UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JUNE 30, 1998
Commission File No. 0001042810
EQUITY ONE, INC.
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
1600 N.E. MIAMI GARDENS DRIVE, SUITE 200
N. MIAMI BEACH, FLORIDA 33179
----------------------------------------
(Address of Principal Executive Offices)
(305) 947-1664
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
MARYLAND 52-1794271
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of the close of business on August 11, 1998, 10,238,528 shares of the
Company's common stock, par value $0.01 per share, were issued and outstanding.
<PAGE>
EQUITY ONE, INC.
INDEX TO FORM 10-Q
QUARTER ENDED JUNE 30, 1998
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets-
As of June 30, 1998 (unaudited) and December 31, 1997
Condensed Consolidated Statements of Operations-
For the three months and six months ended June 30, 1998 and 1997
(unaudited)
Condensed Consolidated Statements of Stockholders' Equity
For the three months and six months ended June 30, 1998 and 1997
(unaudited)
Condensed Consolidated Statements of Cash Flows-
For the six months ended June 30, 1998 and 1997 (unaudited)
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
ASSETS JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED)
Rental Properties:
Land $ 40,978 $ 40,764
Building and improvements 102,553 83,889
Land held for development 2,334 1,394
Construction in progress 1,581 394
-------------- --------------
147,446 126,441
Accumulated depreciation (8,521) (7,191)
-------------- --------------
Rental properties, net 138,925 119,250
Cash and cash equivalents 5,357 2,598
Accounts and other receivables, net 1,198 892
Securities available for sale 874 45
Deposits 1,225 1,339
Prepaid and other assets 1,316 1,252
Deferred expenses, net 995 1,527
-------------- --------------
Total assets 149,890 126,903
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 63,058 $ 71,004
Accounts payable and accrued expenses 2,418 1,281
Put option liability 2,127
Tenants' security deposits 893 764
Deferred rental income 289 274
-------------- --------------
Total liabilities 68,785 73,323
-------------- --------------
Stockholders' equity:
Common stock 102 69
Additional paid-in capital 81,003 55,036
Notes receivable from stock sales (1,525)
Retained earnings
-------------- --------------
Total stockholders' equity 81,105 53,580
-------------- --------------
Total liabilities and stockholders' equity 149,890 126,903
============== ==============
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 5,845 $ 4,682 $ 11,167 $ 9,361
Investment revenue 92 185 164 312
------- ------- -------- -------
Total revenues 5,937 4,867 11,331 9,673
------- ------- -------- -------
COSTS AND EXPENSES:
Operating expenses 1,282 1,092 2,459 2,182
Depreciation and amortization 697 594 1,355 1,178
Interest 1,412 1,446 2,897 2,939
Put option expense 1,320 1,320
General and administrative expenses 491 328 925 802
------- ------- -------- -------
Total costs and expenses 5,202 3,460 8,956 7,101
------- ------- -------- -------
NET INCOME $ 735 $ 1,407 $ 2,375 $ 2,572
======= ======= ======== =======
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $ 0.09 $ 0.23 $ 0.31 $ 0.43
======= ======= ======= =======
NUMBER OF SHARES USED IN COMPUTING
BASIC EARNINGS PER SHARE 8,482 6,178 7,699 5,974
====== ====== ====== =====
DILUTED EARNINGS PER SHARE $ 0.08 $ 0.20 $ 0.30 $ 0.38
======= ======= ======= ======
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 8,678 6,958 7,896 6,778
====== ====== ====== =====
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
NOTES TOTAL
ADDITIONAL RECEIVABLE STOCK-
COMMON PAID-IN FROM RETAINED HOLDERS'
STOCK CAPITAL STOCK SALES EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED JUNE 30, 1998
BALANCE,
APRIL 1, 1998 $ 69 $ 54,949 $ (1,525) $ 53,493
Net income $ 735 735
Issuance of common stock 33 34,088 34,121
Transaction costs (1,077) (1,077)
Put option liability (807) (807)
Property distributed (4,758) 1,525 (3,233)
Dividends paid (1,392) (735) (2,127)
---- -------- -------- ------ -------
BALANCE,
JUNE 30, 1998 (Unaudited) $ 102 $ 81,003 $ $ $ 81,105
===== ======== ======== ======= ========
THREE MONTHS ENDED JUNE 30, 1997
BALANCE,
APRIL 1, 1997 $ 58 $ 44,487 $ (1,525) $ 43,020
Net income $ 1,407 1,407
Issuance of common stock 11 10,596 10,607
Dividends paid (133) (1,407) (1,540)
---- -------- -------- ------ -------
BALANCE,
JUNE 30, 1998 (Unaudited) $ 69 $ 54,950 $ (1,525) $ $ 53,494
==== ======== ======== ======== ========
SIX MONTHS ENDED JUNE 30, 1998
BALANCE,
JANUARY 1 1998 $ 69 $ 55,036 $ (1,525) $ 53,580
Net income $ 2,375 2,375
Issuance of common stock 33 34,088 34,121
Transaction costs (1,077) (1,077)
Put option liability (807) (807)
Property distributed (4,758) 1,525 (3,233)
Dividends paid (1,479) (2,375) (3,854)
---- -------- -------- ------ -------
BALANCE,
JUNE 30, 1998 (Unaudited) $ 102 $ 81,003 $ $ $ 81,105
==== ======= ======== ======== =======
SIX MONTHS ENDED JUNE 30, 1997
BALANCE,
JANUARY 1 1997 $ 58 $ 44,562 $ (1,525) $ 43,095
Net income $ 2,572 2,572
Issuance of common stock 11 10,596 10,607
Dividends paid (208) (2,572) (2,780)
---- ------- -------- ------- -------
BALANCE,
JUNE 30, 1997 (Unaudited) $ 69 $ 54,950 $ (1,525) $ $ 53,494
==== ======== ======== ======= ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
1998 1997
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,375 $ 2,572
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,504 1,335
Provision for losses on accounts receivable 38 23
Loss on sales of securities 5
Put option liability 1,320
Changes in assets and liabilities :
Accounts and other receivables (304) (54)
Deposits (336) (892)
Prepaid and other assets (129) (63)
Accounts payable and accrued expenses 647 729
Tenants' security deposits 129 13
Deferred rental income 15 (176)
----- -----
Net cash provided by operating activities 5,259 3,492
----- -----
INVESTING ACTIVITIES:
Acquisition of rental property (21,080) (5,204)
Improvements to rental property (1,971) (496)
Construction costs incurred (1,187)
Purchases of securities (840) (3,950)
Sales and prepayments of securities 11 2,884
Change in deposits for acquisition of rental property 450
----- -----
Net cash used in investing activities (24,617) (6,766)
----- -----
FINANCING ACTIVITIES:
Repayments of mortgage notes payable (15,646) (18,063)
Borrowings under mortgage notes payable 7,700 16,148
Cash dividends paid to stockholders (3,854) (2,780)
Stock subscription and issuance 34,121 10,607
Deferred expenses, net (204) (31)
----- -----
Net cash provided by financing activities 22,117 5,881
----- -----
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,759 2,607
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,598 1,951
----- -----
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,357 $ 4,558
======== =======
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest, net of amount capitalized $ 2,637 $ 2,755
======== =======
SUPPLEMENTAL SCHEDULE OF NONCASH
FINANCING ACTIVITIES:
Put option liability charged to stockholders' equity $ 807
=====
Accrued stock issuance costs $ 490
=====
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
6
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997(UNAUDITED)
AND DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Equity
One, Inc. and Subsidiaries ( collectively, the "Company") as of June
30, 1998 and 1997 and for the six months and three months then ended,
have been prepared by the Company which is responsible for their
integrity and objectivity and should be read in conjunction with the
Company's December 31, 1997 annual consolidated financial statements
and the related notes.
To the best of management's knowledge and belief, the statements and
related information were prepared in conformity with generally accepted
accounting principles and are based on recorded transactions and
management's best estimates and judgments. The interim results of
operations are not necessarily indicative of the results which may be
expected for the full year.
The condensed consolidated financial statements as of June 30, 1998 and
1997 and for the six months and three months then ended, include, in
the opinion of management, all adjustments (which are normal recurring
adjustments) necessary for a fair presentation of the financial
condition and results of operations of the Company for the periods
indicated.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of the
condensed consolidated financial statements are identical to those applied
in the preparation of the most recent annual consolidated financial
statements.
PUT OPTION EXPENSE - The Company has granted a former stockholder an option
to put 293,430 shares of common stock issuable upon exercise of Series C
Warrants to the Company at a price of $15.50 per share or to put the Series
C Warrants to the Company at a price of $7.25 per Warrant, which equals the
put option price of $15.50 per Warrant less the Series C Warrant exercise
price of $8.25 per Warrant. The put option is exercisable in whole or in
part by the former stockholder from December 1, 1999 until December 15,
1999. The put option would involve a maximum net expenditure of $2.1
million if the shares of common stock are not sold by the former
stockholder prior to the exercise of such option. For the three months
ended June 30, 1998, the Company has recognized $1.3 million as a current
period expense and approximately $807,000 as a reduction of paid-in capital
related to the Company's initial public offering.
7
<PAGE>
3. EARNINGS PER SHARE
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" which requires a dual presentation of basic and diluted earnings per
share on the face of the statement of operations. The Company adopted SFAS
No. 128 during the year ended December 31, 1997. Basic earnings per share
is computed by dividing earnings 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 Company. Earnings per share for all
prior periods presented has been restated to conform with SFAS No. 128.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the Company's
Condensed Consolidated Financial Statements, including the notes thereto, which
are included elsewhere herein.
(1) RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Total revenues increased by approximately $1.1 million, or 22.0%, to
$5.9 million for the three months ended June 30, 1998 from $4.8 million for the
comparable period of 1997. The increase resulted primarily from the acquisition
of a new supermarket anchored shopping center located in Lantana, Florida in
January, 1998 ("Lantana Village"), a new free-standing restaurant property
located in Miami Beach, Florida in April, 1998 ("El Novillo"), a new drug store
anchored shopping center located in Jacksonville, Florida in May, 1998
("Beauclerc Village"), a new supermarket anchored shopping center located in
Fort Myers, Florida in June, 1998 ("Summerlin Square"), a new supermarket
anchored shopping center located in Jacksonville, Florida in January, 1997
("Monument Pointe"), and a redevelopment property located in North Miami Beach,
Florida in August, 1997 ("Sky Lake").
Operating expenses increased by approximately $190,000, or 17.4%, to
$1.3 million for the three months ended June 30, 1998, from $1.1 million for the
comparable period of 1997. The increase is primarily the result of an increase
in real estate taxes of $83,000, an increase in insurance costs of $21,000, an
increase in utility costs of $18,000 and an increase in other property operating
expenses of $68,000 related to the Company's acquisition of Lantana Village in
January, 1998, El Novillo in April, 1998, Beauclerc Village in May, 1998,
Summerlin Square in June, 1998, Monument Pointe in January, 1997 and Sky Lake in
August, 1997.
Depreciation and amortization expense increased by approximately
$103,000, or 17.3%, to $697,000 for the three months ended June 30, 1998, from
$594,000 for the comparable period of 1997. The increase resulted primarily from
the Company's acquisition of Lantana Village in January, 1998, El Novillo in
April, 1998, Beauclerc Village in May, 1998, Summerlin Square in June, 1998,
Monument Pointe in January, 1997 and Sky Lake in August, 1997.
9
<PAGE>
Interest expense decreased by approximately $34,000, or 2.4%, during
the three months ended June 30, 1998, compared to the three months ended June
30, 1997, primarily as a result of the Company's use of proceeds from its
issuances of securities during 1998 and 1997 to reduce mortgage indebtedness.
General and administrative expenses increased by approximately
$163,000, or 49.7%, to $491,000 for the three months ended June 30, 1998, from
$328,000 for the comparable period of 1997. The increase resulted primarily from
an increase in professional and consulting fees of $126,000 and an increase in
payroll costs of $37,000.
During the three months ended June 30, 1998, the Company recognized a
one time expense of $1.3 million relating to the put option granted to a former
stockholder of the Company in connection with the Company's Offering of Common
Stock in May, 1998. Excluding this put option expense, net income would have
been approximately $2.1 million for the three months ended June 30, 1998 and
basic and diluted earnings per share would have been $0.24 and $0.24 for the
three months ended June 30, 1998, respectively.
As a result of the foregoing, net income decreased by approximately
$672,000, or 47.8%, to $735,000 for the three months ended June 30, 1998,
compared to $1.4 million for the comparable period of 1997.
10
<PAGE>
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total revenues increased by approximately $1.6 million, or 17.1%, to
$11.3 million for the six months ended June 30, 1998 from $9.7 million for the
comparable period of 1997. The increase resulted primarily from the Company's
acquisition in January, 1998 of Lantana Village, El Novillo in April, 1998,
Beauclerc Village in May 1998, Summerlin Square in June, 1998, Monument Pointe
in January, 1997, and Sky Lake in August, 1997.
Operating expenses increased by approximately $277,000, or 12.7%, to
$2.5 million for the six months ended June 30, 1998, from $2.2 million for the
comparable period of 1997. The increase is primarily the result of an increase
in real estate taxes of $151,000, an increase in insurance costs of $29,000, an
increase in utility costs of $30,000 and an increase in other property operating
expenses of $67,000 related to the Company's acquisition of Lantana Village in
January, 1998, El Novillo in April, 1998, Beauclerc Village in May, 1998,
Summerlin Square in June, 1998, Monument Pointe in January, 1997 and Sky Lake in
August, 1997.
Depreciation and amortization expense increased by approximately
$177,000, or 15.0%, to $1.4 million for the six months ended June 30, 1998, from
$1.2 million for the comparable period of 1997. The increase resulted primarily
from the Company's acquisition of Lantana Village in January, 1998, El Novillo
in April, 1998, Beauclerc Village in May, 1998, Summerlin Square in June, 1998,
Monument Pointe in January, 1997 and Sky Lake in August, 1997.
11
<PAGE>
Interest expense decreased by approximately $42,000, or 1.4%, during
the six months ended June 30, 1998, compared to the six months ended June 30,
1997 primarily as a result of the Company's use of proceeds from its issuances
of securities during 1998 and 1997 to reduce mortgage indebtedness.
General and administrative expenses increased by $123,000, or 15.3% to
$925,000 for the six months ended June 30, 1998 from $802,000 for the comparable
period of 1997. The increase resulted primarily from an increase in professional
and consulting fees of $105,000 and an increase in payroll costs of $18,000.
During the six months ended June 30, 1998, the Company recognized a one
time expense of $1.3 million relating to the put option granted to a former
stockholder of the Company in connection with the Company's Offering of Common
Stock in May, 1998. Excluding this put option expense, net income would have
been approximately $3.7 million for the six months ended June 30, 1998, and
basic and diluted earnings per share would have been $0.48 and $0.47 for the six
months ended June 30, 1998, respectively.
As a result of the foregoing, net income decreased by approximately
$197,000, or 7.7%, to $2.4 million for the six months ended June 30, 1998,
compared to $2.6 million for the comparable period of 1997.
FUNDS FROM OPERATIONS
In March, 1995, the National Association of Real Estate Investment
Trusts ("NAREIT") adopted the NAREIT White Paper on Funds from Operations (the
"White Paper") which provided additional guidance on the calculation of funds
from operations. The White Paper defines funds from operations as net income
(loss) (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 and after
adjustments for unconsolidated partnerships and joint ventures ("FFO").
Management believes FFO is a helpful measure of the performance of an equity
real estate investment trust ("REIT") because, along with cash flows from
operating activities, investing activities and financing activities, it provides
an understanding of the ability of the Company to incur and service debt and
make capital expenditures. The Company computes FFO in accordance with standards
established by the White Paper, which may differ from the methodology for
calculating FFO utilized by other REIT's, and accordingly, may not be comparable
to such other REIT's. Further, FFO does not represent amounts available for
management's discretionary use because of needed capital replacement or
expansion, debt service obligations, or other commitments and uncertainties. The
Company believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO should be examined
in conjunction with the net income as presented in the condensed consolidated
financial statements and information included elsewhere herein. FFO should not
be considered as an alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial performance or to cash flows
from operating activities (determined in accordance with GAAP) as a measure of
the Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make distributions.
12
<PAGE>
<TABLE>
<CAPTION>
The following table illustrates the calculation of FFO for the three months and
six months ended June 30, 1998 and 1997:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income $ 735 $ 1,407 $ 2,375 $ 2,572
Depreciation of real estate assets 684 581 1,330 1,153
Amortization of leasing costs 12 10 25 19
Loan pre-payment penalties 119 - 119 21
Put option expense 1,320 - 1,320 -
Write-off of unamortized loan costs related
to repayment of mortgage indebtedness 88 26 88 102
Lease termination fees (412) (9) (446) (19)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS $ 2,546 $ 2,015 $ 4,811 $ 3,848
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS PER SHARE $ 0.29 $ 0.29 $ 0.61 $ 0.57
- -------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 8,678 6,958 7,896 6,778
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
FFO increased by approximately $531,000, or 26.4%, to $2.5 million for the three
months ended June 30, 1998, from $2.0 million for the comparable period of 1997.
FFO increased by approximately $963,000, or 25.0%, to $4.8 million for the six
months ended June 30, 1998 from $3.8 million for the comparable period of 1997.
The increase is primarily the result of the Company's acquisitions of additional
properties and the reduction of the Company's mortgage indebtedness during such
periods.
PRO FORMA RESULTS OF OPERATIONS
The Company completed its Offering of an aggregate of 4,700,000 shares
of Common Stock on May 19, 1998. Of the 4,700,000 shares of Common Stock sold in
the offering, 3,330,398 shares, generating net proceeds of approximately $33.0
million, were sold by the Company and 1,369,602 shares were sold by a
stockholder of the Company.
The following pro forma results of operations for the three months and
six months ended June 30, 1998 and 1997, respectively, gives effect to the
Offering as if it had occurred at the beginning of each period. Pro forma
adjustments assume application of the net proceeds of the Offering to purchase
rental properties, retire mortgage indebtedness and other related adjustments
and exclude the non-recurring put option expense. The following pro forma
financial information is not necessarily indicative of the results of operations
which would have been reported if the Offering had occurred on the dates or for
the periods indicated.
13
<PAGE>
<TABLE>
<CAPTION>
The three months and six months ended June 30, 1998 and 1997 pro forma results
of operations would have been as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 6,147 $ 5,138 $ 11,925 $ 10,273
Investment revenue 113 197 230 336
-------- -------- --------- ---------
Total revenues 6,260 5,335 12,155 10,609
-------- -------- --------- ---------
COSTS AND EXPENSES:
Operating expenses 1,317 1,190 2,589 2,378
Depreciation and amortization 745 665 1,474 1,320
Interest 1,080 1,269 2,322 2,555
General and administrative expenses 491 328 925 802
-------- -------- --------- ---------
Total costs and expenses 3,633 3,452 7,310 7,055
-------- -------- --------- ---------
NET INCOME $ 2,627 $ 1,883 $ 4,845 $ 3,554
======== ======== ========= =========
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $ 0.26 $ 0.20 $ 0.47 $ 0.38
======== ======== ========= =========
NUMBER OF SHARES USED IN COMPUTING
BASIC EARNINGS PER SHARE 10,238 9,500 10,238 9,300
======== ======== ========= =========
DILUTED EARNINGS PER SHARE $ 0.25 $ 0.19 $ 0.46 $ 0.36
======== ======== ========= =========
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 10,435 9,999 10,435 9,821
======== ======== ========= =========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
The following table illustrates the calculation of pro forma FFO for the three
months and six months ended June 30, 1998, and 1997:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income $ 2,627 $ 1,883 $ 4,845 $ 3,554
Depreciation of real estate assets 732 652 1,449 1,295
Amortization of leasing costs 12 10 25 19
Loan pre-payment penalties 21
Write-off of unamortized loan costs related
to repayment of mortgage indebtedness -- -- 102
Lease termination fees (412) (9) (446) (19)
- ------------------------------------------------------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS $ 2,959 $ 2,562 $ 5,873 $ 4,972
- ------------------------------------------------------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS PER SHARE $ 0.28 $ 0.26 $ 0.56 $ 0.51
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 10,435 9,999 10,435 9,821
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 securities and
mortgage loans. The Company's principal demands for liquidity are maintenance,
repair and tenant improvements of existing properties, acquisitions and
development activities, debt service and repayment obligations and distributions
to its stockholders.
15
<PAGE>
As of June 30, 1998, the Company had total mortgage indebtedness of
approximately 63.0 million, all of which was fixed rate mortgage indebtedness
bearing interest at a weighted average rate of 7.95% and collateralized by 13 of
the Company's existing properties. Future scheduled annual maturities of
mortgage notes payable for the periods ending June 30 are as follows: 1999 -
$1.2 million, 2000 - $0, 2001 - $2.6 million, 2002 - $2.1 million and 2003 -
$5.9 million. The Company also has provided a $1.5 million letter of credit to
secure certain obligations in connection with the acquisition of one of the
Company's properties. This letter of credit is collateralized by a mixed-use
property located in West Palm Beach, Florida.
The Company has a $2.5 million line of credit (the "Line of Credit")
with a financial institution which is currently due on demand and is
collateralized by the Company's principal office building located in Miami
Beach, Florida. The Line of Credit bears interest at 0.50% over the Citibank,
N.A. prime rate. The purpose of the line of credit is to provide working capital
to the Company. As of June 30, 1998 no amounts were outstanding under the Line
of Credit.
The Company has received a commitment for a $35.0 million revolving
line of credit from the same financial institution providing the Line of Credit,
which would be used to fund property acquisitions and development activities
(the "Acquisition Line of Credit"). The Acquisition Line of Credit will be
secured by certain of the Company's unencumbered properties. Advances under the
Acquisition Line of Credit will bear interest at 225 basis points over LIBOR and
will mature three years after the execution of a definitive loan agreement.
The Company has also received a commitment for a $60.0 million
revolving line of credit from a financial institution, which will also be used
to fund property acquisitions and development activities (the "Additional
Acquisition Line of Credit"). The Additional Acquisition Line of Credit will be
secured by certain of the Company's unencumbered properties. Advances under the
Additional Acquisition Line of Credit will bear interest at 170 basis points
over LIBOR and will mature three years after the execution of a definitive loan
agreement. The execution of definitive documentation respecting the Additional
Acquisition Line of Credit is subject to the financial institution's
satisfactory completion of due diligence.
The Company has one major redevelopment project under construction that
will add an additional 240,000 square feet of retail space to the Company's
portfolio. This project is expected to be completed during 1999. Future funding
required for this project is estimated to be $15.0 million and will come from
the proposed Acquisition Line of Credit or the proposed Additional Acquisition
Line of Credit. Management expects this development to have a positive effect on
cash generated by operating activities and Funds from Operations.
The Company believes, based on currently proposed plans and assumptions
relating to its operations, that the proceeds from its Offering and the
Company's existing financial arrangements, together with cash flows from
operations will be sufficient to satisfy its cash requirements for a period of
at least 12 months. In the event that the Company's plans change, its
assumptions change or prove to be innacurate or the proceeds from the Offering
or available financing arrangements prove to be insufficient to fund the
Company's expansion and development efforts, the Company would be required to
seek additional sources of financing. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. If adequate funds are not available, the Company's business operations
could be materially adversely affected.
16
<PAGE>
During the three months ended June 30, 1998, the Company declared
dividends of $0.13 and $0.12. These dividends were paid on May 18, 1998 and June
30, 1998 to stockholders of record on May 18,1998 and June 29, 1998,
respectively.
YEAR 2000 COSTS
The Company will be required to modify certain portions of its software
so that it will function properly in the year 2000. Maintenance or modification
costs will be expensed as incurred, while the costs of any new software will be
capitalized and amortized over the software's useful life. Management believes
these "year 2000" costs will be immaterial.
INFLATION
Most of the Company's leases contain provisions designed to partially
mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rents based on 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 Consumer
Price Index 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.
The Company's financial results are affected by general economic
conditions in the markets in which its properties are located. An economic
recession, or other adverse changes in general or local economic conditions,
could result in the inability of some existing tenants of the Company to meet
their lease obligations and could otherwise adversely affect the Company's
ability to attract or retain tenants. The properties are typically anchored by
supermarkets, drug stores and other consumer necessity and service retailers
which typically offer day-to-day necessities rather than luxury items. These
types of tenants, in the experience of the Company, generally maintain more
consistent sales performance during periods of adverse economic conditions.
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CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, which represent the Company's expectations or beliefs concerning
future events, including, but not limited to, statements regarding growth in
rental revenues and sufficiency of the Company's cash flow for its future
liquidity and capital resource needs. These forward looking statements are
further qualified by important factors that could cause actual events to differ
materially from those in such forward looking statements. These factors include,
without limitation, increased competition, dependence on key tenants, geographic
concentration, lack of development experience, reliance on key personnel and
maintaining its REIT status. Results actually achieved may differ materially
from expected results included in these forward looking statements as a result
of these or other factors.
18
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In June, 1998, Albertsons, Inc.("Albertsons") filed an Amended
Complaint against a subsidiary of the Company ("Subsidiary")
seeking compensatory and other damages in the sum of
$250,000.00 and other relief in connection with an alleged
breach of a letter agreement between Albertsons and the
Subsidiary of the Company. The Amended Complaint omitted all
of the other counts and claims contained in the original
action which was filed on February 26, 1998 in the Circuit
Court for the Eleventh Judicial District in and for Miami-Dade
County, Florida, and alleges breach of a letter agreement and
sought injunctive relief and the payment of damages in excess
of $10,000,000 representing lost profits and other damages.
This action was commenced in response to the Subsidiary's
entering into a lease agreement with Publix Supermarkets
Inc.("Publix") respecting Publix's lease of anchor space at
Sky Lake. The complaint alleged that Albertsons and the
Subsidiary entered into a letter agreemenet which the parties
intended to be memorialized into a formal lease agreement and
as to which the parties intended to be bound. The complaint
further alleged that representatives of the Subsidiary had on
several occasions verbally assured Albertsons that they had an
agreement with respect to the lease of space at Sky Lake and
that the Subsidiary was not negotiating with any other
prospective tenant for the lease of the space to be occupied
by Albertsons. The complaint also alleged that Albertsons
incurred considerable expenses in connection with, among other
things, the preparation of site evaluations, construction
plans and surveys of the subject property. On March 18, 1998,
the Company filed a motion to dismiss the complaint based upon
various procedural grounds (the "Motion"). As set forth in the
Motion, the Subsidiary asserted that it did not execute any
lease agreement and that although the parties engaged in a
series of negotiations there was never an offer and acceptance
or a "meeting of the minds" respecting the lease of space at
Sky Lake. At a hearing on the Motion held on March 26, 1998,
the court dismissed with prejudice Albertsons' claim for
specific performance upon finding that no written lease
existed which could be specifically enforced. A ruling on the
remaining issues raised in the Motion was deferred until a
future date. The Amended Complaint omitted the claim for
specific performance, which claim had been previously
dismissed by the court, and its claim for lost profits which
included the $10,000,000 of lost profits referred to above.
The Company believes it has meritorious defenses to the
remaining claims and intends to defend the action fully and
vigorously. However, no assurance can be given with respect to
the outcome of this action or its effect on the Company.
Item 2. Changes in Securities and Use of Proceeds
The Company commenced its Offering of Common Stock on May 13,
1998 pursuant to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-11 (the
"Registration Statement"), which Registration Statement was
declared effective by the Securities and Exchange Commission
on May 13, 1998. The representatives of the several
underwriters of the Offering were Credit Suisse First Boston,
Morgan Keegan & Company, Inc. and The Robinson - Humphrey
Company. Of the 4,700,000 shares of Common Stock sold in the
Offering, 3,330,398 shares generating proceeds of
approximately $36.6 million, were sold by the Company. After
the payment of approximately $3.6 million in Offering related
expenses (including approximately $2.1 million for
underwriting discounts and commissions) the Company received
net proceeds of approximately $33.0 million. The net proceeds
from the Offering were used to (i) repay certain mortgage
indebtedness on its properties in the amount of approximately
$12.9 million, including prepayment penalties and costs of
approximately $119,000, (ii) repay amounts outstanding under
the Company's then existing line of credit in the amount of
approximately $2.0 million, (iii) acquire certain real estate
properties for approximately $12.7 million, and (iv) establish
working capital reserves of approximately $5.4 million, which
reserves will be used to fund the Company's development
activities at Sky Lake and otherwise fund the Company's
operations.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
In connection with the Company's Offering of Common Stock in
April, 1998, stockholders approved certain amendments to the
Company's Articles of Incorporation and Bylaws. Such vote of
stockholders occurred prior to the consummation of the
Offering.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
10.1 - Summerlin Square - Agreement to Purchase and Sale
10.2 - Summerlin Square - Bill of Sale
10.3 - Escrow Agreement
27.1 - Financial Data Schedule
(B) Report on Form 8-K
None
19
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Equity One, Inc.
Date: August 11, 1998 /S/ CHAIM KATZMAN
--------------------------
Chaim Katzman
Chief Executive Officer
(Principal Executive Officer)
/S/ DAVID N. BOOKMAN
-------------------------
David N. Bookman
Vice President and Chief Financial Officer
(Principal Accounting Financial Officer)
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Agreement for Purchase and Sale Between Equity One (Gamma)
Inc. and Sunrise Limited Partnership, dated March 12, 1998.
(Summerlin Square)
10.2 Bill of Sale Between Sunrise Limited Partnership and Equity
One (Summerlin) Inc., dated June 5, 1998 (Summerlin Square)
10.3 Escrow Agreement Between Sunrise Limited Partnership and
Equity One (Gamma) Inc., dated March 12, 1998 (Summerlin
Square)
27.1 Financial Data Schedule
AGREEMENT FOR PURCHASE AND SALE
DATE: MARCH 12, 1998
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: SUNRISE LIMITED PARTNERSHIP
A MARYLAND LIMITED PARTNERSHIP
C/O MR. IVAN STERN
ADDRESS OF SELLER: THE EXECUTIVE CENTRE AT HOOKS LANE
2 RESERVOIR CIRCLE, SUITE 104
CITY: BALTIMORE State: MARYLAND ZIP: 21208
1. DESCRIPTION OF PROPERTY: Seller ("Seller") agrees to sell and 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 SUMMERLIN SQUARE,
located in Fort Myers Beach, Lee County, Florida, consisting of an approximately
110,000 square foot shopping center on approximately 23 acres including Phase II
development of approximately 9.5 and a 1 one acre pad site located on San Carlos
Blvd, 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, (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, (ii) any and all refundable security deposits and other deposits and
interest thereon, if required by law (iii) 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 exist as of the Closing Date and relate to the Real or
Personal Property.
<PAGE>
C. All furniture, furnishings, fixtures, equipment and other
tangible personal property that is affixed to and/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").
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 $
9,850,000.00 (U.S.) payable as follows:
A. Initial deposit to be paid within 2 days
after Effective Date to
Alan J. Marcus, Esquire
Trust Account $ 500,000.00
B. Total Deposit: $ 500,000.00
C. Wire transfer of funds
required at closing: $ 9,350,000.00*
TOTAL PURCHASE PRICE $ 9,850,000.00
*The Wire transfer of Funds required at closing may be adjusted if
Buyer elects to assume the first mortgage in favor of IDS LIFE INSURANCE COMPANY
(hereinafter "IDS") with an approximate principal balance of $6,700,000.00
(hereinafter the "Mortgage").
The deposits to be paid by Buyer shall be held by ALAN J. MARCUS TRUST
ACCOUNT 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 2:00 p.m., March 12, 1998, 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
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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 initialed those changes.
5. INSPECTIONS AND CONDITION OF PROPERTY:
A. Buyer shall have until 6:00 p.m. April 11, 1998 to
complete its due diligence inspection of the Real Property (the "Inspection
Period"). To assist Buyer with this inspection, Seller shall deliver to Buyer
copies of all available leases, contracts, agreements, licenses, permits,
surveys, a Phase 1 Environmental Report, 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,
rent rolls, 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. Seller shall certify, to its knowledge, the accuracy of income and
expenses reports and all other financial statements including 1996 statements of
operation and 1997 year to date statements to Buyer's auditors. In addition,
Seller shall supply all information concerning the Mortgage. 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 (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, defend 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 entry onto the Property prior to Closing, which obligation expressly
shall survive Closing or earlier termination of this Agreement.
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 herein and further, Buyer has been given
the opportunity and has made an independent investigation of the Property. Buyer
further acknowledges and agrees that Buyer shall be responsible for all due
diligence and analysis with respect to all documents and information provided by
Seller to Buyer,
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<PAGE>
and that any reliance thereon (unless said document and/or information expressly
has been certified to herein by Seller) shall be at sole risk of the Buyer.
6. CLOSING:
A. The closing for delivery of the deed and payment of the
balance of the purchase price shall take place at Buyer's attorney's office at a
mutually agreeable time on June 10, 1998, unless extended by other provisions
hereof.
B. Possession of the Property shall be transferred by Seller
to Buyer simultaneously with the closing of title.
7. FINANCING:
Should Buyer elect to proceed to purchase the Property, then
prior to completion of the Inspection Period, Buyer shall elect to either (i)
purchase the Property for all cash; or (ii) with due diligence and in good
faith, apply for assumption (hereinafter the "Assumption") of the existing first
mortgage in favor of IDS (hereinafter the "Lender") having an approximate
principal balance of $6,700,000.00, upon the terms and conditions of such
mortgage loan (hereinafter the "Mortgage Loan"). Buyer's obligation to complete
the purchase and sale of the Property is not subject to Buyer's assumption of
the Mortgage Loan. However, if Buyer has elected to apply for assumption of the
Mortgage Loan, Seller agrees to cooperate in the assumption process and provided
Buyer is acting with due diligence, Buyer may extend the Closing Date provided
same is necessary to complete the assumption process, but not beyond May 30,
1998. Seller may extend the Closing Date, if necessary, to satisfy the
notice and payment date requirements of the Lender, but not beyond May 30,
1998. In the event Buyer is not approved for the assumption or elects not to
assume the Mortgage Loan, Buyer shall be obligated to close "all cash."
Both Buyer and Seller agree that each will cooperate with the Lender
and Lender's counsel to obtain an Assumption Agreement for which documentary
stamp taxes will not be required. Buyer agrees that Buyer will indemnify and
hold Seller harmless in the event any claims are made against Seller for the
payment of such documentary stamps. This indemnification shall survive Closing.
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) that Seller has full right and authority to enter into
this Agreement;
4
<PAGE>
(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 of the Seller's Corporate Agreements or restrictions;
(e) that Seller is a Maryland Limited Partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction and is qualified to do business in the State of Florida;
(f) that to Seller's knowledge the Property is in compliance
with building and zoning laws of applicable governmental agencies and is not
currently in violation of any material code requirements;
(g) the Seller has not received any notices from any
governmental agency that it is in violation of the Americans with Disabilities
Act; and
(h) Seller represents and warrants that it has not received
written notice 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 Florida 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.
(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)
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<PAGE>
service contracts that are terminable on not less than 30 days notice. Buyer
shall have five (5) days to approve any proposed leases, which approval shall
not be unreasonably withheld. In the event Buyer does not provide written
consent to the proposed lease or contract, Buyer's silence shall be deemed a
consent to said lease or contract.
11. CONDITION OF PROPERTY AT CLOSING: Seller shall be obligated to
maintain the Property in substantially the same condition as of the Effective
Date, reasonable wear and tear excepted. Seller shall be obligated to repair and
correct any adverse changes in the condition of the Property occurring
subsequent to the Effective Date hereof.
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 in al material respects 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, subject to
the Permitted Exceptions as set forth in Paragraph 17.
(iv) Seller shall furnish a written estoppel letter from each
tenant to the extent required in Paragraph 18 of this Agreement.
(v) All Leases for all of the tenants which occupy the
Property shall be in good standing and to Seller's knowledge, 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,
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<PAGE>
any of the tenants of the Property have vacated their premises or are in default
or breach of their lease obligations or have provide notice of any kind to that
effect, Buyer may within not more than five (5) days after written notice
thereof, by written notice to Seller, terminate this Agreement, whereby Buyer
shall be reimbursed its deposit and Buyer shall be released of all obligations
hereunder, except those which survive Closing or termination 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. Notwithstanding the above, if
any representation or warranty set forth herein shall not be correct in any
material respect at or before Closing and Seller notifies Buyer thereof in
writing, Buyer may terminate this agreement and receive a return of its deposit
as its sole remedy on account of such circumstance, except where the same is
incorrect in any material respect due to the intentional misrepresentation of
the Seller, in which event Buyer shall have the additional remedy of the right
to reimbursement of its third party out-of pocket expenses incurred in
connection with the transaction. Furthermore, if prior to Closing, Buyer
discovers a breach of any representation or warranty made by Seller herein and
not withstanding such discovery, Buyer proceeds to Closing, Buyer shall be
deemed to have waived the breach of such matter of which it had actual knowledge
prior to Closing and Seller shall have no liability on account thereof.
(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. Title Affidavit.
5. Assignment of Leases, Rents and Security
Deposits;
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6. Assignment of Contracts, if any;
7. Title evidence as set forth in Paragraph 17.
8. If Buyer has elected to assume the Mortgage
Loan, an Assignment of Mortgage or similar
documentation evidencing Assumption of the
Mortgage Loan;
9. Appropriate authorizations of the Partners
and if any Partners are Corporations, a
corporate resolution and an incumbency
certificate to evidence such Partner's
capacity and authority to consummate
Closing, a certified copy of Articles of
Incorporation and bylaws, including all
amendments thereto; and a current
Certificate of Good Standing;
10. Such other documents as may be reasonably
required in order to complete the purchase
and sale.
B. At the time of closing, Buyer shall deliver or cause to be
delivered to Seller 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. If Buyer has elected to assume the Mortgage
Loan, Acceptance of the Assignment of
Mortgage Loan or similar documentation
evidencing Assumption of the Mortgage Loan;
and
6. 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
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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.
3. In the event the cost of repairs is in excess of
$100,000.00, either 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.
9
<PAGE>
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;
(iv) Those costs of delivery of the Evidence of
Title, as required in Paragraph 17B, herein;
and
(v) Any assumption fees or prepayment fees equal
to one percent (1%) of the Mortgage Loan
Balance.
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;
(iii) the cost of Title Insurance Premiums, as
required in Paragraph 17B, herein;
(iv) the cost of a survey certified to Buyer;
(v) any additional prepayment penalties incurred
with payoff of the Mortgages Loan; provided
that Buyer's share shall not exceed two
(2.0%) percent of the Mortgage Loan Balance;
(vi) If Buyer has elected to assume the Mortgage
Loan, all costs incurred in the Assumption
of the Mortgage Loan, including all
recording and title costs and Lender's fees,
other than those assumed by Seller in
Paragraph 15.A.(v); and
(vii) Buyer's attorneys fees.
16. PRORATIONS AND CREDITS:
A. PRORATIONS: Current real estate taxes, based on the latest
tax bill then available; personal property taxes and assessments, collected
rents, maintenance fees, solid waste
10
<PAGE>
disposal obligations and other contract obligations, and other similar
customarily proratable items shall be prorated as of the Closing Date with Buyer
being responsible for and assuming payment for all amounts due for all periods
after Closing and being credited with those due or collected for those periods
prior to Closing on the day of Closing. In the event either party collect rent
of which a portion belongs to the other party, then the collecting party shall
prorate such rent and deliver the other party's share within 10 days of receipt.
The provisions of the Paragraph are intended to survive Closing. Seller shall
have the right to collect any past due rents and Buyer shall cooperate with
Seller in the collection process for such rents. All amounts payable by tenants
at the Property as periodic estimates of the costs of the utilities, taxes,
insurance, maintenance, repairs and other operating expenses relating to the
months or other applicable periods up through the month or other applicable
period within which the Closing occurs shall be adjusted and prorated as above.
Seller shall not receive a credit for any estimates and expenses which are due
and payable prior to Closing but not yet billed or paid, or delinquent at the
time of Closing, but Buyer shall pay such amounts to Seller immediately upon
receipt of any amounts which are billed, paid, or are delinquent with respect to
the period after Closing. Buyer agrees to take all reasonable efforts to bill
and collect any such sums due for periods prior to Closing which are not
billable by the Seller prior to Closing and Seller hereby reserves all rights to
take legal action against tenants at the Property for recovery of all such items
applicable to the period before Closing to the extent not paid after Closing.
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 deposits for tenants of the
Property, including rental, cleaning, utility, key, damage and other deposits.
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 "C" and to the extent not
set forth on Exhibit "C":
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.
11
<PAGE>
B. Within 10 days of the Effective Date, Buyer shall obtain,
at Seller's expense not to exceed $500.00, evidence of title consisting of a
Commitment to issue Title Insurance from Commonwealth Land Title Insurance Co.
along with copies of all title exceptions and a certified survey of the Property
for Buyer to review. If any exceptions render the Property unacceptable for
Buyer's use, Buyer shall advise Seller of same prior to the end of the
Inspection Period and the provisions of Section 17.E. shall apply.
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 in Section 17.B. of
this Agreement. 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, but subject to the Permitted Exceptions. In the event any
exception referenced herein cannot be deleted, same shall be treated as a title
defect.
E. If the title is not delivered as required hereunder at the
time of Closing, Seller shall have 90 days following the date for Closing, at
its sole option, within which to remedy such defect and shall use diligent
effort, if it so elects, to cure such defect within 90 days of said notice. If
Seller elects not to cure such defect within said 90 day period, Buyer shall
have the option of either accepting the title as it is or demand 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. Notwithstanding the
foregoing, Seller shall be required to have released any monetary liens on the
Property not assumed, as required hereunder, by Buyer.
18. TENANT ESTOPPEL LETTERS: Seller shall request in writing from each
tenant at the Property execution and delivery of an estoppel certificate
indicating the amount of rent paid, the date last paid, the amount of security
deposits, any prepaid rents, etc. (hereinafter the
12
<PAGE>
"Estoppel Certificate") substantially in the form attached hereto as Exhibit B,
and shall take all reasonable efforts to obtain the same from all tenants.
Seller shall deliver to Buyer copies of the Estoppel Certificates obtained by
Seller prior to Closing. In the event that by Closing, Seller is unable to
obtain Estoppel Certificates from all tenants which occupy 1,750 square feet of
space or more within the Property, the four tenants occupying the out parcels
including the Driving Range, the tenants known as Stamp and Stuff and Ron
Gillenwater, DDS and 50% of all remaining tenants of the Property; Buyer shall
have the right, as its sole and absolute remedy on account thereof, to terminate
this Agreement by giving written notice to Seller, whereupon the Deposit shall
be returned to Buyer, and the parties shall have no further liability hereunder
(except as to those matters which by the terms hereof expressly shall survive
termination). 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.
19. ASSIGNMENT: This Agreement may be assigned to a controlled
affiliate of the Buyer without the consent of Seller, provided assignee accepts
assignment thereof and assumes the obligations contained therein. Buyer may
elect to change the name of the Corporate Purchaser and upon such change, shall
notify Seller, such change to be made within 10 days after the expiration of the
Inspection Period.
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). Buyer agrees not to file any action
against Seller seeking the return of any portion of said deposits or seek any
reduction in the amount of the liquidated and agreed upon damages if this
Agreement is terminated for Buyer's default. Should Seller default under this
Agreement or fails 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 be 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 fraud or wrongful refusal to convey the Property.
21. ESCROW AGENT: The Escrow Agent shall hold the deposit funds and
perform
13
<PAGE>
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:
To Seller: To Buyer:
Ronald P. Fish, Esquire Alan J. Marcus, Esquire
Ballard, Spahr 20803 Biscayne Blvd.; Suite 301
300 East Lombard Street Aventura, FL 33180
Baltimore, Maryland 21202 Tel: (305) 937-1800
Tel: (410) 528-5617 Fax: (305) 937-1857
fax: (410) 528-5540
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 Lee County, Florida.
14
<PAGE>
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 shall be entitled to recover attorneys fees and costs
incurred therewith.
23. BROKER: Seller acknowledges that Seller is and shall be responsible
to pay a commission ("Commission") if Closing occurs hereunder to Grubb and
Ellis (Broker) who in turn will satisfy any Commission due E.B. Marketing (E.B.)
Said fee is payable by Seller 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 other than
Broker and E.B. Buyer agrees to indemnify Seller and hold Seller harmless for
any and all claims concerning Commissions that may arise in favor of any person
claiming by, through or under Buyer.
24. OPTION OF MOBIL OIL: The Obligation of Seller to complete Closing
is expressly subject to the option of Mobil Oil Corporation to Purchase the
Property as set forth in the attached extract and the Memorandum of Lease
attached hereto as Exhibit " " hereto. Should Mobil exercise its option, this
Agreement shall be null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below.
SELLER:
SUNRISE LIMITED PARTNERSHIP
A Maryland Limited Partnership
CHESAPEAKE BAY CAPITAL CORPORATION, G.P.
General Partner
By: ___________________________ Executed by Seller on March 12, 1998
IVAN STERN, President
15
<PAGE>
BUYER:
EQUITY ONE (GAMMA) INC.
By: ___________________________ Executed by Seller on March 12, 1998.
DORON VALERO, Vice President
ESCROW AGENT:
_______________________________ Executed by Escrow Agent on March 12, 1998.
ALAN J. MARCUS
16
EXHIBIT 10.2
BILL OF SALE
THIS BILL OF SALE, made on June 5, 1998, between SUNRISE LIMITED
PARTNERSHIP, a Maryland Limited Partnership ("Seller"), and EQUITY ONE
(SUMMERLIN) INC., a Florida Corporation ("Buyer").
WITNESSETH, that Seller, in consideration of the sum of TEN DOLLARS
($10.00) and other good and valuable consideration paid to Seller by Buyer,
receipt and sufficiency of which is hereby acknowledged, delivers, grants,
bargains, sells and transfers forever to Buyer the following goods and chattels,
to wit:
1. Billy Goat Outdoor Vacuum.
2. Miscellaneous Tools and Supplies at the Property.
Said property being located at:_______________________________________.
See Attached Exhibit "A"
Seller covenants to Buyer that Seller is the lawful owner of the said
goods and chattels; that they are free from all encumbrances; that Seller has
good right to sell that property, and that Seller will warrant and defend the
sale of said property, goods and chattels unto the Buyer against the lawful
claims and demands of all persons whomsoever.
Seller and Buyer shall be used for singular or plural, natural or
artificial, which terms shall include the heirs, legal representatives,
successors and assigns of Seller and Buyer whenever the context so requires or
admits.
SUNRISE LIMITED PARTNERSHIP, a Maryland
Limited Partnership
By: CHESAPEAKE BAY CAPITAL
CORPORATION, A Maryland Corporation,
General Partner
/s/ RONALD N. FISH
- ----------------------------
Witness Name: Ronald N. Fish
/s/ SUSAN M. NOVAK By /s/ IVAN STERN
- ---------------------------- -----------------------------------
Witness Name: Susan M. Novak Ivan Stern, President
21
<PAGE>
STATE OF MARYLAND
CITY OF BALTIMORE
The foregoing instrument was acknowledged before me this 5th day of
June, 1998 by IVAN STERN, President, on behalf of Chesapeake Bay Capital
Corporation, a Maryland Corporation, General Partner. He is personally known to
me or has produced a Driver's License as identification.
/s/ SUSAN M. NOVAK
-------------------------------------
Notary Public
Printed Name:________________________
My Commission Expires:_______________
[SEAL]
SUSAN M. NOVAK
Notary Public
Baltimore County, Maryland
My Commission Expires March 7, 1999
2
<PAGE>
EXHIBIT A
Lot 3, SUMMERLIN SQUARE SUBDIVISION, according to the map or plat thereof on
file and recorded in the office of the Clerk of the Circuit Court, recorded in
Plast Book 47, Pages 89 and 90, of the Public Records of Lee County, Florida.
AND
All of AN ADDITION TO SUMMERLIN SQUARE SUBDIVISION, according to the map or plat
thereof on file and recorded in the office of the Clerk office Circuit Court, in
Plat Book 49, Pages 71 and 72, of the Public Records of Lee County, Florida.
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into by and among SUNRISE
LIMITED PARTNERSHIP, a Maryland Limited Partnership ("Seller") and EQUITY ONE
(GAMMA) INC., a Florida Corporation ("Buyer"); and ALAN J. MARCUS ("Escrow
Agent");
STATEMENT OF PURPOSE
Seller and Buyer have entered into an Agreement for Purchase and Sale
dated March 12, 1998, for the sale and purchase of SUMMERLIN SQUARE (the
"Property"), as more particularly described in the Agreement for Purchase and
Sale (the "Agreement"). Buyer and Seller desire to have the Escrow Agent hold
the Earnest Money and Escrow as required under the Agreement for Purchase and
Sale in escrow pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. APPOINTMENT. Buyer and Seller hereby appoint Alan J. Marcus as
Escrow Agent hereunder.
2. (A) EARNEST MONEY DEPOSIT. Buyer has or will deliver and deposit
with Escrow Agent the amount of $500,000.00 representing the Initial Deposit as
required by the Agreement for Purchase and Sale. The Escrow Agent agrees to
immediately deposit said funds in an account at a local banking institution in
Dade County, Florida, the accounts of which are insured by the FDIC, and to hold
and disburse said funds, and any interest earned thereon (together the "Earnest
Money") in accordance with the terms and conditions set forth in the Agreement.
<PAGE>
3. INSTRUCTIONS. Upon written notice from Buyer, whereby Buyer elects
not to proceed with the purchase, said notice prior to the expiration of the
Inspection Period, as set forth in the Agreement, Escrow Agent may release all
deposit funds to Buyer without further notice.
4. DUTIES OF ESCROW AGENT/EXCULPATION. Buyer and Seller agree that in
performing any of its duties under this Agreement, Escrow Agent shall not be
liable for any loss, costs or damage which it may incur as a result of serving
as Escrow Agent hereunder, except for any loss, costs or damages arising out of
its willful default or negligence. Accordingly, Escrow Agent shall not incur any
liability with respect to (a) any action taken or admitted to be taken in good
faith upon advice of its counsel given with respect to any questions relating to
its duties and responsibilities, or (b) to any action taken or admitted to be
taken in reliance upon any document, including any written notice of instruction
provided for in this Agreement, not only as to its due execution and validity
and effectiveness of its provisions, but also to the truth and accuracy of any
information contained therein, which Escrow Agent shall in good faith believe to
be genuine, to have been signed or presented by a proper person or persons and
to conform with the provisions of this Agreement.
5. INDEMNIFICATION. Buyer and Seller hereby agree to indemnify and hold
harmless Escrow Agent against any and all losses, claims, damages, liabilities
and expense, including, without limitation, reasonable attorneys' fees and
disbursements, which may be imposed upon or incurred by Escrow Agent in
connection with its serving as Escrow Agent hereunder, unless such losses,
claims, damages, liabilities and expenses are the result of Escrow Agent's
willful default or negligence in performing its obligations hereunder.
6. DISPUTES. In an event of dispute between any of the parties hereto,
sufficient in
-2-
<PAGE>
the discretion of Escrow Agent to justify its doing so, Escrow Agent shall be
entitled to tender unto the registry or custody of any court of competent
jurisdiction all money or property held by it under the terms of this Agreement,
together with such legal pleadings as it deems appropriate and thereupon be
discharged.
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:
SUNRISE LIMITED PARTNERSHIP
a Maryland Limited Partnership
CHESAPEAKE BAY CAPITAL CORPORATION, G.P.
General Partner
By: ___________________________ Executed by Seller on March 12, 1998.
IVAN STERN, President
BUYER:
EQUITY ONE (GAMMA) INC.
By: ___________________________ Executed by Seller on March 12, 1998.
DORON VALERO, Vice President
ESCROW AGENT:
_______________________________ Executed by Escrow Agent on March 12, 1998.
ALAN J. MARCUS
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,357,000
<SECURITIES> 874,000
<RECEIVABLES> 1,206,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 147,446,000
<DEPRECIATION> 8,521,000
<TOTAL-ASSETS> 149,890,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 102,000
<OTHER-SE> 81,003,000
<TOTAL-LIABILITY-AND-EQUITY> 149,890,000
<SALES> 5,937,000
<TOTAL-REVENUES> 5,937,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,790,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,412,000
<INCOME-PRETAX> 735,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 735,000
<EPS-PRIMARY> .09
<EPS-DILUTED> .08
</TABLE>
