<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 24, 1997
EASTGROUP PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-7094 13-2711135
(Commission File Number) (IRS Employer Identification No.)
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
P.O. BOX 22728
JACKSON, MISSISSIPPI 39225-2728
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (601) 354-3555
(Former name or former address, if changed since last report)
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FORM 8-K
EASTGROUP PROPERTIES, INC.
ITEM 2. ACQUISITION OF ASSETS
On September 24, 1997, EastGroup Properties, Inc. ("EastGroup" or the "Company")
purchased a portfolio of four industrial properties (14 buildings) totaling
1,692,000 square feet located in Jacksonville, Florida and New Orleans,
Louisiana for a total purchase price of $50,237,000 including closing costs.
EastGroup's acquisition was funded with cash and two first mortgage loans
totaling $45,000,000 at 9.25% interest lent by Meridian Industrial Trust, Inc.
to EastGroup. EastGroup intends to repay this debt which matures on December
31, 1997 through its existing bank lines or with other capital.
The Jacksonville Portfolio consists of six bulk distribution warehouse buildings
containing 839,000 square feet located on the west side of the city. The
buildings, constructed from 1977 to 1991, range in size from 84,000 square feet
to 202,000 square feet. The properties are currently 86% leased to six tenants,
however, announced lease terminations will reduce occupancy to 73% by the end of
the year with an additional three leases totaling 306,060 square feet or 36.5%
of the portfolio expiring in 1998. EastGroup intends to complete a variety of
improvements to the Jacksonville Portfolio and concurrently implement an
aggressive marketing program.
The New Orleans Portfolio consists of 853,000 square feet of which 769,000
square feet (90%) is bulk distribution and 84,000 square feet (10%) is service
center space. The buildings, which are located in two different complexes near
the New Orleans airport, were constructed from 1979 to 1984. The New Orleans
Portfolio is 95% leased to 35 tenants. EastGroup intends to complete nominal
improvements to the New Orleans properties.
Management believes that the average rental rates of the leases for both
portfolios approximate market rates. Other than the vacancy risk discussed above
in conjunction with the Jacksonville Portfolio, EastGroup is not aware of any
material factors relating to the two portfolios that would cause the reported
financial information not to be necessarily indicative of future operating
results.
ITEM 5. OTHER EVENTS
Subsequent to the year ended December 31, 1996, EastGroup has purchased or has
contracted to purchase the following properties.
<TABLE>
<CAPTION>
Acquisition Number of Square Acquisition % leased at
Date Property Location Buildings feet Costs acquisition
- ------------------- ----------------------- ------------------- --------------- -------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
3/20/97 Interchange A Jackson, MS 1 33,000 $1,091,000 86%
4/30/97 Palm River Tampa, FL 1 72,000 2,671,000 78%
Distribution Center I
5/2/97 West Loop Business Houston, TX 1 77,000 2,942,000 100%
Park II
5/9/97 Lockwood Houston, TX 3 392,000 6,183,000(1) 100%
Distribution Center
6/13/97 Interchange D Jackson, MS 1 67,000 3,052,000(1) 100%
6/23/97 Cypress Creek Fort Lauderdale, FL 2 56,000 2,450,000 92%
Business Park
6/23/97 Yankee Boulevard Fort Lauderdale, FL 3 118,000 3,481,000 80%
Industrial Park
7/16/97 Senator Street Memphis, TN 2 80,000 2,715,000(1) 100%
Distribution
Center
</TABLE>
2
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
7/22/97 Chamberlain Tucson, AZ 1 120,000 4,077,000(1) 100%
Distribution Center
7/31/97 35th Avenue Phoenix, AZ 1 124,000 2,800,000 100%
Distribution Center
8/19/97 Washington Santa Fe Springs, CA 1 141,000 6,608,000 62%
Distribution Center
8/21/97 San Clemente
Distribution Center Hayward, CA 1 81,000 2,891,000 100%
9/24/97 Jacksonville Properties Jacksonville, FL 6 839,000 20,854,000(1) 97%
9/24/97 New Orleans Properties New Orleans, LA 8 853,000 29,383,000(1) 95%
Under Butterfield Trail El Paso, TX 7 671,000 19,840,000(1) N/A
Contract Industrial Park
Under Southbay San Diego, CA 1 191,000 10,009,000(1) N/A
Contract Industrial Center
Under Dolton Dallas, TX 3 99,000 2,395,000 N/A
Contract Distribution Center
Under 109th Street Dallas, TX 1 54,000 1,020,000 N/A
Contract Distribution Center
Under Interchange B Jackson, MS 1 27,000 1,210,000 N/A
Contract
Under 56th Street Tampa, FL 1 25,000 889,000 N/A
Contract Commerce Park
-------------- ------------------
4,120,000 $126,561,000
============== ==================
</TABLE>
(1) The summary of gross income and direct operating expenses for these
acquisitions and proposed acquisitions has been audited for the most
recent fiscal year and the audited financial statements are included
herein as part of Item 7. Additionally, these properties are included in
the unaudited pro forma consolidated financial statements, filed
herewith. A description of these transactions is presented below.
Lockwood Distribution Center, which was built in 1968-69, is an institutional
quality bulk distribution facility that is located near major interstates on the
east side of Houston. Lockwood is leased to a single tenant through December
2010. Interchange D was constructed in 1989 as part of a four building
industrial park which includes Interchange A also owned by the Company. The
facility competes in the south Jackson market and currently remains 100% leased
to eight tenants. Senator Street Distribution Center was built in 1982 and is
located just east of the Memphis Airport with excellent access to major
interstates in the area. Senator Street remains 100% occupied by fourteen
tenants. Chamberlain Distribution Center, which was built in 1994, is a front
load warehouse that competes in the southern Tucson market. The complex is
leased to a single tenant through August 2001.
The $91,198,000 of completed purchases above were bought with funds obtained
under a line of credit with a local commercial bank with an interest rate of
LIBOR plus 1.75% and the two first mortgage loans totalling $45,000,000
discussed in Item 2.
EastGroup has a signed contract to acquire the Butterfield Trail Industrial
Park, a portfolio of seven distribution buildings built from 1981 to 1996. The
portfolio is located adjacent to the El Paso International Airport in central El
Paso. In fact, the seven buildings are affixed to land leased from the city of
El Paso. The earliest land lease expiration has 53 years remaining including
renewal options. The process of obtaining the land lease assignments and any
necessary lease extensions is ongoing at present. Butterfield Trail is comprised
of both single and multi tenant buildings, all of which are institutional
quality. The seven complexes are currently 100% occupied by nineteen tenants.
The Company also has a contract to purchase Southbay Industrial Center which
competes in the southern suburban San Diego market. Built in 1988, the complex
is 100% leased to 3 tenants. The Company anticipates funding these two proposed
acquisitions with cash reserves, or if necessary, with funds obtained under a
line of credit with a local commercial bank with an interest rate of LIBOR plus
1.75%.
Management believes that the average rental rates of the leases approximate
market rates and the trust expects minimal capital expenditures. EastGroup is
not aware of any material factors relating to the acquisitions and probable
acquisitions that would cause the reported financial information not to be
necessarily indicative of future operating results.
On August 28, 1997 EastGroup filed a Schedule 13D with the Securities and
Exchange Commission indicating its recent acquisition of 1,449,956 preferred
shares of Meridian Point Realty Trust VIII Co. (AMEX:MPHpr) at an average price
of
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<PAGE> 4
approximately $9.47 per preferred share. EastGroup indicated in its Schedule 13D
filing that it is currently reviewing Meridian VIII's business and assets and,
as a part of this review, EastGroup intends to discuss with Meridian VIII's
management Meridian VIII's strategic alternatives. EastGroup has not yet
formulated a definitive proposal with respect to any possible business
combination or offer. As EastGroup's review of Meridian VIII is continuing,
there can be no assurance that any business combination, tender offer or similar
transaction will be consummated.
Dispositions subsequent to the year ended December 31, 1996 for EastGroup
include the Santa Fe Energy Building on July 31, 1997, its 77.78% interest in
Liberty Corners Shopping Center on August 29, 1997 and its 50% interest in
Cowesett Corners Shopping Center on September 16, 1997. The unaudited pro forma
consolidated financial statements filed herewith also reflect these
transactions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
The following audited financial statements are filed herewith.
<TABLE>
<CAPTION>
LOCKWOOD DISTRIBUTION CENTER PAGE
- ---------------------------- ----
<S> <C>
Independent Auditors' Report 7
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 8
Notes to Historical Summary of Gross Income and Direct Operating Expenses 9
INTERCHANGE D PAGE
- ------------- ----
Independent Auditors' Report 11
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 20, 1996 and six months ended
June 20, 1997 (unaudited) 12
Notes to Historical Summary of Gross Income and Direct Operating Expenses 13
SENATOR STREET DISTRIBUTION CENTER PAGE
- ---------------------------------- ----
Independent Auditors' Report 15
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 16
Notes to Historical Summary of Gross Income and Direct Operating Expenses 17
CHAMBERLAIN DISTRIBUTION CENTER PAGE
- ------------------------------- ----
Independent Auditors' Report 18
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 19
</TABLE>
4
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<TABLE>
<S> <C>
Notes to Historical Summary of Gross Income and Direct Operating Expenses 20
JACKSONVILLE AND NEW ORLEANS PROPERTIES
- ---------------------------------------
PAGE
Independent Auditors' Report 22
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 23
Notes to Historical Summary of Gross Income and Direct Operating Expenses 24
BUTTERFIELD TRAIL INDUSTRIAL PARK PAGE
- --------------------------------- ----
Independent Auditors' Report 26
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 27
Notes to Historical Summary of Gross Income and Direct Operating Expenses 28
SOUTHBAY INDUSTRIAL CENTER
- --------------------------
PAGE
Independent Auditors' Report 31
Historical Summary of Gross Income and Direct Operating Expenses - for the
year ended December 31, 1996 and six months ended
June 30, 1997 (unaudited) 32
Notes to Historical Summary of Gross Income and Direct Operating Expenses 33
(B) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
The following unaudited Pro Forma Consolidated Financial Statements are filed
herewith:
EASTGROUP PROPERTIES, INC.
- --------------------------
Pro Forma Consolidated Balance Sheet (Unaudited) - as of June 30, 1997 35
Notes to Pro Forma Consolidated Balance Sheet
(Unaudited) - as of June 30, 1997 36
Pro Forma Consolidated Statement of Operations (Unaudited) - for the six
months ended June 30, 1997 37
Notes to Pro Forma Consolidated Statement of
Operations (Unaudited) - for the six
months ended June 30, 1997 38
Pro Forma Consolidated Statement of Operations (Unaudited) - for the year
ended December 31, 1996 40
Notes to Pro Forma Consolidated Statement of Operations (Unaudited) - for the
year ended December 31, 1996 42
</TABLE>
(C) EXHIBITS.
The following exhibit is included herein:
10(a) Purchase Agreement for Jacksonville and New Orleans Properties
23(a) Consent of Independent Auditors
5
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FORM 8-K
SIGNATURES
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 hereunto duly authorized.
EastGroup Properties, Inc.
(Registrant)
Dated: September 24, 1997 By: /s/ Keith McKey N.
Keith McKey, CPA
Executive Vice-President,
Chief Financial Officer,
and Secretary
/s/ Diane W. Hayman
Diane W. Hayman, CPA
Controller
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INDEPENDENT AUDITORS' REPORT
LOCKWOOD DISTRIBUTION CENTER:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Lockwood Distribution Center (the
Property) for the year ended December 31, 1996. This Historical Summary is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Lockwood Distribution Center for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
June 6, 1997
7
<PAGE> 8
LOCKWOOD DISTRIBUTION CENTER
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED JUNE
31,1996 30, 1997
------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Gross income:
Base rental income $843 439
Tenant expense reimbursements 26 13
---- ----
869 452
---- ----
Direct operating expenses:
Real estate taxes 135 67
Management fees 28 16
Insurance 16 8
Repairs and maintenance 20 6
Miscellaneous 1 1
---- ----
200 98
---- ----
Excess of gross income over direct operating expenses $669 354
==== ====
</TABLE>
See accompanying notes to historical summary.
8
<PAGE> 9
LOCKWOOD DISTRIBUTION CENTER
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Lockwood Distribution Center ("Lockwood"), is a warehouse complex
located in Houston, Texas. Lockwood is comprised of three buildings with a total
of approximately 392,000 square feet of leasable space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying
with Rule 3-14 of the Securities and Exchange Commission Regulation S-X (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) and is not a complete presentation of Lockwood's revenues
and expenses. The historical summary has been prepared using the accrual basis
of accounting.
The accompanying interim unaudited historical summary has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments and
eliminations (consisting only of normal recurring adjustments) necessary to
present fairly the historical summary for the six months ended June 30, 1997,
have been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
Management of Lockwood has made estimates and assumptions relating to
the reporting of revenues and expenses and the disclosure of contingent assets
and liabilities to prepare the historical summary in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(3) GROSS INCOME
Lockwood leases warehouse space under various operating lease
agreements with its tenants. All leases are accounted for as operating leases.
Base rental income is recognized on a straight-line basis over the terms of the
operating leases. These leases include provisions under which Lockwood is
reimbursed for certain common area maintenance costs, real estate taxes and
other costs.
9
<PAGE> 10
A summary of minimum rents to be received from tenants under
noncancellable operating leases in effect at December 31, 1996 follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997 $ 849,000
1998 993,000
1999 993,000
2000 1,106,000
2001 1,106,000
Thereafter 1,107,000
-----------
$ 6,154,000
===========
</TABLE>
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the
proposed future operation of Lockwood. Costs such as mortgage interest,
depreciation, amortization and professional fees are excluded from the
historical summary.
During 1996, Lockwood was managed by Trammell Crow Company for a fee
based on 3% of gross receipts, as defined.
(5) COMMITMENTS AND CONTINGENCIES
In May 1997, EastGroup Properties purchased Lockwood.
10
<PAGE> 11
INDEPENDENT AUDITORS' REPORT
INTERCHANGE D:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Interchange D (the Property) for the
year ended December 20, 1996. This Historical Summary is the responsibility of
the Property's management. Our responsibility is to express an opinion on the
Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Interchange D for the year ended December 20, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 24, 1997
11
<PAGE> 12
INTERCHANGE D
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER ENDED JUNE 20,
20, 1996 1997
--------------------------
(UNAUDITED)
(IN THOUSANDS)
Gross income:
<S> <C> <C>
Base rental income $314 170
Tenant expense reimbursements 49 30
---- ----
363 200
---- ----
Direct operating expenses:
Real estate taxes 22 11
Management fees 10 5
Insurance 5 3
Repairs and maintenance 26 16
Miscellaneous 4 3
---- ----
67 38
---- ----
Excess of gross income over direct operating expenses $296 162
==== ====
</TABLE>
See accompanying notes to historical summary.
12
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INTERCHANGE D
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Interchange D (Interchange), a warehouse located in Richland (metropolitan
Jackson), Mississippi, has approximately 67,000 square feet of leasable space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) and is not a complete presentation of Interchange's
revenues and expenses. The historical summary has been prepared using the
accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments and
eliminations (consisting only of normal recurring adjustments) necessary to
present fairly the historical summary for the six months ended June 20, 1997,
have been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
Management of Interchange has made estimates and assumptions relating to
the reporting of revenues and expenses and the disclosure of contingent assets
and liabilities to prepare the historical summary in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(3) GROSS INCOME
Interchange leases warehouse space under various operating lease agreements
with its tenants. All leases are accounted for as operating leases. Base rental
income is recognized on a straight-line basis over the terms of the operating
leases. These leases include provisions under which Interchange is reimbursed
for certain common area maintenance costs, real estate taxes and other costs.
A summary of minimum rents to be received from tenants under noncancellable
operating leases in effect at December 20, 1996 follows:
YEAR ENDING
DECEMBER 20,
------------
1997 $ 325,000
1998 259,000
1999 159,000
2000 112,000
2001 33,000
-----------
$ 888,000
===========
13
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(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the
proposed future operation of Interchange. Costs such as mortgage interest,
depreciation, amortization and professional fees are excluded from the
historical summary.
During 1996, Interchange was managed by Trammell Crow Company for a fee
based on 3% of gross receipts, as defined.
(5) COMMITMENTS AND CONTINGENCIES
In June 1997, EastGroup Properties purchased Interchange.
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INDEPENDENT AUDITORS' REPORT
SENATOR STREET DISTRIBUTION CENTER:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Senator Street Distribution Center
(the Property) for the year ended December 31, 1996. This Historical Summary is
the responsibility of the Company's management. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Senator Street Distribution Center for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 24, 1997
15
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SENATOR STREET DISTRIBUTION CENTER
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER ENDED JUNE 30,
31, 1996 1997
--------------------------
(UNAUDITED)
(IN THOUSANDS)
Gross income:
<S> <C> <C>
Base rental income $381 221
Tenant expense reimbursements 65 31
Other income 1 1
---- ----
447 253
---- ----
Direct operating expenses:
Management fees 14 8
Insurance 5 2
Utilities 8 3
Repairs and maintenance 39 16
Real estate taxes 51 29
Miscellaneous 17 9
---- ----
134 67
---- ----
Excess of gross income over direct operating expenses $313 186
==== ====
</TABLE>
See accompanying notes to historical summary.
16
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SENATOR STREET DISTRIBUTION CENTER
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Senator Street Distribution Center ("Senator") is a warehouse complex located in
Memphis, Tennessee, with a total of approximately 80,000 square feet of leasable
space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying with Rule
3-14 of the Securities and Exchange Commission Regulation S-X (for incorporation
by reference in the Registration Statement on Form S-3 of EastGroup Properties)
and is not a complete presentation of Senator's revenues and expenses. The
historical summary has been prepared using the accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments and eliminations
(consisting only of normal recurring adjustments) necessary to present fairly
the historical summary for the six months ended June 30, 1997, have been
included. The results of operations for such interim period are not necessarily
indicative of the results for the full year.
Management of Senator has made estimates and assumptions relating to the
reporting of revenues and expenses and the disclosure of contingent assets and
liabilities to prepare the historical summary in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(3) GROSS INCOME
Senator leases warehouse space under operating lease agreements with its
tenants. Base rental income is recognized as earned over the term of the
operating leases. The leases include provisions under which the tenants are
responsible for common area maintenance costs, real estate taxes and certain
other reimbursable costs.
A summary of minimum rents to be received from the tenants under noncancellable
operating leases in effect at December 31, 1996 follows:
YEAR ENDING
DECEMBER 31,
------------
1997 $ 381,325
1998 249,738
1999 179,664
2000 137,364
2001 41,681
-----------
$ 989,772
===========
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the proposed
future operation of Senator. Costs such as mortgage interest, depreciation,
amortization and professional fees are excluded from the historical summary.
During 1996, Senator was managed by Trammell Crow Company for a fee based on
4% of base rent collected, as defined.
(5) SUBSEQUENT EVENT
In July 1997, EastGroup Properties purchased Senator.
17
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
CHAMBERLAIN DISTRIBUTION CENTER:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Chamberlain Distribution Center (the
Property) for the year ended December 31, 1996. This Historical Summary is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Chamberlain Distribution Center for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 24, 1997
18
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CHAMBERLAIN DISTRIBUTION CENTER
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, 1996 ENDED JUNE 30, 1997
--------------------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Gross income:
Base rental income $ 400 200
Tenant expense reimbursements 147 72
--------- ----------
547 272
--------- ----------
Direct operating expenses:
Real estate taxes 112 56
Repairs and maintenance 12 6
Rental taxes 19 8
Miscellaneous 8 3
--------- ----------
151 73
--------- ----------
Excess of gross income over direct operating expenses $ 396 199
========= ==========
</TABLE>
See accompanying notes to the historical summary.
19
<PAGE> 20
CHAMBERLAIN DISTRIBUTION CENTER
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Chamberlain Distribution Center ("Chamberlain") is a warehouse complex located
in Tucson, Arizona. Chamberlain is a single tenant, front load warehouse with a
total of approximately 120,000 square feet of leasable space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying with Rule
3-14 of the Securities and Exchange Commission Regulation S-X (for incorporation
by reference in the Registration Statement on Form S-3 of EastGroup Properties)
and is not a complete presentation of Chamberlain's revenues and expenses. The
historical summary has been prepared using the accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments and eliminations
(consisting only of normal recurring adjustments) necessary to present fairly
the historical summary for the six months ended June 30, 1997, have been
included. The results of operations for such interim period are not necessarily
indicative of the results for the full year.
Management of Chamberlain has made estimates and assumptions relating to the
reporting of revenues and expenses and the disclosure of contingent assets and
liabilities to prepare the historical summary in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(3) GROSS INCOME
Chamberlain leases warehouse space under an operating lease agreement with its
tenant. Base rental income is recognized as earned over the term of the
operating lease. The lease includes provisions under which the tenant is
responsible for all common area maintenance costs, real estate taxes and certain
other reimbursable costs.
20
<PAGE> 21
The operating lease agreement in effect with the tenant expires on August 31,
2001 with an option to extend the lease for a period of five years. A summary of
minimum rent to be received from the tenant under the noncancellable operating
lease in effect at December 31, 1996 follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997 $ 399,600
1998 399,600
1999 399,600
2000 399,600
2001 266,400
----------
$1,864,800
==========
</TABLE>
The lease agreement requires an increase in rent beginning March 1, 1998 equal
to the percentage increase in the consumer price index occurring between
September 1, 1994 and March 1, 1998, not to exceed four percent each year. This
rate change is not reflected in the five year summary detailed above.
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the proposed
future operation of Chamberlain. Costs such as mortgage interest, depreciation,
amortization and professional fees are excluded from the historical summary.
During 1996, Chamberlain was managed by Partners Management and Consultants Inc.
for a fee of $350 per month.
(5) SUBSEQUENT EVENT
In July 1997 EastGroup Properties purchased Chamberlain.
21
<PAGE> 22
\
INDEPENDENT AUDITORS' REPORT
JACKSONVILLE AND NEW ORLEANS PROPERTIES:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Jacksonville and New Orleans
Properties (the Properties) for the year ended December 31, 1996. This
Historical Summary is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Jacksonville and New Orleans Properties for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 19, 1997
22
<PAGE> 23
JACKSONVILLE AND NEW ORLEANS PROPERTIES
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED JUNE
31,1996 30, 1997
-------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Gross income:
Base rental income $5,135 2,608
Tenant expense reimbursements 772 351
Other income 11 -
------ ------
5,918 2,959
------ ------
Direct operating expenses:
Real estate taxes 586 287
Insurance 141 69
Management fees 159 82
Utilities 106 34
Repairs and maintenance 166 67
Security 27 3
Miscellaneous 62 14
------ ------
1,247 556
------ ------
Excess of gross income over direct operating expenses $4,671 2,403
====== ======
</TABLE>
See accompanying notes to historical summary.
23
<PAGE> 24
JACKSONVILLE AND NEW ORLEANS PROPERTIES
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING
EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
The Jacksonville and New Orleans Properties ("the Properties") include
a warehouse complex located in Jacksonville, Florida, comprised of six
buildings, and a warehouse complex located in New Orleans, Louisiana, comprised
of eight buildings. Total leasable space is approximately 1,692,000 square feet.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying
with Rule 3-14 of the Securities and Exchange Commission Regulation S-X (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) and is not a complete presentation of the Properties'
revenues and expenses. The historical summary has been prepared using the
accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments and
eliminations (consisting only of normal recurring adjustments) necessary to
present fairly the historical summary for the six months ended June 30, 1997,
have been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
Management of the Properties has made estimates and assumptions
relating to the reporting of revenues and expenses and the disclosure of
contingent assets and liabilities to prepare the historical summary in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(3) GROSS INCOME
The Properties lease warehouse space under various operating lease
agreements with its tenants. All leases are accounted for as operating leases.
Base rental income is recognized on a straight-line basis over the terms of the
operating leases. These leases include provisions under which the Properties are
reimbursed for certain common area maintenance costs, real estate taxes and
certain other reimbursable costs. Certain leases contain renewal options for
various periods at various rental rates.
24
<PAGE> 25
A summary of minimum rents to be received from tenants under noncancellable
operating leases in effect at December 31, 1996 follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997 $ 4,878,000
1998 3,959,000
1999 2,997,000
2000 2,287,000
2001 1,819,000
Thereafter 3,268,000
-----------
$19,208,000
===========
</TABLE>
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the
proposed future operation of the Properties. Costs such as mortgage interest,
depreciation, amortization and professional fees are excluded from the
historical summary.
During 1996, the Properties were managed by CB Commercial for a fee
based on a percentage, ranging from 1.5% to 3%, of gross receipts, as defined.
(5) COMMITMENTS AND CONTINGENCIES
In September 1997, EastGroup purchased the Properties.
25
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
BUTTERFIELD TRAIL INDUSTRIAL PARK:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Butterfield Trail Industrial Park
(the Property) for the year ended December 31, 1996. This Historical Summary is
the responsibility of the Company's management. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Butterfield Trail Industrial Park for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 23, 1997
26
<PAGE> 27
BUTTERFIELD TRAIL INDUSTRIAL PARK
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED JUNE
31,1996 30, 1997
-----------------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Gross income:
Base rental income $ 1,939 1,314
Tenant expense reimbursements 142 149
----------- -----
2,081 1,463
----------- -----
Direct operating expenses:
Real estate taxes 218 165
Ground lease 226 118
Insurance 18 9
Repairs and maintenance 29 15
Utilities 52 30
Miscellaneous 18 7
----------- -----
561 344
----------- -----
Excess of gross income over direct operating expenses $ 1,520 1,119
=========== =====
</TABLE>
See accompanying notes to historical summary.
27
<PAGE> 28
BUTTERFIELD TRAIL INDUSTRIAL PARK
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING
EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Butterfield Trail Industrial Park ("Butterfield Trail"), is a warehouse
complex located in El Paso, Texas. Butterfield Trail is comprised of seven
distribution buildings with a total of approximately 671,000 square feet of
leasable space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying
with Rule 3-14 of the Securities and Exchange Commission Regulation S-X (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) and is not a complete presentation of Butterfield Trail's
revenues and expenses. The historical summary has been prepared using the
accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments and
eliminations (consisting only of normal recurring adjustments) necessary to
present fairly the historical summary for the six months ended June 30, 1997,
have been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
Management of Butterfield Trail has made estimates and assumptions
relating to the reporting of revenues and expenses and the disclosure of
contingent assets and liabilities to prepare the historical summary in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(3) GROSS INCOME
Butterfield Trail leases warehouse space under various operating lease
agreements with its tenants. All leases are accounted for as operating leases.
Base rental income is recognized on a straight-line basis over the terms of the
operating leases. These leases include provisions under which Butterfield Trail
is reimbursed for certain common area maintenance costs, real estate taxes and
certain other reimbursable costs. Certain leases contain renewal options for
various periods at various rental rates.
28
<PAGE> 29
A summary of minimum rents to be received from tenants under
noncancellable operating leases in effect at December 31, 1996 follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997 $2,355,000
1998 2,267,000
1999 2,065,000
2000 1,729,000
2001 981,000
Later years 455,000
----------
$9,852,000
==========
</TABLE>
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the
proposed future operation of Butterfield Trail. Costs such as mortgage interest,
depreciation, amortization and professional fees are excluded from the
historical summary.
Butterfield Trail is obligated under long term ground leases with the
City of El Paso that expire at various dates during the next thirty-nine years
(excluding renewal options). These leases contain renewal options for periods
ranging from ten to twenty-five years at various rental rates. Rent expense
under the operating leases was $226,000 for 1996.
Minimum lease payments due under the noncancellable operating leases
follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997 $ 236,000
1998 236,000
1999 236,000
2000 236,000
2001 236,000
Later years 7,343,000
---------
$ 8,523,000
===========
</TABLE>
(5) COMMITMENTS AND CONTINGENCIES
Butterfield Trail is obligated under an existing lease with a tenant to
pay one hundred percent of the rent and other charges accruing under the lease
covering the tenant's previous location. The obligation to pay such rent and
other charges began when the tenant vacated their previous location and
continues until the previous location has been subleased, the lease covering the
previous location is terminated, or the lease covering the previous location
expires. The lease expired on June 1, 1997. Rental payments under this
arrangement approximated $147,000 in 1996; however, these payments were excluded
from the 1996 historical summary because
29
<PAGE> 30
they are not comparable to the proposed future operations of the property (as
defined in Rule 3-14 of the Securities and Exchange Commission Regulation S-X).
It is anticipated that EastGroup Properties will purchase Butterfield Trail.
30
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
SOUTHBAY INDUSTRIAL CENTER:
We have audited the accompanying historical summary of gross income and direct
operating expenses (Historical Summary) of Southbay Industrial Center (the
Property) for the year ended December 31, 1996. This Historical Summary is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
incorporation by reference in the Registration Statement on Form S-3 of
EastGroup Properties) as described in note 2 and is not intended to be a
complete presentation of revenues and expenses.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
note 4 of Southbay Industrial Center for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 24, 1997
31
<PAGE> 32
SOUTHBAY INDUSTRIAL CENTER
HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1996 1997
------------------------------
(UNAUDITED)
(IN THOUSANDS)
Gross income:
<S> <C> <C>
Base rental income $1,019 471
Tenant expense reimbursements 213 91
------ ---
1,232 562
------ ---
Direct operating expenses:
Real estate taxes 107 53
Management fees 17 12
Insurance 27 15
Repairs and maintenance 43 22
Utilities 10 4
Bad debt expense 7 -
------ ----
211 106
------ ----
Excess of gross income over direct operating expenses $1,021 456
====== ====
</TABLE>
See accompanying notes to historical summary.
32
<PAGE> 33
SOUTHBAY INDUSTRIAL CENTER
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES
(UNAUDITED AS TO INTERIM PERIOD)
(1) BUSINESS
Southbay Industrial Center ("Southbay") is a warehouse located in Chula Vista,
California. Southbay is a multiple tenant, one building warehouse with a total
of approximately 191,000 square feet of leasable space.
(2) BASIS OF PRESENTATION
The historical summary has been prepared for the purpose of complying with Rule
3-14 of the Securities and Exchange Commission Regulation S-X (for incorporation
by reference in the Registration Statement on Form S-3 of EastGroup Properties)
and is not a complete presentation of Southbay's revenues and expenses. The
historical summary has been prepared on the accrual basis of accounting.
The accompanying interim unaudited historical summary has been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments and eliminations
(consisting only of normal recurring adjustments) necessary to present fairly
the historical summary for the six months ended June 30, 1997 have been
included. The results of operations for such interim period are not necessarily
indicative of the results for the full year.
Management of Southbay has made estimates and assumptions relating to the
reporting of revenues and expenses and the disclosure of contingent assets and
liabilities to prepare the historical summary in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(3) GROSS INCOME
Southbay leases warehouse space under various operating lease agreements with
tenants. All leases are accounted for as operating leases. Base rental
income is recognized on a straight-line basis over the terms of the operating
leases. The leases include provisions under which Southbay is reimbursed
for certain common area maintenance costs, real estate taxes and property
insurance.
A summary of minimum rents to be received from tenants under noncancellable
operating leases in effect at December 31, 1996 follows:
YEAR ENDING
DECEMBER 31,
------------
1997 $ 975,202
1998 933,709
1999 560,567
2000 37,485
2001 10,461
-----------
$ 2,517,424
===========
33
<PAGE> 34
(4) DIRECT OPERATING EXPENSES
Direct operating expenses include only those costs comparable to the proposed
future operation of Southbay. Costs such as mortgage interest, depreciation,
amortization and professional fees are excluded from the historical summary.
During 1996, Southbay was managed by Spectrum Property Management for a fee
based on 2% of the net rental collections of the property plus 1% of amounts
reimbursed by tenants for their share of real property taxes, common area
maintenance, and other costs, as defined.
(5) COMMITMENTS AND CONTINGENCIES
It is anticipated that EastGroup Properties will purchase Southbay.
34
<PAGE> 35
EASTGROUP PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1997
The following unaudited pro forma consolidated balance sheet sets forth
the effect of the following material acquisitions - Senator Street
Distribution Center on July 16, 1997, Chamberlain Distribution Center on July
22, 1997, the Jacksonville and New Orleans Properties on September 24, 1997,
the August, 1997 acquisition of 1,449,956 preferred shares of Meridian Point
Realty Trust VIII Co. and the probable purchases of Butterfield Trail
Industrial Park and Southbay Industrial Center, as if these acquisitions had
been consummated on June 30, 1997. The unaudited pro forma consolidated balance
sheet also sets forth the effect of the following dispositions - Santa Fe
Energy Building on July 31, 1997, the 77.78% owned Liberty Corners Shopping
Center on August 29, 1997 and the 50% owned Cowesett Corners Shopping Center on
September 16, 1997 - as if the dispositions had been consummated on June 30,
1997. The unaudited pro forma consolidated balance sheet has been prepared by
management of EastGroup based upon the historical financial statements of
EastGroup and the adjustments and assumptions in the accompanying notes to the
unaudited pro forma consolidated financial statements. This unaudited pro forma
consolidated balance sheet may not be indicative of the results that actually
would have occurred if the acquisitions and dispositions had been in effect on
the dates indicated. The unaudited pro forma consolidated balance sheet should
be read in conjunction with the financial statements and the notes to the
financial statements of EastGroup in its annual report on Form 10-K for the
period ended December 31, 1996.
<TABLE>
<CAPTION>
EASTGROUP
JUNE 30,
1997 MATERIAL MATERIAL PRO FORMA
(HISTORICAL) ACQUISITIONS(1) DISPOSITIONS(2) CONSOLIDATED
------------ --------------- ---------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS
Real estate properties
(net of accumulated
depreciation) $267,165 86,878 -- 354,043
Real estate held
for sale, net 14,077 -- (13,492) 585
Investment in joint venture 4,408 -- (4,408) --
Mortgage loans (net of
allowance for losses) 13,515 -- -- 13,515
Land and land purchase-leasebacks 527 -- -- 527
Investment in REIT's 3,377 13,756 -- 17,133
Cash and cash equivalents 787 -- -- 787
Other assets 6,471 -- (145) 6,326
-------- ------- -------- --------
$310,327 100,634 $(18,045) 392,916
======== ======= ======== ========
LIABILITIES
Mortgage notes payable $103,992 52,641 (3) -- 156,633
Notes payable to banks 18,449 47,993 (23,948) 42,494
Accounts payable and
accrued expenses 2,131 -- (25) 2,106
Minority interest 3,267 -- (777) 2,490
Other liabilities 1,552 -- -- 1,552
-------- ------- -------- --------
129,391 100,634 (24,750) 205,275
-------- ------- -------- --------
SHAREHOLDERS' EQUITY
Common Stock 1 -- -- 1
Additional paid-in-capital 171,400 -- -- 171,400
Unrealized gain on securities 226 -- -- 226
Undistributed earnings 9,309 -- 6,705 16,014
-------- ------- -------- --------
180,936 -- 6,705 187,641
-------- ------- -------- --------
$310,327 100,634 $(18,045) 392,916
======== ======= ======== ========
Book value per share $ 14.26 14.79
======== ========
Shares outstanding 12,684 12,684
======== ========
</TABLE>
35
<PAGE> 36
EASTGROUP PROPERTIES, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1997
(1) Material acquisitions include the Senator Street Distribution Center on
July 16, 1997 for $2,715,000, the Chamberlain Distribution Center on
July 22, 1997 for $4,077,000, the Jacksonville and New Orleans
Properties on September 24, 1997 for $50,237,000 and the probable
acquisitions of Butterfield Trail Industrial Park for $19,840,000 and
Southbay Industrial Center for $10,009,000.
Material acquisitions also include EastGroup's August, 1997 acquisition
of 1,449,956 preferred shares of Meridian Point Realty Trust VIII Co.
at an average price of approximately $9.47 per preferred share.
(2) Material dispositions include the Santa Fe Energy Building on July 31,
1997 for $12,673,000 net proceeds, the 77.78% owned Liberty Corners
Shopping Center on August 29, 1997 for $5,260,000 net proceeds and the
50% owned Cowesett Corners Shopping Center on September 16, 1997 for
$6,015,000. The proceeds from the Santa Fe Energy Building sale were
put in escrow and subsequently used to purchase industrial properties
in tax deferred transactions. The proceeds from the Liberty Corners
and Cowesett Corners dispositions was used to repay bank debt.
(3) EastGroup assumed a $2,519,000 non-recourse mortgage note payable in
the acquisition of Chamberlain. The 8.75% mortgage matures October 1,
2004 with monthly payments of principal and interest of $21,376. The
mortgage is secured by the underlying land and building. The September
24, 1997 acquisition of the Jacksonville and New Orleans Properties was
funded with cash and two first mortgage loans totaling $45,000,000 at
9.25% interest lent by Meridian Industrial Trust, Inc. to EastGroup.
The mortgage loans are interest only and are secured by the underlying
real estate and the assignment of rents. EastGroup intends to repay
this debt, which matures December 31, 1997, through its existing bank
lines or with other capital. Also, the Company anticipates assuming a
$5,122,000 recourse mortgage note payable upon the purchase of
Southbay. The 8.5% mortgage matures July 1, 2004 with monthly payments
of principal and interest of $57,115. The mortgage is secured by the
underlying land and building.
36
<PAGE> 37
EASTGROUP PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
The following unaudited pro forma consolidated statement of operations for the
six months ended June 30, 1997 sets forth the effect of EastGroup's material
acquisitions, dispositions and the February, 1997 equity offering as if these
transactions had been consummated on January 1, 1996. The pro forma consolidated
statement of operations has been prepared by management of EastGroup based upon
historical statements of operations of EastGroup and the adjustments and
assumptions in the accompanying notes to the unaudited pro forma consolidated
financial statements. The pro forma statement of operations may not be
indicative of the results that actually would have occurred if the transactions
had been in effect on the dates indicated or which may be obtained in the
future. The unaudited pro forma statement of operations should be read in
conjunction with their notes and the other financial statements and notes to the
financial statements of EastGroup.
<TABLE>
<CAPTION>
EASTGROUP
JUNE 30, FEBRUARY, 1997
1997 MATERIAL MATERIAL EQUITY PRO FORMA
(HISTORICAL) ACQUISITIONS(1) DISPOSITIONS(2) OFFERING CONSOLIDATED
------------ --------------- --------------- ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
REVENUES
<S> <C> <C> <C> <C> <C>
Income from real estate operations $ 22,985 6,161 (1,933) -- 27,213
Interest:
Mortgage loans 1,004 -- -- -- 1,004
Other 186 -- (31) -- 155
Other 479 203 (341) -- 341
-------- -------- -------- -------- --------
24,654 6,364 (2,305) -- 28,713
-------- -------- -------- -------- --------
EXPENSES
Operating expenses from
real estate operations 6,993 1,282 (795) -- 7,480
Interest expense 4,711 4,602(3) (879)(4) (261)(5) 8,173
Depreciation and amortization 4,722 1,021(6) (9) -- 5,734
Minority interest in
joint ventures 299 -- -- -- 299
General and
administrative expenses 1,401 -- -- -- 1,401
-------- -------- -------- -------- --------
18,126 6,905 (1,683) (261) 23,087
-------- -------- -------- -------- --------
Income before gain on
investments 6,528 (541) (622) 261 5,626
-------- -------- -------- -------- --------
GAIN ON INVESTMENTS
Real estate and mortgage loans 107 -- -- -- 107
-------- -------- -------- -------- --------
NET INCOME $ 6,635 (541) (622) 261 5,733
======== ======== ======== ======== ========
Net income per share $ .54 .45
======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 12,201 12,668(7)
======== ========
</TABLE>
37
<PAGE> 38
EASTGROUP PROPERTIES, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(1) EastGroup's material acquisitions include Lockwood Distribution Center
on May 9, 1997 for $6,183,000, Interchange D on June 13, 1997 for
$3,052,000, Senator Street Distribution Center on July 16, 1997 for
$2,715,000, Chamberlain Distribution Center on July 22, 1997 for
$4,077,000 which includes the assumption of a $2,519,000 mortgage, the
Jacksonville and New Orleans Properties on September 24, 1997 for
$50,237,000 which includes two first mortgage loans totaling
$45,000,000, and the probable acquisitions of Butterfield Trail
Industrial Park for $19,840,000 and Southbay Industrial Center for
$10,009,000 which includes the assumption of a $5,122,000 mortgage.
Material acquisitions also include EastGroup's August, 1997 acquisition
of 1,449,956 preferred shares of Meridian Point Realty Trust VIII Co.
at an average price of approximately $9.47 per preferred share.
(2) EastGroup's material dispositions include Santa Fe Energy Building on
July 31, 1997 for $12,673,000 net proceeds, the 77.78% owned Liberty
Corners Shopping Center on August 29, 1997 for $5,260,000 net proceeds
and the 50% owned Cowesett Corners Shopping Center on September
16, 1997 for $6,015,000 net proceeds.
(3) Increase interest expense on bank debt as if the material acquisitions
and the assumed mortgages had been purchased January 1, 1996. The
original $2,600,000 Chamberlain non-recourse mortgage had a remaining
principal balance of $2,519,000 at acquisition date. The mortgage has
an interest rate of 8.75% and matures October 1, 2004 with a 25 year
amortization basis. The original $5,800,000 Southbay recourse mortgage
is expected to have a remaining principal balance of $5,122,000 at
acquisition date. The mortgage has an interest rate of 8.5% and matures
July 1, 2004 with a 15 year amortization basis.
The September 24, 1997 acquisition of the Jacksonville and New Orleans
Properties was funded with cash and two first mortgage loans totaling
$45,000,000 at 9.25% interest lent by the seller to EastGroup. The
mortgage loans are interest only and are secured by the underlying real
estate and the assignment of rents. EastGroup intends to repay this
debt, which matures December 31, 1997, through its existing bank lines
or with other capital.
(4) Decrease interest expense for the reduction of variable rate debt as if
the material dispositions had been sold January 1, 1996.
(5) On February 4, 1997 EastGroup announced the offering of 1,875,000
shares of beneficial interest under its existing shelf registration
statement. On February 28, 1997, in connection with this public
offering, the underwriter exercised in full its over-allotment option
for an additional 225,000 shares. The net proceeds to the Company from
the offering was approximately $36,725,000, net of underwriting
commissions and expenses. For pro forma purposes, interest expense was
reduced for the reduction of variable rate debt as if the proceeds from
the offering had been received on January 1, 1996.
38
<PAGE> 39
EastGroup's weighted average shares outstanding were also restated to
show the effect of the shares as if they had been issued January 1,
1996 as detailed in note (7).
(6) Depreciation adjustment based on an estimated life of forty years.
(7) Weighted average EastGroup Shares outstanding were computed as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997
-------------
(IN THOUSANDS)
<S> <C>
Historical weighted average EastGroup Shares outstanding 10,568
EastGroup Shares issued in February, 1997 equity offering 2,100
-----
Pro Forma weighted average EastGroup Shares outstanding 12,668
======
</TABLE>
39
<PAGE> 40
EASTGROUP PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
The following unaudited pro forma consolidated statement of operations
for the year ended December 31, 1996 sets forth the effect of 1) EastGroup's
merger with LNH REIT and Copley Properties, Inc. and 2) EastGroup and Copley's
material acquisitions, dispositions and February, 1997 equity offering as if
these transactions had been consummated on January 1, 1996. The pro forma
consolidated statement of operations has been prepared by management of
EastGroup based upon historical statements of operations of EastGroup, LNH REIT
and Copley and the adjustments and assumptions in the accompanying notes to the
unaudited pro forma consolidated financial statements. The pro forma statement
of operations may not be indicative of the results that actually would have
occurred if the transactions had been in effect on the dates indicated or which
may be obtained in the future. The unaudited pro forma statement of operations
should be read in conjunction with the other financial statements and the notes
to the financial statements of EastGroup in its annual report on Form 10-K for
the year ended December 31, 1996.
<TABLE>
<CAPTION>
COPLEY 1996
EASTGROUP HISTORICAL
DEC. 31, FEBRUARY, 1997 OPERATIONS
1996 MATERIAL MATERIAL EQUITY PRIOR TO
(HISTORICAL) ACQUISITIONS(9) DISPOSITIONS(10) OFFERING MERGER
------------ --------------- ---------------- -------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
REVENUES
<S> <C> <C> <C> <C> <C>
Income from real estate operations $ 37,143 $ 12,635 $ (5,865) -- $ 6,804
Share of real estate investment
operations -- -- -- -- 39
Equity in earnings of real
estate investment trust 43 -- -- -- --
Interest:
Mortgage loans 1,644 -- -- -- --
Other 74 406 -- --
Other 861 -- (417) -- --
-------- -------- -------- -------- --------
39,765 13,041 (6,282) -- 6,843
-------- -------- -------- -------- --------
EXPENSES
Management fees -- -- -- -- --
Operating expenses from real
estate operations 13,262 2,817 (2,992) -- 1,653
Interest expense 8,930 9,668(11) (2,739)(12) (2,681)(13) 2,526
Depreciation and amortization 7,759 2,207 (809) -- 1,700
Minority interest in joint
ventures 289 -- -- -- --
General and administrative
expenses 2,356 -- -- -- 814
-------- -------- -------- -------- --------
32,596 14,692 (6,540) (2,681) 6,693
-------- -------- -------- -------- --------
Income before gain on
investments 7,169 (1,651) 258 2,681 150
-------- -------- -------- -------- --------
GAIN ON INVESTMENTS
Real estate and mortgage loans 5,340 -- (4,256)(1) -- 30
-------- -------- -------- -------- --------
NET INCOME $ 12,509 $(1,651) $ (3,998) $ 2,681 $ 180
======== ======== ======== -------- ========
Net income per share $ 1.44
========
WEIGHTED AVERAGE SHARES
OUTSTANDING(14) 8,677
========
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
LNH
COPLEY'S HISTORICAL
ACQUISITIONS/ OPERATIONS
DISPOSITIONS/ PRIOR TO PRO FORMA PRO FORMA
EXCHANGES (6) MERGER ADJUSTMENTS CONSOLIDATED
--------------- ---------- ----------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES
Income from real estate
operations $ 514 $ 594 $ -- $ 51,825
Share of real estate investment
operations (39) -- -- --
Equity in earnings of real
estate investment trust -- -- (43)(2) --
Interest:
Mortgage loans -- 251 -- 1,895
Other -- 16 -- 496
Other -- 123 (358)(3,7) 209
-------- -------- -------- --------
475 984 (401) 54,425
-------- -------- -------- --------
EXPENSES
Management fees -- 119 (119)(4) -
Operating expenses from real
estate operations 86 208 -- 15,034
Interest expense 231 -- -- 15,935
Depreciation and amortization 144 140 (218)(8) 10,923
Minority interest in joint
ventures -- 41 -- 330
General and administrative
expenses -- 259 52(5) 3,481
-------- -------- -------- --------
461 767 (285) 45,703
-------- -------- -------- --------
Income before gain on
investments 14 217 (116) 8,722
-------- -------- -------- --------
GAIN ON INVESTMENTS
Real estate and mortgage
loans (30) -- (1,084)(1) --
-------- -------- -------- --------
NET INCOME $ (16) $ 217 $ (1,200) $ 8,722
======== ======== ======== ========
Net income per share $ .69
========
WEIGHTED AVERAGE SHARES
OUTSTANDING(14) 12,632
========
</TABLE>
41
<PAGE> 42
EASTGROUP PROPERTIES, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(1) Gain on EastGroup dispositions of $5,340,000 in 1996 has been removed
in determining pro forma net income.
(2) Eliminate equity in earnings of LNH REIT, Inc.
(3) Eliminate equity in earnings of EastGroup Managers, Inc.
(4) Eliminate LNH management fee expense to LNH REIT Managers.
(5) Eliminate management fee income received from LNH REIT Managers.
(6) Copley's acquisitions/dispositions/exchanges:
<TABLE>
<CAPTION>
Income
From Real
Sales, Purchase Estate R.E.
or Exchange Operating Depreciation Interest
Property Description Date Operations Expense Expense Expense
Amounts (000'S)
<S> <C> <C> <C> <C> <C> <C>
Columbia Place Exchange(A) Feb. 1996 153 (9) (23) (76)
Metro Business Park Exchange(A) Feb. 1996 98 (21) (40) (40)
Dominiguez Properties Exchange(A) Feb. 1996 168 (23) (56) (75)
270 Technology Park Exchange(A) Feb. 1996 -- -- -- --
West Side Business Park Exchange(A) Feb. 1996 7 (6) (7) (7)
Central Distribution Center Exchange(A) Feb. 1996 44 (13) (9) (17)
Carson Industrial Center Exchange(A) Feb. 1996 44 (14) (9) (16)
----- ----- ------ ------
Total $ 514 $ (86) $ (144) $ (231)
===== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARE OF
R.E. GAIN (LOSS) ON
PROPERTY OPERATIONS INVESTMENT INVESTMENTS TOTAL
- ------------------- ---------- ----------- -----
AMOUNTS (000'S)
<S> <C> <C> <C>
Columbia Place (35) (30) (20)
Metro Business Park 2 -- (1)
Dominiguez Properties (9) -- 5
270 Technology Park 1 -- 1
West Side Business Park 8 -- (5)
Central Distribution Center (3) -- 2
Carson Industrial Center (3) -- 2
----- ----- -----
Total $ (39) $ (30) $ (16)
===== ===== =====
</TABLE>
(A) In February 1996 Copley effected two exchange transactions swapping
tenancy-in-common interests to gain 100% ownership of certain wholly
owned properties. For purposes of the pro forma statement of
operations, share of real estate investment operations for all
investments involved in the exchange has been eliminated and the
separate components of income from operations for the 100% owned real
estate properties have been reflected for the pro forma periods.
(7) Eliminate dividend income from Copley's shares.
42
<PAGE> 43
(8) Depreciation adjustment based on allocation of the purchase price over
an estimated life of forty years for buildings and three years for
tenant improvements.
(9) EastGroup's 1996 material acquisitions include Walnut Business Park on
August 10, 1996 for $8,148,000 and Braniff Park West on September 19,
1996 for $5,706,000. EastGroup's 1997 material acquisitions include
Lockwood Distribution Center on May 9, 1997 for $6,183,000, Interchange
D on June 13, 1997 for $3,052,000, Senator Street Distribution Center
on July 16, 1997 for $2,715,000, Chamberlain Distribution Center on
July 22, 1997 for $4,078,000 which includes the assumption of a
$2,519,000 mortgage, Jacksonville and New Orleans Properties on
September 24, 1997 for $50,237,000 which includes two first mortgage
loans totaling $45,000,000, and the probable acquisitions of
Butterfield Trail Industrial Park for $19,840,000 and Southbay
Industrial Center for $10,009,000 which includes the assumption of a
$5,122,000 mortgage.
Material acquisitions also include EastGroup's August, 1997 acquisition
of 1,449,956 preferred shares of Meridian Point Realty Trust VIII Co.
at an average price of approximately $9.47 per preferred share.
(10) EastGroup's 1996 material dispositions include Garden Villa Apartments
on January 31, 1996 for $4,068,000 net proceeds, Sample I-95 land on
July 26, 1996 for $3,267,000 net proceeds, Pin Oaks Apartments on
November 27, 1996 for $4,235,000 net proceeds and Plantantions
Apartments on December 19, 1996 for $7,235,000 net proceeds.
EastGroup's 1997 material dispositions include Santa Fe Energy
Building on July 31, 1997 for $12,673,000 net proceeds, the 77.78%
owned Liberty Corners Shopping Center on August 29, 1997 for
$5,260,000 net proceeds and the 50% owned Cowesett Corners Shopping
Center on September 16, 1997 for $6,015,000 net proceeds.
(11) Increase interest expense on bank debt as if the material acquisitions
and the assumed mortgages had been purchased January 1, 1996. The
original $2,600,000 Chamberlain non-recourse mortgage had a remaining
principal balance of $2,519,000 at acquisition date. The mortgage has
an interest rate of 8.75% and matures October 1, 2004 with a 25 year
amortization basis. The original $5,800,000 Southbay recourse mortgage
is expected to have a remaining principal balance of $5,122,000 at
acquisition date. The mortgage has an interest rate of 8.5% and matures
July 1, 2004 with a 15 year amortization basis.
The September 24, 1997 acquisition of the Jacksonville and New Orleans
Properties was funded with cash and two first mortgage loans totaling
$45,000,000 at 9.25% interest lent by the seller to EastGroup. The
mortgage loans are interest only and are secured by the underlying real
estate and the assignment of rents. EastGroup intends to repay this
debt, which matures December 31, 1997, through its existing bank lines
or with other capital.
(12) Decrease interest expense for the repayment of mortgage notes payable
on real estate properties and for the reduction of variable rate debt
with proceeds in excess of mortgage notes payable.
(13) On February 4, 1997 EastGroup announced the offering of 1,875,000
shares of beneficial interest under its existing shelf registration
statement. On February 28, 1997, in connection with this public
offering, the underwriter
43
<PAGE> 44
exercised in full its over-allotment option for an additional 225,000
shares. The net proceeds to the Company from the offering was
approximately $36,725,000, net of underwriting commissions and
expenses. For pro forma purposes, interest expense was reduced for the
reduction of variable rate debt as if the proceeds from the offering
had been received on January 1, 1996. EastGroup's weighted average
shares outstanding were also restated to show the effect of the shares
as if they had been issued January 1, 1996 as detailed in note (14).
(14) Weighted average EastGroup Shares outstanding were computed as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1996
-----------------
(IN THOUSANDS)
<S> <C>
Historical weighted average EastGroup Shares outstanding 6,366
EastGroup Shares issued in merger with LNH REIT 927
EastGroup Shares issued in merger with Copley 3,239
EastGroup Shares issued in February, 1997 equity offering 2,100
-----
Pro Forma weighted average EastGroup Shares outstanding 12,632
======
</TABLE>
44
<PAGE> 1
Exhibit 10(a)
AGREEMENT REGARDING REAL PROPERTY
---------------------------------
This AGREEMENT REGARDING REAL PROPERTY ("Agreement") is entered into as
of September 22, 1997 by and between Meridian Industrial Trust, Inc., a Maryland
corporation ("Meridian"), and EastGroup Properties, L.P., a Delaware limited
partnership ("EastGroup").
RECITALS
A. Meridian is the contract purchaser under the following agreements:
(i) Purchase and Sale Agreement (Industrial Package Sale - Michigan, Louisiana
and Virginia) dated May 29, 1997 by and between The Prudential Insurance Company
of America ("Prudential"), as seller, and Meridian, as buyer (as amended, the
"Louisiana Agreement"), (ii) Purchase and Sale Agreement (Industrial Package
Sale - 460 Ellis Road (Jacksonville) and Centerport) dated May 29, 1997 by and
between Prudential, as seller, and Meridian, as buyer (as amended, the "Ellis
Road Agreement") and (iii) Purchase and Sale Agreement (Real Estate in
Jacksonville, Florida) dated May 29, 1997 by and between Prudential and One
Federal Street Joint Venture, as sellers, and Meridian, as buyer (as amended,
the "Jacksonville Agreement"). The Louisiana Agreement, the Ellis Road Agreement
and the Jacksonville Agreement are sometimes referred to collectively herein as
the "Purchase Agreements". Capitalized terms used in this Agreement and not
defined herein shall have the meanings set forth in the Purchase Agreements.
B. Pursuant to the Purchase Agreements, Meridian has agreed to purchase
from the sellers thereunder (the "Sellers"), and the Sellers have agreed to
sell to Meridian, the Real Property, Personal Property and other property rights
described therein. Meridian desires to exercise its right to require the Sellers
to convey a portion of the Real Property described in the Purchase Agreements
directly to EastGroup. Such portion of the Real Property is referred to herein
as the "Subject Property", and the Real Property component thereof is more
fully described in EXHIBIT A attached hereto.
C. Meridian desires to assist and cooperate with EastGroup to
facilitate EastGroup's acquisition of the Subject Property, and EastGroup
desires to (i) acquire the Subject Property and (ii) pay that portion of the
Purchase Price under the Purchase Agreements that applies to the Subject
Property, all as more fully set forth in this Agreement.
D. Pursuant to the Purchase Agreements, the Sellers have agreed to
transfer the Subject Property directly to EastGroup at the Closing on the sale
of the Real Property.
<PAGE> 2
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Meridian and EastGroup hereby
agree as follows:
1. TRANSFER OF SUBJECT PROPERTY. With respect to the Subject Property
only, Meridian shall exercise its right to require the Sellers to convey the
Subject Property directly to EastGroup at the Closing. EastGroup shall take such
action as necessary to acquire the Subject Property directly from the Sellers at
the Closing, including, without limitation, paying that portion of the Purchase
Price that applies to the Subject Property.
2. PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Subject Property shall be Forty-Nine Million Seven Hundred Nine Thousand
Eight Hundred Forty-Five Dollars ($49,709,845.00), allocated among the projects
comprising the Subject Property as set forth in Exhibit B attached hereto,
subject to closing adjustments as provided in the Purchase Agreements. The
Closing shall occur on September 24, 1997. On or before the day that is one (1)
day prior to the Closing under the Purchase Agreements, EastGroup shall execute
the Closing Statements and deposit with Escrow Agent that portion of the
Purchase Price that applies to the Subject Property, plus closing costs as
indicated on the closing statements prepared by Escrow Agent, less the Loan
Amount (as hereinafter defined). EastGroup's failure to timely deposit the
Balance with the Escrow Agent shall be a breach of this Agreement.
3. DEPOSIT. Meridian has made a Deposit with Escrow Agent in respect of
the Real Property in the amount of Two Million Dollars ($2,000,000.00) pursuant
to the terms of the Purchase Agreements, which Deposit shall be credited towards
the Purchase Price of the Real Property other than the Subject Property at
Closing. At Closing, all interest accrued on the Deposit shall be paid to
Meridian by Escrow Agent.
4. LOAN. In connection with EastGroup's purchase of the Subject
Property, at Closing on EastGroup's purchase of the Subject Property, Meridian
and EastGroup shall enter into a loan transaction pursuant to which Meridian
shall lend to EastGroup, and EastGroup shall borrow from Meridian, the sum of
Forty-Five Million Dollars ($45,000,000.00) (the "Loan Amount"), pursuant to
and in accordance with the loan documents ("Loan Documents") executed by
EastGroup at Closing on its purchase of the Subject Property, which Loan
Documents are listed on Exhibit C attached hereto.
5. APPROVAL OF DUE DILIGENCE, CONDITION OF TITLE. EastGroup
acknowledges that it has conducted and approved its Due Diligence with respect
to the Subject Property. EastGroup further acknowledges that it has examined,
and has approved the
2
<PAGE> 3
state and condition of title to the Subject Property in accordance with the
Proforma Policies and Title Reports referenced on EXHIBIT D attached hereto.
6. CLOSING COSTS. EastGroup shall pay all fees and costs required of
Meridian, as Buyer, in respect of the Subject Property pursuant to, and in the
manner specified in, the Purchase Agreements.
7. REPRESENTATIONS AND WARRANTIES.
(a) EastGroup represents and warrants to Meridian that:
EastGroup is duly organized or formed, validly existing and in good standing
under the laws of the State of Delaware and is in good standing under the laws
of the states in which the Subject Property is located, and is authorized to
consummate the transactions contemplated hereby and fulfill all of its
obligations hereunder and buyer's obligations under the Purchase Agreements with
respect to the Subject Property and such other documents contemplated hereunder
to be executed by EastGroup, and EastGroup has received all necessary power to
execute and deliver this Agreement and all documents contemplated hereunder to
be executed by EastGroup, and to perform all of the buyer's obligations under
the Purchase Agreements with respect to the Subject Property and EastGroup's
obligations hereunder; this Agreement and all documents contemplated hereunder
to be executed by EastGroup have been duly authorized by all requisite action on
the part of EastGroup and are the valid and legally binding obligations of
EastGroup, enforceable in accordance with their respective terms; neither the
execution and delivery of this Agreement and all documents contemplated
hereunder to be executed by EastGroup, nor the performance of the obligations of
EastGroup hereunder or thereunder will result in the violation of any provision
of the organizational documents of EastGroup or to EastGroup's knowledge will
conflict with any order or decree of any court or governmental instrumentality
by which EastGroup is bound; and EastGroup has the financial capability to
complete the transaction contemplated in this Agreement and the Purchase
Agreements.
(b) Meridian warrants and represents to EastGroup that:
Meridian is duly organized, validly existing and in good standing under the laws
of the State of Maryland, and is authorized to consummate the transactions
contemplated hereby, and fulfill all of its obligations hereunder and such other
documents contemplated hereunder to be executed by Meridian, and Meridian has
received all necessary power to execute and deliver this Agreement and all
documents contemplated hereunder to be executed by Meridian; this Agreement and
all documents contemplated hereunder to be executed by Meridian have been duly
authorized by all requisite action on the part of Meridian and are the valid and
legally binding obligations of Meridian,
3
<PAGE> 4
enforceable in accordance with their respective terms; neither the execution and
delivery of this Agreement and all documents contemplated hereunder to be
executed by Meridian, nor the performance of the obligations of Meridian
hereunder or thereunder will result in the violation of any provision of the
organizational documents of Meridian or to Meridian's knowledge will conflict
with any order or decree of any court or governmental instrumentality by which
Meridian is bound.
8. INDEMNIFICATION.
(a) EastGroup shall indemnify, defend and hold Meridian
harmless from and against any and all loss, cost, claims, damages and liability
arising from or relating to any: (i) breach by EastGroup of Meridian's
obligations under the Purchase Agreements with respect to the Subject Property,
or (ii) any breach by EastGroup of EastGroup's obligations under this Agreement.
(b) Meridian shall indemnify, defend and hold EastGroup
harmless from and against any and all loss, cost, claims, damages and liability
arising from or relating to any: (i) breach by Meridian of Meridian's
obligations under the Purchase Agreements, or (ii) any breach by Meridian of
Meridian's obligations under this Agreement.
9. ESTOPPEL CERTIFICATES. To the extent the same are assignable,
Meridian hereby assigns to EastGroup, effective as of Closing on EastGroup's
purchase of the Subject Property, all the rights and benefits of Meridian in, to
and under all estoppel certificates delivered by tenants of the Subject Property
(or Sellers, or either of them, in respect thereof) to Meridian, and agrees that
Meridian shall, at the request of EastGroup and at EastGroup's sole cost and
expense, endeavor in good faith to enforce the terms of such estoppel
certificates against the signer thereof for the benefit of EastGroup. EastGroup
represents to Meridian that it has reviewed and approved all such estoppel
certificates, and acknowledges that Meridian has made no warranty, express or
implied, respecting the accuracy thereof.
10. PURCHASE AGREEMENTS AND COLLATERAL DOCUMENTS. It is understood and
agreed that Sellers have, prior to the date hereof, executed certain Closing
documents in respect of the Subject Property, which Closing documents identify
Meridian as the purchaser of the Subject Property. Such Closing documents
include, but are not limited to, bills of sale in respect of Personal Property,
and Assignments of Leases and Assignments of Warranties, and are herein referred
to as the "Meridian Collateral Documents". To the extent the same are
assignable, Meridian hereby assigns to EastGroup, effective as of Closing of
EastGroup's purchase of the Subject Property, all the rights and benefits of
Meridian in, to and under the Meridian Collateral
4
<PAGE> 5
Documents (including, but not limited to, all right, title and interest of
Meridian in the Personal Property conveyed by such bills of sale and all rights
of Meridian as successor landlord under the Leases), and, to the extent the same
are assumable, Eastgroup hereby assumes all the obligations of Meridian
thereunder. Meridian shall, at the request of EastGroup and at EastGroup's sole
cost and expense, endeavor in good faith to enforce Meridian's rights, if any,
under the Meridian Collateral Documents against Sellers, or either of them, for
the benefit of EastGroup. Similarly, Meridian shall, at the request of EastGroup
and at EastGroup's sole cost and expense, endeavor in good faith to enforce
against the Sellers, or either of them, any continuing obligations of the
Sellers, or either of them, under any of the Purchase Agreements, for the
benefit of EastGroup, it being the intent of the parties hereto that EastGroup
shall have the benefit, if any, through Meridian, of the covenants and
representations of Sellers under the Purchase Agreements in respect of the
Subject Property. EastGroup acknowledges that Meridian has made no warranty,
express or implied, respecting the accuracy or assignability of the Meridian
Collateral Documents.
11. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the parties hereto.
12. FURTHER ASSURANCES. Meridian and EastGroup each agree to execute
and deliver to the other, upon demand, such further documents, instruments and
conveyances, and shall take such further actions as are necessary or desirable
to effectuate this Agreement. Such actions shall include, but not be limited to,
the correction of any manifest errors that may occur in the Settlement/Closing
statements or any of the other Closing documents.
13. ATTORNEYS' FEES. Upon the bringing of any action, suit or
arbitration by any party against the other party arising out of this Agreement
or the subject matter hereof, the party in whose favor final judgment shall be
entered shall be entitled to recover from the other party all costs and expenses
of suit including, without limitation, reasonable attorneys' fees and costs.
14. BROKERS. Meridian represents and warrants to EastGroup, and
EastGroup represents and warrants to Meridian, that no broker or finder has
been engaged by it in connection with the transaction contemplated by this
Agreement. In the event of any such claims for brokers' or finders' fees,
EastGroup shall indemnify, save harmless and defend Meridian from and against
such claims if they shall be based upon any statement or representation or
agreement by EastGroup, and Meridian shall indemnify, save harmless and defend
EastGroup if such claims shall be based upon any statement, representation or
agreement
5
<PAGE> 6
made by Meridian. The foregoing indemnities shall survive the Closing or
termination of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one instrument. This Agreement may be executed by
fax, with originals to follow.
IN WITNESS WHEREOF, Meridian and EastGroup have executed this Agreement
as of the date first set forth above.
MERIDIAN INDUSTRIAL TRUST, INC.,
a Maryland corporation
By: /s/ Robert A. Dobbin
-----------------------------------
Its: Secretary
----------------------------------
EASTGROUP PROPERTIES, L.P.,
a Delaware limited partnership
By: EastGroup Properties General
Partners, Inc.,
a Delaware corporation
Its: Sole General Partner
By: /s/ David H. Hoster
---------------------------
Name: David H. Hoster II
-------------------------
Its: President
--------------------------
By: /s/ Marshall Loeb
---------------------------
Name: Marshall Loeb
-------------------------
Its: Vice President
--------------------------
6
<PAGE> 7
EXHIBIT A
<PAGE> 8
PHASE I:
A part of the Northwest 1/4 of the Northwest 1/4, Section 18, Township 2 South,
Range 26 East, Jacksonville, Duval County, Florida, and all being more
particularly described as follows:
Commence at the intersection of the center line Of Ellis Road, an original 60
foot right of way as described in O.R. Volume 425, Page 417, of the current
Public Records of said County, with the center line of Broadway Avenue (a
60-foot right of way as now established), said point being the Southeasterly
corner of said Northwest 1/4 of the Northwest 1/4 of Section 18, Township 2
South, Range 26 East; thence South 88 degrees 25'10" West along the Westerly
prolongation of the center line of Broadway Avenue and the Southerly line of
said Northwest 1/4 of the Northwest 1/4, a distance of 40.03 feet to the
present Westerly right-of-way line of Ellis Road and to the Point of Beginning;
thence South 89 degrees 26'50" West, 1245.83 feet, to a point on the Westerly
line of that certain 20 foot perpetual right-of-way and easement for drainage,
recorded in O.R. Volume 1969, Page 581 and Page 584, of the current Public
Records of said County; thence North 00 degrees 45'10" West, along last said
line 377.44 feet; thence North 88 degrees 25'10" East, 1254.39 feet; to a point
on the aforementioned Westerly right-of-way line of Ellis Road; thence South 00
degrees 27'20" West, along last said line 400.00 feet to the Point of
Beginning.
PHASE II:
A part of the Northwest 1/4 of the Northwest 1/4, and a part of the Southwest
1/4 of the Northwest 1/4 of Section 18, Township 2 South, Range 26 East,
Jacksonville, Duval County, Florida, and all being more particularly described
as follows:
Commence at the intersection of the center line of Ellis Road, an original
60 foot right of way described in O.R. Volume 425, Page 417, of the current
Public Records of said County, with the center line of Broadway Avenue (a 60
foot right of way as now established), said point being the Southeasterly
corner of said Northwest 1/4 of the Northwest 1/4 of Section 18, Township 2
South, Range 26 East; thence South 88 degrees 25'10" West, along the Westerly
prolongation of the center line of Broadway Avenue and the Southerly line of
said Northwest 1/4 of the Northwest 1/4, a distance of 40.03 feet to the
present Westerly right-of-way line
<PAGE> 9
of Ellis Road and to the Point of Beginning; thence South 00 degrees 04'04"
East, along said westerly right-of-way line of Ellis Road, a distance of 275.63
feet; thence South 89 degrees 26'50" West, 831.58 feet to a point lying in the
Easterly line of that certain 80 foot D.O.T. Drainage Easement recorded in O.R.
Volume 2841, Page 814, and O.R. Volume 2831, Page 1026, of the current Public
Records of said County; run thence South 00 degrees 31'37" East, along said
Easterly line of the afore-described easement, a distance of 34l.83 feet; run
thence South 89 degrees 26'50" West, a distance of 80.00 feet to a point lying
on the Westerly line of the afore-described 80 foot Drainage Easement, said
point also being the intersection with a curve concave Northeasterly, having a
radius of 385.28 feet and a central angle of 64 degrees 48'00"; run thence along
and around the arc of said curve, an arc length of 435.74 feet, said arc being
subtended by a chord having a bearing of North 49 degrees 16'28" West, and a
distance of 4l2.89 feet to a point of intersection with the Easterly line of
that certain 20 foot perpetual right of way and easement for drainage recorded
in O.R. Volume 1969, Page 581, and Page 584, of the current Public Records of
said County; run thence South 89 degrees 14'51" West, a distance of 20.00 feet
to the Westerly line of the aforementioned 20 foot perpetual right-of-way and
easement for drainage; run thence North 00 degrees 45'10" West, along said
Westerly line, a distance of 345.14 feet; thence North 89 degrees 26'50" East,
1245.83 feet to the Point of Beginning.
PHASE I AND II:
PHASE I AND PHASE II described together as follows:
A part of the Northwest 1/4 of the Northwest 1/4, and a portion of the Southwest
1/4 of the Northwest 1/4 of Section 18, Township 2 South, Range 26 East,
Jacksonville, Duval County, Florida, and all being more particularly described
as follows:
Commence at the intersection of the center line of Ellis Road, an original 60
foot right of way described in O.R. Volume 425, Page 417, of the current Public
Records of said County, with the center line of Broadway Avenue (a 60 foot right
of way as now established), said point being the Southeasterly corner of said
Northwest 1/4 of the Northwest 1/4 of Section 18, Township 2 South, Range 26
East; thence South 88 degrees 25'10" West, along the Westerly prolongation of
the center line of Broadway Avenue and the southerly line of said
Northwest 1/4 of the Northwest 1/4, a
<PAGE> 10
distance of 4O.03 feet to the present Westerly right-of-way line of Ellis Road
and to the Point of Beginning; thence south 00 degrees 04'04" East, 275.63 feet
to a point; thence South 89 degrees 26'50" West, 831.58 feet to a point lying on
the Easterly line of that certain So foot D.O.T. Drainage Easement recorded in
O.R. Volume 2841, Page 814, and O.R. Volume 2831, Page 1026, Of the current
Public Records of said County; run thence south 00 degrees 31'37" East, along
said Easterly line of the afore-described easement, a distance of 34l.83 feet;
run thence South 89 degrees 26'50" West, a distance of 80 feet to a point lying
On the Westerly line of the afore-described 80 foot drainage easement, said
point also being the intersection with a curve concave Northeasterly, having a
radius of 385.28 feet and a central angle of 64 degrees 48'00"; run thence
along and around a curve of said arc, an arc length of 435.74 feet, said arc
being subtended by a chord having a bearing of North 49 degrees 16'28" West,
and a distance of 4l2.89 feet to a point of intersection with the Easterly line
of that certain 20 foot perpetual right of way and easement for drainage
recorded in O.R. Volume 1969, Page 581, and Page 584, of the current Public
Records of said County; run thence South 89 degrees 14'51" West, a distance of
20 feet to the Westerly line of the aforementioned 20 foot perpetual right of
way and easement for drainage; run thence North 00 degrees 45'10" West along
said Westerly line, a distance of 722.58 feet; thence North 88 degrees 25'10"
East, l254.39 feet to a point on the aforementioned Westerly right-of-way line
of Ellis Road; thence South 00 degrees 27'20" West, along last said line 400
feet to the Point of Beginning.
<PAGE> 11
A part of Section 7, Township 2 South, Range 26 East, Duval County,, Florida.,
being more particularly described as follows:
Commencing at the intersection of the Easterly right-of-way line of Ellis Road
(a 70-foot right of way) with the Southerly right-of-way line of 12th Street (a
60-foot right of way); thence North 89 degrees 15'10" East along said Southerly
right-of-way line of 12th Street, a distance of 961.01 feet; thence South 00
degrees 35'55" West along the Easterly line of those certain lands described in
O.R. Volume 5570, Page 1033 of the current Public Records of said County, a
distance of 1275.00 feet to the Southeast corner thereof for a Point of
Beginning; thence North 89 degrees 15'10" East, a distance of 54l.56 feet to a
point situate in the Westerly right-of-way line of Lewis Industrial Drive (a
60-foot right of way as now established) said right-of-way line being a curve
concave Westerly and having a radius of 845.28 feet; thence Southerly around and
along said curve and along said Westerly right-of-way line, an arc distance of
l66.6O feet, said arc being subtended by a chord bearing and distance of South
17 degrees 39'59" West, 166.33 feet to the point of tangency of said curve;
thence South 23 degrees 18'45" West, and continuing along said Westerly
right-of-way line, a distance of 280.09 feet to the point of curvature of a
curve to the left, concave Easterly and having a radius of 984.66 feet; thence
Southerly around and along the arc of said curve and continuing along said
Westerly right-of-way line, an arc distance of 50.16 feet, said arc being
subtended by a chord bearing and distance of South 21 degrees 51'11" West, 50.16
feet; thence South 89 degrees 15'10" West, a distance of 816.36 feet; thence
North 00 degrees 35'55" East, a distance of 460.00 feet to the southwest corner
of said lands described in O.R. Volume 5570, Page 1033; thence North 89 degrees
15'10" East, along the south line of said last mentioned lands, a distance of
450.00 feet to the Southeast corner thereof and the Point of Beginning.
<PAGE> 12
PARCEL I:
That certain piece, parcel or tract of land situate, lying and being in the City
of Jacksonville, County of Duval State of Florida, to wit:
A portion of Section 7, Township 2 South, Range 26 East, Duval County, Florida,
and being more particularly described as follows:
Commencing at the intersection of the Easterly right-of-way line of Ellis Road
(a 70 foot right of way) with the Southerly right-of-way line of 12th Street (a
60-foot right of way); thence North 89 degrees 15'10" East along said Southerly
right-of-way line, a distance of 96l.0l feet; thence South 00 degrees 35'55"
West, a distance of 701.00 feet to the Point of Beginning; thence North 89
degrees 15'10" East, a distance of 538.02 feet to a point situate in the
Westerly right-of-way line of Lewis Industrial Drive (a 60-foot right of way);
thence South 02 degrees 25'19" East, along last said line, a distance of 15.17
feet to its intersection with the arc of a curve concave Easterly and having
a radius of 45.00 feet; thence Southerly along and around the arc of said curve,
an arc distance of 75.69 feet; said arc being subtended by a chord bearing and
distance of South 02 degrees 25'19" East, 67.08 feet; thence South 02 degrees
25'19" East, and continuing along said Westerly right-of-way line of Lewis
Industrial Drive, a distance of 280.24 feet to the point of curvature of a curve
to the right; thence along and around the arc of said curve concave Westerly and
having a radius of 845.28 feet and continuing along said Westerly right-of-way
line, an arc distance of 69.57 feet; said arc being subtended by a chord bearing
and distance of South 00 degrees 03'51" East, 69.55 feet; thence South 89
degrees 15'10", West, a distance of 557.93 feet; thence North 00 degrees 35'55"
East, a distance of 432.00 feet to the Point of Beginning.
PARCEL II:
A part of Section 7, Township 2 South, Range 26 East, Duval County, Florida,
being more particularly described as follows:
Commencing at the intersection of the Easterly right-of-way line of Ellis Road
(a 70-foot right of way) with the Southerly right-of-way line of 12th Street (a
60 foot right of way); thence North 89 degrees 15'10" East along said Southerly
right-of-way
<PAGE> 13
line of 12th Street, a distance of 961.01 feet; thence South 00 degrees 35'55"
West along the Easterly line of those certain lands described in O.R. Volume
5570, Page 1033 of the current Public Records of said County, a distance of
1133.00 feet for a Point of Beginning; thence North 89 degrees 15'10" East
along the Southerly line of those certain lands described in O.R. Volume 6267,
Page 1833 of the said current Public Records, a distance of 557.93 feet to a
point situate in the Westerly right-of-way line of Lewis Industrial Drive (a
60-foot right-of-way as now established) said right-of-way line being a curve
concave Westerly and having a radius of 845.28 feet; thence Southerly around and
along said curve and along said Westerly right-of-way line, an arc distance of
143.49 feet, said arc being subtended by a chord bearing and distance of South
07 degrees 09'24" West 143.32 feet; thence South 89 degrees 15'10" West, a
distance of 54l.56 feet to the Southeast corner of said lands, described in O.R.
Volume 5570, Page 1033; thence North 00 degrees 35'55" East, along said Easterly
line of said last mentioned lands, a distance of 142.00 feet to the Point of
Beginning.
<PAGE> 14
A parcel of lands lying in the Northwest 1/4 of Section 7. Township 2 South,
Range 26 East, Jacksonville, Duval county, Florida, being more particularly
described as follows:
Commence at the intersection of the Easterly right-of-way line of Ellis Road (a
70-foot right of way as now established) with the Easterly prolongation of the
South line of the Northwest 1/4 of the Northwest 1/4 of said Section (said line
being also the Easterly prolongation of the Southerly line of Mays Subdivision,
recorded in Plat Book 6, Page 54, current Public Records of said County, and the
Northerly line of that 60-foot drainage easement described in Agreement of
September 2, 1964, between Seaboard Airline Railroad Company and the Board Of
County Commissioners of Duval county, Florida); from the point of reference thus
described, run thence North 00 degrees 35'55" East, along said Easterly
right-of-way line of Ellis Road, a distance of 858.61 feet to a point for a
Point of Beginning; thence continue North 00 degrees 35'55" East, along said
right-of-way line, a distance of 464.39 feet to the point of intersection of
said Easterly right-of-way line with the Southerly right-of-way line of 12th
Street (formerly Mays Road, a 60-foot right-of-way as now established); thence
North 89 degrees 15'10" East, along said Southerly right-of-way line, a distance
of 435.99 feet to the point of intersection of said Southerly right-of-way line
and the center line of said drainage easement; thence South 00 degrees 35'55"
West, along said center line, a distance of 456.38 feet to a point; thence
South 88 degrees 12'05" West, a distance of 436.25 feet to the Point of
Beginning.
<PAGE> 15
A parcel of land lying in the Northwest 1/4 of Section 7, Township 2 South,
Range 26 East, Jacksonville, Duval County, Florida, being store particularly
described as follows:
For a point of reference, commence at the point Of the intersection of the
Easterly right-of-way line of Ellis Road (a 70-foot right-of-way as now
established) with the Easterly prolongation of the South line of the Northwest
1/4 of the Northwest 1/4 of said Section (said line being also the Easterly
prolongation of the Southerly line of Mays Subdivision, recorded in Plat Book
6, Page 54, of the current Public Records of said County; and the Northerly
line of that 60-foot drainage easement described in Agreement of September 2,
1964, between Seaboard Air Line Railroad Company and the Board of County
Commissioners of Duval County, Florida); from the point of reference thus
described, run South 0 degrees 35'55" West, along said Easterly right-of-way
line of Ellis Road, a distance of 30.03 feet to a point on the center line of
said drainage easement for a Point of Beginning; from the Point of Beginning
thus described, run North 0 degrees 35'55" East along said right-of-way line, a
distance of 888.64 feet to a point; run thence North 88 degrees 12'05" East, a
distance of 436.25 feet to a point on the center line of said drainage
easement; run thence South 0 degrees 35'55" West, along said center line, a
distance of 888.64 feet to an angle point in said center line; run thence South
88 degrees 12'05" West, along said center line, a distance of 436.25 feet
to the Point of Beginning.
<PAGE> 16
EXHIBIT A (A-28)
TRACT I
-------
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the Parish of Jefferson, State of Louisiana,
designated as LOT 15 OF PARCEL 1, ELMWOOD INDUSTRIAL PARK, on a plan of
subdivision by J. J. Krebs & Sons, Inc., C.E. & S., dated August 28,, 1973,
approved by the Jefferson Parish Council on September 27, 1973, by Ordinance No.
11367, registered in COB 801, folio 825, and according to a survey Of Krebs,
LaSalle, LeMieux Consultants, Inc., dated February 26, 1997, File No.
E-25-105-40 ("Lot 15 Survey") said Parcel 1 is bounded by Pepsi Street, Elmwood
Parkway (formerly Wholesalers Parkway), Edwards Avenue, Commerce Point and
Jefferson Highway and Lot 15 is more particularly described as follows:
Begin at the intersection of the southerly right of way line of Pepsi Street
and the westerly right of way line of Elmwood Parkway, measure thence from the
point of beginning along said westerly line S18 degrees 37'56"E a distance of
275.05 feet;
thence S41 degrees 12'39"W a distance of, 655.52 feet;
thence S41 degrees 54'49"W a distance of 3l.91 feet;
thence N34 degrees 07'04"E a distance of 58.57 feet;
thence in a northerly direction along the arc of a curve to the left having a
radius of 440.75 feet an arc length of 405.78 feet, a chord of N07 degrees
44'34"E a chord distance of 391.60 feet;
thence N18 degrees 37'56"W a distance of 236.40 feet to a point on the southerly
right of way line of Pepsi Street;
thence along said southerly line N71 degrees 44'19"E a distance of 374,00
feet to a point on the westerly right of way line of Elmwood Parkway, the
point of beginning.
Improvements thereon bear Municipal No. 5400 Pepsi Street.
TRACT II
--------
A certain piece or portion of ground situated in the Parish of Jefferson, State
of Louisiana, designated as LOT 12-D OF PARCEL 3, Elmwood Industrial Park, on a
plan of resubdivision by J. J. Krebs & Sons, Inc., dated January 31, 1977,
approved by the Jefferson Parish Council on February 24, 1977, by Ordinance No.
12748, recorded under Entry No. 758454, COB 886, folio 585, Parcel 3 is bounded
by Pepsi Street, Elmwood Parkway (formerly Wholesalers Parkway), Distributors
Row and Mounes Street, In accordance with a plan of survey of Krebs, LaSalle,
LeMieux Consultants, Inc., File No. E-25-105-42, dated March 6, 1997 (the "Lot
12-D Survey"), Lot 12-D is more particularly described as follows:
<PAGE> 17
Commence at the intersection of the northerly right of way line of Pepsi Street
and the westerly right of way line of Elmwood Parkway; thence along said
westerly line N18 degrees 37'56"W, a distance of 525.227 feet to the point of
beginning. Thence S71 degrees 22'04"W a distance of 373.99 feet; thence N18
degrees 37'56"W a distance of 667.633 feet; thence N71 degrees 22'04"E a
distance of 374.00 feet to a point on the westerly right of way line of
Elmwood Parkway; thence along said westerly line S18 degrees 37'56"E a distance
of 667.631 feet to a point, the point of beginning.
Improvements thereon bear Municipal No. 700 Elmwood Parkway.
<PAGE> 18
EXHIBIT A (A-29)
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the Parish of Jefferson, in that area known as
Elmwood Industrial Park, PARCEL 2 thereof, and identified as Lot 7 on a plan of
resubdivision of J. J. Krebs & Sons, Inc., dated January 21, 1977, approved by
Jefferson Parish Council Ordinance No. 12848 on May 5, 1977 and registered in
COB 892, folio 796, and in accordance with a survey of Krebs, LaSalle, LeMieux
Consultants, Inc., dated February 28, 1997, File No. E-25-105-41, said Lot 7 is
more particularly describe as follows:
Commence at the intersection of the northerly right of way line of Pepsi
Street and the westerly right of way line of Distributors Row, thence along the
westerly right of way line of Distributors Row N18 degrees 15'15"W a distance
of 275.00 feet to the point of beginning;
thence leaving said right of way S71 degrees 44'45"W a distance of 445.35 feet
to a point;
thence N18 degrees 15'41"W a distance of 314.70 feet to a point;
thence N71 degrees 44'45"E a distance of 445.40 feet to a point on the westerly
right of way line of Distributors Row;
thence along said right of way line S18 degrees 15'15"E a distance of 314.70
feet to the point of beginning.
Improvements thereon bear Municipal No. 660 Distributors Row.
<PAGE> 19
EXHIBIT A (A-30)
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in Section 39, Township 12 South, Range 9 East,
Parish of St. Charles, in the Southeastern District of the State of Louisiana
on the left descending bank of the Mississippi River, being a portion of the
upper portion of Fairview Plantation on the east bank of the Mississippi River,
identified as PARCEL FP-l on a plan of resubdivision of Gerald Swanson, dated
November 2, 1982, approved by Parish of St. Charles Ordinance No. 83-1-9 on
January 18, 1983, filed in COB 292, folio 734, and as shown on a plan of survey
of Krebs, LaSalle, LeMieux Consultants, Inc., Job No. 970128, File No.
G-28-001-20, dated March 3, 1997 (the "Parcel FP-1 Survey"), Parcel FP-1 is
more particularly described as follows:
Begin at the intersection of the southerly right of way line of Airline Highway
and the easterly right of way line of Riverbend Boulevard, thence along the
southerly right of way of Airline Highway N72 degrees 51'35"E a distance of 410
feet to a point; thence S16 degrees 10'00"E a distance of 575.08 feet to a
point; thence S72 degrees 51'35"W a distance of 41O feet to a point on the
easterly right of way line of Riverbend Boulevard; thence along said right of
way line N16 degrees 10'00"W a distance of 575.08 feet to the point of
beginning.
Improvements thereon bear Municipal No. 1000 Riverbend Blvd.
<PAGE> 20
EXHIBIT A (A-31)
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the State of Louisiana, St. Charles Parish,
Section 39, T12S, R9E, in that area known as Riverbend Business Park and
identified as LOT 4-A on a plan of resubdivision prepared by J. J. Krebs & Sons,
Inc., dated September 7, 1990, Job No. 900511, approved by St. Charles Parish on
September 17, 1990, and filed in COB 428, folio 518, and in accordance with a
plan survey of Krebs, LaSalle, LeMieux Consultants, Inc., Job No. 970127, File
No. G-73-003-62, dated March 7, 1997 (the "Lot 4-A Survey"), Lot 4-A is more
particularly described as follows:
Begin at the near point of curvature of the northwest intersection of Delta
Drive and Jefferson Highway; thence along the arc of a curve to the right having
a radius of 35 feet an arc length of 39.56 feet, a chord of S16 degrees 13'00"W,
a chord distance of 37.49 feet to a point on the northerly right of way line of
Jefferson Highway;
thence S48 degrees 36'00"W a distance of 381.86 feet to a point;
thence N16 degrees 10'00"W a distance of 1,012.15 feet to a point;
thence N73 degrees 50'00"E a distance of 365.50 feet to a point on the westerly
right of way line of Delta Drive;
thence along said right of way line S16 degrees 10'00"E a distance of 817.70
feet to the point of beginning.
Improvements bear Municipal No. 101 Delta Drive.
<PAGE> 21
EXHIBIT A (A-32)
TRACT I
-------
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the State of Louisiana, St. Charles Parish,
Section 39, T12S, R9E, in that area known as Riverbend Business Park and
identified as LOT 3 on a plan of resubdivision prepared by J. J. Krebs & Sons,
dated May 16, 19800, Dwg. No. G-73-003-02-A, and approved by St. Charles Parish
Police Jury Ordinance No. 84-5-3, authorizing an Act of Dedication filed in COB
315, folio 394, and in accordance with a plan of survey by Krebs, LaSalle,
LeMieux Consultants, Inc., Job No. 970126, File No. G-73-003-61, dated February
26, 1997 (the "Lot 3 Survey"), Lot 3 is more particularly described as follows:
Begin at the near point of curvature of the northeast intersection of Jefferson
Highway and River Bend Boulevard, thence along the easterly right of way line of
River Bend Boulevard Nl6 degrees 10'00"W a distance of 1,706.00 feet to a point
of curvature;
thence along the arc of a curve to the right having a radius of 35 feet, an arc
length of 49.56 feet, chord bearing N24 degrees 24'00"E, a chord distance of
45.52 feet to a point of tangency;
thence N64 degrees 58'00"E a distance of 339.95 feet to a point;
thence S16 degrees 10'00"E a distance of 1,675.92 feet to a point on the
northerly right of way line of Jefferson Highway;
thence along said northerly right of way line S48 degrees 39'00"W a distance of
348.87 feet to a point;
thence along the arc of a curve to the right, having a radius of 35 feet, an arc
length of 70.39 feet, chord bearing of N73 degrees 47'00"W a chord distance of
59.11 feet to the point of beginning.
Improvements thereon bear Municipal No. 100-184 River Bend Boulevard
TRACT II
--------
A CERTAIN PIECE OR PORTION OF GROUND, together with all the buildings and
improvements thereon, situated in the Parish of St. Charles, State of
Louisiana, in that area known as Riverbend Business Park and identified as LOT
7-A on a plan of resubdivision of Gerald W. Swanson, Land Surveyor, dated March
28, 1989, approved by the St. Charles Parish Council on April 21, 1989,
filed on April 25, 1989 in COB 404, folio 519, and in accordance with a plan of
survey of Krebs, LaSalle, LeMieux Consultants, Inc., Job No. 9701261, File No.
G-73-003-60, dated February 26, 1997 (the "Lot 7-A Survey"), Lot 7-A is more
particularly described as follows:
<PAGE> 22
Begin at the intersection of the easterly right of way line of Riverbend
Boulevard and the northerly right of way line of Y.&M.V. Railroad, thence along
the easterly right of way line of Riverbend Boulevard along a curve to the left,
with a radius of 193.42 feet, an arc length of 118.17 feet, a chord of N73
degrees 40'08"W, a chord length of 116.35 feet, to a reverse curve;
thence along a curve to the right having a radius of 125.40 feet, an arc length
of 162.20 feet, a chord of N54 degrees 07'02"W, a chord length of 151.13 feet to
a point on the southerly right of way line of the L.&A. Railroad right of way
line;
thence along said right of way line N72 degrees 56'16"E a distance of 434.62
feet to a point on the line common to Lots 7-A and 7-B;
thence S25 degrees 02'00"E a distance of 148.69 feet to a point on the northerly
right of way line of Y.&M.V. Railroad;
thence S64 degrees 58'00"W a distance of 269.65 feet to the point of beginning
<PAGE> 23
EXHIBIT B
---------
ALLOCATION OF PURCHASE PRICE
----------------------------
<TABLE>
<CAPTION>
Property Address Allocated Price
-------- ------- ---------------
<S> <C> <C>
460 and 500 North Jacksonville, FL $7,825,672
Ellis Road
1720 Lewis Jacksonville, FL $2,911,189
2000 Lewis Jacksonville, FL $2,136,670
2155 North Ellis Jacksonville, FL $2,856,797
Road
2001 North Ellis Jacksonville, FL $4,692,679
Road
Parkway Center New Orleans, LA $6,928,256
Cypress Point New Orleans, LA $2,207,659
Business Center
Riverbend St. Rose, LA $2,257,946
Office/Service
Center
Riverbend Warehouse St. Rose, LA $5,820,356
No. 2
Riverbend Warehouse St. Rose, LA $12,072,621
No. 1
TOTAL $49,709,845
-----------
</TABLE>
<PAGE> 24
EXHIBIT C
---------
LIST OF LOAN DOCUMENTS
----------------------
FLORIDA PROPERTIES
1. Promissory Note ("Florida Note") dated September 23, 1997 in
principal amount of $18,300,000, from EastGroup Properties, L. P. ("EastGroup"),
maker, to Meridian Industrial Trust, Inc. ("Meridian"), payee.
2. Mortgage and Security Agreement dated September 23, 1997, from
EastGroup to Meridian, securing payment of the Florida Note and encumbering
those projects comprising the Subject Property which are located in the State of
Florida.
3. Assignment of Rents and Leases dated September 23, 1997, from
EastGroup to Meridian, securing payment of the Florida Note and encumbering
those projects comprising the Subject Property which are located in the State of
Florida.
4. State of Florida UCC-1 Financing Statements.
LOUISIANA PROPERTIES
1. Promissory Note ("Louisiana Note") dated September 23, 1997 in
principal amount of $26,700,000, from EastGroup, maker, to Meridian, payee.
2. Mortgage, Security Agreement and Assignment of Leases and Rents
dated September 23, 1997, from EastGroup to Meridian, securing payment of the
Louisiana Note and encumbering those projects comprising the Subject Property
which are located in the State of Louisiana.
3. Assignment of Rents and Leases dated September 23, 1997, from
EastGroup to Meridian, securing payment of the Louisiana Note and encumbering
those projects comprising the Subject Property which are located in the State of
Louisiana.
4. State of Louisiana UCC-1 Financing Statements.
<PAGE> 25
EXHIBIT "D"
PROFORMA POLICIES ISSUED BY
FIRST AMERICAN TITLE INSURANCE COMPANY
TO
EASTGROUP PROPERTIES, L.P.
<TABLE>
<CAPTION>
PROPERTY POLICY NO. POLICY AMT.
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Florida
460 and 500 Ellis Road FA-C-984 $ 8,023,000
1720 Lewis FA-C-978 $ 2,911,189
2000 Lewis FA-C-979 $ 2,136,670
2155 North Ellis FA-C-981 $ 2,856,797
2001 North Ellis FA-C-982 $ 4,692,679
Louisiana
Parkway Center N.A. No. 19791 $ 6,928,256
Cypress Point N.A. No. 19792 $ 2,207,659
Riverbend Office/Service Center N.A. No. 19793 $ 2,257,946
Riverbend Warehouse No. 2 N.A. No. 19794 $ 5,820,356
Riverbend Warehouse No. 1 N.A. No. 19795 $12,072,621
</TABLE>
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
The Directors and Shareholders
EastGroup Properties, Inc.:
We consent to the inclusion of our reports with respect to the historical
summary of gross income and direct operating expenses dated June 6, 1997, for
Lockwood Distribution Center; dated September 19, 1997, for Jacksonville and
New Orleans Properties; dated September 23, 1997, for Butterfield Trail
Industrial Park; dated September 24, 1997, for Southbay Industrial Center,
Senator Street Distribution Center and Chamberlain Distribution Center, all for
the year ended December 31, 1996, and our report dated September 24, 1997, for
Interchange D for the year ended December 20, 1996; which reports appear in the
Form 8-K of EastGroup Properties dated September 24, 1997.
KPMG Peat Marwick LLP
Jackson, Mississippi
September 26, 1997
69
