<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, 2000
--------------
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>
<S> <C>
Georgia 58-1366611
- -------------------------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
200 Galleria Parkway, Suite 1400
Atlanta, Georgia 30339
- --------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(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 9, 2000
- ---------------------------- --------------------------
Common Stock, $1 Par Value 31,843,780 Shares
1
<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 EXCHANGE ACT OF 1934, AS AMENDED. 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 AND THE INFORMATION IN THE SECTION ENTITLED "RISK
FACTORS" CONTAINED IN THE IRT PROPERTY COMPANY ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999, WHICH ARE INCORPORATED HEREIN BY REFERENCE.
2
<PAGE> 3
Item 1. Financial Statements
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate investments:
Rental properties $ 619,914 $ 630,005
Accumulated depreciation (87,401) (86,170)
--------- ---------
Net rental properties 532,513 543,835
Equity investment in and advances to unconsolidated affiliates 7,911 7,251
Net investment in direct financing leases 4,371 4,412
Mortgage loans, net 1,978 92
--------- ---------
Net real estate investments 546,773 555,590
Cash and cash equivalents 536 514
Prepaid expenses and other assets 8,563 9,792
--------- ---------
Total assets $ 555,872 $ 565,896
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable, net $ 118,131 $ 122,164
7.3% convertible subordinated debentures, net 23,275 23,275
Senior notes, net 124,669 124,654
Indebtedness to banks 20,000 20,400
Accrued interest 2,759 3,612
Accrued expenses and other liabilities 7,545 8,196
--------- ---------
Total liabilities 296,379 302,301
Commitments and contingencies (Note 6)
Minority interest payable 7,377 7,392
Shareholders' Equity:
Common stock, $1 par value, 150,000,000 shares authorized;
33,234,206 shares issued in 2000 and 1999, respectively 33,234 33,234
Preferred stock, $1 par value, authorized 10,000,000 shares;
none issued -- --
Additional paid-in capital 272,442 272,448
Deferred compensation/stock loans (1,982) (1,808)
Treasury stock, at cost, 1,211,226 and 516,527 shares
in 2000 and 1999, respectively (9,634) (4,026)
Cumulative distributions in excess of net earnings (41,944) (43,645)
--------- ---------
Total shareholders' equity 252,116 256,203
--------- ---------
Total liabilities and shareholders' equity $ 555,872 $ 565,896
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE> 4
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
REVENUES:
Income from rental properties $ 21,064 $ 20,812
Interest income 216 40
Interest on direct financing leases 188 191
-------- --------
Total revenues 21,468 21,043
-------- --------
EXPENSES:
Operating expenses of rental properties 4,824 4,527
Interest expense 5,401 5,328
Depreciation 3,572 3,472
Amortization of debt costs 132 110
General and administrative 779 945
-------- --------
Total expenses 14,708 14,382
Equity in earnings of unconsolidated affiliates (11) --
-------- --------
Earnings before minority interest and
gain on sales of properties 6,749 6,661
Minority interest of unitholders in operating partnership (159) (170)
Gain on sales of properties 2,738 --
-------- --------
NET EARNINGS $ 9,328 $ 6,491
======== ========
PER SHARE:
Net earnings -- basic $ 0.29 $ 0.20
======== ========
Net earnings -- diluted $ 0.28 $ 0.20
======== ========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 32,298 33,144
======== ========
Diluted 35,188 33,955
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 5
IRT PROPERTY COMPANY
& SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,328 $ 6,491
Adjustments to reconcile earnings to net cash from operating activities:
Depreciation 3,572 3,472
Gain on sales of properties (2,738) --
Minority interest of unitholders in partnership (34) 170
Amortization of deferred compensation 31 27
Amortization of debt costs and discounts 147 125
Amortization of capitalized leasing income 41 44
Changes in assets and liabilities:
Decrease in accrued interest on debentures
and senior notes (853) (853)
Decrease in interest receivable, prepaid expenses
and other assets 1,067 681
(Decrease) increase in accrued expenses and other liabilities (524) 1,955
-------- --------
Net cash flows from operating activities 10,037 12,112
-------- --------
Cash flows from (used in) investing activities:
Proceeds from sales of properties, net 11,660 --
Investment in unconsolidated affiliates (660) --
Additions to real estate investments, net (1,267) (10,724)
Funding of mortgage loans receivable, net (1,888) --
Collections of mortgage loans receivable, net 2 636
-------- --------
Net cash flows from (used in) investing activities 7,847 (10,088)
-------- --------
Cash flows used in financing activities:
Cash dividends, net (7,627) (7,823)
Purchase of treasury stock (5,800) --
Exercise of stock options -- 37
Principal amortization of mortgage notes payable (513) (311)
Repayment of mortgage notes payable (3,520) (625)
Payment of deferred financing costs (2) --
Proceeds from mortgage notes payable -- 39,397
Decrease in bank indebtedness (400) (32,500)
-------- --------
Net cash flows used in financing activities (17,862) (1,825)
-------- --------
Net increase in cash and cash equivalents 22 199
Cash and cash equivalents at beginning of period 514 344
-------- --------
Cash and cash equivalents at end of period $ 536 $ 543
======== ========
Supplemental disclosures of cash flow information:
Total cash paid during period for interest $ 6,294 $ 6,150
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 6
IRT PROPERTY COMPANY
& SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000 and 1999
(Dollars in thousands, except per share amounts)
1. Unaudited Financial Statements
These consolidated financial statements for interim periods are
unaudited and should be read in conjunction with the Company's Report
on Form 10-K for the year ended December 31, 1999. The accompanying
consolidated financial statements include the accounts of IRT Property
Company and its wholly-owned subsidiaries, IRT Management Company, VW
Mall, Inc. and IRT Alabama, Inc., and its majority-owned subsidiary,
IRT Partners LP (collectively, the "Company"). Intercompany
transactions and balances have been eliminated in the consolidation.
The Company's investments in IRT Capital Corporation ("IRTCC") and IRT
Capital Corporation II ("IRTCCII") have been accounted for under the
equity method of accounting. 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, 2000
and 1999 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 Financial Accounting
Standards No. 128, "Earnings Per Share." The effects of 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. The effects of the conversion of
the Operating Partnership Units held by the minority interest are
dilutive and have been included in the calculation of dilutive earnings
per share for all periods presented. For the three months ended March
31, 2000, the effects of the conversion of the 7.3% debentures have
been included in the calculation of dilutive earnings per share as they
are dilutive. The effects of the conversion of such debentures have
been excluded from the calculation of dilutive earnings per share for
the three months ended March 31, 1999 as they were anti-dilutive for
that period.
6
<PAGE> 7
<TABLE>
<CAPTION>
Per Share
Income Shares Amount
------ ------ ---------
(In thousands except per share amounts)
<S> <C> <C> <C>
For the three months ended March 31, 2000
- -----------------------------------------
Basic net earnings available to shareholders $9,328 32,298 $ 0.29
Options outstanding -- 5 ========
Minority interest of unitholders in operating partnership 159 816
Conversion of 7.3% debentures 450 2,069
====== ======
Diluted net earnings available to shareholders $9,937 35,188 $ 0.28
====== ====== ========
For the three months 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
====== ====== ========
</TABLE>
3. 7.3% Convertible Subordinated Debentures
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 of debentures outstanding on March 31, 2000 are
converted.
4. Rental Properties
SHOPPING CENTER DISPOSITIONS
<TABLE>
<CAPTION>
Date Square Sales Cash
Sold Property Name City, State Footage Price Proceeds Gain
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/14/00 Palm Gardens Largo, FL 49,890 $ 1,500 $ 1,389 $ 804
2/18/00 Westgate Square Sunrise, FL 104,853 11,355 10,271 1,934
---------------------------------------------
154,743 $12,855 $11,660 $2,738
=============================================
</TABLE>
5. Investment in Joint Venture
On May 24, 1999 IRTCII was formed under the laws of Georgia. This
taxable subsidiary has the ability to develop properties, buy and sell
properties, provide equity to developers who are merchant builders and
perform third party management, leasing and brokerage functions. The
Company holds 96% of the non-voting common stock and 1% of the voting
common stock of IRTCCII. The remaining voting common stock is held by
an officer of the Company and a director of the Company. The ownership
of
7
<PAGE> 8
the common stock of IRTCCII entitles the Company to substantially all
of the economic benefits from the results of operations of this
subsidiary. IRTCCII is accounted for by the Company under the equity
method of accounting.
On June 1, 1999 the Company loaned IRTCCII approximately $3,800 to
purchase 23 acres of undeveloped land in Miramar, Florida. On September
3, 1999, the Company loaned IRTCCII approximately $2,600 to purchase a
shopping center and two parcels of undeveloped land covering 9 acres in
Pasco County, Florida. Through March 31, 2000, the Company has loaned
an additional $1,511 to IRTCCII for the development of these
properties.
6. Commitments and Contingencies
On January 20, 2000, the Company entered into a co-development
agreement. Under this agreement, the Company will fund, through loans
to the co-developer, monies to acquire land adjacent to an existing
shopping center in Atlanta, Georgia and to develop such land. The
Company has committed up to $3,650 for this project of which $1,888 is
outstanding as of March 31, 2000. The loan, secured by a mortgage on
the development and bearing interest monthly at a rate based on the one
month LIBOR plus 250 basis points, matures on July 1, 2001.
8
<PAGE> 9
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(Dollars in thousands)
Material Changes in Financial Condition.
During the three months ended March 31, 2000, the Company:
- obtained cash proceeds of approximately $11,660 upon the
sales of two properties and recognized a gain of
approximately $2,738 for financial reporting purposes.
During the three months ended March 31, 2000, the Company
utilized funds of:
- approximately $7,627 to pay dividends to the holders of the
Company's common stock,
- approximately $5,800 to repurchase the Company's common
stock,
- approximately $3,520 to repay a 7.75% mortgage at its
scheduled maturity,
- approximately $1,888 to fund a loan for a co-development
project,
- approximately $1,267 for capital expenditures and tenant
improvements, and
- approximately $660 for advances to IRTCCII for further
development of land and properties acquired in 1999.
During the three months ended March 31, 1999, the Company
obtained a $40,000 loan secured by first mortgages on eight properties.
The Company utilized funds of:
- approximately $32,500 to pay down its unsecured revolving
term loan,
- $15,517 for the acquisition of two shopping center
investments, consisting of cash paid of approximately $9,775
and mortgage debt assumed of approximately $5,742 secured by
one of the centers,
- $625 to repay, at its scheduled maturity, a 9% purchase-
money mortgage, and
- $365 to secure a mortgage note receivable on land to
possibly be utilized in future development.
9
<PAGE> 10
Material Changes in Results of Operations.
During the three months ended March 31, 2000, rental income
from the Company's portfolio of shopping center investments:
- increased approximately $376 for the core portfolio,
- increased approximately $468 due to the acquisition of two
shopping centers in 1999, and
- decreased approximately $592 due to sales of two
investments in 2000 and four in 1999.
During the three months ended March 31, 1999, rental income
from the Company's portfolio of shopping center investments:
- increased approximately $391 for the core portfolio,
- increased approximately $2,602 due to the acquisition
of two shopping centers in 1999 and nine shopping centers
in 1999, and
- decreased approximately $153 due to sales of two
investments in 1998.
Percentage rentals received from shopping center investments,
excluding percentage rentals received from the two Wal-Mart investments
classified as direct financing leases, totaled approximately $608 and
$542 during the three months ended March 31, 2000 and 1999, respectively.
Percentage rental income is recorded upon collection based on the
tenants' lease years.
Interest income during the three months ended March 31, 2000
increased approximately $176 due primarily to interest accrued on
development loans.
During the three months ended March 31, 2000, operating
expenses related to the Company's portfolio of real estate investments:
- increased approximately $303 for the core portfolio,
- increased approximately $125 due to the acquisition of two
shopping centers in 1999, and
- decreased approximately $131 due to the sales of two
properties in 2000 and four in 1999.
10
<PAGE> 11
During the three months ended March 31, 1999, operating
expenses related to the Company's portfolio of real estate investments:
- increased approximately $110 for the core portfolio,
- increased approximately $624 due to the acquisition of two
shopping center investments in 1999 and nine shopping
center investments in 1998, and
- decreased approximately $29 due to the sale of two
properties in 1998.
During the three months ended March 31, 2000, interest expense
on mortgages increased approximately $306 primarily due to the addition
of the 6.5% fixed-rate, 25 year fully-amortizing $40,000 mortgage placed
on eight of the Company's properties in February 1999.
Interest expense on bank indebtedness decreased approximately
$233 for the three months ended March 31, 2000. The Company had average
borrowings of approximately $19,569 and $37,430 at effective interest
rates of 7.3% and 6.4%, under its bank credit facility during the three
months ended March 31, 2000 and 1999, respectively. The Company incurred
commitment fees of approximately $51 and $38 in 2000 and 1999,
respectively, which are included in this interest expense.
The net increase of $100 in depreciation expense in 2000 was
due to the acquisition of two real estate investments in the first
quarter of 1999, net of the effect of the disposition of two properties
in the first quarter of 2000 and four properties in the second quarter of
1999.
The net decrease in general and administrative expense of
approximately $166 for the three months ended March 31, 2000 was
primarily due to compensation expense that was accrued in 1999 but not in
2000.
Year 2000 readiness disclosure. The Company's Year 2000
program has been completed as described in the Annual Report on Form 10-K
for the year ended December 31, 1999. In addition, the Company is not
aware of any significant counter parties who were negatively impacted by
their lack of Year 2000 readiness. Due to the nature of Year 2000 issues,
the Company realizes that additional information may come to light at any
time after December 31, 1999; the Company, therefore, intends to continue
to monitor significant counter parties in the future in the event that
circumstances change. The Company designates each of the statements made
by it herein as a Year 2000 Readiness Disclosure made pursuant to the
Year 2000 Information and Readiness Disclosure Act.
Funds from Operations. The Company defines funds from
operations, consistent with the National Association of Real Estate
11
<PAGE> 12
Investment Trusts ("NAREIT") definition of such term, as net earnings on
real estate investments (calculated in accordance with generally accepted
accounting principles) before gains (losses) on the sale of properties
and extraordinary items plus depreciation and amortization of capitalized
leasing costs. Interest and amortization of issuance costs related to
convertible debentures are added back to funds from operations when
assumed conversion of the debentures is dilutive. Conversion of the
debentures is dilutive and therefore assumed for the three months ended
March 31, 2000 and 1999. 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.
12
<PAGE> 13
The following data is presented with respect to the calculation of
funds from operations under the NAREIT definition for the quarters ended March
31, 2000 and 1999 (in thousands except per share data):
<TABLE>
<CAPTION>
FUNDS FROM OPERATIONS ("FFO"): Three Months Ended
March 31,
----------------------
2000 1999
-------- -------
<S> <C> <C>
Net earnings $ 9,328 $ 6,491
Gain on sales of properties (2,738) --
Depreciation (*) 3,517 3,438
Amortization of capitalized leasing fees (*) 173 100
Amortization of capitalized leasing income 41 44
-------- -------
Funds From Operations 10,321 10,073
Interest on convertible debentures 425 425
Amortization of convertible debenture costs 25 25
Amounts attributable to minority interests 224 205
-------- -------
Fully Diluted Funds From Operations $ 10,995 $10,728
======== =======
Per Share:
Fully Diluted Funds From Operations $ 0.31 $ 0.30
======== =======
Applicable weighted average shares 35,188 36,024
======== =======
</TABLE>
(*) Net of amounts attributable to minority interests
ADDITIONAL INFORMATION: The following data is presented with respect to
amounts incurred for improvements to the Company's real estate investments, for
leasing fees paid and for principal amortization of mortgage notes payable
during the three months ended March 31, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
2000 1999
------- -----
<S> <C> <C>
Tenant Improvements:
Shopping Centers $1,069 $ 173
Industrial -- --
------ -----
Total Tenant Improvements 1,069 173
------ -----
Capital Expenditures:
Shopping Centers 198 275
Industrial -- 17
------ -----
Total Capital Expenditures 198 292
------ -----
Total Improvements $1,267 $ 465
====== =====
Leasing Fees Paid $ 390 $ 232
====== =====
Principal Amortization of Mortgage Notes Payable $ 513 $ 311
====== =====
</TABLE>
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(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, 2000.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the three months ended March 31, 2000.
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 9, 2000 /s/ Thomas H. McAuley
---------------------- ---------------------------
Thomas H. McAuley
President & Chief Executive Officer
Date: May 9, 2000 /s/ James G. Levy
---------------------- ---------------------------
James G. Levy
Executive Vice President &
Chief Financial Officer
14
<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 Capital Corporation Georgia 1996
IRT Alabama, Inc. Alabama 1997
IRT Partners L.P. Georgia 1998
IRT Capital Corporation II Georgia 1999
</TABLE>
All are wholly-owned subsidiaries of the Company except IRT Capital
Corporation ("IRTCC"), IRT Capital Corporation II ("IRTCCII") and IRT Partners
L.P. ("LP"). The Company owns 96% of IRTCC's and IRTCCII's non-voting common
stock and 1% of its voting stock. The Company and IRT Management Company,
combined, own 92.9% of IRT Partners L.P.
15
<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 THREE MONTHS
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 536
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,563
<PP&E> 619,914
<DEPRECIATION> (87,401)
<TOTAL-ASSETS> 555,872
<CURRENT-LIABILITIES> 10,304
<BONDS> 286,075
0
0
<COMMON> 33,234
<OTHER-SE> 218,882
<TOTAL-LIABILITY-AND-EQUITY> 555,872
<SALES> 0
<TOTAL-REVENUES> 21,468
<CGS> 0
<TOTAL-COSTS> 4,824
<OTHER-EXPENSES> 779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,401
<INCOME-PRETAX> 9,328
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,328
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,328
<EPS-BASIC> 0.29
<EPS-DILUTED> 0.28
</TABLE>
<PAGE> 1
EXHIBIT 99
Unaudited Financial Statements of IRT Partners L.P. for the three months
ended March 31, 2000
IRT PARTNERS L.P.
BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Rental properties $ 148,061 $ 147,123
Accumulated depreciation (21,391) (20,518)
--------- ---------
Net rental properties 126,670 126,605
Cash and cash equivalents 346 359
Advances to affiliate, net 8,251 8,923
Prepaid expenses and other assets 1,647 1,947
--------- ---------
Total assets $ 136,914 $ 137,834
========= =========
LIABILITIES & PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable, net $ 31,038 $ 31,181
Accrued expenses and other liabilities 2,237 2,545
--------- ---------
Total liabilities 33,275 33,726
Limited partners' capital interest (815,852 OP Units in 2000
and 1999, respectively) at redemption value 6,527 6,374
Commitments and contingencies (Note 3)
Partners' capital
General partner (114,613 OP Units in 2000 and
1999, respectively) 1,036 1,041
Limited partner (10,530,883 OP Units in 2000 and
1999, respectively) 96,076 96,693
--------- ---------
Total partners' capital 97,112 97,734
--------- ---------
Total liabilities and partners' capital $ 136,914 $ 137,834
========= =========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
16
<PAGE> 2
IRT PARTNERS L.P.
STATEMENTS OF EARNINGS
For the Three Months Ended March 31, 2000 and 1999
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
2000 1999
------ ------
<S> <C> <C>
Revenues:
Income from rental properties $5,085 $4,803
Interest income from affiliate 125 --
------ ------
Total revenues 5,210 4,803
Expenses:
Operating expenses of rental properties 1,306 1,086
Interest on mortgages 615 557
Depreciation 873 833
General and administrative 189 2
------ ------
Total expenses 2,983 2,478
------ ------
Net earnings $2,227 $2,325
====== ======
</TABLE>
The accompanying notes are an integral part of this statement.
17
<PAGE> 3
IRT PARTNERS L.P.
STATEMENTS OF EARNINGS
For the Three Months Ended March 31, 2000 and 1999
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
2000 1999
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,227 $ 2,325
Adjustments to reconcile earnings to net cash from operating activities:
Depreciation 873 833
Changes in assets and liabilities:
Decrease (increase) in prepaid expenses and other assets 300 (321)
(Decrease) increase in accrued expenses and other liabilities (308) 601
------- --------
Net cash flows from operating activities 3,092 3,438
------- --------
Cash flows used in investing activities:
Additions to real estate investments, net (938) (15,687)
------- --------
Cash flows (used in) from financing activities:
Distributions paid, net (2,696) (2,492)
Collection of advances to affiliate, net 672 --
Principal amortization of mortgage notes payable (143) (115)
Advances to affiliate, net -- (586)
Proceeds from mortgage note payable -- 5,742
Issuance of units for cash -- 9,259
------- --------
Net cash flows (used in) from financing activities (2,167) 11,808
------- --------
Net decrease in cash and cash equivalents (13) (441)
Cash and cash equivalents at beginning of period 359 1,103
------- --------
Cash and cash equivalents at end of period $ 346 $ 662
======= ========
Supplemental disclosures of cash flow information:
Total cash paid for interest $ 616 $ 522
======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
18
<PAGE> 4
IRT PARTNERS L. P.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
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, 2000 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
on 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, on August 1, 1998,
contributed 20 of its shopping centers and related assets and cash to
LP in exchange for OP Units.
As a result of acquisitions and dispositions, as of March 31,
2000, LP owned 24 neighborhood and community shopping centers located
in Florida, Georgia, Tennessee and North Carolina. The Company and IRT
Management Company, one of the Company's wholly-owned subsidiaries,
collectively own approximately 92.9% of LP as of March 31, 2000. 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, 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.
3. Commitments and Contingencies
LP has guaranteed the bank indebtedness and senior indebtedness of the
Company.
19
