<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: Commission File Number:
JUNE 30, 1996 1-12244
---------------------- -----------------------
EXCEL REALTY TRUST, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 33-0160389
------------------------------ ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
16955 VIA DEL CAMPO, SUITE 110 SAN DIEGO, CALIFORNIA 92127
- --------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 485-9400
--------------
Indicated 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 requirements for the past 90 days.
(1) Yes X No
--- ---
(2) Yes X No
--- ---
Indicated the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period cover by this report.
<TABLE>
<CAPTION>
Class Outstanding at August 9, 1996
- ---------------------------------- ---------------------------------
<S> <C>
Common stock, $.01 par value 14,968,180
</TABLE>
<PAGE> 2
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
INDEX
FORM 10-Q
----------
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
June 30, 1996 (Unaudited)
December 31, 1995 ....................................................... 3
Consolidated Statements of Income
Three Months Ended June 30, 1996 (Unaudited)
Three Months Ended June 30, 1995 (Unaudited)
Six Months Ended June 30, 1996 (Unaudited)
Six Months Ended June 30, 1995 (Unaudited)............................... 4
Consolidated Statements of Changes in Stockholders' Equity
Six Months Ended June 30, 1996 (Unaudited)
Six Months Ended June 30, 1995 (Unaudited)............................... 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 (Unaudited)
Six Months Ended June 30, 1995 (Unaudited)............................... 6
Notes to Consolidated Financial Statements (Unaudited)...................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................... 16
PART II. OTHER INFORMATION ........................................................... 22
</TABLE>
2
<PAGE> 3
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
JUNE 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
----------- ------------
<S> <C> <C>
ASSETS
Real estate:
Land $134,703 $122,394
Buildings 273,964 251,012
Accumulated depreciation (18,379) (14,909)
Real estate held for sale 15,123 13,519
-------- --------
Net real estate 405,411 372,016
Cash 7,159 9,812
Escrow and other cash deposits 1,216 14,890
Accounts receivable, less allowance for bad debts of
$907 and $726 in 1996 and 1995, respectively 3,861 2,156
Receivable from offering proceeds 33,819 -
Notes receivable from affiliates 25,876 18,561
Notes receivable - other 16,426 4,289
Loan acquisition costs 2,227 2,662
Other assets 4,191 3,921
-------- --------
$500,186 $428,307
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages payable $141,164 $123,813
Notes payable 107,835 86,984
Accounts payable and accrued liabilities 4,288 4,806
Deferred rental income 2,840 2,760
Other liabilities 2,053 1,266
-------- --------
Total liabilities 258,180 219,629
-------- --------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized - -
Common stock, $.01 par value, 100,000,000 shares authorized,
14,976,986 and 13,171,353 shares issued and outstanding
in 1996 and 1995, respectively 150 132
Additional paid-in capital 253,663 218,531
Accumulated distributions in excess of net income (11,807) (9,985)
-------- --------
Total stockholders' equity 242,006 208,678
-------- --------
$500,186 $428,307
======== ========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
3
<PAGE> 4
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
Base rent $12,042 $12,164 $23,538 $24,751
Percentage rent 73 28 146 92
Expense reimbursements 1,258 789 2,429 1,564
------- ------- ------- -------
Total revenue 13,373 12,981 26,113 26,407
------- ------- ------- -------
Operating expenses:
Property taxes 713 642 1,362 1,251
Repairs and maintenance 478 399 1,045 792
Utilities 117 102 257 290
Other property expenses 688 476 1,182 869
Master lease - 1,330 351 2,886
General and administrative expenses 877 307 1,519 1,042
Depreciation and amortization 1,861 1,690 3,658 3,339
------- ------- ------- -------
Total operating expenses 4,734 4,946 9,374 10,469
------- ------- ------- -------
Operating income 8,639 8,035 16,739 15,938
Other income (expense):
Interest expense (5,253) (4,993) (10,025) (9,434)
Interest and other income 1,954 774 4,336 1,237
------- ------- ------- -------
Income before real estate impairment and sales 5,340 3,816 11,050 7,741
Impairment of real estate (1,246) - (1,246) -
Gain (loss) on sale of real estate - (123) 148 (131)
------- ------- ------- -------
Net income $ 4,094 $ 3,693 $ 9,952 $ 7,610
======= ======= ======= =======
Net income per common share $ 0.31 $ 0.33 $ 0.75 $ 0.69
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part
of the financial statements.
4
<PAGE> 5
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(IN THOUSANDS, EXCEPT NUMBER OF SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL DISTRIBUTIONS TOTAL
--------------------- PAID-IN IN EXCESS OF STOCKHOLDERS'
NUMBER AMOUNT CAPITAL NET INCOME EQUITY
------ ------ ------- ---------- ------
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1996:
Balance at January 1, 1996 13,171,353 $132 $218,531 $ (9,985) $208,678
Issuance of new shares of
common stock 1,805,633 18 37,189 - 37,207
Selling expenses - - (2,057) - (2,057)
Net income - - - 9,952 9,952
Distributions declared - - - (11,774) (11,774)
---------- ---- -------- -------- --------
Balance at June 30, 1996 14,976,986 $150 $253,663 $(11,807) $242,006
========== ==== ======== ======== ========
SIX MONTHS ENDED JUNE 30, 1995:
Balance at January 1, 1995 10,883,570 $109 $175,702 $(11,913) $163,898
Issuance of new shares of
common stock 2,036,779 20 40,820 - 40,840
Selling expenses - - (2,532) - (2,532)
Net income - - - 7,610 7,610
Distributions declared - - - (4,679) (4,679)
---------- ---- -------- -------- --------
Balance at June 30, 1995 12,920,349 $129 $213,990 $ (8,982) $205,137
========== ==== ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
5
<PAGE> 6
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,952 $ 7,610
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 3,656 3,337
Amortized loan costs and leasing commissions 585 1,206
(Gain) loss on sale of real estate (148) 131
Provision for bad debts, net of accounts written off 301 122
Impairment of real estate value 1,246 -
Changes in operating assets and liabilities:
Increase in assets:
Accounts receivable (1,885) (413)
Other assets (584) (626)
Increase (decrease) in liabilities:
Accounts payable (1,176) (64)
Other liabilities 794 (98)
-------- --------
Net cash provided by operating activities 12,741 11,205
-------- --------
Cash flows from investing activities:
Real estate acquisitions and building improvements (2,138) (10,367)
Advances for notes receivable (21,172) (25,150)
Principal payments on notes receivable 1,600 4,918
Cash deposits paid - (6,239)
Escrow deposits collected 814 3,721
Proceeds from real estate sales - 9,127
Other 753 (371)
-------- --------
Net cash used in investing activities (20,143) (24,361)
-------- --------
Cash flows from financing activities:
Issuance of common stock 572 40,840
Selling and offering costs (150) (2,532)
Distributions paid (11,774) (9,364)
Proceeds from notes payable 23,425 24,021
Principal payments of mortgages and notes payable (7,239) (32,019)
Loan costs refunded 125 -
Loan costs paid (210) (458)
-------- --------
Net cash provided by financing activities 4,749 20,488
-------- --------
Net increase (decrease) in cash (2,653) 7,332
Cash at January 1 9,812 4,131
-------- --------
Cash at June 30 $ 7,159 $ 11,463
======== ========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
6
<PAGE> 7
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements reflect all adjustments of a recurring nature
which are, in the opinion of management, necessary for a fair presentation
of the financial statements. No adjustments were necessary which were not
of a normal recurring nature. Certain reclassifications have been made to
the consolidated financial statements for the periods ended June 30, 1995
in order to conform with the current period presentation. These financial
statements should be read in conjunction with the consolidated financial
statements and accompanying footnotes included in the Company's December
31, 1995 Annual Report on Form 10-K, as amended.
ORGANIZATION
Excel Realty Trust, Inc. (the "Company") was formed in 1985 and is a
Maryland corporation. The Company is in the business of purchasing and
operating commercial real estate. The Company is operated as a
self-administered, self-managed real estate investment trust (REIT).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries, Excel Mortgage Funding Corporation
("EMFC"), Excel Credit Corporation ("ECC"), Excel Realty Trust - NC, Excel
Realty Trust - TX, Excel Realty Trust - NE, Inc., Excel Realty Trust - ST,
Inc., and Excel Realty - PA, Inc., and its interest in 50% or more owned
partnerships. All significant intercompany accounts and transactions have
been eliminated. EMFC and ECC were dissolved in 1995.
The equity method of accounting is used for investments in partnerships
which the Company owns less than 50%, but is able to exercise significant
influence over the partnership's operations. The Company also uses the
equity method to account for its investment in ERT Development Corporation
("EDV") (see Note 5). The investment was recorded initially at cost and
subsequently adjusted for net equity in income (loss) of EDV, and
contributions paid and distributions received. Previous to 1996, the
Company accounted for EDV on the cost method but adopted the equity method
in 1996 pursuant to the Financial Accounting Standards Board ("FASB")
Emerging Issues Task Force 95-6. There was no significant effect from the
change of accounting method and thus, 1995 financial statements have not
been restated.
7
<PAGE> 8
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
REAL ESTATE
Land, buildings and building improvements, and real estate held for sale
are recorded at cost. Depreciation is computed using the straight-line
method over estimated useful lives of 40 years for buildings and 2 to 40
years for building improvements. Expenditures for maintenance and repairs
are charged to expense as incurred and significant renovations are
capitalized. The Company assesses whether there has been a permanent
impairment in the value of its real estate by considering factors such as
expected future operating income, trends and prospects, as well as the
effects of demand, competition and other economic factors. Such factors
include a lessee's ability to pay rent under the terms of the lease. If a
property is leased at a significantly lower rent, the Company may
recognize a permanent impairment loss if the value of the income stream is
not considered sufficient to recover its cost. Such a loss would be
determined as the difference between the carrying value and the fair value
of the property.
LEASE TERMINATION FEES
Revenue recognition of fees received for lease terminations are deferred
and amortized using the straight-line method over the estimated time to
re-lease or sell the related property.
DEFERRED LEASING AND LOAN ACQUISITION COSTS
Costs incurred in obtaining tenant leases and long-term financing are
amortized to leasing commission expense and interest expense,
respectively, on the straight-line method over the terms of the related
leases or debt agreements.
REVENUE RECOGNITION
The straight-line basis, which averages annual minimum rents over the
terms of the leases, is used to recognize rental revenue. Certain of the
leases provide for additional rental revenue by way of percentage rents to
be paid based upon the level of sales achieved by the lessee. These
percentage rents are recorded on the accrual basis. Revenue is also
recognized for tenant reimbursement of common area maintenance and other
operating expenses.
INCOME TAXES
The Company has elected to be treated as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended. Under these
provisions, the Company and its subsidiaries will not be subject to
federal income tax if 95% of its real estate investment trust taxable
income (before dividends paid deduction) is distributed to shareholders
and certain gross income, asset diversification, share ownership and
disclosure requirements are met. Accordingly, no provision for federal
income taxes is included in the accompanying consolidated financial
statements.
8
<PAGE> 9
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
NET INCOME PER COMMON SHARE
Net income per common share is based upon the weighted average number of
common shares and common share equivalents outstanding during each period.
Common share equivalents included in the computation represent shares
issuable upon assumed exercise of common stock options and warrants which
would have a dilutive effect. The weighted average shares outstanding for
the six months ended June 30, 1996 and 1995 were 13,312,720 and
10,875,696, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from those
estimates.
2. REGISTRATION STATEMENT:
In May 1995, the Company filed with the Securities and Exchange Commission
a $250,000,000 shelf registration statement. This registration statement
was filed for the purpose of issuing debt securities, preferred stock,
depositary shares, common stock or warrants for general corporate
purposes.
In June 1996, the Company issued from the shelf, 1,725,000 shares of
common stock in a publicly underwritten offering at a price of $20.625 per
share. Net proceeds of approximately $33,819,000 were received in July and
were used primarily to pay down notes payable (see Note 7). In May, 1995,
the Company issued from the shelf 2,140,000 shares of common stock at a
price of $20.125 per share. Net proceeds of approximately $40,500,000 from
this offering were used to pay off debt, purchase properties, and to make
loans to facilitate the development of certain properties.
3. REAL ESTATE TRANSACTIONS:
In 1996, the Company acquired three shopping centers in North Carolina
remaining under the option agreements described below, and one shopping
center in Georgia. The total cost of the four properties was approximately
$35,983,000 of which the Company assumed $22,088,000 in debt. In the six
months ended June 30, 1995, the Company acquired five shopping centers in
North Carolina under the option agreements. The total cost of these five
properties was approximately $21,251,000.
9
<PAGE> 10
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
3. REAL ESTATE TRANSACTIONS, CONTINUED:
In 1995, the Company entered into master lease and option agreements to
purchase certain shopping centers in North Carolina. The master leases
required the payment equal to eight percent of the lessor/sellers equity
in the properties and gave the Company all management and operating
responsibilities for the shopping centers. Under the master leases, the
Company received all cash flow, if any, in excess of the master lease
expense. The master lease expense included master lease and interest
payments from debt service. All of the rent revenue and related operating
expenses from the master leased properties have been consolidated in the
Company's consolidated financial statements. The option agreements gave
the Company the option to purchase the properties. Upon purchase of the
remaining North Carolina properties in 1996, the master lease and option
agreements were terminated.
The Company sold one single tenant property in 1996 for a net price of
$814,000. During the six months ended June 30, 1995, the Company sold five
single tenant properties for a total net sales price of $9,127,000.
In June 1996, the Company received a lease termination fee (see Note 13)
related to a single tenant property and also entered into negotiations for
the sale of this property to a separate party. In accordance with FASB
Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," the property was written down by
$1,246,000 to the estimated selling price and reclassified as real estate
held for sale.
4. NOTES RECEIVABLE (IN THOUSANDS):
The Company had the following notes receivable at June 30, 1996 and
December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Notes from affiliates, interest at 12-14% per annum,
Due upon demand $25,876 $18,561
Note from a development company, interest at 25% per annum, 9,533 -
payable in Canadian dollars
Notes from development companies, interest from 10% to 12%
per annum. Maturity dates vary from the completion of
certain properties 6,112 3,500
Other 781 789
------- -------
Total notes receivable $42,302 $22,850
======= =======
</TABLE>
10
<PAGE> 11
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
4. NOTES RECEIVABLE (IN THOUSANDS), CONTINUED:
Notes from affiliates are due from EDV and Excel Realty Partners, L.P.
("ERP"), a Delaware limited partnership (see Note 14). Interest and
principal payments from EDV are received upon the completion of certain
development projects. Interest receivable from EDV was $1,257 at June 30,
1996. Interest and principal payments from ERP are received on a monthly
basis or as excess cash is available. Interest receivable from ERP was
$208 at June 30, 1996.
In 1996, the Company made a loan in the amount of $13,000 Canadian dollars
($9,533 in U.S. dollars at June 30, 1996) to a Canadian company which used
the proceeds to acquire a 50% joint venture interest in a commercial
building known as "Atrium on Bay" in Toronto, Ontario, Canada. The loan is
secured by the Canadian company's interest in the "Atrium on Bay." The
Canadian loan bears interest at 25% per annum and matures in seven years.
At June 30, 1996, the Company has made a reserve of $120 against the total
interest receivable of $338 pending future leasing activity.
5. INVESTMENTS:
In April 1995, ERP was formed to own and manage certain real estate
properties. The Company is a 1% partner and the sole general partner of
ERP. In May 1995, ERP entered into an agreement for certain unaffiliated
entities to contribute to the partnership shopping centers in the
southeastern United States. Through June 30, 1996, eight properties with a
basis of approximately $42,000,000 have been contributed to ERP in
exchange for limited partnership units and cash. The Company is entitled
to receive 99% of all earnings, if any, after the limited partners receive
their distributions. Annual distributions approximate $458,000 based on
limited partner units held at June 30, 1996. The partnership had net
income of $273,000 and $0 for the six months ended June 30, 1996 and 1995,
respectively. The Company's investment in the partnership at June 30, 1996
and December 31, 1995 was $543,000 and $139,000, respectively, and is
included in other assets on the Consolidated Balance Sheets.
In April 1995, ERT Development Corp. ("EDV"), a Delaware Corporation was
organized. The Company owns 100% of the outstanding preferred shares of
EDV. The preferred shares receive 95% of the dividends, if any from EDV.
EDV was formed to acquire, develop, hold and sell real estate in the
short-term for capital gains and/or receive fee income (see Note 14).
11
<PAGE> 12
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
6. MORTGAGES PAYABLE (IN THOUSANDS):
The Company had the following mortgages payable at June 30, 1996 and
December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Mortgage notes at 6.92% to 10%, payable in installments through 2018
(monthly payments at June 30, 1996 of $1,298):
Insurance companies $ 66,992 $ 67,356
Banks 41,994 23,603
Private bonds 29,231 29,907
Other 2,947 2,947
-------- --------
Total mortgages payable $141,164 $123,813
======== ========
</TABLE>
The principal payments required to be made on mortgages payable are as
follows:
<TABLE>
<CAPTION>
YEAR
----
<S> <C>
1996, remaining six months $ 2,578
1997 4,009
1998 6,608
1999 27,108
2000 18,060
Thereafter 82,801
--------
$141,164
========
</TABLE>
Mortgages of $59,272 are fully amortizing with no balloon payments with
the final monthly payments coming between the years 2004 and 2018.
12
<PAGE> 13
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
7. NOTES PAYABLE (IN THOUSANDS):
The Company had the following notes payable at June 30, 1996 and December
31, 1995:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Unsecured credit agreement of $150,000, interest at
LIBOR + 1.75% (7.2% at June 30, 1996) $ 94,600 $82,800
Term loan secured by notes receivable, interest at LIBOR +
1.75% (7.2% at June 30, 1996), repaid in July 1996 10,000 -
Line of credit payable to a financial institution, interest at the
lender's base rate plus 1.25% (8.91% at
June 30, 1996) 3,223 3,184
Unsecured revolving line of credit of $1,000, interest at 9.5% - 1,000
Other 12 -
-------- -------
Total notes payable $107,835 $86,984
======== =======
</TABLE>
In December 1995, the Company received a two-year revolving credit
facility of up to $150,000 in unsecured advances through December 1997,
from a consortium of seven banks. The actual amount available to the
Company is dependent on certain covenants such as the value of
unencumbered assets and the ratio of earnings before interest,
depreciation, and amortization to fixed charges. The principal outstanding
is due in December 1997. The Company repaid $22,600 of this line in July
1996, primarily from proceeds of the Company's stock offering (see Note
2). The Company also has a $4,000 line of credit due September 1996 that
is collateralized by certain notes receivable, and an unsecured $1,000
revolving bank line.
In June 1996, the Company obtained a term loan of $10,000 and used the
proceeds to make a loan to a Canadian company which used the proceeds to
acquire a 50% joint venture interest in a commercial building (see Note
4). The loan was repaid in July 1996 with proceeds from the Company's
stock offering (see Note 2).
In 1996, the Company sold certain interest rate protection agreements
related to certain variable rate mortgage debt that was repaid in December
1995. Based upon market quotes obtained, the carrying value of the
interest rate protection agreements was written down by $790 at December
31, 1995 to the estimated fair market value of $803, and charged to
interest expense. The Company then sold these interest rate protection
agreements in March 1996 for $1,218 and recognized a gain of $415. The
Company also purchased for $50, an additional interest rate protection
agreement in March 1996 which limits $50,000 of the outstanding balance on
the unsecured credit agreement to 10%.
13
<PAGE> 14
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
8. COMMITMENTS AND CONTINGENCIES:
As part of an agreement with unaffiliated parties to contribute certain
properties to ERP for limited partnership units, the limited partners are
guaranteed distributions as defined by the contribution agreement. The
Company is obligated to make advances to ERP to pay the distributions in
the event ERP is unable to make these payments (see Note 5). Also, at June
30, 1996, ERP mortgage debt of $2,897,000 was guaranteed by the Company.
The Company has committed to loan $14,000,000 to a developer related to a
joint development project in Florida. As of June 30, 1996, $2,474,000 had
been advanced under this commitment.
9. DISTRIBUTIONS
In April 1995, the Company adopted a policy of declaring distributions to
stockholders of record on the first day of the succeeding quarter, instead
of the last day of the current quarter. The payment date of 15 days
following each quarter remained unchanged. As such, in 1995 a distribution
of $0.43 was declared on March 31 and paid on April 15, and the normal
distribution of June 30 was instead declared on July 1 and paid on July
15, 1995. In 1996, distributions of $0.445 per share were declared on
January 2 and April 1, and paid on January 15 and April 15, respectively.
The distribution per share was increased to $0.46 per share beginning with
the July 15, 1996 distribution. For the six months ended June 30, 1996 and
1995, approximately 15% and 27% of the distributions received by
shareholders, respectively, were considered to be a return of capital for
tax purposes.
10. OPTIONS & WARRANTS:
The Company has adopted the 1993 Stock Option Plan (the "1993 Plan") for
executive officers and other employees of the Company, and the Directors
1994 Stock Option Plan (the "1994 Stock Plan") for directors options. In
the six months ended June 30, 1996, the Company granted 213,000 options at
$20.375 and 21,000 options at $18.25 under the 1993 Plan and 1994 Plan,
respectively. In the six months ended June 1995, the Company granted
131,250 options at $19.25 and 14,000 options at $16.375 under the 1993
Plan and 1994 Plan, respectively.
11. STATEMENTS OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE:
The amounts paid for interest during the six months ended June 30, 1996
and 1995 were $8,798,000 and $8,250,000, respectively. State income taxes
of $246,000 and $0 were paid in 1996 and 1995, respectively. For the six
months ended June 30, 1996, the Company acquired real estate and interests
in partnerships of $36,001,000 without the use of cash. The Company
assumed $22,088,000 of mortgage debt and other liabilities, used
$13,023,000 of escrow and other cash deposits, and issued $890,000 of
common stock. Also, proceeds from the Company's stock offering were not
received until July 1996 (see Note 2). In 1995, the Company acquired real
estate without the use of cash by assuming $13,698,000 in mortgages
payable. Also, net proceeds of $814,000 and $1,091,000 from the sale of
properties were directly deposited to escrow accounts in 1996 and 1995,
respectively.
14
<PAGE> 15
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED, CONTINUED
----------
12. MINIMUM FUTURE RENTALS (IN THOUSANDS):
The Company leases its shopping centers and single-tenant buildings to
tenants under noncancelable operating leases generally requiring the
tenant to pay a minimum rent adjusted by either (i) fixed increases, (ii)
a percentage of gross sales, or (iii) a CPI index. The leases are
generally either (i) triple-net, requiring the tenant to pay all expenses
of operating the property such as insurance, property taxes, repairs and
utilities, or (ii) require the tenant to reimburse the Company for the
tenant's share of real estate taxes and other common area maintenance
expenses.
Minimum future rental revenue for the commercial real estate currently
owned at June 30, 1996 and subject to noncancelable operating leases is as
follows:
<TABLE>
<CAPTION>
YEAR
----
<S> <C>
1996, remaining six months $ 22,185
1997 42,805
1998 40,373
1999 37,553
2000 35,656
Thereafter 310,899
</TABLE>
13. LEASE TERMINATION FEES
The Company had $2,486,000 and $2,446,000 in deferred lease termination
fees at June 30, 1996 and December 31, 1995, respectively, which are
included as part of deferred rental income on the Consolidated Balance
Sheets. For the six months ended June 30, 1996 and 1995, the Company
amortized $1,260,000 and $378,000 of deferred lease termination fees,
respectively, which are included in base rents on the Consolidated
Statements of Income. Additionally, a $300,000 lease termination fee was
recognized as income in the first quarter of 1995 when a building was
re-leased at greater rents. Total cash received from lease termination
fees for the first two quarters of 1996 and 1995 were $1,300,000 and $0,
respectively.
14. RELATED PARTY TRANSACTIONS:
Notes receivable at June 30, 1996 and December 31, 1995 included
$15,068,000 and $12,611,000 from EDV and $10,808,000 and $5,950,000 from
ERP, respectively. Total interest income recognized in 1996 from EDV and
ERP amounted to $1,000,000 and $617,000, respectively. For the first six
months in 1995, $366,000 and $0 was recognized as interest income from EDV
and ERP, respectively. Also, in 1996, the Company recognized as income
$696,000 in fees from EDV.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
NATURE OF BUSINESS
Excel Realty Trust, Inc. (the "Company") is a self-administered, self-managed
equity real estate investment trust ("REIT") which owns and manages commercial
retail income-producing properties primarily leased on a long-term basis. The
terms of such leases typically provide that the tenant is responsible for all
costs and expenses associated with the ongoing maintenance of the property,
including but not limited to property taxes, insurance and common area
maintenance. The majority of the single tenant property leases also require that
tenants pay for roof and structure repairs and maintenance. The properties are
generally either (i) neighborhood or community shopping centers, anchored by a
major retail discount department store and/or a major grocery chain store, or
(ii) single tenant properties leased to a major retail tenant.
The Company has operated and intends to operate in a manner to qualify as a REIT
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended.
As a REIT, the Company is not subject to federal income tax with respect to that
portion of its income which meets certain criteria and is distributed annually
to the stockholders.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto.
Comparison of the three months ended June 30, 1996 to the three months ended
June 30, 1995.
Total revenue increased $392,000 or 3%, to $13,373,000 for the three months
ended June 30, 1996 from $12,981,000 for the three months ended June 30, 1995.
The increase is primarily related to additional expense reimbursements from the
$377,000 in additional property operating expenses in 1996. Also, there were
four shopping centers that were purchased after June 30, 1995 which contributed
$407,000 of total revenue in the three months ended June 30, 1996. Base rents
decreased slightly by $122,000. This was primarily related to the sale of an
office building in December 1995 which accounted for $769,000 in revenue for the
second quarter of 1995. The proceeds of this building were primarily used to
purchase three shopping centers that were being master leased in 1995. Under the
master lease agreements, the Company recognized revenue and expenses from the
properties' owners. Accordingly, as rents were already being recognized on the
master leased properties, there was no increase in rents from purchasing these
properties. The decrease in rents from the office building sale was partly
offset by an increase in the revenues recognized from lease termination fees.
The Company recognized revenue of $805,000 from lease termination fees in 1996
compared with $152,000 in 1995.
Total operating expenses decreased $212,000 or 4.3%, to $4,734,000 in the second
quarter of 1996 from $4,946,000 in the second quarter of 1995. The decrease was
primarily related to a decrease in master lease expense of $1,330,000. In the
first six months of 1995, there were eleven properties that were being master
leased. In the first quarter of 1996, the final three properties remaining under
master leases were purchased. General and administrative expense increased by
$570,000 from 1995. In 1995, approximately $300,000 of expenses were paid by ERT
Development Corporation compared with approximately $150,000 in the second
quarter of 1996. Also, the Company has hired additional personnel to manage the
properties owned by its operating partnership, Excel Realty Partners, L.P., to
accommodate future growth, and to perform certain property management functions
that were previously being rendered by third parties. Finally, the general and
administrative expense included $80,000 of expenses for accrued bonuses compared
with $0 in 1995. Depreciation and amortization increased $171,000 or 10.1% in
1996 from
16
<PAGE> 17
1995, primarily from the master leased properties that were purchased. The
remaining operating expenses included property taxes, repairs and maintenance,
utilities and other property expenses which increased a total of $377,000 or
23.3% in 1996 from 1995. Bad debt expense from tenants accounted for
approximately $203,000 of this increase.
Interest expense increased to $5,253,000 in 1996 from $4,993,000 in 1995, or
5.2%. This increase related to the increase in the Company's debt. At June 30,
1996, the Company had mortgages and notes payable of $248,999,000 compared with
$206,771,000 of mortgage debt at June 30, 1995, an increase of 20.4%. Interest
expense did not increase proportionally with the outstanding balance of debt at
the end of each period, due in part that approximately $22,000,000 of notes
payable were incurred during the second quarter of 1996 and not outstanding the
full period.
Interest and other income increased $1,180,000 or 152% from 1995, primarily
related to additional cash invested and loans made to Excel Realty Partners,
L.P., ERT Development Corporation, and other development companies. The Company
had $42,302,000 in notes receivable outstanding at June 30, 1996 compared to
$29,331,000 outstanding at June 30, 1995.
In June 1996, the Company wrote down the value of one of its real estate
properties held for sale by $1,246,000 to its estimated selling price. There was
no such write-downs in 1995.
Net income increased $401,000, or 10.9% to $4,094,000 in the six months ended
June 30, 1996 from $3,693,000 for the six months ended June 30, 1995, but
decreased to $0.31 per share in 1996 from $0.33 per share in 1995. This decrease
was due to the write-down of real estate value made in June 1996.
Comparison of the six months ended June 30, 1996 to the six months ended June
30, 1995.
Total revenue decreased $294,000 or 1.1% to $26,113,000 for the six months ended
June 30, 1996 from $26,407,000 for the six months ended June 30, 1995. The
decrease is primarily related to a sale of the office building in December 1995
which accounted for $1,502,000 in revenue for the six months ended June 30,
1995. The decrease in rents from the office building was partly offset by an
increase in revenues in lease termination fees. For the six months ended June
30, 1996, the Company recognized $582,000 more in lease termination fees than in
1995. Also, the four shopping centers that were purchased after June 30, 1995
contributed $758,000 of revenue in the six months ended June 30, 1996 and $0 in
1995.
Total operating expenses decreased $1,095,000 or 10.5%, to $9,374,000 in the
first two quarters of 1996 from $10,469,000 in the first two quarters of 1995.
The decrease was primarily related to a decrease in master lease expense of
$2,535,000 as in the first quarter of 1996, the final three properties remaining
under master leases were purchased. General and administrative expense increased
by $477,000 from 1995 and was approximately 6% of base rents in 1996 compared to
4% of base rents in 1995. The increase is primarily related to an increase in
the Company's personnel. Additionally, the general and administrative expense
included $110,000 of expenses for accrued bonuses compared with $0 in 1995.
Depreciation and amortization increased $319,000 or 9.5% in 1996 from 1995,
primarily from the master leased properties that were purchased. The remaining
operating expenses included property taxes, repairs and maintenance, utilities
and other property expenses which increased a total of $644,000 or 20.1%. This
increase in expenses has been offset by an increase in expense reimbursements.
Interest expense increased to $10,025,000 in 1996 from $9,434,000, or 6.3%. This
increase related to the increase in the Company's debt. Interest expense did not
increase proportionally with debt, due in part because approximately $45,000,000
of mortgage debt and notes payable were incurred in 1996 and not outstanding the
full period.
17
<PAGE> 18
Interest and other income increased $3,099,000 or 250% from 1995, primarily
related to additional cash invested and loans made to Excel Realty Partners,
L.P., ERT Development Corporation, and other development companies. Also in the
first quarter of 1996, the Company sold certain interest rate protection
agreements related to the REMIC debt for a gain of $415,000.
Net income increased $2,342,000, or 30.8% to $9,952,000, $0.75 per share, in the
six months ended June 30, 1996 from $7,610,000, $0.69 per share for the six
months ended June 30, 1995.
Other information.
The Company calculates funds from operations ("FFO") as net income plus
depreciation on real estate, amortization, amortized leasing commission costs
and loan costs written off, before impairment and gains or losses on real estate
sales. FFO does not represent cash flows from operations as defined by generally
accepted accounting principles, and may not be comparable to other similarly
titled measures of other REITs. The Company believes however, that to facilitate
a clear understanding of its operating results, FFO should be examined in
conjunction with its net income as reductions for certain items are not
meaningful in evaluating income-producing real estate, which historically has
not depreciated. The following information is included to show the items
included in the Company's FFO for the three months ended June 30, 1996 and 1995
(in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Net income $4,094 $3,693
Depreciation:
Buildings 1,678 1,544
Tenant improvements 151 124
From equity investments 2 -
Amortization (1):
Organization costs 1 1
Leasing commissions 35 60
Loan costs written-off - 325
Impairment in real estate 1,246 -
Loss on sale of buildings - 123
------ ------
Funds from operations (2) $7,207 $5,870
====== ======
Other Information:
Leasing commissions paid $ 31 $ 155
Tenant improvements paid 69 210
Building improvements paid (Parking lots, roofs, etc.) 51 33
</TABLE>
(1) Only amortization of organization costs is shown as amortization expense in
the Consolidated Statements of Income. Leasing commission amortization is
classified as other operating expenses in the Consolidated Statements of Income.
(2) Beginning in 1996, the Company revised its definition of FFO to exclude the
amortization of loan costs and depreciation of furniture, equipment and vehicles
as add-back items. Under the previous definition, FFO was $6,219 for the three
months ended June 30, 1995.
18
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations has been the principal source of capital to fund the
Company's on-going operations. The Company's issuance of common shares, use of
the Company's credit facilities, and long-term financing have been the principal
sources of capital used to fund its property acquisitions. In order to continue
to expand and develop its portfolio of properties, the Company may seek to
obtain funds through additional equity offerings or debt financing in a manner
consistent with its intention to operate with what it believes to be an
appropriate debt level with respect to prudent interest coverage ratios. The
Company anticipates that adequate cash will be available to fund its operating
and administrative expenses, continuing debt service obligations and the payment
of distributions in both the short-term and long-term. In the six month period
ended June 30, 1996, property acquisitions were primarily funded through the use
of existing cash deposits from previous property sales, and long-term mortgage
financing. Investments in Excel Realty Partners, L.P. and advances to ERT
Development Corporation were primarily funded through the use of the Company's
credit facility.
In 1995, the Company obtained a two-year unsecured revolving credit facility for
up to $150,000,000 through 1997 from a consortium of seven banks (the "Credit
Facility). The actual amount available to the Company is dependent on certain
covenants such as the value of unencumbered properties and the ratio of earnings
before interest, depreciation, and amortization to fixed charges. At June 30,
1996, approximately $14,900,000 was available under the Credit Facility.
Subsequent to June 30, 1996, $22,600,000 was repaid on the Credit Facility and
an additional $3,000,000 was borrowed leaving approximately $34,500,000
available under the Credit Facility. In December 1995, the Company used proceeds
from the Credit Facility to repay existing debt related to the REMIC. The Credit
Facility carries an interest rate of LIBOR plus 1.75% (7.2% at June 30, 1996),
while the REMIC carried interest rates of LIBOR plus 0.6% to 0.8%, plus a
servicing fee of 0.1865%. Although the REMIC carried lower interest rates than
the Credit Facility, the Company believes that other capital resources may
become accessible at lower costs with the increase in the Company's unsecured
portfolio. The Company also has a $4,000,000 line of credit and an unsecured
$1,000,000 revolving bank line. Approximately $1,700,000 in total is available
under these two facilities at June 30, 1996.
In June 1996, the Company issued 1,725,000 shares of common stock in a publicly
underwritten offering at a price of $20.625 per share. Net proceeds of
approximately $33,819,000 were received in July and were used primarily to pay
down notes payable of which $22,600,000 was paid on the Company's Credit
Facility.
In April 1995, the Company formed a Delaware limited partnership, Excel Realty
Partner, L.P. ("ERP") to own and manage certain properties. During 1996, the
Company loaned ERP $5,019,000 and may advance additional amounts in the future.
Also, the Company is committed to make loans to ERP to pay partner distributions
in the event ERP is unable to. There are a minimum of six remaining properties
scheduled to be contributed to ERP in 1996. Should all six properties be
contributed, ERP would assume approximately $30,000,000 in debt and pay
$13,000,000 in a combination of cash and partnership units. It is anticipated
that the cash requirements would be principally loaned to ERP by the Company.
There is no assurance that all or any of the six properties will be contributed
to ERP.
In 1996, the Company loaned $2,474,000 to a developer and is committed to loan
an additional $11,526,000 related to a joint development retail project in
Florida. It is anticipated that cash requirements for this commitment, as well
as cash needed for properties to be contributed to ERP, will be primarily
obtained from the Credit Facility.
The Company has elected REIT status for federal income tax purposes and must
distribute at least 95% of
19
<PAGE> 20
its taxable income to its stockholders in order to avoid federal income taxes.
Although the Company receives most of its rental revenue on a monthly basis, it
intends to make quarterly distribution payments. Amounts accumulated for
distribution will be invested by the Company in short-term marketable
instruments including deposits at commercial banks, money market accounts,
certificates of deposit, U.S. government securities, commercial paper or other
liquid investments (including GNMA, FNMA, and FHLMC mortgage-backed securities).
ECONOMIC CONDITIONS
The majority of the Company's leases contain provisions designed to mitigate the
adverse impact of inflation. Such provisions include clauses enabling the
Company to receive percentage rents which generally increase as prices rise,
and/or escalation clauses which are typically related to increases in the
consumer price index or similar inflation indices. In addition, the Company
believes that many of its existing lease rates are below current market levels
for comparable space and that upon renewal or re-rental such rates may be
increased to current market rates. This belief is based upon an analysis of
relevant market conditions, including a comparison of comparable market rental
rates, and upon the fact that many of such leases have been in place for a
number of years and may not contain escalation clauses sufficient to match the
increases in market rental rates over such time. Most of the Company's leases
require the tenant to pay its share of operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.
In addition, the Company periodically evaluates its exposure to interest rate
fluctuations, and may enter into interest rate protection agreements which
mitigate, but do not eliminate, the effect of changes in interest rates on its
variable rate loans.
Many regions of the United States, including regions in which the Company owns
property, may experience an economic recession. Such recessions, or other
adverse changes in general or local economic conditions, could result in the
inability of some existing tenants of the Company to meet their lease
obligations and could otherwise adversely effect the Company's ability to
attract or retain tenants. The Company's shopping centers are typically anchored
by discount department stores, supermarkets and drug stores which usually offer
day-to-day necessities rather than high priced luxury items. These types of
tenants, in the experience of the Company generally continue to maintain their
volume of sales despite a slowdown in economic conditions.
CERTAIN CAUTIONARY STATEMENTS
Certain statements in this Form 10-Q that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results of the Company to be materially different from historical results or
from any results expressed or implied by such forward-looking statements. Such
risks, uncertainties and other factors include, but are not limited to, the
following risks:
Economic Performance and Value of Centers Dependent on Many Factors. Real
property investments are subject to varying degrees of risk. The economic
performance and values of real estate can be affected by many factors, including
changes in the national, regional and local economic climates, local conditions
such as an oversupply of space or a reduction in demand for real estate in the
area, the attractiveness of the properties to tenants, competition from other
available space, the ability of the owner to provide adequate maintenance and
insurance and increased operating costs.
Dependence on Rental Income from Real Property. Since substantially all of the
Company's income is
20
<PAGE> 21
derived from rental income from real property, the Company's income and funds
for distribution would be adversely affected if a significant number of the
Company's tenants were unable to meet their obligations to the Company or if the
Company were unable to lease a significant amount of space in its properties on
economically favorable lease terms. There can be no assurance that any tenant
whose lease expires in the future will renew such lease or that the Company will
be able to re-lease space on economically advantageous terms.
Illiquidity of Real Estate Investments. Equity real estate investments are
relatively illiquid and therefore tend to limit the ability of the Company to
vary its portfolio promptly in response to changes in economic or other
conditions. In addition, mortgage payments and, to the extent the properties are
not subject to triple net leases, certain significant expenditures such as real
estate taxes and maintenance costs, are generally not reduced when circumstances
cause a reduction in income from the investment, and should such events occur,
the Company's income and funds for distribution would be adversely affected. A
portion of the Company's properties are mortgaged to secure payment of
indebtedness, and if the Company were unable to meet its mortgage payments, a
loss could be sustained as a result of foreclosure on such properties by the
mortgagee.
Risk of Bankruptcy of Major Tenants. The bankruptcy or insolvency of a major
tenant or a number of smaller tenants may have an adverse impact on the
properties affected and on the income produced by such properties. Under
bankruptcy law, a tenant has the option of assuming (continuing) or rejecting
(terminating) any unexpired lease. If the tenant assumes its lease with the
Company, the tenant must cure all defaults under the lease and provide the
Company with adequate assurance of its future performance under the lease. If
the tenant rejects the lease, the Company's claim for breach of the lease would
(absent collateral securing the claim) be treated as a general unsecured claim.
The amount of the claim would be capped at the amount owed for unpaid
pre-petition lease payments unrelated to the rejection, plus the greater of one
years' lease payments or 15% of the remaining lease payments payable under the
lease (but not to exceed the amount of three years' lease payments).
Environmental Risks. Under various federal, state and local laws, ordinances and
regulations, the Company may be considered an owner or operator of real property
or may have arranged for the disposal or treatment of hazardous or toxic
substances and, therefore, may become liable for the costs of removal or
remediation of certain hazardous substances released on or in its property or
disposed of by it, as well as certain other potential costs which could relate
to hazardous or toxic substances (including governmental fines and injuries to
persons and property). Such liability may be imposed whether or not the Company
knew of, or was responsible for, the presence of such hazardous or toxic
substances.
Reliance on Major Tenants. As of June 30, 1996, the Company's two largest
tenants were Wal-Mart Stores, Inc. and Kmart Corporation which accounted for
approximately 15% and 14%, respectively, of the Company's annualized base rental
income as of such date. The financial position of the Company and its ability to
make distributions may be adversely affected by financial difficulties
experienced by either of such tenants, or any other major tenant of the Company,
including a bankruptcy, insolvency or general downturn in business of any such
tenant, or in the event any such tenant does not renew its leases as they
expire.
Control by Directors and Executive Officers. Directors and executive officers of
the Company beneficially own approximately 8.3% of the Company's common stock.
Accordingly, such persons should continue to have substantial influence over the
Company and on the outcome of matters submitted to the Company's stockholders
for approval.
21
<PAGE> 22
PART II. OTHER INFORMATION
Items 1 through 4 have been omitted since no events occurred with respect to
these items.
Item 5. Other Information.
The Company purchased four properties in the first quarter of 1996. These
transactions are described in Note 2 to the financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K filed July 2, 1996, respecting the
Underwriting Agreement dated June 26, 1996 between Excel Realty
Trust, Inc. and Smith Barney Inc.
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.
Dated: August 9, 1996
EXCEL REALTY TRUST, INC.
- ------------------------
(Registrant)
By:/s/ Gary B. Sabin
------------------------------------------
Gary B. Sabin, President
By:/s/ David A. Lund
------------------------------------------
David A. Lund, Principal Financial Officer
22
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,159,000
<SECURITIES> 0
<RECEIVABLES> 4,768,000
<ALLOWANCES> (907,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 423,790,000
<DEPRECIATION> (18,379,000)
<TOTAL-ASSETS> 500,186,000
<CURRENT-LIABILITIES> 4,288,000
<BONDS> 141,164,000
0
0
<COMMON> 253,813,000
<OTHER-SE> (11,807,000)
<TOTAL-LIABILITY-AND-EQUITY> 500,186,000
<SALES> 0
<TOTAL-REVENUES> 26,113,000
<CGS> 0
<TOTAL-COSTS> 9,374,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 301,000
<INTEREST-EXPENSE> 10,025,000
<INCOME-PRETAX> 9,952,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,952,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,952,000
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
