CV REIT INC, 10-K, 2000-03-21

CV REIT INC
10-K, 2000-03-21
REAL ESTATE INVESTMENT TRUSTS

Previous: CENTRAL VERMONT PUBLIC SERVICE CORP, 11-K, 2000-03-21

Next: CHAMPION INTERNATIONAL CORP, 425, 2000-03-21

<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 [NO FEE REQUIRED]

For the fiscal year ended December 31, 1999

______ 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: 561-640-3155

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on 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 ]

<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, 1999. 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 March 7, 2000
($9.25), the aggregate market value of the 6,513,285 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 $60.2 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 March 7, 2000.

<PAGE>
3

PART I

Item 1. Business

Background

CV Reit, Inc., together with its subsidiaries, has operated as a real estate
investment trust (REIT) under Sections 856 through 860 of the Internal Revenue
Code since January 1, 1982. A company that qualifies as a REIT may, if it
distributes at least 95% of its ordinary taxable income (90% effective in 2001)
for a taxable year, deduct dividends paid to stockholders with respect to such
taxable year from taxable income. We intend to operate in such a manner that we
will continue to qualify as a REIT. In any year in which we qualify, we will not
be taxed under the Code on income distributed to our stockholders attributable
to that year.

After our qualification as a REIT in 1982, our operating strategy consisted of
investing in real estate mortgage notes receivable, primarily loans to
developers. Due to economic conditions in the real estate market and the economy
in general, in the early 1990's we decided to limit new loan commitments, repaid
all of our outstanding borrowings (other than our long-term collateralized
mortgage obligations) and began to seek alternative real estate investments with
proven and experienced personnel to manage and enhance such a portfolio.

Effective December 31, 1997, we acquired a number of shopping centers and an
interest in Drexel Realty, Inc., a real estate management and leasing company.
In connection with this transaction, we created an Umbrella Partnership REIT
(UPREIT) structure by forming an Operating Partnership, Montgomery CV Realty
L.P. (we refer to the Operating Partnership, together with its wholly owned
subsidiaries as the OP). The OP then acquired 100% of the ownership interests in
nine shopping centers and an office building, located in Pennsylvania and New
Jersey, and a 95% economic interest in Drexel from Louis P. Meshon, Sr.. In
addition, we transferred substantially all of our net assets (or the economic
benefit) to the OP. As a result, we indirectly currently own 84.5% of the OP,
are its sole general partner and operate as a self-administered, self-managed
equity REIT with Mr. Meshon as President and Chief Executive Officer. As of
December 31, 1999, the OP owned twenty neighborhood or community shopping
centers and two office buildings, located in Pennsylvania, New Jersey and
Florida, comprising approximately 1.9 million square feet.

Recent Development - Proposed Merger

On December 10, 1999, we signed a definitive merger agreement and reorganization
plan with Kranzco Realty Trust, a shopping center REIT, to merge our operations
and create a new community shopping center UPREIT to be called Kramont Realty
Trust. Terms of the merger call for common shareholders of both companies to
each receive one share of Kramont common stock for each outstanding share of CV
Reit and Kranzco common stock on a tax-free basis. The merger agreement is
subject to approval by shareholders of both companies and certain other
conditions.

Mr. Meshon will assume the same titles and responsibilities at the newly created
Kramont and our designees will hold the majority of the board seats. Corporate
headquarters will be located at the OP's existing facilities, in Plymouth
Meeting, Pennsylvania.

Kramont is expected to own 84 properties, substantially comprising neighborhood
and community shopping centers, encompassing approximately 11 million square
feet in 16 states with an asset base of approximately $800 million.

The merger will be accounted for as a purchase by CV Reit of Kranzco.
Accordingly, Kranzco's assets and liabilities will be recorded at their
estimated fair values based on the consideration given by CV Reit.

<PAGE>
4

Operating Strategies

Our primary business objectives are to increase Funds From Operations (please
refer to Management's Discussion and Analysis of Results of Operations and
Financial Condition for a definition of Funds From Operations) and to enhance
the value of our properties. It has been our operating strategy to achieve these
objectives through:

Efficient operation of our properties including active leasing and property
management, maintenance of high occupancy levels, increasing rental rates and
controlling operating and capital costs.

Acquisition of additional properties which satisfy our criteria, at favorable
prices, including properties requiring renovation or re-leasing.

Completion of strategic renovations and expansions to further maximize
operating cash flow.

Attainment of greater access to financing sources.

Assets

At December 31, 1999, the book value of our assets amounted to $257.8 million,
including $173.1 million in income producing real estate and $63.4 million in
real estate mortgage notes receivable. A description of our principal assets
follows:

Real Estate - Income Producing

The OP, directly or indirectly, owns 100% of twenty neighborhood or community
shopping centers and two office buildings, located in Pennsylvania, New Jersey
and Florida, comprising 1,891,000 square feet. The properties are diverse in
size, ranging from 8,000 square feet to 202,000 square feet of gross leasable
area and average 86,000 square feet. The shopping centers generally attract
local area customers and are typically anchored by a supermarket, drugstore
and/or discount stores. The centers are smaller than regional malls and do not
depend on customers who travel long distances. The tenant base generally
concentrates on everyday purchases from local customers. Anchors attract
shoppers who then also often patronize the smaller shops. At December 31, 1999,
97.6% of our gross leasable area was leased to tenants under operating leases.
Substantially all of our income producing real estate is pledged as collateral
for borrowings.

The following table sets forth certain pertinent information, as of December 31,
1999, regarding these properties. Except for Century Plaza and the Century
Village Administration Building, which we built, each of the properties were
acquired by the OP on December 31, 1997, or during 1998 and 1999:

Year
of
Latest Lease
Year Renovation Leasable Occupancy Expiration/
Originally or Square Rate as of Principal Option
Built Expansion Footage 12/31/99 Tenants Expiration
________________________________________________________________________________
Shopping Centers
Century Plaza
Deerfield
Beach, FL 1976 1991 85,151 96.7% Broward 2001
County Library
Chalfont Village
Shopping Center 1968 N/A 46,051 83.6% Better Bodies 2005/2010
New Britain, PA

<PAGE>
5

Cherry Square
Shopping Center 1991 N/A 75,005 100.0% Redners 2016/2021
Northampton, PA Supermarket

Chesterbrook
Village Center 1980 1995 122,316 95.9% Genuardi 2010/2030
Wayne, PA Markets

Collegeville
Shopping Center 1978 1994 110,518 100.0% Acme 2003/2038
Collegeville, PA

County Line
Plaza 1970 1998 175,023 100.0% Ames 2002/2017
Souderton, PA Clemens 2007/2027
Markets
Danville Plaza 1971 1987 24,052 96.4% CVS Pharmacy 2007/2027
Danville, PA

Dickson City
Center 1972 1990 47,224 100.0% Office Max 2006/2016
Dickson City, PA

Gilbertsville
Shopping Center 1974 N/A 85,748 97.7% Weis Markets 2004/2014
Gilbertsville, PA

Lakewood Plaza
Shopping Center 1962 N/A 202,499 99.7% Shop Rite 2010/2030
Lakewood, PA Supermarkets

Marlton Shopping
Center-Phase II 1986 N/A 155,587 95.6% Burlington 2002/2030
Evesham, NJ Coat Factory
T.J. Maxx 2001/2011
Marlton Shopping
Center-Phase I 1985 N/A 146,542 100.0% Super Fresh 2007/2047
Evesham, NJ Markets

Mount Carmel
Plaza 1988 N/A 14,504 90.3% CVS Pharmacy 2002/2012
Glenside, PA

New Holland
Plaza 1977 N/A 65,730 85.7% Weis Markets 2000/2015
New Holland, PA

North Penn
Marketplace 1983 N/A 57,898 100.0% Eckerd Drugs 2003/2018
Upper Gwynedd, PA

Rio Grande Plaza 1991 1997 138,747 100.0% JC Penney 2012/2042
Rio Grande, NJ Peebles 2012/2022
Sears 2006/2026
Village at
Newtown 1989 N/A 177,032 96.2% Genuardi 2008/2018
Newtown, PA Markets

Whitemarsh
Shopping Center 1969 1996 67,546 100.0% Clemens 2017/2027
Conshohocken, PA Markets

Woodbourne
Square 1985 N/A 29,976 93.6% Rehab Place 2000
Langhorne, PA at Oxford Valley

<PAGE>
6

555 Scott Street
Center 1961 N/A 8,400 100.0% Pet Supplies 2000/2005
Wilkes-Barre, PA Plus

Office Buildings
Century Village
Administration
Building 1970 1995 25,100 100.0% First Choice 2000
W. Palm Beach, FL Health Care Services

Plymouth Plaza 1974 1994 30,026 97.5% Drexel Realty 2004
Plymouth Meeting, PA
--------- ------
Totals 1,890,675 97.6%
========= ======

Mortgage Notes Receivable

At December 31, 1999, our mortgage notes receivable amounted to $63.4 million,
collateralized by first mortgages on the recreation facilities at the four
completed Century Village adult condominium communities in southeast Florida,
including an aggregate of $35 million due from H. Irwin Levy, Chairman of the
Board and a principal stockholder of our company, or Hilcoast Development Corp.,
of which Mr. Levy is Chairman of the Board, Chief Executive Officer and a
majority stockholder. As of December 31, 1999, none of the mortgage notes were
delinquent.

The notes provide for self-amortizing equal monthly principal and interest
payments in the aggregate amount of $9.5 million per annum, through January 2012
and $2.9 million thereafter through 2023, and bear interest at annual rates
principally ranging from 11% to 13.5%. The notes are pledged as collateral for
certain borrowings. Please refer to Item 13. Certain Relationships and Related
Transactions regarding related party transactions with Hilcoast and Mr. Levy.

Investments in Unconsolidated Affiliates

Self-Storage Warehouse Partnerships

We own 45%-50% general and limited partnership interests in three partnerships
whose principal assets consist of self-storage warehouses located in southeast
Florida, with an aggregate of approximately 2,800 units and 320,000 square feet,
managed by independent parties. Our partners in these partnerships are certain
members of the Granados family. We have no financial obligation with respect to
such partnerships except under state law, as general partners. We receive
monthly distributions from each of the partnerships based on cash flows.

Drexel

Effective December 31, 1997, we acquired a 95% economic interest in Drexel,
which for over 25 years has been engaged in the development, brokerage,
construction, leasing and management of real estate. In addition to managing our
properties, Drexel currently manages seven other properties located in
Pennsylvania and New Jersey. During 1999 and 1998, management contracts for 19
additional properties were terminated, primarily as a result of Drexel's
decision to concentrate mainly on management, leasing and renovation of our own
properties. It is not contemplated that Drexel will seek any additional third
party management contracts in the future. Currently, 99% of the voting stock of
Drexel is beneficially owned by Mr. Meshon and held in a voting trust and 100%
of the non-voting stock is owned by the OP. Mr. Meshon currently serves as
President of Drexel.

<PAGE>
7

Other Real Estate

We own certain real estate acquired by deed in lieu of foreclosure and held for
resale, consisting of three parcels of unimproved commercial land, totaling 38
acres located in southeast Florida, with a book value of $5.5 million at
December 31, 1999, net of a $2.4 million allowance for losses.

Industry Factors

Ownership of commercial real estate involves risks arising from changes in
economic conditions generally and in the commercial real estate market
specifically, as well as risks which result from property-specific factors such
as the failure or inability to make needed capital improvements, competition,
reductions in revenue arising from decreased occupancy or reductions in the
level of rents obtainable, and factors which increase the cost of operating,
financing and refinancing properties such as escalating interest rates and wage
rates, increased taxes, fuel costs and other operating expenses and casualties.
All of these kinds of risks can result in reduced net operating revenues
available for distribution. Our ability to manage the properties effectively
notwithstanding such risks and economic conditions will affect the funds
available for distribution.

The results of operations of our company also depend upon the availability of
suitable opportunities for investment and reinvestment of our funds and on the
yields available from time to time on 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. Our competitors
for acceptable investments include insurance companies, pension funds, and other
REIT's which may have investment objectives similar to ours and some of which
may have greater financial resources than ours. We are not aware of statistics
which would allow us to determine our position with respect to all of our
competitors in the commercial real estate investment industry.

Employees

On December 31, 1999, we employed 71 persons, substantially all of whom were
employed by Drexel or a wholly owned subsidiary of Drexel.

Item 2. Properties

Please refer to Item 1. Business - Real Estate - Income Producing, Investments
in Unconsolidated Affiliates and Other Real Estate.

Item 3. Legal Proceedings

We are subject to various claims and complaints relative to our business
activities. In our opinion, the ultimate disposition of these matters will not
have a material adverse effect on our financial position.

<PAGE>
8

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of security holders during the fourth quarter
of 1999.

PART II

Item 5. Market for Our Common Stock and Related Security Holders Matters

Our common stock 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 which we declared on our common stock, for
each quarter during the past two years.

Market Price Range
____________________ Dividends
High Low Declared
_______ ________ _________

1999
First Quarter 12.69 11.25 $ .29
Second Quarter 13.63 10.38 .29
Third Quarter 13.06 11.75 .29
Fourth Quarter 12.56 9.00 .29
______
$ 1.16
======
1998
First Quarter 15.25 13.25 $ .29
Second Quarter 14.31 13.00 .29
Third Quarter 13.63 12.00 .29
Fourth Quarter 13.00 11.50 .29
______
$ 1.16
======

As of March 7, 2000 there were 7,966,621 shares of common stock outstanding and
approximately 1,700 holders of record.

Through our wholly owned subsidiary, Montgomery CV Realty Trust (the Trust), we
indirectly own 7,966,621 OP units (representing the sole general partnership
interest and 84.5% of the limited partnership interest in the OP). The holders
of substantially all of the remaining 15.5%, or 1,462,406 OP units, have the
right to require the OP to redeem their OP units for cash at any time. However,
upon a holder giving notice of the exercise of this right, the Trust has the
right to acquire such holder's OP units in exchange for cash or, if certain
conditions are satisfied, an equal number of shares of our common stock.

We expect to continue to qualify as a REIT. A corporation, which qualifies as a
REIT may, if it distributes at least 95% of ordinary taxable income (90%
effective in 2001) for a taxable year, deduct dividends paid to stockholders
with respect to such taxable year 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. We have historically
distributed to our stockholders capital gain income arising from principal
repayments on our mortgage notes receivable (please refer to Item 1. Business -
Mortgage Notes Receivable) which are being reported on the installment method
for tax purposes.

<PAGE>
9

Item 6. Selected Financial Data
(dollars in millions, except share data)

Year Ended December 31,
________________________________________________________________________________
1999 1998 1997 1996 1995
________________________________________________________________________________
Revenues:
Rent $25.6 $17.2 $ 2.7 $ 1.1 $ .7
Interest and other 8.0 8.8 10.6 11.7 12.2
_____ _____ _____ _____ _____
Total revenues $33.6 $26.0 $13.3 $12.8 $12.9
===== ===== ===== ===== =====
Income before income
taxes $ 7.2 $ 8.8 $ 8.5 $ 9.4 $ 8.4
===== ===== ===== ===== =====
Net income $ 7.2 $15.9(b) $ 8.5 $ 9.6 $ 9.4
===== ===== ===== ===== =====
Funds From Operations
(FFO) (a) $10.8 $ 9.5 $ 9.1 $ 9.0 $ 8.7
===== ===== ===== ===== =====
Per common share:
Net income, basic
and diluted $ .91 $1.99 $1.07 $1.20 $1.18
===== ===== ===== ===== =====
Dividends declared $1.16 $1.16 $1.16 $1.14 $1.08
===== ===== ===== ===== =====
Average common
shares outstanding,
basic and diluted 7,966,621 7,966,621 7,966,621 7,966,621 7,966,621
========= ========= ========= ========= =========
At Year End:
Total assets $257.8 $225.4 $171.9 $118.9 $120.0
====== ====== ====== ====== ======
Borrowings $156.3 $121.9 $66.3 $35.1 $37.1
====== ====== ====== ====== ======
Stockholders' equity:
Total $77.6 $79.6 $72.9 $73.7 $73.2
===== ===== ===== ===== =====
Per common share $9.74 $9.99 $9.16 $9.25 $9.19
===== ===== ===== ===== =====
___________
(a) Please refer to Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition for a definition of FFO.

(b) Includes $7 million benefit arising from the reversal of deferred tax
liability. Please refer to Note 9 to Consolidated Financial Statements.

Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition

Results of Operations

Net Income

1999 Compared to 1998

For the year ended December 31, 1999, net income was $7,247,000 or $.91 per
share compared to $15,850,000 or $1.99 per share for the same period of 1998.

Net income for 1998 includes a $2,347,000 gain from the sale of real estate, a
$7,041,000 deferred income tax benefit (please refer to Note 1 to Consolidated
Financial Statements) and $300,000 of non-recurring expenses, principally in
connection with the settlement of litigation. In addition, depreciation and
amortization increased by $1,371,000 in 1999 due to shopping center
acquisitions. Excluding these non-operational items, net income increased by
$1,856,000. The discussion below highlights the major components which caused
this increase.

<PAGE>
10

During 1999, rent revenue and operating expenses increased by $8,400,000 and
$2,437,000, respectively (a net rental income increase of $5,963,000), primarily
due to the acquisition of ten shopping centers since the beginning of 1998. The
increase also reflects improved operating results from income producing
properties owned as of December 31, 1997.

Interest income decreased by $846,000 during 1999, attributable to a reduction
in the average balance of mortgage notes receivable and cash. The reduction in
the average balance outstanding principally results from repayments by Hilcoast
of a line of credit and other notes in 1998. Those repayments as well as
available cash balances have generally been utilized to acquire shopping
centers. The Company's remaining mortgage notes receivable are long term and
require self-amortizing payments through 2023.

Interest expense increased by $3,388,000 in 1999 principally as a result of
increased borrowings to finance shopping center acquisitions.

General and administrative expenses increased by $75,000 during 1999 primarily
due to higher professional fees and performance related bonuses.

Equity in income of unconsolidated affiliates decreased by $309,000 principally
due to the decision by our management company (Drexel) to concentrate mainly on
management, leasing and renovation of our own income producing properties and
acquisitions of additional shopping centers. As a result, Drexel has terminated
various management contracts for properties owned by third parties.

Minority interests in income of OP decreased by $511,000 during 1999. The
decrease was due to a $2,073,000 reduction in income attributable to the OP
(which reflects the aforementioned $2,347,000 gain on sale of real estate in
1998) and a reduction in minority interests, due to redemptions, from an average
of 17.4% in 1998 to an average of 15.6% in 1999.

1998 Compared to 1997

Net income for the year ended December 31, 1998 was $15,850,000 or $1.99 per
share compared to $8,515,000 or $1.07 per share for 1997.

Net income for 1998 includes a $2,347,000 gain from the sale of real estate, a
$7,041,000 deferred income tax benefit and $300,000 of non-recurring expenses,
principally in connection with the settlement of litigation. In addition,
depreciation and amortization increased by $2,298,000 due to shopping center
acquisitions. Excluding these non-operational items, net income increased by
$545,000. The discussion below highlights the major components which caused this
increase.

During 1998, rent revenue, operating expenses and interest expense increased by
$14,452,000, $4,314,000 and $5,049,000, respectively, primarily due to the
acquisition of nine shopping centers and an office building on December 31, 1997
and seven additional shopping centers in 1998.

Interest income decreased by $1,758,000 during 1998, primarily attributable to
an approximately $11.2 million reduction in the average balance of our mortgage
notes receivable. These notes principally consisted of a line of credit and
certain other loans to Hilcoast, which were repaid during 1998. The average
interest rate on these notes approximated 10.9% and the repayments as well as a
substantial portion of our cash balances were generally utilized to acquire
shopping centers in 1998 or reinvested in lower yielding short-term investments
(averaging approximately 5% during 1998), pending the completion of certain
planned acquisitions.

<PAGE>
11

General and administrative expenses increased by $1,039,000 during 1998,
reflecting increases in personnel and other costs due to the 1997 acquisition,
and in legal fees primarily in connection with certain litigation which has been
settled.

Minority interests in income of OP amounted to $1,855,000, representing an
average of 17.4% of the income attributable to the OP. There were no minority
interests prior to December 31, 1997.

Funds From Operations (FFO)

FFO, as defined by the National Association of Real Estate Investment Trusts,
consists of net income (computed in accordance with generally accepted
accounting principles) before depreciation and amortization of real property,
certain non-recurring items, extraordinary items, gains and losses on sales of
real estate and income taxes.

The following schedule reconciles FFO to net income for the years presented (in
thousands):

1999 1998 1997
_______________________________

Net income ................................... $ 7,247 $ 15,850 $ 8,515
Deferred income tax benefit .................. -- (7,041) --
Depreciation and amortization of real property
(including unconsolidated affiliates)* ..... 3,576 2,391 573
Gain on sale of real estate* ................. -- (1,917) --
Non-recurring items, principally
settlement of litigation ................... -- 252 --
________ ________ ________
FFO .......................................... $ 10,823 $ 9,535 $ 9,088
======== ======== ========

*Net of amounts attributable to minority interests.

We believe that FFO is an appropriate measure of operating performance because
real estate depreciation and amortization charges are not meaningful in
evaluating the operating results of our properties and certain non-recurring
items, such as the gain on the sale of real estate and deferred income tax
benefit, would distort the comparative measurement of performance and are not
relevant to ongoing operations. However, FFO does not represent cash generated
from operating activities in accordance with generally accepted accounting
principles and should not be considered as an alternative to either net income
as a measure of our operating performance or to cash flows from operating
activities as an indicator of liquidity or cash available to fund all cash flow
needs. In addition, since other REITs may not calculate FFO in the same manner,
FFO presented may not be comparable to that reported by other REITs.

Liquidity and Capital Resources

Consolidated Statements of Cash Flows

As of December 31, 1999, unrestricted cash and cash equivalents decreased to
$3.5 million from $3.8 million and $12 million at December 31, 1998 and 1997,
respectively.

Net cash provided by operating activities, as reported in the Consolidated
Statements of Cash Flows, increased to $11 million in 1999 from $9.9 million in
1998 and $8.9 million in 1997. These amounts generally reflect the OP's FFO and
net changes in other assets and liabilities.

<PAGE>
12

Net cash used by investing activities amounted to $1.4 million in 1999, and $6.8
million in 1998. In 1997, investing activities provided $7.8 million of net
cash. The 1999 amounts reflect $1.6 million of capital improvements and $1.2
million of cash required in connection with the acquisitions of three shopping
centers, partially offset by $1.6 million of collections on mortgage notes
receivable. The 1998 amounts principally consist of $21.4 million of cash
required in connection with the acquisitions of seven shopping centers and $2.1
million of capital improvements, partially offset by $12.7 million of net
collections on mortgage notes receivable and $4.2 million received from the sale
of real estate. The 1997 amounts principally consist of $7.2 million of net
collections on mortgage notes receivable and the maturity of $6.4 million of
short-term investments, partially offset by $5.6 million of cash required in
connection with the acquisition of nine shopping centers and an office building.

Net cash used in financing activities decreased to $9.9 million in 1999 from
$11.2 million in 1998 and $11.4 million in 1997. In each of the three years,
cash dividends declared amounted to $1.16 per share, or $9.2 million. The 1999
amounts also include cash distributions of $1.7 million to minority interests,
partially offset by $1.6 million of net proceeds from borrowings. The 1998
amounts include cash distributions of $1.5 million to minority interests and
$3.7 million for the redemption of approximately 300,000 OP units, partially
offset by $3.2 million of net borrowings. The 1997 amounts include $2.2 million
of repayments of borrowings. There were no minority interests prior to 1998.

Borrowings

At December 31, 1999, our borrowings increased to $156.3 million from $121.9
million at December 31, 1998. The $34.4 million increase included $32.1 million
borrowed under our line of credit (see below) to finance three shopping center
acquisitions in 1999 and $5.2 million in connection with refinancings. Scheduled
principal payments over the next five years are $117 million with $39.3 million
due thereafter.

Our borrowings are collateralized by a substantial portion of our income
producing real estate and our mortgage notes receivable. We expect to refinance
certain of these borrowings, at or prior to maturity, through new mortgage loans
on our real estate. The ability to do so, however, is dependent upon various
factors, including the income level of the properties, interest rates and credit
conditions within the commercial real estate market. Accordingly, there can be
no assurance that such refinancing can be achieved.

At December 31, 1999, borrowings consisted of $106.5 million of fixed rate
indebtedness, with a weighted average interest rate of 7.70% and $49.8 million
of variable rate indebtedness, principally under our line of credit, with a
weighted average interest rate of 8.23%. At December 31, 1998, our fixed rate
indebtedness was $105 million, with a weighted average interest rate of 7.97%
and our variable rate indebtedness was $16.9 million with a weighted average
interest rate of 7.37%. Continued interest rate increases on our variable rate
indebtedness could have an adverse effect on our future operating results and
cash flow.

Under our three-year non-revolving line of credit, we can borrow up to $100
million. Advances under the line of credit: (1) must be secured by assets based
on specified aggregate loan to value and debt service coverage ratios, (2) bear
interest at an annual rate of one month LIBOR plus 1.75% and (3) may be drawn
through March 31, 2000 and must be repaid by certain dates during the twelve
months ended March 31, 2001. Additional provisions include a 1% commitment fee
(which has been paid), a minimum net worth covenant and cross-default and
cross-collateralization requirements. Advances under the line of credit are used
to fund acquisitions, expansions, renovations, financing and refinancing of real
estate, including reimbursement of equity advances, and require certain
performance covenants. As of December 31, 1999, the unused facility amounted to
$51 million of which $10.3 million was available to be borrowed based on
collateral already pledged under the line of credit. We are currently
negotiating an extension of our line of credit and we expect to be able to
extend the dates through which advances may be drawn and repaid. There is no
assurance, however, that we will be successful in doing so. We have an
additional $1.2 million available principally under an unsecured credit
facility.

<PAGE>
13

Capital Resources

Our operating funds are generated from rent revenue from income producing
properties and, to a much lesser extent, interest income on our mortgage notes
receivable. We believe that our operating funds will be sufficient in the
foreseeable future to fund operating and administrative expenses, interest
expense, recurring capital expenditures and distributions to stockholders in
accordance with REIT requirements. Sources of capital for non-recurring capital
expenditures and scheduled principal payments, including balloon payments, on
outstanding borrowings are expected to be obtained from property refinancing,
scheduled principal repayments on our mortgage notes receivable, sales of
non-strategic other real estate, our line of credit and/or potential debt or
equity financing in the public or private markets.

Acquisitions

During 1999, we completed the acquisition of three shopping centers for an
aggregate purchase price of $33.3 million, including transaction costs,
substantially all of which was financed by mortgage debt. In connection with one
of the acquisitions, we were required to deposit an additional $1 million with
the lender for future capital improvements.

During 1998, we acquired seven shopping centers for purchase prices aggregating
$74.6 million, including transaction costs, which consisted of $21.4 million of
cash and the incurrence or assumption of $53.2 million of liabilities,
principally mortgage debt.

On December 31, 1997, we completed the acquisition of nine shopping centers and
an office building and a 95% economic interest in Drexel. The purchase price
amounted to $61.7 million (net of cash acquired), consisting of 1,787,010 OP
units, valued at $21.2 million; the assumption of $34.9 million of liabilities,
principally mortgage debt; and, cash in the amount of $5.6 million, including
transaction costs.

Our policy has been to acquire additional properties only if they are income
producing and any proposed acquisition requires a resolution by a majority of
our Board of Directors that the acquisition will not adversely affect our
ability to pay a quarterly dividend of at least 29 cents per share. Under the OP
agreement, all of the activities of the OP must generally be conducted with a
view toward enabling the OP to make quarterly distributions to all partners of
at least 29 cents per OP unit and such additional amount, if required, to enable
us to pay a regular quarterly dividend of at least 29 cents per share to our
stockholders. As of December 31, 1999, there were 1,462,406 OP units held by
minority interests.

As discussed under Item 1. Business - Recent Development - Proposed Merger, on
December 10, 1999, we signed a definitive merger agreement and reorganization
plan with Kranzco to merge our operations and create Kramont. Terms of the
merger call for common shareholders of both companies to each receive one share
of Kramont common stock for each outstanding share of CV Reit and Kranzco common
stock on a tax-free basis. The merger agreement is subject to approval by
shareholders of both companies and certain other conditions.

We believe the merger will provide benefits to our shareholders. However, there
may be certain disadvantages, including but not limited to the following:

<PAGE>
14

If the merger is completed, certain common stock dividend protections that
currently exist in our certificate of incorporation and by laws will be
terminated. Our common shareholders are currently not subject to the rights of
any preferred shareholders. Upon completion of the merger, the rights of our
common shareholders will be subject to the rights of Kramont's preferred
shareholders. In addition, certain holders of Kranzco preferred shares will have
appraisal rights in connection with the merger. Assertion of appraisal rights by
a significant number of those holders may have a material adverse effect on
Kramont's cash flow. Kramont may be required to incur costs in connection with
obtaining consents from lenders. The inability to obtain certain material
consents may have a material adverse effect on Kramont's cash flow. Kramont will
have operations in a number of different states. There is no assurance that
costs, management's time and effort, or other factors associated with the
integration of our company and Kranzco would not adversely affect future
combined results of operations or the benefits of expected cost savings.

In the event the merger is terminated, depending on the reason for such
termination, we may be required to pay Kranzco a break-up fee of $5 million or
an expense fee of up to $1.5 million or both. The obligation to pay such fees
may deter others from offering to engage in a different transaction with us in
the event the merger is not consummated.

Inflation

During recent years, the rate of inflation has remained at a low level and had
minimal impact on our operating results.

Most of the tenant leases contain provisions designed to lessen the impact of
inflation. These provisions include escalation clauses, which generally increase
rental rates annually based on cost of living indexes (or based on stated rental
increases which are currently higher than recent cost of living increases), and
percentage rentals based on tenants' gross sales, which generally increase as
prices rise. Many of the leases are for terms of less than ten years, which
increases our ability to replace those leases, which are below market rates with
new leases at higher base and/or percentage rentals. In addition, most of the
leases require the tenants to pay their proportionate share of increases in
operating expenses, including common area maintenance, real estate taxes and
insurance.

However, in the event of significant inflation, our operating results could be
adversely affected if general and administrative expenses and interest expense
increase at a rate higher than rent income or if the increase in inflation
exceeds rent increases for certain tenant leases which provide for stated rent
increases (rather than based on cost of living indexes).

Year 2000 Issue

As many computer systems, software programs and other equipment with embedded
chips or processors (collectively referred to as information systems) use only
two digits rather than four to define the applicable year, they may be unable to
process accurately certain data, during or after the year 2000. As a result,
business and governmental entities are at risk for possible miscalculations or
systems failures causing disruptions in their business operations. This is
commonly known as the Year 2000 ("Y2K") issue. The Y2K issue concerns not only
information systems used solely within a company but also concerns third
parties, such as customers, vendors and creditors, using information systems
that may interact with or affect a company's operations.

We have not experienced any material disruption in our business or operations as
a result of Y2K issues. However, there is no assurance that we will not
experience interruptions in the future.

<PAGE>
15

Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133 requires companies to recognize all
derivative contracts as either assets or liabilities in the balance sheet and to
measure them at fair value. SFAS 133 was to become effective for periods
beginning after June 15, 1999; however, SFAS 133 has been amended by SFAS 137,
which delayed the effective date to periods beginning after June 15, 2000. The
adoption of this pronouncement is not expected to have a material impact on our
financial statements or disclosures.

Forward Looking Information: Certain Cautionary Statements

Certain statements contained in "Management's Discussion and Analysis of Results
of Operations and Financial Condition" and elsewhere in this Form 10-K, that are
not related to historical results, are forward looking statements, such as
anticipated liquidity and capital resources, completion of potential
acquisitions and collectibility of real estate mortgage notes receivable. The
matters referred to in forward looking statements are based on assumptions of
future events which may not prove to be accurate and which could be affected by
the risks and uncertainties involved in our business; accordingly, actual
results may differ materially from those projected and implied in the forward
looking statements. These risks and uncertainties include, but are not limited
to, the effect of conditions in the commercial real estate market and the
economy in general, the level and volatility of interest rates, the impact of
current or pending legislation and regulation, as well as certain other risks
described in the Form 10-K. Subsequent written and oral forward looking
statements attributable to our company or persons acting on its behalf are
expressly qualified in their entirety by cautionary statements in this paragraph
and elsewhere described in this Form 10-K and in other reports we filed with the
Securities and Exchange Commission.

Item 8. Financial Statements and Supplementary Data

Table of Contents to Consolidated Financial Statements

Page
------

Report of Independent Certified Public Accountants 16

Consolidated Financial Statements:

Balance Sheets - December 31, 1999 and 1998 17
Statements of Income - Years Ended December 31, 1999, 1998 and 1997 18
Statements of Stockholders'Equity - Years Ended December 31, 1999,
1998 and 1997 19
Statements of Cash Flows - Years Ended December 31, 1999, 1998 and 1997 20
Notes to Consolidated Financial Statements 21-31

Consolidated Financial Statements Schedules:

Schedule III - Real Estate and Accumulated Depreciation 32-33
Schedule IV - Mortgage Loans on Real Estate 34

Schedules, other than those listed above, are omitted because they are not
required, or because the information required is included in the consolidated
financial statements or the notes thereto.

<PAGE>
16

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, 1999 and 1998 and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1999. We have also audited the schedules
listed in the accompanying index. These financial statements and the schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the schedules 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 schedules 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, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with generally accepted accounting principles.

Also, in our opinion, the schedules present fairly, in all material respects,
the information set forth therein.

New York, New York BDO SEIDMAN, LLP
March 3, 2000

<PAGE>
17

CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

December 31,
1999 1998
____________________
ASSETS
______
Real estate - income producing,
net of accumulated depreciation
(Notes 2, 4, 6 and 8)
Land ................................................. $ 18,302 $ 14,980
Buildings ............................................ 154,774 127,428
________ ________
173,076 142,408
Mortgage notes receivable (Notes 5 and 8) ................ 63,385 64,988
Investments in unconsolidated affiliates ................. 3,390 3,323
Cash and cash equivalents (includes $890
and $930 restricted) ................................... 4,385 4,775
Other real estate (net of allowance for
losses of $2,401) ...................................... 5,503 5,463
Receivables and accrued income ........................... 2,164 1,713
Prepaid expenses and other ............................... 5,858 2,752
________ ________
$257,761 $225,422
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Borrowings (Notes 2 and 6) ............................. $156,329 $121,933
Accounts payable and other liabilities ................. 7,024 6,283
________ ________
Total liabilities ................................... 163,353 128,216
Minority interests in Operating Partnership
(Notes 2 and 12) ........................................ 16,846 17,650
________ ________
Commitments and contingencies (Notes 6 and 7)

Stockholders' equity (Note 11):
Common stock, $.01 par-shares authorized
20,000,000; outstanding 7,966,621 ..................... 80 80
Additional paid-in capital ............................. 18,490 18,490
Retained earnings ...................................... 58,992 60,986
________ ________
Total stockholders' equity ......................... 77,562 79,556
________ ________
$257,761 $225,422
======== ========

See accompanying notes to consolidated financial statements.

<PAGE>
18

CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data)

Year Ended December 31,
1999 1998 1997
_________________________________
Revenues:
Rent ....................................... $ 25,555 $ 17,155 $ 2,703
Interest, principally from mortgage notes
(Notes 5, 8 and 10) ...................... 8,008 8,854 10,612
_________ _________ _________
33,563 26,009 13,315
_________ _________ _________
Expenses:
Interest (Note 6) ......................... 11,743 8,355 3,306
Operating .................................. 7,621 5,184 870
Depreciation and amortization .............. 4,078 2,707 409
General and administrative ................. 1,768 1,693 654
_________ _________ _________
25,210 17,939 5,239
_________ _________ _________
8,353 8,070 8,076

Equity in income of unconsolidated affiliates 238 547 439
Gain on sale of real estate (Note 4(d)) ...... -- 2,347 --
Non-recurring items, principally settlement
of litigation .............................. -- (300) --
Minority interests in income of Operating
Partnership ................................ (1,344) (1,855) --
_________ _________ _________
Income before income tax benefit ............. 7,247 8,809 8,515

Deferred income tax benefit .................. -- (7,041) --
_________ _________ _________
Net income ................................... $ 7,247 $ 15,850 $ 8,515
========= ========= =========
Per Common Share:
Net income, basic and diluted .............. $ .91 $ 1.99 $ 1.07
========= ========= =========
Dividends declared ......................... $ 1.16 $ 1.16 $ 1.16
========= ========= =========
Average common shares outstanding,
basic and diluted ........................ 7,966,621 7,966,621 7,966,621
========= ========= =========

See accompanying notes to consolidated financial statements.

<PAGE>
19

CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)

Additional
Common Paid in Retained
Stock Capital Earnings Total
_________________________________________________

Balance at December 31, 1996 ... $ 80 $ 18,490 $ 55,103 $ 73,673
Net income for the year ...... -- -- 8,515 8,515
Cash dividends declared ...... -- -- (9,241) (9,241)
_____ ________ ________ _________
Balance at December 31, 1997 ... 80 18,490 54,377 72,947
Net income for the year ...... -- -- 15,850 15,850
Cash dividends declared ...... -- -- (9,241) (9,241)
_____ ________ ________ _________
Balance at December 31, 1998 ... 80 18,490 60,986 79,556
Net income for the year ...... -- -- 7,247 7,247
Cash dividends declared ...... -- -- (9,241) (9,241)
_____ ________ ________ _________
Balance at December 31, 1999 ... $ 80 $ 18,490 $ 58,992 $ 77,562
===== ======== ======== =========

See accompanying notes to consolidated financial statements.

<PAGE>
20

CV REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,
1999 1998 1997
________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,247 $ 15,850 $ 8,515
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,078 2,707 409
Equity in depreciation and amortization
of unconsolidated affiliates 176 171 175
Minority interests in income of
Operating Partnership 1,344 1,855 -
Gain on sale of real estate - (2,347) -
Deferred income tax benefit - (7,041) -
Changes in assets and liabilities,
net of effects from acquisitions:
(Increase) decrease in receivables
and accrued income (451) (1,073) 36
(Increase) decrease in prepaid
expenses and other (1,953) (996) 11
Increase (decrease) in accounts
payable and other liabilities 565 743 (242)
________ ________ ________
Net cash provided by operating activities 11,006 9,869 8,904
________ ________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of real estate (1,173) (21,364) (5,577)
Capital improvements (1,635) (2,069) (59)
Fundings on mortgage notes receivable - (5,190) (16,112)
Collections on mortgage notes receivable 1,603 17,854 23,268
Proceeds from the sale of real estate - 4,151 -
Maturity of short-term investments - - 6,436
Other (243) (146) (162)
________ ________ ________
Net cash (used) provided by investing
activities (1,448) (6,764) 7,794
________ ________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 24,858 8,366 -
Repayments of borrowings (23,298) (5,196) (2,201)
Cash dividends paid (9,204) (9,249) (9,209)
Distributions to minority interests (1,718) (1,470) -
Redemption of Operating Partnership units (546) (3,665) -
________ ________ ________
Net cash used in financing activities (9,908) (11,214) (11,410)
________ ________ ________
Net (decrease) increase in unrestricted cash
and cash equivalents (350) (8,109) 5,288
Unrestricted cash and cash equivalents at the
beginning of the period 3,845 11,954 6,666
________ ________ ________
Unrestricted cash and cash equivalents at the
end of the period $ 3,495 $ 3,845 $ 11,954
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 11,038 $ 7,542 $ 3,296
======== ======== ========
Acquisitions of real estate:
Fair value of assets acquired $(34,264) $(74,561) $(61,711)
Liabilities assumed or incurred 33,091 53,047 34,913
Operating Partnership units issued - 150 21,221
_______ ________ _______
Cash paid for acquisitions, net of cash
acquired (Note 2) $(1,173) $(21,364) $ (5,577)
======== ======== ========

See accompanying notes to consolidated financial statements

<PAGE>
21

CV REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

Organization and Business

CV Reit, Inc. ("CV Reit") is a real estate investment trust ("REIT") which until
December 31, 1997, was principally engaged in investing in mortgage notes
receivable. Effective December 31, 1997, CV Reit and its subsidiaries converted
to an Umbrella Partnership REIT (UPREIT) structure as part of a series of
transactions which closed on that date and which included the following: (1) a
newly created Operating Partnership, Montgomery CV Realty L.P. (together with
its wholly-owned subsidiaries hereinafter collectively referred to as the "OP"),
acquired 100% of the ownership interests in nine shopping centers and an office
building, and a 95% economic interest in Drexel Realty, Inc. ("Drexel"), a real
estate management and leasing company (Note 2) and (2) CV Reit and its
subsidiaries transferred substantially all of their net assets (or the economic
benefit) to the OP. As a result, CV Reit indirectly currently owns 84.5% of the
OP, is the OP's sole general partner and operates as a self-administered,
self-managed equity REIT. As of December 31, 1999, the OP owned twenty
neighborhood or community shopping centers and two office buildings, located in
Pennsylvania, New Jersey and Florida, comprising approximately $1.9 million
square feet (Note 3).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of CV
Reit and all subsidiaries ("the Company"), including the OP. The Company owns
99% of the non-voting common stock of, and a 95% economic interest in Drexel,
and owns 45%-50% interests in certain real estate partnerships, which are
accounted for on the equity method. Significant intercompany accounts and
transactions have been eliminated in consolidation.

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.

Real Estate - Income Producing ("Real Estate")

Real Estate is carried at cost, net of accumulated depreciation, and is subject
to operating leases. Depreciation is provided over the estimated useful lives of
the assets (7 to 40 years) on the straight-line method.

The Company evaluates its long-lived assets, including its Real Estate, 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.

Revenue Recognition

Rental revenue is recognized on a straight-line basis over the terms of the
leases. Certain leases provide for reimbursement to the Company of the tenants'
share of common area maintenance costs, insurance and real estate taxes, which
are recorded on the accrual basis.

<PAGE>
20

Mortgage Notes Receivable, Other Real Estate and Allowance For Losses

Mortgage notes receivable are carried at the lower of cost or estimated net
realizable value. Accrual of interest is discontinued when management believes,
after considering economic and business conditions and collection efforts, that
timely collection is doubtful.

Other real estate principally consists of three parcels of unimproved commercial
land, totaling 38 acres located in southeast Florida, acquired by deed in lieu
of foreclosure and held for resale (Note 3). These properties are carried at the
lower of cost 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 its mortgage notes
receivable and other real estate. 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.

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 currently
required to distribute at least 95% of its ordinary taxable income to
stockholders (90% effective in 2001) 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
consisted of:

1999 1998 1997
______ ______ ______
Ordinary income 88.3% 65.4% 89.1%
Capital gain distribution 11.7% 34.6% 10.9%

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

As a result of the acquisitions described in Note 2 and the OP structure, the
Company does not expect to be subject to federal income taxes in the future as
it intends to distribute ordinary and capital gain income. Accordingly, during
1998, the Company reversed the existing net deferred tax liability, which arose
from sales reported on the installment method for income tax purposes, and
recorded a deferred tax benefit of $7,041,000.

As of December 31, 1999, the Company has aggregate net operating loss
carryforwards for tax purposes of approximately $15.7 million, expiring $7.1
million in 2007 and $8.6 million in 2006

Net Income Per Common Share

Basic net income per common share is computed using net income divided by the
weighted average number of common shares outstanding. Diluted net income per
common share includes the effect of potentially dilutive securities. During the
years presented, the Company had no dilutive securities since the exercise price
of all outstanding options exceeded the average market price of the Company's
common stock for the year, accordingly, basic and diluted net income per share
are identical.

<PAGE>
23

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.

Reclassifications

Certain 1998 and 1997 amounts have been reclassified to conform to the 1999
financial statement presentation. These reclassifications had no impact on
operating results previously reported.

New Pronouncements

(2) Acquisitions

During 1999, the OP purchased three shopping centers, aggregating 324,000 square
feet, located in Pennsylvania and New Jersey. The aggregate purchase prices
amounted to $33.3 million, including transaction costs, substantially all of
which was financed by mortgage debt. The OP was required to deposit an
additional $1 million with the lender in connection with future capital
improvements.

During 1998, the OP purchased seven shopping centers, aggregating 796,000 square
feet, located in Pennsylvania and New Jersey. The aggregate purchase prices
amounted to $74.6 million, including transaction costs, which consisted of $21.4
million of cash and the incurrence or assumption of $53.2 million of
liabilities, principally mortgage debt.

On December 31, 1997, the OP completed the acquisition of nine shopping centers
and an office building, located in Pennsylvania and New Jersey, from two
separate groups, the Montgomery Parties and the Levy Parties (Note 8), and a 95%
economic interest in Drexel from Louis P. Meshon, Sr. Effective December 31,
1997, Mr. Meshon became President, Chief Executive Officer and a director of CV
Reit. The purchase price amounted to $61.7 million (net of cash acquired),
consisting of 1,787,010 OP units issued to the sellers, valued at $11.88 per OP
unit, or $21.2 million, based on the closing price of the Company's common stock
(into which the OP units were redeemable - Note 12) on April 28, 1997, the date
the acquisition was publicly announced; the assumption of $34.9 million of
liabilities, principally mortgage indebtedness; and, cash in the amount of $5.6
million, including transaction costs.

All of the acquisitions were accounted for under the purchase method;
accordingly, the operating results of the net assets acquired are included in
the consolidated financial statements from their respective purchase dates.

The following unaudited proforma data summarizes the consolidated results of
operations for the years indicated as if the 1999 acquisitions had occurred on
January 1, 1998. The proforma results do not purport to be indicative of the
results of operations which would have actually been reported had the
acquisitions been consummated on those dates, or which may be reported in the
future (in thousands, except per share data):

<PAGE>
24

1999 1998
_________ ________
Revenues ............................................... $34,959 $30,312
Net income before tax benefit .......................... $ 7,429 $ 9,167
Net income ............................................. $ 7,429 $16,208
Net income per common share, basic and diluted ......... $ .93 $ 2.03

(3) Recent Developments

Proposed Merger

On December 10, 1999, the Company signed a definitive merger agreement and
reorganization plan with Kranzco Realty Trust ("Kranzco"), a shopping center
REIT, to merge operations and create a new community shopping center UPREIT to
be called Kramont Realty Trust ("Kramont"). Terms of the merger call for common
shareholders of both companies to each receive one share of Kramont common stock
for each outstanding share of CV Reit and Kranzco common stock on a tax-free
basis. The merger agreement is subject to approval by shareholders of both
companies and certain other conditions.

The Company's President and Chief Executive Officer will assume the same titles
and responsibilities at the newly created Kramont with the Company's designees
holding the majority of the board seats. Corporate headquarters will be located
at the OP's existing facilities, in Plymouth Meeting, Pennsylvania.

The merger will be accounted for as a purchase by the Company of Kranzco.
Accordingly, Kransco's assets and liabilities will be reocrded at their
estimated fair values based on consideration given by the Company.

(4) Real Estate

(a) Real Estate is located in Pennsylvania, New Jersey and Florida and
consists of (in thousands):

December 31,
1999 1998
____________________________
Land ....................................... $ 18,302 $ 14,980
Shopping centers ........................... 156,949 125,670
Office buildings ........................... 4,933 4,900
_________ _________
Totals ..................................... 180,184 145,550
Less accumulated depreciation .............. (7,108) (3,142)
_________ _________
Net Real Estate ............................ $ 173,076 $ 142,408
========= =========

<PAGE>
25

(b) Real Estate is leased to tenants under leases expiring at various dates
through 2017, some of which contain renewal options of up to 30 years. Most of
the leases require fixed base rentals payable monthly in advance; additional
rental based on reimbursements of common area maintenance, insurance and real
estate taxes and, in some leases, based on a percentage of tenants' sales; and,
rent increases based on cost-of-living indexes. During 1999 and 1998, the
Company recognized income from reimbursements of common area maintenance,
insurance, real estate taxes and percentage rent of $6.5 million and $4.4
million, respectively. As of December 31, 1999, future minimum rental income
under noncancellable operating leases, excluding rentals from the exercise of
renewal options, is as follows (in thousands):

Year ending December 31,

2000 $ 19,654
2001 17,712
2002 15,006
2003 12,798
2004 10,711
Thereafter 36,866
________
Total $112,747
========

(c) Real Estate with a net book value of $166.1 million, at December 31, 1999,
is pledged as collateral for borrowings (Note 6).

(d) On May 15, 1998, the Company sold a motel for net cash proceeds of $4.2
million and recognized a gain of $2.3 million.

(5) Mortgage Notes Receivable

At December 31, 1999, the Company's mortgage notes receivable consisted of $24.7
million due from Hilcoast Development Corp. ("Hilcoast") (the "Hilcoast
Recreation Note"), collateralized by first mortgages on the recreation
facilities at a Century Village adult condominium community in southeast
Florida, and $38.7 million, collateralized by first mortgages on the recreation
facilities at three other Century Village communities in southeast Florida
(collectively, the "Recreation Notes"). The Hilcoast Recreation Note provides
for self-amortizing equal monthly principal and interest payments due through
July 31, 2023, bears interest at 11% per annum, and may not be prepaid by
Hilcoast without a prepayment penalty. The remaining Recreation Notes
principally provide for self-amortizing equal monthly principal and interest
payments due through 2012, with interest rates averaging 13% per annum, and
contain certain prepayment prohibitions. The Recreation Notes are pledged as
collateral for certain borrowings (Note 6).

The mortgage notes receivable at December 31, 1999 mature as follows (in
thousands):

One year or less $ 1,649
After one year through five years 9,746
After five years 51,990
________
Totals $ 63,385
========

<PAGE>
26

(6) Borrowings

(a) Borrowings consist of (in thousands):

December 31,
1999 1998
_____________________
Mortgage notes payable through
September 2008, interest ranging
from 6.09% to 10.28%, collateralized
by Real Estate (Note 4) ............................ $ 78,720 $ 74,528

Mortgage notes payable through March
2001 under $100 million credit facility,
(the "Line of Credit"), interest
at one month LIBOR (6.48% at December
31, 1999), plus 1.75%, collateralized by
Real Estate (Note 4) and the Hilcoast
Recreation Note (Note 5) ........................... 49,036 16,950

Collateralized Mortgage Obligations,
net of unamortized discount of $439,000
and $553,000 based on an effective interest
rate of 8.84%, collateralized by certain of
the Recreation Notes (Note 5), quarterly
self-amortizing principal and interest
payments required through March 2007 ............... 27,823 30,455

$1 million revolving credit facility,
interest at one month LIBOR plus 1.8%, maturing
June 2000, collateralized by Real Estate............. 750 --
________ ________
Totals ............................................... $156,329 $121,933
======== ========

In March and May 1999, the Company entered into three interest rate swap
contracts with an aggregate notional amount of $28.7 million, which expire in
2004. The interest rate swaps have an effective interest rate of 6.63%.

(b) Effective March 31, 1998, the Company entered into the Line of Credit with a
financial institution which provides the Company with a $100 million three year
non-revolving line of credit. Advances under the Line of Credit: (1) must be
secured by assets based on specified aggregate loan to value and debt service
coverage ratios, (2) bear interest at an annual rate of one month LIBOR plus
1.75% and (3) may be drawn through March 31, 2000 and must be repaid by certain
dates during the twelve months ended March 31, 2001. Additional provisions
include a 1% commitment fee, a minimum net worth covenant and cross-default and
cross-collateralization requirements. Advances under the Line of Credit are used
to fund acquisitions, expansions, renovations, financing and refinancing of real
estate, including reimbursement of equity advances, and require certain
performance covenants. As of December 31, 1999, the unused facility amounted to
approximately $51 million of which $10.3 million was available to be borrowed
based on collateral already pledged under the Line of Credit.

(c) The OP has agreed that it will not make certain prepayments or refinancings
of certain of the mortgage notes prior to various dates not later than July 31,
2002, without the consent of certain of the limited partners of the OP.

(d) Maturities of borrowings are as follows (in thousands):

2000 $ 21,789
2001 36,474
2002 4,664
2003 18,770
2004 35,327
Thereafter 39,305
________
Total $156,329
========

<PAGE>
27

(7) Contingencies

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.

(8) Related Party Transactions

Hilcoast/H. Irwin Levy ("Mr. Levy")

(a) On July 31, 1992, Hilcoast, an affiliate of the Company on that date,
acquired certain assets from a previous borrower of the Company, subject to the
borrower's indebtedness to the Company, principally consisting of the Hilcoast
Recreation Note (Note 5), which as of December 31, 1999, had an outstanding
balance of $24.7 million. Mr. Levy, Chairman of the Board and a principal
stockholder of the Company, is the Chairman of the Board, Chief Executive
Officer and a majority stockholder of Hilcoast. During 1999, 1998 and 1997, the
Company recognized interest income of $2.7 million, $3.1 million and $4.3
million, respectively, from Hilcoast.

(b) 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 the Hilcoast Recreation Note. The agreement provides for the
payment of $10,000 per month to Hilcoast, plus reimbursement for reasonable out
of pocket expenses. The agreement may be terminated by Hilcoast upon 180 days
notice and by the Company upon 30 days notice. During 1999, 1998 and 1997, the
Company paid $115,000, $110,000 and $120,000, respectively, to Hilcoast under
this agreement, plus expense reimbursement.

(c) Mr. Levy owns the recreation facilities at a Century Village community,
acquired from the Company in 1981, which is collateral for one of the Company's
Recreation Notes, which had an outstanding balance of $10.3 million at December
31, 1999 (Note 5). 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 2011 and may not be prepaid. During 1999, 1998 and
1997, the Company recognized interest income of $1.4 million, $1.4 million and
$1.5 million, respectively, on this note.

(d) Companies controlled by Mr. Levy and certain members of his family lease,
manage and operate the recreation facilities at four Century Village
communities, which are collateral for the Company's Recreation Notes (Note 5).

(e) Two of the shopping centers purchased by the OP on December 31, 1997 (Note
2) were acquired from the Levy Parties (Mr. Levy and members of his family) in
exchange for 390,717 OP units (valued at approximately $4.6 million), including
78,149 OP units (valued at approximately $900,000) issued to Mr. Levy. The
economic basis used to determine the acquisition price was the same as that used
for the other properties acquired on that date.

(f) The Company leases approximately 2,500 square feet of an office building,
located in West Palm Beach, 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 $2,100,
plus an allocation of utility expenses.

Alan Shulman

On May 15, 1998, the Company sold a motel (Note 4(d)), which had been leased to
a corporation controlled by Alan Shulman, a director of the Company. In 1998 and
1997, the Company recognized rent income of $223,000 and $489,000, respectively,
under the lease.

<PAGE>
28

Stanley S. Cohen

Stanley S. Cohen, a director of the Company, is a partner and member of the
Executive Committee of the law firm of Fox, Rothschild, O'Brien & Frankel, LLP.
During 1999 and 1998, we paid $487,487 and $380,093, respectively, to that firm
for legal services.

(9) Major Tenants and Borrowers

During 1999, there were no tenants or borrowers who accounted for 10% or more of
the Company's revenues. During 1998, interest income from one borrower
(Hilcoast) provided 12% of total revenues. During 1997, interest income from
four borrowers provided 33% (Hilcoast), 16%, 14% and 11% (Mr. Levy),
respectively, of total revenues.

(10) Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments are as follows:

December 31,
1999 1998
_________________________________________________
Carrying Carrying
Amount Fair Value Amount Fair Value
_________________________________________________
Real estate mortgage notes
receivable ................. $ 63,385 $ 79,238 $ 64,988 $ 90,835

Cash and cash equivalents .. 4,385 4,385 4,775 4,775

Borrowings ................. (156,329) (156,734) (121,933) (124,274)

Real estate mortgage notes receivable - The fair value of the fixed rate,
Recreation Notes (Note 5) 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.

Borrowings - 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 borrowings.

(11) Stockholders' Equity

Stock Options

The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees",
and related interpretations in accounting for its three stock option plans - the
Montgomery CV Trust Executive Stock Option Plan (the "CV Plan"), the Drexel
Realty, Inc. 1997 Stock Option Plan (the "Drexel Plan") and the CV Reit, Inc.
Non-Employee Director 1998 Stock Option Plan (the "Director Plan").

Under the CV Plan, the Drexel Plan and the Director Plan, qualified and
nonqualified stock options to purchase up to 150,000 shares, 400,000 shares and
150,000 shares, respectively, of the Company's common stock may be granted to
certain executives, employees and non-employee directors. The maximum term of
the options granted under each of the plans is ten years.

<PAGE>
29

Statement of Financial Accounting Standards No.123 (SFAS 123), "Accounting for
Stock-Based Compensation", requires the Company to provide pro forma information
regarding net income and net income per common share as if compensation cost for
stock options granted under the plans, if applicable, had been determined in
accordance with the fair value based method prescribed in SFAS 123.

The Company estimates the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants: expected lives of ten years; dividend yield of
8.51%, volatility at 46%, risk free interest rate of 5.63% for 1999 and dividend
yield of 8.44%, volatility at 46%, risk free interest rate of 5.71% for 1998.

Under accounting provisions of SFAS 123, the Company's net income and net income
per share, would have been reduced to the pro forma amounts indicated below (in
thousands, except per share data):

Year Ended December 31,
1999 1998
______________________________
Net income:
As reported ........................... $ 7,247 $ 15,850
Pro forma ............................. $ 7,095 $ 15,567

Net income per share:
As reported ........................... $ .91 $ 1.99
Pro forma ............................. $ .89 $ 1.95

Changes in options outstanding are summarized as follows:

Weighted
Weighted Average
Average Fair
Exercise Per Share
Price Per of Options
Shares Share Granted
________________________________
1997:
Granted - equal to market value ............. 225,000 $ 13.69 $ 2.94

1998:
Granted - equal to market value ............. 45,000 14.14 3.02

1999:
Granted - equal to market value ............. 25,000 12.50 2.08
_______
Balance December 31, 1999 ..................... 295,000
=======

At December 31, 1999, the weighted average remaining contractual life of the
295,000 options outstanding was 7.54 years. A total of 155,500 of the
outstanding options were exercisable with a weighted average exercise price of
$13.61 per share.

<PAGE>
30

Redemption Rights

Holders of the 1,462,406 OP units at December 31, 1999 have the right to require
the OP to redeem their OP units at any time. However, upon a holder giving
notice of the exercise of this right, the Company has the right to acquire such
holder's OP units in exchange for cash or, if certain conditions are satisfied,
an equal number of shares of the Company's common stock.

During 1999, the OP redeemed 43,018 OP units for $546,000 in cash, resulting in
an increase in CV Reit's indirect ownership of the OP from 84.2% to 84.5%.
During 1998, the OP redeemed 302,552 OP units for $3.7 million in cash,
resulting in an increase in CV Reit's indirect ownership of the OP from 81.7% to
84.2%.

(12) Segment Reporting

Effective December 31, 1997, the Company became an equity REIT engaged in the
acquisition, leasing and management of neighborhood or community shopping
centers, located in Pennsylvania, New Jersey and Florida. Prior to 1998, the
Company's only principal business segment consisted of investments in mortgage
notes receivable. Although the Company no longer invests in new mortgage notes
receivable, it continues to hold its Recreation Notes (Note 5) and, as a result,
the following segment disclosure includes information on those investments (in
thousands):

Income
Producing
Real Estate
Principally Mortgage
Shopping Notes
Centers Receivable Other Consolidated
_____________________________________________
Year Ended December 31, 1999:
Total revenues $ 25,480 $7,878 $ 205 $33,563
======== ====== ====== =======
Net operating income before
interest expense $ 18,020 $7,878 $ 44 $25,942
======== ====== ====== =======
Net operating income after
interest expense $ 9,685 $4,470 $ 44 $14,199
======== ====== ====== =======
Net operating income from reportable
segments $14,199
Depreciation and amortization (4,078)
General, administrative and other (1,530)
Minority interests in income of OP (1,344)
_______
Net income $ 7,247
=======
Year Ended December 31, 1998:
Total revenues $ 16,853 $8,471 $ 685 $26,009
======== ====== ====== =======
Net operating income before
interest expense $ 11,868 $8,471 $ 486 $20,825
======== ====== ====== =======
Net operating income after
interest expense $ 6,554 $5,430 $ 486 $12,470
======== ====== ====== =======
Net operating income from reportable
segments $12,470
Depreciation and amortization (2,707)
General, administrative and other (1,446)
Gain on sale of real estate 2,347
Minority interests in income of OP (1,855)
_______
Income before income tax benefit $ 8,809
=======

<PAGE>
31

Income
Producing
Real Estate
Principally Mortgage
Shopping Notes
Centers Receivable Other Consolidated
______________________________________________

At December 31, 1999:
Investment in real estate and
mortgage notes receivable . $173,076 (a) $ 63,385 $ 8,893 $245,354
======== ======== ======== ========
Borrowings .................. $119,520 $ 36,809 $ -- $156,326
======== ======== ======== ========
At December 31, 1998:
Investment in real estate and
mortgage notes receivable . $142,708 (a) $ 64,988 $ 8,786 $216,482
======== ======== ======== ========
Borrowings .................. $ 91,478 $ 30,455 $ -- $121,933
======== ======== ======== ========

(a) Includes $34,634 and $75,397 of additions during the years ended December
31, 1999 and 1998, respectively.

(13) Selected Quarterly Financial Data (Unaudited)

Selected quarterly financial data follows (in thousands, except per share data):

Quarter Ended
March 31, June 30, Sept. 30, Dec.31,
_______________________________________________
1999:
Revenues ..................... $7,582 $8,488 $8,575 $8,917
Net income ................... 1,829 1,545 1,826 2,047
Per common share ............. .23 .19 .23 .26

1998:
Revenues ..................... $5,248 $5,993 $7,226 $7,542
Net income (a) ............... 1,877 3,680 1,556 8,737
Per common share ............. .24 .46 .20 1.09

(a) The quarter ended June 30, 1998 includes the Company's share of $2.3
million gain on sale of real estate and the quarter ended December 31,
1998 includes $7 million benefit arising from reversal of net deferred tax
liability.

<PAGE>
32

<TABLE>

CV Reit, Inc. and Subsidiaries
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1999
(in thousands)
<CAPTION>
Costs
Capitalized Gross Amount at Accum- Depre-
Initial Subsequent Which Carried at ulated ciable
Cost to Company to Close of Year Depre- Date of Date Life
Description Encumbrances Land Building Acquisition Land Building Total ciation Construction Acquired (Years)
- -------------------- ------------ ---------------- ----------- ----------------- ------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers
Pennsylvania
Chalfont Village
Shopping Center $ - $ 157 $ 1,417 $ 7 $ 157 $ 1,424 $1,581 $ 10 1968 1999 40
Cherry Square
Shopping Center 5,100 683 6,148 1 683 6,149 6,832 95 1991 1999 40
Chesterbrook
Village Center 7,788 1,336 12,023 156 1,336 12,179 13,515 633 1980 1997 40
Collegeville
Shopping Center 4,710 718 6,461 46 718 6,507 7,225 232 1978 1998 40
County Line Plaza 5,051 539 4,852 2,405 539 7,257 7,796 399 1970 1997 40
Danville Plaza 805 156 1,400 36 156 1,436 1,592 72 1971 1997 40
Dickson City
Center - 450 3,844 - 450 3,844 4,294 192 1972 1997 40
Gilbertsville
Shopping Center 2,615 382 3,445 121 382 3,566 3,948 133 1974 1998 40
Lakewood Plaza
Shopping Center 18,750 2,459 22,134 289 2,459 22,423 24,882 415 1962 1999 40
Mount Carmel Plaza 807 210 1,892 4 210 1,896 2,106 95 1988 1997 40
New Holland Plaza 934 117 1,051 - 117 1,051 1,168 37 1977 1998 40
North Penn
Marketplace 2,991 532 4,219 137 532 4,356 4,888 164 1983 1998 40
Village at Newtown 22,300 2,766 24,891 71 2,766 24,962 27,728 1,099 1989 1998 40
Whitemarsh
Shopping Center 7,104 1,077 9,694 61 1,077 9,755 10,832 485 1969 1997 40
Woodbourne Square 1,915 427 3,840 38 427 3,878 4,305 194 1985 1997 40
555 Scott
Street Center - 74 662 - 74 662 736 33 1961 1997 40
New Jersey
Marlton Shopping
Center-Phase II 9,300 (1) 1,252 11,272 98 1,252 11,370 12,622 434 1986 1998 40
Marlton Shopping
Center-Phase I 11,650 1,658 14,922 1 1,658 14,923 16,581 560 1985 1998 40
Rio Grande Plaza 7,744 1,442 12,975 20 1,442 12,995 14,437 651 1991 1997 40
Florida
Century Plaza 10,200 (1) 1,429 5,973 340 1,429 6,313 7,742 649 1976 1996 15-39
Office Buildings
Century Village
Administration
Building, Florida - - 750 220 - 970 970 327 1970 1991 5-30
Plymouth Plaza,
Pennsylvania 2,306 438 3,938 28 438 3,966 4,404 199 1974 1997 40
-------- -------- -------- ------ ------- -------- -------- ------
$122,070 $ 18,302 $157,803 $4,079 $18,302 $161,882 $180,184 $7,108
======== ======== ======== ====== ======= ======== ======== ======

(1) These encumbrances are cross collateralized under mortgages in the amount of
$19.5 million at December 31, 1999.
</TABLE>

<PAGE>
33

CV Reit, Inc. and Subsidiaries
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1999
(in thousands)

The changes in total real estate assets for the three years ended December 31,
1999, are as follows:

1999 1998 1997
_________ _________ _________

Balance, beginning of year ...... $ 145,550 $ 73,748 $ 12,423
New property acquisitions ........ 32,999 73,881 61,266
Capital improvements ............. 1,635 2,069 59
Sale of real estate .............. -- (4,148) --
_________ _________ _________

Balance, end of year ............ $ 180,184 $ 145,550 $ 73,748
========= ========= =========

The changes in accumulated depreciation for the three years ended December 31,
1999, are as follows:

1999 1998 1997
_______ _______ ________

Balance, beginning of year ............ $ 3,142 $ 2,740 $ 2,359
Depreciation for the year .............. 3,966 2,656 381
Sale of real estate .................... -- (2,254) --
_______ _______ _______

Balance, end of year .................. $ 7,108 $ 3,142 $ 2,740
======= ======= =======

CV REIT, INC. AND SUBSIDIARIES
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1999
(dollars in thousands)

Carrying
Final Face Amount of
Interest Maturity Amount of Mortgages
Description Rate Date Periodic Payment Terms Mortgages (a)
- ----------------------- ----------- ---------- -------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Permanent -
Recreation Facilities
Century Village at:
Boca Raton, FL 13.25% 12/31/11 Level P & I due monthly $ 12,533 $10,338
West Palm Beach, FL 13.25% 01/15/12 Level P & I due monthly 18,342 15,131
Deerfield Beach, FL
(2nd mortgage) 13.50% 01/15/12 Level P & I due monthly 13,235 10,975
Deerfield Beach, FL 8.84% 03/01/07 Level P & I due monthly 3,485 2,213
Pembroke Pines, FL 11% 07/31/23 Level P & I due monthly 25,000 24,728
-------
$ 63,385 (b)
========

Note: All loans are first mortgages except where noted, there are no prior liens
and no delinquent principal or interest.

(a) The tax carrying value of the notes is approximately $29.5 million.
(b) The changes in the carrying amounts are summarized as follows:

1999 1998 1997
_________ _________ _________
Balance, beginning of period $ 64,988 $ 77,652 $ 84,808
Advances on new mortgage loans - 5,190 16,112
Collections of principal (1,603) (17,854) (23,268)
_________ _________ _________
Balance, end of period $ 63,385 $ 64,988 $ 77,652
========= ========= =========

</TABLE>

<PAGE>
35

Item 9. Disagreement on Accounting and Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Company

Directors

Set forth below are the names of our directors, their ages, their offices, if
any, their principal occupations or employment for the past five years, the
length of their tenure as directors and the names of other public companies in
which they hold directorships:

H. Irwin Levy, Chairman

Mr. Levy, 73, became a director and Chairman of the Board in December 1997.
Mr. Levy is Chairman of the Board, Chief Executive Officer and a majority
stockholder of Hilcoast. Since 1995, he has also served as a director of
nStor Technologies, Inc., an American Stock Exchange listed computer
storage company. Mr. Levy was our Chairman of the Board and Chief Executive
Officer from 1985 to July 1992. He is currently of counsel to the West Palm
Beach law firm of Levy, Kneen Mariani, Curtin, Kornfeld, and del Russo,
which provides legal services to our company.

Louis P. Meshon, Sr.

Mr. Meshon, 59, became a director, Chief Executive Officer and President in
December 1997. Mr. Meshon has served as President of Drexel since he
co-founded that company in 1974. In December 1997, we acquired a 95%
economic interest in Drexel. Mr. Meshon is a member of the Wharton School's
Real Estate Advisory Board.

Stanley Brenner

Mr. Brenner, 74, has been a director since 1988. Mr. Brenner was a partner
of Laventhol & Horvath, certified public accountants, for more than five
years until his retirement in 1990. From April 1991 until May 1996, Mr.
Brenner served as our consultant and was our Interim President from August
1996 to December 1997.

Stanley S. Cohen

Mr. Cohen, 60, became a director in December 1997. Mr. Cohen is a partner
and a member of the Executive Committee of the law firm of Fox, Rothschild,
O'Brien & Frankel, LLP in Philadelphia, Pennsylvania, which provides legal
services to our company. Mr. Cohen previously served for 11 years as
Co-Chairman of that firm's Real Estate Department. Mr. Cohen presently
serves as an appointee of the Majority Leader of the Pennsylvania State
House of Representatives to the Pennsylvania Economic Development Financing
Authority, which grants loans to encourage economic development within
Pennsylvania, and served as an appointee of the Governor of Pennsylvania to
the Pennsylvania Commission for Women.

<PAGE>
36

Allyn L. Levy

Mr. Levy, 71, has been a director since 1993. Mr. Levy served as Chairman and
Chief Executive Officer of Patriot Bancorporation of Boston, Massachusetts,
and its predecessor, Harbor National Bank of Boston, from 1975 until 1986.
Since 1986, Mr. Levy has been a private investor. Mr. Levy is not related
to H. Irwin Levy.

Milton S. Schneider

Mr.Schneider,50, became a director in December 1997. Mr. Schneider is Chief
Executive Officer of The Glenville Group, Inc., headquartered in Plymouth
Meeting, Pennsylvania, involved in the development, ownership and
management of commercial and residential properties. Mr. Schneider is
Chairman of Togar Property Company, an apartment development company
located in Malvern, Pennsylvania. In addition, Mr. Schneider is Vice
Chairman of Parkland Management Company, a financial services company, and
Vice Chairman of Horvitz Newspapers, Inc.

Alan L. Shulman

Mr. Shulman, 67, has been a director since 1985 and served as Chairman of
the Board from August 1992 until May 1996. Mr. Shulman is a private
investor and was previously a general partner of Unitel Associates, Ltd.,
a Florida limited partnership engaged in the ownership and operation of
Holiday Inn motel properties, for more than twenty years until its
dissolution in 1987. Mr. Shulman also serves as a director of Engle Homes,
a NASDAQ listed real estate development company, and was a director of
Island National Bank from its inception in 1989 until April 1997. A
company controlled by Mr. Shulman leased, operated and managed a Days Inn
Motel in West Palm Beach, Florida, which we owned until sold in May 1998.

Committees of the Board of Directors and Meetings

Our Board of Directors met 6 times during the year ended December 31, 1999. Each
of the directors attended at least 75% of the meetings.

The Audit Committee, consisting of Messrs. Shulman and Brenner, met once during
the past year. The Audit Committee is responsible for overseeing the financial
reporting process and the effectiveness of our internal controls and for
recommendations to the full Board of Directors, including the designation of
independent auditors on an annual basis.

The Acquisition Committee consists of Messrs. Meshon and H. Irwin Levy. If
requested by the Board, the Acquisition Committee reviews for recommendation
to the Board, or rejection, proposed acquisitions of real property. During
1999, the Acquisition Committee did not meet since this function was
performed by the full Board of Directors.

The Board of Directors has no standing nomination or compensation committees or
other committees performing similar functions.

Executive Officers

The following are the executive officers of our company (and our company's
wholly-owned subsidiary, Montgomery CV Realty Trust), their respective ages, the
year in which each was first elected an officer and the office held by each.

<PAGE>
37

Officer's Name Age Office Officer Since
________________________________________________________________________________

H. Irwin Levy 73 Chairman of the Board 1997
Louis P. Meshon,Sr. 59 President and Chief Executive Officer 1997
Elaine Hauff 37 Vice President and Treasurer 1992
Etta Strehle 44 Chief Financial Officer of the Trust 1999
Orilla Floyd 66 Secretary 1996

COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and executive officers, and persons who own more than ten percent of
our outstanding common stock, to file with the Securities and Exchange
Commission (SEC) initial reports of ownership and reports of changes in
ownership of common stock. Such persons are required by SEC regulation to
furnish us with copies of all such reports they file.

To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required,
the officers, directors and greater than ten percent beneficial owners of our
company have complied with all applicable Section 16(a) filing requirements.

Item 11. Executive Compensation

The following table sets forth, for the years ended December 31, 1999, 1998 and
1997, the compensation awarded to, earned by, or paid to those persons who were,
during 1999 (i) our Chief Executive Officer and (ii) the other executive
officers whose compensation is required to be disclosed pursuant to the rules of
the SEC (the Named Officers). The only compensation we paid to our executive
officers was base salary and annual bonuses.

Summary Compensation Table

Annual Compensation
Name and Principal Position Year Salary ($) Bonus ($)
________________________________________________________________________________

Louis P. Meshon, Sr. 1999 $285,000 $97,027 (3)
President and Chief Executive 1998 $279,744 $17,829 (3)
Officer (1)
Etta Strehle 1999 $117,422 (4) $12,962 (4)
Chief Financial Officer of
the Trust(2)

(1) Mr. Meshon was elected President and Chief Executive Officer effective
December 31, 1997.
(2) Ms. Strehle was appointed Chief Financial Officer of the Trust
effective February 1, 1999.
(3) Performance bonus pursuant to Mr. Meshon's Employment Agreement.
Amount attributable to 1999 is expected to be paid in March 2000 and
amount attributable to 1998 was paid in April 1999.
(4) Includes $15,042, which was allocated to Drexel.

Option/Stock Appreciation Rights (SAR) Grants

There were no options to purchase our common stock or SAR's granted during 1999
to the Named Officers Aggregated Year End Options Values

<PAGE>
38

Aggregated Year End Options Values

The following table sets forth information regarding unexercised stock options
held by the Named Officers as of December 31, 1999. No stock options were
exercised by the Named Officers during 1999. No SAR's have been granted or are
outstanding.

Shares Number of Unexercised Value of Unexercised
Acquired Options at December In-the-Money Options
on Value 31, 1999 (#) at December 31, 1999($)
Exercise Realized ___________________________________________________
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
________________________________________________________________________________

Louis P. 0 0 60,000(1) 90,000(1) 0 0
Meshon,Sr.
Etta Strehle 0 0 4,000(2) 6,000(2) 0 0

(1) These options were granted on December 31, 1997 and are exercisable in
equal annual installments of 30,000 shares, commencing on December 31,
1998. Unexercisable options are subject to forfeiture under certain
circumstances.

(2) These options were granted on May 1, 1998 and are exercisable in equal
annual installments of 2,000 shares, commencing on December 31, 1998.
Unexercisable options are subject to forfeiture under certain
circumstances.

Board Compensation

Except for Messrs. Meshon and H. Irwin Levy, our directors receive monthly
compensation of $1,000, are paid $1,000 for attending each Board of Directors
meeting and $500 for attending each committee meeting. Pursuant to the CV Reit,
Inc. Non-Employee Director 1998 Stock Option Plan, non-employee directors,
excluding Mr. H. Irwin Levy, receive annual grants of options to purchase 5,000
shares of our common stock and the Board has the authority to grant, in its sole
discretion, a stock option to purchase up to 20,000 shares of our common stock
on the date any individual first commences service as a non-employee director.

Compensation Committee Interlocks and Insider Participation

We have no Compensation Committee. The Chief Executive Officer's salary is based
upon his Employment Agreement, as discussed below. Other executive salary
decisions are determined in an annual review based upon recommendations of the
Chief Executive Officer and/or our financial consultants and approved by the
Chairman of the Board.

Board Compensation Report

Since our Board does not have a Compensation Committee, the entire Board has
provided the following Compensation Report:

Executive Compensation Policy - Our overall compensation philosophy is to
attract and retain quality talent, which is critical to our short-term and
long-term success, and to create a mutuality of interest between executive
officers and stockholders through compensation structures that share the rewards
and risks of strategic decision making.

We examine market compensation levels and trends observed in the labor market.
Market information is used as a frame of reference for annual salary adjustments
and starting salary offers. Executive salary decisions are generally determined
in an annual review of each individual's performance, decision-making
responsibilities, experience and team-building skills. In certain instances,
these reviews include recommendations by our financial consultants.

<PAGE>
39

Mr. Meshon's compensation arrangement has been established under an
Employment Agreement, dated December 31, 1997 (see below).

Base Compensation - Our approach to base compensation is to offer competitive
salaries in accordance with market practices prevalent in our geographical
areas. In addition, effective in 1999, we are sponsoring a 401(k) - retirement
plan which covers substantially all employees meeting certain minimum age and
service requirements. The plan provides for employer contributions equal to 50%
of amounts contributed by the employee. The employer contributions are limited
to 1.5% of the employee's salary. Mr. Meshon's Employment Agreement provides for
a base salary of $285,000, subject to increases at the sole discretion of the
Trust, in the event that there is a substantial increase in the scope of his
responsibilities, and annually commencing in December 2000. Pursuant to his
Employment Agreement, in the event we do not pay a quarterly dividend to
stockholders of at least $.29 per common share, under certain circumstances, Mr.
Meshon's base salary may be reduced by 50% and remain at such reduced level
until we have paid quarterly dividends of at least $.29 per common share for
four consecutive quarters. In that event, no performance bonus (see below) shall
be paid doing the period for which such decrease has been in effect.

Bonus Compensation - Under his Employment Agreement, Mr. Meshon is entitled to
an annual performance bonus generally equal to 5% of the annual improvement in
our FFO, as determined by our independent auditors. In addition, Mr. Meshon is
entitled to receive a bonus, based upon a formula set forth in his Employment
Agreement, in the event fees are paid by third parties to Drexel in connection
with the termination, on or before December 31, 2000, of certain existing
management and leasing agreements between those third parties and Drexel. No
bonuses have been paid to Mr. Meshon other than the 1998 performance bonus of
$17,829, which was paid in April 1999. The 1999 performance bonus of $97,027 is
expected to be paid in March 2000.

We generally reward our other executive officers with annual bonuses based on
performance on specific projects or transactions, taking into account the
overall performance of our company. Input from our financial consultants and the
Chief Executive Officer is considered when establishing bonuses for other
executive officers. A balance is made between overall corporate performance and
performance of the specific areas under a participant's direct control. This
balance supports the accomplishment of overall objectives and rewards individual
contributions and tasks assigned to our executives.

Equity-Based Compensation - Stock options provide additional incentives to key
employees to maximize shareholder value. Options generally vest over specified
periods to encourage continued employment. In accordance with this philosophy,
on December 31, 1997, we adopted the Montgomery CV Trust Executive Stock Option
Plan which provides for the issuance to certain executives of options to
purchase a maximum of 150,000 shares of common stock, all of which were granted
to Mr. Meshon on December 31, 1997. Mr. Meshon's options are exercisable in
equal annual installments of 30,000 shares, commencing on December 31, 1998.
Unexercisable options are subject to forfeiture under certain circumstances.

Employment Agreement - As discussed above, effective December 31, 1997, we
entered into an Employment Agreement with Mr. Meshon pursuant to which Mr.
Meshon serves as President and Chief Executive Officer of the Company and
President and Chief Operating Officer of the Trust for five years, with an
automatic extension provision except under certain circumstances. In addition to
the compensation provisions discussed above, if, during the term of the
Employment Agreement, Mr. Meshon's employment is terminated for Cause, as
defined, or Mr. Meshon resigns without Good Reason, as defined, all or a portion
of 227,577 OP Units owned by Mr. Meshon was to be transferred to the Trust. The
number of OP Units subject to transfer is being reduced on a pro rata basis over
five years. Mr. Meshon acquired those OP Units in exchange for his shares of
Drexel on December 31, 1997.

<PAGE>
40

In the event of Mr. Meshon's death or disability, we are required to make
severance payments for one year equal to Mr. Meshon's base salary, plus certain
fringe benefits in the event of disability. In the event Mr. Meshon terminates
his employment for Good Reason, as defined, or after the occurrence of a
Significant Event, as defined (which includes a change in control and a transfer
of substantially all our assets and business), we are required to pay severance
benefits equal to the greater of the aggregate sum of all compensation
(including bonuses based on historical averages) due to Mr. Meshon during the
remaining term of his Employment Agreement, or 199% of Mr. Meshon's annual
salary for the year prior to termination. In addition, Mr. Meshon would be
entitled to receive certain fringe benefits for up to three years.

Respectfully submitted,

H. Irwin Levy, Chairman
Stanley Brenner
Stanley S. Cohen
Allyn L. Levy
Louis P. Meshon, Sr.
Milton S. Schneider
Alan L. Shulman

Stock Performance Graph

The following graph sets forth the cumulative total shareholder return (assuming
reinvestment of dividends) to our stockholders during the five year period ended
December 31, 1999, as well as an overall stock market index (S&P 500 Index) and
our peer group index (REIT Industry Index):

12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
____________________________________________________________
CV Reit, Inc. 100.00 140.42 188.96 205.84 206.11 162.10
S&P 500 Index 100.00 137.43 168.98 225.37 289.78 350.72
REIT Industry Index 100.00 115.27 155.92 187.51 154.69 147.54

Total returns assume $100 invested on December 31, 1994 in our common stock, the
S&P 500 Index and the REIT Industry Index with reinvestment of dividends.

<PAGE>
41

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of February 1, 2000, information with respect
to the beneficial ownership of our common stock by (i) persons known to own
beneficially (as defined under applicable rules of the SEC) more than 5% of our
outstanding shares of common stock, (ii) all directors, and all directors and
executive officers of our company as a group, beneficially owned (as defined
under the applicable rules of the SEC) shares of our company, and OP Units of
limited partnership interests in our approximately 84.5% owned subsidiary,
Montgomery CV Realty, L.P.:

Amount and
Nature of Percent of Class
Beneficial Common OP
Name and Address Title of Class Ownership(1) Stock Units
________________________________________________________________________________

H. Irwin Levy Common Stock 747,797 (2) 9.4%
100 Century Boulevard OP Units 78,149 (5) *
West Palm Beach, FL 33417

Alan J. Evans and Robert J. Common Stock 655,759 (3) 8.2%
Cartagena, Trustees
100 Century Boulevard
West Palm Beach, FL 33417

Louis P. Meshon, Sr. Common Stock 60,790 *
580 W. Germantown Pike,Suite 200 OP Units 674,249(4)(5)(6) 7.2%
Plymouth Meeting, PA 19462

Alan L. Shulman Common Stock 35,680 *
100 Century Boulevard
West Palm Beach, FL 33417

Allyn L. Levy Common Stock 35,000(7) *
100 Century Boulevard
West Palm Beach, FL 33417

Stanley Brenner Common Stock 17,500 *
100 Century Boulevard
West Palm Beach, FL 33417

Stanley S. Cohen Common Stock 16,810(8) *
200 Market Street
Philadelphia, PA 19103

Milton S. Schneider Common Stock 15,000 *
580 W.Germantown Pike,Suite 202 OP Units 20,957(5)(9) *
Plymouth Meeting, PA 19462

All executive officers and
directors as a group (10) Common Stock 932,577 11.5%
OP Unit 773,355(4)(5) 8.2%

* Less than 1%.

<PAGE>
42

(1) Unless otherwise indicated, each stockholder listed has the sole power to
vote and direct disposition of the shares shown as beneficially owned by
such stockholder. For purposes of this table, a person or group of persons
is deemed to have "beneficial ownership" of the following shares which such
person or group has the right to acquire pursuant to options exercisable
within 60 days: Allyn L. Levy - 15,000 shares; Alan L. Shulman - 15,000
shares; Stanley Brenner -15,000 shares; Stanley S. Cohen - 15,000 shares;
Milton S. Schneider - 15,000 shares; Louis P. Meshon, Sr. - 60,000 shares;
all directors and executive officers as a group - 139,000 shares.

(2) Includes 102,292 shares owned by a corporation controlled by Mr. Levy.
Excludes 175,000 shares owned by Mr. Levy's wife. Mr. Levy disclaims
beneficial ownership of the excluded shares.

(3) Shares owned by a family trust established by Mr. Evans's deceased wife, of
which Messrs. Evans and Cartagena are Trustees.

(4) Subject to adjustment under certain circumstances.

(5) The Trust owns 7,966,621 OP Units (representing 84.5% of the OP). The
holders of substantially all the remaining 15.5%, or 1,462,406 OP Units,
have the right to require the OP to redeem their OP Units for cash at any
time. However, upon a holder giving notice of the exercise of this right,
the Trust has the right to acquire such holder's OP Units in exchange for
cash or, if certain conditions are satisfied, an equal number of shares of
our common stock.

(6) Includes 89,909 OP Units jointly owned with Mr. Meshon's wife and 4,573
owned by companies controlled by Mr. Meshon.

(7) Held by a revocable trust, of which Mr. Levy is the trustee and income
beneficiary.

(8) Includes 1,000 shares jointly owned with Mr. Cohen's wife. Excludes 145
shares owned by Mr. Cohen's wife. Mr. Cohen disclaims beneficial ownership
of the excluded shares.

(9) Excludes 34,013 OP Units owned by Mr. Schneider's wife. Mr. Schneider
disclaims beneficial ownership of the excluded shares.

<PAGE>
43

Item 13. Certain Relationships and Related Transactions

H. Irwin Levy/Hilcoast

During December 1981 and January 1982, we sold each of the recreation facilities
at the Century Villages in West Palm Beach, Deerfield Beach and Boca Raton in
separate transactions to different purchasers, including Mr. Levy, for sales
prices based upon independent appraisals. We sold the recreation facilities at
Boca Raton to Mr. Levy for $18 million, subject to a lease to a corporation
currently owned by Mr. Levy. (The annual net rental to Mr. Levy on that lease is
$2.2 million.) At closing, Mr. Levy issued a 30-year non-recourse promissory
note to our company in the principal amount of $12.5 million which bears
interest at 13.25% per annum and may not be prepaid. At December 31, 1999, the
outstanding balance on this note was $10.3 million. During 1999, we recognized
$1.4 million in interest income on this note.

Since 1990, companies owned by Mr. Levy and/or 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 certain notes we hold with an outstanding balance of $38.7
million (including the $10.3 million discussed above) at December 31, 1999.
During 1999, we leased approximately 2,500 square feet of office space to those
companies on a month-to-month basis for $2,100 per month, plus an allocation of
utility expenses.

Mr. Levy is Chairman of the Board, Chief Executive Officer and a majority
stockholder of Hilcoast which as of December 31, 1999, owed us $24.7 million,
consisting of an 11% mortgage note collateralized by first mortgages on the
recreation facilities at the Century Village at Pembroke Pines, Florida adult
condominium project. The Hilcoast note requires equal monthly payments of
principal and interest aggregating approximately $2.9 million per annum through
2023 and may not be prepaid by Hilcoast without a prepayment penalty. During
1999, we recognized $2.7 million in interest income from Hilcoast on the
Hilcoast note.

Effective July 31, 1992, we entered into a consulting and advisory agreement
under which Hilcoast provides certain investment advisory, consulting and
administrative services to our company, excluding matters related to the
Hilcoast note. The agreement provides for the payment of $10,000 per month to
Hilcoast, plus reimbursement for reasonable out-of-pocket expenses. The
agreement may be terminated by Hilcoast upon 180 days notice and by our company
upon 30 days notice. During 1999, we paid $115,000 under this agreement, plus
expense reimbursement.

On December 31, 1997, the OP acquired nine shopping centers and an office
building for a purchase price of approximately $61.7 million. Two of the
shopping centers were acquired from Mr. Levy and members of his family in
exchange for 390,717 OP Units (valued at approximately $4.6 million), including
78,149 OP Units (valued at approximately $900,000) issued to Mr. Levy. The
economic basis used to determine the acquisition price was the same as that used
for the other properties acquired by the OP on that date.

Stanley S. Cohen

Mr. Cohen is a partner and a member of the Executive Committee of the law
firm of Fox, Rothschild, O'Brien & Frankel, LLP. During 1999, we paid
$487,487 to that firm for legal services.

<PAGE>
44

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, 1999 and 1998
Consolidated Statements of Income - Years Ended December 31, 1999, 1998
and 1997
Consolidated Statements of Stockholders' Equity -Years Ended December 31,
1999, 1998, and 1997
Consolidated Statements of Cash Flows - Years Ended December 31, 1999,
1998 and 1997

Notes to Consolidated Financial Statements

(2) List of Consolidated Financial Statements Schedules:

Schedule III - Real Estate and Accumulated Depreciation
Schedule IV - Mortgage Loans on Real Estate

(3) See Exhibit Index at page 44 of this Form 10-K

(b) Reports on Form 8-K:

On December 17, 1999, the Registrant filed on Form 8-K reporting under
Item 5. and Item 7. the Agreement and Plan of Reorganization and Merger
With Kranzco Realty Trust

Exhibit
Number Description

3.1 Amended Certificate of Incorporation of CV Reit, Inc., filed with Secretary
of State of Delaware on December 31, 1997. (Incorporated by reference to
Appendix C to the proxy statement of the Company filed November 11, 1997.)

3.2 Amended and Restated By-laws of CV Reit, Inc. (Incorporated by reference to
Appendix D to the proxy statement of the Company filed November 11, 1997.)

10.1 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.)

10.2 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.)

10.3 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.)

10.4 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.)

<PAGE>
45

10.5 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.)

10.6 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.)

10.7 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.)

10.8 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.)

10.9 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.)

10.10Letter 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.)

10.11Letter Agreement, dated July 12, 1996, between CV Reit, Inc. and Hilcoast
Advisory Services, Inc. extending the Consulting and Advisory Agreement to
July 31, 1997. (Incorporated by reference to Exhibit 10(i) to the Quarterly
Report on Form 10-Q of the Company for the quarter ended September 30,
1996.)

10.12Letter agreement, dated June 10, 1997, between CV Reit, Inc. and Hilcoast
Advisory Services, Inc. extending the Consulting and Advisory Agreement to
December 31, 1997. (Incorporated by reference to Exhibit 10(i) to the
Quarterly Report on Form 10-Q of the Company for the quarter ended June
30,1997.)

10.13Definitive Master Agreement, dated September 19, 1997, among CV Reit,
Inc., Montgomery CV Realty Trust, and Drexel Realty, Inc., Royce Realty,
Inc., Louis P. Meshon, Sr. and certain of the Meshon Parties named therein
and the Levy Parties named therein. (Incorporated by reference to Appendix
A to the Company's proxy statement filed on November 11, 1997.)

10.14Amended and Restated Agreement of Limited Partnership of Montgomery CV
Realty L.P. dated December 31, 1997. (Incorporated by reference to Appendix
B to the Company's proxy statement filed on November 11, 1997.)

10.15Supplemental Indenture No. 2 for Collateralized Mortgage Obligations,
dated as of December 30, 1997 between Recreation Mortgages, L.P., (Issuer)
and Bankers Trust Company (Trustee). (Incorporated by reference to the
Annual Report on Form 10-K of the Company for fiscal year ended December
31, 1997.)

10.16Real Estate Purchase Agreement dated September 29, 1997 by and between
Newtown Village Partnership and RCEK, Inc., or its nominee or assignee.
(Incorporated by reference to Exhibit 2.1 to the current report on Form 8-K
filed by CV Reit, Inc. on April 14, 1998.)

<PAGE>
46

10.17Letter Amendment to Real Estate Purchase Agreement dated December 15, 1997
by and between Newtown Village Partnership and RCEK, Inc. (Incorporated by
reference to Exhibit 2.2 to the current report on Form 8-K filed by CV
Reit, Inc. on April 14, 1998.)

10.18Assignment of Real Estate Purchase Agreement dated January 26, 1998 from
RCEK, Inc. to Newtown Village Plaza Associates, L.P. (Incorporated by
reference to Exhibit 2.3 to the current report on Form 8-K filed by CV
Reit, Inc. on April 14, 1998.)

10.19Second Amendment to Real Estate Purchase Agreement dated February 5, 1998
by and between Newtown Village Partnership and Newtown Village Plaza
Associates, L.P. (Incorporated by reference to Exhibit 2.4 to the current
report on Form 8-K filed by CV Reit, Inc. on April 14, 1998.)

10.20Third Amendment to Real Estate Purchase Agreement dated March 31, 1998 by
and between Newtown Village Partnership and Newtown Village Plaza
Associates, L.P. (Incorporated by reference to Exhibit 2.5 to the current
report on Form 8-K filed by CV Reit, Inc. on April 14, 1998.)

10.21Loan and Credit Facility Agreement dated as of March 31, 1998 by and
between Montgomery CV Realty L.P. as Borrower, Century Plaza Associates,
L.P. and CV Reit, Inc., as guarantors, and GMAC Commercial Mortgage
Corporation, as Lender. (Incorporated by reference to Exhibit 5.1 to the
current report on Form 8-K filed by CV Reit, Inc. on April 15, 1998.)

10.22$7,650,000 Promissory Note dated as of April 9, 1998 from Montgomery CV
Realty L.P. to GMAC Commercial Mortgage Corporation. (Incorporated by
reference to Exhibit 5.2 to the current report on Form 8-K filed by CV
Reit, Inc. on April 15, 1998.)

10.23Mortgage and Security Agreement dated as of April 9, 1998 by Century Plaza
Associates, L.P. to GMAC Commercial Mortgage Corporation. (Incorporated by
reference to Exhibit 5.3 to the current report on Form 8-K filed by CV
Reit, Inc. on April 15, 1998.)

10.24Guaranty and Suretyship Agreement dated as of April 9, 1998 by CV Reit,
Inc. to GMAC Commercial Mortgage Corporation. (Incorporated by reference to
Exhibit 5.4 to the current report on Form 8-K filed by CV Reit, Inc. on
April 15, 1998.)

10.25Contribution Agreement dated May 29, 1998 by and between Marlton Crossing
Shopping Center Limited Partnership and Montgomery CV Realty L.P.
(Incorporated by reference to Exhibit 2.1 to the current report on Form 8-K
dated June 24, 1998, filed by CV Reit, Inc. on July 7, 1998.)

10.26Assignment and Assumption of Contribution Agreement dated June 22, 1998 by
and between Montgomery CV Realty L.P. and Marlton Plaza Associates II, L.P.
(Incorporated by reference to Exhibit 2.2 to the current report on Form 8-K
dated June 24, 1998 filed by CV Reit, Inc. on July 7, 1998.)

10.27Mortgage and Security Agreement dated as of June 24, 1998 by and between
Marlton Plaza Associates II, L.P., as Borrower, and GMAC Commercial
Mortgage Corporation, as Lender. (Incorporated by reference to Exhibit 2.3
to the current report on Form 8-K dated June 24, 1998, filed by CV Reit,
Inc. on July 7, 1998.)

10.28$11,650,000 Promissory Note dated as of June 24, 1998 from Marlton Plaza
Associates II, L.P. to GMAC Commercial Mortgage Corporation. (Incorporated
by reference to Exhibit 2.4 to the current report on Form 8-K dated June
24, 1998, filed by CV Reit, Inc. on July 7, 1998.)

<PAGE>
47

10.29Real Estate Purchase Agreement dated January 27, 1998 by and between
Seller and Purchaser. (Incorporated by reference to Exhibit 2.1 to the
current report on Form 8-K dated June 25, 1998, filed by CV Reit, Inc. on
July 7, 1998.)

10.30Amendment to Real Estate Purchaser Agreement dated February 26, 1998 by
and between Seller and Purchaser. (Incorporated by reference to Exhibit 2.2
to the current report on Form 8-K dated June 25, 1998, filed by CV Reit,
Inc. on July 7, 1998.)

10.31Second Amendment to Real Estate Purchase Agreement dated March 31, 1998 by
and between Seller and Purchaser. (Incorporated by reference to Exhibit 2.3
to the current report on Form 8-K dated June 25, 1998, filed by CV Reit,
Inc. on July 7, 1998.)

10.32Mortgage and Security Agreement dated as of June 25, 1998 by and between
Marlton Plaza Associates, L.P., as Borrower, and GMAC Commercial Mortgage
Corporation, as Lender. (Incorporated by reference to Exhibit 2.4 to the
current report on Form 8-K dated June 25, 1998, filed by CV Reit, Inc. on
July 7, 1998.)

10.33$9,300,000 Promissory Note dated as of June 25, 1998 from Marlton Plaza
Associates, L.P. to GMAC Commercial Mortgage Corporation. (Incorporated by
reference to Exhibit 2.5 to the current report on Form 8-K dated June 25,
1998, filed by CV Reit, Inc. on July 7, 1998.)

10.34Guaranty and Suretyship Agreement dated as of June 25, 1998 by CV Reit,
Inc. to GMAC Commercial Mortgage Corporation. (Incorporated by reference to
Exhibit 2.6 to the current report on Form 8-K dated June 25, 1998, filed by
CV Reit, Inc. on July 7, 1998.)

10.35Guaranty and Suretyship Agreement dated as of June 25, 1998 by Montgomery
CV Realty L.P. to GMAC Commercial Mortgage Corporation. (Incorporated by
reference to Exhibit 2.7 to the current report on Form 8-K dated June 25,
1998, filed by CV Reit, Inc. on July 7, 1998.)

10.36Second Amendment to Loan and Credit Facility Agreement dated as of March
8, 1999, by and between Montgomery CV Realty, L.P. as Borrower, Century
Plaza Associates, L.P. and CV Reit, Inc., as Guarantors, and GMAC
Commercial Mortgage Corporation as Lender. (Incorporated by reference to
Exhibit 10.36 Annual Report on Form 10-K of the Company for the fiscal year
ended December 31, 1998.)

10.37$18,500,000 Note dated March 8, 1999 between Montgomery CV Realty, L.P. as
Borrower and GMAC Commercial Mortgage Corporation as Lender. (Incorporated
by reference to Exhibit 10.37 Annual Report on Form 10-K of the Company for
the fiscal year ended December 31, 1998.)

10.38Collateral, Pledge, Assignment and Security Agreement, dated March 8, 1999
between Montgomery CV Realty, L.P. and GMAC Commercial Mortgage
Corporation. (Incorporated by reference to Exhibit 10.38 Annual Report on
Form 10-K of the Company for the fiscal year ended December 31, 1998.)

10.39Agreement of Sale dated January 21, 1999 by and between Lakewood-9
Investors, L.P. and ARC-Lakewood-9, L.L.C. Montgomery CV Realty L.P.
(Incorporated by reference to Exhibit 2.1 to the current report on Form 8-K
dated March 31, 1999, filed by CV Reit, Inc. on April 7, 1999.)

10.40Reinstatement and Amendment Agreement of Sale dated February 5, 1999 by
and between Lakewood-9 Investors, L.P. and ARC-Lakewood-9, L.L.C.
Montgomery CV Realty L.P. (Incorporated by reference to Exhibit 2.2 to the
current report on Form 8-K dated March 31, 1999, filed by CV Reit, Inc. on
April 7, 1999.)

<PAGE>
48

10.41Assignment of Agreement of Sale dated March 17, 1999 from Montgomery CV
Realty L.P. to Lakewood Plaza 9 Associates, L.P. (Incorporated by reference
to Exhibit 2.3 to the current report on Form 8-K dated March 31, 1999,
filed by CV Reit, Inc. on April 7, 1999.)

10.42Agreement of Plan of Reorganization and Merger among CV Reit, Inc.,
Kranzco Realty Trust, KRT Trust and Kramont Realty Trust, dated December
10, 1999 (Incorporated by reference to Exhibit 2.1 to the current report on
Form 8-K dated December 10, 1999, filed by CV Reit, Inc. on December 17,
1999.)

10.43Press Release, dated December 13, 1999, issued by CV Reit, Inc.
(Incorporated by reference to Exhibit 99.1 to the current report on Form
8-K dated December 10, 1999, filed by CV Reit, Inc. on December 17, 1999.)

11 Statement regarding computation of per share earnings. Omitted; computation
can be clearly determined from material contained in the report.

21 Subsidiaries of the Company.

27 Financial Data Schedule

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 Hauff
March 16, 2000 By: ----------------------------
Elaine Hauff, Vice President
and Treasurer

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/ H. Irwin Levy
March 16, 2000 --------------------------------
H. Irwin Levy, Chairman of
the Board of Directors

/s/ Louis P. Meshon
March 16, 2000 --------------------------------
Louis P. Meshon, President and
Director

/s/ Elaine Hauff
March 16, 2000 --------------------------------
Elaine Hauff, Vice President
and Treasurer, (Principal
Financial Officer and
Principal Accounting Officer)

/s/ Stanley Brenner
March 16, 2000 --------------------------------
Stanley Brenner, Director

/s/ Stanley S. Cohen
March 16, 2000 --------------------------------
Stanley S. Cohen, Director

/s/ Allyn Levy
March 16, 2000 --------------------------------
Allyn Levy, Director

/s/ Milton S. Schneider
March 16, 2000 --------------------------------
Milton S. Schneider, Director

/s/ Alan L. Shulman
March 16, 2000 --------------------------------
Alan L. Shulman, Director

EXHIBIT 21

Subsidiaries of the Company
and State of Incorporation or Formation

CV Warehouse 75, Inc. Florida
CV Warehouse 76, Inc. Florida
CV Warehouse 78, Inc. Florida
W.X. Properties, Inc. Florida
D.X. Properties, Inc. Florida
GRX Corp. Florida
Montgomery CV Realty Trust Delaware
Montgomery CV Realty L.P. Delaware
Recreation Mortgages L.P. Delaware
Recreation Mortgages LLC Delaware
Drexel Realty, Inc. Pennsylvania
Royce Realty, Inc. Pennsylvania
MGA Payroll Company, Inc. Pennsylvania
Rio Grande Associates, L.P. Pennsylvania
Rio Grande Associates LLC Delaware
Danville Plaza Associates, L.P. Delaware
Danville Plaza LLC Delaware
Woodbourne Square Associates, L.P. Delaware
Woodbourne Square LLC Delaware
Chesterbrook Village Center Associates, L.P. Delaware
Chesterbrook Village Center LLC Delaware
Mount Carmel Plaza Associates, L.P. Delaware
Mount Carmel Plaza LLC Delaware
Glenmont Associates, L.P. Pennsylvania
Glenmont LLC Delaware
Plymouth Plaza Associates, L.P. Delaware
Plymouth Plaza LLC Delaware
County Line Plaza Realty Associates, L.P. Delaware
County Line Plaza Realty, LLC Delaware
555 Scott Street Associates, L.P. Delaware
555 Scott Street LLC Delaware
Dickson City Center Associates, L.P. Delaware
Dickson City Center LLC Delaware
Century Plaza Associates, L.P. Delaware
CP General Partner, LLC Delaware
Collegeville Plaza Associates, L.P. Delaware
Collegeville Plaza, LLC Delaware
Gilbertsville Plaza Associates, L.P. Delaware
Gilbertsville Plaza, LLC Delaware
Marlton Plaza Associates, L.P. Delaware
Marlton Plaza, LLC Delaware
Marlton Plaza Associates II, L.P. Delaware
Marlton Plaza II, LLC Delaware
New Holland Plaza Associates, L.P. Delaware
New Holland Plaza, LLC Delaware
Newtown Village Plaza Associates, L.P. Delaware
Newtown Village Plaza, LLC Delaware
North Penn Marketplace Associates, L.P. Delaware
North Penn Marketplace, LLC Delaware
Cherry Square MCV Associates, L.P. Delaware
Cherry Square MCV, LLC Delaware
Chalfont Plaza Associates, L.P. Delaware
Chalfont Plaza, LLC Delaware
Lakewood Plaza 9 Associates, L.P. Delaware
Lakewood Plaza 9, LLC Delaware

<ARTICLE> 5
<MULTIPLIER> 1,000

<F1> INCLUDES $890 OF RESTRICTED CASH.
</FN>

</TABLE>