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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to ____________
Commission file number 1-10899
Kimco Realty Corporation
(Exact name of registrant as specified in its charter)
Maryland 13-2744380
(State of incorporation) (I.R.S. Employer Identification No.)
3333 New Hyde Park Road, New Hyde Park, NY 11042-0020
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (516)869-9000 Securities
registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $.01 per share New York Stock Exchange
Depositary Shares, each representing
one-tenth of a share of 7-3/4% Class A
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Depositary Shares, each representing
one-tenth of a share of 8-1/2% Class B
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Depositary Shares, each representing
one-tenth of a share of 8-3/8% Class C
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(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 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 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]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $1.14 billion based upon the closing price on the
New York Stock Exchange for such stock on February 27, 1998.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
40,416,795 shares as of February 27, 1998.
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DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates certain information by reference to the following exhibits
to this annual report on Form 10-K: Exhibit 3.4, Articles Supplementary relating
to the Registrant's 8-3/8% Class C Cumulative Redeemable Preferred Stock;
Exhibit 3.3, Articles Supplementary relating to the Registrant's 8 1/2% Class B
Cumulative Redeemable Preferred Stock; Exhibit 4.4, Certificate of Designations
relating to the Registrant's 7 3/4% Class A Cumulative Redeemable Preferred
Stock; Exhibits 4.5, 4.6 and 4.7, Indenture, First Supplemental Indenture and
Second Supplemental Indenture, respectively, each relating to the Registrant's
public bond issues, and Exhibit 10.4, Credit Agreement relating to the
Registrant's revolving credit facility.
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Stockholders expected to be held on May 28, 1998.
Index to Exhibits begins on page 34.
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TABLE OF CONTENTS
Form
10-K
Report
Item No. Page
- -------- ----
PART I
1. Business ........................................................... 4
2. Properties ......................................................... 13
3. Legal Proceedings .................................................. 15
4. Submission of Matters to a Vote of Security Holders ................ 15
Executive Officers of the Registrant ............................... 24
PART II
5. Market for the Registrant's Common Equity
and Related Shareholder Matters .................................. 25
6. Selected Financial Data ............................................ 26
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .............................. 28
8. Financial Statements and Supplementary Data ........................ 31
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .............................. 31
PART III
10. Directors and Executive Officers of the Registrant ................. 32
11. Executive Compensation ............................................. 32
12. Security Ownership of Certain Beneficial Owners and
Management ....................................................... 32
13. Certain Relationships and Related Transactions ..................... 32
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K ......................................................... 33
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PART I
Item 1. Business
General Kimco Realty Corporation (the "Company") is one of the nation's largest
owners and operators of neighborhood and community shopping centers. As of
February 1, 1998, the Company's portfolio was comprised of 339 property
interests including 273 neighborhood and community shopping center properties,
two regional malls, 62 retail store leases, one leased parcel of undeveloped
land and one distribution center comprising a total of approximately 41.7
million square feet of leasable space located in 37 states. The Company believes
its portfolio of neighborhood and community shopping center properties is the
largest (measured by gross leasable area, "GLA") currently held by any
publicly-traded real estate investment trust ("REIT"). The Company is a
self-administered REIT and manages its properties through present management,
which has owned and operated neighborhood and community shopping centers for
more than 30 years. The Company has not engaged, nor does it expect to retain,
any REIT advisors in connection with the operation of its properties.
The Company's executive offices are located at 3333 New Hyde Park Road, New Hyde
Park, New York 11042-0020 and its telephone number is (516)869-9000. Unless the
context indicates otherwise, the term the "Company" as used herein is intended
to include subsidiaries of the Company.
History The Company began operations through its predecessor, The Kimco
Corporation, which was organized in 1966 upon the contribution of several
shopping center properties owned by its principal stockholders. In 1973, these
principals formed the Company as a Delaware corporation, and in 1985, the
operations of The Kimco Corporation were merged into the Company. The Company
completed its initial public stock offering (the "IPO") in November 1991, and
reorganized as a Maryland corporation during 1994.
The Company's growth through its first fifteen years resulted primarily from the
ground-up development and construction of its shopping centers. By 1981, the
Company had assembled a portfolio of 77 properties that provided an established
source of income and positioned the Company for an expansion of its asset base.
At that time, the Company revised its strategy to focus on the acquisition of
existing shopping centers because it believed generally that available financial
returns did not justify the risks of continued ground-up development of
properties. Furthermore, the Company's management believed that existing
properties with below market-rate leases were available in the market at
attractive prices. The Company considers such properties to offer greater
leasing flexibility in the event space becomes available or should there be an
overcapacity of space in the local economy. The Company also believes that
opportunities exist to create value through the redevelopment and re-tenanting
of existing shopping centers. As a result of this change in strategy, the
Company has developed only two of the 262 property interests added to its
portfolio since 1981, as compared with 68 of the 77 properties owned prior to
that time.
Investment and Operating Strategy The Company's investment objective has been to
increase cash flow, current income and consequently the value of its existing
portfolio of properties, and to seek continued growth through (i) the strategic
re-tenanting, renovation and expansion of its existing centers, and (ii) the
selective acquisition of established income-producing real estate properties,
and properties requiring significant re-tenanting and redevelopment, primarily
in neighborhood and community shopping centers in geographic regions in which
the Company presently operates. The Company intends to consider investments in
other real estate sectors and in geographic markets where it does not presently
operate should suitable opportunities arise.
The Company's neighborhood and community shopping center properties are designed
to attract local area customers and typically are anchored by a supermarket,
discount department store or drugstore tenant offering day-to-day
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necessities rather than high-priced luxury items. The Company may either
purchase or lease income-producing properties in the future, and may also
participate with other entities in property ownership through partnerships,
joint ventures or similar types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such financing
or indebtedness may be incurred in connection with acquiring such investments.
Any such financing or indebtedness will have priority over the Company's equity
interest in such property. The Company may make loans to joint ventures in which
it may or may not participate in the future.
While the Company has historically held its properties for long-term investment,
and accordingly has placed strong emphasis on its ongoing program of regular
maintenance, periodic renovation and capital improvement, it is possible that
properties in the portfolio may be sold, in whole or in part, as circumstances
warrant, subject to REIT qualification rules.
The Company emphasizes equity real estate investments, but may, in its
discretion, invest in mortgages, other real estate interests and other
investments. The mortgages in which the Company may invest may be either first
mortgages, junior mortgages or other mortgage-related securities.
The Company may legally invest in the securities of other issuers, for the
purpose, among others, of exercising control over such entities, subject to the
gross income and asset tests necessary for REIT qualification. The Company may
acquire all or substantially all of these securities or assets of other REITs or
similar entities where such investments would be consistent with the Company's
investment policies. In any event, the Company does not intend that its
investments in securities will require it to register as an "investment company"
under the Investment Company Act of 1940.
The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its properties and a
large tenant base. At December 31, 1997, the Company's single largest
neighborhood and community shopping center accounted for only approximately 1.9%
of the Company's annualized base rental revenues and only 1% of the Company's
total shopping center GLA. At December 31, 1997, the Company's five largest
tenants include Venture, Kmart Corporation, Kohl's, Walmart and TJX Companies,
which represent approximately 11.7%, 4.1%, 3.4%, 2.7% and 2.2%, respectively, of
the Company's annualized base rental revenues.
The Company intends to maintain a conservative debt capitalization with a ratio
of debt to total market capitalization of approximately 50% or less. As of
December 31, 1997, the Company had a debt to total market capitalization ratio
of approximately 24%.
The Company has authority to offer shares of capital stock or other senior
securities in exchange for property and to repurchase or otherwise reacquire its
common stock or any other securities and may engage in such activities in the
future. At all times, the Company intends to make investments in such a manner
as to be consistent with the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), to qualify as a REIT unless, because of circumstances
or changes in the Code (or in Treasury Regulations), the Board of Directors
determines that it is no longer in the best interests of the Company to qualify
as a REIT.
The Company's policies with respect to the aforementioned activities may be
reviewed and modified from time to time by the Company's Board of Directors
without the vote of the stockholders.
Competition As one of the original participants in the growth of the shopping
center industry and one of the nation's largest owners and operators of
neighborhood and community shopping centers, the Company has established close
relationships with a large number of major national and regional retailers and
maintains a broad network of industry contacts. Management is associated with
and/or actively participates in many shopping center and REIT industry
organizations. Notwithstanding these relationships, there are numerous
commercial developers and real estate companies that compete with the Company in
seeking properties for acquisition and tenants who will lease space in
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these properties.
Capital Resources Completion of the Company's IPO, which resulted in net cash
proceeds of approximately $116 million, permitted the Company to significantly
deleverage its real estate portfolio and has made available the public debt and
equity markets as the Company's principal source of capital for the future. A
$100 million, unsecured revolving credit facility established in June 1994,
which is scheduled to expire in June 2000 and an additional $150 million interim
unsecured revolving credit facility, established in March 1998, scheduled to
expire in June 1998, have made available funds to both finance the purchase of
properties and meet any short-term working capital requirements. It is the
Company's intention to extend the term of the $150 million interim revolving
credit facility and establish it as a continuing part of the Company's total
unsecured revolving credit availability. The Company has also implemented a $150
million medium-term notes program (the "MTN program") pursuant to which it may
from time to time offer for sale its senior unsecured debt for any general
corporate purposes, including (i) funding specific liquidity requirements in its
business, including property acquisitions and redevelopment costs, and (ii)
better managing the Company's debt maturities. (See Note 7 of the Notes to
Consolidated Financial Statements included in this annual report on Form 10-K.)
Since the IPO, the Company has completed additional offerings of its public
unsecured debt and equity raising in the aggregate over $1.15 billion for the
purposes of repaying indebtedness, acquiring interests in neighborhood and
community shopping centers and for expanding and improving properties in the
portfolio.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financings, including an increase in the Company's unsecured revolving credit
facility, in a manner consistent with its intention to operate with a
conservative debt capitalization policy.
The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service obligations and all dividend payments in accordance with REIT
requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, borrowings under its revolving credit facilities,
issuance of equity and public debt, as well as other debt and equity
alternatives, will provide the necessary capital required by the Company.
Inflation and Other Business Issues Many of the Company's leases contain
provisions designed to mitigate the adverse impact of inflation. Such provisions
include clauses enabling the Company to receive payment of additional rent
calculated as a percentage of tenants' gross sales above predetermined
thresholds ("Percentage Rents"), which generally increase as prices rise, and/or
escalation clauses, which generally increase rental rates during the terms of
the leases. Such escalation clauses include increases in the consumer price
index or similar inflation indices. In addition, many of the Company's leases
are for terms of less than 10 years, which permits the Company to seek to
increase rents upon renewal to market rates. Most of the Company's leases
require the tenant to pay an allocable share of operating expenses, including
common area maintenance costs, real estate taxes and insurance, thereby reducing
the Company's exposure to increases in costs and operating expenses resulting
from inflation. The Company periodically evaluates its exposure to short-term
interest rates and will, from time to time, enter into interest rate protection
agreements which mitigate, but do not eliminate, the effect of changes in
interest rates on its floating-rate loans.
As an owner of real estate, the Company is subject to risks arising in
connection with the underlying real estate, including defaults or nonrenewal of
tenant leases, environmental matters, financing availability and changes in real
estate and zoning laws. The success of the Company also depends upon trends in
the economy, including interest rates, income tax laws, governmental
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regulations and legislation and population trends.
Operating Practices Nearly all operating functions, including leasing, legal,
construction, data processing, maintenance, finance and accounting, are
administered by the Company from its executive offices in New Hyde Park, New
York. The Company believes it is critical to have a management presence in its
principal areas of operation; accordingly, the Company also maintains regional
offices in Boca Raton and Orlando, Florida; Philadelphia, Pennsylvania; and
Dayton and Cleveland, Ohio. A total of 107 persons are employed at the Company's
executive and regional offices.
The Company's regional offices are generally staffed by a manager and the
support personnel necessary to both function as local representatives for
leasing and promotional purposes and to complement the corporate office efforts
to ensure that property inspection and maintenance objectives are achieved. The
regional offices are important in reducing the time necessary to respond to the
needs of the Company's tenants. Leasing and maintenance personnel from the
corporate office also conduct regular inspections of each shopping center.
The Company also employs a total of 61 persons at several of its larger
properties in order to more effectively administer its maintenance and security
responsibilities.
Management Information Systems Virtually all operating activities are supported
by a sophisticated computer software system designed to provide management with
operating data necessary to make informed business decisions on a timely basis.
These proprietary systems are continually expanded and enhanced by the Company
and reflect a commitment to quality management and tenant relations. The Company
has integrated an advanced mid-range computer with personal computer technology,
creating a management information system that facilitates the development of
property cash flow budgets, forecasts and related management information.
Qualification as a REIT The Company has elected, commencing with its taxable
year which began January 1, 1992, to qualify as a REIT under Sections 856
through 860 of the Code. If, as the Company believes, it is organized and
operates in such a manner so as to qualify and remain qualified as a REIT under
the Code, the Company generally will not be subject to Federal income tax,
provided that distributions to its stockholders equal at least the amount of its
REIT taxable income as defined under the Code.
Recent Developments
Shopping Center Acquisitions -
In January 1997, the Company purchased the Target Shopping Center located
on Sagamore Parkway North in Lafayette, IN. This 177,000 square foot center is
anchored by Target Stores and was acquired for approximately $4.1 million.
In April 1997, the Company acquired the Carrollwood Commons shopping center
located at Ehrlich Road and North Dale Mabry Highway, in Tampa, FL for
approximately $14.1 million. This shopping center has 110,000 square feet of GLA
and is anchored by Staples and Ross Stores.
In June 1997, the Company purchased Shady Oaks Shopping Center, Woodforest
Shopping Center and Hammond Aire Plaza located in Ocala, FL, Houston, TX, and
Baton Rouge, LA, respectively. These properties were acquired in separate
transactions for an aggregate purchase price of approximately $34.6 million.
Shady Oaks Shopping Center, located at the intersection of S.R. 200 and Shady
Oaks Road comprises 251,000 square feet of GLA and is anchored by Kmart
Corporation, Service Merchandise and Kash N' Karry. Woodforest Shopping Center,
which comprises 113,000 square feet of GLA at the intersection of Wood Forest
Boulevard and Uvalde Road, is anchored by HEB Pantry Food and Palais Royal.
Tenants at Hammond Aire Plaza, which comprises 264,000 square feet of GLA at the
intersection of Old Hammond Highway and Airline Highway, include Marshalls,
Steinmart and Taylor Office Supply.
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In September 1997, the Company acquired the Crossroads Center located on
Frontage Road in Florence, SC for approximately $7.3 million. This 114,000
square foot shopping center is anchored by Staples and Hamricks.
In October 1997, the Company purchased Mountainside Plaza and Maplewood
Plaza located in Phoenix, AZ and Coral Springs, FL, respectively. These
properties were acquired in separate transactions for an aggregate purchase
price of approximately $20.5 million, including the assumption of approximately
$8.1 million of mortgage debt encumbering the Mountainside Plaza property.
Mountainside, which comprises 124,000 square feet of GLA at the intersection of
Chandler Boulevard and 40th Street, is anchored by Safeway and Walgreens.
Tenants at Maplewood Plaza, which comprises 86,000 square feet of GLA at the
intersection of Ramblewood Drive and University Drive, include TJ Maxx and
Blockbuster Video.
In November 1997, the Company acquired the Festival at Manassas and
Acadiana Square shopping centers located in Manassas, VA and Lafeyette, LA,
respectively, in separate transactions for an aggregate purchase price of
approximately $19.5 million. The Festival at Manassas is a 118,000 square foot
center located at the intersection of Sudley Road and Portsmouth Drive and is
anchored by Super Fresh Grocery and Blockbuster Video. Acadiana Square shopping
center is a 148,000 square foot center located at the intersection of U.S.
Highway 167 and Ambassador Caffery Parkway and is anchored by SteinMart, TJ Maxx
and Office Max.
In December 1997, the Company acquired The Gallery Shopping Center,
Tri-Cities Square Shopping Center, Greenridge Shopping Center and North Rivers
Market located in Greenville, SC, Mount Dora, FL, Staten Island, NY and North
Charleston, SC, respectively. These properties were acquired in separate
transactions for an aggregate purchase price of approximately $41.6 million,
including the assumption of approximately $5.9 million of mortgage debt
encumbering the Greenridge Shopping Center property. The Gallery Shopping
Center, which comprises 91,000 square feet of GLA on Haywood Road, is anchored
by Baby Superstore. Tri-Cities Square Shopping Center, located on Eurora Road
and US Highway 441, comprises 111,000 square feet of GLA and is anchored by
Kmart. The Greenridge Shopping Center, which comprises 101,000 square feet of
GLA at the intersection of Arthur Kill Road and Richmond Avenue, is anchored by
Waldbaums Supermarket and CVS Drug Stores. North Rivers Market, which comprises
196,000 square feet of GLA at the intersection of Rivers Avenue and Northbrook
Boulevard, is anchored by TJ Maxx, Marshalls and Phar-Mor.
Retail Properties Acquisition -
In August 1997, certain subsidiaries of the Company acquired certain real
estate assets from Venture Stores, Inc. ("Venture") consisting of interests in
49 fee and leasehold properties totaling approximately 5.9 million square feet
of leasable area located in Illinois, Missouri, Texas, Oklahoma, Kansas, Indiana
and Iowa (collectively, the "Venture Properties Acquisition"). The aggregate
price was approximately $130 million, consisting of $70.5 million in cash and
the assumption of approximately $59.5 million of existing mortgage debt on
certain of these properties. The mortgage debt bears interest at 10.54% per
annum and cannot be repaid without penalty, until its maturity on July 1, 2000.
In addition, the Company was granted (i)an option to acquire two other
properties for $4.5 million, (ii) an option to acquire up to 11 additional
properties should certain conditions be satisfied and (iii) rights of first
refusal, for a period of five years, to acquire 31 additional properties
containing 4.2 million square feet of leasable area. The transaction also
included approximately 573,000 square feet of retail space substantially
occupied by other retailers and approximately 165,000 square feet of available
non-Venture retail space. Simultaneously with this transaction, the Company
entered into a long-term unitary net lease with Venture covering all premises
occupied by Venture on these properties. As a result of this transaction,
Venture was the primary or sole tenant at 60 of the Company's locations
representing approximately 11.7% of the Company's annualized base rental
revenues as of December 31, 1997.
In January 1998, Venture filed for protection under Chapter 11 of the
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United States Bankruptcy Code. The Company has not received notice that Venture
will be delinquent in the payment of any rents due. There can be, however, no
assurance that Venture will continue to pay rents as they become due or that the
trustee in bankruptcy will not reject the leases under which Venture is bound.
Irrespective of Venture's current financial status, management believes that the
Venture Properties Acquisition represents a unique strategic opportunity for the
Company, based on the significant intrinsic value in the underlying real estate
assets as a result of (i) attractive geographic locations, (ii) current below
market-rate leases and (iii)the opportunity to lease-up the remaining 165,000
square feet of vacant non-Venture retail space. In addition to its intrinsic
real estate value, the Venture Properties Acquisition also provides the Company
with (i) strong initial yields, (ii) increased geographic diversification and
(iii) options to acquire additional properties. Accordingly, the Company
believes that it could replace any defaulted or discharged leases with leases
that are on no less favorable terms than the leases currently in place.
The Company, as a regular part of its business operations, will continue to
actively seek properties for acquisition which have below market-rate leases or
other cash flow growth potential.
Property Redevelopments -
The Company has an ongoing program to reformat and re-tenant its properties to
maintain or enhance its competitive position in the marketplace. During 1997,
the Company substantially completed the redevelopment of 7 shopping centers in
its portfolio, including properties located in Plainview, NY; Lexington, KY;
Charles Town, WV; Norriton, PA; Westmont, NJ; Coral Springs, FL and Dayton, OH
at a total cost of approximately $26.3 million. The Company is currently
involved in redeveloping several other shopping centers, most notably its
properties in N. Miami, FL, Richboro, PA, Winston-Salem, NC, and Grove Gate, FL.
Approximately $3.7 million was expended during 1997 related to these
ongoing projects. Each redevelopment represents an opportunity for the Company
to capitalize on its leasing, site planning, design and construction expertise.
The Company anticipates its capital commitment toward these and other
redevelopments during 1998 will be approximately $30 million. These projects,
which are currently proceeding on schedule and in line with the Company's
budgeted costs, are expected to contribute to growth in the Company's funds from
operations in the future.
Property Disposition -
During June 1997, the Company disposed of a property in Troy, OH. Proceeds from
the disposition totaling approximately $1.6 million, together with an additional
$8.3 million cash investment, were used to acquire an exchange shopping center
property located in Ocala, FL.
Kimco Select Investments -
Kimco Select Investments, a New York general partnership ("Kimco Select"), was
formed in 1997 to provide the Company, through its 90% ownership interest, the
opportunity to make investments outside of its core neighborhood and community
shopping center business. Although potential investments may be largely
retail-focused, Kimco Select may invest in other asset categories. Kimco Select
will focus on investments where the intrinsic value in the underlying assets may
provide potentially superior returns relative to the inherent risk. These
investments may be in the form of direct ownership of real estate, mortgage
loans, public and private debt and equity securities that Kimco Select believes
are undervalued, unoccupied properties, properties leased to weak or bankrupt
tenants and other assets.
Kimco Select is managed by David M. Samber, formerly President and Chief
Operating Officer of the Company, who owns the remaining 10% ownership interest
in Kimco Select. The Company has made an initial commitment of $35 million
towards investments by Kimco Select and may increase its commitment as
management deems appropriate.
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During 1997, Kimco Select through a joint venture investment, acquired an
interest in a multi-story building in Eastwick, PA. This 39,000 square foot
property, and a 53,000 square foot property in Upper Darby, PA previously
acquired, have been redeveloped as ambulatory care facilities, anchored by Mercy
Health Corporation, a leading regional health care system and contain
complementary retail space. The acquisition and redevelopment costs related to
these two properties totaled approximately $10 million.
Kimco Select also acquired (i) various first mortgage loan participations, (ii)
certain public bonds, and (iii) a joint venture interest in an entity which owns
an office building in Miami, FL. The aggregate acquisition cost
related to these investments was approximately $4.6 million.
Financings -
Debt. During 1997, the Company issued an aggregate principal amount of $100
million of unsecured notes under its MTN program. These unsecured notes are
comprised of (i) a $30 million ten-year note bearing interest at 7.46% and
maturing in May 2007, (ii) a $20 million twelve-year note bearing interest at
7.56% and maturing in May 2009, (iii) a $20 million ten-year note bearing
interest at 6.96% and maturing in July 2007 and (iv) a $30 million twelve-year
note bearing interest at 7.06% and maturing in July 2009. (See Note 7 of the
Notes to Consolidated Financial Statements included in this annual report
on Form 10-K.)
In June 1997, the Company amended its $100 million, unsecured revolving credit
facility with a group of banks to provide, for a reduction (i) by .25% (25 basis
points) in the spread above the LIBOR rate or money-market rate, whichever is
applicable, paid on borrowings under the facility and (ii) by .02% (2 basis
points) in the annual fee payable on a certain portion of the facility which
remains unused from time to time. In addition, certain administrative and
extension fees were also reduced. The facility term was also extended one year
and is now scheduled to expire on June 30, 2000.
Equity. During September 1997, the Company completed a primary public stock
offering of 4,000,000 shares of common stock at $35.50 per share. The net
proceeds from this sale of common stock, totaling approximately $134.5 million
(after related transaction costs of approximately $7.5 million) have been used
primarily for the acquisition of neighborhood and community shopping centers.
(See Note 11 of the Notes to Consolidated Financial Statements included in this
annual report on Form 10-K.)
Subsequent Events
Property Acquisitions / Disposition -
In January 1998, the Company acquired seven neighborhood and community shopping
center properties comprising approximately 632,000 square feet of GLA in the
Denver, CO market for approximately $43.6 million, including the assumption of
$4.2 million of mortgage debt. These properties are primarily anchored by
supermarket or drugstore tenants, including Safeway, Cub Foods and Phar-Mor.
In addition, the Company, through its affiliate Kimco Select, acquired interests
in three retail properties in the Chicago, IL market comprising approximately
516,000 square feet of GLA for an aggregate purchase price of approximately
$23.7 million. These properties include approximately 70,000 square feet of
showroom space and adjoining warehouses of approximately 100,000 square feet at
each location. Simultaneous with this transaction, the Company leased to
Heilig-Meyers, the country's largest furniture retailer, the showroom portion of
each property under individual long-term leases. The Company is currently
planning the redevelopment of the warehouse portion of each property.
The Company disposed of a property in Pinellas Park, FL during January 1998.
Cash proceeds from the disposition totaling $2.3 million will be used to acquire
an exchange shopping center property.
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Price REIT Merger -
On January 13, 1998, the Company and The Price REIT, Inc., a Maryland
corporation ("Price REIT") signed a definitive agreement to merge, (the
"Merger"). Pursuant to the terms of the Agreement and Plan of Merger dated
January 13, 1998, as amended March 5, 1998 (the "Merger Agreement"), Price REIT
will be merged into a newly formed wholly-owned subsidiary of the Company.
The transaction is intended, for financial accounting purposes, to be accounted
for as a purchase. Under the terms of the Merger Agreement each share of Price
REIT common stock will be exchanged for a combination of the Company's common
stock and Kimco depositary shares (the "Class D Depositary Shares"), each
depositary share representing a 1/10 of a share interest in a new issue of
Kimco 7.5% Class D Cumulative Convertible Preferred Stock (the "Class D
Convertible Preferred Stock") having an aggregate value of at least $45 based
on the "Kimco Average Price" (as defined herein) and the liquidation preference
of the Class D Depositary Shares (collectively, the "Merger Consideration").
The Merger, which is expected to be completed in mid-1998, is subject to
customary closing conditions, including certain regulatory approvals and the
approval of the issuance of the Merger Consideration by the stockholders of the
Company and the approval of the Merger by the Stockholders of Price REIT.
The Merger Agreement provides for a pre-closing adjustment to the number of
shares of the Company's common stock and Class D Depositary Shares issuable per
share of Price REIT common stock in order to ensure that Price REIT stockholders
will receive at least, and possibly more than, $45 in the Company's securities
per Price REIT share. Specifically, in the event that the average closing price
of the Company's common stock (the "Kimco Average Price" as defined herein)
ending on and including the seventh trading day immediately preceding the date
of the Company's 1998 annual meeting of stockholders plus $10 is less than
$45, the amount of Class D Depositary Shares will be increased up to a maximum
of $11.25 of Class D Depositary Shares (based on a liquidation preference of $25
per Class D Depositary Share) to arrive at a value of $45. To the extent that
the issuance of $11.25 of Class D Depositary Shares would still result in less
than $45 of combined value, the number of shares of the Company's common stock
issuable per Price REIT share will be increased in order to arrive at a total of
$45 delivered in the Company's securities. However, the Company may elect to
terminate the Merger Agreement in the event its Average Price (the "Average
Price", as defined herein) during a specified calculation period or the closing
price on the scheduled closing date or on either of the two days prior to the
scheduled closing date is less than $32.
In the event that the "Kimco Average Price" (as defined herein) plus $10 is
greater than $45, each share of Price REIT common stock would continue to be
converted into one share of the Company's common stock and the amount of Class D
Depositary Shares will be decreased by 50% of the amount by which the Kimco
Average Price referred to above plus $10 exceeds $45. However, Price REIT
stockholders will never receive less than $9 of Class D Depositary Shares. Thus,
as a result of the merger, Price REIT stockholders will obtain the benefit of
50% of the increase in value of the Company's common stock as reflected in the
Kimco Average Price between $35 and $37, and 100% of any increase above $37.
As used herein, the "Kimco Average Price" shall be the average of Average Prices
(as defined herein) of the Company's common stock for fifteen (15) randomly
selected trading days within the thirty (30) consecutive trading days ending on
and including the seventh trading day immediately preceding the date of the
Company's 1998 annual meeting of stockholders. As used herein, the "Average
Price" for any date means the average of the daily high and low prices of the
Company's common stock on the New York Stock Exchange (the "NYSE") as reported
in The Wall Street Journal, or if not reported thereby, by another authoritative
source. The random selection of trading days shall be made under the joint
supervision of the financial advisors retained by the Company and Price REIT in
connection with the transactions contemplated hereby.
The dividend rate on the Class D Depositary Shares will be 7.5 % per annum, or,
if greater, the dividend on the shares of the Company's common stock into which
a Class D Depositary Share is convertible plus $0.0275 quarterly. The Class D
Depositary Shares will be convertible into the Company's common stock
11
<PAGE>
at a conversion price of $40.25 per share at any time by the holder and may be
redeemed by the Company at the conversion price in shares of the Company's
common stock at any time after the third anniversary of the Merger if for any 20
trading days during a rolling 30 day consecutive trading-day period the
Company's common stock closing price exceeds $48.30, subject to certain
adjustments. The Class D Depositary Shares are expected to be listed on the
NYSE.
The Merger Agreement also provides that each party will be entitled to a
Break-Up Fee in the amount of $12,500,000 or reimbursement of expenses up to
$2,000,000 in the event the agreement is terminated under various circumstances.
The Company has also agreed that if it elects to terminate the Merger Agreement
because its common stock price closes below $32, Price REIT will be entitled
to receive $6,250,000.
Financings -
In March 1998, the Company obtained an additional $150 million interim unsecured
revolving credit facility to both finance the purchase of properties and meet
any short-term working capital requirements. This facility is scheduled to
expire in June 1998, however, it is the Company's intention to extend the term
of this facility and establish it as a continuing part of the Company's total
unsecured revolving credit availability.
KC Holdings, Inc.
To facilitate the Company's November 1991 IPO, forty-six shopping center
properties and certain other assets, together with indebtedness related thereto,
were transferred to subsidiaries of KC Holdings, Inc. ("KC Holdings") a newly
formed corporation that is owned by the stockholders of the Company prior to the
IPO. The Company, although having no ownership interest in KC Holdings or its
subsidiary companies, was granted ten-year, fixed-price options to reacquire the
real estate assets owned by KC Holdings' subsidiaries, subject to any
liabilities outstanding with respect to such assets at the time of an option
exercise. As of February 27, 1998, KC Holdings' subsidiaries had conveyed
fourteen shopping center properties back to the Company and had disposed of ten
additional centers in transactions with third parties. The members of the
Company's Board of Directors who are not also shareholders of KC Holdings
unanimously approved the purchase of each of the fourteen shopping centers that
have been reacquired by the Company from KC Holdings. (See Notes 9 and 13 of the
Notes to Consolidated Financial Statements included in this annual report on
Form 10-K.)
The Company manages 18 of KC Holdings' 22 shopping center properties pursuant to
a management agreement. KC Holdings' other four shopping center properties are
managed by unaffiliated joint venture partners.
Acquisition Option -
The Company holds 10-year acquisition options which expire in November 2001 to
reacquire interests in the 22 shopping center properties owned by KC Holdings'
subsidiaries. The option exercise prices are fixed and payable in shares of the
Company's common stock or, in the event payment in the form of common stock
could jeopardize the Company's status as a REIT, an equivalent value in cash. If
the Company exercises its options to acquire all the remaining shopping center
properties, the maximum aggregate amount payable to KC Holdings would be
approximately $11.1 million, or approximately 316,000 shares of the Company's
common stock (assuming shares valued at the closing price on the NYSE of $35.13
per share as of February 27, 1998). The Company would acquire the properties
subject to any existing mortgage indebtedness and other liabilities on the
properties. The acquisition options enable the Company to obtain any
appreciation in the value of these properties over the option exercise prices,
while eliminating the Company's interim exposure to leverage and operating
risks.
The option exercise prices for the shopping center properties are generally
equal to 10% of KC Holdings' share of the mortgage debt which was outstanding
12
<PAGE>
on the properties at the date of the IPO. If, however, the market value of the
Company's common stock at the time an option is exercised is less than $13.33
per share (the IPO price), then the option exercise price will decline
proportionately (subject to maximum reduction of 50%).
The 22 shopping center properties subject to the acquisition options are held in
8 subsidiaries of KC Holdings. Thirteen of these properties are subject to a
single lease and/or a single cross-collateralized mortgage and are therefore
held by a single subsidiary. Four of the properties, which are owned in two
separate joint ventures and managed by unaffiliated joint venture partners, are
held by two additional subsidiaries, and the remaining five shopping center
properties are each held by separate subsidiaries. The Company may exercise its
acquisition options separately with respect to each subsidiary.
The acquisition options may be exercised by either (i) a majority of the
Company's directors who are not also stockholders of KC Holdings, provided that
the pro forma annualized net cash flows of the properties to be acquired exceed
the dividend yield on the shares issued to exercise each option, or (ii) a
majority of the Company's stockholders who are not also stockholders of KC
Holdings.
KC Holdings' subsidiaries may sell any of the properties subject to the
acquisition options to any third party unaffiliated with KC Holdings or its
stockholders, provided that KC Holdings provides the Company with a 30-day right
of first refusal notice with regard to such sale. KC Holdings may cause such a
selling subsidiary to distribute any sale proceeds to KC Holdings or its
stockholders, provided that the option exercise price with respect to such
subsidiary is reduced by the amount that is distributed, and further provided
that no amount may be distributed so as to cause the option exercise price for
any subsidiary to be reduced to less than $1.
Each of KC Holdings' subsidiaries may pay dividends to KC Holdings to the extent
of net operating cash flow. In addition, any KC Holdings subsidiary may make
distributions to KC Holdings in excess of net operating cash flow, provided that
the option exercise price with respect to such subsidiary is reduced by the
amount of such distribution, and further provided that no amount may be
distributed so as to cause the option exercise price for any subsidiary to be
reduced to less than $1. KC Holdings may increase the indebtedness in its
subsidiaries for the purpose of improving, maintaining, refinancing or operating
the related shopping center properties. Such indebtedness may include borrowings
from the stockholders of KC Holdings.
In the event of a complete casualty or a condemnation of a property held by any
of KC Holdings' subsidiaries, the acquisition option will terminate with respect
to such property and the option shall continue to be effective with respect to
any other properties held by such subsidiary.
Each of KC Holdings' subsidiaries has agreed with the Company that it will
engage in no activities other than in connection with the ownership, maintenance
and improvement of the properties that it owns and only to the extent that the
Company could engage in such activities without receiving or earning
non-qualifying income (in excess of certain limits) under the REIT provisions of
the Code or without otherwise impairing the Company's status as a REIT. In
addition, KC Holdings has covenanted not to engage in any other real estate
activity. The Company has agreed not to make loans to KC Holdings or its
subsidiaries.
Exchange Listings
The Company's common stock, Class A Depositary Shares, Class B Depositary Shares
and Class C Depositary Shares are traded on the NYSE under the trading symbols
"KIM", "KIMprA", "KIMprB" and "KIMprC", respectively.
Item 2. Properties
Real Estate Portfolio As of February 1, 1998 the Company's shopping center
portfolio was comprised of approximately 35.8 million square feet of GLA in 273
neighborhood and community shopping center properties and two regional malls,
located in 30 states. Neighborhood and community shopping centers
13
<PAGE>
comprise the primary focus of the Company's current portfolio, representing
approximately 97% of the Company's total shopping center GLA. As of February 1,
1998 approximately 90% of the Company's neighborhood and community shopping
center space was leased, and the average annualized base rent per leased square
foot was $6.37.
The Company's neighborhood and community shopping center properties, generally
owned and operated through subsidiaries or joint ventures, had an average size
of approximately 126,000 square feet as of February 1, 1998. The Company retains
its shopping centers for long-term investment and consequently pursues a program
of regular physical maintenance together with major renovations and refurbishing
to preserve and increase the value of its properties. These projects usually
include renovating existing facades, installing uniform signage, resurfacing
parking lots and enhancing parking lot lighting. During 1997, the Company
capitalized approximately $3.7 million in connection with these property
improvements.
The Company's neighborhood and community shopping centers are usually "anchored"
by a national or regional discount department store, supermarket or drugstore.
As one of the original participants in the growth of the shopping center
industry and one of the nation's largest owners and operators of shopping
centers, the Company has established close relationships with a large number of
major national and regional retailers. National and regional companies that are
tenants in the Company's shopping center properties include Venture, Kmart
Corporation, Kohl's, WalMart, TJX Companies, Toys/Kids `R Us and Schottenstein
Stores.
A substantial portion of the Company's income consists of rent received under
long-term leases. Most of the leases provide for the payment of fixed base
rentals monthly in advance and for the payment by tenants of an allocable share
of the real estate taxes, insurance, utilities and common area maintenance
expenses incurred in operating the shopping centers. Although a majority of the
leases require the Company to make roof and structural repairs as needed, a
number of tenant leases place that responsibility on the tenant, and the
Company's standard small store lease provides for roof repairs to be reimbursed
by the tenant as part of common area maintenance. The Company's management
places a strong emphasis on sound construction and safety at its properties.
Approximately 1,100 of the Company's 2,680 leases also contain provisions
requiring the payment of additional rent calculated as a percentage of tenants'
gross sales above predetermined thresholds. Percentage rents accounted for
approximately 2% of the Company's revenues from rental property for the year
ended December 31, 1997.
Minimum base rental revenues and operating expense reimbursements accounted for
approximately 98% of the Company's total revenues from rental property for the
year ended December 31, 1997. The Company's management believes that the average
base rent per square foot for the Company's existing leases is generally lower
than the prevailing market rate base rents in the geographic regions where the
Company operates, reflecting the potential for future growth.
The Company has been able to capitalize on the below market-rate leases in its
existing shopping center portfolio to obtain increases in rental revenues
through the renewal of leases or strategic re-tenanting of space. From January
1, 1997 to December 31, 1997, excluding the effect of 1997 acquisitions, the
Company increased the average base rent per leased square foot on its portfolio
of neighborhood and community shopping centers from $6.21 to $6.50, an increase
of $.29 per square foot, or approximately 5%, which was attributable to leasing
activity within the existing portfolio. The effect of 1997 acquisitions reduced
the overall rent per leased square foot by $.19, thus bringing the average rent
per leased square foot to $6.31 as of December 31, 1997. The average annual base
rent per leased square foot for new leases executed in 1997 was $9.07.
The Company seeks to reduce its operating and leasing risks through geographic
and tenant diversity. No single neighborhood and community shopping center
14
<PAGE>
accounted for more than 1.0% of the Company's total shopping center GLA or more
than 1.9% of total annualized base rental revenues as of December 31, 1997. The
five largest tenants of the Company include Venture, Kmart Corporation, Kohl's,
WalMart and TJX Companies, which represent approximately 11.7%, 4.1%, 3.4%, 2.7%
and 2.2%, respectively, of the annualized base rental revenues at December 31,
1997. The Company maintains an active leasing and capital improvement program
that, combined with the high quality of the locations, has made, in management's
opinion, the Company's properties attractive to tenants.
The Company's management believes its experience in the industry and its
relationships with numerous national and regional tenants gives it an advantage
in an industry where ownership is fragmented among a large number of property
owners.
Retail Store Leases In addition to its neighborhood and community shopping
center portfolio and two regional malls, the Company holds interests in various
retail store leases relating to approximately 5.6 million square feet of anchor
store premises in 62 neighborhood and community shopping centers located in 24
states. As of February 1, 1998 approximately 98% of these premises had been
sublet to retailers which lease the stores pursuant to net lease agreements
providing for average annualized base rental payments to the Company of $3.73
per square foot. The Company's average annualized base rental obligation
pursuant to its retail store leases with the fee owners of such subleased
premises is approximately $2.74 per square foot. The average remaining primary
term of the Company's retail store leases (and similarly the remaining primary
terms of its sublease agreements with the tenants currently leasing such space)
is approximately 4.8 years, excluding options to renew such leases for terms
which generally range from 5-25 years.
Ground-Leased Properties The Company has 45 shopping center properties that are
subject to long-term ground leases where a third party owns and has leased the
underlying land to the Company (or an affiliated joint venture) to construct
and/or operate a shopping center. The Company or the joint venture pays rent for
the use of the land and generally is responsible for all costs and expenses
associated with the building and improvements. At the end of these long-term
leases, unless extended, the land together with all improvements revert to the
land owner.
Undeveloped Land Although the Company does not own any unimproved land tracts
that it intends to develop as new shopping centers, the Company does own parcels
of land adjacent to certain of its existing shopping centers that are held for
possible expansion and a parcel of undeveloped land leased to a retailer. At
times, should circumstances warrant, the Company may develop or dispose of these
parcels.
The table on pages 16 to 23 sets forth more specific information with respect to
each of the Company's shopping center properties as of December 31, 1997.
Item 3. Legal Proceedings
The Company is not presently involved in any litigation nor to its knowledge is
any litigation threatened against the Company or its subsidiaries that, in
management's opinion, would result in any material adverse effect on the
Company's ownership, management or operation of its properties, or which is not
covered by the Company's liability insurance.
Item 4. Submission of Matters to a Vote of Security Holders
None
15
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
ARIZONA
PHOENIX 1997 FEE 17.50 124,054 99
PHOENIX 1996 FEE/JOINT VENTURE 13.09 186,575 93
CALIFORNIA
ANAHEIM 1995 FEE 1.04 15,306 100
CONNECTICUT
HAMDEN 1997 FEE/JOINT VENTURE 7.42 341,502 97
WATERBURY 1993 FEE 13.10 136,153 100
DELAWARE
ELSMERE 1979 GROUND LEASE(2076) 17.14 111,600 100
FLORIDA
MELBOURNE 1994 FEE 13.84 131,851 77
MELBOURNE 1968 GROUND LEASE(2071) 11.53 168,797 58
CORAL SPRINGS 1994 FEE 5.90 46,497 100
CORAL SPRINGS 1997 FEE 9.80 83,500 100
LAUDERDALE LAKES 1968 FEE/JOINT VENTURE 10.04 112,476 92
LAUDERHILL 1974 FEE 15.50 180,026 88
MARGATE 1993 FEE 34.07 256,030 91
PLANTATION 1974 FEE/JOINT VENTURE 4.59 60,414 100
POMPANO BEACH 1968 FEE/JOINT VENTURE 6.55 63,838 98
HOMESTEAD 1972 FEE/JOINT VENTURE 21.00 160,819 87
MIAMI (3) 1968 FEE 8.23 104,968 33
MIAMI (3) 1985 FEE 15.92 93,643 88
MIAMI 1986 FEE 7.78 81,780 97
SOUTH MIAMI 1995 FEE 5.44 60,804 96
TAMPA 1997 FEE 16.34 109,408 100
LEESBURG 1969 GROUND LEASE(2017) 1.25 13,468 89
MOUNT DORA 1997 FEE 12.44 118,150 97
BRADENTON 1968 FEE/JOINT VENTURE 6.20 24,700 100
OCALA 1997 FEE 27.17 250,620 95
STUART 1994 FEE 20.67 170,291 98
EAST ORLANDO 1971 FEE 11.63 124,798 100
LAKE BARTON 1968 FEE 4.79 2,800 100
ORLANDO 1994 FEE 28.00 230,704 100
ORLANDO (3) 1996 FEE 11.70 129,036 61
ORLANDO 1968 GROUND LEASE(2047)/JOINT VENTURE 7.75 103,480 100
ORLANDO 1968 FEE/JOINT VENTURE 10.00 114,434 100
ALTAMONTE SPRINGS 1995 FEE 5.58 94,193 100
KISSIMMEE 1996 FEE 18.42 130,983 100
BOCA RATON 1967 FEE 9.85 73,549 92
RIVIERA BEACH 1968 GROUND LEASE(2066)/JOINT VENTURE 5.06 46,390 44
WEST PALM BEACH 1995 FEE 7.93 80,845 99
WEST PALM BEACH 1967 FEE/JOINT VENTURE 7.57 74,326 100
NEW PORT RICHEY 1972 FEE 0.99 9,000
LARGO 1968 FEE 11.98 149,472 100
LARGO 1992 FEE 29.44 215,916 95
LARGO 1993 FEE 6.62 56,630 86
PINELLAS PARK (5) 1970 FEE 13.70 119,355 2
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
ARIZONA
PHOENIX SAFEWAY(2009), WALGREENS(2029)
PHOENIX HOME DEPOT(1998/2018)
CALIFORNIA
ANAHEIM
CONNECTICUT
HAMDEN BRADLEES(2004/2014), STEINBACH INC(2002/2012), BOB'S(2016/2036)
WATERBURY BRADLEES(2002/2007), STOP & SHOP(2013/2043)
DELAWARE
ELSMERE SCHOTTENSTEIN(2008/2038)
FLORIDA
MELBOURNE WINN DIXIE(2002/2027)
MELBOURNE FABRI CENTER(2006/2016), WALGREENS(2045)
CORAL SPRINGS LINENS 'N THINGS(2012/2027), PIER 1 IMPORTS(2001/2011)
CORAL SPRINGS TJ MAXX(2001), BLOCKBUSTER(2006)
LAUDERDALE LAKES FAMILY DOLLAR(2002/2017)
LAUDERHILL BABY SUPERSTORE(2004/2014), PARTY CITY(2007/2017)
MARGATE PUBLIX(2008/2028), OFFICE DEPOT(2000/2020)
PLANTATION WHOLE FOODS(2009/2019)
POMPANO BEACH BIG LOTS(2001/2011)
HOMESTEAD PUBLIX(2014/2034), OFFICE MAX(2013/2028), ECKERD(2002/2012)
MIAMI (3) WALGREENS (1999)
MIAMI (3) PUBLIX(2018/2038), WALGREENS(2058)
MIAMI PUBLIX(2009/2029), WALGREENS(2018)
SOUTH MIAMI KIDS R US (2016/2021), PARTY CITY(2007/2017)
TAMPA STAPLES(2003/2018), ROSS STORES(2002/2022)
LEESBURG DISCOUNT AUTO PARTS (1999/2004)
MOUNT DORA KMART(2013/2063), PET SUPERMARKET(2003/2013)
BRADENTON DISCOUNT VIDEO (2002/2007)
OCALA KMART(2001/2021), SERVICE MERCHANDISE(2007/2032)
STUART SERVICE MERCHANDISE(2010/2070), MARSHALLS (1999/2019)
EAST ORLANDO SPORTS AUTHORITY(2000/2020), OFFICE DEPOT (2005/2025)
LAKE BARTON
ORLANDO COSTCO (2006/2026), SPORTS AUTHORITY(2011/2031)
ORLANDO (3) ROSS STORES(2003/2023), BIG LOTS(1999/2009)
ORLANDO DORIN DISTRIBUTORS (2002/2007), ECONOMY RESTAURANT (1998/2003)
ORLANDO BALLYS HEALTH(2008/2018), HSN REALTY(2000/2009)
ALTAMONTE SPRINGS ROOMS TO GO(2001), THOMASVILLE HOME(2001/2006)
KISSIMMEE KASH N KARRY(2006/2036), OFFICE MAX (2012/2027)
BOCA RATON WINN DIXIE (2008/2033)
RIVIERA BEACH BOATHOUSE DISCOUNT(2002/2007)
WEST PALM BEACH BABY SUPERSTORE(2006/2021)
WEST PALM BEACH WINN DIXIE (2010/2030), FAMILY DOLLAR(2009/2024)
NEW PORT RICHEY
LARGO WALMART (2007/2027)
LARGO PUBLIX (2009/2029), OFFICE DEPOT(1999/2019)
LARGO
PINELLAS PARK (5)
</TABLE>
16
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
ST. PETERSBURG 1968 GROUND LEASE(2084)/JOINT VENTURE 9.01 119,179 90
WINTER HAVEN 1973 FEE/JOINT VENTURE 13.90 88,400 60
PALATKA 1970 FEE 8.90 72,216 93
SARASOTA 1970 FEE 10.00 103,085 97
SARASOTA 1989 FEE 11.98 109,273 97
FERN PARK 1968 FEE 12.00 131,894 99
SANFORD 1989 FEE 40.90 301,801 91
FT. PIERCE 1970 FEE/JOINT VENTURE 14.83 210,460 88
GEORGIA
MACON 1969 FEE 12.30 127,260 78
SAVANNAH 1993 FEE 22.22 187,302 88
SAVANNAH 1995 FEE 9.50 88,480 100
FOREST PARK 1969 FEE 14.21 100,452 90
ATLANTA 1988 FEE 19.48 165,314 100
GAINESVILLE 1970 FEE/JOINT VENTURE 12.60 142,288 99
AUGUSTA 1995 FEE 11.32 119,930 99
IOWA
WATERLOO 1996 FEE 8.97 96,000 100
DUBUQUE 1997 GROUND LEASE(2019) 8.37 83,705 100
CLIVE 1996 FEE 8.80 90,000 100
DES MOINES 1996 FEE 9.56 96,400 100
DAVENPORT 1997 GROUND LEASE(2004) 9.10 91,035 100
ILLINOIS
CALUMET CITY 1997 FEE 16.98 197,386 95
CHICAGO 1997 GROUND LEASE(2020) 10.94 109,441 100
CHICAGO 1997 GROUND LEASE(2040) 17.48 104,263 100
CHICAGO 1997 FEE 6.04 87,563 100
COUNTRYSIDE 1997 GROUND LEASE(2053) 27.67 117,456 100
CRESTWOOD 1997 GROUND LEASE(2051) 36.75 79,903 100
FOREST PARK 1997 GROUND LEASE(2021) 9.83 98,371 100
MATTESON 1997 FEE 17.01 165,623 98
MT.PROSPECT 1997 FEE 16.80 165,603 87
NILES 1997 GROUND LEASE(2022) 10.18 101,775 100
NORRIDGE 1997 GROUND LEASE(2042) 11.69 116,914 100
OAK LAWN 1997 FEE 15.43 165,623 94
OAKBROOK TERRACE 1997 FEE 16.90 169,034 100
SCHAUMBURG 1997 GROUND LEASE(2015) 10.49 104,910 100
SKOKIE 1997 GROUND LEASE(2003) 10.66 106,600 100
ADDISON 1968 GROUND LEASE(2066) 7.99 93,289 100
DOWNERS GROVE 1997 FEE 12.04 144,559 100
NAPERVILLE 1997 FEE 9.00 102,615 100
CARBONDALE 1997 GROUND LEASE(2052) 8.05 80,535 100
BRADLEY 1996 FEE 5.35 80,300 100
ELGIN 1972 FEE 18.69 178,539 89
GENEVA 1996 FEE 8.18 104,000 100
OTTAWA 1970 FEE 9.00 60,000 100
BLOOMINGTON 1972 FEE 16.09 175,530 100
PEORIA 1997 GROUND LEASE(2055) 20.45 158,407 83
CRESTHILL 1997 GROUND LEASE(2039) 9.03 90,313 100
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
ST. PETERSBURG KASH N KARRY(2017/2037), TJ MAXX(2001/2011)
WINTER HAVEN BIG LOTS(2000/2010), FABRI CENTER(2006/2016)
PALATKA SAVE A LOT(2003/2013), BIG LOTS(1999/2009)
SARASOTA TJ MAXX(2001/2016), OFFICE MAX(2009/2024), FRANKS NURSERY(2012/2032)
SARASOTA WINN DIXIE(1998/2023)
FERN PARK BED BATH AND BEYOND(2002/2012), BOOKS-A-MILLION(2006/2016), OFFICE MAX (2008/2023)
SANFORD WALMART(2005/2035), ROSS STORES(2005/2025), PUBLIX (2005/2025)
FT. PIERCE KMART (2001/2016), WINN DIXIE (2002/2027), FABRI CENTER (2000/2010)
GEORGIA
MACON HEILIG-MEYERS(2007/2017)
SAVANNAH PHAR-MOR (1999/2004), TJ MAXX (2005/2015), MARSHALLS (2007/2022)
SAVANNAH MEDIA PLAY (2006/2021), PIGGLY WIGGLY(1999/2004), REVCO (2000)
FOREST PARK
ATLANTA GEORGIA SHOW(2000)
GAINESVILLE CONSOLIDATED STORES(2002), OFFICE DEPOT(2004/2020)
AUGUSTA PHAR-MOR(1997/2007), TJ MAXX(2004/2014), GOLDS GYM(2004/2009)
IOWA
WATERLOO KMART(2021/2051)
DUBUQUE VENTURE(2022/2052)
CLIVE KMART(2021/2051)
DES MOINES VENTURE(2021/2051)
DAVENPORT VENTURE(2022/2052)
ILLINOIS
CALUMET CITY VENTURE(2022/2052), MARSHALLS(2003), BEST BUY (2012)
CHICAGO VENTURE(2022/2052)
CHICAGO VENTURE(2022/2052)
CHICAGO VENTURE(2022/2052)
COUNTRYSIDE VENTURE(2022/2052)
CRESTWOOD VENTURE(2022/2052)
FOREST PARK VENTURE(2022/2052)
MATTESON VENTURE(2022/2052), MARSHALLS(2000/2010)
MT.PROSPECT VENTURE(2022/2052), PAYLESS (2000/2005)
NILES VENTURE(2022/2052), PAYLESS (1999)
NORRIDGE VENTURE(2022/2052)
OAK LAWN VENTURE(2022/2052), CHUCK E CHEESE(2002/2007), FASHION BUG (1998/2008)
OAKBROOK TERRACE VENTURE(2022/2052), LINENS N THINGS(2006)
SCHAUMBURG VENTURE(2022/2052)
SKOKIE VENTURE(2022/2052)
ADDISON SCHOTTENSTEIN STORES(2001/2016)
DOWNERS GROVE VENTURE(2022/2052), BEST BUY (2012/2032)
NAPERVILLE VENTURE(2022/2052)
CARBONDALE VENTURE(2022/2052)
BRADLEY VENTURE(2021/2051)
ELGIN MENARD(2001/2006), EAGLE FOOD (1998/2023)
GENEVA VENTURE(2021/2051)
OTTAWA SCHOTTENSTEIN STORES(2001/2011)
BLOOMINGTON SCHNUCK MARKETS(2004/2024), TOYS R US(2015/2045), BARNES & NOBLE(2005/2015)
PEORIA VENTURE(2022/2052)
CRESTHILL VENTURE(2022/2052)
</TABLE>
17
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
INDIANA
GRIFFITH 1997 GROUND LEASE(2054) 10.57 114,870 100
MERRILLVILLE 1997 GROUND LEASE(2015) 10.19 101,887 100
E. WASHINGTON 1997 FEE 9.56 89,042 100
EAGLEDALE 1967 FEE 11.92 75,000 7
FELBRAM 1970 FEE 4.13 27,400 91
GREENWOOD 1970 FEE 25.68 157,160 100
INDIANAPOLIS 1986 FEE 20.60 178,610 82
LAFAYETTE 1997 FEE 24.34 176,940 94
LAFAYETTE 1971 FEE 12.37 90,500 100
EVANSVILLE 1986 FEE 14.20 193,007 98
EVANSVILLE 1986 FEE 11.50 147,775 98
KANSAS
ROELAND PARK 1997 GROUND LEASE(2024) 12.70 127,401 100
WICHITA 1996 FEE 6.50 96,100 100
WICHITA 1996 FEE 8.06 97,000 100
KENTUCKY
BELLEVUE 1976 FEE 6.04 53,695 100
LEXINGTON 1993 FEE 35.82 259,928 100
LOUISIANA
LAFEYETTE 1997 FEE 21.94 150,936 98
BATON ROUGE 1997 FEE 18.58 257,856 89
BATON ROUGE 1983 FEE/JOINT VENTURE 7.00 190,000 100
MASSACHUSETTS
GREAT BARRINGTON 1994 FEE 14.14 135,435 85
LEOMINSTER 1975 FEE 57.00 596,286 92
MARYLAND
LAUREL 1964 FEE 18.00 75,882 95
LAUREL 1972 FEE 8.06 81,550 100
HAGERSTOWN 1973 FEE 10.48 115,718 100
MICHIGAN
WALKER 1993 FEE 41.78 284,143 91
MUSKEGON 1985 FEE 12.20 71,235 88
CLARKSTON 1996 FEE 20.00 156,864 100
CLAWSON 1993 FEE 13.47 177,797 100
FARMINGTON 1993 FEE 2.78 97,038 98
GRAND HAVEN 1976 FEE 7.55 87,430 100
LIVONIA 1968 FEE 4.53 44,185 97
TAYLOR 1993 FEE 13.00 121,364 100
MISSOURI
SPRINGFIELD 1994 FEE 41.50 271,552 93
CAPE GIRARDEAU 1997 FEE 6.99 79,960 100
ST. LOUIS 1972 FEE 13.11 163,821 82
KANSAS CITY 1997 FEE 15.64 147,989 100
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
INDIANA
GRIFFITH VENTURE(2022/2052)
MERRILLVILLE VENTURE(2022/2052)
E. WASHINGTON VENTURE(2022/2052)
EAGLEDALE
FELBRAM SAVE A LOT(2001/2016), BLOCKBUSTER(1999/2009)
GREENWOOD BABY SUPERSTORE(2006/2021), TJ MAXX(2004/2010)
INDIANAPOLIS TARGET(1999/2029), FABRI CENTER(1998)
LAFAYETTE TARGET(1999/2024), FABRI CENTER(1999)
LAFAYETTE MENARD (TJX) (2001/2006)
EVANSVILLE VENTURE(2012/2032), OFFICE MAX(2012/2027), MICHAELS(2004/2019)
EVANSVILLE VENTURE(2012/2032), BUEHLER FOODS(2003/2013)
KANSAS
ROELAND PARK VENTURE(2022/2052), PRICE CHOPPER(1999/2009)
WICHITA VENTURE(2021/2051)
WICHITA VENTURE(2021/2051)
KENTUCKY
BELLEVUE KROGER(2005/2035)
LEXINGTON BEST BUY(2009/2024), BED BATH & BEYOND(2013/2038), TOYS R US(2013/2038)
LOUISIANA
LAFEYETTE STEIN MART(2005), TJ MAXX(2003), OFFICE MAX(2012)
BATON ROUGE STEIN MART(2006/2016), TAYLOR OFFICE SUPPLY(1997/2005), MARSHALLS(2001/2016)
BATON ROUGE MERCANTILE STORES(2011/2031)
MASSACHUSETTS
GREAT BARRINGTON KMART(2001/2016), PRICE CHOPPER(2016/2036)
LEOMINSTER SEARS(2003/2033), JC PENNEY(2009/2034), BRADLEES(2009/2024)
MARYLAND
LAUREL FOOD A RAMA(1999/2009), FACTORY CARD OUTLET(2005/2015), OLD COUNTRY BUFFET(2009/2019)
LAUREL AMES(2007/2017)
HAGERSTOWN AMES(2007/2017)
MICHIGAN
WALKER KMART(2016/2051), KOHLS(2012/2032), OFFICE MAX(2011)
MUSKEGON PLUMB(2002/2022), FABRI CENTER(2002/2012)
CLARKSTON A&P(2015/2045), FRANKS NURSERY(2011/2031)
CLAWSON A&P(2006/2016), FRANKS NURSERY(1998), STAPLES(2011/2026)
FARMINGTON A&P(2001), DAMMAN HARDWARE(2002/2012)
GRAND HAVEN FAMILY FARE(2006/2026), QUALITY MATTRESS(2008)
LIVONIA DAMMAN HARDWARE(2004/2014)
TAYLOR KOHLS(2011/2031), DRUG EMPORIUM(2000/2020)
MISSOURI
SPRINGFIELD BEST BUY(2011/2026), JC PENNEY(2005/2015), TJ MAXX(2006/2021)
CAPE GIRARDEAU VENTURE(2022/2052)
ST. LOUIS KMART(1999/2019), WALGREENS(2006)
KANSAS CITY VENTURE(2022/2052), PRICE CHOPPER(2001/2006)
</TABLE>
18
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
KANSAS CITY 1997 FEE 17.84 157,938 93
O'FALLON 1997 FEE 18.25 50,000 100
ST.PETERS 1997 FEE 14.77 167,397 97
BRIDGETON 1997 GROUND LEASE(2040) 10.24 102,420 100
ELLISVILLE 1970 FEE 18.37 118,080 100
HAZELWOOD 1970 FEE 15.00 130,780 88
JENNINGS 1971 FEE 8.20 155,095 18
LEMAY 1974 FEE 3.09 73,281 95
ST.LOUIS 1997 FEE 16.58 165,809 80
ST.LOUIS 1997 GROUND LEASE(2025) 19.66 162,901 93
ST.LOUIS 1997 GROUND LEASE(2035) 37.71 164,191 98
ST.LOUIS 1997 GROUND LEASE(2040)
16.33 116,222 100
NORTH CAROLINA
DURHAM 1996 FEE 13.24 116,195 84
WINSTON-SALEM (3) 1969 FEE 13.15 137,929 74
GASTONIA 1989 FEE 24.85 235,607 97
CHARLOTTE 1968 FEE 13.50 110,300 95
CHARLOTTE 1993 FEE 13.96 135,257 95
CHARLOTTE 1986 GROUND LEASE(2048) 18.47 227,883 94
RALEIGH 1993 FEE 35.94 374,395 99
NEW HAMPSHIRE
SALEM 1994 FEE 39.80 332,951 93
NEW JERSEY
RIDGEWOOD 1994 FEE 2.71 24,280 100
CINNAMINSON (3) 1996 FEE 13.67 121,084 14
BLACKWOOD (5) 1996 GROUND LEASE(2032) 9.80 123,970
CHERRY HILL 1996 GROUND LEASE(2035) 15.20 129,809 100
CHERRY HILL 1985 FEE/JOINT VENTURE 18.58 121,673 79
WESTMONT (3) 1994 FEE 17.39 195,824 69
NORTH BRUNSWICK 1994 FEE 38.12 437,433 94
NEW YORK
POUGHKEEPSIE 1972 FEE 20.03 180,150 89
HENRIETTA 1988 FEE 14.90 123,000 15
IRONDEQUOIT 1988 FEE 12.80 105,000
WEST GATES 1993 FEE 18.55 185,153 39
CARLE PLACE 1993 FEE 8.34 132,318 91
PLAINVIEW 1969 FEE 6.98 88,329 92
SYOSSET 1967 FEE 2.49 32,124 64
STATEN ISLAND 1989 FEE 16.70 210,990 98
STATEN ISLAND 1997 FEE 7.00 101,391 98
NANUET 1984 FEE 6.00 70,829 71
BRIDGEHAMPTON 1973 FEE 30.20 281,632 100
CENTEREACH 1993 FEE/JOINT VENTURE 40.68 371,028 90
HAMPTON BAYS 1989 FEE 8.17 70,990 100
YONKERS 1995 FEE 4.13 43,560 100
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
KANSAS CITY VENTURE(2022/2052)
O'FALLON VENTURE(2022/2052)
ST.PETERS VENTURE(2022/2052), OFFICE DEPOT(2004)
BRIDGETON VENTURE(2022/2052)
ELLISVILLE SHOP N SAVE(2005/2015)
HAZELWOOD KMART(2000/2020), WALGREENS(2006)
JENNINGS WALGREENS(2056)
LEMAY SHOP N SAVE(1998/2008), ODD LOTS(1999)
ST.LOUIS VENTURE(2022/2052), COLONEL DAY'S L(2001)
ST.LOUIS VENTURE(2022/2052)
ST.LOUIS VENTURE(2022/2052), OFFICE DEPOT(1999)
ST.LOUIS VENTURE(2022/2052)
NORTH CAROLINA
DURHAM TJ MAXX(2003/2013), DURHAM SPORTING(2002/2012)
WINSTON-SALEM (3) KROGER(2016/2041)
GASTONIA SERVICE MERCHANDISE(2003), TOYS R US(2015/2045), WINN DIXIE(2002)
CHARLOTTE MEDIA PLAY(2004/2019), TJ MAXX(2001/2016)
CHARLOTTE BI-LO(2009/2029), MICHAELS(2003/2013), PARTY CITY(2004/2014)
CHARLOTTE TOYS R US(2012/2042), DRUG EMPORIUM(2005/2015), OFFICE MAX(2009/2024)
RALEIGH BEST BUY(2005/2020), PHAR-MOR(2010/2025), GENERAL CINEMA(2009/2029)
NEW HAMPSHIRE
SALEM BRADLEES(2003/2013), SHAWS SUPERMARKET(2008/2038), BOB'S(2011/2021)
NEW JERSEY
RIDGEWOOD
CINNAMINSON (3)
BLACKWOOD (5)
CHERRY HILL KOHLS(2016/2036), SEARS(2003/2013)
CHERRY HILL GIANT FOOD(2016/2036)
WESTMONT (3) A&P(2017/2081)
NORTH BRUNSWICK WALMART(2018/2058), BURLINGTON COAT FACTORY(2008/2013), HOMEPLACE(2012/2027)
NEW YORK
POUGHKEEPSIE CALDOR(1999/2029), EDWARDS(2002/2012)
HENRIETTA STAPLES(2010/2022)
IRONDEQUOIT
WEST GATES TOPS(2004/2024)
CARLE PLACE HARROWS(2005/2015), STAPLES(2010/2025), SNEAKER STADIUM(2011/2026)
PLAINVIEW WALDBAUMS(2017/2037)
SYOSSET
STATEN ISLAND KMART(2001/2011), PATHMARK(2001/2021)
STATEN ISLAND WALDBAUMS(2001/2031), SUPER X DRUGS(2000/2015)
NANUET RKO CENTURY THEATRES(2000/2010)
BRIDGEHAMPTON CALDOR(2009/2039), KING KULLEN(2015/2035), TJ MAXX(2007/2017)
CENTEREACH WALMART(2015/2044), KING KULLEN(2003/2034), MODELL'S SPORTING GOODS(2009/2019)
HAMPTON BAYS STERNS(2005/2025), GENOVESE(2001/2016)
YONKERS BIG V SUPERMARKET(2008/2028)
</TABLE>
19
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
OHIO
LIMA 1986 FEE 18.13 194,130 99
SPRINGFIELD 1988 FEE 14.32 131,628 100
CLEVELAND 1975 GROUND LEASE(2035) 9.42 82,411 76
COLUMBUS 1988 FEE 12.40 191,789 100
COLUMBUS 1988 FEE 13.70 140,993 100
COLUMBUS 1988 FEE 17.90 129,008 100
COLUMBUS 1988 FEE 12.40 135,650 100
UPPER ARLINGTON 1969 FEE 13.28 149,412 86
WESTERVILLE 1988/93 FEE 25.40 240,224 99
WHITEHALL 1967 FEE 13.80 112,813 16
BEAVERCREEK 1986 FEE 18.19 126,137 69
CAMBRIDGE 1973 FEE 13.08 95,955 100
CINCINATTI 1988 FEE 11.60 139,985 67
CINCINNATI 1988 FEE 29.20 321,537 99
SHARONVILLE 1977 GROUND LEASE(2076)/JOINT VENTURE 14.99 130,715 100
MENTOR 1987 FEE 20.59 103,871 98
MENTOR 1988 FEE 25.00 271,914 100
WICKLIFFE 1995 FEE 10.00 128,180 100
ELYRIA 1988 FEE 8.30 103,400 100
BRUNSWICK 1975 FEE 20.00 171,223 96
CENTERVILLE 1988 FEE 15.20 115,378 65
DAYTON 1988 FEE 16.86 141,616 90
DAYTON 1984 FEE 32.01 215,891 86
DAYTON 1969 GROUND LEASE(2043) 22.82 163,131 66
KETTERING 1988 FEE 11.21 123,148 88
SPRINGBORO PIKE 1985 FEE 12.96 99,007 100
CANTON 1993 FEE 7.88 63,712 70
CANTON 1972 FEE 19.60 161,675 79
MASSILLON 1988 GROUND LEASE(2001) 13.09 102,632 100
AKRON 1975 FEE 6.91 56,975 78
BARBERTON 1972 FEE 9.97 119,975 100
OKLAHOMA
OKLAHOMA CITY 1997 FEE 9.64 96,418 100
OKLAHOMA CITY 1997 GROUND LEASE(2019) 7.36 73,600 100
TULSA 1996 FEE 8.79 96,100 100
PENNSYLVANIA
GETTYSBURG 1986 FEE 2.25 30,706 100
DUQUESNE 1993 FEE 8.77 69,733 100
PENN HILLS 1986 GROUND LEASE(2027) 31.06 110,517 100
WEST MIFFLIN 1974 FEE 24.62 194,776 95
WEST MIFFLIN 1986 FEE 8.33 84,279 100
FEASTERVILLE 1996 FEE 4.60 86,575 100
MORRISVILLE (3) 1996 FEE 14.38 117,511 24
RICHBORO (3) 1986 FEE 14.47 80,737 64
WARRINGTON (3) 1996 FEE 8.28 82,338
EXTON 1996 FEE 9.78 85,184 100
UPPER ALLEN 1986 FEE 6.00 59,470 97
HARRISBURG 1972 FEE/JOINT VENTURE 17.00 175,917 100
MIDDLETOWN 1973 FEE 21.86 140,481 57
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
OHIO
LIMA RAYS SUPERMARKET(2011/2026), THE PHARM(2004/2024)
SPRINGFIELD KMART(2010/2029), KROGER(2001/2007)
CLEVELAND ALDI'S(2003/2023)
COLUMBUS KOHLS(2011/2031), KIDS R US(2015/2040)
COLUMBUS KOHLS(2011/2031), STAPLES(2000/2010)
COLUMBUS KOHLS(2011/2031)
COLUMBUS KOHLS(2011/2031), CIRCUIT CITY(2018/2038)
UPPER ARLINGTON TJ MAXX (2001/2006)
WESTERVILLE KOHLS(2016/2036), OFFICE MAX(2002/2022), HOMEPLACE(2005/2020)
WHITEHALL
BEAVERCREEK KROGER(1996/2021)
CAMBRIDGE QUALITY STORES (TJX)(2000/2018), KROGER(1999/2014)
CINCINATTI CIRCUIT CITY(2008/2031), CONSOLIDATED STORES(1999/2009), OFFICE DEPOT(2004/2024)
CINCINNATI HECHINGERS(2013/2033), SERVICE MERCHANDISE(2002/2012), TOYS R US(2016/2046)
SHARONVILLE KMART(2004/2054), KROGER(1998/2028), CHARMING SHOPPES(2000/2010)
MENTOR HILLS(2020/2045)
MENTOR RINI SUPERMARKET(2019/2029), BURLINGTON COAT FACTORY(2014)
WICKLIFFE GABRIEL BROTHERS(2008/2023), CONSOLIDATED STORES(2000), HANCOCK FABRICS(2000/2010)
ELYRIA KMART(2010/2029)
BRUNSWICK KMART(2000/2050), RINI SUPERMARKET(2001/2031)
CENTERVILLE WACCAMAW(2006/2021), LASER QUEST(2007/2017), COMPLETE PETMART(2002/2007)
DAYTON SCHOTTENSTEIN STORES(2000/2020), CIRCUIT CITY(2018/2038)
DAYTON VICTORIA'S SECRET(2004/2019), JOANN FABRICS(2006/2016), KROGER(2012/2038)
DAYTON BEST BUY(2004/2024), JUST FOR FEET(2005/2015), FABRI CENTER(2002/2012)
KETTERING SCHOTTENSTEIN STORES(2000/2015)
SPRINGBORO PIKE MEDIA PLAY(2007/2022), OFFICE MAX(2002/2022), HANCOCK FABRICS(2007/2017)
CANTON CINEMARK(1998/2003)
CANTON TOYS R US(2018/2043), TJ MAXX(2007/2017)
MASSILLON HILLS(2001)
AKRON DOLLAR GENERAL(1999/2002)
BARBERTON
OKLAHOMA
OKLAHOMA CITY VENTURE(2022/2052)
OKLAHOMA CITY VENTURE(2022/2052)
TULSA KMART(2021/2051)
PENNSYLVANIA
GETTYSBURG GIANT FOOD(2000/2010)
DUQUESNE PAT CATAN(2000/2005)
PENN HILLS HILLS(2017/2026)
WEST MIFFLIN HILLS(2004/2034), GIANT EAGLE(2014/2039)
WEST MIFFLIN HILLS(2007/2032)
FEASTERVILLE VALUE CITY(2011/2026)
MORRISVILLE (3)
RICHBORO (3) A&P(2002/2032), RITE AID(2007/2017)
WARRINGTON (3)
EXTON KOHLS(2016/2036)
UPPER ALLEN GIANT FOOD(2010/2030)
HARRISBURG HILLS(2002/2032), MEDIA PLAY(2011/2026), SUPERPETZ(2002/2022)
MIDDLETOWN ELECTRONIC INSTITUTE(1999)
</TABLE>
20
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
MIDDLETOWN 1986 FEE 4.66 35,747 62
HAVERTOWN 1996 FEE 9.01 80,938 100
SPRINGFIELD 1983 FEE 19.66 218,907 98
UPPER DARBY 1996 FEE/JOINT VENTURE 16.34 52,657 53
ERIE 1968 FEE 1.96 2,196 100
WHITEHALL 1996 GROUND LEASE(2081) 6.00 84,524 100
CENTER SQUARE 1996 FEE 17.72 116,055 100
E STROUDSBURG 1973 FEE 15.33 167,654 96
EAGLEVILLE 1973 FEE 15.20 165,385 100
LANDSDALE 1996 GROUND LEASE(2037) 1.39 71,760 100
NORRISTOWN 1984 FEE 12.52 134,960 87
PHILADELPHIA 1997 FEE 3.40 38,753 90
PHILADELPHIA 1996 FEE 6.30 82,345 100
PHILADELPHIA 1996 GROUND LEASE(2035) 13.33 133,309 100
PHILADELPHIA 1983 FEE/JOINT VENTURE 8.12 214,170 98
PHILADELPHIA 1995 FEE/JOINT VENTURE 22.55 275,033 98
NEW KENSINGTON 1986 FEE 12.53 106,624 100
YORK 1986 FEE 8.00 61,979 100
YORK 1986 FEE 13.65 53,011 100
YORK 1986 FEE 3.32 35,500 100
SOUTH CAROLINA
AIKEN 1989 FEE 16.63 132,345 77
CHARLESTON 1978 FEE 17.60 168,803 76
NORTH CHARLESTON 1997 FEE 21.07 247,908 92
CHARLESTON 1995 FEE 17.15 188,161 100
FLORENCE 1997 FEE 21.00 113,922 100
GREENVILLE 1997 FEE 20.35 97,340 98
TENNESSEE
CHATTANOOGA 1973 GROUND LEASE(2073) 7.63 44,288 66
MADISON 1978 GROUND LEASE(2039) 14.49 182,256 99
TEXAS
PLANO 1996 FEE 9.03 96,700 100
DALLAS 1969 FEE/JOINT VENTURE 75.00 566,826 55
DUNCANVILLE 1996 FEE 6.80 96,500 100
GARLAND 1996 FEE 2.89 41,364 100
GARLAND 1996 FEE 8.83 103,600 100
MESQUITE 1974 FEE 9.03 79,550 100
BAYTOWN 1996 FEE 8.68 103,800 100
HOUSTON 1973 FEE 4.25 45,494 100
HOUSTON 1997 FEE 8.04 112,560 91
HOUSTON 1996 FEE 8.75 106,000 100
HOUSTON 1997 FEE 8.17 105,353 100
WEST OAKS 1996 FEE 8.18 96,500 100
AMARILLO 1997 GROUND LEASE(2061) 9.30 103,589 100
CORSICANA 1997 FEE 10.25 350,000 100
ALRINGTON 1996 FEE 8.04 97,000 100
ARLINGTON 1997 GROUND LEASE(2043) 8.00 96,127 100
FT. WORTH 1996 FEE 12.59 106,000 100
NORTH RICHLAND HILLS (6) 1997 FEE 9.17
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
MIDDLETOWN US POSTAL SERVICE(2016/2026)
HAVERTOWN KOHLS(2016/2036)
SPRINGFIELD VALUE CITY(2013/2043), STAPLES(2008/2023), JO ANN FABRICS(2006/2016)
UPPER DARBY MERCY HEALTH(2012/2022)
ERIE BARRON OIL(2016)
WHITEHALL KOHLS(2016/2036)
CENTER SQUARE KOHLS(2016/2036), SEARS(2002/2007)
E STROUDSBURG KMART(2002/2022), WEIS MARKETS(2002/2012)
EAGLEVILLE KMART(1999/2019), GENUARDI SUPERMARKET(2011/2025)
LANDSDALE KOHLS(2012)
NORRISTOWN GIANT FOOD(2017/2037), STAPLES(2008/2023), FABRI CENTER(2002/2012)
PHILADELPHIA MERCY HEALTH(2012/2022)
PHILADELPHIA KOHLS(2016/2036)
PHILADELPHIA KMART(2010/2035)
PHILADELPHIA JC PENNEY(1999), TOYS R US(2002/2052)
PHILADELPHIA PET FOOD GIANT(2006/2016), PEP BOYS(2004/2014)
NEW KENSINGTON GIANT EAGLE(2006/2026)
YORK SUPERPETZ(2004/2009), DISCOVERY ZONE(2005/2015)
YORK GIANT FOOD(2006/2026)
YORK GIANT FOOD(2002/2017), RITE AID(2002/2012)
SOUTH CAROLINA
AIKEN WALMART(2002/2032), CVS(1997/2007)
CHARLESTON STEIN MART(2001/2016)
NORTH CHARLESTON TOYS R US (REA)(1999), PHAR-MOR(2000/2010), TJ MAXX(2003/2013)
CHARLESTON TJ MAXX(1999/2004), OFFICE DEPOT(2001/2016), MARSHALLS(1998/2001)
FLORENCE HAMRICK'S(2001/2011), STAPLES(2010/2035), ATHLETE'S FOOT(2007/2017)
GREENVILLE BABY SUPERSTORE(2002/2022), GATEWAY 2000(2002/2022)
TENNESSEE
CHATTANOOGA
MADISON OLD TIME POTTERY(2001/2006), HOLLYWOOD ENTERTAINMENT(2008/2014)
TEXAS
PLANO VENTURE(2021/2051)
DALLAS MONTGOMERY WARD(2000/2015)
DUNCANVILLE KMART(2021/2051)
GARLAND KROGER(2000/2025)
GARLAND KMART(2021/2051)
MESQUITE KROGER(2012/2037)
BAYTOWN VENTURE(2021/2051)
HOUSTON KROGER(2002/2012)
HOUSTON HEB GROCERY(2007/2027), PALAIS ROYAL(2007/2022), CATO(2004/2009)
HOUSTON KMART(2021/2051)
HOUSTON VENTURE(2022/2052)
WEST OAKS KMART(2021/2051)
AMARILLO VENTURE(2022/2052)
CORSICANA VENTURE(2022/2052)
ALRINGTON KMART(2021/2051)
ARLINGTON VENTURE(2022/2052)
FT. WORTH KMART(2021/2051)
NORTH RICHLAND HILLS (6) VENTURE(2022/2052)
</TABLE>
21
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
UTAH
OGDEN 1967 FEE 11.36 121,425 100
VIRGINIA
RICHMOND 1995 FEE 11.47 121,550 100
WOODBRIDGE 1973 GROUND LEASE(2072)/JOINT VENTURE 19.63 186,142 59
MANASSAS 1997 FEE 13.50 117,525 88
WISCONSIN
RACINE 1988 FEE 14.20 153,530 85
WEST VIRGINIA
MARTINSBURG 1986 FEE 6.04 43,212 100
CHARLES TOWN 1985 FEE 22.00 201,313 83
------- ---------- --
TOTAL 266 PROPERTY INTERESTS 3742.06 34,931,408 90
------- ---------- --
ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 1997
COLORADO
AURORA 1998 FEE 14.56 145,626 91
AURORA 1998 FEE 4.43 44,270 99
AURORA 1998 FEE 13.90 152,181 97
COLORADO SPRINGS 1998 FEE 10.78 107,798 100
ENGLEWOOD 1998 FEE 6.48 80,330 99
DENVER 1998 FEE 1.45 18,405 100
LAKEWOOD 1998 FEE 7.55 83,304 98
FLORIDA
CORAL WAY 1998 FEE/JOINT VENTURE 6.46 74,973 98
ILLINOIS
DOWNERS'S GROVE (3) 1998 FEE 7.19 182,624 48
ORLANDO (3) 1998 FEE 7.76 166,000 49
SCHAUMBURG (3) 1998 FEE 7.30 167,690 51
INDIANA
INDIANAPOLIS 1998 FEE/JOINT VENTURE 17.42 166,104 55
PENNSYLVANIA
TREXLER TOWN (3) 1998 GROUND LEASE/JOINT VENTURE 1.18 50,000 60
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
UTAH
OGDEN KMART(2002)
VIRGINIA
RICHMOND BURLINGTON COAT FACTORY(2006/2035)
WOODBRIDGE AMES(2000/2020)
MANASSAS SUPERFRESH(2006), BLOCKBUSTER(1999)
WISCONSIN
RACINE PIGGLY WIGGLY(1999/2010), CONSOLIDATED STORES(2000/2005), HEILIG-MEYERS (2007/2017)
WEST VIRGINIA
MARTINSBURG GIANT FOOD(2010/2030), CVS(2003/2009)
CHARLES TOWN WALMART(2017/2047)
TOTAL 266 PROPERTY INTERESTS
ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 1997
COLORADO
AURORA TJ MAXX(2003/2013), GRANTREE FURNITURE(1998), CLASSIC TREASURES(2000/2004)
AURORA BLOCKBUSTER(1998/2003), JJ'S HALLMARK(2003/2013), BENVENUTO(2002/2007)
AURORA ALBERTSON'S(2005/2050), COOMER'S(2001/2006), CROWN LIQUOR(1999)
COLORADO SPRINGS CUB FOODS(2004/2034), SCHOOL DISTRICT(2000), EZ PAWN(2000/2010)
ENGLEWOOD PHAR-MOR(2004/2019), OLD COUNTRY BUFFET(2001), JUNIOR LEAGUE(2009/2019)
DENVER RITE AID(1998/2018)
LAKEWOOD SAFEWAY(2002/2032), PERFORMANCE BIKE(2002), WMC CORP.(1999/2004)
FLORIDA
CORAL WAY BABY SUPERSTORE(2006/2021)
ILLINOIS
DOWNERS'S GROVE (3) HEILIG-MEYERS(2008/2018)
ORLANDO (3) HEILIG-MEYERS(2008/2018)
SCHAUMBURG (3) HEILIG-MEYERS(2008/2018)
INDIANA
INDIANAPOLIS KROGER(2000/2020), CVS(2004/2024)
PENNSYLVANIA
TREXLER TOWN (3) LEHIGH VALLEY HEALTH(2007/2022)
</TABLE>
22
<PAGE>
PROPERTY CHART
<TABLE>
<CAPTION>
YEAR OWNERSHIP LEASABLE PERCENT
DEVELOPED INTEREST/ LAND AREA AREA LEASED
OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1)
----------- --------------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 1997
FLORIDA
PINELLAS PARK 1970 FEE (13.70) (119,355)
NEW JERSEY
BLACKWOOD 1996 GROUND LEASE(2032) (9.80) (123,970)
-------- ----------
TOTAL 277 PROPERTY INTERESTS 3,825.02 36,127,388
======== ==========
RETAIL STORE LEASES(4) 1995/97 LEASEHOLD 5,597,143 98.00
----------
GRAND TOTAL 339 PROPERTY INTERESTS 41,724,531
==========
<CAPTION>
MAJOR LEASES
(LEASE EXPIRATION/
OPTION EXPIRATION)
------------------
<S> <C>
DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 1997
FLORIDA
PINELLAS PARK
NEW JERSEY
BLACKWOOD
TOTAL 277 PROPERTY INTERESTS
RETAIL STORE LEASES(4) VARIOUS
GRAND TOTAL 339 PROPERTY INTERESTS
</TABLE>
(1) PERCENT LEASED INFORMATION AS OF DECEMBER 31, 1997 OR LATER DATE OF
ACQUISITION.
(2) THE TERM "JOINT VENTURE" INDICATES THAT THE COMPANY OWNS THE PROPERTY IN
CONJUNCTION WITH ONE OR MORE JOINT VENTURE PARTNERS. THE DATE INDICATED IS
THE EXPIRATION DATE OF ANY GROUND LEASE AFTER GIVING AFFECT TO ALL RENEWAL
PERIODS.
(3) DENOTES REDEVELOPMENT PROJECT
(4) THE COMPANY HOLDS INTEREST IN VARIOUS RETAIL STORE LEASES RELATED TO THE
ANCHOR STORE PREMISES IN NEIGHBORHOOD AND COMMUNITY SHOPPING CENTERS.
(5) SOLD OR TERMINATED SUBSEQUENT TO DECEMBER 31,1997
(6) LEASED PARCEL OF UNDEVELOPED LAND
23
<PAGE>
Executive Officers of the Registrant
The following table sets forth information with respect to the six executive
officers of the Company as of February 27, 1998.
<TABLE>
<CAPTION>
Name Age Position Since
---- --- -------- -----
<S> <C> <C> <C>
Milton Cooper 69 Chairman of the Board of 1991
Directors and Chief
Executive Officer
Michael J. Flynn 62 Vice Chairman of the 1996
Board of Directors.
President and Chief 1997
Operating Officer
Joseph V. Denis 46 Vice President - 1993
Construction
Bruce M. Kauderer 51 Vice President - Legal 1995
General Counsel and 1997
Secretary
Michael V. Pappagallo 39 Vice President - 1997
Chief Financial Officer
Alex Weiss 40 Vice President - 1988
Management Information
Systems
</TABLE>
Michael J. Flynn has been President and Chief Operating Officer since January 2,
1997, Vice Chairman of the Board of Directors since January 2, 1996 and a
Director of the Company since December 1, 1991. Mr. Flynn was Chairman of the
Board and President of Slattery Associates, Inc. for more than five years prior
to joining the Company.
Joseph V. Denis has been a Vice President of the Company since October 1993. Mr.
Denis was President and Chief Operating Officer of Konover Construction Company,
and previously held various positions with such company as a project and
construction manager, for more than five years prior to joining the Company in
June 1993.
Bruce M. Kauderer has been a Vice President of the Company since June 1995 and
since December 15, 1997, General Counsel and Secretary of the Company. Mr.
Kauderer was a founder of and partner with Kauderer & Pack P.C. from 1992 to
June 1995 and a Partner with Fink Weinberger, P.C. for more than five years
prior to 1992.
Michael V. Pappagallo has been a Vice President and Chief Financial Officer of
the Company since May 27, 1997. Mr. Pappagallo was Chief Financial Officer of GE
Capital's Commercial Real Estate Financial and Services business from September
1994 to May 1997 and held various other positions within GE Capital for more
than five years prior to joining the Company.
The executive officers of the Company serve in their respective capacities for
approximate one-year terms and are subject to re-election by the Board of
Directors, generally at the time of the Annual Meeting of the Board of Directors
following the Annual Meeting of Stockholders.
24
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
Market Information The Company completed its IPO on November 22, 1991. Shares of
the Company's common stock were sold for cash or exchanged for mortgage debt and
equity interests in certain of the Company's shopping center properties based
upon an initial public offering price of $13.33 per share. Additional primary
public common stock offerings were completed in June 1992, April 1993, January
1995, February 1996 and September 1997, wherein shares of the Company's common
stock were sold for cash or exchanged for equity interests in shopping center
properties based upon $16.92, $22.83, $24.17, $26.50 and $35.50 per share
offering prices, respectively.
The table below sets forth, for the quarterly periods indicated, the high and
low sales prices per share reported on the NYSE Composite Tape for the Company's
common stock. The Company's common stock is traded under the trading symbol
"KIM".
Stock Price
--------------
Period High Low
------ ---- ---
1996:
First Quarter $28.00 $25.25
Second Quarter $28.50 $25.63
Third Quarter $30.25 $26.50
Fourth Quarter $34.88 $28.38
1997:
First Quarter $34.63 $31.75
Second Quarter $33.38 $30.25
Third Quarter $36.19 $31.75
Fourth Quarter $35.50 $30.50
Holders The approximate number of holders of record of the Company's common
stock, par value $.01 per share, was 572 as of February 27, 1998.
Dividends Since the IPO, the Company has paid regular quarterly dividends to its
stockholders.
Quarterly dividends at the rate of $.39 per share were declared and paid on
November 30, 1995 and January 16, 1996, March 15, 1996 and April 15, 1996, June
17, 1996 and July 15, 1996 and September 16, 1996 and October 15, 1996
respectively. Quarterly dividends at the increased rate of $.43 per share were
declared and paid on December 2, 1996 and January 15, 1997, March 17, 1997 and
April 15, 1997, June 16, 1997, and July 15, 1997, September 15, 1997 and October
15, 1997. On December 1, 1997 the Company declared its dividend payable during
the first quarter of 1998 at the increased rate of $.48 per share payable
January 15, 1998 to shareholders of record on January 2, 1998. This $.48 per
share dividend, if annualized, would equal $1.92 per share, or an annual yield
of approximately 5.5% based on the closing price of $35.13 of the Company's
common stock on the NYSE as of February 27, 1998.
The Company has determined that 100% of the dividends totaling $1.72 and $1.56
per share, paid during 1997 and 1996, respectively, represented ordinary
dividend income to its stockholders.
While the Company intends to continue paying regular quarterly dividends, future
dividend declarations will be at the discretion of the Board of Directors and
will depend on the actual cash flow of the Company, its financial condition,
capital requirements, the annual distribution requirements under the REIT
provisions of the Code and such other factors as the Board of Directors deems
relevant. The actual cash flow available to pay dividends will be affected by a
number of factors, including the revenues received from rental properties, the
operating expenses of the Company, the interest expense on its borrowings, the
ability of lessees to meet their obligations to the Company and any
unanticipated capital expenditures.
25
<PAGE>
In addition to its common stock offerings, the Company has capitalized the
growth in its business through the issuance of unsecured fixed and floating-rate
medium-term notes, underwritten bonds and perpetual preferred stock. Borrowings
under the Company's revolving credit facility have also been an interim source
of funds to both finance the purchase of properties and meet any short-term
working capital requirements. The various instruments governing the Company's
issuance of its unsecured public debt, bank debt and preferred stock impose
certain restrictions on the Company with regard to dividends, voting,
liquidation and other preferential rights available to the holders of such
instruments. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Notes 7 and 11 of the Notes to Consolidated
Financial Statements included in this annual report on Form 10-K. Reference
should also be made to the documents incorporated by reference into Part II of
this annual report listed in "Documents Incorporated by Reference" above for
further information with respect to such restrictions.
The Company does not believe that the preferential rights available to the
holders of its Class A, Class B and Class C Preferred Stock, the financial
covenants contained in its public bond Indenture or its revolving credit
agreements will have any adverse impact on the Company's ability to pay
dividends in the normal course to its common stockholders or to distribute
amounts necessary to maintain its qualification as a REIT.
The Company maintains a dividend reinvestment program pursuant to which common
and preferred stockholders may elect to automatically reinvest their dividends
to purchase shares of the Company's common stock. The Company may, from time to
time, either (i) repurchase shares of its common stock in the open market, or
(ii) issue new shares of its common stock, for the purpose of fulfilling its
obligations under this dividend reinvestment program.
Item 6. Selected Financial Data
The following table sets forth selected, historical consolidated financial data
for the Company and should be read in conjunction with the Consolidated
Financial Statements of the Company and Notes thereto included in this
annual report on Form 10-K.
The Company believes that the book value of its real estate assets, which
reflects the historical costs of such real estate assets less accumulated
depreciation, is not indicative of the current market value of its properties.
Historical operating results are not necessarily indicative of future operating
performance.
26
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues from rental property (1) $198,929 $168,144 $143,132 $125,272 $98,854
Depreciation and amortization $30,053 $27,067 $26,188 $23,478 $19,898
Income before
extraordinary items $85,836(3) $73,827(3) $51,922 $41,071 $35,159(4)
Income per common share,
before extraordinary items:
Basic $1.80(3) $1.61(3) $1.33 $1.17 $1.17(4)
Diluted $1.78(3) $1.59(3) $1.32 $1.16 $1.17(4)
Interest expense $31,745 $27,019 $25,585 $20,483 $17,203
Weighted average number of shares
of common stock outstanding:
Basic 37,388 35,906 33,388 30,072 28,657
Diluted 37,850 36,219 33,633 30,264 28,783
Cash dividends per common share $1.72 $1.56 $1.44 $1.33 $1.25
December 31,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
Balance Sheet Data:
Real estate, before accumulated depreciation $1,404,196(5) $1,072,056(5) $932,390(5) $796,611 $662,874
Total assets $1,343,890 $1,023,033 $884,242 $736,709 $652,823
Total debt $531,614 $364,655 $389,223 $372,999 $290,886
Other Data:
Year Ended December 31,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
Funds from Operations (2):
Net Income $85,836 $73,827 $51,922 $40,247 $34,573
Depreciation and amortization 30,053 27,067 26,188 23,478 19,898
(Gain) loss on sales of properties and
early repayment of mortgage debt (244) (802) (370) 824 (2,895)
Preferred stock dividends (18,438) (16,134) (7,631) (5,812) (1,582)
Other 976 1,148 2,019 901 875
----------- ----------- ----------- ----------- -----------
Funds from Operations $98,183 $85,106 $72,128 $59,638 $50,869
=========== =========== =========== =========== ===========
Cash flow provided by operations $125,108 $101,892 $74,233 $62,933 $54,886
Cash flow used for investing activities ($280,823) ($144,027) ($127,261) ($142,183) ($119,788)
Cash flow provided by financing activities $149,269 $63,395 $58,248 $37,047 $109,384
</TABLE>
(1) Does not include revenues from rental property relating to unconsolidated
joint ventures or revenues relating to the investment in retail store
leases.
(2) Most industry analysts and equity REITs, including the Company, generally
consider funds from operations ("FFO") to be an appropriate supplemental
measure of the performance of an equity REIT. In March 1995, the National
Assocation of Real Estate Invesment Trusts ("NAREIT") modified the
definition of FFO, among other things, to eliminate adding back
amortization of deferred financing costs and depreciation of non-real
estate items to net income when computing FFO. The Company adopted this new
method as of January 1, 1996. FFO is defined as net income applicable to
common shares before depreciation and amortization, extraordinary items,
gains or losses on sales of real estate, plus FFO of unconsolidated joint
ventures determined on a consistent basis. FFO does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and therefore should not be considered an alternative
for net income as a measure of results of operations, or for cash flows
from operations calculated in accordance with generally accepted accounting
principles as a measure of liquidity. In addition, the comparability of the
Company's FFO with the FFO reported by other REITs may be affected by the
differences that may exist regarding certain accounting policies relating
to expenditures for repairs and other recurring items.
(3) Includes $.2 million or $.01 per share in 1997 and $.8 million or $.02 per
share in 1996 relating to non-recurring gains from the disposition of a
shopping center property in each year.
(4) Includes approximately $3.4 million, or $.12 per share, in non-recurring
gains related to the sale of a shopping center and a casualty claim related
to a joint venture property.
(5) Does not include the Company's investment in retail store leases.
27
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included in this annual report
on Form 10-K. Historical results and percentage relationships set forth in the
Consolidated Statements of Income contained in the Consolidated Financial
Statements, including trends which might appear, should not be taken as
indicative of future operations.
Results of Operations
Comparison of 1997 to 1996
Revenues from rental property increased approximately $30.8 million, or 18.3% to
$198.9 million for the year ended December 31, 1997, as compared with $168.1
million for the year ended December 31, 1996. This increase resulted primarily
from the combined effect of (i) the acquisition of 14 shopping center properties
and 49 retail properties during 1997 providing revenues from rental property of
$6.1 million and $14.0 million, respectively (ii) the full year impact related
to the 39 property interests acquired in 1996 and (iii) new leasing and
re-tenanting within the portfolio at improved rental rates providing an increase
in the overall occupancy level from 87% at December 31, 1996 to 90% at December
31, 1997.
Rental property expenses, including depreciation and amortization, increased
approximately $18.2 million, or 18.8%, to $115.2 million for the year ended
December 31, 1997, as compared with $97.0 million for the preceding calendar
year. Rent, real estate taxes and depreciation and amortization charges
contributed significantly to this net increase in rental property expenses
(increasing $3.5 million, $6.5 million and $3.0 million, respectively, for the
year ended December 31, 1997 as compared to the preceding year) primarily due to
the 14 shopping center properties and 49 retail properties acquired during 1997
and the 39 property interests acquired during 1996. Interest expense increased
approximately $4.7 million between the respective periods reflecting higher
average outstanding borrowings during calendar year 1997 resulting from (i) the
issuance of an aggregate $100 million unsecured medium-term notes during 1997
and (ii) the assumption of approximately $73.2 million of mortgage debt in
connection with the acquisition of certain property interests during 1997, as
compared to the preceding year.
The Company has interests in various retail store leases relating to the anchor
store premises in neighborhood and community shopping centers. These premises
have been substantially sublet to retailers which lease the stores pursuant to
net lease agreements. Income from the investment in retail store leases during
the years ended December 31, 1997 and 1996 was $3.6 million in each year.
General and administrative expenses increased approximately $1.3 million to
$11.6 million for the year ended December 31, 1997, as compared to $10.3 million
for the preceding calendar year. This increase is primarily attributable to
increased senior management and staff levels during 1997 and 1996.
During 1997, the Company disposed of a property in Troy, OH. Cash proceeds from
the disposition totaling $1.6 million, together with an additional $8.3 million
cash investment, were used to acquire an exchange shopping center property
located in Ocala, FL.
Net income for the year ended December 31, 1997 of approximately $85.8 million
represented an improvement of approximately $12.0 million, as compared with net
income of approximately $73.8 million for the preceding calendar year. After
adjusting for the gains on the sale of shopping center properties during both
periods, net income for 1997 increased by $12.6 million, or $.20 per share,
compared to 1996. This substantially improved performance was primarily
attributable to property acquisitions and redevelopments and increased leasing
activity which strengthened operating profitability.
28
<PAGE>
Comparison of 1996 to 1995
Revenues from rental property increased approximately $25.0 million, or 17.5% to
$168.1 million for the year ended December 31, 1996, as compared with $143.1
million for the year ended December 31, 1995. This increase resulted primarily
from the combined effect of shopping center acquisitions during the respective
periods (39 property interests in 1996 and 18 property interests in 1995) as
well as new leasing and re-tenanting within the portfolio at improved rental
rates.
Rental property expenses, including depreciation and amortization, increased
approximately $8.1 million, or 9.1%, to $97.0 million for the year ended
December 31, 1996, as compared with $88.9 million for the preceding calendar
year. This increase is primarily due to property acquisitions and renovations
within the existing portfolio during the respective periods which gave rise to
an overall increase in real estate taxes and depreciation and amortization
expenses, as well as increased snow removal costs during 1996. Interest charges
increased approximately $1.4 million between the respective periods reflecting
higher average outstanding borrowings during calendar year 1996 as compared to
the preceding year.
During July 1995, certain subsidiaries of the Company obtained interests in
retail store leases relating to the anchor store premises in neighborhood and
community shopping centers. These premises have been substantially sublet to
retailers which lease the stores pursuant to net lease agreements. Income from
the investment in retail store leases during the years ended December 31, 1996
and 1995 were $3.6 and $1.8 million, respectively.
General and administrative expenses increased approximately $1.5 million to
$10.3 million for the year ended December 31, 1996, as compared to $8.8 million
for the preceding calendar year. This increase is primarily attributable to
increased senior management and staff levels during 1996 and 1995.
Other income, net increased approximately $3.3 million for the year ended
December 31, 1996 as compared with the preceding year. This increase is
primarily attributable to interest earned on funds raised through public equity
offerings during 1996 and held in short-term income producing investments
pending the acquisition of interests in neighborhood and community shopping
center properties.
During September 1996, the Company disposed of a property in Watertown, NY. Cash
proceeds from the disposition totaling $1.8 million, together with an additional
$2.2 million cash investment, were used to acquire an exchange shopping center
property during January 1997.
Net income for the year ended December 31, 1996 of approximately $73.8 million
represented an improvement of approximately $21.9 million, as compared with net
income of approximately $51.9 million for the preceding calendar year. After
adjusting for the gain on the sale of a shopping center property during 1996,
net income for 1996 increased by $21.1 million, or $.26 per share, compared to
1995. This substantially improved performance was primarily attributable to
property acquisitions and redevelopments, the investment in retail store leases
and sustained leasing activity which strengthened operating profitability.
Liquidity and Capital Resources Completion of the Company's IPO, which resulted
in net cash proceeds of approximately $116 million, permitted the Company to
significantly deleverage its real estate portfolio and has made available the
public debt and equity markets as the Company's principal source of capital for
the future. A $100 million, unsecured revolving credit facility established in
June 1994, which is scheduled to expire in June 2000, and an additional $150
million interim unsecured revolving credit facility established in March 1998,
scheduled to expire in June 1998, have made available funds to both finance the
purchase of properties and meet any short-term working capital requirements. It
is the Company's intention to extend the term of the $150 million interim
revolving credit facility and establish it as a continuing part of the Company's
total unsecured revolving credit availability. As of December 31, 1997 there
were no borrowings under the revolving
29
<PAGE>
credit facility. The Company has also implemented a $150 million MTN program
pursuant to which it may from time to time offer for sale its senior unsecured
debt for any general corporate purposes, including (i) funding specific
liquidity requirements in its business, including property acquisitions and
redevelopment costs and (ii) better managing the Company's debt maturities. (See
Note 7 of the Notes to Consolidated Financial Statements included in this annual
report on Form 10-K.)
Since the IPO, the Company has completed additional offerings of its public
unsecured debt and equity raising in the aggregate over $1.15 billion for the
purposes of repaying indebtedness, acquiring neighborhood and community shopping
centers and for expanding and improving properties in the portfolio.
In connection with its intention to continue to qualify as a REIT for Federal
income tax purposes, the Company expects to continue paying regular dividends to
its stockholders. These dividends will be paid from operating cash flows which
are expected to increase due to property acquisitions and growth in rental
revenues in the existing portfolio and from other sources. Since cash used to
pay dividends reduces amounts available for capital investment, the Company
generally intends to maintain a conservative dividend payout ratio, reserving
such amounts as it considers necessary for the expansion and renovation of
shopping centers in its portfolio, debt reduction, the acquisition of interests
in new properties as suitable opportunities arise, and such other factors as the
Board of Directors considers appropriate.
Cash dividends paid increased to $82.6 million in 1997, compared to $69.8
million in 1996 and $53.9 million in 1995. The Company's dividend payout ratio,
based on funds from operations on a per common share basis, for 1997, 1996 and
1995 was approximately 65.4%, 65.8%, and 66.7%, respectively.
Although the Company receives most of its rental payments on a monthly basis, it
intends to continue paying dividends quarterly. Amounts accumulated in advance
of each quarterly distribution will be invested by the Company in short-term
money market or other suitable instruments.
The Company anticipates its capital commitment toward redevelopment projects
during 1998 will be approximately $30 million. It is management's intention that
the Company continually have access to the capital resources necessary to expand
and develop its business. Accordingly, the Company may seek to obtain funds
through additional equity offerings or debt financings, including an increase in
the Company's unsecured revolving credit facility, in a manner consistent with
its intention to operate with a conservative debt capitalization policy.
The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service obligations and all dividend payments in accordance with REIT
requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, borrowings under its revolving credit facilities,
issuance of equity and public debt, as well as other debt and equity
alternatives, will provide the necessary capital required by the Company. Cash
flows from operations as reported in the Consolidated Statements of Cash Flows
increased to $125.1 million for 1997 from $101.9 million for 1996 and $74.2
million for 1995.
Effects of Inflation Many of the Company's leases contain provisions designed to
mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive Percentage Rents, which generally increase as
prices rise, and/or escalation clauses, which generally increase rental rates
during the terms of the leases. Such escalation clauses include increases in the
consumer price index or similar inflation indices. In addition, many of the
Company's leases are for terms of less than 10 years, which permits the Company
to seek to increase rents upon renewal to market rates. Most of the Company's
leases require the tenant to pay an allocable share of operating expenses,
including common area maintenance costs, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. The Company
30
<PAGE>
periodically evaluates its exposure to short-term interest rates and will, from
time to time, enter into interest rate protection agreements which mitigate, but
do not eliminate, the effect of changes in interest rates on its floating-rate
loans.
New Accounting Pronouncements
In 1997 the Financial Accounting Standards Board issued statement of Financial
Accounting Standards No. 130 - "Reporting Comprehensive Income" which
established standards for reporting and displaying comprehensive income and its
components. In 1997 the Financial Accounting Standards Board also issued
statement of Financial Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related Information" which established standards for
reporting information about operating segments. The Company is required to adopt
these two standards with its December 31, 1998 financial statements. The Company
is currently evaluating the effect, if any, these statements will have on the
Company's financial presentation.
Forward-looking statements
This annual report on Form 10-K includes certain forward-looking statements
reflecting the Company's and management's intentions and expectations, however,
many factors which may affect the actual results are difficult to predict.
Factors that may cause actual results to differ materially from current
expectations include general economic conditions, local real estate conditions,
increases in interest rates and increases in operating costs. Accordingly, there
is no assurance that the Company's expectations will be realized.
Item 8. Financial Statements and Supplementary Data
The response to this Item 8 is included as a separate section of this annual
report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
31
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with respect to its Annual Meeting of Stockholders expected to be held
on May 28, 1998.
Information with respect to the Executive Officers of the Registrant follows
Part I, Item 4 of this annual report on Form 10-K.
Item 11. Executive Compensation
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with respect to its Annual Meeting of Stockholders expected to be held
on May 28, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with respect to its Annual Meeting of Stockholders expected to be held
on May 28, 1998.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with respect to its Annual Meeting of Stockholders expected to be held
on May 28, 1998.
32
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) 1. Financial Statements - Form 10-K
The following consolidated financial information Report
is included as a separate section of this annual Page
report on Form 10-K. ---------
Report of Independent Accountants 38
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1997 and 1996 39
Consolidated Statements of Income for the years
ended December 31, 1997, 1996 and 1995 40
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1997, 1996 and 1995 41
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 42
Notes to Consolidated Financial Statements 43
2. Financial Statement Schedules -
Schedule II - Valuation and Qualifying Accounts 58
Schedule III - Real Estate and Accumulated Depreciation 59
All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule.
3. Exhibits
The exhibits listed on the accompanying Index to
Exhibits are filed as part of this report. 34
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company for the quarter ended
December 31, 1997.
A current report on Form 8-K was filed on January 21, 1998 to disclose the
signing of a definitive agreement to merge The Price REIT, Inc.
("Price REIT") into a wholly owned subsidiary of the Company ("Merger Sub") and
to disclose the Agreement and Plan of Merger, dated January 13, 1998 (the
"Original Agreement") among the Company, Merger Sub and Price REIT. A current
report on Form 8-K was filed on January 30, 1998 to disclose certain historical
and pro forma financial information relating to the Company and Price REIT as if
the Merger had occurred as of January 1, 1996 and September 30, 1997. A current
report on Form 8-K was filed on March 12, 1998 to disclose that the Company,
Merger-Sub and Price REIT entered into a first Amendment, dated March 5, 1998,
to the Original Agreement.
A current report on Form 8-K was filed on January 22, 1998 to disclose certain
historical financial information for certain properties acquired during 1997 and
pro forma financial information for all shopping center acquisitions during
1997.
33
<PAGE>
INDEX TO EXHIBITS
Form 10K
Exhibits Page
- -------- --------
2.1 -- Form of Plan of Reorganization of Kimco Realty
Corporation [Incorporated by reference to
Exhibit 2.1 to the Company's Registration
Statement on Form S-11 No. 33-42588].
2.2 -- Agreement and Plan of Merger dated July 29, 1994
between Kimco Realty Corporation, a Delaware
corporation and Kimco Realty Corporation of
Maryland, a Maryland corporation
[Incorporated by reference to Exhibit 2.2 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 (the
"1994 10-K")].
2.3 -- Agreement and Plan of Merger, dated as of
January 13, 1998, among Kimco Realty
Corporation, REIT Sub, Inc. and The Price
REIT (the "Merger Agreement). [Incorporated by
reference to Exhibit 99.2 to the Company's
Current Report on form 8-K filed January 21,
1998].
2.4 -- First Amendment to the Merger Agreement, dated
as of March 5, 1998, among Kimco Realty
Corporation, REIT Sub, Inc. and The Price
REIT, Inc. [Incorporated by reference to
Exhibit 99.1 to the Company's Current Report
on Form 8-K filed March 12, 1998].
3.1 -- Articles of Amendment and Restatement of the
Company, dated August 4, 1994 [Incorporated
by reference to Exhibit 3.1 to the 1994
10-K].
3.2 -- By-laws of the Company, as amended to August 4,
1994.
3.3 -- Articles Supplementary relating to the 8 1/2%
Class B Cumulative Redeemable Preferred
Stock, par value $1.00 per share, of the
Company, dated July 25, 1995. [Incorporated
by reference to Exhibit 3.3 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995 (file #1-10899) (the "1995
Form 10-K")].
3.4 -- Articles Supplementary relating to the 8 3/8%
Class C Cumulative Redeemable Preferred
Stock, par value $1.00 per share, of the
Company, dated April 9, 1996 [Incorp- orated
by reference to Exhibit 3.4 to the 1996 Form
10-K].
4.1 -- Agreement of the Company pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K
[Incorporated by reference to Exhibit 4.1 to
Amendment No. 3 to the Company's Registration
Statement on Form S-11 No. 33-42588].
4.2 -- Form of $100 million 6-1/2% Senior Notes due
2003 [Incorporated by reference to Exhibit
4.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993,
(file #1-10899) (the "1993 Form 10-K")].
4.3 -- Form of $100 million Floating Rate Senior Notes
due 1999 [Incorporated by reference to
Exhibit 4.3 to the 1993 Form 10-K].
4.4 -- Certificate of Designations [Incorporated by
reference to Exhibit 4(d) to Amendment No. 1
to the Registration Statement on Form S-3
dated September 10, 1993 (the "Registration
Statement", Commission File No. 33-67552)].
4.5 -- Indenture dated September 1, 1993 between Kimco
Realty Corporation and IBJ Schroder Bank and
Trust Company [Incorporated by reference to
Exhibit 4(a) to the Registration Statement].
4.6 -- First Supplemental Indenture, dated as of August
4, 1994. [Incorporated by reference to
Exhibit 4.6 to the 1995 Form 10-K.]
4.7 -- Second Supplemental Indenture, dated as of April
7, 1995 [Incorporated by reference to Exhibit
4(a) to the Company's Current Report on Form
8-K dated April 7, 1995 (the "April 1995
8-K")].
34
<PAGE>
INDEX TO EXHIBITS (continued)
Form 10K
Page
--------
Exhibits
- --------
4.8 -- Form of Medium-Term Note (Fixed Rate)
[Incorporated by reference to Exhibit 4(b) to
the April 1995 8-K].
4.9 -- Form of Medium-Term Note (Floating Rate)
[Incorporated by reference to Exhibit 4(c) to
the April 1995 8-K].
10.1 -- Form of Acquisition Option Agreement between the
Company and the subsidiary named therein
[Incorporated by reference to Exhibit 10.1 to
Amendment No. 3 to the Company's Registration
Statement on Form S-11 No. 33-42588].
10.2 -- Management Agreement between the Company and KC
Holdings, Inc. [Incorporated by reference to
Exhibit 10.2 to the Company's Registration
Statement on Form S-11 No. 33-47915].
10.3 -- Amended and Restated Stock Option Plan
[Incorporated by reference to Exhibit 10.3 to
the 1995 Form 10-K.]
10.4 -- Credit Agreement among Kimco Realty Corporation,
The Several Lenders from Time to Time Parties
Hereto, Chemical Bank and The First National
Bank of Chicago, as Co-Managers and Chemical
Bank, as Administrative Agent, dated as of
June 30, 1994. [Incorporated by reference to
Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended June 30, 1994].
10.5 -- Employment Agreement, Restricted Equity
Agreement, Non-Qualified and Incentive Stock
Option Agreement, and Price Condition
Non-Qualified and Incentive Stock Option
Agreement between Kimco Realty Corporation
and Michael J. Flynn, each dated November 1,
1995 [Incorporated by reference to Exhibit
10.5 to the 1995 Form 10-K].
10.6 -- Employment Agreement between Kimco Realty
Corporation and Bruce M. Kauderer, dated May
5, 1995 [Incorporated by Reference to Exhibit
10.6 to the 1996 Form 10-K].
*10.7 -- Employment Agreement between Kimco Realty
Corporation and Michael V. Pappagallo, dated
April 30, 1997. 63
*10.8 -- Credit Agreement among Kimco Realty Corporation,
The Several Lenders from Time to Time,
Parties Hereto, The Chase Manhattan Bank and
The First National Bank of Chicago, as
Co-Managers and The Chase Manhattan Bank, as
Administrative Agent, dated as of March 2,
1998. 69
*12.1 -- Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends. 127
*12.2 -- Computation of Ratio of Funds from Operations to
Combined Fixed Charges and Preferred Stock
Dividends. 128
*21.1 -- Subsidiaries of the Company 129
*23.1 -- Consent of Coopers & Lybrand L.L.P. 135
99.1 -- Prospectus of Kimco Realty Corporation
[Incorporated by reference to the Prospectus
dated November 4, 1997, filed pursuant to
Rule 424(b) under the Securities Act of 1933,
as amended].
- --------------------------------------------------------------------------------
* Filed herewith.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
KIMCO REALTY CORPORATION
(Registrant)
By: /s/ Milton Cooper
-----------------------
Milton Cooper
Chief Executive Officer
Dated: March 26, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Martin S. Kimmel Chairman (Emeritus) of March 26, 1998
- --------------------------- the Board of Directors
Martin S. Kimmel
/s/ Milton Cooper Chairman of the Board March 26, 1998
- --------------------------- of Directors and Chief
Milton Cooper Executive Officer
/s/ Michael J. Flynn Vice Chairman of the March 26, 1998
- --------------------------- Board of Directors,
Michael J. Flynn President and
Chief Operating Officer
/s/ Richard G. Dooley Director March 26, 1998
- --------------------------
Richard G. Dooley
/s/ Joe Grills Director March 26, 1998
- --------------------------
Joe Grills
/s/ Frank Lourenso Director March 26, 1998
- --------------------------
Frank Lourenso
/s/ Michael V. Pappagallo Chief Financial Officer March 26, 1998
- --------------------------
Michael V. Pappagallo
/s/ Glenn G. Cohen Treasurer March 26, 1998
- ---------------------------
Glenn G. Cohen
/s/ Toni Calandrino Controller March 26, 1998
- ---------------------------
Toni Calandrino
36
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) and (2)
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
-------
FORM 10-K
Page No.
---------
KIMCO REALTY CORPORATION AND SUBSIDIARIES
Report of Independent Accountants 38
Consolidated Financial Statements and Financial Statement Schedules:
Consolidated Balance Sheets as of December 31, 1997 and 1996 39
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995 40
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1997, 1996 and 1995 41
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 42
Notes to Consolidated Financial Statements 43
Financial Statement Schedules:
II. Valuation and Qualifying Accounts 58
III. Real Estate and Accumulated Depreciation 59
37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Kimco Realty Corporation:
We have audited the consolidated financial statements and the financial
statement schedules of Kimco Realty Corporation (the "Company") and Subsidiaries
listed in the index on the preceding page of this annual report on Form 10-K.
These financial statements and the financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedules
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Kimco Realty
Corporation and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
February 27, 1998, except for Note 17,
for which the date is March 5, 1998.
38
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
-----------------------------------------
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
--------------- ---------------
<S> <C> <C>
ASSETS:
Real Estate
Rental property
Land $212,019,596 $165,636,244
Buildings and improvements 1,190,828,854 905,033,615
--------------- ---------------
1,402,848,450 1,070,669,859
Less, accumulated depreciation and amortization 207,408,091 180,552,647
--------------- ---------------
1,195,440,359 890,117,212
Undeveloped land 1,347,709 1,386,127
--------------- ---------------
Real estate, net 1,196,788,068 891,503,339
Investment in retail store leases 15,938,041 18,994,321
Investments and advances in real estate joint ventures 9,794,142 15,143,222
Cash and cash equivalents 30,978,178 37,425,206
Accounts and notes receivable 16,203,454 13,986,138
Deferred charges and prepaid expenses 21,260,041 17,854,754
Other assets 52,928,200 28,125,581
--------------- ---------------
$1,343,890,124 $1,023,032,561
=============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY:
Notes payable $410,250,000 $310,250,000
Mortgages payable 121,363,908 54,404,939
Accounts payable and accrued expenses 34,288,409 21,983,886
Dividends payable 22,545,806 18,720,819
Other liabilities 7,590,856 7,242,868
--------------- ---------------
596,038,979 412,602,512
--------------- ---------------
Minority interests in partnerships 4,531,934 4,659,080
--------------- ---------------
Commitments and contingencies
Stockholders' equity
Preferred Stock, $1 par value, authorized 5,000,000 and
930,000 shares, respectively
Class A Preferred Stock, authorized 345,000 shares
Issued and outstanding 300,000 shares 300,000 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 200,000
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, authorized 460,000 shares
Issued and outstanding 400,000 shares 400,000 400,000
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value,
Authorized 100,000,000, and 50,000,000 shares, respectively
Issued and outstanding 40,394,805 and 36,215,055
shares, respectively 403,948 362,151
Paid-in capital 857,658,054 719,601,956
Cumulative distributions in excess of net income (115,642,791) (115,093,138)
--------------- ---------------
743,319,211 605,770,969
--------------- ---------------
$1,343,890,124 $1,023,032,561
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
39
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
----------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Revenues from rental property $198,929,403 $168,144,419 $143,132,165
------------- ------------- -------------
Rental property expenses:
Rent 4,873,200 1,417,263 1,301,340
Real estate taxes 26,345,685 19,815,808 16,869,710
Interest 31,744,762 27,019,283 25,585,063
Operating and maintenance 22,194,628 21,659,620 18,935,374
Depreciation and amortization 30,052,714 27,066,709 26,187,794
------------- ------------- -------------
115,210,989 96,978,683 88,879,281
------------- ------------- -------------
Income from rental property 83,718,414 71,165,736 54,252,884
Income from investment in retail store leases 3,571,946 3,631,845 1,810,505
------------- ------------- -------------
87,290,360 74,797,581 56,063,389
Management fee income 3,276,152 3,447,577 3,736,062
General and administrative expenses (11,651,341) (10,333,924) (8,831,626)
Equity in income (losses) of real estate joint
ventures, net 1,116,988 820,083 (288,582)
Minority interests in income of partnerships, net (463,522) (470,441) (215,656)
Other income, net 6,023,813 4,764,062 1,458,212
------------- ------------- -------------
Income before gain on sale of shopping
center 85,592,450 73,024,938 51,921,799
Gain on sale of shopping center 243,995 801,955 --
------------- ------------- -------------
Net income $85,836,445 $73,826,893 $51,921,799
============= ============= =============
Net income applicable to common shares $67,398,745 $57,692,418 $44,291,243
============= ============= =============
Net income per common share
Basic $1.80 $1.61 $1.33
============= ============= =============
Diluted $1.78 $1.59 $1.32
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
40
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1997, 1996 and 1995
-----------------
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------- -------------------------- Paid-in
Issued Amount Issued Amount Capital
------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 300,000 $ 300,000 30,097,896 $ 300,979 $ 430,935,721
Net income
Dividends ($1.47 per common share; $1.9375 and
$.99757 per Class A and Class B Depositary Share,
respectively)
Issuance of preferred stock 200,000 200,000 47,975,027
Issuance of common stock 3,592,871 35,929 82,724,947
Exercise of common stock options 40,581 405 676,127
------- --------- ---------- --------- -------------
Balance, December 31, 1995 500,000 500,000 33,731,348 337,313 562,311,822
Net income
Dividends ($1.60 per common share; $1.9375, $2.125
and $1.59943 per Class A, Class B and Class C
Depositary Share, respectively)
Issuance of preferred stock 400,000 400,000 96,037,337
Issuance of common stock 2,320,125 23,201 58,087,001
Exercise of common stock options 163,582 1,637 3,165,796
------- --------- ---------- --------- -------------
Balance, December 31, 1996 900,000 900,000 36,215,055 362,151 719,601,956
Net income
Dividends ($1.77 per common share; $1.9375, $2.125
and $2.0938 per Class A, Class B and Class C
Depositary Share, respectively)
Issuance of common stock 4,000,000 40,000 134,293,408
Exercise of common stock options 179,750 1,797 3,762,690
------- --------- ---------- --------- -------------
Balance, December 31, 1997 900,000 $ 900,000 40,394,805 $ 403,948 $ 857,658,054
======= ========= ========== ========= =============
<CAPTION>
Cumulative
Distributions Total
in Excess Stockholders'
of Net Income Equity
-------------- -------------
<S> <C> <C>
Balance, December 31, 1994 $ (109,335,607) $322,201,093
Net income 51,921,799 51,921,799
Dividends ($1.47 per common share; $1.9375 and
$.99757 per Class A and Class B Depositary Share,
respectively) (57,251,375) (57,251,375)
Issuance of preferred stock 48,175,027
Issuance of common stock 82,760,876
Exercise of common stock options 676,532
-------------- ------------
Balance, December 31, 1995 (114,665,183) 448,483,952
Net income 73,826,893 73,826,893
Dividends ($1.60 per common share; $1.9375, $2.125
and $1.59943 per Class A, Class B and Class C
Depositary Share, respectively) (74,254,848) (74,254,848)
Issuance of preferred stock 96,437,337
Issuance of common stock 58,110,202
Exercise of common stock options 3,167,433
-------------- ------------
Balance, December 31, 1996 (115,093,138) 605,770,969
Net income 85,836,445 85,836,445
Dividends ($1.77 per common share; $1.9375, $2.125
and $2.0938 per Class A, Class B and Class C
Depositary Share, respectively) (86,386,098) (86,386,098)
Issuance of common stock 134,333,408
Exercise of common stock options 3,764,487
-------------- ------------
Balance, December 31, 1997 $ (115,642,791) $743,319,211
============== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
41
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $ 85,836,445 $ 73,826,893 $ 51,921,799
Adjustments for noncash items -
Depreciation and amortization 30,052,714 27,066,709 26,187,794
Gain on sale of shopping center (243,995) (801,955) --
Minority interests in income of partnerships, net 463,522 470,441 215,656
Equity in (income) losses of real estate joint ventures, net (1,116,988) (820,083) 288,582
Change in accounts and notes receivable (2,217,316) 2,626,760 (940,256)
Change in accounts payable and accrued expenses 12,304,523 2,730,442 1,162,406
Change in other operating assets and liabilities 28,736 (3,207,396) (4,602,986)
------------- ------------- -------------
Net cash flow provided by operations 125,107,641 101,891,811 74,232,995
------------- ------------- -------------
Cash flow from investing activities:
Acquisition of and improvements to real estate (261,225,536) (140,916,684) (105,139,671)
Investment in retail store leases -- -- (23,026,673)
Investment in real estate joint ventures (4,625,068) -- (6,523,502)
Investment in marketable equity securities (11,138,247) (4,935,008) (2,470,990)
Advances to affiliated companies (14,036,000) -- --
Construction advances to real estate joint ventures -- -- (1,870,500)
Reimbursement of advances to real estate joint ventures 8,651,653 -- 6,794,928
Proceeds from sale of shopping center 1,550,000 1,825,000 4,975,582
------------- ------------- -------------
Net cash flow used for investing activities (280,823,198) (144,026,692) (127,260,826)
------------- ------------- -------------
Cash flow from financing activities:
Principal payments on debt, excluding
normal amortization of rental property debt (4,650,000) (8,299,980) (29,037,746)
Principal payments on rental property debt, net (1,618,255) (1,267,816) (1,221,912)
Change in notes payable 100,000,000 (15,000,000) 20,050,000
Dividends paid (82,561,111) (69,751,755) (53,885,490)
Proceeds from issuance of stock 138,097,895 157,714,972 122,343,419
------------- ------------- -------------
Net cash flow provided by financing activities 149,268,529 63,395,421 58,248,271
------------- ------------- -------------
Increase(decrease) in cash and cash equivalents (6,447,028) 21,260,540 5,220,440
Cash and cash equivalents, beginning of year 37,425,206 16,164,666 10,944,226
------------- ------------- -------------
Cash and cash equivalents, end of year $ 30,978,178 $ 37,425,206 $ 16,164,666
============= ============= =============
Supplemental schedule of noncash investing/financing activity:
Acquisition of real estate interests by issuance of common stock
and/or assumption of debt $ 73,227,224 $ -- $ 38,714,717
============= ============= =============
Declaration of dividends paid in succeeding year $ 22,545,806 $ 18,720,819 $ 14,217,726
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
42
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------
1. Summary of Significant Accounting Policies:
Business
Kimco Realty Corporation (the "Company"), its subsidiaries, affiliates and
related real estate joint ventures are engaged principally in the
operation of neighborhood and community shopping centers which are
anchored generally by discount department stores, supermarkets or
drugstores. Additionally, the Company provides management services for
shopping centers owned by affiliated entities and various real estate
joint ventures.
The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its
properties, avoiding dependence on any single property, and a large
tenant base. At December 31, 1997, the Company's single largest
neighborhood and community shopping center accounted for only 1.9% of the
Company's annualized base rental revenues and only 1.0% of the Company's
total shopping center gross leasable area ("GLA"). At December 31, 1997,
the Company's five largest tenants include Venture, Kmart Corporation,
Kohl's, WalMart and TJX Companies, which represent approximately 11.7%,
4.1%, 3.4%, 2.7% and 2.2%, respectively, of the Company's annualized base
rental revenues.
Principles of Consolidation and Estimates
The accompanying Consolidated Financial Statements include the accounts of
the Company, its subsidiaries, all of which are wholly-owned, and all
majority-owned partnerships. All significant intercompany balances and
transactions have been eliminated in consolidation.
Generally accepted accounting principles require the Company's management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses during a
reporting period. Actual results may differ from such estimates.
Real Estate
Real estate assets are stated at cost, less accumulated depreciation and
amortization. Such carrying amounts would be adjusted, if necessary, to
reflect an impairment in the value of the assets. Depreciation and
amortization are provided on the straight-line method over the estimated
useful lives of the assets, as follows:
Buildings 15 to 39 years
Fixtures and leasehold improvements Terms of leases or useful
lives, whichever is
shorter
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations are capitalized.
43
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
Investments in Real Estate Joint Ventures
Investments in real estate joint ventures are accounted for on the equity
method.
Deferred Leasing and Financing Costs
Costs incurred in obtaining tenant leases and long-term financing, included
in deferred charges and prepaid expenses in the accompanying Consolidated
Balance Sheets, are amortized over the terms of the related leases or
debt agreements, as applicable.
Revenue Recognition
Minimum revenues from rental property are recognized on a straight-line
basis over the terms of the related leases.
Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax
return. The Company has made an election to qualify, and believes it is
operating so as to qualify, as a Real Estate Investment Trust (a "REIT")
for Federal income tax purposes. Accordingly, the Company generally will
not be subject to Federal income tax, provided that distributions to its
stockholders equal at least the amount of its REIT taxable income as
defined under the Code.
Per Share Data
In 1997 the Financial Accounting Standards Board issued Financial
Accounting Standards No. 128 - "Earnings Per Share". Statement 128
replaces the presentation of primary and fully diluted earnings per share
("EPS") pursuant to Accounting Principles Board Opinion No. 15 with the
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income available to common shareholders by the
weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common shares were exercised or
converted into common shares and then shared in the earnings of the
Company.
The following table sets forth the reconciliation between basic and diluted
weighted average number of shares outstanding for each period:
1997 1996 1995
---------- ---------- ----------
Basic EPS - weighted average number
of common shares outstanding 37,387,984 35,906,029 33,388,004
Effect of dilutive securities -
Stock options 462,076 312,993 244,633
---------- ---------- ----------
Diluted EPS - weighted average number
of common shares 37,850,060 36,219,022 33,632,637
========== ========== ==========
44
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
New Accounting Pronouncements
In 1997 the Financial Accounting Standards Board issued statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income"
which established standards for reporting and displaying comprehensive
income and its components. In 1997 the Financial Accounting Standards
Board also issued statement of Financial Accounting Standards No. 131 -
"Disclosures about Segments of an Enterprise and Related Information"
which established standards for reporting information about operating
segments. The Company is required to adopt these two standards with its
December 31, 1998 financial statements. The Company is currently
evaluating the effect, if any, these statements will have on the
Company's financial presentation.
Reclassifications
Certain account balances in the accompanying Consolidated Balance Sheet as
of December 31, 1996, have been reclassified to conform with the current
year presentation.
2. Shopping Center Acquisitions:
During the years 1997, 1996 and 1995 certain subsidiaries of the Company
acquired real estate interests in various shopping center properties at
aggregate costs of approximately $146 million, $39 million and $83
million, respectively. These acquisitions have been funded principally
through the application of proceeds from the Company's public unsecured
debt and equity offerings. (See Notes 7 and 11.)
3. Retail Property Acquisitions:
In August 1997, certain subsidiaries of the Company acquired certain real
estate assets from a retailer consisting of interests in 49 fee and
leasehold properties totaling approximately 5.9 million square feet of
leasable area located in Illinois, Missouri, Texas, Oklahoma, Kansas,
Indiana and Iowa. The aggregate price was approximately $130 million,
consisting of $70.5 million in cash and the assumption of approximately
$59.5 million of existing mortgage debt on certain of these properties.
The mortgage debt bears interest at 10.54% per annum and cannot be repaid
without penalty, until its maturity on July 1, 2000. In addition, the
Company was granted (i) an option to acquire two other properties for
$4.5 million, (ii) an option to acquire up to 11 additional properties
should certain conditions be satisfied and (iii) rights of first refusal,
for a period of five years, to acquire 31 additional properties
containing 4.2 million square feet of leasable area. The transaction also
included approximately 573,000 square feet of retail space substantially
occupied by other retailers and approximately 165,000 square feet of
available retail space. Simultaneously with this transaction, the Company
entered into a long-term unitary net lease covering all premises occupied
by this retailer pursuant to which this seller/tenant may remain in
occupancy and continue to conduct business in these premises.
45
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
During August 1996, certain subsidiaries of the Company acquired interests
in 16 retail properties, including 2 properties to which the Company and
its affiliates already held fee title, for $21.8 million in cash. These
property interests were acquired from a retailer which had elected to
discontinue operation of its discount department store division.
During January 1996, certain subsidiaries of the Company entered into two
sale-leaseback transactions pursuant to which it acquired fee title to 16
retail properties located in Texas, Iowa, Oklahoma, Illinois and Kansas
for a purchase price of $40 million. Simultaneously, the Company executed
two long-term unitary net leases covering the 16 locations pursuant to
which the seller/tenant may remain in occupancy and continue to conduct
business in these premises. During July 1997, the Company consented to
the modification of these two unitary net lease agreements whereby the
Company entered into two unitary net lease agreements with another
retailer on 9 of the retail properties and a new unitary lease with the
seller/tenant on the remaining 7 locations.
These retail property acquisitions have been funded principally through the
the application of proceeds from the Company's public unsecured debt and
equity offerings. (See Notes 7 and 11.)
4. Investment in Retail Store Leases:
The Company has interests in various retail store leases relating to the
anchor store premises in neighborhood and community shopping centers.
These premises have been substantially sublet to retailers which lease
the stores pursuant to net lease agreements. Income from the investment
in these retail store leases during the years ended December 31, 1997 and
1996 was approximately $3.6 million in each year. These amounts represent
sublease revenues during the years ended December 31, 1997 and 1996 of
approximately $20.9 million and $21.0 million, respectively, less related
expenses of $15.2 million and $15.2 million, respectively, and an amount,
which in management's estimate, reasonably provides for the recovery of
the investment over a period representing the expected remaining term of
the retail store leases. The Company's future minimum revenues under the
terms of all noncancellable tenant subleases and future minimum
obligations through the remaining terms of its retail store leases are as
follows (in millions of dollars): 1998, $20.3 and $15.4; 1999, $19.3 and
$14.2; 2000, $16.5 and $12.3; 2001, $13.1 and $9.8; 2002, $9.5 and $7.2;
and thereafter, $26.3 and $18.4, respectively.
46
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
5. Investments and Advances in Real Estate Joint Ventures:
The Company and its subsidiaries have investments in and advances to
various real estate joint ventures. These joint ventures are engaged in
the operation of shopping centers which are either owned or held under
long-term operating leases. Summarized financial information for the
recurring operations of these real estate joint ventures is as follows
(in millions of dollars):
December 31,
------------------------
1997 1996
------- -------
Assets:
Real estate, net $58.3 $41.5
Other assets 7.8 4.0
------- -------
$66.1 $45.5
======= =======
Liabilities and Partners'
Capital/(Deficit):
Mortgages payable $63.5 $30.3
Other liabilities 19.7 15.1
Partners' Capital/(Deficit) (17.1) .1
------- -------
$66.1 $45.5
======= =======
Years Ended December 31,
------------------------
1997 1996 1995
------- ------- -------
Revenues from rental
property $14.8 $11.2 $8.3
Operating expenses (3.6) (2.9) (2.1)
Mortgage interest (3.1) (2.5) (2.4)
Depreciation and
amortization (2.2) (2.2) (2.0)
Other, net (1.8) (1.3) (1.2)
------- ------- -------
Net income $4.1 $2.3 $.6
======= ======= =======
Other liabilities in the accompanying Consolidated Balance Sheets include
accounts with certain real estate joint ventures totaling approximately
$5.1 and $4.1 million at December 31, 1997 and 1996, respectively. The
Company and its subsidiaries have varying equity interests in these real
estate joint ventures which may differ from their proportionate share of
net income or loss recognized in accordance with generally accepted
accounting principles.
6. Cash and Cash Equivalents:
Cash and cash equivalents (demand deposits in banks, commercial paper and
certificates of deposit with original maturities of three months or less)
includes tenants' security deposits, escrowed funds and other restricted
deposits approximating $10.1 million and $2.4 million at December 31,
1997 and 1996, respectively.
47
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
Cash and cash equivalent balances may, at a limited number of banks and
financial institutions, exceed insurable amounts. The Company believes it
mitigates its risks by investing in or through major financial
institutions. Recoverability of investments is dependent upon the
performance of the issuers.
7. Notes Payable:
The Company has implemented a $150 million unsecured medium-term notes
("MTN") program pursuant to which it may from time to time offer for sale
its senior unsecured debt for any general corporate purposes, including
(i) funding specific liquidity requirements in its business, including
property acquisition and redevelopment costs, and (ii) better managing
the Company's debt maturities.
During May and July 1997, the Company issued under its MTN program $100
million in fixed-rate senior unsecured medium-term notes (the "1997
Notes"). These notes have maturities ranging from ten to twelve years,
and bear interest ranging from 6.96% to 7.56%. Interest on these notes is
payable semi-annually in arrears.
As of December 31, 1997, a total principal amount of $160.25 million,
including the 1997 notes, in fixed-rate senior unsecured notes had been
issued under the MTN program primarily for the acquisition of
neighborhood and community shopping centers and the expansion and
improvement of properties in the Company's portfolio. These notes have
maturities ranging from ten to twelve years and bear interest at rates
ranging from 6.70% to 7.91%. Interest on these fixed-rate senior
unsecured notes is payable semi-annually in arrears.
As of December 31, 1997, the Company had $100 million in Floating Rate
Senior Notes due 1999 bearing interest at LIBOR plus .50% (6.3% at
December 31, 1997). Interest on these floating-rate, senior unsecured
notes resets and is payable quarterly in arrears.
As of December 31, 1997, the Company had $100 million in 6.5% fixed-rate
unsecured Senior Notes due 2003. Interest on these senior unsecured notes
is paid semi-annually in arrears.
During August 1996, the Company redeemed its $50 million unsecured Floating
Rate Senior Notes due in 1998. These Floating Rate Senior Notes,
redeemable at par at the option of the Company after May 11, 1996 and
bearing interest at LIBOR plus .50%, were refinanced with a $50 million
floating-rate unsecured medium-term note issued under the Company's MTN
program. This floating-rate medium-term note is due in 1998 and bears
interest at LIBOR plus .12% (6.0% at December 31, 1997). Interest on this
floating-rate, senior unsecured medium-term note resets and is payable
quarterly in arrears.
In accordance with the terms of the Indenture pursuant to which the
Company's senior, unsecured notes have been issued, the Company is (a)
subject to maintaining certain maximum leverage ratios on both unsecured
48
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
senior corporate and secured debt, minimum debt service coverage ratios
and minimum equity levels, and (b) restricted from paying dividends in
amounts that exceed by more than $26 million the funds from operations,
as defined, generated through the end of the calendar quarter most
recently completed prior to the declaration of such dividend; however,
this dividend limitation does not apply to any distributions necessary to
maintain the Company's qualification as a REIT providing the Company is
in compliance with its total leverage limitations.
The Company maintains a $100 million, unsecured revolving credit agreement
with a group of banks. Borrowings under this facility are available for
general corporate purposes, including property acquisitions and
redevelopment. Interest on borrowings accrues at a spread (currently
.50%) to LIBOR or money-market rates, as applicable, which fluctuates in
accordance with changes in the Company's senior debt ratings. A fee
approximating .14% per annum is payable on that portion of the facility
which remains unused. Pursuant to the terms of the agreement, the
Company, among other things, is (a) subject to maintaining certain
maximum leverage ratios on both unsecured senior corporate and secured
debt, a minimum debt service coverage ratio and minimum unencumbered
asset and equity levels, and (b) restricted from paying dividends in
amounts that exceed 90% of funds from operations, as defined, plus 10% of
the Company's stockholders' equity determined in accordance with
generally accepted accounting principles. There were no borrowings
outstanding under this facility at December 31, 1997. This revolving
credit facility is scheduled to expire in June 2000.
8. Mortgages Payable:
Mortgages payable, collateralized by certain shopping center properties and
related tenants' leases, are generally due in monthly installments of
principal and/or interest which mature at various dates through 2008.
Interest rates range from approximately 6.8% to 12.9% (weighted average
interest rate of 9.5% as of December 31, 1997). The scheduled maturities
of all mortgages payable as of December 31, 1997, are approximately as
follows (in millions of dollars): 1998, $7.9; 1999, $22.6; 2000, $61.6;
2001, $5.7; 2002, $1.2; and thereafter, $22.4.
Three of the Company's properties are encumbered by approximately $13.5
million in floating-rate, tax-exempt mortgage bond financing. The rates
on the bonds are reset annually, at which time bondholders have the right
to require the Company to repurchase the bonds. The Company has engaged a
remarketing agent for the purpose of offering for resale those bonds that
are tendered to the Company. All bonds tendered for redemption in the
past have been remarketed and the Company has arrangements, including
letters of credit, with banks to both collateralize the principal amount
and accrued interest on such bonds and to fund any repurchase
obligations.
9. KC Holdings, Inc.:
To facilitate the Company's November 1991 initial public stock offering
(the "IPO"), forty-six shopping center properties and certain other
assets, together with indebtedness related thereto, were transferred to
subsidiaries of KC Holdings, Inc. ("KC Holdings"), a newly-formed
corporation that is owned by the stockholders of the Company prior to the
49
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
IPO. The Company continues to manage eighteen of these shopping center
properties and was granted ten-year, fixed-price options to reacquire the
real estate assets owned by KC Holdings' subsidiaries, subject to any
liabilities outstanding with respect to such assets at the time of an
option exercise. As of December 31, 1997, KC Holdings' subsidiaries had
conveyed 14 shopping centers back to the Company and had disposed of ten
additional centers in transactions with third parties. The members of the
Company's Board of Directors who are not also shareholders of KC Holdings
unanimously approved the purchase of each of the 14 shopping centers that
have been reacquired by the Company from KC Holdings.
Selected financial information for the twenty-two properties owned by KC
Holdings' subsidiaries as of and for the year ended December 31, 1997, is
as follows: Real estate, net of accumulated depreciation and
amortization, $55.0 million; Notes and mortgages payable, $61.2 million;
Revenues from rental property, $11.2 million; Loss from rental
operations, $.2 million, after depreciation and amortization deductions
of $2.1 million; Income adjustment for real estate joint ventures, net,
$.3 million.
10. Fair Value Disclosure of Financial Instruments:
All financial instruments of the Company are reflected in the accompanying
Consolidated Balance Sheets at amounts which, in management's estimation
based upon an interpretation of available market information and
valuation methodologies (including discounted cash flow analyses with
regard to fixed rate debt) considered appropriate, reasonably approximate
their fair values. Such fair value estimates are not necessarily
indicative of the amounts that would be realized upon disposition of the
Company's financial instruments.
11. Preferred and Common Stock Offerings:
On September 30, 1997, the Company completed a primary public stock
offering of 4,000,000 shares of common stock at $35.50 per share. The net
proceeds from this sale of common stock, totaling approximately $134.5
million (after related transaction costs of approximately $7.5 million),
have been used primarily for the acquisition of neighborhood and
community shopping centers.
On February 2, 1996, the Company completed a primary public stock offering
of 2,200,000 shares of common stock at $26.50 per share. The net proceeds
from this sale of common stock, totaling approximately $55.0 million
(after related transaction costs of approximately $3.4 million), have
been used primarily for the acquisition of neighborhood and community
shopping centers.
On April 10, 1996, the Company completed a public offering of 4,000,000
Depositary Shares (the "Class C Depositary Shares") at $25.00 per share,
each such Class C Depositary Share representing 1/10 of a share of the
Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock (the
"Class C Preferred Stock"), par value $1.00 per share. The cash proceeds
to the Company, net of related transaction costs of approximately $3.6
million, totaling approximately $96.4 million, were used for the
acquisition of interests in neighborhood and community shopping centers,
and the redevelopment, expansion and improvement of properties in the
Company's portfolio.
50
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
Dividends on the Class C Depositary Shares are cumulative and payable
quarterly in arrears at the rate of 8-3/8% per annum based on the $25 per
share initial offering price, or $2.0938 per depositary share. The Class
C Depositary Shares are redeemable, in whole or in part, for cash on or
after April 15, 2001 at the option of the Company at a redemption price
of $25 per depositary share, plus any accrued and unpaid dividends
thereon. The redemption price of the Class C Preferred Stock may be paid
solely from the sale proceeds of other capital stock of the Company,
which may include other classes or series of preferred stock. The Class C
Depositary Shares are not convertible or exchangeable for any other
property or securities of the Company. The Class C Preferred Stock
(represented by the Class C Depositary Shares outstanding) ranks pari
passu with the Company's 7-3/4% Class A Cumulative Redeemable Preferred
Stock and 8-1/2% Class B Cumulative Redeemable Preferred Stock as to
voting rights, priority for receiving dividends and liquidation
preferences as set forth below.
The Company has outstanding 3,000,000 Depositary Shares (the "Class A
Depositary Shares"), each such Class A Depositary Share representing 1/10
of a share of the Company's 7-3/4% Class A Cumulative Redeemable
Preferred Stock (the "Class A Preferred Stock"), par value $1.00 per
share, and 2,000,000 Depositary Shares (the "Class B Depositary Shares"),
each such Class B Depositary Share representing 1/10 of a share of the
Company's 8-1/2% Class B Cumulative Redeemable Preferred Stock (the
"Class B Preferred Stock"), par value $1.00 per share.
Dividends on the Class A Depositary Shares are cumulative and payable
quarterly in arrears at the rate of 7-3/4% per annum based on the $25 per
share initial offering price, or $1.9375 per depositary share. The Class
A Depositary Shares are redeemable, in whole or in part, for cash on or
after September 23, 1998 at the option of the Company, at a redemption
price of $25 per depositary share, plus any accrued and unpaid dividends
thereon. The Class A Depositary Shares are not convertible or
exchangeable for any other property or securities of the Company. The
Class A Preferred Stock (represented by the Class A Depositary Shares
outstanding) ranks pari passu with the Company's Class B Preferred Stock
and Class C Preferred Stock as to voting rights, priority for receiving
dividends and liquidation preferences as set forth below.
Dividends on the Class B Depositary Shares are cumulative and payable
quarterly in arrears at the rate of 8-1/2% per annum based on the $25 per
share initial offering price, or $2.125 per depositary share. The Class B
Depositary Shares are redeemable, in whole or in part, for cash on or
after July 15, 2000 at the option of the Company at a redemption price of
$25 per depositary share, plus any accrued and unpaid dividends thereon.
The redemption price of the Class B Preferred Stock may be paid solely
from the sale proceeds of other capital stock of the Company, which may
include other classes or series of preferred stock. The Class B
Depositary Shares are not convertible or exchangeable for any other
property or securities of the Company. The Class B Preferred Stock
(represented by the Class B Depositary Shares outstanding) ranks pari
passu with the Company's Class A Preferred Stock and Class C Preferred
Stock as to voting rights, priority for receiving dividends and
liquidation preferences as set forth below.
51
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
Voting Rights - As to any matter on which the Class A Preferred Stock,
Class B Preferred Stock and Class C Preferred Stock (collectively, the
"Preferred Stock") may vote, including any action by written consent,
each share of Preferred Stock shall be entitled to 10 votes, each of
which 10 votes may be directed separately by the holder thereof. With
respect to each share of Preferred Stock, the holder thereof may
designate up to 10 proxies, with each such proxy having the right to vote
a whole number of votes (totaling 10 votes per share of Preferred Stock).
As a result, each Class A, each Class B and each Class C Depositary Share
is entitled to one vote.
Liquidation Rights - In the event of any liquidation, dissolution or
winding up of the affairs of the Company, the Preferred Stock holders are
entitled to be paid, out of the assets of the Company legally available
for distribution to its stockholders, a liquidation preference of $250.00
per share ($25 per Class A, Class B and Class C Depositary Share,
respectively), plus an amount equal to any accrued and unpaid dividends
to the date of payment, before any distribution of assets is made to
holders of the Company's common stock or any other capital stock that
ranks junior to the Preferred Stock as to liquidation rights.
12. Dispositions of Real Estate:
During June 1997, the Company disposed of a property in Troy, OH. Proceeds
from the disposition totaling approximately $1.6 million, together with
an additional $8.3 million cash investment, were used to acquire an
exchange shopping center property located in Ocala, FL.
During September 1996, the Company disposed of a property in Watertown, NY.
Proceeds from the disposition totaling approximately $1.8 million in
cash, together with an additional $2.2 million cash investment, were used
to acquire an exchange shopping center property located in Lafayette, IN
during January 1997.
13. Transactions with Related Parties:
The Company provides management services for shopping centers owned
principally by affiliated entities and various real estate joint ventures
in which certain stockholders of the Company have economic interests.
Such services are performed pursuant to management agreements which
provide for fees based upon a percentage of gross revenues from the
properties and other direct costs incurred in connection with management
of the centers. The Consolidated Statements of Income include management
fee income from KC Holdings of approximately $.6 million, $.6 million,
and $.6 million during years 1997, 1996 and 1995, respectively.
Reference should be made to Notes 5 and 9 for further information regarding
transactions with related parties.
14. Commitments and Contingencies:
The Company and its subsidiaries are engaged in the operation of shopping
centers which are either owned or held under long-term leases which
expire at various dates through 2076. The Company and its subsidiaries,
in turn, lease premises in these centers to tenants pursuant to lease
agreements which provide for terms ranging generally from 5 to 25 years
and for annual
52
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
minimum rentals plus incremental rents based on operating expense levels
and tenants' sales volumes. Annual minimum rentals plus incremental rents
based on operating expense levels comprised approximately 98%, 97% and
97% of total revenues from rental property for the years ended December
31, 1997, 1996 and 1995, respectively.
The future minimum revenues from rental property under the terms of all
noncancellable tenant leases, assuming no new or renegotiated leases are
executed for such premises, for future years are approximately as follows
(in millions of dollars): 1998, $175.1; 1999, $165.8; 2000, $153.1; 2001,
$139.2; 2002, $126.1; and thereafter, $1,206.9.
Minimum rental payments under the terms of all noncancellable operating
leases pertaining to its shopping center portfolio for future years are
approximately as follows (in millions of dollars): 1998, $9.8; 1999,
$9.4; 2000, $8.8; 2001, $7.5; 2002, $6.6; and thereafter, $79.6.
15. Incentive Plans:
The Company maintains a stock option plan (the "Plan") pursuant to which a
maximum 3,000,000 shares of the Company's common stock may be issued for
qualified and non-qualified options. Options granted under the Plan
generally vest ratably over a three-year term, expire ten years from the
date of grant and are exercisable at the market price on the date of
grant, unless otherwise determined by the Board in its sole discretion.
Information with respect to stock options under the Plan for years 1997,
1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Weighted Average
Exercise Price
Shares Per share
------ ---------
<S> <C> <C>
Options outstanding, December 31, 1994 1,069,269 $19.87
Exercised (40,581) $16.67
Granted 423,540 $24.96
---------
Options outstanding, December 31, 1995 1,452,228 $21.44
Exercised (163,582) $19.36
Granted 315,500 $28.32
---------
Options outstanding, December 31, 1996 1,604,146 $23.01
Exercised (179,750) $20.94
Granted 470,700 $31.72
---------
Options outstanding, December 31, 1997 1,895,096 $25.37
=========
Options exercisable -
December 31, 1995 762,204 $19.45
========= ======
December 31, 1996 954,175 $20.84
========= ======
December 31, 1997 1,126,093 $22.39
========= ======
</TABLE>
The exercise prices for options outstanding as of December 31, 1997 range
from $13.33 to $34.19 per share. The weighted average remaining
contractual life for options outstanding as of December 31, 1997 was
approximately 7.6 years. Options to purchase 329,673, 800,373 and
53
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
1,115,873 shares of the Company's common stock were available for
issuance under the Plan at December 31, 1997, 1996 and 1995,
respectively.
The Company has elected to adopt the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation". Accordingly, no compensation cost has been
recognized with regard to options granted under the Plan in the
accompanying Consolidated Statements of Income. If stock-based
compensation costs had been recognized based on the estimated fair values
at the dates of grant for options awarded during 1997, 1996 and 1995, net
income and net income per common share for these calendar years would
have been reduced by approximately $.7 million, or $.02 per share, $.4
million, or $.01 per share, and $.1 million, or less than $.01 per share,
respectively.
These pro forma adjustments to net income and net income per common share
assume fair values of each option grant estimated using the Black-Scholes
option pricing formula. The more significant assumptions underlying the
determination of such fair values for options granted during 1997, 1996
and 1995 include: (i) weighted average risk-free interest rates of 6.18%,
6.24% and 6.02%, respectively; (ii) weighted average expected option
lives of 8.2 years, 7.25 years and 6.13 years, respectively; (iii) an
expected volatility of 15.65%, 15.79% and 15.79%, respectively, and (iv)
an expected dividend yield of 6.44%, 6.82% and 6.82%, respectively. The
per share weighted average fair value at the dates of grant for options
awarded during 1997, 1996 and 1995 was $3.02, $2.50 and $2.14,
respectively.
The Company maintains a 401(k) retirement plan covering substantially all
officers and employees which permits participants to defer up to a
maximum 10% of their eligible compensation. This deferred compensation,
together with Company matching contributions which generally equal
employee deferrals up to a maximum of 5%, is fully vested and funded as
of December 31, 1997. Company contributions to the plan totaled less than
$.3 million for each of years 1997, 1996 and 1995.
16. Supplemental Financial Information:
The following summary represents the results of operations, expressed in
thousands except per share amounts, for each quarter during years 1997
and 1996.
1997 (Unaudited)
---------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- --------- -------
Revenues from
rental property $45,195 $45,276 $50,823 $57,635
Net income $20,604 $21,045 $20,641 $23,546
Net income, per common share:
Basic $.44 $.45 $.44 $.47
Diluted $.44 $.45 $.43 $.46
54
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
1996 (Unaudited)
Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- -------
Revenues from
rental property $41,662 $42,444 $40,837 $43,201
Net income $15,928 $18,439 $19,833 $19,627
Net income, per common share:
Basic $.38 $.39 $.42 $.42
Diluted $.38 $.39 $.41 $.41
Interest paid during years 1997, 1996 and 1995 approximated $29.9 million,
$26.9 million and $25.0 million, respectively.
Accounts and notes receivable in the accompanying Consolidated Balance
Sheets are net of estimated unrecoverable amounts of approximately $1.8
million and $1.4 million, respectively, at December 31, 1997 and 1996.
17. Subsequent Events:
Property Acquisitions / Disposition
In January 1998, the Company acquired seven neighborhood and community
shopping center properties comprising approximately 632,000 square feet
of GLA in the Denver, CO market for approximately $43.6 million,
including the assumption of $4.2 million of mortgage debt. These
properties are primarily anchored by supermarket or drugstore tenants.
In addition, the Company, through an affiliated entity, acquired interests
in three retail properties in the Chicago, IL market comprising
approximately 516,000 square feet of GLA for an aggregate purchase price
of approximately $23.7 million. These properties include approximately
70,000 square feet of showroom space and adjoining warehouses of
approximately 100,000 square feet at each location. Simultaneous with
this transaction, the Company leased, to a national furniture retailer,
the showroom portion of each property under individual long-term leases.
The Company is currently planning the redevelopment of the warehouse
portion of each property.
The Company disposed of a property in Pinellas Park, FL during January
1998. Cash proceeds from the disposition totaling $2.3 million will be
used to acquire an exchange shopping center property.
Price REIT Merger
On January 13, 1998, the Company and The Price REIT, Inc., a Maryland
corporation ("Price REIT") signed a definitive agreement to merge, (the
"Merger"). Pursuant to the terms of the Agreement and Plan of Merger
dated January 13, 1998, as amended March 5, 1998 (the "Merger
Agreement"), Price REIT will be merged into a newly formed wholly-owned
subsidiary of the Company.
The transaction is intended, for financial accounting purposes, to be
accounted for as a purchase. Under the terms of the Merger Agreement each
share of Price REIT common stock will be exchanged for a combination of
the Company's common stock and Kimco depositary shares (the "Class D
Depository Shares"), each
55
<PAGE>
depositary share representing a 1/10 of a share interest in a new issue
of Kimco 7.5% Class D Cumulative Convertible Preferred Stock (the "Class
D Convertible Preferred Stock") having an aggregate value of at least $45
based on the "Kimco Average Price" (as defined herein) and the
liquidation preference of the Class D Depositary Shares (collectively,
the "Merger Consideration"). The Merger, which is expected to be
completed in mid-1998, is subject to customary closing conditions,
including certain regulatory approvals and the approval of the issuance
of the Merger Consideration by the stockholders of the Company and the
approval of the Merger by the stockholders of Price REIT.
The Merger Agreement provides for a pre-closing adjustment to the number of
shares of the Company's common stock and Class D Depositary Shares
issuable per share of Price REIT common stock in order to ensure that
Price REIT stockholders will receive at least, and possibly more than,
$45 in the Company's securities per Price REIT share. Specifically, in
the event that the average closing price of the Company's common stock
(the "Kimco Average Price" as defined herein) ending on and including the
seventh trading day immediately preceding the date of the Company's
1998 annual meeting of stockholders plus $10 is less than $45, the
amount of Class D Depositary Shares will be increased up to a maximum of
$11.25 of Class D Depositary Shares (based on a liquidation preference
of $25 per Class D Depositary Share) to arrive at a value of $45. To the
extent that the issuance of $11.25 of Class D Depositary Shares would
still result in less than $45 of combined value, the number of shares of
the Company's common stock issuable per Price REIT share will be
increased in order to arrive at a total of $45 delivered in the
Company's securities. However, the Company may elect to terminate the
Merger Agreement in the event its Average Price (the "Average Price", as
defined herein) during a specified calculation period or the closing
price on the scheduled closing date or on either of the two days prior
to the scheduled closing date is less than $32.
In the event that the "Kimco Average Price" (as defined herein) plus $10
is greater than $45, each share of Price REIT common stock would continue
to be converted into one share of the Company's common stock and the
amount of Class D Depositary Shares will be decreased by 50% of the
amount by which the Kimco Average Price referred to above plus $10
exceeds $45. However, Price REIT stockholders will never receive less
than $9 of Class D Depositary Shares. Thus, as a result of the merger,
Price REIT stockholders will obtain the benefit of 50% of the increase in
value of the Company's common stock as reflected in the Kimco Average
Price between $35 and $37, and 100% of any increase above $37.
As used herein, the "Kimco Average Price" shall be the average of Average
Prices (as defined herein) of the the Company's common stock for fifteen
(15) randomly selected trading days within the thirty (30) consecutive
trading days ending on and including the seventh trading day immediately
preceding the date of the Company's 1998 annual meeting of stockholders.
As used herein, the "Average Price" for any date means the average of the
daily high and low prices of the Company's common stock on the New York
Stock Exchange (the "NYSE") as reported in The Wall Street Journal, or if
not reported thereby, by another authoritative source. The random
selection of trading days shall be made under the joint supervision of
the financial advisors retained by the Company and Price REIT in
connection with the transactions contemplated hereby.
56
<PAGE>
The dividend rate on the Class D Depositary Shares will be 7.5 % per annum,
or, if greater, the dividend on the shares of the Company's common stock
into which a Class D Depositary Share is convertible plus $0.0275
quarterly. The Class D Depositary Shares will be convertible into the
Company's common stock at a conversion price of $40.25 per share at any
time by the holder and may be redeemed by the Company at the conversion
price in shares of the Company's common stock at any time after the third
anniversary of the Merger if for any 20 trading days during a rolling 30
day consecutive trading-day period the Company's common stock closing
price exceeds $48.30, subject to certain adjustments. The Class D
Depositary Shares are expected to be listed on the NYSE.
The Merger Agreement also provides that each party will be entitled to a
Break-Up Fee in the amount of $12,500,000 or reimbursement of expenses up
to $2,000,000 in the event the agreement is terminated under various
circumstances. The Company has also agreed that if it elects to terminate
the Merger Agreement because its common stock price closes below $32
Price REIT will be entitled to receive $6,250,000.
Financings
On March 2, 1998, the Company obtained an additional $150 million interim
unsecured credit facility to both finance the purchase of properties and
meet any short-term working capital requirements. The terms of this
interim facility are substantially the same as those under the Company's
$100 million revolving credit facility (See Note 7). This facility is
scheduled to expire in June 1998, however, it is the Company's intention
to extend the term of this facility and establish it as a continuing part
of the Company's total unsecured revolving credit availability.
18. Pro Forma Financial Information (Unaudited):
The Company and certain of its subsidiaries acquired and disposed of
interests in shopping center properties during 1997. The pro forma
financial information set forth below is based upon the Company's
historical Consolidated Statements of Income for years 1997 and 1996,
adjusted to give effect to these transactions as of January 1, 1996.
The pro forma financial information is presented for informational purposes
only and may not be indicative of what actual results of operations would
have been had the transactions occurred on January 1, 1996, nor does it
purport to represent the results of operations for future periods.
(Amounts presented in millions of dollars, except per share figures.)
Years Ended December 31, 1997 1996
------------------------ ---- ----
Revenues from rental property $212.5 $187.8
Net Income $90.8 $80.5
Net Income, per common share $1.94 $1.79
57
<PAGE>
Schedule II
KIMCO REALTY CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Balance at Charged to Charged to Deductions Balance
Beginning of expenses valuation at end of
Period accounts period
------------ ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1997
Allowance for
uncollectable
accounts $1,350,000 $910,000 $ -- $460,000 $1,800,000
========== ========== ========== ========== ==========
Year Ended
December 31, 1996
Allowance for
uncollectable
accounts $1,350,000 $955,000 $ -- $955,000 $1,350,000
========== ========== ========== ========== ==========
Year Ended
December 31, 1995
Allowance for
uncollectable
accounts $1,000,000 $1,318,000 $ -- $968,000 $1,350,000
========== ========== ========== ========== ==========
</TABLE>
58
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
REAL ESTATE ANJD ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
SCHEDULE III
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION
---------- ---- ------------ -------------- -------- ------------ ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BOCA RATON $573,875 $2,295,501 $788,261 $573,875 $3,083,762 $3,657,637 $430,622
WHITEHALL 432,652 770,159.00 170,161 432,652 940,320 1,372,972 675,739
OGDEN 213,818 855,275 465,600 213,818 1,320,875 1,534,693 663,559
ORLANDO 923,956 3,646,904 1,761,902 1,172,119 5,160,643 6,332,762 408,220
PLAINVIEW 263,693 584,031 9,181,712 263,693 9,765,743 10,029,436 1,371,486
POMPANO BEACH 97,169 874,442 1,187,173 97,169 2,061,615 2,158,784 937,945
LIVONIA 178,785 925,818 595,807 178,785 1,521,625 1,700,410 369,789
LAUDERDALE LAKES 342,420 2,416,645 2,087,730 342,420 4,504,375 4,846,795 2,741,430
FERN PARK 225,000 902,000 2,325,340 225,000 3,227,340 3,452,340 893,618
ADDISON 0 753,343 1,100,049 0 1,853,392 1,853,392 832,646
LARGO 293,686 792,119 1,220,469 293,686 2,012,588 2,306,274 1,237,337
WINSTON-SALEM 540,667 719,655 3,303,629 540,667 4,023,284 4,563,951 948,887
MELBOURNE 0 1,754,000 2,234,629 0 3,988,629 3,988,629 1,392,619
ST. PETERSBURG 0 917,360 681,718 0 1,599,078 1,599,078 564,819
GROVE GATE 365,893 1,049,172 1,048,494 365,893 2,097,666 2,463,559 1,000,774
UPPER ARLINGTON 504,256 2,198,476 4,838,738 1,255,544 6,285,926 7,541,470 3,361,654
SHILOH SPRING RD 0 1,735,836 2,274,519 0 4,010,355 4,010,355 2,228,842
FELBRAM 72,971 302,579 401,599 72,971 704,178 777,149 407,584
LEESBURG 0 171,636 97,728 0 269,364 269,364 180,312
FOREST PARK 141,200 564,800 64,990 141,200 629,790 770,990 375,314
LARGO EAST BAY 2,832,296 11,329,185 509,327 2,832,296 11,838,512 14,670,808 1,806,966
LEXINGTON 1,675,031 6,848,209 4,549,848 1,675,031 11,398,057 13,073,088 1,044,813
CLAWSON 1,624,771 6,578,142 2,077,101 1,624,771 8,655,243 10,280,014 783,771
CHARLOTTE 919,251 3,570,981 891,509 919,251 4,462,490 5,381,741 293,510
LAFAYETTE 230,402 1,305,943 65,497 230,402 1,371,440 1,601,842 773,264
FARMINGTON 1,098,426 4,525,723 911,452 1,098,426 5,437,175 6,535,601 530,816
WEST MIFFLIN 475,815 1,903,231 634,314 475,815 2,537,545 3,013,360 208,727
BRADENTON 125,000 299,253 323,963 125,000 623,216 748,216 297,979
GREENWOOD 423,371 1,883,421 1,145,394 423,371 3,028,815 3,452,186 1,185,108
PINELLAS PARK 219,924 870,000 501,212 219,924 1,371,212 1,591,136 310,411
GRAVOIS 1,032,416 4,455,514 796,472 1,032,416 5,251,986 6,284,402 2,828,335
JENNINGS 257,782 1,031,128 1,233,616 257,782 2,264,744 2,522,526 182,766
DALLAS 1,299,632 5,168,727 5,324,830 1,299,632 10,493,557 11,793,189 7,730,659
TUTTLE BEE SARASOTA 254,961 828,465 1,535,603 254,961 2,364,068 2,619,029 1,063,467
LAUREL 349,562 1,398,250 626,668 349,562 2,024,918 2,374,480 204,750
LAUREL 274,580 1,100,968 0 274,580 1,100,968 1,375,548 639,011
EAST ORLANDO 491,676 1,440,000 1,864,450 491,676 3,304,450 3,796,126 1,224,785
OTTAWA 137,775 784,269 303,414 137,775 1,087,683 1,225,458 858,972
BLOOMINGTON 805,521 2,222,353 2,579,854 805,521 4,802,207 5,607,728 1,317,593
RALEIGH 5,208,885 20,885,792 1,489,509 5,208,885 22,375,301 27,584,186 2,071,894
CANTON HILLS 500,980 2,020,274 758,076 500,980 2,778,350 3,279,330 232,974
SAVANNAH 2,052,270 8,232,978 235,152 2,052,270 8,468,130 10,520,400 949,864
MACON 262,700 1,487,860 1,385,111 349,326 2,786,345 3,135,671 1,089,370
CANTON 792,985 1,459,031 4,454,851 792,985 5,913,882 6,706,867 2,063,765
CHARLOTTE 1,783,400 7,139,131 0 1,783,400 7,139,131 8,922,531 793,257
PALATKA 130,844 556,658 897,013 130,844 1,453,671 1,584,515 694,710
EAST STROUDSBURG 1,050,000 2,372,628 356,808 1,050,000 2,729,436 3,779,436 1,447,631
POUGHKEEPSIE 876,548 4,695,659 1,015,594 876,548 5,711,253 6,587,801 2,851,250
BARBERTON 505,590 1,948,135 107,840 505,590 2,055,975 2,561,565 1,203,487
HAGERSTOWN 541,389 2,165,555 936,929 541,389 3,102,484 3,643,873 1,389,467
ELGIN 842,555 2,108,674 901,399 842,555 3,010,073 3,852,628 1,264,086
GRAND HAVEN 356,800 1,532,689 947,496 356,800 2,480,185 2,836,985 946,018
HOUSTON 275,000 507,588 191,639 275,000 699,227 974,227 523,223
WICKLIFFE 610,991 2,471,965 12,339 610,991 2,484,304 3,095,295 192,885
LEOMINSTER 3,732,508 6,754,092 28,840,650 4,933,640 34,393,610 39,327,250 8,877,994
LAUDERHILL 1,002,733 2,602,415 9,135,669 1,774,443 10,966,374 12,740,817 0
CAMBRIDGE 0 1,848,195 744,742 473,060 2,119,877 2,592,937 1,177,259
OLMSTED 167,337 2,815,856 867,451 167,337 3,683,307 3,850,644 2,345,014
LEMAY 125,879 503,510 127,868 125,879 631,378 757,257 344,485
AKRON WATERLOO 437,277 1,912,222 163,558 437,277 2,075,780 2,513,057 1,326,575
BRUNSWICK 771,765 6,058,560 289,996 771,765 6,348,556 7,120,321 3,922,108
WEST MIFFLIN HILLS 654,366 3,199,729 6,411,726 654,366 9,611,455 10,265,821 3,474,270
CHARLESTON 770,000 3,132,092 3,738,711 770,000 6,870,803 7,640,803 1,189,578
MESQUITE 520,340 2,081,356 528,652 520,340 2,610,008 3,130,348 162,785
BELLEVUE 405,217 1,743,573 0 405,217 1,743,573 2,148,790 1,263,128
<CAPTION>
TOTAL COST, DATE OF
NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A)
---------- ---------------- ------------ --------------
<S> <C> <C> <C>
BOCA RATON $3,227,015 $0 1992(A)
WHITEHALL 697,233 0 1967(C)
OGDEN 871,134 0 1967(C)
ORLANDO 5,924,542 0 1995(A)
PLAINVIEW 8,657,950 0 1969(C)
POMPANO BEACH 1,220,839 0 1968(C)
LIVONIA 1,330,621 0 1968(C)
LAUDERDALE LAKES 2,105,365 0 1968(C)
FERN PARK 2,558,722 0 1968(C)
ADDISON 1,020,746 0 1968(C)
LARGO 1,068,937 0 1968(C)
WINSTON-SALEM 3,615,064 0 1969(C)
MELBOURNE 2,596,010 0 1968(C)
ST. PETERSBURG 1,034,259 0 1968(C)
GROVE GATE 1,462,785 0 1968(C)
UPPER ARLINGTON 4,179,816 0 1969(C)
SHILOH SPRING RD 1,781,513 0 1969(C)
FELBRAM 369,565 0 1970(C)
LEESBURG 89,052 0 1969(C)
FOREST PARK 395,676 0 1969(C)
LARGO EAST BAY 12,863,842 0 1992(A)
LEXINGTON 12,028,275 0 1993(A)
CLAWSON 9,496,243 0 1993(A)
CHARLOTTE 5,088,231 0 1995(A)
LAFAYETTE 828,578 0 1971(C)
FARMINGTON 6,004,785 0 1993(A)
WEST MIFFLIN 2,804,633 0 1993(A)
BRADENTON 450,237 0 1968(C)
GREENWOOD 2,267,078 1,258,779 1970(C)
PINELLAS PARK 1,280,725 0 1970(C)
GRAVOIS 3,456,067 0 1972(C)
JENNINGS 2,339,760 0 1971(C)
DALLAS 4,062,530 0 1969(C)
TUTTLE BEE SARASOTA 1,555,562 0 1970(C)
LAUREL 2,169,730 0 1995(A)
LAUREL 736,537 0 1972(C)
EAST ORLANDO 2,571,341 0 1971(C)
OTTAWA 366,486 0 1970(C)
BLOOMINGTON 4,290,135 0 1972(C)
RALEIGH 25,512,292 0 1993(A)
CANTON HILLS 3,046,356 0 1993(A)
SAVANNAH 9,570,536 0 1993(A)
MACON 2,046,301 0 1969(C)
CANTON 4,643,102 0 1972(C)
CHARLOTTE 8,129,274 0 1993(A)
PALATKA 889,805 0 1970(C)
EAST STROUDSBURG 2,331,805 0 1973(C)
POUGHKEEPSIE 3,736,551 0 1972(C)
BARBERTON 1,358,078 0 1972(C)
HAGERSTOWN 2,254,406 0 1973(C)
ELGIN 2,588,542 0 1972(C)
GRAND HAVEN 1,890,967 0 1976(C)
HOUSTON 451,004 0 1973(C)
WICKLIFFE 2,902,410 0 1995(A)
LEOMINSTER 30,449,256 0 1975(A)
LAUDERHILL 12,740,817 0 1974(C)
CAMBRIDGE 1,415,678 0 1973(C)
OLMSTED 1,505,630 0 1973(C)
LEMAY 412,772 0 1974(C)
AKRON WATERLOO 1,186,482 0 1975(C)
BRUNSWICK 3,198,213 0 1975(C)
WEST MIFFLIN HILLS 6,791,551 0 1973(C)
CHARLESTON 6,451,225 0 1978(C)
MESQUITE 2,967,563 0 1995(A)
BELLEVUE 885,662 0 1976(A)
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION
---------- ---- ------------ -------------- -------- ------------ ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ELSMERE 0 3,185,642 0 0 3,185,642 3,185,642 1,849,509
MADISON 0 4,133,904 2,126,058 0 6,259,962 6,259,962 3,024,957
SPRINGFIELD 919,998 4,981,589 2,213,910 919,998 7,195,499 8,115,497 3,797,978
CHERRY HILL 2,417,583 6,364,094 902,987 2,417,583 7,267,081 9,684,664 2,576,385
NANUET 798,932 2,361,900 1,300,829 798,932 3,662,729 4,461,661 1,308,444
OAKCREEK 1,245,870 4,339,637 3,762,195 1,245,870 8,101,832 9,347,702 2,604,606
NORRISTOWN 686,134 2,664,535 3,215,424 774,084 5,792,009 6,566,093 2,324,405
SPRINGBORO PIKE 1,854,527 2,572,518 2,428,558 1,854,527 5,001,076 6,855,603 1,843,481
LIMA 770,121 3,080,479 463,987 770,121 3,544,466 4,314,587 248,395
CHARLES TOWN 602,000 3,725,871 10,342,778 602,000 14,068,649 14,670,649 2,935,648
MUSKEGON 391,500 958,500 692,656 391,500 1,651,156 2,042,656 854,262
NORTH MIAMI 732,914 4,080,460 2,163,630 732,914 6,244,090 6,977,004 3,008,705
NEW KENSINGTON 521,945 2,548,322 573,181 521,945 3,121,503 3,643,448 1,846,398
PENN HILLS 0 1,737,289 0 0 1,737,289 1,737,289 1,021,689
BEAVERCREEK 635,228 3,024,722 1,924,519 635,228 4,949,241 5,584,469 2,192,705
HAMPTON BAYS 1,495,105 5,979,320 41,919 1,495,105 6,021,239 7,516,344 1,556,758
BRIDGEHAMPTON 1,811,752 3,107,232 20,647,203 1,811,752 23,754,435 25,566,187 4,849,853
EASTERN BLVD. 412,016 1,876,962 149,142 412,016 2,026,104 2,438,120 1,153,321
E. PROSPECT ST. 604,826 2,755,314 250,000 604,826 3,005,314 3,610,140 1,721,499
W. MARKET ST. 188,562 1,158,307 0 188,562 1,158,307 1,346,869 706,146
MIDDLETOWN 207,283 1,174,603 193,507 207,283 1,368,110 1,575,393 718,748
UPPER ALLEN 445,743 1,782,972 152,550 445,743 1,935,522 2,381,265 1,134,354
GETTYSBURG 74,626 671,630 101,519 74,626 773,149 847,775 471,658
MARTINSBURG 242,634 1,273,828 628,937 242,634 1,902,765 2,145,399 1,026,402
SOUTH EAST SARASOTA 1,283,400 5,133,544 1,087,560 1,440,264 6,064,240 7,504,504 1,375,333
AIKEN 980,808 3,923,234 31,700 980,808 3,954,934 4,935,742 1,045,244
TYVOLA RD. 0 4,736,345 1,494,281 0 6,230,626 6,230,626 2,750,950
RACINE 1,403,082 5,612,330 1,075,740 1,403,082 6,688,070 8,091,152 1,672,692
WEST MIFFLIN 1,468,341 0 0 1,468,341 0 1,468,341 0
INDIANAPOLIS 447,600 3,607,193 1,872,732 447,600 5,479,925 5,927,525 2,310,368
RICHBORO 788,761 3,155,044 3,297,541 976,439 6,264,907 7,241,346 2,665,621
MILLER ROAD 1,138,082 4,552,327 1,337,385 1,138,082 5,889,712 7,027,794 2,949,762
SANFORD 3,406,565 13,648,041 1,208,601 3,406,565 14,856,642 18,263,207 3,701,739
CARLE PLACE 1,183,290 4,903,642 10,409,825 1,314,540 15,182,217 16,496,757 309,008
PLAZA EAST 1,236,149 4,944,597 1,963,838 1,236,149 6,908,435 8,144,584 264,087
PLAZA WEST 808,435 3,210,187 575,057 808,435 3,785,244 4,593,679 117,478
MENTOR 503,981 2,455,926 361,206 503,981 2,817,132 3,321,113 932,647
MORSE RD. 835,386 2,097,600 2,587,666 835,386 4,685,266 5,520,652 1,160,778
HAMILTON RD. 856,178 2,195,520 3,270,616 856,178 5,466,136 6,322,314 1,304,267
OLENTANGY RIVER RD. 764,517 1,833,600 2,197,502 764,517 4,031,102 4,795,619 1,205,151
SALEM AVE. 665,314 347,818 4,967,368 665,314 5,315,186 5,980,500 998,800
KETTERING 1,190,496 4,761,984 414,232 1,190,496 5,176,216 6,366,712 1,428,575
W. BROAD ST. 982,464 3,929,856 1,572,526 982,464 5,502,382 6,484,846 1,449,332
ELYRIA 781,728 3,126,912 52,741 781,728 3,179,653 3,961,381 913,510
RIDGE ROAD 1,285,213 4,712,358 485,447 1,285,213 5,197,805 6,483,018 863,250
SPRINGFIELD 842,976 3,371,904 120,272 842,976 3,492,176 4,335,152 999,678
MENTOR ERIE CMNS. 2,234,474 9,648,000 2,440,175 2,234,474 12,088,175 14,322,649 2,444,754
SPRINGDALE 3,205,653 14,619,732 4,595,951 3,205,653 19,215,683 22,421,336 3,102,452
WESTERVILLE 1,050,431 4,201,616 7,303,469 1,050,431 11,505,085 12,555,516 1,709,115
IRONDEQUOIT 1,234,250 8,190,181 0 1,234,250 8,190,181 9,424,431 1,190,274
WEST GATES 1,784,718 9,721,970 78,077 1,784,718 9,800,047 11,584,765 1,053,652
HENRIETTA 1,075,358 6,635,486 0 1,075,358 6,635,486 7,710,844 939,853
JONESBORO RD. &I-285 468,118 1,872,473 53,114 468,118 1,925,587 2,393,705 488,721
STATEN ISLAND 2,280,000 9,027,951 3,931,524 2,280,000 12,959,475 15,239,475 2,819,389
GASTONIA 2,467,696 9,870,785 324,583 2,467,696 10,195,368 12,663,064 1,911,415
MARGATE 2,948,530 11,754,120 1,011,511 2,948,530 12,765,631 15,714,161 1,337,107
CENTEREACH 1,182,650 4,735,779 15,928,405 1,417,098 20,429,736 21,846,834 1,430,301
WALKER 3,682,478 14,730,060 35,709 3,682,478 14,765,769 18,448,247 1,542,905
TAYLOR 1,451,397 5,806,263 0 1,451,397 5,806,263 7,257,660 620,250
WATERBURY 2,253,078 9,017,012 59,581 2,253,078 9,076,593 11,329,671 968,188
GREAT BARRINGTON 642,170 2,547,830 6,100,504 1,280,713 8,009,791 9,290,504 236,404
KISSIMMEE 1,328,536 5,296,652 1,515,262 1,328,536 6,811,914 8,140,450 261,165
WESTMONT 601,655 2,404,604 7,263,252 601,655 9,667,856 10,269,511 277,402
RIDGEWOOD 450,000 2,106,566 0 450,000 2,106,566 2,556,566 216,864
MELBOURNE 715,844 2,878,374 317,408 715,844 3,195,782 3,911,626 281,608
NORTH BRUNSWICK 3,204,978 12,819,912 12,320,414 3,204,978 25,140,326 28,345,304 1,260,413
SAND LAKE 3,092,706 12,370,824 702,368 3,092,706 13,073,192 16,165,898 1,190,544
STUART 2,109,677 8,415,323 109,950 2,109,677 8,525,273 10,634,950 748,304
ROCKINGHAM 2,660,915 10,643,660 7,429,652 2,660,915 18,073,312 20,734,227 1,026,294
CORAL SPRINGS 710,000 2,842,907 3,031,115 710,000 5,874,022 6,584,022 249,516
<CAPTION>
TOTAL COST, DATE OF
NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A)
---------- ---------------- ------------ --------------
<S> <C> <C> <C>
ELSMERE 1,336,133 0 1979(C)
MADISON 3,235,005 0 1978(C)
SPRINGFIELD 4,317,519 3,545,000 1983(A)
CHERRY HILL 7,108,279 4,900,000 1985(C)
NANUET 3,153,217 0 1984(A)
OAKCREEK 6,743,096 5,055,000 1984(A)
NORRISTOWN 4,241,688 0 1984(A)
SPRINGBORO PIKE 5,012,122 0 1985(C)
LIMA 4,066,192 0 1995(A)
CHARLES TOWN 11,735,001 0 1985(A)
MUSKEGON 1,188,394 0 1985(A)
NORTH MIAMI 3,968,299 0 1985(A)
NEW KENSINGTON 1,797,050 0 1986(A)
PENN HILLS 715,600 0 1986(A)
BEAVERCREEK 3,391,764 0 1986(A)
HAMPTON BAYS 5,959,586 0 1989(A)
BRIDGEHAMPTON 20,716,334 0 1972(C)
EASTERN BLVD. 1,284,799 0 1987(A)
E. PROSPECT ST. 1,888,641 0 1986(A)
W. MARKET ST. 640,723 0 1986(A)
MIDDLETOWN 856,645 0 1986(A)
UPPER ALLEN 1,246,911 0 1986(A)
GETTYSBURG 376,117 0 1986(A)
MARTINSBURG 1,118,997 0 1986(A)
SOUTH EAST SARASOTA 6,129,171 0 1989(A)
AIKEN 3,890,498 0 1989(A)
TYVOLA RD. 3,479,676 0 1986(A)
RACINE 6,418,460 0 1988(A)
WEST MIFFLIN 1,468,341 0 1986(A)
INDIANAPOLIS 3,617,157 0 1986(A)
RICHBORO 4,575,725 0 1986(A)
MILLER ROAD 4,078,032 0 1986(A)
SANFORD 14,561,468 0 1989(A)
CARLE PLACE 16,187,749 0 1993(A)
PLAZA EAST 7,880,497 2,138,328 1995(A)
PLAZA WEST 4,476,201 2,138,328 1995(A)
MENTOR 2,388,466 0 1987(A)
MORSE RD. 4,359,874 0 1988(A)
HAMILTON RD. 5,018,047 0 1988(A)
OLENTANGY RIVER RD. 3,590,468 0 1988(A)
SALEM AVE. 4,981,700 3,668,618 1988(A)
KETTERING 4,938,137 3,475,534 1988(A)
W. BROAD ST. 5,035,514 0 1988(A)
ELYRIA 3,047,871 3,861,704 1988(A)
RIDGE ROAD 5,619,768 0 1992(A)
SPRINGFIELD 3,335,474 4,054,789 1988(A)
MENTOR ERIE CMNS. 11,877,895 4,247,874 1988(A)
SPRINGDALE 19,318,884 0 1992(A)
WESTERVILLE 10,846,401 0 1988(A)
IRONDEQUOIT 8,234,157 0 1993(A)
WEST GATES 10,531,113 0 1993(A)
HENRIETTA 6,770,991 0 1993(A)
JONESBORO RD. &I-285 1,904,984 0 1988(A)
STATEN ISLAND 12,420,086 4,894,652 1989(A)
GASTONIA 10,751,649 0 1989(A)
MARGATE 14,377,054 0 1993(A)
CENTEREACH 20,416,533 0 1993(A)
WALKER 16,905,342 0 1993(A)
TAYLOR 6,637,410 0 1993(A)
WATERBURY 10,361,483 5,615,210 1993(A)
GREAT BARRINGTON 9,054,100 0 1994(A)
KISSIMMEE 7,879,285 0 1996(A)
WESTMONT 9,992,109 0 1994(A)
RIDGEWOOD 2,339,702 0 1993(A)
MELBOURNE 3,630,018 0 1994(A)
NORTH BRUNSWICK 27,084,891 0 1994(A)
SAND LAKE 14,975,354 0 1994(A)
STUART 9,886,646 0 1994(A)
ROCKINGHAM 19,707,933 0 1994(A)
CORAL SPRINGS 6,334,506 0 1994(A)
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION
---------- ---- ------------ -------------- -------- ------------ ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
SPRINGFIELD 2,745,595 10,985,778 3,241,680 2,904,022 14,069,031 16,973,053 844,920
CHARLESTON 1,744,430 6,986,094 141,033 1,744,430 7,127,127 8,871,557 424,935
SAVANNAH 652,255 2,616,522 0 652,255 2,616,522 3,268,777 156,520
WEST PALM BEACH 550,896 2,298,964 318,210 550,896 2,617,174 3,168,070 206,319
SOUTH MIAMI 1,280,440 5,133,825 1,792,588 1,280,440 6,926,413 8,206,853 350,240
AUGUSTA 1,482,564 5,928,122 0 1,482,564 5,928,122 7,410,686 311,603
ALTAMONTE SPRINGS 770,893 3,083,574 0 770,893 3,083,574 3,854,467 158,132
KENT 2,261,530 0 0 2,261,530 0 2,261,530 0
ORLANDO 560,800 2,268,112 17,268 560,800 2,285,380 2,846,180 103,050
DURHAM 1,882,800 7,551,576 59,762 1,882,800 7,611,338 9,494,138 337,890
PHOENIX 1,430,790 3,348,652 4,839 1,430,790 3,353,491 4,784,281 224,076
GARLAND 210,286 845,845 0 210,286 845,845 1,056,131 35,940
MARLTON PIKE 0 4,318,534 0 0 4,318,534 4,318,534 147,642
CAMDEN 0 1,000,570 0 0 1,000,570 1,000,570 0
CINNAMINSON 657,140 2,628,559 0 657,140 2,628,559 3,285,699 0
FLORENCE 1,465,661 6,011,013 0 1,465,661 6,011,013 7,476,674 43,011
PHOENIX 2,450,341 9,802,046 0 2,450,341 9,802,046 12,252,387 41,886
MORRISVILLE 627,864 2,511,457 0 627,864 2,511,457 3,139,321 0
CENTER SQUARE 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087
PHILADELPHIA 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087
FEASTERVILLE 520,521 2,082,083 0 520,521 2,082,083 2,602,604 53,387
WARRINGTON 268,194 1,072,774 0 268,194 1,072,774 1,340,968 0
WHITEHALL 0 5,195,577 0 0 5,195,577 5,195,577 177,627
HARRIS COUNTY 1,843,000 7,372,420 0 1,843,000 7,372,420 9,215,420 94,512
HAVERTOWN 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087
EXTON 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087
EASTWICK 889,001 2,762,888 2,386,166 889,001 5,603,093 6,492,094 0
UPPER DARBY 231,821 927,286 3,049,951 285,828 3,923,230 4,209,058 0
TAMPA 2,820,000 11,283,189 0 2,820,000 11,283,189 14,103,189 216,900
OCALA 1,980,000 7,927,484 0 1,980,000 7,927,484 9,907,484 118,461
BATON ROUGE 3,125,527 12,503,083 0 3,125,527 12,503,083 15,628,610 160,284
WHITE LAKE 2,300,050 9,249,607 1,061,046 2,300,050 10,310,653 12,610,703 314,530
LAFAYETTE 2,115,000 8,508,218 0 2,115,000 8,508,218 10,623,218 36,318
LAFAYETTE 812,810 3,252,269 0 812,810 3,252,269 4,065,079 79,925
MANASSAS 1,788,750 7,162,661 0 1,788,750 7,162,661 8,951,411 22,932
CORAL SPRINGS 1,649,000 6,626,301 0 1,649,000 6,626,301 8,275,301 14,094
STATEN ISLAND 2,940,000 11,811,964 0 2,940,000 11,811,964 14,751,964 0
GREENVILLE 1,448,913 5,807,874 0 1,448,913 5,807,874 7,256,787 12,410
MT. DORA 1,011,000 4,062,890 0 1,011,000 4,062,890 5,073,890 8,681
N. CHARLESTON 2,965,748 11,895,294 0 2,965,748 11,895,294 14,861,042 0
RICHMOND 670,500 2,751,375 0 670,500 2,751,375 3,421,875 183,872
YONKERS 871,977 3,487,909 0 871,977 3,487,909 4,359,886 372,650
TULSA 500,950 2,002,508 0 500,950 2,002,508 2,503,458 98,486
WATERLOO 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394
CLIVE 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394
DES MOINES 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394
E. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
W. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
PLANO 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
WEST OAKS 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371
ARLINGTON 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
DUNCANVILLE 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
GARLAND 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
HOUSTON 500,422 2,001,687 0 500,422 2,001,687 2,502,109 146,458
GENEVA 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371
BAYTOWN 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371
FT. WORTH 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371
BRADLEY 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371
O'FALLON 300,000 1,200,000 0 300,000 1,200,000 1,500,000 10,256
N. RICHLAND HILLS 2,900,000 0 0 2,900,000 0 2,900,000 0
CORSICANA 1,600,000 6,400,000 0 1,600,000 6,400,000 8,000,000 54,701
OVERLAND 0 4,928,677 0 0 4,928,677 4,928,677 42,125
ST. LOUIS 0 5,756,736 0 0 5,756,736 5,756,736 49,203
PEORIA 0 3,029,106 0 0 3,029,106 3,029,106 25,890
KANSAS CITY 574,777 2,299,106 0 574,777 2,299,106 2,873,883 19,650
ST. LOUIS 0 2,242,258 0 0 2,242,258 2,242,258 19,165
OAK LAWN 1,316,783 5,267,130 0 1,316,783 5,267,130 6,583,913 45,018
CALUMET CITY 1,247,879 4,991,514 0 1,247,879 4,991,514 6,239,393 42,663
OAKBROOK TERRACE 1,393,667 5,576,268 0 1,393,667 5,576,268 6,969,935 47,660
MATTERSON 731,621 2,926,483 0 731,621 2,926,483 3,658,104 25,013
<CAPTION>
TOTAL COST, DATE OF
NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A)
---------- ---------------- ------------ --------------
<S> <C> <C> <C>
SPRINGFIELD 16,128,133 0 1994(A)
CHARLESTON 8,446,622 0 1995(A)
SAVANNAH 3,112,257 0 1995(A)
WEST PALM BEACH 2,961,751 0 1995(A)
SOUTH MIAMI 7,856,613 0 1995(A)
AUGUSTA 7,099,083 0 1995(A)
ALTAMONTE SPRINGS 3,696,335 0 1995(A)
KENT 2,261,530 0 1995(A)
ORLANDO 2,743,130 0 1996(A)
DURHAM 9,156,248 0 1996(A)
PHOENIX 4,560,205 0 1996(A)
GARLAND 1,020,191 0 1996(A)
MARLTON PIKE 4,170,892 0 1996(A)
CAMDEN 1,000,570 0 1996(A)
CINNAMINSON 3,285,699 0 1996(A)
FLORENCE 7,433,663 0 1997(A)
PHOENIX 12,210,501 8,107,496 1997(A)
MORRISVILLE 3,139,321 0 1996(A)
CENTER SQUARE 3,559,352 0 1996(A)
PHILADELPHIA 3,559,352 0 1996(A)
FEASTERVILLE 2,549,217 0 1996(A)
WARRINGTON 1,340,968 0 1996(A)
WHITEHALL 5,017,950 0 1996(A)
HARRIS COUNTY 9,120,908 0 1997(A)
HAVERTOWN 3,559,352 0 1996(A)
EXTON 3,559,352 0 1996(A)
EASTWICK 6,492,094 0 1997(A)
UPPER DARBY 4,209,058 0 1996(A)
TAMPA 13,886,289 0 1997(A)
OCALA 9,789,023 0 1997(A)
BATON ROUGE 15,468,326 0 1997(A)
WHITE LAKE 12,296,173 0 1996(A)
LAFAYETTE 10,586,900 0 1997(A)
LAFAYETTE 3,985,154 0 1997(A)
MANASSAS 8,928,479 0 1997(A)
CORAL SPRINGS 8,261,207 0 1997(A)
STATEN ISLAND 14,751,964 5,841,637 1997(A)
GREENVILLE 7,244,377 0 1997(A)
MT. DORA 5,065,209 0 1997(A)
N. CHARLESTON 14,861,042 0 1997(A)
RICHMOND 3,238,003 0 1995(A)
YONKERS 3,987,236 0 1995(A)
TULSA 2,404,972 0 1996(A)
WATERLOO 2,404,232 0 1996(A)
CLIVE 2,404,232 0 1996(A)
DES MOINES 2,404,232 0 1996(A)
E. WICHITA 2,403,699 0 1996(A)
W. WICHITA 2,403,699 0 1996(A)
PLANO 2,403,699 0 1996(A)
WEST OAKS 2,403,738 0 1996(A)
ARLINGTON 2,403,699 0 1996(A)
DUNCANVILLE 2,403,699 0 1996(A)
GARLAND 2,403,699 0 1996(A)
HOUSTON 2,355,651 0 1996(A)
GENEVA 2,403,738 0 1996(A)
BAYTOWN 2,403,738 0 1996(A)
FT. WORTH 2,403,699 0 1996(A)
BRADLEY 2,403,738 0 1996(A)
O'FALLON 1,489,744 0 1997(A)
N. RICHLAND HILLS 2,900,000 0 1997(A)
CORSICANA 7,945,299 0 1997(A)
OVERLAND 4,886,552 0 1997(A)
ST. LOUIS 5,707,533 0 1997(A)
PEORIA 3,003,216 2,958,163 1997(A)
KANSAS CITY 2,854,233 2,806,575 1997(A)
ST. LOUIS 2,223,093 0 1997(A)
OAK LAWN 6,538,895 6,429,714 1997(A)
CALUMET CITY 6,196,730 6,093,263 1997(A)
OAKBROOK TERRACE 6,922,275 6,806,686 1997(A)
MATTERSON 3,633,091 3,572,429 1997(A)
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION
---------- ---- ------------ -------------- -------- ------------ ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
MT. PROSPECT 797,082 3,188,329 0 797,082 3,188,329 3,985,411 27,251
ST. PETERS 1,182,194 4,728,775 0 1,182,194 4,728,775 5,910,969 40,417
KANSAS CITY 775,025 3,100,101 0 775,025 3,100,101 3,875,126 26,497
ROELAND PARK 0 4,328,087 0 0 4,328,087 4,328,087 36,992
MAPLEWOOD 604,803 2,419,213 0 604,803 2,419,213 3,024,016 20,677
NORRIDGE 0 2,560,464 0 0 2,560,464 2,560,464 21,884
COUNTRYSIDE 0 2,786,926 0 0 2,786,926 2,786,926 23,820
DUBUQUE 0 1,614,911 0 0 1,614,911 1,614,911 13,803
CARBONDALE 0 1,553,753 0 0 1,553,753 1,553,753 13,280
MERRILLVILLE 0 1,965,694 0 0 1,965,694 1,965,694 16,801
GRIFFITH 0 2,495,820 0 0 2,495,820 2,495,820 21,332
DOWNER GROVE 811,778 3,247,114 0 811,778 3,247,114 4,058,892 27,753
CHICAGO 0 2,111,433 0 0 2,111,433 2,111,433 18,046
SKOKIE 0 2,056,622 0 0 2,056,622 2,056,622 17,578
SCHAUMBURG 0 2,309,103 0 0 2,309,103 2,309,103 19,736
CHICAGO 0 2,011,534 0 0 2,011,534 2,011,534 17,193
DAVENPORT 0 1,756,328 0 0 1,756,328 1,756,328 15,011
TULSA 0 0 0 0 0 0 0
FOREST PARK 0 2,088,921 0 0 2,088,921 2,088,921 17,854
NAPERVILLE 488,267 1,953,067 0 488,267 1,953,067 2,441,334 16,693
INDIANAPOLIS 343,575 1,374,302 0 343,575 1,374,302 1,717,877 11,746
NILES 0 2,217,231 0 0 2,217,231 2,217,231 18,951
ARLINGTON 0 1,854,567 0 0 1,854,567 1,854,567 15,851
JOLIET 0 1,742,399 0 0 1,742,399 1,742,399 14,892
CAPE GIRARDEAU 0 1,542,659 0 0 1,542,659 1,542,659 13,185
BRIDGETON 0 1,975,978 0 0 1,975,978 1,975,978 16,889
EDMOND 477,036 1,908,145 0 477,036 1,908,145 2,385,181 16,309
HOUSTON 406,513 1,626,051 0 406,513 1,626,051 2,032,564 13,898
AMARILLO 0 1,998,531 0 0 1,998,531 1,998,531 17,081
OKLAHOMA CITY 0 1,419,957 0 0 1,419,957 1,419,957 12,136
ELSTON 337,869 1,351,474 0 337,869 1,351,474 1,689,343 11,551
S. CICERO 0 1,541,560 0 0 1,541,560 1,541,560 13,176
BALANCE OF PORTFOLIO 2,951,539 4,071,395 12,356,603 3,112,139 15,813,359 18,925,498 10,555,720
-------------------------------------------------------------------------------------------------------------
$208,025,559 $876,286,555 $319,884,045 $213,367,305 $1,190,828,854 $1,404,196,159 $207,408,091
=============================================================================================================
<CAPTION>
TOTAL COST, DATE OF
NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A)
---------- ---------------- ------------ --------------
<S> <C> <C> <C>
MT. PROSPECT 3,958,160 3,892,071 1997(A)
ST. PETERS 5,870,552 5,772,532 1997(A)
KANSAS CITY 3,848,629 3,784,369 1997(A)
ROELAND PARK 4,291,095 0 1997(A)
MAPLEWOOD 3,003,339 2,953,192 1997(A)
NORRIDGE 2,538,580 0 1997(A)
COUNTRYSIDE 2,763,106 2,721,654 1997(A)
DUBUQUE 1,601,108 0 1997(A)
CARBONDALE 1,540,473 0 1997(A)
MERRILLVILLE 1,948,893 0 1997(A)
GRIFFITH 2,474,488 2,437,366 1997(A)
DOWNER GROVE 4,031,139 3,963,831 1997(A)
CHICAGO 2,093,387 0 1997(A)
SKOKIE 2,039,044 0 1997(A)
SCHAUMBURG 2,289,367 0 1997(A)
CHICAGO 1,994,341 0 1997(A)
DAVENPORT 1,741,317 0 1997(A)
TULSA 0 0 1997(A)
FOREST PARK 2,071,067 0 1997(A)
NAPERVILLE 2,424,641 2,384,156 1997(A)
INDIANAPOLIS 1,706,131 0 1997(A)
NILES 2,198,280 0 1997(A)
ARLINGTON 1,838,716 0 1997(A)
JOLIET 1,727,507 0 1997(A)
CAPE GIRARDEAU 1,529,474 0 1997(A)
BRIDGETON 1,959,089 0 1997(A)
EDMOND 2,368,872 0 1997(A)
HOUSTON 2,018,666 1,984,960 1997(A)
AMARILLO 1,981,450 0 1997(A)
OKLAHOMA CITY 1,407,821 0 1997(A)
ELSTON 1,677,792 0 1997(A)
S. CICERO 1,528,384 0 1997(A)
BALANCE OF PORTFOLIO 8,369,778 0 VARIOUS
---------------------------------------------------
$1,196,788,068 $121,363,910
===================================================
</TABLE>
Depreciation and amortization of the Company's investment in buildings and
improvements reflected in the statements of income is calculated over the
estimated useful lives of the assets as follows:
Buildings....................15 to 39 years
Improvements.................Terms of leases or useful lives, whichever
is shorter
The aggregate cost for Federal income tax purposes was approximately $1,394
million at December 31, 1997.
The changes in total real estate assets for the years ended December 31, 1997,
1996, and 1995 are as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
------------
1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of period $1,072,055,986 $932,390,261 $796,611,263
Acquisitions ............. 276,119,791 100,808,213 83,267,813
Improvements ............. 61,144,440 40,108,471 60,586,575
Sales .................... (5,124,058) (1,250,959) (8,075,390)
--------------------------------------------------------
Balance, end of period ..... $1,404,196,159 $1,072,055,986 $932,390,261
========================================================
</TABLE>
The changes in accumulated depreciation for the years ended December 31, 1997,
1996, and 1995 are as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
-------------
1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of period $180,552,647 $156,131,718 $132,556,084
Depreciation for year .... 28,371,587 24,963,191 23,608,732
Sales .................... (1,516,143) (542,262) (33,098)
--------------------------------------------------
Balance, end of period ..... $207,408,091 $180,552,647 $156,131,718
==================================================
</TABLE>
62
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated April 30, 1997, is made by and between Kimco Realty
Corporation (the "Company"), a Maryland Corporation and Michael V. Pappagallo
(the "Executive").
RECITALS:
A. It is the desire of the Company to assure itself of the management
services of the Executive by engaging the Executive as Chief Financial
Officer of the Company.
B. The Executive desires to commit himself to serve the Company on the
terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. Certain Definitions:
a) "Base Salary" is defined in Section 5(a).
b) "Benefits" is defined in Section 5(d).
c) "Bonus" is defined in Section 5(b).
d) "Calendar Quarter" shall mean each of the three month periods
ending March 31, June 30, September 30 and December 31 of each
year.
e) "Cause": For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon
(i) a finding by the Board that he has harmed the Company through
an act of dishonesty in the performance of his duties hereunder,
(ii) his conviction of a felony, or (iii) his failure to perform
his material duties under this Agreement (other than a failure
due to disability) after written notice specifying the failure
and a reasonable opportunity to cure (it being understood that if
his failure to perform is not of a type requiring a single action
to cure fully, that he may commence the cure promptly after such
written notice and thereafter diligently prosecute such cure to
completion).
f) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a
total of 16 weeks during any 12 month period as a result of
incapacity due to mental or physical illness which is determined
to be total and permanent by a physician selected by the Company
and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
g) "Effective Date" shall mean May 27, 1997.
h) "Employment Fraction" is defined in Section 5(b).
i) "Guaranteed Bonus" is defined in Section 5(b).
j) "Option Plan" is defined in Section 5(c).
k) "Stock Option" is defined in Section 5(c).
l) "Term of Employment" is defined in Section 2.
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<PAGE>
2. Employment The Company shall employ the Executive, and the Executive
shall enter the employ of the Company, in the positions set forth in
Section 3 and upon the other terms and conditions herein provided.
Unless sooner terminated as provided herein, this Agreement and the
term of employment hereunder (the "Term of Employment") shall
initially commence on the Effective Date and expire on the second
anniversary of such date.
3. Position: During the Term of Employment, the Executive shall serve as
the Chief Financial Officer of the Company, reporting directly to the
President of the Company.
4. Place of Performance: In connection with his employment during the
Term of Employment, the Executive shall be based at the Company's
principal executive offices currently located in New Hyde Park, NY.
5. Compensation and Related Matters:
a) Base Salary: During the Term of Employment the Executive shall
receive a base salary ("Base Salary") at a rate of $250,000 per
annum ( or such greater amount as shall be determined by the
Board), payable monthly or more frequently in accordance with the
Company's practice as applied to other senior executives.
b) Bonus: As additional compensation for services rendered, the
Executive shall receive a bonus ("Bonus") in cash as of the
latest day in each Calendar Quarter any part of which falls
within the Term of Employment. The amount of the Bonus shall be
one-quarter of the product of $150,000 and the Employment
Fraction for the Calendar Quarter period in question (the
"Guaranteed Bonus") or such higher amount as the Board in its
sole discretion shall determine. The "Employment Fraction" for a
Calendar Quarter is the fraction of such period which falls
within the Term of Employment.
c) Equity Compensation: at the Effective Date and pursuant to an
agreement under the Stock Option Plan for Key Employees and
Outside Directors of Kimco Realty Corporation (the "Option
Plan"), the Company shall grant the Executive stock options with
respect to 50,000 shares of the Company's common stock,
exercisable at the fair market value of such stock at the date of
grant (the "Stock Options"). The Stock Options shall be "Non
Qualified Options" (as such term is defined in the Option Plan)
and shall vest in three equal installments upon the day prior to
each of the first three anniversaries of the date of grant.
d) Benefits: During the Term of Employment, the Executive shall be
entitled to participate in or receive benefits under the employee
benefit plans and other arrangements made available by the
Company to its senior employees generally (collectively
"Benefits") subject to and on a basis consistent with the terms,
conditions and overall administration of such plans or
arrangements, provided, however that the Executive shall be
entitled to [four] weeks of paid vacation per annum during the
Term of Employment, exclusive of Company holidays and that the
Executive shall be entitled to take sick or personal days off in
accordance with Company's practice as applied to other senior
executives.
e) Business Expenses: the Company shall promptly reimburse the
Executive for all reasonable travel and other business expenses
incurred by the Executive in the performance of his duties to the
Company hereunder.
f) No Waiver: the Executive shall also be entitled to such other
benefits or terms of employment as are provided by law.
6. Termination: The Executive's employment hereunder may be terminated by
the Company or the Executive, as applicable, without any breach of
this Agreement only under the following circumstances:
64
<PAGE>
a) Death: The Executive's employment hereunder shall terminate upon
his death.
b) Disability: If the Company determines in good faith that
Disability of the Executive has occurred during the Term of
Employment, the Company may give the Executive written notice of
its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his duties. The Executive shall continue to
receive his Base Salary and Benefits until the date of
termination.
This subsection 6(b) shall not limit the entitlement of the Executive, his
estate of beneficiaries to any disability or other benefits then available to
the Executive under any disability insurance or other benefit plan or policy
which is maintained by the Company for the Executive's benefit.
c) Cause: The Company may terminate the Executive's employment
hereunder for Cause.
d) Without Cause: the Company may terminate the Executive's
employment hereunder without Cause upon [thirty days] notice.
e) Notice of Termination: Any termination of the Executive's
employment hereunder (other than by reason of the Executive's
death) shall be communicated by a notice of termination to the
other parties hereto. For purposes of this Agreement, a "notice
of termination" shall mean a written notice which (i) indicates
the specific termination provision in the Agreement relied upon,
(ii) sets forth in reasonable detail any facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision indicated and (iii) specifies the
effective date of the termination.
7. Benefits upon Termination of Employment:
a) Termination upon Death or Disability: If the Executive's
employment shall terminate by reason of his death (pursuant to
Section 6(a)) or by reason of his Disability (pursuant to Section
6(b)), the Company shall continue to pay the Executive his Base
Salary and Guaranteed Bonus and to make all necessary payment for
and provide all Benefits to the Executive under this Agreement
pursuant to Section 5(d) until the date of his termination, and
the Executive's Stock shall become fully vested as of such date
of termination.
b) Termination without Cause: If the Executive's employment shall
terminate without Cause (pursuant to Section 6(b))
(i) the Company shall continue to pay the Executive his Base Salary
and Guaranteed Bonus and to make all necessary payments for and
provide all Benefits to the Executive under this Agreement
pursuant to Section 5(d) until the then scheduled expiration of
the Term of Employment
(ii) if the Sock Option have not become 100% vested and have not
otherwise expires, as of such date of termination, the Stock
Options shall become 100% vested as of the termination date.
c) Termination by Reason of Expiration of the Term of Employment:
Should the Executive's employment hereunder terminate by reason
of the expiration of the Term of Employment.
(i) the Company shall continue to pay the Executive his Base Salary
and Guaranteed Bonus and to make all necessary payments for and
provide all Benefits the Executive under this Agreement pursuant
to Section 5(d) until the date of his termination, and
65
<PAGE>
(ii) if the Stock Options have not become 100% vested and have not
otherwise expires as of such date of termination, the Stock
Options shall continue to eligible to vest as scheduled pursuant
to Section 5(c) and shall become vested on such scheduled vesting
date(s) if the Executive shall have made himself available to
consult with the Company as reasonably requested by the Company
during the period beginning on the date of termination and ending
on such scheduled vesting date(s).
d) Other Terminations of Employment: Should the Executive's
employment hereunder terminate for any reason not set forth in
subsections (a) - (c) above, then any Stock Options not then
vested shall be forfeited and the Company shall have no other
obligation of any kind hereunder to the Executive.
8. Survival: The expiration or termination of the Term of Employment
shall not impair the right or obligations of any party hereto which
shall have accrued hereunder prior to such expiration.
9. Mitigation of Damages: In the event of any termination of the
Executive's employment by the Company, the Executive shall not be
required to seek other employment to mitigate damages.
10. Disputes: Any dispute or controversy arising under, out of, in
connection with or in relation to this Agreement shall, at the
election and upon written demand of any party to this Agreement, be
finally determined and settled by arbitration in New York, New York in
accordance with the rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof.
The prevailing party in any such proceeding shall be entitled to collect
from the other party, all legal fees and expenses reasonably incurred in
connection therewith:
11. Binding on Successors: This Agreement shall be binding upon and inure
to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representative, executors,
administrators, heirs, distributees, devisces, and legatees, as
applicable.
12. Governing Law: This Agreement is being made and executed in and is
intended to be preformed in the State of New York, and shall be
governed, construed, interpreted and enforced in accordance with the
substantive laws of the State of New York.
13. Validity: The invalidity or unenforceability of any provision or
provisions of the Agreement shall not affect the validity or
enforceability of any other provision in this Agreement, which shall
remain in full force and effect.
14. Notices: Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal of receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered
mail, postage paid as follows:
If to the Company, addressed to its principal offices to the attention of
President at:
3333 New Hyde Park Road
New Hyde Park, NY 11042
If to the Executive, to him at the address set forth below under his signature;
Or at any other address as any party shall have specified by notice in writing
to the other parties.
15. Counterparts: This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
66
<PAGE>
16. Entire Agreement: The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to
the employment of the Executive by the Company and may not be
contradicted by evidence of any prior contemporaneous agreement. The
parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic
evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding to vary the terms of this Agreement.
17. Amendments: Waivers: This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by the Executive
and a disinterested director of the Company. By an instrument in
writing similarly executed, the Executive or the Company may waive
compliance by the other party with any provision of this Agreement
that such other party was or is obligated to comply with or perform,
provided, however, that such waiver shall not operate as a waiver of,
or Estelle with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy or
power hereunder preclude any other further exercise of any other
right, remedy, or power provided herein or by law or in equity.
18. No Effect on Other Contractual Rights: Notwithstanding Section 6, the
provisions of this Agreement, and any other payment provided for
hereunder, shall not reduce any amounts otherwise payable to the
Executive under any other agreement between the Executive and the
Company, or in any way diminish the Executive's rights under any
employee benefit plan, program or arrangement of the Company to which
he may be entitled as an employee of the Company.
19. No Inconsistent Actions: Cooperation
a) The parties hereto shall not voluntarily undertake or fail to
undertake any action or course of action inconsistent with the
provisions or essential intent of this Agreement. Furthermore, it
is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
b) Each of the parties hereto shall cooperate and take such actions
and execute such other documents as may be reasonably requested
by the other in order to carry out the provisions and purposes of
this Agreement.
20. No Alienation of Benefits: To the extent permitted by law the benefits
provided by this Agreement shall not be subject to garnishment,
attachment or any other legal process by the creditors of the
Executive, his beneficiary of his estate.
67
<PAGE>
IN WITNESS WHEREOF, the parties has executed this Agreement as of the date and
year first above written.
EXECUTIVE KIMCO REALTY CORPORATION
a Maryland Corporation
By: /s/ Michael J. Flynn
-----------------------------------
President & Chief Operating Officer
/s/ Michael V. Pappagallo
- ---------------------------
68
<PAGE>
================================================================================
CREDIT AGREEMENT
among
KIMCO REALTY CORPORATION
The Several Lenders
from Time to Time Parties Hereto
THE CHASE MANHATTAN BANK and
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Managers
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of March 2, 1998
================================================================================
69
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 DEFINITIONS............................................................
1.1 Defined Terms ......................................................... 1
1.2 Other Definitional Provisions ......................................... 17
SECTION 2 AMOUNT AND TERMS OF CREDIT FACILITIES ................................. 17
2.1 RESERVED .............................................................. 17
2.2 Commitments ........................................................... 17
2.3 Optional Prepayments .................................................. 19
2.4 Conversion and Continuation Options ................................... 19
2.5 Fees .................................................................. 20
2.6 Interest Rates and Payment Dates ...................................... 20
2.7 Computation of Interest and Fees ...................................... 21
2.8 Inability to Determine Interest Rate; Unavailability of C/D Rate Option 21
2.9 Pro Rata Treatment and Payments ....................................... 22
2.10 Illegality ............................................................ 23
2.11 Requirements of Law ................................................... 23
2.12 Taxes ................................................................. 25
2.13 Indemnity ............................................................. 26
2.14 Change of Lending Office .............................................. 27
2.15 Replacement of Lenders under Certain Circumstances .................... 27
SECTION 3 LETTERS OF CREDIT ..................................................... 27
3.1. L/C Commitment ........................................................ 27
3.2. Procedure for Issuance of Letters of Credit ........................... 28
3.3. Fees and Other Charges ................................................ 28
3.4. L/C Participations .................................................... 28
3.5. Reimbursement Obligation of the Borrower .............................. 29
3.6. Obligations Absolute .................................................. 30
3.7. Letter of Credit Payments ............................................. 30
3.8. Applications .......................................................... 30
SECTION 4 REPRESENTATIONS AND WARRANTIES ........................................ 30
4.1 Financial Condition ................................................... 30
4.2 No Change ............................................................. 31
4.3 Corporate Existence; Compliance with Law .............................. 31
4.4 Corporate Power; Authorization; Enforceable Obligations ............... 31
4.5 No Legal Bar .......................................................... 32
4.6 No Material Litigation ................................................ 32
4.7 No Default ............................................................ 32
4.8 Ownership of Property ................................................. 32
4.9 Intellectual Property ................................................. 32
4.10 No Burdensome Restrictions ............................................ 32
4.11 Taxes ................................................................. 32
4.12 Federal Regulations ................................................... 33
4.13 ERISA ................................................................. 33
4.14 Investment Company Act; Other Regulations ............................. 33
4.15 Subsidiaries .......................................................... 33
4.16 Purpose of Loans ...................................................... 33
4.17 Environmental Matters ................................................. 33
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.18 Insurance ............................................................ 34
4.19 Condition of Properties .............................................. 34
4.20 Benefit of Loans ..................................................... 35
4.21 REIT ................................................................. 35
SECTION 5 CONDITIONS PRECEDENT ................................................. 35
5.1 Conditions to Initial Extension of Credit ............................ 35
5.2 Conditions to Each Extension of Credit ............................... 36
SECTION 6 AFFIRMATIVE COVENANTS ................................................ 36
6.1 Financial Statements ................................................. 37
6.2 Certificates; Other Information ...................................... 37
6.3 Payment of Obligations ............................................... 38
6.4 Maintenance of Existence, etc ........................................ 38
6.5 Maintenance of Property; Insurance ................................... 38
6.6 Inspection of Property; Books and Records; Discussions ............... 38
6.7 Notices .............................................................. 38
6.8 Environmental Laws ................................................... 39
SECTION 7 NEGATIVE COVENANTS ................................................... 39
7.1 Financial Covenants .................................................. 40
7.2 Limitation on Fundamental Changes .................................... 40
7.3 Limitation on Restricted Payments .................................... 40
7.4 Limitation on Investments, Loans and Advances ........................ 41
7.5 Limitation on Transactions with Affiliates ........................... 41
7.6 Limitation on Changes in Fiscal Year ................................. 41
7.7 Limitation on Lines of Business, Issuance of Commercial Paper,
Creation of Subsidiaries, Negative Pledges ........................... 41
SECTION 8. EVENTS OF DEFAULT .................................................... 42
SECTION 9. THE ADMINISTRATIVE AGENT ............................................. 45
9.1 Appointment .......................................................... 45
9.2 Delegation of Duties ................................................. 45
9.3 Exculpatory Provisions ............................................... 45
9.4 Reliance by Administrative Agent ..................................... 46
9.5 Notice of Default .................................................... 46
9.6 Non-Reliance on Administrative Agent and Other Lenders ............... 46
9.7 Indemnification ...................................................... 47
9.8 Administrative Agent in Its Individual Capacity ...................... 47
9.9 Successor Administrative Agent ....................................... 47
9.10 The Co-Managers ...................................................... 48
SECTION 10 MISCELLANEOUS ........................................................ 48
10.1 Amendments and Waivers ............................................... 48
10.2 Notices .............................................................. 48
10.3 No Waiver; Cumulative Remedies........................................ 49
10.4 Survival of Representations and Warranties............................ 49
10.5 Payment of Expenses and Taxes......................................... 49
10.6 Successors and Assigns................................................ 50
10.7 Participations........................................................ 50
10.8 Assignments........................................................... 51
</TABLE>
72
<PAGE>
<TABLE>
<S> <C> <C>
10.9 The Register; Disclosure; Pledges to Federal Reserve Banks............ 51
10.10 Adjustments; Set-off ................................................. 52
10.11 Counterparts ......................................................... 52
10.12 Severability ......................................................... 52
10.13 Integration .......................................................... 53
10.14 GOVERNING LAW ........................................................ 53
10.15 Submission To Jurisdiction; Waivers .................................. 53
10.16 Acknowledgements ..................................................... 53
10.17 WAIVERS OF JURY TRIAL ................................................ 54
10.18 Confidentiality ...................................................... 54
</TABLE>
73
<PAGE>
CREDIT AGREEMENT, dated as of March 2, 1998, among KIMCO REALTY
CORPORATION, a Maryland corporation (the "Borrower"), the several banks,
financial institutions and other entities from time to time parties to this
Agreement (the "Lenders"), THE CHASE MANHATTAN BANK and THE FIRST NATIONAL BANK
OF CHICAGO, as co-managers (in such capacity, the "Co-Managers"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City (the Prime
Rate not being intended to be the lowest rate of interest charged by Chase
in connection with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the C/D Assessment
Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected
by it; and "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base
CD Rate or the Federal Funds Effective Rate, or both, for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the ABR shall
be determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
74
<PAGE>
2
"ABR Loans": Revolving Credit Loans the rate of interest applicable to
which is based upon the ABR.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Aggregate Outstanding Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Commitment Percentage of the L/C Obligations then
outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": with respect to each Revolving Credit Loan at any
date, the applicable percentage per annum set forth below based upon the
Status on such date:
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V
Status Status Status Status Status
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Eurodollar Loans,
C/D Rate Loans and 0.25% 0.35% 0.50% 0.85% 1.50%
Money Market Loans
ABR Loans 0% 0% 0% 0% 0.35%
</TABLE>
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Available Commitment": as to any Lender, at any time of
determination, an amount equal to such Lender's Commitment at such time
minus such Lender's Aggregate Outstanding Extensions of Credit at such
time.
"Board": the Board of Governors of the Federal Reserve System (or any
successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.2(d) as a date on which the Borrower requests the Lenders to make
Revolving Credit Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close, except that, when used in connection with a Eurodollar Loan with
respect to which the Eurodollar Rate is determined based upon the Telerate
screen in accordance with the definition of Eurodollar Rate, "Business Day"
shall mean any Business Day on which dealings in foreign currencies and
exchange between banks may be carried on in London, England and New York,
New York.
75
<PAGE>
3
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from
the date of acquisition, (ii) time deposits and certificates of deposit
having maturities of not more than one year from the date of acquisition of
any Lender or of any domestic commercial bank the senior long-term
unsecured debt of which is rated at least A or the equivalent thereof by
S&P or A2 or the equivalent thereof by Moody's and having capital and
surplus in excess of $500,000,000, (iii) repurchase obligations with a term
of not more than seven days for underlying securities of the types
described in clauses (i) and (ii) entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper rated
at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent
thereof by Moody's and in either case maturing within 90 days after the
date of acquisition and (v) investments in money market funds that have
assets in excess of $2,000,000,000, are managed by recognized and
responsible institutions and invest all of their assets in (x) obligations
of the types referred to in clauses (i), (ii), (iii) and (iv) above and (y)
commercial paper having at least the rating described in clause (iv) above
and maturing within 270 days after the date of acquisition.
"C/D Assessment Rate": for any day as applied to any C/D Rate Loan or
any ABR Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "B" (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. ss.
327.3(d) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States.
"C/D Base Rate": with respect to each day during each Interest Period
pertaining to a C/D Rate Loan, the rate of interest per annum notified to
the Administrative Agent by Chase as the average rate bid at 9:00 A.M., New
York City time, or as soon thereafter as practicable, on the first day of
such Interest Period by a total of three certificate of deposit dealers of
recognized standing selected by Chase for the purchase at face value from
Chase of its certificates of deposit in an amount comparable to the C/D
Rate Loan of Chase to which such Interest Period applies and having a
maturity comparable to such Interest Period.
"C/D Rate": with respect to each day during each Interest Period
pertaining to a C/D Rate Loan, a rate per annum determined for such day
(rounded upward to the nearest 1/100th of 1%) equal to the C/D Base Rate
plus the C/D Assessment Rate.
"C/D Rate Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the C/D Rate.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars having a maturity of
30 days or more.
"C/D Tranche": the collective reference to C/D Rate Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date
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4
(whether or not such Loans shall originally have been made on the same
day).
"Chase": The Chase Manhattan Bank.
"Closing Date": March 2, 1998.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Co-Managers": as defined in the preamble hereto.
"Commitment": as to any Lender, the obligation of such Lender (if any)
to make Revolving Credit Loans to and/or issue or participate in Letters of
Credit issued on behalf of the Borrower hereunder in an aggregate principal
and/or face amount at any one time outstanding not to exceed the amount set
forth opposite such Lender's name on Schedule 1.1, as such amount may be
changed from time to time in accordance with the provisions of this
Agreement.
"Commitment Fee": as defined in Section 2.5(a).
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the aggregate
Commitments of all Lenders (or, at any time after the Commitments shall
have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Credit Loans then outstanding constitutes
of the aggregate principal amount of the Revolving Credit Loans of all
Lenders then outstanding).
"Commitment Period": the period from and including the Closing Date to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Adjusted Cash Flow": for any period, (a) Consolidated
Cash Flow for such period minus (b) an amount equal to 0.25 times the
aggregate gross leasable area (measured in square feet) of the shopping
centers located on the Properties as of the last day of such period.
"Consolidated Cash Flow": for any period of two consecutive fiscal
quarters (a "Cash Flow Test Period"), an amount equal to (a) Funds From
Operations for such period plus (b) Consolidated Interest Expense for such
period minus (c) the amount (if any) by which (i) the sum of (x) management
fee income of the Borrower and its consolidated Subsidiaries included in
Funds From Operations for such period and (y) other income of the Borrower
and its consolidated Subsidiaries included in Funds From Operations for
such period not attributable to the Properties exceeds (ii) 115% of the sum
of (x) management fee income of the Borrower and its consolidated
Subsidiaries included in Funds From Operations for the corresponding period
of two consecutive fiscal quarters of the Borrower ending on the date which
is one year prior to the last day of such Cash Flow Test Period and (y)
other income of the Borrower and its consolidated Subsidiaries included in
Funds From Operations for such corresponding period not attributable to the
Properties.
"Consolidated Debt Service": for any period of two consecutive fiscal
quarters (a "Debt Service Test Period"), (a) Consolidated Interest Expense
for such period plus (b) the aggregate
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<PAGE>
5
amount of scheduled principal payments on Indebtedness (excluding optional
prepayments and scheduled principal payments in respect of any Indebtedness
which is payable in a single installment at final maturity) required to be
made during such period by the Borrower or any of its consolidated
Subsidiaries; provided, that, in the case of any Indebtedness which
amortizes in annual installments, (i) only 50% of the principal amount of
any such annual installment which is payable during any Debt Service Test
Period shall be included in Consolidated Debt Service for such Debt Service
Test Period and (ii) in the event that no annual installment is payable in
respect of a particular item of such Indebtedness during a Debt Service
Test Period, but an annual installment in respect of such Indebtedness is
payable during the period of two consecutive fiscal quarters commencing
immediately after such Debt Service Test Period, 50% of the amount of such
annual installment shall nevertheless be included in Consolidated Debt
Service for such Debt Service Test Period.
"Consolidated Interest Expense": for any period, the amount of
interest expense of the Borrower and its Subsidiaries for such period on
the aggregate principal amount of their Indebtedness, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Modified Cash Flow": for any period of two consecutive
fiscal quarters of the Borrower, (a) Consolidated Cash Flow for such period
minus (b) the aggregate amount of Property Net Operating Income
attributable to each Identified Property with respect to such period, in
each case from the date of acquisition of such Identified Property through
the last day of such period.
"Consolidated Net Income": for any period, consolidated net income (or
loss) of the Borrower and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or deficit) of any other Person accrued prior to
the date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries and (b) the
undistributed earnings of any Subsidiary or Joint Venture to the extent
that the declaration or payment of dividends or similar distributions by
such Subsidiary or Joint Venture is not at the time permitted by the terms
of any Contractual Obligation or Requirement of Law applicable to such
Subsidiary or Joint Venture.
"Consolidated GAAP Net Worth": at any date of determination, all items
which in conformity with GAAP would be included under shareholders' equity
on a consolidated balance sheet of the Borrower and its Subsidiaries at
such date.
"Consolidated Net Worth": at any date of determination, an amount
equal to (a) Gross Asset Value as of such date minus (b) Consolidated Total
Indebtedness as of such date.
"Consolidated Secured Indebtedness": as of any date of determination,
the sum of (a) the aggregate principal amount of all Indebtedness of the
Borrower and its Subsidiaries outstanding at such date which does not
constitute Unsecured Indebtedness and (b) the excess, if any, of (i) the
aggregate principal amount of all Unsecured Indebtedness of the
Subsidiaries of the Borrower over (ii) $10,000,000, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Senior Unsecured Indebtedness": as of any date of
determination, the sum of (a) the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries outstanding at such date
which constitutes Unsecured Indebtedness (excluding (i) Indebtedness which
is contractually subordinated to the Indebtedness of the Borrower and its
Subsidiaries under the Loan Documents on customary terms acceptable to the
Administrative Agent, (ii) Indebtedness of the Borrower and its
Subsidiaries under the Loan Documents and (iii)
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6
Indebtedness incurred pursuant to any commitment referred to in clause (c)
below), (b) the aggregate Commitments then in effect and (c) the aggregate
commitments then in effect with respect to any other unsecured committed
line of credit extended to the Borrower or any of its Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Indebtedness": as of any date of determination,
all Indebtedness of the Borrower and its Subsidiaries outstanding at such
date, determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect, in each case
to the extent the foregoing are applicable to the Borrower, any Subsidiary
or any Joint Venture or any of their respective assets or properties.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate of interest determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
Service (or otherwise on such service), the "Eurodollar Rate" shall be
determined by reference to such other publicly available service for
displaying eurodollar rates as may be agreed upon by the Administrative
Agent and the Borrower or, in the absence of such agreement, the
"Eurodollar Rate" shall instead be the rate per annum notified to the
Administrative Agent by Chase as the rate at which Chase is offered Dollar
deposits at or about 10:00 A.M., New York City time, two Business Days
prior to the beginning of such Interest Period, in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on
the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Loan to
be outstanding during such Interest Period.
"Eurodollar Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
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<PAGE>
7
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Federal Funds Effective Rate": as defined in the definition of "ABR".
"Final Date": as defined in Section 2.11(e).
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Funds From Operations": for any period, (a) Consolidated Net Income
for such period without giving effect to depreciation and amortization,
gains or losses from extraordinary items, gains or losses on sales of real
estate, gains or losses on investments in marketable securities and any
provisions/benefits for income taxes for such period plus (b) funds from
operations of unconsolidated joint ventures for such period, all determined
on a consistent basis for such period.
"GAAP": generally accepted accounting principles in the United States
of America consistent with those utilized in preparing the audited
financial statements referred to in Section 4.1.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Asset Value": as of the last day of any period of two
consecutive fiscal quarters of the Borrower, an amount equal to the sum of
(a) 2 multiplied by an amount equal to (i) Consolidated Modified Cash Flow
for such period divided by (ii) 0.105, (b) Unrestricted Cash and Cash
Equivalents as of such day and (c) an amount equal to 75% of the aggregate
purchase price paid by the Borrower and its Subsidiaries to acquire each
Identified Property with respect to such period.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation (determined without duplication) of (a) the guaranteeing
person or (b) another Person (including, without limitation, any bank under
any letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar obligation,
in either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of any
other third Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment
of any such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the maximum stated amount of the
primary obligation relating to
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<PAGE>
8
such Guarantee Obligation (or, if less, the maximum stated liability set
forth in the instrument embodying such Guarantee Obligation), provided,
that, in the absence of any such stated amount or stated liability, the
amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined
by the Borrower in good faith.
"Identified Property": with respect to any period of two consecutive
fiscal quarters of the Borrower, any Property acquired by the Borrower or
any of its Subsidiaries during such period and designated as an "Identified
Property" for such period by the Borrower by written notice to the
Administrative Agent concurrently with the delivery of any compliance
certificate pursuant to Section 6.2(b); provided, that, after giving effect
to such designation (and the calculation of Gross Asset Value as a result
thereof), the amount described in clause (c) of the definition of Gross
Asset Value for such period shall not exceed 20% of such Gross Asset Value.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other
than current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices), to the extent such
obligations constitute indebtedness for the purposes of GAAP, (c) any other
indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (d) all obligations of such Person under Financing
Leases, (e) all obligations of such Person in respect of acceptances issued
or created for the account of such Person, (f) all Guarantee Obligations of
such Person (excluding, in the case of the Borrower, Guarantee Obligations
of the Borrower in respect of primary obligations of any Subsidiary), and
(g) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
calendar month to occur while such Loan is outstanding and the Termination
Date, (b) as to any Eurodollar Loan or C/D Rate Loan, the last day of each
calendar month to occur while such Loan is outstanding and the last day of
the Interest Period with respect thereto and (c) as to any Money Market
Loans, the Money Market Loan Maturity Date applicable thereto.
"Interest Period": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two or three months thereafter, as selected by
the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two or three months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
and (b) with respect to any C/D Rate Loan:
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(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such C/D Rate
Loan and ending 30, 60 or 90 days thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such C/D Rate Loan and
ending 30, 60 or 90 days thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than two
Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result of
such extension would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the immediately
preceding Business Day;
(2) if any Interest Period pertaining to a C/D Rate Loan would
otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day; and
(3) any Interest Period pertaining to a Eurodollar Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
"Issuing Lender": Chase, in its capacity as issuer of any Letter of
Credit.
"Joint Venture": any joint venture, partnership or other
minority-owned entity (other than a Subsidiary) in which the Borrower or
any of its Subsidiaries owns an interest.
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": with respect to each Letter of Credit, the
last day of each March, June, September and December to occur while such
Letter of Credit is outstanding and the date on which such Letter of Credit
shall expire or be cancelled or fully drawn.
"L/C Fee Rate": with respect to each Letter of Credit at any date, the
applicable percentage per annum set forth below based upon the Status on
such date:
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V
Status Status Status Status Status
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
0.25% 0.35% 0.50% 0.85% 1.50%
</TABLE>
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 0.
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"L/C Participants": the collective reference to all the Lenders other
than the Issuing Lender.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 0.
"Lien": any mortgage, pledge, hypothecation, assignment (including any
collateral assignment but excluding any assignment of an asset made in lieu
of a sale thereof where the assignor is paid the fair market value of such
asset by the assignee and the assignee assumes all of the rights and
obligations attributable to ownership of such asset), deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest
or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing).
"Loan Documents": this Agreement, the Notes, the Applications and the
Subsidiary Guarantee.
"Loan Parties": the Borrower and the Subsidiary Guarantors.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower to perform its obligations under any Loan Document
to which it is a party, (c) the ability of the Guarantors, taken as a
whole, to perform their respective obligations under the Subsidiary
Guarantee or (d) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Money Market Loan Maturity Date": with respect to any Money Market
Loan, the maturity date requested by the Borrower in connection therewith
(which date shall in no event be later than the earlier of (a) 29 days
after the Borrowing Date thereof or (b) the Termination Date).
"Money Market Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Money Market Rate.
"Money Market Rate": with respect to any proposed Money Market Loan,
the quoted rate per annum obtained by the Administrative Agent with respect
thereto, and accepted by each Lender in its sole discretion, no later than
10:00 A.M., New York City time, two Business Days prior to the requested
Borrowing Date (or, in the case of Money Market Loans having a Money Market
Loan Maturity Date of six days or less from the relevant Borrowing Date,
the quoted rate per annum obtained by the Administrative Agent with respect
thereto, and accepted by each Lender in its sole discretion, no later than
one hour after the quote is obtained by the Administrative Agent, which
quote shall in no event be obtained later than 12:00 Noon, New York City
time, on the relevant Borrowing Date).
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11
"Money Market Tranche": the collective reference to Money Market Loans
having the same Borrowing Date and Money Market Loan Maturity Date.
"Moody's": Moody's Investors Service, Inc. and its successors.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes": as defined in Section 2.12(a).
"Non-Recourse Indebtedness": Indebtedness the documentation with
respect to which expressly provides that (a) the lender(s) thereunder (and
any agent for such lender(s)) may not seek a money judgment against the
Borrower and/or any Subsidiary and (b) recourse for payment in respect of
such Indebtedness is limited to those assets or Capital Stock of the Person
issuing such Indebtedness which secure such Indebtedness (except in the
case of customary indemnities contained in such documentation, provided
that if a claim is made in connection with such indemnities, such claim
shall not constitute Non-Recourse Indebtedness for the purposes of this
Agreement).
"Non-U.S. Lender": as defined in Section 2.12(b).
"Note": as defined in Section 2.2(b).
"Operations and Maintenance Plan": the Borrower's operations and
maintenance plan with respect to environmental matters attached hereto as
Exhibit G.
"Owned Property": (a) each Property wholly owned in fee by the
Borrower or any Subsidiary or Joint Venture and (b) each Property
("Groundlease Properties") as to which (i) the improvements are wholly
owned in fee by the Borrower or any Subsidiary or Joint Venture and (ii)
the land is subject to a valid Qualified Leasehold Interest in favor of the
Borrower or such Subsidiary or Joint Venture, provided, that (x) the
aggregate Property Net Operating Income in respect of Groundlease
Properties included in any calculation of Value of Unencumbered Properties
for any period shall not exceed 15% of the aggregate Property Net Operating
Income with respect to all Unencumbered Properties for such period and (y)
the aggregate Property Net Operating Income in respect of Groundlease
Properties as to which the leasehold interest is not a Qualified
Mortgageable Leasehold Interest included in any calculation of Value of
Unencumbered Properties for any period shall not exceed 10% of the
aggregate Property Net Operating Income with respect to all Unencumbered
Properties for such period.
As used in this definition:
"Qualified Leasehold Interest" means any leasehold interest which
(i) may be transferred and/or assigned without the consent of the
lessor (or as to which the lease expressly provides that (x) such
lease may be transferred and/or assigned with the consent of the
lessor and (y) such consent shall not be unreasonably withheld or
delayed) and (ii) has a remaining term of at least 40 years.
"Qualified Mortgageable Leasehold Interest" means any Qualified
Leasehold Interest with respect to which (i) a security interest may
be granted without the consent of the lessor and (ii) the lease
governing such leasehold interest expressly provides that (x) the
lessor shall notify any holder of a security interest in such
leasehold
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12
interest of the occurrence of any default by the lessee under such
lease and shall afford such holder the right to cure such default and
(y) in the event that such lease is terminated, such holder shall have
the option to enter into a new lease having terms substantially
identical to those contained in the terminated lease.
"Participant": as defined in Section 10.7.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Liens": (a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Borrower
or its Subsidiaries, as the case may be, in conformity with GAAP; (b)
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period of more than
90 days or which are being contested in good faith by appropriate
proceedings; and (c) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Property": each parcel of real property (including the shopping
center thereon) owned or operated by the Borrower, any Subsidiary or any
Joint Venture.
"Property Net Operating Income": with respect to any Property, for any
period, an amount equal to the excess, if any, of (a) Property Gross
Revenues in respect of such Property for such period over (b) Property
Operating Expenses in respect of such Property for such period.
"Property Gross Revenues": with respect to any Property, for any
period, all gross income, revenues and consideration, of whatever form or
nature, received by or paid to or for the account or benefit of the Person
owning such Property (and, if such Person is a Joint Venture or a
Subsidiary which is not a Wholly Owned Subsidiary, distributed or
distributable to the Borrower or any Wholly Owned Subsidiary), in each
instance during such period, in connection with the ownership, operation,
leasing and occupancy of such Property, including, without limitation, the
following: (a) amounts received under the leases, including, without
limitation base rent, escalation, overage, additional, participation,
percentage and similar rentals, late charges and interest payments and
amounts received on account of maintenance or service charges, real estate
taxes, assessments, utilities, air conditioning and heating and other
administrative, management, operating, leasing and maintenance expenses for
such property, but excluding until earned security deposits, prepaid rents
and other refundable receipts, (b) rents and receipts from licenses,
concessions, vending machines and similar items, (c) parking fees and
rentals, (d) other fees, charges or payments not denominated as rental of
office, retail, storage, parking or other space in such property, and (e)
payments received as consideration, in whole or
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13
in part, for the cancellation, modification, extension or renewal of
leases; but in any event excluding the proceeds of any financing in respect
of all or any portion of such Property.
"Property Operating Expenses": with respect to any Property, for any
period, the sum of (I) all expenses incurred by the Borrower and its
Subsidiaries during such period with respect to the ownership, operation,
leasing and occupancy of such Property (including expenses payable by any
Joint Venture to the extent the Borrower or any of its Subsidiaries is
liable therefor), including, without limitation, the following: (a) real
estate taxes; (b) special assessments or similar charges paid during such
period; (c) personal property taxes; (d) costs of utilities, air
conditioning and heating; (e) maintenance and repair costs of a non-capital
nature; (f) operating expenses and fees; (g) wages and salaries of on-site
employees engaged in the operation and management of such Property,
including employers' social security taxes and other taxes, insurance
benefits and the like, levied on or with respect to such wages or salaries;
(h) premiums payable for insurance carried on or with respect to such
Property; (i) advertising and promotion costs; (j) rental expense and (k)
in the case of any Property owned or operated by a Joint Venture, any
obligation of the Borrower or any of its Subsidiaries (contingent or
otherwise) to contribute funds to such Joint Venture and (II) a reserve in
respect of management fees and expenses equal to 5% of Property Gross
Revenues for such period with respect to such Property. The following shall
be excluded from Property Operating Expenses: (1) foreign, U.S., state and
local income taxes, franchise taxes or other taxes based on income, (2)
depreciation, amortization and any other non-cash deduction for income tax
purposes, (3) interest expenses of the Person owning such Property and (4)
any expenditures made for capital improvements and the cost of leasing
commissions.
"Purchasing Lender": as defined in Section 10.8(a).
"Rating Agencies": the collective reference to S&P and Moody's.
"Register": as defined in Section 10.9(a).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 0 for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg.ss. 2615.
"Required Lenders": at any date, the holders of 66-2/3% of the
aggregate Commitments, or, if the Commitments have been terminated, of the
aggregate unpaid principal amount of the Revolving Credit Loans and L/C
Obligations.
"Required Remedial Lenders": at any date, the holders of 66-2/3% of
the aggregate Commitments.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each
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case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer and the president
of the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower.
"Revolving Credit Loan": any loan made by any Lender pursuant to this
Agreement.
"S&P": Standard & Poor's Ratings Group and its successors.
"Significant Subsidiary": at any date of determination, any Subsidiary
of the Borrower which at such date owns or operates one or more Properties
having an aggregate Equity Value in excess of $10,000,000. For the purposes
of this definition, "Equity Value" means:
(a) in the case of any Property owned or operated by the Borrower
or any of its Subsidiaries on October 1, 1996, (i) 2 multiplied by an
amount equal to (x) Property Net Operating Income of such Property for
the period of two consecutive fiscal quarters of the Borrower ending
March 31, 1997 divided by (y) 0.105 minus (ii) the aggregate
outstanding principal amount of any Indebtedness secured by such
Property as of the last day of such period; and
(b) in the case of any other Property, the aggregate purchase
price paid by the Borrower or any of its Subsidiaries in connection
with the acquisition of such Property (excluding (i) the principal
amount of any Indebtedness secured by such Property and assumed in
connection with the acquisition thereof and (ii) if such Property is
acquired subject to Indebtedness, the principal amount of such
Indebtedness).
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Status": as to the Borrower, the existence of Level I Status, Level
II Status, Level III Status, Level IV Status or Level V Status, as the case
may be.
As used in this definition:
"Level I Status" exists at any date if, at such date, the Borrower has
a long-term senior unsecured debt rating of AAA or better by S&P and Aaa or
better by Moody's;
"Level II Status" exists at any date if, at such date, Level I Status
does not exist and the Borrower has a long-term senior unsecured debt
rating of AA- or better by S&P and Aa3 or better by Moody's;
"Level III Status" exists at any date if, at such date, neither Level
I Status nor Level II Status exists and the Borrower has a long-term senior
unsecured debt rating of A- or better by S&P and A3 or better by Moody's;
"Level IV Status" exists at any date if, at such date, neither Level I
Status, Level II Status nor Level III Status exists and the Borrower has a
long-term senior unsecured debt rating of BBB- or better by S&P and Baa3 or
better by Moody's; and
"Level V Status" exists at any date if, at such date, none of Level I
Status, Level II Status, Level III Status or Level IV Status exists;
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provided that if S&P and/or Moody's shall cease to issue ratings of debt
securities of real estate investment trusts generally, then the
Administrative Agent and the Borrower shall negotiate in good faith to
agree upon a substitute rating agency or agencies (and to correlate the
system of ratings of each substitute rating agency with that of the rating
agency for which it is substituting) and (a) until such substitute rating
agency or agencies are agreed upon, Status shall be determined on the basis
of the rating assigned by the other rating agency (or, if both S&P and
Moody's shall have so ceased to issue such ratings, on the basis of the
Status in effect immediately prior thereto) and (b) after such substitute
rating agency or agencies are agreed upon, Status shall be determined on
the basis of the rating assigned by the other rating agency and such
substitute rating agency or the two substitute rating agencies, as the case
may be.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantee": the Guarantee to be executed and delivered by
each Subsidiary of the Borrower, substantially in the form of Exhibit C, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Subsidiary Guarantor": each Subsidiary of the Borrower party to the
Subsidiary Guarantee.
"Termination Date": May __, 1998.
"Tranche": any C/D Tranche, Eurodollar Tranche or Money Market Tranche
in respect of Revolving Credit Loans.
"Transferee": as defined in Section 10.9(b).
"Type": as to any Revolving Credit Loan, its nature as an ABR Loan, a
Eurodollar Loan, a C/D Rate Loan or a Money Market Loan.
"Unencumbered": with respect to any asset, at any date of
determination, the circumstance that such asset on such date (a) is not
subject to any Liens or claims (including restrictions on transferability
or assignability) of any kind (including any such Lien, claim or
restriction imposed by the organizational documents of any Subsidiary or
Joint Venture, but excluding Permitted Liens and, in the case of any
Qualified Leasehold Interest (to the extent permitted by the definition
thereof), restrictions on transferability or assignability in respect of
such leasehold interest), (b) is not subject to any agreement (including
(i) any agreement governing Indebtedness incurred in order to finance or
refinance the acquisition of such asset and (ii) if applicable, the
organizational documents of any Subsidiary or Joint Venture) which
prohibits or limits the ability of the Borrower or any of its Subsidiaries
to create, incur, assume or suffer to exist any Lien upon any assets or
Capital Stock of the Borrower or any of its Subsidiaries (excluding (x) any
agreement which limits generally the amount of secured Indebtedness which
may be incurred by the Borrower and its Subsidiaries and (y) any lease with
respect to a Qualified Leasehold Interest which is not a Qualified
Mortgageable Leasehold
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Interest, so long as such restriction applies only to the leasehold
interest created by such lease) and (c) is not subject to any agreement
(including any agreement governing Indebtedness incurred in order to
finance or refinance the acquisition of such asset) which entitles any
Person to the benefit of any Lien (other than Permitted Liens) on any
assets or Capital Stock of the Borrower or any of its Subsidiaries, or
would entitle any Person to the benefit of any Lien (other than Permitted
Liens) on such assets or Capital Stock upon the occurrence of any
contingency (including, without limitation, pursuant to an "equal and
ratable" clause). For the purposes of this Agreement, any Owned Property of
a Subsidiary which is not a Wholly Owned Subsidiary or of a Joint Venture
shall not be deemed to be Unencumbered unless both (i) such Property and
(ii) all Capital Stock of such Subsidiary or Joint Venture owned by the
Borrower or any of its Subsidiaries is Unencumbered.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Unrestricted Cash and Cash Equivalents": at any date of
determination, the sum of (a) the aggregate amount of Unrestricted cash
then held by the Borrower or any of its consolidated Subsidiaries and (b)
the aggregate amount of Unrestricted Cash Equivalents (valued at the lower
of cost and fair market value) then held by the Borrower or any of its
consolidated Subsidiaries. As used in this definition, "Unrestricted"
means, with respect to any asset, the circumstance that such asset is not
subject to any Liens or claims of any kind in favor of any Person. It is
understood that, for the purposes of this definition, any asset held by the
Borrower or any of its Subsidiaries as security for any obligations owing
to the Borrower or any of its Subsidiaries by any other Person shall not be
deemed to be Unrestricted.
"Unsecured Indebtedness": all Indebtedness of the Borrower and its
Subsidiaries which is not secured by a Lien on any income, Capital Stock,
property or asset of the Borrower or any of its Subsidiaries.
"Value of Unencumbered Properties": for any period of two consecutive
fiscal quarters, an amount equal to 2 multiplied by (a) the aggregate
Property Net Operating Income with respect to the Unencumbered Owned
Properties for such period divided by (b) 0.105.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor which is
a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any other Loan Document or any certificate or other document made or delivered
pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
relating to the Borrower and its Subsidiaries not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this
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Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES
2.1 RESERVED. THIS SECTION INTENTIONALLY OMITTED
2.2 Commitments. (a) Revolving Credit Loans. (i) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
to the Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such Lender's
Commitment Percentage of the then outstanding L/C Obligations, does not exceed
the amount of such Lender's Commitment. During the Commitment Period the
Borrower may use the Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall, at any time, the sum of the Aggregate Outstanding
Revolving Extensions of Credit of all of the Lenders exceed the aggregate
Commitments then in effect.
(ii) The Revolving Credit Loans may from time to time be (v) Eurodollar
Loans, (w) ABR Loans, (x) C/D Rate Loans, (y) Money Market Loans or (z) a
combination thereof, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2(d) and 2.4, provided that
no Revolving Credit Loan shall be made as a Eurodollar Loan or a C/D Rate Loan
after the day that is one month or 30 days, respectively, prior to the
Termination Date.
(b) Notes. The Revolving Credit Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-2, with appropriate insertions as to payee, date and principal amount
(a "Note"), payable to the order of such Lender and in a principal amount equal
to the lesser of (i) the amount of the initial Commitment of such Lender and
(ii) the aggregate unpaid principal amount of all Revolving Credit Loans made by
such Lender. Each Lender is hereby authorized to record the date, Type and
amount of each Revolving Credit Loan made by such Lender, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans and C/D Rate Loans, the length of each Interest Period with
respect thereto and, in the case of Money Market Loans, the Money Market Loan
Maturity Date with respect thereto, on the schedule annexed to and constituting
a part of its Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided that the
failure by any Lender to make any such recordation or any error in such
recordation shall not affect the obligations of the Borrower under this
Agreement or the Notes. Each Note shall (x) be dated the Closing Date, (y) be
stated to have a final maturity on the Termination Date and (z) provide for the
payment of interest in accordance with Section 2.6.
(c) Repayment of Revolving Credit Loans. The Borrower shall repay all then
outstanding Revolving Credit Loans on the Termination Date or such earlier date
as the Commitments shall terminate as provided herein; provided, that each Money
Market Loan shall, in any event, be repaid on the Money Market Loan Maturity
Date in respect thereof.
(d) Procedure for Borrowing Revolving Credit Loans. The Borrower may borrow
under the Commitments during the Commitment Period on any Business Day, provided
that the Borrower shall
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give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, (i) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans or Money
Market Loans having a Money Market Loan Maturity Date of more than six days from
the relevant Borrowing Date, (ii) two Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially C/D Rate Loans or Money Market Loans having a Money Market Loan
Maturity Date of six days or less from the relevant Borrowing Date, or (iii) one
Business Day prior to the requested Borrowing Date, otherwise), specifying (w)
the amount to be borrowed, (x) the requested Borrowing Date and, in the case of
each Money Market Loan, the requested Money Market Loan Maturity Date, (y)
whether the borrowing is to be of Eurodollar Loans, ABR Loans, C/D Rate Loans,
Money Market Loans or a combination thereof and (z) if the borrowing is to be
entirely or partly of Eurodollar Loans or C/D Rate Loans, the respective amounts
of each such Type of Revolving Credit Loan and the respective lengths of the
initial Interest Periods therefor. Each borrowing under the Commitments shall be
in an amount equal to (i) in the case of ABR Loans, $500,000 or a whole multiple
of $100,000 in excess thereof (or, if the then aggregate Available Commitments
are less than $500,000, such lesser amount) and (ii) in the case of Eurodollar
Loans, C/D Rate Loans or Money Market Loans, $3,000,000 or a whole multiple of
$100,000 in excess thereof. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its pro rata share of each such borrowing available to
the Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in Section 10.2 prior to 11:00 A.M., New York
City time (or in the case of Money Market Loans having a Money Market Loan
Maturity Date of six days or less from the relevant Borrowing Date, 3:00 P.M.,
New York City time), on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the account
of the Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent. In no event may the number of Money Market
Loans requested in any calendar month pursuant to this Section 2.2(d) exceed
seven.
(e) Tranches. Notwithstanding anything to the contrary in this Agreement,
all borrowings, prepayments, conversions and continuations of Revolving Credit
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, (i) the aggregate principal amount of the Revolving Credit Loans
comprising each Tranche shall be equal to $3,000,000 or a whole multiple of
$100,000 in excess thereof, (ii) no Lender's share of any Tranche shall be less
than $500,000 and (iii) there shall be no more than four Tranches outstanding at
any one time.
(f) Termination or Reduction of Commitments. The Borrower shall have the
right, upon not less than three Business Days' irrevocable notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any payments
of the Revolving Credit Loans made on the effective date thereof, (i) the
aggregate principal amount of the Revolving Credit Loans then outstanding, when
added to the aggregate L/C Obligations then outstanding, would exceed the
Commitments then in effect or (ii) the Available Commitment of any Lender would
be less than zero. Any such reduction shall be in an amount equal to $1,000,000
or a whole multiple thereof and shall reduce permanently the Commitments then in
effect.
2.3 Optional Prepayments. The Borrower may at any time and from time to
time prepay the Revolving Credit Loans (subject, in the case of Eurodollar
Loans, C/D Rate Loans and Money Market Loans, to compliance with the terms of
Sections 2.2(e) and 2.13), in whole or in part, without premium or penalty, upon
at least three Business Days' irrevocable notice to the Administrative Agent,
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, C/D
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Rate Loans, ABR Loans, Money Market Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to Section 2.13. Partial prepayments shall be in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if
less, the aggregate outstanding principal amount of Revolving Credit Loans).
2.4 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert Eurodollar Loans or C/D Rate Loans to ABR Loans, and/or
to convert Eurodollar Loans or ABR Loans to C/D Rate Loans, by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans or C/D Rate
Loans may only be made on the last day of an Interest Period with respect
thereto. The Borrower may elect from time to time to convert ABR Loans or C/D
Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election, provided that any such
conversion of C/D Rate Loans may, subject to the third succeeding sentence, only
be made on the last day of an Interest Period with respect thereto. Any such
notice of conversion to Eurodollar Loans or C/D Rate Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon receipt
of any such notice the Administrative Agent shall promptly notify each affected
Lender thereof. If the last day of the then current Interest Period with respect
to C/D Rate Loans that are to be converted to Eurodollar Loans is not a Business
Day, such conversion shall be made on the next succeeding Business Day, and
during the period from such last day to such succeeding Business Day such Loans
shall bear interest as if they were ABR Loans. All or any part of outstanding
Eurodollar Loans, ABR Loans and C/D Rate Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar Loan or a
C/D Rate Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined in its or their
sole discretion that such a conversion is not appropriate, (ii) any such
conversion may only be made if, after giving effect thereto, Section 2.2(e)
would not be contravened and (iii) no Revolving Credit Loan may be converted
into a Eurodollar Loan or a C/D Rate Loan after the date that is one month or 30
days, respectively, prior to the Termination Date.
(b) Any Eurodollar Loans or C/D Rate Loans may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan or C/D Rate Loan may be continued as
such (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined in its or their
sole discretion that such a continuation is not appropriate, (ii) if, after
giving effect thereto, Section 2.2(e) would be contravened or (iii) after the
date that is one month or 30 days, respectively, prior to the Termination Date,
and provided, further, that if the Borrower shall fail to give any required
notice as described above in this paragraph or if such continuation is not
permitted pursuant to the preceding proviso such Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period.
2.5 Fees. (a) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee (the "Commitment Fee") for the
period from and including the first day of the Commitment Period to the
Termination Date, computed at the rate of 1/8th of 1% per annum on the average
daily amount of the Available Commitment of such Lender during the period for
which payment is made (taking into consideration any reductions in the
Commitment of such Lender pursuant to Section 2.2(f) occurring during such
period), payable monthly in arrears on the last day of each March, June,
September and December during the term of this Agreement and on the Termination
Date or such earlier date as the Commitments shall terminate as provided herein,
commencing on the first of such
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dates to occur after the Closing Date.
(b) The Borrower shall pay to the Administrative Agent, for its own
account, and, to the extent mutually agreed upon by the Administrative Agent and
the Lenders, for the account of the Lenders, the fees in the amounts and on the
dates previously agreed to in writing by the Borrower.
2.6 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the Applicable Margin.
(c) Each C/D Rate Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the C/D Rate
determined for such day plus the Applicable Margin.
(d) Each Money Market Loan shall bear interest at a rate per annum equal to
the Money Market Rate applicable thereto plus the Applicable Margin.
(e) If all or a portion of (i) the principal amount of any Revolving Credit
Loan, (ii) any interest payable thereon or (iii) any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is (x) in the case of overdue principal (except as
otherwise specified in clause (y) below), the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.6 plus
3% or (y) in the case of any overdue principal with respect to Money Market
Loans or any overdue interest, commitment fee or other amount, the rate
described in Section 2.6(b) plus 3%, in each case from the date of such
non-payment to the date on which such amount is paid in full (as well after as
before judgment).
(f) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to Section 2.6(e) shall be payable from
time to time on demand.
2.7 Computation of Interest and Fees. (a) Commitment fees and interest
(other than interest calculated on the basis of the Prime Rate) shall be
calculated on the basis of a 360-day year for the actual days elapsed. Interest
calculated on the basis of the Prime Rate shall be calculated on the basis of a
365- (or 366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate, C/D Rate or Money Market
Rate. Any change in the interest rate on a Revolving Credit Loan resulting from
a change in the ABR or the C/D Assessment Rate shall become effective as of the
opening of business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate with respect to any Eurodollar Loan or C/D Rate
Loan.
2.8 Inability to Determine Interest Rate; Unavailability of C/D Rate
Option. If prior to the first day of any Interest Period:
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(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or the
C/D Rate for such Interest Period,
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate or the C/D Rate determined or to
be determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Revolving Credit Loans
during such Interest Period, or
(c) the Administrative Agent shall have received notice from any
Lender that it is unable to fund Revolving Credit Loans hereunder on the
basis of the C/D Rate,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans or C/D Rate Loans, as the case may be, requested
to be made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Revolving Credit Loans that were to have been converted on the first day
of such Interest Period to Eurodollar Loans or C/D Rate Loans, as the case may
be, shall be converted to or continued as ABR Loans and (z) any outstanding
Eurodollar Loans or C/D Rate Loans, as the case may be, shall be converted, on
the first day of such Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans or C/D Rate
Loans, as the case may be, shall be made or continued as such, nor shall the
Borrower have the right to convert Revolving Credit Loans to Eurodollar Loans or
C/D Rate Loans, as the case may be.
2.9 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
Commitment Fee hereunder and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Lenders. All payments (including prepayments) to
be made by the Borrower hereunder and under the Notes, whether on account of
principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders, at
the Administrative Agent's office specified in Section 10.2, in Dollars and in
immediately available funds. It is understood that, if any payment of principal
is made on any day in accordance with the preceding sentence, no interest shall
accrue on such day in respect of such principal. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and, with respect to any such
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension) unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender
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is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this Section 2.9(b) shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans hereunder, on demand, from the Borrower.
2.10 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert C/D Rate Loans or ABR Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Lender's Revolving Credit Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.13.
2.11 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the Closing Date:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Letter of Credit or any
Application or any Eurodollar Loan, C/D Rate Loan or Money Market Loan made
by it, or change the basis of taxation of payments to such Lender in
respect thereof (except in each case for Non-Excluded Taxes covered by
Section 2.12 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
relevant office of such Lender which is not otherwise included in the
determination of the Eurodollar Rate, the C/D Rate or the Money Market Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, C/D Rate Loans or Money Market Loans
or issuing or participating in Letters of Credit or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.11(a), it shall promptly notify the Borrower, through
the Administrative Agent, of the event by reason of which it has become so
entitled.
(b) If any Lender shall have determined that the application of any
Requirement of Law
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regarding capital adequacy or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority does or
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under any
Letter of Credit to a level below that which such Lender or such corporation
could have achieved but for such application or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy and such Lender's treatment of its Commitments for internal
purposes as of the date on which it became a party hereto) by an amount deemed
by such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor (setting forth in reasonable detail the basis for such
request), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) The Borrower agrees to pay to each Lender which requests compensation
under this Section 2.11(c) (by notice to the Borrower), on the last day of each
Interest Period with respect to any Eurodollar Loan made by such Lender, so long
as such Lender shall be required to maintain reserves against "Eurocurrency
liabilities" under Regulation D of the Board (or, so long as such Lender may be
required by the Board or by any other Governmental Authority to maintain
reserves against any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or against any category of extensions of credit or
other assets of such Lender which includes any Eurodollar Loans), an additional
amount (determined by such Lender and notified to the Borrower) representing
such Lender's calculation or, if an accurate calculation is impracticable,
reasonable estimate (using such reasonable means of allocation as such Lender
shall determine) of the actual costs, if any, incurred by such Lender during
such Interest Period, as a result of the applicability of the foregoing reserves
to such Eurodollar Loans, which amount in any event shall not exceed the product
of the following for each day of such Interest Period:
(i) the principal amount of the Eurodollar Loans made by such Lender
to which such Interest Period relates and outstanding on such day; and
(ii) the difference between (x) a fraction the numerator of which is
the Eurodollar Rate (expressed as a decimal) applicable to such Eurodollar
Loan, and the denominator of which is one minus the maximum rate (expressed
as a decimal) at which such reserve requirements are imposed by the Board
or other Governmental Authority on such date minus (y) such numerator; and
(iii) a fraction the numerator of which is one and the denominator of
which is 360.
Any Lender which gives notice under this Section 2.11(c) shall promptly withdraw
such notice (by written notice of withdrawal given to the Administrative Agent
and the Borrower) in the event such Lender is no longer required to maintain
such reserves or the circumstances giving rise to such notice shall otherwise
cease to exist.
(d) The Borrower agrees to pay to each Lender which requests compensation
under this Section 2.11(d) (by notice to the Borrower), on the last day of each
Interest Period with respect to any C/D Rate Loan made by such Lender, so long
as such Lender shall be required to maintain reserves against "non-personal time
deposits" under Regulation D of the Board (or, so long as such Lender may be
required by the Board or by any other Governmental Authority to maintain
reserves against any other category of liabilities which includes deposits by
reference to which the interest rate on C/D Rate Loans is determined as provided
in this Agreement or against any category of extensions of credit or other
assets of such Lender which includes any C/D Rate Loans), an additional amount
(determined by such
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Lender and notified to the Borrower) representing such Lender's calculation or,
if an accurate calculation is impracticable, reasonable estimate (using such
reasonable means of allocation as such Lender shall determine) of the actual
costs, if any, incurred by such Lender during such Interest Period, as a result
of the applicability of the foregoing reserves to such C/D Rate Loans, which
amount in any event shall not exceed the product of the following for each day
of such Interest Period:
(i) the principal amount of the C/D Rate Loans made by such
Lender to which such Interest Period relates and outstanding on such
day; and
(ii) the difference between (x) a fraction the numerator of which
is the C/D Rate (expressed as a decimal) applicable to such C/D Rate
Loan, and the denominator of which is one minus the maximum rate
(expressed as a decimal) at which such reserve requirements are
imposed by the Board or other Governmental Authority on such date
minus (y) such numerator; and
(iii) a fraction the numerator of which is one and the
denominator of which is 360.
Any Lender which gives notice under this Section 2.11(d) shall promptly withdraw
such notice (by written notice of withdrawal given to the Administrative Agent
and the Borrower) in the event such Lender is no longer required to maintain
such reserves or the circumstances giving rise to such notice shall otherwise
cease to exist.
(e) A certificate as to any additional amounts payable pursuant to this
Section 2.11 submitted by any Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. The agreements in
this Section 2.11 shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder (the date on which
all of the foregoing shall have occurred, the "Final Date") until the first
anniversary of the Final Date.
2.12 Taxes. (a) All payments made by the Borrower under this Agreement and
the Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or the Notes). If any such non- excluded
taxes, levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Administrative Agent or any Lender hereunder or under the Notes, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes, provided, however, that the Borrower shall not be required to increase
any such amounts payable to any Non-U.S. Lender if such Lender fails to comply
with the requirements of Section 2.12(b). Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the
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Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this Section 2.12(a) shall survive
the termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America, or any estate or
trust that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two copies of either U.S.
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors thereto (and, if such
Non-U.S. Lender delivers a Form W-8, an annual certificate representing under
penalty of perjury that such Non-U.S. Lender is not a "bank" for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.12(b), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.12(b) that
such Non-U.S. Lender is not legally able to deliver.
2.13 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of
Eurodollar Loans, C/D Rate Loans or Money Market Loans, or in the conversion
into or continuation of Eurodollar Loans or C/D Rate Loans, after the Borrower
has given a notice requesting or accepting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement, or (c) the making of a prepayment of Eurodollar
Loans, C/D Rate Loans or Money Market Loans on a day which is not the last day
of an Interest Period, or the Money Market Loan Maturity Date, as the case may
be, with respect thereto. Such indemnification may, at the option of any Lender,
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of the relevant Interest Period
or the relevant Money Market Loan Maturity Date, as the case may be (or proposed
Interest Period or proposed Money Market Loan Maturity Date, as the case may
be), in each case at the applicable rate of interest for such Loans provided for
herein (excluding, however, the Applicable Margin) over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market or other relevant
market. This covenant shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder until the first
anniversary of the Final Date.
2.14 Change of Lending Office. Each Lender and each Transferee agrees that,
upon the
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occurrence of any event giving rise to the operation of Section 2.10, 2.11 or
2.12 with respect to such Lender or Transferee, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender or Transferee) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided, that such designation is made on terms that, in the sole
judgment of such Lender or Transferee, cause such Lender or Transferee and its
lending office(s) to suffer no economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section 2.14 shall affect or postpone
any of the obligations of any Borrower or the rights of any Lender or Transferee
pursuant to Sections 2.10, 2.11 and 2.12.
2.15 Replacement of Lenders under Certain Circumstances. The Borrower shall
be permitted to replace any Lender which (a) requests reimbursement for amounts
owing pursuant to Section 2.11 or 2.12, (b) is affected in the manner described
in Section 2.10 and as a result thereof any of the actions described in Section
2.10 is required to be taken or (c) defaults in its obligation to make Revolving
Credit Loans hereunder, with a replacement bank or other financial institution;
provided that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) the Borrower shall repay (or the replacement bank or
institution shall purchase, at par) all Revolving Credit Loans and other amounts
owing to such replaced Lender prior to the date of replacement, (iv) the
Borrower shall be liable to such replaced Lender under Section 2.13 if any
Eurodollar Loan, C/D Rate Loan or Money Market Loan owing to such replaced
Lender shall be prepaid (or purchased) other than on the last day of the
Interest Period or the Money Market Loan Maturity Date, as the case may be,
relating thereto, (v) the replacement bank or institution, if not already a
Lender, and the terms and conditions of such replacement, shall be satisfactory
to the Administrative Agent and the Issuing Lender, (vi) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 10.8 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (vii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.11 or 2.12, as the case may be,
and (viii) any such replacement shall not be deemed to be a waiver of any rights
which the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1. L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 0, agrees to issue letters of credit ("Letters of Credit") for the
account of the Borrower on any Business Day during the Commitment Period in such
form as may be approved from time to time by the Issuing Lender; provided that
the Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would exceed the
L/C Commitment or (ii) the Available Commitment of any Lender would be less than
zero.
(b) Each Letter of Credit (i) shall be denominated in Dollars, (ii) shall
be a standby letter of credit issued to support obligations of the Borrower and
its Subsidiaries, contingent or otherwise, incurred in the ordinary course of
business and (iii) shall expire no later than the earlier of the first
anniversary of the date of issuance thereof or the Termination Date (or, in the
case of any Letter of Credit with automatic renewal or evergreen provisions,
shall have a final expiration date no later than the Termination Date).
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit
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hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by, any applicable Requirement
of Law.
3.2. Procedure for Issuance of Letters of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.
3.3. Fees and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit fee with respect to each Letter of Credit at a
per annum rate, for each day during the period from the date of issuance of such
Letter of Credit to the first date thereafter on which such Letter of Credit
shall expire or be cancelled or fully drawn (the "L/C Termination Date"), equal
to the L/C Fee Rate in effect on such day, calculated on the basis of a 360-day
year, of the aggregate amount available to be drawn under such Letter of Credit
on such day. Subject to the provisions of the following sentence, such letter of
credit fee shall be payable in arrears on each L/C Fee Payment Date to occur
while the relevant Letter of Credit is outstanding and shall be nonrefundable. A
portion of each aforementioned letter of credit fee equal to 1/8th of 1% per
annum shall be payable to the Issuing Lender, and the remaining portion of such
letter of credit fee shall be payable to the Issuing Lender and the L/C
Participants to be shared ratably among them in accordance with their respective
Commitment Percentages.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse
the Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees received by
the Administrative Agent for their respective accounts pursuant to this Section
3.3.
3.4. L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Commitment Percentage
of the amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender
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pursuant to Section 0 in respect of any unreimbursed portion of any payment made
by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender
within three Business Days after the date such payment is due, such L/C
Participant shall pay to the Issuing Lender on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal funds rate, as
quoted by the Issuing Lender, during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 0 is not in fact made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans hereunder. A certificate of the Issuing
Lender submitted to any L/C Participant with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with this Section 3.4, the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will promptly distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5. Reimbursement Obligation of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (i) such draft so paid
(which reimbursement may be effected through the procedure described in Section
3.5(c)) and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Section 3 from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding ABR Loans which were then
overdue.
(c) Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Administrative Agent for a borrowing pursuant to Section
2.2(d) of ABR Loans in the amount of such drawing. The Borrowing Date with
respect to such borrowing shall be the date of such drawing.
3.6. Obligations Absolute. (a) The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 0 shall not be affected by, among other things, (i)
the validity or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or forged,
or (ii) any dispute between or among the Borrower and any beneficiary of any
Letter of Credit or any other party to which
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such Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence of willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.
3.7. Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
3.8. Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement, to make or maintain the Revolving Credit Loans, and to issue or
participate in the Letters of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1 Financial Condition. The consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at December 31, 1996 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Coopers & Lybrand, copies of which have heretofore
been furnished to the Lenders, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such dates, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 1997 and the related unaudited consolidated statements of
income and of cash flows for the nine-month period ended on such date, certified
by a Responsible Officer, copies of which have heretofore been furnished to the
Lenders, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the nine-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Except as
set forth on Schedule 4.1, neither the Borrower nor any of its consolidated
Subsidiaries has, at the Closing Date, any material Indebtedness, Guarantee
Obligation, contingent liability or liability for taxes, or any unusual forward
or long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto. Except as set forth on Schedule
4.1,
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during the period from December 31, 1996 to and including the Closing Date there
has been no sale, transfer or other disposition by the Borrower or any of its
consolidated Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its consolidated Subsidiaries at
December 31, 1996.
4.2 No Change. Since December 31, 1996 (a) there has been no development or
event nor any prospective development or event, which has had or could
reasonably be expected to have a Material Adverse Effect and (b) except for
regular quarterly dividends, no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Borrower nor has any of the
Capital Stock of the Borrower been redeemed, retired, purchased or otherwise
acquired for value by the Borrower or any of its Subsidiaries.
4.3 Corporate Existence; Compliance with Law. (a) The Borrower (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(iii) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except to the extent
the failure to be so qualified and in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (iv) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Each Subsidiary of the Borrower (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has the corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (iii) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, and (iv) is in compliance with all
Requirements of Law except, in the case of clauses (i), (ii), (iii) or (iv)
above, as could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform each Loan Document to which it is a party and, in the case
of the Borrower, to borrow hereunder and each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of each
Loan Document to which it is a party and, in the case of the Borrower, the
borrowings on the terms and conditions of this Agreement. No consent or
authorization of, filing with or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of any Loan Document. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. Each Loan Document
constitutes a legal, valid and binding obligation of each Loan Party party
thereto enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents and the borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or any Contractual Obligation of the Borrower
or of any of its Subsidiaries and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to
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any such Requirement of Law or Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to this Agreement, the other Loan Documents or any of the
transactions contemplated hereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property. Each of the Borrower and its Subsidiaries has
good record title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to all its other property.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes ("Intellectual Property") necessary for the conduct of
its business as currently conducted except for those the failure to own or
license which could not reasonably be expected to have a Material Adverse
Effect. No claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim. The use of such Intellectual Property by the
Borrower and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
4.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
4.12 Federal Regulations. No part of the proceeds of any Revolving Credit
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of the Board. If requested by the
Administrative Agent, the Borrower will furnish to the Administrative Agent a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in said Regulation U.
4.13 ERISA. No Reportable Event has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code. The present value of all
accrued benefits under each Single Employer Plan maintained by the Borrower or
any Commonly Controlled Entity (based on those assumptions used to fund the
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the
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value of the assets of such Plan allocable to such accrued benefits. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Borrower and
each Commonly Controlled Entity for post retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA) equals or exceeds the assets under all
such Plans allocable to such benefits.
4.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The corporations listed on Schedule 4.15 constitute all
the Subsidiaries of the Borrower at the Closing Date.
4.16 Purpose of Loans. The proceeds of the Revolving Credit Loans shall be
used by the Borrower for general corporate purposes (excluding commercial paper
back-up).
4.17 Environmental Matters. Each of the following representations and
warranties is true and correct on and as of the Closing Date except to the
extent that the facts and circumstances giving rise to any such failure to be so
true and correct, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:
(a) To the best knowledge of the Borrower, the Properties do not
contain, and have not previously contained, any Materials of Environmental
Concern in amounts or concentrations which constitute or constituted a
violation of, or could reasonably give rise to liability under,
Environmental Laws.
(b) To the best knowledge of the Borrower, the Properties and all
operations at the Properties are in compliance, and have in the last two
years been in compliance, with all applicable Environmental Laws, and there
is no contamination at, under or about the Properties, or violation of any
Environmental Law with respect to the Properties.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties, nor does the
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) To the best knowledge of the Borrower, Materials of Environmental
Concern have not been transported or disposed of from the Properties in
violation of, or in a manner or to a location which could reasonably give
rise to liability under, Environmental Laws, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on
or under any of the Properties in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Laws.
(e) No judicial proceedings or governmental or administrative action
is pending, or, to
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the knowledge of the Borrower, threatened, under any Environmental Law to
which the Borrower is or will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees, consent
orders, administrative order or other orders, or other administrative of
judicial requirements outstanding under any Environmental Law with respect
to the Properties.
(f) To the best knowledge of the Borrower, there has been no release
or threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of the Borrower
and its Subsidiaries in connection with the Properties in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws.
4.18 Insurance. The Borrower and each Subsidiary maintains with insurance
companies rated at least A- by A.M. Best & Co., with premiums at all times
currently paid, insurance upon fixed assets and inventories, including public
liability insurance, fire and all other risks insured against by extended
coverage, fidelity bond coverage, business interruption insurance, and all
insurance required by law, all in form and amounts required by law and customary
to the respective natures of their businesses and properties, except in cases
where failure to maintain such insurance will not have or potentially have an
adverse effect on any of such properties or on the business, assets, property or
financial or other condition of the Borrower or any Subsidiary.
4.19 Condition of Properties. Each of the following representations and
warranties is true and correct except to the extent that the facts and
circumstances giving rise to any such failure to be so true and correct, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:
(a) All of the improvements located on the Properties and the use of
said improvements shall comply and shall continue to comply in all respects
with all applicable zoning resolutions, building codes, subdivision and
other similar applicable laws, rules and regulations and are covered by
existing valid certificates of occupancy and all other certificates and
permits required by applicable laws, rules, regulations and ordinances or
in connection with the use, occupancy and operation thereof.
(b) No material portion of any of the Properties, nor any improvements
located on said Properties that are material to the operation, use or value
thereof have been damaged in any respect as a result of any fire,
explosion, accident, flood or other casualty.
(c) No condemnation or eminent domain proceeding has been commenced or
to the knowledge of the Borrower is about to be commenced against any
portion of any of the Properties, or any improvements located thereon that
are material to the operation, use or value of said Properties except as
set forth and described in Schedule 4.19 attached hereto.
(d) No notices of violation of any federal, state or local law or
ordinance or order or requirement have been issued with respect to any
Properties.
4.20 Benefit of Loans. The Borrower and each Subsidiary are engaged as an
integrated corporate group in the business of acquiring, owning, developing and
operating shopping centers and of providing the required services and other
facilities for those integrated operations. The Borrower and each Subsidiary
require financing on such a basis that funds can be made available to the
Borrower and each Subsidiary to the extent required for the continued operation
of their integrated activities and each of them expect to derive benefit,
directly or indirectly, in return for undertaking their respective obligations
under this Agreement and the other Loan Documents, both individually and as
members of the integrated group.
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4.21 REIT. The Borrower is an equity-oriented real estate investment trust
under Sections 856 through 860 of the Code.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each Lender
to make the initial extension of credit requested to be made by it is subject to
the satisfaction, on or prior to the Closing Date, of the following conditions
precedent:
(a) Agreement; Notes. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender and (ii) for the account of
each Lender, a Note conforming to the requirements hereof and executed by a
duly authorized officer of the Borrower.
(b) Closing Certificate. The Administrative Agent shall have received,
with a copy for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit D, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of such Loan Party, and attaching
the documents referred to in Sections 5.1(c) and (d).
(c) Corporate Proceedings of the Loan Parties. The Administrative
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Loan Party authorizing (i) the
execution, delivery and performance of each Loan Document to which it is a
party and (ii) in the case of the Borrower, the borrowings contemplated
hereunder.
(d) Corporate Documents. The Administrative Agent shall have received,
with a copy for each Lender, true and complete copies of the certificate of
incorporation and by-laws of the Borrower.
(e) Fees. The Administrative Agent shall have received an upfront fee
payable for the ratable benefit of the Lenders in the amount previously
disclosed to each Lender.
(f) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the executed legal opinion of Robert P.
Schulman, Esq., counsel to the Borrower, substantially in the form of
Exhibit E.
(g) Subsidiary Guarantee. The Administrative Agent shall have received
the Subsidiary Guarantee, executed and delivered by a duly authorized
officer of each Subsidiary of the Borrower, with a counterpart for each
Lender.
5.2 Conditions to Each Extension of Credit. The agreement of each Lender to
make any extension of credit requested to be made by it on any date (including,
without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. (i) No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extension of
credit requested to be made on
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such date and (ii) the Borrower would be in compliance with each financial
covenant set forth in paragraphs (a) through (d) of Section 7.1 if the
ratio or amount referred to therein were to be calculated as of such date
(provided, that for the purposes of determining such compliance, Gross
Asset Value and Value of Unencumbered Properties shall be determined for
the most recent period of two consecutive fiscal quarters of the Borrower
as to which a compliance certificate has been delivered pursuant to Section
6.2(b)).
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by, or issuance of a Letter of Credit on behalf of, the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent (with
sufficient copies for each Lender):
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Coopers & Lybrand or other
independent certified public accountants of nationally recognized standing;
and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative Agent
(with
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sufficient copies for each Lender (in the case of clauses (a)-(c) below) or each
relevant Lender (in the case of clauses (d)-(e) below)):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and 6.1(b), a compliance certificate of a
Responsible Officer of the Borrower substantially in the form of Exhibit F;
(c) within ten days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within ten days after the same are filed, copies of all financial
statements, reports or other documents which the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(d) promptly upon request of any Lender (through the Administrative
Agent), copies of any environmental report prepared pursuant to Section
6.8(d); and
(e) promptly, such additional financial information, information with
respect to any Property and other information as any Lender may from time
to time reasonably request (through the Administrative Agent).
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except (a) where the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on the
books of the Borrower or its Subsidiaries, as the case may be or (b) (i)
Non-Recourse Indebtedness and (ii) other obligations which aggregate not more
than $5,000,000, in each case to the extent the Borrower or the relevant
Subsidiary has determined in good faith that it is in its best interests not to
pay or contest such Non-Recourse Indebtedness or such other obligations, as the
case may be.
6.4 Maintenance of Existence, etc. (a) Preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to Section
7.2.
(b) Comply with all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith could not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain
insurance with financially sound and reputable insurance companies rated at
least A- by A.M. Best & Co. on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to each Lender, upon written request, full information as to the
insurance carried.
6.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of
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records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities; and permit representatives of any
Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with officers
and employees of the Borrower and its Subsidiaries and with its independent
certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $5,000,000 or more and not
covered by insurance or in which material injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
6.8 Environmental Laws. (a) Comply with, and use its best efforts to ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and use its best
efforts to ensure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that
failure to do so could not be reasonably expected to have a Material Adverse
Effect.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Laws
and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws, except
to the extent that (i) the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect or (ii) the Borrower has determined
in good faith that contesting the same is not in the best interests of the
Borrower and its Subsidiaries and the failure to contest the same could not
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be reasonably expected to have a Material Adverse Effect.
(c) Defend, indemnify and hold harmless the Administrative Agent and each
Lender, and their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the violation
of, noncompliance with or liability under any Environmental Laws applicable to
the operations of the Borrower, its Subsidiaries or the Properties, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the termination of this
Agreement.
(d) Comply in all material respects with the Operations and Maintenance
Plan.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and, in the case of Sections 7.2 through 7.7, shall not
permit any of its Subsidiaries to, directly or indirectly:
7.1 Financial Covenants.
(a) Consolidated Total Indebtedness. Permit, at the last day of any
period of two consecutive fiscal quarters of the Borrower, Consolidated
Total Indebtedness as of such day to exceed an amount equal to 55% of Gross
Asset Value as of such day.
(b) Consolidated Secured Indebtedness. Permit, at the last day of any
period of two consecutive fiscal quarters of the Borrower, Consolidated
Secured Indebtedness as of such day to exceed an amount equal to 25% of
Gross Asset Value as of such day.
(c) Consolidated Net Worth. Permit, at the last day of any period of
two consecutive fiscal quarters of the Borrower, Consolidated Net Worth as
of such day to be less than an amount equal to the sum of (i) $325,000,000
and (ii) 50% of the aggregate proceeds received by the Borrower (net of
customary related fees and expenses) in connection with any offering of
Capital Stock of the Borrower consummated after the Closing Date.
(d) Value of Unencumbered Properties. Permit, for any period of two
consecutive fiscal quarters of the Borrower, the ratio of (i) the sum of
(x) Value of Unencumbered Properties for such period and (y) the excess, if
any, of (I) Unrestricted Cash and Cash Equivalents as of the last day of
such period over (II) $15,000,000 to (ii) Consolidated Senior Unsecured
Indebtedness as of the last day of such period to be less than 1.75 to 1.0.
(e) Consolidated Adjusted Cash Flow. Permit, for any period of two
consecutive fiscal quarters of the Borrower, the ratio of (i) Consolidated
Adjusted Cash Flow for such period to (ii) Consolidated Debt Service for
such period to be less than 2.50 to 1.0.
7.2 Limitation on Fundamental Changes. (a) Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or (b) in
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the case of the Borrower, convey, sell, lease, assign, transfer or otherwise
dispose of, all or a substantial portion (determined on a consolidated basis
with respect to the Borrower and its Subsidiaries taken as a whole) of the
property, business or assets owned or leased by the Borrower (directly or
through a Subsidiary or Joint Venture), except that any Subsidiary of the
Borrower may be merged or consolidated with or into the Borrower (provided that
the Borrower shall be the continuing or surviving corporation) or with or into
any one or more Wholly Owned Subsidiary Guarantors (provided that the Wholly
Owned Subsidiary Guarantor(s) shall be the continuing or surviving corporation).
7.3 Limitation on Restricted Payments. Unless otherwise required in order
to maintain the Borrower's status as a real estate investment trust, declare or
pay any dividend (other than dividends payable solely in the same class of
Capital Stock) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, "Restricted
Payments"); provided, that, notwithstanding the foregoing, (a) during any period
of four consecutive fiscal quarters of the Borrower, the Borrower may make
Restricted Payments in an aggregate amount not to exceed 90% of Funds From
Operations for such period and (b) in addition to Restricted Payments made
pursuant to clause (a) above, the Borrower may make Restricted Payments on any
date so long as, after giving effect thereto, (i) the aggregate amount of
Restricted Payments made pursuant to this clause (b) since the Closing Date
shall not exceed 10% of Consolidated GAAP Net Worth determined as of the last
day of the most recent fiscal period for which financial statements have been
delivered pursuant to Section 6.1, after giving pro forma effect to the making
of such Restricted Payments and any other Restricted Payments made after such
last day and (ii) no Default or Event of Default shall have occurred and be
continuing.
7.4 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to any Person, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or otherwise make any investment in, any
Person, or acquire or otherwise make any investment in any real property
(collectively, "Investments"), except:
(a) Investments in Cash Equivalents;
(b) Investments in (i) any Property now or hereafter owned or leased
by the Borrower or any Subsidiary or (ii) any present or future
consolidated Subsidiary of the Borrower engaged principally in the
ownership, operation and management of shopping centers;
(c) (i) Investments by the Borrower in any present or future Wholly
Owned Subsidiary Guarantor and (ii) Investments by any Subsidiary in the
Borrower or any present or future Wholly Owned Subsidiary Guarantor;
(d) Investments made pursuant to Section 7.3; and
(e) Investments not otherwise permitted by this Section 7.4 so long
as, on the date any such Investment is made and after giving effect
thereto, the aggregate amount of Investments made pursuant to this clause
(e) since the Closing Date (valued at cost) shall not exceed 10% of Gross
Asset Value as of the last day of the most recently ended period of two
consecutive fiscal quarters of the Borrower;
provided, that in no event shall the aggregate amount of Investments made
pursuant to this Section 7.4 in any single Property (including Investments in
any Subsidiary or Joint Venture owning or operating such
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Property) exceed $50,000,000.
7.5 Limitation on Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate (other than any Wholly Owned
Subsidiary Guarantor) unless (a) no Default or Event of Default would occur as a
result thereof and (b) such transaction is (i) in the ordinary course of the
Borrower's or such Subsidiary's business and (ii) upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a Person which is
not an Affiliate.
7.6 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower to end on a day other than December 31, unless otherwise required by
any applicable law, rule or regulation.
7.7 Limitation on Lines of Business, Issuance of Commercial Paper, Creation
of Subsidiaries, Negative Pledges. (a) Fail to continue to engage principally in
business of the same general type as now conducted by it (which is the
ownership, operation and management of shopping centers).
(b) Issue any commercial paper in an aggregate principal amount exceeding
the aggregate unused and available commitments under any revolving credit
facility (other than the Commitments hereunder) entered into by the Borrower and
not prohibited by this Agreement. For the purposes of this paragraph,
commitments shall be deemed to be available to the extent that, on any date of
determination, assuming timely delivery of a borrowing notice by the Borrower,
the lender(s) thereunder would be obligated to fund loans pursuant thereto.
(c) Create or acquire any Subsidiary after the Closing Date unless such
Subsidiary executes a supplement to the Subsidiary Guarantee in form and
substance satisfactory to the Administrative Agent pursuant to which such
Subsidiary shall become a party to the Subsidiary Guarantee, in each case in
accordance with the following schedule: (i) with respect to individual
Subsidiaries, immediately after the aggregate amount expended in connection
therewith (including amounts expended in connection with property acquired by or
contributed to such Subsidiary) ("Subsidiary Expenditures") equals at least
$50,000,000 and (ii) with respect to any Subsidiary that is not already a
Subsidiary Guarantor, (x) immediately after the aggregate amount of Subsidiary
Expenditures relating to all Subsidiaries that are not already Subsidiary
Guarantors equals at least $150,000,000 and (y) immediately after each delivery
of financial statements pursuant to Section 6.1.
(d) Enter into with any Person, or suffer to exist, any agreement, other
than (i) this Agreement and the other Loan Documents or (ii) any agreements
governing any purchase money Liens, Financing Leases or mortgage financings not
prohibited by this Agreement (in which cases, any prohibition or limitation
referred to below shall only be effective against the assets financed thereby)
which prohibits or limits the ability of the Borrower or any of its Subsidiaries
to create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Note, or any
other amount payable hereunder, within five Business Days
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after any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in Section 6.7(a) or Section 7; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section 8), and such default shall continue
unremedied for a period of 30 days after notice from the Administrative
Agent or the Required Lenders; or
(e) The Borrower or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Notes and any
Non-Recourse Indebtedness) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any interest on
any such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or (iii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default under this Agreement unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds
in the aggregate $5,000,000; or
(f) (i) The Borrower or any of its Significant Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Borrower or
any of its Significant Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against the Borrower or any of its
Significant Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded
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pending appeal within 60 days from the entry thereof; or (iv) the Borrower
or any of its Significant Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower
or any of its Significant Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Remedial Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Remedial Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $5,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(i) The Subsidiary Guarantee shall cease, for any reason, to be in
full force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or
(j) The Borrower shall cease, for any reason, to maintain its status
as an equity-oriented real estate investment trust under Sections 856
through 860 of the Code; or
(k) At any time the Borrower and its Subsidiaries shall be required to
take any actions in respect of environmental remediation and/or
environmental compliance, the aggregate expenses, fines, penalties or other
charges with respect to which, in the judgment of the Required Remedial
Lenders, could reasonably be expected to exceed $20,000,000; provided, that
any such remediation or compliance shall not be taken into consideration
for the purposes of determining whether an Event of Default has occurred
pursuant to this paragraph (k) if (i) such remediation or compliance is
being contested by the Borrower or the applicable Subsidiary in good faith
by appropriate proceedings or (ii) such remediation or compliance is
satisfactorily completed within 90 days from the date on which the Borrower
or the applicable Subsidiary receives notice that such remediation or
compliance is required, unless such remediation or compliance cannot
reasonably be completed within such 90 day period in which case such time
period shall be extended for a period of time reasonably necessary to
perform such compliance or remediation using diligent efforts (not to
exceed 180 days if the continuance of such remediation or compliance beyond
such 180 day period, in the judgment of the Required Remedial Lenders,
could reasonably be expected to have a Material Adverse Effect;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Revolving
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Credit Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Remedial Lenders, the Administrative Agent may, or
upon the request of the Required Remedial Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Remedial Lenders, the Administrative Agent may, or
upon the request of the Required Remedial Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Revolving Credit Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower. The Borrower shall execute and
deliver to the Administrative Agent, for the account of the Issuing Lender and
the L/C Participants, such further documents and instruments as the
Administrative Agent may request to evidence the creation and perfection of the
within security interest in such cash collateral account.
Except as expressly provided above in this Section 8, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and appoints The
Chase Manhattan Bank as the Administrative Agent for such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes The Chase Manhattan Bank, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations, liabilities or standard of care shall be
read into this Agreement or any other Loan Document or otherwise exist against
the Administrative Agent.
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9.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to rely upon advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders or the Required
Remedial Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes and the other Loan Documents in accordance with a request of the Required
Lenders or the Required Remedial Lenders, as the case may be, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
9.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders or the Required Remedial Lenders, as the case
may be; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
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9.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of any Loan Party,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and made its own decision to make its
Revolving Credit Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Loan Parties
which may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this Section 9.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Revolving Credit Loans shall have been paid in full, ratably in accordance with
their Commitment Percentages immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement,
any of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Administrative Agent's gross negligence or willful misconduct. The
agreements in this Section 9.7 shall survive the payment of the Notes and all
other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Administrative
Agent were not the Administrative Agent hereunder and under the other Loan
Documents. With respect to its Revolving Credit Loans made or renewed by it and
any Note issued to it, and with respect to any Letter of Credit issued or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
9.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders, in which case the
Required Lenders shall
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appoint from among the Lenders a successor agent for the Lenders. In addition,
in the event that the Administrative Agent, in its capacity as a Lender, shall
have assigned all of its outstanding Commitments and Loans to another bank,
financial institution or other entity pursuant to Section 10.8, then the
Required Lenders may, upon 10 days' notice to the Administrative Agent, replace
the Administrative Agent with a successor agent appointed from among the
remaining Lenders. Upon approval of any such successor agent by the Borrower,
such successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Notes. After any Administrative Agent's resignation or
replacement as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 The Co-Managers. No Co-Manager in its capacity as such shall have any
rights, duties or responsibilities hereunder, or any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against any Co-Manager in its capacity as Co-Manager.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the relevant
Loan Parties written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Revolving Credit Loan or Note, or reduce the stated rate
of any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitment, in each case without the consent of each Lender directly
affected thereby, or (ii) amend, modify or waive any provision of this Section
10.1, reduce the percentage specified in the definition of Required Lenders or
Required Remedial Lenders, consent to the assignment or transfer by the Borrower
of any of its rights and obligations under this Agreement and the other Loan
Documents, or release all or substantially all of the Subsidiaries from the
Subsidiary Guarantee, in each case without the written consent of all the
Lenders, or (iii) amend, modify or waive any provision of Section 3 without the
written consent of the Issuing Lender, or (iv) amend, modify or waive any
provision of Section 9 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
other Loan Parties, the Lenders, the Administrative Agent and all future holders
of the Notes. In the case of any waiver, the Borrower, the other Loan Parties,
the Lenders and the Administrative Agent shall be restored to their former
position and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
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10.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as notified to the Administrative Agent pursuant to an
administrative questionnaire in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Borrower: Kimco Realty Corporation
3333 New Hyde Park Road, Suite 100
New Hyde Park, New York 11042
Attention: Michael V. Pappagallo
Telecopy: 516-869-9001
The Administrative Agent: The Chase Manhattan Bank
380 Madison Avenue, 10th Floor
New York, New York 10017
Attention: Charles Hoagland
Telecopy: 212-622-3395
with a copy to: The Chase Manhattan Bank
380 Madison Avenue, 10th Floor
New York, New York 10017
Attention: Investor Relations Group
Telecopy: 212-622-3553
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.3 or 2.4 shall not be effective until
received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the fees and disbursements of
counsel to the Administrative Agent; (b) to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents, including, without limitation, the
fees and
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48
disbursements of counsel to the Administrative Agent and to the several Lenders;
(c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents; and (d) to pay, indemnify, and hold
each Lender and the Administrative Agent harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower, any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
the Administrative Agent or any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the Administrative
Agent or such Lender, as the case may be. The agreements in this Section 10.5
shall survive repayment of the Notes and all other amounts payable hereunder.
10.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Lenders, the Administrative Agent, all
future holders of the Notes and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
Notwithstanding anything to the contrary in this Agreement, unless a Default or
Event of Default pursuant to Section 8(a) shall have occurred and be continuing,
neither Co-Manager may sell participating interests pursuant to Section 10.7 or
assignments pursuant to Section 10.8 if, after giving effect thereto, the
aggregate amount of such Co-Manager's retained Commitments which are not subject
to any participation shall be less than 15% of the aggregate Commitments of all
of the Lenders then in effect.
10.7 Participations. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or more banks or
other entities (each, a "Participant") participating interests in any Revolving
Credit Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement
and the Notes, and the Borrower and the Administrative Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the Notes. In no event shall any
Participant under any such participation have any right to approve any amendment
or waiver of any provision of this Agreement or any other Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
any Revolving Credit Loan or Note or any fees payable hereunder, or postpone the
date of the final maturity of any Revolving Credit Loan or Note, in each case to
the extent subject to such participation. The Borrower agrees that, while an
Event of Default shall have occurred and be continuing, if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement and any Note
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any Note, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
10.10(a) as fully as if it were a Lender
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49
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.10, 2.11, 2.12 and 2.13 with respect to its
participation in the Commitments and the Revolving Credit Loans outstanding from
time to time as if it was a Lender; provided that, in the case of Section 2.12,
such Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
Promptly after selling any participation pursuant to this Section 10.7, each
Lender shall notify the Administrative Agent in writing of the identity of the
Participant and the amount of such participation.
10.8 Assignments. (a) Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate of any Lender or, with the consent of
the Issuing Lender and the Administrative Agent, to an additional bank,
financial institution or other entity (each, a "Purchasing Lender") all or any
part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit B, executed by such Purchasing Lender, such assigning Lender (and, in
the case of a Purchasing Lender that is not a Lender or an affiliate thereof, by
the Issuing Lender and the Administrative Agent) and delivered to the
Administrative Agent for its acceptance and recording in the Register, provided,
that except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement, the aggregate amount of the Commitments of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $15,000,000 or such lesser amount as may be
consented to by the Administrative Agent (which consent shall not be
unreasonably withheld). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Purchasing Lender thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto).
(b) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and a Purchasing Lender (and, in the case of a Purchasing
Lender that is not a Lender or an affiliate thereof, by the Issuing Lender and
the Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $4,000 (which shall not be payable by the
Borrower), the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) promptly after the effective date determined pursuant
thereto, record the information contained therein in the Register and give
notice of such acceptance and recordation to the Lenders and the Borrower. On or
prior to such effective date, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent a new Note (in exchange for the Note of
the assigning Lender) in an amount equal to the Commitment assumed by the
relevant Purchasing Lender pursuant to such Assignment and Acceptance, and, if
the assigning Lender has retained a Commitment hereunder, a new Note to the
order of the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise
be in the form of the Notes replaced thereby.
10.9 The Register; Disclosure; Pledges to Federal Reserve Banks. (a) The
Administrative Agent shall maintain at its address referred to in Section 10.2
copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders, the
Commitments of the Lenders, and the principal amount of the Revolving Credit
Loans owing to each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of clearly demonstrable error, and the Borrower,
the Administrative Agent and the Lenders
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50
may treat each Person whose name is recorded in the Register as the owner of the
Revolving Credit Loans recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(b) Subject to Section 10.18, the Borrower authorizes each Lender to
disclose to any Participant or Purchasing Lender (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(c) Nothing herein shall prohibit any Lender from pledging or assigning any
Note to any Federal Reserve Bank in accordance with applicable law.
10.10 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of its Revolving Credit Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's
Revolving Credit Loans or the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Revolving
Credit Loans or the Reimbursement Obligations owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.11 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.12 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
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51
provision in any other jurisdiction.
10.13 Integration. This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
10.14 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
10.15 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
10.16 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the
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52
Borrower and the Lenders.
10.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.18 Confidentiality. Each of the Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Transferee or prospective Transferee which agrees to comply with the
provisions of this Section 10.18, (c) to the employees, directors, agents,
attorneys, accountants and other professional advisors of such Lender or its
affiliates, (d) upon the request or demand of any Governmental Authority having
jurisdiction over the Administrative Agent or such Lender, (e) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required to do
so in connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 10.18, or (h) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KIMCO REALTY CORPORATION
By: /s/ Michael V. Pappagallo
---------------------------------------
Title: V.P. & Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Co-Manager
By: /s/ Charles Hoagland
---------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Co-Manager
By: /s/ Lynn Braun
---------------------------------------
Title: Corporate Banking Officer
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53
The Lenders:
THE CHASE MANHATTAN BANK
By: /s/ Charles Hoagland
------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Lynn Braun
------------------------------
Title: Corporate Banking Officer
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Kimco Realty Corporation and Subsidiaries
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends For the Year Ended December 31, 1997
Income before extraordinary items $85,836,445
Add:
Interest on indebtedness 30,745,963
Amortization of debt related expenses 1,253,325
Portion of rents representative of the
interest factor 2,070,049
-------------
119,905,782
Adjustment for equity share in partnerships (653,466)
-------------
Income before extraordinary items, as adjusted $119,252,316
=============
Combined fixed charges and preferred stock dividends-
Interest on indebtedness $31,262,146
Preferred stock dividends 18,437,700
Amortization of debt related expenses 1,141,095
Portion of rents representative of the
interest factor 2,070,049
-------------
Combined fixed charges and preferred stock dividends $52,910,990
=============
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends 2.3
=============
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<PAGE>
Kimco Realty Corporation and Subsidiaries
Computation of Ratio of Funds from Operations
to Combined Fixed Charges and Preferred Stock Dividends
For the Year Ended December 31, 1997
Funds from Operations, Available to Common Stockholders $98,183,170
Add:
Interest on indebtedness 30,745,963
Preferred stock dividends 18,437,700
Portion of rents representative of the
interest factor 2,070,049
-------------
149,436,882
Adjustment for equity share in partnerships (1,629,172)
-------------
Funds from Operations, as adjusted $147,807,710
=============
Combined fixed charges and preferred stock dividends-
Interest on indebtedness $31,262,146
Preferred stock dividends 18,437,700
Portion of rents representative of the
interest factor 2,070,049
-------------
Combined fixed charges and preferred stock dividends $51,769,895
=============
Ratio of Funds from Operations to Combined Fixed Charges
and Preferred Stock Dividends 2.9
=============
128
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KIMCO REALTY CORP. 13-2744380
44 Plaza, Inc. 13-2683791
Auk Realty 11-2612680
BRENDA PROPERTIES 11-2727694
EAST END OPERATING CORP. 11-2498666
Fox Hill II 11-2671016
Fox Hill Poughkeepsie 11-2727165
GC ACQUISITION CORP. 11-2928815
HARVEST OF NASHVILLE 11-2464767
HARVEST OF TEXAS 11-2330375
HARVEST PROPERTIES 11-2330376
KCH ACQUISITION, INC. 11-3238575
KIMCADE, INC. 34-1831497
Kimcal 13-2587851
KIMCO 118 O/P, INC. 65-0471143
KIMCO 120 O/P, INC. 65-0471149
KIMCO 413B, INC. 34-1740528
KIMCO 420, INC. 34-1710200
KIMCO 632, INC. 58-2201467
KIMCO ACADIANA 670, INC. 72-1397863
KIMCO ALTAMONTE SPRINGS 636, INC. 65-0642321
KIMCO ANAHEIM, INC 93-1222235
KIMCO AUGUSTA 635, INC. 58-2214762
KIMCO BATON ROUGE 666, INC. 62-2698758
KIMCO BLACKWOOD 644, INC. 23-3469041
KIMCO BOULDER 688, INC. 84-1444967
Kimco BT Corp. 11-2465201
KIMCO BUCKS 651, INC. 23-2862081
KIMCO BUSTLETON 612, INC. 13-3867963
KIMCO CAMBRIDGE 242, INC. 31-1497725
KIMCO CANTON 182, INC. 34-1744056
KIMCO CARROLLWOOD 664,INC. 65-0737809
KIMCO CENTEREACH 605, INC. 11-3182994
KIMCO CHARLESTON 631, INC. 57-1030009
KIMCO CHARLOTTE 192, INC. 56-1831137
KIMCO CINNAMINSON 645, INC. 22-3469045
KIMCO CLAWSON 143, INC. 38-3115543
KIMCO COLFAX 681, INC 84-1444973
KIMCO CORAL SPRINGS 623, INC. 65-0535840
Kimco Corporation 13-6115192
KIMCO COTTMAN 294, INC. 23-2862072
KIMCO CROSS CREEK 607, INC. 38-3141738
KIMCO DENVER 680, INC. 84-1444974
KIMCO DEV OF WOOSTER 11-2950598
129
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KIMCO DEV. OF AIKEN 11-2978740
KIMCO DEV. OF BRADDOCK HILLS 11-2776505
KIMCO DEV. OF GASTONIA 11-2962621
KIMCO DEV. OF GIANTS 11-2792369
KIMCO DEV. OF GREENWOOD OP 11-2981360
KIMCO DEV. OF HAMPTON BAYS 11-2983330
KIMCO DEV. OF MCINTOSH SARA 11-2981378
KIMCO DEV. OF MENTOR 11-3009184
KIMCO DEV. OF MUSKEGON 11-2757467
KIMCO DEV. OF N. KENSINGTON 11-2776507
KIMCO DEV. OF SEMINOLE SANF 11-2847353
KIMCO DEV. OF TROY 11-2845542
KIMCO DEV. OF TYVOLA 11-2805703
KIMCO DEV. OF WATERLOO AKRON 11-2981359
KIMCO DEVELOPMENT IF 31 SOUTH, 11-2845541
KIMCO DURHAM 639, INC. 59-1968284
KIMCO EAGLEDALE 13-2587857
KIMCO EAST BANK 689, INC. 84-1444975
KIMCO ELEVEN MTG. CORP. 11-2993846
KIMCO ENFIELD 611, INC. 06-1386487
KIMCO ENGLEWOOD 683, INC. 84-1444966
KIMCO FARMINGTON 146, INC. 38-3115548
KIMCO FLORENCE 646, INC. 58-2346490
KIMCO FT. PIERCE 147, INC. 59-3272388
KIMCO GALLERY 660, INC. 23-2862071
KIMCO GARLAND 642, INC. 75-2650811
KIMCO GATES 149, INC. 13-3717461
KIMCO GREAT BARRINGTON 609, INC. 04-3239597
KIMCO GREEN ORCHARD 606, INC. 11-3182994
KIMCO GREENRIDGE 674, INC 13-3974423
KIMCO GREENVILLE 676, INC. 58-2361775
KIMCO HAYDEN PLAZA 640, INC. 86-0821811
KIMCO KENT 637, INC. 13-3850824
KIMCO KISSIMMEE 613, INC. 65-0655663
KIMCO KML, INC. 23-2862080
KIMCO LAFAYETTE 671, INC. 35-2001919
KIMCO LAKEWOOD 684, INC. 84-1445058
KIMCO LARGO 139, INC 65-0406401
KIMCO LARGO 196, INC. 65-0419586
Kimco Laurel 13-2731273
KIMCO LEXINGTON 140, INC. 11-2845537
Kimco Livonia 13-2587856
KIMCO MANAGEMENT OF MARYLAND 52-1844127
KIMCO MANASSAS 672, INC. 54-1868158
130
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KIMCO MAPLEWOOD 673, INC. 133974423
KIMCO MELBOURNE 616, INC. 65-0471154
KIMCO MGT OF NEW JERSEY 11-3046314
KIMCO MORRISVILLE 648, INC 23-2862079
KIMCO MOUNTAINSIDE PHOENIX 647, INC. 86-0892535
KIMCO MT. DORA 677, INC. 65-0797960
KIMCO NO. BRUNSWICK 617, INC. 11-3204466
KIMCO NORTH RIVERS 692, INC 57-1062095
KIMCO OCALA 665, INC. 582317767
KIMCO OF CHERRY HILL 11-2641098
Kimco of Columbus 13-6206133
Kimco of Georgia 13-2697308
KIMCO OF HERMITAGE 11-2513375
KIMCO OF HICKORY HOLLOW 11-2464914
KIMCO OF HUNTINGTON 11-2516647
Kimco of Illinois 13-2731271
KIMCO OF KETTERING 11-2670996
Kimco of Millerode 11-2845539
Kimco of Missouri 13-2736629
KIMCO OF NANUET 11-2669924
Kimco of New England 13-2731276
Kimco of New York 11-2845540
Kimco of North Carolina 13-2660757
Kimco of North Miami 11-2761316
KIMCO OF OAKVIEW 11-2727695
Kimco of Ohio 13-2587859
Kimco of Pennsylvania 13-2731277
Kimco of Racine, Inc. 11-2928818
KIMCO OF SPRINGBORO PIKE 11-2733483
KIMCO OF SPRINGFIELD 11-2612681
KIMCO OF STUART 619, INC. 11-3205441
Kimco of Syosset 13-2660758
KIMCO OF TAMPA 11-2513372
Kimco of Tennessee 62-0813485
KIMCO OPPORTUNITY, INC. 11-3353009
KIMCO ORLANDO 638, INC. 65-0667618
KIMCO PALMER PARK 654, INC. 23-2862077
KIMCO PEPPERTREE, INC. 65-0433600
KIMCO PHILMED, INC. 52-2016394
KIMCO PORT WASHINGTON 675, INC 11-3416853
KIMCO PROPERTIES, INC. 13-2731270
KIMCO PROPS. NASHVILLE 11-2464762
KIMCO PURCHASING AGENCY 11-2966000
KIMCO QUINCY 685, INC 84-1444963
131
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KIMCO RALEIGH 177, INC. 56-1828155
KIMCO RALPH'S CORNER 659, INC. 23-2862075
KIMCO RICHMOND 800, INC. 52-1925248
KIMCO RIDGEWOOD 615, INC. 11-3183902
KIMCO SAND LAKE 618, INC. 65-0471136
KIMCO SARASOTA 378, INC. 65-0531169
KIMCO SAVANNAH 185, INC. 58-2055982
KIMCO SELECT INVESTMENTS 11-3353010
KIMCO SELECT TREXLER 663, INC. 23-2919887
KIMCO SOUTH MIAMI 634,INC. 65-0559378
KIMCO SOUTH PARKER 682, INC 84-1444970
KIMCO SOUTHINGTON 610, INC. 11-3193467
KIMCO SPRING CREEK 686, INC. 84-1444969
KIMCO SPRINGFIELD 625, INC. 43-1698931
KIMCO TOWSON 621, INC. 22-3333299
Kimco Utah 13-2659226
KIMCO VALLEY HI 687, INC. 84-1444972
KIMCO WARRINGTON 652, INC. 23-2862076
KIMCO WATERBURY 608, INC. 06-1382854
KIMCO WEST PALM BEACH 633, INC. 65-0642317
KIMCO WESTERVILLE 178, INC 34-1744144
KIMCO WESTMONT 614, INC. 38-3141736
KIMCO WHITE LAKE 667, INC. 38-3316919
KIMCO WM148, INC. 23-2725735
KIMCO WOODFOREST 655, INC. 75-2713979
KIMCO YONKERS 801, INC. 13-3851642
Kimcoast Warren 13-2683717
KIMSWORTH OF ALABAMA, INC. 51-0368373
KIMSWORTH OF ARIZONA, INC. 51-0368375
KIMSWORTH OF ARKANSAS, INC. 51-0368374
KIMSWORTH OF COLORADO, INC. 51-0368377
KIMSWORTH OF FLORIDA, INC. 51-0368378
KIMSWORTH OF GEORGIA, INC. 51-0368380
KIMSWORTH OF ILLINOIS, INC. 51-0368382
KIMSWORTH OF INDIANA, INC. 51-0368383
KIMSWORTH OF IOWA, INC. 51-0368381
KIMSWORTH OF KANSAS, INC. 51-0368385
KIMSWORTH OF LOUISIANNA, INC. 51-0368386
KIMSWORTH OF MARYLAND, INC. 51-0368387
KIMSWORTH OF MICHIGAN, INC. 51-0368389
KIMSWORTH OF MINNESOTA, INC. 51-0368389
KIMSWORTH OF MISSISSIPPI, INC. 51-0368392
KIMSWORTH OF MISSOURI, INC. 51-0368391
KIMSWORTH OF MONTANA, INC. 51-0368393
132
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KIMSWORTH OF NEBRASKA, INC. 51-0368394
KIMSWORTH OF NEW JERSEY, INC. 51-0368398
KIMSWORTH OF NEW MEXICO, INC. 51-0368399
KIMSWORTH OF OHIO, INC. 51-0368400
KIMSWORTH OF PENNSYLVANIA, INC. 51-0368401
KIMSWORTH OF S. CAROLINA, INC. 51-0368402
KIMSWORTH OF TEXAS, INC. 51-0368403
KIMSWORTH OF VIRGINIA, INC. 51-0368405
KIMSWORTH, INC. 51-0368319
KIMVEN CORPORATION 75-2630665
KIMVEN II CORPORATION 75-2633956
Kimzadd, Inc. 11-3050459
Kimzay Benton Harbor 11-2964477
Kimzay Bloomington 13-2663111
Kimzay Charlotte 13-2603692
KIMZAY CORPORATION 13-2587863
KIMZAY FLORIDA 13-2587853
Kimzay Georgia 13-2603693
Kimzay Greenwood 13-2663112
Kimzay Illinois 13-2587858
Kimzay Missouri 13-2636710
Kimzay Winston-Salem 13-2663113
Kimzfern, Inc. 11-3035885
Kimzgate, Inc. 11-3035881
Kimzlar, Inc. 11-3050459
Kimzwood, Inc. 11-3035886
KMICO DURHAM 639, INC. 56-1968284
KRC ACQUISITION CORP 11-2993846
KRC AMARILLO 879, INC. 752725430
KRC ARLINGTON 866, INC. 75-2725443
KRC BRIDGETON 875, INC. 43-1792428
KRC CARBONDALE 848, INC. 36-4181898
KRC CORPUS CHRISTI 878, INC. 75-2725431
KRC CRESTHILL 868, INC. 36-4181908
KRC CRESTWOOD 887, INC. 36-4181906
KRC DUBUQUE 847, INC. 39-1908742
KRC FOREST PARK 862, INC. 36-4181902
KRC IRVING 867, INC. PENDING
KRC MERRILLVILLE 849, INC. 39-1908741
KRC N KOSTNER 853, INC. 36-4181900
KRC N ROCKWELL 882, INC. 73-1526425
KRC NILES 865, INC. 36-4191909
KRC S SHIELDS 871, INC. 73-1526423
KRC SCHAUMBERG 855, INC. 36-4181901
133
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
13-2744380
DECEMBER 31, 1997
ENTITY NAME FEI
KRC SHAWNEE 884, INC. 75-2725442
KRC TULSA 859, INC. 73-1526424
KRCV CORP. 74-2846276
LAUREL 173, INC. 52-1948299
Manetto Hills 13-2604645
Milmar Realty 13-2671681
NORBER CORP. 11-2691272
Passive Investors 11-2723241
Permelynn Corporation 13-2660042
Permelynn of Bridgehampton 13-2690180
Permelynn of Georgia 13-2731264
Permelynn of Westchester 13-2702562
REDEL CONSTRUCTION 13-3793428
Rich Hill Inc. 13-2731275
ROCKINGHAM 620, INC. 02-0471000
Sanndrel of Harrisburg 13-2684422
Sanndrel of Pennsylvania 13-2700618
Sanndrel of Virginia 13-2700298
SANNDREL, INC. 13-2670120
ST. ANDREWS S.C. 11-2464767
WOODSO CORP 11-2964256
134
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Kimco Realty Corporation and Subsidiaries on Form S-3 (File Nos. 333-04833 and
333-37285), of our report dated February 27, 1998, except for Note 17, for which
the date is March 5, 1998, on our audits of the consolidated financial
statements and financial statement schedules of Kimco Realty Corporation and
Subsidiaries, as of December 31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997, which report is included in this Annual
report on Form 10-K.
COOPERS & LYBRAND L.L.P.
New York, New York
March 25, 1998
135
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule information has been extracted from the Registrant's
Consolidated Balance Sheet (non-classified) as of December 31, 1997 and the
Consolidated Statement of Income for the year then ended.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 30,978,178
<SECURITIES> 18,916,557
<RECEIVABLES> 18,003,454
<ALLOWANCES> 1,800,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,404,196,159
<DEPRECIATION> 207,408,091
<TOTAL-ASSETS> 1,343,890,124
<CURRENT-LIABILITIES> 0
<BONDS> 531,613,908
0
900,000
<COMMON> 403,948
<OTHER-SE> 742,015,263
<TOTAL-LIABILITY-AND-EQUITY> 1,343,890,124
<SALES> 198,929,403
<TOTAL-REVENUES> 198,929,403
<CGS> 53,413,513
<TOTAL-COSTS> 53,413,513
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,744,762
<INCOME-PRETAX> 85,836,445
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<INCOME-CONTINUING> 85,836,445
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,836,445
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.78
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