<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-9349
SIZELER PROPERTY INVESTORS, INC.
(EXACT NAME OF REGISTRANT, AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-1082589
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2542 WILLIAMS BOULEVARD 70062
KENNER, LOUISIANA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 471-6200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
8% Convertible Subordinated
Debentures, due 2003 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent files pursuant to Item 405
of the Registration S-K ((S) 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statement incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( X ).
The aggregate market value of voting stock held by non-affiliates of the
registrant was $59,394,831 at March 25, 1996.
The number of shares of common stock outstanding at March 25, 1996, was
8,422,369.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the annual
meeting of its shareholders to be held in May 1995 are incorporated by
reference into Part III of this report.
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<PAGE>
PART I
ITEM 1. BUSINESS.
THE COMPANY
Sizeler Property Investors, Inc. (the "Company") was organized as a Delaware
corporation with perpetual existence on October 28, 1986.
The Company is a self-administered equity real estate investment trust
("REIT") that invests in income-producing shopping center and apartment
properties in the southern United States. At December 31, 1995, the Company's
investment portfolio included interests in three enclosed regional shopping
malls, two power shopping centers, eleven community shopping centers, and
thirteen apartment communities. The properties are located in Louisiana (15),
Florida (9), Alabama (4), and Texas (1). Leasable area of the retail properties
totalled approximately 2.7 million s.f., and the apartment communities
contained 3,157 units. At December 31, 1995, the Company's retail properties
were approximately 92% leased, and its apartment properties were 96% leased.
The Company has elected to qualify and be treated as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to maintain
its qualification as a REIT in the future. As a qualified REIT, with limited
exceptions, the Company will not be taxed, under federal and certain state
income tax laws, at the corporate level on income that it distributes to its
shareholders. For special tax provisions applicable to REITs, refer to Sections
856-860 of the Code.
INVESTMENT OBJECTIVE AND STRATEGIC PLAN
The Company's fundamental investment objective is to create long-term value
for its shareholders. The Company expects to achieve this objective through an
overall strategic plan, focused on making opportunistic property acquisitions
and employing an effective value-added asset management program, which
emphasizes cash flow growth and the appreciation of property values. The
Company may also participate with other entities in property ownership, through
joint ventures or other types of co-ownership.
The Company's strategy for future growth is to acquire shopping center and
apartment properties in fundamentally strong markets in the southern United
States and to improve the operating performance of those properties through its
leasing and management programs. The Company also intends, from time to time,
to implement programs of redevelopment or expansion of certain of its
properties and, subject to market conditions, develop new properties within its
geographical region. The Company believes that its regional concentration and
substantial knowledge of the markets in which it operates affords it a
competitive advantage in the identification of real estate trends and
investment opportunities within those markets.
At December 31, 1995, approximately 64% of the Company's portfolio consisted
of investments in shopping centers. In order to provide a degree of portfolio
risk diversification, while maintaining a focused approach to asset management,
the Company has elected to expand its ownership of apartment properties and
intends to achieve a balanced portfolio of investments in shopping centers and
apartments.
The Company considers numerous factors in the evaluation of potential real
estate investments, including, but not limited to, the following:
--purchase price and initial cash flow in relation to yield objective;
--the potential to increase cash flow through effective property
management;
--geographic area and demographic profile;
--property size and composition of tenants;
2
<PAGE>
--availability of financing, including the possibility of assuming
existing financing or the potential for refinancing;
--condition, quality of design, construction, and other physical
attributes;
--economic environment of local and regional real estate markets;
--the presence of or proximity to potential environmental problems;
--current and historical occupancy levels;
--current and historical sales levels of retail tenants;
--other characteristics of existing tenants, including credit-worthiness;
--anticipated future treatment under applicable federal, state, and local
tax laws and regulations; and
--potential for appreciation in value.
Although the Company presently makes equity investments in real estate, it
may invest in mortgages and other types of interests in real estate. The
Company may also invest in the securities of other entities engaged in real
estate activities or securities of other issuers, subject to the limitations of
such investments necessary to maintain REIT qualification.
An important part of the Company's overall strategic initiative is to
increase cash flow and to enhance the value of its existing portfolio through:
(1) maximizing rental rates and, thereby, rental income by achieving optimum
retail tenant mix and occupancy levels; (2) operating properties in a cost-
effective manner; and (3) renovating properties in order to maintain or improve
their competitive position and performance in the marketplace.
The Company expects to hold its properties as long-term investments and has
no maximum period for retention of each investment. Under ordinary
circumstances, the Company would not expect to sell property held for less than
four years.
COMPETITION
There are numerous real estate entities which compete with the Company in
seeking properties for acquisition and tenants for occupancy in its market
area. The Company believes that the principal competitive factors affecting the
attraction and retention of its tenants are property location, visibility, and
accessibility, as well as the appearance and overall quality and condition of
its properties. The Company also competes with other entities for capital funds
necessary to support its investment activities and asset growth.
ENVIRONMENTAL MATTERS
Investments in real property have the potential for environmental liability
on the part of the owner of such property. The Company is not aware of any
environmental liabilities, which could not be mitigated, relating to the
Company's investment properties which would have a material adverse effect on
the Company's business, assets, or results of operations.
The Company's acquisition program guidelines require a Phase I environmental
study prior to the acquisition of a property that, because of its prior use or
its proximity to other properties with environmental risks, may be subject to
possible environmental hazards. Where determined appropriate by a Phase I
study, a more extensive evaluation may be undertaken to further investigate the
potential for environmental liability prior to an acquisition. The Company does
not presently maintain insurance coverage for environmental liabilities.
EXECUTIVE OFFICERS
The Company is self-administered and does not engage a separate advisor or
pay an advisory fee for administrative or investment services. Management of
the Company is provided by its officers. The executive officers of the Company
are elected annually by, and serve at the discretion of, the Board of
Directors.
3
<PAGE>
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
<C> <C> <S>
Sidney W. Lassen.................. 61 Chairman of the Board, Chief Executive
Officer, and Director
Thomas A. Masilla, Jr. ........... 49 Vice Chairman, President, Principal
Operating and Financial Officer, and
Director
</TABLE>
Mr. Lassen has been an executive officer of the Company since its inception
in 1986. Mr. Masilla was elected to the position of Vice Chairman in 1994 and
Chief Operating Officer and President in 1995. Mr. Masilla was elected to the
position of Chief Financial Officer when John J. Gilluly, Jr. resigned that
position in March 1996. Mr. Gilluly had served as Vice President, Chief
Financial Officer, Secretary, and Treasurer throughout the year of 1995.
Mr. Lassen has been involved in the acquisition, development, management, and
disposition of shopping center and apartment properties for approximately 37
years. He has previously served as a trustee of the International Council of
Shopping Centers, the national association for the shopping center industry.
Mr. Lassen is Chairman of the Board and Chief Executive Officer of Sizeler
Realty Co., Inc., and a director of the Parkway Company and Hibernia
Corporation. During 1991 and 1992, he also served as Chairman of the Board of
Hibernia Corporation and Hibernia National Bank.
Mr. Masilla, a certified public accountant, was a consultant to the Company
from 1992 to 1994, was a consultant to Sizeler Realty Co., Inc. from 1992 to
1994, and has been a member of the Company's Board of Directors since 1986. Mr.
Masilla has been a corporate executive and manager for more than 25 years, with
extensive experience in commercial bank management.
PROPERTY MANAGEMENT
The Company has a management agreement with Sizeler Real Estate Management
Co., Inc. (the "Management Company"), which is wholly-owned by Sizeler Realty
Co., Inc. ("Sizeler Realty"). Sizeler Realty is a diversified real estate
services company, in which a beneficial minority interest is directly owned by
Sidney W. Lassen and the balance is owned by members of the family of Mr.
Lassen's wife, her mother, and her father's estate.
Under the terms of the management agreement with the Company, the Management
Company performs leasing and management services with respect to the Company's
properties, including the annual preparation of detailed operating and capital
budgets for each property, accounting, collection of rents, repairs, cleaning,
maintenance, and other operating services. Upon request of the Company, the
Management Company also performs, or causes to be performed, additional
services, such as advertising, promotion, market research, management
information, and data processing.
The Management Company is paid a fee based on the Company's gross investment
in real estate, subject to adjustment for year-to-year increases (or decreases)
in funds from operations per share of the Company.
ECONOMIC CONDITIONS
The Company is affected by national and local economic conditions and changes
in real estate markets. The financial performance of shopping center properties
depends upon the strength of retail sales, which are directly affected by
trends in employment and personal income. Apartment properties are, likewise,
affected by the economic conditions and employment trends of the communities in
which they are located.
4
<PAGE>
Fifteen of the Company's properties, comprising approximately 50% of its
investment portfolio, are located in Louisiana. The Louisiana economy was
adversely affected in the mid- to late 1980's by a decline in crude oil and
natural gas prices, resulting in a severe contraction in the state's economic
activity and a reduction in non-agricultural employment.
The Louisiana economy has since experienced a moderate recovery, as reflected
in higher levels of employment and an increase in general economic activity.
The national economy also has an impact on Louisiana, particularly as it
affects the tourism and convention industry, which is an important segment of
the Louisiana economy.
To diversify its portfolio and reduce the risks of geographic concentration
and economic dependency on a primary industry, the Company began a program in
1988 of acquiring properties in other states of the Gulf South region.
ITEM 2. PROPERTIES
As of December 31, 1995, the Company's real estate portfolio included
interests in sixteen shopping centers and thirteen apartment communities. The
Company holds, directly, or indirectly through partnerships, a fee interest in
all of its properties, with the exception of the Southwood Shopping Center in
Gretna, Louisiana, and the Westland Shopping Center, in Kenner, Louisiana, in
which it holds its interests under long-term ground leases. Thirteen of the
Company's properties were subject to mortgage loans at December 31, 1995.
In the opinion of Management, all of the Company's properties are well-
maintained and in good repair, suitable for their intended uses, and are
adequately covered by insurance. The Company does not presently maintain
insurance coverage for environmental liabilities.
5
<PAGE>
The following table sets forth certain information concerning the Company's
real estate investments as of December 31, 1995:
<TABLE>
<CAPTION>
PERCENT LEASED(E)
GROSS LEASABLE AREA DECEMBER 31,
YEAR YEAR LAST IN SQUARE FEET OR -------------------
DESCRIPTION COMPLETED RENOVATED RENTABLE UNITS 1995 1994
----------- ---------- ---------- ------------------- ---- --------
<S> <C> <C> <C> <C> <C>
REGIONAL ENCLOSED MALLS
(3)
Hammond Square(c)...... 1978 1992 355,735s.f. 88% 87%
(Hammond, Louisiana) 426,139 (a)
North Shore Square (c). 1986 1995 356,081 94% 95%
(Slidell, Louisiana) 624,130/(a)
Southland Mall (c)..... 1970, 1981 1995 469,644/ 96% 96%
(Houma, Louisiana) 580,192 (a)
POWER SHOPPING CENTERS
(2)
Lantana Plaza.......... 1993 -- 275,928 96% 97%
(Palm Beach County,
Florida)
Westward............... 1961, 1990 1995 226,547 98% 97%
(W. Palm Beach,
Florida)
COMMUNITY SHOPPING
CENTERS (11)
Airline Park (c)....... 1973 1986 71,368 100% 100%
(Metairie, Louisiana)
Azalea Gardens (c)..... 1950 1986 45,032 100% 100%
(Jefferson, Louisiana)
Camelot Plaza.......... 1981 -- 77,378 94% 94%
(San Antonio, Texas)
Colonial (c)........... 1967 1987 43,230 100% 100%
(Harahan, Louisiana)
Delchamps Plaza (c).... 1989 -- 72,673 100% 100%
(Gonzales, Louisiana) 186,673 (a)
Rainbow Square......... 1986 -- 74,746 100% 100%
(Dunnellon, Florida) 116,746 (a)
Southwood (d).......... 1986 -- 40,000 92% 92%
(Gretna, Louisiana)
Town & Country......... 1993 -- 148,782 99% 99%
(Palatka, Florida)
Weeki Wachee Village... 1987 -- 82,349 93% 100%
(Weeki Wachee,
Florida)
Westgate (c)........... 1964 1987 216,298 50% 98%
(Alexandria,
Louisiana)
Westland (c)........... 1966 1990 108,418 99% 100%
(Kenner, Louisiana) ----------- -------- --------
2,664,209 92% 95%
=========== ======== ========
APARTMENTS (13)
Bel Air................ 1968, 1974 -- 202 units 98% 99%
(Mobile, Alabama)
Bryn Mawr.............. 1991 -- 240 units 100% 100%
(Naples, Florida)
Colonial Manor (c)..... 1967 1992 48 units 94% 98%
(Harahan, Louisiana)
Garden Lane (c)........ 1966, 1968 -- 261 units 100% 98%
(Gretna, Louisiana) 1971, 1972
Georgian (c)........... 1951 1980, 1993 135 units 82% 99%
(New Orleans,
Louisiana)
Hampton Park........... 1977 1995 300 units 94% 90%
(Mobile, Alabama)
Jamestown Estates (b).. 1971, 1972 -- 177 units 99% --
(Pensacola, Florida)
Lafayette Square....... 1969, 1972 1995 675 units 95% 92%
(Mobile, Alabama)
Lakeview Club.......... 1990-1992 -- 443 units 91% 98%
(Ft. Lauderdale,
Florida)
Magnolia Place (c)..... 1984 -- 148 units 97% 95%
(New Iberia,
Louisiana)
Pine Bend.............. 1979 -- 152 units 98% 99%
(Mobile, Alabama)
Steeplechase (c)....... 1982 -- 192 units 98% 98%
(Lafayette, Louisiana)
Woodcliff.............. 1977 -- 184 units 100% 99%
(Pensacola, Florida) ----------- -------- --------
3,157 units 96% 96%
=========== ======== ========
</TABLE>
6
<PAGE>
- --------
(a) The larger number is the total area of the indicated center, including
owner-occupied stores in which the Company has no ownership interest. The
Hammond Square and the Southland Mall Shopping Centers have stores owned by
Dillard Department Stores, Inc., comprising 70,404 s.f. and 110,548 s.f. of
space, respectively; the North Shore Square Shopping Mall has stores owned
by Maison Blanche, Inc., a subsidiary of Mercantile Stores Co. Inc.,
Mervyn's, and Dillard Department Stores, Inc., comprising 115,776 s.f.,
75,319 s.f., and 76,954 s.f. of space, respectively; the Delchamps Plaza
and the Rainbow Square Shopping Centers have stores owned by Wal-Mart
Stores, Inc., comprising 114,000 s.f. and 42,000 s.f., respectively.
(b) Information is not provided for December 31, 1994 with respect to this
property, because it was not acquired until 1995.
(c) The Company has a 99% partnership interest in these properties.
(d) The Company has a 50% partnership interest in Southwood Shopping Center.
(e) Percent leased is computed as the ratio of total space leased, including
anchor stores, to total leasable space, expressed as a percentage. The
computation excludes owner-occupied stores in which the Company has no
ownership interest.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Company's shares of common stock ("Shares") and its 8% convertible
subordinated debentures are listed for trading on the New York Stock Exchange
under the symbol "SIZ" and "SIZ 03," respectively.
The following table sets forth the high and low sales of the Shares for the
periods indicated, as reported by the New York Stock Exchange, and the
dividends paid per share in such periods.
<TABLE>
<CAPTION>
DIVIDENDS
1994 HIGH LOW PAID
- ---- ---- ---- ---------
<S> <C> <C> <C>
1st Quarter........................................... $13 7/8 $12 7/8 $0.27
2nd Quarter........................................... 13 1/2 12 3/8 0.27
3rd Quarter........................................... 13 12 3/8 0.28
4th Quarter........................................... 12 1/4 10 1/2 0.28
<CAPTION>
1995
- ----
<S> <C> <C> <C>
1st Quarter........................................... $11 $10 $0.28
2nd Quarter........................................... 10 3/8 9 3/8 0.28
3rd Quarter........................................... 10 1/8 9 3/8 0.28
4th Quarter........................................... 9 5/8 8 1/2 0.28
</TABLE>
As of March 22, 1996, there were 542 individually-listed owners of record of
the Company's Shares. Approximately 85.7% of the Company's outstanding Shares
are held by CEDE & Co., which is accounted for as a single shareholder of
record for multiple beneficial owners. CEDE & Co. is a nominee of the
Depository Trust Company ("DTC"), with respect to securities deposited by
participants with DTC, e.g., mutual funds, brokerage firms, banks, and other
financial organizations.
7
<PAGE>
The Company has paid dividends in each quarter since its inception as a
publicly-owned company in 1987, with a cumulative total of approximately $55.6
million paid to shareholders over this time period. Cash dividends paid to
shareholders in 1995 amounted to 87.6% of 1995 funds from operations.
Under the REIT rules of the Internal Revenue Code, the Company must pay at
least 95% of its ordinary taxable income as dividends in order to avoid
taxation as a regular corporation. The declaration of dividends is a
discretionary decision of the Board of Directors and depends upon the Company's
distributable funds, financial requirements, tax considerations, and other
factors. A portion of the Company's dividends paid may be deemed either capital
gain income or a return of capital, or both, to its shareholders. The Company
annually provides its shareholders a statement as to its designation of the
taxability of the dividend.
The federal income tax status of dividends per share paid for the five years
ended December 31 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ordinary Income................................... $0.40 $0.72 $0.59 $0.53 $0.64
Return of Capital................................. 0.72 0.38 0.43 0.46 0.34
Capital Gain...................................... -- -- 0.03 0.02 0.02
----- ----- ----- ----- -----
Total........................................... $1.12 $1.10 $1.05 $1.01 $1.00
===== ===== ===== ===== =====
</TABLE>
The Company has a dividend reinvestment plan pursuant to which the Company's
shareholders of record may use their dividends to purchase additional shares.
The Company acquires shares for the plan by open market purchases. Brokerage
commissions on all such purchases are paid by the Company and are not charged
to plan participants.
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial data (in
thousands except per share data) for the Company and its subsidiaries and
should be read in conjunction with the consolidated financial statements and
notes thereto included herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1995 1994 1993 1992 1991
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
OPERATING DATA(1)
Operating Revenue
Rents and other income..... $ 43,087 $ 36,621 $ 25,005 $ 14,786 $10,994
Equity in income of
partnership............... 106 75 72 88 75
--------- -------- -------- -------- -------
43,193 36,696 25,077 14,874 11,069
Operating Expenses.......... 26,044 21,382 14,733 8,714 6,593
--------- -------- -------- -------- -------
INCOME FROM OPERATIONS.... 17,149 15,314 10,344 6,160 4,476
--------- -------- -------- -------- -------
Other Income (Expenses)
Interest and dividend
income.................... 42 82 1,240 270 455
Interest expense........... (14,497) (10,248) (7,529) (3,807) (2,869)
--------- -------- -------- -------- -------
(14,455) (10,166) (6,289) (3,537) (2,414)
--------- -------- -------- -------- -------
INCOME BEFORE GAIN (LOSS)
ON SALE OF REAL ESTATE... 2,694 5,148 4,055 2,623 2,062
--------- -------- -------- -------- -------
Gain (Loss) on Sale of Real
Estate Investments and
Costs Associated with
Proposed Real Estate
Investment................. -- 8 285 (528) (268)
--------- -------- -------- -------- -------
INCOME BEFORE EXTRAORDINARY
ITEM 2,694 5,156 4,340 2,095 1,794
Extraordinary item--early
extinguishment of debt..... -- -- (1,611) -- --
--------- -------- -------- -------- -------
NET INCOME................ $ 2,694 $ 5,156 $ 2,729 $ 2,095 $ 1,794
========= ======== ======== ======== =======
Funds From Operations (2).... $ 11,094 $ 11,512 $ 8,314 $ 5,320 $ 4,174
Net Cash Provided by (Used
in):
Operating Activities........ $ 10,117 $ 10,615 $ 9,767 $ 4,633 $ 4,353
Investing Activities........ $ (17,857) $(52,748) $(59,510) $(33,277) $(4,192)
Financing Activities........ $ 7,591 $ 37,257 $ 54,465 $ 19,311 $10,289
Dividends Paid............... $ 9,723 9,806 7,181 4,784 3,229
Per Share Data:
Net income.................. $ 0.31 $ 0.58 $ 0.37 $ 0.44 $ 0.52
Dividends paid.............. $ 1.12 $ 1.10 $ 1.05 $ 1.01 $ 1.00
Weighted Average Shares
Outstanding................. 8,690 8,914 7,346 4,736 3,429
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------
1995 1994 1993 1992 1991
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Gross Investment in Real
Estate..................... $296,884 $279,698 $203,529 $137,047 $93,692
Total Assets................ 281,857 269,923 202,904 132,178 97,990
Mortgage Notes Payable...... 68,317 42,139 19,704 41,572 29,903
Notes Payable............... 51,419 52,987 5,000 24,113 --
Convertible Subordinated
Debentures................. 62,878 62,878 62,955 -- --
Total Liabilities........... 186,534 163,213 91,737 67,032 30,219
Shareholders' Equity........ 95,323 106,710 111,167 65,146 67,771
</TABLE>
- --------
(1) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information regarding factors such as property
acquisitions and dispositions and other transactions which have affected
operating performance during the periods indicated.
(2) Funds from operations has been defined by the Company for the years covered
in the above table as net income, excluding gains (or losses) from sales of
property and other non-operating extraordinary items, plus depreciation,
and after adjustments for unconsolidated partnerships to reflect funds from
operations on the same basis.
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
The Company's real estate investment portfolio is composed of shopping center
and apartment properties. As of December 31, 1995, approximately 64% of the
Company's real estate investment portfolio, or a gross investment of $191
million, consisted of shopping centers, and approximately 36%, or $106 million,
consisted of apartments.
During 1995 and 1994, the Company made three property acquisitions,
consisting of one enclosed regional shopping center and two apartment
properties, and also acquired additional land adjoining three of its existing
shopping centers, at combined costs of $74.6 million (purchase price plus
improvements thereto). Operating revenue, expenses and income from operations
for these years increased as a result of these acquisitions, effective when
each acquisition was completed.
The following table provides certain information with respect to the
Company's shopping center and apartment properties:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING REVENUES FROM:
Shopping Centers............................... $ 25.2 $ 21.4 $ 15.9
Apartments..................................... 18.0 15.3 9.2
------- ------- -------
$ 43.2 $ 36.7 $ 25.1
======= ======= =======
DIRECT OPERATING EXPENSES OF:
Shopping Centers
Depreciation................................. $ 4.9 $ 3.8 $ 3.0
Other operating expenses..................... 8.3 6.9 5.2
------- ------- -------
13.2 10.7 8.2
------- ------- -------
Apartments
Depreciation................................. 3.2 2.1 1.0
Other operating expenses..................... 7.3 6.3 3.6
------- ------- -------
10.5 8.4 4.6
------- ------- -------
$ 23.7 $ 19.1 $ 12.8
======= ======= =======
INCOME FROM RENTAL OPERATIONS:
Shopping Centers............................... $ 12.0 $ 10.7 $ 7.7
Apartments..................................... 7.5 6.9 4.6
------- ------- -------
$ 19.5 $ 17.6 $ 12.3
======= ======= =======
OTHER OPERATING EXPENSES:
Administrative Expenses........................ $ 2.0 $ 1.9 $ 1.7
Depreciation and Amortization of Non-Real
Estate Assets................................. .4 .4 .3
------- ------- -------
INCOME FROM OPERATIONS........................... $ 17.1 $ 15.3 $ 10.3
======= ======= =======
</TABLE>
10
<PAGE>
RESULTS OF OPERATIONS
Comparison of the years ended December 31, 1995 and 1994.
For the year ended December 31, 1995, results of operations reflected
increases over corresponding 1994 amounts, resulting primarily from the
Company's acquisition of properties during 1995 and 1994, as shown below:
<TABLE>
<CAPTION>
GROSS INVESTMENT (A)
(IN MILLIONS)
---------------------
1995 1994 TOTAL
------ ------ -------
<S> <C> <C> <C>
Shopping Centers..................................... $ 0.9 $ 39.3 $ 40.2
Apartments........................................... 5.1 29.3 34.4
------ ------ ------
TOTAL.............................................. $ 6.0 $ 68.6 $ 74.6
====== ====== ======
</TABLE>
- --------
(a) Gross investment is initial purchase price plus costs capitalized
subsequent to acquisition through December 31, 1995.
Operating revenue from all properties in the portfolio for the year ended
December 31, 1995, compared to 1994, increased by $6.5 million (18%), due
principally to newly-acquired properties and, to a lesser extent, higher rental
rates on properties which were a part of the portfolio during both comparative
periods. Revenue from shopping centers and apartments increased by $3.8 million
and $2.7 million, respectively. Direct operating expenses from all properties
increased by $4.6 million (24%); direct operating expenses of shopping centers
and apartments increased $2.5 million and $2.1 million, respectively; and
income from rental operations (defined by the Company as operating revenues
less direct operating expenses of real estate properties, as set forth in the
preceding table) from all properties increased $1.9 million (11%); income from
rental operations of shopping centers and apartments increased $1.3 million and
$600 thousand, respectively. The reported increases in operating revenue,
direct operating expenses, and income from rental operations were due
principally to newly-acquired properties.
Operating revenue from shopping center and apartment properties, owned during
both comparable periods, increased 4% in 1995, compared to 1994, attributable
to higher average rental rates. Direct operating expenses from these same
properties increased 7% over the same period a year ago, principally
attributable to higher depreciation expense resulting from renovation projects
at several of the Company's properties. As a result, income from rental
operations from shopping center and apartment properties owned during both
comparable periods increased 1%.
Interest, dividend, and other income decreased $40 thousand for the year
1995, compared to 1994, due to disposition of marketable securities in 1994.
Interest expense increased $4.2 million (41%) for the year ended December 31,
1995, compared to 1994, attributable to the following: (1) an increase of $1.1
million in interest expense on bank debt, due to higher average borrowings to
fund acquisitions and capital improvements, and higher interest rates (average
borrowings were approximately $44.0 million and $32.5 million, with a weighted
average interest rate of 8.6% and 7.7% in 1995 and 1994, respectively), and (2)
an increase of $3.1 million in interest expense on mortgage debt, due to higher
mortgage debt outstanding during 1995, net of the Company's repayment of
mortgage debt in 1995. To mitigate the future impact of interest rate changes
on the Company's borrowing costs, the Company focused on refinancing short-term
debt with long-term, fixed-rate debt. Accordingly, during 1995, the Company
completed new mortgage financing totalling $52.2 million, repaid mortgage debt
totalling $25.9 million, and paid down bank lines with the remaining proceeds.
Bank lines were also used to finance capital improvements and other
investments, which resulted in subsequent increases in bank debt to a level
approximately $1.5 million below year-end 1994.
General and administrative expenses increased $142 thousand (8%) in 1995,
compared to 1994. The increase is primarily due to increased payroll costs,
professional fees, and other administrative costs associated with the Company's
increased portfolio size and capital structure.
11
<PAGE>
The reduction in net income between 1995 and 1994 was, in the aggregate and
on a per-share basis, principally attributable to the increase in depreciation
expense due to additional investment in real estate properties, and interest
expense resulting from increased borrowings from acquisitions and capital
improvements, and higher interest rate levels during 1995 over those of the
preceding year.
Comparison of the years ended December 31, 1994 and 1993.
For the year ended December 31, 1994, results of operations reflected
increases over corresponding 1993 amounts, resulting primarily from the
Company's acquisition of properties during 1993 and 1994, as shown below:
<TABLE>
<CAPTION>
GROSS INVESTMENT
(A)
(IN MILLIONS)
------------------
1994 1993 TOTAL
----- ----- ------
<S> <C> <C> <C>
Shopping Centers....................................... $34.9 $26.8 $ 61.7
Apartments............................................. 28.2 42.5 70.7
----- ----- ------
TOTAL.............................................. $63.1 $69.3 $132.4
===== ===== ======
</TABLE>
- --------
(a) Gross investment is initial purchase price plus costs capitalized
subsequent to acquisition through December 31, 1994.
Operating revenue from all properties in the portfolio for the year ended
December 31, 1994, compared to 1993, increased by $11.6 million (46%), due
principally to newly-acquired properties and, to a lesser extent, higher rental
rates on properties which were a part of the portfolio during both comparative
periods. Revenue from shopping centers and apartments increased by $5.5 million
and $6.1 million, respectively. Direct operating expenses of all properties
increased by $6.3 million (49%); direct operating expenses of shopping centers
and apartments increased $2.5 million and $3.8 million, respectively. Income
from rental operations of all properties increased $5.3 million (43%); income
from rental operations of shopping centers and apartments increased $3.0
million and $2.3 million, respectively. The reported increases in operating
revenue, direct operating expenses, and income from rental operations were due
principally to newly-acquired properties.
Operating revenue and expenses from shopping center and apartment properties
owned during both comparable periods each increased 5% in 1994, compared to
1993. As a result, income from rental operations from these properties
increased 5% over the same period in 1993. Management attributes this increase
in income from rental operations to higher rental rates and higher average
occupancies throughout 1994 compared to 1993.
Interest, dividend, and other income decreased $1.2 million for the year
1994, compared to 1993. This decrease is due principally to the Company fully
investing, by the end of 1993, all funds derived from its May 1993 public
offering in income- producing properties and debt repayments, which were
partially invested in short- term, interest-bearing securities during 1993; and
also due to the sale of the Company's investments in real estate companies
during the first quarter of 1993.
Interest expense increased $2.7 million (36%) for the year ended December 31,
1994, compared to 1993, attributable to the following: (1) an increase of $1.8
million in interest expense on the convertible subordinated debentures issued
on May 13, 1993; (2) an increase of $1.9 million in interest expense on bank
debt, due to higher average borrowings to fund acquisitions and capital
improvements, and higher interest rates (average borrowings were approximately
$32.5 million and $8.5 million, with a weighted average interest rate of 7.7%
and 6.1% in 1994 and 1993, respectively). These increases in interest expense
were partially offset by lower mortgage interest expense of $1.0 million,
attributable to the repayment of $28.6 million of mortgage debt, and the
repayment of $24.1 million of bank debt, both with the proceeds of the May 1993
public offering.
General and administrative expenses increased by $188 thousand (11%) in 1994,
compared to 1993. The increase is primarily due to increased costs incurred in
connection with the evaluation of potential acquisitions, higher payroll costs,
professional fees, and other administrative costs associated with the Company's
increased portfolio size and capital structure.
12
<PAGE>
The comparison of net income between 1994 and 1993 was additionally affected
by the recognition of: (1) $1.6 million of costs associated with the early
extinguishment of mortgage debt in 1993; and (2) an $8 thousand gain on the
sale of the Company's available-for-sale investment securities in 1994,
compared to $285 thousand in 1993 from the sale of investments in real estate
companies.
LIQUIDITY AND CAPITAL RESOURCES
The primary source of working capital for the Company is net cash provided by
operating activities, from which the Company funds normal operating
requirements and distributions to shareholders. In addition, the Company
maintains unsecured credit lines with commercial banks, which it utilizes to
temporarily finance the cost of portfolio growth, property improvements, and
other expenditures. At December 31, 1995, the Company had $1.3 million of cash
and cash equivalents, and commitments for a total of $95.0 million of bank
lines of credit, of which approximately $44.0 million was available.
Utilization of the bank lines is subject to certain restrictive covenants that
impose maximum borrowing levels by the Company through the maintenance of
prescribed debt-to-equity or other financial ratios.
Net cash flows from operating activities decreased $498 thousand in 1995 from
1994, and increased $848 thousand in 1994 from 1993. The decrease between 1995
and 1994 was primarily attributable to higher interest charged on the Company's
borrowings and changes in operating liabilities caused by growth in the
Company's investment portfolio. The increase between 1994 and 1993 was
attributable to an increase in income from rental operations, net of changes in
operating assets caused by growth in the Company's investment portfolio.
Net cash flows used in investing activities decreased $34.9 million in 1995
from 1994, attributable to a decrease in the addition of investment properties,
offset by an increase in improvements to existing properties. In 1995, the
Company acquired an apartment community for approximately $4.75 million, and
additional land adjoining two of its existing shopping centers during 1995, at
combined costs of $847 thousand. The increase in improvements to real estate
investments during 1995 was attributable to the completion of renovation
programs at two of the Company's shopping centers and on-going renovation
projects at certain existing apartment properties. The renovation programs
completed at the shopping centers during 1995 were under non-cancellable
construction contracts with non-affiliated companies, for total contract
amounts of $5.0 million. The Company had no major commitments for capital
improvements at December 31, 1995.
Net cash flows used in investing activities decreased $6.8 million in 1994
and 1993, attributable to a decrease in the addition of investment properties,
offset by an increase in improvements to existing properties. In 1994, the
Company acquired an apartment community and a shopping center for $39.0 million
(net of $22.8 million debt assumed), and additional land adjoining three of its
existing shopping centers at combined costs of $2.5 million. The increase in
costs of improvements to real estate properties during 1994 was primarily
attributable to renovation programs at two of the Company's shopping centers
and certain existing apartment properties. In connection with the renovation of
the shopping centers, each contract was approximately 50% complete, on a cost
basis, at December 31, 1994.
Net cash flows provided by financing activities decreased $29.7 million in
1995 from 1994, and decreased $17.2 million in 1994 from 1993. The decrease in
1995 from 1994 was primarily attributable to the Company's increased principal
payments on mortgage notes payable and notes payable to banks, increased debt
issuance costs, and the repurchase of 460,900 Shares of treasury stock. During
1995, the Company completed mortgage debt financing totalling $52.2 million,
from which the Company repaid other mortgage debt totalling $25.9 million and
paid down variable-rate bank debt with the remaining proceeds. Bank lines were
also used to finance capital improvements and other investments, which resulted
in subsequent increases in bank debt to a level approximately $1.5 million
below year-end 1994. The principal purpose of this debt financing was to limit
exposure to rising interest rates by replacing a substantial amount of the
Company's variable rate, short-term debt with fixed-rate, long-term debt. The
decrease in 1994 from 1993 was attributable to the net effect of the
refinancings and repayment of debt in connection with the Company's May 1993
public
13
<PAGE>
offering of 4 million shares of common stock and $65.0 million convertible
subordinated debentures. Substantially all of the costs of investing activities
during 1994 and 1995 were funded by borrowings from bank credit lines and the
assumption of existing mortgage debt with respect to the properties acquired.
As of December 31, 1995, thirteen of the Company's properties, comprising
approximately 37% of its gross investment in real estate, were subject to a
total of $68.3 million in mortgage debt, all of which bears a fixed rate of
interest for a fixed term. The remainder of the portfolio may be available for
additional debt financing, if determined appropriate. The Company anticipates
that its current cash balance, operating cash flows, and borrowings (including
borrowings under its lines of credit) will be adequate to fund the Company's
future (i) operating and administrative expenses, (ii) debt service
obligations, (iii) distributions to shareholders, (iv) capital improvements,
and (v) normal repair and maintenance expenses at its properties.
The Company's current dividend policy is to pay quarterly dividends to
shareholders, based upon, among other factors, funds from operations, as
opposed to net income. Because funds from operations excludes the deduction of
non-cash charges, principally depreciation of real estate assets, and certain
non-operating items, quarterly dividends will typically be greater than net
income and may include a tax-deferred return of capital component. To limit the
Company's reliance on external capital sources to fund future cash flow needs,
the Board of Directors decided to reduce the dividend payout rate. Accordingly,
the Board of Directors on February 1, 1996, declared a cash dividend with
respect to the period October 1, 1995, through December 31, 1995, of $.22 per
share, to shareholders of record as of February 21, 1996. This represents a
reduction in the quarterly dividend rate from the $.28 per share previously
paid.
FUNDS FROM OPERATIONS
Funds from Operations was defined by the Company in 1995 as net income,
excluding gains (or losses) from sales of property and other non-operating
extraordinary items, plus depreciation, and after adjustments for
unconsolidated partnerships to reflect funds from operations on the same basis.
Funds from operations does not represent cash flows from operations as defined
by generally accepted accounting principles, nor is it indicative that cash
flows are adequate to fund all cash needs. Funds from operations should not be
considered as an alternative to net income as defined by generally accepted
accounting principles or to cash flows as a measure of liquidity. Since the
definition of funds from operations is a guideline, computation of funds from
oeprations may vary from one REIT to another. Real estate industry analysts
generally utilize the concept of funds from operations as an important measure
of a REIT's financial performance. The Company considers funds from operations
in evaluating its operating results, and its dividend policy is also based, in
part, on the concept of funds from operations.
For the year ended December 31, 1995, funds from operations totalled $11.1
million, compared to $11.5 million for the same period in 1994, a decrease of
$400 thousand (4.0%). The decrease in funds from operations in 1995 is due
primarily to higher interest charges on the Company's borrowings, offset by an
increase in income from rental operations, primarily due to new property
acquisitions in 1995 and 1994. Funds from operations in 1994 increased over the
same period in 1993 by $3.2 million (38%). This increase was due primarily from
the Company's acquisition of properties during 1994 and 1993.
Effective January 1, 1996, the Company has adopted a new definition of funds
from operations, in keeping with industry guidelines as established by the
National Association of Real Estate Investment Trusts (NAREIT).
EFFECTS OF INFLATION
Substantially all of the Company's retail leases contain provisions designed
to provide the Company with a hedge against inflation. Most of the Company's
retail leases contain provisions which enable the Company to receive percentage
rentals based on tenant sales in excess of a stated breakpoint and/or provide
for periodic increases in minimum rent during the lease term. Also, the
majority of the Company's retail leases are for terms of less than ten years,
which allows the Company to adjust rentals to changing market conditions. In
addition, most retail leases require tenants to contribute towards property
operating expenses, thereby reducing the Company's exposure to higher costs
caused by inflation. Apartment leases are written for short terms, generally
six to twelve months.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's Consolidated Balance Sheets as of December 31, 1995 and 1994,
and its Consolidated Statements of Income, Shareholders' Equity, Cash Flows,
and Notes to Consolidated Financial Statements for the years ended December 31,
1995, 1994, and 1993, together with the Report of Independent Auditors thereon,
are included under Item 14 of this report and are incorporated herein by
reference. Unaudited quarterly results of operations included in the notes to
the consolidated financial statements are also incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with Accountants on accounting and financial
disclosures. The information required by Item 9 of Form 10-K has been
previously reported (as that term is defined in Rule 12b-2 under the Securities
Exchange Act of 1934) by the Company on its Form 8-K, dated May 18, 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For information regarding executive officers of the Company, see "Executive
Officers" in Part I, Item 1 of this report. The other information required by
this Item 10 is incorporated herein by reference to the Company's definitive
proxy statement, which will be filed with the Securities and Exchange
Commission, pursuant to Regulation 14A within 120 days of the end of the
Company's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated herein by reference
to the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days
of the end of the Company's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item 12 is incorporated herein by reference
to the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days
of the end of the Company's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item 13 is incorporated herein by reference
to the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days
of the end of the Company's fiscal year.
15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) and (2) Financial Statements and Financial Statement Schedules
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Reports of Independent Auditors........................................... 17-18
Consolidated Balance Sheets as of December 31, 1995 and 1994.............. 19
Consolidated Statements of Income for the years ended December 31, 1995,
1994, and 1993........................................................... 20
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1995, 1994, and 1993........................................ 21
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994, and 1993..................................................... 22
Notes to Consolidated Financial Statements................................ 23-30
Financial Statement Schedules
Schedule II. Valuation and Qualifying Accounts.......................... 31
Schedule III. Real Estate and Accumulated Depreciation.................. 32-33
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not submitted because
they are not required or the required information appears in the financial
statements or notes thereto.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Sizeler Property Investors, Inc.
We have audited the consolidated balance sheet of Sizeler Property Investors,
Inc. and subsidiaries as of December 31, 1995, and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended. In connection with our audit of the consolidated financial statements,
we have also audited the financial statement schedules listed in the Index at
Item 14(a). These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements and the financial statement schedules based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the 1995 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sizeler
Property Investors, Inc., and subsidiaries at December 31, 1995, and the
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
February 1, 1996, except as to
Note H, which is as of March 5, 1996.
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Sizeler Property Investors, Inc.
We have audited the accompanying consolidated balance sheet of Sizeler
Property Investors, Inc. and subsidiaries as of December 31, 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the two years in the period ended December 31, 1994. Our audits
also included the financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Sizeler Property
Investors, Inc. and subsidiaries at December 31, 1994, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
Ernst & Young LLP
Jackson, Mississippi
February 3, 1995
18
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Real estate investments (Notes B and D)
Land............................................ $ 48,402,000 $ 46,918,000
Buildings and improvements, net of accumulated
depreciation of $29,041,000 in 1995 and
$21,309,000 in 1994............................ 218,478,000 210,498,000
Investment in real estate partnership (Note A).. 963,000 973,000
------------ ------------
267,843,000 258,389,000
Cash and cash equivalents......................... 1,274,000 1,423,000
Accounts receivable and accrued revenue, net of
allowance for doubtful accounts of $166,000 in
1995 and $321,000 in 1994........................ 3,088,000 2,931,000
Prepaid expenses and other assets, net............ 9,652,000 7,180,000
------------ ------------
Total Assets.................................. $281,857,000 $269,923,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable (Note D)................... $ 68,317,000 $ 42,139,000
Notes payable (Note D)............................ 51,419,000 52,987,000
Accounts payable and accrued expenses............. 2,762,000 4,119,000
Tenant deposits and advance rents................. 896,000 845,000
Commitments and contingencies (Note J)............ -- --
Minority interest in real estate partnerships
(Note K)......................................... 262,000 245,000
------------ ------------
123,656,000 100,335,000
Convertible subordinated debentures (Note A
and D)........................................... 62,878,000 62,878,000
------------ ------------
Total Liabilities............................. 186,534,000 163,213,000
------------ ------------
SHAREHOLDERS' EQUITY (Notes E and L)
Preferred stock, 3,000,000 shares authorized, none
issued........................................... -- --
Common stock, par value $.01 per share, 15,000,000
shares authorized, shares issued and
outstanding--8,930,069 in 1995 and 8,922,819 in
1994............................................. 89,000 89,000
Additional paid-in capital........................ 127,273,000 127,199,000
Accumulated distributions in excess of net income
(Note G)......................................... (27,580,000) (20,551,000)
------------ ------------
99,782,000 106,737,000
Treasury shares, at cost, 460,900 shares.......... (4,454,000) --
Unrealized loss on securities (Note A)............ (5,000) (27,000)
------------ ------------
Total Shareholders' Equity.................... 95,323,000 106,710,000
------------ ------------
Total Liabilities and Shareholders' Equity.... $281,857,000 $269,923,000
============ ============
</TABLE>
See notes to consolidated financial statements.
19
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING REVENUE (Notes B, C, and F)
Rents and other income............. $ 43,087,000 $ 36,621,000 $ 25,005,000
Equity in income of partnership.... 106,000 75,000 72,000
------------ ------------ ------------
43,193,000 36,696,000 25,077,000
------------ ------------ ------------
OPERATING EXPENSES
Management and leasing (Note F).... 1,969,000 1,495,000 1,179,000
Utilities.......................... 1,918,000 1,737,000 1,368,000
Real estate taxes.................. 3,189,000 2,625,000 1,482,000
Administrative expenses............ 2,028,000 1,886,000 1,698,000
Operations and maintenance
(Note F).......................... 6,228,000 5,301,000 3,560,000
Other operating expenses........... 2,325,000 1,995,000 1,212,000
Depreciation....................... 8,387,000 6,343,000 4,234,000
------------ ------------ ------------
26,044,000 21,382,000 14,733,000
------------ ------------ ------------
INCOME FROM OPERATIONS........... 17,149,000 15,314,000 10,344,000
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Interest, dividends, and other
income............................ 42,000 82,000 1,240,000
Interest expense (Note D).......... (14,497,000) (10,248,000) (7,529,000)
------------ ------------ ------------
(14,455,000) (10,166,000) (6,289,000)
------------ ------------ ------------
INCOME BEFORE GAIN (LOSS) ON SALE
OF REAL ESTATE AND EXTRAORDINARY
ITEM............................ 2,694,000 5,148,000 4,055,000
------------ ------------ ------------
Gain (loss) on sale of investments
in real estate companies and other
securities........................ -- 8,000 285,000
------------ ------------ ------------
-- 8,000 285,000
------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY ITEM. 2,694,000 5,156,000 4,340,000
Extraordinary item--early
extinguishment of debt
(Note A).......................... -- -- (1,611,000)
------------ ------------ ------------
NET INCOME....................... $ 2,694,000 $ 5,156,000 $ 2,729,000
============ ============ ============
PER SHARE DATA:
Income before extraordinary item. $ 0.31 $ 0.58 $ 0.59
============ ============ ============
Extraordinary item............... $ -- $ -- $ (.22)
============ ============ ============
Net income....................... $ 0.31 $ 0.58 $ 0.37
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
20
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL DISTRIBUTIONS IN UNREALIZED
------------------ PAID- EXCESS OF NET TREASURY LOSS ON
SHARES AMOUNT IN CAPITAL INCOME STOCK SECURITIES TOTAL
--------- ------- ------------ ---------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1993................... 5,263,398 52,000 83,394,000 $(11,449,000) $(6,851,000) $ -- $ 65,146,000
--------- ------- ------------ ------------ ----------- -------- ------------
Issuance of 4,000,000
shares in public
offering, less
underwriters'
commissions and
offering costs of
$3,566,000............. 4,000,000 40,000 48,394,000 48,434,000
Conversion of debentures 157,307 2,000 1,962,000 1,964,000
Retirement of treasury
stock.................. (525,400) (5,000) (6,846,000) 6,851,000 0
Net income for 1993..... 2,729,000 2,729,000
Cash dividends declared
and paid ($1.05 per
share) (Note G)........ (7,181,000) (7,181,000)
Exercise of stock
options................ 6,399 75,000 75,000
--------- ------- ------------ ------------ ----------- -------- ------------
Balance at December 31,
1993................... 8,901,704 89,000 126,979,000 (15,901,000) -- -- 111,167,000
--------- ------- ------------ ------------ ----------- -------- ------------
Conversion of
debentures............. 5,922 77,000 77,000
Offering costs from 1993
offering............... (10,000) (10,000)
Net income for 1994..... 5,156,000 5,156,000
Cash dividends declared
and paid ($1.10 per
share) (Note G)........ (9,806,000) (9,806,000)
Exercise of stock
options (Note E)....... 10,693 95,000 95,000
Shares issued pursuant
to Directors' Stock
Ownership Plan
(Note E)............... 4,500 58,000 58,000
Unrealized loss on
securities (Note A).... (27,000) (27,000)
--------- ------- ------------ ------------ ----------- -------- ------------
Balance at December 31,
1994................... 8,922,819 $89,000 $127,199,000 $(20,551,000) $ -- $(27,000) $106,710,000
--------- ------- ------------ ------------ ----------- -------- ------------
Net income for 1995..... 2,694,000 2,694,000
Cash dividends declared
and paid ($1.12 per
share) (Notes G and H). (9,723,000) (9,723,000)
Exercise of stock
options (Note E)....... 2,000 17,000 17,000
Shares issued pursuant
to Directors' Stock
Ownership Plan
(Note E)............... 5,250 57,000 57,000
Unrealized loss on
securities (Note A).... 22,000 22,000
Purchase of treasury
shares, 460,900 shares. (4,454,000) (4,454,000)
--------- ------- ------------ ------------ ----------- -------- ------------
Balance at December 31,
1995.................... 8,930,069 89,000 $127,273,000 (27,580,000) (4,454,000) (5,000) 95,323,000
========= ======= ============ ============ =========== ======== ============
</TABLE>
See notes to consolidated financial statements.
21
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income......................... $ 2,694,000 $ 5,156,000 $ 2,729,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization.... 8,387,000 6,343,000 4,234,000
Gain on sale of investments in
real estate companies and other
securities...................... -- (8,000) (285,000)
Extraordinary item--early
extinguishment of debt.......... -- -- 1,611,000
Equity in depreciation of real
estate partnership.............. 13,000 21,000 25,000
Issuance of shares pursuant to
Directors' Stock Ownership Plans
for annual directors' fees...... 57,000 58,000 --
Changes in operating assets and
liabilities:
Increase in accounts receivable
and accrued revenue............. (157,000) (354,000) (837,000)
Increase in prepaid expenses and
other assets.................... (242,000) (1,039,000) (383,000)
Increase (decrease) in accounts
payable and accrued expenses.... (686,000) 421,000 2,264,000
Increase in tenant deposits and
advance rents................... 51,000 17,000 409,000
----------- ----------- -----------
Net Cash Provided by Operating
Activities.................... 10,117,000 10,615,000 9,767,000
----------- ----------- -----------
INVESTING ACTIVITIES:
Acquisitions of real estate
investments, net of debt assumed.. (5,594,000) (41,564,000) (57,657,000)
Improvements to real estate
investments....................... (12,263,000) (11,184,000) (3,361,000)
Proceeds on disposal of investment
in real estate companies.......... -- -- 1,508,000
----------- ----------- -----------
Net Cash Used In Investing
Activities.................... (17,857,000) (52,748,000) (59,510,000)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from mortgage notes
payable and notes payable to
banks............................. 52,210,000 50,987,000 5,000,000
Principal payments on mortgage
notes payable and notes payable to
banks............................. (27,600,000) (3,315,000) (52,968,000)
Early extinguishment of debt....... -- -- (1,611,000)
Debt issuance costs and mortgage
escrow deposits................... (2,876,000) (735,000) (2,262,000)
Proceeds from issuance of common
stock and convertible subordinated
debentures........................ -- -- 113,352,000
Cash dividends paid................ (9,723,000) (9,806,000) (7,181,000)
Issuance of shares pursuant to
stock option plans................ 17,000 95,000 75,000
Minority interest in real estate
partnerships...................... 17,000 31,000 60,000
Purchases of treasury shares....... (4,454,000) -- --
----------- ----------- -----------
Net Cash Provided by Financing
Activities.................... 7,591,000 37,257,000 54,465,000
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents.................. (149,000) (4,876,000) 4,722,000
Cash and cash equivalents at
beginning of year................. 1,423,000 6,299,000 1,577,000
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR................... $ 1,274,000 $ 1,423,000 $ 6,299,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
22
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, AND 1993
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include
the accounts of Sizeler Property Investors, Inc., and its majority-owned
subsidiaries and partnerships (the "Company"). All significant intercompany
transactions and accounts have been eliminated in consolidation. The Company's
investment in a real estate partnership at December 31, 1995 and 1994,
represents a 50% interest in a partnership which owns a community shopping
center and is accounted for by the equity method.
Cash and Cash Equivalents. Cash equivalents represent investments that are
highly liquid and have a maturity of three months or less at the time the
investment is made.
Offering Expenses. In May 1993, the Company completed an offering of 4
million shares of common stock at a price of $13 per share (less $3,566,000 of
underwriting and offering costs), and $65 million of 8% Convertible
Subordinated Debentures (the "Debentures"), due 2003 (less $2,600,000 of
underwriting costs). The Debentures are convertible into common stock of the
Company, based on $13.00 per share, at any time prior to maturity, unless
previously redeemed. During 1994 and 1993, $77,000 and $2,045,000 of Debentures
were converted into 5,922 and 157,307 shares of common stock, respectively. No
debentures were converted in 1995.
Costs incurred in connection with public offerings of the Company's shares of
common stock have been charged directly against shareholders' equity.
Real Estate Investments. Real estate investments are recorded at cost.
Depreciation of buildings and improvements is provided by the straight-line
method over the estimated useful lives of the assets, ranging from ten to forty
years. Betterments and major replacements are capitalized and the replaced
asset and accumulated depreciation is removed from the accounts. Tenant
improvement costs are depreciated using the straight-line method over the term
of the related leases. Maintenance and repairs are expensed in the period
incurred.
The Company adopted the provisions of the Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Accordingly, the Company reviews real estate (and other long-lived assets) and
certain identifiable intangibles to be held and used, whenever events or
changes in circumstances indicate that the carrying amounts of an asset may not
be recoverable. If it is indicated that the carrying amount may not be
recoverable from future cash flows generated by the asset, an impairment loss
will be recognized. The adoption of Statement No. 121 had no effect on the 1995
financial statements.
Securities. The Company adopted the provisions of the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" effective
January 1, 1994. As a result, investment securities have been classified as
available-for-sale. In accordance with the Statement, prior period financial
statements have not been restated to reflect the change in accounting
principle. Available-for-sale securities are stated at fair value, with the
unrealized gains and losses, net of taxes, reported as a separate component of
shareholders' equity. Application of the new statement has not had a material
effect on the Company's financial position or results of operations.
Deferred Charges. Debt issuance costs in connection with issuance of the
Company's 8% convertible subordinated debentures and other financings are
included in prepaid expense and other costs and are being amortized using the
interest method over the term of the related obligations. Unamortized costs are
charged
23
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
to expense upon prepayment of financing. Unamortized costs related to the
convertible subordinated debentures are offset against additional paid-in-
capital upon conversion by debenture-holders. Lease acquisition costs incurred
in connection with the execution of leases are included in prepaid expenses and
other assets, and are amortized over the term of the respective leases.
Unamortized costs are charged to expense upon cancellation of leases prior to
expiration of lease terms.
Rental Income. Rental income includes rents from shopping center and
apartment properties. Minimum rents from shopping center leases are accounted
for ratably over the term of the lease. Percentage rents are recognized based
upon tenant sales that exceed specific levels. Tenant reimbursements are
recognized as the applicable services are rendered or expenses incurred.
Federal Income Taxes. The Company has elected to be taxed as a real estate
investment trust ("REIT") under the Internal Revenue Code and intends to
maintain its qualification as a REIT in the future. As a REIT, the Company is
allowed to reduce taxable income by all or a portion of its distribution to
shareholders. As distributions have exceeded taxable income, no provision for
federal or state income taxes has been recorded.
A real estate investment trust is required to distribute to shareholders at
least 95% of its ordinary taxable income and meet certain income source and
investment restriction requirements. Taxable income differs from net income for
financial reporting purposes principally because of differences in the amount
and timing of depreciation of the properties. At December 31, 1995, the income
tax basis, net of accumulated tax depreciation, of the Company's real estate
properties was approximately $263 million.
Earnings Per Share. Primary earnings per share are based upon weighted
average number of shares outstanding. The weighted average number of shares
outstanding were 8,690,063 in 1995, 8,914,054 in 1994, and 7,345,991 in 1993.
Fully-diluted per share amounts are similarly computed, but include the
effect, when dilutive, of the Company's common stock equivalents. The Company's
outstanding Debentures and options are excluded in these calculations for 1995
and 1994, due to their antidilutive effect.
Preferred Stock. The rights and preferences of the Company's authorized
preferred stock may be fixed by the Board of Directors.
Extraordinary Item. Expenses incurred in 1993, in connection with the early
extinguishment of a $22 million mortgage note payable, are reflected in the
1993 Consolidated Statement of Income as an extraordinary item.
Use of Estimates. The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from these estimates.
NOTE B: REAL ESTATE INVESTMENTS
In 1995, the Company acquired an apartment property and additional outparcels
and other developable land adjacent to several retail centers owned by the
Company for approximately $5,594,000.
In 1994, the Company acquired a regional enclosed shopping mall, an apartment
property, and additional outparcels and other developable land adjacent to
several retail centers owned by the Company
24
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
for approximately $64,340,000. In connection with the acquisition of these
properties, the Company assumed mortgage notes payable totalling $22,750,000
(see Note E).
In 1993, the Company acquired a community shopping center, a power shopping
center, and four apartment properties for approximately $64,333,000. In
connection with the acquisition of these properties, the Company assumed
mortgage notes payable totalling $6,987,000 (see Note E).
NOTE C: REAL ESTATE OPERATIONS
The Company's principal business is investing in shopping centers and
apartment communities, located in the southern United States. Tenants in the
Company's shopping centers include national, regional, and local retailers.
Most of the Company's shopping center leases provide for the payment of fixed
monthly rentals (minimum rents), reimbursement of common area maintenance,
utilities, taxes and insurance expenses, and payment of additional rents based
upon a percentage of retail sales in excess of stated minimums. The non-
cancellable portions of such lease terms range from one year for smaller tenant
spaces to forty years for larger tenant spaces.
Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of cash and cash equivalents with high credit-
quality financial institutions. With respect to accounts receivable and accrued
revenue, the Company believes that such items do not represent significant
concentrations of credit risk at December 31, 1995 and 1994, due to diversity
in the Company's tenant base and its geographical dispersion throughout the
southern United States.
Rents and other income in the Company's Consolidated Statements of Income
include reimbursed expenses, comprised of the following items:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Common area maintenance................. $2,841,000 $2,238,000 $1,496,000
Utility service charges................. 1,011,000 819,000 718,000
Real estate tax and insurance........... 1,631,000 1,407,000 917,000
Other tenant income..................... 817,000 800,000 476,000
Other income............................ 717,000 381,000 97,000
---------- ---------- ----------
$7,017,000 $5,645,000 $3,704,000
========== ========== ==========
</TABLE>
The Company's shopping centers are leased to tenants under operating leases.
The future minimum rents on non-cancellable operating leases at December 31,
1995, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------------
<S> <C>
1996......................................................... $ 16,329,000
1997......................................................... 15,175,000
1998......................................................... 14,093,000
1999......................................................... 13,178,000
2000......................................................... 11,804,000
Thereafter................................................... 76,654,000
------------
$147,233,000
============
</TABLE>
The above amounts do not include rental income that is based on tenants'
sales or reimbursed expenses.
25
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE D: NOTES PAYABLE
The Company's mortgage notes payable at December 31, 1995 and 1994, are as
follows:
<TABLE>
<CAPTION>
SECURED BY LAND, BALANCE
BUILDINGS, AND OUTSTANDING AT
IMPROVEMENTS, DECEMBER 31,
PRINCIPAL INTEREST WITH BOOK VALUE ON -----------------------
MATURITY RATE(C) DECEMBER 31, 1995 1995 1994
--------- -------- ------------------ ----------- -----------
<S> <C> <C> <C> <C>
September 1, 1996........... 9.750% $ 4,565,000 $ 3,465,000 $ 3,514,000
November 1, 1996(a)......... 8.350% -- -- 22,750,000
March 1, 1997............... 9.000% 3,359,000 2,229,000 2,263,000
December 1, 1999............ 10.875% 4,532,000 3,561,000 3,590,000
February 1, 2000(b)......... 9.465% 18,881,000 12,025,000 --
February 1, 2000(b)......... 9.465% 12,250,000 7,800,000 --
May 1, 2000................. 8.350% 27,795,000 16,000,000 --
July 1, 2000................ 8.250% 10,530,000 6,852,000 6,915,000
November 1, 2000............ 7.700% 3,791,000 3,000,000 2,222,000
November 1, 2000............ 7.700% 3,975,000 3,600,000 293,000
November 1, 2000............ 7.700% 4,401,000 3,250,000 592,000
November 1, 2000............ 7.700% 5,036,000 3,220,000 --
November 1, 2000............ 7.700% 4,889,000 3,315,000 --
------------ ----------- -----------
$104,004,000 $68,317,000 $42,139,000
============ =========== ===========
</TABLE>
- --------
(a) This mortgage note was paid in full in August 1995.
(b) On January 17, 1996, the Company refinanced these mortgage notes, thereby
reducing the fixed rates of interest to 7.44%. The new mortgage notes total
$20 million and mature on February 1, 2001.
(c) The weighted average interest rate on mortgage debt at December 31, 1995
was 8.73%. Adjusted for the January 17, 1996 refinancing, the weighted
average interest rate was 8.14%.
Future principal payments on the Company's mortgage notes payable at December
31, 1995, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1996.......................................................... $ 3,602,000
1997.......................................................... 2,304,000
1998.......................................................... 118,000
1999.......................................................... 3,542,000
2000.......................................................... 58,751,000
-----------
$68,317,000
===========
</TABLE>
In May 1993, the Company completed an offering of $65 million of 8%
convertible subordinated debentures (the "debentures"), due 2003 (less $2.6
million of underwriting costs). The debentures are convertible into common
stock of the Company, based on $13.00 per share, at any time prior to maturity,
unless previously redeemed. During 1994 and 1993, $77,000 and $2,045,000 of
debentures were converted 5,922 and 157,307 shares of common stock,
respectively. No debentures were converted in 1995.
The Company has commitments for lines of credit from commercial banks
totalling $95 million, of which $44 million was available at December 31, 1995.
The weighted average interest rate was 8.55% and 7.73% for the years ended
December 31, 1995 and 1994, respectively. The terms of the agreements for the
bank lines of credit are renewable on an annualized basis, and generally
provide for the right of the banks to terminate such commitments and to
accelerate all outstanding advances upon the occurrence of any material
26
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
adverse change in the financial condition or operations of the Company. In
addition, the bank credit agreements also contain restrictive covenants that
impose maximum borrowing levels by the Company through the maintenance of
prescribed debt-to-equity or other financial ratios. The Company was in
compliance with the debt covenant agreements at December 31, 1995.
NOTE E: STOCK OPTION AND OWNERSHIP PLANS
At December 31, 1995, the Company had a 1986 Stock Option Plan (the "1986
Plan") under which an aggregate of 350,000 shares of Common Stock are currently
reserved for issuance upon exercise of options granted thereunder. Under the
1986 Plan, 10-year options may be granted to key employees and are annually
granted to directors at the fair market value of the Company's Common Stock at
the date of grant.
Activity under the 1986 Plan is summarized below:
<TABLE>
<CAPTION>
1995 1994 1993
------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
January 1.............. 275,500 $8.50-17.38 296,500 $ 8.50-17.38 201,000 $ 8.50-17.38
Granted............... 36,000 $9.94-10.19 22,000 $12.69-13.56 100,500 $11,75-13.56
Exercised............. (2,000) $8.50- 8.75 (10,000) $ 8.75 (5,000) $11.94
Expired............... -- (33,000) $ 8.50-13.75 -- $-0-
------- ----------- ------- ------------ ------- ------------
Outstanding at
December 31............ 309,500 $8.50-17.38 275,500 $ 8.50-17.38 296,500 $ 8.50-17.38
======= ======= =======
</TABLE>
At December 31, 1995 and 1994, options for 235,750 shares and 183,000 shares,
respectively, were exercisable, with prices ranging from $8.50 to $17.38 per
share. Shares available for future grant under the 1986 Plan totalled 11,500 at
December 31, 1995.
The 1994 Directors' Stock Ownership Plan, effective in January 1994, provides
that directors of the Company who are not salaried officers of the Company are
entitled to receive an annual director's fee of 750 shares. The number of
shares entitled has been amended to 1,000 shares, effective January 1, 1996.
Alternatively, a director may elect to be paid a cash substitute, equal to 90%
of the value of the shares for which the director elects the cash substitute,
in lieu of all or part of the annual stock award. In 1995 and 1994, 5,250 and
4,500 shares were issued, respectively.
NOTE F: RELATED PARTY TRANSACTIONS
The Company has a contract with Sizeler Real Estate Management Co., Inc. (the
"Management Company") to manage the Company's real estate properties. Certain
of the Company's shareholders and an officer have an ownership interest in
Sizeler Realty Co., Inc. ("Sizeler Realty"), the parent of the Management
Company. The agreement is renewable annually, subject to the approval of a
majority of the unaffiliated directors of the Company, and subject to the
termination rights of the parties. The management agreement may be terminated
for any reason by either party upon 180 days' written notice.
The management fee for 1995, 1994, and 1993 is based on the Company's gross
investment in real estate, adjusted for year-to-year increases (or decreases)
in funds from operations per share of the Company. The annual management fee,
which is calculated based upon .65% of the Company's gross investment in real
estate at the beginning of each year, is paid ratably on a monthly basis,
adjusted for acquisitions or dispositions of property during a year. At the end
of each year, the management fee for that year will be adjusted (either upward
or downward) by the percentage increase or decrease in the Company's funds from
operations per share, compared to the previous year. Accordingly, the
management fee paid to the Management Company for 1995 was adjusted to .643% of
the Company's gross investment in real estate due to a small decline in 1995
funds from operations per share as compared to 1994. The Management Company
27
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
also receives a leasing fee equal to 3% of the total fixed minimum rent payable
for retail properties during the term of a new lease (2.5% on renewal leases).
In addition to management and leasing fees, the Management Company is
reimbursed for certain administrative expenses of the Company.
Under the management contract, the Company made cash payments to the
Management Company of $2,591,000, $1,779,000, and $1,468,000 in 1995, 1994, and
1993, respectively. At December 31, 1995 and 1994, no amounts were accrued or
payable for such services.
The Company leases approximately 14,000 s.f. at the Westland Shopping Center
to Sizeler Realty, where it maintains its principal executive offices. Under
this lease, Sizeler Realty paid annual rent, including expense reimbursements,
of $96,000 in 1995, and $94,000 in 1994 and 1993. The lease provides for three
five-year renewal options.
The Company holds its interest in the Westland Shopping Center pursuant to a
long-term ground lease, expiring on December 31, 2046, with Trusts of certain
family members of an officer and director of the Company. During 1995, 1994,
and 1993, the Company paid $52,000, $51,000, and $47,000, respectively, under
this lease.
In March 1991, the Company purchased a 50% interest in the Southwood Shopping
Center ("Southwood") from Sizeler Realty (LaPalco), Inc. ("LaPalco"), a wholly-
owned subsidiary of Sizeler Realty, for $900,000. Southwood is subject to a
long-term ground lease from certain family members of an officer and director
of the Company, expiring on March 31, 2031. The rent under the ground lease is
50% of cash flow up to a maximum of $225,000, and, in the event the rental
payment shall reach $225,000 in any year, it shall remain fixed at $225,000 for
each year there-after. No ground rent was payable under the lease agreement in
1995, 1994, or 1993. LaPalco is the primary obligor on a $1,355,000 mortgage
note payable, guaranteed by Sizeler Realty, which LaPalco is solely obligated
to pay out of its partnership distributions or other sources. Although the
Company is not an obligor on the mortgage note payable, the partnership's
interest in Southwood is subordinated to the mortgage encumbering the property.
The Company incurred $33,000, $34,000, and $41,000 in 1995, 1994, and 1993,
respectively, for maintenance services provided by an affiliate of the
Management Company.
A director and officer of the Company is a director of Hibernia National Bank
("Hibernia"). At December 31, 1995, $20 million of the Company's $95 million
bank lines of credit was provided by Hibernia. The Company had borrowings under
this line totalling $12 million and $13 million at December 31, 1995 and 1994,
respectively.
NOTE G: DIVIDEND DISTRIBUTION
The dividends paid in 1995, 1994, and 1993 for federal income tax purposes
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Taxable income............... $3,080,000 $0.40 $6,156,000 $ .72 $3,425,000 $ .62
Return of capital............ 6,643,000 0.72 3,650,000 .38 3,756,000 .43
---------- ----- ---------- ----- ---------- -----
$9,723,000 $1.12 $9,806,600 $1.10 $7,181,000 $1.05
========== ===== ========== ===== ========== =====
</TABLE>
NOTE H: SUBSEQUENT EVENTS
On March 5, 1996, the Company paid a $.22 per share quarterly dividend, to
shareholders of record as of February 21, 1996.
28
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE I: CASH FLOWS
The Company completed mortgage financing involving nine apartment properties
during 1995, incurring mortgage notes payable totalling $52,210,000. The
Company, in connection with the purchase of real estate properties, assumed
mortgage notes payable in 1994 and 1993 with principal balances totalling
$22,750,000 and $6,987,000, respectively.
Cash interest payments made in 1995, 1994, and 1993 totalled $14,631,000,
$10,250,000, and $5,309,000, respectively.
NOTE J: COMMITMENTS AND CONTINGENCIES
The Company's officers defer a portion of their current compensation. Total
charges to earnings associated with such deferred compensation were $294,000,
$218,000, and $199,000 in 1995, 1994, and 1993, respectively.
The Company maintains a policy of directors' and officers' liability
insurance, which provides coverage for the Company's officers and directors
under the corporate indemnity of officers' and directors' provisions in the
policy. The policy does not provide coverage of corporate defense costs.
Management filed a claim under the terms of the insurance policy to recover a
significant amount of the legal expense related to the defense of the Company's
officers and directors, and was refunded $428,000 of such legal fees in 1995,
resulting in settlement of the Company's claim. The Company had recorded a
receivable in the amount of $312,000 at December 31, 1994, to recover such
legal fees.
The Company, from time to time, may be subject to litigation arising from the
conduct of its business. Management of the Company does not believe that any
existing litigation involving the Company will materially affect its financial
condition or future results of operations.
NOTE K: MINORITY INTEREST IN REAL ESTATE PARTNERSHIP
The Company, directly or through wholly-owned subsidiaries, owns its
interests in its Louisiana-based properties (with the exception of the
Southwood Shopping Center) through separate partnerships, in which the Company
has a 99% interest and its partner has a 1% interest. In each case, its partner
is a wholly-owned subsidiary of Sizeler Realty (see Note G). The Company's
consolidated financial statements include 100% of the assets, liabilities, and
operations of its Louisiana-based properties. Sizeler Realty's ownership
portion is reflected in the Company's consolidated financial statements as
minority interest.
NOTE L: SHAREHOLDERS' RIGHTS PLAN
In 1989, the Company's Board of Directors adopted a shareholders' rights plan
(the "Plan") and simultaneously declared a dividend of one share purchase right
("right") for each outstanding share of the Company's Common Stock outstanding
at May 19, 1989 and any stock subsequently issued. The rights do not become
exercisable until the earlier of (i) the date of the Company's public
announcement that a person or affiliated group has acquired, or obtained the
right to, beneficial ownership of 20% or more of the Company's Common Stock,
(ii) ten business days following the commencement of a tender offer that would
result in a person or affiliated group owning 30% or more of the Company's
common stock of or (iii) ten business days after the Company's Board of
Directors determines that a person or affiliated group has become the
beneficial owner of at least 15% of the Company's Common Stock and that person
or affiliated group intends to sell these shares back to the Company causing a
material adverse impact to the Company.
29
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The exercise price of a right has been established at $60. Once exercisable,
each right would entitle the holder to purchase common stock of the company
having a value equal to two times the value of the right. The rights expire on
May 19, 1999.
NOTE M: QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized (unaudited) quarterly financial data for the years ended 1995 and
1994 are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED IN 1995
-----------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues............................. $10,520 $10,611 $10,759 $11,303
Income before gains (losses) and
extraordinary item.................. $ 695 $ 621 $ 693 $ 685
Net income........................... $ 695 $ 621 $ 693 $ 685
Net income per share................. $ 0.08 $ 0.07 $ 0.08 $ 0.08
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED IN 1994
-----------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues.............................. $ 7,741 $8,702 $9,907 $10,346
Income before gains (losses).......... $ 1,605 $1,476 $1,043 $ 1,024
Net income............................ $ 1,613 $1,476 $1,043 $ 1,024
Net income per share.................. $ 0.18 $ 0.17 $ 0.12 $ 0.11
</TABLE>
NOTE N: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of SFAS No. 107, Disclosure about
Fair Value of Financial Instruments. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies and are described in the following paragraphs.
The carrying amounts of cash and cash equivalents, accounts receivable and
accrued revenue, accounts payable, accrued expenses and deposits approximate
fair value because of the short maturity of these items. The carrying amounts
of notes payable outstanding under the Company's lines of credit with
commercial banks approximate fair value because the interest rates on these
instruments change with market interest rates.
The carrying value of mortgage notes payable is $68.3 million and $42.1
million at December 31, 1995 and 1994, respectively, while the estimated fair
value is $70.9 million and $41.4 million, respectively. The estimated fair
value is based upon interest rates available to the Company for issuance of
similar debt with similar terms and remaining maturities. The estimated fair
value of the Company's 8% convertible subordinated debentures, with a carrying
value of $62.9 million at December 31, 1995 and 1994, was $54.2 million and
$56.6 million, respectively, based upon the quoted market prices of the
securities as of the end of the respective years.
Fair value estimates are subject to certain inherent limitations. Estimates
of fair value are made at a specific point in time, based on relevant market
information and information about the financial instrument. The estimated fair
values of financial instruments presented below are not necessarily indicative
of amounts the Company might realize in actual market transactions. Estimates
of fair value are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
30
<PAGE>
SCHEDULE II
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------- ---------- ----------
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO END
OF PERIOD OPERATIONS DEDUCTIONS OF PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for doubtful accounts... $321,000 $214,000 $369,000 $166,000
-------- -------- -------- --------
TOTAL........................... $321,000 $214,000 $369,000 $166,000
======== ======== ======== ========
Year ended December 31, 1994
Allowance for doubtful accounts... $261,000 $134,000 $ 74,000 $321,000
-------- -------- -------- --------
TOTAL........................... $261,000 $134,000 $ 74,000 $321,000
======== ======== ======== ========
Year ended December 31, 1993
Allowance for doubtful accounts... $206,000 $151,000 $ 96,000 $261,000
-------- -------- -------- --------
TOTAL........................... $206,000 $151,000 $ 96,000 $261,000
======== ======== ======== ========
</TABLE>
31
<PAGE>
SCHEDULE III
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ----------- ------------------------ ------------- ------------------------------------- ------------
COST
CAPITALIZED
SUBSEQUENT TO GROSS AMOUNT AT WHICH
INITIAL COST TO COMPANY ACQUISITION CARRIED AT CLOSE OF PERIOD
------------------------ ------------- -------------------------------------
BUILDINGS & NET BUILDINGS & ACCUMULATED
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
----------- ----------- ----------- ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Regional enclosed
malls:
Hammond Square
Mall............. $ 0 $ 2,574,000 $ 23,664,000 $ 924,000 $ 2,364,000 $ 24,798,000 $ 27,162,000 $ 5,541,000
North Shore
Square Mall...... 0 4,000,000 30,150,000 2,681,000 4,034,000 32,797,000 36,831,000 1,575,000
Southland Mall... 0 2,408,000 28,289,000 10,577,000 2,917,000 38,357,000 41,274,000 7,846,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
0 8,982,000 82,103,000 14,182,000 9,315,000 95,952,000 105,267,000 14,962,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
Power shopping
centers:
Lantana Plaza.... 0 6,000,000 14,107,000 2,270,000 7,808,000 14,569,000 22,377,000 864,000
Westward......... 0 5,676,000 13,506,000 2,586,000 5,677,000 16,091,000 21,768,000 1,556,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
11,676,000 27,613,000 4,856,000 13,485,000 30,660,000 44,145,000 2,420,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
Community
shopping centers:
Airline Park..... 0 977,000 1,037,000 48,000 977,000 1,085,000 2,062,000 265,000
Azalea Gardens... 0 574,000 806,000 488,000 574,000 1,294,000 1,868,000 267,000
Camelot Plaza.... 2,229,000 993,000 2,281,000 324,000 1,126,000 2,472,000 3,598,000 239,000
Colonial......... 0 554,000 555,000 253,000 559,000 803,000 1,362,000 239,000
Delchamps Plaza.. 3,561,000 713,000 4,381,000 44,000 713,000 4,425,000 5,138,000 606,000
Rainbow Square... 3,465,000 970,000 4,443,000 90,000 984,000 4,519,000 5,503,000 938,000
Town & Country... 0 860,000 3,194,000 717,000 1,491,000 3,280,000 4,771,000 171,000
Weeki Wachee..... 0 2,185,000 4,179,000 597,000 2,815,000 4,146,000 6,961,000 905,000
Westgate......... 0 1,809,000 2,162,000 635,000 1,774,000 2,832,000 4,606,000 750,000
Westland......... 0 0 3,068,000 1,980,000 0 5,048,000 5,048,000 1,046,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
9,255,000 9,635,000 26,106,000 5,176,000 11,013,000 29,904,000 40,917,000 5,426,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
Apartments:
Bel Air.......... 3,250,000 500,000 3,674,000 589,000 500,000 4,263,000 4,763,000 362,000
Bryn Mawr........ 6,852,000 1,575,000 9,020,000 498,000 1,575,000 9,518,000 11,093,000 563,000
Colonial Manor... 0 212,000 771,000 272,000 212,000 1,043,000 1,255,000 250,000
Garden Lane...... 3,600,000 500,000 3,117,000 689,000 500,000 3,806,000 4,306,000 331,000
Georgian......... 0 839,000 2,420,000 941,000 839,000 3,361,000 4,200,000 326,000
Hampton Park..... 5,460,000 1,305,000 6,616,000 1,517,000 1,305,000 8,133,000 9,438,000 601,000
Jamestown........ 3,220,000 712,000 4,035,000 397,000 712,000 4,432,000 5,144,000 108,000
Lafayette Square. 12,025,000 2,632,000 14,282,000 3,477,000 2,632,000 17,759,000 20,391,000 1,336,000
Lakeview Club.... 16,000,000 4,400,000 23,200,000 1,308,000 4,400,000 24,508,000 28,908,000 1,113,000
Magnolia Place... 0 175,000 2,050,000 335,000 175,000 2,385,000 2,560,000 328,000
Pine Bend........ 2,340,000 450,000 3,029,000 358,000 450,000 3,387,000 3,837,000 266,000
Steeplechase..... 3,000,000 458,000 3,068,000 956,000 594,000 3,888,000 4,482,000 323,000
Woodcliff........ 3,315,000 695,000 4,047,000 473,000 695,000 4,520,000 5,215,000 326,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
59,062,000 14,453,000 79,329,000 11,810,000 14,589,000 91,003,000 105,592,000 6,233,000
----------- ----------- ------------ ----------- ----------- ------------ ------------ -----------
TOTAL........... $68,317,000 $44,746,000 $215,151,000 $36,024,000 $48,402,000 $247,519,000 $295,921,000 $29,041,000
=========== =========== ============ =========== =========== ============ ============ ===========
<CAPTION>
COLUMN A COLUMN G COLUMN H COLUMN I
-------- ---------------- -------- ------------
LIFE ON
WHICH
DEPRECIATION
IN LATEST
INCOME
DATE OF DATE STATEMENTS
DESCRIPTION CONSTR. ACQUIRED IS COMPLETED
----------- ---------------- -------- ------------
<S> <C> <C> <C>
Regional enclosed
malls:
Hammond Square
Mall............. 1978 1987 10-40 Yrs.
North Shore
Square Mall...... 1986 1994 10-40 Yrs.
Southland Mall... 1970, 1981, 1994 1986 10-40 Yrs.
Power shopping
centers:
Lantana Plaza.... 1992 1993 10-40 Yrs.
Westward......... 1961, 1990, 1995 1992 10-40 Yrs.
Community
shopping centers:
Airline Park..... 1973 1987 10-40 Yrs.
Azalea Gardens... 1950 1987 10-40 Yrs.
Camelot Plaza.... 1981 1992 10-40 Yrs.
Colonial......... 1967 1987 10-40 Yrs.
Delchamps Plaza.. 1989 1991 10-40 Yrs.
Rainbow Square... 1986 1988 10-40 Yrs.
Town & Country... 1989 1993 10-40 Yrs.
Weeki Wachee..... 1987 1988 10-40 Yrs.
Westgate......... 1964 1987 10-40 Yrs.
Westland......... 1966 1987 10-40 Yrs.
Apartments:
Bel Air.......... 1968, 1974 1992 10-40 Yrs.
Bryn Mawr........ 1991 1993 10-40 Yrs.
Colonial Manor... 1967 1987 10-40 Yrs.
Garden Lane...... 1966, 1971 1992 10-40 Yrs.
Georgian......... 1951, 1980 1992 10-40 Yrs.
Hampton Park..... 1977 1993 10-40 Yrs.
Jamestown........ 1971-1972 1995 10-40 Yrs.
Lafayette Square. 1969-1972 1993 10-40 Yrs.
Lakeview Club.... 1992 1994 10-40 Yrs.
Magnolia Place... 1984 1991 10-40 Yrs.
Pine Bend........ 1979 1992 10-40 Yrs.
Steeplechase..... 1982 1992 10-40 Yrs.
Woodcliff........ 1977 1993 10-40 Yrs.
TOTAL...........
</TABLE>
Note: This schedule does not include the Company's 50% interest in a real
estate partnership.
32
<PAGE>
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(CONTINUED)
Note (a) Changes in real estate owned were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of year......... $278,725,000 $202,530,000 $134,836,000
Additions during period:
Investment in properties........... 5,594,000 64,340,000 64,333,000
Improvements....................... 11,602,000 11,855,000 3,361,000
------------ ------------ ------------
Balance at end of year............... $295,921,000 $278,725,000 $202,530,000
============ ============ ============
</TABLE>
Note (b) Changes in accumulated depreciation of real estate assets owned were
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year............. $21,309,000 $15,409,000 $11,491,000
Additions during period:
Depreciation on real estate assets..... 7,732,000 5,900,000 3,918,000
----------- ----------- -----------
Balance at end of year................... $29,041,000 $21,309,000 $15,409,000
=========== =========== ===========
</TABLE>
Note (c) The income tax basis of real estate, net of accumulated tax
depreciation, is approximately $262,980,000 at December 31, 1995.
Note (d) Depreciation is provided by the straight-line method over the
estimated useful lives, which are as follows:
<TABLE>
<S> <C>
Buildings......................................................... 40 years
Parking Lots...................................................... 20 years
Tenant Improvements............................................... Lease term
</TABLE>
Note (e) The Company holds its interest in the Westland Shopping Center under a
long-term ground lease.
33
<PAGE>
FORM 10-K EXHIBITS
<TABLE>
<CAPTION>
NUMBER TITLE METHOD OF FILING
------ ----- ----------------
<C> <S> <C>
3.1A Restated Certificate of Incorporation, Incorporated by Reference(1)
as amended
3.1B Amendment No. 1 to Restated Certificate Incorporated by Reference(6)
of Incorporation, as amended
3.1C Amendment No. 2 to Restated Certificate Incorporated by Reference(12)
of Incorporation, as amended
3.2 Restated By-Laws as amended through Incorporated by Reference(8)
February 26, 1996
4.0A Form of Certificate for Common Stock, Incorporated by Reference(3)
$.01 par value
4.1A Indenture for the Registrant's 8% Incorporated by Reference(13)
Convertible Subordinated Debentures,
due 2003
4.2A Debenture for the Registrant's 8% Incorporated by Reference(13)
Convertible Subordinated Debentures,
due 2003
10.1A Management Agreement Incorporated by Reference(1)
10.1B Amendment No. 1 to Management Agreement Incorporated by Reference(3)
10.1C Amendment No. 2 to Management Agreement Incorporated by Reference(4)
10.1D Amendment No. 3 to Management Agreement Incorporated by Reference(10)
10.1E Amendment No. 5 to Management Agreement Incorporated by Reference(12)
10.1F Amendment No. 4 to Management Agreement Filed herewith
10.1G Amendment No. 6 to Management Agreement Filed herewith
10.1H Amendment No. 7 to Management Agreement Filed herewith
10.2 Form of Indemnification Agreement Incorporated by Reference(1)
(which the Company has entered into
with each officer and director)
10.3 Form of Right of First Refusal which Incorporated by Reference(2)
has been entered into by the Company
and each of Sidney W. Lassen and
Sizeler Realty Co., Inc.
10.4 The Company's 1986 Stock Option Plan, Incorporated by Reference(9)
as amended through January 25, 1991*
10.5 Form of Deferred Compensation Agreement Incorporated by Reference(11)
(the Company has such an agreement
with Sidney W. Lassen)*
10.6 The Company's 1989 Directors' Stock Incorporated by Reference(5)
Option Plan
10.7 Sizeler Property Investors, Inc. Incorporated by Reference(14)
Incentive Award Plan*
10.8 First Amendment to the Sizeler Property Incorporated by Reference(14)
Investors, Inc. Incentive Award Plan*
10.9 Sizeler Property Investors, Inc. 1994 Incorporated by Reference(16)
Directors' Stock Ownership Plan, as
amended
10.10 Agreement between the Company and Incorporated by Reference(14)
Sidney W. Lassen*
10.11 Agreement between the Company and Incorporated by Reference(15)
Thomas A. Masilla, Jr.*
10.12 Non-Elective Deferred Compensation Incorporated by Reference(15)
Agreement between Company and Thomas
A. Masilla, Jr. (The Company also has
a Non-Elective Deferred Compensation
Agreement with Sidney W. Lassen, which
is identical to Mr. Masilla's
agreement).*
19.1 The Company's Shareholder Rights Plan Incorporated by Reference(7)
dated as of April 28, 1989
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NUMBER TITLE METHOD OF FILING
------ ----- ----------------
<C> <S> <C>
19.2 First Amendment to Shareholder Rights Incorporated by Reference(8)
Plan
21 List of Subsidiaries Filed herewith
24.1 Consent of KPMG Peat Marwick LLP Filed herewith
24.2 Consent of Ernst & Young LLP Filed herewith
27 Financial Data Schedule Filed herewith
</TABLE>
- --------
(1) Incorporated by reference to the exhibits filed on November 5, 1986, with
the Company's original registration statement on Form S-11 (No. 33-9973).
(2) Incorporated by reference to the exhibits filed on November 24, 1986, with
Amendment No. 1 to the Company's registration statement on Form S-11.
(3) Incorporated by reference to the exhibits filed on January 14, 1987, with
Amendment No. 3 to the Company's registration statement on Form S-11.
(4) Incorporated by reference to the exhibits filed on February 6, 1987, with
Post-Effective Amendment No. 1 to the Company's registration statement on
Form S-11.
(5) Incorporated by reference to the Exhibit A to the Company's Proxy
Statement, dated March 23, 1989.
(6) Incorporated by reference to the exhibits to the Company's Form 10-K for
the year ended December 31, 1988.
(7) Incorporated by reference to the exhibit to the Company's Form 8-A, filed
on May 4, 1989.
(8) Incorporated by reference to the exhibits to the Company's Form 8-K, dated
February 27, 1996.
(9) Incorporated by reference to the Exhibit A to the Company's Proxy
Statement, dated April 5, 1991.
(10) Incorporated by reference to the exhibits filed with the Company's Form
10-K for the year ended December 31, 1990.
(11) Incorporated by reference to the exhibits filed with the Company's Form
10-K for the year ended December 31, 1991.
(12) Incorporated by reference to the exhibits filed with the Company's Form
10-K for the year ended December 31, 1992.
(13) Incorporated by reference to the exhibits filed with the Company's Form 8-
K, dated May 26, 1993.
(14) Incorporated by reference to the exhibits filed on March 7, 1994, with the
Company's registration statement on Form S-3 (No. 33-76134).
(15) Incorporated by reference to the exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(16) Incorporated by reference to Exhibit B to the Company's definitive proxy
material for its 1996 Annual Meeting of Stockholders.
* Management compensation plan agreements.
35
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF OF THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Sizeler Property Investors, Inc.
/s/ Sidney W. Lassen
By: _________________________________
Sidney W. Lassen
Chairman of the Board (Principal
Executive Officer)
DATE: MARCH 27, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
By: /s/ Sidney W. Lassen Chairman of the Board March 27, 1996
- ------------------------------------ (Principal Executive
Sidney W. Lassen Officer)
By: /s/ Thomas A. Masilla, Jr. Vice Chairman, President and March 27, 1996
- ------------------------------------ Director (Principal
Thomas A. Masilla, Jr. Operating and Financial
Officer)
By: /s/ David A. O'Flynn, Jr. Controller/Secretary March 27, 1996
- ------------------------------------ (Principal Accounting
David A. O'Flynn, Jr. Officer)
By: /s/ J. Terrell Brown Director March 27, 1996
- ------------------------------------
J. Terrell Brown
By: /s/ Francis L. Fraenkel Director March 27, 1996
- ------------------------------------
Francis L. Fraenkel
By: /s/ Harold B. Judell Director March 27, 1996
- ------------------------------------
Harold B. Judell
By: /s/ James W. McFarland Director March 27, 1996
- ------------------------------------
James W. McFarland
By: /s/ Richard L. Pearlstone Director March 27, 1996
- ------------------------------------
Richard L. Pearlstone
By: /s/ Theodore H. Strauss Director March 27, 1996
- ------------------------------------
Theodore H. Strauss
</TABLE>
36
<PAGE>
EXHIBIT 10.1F
AMENDMENT NO. 4
TO
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of August 6, 1991, is by and between SIZELER PROPERTY
INVESTORS, INC., a Delaware corporation (the "Company"), and SIZELER REAL ESTATE
MANAGEMENT CO., INC., a Louisiana corporation (the "Manager"):
W I T N E S S E T H:
WHEREAS, the Company and the Manager are parties to a certain Management
Agreement dated as of December 28, 1986, as amended by Amendment No. 1 dated as
of December 29, 1986, Amendment No. 2 dated as of December 30, 1986, and
Amendment No. 3 dated as of April 12, 1988, (the "Management Agreement"); and
WHEREAS, the Company and the Manager desire to amend the Management
Agreement with respect to compensation to be paid to the Manager for its
Management Services hereunder with respect to multi-family residential property;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree that the following is hereby added to
the Management Agreement as an amendment to subsection (a) of Paragraph 6: "(1)
Four and one-half percent (4-1/2%) of gross revenue received directly or
indirectly from the routine operation of all non-residential Properties, five
percent (5%) of gross revenue received directly or indirectly from the routine
operation of all multi-family residential Properties, . . .". The amended
provisions of this subsection (a) of Paragraph 6 are effective as of the date
first above written.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the date first above written.
SIZELER REAL ESTATE MANAGEMENT CO., INC.
By: /s/ I. Marc Dusang, Jr.
-------------------------------------
I. Marc Dusang, Jr., President
SIZELER PROPERTY INVESTORS, INC.
By: /s/ John J. Gilluly, Jr.
--------------------------------------
John J. Gilluly, Jr., Vice President/
Treasurer
2
<PAGE>
EXHIBIT 10.1G
AMENDMENT NO. 6
TO
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of January 4, 1993, is by and between SIZELER
PROPERTY INVESTORS, INC., a Delaware corporation (the "Company"), and SIZELER
REAL ESTATE MANAGEMENT CO., INC., a Louisiana corporation (the "Manager"):
W I T N E S S E T H:
WHEREAS, the Company and the Manager are parties to a certain Management
Agreement dated as of December 28, 1986, as amended by Amendment No. 1, dated as
of December 29, 1986; Amendment No. 2 dated as of December 30, 1986; Amendment
No. 3, dated as of April 12, 1988; Amendment No. 4, dated as of August 6, 1991;
and Amendment No. 5, dated as of January 1, 1993 (the "Management Agreement");
and
WHEREAS, the Company and the Manager desire to amend the Management
Agreement with respect to compensation to be paid to the Manager for its
Management Services hereunder;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Subsection (b) of Section 4 of the Management Agreement is hereby deleted
in its entirety, and the following is substituted therefor:
(b) As between the Manager and the Company, the Company shall bear and
pay the entire cost of the development of the Properties, including all costs
incurred pursuant to this Agreement.
<PAGE>
2. Subparagraph (iv) of Section 6 (a) of the Management Agreement, is hereby
deleted in its entirety, and the following is substituted therefor:
"(iv) The Company shall reimburse the Manager for the actual costs,
including reasonable out-of-pocket expenses, incurred by the Manager's personnel
in performing Additional Services under this Agreement. In order to be
reimbursed or paid for any expenses incurred in connection with providing
Additional Services, the Manager must submit detailed itemization of such
expenses incurred."
3. Subsection (b) of Section 6 of the Management Agreement is hereby deleted
in its entirety.
The amended provisions of this agreement are effective as of the date first
above written.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the date first above written.
SIZELER REAL ESTATE MANAGEMENT CO., INC.
By: /s/ Charles H. Peterson
-------------------------------------
Charles H. Peterson, President
SIZELER PROPERTY INVESTORS, INC.
By: /s/ John J. Gilluly, Jr.
--------------------------------------
John J. Gilluly, Jr., Vice President/
Treasurer
2
<PAGE>
EXHIBIT 10.1H
AMENDMENT NO. 7
TO
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of October 1, 1995, is by and between SIZELER
PROPERTY INVESTORS, INC., a Delaware corporation (the "Company"), and SIZELER
REAL ESTATE MANAGEMENT CO., INC., a Louisiana corporation (the "Manager");
W I T N E S S E T H
WHEREAS, the Company and the Manager are parties to a certain Management
Agreement dated as of December 28, 1986, as amended, (the "Management
Agreement"); and
WHEREAS, the Company and the Manager desire to amend the Management
Agreement with respect to compensation to be paid to the Manager for its
Management Services hereunder;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Subsection (i) of Section 6 (a) of the Management Agreement (as amended
by Amendment No. 2, dated December 30, 1986, Amendment No. 4, dated August 6,
1991, and Amendment No. 5, dated January 1, 1993), is hereby deleted in its
entirety, and the following is substituted therefore:
"(i) A base management fee of sixty-five one-hundredths of one percent
(.65%) of the Company's gross investment in real properties. The term "gross
investment" is defined as the initial cost to the Company plus costs capitalized
subsequent to acquisition, computed without regard to deductions for
depreciation or amortization expense. With respect to properties managed by the
Manager that are owned by a partnership or joint venture in which the Company is
a partner, the base fee shall be calculated on the partnership's or joint
venture's gross investment in such properties, determined as hereinabove set
forth.
For each fiscal year, the Company's gross investment in real properties
shall be determined with reference to Schedule III (Real Estate and Accumulated
Depreciation) to the Company's Form 10-K of the preceding fiscal year. Changes
in the Company's gross investment in any of its properties as a result of
additional capitalized costs shall be taken into account in computing the base
management fee effective on the first day of the next succeeding calendar year
following the date the improvements made, relating to such capitalized costs,
are placed in service. Changes in the base fee payable with respect to property
acquisitions or dispositions shall become effective on the actual date of such
property acquisition or disposition. The Company's gross investment in
undeveloped land parcels shall not be taken into account in computing the base
management fee.
<PAGE>
With respect to each fiscal year, the base management fee shall be
increased or decreased by the percentage increase or decrease in the Company's
funds from operations per share, computed on a consistent basis, from the prior
to the current fiscal year. Funds from operations (FFO) shall be computed in
accordance with the definition of FFO as then adopted by the National
Association of Real Estate Investment Trusts (NAREIT). Any resulting increase or
decrease in the base management fee for a fiscal year shall be paid to the
Manager or reimbursed to the Company within sixty (60) days following the end of
each fiscal year. Notwithstanding such increase or decrease in the base
management fee for any particular fiscal year, the base management fee for each
successive fiscal year shall initially be calculated utilizing the percentage
rate as hereinabove set forth."
The amended provisions of this agreement are effective as of January 1,
1995.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the date first above written.
SIZELER REAL ESTATE MANAGEMENT CO., INC.
By: /s/ Thomas S. Davidson
-------------------------------------
Thomas S. Davidson, President
SIZELER PROPERTY INVESTORS, INC.
By: /s/ John J. Gilluly, Jr.
--------------------------------------
John J. Gilluly, Jr., President/
Treasurer
2
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name of Corporation State of Incorporation
- ------------------- -----------------------
<S> <C>
Clearwater Acquisition Corporation Delaware
Lafayette Acquisition Corporation Delaware
Realty Acquisition Corporation Delaware
SPIALA Corporation Delaware
SPIANTONIO, Inc. Delaware
SPIAPT, Inc. Alabama
SPIAPTLA, Inc. Delaware
SPIBILE, Inc. Alabama
SPICLIFF, Inc. Delaware
SPICOM, Inc. Alabama
SPICOMLA, Inc. Delaware
SPIDAY, Inc. Delaware
SPIDELA, Inc. Delaware
SPILAF, Inc. Alabama
SPILAKE, Inc. Delaware
SPILAN, Inc. Delaware
SPILOT, Inc. Alabama
SPIMALL, Inc. Alabama
SPIMALLA, Inc. Delaware
SPINAP, Inc. Delaware
SPINELLON, Inc. Delaware
SPINO, Inc. Delaware
SPIPAL, Inc. Delaware
SPIPOWER, Inc. Alabama
SPITON, Inc. Alabama
SPITOWN, Inc. Delaware
SPIWACHEE, Inc. Delaware
SPIWARD, Inc. Delaware
</TABLE>
<PAGE>
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Sizeler Property Investors, Inc.:
We consent to incorporation by reference in the registration statement (No.
33-76134) on Form S-3 of Sizeler Property Investors, Inc. of our report dated
February 1, 1996, relating to the consolidated balance sheet of Sizeler
Property Investor, Inc. and subsidiaries as of December 31, 1995 and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended, and the related financial statement schedules, which
report appears in the December 31, 1995, annual report on Form 10-K of Sizeler
Property Investors, Inc.
KPMG Peat Marwick LLP
New Orleans, Louisiana
March 27, 1996
<PAGE>
EXHIBIT 24.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Amendment No. 1 to Form S-3 No. 33-76134) and the related Prospectus of
Sizeler Property Investors, Inc. of our report dated February 3, 1995, with
respect to the consolidated financial statements and schedules of Sizeler
Property Investors, Inc. included in this Annual Report (Form 10-K) for the
year ended December 31, 1995.
Ernst & Young LLP
Jackson, Mississippi
March 27, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,274,000
<SECURITIES> 0
<RECEIVABLES> 3,254,000
<ALLOWANCES> 166,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 267,943,000
<DEPRECIATION> 29,044,000
<TOTAL-ASSETS> 281,857,000
<CURRENT-LIABILITIES> 54,181,000
<BONDS> 131,195,000
89,000
0
<COMMON> 0
<OTHER-SE> 95,234,000
<TOTAL-LIABILITY-AND-EQUITY> 281,847,000
<SALES> 0
<TOTAL-REVENUES> 43,193,000
<CGS> 0
<TOTAL-COSTS> 26,044,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,497,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,694,000
<EPS-PRIMARY> .31
<EPS-DILUTED> 0
</TABLE>
