<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM __________ TO __________
Commission file number 1-8459
NEW PLAN REALTY TRUST
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 13-1995781
(State or other Jurisdiction of (IRS Employer
Incorporation) Identification No.)
1120 Avenue of the Americas, New York, New York 10036
(Address of Principal Executive Office) (Zip Code)
212-869-3000
Registrant's Telephone Number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of April 27, 1999 the sole outstanding share of beneficial interest of the
registrant was held by New Plan Excel Realty Trust, Inc.
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format.
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NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME and COMPREHENSIVE INCOME
For the Three Months Ended March 31, 1999 and April 30, 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
March 31, 1999 April 30, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income and related revenues $ 67,070 $ 62,424
Interest, dividend and other income 703 1,057
-------- --------
Total revenues 67,773 63,481
Expenses:
Operating costs 19,446 15,354
Real estate and other taxes 6,367 5,874
Interest 9,890 9,754
Depreciation and amortization 8,862 7,921
Provision for doubtful accounts 1,185 968
General and administrative 1,030 719
-------- --------
Total expenses 46,780 40,590
-------- --------
Income before sale of real estate and securities 20,993 22,891
Gain on sale of real estate and securities -- 8
-------- --------
Net income 20,993 22,899
Change in unrealized gain (loss) on securities (71) 5
-------- --------
Comprehensive income $ 20,922 $ 22,904
======== ========
</TABLE>
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty
Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a
presentation of the financial statements of New Plan Excel Realty Trust, Inc.,
see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999
which New Plan Excel Realty Trust, Inc. has filed separately with the SEC.
The accompanying notes are an integral part of the financial statements.
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NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
-----------
March 31, 1999 December 31, 1998
-------------- -----------------
ASSETS
Real estate:
Land $ 280,935 $ 281,352
Building and improvements 1,214,812 1,210,202
Accumulated depreciation (159,892) (151,189)
----------- -----------
Net real estate 1,335,855 1,340,365
Cash and cash equivalents 21,310 12,536
Marketable securities 1,628 1,700
Receivables:
Trade, less allowance for bad debts of $9,690 and $9,212 at 16,592 15,049
March 31, 1999 and December 31, 1998, respectively
Other 1,264 1,236
Mortgage and notes receivable 13,358 13,399
Prepaid expenses and deferred charges 13,742 6,181
Other assets 4,632 4,232
----------- -----------
$ 1,408,381 $ 1,394,698
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Mortgages payable $ 115,815 $ 116,913
Notes payable, net of unamortized discount of $1,088 and
$1,141 at March 31, 1999 and December 31, 1998, respectively 413,912 413,859
Due to New Plan Excel Realty Trust, Inc. 24,437 40,886
Other liabilities 41,456 31,311
Tenant security deposits 5,780 5,670
----------- -----------
Total liabilities 601,400 608,639
----------- -----------
Commitments and contingencies -- --
Shareholder's equity:
Additional paid-in capital 837,002 837,002
Loans receivable for purchase of shares of beneficial interest (2,022) (2,022)
Accumulated other comprehensive income 655 726
Accumulated distributions in excess of net income (28,654) (49,647)
----------- -----------
Total shareholder's equity 806,981 786,059
----------- -----------
$ 1,408,381 $ 1,394,698
=========== ===========
</TABLE>
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty
Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a
presentation of the financial statements of New Plan Excel Realty Trust, Inc.,
see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999
which New Plan Excel Realty Trust, Inc. has filed separately with the SEC.
The accompanying notes are an integral part of the financial statements.
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<PAGE> 4
NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and April 30, 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
March 31, 1999 April 30, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 20,993 $ 22,899
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 8,862 7,918
Provision for doubtful accounts 1,185 832
Gain on sale of real estate and securities, net -- (8)
Changes in operating assets and liabilities, net:
Change in trade and notes receivable (2,729) 591
Change in other receivables (28) 260
Change in other liabilities 10,145 1,488
Change in sundry assets and liabilities (7,955) 1,976
-------- --------
Net cash provided by operating activities 30,473 35,956
-------- --------
Cash flows from investing activities:
Real estate acquisitions and building improvements (4,192) (42,739)
Repayments of mortgage notes receivable 41 10,163
Sales of marketable securities -- 2
Purchases of marketable securities -- (1)
-------- --------
Net cash used in investing activities (4,151) (32,575)
-------- --------
Cash flows from financing activities:
Proceeds from mortgages and notes payable
Principal payments of mortgages and notes payable (1,099) (631)
Distributions paid -- (23,464)
Proceeds from dividend reinvestment plan -- 4,545
Issuance of shares of beneficial interest upon exercise of stock options -- 649
Due to/from New Plan Excel Realty Trust, Inc. (16,449) --
Repayment of loans receivable for the purchase of shares of beneficial
interest -- 75
-------- --------
Net cash used in financing activities (17,548) (18,826)
-------- --------
Net increase (decrease) in cash and cash equivalents 8,774 (15,445)
Cash and cash equivalents at beginning of year 12,536 49,381
-------- --------
Cash and cash equivalents at end of year $ 21,310 $ 33,936
======== ========
</TABLE>
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty
Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a
presentation of the financial statements of New Plan Excel Realty Trust, Inc.,
see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999
which New Plan Excel Realty Trust, Inc. has filed separately with the SEC.
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
NEW PLAN REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared by New Plan Realty Trust (the "Trust"), pursuant to the rules of the
Securities and Exchange Commission ("SEC") and, in the opinion of the Trust,
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of financial position, results of operations and cash
flows in accordance with generally accepted accounting principles. 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 SEC rules. The Trust believes that the
disclosures made are adequate to make the information presented not misleading.
The consolidated statements of income for the three-month periods ended March
31, 1999 and April 30, 1998 are not necessarily indicative of the results
expected for the full year. These financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Trust's latest annual report on Form 10-K.
New Plan Realty Trust was organized in 1972 as a Massachusetts business trust.
Excel Realty Trust, Inc. ("Excel") was formed in 1985 and subsequently
reincorporated as a Maryland corporation. On September 28, 1998, Excel and the
Trust consummated a merger pursuant to an Agreement and Plan of Merger dated as
of May 14, 1998, as amended as of August 7, 1998 (the "Merger"). Immediately
following the Merger, the Trust changed its fiscal year end from July 31 to
December 31. Accordingly, comparative information reported in this Form 10-Q for
1998 represents information previously reported by the Trust for the three month
period ended April 30, 1998.
The Trust has continued to prepare its financial statements pursuant to the
Securities and Exchange Act of 1934 and the reporting requirements of the
indenture under which certain outstanding Notes have been issued.
Note B: Supplemental Cash Flow Information
State and local income taxes paid for the three months ended March 31, 1999 were
$92,000 and no taxes were paid for the three months ended April 30, 1998.
Interest paid for the three months ended March 31, 1999 and April 30, 1998 was
approximately $8.2 million and $9.3 million, respectively.
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Note C: Segment Information
The Trust's two reportable business segments are retail and residential
properties. At March 31, 1999, the retail segment consists of 145 shopping
centers and the residential segment consists of 54 garden apartment communities.
Selected financial information for each segment is as follows (in thousands):
<TABLE>
<CAPTION>
Retail Residential Other Total
------ ----------- ----- -----
<S> <C> <C> <C> <C>
For Three Months Ended
March 31, 1999
Revenue $ 47,928 $ 19,142 $ 703 $ 67,773
Operating expenses 16,531 10,467 1,030 28,028
Interest expense 9,890 9,890
Depreciation and amortization 6,692 2,170 8,862
----------- ----------- ----------- -----------
Net income $ 24,705 $ 6,505 $ (10,217) $ 20,993
=========== =========== =========== ===========
Real Estate Assets, net $ 986,672 $ 349,183 $ 1,335,855
=========== =========== ===========
For Three Months Ended
April 30, 1998
Revenue $ 44,699 $ 17,725 $ 1,057 $ 63,481
Operating expenses 12,598 9,598 719 22,915
Interest expense 9,754 9,754
Depreciation and amortization 6,020 1,901 7,921
Gain on sale of securities/properties 8 8
----------- ----------- ----------- -----------
Net income $ 26,081 $ 6,226 $ (9,408) $ 22,899
=========== =========== =========== ===========
Real Estate Assets, net $ 950,869 $ 329,323 $ 1,280,192
=========== =========== ===========
</TABLE>
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<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
I. Liquidity and Capital Resources
On March 31, 1999, the Trust had approximately $22.9 million in available
cash, cash equivalents and marketable securities.
Debt as of March 31, 1999 consisted of $115.8 million of mortgages payable
and $413.9 million of notes payable. In connection with the Merger, on September
28, 1998, the Trust guaranteed the borrowings of New Plan Excel under New Plan
Excel's $250 million revolving credit facility ($188 million of which was
outstanding as of March 31, 1999) as well as New Plan Excel's $50 million
revolving credit facility ($50 million of which was outstanding as of March 31,
1999).
II. Results of operations for the three months ended March 31, 1999 and April
30, 1998
The Trust acquired 9 properties between May 1, 1998 and December 31, 1998,
including 7 retail and 2 residential properties. These acquisitions produced
revenue increases of $1.2 million and $1.0 million between the three months
ended April 30, 1998 and the three months ended March 31, 1999 for the retail
and residential portfolios, respectively. The remaining $2.1 million and $.4
million increases represent 4.6% and 2.1% improvements in rentals on the
remainder of the retail and residential properties, respectively.
Property acquisitions resulted in $1.7 million of the $6.2 million
increase in total expenses, including a $.7 million increase in operating costs,
$.3 million in additional depreciation, $.2 million in additional real estate
and taxes, and $.5 million in interest expense. Increases in snow removal,
professional fees, utilities and turnover costs account for the major portions
of the remaining $3.4 million increase in operating costs. The $.3 million
increase in general and administrative costs relate primarily to increases in
personnel costs.
III. Year 2000 Compliance
Year 2000 Compliance Readiness
The Trust's centralized corporate business and technical information
systems have been assessed as to Year 2000 compliance and functionality. Year
2000 compliance issues with respect to the Trust's internal business and
technical information systems were substantially remediated as of March 31,
1999. See "Year 2000 Compliance Detail" below. In addition, the Trust has
completed the identification and review of major computer hardware and software
suppliers and has verified the Year 2000 preparedness of these suppliers.
Year 2000 Compliance Detail
The Trust addressed the Year 2000 issue with respect to the following: (i)
the Trust's information technology and operating systems, including its billing,
accounting and financial reporting systems; (ii) the Trust's non-information
technology systems, including building access, parking lot light and energy
management, equipment and other infrastructure systems that may contain or use
computer systems or embedded micro controller technology; and (iii) certain
systems of the Trust's major suppliers and material service providers (insofar
as such systems relate to the Trust's business activities such as payroll,
health services and alarm systems). As described below, the Trust's Year 2000
review involves
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(a) an assessment of the Year 2000 problems that may affect the Trust, (b) the
development of remedies to address the problems discovered in the assessment
phase to the extent practical or feasible, (c) the testing of such remedies and
(d) the preparation of contingency plans to deal with worst case scenarios.
Assessment Phase
As part of the internal assessment phase, the Trust has attempted to
substantially identify all the major components of the systems described above.
In determining the extent to which such systems are vulnerable to the Year 2000
issue, the Trust is evaluating internally developed and/or purchased software
applications and property operational control systems (e.g., heating ventilation
and air conditioning (HVAC), lighting timers, alarms, fire, sewage and access).
In addition, in October 1998, the Trust began sending letters to or making
inquiries of certain of its major suppliers and service providers, requesting
them to provide the Trust with assurance of existing or anticipated Year 2000
compliance by their systems insofar as the systems relate to their activities
with the Trust. The Trust expects that it will complete its distribution of
these inquiries by May 31, 1999. The Trust is requesting that all responses to
the inquiries be returned to it no later than June 30, 1999.
Remediation and Testing Phase
Based upon the assessment and remediation efforts to date, the Trust has
completed, tested and put on line the Year 2000 compliance modification in all
the internally developed software for its accounting and property management
applications. The Trust's personal computers are Year 2000 compliant in all
material respects. Any personal computers that are not currently Year 2000
compliant will be replaced with Year 2000 compliant personal computers.
The versions of the purchased software that the Trust uses for spread
sheet analysis, database applications, word processing systems and its apartment
rent collection system have been tested and are compliant. The outsourced
payroll service and the integrated internal input system are compliant. The
Trust's data collection networks are Year 2000 compliant. The Trust will be
replacing the New York office phone system (including the voicemail system) with
a Year 2000 compliant system, which replacement is scheduled to occur by June
30, 1999. Phone systems at other than the New York office and the Trust's
apartment communities are Year 2000 compliant. Phone systems at the apartment
communities are 87% Year 2000 compliant. The balance of the phone systems at the
apartment communities are scheduled to be reviewed and be Year 2000 compliant by
June 1999. The cost estimates derived from this assessment are treated as worst
case. All of the Trust's shopping centers are "open air" type and are simple and
very limited in terms of technology. Field systems for shopping center HVAC,
sprinkler and lighting are more than 95% reviewed and Year 2000 compliant for
those systems supplied by the Trust (some are supplied by tenants). The systems
not supplied by the Trust, the number of which is small, are being reviewed and
are projected to not have a material impact. All of the 54 apartment communities
have had reviews completed and, except for phone systems (as discussed above),
are Year 2000 compliant.
Costs Related to the Year 2000 Issue
The total historical or anticipated remaining costs for the Year 2000
remediation are estimated to be immaterial to the Trust's financial condition.
The costs to date have been expensed as incurred and consist of immaterial
internal staff costs and other expenses such as telephone and mailing costs. The
Trust currently estimates that to have all systems Year 2000 compliant will
require certain additional expenditures. At this time, the expenditures are
expected to range from a total of $60,000 to a "worst case" of $260,000.
Risks and Contingency Plans
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Considering the substantial progress made to date, the Trust does not
anticipate delays in finalizing internal Year 2000 remediation within remaining
time schedules. However, third parties having a material relationship with the
Trust (e.g., utilities, financial institutions, major tenants, suppliers,
governmental agencies and municipalities) may be a potential risk based on their
individual Year 2000 preparedness which may not be within the Trust's reasonable
control. The failure of critical third parties' computer software programs and
operating systems to achieve Year 2000 compliance may result in system
malfunctions or failures. Such an occurrence would potentially affect the
ability of the third party to operate its business and thereby raise adequate
revenue to meet its contractual obligations to the Trust or provide services to
the Trust. In that event, the Trust may not receive revenue or services that it
had otherwise expected to receive pursuant to existing leases and contracts. The
failure of critical third parties to achieve Year 2000 compliance may have a
material adverse impact on the Trust's business, operating results and financial
condition.
The Trust is in the process of identifying and reviewing the Year 2000
preparedness of critical third parties. Anticipated completion of this review is
May 31, 1999. Pending the results of that review, the Trust will determine what
course of action and contingencies, if any, will need to be made.
Although the Trust's Year 2000 efforts are intended to minimize the
adverse effects of the Year 2000 issue on the Trust's business, operating
results and financial condition, the actual effects of the issue and the success
or failure of the Trust's efforts cannot be known until the year 2000. At this
point, the Trust believes that the most likely external sources of a material
adverse impact on the Trust's business, operating results and financial
condition as a result of Year 2000 issues are utilities (i.e., electricity,
natural gas, telephone service and water) furnished by third parties to the
Trust and a wide universe of other customers, none of which utilities are
readily available from alternate sources. The reasonably likely worst case
scenario that could affect the Trust's business, operating results and financial
condition would be a widespread prolonged power failure affecting a substantial
number of the geographic regions in which the Trust's properties are located. In
the event of such a widespread prolonged power failure, a significant number of
tenants may not be able to operate their stores and, as a result, their ability
to pay rent could be substantially impaired. The Trust is not aware of an
economically feasible contingency plan which could be implemented to prevent
such a power failure from having a material adverse effect on the Trust's
business, operating results and financial condition.
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<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 12.1 - Ratio of Earnings to Fixed Charges
Exhibit 27 - Financial Data Schedule (This exhibit
is filed for EDGAR filing purposes only.)
(b) During the period covered by this report the Trust filed the
following reports on Form 8-K:
Form 8-K filed on February 3, 1999 relating to the filing of
certain exhibits to the Trust's Registration Statement on Form
S-3 (No. 333-67511) in connection with the establishment of a
medium-term note program.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 17, 1999
NEW PLAN REALTY TRUST
By: /s/Jeffrey D. Egertson
----------------------
Jeffrey D. Egertson
Senior Vice President
Chief Financial Officer
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<PAGE> 11
EXHIBIT INDEX
Number Description Page
- ------ ----------- ----
12.1 Ratio of Earnings to Fixed Charges 12
27 Financial Data Schedule (Included only
in EDGAR filing)
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11
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<PAGE> 1
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the three months ended March
31, 1999 is: 3.1:1
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before
extraordinary items. Fixed charges consist of interest costs, whether expensed
or capitalized, preferred stock dividend requirements, the interest component of
rental expense, if any, and amortization of debt discounts and issue costs,
whether expensed or capitalized.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
THREE MONTHS ENDED MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
EARNINGS:
Net income $20,993
Interest expense (including debt
discount and debt issuing costs) 9,890
Capitalized interest 126
Other adjustments 268
-------
$31,277
=======
FIXED CHARGES:
Interest expense (including debt
discount and debt
issuing costs) $ 9,890
Capitalized interest 126
Other adjustments 83
-------
$10,099
=======
RATIO OF EARNINGS TO FIXED CHARGES 3.1:1
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END>
<PERIOD-START>
<PERIOD-END>
<CASH> 21,310
<SECURITIES> 1,628
<RECEIVABLES> 16,592
<ALLOWANCES> 9,690
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,495,747
<DEPRECIATION> 159,892
<TOTAL-ASSETS> 1,408,381
<CURRENT-LIABILITIES> 0
<BONDS> 529,727
0
0
<COMMON> 0
<OTHER-SE> 806,981
<TOTAL-LIABILITY-AND-EQUITY> 1,408,381
<SALES> 0
<TOTAL-REVENUES> 67,773
<CGS> 0
<TOTAL-COSTS> 35,705
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,185
<INTEREST-EXPENSE> 9,890
<INCOME-PRETAX> 20,993
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,993
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
