<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: MARCH 31, 2000 Commission File Number: 0-23503
EXCEL LEGACY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-0781747
- ------------------------ ------------------------------------
(State of incorporation) (IRS Employer Identification Number)
17140 BERNARDO CENTER DRIVE, SUITE 300, SAN DIEGO, CALIFORNIA 92128
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number: (858) 675-9400
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 12, 2000
- ---------------------------- ---------------------------
Common Stock, $.01 par value 41,963,435
<PAGE> 2
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
INDEX
FORM 10-Q
----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
March 31, 2000
December 31, 1999 .............................................. 3
Consolidated Statements of (Loss) Income
Three Months Ended March 31, 2000
Three Months Ended March 31, 1999............................... 4
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended March 31, 2000
Three Months Ended March 31, 1999............................... 5
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000
Three Months Ended March 31, 1999............................... 6
Notes to Consolidated Financial Statements......................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 18
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds........................ 19
Item 6. Exhibits and Reports on Form 8-K................................. 19
</TABLE>
2
<PAGE> 3
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Real estate:
Land $ 21,412 $ 27,099
Buildings 43,251 47,664
Construction in progress 18,678 27,380
Leasehold interest 2,351 2,351
Accumulated depreciation (2,261) (2,303)
--------- ---------
Net real estate 83,431 102,191
Cash 2,774 1,767
Accounts receivable, less allowance for bad debts of
$36 and $55 in 2000 and 1999, respectively 257 739
Notes receivable 28,988 28,380
Investment in securities 137,684 136,570
Investment in partnerships 19,593 18,341
Interest receivable 9,839 8,929
Pre-development costs 24,662 16,783
Other assets 5,141 7,938
Deferred tax asset 6,738 6,515
--------- ---------
$ 319,107 $ 328,153
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable $ 56,629 $ 70,661
Convertible debentures 33,231 33,243
Senior notes 18,067 18,067
Mortgages payable 2,086 15,835
Accounts payable and accrued liabilities 6,690 9,188
Other liabilities 2,148 151
--------- ---------
Total liabilities 118,851 147,145
--------- ---------
Commitments and contingencies -- --
Minority interests 969 969
--------- ---------
Stockholders' equity:
Series B Preferred stock, $.01 par value, 50,000,000 shares
authorized, 21,281,000 shares issued and outstanding 213 213
Common stock, $.01 par value, 150,000,000 shares authorized,
41,963,435 shares issued and outstanding 420 368
Additional paid-in capital 205,794 187,699
Accumulated other comprehensive income, net of tax 1,313 922
Retained earnings 1,306 1,679
Notes receivable from affiliates for common shares (9,759) (10,842)
--------- ---------
Total stockholders' equity 199,287 180,039
--------- ---------
$ 319,107 $ 328,153
========= =========
</TABLE>
The accompanying notes are an integral part
of the financial statements
3
<PAGE> 4
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME - UNAUDITED
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Revenue:
Rental $ 581 $ 3,312
Operating income 1,135 4,896
Interest income 929 858
Partnership and other income 1,048 151
------- -------
Total revenue 3,693 9,217
------- -------
Operating expenses:
Interest 3,351 2,025
Depreciation and amortization 411 1,196
Property operating expenses 597 482
Other operating expenses 978 2,511
General and administrative 833 2,690
------- -------
Total operating expenses 6,170 8,904
------- -------
Net operating (loss) income (2,477) 313
Net gain from real estate sales 1,880 --
------- -------
(Loss) income before income taxes (597) 313
Benefit (provision) for income taxes 224 (139)
------- -------
Net (loss) income $ (373) $ 174
======= =======
Basic net (loss) income per common share $ (0.01) $ 0.01
======= =======
Diluted net (loss) income per common share $ (0.01) $ 0.00
======= =======
</TABLE>
The accompanying notes are an integral part
of the financial statements
4
<PAGE> 5
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
----------
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
PREFERRED STOCK COMMON STOCK ADDITIONAL COMPRE- TOTAL
------------------ ------------------ PAID-IN HENSIVE RETAINED NOTES STOCKHOLDERS'
NUMBER AMOUNT NUMBER AMOUNT CAPITAL INCOME EARNINGS RECEIVABLE EQUITY
---------- ------ ---------- ------ ----------- ------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 2000:
Balance at January 1, 2000 21,281,000 $213 36,835,921 $368 $187,699 $ 922 $1,679 $(10,842) $180,039
Conversion of notes payable to
common stock -- -- 5,102,181 51 18,012 -- -- -- 18,063
Issuance of common shares -- -- 25,333 1 83 -- -- -- 84
Repayment of notes to affiliates -- -- -- -- -- -- -- 1,083 1,083
Comprehensive income:
Net loss -- -- -- -- -- -- (373) -- (373)
Unrealized gain on marketable
securities, net of tax -- -- -- -- -- 391 -- -- 391
Total comprehensive income -- -- -- -- -- -- -- -- 18
---------- ---- ---------- ---- -------- ------ ------ -------- --------
Balance at March 31, 2000 21,281,000 $213 41,963,435 $420 $205,794 $1,313 $1,306 $ (9,759) $199,287
========== ==== ========== ==== ======== ====== ====== ======== ========
Three Months Ended March 31, 1999:
Balance at January 1, 1999: 21,281,000 213 33,457,804 335 174,508 -- 2,456 (10,872) 166,640
Net income -- -- -- -- -- -- 174 -- 174
---------- ---- ---------- ---- -------- ------ ------ -------- --------
Balance at March 31, 1999 21,281,000 $213 33,457,804 $335 $174,508 $ -- $2,630 $(10,872) $166,814
========== ==== ========== ==== ======== ====== ====== ======== ========
</TABLE>
The accompanying notes are an integral part
of the financial statements
5
<PAGE> 6
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS - UNAUDITED
Three Months Ended March
31, 2000 and 1999
(in thousands)
----------
<TABLE>
<CAPTION>
2000 1999
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (373) $ 174
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 411 1,196
Gain from real estate sales (1,880) --
Earnings from equity investments 724 72
Change in accounts receivable and other assets 133 (1,073)
Change in accounts payable and other liabilities 717 17
-------- -------
Net cash (used) provided by operating activities (268) 386
-------- -------
Cash flows from investing activities:
Proceeds from real estate sales 10,046 --
Pre-development costs paid (7,879) (5,733)
Real estate acquired and construction costs paid (6,725) (973)
Investment in partnerships (1,252) (1,406)
Notes receivable issued (608) --
-------- -------
Net cash used in investing activities (6,418) (8,112)
-------- -------
Cash flows from financing activities:
Principal payments of mortgages (72) (736)
Borrowings from issuance of notes 7,765 8,850
-------- -------
Net cash provided by financing activities 7,693 8,114
-------- -------
Net increase in cash 1,007 388
Cash at the beginning of the period 1,767 1,387
-------- -------
Cash at the end of the period $ 2,774 $ 1,775
======== =======
</TABLE>
The accompanying note are an integral part
of the financial statements
6
<PAGE> 7
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements reflect all adjustments of a recurring nature
which are, in the opinion of management, necessary for a fair
presentation of the financial statements. No adjustments were necessary
which were not of a normal recurring nature. Certain footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to
the quarterly reporting rules of the Securities and Exchange Commission.
These financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in
the Company's December 31, 1999 Form 10-K.
ORGANIZATION
Excel Legacy Corporation (the "Company"), a Delaware corporation was
formed on November 17, 1997. The Company was originally a wholly-owned
subsidiary of Excel Realty Trust, Inc. ("Excel"), a Maryland corporation
and a self-administered, self-managed real estate investment trust
("REIT"), now known as New Plan Excel Realty Trust, Inc. On March 31,
1998, Excel effected a spin-off of the Company through a special dividend
to the holders of common stock of Excel of all of the outstanding common
stock of the Company held by Excel (the "Spin-off"). Upon completion of
the Spin-off, the Company ceased to be a wholly-owned subsidiary of Excel
and began operating as an independent public real estate operating
company.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company, its wholly-owned subsidiaries and all affiliates in which
the Company has an ownership interest greater than 50%. The Company uses
the equity method of accounting to account for its investments in which
its ownership interest is 50% or less, but in which it has significant
influence. The Company accounts for its interest in Price Enterprises,
Inc. ("PEI") (Note 3) under the equity method of accounting because the
holders of PEI preferred stock have the right to elect a majority of the
PEI board of directors. All other investments are accounted using the
cost method of accounting.
REAL ESTATE
Certain real estate assets were transferred to the Company from Excel and
recorded at Excel's cost basis. Other real estate assets acquired
subsequent to the Spin-off were recorded at the Company's cost.
Depreciation is computed using the straight-line method over estimated
useful lives of 40 years for buildings. Expenditures for maintenance and
repairs are charged to expense as incurred and significant renovations
are capitalized.
The Company assesses its properties individually for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the property may not be recoverable. Recoverability of property to be
held and used is measured by comparing the carrying amount of the
property to future undiscounted net cash flows expected to be generated
by the property. If the sum of the expected undiscounted future cash
flows is less than the carrying amount of the property, the property is
considered to be impaired. If the property is impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of
the property exceeds the fair value of the property.
PRE-DEVELOPMENT COSTS
Pre-development costs that are directly related to specific construction
projects are capitalized as incurred. The Company expenses these costs to
the extent they are unrecoverable or it is determined that the related
project will not be pursued.
Continued
7
<PAGE> 8
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
MANAGEMENT CONTRACTS
Management contracts are recorded at cost and amortized over a period of
seven years.
INCOME TAXES
The Company provides for income taxes under the liability method. A
current tax asset or liability is recognized for the estimated taxes
refundable or payable for the current year. A deferred tax asset or
liability is recognized for the estimated future tax effects attributable
to carryforwards and to temporary differences between the tax and
financial reporting basis of assets and liabilities. The measurement of
current and deferred tax assets and liabilities is based on enacted tax
laws and rates. The measurement of deferred tax assets is reduced, if
necessary, by the amount of any tax benefits that, based on available
evidence, are not expected to be realized.
DEFERRED LEASING AND LOAN ACQUISITION COSTS
Costs incurred in obtaining tenant leases and long-term financing are
amortized to other property expense and interest expense, respectively,
on the effective interest method over the terms of the related leases or
debt agreements.
REVENUE RECOGNITION
Base rental revenue is recognized on the straight-line basis, which
averages annual minimum rents over the terms of the leases. Certain of
the leases provide for additional contingent rental revenue based upon
the level of sales achieved by the lessee. Contingent rental revenue is
recognized when earned.
COMPREHENSIVE INCOME
In 1999, the Company adopted Statement of Financial Accounting Standard
("SFAS") No. 130 "Reporting Comprehensive Income." This statement
requires that all components of comprehensive income be reported in the
financial statements in the period in which they are recognized. The
components of comprehensive income for the Company include net income and
unrealized gains on investments.
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 assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the consolidated financial
statements at December 31, 1999 and for the three months ended March 31,
1999 to conform with the current period's presentation.
Continued
8
<PAGE> 9
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
2. PRICE ENTERPRISES, INC.
In November 1999, the Company completed an exchange offer of $8.50 per
share for any and all common shares of Price Enterprises, Inc., a
Maryland corporation which is operated as a real estate investment trust
("PEI"). The exchange offer consisted of per share consideration for PEI
common stock of $4.25 in cash, $2.75 in principal amount of newly issued
9% Convertible Redeemable Subordinated Secured Debentures of the Company
due in 2004 (convertible at any time into the Company's common stock at
$5.50 per share) and $1.50 in newly issued 10% Senior Redeemable Secured
Notes of the Company due in 2004. Approximately, 12,154,000 shares of PEI
common stock were tendered representing approximately 91% of the
outstanding common stock. Below is summarized financial information as of
March 31, 2000 and the three months then ended for PEI:
<TABLE>
<CAPTION>
BALANCE SHEET INCOME STATEMENT
<S> <C> <C> <C>
Real estate, net of Operating revenue $ 17,890
accumulated depreciation $576,591 Operating expenses (3,906)
Other assets 23,035 General and administrative (775)
--------
Total assets $599,626 Interest expense (1,748)
========
Depreciation and amortization (2,290)
--------
Notes and mortgage payable $131,702 Net Income 9,171
Accounts payable and other liabilities 5,588 Preferred dividends (8,324)
-------- --------
137,290 Net income available for
8 3/4% Series A Preferred Stock 353,404 common shares $ 847
========
Other stockholders' equity 108,932
--------
Total liabilities and stockholders' equity $599,626
========
</TABLE>
The following unaudited pro forma information for the three months ended
March 31, 1999 has been presented as if the Company acquired
approximately 91% of the common shares of PEI on January 1, 1999. The
unaudited pro forma information makes certain assumptions regarding
capital sources and interest rates and the pro forma information is not
necessarily indicative of what the actual results of operations of the
Company would have been had the acquisition actually occurred on January
1, 1999 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------
2000 (actual) 1999 (actual) 1999 (PRO FORMA)
------------- ------------- ----------------
<S> <C> <C> <C>
Total revenue $ 3,693 $ 9,217 $ 10,042
Operating expenses, excluding interest (2,819) (6,879) (6,879)
Interest expense (3,351) (2,025) (3,703)
Real estate sales 1,880 -- --
Income taxes 224 (139) 203
------- ------- --------
Net income (loss) $ (373) $ 174 $ (337)
======= ======= ========
Net Income (loss) per share -
Basic $ (0.01) $ 0.01 $ (0.01)
======= ======= ========
Diluted $ (0.01) $ 0.00 $ (0.01)
======= ======= ========
</TABLE>
Continued
9
<PAGE> 10
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
3. MILLENNIA:
The Company has an investment in a joint venture known as Millennia Car
Wash, LLC ("Millennia") which owns 3.75 million shares of common stock
and 62,500 common stock purchase warrants of Mace Security International
("MACE") and 250,000 common shares of US Plastic Lumber Corporation
("USPL"). The Company's common shares in MACE and USPL are subject to
certain sale restrictions. One of the Company's senior officers holds a
board seat on MACE.
The Company accounts for Millennia's investment in MACE on the equity
method of accounting. The Company classifies its investment in USPL as
available-for-sale and recognizes changes in the fair value of its
investments in USPL in other comprehensive income.
<TABLE>
<CAPTION>
Investment in USPL (in thousands): March 31, 2000
---------------------------------- --------------
<S> <C>
Cost $1,000
Unrealized gain 1,313
------
Fair value $2,313
======
</TABLE>
4. REAL ESTATE:
In 2000 the Company sold three properties to PEI for approximately $24.4
million. Mortgage debt of approximately $14.3 million was transferred as
part of the sales. The Company entered into an agreement to lease one of
the sold properties back from PEI.
5. NOTES RECEIVABLE:
The Company had $29.0 million in notes receivable outstanding at March
31, 2000 related to various development projects. The notes bear interest
at 11% to 12% and are secured by the related projects. The notes mature
on various dates between 2000 and the earlier of the sale of the related
projects or 2003 to 2004.
6. NOTES AND MORTGAGES PAYABLE:
NOTES PAYABLE
The Company had $56.6 million in notes payable outstanding at March 31,
2000. Of this amount, $35.0 million was outstanding under the Company's
revolving credit facility (the "Credit Facility"). The Credit Facility is
secured by various properties and carries an interest rate of LIBOR plus
3.75% (9.9% at March 31, 2000). The Credit Facility expires in June 2000.
The Company anticipates extending this facility, repaying the outstanding
amounts with asset sales, or refinancing it with a new facility.
To facilitate the PEI exchange offer, The Sol and Helen Price Trust
loaned the Company $27.4 million. This note bears an interest rate of
LIBOR plus 1.50% (7.4% at March 31, 2000) and is due in November 2004.
The note is secured by the Company's PEI common shares. An additional
$2.6 million is available under the note to purchase the additional
common shares of PEI not tendered in 1999. In March 2000, $18.0 million
of this note was converted into 5.1 million shares of the Company's
common stock.
The Company has a $5.0 million note outstanding at March 31, 2000 secured
by second trust deeds on two of the Company's investments. The note bears
interest at Prime plus 2% (11.0% at March 31, 2000) and matures October
2000. On March 31, 2000, the Company borrowed $5.0 million from PEI under
a note payable due July 31, 2000. Up to $10.0 million can be borrowed
under the PEI note, which bears interest at LIBOR plus 3.75% (9.9% at
March 31, 2000). An additional $4.0 million was borrowed under the PEI
note in April and May 2000 . At March 31, 2000,
Continued
10
<PAGE> 11
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
-----------
6. NOTES AND MORTGAGES PAYABLE, CONTINUED:
the Company had an additional $1.0 million in various notes payable.
The Company has a 65% interest in Newport on the Levee, LLC ("Newport")
which has $1.2 million outstanding related to a development project in
Newport, KY. Additionally, the City of Newport has issued two series of
public improvement bonds. The Series 2000a tax exempt bonds total $44.2
million and are broken down as follows: (i) $18.7 million maturing 2027
with interest at 8.375%; (ii) $20.5 million maturing 2018 with interest
at 8.5%; and (iii) $5.0 million maturing 2027 with interest at 8.375%.
The Series 2000b bonds are taxable and have a par amount of $11.6 million
with interest at 11% due 2009. The bonds are guaranteed by Newport, the
Company, and the third party developers of the project. Newport has drawn
on $19.3 million of the Series 2000a Bonds at March 31, 2000 from the
trustee for construction incurred to date and $1.2 million on a $4.7
million secured credit facility due March 2001 with interest at Prime
plus 0.5% (9.5% at March 31, 2000). The Company also has a 50% interest
in a LLC which owns land in Orlando, Florida. The land was purchased for
$17.8 million and has mortgage debt of $10.2 million secured by the land.
The mortgage is guaranteed by members of the LLC, including the Company.
The Company also has approximately $7.0 million of guaranteed debt
related to other development projects.
CONVERTIBLE DEBENTURES
In conjunction with the PEI exchange offer, the Company issued $33.2
million in convertible debentures ("Debentures"). The Debentures bear an
interest rate of 9% per annum and are secured by a first priority
security interest in common shares of PEI. The holders of the Debentures
are entitled at any time before the day prior to the final maturity date,
subject to prior redemption, to convert any Debentures into the Company's
common stock at the conversion price of $5.50 per share. The Debentures
mature in November 2004.
SENIOR NOTES
In conjunction with the PEI exchange offer, the Company issued $18.1
million in senior notes ("Senior Notes"). The Senior Notes bear an
interest rate of 10% per annum and, along with the Debentures, are
secured by a first priority security interest in common shares of PEI.
The Senior Notes rank equal to future senior indebtedness of the Company
and senior to the Debentures. The Senior Notes mature in November 2004.
MORTGAGE PAYABLE
The Company had $2.1 million in a mortgage payable outstanding at March
31, 2000 secured by real estate. The mortgage debt is due in 2006 and
bears interest at 8.25%.
The principal payments required to be made on mortgages and notes payable
over the next five years are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
<S> <C>
2000 (remaining nine months) $ 45,115
2001 2,431
2002 162
2003 176
2004 60,835
Thereafter 1,294
--------
$110,013
========
</TABLE>
Continued
11
<PAGE> 12
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
7. INCOME TAXES:
At March 31, 2000, the Company had a net deferred tax asset of $6.7
million. The deferred tax asset primarily relates to the difference
between the tax basis and cost basis of the real estate assets acquired
from Excel in connection with the Spin-off and is non-current.
Additionally, $1.4 million relates to an impairment in the Company's
investment in a development project in Indianapolis, Indiana. The
offsetting portion of the deferred asset relates to timing differences in
recognizing revenue and expenses for tax purposes through operations of
the Company. No valuation allowance has been provided against the
deferred tax asset as the Company believes future taxable income is more
likely than not. The provision for income taxes consisted of the
following (in thousands):
<TABLE>
<CAPTION>
FEDERAL STATE
------- -----
<S> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000:
Current payable $ -- $ 35
Deferred tax benefit (187) (72)
----- ----
Provision for income taxes $(187) $(37)
===== ====
THREE MONTHS ENDED MARCH 31, 1999:
Current payable $ 62 $ 20
Deferred tax expense 54 3
----- ----
Provision for income taxes $ 116 $ 23
===== ====
</TABLE>
8. CAPITAL STOCK:
In the three months ended March 31, 2000, $18.0 million of notes payable
were converted into 5.1 million shares of the Company's common stock.
9. EARNINGS PER SHARE (EPS):
A reconciliation of the numerator and denominator of basic and diluted
EPS is provided for the three months ended March 31, 2000 and 1999 as
follows (in thousands, except per share amounts).
<TABLE>
<CAPTION>
2000 1999
-------- -------
<S> <C> <C>
BASIC EPS
Net (loss) income $ (373) $ 174
======== =======
Weighted average of common shares outstanding 36,893 33,458
======== =======
EARNINGS PER SHARE: $ (0.01) $ 0.01
======== =======
DILUTED EPS
Net (loss) income $ (373) $ 174
======== =======
DENOMINATOR:
Weighted average of common shares outstanding 36,893 33,458
Effect of diluted securities:
Preferred B Shares 21,281 21,281
Common stock options 12 8
Deduct diluted securities for net loss (21,293) --
-------- -------
36,893 54,747
======== =======
EARNINGS PER SHARE: $ (0.01) $ 0.01
======== =======
</TABLE>
Continued
12
<PAGE> 13
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
10. STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE:
The amounts paid for interest during the three months ended March 31,
2000 and March 31, 1999 were $4.1 million and $2.2 million, respectively.
The amounts paid for income taxes in the three months ended March 31,
2000 and March 31, 1999 were $0 and $0.6 million, respectively.
In 2000, the Company converted $18.1 million of notes payable into 5.1
million common shares. Also in 2000, $13.7 million in mortgage debt was
assumed by PEI in conjunction with three asset sales to PEI and Newport
assumed $1.2 million in debt in conjunction with real estate construction
and acquisitions. In January 2000, the notes receivable from certain
officers were decreased by $1.1 million for salary and bonuses not paid
in cash. This amount was included as a general and administrative expense
in 1999. In the three months ended March 31, 1999, $0.6 million of debt
was assumed related to the construction of an office building.
11. SEGMENT REPORTING:
The Company's primary business segment is retail real estate investments.
Other reportable business segments of the Company include hospitality,
operating companies, and office buildings. Below is selected financial
information for each segment (in thousands). The operating companies
segment primarily relates to Millennia in the periods presented. Certain
revenues and expenses such as general and administrative not specifically
incurred by specific segments, and corporate income taxes have been
grouped with "retail & other" for presentation purposes.
<TABLE>
<CAPTION>
RETAIL & OPERATING
OTHER HOSPITALITY COMPANIES OFFICE TOTAL
--------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
The three months ended March 31, 2000:
Total revenues $ 2,470 $ 860 $ 23 $ 340 $ 3,693
--------- -------- -------- ------- ---------
Interest 3,308 -- -- 43 3,351
Depreciation and amortization 270 107 2 32 411
General and administrative 819 -- 14 -- 833
Operating expenses 376 982 -- 217 1,575
--------- -------- -------- ------- ---------
Total operating expenses 4,773 1,089 16 292 6,170
--------- -------- -------- ------- ---------
Net operating (loss)/income (2,303) (229) 7 48 (2,477)
Real estate sales 1,880 -- -- -- 1,880
Provision for income taxes 224 -- -- -- 224
--------- -------- -------- ------- ---------
Net (loss) income $ (199) $ (229) $ 7 $ 48 $ (373)
========= ======== ======== ======= =========
Total assets $ 275,219 $ 24,886 $ 24,714 $14,577 $ 339,396
========= ======== ======== ======= =========
The three months ended March 31, 1999:
Total revenues $ 4,030 $ 540 $ 4,274 $ 373 $ 9,217
--------- -------- -------- ------- ---------
Interest 1,556 -- 419 50 2,025
Depreciation and amortization 679 161 334 22 1,196
General and administrative 781 -- 1,909 -- 2,690
Operating expenses 335 703 1,809 146 2,993
--------- -------- -------- ------- ---------
Total operating expenses 3,351 864 4,471 218 8,904
--------- -------- -------- ------- ---------
Net operating income(loss) 679 (324) (197) 155 313
Provision for income taxes (139) -- -- -- (139)
--------- -------- -------- ------- ---------
Net (loss ) income $ 540 $ (324) $ (197) $ 155 $ 174
========= ======== ======== ======= =========
Total assets $ 195,840 $ 17,527 $ 35,675 $21,096 $ 270,138
========= ======== ======== ======= =========
</TABLE>
Continued
13
<PAGE> 14
EXCEL LEGACY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
12. RELATED PARTY TRANSACTIONS:
In connection with the sale of common stock to certain affiliates in
1998, the Company issued notes receivable of which $9.8 million is
outstanding at March 31, 2000. The notes bear interest at a fixed rate of
7%, are recourse obligations of the note holders, and are due in March
2003. The total interest receivable at March 31, 2000 from these notes
totaled $1.4 million. The notes have been offset against stockholders'
equity on the Company's accompanying Consolidated Balance Sheets.
In 2000, three properties were sold to PEI. The Company leases back one
of the properties for a quarterly amount of $0.1 million. Also, at March
31, 2000, the Company had $5.0 million payable to PEI on a $10.0 million
note. Finally, the Company offsets the general and administrative costs
with reimbursements received monthly from PEI. In the three months ended
March 31, 2000, $0.7 million was received as reimbursements.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NATURE OF BUSINESS
Excel Legacy Corporation (the "Company"), a Delaware Corporation, was formed on
November 17, 1997. The Company was organized to create and realize value by
identifying and making opportunistic real estate and other investments through
the direct acquisition, rehabilitation, development, financing and management of
real properties and/or participation in these activities through the purchase of
equity interests of entities in real estate and other businesses.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and the Notes thereto.
Comparison of the three months ended March 31, 2000 to the three months ended
March 31, 1999
Rental revenue was $0.6 million during the three months ended March 31, 2000
compared to $3.3 million in the three months ended March 31, 1999 resulting in a
decrease of $2.7 million. Of this decrease $1.8 million related to eleven
properties sold. Eight of these properties were leased to Wal-Mart Stores, Inc.
("Wal-Mart"), two of the properties were leased to Lowe's Home Centers, Inc. and
one was leased to AMC Multi-Cinema. An additional decrease of $0.7 million
related to a property which was leased to AMC which was contributed to a
partnership for an approximate 50% interest in a development project. Finally, a
$0.2 million decrease related to a shopping mall located in Palm Springs,
California which is beginning redevelopment.
Operating income totaled $1.1 million in the three months ended March 31, 2000
compared to $4.9 million in the three months ended March 31, 1999 resulting in a
decrease of $3.8 million. In 1999, Millennia, a subsidiary of the Company, owned
19 car wash properties which generated $4.2 million of operating income. On
March 31, 1999, these properties were sold for common shares in a publically
traded company, Mace Security International. The Grand Hotel, which was not
opened until the second half of 1998, generated $0.4 million of additional
operating income in 2000 when compared to 1999.
Interest income was $0.9 million in both the three months ended March 31, 2000
and 1999. Interest income is primarily generated from notes receivable and cash
balances.
Partnership income and other revenues was approximately $1.0 million in the
three months ended March 31, 2000 compared to $0.2 million in the three months
ended March 31, 1999. In 2000, the Company recognized $0.7 million in income
from its equity investment in Price Enterprises, Inc. ("PEI") which was
consummated in November 1999. Additionally, the Company recognized $0.3 million
from its investments in joint ventures related to projects in Westminster, CO
and Winnipeg, Canada.
Interest expense was $3.4 million in the three months ended March 31, 2000
compared to $2.0 million in the three months ended March 31, 1999. Debt assumed
in conjunction with the acquisition of PEI in November 1999 accounted for $1.7
million of interest expense in the three months ended March 31, 2000. An
increase of $0.8 million relates to additional amounts borrowed on the Company's
credit facilities and short therm notes, primarily to fund its development
projects. A decrease of $1.1 million relates to mortgage debt on properties that
were sold in 1999 and 2000.
Depreciation and amortization expense totaled $0.4 million in the three months
ended March 31, 2000 compared to $1.2 million in the three months ended March
31, 1999. The decrease of $0.8 million primarily relates to properties sold of
$0.5 million and the depreciation of Millennia assets in 1999 of $0.3 million.
Property operating expenses were $0.6 million in the three months ended March
31, 2000 compared to $0.5 million in the three months ended March 31, 1999. The
increase of $0.1 million primarily relates to costs incurred in improving an
office building in Scottsdale, AZ.
Other operating expenses were $1.0 million in the three months ended March 31,
2000 compared to $2.5 million in the three months ended March 31, 1999,
resulting in a decrease of $1.5 million. In 1999, expenses of $1.3 million
related
15
<PAGE> 16
to Millennia compared to $0 in 2000. In 2000, expenses related to the Grand
Hotel were $0.3 million greater than expenses incurred in 1999 and related to
the increased revenues in 2000.
General and administrative expenses were $0.8 million in the three months ended
March 31, 2000 compared to $2.7 million in the three months ended March 31,
1999. The primary reason for the decrease was that Millennia accounted for $1.9
million of general and administrative expenses in 1999 compared to $0 in 2000.
The Company also received $0.6 million as general and administrative expense
reimbursements from PEI in 2000. These savings were offset by additional
personnel hired to manage the PEI properties, and additional personnel on the
Company's payroll in 2000, primarily related to several executives who were
working for another company and whose time was only partially paid by the
Company.
The net gain from real estate sales was $1.9 million in 2000. This gain
primarily related to two properties sold to PEI in 2000. An additional building
was sold to PEI in 2000 of which there was no gain recorded as the Company is
leasing back the building. There were no real estate sales in the three months
ended March 31, 1999.
The Company recognized a benefit for income taxes of $0.2 million in the three
months ended March 31, 2000 related to the net loss before income taxes of $0.6
million. A tax provision of $0.1 million was recognized by the Company in the
three months ended March 31, 1999 related to the income before income taxes of
$0.3 million.
The Company calculates Earnings Before Depreciation, Amortization and Deferred
Taxes ("EBDADT") as net income, plus depreciation and amortization on real
estate and real estate related assets, and deferred income taxes. EBDADT does
not represent cash flows from operations as defined by generally accepted
accounting principles, and may not be comparable to other similarly titled
measures of other companies. The Company believes, however, that to facilitate a
clear understanding of its operating results, EBDADT should be examined in
conjunction with its net income as reductions for certain items are not
meaningful in evaluating income-producing real estate. The following information
is included to show the items included in the Company's EBDADT for the three
months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Net (loss) income $ (373) $ 174
Depreciation and
amortization 411 1,196
Proportionate share of depreciation and amortization
from equity investments:
PEI 2,090 --
Other 194 --
Less depreciation of non-real estate assets (49) (22)
Deferred taxes (224) 57
------- -------
EBDADT $ 2,049 $ 1,405
======= =======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from asset sales and borrowings from debt were the primary source of
capital to fund the Company's development and ongoing operations in the three
months ended March 31, 2000.
In November 1999, the Company completed an exchange offer for the common stock
of PEI. In the exchange offer, the Company acquired approximately 91.3% of the
PEI common stock. PEI stockholders who tendered their shares of the PEI common
stock in the exchange offer received from the Company a total of $8.50
consisting of $4.25 in cash, $2.75 in principal amount of the Company's 9.0%
Convertible Redeemable Subordinated Secured Debentures ("Debentures") due 2004
and $1.50 in principal amount of the Company's 10.0% Senior Redeemable Secured
Notes ("Senior Notes") due 2004 for each share of PEI common stock. After
expenses, the Company paid approximately $61.0 million in cash and issued
approximately $33.2 million in principal amount of the Debentures and
approximately $18.1 million in principal amount of the Senior Notes to acquire
the PEI common stock in the exchange offer. Of the cash, $27.4 million was
borrowed from The Sol and Helen Price Trust. The remaining $33.6 million was
available cash borrowed from other notes, including the Company's credit
facility, and from asset sales.
16
<PAGE> 17
In accordance with the stockholders agreement entered into in connection with
the exchange offer, until a certain amount of PEI preferred stock is repurchased
or tendered for, $7.5 million of cash flow, as defined, is required to be
reinvested in PEI before dividends can be paid to its common shareholders. As
such, cash available to service the Company's debt incurred to complete the PEI
tender offer is subject to this restriction. The Company does, however, directly
benefit from savings in general and administrative expenses from managing the
combined companies, and would receive its portion of PEI common stock dividends
for cash flows in excess of the $7.5 million.
The Company anticipates that cash flow will be generated from existing
properties and from opportunistic trading of assets. In 2000, the Company
announced its intention to sell a group of assets to repay the Company's
short-term debt. The board of directors also approved the repurchase of up to
10% of the outstanding shares of common stock of the Company with excess
proceeds. Although the business of buying and selling assets is part of the
Company's recurring operations, should anticipated asset sales not occur, the
Company anticipates that cash flows from current recurring operations, excluding
PEI's cash flows, would not be sufficient to fund short-term obligations.
In addition to using proceeds from asset sales to repay debt and fund
development projects, the Company has on file a $300.0 million shelf
registration statement for the purpose of issuing debt securities, preferred
stock, depository shares, common stock, warrants or rights. Currently, there
remains $286.5 million of securities for issuance available under this shelf.
The Company's $35.0 million credit facility is due in June 2000. The Company
anticipates extending this facility, repaying the outstanding amounts with asset
sales, or refinancing it with a new facility.
The Company expects to meet its long-term liquidity requirements, such as
property acquisitions and development, mortgage debt maturities, and other
investment opportunities, through the most advantageous sources of capital
available to the Company at the time, which may include operating cash flows
from existing properties and the completion of current development projects, the
sale of common stock, preferred stock or debt securities through public
offerings or private placements, entering into joint venture arrangements with
financial partners, the incurrence of indebtedness through secured or unsecured
borrowings and the reinvestment of proceeds from the disposition of assets.
In October 1999, the Company completed the sale of Millennia's assets to
American Wash Services, Inc. ("AWS"), in exchange for 3,500,000 shares of common
stock of the parent of AWS, Mace Security International, Inc. ("MSI"), a warrant
to acquire an additional 62,500 shares of MSI common stock at an exercise price
of $4.00 per share, and the assumption by AWS of certain liabilities of
Millennia. In conjunction with this transaction, Millennia had assigned the
operations of its assets to AWS effective April 1, 1999, and thus did not
receive cash flow from operations after April 1, 1999. In addition, Millennia
acquired 250,000 common shares of MSI through a private placement at $2.00 per
share and 250,000 common shares of US Plastic Lumber Corporation ("USPL") at
$4.00 per share. The MSI and USPL common shares are subject to certain
restrictions and not currently available for sale.
At March 31, 2000, the total debt of the Company consisted of the following: (i)
$33.2 million in Debentures due 2004. These Debentures are traded on the
American Stock Exchange and bear interest at 9% payable February 15 and August
15 of each year; (ii) $35.0 million outstanding on the Company's revolving
credit facility. The facility bears interest at LIBOR plus 3.75% (9.9% at March
31, 2000) and is due in June 2000; (iii) $9.4 million payable to The Sol and
Helen Price Trust due 2004. This note bears interest at LIBOR plus 1.50% (7.4%
at March 31, 2000) with interest only due monthly; (iv) $1.2 million related to
Newport on the Levee LLC ("Newport") of which the Company owns 65%. This note
bears interest at 9.5% and is due March 2001. An additional $3.5 million is
available under this note. (v) $18.1 million in Senior Notes due 2004. These
notes are traded on the American Stock Exchange and bear interest at 10% payable
February 15 and August 15 of each year; (vi) $5.0 million secured note bearing
interest at prime plus 2% (11.0% at March 31, 2000) due October 2000; (vii) $5.0
million unsecured note to PEI with an interest rate of 3.75% plus LIBOR (9.9% at
March 31, 2000). Up to $10.0 million can be borrowed on this note for certain
uses. This note is due July 31, 2000; (viii) A $2.1 million mortgage
collateralized by an office building in Scottsdale, Arizona, of which monthly
payments are approximately $25,000 with a balloon payment in the year 2006. The
note bears interest at 8.25% (ix) $1.1 million in various other notes, primarily
related to $0.8 million for certain costs on a project in Anaheim.
The City of Newport has issued two series of public improvement bonds related to
Newport development project. The Series 2000a tax exempt bonds total $44.2
million and are broken down as follows: (i) $18.7 million maturing 2027 with
interest at 8.375%; (ii) $20.5 million maturing 2018 with interest at 8.5%; and
(iii) $5.0 million maturing 2027 with interest at 8.375%. The Series 2000b bonds
are taxable and have a par amount of $11.6 million with interest at 11% due
2009. The bonds are guaranteed by Newport, the Company, and the third party
developers of the project. Newport has drawn on $19.3 million of
17
<PAGE> 18
the Series 2000a Bonds at March 31, 2000 from the trustee for construction
incurred to date. The Company also has a 50% interest in a LLC which owns land
in Orlando, Florida. The land was purchased for $17.8 million and has mortgage
debt of $10.2 million secured by the land. The mortgage is guaranteed by members
of the LLC, including the Company.
At March 31, 2000, the Company had 21,281,000 shares of Series B Preferred
Stock outstanding (the "Preferred B Shares"). Holders of the Preferred B Shares
are entitled to receive, when, as and if declared by the Board of Directors,
cumulative cash dividends payable in an amount per share equal to the cash
dividends, if any, on the shares of common stock into which the Preferred B
Shares are convertible. Holders of the Preferred B Shares are also entitled to a
liquidation preference of $5.00 per share, plus a premium of 7% per annum, in
the event of any liquidation, dissolution or other winding up of the affairs of
the Company. The Preferred B Shares are convertible into common stock of the
Company at the election of the Company or the holders at any time, on a
one-for-one basis, subject to adjustment in certain circumstances.
CERTAIN CAUTIONARY STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q, including, but not
limited to, "Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations," contain 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, that are not
historical facts, but rather reflect current expectations concerning future
results and events. The words "believes," "expects," "intends," "plans,"
"anticipates," "likely," "will" and similar expressions identify such
forward-looking statements. These forward-looking statements are subject to
risks, uncertainties and other factors, some of which are beyond the Company's
control that could cause actual results to differ materially from those forecast
or anticipated in such forward-looking statements. These factors include, but
are not limited to, the Company's development activities, leverage including
short term obligations, reliance on major tenants, competition, dependence on
regional economic conditions, fluctuations in operating results, integration of
acquired businesses, costs of regulatory compliance, dependence on senior
management, and possible stock price volatility. These factors are discussed in
greater detail under the caption "Certain Cautionary Statements" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure affecting its market risk sensitive
financial instruments is interest rate risk. The Company's balance sheet
contains financial instruments in the form of interest-earning notes receivable
and interest-bearing mortgages payable. The Company manages the risk to its cash
flow from changes in interest rates by monitoring its variable rate financial
instruments. Although the fair value of its financial instruments may be
affected by changes in interest rates, the Company typically does not dispose of
them prior to maturity. Thus, the primary effect of changes in interest rates
would occur to the extent that financial instruments mature and are replaced
with others at different interest rates.
At March 31, 2000, the Company had debts totaling $55.6 million in variable
interest rates. If interest rates increased 100 basis points, the annual effect
of such increase to the Company's financial position and cash flows would be
approximately $0.6 million, based on the outstanding balance at March 31, 2000.
The actual fluctuation of interest rates is not determinable; accordingly,
actual results from interest rate fluctuation could differ.
The table on the following page presents (1) the scheduled principal payments on
notes receivable, and (2) the scheduled principal repayments on mortgages
payable: over the next five years and thereafter. The table also includes the
average interest rates of the financial instruments during each respective year
and the fair value of the notes receivable and mortgages payable. The Company
determines the fair value of financial instruments through the use of discounted
cash flow analysis using current interest rates for (1) notes receivable with
terms and credit characteristics similar to its existing portfolio and (2)
borrowings under terms similar to its existing mortgages payable. Accordingly,
the Company has determined that the carrying value of its financial instruments
at March 31, 2000 approximates fair value.
18
<PAGE> 19
Expected Maturity Date
(dollar amounts in thousands)
<TABLE>
<CAPTION>
There-
2000 2001 2002 2003 2004 after Total Fair Value
------- ------ ----- ------- ------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Notes Receivable, including notes
from affiliates $ 3,480 -- -- $18,939 $ 5,518 $1,051 $ 28,988 $ 29,000
Average interest rate 12.00% -- -- 9.99% 11.00% 10.00% 10.19%
------- ------ ----- ------- ------- ------ -------- --------
Mortgages and Notes payable $45,115 $2,431 $ 162 $ 176 $60,835 $1,294 $110,013 $110,000
Average interest rate 10.02% 9.51% 8.25% 8.25% 9.05% 8.25% 9.44%
------- ------ ----- ------- ------- ------ -------- --------
</TABLE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 29, 2000, the Company issued an aggregate of 12,000
shares of common stock to certain executives in lieu of cash
bonus payments and 13,333 shares of common stock to a consultant
in consideration for certain consulting services. On March 31,
2000, the Company issued 5,100,000 shares of common stock to The
Sol and Helen Price Trust in consideration for the cancellation
of $18.0 million of outstanding indebtedness under a note
payable to the Trust. In each case, the issuance of these
securities was exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended, as a transaction not
involving a public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
1. Exhibits
27.1 Financial Data Schedule
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.
EXCEL LEGACY CORPORATION
(Registrant)
DATE: May 12, 2000 By: /s/ Gary B. Sabin
-------------------------------------
GARY B. SABIN
President and Chief Executive Officer
DATE: May 12, 2000 By: /s/ James Y. Nakagawa
------------------------------------
JAMES Y. NAKAGAWA
Principal Financial Officer
19
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,774,000
<SECURITIES> 137,684,000
<RECEIVABLES> 29,281,000
<ALLOWANCES> (36,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 85,692,000
<DEPRECIATION> (2,261,000)
<TOTAL-ASSETS> 319,107,000
<CURRENT-LIABILITIES> 0
<BONDS> 110,013,000
0
213,000
<COMMON> 420,000
<OTHER-SE> 198,654,000
<TOTAL-LIABILITY-AND-EQUITY> 319,107,000
<SALES> 0
<TOTAL-REVENUES> 3,693,000
<CGS> 0
<TOTAL-COSTS> (6,170,000)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,351,000
<INCOME-PRETAX> (597,000)
<INCOME-TAX> (224,000)
<INCOME-CONTINUING> (373,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (373,000)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
