<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: June 30, 1994
-------------------------------------
Commission File No. 1-7533
--------------------------
FEDERAL REALTY INVESTMENT TRUST
---------------------------------
(Exact name of registrant as specified in its charter)
District of Columbia 52-0782497
-------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4800 Hampden Lane, Suite 500, Bethesda, Maryland 20814
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(301) 652-3360
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(Registrant's telephone number, including area code)
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 .
--- ---
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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 August 5. 1994
----------------------------- ------------------------------
Common Shares of Beneficial Interest 31,525,100
This report, including exhibits, contains 38 pages.
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FEDERAL REALTY INVESTMENT TRUST
S.E.C. FORM 10-Q
June 30, 1994
I N D E X
PART I. FINANCIAL INFORMATION PAGE NO.
Accountants' Report 4
Consolidated Balance Sheets 5
June 30, 1994 (unaudited) and
December 31, 1993 (audited)
Consolidated Statements of Operations (unaudited) 6
Six months ended June 30, 1994 and 1993
Consolidated Statements of Operations (unaudited) 7
Three months ended June 30, 1994 and 1993
Consolidated Statements 8
of Shareholders' Equity (unaudited)
Six months ended June 30, 1994 and 1993
Consolidated Statements of Cash Flows (unaudited) 9
Six months ended June 30, 1994 and 1993
Notes to Financial Statements 10-13
Management's Discussion and Analysis of 14-18
Financial Condition and Results of Operations
PART II. OTHER INFORMATION 19
Exhibits 21-38
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FEDERAL REALTY INVESTMENT TRUST
S.E.C. FORM 10-Q
June 30, 1994
PART I. FINANCIAL INFORMATION
The following financial information is submitted in response
to the requirements of Form 10-Q and does not purport to be
financial statements prepared in accordance with generally
accepted accounting principles since they do not include all
disclosures which might be associated with such statements. In
the opinion of management, such information includes all
adjustments, consisting only of normal recurring accruals,
necessary to a fair statement of the results for the interim
periods presented.
The balance sheet as of December 31, 1993 was audited by
Grant Thornton, independent public accountants, who expressed an
unqualified opinion on it in their report dated February 14,
1994. All other financial information presented is unaudited but
has been reviewed as of June 30, 1994 and for each of the six
months ended June 30, 1994 and 1993 by Grant Thornton whose report
thereon appears on Page 4. All adjustments and disclosures
proposed by them have been reflected in the data presented.
4
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Accountants' Review Report
--------------------------
Trustees and Shareholders
Federal Realty Investment Trust
We have reviewed the accompanying consolidated balance sheet of Federal
Realty Investment Trust as of June 30, 1994 and the related consolidated
statements of operations, shareholders' equity and cash flows for the six-
month periods ended June 30, 1994 and 1993, and the consolidated statements
of operations for the three-month periods ended June 30, 1994 and 1993.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993 and the
related consolidated statements of operations, shareholders' equity and cash
flows for the year then ended (not presented herein); and in our report
dated February 14, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of December 31, 1993
5
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is stated fairly, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
Grant Thornton
Washington, D.C.
August 5, 1994
6
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<TABLE>
<CAPTION>
Federal Realty Investment Trust
CONSOLIDATED BALANCE SHEETS
(see accountants' review report)
June 30, 1994 December 31, 1993
------------- -----------------
(unaudited)
ASSETS (in thousands)
<S>
Investments <C> <C>
Real estate, at cost $800,606 $758,088
Less accumulated depreciation and amortization (146,812) (135,045)
--------- ---------
653,794 623,043
Mortgage notes receivable 18,319 13,871
--------- ---------
672,113 636,914
Other Assets
Cash 12,462 9,635
Investments 3,696 4,008
7
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Notes receivable - officers 2,312 1,890
Accounts receivable 15,281 15,681
Prepaid expenses and other assets, principally
property taxes, insurance, and lease commissions 17,274 19,499
Debt issue costs (net of accumulated amortization of
$2,970,000 and $3,862,000, respectively) 3,075 3,316
------- -------
$726,213 $690,943
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases 136,829 137,308
Mortgages payable 103,270 81,237
Notes payable 23,569 30,519
Accrued expenses 8,928 19,104
Accounts payable 3,723 5,785
Dividends payable 12,282 10,927
Security deposits 2,560 2,430
Prepaid rents 1,414 1,783
5 1/4% Convertible subordinated debentures, due 2003 75,000 75,000
5 1/4% Convertible subordinated debentures, due 2002 289 40,167
Investors' interest in consolidated assets 2,508 2,484
8
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Commitments and contingencies
- -
Shareholders' equity
Common shares of beneficial interest, no par or stated
value, unlimited authorization, issued 31,551,964 and
28,077,999 shares, respectively 494,302 408,005
Accumulated dividends in excess of Trust net income (130,778) (116,823)
Allowance for unrealized loss on marketable
securities (486) (364)
--------- ---------
363,038 290,818
Less 60,200 common shares in treasury - at cost, and
subscriptions receivable (7,197) (6,619)
--------- ---------
355,841 284,199
--------- ---------
$726,213 $690,943
========= =========
The accompanying notes are an integral part of these
statements.
</TABLE>
9
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<TABLE>
<CAPTION>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
(see accountants' review report)
(unaudited)
Six months ended June 30,
1994 1993
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Revenue
Rental income $61,930 $50,725
Interest 2,037 2,056
Other income 2,519 2,307
-------- --------
66,486 55,088
Expenses
Rental 17,936 12,738
Real estate taxes 5,620 4,848
Interest 15,815 16,206
10
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Administrative 3,184 2,322
Depreciation and amortization 14,166 12,121
-------- --------
56,721 48,235
-------- --------
Operating income before investors' share of operations and
extraordinary item 9,765 6,853
Investors' share of operations (476) (480)
-------- --------
Income before extraordinary item 9,289 6,373
Extraordinary item
Net loss on early extinquishment of debt - (1,027)
-------- --------
Net Income $9,289 $5,346
======== ========
Weighted Average Number of Common Shares 29,760 26,135
======== ========
Earnings per share
Income before extraordinary item $0.31 $0.24
11
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Extraordinary item - (.04)
-------- --------
$0.31 $0.20
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
12
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<TABLE>
<CAPTION>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
(see accountants' review report)
(unaudited)
Three months ended June 30,
1994 1993
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Revenue
Rental income $30,449 $26,158
Interest 1,168 1,012
Other income 1,177 1,274
-------- --------
32,794 28,444
Expenses
Rental 7,824 6,684
Real estate taxes 2,761 2,450
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Interest 7,637 7,705
Administrative 1,803 1,297
Depreciation and amortization 7,269 6,185
-------- --------
27,294 24,321
-------- --------
Operating income before investors' share of operations and
extraordinary item 5,500 4,123
Investors' share of operations (294) (336)
-------- --------
Income before extraordinary item 5,206 3,787
Extraordinary item
Net loss on early extinquishment of debt - (962)
-------- --------
Net Income $5,206 $2,825
======== ========
Weighted Average Number of Common Shares 31,351 27,409
======== ========
Earnings per share
Income before extraordinary item $0.17 $0.14
14
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Extraordinary item - (0.04)
------- -------
$0.17 $0.10
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
15
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<TABLE>
<CAPTION>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(see accountants' review report)
(unaudited)
Six months ended June 30,
1994 1993
---------- --------- ----------- ----------
(In thousands, except share amounts) Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Common Shares of Beneficial Interest
Balance, beginning of period 28,077,999 $408,005 24,777,831 $322,903
Exercise of stock options 18,716 406 43,884 875
Shares issued under dividend
reinvestment plan 73,520 1,864 64,621 1,719
Conversion of 8 3/4% subordinated
debentures, net of costs of
$50,000 - - 137,364 2,209
Conversion of 5 1/4% subordinated
debentures, net 1,729 64
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Shares purchased under share
purchase plan 40,000 1,000
Net proceeds of public offering
and private placement 3,340,000 82,963 2,757,800 72,807
---------- ------- ---------- -------
Balance, end of period 31,551,964 $494,302 27,781,500 $400,513
========== ======= ========== =======
Common Shares of Beneficial Interest
in Treasury, Deferred Compensation
and Subscriptions Receivable
Balance, beginning of period (422,575) $(6,619) (426,575) $(6,708)
Amortization of deferred
compensation 27,875 422 2,000 45
Subscription of shares under share
purchase plan (40,000) (1,000) - -
-------- ------- --------- -------
Balance, end of period (434,700) $(7,197) (424,575) $(6,663)
========= ======= ========= =======
Allowance for Unrealized Loss on
Marketable Securities
Balance, beginning of period $(364) $(385)
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Unrealized (loss ) recovery (122) 38
----- -----
Balance, end of period $(486) $(347)
===== =====
Accumulated Dividends in Excess of
Trust Net Income
Balance, beginning of period $(116,823) $(92,932)
Net income 9,289 5,346
Dividends declared to shareholders (23,244) (20,264)
--------- --------
Balance, end of period $(130,778) $(107,850)
========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
18
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<TABLE>
<CAPTION>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF CASH FLOWS
(see accountants' review report)
(unaudited)
(In thousands)
Six months ended June 30,
1994 1993
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $9,289 $5,346
Adjustments to reconcile net income to net cash
provided by operations
Depreciation and amortization 14,166 12,121
Rent abatements in lieu of leasehold improvements,
net of tenant improvements retired (122) (594)
Imputed interest and amortization of debt cost 297 273
Amortization of deferred compensation and
forgiveness of officers' notes 300 296
Payment of trustees' fees in shares of beneficial
interest - 39
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Net loss on early extinguishment of debt - 1,027
Changes in assets and liabilities
(Increase) decrease in accounts receivable 400 (2,493)
Increase in prepaid expenses and other assets before
depreciation and amortization (631) (460)
(Decrease) increase in operating accounts payable,
security deposits and prepaid rent
(822) 1,141
Decrease in accrued expenses, net of the premium put on
the 5 1/4% convertible subordinated debentures
(2,014) (1,566)
------- -------
Net cash provided by operating activities 20,863 15,130
INVESTING ACTIVITIES
Acquisition of real estate (26,334) (43,491)
Capital expenditures (17,132) (14,213)
Net decrease (increase)in notes receivable (4,566) 21
Net decrease in temporary investments 190 30,418
-------- --------
Net cash used in investing activities (47,842) (27,265)
20
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FINANCING ACTIVITIES
Regular payments on mortgages, capital leases, and notes
payable
(1,018) (1,106)
Balloon payments on mortgages, including prepayment fees - (10,046)
Proceeds of mortgage financings, net of costs 22,500 -
Repayments of short-term debt, net (6,913) -
Redemption of 8 3/4% convertible debentures - (176)
Redemption of senior notes (50,505)
Redemption of 5 1/4% convertible subordinated debentures
including premium put (47,790)
Dividends paid (20,574) (17,877)
Issuance of shares of beneficial interest 83,577 73,582
Increase in minority interest 24 83
-------- --------
Net cash provided by (used in) financing activities 29,806 (6,045)
-------- --------
Increase (decrease) in cash 2,827 (18,180)
Cash at beginning of period 9,635 36,316
-------- --------
21
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Cash at end of period $12,462 $18,136
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
22
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Federal Realty Investment Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1994
(see accountants' review report)
(unaudited)
NOTE A - ACCOUNTING POLICIES AND OTHER DATA
Reference should be made to the notes to financial statements
included in the Annual Report to shareholders for the year ended December
31, 1993 which contain the Trust's accounting policies and other data.
NOTE B - DIVIDENDS PAYABLE
On June 2, 1994 the Trustees declared a cash dividend of $.39 per share,
payable July 15, 1994 to shareholders of record June 26, 1994.
NOTE C - REAL ESTATE
On April 15, 1994 the Trust purchased Idylwood Plaza in Fairfax, Virginia
for a cash price of $14.3 million. On April 29, 1994 the Trust purchased
North Lake Commons Shopping Center in Lake Zurich, Illinois for a cash price
of $10.8 million. A parcel of land with a grocery store adjoining the
Trust's Bala Cynwyd Shopping Center was also purchased on April 29, for a
cash price of $990,000.
NOTE D - MORTGAGE NOTES RECEIVABLE
On March 1, 1994 the Trust loaned $4.4 million to the lessor of Bethesda
Row. The note, which bears interest at 10.625%, is due in September, 1994
and is secured by a portion of Bethesda Row, the leasehold interest in
which was acquired by the Trust in December 1993.
23
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NOTE E - MORTGAGES PAYABLE
On January 31, 1994 the Trust placed with a bank a $22.5 million mortgage
on Northeast Plaza in Atlanta, Georgia. The mortgage, which matures on
January 31, 1995, originally bore interest at 150 basis points over LIBOR
(London Interbank Offered Rate). The interest rate was reduced to 100 basis
points over LIBOR as of April 7, 1994 provided that the Trust does not draw
over $15.0 million on its $20.0 million line of credit with the bank.
NOTE F - NOTES PAYABLE
In February 1994 the Trust obtained a $15.0 million revolving credit
facility with a bank, bringing the Trust's total availability of revolving
credit facilities to $85.0 million. All four facilities require fees and
have covenants requiring a minimum shareholders' equity and a maximum ratio
of debt to net worth. At June 30, 1994 there was $17.5 million outstanding
on these facilities. The average weighted interest rate on borrowings as of
June 30, 1994 was 4.6%. The maximum amount borrowed under these facilities
during the first six months of 1994 was $33.5 million.
NOTE G - 5 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
On April 30, 1994 $39.8 million of the Trust's 5 1/4% convertible
subordinated debentures due 2002 were redeemed at a redemption price equal
to 120% of their principal amount or $47.8 million. A principal amount of
$53,000 of these debentures were converted into 1,729 shares. There is
$289,000 left outstanding of this issue.
NOTE H - SHAREHOLDERS' EQUITY
On April 5, 1994 the Trust sold 840,000 shares at $25.875 to an
institutional investor, raising net proceeds of $21.7 million. In a
concurrent public offering, on April 6, 1994 the Trust sold 2.5 million
shares at $26 per share, raising net proceeds of $61.3 million.
On January 1, 1994 under the terms of the 1993 Long-Term Incentive Plan,
an officer of the Trust purchased 40,000 common shares at $25 per share with
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the assistance of a $1.0 million loan from the Trust. The loan, which has a
term of 12 years, bears interest at 6.24%. One-sixteenth of the loan will
be forgiven on January 31, 1995. Forgiveness of the remainder of the loan
is subject to the future performance of the Trust.
During the first six months of 1994, 18,716 shares were issued at prices
ranging from $20.50 a share to $22.63 a share as the result of the exercise
of stock options. The Trust accepted notes from its officers and employees
of $341,000 in connection with the issuance of certain of these shares.
NOTE I - INTEREST EXPENSE
The Trust incurred interest expense totaling $15.9 million during the
first six months of 1994 and $16.3 million during the first six months of
1993, of which $76,000 and $109,000, respectively, were capitalized.
Interest paid was $24.8 million in the first six months of 1994 and $17.7
million in the first six months of 1993.
NOTE J - COMMITMENTS AND CONTINGENCIES
The State of New Jersey Division of Taxation has assessed the Trust
$364,000 in taxes, penalty and interest for the years 1985 through 1990,
since the State has disallowed the dividends paid deduction in computing New
Jersey taxable income. The Trust is protesting this assessment since the
Trust believes that it is entitled to the deduction. At this time, the
outcome of this matter is unknown; however in a case involving another real
estate investment trust, the New Jersey tax court recently ruled that the
dividends paid deduction was allowable.
The Trust's non real estate investments consist of $401,000 of marketable
equity securities, at market, and $3.3 million of Olympia and York Senior
First Mortgage Notes. The Olympia & York notes were written down in 1992 to
management's best estimate of their net realizable value.
The North Carolina Department of the Environment, Health and Natural
Resources ("DEHNR") issued a Notice of Violation ("NOV") against a
drycleaner tenant at Eastgate Shopping Center in Chapel Hill, North Carolina
25
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concerning a spill at the shopping center. As owner of the shopping
center, the Trust was named in and received a copy of the NOV. Estimates to
remediate the spill range from $300,000 to $500,000. The Trust has entered
into an agreement with two previous owners of the shopping center to share
the costs to assess and remediate. In 1993 the Trust recorded a liability
of $120,000 as its estimated share of the clean up costs.
Contaminants at levels in excess of New Jersey cleanup standards were
identified at a shopping center in New Jersey. The Trust has retained an
environmental consultant to investigate the contamination. The Trust is
also evaluating whether it has insurance coverage for this matter. At this
time, the Trust is unable to determine what the range of remediation costs
might be. The Trust has also identified chlorinated solvent contamination
at two Virginia properties. In each case, the contamination appears to be
linked to the current and/or previous dry cleaner. The Trust intends to
look to the responsible parties for any remediation effort. Evaluation of
these situations is preliminary and it is impossible to estimate the range
of remediation costs, if any.
The Trust reserved $2.25 million at closing in 1993 for environmental
issues principally associated with Gaithersburg Square Shopping Center.
Pursuant to an indemnity agreement entered into with the seller at closing,
the Trust agreed to take certain actions with respect to identified
chlorinated solvent contamination. The seller indemnified the Trust for
certain third party claims and government requirements related to
contamination at adjacent properties.
At June 30, 1994 in connection with certain redevelopment projects, the
Trust is contractually obligated on contracts of approximately $9.8 million.
At June 30, 1994 the Trust is also contractually obligated under leases with
tenants to provide approximately $9.3 million for improvements.
NOTE K - COMPONENTS OF RENTAL INCOME
The components of rental income for the six months ended June 30 are as
follows:
26
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1994 1993
(in thousands)
Shopping Centers
Minimum rents $47,173 $38,939
Cost reimbursements 10,944 8,181
Percentage rents 2,649 2,448
Apartments 1,164 1,157
------- -------
$61,930 $50,725
======== =======
NOTE L - SUBSEQUENT EVENTS
On July 28, 1994 the Trust purchased the Garden Market Shopping Center in
suburban Chicago, Illinois for a cash price of $7.3 million.
27
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FEDERAL REALTY INVESTMENT TRUST
FORM 10-Q
JUNE 30, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Federal Realty meets its liquidity requirements through net cash provided
by operating activities, long-term borrowing through debt offerings and
mortgages, medium and short-term borrowing under lines of credit, and equity
offerings. Because all or a significant portion of the Trust's net cash
provided by operating activities is distributed to shareholders, capital
outlays for property acquisitions, renovation projects and debt repayments
require funding from borrowing or equity offerings.
During the first six months of 1994, the Trust purchased the 73,405
square foot Idylwood Shopping Center in Fairfax, Virginia, the 121,000
square foot North Lake Commons Shopping Center in suburban Chicago, Illinois
and a parcel of land adjacent to the Trust's Bala Cynwyd Shopping Center
containing a 36,370 square foot grocery store for a combined cash outlay of
$26.3 million. In July 1994 the Trust purchased the 125,747 square foot
Garden Market shopping center outside Chicago for a cash price of $7.3
million. During the first six months of 1994 the Trust also spent $17.1
million in improvements to its properties; included in these improvements
were $3.2 million, $2.3 million and $1.0 million towards the redevelopment
and retenanting of Ellisburg Shopping Center, Congressional Shopping Center
and Gaithersburg Square Shopping Center, respectively.
These acquisitions and renovations were funded by sales of equity and
additional borrowings. In April the Trust raised net proceeds of $83.0
million from a public offering of 2.5 million shares and a concurrent
private placement of 840,000 shares. In January 1994 the Trust placed a
$22.5 million one year mortgage on Northeast Plaza in Atlanta, Georgia.
Proceeds from these transactions were also used to redeem $39.8 million of
28
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the Trust's 5 1/4% convertible subordinated debentures due 2002 at a
redemption price equal to 120% of their principal or $47.8 million.
The Trust has available $85.0 million of unsecured medium-term revolving
credit facilities with four banks. The facilities, which require fees and
have covenants requiring a minimum shareholders' equity and a maximum ratio
of debt to net worth, are used to fund acquisitions and other cash
requirements until conditions are favorable for issuing equity or long-term
debt. At June 30, 1994 there was $17.5 million outstanding on these
facilities. The average weighted interest rate on borrowings through June
30, 1994 was 4.6%. The maximum amount borrowed under these facilities
during the first six months of 1994 was $33.5 million.
The Trust is committed under leases for approximately $9.3 million in
tenant work. In addition the Trust has budgeted approximately $16.1
million for the remainder of 1994 for improvements to its properties.
Furthermore, the Trust is actively seeking to acquire both existing shopping
centers and sites for development of new shopping centers. Accordingly
since the Trust has identified certain opportunities for development of new
shopping centers, the Trustees have amended the Bylaws to allow the Trust to
acquire raw land for the purpose of new development of shopping centers.
Management believes that carefully planned development can offer yields
that exceed the yields obtainable on the purchase of existing properties,
thereby compensating for the additional risk to the Trust. These
expenditures will be funded with the revolving credit facilities pending
their permanent financing with either equity or debt. The Trust believes
that the unencumbered value of its properties and its access to the capital
markets, as demonstrated by its past success in raising capital, give it the
ability to raise the capital, both debt and equity, needed to fund these
activities as well as its longer term growth and debt refinancing needs.
CONTINGENCIES
The State of New Jersey Division of Taxation has assessed the Trust
$364,000 in taxes, penalty and interest for the years 1985 through 1990,
since the State has disallowed the dividends paid deduction in computing New
Jersey taxable income. The Trust is protesting this assessment since the
29
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Trust believes that it is entitled to the deduction. At this time, the
outcome of this matter is unknown; however in a case involving another real
estate investment trust, the New Jersey tax court recently ruled that the
dividends paid deduction was allowable.
Included in the Trust's non real estate investments of $3.7 million is
$3.3 million of Olympia and York Senior First Mortgage Notes. The Olympia
and York notes were written down during 1992 to management's best estimate
of their net realizable value. Interest income on these notes is not being
recorded as revenue, but is being treated as a reduction of principal.
The North Carolina Department of the Environment, Health and Natural
Resources ("DEHNR") issued a Notice of Violation ("NOV") against a
drycleaner tenant at Eastgate Shopping Center in Chapel Hill, North Carolina
concerning a spill at the shopping center. As owner of the shopping center,
the Trust was named in and received a copy of the NOV. Estimates to
remediate the spill range from $300,000 to $500,000. The Trust has entered
into an agreement with two previous owners of the shopping center to share
the costs to assess and remediate. In 1993 the Trust recorded a liability
of $120,000 as its estimated share of the clean up costs.
Contaminants at levels in excess of New Jersey cleanup standards were
identified at a shopping center in New Jersey. The Trust has retained an
environmental consultant to investigate the contamination. The Trust is
also evaluating whether it has insurance coverage for this matter. At this
time, the Trust is unable to determine what the range of remediation costs
might be. The Trust has also identified chlorinated solvent contamination
at two Virginia properties. In each case, the contamination appears to be
linked to the current and/or previous dry cleaner. The Trust intends to
look to the responsible parties for any remediation effort. Evaluation of
these situations is preliminary and it is impossible to estimate the range
of remediation costs, if any.
The Trust reserved $2.25 million at closing in 1993 for environmental
issues principally associated with Gaithersburg Square Shopping Center.
Pursuant to an indemnity agreement entered into with the seller at closing,
30
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the Trust agreed to take certain actions with respect to identified
chlorinated solvent contamination. The seller indemnified the Trust of
certain third party claims and government requirements related to
contamination at adjacent properties.
RESULT OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1994 AND 1993
Funds from operations is defined as income before depreciation and
amortization and extraordinary items less gains on sale of real estate.
Management believes that funds from operations is an appropriate
supplemental measure of the Trust's operating performance because it
believes that reductions for depreciation and amortization charges are not
meaningful in evaluating income-producing real estate, which have
historically been appreciating assets. The Trust acquires, evaluates and
sells income-producing properties based upon operating income without taking
into account property depreciation and amortization charges and utilizes
funds from operations, together with other factors in setting shareholder
distribution levels. Gains on sale of real estate and extraordinary items
are also excluded from this supplemental measure of performance because such
amounts are not part of the ongoing operations of the Trust's portfolio.
Funds from operations does not replace net income as a measure of
performance or net cash provided by operating activities as a measure of
liquidity.
Funds from operations increased 27% to $23.5 million in the first half of
1994 from $18.5 million in the first half of 1993.
Rental income, which consists of minimum rent, percentage rent and cost
recoveries, increased 22% from $50.7 million in the first half of 1993 to
$61.9 million in the first half of 1994. If rental income is adjusted to
remove the effect of properties purchased in 1993 and 1994, it increased
5.2%, despite a $500,000 reduction in rental income at Congressional Plaza,
a large part of which has been vacated during its major redevelopment. A
major component of this 5.2% increase is cost recoveries, the increase in
which is due to recovery of the large increase in snow removal expense
during the first quarter of 1994.
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Other income which includes items which tend to fluctuate from period to
period, such as utility reimbursements, telephone income, merchant
association dues, lease termination fees, late fees and temporary tenant
income, has increased from $2.3 million in 1993 to $2.5 million in 1994
because of the 1993 and 1994 acquisitions.
Rental expenses have increased from $12.7 million in the first half of
1993 to $17.9 million in the first half of 1994. This increase results
primarily from new acquisitions and from an increase of over $1.5 million in
snow removal expenses during the winter of 1994. Real estate taxes have
increased because of the 1993 and 1994 acquisitions. Depreciation and
amortization charges increased because of the 1993 acquisitions but also
because of depreciation on recent tenant work and property improvements.
Administrative expenses are increasing as the Trust grows and as it seeks
new acquisition and development opportunities. A major component of the
increase in 1994 over 1993 is the write off of costs connected with
acquisition projects that will not be purchased.
Interest expense has decreased from $16.2 million during the first six
months of 1993 to $15.8 million during the comparable period of 1994.
Decreases in interest expense resulting from the repayment of several
mortgages and the senior notes in 1993 and the redemption on April 30, 1994
of the 5 1/4% convertible debentures due 2002 are mostly offset by
increases in interest because of the issuance of the 5 1/4% convertible
subordinated debentures due 2003, because of the interest portion of the
capital lease payment on Bethesda Row, and because of interest on increased
usage of the revolving credit facilities.
Income before extraordinary item increased from $6.4 million during the
first six months of 1993 to $9.3 million in the comparable period of 1994
primarily due to increased revenue from the Trust's new acquisitions.
During the first half of 1993 the Trust incurred losses on the early
extinguishment of debt of $1.0 million due to the prepayment of two
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mortgages and the redemption of its 8 3/4% convertible subordinated
debentures and senior notes.
As a result of the foregoing items, primarily the increases in property
income, net income rose from $5.3 million in the first half of 1993 to $9.3
million in the first half of 1994.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1994 AND 1993
Funds from operations increased $2.5 million from $10.0 million in the
second quarter of 1993 to $12.5 million in the second quarter of 1994.
Rental income increased from $26.2 million in the second quarter of 1993 to
$30.4 million in the comparable period of 1994 due to the 1993 and 1994
acquisitions. If the contribution of the new acquisitions is excluded,
rental income decreased $200,000 because of the loss of rental income while
Congressional Plaza is being renovated.
Rental expenses increased from $6.7 million during the second quarter of
1993 to $7.8 million during the same period of 1994, because of the 1993 and
1994 acquisitions. Real estate taxes also rose from 1993 to 1994 because of
the recent acquisitions. If the properties acquired in 1993 and 1994 are
excluded, rental expenses and real estate taxes both declined slightly. The
1993 and 1994 acquisitions were the primary cause of the increase in
depreciation and amortization expense, followed by increased depreciation on
recent tenant work and renovations.
Interest expense has remained approximately the same between the second
quarter of 1994 and 1993 at $7.6 million and $7.7 million, respectively.
Decreases in interest expense resulting from the repayment of several
mortgages and the senior notes in 1993 and the redemption on April 30, 1994
of the 5 1/4% convertible debentures due 2002 are offset by increases in
interest because of the issuance of the 5 1/4% convertible subordinated
debentures due 2003, because of the interest portion of the capital lease
payment on Bethesda Row, and because of interest on increased usage of the
revolving credit facilities.
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Administrative expenses are increasing as the Trust grows and as it seeks
new development and acquisition opportunities. During the second quarter of
1994, a major component of the increase in 1994 administrative expense over
1993 expenses is the write off of costs connected with acquisition projects
that will not be purchased.
During the second quarter of 1993 the Trust incurred costs on the early
extinguishment of debt, resulting from the early redemption of its senior
notes and from the prepayment of a mortgage.
As a result of the foregoing items, primarily the 1993 and 1994
acquisitions, net income rose from $2.8 million for the second quarter of
1993 to $5.2 million for the second quarter of 1994.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Shareholders
At the 1994 Annual Meeting of Shareholders on May 4, 1994, the
Shareholders elected three Trustees to serve for the ensuing three years.
Holders of 21 million shares voted for each of the three Trustees and
holders of approximately 100,000 shares voted against each of the three
Trustees.
At the 1994 Annual Meeting, the Shareholders also voted on a shareholder
proposal to limit compensation payable by the Trust based upon a comparison
to the President of the United States. Holders of 2.6 million shares voted
for the proposal, holders of 13.6 million shares voted against and holders
of 4.0 million shares abstained or did not vote.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
3(ii). By-Laws of Federal Realty Investment Trust, amended
August 3, 1994.
(B) Reports on Form 8-K
None.
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Pursuant to the requirements 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.
FEDERAL REALTY INVESTMENT TRUST
-------------------------------
(Registrant)
Date: August 9, 1994 Steven J. Guttman
------------- ----------------------------
Steven J. Guttman, President
(Chief Executive Officer)
Date: August 9, 1994 Cecily A. Ward
------------- ------------------------------
Cecily A. Ward
(Principal Accounting Officer)
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BYLAWS OF
FEDERAL REALTY INVESTMENT TRUST
ARTICLE I. SHAREHOLDERS
Section 1.1. Notice of Shareholder Meetings. Notice of each annual
meeting of shareholders, stating the date, place and purposes of the
meeting, shall be given by the President to each shareholder at least ten
(10) days and not more than sixty (60) days before any such meeting. Notice
for any special meeting of shareholders shall be sent within a reasonable
period of time after the request for such meeting has been made in
accordance with the requirements set forth in the Declaration of Trust and
shall be held at such place and on such date as the Trustees shall designate
in the notice.
Section 1.2. Adjourned Meetings of Shareholders. Any meeting of
shareholders may be adjourned from time to time by a majority of the votes
properly cast upon the matter, whether or not a quorum is present, and such
meeting may be reconvened without notice other than that given at such
meeting. At any reconvened session of the meeting at which there shall be a
quorum any business may be transacted which might have been transacted at
the meeting as originally noticed.
Section 1.3. Voting by Proxy. At any meeting of shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. Such proxy shall be filed with the
Trust before or at the time of the meeting. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless otherwise
provided in the proxy.
Section 1.4. Inspectors of Election. In advance of any meeting of
shareholders, the Board of Trustees may appoint any person other than a
nominee for Trustee as an inspector of election to act at such meeting or
any adjournment thereof. The number of inspectors shall be either one (1)
or three (3). Any such appointment shall not be altered at the meeting for
which such appointment has been made. If inspector(s) of election are not
so appointed, the President may, or on the request of the holders of not
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less than ten percent (10%) of the Shares present in person or by proxy at
the meeting and entitled to vote thereat, the President shall, make such
appointment at the meeting. If inspector(s) are appointed at the meeting
upon request of the shareholders, the majority of votes cast shall determine
whether one (1) or three (3) inspectors are to be appointed. In case any
person appointed as inspector fails to appear or fails or refuses to act as
an inspector, the vacancy may be filled by appointment by the Board of
Trustees in advance of the meeting or at the meeting by the President.
The duties of such inspector(s) shall include: determining the number of
Shares outstanding and the voting power of each Share, the Shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies; receiving votes, ballots or consents;
hearing and determining all challenges and questions in any way arising in
connection with rights to vote; counting and tabulating all votes, ballots
or consents; determining the result of any vote; and such other acts as may
be proper to conduct the election or vote with fairness to all shareholders.
Section 1.5. Notice of Shareholder Proposals. (a) At an annual meeting
of the shareholders, only such business shall be conducted and only such
proposals shall be acted upon as shall have been brought before the annual
meeting (i) by, or at the direction of, the Board of Trustees or (ii) by any
shareholder of record of the Trust who complies with the notice procedures
set forth in this Section 1.5 of these Bylaws. For a proposal to be
properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
Trust. To be timely, a shareholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Trust not less than
sixty (60) days nor more than ninety (90) days prior to the anniversary date
of the prior annual meeting. A shareholder's notice to the Secretary shall
set forth as to each matter the shareholder proposes to bring before the
annual meeting (i) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at
the annual meeting, (ii) the name and address, as they appear on the Trust's
books, of the shareholder proposing such business and any other shareholders
known by such shareholder to be supporting such proposal, (iii) the class
and number of Shares of the Trust which are beneficially owned by the
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shareholder on the date of such shareholder notice and by any other
shareholders known by such shareholder to be supporting such proposal on the
date of such shareholder notice, and (iv) any financial interest of the
shareholder in such proposal.
(b) If the presiding officer of the annual meeting determines that a
shareholder proposal was not made in accordance with the terms of this
Section 1.5, he shall so declare at the annual meeting and any such proposal
shall not be acted upon at the annual meeting.
(c) This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers of the Trust or
Trustees and committees of the Board of Trustees, but, in connection with
such reports, no business shall be acted upon at such annual meeting unless
stated, filed and received as herein provided in this Section 1.5.
(d) Any shareholder seeking to bring a proposal before an annual meeting
of the Trust shall continue to be subject, to the extent applicable, to the
requirements of Section 14(a) of the Securities Exchange Act of 1934, as
amended, and the regulations thereunder, as well as the requirements of this
Section 1.5 and Section 7.2 of the Declaration of Trust.
Section 1.6. Record Date for Consent Solicitation. In order that the
Trust may determine the shareholders entitled to consent to action in
writing without a meeting, the Board of Trustees may fix a record date,
which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Trustees, and which date
shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Trustees. Any
shareholder of record seeking to have the shareholders authorize or take
action by written consent shall, by written notice to the Secretary of the
Trust, request the Board of Trustees to fix a record date. The Board of
Trustees shall promptly, but in all events within ten (10) days of the date
on which such a request is received, adopt a resolution fixing the record
date. If no record date has been fixed by the Board of Trustees within ten
(10) days of the date on which such a request is received and no prior
action by the Board of Trustees is required by applicable law, the record
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date for determining shareholders entitled to consent to action in writing
without a meeting shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Trust by delivery to its registered office in the District of Columbia, its
principal place of business, or an officer or agent of the Trust having
custody of the book in which proceedings of shareholders meetings are
recorded, in each case to the attention of the Secretary of the Trust.
Delivery shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Trustees within
ten (10) days of the date on which such a request is received and prior
action by the Board of Trustees is required by applicable law, the record
date for determining shareholders entitled to consent to action in writing
without a meeting shall be at the close of business on the date on which the
Board of Trustees adopts the resolution taking such prior action.
ARTICLE II. TRUSTEES
Section 2.1. Regular Meetings of Trustees. A regular meeting of the
Board of Trustees shall be held without further notice than this Bylaw on
the same day as the annual meeting of shareholders either at the same place
as such meeting or at the Trust's principal offices. The Board of Trustees
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than the adoption of such resolutions.
Section 2.2. Adjourned Meetings of Trustees. Any meeting of the
Trustees may be adjourned from time to time by a vote of the majority of
Trustees present at such meeting, whether or not a quorum is present, and
such meeting may be reconvened without notice other than that given at such
meeting. At any reconvened session of a meeting at which there shall be a
quorum any business may be transacted which might have been transacted at
the meeting as originally noticed.
Section 2.3. Presumption of Assent. A Trustee who is present at a
meeting of the Board of Trustees at which action on any matter is taken
shall be presumed to have assented to the action taken unless he shall have
requested the secretary of the meeting to enter his dissent or abstention in
the minutes of the meeting.
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Section 2.4. Trustee Nominations. Nominations for the election of
Trustees may be made by the Board of Trustees or a nominating committee
appointed by the Board of Trustees or by any shareholder entitled to vote in
the election of Trustees generally. However, any shareholder entitled to
vote in the election of Trustees generally may nominate one or more persons
for election as Trustees at a meeting only if written notice of such
shareholder's intent to make such a nomination or nominations has been
given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Trust not later than (i) with respect to an
election to be held at an annual meeting of shareholders, ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting,
and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of Trustees, the close of business on the
tenth (10th) day following the date on which notice of such meeting is first
given to shareholders. Each such notice shall set forth: (a) the name and
address of the shareholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of shares of the Trust entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description
of all arrangements or understandings between the shareholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission
as then in effect; and (e) the consent of each nominee to serve as a
Trustee of the Trust if so elected. The presiding officer of the meeting
may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
ARTICLE III. OFFICERS
Section 3.1. Election. The officers of the Trust shall be elected
by the Trustees. There shall be a President and a Secretary, in each case
elected by the Trustees. In addition, the Trustees may also elect such
additional officers, including vice-presidents, one (1) or more assistant
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secretaries, a treasurer and one (1) or more assistant treasurers, as they
may designate. All officers of the Trust shall exercise such powers and
perform such duties as the Trustees may determine from time to time, in
addition to those provided in these Bylaws. The President shall be a
Trustee, but no other officers need be Trustees.
Section 3.2. Term of Office. The officers of the Trust shall be
elected by the Trustees at such intervals as the Trustees may determine, and
shall hold office until death, resignation of removal, or until their
successors are elected and qualify. Any officer may be removed at any time
by the affirmative vote of two-thirds of the full Board of Trustees taken at
any regular or special meeting of the Trustees, without prejudice to any
contractual rights which such officer may have. Any vacancy occurring in
the office of President of the Trust shall be filled by the Trustees.
Section 3.3. President. The President, who shall be a Trustee,
shall be the chief executive officer of the Trust, shall preside at all
meetings of the shareholders and of the Trustees, shall have general
management and supervision of the business and affairs of the Trust, and
shall see that all orders and resolutions of the Trustees are carried into
effect. The President shall have the authority to execute bonds, mortgages,
documents and other contracts of the Trust, and the power to delegate such
authority to other officers of the Trust on the terms and under the
circumstances as he shall determine.
Section 3.4. Secretary. The Secretary shall keep minutes of all
meetings of the Trustees, shall have custody of the seal of the Trust, and
generally shall perform the duties usually performed by a secretary of a
corporation, including certifying as to Trust resolutions and other
documents.
Section 3.5. Succession. The Trustees shall from time to time
determine the order in which officers of the Trust shall, in the absence or
disability of the President, perform the duties and exercise the powers of
the President, except that if any such officer is not a Trustee, he shall
not preside at meetings of the shareholders or of the Trustees.
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ARTICLE IV. INVESTMENTS
Section 4.1. Restrictions on Investments. The Trust shall not:
(a) invest in commodities, foreign currencies of chattels, except as
required in the day-to-day business of the Trust or in connection with its
investments;
(b) invest in contracts for sale of Real Property in excess of a value
of one percent (1%) of all of the Trust's Property; provided, however, that
nothing in this Section 4.1. shall prevent the holding of contracts of sale
as security for loans made by the Trust and the ownership of such contracts
of sale upon foreclosure of, or realization upon, such security interests,
and contracts of sale so held or owned shall be excluded from the
computation required by this Section 4.1(b);
(c) engage in any short sale;
(d) engage in trading as compared with investment activities, or
engage in the business of underwriting or agency distribution of Securities
issued by others; provided that this prohibition shall not prevent the Trust
from acquiring Securities as permitted herein, in circumstances where if
such Securities were sold the Trust might be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933 and the rules and
regulations thereunder, and provided further that this prohibition shall not
prevent the Trust from selling participations in Mortgage loans or interests
in Real Property;
(e) hold property primarily for sale to customers in the ordinary
course of the trade or business of the Trust, but this prohibition shall not
be construed to deprive the Trust of the power to sell any property
(including divided or undivided interests in such property) which it owns at
any time;
(f) invest more than ten percent (10%) of the total value of the
Trust's Property in the ownership of, or participations in the ownership of,
unimproved non-income-producing Real Property, or in Mortgage loans (other
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than development or construction loans) secured by Mortgages upon unimproved
non-income-producing Real Property, excluding Real Property which is being
developed or will be developed within a reasonable period;
(g) invest more than ten percent (10%) of the total value of the
Trust's Property in junior Mortgage loans, including wraparound Mortgage
loans but excluding junior Mortgage loans where the Trust either holds a
first Mortgage loan on Real Property subject to the junior Mortgage loan in
question, or a participation in a first Mortgage loan thereon which is pro
rata no less than the participation of the Trust in the junior Mortgage loan
in question;
(h) invest in equity Securities (except Securities acquired as
additional consideration in connection with Mortgage loans made by the Trust
or leases of Real Property owned by the Trust) issued by any corporation or
other trust which, to the actual knowledge of the Trustees, is then holding
investments or engaging in activities prohibited to the Trust;
(i) invest in bullion;
(j) enter into contracts or other documents evidencing obligations of
the Trust unless such contract complies with Section 8.3 of the Declaration
of Trust;
(k) issue debt Securities (other than: (a) commercial paper having a
maturity not in excess of two hundred seventy (270) days from its issuance,
or (b) Securities issued in a transaction exempt from registration under the
Securities Act of 1933, as from time to time amended, as a transaction by an
issuer not involving any public offering) unless the historical cash flow,
or the substantiated future cash flow of the Trust, giving effect to the
receipt of and investment of the proceeds of the offering of debt Securities
(excluding in each case extraordinary items), is sufficient in the opinion
of the Trustees to cover the interest on such debt Securities. The Trustees
shall receive and may rely upon a certificate of a financial officer of the
Trust as to the computations contemplated by the preceding sentence prior to
issuing such debt Securities;
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(l) invest in any Real Property which is subject to a Mortgage or
other encumbrance to other than a bank, insurance company, pension fund,
institutional lender or corporation engaged in the business of Mortgage
investments, except in the case of a purchase money Mortgage;
(m) invest in any Mortgage on unimproved Real Property or in any
Mortgage other than a first Mortgage not in a greater percentage of value as
confirmed by a competent independent appraiser, than permitted under local
law to a savings and loan association.
Section 4.2. Investment Criteria. The following are the
Investment Criteria of the Trust:
(a) Shopping Centers - The minimum size for a shopping center is one
hundred thousand (100,000) square feet, unless the center is adjacent to an
existing Trust property or part of a multiple property purchase.
(b) Apartment Buildings - The minimum size for an apartment building
is two hundred (200) units.
(c) Geographic Limitations - Investments will only be made in
properties located within a fifty (50) mile radius of major metropolitan
areas east of the Mississippi River with a minimum population of one hundred
fifty thousand (150,000), except for apartment buildings which will only be
acquired within a two hundred (200) mile radius of Washington, D.C.
(d) New Development of Shopping Centers - New development of shopping
centers is authorized and raw land may be acquired for the sole purpose of
new development of shopping centers.
(e) Partial Interest - No less than a fifty-one percent (51%) interest
in any property will be acquired, unless such lesser interest has total
control over financing, operations, sale, and other matters relating to the
business conducted on the property.
Any person covered by Section 8.9 of the Declaration of Trust who
desires to acquire a property which meets the Investment Criteria of the
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Trust must either notify the President of the Trust of the proposed
acquisition so that it may be considered at the next regularly scheduled or
special meeting of the Trustees or include in the purchase contract relating
to such property a stipulation that the Trust has the right of first refusal
regarding the property and may be the purchaser.
ARTICLE V. GENERAL PROVISIONS
Section 5.1. Capitalized Terms. Except as otherwise provided herein,
the capitalized terms used in these Bylaws shall have the same meanings in
Section 1.4 of the Trust's Third Amended and Restated Declaration of Trust.
Section 5.2. Amendment. These Bylaws may be amended, modified,
repealed, or added to only by vote of at least two-thirds (2/3) of the
Trustees, such vote to be given at a meeting of the Trustees for which at
least forty-eight (48) hours notice was given specifying the proposed change
to these Bylaws, unless such change is approved by the written consent of
all of the Trustees.
Section 5.3. Severance. All provisions of these Bylaws shall be
construed, insofar as possible, as supplemental to and consistent with the
Declaration of Trust. If any Section, clause or provision of these Bylaws,
or the application thereof, shall be held to be invalid by any federal or
state court having jurisdiction over the issue, such invalidity shall not
affect any other Section, clause or provision of these Bylaws or their
application, except to the extent necessary to comply with the determination
of such court.
Section 5.4. Lost, Mutilated or Destroyed Certificates. The Trust
shall issue a new certificate to replace a previously issued certificate
which has been lost, mutilated or destroyed upon receipt of an affidavit
from the registered owner of such certificate reciting the facts and
circumstances regarding such loss, mutilation or destruction and a bond
sufficient to indemnify the Trust against any claim that may be made against
it on account of such loss, mutilation or destruction.
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Section 5.5. Inspection of Trust Records. The share register, the
books of accounts and the minutes of the proceedings of the Trust's
shareholders and its Trustees shall be open at any reasonable time during
normal business hours upon the demand of any person who is the record owner
of ten percent (10%) or more of the outstanding Shares. Such inspection may
be made in person or by an agent or attorney and only for a purpose
reasonably related to such shareholder's interests as a shareholder. Demand
of inspection other than at a shareholder's meeting shall be made in writing
delivered to the Trust.
Section 5.6. Effective Date. These Bylaws have been adopted by
the Trustees effective at the close of business on February 11, 1985.
Amended on: April 28, 1986
September 10, 1990
August 3, 1994
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