<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED OCTOBER 31, 1996 COMMISSION FILE NO. 0-13804
THE CHICAGO DOCK AND CANAL TRUST
--------------------------------
(Exact name of registrant as specified in its charter)
ILLINOIS 36-2476640
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
455 EAST ILLINOIS STREET, SUITE 565
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CHICAGO, ILLINOIS 60611
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(Address of principal executive offices) (zip code)
(312) 467-1870
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing for the
past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON SHARES OF BENEFICIAL INTEREST - NO PAR VALUE PER SHARE, 5,786,300 SHARES
OUTSTANDING ON DECEMBER 13, 1996.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THE CHICAGO DOCK AND CANAL TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
OCTOBER 31, APRIL 30,
1996 1996
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(IN THOUSANDS)
INVESTMENT IN REAL ESTATE, at cost:
DEVELOPED PROPERTIES $70,514 $70,246
LAND AND LAND IMPROVEMENTS
HELD FOR DEVELOPMENT 16,523 16,961
LAND SUBJECT TO GROUND
LEASES 7,244 6,743
LESS:ACCUMULATED
DEPRECIATION AND AMORTIZATION (15,493) (14,104)
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NET INVESTMENT IN REAL ESTATE 78,788 79,846
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OTHER ASSETS:
CASH AND CASH EQUIVALENTS 987 757
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INVESTMENTS AVAILABLE FOR SALE, AT COST
(APPROXIMATE MARKET VALUE OF $7,532
AT OCTOBER 31, 1996) 7,502 5,973
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SHORT TERM INVESTMENTS-RESTRICTED,
AT COST (AND AT APPROXIMATE MARKET
VALUE) 204 203
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SECURITY DEPOSIT CASH 356 808
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RECEIVABLES:
TENANTS (INCLUDING $30,453 OF ACCRUED
BUT UNBILLED RENTS AT OCTOBER 31, 1996) 30,729 29,647
REAL ESTATE TAXES PAYABLE BY LESSEES 5,652 5,931
LAND IMPROVEMENTS 1,388 1,388
INTEREST 55 45
OTHER 189 225
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38,013 37,236
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OTHER ASSETS, NET 913 1,185
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$126,763 $126,008
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THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE BALANCE SHEETS.
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THE CHICAGO DOCK AND CANAL TRUST
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
OCTOBER 31, APRIL 30,
1996 1996
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(IN THOUSANDS)
LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
REAL ESTATE TAXES $4,375 $4,946
REAL ESTATE TAXES PAYABLE BY LESSEES 5,652 5,931
ACCRUED ENVIRONMENTAL REMEDIATION COSTS 725 750
OTHER 2,221 2,208
CASH DIVIDENDS PAYABLE 463 231
MORTGAGE NOTES PAYABLE 28,107 28,068
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TOTAL LIABILITIES 41,543 42,134
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SHAREHOLDERS' EQUITY:
COMMON SHARES OF BENEFICIAL INTEREST:
NO PAR VALUE, 20,000,000 AUTHORIZED,
5,944,200 ISSUED 3,121 3,101
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PREFERRED SHARES OF BENEFICIAL INTEREST:
NO PAR VALUE, 1,000,000 AUTHORIZED,
NONE ISSUED 0 0
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UNDISTRIBUTED INCOME BEFORE NET GAIN FROM
SALE OF REAL ESTATE PROPERTIES 10,339 9,020
UNDISTRIBUTED NET GAIN FROM SALE
OF REAL ESTATE PROPERTIES 72,372 72,372
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TOTAL UNDISTRIBUTED NET INCOME 82,711 81,392
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LESS:
TREASURY SHARES OF BENEFICIAL INTEREST,
AT COST-157,900 AND 160,400 AT OCTOBER 31,
1996 AND APRIL 30, 1996, RESPECTIVELY (612) (619)
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TOTAL SHAREHOLDERS' EQUITY 85,220 83,874
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$126,763 $126,008
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THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE BALANCE SHEETS.
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
REVENUES:
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL PROPERTY $4,777 $3,931 $9,386 $7,439
REAL ESTATE TAXES PAYABLE BY LESSEES 1,617 1,483 3,047 3,324
------------ ------------ ------------ ------------
TOTAL REVENUES 6,394 5,414 12,433 10,763
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EXPENSES:
REAL ESTATE TAXES 715 743 1,430 1,472
REAL ESTATE TAXES PAYABLE BY LESSEES 1,617 1,483 3,047 3,324
PROPERTY OPERATING EXPENSES 748 859 1,575 1,565
GENERAL AND ADMINISTRATIVE 426 550 869 1,012
DEPRECIATION AND AMORTIZATION 760 756 1,501 1,506
INTEREST EXPENSE 725 720 1,450 1,435
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TOTAL EXPENSES 4,991 5,111 9,872 10,314
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OPERATING INCOME 1,403 303 2,561 449
INVESTMENT AND OTHER INCOME 129 86 233 172
EQUITY IN NET LOSS OF LCD PARTNERSHIP (91) (94) (192) (197)
RESTRUCTURING EXPENSES (384) 0 (473) 0
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NET INCOME $1,057 $295 $2,129 $424
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------------ ------------ ------------ ------------
EARNINGS PER SHARE:
PRIMARY $0.18 $0.05 $0.36 $0.07
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------------ ------------ ------------ ------------
FULLY DILUTED $0.17 $0.05 $0.35 $0.07
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</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE
AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
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(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $2,129 $424
ADD (DEDUCT)-ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,501 1,506
EFFECT OF AVERAGING HOTEL RENTAL REVENUE (1,374) (1,799)
EQUITY IN NET LOSS OF LCD PARTNERSHIP 192 197
CHANGES IN RECEIVABLES 1,048 (3,434)
CHANGES IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES (862) 4,795
DIFFERENCE BETWEEN CURRENT INTEREST PAYABLE AND CONTRACTUAL INTEREST 88 632
AMORTIZATION OF LOAN FEES 41 41
OTHER 151 140
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 2,914 2,502
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CASH FLOWS FROM INVESTING ACTIVITIES:
NET (ACQUISITION) DISPOSITION OF SHORT-TERM INVESTMENTS (1,529) (774)
NET (ACQUISITION) DISPOSITION OF SHORT-TERM INVESTMENTS-RESTRICTED (1) (600)
ADDITIONS TO INVESTMENTS IN REAL ESTATE (522) (314)
LEASE COMMISSIONS AND OTHER (32) (39)
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CASH FLOWS (USED IN) INVESTING ACTIVITIES (2,084) (1,727)
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CASH FLOWS FROM FINANCING ACTIVITIES:
CASH DIVIDENDS DECLARED (810) (116)
CHANGE IN DIVIDENDS PAYABLE 232 0
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 27 0
PRINCIPAL PAYMENTS ON LOANS (49) (45)
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CASH FLOWS (USED IN) FINANCING ACTIVITIES (600) (161)
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INCREASE IN CASH AND CASH EQUIVALENTS 230 614
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 757 344
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CASH AND CASH EQUIVALENTS, END OF PERIOD $987 $958
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</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
1. Business of the Trust
The Trust is an equity oriented real estate investment trust which owns
partially developed land (including certain developed sites) located in downtown
Chicago, Illinois and income producing real property in Chicago and elsewhere.
The Trust was organized in 1962, succeeding to the business of its corporate
predecessor. The Trust has elected to continue its operation as a real estate
investment trust under the Internal Revenue Code of 1986, as amended. The Trust
is self administered.
As of October 31, 1996, the Trust's principal real estate investments
consisted of: (i) fee title or other interests in approximately 22 acres of
partially developed land in Cityfront Center in downtown Chicago (including
certain developed sites); (ii) Waterplace Park, an office complex in
Indianapolis, Indiana; and (iii) Lincoln Garden, an office complex in Tampa,
Florida.
2. Summary of Significant Accounting Policies
The financial statements have been prepared in conformity with generally
accepted accounting principles and reporting practices. Significant accounting
policies are described below and reference is made to the Notes to Consolidated
Financial Statements in the Trust's Form 10-K filed with the Securities and
Exchange Commission on July 9, 1996.
The financial statements in this report have not been audited by
independent public accountants. In the opinion of management, all adjustments
necessary for the fair presentation of the financial position and the results of
operations for the interim periods have been made. The results for the three
and six month periods are not necessarily indicative of the results for the full
year.
3. Subsidiaries and Joint Venture
CDCT Plaza Corporation:
CDCT Plaza Corporation (the "Plaza Corp.") was formed by the Trust as a
wholly owned subsidiary. The Plaza Corp. owns or controls the 400 stall parking
facility under and adjacent to Ogden Plaza. The Plaza Corp. owns the area under
Park Drive, adjacent to Ogden Plaza, has a lessee's interest pursuant to a long
term lease from the Chicago Park District in the area under Ogden Plaza, and has
a licensee's interest in the area under Columbus Drive, adjacent to Ogden Plaza,
pursuant to a license with the City of Chicago. The license expires February
2002, subject to the City of Chicago's right to cancel the license for the
payment of a fee to
<PAGE>
the Plaza Corp. The area subject to the license contains 100 parking stalls and
is separate from the main portion of the parking facility which contains 300
stalls. An independent contractor operates the 400 stall parking facility, with
the Plaza Corp. receiving a varying percentage of gross revenues. The Trust
consolidates the operations of the Plaza Corp. in these financial statements.
CDCT Residence Corporation:
CDCT Residence Corporation (the "Residence Corp.") is a wholly owned
subsidiary which was capitalized with land located at the southeast corner of
East North Water and New Streets, (the "High-Rise" site) in Cityfront Center.
The Trust consolidates the operations of the Residence Corp. in these financial
statements.
In August 1989, the Residence Corp. entered into a partnership, LCD
Partnership ("LCD"), with Daniel E. Levin ("Levin"). The Residence Corp.
contributed the High-Rise site which was valued at $6,602,000 and which had an
historic cost of $1,689,000. Levin contributed cash, building plans for the
High-Rise building and a note for $903,000 which matured and was paid in
September 1991. Levin's contribution was valued at $3,301,000. The Residence
Corp. is a two-thirds partner in LCD and Levin is a one-third partner. Major
decisions of LCD, however, require unanimous approval. Accordingly, the
Residence Corp. accounts for its investment in LCD under the equity method.
In August 1989, LCD entered into a joint venture, New Street Joint Venture
("NSJV"), with Northwestern Mutual Life Insurance Company ("Northwestern
Mutual"). LCD contributed the High-Rise site, the plans and other assets
related to the development of the building (excluding the $903,000 note from
Levin). LCD's capital account was credited with $9,000,000. Northwestern
Mutual contributed an equal amount of cash. Northwestern Mutual and LCD are
50/50 partners in NSJV, subject, however, to Northwestern Mutual's priority over
LCD in certain distributions of cash flow and proceeds from sale or refinancing.
LCD accounts for its investment in NSJV under the equity method. The NSJV
agreement provides for Northwestern Mutual to receive a priority return of
operating cash flow and the proceeds from sale or refinancing of the High-Rise.
Cash flow must increase significantly from its current level for LCD to receive
any cash distribution from NSJV after the payment of Northwestern's preferential
return.
Northwestern Mutual also loaned NSJV $36,700,000 on a non-recourse basis.
In addition, the NSJV Agreement calls for LCD and Northwestern Mutual to
contribute, if necessary, their prorata shares of shortfalls in operating and
capital requirements. The High-Rise building opened in July 1991 and contains
480 units.
As of June 30, 1996, total assets and liabilities of NSJV were $45,724,000
and $38,599,000, respectively. For the six months ended June 30, 1996, NSJV
recorded gross revenues of $3,558,000 and total expenses of $4,227,000, which
resulted in a net loss of $669,000. Included in total expenses is depreciation
and amortization
<PAGE>
expense, which for the six months ended June 30, 1996 equaled $424,000. LCD has
a fiscal year which ends on April 30 and NSJV uses the calendar year.
Accordingly, LCD records its proportionate share of NSJV's operating results
four months in arrears.
4. Investments in Real Estate
Land and Land Improvements Held for Development -
Surface Parking:
During the third quarter of fiscal 1996, the Trust leased four surface
parking lots containing 725 stalls to System Parking, Inc. The lots had
previously been leased to North Pier Chicago on a fixed rental basis. The new
lease started January 1, 1996 and provides that the Trust will receive varying
percentages of the gross revenue generated by the lots. System Parking is
responsible for paying the operating expenses of the lots, but the Trust has the
obligation to pay the real estate taxes. The recent renovation of nearby Navy
Pier has increased demand for parking in the area and, as a result, the Trust
has received an increase in net cash flow under the terms of the new lease
compared to the prior lease. For calendar year 1996, the new lease initially
provided for minimum rent of $3,600,000. However, due to the remediation of the
Tested Site (See Note 7), the minimum rent for calendar year 1996 was adjusted
to $3,200,000. The minimum annual rent for calendar year 1997 is $3,600,000.
The minimum monthly rental during calendar 1997 will be reduced by 50% during
each month that the Tested Site is undergoing remediation.
Land Subject to Ground Leases -
Sheraton Chicago Hotel & Towers:
During fiscal 1989, the Trust entered into a 50 year ground lease (with
lessee options to extend the term 49 more years) with Tishman Realty Corporation
of Cook County ("Tishman Realty") for approximately 2.3 acres of land in
Cityfront Center in Chicago. Tishman Realty subsequently assigned this lease to
Cityfront Hotel Associates Limited Partnership ("Cityfront Hotel Associates"),
the current lessee. The site is currently improved with a 1,200 room convention
hotel called the Sheraton Chicago Hotel & Towers which opened in March 1992.
The lease provides for minimum annual rental payments which were fixed at
$150,000 through calendar 1994, and for payments which totalled $75,000 for the
six month period January 1, 1995 through June 30, 1995. The payments increased
to $900,000 for the six month period July 1, 1995 through December 31, 1995, and
will equal $2,100,000 for calendar 1996. After 1996, the base rent increases
annually by the increase in the Consumer Price Index, but not less than 5% nor
more than 10% per year. In addition to the base rent, percentage rent became
payable beginning July 1, 1995. Percentage rent equals the amount by which base
rent is exceeded by the product obtained by multiplying gross revenues from
operations by certain applicable percentages ranging from 2% - 5%.
The lessee also acquired an option to purchase the land. The earliest date
on
<PAGE>
which the land could be acquired pursuant to the option is July 30, 2003. The
purchase option provides that the land price will be the greater of (i) $40
million at January 1, 1999 escalating thereafter by the increase in the Consumer
Price Index, but not less than 5% nor more than 10% per year or (ii) the highest
annual ground rent payable during the thirty-six month period preceding the
closing date divided by the Applicable Capitalization Rate which ranges from
7.2% - 7.5%. In addition, in the event the option is exercised during the
twelfth operating year beginning April 1, 2003, a supplemental amount of $2.5
million will be added to the purchase price. If the land is acquired at
its earliest date, July 30, 2003, the minimum purchase price which the Trust
would receive is approximately $52 million.
The Trust recognizes as rental revenue the average minimum base rent
payable over the initial 50 year term of the lease. This rent increases from
$150,000 in 1989 to approximately $16 million in 2038. The average rent
calculation also considers the minimum purchase price pursuant to the terms of
the above described purchase option. Under the Trust's method of revenue
recognition, the total carrying value of the land and the related accrued rent
receivable will never exceed the minimum option purchase price. The annual base
rental income recognized on the lease is approximately $4,848,000. The cash
base rent received during the first six months of fiscal 1997 equaled
$1,050,000.
The lease obligated the Trust to construct certain Phase II infrastructure
prior to the opening of the hotel. These development obligations consisted
primarily of Ogden Plaza and the elevated roadways adjacent to Columbus Drive
and surrounding the plaza. In addition to the infrastructure obligation under
the terms of the lease, the Trust also constructed the parking facility under
Ogden Plaza. Phase II infrastructure was substantially completed in March 1992.
This infrastructure was financed with the proceeds from a loan which has debt
service payments which, for the first eight years, correspond to the base rent
payable on the ground lease.
5. Mortgage Notes Payable
At October 31, 1996, mortgage notes payable consisted of two notes secured
by first mortgages on the rents from and the land under the Kraft Building, and
the rents from and the land under the Sheraton Chicago Hotel & Towers. Both
notes are non-recourse with respect to the Trust.
The principal balance of the Kraft Building note issued in May 1987, was
$5,672,000 at October 31, 1996. It is due in April 2016, bears interest at an
annual rate of 9.5%, payable monthly, and is self-amortizing over its term. The
carrying value of collateral pledged on this note at October 31, 1996 equaled
$15,000.
At October 31, 1996, the principal balance of the note secured by the rents
from and the land under the Sheraton Chicago Hotel & Towers was $22,435,000.
The note is due January 1, 2005. The initial principal amount of the loan was
$14,367,000 and the interest rate is 10.25%. Amounts are payable monthly, but
<PAGE>
through December 31, 1998, the debt service currently payable coincides with the
ground rent due under the Sheraton lease. The difference between current
interest payable and the contractual interest is added to principal. Starting
in 1999, debt service will be computed on a 30 year amortization based on the
then current principal balance. The carrying value of collateral pledged on
this note at October 31, 1996 was $35,809,000 and consisted of land, the
depreciated basis in land improvements and accrued but unbilled rent.
On December 23, 1994, the Trust entered into a revolving credit agreement
with First Bank, N.A. The agreement has a three year term and provides for a
maximum commitment by the lender of $20,000,000. The agreement is secured by
the Cityfront Place Mid-Rise. Initially the Trust borrowed $4,000,000 of the
available credit and used the proceeds to retire the $4,000,000 Cityfront Place
Mid-Rise note issued February 25, 1992. During the fourth quarter of fiscal
1995, the Trust repaid the $4,000,000 initially advanced under the credit
facility using available cash and cash equivalents and investments available for
sale. Since that time the Trust has not borrowed any of the available credit.
Accordingly, at October 31, 1996, the full amount of the facility is available.
Interest only, based on LIBOR plus 135 basis points, is due monthly on the
amount advanced under the revolving credit agreement. The carrying value of
collateral pledged on this revolving credit agreement at October 31, 1996
equaled $45,421,000.
6. Short-Term Investments - Restricted
As a requirement of the revolving credit agreement entered into by the
Trust on December 23, 1994 with First Bank, N.A., the Trust agreed to make
monthly payments into an escrow account. This account funds the semi-annual
real estate tax payments due on the Cityfront Place Mid-Rise. At October 31,
1996, the balance in this account equaled $204,000.
7. Environmental Remediation Costs
In June 1993, the U.S. Environmental Protection Agency (the "EPA")
conducted preliminary surface tests on a 2.8 acre site used as a surface parking
lot (the "Tested Site"). The Tested Site was examined because thorium, a
radioactive element, may have been used on the Tested Site earlier in the
century by a former tenant, in a building which was demolished in the mid 1930's
after the expiry of the tenant's lease.
In January 1994, the Trust entered into a consent order with the EPA
regarding preliminary testing to be performed on the Tested Site. Initial on-
site tests were conducted pursuant to that order in May 1994 and laboratory
analysis was completed on the samples in June 1994. The results of the tests
indicate one concentrated area which appears to be contaminated by thorium, and
other scattered areas on the Tested Site with significantly lower levels of
contamination. The most contaminated area is within the footprint of the
building previously occupied by the
<PAGE>
former tenant. The Trust submitted the results of the testing to the EPA in
September 1994.
The Trust's consultants have prepared cost estimates to remediate the
contaminated areas on the Tested Site which range from $1 million to $7 million,
with $3.5 million representing the most likely estimated cost of the required
remediation, which involves excavation and disposal of the areas contaminated by
thorium. That range of costs is estimated based on the results of surface
measurements, the analysis of samples gathered from nine borings taken on the
site and the review of the Unilateral Administrative Order. While the tests
conducted to date were made pursuant to the consent order with the EPA,
additional conditions may exist on the site which would be discovered only upon
excavation.
The Trust entered into an agreement on August 11, 1995 (which was expanded
and superseded by an agreement dated January 18, 1996) with Kerr-McGee Chemical
Corporation ("KMCC"), the successor to a former tenant of the Tested Site,
regarding the financial responsibilities of the parties for the remediation of
the Tested Site (the "Reimbursement Agreement"). Under the terms of the
Reimbursement Agreement, KMCC is responsible for the remediation of the Tested
Site with respect to thorium contamination and any thorium/mixed waste
contamination, and the Trust has the obligation to reimburse KMCC for 25% of the
cost of this remediation, not to exceed a maximum reimbursement obligation of
the Trust of $750,000. Legal counsel has advised the Trust that it may have
claims for coverage for some or all of its share of the remediation costs under
its current or prior insurance policies.
On June 6, 1996, the EPA issued a Unilateral Administrative Order which
requires the remediation of the Tested Site and the disposal of the contaminated
material at an approved off-site facility. In response to this Order, KMCC, in
conjunction with the Trust, submitted a work plan for the remediation to the
EPA. The EPA has since reviewed and commented on the work plan and the Trust
and KMCC responded to the comments. In September, additional drilling began to
more precisely define the area to be remediated. Remediation began in October
1996, with completion expected by the end of calendar year 1996 or early 1997.
During the remediation, no parking is allowed on the Tested Site. Additional
conditions may exist on the site which would be discovered only upon excavation
which may impact the timing of remediation.
In the fourth quarter of fiscal 1995, the Trust recorded environmental
remediation expense of $1,035,000 based upon the resolution of accounting and
other issues related to environmental remediation costs of property held for
development and the execution of the Reimbursement Agreement with KMCC. This
amount included the Trust's share of testing and legal costs related to the
Tested Site through April 30, 1995, plus $750,000, which is the maximum
reimbursement obligation of the Trust pursuant to the terms of the Reimbursement
Agreement. This amount excluded the amount of the potential claims for some or
all of the Trust's
<PAGE>
share of the remediation costs under the Trust's current or prior insurance
policies.
8. Agreement and Plan of Merger
On September 27, 1996, the Trust entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement") with Newsweb Corporation providing
for the purchase of all outstanding shares of the Trust by Newsweb
Corporation for $21.00 per share in cash. The Trust has called a special
meeting of its shareholders for January 9, 1997 to vote on the proposed
merger with Newsweb Corporation.
On November 29, 1996, the Trust announced that it had received an
unsolicited proposal from Cityfront Center, L.L.C. ("Cityfront") to acquire
all of the outstanding shares of the Trust for $22.00 in cash. On December
10, 1996, the Trust announced that it had received a revised proposal from
Cityfront to acquire all of the outstanding shares of the Trust for $23.00
per share in cash. The Trust's press releases dated November 29, 1996 and
December 10, 1996 are included as exhibits hereto and incorporated herein by
this reference. Each of the Trust's press releases disclosed that the Board
of Trustees of the Trust had determined that, in order to comply with its
fiduciary duties to the Trust's shareholders under applicable law, the Trust,
consistent with its rights under the Merger Agreement, would meet with
representatives of Cityfront regarding its proposal. There can be no
assurance that any discussions or negotiations with Cityfront will result in
a definitive agreement between Cityfront and the Trust.
9. Earnings Per Share
Primary earnings per share is computed by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period. The number of common shares is increased by the
number of shares issuable on the exercise of stock options if the market price
of the common stock exceeds the exercise price of the options. This increase in
the number of common shares is reduced by the number of common shares that are
assumed to have been purchased with the proceeds from the exercise of the
options. These purchases are assumed to have been made at the average price of
common stock during the period. Fully diluted earnings per share is determined
in the same manner except that the stock price at the end of the period is used.
The number of shares used in the primary earnings per share computation for
the three and six months ended October 31, 1996 was 5,996,736 and 5,996,232,
respectively. The number of shares used in the fully diluted earnings per share
computation for the three and six months ended October 31, 1996 was 6,057,396
and 6,056,892, respectively. The number of shares used for the prior year
computation was 5,783,800 in all cases.
<PAGE>
ITEM 2
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
On September 27, 1996, the Trust entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement") with Newsweb Corporation providing
for the purchase of all outstanding shares of the Trust by Newsweb
Corporation for $21.00 per share in cash. The Trust has called a special
meeting of its shareholders for January 9, 1997 to vote on the proposed
merger with Newsweb Corporation.
On November 29, 1996, the Trust announced that it had received an
unsolicited proposal from Cityfront Center, L.L.C. ("Cityfront") to acquire
all of the outstanding shares of the Trust for $22.00 in cash. On December
10, 1996, the Trust announced that it had received a revised proposal from
Cityfront to acquire all of the outstanding shares of the Trust for $23.00
per share in cash. The Trust's press releases dated November 29, 1996 and
December 10, 1996 are included as exhibits hereto and incorporated herein by
this reference. Each of the Trust's press releases disclosed that the Board
of Trustees of the Trust had determined that, in order to comply with its
fiduciary duties to the Trust's shareholders under applicable law, the Trust,
consistent with its rights under the Merger Agreement, would meet with
representatives of Cityfront regarding its proposal. There can be no
assurance that any discussions or negotiations with Cityfront will result in
a definitive agreement between Cityfront and the Trust.
As of November 1, 1996, East Water Place, L.P., the developer lessee of
East Water Place Townhomes had leased all 56 townhome lots from the Trust.
Initial occupancy of the townhomes occurred in November 1996.
On June 6, 1996, the EPA issued a Unilateral Administrative Order which
requires the remediation of an area in Cityfront Center used as a parking lot
known as the Tested Site. Kerr-McGee Chemical Corporation ("KMCC"), which is
responsible for the remediation of the Tested Site, in conjunction with the
Trust submitted a work plan for the remediation to the EPA. The EPA has since
reviewed and commented on the work plan and the Trust and KMCC responded to the
comments. In September, additional drilling began to more precisely define the
area to be remediated. Remediation began in October 1996, with completion
expected by the end of calendar year 1996 or early 1997. During the
remediation, no parking is allowed on the Tested Site. Additional conditions
may exist on the site which would be discovered only upon excavation which may
impact the timing and the extent of remediation.
During the third quarter of fiscal 1995, the Trust sold a parcel of land to
the
<PAGE>
Chicago Music and Dance Theater, Inc. (the "Theater") for the construction of a
1,500 seat performing arts theater in Cityfront Center. The Theater reports it
is close to raising the necessary financing for the construction of the project.
The Trust retained repurchase rights for the site if the Theater had not made a
substantial commencement of construction prior to September 1, 1996, subject to
force majeure delays (which date was extended to October 1, 1996, subject to
force majeure delays, by agreement of the Trust and the Theater dated August 30,
1996). The Theater began site preparation with its existing funds on an interim
basis prior to October 1, 1996.
Recently the actual calendar 1995 real estate tax bills for the Trust's
Cityfront Center property were released by the Cook County Assessor. These
bills were lower than the estimate reflected as of April 30, 1996.
During the first six months of fiscal 1997, the Mid-Rise and High-Rise
buildings of Cityfront Place continued their strong performances. Average
occupancy during the period was 95% and 96% for the Mid-Rise and High-Rise
respectively. At the Trust's two properties outside of Chicago, occupancy at
Lincoln Garden in Tampa, Florida and at Waterplace Park in Indianapolis, Indiana
rose to 96% and 100%, respectively, at October 31, 1996.
RESULTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 VERSUS
SIX MONTHS ENDED OCTOBER 31, 1995
Revenues:
Revenue from rental property increased for the six months ended October
31, 1996 compared to the same period in the prior year primarily due to
additional revenue generated by the Trust's surface parking lots. As a
result of a lease, which began January 1, 1996, with System Parking, Inc.,
current period revenues from these lots increased $1,309,000 over the same
period in the prior year. Current period revenues also exceeded revenues from
the first six months of fiscal 1996 for the Mid-Rise, the Ogden Plaza parking
facility, Waterplace Park and Lincoln Garden by a total of $470,000. The
current period also reflects revenues generated by the East Water Place
Townhomes of $93,000. No townhome revenue was recorded during the first six
months of fiscal 1996. Finally, the Trust recorded $75,000 in percentage
rent from the Sheraton Chicago Hotel & Towers during the current period. No
percentage rent was recorded during the first six months of fiscal 1996.
Under the terms of the lease with System Parking, Inc., the Trust has the
obligation to pay real estate taxes on all four of the surface parking lots.
Under the prior lease, the lessee had the responsibility for the payment of real
estate taxes. As
<PAGE>
a result, real estate taxes payable by lessees decreased in the current period.
Real estate taxes payable by lessees are also reflected as an expense, and
therefore, do not affect net income.
Equity in Net Loss of LCD Partnership reflects the Trust's effective one-
third share of the operations of New Street Joint Venture, the entity which owns
the Cityfront Place High-Rise. The loss during the Trust's first six months of
fiscal 1997, which ended October 31, 1996, reflects the building's operations
from January 1, 1996 through June 30, 1996, the first six months of New Street
Venture's fiscal year. The current period loss had no impact on Trust cash
flows since New Street Joint Venture did not require additional equity
contributions and because of the cash flow priority of LCD's partner in New
Street Joint Venture.
Expenses:
Although real estate tax expense decreased by only $42,000 this period
compared to the first six months of fiscal 1996, two major differences exist
between the periods. First, actual calendar 1995 real estate tax bills were
lower than the estimate reflected as of April 30, 1996. Second, under the terms
of its lease with System Parking, Inc., the Trust assumed the responsibility for
real estate taxes on all four of the surface parking lots. Under the terms of
the prior lease, the lessee had the responsibility for the payment of taxes and
these were reported as real estate taxes payable by lessees.
General and administrative expense decreased for the current period
primarily due to lower legal and accounting fees and lower trustee meeting
expenses.
Restructuring expenses consist primarily of legal and consulting fees
and trustee meeting expenses related to the solicitation of indications of
interest for a potential business combination involving the Trust, which led
to the Agreement and Plan of Merger with Newsweb Corporation.
THREE MONTHS ENDED OCTOBER 31, 1996 VERSUS
THREE MONTHS ENDED OCTOBER 31, 1995
Revenues:
Revenue from rental property increased for the three months ended
October 31, 1996 compared to the same period in the prior year primarily due
to additional revenue generated by the Trust's surface parking lots. As a
result of a lease, which began January 1, 1996, with System Parking, Inc.,
current quarter revenues from these lots increased by $485,000 over the same
quarter in the prior year. Current quarter revenues also exceeded revenues
from the second quarter of fiscal 1996 for the Mid-Rise, the Ogden Plaza
parking facility, Waterplace Park and Lincoln Garden by a total of $231,000.
The current quarter also reflects revenues generated by the East Water Place
Townhomes of $55,000. No townhome revenue was recorded during the second
quarter of fiscal 1996. Finally, the Trust recorded $75,000 in percentage
rent from the Sheraton
<PAGE>
Chicago Hotel & Towers during the current quarter. No percentage rent was
recorded during the second quarter of fiscal 1996.
Real estate taxes payable by lessees reflects a total increase of $244,000
in the current quarter on the Sheraton Chicago Hotel & Towers and the East Water
Place Townhomes. This increase is partially offset by a decrease in the real
estate taxes payable by lessees for the surface parking lots. Real estate taxes
payable by lessees are also reflected as an expense, and therefore, do not
affect net income.
Equity in Net Loss of LCD Partnership reflects the Trust's effective one-
third share of the operations of New Street Joint Venture, the entity which owns
the Cityfront Place High-Rise. The loss during the Trust's second quarter of
fiscal 1997, which ended October 31, 1996, reflects the building's operations
from April 1, 1996 through June 30, 1996, the second quarter of New Street Joint
Venture's fiscal year. The current quarter loss had no impact on Trust cash
flows since New Street Joint Venture did not require additional equity
contributions and because of the cash flow priority of LCD's partner in New
Street Joint Venture.
Expenses:
Property operating expenses decreased primarily due to the absence of
expenses in the current quarter related to the surface parking lot on parcel
P-9. In the current quarter, this parcel was subject to the lease with System
Parking, Inc. In the second quarter of the prior year the lease with respect to
this parcel had been terminated. As a result, the Trust was recording the
expenses related to the operations of this parking lot throughout the second
quarter of fiscal 1996.
General and administrative expense decreased for the current quarter
primarily due to lower legal and accounting fees and lower trustee meeting
expenses.
Restructuring expenses consist primarily of legal and consulting fees
and trustee meeting expenses related to the solicitation of indications of
interest for a potential business combination involving the Trust, which led
to the Agreement and Plan of Merger with Newsweb Corporation.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows:
OPERATING
Cash flows from operating activities increased in the first six months of
fiscal 1997 compared to the same period in the prior year due primarily to an
increase in cash flows from parking operations. This increase was partially
offset due to the delay last year by Cook County, from September 1995 until
November 1995, in the date that the second installment of real estate taxes was
due for all property owners in the county.
<PAGE>
INVESTING
Cash flows used in investing activities increased for the current six month
period due to an increase in the acquisition of unrestricted short-term
investments. These acquisitions were made possible by the increase in operating
cash flows. Cash flows used in the acquisition of short-term investments -
restricted declined in the current period. This reflects the delay last year in
making payment from the escrow account used to fund real estate tax payments due
on the Cityfront Place Mid-Rise. This delay was caused by the delay in the date
that the second installment of real estate taxes was due.
FINANCING
Cash flows used in financing activities increased during the current six
month period due to the increase in dividends paid.
Funds From Operations:
The Board of Governors of the National Association of Real Estate
Investment Trusts in 1991 adopted a definition of "Funds From Operations" as
follows:
Funds from Operations means net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect funds from operations on the same
basis.
Funds from Operations equaled $4,362,000 for the six months ended October
31, 1996 compared to $2,194,000 for the same period in the prior fiscal year.
This increase of $2,168,000 is primarily due to the increase in net income from
parking operations, improved operating results at the Mid-Rise and Waterplace
Park, and revenues from the East Water Place Townhomes.
In March 1995, the Board of Governors clarified the preceding definition
with respect to the treatment of certain items, although the clarification did
not affect the Trust's reporting of such funds. The preceding definition of
Funds from Operations includes certain material non-cash items which are
reported in income and expense of the Trust. Please refer to the Consolidated
Statements of Cash Flows in the financial statements for the computation of cash
flows from operating, investing and financing activities.
General Discussion:
The Trust has historically used non-recourse debt secured by individual
properties as the primary source of additional capital, when needed, to fund
<PAGE>
acquisitions or development. It has also acquired income producing properties
in tax-deferred exchanges in which little or no debt was required. The Trust
currently has four income producing properties with no debt outstanding -
Waterplace Park, Lincoln Garden, the Cityfront Place Mid-Rise and the Ogden
Plaza parking facility.
During the third quarter of fiscal 1995, the Trust entered into a three
year $20,000,000 revolving credit agreement with First Bank, N.A. secured by the
Mid-Rise apartment building. At October 31, 1996, the full amount of the
facility is available. The Trust agreed to make monthly payments into an escrow
account to fund the semi-annual real estate tax payments due on the Cityfront
Place Mid-Rise. At October 31, 1996 the balance in this account equaled
$204,000.
At October 31, 1996, total interest bearing debt of the Trust equaled
$28,107,000, all of which was fixed rate debt.
While the Trust may not, under federal tax law applicable to REIT's, hold
property for sale in the ordinary course of business, its policy is to evaluate
periodically its portfolio of properties which might be considered for sale,
lease or exchange.
In January 1994, the Trust entered into a consent order with the EPA
regarding preliminary testing to be performed on a 2.8 acre site in Cityfront
Center used as a parking lot (the "Tested Site"). The Trust's consultants have
prepared cost estimates to remediate the contaminated areas on the Tested Site
which range from $1 million to $7 million, with $3.5 million representing the
most likely estimated cost of the required remediation, which involves
excavation and disposal of the areas contaminated by thorium.
The Trust entered into an agreement on August 11, 1995 (which was expanded
and superseded by an agreement dated January 18, 1996) with Kerr-McGee Chemical
Corporation ("KMCC"), regarding the financial responsibilities of the parties
for the remediation of the Tested Site (the "Reimbursement Agreement"). Under
the terms of the Reimbursement Agreement, KMCC is responsible for the
remediation of the Tested Site with respect to thorium contamination and any
thorium/mixed waste contamination, and the Trust has the obligation to reimburse
KMCC for 25% of the cost of this remediation, not to exceed a maximum
reimbursement obligation of the Trust of $750,000.
On June 6, 1996, the EPA issued a Unilateral Administrative Order which
requires the remediation of the Tested Site and the disposal of the contaminated
material at an approved off-site facility. In response to this Order, KMCC, in
conjunction with the Trust, submitted a work plan for the remediation to the
EPA.
<PAGE>
The EPA has since reviewed and commented on the work plan and the Trust and KMCC
responded to the comments. In September, additional drilling began to more
precisely define the area to be remediated. Remediation began in October 1996,
with completion expected by the end of calendar year 1996 or early 1997. During
the remediation, no parking is allowed on the Tested Site. Additional
conditions may exist on the site which would be discovered only upon excavation
which may impact the timing and the extent of remediation.
The Trust will consider using its current cash, investments available for
sale or its current credit facility, to fund its obligations under the
Reimbursement Agreement with KMCC. The Trust may have claims for coverage for
some or all of its share of the remediation costs under its current or prior
insurance policies.
In order to fully develop the land owned by the Trust in Chicago,
additional infrastructure expenditures will be required. These improvements are
necessary to fully redevelop the property in accordance with the Planned
Development Ordinance approved by the Chicago City Council on November 6, 1985.
The Trust completed Phase I infrastructure in fiscal 1988 using the
proceeds from borrowings secured by the Kraft Building and One Michigan
Avenue. The Trust completed Phase II infrastructure in fiscal 1992 using the
proceeds from a borrowing secured by the rents from and land under the
Sheraton Chicago Hotel & Towers ground lease.
Phase III infrastructure consists primarily of the River Esplanade and
River Drive east of McClurg Court, Du Sable Park (a 3 acre park east of Lake
Shore Drive), the slip promenade on the south bank of the Ogden Slip and the
upgrading of the remainder of East North Water Street. The total current cost
to the Trust for the improvements is estimated to be approximately $8.5 million,
which includes the Trust's obligation to contribute $600,000 for improvements to
be made in Du Sable Park expected to be completed during calendar 1997. The
remainder of Phase III will be constructed as needed to support additional
development in the area. However, certain improvements are required to be
completed no later than the completion of 2,500 units of residential development
on the east portion of Cityfront Center. The estimated cost of the remaining
infrastructure is based on a number of assumptions, including, but not limited
to the following: (i) East Water Place, L.P. completes all improvements on the
parcels which are currently under development for the East Water Place Townhomes
related to the slip promenade on the south bank of the Ogden Slip; (ii) the
Chicago Music and Dance Theater, Inc. completes the pedestrian concourse through
its parcel; (iii) the estimate is based on design development drawings; actual
site conditions may materially increase the amount; and (iv) the cost estimate
includes hard construction costs only and is stated in terms of current costs.
It is the intention of the Trust to finance future infrastructure with cash on
hand, its current credit facility, general corporate indebtedness, borrowings
secured by its income producing properties and ground leases, asset sales or
some combination of these sources.
<PAGE>
The recent renovation of nearby Navy Pier has increased demand for parking
in the surrounding area. As a result, the Trust has received an increase in net
cash flow under the terms of its new lease for four surface parking lots with
System Parking, Inc. compared to the cash flow it received from its prior lease
with North Pier Chicago. In addition, the Trust has experienced an increase in
net cash flow from the operations of the Ogden Plaza parking facility.
Starting January 1, 1996, the base rent payable to the Trust from its lease
with Cityfront Hotel Associates Limited Partnership for the Sheraton Chicago
Hotel & Towers increased to an annual rate of $2.1 million. While all of the
base rent will be paid as additional debt service on the loan which financed the
infrastructure improvements associated with the hotel, it is the starting point
for the future increases in minimum base rent and minimum rent will exceed the
debt service beginning in 1999. Also starting July 1, 1995, the percentage rent
provisions of the ground lease became effective. During fiscal 1996 the Trust
recognized revenue of $96,000 in percentage rent. For the first six months of
fiscal 1997 the Trust recognized revenue of $75,000 in percentage rent.
The New Street Joint Venture Agreement obligates LCD and Northwestern
Mutual to contribute, if necessary, their prorata shares of funds related to the
operation of the High-Rise building. As of October 31, 1996, LCD had funded
$335,000 as its share of additional capital contributions, all of which was
contributed prior to fiscal 1994. LCD currently holds approximately $940,000 in
short term investments. The Trust's two-thirds share of these short term
investments is not reflected on the Trust's balance sheet and is in addition to
the Trust's cash and investments. The New Street Joint Venture agreement
provides for Northwestern Mutual to receive a priority return of operating cash
flow and the proceeds from sale or refinancing of the High-Rise. Cash flow must
increase significantly from its current level for LCD to receive any cash
distributions from New Street Joint Venture after the payment of Northwestern's
preferential return. The cash held by LCD is not subject to any such
priorities.
On October 15, 1996 the Board of Trustees of the Trust declared a
quarterly dividend of $.08 per share payable December 2, 1996. This followed
increases in the Trust's per share quarterly dividend to $.06 on September 1,
1996 and to $.04 on March 1, 1996. These dividend increases reflect an
overall improvement in the cash flow and the operating results of the Trust.
Management considers that the Trust's liquidity at October 31, 1996 is
adequate to meet its operating needs and commitments.
<PAGE>
PART II
Item 1 - Legal Proceedings.
On December 12, 1996, Newsweb Corporation filed a Verified Amended
Complaint in the Circuit Court of Cook County against the Trust and each of
its eight trustees. NEWSWEB CORPORATION, ET. AL. V. CITYFRONT CENTER, L.L.C.,
ET. AL., 96 CH 13306 (Cook County Chancery Division). The Amended Complaint
alleges that the Trust and its trustees have breached the Merger Agreement
with Newsweb Corporation and requests an order enjoining the Trust and its
trustees from, INTER ALIA, modifying or withdrawing their approval of the
Merger Agreement or terminating the Merger Agreement. The Amended Complaint
also seeks injunctive relief against Cityfront and four other related
defendants, alleging that these defendants have tortiously interfered with,
INTER ALIA, Newsweb Corporation's contractual relationship with the Trust.
The Trust and its trustees are reviewing the Amended Complaint and intend to
defend against it vigorously. A preliminary injunction hearing is scheduled
for December 19 and 20, 1996.
Item 4 - Submission of Matters to a Vote of Security Holders.
On October 15, 1996 the Trust held its Annual Meeting of Shareholders.
Matters voted upon at this meeting were the election of eight Trustees and
ratification of Arthur Andersen LLP as independent auditors for fiscal 1997. Of
the 5,783,800 shares outstanding, 4,396,280 shares were represented at the
meeting. There were no broker non-votes. All nominees were elected and the
appointment of Arthur Andersen LLP was ratified.
ELECTION OF TRUSTEES
The voting with respect to the nominees for trustees was as follows:
Number of
Number of Shares
Shares Withholding
Voted For Authority
--------- ---------
Edward McCormick Blair, Jr. 4,261,871 134,409
Peter J.P. Brickfield 4,277,671 118,609
Charles R. Gardner 4,238,694 157,586
John S. Gates, Jr. 4,261,871 134,409
Ogden McC. Hunnewell 4,261,871 134,409
Charles N. Seidlitz 4,277,671 118,609
Nancy W. Trowbridge 4,277,671 118,609
Robert E. Wood II 4,277,671 118,609
RATIFICATION OF AUDITORS
------------------------
The voting for the ratification of the appointment of Arthur Andersen LLP
as auditors of the Trust for fiscal year 1997 was as follows:
Number of Number of Number of
Shares Shares Voted Shares
Voted For Against Abstaining
--------- ------- ----------
4,349,668 40,002 6,610
<PAGE>
Item 6(a) - Exhibits
99.1 Press release dated November 29, 1996 is filed herewith.
99.2 Press release dated December 10, 1996 is filed herewith.
Item 6(b) - Reports on Form 8-K.
The Trust filed a Form 8-K on September 30, 1996 reporting that the
Trust had entered into a definitive Agreement and Plan of Merger,
dated September 27, 1996, with Newsweb Corporation ("Newsweb")
providing for the purchase of all outstanding shares of the Trust by
Newsweb for $21.00 per share in cash.
<PAGE>
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.
THE CHICAGO DOCK AND CANAL TRUST
/s/ DAVID R. TINKHAM
---------------------------------
David R. Tinkham, Vice President
and Chief Accounting Officer
December 13, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 987
<SECURITIES> 8,062
<RECEIVABLES> 38,013
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 94,281
<DEPRECIATION> 15,493
<TOTAL-ASSETS> 126,763
<CURRENT-LIABILITIES> 0
<BONDS> 28,107
0
0
<COMMON> 3,121
<OTHER-SE> 82,099
<TOTAL-LIABILITY-AND-EQUITY> 126,763
<SALES> 0
<TOTAL-REVENUES> 12,433
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,450
<INCOME-PRETAX> 2,129
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,129
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.35
</TABLE>
<PAGE>
FOR: THE CHICAGO DOCK AND CANAL TRUST
455 East Illinois Street
Chicago, Illinois 60611
312/467-1870
Contact: David R. Tinkham
For Immediate Release
THE CHICAGO DOCK AND CANAL TRUST (NASDAQ/DOCKS)
ANNOUNCES RECEIPT OF ACQUISITION PROPOSAL FROM
CITYFRONT CENTER, L.L.C.
CHICAGO, November 29, 1996 The Chicago Dock and Canal Trust (the
"Trust") (NASDAQ/DOCKS) announced today that it has received an unsolicited
proposal from Cityfront Center, L.L.C. to acquire all of the issued and
outstanding shares of beneficial interest in the Trust for $22.00 per share
in cash. The Trust is currently a party to an agreement and plan of merger
dated September 27, 1996 with Newsweb Corporation and CDCT Acquisition Trust,
an affiliate of Newsweb Corporation, providing for the acquisition of the
Trust's shares at a price of $21.00 per share. The Trust has previously
called a special meeting of its shareholders for January 9, 1997 to vote on
the proposed merger with Newsweb Corporation. The proposal received from
Cityfront Center, L.L.C. indicates that it is the intention of Cityfront
Center, L.L.C. to offer the Trust's shareholders "an offer that is identical
to the September 27, 1996 agreement with Newsweb Corporation and CDCT
Acquisition Trust, with the exception of increasing the per share price paid
to shareholders from $21.00 to $22.00." Cityfront Center, L.L.C. has
indicated that it is an affiliate of MCL Chicago Homes, Inc.
The Board of Trustees of the Trust has determined that, in order to
comply with its fiduciary duties to the Trust's shareholders under applicable
law, the Trust, consistent with its rights under the merger agreement with
Newsweb Corporation, will seek to meet with representatives of Cityfront
Center L.L.C. regarding the Cityfront Center, L.L.C. proposal. Under the
merger agreement with Newsweb Corporation, the Trust has the right, in
certain circumstances, to approve or recommend a "Superior Proposal" or
terminate the merger agreement with Newsweb Corporation. Any such action by
the Trust is subject to compliance by the Trust with the provisions of the
merger agreement with Newsweb Corporation.
There can be no assurance that any discussions or negotiations with
Cityfront Center, L.L.C. will occur or result in a definitive agreement
between Cityfront Center, L.L.C. and the Trust.
The Chicago Dock and Canal Trust is a real estate investment trust
engaged primarily in the business of acquiring and holding real estate and
interests in real estate for investment. Formed in 1962, the Trust is a
successor to The Chicago Dock and Canal Company which was founded in 1857 by
Chicago's first mayor, William Ogden. The Chicago Dock and Canal Trust is
traded on NASDAQ under the trading symbol DOCKS.
<PAGE>
FROM: MARCY MONYEK AND ASSOCIATES FOR: THE CHICAGO DOCK AND CANAL TRUST
55 West Wacker Drive 455 East Illinois Street
Chicago, Illinois 60601 Chicago, Illinois 60611
312/263-2135 312/467-1870
Contact: Pat Higgins Contact: David R. Tinkham
FOR IMMEDIATE RELEASE
THE CHICAGO DOCK AND CANAL TRUST (NASDAQ/DOCKS)
ANNOUNCES RECEIPT OF REVISED ACQUISITION PROPOSAL FROM
CITYFRONT CENTER, L.L.C.
CHICAGO, December 10, 1996----The Chicago Dock and Canal Trust (the
"Trust") (NASDAQ/DOCKS) announced today that it has received a revised proposal
from Cityfront Center, L.L.C. to acquire all of the issued and outstanding
shares of beneficial interest in the Trust for $23.00 per share in cash. The
revised offer amends Cityfront Center L.L.C.'s previously submitted unsolicited
proposal to acquire the shares of the Trust for $22.00 per share in cash. The
Trust is currently a party to an agreement and plan of merger dated
September 27, 1996 with Newsweb Corporation and CDCT Acquisition Trust, an
affiliate of Newsweb Corporation, providing for the acquisition of the Trust's
shares at a price of $21.00 per share. The Trust has previously called a
special meeting of its shareholders for January 9, 1997 to vote on the proposed
merger with Newsweb Corporation. Cityfront Center, L.L.C. has indicated that it
is an affiliate of MCL Chicago Homes, Inc.
The Board of Trustees of the Trust has determined that, in order to comply
with its fiduciary duties to the Trust's shareholders under applicable law, the
Trust, consistent with its rights under the merger agreement with Newsweb
Corporation, will continue to evaluate the Cityfront Center, L.L.C. proposal,
including the availability of definitive financing for the proposal, and hold
discussions with representatives of Cityfront Center, L.L.C. regarding the
proposal. Under the merger agreement with Newsweb Corporation, the Trust has
the right, in certain circumstances, to approve or recommend a "Superior
Proposal" or terminate the merger agreement with Newsweb Corporation. Any such
action by the Trust is subject to compliance by the Trust with the provisions of
the merger agreement with Newsweb Corporation.
There can be no assurance that any negotiations with Cityfront Center,
L.L.C. will result in a definitive agreement between Cityfront Center, L.L.C.
and the Trust. The Cityfront Center, L.L.C. offer is the subject of certain
litigation filed by Newsweb Corporation against Cityfront Center, L.L.C. and
certain related parties.
The Chicago Dock and Canal Trust is a real estate investment trust engaged
primarily in the business of acquiring and holding real estate and interests in
real estate for investment. Formed in 1962, the Trust is a successor to The
Chicago Dock and Canal Company which was founded in 1857 by Chicago's first
mayor, William Ogden. The Chicago Dock and Canal Trust is traded on NASDAQ
under the trading symbol DOCKS.
# # #
