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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A AMENDMENT NO. 1
Annual Report Under Sections 13 Or 15(d) Of
The Securities Exchange Act of 1934
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For The Fiscal Year Ended Commission File Number:
DECEMBER 31, 1995 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 Identification Number)
Incorporation Or Organization)
16955 VIA DEL CAMPO, SUITE 110, SAN DIEGO, CALIFORNIA 92127
(Address Of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:
(619) 485-9400
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EXCEL REALTY TRUST, INC.
PART I
ITEM 1. BUSINESS
General.
Excel Realty Trust, Inc. (the "Company") was incorporated under the laws of
California in 1985 and reincorporated as a Maryland corporation in 1993. The
Company is a self-administered, self-managed equity real estate investment trust
("REIT") which owns and manages neighborhood and community shopping centers and
other retail and commercial properties primarily leased on a long-term basis to
major retail companies. The terms of such leases typically provide that the
tenant is responsible for costs and expenses associated with the ongoing
maintenance of the property. The majority of the single tenant property leases
also require that tenants pay for structural repairs and maintenance. At
December 31, 1995, the Company owned 109 operating properties and managed 3
additional operating properties under master lease agreements. The 112
properties are located in 27 states as outlined in Item 2.
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. In order to
maintain qualification as a REIT, the Company must distribute at least 95% of
its real estate investment trust taxable income and meet certain other asset and
income tests. 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. Additionally, ownership of the shares
of common stock of the Company, directly or constructively, by any single person
is limited, by the Company, to 9.8% of the total number of outstanding shares,
subject to certain exceptions. Any purported ownership in excess of such limit
will be void ab initio.
As of March 7, 1996, the Company employed 53 persons. Its executive offices are
located at 16955 Via Del Campo, Suite 110, San Diego, California 92127 and its
telephone number is (619) 485-9400.
Properties
The Company emphasizes investments in retail and commercial properties where a
substantial majority of gross leasable area ("GLA") is subject to long-term net
leases to national or regional tenants. The properties consist of three primary
types: (i) multi-tenant retail properties (the "Shopping Centers"); (ii) single
tenant net leased retail properties (the "Single Tenant Properties"); and (iii)
commercial properties and office buildings (the "Commercial Properties"). At
December 31, 1995, the Company and its subsidiaries owned (i) 38 Shopping
Centers (three of which were master leased) which accounted for approximately
61% of the Company's scheduled annualized base rent ("ABR") at December 31,
1995; (ii) 71 Single Tenant Properties which accounted for approximately 38% of
the Company's ABR at December 31, 1995; and (iii) 3 Commercial Properties which
accounted for approximately 1% of the Company's ABR at December 31, 1995. These
112 properties total approximately 7.4 million square feet of GLA, of which the
Shopping Centers, Single Tenant Properties, and Commercial Properties comprise
approximately 60%, 39%, and 1% respectively.
During 1995, the Company purchased 10 properties for a total purchase price of
approximately $48 million. All ten properties were Shopping Centers. At December
31, 1995, the Company operated an additional three Shopping Centers under master
lease agreements. These three properties were purchased and the master lease
agreements terminated in January and February of 1996. Also during 1995, the
Company sold nine Single Tenant Properties and one Commercial Property for net
sales proceeds of $29 million.
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Strategy and Philosophy
The following is a brief discussion of the Company's current strategies and
policies concerning acquisitions, management, dispositions, investments,
finances and operations, and certain support practices. The Company may,
however, from time to time, alter or change one or more of these strategies or
its policies in these areas. There can be no assurance that the Company's
strategies will be successful.
In general, the Company's policies and strategies are determined by the Board of
Directors and implemented by its executive officers. Certain policies and
objectives of the Company are subject to restrictions set forth in the Company's
bylaws which may not be altered without the majority vote of the directors,
including the Independent Directors, and by the Company's shareholders. The
Company's objectives are to acquire, own, and manage a portfolio of commercial
retail properties that will provide cash for quarterly distributions to
stockholders, while protecting investor capital and providing potential for
capital appreciation.
Aggressive Management - The Company aggressively manages its properties, with an
emphasis on maintaining high occupancy rates and a strong base of nationally
recognized anchor tenants. In addition, the Company emphasizes monitoring of the
physical condition of the properties and the financial condition of the tenants.
Over time, the Company will seek to increase cash flow and portfolio value
primarily through contractual rent increases during the terms of its leases,
reletting of existing space at higher rents, expansion of existing properties
and the minimization of overhead and operating costs.
Acquisition of Properties - The Company intends to continue its portfolio focus
on retail properties with predictable cash flow and growth potential. The
Company seeks to expand its portfolio by acquiring well-located neighborhood
and community shopping centers and other retail properties with comparable
rents. In addition, the Company seeks to acquire properties with tenants that
have a national or regional presence and an established credit quality. The
Company intends to continue to concentrate its property acquisitions in the
southwestern and southeastern United States, where a majority of its current
properties are located. Management believes that such emphasis will allow the
Company to utilize its current property management and maintenance personnel in
these areas. The Company may, however, acquire properties in other areas of the
United States. Additionally, the Company intends to continue to evaluate its
property type mix and may purchase from time to time other properties that the
Company believes will meet its objectives. Such properties may include power
centers, which are anchored by multiple major retail tenants, or other types of
properties which management believes will meet the Company's objectives.
Occasionally, the Company may acquire certain "opportunity" properties which may
be either retail or non-retail, but are well located and present significant
appreciation potential when combined with the Company's aggressive style of
management. These are typically properties which are purchased at a great
discount to their replacement cost.
Acquisitions through Partnerships - The Company may from time to time acquire
properties from unaffiliated property owners by forming partnerships and
exchanging limited partnership units in such partnerships for the property
owners' equity in the acquired properties. Such partnership units are generally
exchangeable for shares of common stock under certain circumstances. The Company
believes that this acquisition method may permit the Company to acquire
properties at attractive prices from property owners wishing to enter into tax
deferred transactions. In 1994, the Company acquired six properties through a
single partnership using the foregoing structure. In 1995, the Company formed a
second partnership, Excel Realty Partners, L.P. ("ERP"), a Delaware limited
partnership, to facilitate the acquisition of five properties and additional
potential acquisitions in the southeastern United States (see "Recent
Developments").
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Ground Lease Developments - The Company may from time to time finance properties
under development. In such circumstances, the Company generally requires that
the developer of such property has previously obtained (i) all necessary
entitlements allowing completion of the property, and (ii) signed leases from
the principal tenant(s) who will occupy the property. Under this financing
method, the Company purchases the undeveloped property and leases such property
back to the developer, and upon completion, the Company has the option to
purchase the development. The Company believes that this method of financing may
give the Company opportunities to purchase developed properties at
capitalization rates slightly above those which might otherwise be available
after completion of development.
Disposition of Properties - The Company continually analyzes each asset in its
portfolio and identifies those properties which can be sold (to the extent
consistent with REIT qualification requirements) for optimal sales prices given
prevailing market conditions and the particular characteristics of each
property. Through this strategy, the Company seeks to continually update its
core property portfolio and redeploy capital into newer properties or properties
where its aggressive management techniques may maximize property values. The
Company, however, holds its properties for investment and the production of
rental income and not for sale to customers or other buyers in the ordinary
course of the Company's business. If the Company were treated as holding
properties for sale to customers in the ordinary course of its business, it
would be subject to tax equal to 100% of its gain from each property sold (with
no offset allowed for properties sold at a loss). In addition, if the gain
recognized in any taxable year from certain asset dispositions were to exceed
specified limits, such gain could cause the disqualification of the Company as a
REIT. The Company intends to take appropriate measures before entering into any
binding agreement to dispose of an asset to determine that such disposition will
not result in the imposition of such tax on the Company and will not result in
the disqualification of the Company as a REIT.
Financing - The Company intends to finance future acquisitions with the most
advantageous sources of capital available to the Company at the time, which may
include the sale of common stock, preferred stock or debt securities through
public offerings or private placements, the incurrence of additional
indebtedness through secured or unsecured borrowings, and the reinvestment of
proceeds from the disposition of assets. The Company may acquire properties
subject to seller financing, existing loans secured by mortgages, deeds of trust
or similar liens. The Company may obtain mortgage financing for properties it
acquires and refinance its existing properties. (See "Recent Developments" for
financing transactions completed in 1995).
Environmental Matters
Under various federal, state and local laws, ordinances and regulations, an
owner of real estate generally is liable for the costs of removal or remediation
of certain hazardous or toxic substances located on or in, or emanating from,
such property, as well as related costs of investigation and property damage.
Such laws often impose such liability without regard to whether the owner knew
of, or was responsible for, the presence of such hazardous or toxic substances.
The presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or lease a property
or to borrow using such real estate as collateral. Other federal and state laws
require the removal or encapsulation of asbestos-containing material in poor
condition in the event of remodeling or renovation. Other statutes may require
the removal of underground storage tanks that are out of service or out of
compliance. Noncompliance with these and other environmental, health or safety
requirements may result in the need to cease or alter operations at a property,
which could affect the financial reliability of the property.
The Company seeks to protect itself from environmental liabilities associated
with properties it acquires in a number of ways. As part of its internal due
diligence process, the Company undertakes environmental site assessments prior
to purchasing a property. The Company will normally not purchase a property in
the event these assessments reveal potential environmental liabilities. The
Company may however, evaluate the risks and attempt to quantify the potential
costs associated with such liabilities, and then make a determination of whether
to acquire the property.
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If the Company chooses to acquire the property, it will typically require the
prospective seller/tenant to agree to remediate any environmental problems and
may obtain a letter of credit or other security to provide adequate assurance to
the Company that sufficient funds will be available to complete the work. The
Company will continue to obtain environmental reports on all properties it seeks
to acquire. Moreover, to protect itself against environmental liabilities that
were not discovered during its pre-purchase investigations as well as those that
were disclosed, the Company, in the purchase agreement and/or lease, will
typically require the seller/tenant to indemnify the Company against any and all
environmental liabilities arising from the property acquired.
Substantially all of the Company's properties have been subject to environmental
reports (which typically involve inspection without soil sampling or ground
water analysis) by independent environmental consultants. The environmental
reports have not revealed any material environmental liability, except for the
presence of certain asbestos-containing material at the Mesa, Arizona, Kmart
property. Although the asbestos discovered is thought to present no immediate
health hazard, its removal (at an estimated cost of $300,000 to $600,000) would
likely be required prior to commencing any improvements on the property. The
terms of the lease for such property require the tenant to assume the cost of
any required environmental remediation, including the removal of asbestos. The
Company is not aware of any other material environmental liability with respect
to any of its properties.
No assurance can be given that the environmental studies that were performed at
the properties would disclose all environmental liabilities thereon, that any
prior owner thereof did not create a material environmental condition not known
to the Company or that a material environmental condition does not otherwise
exist with respect to any of its properties.
Principal Tenants
Wal-Mart Stores, Inc. ("Wal-Mart") is the Company's largest tenant in terms of
both GLA and base rental revenues. Wal-Mart is the nation's largest retailer and
operates over 2,000 discount department stores, over 400 warehouse clubs and
four hypermarkets. Wal-Mart is listed on the New York Stock Exchange and as of
December 31, 1995, had credit ratings of AA from Standard and Poor's Corporation
("Standard and Poor's") and Aa2 from Moody's Investor Services, Inc.
("Moody's").
Kmart Corporation ("Kmart") is the Company's second largest tenant in terms of
both GLA and base rental revenues. Kmart's principal business is general
merchandise retailing through a chain of discount department stores. It is one
of the world's largest retailers based on sales volume. Kmart has experienced
flat or declining earnings in recent periods, and had announced plans to
eliminate a significant number of jobs and close certain of its existing stores.
In January 1996, Moody's lowered its rating on Kmart's long-term debt to Ba2.
Standard and Poor's rating on Kmart's long-term debt at December 31, 1995 was
BB. Kmart has closed five stores that were leased from the Company. The Company
negotiated receipt of lease termination fees on four of these properties, two of
which were subsequently sold. The Company is currently in the process of
re-leasing or selling the other two properties. Kmart has continued to make its
lease payments on the fifth closed property. Should Kmart in the future announce
additional store closures, the Company believes Kmart would continue its lease
payments for the term of the leases unless a lease termination fee is
negotiated, or the properties would be released at equal or greater rents.
Wal-Mart and Kmart are publicly traded companies and financial and other
information regarding these tenants is on file with the Commission.
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The table below sets forth information concerning the five largest tenants of
the Company and its subsidiaries at December 31, 1995:
<TABLE>
<CAPTION>
Percent of Percent of
Company Company Total
Number Total GLA Total GLA Scheduled Scheduled
Tenant Leases Under Lease Under Leases ABR ABR
- ------ ------ ----------- ------------ --- ---
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Wal-Mart 18 1,543 20.9% $ 6,618 14.7%
Kmart 17 1,373 18.6% 6,501 14.5%
Kroger 14 504 6.8% 3,242 7.2%
Lucky 15 484 6.6% 2,796 6.2%
Food Lion 11 299 4.1% 1,669 3.7%
--- ------ ----- ------- ------
75 4,203 57.0% $ 20,826 46.3%
=== ====== ====== ======= ======
</TABLE>
Certain leases related to the tenants in the table have either been subleased or
the leases relating thereto have been assigned to such party. Nevertheless, the
original tenant under the lease remains responsible for payment of all rents and
all other obligations due under such lease. An assignment of the lease would not
affect the terms of the lease. Generally, all subtenants are currently required
to pay the same rent to the tenant as the tenant is required to pay to the
Company and have been subleased for a term that is approximately the same as the
remaining term of the lease. In the event that the subtenant defaults under the
sublease and vacates the property, or in the event that the term of the sublease
expires earlier than the term of the lease, the property could remain unoccupied
until a new subtenant is located. In any event, the original tenant will remain
responsible for payment of all rents and all other obligations due under the
lease for the full remaining term of the lease.
Recent Developments
In May 1995, the Company filed with the Securities and Exchange Commission a
$250 million shelf registration statement. This registration statement was filed
for the purpose of issuing debt securities, preferred stock, depositary shares,
common stock or warrants. Subsequently in 1995, the Company issued from the
shelf, 2.14 million shares of common stock in a publicly underwritten offering
at a price of $20.125 per share. Net proceeds of approximately $40.5 million
from the offering were used to repay debt, purchase properties, and make loans
to facilitate the development of certain properties.
In December 1995, the Company received a two-year unsecured revolving credit
facility up to $150 million through December 1997 from a consortium of six banks
(the "Credit Facility"). 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. Upon
obtaining the Credit Facility, the Company borrowed $82.8 million, primarily to
repay existing secured debt on 52 properties.. With the Company's unsecured real
estate base at December 31, 1995, the Company had an additional $16 million
available under the Credit Facility. The Credit Facility carries an interest
rate of LIBOR plus 1.75% (7.5% at December 31, 1995).
In January 1995, the Company entered into master lease and option agreements
with respect to 11 shopping centers, containing approximately 1.4 million square
feet of GLA, located in North Carolina. The master leases required the payment
equal to eight percent of the lessor/sellers equity 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 payments. The option agreements gave the Company the option to
purchase the properties. In 1995, the Company purchased seven of the properties
under the option agreements. The Company terminated the master lease and
purchase option on one
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property on December 31, 1995. In January and February of 1996, the Company
purchased the three remaining properties.
In April 1995, the Company formed a Delaware limited partnership, Excel Realty
Partners, L.P. ("ERP") 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 several shopping centers located in the southeastern United States.
The Company anticipates that a minimum of 13 properties will be contributed to
ERP under this agreement. The contributing partners will receive partnership
units which will be exchangeable into common shares of the Company at prices of
$21.50 and $20.70 per share. The units priced at $21.50 will be exchangeable
anytime after one year from closing and adjust to the existing market price, but
exchange on a basis of one partnership unit for one common share of the Company.
The units priced at $20.70 are exchangeable anytime after two years and do not
adjust to the prevailing market price of the common stock. As part of the
agreement, after the partners receive annual per unit distributions of $1.72 for
the $21.50 units and $1.78 for the $20.70 units, the Company will be entitled to
receive 99% of all remaining income and gains, if any. The Company is committed
to make loans to ERP to pay partner distributions in the event ERP is unable to.
In 1995, ERP's cash flows were sufficient to make the limited partner
distributions. The Company has initially contributed cash for a 1% equity
position in the partnership. In 1995, five real estate properties with a value
of $28.5 million subject to outstanding mortgages of $18 million, were
contributed to ERP for limited partnership units and cash. During 1995, the
Company loaned ERP approximately $6 million to help facilitate these
transactions. At December 31, 1995, the Company is committed to advance ERP an
additional $2 million under existing credit agreements and may advance
additional amounts in the future. The approximate value of the 8 additional
properties scheduled to be contributed to the partnership is $57 million of
which ERP would assume approximately $40 million of indebtedness and pay $17
million in a combination of cash and 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 such properties will be contributed. In February
1996, one additional property was contributed to ERP. The Company primarily used
existing cash deposits to make advances to ERP of approximately $1.5 million to
facilitate this transaction.
In April 1995, ERT Development Corporation ("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. At December 31, 1995, the Company had notes
receivable outstanding to EDV of $12.6 million to facilitate certain
transactions.
The Company is currently in the process of evaluating other potential property
acquisitions and financing alternatives. The Company intends to continue to
emphasize the acquisition of shopping centers and other retail properties under
long-term lease to creditworthy national or regional tenants.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
YEAR ENDED DECEMBER 31
--------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
INCOME STATEMENT DATA
<S> <C> <C> <C> <C> <C>
Total revenue $ 55,229 $ 41,014 $ 22,525 $ 5,827 $ 2,472
Operating and G&A expenses 15,470 7,278 5,049 2,749 882
Depreciation and amortization 6,933 6,887 4,186 608 280
Net operating income 32,826 26,849 13,290 2,470 1,310
Interest expense 22,458 14,190 9,360 2,218 1,340
Net income 18,192 13,796 3,232 454 65
Per share data:
Net income $ 1.51 $ 1.27 $ 0.55 $ 0.41 $ 0.11
Distributions 1.32[a] 1.71 1.42 1.14 1.02
Weighted average number of shares 12,084 10,883 5,878 1,110 615
BALANCE SHEET DATA
Net real estate $372,016 $349,255 $273,362 $112,971 $ 22,890
Total assets 428,307 375,100 290,226 116,621 24,768
Mortgages payable 123,813 201,157 113,487 89,442 14,582
Notes payable 86,984 15 6,575 1,102 16
Stockholders' equity 208,678 163,898 161,962 22,312 9,649
</TABLE>
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[a] 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. In 1996, a distribution
of $0.445 per share was declared on January 1 and paid on January 15. Had
the Company not changed its distribution declaration date, the
distributions would have been $1.77 in 1995.
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ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto.
Comparison of year ended December 31, 1995 to year ended December 31, 1994.
On January 1, 1995, the Company entered into master lease and option agreements
to manage and/or purchase eleven shopping centers in North Carolina (the "North
Carolina Properties"). During 1995, seven of these properties were purchased.
Furthermore, the Company experienced a full year of operations on the 19 income
producing properties acquired during 1994 and almost a full year of operations
on one property sold in December 1995. In addition, the Company sold a total of
nine single tenant properties and one office building in 1995.
Total revenue increased $14,215,000 or 35%, to $55,229,000 in 1995 from
$41,014,000 in 1994 due to the acquisitions mentioned above. The North Carolina
Properties accounted for $9,041,000 of this revenue. Additionally, approximately
$3,855,000 of lease termination fees were recognized as base rents in 1995
compared to $988,000 in 1994. Two of the four properties the Company received
lease termination fees for in 1995 were sold. The Company is in the process of
selling or re-leasing the other two properties and is recognizing the fees as
base rents over the estimated time the Company will take to sell or re-lease
these properties at comparable rents. Expense reimbursements increased
$1,562,000 related to the increase in property related expenses as noted below.
Total operating expenses increased $8,192,000, or 113%, to $15,470,000 in 1995
from $7,278,000 in 1994. Operating expenses increased as a percentage of total
revenue to 28% in 1995 from 17% in 1994, primarily due to the master lease
expenses. Master lease expenses accounted for $4,681,000 and other expenses
related to the North Carolina Properties accounted for $1,141,000. General and
administrative expenses increased by $210,000 but decreased as a percentage of
total revenue from 6% in 1994 to 5% in 1995. General and administrative expenses
in 1995 did not include $655,000 which were paid by EDV which commenced
operations in 1995. Netted against this decrease in 1995 was an accrual for an
estimated state tax liability of $380,000. In the prior year, the Company made
an $80,000 accrual.
Interest expense increased from $14,190,000 in 1994 to $22,458,000 in 1995, or
58%. The increase is primarily attributable to additional outstanding debt and
loan costs written-off during 1995. In December 1995, upon obtaining a new
credit facility, the Company repaid its securitized mortgage financing known as
a Real Estate Mortgage Investment Conduit ( the "REMIC") and a former bank line.
The Company wrote-off loan costs of $2,806,000 related to the REMIC debt, and
$254,000 related to the former bank line. Total loan costs written-off in 1995
including other REMIC debt repayments during the year amounted to $3,663,000.
Additionally, the Company wrote-down its interest rate protection agreement by
$790,000. Loan costs written off in 1994 and charged to interest expense in 1994
were $88,000. Finally, overall mortgages and notes payable increased. At
December 31, 1995, mortgage and notes payable of $210,797,000 were $9,625,000
greater than the debt of $201,172,000 outstanding at December 31, 1994.
Depreciation expense for 1995 was $6,929,000 compared to $6,119,000 in 1994, or
a 13% increase. The increase is primarily due to a full period of depreciation
in 1995 on properties acquired in 1994, and the ten Shopping Centers acquired in
1995 which had greater carrying values than the properties sold during the year.
Amortization expense decreased by $764,000 in 1995 due to a management contract
which was fully amortized in 1994.
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Interest and other income increased $2,896,000 or 233% from 1994 primarily
related to additional cash invested and loans made to Excel Development
Corporation and other development companies. The Company had $22,850,000 in
notes receivable outstanding at December 31, 1995 compared to $9,099,000
outstanding at December 31, 1994.
The Company recognized a net gain of $3,683,000 on real estate sales in 1995
compared to a net loss of $108,000 in 1994. The gain was primarily associated
with the sale of an office building in Arizona.
Net income increased $4,396,000, or 32%, to $18,192,000 ($1.51 per share) in
1995 from $13,796,000 ($1.27 per share) in 1994. Quarterly distributions per
share increased from $0.43 to $0.445 in the third quarter of 1995.
Comparison of year ended December 31, 1994 to year ended December 31, 1993.
During 1994, the Company acquired 19 income producing properties. Additionally,
the Company experienced a full year of operations on the 59 properties acquired
in 1993 of which 54 were acquired in the second half of the year. Also, during
1993, the Company acquired all of the assets and liabilities of Excel Realty
Advisors, Inc. ("ERA"), an affiliate of the Company, and terminated the advisory
contract between ERA and the Company.
Total revenue increased $18,489,000 or 82%, to $41,014,000 in 1994 from
$22,525,000 in 1993. The increase was due to the increase in the Company's
property portfolio as mentioned above. Lease termination fees of $988,000 were
recognized as rental income in 1994. No lease termination fees were recognized
as income in 1993.
Total operating expenses increased $2,229,000, or 44%, to $7,278,000 in 1994
from $5,049,000 in 1993. Total operating expenses as a percentage of total
revenue decreased from 22% in 1993 to 17% in 1994. This was primarily due to
efficiencies gained in operations from the increase in the Company's portfolio.
Included in the increase were general and administrative expenses of $709,000
which decreased as a percentage of total revenue from 8% to 6%. This decrease
was also due to operational efficiencies gained from the increase in the
property portfolio. Of the increase in general and administrative expenses,
approximately $572,000 was attributable to salaries and wages. This increase was
primarily due to the payment and accrual of 1993 and 1994 bonuses to the
executive officers of the Company, and the hiring of additional personnel needed
to manage the Company's growth. The increase in other property expenses was
directly related to the increased property portfolio.
Interest expense increased 52% from $9,360,000 in 1993 to $14,190,000 in 1994.
The increase was primarily due to new mortgage debt incurred in 1994. Total
mortgage debt at December 31, 1994 was $201,157,000 or $87,670,000 higher than
the mortgage debt of $113,487,000 at December 31, 1993. The REMIC notes during
the year averaged approximately 5.6% while the mortgage debt which was replaced
of approximately $39,800,000 carried interest at 6.5% to 10.25%.
Depreciation and amortization expense increased $2,701,000 due to the new
properties acquired during 1994 and the recognition of a full year's
depreciation on the 59 properties acquired during 1993. The acquisition costs of
ERA, totaled approximately $1,655,000 and were charged to expense in 1993.
Net income increased $10,564,000, or 327%, to $13,796,000 ($1.27 per share) in
1994 from $3,232,000 ($0.55 per share) in 1993. Distributions per share
increased from $1.42 in 1993 to $1.71 in 1994.
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LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations has been the principal source of capital to fund the
Company's ongoing operations. The Company's issuance of common shares, use of
the Company's credit facilities, and long-term mortgage financing have been the
principal sources of capital required 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. In
April 1995, the Company increased its quarterly distributions from $0.43 per
share to $0.445 per share. The Company anticipates that adequate cash will be
available to fund its operating and administrative expenses, continuing debt
service obligations and payment of distributions in both the short and
long-term. During the year, property acquisitions were primarily funded through
property sales and the proceeds from an equity offering.
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 1995, the company
issued from the shelf 2,140,000 shares of common stock in a publicly
underwritten offering at a price of $20.125 per share. Net proceeds of
approximately $40,500,000 from the offering were used to repay an existing loan
agreement, purchase properties, and make loans to ERT Development Corporation
(see below) and other development companies for the purpose of taking advantage
of short-term development opportunities.
In December 1995, the Company received a two-year unsecured revolving credit
facility for up to $150,000,000 through December 1997 from a consortium of six
banks (the "Credit Facility"). 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. Upon obtaining the Credit Facility, the Company borrowed $82,800,000.
The proceeds were used primarily to repay the outstanding REMIC debt of
$76,000,000, to repay a former bank line, and to pay loan costs. With the
Company's unsecured real estate base at December 31, 1995, the Company had an
additional $16,000,000 available under the Credit Facility. The Credit Facility
carries an interest rate of LIBOR plus 1.75% (7.5% at December 31, 1995), while
the REMIC carried interest rates of LIBOR + 0.6% to 0.8%, plus a servicing fee
of 0.1865%. Although the REMIC debt 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 real
estate portfolio. The Company also has a $4,000,000 line of credit due September
1996 and an unsecured $1,000,000 revolving bank line. The amounts from these
facilities were primarily used to loan funds to ERT Development Corporation (see
results of operations). Approximately $800,000 in total is available under these
two facilities at December 31, 1995. During the year, the Company also used
other former loan agreements to make loans to ERP (see below) and fund other
operating costs.
In April 1995, the Company formed a Delaware limited partnership, Excel Realty
Partners, L.P. ("ERP") to own and manage certain real estate properties. At
December 31, 1995, the Company is committed to advance ERP an additional
$2,000,000 under existing credit agreements 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. The approximate value of
eight properties scheduled to be contributed to ERP in 1996 under existing
agreements is $57,000,000 of which ERP would assume approximately $40,000,000 of
indebtedness and pay $17,000,000 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 eight properties
will be contributed to ERP.
In 1996, the Company loaned $2,000,000 to a developer and is committed to loan
an additional $12,000,000 related to a development project in Florida.
11
<PAGE> 12
The Company has elected REIT status for federal income tax purposes and must
distribute at least 95% of its taxable income to its stockholders in order to
avoid income taxes. Although the Company receives most of its rental payments on
a monthly basis, it intends to make quarterly distribution payments. Amounts
accumulated for distributions 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 or other liquid
investments (including GNMA, FNMA, and FHLMC mortgage-backed securities) as the
Board of Directors deems appropriate.
With $9,812,000 in cash and net accounts receivable of $2,156,000 at December
31, 1995, the Company had sufficient funds available to cover current accounts
payable and accrued liabilities of $4,806,000 and the January 1996 stockholders'
distribution payment of $5,861,000. The Company used escrow and other cash
deposits it had at December 31, 1995 to fund its four acquisitions made in
January and February 1996. The cash position of the Company at December 31, 1995
increased by a net $5,681,000 when compared to December 31, 1994.
Cash provided by operations amounted to $28,895,000, primarily related to net
income of $18,192,000, and depreciation and amortization of $13,350,000 which
did not require the use of cash, less the net gain on real estate sales of
$3,683,000. Amortization expenses included loan costs written-off and a
write-down of an interest rate protection agreement which both totaled
$4,200,000. Expenses included in net income which had not yet been paid due to
the increase in accounts payable of $2,213,000 and other liabilities of
$1,378,000 also added to the cash position of the Company. This was offset by
increases in accounts receivable of $1,121,000 and other assets of $1,843,000.
These increases in current assets and liabilities are primarily the result of
the Company's growth in operations.
Net cash used in investing activities amounted to $28,425,000. During 1995,
$36,881,000 was used to make loans to EDV ($23,315,000), ERP ($5,950,000) and
other development companies, $26,281,000 was used for real estate acquisitions,
and $17,146,000 were paid in escrow and other cash deposits of which $10,657,000
relates to proceeds from the sale of an office building and $4,000,000 relates
to deposits on the North Carolina Properties the Company purchased in 1995 and
1996. These escrow deposits are not listed as cash on the balance sheet but are
deposits which will be available to the Company in 1996 for property
acquisitions. Receipts of cash from investing activities include $29,397,000
obtained from the sale of ten properties in 1995, $23,130,000 received from
payments on notes receivable, and $4,751,000 in deposits collected.
Cash provided by financing activities amounted to $5,211,000. The net increase
is primarily due to the Company's offering of common stock as previously
described. Total cash received from stock issued was $44,451,000 less stock
selling and offering costs of $2,812,000. Additionally the Company received from
its credit facility $82,800,000 of which $76,000,000 was used to repay existing
mortgage debt. Total proceeds from notes payable amounted to $105,253,000 and
repayments on mortgage and notes payable totaled $118,516,000. The Company also
paid distributions of $20,949,000 in 1995.
12
<PAGE> 13
The Company calculates funds from operations ("FFO") as net income plus
depreciation, amortization, amortized loan and leasing commission costs and loan
costs written off, before gains or losses on real estate sales. FFO does not
represent cash flows from operations as defined by generally accepted accounting
principles nor 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 past three years (in thousands except per share amounts):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income $ 18,192 $ 13,796 $ 3,232
Depreciation:
Buildings 6,314 5,685 3,157
Tenant improvements 531 353 213
Amortization (1):
Leasing commissions 724 166 157
Management contract -- 766 766
Organization costs 4 2 --
Loan costs written off 4,453 88 110
Buy out of advisory contract -- -- 1,655
(Gain) loss on sale of buildings (3,682) 108 (399)
-------- -------- --------
Funds from operations - revised definition (2) 26,536 20,964 8,891
Loan cost amortization 1,240 824 117
Depreciation on furniture, equipment
and vehicles 85 81 50
-------- -------- --------
Funds from operations $ 27,861 $ 21,869 $ 9,058
======== ======== ========
Other Information:
Leasing commissions paid $ 335 $ 329 $ 228
Tenant improvements paid 741 1,095 796
Building improvements paid 716 459 631
</TABLE>
(1) Only amortization of the management contract and organizational costs are
shown as amortization expense in the Consolidated Statements of Income. The
management contract was fully amortized in 1994. Loan cost amortization and loan
costs written-off are classified as interest expense and leasing commission
amortization is classified as other operating expenses in the Consolidated
Statements of Income.
(2) Beginning in 1996, the Company will revise its definition of FFO to exclude
the amortization of loan costs and depreciation of furniture, equipment and
vehicles as add-back items.
ECONOMIC CONDITIONS
The majority of the Company's leases contain provisions deemed 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
13
<PAGE> 14
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 increase 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 floating rate loans.
Many regions of the United States, including regions in which the Company owns
property, may experience economic recessions. 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 affect 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.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 ("FAS 121") "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," which becomes effective for fiscal years beginning after December 15, 1995.
FAS 121 establishes standards for determining when impairment losses on
long-lived assets have occurred and how impairment losses should be measured.
The Company intends to adopt FAS 121 in 1996. The financial statement impact of
adopting FAS 121 is not expected to be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements required by this item appear with an Index to Financial
Statements and Schedules, starting on page F-1 of this report.
14
<PAGE> 15
Exhibit Index
3.1 Articles of Incorporation of Excel Realty Trust, Inc., a Maryland
corporation (the "Company"), as amended. (1)
3.2 Bylaws of the Company. (1)
4.1 Trust and Servicing Agreement, dated as of March 1, 1994, by and among
Excel Credit Corporation ("ECC"), EQ Services ("EQ"), and State Street
Bank and Trust Company, as Trustee ("Trustee"), with respect to the
Commercial Mortgage Pass-Through Certificates, Series 1994-1, of ECC.
(3)
4.2 Indenture, dated as of March 1, 1994 by and among Excel Mortgage
Funding Corporation ("EMFC"), Wilmington Trust Company, as Trustee
(the "Indenture Trustee"), and EQ, with respect to the Collateralized
Floating Rate Notes due 2001 of EMFC (the "EMFC Notes"). (3)
4.3 Form of Mortgages entered into between Excel Mortgage Funding
Corporation and the Indenture Trustee, with respect to the EMFC Notes.
(3)
4.4 Interest Rate Cap Agreement, dated as of March 1, 1994, by and between
ECC, Trustee, and Deutsche Bank AG - New York (the "Cap Provider") .
(3)
4.5 Interest Rate Cap Agreement, dated as of March 1, 1994, by and between
ECC, Trustee, and the CAP provider. (3)
10.1 Amended Option and Contract for Purchase of Real Estate, dated as of
September 11, 1992, by and between Excel California and Horne
Properties, Inc., a Tennessee corporation ("Horne"). (1)
10.2 General Partnership Agreement of Horne & Excel Properties, a Tennessee
general partnership, dated as of October 13, 1992, by and between
Horne and Excel California. (1) Exhibit 10.2A
10.3 General Partnership Agreement of Horne & Excel Properties (Chapman), a
Tennessee general partnership, dated as of December 30, 1992, by and
between Horne and Excel California. (1) Exhibit 10.2B
10.4 Employment Contract, dated as of April 1, 1993, by and between Excel
California and Gary Sabin, an individual. (1) Exhibit 10.8
10.5 Employment Contract, dated as of April 1, 1993, by and between Excel
California and Richard Muir, an individual. (1) Exhibit 10.8A
10.6 Employment Contract, dated as of April 1, 1993, by and between Excel
California and Graham Bullick, an individual. (1) Exhibit 10.9
10.7 Employment Contract, dated as of April 1, 1993, by and between Excel
California and Ronald Sabin an individual. (1) Exhibit 10.9A
10.8 1993 Stock Option Plan of the Company. (1) Exhibit 10.10
10.9 Form of Incentive Stock Option Agreement under the Company's 1993
Stock Option Plan. (1) Exhibit 10.11
15
<PAGE> 16
10.10 Form of Non-Qualified Stock Option Agreement under the Company's 1993
Stock Option Plan. (1) Exhibit 10.12
10.11 401(k) Retirement Plan of the Company. (1) Exhibit 10.13
10.12 Form of Common Stock Purchase Option, dated as of March 15, 1993 by
and between Excel California and each of seven directors thereof. (1)
Exhibit 10.27
10.13 Form of Common Stock Purchase Option, dated as of March 15, 1993, by
and between Excel California and each of the seven directors thereof.
(1) Exhibit 10.28
10.14 Form of 1993 Executive Officer Common Stock Purchase Option, dated as
of April 1, 1993 by and between Excel California and each of six
executive officers thereof. (1) Exhibit 10.29
10.15 Assignment of Beneficial Interest Under Existing Leases, Deed of
Trust, Collateral Assignment of Leases and Rent, and Other Loan
Documents between BG Development Corporation ('BG") and the Company,
dated September 29, 1993. (2) Exhibit 10.30
10.16 Master Lease between Excel Realty Trust, Inc. as landlord, and BG
Development Corporation ("BG") as tenant, dated September 29, 1993.
(2) Exhibit 10.31
10.17 Side Letter Agreement between Excel Realty Trust, Inc. and BG. (2)
Exhibit 10.32
10.18 Term Loan Agreement among EMFC, the Company, and Casco Northern Bank,
N.A. dated December 29, 1993. (2) Exhibit 10.33
10.19 Property Management Agreement, dated as of March 17, 1994, by and
between the Company and EMFC. (2) Exhibit 10.34
10.20 Agreement of Limited Partnership of EH Properties, L.P., a Delaware
limited partnership, dated as of March 25, 1994, by and between the
Company, as general partner, and Horne, as limited partner. (3)
Exhibit 10.37
10.21 Partnership Contribution Closing Agreement dated as of March 28, 1994,
by and between Horne, the Company, and EH Properties, L.P., a Delaware
limited partnership. (3) Exhibit 10.38
10.22 1994 Director's Stock Plan of the Company. (3) Exhibit 10.39
10.23 Form of Stock Option Agreement under the 1994 Director's Stock Plan of
the Company. (3) Exhibit 10.40
10.24 Loan Agreement, dated as of December 29, 1994, by and among the
Company and the First National Bank of Boston ("FNBB"). (3) Exhibit
10.41
10.25 Note, dated as of December 29, 1994, executed by the Company in favor
of FNBB. (3) Exhibit 10.42
10.26 Unconditional Guaranty of Payment and Performance, dated as of
December 29, 1994, executed by EH Properties, L.P. in favor of FNBB.
(3) Exhibit 10.43
10.27 Collateral Assignment of Partnership Interests, dated as of December
29, 1994, executed by the Company in favor of FNBB. (3) Exhibit 10.44
16
<PAGE> 17
10.28 Master Agreement, dated as of January 1, 1995, by and among the
Company and the limited partnerships named therein (the "Tricor
Partnerships"). (3) Exhibit 10.45
10.29 Closing Memorandum, dated as of January 20, 1995, by and among the
Company and the Tricor Partnerships. (3) Exhibit 10.46
10.30 Agreement, dated as of January 20, 1995, by and among the Company and
the Tricor Partnerships. (3) Exhibit 10.47
10.31 Loan modification agreement dated as of December 1994, by and amount
the Company and B.G. (3) Exhibit 10.48
10.32 Agreement of Limited Partnership of Excel Realty Partners, L.P., a
Delaware limited partnership ("ERP"). (4)
10.33 Contribution Agreement by and between each of the partnerships named
therein and ERP. (4)
10.34 Credit Agreement Among the Company, as Borrower, and the First
National Bank of Boston, Wells Fargo Bank, N.A., First Interstate Bank
of California, Dresdner Bank AG, and NBD Bank, as Lenders, and the
First National Bank of Boston, as Agent dated December 27, 1995. (4)
21.1 Subsidiaries of the Registrant. (4)
23.1 Consent of Coopers and Lybrand L.L.P. (5)
27.1 Financial data schedules. (4)
- ----------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-11, File No. 33-063160, filed with the Commission on May 21,
1993, as amended, in which this exhibit bore the same number, unless
otherwise indicated.
(2) Incorporated by reference from the Company's report on Form 10-K dated
March 30, 1994 in which this exhibit bore the same number, unless
otherwise indicated.
(3) Incorporated by reference from the Company's report on Form 10-K dated
March 13, 1995 in which this exhibit bore the same number, unless
otherwise indicated.
(4) Previously filed on Form 10-K dated, March 7, 1996.
(5) Filed herewith.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned there unto duly authorized.
EXCEL REALTY TRUST, INC.
DATED: May 8, 1996 By: /s/ David A. Lund
----------------------
DAVID A. LUND
Chief Financial Officer
18
<PAGE> 19
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Accountants...................................................................F-2
Consolidated Balance Sheets
December 31, 1995 and 1994.......................................................................F-3
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993.....................................................F-4
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993.....................................................F-5
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993.....................................................F-6
Notes to Consolidated Financial Statements..........................................................F-7
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 1995, 1994 and 1993....................................................F-19
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995...............................................................................F-20
</TABLE>
F-1
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Excel Realty Trust, Inc.
We have audited the consolidated financial statements and the financial
statement schedules of Excel Realty Trust, Inc. and subsidiaries as listed in
the index on page F-1 of this Form 10-K/A. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Excel
Realty Trust, Inc. and subsidiaries as of December 31, 1995 and 1994 and the
consolidated results of operations and their cash flows for the each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND, L.L.P.
San Diego, California
February 5, 1996
F-2
<PAGE> 21
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
1995 1994
--------- ---------
ASSETS
<S> <C> <C>
Real estate:
Land $ 122,394 $ 115,614
Buildings 251,012 243,869
Less accumulated depreciation (14,909) (10,228)
Real estate held for sale 13,519 --
--------- ---------
Net real estate 372,016 349,255
Cash 9,812 4,131
Escrow and other cash deposits 14,890 2,494
Accounts receivable, less allowance for bad debts of
$726 and $318 in 1995 and 1994, respectively 2,156 1,443
Notes receivable from affiliates 18,561 --
Notes receivable - other 4,289 9,099
Loan acquisition costs 2,662 5,060
Other assets 3,921 3,618
--------- ---------
$ 428,307 $ 375,100
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages payable $ 123,813 $ 201,157
Notes payable 86,984 15
Accounts payable and accrued liabilities 4,806 2,683
Distributions payable -- 4,685
Deferred rental income 2,760 1,713
Other liabilities 1,266 949
--------- ---------
Total liabilities 219,629 211,202
--------- ---------
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,
13,171,352 and 10,883,570 shares issued and outstanding
in 1995 and 1994, respectively 132 109
Additional paid-in capital 218,531 175,702
Accumulated distributions in excess of net income (9,985) (11,913)
--------- ---------
Total stockholders' equity 208,678 163,898
--------- ---------
$ 428,307 $ 375,100
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 22
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Base rent $ 51,160 $ 38,603 $ 20,736
Percentage rent 293 197 519
Expense reimbursements 3,776 2,214 1,270
-------- -------- --------
Total revenue 55,229 41,014 22,525
-------- -------- --------
Operating expenses:
Master lease 4,681 -- --
Property taxes 2,877 1,822 1,199
General and administrative expenses 2,821 2,611 1,902
Repairs and maintenance 1,861 1,007 621
Utilities 923 752 577
Other property expenses 2,307 1,086 750
Depreciation and amortization 6,933 6,887 4,186
-------- -------- --------
Total operating expenses 22,403 14,165 9,235
-------- -------- --------
Operating income 32,826 26,849 13,290
Other income (expense):
Interest expense (22,458) (14,190) (9,360)
Interest and other income 4,141 1,245 558
Buy out of advisory contract -- -- (1,655)
-------- -------- --------
Income before real estate sales 14,509 13,904 2,833
Gain (loss) on sale of real estate 3,683 (108) 399
-------- -------- --------
Net income $ 18,192 $ 13,796 $ 3,232
======== ======== ========
Net income per common share $ 1.51 $ 1.27 $ 0.55
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 23
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(IN THOUSANDS, EXCEPT NUMBER OF SHARE AMOUNTS)
----------
<TABLE>
<CAPTION>
ACCUMULATED
DISTRIBUTIONS
IN EXCESS OF
NET INCOME ACCUMULATED
COMMON STOCK ADDITIONAL OTHER THAN UNDISTRIBUTED TOTAL
---------------------- PAID-IN GAIN ON SALE GAIN ON SALE STOCKHOLDERS'
NUMBER AMOUNT CAPITAL OF PROPERTIES OF PROPERTIES EQUITY
------ ------ ------- ------------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 1,798,739 $ 23,439 $ -- $ (1,127) $ -- $ 22,312
Change in par value of common
stock -- (23,421) 23,421 -- -- --
Common stock no longer subject
to repurchase 64,438 1 966 -- -- 967
Issuance of new shares of
common stock 8,606,128 86 155,630 -- -- 155,716
Redemption of common stock (3,662) -- (61) -- -- (61)
Selling expenses -- -- (10,994) -- -- (10,994)
Net income -- -- -- 2,833 399 3,232
Distributions declared -- -- -- (8,811) (399) (9,210)
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1993 10,465,643 105 168,962 (7,105) -- 161,962
Issuance of new shares of
common stock 462,927 5 7,476 -- -- 7,481
Repurchase of common stock (45,000) (1) (736) -- -- (737)
Net income -- -- -- 13,796 -- 13,796
Distributions declared -- -- -- (18,604) -- (18,604)
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1994 10,883,570 109 175,702 (11,913) -- 163,898
Issuance of new shares of
common stock 2,287,783 23 45,641 -- -- 45,664
Selling expenses -- -- (2,812) -- -- (2,812)
Net income -- -- -- 18,192 3,683 21,875
Distributions declared -- -- -- (16,264) (3,683) (19,947)
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1995 13,171,353 $ 132 $ 218,531 $ (9,985) $ -- $ 208,678
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 24
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 18,192 $ 13,796 $ 3,232
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation 6,929 6,119 3,420
Amortization of loan costs and leasing commissions 6,417 1,085 386
Amortization 4 768 766
(Gain) loss on sale of real estate (3,683) 108 (399)
Provision for bad debts, net of accounts written off 409 19 250
Buy out of advisory contract -- -- 1,655
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (1,121) 2,401 (3,351)
Other assets (1,843) (380) (261)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 2,213 (10) 492
Other liabilities 1,378 746 73
--------- --------- ---------
Net cash provided by operating activities 28,895 24,652 6,263
--------- --------- ---------
Cash flows from investing activities:
Advances for notes receivable (36,881) (11,154) (3,710)
Proceeds from real estate sales 29,397 4,244 966
Real estate acquisitions and building improvements (26,281) (55,399) (109,315)
Principal payments on notes receivable 23,130 5,999 1,269
Escrow and other deposits paid (17,146) (8,020) (201)
Escrow and other deposits collected 4,751 5,717 1,131
Other (5,395) (259) (745)
--------- --------- ---------
Net cash used in investing activities (28,425) (58,872) (110,605)
--------- --------- ---------
Cash flows from financing activities:
Principal payments of mortgages and notes payable (118,516) (52,569) (31,667)
Proceeds from mortgages and notes payable 105,253 109,574 14,953
Issuance of common stock 44,451 891 143,965
Distributions paid (20,949) (18,240) (5,046)
Selling and offering costs (2,812) (36) (10,994)
Loan costs paid (2,216) (5,909) (1,869)
Repurchase and redemption of common stock -- (736) (61)
--------- --------- ---------
Net cash provided by financing activities 5,211 32,975 109,281
--------- --------- ---------
Net increase (decrease) in cash 5,681 (1,245) 4,939
Cash at beginning of year 4,131 5,376 437
--------- --------- ---------
Cash at end of year $ 9,812 $ 4,131 $ 5,376
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 25
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Excel Realty Trust, Inc. (the "Company") was formed in the State of
California in 1985 and reincorporated as a Maryland corporation in 1993.
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
and its wholly-owned subsidiaries, Excel Mortgage Funding Corporation,
Excel Credit Corporation, Excel Realty Trust - NC, Excel Realty Trust -
TX, Excel Realty - NE, Inc., Excel Realty Trust - ST, Inc., and Excel
Realty - PA, Inc. Intercompany accounts and transactions have been
eliminated.
INVESTMENTS
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. These investments are
recorded initially at cost and subsequently adjusted for net equity in
income (loss) and cash contributions and distributions.
The cost method of accounting is used for the Company's investment in ERT
Development Corporation ("EDV") (see Note 8). Under this method, the
Company recognizes income from distributions received from net accumulated
earnings of the investee, if any.
INCOME TAXES
The Company has elected to be treated as a real estate investment trust
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 distributions 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.
RECENT ACCOUNTING PRONOUNCEMENT
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 ("FAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long Lived
Assets to Be Disposed Of," which becomes effective for fiscal years
beginning after December 15, 1995. The financial statement impact of
adopting FAS 121 is not expected to be material.
Continued F-7
<PAGE> 26
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
REAL ESTATE
Land, buildings and building improvements 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.
LEASE TERMINATION FEES
Revenue recognition of fees received for lease terminations are deferred
as deferred rental income and amortized using the straight line method
over the estimated time to re-lease the related property at comparable
rents, or until the property is sold, whichever comes first.
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
Base rental income attributable to leases is recorded when due from
tenants. 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.
The leases also typically provide for tenant reimbursement of common area
maintenance and other operating expenses which are included in the
accompanying Consolidated Statements of Income as expense reimbursements.
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 years ended December 31, 1995, 1994, and 1993 were 12,084,305,
10,882,728 and 5,877,500 respectively.
Continued F-8
<PAGE> 27
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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.
RECLASSIFICATIONS
Certain reclassifications have been made to the consolidated financial
statements for the years ended December 31, 1994 and 1993 in order to
conform with the current period's presentation. In July 1993, the Company
reincorporated in the State of Maryland and effected a one-for-three
reverse stock split. The 1993 share information has been changed to give
effect to the reverse stock split.
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 1995, the Company issued from the shelf 2,140,000 shares of common
stock in a publicly underwritten offering at a price of $20.125 per share.
Net proceeds of approximately $40,500,000 from the offering were used to
repay debt, purchase properties, and to make loans to EDV to facilitate
the development of certain properties (see Note 8 and 16).
3. REAL ESTATE ACQUISITIONS:
In 1995, the Company acquired, in separate transactions, seven shopping
centers in North Carolina (see Note 6), two shopping centers in Tennessee,
and one shopping center in South Carolina. The total cost of the ten
properties was approximately $47,583,000 of which the Company assumed
$22,888,000 in mortgage debt. Also in 1995, five properties were
contributed to Excel Realty Partners, L.P. (see Note 8).
In 1994, the Company purchased six shopping centers, six single tenant
buildings, and one office building. The total cost of the 13 properties
was approximately $62,565,000 of which the Company assumed $17,498,000 in
mortgage debt. Additionally in 1994, the Company contributed $14,753,000
for a 93.16% general partnership interest in E.H. Properties, L.P., a
Delaware limited partnership. The partnership owns six shopping centers
valued at $22,226,000. In 1995, the limited partner converted a portion of
its equity interest into common stock of the Company at $22.25 per share.
At December 31, 1995, the Company owned 94.17% of the partnership.
Continued F-9
<PAGE> 28
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
4. SALES OF REAL ESTATE PROPERTIES:
In 1995, the Company sold nine single tenant properties and one office
building. The net sales prices of the ten properties totaled $29,397,000.
Of this amount, the net sales price of the office building was $16,310,000
which resulted in a gain of $4,960,000. In 1995, a net gain of $3,683,000
was recognized on all real estate sales. In 1994, five single tenant
properties and a parcel of land were sold for $4,232,000. A net loss of
$108,000 was recognized on these sales.
On the above properties, lease termination fees totaling $2,419,000 and
$988,000 were received from tenants and recognized as revenue in 1995 and
1994, respectively, prior to the sale of certain of the properties.
5. REAL ESTATE HELD FOR SALE
In preparation for the sale of an undeveloped shopping mall in Arizona,
the Company terminated a master lease to an unaffiliated developer on
August 1, 1995. As part of the termination agreement, the Company paid the
lessee $5,000,000 which was capitalized as part of the asset held for
sale. The property, net of accumulated depreciation, was reclassified to
real estate held for sale on the Company's Consolidated Balance Sheet.
Depreciation expense is no longer being charged to the property and costs
to hold the property until sale are being capitalized.
6. MASTER LEASE AND OPTION AGREEMENT:
In January 1995, the Company entered into master lease and option
agreements with respect to eleven 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 in excess of the
master lease expense. The master lease expense included master lease and
interest payments from debt service which totaled $4,681,000. Accordingly,
all of the rent revenue and related operating expenses of these properties
have been consolidated in the Company's consolidated financial statements.
The option agreements gave the Company the option to purchase the
properties. In 1995, the Company purchased seven of the properties (see
Note 3). The Company terminated the master lease and purchase option on
one property on December 31, 1995. In January and February of 1996, the
Company purchased the three remaining properties for approximately
$32,000,000 assuming mortgage debt of approximately $22,000,000. Upon
purchase of these properties, the Company received funds of $3,225,000 it
had on deposit in an escrow account related to the option agreements and
the remaining master leases were canceled.
Continued F-10
<PAGE> 29
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
7. NOTES RECEIVABLE (IN THOUSANDS):
The Company had the following notes receivable at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Notes from affiliates, interest on 12-14% per annum,
collateralized by real estate. Due on demand
(see Note 8 and 16) $18,561 $ --
Notes from development companies, monthly interest
from 10% - 14% per annum. Maturity dates vary
depending on the completion or sale of certain properties 3,500 8,306
Other 789 793
------- -------
Total $22,850 $ 9,099
======= =======
</TABLE>
8. INVESTMENTS:
In April 1995, Excel Realty Partners, L.P. ("ERP"), a Delaware Limited
partnership, 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. The Company anticipates that a minimum of 13 properties will be
contributed to ERP under this agreement. In 1995, five real estate
properties with a value of $28,500,000, with outstanding mortgages of
$20,700,000, were contributed to ERP for limited partnership units valued
at $4,500,000 and cash of approximately $3,300,000. ERP also repaid
$2,700,000 of mortgages payable on the properties at the time two of the
properties were contributed. The cash used in the transactions was funded
by the Company in exchange for notes from ERP and general partnership
contributions to ERP. The Company is entitled to receive 99% of all
earnings, if any, after the limited partners receive their distributions.
Annual distributions approximate $400,000 based on the limited partner
units held at December 31, 1995. The partnership had net income in 1995 of
$84,000. At December 31, 1995, the partnership had total assets of
$29,079,000 and total liabilities of $24,367,000 including mortgage debt
of $17,954,000. The Company's 1% investment in the partnership at December
31, 1995 was $139,000 (see Note 16) which is included in other assets on
the Consolidated Balance Sheet.
In April 1995, 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 16).
Continued F-11
<PAGE> 30
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
9. MORTGAGES PAYABLE, (IN THOUSANDS):
The Company had the following mortgages payable at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Mortgage notes at 6.86% to 10%, payable in installments through 2018
(monthly payments at December 31, 1995 of $1,153), collateralized by
real estate and an assignment of rents:
Pass through certificates/bonds:
Public $ -- $ 96,486
Private 29,907 31,187
Insurance companies 67,356 68,622
Banks 23,602 1,914
Other 2,948 2,948
-------- --------
Total mortgages payable $123,813 $201,157
======== ========
</TABLE>
The principal payments required to be made on mortgages payable are as
follows:
<TABLE>
<CAPTION>
YEAR
----
<S> <C> <C>
1996 $ 6,493
1997 3,522
1998 6,149
1999 21,625
2000 8,916
Thereafter 77,108
--------
$123,813
========
</TABLE>
Mortgages of $55,903 are fully amortizing with the final monthly payments
to be made between the years 2004 and 2018. In March 1994, the Company's
wholly-owned subsidiary, Excel Mortgage Funding Corporation ("EMFC"), and
EMFC's wholly-owned subsidiary, Excel Credit Corporation ("ECC"),
completed a securitized mortgage financing known as a Real Estate Mortgage
Investment Conduit (a "REMIC"). Pursuant to this transaction, ECC issued
and sold publicly, in an underwritten offering, $100,000 aggregate
principal amount of its Commercial Mortgage Pass-Through Certificates. The
Certificates were originally collateralized by 65 retail commercial
properties. In December 1995, the REMIC was repaid with advances from the
Company's credit facility (see Note 10).
Continued F-12
<PAGE> 31
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
10. NOTES PAYABLE (IN THOUSANDS):
The Company had the following notes payable at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Unsecured credit agreement of $150,000, interest
at LIBOR + 1.75% (7.5% at December 31, 1995) $82,800 $ --
Line of credit of $4,000 payable to a financial institution, interest at
the lender's base rate plus 1.25%
(8.91% at December 31, 1995) 3,184 --
Unsecured revolving line of credit of $1,000, interest
at 9.5% 1,000 --
Other -- 15
------- -------
Total notes payable $86,984 $ 15
======= =======
</TABLE>
In December 1995, the Company received a two-year revolving credit
facility up to $150,000 in unsecured advances through December 1997, from
a group of six 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 amount outstanding is due in December
1997.
Upon obtaining the credit facility, the Company borrowed $82,800. The
Company used the proceeds primarily to repay the outstanding REMIC debt of
$76,000 (see Note 9), repay a former bank line of $5,100, and pay loan
costs. The Company wrote-off loan costs of $2,806 related to the REMIC
debt and $254 related to a former bank line. Total loan costs written-off
in 1995, including other REMIC debt repayments during the year and the
write-down of the interest rate protection agreement (see Note 12),
amounted to $4,453 which were charged to interest expense. 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.
11. COMMITMENTS AND CONTINGENCIES
As part of an agreement with an unaffiliated developer to contribute
certain properties to ERP for limited partnership units and cash (see Note
8), 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. In 1995, ERP's cash flows were sufficient to make the limited
partner distributions. At December 31, 1995, ERP mortgage debt of
$8,150,000 was guaranteed by the Company. Also, the Company is committed
to advance ERP up to $2,000,000 in additional advances in conjunction with
existing credit agreements with ERP.
Continued F-13
<PAGE> 32
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
12. FINANCIAL INSTRUMENTS AND CREDIT RISK:
Financial instruments which potentially subject the Company to
concentrations of risk consist principally of cash, accounts receivable
and notes receivable. The following fair value disclosure was determined
by the Company, using available market information and discounted cash
flow analyses as of December 31, 1995. However, considerable judgement is
necessary to interpret market data and to develop the related estimates of
fair value. Accordingly, the estimates presented are not necessarily
indicative of the amounts that the Company could realize upon disposition.
The use of different estimation methodologies may have a material effect
on the estimated fair value amounts.
The Company believes that the carrying values reflected in the balance
sheet at December 31, 1995 approximates the fair values for cash, accounts
receivables and payables, notes receivable, and variable-rate debt. The
Company believes the market value of its real estate held for sale exceeds
the carrying value at December 31, 1995. At December 31, 1995, the
carrying value of the interest rate protection agreements were written
down to the estimated fair market value. The write down of $803,000 was
charged to interest expense. The Company estimates that the fair values of
its fixed-rate mortgage debt at December 31, 1995 is approximately $107
million which is $9 million lower than the historical carrying value of
approximately $116 million.
At December 31, 1995, the Company's largest and second largest tenants
each account for approximately 15% of the Company's scheduled annual base
rental revenue ("ABR"). The Company's next three largest tenants account
for approximately 18% in total, of the Company's ABR. At December 31,
1995, the Company owned or master leased 113 properties located in 27
states. There were 13 properties in Indiana, 12 properties in North
Carolina, 11 properties in Arizona, and 9 properties in Illinois.
Approximately 42% of the Company's ABR are derived from these four states.
13. 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, distributions
of $0.43 per share were declared on March 31 and paid on April 15 and
distributions of $0.445 per share were declared on July 1 and October 1
and paid on July 15 and October 15 respectively. In 1996, distributions of
$0.445 per share or $5,861,000 were declared on January 1 and paid on
January 15. Distributions of $0.415, $0.43, $0.43 and $0.43 per share were
declared for the four quarters in 1994, respectively and distributions of
$0.315, $0.315, $0.37 and $0.415 per share were declared for the four
quarters in 1993, respectively. For the years ended December 31 1995,
1994, and 1993, approximately 27%, 14% and 29%, respectively, of the
distributions received by shareholders were considered to be a return of
capital for tax purposes.
Continued F-14
<PAGE> 33
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
14. STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURE (IN THOUSANDS):
The amounts paid for interest during the years ended December 31, 1995,
1994 and 1993 were $16,507, $13,236 and $9,040 respectively.
The Company acquired real estate properties and interests in partnerships,
without the use of cash, for the years ended December 31, 1995, 1994, and
1993 as summarized below:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Mortgage notes payable assumed $ 22,888 $ 24,106 $ 48,810
Common stock issued 1,213 6,626 6,221
Other assets received and payables assumed (104) 154 651
-------- -------- --------
Net real estate acquired without cash $ 23,997 $ 30,886 $ 55,682
======== ======== ========
</TABLE>
15. MINIMUM FUTURE RENTALS:
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 either (i)
require the tenant to pay all expenses of operating the property such as
insurance, property taxes, and structural repairs and maintenance, 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 next five years for the commercial
real estate owned (or master leased) at December 31, 1995 and subject to
noncancelable operating leases is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR
----
<S> <C> <C>
1996 $ 43,061
1997 41,103
1998 38,726
1999 36,162
2000 and thereafter 338,242
</TABLE>
Continued F-15
<PAGE> 34
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
16. RELATED PARTY TRANSACTIONS:
Notes receivable at December 31, 1995 included $12,611,000 and $5,950,000
from EDV and ERP respectively (see Note 7). Total interest income
recognized in 1995 from EDV and ERP amounted to $1,628,000 and $135,000,
respectively. Also in 1995, the Company recognized as income, $344,000 in
development fees from EDV.
In April 1993, the Company terminated its management contract with its
real estate manager, Excel Management Corporation ("EMC"), and issued
110,000 shares of its common stock to Excel Interfinancial Corporation
("EIC"), the parent of EMC, in consideration for such termination. The
amount paid in connection with the termination of the management contract
was capitalized as an "other asset" and was amortized over an 18-month
period, ending in September 1994.
17. OPTIONS AND WARRANTS:
The Company has adopted the 1993 Stock Option Plan (the "1993 Stock Plan")
for executive officers and other key employees of the Company and its
subsidiaries. In May 1994, the Company also adopted the Directors 1994
Stock Option Plan (the "1994 Stock Plan") for directors options.
Options may be granted under the 1993 Stock Plan for a period through 2003
and under the 1994 Stock Plan through the year 2004. Options under these
plans are exercisable for 10 years from the date of grant. The exercise
price of stock options may not be less than 100% of the fair market value
of the stock on the date of grant. The aggregate number of shares issuable
upon exercise of options under the 1993 Stock Plan may not exceed the
greater of (a) 500,000 shares or (b) 5% of the outstanding shares minus
300,000 shares, but in no event exceeding 700,000 shares. The aggregate
number of shares issuable upon exercise of options under the 1994 Stock
Plan may not exceed 240,000 shares.
Continued F-16
<PAGE> 35
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
17. OPTIONS AND WARRANTS, CONTINUED:
<TABLE>
<CAPTION>
Stock option and warrant activity is summarized below: EXERCISE PRICE
SHARES PER SHARE
------ ---------
<S> <C> <C>
Outstanding at January 1, 1993 11,662 $13.92
Stock options granted - 1993 11,662 $13.92
Stock options granted - 1993 325,000 $19.75
Stock options exercised - 1993 (9,996) $13.92
Warrants issued - 1993 253,591 $15.00 - $18.15
Stock options granted - 1994 14,000 $20.13
Stock options exercised - 1994 (3,332) $13.92
Stock options granted - 1995 3,000 $16.38
Stock options granted - 1995 14,000 $19.63
Stock options granted - 1995 131,250 $19.25
Warrants expired - 1995 (18,028) $18.15
Warrants exercised - 1995 (87,585) $15.00 - $18.15
------- ---------------
Outstanding December 31, 1995 645,224 $13.92 - $20.25
======= ===============
</TABLE>
At December 31, 1995, options were exercisable as follows: 9,996 shares at
$13.92 per share, 17,000 shares at $16.38 per share, 131,250 shares at
$19.25 per share, 300,000 shares at $19.75 per share and 14,000 shares at
$20.13 per share. Warrants exercisable at December 31, 1995 were 20,840 at
$15.00 per share, 5,750 at $18.00 per share, and 121,388 at $20.25 per
share. The options and warrants expire at various dates through May 2005.
Of the options and warrants, 472,246 were issued to officers, directors or
affiliates of the Company. Options for 365,750 shares are available for
granting under the 1993 Stock Plan at December 31, 1995.
18. DISTRIBUTION REINVESTMENT PLAN:
The Company has adopted a distribution reinvestment plan (the "Plan").
Shares purchased under the Plan will be, at the Company's discretion,
either newly issued shares of the Company, shares purchased in the open
market or a combination of the foregoing. Distributions may be invested in
newly issued shares at a 5% discount from the average closing price for
the five trading days prior to the distribution pay date or in shares
purchased in the open market without brokerage commissions or service
charges.
Continued F-17
<PAGE> 36
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
19. 401(K) PLAN:
In 1993, the Company established and implemented a 401(k) retirement plan
(the "401(k) Plan") covering substantially all of the officers and
employees of the Company. The 401(k) Plan permits participants to defer,
until termination of employment with the Company, up to a maximum of 15%
of their compensation. In addition, contributions of participants are
matched by the Company in an amount equal to 50% of the participant's
contribution (up to a maximum of 3% of such person's compensation) plus an
annual discretionary contribution, to be determined by the Board of
Directors, based upon the performance of the Company. For the years ended
December 31, 1995, 1994 and 1993, the Company incurred costs of $46,000,
$32,000 and $27,000, respectively, in connection with the 401(k) Plan.
20. SUBSEQUENT EVENTS
In January 1996, the Company acquired, for cash, a real estate property in
Georgia for approximately $2,700,000. Additionally, the Company purchased
three properties in North Carolina which were previously master leased
(see Note 6).
21. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for the periods ended December 31,
1995 and 1994 is as follows (in thousands except per share amounts):
<TABLE>
<CAPTION>
NET INCOME
REVENUES NET INCOME PER SHARE
-------- ---------- ---------
<S> <C> <C> <C>
1995:
December 31 $ 15,301 $ 5,048 $ 0.39
September 30 13,521 5,534 0.43
June 30 12,981 3,693 0.33
March 31 13,426 3,917 0.36
1994:
December 31 $ 11,095 $ 3,501 $ 0.32
September 30 10,648 3,537 0.33
June 30 10,144 3,514 0.32
March 31 9,127 3,244 0.30
</TABLE>
F-18
<PAGE> 37
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
--------- ----------
ACCOUNTS
BALANCE AT CHARGED TO RECEIVABLE BALANCE AT
BEGINNING BAD DEBT WRITTEN END OF
DESCRIPTION OF YEAR EXPENSE OFF YEAR
----------- ------- ------- --- ----
<S> <C> <C> <C> <C>
Allowance for bad debts:
Year ended December 31, 1995 $ 318 $ 445 $ 37 $ 726
===== ===== ===== =====
Year ended December 31, 1994 $ 280 $ 67 $ 29 $ 318
===== ===== ===== =====
Year ended December 31, 1993 $ 128 $ 250 $ 98 $ 280
===== ===== ===== =====
</TABLE>
F-19
<PAGE> 38
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office Building $ -- $ 2,610 $ 2,610 $ -- $ -- $ 2,610 $ 2,610 $ 5,220
Burbank, CA
Genetrix Building -- 666 1,434 -- -- 666 1,434 2,100
Scottsdale, AZ
Shopping Center -- 2,394 3,132 (14) 210 2,380 3,342 5,722
Mesa, AZ
Office Building 424 175 525 -- 2 175 527 702
Stillwater, MN
Kinder Care #1182 -- 170 397 -- -- 170 397 567
Kalamazoo, MI
Shopping Center -- 7,312 8,995 -- 961 7,312 9,956 17,268
Phoenix, AZ
Shopping Center -- 1,559 7,711 315 140 1,874 7,851 9,725
Norton, VA
Shopping Center 7,514 2,025 8,075 -- 469 2,025 8,544 10,569
Perry, GA
Shopping Center -- 1,436 4,584 30 650 1,466 5,234 6,700
Leesburg, FL
Shopping Center (50%) 3,293 527 3,817 -- 4 527 3,821 4,348
Knoxville, TN
Wal-Mart Building 1,776 680 1,586 -- -- 680 1,586 2,266
Berlin, WI
Wal-Mart Building 2,641 1,011 2,359 -- -- 1,011 2,359 3,370
Decatur, IN
Wal-Mart Building 2,620 1,052 2,455 (10) -- 1,042 2,455 3,497
Big Rapids, MI
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Office Building $ 405 1988 1989-90 40 years
Burbank, CA
Genetrix Building 181 1971 1990 40 years
Scottsdale, AZ
Shopping Center 471 1970 1990 40 years
Mesa, AZ
Office Building 59 1985 1991 40 years
Stillwater, MN
Kinder Care #1182 48 1990 1991 40 years
Kalamazoo, MI
Shopping Center 1,194 1988 1991-92 40 years
Phoenix, AZ
Shopping Center 598 1989 1992 40 years
Norton, VA
Shopping Center 645 1992 1992 40 years
Perry, GA
Shopping Center 451 1986 1992 40 years
Leesburg, FL
Shopping Center (50%) 291 1990 1992 40 years
Knoxville, TN
Wal-Mart Building 120 1992 1992 40 years
Berlin, WI
Wal-Mart Building 179 1992 1992 40 years
Decatur, IN
Wal-Mart Building 187 1992 1992 40 years
Big Rapids, MI
</TABLE>
F-20
<PAGE> 39
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wal-Mart Building 5,276 2,118 4,942 -- - 2,118 4,942 7,060
Wyomissing, PA
Wal-Mart Building 2,663 1,069 2,494 -- - 1,069 2,494 3,563
Brighton, CO
Wal-Mart Bldg
and outparcel 4,888 1,963 4,580 30 - 1,993 4,580 6,573
Temple, TX
Wal-Mart Building 2,908 1,167 2,724 -- - 1,167 2,724 3,891
Wabash, IN
Mtn. Jacks #210310 -- 303 708 -- - 303 708 1,011
Mentor, OH
Mtn. Jacks #210303 [1] 378 1,134 -- - 378 1,134 1,512
Dearborn Heights, MI
Autoworks #125 [1] 105 332 -- - 105 332 437
Hastings, NE
Autoworks #138 [1] 189 421 -- - 189 421 610
Grand Island, NE
Kinder Care #125 [1] 63 146 -- - 63 146 209
Indianapolis, IN
Kinder Care #126 [1] 63 146 -- - 63 146 209
Indianapolis, IN
Kinder Care #577 [1] 60 238 -- - 60 238 298
High Ridge, MO
Kinder Care #162 [1] 59 235 -- - 59 235 294
Fenton, MO
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Wal-Mart Building 376 1992 1992 40 years
Wyomissing, PA
Wal-Mart Building 190 1992 1992 40 years
Brighton, CO
Wal-Mart Bldg
and outparcel 348 1992 1992 40 years
Temple, TX
Wal-Mart Building 207 1992 1992 40 years
Wabash, IN
Mtn. Jacks #210310 60 1974 1992 40 years
Mentor, OH
Mtn. Jacks #210303 86 1980 1992 40 years
Dearborn Heights, MI
Autoworks #125 25 1988 1992 40 years
Hastings, NE
Autoworks #138 32 1988 1992 40 years
Grand Island, NE
Kinder Care #125 11 1975 1992 40 years
Indianapolis, IN
Kinder Care #126 11 1976 1992 40 years
Indianapolis, IN
Kinder Care #577 18 1980 1992 40 years
High Ridge, MO
Kinder Care #162 18 1977 1992 40 years
Fenton, MO
</TABLE>
F-21
<PAGE> 40
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kinder Care #128 -- 90 211 -- -- 90 211 301
Indianapolis, IN
Kinder Care #134 -- 90 211 -- -- 90 211 301
Indianapolis, IN
Kinder Care #132 [1] 63 146 -- -- 63 146 209
Ft. Wayne, IN
Kinder Care #1075
(61.36%) -- 212 495 -- -- 212 495 707
Ventura, CA
DHG -- 74 110 -- -- 74 110 184
Houston, TX
DHG -- 103 155 -- -- 103 155 258
Houston, TX
Egghead Software -- 172 258 -- -- 172 258 430
Maplewood, MN
United Artists -- 247 576 -- -- 247 576 823
Pueblo, CO
Lowes Building 3,876 1,325 3,446 530 -- 1,855 3,446 5,301
Terra Haute, IN
Wal-Mart Building 6,712 2,631 6,140 -- -- 2,631 6,140 8,771
Orland Hills, IL
Kmart Building -- 698 1,297 -- -- 698 1,297 1,995
Durango, CO
Kmart Building -- 1,033 1,918 -- -- 1,033 1,918 2,951
Albany, GA
Kmart Building -- 951 1,767 -- 152 951 1,919 2,870
DeSoto, TX
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Kinder Care #128 16 1976 1992 40 years
Indianapolis, IN
Kinder Care #134 16 1976 1992 40 years
Indianapolis, IN
Kinder Care #132 11 1976 1992 40 years
Ft. Wayne, IN
Kinder Care #1075
(61.36%) 38 1989 1992 40 years
Ventura, CA
DHG 8 1985 1992 40 years
Houston, TX
DHG 12 1985 1992 40 years
Houston, TX
Egghead Software 20 1987 1992 40 years
Maplewood, MN
United Artists 44 1977 1992 40 years
Pueblo, CO
Lowes Building 219 1993 1992/1993 40 years
Terra Haute, IN
Wal-Mart Building 429 1992 1993 40 years
Orland Hills, IL
Kmart Building 77 1982 1993 40 years
Durango, CO
Kmart Building 114 1981 1993 40 years
Albany, GA
Kmart Building 124 1980 1993 40 years
DeSoto, TX
</TABLE>
F-22
<PAGE> 41
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kmart Building - 912 1,693 - 19 912 1,712 2,624
Fargo, ND
Kmart Building - 924 1,715 - -- 924 1,715 2,639
Omaha, NE
Kmart Building - 892 1,656 - -- 892 1,656 2,548
Pine Bluff, AR
Kmart Building - 836 1,553 - -- 836 1,553 2,389
Somerville, NJ
Kmart Building - 1,293 2,401 - -- 1,293 2,401 3,694
Springfield, MO
Kmart Building - 936 1,738 - 182 936 1,920 2,856
St. Charles, MO
Kmart Building - 414 768 - 8 414 776 1,190
Waverly, OH
Lucky Building - 698 1,295 - -- 698 1,295 1,993
Brandon, FL
Kroger Building - 731 1,357 - -- 731 1,357 2,088
Clearfield, PA
Kroger Building - 639 1,186 - -- 639 1,186 1,825
East Albany, GA
Kroger Building - 722 1,340 - -- 722 1,340 2,062
James Island, SC
Safeway Building - 790 1,466 - -- 790 1,466 2,256
Missouri City, TX
Kroger Building - 817 1,517 - -- 817 1,517 2,334
Muscle Shoals, AL
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Kmart Building 105 1982 1993 40 years
Fargo, ND
Kmart Building 102 1981 1993 40 years
Omaha, NE
Kmart Building 98 1981 1993 40 years
Pine Bluff, AR
Kmart Building 92 1982 1993 40 years
Somerville, NJ
Kmart Building 143 1982 1993 40 years
Springfield, MO
Kmart Building 140 1981 1993 40 years
St. Charles, MO
Kmart Building 46 1981 1993 40 years
Waverly, OH
Lucky Building 77 1982 1993 40 years
Brandon, FL
Kroger Building 81 1982 1993 40 years
Clearfield, PA
Kroger Building 70 1982 1993 40 years
East Albany, GA
Kroger Building 80 1982 1993 40 years
James Island, SC
Safeway Building 87 1982 1993 40 years
Missouri City, TX
Kroger Building 90 1982 1993 40 years
Muscle Shoals, AL
</TABLE>
F-23
<PAGE> 42
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kroger Building - 902 1,674 - - 902 1,674 2,576
Ottawa, IL
Kroger Building - 703 1,305 - - 703 1,305 2,008
Scottsboro, AL
Ben Franklin Building - 511 949 - - 511 949 1,460
Tucson, AZ
Payless Drug Building - 389 723 - - 389 723 1,112
Yuma, AZ
Lucky Building - 471 875 - - 471 875 1,346
Phoenix, AZ
Lucky Building - 558 1,037 - - 558 1,037 1,595
Coralville, IA
Lucky Building - 588 1,093 - - 588 1,093 1,681
Decatur, IL
Lucky Building - 744 1,382 - - 744 1,382 2,126
Dubuque, IA
Lucky Building - 617 1,145 - - 617 1,145 1,762
Hobart, IN
Lucky Building - 435 809 - - 435 809 1,244
Mesa, AZ
Lucky Building - 511 948 - - 511 948 1,459
Michigan City, IN
Lucky Building - 735 1,365 - - 735 1,365 2,100
Moline, IL
Lucky Building - 908 1,686 - - 908 1,686 2,594
New Lenox, IL
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Kroger Building 100 1982 1993 40 years
Ottawa, IL
Kroger Building 77 1981 1993 40 years
Scottsboro, AL
Ben Franklin Building 56 1984 1993 40 years
Tucson, AZ
Payless Drug Building 43 1980 1993 40 years
Yuma, AZ
Lucky Building 43 1981 1993 40 years
Phoenix, AZ
Lucky Building 62 1981 1993 40 years
Coralville, IA
Lucky Building 65 1983 1993 40 years
Decatur, IL
Lucky Building 82 1980 1993 40 years
Dubuque, IA
Lucky Building 68 1983 1993 40 years
Hobart, IN
Lucky Building 48 1982 1993 40 years
Mesa, AZ
Lucky Building 56 1983 1993 40 years
Michigan City, IN
Lucky Building 81 1981 1993 40 years
Moline, IL
Lucky Building 100 1982 1993 40 years
New Lenox, IL
</TABLE>
F-24
<PAGE> 43
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lucky Building - 673 1,249 - - 673 1,249 1,922
Peoria, IL
Kroger Building - 862 1,601 - - 862 1,601 2,463
Pittsburgh, PA
Lucky Building - 582 1,081 - - 582 1,081 1,663
Springfield, IL
Lucky Building - 744 1,382 - - 744 1,382 2,126
Sterling, IL
Lucky Building - 364 676 - - 364 676 1,040
Tucson, AZ
Kroger Building - 670 1,243 - - 670 1,243 1,913
Waterloo, IL
Safeway Building - 906 1,683 - - 906 1,683 2,589
Muskogee, OK
Safeway Building - 778 1,445 - - 778 1,445 2,223
Sherwood, AR
Safeway Building - 739 1,373 - - 739 1,373 2,112
West Monroe, LA
Rite Aid Building - 176 328 - - 176 328 504
East Albany, GA
Super X Building - 195 363 - - 195 363 558
Muscle Shoals, AL
Shopping Center 5,157 1,888 4,981 - 23 1,888 5,004 6,892
Elizabethtown, KY
Shopping Center 4,717 629 5,555 - 24 629 5,579 6,208
Glasgow, KY
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Lucky Building 74 1983 1993 40 years
Peoria, IL
Kroger Building 95 1982 1993 40 years
Pittsburgh, PA
Lucky Building 64 1982 1993 40 years
Springfield, IL
Lucky Building 82 1980 1993 40 years
Sterling, IL
Lucky Building 40 1983 1993 40 years
Tucson, AZ
Kroger Building 74 1982 1993 40 years
Waterloo, IL
Safeway Building 100 1981 1993 40 years
Muskogee, OK
Safeway Building 86 1981 1993 40 years
Sherwood, AR
Safeway Building 82 1981 1993 40 years
West Monroe, LA
Rite Aid Building 19 1982 1993 40 years
East Albany, GA
Super X Building 22 1982 1993 40 years
Muscle Shoals, AL
Shopping Center 360 1992 1993 40 years
Elizabethtown, KY
Shopping Center 391 1992 1993 40 years
Glasgow, KY
</TABLE>
F-25
<PAGE> 44
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Center 8,743 3,469 8,125 - - 3,469 8,125 11,594
Deland, FL
Shopping Center 3,209 1,655 3,074 - 6 1,655 3,080 4,735
Irving, TX
Shopping Center - 2,689 4,994 35 144 2,724 5,138 7,862
Ashland, OH
Shopping Center - 3,188 5,921 - 23 3,188 5,944 9,132
Covington, GA
Kmart Building - 564 1,048 - - 564 1,048 1,612
Atlantic, IA
Kash N' Karry Building - 378 702 - - 378 702 1,080
Homosassa Springs, FL
Shopping Center (94.17%) - 1,779 3,305 44 159 1,823 3,464 5,287
Brooksville, FL
Shopping Center (94.17%) - 1,552 2,882 58 113 1,610 2,995 4,605
Celina, OH
Shopping Center (94.17%) 2,455 984 1,827 62 118 1,046 1,945 2,991
Albemarle, NC
Shopping Center (94.17%) - 656 1,219 21 40 677 1,259 1,936
Marion, IN
Shopping Center (94.17%) - 568 1,056 71 133 639 1,189 1,828
Warsaw, IN
Shopping Center (94.17%) 3,060 1,618 3,013 80 148 1,698 3,161 4,859
Terre Haute, IN
Office Building 1,889 753 1,762 - 5 753 1,767 2,520
San Diego, CA
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Shopping Center 521 1993 1993 40 years
Deland, FL
Shopping Center 177 1987 1993 40 years
Irving, TX
Shopping Center 294 1990 1993 40 years
Ashland, OH
Shopping Center 304 1991 1993 40 years
Covington, GA
Kmart Building 51 1980 1994 40 years
Atlantic, IA
Kash N' Karry Building 34 1982 1994 40 years
Homosassa Springs, FL
Shopping Center (94.17%) 156 1987 1994 40 years
Brooksville, FL
Shopping Center (94.17%) 132 1990 1994 40 years
Celina, OH
Shopping Center (94.17%) 84 1988 1994 40 years
Albemarle, NC
Shopping Center (94.17%) 56 1989 1994 40 years
Marion, IN
Shopping Center (94.17%) 50 1989 1994 40 years
Warsaw, IN
Shopping Center (94.17%) 139 1989 1994 40 years
Terre Haute, IN
Office Building 87 1988 1994 40 years
San Diego, CA
</TABLE>
F-26
<PAGE> 45
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Center 4,398 2,431 4,515 - 14 2,431 4,529 6,960
Hilton Head, SC
Shopping Center - 2,028 3,767 - - 2,028 3,767 5,795
Lake Wales, FL
Shopping Center 8,165 3,882 7,209 - 6 3,882 7,215 11,097
Versailles, KY
Shopping Center - 1,300 2,415 - 257 1,300 2,672 3,972
Mesa, AZ
Shopping Center 5,389 3,351 6,223 - 18 3,351 6,241 9,592
London, KY
Q-Club Building - 1,822 3,385 - - 1,822 3,385 5,207
Scottsdale, AZ
Q-Club Building - 1,813 3,366 - - 1,813 3,366 5,179
Phoenix, AZ
Lowe's Building 4,265 2,187 4,061 - - 2,187 4,061 6,248
Middletown, OH
Shopping Center 2,265 1,035 1,924 69 127 1,104 2,051 3,155
Kannapolis, NC
Shopping Center 4,107 2,109 3,917 - - 2,109 3,917 6,026
Asheboro, NC
Shopping Center 2,634 1,100 2,043 - - 1,100 2,043 3,143
Kernersville, NC
Shopping Center 3,363 1,846 3,429 - - 1,846 3,429 5,275
Roxboro, NC
Shopping Center 5,462 2,335 4,337 - - 2,335 4,337 6,672
Siler City, NC
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Shopping Center 204 1994 1994 40 years
Hilton Head, SC
Shopping Center 153 1994 1994 40 years
Lake Wales, FL
Shopping Center 308 1994 1994 40 years
Versailles, KY
Shopping Center 136 1981 1994 40 years
Mesa, AZ
Shopping Center 263 1994 1994 40 years
London, KY
Q-Club Building 117 1994 1994 40 years
Scottsdale, AZ
Q-Club Building 136 1994 1994 40 years
Phoenix, AZ
Lowe's Building 190 1993 1994 40 years
Middletown, OH
Shopping Center 53 1992 1994 40 years
Kannapolis, NC
Shopping Center 69 1988 1995 40 years
Asheboro, NC
Shopping Center 27 1988 1995 40 years
Kernersville, NC
Shopping Center 47 1989 1995 40 years
Roxboro, NC
Shopping Center 59 1988 1995 40 years
Siler City, NC
</TABLE>
F-27
<PAGE> 46
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
<TABLE>
<CAPTION>
COST
CAPITALIZED (SOLD)
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- --------------------- ------------------------------
BUILDINGS AND BUILDINGS AND BUILDINGS AND TOTAL
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS [a]
----------- ------------ ---- ------------ ---- ------------- ---- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Center -- 2,267 4,211 -- -- 2,267 4,211 6,478
Wadesboro, NC
Shopping Center 1,916 824 1,531 -- -- 824 1,531 2,355
Jonesville, NC
Shopping Center -- 2,876 5,341 -- -- 2,876 5,341 8,217
Kinston, NC
Shopping Center 2,500 1,157 2,149 -- -- 1,157 2,149 3,306
Hilton Head, SC
Shopping Center 2,580 1,325 2,461 -- -- 1,325 2,461 3,786
Hendersonville, TN
Shopping Center -- 807 1,499 -- -- 807 1,499 2,306
Manchester, TN
All encompassing
mortgage debt on
properties marked
[1] above 2,948 -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------- ---------
$123,813 $121,073 $246,857 $ 1,321 $ 4,155 $122,394 $ 251,012 $ 373,406
======== ======== ======== ======== ======== ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
ACCUMULATED INCOME
DEPRECIATION DATE OF DATE STATEMENTS
DESCRIPTION [b] CONSTRUCTION ACQUIRED IS COMPUTED*
----------- ------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Shopping Center 39 1988 1995 40 years
Wadesboro, NC
Shopping Center 21 1988 1995 40 years
Jonesville, NC
Shopping Center 61 1991 1995 40 years
Kinston, NC
Shopping Center 11 1989 1995 40 years
Hilton Head, SC
Shopping Center 8 1989 1995 40 years
Hendersonville, TN
Shopping Center 2 1990 1995 40 years
Manchester, TN
All encompassing
mortgage debt on
properties marked
[1] above --
---------
$ 14,909
=========
</TABLE>
Listing does not include one real estate property held for sale in Scottsdale,
AZ. The net carrying cost of this property is $8,519.
* Tenant improvements and other costs capitalized subsequent to acquisition are
depreciated over 2 - 40 years.
F-28
<PAGE> 47
EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1995
(IN THOUSANDS)
----------
[a] Reconciliation of total real estate carrying value for the past three years
is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 359,459 $ 277,412 $ 113,639
Acquisitions 47,583 84,926 163,768
Improvements and other additions 2,473 1,554 1,427
Cost of property sold (27,590) (4,433) (1,422)
--------- --------- ---------
Balance at end of year $ 381,925 $ 359,459 $ 277,412
========= ========= =========
Total cost for federal income tax purposes
at the end of each year (difference is
from tax free exchanges) $ 381,062 $ 358,689 $ 276,642
========= ========= =========
</TABLE>
[b] Reconciliation of accumulated depreciation for the past three years is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 10,228 $ 4,270 $ 998
Depreciation expense 6,845 6,038 3,369
Deletions - property sold (1,918) (80) (97)
Reclass to real estate held for sale (246) -- --
-------- -------- --------
Balance at end of year $ 14,909 $ 10,228 $ 4,270
======== ======== ========
</TABLE>
F-29
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Excel Realty Trust, Inc. and subsidiaries on Form S-8 (File No. 33-84982) of our
report dated February 5, 1996 on our audits of the consolidated financial
statements and financial statement schedules of Excel Realty Trust, Inc. and
subsidiaries as of December 31, 1995 and 1994, and for each of the three years
in the period ended December 31, 1995, which report is included in this Annual
Report on Form 10-K/A.
Coopers & Lybrand L.L.P.
San Diego, California
May 7, 1996
