United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended June 30, 1998
-or-
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 1-12298
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 59-3429602
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
(904) 356-7000
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year,
if changed since last report)
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[ ]
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Assets
Real estate investments, at cost:
Land $ 183,543,075 134,457,274
Buildings and improvements 653,450,521 467,730,009
Construction in progress - development for investment 9,947,030 13,427,370
Construction in progress - development for sale 21,186,446 20,173,039
------------ -----------
868,127,072 635,787,692
Less: accumulated depreciation 24,857,246 22,041,114
------------ -----------
843,269,826 613,746,578
Investments in real estate partnerships 22,401,368 999,730
------------ -----------
Net real estate investments 865,671,194 614,746,308
Cash and cash equivalents 7,997,662 14,642,429
Tenant receivables, net of allowance for
uncollectible accounts of $2,203,559
and $1,162,570 at June 30, 1998
and December 31, 1997, respectively 8,523,897 7,245,788
Deferred costs, less accumulated amortization
of $1,626,167 and $1,456,933 at June 30, 1998
and December 31, 1997, respectively 2,589,036 2,215,099
Other assets 2,764,023 2,299,521
----------- -----------
$ 887,545,812 641,149,145
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgage loans payable 224,440,767 145,455,989
Acquisition and development line of credit 89,731,185 48,131,185
Accounts payable and other liabilities 14,484,214 9,972,065
Tenants' security and escrow deposits 2,255,767 1,854,700
----------- -----------
Total liabilities 330,911,933 205,413,939
----------- -----------
Limited partners' interest in consolidated partnerships
(note 2) 7,354,704 7,305,945
----------- -----------
Redeemable preferred units 78,800,000 -
Redeemable operating partnership units 470,479,175 428,429,261
------------ -----------
Partners' capital 549,279,175 428,429,261
------------ -----------
Commitments and contingencies
$ 887,545,812 641,149,145
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the Three Months ended June 30, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
1998 1997
---- -----
<S> <C> <C>
Revenues:
Minimum rent $ 20,137,351 14,163,423
Percentage rent 203,785 404,913
Recoveries from tenants 4,534,061 2,863,135
Management, leasing and brokerage fees 2,902,262 2,046,334
Equity in income (loss) of investments in
real estate partnerships 145,425 (9,654)
---------- ----------
Total revenues 27,922,884 19,468,151
---------- ----------
Operating expenses:
Depreciation and amortization 4,594,855 3,200,573
Operating and maintenance 3,326,494 2,755,616
General and administrative 3,829,341 2,995,008
Real estate taxes 2,304,500 1,344,411
---------- ----------
Total operating expenses 14,055,190 10,295,608
---------- ----------
Interest expense (income):
Interest expense 5,840,063 5,173,451
Interest income (615,226) (264,326)
----------- ---------
Net interest expense 5,224,837 4,909,125
----------- ---------
Income before minority interests and sale
of real estate investments 8,642,857 4,263,418
--------- ---------
Minority interest of limited partners (103,009) (214,406)
Gain on sale of real estate investments 508,678 -
-------- --------
Net income for unitholders $ 9,048,526 4,049,012
========= =========
Net income per unit:
Basic $ .32 .20
========= ==========
Diluted $ .31 .19
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the Six Months ended June 30, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
1998 1997
---- -----
<S> <C> <C>
Revenues:
Minimum rent $ 37,201,835 23,099,828
Percentage rent 622,899 526,799
Recoveries from tenants 8,344,603 5,127,636
Management, leasing and brokerage fees 5,406,368 3,687,525
Equity in income of investments in
real estate partnerships 146,411 17,137
--- ------- -----------
Total revenues 51,722,116 32,458,925
---------- -----------
Operating expenses:
Depreciation and amortization 8,740,321 5,151,973
Operating and maintenance 6,370,748 4,447,846
General and administrative 7,262,449 5,216,014
Real estate taxes 4,398,495 2,719,695
--------- ----------
Total operating expenses 26,772,013 17,535,528
---------- ----------
Interest expense (income):
Interest expense 9,249,580 7,631,828
Interest income (933,472) (423,016)
---------- ----------
Net interest expense 8,316,108 7,208,812
----------- ---------
Income before minority interests and sale
of real estate investments 16,633,995 7,714,585
---------- ---------
Minority interest of limited partners (200,159) (345,142)
Gain on sale of real estate investments 10,746,097 -
---------- ---------
Net income for unitholders $ 27,179,933 7,369,443
========== =========
Net income per unit:
Basic $ 1.04 .35
==== ===
Diluted $ 1.02 .32
==== ===
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 27,179,933 7,369,443
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation and amortization 8,740,321 5,151,973
Deferred financing cost and debt premium amortization (28,814) 441,004
Minority interest of limited partners 200,159 345,142
Equity in income of investments in
real estate partnerships (146,411) (17,137)
Gain on sale of real estate investments (10,746,097) -
Changes in assets and liabilities:
Tenant receivables (1,278,109) (1,175,630)
Deferred leasing commissions (477,146) (173,658)
Other assets (1,656,348) 712,327
Tenants' security deposits 401,067 689,406
Accounts payable and other liabilities 4,512,149 8,126,544
----------- -----------
Net cash provided by operating activities 26,700,704 21,469,414
------------ -----------
Cash flows from investing activities:
Acquisition and development of real estate (119,980,748) (113,482,333)
Investment in real estate partnerships (21,276,350) -
Capital improvements (1,878,993) (1,013,456)
Construction in progress for sale, net of reimbursement (1,013,407) (8,248,018)
Proceeds from sale of real estate investments 30,662,197 -
Distributions received from real
Estate partnership investments 21,123 -
------------- ------------
Net cash used in investing activities (113,466,178) (122,743,807)
------------- ------------
Cash flows from financing activities:
Net proceeds from issuance of redeemable partnership units 7,667 2,255,140
Cash contributions from the issuance of Regency stock 9,685,435 68,275,213
Cash distributions for dividends (25,416,413) (13,719,745)
Other contributions (distributions), net 1,478,481 609,420
Proceeds from issuance of redeemable preferred units 78,800,000 -
Proceeds from acquisition and
Development line of credit, net 41,600,000 37,630,000
Proceeds from mortgage loans payable 7,345,000 15,148,753
Repayments of mortgage loans payable (32,763,104) (2,148,114)
Deferred financing costs (616,359) (510,471)
----------- -----------
Net cash provided by financing activities 80,120,707 107,540,196
------------ -----------
Net (decrease) increase in cash and cash equivalents (6,644,767) 6,265,803
------------- ------------
Cash and cash equivalents at beginning of period 14,642,429 6,466,899
------------ -----------
Cash and cash equivalents at end of period $ 7,997,662 12,732,702
=========== ===========
</TABLE>
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(unaudited)
-continued-
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Supplemental disclosure of non cash transactions:
Mortgage loans assumed from sellers of real estate at fair value $ 104,751,624 111,052,817
=========== ===========
Redeemable operating partnership units
issued to sellers of real estate $ 28,963,411 94,769,706
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies
(a) Organization and Principles of Consolidation
Regency Centers, L.P. (the Partnership) is the primary entity
through which Regency Realty Corporation ("Regency"), a
self-administered and self-managed real estate investment trust
("REIT"), conducts substantially all of its business and owns
substantially all of its assets. In 1993, Regency was formed for
the purpose of managing, leasing, brokering, acquiring, and
developing shopping centers. The Partnership also provides
management, leasing, brokerage and development services for real
estate not owned by Regency (i.e., owned by third parties).
The Partnership was formed in 1996 for the purpose of acquiring
certain real estate properties. The historical financial
statements of the Partnership reflect the accounts of the
Partnership since its inception, together with the accounts of
certain predecessor entities (including Regency Centers, Inc., a
wholly-owned subsidiary of Regency through which Regency owned a
substantial majority of its properties), which were merged with
and into the Partnership as of February 26, 1998.
The accompanying interim unaudited financial statements (the
"Financial Statements") include the accounts of the Partnership,
and its majority owned subsidiaries and partnerships. All
significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
The Financial Statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission, and
reflect all adjustments which are of a normal recurring nature,
and in the opinion of management, are necessary to properly state
the results of operations and financial position. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information
presented not misleading. The Financial Statements should be read
in conjunction with the financial statements and notes thereto
included in the Partnership's December 31, 1997 Form 10 filed with
the Securities and Exchange Commission.
(b) Statement of Financial Accounting Standards No. 130
The Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("FAS 130"), which is effective for fiscal
years beginning after December 15, 1997. FAS 130 establishes
standards for reporting total comprehensive income in financial
statements, and requires that Companies explain the differences
between total comprehensive income and net income. Management has
adopted this statement in 1998. No differences between total
comprehensive income and net income existed in the interim
financial statements reported at June 30, 1998 and 1997.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies (continued)
(c) Statement of Financial Accounting Standards No. 131
The FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
Information" ("FAS 131"), which is effective for fiscal years
beginning after December 15, 1997. FAS 131 establishes standards
for the way that public business enterprises report information
about operating segments in annual financial statements and
requires that those enterprises report selected information about
operating segments in interim financial reports. Management does
not believe that FAS 131 will effect its current disclosures.
(d) Emerging Issues Task Force Issue 97-11
Effective March 19, 1998, the Emerging Issues Task Force (EITF)
ruled in Issue 97-11, "Accounting for Internal Costs Relating to
Real Estate Property Acquisitions", that only internal costs of
identifying and acquiring non-operating properties that are
directly identifiable with the acquired properties should be
capitalized, and that all internal costs associated with
identifying and acquiring operating properties should be expensed
as incurred. The Partnership had previously capitalized direct
costs associated with the acquisition of operating properties as a
cost of the real estate. The Partnership has adopted EITF 97-11
effective March 19, 1998. During 1997, the Partnership capitalized
approximately $1.5 million of internal costs related to acquiring
operating properties. Through the effective date of EITF 97-11,
the Partnership has capitalized $474,000 of internal acquisition
costs. For the remainder of 1998, the Partnership expects to incur
$1.1 million of internal costs related to acquiring operating
properties which will be expensed.
(e) Emerging Issues Task Force Issue 98-9
On May 22, 1998, the EITF reached a consensus on Issue 98-9
"Accounting for Contingent Rent in Interim Financial Periods". The
EITF has stated that lessors should defer recognition of
contingent rental income that is based on meeting specified
targets until those specified targets are met and not ratably
throughout the year. The Partnership has previously recognized
contingent rental income (i.e. percentage rent) ratably over the
year based on the historical trends of its tenants. The
Partnership has adopted Issue 98-9 prospectively and has ceased
the recognition of contingent rents until such time as its tenants
have achieved its specified target. The Partnership believes this
will effect the interim period in which percentage rent is
recognized, however it will not have a material impact on the
annual recognition of percentage rent.
(f) Reclassifications
Certain reclassifications have been made to the 1997 amounts to
conform to classifications adopted in 1998.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
2. Acquisitions of Shopping Centers
During the first six months of 1998, the Partnership acquired a total of
23 shopping centers for approximately $225.2 million (the "1998
Acquisitions"). In January, 1998, the Partnership entered into an
agreement to acquire the shopping centers from various entities
comprising the Midland Group ("Midland") consisting of 21 shopping
centers plus a development pipeline of 11 shopping centers. Of the 32
centers to be acquired or developed, 31 are anchored by Kroger, or its
affiliate. Eight of the shopping centers included in the development
pipeline will be owned through a joint venture in which the Partnership
will own less than a 50% interest upon completion of construction (the
"JV Properties"). As of June 30, 1998, the Partnership has acquired all
but one of the shopping centers and all of the JV Properties. The
Partnership's investment in the properties acquired from Midland is
$180.3 million at June 30, 1998. During 1998, 1999 and 2000, including
all payments made to date, the Partnership will pay approximately $213
million (including costs to be incurred on propertied currently under
construction) for the 32 properties, and in addition may pay contingent
consideration of $23 million, for the properties through the issuance of
units of the Partnership, the payment of cash and the assumption of debt.
In March, 1997, the Partnership acquired 26 shopping centers from Branch
Properties ("Branch") for $232.4 million. Additional Units and shares of
common stock may be issued after the first, second and third
anniversaries of the closing with Branch (each an "Earn-Out Closing"),
based on the performance of the properties acquired. The formula for the
earn-out provides for calculating any increases in value on a
property-by-property basis, based on any increases in net income for the
properties acquired, as of February 15 of the year of calculation. The
earn-out is limited to 721,997 Units at the first Earn-Out Closing and
1,020,061 Units for all Earn-Out Closings (including the first Earn-Out
Closing). During March, 1998, the Partnership issued 721,997 Units and
shares valued at $18.2 million to the partners of Branch.
3. Mortgage Loans Payable and Unsecured Line of Credit
The Partnership's outstanding debt at June 30, 1998 and December 31, 1997
consists of the following:
1998 1997
---- ----
Mortgage Loans Payable:
Fixed rate secured loans $189,995,742 114,615,011
Variable rate secured loans 12,679,515 30,840,978
Fixed rate unsecured loans 21,765,510 -
Unsecured line of credit 89,731,185 48,131,185
------------ -----------
Total $314,171,952 193,587,174
============ ===========
During March, 1998, the Partnership modified the terms of its unsecured
line of credit (the "Line") by increasing the commitment to $300 million,
reducing the interest rate, and incorporating a competitive bid facility
of up to $150 million of the commitment amount. Maximum availability
under the Line is subject to a pool of unencumbered assets which cannot
have an aggregate value less than 175% of the amount of the Partnership's
outstanding unsecured liabilities. The Line matures in May 2000, but may
be extended annually for one year periods. Borrowings under the Line bear
interest at a variable rate based on LIBOR plus a specified spread,
(.875% currently), which is dependent on the Partnership's investment
grade rating. The Partnership's ratings are currently Baa2 from Moody's
Investor Service, BBB from Duff and Phelps, and BBB- from Standard and
Poors. The Partnership is required to comply with certain financial
covenants consistent with this
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
3. Mortgage Loans Payable and Unsecured Line of Credit (continued)
type of unsecured financing. The Line is used primarily to finance the
acquisition and development of real estate, but is available for general
working capital purposes.
On June 29, 1998, the Partnership issued $80 million of 8.125% Series A
Cumulative Redeemable Preferred Units to an institutional investor in a
private placement. The issuance involved the sale of 1.6 million
Preferred Units for $50.00 per unit. The Preferred Units, which may be
called by the Partnership at par on or after June 25, 2003, have no
stated maturity or mandatory redemption, and pay a cumulative, quarterly
dividend at an annualized rate of 8.125%. The Preferred Units are not
convertible into common stock of Regency. The net proceeds of the
offering were used to reduce the Partnership's bank line of credit.
On July 17, 1998 the Partnership completed a $100 million private
offering of senior term notes at an effective interest rate of 7.17%. The
Notes were priced at 162.5 basis points over the current yield for seven
year US Treasury Bonds. The net proceeds of the offering will be used to
repay borrowings under the line of credit.
Mortgage loans are secured by certain real estate properties, but
generally may be prepaid subject to a prepayment of a yield-maintenance
premium. Unconsolidated partnerships and joint ventures had mortgage
loans payable of $62,727,120 at June 30, 1998, and the Partnership's
share of these loans was $25,447,514. Mortgage loans are generally due in
monthly installments of interest and principal and mature over various
terms through 2018. Variable interest rates on mortgage loans are
currently based on LIBOR plus a spread in a range of 125 basis points to
150 basis points. Fixed interest rates on mortgage loans range from 7.04%
to 9.8%.
During the first six months of 1998, the Partnership assumed mortgage
loans with a face value of $99,602,679 related to the acquisition of
shopping centers. The Partnership has recorded the loans at fair value
which created debt premiums of $5,148,945 related to assumed debt based
upon the above market interest rates of the debt instruments. Debt
premiums are being amortized over the terms of the related debt
instruments.
As of June 30, 1998, scheduled principal repayments on mortgage loans
payable and the unsecured line of credit were as follows:
1998 $8,325,724
1999 14,935,360
2000 99,525,400
2001 18,931,911
2002 38,654,417
Thereafter 128,998,937
-----------
Subtotal 309,371,749
Net unamortized debt premiums 4,800,203
-----------
Total 314,171,952
===========
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
4. Earnings Per Unit
The following summarizes the calculation of basic and diluted earnings
per unit for the three months ended, June 30, 1998 and 1997(in thousands
except per unit data):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Basic Earnings Per Unit (EPU) Calculation:
Weighted average units outstanding 23,855 13,440
Net income for unitholders $ 9,049 4,049
Less: dividends paid on Class B common stock
1,344 1,285
----- -----
Net income for Basic Earnings per Unit $ 7,705 2,764
===== =====
Basic Earnings per Unit $ .32 .20
=== ===
Diluted Earnings Per Unit (EPU) Calculation:
Weighted average units outstanding for Basic EPU 23,855 13,440
Incremental units to be issued under common
stock options using the Treasury method - 78
Contingent units for the acquisition
of real estate
519 1,138
------ ------
Total diluted units 24,374 14,656
====== ======
Diluted Earnings per Unit $ .32 .19
=== ===
</TABLE>
The Class B common stock dividends are deducted from income in computing
earnings per unit since the proceeds of this offerings was transferred to
and reinvested by the Partnership. Accordingly, payment of such dividends
is dependent upon the operations of the Partnership.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 1998
4. Earnings Per Unit (continued)
The following summarizes the calculation of basic and diluted earnings
per unit for the six months ended, June 30, 1998 and 1997(in thousands
except per unit data):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Basic Earnings Per Unit (EPU) Calculation:
Weighted average units outstanding 23,602 13,691
Net income for unitholders $ 27,180 7,369
Less: dividends paid on Class B common stock 2,689 2,570
----- -----
Net income for Basic Earnings per Unit $ 24,491 4,799
====== =====
Basic Earnings per Unit $ 1.04 .35
===== ===
Diluted Earnings Per Unit (EPU) Calculation:
Weighted average units outstanding for Basic EPU 23,602 13,691
Incremental units to be issued under common
stock options using the Treasury method 27 89
Contingent units for the acquisition
of real estate 428 759
------ ------
Total diluted units 24,057 14,539
====== ======
Diluted Earnings per Unit $ 1.02 .33
==== ===
</TABLE>
The Class B common stock dividends are deducted from income in
computing earnings per unit since the proceeds of this offerings was
transferred to and reinvested by the Partnership. Accordingly, payment of
such dividends is dependent upon the operations of the Partnership.
<PAGE>
PART II
Item 1. Legal Proceedings
None
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (dollar amounts in thousands).
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements and Notes thereto of Regency Centers, L.P.
("RCLP" or the "Partnership") appearing elsewhere in this Form 10-Q, and with
the Partnership's Form 10 filed August 7, 1998. Certain statements made in the
following discussion may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
involve unknown risks and uncertainties of business and economic conditions
pertaining to the operation, acquisition, or development of shopping centers
including the retail business sector, and may cause actual results of the
Partnership in the future to significantly differ from any future results that
may be implied by such forward-looking statements.
Organization
RCLP is the primary entity through which Regency Realty Corporation ("Regency"),
a self-administered and self-managed real estate investment trust ("REIT")
conducts substantially all of its business and owns substantially all of its
assets. In 1993, Regency was formed for the purpose of managing, leasing,
brokering, acquiring, and developing shopping centers. The Partnership also
provides management, leasing, brokerage and development services for real estate
not owned by Regency (i.e., owned by third parties).
Of the 124 properties included in Regency's portfolio at June 30, 1998, 103
properties were owned either fee simple or through partnership interests by the
Partnership. At June 30, 1998, Regency had an investment in real estate, at
cost, of approximately $1.1 billion of which $891 million or 81% was owned by
the Partnership.
Shopping Center Business
The Partnership's principal business is owning, operating and developing grocery
anchored neighborhood infill shopping centers. Infill refers to shopping centers
within a targeted investment market offering sustainable competitive advantages
such as barriers to entry resulting from zoning restrictions, growth management
laws, or limited new competition from development or expansions. The
Partnership's properties summarized by state including their gross leasable
areas (GLA) follows:
<TABLE>
<CAPTION>
Location June 30, 1998 December 31, 1997
-------- ------------- -----------------
# Properties GLA % Leased # Properties GLA % Leased
----------- ----------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Florida 36 4,529,458 93.0% 35 4,168,458 93.5%
Georgia 25 2,538,711 91.3% 23 2,368,890 92.4%
North Carolina 12 1,241,784 97.2% 6 554,332 99.0%
Ohio 10 1,045,630 97.3% - - -
Texas 5 450,267 89.6% - - -
Colorado 5 451,949 81.1% - - -
Tennessee 4 295,257 93.7% 3 208,386 98.5%
Kentucky 1 205,060 96.1% - - -
South Carolina 1 79,723 95.0% 1 79,743 84.3%
Virginia 2 197,324 98.1% - - -
Michigan 1 85,478 99.0% - - -
Missouri 1 82,498 98.4% - - -
-------------- --------- ---------- ------------- ----------- ------------
Total 103 1,203,189 93.1 68 7,379,778 93.6%
============= ========= ========== ============= =========== ============
</TABLE>
The Partnership is focused on building a platform of grocery anchored
neighborhood shopping centers because grocery stores provide convenience
shopping of daily necessities, foot traffic for adjacent local tenants, and
should withstand adverse economic conditions. The Partnership's current
investment markets have continued to offer strong stable economies, and
accordingly, the Partnership expects to realize growth in net income as a result
of increasing occupancy in the portfolio, increasing rental rates, development
and acquisition of shopping centers in targeted markets, and redevelopment of
existing shopping centers. The following table summarizes the four largest
tenants occupying the Partnership's shopping centers:
Average
Grocery Anchor Number of % of % of Annual Remaining Lease
Stores Total GLA Base Rent Term
Kroger * 36 15.5% 15.5% 20 yrs
Publix 26 8.3% 6.3% 13 yrs
Winn Dixie 11 3.6% 2.7% 13 yrs
Blockbuster 29 1.3% 2.1% 4 yrs
*includes properties under development scheduled for opening in 1998
and 1999. Excluding development properties, Kroger would represent
12.3% of GLA and 11.8% of annual base rent.
Acquisition and Development of Shopping Centers
During the first six months of 1998, the Partnership acquired a total of 23
shopping centers for approximately $225.2 million (the "1998 Acquisitions"). In
January, 1998, the Partnership entered into an agreement to acquire the shopping
centers from various entities comprising the Midland Group ("Midland")
consisting of 21 shopping centers plus a development pipeline of 11 shopping
centers. Of the 32 centers to be acquired or developed, 31 are anchored by
Kroger, or its affiliate. Eight of the shopping centers included in the
development pipeline will be owned through a joint venture in which the
Partnership will own less than a 50% interest upon completion of construction
(the "JV Properties"). As of June 30, 1998, the Partnership has acquired all but
one of the shopping centers and all of the JV Properties. The Partnership's
investment in the properties acquired from Midland is $186.5 million at June 30,
1998. During 1998, 1999 and 2000, including all payments made to date, the
Partnership will pay approximately $213 million (including costs to be incurred
on propertied currently under construction) for the 32 properties, and in
addition may pay contingent consideration of $23 million, for the properties
through the issuance of units of RCLP, the payment of cash and the assumption of
debt.
The Partnership acquired 36 shopping centers during 1997 (the "1997
Acquisitions") for approximately $346.1 million. The 1997 Acquisitions include
the acquisition of 26 shopping centers from Branch Properties ("Branch") for
$232.4 million in March, 1997. The real estate acquired from Branch included
100% fee simple interests in 20 shopping centers, and also partnership interests
(ranging from 50% to 93%) in four partnerships with outside investors that owned
six shopping centers. The Partnership was also assigned the third party property
management contracts of Branch on approximately 3 million SF of shopping center
GLA that generate management fees and leasing commission revenues. Additional
Units and shares of common stock may be issued after the first, second and third
anniversaries of the closing with Branch (each an "Earn-Out Closing"), based on
the performance of the properties acquired. The formula for the earn-out
provides for calculating any increases in value on a property-by-property basis,
based on any increases in net income for the properties acquired, as of February
15 of the year of calculation. The earn-out is limited to 721,997 Units at the
first Earn-Out Closing and 1,020,061 Units for all Earn-Out Closings (including
the first Earn-Out Closing). During March, 1998, the Partnership issued 721,997
Units and shares valued at $18.2 million to the partners of Branch.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities was $26.7 million and $21.5 million
for the six months ended June 30, 1998 and 1997, respectively, and is the
primary source of funds to pay distributions on outstanding partnership Units
(which Regency uses to pay dividends on its common stock), maintain and operate
the shopping centers, and pay interest and scheduled principal reductions on
outstanding debt. Changes in net cash provided by operating activities is
further discussed below under results from operations. Net cash used in
investing activities was $113.5 million and $122.7 million, during 1998 and
1997, respectively, as discussed above in Acquisitions and Development of
Shopping Centers. Net cash provided by financing activities was $80.1 million
and 107.5 million during 1998 and 1997, respectively.
The Partnership paid distributions of $25.4 million and $13.7 million, during
1998 and 1997, respectively. In 1998, the Partnership increased its quarterly
distribution per Unit to $.44 per share vs. $.42 per share in 1997, had more
outstanding Units in 1998 vs. 1997; and accordingly, expects distributions paid
during 1998 to increase substantially over 1997.
The Partnership's total indebtedness at June 30, 1998 and 1997 was approximately
$314.2 million and $271.1 million, respectively, of which $211.8 million and
$120.4 million had fixed interest rates averaging 7.4% and 8.2 %, respectively.
The weighted average interest rate on total debt at June 30, 1998 and 1997 was
7.4% and 7.8% respectively. During 1998, the Partnership, as part of its
acquisition activities, assumed debt with a fair value of $104.8 million. The
cash portion of the purchase price for the 1998 and 1997 Acquisitions was
financed from the Partnership's line of credit (the "Line"). At June 30, 1998
and 1997, the balance of the Line was $89.7 million and $111.3 million,
respectively. The Line has a variable rate of interest currently equal to the
London Inter-bank Offered Rate ("LIBOR") plus 87.5 basis points.
In March, 1998, the Partnership entered into an agreement with the banks that
provide the Line to increase the unsecured commitment amount to $300 million,
provide for a $150 million competitive bid facility, and reduce the interest
rate on the line based upon achieving an investment grade rating. During the
first quarter of 1998, RCLP received investment grade ratings from Moody's of
Baa2, Duff and Phelps of BBB, and S&P of BBB-.
On June 29, 1998, the Partnership issued $80 million of 8.125% Series A
Cumulative Redeemable Preferred Units to an institutional investor in a private
placement. The issuance involved the sale of 1.6 million Preferred Units for
$50.00 per unit. The Preferred Units, which may be called at par on or after
June 25, 2003, have no stated maturity or mandatory redemption, and pay a
cumulative, quarterly dividend at an annualized rate of 8.125%. The Preferred
Units are not convertible into common stock of Regency. The net proceeds of the
offering were used to reduce the balance of the Line.
On July 17, 1998 the Partnership completed a $100 million private offering of
senior term notes at an effective interest rate of 7.17%. The Notes were priced
at 162.5 basis points over the current yield for seven year US Treasury Bonds.
The net proceeds of the offering were used to reduce the balance of the Line.
Regency qualifies and intends to continue to qualify as a REIT under the
Internal Revenue Code. As a REIT, Regency is allowed to reduce taxable income by
all or a portion of its distributions to stockholders. Since Regency's
distributions have exceeded it's taxable income, Regency has made no provision
for federal income taxes. While the Partnership intends to continue to pay
distributions such that Regency can continue to pay dividends to its
stockholders, the Partnership will reserve such amounts of cash flow as it
considers necessary for the proper maintenance and improvement of its real
estate, while still allowing Regency to maintain its qualification as a REIT.
The Partnership's real estate portfolio has grown substantially during 1998 as a
result of the acquisitions discussed above. The Partnership intends to continue
to acquire and develop shopping centers during 1998, and expects to meet the
related capital requirements from borrowings on the Line, and from additional
public equity and debt offerings. Because such acquisition and development
activities are discretionary in nature, they are not expected to burden the
Partnership's capital resources currently available for liquidity requirements.
The Partnership expects that cash provided by operating activities, unused
amounts available under the Line, and cash reserves are adequate to meet
liquidity requirements.
<PAGE>
Results from Operations
Comparison of the Six Months Ended June 30, 1998 to 1997
Revenues increased $19.3 million or 59% to $51.7 million in 1998. The increase
was due primarily to the 1998 Acquisitions and 1997 Acquisitions. At June 30,
1998, the real estate portfolio contained approximately 11.2 million SF, was
93.1% leased and had average rents of $9.45 per SF. Minimum rent increased $14.1
million or 61%, and recoveries from tenants increased $3.2 million or 63%.
Revenues from property management, leasing, brokerage, and development services
provided on properties not owned by the Partnership were $5.4 million in 1998
compared to $3.7 million in 1997, the increase due primarily to fees earned from
third party property management and leasing contracts acquired as part of the
acquisition of Branch. During 1998, the Company sold four office buildings and a
parcel of land for $30.6 million, and recognized a gain on the sale of $10.7
million. As a result of these transactions the Company's real estate portfolio
is comprised entirely of neighborhood shopping centers. The proceeds from the
sale were applied toward the purchase of the 1998 acquisitions.
Operating expenses increased $9.2 million or 53% to $26.8 million in 1998.
Combined operating and maintenance, and real estate taxes increased $3.6 million
or 50% during 1998 to $10.8 million. The increases are due to the 1998 and 1997
Acquisitions. General and administrative expenses increased 39% during 1998 to
$7.3 million due to the hiring of new employees and related office expenses
necessary to manage the shopping centers acquired during 1998 and 1997, as well
as, the shopping centers that the Partnership began managing for third parties
during 1997. Depreciation and amortization increased $3.6 million during 1998 or
70% primarily due to the 1998 and 1997 Acquisitions.
Interest expense increased to $9.2 million in 1998 from $7.6 million in 1997 or
21% due to increased average outstanding loan balances related to the financing
of the 1998 and 1997 Acquisitions on the Line and the assumption of debt.
Net income for common stockholders was $27.2 million in 1998 vs. $7.4 million in
1997, a $19.8 million or 269% increase for the reasons previously described.
Diluted earnings per unit in 1998 was $1.02 vs. $0.32 in 1997 due to the
increase in net income combined with the dilutive impact from the increase in
weighted average common units and equivalents of 9.5 million primarily due to
the acquisition of Branch and Midland, the issuance of units to SC-USREALTY
during 1997, and the public offering completed in July, 1997.
Comparison of the Three Months Ended June 30, 1998 to 1997
Revenues increased $8.5 million or 43% to $27.9 million in 1998. The increase
was due primarily to the 1998 Acquisitions and 1997 Acquisitions. Minimum rent
increased $6.0 million or 42%, and recoveries from tenants increased $1.7
million or 58%. Revenues from property management, leasing, brokerage, and
development services provided on properties not owned by the Partnership were
$2.9 million in 1998 compared to $2.0 million in 1997, the increase due
primarily to fees earned from third party property management and leasing
contracts acquired as part of the acquisition of Branch.
Operating expenses increased $3.8 million or 37% to $14.1 million in 1998.
Combined operating and maintenance, and real estate taxes increased $1.5 million
or 37% during 1998 to $5.6 million. The increases are due to the 1998 and 1997
Acquisitions. General and administrative expenses increased 28% during 1998 to
$3.8 million due to the hiring of new employees and related office expenses
necessary to manage the shopping centers acquired during 1998 and 1997, as well
as, the shopping centers that the Partnership began managing for third parties
during 1997. Depreciation and amortization increased $1.4 million during 1998 or
44% primarily due to the 1998 and 1997 Acquisitions.
Interest expense increased to $5.8 million in 1998 from $5.2 million in 1997 or
13% due to increased average outstanding loan balances related to the financing
of the 1998 and 1997 Acquisitions on the Line and the assumption of debt.
<PAGE>
New Accounting Standards and Accounting Changes
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130"),
which is effective for fiscal years beginning after December 15, 1997. FAS 130
establishes standards for reporting total comprehensive income in financial
statements, and requires that Companies explain the differences between total
comprehensive income and net income. Management has adopted this statement in
1998. No differences between total comprehensive income and net income existed
in the interim financial statements reported at June 30, 1998 and 1997.
The FASB issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131"), which is effective for fiscal years beginning after December 15, 1997.
FAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Management does not believe that FAS 131
will effect its current disclosures.
Effective March 19, 1998, the Emerging Issues Task Force (EITF) ruled in Issue
97-11, "Accounting for Internal Costs Relating to Real Estate Property
Acquisitions", that only internal costs of identifying and acquiring
non-operating properties that are directly identifiable with the acquired
properties should be capitalized, and that all internal costs associated with
identifying and acquiring operating properties should be expensed as incurred.
The Partnership had previously capitalized direct costs associated with the
acquisition of operating properties as a cost of the real estate. The
Partnership has adopted EITF 97-11 effective March 19, 1998. During 1997, the
Partnership capitalized approximately $1.5 million of internal costs related to
acquiring operating properties. Through the effective date of EITF 97-11, the
Partnership has capitalized $474,000 of internal acquisition costs. For the
remainder of 1998, the Partnership expects to incur $1.1 million internal costs
related to acquiring operating properties which will be expensed.
On May 22, 1998, the EITF reached a consensus on Issue 98-9 "Accounting for
Contingent Rent in Interim Financial Periods". The EITF has stated that lessors
should defer recognition of contingent rental income that is based on meeting
specified targets until those specified targets are met and not ratably
throughout the year. The Partnership has previously recognized contingent rental
income (i.e. percentage rent) ratably over the year based on the historical
trends of its tenants. The Partnership has adopted Issue 98-9 prospectively and
has ceased the recognition of contingent rents until such time as its tenants
have achieved its specified target. The Partnership believes this will effect
the interim period in which percentage rent is recognized, however it will not
have a material impact on the annual recognition of percentage rent.
Environmental Matters
The Partnership like others in the commercial real estate industry, is subject
to numerous environmental laws and regulations and the operation of dry cleaning
plants at the Partnership's shopping centers is the principal environmental
concern. The Partnership believes that the dry cleaners are operating in
accordance with current laws and regulations and has established procedures to
monitor their operations. Based on information presently available, no
additional environmental accruals were made and management believes that the
ultimate disposition of currently known matters will not have a material effect
on the financial position, liquidity, or operations of the Partnership.
Inflation
Inflation has remained relatively low during 1998 and 1997 and has had a minimal
impact on the operating performance of the shopping centers, however,
substantially all of the Partnership's long-term leases contain provisions
designed to mitigate the adverse impact of inflation. Such provisions include
clauses enabling the Partnership to receive percentage rentals based on tenants'
gross sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer price index or
similar inflation indices. In addition, many of the Partnership's leases are for
terms of less than ten years, which permits the Partnership to seek increased
rents upon re-rental at market rates. Most of the Partnership's leases require
the tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation.
Year 2000 System Compliance
The Partnership has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" problem and is in
process of resolving the issue. During 1997, the Partnership converted its
operating system, and its general accounting and lease administration software
systems to versions containing modifications that corrected for the Year 2000
problem. The Partnership will continue to assess its other internal systems and
reprogram or upgrade as necessary, however, the cost to convert remaining
systems is not expected to have a material effect on the Partnership's financial
position. The Partnership is also reviewing the Year 2000 system conversions of
other companies of which it does business in order to determine their
compliance.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
4. Instruments defining the rights of security holders, including indentures
Indenture dated as of July 20, 1998 among RCLP, the Guarantors named
therein and First Union National Bank, as trustee, incorporated by reference to
Exhibit 10.3 to the Regency Centers, L.P. Form 10 Registration Statement.
Material Contracts
Item 10. Material contracts
Purchase and Sale Agreement, dated March 10, 1998 between
Faison-Fleming Island Limited Partnership, a Florida limited
partnership, as Seller, and RRC Acquisitions, Two, Inc. a Florida
corporation, its designees, successors and assigns ("Buyer"), relating
to the acquisition of Fleming Island Shopping Center.
10.1
Exchange and Registration Rights Agreement dated as of July 15, 1998
among RCLP, the Guarantors named therein and the Purchasers named
therein, incorporated by reference to Exhibit 10.4 to the Partnership's
Form 10 Registration Statement.
Reports on Form 8-K:
A report on Form 8-K was filed on July 20, 1998 reporting
under Item 5. Acquisition of five shopping centers to include
audited financial statements and December 31, 1997 audited
financial statements for the Midland Group and pro forma
condensed consolidated financial statements of operations for
the three months ended March 31, 1998 and the year ended
December 31, 1997.
27. Financial Data Schedule
June 30, 1998
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 14, 1998 REGENCY CENTERS, L.P.
By: /s/ J. Christian Leavitt
Vice President, Treasurer
and Secretary
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 10th day of March, 1998, between
FAISON-FLEMING ISLAND LIMITED PARTNERSHIP, a Florida limited partnership
("Seller"), and RRC ACQUISITIONS TWO, INC., a Florida corporation, its
designees, successors and assigns ("Buyer").
Background
Buyer wishes to purchase a shopping center in the County of Clay, State
of Florida, owned by Seller, known as Fleming Island Shopping Center (the
"Shopping Center");
In consideration of the mutual agreements herein, and other good and
valuable consideration, the receipt of which is hereby acknowledged, Seller
agrees to sell and Buyer agrees to purchase the Property (as hereinafter
defined) on the following terms and conditions:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 Agreement means this instrument as it may be amended from time to
time.
1.2 Allocation Date means the close of business on the day immediately
prior to the Closing Date.
1.3 Audit Representation Letter means the form of Audit Representation
Letter attached hereto as Exhibit .
1.4 Buyer means the party identified as Buyer on the initial page
hereof.
1.5 Closing means generally the execution and delivery of those
documents and funds necessary to effect the sale of the Property by Seller to
Buyer.
1.6 Closing Date means the date on which the Closing occurs.
1.7 Contracts means all service contracts, agreements or other
instruments to be assigned by Seller to Buyer at Closing.
1.8 Day means a calendar day, whether or not the term is capitalized.
<PAGE>
1.9 Earnest Money Deposit means the deposit delivered by Buyer to
Escrow Agent under Section of this Agreement, together with the earnings
thereon, if any.
1.10 Environmental Claim means any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Material or actual or alleged Hazardous Material Activity, (c) from
any abatement, removal, remedial, corrective, or other response action in
connection with a Hazardous Material, Environmental Law or other order of a
governmental authority or (d) from any actual or alleged damage, injury, threat,
or harm to health, safety, natural resources, or the environment.
1.11 Environmental Law means any current legal requirement in effect at
the Closing Date pertaining to (a) the protection of health, safety, and the
indoor or outdoor environment, (b) the conservation, management, protection or
use of natural resources and wildlife, (c) the protection or use of source water
and groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material or (e) pollution (including any Release to air, land, surface
water, and groundwater); and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 USC ss.ss.9601 et
seq., Solid Waste Disposal Act, as amended by the Resource Conservation Act of
1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC ss.ss.6901 et
seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 USC ss.ss.1251 et seq., Clean Air Act of 1966, as amended, 42 USC
ss.ss.7401 et seq., Toxic Substances Control Act of 1976, 15 USC ss.ss.2601 et
seq., Hazardous Materials Transportation Act, 49 USC App. ss.ss.1801,
Occupational Safety and Health Act of 1970, as amended, 29 USC ss.ss.651 et
seq., Oil Pollution Act of 1990, 33 USC ss.ss.2701 et seq., Emergency Planning
and Community Right-to-Know Act of 1986, 42 USC App. ss.ss.11001 et seq.,
National Environmental Policy Act of 1969, 42 USC ss.ss.4321 et seq., Safe
Drinking Water Act of 1974, as amended by 42 USC ss.ss.300(f) et seq., and any
similar, implementing or successor law, any amendment, rule, regulation, order
or directive, issued thereunder.
1.12 Escrow Agent means Rogers, Towers, Bailey, Jones & Gay, Attorneys,
whose address is 1301 Riverplace Blvd., Suite 1500, Jacksonville, Florida 32207
(Fax 904/396-0663), or any successor Escrow Agent.
1.13 Governmental Approval means any permit, license, variance,
certificate, consent, letter, clearance, closure, exemption, decision, action or
approval of a governmental authority.
- 2 -
<PAGE>
1.14 Hazardous Material means any asbestos, petroleum, petroleum
product, drycleaning solvent or chemical, biological or medical waste, "sharps"
or any other hazardous or toxic substance as defined in or regulated by any
Environmental Law in effect at the pertinent date or dates.
1.15 Hazardous Material Activity means any activity, event, or
occurrence at or prior to the Closing Date involving a Hazardous Material,
including, without limitation, the manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation, handling or corrective or response
action to any Hazardous Material which is in violation of any Environmental Law.
1.16 Improvements means all buildings, structures or other improvements
situated on the Real Property.
1.17 Inspection Period means the period of time which expires at
midnight on April 20, 1998.
1.18 Leases means all leases and other occupancy agreements permitting
persons to lease or occupy all or a portion of the Property.
1.19 Materials means all plans, drawings, specifications, soil test
reports, environmental reports, market studies, surveys, and similar
documentation, if any, owned by or in the possession of Seller with respect to
the Property, Improvements and any proposed improvements to the Property, which
Seller may lawfully transfer to Buyer except that, as to financial and other
records, Materials shall include only photostatic copies.
1.20 Permitted Exceptions means only the following interests, liens and
encumbrances:
(a) Liens for ad valorem taxes not payable on or before Closing;
(b) Rights of tenants under Leases; and
(c) Other matters approved or deemed approved by Buyer to be
acceptable pursuant to the terms of this Agreement.
1.21 Personal Property means all (a) sprinkler, plumbing, heating,
air-conditioning, electric power or lighting, incinerating, ventilating and
cooling systems, with each of their respective appurtenant furnaces, boilers,
engines, motors, dynamos, radiators, pipes, wiring and other apparatus,
equipment and fixtures, elevators, partitions, fire prevention and extinguishing
systems located in or on the Improvements,
- 3 -
<PAGE>
(b) all Materials, and (c) all other personal property used in connection with
the Improvements, provided the same are now owned or are acquired by Seller
prior to the Closing.
1.22 Property means collectively the Real Property, the Improvements
and the Personal Property.
1.23 Prorated means the allocation of items of expense or income
between Buyer and Seller based upon that percentage of the time period as to
which such item of expense or income relates which has expired as of the date at
which the proration is to be made.
1.24 Purchase Price means the consideration agreed to be paid by Buyer
to Seller for the purchase of the Property as set forth in Section (subject to
adjustments as provided herein).
1.25 Real Property means the lands more particularly described on
Exhibit , together with all easements, licenses, privileges, rights of way and
other appurtenances pertaining to or accruing to the benefit of such lands.
1.26 Release means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the indoor or outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Hazardous Material at or
prior to the Closing Date.
1.27 Rent Roll means the list of Leases attached hereto as Exhibit ,
identifying with particularity the space leased by each tenant, the term
(including extension options), square footage and applicable rent, common area
maintenance, tax and other reimbursements, security deposits and similar data.
1.28 Seller means the party identified as Seller on the initial page
hereof.
1.29 Seller Financial Statements means the unaudited statements of
income and expenses, cash flows and changes in financial positions prepared by
Seller for the Property, as of and for the two (2) calendar years next preceding
the date of this Agreement and all monthly reports of income, expense and cash
flow prepared by Seller for the Property, which shall be consistent with past
practice, for any period beginning after the latest of such calendar years, and
ending prior to Closing.
1.30 Shopping Center means the Shopping Center identified on the
initial page hereof including the adjacent five acre parcel (excluding
outparcels M and K) and including Outparcel P/Q.
- 4 -
<PAGE>
1.31 Site Plan means the map or survey which is attached hereto as part
of Exhibit .
1.32 Survey means a map of a stake survey of the Real Property which
shall comply with Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, jointly established and adopted by ALTA and ACSM in 1992, and includes
items 1, 2, 3, 4, 6, 7, 8, 9, 10 and 11 of Table "A" thereof, which meets the
accuracy standards (as adopted by ALTA and ACSM and in effect on the date of the
Survey) of an urban survey, which is dated not earlier than thirty (30) days
prior to the Closing, and which is certified to Buyer, Seller, the Title
Insurance company providing Title Insurance to Buyer, and Buyer's lender, and
dated as of the date the Survey was made.
1.33 Surviving Mortgage means the Mortgage, Security Agreement,
Financing Statement and Assignment of Leases given by Faison to United of Omaha
Life Insurance Company, a Nebraska corporation, dated January 10, 1995 and
recorded in Official Records Book 1536, Page 1090 of the public records of Clay
County, Florida, which has an approximate principal balance of $________________
and bears interest at _____% per annum, amortizing over a period of _____ years.
To Seller's knowledge, the Surviving Mortgage is in good standing with no
defaults existing thereunder and no event has occurred which with the giving of
notice and passage of time would constitute in event of default thereunder.
Prior to the end of the Inspection Period, Seller will use reasonable efforts to
cause the holder of the Surviving Mortgage to execute and deliver to Buyer an
estoppel letter and certifying that as of a date which is no more than fifteen
(15) days prior to the Closing Date no default exists thereunder and further
certifying the principal balance due and the date of the next regular
installment. Seller agrees that the Surviving Mortgage will remain in good
standing without default until Closing.
1.34 Tenant Estoppel Letter means a letter or other certificate from a
tenant certifying as to certain matters regarding such tenant's Lease, in
substantially the same form as attached hereto as Exhibit , or in the case of
national or regional "credit" tenants identified as such on the Rent Roll, the
form customarily used by such tenant provided the information disclosed is
acceptable to Buyer.
1.35 Title Defect means any exception in the Title Insurance Commitment
or any matter disclosed by the Survey, other than a Permitted Exception.
1.36 Title Insurance means an ALTA Form B Owners Policy of Title
Insurance for the full Purchase Price insuring marketable title in Buyer in fee
simple, subject only to the Permitted Exceptions, issued by a title insurer
acceptable to Buyer.
- 5 -
<PAGE>
1.37 Title Insurance Commitment means a binder whereby the title
insurer agrees to issue the Title Insurance to Buyer.
1.38 Transaction Documents means this Agreement, the deed conveying the
Property, the assignment of leases, the bill of sale conveying the Personal
Property and all other documents required or appropriate in connection with the
transactions contemplated hereby.
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price; Payment.
(a) Purchase Price and Terms. The total Purchase Price for the
Property (subject to adjustment as provided herein) shall be $9,000,000.
The Purchase Price shall be payable as follows:
(1)Buyer will accept title subject to an existing mortgage (the
"Surviving Mortgage") with an approximate principal balance of $________________
and receive credit for the principal balance as partial payment of the Purchase
Price, and
(2) The balance of the Purchase Price shall be paid in cash at
Closing.
Buyer shall be responsible for obtaining the consent of the holder of the
Surviving Mortgage to the transfer of the Property to Buyer. Seller shall be
responsible for the payment of all costs incurred on account thereof including,
without limitation, fees charged by such lender, taxes and lender's attorneys
fees up to a cap of $5,000.00.
(b) Adjustments to the Purchase Price. The Purchase Price
shall be adjusted as of the Closing Date by:
(1) prorating the Closing year's real and tangible personal
property taxes as of the Allocation Date (if the amount of the current year's
property taxes are not available, such taxes will be prorated based upon the
prior year's assessment); taxes shall not be pro rated on space for which the
tenant is to either pay the real estate taxes directly or reimburse or pay
landlord after the date of closing.
(2) prorating as of the Allocation Date cash receipts and
expenditures for the Shopping Center and other items customarily prorated in
transactions of this sort; and
(3) subtracting the amount of security deposits, prepaid rents
from tenants under the Leases, and credit balances, if any, of any tenants.
Any rents,
- 6 -
<PAGE>
percentage rents or tenant reimbursements payable by tenants after the
Allocation Date but applicable to periods on or prior to the Allocation Date
shall be remitted to Seller by Buyer within thirty (30) days after receipt, less
any expenses of the Property incurred on or prior to the Allocation Date but
discovered by Buyer after Closing. Buyer shall have no obligation to collect
delinquencies, but should Buyer collect any delinquent rents or other sums which
cover periods prior to the Allocation Date and for which Seller have received no
proration or credit, Buyer shall remit same to Seller within thirty (30) days
after receipt, less any costs of collection. Buyer will not interfere in
Seller's efforts to collect sums due it prior to the Closing. Seller will remit
to Buyer promptly after receipt any rents, percentage rents or tenant
reimbursements received by Seller after Closing which are attributable to
periods occurring after the Allocation Date. Undesignated receipts after Closing
of either Buyer or Seller from tenants in the Shopping Center shall be applied
first to then current rents and reimbursements for such tenant(s), then to
delinquent rents and reimbursements attributable to post-Allocation Date
periods, and then to pre-Allocation Date periods.
2.2 Earnest Money Deposit. An Earnest Money Deposit in the amount of
$100,000 shall be delivered to Escrow Agent within three (3) days after the date
of execution by the last of Buyer or Seller to execute and transmit a copy of
this Agreement to the other. This Agreement may be terminated by Seller if the
Earnest Money Deposit is not received by Escrow Agent by such deadline. The
Earnest Money Deposit paid by Buyer shall be deposited by Escrow Agent in an
interest bearing account at First Union National Bank, and shall be held and
disbursed by Escrow Agent as specifically provided in this Agreement. The
Earnest Money Deposit shall be applied to the Purchase Price at the Closing.
2.3 Closing Costs.
(a) Seller shall pay:
(1) Documentary stamp and other transfer taxes imposed upon
the transactions contemplated hereby;
(2) Cost of the Survey;
(3) Cost of satisfying any liens on the Property;
(4) Cost of curing title defects and recording any curative title
documents;
(5) All broker's commissions, finders' fees and similar expenses
incurred by either party in connection with the sale of the Property, subject
however to Buyer's indemnity given in Section of this Agreement; and
- 7 -
<PAGE>
(6) Seller's attorneys' fees relating to the sale of
the Property.
(7) Costs incurred in connection with the Surviving Mortgage as
provided in Section .
(b) Buyer shall pay:
(1) Cost of Buyer's due diligence inspection;
(2) Costs of the Phase 1 environmental site assessment to be
obtained by Buyer;
(3) Cost of recording the deed;
(4) Buyer's attorneys' fees; and
(5) Cost of title insurance.
3. INSPECTION PERIOD AND CLOSING
3.1 Inspection Period.
(a) Buyer agrees that it will have the Inspection Period to
physically inspect the Property, review the economic data, underwrite the
tenants and review their Leases, and to otherwise conduct its due diligence
review of the Property and all books, records and accounts of Seller related
thereto. Buyer shall not enter upon the Property for inspection without prior
reasonable notice to Seller. Buyer hereby agrees to indemnify and hold Seller
harmless from any damages, liabilities or claims for property damage or personal
injury arising out of such inspection and investigation by Buyer or its agents
or independent contractors. Within the Inspection Period, Buyer may, in its sole
discretion and for any reason or no reason, elect to go forward with this
Agreement to closing, which election shall be made by notice to Seller given
within the Inspection Period. If such notice is not timely given, this Agreement
and all rights, duties and obligations of Buyer and Seller hereunder, except any
which expressly survive termination, shall terminate and Escrow Agent shall
forthwith return to Buyer the Earnest Money Deposit.
The Property is being sold in an "as is" condition and "with all
faults" as of the Effective Date of this Agreement and as of Closing. Except as
may be expressly set forth in this Agreement, no representations or warranties
have been made or are made and no responsibility has been or is assumed by
Seller or by any partner, officer, person, firm, agent or representative acting
or purporting to act on behalf of Seller as to the condition or repair of the
Property or the value, expense of operation, or income
- 8 -
<PAGE>
potential thereof or as to any other fact or condition which has or might affect
the Property or the condition, repair, value, expense of operation or
warranties, express or implied, as to the suitability or fitness of the Property
for Buyer's intended use of the Property. The parties agree that all
understandings and agreements heretofore made between them or their respective
agents or representatives are merged in this Agreement and the Exhibits hereto
annexed, which alone fully and completely express their agreement, and that this
Agreement has been entered into after full investigation, or with the parties
satisfied with the opportunity afforded for investigation, neither party relying
upon any statement or representation by the other unless such statement or
representation is specifically embodied in this Agreement or the Exhibits
annexed hereto. To the extent that Seller has provided to Buyer information from
any inspection, engineering or environmental reports concerning asbestos or
harmful or toxic substances, Seller makes no representations or warranties with
respect to the accuracy or completeness, methodology of preparation or otherwise
concerning asbestos or harmful or toxic substances, Seller makes no
representations or warranties with respect to the accuracy or completeness,
methodology of preparation or otherwise concerning the contents of such reports.
Buyer acknowledges that Seller has requested Buyer to inspect fully the Property
and investigate all matters relevant thereto and to rely solely upon the results
of Buyer's own inspections or other information obtained or otherwise available
to Buyer, rather than any information that may have been provided by Seller to
Buyer.
(b) Seller will promptly furnish or make available to Buyer
the documents enumerated on Exhibit attached hereto which are available to
Seller. Buyer, through its officers, employees and other authorized
representatives, shall have the right to reasonable access to the Property and
all income and expense, maintenance and tenant records of Seller related
thereto, including without limitation all Leases, at reasonable times and notice
during the Inspection Period for the purpose of inspecting the Property, taking
soil and ground water samples, conducting Hazardous Materials inspections,
reviewing the books and records of Seller concerning the Property and otherwise
conducting its due diligence review of the Property. Seller shall cooperate with
and assist Buyer in making such inspections. Seller shall give Buyer any
authorizations which may be required by Buyer in order to gain access to records
or other information pertaining to the Property or the use thereof maintained by
any governmental or quasi-governmental authority or organization. Buyer, for
itself and its agents, agrees not to, and has no authority to enter into any
contract with existing tenants without the written consent of Seller if such
contract would be binding upon Seller should this transaction fail to close.
Buyer shall have the right to have due diligence interviews and other
discussions or negotiations with tenants, provided Seller is notified in advance
of all such meetings and given the opportunity to be present at any meeting held
with a tenant or tenants.
- 9 -
<PAGE>
(c) Buyer, through its officers or other authorized
representatives, shall have the right to reasonable access to all Materials
(other than privileged or confidential litigation materials) for the purpose of
reviewing and copying the same.
3.2 Hazardous Material. Prior to the end of the Inspection Period Buyer
may order environmental assessments of the Property. A copy of any assessment
report, if made, shall be furnished by Buyer to Seller promptly upon its
completion. If an assessment report discloses the existence of any Hazardous
Material or any other matters concerning the environmental condition of the
Property or its environs, Buyer may notify Seller in writing, within ten (10)
business days after receipt of the assessment report that it elects to terminate
this Agreement, whereupon this Agreement shall terminate and Escrow Agent shall
return to Buyer its Earnest Money Deposit.
3.3 Time and Place of Closing. Unless otherwise agreed by the parties,
the Closing shall take place by express courier at the offices of the title
agent issuing the title insurance commitment at 10:00 A.M. on the date which is
the tenth (10th) day following the expiration of the Inspection Period, provided
that Buyer may designate an earlier date for Closing.
4. WARRANTIES, REPRESENTATIONS AND COVENANTS OF SELLER
Seller warrants and represents as follows as of the date of this
Agreement and as of the Closing and where indicated covenants and agrees as
follows:
4.1 Organization; Authority. Seller is duly organized, validly existing
and in good standing under the laws of the state of its organization and the
state in which the Shopping Center is located, and has full power and authority
to enter into and perform this Agreement in accordance with its terms, and the
persons executing this Agreement and other Transaction Documents have been duly
authorized to do so on behalf of Seller. Seller is not a "foreign person" under
Sections 1445 or 897 of the Internal Revenue Code nor is this transaction
subject to any withholding under any state or federal law.
4.2 Authorization; Validity. The execution and delivery of this
Agreement by Seller and Seller's consummation of the transactions contemplated
by this Agreement have been duly and validly authorized. This Agreement
constitutes a legal, valid and binding agreement of Seller enforceable against
it in accordance with its terms.
4.3 Title. Seller is the owner of the Property.
4.4 Commissions. Seller has neither dealt with nor does it have any
knowledge of any broker or other party who has or may have any claim against
Seller,
- 10 -
<PAGE>
Buyer or the Property for a brokerage commission or finder's fee or like payment
arising out of or in connection with the transaction provided herein. Seller
agrees to indemnify Buyer from any such claim arising by, through or under
Seller, including without limitation any claim that may be asserted against
Buyer or the Property by Delta Shamrock Enterprises, Inc. or any of its
officers.
4.5 Sale Agreements. The Property is not subject to any outstanding
agreement(s) of sale, option(s), or other right(s) of third parties to acquire
any interest therein, except for Permitted Exceptions, this Agreement and the
Faison Contract.
4.6 Litigation. To the best of Seller's knowledge, there is no
litigation or proceeding pending or threatened against Seller relating to the
Property.
4.7 Leases. There are no Leases affecting the Property, oral or
written, except as listed on the Rent Roll, and any Leases or modifications
entered into between the date of this Agreement and the Closing Date with the
consent of Buyer. Copies of the Leases, which have been delivered to Buyer or
shall be delivered to Buyer within five (5) days from the date hereof, are, to
the best knowledge of Seller, true, correct and complete copies thereof, subject
to the matters set forth on the Rent Roll. Between April 15, 1998 and the
Closing Date, Seller will not terminate or modify existing Leases or enter into
any new Leases without the consent of Buyer which Buyer agrees not to
unreasonably withhold. All of the Property's tenant leases are in good standing
and to the best of Seller's knowledge no defaults exist thereunder except as
noted on the Rent Roll. No rent or reimbursement has been paid more than one (1)
month in advance and no security deposit has been paid, except as stated on the
Rent Roll. No tenants under the Leases are entitled to interest on any security
deposits. No tenant under any Lease has or will be promised any inducement,
concession or consideration by Seller other than as expressly stated in such
Lease, and except as stated therein there are and will be no side agreements
between Seller and any tenant.
4.8 Financial Statements. Seller covenants to furnish promptly to Buyer
copies of the income and expense accounts together with unaudited updated
monthly reports of cash flow for interim periods beginning after December 31,
1997. Buyer and its independent certified accountants shall be given access to
Seller's books and records at any time prior to and for six (6) months following
Closing upon reasonable advance notice in order that they may verify the
financial statements. Buyer agrees to reimburse Seller for any reasonable and
direct costs incurred by Seller on account of any audit performed by Buyer or
Buyer's representatives after Closing. Seller agrees to execute and deliver to
Buyer or its accountants the Audit Representation Letter should Buyer's
accountants audit the records of the Shopping Center.
4.9 Contracts. Except for Leases, Permitted Exceptions, and as may be set
forth in the schedule of service contracts attached hereto as Exhibit 4.9,
there are no
- 11 -
<PAGE>
management, service, maintenance, utility or other contracts or agreements
affecting the Property, oral or written, which extend beyond the Closing Date
and which would bind Buyer or encumber the Property, at Buyer's option, more
than thirty (30) days after Closing.
4.10 Permits and Zoning. To the best knowledge of Seller, there are no
material permits and licenses (collectively referred to as "Permits") required
to be issued to Seller or to Faison by any governmental body, agency or
department having jurisdiction over the Property which materially affect the
ownership or the use thereof which have not been issued.
4.11 Rent Roll; Tenant Estoppel Letters. The Rent Roll is true and
correct in all respects. Buyer agrees to accept Seller's existing local Tenant
Estoppel Letters (not including Publix) from the Tenants under Leases which are
annexed hereto as Composite Exhibit 4.11, together with a certificate from
Seller that there have been no material changes in the terms and status of the
leases.
4.12 Condemnation. Neither the whole nor any portion of the Property,
including access thereto or any easement benefitting the Property, is subject to
temporary requisition of use by any governmental authority or has been
condemned, or taken in any proceeding similar to a condemnation proceeding, nor
is there now pending any condemnation, expropriation, requisition or similar
proceeding against the Property or any portion thereof. Seller has received no
notice nor has any knowledge that any such proceeding is contemplated.
4.13 Governmental Matters. Seller has not entered into any commitments
or agreements with any governmental authorities or agencies affecting the
Property that have not been disclosed in writing to Buyer or which are not
available to Buyer by an examination of the records of such authorities or
agencies having jurisdiction over the Property and Seller has received no
notices from any such governmental authorities or agencies of uncured violations
at the Property of building, fire, air pollution or zoning codes, rules,
ordinances or regulations, environmental and hazardous substances laws, or other
rules, ordinances or regulations relating to the Property. Seller shall be
responsible for the remittance of all sales tax for periods occurring prior to
the Allocation Date directly to the appropriate state department of revenue.
4.14 Repairs. Seller has received no notice of any requirements or
recommendations by any lender, insurance companies, or governmental body or
agencies requiring or recommending any repairs or work to be done on the
Property which have not already been completed.
4.15 Consents and Approvals; No Violation. Neither the execution and delivery
of this Agreement by Seller nor the consummation by Seller of the transactions
- 12 -
<PAGE>
contemplated hereby will (a) require Seller to file or register with, notify, or
obtain any permit, authorization, consent, or approval of, any governmental or
regulatory authority; (b) conflict with or breach any provision of the
organizational documents of Seller; (c) violate or breach any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Seller is a party, or by which
Seller, the Property or any of Seller's material assets may be bound; or (d)
violate any order, writ, injunction, decree, judgment, statute, law or ruling of
any court or governmental authority applicable to Seller, the Property or any of
Seller's material assets.
4.1 Environmental Matters. Seller represents and warrants as of the date
hereof and as of the Closing that:
(a) Seller has not, and has no knowledge of any other person
who has, caused any Release, threatened Release, or disposal of any Hazardous
Material at the Property in any material quantity; and
(b) The Property does not now contain and to the best of
Seller's knowledge has not contained any: (a) underground storage tank, (b)
material amounts of asbestos-containing building material, (c) landfills or
dumps, (d) drycleaning plant or other facility using drycleaning solvents; or
(e) hazardous waste management facility as defined pursuant to the Resource
Conservation and Recovery Act ("RCRA") or any comparable state law. The Property
is not a site on or nominated for the National Priority List promulgated
pursuant to Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") or any state remedial priority list promulgated or published pursuant
to any comparable state law; and
4.17 No Untrue Statement. Neither this Agreement nor any exhibit nor
any written statement or Transaction Document furnished or to be furnished by
Seller to Buyer in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
5. WARRANTIES, REPRESENTATIONS AND COVENANTS OF BUYER
Buyer hereby warrants and represents as of the date of this Agreement
and as of the Closing and where indicated covenants and agrees as follows:
5.1 Organization; Authority. Buyer is a corporation duly organized,
validly existing and in good standing under laws of Florida and has full power
and authority
- 13 -
<PAGE>
to enter into and perform this Agreement in accordance with its terms, and the
persons executing this Agreement and other Transaction Documents on behalf of
Buyer have been duly authorized to do so.
5.2 Authorization; Validity. The execution, delivery and performance of
this Agreement and the other Transaction Documents have been duly and validly
authorized by the Board of Directors of Buyer. This Agreement has been duly and
validly executed and delivered by Buyer and (assuming the valid execution and
delivery of this Agreement by Seller) constitutes a legal, valid and binding
agreement of Buyer enforceable against it in accordance with its terms.
5.3 Commissions. Buyer has neither dealt with nor does it have any
knowledge of any broker or other party who has or may have any claim against
Buyer or Seller for a brokerage commission or finder's fee or like payment
arising out of or in connection with the transaction provided herein. Buyer
agrees to indemnify Seller from any other such claim arising by, through or
under Buyer.
6. POSSESSION; RISK OF LOSS
6.1 Possession. Possession of the Property will be transferred to Buyer
at the conclusion of the Closing.
6.2 Risk of Loss. All risk of loss to the Property shall remain upon
Seller until the conclusion of the Closing. If, before the possession of the
Property has been transferred to Buyer, any material portion of the Property is
damaged by fire or other casualty and will not be restored by the Closing Date
or if any material portion of the Property is taken by eminent domain or there
is a material obstruction of access to the Improvements by virtue of a taking by
eminent domain, Seller shall, within ten (10) days of such damage or taking,
notify Buyer thereof and Buyer shall have the option to:
(a) terminate this Agreement upon notice to Seller given
within ten (10) business days after such notice from Seller, in which case Buyer
shall receive a return of its Earnest Money Deposit; or
(b) proceed with the purchase of the Property, in which event
Seller shall assign to Buyer all Seller's right, title and interest in all
amounts due or collected by Seller under the insurance policies or as
condemnation awards. In such event, the Purchase Price shall be reduced by the
amount of any insurance deductible to the extent it reduced the insurance
proceeds payable.
- 14 -
<PAGE>
7. TITLE MATTERS
7.1 Title.
(a) Title Insurance and Survey. Prior to the end of the
Inspection Period Buyer's counsel shall order the Title Insurance Commitment and
a Survey (Seller agreeing to furnish to Buyer copies of any existing surveys and
title information in its possession promptly after execution of this Agreement
including the title commitment and survey furnished by Faison under the Faison
Contract). The title evidence will also include copies of restrictive covenants
imposed on lands lying between the Shopping Center and US Highway 17. Buyer will
have ten (10) days from receipt of the Title Commitment (including legible
copies of all recorded exceptions noted therein) and Survey to notify Seller in
writing of any Title Defects, encroachments or other matters (including the said
restrictive covenants) not acceptable to Buyer. Any Title Defect or other
objection disclosed by the Title Insurance Commitment (other than liens
removable by the payment of money) or the Survey which is not timely specified
in Buyer's written notice to Seller of Title Defects shall be deemed a Permitted
Exception. Seller shall notify Buyer in writing within five (5) days of Buyer's
notice if Seller intends to cure any Title Defect or other objection. If Seller
elects to cure, Seller shall use diligent efforts to cure the Title Defects
and/or objections by the Closing Date (as it may be extended with Seller's and
Buyer's agreement). If Seller elects not to cure or if such Title Defects and/or
objections are not cured, Buyer shall have the right, in lieu of any other
remedies, to: (i) refuse to purchase the Property, terminate this Agreement and
receive a return of the Earnest Money Deposit; or (ii) waive such Title Defects
and/or objections and close the purchase of the Property subject to such Title
Defects.
(b) Miscellaneous Title Matters. If a search of the title
discloses judgments, bankruptcies or other returns against other persons having
names the same as or similar to that of Seller, Seller shall on request deliver
to Buyer an affidavit stating, if true, that such judgments, bankruptcies or the
returns are not against Seller. Seller further agrees to execute and deliver to
the Title Insurance agent at Closing such documentation, if any, as the Title
Insurance underwriter shall reasonably require to evidence that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized and that there are no mechanics'
liens on the Property or parties in possession of the Property other than
tenants under Leases and Seller.
- 15 -
<PAGE>
8. CONDITIONS PRECEDENT
8.1 Conditions Precedent to Buyer's Obligations. The obligations of
Buyer under this Agreement are subject to satisfaction or waiver by Buyer of
each of the following conditions or requirements on or before the Closing Date:
(a) Seller's warranties and representations under this
Agreement shall be true and correct as of the Closing Date, and Seller shall not
be in default hereunder.
(b) All obligations of Seller contained in this Agreement,
shall have been fully performed in all material respects and neither Seller nor
Faison shall be in default under any covenant, restriction, right-of-way or
easement affecting the Property.
(c) A Title Insurance Commitment in the full amount of the
Purchase Price shall have been issued and "marked down" through Closing, subject
only to Permitted Exceptions.
(d) The physical and environmental condition of the Property
shall be unchanged from the date of this Agreement, ordinary wear and tear
excepted.
(e) Seller shall have delivered to Buyer the following in form
reasonably satisfactory to Buyer:
(f) A special warranty deed in proper form for recording, duly
executed and acknowledged so as to convey to Buyer the fee simple title to the
Property, subject only to the Permitted Exceptions;
(1) Originals, if available, or if not, true copies of the Leases and
of the contracts, agreements, permits and licenses, and such Materials as may
be in
the possession or control of Seller;
(2) A blanket assignment to Buyer of all Leases and the
contracts, agreements, permits and licenses (to the extent assignable) as they
affect the Property, including an indemnity against breach of such instruments
by Seller prior to the Closing Date
(3) A bill of sale with respect to the Personal Property and
Materials;
(4) The Survey;
- 16 -
<PAGE>
(5) A current rent roll for all Leases in effect showing no
changes from the rent roll in effect on April 15, 1998 other than those set
forth in the Leases or approved in writing by Buyer;
(6) All Tenant Estoppel Letters by Seller pursuant to the terms
of this Agreement which must include Publix and eighty percent (80%) (which 80%
includes the tenant estoppel letters or certificates attached hereto as
composite Exhibit 4.11) of the other tenants who have signed leases for any
portion of the Property, without any material exceptions, covenants, or changes
to the form approved by Buyer and distributed to the tenants by Seller, the
substance of which Tenant Estoppel Letters must be acceptable to Buyer in all
respects;
(7) A general assignment of all assignable existing warranties
relating to the Property, provided any cost to transfer such warranty shall be
Buyer's expense;
(8) An owner's affidavit, non-foreign affidavits, non-tax
withholding certificates and such other documents as may reasonably be required
by Buyer or its counsel in order to effectuate the provisions of this Agreement
and the transactions contemplated herein;
(9) The originals or copies of any real and tangible personal
property tax bills for the Property for the tax year of Closing and the previous
year, and, if requested, the originals or copies of any current water, sewer and
utility bills which are in Seller's custody or control;
(10) Resolutions of Seller authorizing the transactions described
herein;
(11) All keys and other means of access to the Improvements in
the possession of Seller or its agents;
(12) Materials; and
(13) Such other documents as Buyer may reasonably request to
effect the transactions contemplated by this Agreement.
In the event that all of the foregoing provisions of this Section are
not satisfied, then Buyer, at its sole and exclusive remedy, may either waive
such condition and close or elect in writing to terminate this Agreement,
whereupon the Earnest
- 17 -
<PAGE>
Money Deposit shall be promptly delivered to Buyer by Escrow Agent and, upon the
making of such delivery, neither party shall have any further claim against the
other by reasons of this Agreement, except as provided in Article .
8.2 Conditions Precedent to Seller's Obligations. The obligations of
Seller under this Agreement are subject to satisfaction or waiver by Seller of
each of the following conditions or requirements on or before the Closing date:
(a) Buyer's warranties and representations under this
Agreement shall be true and correct as of the Closing Date, and Buyer shall not
be in default hereunder.
(b) All of the obligations of Buyer contained in this
Agreement shall have been fully performed by or on the date of Closing in
compliance with the terms and provisions of this Agreement.
(c) Buyer shall have delivered to Seller at or prior to the
Closing the following, which shall be reasonably satisfactory to Seller:
(1) Delivery and/or payment of the balance of the Purchase
Price in accordance with Section at Closing;
(2) An assumption of the leases, contracts, agreements, permits,
licenses by Buyer in a manner acceptable to Seller, including an indemnity
against breach of such instruments by Buyer subsequent to the Closing Date;
(3) Seller's full and complete release from the Surviving
Mortgage; and
(4) Such other documents as Seller may reasonably request to
effect the transactions contemplated by this Agreement.
In the event that all conditions precedent to Buyer's obligation to
purchase shall have been satisfied but the foregoing provisions of this Section
have not, and Seller elects in writing to terminate this Agreement, then the
Earnest Money Deposit shall be promptly delivered to Seller by Escrow Agent and,
upon the making of such delivery, neither party shall have any further claim
against the other by reasons of this Agreement, except as provided in Article .
8.3 Best Efforts. Each of the parties hereto agrees to use reasonable
best efforts to take or cause to be taken all actions necessary, proper or
advisable to consummate the transactions contemplated by this Agreement.
- 18 -
<PAGE>
9. PRE-CLOSING BREACH; REMEDIES
9.1 Breach by Seller. In the event of a breach of Seller's covenants or
warranties herein and failure by Seller to cure such breach within the time
provided for Closing, Buyer may, at Buyer's election (i) terminate this
Agreement and receive a return of the Earnest Money Deposit, and the parties
shall have no further rights or obligations under this Agreement (except as
survive termination); (ii) enforce this Agreement by suit for specific
performance; or (iii) waive such breach and close the purchase contemplated
hereby, notwithstanding such breach.
9.2 Breach by Buyer. In the event of a breach of Buyer's covenants or
warranties herein and failure of Buyer to cure such breach within the time
provided for Closing, Seller's sole remedy shall be to terminate this Agreement
and retain Buyer's Earnest Money Deposit as agreed liquidated damages for such
breach, and upon payment in full to Seller of such amounts, the parties shall
have no further rights, claims, liabilities or obligations under this Agreement
(except as survive termination).
10. MISCELLANEOUS
10.1 Radon Gas. Radon is a naturally occurring radioactive gas which,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon which
exceed federal and state guidelines have been found in buildings in the state in
which the Property is located. Additional information regarding radon and radon
testing may be obtained from the county public health unit.
10.2 Entire Agreement. This Agreement, together with the exhibits
attached hereto, constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and may not be modified, amended or
otherwise changed in any manner except by a writing executed by Buyer and
Seller.
10.3 Notices. All written notices and demands of any kind which either
party may be required or may desire to serve upon the other party in connection
with this Agreement shall be served by personal delivery, certified or overnight
mail, reputable overnight courier service or facsimile (followed promptly by
hard copy) at the addresses set forth below:
- 19 -
<PAGE>
As to Seller: c/o Faison & Associates
Attention: David Lampke
1900 Interstate Tower
121 Trade Street
Charlotte, North Carolina 28202-5519
Facsimile: 1-704-331-2500
With a copy to: Steel Hector & Davis, LLP
Attention: Michael E. Botos, Esq.
777 South Flagler Drive
Suite 1900 West
West Palm Beach, Florida 33401-6198
As to Buyer: RRC Acquisitions Two, Inc.
Attention: Robert L. Miller
Suite 200, 121 W. Forsyth St.
Jacksonville, Florida 32202
Facsimile: (904) 634-3428
With a copy to: Rogers, Towers, Bailey, Jones & Gay
Attention: William E. Scheu, Esq.
1301 Riverplace Blvd., Suite 1500
Jacksonville, Florida 32207
Facsimile: (904) 396-0663
Any notice or demand so served shall constitute proper notice hereunder upon
delivery to the United States Postal Service or to such overnight courier. A
party may change its notice address by notice given in the aforesaid manner.
10.4 Headings. The titles and headings of the various sections hereof
are intended solely for means of reference and are not intended for any purpose
whatsoever to modify, explain or place any construction on any of the provisions
of this Agreement.
10.5 Validity. If any of the provisions of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement by the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable shall not be affected thereby,
and every provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10.6 Attorneys' Fees. In the event of any litigation between the parties
hereto to enforce any of the provisions of this Agreement or any right of
either party hereto,
- 20 -
<PAGE>
the unsuccessful party to such litigation agrees to pay to the successful party
all costs and expenses, including reasonable attorneys' fees, whether or not
incurred in trial or on appeal, incurred therein by the successful party, all of
which may be included in and as a part of the judgment rendered in such
litigation. Any indemnity provisions herein shall include indemnification for
reasonable attorneys' fees and costs, whether or not suit be brought and
including fees and costs on appeal.
10.7 Time of Essence. Time is of the essence of this Agreement.
10.8 Governing Law. This Agreement shall be governed by the laws of the
state in which the Property is located, and the parties hereto agree that any
litigation between the parties hereto relating to this Agreement shall take
place (unless otherwise required by law) in a court located in the county in
which Escrow Agent's principal place of business is located. Each party waives
its right to jurisdiction or venue in any other location.
10.9 Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. No third parties, including any brokers or
creditors, shall be beneficiaries hereof.
10.10 Exhibits. All exhibits attached hereto are incorporated herein by
reference to the same extent as though such exhibits were included in the body
of this Agreement verbatim.
10.11 Gender; Plural; Singular; Terms. A reference in this Agreement to
any gender, masculine, feminine or neuter, shall be deemed a reference to the
other, and the singular shall be deemed to include the plural and vice versa,
unless the context otherwise requires. The terms "herein," "hereof,"
"hereunder," and other words of a similar nature mean and refer to this
Agreement as a whole and not merely to the specified section or clause in which
the respective word appears unless expressly so stated.
10.12 Further Instruments, Etc. This Agreement may be executed in
counterparts and when so executed shall be deemed executed as one agreement.
Seller and Buyer shall execute any and all documents and perform any and all
acts reasonably necessary to fully implement this Agreement.
10.13 Survival. The obligations of Seller and Buyer intended to be
performed after the Closing shall survive the closing for a period of one (1)
year and then terminate.
- 21 -
<PAGE>
10.14 No Recording. Neither this Agreement nor any notice, memorandum or
other notice or document relating hereto shall be recorded.
THE CROSSINGS AT FLEMING ISLAND COMMUNITY DEVELOPMENT DISTRICT IMPOSES
TAXES OR ASSESSMENTS, OR BOTH TAXES AND ASSESSMENTS, ON THE PROPERTY
THROUGH A SPECIAL TAXING DISTRICT. THESE TAXES AND ASSESSMENTS PAY THE
CONSTRUCTION, OPERATION AND MAINTENANCE COSTS OF CERTAIN PUBLIC
FACILITIES OF THE DISTRICT AND ARE SET ANNUALLY BY THE GOVERNING BOARD
BY THE DISTRICT. THESE TAXES AND ASSESSMENTS ARE IN ADDITION TO COUNTY
AND ALL OTHER TAXES AND ASSESSMENTS PROVIDED BY LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Witnesses: RRC ACQUISITIONS TWO, INC.,
a Florida corporation
___________________________________ By:________________________________________
Name:_____________________________ Name:_________________________________
Title:__________________________________
- -----------------------------------
Name:_____________________________ Date: ______________________________, 1998
Tax Identification No.: 59-3478325
"BUYER"
- 22 -
<PAGE>
FAISON-FLEMING ISLAND LIMITED
PARTNERSHIP
By: FCD-Fleming Island Limited Partnership,
its sole general partner
By: Faison Capital Development, Inc.,
its sole general partner
___________________________________ By:________________________________________
Name:_____________________________ Name:_________________________________
Title:__________________________________
- -----------------------------------
Name:_____________________________ Date: ______________________________, 1998
Tax Identification No.: ______________________
"SELLER"
- 23 -
<PAGE>
JOINDER OF ESCROW AGENT
1. Duties. Escrow Agent joins herein for the purpose of agreeing to
comply with the terms hereof insofar as they apply to Escrow Agent. Escrow Agent
shall receive and hold the Earnest Money Deposit in trust, to be disposed of in
accordance with the provisions of this joinder and the foregoing Agreement. The
Earnest Money Deposit shall be invested by Escrow Agent in an interest bearing
account at First Union National Bank.
2. Indemnity. Escrow Agent shall not be liable to either party except
for claims resulting from the gross negligence or willful misconduct of Escrow
Agent. If the escrow is involved in any controversy or litigation, the parties
hereto shall jointly and severally indemnify and hold Escrow Agent free and
harmless from and against any and all loss, cost, damage, liability or expense,
including costs of reasonable attorneys' fees to which Escrow Agent may be put
or which may incur by reason of or in connection with such controversy or
litigation, except to the extent it is finally determined that such controversy
or litigation resulted from Escrow Agent's gross negligence or willful
misconduct. If the indemnity amounts payable hereunder result from the fault of
Buyer or Seller (or their respective agents), the party at fault shall pay, and
hold the other party harmless against, such amounts.
3. Conflicting Demands. If conflicting demands are made upon Escrow
Agent or Escrow Agent is uncertain with respect to the escrow, the parties
hereto expressly agree that Escrow Agent shall have the absolute right to do
either or both of the following: (i) withhold and stop all proceedings in
performance of this escrow and await settlement of the controversy by final
appropriate legal proceedings or otherwise as it may require; or (ii) file suit
for declaratory relief and/or interpleader and obtain an order from the court
requiring the parties to interplead and litigate in such court their several
claims and rights between themselves. Upon the filing of any such declaratory
relief or interpleader suit and tender of the Earnest Money Deposit to the
court, Escrow Agent shall thereupon be fully released and discharged from any
and all obligations to further perform the duties or obligations imposed upon
it. Buyer and Seller agree to respond promptly in writing to any request by
Escrow Agent for clarification, consent or instructions. Any action proposed to
be taken by Escrow Agent for which approval of Buyer and/or Seller is requested
shall be considered approved if Escrow Agent does not receive written notice of
disapproval within five (5) business days after a written request for approval
is received by the party whose approval is being requested. Escrow Agent shall
not be required to take any action for which approval of Buyer and/or Seller has
been sought unless such approval has been received. No disbursements shall be
made, other than as provided in Sections and of the foregoing Agreement, or to a
court in an interpleader action, unless Escrow Agent shall have given written
notice of the proposed disbursement to Buyer and Seller and
- 24 -
<PAGE>
neither Buyer nor Seller shall have delivered any written objection to the
disbursement within five (5) business days after receipt of Escrow Agent's
notice. No notice by Buyer or Seller to Escrow Agent of disapproval of a
proposed action shall affect the right of Escrow Agent to take any action as to
which such approval is not required.
4. Continuing Counsel. Seller acknowledges that Escrow Agent is counsel
to Buyer herein and Seller agrees that in the event of a dispute hereunder or
otherwise between Seller and Buyer, Escrow Agent may continue to represent Buyer
notwithstanding that it is acting and will continue to act as Escrow Agent
hereunder, it being acknowledged by all parties that Escrow Agent's duties
hereunder are ministerial in nature.
5. Tax Identification. Seller and Buyer shall provide to Escrow Agent
appropriate Federal tax identification numbers.
ROGERS, TOWERS, BAILEY, JONES & GAY, P.A.
By:______________________________________
Its Authorized Agent
Date: ______________________________, 1998
"ESCROW AGENT"
- 25 -
<PAGE>
EXHIBIT
Audit Representation Letter
--------------------------
(Acquisition Completion Date)
KPMG Peat Marwick LLP
Suite 2700
One Independent Drive
Jacksonville, Florida 32202
Dear Sirs:
We are writing at your request to confirm our understanding that your
audit of the Statement of Revenue and Certain Expenses for the twelve months
ended ________________, was made for the purpose of expressing an opinion as to
whether the statement presents fairly, in all material respects, the results of
its operations in conformity with generally accepted accounting principles. In
connection with your audit we confirm, to the best of our knowledge and belief,
the following representations made to you during your audit:
1. We have made available to you all financial records and related data
for the period under audit.
2. There have been no undisclosed:
a. Irregularities involving any member of management or
employees who have significant roles in the internal control structure.
b. Irregularities involving other persons that could have a
material effect on the Statement of Revenue and Certain Expenses.
c. Violations or possible violations of laws or regulations,
the effects of which should be considered for disclosure in the Statement of
Revenue and Certain Expenses.
3. There are no undisclosed:
a. Unasserted claims or assessments that our lawyers have
advised us are probable of assertion and must be disclosed in accordance with
Statement of Financial Accounting Standards No. 5 (SFAS No. 5).
<PAGE>
b. Material gain or loss contingencies (including oral and
written guarantees) that are required to be accrued or disclosed by SFAS No. 5.
c. Material transactions that have not been properly recorded
in the accounting records underlying the Statement of Revenue and Certain
Expenses.
d. Material undisclosed related party transactions and related
amounts receivable or payable, including sales, purchases, loans, transfers,
leasing arrangements, and guarantees.
e. Events that have occurred subsequent to the balance sheet
date that would require adjustment to or disclosure in the Statement of Revenue
and Certain Expenses.
4. All aspects of contractual agreements that would have a material
effect on the Statement of Revenue and Certain Expenses have been complied with.
Further, we acknowledge that we are responsible for the fair
presentation of the Statements of Revenue and Certain Expenses prepared in
conformity with generally accepted accounting principles.
Very truly yours,
"Seller/Manager"
Name
Title
<PAGE>
EXHIBIT
Legal Description of Real Property
<PAGE>
EXHIBIT
Rent Roll
<PAGE>
EXHIBIT
Form of Estoppel Letter
_____________________, 199_
RRC Acquisitions Two, Inc.
Regency Centers, Inc.
121 W. Forsyth St., Suite 200
Jacksonville, Florida 32202
RE: ___________________________ (Name of Shopping Center)
Ladies and Gentlemen:
The undersigned (Tenant) has been advised you may purchase the above
Shopping Center, and we hereby confirm to you that:
1. The undersigned is the Tenant of ___________________________,
Landlord, in the above Shopping Center, and is currently in
possession and paying rent on premises known as Store No.
_______________ [or Address
----------------------------------------------------------------],
and containing approximately _____________ square feet, under
the terms of the lease dated ______________________, which has
(not) been amended by amendment dated ________________________
(the "Lease"). There are no other written or oral agreements
between Tenant and Landlord. Tenant neither expects nor has
been promised any inducement, concession or consideration for
entering into the Lease, except as stated therein, and there
are no side agreements or understandings between Landlord and
Tenant.
2. The term of the Lease commenced on ____________________,
expiring on ___________________, with options to extend of
________________ (____) years each.
3. As of ____________________, monthly minimum rental is
$_______________ a month.
4. Tenant is required to pay its pro rata share of Common Area
Expenses and its pro rata share of the Center's real property
taxes and insurance cost. Current additional monthly payments
for expense reimbursement total $____________ per month for
common area maintenance, property insurance and real estate
taxes.
5. Tenant has given [no security deposit] [a security deposit of
$--------------].
<PAGE>
6. No payments by Tenant under the Lease have been made for more
than one (1) month in advance, and minimum rents and other
charges under the Lease are current.
7. All matters of an inducement nature and all obligations of the
Landlord under the Lease concerning the construction of the
Tenant's premises and development of the Shopping Center,
including without limitation, parking requirements, have been
performed by Landlord.
8. The Lease contains no first right of refusal, option to
expand, option to terminate, or exclusive business rights,
except as follows:
9. Tenant knows of no default by either Landlord or Tenant under
the Lease, and knows of no situations which, with notice or
the passage of time, or both, would constitute a default.
Tenant has no rights to off-set or defense against Landlord as
of the date hereof.
10. The undersigned has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the
Lease or the Premises except as follows:
11. Tenant has not generated, used, stored, spilled, disposed of, or released
any hazardous substances at, on or in the Premises. "Hazardous
Substances" means any flammable, explosive, toxic, carcino
mutagenic, or corrosive substance or waste, including volatile petroleum
products and derivatives and drycleaning solvents. To the best of
Tenant's knowledge, no asbestos or polychlorinated biphenyl ("PCB") is
located at, on or in the Premises. The term "Hazardous Substances"
does not include those materials which are technically within the definition
set forth above but which are contained in pre-packaged office supplies,
cleaning materials or personal grooming items or other items which are
sold for consumer or commercial use and typically used in other similar
buildings or space.
The undersigned makes this statement for your benefit and protection with the
understanding that you intend to rely upon this statement in connection with
your intended purchase of the above described Premises from Landlord. The
undersigned agrees that it will, upon receipt of written notice from Landlord,
commence to pay all rents to you or to any Agent acting on your behalf.
Very truly yours,
-------------------------------------------
____________________________________(Tenant)
Mailing Address:
____________________________ By:________________________________________
Its:_________________________________
- ----------------------------
<PAGE>
Exhibit
Document Request List
Items Required from the Seller:
1) Property Specifications (Zoning)
2) As Built Plans & Specs (arch. and engineering)
3) Site Plan (including suite numbers)
4) Location maps
5) Aerial photographs
6) Demographics (including traffic counts)
7) Legal Description
8) Parking Information - Space count
9) Copy of All Leases (and amendments) & Lease Briefs
10) Certificates of Occupancy - All current tenants
11) Schedule of Security Deposits
12) Most recent Rent Roll (with suite #'s, rent escalations, and option
period info)
13) Sales Reports (most recent 3 Years) for tenants reporting
14) Current Rent Billings (by category, base, CAM, etc.)
15) Current Delinquency Report (with explanations for balances > $1,000)
16) Tenant Activity Register for all Current Tenants (billings &
payments)
17) Tenant Estoppels
18) Property Operating Results - Most recent 3 Years
19) Property Capital Expenditures - Most recent 3 Years
20) Audited Financial Statements - 3 Years
21) Real Estate and other tax bills - 3 Years
22) Year to Date Financials & YTD detail general Ledger
23) Existing Service Agreements and Warranties
24) Three years loss history - reported claims
25) Most Recent Year Expense Recovery Reconciliation
26) Breakdown of CAM Pools
27) Proof Sales Tax Payments are Current
28) Appraisal (last available)
29) Seller's Budget for up-coming/current year
30) Utility Bills for last 12 mths/deposits
31) Personal Property Inventory
32) Existing Title Insurance Policy
33) Available Inspection Reports (environmental, roof, structural, etc.)
34) Summary of Tenant Contacts (with address and telephone numbers)
With local (incld store#) & national addresses
35) Survey
36) Tax plat map
<PAGE>
Exhibit
Schedule of Service Contracts
<PAGE>
Exhibit (4.11)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM REGENCY
CENTER'S, LP QUARTERLY REPORT FOR THE PERIOD ENDED 6/30/98
</LEGEND>
<CIK> 0001066247
<NAME> REGENCY CENTERS, LP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,997,662
<SECURITIES> 0
<RECEIVABLES> 10,727,456
<ALLOWANCES> 2,203,559
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 890,528,440
<DEPRECIATION> 24,857,246
<TOTAL-ASSETS> 887,545,812
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 549,279,175
<TOTAL-LIABILITY-AND-EQUITY> 887,545,812
<SALES> 0
<TOTAL-REVENUES> 51,722,116
<CGS> 0
<TOTAL-COSTS> 10,769,243
<OTHER-EXPENSES> 8,740,321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,249,580
<INCOME-PRETAX> 27,179,933
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,179,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,179,933
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.02
</TABLE>
