<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to ______________
Commission File Number: 1-8073
CV REIT, INC.
(Exact name of the registrant as specified in its charter)
Delaware 59-0950354
(State of Incorporation) (I.R.S. Employer Identification No.)
100 Century Boulevard, West Palm Beach, Florida 33417
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 407-640-3155
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common stock, par value New York Stock Exchange
$.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ X ]
This report contains a total of 48 pages.
<PAGE> 2
AGGREGATE MARKET VALUE OF THE VOTING STOCK
HELD BY NONAFFILIATES OF THE REGISTRANT
Common Stock, par value $.01 per share ("Common Stock"), was
the only class of voting stock of the Registrant outstanding on
December 31, 1995. Based on the last sale price of the Common
Stock on the New York Stock Exchange as reported by the
consolidated transaction reporting system on January 31, 1996
($11.25), the aggregate market value of the 6,225,007 shares of the
Common Stock held by persons other than officers, directors and
persons known to the Registrant to be the beneficial owner (as that
term is defined under the rules of the Securities and Exchange
Commission) of more than five percent of the Common Stock on that
date was approximately $70 million. By the foregoing statements,
the Registrant does not intend to imply that any of these officers,
directors or beneficial owners are affiliates of the Registrant or
that the aggregate market value, as computed pursuant to rules of
the Securities and Exchange Commission, is in any way indicative of
the amount which could be obtained for such shares of Common Stock.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13, or
14(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes ___ No ___
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date:
7,966,621 shares of Common Stock, par value $.01
per share, were outstanding as of February 29, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement of CV Reit, Inc.
for the 1996 Annual Meeting of Stockholders
(incorporated in Part III)
<PAGE> 3
PART I
Item 1. Business
General
CV Reit, Inc. (hereinafter, together with its subsidiaries,
the "Company" or "Registrant") has operated as a real estate
investment trust ("REIT") under Sections 856 through 860 of the
Internal Revenue Code since January 1, 1982. The Company has
invested in a portfolio of real estate interests consisting
primarily of real estate mortgage notes.
A REIT must be a calendar year unincorporated trust,
association or corporation with certain attributes including the
following:
* At no time during the last half of its taxable year may more
than 50% in value of its outstanding stock be owned directly
or indirectly by or for five or fewer individuals. Certain
rules regarding constructive ownership and attribution of
stock apply for purposes of this test.
* Gross income tests must be met: a) at least 75% must be from
specified types of real property related income, b) at least
95% must be from such real property related and other
specified investment income, and c) less than 30% must be from
short term capital gains from stocks, etc., "prohibited
transactions" or gain from the sale or disposition of real
property (other than by involuntary conversion or disposition
of mortgage foreclosure property) held less than four years.
* At the close of each quarter of the tax year, at least 75% of
the value of its total assets must be in real estate assets
(including real estate mortgage loans), government securities,
and cash and cash items. Not more than 25% of the value of
its total assets may be invested in securities other than
government securities and real estate assets. It may not
invest more than 5% of the value of the total assets of the
trust in the securities of any nongovernmental issuer (other
than securities qualifying as real estate assets), and, with
certain exceptions, may not own more than 10% of the out-standing voting
securities of any nongovernmental issuer.
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A Company which qualifies as a REIT may, if it distributes at
least 95% of its ordinary taxable income for a taxable year, deduct
dividends paid to stockholders with respect to such taxable year
from taxable income. The Company intends to operate in such a
manner that it will continue to qualify as a REIT. In any year in
which it so qualifies, the Company itself will not be taxed under
the Code on income distributed to its stockholders attributable to
that year.
The primary objective of the Company is to provide income for
distribution to its stockholders. The Company considers
appropriate investments in real estate or interests in real estate
and real estate mortgages, and securities or interests in persons
engaged in real estate activities. The Company intends to maintain
the percentages of its assets in various types of investments
necessary to continue to qualify as a REIT. The Company may borrow
money and issue additional debt securities, preferred stock, or
other equity securities, including securities senior to its Common
Stock, in connection with the acquisition of future investments, or
to otherwise finance its operations.
Recent Developments
On December 8, 1995, the Company entered into a Letter of
Intent with WCI Communities L.P. ("WCI"), a private real estate
partnership, which involved a proposed series of transactions
pursuant to which present holders of the Company's common stock
would receive, in a tax-free exchange, a new class of preferred
stock and the Company would issue new common stock to WCI and/or
its designees. On March 26, 1996, the Letter of Intent was
terminated and the parties were released from all obligations in
connection therewith.
Real Estate Mortgage Notes
At December 31, 1995, total assets of the Company were $120
million, including $100 million in real estate mortgage notes,
$4.9 million in real estate acquired by foreclosure (net of
allowance for losses), $6.1 million of income producing real estate
(primarily partnership interests in three self-storage warehouses,
a motel and an office building) and $7.6 million in cash and cash
equivalents. The Company's principal investments in real estate
mortgage notes are described in detail herein and are summarized as
follows (in thousands):
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December 31,
------------------
1995 1994
-------- --------
Long Term Recreation Notes
(the "Recreation Notes") $68,243 $69,096
Hilcoast Development Corp. ("Hilcoast"):
Lines of Credit 15,570 7,870
Other 8,039 6,297
Century Plaza Note (1) 6,282 6,285
First mortgage notes, maturing through
1998, with interest ranging from
8.9% to 11.5%, collateralized
primarily by real property in Palm
Beach and Broward Counties, Florida 1,785 3,143
-------- --------
99,919 92,691
Less allowance for losses (38) (62)
-------- --------
Totals (2) $99,881 $92,629
======== ========
_________
(1) The Century Plaza Note was not repaid on its December 31, 1994
maturity date. See Legal Proceedings - Century Plaza for a
discussion of litigation in connection with the Century
Plaza Note.
(2) As of December 31, 1995, other than the Century Plaza Note,
none of the above real estate mortgage notes were delinquent.
Recreation Notes
At December 31, 1995, the Recreation Notes consisted of $25
million due from Hilcoast (the "Hilcoast Recreation Note" - see
Relationship Between the Company and Hilcoast), collateralized by
a first mortgage on certain residential and commercial real estate
at the Century Village at Pembroke Pines, Florida adult condominium
project ("Pembroke Century Village"), including the recreation
facilities at that project (the "Pembroke Recreation Facilities"),
and $43.2 million, collateralized by first mortgages on the
recreation facilities at the three previously completed Century
Village communities, including $11.4 million due from H. Irwin Levy
(the "Levy Note"), a principal stockholder and former Chairman of
the Board of the Company and a principal stockholder, Chairman of
the Board and Chief Executive Officer of Hilcoast.
The Hilcoast Recreation Note bears interest at prime (8.50% at
December 31, 1995) plus 3%, but in any event not less than 9% nor
more than 11%, matures on July 31, 1998, and currently requires
monthly interest payments only. Upon the earlier to occur of
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delivery of the last condominium apartment at the Pembroke Century
Village or July 31, 1998, the Hilcoast Recreation Note is scheduled
to be converted to an 11%, fixed rate, 25 year, $25 million, self-
amortizing loan providing for equal monthly payments of principal
and interest in the aggregate amount of $2.9 million per annum.
This note may not be prepaid by Hilcoast without a prepayment
penalty and will be collateralized by a first mortgage on the
Pembroke Recreation Facilities.
The remaining Recreation Notes generally arose from the
Company's sale of the recreation facilities at the Century Village
adult condominium communities in West Palm Beach and Deerfield
Beach, Florida to unrelated parties in January 1982 and in Boca
Raton, Florida to Mr. Levy in December 1981. The terms of Mr.
Levy's acquisition of the recreation facilities, including the
terms and security of the Levy Note, were substantially the same as
the terms of the sales (negotiated independently) of the other two
recreation facilities. These notes principally consist of 30 year
non-recourse notes maturing in 2012, with interest rates averaging
13% (13.25% in the case of the Levy Note). Equal monthly self-
amortizing installments of principal and interest in the aggregate
amount of $6.5 million per annum are required, including $1.7
million from Mr. Levy. The Levy Note may not be prepaid;
prepayments on the other Recreation Notes generally are not
permitted until 2007. Since 1990, companies owned by Mr. Levy and
certain members of his family have leased, managed and operated the
recreation facilities at the Century Villages in West Palm Beach,
Deerfield Beach and Boca Raton, which are collateral for these
notes.
The Recreation Notes, excluding the Hilcoast Recreation Note,
are pledged as collateral for Collateralized Mortgage Obligations
("CMO's") issued by the Company which, as of December 31, 1995, had
an outstanding balance of $37.1 million (net of $950,000
unamortized discount based on an effective interest rate of 8.84%).
See Management's Discussion and Analysis of Results of Operations
and Financial Condition - Liquidity and Capital Resources for a
description of the CMO's.
The Hilcoast Recreation Note is pledged as collateral for a $4
million promissory note to a bank, consisting of a $2.5 million
line of credit through June 30, 1996 which, as of December 31,
1995, had no outstanding balance, and a $1.5 million Letter of
Credit issued by that bank for the benefit of Hilcoast.
Hilcoast
Lines of Credit
Lines of credit to Hilcoast (the "Lines of Credit" - see
Relationship Between the Company and Hilcoast) consist of revolving
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construction loan commitments which as of December 31, 1995,
aggregated $17 million (including $4 million approved on August 11,
1995) of which $15.6 million was outstanding on that date. The
Lines of Credit are collateralized by certain residential and
commercial real estate at the Pembroke Century Village; bear
interest, payable monthly, ranging from prime plus 3% (but in any
event not less than 9% nor more than 11%) to 12.5%; mature
gradually from November 1996 through July 1998; provide for unused
commitment fees ranging from .9% to 1.8% per annum; and, require
specific release prices, principally based on sales of condominium
apartments at the Pembroke Century Village, to be applied as
permanent reductions of amounts available under the Lines of
Credit.
Other
Other real estate mortgage notes due from Hilcoast amounted to
$8 million as of December 31, 1995 and included $5 million which
arose effective March 31, 1995, in connection with the redemption
by Hilcoast of the $5 million Hilcoast Preferred Stock owned by the
Company. As consideration, Hilcoast issued a $5 million note,
payable July 31, 1998, with interest at 10%, collateralized by the
Pembroke Recreation Facilities. The remaining mortgage notes due
from Hilcoast mature variously through July 31, 1998 and bear
interest, ranging from prime plus 1.5% to 12%.
Real Estate Acquired by Foreclosure
Real estate acquired by foreclosure, which consists of various
properties acquired by foreclosure or deed in lieu thereof and held
for resale, is summarized as follow (in thousands):
December 31,
-----------------
1995 1994
Commercial: ------- -------
Broward County, Florida:
Nine acre site in Dania $ 5,000 $ 5,000
29 acre site in Miramar 2,595 2,563
Other - 600
------- -------
Total commercial 7,595 8,163
Residential 381 306
------- -------
7,976 8,469
Less allowance for losses (3,069) (3,469)
------- -------
Totals $ 4,907 $ 5,000
======= =======
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Real Estate and Investments in Real Estate Partnerships
The Company's real estate equities are located in southeast
Florida and are summarized as follows (in thousands):
December 31,
-----------------
1995 1994
------- -------
Days Inn motel $ 4,054 $ 3,654
Administration Building 959 764
Other 79 82
------- -------
5,092 4,500
Less accumulated depreciation (2,202) (2,074)
------- -------
2,890 2,426
45%-50% investments in self-storage
warehouse partnerships 3,218 3,263
------- -------
Totals $ 6,108 $ 5,689
======= =======
Motel
The Company owns a 154-room Days Inn motel, located near the
entrance to Century Village at West Palm Beach, Florida. The motel
is leased to a corporation controlled by Alan Shulman, the Chairman
of the Board of the Company.
The lease, as amended, provided for annual rental through the
expiration of the lease term on August 31, 1999, equal to a minimum
of $300,000, plus 30% of gross room revenues in excess of $1.2
million. In February 1995, the Company and the lessee agreed to
adjust the annual rental to a minimum of $330,000, plus 30% of
gross room revenues in excess of $1.3 million. In connection
therewith, the Company agreed to make certain capital improvements
to the motel, which amounted to $400,000. The lease also provides
for the lessee to pay all operating costs of the motel, including
real estate taxes and insurance, and to pay to the Company 50% of
certain amounts received by the lessee from the concessionaire who
operates the food and beverage facilities at the motel.
Administration Building
The Company owns a two-story office building containing
approximately 25,000 square feet (the "Administration Building"),
located within the Century Village at West Palm Beach community, a
<PAGE> 9
portion of which is occupied by the Company as its corporate
headquarters. On May 10, 1995, the Company leased approximately
15,000 square feet to an unrelated party for provision of physician
and medically related services for five years, with five additional
five-year options, at an initial annual rent of $10 per square foot
on a triple net basis plus annual increases of 3%-4%. The Company
leases approximately 3,000 square feet on a month to month basis
to a company owned by Mr. Levy and a member of his family at a
monthly rental of approximately $2,500, plus an allocation of
utility expenses. The Company also leased approximately 3,800
square feet to Hilcoast on a month to month basis at a monthly
rental of approximately $3,400 until July 1995 at which time
Hilcoast substantially vacated this space.
Self-Storage Warehouses
The Company, through three wholly-owned subsidiaries, has 45%-50%
general and limited partnership interests in three partnerships
whose principal assets consist of self-storage warehouses, two in
Dade County and one in Palm Beach County, Florida with an aggregate
of approximately 3,000 units, managed by independent parties. The
Company's partners in these partnerships are Felix Granados, Sr.
and certain members of his family. The subsidiaries have no
financial obligation with respect to such partnerships except,
under state law, as general partners. The subsidiaries receive
monthly distributions from each of the partnerships based on cash
flows.
Industry Factors
The results of operations of the Company depend upon the
availability of suitable opportunities for investment and
reinvestment of its funds and on the yields available from time to
time on mortgage and other real estate investments, which in turn
depend to a large extent on the type of investment involved,
prevailing interest rates, the nature and geographical location of
the property, competition and other factors, none of which can
be predicted with certainty. The Company competes for acceptable
investments with financial institutions, including banks,
insurance companies, savings and loan associations, pension funds,
and other real estate investment trusts which have investment
objectives similar to those of the Company and some of which may
have greater financial resources than the Company. The Company is
not aware of statistics which would allow it to determine its
position with respect to all of its competitors in the real estate
investment industry.
Historically, the Company has invested in real estate and
mortgages in real estate projects located primarily in the State of
Florida. Although certain fundamental aspects of the Florida
<PAGE> 10
market, including economic development opportunities and an
attractive climate and quality of life, have contributed to
Florida's significant population and economic growth, the Florida
economy, in general, and the Florida real estate market,
specifically, are cyclical.
The Company's mortgage notes receivable are collateralized by
land and improvements in certain residential and commercial
projects. The competitive environment for those projects and the
Company's real estate acquired by foreclosure may affect the future
income of the Company, and the Company may not be immune from the
risks connected with these projects.
Potential competition to the Company's motel and self-storage
warehouse partnerships comes from similar facilities in the
immediate surrounding area. Therefore, the operations of these
properties could be adversely affected by the building of
additional motels and self-storage warehouses in those areas.
Relationship Between the Company and Hilcoast
On July 31, 1992, Hilcoast, an affiliate of the Company on
that date, acquired certain assets from a previous borrower of the
Company, pursuant to approval by the Bankruptcy Court of the
Southern District of Florida in connection with Chapter 11
proceedings filed by that borrower. The assets were acquired by
Hilcoast subject to the borrower's indebtedness to the Company,
consisting of a term loan in the amount of $41.7 million which as
of December 31, 1995 had an outstanding balance of $25 million (see
Real Estate Mortgage Notes - Recreation Notes) and certain lines of
credit (see Real Estate Mortgage Notes - Hilcoast - Lines of
Credit).
On July 31, 1992, H. Irwin Levy resigned as Chairman of the
Board of the Company, Joseph D. Weingard resigned as a director,
Michael S. Rubin resigned as Vice President-Real Estate Management
and Jack Jaiven resigned as Vice President and Treasurer of the
Company. Those individuals were elected to the following positions
with Hilcoast: H. Irwin Levy-Chairman of the Board and Chief
Executive Officer; Joseph D. Weingard, Director; Michael S. Rubin,
President, Chief Operating Officer and Director; and Jack Jaiven,
Executive Vice President, Chief Financial Officer and Director.
Effective July 31, 1992, the Company and Hilcoast entered into
a consulting and advisory agreement under which Hilcoast provides
certain investment advisory, consulting and administrative services
to the Company, excluding matters related to Hilcoast's loans from
the Company. The agreement, which originally expired on July 31,
1994, has been extended to July 31, 1996 and provides for the
payment of $10,000 per month to Hilcoast, plus reimbursement for
<PAGE> 11
all out of pocket expenses. The agreement may be terminated by
Hilcoast upon 180 days notice and by the Company upon 30 days
notice. During 1995, the Company paid $120,000 to Hilcoast under
this agreement, plus expense reimbursement.
During 1995, Hilcoast leased certain office space at the
Company's Administration Building (see Real Estate and Investments
in Real Estate Partnerships - Administration Building).
Employees
On December 31, 1995, the Company employed 4 full-time
persons.
Item 2. Properties
See Item 1. Business - Real Estate and Investments in Real
Estate Partnerships.
Item 3. Legal Proceedings
TGI Development, Inc. ("TGI")
On October 9, 1989, TGI filed a complaint in the Circuit Court
of Palm Beach County against the Company, H. Irwin Levy and certain
unrelated parties alleging misrepresentations by the defendants in
connection with TGI's purchase and development of land from a
previous borrower of the Company. The complaint, as subsequently
amended, consisted of counts of common law fraud and breach of
contract and sought compensatory damages of approximately $2
million in addition to punitive damages. On October 3, 1990, the
Company filed a counterclaim against TGI in connection with an
$800,000 promissory note from TGI to the Company. On February 9,
1994, the Circuit Court granted a Final Judgment in favor of the
Company, which dismissed TGI's claim of common law fraud against
the Company and struck its punitive damage claim. In accordance
with an agreement between the parties, on August 23, 1994, the
Court dismissed the breach of contract claim with prejudice and
entered a judgment in the amount of $1.1 million in favor of the
Company on the aforementioned counterclaim. The Company agreed not
to execute that judgment until completion of TGI's appeal of the
Final Judgment on its claim for compensatory damages. On January
3, 1996, the Fourth District Court of Appeals reversed the Final
Judgment. The Company has appealed this reversal to the Florida
Supreme Court. If the appeal is not successful, the case will be
<PAGE> 12
remanded to the Circuit Court. Although the Company believes it
has substantial defenses, the ultimate outcome of this litigation
cannot presently be determined. Accordingly, no provision for any
liability that may result upon final adjudication has been made in
the accompanying financial statements. In management's opinion,
the final outcome of this litigation will not have a material
adverse effect on the Company's financial condition.
Century Plaza
In December 1989, the Company sold its 85,000 square feet
Century Plaza Shopping Center ("Century Plaza") in Deerfield Beach,
Florida to Century Plaza Investments, Inc., an unrelated party (the
"Buyer"), for $8 million, consisting of $1.6 million cash and a
$6.4 million first mortgage note due on December 31, 1994 (the
"Century Plaza Note"). On December 5, 1994, the Buyer filed a
Complaint, as amended, in the Circuit Court of Broward County,
Florida, against the Company seeking a judicial declaration as to
the Buyer's obligation to provide parking areas to members of a
religious institution located adjacent to Century Plaza. The basis
for the Complaint is that the Company failed to advise the Buyer
that in 1978, a former officer of the Company had allegedly
consented to a limited number of parking spaces to be allocated by
the City of Deerfield Beach to the religious institution. Should
the Court determine that the institution has parking rights, the
Buyer seeks recision of the original sales agreement and the
Century Plaza Note which has an outstanding balance of
approximately $6.3 million, restoration of amounts paid by the
Buyer to the Company pursuant to the sales agreement, plus interest
thereon, and reconveyance of Century Plaza to the Company.
The Century Plaza Note was not paid on its December 31, 1994
maturity date and the Company instituted foreclosure proceedings.
The Buyer has been remitting monthly interest payments to the
Company since maturity. In February 1996, the Company and the
Buyer reached an agreement in principle, whereby the Company agreed
to reacquire Century Plaza for an amount equal to $1.1 million in
excess of the outstanding balance of the Century Plaza Note,
subject to due diligence and certain other conditions. The Company
believes that the proposed purchase price represents an amount
which is not in excess of fair value. In the event the proposed
purchase transaction is not completed, the Company believes it has
substantial defenses to the Complaint; however, the final outcome
of this litigation cannot be determined. In management's opinion,
the ultimate decision in this matter will not have a material
adverse effect on the Company's financial condition.
<PAGE> 13
Other
The Company is subject to various claims and complaints
relative to its business activities. In the opinion of management,
the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Stock
and Related Security Holders Matters
The Common Stock of the Company is listed for trading on the
New York Stock Exchange under the symbol CVI. The following table
sets forth the high and low sales prices per share and the
dividends per share declared by the Company on the Common Stock,
for each quarter during the past two years.
Market
Price Range
------------------- Dividends
High Low Declared
---- --- ------------
1995
First Quarter 9-1/2 8-7/8 $ .27
Second Quarter 9-7/8 8-7/8 .27
Third Quarter 9-3/4 8-7/8 .27
Fourth Quarter 11-1/4 9-3/8 .27
-----
$1.08
=====
1994
First Quarter 11-1/2 9 $ .27
Second Quarter 10-7/8 9-1/4 .27
Third Quarter 9-5/8 8-3/4 .27
Fourth Quarter 9-5/8 8-3/8 .27
-----
$1.08
=====
<PAGE> 14
As of February 29, 1996, the Company had 7,966,621 shares of
Common Stock outstanding and 2,073 holders of record of such stock.
The Company expects to continue to qualify as a REIT. A
corporation which qualifies as a REIT may deduct from taxable
income dividends paid to stockholders. The Company's policy is to
distribute approximately 100% of its taxable ordinary income.
Item 6. Selected Financial Data
(in millions, except per share data)
Year Ended December 31,
--------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Total revenues $13.4 $13.9 $15.4 $15.1 $20.3
====== ====== ====== ====== ======
Income before income taxes $8.4 $6.3 $11.3 $13.0 $5.4
====== ====== ====== ====== ======
Net income $9.4 $6.3 $9.5 $9.9 $3.4
====== ====== ====== ====== ======
Net income per common share $1.18 $0.79 $1.29 $1.38 $0.47
====== ====== ====== ====== ======
Dividends declared per share:
Cash $1.08 $1.08 $1.00 $0.45 $0.75
Hilcoast Development Corp.
Common Stock - - - 0.19(1) -
------ ------ ------ ------ ------
$1.08 $1.08 $1.00 $0.64 $0.75
====== ====== ====== ====== ======
At Year End:
Total assets $120.0 $122.8 $163.2 $160.0 $177.7
====== ====== ====== ====== ======
Borrowings $37.1 $38.9 $77.2 $83.5 $109.2
====== ====== ====== ====== ======
Stockholders' equity:
Total $73.2 $72.4 $74.7 $66.0 $60.5
====== ====== ====== ====== ======
Per common share $9.19 $9.09 $9.38 $9.14 $8.37
====== ====== ====== ====== ======
<PAGE> 15
________
(1) Based on 75 cents per share market price of Hilcoast Development
Corp. ("Hilcoast") Common Stock on October 19, 1992. The
distribution was based upon one share of Hilcoast Common Stock for
each four shares of the Company's Common Stock owned.
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
1995 Compared to 1994
Funds From Operations
The Company's Funds From Operations generally consists of net
income, excluding the reversal of previously recorded losses, gains
or losses on the sales of GNMA certificates and real estate, and
income tax benefit, plus depreciation of real property (including
the Company's share of depreciation in connection with its equity
in earnings of unconsolidated partnerships.)
For the year ended December 31, 1995, Funds From Operations
was $8.7 million compared to $8.4 million for 1994.
The increase in Funds From Operations reflects a reduction in
general and administrative expenses and higher rental income
received from the Days Inn motel and the Administration Building.
In addition, although there was a $386,000 reduction in net
interest income in 1995 resulting from the sale in April 1994 of
the Company's leveraged GNMA certificate portfolio, this reduction
was offset by an increase in interest income earned on the
Company's variable rate mortgage notes receivable, primarily due to
increases in the prime rate.
Net Income
For the year ended December 31, 1995, net income was $9.4
million or $1.18 per share compared to $6.3 million or $.79 per
share for the same period in 1994.
The 1995 net income includes a $1 million deferred income tax
benefit. The 1994 period includes a $2.4 million loss on the
aforementioned sale of the Company's GNMA certificate portfolio and
a $.6 million reversal of previously recorded losses.
<PAGE> 16
1994 Compared to 1993
Funds From Operations
For the year ended December 31, 1994, Funds From Operations
amounted to $8.4 million compared to $7.3 million during 1993. The
$1.1 million (15%) increase in Funds From Operations was principally
attributable to a $.6 million reduction in operating, general
and administrative expenses and a $.4 million increase in net
interest income.
The decrease in operating, general and administrative expenses
was primarily due to the elimination of costs incurred in connection
with operating residential real estate acquired by foreclosure, sold
during 1993, and reduced legal fees. The improved net interest income
includes an approximate $1.1 million reduction in interest expense due
to the retirement in November 1993 of the $14.7 million outstanding
balance of the Company's senior subordinated notes. The funds used to
retire the notes included approximately $6.7 million generated from the
issuance of 748,000 additional shares of Common Stock in connection with
the October 1993 Rights Offering and a $7.5 million bank loan (which loan
was repaid by March 1994). The higher net interest income also
reflects an approximate $.4 million increase in interest income on
the Company's variable rate mortgage notes receivable due to the
rise in the prime rate during 1994, offset by a $1 million
reduction in net interest income from the sale of the Company's
leveraged GNMA certificate portfolio.
Net Income
During 1994, the Company incurred a $2.4 million loss on the
sale of its GNMA certificate portfolio and recognized as income a
$.6 million reversal of previously recorded losses. In 1993, the
Company recognized a $1.1 million gain on the sale of GNMA
certificates and a $2.9 million reversal of previously recorded
losses. In addition, the Company's 1993 results included a
deferred income tax expense of $1.8 million. As a result, net
income in 1994 was $6.3 million or $.79 per share compared to $9.5
million or $1.29 per share in 1993.
<PAGE> 17
Liquidity and Capital Resources
At December 31, 1995, total assets were $120 million,
including $100 million in real estate mortgages notes.
Approximately $68.2 million of the real estate mortgage notes are
collateralized by recreation facilities under long-term leases with
unit owners at approximately 28,700 apartments at Century Village
adult condominium communities at Pembroke Pines, West Palm Beach,
Deerfield Beach and Boca Raton, Florida, and generally provide for
self-amortizing, equal monthly installment payments through 2028
(the "Recreation Notes" - see Note 2(b) to Consolidated Financial
Statements). The operations of these facilities historically have
been profitable and, in the Company's opinion, are not likely to be
affected by adverse economic conditions.
The remaining $31.8 million of real estate mortgage notes are
collateralized by residential and commercial real estate, generally
in southeast Florida, including $23.6 million due from Hilcoast,
principally collateralized by first mortgages on certain real
estate at the Century Village at Pembroke Pines adult condominium
community in Broward County, Florida (the "Pembroke Century
Village" - see Note 2(c) to Consolidated Financial Statements). At
December 31, 1995, 6,647 units had been sold and delivered at the
planned 7,780 unit Pembroke Century Village and the backlog of
units under contract for future delivery was 237 units with a sales
value of $18.2 million.
Collections on the Company's real estate mortgage notes may be
affected by the future success of the projects which collateralize
these notes, which may, in turn, be affected by conditions in the
housing and commercial real estate markets.
Operating funds are currently generated from interest income
on mortgage notes and rentals from income producing properties,
including distributions from self-storage warehouse partnerships.
Dividend payments to stockholders, in accordance with the
provisions of the Internal Revenue Code, limit the Company from
utilizing significant amounts of income-generated funds for
investment purposes.
Since its qualification as a REIT and until 1990, monies
received from the repayment of existing mortgage notes and
borrowings were generally reinvested in new and existing mortgage
notes and other real estate related investments, including loans to
developers for the purpose of acquiring, developing or constructing
real estate. In the past several years, the Company's only new
loan commitments have been in connection with its existing
borrowers. During 1995, the Company's only new loan commitments
consisted of a $4 million increase to the Hilcoast Lines of Credit;
$4.7 million of short-term investments in notes due by Hilcoast to
unrelated third parties, which were substantially repaid as of year
<PAGE> 18
end; and, $5 million which arose in connection with the redemption
by Hilcoast of the $5 million Preferred Stock owned by the Company
(see Note 2(c) to Consolidated Financial Statements). The Company
has generally reinvested its other available funds in high quality
short-term corporate and government securities. The Company
expects to pursue this strategy while it continues to evaluate
alternative real estate investments.
At December 31, 1995, commitments on outstanding real estate
loans consisted of $1.4 million under the Hilcoast Lines of Credit.
The Company expects to be able to meet these commitments with
internally generated funds, including existing cash balances.
There are currently no material commitments for capital
expenditures.
During 1995 and 1994, the Company declared cash dividends of
$1.08 per share, aggregating $8.6 million which approximates the
Company's Funds From Operations.
At December 31, 1995, the outstanding balance of the Company's
Collateralized Mortgage Obligations (the "CMO's") amounted to $37.1
million (net of unamortized discount of $950,000 based on an
effective interest rate of 8.84%). The CMO's are collateralized by
$43.2 million of the Recreation Notes and require self-amortizing
principal and interest payments through March 2007. During the
term of the CMO's, the Company's scheduled annual debt service
requirement approximates $5.2 million compared to annual principal
and interest payments scheduled to be received under the related
mortgage notes receivable of $6.5 million.
Inflation
As of December 31, 1995, the Company had no variable interest
rate borrowings; however, the Company's interest-sensitive mortgage
notes receivable amounted to $38 million. Of this amount, the
interest rate on $34 million is limited to the lower of 11% or
prime + 3%. As of December 31, 1995, the interest rate on those
notes had reached the 11% ceiling; accordingly, in the event of
inflation, even if such inflation is accompanied by rising interest
rates, the effect on the Company's results of operations is not
expected to be material.
<PAGE> 19
Item 8. Financial Statements and Supplementary Data
Table of Contents to Consolidated Financial Statements
Page
----
Report of Independent Certified Public Accountants 20
Consolidated Financial Statements:
Balance Sheets - December 31, 1995 and 1994 21
Statements of Income - Years Ended
December 31, 1995, 1994 and 1993 22
Statements of Stockholders' Equity - Years
Ended December 31, 1995, 1994 and 1993 23
Statements of Cash Flows - Years Ended
December 31, 1995, 1994 and 1993 24
Notes to Consolidated Financial Statements 25-37
Consolidated Financial Statements Schedules:
Schedule IV - Mortgage Loans on Real Estate 38
Schedules, other than that listed above, are omitted because
of the conditions under which they are required, or because the
information required therein is set forth in the consolidated
financial statements or the notes thereto.
<PAGE> 20
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of CV Reit, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheets of CV
Reit, Inc. and subsidiaries as of December 31, 1995 and 1994 and
the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended
December 31, 1995. We have also audited the schedule listed in the
accompanying index. These financial statements and the schedule
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and schedule are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of CV Reit, Inc. and subsidiaries at December 31, 1995 and
1994, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Also, in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
West Palm Beach, Florida BDO SEIDMAN, LLP
February 20, 1996
<PAGE> 21
CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31,
-------------------
ASSETS 1995 1994
------ -------- --------
Investments (Notes 2, 3, 4 and 5):
Real estate mortgage notes:
Long Term Recreation Notes $ 68,243 $ 69,096
Other 31,676 23,595
-------- --------
99,919 92,691
Real estate acquired by foreclosure 7,976 8,469
Less allowance for losses (3,107) (3,531)
Real estate and investments in real
estate partnerships, net of
accumulated depreciation 6,108 5,689
Investment in Hilcoast Development
Corp. Preferred Stock - 5,000
-------- --------
Total investments 110,896 108,318
Cash and cash equivalents (includes
$884 and $868 restricted) 7,633 9,998
Short-term investments - 2,920
Other 1,492 1,546
-------- --------
$120,021 $122,782
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities and other credits:
Collateralized Mortgage Obligations
(Note 3) $ 37,074 $ 38,908
Accounts payable, accruals and
other liabilities 192 861
Dividends payable 2,407 2,418
Deferred income taxes (Note 6) 7,162 8,179
-------- --------
Total liabilities and other credits 46,835 50,366
-------- --------
Commitments and contingencies (Notes 2, 3, 4 and 9)
Stockholders' equity:
Common stock, $.01 par-shares authorized
10,000,000; outstanding 7,966,621 80 80
Additional paid-in capital 18,490 18,490
Retained earnings 54,616 53,846
-------- --------
Total stockholders' equity 73,186 72,416
-------- --------
$120,021 $122,782
======== ========
See accompanying notes to consolidated financial statements.
<PAGE> 22
CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Year Ended December 31,
---------------------------------
1995 1994 1993
Revenues: --------- --------- ---------
Interest, substantially
from mortgage notes, and
dividends (Notes 2, 5 and 8) $ 12,231 $ 12,796 $ 14,433
Rent, income from real estate
partnerships and other 1,194 1,091 984
--------- --------- ---------
13,425 13,887 15,417
--------- --------- ---------
Expenses:
Interest (Note 3) 3,434 4,156 6,038
Operating, general and
administrative 1,496 1,615 2,228
Depreciation 138 161 133
--------- --------- ---------
5,068 5,932 8,399
--------- --------- ---------
8,357 7,955 7,018
Gain on sales of real estate - 130 285
Gain (loss) on sales of GNMA
certificates (Note 2(g)) - (2,392) 1,138
Reversal of provision for losses
(Note 2(e)) - 630 2,857
--------- --------- ---------
Income before income tax (benefit)
expense 8,357 6,323 11,298
Income tax (benefit) expense (Note 6) (1,017) - 1,786
--------- --------- ---------
Net income $ 9,374 $ 6,323 $ 9,512
========= ========= =========
Net income per common share (Note 1) $ 1.18 $ .79 $ 1.29
========= ========= =========
Dividends declared per common
share $ 1.08 $ 1.08 $ 1.00
========= ========= =========
Average common shares outstanding 7,966,621 7,966,621 7,378,479
========= ========= =========
See accompanying notes to consolidated financial statements.
<PAGE> 23
CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Additional
Common Paid-in Retained
Stock Capital Earnings
------ ---------- --------
Balance at December 31, 1992 $72 $11,862 $54,020
Issuance of 747,988 shares of
Common Stock in connection
with Rights Offering 8 6,628 -
Net income for the year - - 9,512
Cash dividends declared - - (7,406)
------ -------- --------
Balance at December 31, 1993 80 18,490 56,126
Net income for the year - - 6,323
Cash dividends declared - - (8,603)
------ --------- --------
Balance at December 31, 1994 80 18,490 53,846
Net income for the year - - 9,374
Cash dividends declared - - (8,604)
------ --------- --------
Balance at December 31, 1995 $80 $18,490 $54,616
====== ========= ========
See accompanying notes to consolidated financial statements.
<PAGE> 24
CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
---------------------------
1995 1994 1993
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,374 $ 6,323 $ 9,512
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation 138 161 133
Equity in depreciation of real estate
partnerships 178 179 179
Gain on sales of real estate - (130) (285)
Deferred income tax (benefit) expens (1,017) - 1,786
Reversal of provision for losses - (630) (2,857)
Loss (gain) on sales of GNMA certifiates - 2,392 (1,138)
------- ------- -------
8,673 8,295 7,330
Changes in operating assets and liabilities:
Decrease in other assets 38 87 244
Decrease in accounts payable, accruals
and other liabilities (669) (40) (939)
------- ------- -------
Net cash provided by operating activities 8,042 8,342 6,635
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate mortgage notes (23,068) (21,469) (25,046)
Collections on real estate mortgage notes 20,661 33,436 26,907
Maturity (purchase) of GNMA certificates
and short-term investments 2,920 (2,920) (26,412)
Sale of GNMA certificates - 32,412 19,479
Return of principal of GNMA certificates - 977 2,292
Proceeds from sales of real estate - 1,030 4,224
Other (471) (132) (192)
------- ------- -------
Net cash provided by investing activities 42 43,334 1,252
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 500 3,150 31,477
Repayments of borrowings (2,334) (41,443) (37,787)
Cash dividends paid (8,615) (8,435) (7,212)
Increase in restricted cash (16) (46) (56)
Proceeds from issuance of Common Stock - - 6,636
------- ------- -------
Net cash used in financing activities (10,465) (46,774) (6,942)
------- ------- -------
Net (decrease) increase in unrestricted
cash and cash equivalents (2,381) 4,902 945
Unrestricted cash and cash equivalents at
beginning of the period 9,130 4,228 3,283
------- ------- -------
Unrestricted cash and cash equivalents at
end of the period $ 6,749 $ 9,130 $ 4,228
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 3,436 $ 4,307 $ 6,256
======= ======= =======
Supplemental schedule of non-cash investing
and financing activities:
Increase in real estate mortgage notes in
connection with redemption of the Company's
investment in Hilcoast Development Corp.
Preferred Stock (Note 2(c)) $ 5,000 $ - $ -
======= ======= =======
See accompanying notes to consolidated financial statements.
<PAGE> 25
CV REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Business
CV Reit, Inc. is a real estate investment trust ("REIT")
principally engaged in investing in real estate mortgage notes.
Principles of Consolidation
The consolidated financial statements include the accounts of
CV Reit, Inc. and all subsidiaries ("the Company"). Certain
subsidiaries own 45%-50% interests in partnerships, which are
accounted for on the equity method. Significant intercompany
accounts and transactions have been eliminated in consolidation.
Real Estate Mortgage Notes, Real Estate Acquired
By Foreclosure, and Allowance For Losses
Mortgage notes are carried at the lower of cost or estimated
net realizable value. Accrual of interest is discontinued on
mortgage notes when management believes, after considering economic
and business conditions and collection efforts, that timely
collection is doubtful.
Real estate acquired by foreclosure, which consists of various
properties acquired through foreclosure or deed in lieu thereof and
held for resale, is carried at the lower of cost (fair value at
date of acquisition) or fair value less selling costs. Carrying
costs and subsequent declines in net realizable value are charged
to operations as incurred.
The allowance for losses is established through a provision
charged to operations based upon an evaluation by management of the
loan portfolio and real estate acquired by foreclosure. In
evaluating possible losses, management takes into consideration
appropriate information which may include the borrower's cash flow
projections, historical operating results and financial strength,
pending sales, adverse conditions that may affect the borrower's
ability to repay, appraisals and current economic conditions.
<PAGE> 26
New Accounting Pronouncements
In 1993, the FASB issued SFAS No. 114, which was amended by
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan".
This statement addresses the accounting by creditors for impairment
of certain loans and requires that certain impaired loans be
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, observable market
price, or the fair value of the collateral, if the loan is
collateral dependent. The Company adopted SFAS No. 114 and SFAS
No. 118 effective January 1, 1995. Adoption of the standards did
not have a material impact on the Company's financial position or
results of operations.
In 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of". SFAS No. 121 requires companies to evaluate long-lived
assets for impairment based on the undiscounted future cash
flows of the asset. If a long-lived asset is identified as
impaired, the value of the asset must be reduced to its fair value.
The Company's real estate, including its income producing
properties, would be considered long-lived assets under this
pronouncement.
This statement is effective for fiscal years beginning after
December 15, 1995. Accordingly, the Company plans to adopt this
statement in 1996. Adoption is not expected to have a material
adverse affect on the Company's financial position or results of
operations.
Dividends and Income Taxes
The Company has elected to qualify as a REIT under the
provisions of Section 856-860 of the Internal Revenue Code. As a
REIT, the Company is required to distribute at least 95% of its
ordinary taxable income to stockholders and may deduct such
distributions from taxable income. A REIT is not required to
distribute capital gain income but to the extent it does not, it
must pay the applicable capital gain income tax unless it has
ordinary losses to offset such capital gain income.
The federal income tax characteristics of dividends paid by
the Company, reported to stockholders in January of the subsequent
year, consisted of:
1995 1994 1993
Ordinary income 65.6% 80.2% 88.2%
Capital gain distribution 34.4% 19.8% 11.8%
<PAGE> 27
The Company accounts for income taxes based upon SFAS No.109
"Accounting for Income Taxes", which requires, among other things,
a liability approach to calculating deferred income taxes.
Real Estate and Investments in Real Estate
Partnerships ("Real Estate")
Real Estate, recorded at cost, consists primarily of a motel,
subject to an operating lease, and partnership interests in self-storage
warehouses. In the event that the net carrying amount
exceeds estimated net realizable value, a provision is made to
reduce the net carrying amount accordingly. Depreciation is
provided over the estimated useful lives of the assets on the
straight-line method.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Net Income Per Common Share
Net income per common share is based on the weighted average
number of common shares outstanding during each year.
Statements of Cash Flows
For financial statement purposes, the Company considers all
highly liquid investments with initial maturities of three months
or less to be cash equivalents.
Reclassification
Certain 1994 and 1993 amounts have been reclassified to
conform to the 1995 financial statement presentation.
<PAGE> 28
(2) Investments
(a) Investments in real estate mortgage notes, substantially
all of which are collateralized by real estate located in southeast
Florida, consist of (in thousands):
December 31,
------------------
1995 1994
Long Term Recreation Notes (the ------- -------
"Recreation Notes") (Note 2(b)) $68,243 $69,096
Hilcoast Development Corp.
("Hilcoast") (Note 2(c)):
Lines of Credit 15,570 7,870
Other 8,039 6,297
First mortgage notes, maturing through
1998, with interest ranging primarily
from 8.9% to 11.5%, collateralized
primarily by real property in Palm
Beach and Broward Counties, Florida:
Residential 1,785 3,143
Commercial (Note 4(b)) 6,282 6,285
------- -------
99,919 92,691
Less allowance for losses (38) (62)
------- -------
Totals $99,881 $92,629
======= =======
Interest Sensitivity
--------------------
Fixed Variable
Rate Rate
------- -------
Maturity of real estate
mortgage notes at
December 31, 1995:
One year or less $10,735 $10,235 $ 500
After one year through
five years 27,471 15,311 12,160
After five years 61,713 61,713 -
------- ------- -------
Totals $99,919 $87,259 $12,660
======= ======= =======
(b) At December 31, 1995, the Recreation Notes consisted of
$25 million due from Hilcoast (the "Hilcoast Recreation Note"),
collateralized by a first mortgage on certain residential and
commercial real estate at the Century Village at Pembroke Pines,
Florida adult condominium project (the "Pembroke Century Village"),
<PAGE> 29
including the recreation facilities at that project (the "Pembroke
Recreation Facilities") and $43.2 million, collateralized by first
mortgages on the recreation facilities at the three previously
completed Century Village communities (Note 5).
The Hilcoast Recreation Note bears interest at prime (8.50% at
December 31, 1995) plus 3%, but in any event not less than 9% nor
more than 11%, matures on July 31, 1998, and currently requires
monthly interest payments only. Upon the earlier to occur of
delivery of the last condominium apartment at the Pembroke Century
Village or July 31, 1998, the Hilcoast Recreation Note is scheduled
to be converted to an 11%, fixed rate, 25 year, $25 million, self-
amortizing loan providing for equal monthly payments of principal
and interest. This note may not be prepaid by Hilcoast without a
prepayment penalty and will be collateralized by a first mortgage
on the Pembroke Recreation Facilities.
The remaining Recreation Notes principally provide for self-amortizing
equal monthly principal and interest payments due through 2012, with interest
rates averaging 13%, and contain certain prepayment prohibitions
(Notes 3(a) and 5).
(c) Hilcoast
Lines of credit to Hilcoast consist of revolving construction
loan commitments which as of December 31, 1995, aggregated $17
million (including $4 million approved on August 11, 1995) of which
$15.6 million was outstanding on that date. The Lines of Credit
are collateralized by certain residential and commercial real
estate at the Pembroke Century Village; bear interest, payable
monthly, ranging from prime plus 3% (but in any event not less than
9% nor more than 11%) to 12.5%; mature gradually from November 1996
through July 1998; provide for unused commitment fees ranging from
.9% to 1.8% per annum; and, require specific release prices,
principally based on sales of condominium apartments at the
Pembroke Century Village, to be applied as permanent reductions of
amounts available under the Lines of Credit.
Other real estate mortgage notes due from Hilcoast amounted to
$8 million as of December 31, 1995 and included $5 million which
arose effective March 31, 1995, in connection with the redemption
by Hilcoast of the $5 million Hilcoast Preferred Stock owned by the
Company. As consideration, Hilcoast issued a $5 million note,
payable July 31, 1998, with interest at 10%, collateralized by the
Pembroke Recreation Facilities. The remaining mortgage notes due
from Hilcoast mature variously through July 31, 1998 and bear
interest, ranging from prime plus 1.5% to 12%.
(d) Real estate acquired by foreclosure consists of (in
thousands):
<PAGE> 30
December 31,
--------------------
1995 1994
Commercial: ------- -------
Broward County, Florida:
Nine acre site in Dania $5,000 $5,000
29 acre site in Miramar 2,595 2,563
Other - 600
------ ------
Total commercial 7,595 8,163
Residential 381 306
------ ------
7,976 8,469
Less allowance for losses (3,069) (3,469)
------ ------
Totals $4,907 $5,000
====== ======
(e) Changes in the allowance for losses follow (in
thousands):
1995 1994 1993
------ ------ ------
Balance, beginning of year $3,531 $5,119 $8,593
Reversal of allowance for
losses - (630) (2,857)
Charge-offs (424) (1,158) (806)
Recoveries - 200 189
------ ------ ------
Balance, end of year $3,107 $3,531 $5,119
====== ====== ======
(f) Real estate and investments in real estate partnerships
are located in southeast Florida and consist of (in thousands):
December 31,
-------------------
1995 1994
------ ------
Days Inn motel $4,054 $3,654
Administration Building 959 764
Other 79 82
------ ------
5,092 4,500
Less accumulated depreciation (2,202) (2,074)
------ ------
2,890 2,426
45%-50% investments in
self-storage warehouse
partnerships 3,218 3,263
------ ------
Totals $6,108 $5,689
====== ======
<PAGE> 31
(g) During 1994 and 1993, the Company sold GNMA certificates
with an aggregate book value of $34.8 million and $18.5 million,
respectively, and recognized a loss of $2.4 million in 1994 and a
gain of $1.1 million in 1993.
(3) Borrowings
(a) The Collateralized Mortgage Obligations ("CMO's")
amounted to $37.1 million at December 31, 1995 and $38.9 million at
December 31, 1994 (net of unamortized discounts of $950,000 in 1995
and $1.1 million in 1994, based on an effective interest rate of
8.84%), are collateralized by the Recreation Notes, excluding the
Hilcoast Recreation Note (Note 2(b)), require quarterly self-amortizing
principal and interest payments and mature on March 15, 2007.
(b) Maturities of borrowings are as follows (in thousands):
1996 $ 2,009
1997 2,200
1998 2,408
1999 2,633
2000 2,877
Thereafter 24,947
-------
$37,074
=======
(4) Commitments and Contingencies
(a) TGI Development, Inc. ("TGI")
On October 9, 1989, TGI filed a complaint in the Circuit Court
of Palm Beach County against the Company, H. Irwin Levy and certain
unrelated parties alleging misrepresentations by the defendants in
connection with TGI's purchase and development of land from a
previous borrower of the Company. The complaint, as subsequently
amended, consisted of counts of common law fraud and breach of
contract and sought compensatory damages of approximately $2
million in addition to punitive damages. On October 3, 1990, the
Company filed a counterclaim against TGI in connection with an
$800,000 promissory note from TGI to the Company. On February 9,
1994, the Circuit Court granted a Final Judgment in favor of the
Company, which dismissed TGI's claim of common law fraud against
the Company and struck its punitive damage claim. In accordance
with an agreement between the parties, on August 23, 1994, the
Court dismissed the breach of contract claim with prejudice and
entered a judgment in the amount of $1.1 million in favor of the
Company on the aforementioned counterclaim. The Company agreed not
to execute that judgment until completion of TGI's appeal of the
<PAGE> 32
Final Judgment on its claim for compensatory damages. On January
3, 1996, the Fourth District Court of Appeals reversed the Final
Judgment. The Company has appealed this reversal to the Florida
Supreme Court. If the appeal is not successful, the case will be
remanded to the Circuit Court. Although the Company believes it
has substantial defenses, the ultimate outcome of this litigation
cannot presently be determined. Accordingly, no provision for any
liability that may result upon final adjudication has been made in
the accompanying financial statements. In management's opinion,
the final outcome of this litigation will not have a material
adverse effect on the Company's financial condition.
(b) Century Plaza
In December 1989, the Company sold its 85,000 square feet
Century Plaza Shopping Center ("Century Plaza") in Deerfield Beach,
Florida to Century Plaza Investments, Inc., an unrelated party (the
"Buyer"), for $8 million, consisting of $1.6 million cash and a
$6.4 million first mortgage note due on December 31, 1994 (the
"Century Plaza Note"). On December 5, 1994, the Buyer filed a
Complaint, as amended, in the Circuit Court of Broward County,
Florida, against the Company seeking a judicial declaration as to
the Buyer's obligation to provide parking areas to members of a
religious institution located adjacent to Century Plaza. The basis
for the Complaint is that the Company failed to advise the Buyer
that in 1978, a former officer of the Company had allegedly
consented to a limited number of parking spaces to be allocated by
the City of Deerfield Beach to the religious institution. Should
the Court determine that the institution has parking rights, the
Buyer seeks recision of the original sales agreement and the
Century Plaza Note which has an outstanding balance of
approximately $6.3 million, restoration of amounts paid by the
Buyer to the Company pursuant to the sales agreement, plus interest
thereon, and reconveyance of Century Plaza to the Company.
The Century Plaza Note was not paid on its December 31, 1994
maturity date and the Company instituted foreclosure proceedings.
The Buyer has been remitting monthly interest payments to the
Company since maturity. In February 1996, the Company and the
Buyer reached an agreement in principle, whereby the Company agreed
to reacquire Century Plaza for an amount equal to $1.1 million in
excess of the outstanding balance of the Century Plaza Note,
subject to due diligence and certain other conditions. The Company
believes that the proposed purchase price represents an amount
which is not in excess of fair value. In the event the proposed
purchase transaction is not completed, the Company believes it has
substantial defenses to the Complaint; however, the final outcome
of this litigation cannot be determined. In management's opinion,
the ultimate decision in this matter will not have a material
adverse effect on the Company's financial condition.
<PAGE> 33
(c) Other
The Company is subject to various claims and complaints
relative to its business activities. In the opinion of management,
the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position.
(5) Related Party Transactions
Hilcoast
On July 31, 1992, Hilcoast, an affiliate of the Company on
that date, acquired certain assets from a previous borrower of the
Company, pursuant to approval by the Bankruptcy Court of the
Southern District of Florida in connection with Chapter 11
proceedings filed by that borrower. The assets were acquired by
Hilcoast subject to the borrower's indebtedness to the Company,
consisting of a term loan in the amount of $41.7 million which as
of December 31, 1995 had an outstanding balance of $25 million
(Note 2(b)) and certain lines of credit (Note 2(c))
On July 31, 1992, H. Irwin Levy resigned as Chairman of the
Board of the Company, Joseph D. Weingard resigned as a director,
Michael S. Rubin resigned as Vice President-Real Estate Management
and Jack Jaiven resigned as Vice President and Treasurer of the
Company. Those individuals were elected to the following positions
with Hilcoast: H. Irwin Levy, Chairman of the Board and Chief
Executive Officer; Joseph D. Weingard, Director; Michael S. Rubin,
President, Chief Operating Officer and Director; and Jack Jaiven,
Executive Vice President, Chief Financial Officer and Director.
Effective July 31, 1992, the Company and Hilcoast entered into
a consulting and advisory agreement under which Hilcoast provides
certain investment advisory, consulting and administrative services
to the Company, excluding matters related to Hilcoast's loans from
the Company. The agreement, which originally expired on July 31,
1994, has been extended to July 31, 1996, and provides for the
payment of $10,000 per month to Hilcoast, plus reimbursement for
all out of pocket expenses. The agreement may be terminated by
Hilcoast upon 180 days notice and by the Company upon 30 days
notice. During 1995, the Company paid $120,000 to Hilcoast under
this agreement, plus expense reimbursement.
Recreation Notes
Mr. Levy owns the recreation facilities at the Century Village
in Boca Raton, acquired from the Company in 1981, which is
collateral for one of the Company's Recreation Notes (Note 2(b)),
issued in connection with the acquisition, in the original principal
<PAGE> 34
amount of $12.6 million. The note bears interest at 13.25%,
requires self-amortizing equal monthly payments of principal and
interest in the aggregate amount of $1.7 million per annum through
2012 and may not be prepaid. At December 31, 1995, the outstanding
balance on the note was $11.4 million. In 1995, the Company
recognized interest income of $1.5 million and in 1994 and 1993,
$1.6 million, respectively, per annum on this note.
Since 1990, companies owned by Mr. Levy and certain members of
his family lease, manage and operate the recreation facilities at
the Century Villages in West Palm Beach, Deerfield Beach and Boca
Raton, which are collateral for $43.2 million of the Company's
Recreation Notes (Note 2(b)).
Days Inn
The Company owns a 154-room Days Inn motel, located near the
entrance to Century Village at West Palm Beach, Florida. The motel
is leased to a corporation controlled by Alan Shulman, the Chairman
of the Board of the Company.
The lease, as amended, provided for annual rental through the
expiration of the lease term on August 31, 1999, equal to a minimum
of $300,000, plus 30% of gross room revenues in excess of $1.2
million. In February 1995, the Company and the lessee agreed to
adjust the annual rental to a minimum of $330,000, plus 30% of
gross room revenues in excess of $1.3 million. In connection
therewith, the Company agreed to make certain capital improvements
to the motel, which amounted to $400,000. The lease also provides
for the lessee to pay all operating costs of the motel, including
real estate taxes and insurance, and to pay to the Company 50% of
certain amounts received by the lessee from the concessionaire who
operates the food and beverage facilities at the motel. In 1995,
1994 and 1993, the Company recognized rent income of $472,000,
$343,000 and $310,000, respectively, under the lease.
Administration Building
The Company leases approximately 3,000 square feet of its
Administration Building, located within the Century Village at West
Palm Beach community, on a month to month basis to a company owned
by Mr. Levy and a member of his family at a monthly rental of
approximately $2,500, plus an allocation of utility expenses. The
Company also leased approximately 3,800 square feet to Hilcoast on
a month to month basis at a monthly rental of approximately $3,400
until July 1995 at which time Hilcoast substantially vacated this
space.
<PAGE> 35
(6) Income Tax (Benefit) Expense
(a) Total deferred income tax (benefit) expense differs from
the amount computed by applying the statutory federal income tax
rate to income before income taxes for the following reasons (in
thousands):
1995 1994 1993
------ ------ ------
Tax expense computed at
statutory rate $2,841 $2,150 $3,841
State income tax (benefit)
expense, net of federal effect (86) (32) 203
Dividends paid deduction (3,644) (2,453) (2,258)
Other (128) 335 -
------ ------ ------
Totals ($1,017) $ - $1,786
====== ====== ======
(b) The components of the net deferred tax liability are as
follows (in thousands):
December 31,
-----------------
1995 1994
Deferred tax liabilities: ------- -------
Gains on the sales of recreation
facilities reported on the install-
ment method for tax purposes $14,106 $14,352
Basis differential on certain notes
receivable - 865
Other 470 423
------- -------
Total deferred tax liabilities 14,576 15,640
------- -------
Deferred tax assets:
Differences in reporting the
provision for losses 1,169 1,329
Net operating loss carryforwards
for tax purposes 6,065 6,065
Other 180 67
------- -------
Total deferred tax assets 7,414 7,461
------- -------
Net deferred tax liability $ 7,162 $ 8,179
======= =======
(c) As of December 31, 1995, the Company has aggregate net
operating loss carryforwards for tax purposes of approximately
$16.1 million, expiring $7.1 million in 2007 and $9.0 million in
2006.
<PAGE> 36
(7) Major Customers
During 1995, interest income from four borrowers provided 38%
(Hilcoast), 17%, 14% and 12% (H. Irwin Levy), respectively, of
total revenues. During 1994, interest income from four borrowers
provided 32% (Hilcoast), 16%, 14% and 11% (H. Irwin Levy),
respectively, of total revenues. During 1993, interest income from
four borrowers provided 26% (Hilcoast), 15%, 13% and 10% (H. Irwin
Levy), respectively, of total revenues. See Note 2 regarding
concentration of credit risk.
(8) Financial Instruments with Off-Balance-Sheet Risk
The Company is a party to financial instruments with off-
balance-sheet risk in the normal course of business to meet the
financing needs of its customers, including commitments to extend
credit and standby letters of credit to guarantee the contractual
performance of certain borrowers to third parties. Those instruments
involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the balance sheet. The contract
amounts of those instruments reflect the extent of involvement and
the exposure to credit loss the Company has in particular classes
of financial instruments. The Company uses the same credit
policies and has the same credit risk in making commitments and
conditional obligations as it does for on-balance-sheet
instruments.
At December 31, 1995, financial instruments whose contract
amounts represent credit risk consisted of $1.4 million of
commitments to extend credit and $.6 million standby letters of
credit. Commitments to extend credit are agreements to lend to a
borrower as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses. Since commitments
may expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements.
(9) Fair Value of Financial Instruments
The estimated fair values of the Company's financial
instruments as of December 31, 1995 are as follows:
Carrying Fair
Amount Value
-------- --------
Real estate mortgage notes $99,919 $125,063
Cash and cash equivalents 7,633 7,633
CMO's (37,074) (39,445)
<PAGE> 37
Real estate mortgage notes - Except for the Recreation Notes (Note
2(b)), the Company's real estate mortgage notes principally consist
of variable rate loans or loans which mature within three years,
and have carrying amounts that approximate fair value. The fair
value of the fixed rate, Long Term Recreation Notes is estimated by
discounting the future cash flows using the current rates at which
similar loans would be made with similar credit ratings and for the
same remaining maturities.
CMO's - Rates currently available to the Company for debt with
similar terms and remaining maturities are used to estimate the
fair value of the Company's long-term, fixed rate CMO's.
(10) Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data follows (in thousands, except per
share data):
Quarter Ended
-----------------------------------------
Mar. 31, Jun. 30, Sept.30, Dec. 31,
1995
Revenues $3,321 $3,318 $3,338 $3,448
Net income 2,037 2,037 2,136 3,164
Per common share .26 .26 .27 .40
1994
Revenues $3,848 $3,367 $3,365 $3,307
Net income (loss) 2,127 (397)(1) 2,240 2,354
Per common share .27 (.05)(1) .28 .30
__________
(1) During the quarter ended June 30, 1994, the Company sold its
GNMA certificates and recognized a loss of $2.4 million.
<PAGE> 38
<TABLE>
CV REIT, INC. AND SUBSIDIARIES
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1995
=============================================
(dollars in thousands) Principal
amount of
<CAPTION> Carrying loans subject
Final Face amount of to delinquent
Interest maturity Prior amount of mortgages principal or
Description Rate date Periodic payment terms liens mortgages (a) interest
- -------------------------------- ---------- --------- ------------------------ ------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Permanent - Recreation
Facilities (1st mortgages,
except where noted):
Century Village at Boca Raton, FL 13.25% 12/31/11 Level principal and
interest due monthly -- $12,533 $11,435 $ --
Century Village at
West Palm Beach, FL 13.50% 01/15/12 Level principal and
interest due monthly -- 18,342 16,736 --
Century Village at Deerfield
Beach, FL (2nd mortgage) 13.25% 01/15/12 Level principal and
interest due monthly N/A 13,235 12,112 --
Century Village at Deerfield Beach, FL 8.84% 03/01/07 Level principal and
interest due monthly -- 3,485 2,960 --
Century Village at Pembroke Pines, FL Prime + 3% (c) (c) -- 25,000 25,000 --
(Minimum 9%, Maximum 11%) ------- -------
68,243 --
------- -------
Residential Construction and Development:
Condominium project (1st mortgage)
in Pembroke Pines, FL (d) 07/31/98 Interest monthly,
principal at maturity -- 18,750 17,199 --
Recreation facilities at Century Village
at Pembroke Pines, FL (2nd mortgage) 10% 07/31/98 Interest quarterly,
principal at maturity N/A 5,000 5,000 --
Residential project in Deland, FL Prime + 3% 12/31/97 Interest monthly,
(1st mortgage) (Minimum 9%, Maximum 11%) principal at maturity -- 2,100 1,410 --
Aggregate of mortgage loans which
individually do not exceed 3% 8.9% to 11.5% Various -- 1,785 --
thru 12/98 ------- -------
25,394 --
------- -------
1st Mortgage on shopping center in
Deerfield Beach, FL N/A 12/31/94 (e) -- 6,400 6,282 6,282
------- -------
$99,919(b) $ 6,282
======= =======
- ----------
(a) The tax carrying value of the notes is approximately $62 million. 1995 1994 1993
(b) The changes in the carrying amounts are summarizd as followings: -------- -------- --------
Balance, beginning of period $92,691 $105,863 $107,935
Advances on new mortgage loans 24,493 21,469 25,046
Collections of principal (17,086) (33,236) (26,718)
Foreclosures (171) (321) --
Charge-offs (8) (1,084) (400)
-------- -------- --------
Balance, end of period $99,919 $92,691 $105,863
======== ======== ========
(d) Ranging from prime plus 3% (minimum 9%, maximum 11%) to 12.5%.
(e) See Note 4(b) to Consolidated Financial Statements.
</TABLE>
<PAGE> 39
Item 9. Disagreement on Accounting
and Financial Disclosure
None
PART III
Information in response to Items 10, 11, 12 and 13 is not
included in this Report, since the Registrant anticipates filing a
definitive proxy statement for its next annual meeting of stockholders
prior to May 1, 1995. Such definitive proxy statement is incorporated
by reference herein.
<PAGE> 40
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K
(a) (1) List of Consolidated Financial Statements:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Income - Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity - Years
Ended December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows - Years Ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(2) List of Consolidated Financial Statements Schedules:
Schedule IV - Mortgage Loans on Real Estate
(3) List of Exhibits:
(3)(i) Amended Certificate of Incorporation of CV Reit, Inc.,
filed with Secretary of State of Delaware on June 17,
1991. (Incorporated by reference to Exhibit (3)(i) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1991.)
(3)(ii) By-laws of CV Reit, Inc. (Incorporated by
reference to Exhibit (3)(ii) to the Annual Report
on Form 10-K of the Company for the fiscal year
ended December 31, 1990.)
(10)(i) Agreement between Cenvill Investors, Inc. and H. Irwin
Levy, dated December 31, 1981. (Incorporated by reference
to Exhibit (2)(i) to the current report on Form 8-K filed
by the Company to report event of December 31, 1981.)
<PAGE> 41
(10)(ii) Agreement of Lease between Cenvill Investors, Inc. and
B.R.F., Inc., dated December 30, 1981. (Incorporated by
reference to Exhibit (2) (ii) to the current report on Form
8-K filed by the Company to report event of December 31,
1981.)
(10)(iii) Agreement dated January 15, 1982, between Century Village,
Inc. and Benenson Capital Company. (Incorporated by
reference to Exhibit (2)(i) to the current report on Form
8-K filed by Cenvill Investors, Inc. (File No. 0-03427) to
report event of January 15, 1982.)
(10)(iv) Agreement dated January 15, 1982, between Century Village
East, Inc. and CVRF Deerfield Limited. (Incorporated by
reference to exhibit (2) (ii) to the current report on Form
8-K filed by Cenvill Investors, Inc. (File No. 0-03427)
to report event of January 15, 1982.)
(10)(v) Lease dated as of November 8, 1988 between Cenvill
Investors, Inc. and Century Inn Operating Corp.
(Incorporated by reference to Exhibit (10) (xiii) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1988.)
(10)(vi) Revolving Credit and Term Loan Agreement dated July 3, 1990
between Cenvill Development Corp. and CV Reit, Inc.
(Incorporated by reference to Exhibit (10)(xvi) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1990.)
(10)(vii) Loan Agreement among CV Reit, Inc. and Cenvill Development
Corp. and various subsidiaries, dated June 6, 1991.
(Incorporated by reference to Exhibit (10)(xiv) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1991.)
(10)(viii) Indenture for Collateralized Mortgage Obligations, dated
as of December 30, 1991 between Recreation Mortgages, Inc.
(Issuer) and Bankers Trust Company (Trustee).
(Incorporated by reference to Exhibit (10)(xvi) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1991.)
<PAGE> 42
(10)(ix) Agreement to Use Best Reasonable Efforts to Obtain
Construction Financing, dated as of September 17, 1992,
between CV Reit, Inc. and Hilcoast Development Corp.
(Incorporated by reference to Exhibit (10)(v) to Amendment
No. 1 to the Form S-1 Registration Statement of Hilcoast
Development Corp. (File No. 33-51388) filed with the
Commission on October 1, 1992.)
(10)(x) Restated Loan Agreement, dated July 31, 1992, between CV
Reit, Inc. and Cenvill Development Corp. and certain
subsidiaries and affiliates thereof. (Incorporated by
reference to Exhibit (10)(xi) to the Annual Report on Form
10-K of the Company for the fiscal year ended December 31,
1992.)
(10)(xi) Proposal for the Acquisition of Certain Assets, dated June
19, 1992, by and among CV Reit, Inc., Cenvill Development
Corp. and certain subsidiaries and affiliates thereof.
(Incorporated by reference to Exhibit (10)(xiv) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1992.)
(10)(xii) Order granting Motion of Debtor's [sic] for Approval of
Sale of Assets dated July 17, 1992. (Incorporated by
reference to Exhibit (10)(xv) to the Annual Report on Form
10-K of the Company for the fiscal year ended December 31,
1992.)
(10)(xiii) Stock Purchase Agreement, dated as of August 5, 1992,
between CV Reit, Inc. and Hilcoast Development Corp.
(Incorporated by reference to Exhibit (10)(xvii) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1992.)
(10)(xiv) Consulting and Advisory Agreement, dated July 31, 1992,
between CV Reit, Inc. and Hilcoast Development Corp.
(Incorporated by reference to Exhibit (10)(xviii) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1992.)
(10)(xv) Loan Agreement, Security Agreement and Collateral
Assignment of Loans, Notes, Mortgages and Security
Documents with Ohio Savings Bank dated October 26, 1993.
(Incorporated by reference to Exhibit 10(a) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended September 30, 1993.)
<PAGE> 43
(10)(xvi) $1.3 million Promissory Note, dated August 27, 1993,
between CV Reit, Inc. and NewCen Communities, Inc.
(Incorporated by reference to Exhibit (10)(xx) to the
Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1993.)
(10)(xvii) $3.0 million Promissory Note and Side Letter, dated
September 30, 1993, between CV Reit, Inc. and NewCen
Communities, Inc. (Incorporated by reference to Exhibit
(10)(xxi) to the Annual Report on Form 10-K of the Company
for the fiscal year ended December 31, 1993.)
(10)(xviii) First Amendment to Loan Agreement, Security Agreement and
Collateral Assignment of Loans, Notes, Mortgages and
Security Documents with Ohio Savings Bank dated February
25, 1994. (Incorporated by reference to Exhibit 10(a) to
the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1994.)
(10)(xix) $2.5 million Future Advance Promissory Note, dated
September 15, 1994 from NewCen Communities, Inc. (a
subsidiary of Hilcoast Development Corp.) to CV Reit, Inc.,
Notice and Agreement of Future Advance and Side Letters
between CV Reit, Inc. and NewCen Communities, Inc.
(Incorporated by reference to Exhibit 10(a) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended September 30, 1994.)
(10)(xx) Letter, dated February 5, 1995, from Hilcoast Development
Corp. to CV Reit, Inc. in connection with $3.0 million
Promissory Note. (Incorporated by reference to Exhibit
10(xxiii) to the Annual Report on Form 10-K of the Company
for the fiscal year ended December 31, 1994.)
(10)(xxi) Letter, dated February 6, 1995, from CV Reit, Inc. to
NewCen Communities, Inc. in connection with $3.0 million
Promissory Note. (Incorporated by reference to Exhibit
10(xxiv) to the Annual Report on Form 10-K of the Company
for the fiscal year ended December 31, 1994.)
<PAGE> 44
(10)(xxii) Letter, dated February 5, 1995, from Hilcoast Development
Corp. to CV Reit, Inc. in connection with $2.5 million
Future Advance Promissory Note. (Incorporated by reference
to Exhibit 10(xxv) to the Annual Report on Form 10-K of the
Company for the fiscal year ended December 31, 1994.)
(10)(xxiii) Letter, dated February 6, 1995, from CV Reit, Inc. to
NewCen Communities, Inc. in connection with $2.5 million
Future Advance Promissory Note. (Incorporated by reference
to Exhibit 10(xxvi) to the Annual Report on Form 10-K of
the Company for the fiscal year ended December 31, 1994.)
(10)(xxiv) Agreement dated February 17, 1995, between CV Reit, Inc.,
NewCen Communities, Inc. and Hilcoast Development Corp.
(Incorporated by reference to Exhibit 10(i) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995.)
(10)(xxv) $5.0 million Promissory Note, dated March 31, 1995, from
C.V.P. Community Center, Inc. to Hilcoast Development Corp.
(Incorporated by reference to Exhibit 10(ii) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995.)
(10)(xxvi) Allonge dated March 31, 1995, which assigns the $5.0
million Promissory Note, dated March 31, 1995, from
Hilcoast Development Corp. to CV Reit, Inc. (Incorporated
by reference to Exhibit 10(iii) to the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 31,
1995.)
(10)(xxvii) Loan Agreement between C.V.P. Community Center, Inc. and
Lloyds Bank PLC-Miami Agency (N/K/A The Daiwa Bank, Ltd.),
dated November 5, 1986. (Filed under cover Form SE).
(Incorporated by reference to Exhibit 10(iv) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995.)
(10)(xxviii) First Amendment to Loan Agreement, dated June 6, 1991,
between C.V.P. Community Center, Inc. and The Daiwa Bank,
Ltd. (Filed under cover Form SE). (Incorporated by
reference to Exhibit 10(v) to the Quarterly Report on Form
10-Q of the Company for the quarter ended March 31, 1995.)
<PAGE> 45
(10)(xxix) $10.0 million Promissory Note, dated November 5, 1986, from
C.V.P. Community Center, Inc. to Lloyds Bank PLC.
(Incorporated by reference to Exhibit 10(vi) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995.)
(10)(xxx) Absolute Assignment of Mortgages, Promissory Note and Other
Security Documents dated March 17, 1995 from The Daiwa
Bank, Ltd. to CV Reit, Inc. (Incorporated by reference to
Exhibit 10(vii) to the Quarterly Report on Form 10-Q of the
Company for the quarter ended March 31, 1995.)
(10)(xxxi) $4.0 million Promissory Note dated August 11, 1995, from
NewCen Communities, Inc. (a subsidiary of Hilcoast
Development Corp.) to CV Reit, Inc. and Side Letters
between CV Reit, Inc. and NewCen Communities, Inc.
(Incorporated by reference to Exhibit 10(i) to the
Quarterly Report on Form 10-Q of the Company for the
quarter ended September 30, 1995.)
(10)(xxxii) Letter, dated August 11, 1995, from Hilcoast Development
Corp. to CV Reit, Inc. in connection with $3.0 million
Promissory Note. (Incorporated by reference to Exhibit
10(ii) to the Quarterly Report on Form 10-Q of the Company
for the quarter ended September 30, 1995.)
(10)(xxxiii) Letter, dated August 11, 1995, from CV Reit, Inc. to
Hilcoast Development Corp. in connection with $3.0 million
Promissory Note. (Incorporated by reference to Exhibit
10(iii) to the Quarterly Report on Form 10-Q of the Company
for the quarter ended September 30, 1995.)
(10)(xxxiv) Letter, dated August 11, 1995, from Hilcoast Development
Corp. to CV Reit, Inc. in connection with $2.5 million
Promissory Note. (Incorporated by reference to Exhibit
10(iv) to the Quarterly Report on Form 10-Q of the Company
for the quarter ended September 30, 1995.)
(10)(xxxv) Letter, dated August 11, 1995, from CV Reit, Inc. to
Hilcoast Development Corp. in connection with $2.5 million
Promissory Note. (Incorporated by reference to Exhibit
10(v) to the Quarterly Report on Form 10-Q of the Company
for the quarter ended September 30, 1995.)
<PAGE> 46
(10)(xxxvi) Letter Agreements, dated July 11, 1994 and August 3, 1995,
between CV Reit, Inc. and Hilcoast Advisory Services, Inc.
extending the Consulting and Advisory Agreement to July 31,
1995 and July 31, 1996, respectively. (Incorporated by
reference to Exhibit 10(vi) to the Quarterly Report on Form
10-Q of the Company for the quarter ended September 30,
1995.)
(11) Statement regarding computation of per share earnings.
Omitted; computation can be clearly determined from
material contained in the report.
(22) Subsidiaries of the Company.
(27) Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
December 31, 1995.
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CV REIT, INC.
/s/ Elaine Kahant
By:__________________________________
Elaine Kahant, Vice President
and Treasurer
Dated: March 25, 1996
<PAGE> 48
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Alan L. Shulman
March 25, 1996 ________________________________
Alan L. Shulman, Chairman of the
Board of Directors
/s/ Alvin Wilensky
March 25, 1996 _________________________________
Alvin Wilensky, President
and Director
(Principal Executive Officer)
/s/ Elaine Kahant
March 25, 1996 _________________________________
Elaine Kahant, Vice President,
and Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
/s/ Mac Gache
March 25, 1996 _________________________________
Mac Gache, Director
/s/ Stanley Brenner
March 25, 1996 _________________________________
Stanley Brenner, Director
/s/ Allyn Levy
March 25, 1996 _________________________________
Allyn Levy, Director
EXHIBIT 21
CV REIT, INC. AND SUBSIDIARIES
Subsidiaries of the Company
State of Date of
Name Incorporation Incorporation
D.X. Properties, Inc. Florida November 27, 1989
CV Warehouse 75, Inc. Florida June 6, 1990
CV Warehouse 76, Inc. Florida June 6, 1990
CV Warehouse 78, Inc. Florida June 6, 1990
GRX Corp. Florida November 16, 1990
Recreation Mortgages, Inc. Delaware December 23, 1991
W.X. Properties, Inc. Florida January 10, 1992
CX Properties, Inc. California January 15, 1992
LRX Properties, Inc. Florida March 19, 1993
Boca Mortgage Funding, Inc. Florida March 19, 1993
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 7,633<F1>
<SECURITIES> 0
<RECEIVABLES> 99,919
<ALLOWANCES> 3,107
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 16,286
<DEPRECIATION> 2,202
<TOTAL-ASSETS> 120,021
<CURRENT-LIABILITIES> 0
<BONDS> 37,074
0
0
<COMMON> 80
<OTHER-SE> 73,106
<TOTAL-LIABILITY-AND-EQUITY> 120,021
<SALES> 0
<TOTAL-REVENUES> 13,425
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,496
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,434
<INCOME-PRETAX> 8,357
<INCOME-TAX> (1,017)
<INCOME-CONTINUING> 9,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,374
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
<FN>
<F1>Includes $884 restricted.
</FN>
</TABLE>
