<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
----------- -----------
Commission File Number 1-7859
- --------------------------------------------------------------------------------
IRT PROPERTY COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1366611
- --------------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Galleria Parkway, Suite 1400
Atlanta, Georgia 30339
- ---------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 955-4406
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Shares of Common Stock New York Stock Exchange
$1 Par Value
Securities registered pursuant to Section 12(g) of the Act: None
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
-----
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
--- ---
Based upon the assumption that directors and executive officers of the
registrant are not affiliates of the registrant, the aggregate market value of
the voting stock of the registrant held by nonaffiliates of the registrant at
February 6, 1995 was $254,207,470. Presuming that such directors and executive
officers are affiliates of the registrant, the aggregate market value of the
voting stock of the registrant held by nonaffiliates of the registrant at
February 6, 1995 was $250,694,487.
25,420,747 shares of Common Stock, $1 Par Value, outstanding at February 6,
1995.
DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Part III (Items 10, 11, 12 and 13) is
incorporated by reference to the registrant's definitive proxy statement to be
filed pursuant to Regulation 14A.
<PAGE> 2
AMENDMENT NO. 1
The undersigned registrant hereby amends Items 1, 2, 5, 6, 7, 8 and 14
and restates in its entirety its Form 10-K405 for the fiscal year ended
December 31, 1994.
PART I
Item 1. Business.
General Development of Business. IRT Property Company (the
"Company"), founded in 1969, is a self-administered and self-managed equity
real estate investment trust which invests primarily in neighborhood and
community shopping centers which are located in the Southeastern United States
and are anchored by supermarkets, drug stores and/or discount variety stores.
IRT Property Company was incorporated under the laws of Georgia in June 1979.
It was organized in order to accommodate a merger of Investors Realty Trust, a
Tennessee business trust organized in 1969, and Summit Properties, an Ohio
business trust organized in 1965. That merger was accomplished effective June
20, 1979, and the Company then succeeded to all of the assets and liabilities
of both trusts.
The Company and its predecessor, Investors Realty Trust, have each
elected since their inceptions to be treated as "Real Estate Investment Trusts"
("REITs") under the Internal Revenue Code (the "Code"). The Company intends to
continue such election, although it is not required to do so. For the special
provisions applicable to REITs, reference is made to Sections 856-860 of the
Code, as amended.
The Company has two wholly-owned subsidiaries. IRT Management Company
("IRTMC") was formed in 1990. The only business conducted thus far by IRTMC
has been the purchase of a portion of the Company's 2% convertible subordinated
debentures, although it may engage in other activities in the future. VW Mall,
Inc. ("VWM") was formed in July 1994. Upon its formation, VWM purchased the
land underlying Valley West Mall and now holds 100% of the Company's interest
in this investment.
Financial Information and Description of Business. The Company's sole
business is the ownership of real estate investments which consist principally
of equity investments in income-producing properties, with primary emphasis on
neighborhood and community shopping centers in the Southeastern United States.
The Company's investment portfolio also includes some apartment, industrial and
other properties, and to a lesser extent various purchase-money mortgages taken
back on the sales of former equity investments. In addition, the Company has
authority to make other types of equity and mortgage investments in real
estate. The Company considers its investment activity to consist of a single
industry segment.
1
<PAGE> 3
For a description of the Company's individual investments and of
material developments during the year regarding these investments and the
Company as a whole, reference is made to Items 2 and 7 hereof. For financial
information about the Company's 1987 and 1993 debenture offerings, reference is
made to Items 6 and 7 and to Note 7 to the consolidated financial statements.
For information regarding the Company's 1992 and 1993 common stock offerings,
reference is made to Item 7 and to Note 2 to the consolidated financial
statements. Readers are also urged to review the Company's Annual Report to
Shareholders for the year ended December 31, 1994.
In making new real estate investments, the Company intends to continue
to place primary emphasis on obtaining equity interests in well-located
income-producing properties, principally shopping centers in the Southeastern
United States, with attractive yields and potential for increases in income and
capital appreciation. The Company will also from time to time consider the
disposition or exchange of existing investments in order to improve its
investment portfolio or increase its funds from operations. Existing
investments are continuously reviewed by Company management, and appropriate
programs to renovate and modernize properties are designed and implemented in
order to improve leasing arrangements, thereby increasing funds from operations
and property values. The Company's investment and portfolio management
philosophy is designed to implement its overall objective of maximizing funds
from operations and distributions to shareholders.
The Company directly provides property management and leasing services
for all but fourteen of its operating properties. Self-management enables the
Company to emphasize and more closely control leasing and property management.
Internal property management also provides the Company opportunities for
operating efficiencies by enabling it to acquire additional properties without
proportionate increases in property management expenses. The Company's
property management program is implemented by on-site property managers and
property management and leasing professionals located in offices in Atlanta,
Charlotte and Orlando.
The results of the Company's operations depend upon the performance of
its existing investment portfolio, the availability of suitable opportunities
for new investments and the yields then available on such investments. Such
yields will vary with the type of investment involved, the condition of the
financial and real estate markets, the nature and geographic location of the
investment, competition and other factors. The performance of a real estate
investment company is strongly influenced by the cycles of the real estate
industry. As financial intermediaries providing equity funds for real estate
projects, real estate investment companies are generally subject to the same
market and economic forces as other real estate investors.
2
<PAGE> 4
Competitive Conditions. In seeking new investment opportunities, the
Company competes with other real estate investors, including pension funds,
foreign investors, real estate partnerships, and other domestic real estate
companies. On properties presently owned by the Company or in which it has
investments, the Company and its tenants and borrowers compete with other
owners of like properties for tenants and/or customers depending on the nature
of the investment. Management believes that the Company is well positioned to
compete effectively for new investments and tenants.
For any borrowed funds that may be used in new investment activity,
the Company would be in competition with other borrowers, particularly real
estate borrowers. For a description of the Company's mortgage debt, reference
is made to Table V in Item 2 hereof, to Item 7 and to Note 6 to the
consolidated financial statements included as a part of this report. For a
description of the Company's 7.3% convertible subordinated debentures,
reference is made to Item 7 and to Note 7 to the consolidated financial
statements. For a description of the Company's 5-year $50,000,000 revolving
term loan, reference is made to Item 7 and to Note 8 to the consolidated
financial statements.
Regulation. Investments in real property create a potential for
environmental liability on the part of the owner of or any mortgage lender on
such real property. If hazardous substances are discovered on or emanating
from any of the Company's properties, the owner or operator of the property
(including the Company) may be held strictly liable for all costs and
liabilities relating to such hazardous substances. In 1989, the Company
adopted a policy of obtaining a Phase I environmental study on each property it
seeks to acquire.
The Company's Charlotte, North Carolina industrial facility is among
the sites appearing on the Comprehensive Environmental Response, Compensation
and Liability Act List ("CERCLIS") maintained by the United States
Environmental Protection Agency ("EPA"). The CERCLIS list contains sites which
have possible environmental contamination. The EPA regularly requests that
state environmental agencies conduct screening site investigations ("SSI") at
various sites appearing on the CERCLIS list. At the request of the EPA, the
North Carolina Department of Environment, Health, and Natural Resources
("DEHNR") conducted an SSI at this facility on May 28, 1991. Following receipt
of results of such SSI, the DEHNR advised the Company that it would not
recommend further action to the EPA with respect to this facility. There can
be no assurance that the EPA or DEHNR will not require remediation action, but
based on information presently available to the Company, the Company believes
the costs of any such remediation would not have a material adverse effect on
the Company's results of operations, financial position or liquidity.
3
<PAGE> 5
The Charlotte industrial facility contained underground petroleum and
used oil storage tanks ("USTs") believed to have been owned by the previous
owner of this property. The Company had the USTs removed in December 1993 and
was notified on March 2, 1994 by the DEHNR that certain investigative,
corrective and/or remedial actions ("Corrective Actions") must be performed by
the Company to, among other things, determine the level of soil and/or
groundwater contamination due to suspected leakage from some of the USTs.
Depending upon the results of the investigation phase of the Corrective Action
work, which has not been completed at this time, the Company may be required to
remediate impacted soil and/or groundwater. In November 1994, the Company
(through its environmental consultant) submitted to DEHNR a Comprehensive Site
Assessment ("CSA") report covering the results of investigation work to date.
The CSA report confirmed the presence of petroleum product-related substances
in soil and groundwater at levels that exceed applicable standards, and the
Company has begun removing free phase liquids from a well on the property.
DEHNR has reviewed the CSA report and has asked the Company to undertake
further investigation work. Based upon consultation with a professional
engineering firm, any additional investigation costs to be incurred by the
Company should be less than $20,000. Based on the engineering firm's
estimates, soil remediation, if required, should cost between $30,000 and
$142,000, and groundwater remediation, if required, should cost between $20,000
to be spent over three years to $435,000 to be spent over ten years. These
estimates are based on information available at this time and may vary
depending upon the results of phases of the Corrective Action work. At this
time it is not clear that the Company is responsible for taking Corrective
Action, and some of the costs of Corrective Action are reimbursable under the
North Carolina Commercial Leaking Petroleum Underground Storage Tank Cleanup
Fund. Based on the information presently available, the Company believes the
costs of any such Corrective Action would not have a material adverse effect on
the Company's results of operations, financial position or liquidity.
During its soil and groundwater investigation at the Bluebonnet
Village Shopping Center in Baton Rouge, Louisiana, the Company's environmental
consultant discovered concentrations of various chemicals in a single
groundwater monitoring well that exceeded the maximum contaminant levels under
the Federal Safe Drinking Water Act. The Company has notified the Louisiana
Department of Environmental Quality-Groundwater Protection Division
("LDEQ-GWPD") of such discovery. The Company has been advised that the
groundwater impact appears to be very localized, since six other groundwater
monitoring wells placed around the initial well did not exhibit any impact.
There can be no assurance that the LDEQ-GWPD will not require remediation, but
based on information presently available to the Company and discussions with
the Company's environmental consultant, the Company believes the cost of any
such remediation would not have a material adverse effect on the Company's
results of operations, financial position or liquidity.
4
<PAGE> 6
There is potential for contamination from reported off-site leaking
petroleum USTs at the following Company properties: Gulf Gate Plaza Shopping
Center, Naples, Florida; Thomasville Commons, Thomasville, North Carolina;
Wesley Chapel Crossing, Decatur, Georgia; and Chestnut Square, Brevard, North
Carolina. In addition, there are reported low levels of contamination from
leaking USTs formerly located at the Company's Venice Plaza Shopping Center,
Venice, Florida. Kash n' Karry Food Stores, Inc., the Florida food division of
Lucky Stores, Inc., formerly operated such USTs at Venice Plaza Shopping
Center. The Company is not the owner or operator of any such USTs described
above. No investigative or corrective action concerning such leaking USTs and
contamination has been suggested or required of the Company by any federal,
state or local agency or any other party. Based on information presently
available to the Company, the Company believes that the off-site landowners and
UST operators, or Kash n' Karry Food Stores, Inc. and/or Lucky Stores, Inc. in
the case of Venice Plaza Shopping Center, are responsible for investigation and
cleanup of any such leaking USTs and contamination. Accordingly, the Company
believes that the cost of any such investigation and cleanup would not have a
material adverse effect on the Company's results of operations, financial
position or liquidity.
The Company has not commissioned independent environmental analyses
with respect to properties acquired prior to 1989, except as required pursuant
to its secured revolving term loan. Phase I environmental site assessments
(which generally did not include environmental sampling, monitoring or
laboratory analysis) were implemented by the Company with respect to those
properties which the Company acquired from 1989 to the present, prior to the
acquisition of such properties. No assurance can be given that hazardous
substances are not located on any of the properties. However, the Company has
no reason to believe that any environmental contamination has occurred nor any
violation of any applicable environmental law, statute, regulation or ordinance
exists that would have a material adverse effect on the Company's results of
operations or financial position. The Company presently carries no insurance
coverage for the types of environmental risks described above.
Employees. The Company presently employs 54 persons, 14 of whom are
on-site management, maintenance and security personnel at four of the Company's
real estate investments.
Item 2. Properties.
The following tables and notes thereto describe the properties in
which the Company had investments at December 31, 1994, as well as the mortgage
indebtedness to which the Company's investments were subject. Reference is
made to Note 3 to the consolidated financial statements included as a part of
this report for information on minimum base rentals on noncancellable operating
leases for the next five years and thereafter.
5
<PAGE> 7
I. EQUITY INVESTMENTS (LAND & BUILDINGS)
The Company had a fee or leasehold interest in land and improvements
thereon as follows:
<TABLE>
<CAPTION>
Percent Cost to Depreciated Property Property
Date Area or Leased Year Company Cost FFO Net Income
Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2)
----------- -------- ------------ -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Abbeville Plaza 4/86 59,525 sq. ft. 22% 1970 $ 516,598 $ 346,828 $ 8,638 $ (11,707)
Abbeville, SC
Ambassador Row 12/94 193,982 sq. ft. 97% 1980 & 9,696,440 9,692,767 26,871 23,198
Lafayette, LA 1991
Ambassador Row Courtyard 12/94 156,283 sq. ft. 90% 1986 & 11,597,751 11,592,826 32,148 27,223
Lafayette, LA 1991
Asheville Plaza 4/86 49,800 sq. ft. 100% 1967 405,287 305,915 95,751 84,555
Asheville, NC
Bluebonnet Village 12/94 89,879 sq. ft. 100% 1983 8,050,589 8,046,074 22,226 17,711
Baton Rouge, LA
The Boulevard 12/94 68,012 sq. ft. 92% 1976 & 3,793,337 3,791,458 10,506 8,627
Lafayette, LA 1994
Carolina Place 5/89 36,560 sq. ft. 100% 1989 2,351,494 2,073,454 221,953 171,613
Hartsville, SC
Centre Pointe Plaza 12/92 & 163,642 sq. ft. 100% 1989 & 9,122,188 8,719,372 849,298 640,087
Smithfield, NC 12/93 1993
Chadwick Square 1/92 31,700 sq. ft. 100% 1985 1,456,727 1,370,697 210,255 93,842
Hendersonville, NC
Chelsea Place 7/93 81,144 sq. ft. 100% 1992 6,937,585 6,735,232 762,029 623,273
New Port Richey, FL
Chester Plaza 4/86 & 71,443 sq. ft. 66% 1967 & 2,199,971 1,859,970 215,263 131,402
Chester, SC 2/92 1992
Chestnut Square 1/92 39,640 sq. ft. 96% 1985 1,416,987 1,333,647 230,141 92,555
Brevard, NC
Colony Square 2/88 50,000 sq. ft. 100% 1987 2,922,695 2,431,894 258,820 165,034
Fitzgerald, GA
Commerce Crossing 12/92 100,668 sq. ft. 100% 1988 4,467,493 4,261,477 390,130 288,212
Commerce, GA
Countryside Shops 6/94 173,161 sq. ft. 100% 1986,1988 16,642,378 16,505,458 826,737 689,817
Cooper City, FL & 1991
The Crossing 12/94 113,989 sq. ft. 93% 1988 & 4,495,652 4,492,411 12,438 9,197
Slidell, LA 1993
Delchamps Plaza 4/88 66,857 sq. ft. 100% 1987 4,506,247 3,807,211 441,991 26,883
Pascagoula, MS
Douglas Commons 8/92 97,027 sq. ft. 95% 1988 8,574,939 8,207,193 795,830 19,779
Douglasville, GA
</TABLE>
6
<PAGE> 8
I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
<TABLE>
<CAPTION>
Percent Cost to Depreciated Property Property
Date Area or Leased Year Company Cost FFO Net Income
Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2)
----------- -------- ------------ -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS, continued
Eden Centre 11/94 56,355 sq. ft. 100% 1991 $ 3,527,217 $ 3,515,129 $ 67,733 $ 55,645
Eden, NC
Elmwood Oaks 1/92 130,284 sq. ft. 100% 1989 11,125,788 10,641,730 1,183,295 141,579
Harahan, LA
First Street Station 8/94 52,230 sq. ft. 95% 1989 3,034,670 3,011,092 101,526 77,948
Albemarle, NC
Forest Hills Centre 8/90 65,360 sq. ft. 100% 1990 5,060,366 4,655,920 501,968 397,532
Wilson, NC
Forrest Gallery 12/92 214,450 sq. ft. 98% 1987 12,271,062 11,766,795 1,006,373 755,691
Tullahoma, TN
Ft. Walton Beach Plaza 7/86 48,248 sq. ft. 96% 1986 2,647,943 2,120,419 222,688 37,182
Ft. Walton Beach, FL
Gaffney Plaza 4/86 27,828 sq. ft. 0% 1964 & 405,917 199,750 (8,462) (35,165)
Gaffney, SC 1974
The Galleria 8/86 & 81,544 sq. ft. 99% 1986 & 7,535,769 6,390,531 517,356 328,786
Wrightsville Beach, NC 12/87 1990
Gulf Gate Plaza 6/79 171,549 sq. ft. 94% 1969 & 4,269,794 2,238,531 635,173 389,702
Naples, FL 1974
Harris Teeter 6/88 & 36,535 sq. ft. 100% 1981 & 2,600,657 2,115,957 295,744 218,704
Lexington, VA 6/89 1989
Heritage Walk 6/93 159,362 sq. ft. 100% 1991 & 8,754,552 8,441,696 912,112 713,476
Milledgeville, GA 1992
Hoffner Plaza 6/79 39,370 sq. ft. 23% 1972 1,137,117 450,002 25,417 (5,039)
Orlando, FL
Lancaster Plaza 4/86 77,400 sq. ft. 100% 1971 1,163,909 798,801 146,539 106,073
Lancaster, SC
Lancaster Shopping Center 8/86 & 29,047 sq. ft. 100% 1963 & 1,595,667 1,284,623 167,046 125,656
Lancaster, SC 12/87 1987
Lawrence Commons 8/92 52,295 sq. ft. 100% 1987 3,451,728 3,287,392 362,656 33,362
Lawrenceburg, TN
Litchfield Landing 8/86 42,201 sq. ft. 91% 1984 2,620,314 2,162,625 310,889 253,453
North Litchfield, SC
Macland Pointe 1/93 79,699 sq. ft. 100% 1992 & 6,113,405 5,883,586 723,849 295,333
Marietta, GA 1993
Masonova Plaza 6/79 157,955 sq. ft. 44% 1969 3,030,852 1,272,199 62,996 (118,517)
Daytona Beach, FL
Millervillage Shopping Center 12/94 94,559 sq. ft. 95% 1983 & 7,588,527 7,583,813 21,022 16,308
Baton Rouge, LA 1992
</TABLE>
7
<PAGE> 9
I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
<TABLE>
<CAPTION>
Percent Cost to Depreciated Property Property
Date Area or Leased Year Company Cost FFO Net Income
Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2)
----------- -------- ------------ -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS,continued
New Smyrna Beach Regional 8/92 118,451 sq. ft. 92% 1987 $10,290,171 $ 9,902,345 $ 887,533 $726,414
New Smyrna Beach, FL
North River Village Center 12/92 & 177,128 sq. ft. 100% 1988 & 10,110,385 9,856,134 1,122,145 941,553
Ellenton, FL 12/93 1993
North Village Center (3) 8/86 60,356 sq. ft. 98% 1984 3,281,879 2,752,298 374,401 32,194
North Myrtle Beach, SC
Old Kings Commons 5/88 84,759 sq. ft. 100% 1988 6,082,206 5,309,410 546,671 421,477
Palm Coast, FL
Palm Gardens 6/79 52,670 sq. ft. 100% 1970 2,022,412 1,380,990 269,168 145,322
Largo, FL
Parkmore Plaza 12/92 159,067 sq. ft. 100% 1986 & 8,260,407 7,933,854 880,370 717,628
Milton, FL 1992
Paulding Commons 8/92 192,391 sq. ft. 96% 1991 12,950,114 12,308,452 1,213,866 265,050
Dallas, GA
Pensacola Plaza 7/86 56,098 sq. ft. 100% 1985 2,644,578 1,930,963 203,387 (18,689)
Pensacola, FL
Pinhook Plaza 12/94 190,371 sq. ft. 97% 1979 & 11,072,604 11,066,940 9,602 3,938
Lafayette, LA 1992
Plaza Acadienne (4) 12/94 105,419 sq. ft. 96% 1980 2,917,925 2,915,975 1,225 (725)
Eunice, LA
Plaza North 8/92 47,240 sq. ft. 95% 1986 2,459,244 2,350,692 259,933 214,988
Hendersonville, NC
Providence Square 12/71 85,390 sq. ft. 93% 1973 4,196,728 2,035,700 422,149 248,303
Charlotte, NC
Riverview Shopping Center 3/72 130,058 sq. ft. 83% 1973 6,003,033 4,484,369 245,639 138,253
Durham, NC
Scottsville Square 8/92 38,450 sq. ft. 90% 1986 2,438,204 2,330,493 275,356 230,759
Bowling Green, KY
Seven Hills 7/93 64,890 sq. ft. 99% 1991 4,894,767 4,786,249 488,156 43,244
Spring Hill, FL
Shelby Plaza (4) 4/86 103,000 sq. ft. 73% 1972 1,103,226 749,952 102,200 43,530
Shelby, NC
Sherwood South 12/94 77,107 sq. ft. 100% 1972, 1988 1,984,695 1,983,280 5,468 4,053
Baton Rouge, LA & 1992
Siegen Village 12/94 115,762 sq. ft. 96% 1988 6,677,883 6,676,952 18,512 17,581
Baton Rouge, LA
Smyrna Village 8/92 83,334 sq. ft. 98% 1992 5,842,566 5,549,157 601,592 151,181
Smyrna, TN
</TABLE>
8
<PAGE> 10
I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
<TABLE>
<CAPTION>
Percent Cost to Depreciated Property Property
Date Area or Leased Year Company Cost FFO Net Income
Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2)
----------- -------- ------------ -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS,continued
Smyth Valley Crossing 12/92 126,841 sq. ft. 98% 1989 $ 6,994,084 $ 6,723,640 $ 645,416 $ 507,008
Marion, VA
South Beach Regional 8/92 289,319 sq. ft. 99% 1990 & 21,809,241 20,743,151 2,170,734 503,267
Jacksonville Beach, FL 1991
Spalding Village 8/92 235,318 sq. ft. 97% 1989 15,317,546 14,561,899 1,449,424 (32,865)
Griffin, GA
Stadium Plaza 8/92 70,475 sq. ft. 99% 1988 4,458,526 4,299,171 424,977 (7,541)
Phenix City, AL
Stanley Market Place 1/92 40,364 sq. ft. 100% 1980 & 1,800,935 1,684,035 221,527 181,447
Stanley, NC 1991
Taylorsville Shopping Center 8/86 & 48,537 sq. ft. 89% 1982 & 2,612,159 2,152,674 261,673 182,456
Taylorsville, NC 12/88 1988
Thomasville Commons 8/92 148,754 sq. ft. 100% 1991 7,172,961 6,794,952 785,572 83,240
Thomasville, NC
Union Plaza 4/86 41,350 sq. ft. 100% 1967 227,751 132,284 37,372 23,127
Union, SC
University Center 12/89 56,180 sq. ft. 91% 1989 3,937,447 3,533,127 365,009 285,070
Greenville, NC
Valley West Mall (5) 3/86 478,180 sq. ft. 75% 1973 10,207,598 5,806,112 649,017 (173,703)
Glendale, AZ
Venice Plaza (3) 6/79 144,850 sq. ft. 93% 1971 & 2,803,349 1,462,651 449,113 296,209
Venice, FL 1979
Village at Northshore 12/94 144,373 sq. ft. 96% 1988 & 8,262,533 8,258,362 6,675 2,504
Slidell, LA 1993
Waterlick Plaza 10/89 98,694 sq. ft. 96% 1973 & 6,254,924 5,566,602 675,247 533,387
Lynchburg, VA 1988
Watson Central 12/92 & 227,730 sq. ft. 99% 1989 & 13,024,297 12,493,109 1,294,662 1,011,765
Warner Robins, GA 10/93 1993
Wesley Chapel Crossing 12/92 170,792 sq. ft. 100% 1989 10,893,715 10,536,908 971,881 794,690
Decatur, GA
West Gate Plaza 6/74 & 64,378 sq. ft. 97% 1974 2,357,547 1,743,170 61,995 (4,373)
Mobile, AL 1/85
Westgate Square 6/94 104,904 sq. ft. 92% 1984 & 9,078,855 8,993,361 439,278 353,784
Sunrise, FL 1988
West Towne Square 3/90 89,596 sq. ft. 87% 1988 5,988,565 5,318,834 457,451 315,439
Rome, GA
</TABLE>
9
<PAGE> 11
I. EQUITY INVESTMENTS (LAND & BUILDINGS), continued
<TABLE>
<CAPTION>
Percent Cost to Depreciated Property Property
Date Area or Leased Year Company Cost FFO Net Income
Description Acquired Rental Units 12/31/94 Completed 12/31/94 12/31/94 1994 (1) 1994 (2)
----------- -------- ------------ -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS,continued
Willowdaile Shopping Center 8/86 & 120,815 sq. ft. 97% 1986 $ 8,573,127 $ 7,120,527 $ 1,082,249 $ 856,339
Durham, NC 12/87
Winnsboro Plaza 4/86 36,000 sq. ft. 83% 1973 614,550 441,969 54,671 30,587
Winnsboro, SC
--------- -------------------------------------------------
7,938,974 sq. ft. 434,712,349 398,065,218 33,098,261 16,956,901
========= -------------------------------------------------
APARTMENTS
Whitehall Kent Apartments 6/79 188 units 97% 1968 3,555,285 1,568,735 703,901 651,471
Kent, OH -------------------------------------------------
INDUSTRIAL PROPERTIES
Industrial Buildings 6/79 109,810 sq. ft. 91% 1956 & 2,963,840 321,348 308,884 301,114
Charlotte, NC 1963
Plasti-Kote 6/79 41,000 sq. ft. 100% 1961 & 482,939 81,390 97,376 97,376
Medina, OH 1966
--------- -------------------------------------------------
150,810 sq. ft. 3,446,779 402,738 406,260 398,490
========= -------------------------------------------------
$441,714,413 $400,036,691 $34,208,422 $18,006,862
=================================================
</TABLE>
NOTES:
(1) Property FFO represents cash flows from operating activities before
interest expense excluding changes in accrued assets and liabilities for
the fiscal year ended December 31, 1994 or from the date of acquisition
(if acquired in 1994) through December 31, 1994. Property FFO should not
be considered an alternative to net income or other measurements under
generally accepted accounting principles as an indicator of operating
performance; or to cash flows from operating, investing, or financing
activities as a measure of liquidity. Property FFO is presented as an
additional measure in valuing and analyzing the underlying real estate
investments.
(2) Property Net Income represents net income of the property calculated in
accordance with generally accepted accounting principles, excluding any
allocation of general and administrative expenses of the Company.
(3) The Company owns a 54.5% interest in North Village Center and a 75%
interest in Venice Plaza Shopping Center, which are consolidated for
financial reporting purposes and minority interests recorded.
(4) Subject to gound leases expiring in 1997 for Shelby Plaza and 1998 and
2008 for Plaza Acadienne. The Company has an option to purchase the
land at Shelby Plaza for $265,000 in 1997.
(5) Annual cash flow for 1994 includes $72,261 of percentage rentals.
10
<PAGE> 12
II. EQUITY INVESTMENTS (DIRECT FINANCING LEASES)
The Company also had a fee interest in land and improvements thereon in
the following properties occupied by tenants under leases which are
treated as direct financing leases:
<TABLE>
<CAPTION>
Percent Cost to Property Property
Date Leased Year Company FFO Net Income
Description Acquired Square Feet 12/31/94 Completed 12/31/94 1994 (1) 1994 (2)
----------- -------- ----------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE
The Old Phoenix National Bank (3) 12/84 73,074 sq. ft. 100% Various $2,192,763 $ 313,049 $ 287,628
Medina County, OH ======= ----------------------------------
SHOPPING CENTERS
Wal-Mart Stores, Inc. (4) 6/85 54,223 sq. ft. 100% 1985 1,345,539 194,111 164,748
Mathews, LA
Wal-Mart Stores, Inc. (4) 6/85 64,890 sq. ft. 100% 1985 1,714,478 264,381 226,894
Fremont, NE
Wal-Mart Stores, Inc. (4) 6/85 & 83,249 sq. ft. 100% 1985 2,543,578 419,778 364,967
Kearney, NE 1/91
Wal-Mart Stores, Inc. (4) 7/85 53,571 sq. ft. 100% 1985 1,499,522 241,891 209,201
Marble Falls, TX
------- ----------------------------------
255,933 sq. ft. 7,103,117 1,120,161 965,810
======= ----------------------------------
$9,295,880 $1,433,210 $1,253,438
==================================
</TABLE>
NOTES:
(1) Property FFO represents cash flows from operating activities before
expense excluding changes in accrued assets and liabilities for the
fiscal year ended December 31, 1994 or from the date of acquisition (if
acquired in 1994) through December 31, 1994. Property FFO should not be
considered an alternative to net income or other measurements under
generally accepted accounting principles as an indicator of operating
performance; or to cash flows from operating, investing or financing
activities as a measure of liquidity. Property FFO is presented as an
additional measure in valuing and analyzing the underlying real estate
investments.
(2) Property Net Income represents net income of the property calculated in
accordance with generally accepted accounting principles, excluding
any allocation of general and administrative expenses of the Company.
(3) This investment represents ten banking facilities leased to The Old
Phoenix National Bank at an annual rental of $313,049. The leases
expire March 2013 with no purchase or renewal options.
(4) These four retail facilities are leased to Wal-Mart Stores, Inc. at a
total annual rental of $827,925 plus percentage rentals of 1% of gross
sales in excess of fourth year sales. The leases expire January 2011,
with five 5-year renewal options. There are no purchase options.
Percentage rentals totaling $292,236 were received during the fiscal
year ended December 31, 1994.
11
<PAGE> 13
III. EQUITY INVESTMENTS (LAND PURCHASE-LEASEBACKS)
The Company owned land under the following properties, all of which are
net leased back to lessees on terms summarized below. The improvements
on such properties are owned by others but will revert to the Company at
the end of the lease terms unless the purchase options of the lessees, as
referred to below, are exercised. The interest of the Company in all
properties is subordinate to first mortgage loans to the lessees,
aggregating $1,294,687 as of December 31, 1994.
<TABLE>
<CAPTION>
Lease Cost to Property Property
Date Land Area Year Expiration Company FFO Net Income
Description Acquired In Acres Improvements Completed Date 12/31/94 1994 (1) 1994 (2)
----------- -------- -------- ------------ --------- ---- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Lawrence County Shopping Center 5/71 13.62 135,605 sq. ft. 1971 2069 (3) $435,994 $ 67,200 $ 67,200
Sybene, OH
Grand Marche Shopping Center 9/72 11.38 200,585 sq. ft. 1969 2012 250,500 56,228 (4) 56,228
Lafayette, LA
Manatee County Shopping Center 5/71 16.00 120,500 sq. ft. 1971 2069 (3) 241,798 30,000 30,000
Bradenton, FL
------- --------------------------------
456,690 sq. ft. $928,292 $153,428 $153,428
======= ================================
</TABLE>
NOTES:
(1) Property FFO represents cash flows from operating activities before
interest expense excluding changes in accrued assets and liabilities for
the fiscal year ended December 31, 1994 or from the date of acquisition
(if acquired in 1994) through December 31, 1994. Property FFO should not
be considered an alternative to net income or other measurements under
generally accepted accounting principles as an indicator of operating
performance; or to cash flows from operating, investing or financing
activities as a measure of liquidity. Property FFO is presented as an
additional measure in valuing and analyzing the underlying real estate
investments.
(2) Property Net Income represents net income of the property calculated in
accordance with generally accepted accounting principles, excluding
any allocation of general and administrative expenses of the Company.
(3) Each lessee has a repurchase option exercisable at a specified price (in
each case higher than the cost to the Company of its investment) which
increases annually by a fixed amount.
(4) Includes percentage rentals of $28,728.
12
<PAGE> 14
IV. MORTGAGE LOAN INVESTMENTS
The Company had mortgage loans receivable on the following properties:
<TABLE>
<CAPTION>
|------Security------| Principal Stated
Type of Land Area Outstanding Maturity Interest
Location Loan In Acres Improvements 12/31/94 Date Rate
-------- ---- -------- ------------ -------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Walton Plaza Shopping Center 1st Mortgage 5.53 43,460 sq. ft. $3,245,122 8/98 (1) 10.25%
Augusta, GA
Spanish Quarter Apartments Wrap-Around 15.00 276 units 5,194,228 9/01 (2) (2)
Montgomery, AL Mortgage
Mill Creek Club Condominiums 1st Mortgage --- 4 units 40,504 2006- (3) 8.63% -
Nashville, TN Participation 2007 12.38%
Cypress Chase "A" Condominiums 1st Mortgage 2.00 recreational 145,369 5/09 (4) 10.00%
Lauderdale Lakes, FL
----------
8,625,223
Less interest discounts and negative goodwill (333,080)
----------
$8,292,143
==========
</TABLE>
(1) Monthly payments of $29,670 of principal and interest at an annual rate of
10.25%, with a balloon payment at maturity August 1, 1998.
(2) Modified effective December 1, 1994 to extend the term for 3 years to
September 1, 2001 and to reduce the cash interest rate from 10% to 9.5%
prospectively, requiring monthly payments of $45,382 of principal and
interest for the remaining term, with a balloon payment at maturity.
Additional interest at an annual rate of 1% accrues for the periods
September 1, 1984 through August 31, 1989 and September 1, 1991 through
August 31, 2001 and is payable at maturity or on sale of the property.
In addition, the Company has agreed to fund additional principal of up
to $260,000 under this mortgage to make certain capital improvements.
This wrap-around mortgage is subject to two first mortgages having an
aggregate balance of $1,134,260 as of December 31, 1994. See Table V.
Mortgage Indebtedness for a summary of the terms of the first mortgages.
(3) Principal outstanding December 31, 1994 represents the Company's 46.154%
participation in the total loan outstanding of $87,758.
(4) Monthly payments include principal and interest of $1,590.
13
<PAGE> 15
V. MORTGAGE INDEBTEDNESS
Indebtedness of the Company secured by its investments (not including
mortgage debt owed by lessees of its land purchase-leaseback investments)
was as follows:
<TABLE>
<CAPTION>
Principal Balance Annual
Investment 12/31/94 Maturity Date Interest Rate Constant Payment
---------- -------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Pensacola Plaza $ 1,750,000 2/06/95 (7) 7.640% (3) $ 133,700 (1)
Pensacola, FL
Venice Plaza 108,339 (2) 8/01/95 9.500% 168,776
Venice, FL
Chadwick Square 863,497 11/01/95 (4) 13.875% 126,900
Hendersonville, NC
Ft. Walton Beach Plaza 1,773,737 12/30/95 7.640% (3) 135,514 (1)
Ft. Walton Beach, FL
Elmwood Oaks 9,000,000 2/01/96 9.750% 877,500 (1)
Harahan, LA
Douglas Commons 6,314,134 3/01/96 (4) 9.780% 659,281
Douglasville, GA
Spalding Village 12,413,464 4/01/96 (4) 9.375% 1,272,576
Griffin, GA
Chestnut Square 1,059,548 5/01/96 (4) 13.875% 155,100
Brevard, NC
Lawrence Commons 2,772,496 8/01/96 (4) 9.375% 291,944
Lawrenceburg, TN
Spanish Quarter Apartments Phase I 227,306 9/20/96 8.500% 140,244
Montgomery, AL Phase II 906,954 7/15/02 8.250% 162,360
Stadium Plaza 3,850,000 11/01/96 9.500% 365,750 (1)
Phenix City, AL
Seven Hills 3,800,000 2/01/97 9.750% 370,500 (1)
Spring Hill, FL
Delchamps Plaza 3,277,511 8/01/97 (4) 9.375% 349,335
Pascagoula, MS
Paulding Commons 8,818,984 8/01/97 (4) 7.600% 762,561
Dallas, GA (5)
Smyrna Village 4,213,514 8/01/97 (4) 7.600% 364,335
Smyrna, TN (5)
South Beach Regional 15,569,828 8/01/97 (4) 7.600% 1,396,598
Jacksonville Beach, FL (5)
Pinhook Plaza Phase I 1,949,996 1/01/00 (4) 9.875% 250,320
Lafayette, LA Phase II 2,049,065 1/01/00 (4) 9.875% 258,504
Phase III 3,586,106 1/01/00 (4) 9.875% 407,979
Macland Pointe 3,896,820 2/01/00 (4) 7.750% 362,558
Marietta, GA
Plaza Acadienne 2,457,481 7/01/00 (4) 10.250% 317,420
Eunice, LA
</TABLE>
14
<PAGE> 16
V. MORTGAGE INDEBTEDNESS. continued
<TABLE>
<CAPTION>
Principal Balance Annual
Investment 12/31/94 Maturity Date Interest Rate Constant Payment
---------- -------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Thomasville Commons $ 5,626,354 6/1/02 (4) 9.625% $ 583,303
Thomasville, NC
North Village Center 2,891,504 (2) 3/15/09 8.125% 343,171
North Myrtle Beach, SC
Village at Northshore 5,837,763 7/01/13 9.000% 647,803
Slidell, LA
------------ -----------
105,014,401 $10,904,032
===========
Interest Premium (6) 92,683
------------
$105,107,084
============
</TABLE>
NOTES:
(1) Interest only. Entire principal due at maturity.
(2) Although the Company is a partner or joint venturer in these
investments, 100% of the mortgage notes payable is recorded for
financial reporting purposes.
(3) Adjustable quarterly.
(4) Balloon payment at maturity.
(5) The Company has the option to extend for two additional years.
(6) For financial reporting purposes, mortgage indebtedness is valued
assuming current interest rates at the dates of acquisition.
(7) Extended to May 1, 1995 on the same terms pending possible refinancing
by the lender or repayment.
15
<PAGE> 17
Rental Properties. On June 30, 1994, the Company purchased two
shopping centers located in Cooper City and Sunrise, Florida for a total
purchase price of approximately $25,350,000 cash. Countryside Shops in Cooper
City, Florida contains 173,161 square feet and is anchored by Publix and J.
Byrons. Westgate Square in Sunrise, Florida contains 104,904 square feet and
is anchored by Winn-Dixie.
On August 3, 1994, the Company acquired the land underlying Valley
West Mall in Glendale, Arizona for $1,500,000 cash and terminated the ground
lease, extinguishing approximately $204,000 of ground lease payments. The
purchase was made as part of a restructuring of this investment which included
the purchase of the underlying debt described under "Mortgage Indebtedness"
below.
On August 31, 1994, the Company purchased First Street Station
Shopping Center in Albemarle, North Carolina for approximately $3,010,000 cash.
This center contains 52,230 square feet of retail space and is anchored by
Harris Teeter.
On November 1, 1994, the Company purchased Eden Centre in Eden, North
Carolina for approximately $3,513,000 cash. This center contains 56,355 square
feet and is anchored by Food Lion.
On December 21, 1994, the Company acquired eleven shopping centers in
Baton Rouge, Eunice, Lafayette and Slidell, Louisiana from a Massachusetts
limited partnership and various related or affiliated Louisiana partnerships.
The total purchase price was approximately $75,842,000 consisting of
$59,962,000 cash and $15,880,000 of existing first mortgage financing to which
three of the centers are subject. These centers contain approximately
1,350,000 square feet of retail space and are anchored by such tenants as
Kmart, Delchamps, Albertsons, K & B Drugs, Marshalls and Service Merchandise.
This acquisition was part of a package of thirteen centers, two of which closed
January 6, 1995. See "Subsequent Events" below.
During 1994, the Company completed construction of a 4,800 square foot
expansion of its Forest Hills Shopping Center in Wilson, North Carolina for a
total cost of approximately $262,000. Also, the Company completed a 10,553
square foot expansion of its department store anchor at South Beach Regional in
Jacksonville, Florida for a total cost of approximately $506,000, $97,000 of
which was funded during 1993. Additionally, the Company funded approximately
$7,000 in initial expenditures on three additional potential tenant expansions.
During 1994, the Company completed the redevelopment of its Riverview
Shopping Center in Durham, North Carolina. This redevelopment included the
demolition of approximately 40,000 square feet and the construction of a new
54,000 square foot store for a new grocery tenant. The cost of this
redevelopment and
16
<PAGE> 18
renovation of the existing center totaled approximately $3,015,000, $7,000 of
which was funded during 1993. Also, the Company funded approximately $661,000
for a redevelopment project at its West Gate Plaza Shopping Center in Mobile,
Alabama which commenced in late 1994 and is expected to be completed in 1995.
The total cost of this redevelopment is expected to be approximately $2,750,000
and includes the demolition of approximately 35,000 square feet and the
construction of a new 44,000 square foot store for a new grocery tenant.
Mortgage Investments. During April, 1994, the borrower under the
Spanish Quarter Apartments wrap-around mortgage loan filed Chapter 11
bankruptcy. In December, 1994, the Bankruptcy Court approved the plan of
reorganization which amended the mortgage loan effective December 1, 1994 to
extend the term for 3 years to September 1, 2001 and to reduce the cash
interest rate from 10% to 9.5% prospectively. Additional interest at an annual
rate of 1% continues to accrue through the remainder of the term. In addition,
the Company has agreed to fund additional principal of up to $260,000 under
this mortgage for capital improvements to the property.
Mortgage Indebtedness. On June 28, 1994, the Company purchased the
9.5% mortgage note payable secured by Valley West Mall in Glendale, Arizona for
$4,500,000. The mortgage note payable had an outstanding principal balance of
$8,248,095, which resulted in an extraordinary gain on extinguishment of this
indebtedness of $3,748,095 for both financial reporting and tax purposes.
Subsequent Events. On January 6, 1995, the Company acquired two
additional centers in Slidell and Galliano, Louisiana. The total purchase
price was approximately $6,658,000, consisting of approximately $4,275,000 cash
over first mortgage financing on one of the centers of approximately
$2,383,000. Country Club Plaza in Slidell, Louisiana contains 64,786 square
feet and Tarpon Heights Plaza in Galliano, Louisiana contains 56,605 square
feet. Both centers are anchored by Delchamps. These two centers were part of
a package of thirteen centers, eleven of which were acquired December 21, 1994.
The February 6, 1995 maturity of the mortgage indebtedness secured by
Pensacola Plaza, has been extended to May 1, 1995 on the same terms pending
possible refinancing by the lender or repayment.
17
<PAGE> 19
Item 3. Legal Proceedings.
There are no material pending legal proceedings of which the Company
is aware involving the Company or its properties.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
18
<PAGE> 20
PART II
Item 5. Market for the Registrant's Common Equity and Related
Security Holder Matters.
a) The following table shows the high and low sale prices for the
Company's common stock, as reported on the New York Stock Exchange for
the periods indicated.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1993
----
First Quarter $15.50 $11.63
Second Quarter 15.13 12.00
Third Quarter 14.13 11.00
Fourth Quarter 12.88 10.38
1994
----
First Quarter 11.75 10.38
Second Quarter 10.75 9.75
Third Quarter 10.50 8.75
Fourth Quarter 10.38 9.00
</TABLE>
b) Approximate number of Equity Security Holders.
<TABLE>
<CAPTION>
Approximate Number of Record
Title of Class Holders at February 6, 1995
-------------- ----------------------------
<S> <C>
Shares of Common Stock 4,000
$1 Par Value
</TABLE>
c) IRT Property Company paid quarterly cash dividends during the years
1993 and 1994 as follows:
<TABLE>
<CAPTION>
Cash Dividends Paid
-------------------
<S> <C>
1993
----
First Quarter $ .21
Second Quarter .21
Third Quarter .21
Fourth Quarter .21
1994
----
First Quarter .21
Second Quarter .21
Third Quarter .21
Fourth Quarter .21
</TABLE>
IRT has paid 68 consecutive quarterly dividends. The current
annualized dividend rate is $.84. The Company does not foresee any
restrictions upon its ability to continue its dividend payment policy
of distributing at least the 95% of its otherwise taxable ordinary
income required for qualification as a REIT.
19
<PAGE> 21
Item 6: Selected Consolidated Financial Data
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this report.
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31,
As of or for the years ended 1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross revenues $ 49,202,144 $ 45,062,911 $ 34,006,687 $ 28,686,196 $ 29,808,804
============ ============ ============ ============ ============
Earnings from operations $ 12,788,923 $ 11,772,265 $ 7,441,692 $ 6,261,200 $ 6,656,881
Gain (loss) on real estate investments (3,825,418) 4,556,511 3,547,071 1,134,475 4,001,561
------------ ------------ ------------ ------------ ------------
Earnings before extraordinary items 8,963,505 16,328,776 10,988,763 7,395,675 10,658,442
Extraordinary items:
Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811) - -
Gain on purchase of debentures - - - 17,400 1,058,802
------------ ------------ ------------ ------------ ------------
Net earnings $ 12,711,600 $ 14,888,298 $ 10,973,952 $ 7,413,075 $ 11,717,244
============ ============ ============ ============ ============
Per share:
Earnings before extraordinary items $ .35 $ .72 $ .74 $ .59 $ .88
Extraordinary items .15 (.06) - - .09
----- ----- ----- ----- -----
Net earnings $ .50 $ .66 $ .74 $ .59 $ .97
===== ===== ===== ===== =====
Dividends paid $ .84 $ .84 $ .81 $ .80 $1.07
===== ===== ===== ===== =====
Federal income tax status of dividends
paid to shareholders:
Ordinary income $ .72 $ .39 $ .39 $ .55 $ .52
Capital gain .04 .45 .42 .13 .55
Return of capital .08 - - .12 -
------------ ------------ ------------ ------------ ------------
$ .84 $ .84 $ .81 $ .80 $1.07
============ ============ ============ ============ ============
Weighted average number of shares
outstanding 25,349,303 22,457,131 14,896,369 12,633,644 12,038,407
============ ============ ============ ============ ============
Total assets $428,579,355 $402,319,125 $297,590,922 $184,627,532 $185,593,048
============ ============ ============ ============ ============
Indebtedness:
Mortgage notes payable $105,107,084 $ 98,878,505 $115,379,078 $ 72,865,897 $ 75,855,354
7.3% convertible subordinated debentures 86,250,000 86,250,000 - - -
2.0% convertible subordinated debentures - - 5,730,000 5,730,000 11,465,000
Indebtedness to bank 26,000,000 - 1,200,100 7,000,000 9,540,000
------------ ------------ ------------ ------------ ------------
$217,357,084 $185,128,505 $122,309,178 $ 85,595,897 $ 96,860,354
============ ============ ============ ============ ============
Shareholders' equity $203,038,464 $210,335,167 $168,574,002 $ 93,610,551 $ 82,200,090
============ ============ ============ ============ ============
Other Data:
Funds From Operations (1) $ 21,615,588 $ 19,825,901 $ 13,847,999 $ 11,865,950 $ 12,238,142
Net Cash Flows from (used in) -
Operating Activities $ 22,511,731 $ 19,116,142 $ 14,274,651 $ 10,195,538 $12,950,891
Investing Activities ($99,052,456) ($16,990,558) ($55,114,524) ($4,206,753) ($10,385,497)
Financing Activities ($247,587) $ 76,370,567 $ 40,247,232 ($5,837,312) ($24,019,935)
</TABLE>
(1) Funds from operations is defined as net cash flows from operating
activities before changes in accrued assets and liabilities. Management
believes funds from operations should be considered along with, but not as
an alternative to, net income as defined by generally accepted accounting
principles as a measure of the Company's operating performance. Funds from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs.
20
<PAGE> 22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Changes in Financial Condition. During 1994, the Company utilized
funds of:
a) $108,408,000 for the acquisition of fifteen shopping center
investments, consisting of cash of $92,528,000 and mortgage
debt of $15,880,000 secured by four of the centers,
b) $4,347,000 to fund expansion or redevelopment costs of seven
existing investments,
c) $1,500,000 for the purchase of the land underlying Valley West
Mall, extinguishing approximately $204,000 of annual ground
lease payments,
d) $4,500,000 to purchase the $8,248,000 mortgage note payable
secured by Valley West Mall, extinguishing approximately
$1,076,000 of annual debt service payments (see Note 10).
These transactions were funded with the remaining proceeds from the 1993 public
offerings and $26,000,000 of borrowings under the Company's revolving term
loan.
During 1993, the Company completed concurrent public offerings of
4,127,580 shares of its common stock at $11.25 per share and $86,250,000 of
7.3% convertible subordinated debentures for net proceeds of approximately
$126,330,000. Also during 1993, the Company received approximately $7,779,000
on the sale of an apartment investment, two parcels of land and a third parcel
of land with the buildings thereon. In addition, the Company received net
proceeds of approximately $4,130,000 from the repayment of two mortgage loan
investments. The Company utilized funds of:
a) $26,329,000 for the acquisition of four shopping center
investments, consisting of cash of $18,529,000 and mortgage
debt of $7,800,000 secured by two of the centers,
b) $9,168,000 to purchase or fund expansions of six of its real
estate investments,
c) $22,816,000 to repay eleven mortgage notes payable, and
d) $8,308,500 of principal and premium to redeem the remainder of
the Company's 2% convertible subordinated debentures.
21
<PAGE> 23
A portion of proceeds made available by the offerings in 1993 were used
temporarily to reduce bank indebtedness. The remaining funds were temporarily
invested in short-term money market instruments, pending the acquisition of
shopping center investments.
Changes in Results of Operations. The $3,074,000 increase in income
from rental properties during 1994 was due to approximately $4,646,000 of income
earned from the 19 shopping centers acquired during 1993 and 1994 and the recent
property expansions purchased or funded by the Company. This was partially
offset by $1,332,000 less income earned from the investments sold during 1993
and 1994 as well as approximately $240,000 less income due to the ongoing
redevelopment of two shopping center investments. Similarly, the $10,823,000
increase in income from rental properties during 1993 was primarily due to
approximately $15,952,000 of income earned from the 27 shopping centers acquired
during 1992 and 1993, partially offset by $5,010,000 less income earned from the
23 Ingles centers sold in October 1992 and the apartment investment sold in
October 1993 and by $119,000 of bankruptcy claim settlements received from Revco
in June 1992.
The percentage leased of the Company's shopping center investments
remained stable at 93% at December 31, 1992, 1993 and 1994. The average
occupancy of the Company's Ohio apartment investment decreased from 92% in 1992
to 89% in 1993 but increased to 92% in 1994. Percentage rentals received from
shopping center investments, excluding percentage rentals received from the
four Wal-Mart investments classified as direct financing leases, totaled
$823,000 in 1992, $755,000 in 1993 and $470,000 in 1994. Included in these
percentage rentals were $54,000 received from the Ingles centers in 1992.
During 1993 and 1992, three of the Company's mortgage loan investments
were repaid in full. These loan repayments resulted in decreased interest
income of $421,000 in 1994 and $433,000 in 1993. The decreases were more than
offset by increases in interest earned on short-term investments of
approximately $1,541,000 and $635,000 in 1994 and 1993, respectively.
The increases in interest on direct financing leases in both 1994 and
1993 were primarily due to receipt of percentage rentals from the four Wal-Mart
investments, which were approximately $292,000, $219,000 and $123,000 during
1994, 1993 and 1992, respectively.
The increases in operating expenses of rental properties and
depreciation during 1994 and 1993 were primarily due to property acquisitions
and dispositions during the three-year period. The Company acquired 15
shopping center investments in 1994, four in 1993 and 23 in 1992. The
additional operating expenses and depreciation related to these centers was
partially offset by the sale of an apartment investment in October 1993 and the
23 Ingles
22
<PAGE> 24
centers in October 1992. Depreciation also increased in 1994 due to four
property expansions purchased or funded during 1993.
The 1993 and 1992 acquisitions also resulted in increased interest
expense on mortgages in 1994 and 1993. These increases were fully offset in
1994 and partially offset in 1993 by the repayment of eleven mortgage notes
payable during 1993 aggregating $22,816,000 of principal with interest rates
ranging from 7% to 13.625%. The 1994 increase was further offset by the
refinancing of one mortgage note payable in February 1994 which reduced the
interest rate from 12.625% to 8.125% and the purchase of the 9.5% mortgage
secured by Valley West Mall in June 1994. The 1993 increase was further offset
by the 1992 sale of the 23 Ingles centers and the prepayment of a $444,000
mortgage note payable.
The $3,764,000 and $2,027,000 increases in interest on debentures
during 1994 and 1993, respectively, were primarily due to the 7.3% debentures
issued in August 1993. The 1993 increase was partially offset by a decrease in
interest expense on the 2% debentures totaling $182,000 which resulted from the
redemption of the remaining $5,730,000 of debentures on August 1, 1993 in
accordance with the debenture agreement. Similarly, the issuance of the 7.3%
debentures resulted in an increase in amortization of debt cost of $234,000 and
$142,000 during 1994 and 1993, respectively.
The Company had average borrowings under its revolving term loan of
$789,000 and $6,494,000 during 1994 and 1993, respectively, which resulted in
decreased interest on bank debt during 1994. The interest rate on this
facility is, at the option of the Company, either prime or 1.25% over adjusted
LIBOR. Interest on indebtedness to bank decreased $164,000 during 1993 due to
lower average borrowings at slightly higher average rates.
The increase in general and administrative expenses in 1994 was
primarily due to the costs of increased administrative and property management
personnel as well as increased shareholder relations costs and professional
services.
The amount of gains recognized on sales of investments have fluctuated
and in the future may continue to fluctuate depending upon sales activity in
any given year. During 1994, the Company recognized gains on sales of
properties of approximately $257,000. This gain was more than offset by
$4,125,000 of reductions in carrying values of certain investments, primarily
Valley West Mall. During 1993 and 1992, the Company recognized gains on sales
of properties of approximately $4,557,000 and $7,112,000, respectively. The
gains on sales during 1992 were offset by the initial reduction in carrying
value of Valley West Mall of $3,565,000. These adjustments to carrying value
were a result of the Company's quarterly evaluations of its individual
investments based on current and forecasted net operating income of the
23
<PAGE> 25
investment, competition resulting from new properties in the market place and
other changes in the local economy. The development of a new mall which would
directly compete with Valley West Mall was announced in 1992, and in November
1992, one of the anchor tenants at Valley West gave notice to terminate its
lease effective November 1993. Based on this lease termination and the
predicted impact of the new mall when opened on the tenants of Valley West, the
Company determined that a permanent impairment of $3,565,000 had occurred and
reflected such writedown in its financial statements during the fourth quarter
of 1992. The new mall opened for business in October 1993, the terminating
tenant ceased operations in November 1993, and another anchor tenant changed
its business to an outlet concept. After a concerted leasing effort which
commenced in 1992, review of tenant sales reductions since the opening of the
new mall, meetings with the City and potential purchasers of the center, and
restructuring of the Company's ownership in this investment, including
prepayment of the mortgage and negotiations with the land lessor concerning a
joint venture or the ultimate purchase of the underlying land, the Company
determined that a further permanent impairment of the value of this mall had
developed. An additional indicator of value was the discount received by the
Company in the prepayment of the underlying mortgage debt in June 1994.
Accordingly, the Company recorded an additional writedown of this investment in
June 1994.
During 1994, the Company recognized an extraordinary gain of
approximately $3,748,000 on the purchase of the 9.5% mortgage note payable
secured by Valley West Mall. The mortgage had an outstanding balance of
$8,248,000 and was purchased for $4,500,000. During 1993, the Company
recognized extraordinary losses of approximately $1,440,000 on the prepayment
of nine mortgage notes payable totaling $21,896,000 with interest rates ranging
from 9.3% to 13.625%. This extraordinary loss included $186,000 of unamortized
net interest discounts and $1,254,000 of prepayment penalties. During 1992,
the Company recognized extraordinary losses of approximately $15,000 on the
prepayment of a 10% mortgage note payable totaling $444,000 and the prepayment
of LIBOR advances under the revolving term loan totaling $15,000,000.
Funds From Operations. Funds from operations is defined as net cash
flows from operating activities before changes in accrued assets and
liabilities. Funds from operations totaled $21,615,588, $19,825,901 and
$13,847,999 for the years ended December 31, 1994, 1993 and 1992, respectively.
Management believes funds from operations should be considered along with, but
not as an alternative to, net income as defined by generally accepted accounting
principles as a measure of the Company's operating performance. Funds from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs.
24
<PAGE> 26
During 1994 and 1993, the Company had an average of approximately
$57,000,000 and $25,000,000, respectively, of the proceeds of the August 1993
equity and debenture offerings invested in short-term money market investments
earning an average interest rate of approximately 4.2% and 3.4%, respectively.
This resulted in temporary dilution in funds from operations. This temporary
dilution ceased when the remaining cash was invested in higher-yielding real
estate investments on December 21, 1994.
In addition, funds from operations for 1994, 1993 and 1992 did not
include rental income received through the rental guarantees related to major
portfolio acquisitions completed in July and December 1992. Rental income
covered by the guarantees for 17 centers totaled approximately $510,000 and
$838,000 for 1994 and 1993, respectively. For 1992, rental income covered by
guarantees for 10 centers totaled approximately $450,000 but encompassed only
five months of the year. These rental guarantees were reflected in the initial
purchase prices of these centers rather than as current operating results.
Liquidity and Capital Resources. In 1994 and 1993, the Company's
dividends, mortgage amortization payments and capital improvements were funded
primarily by funds from operations and also through supplemental funding from
mortgage financing, available cash investments, bank borrowings and other
sources. The Company believes that funds from operations will be sufficient to
pay dividends and to make mortgage amortization payments and fund necessary
capital improvements. Other planned activities, including property
acquisitions, certain capital improvement programs, and debt repayments are
expected to be funded to the extent necessary by bank borrowings, mortgage
financing, periodic sales or exchanges of existing properties and public or
private offerings of stock or debt.
For a description of the Company's mortgage debt, reference is made to
Table V in Item 2 hereof and to Note 6 to the consolidated financial statements
included as a part of this report. For a description of commitments and
contingencies, reference is made to Note 15 to the consolidated financial
statements included as a part of this report.
On August 31, 1993, the Company completed concurrent public offerings
of 4,127,580 shares of its common stock and $86,250,000 of 7.3% convertible
subordinated debentures for net proceeds aggregating approximately
$126,330,000. On October 29, 1992, the Company completed a public offering of
5,750,000 shares of its common stock at $11 per share for net proceeds of
approximately $59,520,000. The Company used the proceeds from these offerings
to acquire new shopping center investments, to improve existing investments and
temporarily to reduce bank debt.
25
<PAGE> 27
On November 1, 1990, the Company obtained a $25,000,000 secured
revolving term loan maturing November 1, 1995. On July 31, 1992, the loan
agreement was modified to increase the commitment from $25,000,000 to
$50,000,000 and to extend the maturity from November 1, 1995 to August 1, 1997.
The interest rate on this loan is either prime or 1.25% over adjusted LIBOR, at
the option of the Company. The Company may borrow, repay and/or reborrow under
this loan at any time. As of December 31, 1994, the borrowings under this
credit facility totaled $26,000,000. As of December 31, 1993, the Company had
no amounts outstanding under this loan. For additional information on this
revolving term loan, reference is made to Note 8 to the consolidated financial
statements.
The Company's 7.3% convertible subordinated debentures are convertible
into common stock of the Company at any time prior to maturity at $11.25 per
share, subject to adjustments in certain events. As of December 31, 1994 and
1993, the entire issue of $86,250,000 of debentures was outstanding. On August
1, 1993, the Company's 2% convertible subordinated debentures were redeemed in
full at a premium of 45% over par. For additional information on the
debentures, reference is made to Note 7 to the consolidated financial
statements.
The Company's Dividend Reinvestment Plan allows shareholders to elect
to reinvest all or a portion of their distributions in newly issued shares of
the Company at 95% of the market price of the shares. During 1994, 1993 and
1992, the Company received net proceeds under this plan of $938,000, $1,249,000
and $996,000, respectively. For additional information on the Dividend
Reinvestment Plan, reference is made to Note 11 to the consolidated financial
statements.
Inflationary and Economic Factors. The effects of inflation upon the
Company's results of operations and investment portfolio are varied. From the
standpoint of revenues, inflation has the dual effect of both increasing the
tenant revenues upon which percentage rentals are based and allowing increased
fixed rentals as rental rates rise generally to reflect higher construction
costs on new properties. This positive effect is partially offset by
increasing operating expenses, but usually not to the extent of the increases
in revenues.
Environmental Factors. On March 2, 1994, the Company was advised by
the North Carolina Department of Environment, Health and Natural Resources that
certain Corrective Actions must be performed at the Company's Charlotte, North
Carolina industrial facility. During its soil and groundwater investigation at
the Bluebonnet Village Shopping Center in Baton Rouge, Louisiana, the Company's
environmental consultant discovered concentrations of various chemicals in a
single groundwater monitoring well that exceeded the maximum contaminant levels
under the Federal Safe Drinking Water Act. The Company has notified the
Louisiana Department of
26
<PAGE> 28
Environmental Quality-Groundwater Protection Division ("LDEQ-GWPD") of such
discovery. For additional information, see "Regulation" under Item 1 and Note
16 to the consolidated financial statements included as a part of this Report.
Based on the information presently available, the Company believes the costs of
any corrective action would not have a material adverse effect on the Company's
results of operations, financial position or liquidity.
27
<PAGE> 29
Item 8. Financial Statements and Supplementary Data.
IRT PROPERTY COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 29
Consolidated Balance Sheets -
December 31, 1994 and 1993 30
Consolidated Statements of Earnings -
For the Years Ended December 31, 1994
1993 and 1992 31
Consolidated Statements of Changes
in Shareholders' Equity - For the Years Ended
December 31, 1994, 1993 and 1992 32
Consolidated Statements of Cash Flows -
For the Years Ended December 31, 1994,
1993 and 1992 33
Notes to Consolidated Financial Statements -
December 31, 1994, 1993 and 1992 35
</TABLE>
Schedules:
<TABLE>
<CAPTION>
Schedule
Number
- --------
<S> <C>
XI Real Estate and Accumulated Depreciation 50
XII Mortgage Loans on Real Estate 62
</TABLE>
Note: All other schedules are omitted since they are not required, are not
applicable or the required information is set forth in the
consolidated financial statements or the notes thereto.
28
<PAGE> 30
Report of Independent Public Accountants
To The Shareholders of
IRT Property Company:
We have audited the accompanying consolidated balance sheets of IRT
PROPERTY COMPANY (a Georgia corporation) and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of earnings, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements and the schedules referred
to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
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 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 financial statements referred to above present
fairly, in all material respects, the financial position of IRT Property
Company and subsidiary as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed in the index
to consolidated financial statements are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 24, 1995
29
<PAGE> 31
IRT PROPERTY COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
Real estate investments:
Rental properties $442,642,705 $331,012,764
Accumulated depreciation (41,677,722) (33,463,530)
----------- -----------
400,964,983 297,549,234
Net investment in direct financing
leases 9,295,880 9,461,899
Mortgage loans, net 8,292,143 8,392,959
----------- -----------
Net real estate investments 418,553,006 315,404,092
Cash and cash equivalents 1,841,388 78,629,700
Accrued interest receivable 544,712 895,556
Prepaid expenses and other assets 7,640,249 7,389,777
----------- -----------
$428,579,355 $402,319,125
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable plus net
interest premium of $92,683 in
1994 and $163,244 in 1993 $105,107,084 $ 98,878,505
7.3% convertible subordinated
debentures due August 15, 2003 86,250,000 86,250,000
Indebtedness to bank 26,000,000 -
Accrued interest on debentures 2,378,583 2,116,240
Accrued expenses and other
liabilities 4,726,224 3,617,213
Deferred income taxes 1,079,000 1,122,000
----------- -----------
Total liabilities 225,540,891 191,983,958
----------- -----------
Commitments and Contingencies (Note 15)
Shareholders' Equity:
Common stock, $1 par value,
authorized 75,000,000 shares;
25,420,747 shares issued and
outstanding in 1994 and 25,288,624
shares in 1993 25,420,747 25,288,624
Additional paid-in capital 197,937,465 196,793,150
Cumulative distributions in excess
of net earnings (20,319,748) (11,746,607)
----------- -----------
Total shareholders' equity 203,038,464 210,335,167
----------- -----------
$428,579,355 $402,319,125
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
30
<PAGE> 32
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues:
Income from rental properties $44,681,220 $41,607,391 $30,784,664
Interest, including $2,388,308 in
1994, $846,938 in 1993 and $211,572 3,267,486 2,257,405 2,103,209
in 1992 on cash equivalents 1,253,438 1,198,115 1,118,814
---------- ---------- ----------
Interest on direct financing leases
49,202,144 45,062,911 34,006,687
---------- ---------- ----------
Expenses:
Operating expenses of rental
properties 10,318,596 10,022,610 7,541,256
Interest on mortgages 8,191,240 10,269,423 9,693,316
Interest on debentures 6,202,025 2,438,114 524,842
Interest on indebtedness to bank 159,603 384,687 577,303
Depreciation 8,214,192 7,668,797 6,201,949
Amortization of debt costs 446,454 212,421 70,156
General & administrative 2,881,111 2,294,594 1,956,173
---------- ---------- ----------
36,413,221 33,290,646 26,564,995
---------- ---------- ----------
Earnings before gain (loss) on
real estate investment 12,788,923 11,772,265 7,441,692
---------- ---------- ----------
Gain (loss) on real estate investments:
Gain on sales of properties 300,036 4,556,511 7,112,382
Valuation loss (4,125,454) - (3,565,311)
---------- ---------- ----------
(3,825,418) 4,556,511 3,547,071
---------- ---------- ----------
Earnings before extraordinary
item 8,963,505 16,328,776 10,988,763
Extraordinary item -
Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811)
---------- ---------- ----------
Net earnings $12,711,600 $14,888,298 $10,973,952
========== ========== ==========
Per Share:
Earnings before extraordinary
item $ 0.35 $ 0.72 $ 0.74
Extraordinary item 0.15 (0.06) -
----- ----- -----
Net earnings $ 0.50 $ 0.66 $ 0.74
===== ===== =====
Weighted average number of shares
outstanding 25,349,303 22,457,131 14,896,369
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
31
<PAGE> 33
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Cumulative
Additional Distributions Total
Common Paid-In in Excess of Shareholders'
Stock Capital Net Earnings Equity
------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1991 $13,667,993 $ 86,508,218 $ (6,565,660) $ 93,610,551
Net earnings - - 10,973,952 10,973,952
Cash dividends declared - - (12,469,411) (12,469,411)
Issuance of shares under
Dividend Reinvestment
Plan, net 102,092 893,873 - 995,965
Exercise of Incentive Stock
Options 25,090 151,075 - 176,165
Issuance of shares for the
acquisition of properties 1,471,395 14,295,294 - 15,766,689
Issuance of common stock,
net 5,750,000 53,770,091 - 59,520,091
---------- ----------- ----------- -----------
Balance at December 31, 1992 21,016,570 155,618,551 (8,061,119) 168,574,002
Net earnings - - 14,888,298 14,888,298
Cash dividends declared - - (18,573,786) (18,573,786)
Issuance of shares under
Dividend Reinvestment
Plan, net 109,807 1,138,821 - 1,248,628
Exercise of Incentive Stock
Options 5,689 30,891 - 36,580
Issuance of shares for the
acquisition of properties 28,978 350,997 - 379,975
Issuance of common stock,
net 4,127,580 39,653,890 - 43,781,470
---------- ----------- ----------- -----------
Balance at December 31, 1993 25,288,624 196,793,150 (11,746,607) 210,335,167
Net earnings - - 12,711,600 12,711,600
Cash dividends declared - - (21,284,741) (21,284,741)
Issuance of shares under
Dividend Reinvestment
Plan, net 99,477 838,273 - 937,750
Exercise of Incentive Stock
Options 1,010 2,131 - 3,141
Issuance of shares for the
acquisition of properties 31,636 303,911 - 335,547
---------- ----------- ----------- ----------
Balance at December 31, 1994 $25,420,747 $197,937,465 $(20,319,748) $203,038,464
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
32
<PAGE> 34
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $12,711,600 $ 14,888,298 $ 10,973,952
Adjustments to reconcile earnings to net cash
flows from operating activities:
Depreciation 8,214,192 7,668,797 6,201,949
Gain (loss) on real estate investments 3,825,418 (4,556,511) (3,547,071)
Extraordinary loss (gain) (3,748,095) 1,440,478 14,811
Amortization of debt costs 446,454 212,421 70,156
Recovery of investment in direct
financing leases 166,019 172,418 134,202
----------- ---------- -----------
Changes in accrued assets and 21,615,588 19,825,901 13,847,999
liabilities:
Increase (decrease) in accrued
interest on debentures -
7.3% interest payable 262,343 2,084,302 -
2.0% interest payable - (9,550) -
Accrued premium on 2.0%
debentures - (2,291,542) 410,242
Increase in interest receivable,
prepaid expenses and other assets (592,782) (785,054) (808,244)
Increase in accrued expenses and
other liabilities 1,226,582 292,085 824,654
----------- ----------- -----------
Net cash flows from operating activities 22,511,731 19,116,142 14,274,651
----------- ----------- -----------
Cash flows from (used in) investing activities:
Proceeds from sales of properties, net 562,070 7,779,046 15,248,873
Additions to real estate investments, net -
Acquisitions, expansions and renovations (98,461,982) (27,697,142) (75,214,688)
Improvements (1,253,360) (1,208,045) (1,873,666)
Collections of mortgage loans, net 100,816 4,135,583 6,724,957
----------- ----------- -----------
Net cash flows used in investing
activities (99,052,456) (16,990,558) (55,114,524)
----------- ----------- -----------
Cash flows from (used in) financing activities:
Cash dividends paid, net (20,346,991) (17,325,158) (11,473,446)
Issuance of common stock, net - 43,781,470 59,520,091
Exercise of Incentive Stock Options 3,141 36,580 176,165
Issuance of 7.3% convertible subordinated
debentures, net - 82,548,826 -
Redemption of 2.0% convertible subordinated
debentures - (5,730,000) -
Amortization of mortgage notes payable, net (1,273,737) (1,484,658) (1,716,794)
Repayment of mortgage notes payable (8,378,095) (22,815,915) (444,073)
Increase (decrease) in bank indebtedness, net 26,000,000 (1,200,100) (5,799,900)
Extraordinary item -
Gain (loss) on extinguishment of debt 3,748,095 (1,440,478) (14,811)
----------- ----------- -----------
Net cash flows from (used in) financing
activities (247,587) 76,370,567 40,247,232
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents (76,788,312) 78,496,151 (592,641)
Cash and cash equivalents at beginning of year 78,629,700 133,549 726,190
----------- ----------- -----------
Cash and cash equivalents at end of year $ 1,841,388 $78,629,700 $ 133,549
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
33
<PAGE> 35
IRT PROPERTY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosures of cash flow
information:
-------------------------------------
Cash paid during the year for interest
related to:
Mortgage notes payable $ 8,082,615 $10,428,907 $ 9,564,518
Convertible subordinated debentures -
7.3% interest 6,033,906 - -
2.0% interest - 57,404 114,600
Premiums on 2.0% debentures - 2,578,500 -
Indebtedness to bank 153,941 457,816 662,421
----------- ---------- -----------
Total cash paid during the year for
interest $ 14,270,462 $13,522,627 $ 10,341,539
=========== ========== ===========
Supplemental schedule of noncash
investing and financing activities:
-----------------------------------
Acquisitions:
Cost of acquisitions, expansions and
renovations $114,677,940 $35,877,117 $176,283,071
Additions to mortgage notes payable -
Assumed (15,880,411) (7,800,000) (56,001,694)
Acquired - - (29,300,000)
Issuance of common stock (335,547) (379,975) (15,766,689)
----------- ---------- -----------
Cash paid for acquisitions, expansions
and renovations of real estate investments $ 98,461,982 $27,697,142 $ 75,214,688
=========== ========== ===========
Dispositions:
Fair values of assets sold $ 562,070 $ 7,779,046 $ 55,876,519
Repayment of mortgage notes payable - - (40,627,646)
----------- ---------- -----------
Proceeds from sales of properties, net $ 562,070 $ 7,779,046 $ 15,248,873
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
34
<PAGE> 36
IRT PROPERTY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 and 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation-
The accompanying consolidated financial statements include the
accounts of IRT Property Company and its wholly-owned subsidiaries,
IRT Management Company and VW Mall, Inc., (collectively, the
"Company"). Intercompany transactions and balances have been
eliminated in consolidation.
Income Taxes-
The Company has in past years elected to qualify, and intends
to continue such election, to be taxed as a "Real Estate Investment
Trust" ("REIT") under Sections 856-860 of the Internal Revenue Code,
as amended. In general terms, under such Code provisions a trust or
corporation which, in any taxable year, meets certain requirements and
distributes to its shareholders at least 95% of its taxable income
will not be subject to Federal income tax to the extent of the income
which it distributes.
The Company computes taxable income on a basis different from
that used for financial reporting purposes due to differences in the
estimated useful lives used to compute depreciation, timing
differences in the recognition of loan commitment fees, and certain
interest discounts which are not recognized for tax purposes. The
Company also reports certain gains on sales of properties on the
installment basis for tax purposes.
Income Recognition-
The Company follows the policy of suspending the accrual of
income on any investments where interest or rental payments are
delinquent 60 days or more. Percentage rental income is recorded upon
collection.
Gains from the sale of real estate are deferred until such
time as minimum down payment and loan amortization requirements are
met in conformity with the provisions of Statement of Financial
Accounting Standards No. 66. Interest discounts are imputed on
financed sales when the contractual interest rates are less than
prevailing market rates at the time of sale.
35
<PAGE> 37
Depreciation-
The Company provides depreciation on buildings and other
improvements on the straight-line basis over their estimated useful
lives. Such lives are from 14 to 40 years for buildings and 6 years
for improvements. Maintenance and repairs are charged to expense as
incurred, while significant improvements are capitalized. The profit
or loss on assets retired or otherwise disposed of is credited or
charged to operations and the cost and related accumulated
depreciation are removed from the asset and accumulated depreciation
accounts.
Valuation Loss-
The need for any allowance for possible losses or reductions
in carrying values applicable to the Company's investments is
evaluated by management by means of quarterly reviews of the portfolio
on an individual investment basis considering such factors as current
and projected net operating income and other market factors. Rental
properties are carried at the lower of depreciated cost or net
realizable value.
Cash Equivalents -
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
Earnings Per Share-
Earnings per share is computed by dividing net earnings by the
weighted average number of shares outstanding. The effect on earnings
per share assuming conversion of the 2% and the 7.3% convertible
subordinated debentures would be anti-dilutive. Exercise of the
outstanding stock options would not have a material dilutive effect on
earnings per share.
Reclassification of Prior Year Amounts-
Certain items on the consolidated statements of earnings have
been reclassified to conform with the 1994 presentation.
2. PUBLIC OFFERINGS:
On August 31, 1993, the Company completed concurrent public
offerings of 4,127,580 shares of its common stock at $11.25 per share
and $86,250,000 of 7.3% convertible subordinated debentures due August
15, 2003. Net proceeds
36
<PAGE> 38
from these offerings totaled approximately $126,330,000. For more
information regarding the convertible debentures, see Note 7.
On October 29, 1992, the Company completed a public offering
of 5,750,000 shares of its common stock at $11 per share. Net
proceeds from this offering totaled approximately $59,520,000.
3. RENTAL PROPERTIES:
Rental properties are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1994 1993
---- ----
<S> <C> <C>
Land covered by purchase-
leaseback agreements $ 928,292 $ 928,292
Land related to buildings
and improvements 97,129,292 61,094,813
Buildings & improvements 344,585,121 268,989,659
----------- -----------
$442,642,705 $331,012,764
=========== ===========
</TABLE>
Upon expiration of the leases for land covered by
purchase-leaseback agreements, all improvements on the land will
become the property of the Company.
At December 31, 1994, land covered by purchase-leaseback
agreements having an aggregate cost of $928,292 is subordinate to
first mortgage liens of $1,294,687 which are on both land and
improvements but are not obligations of the Company. In addition,
various lessees of properties, which have an aggregate cost of
$677,792 at December 31, 1994, have the option, subject to certain
conditions, to repurchase the land. Such option prices are for
amounts greater than the Company's carrying value of the related land.
In 1986 the Company purchased 24 community and neighborhood
shopping centers in North Carolina and Georgia, each of which is
anchored by an Ingles supermarket, and leased back these centers to
Ingles Markets, Incorporated. During the year ended December 31,
1991, the Company sold its Ingles shopping center in Brevard, North
Carolina. The remaining 23 centers were sold by the Company on
October 1, 1992 (see Note 9). Rental income from these leases totaled
$4,764,074 in 1992.
37
<PAGE> 39
Minimum base rentals on noncancellable operating leases for
the Company's shopping center, industrial and land purchase-leaseback
investments for the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1995 $ 46,190,336
1996 42,522,193
1997 37,469,755
1998 33,592,108
1999 30,961,321
Thereafter 277,970,128
-----------
$468,705,841
============
</TABLE>
4. NET INVESTMENT IN DIRECT FINANCING LEASES:
Four retail facilities are leased to Wal-Mart Stores, Inc. at
a total annual rental of $827,925 plus percentage rentals of 1% of
gross sales in excess of the tenant's actual sales for its fiscal year
ended January 31, 1990. Rental income from these leases totaled
$1,120,161 (including $292,236 of percentage rentals) in 1994,
$1,046,737 (including $218,812 of percentage rentals) in 1993 and
$951,176 (including $123,251 of percentage rentals) in 1992.
The Company acquired ten branch bank buildings in a 1984
merger. These facilities are leased to The Old Phoenix National Bank
at a total annual rental of $313,049.
The Company is to receive minimum lease payments of $1,140,974
per year during 1995 through 1999 and a total of $13,324,064
thereafter through the remaining lease terms. The estimated residual
values of the leased properties included in net investment in direct
financing leases totaled $644,872 as of December 31, 1994 and 1993.
38
<PAGE> 40
5. MORTGAGE LOANS:
The Company's investments in mortgage loans, all of which are
secured by real estate investments, are summarized by type of loan at
December 31, 1994 and 1993, as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------- ---------------------------
Number Amount Number Amount
of Loans Outstanding of Loans Outstanding
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
First mortgages 2 $3,390,491 2 $3,444,689
Mortgage
participation 1 40,504 1 42,402
Wrap-around
mortgage 1 5,194,228 1 5,246,024
- --------- - ---------
4 8,625,223 4 8,733,115
Less-Interest
discounts and
negative
goodwill - (333,080) - (340,156)
- --------- - --------
Mortgage
loans, net 4 $8,292,143 4 $8,392,959
= ========= = =========
</TABLE>
During April, 1994, the borrower under the Spanish Quarter
Apartments wrap-around mortgage loan filed Chapter 11 bankruptcy. In
December, 1994, the Bankruptcy Court approved the plan of
reorganization which amended the loan effective December 1, 1994 to
extend the term for 3 years to September 1, 2001 and to reduce the
cash interest rate from 10% to 9.5% prospectively. Additional
interest at an annual rate of 1% continues to accrue through the
remainder of the term. In addition, the Company has agreed to fund
additional principal of up to $260,000 under this mortgage for capital
improvements. In accordance with SFAS No. 15, the Company will
realize total proceeds in excess of the carrying value of the
indebtedness at the time of the restructuring.
39
<PAGE> 41
Annual principal payments applicable to mortgage loan
investments in the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1995 $ 83,509
1996 92,226
1997 101,833
1998 3,242,361
1999 87,157
Thereafter 4,685,057
---------
$8,292,143
=========
</TABLE>
Based on current rates at which similar loans would be made,
the estimated fair value of mortgage loans was approximately
$8,576,000 and $9,094,000 at December 31, 1994 and 1993, respectively.
6. MORTGAGE NOTES PAYABLE:
Mortgage notes payable are collateralized by various real
estate investments having a net carrying value of approximately
$136,934,847 as of December 31, 1994. These notes have stated
interest rates ranging from 7.6% to 13.875% and are due in monthly
installments with maturity dates ranging from 1995 to 2013.
During 1994, the Company purchased for $4,500,000 the mortgage
note payable secured by Valley West Mall which had a balance
outstanding of approximately $8,248,000. During 1993, the Company
paid in full eleven mortgage notes payable aggregating approximately
$22,816,000. See also Note 10 where some of these prepayments
resulted in extraordinary gains and losses.
Principal amortization and balloon payments applicable to
mortgage notes payable in the next five years and thereafter are as
follows:
<TABLE>
<CAPTION>
BALLOON
YEAR AMORTIZATION PAYMENTS TOTAL
---- ------------ -------- -----
<S> <C> <C> <C>
1995 $ 1,558,825 $ 4,380,346 $ 5,939,171
1996 1,332,011 35,130,347 36,462,358
1997 1,056,758 34,648,703 35,705,461
1998 876,293 - 876,293
1999 958,888 - 958,888
Thereafter 7,953,731 17,211,182 25,164,913
---------- ---------- -----------
$13,736,506 $91,370,578 $105,107,084
========== ========== ===========
</TABLE>
40
<PAGE> 42
Based on the borrowing rates currently available to the
Company for mortgages with similar terms and maturities, the estimated
fair value of mortgage notes payable was approximately $102,098,000
and $100,161,000 at December 31, 1994 and 1993, respectively.
7. CONVERTIBLE SUBORDINATED DEBENTURES:
Pursuant to the terms of the debentures, the Company redeemed
$5,530,000 of its 2% convertible subordinated debentures on August 1,
1991 at a premium to par of 27% and the remaining $5,730,000 of this
issue on August 1, 1993 at a premium to par of 45%. The premium paid
by the Company totaled $2,578,500 and $1,493,100 on August 1, 1993 and
1991, respectively.
Effective August 31, 1993, the Company issued $86,250,000 of
7.3% convertible subordinated debentures due August 15, 2003.
Interest on the debentures is payable semi-annually on February 15 and
August 15. The debentures are convertible at any time prior to
maturity into common stock of the Company at $11.25 per share, subject
to adjustment in certain events. Accordingly, 7,666,666 authorized
but unissued common shares have been reserved for possible issuance.
The Company has the option to redeem the debentures at par at any time
after August 15, 1996.
Costs associated with the issuance of the debentures were
approximately $3,701,000 and are being amortized over the life of the
debentures.
Based on the closing market price at year end the estimated
fair value of the 7.3% debentures was approximately $79,350,000 and
$86,681,250 at December 31, 1994 and 1993, respectively.
8. INDEBTEDNESS TO BANK:
On November 1, 1990, the Company obtained from a financial
institution a $25,000,000 revolving term loan maturing November 1,
1995. On July 31, 1992, the Company amended and restated this
revolving term loan to increase the lender's commitment to a maximum
of $50,000,000 ($38,520,000 at December 31, 1994, based on existing
collateral) and extend the maturity to August 1, 1997. The interest
rate is, at the option of the Company, either a) prime, fluctuating
daily, or b) 1.25% over the adjusted London Interbank Offered Rates
("LIBOR"), set for periods of one, two, three, or six months at the
option of the Company. Prepayments may be made with no fee at any
time on prime rate advances and at the maturity of LIBOR advances.
The Company pays a fee of 0.25% per annum of the aggregate unused
portion of the commitment.
As of December 31, 1994, the Company had $26,000,000
outstanding under this loan at an effective interest rate of
41
<PAGE> 43
8.125%. As of December 31, 1993, the Company had no amounts
outstanding under this loan.
The loan agreement contains restrictive covenants pertaining
to net worth, the ratio of debt to equity and interest coverage. As
of December 31, 1994, the Company was in compliance with all
covenants. The term loan is secured by various investments of the
Company having a net carrying value of approximately $46,621,000 as of
December 31, 1994.
9. DEFERRED INCOME TAXES, GAIN ON SALES AND VALUATION LOSS:
During 1984, the Company recognized a gain on sale for
financial reporting purposes, net of a deferred tax provision of
$1,122,000, which reflected the timing differences arising from the
Company's election to recognize the gain on this property sale on the
installment basis for tax purposes. Installment gains are recognized
for tax purposes based on the principal payments received in each year
under the purchase-money financing taken back on the sales.
The purchase-money financing on this sale commenced principal
amortization in 1987 based on a 25-year amortization period, with a
balloon payment in 2001. The Company had a deferred tax liability
related to this sale of $1,079,000 and $1,122,000 at December 31, 1994
and 1993, respectively. Should the Company elect to distribute the
taxable installment gain recognized in future years to its
shareholders as capital gain distributions, the reversal of this
previously recorded tax liability would be reflected in income for
financial reporting purposes in the periods in which the distributions
are elected.
During 1994, the Company sold two parcels of land for gains
totaling approximately $257,000. During 1993, the Company sold an
apartment investment, two parcels of land and a third parcel of land
with the buildings thereon for a total gain of approximately
$4,557,000. During 1992, the Company sold twenty-three (23) Ingles
shopping centers for a total gain of $6,929,000 and a parcel of land
for a gain of $183,000. Installment sale treatment for tax purposes
was either not elected by the Company or not available. The Company
elected to distribute the gains to shareholders. Accordingly, no
current or deferred tax provisions were required on these gains.
In 1994, the Company recorded approximately $4,125,000 of
reductions in the carrying values of certain investments, primarily
Valley West Mall due to permanent impairments in the values of the
investments. In addition, in December 1992 the Company recorded a
$3,565,000 reduction in the carrying value of Valley West Mall. These
adjustments to carrying value were a result of the Company's quarterly
evaluations of its individual investments based on current and
forecasted net operating income of the investment, competition
resulting from
42
<PAGE> 44
new properties in the market place and other changes in the local
economy. For tax purposes, the Company will not be able to claim
these deductions until the actual disposition of the properties.
10. EXTRAORDINARY ITEM:
During 1994, the Company purchased the 9.5% mortgage note
payable secured by Valley West Mall in Glendale, Arizona for
$4,500,000. The mortgage note payable had an outstanding principal
balance of $8,248,000 at the time of purchase, which resulted in an
extraordinary gain on extinguishment of this indebtedness of
$3,748,000 for both financial reporting and tax purposes.
During 1993, the Company prepaid in full nine mortgage notes
payable totaling approximately $21,896,000 with interest rates ranging
from 9.3% to 13.625% for financial reporting purposes. The Company
recognized an extraordinary loss on these prepayments of approximately
$1,440,000, representing $186,000 of unamortized net interest
discounts and $1,254,000 of prepayment penalties.
During 1992, the Company prepaid in full a 10% mortgage note
payable totaling approximately $444,000. Additionally, the Company
prepaid LIBOR advances under the revolving term loan totaling
$15,000,000 from its public offering proceeds. The Company recognized
extraordinary losses on these prepayments of approximately $15,000.
11. CASH DISTRIBUTIONS AND DIVIDEND REINVESTMENT PLAN:
The taxability of per share distributions paid to shareholders
during the years ended December 31, 1994, 1993 and 1992 was as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Ordinary income $.72 $ .39 $ .39
Capital gains .04 .45 .42
Return of capital .08 - -
--- ---- ----
$.84 $ .84 $ .81
=== ==== ====
</TABLE>
In addition, the 5% discount received upon purchase of shares
under the Dividend Reinvestment Plan is taxable as ordinary income to
the participant.
In 1984, the Company implemented a Dividend Reinvestment Plan
(the "Plan") under which shareholders of the Company may elect to
reinvest all or a portion of their dividends in the purchase of newly
issued shares of the Company. The price of shares so purchased is 95%
of the average high and low sales prices of the Company's common stock
on the applicable dividend payment date. During 1994, 1993 and 1992,
shares
43
<PAGE> 45
issued under the Plan totaled 99,477, 109,807 and 102,092,
respectively, and dividends totaling $937,750, $1,248,628 and
$995,965, respectively, were reinvested to purchase these shares.
12. STOCK OPTIONS:
Effective May 8, 1989, the Company adopted and its
shareholders approved the 1989 Stock Option Plan (the "1989 Plan").
In May 1993, the shareholders approved a 750,000 share increase in the
number of shares authorized to be granted under the 1989 Plan. The
1989 Plan, which expires on May 8, 1999, replaces the prior Key
Employee Stock Option Plan (the "Prior Plan"), except that options
granted under the Prior Plan and unexercised as of the date of the
1989 Plan shall remain in full force and effect.
The 1989 Plan includes provisions for a) the granting of both
Incentive Stock Options ("ISOs") (as defined in Section 422A of the
Internal Revenue Code) and nonqualified options to officers and
employees and b) the automatic granting of nonqualified options for
1,250 shares to each non-employee director upon the election and each
annual re-election of each non-employee director. Under the terms of
the 1989 Plan, the option price shall be no less than the fair market
value of the optioned shares at the date of grant.
Details of the stock option activity during 1994, 1993 and
1992 are as follows:
<TABLE>
<CAPTION>
Number of Shares
---------------- Option Price
Employees Directors Per Share
--------- --------- ------------
<S> <C> <C> <C>
Options outstanding,
December 31, 1991 116,515 30,000 $7.63-$15.10
Granted, 1992 53,000 - $ 9.25
Granted, 1992 - 7,500 $10.00
Exercised, 1992 (29,700) - $ 7.63
Expired unexercised,
1992 (9,800) - $7.63-$12.50
------ ------
Options outstanding,
December 31, 1992 130,015 37,500 $7.63-$15.10
Granted, 1993 56,000 - $12.00
Granted, 1993 - 8,750 $13.38
Exercised, 1993 (1,800) (6,250) $7.63-$10.25
Expired unexercised,
1993 (3,000) - $ 9.25
------- ------
Options outstanding,
December 31, 1993 181,215 40,000 $7.63-$15.10
Granted, 1994 66,000 - $10.75
Granted, 1994 - 7,500 $10.63
Exercised, 1994 (6,210) - $7.63-$10.24
Expired unexercised,
1994 (16,350) - $9.25-$15.10
------- ------
Options outstanding,
December 31, 1994 224,655 47,500 $7.63-$15.10
======= ======
</TABLE>
There are currently ISOs outstanding on 305,155 shares (including
43,437 shares granted under the Prior Plan), non-
44
<PAGE> 46
qualified options outstanding on 47,500 shares, and 711,550
unoptioned shares remaining in the 1989 Plan after the granting of
ISOs for 80,500 additional shares at $10.13 per share on January 3,
1995.
13. EMPLOYEE RETIREMENT BENEFITS:
During 1980 the Board of Directors approved and adopted a
pension program for the employees of the Company. The program
included a noncontributory pension plan for all employees of the
Company, under which the Company accrued and funded pension costs each
year equal to 12% of employees' salaries. Effective June 30, 1990,
the Board of Directors of the Company elected to terminate the pension
plan.
Upon termination of the pension plan, the Board of Directors
determined that it would be appropriate to substitute in lieu thereof
a program of year-end cash payments to certain employees of the
Company. This program was instituted in 1990. Under this program,
participants receive a year-end cash payment from the Company, the
amount of which is based upon each participant's length of service
with the Company. Each participant who has been employed by the
Company for more than five years will receive a year-end cash payment
equal to 12% of his or her salary. Each participant with less than
five years will receive year-end cash payments in graduated amounts
designed to produce a cumulative 12% payment after completion of five
years of service. The Company accrued approximately $168,000,
$154,000 and $99,000 under this program in 1994, 1993 and 1992,
respectively.
Certain employees whose time in service with the Company was
significantly greater than that of the remaining employees were
provided with employment contracts during 1980. These employment
contracts call for annual payments to each of these employees equal to
12% of the employee's salary in the event the Company's pension plan
is terminated and deferred compensation amounts to be paid at
retirement. The Company accrued approximately $23,000 for these
contracts in 1994, $21,000 in 1993, and $19,000 in 1992.
The Company currently has no postretirement or postemployment
benefits, and therefore Statements of Financial Accounting Standards
Nos. 106 and 112 have no effect on the Company.
14. TRANSACTIONS WITH RELATED PARTIES:
Ewing Southeast Realty, Inc., of which a member of the Board
of Directors of the Company is a minority shareholder, received an
$86,576 brokerage commission from the seller of one of the investments
acquired by the Company during 1993 and
45
<PAGE> 47
a $50,000 brokerage commission from the seller of three of the
investments acquired by the Company during 1992.
The former Chairman of the Executive Committee of the Company,
who is also a member of the Board of Directors, received consulting
fees included in general and administrative expenses for the years
ended December 31, 1994, 1993 and 1992 totaling approximately $2,000,
$24,000 and $24,000, respectively. This consulting arrangement was
discontinued in January 1994.
The holdback shares and dividend equivalents related thereto
on the Sofran Centers were issued or paid to entities which were
directly or indirectly owned or controlled by Norman Zavalkoff, a
director of the Company from August 14, 1992 to January 27, 1994, and
nine other investors. (See Note 15).
15. COMMITMENTS AND CONTINGENCIES:
During 1992, the Company purchased 17 shopping centers (the
"Sofran Centers" and the "Dreyfus Centers") which have certain rental
guaranties from the sellers. At the time of the purchases, 290,762
shares of the Company's common stock (representing approximately
$3,003,000 of the purchase prices) were retained as "holdback shares."
The Company may be required to issue all or a portion of the holdback
shares at various dates over the holdback periods if certain occupancy
levels on a portfolio basis or on agreed-upon spaces are achieved by
the end of the respective periods.
The Sofran holdback, which expires January 1995, contained a
total of 169,290 shares. For the period August 1, 1992 through
December 31, 1993, the number of shares available to the sellers was
reduced by 110,540 shares and the Company issued 9,182 shares to the
sellers, leaving a balance of 49,568 holdback shares.
The Dreyfus holdback, which expires December 1995, contained a
total of 121,472 shares. For the period December 23, 1992 through
September 30, 1994, the number of shares available to the sellers was
reduced by 31,714 shares and the Company issued 56,297 shares to the
sellers, leaving a balance of 33,461 holdback shares.
The shares issued represented additional cost of acquisition
for financial reporting purposes. In addition, during the holdback
periods, the sellers are entitled to amounts equivalent to dividends
on the holdback shares until such time as their right to receive such
holdback shares may be extinguished. The Company paid dividend
equivalents of $41,637 and $100,466 during 1994 and 1993,
respectively, to
46
<PAGE> 48
the sellers of the Sofran Centers. Also, the Company paid dividend
equivalents of $45,700 and $87,697 during 1994 and 1993, respectively,
to the sellers of the Dreyfus Centers. These payments are considered
part of the cost of acquisition on the respective payment dates.
Additionally, the seller of one of the Dreyfus Centers pledged
115,343 of its IRT Property Company shares to the Company as
collateral for a guarantee of rents payable by one of the anchor
tenants which had filed bankruptcy. For the period December 23, 1992
through September 30, 1994, 24,388 shares held as collateral were
released to the seller and 4,865 shares were retired, leaving a
balance of 86,090 shares.
In December 1993, the Company entered into a contract for the
redevelopment of one of its shopping center investments. The cost to
the Company will be approximately $2,750,000 of which approximately
$661,000 has been incurred through December 31, 1994.
16. ENVIRONMENTAL INVESTIGATIONS:
The Company's Charlotte, North Carolina industrial facility
contained underground petroleum and used oil storage tanks ("USTs")
believed to have been owned by the previous owner of this property.
The Company had the USTs removed in December 1993 and was notified on
March 2, 1994 by the North Carolina Department of Environment, Health,
and Natural Resources that certain investigative, corrective and/or
remedial actions ("Corrective Actions") must be performed by the
Company to, among other things, determine the level of soil and/or
groundwater contamination due to suspected leakage from some of the
USTs. Depending upon the results of the investigation phase of the
Corrective Action work, which has not been completed at this time, the
Company may be required to remediate impacted soil and/or groundwater.
At this time it is not clear that the Company is responsible for
taking Corrective Action, and some of the costs of Corrective Action
are reimbursable under the North Carolina Commercial Leaking Petroleum
Underground Storage Tank Cleanup Fund for leaking USTs. Based on the
information presently available, the Company believes the costs of any
such Corrective Action would not have a material adverse effect on the
Company's results of operations, financial position or liquidity.
During its soil and groundwater investigation at the
Bluebonnet Village Shopping Center in Baton Rouge, Louisiana, the
Company's environmental consultant discovered concentrations of
various chemicals in a single groundwater monitoring well that
exceeded the maximum contaminant levels under the Federal Safe
Drinking Water Act. The Company has notified the Louisiana Department
of Environmental Quality-
47
<PAGE> 49
Groundwater Protection Division ("LDEQ-GWPD") of such discovery. The
Company has been advised that the groundwater impact appears to be
very localized, since six other groundwater monitoring wells placed
around the initial well did not exhibit any impact. There can be no
assurance that the LDEQ-GWPD will not require remediation, but based
on information presently available to the Company and discussions with
the Company's environmental consultant, the Company believes the cost
of any such remediation would not have a material adverse effect on
the Company's results of operations, financial position or liquidity.
17. SUBSEQUENT EVENT:
On January 6, 1995, the Company acquired two shopping centers
in Slidell and Galliano, Louisiana. The total purchase price was
approximately $6,658,000, of which approximately $2,383,000 was
represented by mortgage debt to which one of the centers is subject.
The balance of the purchase price of approximately $4,275,000 was paid
in cash.
48
<PAGE> 50
18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
The following is a summary of the unaudited quarterly financial
information for the years ended December 31, 1994 and 1993.
<TABLE>
<CAPTION>
1994
------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $12,038,799 $11,755,214 $12,306,661 $13,101,470
========== ========== ========== ==========
Earnings before gain (loss) on real
estate investments $ 3,131,931 $ 2,888,770 $ 3,150,599 $ 3,617,623
---------- ---------- ---------- ----------
Gain (loss) on real estate
investments:
Gain on sales of properties - - 257,036 43,000
Valuation loss - (3,685,454) - (440,000)
---------- ---------- ---------- ----------
- (3,685,454) 257,036 (397,000)
---------- ---------- ---------- ----------
Earnings before extraordinary
item 3,131,931 (796,684) 3,407,635 3,220,623
Extraordinary item - 3,748,095 - -
---------- ---------- ---------- ----------
Net earnings $ 3,131,931 $ 2,951,411 $ 3,407,635 $ 3,220,623
========== ========== ========== ==========
Per Share:
Earnings before extraordinary
item $ .12 $(.03) $ .13 $ .13
Extraordinary item - .15 - -
---- ---- ---- ----
Net earnings $ .12 $ .12 $ .13 $ .13
==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
1993
------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $10,944,354 $10,918,865 $11,656,376 $11,543,316
========== ========== ========== ==========
Earnings before gain (loss) on real
estate investments $ 3,082,723 $ 2,898,059 $ 3,052,075 $ 2,739,408
Gain on sales of properties, net - - 306,625 4,249,886
---------- ---------- ---------- ----------
Earnings before extraordinary
item 3,082,723 2,898,059 3,358,700 6,989,294
Extraordinary item - - (1,440,478) -
---------- ---------- ---------- ----------
Net earnings $3,082,723 $ 2,898,059 $ 1,918,222 $ 6,989,294
========= ========== ========== ==========
Per Share:
Earnings before extraordinary
item $ .15 $ .14 $ .15 $ .28
Extraordinary item - - (.06) -
---- ---- ---- ----
Net earnings $ .15 $ .14 $ .09 $ .28
==== ==== ==== ====
</TABLE>
49
<PAGE> 51
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Abbeville Plaza
Abbeville, SC
Land $ - $ 48,066 $ - $ 48,066 $ -
Buildings 458,062 10,470 468,532 169,770
Ambassador Row
Lafayette, LA
Land - 2,451,860 - 2,451,860 -
Buildings 7,244,580 - 7,244,580 3,673
Ambassador Row Courtyard
Lafayette, LA
Land - 2,899,438 - 2,899,438 -
Buildings 8,698,313 - 8,698,313 4,925
Asheville Plaza
Asheville, NC
Land - 52,710 15,000 67,710 -
Buildings 335,717 1,860 337,577 99,372
Bluebonnet Village
Baton Rouge, LA
Land - 2,540,594 - 2,540,594 -
Buildings 5,509,995 - 5,509,995 4,515
The Boulevard
Lafayette, LA
Land - 948,334 - 948,334 -
Buildings 2,845,003 - 2,845,003 1,879
Carolina Place
Hartsville, SC
Land - 345,000 - 345,000 -
Buildings 2,006,494 - 2,006,494 278,040
Centre Pointe Plaza
Smithfield, NC
Land - 980,857 12,583 993,440 -
Buildings 7,981,826 146,922 8,128,748 402,816
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Abbeville Plaza
Abbeville, SC
Land 30 April, 1986 1970
Buildings
Ambassador Row
Lafayette, LA
Land 40 December, 1994 1980 &
Buildings 1991
Ambassador Row Courtyard
Lafayette, LA
Land 40 December, 1994 1986 &
Buildings 1991
Asheville Plaza
Asheville, NC
Land 30 April, 1986 1967
Buildings
Bluebonnet Village
Baton Rouge, LA
Land 40 December, 1994 1983
Buildings
The Boulevard
Lafayette, LA
Land 40 December, 1994 1976 &
Buildings 1994
Carolina Place
Hartsville, SC
Land 40 May, 1989 1989
Buildings
Centre Pointe Plaza
Smithfield, NC
Land 40 December, 1992 1989 &
Buildings 1993
</TABLE>
50
<PAGE> 52
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Chadwick Square
Hendersonville, NC
Land $ 863,497 $ 276,778 $ - $ 276,778 $ -
Buildings 1,179,949 - 1,179,949 86,030
Chelsea Place
New Port Richey, FL
Land - 1,387,517 - 1,387,517 -
Buildings 5,550,068 - 5,550,068 202,353
Chester Plaza
Chester, SC
Land - 68,649 143,504 212,153 -
Buildings 414,117 1,573,701 1,987,818 340,001
Chestnut Square
Brevard, NC
Land 1,059,548 295,984 - 295,984 -
Buildings 1,113,464 7,539 1,121,003 83,340
Colony Square
Fitzgerald, GA
Land - 272,833 - 272,833 -
Buildings 2,455,826 194,036 2,649,862 490,801
Commerce Crossing
Commerce, GA
Land - 378,089 889 378,978 -
Buildings 4,072,946 15,569 4,088,515 206,016
Countryside Shops
Cooper City, FL
Land - 5,675,614 - 5,675,614 -
Buildings 10,954,065 12,699 10,966,764 136,920
The Crossing
Slidell, LA
Land - 1,282,036 - 1,282,036 -
Buildings 3,213,616 - 3,213,616 3,241
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Chadwick Square
Hendersonville, NC
Land 40 January, 1992 1985
Buildings
Chelsea Place
New Port Richey, FL
Land 40 July, 1993 1992
Buildings
Chester Plaza
Chester, SC
Land 30 April, 1986 1967 &
Buildings 1992
Chestnut Square
Brevard, NC
Land 40 January, 1992 1985
Buildings
Colony Square
Fitzgerald, GA
Land 40 February, 1988 1987
Buildings
Commerce Crossing
Commerce, GA
Land 40 December, 1992 1988
Buildings
Countryside Shops
Cooper City, FL
Land 40 June, 1994 1986, 1988
Buildings & 1991
The Crossing
Slidell, LA
Land 40 December, 1994 1988 &
Buildings 1993
</TABLE>
51
<PAGE> 53
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Delchamps Plaza
Pascagoula, MS
Land $ 3,277,511 $ 359,000 $ - $ 359,000 $ -
Buildings 4,130,247 17,000 4,147,247 699,036
Douglas Commons
Douglasville, GA
Land 6,314,134 2,543,385 2,951 2,546,336 -
Buildings 5,958,475 70,128 6,028,603 367,746
Eden Centre
Eden, NC
Land - 625,901 - 625,901 -
Buildings 2,901,316 - 2,901,316 12,088
Elmwood Oaks
Harahan, LA
Land 9,000,000 4,558,654 - 4,558,654 -
Buildings 6,560,014 7,120 6,567,134 484,058
First Street Station
Albemarle, NC
Land - 202,578 - 202,578 -
Buildings 2,832,092 - 2,832,092 23,578
Forest Hills Centre
Wilson, NC
Land - 869,981 - 869,981 -
Buildings 3,644,541 545,844 4,190,385 404,446
Forrest Gallery
Tullahoma, TN
Land - 2,124,023 10,639 2,134,662 -
Buildings 9,917,627 218,773 10,136,400 504,267
Ft. Walton Beach Plaza
Ft. Walton Beach, FL
Land 1,773,737 787,583 - 787,583 -
Buildings 1,860,360 - 1,860,360 527,524
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Delchamps Plaza
Pascagoula, MS
Land 40 April, 1988 1987
Buildings
Douglas Commons
Douglasville, GA
Land 40 August, 1992 1988
Buildings
Eden Centre
Eden, NC
Land 40 November, 1994 1991
Buildings
Elmwood Oaks
Harahan, LA
Land 40 January, 1992 1989
Buildings
First Street Station
Albemarle, NC
Land 40 August, 1994 1989
Buildings
Forest Hills Centre
Wilson, NC
Land 40 August, 1990 1990
Buildings
Forrest Gallery
Tullahoma, TN
Land 40 December, 1992 1987
Buildings
Ft. Walton Beach Plaza
Ft. Walton Beach, FL
Land 30 July, 1986 1988
Buildings
</TABLE>
52
<PAGE> 54
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gaffney Plaza
Gaffney, SC
Land $ - $ 66,527 $ - $ 66,527 $ -
Buildings 270,567 68,823 339,390 206,167
The Galleria
Wrightsville Beach, NC
Land - 1,069,672 - 1,069,672 -
Buildings 5,222,517 1,243,580 6,466,097 1,145,238
Gulf Gate Plaza
Naples, FL
Land - 277,562 - 277,562 -
Buildings 1,857,532 2,134,700 3,992,232 2,031,263
Harris Teeter
Lexington, VA
Land - 312,105 - 312,105 -
Buildings 1,638,552 650,000 2,288,552 484,700
Heritage Walk
Milledgeville, GA
Land - 810,292 - 810,292 -
Buildings 7,944,260 - 7,944,260 312,856
Hoffner Plaza
Orlando, FL
Land - 185,293 - 185,293 -
Buildings 476,469 475,355 951,824 687,115
Lancaster Plaza
Lancaster, SC
Land - 120,790 - 120,790 -
Buildings 743,852 299,267 1,043,119 365,108
Lancaster Shopping Center
Lancaster, SC
Land - 338,355 - 338,355 -
Buildings 1,227,552 29,760 1,257,312 311,044
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Gaffney Plaza
Gaffney, SC
Land 30 April, 1986 1964 &
Buildings 1974
The Galleria
Wrightsville Beach, NC
Land 40 August, 1986 & 1986 &
Buildings December, 1987 1990
Gulf Gate Plaza
Naples, FL
Land 28 June, 1979 1969 &
Buildings 1974
Harris Teeter
Lexington, VA
Land 30 June, 1988 & 1981 &
Buildings June, 1989 1989
Heritage Walk
Milledgeville, GA
Land 40 June,1993 1991 &
Buildings 1992
Hoffner Plaza
Orlando, FL
Land 28 June, 1979 1972
Buildings
Lancaster Plaza
Lancaster, SC
Land 30 April, 1986 1971
Buildings
Lancaster Shopping Center
Lancaster, SC
Land 30 August, 1986 & 1963 &
Buildings December, 1987 1987
</TABLE>
53
<PAGE> 55
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Lawrence Commons
Lawrenceburg, TN
Land $ 2,772,496 $ 715,653 $ 829 $ 716,482 $ -
Buildings 2,719,190 16,056 2,735,246 164,336
Litchfield Landing
North Litchfield, SC
Land - 475,000 - 475,000 -
Buildings 2,118,429 26,885 2,145,314 457,689
Macland Pointe
Marietta, GA
Land 3,896,820 1,252,098 - 1,252,098 -
Buildings 4,317,234 544,073 4,861,307 229,819
Masonova Plaza
Daytona Beach, FL
Land - 296,643 - 296,643 -
Buildings 1,680,977 1,053,232 2,734,209 1,758,653
Millervillage Shopping Center
Baton Rouge, LA
Land - 1,926,535 - 1,926,535 -
Buildings 5,661,992 - 5,661,992 4,714
New Smyrna Beach Regional
New Smyrna Beach, FL
Land - 3,704,368 6,757 3,711,125 -
Buildings 6,402,297 176,749 6,579,046 387,826
North River Village
Ellenton, FL
Land - 2,949,031 - 2,949,031 -
Buildings 7,150,403 10,951 7,161,354 254,251
North Village Center
North Myrtle Beach, SC
Land 2,891,504 483,400 - 483,400 -
Buildings 2,785,154 13,325 2,798,479 529,581
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Lawrence Commons
Lawrenceburg, TN
Land 40 August, 1992 1987
Buildings
Litchfield Landing
North Litchfield, SC
Land 40 August, 1986 1984
Buildings
Macland Pointe
Marietta, GA
Land 40 January, 1993 1992 &
Buildings 1993
Masonova Plaza
Daytona Beach, FL
Land 25 June, 1979 1969
Buildings
Millervillage Shopping Center
Baton Rouge, LA
Land 40 December, 1994 1983 &
Buildings 1992
New Smyrna Beach Regional
New Smyrna Beach, FL
Land 40 August, 1992 1987
Buildings
North River Village
Ellenton, FL
Land 40 December, 1992 & 1988 &
Buildings December, 1993 1993
North Village Center
North Myrtle Beach, SC
Land 37 August, 1986 1984
Buildings
</TABLE>
54
<PAGE> 56
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Old Kings Commons
Palm Coast, FL
Land $ - $ 1,491,458 $ - $ 1,491,458 $ -
Buildings 4,474,372 116,376 4,590,748 772,796
Palm Gardens
Largo, FL
Land - 98,279 - 98,279 -
Buildings 657,716 1,266,417 1,924,133 641,422
Parkmore Plaza
Milton, FL
Land - 1,789,806 8,141 1,797,947 -
Buildings 6,419,777 42,683 6,462,460 326,553
Paulding Commons
Dallas, GA
Land 8,818,984 2,312,372 2,687 2,315,059 -
Buildings 10,606,781 28,274 10,635,055 641,662
Pensacola Plaza
Pensacola, FL
Land 1,750,000 130,688 - 130,688 -
Buildings 2,392,249 121,642 2,513,890 713,615
Pinhook Plaza
Lafayette, LA
Land 7,585,167 2,768,151 - 2,768,151 -
Buildings 8,304,453 - 8,304,453 5,664
Plaza Acadienne
Eunice, LA
Land 2,457,481 - - - -
Buildings 2,917,925 - 2,917,925 1,950
Plaza North
Hendersonville, NC
Land - 657,797 770 658,567 -
Buildings 1,795,992 4,685 1,800,677 108,552
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Old Kings Commons
Palm Coast, FL
Land 40 May, 1988 1988
Buildings
Palm Gardens
Largo, FL
Land 26 June, 1979 1970 &
Buildings 1993
Parkmore Plaza
Milton, FL
Land 40 December, 1992 1986 &
Buildings 1992
Paulding Commons
Dallas, GA
Land 40 August, 1992 1991
Buildings
Pensacola Plaza
Pensacola, FL
Land 30 July, 1986 1985
Buildings
Pinhook Plaza
Lafayette, LA
Land 40 December, 1994 1979 &
Buildings 1992
Plaza Acadienne
Eunice, LA
Land 40 December, 1994 1980
Buildings
Plaza North
Hendersonville, NC
Land 40 August, 1992 1986
Buildings
</TABLE>
55
<PAGE> 57
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Providence Square
Charlotte, NC
Land $ - $ 450,000 $ 300 $ 450,300 $ -
Buildings 1,895,606 1,850,822 3,746,428 2,161,028
Riverview Shopping Center
Durham, NC
Land - 400,000 322 400,322 -
Buildings 1,476,500 4,126,211 5,602,711 1,518,664
Scottsville Square
Bowling Green, KY
Land - 653,010 765 653,775 -
Buildings 1,782,340 2,089 1,784,429 107,711
Seven Hills
Spring Hill, FL
Land 3,800,000 1,903,090 - 1,903,090 -
Buildings 2,976,628 15,049 2,991,677 108,518
Shelby Plaza
Shelby, NC
Land - - - - -
Buildings 937,483 165,743 1,103,226 353,274
Sherwood South
Baton Rouge, LA
Land - 496,174 - 496,174 -
Buildings 1,488,521 - 1,488,521 1,415
Siegen Village
Baton Rouge, LA
Land - 2,375,168 - 2,375,168 -
Buildings 4,302,715 - 4,302,715 931
Smyrna Village
Smyrna, TN
Land 4,213,514 968,358 20,601 988,959 -
Buildings 4,743,708 109,899 4,853,607 293,409
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Providence Square
Charlotte, NC
Land 35 December, 1971 1973
Buildings
Riverview Shopping Center
Durham, NC
Land 35 March, 1972 1973
Buildings
Scottsville Square
Bowling Green, KY
Land 40 August, 1992 1986
Buildings
Seven Hills
Spring Hill, FL
Land 40 July, 1993 1991
Buildings
Shelby Plaza
Shelby, NC
Land 30 April, 1986 1972
Buildings
Sherwood South
Baton Rouge, LA
Land 40 December, 1994 1972, 1988
Buildings & 1992
Siegen Village
Baton Rouge, LA
Land 40 December, 1994 1988
Buildings
Smyrna Village
Smyrna, TN
Land 40 August, 1992 1992
Buildings
</TABLE>
56
<PAGE> 58
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Smyth Valley Crossing
Marion, VA
Land $ - $ 1,687,013 $ 6,523 $ 1,693,536 $ -
Buildings 5,211,299 89,249 5,300,548 270,444
South Beach Regional
Jacksonville Beach, FL
Land 15,569,828 3,972,815 19,710 3,992,525 -
Buildings 17,115,106 701,610 17,816,716 1,066,090
Spalding Village
Griffin, GA
Land 12,413,464 2,813,854 3,281 2,817,135 -
Buildings 12,470,446 29,965 12,500,411 755,647
Stadium Plaza
Phenix City, AL
Land 3,850,000 1,828,942 2,130 1,831,072 -
Buildings 2,614,155 13,299 2,627,454 159,355
Stanley Market Place
Stanley, NC
Land - 198,103 - 198,103 -
Buildings 1,602,832 - 1,602,832 116,900
Taylorsville Shopping Center
Taylorsville, NC
Land - 89,689 - 89,689 -
Buildings 1,443,704 1,078,766 2,522,470 459,485
Thomasville Commons
Thomasville, NC
Land 5,626,354 963,333 - 963,333 -
Buildings 6,183,052 26,576 6,209,628 378,009
Union Plaza
Union, SC
Land - 18,154 - 18,154 -
Buildings 140,468 69,129 209,597 95,467
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Smyth Valley Crossing
Marion, VA
Land 40 December, 1992 1989
Buildings
South Beach Regional
Jacksonville Beach, FL
Land 40 August, 1992 1990 &
Buildings 1991
Spalding Village
Griffin, GA
Land 40 August, 1992 1989
Buildings
Stadium Plaza
Phenix City, AL
Land 40 August, 1992 1988
Buildings
Stanley Market Place
Stanley, NC
Land 35 January, 1992 1980 &
Buildings 1991
Taylorsville Shopping Center
Taylorsville, NC
Land 40 August, 1986 & 1982 &
Buildings December, 1988 1988
Thomasville Commons
Thomasville, NC
Land 40 August, 1992 1991
Buildings
Union Plaza
Union, SC
Land 30 April, 1986 1967
Buildings
</TABLE>
57
<PAGE> 59
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
University Center
Greenville, NC
Land $ - $ 750,000 $ - $ 750,000 $ -
Buildings 3,159,065 28,382 3,187,447 404,320
Valley West Mall
Glendale, AZ
Land - 1,500,000 - 1,500,000 -
Buildings 5,801,772 2,905,826 8,707,598 4,401,486
Venice Plaza
Venice, FL
Land 108,339 333,127 - 333,127 -
Buildings 1,887,721 582,501 2,470,222 1,340,698
Village at Northshore
Slidell, LA
Land 5,837,763 2,065,633 - 2,065,633 -
Buildings 6,196,900 - 6,196,900 4,171
Waterlick Plaza
Lynchburg, VA
Land - 1,071,000 - 1,071,000 -
Buildings 5,091,222 92,702 5,183,924 688,322
Watson Central
Warner Robins, GA
Land - 1,640,541 12,478 1,653,019 -
Buildings 11,288,357 82,921 11,371,278 531,188
Wesley Chapel Crossing
Decatur, GA
Land - 3,822,875 9,154 3,832,029 -
Buildings 7,020,873 40,812 7,061,686 356,807
West Gate Plaza
Mobile, AL
Land - 475,270 - 475,270 -
Buildings 1,401,087 481,190 1,882,277 614,377
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
University Center
Greenville, NC
Land 40 December, 1989 1989
Buildings
Valley West Mall
Glendale, AZ
Land 30 March, 1986 1973
Buildings
Venice Plaza
Venice, FL
Land 27 June, 1979 1971 &
Buildings 1979
Village at Northshore
Slidell, LA
Land 40 December, 1994 1988 &
Buildings 1993
Waterlick Plaza
Lynchburg, VA
Land 40 October, 1989 1973 &
Buildings 1988
Watson Central
Warner Robins, GA
Land 40 December, 1992 & 1989 &
Buildings October, 1993 1993
Wesley Chapel Crossing
Decatur, GA
Land 40 December, 1992 1989
Buildings
West Gate Plaza
Mobile, AL
Land 25 June, 1974 & 1974
Buildings January, 1985
</TABLE>
58
<PAGE> 60
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Westgate Square
Sunrise, FL
Land $ - $ 2,238,886 $ - $ 2,238,886 $ -
Buildings 6,839,969 - 6,839,969 85,494
West Towne Square
Rome, GA
Land - 324,800 - 324,800 -
Buildings 5,580,776 82,989 5,663,765 669,731
Willowdaile Shopping Center
Durham, NC
Land - 936,977 - 936,977 -
Buildings 7,351,612 284,538 7,636,150 1,452,600
Winnsboro Plaza
Winnsboro, SC
Land - 60,574 - 60,574 -
Buildings 463,641 90,335 553,976 172,581
Whitehall Kent Apartments
Kent, OH
Land - 136,404 117,938 254,342 -
Buildings 2,136,996 1,163,947 3,300,943 1,986,550
Industrial Buildings
Charlotte, NC - Industrial
Land - 143,160 178,188 321,348 -
Buildings 2,170,057 472,435 2,642,492 2,642,492
Plasti-Kote
Medina, OH - Industrial
Land - 81,390 - 81,390 -
Buildings 346,979 54,570 401,549 401,549
Lawrence County
Shopping Center
Sybene, OH
Land - 435,994 - 435,994 -
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Westgate Square
Sunrise, FL
Land 40 June, 1994 1984 &
Buildings 1988
West Towne Square
Rome, GA
Land 40 April, 1990 1988
Buildings
Willowdaile Shopping Center
Durham, NC
Land 40 August, 1986 & 1986
Buildings December, 1987
Winnsboro Plaza
Winnsboro, SC
Land 30 April, 1986 1973
Buildings
Whitehall Kent Apartments
Kent, OH
Land 29 June, 1979 1968
Buildings
Industrial Buildings
Charlotte, NC - Industrial
Land 14 June, 1979 1956 &
Buildings 1963
Plasti-Kote
Medina, OH - Industrial
Land 14 June, 1979 1961 &
Buildings 1966
Lawrence County
Shopping Center
Sybene, OH
Land May, 1971 1971
</TABLE>
59
<PAGE> 61
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
<TABLE>
<CAPTION>
Costs Gross Amount Accumulated
Initial Capitalized at Which Depreciation
Cost to Subsequent to Carried at at Close
Description Encumbrances Company Acquisition Close of Year of Year
----------- ------------ ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Grand Marche
Shopping Center
Lafayette, LA
Land $ - $ 250,000 $ 500 $ 250,500 $ -
Manatee County
Shopping Center
Bradenton, FL
Land - 241,798 - 241,798 -
------------ ------------ ----------- ------------- ------------
$103,880,141 $416,280,016 $26,362,689 $ 442,642,705 $ 41,677,722
============ ============ =========== ============= ============
<CAPTION>
Estimated
Useful
Life of
Buildings Date Year
Description (Years) Acquired Completed
----------- ---------- -------- ---------
<S> <C> <C> <C>
Grand Marche
Shopping Center
Lafayette, LA
Land September, 1972 1969
Manatee County
Shopping Center
Bradenton, FL
Land May, 1971 1971
</TABLE>
60
<PAGE> 62
IRT PROPERTY COMPANY SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994
NOTE:
Real estate activity is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
RENTAL PROPERTIES:
Cost -
Balance at beginning of year $331,012,764 $300,285,526 $184,018,854
Acquisitions and improvements 115,813,729 37,157,578 178,208,499
Retirements - - -
Reduction in carrying value (3,878,754) - (3,565,311)
------------ ------------ ------------
442,947,739 337,443,104 358,662,042
Cost of properties sold (305,034) (6,430,340) (58,376,516)
------------ ------------ ------------
Balance at end of year $442,642,705 $331,012,764 $300,285,526
============ ============ ============
Accumulated depreciation -
Balance at beginning of year $ 33,463,530 $ 29,002,538 $ 32,412,968
Depreciation 8,214,192 7,668,797 6,201,949
Retirements - - -
------------ ------------ ------------
41,677,722 36,671,335 38,614,917
Accumulated depreciation related to
rental properties sold - (3,207,805) (9,612,379)
------------ ------------ ------------
Balance at end of year $ 41,677,722 $ 33,463,530 $ 29,002,538
============ ============ ============
</TABLE>
61
<PAGE> 63
IRT PROPERTY COMPANY SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
December 31, 1994
<TABLE>
<CAPTION>
Final Periodic
Type of Type of Interest Maturity Payment
Location of Property Loan Property Rate Date Terms Prior Liens
- -------------------- ---- -------- ---- ---- ----- -----------
(See Notes) (See Notes)
<S> <C> <C> <C> <C> <C> <C>
Augusta, GA First Mortgage Shopping Center 10.25% August, 1998 (1) $ -
Lauderdale Lakes, FL First Mortgage Condominiums 10.00% May, 2009 (2) -
Nashville, TN First Mortgage Condominiums 8.63% - 2006-2007 (2) -
Participation 12.38%
Montgomery, AL Wrap-Around Apartments (3) September, 2001 (3) -
--------
-
Less interest discounts and negative goodwill -
--------
$ -
<CAPTION>
Principal
Face Amount Amount of
and Carrying Loans Subject
Amount of Principal
Location of Property Mortgages or Interest
- -------------------- --------- -------------
<S> <C> <C>
Augusta, GA $3,245,122 -
Lauderdale Lakes, FL 145,369 -
Nashville, TN 40,504 -
Montgomery, AL 5,194,228 -
----------
8,625,223
(333,080)
----------
$8,292,143
==========
</TABLE>
NOTES:
(1) Monthly payments of principal and interest at an annual rate of 10.25%,
with a balloon payment at maturity August 1, 1998.
(2) Monthly payments include principal and interest.
(3) Modified effective, December 1, 1994 to extend the term for 3 years to
September 1, 2001 and to reduce the cash interest rate from 10% to 9.5%
prospectively, requiring monthly payments of $45,382 of principal and
interest for the remaining term, with a balloon payment at maturity.
Additional interest at an annual rate of 1% accrues for the periods
September 1,1984 through August 31, 1989 and September 1,1991 through
August 31, 2001 and is payable at maturity or on sale of the property.
In addition, the Company has agreed to fund additional principal of up
to $260,000 under this mortgage to make certain capital improvements.
This wrap-around mortgage is subject to two first mortgages having an
aggregate balance of $1,134,260 as of December 31, 1994.
62
<PAGE> 64
IRT PROPERTY COMPANY SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
December 31, 1994
Mortgage loan activity is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $8,392,959 $12,528,542 $19,253,499
New mortgage loans - - -
Additions to mortgage loans - - -
Amortization of interest discounts, negative
goodwill and commitment fees 7,076 93,801 398,370
Collections of principal (107,892) (4,229,384) (7,123,327)
---------- ----------- -----------
Balance at end of year $8,292,143 $ 8,392,959 $12,528,542
========== =========== ===========
</TABLE>
63
<PAGE> 65
Item 9. Disagreements on Accounting and Financial Disclosure.
Not applicable.
64
<PAGE> 66
PART III
The information called for by Part III (Items 10, 11, 12, and 13) is
incorporated herein by reference to the Company's definitive proxy statement to
be filed pursuant to Regulation 14A, pursuant to General Instruction G(3) to
the Report of Form 10-K.
65
<PAGE> 67
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Financial Statements and Schedules. Included in Part II of this
Report are the following:
Report of Independent Public Accountants
Consolidated Balance Sheets at December 31, 1994 and 1993
Consolidated Statements of Earnings for the Years Ended December 31,
1994, 1993 and 1992
Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992
Notes to Consolidated Financial Statements
Schedule XI - Real Estate and Accumulated Depreciation
Schedule XII - Mortgage Loans on Real Estate
Exhibits.
---------
(3)(a) The Company's Articles of Incorporation, as amended, were
filed as Exhibit 4.1 to the Company's Registration Statement
on Form S-3 (No. 33-65604) dated July 6, 1993, to which
reference is hereby made.
(3)(b) The Company's By-Laws, including amendment to Article VII of
the By-Laws, were filed as Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (No. 33-65604) dated July
6, 1993, to which reference is hereby made.
(4)(a) The Indenture dated August 15, 1993 between the Company and
Trust Company Bank, as Trustee, relating to the 7.3%
Convertible Subordinated Debentures due August 15, 2003 was
filed as an exhibit to the Company's Form 10-K for the year
ended December 31, 1993, to which reference is hereby made.
(4)(b) The form of 7.3% Convertible Subordinated Debenture was
included in (4)(a) above.
66
<PAGE> 68
(10)(a) The Deferred Compensation Agreement between the Company and
Donald W. MacLeod was filed as an exhibit to the Company's
Registration Statement on Form S-2 (No. 2-88716) dated January
4, 1984, to which reference is hereby made.
(10)(b) The Company's 1989 Stock Option Plan was filed as an exhibit
to the Company's Form 8-K dated March 22, 1989, to which
reference is hereby made.
(10)(c) Amendment No. 1 to the Company's 1989 Stock Option Plan was
filed as an exhibit to the Company's Form 10-K for the year
ended December 31, 1993, to which reference is hereby made.
(10)(d) The Company's Key Employee Stock Option Plan was filed as an
exhibit to the Company's Registration Statement on Form S-2
(No. 2-88716) dated January 4, 1984, to which reference is
hereby made.
(10)(e) The Company's amended and restated revolving term loan
agreement dated July 31, 1992 was filed as Exhibit (10)(e) to
the Company's Form 10-K for the year ended December 31, 1992,
to which reference is hereby made. The Company's revolving
term loan agreement dated November 1, 1990 was filed as
Exhibit (10)(e) to the Company's Form 10-K for the year ended
December 31, 1990, to which reference is hereby made.
(10)(f) The Real Property Purchase Agreement and first amendment
thereto dated June 23, 1992 relative to the Company's
acquisition of the ten Sofran Centers was filed as an exhibit
to the Company's report on Form 8-K dated August 12, 1992
(date of event reported, July 31, 1992), to which reference is
hereby made.
(10)(g) Form of Agreement for the Sale and Purchase of Property dated
October 30, 1992 and the letter amendment thereto dated
November 19, 1992 relative to the Company's acquisition of the
seven Dreyfus Centers was filed as an exhibit to the Company's
report on Form 8-K dated January 6, 1993 (date of event
reported, December 23, 1992), to which reference is hereby
made.
(10)(h) The letter agreement dated December 23, 1992 between the IBM
Retirement Plan Trust Fund and its seven wholly-owned
subsidiaries and the Company was filed as an exhibit to the
Company's report on Form 8-K dated January 6, 1993 (date of
event reported, December 23, 1992), to which reference is
hereby made.
67
<PAGE> 69
(10)(i) The letter agreement dated July 29, 1993 between the IBM
Retirement Plan Trust Fund and its seven wholly-owned
subsidiaries and the Company was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1993, to
which reference is hereby made.
(21) The Company has two subsidiaries, IRT Management Company
("IRTMC") and VW Mall, Inc. ("VWM"), Georgia corporations
which are wholly owned by the Company. IRTMC was formed in
1990 and VWM in 1994.
(23)* Consent of Arthur Andersen & Co. to the incorporation of their
report included in this Form 10-K in the Company's previously
filed Registration Statements File Nos. 33-65604, 33-66780,
33-51238, 33-59938, 33-64628 and 33-64741.
(23)(a) Consent of Arthur Andersen & Co. to the incorporation of their
report included in this Form 10-K/A Amendment No. 1 in the
Company's previously filed Registration Statements File Nos.
33-65604, 33-66780, 33-51238, 33-59938, 33-64628 and 33-64741.
(27)* Financial Data Schedule (for S.E.C. use only)
* Previously filed.
Reports on Form 8-K. The Company filed a Current Report on Form 8-K
dated January 5, 1995 (date of event reported, December 21, 1994), as amended
under Form 8-K/A dated January 20, 1995, reporting under Items 2 and 7, the
acquisition of thirteen centers, eleven as of December 21, 1994 and two as of
January 6, 1995, which Form 8-K as amended is incorporated herein by reference.
68
<PAGE> 70
SIGNATURES
Pursuant to the requirements of Section 13 or 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.
February 21, 1995 IRT PROPERTY COMPANY
By:/s/ Donald W. MacLeod
----------------------------
Donald W. MacLeod
Chairman and President
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/ Donald W. MacLeod Chairman of the February 21, 1995
- ---------------------------- Board, President and
Donald W. MacLeod Director (Principal
Executive Officer)
/s/ Mary M. Thomas Executive Vice February 21, 1995
- ---------------------------- President, Chief
Mary M. Thomas Financial Officer
and Director (Principal
Financial & Accounting
Officer)
/s/ Homer B. Gibbs, Jr. Director February 21, 1995
- ----------------------------
Homer B. Gibbs, Jr.
/s/ Samuel W. Kendrick Director February 21, 1995
- ----------------------------
Samuel W. Kendrick
/s/ Thomas H. McAuley Director February 21, 1995
- ----------------------------
Thomas H. McAuley
/s/ Bruce A. Morrice Director February 21, 1995
- ----------------------------
Bruce A. Morrice
/s/ James H. Nobil Director February 21, 1995
- ----------------------------
James H. Nobil
/s/ Louis P. Wolfort Director February 21, 1995
- ----------------------------
Louis P. Wolfort
69
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amended and restated Form 10-K/A Amendment
No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.
IRT PROPERTY COMPANY
Date: September 28, 1995 By:/s/Mary M. Thomas
------------------ ---------------------------------
Mary M. Thomas
Executive Vice President &
Chief Financial Officer
70
<PAGE> 1
EXHIBIT (23)(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
IRT Property Company:
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K/A Amendment No. 1 into
the Company's previously filed Registration Statements File Nos. 33-65604,
33-66780, 33-51238, 33-59938, 33-64628 and 33-64741.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
September 28, 1995
