<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM AUGUST 1, 1998 TO
SEPTEMBER 30, 1998
Commission file number 1-12244
NEW PLAN EXCEL REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
(formerly Excel Realty Trust, Inc.)
MARYLAND 33-0160389
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1120 Avenue of the Americas, New York, New York 10036
(Address of Principal Executive Office) (Zip Code)
212-869-3000
Registrant's Telephone Number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No_____
The number of shares of common stock outstanding as of November 12, 1998 was
88,237,368.
<PAGE> 2
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - UNAUDITED
TWO MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Rental income and related revenues $ 45,507 $ 38,481
Interest and dividend income 563 625
-------- --------
Total revenues 46,070 39,106
-------- --------
Operating expenses:
Operating costs 10,263 9,991
Real estate and other taxes 4,155 3,424
Interest expense 7,278 5,671
Depreciation and amortization 5,857 4,921
Provision for doubtful accounts 1,102 566
-------- --------
Total operating expenses 28,655 24,573
Administrative expenses 512 417
-------- --------
Income before gain/(loss) on
Sale of real estate 16,903 14,116
Gain/(loss) on sale of real estate, net 34 (67)
-------- --------
Net income 16,937 14,049
Unrealized (loss)/gain on securities reported at fair value (103) 55
-------- --------
Comprehensive income $ 16,834 $ 14,104
======== ========
Net income per share of common stock:
Basic $ .26 $ .22
======== ========
Diluted $ .26 $ .22
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 3
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, July 31,
1998 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate:
Land $ 543,996 $ 272,176
Buildings and improvements 2,257,927 1,180,562
Less accumulated depreciation and amortization (142,735) (136,978)
----------- -----------
2,659,188 1,315,760
Cash and cash equivalents 12,242 26,284
Marketable securities 1,771 1,787
Mortgages and notes receivable 123,845 13,878
Receivables:
Trade and notes, net of allowance for doubtful
accounts (September 30: $9,951; July 31: $7,926) 20,760 14,025
Other 1,192 1,376
Prepaid expenses and deferred charges 6,475 7,823
Other assets 26,587 3,592
----------- -----------
TOTAL ASSETS $ 2,852,060 $ 1,384,525
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
(Continued on next page)
-3-
<PAGE> 4
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, Continued
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, July 31,
1998 1998
----------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages payable, net of unamortized premium
(September 30: $12,876; July 31: $0) $ 391,880 $ 114,099
Notes payable, net of unamortized discount
(September 30: $1,183; July 31: $1,211) 663,204 462,789
Other liabilities 88,225 37,520
Tenants' security deposits 7,132 5,590
----------- -----------
Total liabilities 1,150,441 619,998
----------- -----------
Minority interests in partnerships 41,104 --
----------- -----------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, $.01 par value, 25,000 shares authorized: 4,600 shares
designated as 8 1/2% Series A Cumulative Convertible Preferred, 2,125 and 0
shares outstanding as of September 30, and July 31, respectively; 6,300
depository shares, each representing 1/10 of one share of 8 5/8% Series B
Cumulative Redeemable Preferred, 630 and 0 shares outstanding as of
September 30 and July 31, respectively; 1,500 depository shares, each
representing 1/10 of one share of Series D Cumulative Voting Step-Up
Premium Rate Preferred (previously
denominated Series A Cumulative Step-Up Premium Rate 30 72,775
Preferred of New Plan Realty Trust), 150 shares
outstanding as of both September 30, and July 31
Common stock, $.01 par value, 250,000 shares authorized, 88,237 and 0 shares
issued and outstanding as of September 30, and July 31, respectively
882 --
Shares of beneficial interest, no par value; 0 shares and
59,874 shares outstanding as of September 30, and July -- 759,853
31, respectively
Additional paid-in capital 1,734,761 --
Loans receivable for purchase of shares of
beneficial interest/common stock (2,281) (2,306)
Unrealized gain on securities 710 813
Less distributions in excess of net income (73,587) (66,608)
----------- -----------
Total Shareholders' Equity 1,660,515 764,527
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,852,060 $ 1,384,525
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 5
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE TWO MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 16,937 $ 14,049
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 5,857 4,921
(Gain)/loss on sale of real estate, net (34) 67
Cash received in connection with the Merger 4,892 --
Changes in operating assets and liabilities, net:
Change in trade and notes receivable (1,668) 8,148
Change in other receivables (6,306) 4,668
Change in allowance for doubtful accounts 482 566
Change in other liabilities 2,138 (11,122)
Change in net sundry assets and liabilities 695 482
-------- --------
Net cash provided by operating activities 22,993 21,779
-------- --------
Investing activities:
Sales of marketable securities 3 48
Purchases of marketable securities -- (96)
Net proceeds from the sale of real estate 329 (67)
Purchases and improvement of real estate (16,938) (31,284)
Change in mortgage notes receivable, net (190) 124
-------- --------
Net cash used in investing activities (16,796) (31,275)
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
(Continued on next page)
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<PAGE> 6
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE TWO MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS)
(Continued)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Financing activities:
Distributions to shareholders $(23,916) $ (1,219)
Issuance of shares of beneficial interest 4,374 652
Repayment of notes payable (10,000) --
Proceeds from issuance of notes payable 10,000 --
Principal payments on mortgages (722) (381)
Repayment of loans receivable for the purchase of
shares of beneficial interest/common stock 25 28
-------- --------
Net cash used in financing activities (20,239) (920)
-------- --------
Decrease in cash and cash equivalents (14,042) (10,416)
Cash and cash equivalents at August 1 26,284 42,781
-------- --------
Cash and cash equivalents at September 30 $ 12,242 $ 32,365
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 7
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared by New Plan Excel Realty Trust, Inc., formerly Excel Realty Trust, Inc.
(the "Company"), pursuant to the rules of the Securities and Exchange Commission
(the "SEC") and, in the opinion of management, include all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of financial position, results of operations and cash flows in accordance with
generally accepted accounting principles. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such SEC rules. Management believes that the disclosures made are
adequate to make the information presented not misleading. The consolidated
statements of income for the two-month periods ended September 30, 1998 and 1997
are not necessarily indicative of the results expected for the full year. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the latest annual report on Form 10-K
of each of the Company and New Plan Realty Trust, a wholly owned subsidiary of
the Company (the "Trust"), and the latest quarterly report on Form 10-Q of the
Company.
Note B: Supplemental Cash Flow Information
There were no state and local income taxes paid for the two months ended
September 30, 1998 and 1997. Interest paid for the two months ended September
30, 1998 and 1997 was approximately $7.3 million and $6.9 million, respectively.
The Company entered into the following noncash investing activities in the
two-month period ended September 30, 1998: assumption of mortgages in the amount
of $4.7 million in connection with the acquisition of a real estate property;
and issuance of 28.1 million shares of common stock in exchange for $898.7
million of assets of the Company, net of liabilities (see Note D).
Note C: Change in Fiscal Year
By unanimous written consent dated as of September 28, 1998, the Board of
Directors of the Company adopted a fiscal year-end of December 31, beginning
with a short fiscal year ending on December 31, 1998. Because the Trust, the
accounting acquirer in the Merger (as defined below), had a fiscal year-end of
July 31, a transition report for the period from August 1, 1998 through
September 30, 1998 is being filed on this Form 10-Q.
Note D: Merger Transaction
On September 28, 1998, the Company and the Trust consummated a previously
announced merger pursuant to an Agreement and Plan of Merger dated as of May 14,
1998, as amended as of August 7, 1998 (the "Merger Agreement"), whereby ERT
Merger Sub, Inc., a wholly owned subsidiary of the Company, was merged with and
into the Trust with the Trust surviving as a wholly owned subsidiary of the
Company (the "Merger"). The Merger was approved by the stockholders of the
Company and the shareholders of the Trust at special meetings held on September
25, 1998. In connection with the consummation of the Merger, the Company changed
its name from "Excel Realty Trust, Inc." to "New Plan Excel Realty Trust, Inc."
Continued:
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<PAGE> 8
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Note D: Merger Transaction - Continued
As provided in the Merger Agreement, the Company paid a 20% stock dividend prior
to the Merger. Upon consummation of the Merger, each common share of beneficial
interest, no par value, of the Trust was converted into one share of common
stock, par value $.01 per share, of the Company ("Company Common Stock"), and
each 7.8% Series A Cumulative Step-Up Premium Rate Preferred Share, par value
$1.00 per share, of the Trust was converted into one share of 7.8% Series D
Cumulative Voting Step-Up Premium Rate Preferred Stock, par value $.01 per
share, of the Company ("Company Series D Preferred Stock"). The Company issued
an aggregate of approximately 60,000,000 shares of Company Common Stock and
150,000 shares of Company Series D Preferred Stock (represented by 1,500,000
depositary shares, each of which represents a one-tenth fractional interest in a
share of Company Series D Preferred Stock) to the Trust's shareholders in the
Merger. The Company Common Stock is listed for trading on the New York Stock
Exchange under the symbol "NXL."
The Merger has been treated as a purchase by the Trust of the assets and
liabilities of the Company using the purchase method of accounting in the
accompanying consolidated financial statements because the shareholders of the
Trust immediately prior to the consummation of the Merger owned approximately
65% of the total Company Common Stock outstanding immediately following the
consummation of the Merger and the members of the Board of Trustees of the Trust
immediately prior to the consummation of the Merger comprised nine of 15 members
of the Board of Directors of the Company immediately following the consummation
of the Merger. However, as a result of the consummation of the Merger, the Trust
is a wholly owned subsidiary of the Company.
The accompanying consolidated financial statements reflect the results of the
Trust prior to the Merger and reflect the reverse purchase of the Company as of
September 28, 1998 and the results of operations for the combined entity from
September 28, 1998 to September 30, 1998. In addition, all information regarding
the shares of beneficial interest and per share information prior to the Merger
have been restated to reflect the conversion of shares of beneficial interest in
the Trust into the Company Common Stock. The Trust valued the equity of the
Company (assets net of liabilities) at $905,070,600, calculated as follows:
<TABLE>
<CAPTION>
Shares Value Total
Security Outstanding Per Share Consideration
- -------- ----------- --------------- -------------
<S> <C> <C> <C>
Common stock 28,128,406 $ 24.20 $680,707,425
Series A preferred stock 2,124,980 28.75 61,093,175
Series B preferred stock 630,000
to depository shares 6,300,000 24.90 156,870,000
------------
898,670,600
Merger and other transaction costs 6,400,000
------------
Total purchase price $905,070,600
============
</TABLE>
Continued:
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<PAGE> 9
NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Note D: Merger Transaction - Continued
The following unaudited pro forma information for the two months ended September
30, 1998 and 1997 have been presented as if the Merger had been consummated on
August 1, 1998 and 1997, respectively. The unaudited pro forma information is
not necessarily indicative of what the actual results of operations of the Trust
would have been had the Merger actually occurred on August 1, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Total revenues $ 73,890 $ 58,292
Net income 24,650 21,721
Preferred dividends (4,085) (2,604)
-------- --------
Net income applicable to
shares of common stock 20,565 19,117
======== ========
Weighted average:
Basic 88,237 84,037
Diluted 90,511 86,311
Net income per share of common stock:
Basic $ 0.23 $ 0.23
Diluted $ 0.23 $ 0.22
</TABLE>
Note E: Earnings Per Share
The following table sets forth the computation of average shares of common stock
outstanding and basic earnings and diluted earnings per share("EPS"). (Amounts
in thousands except per share amounts.)
<TABLE>
<CAPTION>
Two Months Ended September 30,
------------------------------
1998 1997
------- -------
<S> <C> <C>
Numerators
Net income $16,937 $14,049
Less preferred stock dividends 975 975
------- -------
$15,962 $13,074
======= =======
Denominators
Weighted average shares outstanding for
basic EPS 60,873 58,941
Effects of dilutive securities - options 209 317
------- -------
Adjusted weighted average shares
outstanding for diluted EPS 61,082 59,258
======= =======
Basic EPS $ .26 $ .22
Diluted EPS $ .26 $ .22
</TABLE>
-9-
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
I. Liquidity and Capital Resources
On September 30, 1998, the Company had approximately $12.2 million in
available cash, cash equivalents and marketable securities.
During the two-month period ended September 30, 1998, the Company
paid approximately $9.6 million to acquire one shopping center
containing approximately 34,000 gross leasable square feet and one
apartment property containing 278 units.
Debt as of September 30, 1998 consisted of $391.9 million of
mortgages payable and $663.2 million of notes payable.
The Company has two unsecured revolving credit facilities. One
facility is for up to $250 million, with an interest rate of LIBOR
plus 1.2%. The actual amount available to the Company is dependent on
compliance with certain covenants, such as the value of unencumbered
assets and certain financial ratios. The second facility is for up to
$50 million, with an interest rate of LIBOR plus .20%. The
outstanding balances on the credit facilities as of September 30,
1998 totaled $125 million.
During the two-month period, the Company made dividend distributions
of $23.9 million to shareholders and paid $7.3 million for
improvements to existing properties.
Funds from operations applicable to common shares of the Company,
defined as net income plus depreciation and amortization of real
estate, less gains from sales of assets and securities, less dividend
distribution requirements with respect to preferred shares of the
Company, increased $3.7 million to $21.8 million from $18.1 million
in the prior year's comparable two-month period.
II. Results of operations for the two months ended September 30, 1998 and
1997
The following results of operations for 1998 include operations of
the Company (on a consolidated basis) for the two days following the
Merger. The results prior to the Merger only include the results of
the Trust.
Revenues:
Total revenues increased approximately $6.9 million to $46.0 million.
The increase was primarily the result of the acquisition of 17
properties since September 1997 and revenue increases in properties
owned more than one year.
Operating Expenses:
Operating costs increased $0.3 million to $10.3 million. Costs
associated with properties owned for a year or more decreased.
However, the decreases were more than offset by costs associated with
newly acquired properties.
Real estate and other taxes increased $0.7 million to $4.2 million.
The principal reason for this increase was the larger portfolio of
properties.
Interest expense increased approximately $1.6 million to $7.3
million. This increase was due to the issuance, in January 1998, of
$50 million of
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<PAGE> 11
notes which were used to fund the Company's property acquisition
program, and the assumption of $56.7 million of mortgage debt in
connection with property acquisitions.
Depreciation and amortization of properties increased approximately
$0.9 million to $5.9 million. This increase was the result of the
acquisition of properties and higher levels of spending on tenant
alterations.
Provision for doubtful accounts, net of recoveries, increased $0.5
million to $1.1 million. This was due to an increase in delinquencies
and a higher level of revenue.
Administrative Expenses:
Administrative expenses as a percentage of revenue was constant at
1.1% compared to last year's comparable period.
III. New Accounting Standards
During fiscal 1998, the Financial Accounting Standards Board issued
(a) No. 130 "Reporting Comprehensive Income" ("SFAS 130"), which is
effective for fiscal years beginning after December 15, 1997, (b) No.
131 "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"), which is effective for fiscal years
beginning after December 15, 1997, (c) No. 132 "Employees Disclosure
About Pensions and Other Postretirement Benefits" ("SFAS 132"), which
is effective for fiscal years beginning after December 15, 1997, and
(d) No. 133 "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), which is effective for fiscal years
beginning after June 15, 1999.
The Company adopted SFAS 130 for the two months ended September 30,
1998 and 1997. Management believes that the implementation of SFAS
131, 132, and 133 will not have a material impact on the Trust's
financial statements.
In addition, during fiscal 1998, the Accounting Standards Executive
Committee of the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5"), and Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use" ("SOP 98-1"), each of which is effective for fiscal
years beginning after December 15, 1998. SOP 98-5 requires that
certain costs incurred in conjunction with start-up activities be
expensed. SOP 98-1 provides guidance on whether the costs of computer
software developed or obtained for internal use should be capitalized
or expensed. Management believes that, when adopted, SOP 98-5 and SOP
98-1 will not have a significant impact on the Company's financial
statements.
IV. Year 2000 Compliance
Readiness
The Company's centralized corporate business and technical
information systems have been assessed as to Year 2000 compliance and
functionality. Presently these systems are nearly complete with
respect to required software or hardware changes. See "Year 2000
Compliance Detail" below. The Company anticipates that internal
business and technical information Year 2000 compliance issues will
be substantially remediated by the end of calendar 1998.
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<PAGE> 12
The Company has satisfactorily completed the identification and
review of computer hardware and software suppliers and is in the
process of verifying the Year 2000 preparedness of suppliers, vendors
and/or service providers that the Company has identified as critical.
Cost
The total historical or anticipated remaining costs for the Year 2000
remediation are estimated to be immaterial to the Company's financial
condition. The costs to date have been expensed as incurred and
consist of immaterial internal staff costs and other expenses such as
telephone and mailing costs. In addition, where the appropriate
course of action includes replacement or upgrade of certain systems
or equipment, the Company's review at this time indicates a minor
cost to the Company.
Risks and Contingency Plans
Considering the substantial progress made to date, the Company does
not anticipate delays in finalizing internal Year 2000 remediation
within remaining time schedules. However, third parties having a
material relationship with the Company (e.g., utilities, financial
institutions, governmental agencies, municipalities and major
tenants) may be a potential risk based on their individual Year 2000
preparedness which may not be within the Company's reasonable
control. The Company is in the process of identifying, reviewing and
logging the Year 2000 preparedness of critical third parties.
Anticipated completion of this review is March 31, 1999. Pending the
results of that review, the Company will determine what course of
action and contingencies, if any, will need to be made.
There can be no assurance that the external Year 2000 issues will be
resolved in 1998 or 1999. If not resolved, such issues could have a
material adverse impact on the Company's business, operating results
and financial condition.
Year 2000 Compliance Detail
The Company's "Program" addresses the Year 2000 issue with respect to
the following: (i) the Company's information technology and operating
systems, including its billing, accounting and financial reporting
systems; (ii) the Company's non-information technology systems,
including building access, parking lot light and energy management,
equipment and other infrastructure systems that may contain or use
computer systems or embedded microcontroller technology; and (iii)
certain systems of the Company's major suppliers and material service
providers (insofar as such systems relate to the Company's business
activities such as payroll, health services and alarm systems). As
described below, the Company's Year 2000 program involves (w) an
assessment of the Year 2000 problems that may affect the Company, (x)
the development of remedies to address the problems discovered in the
assessment phase, (y) the testing of such remedies and (z) the
preparation of contingency plans to deal with worst case scenarios.
Assessment Phase. As part of the internal assessment phase, the
Company has attempted to substantially identify all the major
components of the systems described above. In determining the extent
to which such systems are vulnerable to the Year 2000 issue, the
Company is evaluating internally developed and/or purchased software
applications and property operational control systems, e.g., heating
ventilation and air
-12-
<PAGE> 13
conditioning (HVAC), lighting timers, alarms, fire, sewage and
access. In addition, in the third quarter of 1998, the Company began
sending letters to certain of its major suppliers and service
providers, requesting them to provide the Company with assurance of
existing or anticipated Year 2000 compliance by their systems insofar
as the systems relate to their activities with the Company. The
Company expects that it will complete its distribution of these
inquiries in the fourth quarter of 1998. The Company is requesting
that all responses to the inquiries be returned to it no later than
March 31, 1999.
Remediation and Testing Phase. Based upon the assessment and
remediation efforts to date, the Company has completed, tested and
put on line the Year 2000 compliance modification in all the
internally developed software for its accounting and property
management applications. The Company's computer terminals or personal
computers are Year 2000 compliant in all material respects. The
Company has secured software to upgrade that part of the computer
that will make it compliant. That part is called the BIOS chip or
Basic Input Output System. If there is any unforeseen problem with a
particular unit it will be replaced. Replacements are readily
available. Based on an inventory by model type of the Company's
personal computers, BIOS chip Year 2000 issues are not expected to be
material. A conservative, "worst case" scenario is included in the
cost estimate.
The versions of the purchased software that the Company uses for
spread sheet analysis, database applications, word processing systems
and its apartment rent collection system have been tested and are
compliant. The outsourced payroll service and the integrated internal
input system are compliant.
The New York corporate office phone, communication and data
collection networks are Year 2000 compliant. The New York corporate
office voice mail system is scheduled for upgrade to Year 2000
compliance by December 25, 1998. San Diego and other corporate phone
systems are Year 2000 compliant. Phone systems at other than
corporate office locations are Year 2000 compliant. Phone systems at
the apartment communities are 72.5% Year 2000 compliant. The balance
of the phone systems at the apartment communities are scheduled to be
reviewed and be Year 2000 compliant in 1998 or upgraded in the first
quarter of 1999. The cost estimates derived from this assessment are
treated as worst case.
The Company's strip shopping centers and single tenant properties are
all "open air" type and are simple and very limited in terms of
technology. Field systems for shopping center HVAC, sprinkler and
lighting are more than 95% reviewed and Year 2000 compliant for those
systems supplied by the Company (some are supplied by tenants). The
small number of systems not supplied by the Company are being
reviewed and are projected to not have a material impact.
All of the 54 apartment communities have had reviews completed and,
except for phone systems (as discussed above), are Year 2000
compliant.
All of the six factory outlets, two enclosed shopping malls, one
medical office building and one corporate office building have had
reviews completed and, except for one minor item, are Year 2000
compliant. This one item is a telephone system modification at one
property which is expected to be completed by December 31, 1998.
Contingency Plans. The Company intends to develop contingency plans
to handle its most reasonably likely worst case Year 2000 scenarios.
These have not yet been identified fully. The Company intends to
complete its
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<PAGE> 14
determination of worst case scenarios after it has received and
analyzed responses to substantially all of the inquiries it has made
of third parties. Following its analysis, the Company intends to
develop a timetable for completing its contingency plans.
Costs Related to the Year 2000 Issue. To date, the Company has
incurred no material costs. Labor, mailing and phone costs attributed
to the Year 2000 program are minimal. The Company currently estimates
that to have all systems compliant will require certain additional
expenditures. At this time, these expenditures are expected to range
from a total of $50,000 to a conservative, "worst case" of $260,000.
These costs may vary plus or minus 20% from the foregoing estimates.
Risks Related to the Year 2000 Issue. Although the Company's Year
2000 efforts are intended to minimize the adverse effects of the Year
2000 issue on the Company's business and operations, the actual
effects of the issue and the success or failure of the Company's
efforts described above cannot be known until the year 2000. Failure
by the Company's major suppliers, and other service providers to
address adequately their respective Year 2000 issues in a timely
manner (insofar as such issues relate to the Company's business)
could have a material adverse effect on the Company's business,
results of operations and financial condition.
However, the Company believes that such material effect is primarily
limited to items of a utility nature furnished by third parties to
the Company and a wide universe of other customers. Included are
items as electricity, natural gas, telephone service and water, all
of which are not readily in some form susceptible to alternate
sources and which in all likelihood will be available.
V. The Merger
Immediately following the consummation of the Merger on September 28,
1998, approximately 88.2 million shares of Company Common Stock were
outstanding. The Merger Agreement provides that the initial quarterly
dividend to be paid on the Company Common Stock will be at the
annualized rate of $1.60 per share ($.40 per share for the first
quarter following the Merger) and, after anticipated minimum
quarterly increases of at least $.0025 per share, each holder of
Company Common Stock is expected to receive aggregate dividend
distributions of $1.625 per share for the 12- month period
immediately following the initial quarterly dividend payment of $.40
per share. Thereafter, it is anticipated that the quarterly dividend
will continue to be increased by a minimum of $.0025 per share (which
quarterly increases amount to $.01 per share on an annualized basis
and effectively increase the annualized dividend rate by $.04 per
share for each share held over a 12-month period) until the
annualized quarterly dividend on the Company Common Stock is at least
$1.67 per share. The maintenance of this dividend policy will be
subject to various factors, including the discretion of the Board of
Directors of the Company, the exercise by the Board of Directors of
the Company of its duties to the holders of Company Common Stock, the
ability to pay dividends under applicable law and the effect which
the payment of dividends may have from time to time on the
maintenance by the Company of its status as a REIT.
The Merger will, for financial accounting purposes, be accounted for
as a purchase by the Trust of the Company using the purchase method
of accounting. The transaction was completed on September 28, 1998.
-14-
<PAGE> 15
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of stockholders was held on September 25, 1998. Proxies for
the meeting were solicited by the registrant pursuant to Regulation 14 under the
Securities Exchange Act of 1934.
Proposal One:
To consider and vote upon a proposal to approve the issuance by the Company of
shares of Company Common Stock and depositary shares, each of which represents a
one-tenth fractional interest in a share of Company Series D Preferred Stock,
pursuant to the Merger Agreement.
<TABLE>
<CAPTION>
For Against Abstain
- --- ------- -------
<S> <C> <C>
15,907,976 317,146 119,774
</TABLE>
Proposal Two:
To consider and vote upon a proposal to approve certain amendments to the
Company's articles of incorporation to, among other things, change the name of
the Company in connection with the Merger to "New Plan Excel Realty Trust, Inc."
and to increase the number of authorized shares of capital stock of the Company
to 275,000,000.
<TABLE>
<CAPTION>
For Against Abstain
- --- ------- -------
<S> <C> <C>
13,225,737 2,967,407 121,752
</TABLE>
Proposal Three:
To consider and vote upon a proposal to elect the following ten nominees to the
board of directors of the Company effective as of the consummation of the
Merger:
<TABLE>
<CAPTION>
Withholding
Name For Authority
- ---- --- ---------
<S> <C> <C>
Gary B. Sabin 16,142,055 202,841
William Newman 16,139,908 204,988
Arnold Laubich 16,140,798 204,098
James M. Steuterman 16,141,488 203,408
Dean Bernstein 16,035,588 309,308
Raymond A. Bottorf 16,157,755 187,141
Norman Gold 16,158,315 186,581
Melvin Newman 16,139,918 204,978
John Wetzler 16,158,755 186,141
Gregory White 16,159,555 185,341
</TABLE>
-15-
<PAGE> 16
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Credit Agreement by and among New Plan Realty
Trust, the Lenders party thereto and The Bank of
New York, as agent, dated as of October 20, 1996,
filed as Exhibit 10.1 to New Plan Realty Trust's
Form 10-K for the fiscal year ended July 31, 1997.
10.2 Assignment and Assumption Agreement dated
December 1, 1997 by and among New Plan Realty
Trust, Bank Hapoalim B.M. and The Bank of New
York, filed as Exhibit 10.2 to New Plan Realty
Trust's Form 10-K for the fiscal year ended July
31, 1998.
10.3 Waiver and Amendment to Credit Agreement dated as
of September 25, 1998 by and among New Plan Realty
Trust, the Lenders party thereto and The Bank of
New York, as agent, filed as Exhibit 10.3 to New
Plan Realty Trust's Form 10-K for the fiscal year
ended July 31, 1998.
10.4 Assumption and Substitution Agreement dated as of
September 28, 1998 by and among New Plan Excel
Realty Trust, Inc., New Plan Realty Trust, the
Lenders party thereto and The Bank of New York, as
agent, filed as Exhibit 10.4 to New Plan Realty
Trust's Form 10-K for the fiscal year ended July
31, 1998.
12.1 Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements
27 Financial Data Schedule (included only in
EDGAR filing)
(b) During the period covered by this report the Trust filed
the following:
Form 8-K dated October 13, 1998 containing items 2 and 7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 12, 1998 NEW PLAN EXCEL REALTY TRUST, INC.
By: /s/ Gary B. Sabin
-----------------------------------
Gary B. Sabin
President
By: /s/ David A. Lund
-----------------------------------
David A. Lund
Chief Financial and Accounting
Officer
-16-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.1 Credit Agreement by and among New Plan Realty Trust, the Lenders
party thereto and The Bank of New York, as agent, dated as of October
20, 1996, filed as Exhibit 10.1 to New Plan Realty Trust's Form 10-K
for the fiscal year ended July 31, 1997.
10.2 Assignment and Assumption Agreement dated December 1, 1997 by and
among New Plan Realty Trust, Bank Hapoalim B.M. and The Bank of New
York, filed as Exhibit 10.2 to New Plan Realty Trust's Form 10-K for
the fiscal year ended July 31, 1998.
10.3 Waiver and Amendment to Credit Agreement dated as of September 25,
1998 by and among New Plan Realty Trust, the Lenders party thereto
and The Bank of New York, as agent, filed as Exhibit 10.3 to New Plan
Realty Trust's Form 10-K for the fiscal year ended July 31, 1998.
10.4 Assumption and Substitution Agreement dated as of September 28, 1998
by and among New Plan Excel Realty Trust, Inc., New Plan Realty
Trust, the Lenders party thereto and The Bank of New York, as agent,
filed as Exhibit 10.4 to New Plan Realty Trust's Form 10-K for the
fiscal year ended July 31, 1998.
12.1 Ratio of Earnings to Fixed Charges and Preferred Stock Dividend
Requirements
27 Financial Data Schedule (included only in EDGAR filing)
</TABLE>
-17-
<PAGE> 1
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The ratio of earnings to fixed charges and preferred stock dividend
requirements for the two months ended September 30, 1998 was 2.9 to 1.
For purposes of computing these ratios, earnings were calculated by
adding fixed charges (excluding capitalized interest) to income before
extraordinary items. Fixed charges consist of interest costs, whether expensed
or capitalized, preferred stock dividend requirements, the interest component of
rental expense, if any, and amortization of debt discounts and issue costs,
whether expensed or capitalized.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
TWO MONTHS ENDED SEPTEMBER 30, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<S> <C>
EARNINGS:
Net income $16,937
Interest expense (including debt
discount and debt issuing costs) 7,278
Capitalized interest 49
Other adjustments 233
-------
$24,497
=======
FIXED CHARGES:
Interest expense (including debt
discount and debt issuing costs) $ 7,278
Capitalized interest 49
Preferred stock dividends 975
Other adjustments 54
-------
$ 8,356
=======
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS 2.9
</TABLE>
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> AUG-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 12,242,000
<SECURITIES> 1,771,000
<RECEIVABLES> 154,556,000
<ALLOWANCES> (9,951,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,801,923,000
<DEPRECIATION> (142,735,000)
<TOTAL-ASSETS> 2,852,060,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,055,084,000
0
30,000
<COMMON> 882,000
<OTHER-SE> 1,734,761,000
<TOTAL-LIABILITY-AND-EQUITY> 2,852,060,000
<SALES> 0
<TOTAL-REVENUES> 46,070,000
<CGS> 0
<TOTAL-COSTS> 28,655,000
<OTHER-EXPENSES> 512,000
<LOSS-PROVISION> 1,102,000
<INTEREST-EXPENSE> 7,278,000
<INCOME-PRETAX> 16,937,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 16,937,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,937,000
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
