SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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: 33-29987
Corporate Realty Income Trust I
(Exact name of registrant as specified
in its governing instrument)
Massachusetts 13-6931017
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification Number)
388 Greenwich Street, 33rd Fl., New York, NY 10013
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 816-8237
Securities registered pursuant to Section 12(b) of the Act:
Name of each
exchange on
Title of each class which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest, par value $.10 per share
(Title of Class)
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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to filing
requirements for the past 90 days.
Yes X No ___
<PAGE>
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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x ]
Aggregate market value of the shares of beneficial interest ("Shares")
held by non-affiliates as of a date within 60 days prior to this filing: not
applicable. Since the termination of the Trust's public offering in October,
1991, there have only been only occasional, isolated trades of the Trust's
Shares. No established public trading market for the Trust's Shares exists
and none is anticipated.
The number of the Registrant's Shares outstanding as of March 11, 1997
is 1,010,776 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
ITEM 1. BUSINESS.
Corporate Realty Income Trust I (the "Trust" or "Registrant")
was formed as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts on June 27, 1989. The Trust qualified in 1990 as a real
estate investment trust ("REIT"). Corporate Realty Advisors, Inc. (the
"Advisor") acts as advisor to the Trust pursuant to an advisory agreement (the
"Advisory Agreement").
The Trust was formed to invest in triple net leased income-
producing commercial and industrial real estate properties. Through the
ownership of equity interests in income-producing real property, the Trust
seeks rental income from the leasing of its real properties and long term
capital gains from appreciation in the value of its real properties. The Trust
is a self-liquidating/finite life trust, and as such anticipates that it will
liquidate its portfolio of properties approximately 10 years after the
acquisition of the last acquired property, and will distribute the net proceeds
to its shareholders.
On October 3, 1989, the Trust commenced a public offering (the
"Offering") of 5,000,000 shares of beneficial interest (the "Shares") with an
option to increase the Offering to a maximum of 7,500,000 Shares. Smith
Barney, Harris Upham & Co., Incorporated ("SBHU"), the predecessor of the
current Smith Barney, Inc. ("Smith Barney") and an affiliate of the Advisor,
acted on a best efforts basis as the Trust's selling agent for the offering and
sale of the Shares. SBHU received a selling commission in connection with the
sale of Shares.
The Offering terminated effective October 3, 1991, at which time
the Trust had sold an aggregate of 1,010,776 Shares and received gross proceeds
therefrom of $19,721,020. From these gross proceeds the Trust paid $435,631 to
the Advisor as an allowance for non-accountable organization and offering
expenses and $871,261 to SBHU as a selling commission.
A substantial portion of the remaining net proceeds of
$18,414,129 have been used by the Trust for the acquisition of three rental
properties and the making of related expenditures (as more fully described in
Part 1, ITEM 2 of this filing).
The Trust has acquired three properties which are triple net
leased. The Trust has contracted with the Advisor to provide management and
other related services with respect to such properties and with respect to the
investment of monies held in reserve for working capital purposes. The
business conducted by the Trust during 1996 related primarily to managing the
three properties previously acquired by the Trust.
During the second half of 1996, the Trust solicited proposals
from interested parties for the potential sale by the Trust of its portfolio of
properties. The Trust entered into preliminary negotiations with two
interested parties during such period; however these discussions were not
active as of the date of this report.
The Trust currently has no employees, as the Advisor and
affiliates provide all services. (See Item 13 "Certain Relationships and
Related Transactions.") All of the Trust's operations are located in the
United States.
<PAGE>
ITEM 2. PROPERTY.
The Circuit City Property
On March 27, 1990, the Trust acquired its first rental property:
the Circuit City Stores, Inc. ("Circuit City") corporate headquarters building
located outside of Richmond, Virginia. The Trust purchased the headquarters
building, and assumed the rights and obligations under a ground lease for the
underlying land, from CRA Acquisition Corp. ("CRAAC") for $25,000,000 (less
certain pro-rated closing amounts). The office building and underlying land
(the "Circuit City Property") has been leased to Circuit City under a triple
net lease for use by Circuit City as its corporate headquarters.
Funding sources for the purchase price of the Circuit City
Property were as follows: offering proceeds and cash in the amount of
$9,313,609; a first mortgage loan in the amount of $12,500,000 from Principal
Mutual Life Insurance Company plus accrued interest of $6,552 thereon; and an
unsecured loan from CRAAC in the amount of $3,156,990, which unsecured loan was
net of $22,849 of prorated rental income and interest. The unsecured loan
from CRAAC was subsequently paid in installments as additional offering
proceeds were received and was fully repaid on April 30, 1991.
The Circuit City Property is encumbered by a Deed of Trust and
Security Agreement (the "Deed of Trust") which secures a non-recourse note from
CRAAC to Principal Mutual Life Insurance Company (the "Lender") for $12,500,000
(the "Note"). The Trust has assumed responsibility for payment on the Note and
the Trust has agreed to comply with the terms of the Deed of Trust. During the
first five years that the Note was outstanding, interest accrued at the rate of
9.25% per annum, but was payable monthly in advance at the rate of 8.5%
per annum. The unpaid interest which accrued at a rate of .75% per annum was
added monthly to the principal balance of the Note. The Note matures on March
1, 2000, subject to the right of the Trust to prepay the Note. Prepayment on
the Note is subject to a "make-whole" prepayment premium. The amount of the
premium, if any, is determined by comparing the then present value of the
future yield on the Note with the then present value of the future yield on
certain government securities specified in the Note. The Trust must pay a
premium, in the amount of the difference, only if the government securities
would yield less in the future than the Note.
The rate of interest on the Note was subject to adjustment at
the end of five years to reflect the then current interest rate offered by the
Lender for a real estate loan of similar quality, term and amount, with the
setting of an amortization arrangement as then prevalent in the lending
industry. In December 1994, the Trust reached an agreement with the Lender
with respect to the interest rate for the second five years. Effective March
1, 1995, the interest rate under the Note decreased from 9.25% to 8.875%, and
interest on the Note is now payable in full monthly. The principal amount of
the Note plus the unpaid interest which accrued during the first five years of
the loan, totaling $13,093,133 in the aggregate, is payable on March 1, 2000.
The Circuit City office building is located on approximately
18.5 acres of land, and has approximately 288,000 gross leasable square feet.
The building also houses a gymnasium/basketball court, exercise facility, full
service cafeteria with 200 seats, a 9,000 square foot computer facility with
satellite linkage to Circuit City's other business locations, and a 6,000
square foot warehouse and staging facility. The Circuit City building has
parking available for approximately 1,100 cars.
The lease for the Circuit City office building (the "Circuit
City Lease") is a triple net lease under which Circuit City is responsible for
real estate taxes, maintenance, utility fees and insurance. As sole tenant,
Circuit City will occupy 100% of the leasable square footage. The Circuit City
Lease commenced on February 28, 1990 and will expire on February 28, 2010.
Circuit City has five options to renew and extend the Circuit City Lease
consisting of four ten-year periods followed by one five-year period. The
monthly rental for years one through five was $189,583 payable monthly in
advance. The monthly rental for years six through ten is $206,510 and monthly
rental for years eleven through twenty will be $238,281. The rent for
each renewal term may be adjusted by the percent change in the consumer price
index, as defined in the Circuit City Lease. Rent attributed to the Circuit
City Lease represented 76% of the Trust's total rental income in 1996, which
percentage was unchanged from 1995.
Circuit City is a leading retailer of brand name consumer electronics
and major appliances with over 320 stores in 31 states. Circuit City reported
revenues in fiscal 1996 of approximately $7.0 billion.
The Allegiance Property (formerly the "Baxter Property")
On October 9, 1991, pursuant to a Purchase and Sale Agreement
dated as of October 19, 1990 between the Trust and Birmware I Limited
Partnership ("Birmware"), a Texas limited partnership affiliated with Trammell
Crow Company, the Trust purchased all of Birmware's right, title and interest
in the land and a 123,924 square foot distribution center built thereon
(together, the "Allegiance Property") in Bessemer, Alabama. The Trust
purchased the rights to the Allegiance Property for $4,500,000, including a
7.5% development fee payable to Birmware. The Allegiance Property is located
on 10.16 acres in the Greenwood Exchange development, an industrial park
developed by Trammell Crow Company in Bessemer, and is serving as a regional
distribution center for Allegiance Healthcare Corporation ("Allegiance").
Allegiance was formed as a result of the spin-off by Baxter
International, Inc. ("Baxter International") of the distribution and surgical
manufacturing businesses of Baxter Healthcare Corporation ("Baxter"), a
subsidiary of Baxter International, which spin-off was completed on September
30, 1996. In connection with the spin-off, assets of Baxter were transferred
to Allegiance, including the net lease covering the Allegiance Property
described below.
The Trust effected the acquisition of the Allegiance Property by
means of a financing arrangement with the Industrial Development Board of the
City of Bessemer ("IDB") in the form of an Inducement and Loan Agreement (the
"Inducement and Loan Agreement"). The Inducement and Loan Agreement was
originally entered into between Birmware and the IDB and was subsequently
assigned by Birmware to the Trust. In accordance with the terms of the
Inducement and Loan Agreement, at the request of Birmware the IDB purchased the
land and constructed the building with the proceeds of a non-interest bearing
loan made by Birmware to the IDB and evidenced by a bond anticipation note.
The Trust acquired beneficial interest to the Allegiance Property upon payment
to the IDB of the purchase price of $4,500,000.
In June, 1992, the Trust financed $1,000,000 of the purchase
price pursuant to a lease financing arrangement with the IDB, under which the
IDB issued a first mortgage industrial revenue bond in the principal amount of
$1,000,000 to a third party lender, Modern Woodmen of America. The payment of
such revenue bond is collateralized by, among other things, a first mortgage
lien on the property. The loan matures on September 1, 2001 and bears
interest at an annual rate of 9.5% with monthly payments of interest only until
maturity. The Trust, in turn, entered into a lease with the IDB under which
the lease payments equal an amount sufficient to service the revenue bond. The
Trust has the option to purchase the Allegiance Property at any time after the
revenue bond has been paid in full for a nominal purchase price.
The Allegiance Property is being leased to Allegiance under a
pre-existing ten-year triple net lease which commenced on November 1, 1991 (the
"Allegiance Lease", formerly the "Baxter Lease"). As part of the spin-off from
Baxter International, Baxter assigned all of its right, title and interest
under the Baxter Lease to Allegiance, and Allegiance assumed the obligations of
Baxter under the lease accruing after the date of the assignment. Baxter
remains liable to the Trust under the Allegiance Lease except with respect to
any amendment of the Allegiance Lease subsequently entered into between the
Trust and Allegiance. The Allegiance Lease has a base annual rent of $472,500.
Allegiance is required to pay all taxes, utility charges, insurance,
maintenance and repairs, management fees and all other charges relating to the
use and occupancy of the Allegiance Property. Baxter International has
unconditionally guaranteed all of the obligations under the Allegiance Lease,
except with respect to any amendments entered into between the Trust and
Allegiance. Under the terms of the Allegiance Lease, Allegiance has
two five-year renewal options at rents which reflect increases in the Consumer
Price Index, as published by the Bureau of Labor Statistics of the United
States Department of Labor, from the initial commencement date of the lease
through the renewal date; provided, however, that pursuant to the assignment
and assumption agreement entered into between Baxter and Allegiance, any
exercise by Allegiance of an option that would extend the term of the
Allegiance Lease beyond December 31, 2006 is subject to the prior consent of
Baxter. Any increase in rents may not be less than 3% nor more than 5% on a
compounded annual basis. Rent attributed to the Allegiance Lease represented
14% of the Trust's total rental income in 1996, which percentage was unchanged
from 1995.
Allegiance has the right under the Allegiance Lease to require
the Trust to pay for the expansion of the distribution center by an additional
88,920 square feet. Allegiance may exercise this right at any time during the
initial ten years of the Allegiance Lease. If Allegiance does not exercise
this option within the first five years of the Allegiance Lease, Allegiance
would be obligated to pay the Trust an additional $100,000 if it later
exercises the expansion option.
Once the distribution center is expanded, the basic term of the
Allegiance Lease will be automatically extended by five to ten years, at
Allegiance's option, provided that under no circumstances will the term of the
Allegiance Lease expire before the end of the ten-year basic term.
Commencement of the two five-year optional renewal terms would then be deferred
until the end of the extended base term. Rent on the expanded space will
depend on the length of the lease extension and prevailing interest rates at
the time of expansion, but in no event will be less than 10.5% of the total
cost of the expansion.
If Allegiance exercises the expansion option, the Trust would
attempt to finance 100% of the cost of construction of the expansion space and
to arrange the term of such financing to be coterminous with the lease
extension selected by Allegiance.
The Allegiance Property is located at the interchange of Morgan
Road and Interstate 459, a major artery serving the southern quadrant of the
Birmingham metropolitan area. Birmingham is Alabama's largest city with,
according to the National Census Bureau, a population in the metropolitan area
in 1990 of over 907,000.
Depreciation of that portion of the purchase price allocated to
the distribution center is provided by the straight line method over a 40-year
recovery period.
The Dana Property
On September 28, 1992, pursuant to a Purchase and Sale agreement
dated as of May 15, 1992 between the Trust and Shannon Properties Inc.
("Shannon"), a Delaware corporation, the Trust purchased all of Shannon's
rights, title and interest in the land and a 148,000 square foot regional
assembly facility built thereon (together, the "Dana Property"). The Trust
purchased the rights to the Property for $3,100,000. The Dana Property is
located on 20.95 acres in Gordonsville, Tennessee, and is serving as a regional
assembly facility for Dana Corporation ("Dana").
The Trust financed 50% of the purchase price of the Dana
Property by obtaining a first mortgage loan from American Fidelity Assurance
Company in the principal amount of $1,550,000. The loan is due on September 1,
2002 and bears interest at an annual rate of 9.5% with a 15-year amortization
of monthly payments of principal and interest of $16,185, and a balloon payment
in the amount of $770,669 payable upon maturity of the loan. The loan is
secured by a deed of trust with respect to the Dana Property and assignment of
the lease with Dana. On December 31, 1996, the balance of the loan was
$1,311,013.
The Dana Property is being leased to Dana under a pre-existing
triple net lease (the "Dana Lease") whereby Dana is required to pay all taxes,
utility charges, insurance, maintenance and repairs, management fees and all
other charges relating to the use and occupancy of the Dana Property. The
lease is for a term of 15 years, expiring on August 31, 2007. Dana has three
options to renew and extend the lease consisting of two five-year periods
followed by one term of four years and eleven months. The rent is payable
monthly in advance. The monthly rental was $26,324.17 per month through the
period ending July 31, 1996; $27,113.92 per month for the three-year period
ending July 31, 1999; $27,927.33 per month for the three-year period ending
July 31, 2002; $28,765.17 per month for the three-year period ending July 31,
2005 and $29,544.75 per month thereafter through August 31, 2007. The base
rent for each renewal term will be fixed and will equal market rates, but, in
no event less than 95% or greater than 105% of the rent in the year immediately
preceding such option period. Rent attributed to the Dana Lease represented
10% of the Trust's total rental income in 1996, which percentage was unchanged
from 1995.
Dana is a manufacturer of vehicular products, including
drivetrain components, engine parts and chassis products, and other industrial
products, including fluid power systems and industrial power transmission
products. Dana had reported revenues in 1996 of approximately $7.7 billion.
ITEM 3. LEGAL PROCEEDINGS.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5.MARKET FOR REGISTRANT'S SHARES AND RELATED STOCKHOLDER MATTERS.
The Trust's Shares were sold in the public offering at a price of
$20 per share, except for an aggregate of 274,725 Shares which were sold in the
offering to an institutional investor at a price of $18.20 per share, which
lower price reflected a volume discount in the form of the elimination of the
6% selling commission and the waiver by the Advisor of the 3% allowance for
offering and organization costs. See ITEM 12, SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Since the termination of the
public offering in October, 1991, there have been only occasional, isolated
trades of the Trust's Shares. No established public trading market for the
Trust's Shares exists and none is anticipated.
As of March 11, 1997, the Shares were held by 505 holders of
record.
It is the Trust's policy to make distributions at least quarterly
to holders of its Shares aggregating annually at least 95% of its REIT Taxable
Income (which term does not include capital gains realized by the Trust). In
addition, when investment properties are sold by the Trust, the Trust intends
to distribute the net proceeds (less appropriate reserves) of the sale of
each investment property to the holders of its Shares (a "self-liquidating"
distribution), except under limited circumstances.
The following represents per share cash dividends to Shareholders
for the years ended December 31, 1996 and 1995:
Record Date Dividend Per Share Payment Date
March 31, 1995 .35 May 1995
June 30, 1995 .35 August 1995
September 30, 1995 .35 November 1995
December 31, 1995 .35 February 1996
March 31, 1996 .35 May 1996
June 30, 1996 .35 August 1996
September 30, 1996 .35 November 1996
December 31, 1996 .35 February 1997
<PAGE>
ITEM 6.SELECTED FINANCIAL DATA.
Year Ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total Revenues $3,459,966 $3,442,823 $3,443,391 $3,440,936 $3,232,331
Net Income 909,193 903,424 876,858 880,836 872,709
Net Income Per 0.90 0.89 0.87 0.87 0.86
Share (1)
Total Assets 30,585,114 31,155,095 31,802,627 32,241,966 32,715,083
Long Term 15,404,146 15,470,369 15,506,127 15,421,658 15,344,500
Obligations
Dividends $1.40 $1.40 $1.40 $ 1.40 $ 1.50
Per Share
</TABLE>
______________________
(1) Based on 1,010,776 Shares outstanding during each of such years.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The Trust expects to have a life cycle consisting of three
phases: (1) capital formation and property acquisition; (2) real estate
portfolio management; and (3) property disposition. The Trust has completed
the first phase, capital formation and property acquisition, and is currently
in the second phase of its life cycle, real estate portfolio management.
The following discussion should be read in conjunction with the
Trust's financial statements commencing on page F-1 of this report.
Liquidity and Capital Resources.The Trust's main sources of
current liquidity are: (1) a working capital reserve generated by the cash
proceeds from the Offering of Shares; (2) net cash flow generated from rental
payments received from the Circuit City, Allegiance and Dana Properties; and
(3) borrowings from financial institutions.
Since its inception in June 1989, the Trust's principal
applications of its capital resources have been: (1) the acquisition of income
producing real estate; (2) the payment of offering and organization expenses;
(3) the payment of interest and administrative expenses; (4) the payment of
distributions to shareholders; and (5) payments in respect of mortgages.
As of December 31, 1996, the Trust had cash of $834,489 and
prepaid expenses of $102,525, totaling $937,014, of which $811,308 was invested
in a money market fund of an affiliate. Of the total amount, approximately
$396,000 represented a working capital reserve, $353,772 was reserved for
dividends to be paid to Shareholders in February 1997 and the balance was
reserved for operations.
The Trust expects sufficient cash flow to be generated from
operations to meet its current operating and debt service requirements on a
short-term and long-term basis. The Trust's only significant liabilities are
mortgages aggregating $15,404,146, maturing at various dates in approximately
three to five years. The Trust anticipates satisfying these mortgages with the
proceeds of refinancings or sales of underlying properties.
The Trust paid dividends aggregating $1,566,702 in 1992,
$1,415,086 in each of 1993, 1994, 1995 and 1996 and $353,772 in February 1997.
Dividends have been paid by the Trust in excess of net income. Such excess
amounts have been charged to additional paid-in capital.
Results of Operations
1996 versus 1995
Net income in 1996 approximated net income in 1995. Interest
income increased due to the increase in cash invested in an interest bearing
account. Interest expense decreased primarily due to the decrease in the
interest rate on the Circuit City loan. An increase in general and
administrative expenses was attributable primarily to an increase in the
aggregate amount of trustee fees paid by the Trust. Such fees increased as a
result of an additional independent trustee (which was due to the change in
status of an existing trustee from an affiliated to an independent trustee) and
payment for additional trustee meetings to discuss and review proposals
received regarding potential sales of assets. (See Item 11. "Executive
Compensation".)
1995 versus 1994
Net income in 1995 increased from 1994 due to the decrease in
interest expense resulting from the interest rate adjustment, from 9.25% to
8.875%, on the Circuit City loan. Although rental income recognized for
financial statement purposes was the same for 1995 and 1994, actual rent
received increased by approximately $170,000 due to the rental increase on the
Circuit City Property, which became effective in March 1995. Interest expense
decreased due to the reduction in the annual interest rate on the Circuit City
loan, which also became effective in March 1995. However, since the pay rate
on this loan increased from 8.5% to 8.875%, actual cash paid for interest
increased by approximately $83,000. (See Item 2. "Property - The Circuit City
Property"). Net cash flow during 1995 increased as the higher rent for the
Circuit City Property more than offset the increased cash interest payments on
the Circuit City loan. As a result of the increased cash flow, the base annual
fee to the advisor increased by approximately $9,000 from 1994. (See Item 13.
"Certain Relationships and Related Transactions".)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is contained on pages F-1
through F-15 following this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There are currently five Trustees, four of whom (Messrs.
Lowenthal, Ellwood, Sandler and Treadway) are Independent Trustees. Trustees
serve for one-year terms.
The Trustees and executive officers of the Trust and their
primary occupations during the last five years or more are set forth below.
James C. Cowles (Age 43: Trustee, Chairman, President and
Treasurer of the Trust Since: December 1995) is a Managing Director of Smith
Barney and Deputy Head of the Investment Banking Division and Co-Head of Equity
Capital Markets. In 1995 and 1996, Mr. Cowles managed the Real Estate Finance
Group of Smith Barney. In 1994, Mr. Cowles was responsible for the Fixed
Income Capital Markets Group of Smith Barney. For the period from July 1991
through 1993, Mr. Cowles was CEO and Chairman of Cowles Educational Publishing
Corp. Mr. Cowles originally joined Smith Barney in 1979 and was a Managing
Director of Direct Investments when he left Smith Barney in June 1991 to form
his own company. Mr. Cowles received his B.A. from Dennison University in 1977
and his M.B.A. from the Wharton School of Business, University of Pennsylvania
in 1979.
Richard S. Ellwood (Age 65: Trustee Since: 1989) is engaged in
the real estate investment banking business through his own firm, R.S. Ellwood
& Co., Incorporated, organized in 1987 and based in Rumson, New Jersey. From
1984 to 1987, Mr. Ellwood was a Managing Director, senior banker and a member
of the Commitment Committee in the Investment Banking Division of Merrill Lynch
Capital Markets. Mr. Ellwood was a Managing Director of Becker Paribas,
Incorporated from 1978 to 1984 and prior thereto a Senior Vice President and
Director of White, Weld & Co., Incorporated. He is a director of Apartment
Investment & Management Corp. and of Felcor Suite Hotels, Inc. Mr. Ellwood
received his bachelor's degree from Princeton University in 1953.
Edward Lowenthal (Age 52: Trustee Since: 1990) is a founder,
Trustee and President of Wellsford Residential Property Trust ("WRP"), a New
York Stock Exchange listed real estate investment trust. WRP succeeded to the
business of Wellsford Group, Inc., a private real estate investment firm of
which Mr. Lowenthal was a founding shareholder, Director and President since
its formation in 1986. Prior to Wellsford's formation, Mr. Lowenthal had been
engaged in the practice of law for 15 years, becoming a Partner in the New York
City law firm of Robinson, Silverman, Pearce, Aronsohn & Berman in 1981. In
January 1984, Mr. Lowenthal became a Managing Director of Becker Paribas and
then, in 1985, a Partner of Bear Stearns & Co. He is a Director of United
American Energy Corporation, a developer of hydroelectric and other alternative
energy facilities, and Great Lakes REIT. Mr. Lowenthal holds a B.A. degree
from Case Western University and a J.D. degree from Georgetown University Law
Center.
Mark J. Sandler (Age 54: Trustee Since: 1989) is a private
investor and a former senior Managing Director of Bear Stearns & Company. At
Bear Stearns & Company, Mr. Sandler managed the firm's real estate activities
and the activities of the Special Investments Group. Mr. Sandler retired from
Bear Stearns & Company in 1988. Prior to joining Bear Stearns & Company in
1980, Mr. Sandler served as a Senior Vice President for Donaldson Lufkin
Jenrette. He is a director of United Dominion Realty Trust. Mr. Sandler
received his bachelor's degree from Amherst College in 1964 and received
degrees in law and business administration from Columbia University in 1968.
Stephen J. Treadway (Age 49: Trustee Since: 1989) is an
Executive Vice President of PIMCO Advisors, L.P., an investment management firm
which he joined in May 1996. Prior to that Mr. Treadway was an Executive Vice
President and Director of Corporate Services at Smith Barney. He served as
Chairman of the Board of the Trust from 1989 to December, 1992 and as the
Chairman of the Advisor from 1989 to April, 1993. Mr. Treadway joined Smith
Barney in 1981, and formerly served as Chairman of Smith Barney's mutual fund
and unit trust complex and a Manager of the Direct Investments Department for
Smith Barney. He also served as a Vice President of Smith Barney Real Estate
Corporation from 1977 through 1981. Prior to 1977, Mr. Treadway practiced law
with the firm of Finley, Kumble, Wagner, Heine, Underberg, Manley and Casey.
Mr. Treadway received his bachelor's degree from Cornell University in 1969 and
received his law degree from Columbia University Law School in 1972.
The directors and executive officers of the Advisor and their
backgrounds and primary occupations during the last five years or more are set
forth below.
Directors and Officers of Corporate Realty Advisors Inc.
Lewis L. Glucksman is a Director of the Advisor and Senior
Advisor of Smith Barney. Prior to joining Smith Barney, Mr. Glucksman served
as the Chairman of Glucksman & Company, a private investment banking firm which
he founded in 1984. Mr. Glucksman had previously, for 21 years, been with
Lehman Brothers, a predecessor company to Shearson Lehman, and served most
recently as Lehman Brothers' Chairman and Chief Executive Officer. Mr.
Glucksman is a graduate of the College of William and Mary and the Graduate
School of Business Administration at New York University.
A. George Saks is a Director and Secretary of the Advisor and an
Executive Vice President, Secretary and General Counsel of Smith Barney which
he joined in 1973. Prior to joining Smith Barney, Mr. Saks served as General
Counsel for Neuberger Loeb & Co., Inc. from 1971 to 1973. Mr. Saks is a
Director of the Law and Compliance Division of the Security Industry
Association and is a member of the Federal Regulation Committee, the New York
Bar Association and the American Bar Association. Mr. Saks is a graduate of
Hofstra University Law School and New York University Graduate Law School.
Robert Druskin is a Director of the Advisor and a Director and
Vice Chairman of Smith Barney. Before joining Smith Barney in April 1991,
Mr. Druskin was a Senior Executive Vice President and Chief Financial Officer
of Shearson Lehman Brothers Inc. and an Executive Vice President and Chief
Financial Officer of Shearson Lehman Brothers Holdings Inc. He joined Shearson
Hammill & Co. in 1969, serving in various capacities for the firm before
becoming Treasurer in 1980, Chief Financial Officer in 1984 and Senior
Executive Vice President in 1986. He was also a member of Shearson's
Executive Committee. Mr. Druskin is a graduate of Rutgers University and
received his B.A. in Economics in 1969.
James C. Cowles is the Chairman and President of the Advisor.
Mr. Cowles's background and primary occupations during the last five years are
set forth above under the caption DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
Michael J. Day is Treasurer of the Advisor and an Executive Vice
President of Smith Barney. He is also a Vice President and Controller of Smith
Barney Holdings, Inc., the parent corporation of Smith Barney. Mr. Day joined
Smith Barney in 1971. Mr. Day received his bachelor's degree from St. Francis
College in 1971.
Compliance with Section 16(a) of the Exchange Act of 1934
Section 16 of the Securities Exchange Act of 1934 requires the Trustees
and executive officers of the Trust and persons who own more than ten percent
of the Trust's Shares to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Shares of
the Company. Such persons are required by SEC regulation to furnish the Trust
with copies of all Section 16(a) forms they file. To the Trust's knowledge,
all such filing requirements were complied with in 1996.
ITEM 11.EXECUTIVE COMPENSATION.
Trustees and officers of the Trust who are affiliated with the
Advisor are not entitled to compensation or reimbursement for out-of-pocket
expenses from the Trust. Non-affiliated Trustees are entitled to receive
annual Trustees fees of $8,000 and a fee of $1,000 for each Trustee meeting
attended, as well as reimbursement for travel and other out-of-pocket
expenses incurred in connection with attending any such meeting and for
carrying on the business of the Trust. The Trustees attended five meetings in
1996 and were paid an aggregate amount of $46,000 representing fees for annual
compensation and meetings.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of management of the Trust, the following
entity is the only holder of record or beneficial owner of more than 5% of the
outstanding Shares of the Trust.
Amount and Nature Percent of
Name and Address of Beneficial Ownership Class
Glenmede Trust Company 274,725 Shares(1) 27.2%
Trustee for the
Pew Memorial Trust
One Liberty Place
1650 Market Street, Suite 1200
Philadelphia, PA 19103
(1) Sole voting and investment power.
As of March 20, 1997, none of the Trustees or the officers of
the Trust beneficially owned any Shares of the Trust. As of March 20, 1997,
the Advisor owned 10,000 Shares of the Trust.
Management of the Trust is not aware of any arrangements,
including any pledge by any person of securities of the Trust, the operation of
which may at a subsequent date result in a change in control of the Trust.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Trust has entered into an Advisory Services Agreement with
the Advisor for real estate acquisition and disposition services, financing and
administrative services and property management services. James C. Cowles is
currently President of the Advisor and Chairman, President, Treasurer and a
Trustee of the Trust.
The Advisory Agreement provides for fees to be paid by the Trust
to the Advisor as follows: (a) a base annual fee of 10% of the adjusted cash
flow from operations, except that if total operating expenses of the Trust, for
any twelve-month period exceed the greater of 2% of the Trust average invested
assets or 25% of the Trust's net income, then the base annual fee will
be reduced to a level that would not exceed such limit (the amount of such
reduction to be deferred until and paid at such time as total operating
expenses are less than the limits defined above); (b) an incentive fee of 15%
of cash proceeds from sales or refinancings of the Trust's equity interest in
real properties, after certain priority distributions to shareholders and other
limitations; (c) a subordinated disposition fee amounting to the lessor of (i)
3% of the sale price of a property at the time of a sale after certain priority
distributions to shareholders and other limitations, or (ii) the fee
customarily charged by unaffiliated parties for rendering similar services;
(d) a mortgage placement fee amounting to the lessor of (i) 1% of the amount of
financing or refinancing obtained by the Advisor or (ii) the fee customarily
charged by unaffiliated parties rendering similar services. The mortgage
placement fee will be reduced by the amount of any mortgage placement fee
previously earned by the Advisor with respect to the same property.
The Advisory Agreement also provides for the Advisor to be
reimbursed for expenses incurred related to goods and materials acquired and
administrative services performed for the Trust. This reimbursement will be
payable out of adjusted cash from operations. Amounts charged by the Advisor
for services may not exceed an amount equal to the lessor of (i) the actual
cost of such services, or (ii) 90% of the competitive price which would be
charged by an unaffiliated person for such services.
The base annual fee payable to the Advisor for 1996 under the
Advisory Agreement was $175,152. Of this amount, $161,211 was paid in 1996 and
the balance of $13,941 was paid in February 1997. In addition, the Advisor
charged the Trust $40,000 for administrative services in 1996.
The Trust paid Smith Barney $1,393 for printing costs in 1996.
The Trust also maintains an interest-bearing customer account with Smith Barney
for investing funds that are kept for working capital and other purposes.
Interest of $36,699 was earned by the Trust in 1996 on this account.
<PAGE>
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1), See page F-2.
(2)
(b) Reports on Form 8-K
The Trust filed a report on Form 8-K with the Commission dated
October 7, 1996 to report under Item 5, Other Events, that the
Trust had entered into preliminary discussions regarding the
potential sale of the Trust's portfolio of investment
properties.
(a)(3), Exhibits:
(c)
No. Exhibit
(3)(a) First Amended and Restated Declaration of Trust, incorporated by
reference to Exhibit 3 to Registration Statement No. 33-29987
(the "Registration Statement")
(b) Amendment to Amended and Restated Declaration of Trust dated
December 27, 1995, incorporated by reference to Exhibit 3(b) to
the Trust's Form 10-K Annual Report for the year ended
December 31, 1995.
(4) Specimen Share Certificate, incorporated by reference to Exhibit
4 to the Trust's Form 10-K Annual Report for the Year Ended
December 31, 1989 (the "1989 Form 10-K").
10(a) Amended and Restated Advisory Services Agreement incorporated by
reference to Exhibit 10(b) to the Registration Statement.
(b) Dividend Reinvestment Plan (included in the Prospectus)
incorporated by reference to Exhibit 10(c) of the Registration
Statement.
(c) Management and Consulting Services Agreement incorporated by
reference to Exhibit 10(e) of the Registration Statement.
(d) Ground Lease and Agreement, dated as of February 28, 1990,
between CRAAC and Circuit City, incorporated by reference to
Exhibit 10(g) to the 1989 Form 10-K.
(e) Assignment and Assumption of Ground Lease and Agreement, dated
as of March 26, 1990, between CRAAC and the Trust, incorporated
by reference to Exhibit 10(h) to the 1989 Form 10-K.
(f) Lease and Agreement, dated as of February 28, 1990, between
CRAAC and Circuit City, incorporated by reference to Exhibit
10(i) to the 1989 Form 10-K.
(g) Assignment and Assumption of Lease and Agreement, dated as of
March 26, 1990, between CRAAC and the Trust, incorporated by
reference to Exhibit 10(j) to the 1989 Form 10-K.
(h) Letter Agreement Regarding Adjustment of Lease Rental Payments,
dated February 28, 1990, among CRAAC, Circuit City and the
Lender, incorporated by reference to Exhibit 10(k) to the 1989
Form 10-K.
(i) Construction Completion Agreement dated as of February 28, 1990,
among CRAAC, Circuit City and the Lender, incorporated by
reference to Exhibit 10(l) to the 1989 Form 10-K.
(j) Promissory Note, dated February 28, 1990, in the stated
principal amount of $12,500,000 from CRAAC to the Lender,
incorporated by reference to Exhibit 10(m) to the 1989 Form 10-
K.
(k) Deed of Trust and Security Agreement, dated February 28, 1990,
between CRAAC and certain trustees to secure payment on the
Note, incorporated by reference to Exhibit 10(n) to the 1989
Form 10-K.
(l) Executed Assumption of Deed of Trust, dated as of March 26, 1990
by the Trust and consented to by the Lender, incorporated by
reference to Exhibit 10(o) to the 1989 Form 10-K.
(m) Collateral Assignment of Lessor's Interest in Leases, dated
February 28, 1990, between CRAAC and the Lender, incorporated by
reference to Exhibit 10(p) to the 1989 Form 10-K.
(n) Agreement, dated as of March 15, 1990, between CRAAC and the
Trust detailing the terms of the transfer of CRAAC's interest in
the Circuit City Property to the Trust, incorporated by
reference to Exhibit 10(q) to the 1989 Form 10-K.
(o) Certificate and Indemnity Agreement Regarding Hazardous
Substances, dated February 28, 1990, by CRAAC to the Lender,
incorporated by reference to Exhibit 10(s) to the 1989 Form 10-
K.
(p) Assumption of Certificate and Indemnity Agreement Regarding
Hazardous Substances, dated March 26, 1990, by the Trust,
incorporated by reference to Exhibit 10(t) to the 1989 Form 10-
K.
(q) Assignment of Closing Rights, dated March 26, 1990, between the
Trust and CRAAC and consented to by Circuit City, incorporated
by reference to Exhibit 10(u) to the 1989 Form 10-K.
(r) Purchase and Sale Agreement between Birmware I Limited
Partnership (Seller) and Corporate Realty Income Trust I
(Purchaser) dated as of October 19, 1990, incorporated by
reference to Exhibit 10(v) to the 1990 Form 10-K.
(s) Lease Agreement, dated as of September 10, 1990 between Birmware
I Limited Partnership ("Birmware") and Baxter Healthcare
Corporation ("Baxter"), incorporated by reference to Exhibit
10(w) to the Trust's Form 10-Q Quarterly Report for the Quarter
Ended September 30, 1991 (the "September 1991 Form 10-Q").
(t) Lease Guaranty, dated as of August 20, 1990, between Baxter
International, Inc. and Birmware, incorporated by reference to
Exhibit 10(x) to the September 1991 Form 10-Q.
(u) Inducement and Loan Agreement, dated as of October 20, 1990,
between Industrial Development Board of the City of Bessemer
("IDB") and Birmware, incorporated by reference to Exhibit 10(y)
to the September 1991 Form 10-Q.
(v) Assignment (Lease, Inducement and Loan Agreement and Related
Rights), dated as of September 18, 1991, between Birmware and
the Trust, incorporated by reference to Exhibit 10(z) to the
September 1991 Form 10-Q.
(w) Confirmation of Guaranty, dated as of October 1, 1991, by Baxter
International, Inc. to the Trust, incorporated by reference to
Exhibit 10(aa) to the September 1991 Form 10-Q.
(x) Indemnity Agreement, dated as of November 29, 1990, between
Baxter, Birmware, the Trust, Brice Building Company and the IDB,
incorporated by reference to Exhibit 10(bb) to the September
1991 Form 10-Q.
(y) Bond Anticipation Note, dated as of October 9, 1991, between the
IDB and the Trust, incorporated by reference to Exhibit 10(cc)
to the September 1991 Form 10-Q.
(z) Estoppel Certificate, dated as of October 8, 1991, from Baxter
to Birmware and the Trust, incorporated by reference to Exhibit
10(dd) to the September 1991 Form 10-Q.
(aa) Confirmation of Inducement and Loan Agreement, dated as of
September 18, 1991, between the IDB and the Trust, incorporated
by reference to Exhibit 10(ee) to the September 1991 Form 10-Q.
(bb) Loan commitment letters with Modern Woodmen of America dated
December 27, 1991, January 6, 1992, January 13, 1992, January
17, 1992, January 23, 1992 and January 24, 1992, incorporated by
reference to Exhibit (ff) to the Trust's Form 10-K Annual Report
for the Year Ended December 31, 1991.
(cc) Purchase and Sale Agreement between Shannon Properties, Inc. and
the Trust dated as of May 15, 1992, incorporated by reference to
Exhibit 10(gg) to the Trust's Form 10-Q Quarterly Report for the
Quarter Ended September 30, 1992 (the "September 1992 Form 10-
Q").
(dd) Special Warranty Deed from Shannon Properties, Inc. to the Trust
dated September 15, 1992, incorporated by reference to Exhibit
10(hh) to the September 1992 Form 10-Q.
(ee) Lease Agreement between Shannon Properties, Inc. and Dana
Corporation Universal Joint Division dated December 19, 1983,
incorporated by reference to Exhibit 10(ii) to the September
1992 Form 10-Q.
(ff) Assignment of Lease from Shannon Properties, Inc. to the Trust
dated September 15, 1992, incorporated by reference to Exhibit
10(jj) to the September 1992 Form 10-Q.
(gg) Amendment to Lease dated as of May 15, 1992 between the Trust
and Dana Corporation, incorporated by reference to Exhibit
10(kk) to the September 1992 Form 10-Q.
(hh) Deed of Trust and Security Agreement from the Trust to American
Fidelity Assurance Company dated September 21, 1992,
incorporated by reference to Exhibit 10(ll) to the September
1992 Form 10-Q.
(ii) Assignment of Leases and Rents dated September 21, 1992 from the
Trust to American Fidelity Assurance Company, incorporated by
reference to Exhibit 10(mm) to the September 1992 Form 10-Q.
(jj) Promissory Note from the Trust to American Fidelity Assurance
Company in the principal amount of $1,550,000 dated September
28, 1992, incorporated by reference to Exhibit 10(nn) to the
September 1992 Form 10-Q.
(kk) Lease, dated as of January 1, 1992, between the IDB and the
Trust with respect to the Baxter Property, incorporated by
reference to Exhibit 10(oo) to the Trust's Form 10-K Annual
Report for the Year Ended December 31, 1992 (the "1992
Form 10-K").
(ll) Mortgage and Trust Indenture, dated as of March 20, 1992,
between the IDB and Security Pacific National Trust Company (New
York), as Trustee, incorporated by reference to Exhibit 10(pp)
to the 1992 Form 10-K.
(mm) First Mortgage Industrial Revenue Bond (Baxter Project) in the
amount of $1,000,000 issued by the IDB to Modern Woodmen of
America, incorporated by reference to Exhibit 10(qq) to the 1992
Form 10-K.
(nn) Assignment of Leases and Rents, dated as of March 20, 1992,
between the IDB and Security Pacific National Trust Company (New
York), as Trustee, incorporated by reference to Exhibit 10(rr)
to the 1992 Form 10-K.
(oo) Bond Anticipation Note, dated as of October 9, 1991, between the
IDB and the Trust, marked "Cancelled" (see Exhibit 10(cc)
above), incorporated by reference to Exhibit 10(ss) to the 1992
Form 10-K.
(pp) Letters dated December 7, 1994 and January 3, 1995 from
Principal Mutual Life Insurance Company regarding change in
interest rate under the $12,500,000 Promissory Note payable to
Principal, incorporated by reference to Exhibit 10(pp) to the
Trust's Form 10-K Annual Report for the Year Ended December 31,
1994.
(27) Financial Data Schedule
(d) Financial statement schedule - See page F-2.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Trust has duly caused this report to be
signed on its behalf by the undersigned, thereto duly authorized.
CORPORATE REALTY INCOME TRUST I
Dated: March 28, 1997 By:/s/ James C. Cowles
James C. Cowles, Chairman,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Trust and in the capacities and on the dates indicated.
Dated: March 28, 1997 By: /s/ James C. Cowles
James C. Cowles, not individually,
but as Trustee of Corporate
Realty Income Trust I and as
Chairman, President
and Treasurer
Dated: March 28, 1997 By:/s/ Valerie A. St. John
Valerie A. St. John
Controller
Dated: March 28, 1997 By: /s/ Stephen J. Treadway
Stephen J. Treadway, not
individually, but as Trustee of
Corporate Realty Income Trust I
Dated: March 28, 1997 By:/s/ Mark J. Sandler
Mark J. Sandler, not
individually, but as Trustee of
Corporate Realty Income Trust I
Dated: March 28, 1997 By: /s/ Edward Lowenthal
Edward Lowenthal, not
individually, but as Trustee of
Corporate Realty Income Trust I
Dated: March 28, 1997 By: /s/ Richard S. Ellwood
Richard S. Ellwood, not
individually, but as Trustee of
Corporate Realty Income Trust I
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
FINANCIAL STATEMENTS
DECEMBER 31, 1996
CORPORATE REALTY INCOME TRUST I
<PAGE>
Form 10-K - Item 14(a)(1) and (2)
CORPORATE REALTY INCOME TRUST I
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The following financial statements of Corporate Realty Income Trust I are
included in Item 8:
Page No.
Part I Report of Independent Auditors F-3
Financial Statements:
Balance Sheets --
December 31, 1996 and 1995 F-4
Statements of Income --
For the years ended December 31, 1996, 1995 and 1994
F-5
Statements of Shareholders' Equity --
For the years ended December 31, 1996, 1995 and 1994
F-6
Statements of Cash Flows --
For the years ended December 31, 1996, 1995 and 1994
F-7
Notes to the Financial Statements F-8 to F-14
Schedule III - Real Estate and Accumulated Depreciation
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission have been omitted since (1) the
information required is disclosed in the financial statements
and notes thereto; (2) the schedules are not required under
the related instructions; or (3) the schedules are
inapplicable.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders of
Corporate Realty Income Trust I
We have audited the accompanying balance sheets of Corporate Realty Income
Trust I as of December 31, 1996 and 1995, and the related statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. Our audits also included the financial statement
schedule listed in the Index at item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corporate Realty Income Trust
I as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996,
in conformity with generally accepted accounting principles. Also, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements take as a whole, presents fairly, in
all material respects, the information set forth therein.
/s/
ERNST & YOUNG LLP
New York, New York
January 29, 1997
<PAGE>
CORPORATE REALTY INCOME TRUST I
BALANCE SHEETS
As of December 31, 1996 and 1995
________________________________
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land $715,400 $715,400
Buildings 31,884,600 31,884,600
32,600,000 32,600,000
Less: accumulated depreciation 5,054,542 4,257,428
27,545,458 28,342,572
Cash and cash equivalents 834,489 531,435
Rent receivable - 206,510
-
Prepaid expenses 102,525 101,877
Deferred rent receivable 2,020,078 1,867,274
Deferred financing costs, net of accumulated
amortization of $143,594 in 1996 and $120,731 in 1995 82,564 105,427
Total assets $30,585,114 $31,155,095
LIABILITIES AND SHAREHOLDERS' EQUITY:
Mortgage loans payable $15,404,146 $15,470,369
Accrued expenses 78,436 80,652
Due to affiliate 13,941 9,590
Dividends payable 353,772 353,772
Total liabilities 15,850,295 15,914,383
Shareholders' equity:
Shares of beneficial interest $.10 par value;
20,000,000 shares authorized; 1,010,776
shares issued and outstanding 101,078 101,078
Additional paid-in capital 14,633,741 15,139,634
Retained earnings - -
Total shareholders' equity 14,734,819 15,240,712
Total liabilities and shareholders' equity $30,585,114 $31,155,095
</TABLE>
See accompanying notes
<PAGE>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF INCOME
For the years ended December 31, 1996, 1995 and 1994
________________________________
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
INCOME:
Rental $3,423,267 $3,423,267 $3,423,267
Dividend and interest 36,699 19,556 20,124
3,459,966 3,442,823 3,443,391
EXPENSES:
Interest 1,407,881 1,421,200 1,459,015
Depreciation 797,114 797,114 797,115
Base annual fee to related party 175,152 173,028 164,005
General and administrative 170,626 148,057 146,398
2,550,773 2,539,399 2,566,533
Net income $ 909,193 $ 903,424 $ 876,858
Net income per share $ .90 $ .89 $ .87
Dividend per share $ 1.40 $ 1.40 $ 1.40
See accompanying notes
</TABLE>
<PAGE>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 1996, 1995 and 1994
________________________________
Shares of
Beneficial
<TABLE>
<CAPTION>
Interest, Additional Retained
Par Value Paid-in Capital Earnings Total
<S> <C> <C> <C> <C>
Balance as of December 31, 1993 $101,078 $16,189,524 $ - $16,290,602
Net income - - 876,858 876,858
Dividends - (538,228) (876,858) (1,415,086)
Balance as of December 31, 1994 101,078 15,651,296 - 15,752,374
Net income - - 903,424 903,424
Dividends - (511,662) (903,424) (1,415,086)
Balance as of December 31, 1995 101,078 15,139,634 - 15,240,712
Net income - - 909,193 909,193
Dividends - (505,893) (909,193) (1,415,086)
Balance as of December 31, 1996 $101,078 $14,633,741 $ - $14,734,819
See accompanying notes
</TABLE>
<PAGE>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
_______________________________
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities: $909,193 $903,424 $876,858
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of deferred
financing costs 819,977 819,893 819,485
Interest accrued into the balance of
the mortgage payable - 24,486 139,273
Changes in assets and liabilities:
Decrease (increase) in rent receivable 206,510 (206,510) -
Increase in prepaid expenses (648) (8,293) (3,577)
Decrease in accrued expenses
(2,216) (6,553) (1,919)
Increase in deferred rent receivable (152,804) (190,605) (359,877)
Increase in deferred financing costs - (2,463) -
Increase (decrease) in due to affiliate 4,351 (93,559) 55,714
Decrease in rent received in advance - - -
(39,375)
Total adjustments 875,170 336,396 609,724
Net cash provided by operating activities 1,784,363 1,239,820 1,486,582
Cash flows from financing activities:
Principal payments on mortgage (66,223) (60,244) (54,804)
Dividends paid to shareholders (1,415,086) (1,415,086) (1,415,086)
Net cash used in financing activities (1,481,309) (1,475,330) (1,469,890)
Net increase (decrease) in cash and cash equivalents 303,054 (235,510)
16,692
Cash and cash equivalents at beginning of period 531,435 766,945 750,253
Cash and cash equivalents at end of period $834,489 $531,435 $766,945
</TABLE>
Supplemental disclosure of cash flow information:
Cash paid for interest during the years ended December 31, 1996, 1995, and
1994 amounted to $1,377,102, $1,382,706 and $1,296,921, respectively.
See accompanying notes
<PAGE>
CORPORATE REALTY INCOME TRUST I
NOTES TO FINANCIAL STATEMENTS
1. Organization, Operations and Public Offering
Corporate Realty Income Trust I (the "Company") was organized on June 27,
1989, as a Massachusetts business trust which satisfied the requirements of the
Internal Revenue Code to qualify as a Real Estate Investment Trust ("REIT").
The Company was formed for the purpose of acquiring triple net leased
commercial and industrial real estate properties, leased primarily to single
tenants. The Company was initially capitalized by an affiliate with $200,000
representing 10,000 shares of beneficial interest.
The Company filed a Form S-11 Registration Statement with the Securities
and Exchange Commission, which became effective on October 3, 1989, covering a
maximum offering of 7,500,000 shares of beneficial interest at $20 per
share (the "Public Offering"). The shares were offered on a best-efforts
basis. The Public Offering terminated on October 3, 1991. The Company sold
1,010,776 shares representing capital contributions totalling $18,414,129, net
of allowances for offering and organizational expense and commissions paid to
affiliates.
2. Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consists of cash and time deposits
with maturities from the date of purchase of three months or less. As
of December 31, 1996, the Company had cash of $834,489 of which
$811,308 was invested in a money market fund of an affiliate. The
Company does not believe it is exposed to any significant credit risk
on cash and cash equivalents.
Offering Costs
Selling commissions paid and other costs incurred in connection
with the Public Offering were charged against the Shareholders'
additional paid-in capital.
Deferred Financing Costs
Deferred financing costs consist of costs incurred in connection
with obtaining mortgages. These costs are amortized using the
straight-line method over the term of the mortgage, which was
determined to be not materially different from the results of the
interest method. Amortization with respect thereto was $22,863 in
1996, $22,779 in 1995, and $22,370 in 1994 and is included in interest
expense.
Investment in Real Estate
Depreciation of buildings is computed using the straight-line
method over the estimated economic useful life of forty years. The
Company reviews real estate assets for impairment whenever events or
changes in circumstances indicate that the carrying value of assets to
be held and used may not be recoverable. Impaired assets are reported
at the lower of cost or fair value. While management may from time to
time consider offers for the sale of its assets, at December 31, 1996,
the real estate assets are considered by management to be held for use.
Net Income Per Share
The amount of net income per share of common stock was
calculated using the actual number of shares outstanding of 1,010,776
shares.
Income Taxes
The Company qualifies as a REIT as defined in the Internal
Revenue Code and, as such, is not taxed on that portion of its taxable
income which is distributed to shareholders provided that at least 95%
of such taxable income is distributed. The Company intends to
continue to distribute substantially all of its taxable income.
The Company, however, may be subject to tax at normal corporate rates
on net income or capital gain not distributed. No provision for
federal income taxes has been made in the accompanying financial
statements as the Company distributed to Shareholders all of its 1996,
1995 and 1994 taxable income. Cash dividends of $1.40 per share in
1996 and 1995 were comprised of a non-taxable return of capital of
$.74 and .78, respectively, since the Company distributed dividends in
excess of its current earnings and profits, and a distribution of
ordinary income of $.66 and $.62, respectively.
3. Investment in Real Estate and Related Financing
The Circuit City Property
On March 27, 1990, the Company acquired its first rental property, a
corporate headquarters building located in Richmond, Virginia ("Circuit City").
The Company purchased the building and assumed the rights and obligations under
an operating ground lease (the "Ground Lease") for the underlying land from CRA
Acquisition Corp. ("CRAAC"), an affiliate of the Company, for $25,000,000 (less
certain pro-rated closing amounts). This price reflects the purchase price
paid by CRAAC for the building.
Pursuant to a letter of intent between Corporate Realty Advisors, Inc.,
the advisor to the Company ("CRA") and Circuit City Stores, Inc., CRA arranged
for the purchase by CRAAC of the property on February 28, 1990. CRAAC, a
wholly-owned subsidiary of Smith Barney, Inc. was formed solely for the purpose
of acquiring and holding the building until the initial sale of shares of
beneficial interest in the Company and receipt therefrom of sufficient proceeds
to enable the Company to purchase the building. CRAAC is an affiliate of the
Company and of CRA.
The building is encumbered by a deed of trust and security agreement which
collateralizes a non-recourse note from CRAAC to Principal Mutual Life
Insurance Company ("PML") for $12,500,000. Upon purchase, the Company assumed
responsibility for payment on the note which had a balance of $12,506,552 and
agreed to comply with the terms of the deed of trust. The principal of the
note is payable in full on March 1, 2000. For the first five years of the
note, interest accrued at the rate of 9.25%, payable monthly at a rate of 8.5%,
with the difference being added to the principal balance. The rate of interest
on the note was subject to adjustment at the end of five years to reflect the
then current interest rate offered by PML for a real estate loan of similar
quality, term and amount, with the setting of an amortization arrangement
as is then prevalent in the lending industry. The Company reached an agreement
with PML and, effective March 1, 1995, the note bears interest at an annual
rate of 8.875%, payable monthly. Principal plus interest accrued during the
first five years of the loan, amounting to $13,093,133, is payable on March 1,
2000.
The Company also borrowed $3,156,990 from CRAAC to fund the acquisition of
Circuit City (the "Note"). The borrowing from CRAAC was not collateralized and
was paid in installments as proceeds were received from investor closings. The
note was fully repaid on April 30, 1991.
The property is currently subject to a triple net lease with Circuit City
under which Circuit City is obligated to pay all costs of maintenance and
repair, real estate taxes, insurance and operating expenses of the property.
The term of the lease is for 20 years commencing on February 28, 1990. Circuit
City has five options to renew and extend the lease consisting of four ten-year
periods followed by one five-year period. The monthly rental for years one
through five was $189,583 payable monthly in advance. The monthly rental for
years six through ten is $206,510 and monthly rental for years eleven through
twenty will be $238,281. The base rent for each renewal term will be adjusted
for by the percent change in the consumer price index, as defined. Rent
attributable to Circuit City represented 76% of total rental income in
1996.
The land covered by and supporting the use of the property is leased to
the Company by Circuit City under the Ground Lease, which is a long-term, fully
subordinated lease. The basic term of the Ground Lease is coterminous with the
lease on the building with Circuit City. The Company also has renewal options
extending for an additional 45 years, for a total of 65 years. In the event of
default, the Ground Lease would remain in effect.
#######
The Allegiance Property (formerly the "Baxter Property")
On October 9, 1991, the Company acquired beneficial interest in, but not
legal title to, land in Bessemer, Alabama and a 123,924 square foot
distribution center built thereon (together, the "Allegiance Property") for
$4,500,000. The Allegiance Property is located on 10.16 acres in the Greenwood
Exchange development, an industrial park in Bessemer. The Allegiance Property
is serving as a regional distribution center for Allegiance Healthcare
Corporation ("Allegiance"), formerly Baxter Healthcare Corporation ("Baxter"),
an affiliate of Baxter International Inc. Allegiance was formed as a result
of the spin-off by Baxter International, Inc. completed in September 1996.
Assets of Baxter were transferred to Allegiance, including all of Baxter's
rights and obligations under the lease.
In June 1992 the Company obtained $1,000,000 pursuant to a financing
arrangement with the Industrial Development Board of the City of Bessemer (the
"IDB"), under which the IDB issued a first mortgage industrial revenue
bond in the amount of $1,000,000 to Modern Woodman of America. The payment of
such revenue bond is collateralized by a first mortgage lien on the Allegiance
Property. The loan is due on September 1, 2001 and bears interest at an annual
rate of 9.5% with monthly payments of interest only until maturity. The
Company entered into a lease obligation under which the lease payments equal an
amount sufficient to service the revenue bond. The Company accounts for this
obligation as financing. The Company has the option to record legal title to
the Allegiance Property at any time after the revenue bond has been paid in
full for a nominal purchase price.
The Allegiance Property is being leased to Allegiance under a
pre-existing ten- year triple net lease (the "Allegiance Lease") which
commenced on November 1, 1991 with a base annual rent of $472,500. Allegiance
is required to pay all taxes, utility charges, insurance, maintenance and
repairs, management fees and all other charges relating to the use and
occupancy of the building. Baxter International, Inc. continues to
unconditionally guarantee all of Allegiance's obligations under the lease
as assigned by Baxter to Allegiance. Under the terms of the lease, Allegiance
has two five-year renewal options at rents which reflect increases in the
Consumer Price Index, as published by the Bureau of Labor Statistics of the
United States Department of Labor, from the initial commencement date of the
lease through the renewal date. Any increase in rents may not be less than 3%
nor more than 5% on a compounded annual basis. Rent attributable to
Allegiance represented 14% of total rental income in 1996.
Allegiance has the right under the lease to require the Company to expand
the distribution center by an additional 88,920 square feet. If Allegiance
exercises this right the rent due under the Allegiance lease will increase.
Allegiance may exercise this right at any time during the initial ten years of
the lease. If Allegiance does not exercise this option within the first five
years of the lease, Allegiance would be obligated to pay the Company an
additional $100,000 if it later exercised the expansion option.
The Dana Property
On September 28, 1992, pursuant to a Purchase and Sale Agreement dated as
of May 15, 1992 between the Company and Shannon Properties Inc. ("Shannon"), a
Delaware corporation, the Company purchased all of Shannon's rights, title and
interest in the land and a 148,000 square foot regional assembly facility built
thereon (together, the "Dana Property"). The Company purchased the rights to
the Dana Property for $3,100,000. The building is located on 20.95 acres in
Gordonsville, Tennessee and is serving as a regional assembly facility for Dana
Corporation ("Lessee, Dana").
The Company financed 50% of the purchase price of the Dana Property by
obtaining a first mortgage loan from American Fidelity Assurance Company in the
principal amount of $1,550,000. The loan is due on October 1, 2002 and
bears interest at an annual rate of 9.5% with a 15-year amortization of monthly
payments of principal and interest of $16,185 and a balloon payment in the
amount of $770,669 payable upon maturity of the loan. The loan is secured by a
deed of trust with respect to the Dana Property and assignment of the lease
with Dana. At December 31, 1996, the balance of the loan was $1,311,013.
The Dana Property is being leased to Dana under a pre-existing triple net
lease (the "Dana Lease") whereby Dana is required to pay all taxes, utility
charges, insurance, maintenance and repairs, management fees and all other
charges relating to the use and occupancy of the Dana Property. The lease is
for a term of 15 years, expiring on August 31, 2007. Dana has three options to
renew and extend the lease consisting of two five-year periods followed by one
term of fours years and eleven months. The rent is payable monthly in advance.
The rental is $26,324.17 per month for the three-year period ending July 31,
1996; $27,113.92 per month for the three-year period ending July 31, 1999;
$27,927.33 per month for the three-year period ending July 31, 2002; $28,765.17
per month for the three-year period ending July 31, 2005 and $29,544.75 per
month thereafter through August 31, 2007. The base rent for each renewal term
will be fixed and will equal market rates, but, in no event less than 95% or
greater than 105% of the rent in the year immediately proceeding such option
period. Rent attributable to Dana represented 10% of total rental income in
1996.
4. Agreements and Transactions with Related Parties
The Company maintains an interest-bearing customer account with Smith
Barney Inc. ("SB"). Interest of $36,699, $19,556, and $20,124 was earned by
the Company for 1996, 1995 and 1994, respectively, on this account. For
purposes of these financial statements, the Company considers its SB account to
be cash.
The Company declared dividends of $14,000 for each of years 1996, 1995 and
1994 on the 10,000 shares of beneficial interest owned by CRA, which is a
wholly owned subsidiary of SB.
Both an officer and a director of CRA serve on the five-member Board of
Trustees of the Company.
The Company has entered into an Advisory Services Agreement (the "Advisory
Agreement") with CRA. Under the terms of the Advisory Agreement, CRA will (a)
recommend real estate investment opportunities consistent with the Company's
investment policies and objectives; (b) provide advice to, and act as agent
for, the acquisition, financing, refinancing, leasing and disposition of real
estate investments; (c) recommend for investment assets other than real estate
that generate qualifying REIT income; and (d) provide day-to-day management and
administrative services for the Company.
The Advisory Agreement provides for fees to be paid by the Company to CRA
as follows: (a) a base annual fee of 10% of the adjusted cash flow from
operations, except that if total operating expenses of the Company for any
twelve-month period exceed the greater of 2% of the Company's average invested
assets as defined, or 25% of the Company's net income as defined, then the base
annual fee will be reduced to a level that would not exceed such limit (the
amount of such reduction to be deferred until and paid at such time as total
operating expenses are less than the limit defined above); (b) an incentive fee
of 15% of cash proceeds from sales or refinancings of the Company's equity
interest in real property, after certain priority distributions to shareholders
and other limitations as defined; (c) a subordinated disposition fee amounting
to the lesser of (i) 3% of the sale price of a property at the time of a sale
after certain priority distributions to shareholders and other limitations as
defined, or (ii) the fee customarily charged by unaffiliated parties for
rendering similar services; (d) a mortgage placement fee amounting to the
lesser of (i) 1% of the amount of financing or refinancing obtained by
CRA, or (ii) the fee customarily charged by unaffiliated parties rendering
similar services. The mortgage placement fee will be reduced by the amount of
any mortgage placement fee previously earned by CRA with respect to the same
property. The Company paid mortgage placement fees to CRA of $125,000 with
respect to the Circuit City loan and $10,000 with respect to the Baxter loan.
The base annual fees for 1996, 1995 and 1994 amounted to $175,152, $173,028
and $164,005, respectively, of which $13,941, was unpaid as of December 31,
1996. Such amount was subsequently paid in February of 1997.
The Advisory Agreement also provides for CRA to be reimbursed for expenses
incurred related to goods and materials acquired and administrative services
performed for the Company as defined. This reimbursement will be payable out
of adjusted cash from operations and amounts charged for services will not
exceed an amount equal to the lesser of (i) the actual cost of such services,
or (ii) 90% of the competitive price which would be charged by an unaffiliated
person for such services. The Company incurred $41,393 in 1996, $40,682 in
1995 and $32,000 in 1994 for such services.
The Advisory Agreement is automatically renewable for one-year periods,
unless either party presents in writing a notice of non-renewal to the other
not less than sixty days before the end of any such year. In addition, CRA is
entitled to receive all earned but unpaid fees as of the date of termination,
including an amount in lieu of the incentive fee equal to 15% of the difference
between the fair market value of the properties on the date of termination and
the cash invested by the Company in the properties, plus an amount equal to a
cumulative noncompounded annual return of 8% on shareholders' capital, less
cash distributed to shareholders related to sales and refinancings, as defined.
If the Advisory Agreement is terminated in connection with a change of control
or for good reason as defined, then CRA shall be entitled to receive a
termination fee equal to the lesser of (i) the sum of (a) the excess of 15% of
gross proceeds over the aggregate offering and organization expenses, plus
interest as defined; (b) the excess of 6% of gross proceeds over acquisition
expenses, plus interest as defined; and (c) for each year or portion thereof
from the initial closing date under the Public Offering through the date of
termination of the Advisory Agreement, the excess, if any, of the Base Annual
Fee for such year or portion thereof over limits on total operating expenses
indicated above for such year or portion thereof, plus interest as defined, or
(ii) the sum of (a) the Subordinated Disposition Fee and the Incentive Fee
which would be payable if the Trust were liquidated on the Termination Date,
based upon the appraised fair market value of all of the Properties and other
assets of the Company as of the termination date; and (b) the discounted value
of the aggregate Base Annual Fee payable to the Advisor from the termination
date to and including December 31, 2002, as defined.
In accordance with the Advisory Agreement, CRA was entitled to receive 3%
of the gross proceeds raised in the public offering as a nonaccountable expense
allowance for organizational and offering costs (excluding the selling
commission). CRA was responsible for all organization and offering costs and
acquisition expenses incurred by the Company. Also 6% of gross proceeds raised
in the public offering were paid to Smith Barney Harris Upham & Co. ("SBHU"),
the selling agent, now named SB, for commissions. However, as described in
Supplement No. 3 to the Company's Prospectus the 3% expense allowance for
offering and organization costs and the 6% payment for commissions was not
charged to a major institutional investor who purchased $5,000,000 worth of
shares in 1991. CRA was paid $39,270 in 1991 and $396,361 in 1990,
respectively, for the expense allowance for offering and organizational
costs. SBHU was paid $78,540 in 1991 and $792,721 in 1990 for selling
commissions.
CRA has entered into a management and consulting services agreement with
Hadley Paige Ellis, Inc. ("HPE"), an S Corporation whose sole shareholder was
both a Trustee of the Company and the President of CRA from 1989 to December
1992. The agreement stipulates that HPE will provide consulting services with
respect to the selection, financing, refinancing, leasing and disposition of
properties and other REIT qualifying investments.
5. Rental Income
In accordance with the Financial Accounting Standards Board Statement No.
13, "Accounting for Leases," the Company recognizes rental income on a
straight-line basis over the fixed term of the lease period. Rental income is
net of the rent due to Circuit City under the terms of the ground lease.
Deferred rent receivable represents unbilled future rentals. The following
reconciles rental income received to rental income recognized in 1996, 1995 and
1994.
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C> <C>
Rental income received $3,270,463 $3,232,662 $3,063,390
Deferred rent receivable 152,804 190,605 359,877
Rental income recognized $3,423,267 $3,423,267 $3,423,267
</TABLE>
<PAGE>
6. Leases
Minimum future rentals under noncancellable operating leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C> <C>
1997 $ 3,275,992
1998 3,275,992
1999 3,280,059
2000 3,603,461
2001 3,588,253
Thereafter 25,379,645
Total $42,403,402
</TABLE>
Circuit City is required to make all payments under the Ground Lease
when and as such payments become due and payable. The obligation of Circuit
City to pay rent under the Ground Lease is in addition to rent payable for the
building.
Minimum future payments to be made under the Ground Lease as of December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C> <C>
1997 $ 219,714
1998 219,714
1999 219,714
2000 247,210
2001 247,210
Thereafter 2,069,334
Total $3,222,896
</TABLE>
7. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure on the fair value of
financial instruments. Certain of the Company's assets and liabilities are
considered financial instruments. Fair value estimates, methods and
assumptions are set forth below.
Cash and Cash Equivalents, Rent Receivable, Prepaid Expenses and Accrued
Expenses
The carrying amount of these assets and liabilities approximates
fair value due to the short-term nature of such accounts.
Mortgage Notes Payable
The fair values for mortgage notes payable are estimated using
discounted cash flow analyses, based on the Company's incremental borrowing
rate for similar types of borrowing arrangements. The Company has determined
that the estimated fair value of its mortgage notes payable to be approximately
their carrying values as of December 31, 1996 and 1995.
<PAGE>
<TABLE>
<CAPTION>
Schedule III
CORPORATE REALTY INCOME TRUST I
Real Estate and Accumulated Depreciation
December 31, 1996
Initial cost to Company and gross
amount at which carried at end of period (A)
Life on which
depreciation in
latest statement
Buildings and Accumulated Date of Date of operations
Description Encumbrances Land (B) Improvements (B) Total Depreciation (C)Construction Acquired is computed
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office Building $13,093,133 -0- $25,000,000 $25,000,000 $4,227,150 1990 March 1990 40 years
Richmond, VA
Distribution Center 1,000,000 663,800 3,836,200 4,500,000 503,500 1991 October 1991 40 years
Bessemer, AL
Assembly Facility 1,311,013 51,600 3,048,400 3,100,000 323,892 1983 September 1992 40 years
Gordonsville, TN
$15,404,146 $715,400 $31,884,600 $32,600,000 $5,054,542
</TABLE>
Notes:
(A)There is no difference between cost for financial reporting purposes and
cost for federal income tax purposes.
<TABLE>
<CAPTION>
(B)Reconciliation of real estate owned: 1996 1995 1994
<S> <C> <C> <C> <C>
Balance at beginning of year $32,600,000 $32,600,000 $32,600,000
Addition during period: Building and Land - - -
Balance at end of year $32,600,000 $32,600,000 $32,600,000
</TABLE>
(C)Reconciliation of accumulated depreciation:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Balance at beginning of year $4,257,428 $ 3,460,314 $ 2,663,199
Depreciation expense 797,114 797,114 797,115
Balance at end of year $5,054,542 $ 4,257,428 $ 3,460,314
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
CORPORATE REALTY INCOME TRUST I
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE YEARLY PERIOD ENDED DECEMBER 31, 1996
AS REPORTED ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 834,489
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 937,014
<PP&E> 32,600,000
<DEPRECIATION> 5,054,542
<TOTAL-ASSETS> 30,585,114
<CURRENT-LIABILITIES> 446,149
<BONDS> 0
0
0
<COMMON> 101,078
<OTHER-SE> 14,633,741
<TOTAL-LIABILITY-AND-EQUITY> 30,585,114
<SALES> 3,423,267
<TOTAL-REVENUES> 3,459,966
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,142,892
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,407,881
<INCOME-PRETAX> 909,193
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 909,193
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
