<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
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)
<TABLE>
<CAPTION>
Georgia 58-1366611
----------------------- ------------------
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
200 Galleria Parkway, Suite 1400
Atlanta, Georgia 30339
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 955-4406
--------------
(Registrant's telephone number, including area code)
N/A
-----
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 4, 1999
- -------------------------- --------------------------
Common Stock, $1 Par Value 33,234,206 Shares
<PAGE> 2
CERTAIN INFORMATION CONTAINED IN THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS, WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND
SECTION 21E OF THE SECURITIES ACT OF 1934. READERS OF THIS REPORT SHOULD BE
AWARE THAT THERE ARE VARIOUS FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM ANY FORWARD-LOOKING STATEMENTS MADE HEREIN. THIS INFORMATION IS
FURTHER QUALIFIED BY THE SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING
STATEMENTS CONTAINED IN THE IRT PROPERTY COMPANY ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1998, WHICH IS INCORPORATED HEREIN BY REFERENCE.
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data )
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate investments:
Rental properties, at cost $ 638,583 $ 622,117
Accumulated depreciation (78,414) (74,943)
--------- ---------
560,169 547,174
Net investment in direct financing leases 4,528 4,572
Mortgage loans, net 461 1,097
--------- ---------
Net real estate investments 565,158 552,843
Cash and cash equivalents 543 344
Accrued interest receivable 30 59
Prepaid expenses and other assets 8,853 9,013
--------- ---------
Total Assets $ 574,584 $ 562,259
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable, net $ 127,021 $ 82,215
7.3% convertible subordinated debentures, net 23,275 23,275
Senior notes, net 124,610 124,595
Indebtedness to banks 19,000 51,500
Accrued interest 2,759 3,612
Accrued expenses and other liabilities 8,587 6,465
--------- ---------
Total liabilities 305,252 291,662
--------- ---------
Commitments and Contingencies (Note 7) -- --
Minority interest payable 7,815 7,824
Shareholders' Equity:
Common stock, $1 par value, authorized 75,000,000 shares; 33,234,206 33,234 33,252
shares issued and outstanding in 1999 and 33,251,763 shares in
1998
Preferred stock, $1 par value, authorized 10,000,000 shares; none issued -- --
Additional paid-in capital 272,637 272,975
Deferred compensation/stock loans (2,133) (2,386)
Cumulative distributions in excess of net earnings (42,221) (41,068)
--------- ---------
Total shareholders' equity 261,517 262,773
--------- ---------
Total Liabilities and Shareholders' Equity $ 574,584 $ 562,259
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
<PAGE> 4
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Revenues:
Income from rental properties $ 20,812 $ 18,224
Interest income 40 114
Interest on direct financing leases 191 189
------------ -----------
21,043 18,527
------------ -----------
Expenses:
Operating expenses of real estate investments 4,527 3,988
Interest expense 5,328 4,424
Depreciation 3,472 3,086
Amortization of debt costs 110 111
General & administrative 945 917
------------ -----------
Total expenses 14,382 12,526
------------ -----------
Equity in income of joint venture -- 54
------------ -----------
Income before minority interest 6,661 6,055
Minority interest of unitholders in operating partnership (170) --
------------ -----------
Net earnings $ 6,491 $ 6,055
============ ===========
Per share: (Note 2 )
Basic $ 0.20 $ 0.19
============ ===========
Diluted $ 0.20 $ 0.19
============ ===========
Weighted average number of shares outstanding:
Basic 33,144 32,514
============ ===========
Diluted 33,955 32,567
============ ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 5
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings 6,491 6,055
Adjustments to reconcile earnings to net cash from operating activities:
Depreciation 3,472 3,086
Minority interest of unitholders in operating partnership 170 --
Amortization of deferred compensation 27 --
Amortization of debt costs and discount 125 126
Amortization of capitalized leasing income 44 33
Changes in assets and liabilities:
Decrease in accrued interest on debentures and senior notes (853) (996)
Decrease (increase) in interest receivable, prepaid expenses and other assets 681 (143)
Increase in accrued expenses and other liabilities 1,955 1,433
-------- --------
Net cash flows from operating activities 12,112 9,594
-------- --------
Cash flows used in investing activities:
Non-operating distributions from unconsolidated joint venture -- 356
Additions to real estate investments, net (10,724) (20,946)
Collections of mortgage loans, net 636 9
-------- --------
Net cash flows used in investing activities (10,088) (20,581)
-------- --------
Cash flows (used in) from financing activities:
Cash dividends and distributions paid, net (7,823) (6,361)
Exercise of stock options 37 2
Repayment of mortgage notes payable (936) (3,120)
Proceeds from mortgage notes payable 39,397 --
(Decrease) increase in bank indebtedness, net (32,500) 20,600
-------- --------
Net cash flows (used in) from financing activities (1,825) 11,121
-------- --------
Net increase in cash and cash equivalents 199 134
Cash and cash equivalents at beginning of period 344 275
-------- --------
Cash and cash equivalents at end of period $ 543 $ 409
======== ========
Supplemental disclosures of cash flow information:
Total cash paid during the period for interest $ 6,150 $ 5,496
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 6
IRT PROPERTY COMPANY
& SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
-----------------------
1. Unaudited Financial Statements
These consolidated financial statements for interim periods are unaudited and
should be read in conjunction with the Company's Annual Report to Shareholders
for the year ended December 31, 1998. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to a
fair presentation of the financial statements as of March 31, 1999 and 1998 have
been recorded. The results of operations for the interim period are not
necessarily indicative of the results that may be expected for future interim
periods or for the full year.
2. Earnings Per Share
Basic earnings per share is computed by dividing net earnings by the weighted
average number of shares outstanding during the period consistent with the
guidelines of Statement of Accounting Standards No. 128, "Earnings Per Share."
The effect of the Convertible Debentures and certain stock options and
non-vested restricted stock, using the treasury stock method, have been excluded
from the calculation of dilutive earnings per share, as they are anti-dilutive.
<TABLE>
<CAPTION>
Per-Share
Income Shares Amount
------ ------ ---------
<S> <C> <C> <C>
(In thousands except per share data)
- ------------------------------------
For the quarter ended March 31, 1999
- ------------------------------------
Basic Net Earnings available to shareholders $6,491 33,144 $ 0.20
======
Options outstanding 1
Minority Interest of unitholders in operating
partnership 170 810
------ ------
Diluted Net Earnings available to shareholders $6,661 33,955 $ 0.20
====== ====== ======
For the quarter ended March 31, 1998
- ------------------------------------
Basic Net Earnings available to shareholders $6,055 32,514 $ 0.19
======
Options outstanding 53
------ ------
Diluted Net Earnings available to shareholders $6,055 32,567 $ 0.19
====== ====== ======
</TABLE>
3. 7.3% Convertible Subordinated Debentures
During February and March 1998, $5,178,000 of the 7.3% convertible subordinated
debentures were converted into 460,263 shares of common stock at $11.25 per
share.
Based upon the $11.25 conversion price, 2,068,889 authorized but unissued common
shares have been reserved for possible issuance if the remaining $23,275,000 of
debentures outstanding March 31, 1999 are converted.
<PAGE> 7
4. Purchase of Rental Properties
(in thousands except square footage)
<TABLE>
<CAPTION>
Date Square Year % Leased Total Principal
Acquired Property Name City, State Footage Built at Initial Cash Paid Mortgage Tenants
Acquisition Cost
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/26/99 The Shoppes at Lago Mar Kendall, FL 82,436 1995 98% $9,916 $4,174 $5,742 Publix
Blockbuster
3/15/99 Williamsburg at Dunwoody Dunwoody, GA 44,928 1983 100% 5,601 5,601 -- N/A
------- ----------------------------
127,364 $15,517 $9,775 $5,742
======= ============================
</TABLE>
5. Investment in Joint Venture
IRT Capital Corporation ("IRTCC"), a taxable subsidiary of the Company, was a
50% owner of a joint venture which purchased in 1996 a 1.31 acre parcel of land
located in Savannah, Georgia, for development or sale. During March 1998, this
parcel was sold for a total sales price of $464,000. IRTCC, which is accounted
for by the Company under the equity method, recognized income from the joint
venture of $54,000 in 1998.
6. Mortgage Loans
During the fourth quarter of 1997, the borrower under the Spanish Quarter
Apartments wrap-around mortgage loan defaulted under the terms of the mortgage,
and on February 18, 1998, the Company obtained title to the property through
foreclosure. On August 14, 1998, the Company sold Spanish Quarter Apartments for
approximately $5,100,000. The Company received net cash proceeds from the sale
of approximately $4,806,000 and recognized a gain, net of deferred income tax,
of approximately $469,000 for financial reporting purposes.
7. Commitments and Contingencies
IRTCC has entered into a co-development agreement for the development of a
Kroger anchored shopping center in Decatur, Georgia. The project will be
developed in two phases totaling approximately 140,000 square feet, not
including two outparcels, at a total anticipated cost of approximately
$14,100,000. The venture may require the Company to purchase the shopping center
upon the completion of Phase I at cost or upon the completion of Phase II at the
greater of cost or a 10.75% capitalization rate. It is anticipated that the
Company will ultimately acquire the project upon completion.
<PAGE> 8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Material Changes in Financial Condition. During the first quarter of
1999 the Company obtained a $40,000,000 loan secured by first mortgages on eight
properties. The Company utilized funds of:
a) $32,500,000 to pay down its unsecured revolving term loan,
b) $15,517,000 for the acquisition of two shopping center investments,
consisting of cash of approximately $9,775,000 and mortgage debt of
approximately $5,742,000 secured by one of the centers,
c) $625,000 to repay at maturity a 9% purchase-money mortgage, and
d) $365,000 to secure a mortgage note receivable on land to possibly be
utilized in a future development.
During the first quarter of 1998 the Company borrowed $20,600,000 under
its unsecured revolving term loan. It utilized funds of:
a) $22,588,000 for the acquisition of three shopping center
investments, consisting of cash of approximately $20,356,000 and mortgage debt
of approximately $2,232,000 secured by one of the centers,
b) $2,224,000 to repay at maturity an 11% mortgage (discounted to 9.75%
for financial reporting purposes), and
c) $625,000 to make a scheduled principal payment under a 9%
purchase-money mortgage.
Additionally, in 1998, $5,178,000 of the Company's 7.3% convertible
subordinated debentures were converted into 460,263 shares of common stock at
$11.25 per share.
Material Changes in Results of Operations. During the first quarter of
1999, rental income from the Company's portfolio of shopping center investments:
a) increased approximately $391,000 for the core portfolio,
b) increased approximately $2,602,000 due to the acquisition of nine
shopping centers in 1998 and two in 1999,
c) decreased approximately $153,000 due to sales of two investments in
1998, and
d) decreased approximately $231,000 due to centers under redevelopment.
During the first quarter of 1998, rental income from the Company's portfolio
of shopping center investments:
a) increased approximately $351,000 for the core portfolio,
b) increased approximately $2,586,000 due to the acquisition of nine
shopping centers in 1997 and three in 1998,
c) increased approximately $134,000 due to the foreclosure of an
apartment investment obtained by the Company through foreclosure of the
wrap-around mortgage in February, 1998,
d) decreased approximately $51,000 due to a tenant bankruptcy during
1997, and
e) decreased approximately $316,000 due to sales of two investments in
1997.
Percentage rentals received from shopping center investments, excluding
percentage rentals received from the Wal-Mart investments classified as direct
financing leases, totaled approximately
<PAGE> 9
$543,000 and $411,000 during the three months ended March 31, 1999 and 1998,
respectively. Percentage rental income is recorded upon collection based on the
tenants' lease years.
Interest income during the first quarter of 1999 decreased
approximately $80,000 due to the foreclosure of a mortgage loan in the third
quarter of 1998.
Interest income during the first quarter of 1998:
a) decreased approximately $85,000 due to the repayment of one
purchase-money mortgage in the third quarter 1997,
b) decreased approximately $136,000 due to the foreclosure of the
wrap-around mortgage during the first quarter of 1998, and
c) decreased approximately $55,000 due to less interest being earned on
short-term money market investments during the first quarter of 1998 compared to
the first quarter of 1997.
IRTCC, which is accounted for by the Company under the equity method,
recognized $54,000 of income from a joint venture upon the sale during the first
quarter of 1998 of the 1.31 acre parcel of land held by the joint venture.
During the first quarter of 1999 operating expenses related to the
Company's portfolio of real estate investments:
a) increased approximately $110,000 for the core portfolio,
b) increased approximately $624,000 due to the acquisition of nine
shopping centers in 1998 and two in 1999, and
c) decreased approximately $29,000 due to the sale of an apartment
investment in 1998.
During the first quarter of 1998 operating expenses related to the
Company's portfolio of real estate investments:
a) increased approximately $335,000 for the core portfolio,
b) increased approximately $581,000 due to the acquisition of nine
shopping centers in 1997 and three in 1998,
c) increased approximately $50,000 due to the acquisition of an
apartment investment obtained through foreclosure of the wrap-around mortgage
loan in the first quarter of 1998, and
d) decreased by approximately $148,000 due to sales in 1997.
During the first quarter of 1999 interest expense on mortgages
decreased approximately $193,000 due to four mortgages being repaid in 1998 and
one in 1999 and increased approximately $850,000 due to:
a) the assumption of a $2,232,000 mortgage bearing interest at 7.65%
upon the acquisition of Town & Country shopping center in January, 1998,
b) the assumption of three mortgages for a combined amount of
$20,083,000 bearing interest at 9.1875% upon the acquisition of Charlotte
Square, Riverside Square and Tamarac Square in August, 1998 (these mortgages
were discounted to 8% for financial reporting purposes),
c) the assumption of a $5,937,000 mortgage bearing interest at 8% upon
the acquisition of Treasure Coast shopping center in August, 1998,
<PAGE> 10
d) the placement of a $4,500,000 mortgage bearing interest at 6.85% on
Mableton Crossing in August, 1998 (Mableton was acquired without debt in June,
1998),
e) the assumption of a $5,742,000 mortgage bearing interest at 8% upon
the acquisition of Lago Mar shopping center in February, 1999, and
f) the placement of a $40,000,000 loan, secured by first mortgages on
eight properties, bearing interest at 6.5% in February, 1999.
During the first quarter of 1998 interest expense on mortgages
decreased approximately $660,000 due to the repayment of five mortgages in 1997
and one in 1998 and increased approximately $167,000 due to:
a) the assumption of a $6,793,000 mortgage bearing interest at 7.865%
upon the acquisition of Grassland Crossing in February, 1997,
b) the placement of a $1,250,000 purchase-money mortgage bearing
interest at 9% taken upon the acquisition of Powers Ferry Plaza in May, 1997,
c) the assumption of a $3,502,000 mortgage bearing interest at 7.75%
upon the acquisition of Shoppes of Silverlakes in November, 1997, and
d) the assumption of a $2,232,000 mortgage bearing interest at 7.675%
upon the acquisition of Town and Country Shopping Center in January, 1998.
Interest expense on bank indebtedness increased approximately $289,000
for the first quarter of 1999. The Company had average borrowings of
approximately $37,430,000 and $17,052,000 at effective interest rates of 6.43%
and 7.02%, under its bank credit facility during the three months ended March
31, 1999 and 1998, respectively. In addition, the Company incurred commitment
fees of approximately $38,000 and $51,000 in 1999 and 1998, respectively, based
on the aggregate unused portion of the commitment.
The net increase in depreciation expense in the first quarter of 1999
was primarily due to the eleven shopping center investments acquired during 1998
and 1999, partially offset by the two investments sold during 1998.
Funds from Operations. The Company defines funds from operations,
consistent with the NAREIT definition, as net earnings on real estate
investments and extraordinary items plus depreciation and amortization of
capitalized leasing costs. Interest on debentures and amortization of
convertible debenture costs are added to funds from operations when assumed
conversion of the debentures is dilutive. Conversion of the debentures is
dilutive and therefore assumed for the quarters ended March 31, 1999 and 1998.
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.
<PAGE> 11
The following data is presented with respect to the calculation of
funds from operations under the NAREIT definition for the quarters ended March
31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net earnings $ 6,491 $ 6,055
Depreciation* 3,438 3,086
Amortization of capitalized leasing fees* 100 62
Amortization of capitalized leasing income 44 32
----------- -----------
Funds from operations 10,073 9,235
----------- -----------
Interest on convertible debentures 425 471
Amortization of convertible debenture costs 25 29
Amounts attributed to minority interests 205 --
----------- -----------
Fully diluted funds from operations $ 10,728 $ 9,735
=========== ===========
Fully diluted weighted average shares 36,024 34,997
=========== ===========
</TABLE>
* net of amounts attributed to minority interest
Additional Information. The following data is presented with respect to
amounts incurred for improvements to the Company's real estate investments and
for leasing fees during the quarters ended March 31, 1999 and 1998 (in
thousands):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Tenant improvements
Shopping centers $173 $124
Industrial -- --
---- ----
Total tenant improvements 173 124
---- ----
Capital expenditures:
Shopping centers 275 435
Industrial 17 1
---- ----
Total capital expenditures 292 436
---- ----
Total improvements $465 $560
==== ====
Leasing fees $232 $ 93
==== ====
</TABLE>
<PAGE> 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(4.1) IRT Property Company Common Stock Certificate Legend
Regarding Shareholder Rights Agreement
(21) Company Subsidiaries
(27) Financial Data Schedule (for S.E.C. use only)
(99) Unaudited Financial statements of IRT Partners L.P.
for the three months ended March 31, 1999
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the first quarter of 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
IRT PROPERTY COMPANY
Date: May 4, 1999 /s/ Thomas H. McAuley
-------------- ---------------------------
Thomas H. McAuley
President & Chief Executive
Officer
Date: May 4, 1999 /s/ James G. Levy
-------------- -----------------
James G. Levy
Senior Vice President &
Chief Accounting Officer
<PAGE> 1
EXHIBIT 4.1
IRT Property Company Common Stock Certificate Legend Regarding Shareholder
Rights Agreement
Common Stock Certificate Legend Regarding
Shareholder Rights Agreement
dated as of August 21, 1998
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement, dated as of August 21, 1998
(as such may be amended from time to time, the "Rights Agreement"), between IRT
Property Company (the "Company") and SunTrust Bank, Atlanta, as Rights Agent,
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may become exercisable for securities or assets of the Company or of
another entity, may be exchanged for shares of Common Stock or other securities
or assets of the Company, may expire, may become void (if they are "Beneficially
Owned" by an "Acquiring Person" or an Affiliate or Associate thereof, as such
terms are defined in the Rights Agreement, or by any transferee of any of the
foregoing) or may be evidenced by separate certificates and may no longer be
evidenced by this certificate. The Company will mail or arrange for the mailing
of a copy of the Rights Agreement to the holder of this certificate without
charge promptly after the receipt of a written request therefor.
<PAGE> 1
EXHIBIT 21
Company Subsidiaries
<TABLE>
<CAPTION>
Jurisdiction of Year
Name Organization Incorporated
---- --------------- ------------
<S> <C> <C>
IRT Management Company Georgia 1990
VW Mall, Inc. Georgia 1994
IRT Alabama, Inc. Alabama 1997
IRT Capital Corporation Georgia 1996
IRT Partners L.P. Georgia 1998
</TABLE>
All are wholly-owned subsidiaries of the Company except IRT Capital
Corporation ("IRTCC") and IRT Partners L.P. ("LP"). The Company owns 96% of
IRTCC's non-voting common stock and 1% of its voting stock. The Company and IRT
Management Company combined, own 93.1% of IRT Partners L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF IRT PROPERTY COMPANY AS OF AND FOR THE QUARTER ENDED
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 543
<SECURITIES> 0
<RECEIVABLES> 30
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,426
<PP&E> 638,583
<DEPRECIATION> 78,414
<TOTAL-ASSETS> 574,584
<CURRENT-LIABILITIES> 11,346
<BONDS> 0
0
0
<COMMON> 33,234
<OTHER-SE> 228,283
<TOTAL-LIABILITY-AND-EQUITY> 574,584
<SALES> 0
<TOTAL-REVENUES> 21,043
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,472
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,438
<INCOME-PRETAX> 6,491
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,491
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
<PAGE> 1
EXHIBIT 99
IRT PARTNERS L.P.
BALANCE SHEETS
(In thousands, except unit data)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Rental properties $ 155,623 $ 139,936
Accumulated depreciation (19,932) (19,099)
--------- ---------
135,691 120,837
Cash & cash equivalents 662 1,103
Advances to affiliate, net 553 0
Prepaid expenses and other assets 1,591 1,269
--------- ---------
Total Assets $ 138,497 $ 123,209
========= =========
LIABILITIES & PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable, net $ 31,591 $ 25,963
Advances from affiliate, net 0 33
Accrued expenses and other liabilities 2,261 1,660
--------- ---------
Total Liabilities 33,852 27,656
--------- ---------
Limited partners' capital interest (779,385 OP Units at March 31, 1999 and
December 31, 1998), at redemption value
6,874 7,794
Commitments and contingencies (Note 4) -- --
Partners' Capital:
General partner (113,713 OP units at March 31, 1999 and 103,982
OP units at December 31, 1998) 1,043 955
Limited partner (10,478,066 OP units at March 31, 1999 and
9,514,844 OP units at December 31, 1998) 96,728 86,804
--------- ---------
Total Partners' Capital 97,771 87,759
--------- ---------
Total Liabilities and Partners' Capital $ 138,497 $ 123,209
========= =========
</TABLE>
The accompanying notes are an integral part of this
balance sheet.
<PAGE> 2
IRT PARTNERS L.P.
STATEMENT OF EARNINGS
For the Three Months Ended March 31, 1999
(Unaudited)
(In thousands)
<TABLE>
<S> <C>
Income from rental properties $4,803
------
Expenses:
Operating expenses of rental properties 1,086
Interest on mortgages 557
Depreciation 833
General & administrative 2
2,478
------
Net earnings $2,325
======
</TABLE>
The accompanying notes are an integral part of this
financial statement.
<PAGE> 3
IRT PARTNERS L.P.
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1999
(Unaudited)
(In thousands)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net earnings $ 2,325
Adjustments to reconcile earnings to net cash from operating activities:
Depreciation 833
Changes in accrued assets and liabilities:
Increase in prepaid expenses and other assets (321)
Increase in accrued expenses and other liabilities 601
--------
Net cash flows from operating activities 3,438
--------
Cash flows used in investing activities:
Additions to real estate investments, net (15,687)
--------
Cash flows used in financing activities:
Cash distributions paid, net (2,492)
Principal amortization of mortgage notes payable (115)
Increase in mortgage notes payable 5,742
Net advances from affiliate (586)
Issuance of units for cash 9,259
--------
Net cash flows used in financing activities 11,808
--------
Net decrease in cash and cash equivalents (441)
Cash and cash equivalents at beginning of period 1,103
--------
Cash and cash equivalents at end of period $ 662
========
Supplemental disclosures of cash flow information:
Total cash paid during the period for interest $ 522
========
</TABLE>
The accompanying notes are an integral part of this
financial statement.
<PAGE> 4
IRT PARTNERS L. P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
1. Unaudited Financial Statements
These financial statements for interim periods are unaudited. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to a fair presentation of the financial statements as of
March 31, 1999 have been recorded. The results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
future interim periods or for a full year.
2. Organization and Nature of Operations
IRT Partners L.P. ("LP"), a Georgia limited partnership formed July 15,
1998, is the entity through which IRT Property Company (the "Company"), a
self-administered and self-managed real estate investment trust, conducts a
portion of its business and owns (either directly or through subsidiaries) a
portion of its assets. LP was formed by the Company in order to enhance
acquisition opportunities by offering potential sellers of properties the
ability to engage in tax-deferred sales in exchange for Operating Partnership
Units ("OP Units") of LP which are redeemable for shares of common stock of the
Company. The Company serves as general partner of LP and, as of August 1, 1998,
contributed 20 of its shopping centers and related assets and cash to LP in
exchange for OP Units. As a result, the Company and IRT Management Company, one
of the Company's wholly-owned subsidiaries, own approximately 93.1% of LP as of
March 31, 1999.
LP owns 27 neighborhood and community shopping centers located in
Florida, Georgia, Tennessee and North Carolina. The shopping centers are
anchored by necessity-oriented retailers such as supermarkets, drug stores
and/or discount variety stores.
LP currently has several unaffiliated limited partners resulting from
the acquisition of three Florida properties in August 1998. The unaffiliated
limited partners have the option to require LP to redeem their OP Units at any
time after one year, in which event LP has the option to purchase the OP Units
for cash or convert them into one share of the Company's common stock for each
OP Unit.
<PAGE> 5
3. Purchase of Rental Properties
In thousands except square footage
<TABLE>
<CAPTION>
Date Square Year % Leased Total Principal
Acquired Property Name City, State Footage Built at Initial Cash Mortgage Tenants
Acquisition Cost Paid
- ------------ ----------------------- ----------- ------- ----- ----------- ------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/26/99 The Shoppes at Lago Mar Kendall, FL 82,436 1995 98% $ 9,916 $4,174 $5,742 Publix
Blockbuster
3/15/99 Williamsburg at Dunwoody, GA 44,928 1983 100% 5,601 5,601 -
Dunwoody
------- ------- ------ ------
127,364 $15,517 $9,775 $5,742
======= ======= ====== ======
</TABLE>
4. Commitments and Contingencies
In connection with the formulation of LP and its proposed operations,
LP has guaranteed the bank indebtedness and senior indebtedness of the Company.
