAMMA) INC.
By:/s/ DORON VALERO Executed by Buyer on June 12, 1997
--------------------------------
DORON VALERO, Vice President
ESCROW AGENT:
_____________________________ Executed by Agent on June ____, 1997
ALAN J. MARCUS
13
[LETTERHEAD]
<PAGE>
ADDENDUM TO AGREEMENT FOR PURCHASE AND SALE
THIS ADDENDUM is made and entered into between ISIDORO LERMAN, as Trustee,
hereinafter referred to as "Seller" and EQUITY ONE (GAMMA), INC., hereinafter
referred to as "Buyer".
It is understood and agreed that any provisions of this Addendum that are
in conflict with the main body of the Agreement for Purchase and Sale, that it
is the provisions of this Addendum that are to control.
1. That paragraph 1, B (iv) is amended to read as follows:
"any and all transferable warranties, architectural or engineering plans
and specifications and tests and studies, development rights that are in
possession OF THE SELLER as of the Closing Date and relate to the Real or
Personal Property."
2. Paragraph 5 is amended to provide that Seller is not required to provide
any sales reports for any tenant other than Morrison's.
3. With regard to your letter of June 12, 1997, once this Agreement for
Purchase and Sale and Addendum is executed, paragraph 22, as is applicable.
4. Paragraph 20 is amended to provide that Buyer's remedies are limited to
a refund of the deposit monies or in the alternative, to an action for specific
performance against Seller.
5. Paragraph 3 is amended to provide for acceptance to June 13, 1997, at
6:30 p.m.
6. Buyer acknowledges being advised that Tenant, LOX Haven, has this date
advised that it requires the Third Addendum to be amended, Buyer authorizes
seller to enter into such an agreement provided that it remain in the form of an
option.
7. Buyer approves for Seller to enter into a one-year extension of Tenent,
Humana's lease on its current terms and conditions.
8. Paragraph 6 is amended to provide that the closing is to occur on August
15, 1997, unless the parties mutually agree to another date.
9. Paragraph 8 (g) is deleted.
10. Paragraph 12 (v) is limited to apply only in the event of default by
tenants leasing more than 5,000 sq. ft.
11. Paragraph 14 only applies after the expiration of the inspection period
and Buyer having placed the additional deposit monies.
12. Paragraphp 18 is amended to provided that Buyer is not required to
obtain estoppel letters from any of the tenants, and in lieu thereof may provide
Seller's affidavits as provided for in that paragraph. Buyer at its discretion
may obtain estoppel certificates from the tenants if Buyer so desires.
Facsimile copies of this Addendum, signed and initialed in counterpart,
shall be considered for all purposes, including delivery, as originals.
DATED this 13th day of June, 1997.
SELLER: ISIDORO LERMAN, as
Trustee
By: /s/ ISIDORO LERMAN
--------------------------
ISIDORO LERMAN, as Trustee
BUYER: EQUITY ONE (GAMMA), INC.
By: __________________________
<PAGE>
SECOND ADDENDUM TO PURCHASE AND SALE AGREEMENT
This Second Addendum to Purchase and Sale Agreement is dated the ___ day of
July, 1997 by and between Isidoro Lerman, Trustee (hereinafter the "Seller") and
Equity One (Sky Lake) Inc. (hereinafter the "Buyer").
WITNESSETH
WHEREAS, Buyer and Seller entered into an agreement dated June 13, 1997
(the "Agreement") for the purchase of the Shopping Center known as Sky Lake Mall
(the "Property"); and
WHEREAS, Buyer has completed its due diligence inspection of the Property;
and
WHEREAS, the Buyer has discovered certain environmental matters which the
Seller has agreed to remedy; and
WHEREAS, Buyer wishes to proceed to purchase the Property in accordance
with the terms and conditions of the Agreement subject to Seller's remediation
of the environmental matters; and
WHEREAS, the parties wish to provide for the terms and conditions whereby
Seller will be responsible for remedying such environmental conditions.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agrees as follows:
1. The Buyer accepts the condition of the Property in its "As Is, Where As"
condition, except as set forth herein,
2. On July 17, 1997, Buyer will deliver to the Escrow Agent the additional
deposit required by the Agreement.
3. Seller agrees to credit the sum of $7,500.00 to Buyer at Closing in
satisfaction of the asbestos related matters with proof of existance.
Page 1 of 2
<PAGE>
The Ardaman & Associates Phase II Environmental Report dated July 15,
1997, indicates contamination apparently from the dry cleaner located on
the Property and recommends that a Contamination Assessment Report (CAR)
be implemented in order to determine the extent of the contamination and
to determine a Remedial Action Plan (RAP). Buyer shall obtain separate
quotes from Ardaman & Associates and Hydrologic Associates USA, Inc. for
the cost of the CAR, RAP and actual remediation. Each quote shall
separate the costs of the CAR, RAP and actual remediation. Buyer shall
submit each quote to Seller and the parties shall either select the
lowest total quote or agree otherwise for the preparation of the CAR and
RAP and actual remediation. Thereafter, Buyer agrees to immediately and
diligently commence remediation, in accordance with the RAP, in order
that the Property be free and clear of all contamination. All costs and
expenses incurred in connection with the CAR, RAP and actual remediation
shall be paid by Seller. At Closing, Seller agrees to escrow, with the
Escrow Agent, in a account which will bear interest in favor of the
Seller, the sum of $500,000.00; said funds to remedy this environmental
condition. In the event that said sum shall be insufficient to pay the
costs of the CAR, RAP and actual remediation, the Seller and Jack
Chester, individually, agree to be responsible for all additional costs.
This Paragraph is intended to survive Closing.
4. The terms and conditions of this Second Addendum are incorporated in and
shall constitute a part of the Agreement and in the event of any
inconsistencies between this Second Addendum and the Contract for Sale
and Purchase or First Addendum, then this Addendum shall be controlling.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly
executed and sealed as of the day and year first above written.
SELLER: Executed by Seller on July 16, 1997.
By: /s/ ISIDORO LERMAN
------------------------
ISIDORO LERMAN, Trustee
BUYER: Executed by Buyer on July , 1997.
EQUITY ONE (SKY LAKE) INC.
By: /s/ DORON VALERO
------------------------
DORON VALERO, Vice President
Page 2 of 2
EXHIBIT 10.21
SECOND ADDENDUM TO CONTRACT FOR SALE AND PURCHASE
This Second Addendum to Contract for Sale and Purchase between EQUITY ONE
(GAMMA) INC., AND/OR ASSIGNS, as Buyer, and ANGEL PENA & HERMILIO CONCEPCION, as
Seller, dated MARCH 31, 1997 ("Agreement") concerning that following described
real property:
See "Exhibit A" attached hereto
Subject to and in accordance with the terms and conditions hereinafter set
forth, Seller and Buyer agree as follows:
1. The Inspection Period set forth in the Agreement shall expire at
11:00 p.m. on June 23, 1997.
2. The terms and conditions of this Addendum are incorporated in and
shall constitute as part of the Agreement.
BUYER: SELLER:
EQUITY ONE (GAMMA) INC., /s/ ANGEL PENA
a Florida Corporation -----------------------
ANGEL PENA
Date of Execution: 5-30-97
/s/ DORON VALERO, VICE PRESIDENT /s/ HERMILIO CONCEPCION
- -------------------------------- -----------------------------
By: DORON VALERO HERMILIO CONCEPCION
Date of Execution: 5-29-97 Date of Execution: 5-30-97
<PAGE>
ADDENDUM TO CONTRACT FOR SALE AND PURCHASE
This Addendum to Contract for Sale and Purchase between EQUITY ONE (GAMMA)
INC., AND/OR ASSIGNS, as Buyer, and ANGEL PENA & HERMILIO CONCEPCION, as Seller,
dated MARCH 31, 1997 ("Agreement") concerning that following described real
property:
See "Exhibit A" attached hereto
Subject to and in accordance with the terms and conditions hereinafter set
forth, Seller and Buyer agree as follows.
1. The Inspection Period set forth in the Agreement shall expire at
11:00 p.m. on June 1, 1997.
2. The Closing Date shall be extended until Seller delivers the
Property officially zoned BU-1A with approval of the site plan to be submitted
by the Buyer subsequent to the expiration of the Inspection Period.
3. Seller will supply copies of all documentation filed with Dade
County concerning the proposed zoning.
4. The terms and conditions of this Addendum are incorporated in and
shall constitute as part of the Agreement.
BUYER: SELLER:
EQUITY ONE (GAMMA) INC., /s/ ANGEL PENA
a Florida Corporation -----------------------
ANGEL PENA
Date of Execution: 5-11-97
/s/ DORON VALERO /s/ HERMILIO CONCEPCION
- ----------------------------- -----------------------------
By: DORON VALERO HERMILIO CONCEPCION
Date of Execution: 4-17-97 Date of Execution: 5-11-97
Buyer is aware that he will be responsible for any expenses related to the
development of the land such as mitigation, water hook up, paving of road as
required by any zoning regulations.
INITIALS
5/13/97
Seller to pay all expenses with regard to zoning change to BU-1A and
approval of the Site Plan.
INITIAL
5/13/97
<PAGE>
CONTRACT FOR SALE AND PURCHASE
(This Form has been approved by the Dade County associations of REALTORS
/Registered trademark/*)
Date Prepared: March 31, 1997
PARTIES: Equity One (Gamma) Inc., ("Buyer"), and Angel Pena & Hermilio
Concepcion ("Seller"), hereby agree that SELLER shall sell and BUYER shall buy
the following real property ("Real Property") and personal property
("Personalty") (collectively, "Property") upon the terms and conditions of this
Contract for Sale and Purchase ("Contract"), which includes any Riders attached
hereto.
1. DESCRIPTION OF PROPERTY:
A. TAX FOLIO #: 30-4910-003-0220
B. LEGAL DESCRIPTION OF REAL PROPERTY: 1 10 54 39 2.02 AC M/L J.G.
Heads Farms Sub, Plat book 46 Page 44, W 1/2 TR 15 Less W 15 ft for
R/W.
C. STREET ADDRESS: 147 S.W. & 26 St. (Coral Way) City: Miami, Fla.
Zip: 33175
D. PERSONALTY: (Included in this sale are all fixtures including, but
not limited to: antennae; fans; central and room A/Cs and heating
units; all other electrical, plumbing, mechanical systems; and
interior and exterior lighting fixtures; as presently attached to
the Real Property.)
VACANT LAND
2. PURCHASE PRICE AND METHOD OF PAYMENT:
A. PURCHASE PRICE..........................................$610,000
B. DEPOSIT to be held in escrow by Alan J. Marcus - Trust Account -
__________________________________________________("Escrow Agent")
1. Initial deposit........................$10,000.00
2. Additional deposit due within 30 days
and Effective Date.....................$40,000,00
3. Total deposit ("Deposit").......................$50,000.00
C. FINANCING as a percentage of the Purchase Price (%)
or dollar amount ($)................................__________
to be provided by (please check as applicable):
[ ] 1. New third party conventional mortgage loan
a. [ ] first or [ ] second mortgage
b. [ ] fixed rate [ ] adjustable/variable rate
[ ] fixed or adjustable/variable rate
c. Term: ________ years
[ ] 2. New third party FHA or VA mortgage loan (see FHA/VA Rider)
[ ] 3. Assumption of existing mortgage(s) (see Financing Rider)
[ ] 4. Seller financing (see Financing Rider)
[ ] 5. Other: ___________________________________________________
D. OTHER TERMS: All cash transaction.
E. BALANCE TO CLOSE, in U.S. Dollars, in cashier's checks issued by local
financial institutions or in certified checks certified by local
financial institutions, subject to adjustments and prorations.
$302,000.00
3. FINANCING: If a portion of the Purchase Price is to be financed by a third
party loan described in paragraph 2.C.(1) or 2.C.(2) ("Loan"), BUYER shall
obtain the Loan at BUYER'S expense at the prevailing interest rate and loan
costs. BUYER agrees: (a) to apply for the Loan within five (5) days after
the Effective Date; (b) to use reasonable diligence to obtain the Loan; (c)
thereafter, to meet the terms and conditions of the Loan commitment; and
(d) to close the Loan. If BUYER fails to obtain a written commitment for
the Loan within 45 days after the Effective Date, this Contract shall be
automatically canceled (unless SELLER grants a written extension, which
shall not exceed an additional 45 days), the Deposit shall forthwith be
returned to BUYER and BUYER and SELLER ahall be relieved, as to each other
of all obligations under this Contract.
4. ACCEPTANCE; FACSIMILE; EFFECTIVE DATE: If this offer is not executed by and
delivered to all parties on or before April 4, 1997, the Deposit will, at
BUYER'S option, be returned to BUYER and this offer withdrawn. Facsimile
copies of this Contract, signed and initialed in counterpart, shall be
considered for all purposes, including delivery, as originals. The
"Effective Date" of this Contract will be: (a) the date when the last one
of the BUYER and SELLER has signed this offer; or (b) if changes in this
offer (after signature) have been made and initialed by the parties, the
date when the last one of the BUYER and SELLER has initialed those changes.
5. DATE AND PLACE OF CLOSING: This transaction shall close on SEE ADDENDUM,
unless extended by other provisions of this Contract ("Closing"), at the
office of SELLER'S attorney if said office is located in the county in
which the Property is located. If a portion of the Purchase Price is to be
derived from institutional financing, the requirements of the institution
as to place, time of day, and procedures for Closing and for disbursement
of mortgage proceeds shall control, anything in this Contract to the
contrary notwithstanding. However, the institution shall not have the right
to delay the Closing.
6. SPECIAL CLAUSES: Seller shall deliver subject property officially zoned
BU1-A (business) at time of closing. Property size is 2.65 acres gross
approximately.
7. RIDERS. (Check applicable Riders which are attached to this Contract):
<TABLE>
<S> <C> <C> <C>
[ ] 1. Association Rider [ ] 5. Interest Bearing [ ] 8. Coastal Construction Control Line Rider
[ ] 2. FHA/VA Rider Escrow Rider [ ] 9. Flood Area Rider
[X] 3. Latent Defect Rider [X] 6. "AS IS" Rider [ ] 10. Other__________________________________
[ ] 4. Financing Rider [ ] 7. Misc. Clauses Rider _______________________________________
</TABLE>
PAGE 1/4
<PAGE>
====================STANDARDS FOR REAL ESTATE TRANSACTIONS=====================
8. EVIDENCE OF TITLE:
A. DEFINED: Evidence Of Title shall be defined as:
(1) AN EXISTING ABSTRACT OF TITLE, prepared by a reputable and
existing abstract firm (if firm not existing, then abstract must be
certified as correct by an existing firm), purporting to be an
accurate synopsis of the instruments affecting the title to the Real
Property recorded in the public records of the county wherein the Real
Property is located, which shall commence with the earliest public
records ("Abstract"); or
(2) IF AN EXISTING ABSTRACT OF TITLE IS NOT AVAILABLE, SELLER shall
provide an existing or prior owner's title insurance policy qualified
by use as a title base for reissuance of coverage on the Real Property
at the Purchase Price ("Prior Policy") together with copies of all
exceptions thereto and, at SELLER'S option, either: (a) an Abstract
continuation from the effective date of the Prior Policy; or (b) a
computer title search printout and name search printout, from the
effective date of the Prior Policy and certified to BUYER'S closing
agent, together with copies of all documents recited in the Prior
Policy and in the computer searches; or
(3) IF NEITHER AN EXISTING ABSTRACT NOR A PRIOR POLICY IS AVAILABLE,
SELLER shall provide, at SELLER'S option, either: (a) alternative
title evidence acceptable to BUYER'S closing agent; or (b) a standard
title insurance commitment issued by a Florida licensed title insuror
agreeing to issue to BUYER, upon recording of the deed to BUYER, an
owner's policy of title insurance in the amount of the Purchase Price,
subject only to those title exceptions set forth in this Contract or
which shall be discharged by SELLER at or before Closing. If SELLER
provides a title insurance commitment, SELLER shall pay the premium
for the owner's title insurance policy.
B. CERTIFICATION, MARKETABILITY: Evidence Of Title shall be certified or
brought current through a date not more than 30 days prior to Closing.
Evidence Of Title shall show a marketable title of record in SELLER,
in accordance with current title standards adopted by the Florida Bar,
subject only to those title exceptions permitted by this Contract or
which shall be discharged by SELLER at or before Closing. At Closing,
SELLER shall convey to BUYER a marketable title of record as described
in this paragraph.
C. DELIVERY, EXAMINATION: SELLER, at SELLER'S expense, shall deliver
Evidence Of Title to BUYER at least 15 days prior to Closing and if
Evidence Of Title is not received by BUYER as required, BUYER may
delay the Closing so that BUYER shall have up to 15 days from date of
receipt of Evidence Of Title to examine same. BUYER shall examine
Evidence Of Title within 15 days after receipt thereof, and BUYER
shall, within the same 15 day period, notify SELLER in writng of any
title defects. If any title defects render the title unmarketable,
SELLER shall use diligent effort to cure such defects (including the
bringing of necessary lawsuits) within 90 days from receipt of such
notice. If SELLER shall fail to cure such defects within the 90 day
period, BUYER shall have the option of: (1) accepting title as it is;
or (2) demanding a refund of the Deposit, in which case, the Deposit
shall forthwith be returned to BUYER, and BUYER and SELLER shall be
relieved, as to each other, of all obligations under this Contract.
Upon Closing, the Evidence Of Title shall become the property of
BUYER.
9. RESTRICTIONS AND EASEMENTS; BUILDING AND ZONING: (A) BUYER shall take title
subject to: (1) Zoning restrictions imposed by governmental authority; (2)
Restrictions and matters appearing on the plat, or otherwise common to the
subdivision; (3) Taxes for year of Closing; (4) Assumed mortgages and
purchase money mortgages, if any; (5) Restrictions, utility easements or
other matters which do not render the title unmarketable or adversely
affect the present use of the Property. (B) SELLER warrants that, at the
time of Closing, there shall be no violation of building or zoning codes.
If the Property is in violation of such codes, SELLER shall pay for the
expenses required to bring the Property into compliance with such codes at
time of Closing, subject to Subparagraph 12.E. below. This warranty shall
not survive Closing.
10. SURVEY: BUYER, within the time allowed for delivery of Evidence Of Title
and examination thereof, may have the Real Property surveyed at BUYER'S
expense. If the survey shows any encroachment on the Real Property or that
the improvements presumed to be located on the Real Property in fact
encroach on setback lines, easements, or lands of others, or violate any
restriction, Contract convenant, or applicable governmental regulation, the
same shall be treated as a title defect which renders title unmarketable.
11. INGRESS AND EGRESS: SELLER convenants and warrants that there is ingress
and egress to the Property over public roads.
12. INSPECTIONS: The parties acknowledge that the Property is not new
construction. Within 15 days after the Effective Date, BUYER may, at
BUYER'S expense, obtain and furnish to SELLER the written inspection
reports described below. All reports, repairs and/or treatments described
in Subparagraphs A and B below shall be performed by a person or firm
holding an appropriate Florida license. All reports, repairs and/or
treatments described in Subparagraph C below shall be performed by a person
or firm specializing in such matters and holding an occupational license
(if required) for such work or by an appropriately licensed Florida
contractor. BUYER may have repairs and/or treated items reinspected prior
to Closing. BUYER may have the energy efficiency rating determined by a
properly certified rater for any building located on the Real Property;
however, SELLER shall incur no liability or be required to make any repairs
as a result of such a determination. Should the Property suffer any damage
as a result of any inspections performed at BUYER'S request, BUYER shall be
solely responsible for repair of any such damage and restoration of the
Property. SELLER shall provide access and utilities to the Property for all
inspections.
A. TERMITES: (1) If the report discloses evidence of live termites, other
wood-boring insect infestation, or wood destroying organisms
(collectively "Infestation"), SELLER shall have said infestation
chemically treated or repaired prior to Closing by a person or firm
chosen by SELLER, subject to Subparagraph E below. (2) If the report
discloses evidence of prior infestation, then SELLER shall have the
affected area chemically treated or repaired prior to Closing by a
person or firm chosen by SELLER, subject to Subparagraph E below,
unless SELLER furnishes BUYER with a certificate of chemical treatment
by a person or firm within five (5) years of the Effective Date and a
current transferrable guarantee. (3) If the report discloses damage
from Infestation, SELLER shall pay for the cost of such repairs,
subject to Subparagraph E below.
B. ROOF: If the report discloses evidence of existing leaks, or damage to
fascia, soffit, sheathing, or rafters, SELLER shall pay for the
required repairs by a person or firm chosen by SELLER, subject to
Subparagraph E below.
C. OTHER INSPECTIONS: If the report discloses functional defects (as
distinguished from aesthetic defects) with respect to air conditioning
and heating systems, electrical systems, alarm systems, plumbing
systems, septic tank, appliances, machinery, sprinkler systems,
seawall, pool, structural, radon and environmental inspections, SELLER
shall pay for the required repairs by a person or firm chosen by
SELLER, subject to Subparagraph E below, to place such inspected items
in working condition or free of contamination, as appropriate, at
Closing.
D. SECOND INSPECTIONS: Within 5 days of SELLER'S receipt of BUYER'S
written inspection reports, SELLER shall have the right, at SELLER'S
expense, to obtain, and deliver to BUYER, a second written inspection
report. In the event BUYER'S and SELLER'S respective inspection
reports do not agree and the parties cannot mutually resolve their
differences, then BUYER and SELLER shall agree on a third inspector
and obtain a third written report within 3 days, which report shall be
binding upon the parties. The cost of a third inspector shall be borne
equally between the BUYER and SELLER.
E. LIMITATION: In no event shall SELLER'S total liability under
Paragraph 9.(B) and Subparagraphs A, B, C and D above exceed four
percent (4%) percent of the Purchase Price. If the total cost of all
required expenses, treatment and/or repairs does exceed said
percentage, BUYER may elect to pay such excess. Should BUYER elect not
to pay the excess, SELLER shall pay the excess or cancel the Contract
by delivery of written notice to BUYER or his agent, and the Deposit
shall forthwith be returned to BUYER, and BUYER and SELLER shall be
relieved, as to each other, of all obligations under this Contract.
F. WALK-THROUGH: Within forty-eight (48) hours prior to Closing, BUYER
shall be entitled to inspect the Property to ensure that all items
included in the sale are on the Property, that all required repairs
have been made, and that the Property has been maintained, including
but not limited to the lawn, shrubbery, and pool, if any, in the
condition as contracted, ordinary wear and tear excepted.
G. WAIVER OF BUYER'S INSPECTION RIGHTS: BUYER'S failure to provide
written inspection reports in accordance with this paragraph shall be
deemed a waiver of BUYER'S inspection rights hereuner and the Property
shall be accepted in "as is" condition. In such event, SELLER shall
not have further responsibilities as to repairs or treatments as
described above.
13. EXISTING MORTGAGES: SELLER shall obtain and furnish to BUYER no later than
10 days prior to Closing: (a) an estoppel letter for each existing
mortgage containing the necessary data for payoff; and (b) for equity line
loans, a written statement from the mortgagee showing that the account has
been closed in accordance with mortgagee's requirements to facilitate
payoff at Closing. Any prepayment penalties charged by mortgagees shall be
paid by SELLER.
PAGE 2/4
<PAGE>
14. POSSESSION; LEASES: Unless otherwise specified in this Contract: (a)
SELLER warrants and represents that there are no parties in possession or
with a right to possession of the Property other than SELLER; and (b)
SELLER shall deliver possession of the Property to BUYER at the time of
delivery to SELLER of the proceeds of the sale in accordance with Paragraph
20. If this Conract specifies that there are parties in possession or with
a right to possession who shall retain such possession or right to
possession after Closing and delivery to SELLER of the proceeds of sale,
then: (c) SELLER shall, no later than 15 days after Effective Date, furnish
to BUYER copies of all written leases and estoppel letters from each
tenant specifying the nature and duration of the tenants' occupancy, rental
rates, advance rent and security deposits paid by tenant; and (d) at
Closing: (1) the rent shall be prorated; (2) any security deposit and
advance rent shall be paid to BUYER; and (3) all original leases shall be
assigned and delivered to BUYER.
15. INSURANCE: The premium on any hazard insurance and flood insurance policies
in force covering improvements on the Property shall be prorated between
parties, or the policies may be cancelled as BUYER may elect. If insurance
is to be prorated, SELLER shall, on or before Closing, furnish BUYER all
insurance policies or copies thereof. SELLER shall not be responsible if
the insuror cancels the policies.
16. RISK OF LOSS: If the improvements are damaged by fire or other casualty
before delivery of the deed and can be restored to substantially the same
condition as now existing within a period of 60 days thereafter, SELLER may
restore the improvements and the Closing shall be extended accordingly. If
SELLER fails to so restore the Property, BUYER shall have the option of (a)
taking the Property in "as is" condition, together with the insurance
proceeds, if any, or (b) cancelling this Contract and the Deposit shall
forthwith be returned to BUYER, and BUYER and SELLER shall be relieved, as
to each other, of all obligations under this Contract.
17. MAINTENANCE: Between the Effective Date and Closing, the Property,
including lawn, shrubbery and pool, if any, shall be maintained by SELLER
in the condition as it exists as of the Effective Date, ordinary wear and
tear excepted.
18. ESCROW AGENT: Any escrow agent ("Agent") including the Escrow Agent for
the Deposit, receiving funds or equivalent ("Escrow Funds"), is authorized
to receive the Escrow Funds, hold the Escrow Funds in escrow, and, subject
to clearance, disburse the Escrow Funds according to this Contract. If
Agent is in doubt as to Agent's duties or liabilities under this Contract,
Agent may, at Agent's option: (a) continue to hold the Escrow Funds until
BUYER and SELLER mutually agree to its disbursement or until a judgment of
a court of competent jurisdiction shall determine the rights of the
parties; or (b) place the Escrow Funds into the registry of the circuit
court having jurisdiction of the dispute and interplead the parties having
an interest in the Escrow Funds. Upon notifying all interested parties of
such action, all liability on the part of Agent shall fully terminate,
except to the extent of accounting for the Escrow Funds. If Agent is a
licensed real estate broker, Agent will comply with the provisions of
Chapter 475 F.S.(1991), as amended. Any suit between BUYER and SELLER
wherein Agent is made a party because of acting as Agent hereunder, or in
any suit wherein Agent places the Escrow Funds into the registry of the
court and interpleads the interested parties, Agent shall recover
reasonable attorney's fees and costs incurred, which fees and costs shall
be paid from and out of the Escrow Funds and charged and awarded as court
costs in favor of the prevailing party. All parties agree that Agent shall
not be liable to any party or person for misdelivery to BUYER or SELLER of
the Escrow Funds unless such misdelivery is due to willful breach of this
Contract or gross negligence of Agent.
19. CLOSING DOCUMENTS: SELLER shall deliver to BUYER at Closing: (a) statutory
warranty, trustee's, personal representative's, or guardian's deed, as
appropriate to the status of SELLER, free and clear of all reverter clauses
and reservations for drainage, phosphate, minerals, metals, petroleum and
road rights-of-way, whether in favor of an individual or governmental unit
(waiver of right of entry from governmental unit shall be sufficient), but
subject to matters contained in Paragraph 9 (A); (b) Bill of sale conveying
Personalty; (c) affidavit attesting to the absence of liens or potential
lienors known to SELLER, gap affidavit, and affidavit of possession; (D)
IRS form 1099b or such other forms as may be required by the federal
government from time to time; (e) FIRPTA affidavits or exemption
certificates as may be required to exempt SELLER or any agent from the
income tax withholding requirements or SELLER shall authorize BUYER to
withhold the necessary amount.
20. CLOSING PROCEEDS; ESCROW AND DELIVERY: The proceeds of the sale, including
the Deposit, shall be held in escrow by SELLER'S attorney, or by such other
mutually acceptable escrow agent, for a period of not longer than 7 days
after Closing, to allow Evidence of Title to be continued at BUYER'S
expense, to show record title in BUYER without any intervening liens,
encumbrances, or defects which would render BUYER'S title unmarketable. If
title is rendered unmarketable through no fault of BUYER, BUYER shall,
within the 7 day period, notify SELLER and the escrow agent in writing of
the defect and SELLER shall have 30 days from date of receipt of such
notification to cure said defect. If SELLER fails to timely cure said
defect, all moneys paid hereunder, including the Deposit, shall, upon
written demand therefore and within 5 days thereafter, be returned to BUYER
by escrow agent and, simultaneously with such repayment, BUYER shall vacate
the Property, reconvey same to SELLER by special warranty deed, and return
the Personalty. If BUYER fails to timely notify SELLER of any such title
defect, BUYER shall take title "as is," waiving all rights against SELLER
as to such intervening defect except as may be available to BUYER by virtue
of warranties, if any, contained in the deed. BUYER shall be entitled to
possession of the Property upon delivery to SELLER of the proceeds of the
sale, which shall be at Closing if the escrow of closing proceeds is
waived. The escrow of closing proceeds required by this Paragraph shall be
waived if the BUYER receives title insurance against adverse matters
pursuant to Section 627.7841, F.S.(1991), as amended. SELLER shall have the
right to receive SELLER'S net proceeds of sale in cashier's checks issued
by local financial institutions if SELLER gives BUYER written demand for
such checks at least 7 days prior to closing.
21. EXPENSES: State documentary stamps and surtax on deed and the cost of
recording any corrective instruments shall be paid by SELLER. Documentary
stamps to be affixed to the note secured by the purchase money mortgage,
intangible tax on the purchase money mortgage and the cost of recording the
deed and purchase money mortgage shall be paid by BUYER.
22. PRORATIONS: All prorations shall be made as of midnight of the day
preceding the Closing. Real and personal property taxes shall be prorated
based on the current year's tax with due allowance being made for the
maximum allowable discount and for homestead or other exemption if allowed
for said year. If Closing occurs at a date when the current year's
assessment is not available, then taxes shall be prorated on the prior
year's tax. However, if there are completed improvements on the Property by
January 1st of the year of Closing which improvements were not in existence
on January 1st of the prior year, then the taxes shall be prorated based
upon the prior year's millage and at an equitable assessment to be agreed
upon between the parties. However, any tax proration based on an estimate
may at the request of either party be subsequently readjusted upon receipt
of the tax bill, and a statement to that effect will be set forth in the
closing statement. Waste fees, association fees, expenses and revenues of
the Property shall also be prorated.
23. SPECIAL ASSESSMENT LIENS: Certified, confirmed and ratified special
assessment liens as of Closing are to be paid by SELLER. Pending liens as
of Closing shall be assumed by BUYER, provided, however, that where the
improvement has been substantially completed as of Effective Date, such
pending lien shall be considered as certified or ratified and SELLER shall,
at Closing, be charged an amount equal to the last estimate by the public
body of the assessment for the improvement.
24. JOINDER OF SPOUSE: In the event there is failure of a spouse of BUYER or
SELLER to join in the execution of any documents required by a mortgage
lender due to Florida homestead law considerations, whether in the case of
a new mortgage or an assmumption of an existing loan, such failure shall be
deemed a default under this Contract.
25. PERSONS BOUND; GENDER; FLORIDA LAW: The benefits and obligations of this
Contract shall enure to and bind the respective heirs, personal
representatives, successors and assigns of the parties hereto. Whenever
used, the singular shall include the plural, the plural the singular, and
the use of any gender shall include all genders. This Contract shall be
governed by the law of the State of Florida.
26. DEFAULT: If BUYER fails to perform this Contract within the time specified
(including the payment of the Deposit), the Deposit made, or agreed to be
made by BUYER, may be retained or recovered by or for the account of SELLER
as agreed upon liquidated damages as consideration for the execution of
this Contract and in full settlement of SELLER'S claims, whereupon BUYER
and SELLER shall be relieved, as to each other, of all obligations under
this Contract; or SELLER, at SELLER'S option, may proceed in equity to
enforce SELLER'S rights under this Contract. If, for any reason other than
failure of SELLER to make SELLER'S title marketable after diligent effort,
SELLER fails, negelects or refuses to perform this Contract, BUYER may seek
specific performance or elect to receive the return of BUYER'S Deposit
without thereby waiving any action for damages resulting from SELLER'S
breach.
27. ATTORNEY'S FEES AND COSTS: In connection with any litigation (including all
appeals and interpleaders) involving the SELLER, BUYER, Lising Broker,
Selling Broker, or Escrow Agent, arising out of this Contract, the
prevailing party shall be entitled to recover all costs incurred, including
reasonable attorney's fees at trial and appellate levels.
PAGE 3/4
<PAGE>
28. ASSIGNABILITY: The BUYER may not assign this Contact without the written
consent of SELLER.
29. TIME: Time is of the essence for all provisions of this Contract.
30. ENTIRE AGREEMENT; TYPEWRITTEN OR HANDWRITTEN PROVISIONS; NOT RECORDABLE:
This Contract, including any exhibits and Riders attached, set forth the
entire agreement between BUYER and SELLER and contains all of the
covenants, promises, agreements, representations, conditions and
understandings. Typewritten or handwritten provisions inserted in this
Contract or attached hereto as exhibits or Riders shall control all printed
provisions in conflict therewith. Neither this Contract, not any notice of
it, shall be recorded in any public records.
31. RADON GAS: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
32. WARRANTY: SELLER warrants and represents that there are no facts known to
SELLER which materially affect the value of the Real Property which are not
readily observable by BUYER or which have not been disclosed to BUYER.
[LANDSCAPE]
/s/ ILLEGIBLE
- -------------
Initials
33. BUYER AND SELLER ACKNOWLEDGE RECEIPT OF THE AGENCY, RADON, COMPENSATION,
AND REAL PROPERTY SALES DISCLOSURES, AND INFORMATION BROCHURE ON ENERGY
EFFICIENCY RATING DETERMINATION.
THIS IS INTENDED TO BE A LEGALLY BINDING CONTRACT.
IF NOT FULLY UNDERSTOOD, SEEK THE ADVICE OF AN ATTORNEY PRIOR TO SIGNING.
This Form has been approved by and Copyrighted in 1995 by the following Dade
County associations of REALTORS/registered trademark/; Coral Gables Association
of REALTORS/registered trademark/, Inc., Northwestern Dade Association of
REALTORS/registered trademark/, Inc., Homestead-South Dade Board of
REALTORS/registered trademark/, Inc., Kendall-Perrine Association of
REALTORS/registered trademark/, Inc., Miami Beach Association of
REALTORS/registered trademark/, Inc. and REALTOR/registered trademark/
Association of Miami, Inc. All rights reserved. Approval of this form by these
organizations does not constitute an opinion that any of the terms and
conditions in this Contract form should be accepted by the parties in a
particular transaction.
<TABLE>
<S> <C>
Date last initialed by BUYER, if applicable _________
BUYER: Date Signed by BUYER 3/31/97
_______________________________________(Seal) /s/ ILLEGIBLE (Seal)
-----------------------------------
Print Name:__________________________________ Print Name: Equity One (Gamma) Inc.
-----------------------------
Tax ID #:____________________________________ Tax ID #:_______________________________
Address:__________________________________________________________________________________
</TABLE>
34. BROKERAGE FEE: SELLER acknowledges that this Contract has been read in its
entirety and agrees to sell the Property for the terms and conditions
stated in this Contract, and does hereby approve, ratify and confirm the
Contract in all respects. The undersigned SELLER agrees to pay said
Broker(s) 10% of the Purchase Price or $_________ (plus service sales tax,
if applicable) for services performed in finding a BUYER ready, willing and
able to purchase the Property pursuant to this Contract. Said fee is
payable at time of Closing of this transaction. The provisions of this
paragraph shall survive the Closing. If Buyer fails to perform and the
Deposit is retained, 50% thereof, but not exceeding the Broker's fee
provided above, shall be paid to Broker as full consideration for Broker's
services, and the balance shall be paid to SELLER. If the transaction shall
not close because of refusal or failure of the SELLER to perform, or, if
BUYER and SELLER shall mutually rescind this Contract without Broker's
consent, SELLER shall pay full fee to Broker upon demand. In any litigation
arising out of the Contract concerning the Broker's fee, the prevailing
party shall recover reasonable attorney's fees and costs, including at
trial and appellate levels.
<TABLE>
<S> <C>
Date last initialed by SELLER, if applicable _________
SELLER: Date Signed by SELLER 4/8/97
/s/ ANGEL PENA (Seal) /s/ HERMILIO CONCEPCION (Seal)
- --------------------------------------- -----------------------------------
Print Name: Angel Pena Print Name: Hermilio Concepcion
---------------------------------- -----------------------------
Tax ID #:____________________________________ Tax ID #:_______________________________
Address:__________________________________________________________________________________
</TABLE>
35. BROKERS: The Broker(s) named below agree to the brokerage fee specified
herein and to the proportion set out and adjacent to their names. Each
Broker hereby holds the other Broker(s) harmless from any claims for
brokerage fees arising from such Broker's dealings with any Broker not
specified herein.
<TABLE>
<S> <C>
Global Realty & Management 2.50 %
Pedro Realty U.S.A., Inc. 5 % Point Realty, Inc. 2.50 %
- -------------------------------- ------- ---------------------------- -------
Firm Name of Listing Broker as (check one) Firm Name of Selling Broker as (check one)
Telephone: 385-2911 Telephone: 538-0191
[X] Seller's Agent [ ] Disclosed Dual Agent [ ] Cooperating Sub-agent of Listing Broker [ ] Buyer's Broker
[ ] Transaction Broker/Independent Contractor [X] Transaction Broker/Independent Contractor
/s/ ILLEGIBLE /s/ ILLEGIBLE
- -------------------------------------------- ----------------------------------------
(Authorized Signatory) (Authorized Signatory)
36. DEPOSIT RECEIPT: The Initial Deposit (subject to clearance) was received
on _______________ and shall be held and disbursed according to this
Contract by the undersigned Escrow Agent.
Alan J. Marcus - Trust Account - 937-1800 By:
- -------------------------------- ---------- --------------------------------------
Firm Name of Escrow Agent Telephone (Authorized Signatory)
</TABLE>
PAGE 4/4
<PAGE>
TRANSACTION BROKER NOTICE
Florida real estate licensees who desire to operate as a transaction broker are
required by Section 475.25(1)(q)3, Florida Statutes, to give written notice to
all parties to the real estate transaction. The purpose of the TRANSACTION
BROKER NOTICE is to place the parties on notice that the licensee will be
operating as a transaction broker and to describe the licensee's role as a
transaction broker.
A licensee who facilitates a brokerage transaction between a seller and a buyer
without representng either party as an agent is known as a transaction broker. A
transaction broker has no fiduciary duty to either party except the duties of
accounting and to use skill, care and diligence.
A transaction broker is required to treat the seller and buyer with honesty and
fairness, and shall disclose all known facts materially affecting the value of
the property to the seller and buyer in a residential transaction.
The TRANSACTION BROKER NOTICE has been adopted by the Florida Real Estate
Commission and is required by Rule 10.037 of the rules of the Commission.
AGENCY DISCLOSURE
Equity One (Gamma) Inc. is a buyer/seller and is hereby informed that Point
Realty, Inc., and Global Rlty & Management are acting as Transaction Broker.
You have the explicit right to refuse this relationship. Other brokerage firms
may offer you other brokerage relationships. You are free to seek any brokerage
firm offering the type of relationship you desire.
3/21/97 /s/ ILLEGIBLE
- -------- ----------------------------------------
Date Seller or Buyer
4/8/97 /s/ ILLEGIBLE
- -------- ----------------------------------------
Date Seller or Buyer
<PAGE>
"AS IS" RIDER
TO CONTRACT FOR SALE AND PURCHASE
(This Form has been approved by the Dade County associations of REALTOR
/Registered Trademark/*
This "As Is" Rider ("Rider") shall amend, modify, and be a part of that certain
Contract for Sale and Purchase (Date Prepared: March 31, 1997) by and between
EQUITY ONE (GAMMA) INC., "Buyer," and ANGEL PENA & HERMILIO CONCEPCION,
"Seller," to which this Rider is attached. BUYER and SELLER further agree as
follows:
1. "AS IS": BUYER and SELLER agree that the Property, including but not
limited to the structure, the roof, and the Personalty described in
Paragraph 1.D. of the Contract, is being sold to and accepted by BUYER in
"AS IS" condition as of the Effective Date.
2. INSPECTIONS:
A. Paragraph 12 of the Contract is hereby deleted in its entirety.
B. Check one of the following boxes. If neither box is checked, then
BUYER and SELLER agree that Paragraph 9.(B) of the Contract is hereby
deleted.
[ ] Paragraph 9.(B) of the Contract is hereby deleted.
[X] Paragraph 9.(B) of the Contract is not deleted, but it hereby modified
to provide as follows:
1. SELLER warrants that, at the time of Closing, there shall be no
violation of building or zoning codes. This warranty shall not
survive Closing.
2. BUYER shall have the right to inspect the Property (to determine
if there are any violations of building or zoning codes) within
the time period set forth below as the "Inspection Period." All
reports of building and zoning codes compliance or violations
shall be made by a person or firm specializing in such matters
and holding an occupational license (if required) for such work,
by an appropriately licensed Florida contractor, or by an
appropriate governmental authority. Any report of any violation
shall cite the specific section and paragraph of the code
violated, and the effective date thereof.
3. If BUYER obtains and delivers to SELLER within the Inspection
Period written reports or other written evidence showing that
the property is in violation of an applicable building or zoning
code, SELLER shall pay for the expenses required to bring the
Property into compliance with such codes at Closing, subject to
limitation on liability as specified in Subparagraph 2.B.4.
(of this Rider) below.
4. In no event shall SELLER'S total liability under Subparagraph
2.B.3. (of this Rider) above exceed two percent (2%) of the
Purchase Price. If the total cost of all required expenses does
exceed said percentage, BUYER may elect to pay such excess.
Should BUYER elect not to pay the excess, SELLER may pay the
excess or cancel the Contract by delivery of written notice to
BUYER or his agent, and the Deposit shall forthwith be returned
to BUYER, and BUYER AND SELLER shall be relieved, as to each
other, of all obligations under this Contract.
C. If the Association Rider is a part of this Contract, then: (1)
Paragraph 5 of the Association Rider is hereby deleted in its
entirety; and (2) BUYER'S right to inspect the Property shall be
limited only to the Property (excluding common elements) and therefore
shall not apply to personal property or real property owned by the
Association; and (3) unless otherwise specified, Paragraph 6 of the
Association Rider is not deleted.
D. BUYER shall have the right to inspect the Property and to have such
inspections performed as BUYER shall desire for a period of Thirty
(30) days immediately following the Effective date ("Inspection
Period").
E. Any inspections of the roof or for termites or other wood destroying
organisms shall be performed by a person or firm holding an
appropriate Florida license. Any other inspections shall be performed
by a person or firm specializing in such matters and holding an
occupational license for such work (if required) or by an
appropriately licensed Florida contractor.
F. All costs of such inspections shall be paid by BUYER.
G. SELLER shall provide access and necessary utilities for such
inspections.
H. If BUYER determines, in BUYER'S sole discretion, that the results of
any such inspections are not acceptable to BUYER, BUYER may, at
BUYER'S option: (1) elect to cancel this Contract by providing SELLER
with notice of such election within the Inspection Period, in which
case the Deposit shall be forthwith returned to BUYER, and BUYER and
SELLER shall be relieved, as to each other, of all obligations under
this Contract; or (2) elect to accept the Property in its "AS IS"
condition and proceed to Closing.
I. If SELLER has not received written notice of BUYER'S election to
cancel the Contract within the Inspection Period, BUYER shall be
deemed to have waived the Inspection and cancellation rights granted
by this Paragraph 2.
J. Notice shall be deemed received by the SELLER if received at the
address set forth in Paragraph 34 of the Contract.
3. LENDER REQUIRED INSPECTIONS: If BUYER'S lender requires inspections of the
Property, SELLER shall provide access and necessary utilities for such
inspections. The cost of such inspections and any required repairs shall be
the sole responsibility of BUYER.
4. DAMAGE: Should the Property suffer any damage as a result of any
inspections performed at BUYER'S or BUYER'S lender's request, BUYER shall
be solely responsible for repair of any damage and/or restoration of the
Property.
5. WALKTHROUGH: Within 48 hours prior to Closing, BUYER shall be entitled to
inspect the Property to ensure that all items included in the sale are on
the premises and that the Property has been maintained, including but not
limited to the lawn, shrubbery and pool, if any, in the condition as of the
Effective Date, ordinary wear and tear excepted.
This Form has been approved by and Copyrighted in 1995 by the following Dade
County associations of REALTORS/registered trademark/: Coral Gables Association
of REALTORS/registered trademark/, Inc., Northwestern Dade Association of
REALTORS/registered trademark/, Inc., Homestead-South Dade Board of
REALTORS/registered trademark/, Inc., Kendall-Perrine Association of
REALTORS/registered trademark/, Inc., Miami Beach Association of
REALTORS/registered trademark/, Inc. and REALTOR/registered trademark/
Association of Miami, Inc. All rights reserved. Approval of this form by these
organizations does not constitute an opinion that any of the terms and
conditions in this Rider should be accepted by the parties in a particular
transaction.
<TABLE>
<S> <C>
BUYER: Date Signed by BUYER 3/31/97
_______________________________________(Seal) /s/ ILLEGIBLE (Seal)
-----------------------------------
Print Name:__________________________________ Print Name: Equity One (Gamma) Inc.
-----------------------------
SELLER: Date Signed by SELLER 4/8/97
/s/ ANGEL PENA (Seal) /s/ HERMILIO CONCEPCION (Seal)
- --------------------------------------- -----------------------------------
Print Name: Angel Pena Print Name: Hermilio Concepcion
----------------------------- -----------------------------
</TABLE>
<PAGE>
LATENT DEFECT RIDER
TO CONTRACT FOR SALE AND PURCHASE
(This Form has been approved by the Dade County associations of REALTOR
/Registered Trademark/*
This Latent Defect Rider ("Rider") shall amend, modify, and be a part of that
certain Contract for Sale and Purchase (Date Prepared: March 31, 1997) by and
between EQUITY ONE (GAMMA) INC., "Buyer," and ANGEL PENA & HERMILIO CONCEPCION,
"Seller," to which this Rider is attached. BUYER and SELLER further agree as
follows:
SELLER represents that SELLER knows of no facts materially affecting the value
of the subject Property which are not readily observable, except for the
following, which SELLER hereby discloses to BUYER:
[STRIKE OUT]
1. ____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
2. ____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
3. ____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
4. ____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
5. ____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
This Form has been approved by and Copyrighted in 1995 by the following Dade
County associations of REALTORS/registered trademark/; Coral Gables Association
of REALTORS/registered trademark/, Inc., Northwestern Dade Association of
REALTORS/registered trademark/, Inc., Homestead-South Dade Board of
REALTORS/registered trademark/, Inc., Kendall-Perrine Association of
REALTORS/registered trademark/, Inc., Miami Beach Association of
REALTORS/registered trademark/, Inc. and REALTOR/registered trademark/
Association of Miami, Inc. All rights reserved. Approval of this form by these
organizations does not constitute an opinion that any of the terms and
conditions in this Rider should be accepted by the parties in a particular
transaction.
<TABLE>
<S> <C>
BUYER: Date Signed by BUYER 3/31/97
_______________________________________(Seal) /s/ ILLEGIBLE (Seal)
-----------------------------------
Print Name:__________________________________ Print Name: Equity One (Gamma) Inc.
-----------------------------
SELLER: Date Signed by SELLER 4/8/97
/s/ ANGEL PENA (Seal) /s/ HERMILIO CONCEPCION (Seal)
- --------------------------------------- -----------------------------------
Print Name: Angel Pena Print Name: Hermilio Concepcion
----------------------------- -----------------------------
</TABLE>
<PAGE>
ADDENDUM TO CONTRACT FOR SALE AND PURCHASE
This Addendum to Contract for Sale and Purchase between EQUITY ONE
(GAMMA) INC., AND/OR ASSIGNS, as Buyer, and ANGEL PENA & HERMILIO CONCEPCION, as
Seller, dated MARCH 31, 1997 ("Agreement") concerning that following described
real property:
See "Exhibit A" attached hereto
Subject to and in accordance with the terms and conditions hereinafter set
forth, Seller and Buyer agree as follows:
1. Seller agrees to provide sufficient evidence concerning the
Property, as follows:
[STRIKE OUT]
a. That the Property is suitable for the construction of a
building 144 feet wide, which fronts Coral Way and at
initials least 100 feet in depth. In addition, that a dividing
wall may be built on the East and North Property line
with such a building.
b. That water and sewer service has been brought to the
initials Property line.
2. The Closing Date shall be extended until Seller delivers the
Property officially zoned BU-1A and sufficient evidence as set forth in
Paragraph 1, herein. Seller to be provided with site plan by buyer by April 30,
1997 but will not present for zoning until the Inspection Period has passed.
[initials]
3. Seller will supply copies of all documentation filed with Dade
County concerning the proposed zoning.
4. The terms and conditions of this Addendum are incorporated in and
shall constitute as part of the Agreement.
5. Buyer can use the Inspection Period to determine if land use is
appropriate for building measurement. [initials]
BUYER: SELLER:
EQUITY ONE (GAMMA) INC., /s/ ANGEL PENA
a Florida Corporation -----------------------
ANGEL PENA
Date of Execution: 4-11-97
/s/ DORON VALERO /s/ HERMILIO CONCEPCION
- ----------------------------- -----------------------------
By: DORON VALERO HERMILIO CONCEPCION
Date of Execution: 4-10-97 Date of Execution: 4-11-97
EXHIBIT 10.22
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1996 between
Equity One, Inc., having an address at 777 17th Street Penthouse Suite, Miami
Beach, Florida 33139, (hereinafter referred to as the "Owner"), and Global
Realty & Management, Inc., having an address at 777 17th Street, Penthouse
Suite. Miami Beach, Florida 33139 (herein after referred to as the "Manager"),
whereas the Owner appoints the Manager as Agent for Management *(See Attached)
(hereinafter referred to as the "Property"), having an address at **(See
Attached).
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual
promises an agreements hereinafter set forth an for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Owner and the
Manager covenant and agree as follows:
WITNESSETH:
1. APPOINTMENT OF THE MANAGER AS AGENT FOR MANAGEMENT OF THE PROPERTY:
The Owner hereby appoints the Manager (and the Manager or Assignee hereby
accepts such appointment), as the Owner's Agent for the management of the
Property and delegates to the Manager (and the Manager hereby accepts such
delegation), the following rights and obligations:
The right and obligation to manage and supervise, through one or more
employees of the Manager, the Property in the manner and under the terms and
conditions hereinafter more particularly set forth. The services to be
provided by the Manager hereunder shall include, but shall not be limited to,
negotiating for the renting of vacant local tenant space (as hereinafter
defined) at the Property, executing such leases for local tenant space as
Managing Agent on behalf of Owner, and renewing expiring leases of local
tenant space on such terms and conditions as Owner shall approve.
2. OTHER SERVICES TO BE PERFORMED BY MANAGER:
A. All acts performed by the Manager as permitted under this agreement shall be
done as the Agent of the Owner and shall be subject to the Owner's
supervision and control. Any expenses reasonably incurred by the Manager on
behalf of the Owner for the actual Operating Expenses of managing the
Property are subject to reimbursement and shall be paid to the Manager within
thirty (30) days after they are incurred.
i. The Manager shall be liable for its own expenses in administering this
Agreement and for its own office overhead, including but not limited to
the following: expenses for office equipment; expenses for office
supplies of the Manager; any overhead expenses of the Manager incurred in
its general offices in Florida; and salaries of any executives or
supervisory employees of the Manager.
ii. The Owner shall reimburse to the manager postage and long-distance
telephone charges directly related to the Management of the Property.
B. The Manager shall investigate, hire, train, pay, supervise, and discharge the
personnel necessary to be employed in order to properly maintain the
property. Such personnel shall in every instance be deemed employees of the
Manager and not the Owner, and Owner shall have no right to supervise or
direct such employees. Nothing contained in this Agreement shall be deemed to
constitute a joint venture between the Owner and the Manager or to cause the
Manager to be responsible in any way for the debts or obligation of the Owner
or any other party (but nothing contained herein shall effect the Manager's
responsibility to transmit
1
<PAGE>
payments for the account of the Owner as provided herein), it being the
intention of the parties that the only relationship hereunder is that of agent
and principal, and the Manager shall not represent to anyone that its
relationship to the Owner is other than that set forth herein. The Manager shall
not be liable, responsible or accountable in damages or otherwise to the owner
for any acts performed by it in good faith and within the scope of this
Agreement. The Manager shall, however, be liable for such actions to the extent
they are attributable to gross negligence, malfeasance, misappropriation,
willful default or fraud by the Manager, its servants, employees,
representatives and personnel. The Manager does hereby indemnify and shall hold
the Owner harmless from any liability or damage to the Owner or the Property
resulting from negligence, malfeasance, misappropriation, willful default,
fraud, or act done without the scope of this Agreement by Manager, its servants,
employees, representatives, and personnel.
C. The Manager shall make, in the Owner's name or in the Manager's name as agent
for the owner, contracts for water, electricity, gas, telephone, vermin
extermination, trash removal, janitorial services and other services deemed
by the Manager to be necessary or advisable for the operation of the
Property. The Manager shall also place orders (in the Owner's name or in the
Manager's name as agent for the Owner) for such equipment, tools, appliances,
materials and supplies as are reasonable and necessary to properly maintain
the Property. In no event, however, shall the Manager enter into any service
contract or agreement related to the Property, or purchase such equipment,
etc., which is not part of any prior approved budget, in excess of $2000.00,
without the prior written consent of the Owner.
D. The Manager shall make, in the Owner's name or in the Manager's name, as
Agent for the Owner, contracts for the maintenance of the buildings,
appurtenances and ground of the Property in accordance with standards of
comparable projects in ***(See Attached) County, Florida, including within
such maintenance, without limitation thereof, interior and exterior cleaning,
painting and decorating, plumbing, carpentry and such other normal
maintenance and repair work as may be necessary and desirable; provided,
however, that unless there is immediate danger to life or property the
Manager shall not incur or otherwise agree to pay any expense in excess of
$2000.00 which is not part of any prior approved budget, without the prior
written consent of the Owner. The Manager shall promptly notify the Owner of
any and all orders or violations of any governmental authority having
jurisdiction over the Property or by any Board of Fire Underwriters or
similar body. Any services including, but not limited to, supervision of fire
restoration, major rehabilitation, or structural modifications shall not be
obligations of the Manager under the Agreement unless the Owner and the
Manager mutually agree on the Manager's responsibilities and compensation for
such additional services.
E. The Manager shall, on behalf of the Owner, collect all rent and other charges
due from tenants from leases of rental space at the Property. Owner
authorizes the Manager to request, demand, collect and receive all such rent
and other charges and, upon the prior authorization from the Owner, to
institute legal collection thereof and for the dispossession of tenants and
other persons from the Property, and such expense may include the engaging of
counsel approved by the Owner for any such matter.
All rents and other income collected by the Manager from the Property shall
be deposited into an account (hereinafter referred to as the "Account") in
the Owner's name to be established at such bank as Owner shall direct. The
Manager shall have the right to write checks against such Account during the
Management Services Period (as against such Account during the Management
Services Period (as hereinafter defined) to pay for the Operating Expenses of
the Property (exclusive of debt service on any mortgages) required or
permitted to be paid hereunder by Manager. The excess of all monies collected
by the Manager over the Operating Expenses of the Property required or
permitted to be paid by the manager under this Agreement shall remain in the
Account or be forthwith permitted to the Owner at the Owner's direction.
2
<PAGE>
F. All required or appropriate insurance coverage for the Property shall be
placed by the Owner with such companies in such amount, and with such
beneficial interest appearing therein as shall be in conformity with the
requirements of any mortgage of the Property and including rental insurance
covering rents payable by tenants of the Property. The Manager shall promptly
investigate and supply the Owner with a full and timely report as to all
accidents, claims for damages relating to the ownership, operation and
maintenance of the Property, and damages or destruction to the Property of
which the Manager has notice or knowledge and the estimated cost of repair
thereof.
3. RECORDS AND REPORTING:
A. The Manager shall maintain at the Property the regular business office of the
Manager located at the address of the Manager as set forth above, separate
Property books and journals and orderly files, containing rental records,
insurance policies, lease agreements, correspondence, receipts, bills and
vouchers, and all other documents and papers pertaining directly to the
property or operation thereof.
B. The Manager shall provide the Owner with written monthly reporting statements
in a format to be agreed upon by the Owner and the Manager but clearly
showing the gross income and Operating Expenses from the Property.
C. The Manager shall deliver to the Owner, as soon as practical after the end of
each calendar year, a statement of income and expenses of the Property, which
statement shall be certified by an independent certified public accountant,
if requested in writing by the Owner (at the expense of the Owner).
D. The Manager shall execute, and file punctually when due, all forms, reports,
and returns required by law relating to employment of the personnel of the
Manager.
E. The Manager shall notify the Owner of any action which the Manager has actual
notice or knowledge as may be necessary to comply with any and all orders for
requirements affecting the Property by any Federal, State, County, or
Municipal authority having jurisdiction thereof, and order the Board of Fire
Underwriters or other similar bodies, if and to the extent the Manager has
actual notice or knowledge of which the Owner is not in compliance.
F. The Manager shall furnish to the Owner, upon receipt by the Manager, any and
all legal notices received by the Manager affecting the Property, including
without limitation, notices of violation of law or municipal ordinances or
orders issued by any governmental authority or by any Board of Fire
Underwriters or other similar body, all notices from any mortgagor claiming
default in any mortgage on the Property, and other notices from any mortgagor
not routine of nature.
4. MANAGEMENT AND OPERATIONS:
Subject to the conditions expressly set forth in this Agreement, the Manager is
expressly authorized on behalf of the Owner to perform any management and
operational functions normal or customary for the Manager of a real estate
development similar to the Property. The Manager agrees to apply prudent
business practices in managing the Property and to use the same care and
diligence carrying out its responsibilities under this Agreement as if the
Manager itself was the Owner of the Property.
5. COMPENSATION OF MANAGER:
For its services rendered pursuant to the Agreement (herein defined as the
"Management Services"), the Manager shall receive a management fee equal to four
percent (4%)*** of the minimum collected
__________
****
3
<PAGE>
rents (or proceeds of collected rental insurance proceeds, if applicable)
payable monthly, which fee will be payable to the Manager by the Owner in
monthly installments from the Account in arrears on the first day of each month
next proceeding the month in question during the Management Services Period.
Manager shall be entitled to a commission equal to: two dollars ($2.00) per
square foot under new leases for tenant space which are acceptable to Owner; one
dollar ($1.00) per square foot for renewed leases; and ($2.00)**** per square
foot for expired leases with no option to renew. Such commission shall be
payable from the first month's rent under any such lease.
6. USE AND MAINTENANCE OF THE PROPERTY:
The Manager agrees that it will not knowingly permit the use of the Property for
any purposes which might void any policy of insurance held by the Owner or which
might render any loss thereunder uncollectible, or which might be in violation
of any governmental restriction. It shall be the duty of the Manager at all time
during the term of this Agreement to operate and maintain the Property according
to the highest standards achievable. The Manager shall be expected to perform
such other acts and deeds as are reasonable, necessary and proper in the
discharge of its duties under this Agreement. All costs for correcting or
complying with, all fines payable in connection with, and all orders of
violation affecting the Property by any Governmental authority or Board of Fire
Underwriters or other similar body shall be at the cost and expense of the Owner
unless the same are caused by the Manager's malfeasance, gross negligence, or
willful failure or refusal to perform it's obligations hereunder, in which case
and to that extent such costs shall be borne by the Manager.
7. MANAGEMENT SERVICES PERIOD:
The Manager shall perform the Management services pursuant to this Agreement for
the period commencing of the date first above written, and ending on January
1st. 1997 (the "Management Services Period").
This Agreement may, however, be terminated by the Owner in accordance with
Paragraph 7(A) of this Agreement at any time during the Management Services
period upon ten (10) days prior notice to the Manager, whereupon the Management
Fee payable to the Manager, as described in Paragraph 5 above, shall be pro
rated to the date of such earlier termination.
A. If Manager shall (i) steal any money from owner, or (ii) pay any money to any
tenant of the Property as an inducement to such tenant to move its store to
any other shopping center or entity controlled by him, then, in either of
such event, the owner may terminate this Management Agreement as provided in
Paragraph 7 above. For purposes of this Paragraph 7(A) honest errors and
clerical errors do not constitute stealing, and nothing herein or otherwise
set forth in this Agreement shall prohibit the manager from talking with or
negotiating with tenants of the Property, or signing leases with or
negotiating with tenants of the Property for any stores or space in other
property owned by the Manager or any entity controlled by him.
8. NOTICE:
All notices, demands, consents, approvals and requests given by either party to
the other hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, to the parties at the following address:
__________
****For East Bay Plaza, the Manager shall receive a Management Fee of One
Thousand Seven Hundred ($1,700.00) Dollars and 00/100, and is entitled to a
commission equal to two dollars ($2.00) per square foot under new leases for
tenant space which are acceptable to Owner.
For Mandarin Mini-Storage, the Manager shall receive a Management Fee equal
to five percent (5%) of the minimum collected rents and sales payable monthly.
4
<PAGE>
If to the Owner: Equity One, Inc.
777 17th Street, Penthouse Suite
Miami Beach, FL 33139
Attention: Mr. Chaim Katzman
If to the Manager: Global Realty & Management, Inc.
777 17th Street, Penthouse Suite
Miami Beach, FL 33139
Attention: Mr. Doron Valero
Any party may at any time change its respective address by sending written
notice to the other party of the change in the manner hereinabove prescribed.
Notices shall be deemed to be given on the second business day after mailing.
9. MISCELLANEOUS:
A. If any term or provision of this Agreement, or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or the application of such terms or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
this Agreement shall be valid and be enforced to the fullest extent permitted
by law.
B. The failure of the Owner and Manager to seek redress for any violation of, or
insist upon the strict performance of, any term or condition of this
Agreement shall not prevent a subsequent act by the Manager which would have
originally constituted a violation of this Agreement by the Manager from
having all the force and effect of an original violation. The owner may
restrain any breach or threatened breach by the Manager of any term or
condition herein and any particular remedy shall not preclude the Owner from
any other remedy it might have against the Manager, whether at law or in
equity. The failure by the owner to insist upon the strict performance of any
of the terms or conditions of this Agreement or to exercise any right, remedy
or election herein contained or permitted by law shall not constitute as a
waiver or relinquishment for the future of such term, condition, right,
remedy or election, but the same shall continue and remain in full force and
effect.
All rights and remedies that the Owner may have at law, in equity or
otherwise upon breach of any term or condition of this Agreement, shall be in
distinct, separate and cumulative rights and remedies and no one of them,
whether exercised by the Owner or not, shall be deemed to be in exclusion of
any other right or remedy of the Owner.
C. This Agreement contains the entire agreement between the parties hereto with
respect to the matters herein contained and any agreement hereinafter made
shall be ineffective to effect any change or notification in whole or in
part, unless such agreement is in writing and signed by the manager and the
Owner.
D. This Agreement shall be governed by and construed in accordance with the laws
of the state of Florida.
E. This Agreement shall be binding upon and shall inure to the benefit of the
respective successors and assigns of the parties hereto.
F. In the event of litigation arising out of this contract the prevailing party
shall be entitled to any and all costs incurred due to such litigation,
including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be fully
executed by their authorized representatives as of the date first above written.
5
<PAGE>
SIGNED AND SEALED IN THE PRESENCE OF:
- ------------------------------------ OWNER: EQUITY ONE, INC.
- ------------------------------------ /s/ CHAIM KATZMAN
-------------------------------
BY: Chaim Katzman, President
- ------------------------------------ MANAGER: GLOBAL REALTY &
MANAGEMENT, INC.
- ------------------------------------ /s/ DORON VALERO
--------------------------------
BY: Doron Valero
6
<PAGE>
*Name of Property **Address ***County
1. Atlantic Village 953-990 Atlantic Blvd. Duval
Atlantic Beach,FL 32233
2. Bird Ludlam Shopping Center 6710-6848 Bird Road Dade
Miami,FL 33155
3. Commonwealth Shopping 1020 Edgewood Ave and Duval
Center Commonwealth Ave
Jacksonville, FL 32254
4. East Bay Plaza 3665 East Bay Drive Pinellas
Largo, FL 33641
5. Eustis Square 200-322 Ardice Avenue Leon
Eustis, FL 32726
6. Ft. Caroline Trading Post 6060 Ft. Caroline Road Duval
Jacksonville, FL 32211
7. Equity One (Epsilon) 300 Clematis,
Palm Beach, FL Palm Beach
8. Lake Mary Centre 3697 Lake Emma Road Seminole
Lake Mary, FL 32746
9. Oak Hill Village 7628 103rd Street & Ricker Rd Duval
Jacksonville, FL 32210
10. Parker Towne Centre 1105 East Park Road
Plano, TX Collin
11. Point Royale 19101-19191 South Dixie Hwy Dade
Shopping Center Miami, FL 33157
12. Plaza Del Rey 10000 W. Flagler Street Dade
& 102nd Ave
Miami, FL 33174
13. Mandarin Mini Storage 10601-37 San Jose Blvd. Duval
Jacksonville, FL 32257
14. Gazit Meridian 777 17th Street Dade
Miami Beach, FL 33139
15. Four Corners 28519 Tomball Parkway Harris
Shopping Center Tomball, TX 77375
7
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Equity One, Inc. and
subsidiaries on Form S-11 of our report dated February 15, 1997 (July 15, 1997
as to Note 10) appearing in the Prospectus, which is part of this Registration
Statement, and of our report dated February 15, 1997 relating to the financial
statement schedule appearing elsewhere in this Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Miami, Florida
August 19, 1997
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Equity One, Inc. and
subsidiaries on Form S-11 of our report dated July 22, 1997 relating to the
statement of revenues and certain expenses of West Lake Plaza Shopping Center
for the year ended December 31, 1996 appearing in the Prospectus, which is part
of this Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Miami, Florida
August 19, 1997
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 1,951 4,558
<SECURITIES> 4,528 5,589
<RECEIVABLES> 800 824
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 106,706 112,406
<DEPRECIATION> 4,849 6,003
<TOTAL-ASSETS> 111,822 120,873
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 5,768 6,908
<OTHER-SE> 37,327 46,586
<TOTAL-LIABILITY-AND-EQUITY> 111,822 120,873
<SALES> 0 0
<TOTAL-REVENUES> 16,714 9,673
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 7,414 4,162
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,380 2,939
<INCOME-PRETAX> 3,920 2,572
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,920 2,572
<EPS-PRIMARY> 0 0
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</TABLE>
