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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-10093
RAMCO-GERSHENSON PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
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MARYLAND 13-6908486
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
27600 NORTHWESTERN HIGHWAY 48034
SOUTHFIELD, MICHIGAN (zip code)
(Address of Principal Executive Offices)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 248-350-9900
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Shares of Beneficial Interest, New York Stock Exchange
$0.01 Par Value Per Share
Share Purchase Rights New York Stock Exchange
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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 filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements to this Form 10-K. [ ]
Aggregate market value of the voting shares held by non-affiliates of the
registrant as of March 8, 1999: approximately $112,301,000.
Approximately 7,217,993 Common Shares of Beneficial Interest of the
registrant were outstanding as of March 8, 1999.
DOCUMENT INCORPORATED BY REFERENCE: Portions of the 1999 Ramco-Gershenson
Properties Trust Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Form 10-K with respect
to the annual meeting of shareholders to be held on June 9, 1999 are
incorporated by reference into Part III.
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TABLE OF CONTENTS
NOTE:Ramco-Gershenson Properties Trust is sometimes referred to in this Annual
Report on Form 10-K as "Registrant", or the "Company".
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ITEM PAGE
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PART I 1. Business.................................................... 2
2. Properties.................................................. 8
3. Legal Proceedings........................................... 13
4. Submission of Matters to a Vote of Security Holders......... 13
PART II 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 14
6. Selected Financial Data..................................... 16
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 18
8. Financial Statements and Supplementary Data................. 27
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 27
PART III 10. Directors and Executive Officers of the Registrant.......... 28
11. Executive Compensation...................................... 28
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 28
13. Certain Relationships and Related Transactions.............. 28
PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 29
SIGNATURES..................................................................... 34
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PART I
ITEM 1. BUSINESS.
GENERAL
Ramco-Gershenson Properties Trust (the "Company") is a Maryland trust
organized pursuant to Articles of Amendment and Restatement of Declaration of
Trust dated October 2, 1997. The Company is the successor entity of
Ramco-Gershenson Properties Trust (the "Massachusetts Trust") a Massachusetts
business trust. In December 1997, with the approval of its shareholders, the
Company changed its state of organization from Massachusetts to Maryland through
the termination of the Massachusetts Trust's Amended and Restated Declaration of
Trust by amending such Amended and Restated Declaration of Trust to provide for
the termination of the Trust, the merger (the "Change of Venue Merger") of the
Massachusetts Trust into the Company and the conversion of each outstanding
share of beneficial interest in the Massachusetts Trust into a common share of
beneficial interest of the Company. The term the "Company" refers to Ramco-
Gershenson Properties Trust and/or its predecessors.
The principal office of the Company is located at 27600 Northwestern
Highway, Suite 200, Southfield, Michigan 48034.
RPS Realty Trust, a Massachusetts business trust, was formed on June 21,
1988 to be a diversified growth oriented real estate investment trust ("REIT").
From 1988 until April 30, 1996, RPS Realty Trust was primarily engaged in the
business of owning and managing a participating mortgage loan portfolio, and,
through its wholly-owned subsidiaries, owning and operating eight real estate
properties.
In May 1996, the Company (i) acquired substantially all of the shopping
center and retail properties as well as the management organization and business
operations, of Ramco-Gershenson, Inc. and certain of its affiliates (the "Ramco
Acquisition"), (ii) changed the Company's name from RPS Realty Trust to Ramco-
Gershenson Properties Trust, (iii) combined the outstanding shares of the
Company by way of a one-for-four reverse split, and, (iv) spun-off eight
mortgage loans and two real properties (the "RPS Mortgage Assets") to Atlantic
Realty Trust , a newly formed real estate investment trust ("Atlantic"). The
Ramco Acquisition was accomplished by the transfer by the Company to
Ramco-Gershenson Properties, L.P. (the "Operating Partnership"), a Delaware
limited partnership of which the Company is the general partner, of six
properties containing approximately 931,000 square feet of gross leasable area
("GLA") and of $68,000,000 in cash, and by the transfer to the Operating
Partnership by the principals of Ramco-Gershenson, Inc. (the "Ramco Principals")
and by their affiliates (collectively the "Ramco Group"), of, (a) 20 properties
containing approximately 4,826,000 square feet of gross leasable area (the
"Ramco Properties"), (b) 100% of the non-voting stock and 5% of the voting stock
(representing in excess of 95% of the economic interest) in Ramco-Gershenson,
Inc. ("Ramco") (c) 50% general partner interests in two partnerships which each
own a shopping center comprising a total of approximately 288,000 square feet of
GLA (d) rights in and/or options to acquire certain development land totaling
approximately 155 acres, (e) options to acquire interests in six shopping center
properties and (f) five outparcels totaling 7.1 acres. In return for its
transfers, the Ramco Group received 2,377,492 Units ("Units") of the Operating
Partnership (representing an approximate 25% limited partnership interest in the
Operating Partnership). The acquisition was accounted for using the purchase
method. The purchase price was allocated to the assets acquired and liabilities
assumed based upon their estimated fair market value. Units were valued at
approximately $16.50 per share representing the average trading price of the
Company's stock immediately preceding and following the Ramco Acquisition. The
Company assumed approximately $176,556,000 of secured indebtedness on the Ramco
Properties. In addition, the Ramco Group received 279,181 Units as a partial
earnout relative to Jackson Crossing Shopping Center. In December 1998, the
Company's Board of Trustees approved the issuance of an additional 238,965 Units
as a result of achieving certain leasing objectives related to the Jackson
Crossing earnout. The Units, with a value of $3,823,000, increased the Ramco
Group's aggregate interest to approximately 29% in the Operating Partnership.
Subject to certain limitations, the Units in the Operating Partnership are
exchangeable into common shares of the Company on a one-for-one basis. At
December 31, 1998, the Company owned 7,217,993 Units which represents
partnership interests amounting to approximately 71% of the total interest in
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the Operating Partnership. In connection with the Ramco Acquisition, the Company
entered into three-year employment agreements with Joel D. Gershenson (the
Chairman and a Director of the Company), Dennis E. Gershenson (the President and
a Director of the Company), Richard D. Gershenson (an Executive Vice President
and the Secretary of the Company), Bruce A. Gershenson (an Executive Vice
President and the Treasurer of the Company) and Michael A. Ward (an Executive
Vice President and the Chief Operating Officer of the Company). The Ramco
Acquisition permitted the Company to become a self-administered, self-managed
and fully integrated real estate investment trust.
The Company was organized for the purpose of qualifying as a real estate
investment trust ("REIT") under Section 856-860 of the Internal Revenue Code of
1986, as amended (the "Code").
The RPS Trusts first elected to qualify as a REIT for the years ended
December 31, 1982, 1983 and 1984 respectively. The Company first elected to
qualify as a REIT for the year ended December 31, 1988 and intends to operate so
as to continue to qualify as a REIT. See "Qualification as a REIT."
Operations of the Company. The Company is engaged in the business of
owning, developing, acquiring, managing and leasing community shopping centers,
regional malls and single tenant retail properties, nationally. At December 31,
1998, the Company had a portfolio of 54 shopping centers, with more than
10,400,000 square feet of gross leasable area, located in Michigan, Ohio,
Florida, New York, New Jersey, Maryland, North Carolina, South Carolina,
Tennessee, Alabama, Wisconsin, Virginia and Georgia.
The Company's properties consist of 2 enclosed regional malls, 43 community
centers, 6 power centers, and 3 single tenant retail properties. Regional
enclosed malls are larger retail properties (containing 400,000 to more than
1,000,000 square feet of GLA) with two or more department stores as anchors and
a wide variety of stores along enclosed, climate controlled malls connecting the
anchors.
Community shopping centers generally range in size up to 400,000 square
feet of GLA and are located in developed retail and commercial areas in which
other similar centers may be nearby. In addition, with respect to some of these
centers, there may be one or more regional enclosed malls nearby. Community
shopping centers generally fall into two types: traditional community centers
and power centers. Traditional community centers typically are convenient to
their trade areas and focus primarily on value-oriented and convenience goods
and services. They are designed to service a neighborhood area, and are usually
anchored by a supermarket, drugstore or discount retailer providing basic
necessities, although certain community centers are free standing single-user
buildings. Power centers are different from traditional community centers
because they are designed to service a larger trade area and they contain at
least two anchors, which occupy a substantial portion of the GLA in the center.
These anchors are often national retailers which are leaders in their market or
"category killers" i.e., larger stores which offer a complete selection of a
category of items (e.g., toys, office supplies, home improvement products,
electronics, etc.) at low prices, and often in a warehouse format.
The Company conducts substantially all of its business through the
Operating Partnership. The Company is the sole general partner of, and has
exclusive power to manage and conduct the business of, the Operating
Partnership. The Operating Partnership holds substantially all of the Company's
interest in its properties, either directly or indirectly through subsidiaries
(including subsidiary property partnerships). The Operating Partnership also
owns 100% of the non-voting common stock and 5% of the voting common stock of
Ramco; such stock ownership enables the Company to receive in excess of 95% of
the dividend and liquidating distributions of Ramco. The Company's property
management operations are conducted through Ramco to facilitate compliance with
certain REIT requirements under the Code. The income attributable to the
ownership of the Ramco stock is accounted for under the equity method.
The Company's business objective and operating strategy is to increase
funds from operations and cash available for distribution per share. The Company
expects to achieve internal growth and to enhance the value of the properties by
increasing their rental income over time through (i) contractual rent increases,
(ii) the leasing and re-leasing of available space at higher rental levels, and
(iii) the selective renovation of the properties. The Company intends to achieve
external growth through the selective development of new
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shopping center properties, the acquisition of shopping center properties and
through the expansion and redevelopment of existing properties.
Ramco performs all property management functions for the properties. At
December 31, 1998, Ramco had 125 full-time employees devoted exclusively to
property management, including on-site personnel. Property management efforts
are directed toward improving tenant sales and rents by continually
respositioning the centers. Ramco strives to meet the needs of its tenants in
the areas of promotion, marketing and ongoing management of its properties and
seeks to bring together a sufficient critical mass of complementary tenants. As
part of its property management efforts, Ramco monitors tenant mix, store size,
sales results and store locations, and works closely with tenants to improve the
overall performance of their stores. Ramco seeks to anticipate trends in the
retailing industry and introduce new retail names and concepts into its shopping
center properties in response to these trends.
As part of its ongoing business strategy, the Company seeks to expand and
redevelop existing properties in its shopping center portfolio, as well as newly
acquired properties, depending on tenant demands and market conditions. The
Company plans to take advantage of attractive purchase opportunities by
acquiring additional shopping center properties in underserved, attractive
and/or expanding markets. The Company also seeks to acquire strategically
located, quality shopping centers that (i) have leases at rental rates below
market rates, (ii) have potential for rental and/or occupancy increases or (iii)
offer cash flow growth or capital appreciation potential where the Company's
financial strength, relationships with retail companies or expansion or
redevelopment capabilities can enhance value, and provide anticipated total
returns that will increase the Company's cash available for distribution per
share. The Company believes that its in-house redevelopment and expansion
capabilities provide it with opportunities to acquire shopping center properties
that may not necessarily be attractive to other owners.
DEVELOPMENTS IN 1998
In May 1998, the Company acquired Southbay Fashion Center in Osprey,
Sarasota County, Florida for approximately $6,000,000. The shopping center is an
approximately 96,700 square foot community center anchored by Jacobson's (31,700
square feet), Ethan Allen (12,700 square feet), and Eckerd Drug Store (10,800
square feet).
Conyers Crossing, located in Conyers, Georgia, was acquired in September
1998 for approximately $7,500,000. The shopping center is an approximately
170,400 square foot community center anchored by Kmart (83,600 square feet), and
Uptons (55,300 square feet). This center is located in Rockdale County, in the
southeast quadrant of metropolitan Atlanta. The population base within a
seven-mile radius of the center exceeds 93,000, with an average household income
level of $64,000.
In September 1998, the Company acquired Aquia Towne Center in Stafford,
Virginia, for approximately $22,000,000. The shopping center is an approximately
240,000 square foot community center. Aquia Towne Center is anchored by Shoppers
Food Warehouse (43,900 square feet) and Big Lots (33,500 square feet). The
shopping center is located in the northern part of Stafford County, Virginia,
which is one of the fastest growing counties in the Washington D.C. metropolitan
area. The average household income within a five-mile radius is $58,000.
In November 1998, the Company acquired Rivertowne Square Shopping Center in
Deerfield Beach, Florida for approximately $8,700,000. The 136,600 square foot
community center is anchored by Winn-Dixie (45,900 square feet), and Office
Depot (25,000 square feet). This center is located approximately 16 miles north
of Fort Lauderdale and the area's current unemployment rates are among the
lowest in the state and has an average household income of $65,200.
In July 1998, the Company began construction on its newest development,
White Lake MarketPlace, a community shopping center of approximately 350,000
square feet located in White Lake Township, Michigan. Wal-Mart, Home Depot,
Farmer Jack, and OfficeMax will anchor the center. White Lake MarketPlace is
located in one of the more significant growth corridors of metropolitan Detroit.
White Lake Township is in Oakland County, which has the third highest per capita
income in the United States.
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COMPETITION
Numerous shopping center properties compete with the Company's properties
in attracting tenants to lease space. Some of these competing properties may be
newer, better located, better capitalized or better tenanted than some of the
Company's properties. Furthermore, the Company believes that it is likely that
major national or regional commercial property developers will continue to seek
development opportunities in markets where the Company's properties are located.
These developers may have greater financial resources than the Company. The
number of competitive commercial properties in a particular area could have a
material effect on the Company's ability to lease space in its properties or at
newly developed or acquired properties and on the rents charged. In addition,
the Company may face competition from alternate forms of retailing, including
home shopping networks, mail order catalogues and on-line based shopping
services which may limit the number of retail tenants that desire to seek space
in shopping center properties generally, all of which may affect the Company's
ability to make expected distributions.
The Company is subject to the risks that upon expiration of leases for
space located in its properties, the leases may not be renewed, the space may
not be relet or the terms of renewal or reletting (including the cost of
required renovations) may be less favorable than current lease terms. Leases on
a total of approximately 6.0% of the Company owned GLA will expire in 1999. If
the Company was unable to promptly relet or renew the leases for all or a
substantial portion of this space and, if the rental rates upon such renewal or
reletting were significantly lower than expected rates, or if the Company was
unable to maintain its current occupancy levels, then the Company's cash flow
and ability to make distributions to shareholders may be adversely affected.
The shopping center industry is seasonal in nature. Tenant sales and
occupancy are higher in the fourth quarter due to the Christmas selling season.
Back-to-school and Easter events also result in sales fluctuations.
TAX MATTERS
Qualification as a REIT. The Company first elected to qualify as a REIT for
the year ended December 31, 1988. The Company's policy is to qualify as a REIT
for federal income tax purposes. If the Company so qualifies, amounts paid by
the Company as distributions to its shareholders will not be subject to
corporate income taxes. For any year in which the Company does not meet the
requirements for electing to be taxed as a REIT, it will be taxed as a
corporation.
The requirements for qualification as a REIT are contained in sections
856-860 of the Code and the regulations issued thereunder. The following
discussion is a brief summary of some of those requirements. Such requirements
include certain provisions relating to the nature of a REIT's assets, the
sources of its income, the ownership of its stock, and the distribution of its
income. Among other things, at the end of each fiscal quarter, at least 75% of
the value of the total assets of the Company must consist of real estate assets
(including interests in mortgage loans secured by real property and interests in
other REIT's) as well as cash, cash items and government securities (the "75%
Asset Test"). There are also certain limitations on the amount of other types of
securities which can be held by a REIT. Additionally, at least 75% of the gross
income of the Company for the taxable year must be derived from certain sources,
which include "rents from real property," and interest secured by mortgages on
real property. An additional 20% of the gross income of the Company must be
derived from these same sources or from dividends, interest from any source, or
gains from the sale or other disposition of stock or securities or any
combination of the foregoing. There are also restrictions on the percentage of
gross income derived from the sale or disposition of certain assets within
certain time periods. A REIT is also required to distribute annually at least
95% of its REIT Taxable Income (as defined in the Code) to its shareholders.
During the third quarter of 1994, the Company held more than 25% of its
value of its gross assets in overnight Treasury Bill reverse repurchase
transactions which the United States Internal Revenue Service (the "IRS") may
view as non-qualifying assets for the purpose of satisfying an asset
qualification test applicable to REITs based on a Revenue Ruling published in
1977 (the "Asset Issue"). The Company requested that the IRS enter into a
closing agreement that the Asset Issue would not impact the Company's status as
a REIT. The IRS has deferred any action relating to the Asset Issue pending the
further examination
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of the Company's 1991-1995 tax returns (the "Tax Audit"). Based on developments
in the law which occurred since 1977, the Company's Tax Counsel, Battle Fowler
LLP, rendered an opinion that the Company's investment in Treasury Bill
repurchase obligations would not adversely affect its REIT status. However, such
opinion is not binding upon the IRS.
In connection with the spin-off of Atlantic, Atlantic assumed all liability
arising out of the Tax Audit and the Asset Issue, including liabilities for
interest and penalties and attorney fees relating thereto. In connection with
the assumption of such potential liabilities, Atlantic and the Company entered
into a tax agreement which provides that the Company (under the direction of its
Continuing Trustees), and not Atlantic, will control, conduct and effect the
settlement of any tax claims against the Company relating to the Tax Audit and
the Asset Issue. Accordingly, Atlantic would not have any control as to the
timing of the resolution or disposition of any such claims. The Company and
Atlantic also received an opinion from Special Tax Counsel, Wolf, Block, Schorr
and Solis-Cohen LLP, that, to the extent there is a deficiency in the Company's
taxable income arising out of the IRS examination and provided the Company
timely makes a deficiency dividend (i.e., declares and pays a distribution which
is permitted to relate back to the year for which each deficiency was determined
to satisfy the requirement that the REIT distribute 95 percent of its taxable
income), the classification of the Company as a REIT for the taxable years under
examination would not be affected. Under the tax agreement referred to above,
Atlantic agreed to reimburse the Company for the amount of any deficiency
dividend so made. If notwithstanding the above-described opinions of legal
counsel, the IRS successfully challenged the status of the Company as a REIT,
its status could be adversely affected. If the Company lost its status as a
REIT, the Company believes that it would be able to re-elect REIT status for the
taxable year beginning January 1, 1999.
The IRS agent conducting the examination has issued his examination report
with respect to the tax issues raised in the Tax Audit, including the Asset
Issue (collectively, the "Tax Issues"). The report sets forth a number of
positions which the examining agent has taken with respect to the Company's
taxes for the years that are subject to the Tax Audit, which the Company
believes are not consistent with applicable law and regulations of the IRS.
Based upon the report, the Company could be liable for up to $39.7 million in
combined taxes, penalties and interest through March 15, 1999. The proposed
adjustments to taxable income could require the Company to pay a deficiency
dividend to its current shareholders resulting in combined taxes, penalties,
interest and deficiency dividend of approximately $41 million as of March 15,
1999.
As noted above, pursuant to a Tax Agreement between Atlantic and the
Company, Atlantic has assumed all liability arising out of the Tax Audit and Tax
Issues, including the payment of the deficiency dividend. Based upon the amount
of Atlantic's net assets, as disclosed in its most recent quarterly report on
Form 10-Q for the period ended September 30, 1998, the Company does not believe
that the ultimate resolution of the Tax Issues will have a material adverse
effect on the financial position, results of operations or cash flows of the
Company. The issuance of the revenue agent's report constitutes only the first
step in the IRS administrative process for determining whether there is any
deficiency in the Company's tax liability for the years at issue and any adverse
determination by the examining agent is subject to administrative appeal within
the IRS and, thereafter, to judicial review. As noted above, the agent's report
sets forth a number of positions, which the Company and its legal counsel
believe are not consistent with applicable law and regulations of the IRS.
Accordingly, the Company intends to file an administrative appeal challenging
the findings contained in the IRS agent's examination report.
Environmental Matters. Under various Federal, state and local laws,
ordinances and regulations relating to the protection of the environment
("Environmental Laws"), a current or previous owner or operator of real estate
may be liable for the costs of removal or remediation of certain hazardous or
toxic substances disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property. Environmental Laws
often impose such liability without regard to whether the owner or operator knew
of, or was responsible for, the presence or release of such hazardous or toxic
substance. The presence of such substances, or the failure to properly remediate
such substances when present, released or discharged, may adversely affect the
owner's ability to sell or rent such property or to borrow using such property
as collateral. The cost of any required remediation and the liability of the
owner or operator therefore as to any property is generally not limited under
such Environmental Laws and could exceed the value of the property and/or the
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aggregate assets of the owner or operator. Persons who arrange for the disposal
or treatment of hazardous or toxic substances may also be liable for the cost of
removal or remediation of such substances at a disposal or treatment facility,
whether or not such facility is owned or operated by such persons. In addition
to any action required by Federal, state or local authorities, the presence or
release of hazardous or toxic substances on or from any property could result in
private plaintiffs bringing claims for personal injury or other causes of
action.
In connection with the ownership (direct or indirect), operation,
management and development of real properties, the Company may be potentially
liable for remediation, releases or injury. In addition, Environmental Laws
impose on owners or operators the requirement of on-going compliance with rules
and regulations regarding business-related activities that may affect the
environment. Such activities include, for example, the ownership or use of
transformers or underground tanks, the treatment or discharge of waste waters or
other materials, the removal or abatement of asbestos-containing materials
("ACMs") or lead-containing paint during renovations or otherwise, or
notification to various parties concerning the potential presence of regulated
matter, including ACMs. Failure to comply with such requirements could result in
difficulty in the lease or sale of any affected property and/or the imposition
of monetary penalties, fines or other sanctions in addition to the costs
required to attain compliance. Various of the Company's properties have or may
contain ACMs or underground storage tanks ("USTs"); however, except as set forth
below, the Company is not aware of any potential environmental liability which
could reasonably be expected to have a material impact on the Company's business
or operations. No assurance can be given that future laws, ordinances or
regulations will not impose any material environmental requirement or liability,
or that a material adverse environmental condition does not otherwise exist.
There was a release of approximately 2,300 gallons of gasoline from a
product line break in August 1986 and a release of approximately 1,200 gallons
of gasoline from a delivery line break in October 1991 at a gasoline station
located at Jackson Crossing. A release of gasoline was also discovered in 1987
at a time of removal of USTs from a gasoline station located adjacent to Lake
Orion Plaza. Subsequent investigations indicated that levels of contamination
exist in the ground water under such properties. The Ramco Principals, jointly
and severally, have agreed to indemnify the Company, the Operating Partnership
and their respective subsidiaries and affiliates for any and all damages arising
from or in connection with such environmental conditions at the Jackson Crossing
and Lake Orion Plaza properties.
Year 2000 Compliance. The Company recognizes that Year 2000 issues may have
an impact on its business, operations and financial condition. The Company has
completed an assessment of its Year 2000 readiness with respect to all of its
information technology ("IT") systems and is currently addressing the
reliability and condition of its non-IT systems. These assessments will continue
to be updated as additional information becomes available and as new concerns
are identified.
The Company's IT systems generally consist of file servers, operating
systems, application programs and workstations that utilize purchased and
customized software. The Company continues to evaluate the Year 2000 compliance
status of each vendor and tenant and believes that its existing systems or
planned upgrades during 1999 will be Year 2000 compliant. Implementation and
upgrades of non-Year 2000 compliant systems are not expected to result in
significant additional cost to the Company.
The Company's non-IT systems which may be subject to Year 2000 issues are
facility related and encompass areas such as HVAC systems, elevators, security,
lighting, telecommunications, electrical, plumbing, fire and sprinkler controls.
The Company is currently addressing the potential impact of Year 2000 issues in
these areas and has not identified any instances where Year 2000 issues will
require material costs to repair or replace any of these systems.
The significant risks to the Company, in the event that Year 2000 issues
are not identified and corrected, are that the Company could experience delays
or errors in processing financial and operational information. Non-IT system
problems could result in forced closure of certain facilities, which could limit
the efficient operation of the Company's properties.
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Contingency plans will be developed if it appears the Company or its key
suppliers and tenants will not be Year 2000 compliant, and such noncompliance is
expected to have a significant adverse effect on the Company's financial
position or results of operations.
ITEM 2. PROPERTIES
The Company's properties are located in thirteen states primarily
throughout the Midwest, East and the Southeast United States as follows:
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ANNUALIZED BASE
NUMBER OF RENTAL AT COMPANY
STATE PROPERTIES DECEMBER 31, 1998(1) OWNED GLA
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Michigan............................... 20 $23,989,229 3,528,094
Florida................................ 9 7,035,254 1,298,392
Tennessee.............................. 5 4,195,699 783,090
Ohio................................... 3 3,535,846 375,858
North Carolina......................... 3 3,091,550 537,347
Georgia................................ 4 2,853,908 543,298
South Carolina......................... 2 2,542,493 471,688
New Jersey............................. 1 2,518,636 223,981
Wisconsin.............................. 1 2,336,845 329,454
Virginia............................... 1 2,268,083 240,042
Alabama................................ 2 1,668,237 348,790
Maryland............................... 1 1,402,582 250,016
New York............................... 2 444,615 98,635
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Total............................. 54 $57,882,977 9,028,685
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With the exception of Kentwood Towne Centre and Southfield Plaza Expansion
in which the Company owns a 50% interest in the partnerships that own such
properties, all of the properties are 100% owned by the Operating Partnership or
its subsidiaries. These two properties are included in the above tables.
The Company's properties, by type of center, consist of the following:
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ANNUALIZED BASE
NUMBER OF RENTAL AT COMPANY
TYPE OF TENANT PROPERTIES DECEMBER 31, 1998(1) OWNED GLA
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<S> <C> <C> <C>
Community centers...................... 43 $40,758,608 6,701,348
Power centers.......................... 6 8,787,400 1,079,802
Enclosed regional malls................ 2 7,622,171 1,054,731
Single tenant properties............... 3 714,798 192,804
-- ----------- ---------
Total............................. 54 $57,882,977 9,028,685
== =========== =========
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1998 base rental revenues
multiplied by 12.
Additional information regarding the Properties is included in the Property
Schedule on the following pages.
8
<PAGE> 10
RAMCO-GERSHENSON PROPERTIES TRUST
PROPERTY SCHEDULE
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION [3] GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center................. Athens, AL Community Center 1997/NA 128,747
Cox Creek Plaza.................... Florence, AL Community Center 1997/NA 99,428
FLORIDA
Crestview Corners.................. Crestview, FL Community Center 1997/1993 79,603
Shoppes of Lakeland................ Lakeland, FL Power Center 1996/NA 216,792
Southbay Fashion Center............ Osprey, FL Community Center 1998/NA 31,700
Lantana Plaza...................... Lantana, FL Community Center 1993/NA 40,275
Naples Towne Centre................ Naples, FL Community Center 1983/NA 104,577 21,000
Rivertowne Square.................. Deerfield Beach, FL Community Center 1998/NA 70,948
Sunshine Plaza..................... Tamarac, FL Community Center 1991/NA 183,052
Pelican Plaza...................... Sarasota, FL Community Center 1997/NA 35,768
Village Lakes Shopping Center...... Land O' Lakes, FL Community Center 1997/NA 125,141
GEORGIA
Conyers Crossing................... Conyers, GA Community Center 1998/NA 138,882
Holcomb Center..................... Alpharetta, GA Community Center 1996/NA 39,668
Indian Hills....................... Calhoun, GA Community Center 1997/NA 97,930
Mays Crossing...................... Stockbridge, GA Community Center 1997/1986 100,183
MARYLAND
Crofton Plaza...................... Crofton, MD Community Center 1991/NA 181,039
MICHIGAN
Sterling Heights,
Clinton Valley Mall................ MI Community Center 1979/1993 108,680
Sterling Heights,
Clinton Valley Strip............... MI Community Center 1979/NA 50,000 0
Eastridge Commons.................. Flint, MI Power Center 1990/1997 101,909 123,869
Edgewood Towne Center.............. Lansing, MI Power Center 1990/1992 209,272 23,524
Ferndale Plaza..................... Ferndale, MI Community Center 1984/NA 0
Fraser Shopping Center............. Fraser, MI Community Center 1983/NA 52,784
Jackson Crossing................... Jackson, MI Regional Mall 1990/1996 254,243 139,857
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL % OF TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY COMPANY OWNED GLA GLA LEASED
TENANT CENTER OWNED OWNED LEASED AS AS OF
PROPERTY GLA GLA GLA GLA OF 12/31/98 12/31/98
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center................. 80,815 209,562 209,562 2.3% 195,641 93.4%
Cox Creek Plaza.................... 39,800 139,228 139,228 1.5% 124,178 89.2%
FLORIDA
Crestview Corners.................. 32,050 111,653 111,653 1.2% 108,053 96.8%
Shoppes of Lakeland................ 32,000 248,792 248,792 2.8% 245,592 98.7%
Southbay Fashion Center............ 64,999 96,699 96,699 1.1% 89,786 92.9%
Lantana Plaza...................... 76,022 116,297 116,297 1.3% 106,647 91.7%
Naples Towne Centre................ 23,152 148,729 44,152 0.5% 17,952 40.7%
Rivertowne Square.................. 65,699 136,647 136,647 1.5% 121,747 89.1%
Sunshine Plaza..................... 68,514 251,566 251,566 2.8% 175,978 70.0%
Pelican Plaza...................... 70,342 106,110 106,110 1.2% 97,326 91.7%
Village Lakes Shopping Center...... 61,335 186,476 186,476 2.1% 186,476 100.0%
GEORGIA
Conyers Crossing................... 31,560 170,442 170,442 1.9% 170,442 100.0%
Holcomb Center..................... 66,835 106,503 106,503 1.2% 80,191 75.3%
Indian Hills....................... 31,200 129,130 129,130 1.4% 125,080 96.9%
Mays Crossing...................... 37,040 137,223 137,223 1.5% 133,623 97.4%
MARYLAND
Crofton Plaza...................... 68,977 250,016 250,016 2.8% 248,927 99.6%
MICHIGAN
Clinton Valley Mall................ 48,452 157,132 157,132 1.7% 38,455 24.5%
Clinton Valley Strip............... 44,360 94,360 44,360 0.5% 44,360 100.0%
Eastridge Commons.................. 45,637 271,415 169,506 1.9% 166,391 98.2%
Edgewood Towne Center.............. 62,233 295,029 85,757 0.9% 83,857 97.8%
Ferndale Plaza..................... 30,916 30,916 30,916 0.3% 23,461 75.9%
Fraser Shopping Center............. 23,800 76,584 76,584 0.8% 76,584 100.0%
Jackson Crossing................... 243,193 637,293 383,050 4.2% 357,602 93.4%
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
ALABAMA
Athens Town Center................. Bruno's Food World
Wal-Mart(4)
Cox Creek Plaza.................... Wal-Mart(4)
FLORIDA
Crestview Corners.................. Fleming Foods
Wal-Mart(4)
Shoppes of Lakeland................ Builder's Square
Montgomery Ward
Service Merchandise
Southbay Fashion Center............ Jacobson's
Lantana Plaza...................... Publix
Naples Towne Centre................ Florida Food & Drug(1)
Kmart(1)
Rivertowne Square.................. Office Depot
Winn-Dixie
Sunshine Plaza..................... Old Time Pottery
Publix
Pelican Plaza...................... Linens 'N Things
Village Lakes Shopping Center...... Kash 'N Karry Food Store
Wal-Mart
GEORGIA
Conyers Crossing................... Kmart
Upton's
Holcomb Center..................... A & P
Indian Hills....................... Ingles Grocery
Wal-Mart(4)
Mays Crossing...................... Ingles Grocery
Wal-Mart(4)
MARYLAND
Crofton Plaza...................... Basic's Supermarket
Drug Emporium
Kmart
MICHIGAN
Clinton Valley Mall................ Office Depot
Clinton Valley Strip............... Service Merchandise(1)
Eastridge Commons.................. Farmer Jack
Staples
Target(1)
TJ Maxx
Edgewood Towne Center.............. OfficeMax
Sam's Club(1)
Target(1)
Ferndale Plaza..................... None
Fraser Shopping Center............. Oakridge Market
Rite-Aid
Jackson Crossing................... Kohl's Department Store
Sears(1)
Target(1)
Toys 'R Us
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION [3] GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
Jackson West....................... Jackson, MI Community Center 1996/NA 173,480
Kentwood Towne Center(2)........... Kentwood, MI Power Center 1989/NA 101,909 122,390
Lake Orion Plaza................... Lake Orion, MI Community Center 1977/NA 114,574
Madison Center..................... Madison Heights, MI Community Center 1997/NA 132,360
New Towne Plaza.................... Canton, MI Community Center 1976/1993 91,122
Oakbrook Square.................... Flint, MI Community Center 1989/NA 57,160
Roseville Plaza.................... Roseville, MI Community Center 1983/1994 135,637
Southfield Plaza................... Southfield, MI Community Center 1983/1983 128,192
Southfield Plaza Expansion(2)...... Southfield, MI Community Center 1985/NA 0
Taylor Plaza....................... Taylor, MI Single Tenant Retail 1996/NA 122,374
Tel-Twelve Mall.................... Southfield, MI Regional Mall 1983/1997 462,696
West Oaks I........................ Novi, MI Power Center 1981/1998 226,839
West Oaks II....................... Novi, MI Power Center 1987/NA 220,097 25,000
NEW JERSEY
Chester Springs.................... Chester, NJ Community Center 1994/NA 81,760
NEW YORK
Toys 'R Us......................... Commack, NY Single Tenant Retail 1992/NA 47,500
Trinity Corners Pound Ridge, NY Community Center 1992/NA 28,515
NORTH CAROLINA
Hickory Corners Hickory, NC Community Center 1997/1987 106,922
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL % OF TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY COMPANY OWNED GLA GLA LEASED
TENANT CENTER OWNED OWNED LEASED AS AS OF
PROPERTY GLA GLA GLA GLA OF 12/31/98 12/31/98
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jackson West....................... 15,837 189,317 189,317 2.1% 189,317 100.0%
Kentwood Towne Center(2)........... 61,265 285,564 183,655 2.0% 183,655 100.0%
Lake Orion Plaza................... 14,878 129,452 129,452 1.4% 129,452 100.0%
Madison Center..................... 60,384 192,744 192,744 2.1% 178,256 92.5%
New Towne Plaza.................... 80,704 171,826 171,826 1.9% 158,716 92.4%
Oakbrook Square.................... 83,122 140,282 140,282 1.6% 133,382 95.1%
Roseville Plaza.................... 95,464 231,101 231,101 2.6% 212,440 91.9%
Southfield Plaza................... 37,658 165,850 165,850 1.8% 130,053 78.4%
Southfield Plaza Expansion(2)...... 19,400 19,400 19,400 0.2% 11,900 61.3%
Taylor Plaza....................... 0 122,374 122,374 1.4% 122,374 100.0%
Tel-Twelve Mall.................... 208,985 671,681 671,681 7.4% 656,382 97.7%
West Oaks I........................ 15,324 242,163 242,163 2.7% 242,163 100.0%
West Oaks II....................... 95,944 341,041 120,944 1.3% 120,944 100.0%
NEW JERSEY
Chester Springs.................... 142,221 223,981 223,981 2.5% 217,590 97.1%
NEW YORK
Toys 'R Us......................... 0 47,500 47,500 0.5% 47,500 100.0%
Trinity Corners 22,620 51,135 51,135 0.6% 35,134 68.7%
NORTH CAROLINA
Hickory Corners 63,317 170,239 170,239 1.9% 167,439 98.4%
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
Jackson West....................... Circuit City
Lowe's
OfficeMax
Kentwood Towne Center(2)........... Builder's Square
OfficeMax
Target(1)
Lake Orion Plaza................... Farmer Jack (A&P)
Kmart
Madison Center..................... Dunham's
Kmart
Oakridge Market
New Towne Plaza.................... Kohl's Department Store
Oakbrook Square.................... Kids 'R Us
TJ Maxx
Roseville Plaza.................... A & P
Marshall's
Service Merchandise
Southfield Plaza................... Burlington Coat Factory
Marshall's
Southfield Plaza Expansion(2)...... None
Taylor Plaza....................... Kmart
Tel-Twelve Mall.................... Chrysler (land lease)
Circuit City
Crowley's
Crowley's (land lease)
Kmart
Media Play
Montgomery Ward
Office Depot
West Oaks I........................ Circuit City
Designer Shoe
Warehouse
Kmart (land lease)
OfficeMax
Service Merchandise
West Oaks II....................... Builder's Square(1)
Kids 'R Us(1)
Kohl's Department Store(1)
Marshall's
Toys 'R Us(1)
NEW JERSEY
Chester Springs.................... Shop-Rite Supermarket
Staples
NEW YORK
Toys 'R Us......................... Toys 'R Us
Trinity Corners Scott's Corner Market
NORTH CAROLINA
Hickory Corners Food Lion Grocery
OfficeMax
Wal-Mart(4)
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
YEAR OPENED OR
ACQUIRED/YEAR COMPANY
OF LATEST ANCHOR OWNED
RENOVATION OR OWNED ANCHOR
PROPERTY LOCATION TYPE OF PROPERTY EXPANSION [3] GLA GLA
-------- -------- ---------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
Holly Springs Plaza................ Franklin, NC Community Center 1997/1992 124,484
Ridgeview Crossing................. Elkin, NC Community Center 1997/1995 168,659
OHIO
OfficeMax Center................... Toledo, OH Single Tenant Retail 1994/NA 22,930
Spring Meadows Place............... Holland, OH Power Center 1987/1997 275,372 81,125
Troy Towne Center.................. Troy, OH Community Center 1990/1996 90,921 85,000
SOUTH CAROLINA
Edgewood Square.................... North Augusta, SC Community Center 1997/1995 207,829
Taylors Square..................... Greenville, SC Community Center 1997/1995 209,724
TENNESSEE
Cumberland Gallery................. New Tazewell, TN Community Center 1997/NA 73,304
Highland Square.................... Crossville, TN Community Center 1997/NA 131,126
Northwest Crossing................. Knoxville, TN Community Center 1997/1995 217,443
Stonegate Plaza.................... Kingsport, TN Community Center 1997/1993 127,042
Tellico Plaza...................... Lenoir City, TN Community Center 1997/NA 94,805
VIRGINIA
Aquia Towne Center................. Stafford, VA Community Center 1998/NA 77,438
WISCONSIN
West Allis Town Centre............. West Allis, WI Community Center 1987/NA 216,474
--------- ---------
Total........................... 1,408,300 5,932,774
========= =========
<CAPTION>
% OF TOTAL
COMPANY
COMPANY TOTAL TOTAL % OF TOTAL COMPANY OWNED
OWNED SHOPPING COMPANY COMPANY OWNED GLA GLA LEASED
TENANT CENTER OWNED OWNED LEASED AS AS OF
PROPERTY GLA GLA GLA GLA OF 12/31/98 12/31/98
-------- ------- -------- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Holly Springs Plaza................ 31,100 155,584 155,584 1.7% 154,084 99.0%
Ridgeview Crossing................. 42,865 211,524 211,524 2.3% 209,724 99.1%
OHIO
OfficeMax Center................... 0 22,930 22,930 0.3% 22,930 100.0%
Spring Meadows Place............... 117,366 473,863 198,491 2.2% 190,417 95.9%
Troy Towne Center.................. 69,437 245,358 154,437 1.7% 145,800 94.4%
SOUTH CAROLINA
Edgewood Square.................... 20,375 228,204 228,204 2.5% 223,829 98.1%
Taylors Square..................... 33,760 243,484 243,484 2.7% 202,484 83.2%
TENNESSEE
Cumberland Gallery................. 24,851 98,155 98,155 1.1% 93,055 94.8%
Highland Square.................... 40,420 171,546 171,546 1.9% 161,326 94.0%
Northwest Crossing................. 43,264 260,707 260,707 2.9% 259,212 99.4%
Stonegate Plaza.................... 11,448 138,490 138,490 1.5% 138,490 100.0%
Tellico Plaza...................... 19,387 114,192 114,192 1.3% 114,192 100.0%
VIRGINIA
Aquia Towne Center................. 162,604 240,042 240,042 2.7% 210,347 87.6%
WISCONSIN
West Allis Town Centre............. 112,980 329,454 329,454 3.6% 327,454 99.4%
--------- ---------- --------- ----- --------- ------
Total........................... 3,095,911 10,436,985 9,028,685 100.0% 8,408,390 93.1%
========= ========== ========= ===== ========= ======
<CAPTION>
PROPERTY ANCHORS
-------- -------
<S> <C>
Holly Springs Plaza................ Ingles Grocery
Wal-Mart
Ridgeview Crossing................. Belk Department Store
Ingles Grocery
Wal-Mart
OHIO
OfficeMax Center................... OfficeMax
Spring Meadows Place............... Dick's Sporting Goods(1)
Kroger(1)
OfficeMax
Service Merchandise(1)
SuperPetz(5)
Target(1)
TJ Maxx
Troy Towne Center.................. County Market
Sears Hardware
Stage Department Store
Wal-Mart(1)
SOUTH CAROLINA
Edgewood Square.................... Bi-Lo Grocery
Goody's Family Clothing
Wal-Mart
Taylors Square..................... Goody's Family Clothing
Wal-Mart
TENNESSEE
Cumberland Gallery................. Ingles Grocery
Wal-Mart
Highland Square.................... Kroger
Wal-Mart(4)
Northwest Crossing................. Goody's Family Clothing
Ingles Grocery
Wal-Mart
Stonegate Plaza.................... Food Lion Grocery
Wal-Mart
Tellico Plaza...................... Bi-Lo Grocery
Wal-Mart(4)
VIRGINIA
Aquia Towne Center................. Big Lots
Shoppers Food
Warehouse
WISCONSIN
West Allis Town Centre............. Builder's Square
Kmart
Kohl's Supermarket (A&P)
Total...........................
</TABLE>
- -------------------------
(1) Anchor-owned store
(2) 50% general partner interest
(3) Represents year opened or acquired/year of latest renovation or expansion by
either the Company or the former Ramco Group, as applicable.
(4) Wal-Mart currently is not occupying its leased premises in this shopping
center but remains obligated to pay under the terms of the respective lease
agreement.
11
<PAGE> 13
TENANT INFORMATION
The following table sets forth, as of December 31, 1998, information
regarding space leased to tenants which in each case, individually account for
more than 2% of total annualized base rental revenue from the Company's
properties.
<TABLE>
<CAPTION>
TOTAL ANNUALIZED % OF ANNUALIZED AGGREGATE % OF TOTAL
NUMBER OF BASE RENTAL BASE RENTAL GLA LEASED COMPANY
TENANT STORES REVENUE(1) REVENUE BY TENANT OWNED GLA
------ --------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Wal-Mart.......................... 16 $ 6,239,653 10.8% 1,431,499 15.9%
Kmart............................. 8 2,053,196 3.6 768,103 8.5
A&P/Farmer Jack................... 5 1,911,175 3.3 231,257 2.6
OfficeMax......................... 7 1,705,490 3.0 161,801 1.8
Circuit City...................... 3 1,418,639 2.5 100,439 1.1
Builder's Square.................. 3 1,345,086 2.3 249,440 2.8
----------- ---- --------- ----
$14,673,239 25.5% 2,942,539 32.7%
=========== ==== ========= ====
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1998 base rental revenue
multiplied by 12.
Approximately 605,000 square feet of GLA at eight of the Southeast
Portfolio shopping centers is leased to Wal-Mart, but not currently occupied by
Wal-Mart, although Wal-Mart remains obligated under the respective lease
agreements. Wal-Mart has entered into various subleases, which sub-tenants
currently covering approximately 382,000 square feet of GLA.
During July 1997 Montgomery Wards ("Wards"), a tenant at three of the
Company's properties, Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland, filed for protection under Chapter 11 of the Bankruptcy Code. The
Company was notified in March 1998 that Wards rejected the lease at the
Company's Clinton Valley Mall. This location consists of a 101,200 square foot
department store and a 7,480 square foot TBA store (Tires, Batteries and
Automotive). On an annual basis, Wards paid approximately $1,000,000 in base
rent and operating and real estate tax expense reimbursement for the Clinton
Valley Mall. The Company is pursuing replacement tenants to lease the space and
has currently leased 33,000 square feet of the former department store and
rental income is expected to commence during the first quarter of 1999.
On February 4, 1999, Crowley, Milner and Company, a tenant at the Company's
Tel-Twelve Mall, filed for protection under Chapter 11 of the Bankruptcy Code.
For 1998, Crowley's paid approximately $396,000 in base rent and operating and
real estate tax expense reimbursement.
The following table sets forth, as of December 31, 1998, the total GLA
leased to anchors, retail tenants, and available space, in the aggregate, of the
Company's properties.
<TABLE>
<CAPTION>
ANNUALIZED % OF ANNUALIZED AGGREGATE % OF TOTAL
BASE RENTAL BASE RENTAL GLA LEASED COMPANY
TYPE OF TENANT REVENUE(1) REVENUE BY TENANT OWNED GLA
-------------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Anchor...................................... $29,487,016 50.9% 5,681,217 62.9%
Retail (non-anchor)......................... 28,395,961 49.1 2,727,173 30.2
Available................................... -- -- 620,295 6.9
----------- ----- --------- -----
Total.................................. $57,882,977 100.0% 9,028,685 100.0%
=========== ===== ========= =====
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1998 base rental revenue
multiplied by 12.
12
<PAGE> 14
The following table sets forth as, of December 31, 1998, the total GLA
leased to national, regional and local tenants, in the aggregate, of the
Company's properties.
<TABLE>
<CAPTION>
ANNUALIZED % OF ANNUALIZED AGGREGATE % OF TOTAL
BASE RENTAL BASE RENTAL GLA LEASED COMPANY
TYPE OF TENANT REVENUE(1) REVENUE BY TENANT OWNED GLA
-------------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
National.................................... $42,195,670 72.9% 6,754,947 80.3%
Local....................................... 11,605,120 20.1 1,101,811 13.1
Regional.................................... 4,082,187 7.0 551,632 6.6
----------- ----- --------- -----
Total.................................. $57,882,977 100.0% 8,408,390 100.0%
=========== ===== ========= =====
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1998 base rental revenue
multiplied by 12.
The following table sets forth lease expirations for the next five years at
the Company's properties assuming that no renewal options are exercised.
<TABLE>
<CAPTION>
AVERAGE BASE % OF ANNUALIZED
RENTAL REVENUE ANNUALIZED BASE RENTAL
PER SQ. FT. AS OF BASE RENTAL REVENUE AS OF LEASED COMPANY
NO. OF 12/31/98 REVENUE AS OF 12/31/98 OWNED GLA
LEASE LEASES UNDER 12/31/98 UNDER REPRESENTED BY EXPIRING (IN
EXPIRATION EXPIRING EXPIRING LEASES EXPIRING LEASES(1) EXPIRING LEASES SQUARE FEET)
---------- -------- ----------------- ------------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
1999................. 168 $9.00 $4,503,929 7.8% 500,248
2000................. 171 8.66 6,093,983 10.5 703,629
2001................. 136 7.59 4,319,182 7.5 568,806
2002................. 119 7.50 5,090,573 8.8 679,056
2003................. 107 8.92 4,712,330 8.1 528,565
<CAPTION>
% OF TOTAL
COMPANY
OWNED GLA
LEASE REPRESENTED BY
EXPIRATION EXPIRING LEASES
---------- ---------------
<S> <C>
1999................. 5.5%
2000................. 7.8
2001................. 6.3
2002................. 7.5
2003................. 5.9
</TABLE>
- -------------------------
(1) Annualized Base Rental Revenue is December 1998 base rental revenue
multiplied by 12.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business against or involving the Company
or its properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1998, no matters were submitted for a vote of
stockholders of the Company.
13
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION -- The Company's Common Shares have been listed and
traded on the New York Stock Exchange ("NYSE") under the symbol "RPT" since May
13, 1996. The Common Shares were previously listed on the NYSE under the name of
RPS Realty Trust, symbol "RPS", from December 28, 1988 until May 10, 1996.
The following table shows high and low closing prices per share for each
quarter in 1997 and 1998.
<TABLE>
<CAPTION>
SHARE PRICE
-----------------
QUARTER ENDED HIGH LOW
------------- ---- ---
<S> <C> <C>
March 31, 1997............................................. $18.125 $16.750
June 30, 1997.............................................. 18.250 16.625
September 30, 1997......................................... 19.938 17.875
December 31, 1997.......................................... 20.063 18.063
March 31, 1998............................................. 21.250 19.500
June 30, 1998.............................................. 21.625 19.000
September 30, 1998......................................... 19.000 16.125
December 31, 1998.......................................... 16.375 14.500
</TABLE>
HOLDERS -- The number of holders of record of the Company's Common Shares
was 3,072 as of March 8, 1999.
DIVIDENDS -- Under the Code, a REIT must meet certain requirements,
including a requirement that it distribute annually to its shareholders at least
95 percent of its taxable income. Dividend distributions per common share for
the years ended December 31, 1998 and 1997, are summarized as follows.
The Company declared the following cash distributions per share to common
shareholders for the year ended December 31, 1997.
<TABLE>
<CAPTION>
DIVIDEND
RECORD DATE DISTRIBUTION PAYMENT DATE
----------- ------------ ------------
<S> <C> <C>
March 31, 1997.................................... $.42 April 15, 1997
June 30, 1997..................................... $.42 July 15, 1997
September 30, 1997................................ $.42 October 21, 1997
December 31, 1997................................. $.42 January 20, 1998
</TABLE>
The Company declared the following cash distributions per common share to
shareholders for the year ended December 31, 1998:
<TABLE>
<CAPTION>
DIVIDEND
RECORD DATE DISTRIBUTION PAYMENT DATE
----------- ------------ ------------
<S> <C> <C>
March 31, 1998.................................... $.42 April 21, 1998
June 30, 1998..................................... $.42 July 21, 1998
September 30, 1998................................ $.42 October 20, 1998
December 31, 1998................................. $.42 January 19, 1999
</TABLE>
Distributions paid by the Company are at the discretion of the Board of
Trustees and will depend on a number of factors, including cash flow of the
Company, its financial condition and capital requirements, the annual
distribution requirements necessary to maintain its status as a REIT under the
Code, and such other factors as the Board of Trustees deems relevant.
The Company has a Dividend Reinvestment Plan (the "DRP Plan") which allows
shareholders to acquire additional Common Shares by automatically reinvesting
cash dividends. Shares are acquired pursuant to the DRP Plan at a price equal to
the prevailing market price of such Shares, without payment of any
14
<PAGE> 16
brokerage commission or service charge. Shareholders who do not participate in
the Plan continue to receive cash distributions, as declared.
The Company has issued an aggregate of 1,400,000 Series A Preferred Shares
to certain clients advised by Morgan Stanley Asset Management, Inc. ("MSAM") and
Kimco Realty Corporation ("Kimco"). The Series A Preferred Shares were sold
pursuant to a Preferred Units and Stock Purchase Agreement dated as of September
30, 1997 among the Company, the Operating Partnership, certain clients advised
by MSAM and Special Situations RG REIT, Inc. (the entity the investors used to
effect their investment). The Series A Preferred Shares were sold for an
aggregate consideration of $35,000,000 or $25.00 per Series A Preferred Share.
The sale and issuance of the Series A Preferred Shares was not registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
Section 4(2) of the Securities Act. The purchasers of the Series A Preferred
Shares were limited to six institutional investors consisting of insurance
companies, pension funds and other sophisticated institutional investors each of
whom made representations to the Company and the Operating Partnership with
respect to its intention to purchase the securities for investment only, and not
with a view to or for sale in connection with any distribution. Each investor
also represented to the Company and the Operating Partnership that such investor
was sophisticated and was able to bear the economic risk of its investment in
the Operating Partnership and the Company. No underwriter was involved in the
transaction and there were no underwriting discounts or commissions paid in
connection therewith.
Under certain circumstances, the Series A Preferred Shares are convertible
into Common Shares. Each Series A Preferred Share may be converted into Common
Shares at the Stated Value (equal to $25.00) plus any unpaid dividends, if any,
for each Series A Preferred Share so converted, for Common Shares issued on
conversion priced at $17.50 per Common Share, subject to adjustment under
certain circumstances to prevent the dilution of the Series A Preferred Shares,
including certain issues of Common Shares by the Company at prices less than
$17.50.
15
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER
OF PROPERTIES)
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this report:
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED DECEMBER 31, YEAR ENDED
------------------------------------------------- DECEMBER 31,(1)
1998 1997 1996(2) 1995 1994 1997
---- ---- ------- ---- ---- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues
Rental revenues................... $ 75,997 $ 58,492 $37,598 $ 8,936 $ 6,764 $73,128
Interest and other income......... 758 752 2,915 7,781 19,642 855
-------- -------- ------- ------- ------- -------
Total Revenues............... 76,755 59,244 40,513 16,717 26,406 73,983
-------- -------- ------- ------- ------- -------
Expenses:
Real estate taxes................. 7,354 6,230 4,643 1,271 1,236 7,426
Recoverable operating expenses.... 12,763 11,462 8,230 1,934 1,530 12,346
Depreciation and amortization..... 12,189 8,216 4,798 1,214 947 10,949
Other operating................... 809 974 791 183 227 1,119
General and administrative........ 5,831 4,753 4,683 4,127 3,898 5,085
Interest expense.................. 25,396 14,753 6,725 -- 426 24,183
Spin-off and other expenses....... -- -- 7,976 -- -- --
Allowance for loan losses......... -- -- -- 4,450 2,500 --
-------- -------- ------- ------- ------- -------
Total Expenses............... 64,342 46,388 37,846 13,179 10,764 61,108
-------- -------- ------- ------- ------- -------
Operating Income....................... 12,413 12,856 2,667 3,538 15,642 12,875
Loss From Unconsolidated Entities...... 304 314 216 -- -- 314
-------- -------- ------- ------- ------- -------
Income Before Minority Interest........ 12,109 12,542 2,451 3,538 15,642 12,561
Minority Interest...................... 3,451 3,344 2,159 -- -- 3,350
-------- -------- ------- ------- ------- -------
Net Income................... $ 8,658 $ 9,198 $ 292 $ 3,538 $15,642 $ 9,211
======== ======== ======= ======= ======= =======
Net Income Available to Common
Shareholders......................... $ 7,044 $ 8,920 $ 292 $ 3,538 $15,642 $ 8,933
======== ======== ======= ======= ======= =======
Earnings Per Common Share:
Basic................................ $0.99 $1.25 $0.04 $0.50 $2.20 $1.25
======== ======== ======= ======= ======= =======
Diluted.............................. $0.98 $1.25 $0.04 $0.50 $2.20 $1.25
======== ======== ======= ======= ======= =======
Weighted Average Shares Outstanding
Basic................................ 7,133 7,123 7,123 7,123 7,123 7,123
======== ======== ======= ======= ======= =======
Diluted.............................. 7,165 7,148 7,123 7,123 7,123 7,148
======== ======== ======= ======= ======= =======
OTHER DATA:
Funds from Operations(3)............. $ 22,716 $ 20,500 $15,225 $23,260
Cash flow provided by (used in):
Operating activities.............. 16,794 17,026 15,495 2,335 14,452
Investing activities.............. (38,280) (153,183) 18,976 (56,335) 37,184
Financing activities.............. 21,003 137,649 (42,397) (9,117) (15,852)
Number of Properties at Year End..... 54 50 32 8 8 50
Company owned GLA.................... 9,029 8,372 5,297 1,189 1,189 8,372
Cash Distributions Declared Per
Share............................. $1.68 $1.68 $1.44 $1.28 $1.28
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 4,550 $ 5,033 $ 3,541 $ 11,467 $ 74,584
REMIC Investments....................... 58,099
Interest and accounts receivable........ 9,864 6,035 3,901 7,748 8,608
Mortgage loans receivable -- net........ 36,023 41,892
Investment in real estate (before
accumulated depreciation)............ 535,980 473,213 314,854 58,046 57,841
Total Assets............................ 544,404 484,682 323,627 180,581 186,171
Mortgages and Notes Payable............. 328,248 295,618 143,410
Total Liabilities....................... 348,727 314,436 159,056 3,561 3,572
Minority Interest....................... 48,535 42,282 44,706
Shareholders' Equity.................... 147,142 127,964 119,865 177,020 182,599
</TABLE>
- -------------------------
(1) Pro forma information has been presented as if the acquisitions of shopping
center properties during 1997 had occurred on January 1, 1997. Pro forma
consolidated financial data related to 1998 acquisitions would not be
significantly different than actual results.
(2) Effective May 1, 1996, the Company completed the acquisition of
substantially all of the shopping center and retail properties, as well as
the management organization and business operations of Ramco and its
affiliates and the spin-off of its wholly owned subsidiary, Atlantic Realty
Trust, a Maryland real estate investment trust. In connection with the Ramco
Acquisition, the Company's name was changed to Ramco-Gershenson Properties
Trust and a one-for-four reverse stock split was effectuated as of the close
of business on May 1, 1996.
(3) Management generally considers Funds From Operations ("FFO") to be one
measure of financial performance of an equity REIT. The Company has adopted
the most recent National Association of Real Estate Investment Trusts
("NAREIT") definition of FFO, which was effective on January 1, 1996. Under
the definition, FFO represents income (loss) before minority interest
(computed in accordance with generally accepted accounting principles
("GAAP")), excluding gains (losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustment for unconsolidated
partnerships and joint ventures. Therefore, FFO does not represent cash
generated from operating activities in accordance with GAAP and should not
be considered an alternative to net income as an indication of the Company's
performance or to cash flows from operating activities as a measure of
liquidity or the ability to pay distributions. Furthermore, while net income
and cash generated from operating, investing and financing activities,
determined in accordance with GAAP, consider capital expenditures which have
been and will be incurred in the future, the calculations of FFO does not.
17
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with Ramco-Gershenson
Properties Trust's (the "Company") Consolidated Financial Statements, the notes
thereto, and the comparative summary of selected financial data appearing
elsewhere in this report. Dollars and square feet information are in thousands,
except per Share and per Unit amounts.
Certain information included in the following section of this report, other
than historical information may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are identified by terminology such as "may," "will,"
"believe," "expect," "estimate," "anticipate," "continue" or similar terms.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, actual results may differ materially
from those projected in the forward-looking statements.
OVERVIEW
The results of operations depends primarily upon rental income. The
Company's future success is dependent in part by its ability to maintain
occupancy and increase rental rates.
OCCUPANCY -- Occupancy remained stable for the Company's overall portfolio
with a breakdown by asset category as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Enclosed regional malls..................................... 96.1% 92.3%
Power centers............................................... 98.8 94.9
Community centers........................................... 91.6 93.4
Single tenant retail properties............................. 100.0 100.0
Portfolio summary........................................... 93.1% 93.6%
===== =====
</TABLE>
AVERAGE BASE RENTS -- Average base rents per square foot for the asset
categories at December 31:
<TABLE>
<CAPTION>
PERCENTAGE
INCREASE
1998 1997 (DECREASE)
---- ---- ----------
<S> <C> <C> <C>
Enclosed regional malls............................. $7.52 $7.88 (4.6)%
Power centers....................................... 8.24 7.77 6.0
Community centers................................... 6.64 6.40 3.8
Single tenant retail properties..................... 3.71 3.71 0.0
Portfolio summary................................... $6.88 $6.70 2.7 %
===== ===== ====
</TABLE>
LEASE RENEWALS -- The Company achieved the following increases in base rent
for leases that were renewed during 1998:
<TABLE>
<CAPTION>
PER SQUARE PER SQUARE
FOOT RENT FOOT RENT PERCENTAGE
PRIOR LEASE NEW LEASE INCREASE GLA
----------- ---------- ---------- ---
<S> <C> <C> <C> <C>
Enclosed regional malls................ $13.43 $13.43 0.0% 8,083
Power centers.......................... 13.23 14.47 9.4 24,424
Community centers...................... 10.46 11.11 6.2 70,766
</TABLE>
18
<PAGE> 20
NEW LEASES -- For new leases entered into during 1998, the Company achieved
the following increases in base rent:
<TABLE>
<CAPTION>
PER SQUARE PER SQUARE
FOOT RENT FOOT RENT PERCENTAGE
PORTFOLIO AVERAGE NEW LEASE INCREASE GLA
----------------- ---------- ---------- ---
<S> <C> <C> <C> <C>
Anchor............................ $ 5.19 $ 6.47 24.7% 263,458
Non-anchor........................ 10.41 11.00 5.7 200,857
</TABLE>
<TABLE>
<CAPTION>
PER SQUARE PER SQUARE
FOOT RENT FOOT RENT PERCENTAGE
PORTFOLIO AVERAGE NEW LEASE INCREASE GLA
----------------- ---------- ---------- ---
<S> <C> <C> <C> <C>
Enclosed regional malls........... $7.52 $ 8.98 19.4% 29,635
Power centers..................... 8.24 13.44 63.1 97,293
Community centers................. 6.64 6.93 4.4 337,387
</TABLE>
RESULT OF OPERATIONS
Comparison of Year Ended December 31, 1998 to Year ended December 31, 1997
The Company increased its portfolio of shopping centers from 50 properties
with 8,385 square feet of Company owned gross leaseable area ("GLA") at December
31, 1997 to 54 properties with 9,029 square feet at December 31, 1998 through
the acquisition of 4 properties totaling 644 square feet of GLA.
Total revenue increased 29.6% or $17,511, to $76,755 for the year ended
December 31, 1998, as compared to $59,244 for the year ended December 31, 1997.
Of this increase, minimum rents increased by $15,824, or 40.5%, to $54,859 in
1998 from $39,035 in 1997. Recoveries from tenants increased $1,610 or 9.0% to
$19,600 for the year ended December 31, 1998, compared to $17,990 for the year
ended December 31, 1997.
Approximately $13,200 of the increase in minimum rents resulted from a full
year of operations in 1998 for the 1997 property acquisitions. The four shopping
centers acquired in 1998 contributed $1,533 to minimum rents. In addition, $548
of the increase in minimum rents is related to buildable sites delivered to two
anchor tenants at the White Lake MarketPlace development during 1998. The
balance of the increase in minimum rents is primarily attributable to anchor
tenant openings at New Towne Plaza and the repositioning of West Oaks I,
resulting in the opening of three new tenant stores.
The increase in recoveries from tenants is primarily due to a higher level
of recoverable operating expenses and real estate taxes due to a full year of
operations for the 1997 property acquisitions. The overall recovery ratio
decreased to 97.4% in 1998 from 101.7% in 1997. The decrease is attributable to
lower recovery ratios for the Southeast Portfolio properties, approximately 84%,
when compared to the existing core portfolio (shopping center properties owned
as of January 1, 1997). As the Southeast Portfolio leases expire, the Company
expects that new lease agreements will allow recovery ratios to increase to
levels similar to the Company's normal recovery ratio of approximately 100%.
Total expenses for the year ended December 31, 1998 increased 38.7%, or
$17,954 as compared to $46,388 for the year ended December 31, 1997. The
increase was due to a $2,425 increase in operating expenses, including
recoverable operating expenses and real estate taxes, a $3,973 increase in
depreciation and amortization, a $1,078 increase in general and administrative
expenses, and a $10,643 increase in interest expense, offset in part, by a $165
decrease in other operating expenses. The increase in recoverable expenses,
including recoverable operating expenses and real estate taxes, are primarily
attributable to the acquisition of the Southeast Portfolio and the other
acquisitions in 1997 and the four acquisitions made during 1998.
Depreciation and amortization increased in 1998 by $3,973, or 48.4% to
$12,189 from $8,216 in 1997. The increase resulted primarily from depreciation
and amortization of the shopping centers acquired in 1997 and 1998.
19
<PAGE> 21
General and administrative expenses were $5,831 in 1998 as compared to
$4,753 in 1997, an increase of $1,078, or 22.7%. The increase is attributable to
the growth of the Company related to the 1997 and 1998 acquisitions and
developments, and the full year effect of increased full-time employees hired
during the fourth quarter of 1997. However, general and administrative expenses
as a percentage of total revenue decreased from 8.0% in 1997 to 7.6% in 1998.
Interest expense increased in 1998 by $10,643, or 72.1%, to $25,396 as
compared to $14,753 in 1997. Approximately $6,900 of the increase in interest
expense resulted from a full year of expense in 1998 for debt incurred for the
Southeast Portfolio acquisition in 1997. In addition, $580 of the 1998 increase
is attributable to a mortgage loan that was closed on in December 1997. The
increase in borrowings under the Company's $110,000 Credit Facility during 1998
resulted in additional interest expense of approximately $2,605.
Comparison of year ended December 31, 1997 to year ended December 31, 1996
Total revenues for the year ended December 31, 1997 increased by 46.2%, or
$18,731, to $59,244 as compared to $40,513 for the year ended December 31, 1996.
The increase was a result of a $15,322 increase in minimum rents, a $277
increase in percentage rents, and a $5,295 increase in recoveries from tenants
offset in part by a $2,163 decrease in interest and other income.
Minimum rents increased 64.6%, or $15,322, to $39,035 for the year ended
December 31, 1997 as compared to $23,713 for the year ended December 31, 1996.
Percentage rents increased 23.3%, or $277, to $1,467 in 1997 as compared to
$1,190 for the year ended December 31, 1996. Recoveries from tenants increased
41.7%, or $5,295, to $17,990 as compared to $12,695 for the year ended December
31, 1996. The $15,322 increase in minimum rents is due to the partial year
impact of 1997 acquisitions of $3,196, the full impact of 1996 property
acquisitions of $2,430, the full year impact of the Ramco Acquisition of
$10,080, and a decrease of $348 related to the former RPS shopping centers. The
$10,080 increase related to the full year impact of the Ramco Acquisition
consisted of a $9,132 increase for the first four months of 1997 for which the
Company did not own the properties in 1996, and a $948 increase during the last
eight months for which the Company owned the properties in both 1996 and 1997.
The $948 increase in minimum rents at the Ramco Properties was primarily due to
the impact of anchor tenant openings at the Tel-Twelve Mall, Jackson West,
Jackson Crossing, Troy Towne Center and Spring Meadows shopping centers,
amounting to $1,052, offset in part by reductions in minimum rents of $111 at
the West Oaks I shopping center during its repositioning. The $348 decrease in
the minimum rents from the former RPS properties was primarily due to lower
occupancy at the Sunshine Plaza shopping center as a result of the vacancy of
anchor stores. The increase in recoveries from tenants was due to a higher level
of recoverable operating expenses and real estate taxes due to the increase in
the number of shopping centers owned in 1997 as compared to 1996, combined with
an increase in the overall recovery ratio in 1997 to 101.7% as compared to 98.6%
in 1996. The increase in percentage rents was primarily due to the impact of the
Ramco Acquisition and the other 1996 acquisitions.
Interest and other income decreased 74.2%, or $2,163, to $752 in 1997 as
compared to $2,915 in 1996. The decrease of $2,163 in interest and other income
is primarily due to the impact of the spin-off of Atlantic including the
transfer of the mortgage loan portfolio to Atlantic effective May 1, 1996.
Approximately $183 of the $752 recognized in 1997 was attributable to
non-recurring tenant lease obligations.
Total expenses for the year ended December 31, 1997 increased 22.6%, or
$8,542, to $46,388 as compared to $37,846 for the year ended December 31, 1996.
The increase was due to a $4,819 increase in operating expenses, including
recoverable operating expenses and real estate taxes, a $3,418 increase in
depreciation and amortization, a $183 increase in other operating expenses, a
$70 increase in general and administrative expenses, and a $8,028 increase in
interest expense, offset in part, by a $7,976 decrease in spin-off and other
expenses.
Total recoverable expenses, including recoverable operating expenses and
real estate taxes, increased $4,819, or 37.4% to $17,692 for the year ended
December 31, 1997 from $12,873 for the year ended December 31, 1996. Other
operating expenses increased 23.1%, or $183, to $974 in 1997 from $791 in 1996.
General and administrative expenses increased $70, or 1.5% from $4,683 in 1996
to $4,753 in 1997. Interest expense increased 119.4%, or $8,028, to $14,753 in
1997 as compared to $6,725 in 1996. Depreciation and
20
<PAGE> 22
amortization increased $3,418, or 71.2%, to $8,216 in 1997 as compared to $4,798
in 1996. The increases in recoverable expenses, other operating expenses,
general and administrative expenses, interest expense and depreciation and
amortization expense are primarily attributable to the impact of the acquisition
of the Ramco Properties effective May 1, 1996 and the impact of shopping center
acquisitions during 1996 and 1997. The operating results for the year ended
December 31, 1997, included the impact of the acquisition of the Ramco
Properties and the shopping centers acquired during 1996 for the full twelve
months in 1997, while the results for the year ended December 31, 1996 include
the results of the Ramco Properties for only eight months and include the impact
of the subsequent 1996 acquisitions only from the date of acquisition. The
impact of shopping centers acquired in 1997 is reflected only from the
acquisition date until December 31, 1997. In addition, two properties which were
part of the Company's portfolio at December 31, 1995 were spun-off to Atlantic
effective May 1, 1996.
For the year ended December 31, 1996, the Company incurred $7,976 of
spin-off and other expenses for which there were no corresponding costs for the
year ended December 31, 1997. These non-recurring costs were primarily a result
of the employee severance and bonus expenses, the cost of run-off directors' and
officers' liability insurance and the write-off of deferred acquisition costs
related to the spin-off of Atlantic.
The loss from unconsolidated entities of $314 in 1997 as compared to $216
in 1996 is due to the impact of the Ramco Acquisition on May 1, 1996.
The minority interest during 1997 was $3,344 as compared to $2,159 in 1996.
The minority interest represents the portion of the Operating Partnership that
is not owned by the Company. The minority interest for 1997 represents the
impact of a full year while in 1996 it represents the impact only from the Ramco
Acquisition effective May 1996 until the end of 1996.
Comparison of Year Ended December 31, 1998 to Pro forma year ended December 31,
1997
Pro forma consolidated information related to the four acquisitions made
during 1998 would not be significantly different than actual results. Therefore,
1998 actual consolidated information has been used in the following analysis.
The pro forma consolidated information for 1997, which is included in Note 13 to
the Consolidated Financial Statements, is presented as if Madison Center,
Pelican Plaza, the Southeast Portfolio and Village Lakes shopping centers
acquisitions had occurred on January 1, 1997.
Total revenues for the year ended December 31, 1998 increased 3.7%, or
$2,772, to $76,755 as compared to $73,983 for the year ended December 31, 1997.
The increase was due to a $3,145 increase in minimum rents, reduced by $82
decrease in percentage rents, a $194 reduction in recoveries from tenants and a
$97 decrease in interest and other income.
Minimum rents increased 6.1%, or $3,145 to $54,859 for 1998 as compared to
$51,714 for the year ended December 31, 1997. The four shopping centers acquired
in 1998 increased minimum rents by $1,533. Minimum rents related to a buildable
pad delivered to an anchor tenant at the White Lake MarketPlace development
increased revenue by $548. The balance of the increase in minimum rents is
primarily attributable to initial anchor tenant openings at New Towne Plaza and
the repositioning of West Oaks I, resulting in the opening of three new tenants
stores.
In 1998, recoveries from tenants decreased $194, to $19,600 from $19,794
for the year ended December 31, 1997. The decrease is a result of lower
recoverable operating expenses that the Company can charge tenants of the
Southeast Portfolio properties, when compared to the overall portfolio recovery
ratio. As the Southeast Portfolio leases expire, the Company expects that new
lease agreements will allow for recovery ratios similar to the Company's normal
recovery ratio of approximately 100%.
Total expenses for the year ended December 31, 1998 increased 5.3%, or
$3,234 as compared to $61,108 for the year ended December 31, 1997. The increase
was due to a $345 increase in operating expenses, including recoverable
operating expenses and real estate taxes, a $1,240 increase in depreciation and
amortization, a $746 increase in general and administrative expenses, and a
$1,213 increase in interest expense, offset in part, by a $310 decrease in other
operating expenses.
21
<PAGE> 23
The increase of 11.3%, or $1,240, in depreciation and amortization expense
to $12,189 in 1998 from $10,949 in 1997 was attributable to acquisitions and
capital expenditures made in 1998.
General and administrative expense was $5,085 in 1997 as compared to $5,831
in 1998. This 14.7% increase was primarily due to increases in salary, including
an increase in headcount during 1998 and an increase in state and local tax
expense.
Interest expense increased in 1998 by $1,213, or 5.0%, to $25,396 as
compared to $24,183 in 1997. The increase is primarily due to increased level of
borrowings related to the 1998 acquisitions, development cost reimbursements and
other capital projects.
CAPITAL RESOURCES AND LIQUIDITY
The Company generated $16,794 in cash flows from operating activities and
$21,003 in cash flows from financing activities for the year ended December 31,
1998. These combined cash flows of $37,797 were used to fund $38,280 of the
investing activities, which were primarily the acquisition of real estate
assets.
The Company's mortgages and notes payable amounted to $328,248 at December
31, 1998, with a weighted average interest rate of 7.78%. The debt consists of
ten loans secured by various properties, plus one construction loan, one
unsecured term loan and the Credit Facility, as defined below. Eight of the
mortgage loans amounting to $172,371 have maturities ranging from 2000 to 2008,
monthly payments which include regularly scheduled amortization, and have fixed
interest rates ranging between 6.83% to 8.28%. One of the mortgage loans,
evidenced by tax free bonds, amounting to $7,000 secured by Oak Brook Square
Shopping Center is non-amortizing, matures in 2010, and carries a floating
interest rate equal to 75% of the new issue long term Capital A rated utility
bonds, plus interest to the lender sufficient to cause the lender's overall
yield on its investment in the bonds to be equal to 200 basis points over their
applicable LIBOR rate (7.49% at December 31, 1998). Another mortgage loan with
an interest rate of 8.75%, matured in June 1998.
In connection with the acquisition of Aquia Towne Center shopping center,
the Company assumed an existing $15,170 mortgage loan. The loan matures in March
2008 and has an interest rate of 7.39%. In addition, Ramco-Gershenson
Properties, L.P. (the "Operating Partnership"), the Company's operating
partnership, issued 239,697 OP Units valued at approximately $5,300.
The Company has a $14 million construction loan to finance the White Lake
MarketPlace shopping center development. The loan carries an interest rate of
185 basis points over LIBOR, an effective rate of 7.1% at December 31, 1998, and
matures June 2000. At the Company's option, the loan can then be converted to a
2-year term loan. Approximately $5.9 million has been borrowed at December 31,
1998.
The Company has an unsecured term loan amounting to $45,000, maturing
October 2000. This term loan bears interest between 250 and 275 basis points
over LIBOR, depending on certain debt ratios (9.06% at December 31, 1998).
The Company currently has a $110,000 Credit Facility, of which $97,988 was
outstanding as of December 31, 1998. This credit facility bears interest between
137.5 and 162.5 basis points over LIBOR depending on certain debt ratios
(effective interest rate of 7.35% at December 31, 1998) and matures October
2000. The credit facility is secured by mortgages on various properties and
contains financial covenants relating to liabilities-to-asset ratio, minimum
operating coverage ratios and a minimum equity value. As of December 31, 1998
the Company was in compliance with the covenant terms. At December 31, 1998,
outstanding letters of credit issued under the credit facility total $835.
The Company used proceeds from the borrowings under the Credit Facility and
the construction loan, the assumption of the existing mortgage on Aquia Towne
Center, the issuance of 933,333 Series A Preferred Shares and the issuance of
239,697 OP Units, to finance the acquisitions of Southbay Fashion Center,
Conyers Crossing and Aquia Towne Center, the development of White Lake
MarketPlace, the repayment of a mortgage loan in June 1998, and to pay for other
capital expenditures.
During August 1998, the Company executed an interest rate swap agreement to
limit the Company's exposure to increases in interest rates on its floating rate
debt. The notional amount of the agreement was
22
<PAGE> 24
$75,000. Based on rates currently in effect under the Company's Credit Facility,
the agreement provides for a fixed rate of 7.425% through October 2000. In
conjunction with this agreement, the Company terminated, at no cost, the two
interest rate collar agreements previously in place. These terminated agreements
consisted of a $75,000 agreement through May 1, 1999 which had a cap at 8.375%
and a floor of 7.125%, and a $50,000 agreement for the period May 1999 to
October 2000 which had a cap at 8.375% and a floor of 7.225%. The Company is
exposed to credit loss in the event of non-performance by the other parties to
the interest rate swap agreement, however, the Company does not anticipate
non-performance by the counter parties.
After taking into account the impact of converting the variable rate debt
into fixed rate debt by use of the rate protection agreement, the Company's
variable rate debt accounted for $80,877 of outstanding debt with a weighted
average interest rate of 8.2%. Variable rate debt accounted for approximately
24.6% of the Company's total debt and 16.0% of its total capitalization. The
Company has an interest rate protection agreement in place relative to $75,000
of floating rate debt as discussed above.
Based on the debt and the market value of equity, the Company's debt to
total market capitalization (debt plus market value equity) ratio was 65.0% at
December 31, 1998.
The two properties in which the Operating Partnership owns an interest and
are accounted for on the equity method of accounting are subject to non-recourse
mortgage indebtedness. At December 31, 1998, the pro rata share of non-recourse
mortgage debt on the unconsolidated properties (accounted for on the equity
method) was $6,195 with a weighted average interest rate of 9.1%.
In October 1997, the Company entered into an agreement with certain clients
advised by Morgan Stanley Asset Management, Inc. ("MSAM"), and Kimco Realty
Corporation ("Kimco") pursuant to which such entities agreed to invest up to an
aggregate of $35,000 in the Operating Partnership through the purchase of up to
1.4 million Series A Convertible Preferred Shares, ("Series A Preferred Share")
issued by the Company at a price of $25.00 per share. The Series A Preferred
Shares are convertible, under certain circumstances, into Common Shares of the
Company at a conversion price of $17.50 per Common Share. An initial investment
of $11,667 was made in October 1997. During 1998, additional investments of
$10,000 and $13,333 were made, completing the total investment of $35,000. The
dividend rate on the Series A Preferred Shares is expected to equal the dividend
rate presently being paid to the Company's common shareholders.
After the closing of this transaction, the MSAM clients are required to
purchase 19.4% of the first $50,000 in a follow-on public offering of the
Company's Common shares at the offering price less the underwriter's fees,
commissions, and discounts per share. Upon consummation of such public offering,
all outstanding Series A Preferred Shares will be exchanged into Common Shares
of the Company, at a conversion price of $17.50 per share, which conversion
price is subject to adjustment in certain circumstances.
The Company's current capital structure includes property specific
mortgages and a construction loan, the unsecured term loan, the Credit Facility,
Series A Preferred Shares, Common Shares and a minority interest in the
Operating Partnership. Minority interest increased to 29.0%, from 26.5% at
December 31, 1997. The increase to minority interest resulted from the 238,965
OP Units issued in conjunction with the earnout calculation for the Jackson
Crossing shopping center, and the issuance of 239,697 OP Units in connection
with the acquisition of Aquia Towne Center. Currently, the minority interest in
the Operating Partnership represents the 29.0% ownership in the Operating
Partnership which may, under certain conditions, be exchanged for approximately
2,952,450 Common Shares.
As of December 31, 1998, OP Units issued are exchangeable for Common Shares
of the Company on a one-for-one basis. The Company, as sole general partner of
the Operating Partnership, has the option to exchange OP Units for cash based on
the current trading price of the Company's Common Shares. Assuming the exchange
of all limited partnership interests in the Operating Partnership, there would
be outstanding approximately 10,170,443 common shares with a market value of
approximately $147,471 at December 31, 1998 (based on the closing price of
$14.50 per share on December 31, 1998).
In July 1998, the Company commenced the construction of its newest
development, White Lake MarketPlace, a 350,000 square foot community shopping
center, located in the metro Detroit area. Management anticipates this $14,000
development will be funded utilizing the construction loan.
23
<PAGE> 25
The principal uses of the Company's liquidity and capital resources are for
acquisitions, development, including expansion and renovation programs, and debt
repayment. To maintain its qualification as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"), the Company is
required to distribute to its shareholders at least 95% of its "Real Estate
Investment Trust Taxable Income" as defined in the Code.
The Company anticipates that the combination of the availability under the
Credit Facility, potential new borrowings relative to the acquired properties
and development properties, construction loans, the sale of existing properties,
joint ventures, and potential future offering of securities under the shelf
registration statement will provide adequate liquidity for the foreseeable
future to fund future acquisitions, developments, expansions, repositionings,
and to continue its currently planned capital programs and to make distributions
to its shareholders in accordance with the Code's requirements applicable to
REIT's. Although the Company believes that the combination of factors discussed
above will provide sufficient liquidity, no such assurance can be given.
During July 1997 Montgomery Wards, ("Wards"), a tenant at three of the
Company's properties, Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland, filed for protection under Chapter 11 of the Bankruptcy Code. The
Company was notified in March 1998 that Wards rejected the lease at the
Company's Clinton Valley Mall. This location consists of a 101,200 square foot
department store and a 7,480 square foot TBA store (Tires, Batteries and
Automotive). On an annual basis, Wards paid, in the aggregate, approximately
$1,000 in base rent and operating and real estate tax expense reimbursement for
the Clinton Valley Mall. The Company has leased 30,900 square feet of the former
department store and rental income is expected to commence during the first
quarter of 1999.
On February 4, 1999, Crowley, Milner and Company, a tenant at the Company's
Tel-Twelve Mall, filed for protection under Chapter 11 of the Bankruptcy Code.
For 1998, Crowley's paid approximately $396 in base rent and operating and real
estate tax expense reimbursement.
YEAR 2000
The Company recognizes that Year 2000 issues may have an impact on its
business, operations and financial condition. The Company has completed an
assessment of its Year 2000 readiness with respect to all of its information
technology ("IT") systems and is currently addressing the reliability and
condition of its non-IT systems. These assessments will continue to be updated
as additional information becomes available and as new concerns are identified.
The Company's IT systems generally consist of file servers, operating
systems, application programs and workstations that utilize purchased and
customized software. The Company continues to evaluate the Year 2000 compliance
status of each vendor and tenant and believes that its existing systems or
planned upgrades during 1999 will be Year 2000 compliant. Implementation and
upgrades of non-Year 2000 compliant systems are not expected to result in
significant additional cost to the Company.
The Company's non-IT systems which may be subject to Year 2000 issues are
facility related and encompass areas such as HVAC systems, elevators, security,
lighting, telecommunications, electrical, plumbing, fire and sprinkler controls.
The Company is currently addressing the potential impact of Year 2000 issues in
these areas and has not identified any instances where Year 2000 issues will
require material costs to repair or replace any of these systems.
The significant risks to the Company in the event that Year 2000 issues are
not identified and corrected are that the Company could experience delays or
errors in processing financial and operation information. non-IT system problems
could result in forced closure of certain facilities, which could limit the
efficient operation of the company's properties.
Contingency plans will be developed if it appears the Company or its key
suppliers and tenants will not be Year 2000 compliant, and such noncompliance is
expected to have a significant adverse effect on the Company's financial
position or results of operations.
24
<PAGE> 26
INFLATION
Substantially, all of the leases at the Company's properties provide for
tenants to pay their pro rata share of operating expenses, including common area
maintenance and real estate taxes, thereby reducing the Company's exposure to
increases in operating expenses resulting from inflation. Many of the tenants'
leases contain provisions designed to lessen the impact of inflation. Such
provisions include the ability to receive percentage rentals based on a tenant's
gross sales, which generally increase as prices rise, and or escalation clauses,
which generally increase rental rates during the terms of the leases. In
addition, many of the leases are for terms of less than ten years, which may
enable the Operating Partnership to replace existing leases with new leases at a
higher base and/or percentage rentals if rents of the existing leases are below
the then existing market rate.
FUNDS FROM OPERATIONS
Management generally considers funds from operations ("FFO") to be one
measure of financial performance of an equity REIT. It has been presented to
assist investors in analyzing the performance of the Company and to provide a
relevant basis for comparison to other REITs.
The Company has adopted the most recent National Association of Real Estate
Investment Trusts ("NAREIT") definition of FFO, which was effective on January
1, 1996. Under the NAREIT definition, FFO represents income (loss) before
minority interest (computed in accordance with generally accepted accounting
principles), excluding gains (losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustments for unconsolidated
partnerships and joint ventures.
Therefore, FFO does not represent cash generated from operating activities
in accordance with generally accepted accounting principles and should not be
considered an alternative to net income as an indication of the Company's
performance or to cash flows from operating activities as a measure of liquidity
or of the ability to pay distributions. Furthermore, while net income and cash
generated from operating, investing and financing activities determined in
accordance with generally accepted accounting principles consider capital
expenditures which have been and will be incurred in the future, the calculation
of FFO does not.
The following pro forma FFO is presented as if the acquisitions of each
shopping center acquired in 1997, had occurred January 1, 1997.
25
<PAGE> 27
The following table illustrates the calculation of actual FFO for the years
ended December 31, 1998 and 1997 and pro forma FFO for the year ended December
31, 1997:
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------------------ YEAR ENDED
1998 1997 DECEMBER 31, 1997
---- ---- -----------------
<S> <C> <C> <C>
Net Income................................................ $ 8,658 $ 9,198 $ 9,211
Add: Depreciation and amortization...................... 12,221 8,236 10,977
Add: Minority interest in partnership................... 3,451 3,344 3,350
------- ------- -------
Funds from operations -- diluted.......................... 24,330 20,778 23,538
Less: Preferred share dividends......................... (1,614) (278) (278)
------- ------- -------
Funds from operations -- basic............................ $22,716 $20,500 $23,260
======= ======= =======
Weighted average equivalent shares outstanding(1)
Basic................................................... 9,991 9,713 9,713
======= ======= =======
Diluted................................................. 10,967 9,905 9,905
======= ======= =======
Supplemental disclosure:
Straight-line rental income............................. $ 2,159 $ 1,627 $ 1,627
======= ======= =======
Amortization of management contracts and covenants not
to compete........................................... $ 494 $ 494 $ 494
======= ======= =======
</TABLE>
- -------------------------
(1) For basic, represents the weighted average total shares outstanding,
assuming the redemption of all Operating Partnership Units for Common
Shares. For diluted, represents the weighted average total shares
outstanding, assuming the redemption of all Operating Partnership Units for
Common Shares, the Series A Preferred Shares converted to Common Shares and
the common shares issuable under the treasury stock method upon exercise of
stock options.
CAPITAL EXPENDITURES
During 1998, the Company spent approximately $8,757 on revenue generating
capital expenditures including tenant allowances, leasing commissions paid to
third-party brokers, legal costs relative to lease documents, and capitalized
leasing and construction costs. These types of costs generate a return through
rents from tenants over the term of their leases. Revenue enhancing capital
expenditures, including expansions, renovations or repositionings were
approximately $5,879. Revenue neutral capital expenditures, such as roof and
parking lot repairs, which are anticipated to be recovered from tenants,
amounted to approximately $2,643.
During 1998, the Company spent approximately $44,200 on the acquisition of
the Southbay Fashion Center, Conyers Crossing, Aquia Towne Center and Rivertowne
Square shopping centers.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 130, "Reporting
Comprehensive Income" which establishes standards for reporting and displaying
comprehensive income and its components in a full set of financial statements.
The Statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The provisions of this Statement were adopted during 1998
and the adoption of this Statement did not have an impact on the Company's
financial statement presentation.
In June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" which established standards
for reporting information about operating segments in financial statements. It
also established standards for disclosure about products and services,
geographical areas, and major customers. The Company adopted this statement for
the year ended December 31, 1998.
26
<PAGE> 28
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Management has not yet evaluated the effects of this change on its financial
position. The Company will adopt SFAS No. 133 as required for its first
quarterly filing of fiscal year 2000.
This Form 10-K contains forward-looking statements with respect to the
operation of certain of the Company's properties. Management of the Company
believes the expectations reflected in the forward-looking statements made in
this document are based on reasonable assumptions. Certain factors could occur
that might cause actual results to vary. These include general economic
conditions, the strength of key industries in the cities in which the Company's
properties are located, the performance of the Company's tenants at the
Company's properties and elsewhere, and other factors discussed in the Company's
report filed with the Securities and Exchange Commission.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See pages F-1 to F-22, which are included herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
27
<PAGE> 29
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 9,
1999.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 9,
1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 9,
1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference to Ramco-Gershenson Properties Trust
definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the year covered by this Annual Report on Form
10-K with respect to its Annual Meeting of Shareholders to be held on June 9,
1999.
28
<PAGE> 30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
(a)(1) Financial Statements
See pages F-1 to F-22, which are included herein.
(a)(3) Exhibits
<TABLE>
<C> <S>
3.1 Amended and Restated Declaration of Trust of the Company,
dated October 2, 1997, incorporated by reference to Exhibit
3.1 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
3.2 Articles Supplementary to Amended and Restated Declaration
of Trust, dated October 2, 1997, incorporated by reference
to Exhibit 3.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997.
3.3 By-Laws of the Company adopted October 2, 1997, incorporated
by reference to Exhibit 3.3 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
3.4 Rights Agreement dated as of December 6, 1989 between the
Company and American Stock Transfer & Trust Company,
incorporated by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A, File No. 1-10093, for
the registration of Share Purchase Rights.
10.1 Pledge Agreement, dated as of May 10, 1996, among the
Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/88, as amended, and the holders of
interest in Ramco-Gershenson Properties, L.P., a Delaware
limited partnership, incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.2 Registration Rights Agreement, dated as of May 10, 1996,
among the Company, Dennis Gershenson, Joel Gershenson, Bruce
Gershenson, Richard Gershenson, Michael A. Ward, Michael A.
Ward U/T/A dated 2/22/88, as amended, and each of the
Persons set forth on Exhibit A attached thereto,
incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.3 Exchange Rights Agreement, dated as of May 10, 1996, by and
among the Company and each of the Persons whose names are
set forth on Exhibit A attached thereto, incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.4 1996 Share Option Plan of the Company, incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.5 Letter Agreement, dated May 10, 1996, among the Persons and
Entities party to the Amended and Restated Master Agreement,
dated as of December 27, 1995, as amended, incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1996.
10.6 Promissory Note payable by Atlantic Realty Trust in favor of
the Company in the principal face amount of $5,500,000 due
November 9, 1997, incorporated by reference to Exhibit 10.6
to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1996.
10.7 Letter Agreement, dated as of May 10, 1996, by and between
Atlantic Realty Trust ("Atlantic") and the Company
concerning the assumption of certain liabilities by
Atlantic, incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1996.
</TABLE>
29
<PAGE> 31
<TABLE>
<S> <C>
10.8 Employment Agreement, dated as of May 10, 1996, between the Company and Joel Gershenson, incorporated by
reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.9 Employment Agreement, dated as of May 10, 1996, between the Company and Dennis Gershenson, incorporated by
reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.10 Employment Agreement, dated as of May 10, 1996, between the Company and Michael A. Ward, incorporated by
reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.11 Employment Agreement, dated May 10, 1996, between the Company and Richard Gershenson, incorporated by
reference to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.12 Employment Agreement, dated as of May 10, 1996, between the Company and Bruce Gershenson, incorporated by
reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.13 Noncompetition Agreement, dated as of May 10, 1996, between Joel Gershenson and the Company, incorporated
by reference to Exhibit 10.13 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.14 Noncompetition Agreement, dated as of May 10, 1996, between Dennis Gershenson and the Company,
incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1996.
10.15 Noncompetition Agreement, dated as of May 10, 1996, between Michael A. Ward and the Company, incorporated
by reference to Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.16 Noncompetition Agreement, dated as of May 10, 1996, between Richard Gershenson and the Company,
incorporated by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1996.
10.17 Noncompetition Agreement, dated as of May 10, 1996, between Bruce Gershenson and the Company, incorporated
by reference to Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1996.
10.18 Letter Agreement, dated April 15, 1996, among the Company and Richard Smith concerning Mr. Smith's
employment by the Company, incorporated by reference to Exhibit 10.18 to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1996.
10.19 Loan Agreement dated May 1, 1996 by and between Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $77,585,524.73 loan, incorporated by reference to Exhibit 10.22 to
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
10.20 Note dated May 1, 1996 in the aggregate principal amount of $77,585,524.73 made by Ramco-Gershenson
Properties L.P. in favor of The Lincoln National Life Insurance Company, incorporated by reference to
Exhibit 10.23 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
10.21 Loan Agreement dated May 1, 1996 by and between Ramco-Gershenson Properties, L.P. and The Lincoln National
Life Insurance Company relating to a $4,346,778.73 loan, incorporated by reference to Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
10.22 Note dated May 1, 1996 in the aggregate principal amount of $4,346,778.73 made by Ramco-Gershenson
Properties, L.P., in favor of The Lincoln National Life Insurance Company, incorporated by reference to
Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
<S> <C>
10.23 Preferred Units and Stock Purchase Agreement dated as of September 30, 1997 by and among the
Company, Special Situations RG REIT, Inc., and the Advancing Party named therein,
incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the period ended September 30, 1997.
10.24 Agreement Regarding Exercise of Registration Rights dated as of September 30, 1997 among the
Company, the Ramco Principals (as defined therein), the Other Holders (as defined therein),
Special Situations RG REIT, Inc., and the Advancing Party, incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.25 Registration Rights Agreement dated as of September 30, 1997 by and among the Company,
Special Situations RG REIT, Inc., and the Advancing Party named therein, incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1997.
10.26 Second Amended and Restated Master Revolving Credit Agreement dated as of October 30, 1997
among Ramco-Gershenson Properties, L.P., as Borrower, the Company, as Guarantor, and
BankBoston, N.A., and the other Banks which may become parties to the loan agreement, and
BankBoston, N.A., as Agent, incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1997.
10.27 Second Amended and Restated Note dated October 30, 1997 in the principal amount of
$160,000,000 made by Ramco-Gershenson Properties, L.P. in favor of BankBoston, N.A.,
incorporated by reference to Exhibit to 10.5 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
10.28 Amended and Restated Unconditional Guaranty of Payment and Performance dated as of October
30, 1997 by the Company in favor of BankBoston, N.A., incorporated by reference to Exhibit
10.6 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997.
10.29 Unsecured Term Loan Agreement dated as of October 30, 1997 among Ramco-Gershenson
Properties, L.P., as Borrower, the Company, as Guarantor, BankBoston, N.A., the other Banks
which may become parties to the agreement, and BankBoston, N.A., as Agent, incorporated by
reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1997.
10.30 Note dated as of October 30, 1997 in the principal amount of $45,000,000 made by Ramco-
Gershenson Properties, L.P. in favor of BankBoston, N.A., incorporated by reference to
Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1997.
10.31 Unconditional Guaranty of Payment and Performance dated as of October 30, 1997 by the
Company in favor of BankBoston, N.A., incorporated by reference to Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q for the period ended September 30, 1997.
10.32 Form of Contract of Sale dated July 7, 1997 relating to the acquisition of the Southeast
Portfolio (Form #1), incorporated by reference to Exhibit 10.10 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1997.
10.33 Form of Contract of Sale dated July 7, 1997 relating to the acquisition of the Southeast
Portfolio (Form #2), incorporated by reference to Exhibit 10.11 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1997.
10.34 Form of Contract of Sale dated July 7, 1997 relating to the acquisition of the Southeast
Portfolio (Form #3), incorporated by reference to Exhibit 10.12 to the Company's Quarterly
Report on Form 1O-Q for the period ended September 30, 1997.
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
<S> <C>
10.35 Agreement dated July 7, 1997 by and between Seller (as defined therein) and Ramco-Gershenson
Properties, L.P., which agreement amends certain Contracts of Sale relating to the Acquisition of
the Southeast Portfolio, incorporated by reference to Exhibit 10.13 to the Company's Quarterly
Report on Form 10-Q or the period ended September 30, 1997.
10.36 Loan Agreement dated as of November 26, 1997 between Ramco Properties Associates Limited
Partnership and Secore Financial Corporation relating to a $50,000,000 loan, incorporated by
reference to Exhibit 10.36 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
10.37 Promissory Note dated November 26, 1997 in the aggregate principal amount of $50,000,000 made by
Ramco Properties Associates Limited Partnership in favor of Secore Financial Corporation,
incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
10.38 Loan Agreement dated December 17, 1997 by and between Ramco-Gershenson Properties, L.P. and The
Lincoln National Life Insurance Company relating to a $8,500,000 loan, incorporated by reference
to Exhibit 10.38 to the Company's Annual Report on Form 10-K for the year ended December 31,
1997.
10.39 Note dated December 17, 1997 in the aggregate principal amount of $8,500,000 made by Ramco-
Gershenson Properties, L.P. in favor of The Lincoln National Life Insurance Company, incorporated
by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
10.40 1997 Non-Employee Trustee Stock Option Plan of the Company, incorporated by reference to Exhibit
10.40 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
10.41 Change of Venue Merger Agreement dated as of October 2, 1997 between the Company (formed known as
RGPT Trust, a Maryland real estate investment trust), and Ramco-Gershenson Properties Trust, a
Massachusetts business trust, incorporated by reference to Exhibit 10.41 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
10.42 Promissory Note dated as of February 27, 1998 in the principal face amount of $15,225,000.00 made
by A.T.C., L.L.C. in favor of GMAC Commercial Mortgage Corporation, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 30,
1998.
10.43 Deed of Trust and Security Agreement dated as of February 27, 1998 by A.T.C., L.L.C. to Lawyers
Title Insurance Company for the benefit of GMAC Commercial Mortgage Corporation relating to a
$15,225,000.00 loan, incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1998.
10.44 Assignment and Assumption Agreement dated as of October 8, 1998 among A.T.C., L.L.C., Ramco
Virginia Properties, L.L.C., A.T. Center, Inc., Ramco-Gershenson Properties Trust and LaSalle
National Bank, as trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc.
Mortgage Pass-Through Certificates, incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1998.
10.45 Exchange Rights Agreement dated as of September 4, 1998 between Ramco-Gershenson Properties
Trust, and A.T.C., L.L.C, incorporated by reference to Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1998.
10.46 Loan Agreement dated December 22, 1998 between Ramco-Gershenson Properties, L.P. and NBD Bank
relating to a $14,000,000 loan.
10.47 Construction Note dated as of December 22, 1998 in the principal face amount of $14,000,000 made
by Ramco-Gershenson Properties, L.P. in favor of NBD Bank.
</TABLE>
32
<PAGE> 34
21.1 Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule.
33
<PAGE> 35
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 by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
Ramco-Gershenson Properties Trust
Dated: March 18, 1999 By: /s/ JOEL D. GERSHENSON
------------------------------------------------
Joel D. Gershenson,
Chairman
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of registrant and in
the capacities and on the dates indicated.
<TABLE>
<S> <C>
Dated: March 18, 1999 By: /s/ JOEL D. GERSHENSON
----------------------------------------------------
Joel D. Gershenson,
Trustee and Chairman
Dated: March 18, 1999 By: /s/ DENNIS E. GERSHENSON
----------------------------------------------------
Dennis E. Gershenson,
Trustee and President
(Principal Executive Officer)
Dated: March 18, 1999 By: /s/ STEPHEN R. BLANK
----------------------------------------------------
Stephen R. Blank,
Trustee
Dated: By:
----------------------------------------------------
Arthur H. Goldberg,
Trustee
Dated: March 18, 1999 By: /s/ HERBERT LIECHTUNG
----------------------------------------------------
Herbert Liechtung,
Trustee
Dated: March 18, 1999 By: /s/ ROBERT A. MEISTER
----------------------------------------------------
Robert A. Meister,
Trustee
Dated: March 18, 1999 By: /s/ JOEL M. PASHCOW
----------------------------------------------------
Joel M. Pashcow,
Trustee
Dated: March 18, 1999 By: /s/ MARK K. ROSENFELD
----------------------------------------------------
Mark K. Rosenfeld,
Trustee
Dated: March 18, 1999 By: /s/ SELWYN ISAKOW
----------------------------------------------------
Selwyn Isakow,
Trustee
Dated: March 18, 1999 By: /s/ RICHARD J. SMITH
----------------------------------------------------
Richard J. Smith,
Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
34
<PAGE> 36
RAMCO-GERSHENSON PROPERTIES TRUST
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
Ramco-Gershenson Properties Trust:
We have audited the accompanying consolidated balance sheets of
Ramco-Gershenson Properties Trust and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statements 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 consolidated 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Ramco-Gershenson Properties
Trust and subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Detroit, Michigan
February 16, 1999
F-1
<PAGE> 37
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investment in real estate -- net (Notes 3, 5 and 16)........ $509,844 $458,294
Cash and cash equivalents................................... 4,550 5,033
Accounts receivable -- net.................................. 9,864 6,035
Equity investments in and advances to unconsolidated
entities (Note 7)......................................... 5,896 6,421
Other assets -- net (Note 4)................................ 14,250 8,899
-------- --------
TOTAL ASSETS........................................... $544,404 $484,682
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable (Note 5)........................ $328,248 $295,618
Distributions payable....................................... 5,244 4,348
Accounts payable and accrued expenses....................... 15,235 13,145
Due to related entities (Note 1)............................ -- 1,325
-------- --------
Total Liabilities...................................... 348,727 314,436
Minority Interest........................................... 48,535 42,282
Commitments and Contingencies (Note 9)...................... -- --
SHAREHOLDERS' EQUITY
Preferred Shares, par value $.01, 10,000 shares
authorized; 1,400 and 467 Series A convertible shares
issued and outstanding, respectively, liquidation
values of $35,000 and $11,666, respectively............ 33,829 11,147
Common Shares of Beneficial Interest, par value, $.01,
30,000 shares authorized; 7,218 and 7,123 issued and
outstanding, respectively.............................. 72 71
Additional paid-in capital................................ 151,973 150,513
Cumulative distributions in excess of net income.......... (38,732) (33,767)
-------- --------
Total Shareholders' Equity.................................. 147,142 127,964
-------- --------
Total Liabilities and Shareholders' Equity............. $544,404 $484,682
======== ========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE> 38
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996(*)
------- ------- -------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES
Minimum rents............................................. $54,859 $39,035 $23,713
Percentage rents.......................................... 1,538 1,467 1,190
Recoveries from tenants................................... 19,600 17,990 12,695
Interest and other income................................. 758 752 2,915
------- ------- -------
Total revenues.................................... 76,755 59,244 40,513
------- ------- -------
EXPENSES
Real estate taxes......................................... 7,354 6,230 4,643
Recoverable operating expenses............................ 12,763 11,462 8,230
Depreciation and amortization............................. 12,189 8,216 4,798
Other operating........................................... 809 974 791
General and administrative................................ 5,831 4,753 4,683
Interest expense.......................................... 25,396 14,753 6,725
Spin-off and other expenses (Note 1)...................... -- -- 7,976
------- ------- -------
Total expenses.................................... 64,342 46,388 37,846
------- ------- -------
Operating income............................................ 12,413 12,856 2,667
Loss from unconsolidated entities (Note 7).................. 304 314 216
------- ------- -------
Income before minority interest............................. 12,109 12,542 2,451
Minority interest........................................... 3,451 3,344 2,159
------- ------- -------
Net income.................................................. 8,658 9,198 292
Preferred stock dividends................................... 1,614 278 --
------- ------- -------
Net income available to common shareholders................. $ 7,044 $ 8,920 $ 292
======= ======= =======
Basic earnings per share (Note 8)........................... $0.99 $1.25 $0.04
======= ======= =======
Diluted earnings per share (Note 8)......................... $0.98 $1.25 $0.04
======= ======= =======
Weighted average shares outstanding:
Basic..................................................... 7,133 7,123 7,123
======= ======= =======
Diluted................................................... 7,165 7,148 7,123
======= ======= =======
</TABLE>
- -------------------------
(*) The 1996 historical results consist of the operations of RPS Realty Trust
prior to the Spin-Off Transaction and the Ramco Acquisition, which was
effective on May 1, 1996 (Note 1).
See notes to consolidated financial statements.
F-3
<PAGE> 39
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
COMMON ADDITIONAL CUMULATIVE TOTAL
PREFERRED STOCK PAID-IN EARNINGS/ SHAREHOLDERS'
STOCK PAR VALUE CAPITAL DISTRIBUTION EQUITY
--------- --------- ---------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996................. $712 $197,061 $(20,753) $177,020
Assets transferred in Spin-Off
Transaction......................... (45,483) (45,483)
Minority interests' equity............. (1,706) (1,706)
Cash distributions declared............ (10,258) (10,258)
Net income............................. 292 292
------- ---- -------- -------- --------
BALANCE, DECEMBER 31, 1996............... 712 149,872 (30,719) 119,865
Cash distributions declared............ (11,968) (11,968)
Conversion to $.01 par value Common
Shares.............................. (641) 641 -- --
Series A Preferred Shares issuance (467
Shares)............................. $11,147 11,147
Preferred Shares dividends declared.... (278) (278)
Net income............................. 9,198 9,198
------- ---- -------- -------- --------
BALANCE, DECEMBER 31, 1997............... 11,147 71 150,513 (33,767) 127,964
Cash distributions declared............ (12,009) (12,009)
Conversion of Operating Partnership
Units to Common Shares (95
Shares)............................. 1 1,450 1,451
Stock options exercised................ 10 10
Series A Preferred Shares issuance (933
Shares)............................. 22,682 22,682
Preferred Shares dividends declared.... (1,614) (1,614)
Net Income............................. 8,658 8,658
------- ---- -------- -------- --------
BALANCE, DECEMBER 31, 1998............... $33,829 $ 72 $151,973 $(38,732) $147,142
======= ==== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 40
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996(*)
---- ---- -------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $ 8,658 $ 9,198 $ 292
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization........................... 12,189 8,216 4,705
Amortization of deferred financing costs................ 1,102 335 93
Loss from unconsolidated entities....................... 304 314 216
Minority Interest....................................... 3,451 3,344 2,159
Provision for possible loan losses...................... -- -- 129
Write-off of deferred acquisition expenses.............. -- -- 2,154
Loss on disposal of REMIC's............................. -- -- 91
Changes in operating assets and liabilities:
Interest and accounts receivable...................... (3,829) (2,134) (2,987)
Other assets.......................................... (7,171) (4,907) (1,431)
Transaction advances.................................. -- -- 2,471
Accounts payable and accrued expenses................. 2,090 2,660 7,603
-------- -------- --------
Cash Flows Provided By Operating Activities................. 16,794 17,026 15,495
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquired...................................... (38,501) (152,492) (41,727)
Distributions received from unconsolidated entity......... 106 -- --
Proceeds from (advances to) unconsolidated entities....... 115 (691) (773)
Satisfaction of mortgage loans receivable................. -- -- 3,468
Amortization of REMICs.................................... -- -- 1,100
Proceeds from REMICs...................................... -- -- 56,908
-------- -------- --------
Cash Flow (Used In) Provided By Investing Activities........ (38,280) (153,183) 18,976
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholders........................ (11,970) (11,967) (9,545)
Cash distributions to operating partnership unit
holders................................................. (4,414) (4,389) (1,860)
Cash dividends paid on preferred Shares................... (1,186) -- --
Principal repayments on credit facility................... (7,400) (58,594) --
Principal repayment on mortgage debt...................... (4,829) (1,915) (74,852)
Net advances (proceeds) from affiliated entities.......... (1,325) 272 2,625
Payments of deferred financing costs...................... (504) (2,335) (471)
Purchase of operating partnership units................... -- (1,417) --
Borrowings on debt........................................ 29,689 206,847 41,706
Net proceeds from preferred shares........................ 22,682 11,147 --
Refund of deferred financing costs........................ 250 -- --
Proceeds from exercise of stock options................... 10 -- --
-------- -------- --------
Cash Flows Provided By (Used In) Financing Activities....... 21,003 137,649 (42,397)
-------- -------- --------
Net (Decrease) Increase in Cash and Cash Equivalents........ (483) 1,492 (7,926)
Cash and Cash Equivalents, Beginning of Period.............. 5,033 3,541 11,467
-------- -------- --------
Cash and Cash Equivalents, End of Period.................... $ 4,550 $ 5,033 $ 3,541
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid for Interest During the Period.................. $ 24,469 $ 13,358 $ 6,100
======== ======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCIAL
ACTIVITIES:
Spin-off of net assets to Atlantic........................ $ 45,483
Acquisition of Ramco and other property acquisitions:
Debt assumed............................................ $ 15,170 $ 5,867 176,478
Value of OP units assumed............................... 43,835
Value of OP units issued:
Purchase of Aquia Towne Center........................ 5,273
Jackson earnout....................................... 3,823
Conversion of OP units into shares...................... 1,451
Other liabilities assumed............................... 1,600
</TABLE>
- -------------------------
(*) The 1996 historical results consist of the operations of RPS Realty Trust
prior to the Spin-Off Transaction and the Ramco Acquisition, which was
effective on May 1, 1996 (Note 1).
See notes to consolidated financial statements.
F-5
<PAGE> 41
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS)
1. RAMCO ACQUISITION AND SPIN-OFF TRANSACTION
Effective May 1, 1996, RPS Realty Trust, completed the acquisition of
substantially all of the shopping center and retail properties, as well as the
management organization and business operations of Ramco-Gershenson, Inc. and
its affiliates (the "Ramco Acquisition") and the spin-off of its wholly owned
subsidiary, Atlantic Realty Trust ("Atlantic"), a Maryland real estate
investment trust. In connection with the Ramco Acquisition, RPS Realty Trust's
name was changed to Ramco-Gershenson Properties Trust and a one-for-four reverse
stock split was effectuated as of the close of business on May 1, 1996.
Ramco-Gershenson Properties Trust is referred to herein as the "Company".
Concurrent with the Ramco Acquisition, the former owners of the Ramco
Properties (as defined below) and the shareholders of Ramco-Gershenson, Inc.
("Ramco") (collectively, the "Ramco Group") transferred to Ramco-Gershenson
Properties, L.P. (the "Operating Partnership") (i) their interests in 20
shopping center and retail properties (the "Ramco Properties") containing an
aggregate of approximately 4,826,000 square feet of total gross leasable area
("GLA"), of which approximately 3,520,000 square feet was owned by the Operating
Partnership, and the balance is owned by certain anchor tenants, (ii) 100% of
the non-voting common stock and 5% of the voting common stock in Ramco
(representing in excess of a 95% economic interest in Ramco), (iii) 50% general
partner interests in two partnerships which each own a shopping center, (iv)
rights in and/or options to acquire certain development land, (v) options to
acquire the Ramco Group's interest in six shopping center properties and (vi)
five outparcels.
In return for these transfers, the Ramco Group received 2,377,492 Units
("Units") of the Operating Partnership (representing an approximate 25% limited
partnership interest in the Operating Partnership). The Acquisition was
accounted for using the purchase method. The purchase price was allocated to the
assets acquired and liabilities assumed based upon their estimated fair market
value. Units, which are convertible into common shares of beneficial interest in
the Company, as described below, were valued at approximately $16.50 per Unit
representing the average trading price of the Company's shares immediately
preceding and following the Ramco Acquisition. In addition, the Ramco Group
received 279,181 Units as a partial earnout relative to Jackson Crossing
Shopping Center. In December 1998, the Company's Board of Trustees approved the
issuance of an additional 238,965 Units as a result of achieving certain leasing
objectives related to the Jackson Crossing earnout. The Units, with a value of
$3,823,000, increased the Ramco Group's aggregate interest to approximately 29%
in the Operating Partnership. In connection with the transfer of the Ramco
Properties, the Company assumed approximately $176,556 of secured indebtedness
on the Ramco Properties. Subject to certain limitations, the interests in the
Operating Partnership are exchangeable into common shares of the Company on a
one-for-one basis.
Pursuant to the Ramco Acquisition, the Company transferred to the Operating
Partnership six properties containing an aggregate of approximately 931,000
square feet of GLA and $68,000 in cash in exchange for 7,123,105 Units of the
Operating Partnership.
The transfer of the Company's net assets in exchange for Units was
accounted for as a reorganization of entities under common control. As such,
these assets and liabilities were transferred and accounted for at historical
cost in a manner similar to that of a pooling of interests.
Concurrently with the closing of the Ramco Acquisition, the Company's
former mortgage loan portfolio as well as certain of its former real estate
assets were transferred to Atlantic and the shares of Atlantic were distributed
to the Company's shareholders.
F-6
<PAGE> 42
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For the year ended December 31, 1996 non-recurring expenses, including
expenses related to the spin-off of Atlantic, have been charged to operations as
follows:
<TABLE>
<S> <C>
Severance and other termination costs....................... $4,672
Directors and officers insurance............................ 1,150
Write-off of deferred acquisition expense................... 2,154
------
$7,976
======
</TABLE>
In connection with the Ramco Acquisition, the due to related entities of
$1,325 at December 31, 1997, represents unreimbursed development costs of $565
and funds collected on behalf of the Ramco Group relating to receivables prior
to the closing of $760. These amounts were paid in December 1998.
In December 1997, with the approval of its shareholders, the Company
changed its state of organization from Massachusetts to Maryland by means of a
merger of the Massachusetts Trust into the Company and the conversion of each
outstanding share of beneficial interest in the Trust into a common share of
beneficial interest of the surviving Company. The par value of the common shares
was reduced from $.10 per share in 1996 to $.01 per share in 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements for
the year ended December 31, 1998, and 1997 include the accounts of the Company
and its majority owned subsidiary, the Operating Partnership (70.9% owned by the
Company at December 31, 1998) and its wholly owned subsidiary, Ramco Properties
Associates Limited Partnership, a financing subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The consolidated financial statements of the Company include the effects of
the Ramco Acquisition and the spin-off of Atlantic as well as the operations of
the Operating Partnership commencing May 1, 1996.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION -- Shopping center space is generally leased to retail
tenants under leases which are accounted for as operating leases. Minimum rents
are recognized on the straight-line method over the terms of the leases.
Percentage rent is accrued when the tenants' specified sales targets have been
met or achievement of the sales targets is probable. The effect on 1998 income
of recognizing percentage rent only after specified sales targets have been
achieved rather than the Company's method of recognition is immaterial. The
leases also typically provide for tenant recoveries of common area maintenance,
real estate taxes and other operating expenses. These recoveries are recognized
as revenue in the period the applicable costs are incurred.
An allowance for doubtful accounts has been provided against the portion of
tenant accounts receivable which is estimated to be uncollectible. Accounts
receivable in the accompanying balance sheet is shown net of an allowance for
doubtful accounts of approximately $1,298 and $910 as of December 31, 1998 and
1997, respectively.
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments with an original maturity of three months or less to be cash and
cash equivalents.
INCOME TAX STATUS -- The Company conducts its operations with the intent of
meeting the requirements applicable to a real estate investment trust ("REIT")
under Sections 856 through 860 of the Internal Revenue
F-7
<PAGE> 43
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Code of 1986 as amended (the "Code"). In order to maintain qualification as a
real estate investment trust, the REIT is required to distribute at least 95% of
its taxable income to shareholders and meet certain other asset and income tests
as well as other requirements. As a real estate investment trust, the REIT will
generally not be liable for federal corporate income taxes. Thus, no provision
for federal income taxes has been included in the accompanying financial
statements (Note 9).
REAL ESTATE -- Real estate assets are stated at the lower of cost or net
realizable value. Costs incurred for the acquisition, development, construction,
and improvement of properties are capitalized, including direct costs incurred
by Ramco. Depreciation is computed using the straight-line method over estimated
useful lives. Expenditures for improvements and construction allowances paid to
tenants are capitalized and amortized over the remaining life of the initial
terms of each lease. Maintenance and repairs are charged to expense when
incurred.
Real estate assets are reviewed periodically for impairment whenever events
or changes in circumstances indicate that the carrying value of the asset may
not be recoverable. To the extent an impairment has occurred, the excess of
carrying value over its estimated net realizable value will be charged to
income.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED ENTITIES -- Consist of 50%
general partner interests in Kentwood Town Center ("Kentwood") and the
Southfield Plaza Expansion ("Southfield Plaza") and the Company's 100% interest
in the non-voting and 5% interest in the voting common stock of Ramco. These
investments are not unilaterally controlled and are therefore accounted for on
the equity method.
OTHER ASSETS -- Consist primarily of prepaid expenses, proposed development
and acquisition costs, and deferred financing and leasing costs which are
amortized using the straight-line method over the terms of the respective
agreements.
DERIVATIVE FINANCIAL INSTRUMENTS -- In managing interest rate exposure on
certain floating rate debt, the Company at times enters into interest rate
protection agreements. When interest rates change, the differential to be paid
or received is accrued to interest expense and is recognized over the life of
the agreements. The costs of these transactions are deferred and amortized over
the contract period. The amortized costs of these transactions and interest
income and interest expense on these interest rate protection agreements are
included in interest expense.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS -- In June 1997, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standard (SFAS) No. 130, "Reporting Comprehensive Income" which establishes
standards for reporting and displaying comprehensive income and its components
in a full set of financial statements. The Statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The provisions of this
Statement were adopted during 1998 and the adoption of this Statement did not
have an impact on the Company's financial statement presentation.
In 1997, the FASB issued Statement No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which established standards for reporting
information about operating segments in financial statements. It also
established standards for disclosure about products and services, geographical
areas, and major customers. The Company adopted this statement for the year
ended December 31, 1998 (Note 15).
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Management has not yet evaluated the effects of this change on its financial
position. The Company will adopt SFAS No. 133 as required for its first
quarterly filing of fiscal year 2000.
F-8
<PAGE> 44
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. REAL ESTATE
Investment in real estate consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Land..................................................... $ 64,433 $ 57,075
Buildings and improvements............................... 464,216 414,115
Construction in progress................................. 7,331 2,023
-------- --------
535,980 473,213
Less: accumulated depreciation........................... (26,136) (14,919)
-------- --------
Investment in real estate -- net......................... $509,844 $458,294
======== ========
</TABLE>
REAL ESTATE ACQUISITIONS
The Company has made the following property acquisitions (the "Property
Acquisitions") during the years ended December 31, 1998 and 1997 and the
consolidated financial statements include the effects of the Property
Acquisitions commencing with the date of acquisition. All acquisitions have been
accounted for using the purchase method of accounting. The purchase prices were
allocated to the assets acquired and liabilities assumed based upon their
estimated fair market value.
<TABLE>
<CAPTION>
ACQUISITION DATE PROPERTY NAME PROPERTY LOCATION PURCHASE PRICE
- ---------------- ------------- ----------------- --------------
<S> <C> <C> <C>
May 1997 Madison Center Madison Heights, Michigan $ 7,400
July 1997 Pelican Plaza Sarasota, Florida 7,200
Southeastern United
October 1997 Southeast Portfolio States 124,500
December 1997 Village Lakes Land O' Lakes, Florida 8,600
May 1998 Southbay Fashion Center Sarasota, Florida 6,000
September 1998 Conyers Crossing Conyers, Georgia 7,500
September 1998 Aquia Towne Center Stafford, Virginia 22,000
November 1998 Rivertowne Square Deerfield Beach, Florida 8,700
</TABLE>
4. OTHER ASSETS
Other assets at December 31 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Leasing costs............................................... $ 6,893 $4,603
Prepaid expenses and other.................................. 3,426 1,242
Deferred financing costs.................................... 3,059 2,806
Proposed development and acquisition costs.................. 3,911 1,214
------- ------
17,289 9,865
Less: accumulated amortization.............................. (3,039) (966)
------- ------
Other assets -- net....................................... $14,250 $8,899
======= ======
</TABLE>
F-9
<PAGE> 45
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. MORTGAGES AND NOTES PAYABLE
Mortgages and notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Fixed rate mortgages with interest rates ranging from 6.83%
to 8.28% due at various dates through 2008................ $172,371 $162,030
Floating rate mortgages at 75% of the rate of long-term
Capital A rated utility bonds, due January 1, 2010, plus
supplemental interest to equal LIBOR plus 200 basis
points. The effective rate at December 31, 1998 and 1997
was 7.49% and 7.33%, respectively......................... 7,000 7,000
Construction loan financing, with an interest rate at LIBOR
plus 185 basis points due June 2002. The effective rate at
December 31, 1998 was 7.10%. Maximum borrowings of
$14,000................................................... 5,889
Unsecured term loan, due October 1, 2000. The effective rate
at December 31, 1998 and 1997 was 9.06% and 8.75%
respectively.............................................. 45,000 45,000
Credit Facility, due October 2000, maximum available
borrowings of $110,000. The effective rate at December 31,
1998 and 1997, was 7.35% and 7.66%, respectively.......... 97,988 81,588
-------- --------
$328,248 $295,618
======== ========
</TABLE>
The mortgage notes and construction loan are secured by mortgages on
properties that have an approximate net book value of $306,444 as of December
31, 1998. The Credit Facility is secured by mortgages on various properties that
have an approximate net book value of $181,415 as of December 31, 1998.
At December 31, 1998, $110,000 of the Credit Facility was available for
borrowing, of which $97,988 was outstanding. The interest rate payable under the
Credit Facility and the unsecured term loan is between 137.5 and 162.5 basis
points over LIBOR, and between 250 and 275 basis points over LIBOR,
respectively, depending on certain debt ratios set forth in the agreements. In
January 1999, the Company exercised its option to extend the maturity dates of
the Credit Facility and the unsecured term loan to October 2000. At December 31,
1998, outstanding letters of credit issued under the Credit Facility, not
reflected in the accompanying consolidated balance sheet, total approximately
$835.
The Credit Facility and the unsecured term loan contain financial covenants
relating to loan to asset value, minimum operating coverage ratios, and a
minimum equity value. As of December 31, 1998 the Company was in compliance with
the covenant terms.
During August 1998, the Company executed an interest rate swap agreement to
limit the Company's exposure to increases in interest rates on its floating rate
debt. The notional amount of the agreement was $75,000. Based on rates currently
in effect under the Company's Credit Facility, the agreement provides for a
fixed rate of 7.425% through October 2000. In conjunction with this agreement,
the Company terminated, at no cost, the two interest rate collar agreements
previously in place. These terminated agreements consisted of a $75,000
agreement through May 1, 1999 which had a cap at 8.375% and a floor of 7.125%,
and a $50,000 agreement for the period May 1999 to October 2000 which had a cap
at 8.375% and a floor of 7.225%. The Company is exposed to credit loss in the
event of non-performance by the other parties to the interest rate swap
agreement, however, the Company does not anticipate non-performance by the
counter party.
F-10
<PAGE> 46
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During December 1998, the Company entered into a $14,000 construction loan
agreement to provide funds for the White Lake Marketplace development. The
construction loan bears interest at 185 basis points over LIBOR. The
construction loan matures in June 2000 and may be converted to a permanent
mortgage loan, which matures June 2002.
The following table presents scheduled principal payments on mortgages and
notes payable as of December 31, 1998:
<TABLE>
<S> <C>
Year end December 31,
1999...................................................... $ 3,112
2000...................................................... 151,427
2001...................................................... 3,464
2002...................................................... 9,008
2003...................................................... 3,654
Thereafter................................................ 157,583
--------
Total..................................................... $328,248
========
</TABLE>
6. LEASES
Approximate future minimum rentals under noncancelable operating leases in
effect at December 31, 1998, assuming no new or renegotiated leases nor option
extensions on lease agreements, are as follows:
<TABLE>
<S> <C>
Year ended December 31,
1999...................................................... $ 55,988
2000...................................................... 51,993
2001...................................................... 46,637
2002...................................................... 42,121
2003...................................................... 37,235
Thereafter................................................ 251,688
--------
Total..................................................... $485,662
========
</TABLE>
F-11
<PAGE> 47
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. UNCONSOLIDATED ENTITIES
Condensed financial statement information of Ramco, Kentwood and Southfield
Plaza Expansion as of December 31, 1998 and 1997, and for the years ended
December 31, 1998 and December 31, 1997 and the period May 1, 1996 to December
31, 1996 are presented as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------------------- ------- -------
SOUTHFIELD
RAMCO KENTWOOD PLAZA TOTAL TOTAL TOTAL
----- -------- ---------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in real estate -- net...... $ 1,735 $ 555 $ 2,290 $ 2,426
Other Assets.......................... $ 3,760 496 144 4,400 5,224
------- ------- ------ ------- -------
Total Assets..................... $ 3,760 $ 2,231 $ 699 $ 6,690 $ 7,650
======= ======= ====== ======= =======
LIABILITIES
Mortgage Notes Payable................ $10,838 $1,552 $12,390 $12,542
Other Liabilities..................... $ 1,065 287 1,352 1,711
------- ------- ------ ------- -------
Total Liabilities................ 1,065 11,125 1,552 13,742 14,253
------- ------- ------ ------- -------
Owners' Equity (deficit).............. 2,695 (8,894) (853) (7,052) (6,603)
------- ------- ------ ------- -------
Total Liabilities and Owners' Equity
(deficit)........................... $ 3,760 $ 2,231 $ 699 $ 6,690 $ 7,650
======= ======= ====== ======= =======
Company's Equity Investments in
Unconsolidated Entities............. $ 2,818 $ 940 $ 583 $ 4,341 $ 4,957
Advances to Unconsolidated Entities... 1,555 1,555 1,464
------- ------- ------ ------- -------
Total Equity Investments in and
Advances to Unconsolidated
Entities............................ $ 4,373 $ 940 $ 583 $ 5,896 $ 6,421
======= ======= ====== ======= =======
REVENUES
Management Fees..................... $ 913 $ 913 $ 1,063 $ 711
Leasing and Development Fees........ 110 110 392 131
Property Revenues................... $ 1,841 $ 263 2,104 2,077 1,571
Other Revenues...................... 761 761 496 417
Leasing/Development Cost
Reimbursements................... 2,080 2,080 1,321
------- ------- ------ ------- ------- -------
Total Revenues................... 3,864 1,841 263 5,968 5,349 2,830
------- ------- ------ ------- ------- -------
EXPENSES
Employee Expenses................... 4,887 4,887 4,079 2,187
Office and Other Expenses........... 1,523 1,523 1,190 630
Property Expenses................... 1,495 173 1,668 1,662 1,307
Depreciation and Amortization....... 266 266 221 45
------- ------- ------ ------- ------- -------
Total Expenses................... 6,676 1,495 173 8,344 7,152 4,169
------- ------- ------ ------- ------- -------
Excess Revenues Over Expenses......... (2,812) 346 90 (2,376) (1,803) (1,339)
Cost Reimbursement From Operating
Partnership......................... 2,812 2,812 2,218 1,603
------- ------- ------ ------- ------- -------
Income................................ $ 0 $ 346 $ 90 $ 436 $ 415 $ 264
======= ======= ====== ======= ======= =======
Company's Share of Income............. $ 0 $ 173 $ 45 $ 218 $ 208 $ 132
======= ======= ====== ======= ======= =======
</TABLE>
F-12
<PAGE> 48
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's share of the unconsolidated entities' income of $218, $208
and $132, for the years ended December 31, 1998 and December 31, 1997, and the
period May 1, 1996 to December 31, 1996, was reduced by $522 in both 1998 and
1997, and $348 in 1996 respectively, which represents depreciation and
amortization adjustments arising from the Company's net basis adjustments in the
unconsolidated entities' assets. These adjustments result in a net loss of $304
and $314 from unconsolidated entities for the years ended December 31, 1998 and
1997 and $216 for the period May 1, 1996 to December 31, 1996.
8. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128
during 1997. This statement requires the presentation of basic and diluted
earnings per share. The following table sets forth the computation of basic and
diluted earnings per share (in thousands, except share and per share data):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Numerator:
Net Income................................................ $ 8,658 $9,198 $292
Preferred dividends....................................... (1,614) (278) --
--------- --------- ---------
Numerator for basic earnings per share -- income
Available to common shareholders....................... 7,044 8,920 292
Effect of dilutive securities:
Preferred dividends.................................... -- -- --
Operating partnership units............................ -- -- --
--------- --------- ---------
Numerator for diluted earnings per share -- income
Available to common shareholders after assumed
conversion........................................... $ 7,044 $8,920 $292
========= ========= =========
Denominator:
Denominator for basic earnings per
share -- weighted-average shares....................... 7,132,517 7,123,105 7,123,105
Effect of dilutive securities --
Dilutive stock options outstanding..................... 32,097 25,257 --
--------- --------- ---------
Denominator for dilutive earnings per share -- adjusted
weighted-average shares and assumed conversion......... 7,164,614 7,148,362 7,123,105
========= ========= =========
Basic earnings per share.................................... $0.99 $1.25 $0.04
========= ========= =========
Diluted earnings per share.................................. $0.98 $1.25 $0.04
========= ========= =========
</TABLE>
In 1998 and 1997, conversion of the Series A Preferred Shares and of the
Operating Partnership Units would have been antidilutive and, therefore, were
not considered in the computation of diluted earnings per share.
9. COMMITMENTS AND CONTINGENCIES
Substantially all of the properties have been subjected to Phase I
environmental audits. Such audits have not revealed nor is management aware of
any environmental liability that management believes would have a material
adverse impact on the Company's financial position or results of operations.
Management is unaware of any instances in which it would incur significant
environmental costs if any or all properties were sold, disposed of or
abandoned.
During the third quarter of 1994, the Company held more than 25% of the
value of its gross assets in overnight Treasury Bill reverse repurchase
transactions which the United States Internal Revenue Service (the "IRS") may
view as non-qualifying assets for the purposes of satisfying an asset
qualification test
F-13
<PAGE> 49
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
applicable to REITs, based on a Revenue Ruling published in 1977 (the "Asset
Issue"). The Company requested that the IRS enter into a closing agreement that
the Asset Issue would not impact the Company's status as a REIT. The IRS
deferred any action relating to the Asset Issue pending the further examination
of the Company's 1991-1995 tax returns (the "Tax Audit"). Based on developments
in the law which occurred since 1977, the Company's Tax Counsel, Battle Fowler
LLP, rendered an opinion that the Company's investment in Treasury Bill
repurchase obligations would not adversely affect its REIT status. However, such
opinion is not binding upon the IRS.
In connection with the spin-off of Atlantic, Atlantic assumed all liability
arising out of the Tax Audit and the Asset Issue, including liabilities for
interest and penalties and attorney fees relating thereto. In connection with
the assumption of such potential liabilities, Atlantic and the Company entered
into a tax agreement which provides that the Company (under the direction of its
Continuing Trustees), and not Atlantic, would control, conduct and effect the
settlement of any tax claims against the Company relating to the Tax Audit and
the Asset Issue. Accordingly, Atlantic will not have any control as to the
timing of the resolution or disposition of any such claims. The Company and
Atlantic also received an opinion from Special Tax Counsel, Wolf, Block, Schorr
and Solis-Cohen LLP, that, to the extent there is a deficiency in the Company's
taxable income arising out of the IRS examination and provided the Company
timely makes a deficiency dividend (i.e., declares and pays a distribution which
is permitted to relate back to the year for which each deficiency was determined
to satisfy the requirement that the REIT distribute 95 percent of its taxable
income), the classification of the Company as a REIT for the taxable years under
examination would not be affected. Under the tax agreement referred to above,
Atlantic agreed to reimburse the Company for the amount of any deficiency
dividend so made. If notwithstanding the above-described opinions of legal
counsel, the IRS successfully challenged the status of the Company as a REIT,
its status could be adversely affected. If the Company lost its status as a
REIT, the Company believes that it would be able to re-elect REIT status for the
taxable year beginning January 1, 1999.
The IRS agent conducting the examination has issued his examination report
with respect to the tax issues raised in the Tax Audit, including the Asset
Issue (collectively, the "Tax Issues"). The report sets forth a number of
positions which the examining agent has taken with respect to the Company's
taxes for the years that are subject to the Tax Audit, which the Company
believes are not consistent with applicable law and regulations of the IRS.
Based upon the report, the Company could be liable for up to $39.7 million in
combined taxes, penalties and interest through March 15, 1999. The proposed
adjustments to taxable income could require the Company to pay a deficiency
dividend to its current shareholders resulting in combined taxes, penalties,
interest and deficiency dividend of approximately $41 million as of March 15,
1999.
As noted above, pursuant to a Tax Agreement between Atlantic and the
Company, Atlantic has assumed all liability arising out of the Tax Audit and Tax
Issues, including the payment of the deficiency dividend. Based upon the amount
of Atlantic's net assets, as disclosed in its most recent quarterly report on
Form 10-Q for the period ended September 30, 1998, the Company does not believe
that the ultimate resolution of the Tax Issues will have a material adverse
effect on the financial position, results of operations or cash flows of the
Company. The issuance of the revenue agent's report constitutes only the first
step in the IRS administrative process for determining whether there is any
deficiency in the Company's tax liability for the years at issue and any adverse
determination by the examining agent is subject to administrative appeal within
the IRS and, thereafter, to judicial review. As noted above, the agent's report
sets forth a number of positions, which the Company and its legal counsel
believe are not consistent with applicable law and regulations of the IRS.
Accordingly, the Company intends to file an administrative appeal challenging
the findings contained in the IRS agent's examination report.
During July 1997 Montgomery Ward ("Wards") a tenant at three of the
Company's properties, (Tel-Twelve Mall, Clinton Valley Mall and Shoppes of
Lakeland), filed for protection under Chapter 11 of the Bankruptcy Code. In
October 1997, Wards issued a list of anticipated store closings which included
the store
F-14
<PAGE> 50
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
at the Company's Clinton Valley Mall. This location consists of a 101,200 square
foot department store and a 7,480 square foot TBA store (Tires, Batteries and
Automotive). The Company was notified in March 1998 that Wards rejected the
lease. On an annual basis, Wards paid approximately $1,000 in base rent and
operating and real estate tax expense reimbursements for the Clinton Valley
Mall. The Company leased 30,900 square feet of the former department store and
rental income is expected to commence during the first quarter of 1999. The
Company is pursuing replacement tenants for the balance of the space.
On February 4, 1999, Crowley, Milner and Company, a tenant at the Company's
Tel-Twelve Mall, filed for protection under Chapter 11 of the Bankruptcy Code.
For 1998, Crowley's paid approximately $396 in base rent and operating and real
estate tax expense reimbursement.
10. SHAREHOLDERS' EQUITY
Convertible Series A Preferred Shares -- In October, 1997 the Company
entered into an agreement with certain clients advised by Morgan Stanley Asset
Management, Inc. ("MSAM"), and Kimco Realty Corporation ("Kimco") pursuant to
which such entities agreed to invest up to an aggregate of $35,000 in the
Operating Partnership. The MSAM clients and Kimco initially purchased Preferred
Operating Partnership Units which, after shareholder approval in December 1997,
were converted into the Company's Series A Convertible Preferred Shares ("Series
A Preferred Series") and, ultimately, may be converted into Common Shares. The
initial investments of $11,667 were made in October 1997. During 1998, the
Company issued 933,000 Series A Preferred Shares receiving net proceeds of
approximately $22,682.
After the closing of this transaction, the MSAM clients are required to
purchase 19.4% of the first $50,000 in a follow-on public offering of the
Company's Shares at the offering price less the underwriter's fees, commissions,
and discounts per share. Upon consummation of such public offering, all
outstanding Series A Preferred Shares will be exchanged into Common Shares of
the Company, at a conversion price of $17.50 per share, which conversion price
is subject to adjustment in certain circumstances.
The Series A Preferred Shares rank senior to the Common Shares with respect
to dividends and upon liquidation, dissolution or winding up of the Company. The
Series A Preferred Shares are entitled to receive cumulative dividends, payable
quarterly in arrears, at an annual rate equal to the greater of (i) 9.60% of the
stated value ($25.00 per share) and (ii) the dividend rate expressed as an
annual rate which is implicit in the amount of dividends actually paid with
respect to Common Shares, based on a $17.50 per share price for the Common
Shares, determined as of each quarterly dividend payment date (the "Payable
Component").
The Payable Component will be increased by an amount equal to an annual
rate of 3% under certain circumstances. The holders of Series A Preferred Shares
have the right to vote on all matters which holders of Common Shares are
entitled to vote upon on an as converted basis, as though such holders own
Common Shares. In addition, the Trust will not be permitted to engage in or
effect certain types of transactions or actions without the approval of holders
of at least 51% of the outstanding Series A Preferred Shares voting separately
as a class. The conversion price for Common Shares of $17.50 contain
anti-dilution rights and will be adjusted to reflect the effects of stock
dividends, distributions, subdivisions or combination.
The Series A Preferred Shares are subject to mandatory conversion on the
date which is the earlier of a qualified underwritten offering or the maturity
date which is on October 3, 2002. At the option of the holders, the Series A
Preferred Shares will be convertible in whole or in part into Common Shares at
the stated value plus unpaid dividends prior to the maturity date or qualified
underwritten offering date. The maturity date will be accelerated and all Series
A Preferred Shares will be redeemed in cash at the stated value plus unpaid
dividends in the event that it is determined by the IRS that it will, for any
period, deny to the Company the tax benefits associated with REIT qualification
and either or both of the following circumstances arise: (i) the Company does
not receive (within a period of 60 days of the date established by the IRS as
the date of which the deficiency dividend or other additional taxes are required
to be paid) the full indemnity payment for such
F-15
<PAGE> 51
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
loss of tax benefits that the Company is entitled to receive from Atlantic
pursuant to the Tax Agreement with Atlantic, or (ii) counsel reasonably
satisfactory to MSAM is unable to provide to the holders of the Series A
Preferred Shares affirmative advice that, commencing not later than with the
taxable year ending December 31, 1999, the Company will, notwithstanding such
determination by the IRS, be able to elect to be qualified and taxed as a REIT
under the Code, and its proposed method of operation will enable it so to
qualify for following years.
Shareholder Rights Plan -- On December 6, 1989, the Company's Board of
Trustees (the "Board") declared a dividend distribution of one share purchase
right to each outstanding share of beneficial interest, $.10 par value per
share, to shareholders of record at the close of business on December 18, 1989.
These rights may be exercised to purchase one share of beneficial interest at a
price of $80 per share, subject to adjustment, under certain specified
conditions at the Board's option. These rights are not exercisable or
transferable apart from the shares of beneficial interest until the distribution
date, which is the earlier of (i) 10 days following a public announcement that
any person or group has acquired beneficial ownership of 20 percent or more of
the outstanding shares (the "Share Acquisition Date"), (ii) 10 days following
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 20 percent or more of the outstanding shares
or (iii) the day the Board determines that any person or group has become the
beneficial owner of an amount of shares the Board determines to be substantial
(which amount shall in no event be less than 10 percent of the shares
outstanding) and the Board shall determine that such beneficial ownership is
intended to cause the Company to repurchase the shares owned by such person or
group or is reasonably likely to cause a material adverse impact on the
Company's business. The rights, which do not have voting rights, expire on
December 6, 1999 and may be redeemed by the Company at a price of $.01 per right
at any time until rights expire or, if earlier, 10 days following the Share
Acquisition Date.
Upon the occurrence of certain events following the distribution date, the
holder of each right will have the right to receive, upon exercise, shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the right. In certain
events in which the Company is not a surviving entity or has transferred 50
percent or more of its assets or earnings power, the rights will entitle the
holder, upon exercise, to receive equity securities of the acquiring company
having a value equal to two times the exercise price of the right.
Dividend Reinvestment Plan -- The Company has a dividend reinvestment plan
that allows for participating shareholders to have their dividend distributions
automatically invested in additional shares of beneficial interest in the
Company based on the average price of the shares acquired for the distribution.
11. STOCK OPTION PLANS
1989 Trustees' Stock Option Plan -- On April 4, 1989, the Board approved
the establishment of the 1989 Trustees' Stock Option Plan (the "Former Trustees'
Plan") which permitted the Company to grant options to purchase up to 350,000
shares of beneficial interest in the Company at the fair market value at the
date of grant. The Company had 350,000 options outstanding under the Former
Trustees' Plan at December 31, 1995. In connection with the Ramco Acquisition
and Spin-off Transaction, all Trustees who had been granted options under the
Former Trustees' Plan surrendered their options to the Company without
consideration.
1989 Employee's Stock Option Plan -- On June 21, 1989, the Board approved
the establishment of the 1989 Employee Stock Option Plan which permitted the
Company to grant options to purchase up to 1,550,000 shares of beneficial
interest in the Company at the fair market value at the date of grant. On
December 6, 1989, 1,355,000 options were granted. Option shares in the amount of
125,000 were purchased from certain employees prior to the closing of the Ramco
Acquisition and Spin-off Transaction for $.50 per share and the balance of the
options were canceled.
F-16
<PAGE> 52
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1996 Share Option Plan -- Concurrent with the Ramco Acquisition in May
1996, the Company adopted the 1996 Share Option Plan (the "Plan") to enable its
employees to participate in the ownership of the Company. The Plan provides for
the award of up to 855,000 stock options to purchase common shares of beneficial
interest, at the fair market value at the date of grant, to executive officers
and employees of the Company. The Plan is administered by the independent
trustee members of the Compensation Committee of the Board of Trustees, whose
members are not eligible for grants under the Plan. Stock options granted under
the Plan vest and become exercisable in installments on each of the first three
anniversaries of the date of grant and expire ten years after the date of grant.
No more than 50,000 share options may be granted to any one individual in any
calendar year.
1997 Non-Employee Trustee Stock Option Plan -- On June 10, 1997, the
Company adopted the 1997 Non-Employee Trustee Stock Option Plan (the "Trustees'
Plan") which permits the Company to grant non-qualified options to purchase up
to 100,000 common shares of beneficial interest in the Company at the fair
market value at the date of grant. Each Non-Employee Trustee will be granted an
option to purchase 2,000 shares annually on the Company's annual meeting date,
beginning June 10, 1997. Stock options granted to participants vest and become
exercisable in installments on each of the first two anniversaries of the date
of grant and expire ten years after the date of grant.
Information relating to the 1996 Share Option Plan and the 1997
Non-Employee Trustee Stock Option Plan (the "Plans") from inception through
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Granted since inception............................... 183,200 $16.04
Exercised............................................. -- --
Cancelled or expired.................................. -- --
------- ------
Outstanding at December 31, 1996...................... 183,200 $16.04
Granted............................................... 92,813 17.69
Exercised............................................. -- --
Cancelled or forfeited................................ (3,051) 16.56
------- ------
Outstanding at December 31, 1997...................... 272,962 $16.60
Granted............................................... 243,500 16.91
Exercised............................................. (533) 16.56
Cancelled or expired.................................. (4,826) 17.08
------- ------
Outstanding at December 31, 1998...................... 511,103 $16.74
======= ======
Shares exercisable at December 31, 1997............... 60,050 $16.03
======= ======
Shares exercisable at December 31, 1998............... 151,152 $16.39
======= ======
</TABLE>
At December 31, 1998, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $15.44 -- $21.63, and 8.6
years.
F-17
<PAGE> 53
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The fair value of options granted during 1998, 1997 and 1996 was estimated
to be negligible on the date of grant. All options granted were non-qualified
share options. This was determined using the Black-Scholes option pricing model
with the following weighted average assumptions used:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Risk-free interest rate.................................. 4.8% 6.4% 6.5%
Dividend yield........................................... 10.8% 9.2% 10.2%
Volatility............................................... 17.3% 15.8% 10.0%
Weighted average expected life........................... 5.0 5.0 6.0
</TABLE>
The Company accounts for the Plans in accordance with Accounting Principles
Board Opinion No. 25 under which no compensation cost has been recognized for
stock option awards. There would be no material difference if compensation cost
had been calculated consistent with the provisions of Statement of Financial
Standards No. 123, "Accounting for Stock Based Compensation". Therefore, there
would be no change in the Company's pro forma net income and earnings per share
for 1998, 1997 and 1996 (Note 13).
12. FINANCIAL INSTRUMENTS
Statements of Financial Accounting Standards No. 107 requires disclosure
about fair value of all financial instruments. The carrying values of cash and
cash equivalents, receivables, accounts payable and accrued expenses are
reasonable estimates of their fair values because of the short maturity of these
financial instruments. As of December 31, 1998 and 1997 the mortgages and notes
payable amounts are also a reasonable estimate of their fair value because their
interest rates approximate the current borrowing rates available to the Company.
The fair value of the Company's interest rate protection agreement
represents the estimated amount the Company would receive or pay to terminate
the agreement at December 31, 1998. The fair value of this agreement was
($1,087) at December 31, 1998.
13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro forma consolidated information related to 1998 acquisitions would not
be significantly different than actual results. Therefore, 1998 actual
consolidated information has been included in the table below. The following
consolidated pro forma information has been presented as if the 1997 Property
Acquisitions had occurred on January 1, 1997. In management's opinion, all
adjustments necessary to reflect the Property Acquisitions have been made. The
pro forma consolidated information is not necessarily indicative of what the
actual results of operations of the Company would have been had such
transactions actually occurred as of January 1, 1997, nor do they purport to
represent the results of the Company for future periods.
<TABLE>
<CAPTION>
1998 1997
(ACTUAL) (PRO FORMA)
-------- -----------
<S> <C> <C>
Revenues................................................. $76,755 $73,983
Income before minority interest.......................... 12,109 12,561
Net income............................................... 8,658 9,211
Net earnings per share:
Basic.................................................. $ 0.99 $ 1.25
Diluted................................................ $ 0.98 $ 1.25
</TABLE>
F-18
<PAGE> 54
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
EARNINGS PER SHARE
-------------------
REVENUES NET INCOME BASIC DILUTED
-------- ---------- ----- -------
<S> <C> <C> <C> <C>
1998
Quarter ended:
March 31 $18,444 $2,003 $0.24 $0.24
June 30 $18,261 $2,079 $0.25 $0.25
September 30 $18,963 $1,995 $0.23 $0.23
December 31 $21,087 $2,581 $0.26 $0.26
1997
Quarter ended:
March 31 $13,819 $2,344 $0.33 $0.33
June 30 $13,931 $2,251 $0.32 $0.32
September 30 $14,461 $2,287 $0.32 $0.32
December 31 $17,033 $2,316 $0.29 $0.29
</TABLE>
15. SEGMENT INFORMATION
In 1997, the FASB issued Statement No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which established standards for reporting
information about operating segments in financial statements. It also
established standards for disclosure about products and services, geographical
areas, and major customers. The Company adopted this statement for the year
ended December 31, 1998.
The Company is engaged in principally one business segment, that is owning,
developing, acquiring, managing and leasing neighborhood and community shopping
centers, regional enclosed malls and single tenant retail properties. The
properties are located in thirteen states primarily throughout the Midwest and
Southeast United States. The Company's centers are usually anchored by discount
department stores or supermarkets and the tenant base consists primarily of
national and regional retail chains and local retailers. The Company's credit
risk, therefore, is concentrated in the retail industry.
Revenues from the Company's largest tenant amounted to approximately 10.8%
of minimum rents for the year ended December 31, 1998. No single tenant
accounted for more than 10.0% of minimum rents for the years ended December 31,
1997 and 1996.
F-19
<PAGE> 55
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. REAL ESTATE ASSETS
Net Investment in Real Estate Assets at December 31, 1998
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1998, 1997, 1996, 1995
------------------------
INITIAL COST
TO COMPANY
-----------------------
YEAR YEAR YEAR BUILDING &
PROPERTY LOCATION CONSTRUCTED(A) ACQUIRED RENOVATED LAND IMPROVEMENTS
- ------------------------------------------- ----------------------- -------------- -------- --------- -------- ------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AND
PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center......................... Athens, Alabama 1997 854 7,695
Cox Creek Plaza............................ Florence, Alabama 1997 589 5,336
FLORIDA
Naples Towne Center........................ Naples, Florida 1983 1996 218 1,964
Lantana Plaza.............................. Lantana, Florida 1993 2,590 2,600
Sunshine Plaza............................. Tamarac, Florida 1991 1998 1,748 7,452
Shoppes of Lakeland........................ Lakeland, Florida 1996 1,279 11,543
Pelican Plaza.............................. Sarasota, Florida 1997 710 6,404
Crestview Corners.......................... Crestview, Florida 1997 400 3,602
Village Lakes.............................. Land O' Lakes, Florida 1997 862 7,768
Southbay Fashion Center.................... Sarasota, Florida 1998 597 5,355
Rivertowne Square.......................... Deerfield Beach,
Florida 1998 880 7,852
GEORGIA
Holcomb Center............................. Alpharetta, Georgia 1996 658 5,953
Mays Crossing.............................. Stockbridge, Georgia 1997 725 6,532
Indian Hills............................... Calhoun, Georgia 1997 706 6,355
Conyers Crossing........................... Conyers, Georgia 1998 729 6,562
MARYLAND
Crofton Plaza.............................. Crofton, Maryland 1991 3,201 6,499
MICHIGAN
Tel-Twelve Mall............................ Southfield, Michigan 1968 1996 1996 4,777 43,181
New Towne Plaza............................ Canton, Michigan 1976 1996 1993 817 7,354
Ferndale Plaza............................. Ferndale, Michigan 1984 1996 265 2,388
Clinton Valley Strip Center................ Sterling Heights,
Michigan 1979 1996 399 3,588
Fraser Shopping Center..................... Fraser, Michigan 1996 363 3,263
Eastridge Commons.......................... Flint, Michigan 1990 1996 1997 1,086 9,775
Oak Brook Square........................... Flint, Michigan 1996 955 8,591
Jackson West............................... Jackson, Michigan 1996 1996 1997 2,806 6,270
Jackson Crossing........................... Jackson, Michigan 1996 1996 2,249 20,237
Roseville Plaza............................ Roseville, Michigan 1996 1994 1,466 13,195
Southfield Plaza........................... Southfield, Michigan 1996 1983 1,121 10,090
Clinton Valley Mall........................ Sterling Heights,
Michigan 1979 1996 1993 1,101 9,910
Lake Orion Plaza........................... Lake Orion, Michigan 1977 1996 470 4,234
Edgewood Towne Center...................... Lansing, Michigan 1990 1996 1992 665 5,981
<CAPTION>
YEARS ENDED DECEMBER 31, 1998, 1997, 1996, 1995
--------------------------------------------------------------------------------
GROSS COST AT
END OF PERIOD(B)
SUBSEQUENT ----------------------
CAPITALIZED BUILDING & ACCUMULATED
PROPERTY COSTS LAND IMPROVEMENTS TOTAL DEPRECIATION(C) ENCUMBRANCES
<S> <C> <C> <C> <C> <C> <C>
ALABAMA
Athens Town Center......................... 9 854 7,704 8,558 225 (d)
Cox Creek Plaza............................ 11 589 5,347 5,936 156 (d)
FLORIDA
Naples Towne Center........................ 12 218 1,976 2,194 134 (d)
Lantana Plaza.............................. 589 2,590 3,189 5,779 458 (d)
Sunshine Plaza............................. 3,227 1,748 10,679 12,427 1,422 (d)
Shoppes of Lakeland........................ 120 1,279 11,663 12,942 641 (d)
Pelican Plaza.............................. 14 710 6,418 7,128 235 (d)
Crestview Corners.......................... 11 400 3,613 4,013 105 (d)
Village Lakes.............................. 41 862 7,809 8,671 195 (d)
Southbay Fashion Center.................... 50 597 5,405 6,002 85
Rivertowne Square..........................
69 880 7,921 8,801 25
GEORGIA
Holcomb Center............................. 33 658 5,986 6,644 314 (d)
Mays Crossing.............................. 7 725 6,539 7,264 191 (d)
Indian Hills............................... 7 706 6,362 7,068 186 (d)
Conyers Crossing........................... 42 729 6,604 7,333 48
MARYLAND
Crofton Plaza.............................. 1,147 3,201 7,646 10,847 1,385 (d)
MICHIGAN
Tel-Twelve Mall............................ 2,385 4,777 45,566 50,343 3,078 (e)
New Towne Plaza............................ 990 817 8,344 9,161 511 (e)
Ferndale Plaza............................. 12 265 2,400 2,665 164 (d)
Clinton Valley Strip Center................
52 399 3,640 4,039 248 (d)
Fraser Shopping Center..................... 134 363 3,397 3,760 241 (e)
Eastridge Commons.......................... 2,053 1,086 11,828 12,914 843 (e)
Oak Brook Square........................... 68 955 8,659 9,614 575 7,000
Jackson West............................... 4,931 2,806 11,201 14,007 723 8,319
Jackson Crossing........................... 4,486 2,249 24,723 26,972 1,483 (e)
Roseville Plaza............................ 542 1,466 13,737 15,203 932 (e)
Southfield Plaza........................... 381 1,121 10,471 11,592 682 (e)
Clinton Valley Mall........................
261 1,101 10,171 11,272 670 (e)
Lake Orion Plaza........................... 76 470 4,310 4,780 291 (e)
Edgewood Towne Center...................... 8 665 5,989 6,654 400 (d)
</TABLE>
F-20
<PAGE> 56
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1998, 1997, 1996, 1995
-----------------------
INITIAL COST
TO COMPANY
-----------------------
YEAR YEAR YEAR BUILDING &
PROPERTY LOCATION CONSTRUCTED(A) ACQUIRED RENOVATED LAND IMPROVEMENTS
- ------------------------------------------- ----------------------- -------------- -------- --------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
West Oaks I................................ Novi, Michigan 1981 1996 1997-98 0 6,304
West Oaks II............................... Novi, Michigan 1987 1996 1,391 12,519
Taylor Plaza............................... Taylor, Michigan 1996 400 1,930
Madison Center............................. Madison Heights,
Michigan 1997 817 7,366
Whitelake Marketplace...................... Whitelake Township,
Michigan 1998 2,965 0
NEW JERSEY
Chester Springs............................ Chester, New Jersey 1994 1997-98 4,931 13,331
NEW YORK
Commack Shopping Center.................... Commack, New York 1992 1,160 1,740
Trinity Corners............................ Pound Ridge, New York 1992 1,250 1,250
NORTH CAROLINA
Ridgeview Crossing......................... Elkin, North Carolina 1997 1,054 9,494
Hickory Corners............................ Hickory, North Carolina 1997 798 7,192
Holly Springs Plaza........................ Franklin, North
Carolina 1997 829 7,470
OHIO
Office Max Center.......................... Toledo, Ohio 1994 1996 227 2,042
Troy Towne Center.......................... Troy, Ohio 1990 1996 1996 930 8,372
Spring Meadows Place....................... Springfield Twp, Ohio 1987 1996 1997 1,662 14,959
SOUTH CAROLINA
Taylors Square............................. Greenville, South
Carolina 1997 1,581 14,237
Edgewood Square............................ North Augusta, South
Carolina 1997 1,358 12,229
TENNESSEE
Stonegate Plaza............................ Kingsport, Tennessee 1997 606 5,454
Cumberland Gallery......................... New Tazewell, Tennessee 1997 327 2,944
Highland Square............................ Crossville, Tennessee 1997 913 8,189
Northwest Crossing......................... Knoxville, Tennessee 1997 1,284 11,566
Tellico Plaza.............................. Lenoir City, Tennessee 1997 611 5,510
VIRGINIA
Aquia Towne Center......................... Stafford County,
Virginia 1998 2,187 19,776
<CAPTION>
YEARS ENDED DECEMBER 31, 1998, 1997, 1996, 1995
--------------------------------------------------------------------------------
GROSS COST AT
END OF PERIOD(B)
SUBSEQUENT ----------------------
CAPITALIZED BUILDING & ACCUMULATED
PROPERTY COSTS LAND IMPROVEMENTS TOTAL DEPRECIATION(C) ENCUMBRANCES
- ------------------------------------------ ----------- ------- ------------ ------- --------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
West Oaks I................................ 2,733 0 9,037 9,037 481 4,224
West Oaks II............................... 126 1,391 12,645 14,036 858 7,507
Taylor Plaza............................... 15 400 1,945 2,345 118 (d)
Madison Center.............................
78 817 7,444 8,261 298 (d)
Whitelake Marketplace......................
3,967 2,965 3,967 6,932 0 (e)
NEW JERSEY
Chester Springs............................ 2,418 4,931 15,749 20,680 1,667 (d)
NEW YORK
Commack Shopping Center.................... 2 1,160 1,742 2,902 263 (d)
Trinity Corners............................ 530 1,250 1,780 3,030 262 (d)
NORTH CAROLINA
Ridgeview Crossing......................... 12 1,054 9,506 10,560 278 (e)
Hickory Corners............................ 31 798 7,223 8,021 211 (d)
Holly Springs Plaza........................
7 829 7,477 8,306 218 (d)
OHIO
Office Max Center.......................... 0 227 2,042 2,269 136 (d)
Troy Towne Center.......................... 884 930 9,256 10,186 622 (e)
Spring Meadows Place....................... 690 1,662 15,649 17,311 1,058 6,548
SOUTH CAROLINA
Taylors Square.............................
9 1,581 14,246 15,827 416 (e)
Edgewood Square............................
10 1,358 12,239 13,597 357 (d)
TENNESSEE
Stonegate Plaza............................ 2 606 5,456 6,062 159 (e)
Cumberland Gallery......................... 13 327 2,957 3,284 86 (d)
Highland Square............................ 5 913 8,194 9,107 239 5,566
Northwest Crossing......................... 14 1,284 11,580 12,864 338 (e)
Tellico Plaza.............................. 4 611 5,514 6,125 161 (d)
VIRGINIA
Aquia Towne Center.........................
25 2,187 19,801 21,988 144 15,124
</TABLE>
F-21
<PAGE> 57
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1998, 1997, 1996, 1995
-----------------------
INITIAL COST
TO COMPANY
-----------------------
YEAR YEAR YEAR BUILDING &
PROPERTY LOCATION CONSTRUCTED(A) ACQUIRED RENOVATED LAND IMPROVEMENTS
- ------------------------------------------- ----------------------- -------------- -------- --------- -------- ------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AND
PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
WISCONSIN
West Allis Towne Centre.................... West Allis, Wisconsin 1987 1996 1,866 16,789
-------- --------
Totals $ 64,433 $438,192
======== ========
<CAPTION>
YEARS ENDED DECEMBER 31, 1998, 1997, 1996, 1995
--------------------------------------------------------------------------------
GROSS COST AT
END OF PERIOD(B)
SUBSEQUENT ----------------------
CAPITALIZED BUILDING & ACCUMULATED
PROPERTY COSTS LAND IMPROVEMENTS TOTAL DEPRECIATION(C) ENCUMBRANCES
---------- ----------- ------ ------------ ------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
WISCONSIN
West Allis Towne Centre.................... 12 1,866 16,801 18,667 1,120 (e)
------- ------- -------- -------- -------
$33,355 $64,433 $471,547 $535,980 $26,136
======= ======= ======== ======== =======
</TABLE>
- -------------------------
(a) If constructed by a predecessor of the Company.
(b) The aggregate cost of land and buildings and improvements for federal income
tax purposes is approximately $409 million.
(c) Depreciation for all properties is computed over the useful life which is
generally forty years.
(d) The property is pledged as collateral on the secured line of credit.
(e) The property is pledged as collateral on secured mortgages.
The changes in real estate assets and accumulated depreciation for the years
ended December 31, 1998, and 1997 are as follows:
<TABLE>
<CAPTION>
REAL ESTATE ASSETS 1998 1997 ACCUMULATED DEPRECIATION
------------------ ---- ---- ------------------------
<S> <C> <C> <C>
Balance at beginning of period............. $473,213 $314,854 Balance at beginning of period.............
Acquisitions............................... 46,910 150,368 Depreciation...............................
Capital Improvements....................... 15,857 7,991 Balance at end of period...................
-------- --------
Balance at end of period................... $535,980 $473,213
======== ========
<CAPTION>
ACCUMULATED DEPRECIATION 1998 1997
------------------------ ---- ----
<S> <C> <C>
Balance at beginning of period............. $14,919 $ 7,102
Depreciation............................... 11,217 7,817
------- -------
Balance at end of period................... $26,136 $14,919
======= =======
</TABLE>
F-22
<PAGE> 1
EXHIBIT 10.46
LOAN AGREEMENT
THIS AGREEMENT is made this 22nd day of December, 1998, between
RAMCO-GERSHENSON PROPERTIES, L.P., a Delaware limited partnership, whose address
is 27600 Northwestern Highway, Suite 200, Southfield, Michigan 48034
(hereinafter called "Borrower"), and NBD BANK, a Michigan banking corporation,
whose address is 611 Woodward Avenue, Detroit, Michigan 48226 (hereinafter
called "Lender").
The following is a recital of the facts underlying this Agreement:
The purpose of this facility is to provide partial construction
financing for a shopping center development on certain real estate located in
Oakland County, Michigan (hereinafter called "Site") which Site is described in
Exhibit A attached hereto and is sometimes hereinafter called "Premises" or
"Project".
Borrower has applied to Lender for a loan for the purpose of providing
funds for the construction described above. Lender desires to make said loan to
Borrower, and Borrower desires to borrow said money from Lender, upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and agreements of the
parties, Borrower and Lender agree as follows:
1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
1.1 "Appraisal" shall mean an Appraisal of the Project prepared by an
appraiser approved by Lender in form and substance acceptable to Lender.
1.2 "Appraised Value" shall mean the value of the Project as
determined by Lender, in its discretion, based upon the Appraisal.
1.3 "Assignment of Leases" shall mean the Assignment of Leases
executed by Borrower and delivered to Lender on even date, as it may be amended,
restated or replaced from time to time.
1.4 "Base LIBOR Rate" shall mean, with respect to a LIBOR Borrowing
for a LIBOR Interest Period, the rate at which deposits in U.S. Dollars are
offered to Lender by first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such LIBOR Interest Period, with a maturity approximately equal to such
LIBOR Interest Period and in an amount approximately equal to the amount of such
LIBOR Borrowing.
1.5 Each "Basis Point" shall mean one one-hundredth of one (1/100%)
percent per annum.
1.6 "Borrowing" or "Loan Advance" shall mean an advance of all or any
portion of the Loan.
1.7 "Borrowing and Rate Selection Notice" shall mean a written, telex
or telephonic notice by Borrower to Lender specifying:
(1) that Borrower wishes to make a Borrowing;
(2) the amount thereof and the rate option or options applicable
to the whole or designated portions;
(3) the Effective Date of the selection of the Rate; and
(4) the Interest Period applicable to each Borrowing.
1.8 "Business Day" shall mean with respect to borrowing, payment or
rate selection of LIBOR Borrowings, a day on which banks, generally, are open
for business in Detroit and on which dealings in U.S. Dollars are carried on in
the London interbank market.
<PAGE> 2
1.9 "Completion Date" shall mean the Maturity Date of the Construction
Note.
1.10 "Construction Loan" shall mean the loan evidenced by the
Construction Note.
1.11 "Construction Note" shall mean the Construction Note in the
original principal amount of Fourteen Million ($14,000,000.00) Dollars, executed
by Borrower and delivered to Lender on even date, as it may be amended, restated
or replaced from time to time.
1.12 "Conversion Date" shall mean the earlier of (i) the date of the
final advance, or (ii) the Maturity Date of the Construction Note.
1.13 "Cost Budget" shall mean a budget attached as Exhibit B, which
Borrower certifies as true and correct for the development and construction
costs for the Project.
1.14 "Debt Service Coverage Ratio" shall mean Net Operating Income
divided by principal and interest debt service.
1.15 "Effective Date" shall mean any future Business Day designated by
Borrower in a Borrowing and Rate Selection Notice or in a Prepayment Notice as
the date such borrowing and rate selection or such prepayment shall become
effective.
1.16 "Effective Rate" shall mean the Prime Rate.
1.17 "Fixed Rate" shall mean a fixed rate of interest negotiated by the
parties for the Term Note.
1.18 "Guarantor" shall mean Ramco-Gershenson Properties Trust.
1.19 "Guaranty" shall mean the Guaranty executed by Guarantor and
delivered to Lender on even date, as it may be amended, restated or replaced
from time-to-time.
1.20 "Improvements" shall mean the Site development and the
construction of the shopping center and related amenities and improvements in
accordance with the Plans and Specifications.
1.21 "Interest Period" shall mean a LIBOR Interest Period.
1.22 "LIBOR Borrowing" shall mean that portion of any Borrowing at the
time a LIBOR Rate is applicable, under Section 2.5.
1.23 "LIBOR Interest Period" shall mean, with respect to a LIBOR
Borrowing, a period of thirty (30), sixty (60), ninety (90), or one-hundred
eighty (180) days, to the extent LIBOR Borrowings of such or similar periods are
available, commencing on a Business Day and selected by Borrower in its
Borrowing and Rate Selection Notice. If any LIBOR Interest Period would
otherwise end on a day which is not a Business Day, such LIBOR Interest Period
shall end on the next succeeding Business Day.
1.24 "LIBOR Rate" shall mean, with respect to a LIBOR Borrowing and a
LIBOR Interest Period, the sum of:
(1) the quotient of:
(a) the Base LIBOR Rate applicable to that LIBOR Interest
Period, divided by
(b) one (1) minus the Reserve Requirement (expressed as a
decimal) applicable to that LIBOR Interest Period; plus
-2-
<PAGE> 3
(2) One hundred eighty-five (185) Basis Points per annum.
The LIBOR Rate shall be rounded, if necessary, to the next higher
one one-hundredth of one (1/100%) percent.
1.25 "Loan" shall mean the facility provided for under this Loan
Agreement and evidenced by the Note (the Construction Loan and Term Loan).
1.26 "Loan Amount" shall mean Fourteen Million ($14,000,000.00)
Dollars.
1.27 "Loan Documents" shall mean this Loan Agreement, the Construction
Note, the Term Note, the Mortgage, the Assignment of Leases, the Security
Agreement, and all accompanying financing statements, and the Guaranty, as these
documents may be amended, restated or replaced from time to time, together with
each and every other document now or hereafter evidencing, securing or executed
in conjunction with the Loan.
1.28 "Maturity Date" shall mean eighteen (18) months from the date of
this Agreement for the Construction Note, and if the Construction Note is
converted to a Term Note in accordance with this Agreement, the Maturity Date
for the Term Note shall mean twenty-four (24) months from the Conversion Date.
1.29 "Minimum Notice Period" shall mean receipt of notice no later
than:
(1) 11:00 a.m. (Detroit time) on the Effective Date of a Prime
Rate Borrowing or a rate selection relating thereto; and
(2) 11:00 a.m. (Detroit time) four (4) Business Days before the
Effective Date of a LIBOR Rate Borrowing and the rate
selection relating thereto.
1.30 "Mortgage" shall mean the Mortgage executed by Borrower and
delivered to Lender on even date, as it may be amended, restated or replaced
from time to time.
1.31 "Net Operating Income" shall mean gross receipts and all other
income, less Operating Expenses.
1.32 "Note" shall mean the Construction Note and/or the Term Note, as
the context requires.
1.33 "Operating Expenses" shall mean expenditures of all kinds made
with respect to operation of the Premises in the normal course of business,
including but not limited to, expenditures for taxes, insurance, repairs,
replacements, maintenance, management fees, advertising expenses, salaries and
wages, and utility payments and amounts equal to Seven ($0.07) Cents per square
foot for capital reserves, but expressly exclusive of (i) any debt service on
the Loan, (ii) depreciation, amortization and other non-cash expenditures, and
(iii) capital expenditures.
1.34 "Phase I Environmental Report" shall mean a Phase I Environmental
Site Assessment Report, in form and substance satisfactory to Lender.
1.35 "Plans and Specifications" shall mean the plans and specifications
pertaining to the construction of the Improvements identified on Exhibit C, as
they may be amended in accordance with the terms of this Loan Agreement.
1.36 "Premises" shall mean the Site.
1.37 "Prepayment Notice" shall mean a written, telex or telephonic
notice by Borrower to Lender in accordance with Section 2.9, specifying the
amount of principal to be prepaid and the Effective Date of such prepayment.
1.38 "Prime Rate" shall mean a rate of interest per annum equal to the
prime rate of interest as publicly announced by Lender from time to time,
adjusting and changing when and as the prime rate changes, which rate may not be
the lowest rate charged by Lender.
-3-
<PAGE> 4
1.39 "Prime Rate Borrowing" shall mean that portion of the Loan
outstanding at any time that the Effective Rate is applicable.
1.40 "Project" shall mean the Site and all Improvements constructed or
to be constructed thereon.
1.41 "Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
1.42 "Reserve Requirement" shall mean, with respect to a LIBOR Interest
Period, the daily average during such LIBOR Interest Period of the aggregate
reserve requirement (including all basic, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements during such LIBOR Interest Period) which may be
imposed on Lender under Regulation D in respect of "Eurocurrency liabilities"
(or in respect of any other category of liabilities which consist of or include
deposits by reference to which the interest rate on LIBOR loans is determined or
any category of extensions of credit or other assets which consists of or
includes loans by any non-United States office of Lender to United States
residents).
1.43 "Security Agreement" shall mean the Security Agreement executed by
Borrower and delivered to Lender on even date, as it may be amended, restated or
replaced from time to time.
1.44 "Site" shall mean the real property upon which the Improvements
shall be constructed, as more particularly described in Exhibit A.
1.45 "Survey" shall mean an ALTA/ACSM mortgage survey otherwise
conforming to requirements set forth in Section 4.1(l).
1.46 "Term Loan" shall mean the loan evidenced by the Term Note.
1.47 "Term Note" shall mean the promissory note to be executed by
Borrower and delivered to Lender in the form attached as Exhibit D-1 or D-2 if
the requirements for conversion under Section 13 of this Agreement have been
satisfied.
2. COMMITMENT TO LEND, BORROWINGS AND CONDITIONS OF LENDING
2.1 Agreement to Lend. Lender agrees, subject to the terms and
conditions set forth in this Agreement, to advance to Borrower, from time to
time, from and after the effective date of this Agreement, sums not to exceed,
in the aggregate at any one time outstanding, the Loan Amount. The sums shall be
repaid, together with interest and certain costs and charges which may be
incurred by Lender, all as set forth in the Note.
2.2 The Note and Other Loan Documents. All Borrowings under this
Agreement shall be evidenced by, secured, and repaid pursuant to the Note and by
the other Loan Documents, which shall be executed and delivered by Borrower
simultaneously upon the execution of this Agreement (except the Term Note which
shall be executed and delivered under the terms of this Loan Agreement).
2.3 Limitation on Borrowings. Anything herein to the contrary
notwithstanding, Loan Advances shall be limited to the amounts as Borrower is
eligible to receive under and upon compliance with, the conditions of Section 4.
2.4 Rate. The outstanding principal balance due under the Construction
Note shall bear interest at the Effective Rate, unless the LIBOR Rate is
selected by Borrower as provided in Section 2.5. The outstanding principal
balance due under the Term Note shall bear interest at the Prime Rate unless a
Fixed Rate or the LIBOR Rate is selected by Borrower.
2.5 Selection of LIBOR Rate. Subject to the terms and conditions of
this Agreement, with respect to the Construction Note, Borrower may elect once
per month, which shall be at the time when the monthly advance is made if an
advance is made during such month, to have interest accrue and be payable at the
LIBOR Rate and for a LIBOR Interest
-4-
<PAGE> 5
Period selected by Borrower as provided in this Agreement for any new Borrowing
or any Borrowing made upon expiration of the Interest Period by giving Lender a
Borrowing and Rate Selection Notice of not less than the applicable Minimum
Notice Period. Borrower may request Lender to provide a LIBOR Rate quote, but
the quotation shall only remain available for a period of thirty (30) minutes.
The unpaid principal amount of each LIBOR Borrowing shall bear interest from and
including the first day of the applicable Interest Period, but not including,
the last day of such Interest Period at the rate of interest applicable to the
Borrowing. During the Interest Period, the rate of interest applicable to the
Borrowing shall not be changed. If, at the end of an Interest Period for an
outstanding LIBOR Borrowing, Borrower fails to extend the option by giving a new
Borrowing and Rate Selection Notice as to the Borrowing, then the Borrowing
shall bear interest at the Effective Rate on and after the last day of the
Interest Period until paid or until the Effective Date of a new LIBOR Rate which
is selected by Borrower in accordance with this section. This provision shall
also apply to the Term Note except LIBOR Borrowings must apply to the entire
outstanding principal balance.
2.6 Limitation on Selection of LIBOR Rate. Borrower shall not have the
right to make a LIBOR Rate election of any Interest Period extending beyond the
Maturity Date of the Construction Note or the Term Note, as the case may be. In
addition, Borrower shall not have the right to make a LIBOR Rate election for
LIBOR Borrowings in any amount less than Five Hundred Thousand ($500,000.00)
Dollars for the Construction Note and the full principal balance for the Term
Note.
2.7 Interest Basis and Payment Dates. Interest on the outstanding
principal balance of the Loan shall be calculated on the basis of the actual
number of days elapsed over a three hundred sixty (360) day year. The interest
rate payable on Prime Rate Borrowings shall change when and as the Prime Rate
changes. Interest accrued on all Prime Rate Borrowings, Fixed Rate Borrowings
and LIBOR Borrowings shall be payable monthly on the first day of each calendar
month beginning on the first day of the first month following the date of the
first disbursement under the Construction Note. Interest shall be payable for
the day on which a Borrowing is made, but not for the day of any payment on the
amount paid.
2.8 Method of Payment. All principal payments and any interest paid on
the Maturity Date (defined in the Note) shall be made in immediately available
funds to Lender at the place specified by Lender by 12:00 noon (Detroit time) on
the date when due, and all interim interest payments due under the Note and fees
due may be paid by Borrower's check or draft.
2.9 Prepayment. Borrower may, from time to time and without penalty,
pay all, or any part of the principal, of the Prime Rate Borrowings at any time
outstanding before maturity by paying, in addition to the principal amount of
the payment, all interest accrued on the amount of such prepayment to the date
thereof. Fixed Rate Borrowings may be prepaid in accordance with Section 13 of
this Loan Agreement. LIBOR Borrowings may not be prepaid before the last day of
the applicable Interest Period unless:
(1) the Borrowings are subject to either Sections 2.10 or 2.11; and
(2) all sums described in Sections 2.10 and 2.11 are paid by Borrower
to Lender.
2.10 Failure to Pay or Borrow on Certain Dates. If (i) any payment of a
LIBOR Borrowing occurs on a date which is not the last day of an applicable
Interest Period, or (ii) a LIBOR Borrowing is not made on the date specified in
a Borrowing and Rate Selection Notice for any reason other than default by
Lender, Borrower will indemnify Lender for any loss, costs or penalties
reasonably incurred by it resulting therefrom, including, without limitation,
any prepayment costs or penalties or loss in liquidating or employing deposits
acquired or required to fund or maintain the LIBOR Borrowing.
2.11 Yield Protection. If either:
(1) there is any change (including, but not limited to, any change by
way of imposition of increased Reserve Requirement) of or in the
official interpretation of any existing or future law, rule,
regulation or directive, whether or not having the force of law;
or
-5-
<PAGE> 6
(2) the compliance by Lender with any guidelines or requests from any
central bank or other governmental authority, whether or not
having the force of law, shall in the reasonable judgment of
Lender's counsel result in any increase in the cost to Lender of
making, funding or maintaining Eurodollar Advances (LIBOR
Borrowings),
then, within fifteen (15) days of demand by Lender, Borrower shall pay as
additional interest the increased costs or the amount of reduction in the amount
received by Lender which Lender reasonably determines is attributable to making,
funding and maintaining the LIBOR Borrowings, or if such increased costs would
cause the Loan to violate Michigan's criminal usury laws, Lender may, at its
option, without complying with Article 24 of the Mortgage, waive the portion of
the costs which would be violative of the criminal usury law or immediately
terminate Borrower's right to elect LIBOR Rate Borrowings.
2.12 Certificates; Survival of Indemnity. A certificate of Lender as to
the amount of payment or additional interest due under Sections 2.10 and 2.11
shall be rebuttably presumed to be correct in the absence of manifest error, and
Borrower shall pay Lender during the pendency of any dispute all amounts
specified in such certificate. Lender will, on request, provide evidence
supporting the certificate. Determination of amounts payable under Sections 2.10
and 2.11 in connection with a LIBOR Borrowing shall be calculated as though
Lender funded the LIBOR Borrowing through the purchase of a deposit of the type,
maturity and amount corresponding to the deposit used as a reference in
determining the amount payable which is applicable to the Borrowing. Unless
otherwise provided in this Agreement, the amount specified in the certificate
shall be payable five (5) Business Days after Lender's mailing of the
certificate by certified mail. The obligations under Sections 2.10 and 2.11
shall survive payment of the Loan and termination of this Agreement.
2.13 Availability of Interest Rate. If and as long as Lender, in its
sole discretion, determines, and notifies Borrower, that:
(1) Lender is unable to obtain deposits in U.S. dollars in the London
interbank market; or
(2) maintenance of Eurodollar advances (LIBOR Borrowings) would
violate any applicable law, rule, regulation or directive, whether
or not having the force of law; then Lender may suspend the availability of the
LIBOR Rate and LIBOR Borrowings with respect to all Borrowings and require all
outstanding Borrowings under a LIBOR Rate to be converted to Prime Rate
Borrowings.
2.14 Telephonic Notices. Lender is authorized to extend Borrowings and
effect rate selection choices based on telephonic Borrowing and Rate Selection
Notices made by any person Lender, in good faith, believes to be an authorized
agent acting on behalf of Borrower. Borrower agrees to confirm to Lender
promptly any telephonic Borrowing and Rate Selection Notice in writing signed by
an authorized agent. If the written confirmation differs in any material respect
from the action taken by Lender, the records of Lender shall govern, absent
manifest error.
2.15 Conditions of Lending. Lender shall not be obligated to lend or
make any Loan Advances at any time unless:
(1) all of the conditions for receipt of Loan Advances set forth in
Section 4 have been fulfilled; and
(2) no uncured default under any of the Loan Documents then exists,
and no event which might become a default after the lapse of time
or the giving of notice, or both, has occurred and is continuing
or shall exist upon the disbursement of such advance, provided
that Lender shall not unreasonably exercise its right to refuse to
make advances because of conditions which have not yet ripened
into defaults.
2.16 Designation of Agent. Borrower designates Dennis Gershenson as its
agent for purposes of delivery of all notices required or permitted to be given
pursuant to this Agreement and for purposes of execution and/or certification,
on behalf of Borrower, of all documents required to be executed and/or certified
on behalf of Borrower in conjunction with all requests for advances under this
Agreement, and any such notice delivered by or document executed and/or
certified by the said agent shall be fully binding upon Borrower.
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<PAGE> 7
3. CONSTRUCTION, COSTS AND FEES
3.1 Construction. Borrower shall, at its expense, construct or cause
to be constructed upon the Site the Improvements described in Exhibit A attached
hereto. Said Improvements shall be completed prior to the Completion Date, in a
workmanlike manner and in substantial compliance with the Plans and
Specifications, heretofore submitted to and approved by Lender, and in
accordance with all building, safety, zoning, environmental and other
requirements of any state, municipal or other governmental authority. Borrower
shall diligently and continuously carry out or cause to be carried out the
construction of the Improvements so as to insure the completion thereof by the
Completion Date.
With respect to the Project and this Loan Agreement, Lender hereby
approves as:
A. General Contractor: F & L Construction Corporation
5515 Southwyck Boulevard
Toledo, Ohio 43614
B. Project Architect: Richard L. Bowen & Associates Inc.
13000 Shaker Boulevard
Cleveland, Ohio 44120
C. Site Engineer: Giffels-Webster Engineers, Inc.
407 East Fort Street, Suite 600
Detroit, Michigan 48226
3.2 Plans and Specifications. All requests for changes in the Plans
and Specifications must be in writing signed and approved by the General
Contractor, Borrower, Permanent Lender, if any, tenants whose approval is
required, if any, Lender and such other parties as Lender may require. Lender's
approval may be subject to such terms and conditions as Lender may prescribe.
Copies of all bulletins, addenda, change orders and modifications to the Plans
and Specifications shall be promptly delivered to Lender.
Lender shall at all times have the right to require strict compliance
with the original Plans and Specifications, but Borrower may effect changes in
the Plans from time to time, without first obtaining Lender's approval, provided
such changes do not impair the structural integrity, design concept or
architectural appearance of the Improvements, no default in any other obligation
to any other party or authority results therefrom and the aggregate of all such
changes does not result in a net construction cost increase or decrease of more
than two (2.0%) percent of the construction contract.
All materials, fixtures, equipment or articles used in the construction
or equipping of Improvements shall comply with the Plans and Specifications, and
said Improvements shall not be constructed in violation of any restrictive
covenants, laws, statutes, ordinances or other governmental rules or
regulations.
3.3 Construction Costs and Fees. Borrower represents that the total
construction costs, together with Related Costs (as hereinafter defined), shall
not exceed Fourteen Thousand Nine Hundred Thirty Two Hundred Seventy-Nine
($14,930,279.00) Dollars, as more particularly set forth in the Cost Budget and
that prior to the first request for advance by it hereunder, it will have paid
Borrower's equity set forth on Exhibit B in the amount of Nine Hundred Thirty
Thousand Two Hundred Seventy-Nine ($930,279.00) Dollars. Borrower acknowledges
and agrees that the Loan Amount does not constitute adequate funds to complete
construction of the Improvements. Borrower further acknowledges and agrees that
Lender shall not be obligated to fund any amounts in excess of the Loan Amount.
Prior to such first request for advance, Borrower shall furnish such sworn
statements, waivers of lien and other assurances of payment as Lender may
require and acceptable to the title company insuring the Loan, evidencing
payment of all such costs heretofore paid including the Borrower's equity
described above and on Exhibit B.
Related Costs of the Project shall include:
(1) premiums for title, casualty and other insurance required by
Lender;
(2) the cost of recording and filing Loan Documents and any tax levied
upon such filing;
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<PAGE> 8
(3) real estate taxes and other assessments which Borrower is
obligated to pay;
(4) fees and disbursements of Lender's counsel and architect, if any;
and
(5) interest and other costs and charges payable by Borrower to Lender
or the mortgagee under the permanent loan commitment, as they
become due and payable.
Lender may advance to or on behalf of Borrower amounts payable as
Related Costs to the extent such costs have accrued. In every such event,
Borrower shall deliver to Lender acceptable receipts showing payment of said
items.
3.4. Commitment Fee and Expenses. Borrower shall pay to Lender an
initial commitment fee of one-half (0.5%) percent of the Loan amount, which fee
is hereby deemed earned and nonrefundable. This commitment fee shall be paid
simultaneously with the execution of this Agreement.
In addition, Borrower shall promptly pay all of Lender's out-of-pocket
costs incurred related to the Loan, including, without limitation, reasonable
attorneys' fees, costs of title insurance, surveys and environmental reports,
recording costs, outside architectural/engineering inspection fees, and such
other work provided for in the Loan Documents, upon presentation of an invoice
therefor.
3.5 Conversion Fee. In the event the Loan is converted to a Term Loan
in accordance with Paragraph 13, Borrower shall pay to Lender as a condition of
the conversion a conversion fee of one-quarter (0.25%) percent of the original
principal amount of the Term Note.
4. ADVANCES. Lender shall, subject to the terms and conditions of
this Loan Agreement, make advances to the Borrower to defray actual costs of
construction of the Improvements incurred up to the Loan Amount, subject to the
following conditions:
4.1 Requests for advances shall be made upon forms provided by or
acceptable to Lender, and all such requests shall be approved by such parties as
Lender may require. Such requests shall indicate the amount of the advance and
the date upon which the advance is desired, which date shall be not less than
ten (10) days after the date upon which such request is received by Lender.
Advances shall be limited to one (1) in any calendar month.
Additional advances may be made available at the sole discretion of Lender.
4.2. Lender shall not be obligated to make the first advance hereunder
unless the following conditions have been satisfied:
(1) All representations and warranties made in this Loan Agreement
shall be true and correct on and as of the date of the advance
with the same effect as if made on such date;
(2) Lender shall have received:
(a) executed copies of all Loan Documents, Guaranties and any
other documents required by Lender;
(b) an estimated cost breakdown of all direct and indirect
costs of the Project;
(c) such appraisals of the Project as may be required by
Lender in form and substance satisfactory to Lender;
(d) Plans and Specifications, and all bulletins, addenda,
change orders and modifications to the date of the request for
such advance, acceptable to Lender, and approved in writing by
Borrower, the Architect, the General Contractor, Permanent
Lender and tenants whose approval is required, if any;
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<PAGE> 9
(e) an undertaking by the General Contractor and Architect to
continue performance on Lender's behalf without additional
cost in the event of a default by the Borrower;
(f) evidence of compliance with all building, safety, zoning,
environmental and other requirements of any state, municipal
or other governmental authority affecting the construction and
use of the Project;
(g) all required permits, licenses, approvals and
authorizations then procurable which are required for the
construction and use of the Project;
(h) original paid insurance policies as required hereunder and
by the Mortgage;
(i) a request for advance as specified in Section 4.2(l)
hereof;
(j) Borrower shall, in Lender's opinion, have fully complied
with all of the provisions of the Construction Lien Act, being
Michigan Public Act 497 of 1980, as amended, and shall prior
to the commencement of any actual physical improvements (as
defined in said Act) on the Site, have recorded a Notice of
Commencement (as defined therein) and delivered a copy of same
to Lender;
(k) sworn statements, schedule of costs by work trade
category, waivers of lien, copies of all writings received or
transmitted by the "Designee" identified in the Notice of
Commencement during the period ending with the date of the
Request for Advance, affidavits and certificate of the
Architect and of Borrower, and acceptable assurances of
payment of the General Contractor, all subcontractors and
materialmen, which shall cover all work, labor and materials,
including equipment and fixtures of all kinds, done, performed
or furnished for the Project to the date of the request. The
Architect's certificate shall be certified to both Lender and
Borrower and shall certify:
(1) that each request for payment is correct and that to
the best of its knowledge all work pursuant to the
contract to the date thereof has been done in substantial
compliance with the Plans and Specifications therefor;
(2) that to the date thereof, there has been no material
deviation from the contract amount or time of completion
of the work thereunder, except as authorized by contract
modifications approved by Lender; and
(3) the total construction cost, the cost to complete the
Improvements, and that after giving effect to all amounts
previously certified for payment, plus the amount then
requested, the remaining uncertified and undisbursed funds
will be sufficient to meet all known costs to complete the
work covered by the contract;
(l) a current engineering survey, certified by a registered
land surveyor or engineer to Lender and the mortgage title
insurer, showing the location of all Improvements made to the
Site, the location of all easements and public utilities
(identified by liber and page of recording), all means of
ingress and egress, all set-back lines, any encroachments
either upon the real estate of others or by others upon the
Site, indicating the location and availability of satisfactory
utility services and storm drain and sewer facilities, and
disclosing no other matter objectionable to Lender, and
bearing the following certification:
"We hereby certify to NBD Bank and Philip R. Seaver Title Co.,
we have surveyed the property described herein (the
"Property") for the purpose of a mortgage loan to be received
by Ramco-Gershenson Properties L.P., a Michigan limited
partnership, from NBD Bank, and further certify that (i) there
are located thereon buildings, improvements and parking areas,
as shown, (ii) said buildings, improvements and parking areas
are within the boundaries of the Property and do not encroach
on any adjoining property, nor do the buildings, improvements
or parking areas on any
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<PAGE> 10
adjoining property encroach upon the Property, (iii) all
easements, rights-of-way and building lines affecting the
Property are noted and located hereon by dimension and liber
and page of recording, (iv) all means of ingress and egress to
the Property are shown and, if by virtue of an easement, the
liber and page of recording thereof is shown, (v) there is no
moving or standing water on the Property, except as shown, and
(vi) the Property (is) (is not) located within a Special Flood
Hazard Area as identified by the Federal Insurance
Administration, Department of Housing and Urban Development.
We further certify that this map or plat and the survey on
which it is based were made in accordance with "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys"
currently established and adopted by ALTA and ACSM in 1997;
and meets the accuracy requirements of a Class A survey as
registered therein.";
(m) copies of soil tests, indicating that the sub-soil and
geological conditions of the land are normal and suitable for
the Project without incurring any premium costs with respect
thereto;
(n) a paid policy of mortgage title insurance, without
exceptions, issued by a company and in form satisfactory to
Lender, in the full amount of the Loan, insuring that Lender
is a first mortgagee of the Premises, and that title to the
Premises is in Borrower, free and clear of all other liens,
claims, charges and encumbrances, except such as are indicated
in the Schedule of Encumbrances attached to the Mortgage or
approved by Lender hereafter. At the time of each advance,
Lender shall be furnished with an appropriate endorsement of
coverage with respect to each advance then being made,
indicating that since the last advance, there has been no
change in the state of title and no survey exceptions not
theretofore approved by Lender, increasing the coverage under
the policy by an amount equal to the advance then being made,
and insuring that the full amount of all disbursements up to
and including such increase constitutes a valid lien prior to
any liens or other matters of record and any unrecorded
mechanics' liens arising from nonpayment of bills covering
improvements set forth in the work progress and inspection
reports and sworn statements submitted in connection with such
disbursements;
(o) a written opinion of counsel for Borrower and Guarantor,
in form and substance satisfactory to Lender, setting forth
that:
(1) Borrower is a duly organized and existing Delaware
limited partnership with a current and valid Certificate
of Limited Partnership and a Certificate of Fact, each
certified by the Secretary of State, Division of
Corporations and the Borrower and Guarantor are authorized
to do business in Michigan. Guarantor is a duly formed
Maryland Corporation (Real Estate Investment Trust).
(2) the due authorization of the Loan by appropriate
partnership action and due authorization of the Guaranty
by appropriate corporate action;
(3) the execution of the Loan Documents is not in
contravention of the Limited Partnership Agreement or of
any undertaking, contract or restriction known to such
counsel to which Borrower is a party or subject and the
execution of the Guaranty is not in contravention of the
bylaws or of Declaration of Trust or any undertaking,
contract or restriction known to such counsel to which
Borrower or Guarantor is a party or subject;
(4) counsel has no knowledge of any proceeding, whether
legal or equitable, pending or threatened against
Borrower, Guarantor or the Premises which involves the
validity or enforceability of the Loan Documents or which
would affect the contemplated use of the Premises; and
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<PAGE> 11
(5) when executed and delivered, the Loan Documents will
be valid and legally binding upon Borrower and Guarantor
enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by any
proceedings in bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and
remedies;
(p) a Phase I environmental report by an environmental
engineer acceptable to Lender (including a 50-year title
search), together with an Environmental Questionnaire and an
Environmental Certificate executed by Borrower;
(q) such other documents as may be reasonably required by
Lender; and
(r) each of the items described above shall be in form and
substance satisfactory to Lender.
4.3 The obligation of Lender to make any advances after the first
advance shall be subject to satisfaction of the following conditions:
(1) All conditions for the first advance set forth in Section 4.2
hereof, except condition 4.2(l);
(2) There shall be no default under any of the Loan Documents;
(3) If required by Lender, an updated engineering survey in form
and substance as required by Section 4.2(l).
4.4 Each advance shall be subject to inspection and approval of the
portion of the Improvements which has been completed at the time of such advance
by Lender or its designee.
4.5 Lender shall not be required to make any advance if:
(1) there is any materially adverse change in the projected income
and expenses of the Premises or any lessee under a lease to be
assigned as security or Borrower does not satisfy the financial
covenants set forth in the Second Amended and Restated Revolving
Credit Agreement dated as of October 30, 1997 between Borrower and
Bank Boston, N.A., and others, as it may be amended, restated or
replaced from time to time;
(2) there shall have occurred any of the events described in
Sections 14.5 or 14.6 hereof for which Lender has the right to
terminate this Loan Agreement as set forth therein;
(3) either the Borrower, or any tenant under any lease to be
assigned as security, or any Guarantor of the Loan or any such
lease shall be the subject of any bankruptcy, reorganization or
insolvency proceeding;
(4) there shall have occurred and be continuing any default by
Borrower under the Loan Documents; or
(5) there shall be a default in any other loan by Lender to
Borrower or any Guarantor of the Loan.
4.6 At no time shall the total amount of advances made hereunder,
together with the cost to complete the Improvements in accordance with the Plans
and Specifications, Loan Documents and leases, if any, exceed the aggregate
amount provided in Section 1 hereof. As construction progresses, Lender will
hold back from each advance ten (10%) percent (said hold back shall be reduced
to five (5%) percent once fifty (50%) percent of the Improvements have been
completed) of all amounts advanced to cover the cost of labor and materials
furnished to the Project, which hold-backs shall be distributed upon completion
of the Improvements in accordance with the Plans and Specifications, Loan
Documents and leases, if any, and upon satisfaction of all of the conditions for
the final advance hereinafter set forth.
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<PAGE> 12
4.7 Lender may establish reserves from the undisbursed portion of the
Loan in sums sufficient, in its opinion, to pay or satisfy any requirements of
the permanent loan commitment or any lien or claim prior or prejudicial to the
lien of Lender, and all funds so reserved shall be deemed loan proceeds
disbursed under this Loan Agreement whether or not segregated and whether or not
at interest. If at any time, in the reasonable judgment of Lender, the then
undisbursed portion of the Loan shall be insufficient to defray the remaining
cost of completion of the Improvements, then, Lender may in its sole discretion
cease making Loan Advances until the Loan is brought in balance and Borrower
shall go out-of-pocket to pay all costs of the Project until the Loan is brought
in balance.
4.8 Lender's obligation to make the final advance shall be subject to
satisfaction of the following conditions:
(1) Borrower shall have furnished all of the certificates and
documents required hereunder; provided, however, that the
certified engineering survey required shall be a final, as-built
survey and shall include the location of all parking areas, if
any, with any dimensions and striping indicated and photographs of
the Premises from at least three (3) different views.
(2) Delivery to Lender of evidence satisfactory to it of issuance
of all certificates, permits, licenses and other approvals
required by any governmental or public authority or rating bureau
of all work requiring inspection and authorizing the use and
occupancy of the Premises.
(3) The requirements of Section 4.5 hereinabove.
(4) Receipt of Subordination, Non-Disturbance and Attornment
Agreements and Tenant Estoppels from tenants where required by
leases with such tenants or if requested by Lender.
(5) Certification by the Architect and General Contractor, if any,
and by Borrower of final completion of the Improvements in
accordance with the Plans and Specifications, and final inspection
and approval of said construction by Lender or its designee.
(6) All other documents, as may be reasonably required by Lender.
(7) Each of the items described above shall be in form and
substance satisfactory to Lender.
Anything herein to the contrary notwithstanding, Lender's obligation to
make said final advance shall terminate on the Maturity Date of the Note,
without in any way affecting the obligations of Borrower hereunder.
5. INSURANCE. During the construction of the Improvements and for as
long as any part of the Loan advanced to or on behalf of Borrower remains
unpaid, Borrower shall maintain a policy or policies of insurance against fire
(with extended coverage, malicious mischief and vandalism endorsements and
covering all property covered by the lien of the Mortgage or any other
instrument securing the Loan), builder's risk, public liability, workers'
compensation, Federal Flood Insurance and such other insurance as Lender may,
from time to time, require (including but not limited to rental interruption
insurance for a term of at least 12 months upon issuance of a temporary
certificates of occupancy), containing where applicable a standard loss payable
clause, without contribution, in favor of Lender. All such policies shall be
with companies and in form, amount and substance satisfactory to Lender, and
shall be noncancellable, except upon thirty (30) days' written notice to Lender.
6. APPLICATION OF ADVANCES. Borrower shall apply each advance made
hereunder against amounts due and payable for construction of the Improvements
or obligations in connection therewith, and shall set aside the remainder, if
any, to apply against all such amounts as shall become due and payable therefor.
Nothing contained in the Loan Documents shall impose upon Lender any obligation
to see to the proper application of such advances by Borrower or any other
party. In the event of default by Borrower, Lender may, in making advances
hereunder, pay any portion of such advance directly to the General Contractor or
any subcontractor or supplier of materials, fixtures, equipment or labor for the
Premises.
7. REPRESENTATIONS AND WARRANTIES. Borrower and Guarantor (where
applicable) represent and warrant that:
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<PAGE> 13
7.1 Borrower has good and marketable fee simple title to the Premises
free from all liens and encumbrances, except as provided in the Mortgage
executed simultaneously herewith.
7.2. Borrower has fully performed all covenants and obligations to be
performed by Borrower under all leases assigned as security for the repayment of
the Loan.
7.3 The financial statements heretofore delivered to Lender are true
and correct in all material respects and have been prepared in conformity with
generally accepted accounting principles. No materially adverse change has
occurred since the date of each such financial statement.
7.4 There are no suits or proceedings pending or, to the knowledge of
Borrower, threatened against or affecting Borrower, the Premises or the
Guarantors, if any, or involving the validity or enforceability of the Loan
Documents or involving any risk of a judgment or liability which, if satisfied,
would have a materially adverse effect on the financial condition, business or
properties of Borrower, or the priority of the lien of the Mortgage.
7.5 The execution and delivery of this Loan Agreement and the other
Loan Documents, and the consummation of the transactions contemplated thereby do
not conflict with or result in the breach of any valid regulation, order, writ,
injunction, judgment or decree of any court or governmental or municipal
instrumentality or in breach of or default under any agreement or other
instrument to which the Borrower or Guarantor is a party or by which it is
bound.
7.6 Borrower has delivered to Lender accurate and complete copies of
the Plans and Specifications and all other contract documents requested,
including all modifications thereof.
7.7 The Premises have adequate rights of access to public ways, soil
conditions are appropriate for the construction of the Project, and water,
sanitary sewer and storm drain facilities and all public utilities necessary or
convenient to the full use and enjoyment of the completed Project are available
to the Site and, if not now installed, will be promptly constructed and
installed to service the Project.
7.8 Borrower has obtained all required permits, licenses, approvals
and authorizations, including those required by the Federal Environmental
Protection Agency and any state or local authority charged with the enforcement
of regulations of such agency, and fully complied with all building, safety,
zoning, environmental and other requirements of any state, municipal or other
governmental authority pertaining to the construction of the Improvements
capable of being complied with at the date hereof, and will obtain all such
permits, licenses, approvals and authorizations and will comply with all such
building, safety, zoning and other requirements hereafter.
7.9 The Project will be constructed in strict accordance with all
applicable building, safety, zoning and other requirements of all state,
municipal or other governmental or regulatory authorities and rating or
inspection offices having jurisdiction, and will be constructed entirely on the
Site and will not unlawfully encroach on any easement, right-of-way or land of
others or violate any set-back lines or applicable use or other restrictions or
regulations.
7.10 There is no default on the part of the Borrower under any of the
Loan Documents.
8. COVENANTS OF BORROWER. Borrower and Guarantor (where applicable)
covenant with Lender as follows:
8.1 To permit Lender or its designee access to the Project and to make
available for audit and inspection, at any reasonable time by the Lender or its
duly authorized agents, all property, equipment, books, contracts, records and
other papers relating to the Project. To keep the books and accounts of all
operations relating to the Project in accordance with generally accepted
accounting procedures.
8.2 To promptly respond to any inquiry from Lender for information
with respect to the Project, which information may be verified by Lender at
Borrower's expense; provided, however, that Lender shall at all times be
entitled to rely upon any statements or representations made by Borrower or its
agents, and Borrower shall hold Lender harmless from and indemnify it against
all loss, cost (including reasonable attorney's fees) and damage suffered
through any action
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<PAGE> 14
taken or forbearance granted by Lender in reliance on such statements or
representations, excluding, however, any loss, cost or damage resulting from
Lender's willful misconduct or negligence.
8.3 To cause the construction of the Project to be prosecuted with
diligence and continuity and to complete the same in accordance with the Plans
and Specifications, leases, if any, and the Loan Documents before the Completion
Date.
8.4 To pay, when due, all costs, fees and expenses, required to
satisfy the conditions of the Loan Documents, and the consummation of the
transactions contemplated thereby.
8.5 Borrower shall not, without the prior written approval of Lender:
(1) Convey, transfer, sell, lease or encumber any of the mortgaged
property, or modify any existing or future lease affecting the
Premises;
(2) Assign, transfer, dispose of or encumber any personal property
or equipment covered by the Loan Documents, except in the ordinary
course of its business and as permitted by any of said Loan
Documents;
(3) Convey, assign or transfer any beneficial interest in the
properties described in the Mortgage or any right to manage or
receive any of the rents, contract payments, income and profits
thereof;
(4) Remodel, add to, reconstruct, improve or demolish any part of
the properties described in the Mortgage, except as required to do
so by the provisions of this Loan Agreement;
(5) Permit the use of the Project for any purpose except the use
which was originally intended, nor suffer any occupancy of the
Project prior to completion thereof, excepting only in connection
with the construction thereof;
(6) Guarantee the indebtedness of any other party;
(7) Purchase or acquire any materials, fixtures or equipment for
the Project upon leases, conditional sale or other type of title
retention of security agreement.
8.6 To comply with all terms and conditions of the permanent loan
commitment, if any, so that Borrower will qualify for the financing provided for
therein (which financing Borrower will accept), and to transmit to Lender,
immediately upon receipt thereof, any communication pertaining to the permanent
loan commitment or the Project.
8.7 Upon demand of Lender, to correct any structural defect or
unauthorized departure from the Plans and Specifications not approved by Lender.
8.8 The Borrower will take all actions reasonably necessary to assure
that Year 2000 Issues will not have a material adverse effect on the business
operations or financial condition of the Borrower. "Year 2000 Issues" means
anticipated costs, problems and uncertainties associated with the inability of
certain computer applications to effectively handle data including dates on and
after January 1, 2000, as such inability affects the business, operations, and
financial condition of the Borrower and of the Borrower's material customers,
suppliers and vendors. Upon Banks' request, Borrower will provide Banks with a
description of its plan to address Year 2000 Issues, including updates and
progress reports. Borrower will advise Banks of any reasonably anticipated
material adverse effect on the business operations or financial condition of the
Borrower as a result of Year 2000 Issues.
8.9 From and after one year from conversion to a Term Loan under
Section 13, it will maintain a debt service coverage ratio of not less than 1:25
to 1. This covenant shall be serviced quarterly based on a trailing twelve (12)
month period.
9. EVENTS OF DEFAULT. The following shall constitute Events of
Default hereunder:
9.1 If Borrower shall be in default under any of the Loan Documents;
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<PAGE> 15
9.2 If at any time any representation or warranty contained herein or
in any certificate or document delivered to the Lender is false or incorrect;
9.3 If the Project, in the exclusive judgment of Lender, is not or
cannot be completed on or before the Completion Date;
9.4 If construction of the Improvements is not carried on with
reasonable dispatch, except for delays and events entirely beyond the control of
Borrower, such as strikes, acts of God or inability to obtain materials;
9.5 If a lien for the performance of work or the supply of materials
be perfected against the Premises and remains unsatisfied or unbonded at the
time of any request for advance or for a period of thirty (30) days after the
date of filing thereof;
9.6 Any assignment by Borrower of this Loan Agreement or any advance
hereunder without Lender's prior written consent;
9.7 The filing of formal charges under any federal, state or local
statute, law or ordinance for which forfeiture of any property mortgaged or
pledged to Lender or in which Lender is granted a security interest pursuant to
any documents required to be executed by Borrower under this Agreement is a
potential penalty; or
9.8 If Lender, or its employees, agents or designees, shall be denied
any information relating to the Premises or access thereto for information
purposes.
10. REMEDIES UPON DEFAULT. In addition to all other remedies available
under the Loan Documents, the following remedies shall be available upon default
by Borrower:
10.1 Lender may, as an alternative to other methods of summary
execution, but without waiving such other methods, and particularly its rights
and remedies as mortgagee, enter into possession of the Premises and perform any
and all work and labor necessary to complete said Project substantially
according to said Plans and Specifications and/or take all appropriate steps to
secure and protect the Project. All sums expended by Lender for such purpose
shall be deemed to have been paid to Borrower and secured by the Mortgage. In
the event of any default, Borrower hereby constitutes and appoints Lender its
true and lawful attorney-in-fact with full power of substitution in the
premises, to complete the Project in the name of Borrower, and hereby empowers
Lender as its attorney-in-fact as follows: (a) to use any funds of Borrower,
including any balance which may be held in escrow and any funds which may remain
unadvanced under the Mortgage or hereunder, for the purpose of completing the
Project in the manner called for by the Plans and Specifications; (b) to make
such additions, changes and corrections in the Plans and Specifications which
may be necessary or desirable to complete the Project in the manner contemplated
by the permanent loan commitment or otherwise to Lender's satisfaction; (c) to
employ such contractors, subcontractors, agents, architects and inspectors as
shall be required for said purposes; (d) to execute all applications and
certificates in the name of Borrower which may be required by any contract
documents relating to the Project; and (e) to do any and every act which
Borrower could be required by Lender to do in its own behalf. In the event of
entry by Lender for the purposes aforesaid, Lender shall be paid as compensation
for such efforts and in addition to all other sums payable to it, a sum equal to
ten (10%) percent of all costs incurred for such purposes and of all costs
directly related thereto. This power of attorney shall be deemed a power coupled
with an interest and cannot be revoked by Borrower. Lender, as attorney-in-fact,
shall also have power to prosecute and defend all actions or proceedings in
connection with the construction and/or security of the Project or in any other
respect relating to the Premises and to take such action and require such
performance as it deems necessary under accepted bonds, guaranties or other
assurances of completion. Borrower hereby assigns and transfers to Lender all
sums unadvanced under said Mortgage or hereunder and all sums held in escrow,
conditioned upon the use of said sums in the completion of the Improvements and
payment of all costs directly related to such completion and/or security
thereof, such assignment to become effective only in case of Borrower's default,
but upon such default being called, without further notice to or demand made
upon Borrower. In the event of such default and entry by Lender, all materials
purchased by Borrower for use in construction shall be and become forthwith the
property of Lender and shall be deemed to have been delivered to Lender
accordingly, and, upon demand, Borrower shall deliver to Lender bills of sale as
further evidence thereof.
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<PAGE> 16
10.2 Lender may avail itself of any and all remedies available to it at
law or in equity or hereunder, and all such remedies shall be cumulative and
none shall be deemed exclusive of any other. Further, and not in limitation of
the foregoing, Lender may terminate this Loan Agreement and demand full payment
of Borrower's indebtedness to it, may enter upon the Premises and complete the
Project as hereinabove provided, and may utilize any remedy available to it
under the terms and provisions of the Loan Documents. In addition, Borrower
will, at the request of Lender, assign, transfer and set over to Lender by
appropriate instrument, in writing, all of Borrower's right, title and interest
in and to any construction contract, bonds or other contracts relating to the
construction and operation of the Project. Borrower does hereby constitute
Lender its attorney-in-fact, with full power of substitution, to act in
Borrower's name to execute assignments and contracts and to realize upon any of
Borrower's right, title and interest therein and to negotiate, receive and
receipt for all goods, funds or credits which may be owing Borrower, and to such
end to initiate legal action and prosecute or compromise all claims relating
thereto.
11. CAPITAL ADEQUACY PROTECTION. If Lender shall have determined that
(i) the adoption of, or compliance with, the risk based capital guidelines
adopted by the Board of Governors of the Federal Reserve System, 12 CFR Part
208, Appendix A, or the Federal Deposit Insurance Corporation, 12 CFR Part 325,
Appendix A, and amendments thereto, or (ii) the adoption of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender (or any branch or lending office
thereof) with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on Lender's
capital as a consequence of its obligations under this Agreement and the Note to
a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then, from
time to time within fifteen (15) days after demand by Lender, Borrower shall pay
to Lender such additional amount or amounts as will compensate Lender for such
reduction.
Lender will promptly notify Borrower of any event of which it has
knowledge, occurring after such date, which will entitle Lender to compensation
pursuant to this Section 11 pertaining to capital adequacy requirements and will
designate a different branch or lending office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of Lender, be otherwise disadvantageous to Lender. A certificate of
Lender claiming such compensation and setting forth the additional amount or
amounts to be paid to it in respect hereof shall be conclusive in the absence of
manifest error. In determining such amount, Lender may use any reasonable
averaging and attribution methods.
12. APPLICATION OF RENTS AND RECEIPTS. After completion of the
Project, or of any phase, unit or portion thereof, all rents, revenues or
receipts received by Borrower from the operation thereof in excess of normal
operating expenses shall be used by Borrower exclusively for payment of (i)
construction costs and Related Costs of the Project, or (ii) interest or
principal due on the Note, as specified by Lender.
13. CONVERSION TO TERM LOAN. Besides any other conditions or
requirements the Borrower must meet under the terms of this Agreement or the
other Loan Documents to convert the Construction Loan to the Term Loan, Lender's
obligation to convert the Construction Loan to the Term Loan shall be further
subject to the Borrower's compliance with and fulfillment of the following
conditions/requirements on or before the Conversion Date, each in form,
substance and amount (if applicable) satisfactory to Lender:
(A) There is no default under any of the Loan Documents, and a default
would not occur with the passage of time or giving of notice or
both;
(B) The Borrower shall have paid all fees, expenses and costs
associated with the conversion;
(C) The Borrower shall have caused the title insurance company
insuring the Mortgage to issue a "date down" or other appropriate
endorsement(s) to its title policy for the Mortgage (1) changing
the "Date of Policy" in the title policy to the Conversion Date,
(2) indicating that since the last advance under the Construction
Loan, there has been no change in the state of title of the Site
and no survey exceptions not previously approved by the Bank and
(3) insuring that, as of the Conversion Date, the full amount of
the Term Loan constitutes a valid lien on the Site that is prior
to any liens or other matters of record and any unrecorded
construction
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<PAGE> 17
liens arising from nonpayment of bills covering improvements
described in the work progress and inspection reports and sworn
statements submitted as part of advances made under Construction
Loan:
(D) The Borrower shall have caused the title insurance company
insuring the Mortgage to have (1) changed the ALTA Form 3.0 zoning
endorsement to an ALTA Form 3.1 zoning endorsement that covers the
completed Improvements and (2) issued/brought current such other
endorsements (including, without limitation, the ALTA 9
endorsement) to the title policy as the Bank may require; and
(E) The Borrower shall have executed and delivered the Term Note in
the form attached as Exhibit D-1 or D-2 to Lender, together with
all other documents required under this Agreement and the other
Loan Documents; and
(F) At least one (1) day before the conversion, Borrower shall notify
Lender in writing of its election of a LIBOR Rate, the Effective
Rate, or a Fixed Rate. If Borrower wishes to elect a LIBOR Rate,
it shall comply with the requirements set forth in this Loan
Agreement. If Borrower does not elect a rate of interest, the
Effective Rate will apply.
If Borrower elects a floating rate of interest, the Term Note may be
prepaid in whole or in part, at any time without penalty as to any floating rate
borrowings. If Borrower elects a Fixed Rate of interest, prepayment shall be
subject to a prepayment premium equal to the Current Value of: (a) the interest
that would have accrued on the amount prepaid at the Fixed Rate, minus (b) the
interest rate that could accrue on the amount prepaid at the Treasury Rate. In
both cases, interest will be calculated from the prepayment to the maturity
dates of the installments being paid. Such maturity dates shall be determined by
applying the prepayment to the scheduled installments of principal in their
inverse order of maturity. "Treasury Rate" shall mean the yield, as of the date
of prepayment, on United States Treasury bills, notes or bonds, selected by the
Lender in its discretion, having maturities comparable to the scheduled
maturities of the installments being prepaid. "Current Value" means the net
present value of the dollar amount of the interest to be earned, discounted at
the Treasury Rate. In no event shall the prepayment premium be less than zero.
As to LIBOR Borrowings, prepayment shall be subject to Section 2.
Borrower shall provide one (1) day notice of its intent to prepay the
Term Note which notice shall be irrevocable. If the balance of the Loan is
accelerated, the resulting balance due shall be considered a prepayment due and
payable as of the date of acceleration.
Borrower agrees that the prepayment premium is a reasonable estimate of
loss and not a penalty. The prepayment premium is payable as liquidated damages
for the loss of bargain, and its payments shall not in any way reduce,
affect or impair any other obligation of the Borrower under the Loan.
14. MISCELLANEOUS. No waiver at any time of the provisions or
conditions of this Loan Agreement or of any other Loan Documents shall be
construed as a waiver of any of the other provisions or conditions thereof, nor
shall a waiver of any such provision or condition be construed as a right to
subsequent waiver of the same provision or condition.
14.2 No provision of this Agreement shall be amended, waived or
modified, except by an instrument in writing signed by the parties hereto.
14.3 Unenforceability for any reason of any provision of this Loan
Agreement shall not limit or impair the operation or validity of any other
provisions of this Loan Agreement or any other of the Loan Documents.
14.4 If, in the opinion of Lender, its position under the Loan
Documents may be prejudiced or impaired by failure or unreasonable delay on the
part of Borrower in the performance of its obligations hereunder, including the
payment of any prior charge upon the Premises or any other charge payable by
Borrower whether or not related to the Project, then and in any such events,
Lender may pay or otherwise satisfy the obligations of Borrower with respect
thereto, and any such payments or costs of such satisfaction, including a
reasonable attorney's fee, may be charged to the proceeds of the Loan as any
other advance hereunder and deemed made pursuant to this Loan Agreement and not
in modification thereof.
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<PAGE> 18
14.5 In the event of any loss or damage to the Project by fire or other
casualty, and the same is not repaired or replaced, or such repairs commenced or
arrangements therefor made and reasonable progress toward the completion thereof
made, within sixty (60) days from date of such fire or casualty in accordance
with Article 4 of the Mortgage, Lender may, at its election, terminate this Loan
Agreement without affecting the validity of the Note or the security for the
principal advances already made and interest thereon, and demand full payment of
the entire indebtedness owing hereunder and under the Loan Documents. If this
Loan Agreement is not terminated, as provided above, when the Project shall have
been repaired to the same state of completion as was when the loss or damage was
suffered, both parties shall then carry out the terms of this Loan Agreement as
if no such loss or damage had occurred.
14.6 In the event that by or pursuant to proper authority there is
taken or condemned the entire Premises, or such part thereof as in the opinion
of Lender would result in limitation or impairment of Borrower's ability or
capacity to satisfy all of its obligations now or at any time relating to the
Premises, or if any such taking or condemnation results in the cancellation,
termination or amendment of the permanent loan commitment or any lease or other
agreement for occupancy of the Premises or any part thereof, which is
unsatisfactory to Lender, Lender may terminate this Loan Agreement without
affecting the validity of the Note or the security for the principal advances
already made and interest thereon and demand full payment of the entire
indebtedness owing hereunder and under the Loan Documents; provided, however,
Borrower shall have thirty (30) days within which to seek other financing
arrangements satisfactory to Borrower and Lender.
14.7 Borrower acknowledges that the right to trial by jury is a
constitutional one, but that it may be waived. Borrower, after consulting
counsel of its choice (or having had the opportunity to consult with counsel),
knowingly, voluntarily and without coercion, waives all rights to a trial by
jury of all disputes between Borrower and Lender.
14.8 This Agreement is cross-defaulted with all other Loan Documents.
Any default under any instrument or agreement delivered to evidence or secure
the indebtedness secured by the Note, or executed in conjunction therewith,
including, this Loan Agreement, shall be deemed an act of default by the
Mortgagor under any other instrument or agreement delivered to evidence or
secure the indebtedness evidenced by the Note.
14.9 This Agreement is entered into by and between, and for the benefit
of, Borrower and Lender only. No other party (including, but not limited to, the
General Contractor, Architect, subcontractors, laborers and materialmen) shall
have the right to rely upon or derive any benefits from this Agreement, nor
shall such party be deemed to be a third party beneficiary of this Agreement.
14.10 Borrower has informed Lender that it has agreed to grant to White
Lake Township three (3) easements for pedestrian and/or vehicular access. Lender
agrees to consent to these easements when they are ready for recording provided
the easements are restricted to the above purposes and do not interfere with the
Improvements.
14.11 Any notice, demand, request or other instrument which may be or
is required to be given under this Loan Agreement shall be given to the parties
at their respective addresses first above written by U.S. Certified Mail, Return
Receipt Requested.
14.12 Time is of the essence for all purposes of this Agreement.
14.13 This Loan is made and accepted in the State of Michigan and this
Loan Agreement and all of the Loan Documents shall be construed in accordance
with the laws of the State of Michigan.
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<PAGE> 19
The parties hereto have executed this Loan Agreement as of the day and
year first above written.
Signed:
RAMCO-GERSHENSON PROPERTIES L.P., a Delaware limited
partnership
By: Ramco-Gershenson Properties Trust, a Maryland real
estate investment trust
Its: General Partner
By: /s/ Joel Gershenson
-------------------------------------------------------
Joel Gershenson
Its: Chairman and Vice President
"Borrower"
NBD BANK, a Michigan banking corporation
By: /s/ Steven J. Mahn
-------------------------------------------------------
Steven J. Mahr
Its: First Vice President
"Lender"
INSTRUMENT DRAFTED BY:
Elaine Fieldman, Atty.
BARRIS, SOTT, DENN & DRIKER, P.L.L.C.
211 West Fort Street, Suite 1500
Detroit, Michigan 48226-3281
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<PAGE> 20
EXHIBIT A
Description of Real Estate
Land situated in the Township of White Lake, County of Oakland and State of
Michigan, being more particularly described as follows:
PART OF THE NE 1/4 OF SECTION 23 & PART OF THE SW 1/4 OF SECTION 13 & PART OF
THE SE 1/4 OF SECTION 14, T-3-N, R-8-E, WHITE LAKE TOWNSHIP, OAKLAND COUNTY,
MICHIGAN, BEING MORE PARTICULARLY DESCRIBED AS: COMMENCING AT THE SE CORNER OF
SECTION 14, T-3-N, R-8-E; THENCE N 01(degrees)56'14" W. 76.19 FEET ALONG THE
EAST LINE OF SAID SECTION 14 TO A POINT ON THE NORTH RIGHT-OF-WAY LINE OF M-59
(100 FEET WIDE). SAID POINT ALSO BEING THE POINT OF BEGINNING; THENCE THE
FOLLOWING THREE COURSES ALONG SAID NORTH RIGHT-OF-WAY LINE: (1) ALONG A CURVE TO
THE LEFT 562.25 FEET, SAID CURVE HAVING A RADIUS OF 3,869.72 FEET, CENTRAL ANGLE
OF 08(degrees)19'29" AND A LONG CHORD BEARING OF S 81(degrees)10'41" W. 561.76
FEET TO A POINT ON THE SOUTH LINE OF SAID SECTION 14 AND (2) CONTINUING ALONG A
CURVE TO THE LEFT 209.28 FEET, SAID CURVE HAVING A RADIUS OF 3,869.72 FEET,
CENTRAL ANGLE OF 03(degrees)05'55" AND A LONG CHORD BEARING OF S 75'27'58" W.
209.25 FEET, AND (3) S 73(degrees)55'01" W, 262.77 FEET; THENCE N
00(degrees)25'58" E. 117.16 FEET TO A POINT ON THE SOUTH LINE OF SAID SECTION
14; THENCE S 88(degrees)58'18" W. 2.02 FEET ALONG SAID SOUTH LINE; THENCE N
01(degrees)40'03" W, 544.10 FEET; THENCE N 88(degrees)19'57" E. 237.36 FEET;
THENCE N 01(degrees)40'03" W. 344.50 FEET; THENCE S 88(degrees)19'57" W, 60.11
FEET; THENCE N 01(degrees)40'03" W, 545.08 FEET; THENCE N 87(degrees)45'00" E,
180.76 FEET; THENCE S 67(degrees)00'00" E, 363.49 FEET; THENCE N
23(degrees)00'00" E, 269.99 FEET; THENCE S 76(degrees)44'36" E, 414.76 FEET;
THENCE S 48(degrees)02'21" W, 462.02 FEET; THENCE S 01(degrees)31'55" E, 666.36
FEET; THENCE N 88(degrees)28'05" E, 75.00 FEET; THENCE S 56(degrees)15'07" E,
109.52 FEET TO A POINT ON THE EAST LINE OF SAID SECTION 14; THENCE S
01(degrees)56'14" E, 109.43 FEET ALONG SAID EAST LINE; THENCE N
87(degrees)14'36" E, 108.57 FEET; THENCE S 01(degrees)56'14" E. 217.17 FEET TO A
POINT ON THE NORTH RIGHT-OF-WAY LINE OF M-59 (100 FEET WIDE); THENCE ALONG SAID
NORTH RIGHT-OF-WAY LINE ALONG A CURVE TO THE LEFT 108.62 FEET, SAID CURVE HAVING
A RADIUS OF 3,869.72 FEET, CENTRAL ANGLE OF 01(degrees)36'30" AND A LONG CHORD
BEARING OF S 86(degrees)08'40" W, 108.62 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH RIGHTS UNDER EASEMENTS RECORDED IN LIBER 18771, PAGE 887, LIBER
18771, PAGE 894 AND LIBER 18772, PAGE 13.
Parcel Nos: 12-14-476-007
12-14-476-008
12-14-476-009
12-14-476-010
12-14-476-011
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<PAGE> 21
EXHIBIT B
(Cost Budget)
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<PAGE> 22
EXHIBIT C
Plans and Specifications
-22-
<PAGE> 23
EXHIBIT D-1
FORM OF TERM NOTE-LIBOR/FLOATING RATE
TERM NOTE
$ Detroit, Michigan
, 2000
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the order
of NBD BANK, a Michigan banking corporation ("Payee") the principal sum of
($ ) Dollars, together with
interest on the unpaid balance from time to time outstanding while not in
default at the Effective Rate unless Maker elects to have interest accrue at the
LIBOR Rate in accordance with the terms of the Loan Agreement, and at the rate
of four (4.0%) percent per annum over the Prime Rate, during the period of any
default, until paid, computed on the basis of the actual number of days elapsed
over a three hundred sixty (360) day year.
Principal and interest shall be paid in United States legal tender, at the
office of Payee at 611 Woodward Avenue, Mail Suite 8029-M03, Detroit, Michigan
48226, or at such other place as the holder directs in writing.
Principal and interest shall be paid as follows:
1. Beginning on the first day of , 2000, and on the
first day of each and every month thereafter until
, 2002, Maker shall make a monthly payment of
principal and interest based upon a twenty-five (25) year
mortgage amortization.
2. On , 2002 ("Maturity Date"), the entire
principal balance, together with accrued interest, shall be
due and payable in full. Maker acknowledges that the payments
of principal and interest will not result in full repayment of
this Note and that a balloon payment will be due at the
Maturity Date.
All installments, when received, shall be applied on interest then due
and the balance, if any, on principal. In the event that any installment shall
be overdue for a period in excess of ten (10) days, a late charge of four ($.04)
cents for each One ($1.00) Dollar so overdue may be charged by the holder for
the purpose of defraying the expense incident to handling the delinquent
payment, and such charge shall be in addition to and not in lieu of reasonable
fees and charges of any agents or attorneys which the holder is entitled to
employ in the event of any default.
This Term Note is issued under a Loan Agreement dated December 22, 1998
("Loan Agreement") between Maker and Payee. All capitalized terms shall have the
meanings assigned in the Loan Agreement unless otherwise defined in this Note.
This Note is secured by the Loan Documents which are made a part by reference.
If there is a default in the payment of the whole or any part of the
several installments of this Note when due, or if a default shall occur under
any of the Loan Documents, then or at any time thereafter during the continuance
of any default, the entire principal of this Note remaining at the time unpaid,
together with accrued interest thereon, shall, at the election of the holder and
without notice of the election and without demand or presentment, become
immediately due and payable at the place of payment, anything contained herein
or in the Loan Documents to the contrary notwithstanding, and all costs and
expenses of collection, including a reasonable attorney's fee, shall be added to
and become part of the total indebtedness.
In the event of any default, the failure of the holder promptly to
exercise any of its rights hereunder shall not constitute a waiver of such
rights while such default continues, nor a waiver of such rights in connection
with any future default on the part of the Maker.
The Maker, any endorsers and guarantors and all other parties who may
become liable for payment of all or any part of this Note, severally waive
presentment for payment, protest and demand, and notice of protest, demand,
dishonor and nonpayment, and hereby expressly consent to any number of renewals
or extensions of the time of payment of this Note. Any renewals or extensions
may be made without notice to any of these parties and without affecting their
liability, and
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<PAGE> 24
these parties shall not be released from liability by reason of any forbearance
or extension of time granted to Maker or any subsequent owner or owners of the
property mortgaged as security for this Note, with or without notice to or the
consent of any of the parties.
Maker acknowledges that the right to trial by jury is a constitutional
one, but that it may be waived. Maker, after consulting counsel of its choice
(or having had the opportunity to consult with counsel), knowingly, voluntarily
and without coercion, waives all rights to a trial by jury of all disputes
between Maker and Payee.
This Note may be prepaid, in whole or in part, only in accordance with
the terms of the Loan Agreement.
Notwithstanding any provision, it is not intended by this Note to
impose upon the Maker any obligation to pay interest in excess of the maximum
rate of interest permitted by law, and any interest which so exceeds such
maximum rate of interest shall automatically be applied in reduction of
principal due on this Note to the extent of such excess.
This Note and the liability of all parties hereunder shall be governed
by the laws of the State of Michigan, where this Note has been delivered for
value.
Signed:
RAMCO-GERSHENSON PROPERTIES L.P., a Delaware limited
partnership
By: Ramco-Gershenson Properties Trust, a Maryland real
estate investment trust
Its: General Partner
By:
-------------------------------------------------------
Joel Gershenson
Its: Chairman and Vice President
"Maker"
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<PAGE> 25
EXHIBIT D-2
FORM OF TERM NOTE-FIXED RATE
TERM NOTE
$ Detroit, Michigan
, 2000
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the order
of NBD BANK, a Michigan banking corporation ("Payee") the principal sum of
($ ) Dollars, together with
interest on the unpaid balance from time to time outstanding while not in
default at the rate of ( %) percent per annum, and at the rate of
four (4.0%) percent per annum over the Prime Rate, during the period of any
default, until paid, computed on the basis of the actual number of days elapsed
over a three hundred sixty (360) day year.
Principal and interest shall be paid in United States legal tender, at the
office of Payee at 611 Woodward Avenue, Mail Suite 8029-M03, Detroit, Michigan
48226, or at such other place as the holder directs in writing.
Principal and interest shall be paid as follows:
1. Beginning on the first day of , 2000, and on the
first day of each and every month thereafter until
, 2002, Maker shall make a monthly payment of
principal and interest in the amount of
($ )
Dollars [based upon a twenty-five (25) year mortgage
amortization].
2. On , 2002 ("Maturity Date"), the entire
principal balance, together with accrued interest, shall be
due and payable in full. Maker acknowledges that the payments
of principal and interest will not result in full repayment of
this Note and that a balloon payment will be due at the
Maturity Date.
All installments, when received, shall be applied on interest then due
and the balance, if any, on principal. In the event that any installment shall
be overdue for a period in excess of ten (10) days, a late charge of four ($.04)
cents for each One ($1.00) Dollar so overdue may be charged by the holder for
the purpose of defraying the expense incident to handling the delinquent
payment, and such charge shall be in addition to and not in lieu of reasonable
fees and charges of any agents or attorneys which the holder is entitled to
employ in the event of any default.
This Term Note is issued under a Loan Agreement dated December 22, 1998
("Loan Agreement") between Maker and Payee. All capitalized terms shall have the
meanings assigned in the Loan Agreement unless otherwise defined in this Note.
This Note is secured by the Loan Documents which are made a part by reference.
If there is a default in the payment of the whole or any part of the
several installments of this Note when due, or if a default shall occur under
any of the Loan Documents, then or at any time thereafter during the continuance
of any default, the entire principal of this Note remaining at the time unpaid,
together with accrued interest thereon, shall, at the election of the holder and
without notice of the election and without demand or presentment, become
immediately due and payable at the place of payment, anything contained herein
or in the Loan Documents to the contrary notwithstanding, and all costs and
expenses of collection, including a reasonable attorney's fee, shall be added to
and become part of the total indebtedness.
In the event of any default, the failure of the holder promptly to
exercise any of its rights hereunder shall not constitute a waiver of such
rights while such default continues, nor a waiver of such rights in connection
with any future default on the part of the Maker.
The Maker, any endorsers and guarantors and all other parties who may
become liable for payment of all or any part of this Note, severally waive
presentment for payment, protest and demand, and notice of protest, demand,
dishonor and nonpayment, and hereby expressly consent to any number of renewals
or extensions of the time of payment of this Note.
-25-
<PAGE> 26
Any renewals or extensions may be made without notice to any of these parties
and without affecting their liability, and these parties shall not be released
from liability by reason of any forbearance or extension of time granted to
Maker or any subsequent owner or owners of the property mortgaged as security
for this Note, with or without notice to or the consent of any of the parties.
Maker acknowledges that the right to trial by jury is a constitutional
one, but that it may be waived. Maker, after consulting counsel of its choice
(or having had the opportunity to consult with counsel), knowingly, voluntarily
and without coercion, waives all rights to a trial by jury of all disputes
between Maker and Payee.
This Note may be prepaid, in whole or in part, only in accordance with
the terms of the Loan Agreement.
Notwithstanding any provision, it is not intended by this Note to
impose upon the Maker any obligation to pay interest in excess of the maximum
rate of interest permitted by law, and any interest which so exceeds such
maximum rate of interest shall automatically be applied in reduction of
principal due on this Note to the extent of such excess.
This Note and the liability of all parties hereunder shall be governed
by the laws of the State of Michigan, where this Note has been delivered for
value.
Signed:
RAMCO-GERSHENSON PROPERTIES L.P., a Delaware limited
partnership
By: Ramco-Gershenson Properties Trust, a Maryland real
estate investment trust
Its: General Partner
By:
-------------------------------------------------------
Joel Gershenson
Its: Chairman and Vice President
"Maker"
-26-
<PAGE> 1
EXHIBIT 10.47
CONSTRUCTION NOTE
$14,000,000.00 Detroit, Michigan
December 22, 1998
FOR VALUE RECEIVED, the undersigned (hereinafter called
"Maker") promises to pay to the order of NBD BANK, a Michigan banking
corporation (hereinafter called "Payee"), the principal sum of Fourteen Million
($14,000,000.00) Dollars, together with interest on the unpaid balance from time
to time outstanding while not in default at the Effective Rate unless Maker
elects to have interest accrue at the Libor Rate in accordance with the terms of
the Loan Agreement, and at the rate of four (4.0%) percent per annum over the
Prime Rate during the period of any default, until paid, computed on the basis
of the actual number of days elapsed over a three hundred sixty (360) day year.
Principal and interest shall be paid in United States legal
tender, at the office of Payee at 611 Woodward Avenue, Detroit, Michigan 48226,
or at such other place as the holder hereof directs in writing. Principal and
interest shall be paid as follows:
1. Interest only shall be paid on the first day of
February and on the first day of each and every month
thereafter until June 1, 2000.
2. On June 22, 2000 ("Maturity Date") the entire
principal balance due hereunder, plus accrued
interest, shall be due and payable in full.
All installments, when received, shall be applied on interest
then due and the balance, if any, on principal. In the event that any
installment shall be overdue for a period in excess of ten (10) days, a late
charge of four ($.04) cents for each One ($1.00) Dollar so overdue may be
charged by the holder hereof for the purpose of defraying the expense incident
to handling such delinquent payment, and such charge shall be in addition to and
not in lieu of reasonable fees and charges of any agents or attorneys which the
holder is entitled to employ in the event of any default hereunder.
This Note is issued pursuant to a Loan Agreement between Maker
and Payee of even date. All capitalized terms shall have the meanings assigned
in the Loan Agreement unless otherwise defined in this Note. This Note is
secured by the Loan Documents which are made a part by reference.
If default be made in the payment of the whole or any part of
the several installments of this Note when due, or if a default shall occur
under any of the Loan Documents, then or at any time thereafter during the
continuance of any such default and the expiration of the grace period for the
curing of such default set forth in Article 24 of the Mortgage, if any, the
entire principal of this Note remaining at the time unpaid, together with
accrued interest thereon, shall, at the election of the holder hereof and
without notice of such election and without demand or presentment, become
immediately due and payable at the place of payment aforesaid, anything
contained herein or in the Loan Documents to the contrary notwithstanding, and
all costs and expenses of collection, including a reasonable attorney's fee,
shall be added to and become part of the total indebtedness.
In the event of any such default, the failure of the holder
hereof promptly to exercise any of its rights hereunder shall not constitute a
waiver of such rights while such default continues, nor a waiver of such rights
in connection with any future default on the part of the undersigned.
The Maker hereof, any endorsers and guarantors hereof and all
other parties who may become liable for payment of all or any part of this Note,
severally waive presentment for payment, protest and demand, and notice of
protest, demand, dishonor and nonpayment, and hereby expressly consent to any
number of renewals or extensions of the time of payment of this Note. Any such
renewals or extensions may be made without notice to any of said parties and
without affecting their liability, and said parties shall not be released from
liability hereon by reason of any forbearance or extension of time granted to
the undersigned or any subsequent owner or owners of the property mortgaged as
security for this Note, with or without notice to or the consent of any of said
parties.
<PAGE> 2
Maker acknowledges that the right to trial by jury is a
constitutional one, but that it may be waived. Maker, after consulting counsel
of its choice (or having had the opportunity to consult with counsel),
knowingly, voluntarily and without coercion, waives all rights to a trial by
jury of all disputes between Maker and Payee.
This Note may be prepaid, in whole or in part, only in
accordance with the terms of the Loan Agreement.
Notwithstanding any provision hereof, it is not intended by
this Note to impose upon the Maker any obligation to pay interest in excess of
the maximum rate of interest permitted by law, and any interest which so exceeds
such maximum rate of interest shall automatically be applied in reduction of
principal due on this Note to the extent of such excess.
This Note and the liability of all parties hereunder shall be
governed by the laws of the State of Michigan, where this Note has been
delivered for value.
Signed:
RAMCO-GERSHENSON PROPERTIES, L.P., a Delaware
limited partnership
By: Ramco-Gershenson Properties Trust,
a Maryland real estate investment trust
Its: General Partner
By: /s/ Joel Gershenson
-------------------------------------------
Joel Gershenson
Its: Chairman and Vice President
"Maker"
-2-
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
NAME JURISDICTION
---- ------------
Ramco-Gershenson, Inc............................... Michigan
Ramco-Gershenson Properties, L.P.................... Deleware
S-12 Associates..................................... Michigan
28th Street Kentwood Associates..................... Michigan
Ramco Properties Associated Limited Partnership..... Michigan
Ramco Properties GP, L.L.C.......................... Michigan
Ramco SPC, Inc...................................... Michigan
Ramco Virginia Management, L.L.C.................... Michigan
Ramco SPC II, Inc................................... Michigan
Ramco Acquisitions, L.L.C........................... Michigan
Ramco Acquisitions II, L.L.C........................ Michigan
Ramco Acquisitions III, L.L.C....................... Michigan
Ramco Acquisitions IV, L.L.C........................ Michigan
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-42509 and 333-66409 on Form S-8 and Registration Statement No. 333-57871 on
Form S-3 of Ramco-Gershenson Properties Trust of our report dated February 16,
1999, appearing in this Annual Report on Form 10-K of Ramco-Gershenson
Properties Trust for the year ended December 31, 1998.
Deloitte & Touche LLP
Detroit, Michigan
March 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, STATEMENT OF INCOME, STATEMENTS OF SHAREHOLDERS'
EQUITY, STATEMENTS OF CASH FLOWS AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,550
<SECURITIES> 0
<RECEIVABLES> 9,864
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 535,980
<DEPRECIATION> 26,136
<TOTAL-ASSETS> 544,404
<CURRENT-LIABILITIES> 20,479
<BONDS> 328,248
0
0
<COMMON> 0
<OTHER-SE> 147,142
<TOTAL-LIABILITY-AND-EQUITY> 544,404
<SALES> 0
<TOTAL-REVENUES> 76,755
<CGS> 0
<TOTAL-COSTS> 20,117
<OTHER-EXPENSES> 18,829
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,396
<INCOME-PRETAX> 8,658
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,658
<EPS-PRIMARY> .99
<EPS-DILUTED> .98
</TABLE>
