<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 JANUARY 31, 1997 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, 5,789,300 SHARES
OUTSTANDING ON MARCH 17, 1997.
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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)
JANUARY 31, APRIL 30,
1997 1996
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(IN THOUSANDS)
INVESTMENT IN REAL ESTATE, at cost:
DEVELOPED PROPERTIES $70,465 $70,246
LAND AND LAND IMPROVEMENTS
HELD FOR DEVELOPMENT 16,439 16,961
LAND SUBJECT TO GROUND
LEASES 7,361 6,743
LESS:ACCUMULATED
DEPRECIATION AND AMORTIZATION (16,196) (14,104)
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NET INVESTMENT IN REAL ESTATE 78,069 79,846
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OTHER ASSETS:
CASH AND CASH EQUIVALENTS 633 757
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INVESTMENTS AVAILABLE FOR SALE, AT COST
(APPROXIMATE MARKET VALUE OF $4,249
AT JANUARY 31, 1997) 4,226 5,973
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SHORT TERM INVESTMENTS-RESTRICTED,
AT COST (AND AT APPROXIMATE MARKET
VALUE) 403 203
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SECURITY DEPOSIT CASH 347 808
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RECEIVABLES:
TENANTS (INCLUDING $31,126 OF ACCRUED
BUT UNBILLED RENTS AT JANUARY 31, 1997) 31,354 29,647
REAL ESTATE TAXES PAYABLE BY LESSEES 7,183 5,931
LAND IMPROVEMENTS 1,388 1,388
INTEREST 33 45
OTHER 460 225
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40,418 37,236
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OTHER ASSETS, NET 1,026 1,185
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$125,122 $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 BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
JANUARY 31, APRIL 30,
1997 1996
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(IN THOUSANDS)
LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
REAL ESTATE TAXES $5,168 $4,946
REAL ESTATE TAXES PAYABLE BY LESSEES 7,183 5,931
ACCRUED ENVIRONMENTAL REMEDIATION COSTS 717 750
OTHER 1,807 2,208
CASH DIVIDENDS PAYABLE 579 231
MORTGAGE NOTES PAYABLE 28,127 28,068
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TOTAL LIABILITIES 43,581 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 6,660 9,020
UNDISTRIBUTED NET GAIN FROM SALE
OF REAL ESTATE PROPERTIES 72,372 72,372
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TOTAL UNDISTRIBUTED NET INCOME 79,032 81,392
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LESS:
TREASURY SHARES OF BENEFICIAL INTEREST,
AT COST-157,900 AND 160,400 AT JANUARY 31,
1997 AND APRIL 30, 1996, RESPECTIVELY (612) (619)
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TOTAL SHAREHOLDERS' EQUITY 81,541 83,874
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$125,122 $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 NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1997 1996 1997 1996
----------- ----------- ----------- ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES:
REVENUE FROM RENTAL PROPERTY $4,787 $4,009 $14,173 $11,448
REAL ESTATE TAXES PAYABLE BY LESSEES 1,645 1,460 4,692 4,784
----------- ----------- ----------- ----------
TOTAL REVENUES 6,432 5,469 18,865 16,232
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EXPENSES:
REAL ESTATE TAXES 755 733 2,185 2,205
REAL ESTATE TAXES PAYABLE BY LESSEES 1,645 1,460 4,692 4,784
PROPERTY OPERATING EXPENSES 596 779 2,171 2,344
GENERAL AND ADMINISTRATIVE 443 472 1,312 1,484
DEPRECIATION AND AMORTIZATION 763 759 2,264 2,265
INTEREST EXPENSE 726 723 2,176 2,158
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TOTAL EXPENSES 4,928 4,926 14,800 15,240
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OPERATING INCOME 1,504 543 4,065 992
INVESTMENT AND OTHER INCOME 94 74 327 246
EQUITY IN NET LOSS OF LCD PARTNERSHIP (45) (59) (237) (256)
RESTRUCTURING EXPENSES (4,653) (103) (5,126) (103)
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NET INCOME (LOSS) ($3,100) $455 ($971) $879
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EARNINGS (LOSS) PER SHARE:
PRIMARY ($0.54) $0.08 ($0.17) $0.15
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FULLY DILUTED ($0.54) $0.08 ($0.17) $0.15
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</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE
AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
THE CHICAGO DOCK AND CANAL TRUST
AND SUBSIDIARIES NINE MONTHS NINE MONTHS
CONSOLIDATED STATEMENTS OF CASH FLOWS ENDED ENDED
(UNAUDITED) JANUARY 31, JANUARY 31,
1997 1996
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(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ($971) $879
ADD (DEDUCT)-ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 2,264 2,265
EFFECT OF AVERAGING HOTEL RENTAL REVENUE (2,052) (2,536)
EQUITY IN NET LOSS OF LCD PARTNERSHIP 237 256
CHANGES IN RECEIVABLES (669) (1,037)
CHANGES IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES 1,041 2,062
DIFFERENCE BETWEEN CURRENT INTEREST PAYABLE AND
CONTRACTUAL INTEREST 134 748
AMORTIZATION OF LOAN FEES 61 61
OTHER (9) (44)
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 36 2,654
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CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALES AND MATURITIES OF INVESTMENTS AVAILABLE
FOR SALE 750 0
NET (ACQUISITION) DISPOSITION OF SHORT-TERM INVESTMENTS 997 (1,208)
NET (ACQUISITION) DISPOSITION OF SHORT-TERM INVESTMENTS-
RESTRICTED (200) (261)
ADDITIONS TO INVESTMENTS IN REAL ESTATE (552) (442)
LEASE COMMISSIONS AND OTHER (66) (52)
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CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES 929 (1,963)
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CASH FLOWS FROM FINANCING ACTIVITIES:
CASH DIVIDENDS DECLARED (1,389) (174)
CHANGE IN DIVIDENDS PAYABLE 348 0
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 27 0
PRINCIPAL PAYMENTS ON LOANS (75) (68)
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CASH FLOWS (USED IN) FINANCING ACTIVITIES (1,089) (242)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (124) 449
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 757 344
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CASH AND CASH EQUIVALENTS, END OF PERIOD $633 $793
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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
JANUARY 31, 1997 AND 1996
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 January 31, 1997, 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 nine 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 the Plaza Corp. The area subject to the license contains
100 parking stalls and is
<PAGE>
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 or a difference of $4,913,000. This represents the
difference between the amount at which the Trust's investment in LCD is carried
and the amount of underlying equity in net assets. This difference will remain
until the disposition of the property or of the partnership interest. 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 September 30, 1996, total assets and liabilities of NSJV were
$45,137,000 and $38,191,000, respectively. For the nine months ended September
<PAGE>
30, 1996, NSJV recorded gross revenues of $5,428,000 and total expenses of
$6,276,000, which resulted in a net loss of $848,000. Included in total
expenses is depreciation and amortization expense, which for the nine months
ended September 30, 1996 equaled $1,273,000. 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 rent for calendar year 1997 (set at $3,600,000 on an
annual basis) will be reduced by 50% during each month that the Tested Site is
undergoing remediation, plus a 60 day period following completion of the
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
equaled $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
<PAGE>
percentages ranging from 2% - 5%.
The lessee also acquired an option to purchase the land. The earliest date
on 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 nine months of fiscal 1997 equaled
$1,583,750.
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 January 31, 1997, 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
$5,646,000 at January 31, 1997. 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 January 31, 1997 equaled
$15,000.
At January 31, 1997, the principal balance of the note secured by the rents
<PAGE>
from and the land under the Sheraton Chicago Hotel & Towers was $22,481,000.
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
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 January 31, 1997 was $36,445,000 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 January 31, 1997, 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 January 31, 1997
equaled $45,036,000.
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 January 31,
1997, the balance in this account equaled $403,000.
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. 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
<PAGE>
facility. In response to this Order, Kerr McGee Chemical Corporation ("KMCC"),
in conjunction with the Trust, submitted a work plan for the remediation to the
EPA. Remediation began in October 1996, with completion expected by early to
mid 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 entered into an agreement on August 11, 1995 (which was expanded
and superseded by an agreement dated January 18, 1996) with 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. The current
estimated total cost of the remediation based on test results and excavation
performed to date is approximately $7.5 million. 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.
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 share of the remediation costs under the Trust's current or
prior insurance policies.
8. Agreement and Plan of Merger
On December 27, 1996, the Trust entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement") with CityFront Center, L.L.C.
("CityFront") providing for the purchase of all outstanding shares of the Trust
by CityFront for $25.00 per share in cash. The Trust has called a special
meeting of its shareholders for April 18, 1997 to vote on the proposed merger
with CityFront.
The Merger Agreement replaces the Agreement and Plan of Merger dated
September 27, 1996 among Newsweb Corporation and the Trust (the "Newsweb Merger
Agreement") which was terminated by the Trust on December 27, 1996. The
execution of the Merger Agreement was the culmination of a series of proposals
made by CityFront and Newsweb Corporation between November 27, 1996 and December
21, 1996. The Trust's press releases dated November 29, 1996 and December 10,
1996 were filed as Exhibits to the Form 10-Q filed December 13, 1996.
<PAGE>
The Trust's press releases dated December 17 and 21, 1996 are included as
Exhibits herewith.
Expenses incurred in connection with the Merger Agreement, including a
termination fee of $3,500,000 and an expense reimbursement of $750,000 paid by
the Trust to Newsweb as required by the Newsweb Merger Agreement, are recorded
as restructuring expenses.
9. Litigation
In connection with the Trust's Merger Agreement with CityFront, on December
12, 1996, Newsweb Corporation filed a Verified Amended Complaint in the Circuit
Court of Cook County, Illinois against the Trust, its trustees, CityFront and
certain related parties (the complaint was originally filed on December 6, 1996
against only CityFront and certain related parties). (NEWSWEB CORPORATION, ET.
AL. V. CITYFRONT CENTER, L.L.C., ET. AL., 96 CH 13306 (Cook County Chancery
Division)). Newsweb's complaint alleged that the Trust and its trustees
breached the Newsweb Merger Agreement and requested an order enjoining the Trust
and its trustees from, INTER ALIA, modifying, withdrawing their approval of, or
terminating the Newsweb Merger Agreement. Newsweb's complaint also sought
injunctive relief against CityFront and four other related defendants alleging
that CityFront and such defendants had tortiously interfered with, INTER ALIA,
Newsweb's contractual relationship with the Trust. At a hearing with respect to
the Newsweb Litigation held on December 19 and 20, 1996, the court declined to
issue a preliminary injunction to enjoin the Trust and its trustees from
modifying, withdrawing their approval of, or terminating the Newsweb Merger
Agreement or from considering and pursuing CityFront's offer for a merger with
the Trust. The court reserved consideration of all other claims in the Newsweb
Litigation (including claims relating to damages). On December 26, 1996,
CityFront entered into an agreement with Newsweb providing for, among other
things, dismissal of the Newsweb Litigation with prejudice (including all claims
against the Trust and its trustees) upon consummation of the Merger and voting
of Shares held by Newsweb in favor of the CityFront Merger Agreement and the
Merger.
On December 23, 1996, a purported Shareholder of the Trust filed a class
action complaint against the Trust and its trustees and executive officers.
(IRVING KAS V. THE CHICAGO DOCK AND CANAL TRUST, ET AL., 96 CH 13897 (Cook
County Chancery Division)). The complaint, which was filed before the Trust
entered into the Merger Agreement, alleges various breaches of fiduciary duty by
the Trust and its trustees and executive officers, and specifically requests
that the defendants take steps to ensure that Shareholders receive maximum value
as a result of the negotiations with bidders for the Trust. The Trust believes
that the claims contained in the complaint are without merit and intends to
vigorously contest this action if it is pursued by the plaintiff.
<PAGE>
10. 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.
In computing net loss per share for the three and nine months ended January
31, 1997, the exercise of common stock equivalents was not assumed as the effect
would be antidilutive. The number of shares used in the primary and fully
diluted earnings per share computation for the three and nine months ended
January 31, 1997 was 5,786,300 and 5,784,968, 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 December 27, 1996, the Trust entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement") with CityFront Center, L.L.C.
("CityFront") providing for the purchase of all outstanding shares of the Trust
by CityFront for $25.00 per share in cash. The Trust has called a special
meeting of its shareholders for April 18, 1997 to vote on the proposed merger
with CityFront.
The Merger Agreement replaces the Agreement and Plan of Merger dated
September 27, 1996 among Newsweb Corporation and the Trust (the "Newsweb Merger
Agreement") which was terminated by the Trust on December 27, 1996. The
execution of the Merger Agreement was the culmination of a series of proposals
made by CityFront and Newsweb Corporation between November 27, 1996 and December
21, 1996. The Trust's press releases dated November 29, 1996 and December 10,
1996 were filed as Exhibits to the Form 10-Q filed December 13, 1996. The
Trust's press releases dated December 17 and 21, 1996 are included as Exhibits
herewith.
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. Remediation began
in October 1996, with completion expected by early to mid 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 Chicago Music and Dance Theater, Inc. (the "Theater") for the construction
of a 1,500 seat performing arts theater in Cityfront Center. The Trust retained
repurchase rights for the site if the Theater were to notify the Trust that it
has determined not to proceed with construction or 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 and
<PAGE>
subsequently extended to March 31, 1997, subject to force majeure delays, by
agreement of the Trust and Theater dated December 30, 1996). The Theater
notified the Trust on March 11, 1997 that the Theater had determined not to
proceed with the construction of the Performing Arts Theater. Accordingly, the
repurchase rights became effective on that date and may be exercised by the
Trust on or prior to 90 days following receipt of such notice.
During fiscal 1997, 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 nine 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% for both the Mid-Rise and High-Rise. At the
Trust's two properties outside of Chicago, occupancy at Lincoln Garden in Tampa,
Florida and at Waterplace Park in Indianapolis, Indiana was 92% and 100%,
respectively, at January 31, 1997.
RESULTS OF OPERATIONS
NINE MONTHS ENDED JANUARY 31, 1997 VERSUS
NINE MONTHS ENDED JANUARY 31, 1996
Revenues:
Revenue from rental property increased for the nine months ended January
31, 1997 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 $1,500,000 over the same period in the
prior year. Current period revenues also exceeded revenues from the first nine
months of fiscal 1996 for the Mid-Rise, the Ogden Plaza parking facility,
Waterplace Park and Lincoln Garden by a total of $817,000. The current period
also reflects an increase in revenues generated by the East Water Place
Townhomes of $273,000. Finally, the Trust recorded $135,000 in percentage rent
from the Sheraton Chicago Hotel & Towers during the current period. No
percentage rent was recorded during the first nine 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 a result, real estate taxes payable by lessees decreased in
the current period. This decrease was partially offset by an increase in real
estate taxes payable by lessees with respect to the East Water Place Townhomes
and by an increase in the estimated tax assessment on the Sheraton Chicago Hotel
& Towers. Real estate taxes payable by lessees are also reflected as an expense,
and therefore, do not
<PAGE>
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 nine
months of fiscal 1997, which ended January 31, 1997, reflects the building's
operations from January 1, 1996 through September 30, 1996, the first nine
months of New Street Joint 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 $20,000 this period compared
to the first nine 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 not associated with restructuring efforts.
In connection with the termination of the Newsweb Merger Agreement, the
Trust paid Newsweb a termination fee of $3,500,000 and an expense reimbursement
of $750,000, as required by the Newsweb Merger Agreement. Restructuring
expenses also consist 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 resulted in the execution of the Merger
Agreement.
THREE MONTHS ENDED JANUARY 31, 1997 VERSUS
THREE MONTHS ENDED JANUARY 31, 1996
Revenues:
Revenue from rental property increased for the three months ended January
31, 1997 compared to the same period in the prior year partially 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 $191,000 over the same quarter in
the prior year. Current quarter revenues also exceeded revenues from the third
quarter of fiscal 1996 for the Mid-Rise, the Ogden Plaza parking facility,
Waterplace Park and Lincoln Garden by a total of $347,000. The current quarter
also reflects an increase in revenues
<PAGE>
generated by the East Water Place Townhomes of $180,000. Finally, the Trust
recorded $60,000 in percentage rent from the Sheraton Chicago Hotel & Towers
during the current quarter. No percentage rent was recorded during the third
quarter of fiscal 1996.
Real estate taxes payable by lessees reflects a total increase of $291,000
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 which had been the
responsibility of the lessee under the prior lease which expired December 31,
1995. 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 third quarter
of fiscal 1997, which ended January 31, 1997, reflects the building's operations
from July 1, 1996 through September 30, 1996, the third 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 partially 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. For two months in the third quarter of the prior year, the lot
was operated under a management agreement. As a result, the Trust recorded the
expenses related to the operations of this parking lot for two months of the
third quarter of fiscal 1996. The decrease in property operating expenses also
reflects a reimbursement to the Trust of assessments from Cityfront Center East
Maintenance Association ("CCEMA"). The Trust is the largest member of CCEMA,
which maintains some of the public areas in Cityfront Center.
In connection with the termination of the Newsweb Merger Agreement, the
Trust paid Newsweb a termination fee of $3,500,000 and an expense reimbursement
of $750,000, as required by the Newsweb Merger Agreement. Restructuring
expenses also consist 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 resulted in the execution of the Merger
Agreement.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows:
OPERATING
Cash flows from operating activities decreased in the first nine months of
fiscal 1997 compared to the same period in the prior year due primarily to the
payment by the Trust to Newsweb of a termination fee of $3,500,000 and an
expense reimbursement of $750,000 in connection with the termination of the
Newsweb Merger Agreement. This decrease was partially offset by an increase in
cash flows from parking operations.
INVESTING
Cash flows from investing activities increased for the current nine month
period due to an increase in the maturity and disposition of unrestricted
short-term investments. The proceeds from these dispositions were used to fund
the termination fee and expense reimbursement paid in connection with the
termination of the Newsweb Merger Agreement.
FINANCING
Cash flows used in financing activities increased during the current nine
month period due to the increase in dividends paid.
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
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 January 31, 1997, the full amount of the
facility was 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 January 31, 1997 the balance in this account
equaled $403,000.
At January 31, 1997, total interest bearing debt of the Trust equaled
$28,127,000, all of which was fixed rate debt.
<PAGE>
While the Trust may not, under federal tax law applicable to real estate
investment trusts, 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 the Tested Site. 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.
Remediation began in October 1996, with completion expected by early to mid
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 entered into an agreement on August 11, 1995 with KMCC regarding
the financial responsibilities of the parties for the remediation of the Tested
Site, which agreement was expanded and superseded by 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. The current estimated total
cost of the remediation based on test results and excavation performed to date
is approximately $7.5 million.
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, Illinois,
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
<PAGE>
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 pedestrian
concourse through the parcel acquired by the Chicago Music and Dance Theater,
Inc. is completed by a third party; (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.
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 nine months of
fiscal 1997 the Trust recognized revenue of $135,000 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 January 31, 1997, 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 $975,000 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
<PAGE>
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 January 21, 1997 the Board of Trustees of the Trust declared a quarterly
dividend of $.10 per share payable March 2, 1997. This followed increases in
the Trust's per share quarterly dividend to $.08 on December 2, 1996, 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 January 31, 1997 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, Illinois against the
Trust, its trustees, CityFront and certain related parties (the
complaint was originally filed on December 6, 1996 against only
CityFront and certain related parties). (NEWSWEB CORPORATION, ET. AL.
V. CITYFRONT CENTER, L.L.C., ET. AL., 96 CH 13306 (Cook County
Chancery Division)). Newsweb's complaint alleged that the Trust and
its trustees breached the Newsweb Merger Agreement and requested an
order enjoining the Trust and its trustees from, INTER ALIA,
modifying, withdrawing their approval of, or terminating the Newsweb
Merger Agreement. Newsweb's complaint also sought injunctive relief
against CityFront and four other related defendants alleging that
CityFront and such defendants had tortiously interfered with, INTER
ALIA, Newsweb's contractual relationship with the Trust. At a hearing
with respect to the Newsweb Litigation held on December 19 and 20,
1996, the court declined to issue a preliminary injunction to enjoin
the Trust and its trustees from modifying, withdrawing their approval
of, or terminating the Newsweb Merger Agreement or from considering
and pursuing CityFront's offer for a merger with the Trust. The court
reserved consideration of all other claims in the Newsweb Litigation
(including claims relating to damages). On December 26, 1996,
CityFront entered into an agreement with Newsweb providing for, among
other things, dismissal of the Newsweb Litigation with prejudice
(including all claims against the Trust and its trustees) upon
consummation of the Merger and voting of Shares held by Newsweb in
favor of the CityFront Merger Agreement and the Merger.
On December 23, 1996, a purported Shareholder of the Trust filed a
class action complaint against the Trust and its trustees and
executive officers. (IRVING KAS V. THE CHICAGO DOCK AND CANAL TRUST,
ET AL., 96 CH 13897 (Cook County Chancery Division)). The complaint,
which was filed before the Trust entered into the Merger Agreement,
alleges various breaches of fiduciary duty by the Trust and its
trustees and executive officers, and specifically requests that the
defendants take steps to ensure that Shareholders receive maximum
value as a result of the negotiations with bidders for the Trust. The
Trust believes that the claims contained in the complaint are without
merit and intends to vigorously contest this action if it is pursued
by the plaintiff.
<PAGE>
Item 6(a) - Exhibits
99.3 Press release dated December 17, 1996 is filed herewith.
99.4 Press release dated December 21, 1996 is filed herewith.
Item 6(b) - Reports on Form 8-K.
The Trust filed a Form 8-K on December 30, 1996 reporting that the
Trust had terminated the Agreement and Plan of Merger (the "Newsweb
Merger Agreement") dated as of September 27, 1996 among the Trust,
Newsweb Corporation and CDCT Acquisition Trust and entered into a
definitive Agreement and Plan of Merger (the "CityFront Merger
Agreement") dated as of December 27, 1996 among the Trust, CityFront
Center, L.L.C. ("CityFront") and CityFront Acquisition Trust providing
for the purchase of all outstanding common shares of beneficial
interest of the Trust by CityFront for $25.00 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
March 17, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 633
<SECURITIES> 4,976
<RECEIVABLES> 40,418
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 94,265
<DEPRECIATION> 16,196
<TOTAL-ASSETS> 125,122
<CURRENT-LIABILITIES> 0
<BONDS> 28,127
0
0
<COMMON> 3,121
<OTHER-SE> 78,420
<TOTAL-LIABILITY-AND-EQUITY> 125,122
<SALES> 0
<TOTAL-REVENUES> 18,865
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,176
<INCOME-PRETAX> (971)
<INCOME-TAX> 0
<INCOME-CONTINUING> (971)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (971)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
<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)
ADVISES NEWSWEB CORPORATION OF RECEIPT OF SUPERIOR PROPOSAL
CHICAGO, December 17, 1996 -- The Chicago Dock and Canal Trust (the
"Trust") announced today that it has advised Newsweb Corporation that the
previously disclosed proposal received by the Trust 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 has been determined by the
Trust to be a "Superior Proposal" for purposes of the existing agreement and
plan of merger dated September 27, 1996 among the Trust, 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.
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, including a provision requiring the Trust to
provide Newsweb Corporation with not less than three business days notice of the
receipt of a Superior Proposal.
There can be no assurance that the receipt by Trust of the Cityfront
Center, L.L.C. proposal will result in the termination of the merger agreement
with Newsweb Corporation or the approval of or entry into a definitive agreement
between Cityfront Center, L.L.C. and the Trust. Cityfront Center, L.L.C.'s
offer is the subject of certain litigation filed by Newsweb Corporation against
the Trust, its trustees, Cityfront Center L.L.C. and certain related parties. A
hearing with respect to Newsweb Corporation's claims has been scheduled for
December 19 and 20, 1996.
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: Amy Dolnick Contact: David R. Tinkham
FOR IMMEDIATE RELEASE
THE CHICAGO DOCK AND CANAL TRUST (NASDAQ/DOCKS)
ADVISES NEWSWEB CORPORATION OF RECEIPT OF $25 PER SHARE SUPERIOR PROPOSAL
CHICAGO, December 21, 1996--The Chicago Dock and Canal Trust (the "Trust")
announced today that it has advised Newsweb Corporation that the Trust 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 $25.00 per
share in cash and that such revised proposal has been determined by the Trust to
be a "Superior Proposal" for purposes of the existing agreement and plan of
merger dated September 27, 1996 among the Trust, Newsweb Corporation and CDCT
Acquisition Trust, an affiliate of Newsweb Corporation.
On December 20, 1996, the Trust received a revised proposal from Newsweb
Corporation to acquire all of the issued and outstanding shares of beneficial
interest in the Trust for $23.00 per share in cash. The Trust previously
announced that it had received a 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 existing agreement and plan of merger
with Newsweb Corporation provides for the purchase of the Trust's shares at a
price of $21.00 per share.
CityFront Center, L.L.C.'s offer to the Trust is the subject of certain
litigation filed by Newsweb Corporation against the Trust, its trustees,
CityFront Center, L.L.C. and certain related parties. At a hearing with respect
to Newsweb Corporation's claims held on December 19 and 20, 1996 in the Circuit
Court of Cook County, Illinois, the Court declined to issue a preliminary
injunction to enjoin consideration and pursuit of the CityFront Center, L.L.C.
offer. The court reserved consideration of all other claims in the litigation.
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 the receipt by Trust of the CityFront
Center, L.L.C. proposal will result in the approval of or entry into 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.
# # #
