<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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 No. 1-8815
--------------------------
EQK REALTY INVESTORS I
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(Exact name of Registrant as specified in its Charter)
Massachusetts 23-2320360
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5775 Peachtree Dunwoody Road, Suite 200D, Atlanta, GA 30342
-----------------------------------------------------------
(Address of principal executive offices)
(404) 303-6100
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(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING
FIVE YEARS:
Indicate by checkmark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: 9,264,344 Shares as of August
10, 1995.
<PAGE> 2
EQK REALTY INVESTORS I
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1995
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Balance Sheets as of June 30, 1995 3
and December 31, 1994
Statements of Operations for the three 4
and six months ended June 30, 1995 and
June 30, 1994
Statements of Cash Flows for the six 5
months ended June 30, 1995 and
June 30, 1994
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II - OTHER INFORMATION
Items 1 through 6. 15
SIGNATURES 16
</TABLE>
2
<PAGE> 3
EQK REALTY INVESTORS I
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investments in real estate, at cost:
Castleton Commercial Park, net of
valuation allowance of $19,565 $ 62,683 $ 61,706
Harrisburg East Mall 51,257 47,819
-------- --------
113,940 109,525
Less accumulated depreciation 33,778 31,793
-------- --------
80,162 77,732
Restricted cash 1,630 3,734
Cash and cash equivalents 1,162 967
Accounts receivable and other assets 7,323 7,825
-------- --------
TOTAL ASSETS $ 90,277 $ 90,258
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage Note payable, net of debt
discounts of $200 and $413,
respectively $ 78,076 $ 77,186
Term Loan payable to bank 2,843 2,846
Accounts payable and other liabilities 6,563 5,413
-------- --------
87,482 85,445
-------- --------
Shareholders' equity:
Shares of beneficial interest, without
par value: 10,055,555 shares
authorized, 9,264,344 shares
issued and outstanding 135,875 135,875
Accumulated deficit (133,080) (131,062)
-------- --------
2,795 4,813
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 90,277 $ 90,258
======== ========
</TABLE>
___________________
See accompanying Notes to Financial Statements.
3
<PAGE> 4
EQK REALTY INVESTORS I
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
------- ------- ------ -------
<S> <C> <C> <C> <C>
Revenues from rental operations $4,113 $4,169 $8,079 $ 8,187
Operating expenses, net of tenant
reimbursements 1,411 1,421 2,862 2,908
Depreciation and amortization 1,215 1,150 2,444 2,335
------ ------ ------- -------
Income from rental operations 1,487 1,598 2,773 2,944
Interest expense 2,152 2,028 4,296 4,042
Other expenses, net of
interest income 225 191 495 451
------ ------ ------- -------
Net loss $ (890) $ (621) $(2,018) $(1,549)
====== ====== ======= =======
Net loss per share $(0.10) $(0.07) $ (0.22) $ (0.17)
====== ====== ======= =======
</TABLE>
_______________
See accompanying Notes to Financial Statements.
4
<PAGE> 5
EQK REALTY INVESTORS I
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1995 1994
------ -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,018) $(1,549)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,444 2,335
Amortization of discount on
Mortgage Note payable 213 165
Imputed and deferred interest 816 639
Changes in assets and liabilities:
Increase (decrease)in accounts payable
and other liabilities 161 (565)
(Increase) decrease in accounts receivable
and other assets 43 (120)
------- -------
Net cash provided by operating activities 1,659 905
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate investments (3,565) (1,548)
Payment of real estate disposition fee -- (216)
------- -------
Net cash used in investing activities (3,565) (1,764)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Term Loan principal payments (3) (3)
------- -------
DECREASE IN CASH AND
CASH EQUIVALENTS (1,909) (862)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,701 5,716
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,792 $ 4,854
======= =======
Supplemental disclosure of cash
flow information:
Interest paid $ 3,350 $ 3,350
======= =======
</TABLE>
_______________
See accompanying Notes to Financial Statements.
5
<PAGE> 6
EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
EQK Realty Investors I, a Massachusetts business trust (the
"Trust"), was formed pursuant to a Declaration of Trust dated
October 8, 1984 to acquire certain income-producing real estate
investments. Commencing with the period beginning April 1, 1985,
the Trust qualified and elected real estate investment trust
("REIT") status under the provisions of the Internal Revenue
Code, and adopted December 31 as its year end, as required for
real estate investment trusts.
The Trust's portfolio consists of two real estate investments:
Castleton Commercial Park ("Castleton"), an office park located
in Indianapolis, Indiana; and Harrisburg East Mall ("Harrisburg"
or the "Mall"), a regional shopping center located in Harrisburg,
Pennsylvania. In December 1993, the Trust sold its two remaining
office buildings within its office complex in Atlanta, Georgia,
formerly known as Peachtree-Dunwoody Pavilion ("Peachtree").
The Declaration of Trust established the Trust as a finite life
REIT with an investment holding period of up to 12 years, after
which it is required to dispose of its assets in an orderly
fashion within two years. The Trust's management is currently
pursuing the orderly liquidation of its real estate holdings.
NOTE 2. BASIS OF PRESENTATION
The financial statements have been prepared by the Trust, without
audit, 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 the Trust believes that the disclosures are adequate to
make the information presented not misleading. The financial
statements should be read in conjunction with the audited
financial statements and related notes thereto included in the
Annual Report on Form 10-K for the year ended December 31, 1994.
In the opinion of the Trust, all adjustments, which include only
normal recurring adjustments necessary to present fairly its
financial position as of June 30, 1995, its results of operations
for the six months ended June 30, 1995 and 1994 and its cash
flows for the six months ended June 30, 1995 and 1994 have been
included in the accompanying unaudited financial statements.
Net loss per share for the three and six months ended June 30,
1995 and 1994 have been computed on the basis of the 9,264,344
shares outstanding during the periods. Stock warrants issued in
December 1994, 1993 and 1992 to the Trust's mortgage lender are
considered common stock equivalents for purposes of the
calculation of net loss per share. However, the warrants have
not been included in the calculation of net loss per share for
the periods presented since the effect of such calculation
would be antidilutive.
6
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EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. BASIS OF PRESENTATION, (CONTINUED)
At June 30, 1995, The Trust accrued $850,000 of additional
investments in real estate. Such amounts have been excluded from
investing activities in the statement of cash flows for the six
months ended June 30, 1995.
NOTE 3. CASH MANAGEMENT AGREEMENT
In connection with the Trust's mortgage agreement, the Trust has
entered into a Cash Management Agreement with the mortgage lender
and has assigned all lease and rent receipts to the lender as
additional collateral. Pursuant to this agreement, a third-party
escrow agent has been appointed to receive all rental payments
from tenants and to fund monthly operating expenses in accordance
with a budget approved by the lender. As of June 30, 1995, a
balance of $436,000 was held by the third-party escrow agent in
accordance with the Cash Management Agreement. The agreement
also provides for a capital reserve account, which is maintained
by the escrow agent. Disbursements from this account, which is
funded each month with any excess operating cash flows, are
limited to capital expenditures approved by the lender. As of
June 30, 1995, the balance of the capital reserve account was
$867,000.
NOTE 4. ADVISORY AND MANAGEMENT AGREEMENTS
The Trust has entered into an agreement with Equitable Realty
Portfolio Management, Inc., a wholly owned subsidiary of
Equitable Real Estate Investment Management, Inc. ("Equitable
Real Estate"), to act as its "Advisor". The Advisor makes
recommendations to the Trust concerning investments,
administration and day-to-day operations.
Under the terms of the advisory agreement, as amended in December
1989, the Advisor receives a management fee that is based upon
the average daily per share price of the Trust's shares plus the
average daily balance of outstanding mortgage indebtedness. Such
fee is calculated using a factor of 42.5 basis points (0.425%)
and is generally payable monthly without subordination (see Note
5). For the six months ended June 30, 1995 and 1994, portfolio
management fees were $206,000 and $216,000, respectively.
As part of the 1989 amendment to the advisory agreement, the
Advisor forgave one-half, or $2,720,000, of the total amount of
fees previously deferred pursuant to subordination provisions of
the original advisory agreement. The remaining deferred fees are
to be paid upon the disposition of the Trust's properties. For
financial reporting purposes, the deferred balance is discounted
from December 1, 1996. As of June 30, 1995, the discounted
liability for deferred management fees was $2,279,000.
7
<PAGE> 8
EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. ADVISORY AND MANAGEMENT AGREEMENTS (CONTINUED)
The Trust has also entered into agreements for the on-site
management of each of its properties. Harrisburg East Mall is
managed by Compass Retail, Inc. ("Compass") a subsidiary of
Equitable Real Estate and an affiliate of the Advisor. Castleton
Commercial Park is managed by an unaffiliated third-party
management company.
Management fees paid to Compass are generally based upon a
percentage of rents and certain other charges. Such fees are
comparable to those charged by unaffiliated third-party
management companies providing comparable services. For the six
months ended June 30, 1995 and 1994, management fee expense
attributable to services rendered by Compass was $145,000 and
$154,000, respectively.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Harrisburg Anchor Tenant Replacement and Outparcel Building
Redevelopment
On August 1, 1994, Hess's Department Stores, Inc. ("Hess's")
announced its intentions to sell certain of its stores, including
its locations at Harrisburg, to the May Department Stores Company
("May"). In November 1994, the Hess's location at Harrisburg
closed, its anchor tenant lease was assigned to May, and
remodeling and expansion of the former Hess's space commenced for
the purpose of accommodating the opening of a Hecht's department
store (a division of May).
The expansion of the Hecht's space resulted in the relocation in
April 1995 of Toys 'R' Us (which was situated in the basement
area previously occupied by Hess's) to Harrisburg's outparcel
building. Prior to the Toys 'R' Us relocation, the Trust
redeveloped the outparcel building to suit this tenant's
specifications. The redevelopment project, which was
substantially complete by the end of the first quarter of 1995,
cost approximately $3,450,000. As of June 30, 1995, approximately
$1,330,000 remains to be spent. Such future expenditures are
principally comprised of the remaining payments due the general
contractor and tenant allowances due Toys 'R' Us, and are
anticipated to be paid during the third quarter of 1995. This
project is being funded by existing cash reserves, pursuant to
approval by the mortgage lender as required under the terms of
the Cash Management Agreement (see Note 3), and 1995 operating
cash flows.
In accordance with the terms of its lease, May is responsible for
the costs associated with the remodeling and expansion of the
Hecht's space. It is anticipated that Hecht's will open in the
fourth quarter of 1995.
As a condition of its approval of the addition of Hecht's and the
relocation of Toys 'R' Us, the Trust's mortgage lender required
the deferral of payment to the Advisor of the portfolio
management fee
8
<PAGE> 9
EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
(described in Note 4). Such deferral commenced in December 1994
and continues until such time as the lender has been provided
with evidence that the redevelopment project was completed within
budget and that certain construction-related documentation has
been finalized. Upon satisfaction of these conditions, which
management believes will occur during the third quarter of 1995,
the Advisor will be entitled to payment of advisory fees deferred
since December 1994 and to payment of ongoing advisor fees
subsequently earned on a current basis.
Debt Maturities
The Trust's debt instruments mature in December 1995 in the
aggregate principal amount of $81,767,000, which assumes no 1995
prepayments resulting from property dispositions. Management
intends to refinance this debt on a short-term basis with either
the existing lender or a new lending institution such that the
terms of the Trust's financing will be consistent with its
current property disposition strategy. Based on its current
assessment of the credit markets, Management believes that a new
debt facility would be well collateralized as evidenced by the
Properties' aggregate appraised value of $116,100,000 as of
December 31, 1994, and that such new facility will be in place on
or before the maturity date of the existing debt. However, if
the Trust is unable to refinance or replace the existing debt at
commercially reasonable terms or at all, Management's plans with
respect to liquidating the Trust's real estate investments will
be accelerated to satisfy its debt obligations.
John Wanamaker
In January 1994, Woodward & Lothrop, the parent company of John
Wanamaker ("Wanamaker", an anchor department store tenant at
Harrisburg), filed for protection under Chapter 11 of the United
States Bankruptcy Code (the "Code"). While under court
protection, the Wanamaker location at Harrisburg has continued to
operate and has remained current on all post-petition billings.
In June 1995, Woodward & Lothrop announced its intentions to sell
a majority of its department stores, including its Wanamaker
location at Harrisburg. In advance of the bankruptcy court's
consideration of this matter, competing bids were received from
two retail groups, and on August 8, 1995, the bankruptcy court
approved such department store sales to the retail group
comprised of May Department Stores Company ("May") and J.C.
Penney Company. May has indicated that it will purchase the
Wanamaker location at Harrisburg. However, May also indicated to
the bankruptcy court its intentions to assign this particular
leasehold interest to another, unspecified retailer given the
scheduled opening of its Hecht's store at Harrisburg later this
year. Pursuant to the terms of the existing Wanamaker lease, the
Trust must consent to any assignment of this lease.
9
<PAGE> 10
EQK REALTY INVESTORS I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Wanamaker location at Harrisburg is currently undergoing an
estimated $10 million interior renovation, which Woodward &
Lothrop indicated will be completed in September 1995. Management
believes that this newly renovated interior will minimize the
down time associated with the conversion of Wanamaker to a
new store format. Although Management can not currently predict
the impact, if any, that these transactions may have on the
operations or future value of the Mall, Management does not
believe these transactions will have a materially adverse effect
on the financial condition of the Trust.
10
<PAGE> 11
EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial
statements and notes that appear on pages 3 to 10.
FINANCIAL CONDITION
Capital Resources
The Trust's portfolio at June 30, 1995 consists of two real estate investments
(the "Properties"): Castleton Commercial Park ("Castleton"), an office park
located in Indianapolis, Indiana; and Harrisburg East Mall ("Harrisburg" or the
"Mall"), a regional shopping center located in Harrisburg, Pennsylvania.
During 1993, the Company sold its two remaining office buildings within its
office complex in Atlanta, Georgia, formerly known as Peachtree-Dunwoody
Pavilion or "Peachtree."
As discussed in Note 1 to the financial statements, the Trust continues to
pursue the orderly liquidation of its real estate portfolio. During this
process, the Trust will make certain capital expenditures required to enhance
or maintain the value of the Properties, including tenant allowances associated
with leasing activity. The Trust anticipates making capital expenditures
during the remainder of 1995 of approximately $2,300,000, including
approximately $1,330,000 associated with the redevelopment of Harrisburg's
outparcel building as described below. One of the conditions of the mortgage
restructuring completed in 1992 was the establishment of a capital reserve
account, which is maintained by a third-party escrow agent and from which
expenditures must be approved by the lender. The balance of this account at
June 30, 1995 was $867,000 which, together with operating cash flows for the
remainder of the year, is expected to be sufficient to fund the capital
expenditure requirements.
Debt Maturities
The Trust's debt instruments mature in December 1995 in the aggregate principal
amount of $81,767,000, which assumes no 1995 prepayments resulting from
property dispositions. Management intends to refinance this debt on a
short-term basis with either the existing lender or a new lending institution
such that the terms of the Trust's financing will be consistent with its
current property disposition strategy. Based on its current assessment of the
credit markets, Management believes that a new debt facility would be well
collateralized as evidenced by the Properties' aggregate appraised value of
$116,100,000 as of December 31, 1994, and that such new facility will be in
place on or before the maturity date of the existing debt. However, if the
Trust is unable to refinance or replace the existing debt at commercially
reasonable terms or at all, Management's plans with respect to liquidating the
Trust's real estate investments will be accelerated to satisfy its debt
obligations.
11
<PAGE> 12
EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Harrisburg Anchor Tenant Replacement and Outparcel Building Renovation
On August 1, 1994, Hess's Department Stores, Inc. announced its intentions to
sell certain of its stores, including its location at Harrisburg, to the May
Department Stores Company ("May"). In November 1994, the Hess's location at
Harrisburg closed, its anchor tenant lease was assigned to May, and remodeling
and expansion of the former Hess's space commenced for the purpose of
accommodating the opening of a Hecht's department store (a division of May).
The expansion of the Hecht's space resulted in the relocation in April 1995 of
Toys 'R' Us (which was situated in the basement area previously occupied by
Hess's) to Harrisburg's outparcel building. Prior to the Toys 'R' Us
relocation, the Trust redeveloped the outparcel building to suit this tenant's
specifications. The redevelopment project, which was substantially complete by
the end of the first quarter of 1995, cost approximately $3,450,000. As of
June 30, 1995, approximately $1,330,000 remains to be spent. Such future
expenditures are principally comprised of the remaining payments due the
general contractor and tenant allowances due Toys 'R' Us, and are anticipated
to be paid during the third quarter of 1995. This project is being funded by
existing cash reserves, pursuant to approval by the mortgage lender as required
under the terms of the Cash Management Agreement (see Note 3 to the financial
statements), and 1995 operating cash flows.
In accordance with the terms of its lease, May is responsible for the costs
associated with the remodeling and expansion of the Hecht's space. It is
anticipated that Hecht's will open in the fourth quarter of 1995.
Liquidity
The Trust generated $1,659,000 and $905,000 of cash flows from operating
activities during the six months ended June 30, 1995, and 1994, respectively.
The $754,000 increase in operating cash flows was attributable to the deferral
of 1995 portfolio management fees in the amount of $206,000 (see Note 4 to the
financial statements), and the timing of payment of certain recurring
operational expenses at both Properties.
In connection with the anchor tenant substitution of Hecht's for Hess's at
Harrisburg, the Trust expects an approximate $800,000 decrease in minimum rents
in 1995, including an approximate $100,000 decrease in base rent to be received
from Hecht's as compared to Hess's base rent. Subsequent to the opening of the
Hecht's store, anticipated to occur during the fourth quarter of 1995, the
minimum rent reduction is expected to amount to $400,000 per year. Such
reduction may be offset in whole or in part by increases in percentage rental
and other revenues as a result of the expected increase in customer traffic
associated with the inclusion of Hecht's as an anchor tenant.
12
<PAGE> 13
EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cash flows used in investing activities during the six months ended June 30,
1995 and 1994 amounted to $3,565,000 and $1,764,000, respectively. The 1995
results reflect expenditures of $2,120,000 related to the redevelopment of
Harrisburg's outparcel building and a $375,000 build-out allowance for a new
tenant at Harrisburg, in addition to other routine capital expenditures at both
Properties. The 1994 results include the final payments to contractors arising
from the renovation of Harrisburg (which was completed in late 1993) in the
amount of $489,000.
During the six month periods ending June 30,1995 and 1994, cash flows used in
financing activities were limited to mortgage principal payments on the Trust's
Term Loan.
In addition to the capital expenditure requirements described above, liquidity
requirements for the remainder of 1995 will also include principal and interest
payments of approximately $3,350,000 pursuant to the existing loan agreements
prior to such debt maturities in December 1995.
The Trust's Cash Management Agreement stipulates that all rental payments from
tenants are to be made directly to a third party escrow agent who also funds
monthly operating expenses in accordance with a budget approved by the lender.
The Trust believes that its cash flow for the remainder of 1995 will be
sufficient to fund its various operating requirements, including budgeted
capital expenditures and monthly principal and interest payments, although its
discretion with respect to cash flow management will be limited by the terms of
the cash management agreements.
RESULTS OF OPERATIONS
For the six months ended June 30, 1995, the Trust reported a net loss of
$2,018,000 ($0.22 per share) compared to a net loss of $1,549,000 ($0.17 per
share) for the six months ended June 30, 1994. For the second quarter of 1995,
a net loss of $890,000 ($0.10 per share) was reported compared to a net loss of
$621,000 ($0.07 per share) in the second quarter of 1994.
The Trust's revenues for the three and six months ended June 30, 1995 were
$4,113,000 and $8,079,000, respectively, representing decreases of $56,000 and
$108,000 over the comparable 1994 periods. Such changes reflect a decline in
Harrisburg's revenues partially offset by revenue growth at Castleton over the
prior year periods. The decrease in Harrisburg's revenues is primarily due to
the aforementioned reduction in minimum rents arising from the replacement of
Hess's by Hecht's and the related
13
<PAGE> 14
EQK REALTY INVESTORS I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
relocation of Toys 'R' Us to the outparcel building. In addition, revenues at
Harrisburg declined in 1995 as a result of the non-recurrence of a one-time
utility reimbursement received in 1994. Revenue growth at Castleton was
attributable to a 3% increase in occupancy over the comparable periods in 1994
and the receipt of lease buyout payments from certain tenants in the second
quarter of 1995. The space occupied by such vacating tenants has been
re-leased and, therefore, will not result in future revenue losses.
Operating expenses for the three and six month periods ending June 30, 1995
were $1,411,000 and $2,862,000, respectively, representing decreases of $10,000
and $46,000 over the comparable 1994 periods. Such decreases are attributable
to reductions in repairs and bad debt expense at Harrisburg, partially offset
by increases in repairs and utility expenses at Castleton.
Interest expense for the three and six month periods ended June 30, 1995
increased by $124,000 and $254,000, respectively, due to an increase in the
balance of the Mortgage Note resulting from the addition to principal of
accrued but not currently payable interest and the amortization of non-cash
expense arising from the issuance of warrants to the lender.
Other expenses - net consist of portfolio management fees, other costs related
to the operations of the Trust, and interest income earned on cash balances.
The increase in other expenses - net of $34,000 and $44,000 for the quarter and
six months ended June 30, 1995, respectively, is attributable to an increase in
expenses related to the Trust's disposition efforts, coupled with a decrease in
interest income attributable to lower cash balances during 1995.
In connection with the Harrisburg outparcel building renovation, the Trust's
mortgage lender required a deferral of payment to the Advisor of the portfolio
management fee (described in Note 4 to the financial statements). Such deferral
commenced in December 1994 and continues until such time as the lender has been
provided with evidence that the project was completed within budget and that
certain construction-related documentation has been finalized. Upon
satisfaction of these conditions, which management believes will occur in the
third quarter of 1995, the Advisor will be entitled to payment of advisory fees
deferred since December 1994 and to payment of ongoing advisory fees
subsequently earned on a current basis.
14
<PAGE> 15
EQK REALTY INVESTORS I
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
None
ITEM 2. Changes in Securities.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Shareholders was held on June 6,
1995. The only matter submitted to a vote at the meeting was the
election of five Trustees to serve for the ensuing year. All
members were elected without opposition.
ITEM 5. Other Information.
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2. None
4. None
10. None
11. See Note 2 to the Financial Statements.
15. Not Applicable
18. Not Applicable
19. None
22. None
23. Not Applicable
24. None
27. Financial Data Schedule
Included in EDGAR transmission only.
(b) Reports on Form 8-K.
The Trust filed a Current Report on Form 8-K dated June
22, 1995 that disclosed the identification of a printing
error contained within the independent auditors' report
appearing in the Trust's 1994 Annual Report. Such Form
8-K also disclosed that the Trust had undertaken a
shareholder mailing as of June 22, 1995 for the purposes
of notifying its shareholders of such printing error and
providing them with an appropriately worded independent
auditors' report.
15
<PAGE> 16
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 thereunto duly authorized.
Date: August 11, 1995 EQK REALTY INVESTORS I
By: /s/ Gregory R. Greenfield
-----------------------------
Gregory R. Greenfield
Executive Vice President and Treasurer
(Principal Financial Officer)
By: /s/ William G. Brown, Jr.
-----------------------------
William G. Brown, Jr.
Vice President and Controller
(Principal Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EQK REALTY INVESTORS I FOR THE PERIOD ENDED JUNE 30,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,792
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,277
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 135,875
0
0
<OTHER-SE> (133,080)
<TOTAL-LIABILITY-AND-EQUITY> 90,277
<SALES> 0
<TOTAL-REVENUES> 8,079
<CGS> 0
<TOTAL-COSTS> 2,862
<OTHER-EXPENSES> 2,939
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,296
<INCOME-PRETAX> (2,018)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,018)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
