<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 Commission File
December 31, 1999 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 Blvd. 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:
Name of each exchange on
------------------------
Title of each class which registered
------------------- ----------------
Common Stock, $.01 par value New York Stock Exchange
8% Convertible Subordinated
Debentures, due 2003 New York Stock Exchange
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 (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 $53,027,000 at March 14, 2000.
The number of shares of common stock outstanding at March 14, 2000, was
7,874,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the annual meeting
of its shareholders to be held in May 2000 are incorporated by reference in Part
III of this report.
<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, 1999, the Company's investment portfolio
included interests in three enclosed regional shopping malls, three power
shopping centers, ten community shopping centers, and fourteen apartment
communities. The properties are located in Louisiana (15), Florida (10), Alabama
(4), and Texas (1). Leasable area of the retail properties totalled
approximately 2.7 million s.f., and the apartment communities contained 3,397
units.
During 1999, the Company's retail and apartment properties were on average,
approximately 95% leased. However, at December 31, 1999 the Company's retail
properties were approximately 91% leased which is reflective of the Company
reacquiring possession of approximately 75,000 s.f. of gross leasable area -
35,000 s.f. by mutual agreement of the parties and 40,000 s.f. surrendered by
the tenant. Accordingly, the Company now has the opportunity to lease these
spaces at higher current market rates. The Company defines "leased" as an
executed conveyance whereby the tenant possesses the premises, including those
in which the tenant may not have commenced occupancy or rental payments.
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 taxable 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 primary objective is to maximize shareholder value through
internal growth (by employing an effective value-added asset management program
which emphasizes increasing funds from operations and the appreciation of
property values) and development of new properties. The Company may also make
opportunistic property acquisitions and participate with other entities in
property ownership, through joint ventures or other types of co-ownership.
The Company's strategy for growth is to (1) develop new properties within its
geographic region (the southern United States); (2) implement programs of
redevelopment or expansion of certain properties; and (3) acquire shopping
center and apartment properties in fundamentally strong markets in its
geographic region; and (4) improve the operating performance of those properties
through effective and efficient leasing and management programs.
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, to the extent practical,
intends to achieve a balanced portfolio of investments in shopping centers and
apartments. At December 31, 1999, approximately 60% of the Company's portfolio
consisted of investments in retail properties and 40% consisted of investments
in apartment communities.
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 these
markets, which will facilitate the Company's overall strategy to increase cash
flow and to enhance the value of its existing portfolio through: (1) maximizing
rental income by achieving an optimum level of rental rates and occupancy
levels; (2) operating properties in a cost-effective manner; (3) renovating
properties in order to maintain and improve its competitive position and
performance in the marketplace; and (4) assessing the most cost-effective
sources of capital to finance properties.
<PAGE>
The Company considers numerous factors in the evaluation of potential real
estate investments, including, but not limited to, the following:
--acquisition and/or development cost 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;
--availability of financing, including the possibility of assuming existing
financing or the potential for refinancing;
--condition, quality of design, construction, and other physical
attributes;
--current and expected economic environment of local and regional real
estate markets;
--the presence of or proximity to potential environmental issues;
--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.
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
Competition in the market areas in which the Company operates is significant and
affects acquisitions and/or development of properties, occupancy levels, rental
rates, and operating expenses of certain properties. The Company also competes
with a wide variety of institutions and other investors for capital funds
necessary to support its investment activities and asset growth.
The Company believes that the significant operating and financial experience of
management, combined with the Company's regional concentration, as well as the
location, quality, condition, and overall appearance of its properties, which
affect the attraction and retention of its tenants, should enable the Company to
continue to compete effectively with other entities.
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 to the Company relating to the Company's investment
properties, which would have a material adverse effect on the Company's
business, assets, or results of operations.
<PAGE>
The Company's guidelines require a Phase I environmental study prior to the
acquisition or development 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 investment in a property. The
Company does not presently maintain insurance coverage for environmental
liabilities.
The Company has asserted a claim against the operator of a property adjoining
one of the Company's properties with respect to spills of petroleum-based
substances on the adjoining property and their migration or potential migration
to Company property. The Company has been engaged in discussions with this
operator, which is one of the world's largest oil companies. The operator has
assumed responsibility for remediation with state environmental authorities and
has, subsequent to December 31, 1999, proposed a remediation plan, which the
Company is reviewing and discussing with the operator.
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.
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position(s) with the Company
- ---- --- ----------------------------
<S> <C> <C>
Sidney W. Lassen........... 65 Chairman of the Board and Chief Executive Officer
Thomas A. Masilla, Jr...... 53 Vice Chairman of the Board, President, and Principal Operating Officer
Robert A. Whelan........... 32 Chief Financial Officer
James W. Brodie............ 31 Secretary and Vice President of Acquisition and Development
</TABLE>
Mr. Lassen has been an executive officer of the Company since its inception in
1986, and has been involved in the acquisition, development, management, and
disposition of shopping center and apartment properties for approximately 40
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 Hibernia Corporation.
Mr. Masilla, a certified public accountant, was elected to the position of Vice
Chairman of the Company in 1994, Principal Operating Officer and President in
1995, 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 30 years, with
extensive experience in both the real estate and commercial bank industries.
Mr. Whelan joined the management team in May 1999. Mr. Whelan is a certified
public accountant and has 14 years of experience in the acquisition,
disposition, management, financing, and auditing of real estate properties.
Mr. Brodie has been involved in the acquisition, development, management, and
disposition of shopping center and apartment properties for approximately 11
years. He joined the company in May 1989.
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 service
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,
and residual entities of the estates of her mother and father.
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, for each property, the annual preparation of detailed
operating and capital budgets, accounting, data processing, collection of rents,
repairs, cleaning, maintenance, and other operating services. Upon request of
the Company, the Management Company also performs, or causes to be
<PAGE>
performed, additional services, such as development and re-development of
properties, advertising, promotion, market research, and other management
information, and may perform for fees, services for tenants and other third
parties.
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
the real estate and capital markets. The financial performance of the retail
properties are partially dependent upon the strength of retail sales, which are
directly affected by trends in employment and personal income. Apartment
properties are affected by market conditions, economic trends, and employment
conditions in the communities in which they are located.
Fifteen of the Company's properties, comprising approximately 46% of its
investment portfolio, are located in Louisiana. The Louisiana economy, since the
late 1980's, has experienced positive growth as reflected in higher levels of
employment and an increase in general economic activity. The national and global
economies also have an impact on Louisiana, particularly as they affect the
tourism, convention, energy, and port industries, which are important segments
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 in the Gulf South region. As of the date
of this filing, the Company has properties in Louisiana, Florida, Alabama, and
Texas.
Item 2. Properties
As of December 31, 1999, the Company's real estate portfolio included interests
in sixteen shopping centers and fourteen 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. Twelve of the Company's
properties were subject to mortgage loans at December 31, 1999.
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.
<PAGE>
The following table sets forth certain information concerning the Company's real
estate investments as of December 31, 1999:
<TABLE>
<CAPTION>
Percent
Gross Leasable Area Leased (c)
Year Year Last in Square Feet or December 31
-------------
Description Completed Renovated Rentable Units 1999 1998
- ----------- --------- --------- -------------- ---- ----
<S> <C> <C> <C> <C> <C>
Regional Enclosed Malls (3)
- ---------------------------
Hammond Square 1978 1992 365,000 85% 89%
(Hammond, Louisiana) 435,000 (a)
North Shore Square 1986 1995 356,000 97% 97%
(Slidell, Louisiana) 624,000 (a)
Southland Mall 1970, 1981 1994 465,000 89% 98%
(Houma, Louisiana) 619,000 (a)
Power Shopping Centers (3)
- --------------------------
Lantana Plaza 1992 1999 276,000 98% 98%
(Palm Beach County, Florida)
Town & Country 1989 --- 193,000 79% 99%
(Palatka, Florida)
Westward 1961, 1990 1995 227,000 100% 100%
(W. Palm Beach, Florida)
Community Shopping Centers (10)
- -------------------------------
Airline Park 1973 1986 71,000 92% 92%
(Metairie, Louisiana)
Azalea Gardens 1950 1986 45,000 100% 100%
(Jefferson, Louisiana)
Camelot Plaza 1981 1999 91,000 76% 84%
(San Antonio, Texas)
Colonial 1967 1987, 1999 45,000 100% 22%
(Harahan, Louisiana)
Delchamps Plaza 1989 --- 73,000 97% 100%
(Gonzales, Louisiana) 187,000 (a)
Rainbow Square 1986 --- 75,000 97% 100%
(Dunnellon, Florida) 117,000 (a)
Southwood (b) 1986 --- 40,000 100% 100%
(Gretna, Louisiana)
Weeki Wachee Village 1987 --- 82,000 90% 91%
(Weeki Wachee, Florida)
Westgate 1964 1987 208,000 93% 98%
(Alexandria, Louisiana)
Westland 1966 1990, 1999 108,000 62% 94%
(Kenner, Louisiana)
----------- ---- ----
2,720,000 91% (d) 95%
=========== ==== ====
Apartments (14)
- ---------------
Bel Air 1968, 1974 --- 202 units 94% 98%
(Mobile, Alabama)
Bryn Mawr 1991 1999 240 units 100% 99%
(Naples, Florida)
Colonial Manor 1967 1994 48 units 92% 100%
(Harahan, Louisiana)
Garden Lane 1966, 1971 1999 261 units 99% 100%
(Gretna, Louisiana)
Georgian 1951 1993 135 units 96% 99%
(New Orleans, Louisiana)
Governors Gate 1999 --- 240 units 90% 66%
(Pensacola, Florida)
Hampton Park 1977 1995 300 units 95% 96%
(Mobile, Alabama)
Jamestown Estates 1972 --- 177 units 93% 96%
(Pensacola, Florida)
Lafayette Square 1969-1972 1995, 1999 675 units 94% 94%
(Mobile, Alabama)
Lakeview Club 1992 --- 443 units 98% 96%
(Ft. Lauderdale, Florida)
Magnolia Place 1984 --- 148 units 93% 91%
(New Iberia, Louisiana)
Pine Bend 1979 --- 152 units 97% 97%
(Mobile, Alabama)
Steeplechase 1982 --- 192 units 92% 98%
(Lafayette, Louisiana)
Woodcliff 1977 1999 184 units 98% 95%
(Pensacola, Florida)
----------- ---- ----
3,397 units 96% 95%
=========== ==== ====
</TABLE>
<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.
Hammond Square and Southland Mall have stores owned by Dillard Department
Stores, Inc., comprising 70,000 s.f. and 154,000 s.f. of space,
respectively; North Shore Square Mall has stores owned by Dillard Department
Stores, Inc. comprising 116,000 s.f. and 77,000 s.f. of space, and Mervyn's
comprising 75,000 s.f. of space; Delchamps Plaza and Rainbow Square Shopping
Centers have stores owned by Wal-Mart Stores, Inc., comprising 114,000 s.f.
and 42,000 s.f., respectively.
(b) The Company has a 50% partnership interest in Southwood Shopping Center.
(c) The Company defines "leased" as an executed conveyance whereby the tenant
possesses the premises, including those in which the tenant may not have
commenced occupancy or rental payments. Percent leased for retail 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.
(d) During 1999, the Company's retail properties, on average, were approximately
95% leased. However, at December 31, 1999 the Company's retail properties
were approximately 91% leased which is reflective of the Company reacquiring
possession of approximately 75,000 s.f. of gross leasable area - 35,000 s.f.
by mutual agreement of the parties and 40,000 s.f. surrendered by the
tenant. Accordingly, the Company now has the opportunity to lease these
spaces at higher current market rates.
Item 3. Legal Proceedings.
The Company is not presently involved in any material litigation nor, to its
knowledge, is any material litigation threatened against the Company or its
properties, other than routine litigation arising in the ordinary course of
business or which is expected to be covered by the Company's liability
insurance.
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 1999.
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
The Company's shares of common stock ("shares") are listed for trading on the
New York Stock Exchange under the symbol "SIZ".
The following table sets forth the high and low sales price 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
High Low Paid
---------- --------- -----
<S> <C> <C> <C>
1999
----
1st Quarter.... $ 8 15/16 $ 7 15/16 $0.22
2nd Quarter.... 9 7/16 7 3/4 $0.22
3rd Quarter.... 9 1/8 8 1/4 $0.22
4th Quarter.... 8 11/16 8 $0.22
1998
----
1st Quarter.... $11 3/8 $10 5/16 $0.22
2nd Quarter.... 11 3/16 9 13/16 $0.22
3rd Quarter.... 10 5/16 8 5/8 $0.22
4th Quarter.... 9 3/16 8 1/16 $0.22
</TABLE>
As of March 14, 2000, there were 473 individually listed owners of record of the
Company's shares. Approximately 82% of the Company's outstanding shares are
held in nominee name 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.
The Company has paid dividends in each quarter since its inception as a publicly
owned company in 1987, with a cumulative total of approximately $85 million paid
to shareholders over this time period.
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 funds from operations,
financial requirements, tax considerations, and other factors. A portion of the
Company's dividends paid may be deemed capital gain income, 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 each of the five
years ended December 31 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ordinary Income $0.54 $0.62 $0.54 $0.37 $0.40
Return of Capital 0.34 0.27 (a) 0.34 0.51 0.72
Capital Gain --- --- --- --- ---
----- ----- ----- ----- -----
Total $0.88 $0.89 $0.88 $0.88 $1.12
===== ===== ===== ===== =====
</TABLE>
(a) Includes a $0.01 per share distribution for the redemption of stock
purchase rights in connection with the Company's adoption of a
replacement shareholder rights plan.
The Company has a direcct stock pruchase and dividend reinvestment plan pursuant
to which the Company's shareholders of record may use their dividends or invest
other funds to purchase additional shares. The Company has acquired shares for
the plan by open market purchases and newly issued shares. Brokerage commissions
on all such purchases are paid by the Company and are not charged to plan
participants.
<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
------------------------------------------------------------------------
OPERATING DATA /(1)/ 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Operating Revenue
Rents and Other Income $ 49,848 $ 47,680 $ 46,349 $ 44,353 $ 43,129
Equity in Income of
Partnership 121 111 94 103 106
-------- -------- -------- -------- -------------
49,969 47,791 46,443 44,456 43,235
Operating Expenses 32,604 30,481 29,280 27,630 26,044
-------- -------- -------- -------- -------------
INCOME FROM OPERATIONS 17,365 17,310 17,163 16,826 17,191
Interest Expense 15,018 14,554 14,608 14,542 14,497
-------- -------- -------- -------- -------------
INCOME BEFORE EXTRAORDINARY ITEM 2,347 2,756 2,555 2,284 2,694
Extraordinary Item - Early
Extinguishment of Debt - - - (449) -
-------- -------- -------- -------- -------------
NET INCOME $ 2,347 $ 2,756 $ 2,555 $ 1,835 $ 2,694
======== ======== ======== ======== =============
Funds From Operations /(2)/ $ 12,603 $ 12,284 $ 11,509 $ 10,771 $ 10,492
Net Cash Provided by (Used in):
Operating Activities $ 13,180 $ 12,510 $ 13,024 $ 13,583 $ 10,117
Investing Activities $ (9,912) $(17,020) $ (6,836) $ (7,555) $(17,857)
Financing Activities $ (3,081) $ 4,532 $ (5,528) $ (6,834) $ 7,591
Dividends Paid $ 6,938 $ 7,330 $ 7,413 $ 7,425 $ 9,723
Per Share Data:
Net Income $ 0.30 $ 0.33 $ 0.30 $ 0.22 $ 0.31
Dividends Paid $ 0.88 $ 0.88 $ 0.88 $ 0.88 $ 1.12
Weighted Average Shares Outstanding 7,888 8,331 8,423 8,433 8,690
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
BALANCE SHEET DATA
Gross Investment in Real Estate $339,306 $329,390 $311,216 $304,424 $296,884
Total Assets 286,061 285,886 276,345 278,380 281,857
Mortgage Notes Payable 84,712 89,869 90,615 68,080 68,317
Notes Payable 59,988 49,178 32,342 52,639 51,419
Convertible Subordinated
Debentures 61,878 62,878 62,878 62,878 62,878
Total Liabilities 215,108 209,669 191,818 189,013 186,534
Shareholders' Equity 70,953 76,217 84,527 89,367 95,323
</TABLE>
________________
/(1)/ See "Management's Discussion and Analysis of Financial Condition and
Results of Operations for information regarding factors such as property
development and other transactions which have affected operating
performance during the periods indicated.
/(2)/ Real estate industry analysts and the Company utilize the concept of funds
from operations (FFO) as an important analytical measure of a Real Estate
Investment Trust's financial performance, with FFO being defined by the
Company and the National Association of Real Estate Investment Trusts
(NAREIT) as net income, excluding gains or losses from sales of property
and those items defined as "extraordinary" under generally accepted
accounting principals (GAAP), plus depreciation on real estate assets, and
after adjustments for unconsolidated partnerships to reflect funds from
operations on the same basis.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this Annual Report
on Form 10-K. Historical results and percentage relationships, including trends
which might appear, set forth in the consolidated statements of income contained
in the consolidated financial statements, should not be taken as indicative of
future operations.
The Company's real estate investment portfolio is composed of sixteen retail
properties and fourteen apartment communities. As of December 31, 1999, the
Company's gross investment in real estate totalled $339 million, and consisted
of approximately 60%, or $204 million, in shopping centers, and approximately
40%, or $135 million, in apartments. Total revenue for 1999 was $50 million, and
consisted of approximately 56%, or $28 million, generated by the shopping center
properties, and approximately 44%, or $22 million, generated by the apartment
properties.
Results of Operations
Comparison of the years ended December 31, 1999, and 1998.
For the year ended December 31, 1999, operating revenue from shopping centers
and apartments increased approximately $584,000 and $1,594,000, respectively,
resulting in a combined total increase of approximately $2.2 million. The
increase in operating revenue is primarily attributable to the Governors Gate
Apartments complex, which was completed in the first quarter of 1999. In
addition, there were increases in rental rates coupled with market sustained
occupancy levels at the retail properties. Operating expenses, net of
depreciation, increased approximately $1.4 million in 1999 compared to 1998. The
increase in operating expenses associated with the retail properties is $408,000
and with the apartment properties is $1.0 million. The increase in operating
expenses was due to costs related to Governors Gate apartments as well as
increases in management and leasing fees, and other non-controllable costs.
Interest expense reflects a net increase of $464,000 resulting from activity
described below. During 1998, the Company refinanced mortgage debt on ten of its
apartment properties, resulting in a net decrease in mortgage interest expense
of $285,000. These mortgage notes payable are long-term, fixed-rate, non-
recourse instruments. The mortgage proceeds derived from the refinancings were
used to pay down bank debt resulting in lower bank line balances. Subsequently,
the Company drew on its bank lines to fund the following transactions: (i)
repaid a mortgage note payable on one of its retail centers; (ii) made contract
payments for the development of Governors Gate apartment community and a free-
standing Walgreens store (of which related interest has been capitalized); and
(iii) funded treasury share repurchases. As a result of the above activity, bank
line interest expense increased $895,000, and mortgage interest expense
decreased $431,000, resulting in a net increase of $464,000. The average bank
borrowings were approximately $54.0 million and $38.6 million for 1999 and 1998,
respectively, with an average rate of 6.8% and 7.6% respectively.
Comparison of the years ended December 31, 1998, and 1997.
For the year ended December 31, 1998, operating revenue from shopping centers
and apartments increased approximately $894,000 and $485,000, respectively,
resulting in a combined total increase of approximately $1.4 million. The
increase in operating revenue is primarily attributable to increases in rental
rates coupled with sustained occupancy levels at the properties, offset by the
effect of the new accounting method for recognizing percentage rental income for
the retail properties (see Note A of Notes to Consolidated Financial
Statements). Operating expenses, before depreciation, increased approximately
$677,000 in 1998 compared to 1997. The increase in operating expenses associated
with the retail properties is $396,000 and with the apartment properties is
$281,000. The increase in operating expenses is attributable to the following:
(i) an increase in management fees due to increases in investments in real
estate properties on which the management fee is based, and an increase in
leasing fees due to higher leasing activity in 1998; (ii) an increase in real
estate taxes due to increased property value assessments at certain properties;
and (iii) an increase in maintenance and administrative expenses due to higher
payroll costs, professional fees and other administrative costs associated with
the Company's real estate portfolio and capital structure. Depreciation
increased $524,000 due to capital improvements made to the Company's properties
during 1998 and 1997. Accordingly, income from operations totalled $17.3 million
in 1998, compared to $17.1 million in 1997, and income from operations, before
depreciation, totalled $27.4 million in 1998, compared to $26.7 million in 1997.
<PAGE>
Interest expense reflects a net decrease of $54,000 resulting from the following
activity completed within the past twelve months. In December 1997, mortgage
financing was completed at one of the Company's enclosed regional malls and has
increased interest expense approximately $1.8 million. In the second quarter of
1998, the Company refinanced mortgage debt on ten of its apartment properties,
and repaid a mortgage note payable on one of its retail centers, all of which
resulted in a reduction in interest expense totalling $394,000. The mortgage
proceeds derived from the mortgage financing and refinancing mentioned above
were used to pay down variable-rate bank debt and as a result, interest expense
on bank debt decreased $1.4 million. During 1998, the Company drew on its bank
lines to fund contract payments on the Governors Gate development in Florida,
and the related interest charges of $308,000 have been capitalized to the
development. The average bank borrowings were approximately $38.6 million and
$51.6 million for 1998 and 1997, respectively, with an average rate of 7.6% and
7.8%, respectively.
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, 1999, the Company had $1.3 million in cash and cash equivalents,
and commitments for a total of $85 million of bank lines of credit, of which
approximately $25 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 certain prescribed financial ratios.
Net cash flows provided by operating activities increased $670,000 in 1999 from
1998, as compared to a decrease of $514,000 in 1998 from 1997. The increase
between 1999 and 1998 is primarily attributable to a net increase in income from
operations before depreciation, as well as a net increase in operating
liabilities. The decrease between 1998 and 1997 is primarily attributable to a
net increase in operating assets over 1997, partially offset by an increase in
income from operations before depreciation.
Net cash flows used in investing activities decreased $7.1 million in 1999 from
1998, primarily due to the construction of Governors Gate apartments during
1998, which was completed in March 1999. This luxury 240-unit garden-style
apartment community, located in Florida, contributed positively to the Company's
increase in revenue for 1999. The decrease was partially offset by the
development of a freestanding Walgreens store at the Camelot Plaza Shopping
Center in San Antonio, Texas and the start of construction on a new Publix super
market at the Town and Country Shopping Center in Palatka, Florida. The Company
also acquired two parcels of land, one in Florida, and the other in Texas, which
can be used for future development. The Company had no other material
commitments for capital improvements at December 31, 1999.
Net cash flows used in investing activities increased $10.2 million in 1998 over
1997, resulting from the development of the Governors Gate apartments. As of
December 31, 1998 the Company had $14.0 million invested in this development.
Also during 1998, the Company acquired two parcels of land for future
development, totalling $611,000.
Net cash flows used in financing activities increased $7.6 million in 1999 from
1998 due to a net reduction of approximately $7.8 million in the utilization of
bank lines for development projects, as the development of Governors Gate
apartments was completed during the first quarter of 1999. This was partially
offset by a reduction of total cash dividends paid of approximately $392,000 in
1999 as compared to the prior year. Although the dividends paid per share
remained consistent, fewer common shares outstanding resulted in the reduction
of total cash dividends paid.
As of December 31, 1999, twelve of the Company's properties, comprising
approximately 45% of its gross investment in real estate, were subject to a
total of $84.7 million in mortgage debt, all of which are non-recourse and bear
a fixed rate of interest for a fixed term. The remaining eighteen properties in
the portfolio are currently unencumbered by mortgage debt. The Company
anticipates that its current cash balance, operating and investing 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 on existing properties, (v) development of new properties, and (vi)
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
<PAGE>
non-cash charges, principally depreciation of real estate assets, quarterly
dividends will typically be greater than net income and may include a tax-
deferred return of capital component. The Board of Directors, on February 3,
2000, declared a cash dividend with respect to the period October 1, 1999,
through December 31, 1999, of $0.22 per share, to shareholders of record as of
February 25, 2000.
Funds From Operations
Real estate industry analysts and the Company utilize the concept of funds from
operations as an important analytical 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.
Funds from Operations (FFO) is defined by the Company and the National
Association of Real Estate Investment Trusts (NAREIT) as net income, excluding
gains or losses from sales of property and those items defined as
"extraordinary" under generally accepted accounting principals (GAAP), plus
depreciation on real estate assets, and after adjustments for unconsolidated
partnerships to reflect funds from operations on the same basis. Funds from
operations do 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, including distributions to shareholders. 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. A reconciliation of net income to basic funds from
operations is presented below (in thousands).
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998
---- ----
($000) Shares ($000) Shares
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Net Income $ 2,347 7,888 $ 2,756 8,331
Additions:
Depreciation 10,845 10,145
Partnership depreciation 37 38
Deductions:
Minority depreciation 48 47
Amortization costs 578 608
-------- --------- ---------- ----------
Funds from Operations - Basic $ 12,603 7,888 $ 12,284 8,331
======== ========= =========== =========
</TABLE>
For the year ended December 31, 1999, funds from operations totalled $12.6
million, compared to $12.3 million in 1998, an increase of approximately
$300,000. This increase in funds from operations is primarily attributable to
internal growth and improved operating performance by the Company's retail and
apartment properties, which experienced overall revenue growth, primarily from
higher rental rates coupled with market sustained occupancy.
For the year ended December 31, 1998, funds from operations totalled $12.3
million, compared to $11.5 million in 1997, an increase of approximately
$800,000. This increase in funds from operations results from internal growth
and improved operating performance by the Company's real estate properties,
which experienced overall revenue growth, primarily from higher rental rates
coupled with market sustained occupancy.
Future Results
This Form 10-K and other documents prepared, and statements made by the Company,
may contain certain forward-looking statements that are subject to risk and
uncertainty. Investors and potential investors in the Company's securities are
cautioned that a number of factors could adversely affect the Company and cause
actual results to differ materially from those in the forward-looking
statements, including, but not limited to (a) the inability to lease current or
future vacant space in the Company's properties; (b) decisions by tenants and
anchor tenants who own their space to close stores at the Company's properties;
(c) the inability of tenants to pay rent and other expenses; (d) tenant
bankruptcies; (e) decreases in rental rates available from tenants; (f)
increases in operating costs at the Company's properties; (g) lack of
availability of financing for acquisition, development, and rehabilitation of
properties by the Company; (h) increases in interest rates; (i) Year 2000
issues; (j) a general economic downturn resulting in lower retail sales and
causing downward pressure on occupancies and rents at retail properties; as well
as (k) the adverse tax consequences if the Company were to fail to qualify as a
REIT in any taxable year; and (l) the competitive factors
<PAGE>
described in Item 1 -Competition of this report.
Year 2000 Issue
As of March 28, 2000, the Company has experienced no computer program
or hardware problems resulting from the arrival of Year 2000 (Y2K). In addition
it experienced no Y2K problems in its dealings with significant tenants and
vendors and suppliers of financial and other services (collectively "independent
third parties").
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. 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 pay a contribution towards property operating
expenses, thereby reducing the Company's exposure to higher costs caused by
inflation. The Company's apartment leases are written for short terms,
generally six to twelve months, and are adjusted according to changing market
conditions.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to interest rate changes primarily as a result of its
bank lines of credit and long-term debt used to maintain liquidity, and fund
capital expenditures and expansion of the Company's real estate investment
portfolio and operations. The Company's interest rate risk management objective
is to limit the impact of interest rate changes on earnings and cash flows, and
to optimize its overall borrowing costs. To achieve its objective, the Company
utilizes its variable LIBOR-based, short-term (one to six month maturities) bank
credit lines to fund new investments until such investments can be financed with
long-term fixed-rate mortgage debt. At December 31, 1999, borrowings under the
Company's bank lines of credit totaled $59,988,000, bore an average interest
rate of 6.84%, and had an approximate fair market value of $54,709,000.
Based on the balance of bank lines of credit outstanding at December 31, 1999
and the average interest rate during 1999, a 10% increase in variable interest
rates would increase the Company's interest expense in 2000 by approximately
$410,000.
As the bank lines of credit include those obligations that exist as of December
31, 1999, it does not consider those exposures or positions which could arise
after that date. Moreover, because firm commitments are not included in the
fair market value above, the information presented therein has limited
predictive value. As a result, the Company's ultimate realized gain or loss
with respect to interest rate fluctuations will depend on the exposures that
arise during the period and the level of interest rates.
Item 8. Financial Statements and Supplementary Data.
The Company's Consolidated Balance Sheets as of December 31, 1999 and 1998, and
its Consolidated Statements of Income, Shareholders' Equity, Cash Flows, and
Notes to Consolidated Financial Statements for the years ended December 1999,
1998, and 1997, together with the Reports 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 Notes to 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 changes in, nor disagreements with Accountants on accounting
and financial disclosures.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
For information regarding the 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.
<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>
Report of Independent Auditors 16
Consolidated Balance Sheets as of December 31, 1999, and 1998 17
Consolidated Statements of Income for the years ended December 31, 1999, 1998,
and 1997 18
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1999,
1998, and 1997 19
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998, and 1997 20
Notes to Consolidated Financial Statements 21
Financial Statement Schedules
Schedule II. Valuation and Qualifying Accounts 31
Schedule III. Real Estate and Accumulated Depreciation 32
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations 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.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Sizeler Property Investors, Inc.
We have audited the consolidated balance sheets of Sizeler Property Investors,
Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1999. In connection
with our audits 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 these consolidated financial statements and the financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sizeler Property
Investors, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, 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 LLP
New Orleans, Louisiana
February 4, 2000
except for Note H, as to
which the date is March 2, 2000
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Real estate investments (Note B)
Land $ 50,814,000 $ 49,814,000
Buildings and improvements, net of accumulated depreciation
of $66,162,000 in 1999 and $55,964,000 in 1998 221,413,000 222,699,000
Investments in real estate partnership (Notes A and F) 917,000 913,000
------------ ------------
273,144,000 273,426,000
Cash and cash equivalents 1,337,000 1,150,000
Accounts receivable and accrued revenue, net of allowance for
doubtful accounts of $430,000 in 1999 and $423,000 in 1998 2,938,000 2,829,000
Prepaid expenses and other assets, net 8,642,000 8,481,000
------------ ------------
Total Assets $286,061,000 $285,886,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable (Notes D and L) $ 84,712,000 $ 89,869,000
Notes payable (Note D) 59,988,000 49,178,000
Accounts payable and accrued expenses 7,703,000 6,866,000
Tenant deposits and advance rents 827,000 878,000
------------ ------------
153,230,000 146,791,000
Convertible subordinated debentures (Notes D and L) 61,878,000 62,878,000
------------ ------------
Total Liabilities 215,108,000 209,669,000
------------ ------------
SHAREHOLDERS' EQUITY (Notes E and K)
Preferred stock, 6,000,000 shares authorized, none issued ---- ----
Common stock, par value $.01 per share, 30,000,000
shares authorized
Shares issued and outstanding--9,085,000 in 1999 and 8,980,000 in 1998 91,000 90,000
Additional paid-in capital 128,604,000 127,750,000
Accumulated distributions in excess of net income (Note G) (47,288,000) (42,697,000)
------------ ------------
81,407,000 85,143,000
------------ ------------
Treasury shares, at cost, 1,176,000 shares in 1999 and 990,000 shares in 1998 (10,454,000) (8,926,000)
------------ ------------
Total Shareholders' Equity 70,953,000 76,217,000
------------ ------------
Total Liabilities and Shareholders' Equity $286,061,000 $285,886,000
============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING REVENUE (Note C)
Rents and other income $49,848,000 $47,680,000 $46,349,000
Equity in income of partnership 121,000 111,000 94,000
----------- ----------- -----------
49,969,000 47,791,000 46,443,000
----------- ----------- -----------
OPERATING EXPENSES (Note C)
Management and leasing
(Note F) 2,694,000 2,468,000 2,429,000
Utilities 2,050,000 1,999,000 2,004,000
Real estate taxes 3,693,000 3,692,000 3,446,000
Administrative expenses 2,788,000 2,431,000 2,520,000
Operations and maintenance (Note F) 7,825,000 7,201,000 6,828,000
Other operating expenses 2,709,000 2,545,000 2,432,000
Depreciation and amortization (Note A) 10,845,000 10,145,000 9,621,000
----------- ----------- -----------
32,604,000 30,481,000 29,280,000
----------- ----------- -----------
INCOME FROM OPERATIONS 17,365,000 17,310,000 17,163,000
Interest expense (Note D) 15,018,000 14,554,000 14,608,000
----------- ----------- -----------
NET INCOME $ 2,347,000 $ 2,756,000 $ 2,555,000
=========== =========== ===========
PERSHARE DATA (Note A)
Net income $ 0.30 $ 0.33 $ 0.30
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Distributions in
------------------------ Paid-in Excess of Treasury
Shares Amount Capital Net Income Stock Total
------------ ---------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 8,946,369 $ 89,000 $127,420,000 $(33,172,000) $ (4,970,000) $89,367,000
Net income for 1997 2,555,000 2,555,000
Cash dividends declared and
paid ($.88 per share)
(Notes G and H) (7,413,000) (7,413,000)
Exercise of stock options
(Note E) 8,750 75,000 75,000
Shares issued pursuant to
Directors' Stock Ownership
Plan (Note E) 9,000 1,000 90,000 91,000
Shares issued pursuant to
Incentive Award Plan (Note E) 2,000 17,000 17,000
Unrealized gain on securities 11,000 11,000
Purchase of treasury shares,
17,100 shares (176,000) (176,000)
------------ ---------- ------------- ------------- ------------- ------------
Balance at December 31, 1997 8,966,119 $ 90,000 $127,602,000 $(38,019,000) $ (5,146,000) $84,527,000
Net income for 1998 2,756,000 2,756,000
Cash dividends declared and
paid ($.88 per share)
(Notes G and H) (7,330,000) (7,330,000)
Stock Rights Redemptions (86,000) (86,000)
Shares issued pursuant to
Directors' Stock Ownership
Plan (Note E) 9,000 98,000 98,000
Shares issued pursuant to
Incentive Award Plan (Note E) 4,687 50,000 50,000
Unrealized loss on securities (18,000) (18,000)
Purchase of treasury shares,
449,000 shares (3,780,000) (3,780,000)
------------ ---------- ------------ ------------- ------------- ------------
Balance at December 31, 1998 8,979,806 $ 90,000 $127,750,000 $(42,697,000) $ (8,926,000) $76,217,000
Net income for 1999 2,347,000 2,347,000
Cash dividends declared and
paid ($.88 per share)
(Notes G and H) (6,938,000) (6,938,000)
Shares issued pursuant to
Directors' Stock Ownership
Plan (Note E) 9,000 75,000 75,000
Shares issued pursuant to
Incentive Award Plan (Note E) 5,677 47,000 47,000
Shares issued pursuant to
Direct Stock Purchase Plan 90,206 1,000 732,000 733,000
Purchase of treasury shares,
186,100 shares (1,528,000) (1,528,000)
------------ ---------- ------------ ------------- ------------- ------------
Balance at December 31, 1999 9,084,689 $ 91,000 $128,604,000 $(47,288,000) $(10,454,000) $70,953,000
============ ========== ============ ============= ============= ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------
1999 1998 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,347,000 $ 2,756,000 $ 2,555,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 10,845,000 10,145,000 9,621,000
(Increase) decrease in accounts receivable and
accrued revenue (109,000) (133,000) 332,000
Increase in prepaid expenses and
other assets (740,000) (867,000) (12,000)
Increase in accounts payable and accrued expenses 837,000 609,000 528,000
------------------ ------------------ ------------------
Net Cash Provided by Operating Activities 13,180,000 12,510,000 13,024,000
------------------ ------------------ ------------------
INVESTING ACTIVITIES:
Acquisitions of and improvements to real estate investments (9,912,000) (17,020,000) (6,836,000)
------------------ ------------------ ------------------
Net Cash Used in Investing Activities (9,912,000) (17,020,000) (6,836,000)
------------------ ------------------ ------------------
FINANCING ACTIVITIES:
Proceeds from mortgage notes payable and notes
payable to banks (Note I) 54,540,000 78,345,000 23,000,000
Principal payments on mortgage notes payable and
notes payable to banks (Note I) (49,821,000) (62,255,000) (20,764,000)
Debt issuance costs and mortgage escrow deposits (189,000) (414,000) (267,000)
Cash dividends and other distributions to
Shareholders (Note G) (6,938,000) (7,414,000) (7,413,000)
Issuance of shares of common stock pursuant to
direct stock purchase, stock option and stock award plans 855,000 50,000 92,000
Purchases of treasury shares (1,528,000) (3,780,000) (176,000)
------------------ ------------------ ------------------
Net Cash (Used in) Provided by Financing Activities (3,081,000) 4,532,000 (5,528,000)
------------------ ------------------ ------------------
Net increase in cash and cash equivalents 187,000 22,000 660,000
Cash and cash equivalents at beginning of year 1,150,000 1,128,000 468,000
------------------ ------------------ ------------------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 1,337,000 $ 1,150,000 $ 1,128,000
================== ================== ==================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998, and 1997
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include the
accounts of Sizeler Property Investors, Inc., and its majority-owned and
controlled subsidiaries and partnerships (the "Company"). All significant
intercompany transactions and balances have been eliminated in consolidation.
The Company's investment in a real estate partnership at December 31, 1999 and
1998 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.
Real Estate Investments. Real estate investments are recorded at cost.
Depreciation of buildings and improvements is provided for 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 are 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.
In accordance with Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, the Company is required to review such assets for impairment
whenever any events or circumstances indicate that the carrying value of the
assets may not be recoverable. When indicators of impairment are present, the
Company makes an assessment of its recoverability by estimating the future
undiscounted cash flows expected to result from the use of the property and its
eventual disposition. If the carrying value exceeds the aggregate future cash
flows, the Company would recognize an impairment loss. No such impairment losses
have been recognized for the years ended December 31, 1999, 1998 or 1997. No
real estate is held for sale at December 31, 1999 or 1998.
Deferred Charges. Debt issuance costs in connection with issuance of the
Company's 8% Convertible Subordinated Debentures (the "Debentures") and other
financings are included in prepaid expense and other assets and are being
amortized over the term of the related obligations. Unamortized costs are
charged to expense upon prepayment of the obligation. Unamortized costs related
to the Debentures are offset against shareholders' equity upon conversion by
debenture-holders. 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 the 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 are incurred.
On May 21, 1998, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board reached a consensus decision on Issue No. 98-9,
Accounting for Contingent Rent in Interim Financial Periods, which provides that
recognition of contingent (percentage) rental income in interim periods must be
deferred until the specified target (breakpoint) that triggers the percentage
rental income is achieved. However, on November 19, 1998, the EITF withdrew its
May 21, 1998, consensus on Issue No. 98-9. This change in thinking by the EITF
was met with objections from the Securities and Exchange Commission (SEC) on the
basis that income should not be accrued if it can be reversed. The SEC
subsequently issued Staff Accounting Bulletin No. 101 on December 3, 1999, which
affirmed issue No. 98-9. The Company has adopted Issue No. 98-9 and has deferred
the recognition of percentage rental income until the date that the tenants'
sales exceed the breakpoint set forth in the lease agreements.
<PAGE>
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, 1999, the income
tax basis, net of accumulated tax depreciation, of the Company's real estate
properties was approximately $278 million.
Earnings Per Share. The Company adopted SFAS No. 128, Earnings Per Share, in
1997. Basic EPS excludes dilution and is computed by dividing income available
to common stock holders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.
For the years ended December 31, 1999, 1998, and 1997, options to purchase
482,631, 316,940, and 147,000, shares of common stock, respectively, were
outstanding but excluded in the computation of diluted EPS because the options'
exercise prices were greater than the average market prices of common shares.
The Company's outstanding Debentures are also excluded from the computation for
1999, 1998, and 1997 due to their antidilutive effect. Accordingly, there is no
effect on net income in the calculation of diluted EPS for the years ended
December 31, 1999, 1998 or 1997.
Common Stock and Preferred Stock. In March 1998, the Board of Directors approved
an increase in the Company's authorized Preferred Stock, from 3 million shares
to 6 million shares, and its authorized Common Stock, from 15 million to 30
million shares, pursuant to shareholder approval given at the Company's 1994
Annual Meeting of Shareholders, which gave the Board of Directors authority to
effect the said increases in the Company's authorized shares for a period of
five years. The Company has one class of Common Stock, and the additional
authorized shares have the same voting rights and other attributes as the
existing outstanding shares of Common Stock. The Board of Directors is
authorized to provide for the issuance of the Preferred Stock, and to fix the
designations, powers, preferences and rights of the shares of each series, and
the qualifications, limitations, or restrictions thereof. The Company does not
have any outstanding shares of Preferred Stock as of December 31, 1999.
Stock Option Plans. The Company applies the intrinsic value-based method of
accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations, in
accounting for its fixed plan stock options. As such, compensation expense would
be recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. SFAS No. 23, "Accounting for
Stock-Based Compensation," established accounting and disclosure requirements
using a fair value-based method of accounting for stock-based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to
continue to apply the intrinsic value-based method of accounting described
above, and has adopted the disclosure requirements of SFAS No. 123 (See Note E).
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 amounts 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.
Reclassifications. Certain reclassifications have been made in the 1998
Consolidated Financial Statements to conform with the 1999 financial statement
presentation.
<PAGE>
NOTE B: REAL ESTATE INVESTMENTS
Certain real estate with a book value of approximately $124,819,000 at
December 31, 1999 is pledged as collateral for notes payable described in Note
D. In addition, certain notes are secured by collateral assignments of rents and
leases on such real estate. Certain real estate is located on land subject to
long-term ground leases expiring at dates through 2046.
In 1999, the Company incurred development costs of $1.4 million on the
development of a new freestanding Walgreens store at the Camelot Plaza Shopping
Center. The store was completed and opened for business on August 30, 1999.
Construction began on a new Publix super market during the fourth quarter of
1999, of which the Company has incurred development costs of $1.5 million, as of
December 31, 1999. This project is scheduled for a third quarter, 2000
completion. Also in 1999, the Company acquired land adjacent to an apartment
property, totalling approximately $464,000.
In 1998, the Company incurred total development costs of $12.2 million on the
development of an apartment property, which was completed in early 1999. At
December 31, 1998, the Company had a total investment in the development of
$14.0 million, of which construction in progress totalled $7.9 million. Also in
1998, the Company acquired two parcels of developable land, one parcel adjacent
to a retail center and the other parcel adjacent to an apartment property,
totalling approximately $611,000.
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 many of the Company's retail leases also
provide for payment of additional rents based upon a percentage of retail sales
in excess of stated minimums. The non-cancelable portions of such lease terms
range from one to forty years.
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 due to diversity in the Company's tenant base and
its geographical dispersion throughout the southern United States.
The Company's shopping centers are leased to tenants under operating leases. The
future minimum rents on non-cancelable operating leases at December 31, 1999 are
as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------------
<S> <C>
2000 $ 18,681,000
2001 17,579,000
2002 16,076,000
2003 14,423,000
2004 13,010,000
Thereafter 41,981,000
------------
$121,750,000
============
</TABLE>
The above amounts do not include rental income that is based on tenants' sales
or reimbursed expenses.
Reportable Operating Segments. Effective January 1, 1998, the Company adopted
SFAS No. 131, Disclosure About Segments of an Enterprise and Related
Information. This Statement establishes standards for the way that public
business enterprises report information about operating segments in financial
statements. It also establishes standards for related disclosures about products
and services, geographic areas, and major customers.
<PAGE>
The Company is engaged in two operating segments, the ownership and rental of
retail shopping center properties and apartment properties. These reportable
segments offer different products or services and are managed separately because
each requires different operating strategies and management expertise. There are
no intersegment sales or transfers. The accounting policies of the segments are
the same as those described in Note A, Significant Accounting Policies.
The Company assesses and measures segment operating results based on a
performance measure referred to as Income from Rental Operations, and is based
on the revenues and expenses associated with the operations of the real estate
properties. Income from Rental Operations is not a measure of operating results
or cash flows from operating activities as measured by generally accepted
accounting principles, and is not necessarily indicative of cash available to
fund cash needs and should not be considered an alternative to cash flows as a
measure of liquidity.
The operating revenues, operating expenses, income from rental operations, and
real estate investments for each of the reportable segments are summarized below
for the years ended December 31, 1999, 1998, and 1997.
<TABLE>
<CAPTION>
Retail: 1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Operating Revenue $ 28,022,000 $ 27,438,000 $ 26,554,000
Operating Expenses 11,339,000 10,931,000 10,486,000
------------ ------------ ------------
Income from Retail
Rental Operations $ 16,683,000 $ 16,507,000 $ 16,068,000
Apartments:
Operating Revenue $ 21,947,000 $ 20,353,000 $ 19,889,000
Operating Expenses 10,420,000 9,405,000 9,173,000
------------ ------------ ------------
Income from Apartment
Rental Operations $ 11,527,000 $ 10,948,000 $ 10,716,000
Total Income from Rental
Operations $ 28,210,000 $ 27,455,000 $ 26,784,000
Depreciation (10,845,000) (10,145,000) (9,621,000)
------------ ------------ ------------
Income From Operations 17,365,000 17,310,000 17,163,000
Interest Expense (15,018,000) (14,554,000) (14,608,000)
------------ ------------ ------------
Net Income $ 2,347,000 $ 2,756,000 $ 2,555,000
============ ============ ============
Gross Real Estate
Investments: /(1)/
Retail $205,214,000 $199,880,000 $197,770,000
Apartments 134,092,000 129,510,000 113,446,000
------------ ------------ ------------
$339,306,000 $329,390,000 $311,216,000
============ ============ ============
</TABLE>
/(1)/ Includes investments in land which the Company can use for future
development, and an investment in a real estate partnership, which
is accounted for by the equity method.
<PAGE>
NOTE D: NOTES PAYABLE AND OTHER LONG TERM LIABILITIES
The Company's mortgage notes payable at December 31, 1999 and 1998, are as
follows:
<TABLE>
<CAPTION>
Secured by Land,
Buildings, and Balance
Improvements, Outstanding at
Interest with Book Value on December 31,
--------------------------------
Principal Maturity Rate (c) December 31, 1999 1999 1998
- -------------------- -------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C>
December 1, 1999 10.88% $ (a) $ - $ 3,450,000
May 1, 2008 (b) 6.85% 25,386,000 15,872,000 16,048,000
June 1, 2008 (b) 6.87% 9,854,000 8,455,000 8,548,000
May 1, 2008 (b) 6.85% 3,735,000 2,976,000 3,009,000
May 1, 2008 (b) 6.85% 4,739,000 3,571,000 3,611,000
May 1, 2008 (b) 6.85% 4,398,000 3,224,000 3,260,000
May 1, 2008 (b) 6.85% 5,015,000 3,194,000 3,230,000
May 1, 2008 (b) 6.85% 4,900,000 3,289,000 3,325,000
May 1, 2008 (b) 6.85% 18,606,000 12,102,000 12,237,000
May 1, 2008 (b) 6.85% 12,499,000 7,737,000 7,824,000
September 30, 2001 8.63% 4,092,000 3,009,000 3,151,000
January 1, 2013 8.05% 31,595,000 21,283,000 22,176,000
------------ ----------- -----------
$124,819,000 $84,712,000 $89,869,000
============ =========== ===========
</TABLE>
___________________________
(a) In 1999, the Company repaid this mortgage debt totalling $3.45 million.
(b) In April and May 1998, the Company refinanced these mortgage notes payable,
thereby reducing the fixed rates of interest from an average of 7.85% to an
average of 6.85%.
(c) The weighted average interest rate on mortgage debt at December 31, 1999,
was 7.21%.
Future principal payments on the Company's mortgage notes payable at
December 31, 1999, are as follows:
<TABLE>
<CAPTION>
Year Amount
---- -----------
<S> <C>
2000 $ 1,843,000
2001 4,674,000
2002 1,962,000
2003 2,114,000
2004 2,283,000
-----------
$12,876,000
===========
</TABLE>
In May 1993, the Company completed an offering of $65 million of 8% Convertible
Subordinated 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. No debentures
were converted in 1999, 1998, or 1997. The Company re-purchased one million of
its debentures during 1999.
The Company has commitments for lines of credit from commercial banks totalling
$85 million, of which $25 million were available at December 31, 1999. The
weighted average interest rate was 6.8% and 7.6% for the years ended December
31, 1999 and 1998, 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 adverse change in the
financial condition or operation 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 financial ratios.
The Company was in compliance with the bank debt covenant agreements at December
31, 1999.
<PAGE>
NOTE E: STOCK OPTION AND OWNERSHIP PLANS
On February 1, 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan"). Under the 1996 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 on the date of grant. A total of 600,000 shares of common stock of
the Company are available for grant, of which a maximum of 125,000 shares may be
issued to non-employee directors upon the exercise of non-qualified stock
options granted. Options granted under the 1996 Plan vest, for key employees,
50% after one year, and the remaining 50% after two years, from the grant date;
for directors, 100% vests six months from the grant date. No options will be
granted under the 1996 Plan after February 1, 2006. A total of 184,000 options
were exercisable under the 1996 Plan at December 31, 1999.
The Company had a 1986 Stock Option Plan (the "1986 Plan"), which terminated in
October 1996. Under the 1986 Plan, 10-year options were granted to key employees
and were annually granted to directors at the fair market value of the Company's
common stock at the date of grant. At December 31, 1999, there were a total of
263,250 shares of common stock reserved for issuance upon exercise of options
granted under the 1986 Plan. Options granted under the 1986 Plan vest, for key
employees, 50% after one year, and the remaining 50% after two years, from the
grant date; for directors, 100% vests six months from the grant date.
The Company applies APB Opinion No. 25 in accounting for its Plans, and
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Company's net income would have been reduced to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
As Reported Pro Forma Results
---------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income $2,347,000 $2,756,000 $2,555,000 $2,238,000 $2,671,000 $2,501,000
Net income per share $ 0.30 $ 0.33 $ 0.30 $ 0.28 $ 0.32 $ 0.30
</TABLE>
For grants in 1999, 1998 and 1997, the fair value of each option grant is
estimated on the date of grant using an option-pricing model based on the
following assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Risk free interest rate 5.5% 5.8% 6.8%
Expected life 10 years 10 years 10 years
Expected volatility 20.8% 23.7% 26.6%
Expected dividend 10.2% 8.0% 8.3%
</TABLE>
<PAGE>
The following summary is on the Company's 1996 and 1986 Plans combined for the
years ended December 31, 1999, 1998, and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ----------------- -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- ------ --------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 450,750 $10.83 368,750 $11.18 327,500 $11.44
Granted 118,000 8.61 107,000 11.00 60,000 10.25
Exercised (1,000) 8.50 0 0.00 (8,750) 8.63
Expired (3,000) 14.94 (25,000) 16.75 (10,000) 16.38
------- ------ ------- ------ ------- ------
Outstanding at end of year 564,750 $10.34 450,750 $10.83 368,750 $11.18
======= ====== ======= ====== ======= ======
Options exercisable 447,250 $10.58 325,750 $10.83 260,000 $11.86
======= ====== ======= ====== ======= ======
</TABLE>
The weighted-average grant date fair value of options granted in 1999, 1998, and
1997, was $8.61, $11.00, and $10.25, respectively.
The following table summarizes information about the Company's stock option
plans outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------------- ------------------------------------
Number Weighted-Average Number
Range of Outstanding at Remaining Weighted-Average Exercisable at Weighted Average
Exercise Prices December 31, 1999 Contractual Life Exercise Price December 31, 1999 Exercise Price
- -------------------------- ----------------- ------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$8.37-$8.78 194,250 7.0 yrs. $ 8.55 124,250 $ 8.65
$8.79-$10.25 144,500 7.2 yrs. 9.80 144,500 9.80
$10.26-$14.06 226,000 5.3 yrs. 12.23 178,500 12.56
------- -------- -------- -------- ------
564,750 6.4 yrs. $10.34 447,250 $10.58
======= ======== ======== ======== ======
</TABLE>
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 was amended to 1,000 shares, effective January 1, 1996, and amended to
1,500 shares, effective January 1, 1997. 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. Under this Plan, there were 9,000 shares issued each year in 1999 and
1998, and 1997.
The Company adopted an Incentive Award Plan, effective January 1, 1994. The
purpose of the Plan is to reward eligible officers of the Company on the basis
of their contribution to the Company, and in particular on the basis of their
contribution to the Company's achievement of planned growth in funds from
operations per share. The Plan is administered by the Compensation Committee of
the Board of Directors of the Company. An award under this Plan is payable by
the Company one-half in cash and one-half in shares of common stock of the
Company. The Company recognized compensation costs totalling $119,000 in 1999,
$101,000 in 1998, and $100,000 in 1997, which includes the issuance of 7,362,
5,677, and 4,687 shares, 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. A
beneficial minority interest is directly owned in Sizeler Realty Co., Inc.
("Sizeler Realty"), the parent of the Management Company, by an officer and
director of the Company, and the balance is owned by members of the family of
the officer's wife and residual entities of the estates of her mother and
father. 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.
<PAGE>
The management fee 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. 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 adjusted management fee paid to the Management
Company for 1999 was based on .707% of the Company's gross investment in real
estate while 1998 and 1997 were each based upon .697% of the Company's gross
investment in real estate due to an increase in funds from operations per share
year over year. The Management Company 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.
Under the management contract, the Company made cash payments to the Management
Company of $2,994,000, $2,789,000, and $2,515,000 in 1999, 1998, and 1997,
respectively.
The Company leases approximately 14,000 s.f. at the Westland Shopping Center to
Sizeler Realty. Under this lease, Sizeler Realty paid annual rent, including
expense reimbursements, of $104,000 in 1999, $101,000 in 1998, and $99,000 in
1997. The lease provides for two 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 two trusts that own
the land, the respective beneficiaries of which are an officer and director's
wife and her brother. The two trusts were extinguished upon the last to die of
the parents of the officer and director's wife and her brother, and a residual
entity succeeded to ownership. The Company was charged $56,000 in 1999, $45,000
in 1998, and $51,000 in 1997.
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 an entity in which an officer and director and his
wife and her brother and her brother's wife own interests, expiring on March 31,
2031. The rent under the ground lease is 50% of cash flow (after debt service
and certain other adjustments) 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 thereafter. Ground rent in the amount of $22,000 was
payable under the lease agreement in 1999. No ground rent was payable in 1998 or
1997. LaPalco is the primary obligor on a mortgage note payable, guaranteed by
Sizeler Realty, which LaPalco is solely obligated to pay out of its partnership
distributions or other sources. At December 31, 1999, the balance of the
mortgage note payable was $1,145,000. 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.
An officer and director of the Company is a director of Hibernia National Bank
("Hibernia"). At December 31, 1999, $20,000,000 of the Company's $85,000,000
bank lines of credit was provided by Hibernia. The Company had borrowings under
this line totalling $16,740,000 at December 31, 1999, and $14,092,000 at
December 31, 1998.
NOTE G: DIVIDEND DISTRIBUTION
The dividends paid in 1999, 1998, and 1997 for federal income tax purposes were
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ------------------------ -----------------
Per Per Per
Total Share Total Share Total Share
---------- ---------- ---------- ------------ ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Ordinary income $4,257,000 $ 0.54 $5,165,000 $ 0.62 $4,549,000 $0.54
Return of capital 2,681,000 0.34 2,249,000 0.27 (a) 2,864,000 0.34
---------- ---------- ---------- ---------- ---------- -----
$6,938,000 $ 0.88 $7,414,000 $ 0.89 $7,413,000 $0.88
========== ========== ========== ========== ========== =====
</TABLE>
(a) Includes a $0.01 per share distribution for the redemption of stock
purchase rights in connection with the Company's adoption of a
replacement shareholder rights plan.
<PAGE>
NOTE H: SUBSEQUENT EVENTS
On March 2, 2000, the Company paid a $.22 per share quarterly dividend, to
shareholders of record as of February 25, 2000.
NOTE I: CASH FLOWS
During 1998, the Company completed long-term, fixed-rate, non-recourse mortgage
refinancing involving ten of the Company's apartment properties. Mortgage debt
totalling $59.1 million was refinanced resulting in new mortgage debt totalling
$61.5 million, of which net proceeds totalling $2.4 million were used to pay-
down short-term variable-rate debt. The Company was able to achieve a reduction
in the average interest rate paid on the mortgages refinanced by approximately
100 basis points, from an average rate of approximately 7.8% down to an average
rate of approximately 6.8%. During 1998, the Company also repaid mortgage debt
totalling $1.7 million bearing a fixed rate of interest of 9.0% on a retail
community center.
During 1997, the Company completed mortgage financing on a regional enclosed
mall incurring a mortgage note payable totalling $23,000,000.
Cash interest payments, net of capitalized interest, made in 1999, 1998, and
1997 totalled $14,947,000, $14,562,000, and $14,591,000, 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 $121,000,
$111,000, and $115,000 in 1999, 1998, and 1997, respectively.
The Company, from time to time, may be subject to litigation arising from the
ordinary course of its business. Management does not believe that any existing
litigation involving the Company will materially affect its financial condition
or future results of operations.
NOTE K: SHAREHOLDER RIGHTS PLAN
On August 6, 1998, the Company's Board of Directors adopted a replacement
shareholder rights plan ("Plan") to supersede a shareholder rights plan which
had been in effect since 1989. Simultaneously, the board declared a dividend
distribution of one purchase right ("Right") for each share of the Company's
Common Stock outstanding at the close of business August 27, 1998, or
subsequently issued. Each Right entitles the holder to purchase 1/1,000 of a
share of a new Series A Preferred Stock of the Company ("Preferred Stock").
The Rights become exercisable upon 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 15% 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; 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 10% of the Company's Common Stock and that ownership (a) is intended to
cause pressure on the Company to take action or enter into a transaction or
transactions intended to provide such persons with short-term financial gain
under circumstances where the best long-term interests of the Company and its
shareholders would not be served, or (b) is causing or is reasonably likely to
cause a material adverse impact on the business or prospects of the Company
(including but not limited to jeopardizing the Company's status as a real estate
investment trust, impairing relationships with the Company's tenants, customers,
lenders, providers of financial and other services, or regulators or impairing
the Company's ability to maintain its competitive position).
<PAGE>
The exercise price of a Right has been established at $40, subject to adjustment
as provided in the Plan. Once exercisable, each Right would entitle the holder
to purchase Preferred Stock having a value equal to two times the value of the
Right. The Rights expire on August 27, 2008.
NOTE L: 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.
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 judgement and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
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 $84.7 million and $89.9 million
at December 31, 1999, and 1998, respectively, while the estimated fair value is
$80.4 million and $90.3 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 $61.9
million and $62.9 million at December 31, 1999, and 1998, respectively, was
$57.9 million and $59.1 million, respectively, based upon the quoted market
prices of the securities as of the end of the respective years.
NOTE M: QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized (unaudited) quarterly financial data for the years ended 1999 and
1998 are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Three months ended in 1999
--------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $12,427 $12,214 $12,353 $12,975
Net income $ 614 $ 599 $ 568 $ 566
Net income per share $ 0.08 $ 0.08 $ 0.07 $ 0.07
Three months ended in 1998
----------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Revenues $11,791 $11,838 $11,729 $12,433
Net income $ 664 $ 711 $ 680 $ 701
Net income per share $ 0.08 $ 0.08 $ 0.08 $ 0.09
</TABLE>
<PAGE>
SCHEDULE II
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ----------- --------- ---------- ----------
Balance at Additions Balance
Beginning Charged to at End
of Period Operations Deductions of Period
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1999
Allowance for doubtful accounts $ 423,000 $ 95,000 $ 88,000 $430,000
Year ended December 31, 1998
Allowance for doubtful accounts $ 281,000 $ 248,000 $106,000 $423,000
Year ended December 31, 1997
Allowance for doubtful accounts $ 204,000 $ 149,000 $ 72,000 $281,000
</TABLE>
<PAGE>
SCHEDULE III
SIZELER PROPERTY INVESTORS, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------- ----------- ------------------------- ------------ --------------------------------------
Costs
Capitalized
Subsequent to Gross Amount at Which
Initial Cost to Company Acquisition Carried at Close of Period
------------------------- ------------- -------------------------------------
Buildings & Net Buildings &
Description Encumbrance Land Improvements Improvements Land Improvements Total
- ----------- ----------- ----------- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Regional enclosed malls:
Hammond Square $ - $ 2,574,000 $ 23,664,000 $ 3,057,000 $2,818,000 $ 26,477,000 $ 29,295,000
North Shore Square 21,283,000 4,000,000 30,150,000 3,963,000 4,058,000 34,055,000 38,113,000
Southland - 2,408,000 28,289,000 12,038,000 2,485,000 40,250,000 42,735,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
21,283,000 8,982,000 82,103,000 19,058,000 9,361,000 100,782,000 110,143,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
Power shopping centers:
Lantana Plaza - 6,000,000 14,107,000 4,163,000 7,808,000 16,462,000 24,270,000
Town and Country - 860,000 3,194,000 2,315,000 1,491,000 4,878,000 6,369,000
Westward Plaza - 5,676,000 13,506,000 3,423,000 5,676,000 16,929,000 22,605,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
- 12,536,000 30,807,000 9,901,000 14,975,000 38,269,000 53,244,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
Community shopping centers:
Airline Park - 977,000 1,037,000 210,000 977,000 1,247,000 2,224,000
Azalea Gardens - 574,000 806,000 509,000 574,000 1,315,000 1,889,000
Camelot Plaza - 993,000 2,281,000 2,367,000 1,312,000 4,329,000 5,641,000
Colonial - 554,000 555,000 400,000 559,000 950,000 1,509,000
Delchamps Plaza - 713,000 4,381,000 140,000 713,000 4,521,000 5,234,000
Rainbow Square 3,009,000 970,000 4,443,000 166,000 984,000 4,595,000 5,579,000
Weeki Wachee - 2,185,000 4,179,000 202,000 2,149,000 4,417,000 6,566,000
Westgate - 1,809,000 2,162,000 1,248,000 1,774,000 3,445,000 5,219,000
Westland (e) - - 3,068,000 2,168,000 - 5,236,000 5,236,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
3,009,000 8,775,000 22,912,000 7,410,000 9,042,000 30,055,000 39,097,000
----------- ----------- ------------ ----------- ---------- ------------ ------------
Apartments:
Bel Air 3,224,000 500,000 3,674,000 1,335,000 500,000 5,009,000 5,509,000
Bryn Mawr 8,455,000 1,575,000 9,020,000 1,072,000 1,575,000 10,092,000 11,667,000
Colonial Manor - 212,000 771,000 429,000 212,000 1,200,000 1,412,000
Garden Lane 3,571,000 500,000 3,117,000 2,275,000 500,000 5,392,000 5,892,000
Georgian - 839,000 2,420,000 1,555,000 839,000 3,975,000 4,814,000
Governors Gate (f) - 499,000 - 14,417,000 499,000 14,417,000 14,916,000
Hampton Park 5,416,000 1,305,000 6,616,000 3,245,000 1,156,000 10,010,000 11,166,000
Jamestown 3,194,000 712,000 4,035,000 1,112,000 712,000 5,147,000 5,859,000
Lafayette Square 12,102,000 2,632,000 14,282,000 6,781,000 2,458,000 21,237,000 23,695,000
Lakeview Club 15,872,000 4,400,000 23,200,000 1,849,000 4,400,000 25,049,000 29,449,000
Magnolia Place - 175,000 2,050,000 859,000 175,000 2,909,000 3,084,000
Pine Bend 2,321,000 450,000 3,029,000 1,112,000 450,000 4,141,000 4,591,000
Steeplechase 2,976,000 458,000 3,068,000 1,569,000 594,000 4,501,000 5,095,000
Woodcliff 3,289,000 695,000 4,047,000 1,279,000 695,000 5,326,000 6,021,000
----------- ----------- ------------ ----------- ----------- ------------ ------------
60,420,000 14,952,000 79,329,000 38,889,000 14,765,000 118,405,000 133,170,000
Undeveloped Land - 2,658,000 - 77,000 2,671,000 64,000 2,735,000
----------- ----------- ------------ ----------- ----------- ------------ ------------
TOTAL $84,712,000 $47,903,000 $215,151,000 $75,335,000 $50,814,000 $287,575,000 $338,389,000
=========== =========== ============ =========== =========== ============ ============
</TABLE>
<TABLE>
COLUMN A COLUMN F COLUMN G COLUMN H COLUMN I
- ------------------------- ------------ ------------ ------------ -------------
Life on
which
Depreciation
in Latest
Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- ----------- ------------ ---------------- -------- -------------
<S> <C> <C> <C> <C>
Regional enclosed malls:
Hammond Square $8,944,000 1978 1987 10-40 yrs
North Shore Square 6,517,000 1986 1994 10-40 yrs
Southland 12,844,000 1970, 1981, 1994 1986 10-40 yrs
------------
28,305,000
------------
Power shopping centers:
Lantana Plaza 2,633,000 1992 1993 10-40 yrs
Town and Country 521,000 1989 1993 10-40 yrs
Westward Plaza 3,680,000 1961, 1990, 1995 1992 10-40 yrs
------------
6,834,000
------------
Community shopping centers:
Airline Park 428,000 1973 1987 10-40 yrs
Azalea Gardens 473,000 1950 1987 10-40 yrs
Camelot Plaza 541,000 1981 1992 10-40 yrs
Colonial 330,000 1967 1987 10-40 yrs
Delchamps Plaza 1,162,000 1989 1991 10-40 yrs
Rainbow Square 1,488,000 1986 1988 10-40 yrs
Weeki Wachee 1,432,000 1987 1988 10-40 yrs
Westgate 1,192,000 1964 1987 10-40 yrs
Westland (e) 1,785,000 1966 1987 10-40 yrs
------------
8,831,000
------------
Apartments:
Bel Air 1,110,000 1968, 1974 1992 10-40 yrs
Bryn Mawr 1,812,000 1991 1993 10-40 yrs
Colonial Manor 429,000 1967 1987 10-40 yrs
Garden Lane 1,153,000 1966, 1971 1992 10-40 yrs
Georgian 993,000 1951, 1980 1992 10-40 yrs
Governors Gate (f) 543,000 1999 1997 10-40 yrs
Hampton Park 2,410,000 1977 1993 10-40 yrs
Jamestown 844,000 1972 1995 10-40 yrs
Lafayette Square 5,089,000 1969 - 1972 1993 10-40 yrs
Lakeview Club 4,063,000 1992 1994 10-40 yrs
Magnolia Place 742,000 1984 1991 10-40 yrs
Pine Bend 849,000 1979 1992 10-40 yrs
Steeplechase 1,034,000 1982 1992 10-40 yrs
Woodcliff 1,121,000 1977 1993 10-40 yrs
------------
22,192,000
Undeveloped Land -
------------
TOTAL $ 66,162,000
============
</TABLE>
Note: This schedule does not include the Company's 50% interest in a real
estate partnership.
<PAGE>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION -- (Continued)
Note (a) Changes in real estate owned were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Balance at beginning of year $ 328,477,000 $310,312,000 $303,476,000
Additions during period:
Investments in land 1,000,000 611,000 550,000
Improvements 8,912,000 17,554,000 6,286,000
------------- ------------ ------------
Balance at end of year $ 338,389,000 $328,477,000 $310,312,000
============= ============ ============
</TABLE>
Note (b) Changes in accumulated depreciation of real estate assets owned were
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $55,964,000 $46,454,000 $37,518,000
Additions during period:
Depreciation on real estate assets 10,198,000 9,510,000 8,936,000
----------- ----------- -----------
Balance at end of year $66,162,000 $55,964,000 $46,454,000
=========== =========== ===========
</TABLE>
Note (c) The income tax basis of real estate, net of accumulated tax
depreciation, was approximately $278,132,000 at December 31, 1999.
Note (d) Depreciation is provided by the straight-line method over the
estimated useful lives, which are as follows:
Buildings and improvements 10 - 40 years
Parking lots 20 years
Tenant improvements Lease term
Note (e) The Company holds its interest in the Westland Shopping Center under a
long-term ground lease.
Note (f) The Company acquired land in 1997 for the development of a 240-unit
luxury apartment community. Construction commenced in late 1997, and
the Company completed the development in early 1999.
<PAGE>
FORM 10-K EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
3.1A Restated Certificate of Incorporation, as amended Incorporated by Reference (1)
3.1B Amendment No. 1 to Restated Certificate of Incorporation, Incorporated by Reference (6)
as amended
3.1C Amendment No. 2 to Restated Certificate of Incorporation, Incorporated by Reference (11)
as amended
3.2 Restated By-Laws as amended through March 1, 1999 Filed herewith
4.0A Form of Certificate for Common Stock, $.01 par value Incorporated by Reference (3)
4.1A Indenture for the Registrant's 8% Convertible Incorporated by Reference (12)
Subordinated Debentures, due 2003
4.2A Debenture for the Registrant's 8% Convertible Incorporated by Reference (12)
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 (9)
10.1E Amendment No. 5 to Management Agreement Incorporated by Reference (11)
10.1F Amendment No. 4 to Management Agreement Incorporated by Reference (15)
10.1G Amendment No. 6 to Management Agreement Incorporated by Reference (15)
10.1H Amendment No. 7 to Management Agreement Incorporated by Reference (15)
10.2 Form of Indemnification Agreement (which the Company Incorporated by Reference (1)
has entered into with each officer and director)
10.3 Form of Right of First Refusal which has been entered Incorporated by Reference (2)
into by the Company and each of Sidney W. Lassen
and Sizeler Realty Co., Inc.
10.4 The Company's 1986 Stock Option Plan, as amended Incorporated by Reference (9)
through January 25, 1991*
10.5 Form of Deferred Compensation Agreement (the Incorporated by Reference (10)
Company has such an agreement with Sidney W.
Lassen)*
10.6 The Company's 1989 Directors Stock Option Plan Incorporated by Reference (5)
10.7 Sizeler Property Investors, Inc. Incentive Award Plan* Incorporated by Reference (13)
10.8 First Amendment to the Sizeler Property Investors, Inc. Incorporated by Reference (13)
Incentive Award Plan*
10.9 Sizeler Property Investors, Inc. 1994 Directors' Stock Incorporated by Reference (16)
Ownership Plan, as amended*
10.10 Agreement between the Company and Sidney W. Lassen* Incorporated by Reference (13)
10.11 Agreement between the Company and Thomas A.
Masilla, Jr.* Incorporated by Reference (14)
10.12 Non-Elective Deferred Compensation Agreement Incorporated by Reference (14)
between Company and Thomas A. Masilla, Jr.
(The Company also has Non-Elective Deferred
Compensation Agreements with Sidney W. Lassen
and Robert A. Whelan, which are identical to
Mr. Masilla's Agreement).*
10.13 The Company's 1996 Stock Option Plan, as amended Incorporated by Reference (16)
19.1 Shareholder Rights Agreement dated as of Incorporated by Reference (7)
August 6, 1998
19.2 Amendment No. 1 to Shareholder Rights Agreement Incorporated by Reference (7)
21 List of Subsidiaries Filed herewith
23.1 Consent of KPMG LLP Filed herewith
</TABLE>
_______________________
<PAGE>
(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 August 26, 1998.
(8) Incorporated by reference to the Exhibit A to the Company's Proxy
Statement, dated April 5, 1991.
(9) Incorporated by reference to the exhibits filed with the Company's Form 10-
K for the year ended December 31, 1990.
(10) Incorporated by reference to the exhibits filed with the Company's Form 10-
K for the year ended December 31, 1991.
(11) Incorporated by reference to the exhibits filed with the Company's Form 10-
K for the year ended December 31, 1992.
(12) Incorporated by reference to the exhibits filed with the Company's Form 8-
K, dated May 26, 1993.
(13) Incorporated by reference to the exhibits filed on March 7, 1994, with the
Company's registration statement on Form S-3 (No. 33-76134).
(14) Incorporated by reference to the exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(15) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
(16) Incorporated by reference to the exhibits to the Company's definitive proxy
material for its 1997 Annual Meeting of Stockholders.
* Management compensation plan agreements.
<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.
By: /s/ Sidney W. Lassen
------------------------
Sidney W. Lassen
Chairman of the Board
(Chief Executive Officer)
Date: March 28, 2000
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 28, 2000
--------------------------
Sidney W. Lassen (Chief Executive Officer)
By: /s/ THOMAS A. MASILLA, JR. Vice Chairman of the Board March 28, 2000
-------------------------- and President (Principal
Thomas A. Masilla, Jr. Operating Officer)
By: /s/ ROBERT A. WHELAN Chief Financial Officer March 28, 2000
--------------------------
Robert A. Whelan (Principal Accounting Officer)
By: /s/ J. TERRELL BROWN Director March 28, 2000
--------------------------
J. Terrell Brown
By: /s/ FRANCIS L. FRAENKEL Director March 28, 2000
--------------------------
Francis L. Fraenkel
By: /s/ HAROLD B. JUDELL Director March 28, 2000
--------------------------
Harold B. Judell
By: /s/ JAMES W. McFARLAND Director March 28, 2000
--------------------------
James W. McFarland
By: /s/ RICHARD L. PEARLSTONE Director March 28, 2000
--------------------------
Richard L. Pearlstone
By: /s/ THEODORE H. STRAUSS Director March 28, 2000
--------------------------
Theodore H. Strauss
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Name of Corporation State of Incorporation
------------------- ----------------------
SPIAPT, Inc. Alabama
SPICOM, Inc. Alabama
SPIMALL, Inc. Alabama
SPITON, Inc. Alabama
SPITOWN, Inc. Delaware
SPILAF, Inc. Alabama
SPINAP, Inc. Delaware
SPIBILE, Inc. Alabama
SPICLIFF, Inc. Delaware
SPILAKE, Inc. Delaware
Clearwater Acquisition Corporation, Inc. Delaware
Lafayette Acquisition, Inc. Louisiana
SPIDELA, Inc. Delaware
Slidell Acquisition, Inc. Delaware
SPIANTONIO, Inc. Delaware
SPINELLON, Inc. Delaware
SPIPAL, Inc. Delaware
SPIWACHEE, Inc. Delaware
FAGALA Corp. Louisiana
SPILAN, Inc. Delaware
SPIWARD, Inc. Delaware
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
Board of Directors
Sizeler Property Investors, Inc.:
We consent to incorporation by reference in the registration statement
(No. 33-76134) on Form S-3 and in the registration statement (No. 333-16073) on
Form S-8 of Sizeler Property Investors, Inc. of our report dated February 4,
2000, except for Note H as to which the date is March 2, 2000, relating to the
consolidated balance sheets of Sizeler Property Investors, Inc. and subsidiaries
as of December 31, 1999 and 1998, and the related consolidated statements of
income, shareholders' equity , and cash flows for each of the years in the
three-year period ended December 31, 1999, and the related financial statement
schedules, which report appears in the December 31, 1999, annual report on Form
10-K of Sizeler Property Investors, Inc.
KPMG LLP
New Orleans, Louisiana
March 28, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,337,000
<SECURITIES> 0
<RECEIVABLES> 3,368,000
<ALLOWANCES> 430,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 339,306,000
<DEPRECIATION> 66,162,000
<TOTAL-ASSETS> 286,061,000
<CURRENT-LIABILITIES> 67,691,000
<BONDS> 146,590,000
0
0
<COMMON> 91,000
<OTHER-SE> 70,862,000
<TOTAL-LIABILITY-AND-EQUITY> 286,061,000
<SALES> 0
<TOTAL-REVENUES> 49,969,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,604,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,018,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,347,000
<EPS-BASIC> .30
<EPS-DILUTED> .30
</TABLE>
