SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number: 1-12216
CROWN AMERICAN REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
25-1713733
(IRS Employer Identification No.)
Pasquerilla Plaza, Johnstown, Pennsylvania 15901
(Address of principal executive offices)
(814) 536-4441
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, par value $.01 per share
11.00% Senior Preferred Shares, par value $.01 per share ($50.00 Liquidation
Preference)
(Title of Class)
As of July 17, 2000, 26,207,919 Common Shares of Beneficial Interest and
2,500,000 11.00% Senior Preferred Shares of the registrant were issued and
outstanding.
New York Stock Exchange
(Name of Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
at least the past 90 days.
Yes X No ____
Crown American Realty Trust
Form 10-Q
For the Quarterly Period ended June 30, 2000
INDEX
Part I - Financial Information
Item 1: Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999
Consolidated Statements of Operations for the three and
six months ended June 30, 2000 and 1999
Consolidated Statement of Shareholders' Equity for the six
months ended June 30, 2000
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II- Other Information
Item 1: Legal Proceedings
Item 2: Changes in Securities
Item 3: Defaults Upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
Signatures
<TABLE>
<CAPTION>
CROWN AMERICAN REALTY TRUST
Consolidated Balance Sheets
June 30, December 31,
2000 1999
(Unaudited)
(in thousands, except share
and per share data)
<S> <C> <C>
Income-producing properties:
Land $ 153,207 $ 154,341
Buildings and improvements 1,007,508 986,042
Deferred leasing and other charges 44,880 44,313
Net 1,205,595 1,184,696
Accumulated depreciation and amortization (410,087) (388,965)
Net 795,508 795,731
Minority interest in Operating Partnership 2,463
Other assets:
Investment in joint venture 4,661 5,055
Cash and cash equivalents, unrestricted 9,550 17,171
Restricted cash and escrow deposits 12,930 15,635
Tenant and other receivables 15,478 15,859
Deferred charges and other assets 19,514 25,757
Net $ 860,104 $ 875,208
Liabilities and Shareholders' Equity
Liabilities:
Debt on income-producing properties $ 718,415 $ 709,000
Accounts payable and other liabilities 29,501 37,630
Net 747,916 746,630
Minority interest in Operating Partnership 2,727
Commitments and contingencies
Shareholders' equity:
Non-redeemable senior preferred shares, 11%
cumulative, $.01 par value, 2,500,000 shares
issued and outstanding 25 25
Common shares, par value $.01 per share,
120,000,000 shares authorized, 27,742,317
shares issued at both Junee 30, 2000 and
December 31, 1999 277 277
Additional paid-in capital 317,482 316,421
Accumulated deficit (190,944) (176,220)
Net 126,840 140,503
Less common shares held in treasury at cost,
1,534,398 shares at both June 30, 2000 and
December 31, 1999 (14,652) (14,652)
Net 112,188 125,851
Net $ 860,104 $ 875,208
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
CROWN AMERICAN REALTY TRUST
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Rental operations:
Revenues:
Minimum rent $ 26,340 $ 25,331 $ 53,268 $ 50,245
Percentage rent 2,049 1,433 3,834 2,701
Property operating cost recoveries 8,474 7,772 17,922 16,356
Temporary and promotional leasing 2,048 1,885 4,111 3,808
Net utility income 858 752 1,837 1,648
Miscellaneous income 296 132 486 397
Net 40,065 37,305 81,458 75,155
Property operating costs:
Recoverable operating costs 11,201 10,360 23,382 21,663
Property administrative costs 610 586 1,217 1,114
Other operating costs 566 494 1,123 994
Depreciation and amortization 11,941 11,358 23,764 22,326
Net 24,318 22,798 49,486 46,097
Net 15,747 14,507 31,972 29,058
Other expenses:
General and administrative 1,215 1,171 2,431 2,228
Restructuring costs 369 1,039
Interest 14,175 12,525 28,078 24,731
Net 15,390 13,696 30,878 27,998
Net 357 811 1,094 1,060
Gain on sale of assets 17 17
Gain on sale of outparcel land 354 100 354 100
Income before minority interest in 728 911 1,465 1,160
Operating Partnership
Minority interest in Operating 751 659 1,497 1,582
Partnership
Net income 1,479 1,570 2,962 2,742
Dividends on preferred shares (3,437) (3,437) (6,875) (6,875)
Net (loss) applicable to common $ (1,958) $ (1,867) $ (3,913) $ (4,133)
shares
Per common share data:
Basic EPS:
Net (loss) $ (0.07) $ (0.07) $ (0.15) $ (0.16)
Weighted average shares outstanding 26,208 26,208 26,208 26,208
Diluted EPS:
Net (loss) $ (0.07) $ (0.07) $ (0.15) $ (0.16)
Weighted average shares outstanding 26,208 26,208 26,208 26,208
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
CROWN AMERICAN REALTY TRUST
Consolidated Statement of Shareholder's Equity
(Unaudited)
Common
Shares Senior
Issued and Preferred Common
Outstanding Shares Shares
(in thousands)
<S> <C> <C> <C> <C>
Balance, December 31, 1999 26,208 $ 25 $ 277
Transfer in (out) of limited
partner's interest in the
Operating Partnership
Capital contributions from Crown
Investments Trust:
Cash flow support
Net income
Dividends paid and accrued
Balance, June 30, 2000 26,208 $ 25 $ 277
Common
Additional Shares
Paid in Accumulated Held in
Capital Deficit Treasury Total
(in thousands)
Balance, December 31, 1999 $ 316,421 $ (176,220) $ (14,652) $ 125,851
Transfer in (out) of limited (50) (50)
partner's interest in the Operating
Partnership
Capital contributions from Crown
Investments Trust:
Cash flow support 1,111 1,111
Net income 2,962 2,962
Dividends paid and accrued (17,686) (17,686)
Balance, June 30, 2000 $ 317,482 $ (190,944) $ (14,652) $ 112,188
</TABLE>
<TABLE>
<CAPTION>
CROWN AMERICAN REALTY TRUST
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
2000 1999
(in thousands)
<S>
Cash flows from operating activities: <C> <C>
Net income $ 2,962 $ 2,742
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in Operating Partnership (1,497) (1,582)
Equity earnings in joint venture (78) (209)
Depreciation and amortization 26,943 25,061
Restructuring costs 369 1,039
Net changes in:
Tenant and other receivables 290 3,814
Deferred charges and other assets 3,028 1,925
Restricted cash and escrow deposits (1,644) (1,907)
Accounts payable and other liabilities (8,503) (7,972)
Net cash provided by operating activities 21,870 22,911
Cash flows from investing activities:
Investment in income-producing properties (23,563) (25,079)
Proceeds from asset sales 4,646
Distributions from joint venture 288 550
Net cash (used in) investing activities (18,629) (24,529)
Cash flows from financing activities:
Net proceeds from exercise of stock options and 6
dividendreinvestment plan
Proceeds from issuance of debt, net of deposits 18,851 23,434
Cost of issuance of debt (19) (433)
Debt repayments (9,435) (5,157)
Dividends and distributions paid on common shares and (14,919) (14,647)
partnership units
Dividends paid on senior preferred shares (6,875) (6,875)
Cash flow support payments 1,535 1,572
Net cash (used in) financing activities (10,862) (2,100)
Net (decrease) in cash and cash equivalents (7,621) (3,718)
Cash and cash equivalents, beginning of period 17,171 13,512
Cash and cash equivalents, end of period $ 9,550 $ 9,794
Supplemental cash flow data:
Interest paid (net of capitalized amounts) $ 26,847 $ 24,023
Interest capitalized $ 564 $ 716
The accompanying notes are an integral part of these statements.
</TABLE>
CROWN AMERICAN REALTY TRUST
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Organization
Crown American Realty Trust (the "Company") was formed on May 14, 1993 as a
Maryland real estate investment trust (a "REIT") to acquire and operate
substantially all of the enclosed shopping mall properties and two office
buildings (the "Properties") owned by Crown American Associates ("Crown
Associates"), formerly Crown American Corporation. Crown Associates is a wholly-
owned subsidiary of Crown Holding Company ("Crown Holding"). Crown Associates,
which was founded in 1950, was engaged principally in the development,
acquisition, ownership and management of enclosed shopping malls and, to a
lesser extent, strip shopping centers, hotels and office buildings. The Company
raised approximately $405 million in equity through an initial public offering
of approximately 25.5 million shares, which occurred on August 17, 1993, and
used the proceeds to purchase an initial 78% general partnership interest in
Crown American Properties, L.P. (the "Operating Partnership"), a partnership
which was formed just prior to consummation of the offering to own and operate
the Properties. These proceeds, along with new borrowings, were used by the
Operating Partnership to retire debt related to the Properties.
Simultaneously with the public offering, Crown Associates and an affiliate
transferred the Properties and the management operations into either the
Company, the Operating Partnership, or Crown American Financing Partnership (the
"Financing Partnership"), a partnership which is 99.5% owned by the Operating
Partnership and 0.5% owned by the Company.
The limited partnership interest in the Operating Partnership and the 1.6
million shares in the Company received for two malls transferred in 1993 are
currently held by Crown Investments Trust ("Crown Investments") and by Crown
American Investment Company (a subsidiary of Crown Investments).
As of June 30, 2000, the Properties consist of: (1) 26 wholly-owned enclosed
shopping malls (together with adjoining outparcels and undeveloped land) located
in Pennsylvania, New Jersey, Maryland, Tennessee, North Carolina, West Virginia,
Virginia and Georgia, (2) a 50% general partnership interest in Palmer Park Mall
Venture, which owns Palmer Park Mall located in Easton, Pennsylvania, (3)
Pasquerilla Plaza, an office building in Johnstown, Pennsylvania, which serves
as the headquarters of the Company and is partially leased to other parties, and
(4) a parcel of land and building improvements located in Pennsylvania (under
ground lease with a purchase option) sub-leased to a department store chain.
As the owner of real estate, the Company is subject to risks arising in
connection with the underlying real estate, including defaults under or non-
renewal of tenant leases, tenant bankruptcies, competition, inability to rent
unleased space, failure to generate sufficient income to meet operating
expenses, as well as debt service, capital expenditures and tenant improvements,
environmental matters, financing availability and changes in real estate and
zoning laws. The success of the Company also depends upon certain key
personnel, the Company's ability to maintain its qualification as a REIT,
compliance with the terms and conditions of the Mortgage Loans and other debt
instruments, and trends in the national and local economy, including interest
rates, income tax laws, governmental regulations and legislation and population
trends.
Basis of Presentation
The accompanying consolidated financial statements of the Company include all
accounts of the Company, its wholly-owned subsidiaries, and its majority-owned
subsidiary, the Operating Partnership. The Operating Partnership directly owns
seven malls, the 50% joint venture interest in Palmer Park Mall, the Corporate
headquarters building, and the Westgate anchor pad. All remaining properties
are owned by seven partnerships and limited liability companies that are either
99.5% or 100.0% owned by the Operating Partnership. The remaining 0.5%
interests in these second-tier entities are owned by the Company through its
wholly-owned subsidiaries. The Operating Partnership also has all paid
employees and manages all properties except the Palmer Park Mall and the
Westgate anchor pad. Other than its ownership interests in its subsidiaries,
the Company owns no other assets and has no other business activities. The
Company is the sole general partner in the Operating Partnership, and at June
30, 2000 the Company held 100% of the preferred partnership interests and 72.47%
of the common partnership interests. All significant intercompany amounts have
been eliminated.
In the opinion of management, the accompanying unaudited consolidated interim
financial statements include all adjustments of a normal recurring nature
necessary for a fair presentation of the financial position and results of
operations of the Company. These consolidated interim financial statements and
the accompanying notes should be read in conjunction with the audited
consolidated financial statements of the Company for the year ended December 31,
1999, which are included in its Annual Report on Form 10-K. The results of
operations for interim periods are not necessarily indicative of results to be
expected for the year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Minority Interest
Minority interest represents the common partnership units in the Operating
Partnership that are owned by Crown Investments and its subsidiary. At June 30,
2000 Crown Investments and its subsidiary owned 9,956,398 common partnership
units, or 27.53% of the total common partnership units outstanding. Crown
American Realty Trust owns the remaining 72.47%. The minority interest balance
is adjusted each year for Crown Investments' and its subsidiary's proportionate
share of net income (loss) of the Operating Partnership (after deducting
preferred unit distributions), common partnership distributions, and additional
capital contributions. Primarily because the common partnership distributions
have been larger than the Operating Partnership's income (loss) after preferred
unit distributions, the minority interest account on the consolidated balance
sheet has been declining each year. The balance has been reduced to below zero
in the second quarter of 2000. Under generally accepted accounting principles,
when the minority partner's share of the Operating Partnership's net income
(loss) and the minority partner's cash distributions and capital contributions,
would cause the minority interest balance to be less than zero, such balance
must be reported at zero unless there is a legal obligation of the minority
partner to reimburse the Operating Partnership for such excess amounts. The
partnership agreement does provide for such obligation by the minority partner
in the form of cash flow support payments on four of the Company's malls that
were in the lease-up phase at the time of the Company's IPO in 1993.
Accordingly, since the minority interest account is reduced to below zero, and
there is a legal obligation of the minority partner to fund a portion of the
Operating Partnership's losses, the minority interest balance at June 30, 2000
is shown on the Consolidated Balance Sheet as an asset.
Net Income (Loss) Per Share
During 1997 the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings Per Share. Under SFAS No. 128, basic income (loss)
per common share is computed by dividing net income (loss) applicable to common
shares, as shown in the Consolidated Statements of Operations, by the weighted
average number of common shares outstanding for the year. Diluted income (loss)
per share is computed the same way except that the weighted average number of
common shares outstanding is increased, using the treasury stock method, for the
assumed exercise of options under the Company's share incentive plans, which are
the Company's only dilutive securities. Because no anti-dilution is permitted
under SFAS No. 128, diluted and basic EPS for the six months ended June 30,
2000 and 1999 are identical.
The assumed exercise of options under the Company's share incentive plans had no
effect on the calculation of diluted earnings per share for the six months ended
June 30, 2000 and 1999, as the assumed exercise price of the options was higher
than the market price during these periods.
NOTE 3 - DEBT ON INCOME-PRODUCING PROPERTIES
Debt on income-producing properties consisted of the following (in thousands):
June 30, 2000 December 31, 1999
Mortgage loans $ 465,000 $ 465,000
Permanent loans 125,692 131,429
Construction loans 21,079 15,625
Secured term loans and lines of credit 106,644 96,946
Net $ 718,415 $ 709,000
Mortgage Loans
Concurrently with the offering of shares of the Company in 1993, the Financing
Partnership borrowed an aggregate $300 million in mortgage debt through Kidder
Peabody Mortgage Capital Corporation (collectively, the "Kidder Mortgage
Loans"). In connection with obtaining a construction loan for rebuilding and
expanding Logan Valley Mall, in December 1995 the Company repaid $19.4 million
of the Kidder Mortgage Loans in order to release the Logan Valley Mall from the
Kidder Mortgage Loans and Financing Partnership. No prepayment penalty was
incurred. On August 28, 1998, the Company closed a $465 million 10-year
mortgage with General Electric Capital Corporation ("GECC"). The gross proceeds
from the new loan (the "GECC Mortgage Loan") were used to refinance the $280.6
million Kidder Mortgage Loans, the $110.0 million interim mortgage loan, and the
$30.0 million secured term loan. The remaining proceeds were used largely to
establish escrows to fund the remaining expansion and redevelopment costs of
Patrick Henry Mall and Nittany Mall, and to fund closing costs, initial loan
reserves and prepayment penalties with respect to $200.0 million of the Kidder
Mortgage Loans and the $30.0 million secured term loan that were pre-paid prior
to their maturity dates. The prepayment penalties for the Kidder Mortgage Loans
and the $30 million term loan were approximately $16.6 million. In addition,
approximately $5.9 million of unamortized deferred financing costs related to
the Kidder Mortgage Loans and the $110.0 million interim mortgage loan were
written off in the third quarter of 1998. Both of these items were accounted
for as an extraordinary loss on early extinguishment of debt. The GECC Mortgage
Loan has a fixed stated interest rate of 7.43% and is secured by cross-
collateralized mortgages on 15 of the malls. The loan provides for payment of
interest only during the first two years and interest and principal
amortization, based on 25 year amortization, during the last eight years. Crown
Investments has guaranteed $250 million of the GECC Mortgage Loan. In
connection with the GECC Mortgage Loan, in November 1997, the Company made a
$6.0 million interest-bearing good-faith deposit with GECC, and in July and
August 1998, the Company made $12.2 million in non-interest bearing rate lock
deposits with GECC. These deposits were refunded at closing.
Permanent Loans
At June 30, 2000, permanent loans consisted of eight loans secured by six
properties held by the Operating Partnership. Included in permanent loans is a
$2.5 million interest free Urban Development Action Grant loan with the City of
Johnstown, Pennsylvania, secured by an office building and due October 2006. A
$1.0 million loan related to Carlisle Plaza Mall is an Industrial Development
Bond secured with a $1.0 million letter of credit, which expires in January,
2008. Crown Holding has guaranteed one of the permanent loans with a current
outstanding balance of $10.2 million.
Construction Loans
In September 1998 the Company entered into a $26.8 million construction and
three-year permanent loan with a bank lender to finance a renovation/expansion
program at Washington Crown Center. The loan has an interest rate of LIBOR plus
1.90%. The construction loan term is for two years followed by a three-year
permanent term loan.
Secured Term Loans and Lines of Credit
In September 1999 the Company completed an extension to November 2001 and
certain modifications to its existing secured line of credit facility with
General Electric Capital Corporation. Prior to the modifications, the line of
credit consisted of a $50 million general line, of which $49.2 million was
outstanding, and a $100 million acquisition line of which $27.1 million was
outstanding related to the 1998 acquisition of Jacksonville Mall. The modified
credit facility combines the prior two lines into a single line of credit with a
$150 million maximum commitment level, and a current availability of $120
million, of which $20 million is reserved for the Valley Mall expansion project.
The availability under the line can be increased up to the maximum amount upon
achieving certain financial and debt service ratio tests that depend on the
future operating performance of the five malls that secure the line and on
future interest rates. Interest under the modified line is based on LIBOR plus
2.95%. Borrowings under this credit facility totaled $103.3 million at June
30, 2000.
In addition to the above facility, the Company has a $6.0 million line with a
bank secured by a mortgage on the Company's headquarters office building bearing
interest at LIBOR plus 2.25%. This line is renewable annually on April 30 and
has been renewed through April 30, 2001. $3.3 million was outstanding under
this line as of June 30, 2000.
Covenants and Restrictions
Various of the above loans and lines of credit contain certain financial
covenants and other restrictions, including limitations on the ratios, as
defined, of total Company debt to EBITDA, EBITDA to fixed charges, and floating
rate debt to total debt. The Company was in compliance with all such loan
covenants as of and during the period ended June 30, 2000. Twenty of the
Company's malls are mortgaged under the GECC Mortgage Loan and the GECC lines of
credit. All of these malls are owned by special purpose subsidiaries of the
Company. The sole business purpose of these subsidiaries, as an ongoing
covenant under the related loan agreements, is the ownership and operation of
the properties. The mortgaged malls and related assets owned by these
subsidiary entities are restricted under the loan agreements for the payment of
the related mortgage loans and are not available to pay other debts of the
consolidated Company. However, so long as the loans are not under an event of
default, as defined in the loan agreements, the cash flows from these
properties, after debt service and reserve payments are made, are available for
the general use of the consolidated Company.
Interest Rates
The Mortgage Loans on the Financing Partnership properties and nine of the
permanent loans with an aggregate principal balance of $590.7 million at June
30, 2000 have fixed interest rates ranging from 4.25% to 9.11%. The weighted
average interest rate on this fixed-rate debt at both June 30, 2000 and 1999 was
7.63%. The weighted average interest rate during the six months ended June 30,
2000 and 1999 were each 7.63%. All of the remaining loans with an aggregate
principal balance of $127.7 million at June 30, 2000 have variable interest
rates based on spreads ranging from 1.90% to 2.95% above 30 day LIBOR. The
weighted average interest rates on the variable rate debt at June 30, 2000 and
1999 were 9.40% and 7.36%, respectively. The weighted average interest rates
during the six months ended June 30, 2000 and 1999 were 8.89% and 7.02%,
respectively.
Debt Maturities
As of June 30, 2000, the scheduled principal payments on all debt, including
extensions available at the Company's option provided the debt is not in default
at the extension dates, are as follows (in thousands):
Year Ending
December 31,
2000 (six months) $ 3,435
2001 (year) 113,960
2002 (year) 43,546
2003 (year) 30,146
2004 (year) 77,376
Thereafter 449,952
Net $ 718,415
NOTE 4 - NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133"). The Statement establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
FASB has approved Statement No. 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the effective date of FASB Statement No. 133,
which amends Statement 133 to be effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. Had the Company applied this standard
currently, the effect on the Company's financial position and results of
operations for the six months ended June 30, 2000 would be immaterial.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, "Revenue Recognition ("SAB No. 101"), to provide
guidance on the recognition, presentation and disclosure of revenue in financial
statements. Specifically, SAB No. 101 provides guidance on lessors' accounting
for contingent rent. SAB No. 101 explains the SEC staff's general framework for
revenue recognition. SAB No. 101 does not change existing literature on revenue
recognition, but rather clarifies the SEC's position on preexisting literature.
SAB No. 101 did not require the Company to change existing revenue recognition
policies and therefore had no impact on the Company's financial position or
results of operations at June 30, 2000.
NOTE 5 - MALL EXPANSIONS
The Company has substantially completed construction of an expansion and
redevelopment of Washington Crown Center and an expansion at Valley Mall. The
total costs of the two projects, including capitalized construction overhead,
interest, and tenant allowances, are estimated at $33 million and $33 million,
respectively, of which $27 million and $28 million, respectively, had been
incurred as of June 30, 2000. In addition to amounts incurred at June 30, 2000,
the Company is committed for future payments under various construction purchase
orders and certain leases. The Company has secured through a bank lender a
$26.8 million construction and three-year permanent loan for the Washington
Crown Center expansion and redevelopment; the loan bears interest at LIBOR plus
1.90%, and $21.1 million was borrowed and outstanding at June 30, 2000. The
Valley Mall expansion is being financed under the line of credit with GECC as
described in Note 3.
NOTE 6 - PROPERTY SALES AND DISPOSALS
In late June 2000 the Company sold Greater Lewistown Plaza, a non-enclosed
shopping center located in Lewistown, Pennsylvania, to a third party at a price
of $5.0 million. After selling expenses and commissions and after paying off
the related first mortgage, this sale generated approximately $1.2 million in
net cash proceeds for the Company. The impact of the sale on the Company's
revenues and net income for the remainder of 2000 will approximate $0.6 million
and $0.2 million, respectively. The sale did not result in a material gain.
With respect to Middletown Mall, a property acquired by the Company on February
1, 1995 from Crown Associates, additional contingent consideration, in the form
of 437,888 common Partnership Units, was paid to Crown Investments Trust
effective as of January 1, 1998, as consideration for the contribution of
Middletown Mall to the Operating Partnership. The 437,888 units represented
approximately 1.2% of the total common Partnership Units outstanding prior to
the issuance of the new units. In July 1998 the Company sold Middletown Mall,
together with approximately 60 acres of undeveloped outparcels and vacant land,
to an unrelated third party. The aggregate purchase price was $12.2 million.
The Company received $8.5 million in cash, net of closing costs, and received a
$3.5 million one-year 9.5% mortgage from the purchaser, secured by a first
mortgage on all the undeveloped land and outparcels and by a second mortgage on
the mall. The note was paid in full in December 1999 at which time the deferred
gain of $1.3 million was recognized.
With regard to the Company's disposition strategy, the Company will dispose of
any of the Properties, if, based upon management's periodic review of the
Company's portfolio, the Board of Trustees determines that such action would be
in the best interests of the Company. While none of the properties are under a
definitive sale agreement at this time, the Company is currently exploring
dispositions of a few properties in order to recycle capital for future
investment opportunities or to enhance cash flows and liquidity. No properties
are classified as held for sale at June 30, 2000. It is possible that the net
sales proceeds for some properties, if sold in the future, could be lower than
their current net book value, which would result in a loss upon future sale.
NOTE 7 - RESTRUCTURING COSTS
During the first quarter of 2000, the Company recorded a restructuring charge of
$0.4 million related to severance and related costs for employees affected by an
8% reduction in the corporate office staff together with reductions in other
corporate expenses. The restructuring involved approximately twelve home office
employees who were terminated and who represented a cross-section of management,
clerical, and secretarial employees.
During the first and third quarters of 1999, the Company recorded restructuring
charges of $1.0 million and $1.2 million, respectively, related to severance and
related costs for employees affected by two reductions in the number of
corporate office staff together with reductions in other corporate office-
related expenses. The restructurings involved approximately thirty-five home
office employees who were terminated and who represented a cross-section of
management, clerical, and secretarial employees.
The restructuring costs are shown as a separate line item in the Consolidated
Statements of Operations. The amount remaining to be paid at June 30, 2000 was
approximately $0.4 million, and is included in "Accounts payable and other
liabilities" in the Consolidated Balance Sheet. It is expected that most of the
remaining liability that exists at June 30, 2000 will be paid out in 2000 and
2001.
NOTE 8 - SUBSEQUENT EVENT
In early July 2000 the Company sold a 115,000 square foot anchor store building
and related parking aggregating approximately 15.4 acres, located at Oak Ridge
Mall in Oak Ridge, Tennessee, to Wal-Mart to accommodate a 95,700 square foot
expansion of this store into a Wal-Mart Supercenter. This anchor store had been
occupied by Wal-Mart under an operating lease. The sales proceeds of $4.25
million were applied by the Company to reduce the outstanding principal balance
on the existing mortgage loan on Oak Ridge Mall. The sale did not result in a
material gain or loss.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain of the following comments contain forward looking statements that
involve risk and uncertainties. Factors that could cause actual results to
differ materially include: overall economic conditions, local economic
conditions in the market areas surrounding each property, consumer buying
trends, expansion and development plans of retailers and other current and
potential tenants, the impact of competition, weather patterns and related
impact on consumer spending, changing interest rates and financing conditions,
and other risk factors listed from time to time in the Company's SEC reports,
including this report on Form 10-Q for the quarter ended June 30, 2000.
Selected Financial Data
The table on the following page sets forth selected financial data for the
Company for the three and six months ended June 30, 2000 and 1999. Management's
discussion and analysis of financial condition and results of operations should
be read in conjunction with this table and the interim consolidated financial
statements on pages 3 to 12.
Performance Measurement
Management believes that there are several important factors that contribute to
the ability of the Company to increase rent and improve profitability of its
enclosed shopping malls and other income properties, including aggregate anchor
tenant and mall shop tenant sales volume, mall shop retail tenant sales per
square foot and occupancy levels. Each of these factors has a significant
effect on Funds from Operations and EBITDA.
Funds from Operations (FFO) is a recognized industry performance measure for
real estate investment trusts (REIT's) and as defined by the National
Association of Real Estate Investment Trusts (NAREIT) generally represents net
income or loss (computed in accordance with generally accepted accounting
principles) before minority interest, real estate depreciation and amortization
(as defined) and extraordinary and unusual non-recurring items, and additionally
includes earned cash flow support (see Note 8 to the financial statements
included in the Company's 1999 Form 10-K). Funds from Operations is used in the
real estate industry as a measure of operating performance because reductions
for real estate depreciation and amortization charges are not meaningful in
evaluating the operating results of real estate, which have historically been
appreciating assets. Gain on sales of outparcel land have been included in
Funds from Operations. Gain on sales of properties and anchor store locations,
adjustments to carrying values of assets to be disposed of, and extraordinary
items are excluded from FFO because such transactions are uncommon and not a
part of ongoing operations.
In 1999, the National Association of Real Estate Investment Trusts (NAREIT)
adopted changes to the definition of Funds from Operations that became effective
in 2000, at which time prior years' reported FFO has been restated to conform to
the new changes. The primary impact on the Company is that "unusual non-
recurring" items previously excluded from FFO are now being included. As a
result, for the first quarter of 2000 and 1999, restructuring costs (see Note 7
of the interim consolidated financial statements) in the amounts of $0.4 million
and $1.0 million, respectively, are being deducted from FFO.
EBITDA is defined as revenues and gain on sale of outparcel land, less operating
costs, including general and administrative expenses, before interest, and all
depreciation and amortization; EBITDA also excludes gain on sales of properties
and anchor store locations, adjustments to carrying values of assets to be
disposed of, and extraordinary items because such items are uncommon and not a
part of ongoing operations. Management believes EBITDA, as defined, provides
the clearest indicator of operating performance for the following reasons: (i)
it is industry practice to evaluate the performance of real estate properties
based on net operating income (or NOI), which is generally equivalent to EBITDA;
and (ii) both NOI and EBITDA are unaffected by the debt and equity structure of
the property owner.
Funds from Operations and EBITDA (i) do not represent cash flow from operations
as defined by generally accepted accounting principles, (ii) are not
necessarily indicative of cash available to fund all cash flow needs and (iii)
should not be considered as an alternative to net income for purposes of
evaluating the Company's operating performance.
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the Selected Financial Data and
the accompanying consolidated interim financial statements and notes thereto.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(restated)
<S> <C> <C> <C> <C>
Selected Financial Data:
EBITDA (1 & 3) $ 27,914 $ 25,919 $ 55,824 $ 51,461
Funds from Operations (FFO)
(2 & 3):
Net Income $ 1,479 $ 1,570 $ 2,962 $ 2,742
Adjustments:
Minority interest in Operating (751) (659) (1,497) (1,582)
Partnership
Depreciation and amortization - 12,332 11,786 24,542 23,142
real
estate
Operating covenant amortization 657 657 1,315 1,315
Cash flow support 779 756 1,535 1,571
Gain on sale of assets (17) (17)
Funds from Operations, before
allocations to minority
interests and preferred shares 14,479 14,110 28,840 27,188
Less:
Amount allocable to preferred 3,437 3,437 6,875 6,875
shares
Amount allocable to minority 3,040 2,938 6,047 5,592
interest
Funds from Operations applicable $ 8,002 $ 7,735 $ 15,918 $ 14,721
to common shares
Average common shares outstanding 26,208 26,208 26,208 26,208
(000)
Cash Flows:
Net cash provided by operating $ 13,040 $ 12,719 $ 21,870 $ 22,911
activities
Net cash (used in) investing $ (4,771) $(13,617) $(18,629) $ (24,529)
activities
Net cash provided by (used in) $ (6,738) $ 815 $(10,862) $ (2,100)
financing activities
(1) EBITDA represents revenues and gain on sale of outparcel land, less
operating costs, including general and administrative expenses, before
interest, and all depreciation and amortization; EBITDA also excludes gain
on sales of properties and anchor store locations, adjustments to carrying
values of assets to be disposed of, and extraordinary items because such
items are uncommon and not a part of ongoing operations.
(2) Funds from Operations represents net income before minority interest and
before depreciation and amortization plus earned cash flow support and
adjustment for certain unusual items.
(3) EBITDA and Funds from Operations (i) do not represent cash flow from
operations as defined by generally accepted accounting principles, (ii) are
not necessarily indicative of cash available to fund all cash flow needs
and (iii) should not be considered as an alternative to net income for
purposes of evaluating the Company's operating performance.
</TABLE>
Comparison of Six and Three Months Ended June 30, 2000 to the corresponding
period in 1999
- Revenues
Total revenues for the second quarter of 2000 were $40.1 million, up $2.8
million, or 7.5 percent, from $37.3 million for the same period in 1999.
The primary composition of this $2.8 million increase was as follows: a) a $1.0
million increase in mall shop and anchor-base minimum rents as a result of
higher occupancy and higher average rates; b) a $0.6 million increase in
percentage (overage) rents due to higher mall shop sales; c) higher recovery
income in the amount of $0.7 million due to higher operating costs and due to a
higher recovery rate; d) higher temporary and seasonal leasing income of $0.2
million, and e) higher net utility income and miscellaneous income of $0.3
million.
Total revenues for the first six months of 2000 were $81.5 million compared to
$75.2 million for the same period in 1999, an increase of $6.3 million, or 8.4
percent.
- Property Operating Costs:
Total recoverable and non-recoverable mall operating costs for the second
quarter of 2000 were $12.4 million, an increase of $1.0 million compared to the
corresponding period in 1999. For the first six months of 2000, recoverable
and non-recoverable mall operating costs were $25.7 million, an increase of $1.9
million over the first six months of 1999.
Depreciation and amortization expense for the second quarter of 2000 was $11.9
million, an increase of $0.6 million over the second quarter of 1999.
Depreciation and amortization expense for the first half of 2000 totals $23.8
million, up $1.4 million over the first half of 1999.
- General, Administrative and Interest Expenses:
For the second quarter of 2000, general and administrative expenses were $1.2
million, or even with the second quarter of 1999. For the first six months of
2000, general and administrative costs were $2.4 million, an increase of $0.2
million compared to the first six months of 1999. Although gross spending
levels are down in the first half of 2000 compared to a year ago, capitalization
amounts have decreased even more due to the lower volume of construction
activities.
Interest expense increased by $1.7 million in the second quarter of 2000 versus
the second quarter of 1999, primarily due to higher average borrowings
outstanding and due to higher interest rates. For the first six months of 2000,
interest expense was $28.1 million, an increase of $3.3 million over the
comparable period of 1999.
- Gain on Property Sales and Disposals:
Gain on land sales during both the second quarter and first half of 2000 was
$0.4 million, compared to $0.1 million of gain recorded in the second quarter
and first half of 1999.
- Net Income (loss):
The net income for the second quarter of 2000 was $1.5 million compared to net
income of $1.6 million for the second quarter of 1999. After deducting preferred
dividends, there was a net loss of $2.0 million applicable to common shares,
compared to a net loss of $1.9 million for the second quarter of 1999.
The Company's net income for the first six months of 2000 was $3.0 million
compared to net income of $2.7 million for the comparable period of 1999. After
deducting preferred dividends, there was a net loss in the first half of 2000
applicable to common shares of $3.9 million; this compares to a net loss of $4.1
million applicable to common shares for the first half of 1999.
- Funds from Operations:
For the quarter ended June 30, 2000, Funds from Operations ("FFO") before
allocations to minority interest and to preferred dividends was $14.5 million,
up from $14.1 million in the same quarter of 1999. FFO including land sales
allocable to common shares (after minority interest and preferred dividends) was
$8.0 million, compared to $7.7 million in the same quarter of 1999. The net
increase in total FFO during the second quarter was largely comprised of the
following: a) a $1.6 million increase in mall shop and anchor base and
percentage rents from the existing properties reflecting higher occupancy and
higher average rents; b) $0.2 million in higher temporary and seasonal leasing;
c) $0.3 million in higher net utility and ancillary income; and d) $0.3 million
in higher gain on land sales. These positive variances in FFO were partially
offset by; e) $1.7 million in higher net interest expense; and f) $0.3 million
in higher operating costs, net of recoveries.
For the first six months of 2000, FFO before allocations to minority interest
and to preferred dividends was $28.8 million compared to $27.2 million for the
same period in 1999. FFO allocable to common shares (after minority interest
and preferred dividends) was $15.9 million for the first half of 2000, compared
to $14.7 million for the first half of 1999. The $1.7 million increase in total
FFO for the first six months of 2000 compared to 1999 was largely comprised of :
a) a $4.2 million increase in mall shop and anchor base and percentage rents as
a result of higher occupancy and higher average rents; b) $0.3 million in higher
temporary and seasonal income; c) $0.3 million in higher net utility and
ancillary income; d) $0.3 million in higher gain on land sales; and e) lower
restructuring costs, net of other G & A increases, of $0.3 million. These
positive variances were partially offset by; f) $3.3 million in higher interest
costs due to higher average balances outstanding and higher rates; and g) $0.4
million in higher property operating costs, net of recoveries.
EBITDA - Earnings before Interest, Taxes, Depreciation and Amortization
The computation of EBITDA is shown below for the six months ended June 30, 2000
and 1999 (000's):
Six Months Ended June 30,
2000 1999
Total revenues $ 81,458 $ 75,155
Add back operating covenant amortization
deducted in minimum rent 1,315 1,315
Net 82,773 76,470
Less recoverable costs and expenses 23,382 21,663
Less non-recoverable costs and expenses 1,123 994
Less property general and administrative costs 1,217 1,114
Less corporate general and administrative costs 2,431 2,228
Add back depreciation/amortization in above
expense lines and joint venture depreciation 850 890
Gain on outparcel land sales 354 100
EBITDA, as reported $ 55,824 $ 51,461
For the six months ended June 30, 2000, EBITDA was $55.8 million compared to
$51.5 million in the first six months of 1999, an increase of 8.3 percent.
EBITDA was largely impacted by the same factors as FFO above, except for
interest costs, preferred stock dividends and restructuring costs, which are not
included in EBITDA.
Liquidity and Capital Resources
The Company has significant ongoing capital requirements. The Company believes
that its cash generated from property operations and funds obtained from
property financings and general corporate borrowings will provide the necessary
funds on a short-term and long-term basis for its operating expenses, interest
expense on outstanding indebtedness and recurring capital expenditures and
tenant allowances, and all dividends to the shareholders necessary to satisfy
the REIT dividend distribution requirements under the Internal Revenue Code.
The Company intends to pay regular quarterly dividends to its shareholders.
However, the Company's ability to pay dividends is affected by several factors,
including cash flow from operations, capital expenditures, and its ability to
refinance its maturing debt as described below. Dividends by the Company will
be at the discretion of the Board of Trustees and will depend on the cash
available to the Company, its financial condition, capital and other
requirements, and such other factors as the Trustees may consider.
Sources of capital for non-recurring capital expenditures, such as major
building renovations and expansions, as well as for scheduled principal
payments, including balloon payments on the outstanding indebtedness, are
expected to be obtained from additional Company or property financings and
refinancings, sale of non-strategic assets, additional equity raised in the
public or private markets, and from retained internally generated cash flows, or
from combinations thereof. The Company has substantially completed construction
of an expansion and redevelopment of Washington Crown Center and an expansion at
Valley Mall. The total cost of the two projects, including capitalized
construction overhead, interest, and tenant allowances, are estimated at $33
million and $33 million respectively, of which $27 million and $28 million,
respectively, had been incurred as of June 30, 2000. In addition to amounts
incurred at June 30, 2000, the Company is committed for future payments under
various construction purchase orders and certain leases. The Company has
secured through a bank lender a $26.8 million construction and three-year
permanent loan for the Washington Crown Center expansion and redevelopment; the
loan bears interest at LIBOR plus 1.90%, and $21.1 million was borrowed and
outstanding at June 30, 2000. The Valley Mall expansion is being financed under
the lines of credit with GECRE, as described in Note 3 to the interim financial
statements.
As of June 30, 2000 the scheduled principal payments on all debt are $3.4
million, $114.0 million, $43.5 million, $30.1 million, and $77.4 million for the
years ended December 31, 2000 through 2004, respectively, and $450.0 million
thereafter. The Company expects to refinance or extend the majority of the
maturities over the next five years through additional Company financings and
from refinancing the maturing loans. The Company's ability to refinance or
extend these loans on or before their due dates depends on the level of income
generated by the properties, prevailing interest rates, credit market trends,
and other factors that may be in effect at the time of such refinancings or
extensions and there is no assurance that such refinancings or extensions will
be executed. The ratios of the Company's EBITDA to interest paid on total
indebtedness (exclusive of capitalized interest and interest income) for the
years ended December 31, 1999, 1998, and 1997 were 2.06 to 1, 2.14 to 1, and
2.04 to 1, respectively.
As further described in Note 2 to the Consolidated Financial Statements, the
minority interest balance has been reduced below zero and, consequently, is now
shown as an asset of the Company, reflecting the legal obligation of the
minority partner to fund this deficit through future cash flow support payments.
This asset must continually be monitored by the Company to ensure its
realizability.
Part II - Other Information
Item 1: Legal Proceedings
The Company from time to time is involved in litigation incidental to its
business. Except as described below, neither the Company nor any of the
Partnerships are currently involved in any material litigation and, to the best
of the Company's knowledge, there is no material litigation currently threatened
against the Company or the Partnerships, other than routine litigation arising
in the ordinary course of business, most of which is expected to be covered by
liability insurance or established reserves.
Shareholder litigation
On August 10, 1995, August 17, 1995, and September 8, 1995 complaints were filed
by various individuals on behalf of themselves and also purportedly on behalf of
other similarly situated persons against the Company and certain of its
executive officers in United States District Court for the Western District of
Pennsylvania to recover unspecified damages under the federal securities laws
resulting from a decline in the market price for the Company's common shares of
beneficial interest which are listed and traded on the New York Stock Exchange.
The decline in the Company's share price followed the announcement on August 8,
1995 of various operational and capital resource initiatives by the Company,
including the reduction of the Company's quarterly dividend to increase its
levels of retained internal cash flow and the planned sale of certain assets
that at the time did not fit the Company's growth strategy. The complaints in
these three cases were consolidated by the Court and a consolidated amended
complaint was filed on July 30, 1996. The consolidated amended complaint
asserts a class period extending from March 1, 1995 to August 8, 1995,
inclusive.
A fourth Complaint was filed the week of December 15, 1995 by an individual on
behalf of himself and also purportedly on behalf of other similarly situated
persons against the Company and certain of its current and former executive
officers in the United States District Court for the Eastern District of
Pennsylvania (the Warden action). This action was subsequently transferred to
the Western District of Pennsylvania. While this Complaint is substantially
similar to the previous Complaints, it alleged a class period extending from
August 17, 1993 (the IPO date) to August 8, 1995.
The Company filed a motion seeking to dismiss the consolidated action and
negotiated a stay of the Warden action pending resolution of the motion to
dismiss the consolidated actions. On September 15, 1997 the Court issued an
opinion dismissing the consolidated amended complaint. In its ruling, the Court
dismissed certain allegations with prejudice and others with an opportunity to
amend. On October 10, 1997 the Plaintiffs filed a second amended complaint in
the consolidated action. On December 2, 1997 the court entered an order
consolidating the cases for pretrial purposes. On December 16, 1997 the
Plaintiff in the Warden action filed a second amended complaint, which changed
the end of the putative class period to February 28, 1995. On January 16, 1998
the Company filed motions seeking dismissal of both the consolidated action and
the Warden action. On October 15, 1998 the Court in the Warden action granted
the Company's motion to dismiss and permitted the plaintiffs to file a third
amended complaint.
On November 2, 1998, the Court granted in part and denied in part the Company's
motion to dismiss the second amended complaint in the consolidated action. In
its ruling, the Court dismissed the Company as a defendant and dismissed all of
the plaintiff's claims with prejudice, except for a narrow set of allegations
relating to projections of the 1995 dividend at a March 1995 REIT conference and
in the 1994 annual report. On November 30, 1998, the plaintiffs in the Warden
action and the consolidated action each filed third amended complaints. In the
consolidated action, plaintiffs sought to renew certain claims against the
Company notwithstanding the Court's prior rulings. On December 21, 1998, the
Company filed a motion seeking dismissal of the third amended complaint in the
Warden action. On February 5, 1999, the Company filed a motion to dismiss the
third amended complaint in the consolidated action.
On July 6, 1999, the Court granted the Company's motion to dismiss the third
amended complaint in the Warden action in its entirety with prejudice. On
August 5, 1999, the plaintiffs filed an appeal to the U.S. Court of Appeals for
the Third Circuit. On July 20, 1999, the Court granted in part and denied in
part the Company's motion to dismiss the third amended complaint in the
consolidated action. In its ruling, the Court dismissed the Company as a
defendant and otherwise ruled consistent with its November 2, 1998, decision,
dismissing all of the claims, except for the narrow set of allegations
referenced above. On May 17, 2000, the individual defendants filed a motion for
summary judgment in the Consolidated action. This motion is awaiting decision.
On July 12, 2000, the Court of Appeals affirmed in all respects the dismissal of
the Warden action.
The Company believes, based on the advice of legal counsel, that it and the
named officers have substantial defenses to the plaintiffs' claims, and the
Company intends to vigorously defend the action. The Company's current and
former officers that are named in this litigation are covered under a liability
insurance policy paid for by the Company. The Company's officers also have
indemnification agreements with the Company. While the final resolution of this
litigation cannot be presently determined, management does not believe that it
will have a material adverse effect on the Company's consolidated results of
operations or financial condition.
Item 2: Changes in Securities
None
Item 3: Defaults Upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
On July 26, 2000, the Company issued its regular quarterly
earnings release and its Second Quarter 2000 Supplemental Financial and
Operational Information Package for analysts and investors. Copies of these
documents are hereby filed as Exhibits to the Form 10-Q.
Exhibit 99 (a) - Press release dated July 26, 2000
Exhibit 99 (b) - Second Quarter 2000 Supplemental Financial
and Operational Information Package
Item 6: Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements 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.
Date: August 8, 2000 CROWN AMERICAN REALTY TRUST
/s/ Mark E. Pasquerilla
Mark E. Pasquerilla
Chairman of the Board of Trustees,
Chief Executive Officer and President
(Authorized Officer of the Registrant
and Principal Executive and Operating Officer)
Date: August 8, 2000 CROWN AMERICAN REALTY TRUST
/s/ Terry L. Stevens
Terry L. Stevens
Executive Vice President and
Chief Financial Officer
(Authorized Officer of the Registrant
and Principal Financial Officer)
Date: August 8, 2000 CROWN AMERICAN REALTY TRUST
/s/ John A. Washko
John A. Washko
Vice President and
Chief Accounting Officer
(Authorized Officer of the Registrant
and Principal Accounting Officer)
EXHIBIT 99 (a)
NEWS FROM:
C R O W N A M E R I C A N R E A L T Y T R U S T
CONTACT: Media: Christine Menna 814-536-9520 [email protected]
Investors: Terry L. Stevens 814-536-9538 [email protected]
Internet: www.crownam.com
IMMEDIATE RELEASE: Wednesday, July 26, 2000
CROWN AMERICAN REALTY TRUST REPORTS
SECOND QUARTER FFO PER SHARE UP 7 PERCENT FROM 1999
SAME CENTER NOI INCREASED BY 8.1%
SHARE REPURCHASE PLAN APPROVED
Johnstown, Pa. - Crown American Realty Trust (NYSE:CWN), a real estate
investment trust, today announced financial results and operating information
for the quarter ended June 30, 2000. The Board of Trustees also declared
regular quarterly dividends on its common and senior preferred shares.
_______________________
"The second quarter of 2000 continued to produce strong results, following
the pattern of the first quarter and all of 1999," stated Company Chairman, CEO
and President, Mark E. Pasquerilla. "FFO per common share was $0.31 in the
second quarter, up 7 percent from $0.29 in the second quarter of 1999. For the
first six months of 2000, FFO per share was $0.61 compared to $0.56 per share
for the first six months of 1999, an increase of 9 percent. Same center NOI for
the second quarter was up 8.1% compared to the second quarter of 1999, and same
center NOI is up 8.9% for the first half of this year.
"Operating trends continue to reflect the transformation of our portfolio
over the last several years. Mall shop occupancy ended the quarter at 85%, up
from 82% a year ago, and up from 84% at the end of the first quarter. The 85%
mall shop occupancy represents an all-time high for our portfolio. Average mall
shop base rent per square foot increased for the 27th consecutive quarter to
$19.01 per square foot, up 5% from one year ago. Leasing results continued to be
strong for the quarter with 196,000 square feet of new and renewal mall shop
leases signed at rates that will produce $4.8 million in annual base rental
income, down from $5.8 million in the comparable period of last year. Base rent
on new leases was $21.01 per foot compared to $14.10 per foot for tenants that
closed, an uplift of 49%. Comparable mall shop sales through June were up 4.2%
over the same period of 1999. Our tenants' occupancy cost percentage fell again
in the second quarter to 9.9%, down from 10.1% a year ago, as strong tenant
sales growth continues to outpace rents and as we continue to focus on
controlling costs. The 9.9% tenant occupancy cost percentage represents an all-
time low for our portfolio."
Mr. Pasquerilla continued, "The Valley Mall and Washington Crown Center
redevelopments represent the last major capital expenditures for our portfolio,
and both are substantially completed. Therefore, capital expenditures in future
years will fall significantly. This decrease in future capital expenditures
along with our improved operating performance will allow the Company to bear the
fruits of the investments we have made, and thus increase our financial
flexibility. We will continue the philosophy of managing the Company
conservatively to enhance cash flow and improve financial flexibility. We will
continue to explore recycling capital through a prudent disposition program.
However, it is significant to point out that neither a refinancing or a mall
sale transaction is needed in order to meet our fixed charges."
Mr. Pasquerilla concluded, "Management believes that there is a
significant disconnect between current market values for the Company's common
shares and its significantly improved operating performance and improved
prospects. Management and the Company's Trustees have exhibited their
bullishness about the stock by being consistent buyers of the common shares.
Insider ownership increased from 36.6 percent at June 30, 1999 to 37.6 percent
at June 30, 2000, a 2.7 percent increase in one year. To show further
confidence in the future prospects for the Company, a conservative share
repurchase program has been authorized by the Board, under which the Company may
repurchase up to 50,000 common shares and/or up to 25,000 preferred shares.
These repurchases will be made on the open market or in private transactions
from time to time. Any open market purchases will be made in accordance with
SEC Rule 10b-18."
Dividend Information
For the quarter ended June 30, 2000, the Board of Trustees declared regular
quarterly dividends of $.2075 per common share and $1.375 per senior preferred
share. Both dividends are payable September 15, 2000 to shareholders of record
on September 1, 2000. In April 2000, the Board increased the quarterly common
dividends by 1.2 percent to $0.2075 per share per quarter; this quarter's
dividend retains that increased level.
Financial Information
For the quarter ended June 30, 2000, the Company reports that Funds from
Operations ("FFO") before allocations to minority interest and to preferred
dividends was $14.5 million, up from $14.1 million in the same quarter of 1999.
FFO allocable to common shares (after minority interest and preferred dividends)
was $8.0 million, or $0.31 per share, compared to $7.7 million, or $0.29 per
share, in the same quarter of 1999. The increase in FFO before allocations to
minority interest and preferred dividends during the second quarter compared to
second quarter 1999 was mainly due to the following:
$1.8 million in higher mall shop and anchor base and percentage rents, as a
result of higher occupancy, higher average rental rates, and higher mall shop
sales;
$0.2 million in higher temporary and seasonal income, as a result of higher
sponsorship income and revenues generated from additional Retail Merchandising
Units (RMU's) at the properties;
$0.4 million in higher net utility income, straight-line rents, and
miscellaneous mall revenues;
$0.3 million in higher gains on the sale of outparcel land; these increases were
offset by:
$1.7 million in higher interest expense due to higher LIBOR rates, higher
deferred financing cost amortization, lower interest capitalization, and higher
average borrowings outstanding;
$0.2 million in higher property operating costs, net of recovery income;
$0.3 million in lower lease buyout income due to one-time buyouts during 1999 of
several tenants; and
$0.1 million in higher property and general and administrative expenses due to
lower capitalization of costs to construction activities.
Total revenues for the second quarter of 2000 were $40.1 million, up $2.8
million, or 7.5 percent, from $37.3 million in the same period in 1999. The
Company reported net income for the quarter of $1.5 million. This compares to
a net income of $1.6 million for the second quarter of 1999. After deducting
preferred dividends, there was a net loss in the second quarter applicable to
common shares of $2.0 million, or $0.07 per share. This compares to a net loss
of $1.9 million, or $0.07 per share applicable to common shares for the second
quarter of 1999.
For the first six months of 2000, FFO before allocations to minority
interest and to preferred dividends was $28.8 million, $0.61 per share, as
compared to $27.2 million, or $0.56 per share for the same period in 1999.
Total revenues for the first six months of 2000 were $81.5 million compared to
$75.2 million for the same period in 1999, an increase of $6.3 million, or 8.4
percent. The Company reported net income of $3.0 million for the first six
months of 2000, compared to net income of $2.7 million for the first six months
of 1999. After deducting preferred dividends, there was a net loss in the first
half of 2000 applicable to common shares of $3.9 million, or $0.15 per share.
This compares to a net loss of $4.1 million, or $0.16 per share applicable to
common shares for the first half of 1999.
Operating Information
During the second quarter of 2000, leases for 196,000 square feet of mall shops
were signed resulting in $4.8 million in annual base rental income. A total of
112 leases were signed, which included 54 renewals and 58 new leases. The
average rents per square foot in the second quarter were $21.01 for new leases
and $33.35 for renewals. For the first half of 2000, the average base rent for
signed mall shop leases was $22.13 per square foot compared with $19.61 for the
same period in 1999, an increase of 13 percent. The average rents per square
foot were $21.01 for new leases and $24.17 for renewals in the first half of
2000 compared with $22.02 and $16.32, respectively, in 1999.
The average mall shop base rent of the portfolio at June 30, 2000 was $19.01 per
square foot, up 5.2 percent compared to $18.07 per square foot at June 30, 1999.
This is the 27th consecutive quarter that average mall shop base rent has
increased.
Mall shop occupancy was 85 percent at June 30, 2000, up from 82 percent reported
at June 30, 1999. The 85 percent occupancy is a record high for the portfolio.
The net effective rent (annual gross rent less the annual amortization of tenant
allowances and leasing costs) for new leases signed in the second quarter was
$16.87 per square foot as compared to $18.17 per square foot for the second
quarter of 1999. This decrease was mainly due to signing two GAP leases and one
Old Navy lease in the quarter. Going forward management expects this trend to
reverse, and a major focus of management is to increase net effective rents from
new leasing.
Comparable mall shop sales for the six months ended June 30, 2000 were up 4.2
percent over the same period of 1999.
Occupancy costs, that is, base rent, percentage rent and expense recoveries as a
percentage of mall shop sales at all properties, were 9.9 percent as of June 30,
2000, as compared to 10.1 percent as of June 30, 1999. The 9.9 percent tenant
occupancy cost is a record low for the portfolio.
Seasonal and temporary leasing income for the first half of 2000 amounted to
$4.1 million,
a 7.9 percent increase from the $3.8 million reported in the first six months of
1999.
Expansion/Renovations
Construction has been completed at Valley Mall (Hagerstown, MD) and Washington
Crown Center (Washington, PA) on two megaplex theaters. Both facilities opened
in May 2000.
Dispositions
In June, Greater Lewistown Plaza (Lewistown, PA), a 171,000 square foot, non-
enclosed shopping center, was sold to a third party for $5.0 million. This was
the only non-enclosed shopping center in the Company portfolio.
In July, the 115,000 square foot Wal-Mart anchor store building and related
parking area at Oak Ridge Mall (Oak Ridge, TN) was sold to Wal-Mart in order to
accommodate a 95,700 square foot expansion of this store into a Wal-Mart Super-
center. The anchor store had been occupied by Wal-Mart under an operating
lease.
_______________________
Crown American Realty Trust through various affiliates and subsidiaries
owns, acquires, operates and develops regional shopping malls in Pennsylvania,
Maryland, West Virginia, Virginia, New Jersey, North Carolina, Tennessee and
Georgia. The current portfolio includes 27 regional shopping malls.
Supplemental Financial and Operational Information Package follows for
Crown American Realty Trust for the three and six months ended June 30, 2000.
Additional information can be obtained by calling Investor Relations at 1-800-
860-2011.
This news release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are
based on assumptions and expectations, which may not be realized and are
inherently subject to risks and uncertainties, many of which cannot be predicted
with accuracy. Future events and actual results, financial and otherwise, may
differ from the results discussed in the forward-looking statements. Risk and
other factors that might cause differences, some of which could be material,
include, but are not limited to, economic and credit market conditions, the
ability to refinance maturing indebtedness, the impact of competition, consumer
buying trends, financing and development risks, construction and lease-up
delays, cost overruns, the level and volatility of interest rates, the rate of
revenue increases versus expense increases and financial stability of tenants
within the retail industry, as well as other risks listed from time to time in
the Company's reports filed with the Securities and Exchange Commission or
otherwise publicly disseminated by the Company.
- 30 -
<TABLE>
<CAPTION>
EXHIBIT 99 (b)
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
SECOND QUARTER 2000
OTHER FINANCIAL AND OPERATING DATA
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 vs. 1999 2000 vs. 1999
(in thousands, except per share data)
FINANCIAL AND ANALYTICAL
DATA:
Total FFO - Incr (decr) -
2000 compared to 1999: $ 000 $ per $ 000 $ per
share share
<S> <C> <C> <C> <C>
Base and percentage rents from $ 1,828 $ 0.051 $ 4,554 $ 0.126
anchors and mall shops
Temporary and promotional leasing 163 0.005 303 0.008
income
Mall operating costs, net of tenant (211) (0.006) (282) (0.008)
recovery income
Utility and misc. mall income, equity 251 0.007 273 0.008
in joint venture
Straight line rental income 115 0.003 (78) (0.002)
Core mall operations-comparable 2,146 0.060 4,770 0.132
properties
Interest expense (1,650) (0.046) (3,347) (0.093)
Property admin. and general & admin. (68) (0.002) (306) (0.008)
expenses
Restructuring costs - - 670 0.019
Cash flow support earned 23 0.001 (36) (0.001)
Gain on sale of outparcel land 254 0.007 254 0.007
Depreciation and amortization expense (37) (0.001) (38) (0.001)
Lease buyout income and other items (299) (0.008) (315) (0.009)
Change in FFO before pref'd div's and 369 0.011 1,652 0.046
minority interest
Allocation to minority interest in (102) - (455) -
Operating Partnership
Rounding to whole cents - 0.009 - 0.004
Change in FFO allocable to common $ 267 $ 0.020 $ 1,197 $ 0.050
shareholders
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(restated)
Funds from Operations ($000 except
per share data):
Net income $ 1,479 $ 1,570 $ 2,962 $ 2,742
Adjustments:
Minority Interest in Operating (751) (659) (1,497) (1,582)
Partnership
Depreciation and amortization - real 12,332 11,786 24,542 23,142
estate
Operating covenant amortization 657 657 1,315 1,315
Gain on Sale of Assets (17) - (17) -
Cash flow support amounts 779 756 1,535 1,571
FFO before allocations to minority 14,479 14,110 28,840 27,188
interest and pref'd shares
Allocation to preferred shareholders (3,437) (3,437) (6,875) (6,875)
(preferred dividends)
Allocation to minority interest in (3,040) (2,938) (6,047) (5,592)
Operating Partnership
FFO allocable to common shares $ 8,002 $ 7,735 $15,918 $ 14,721
FFO per common share $ 0.31 $ 0.29 $ 0.61 $ 0.56
*Restated to adopt changes to the definition of FFO as promulgated by Nareit.
1999's previously reported FFO of $0.30 for 1Q99 was restated to $0.27 to
reflect restructuring charges that were excluded from FFO under the previous
definition.
Average shares outstanding during the 26,208 26,208 26,208 26,208
period
Shares outstanding at period end 26,208 26,208 26,208 26,208
Avg. partnership units and shares 36,164 36,164 36,164 36,164
outstanding during period
Partnership units and shares 36,164 36,164 36,164 36,164
outstanding at period end
Components of Minimum Rents:
Anchor - contractual or base rents $ 6,253 $ 6,044 $ 12,442 $ 12,074
Mall shops - contractual or base rents 20,097 19,069 40,885 37,769
Straight line rental income 159 44 278 356
Ground lease - contractual or base 488 513 962 1,025
rents
Lease buyout income - 318 16 336
Operating covenant amortization (657) (657) (1,315) (1,315)
Total minimum rents $ 26,340 $ 25,331 $ 53,268 $ 50,245
Components of Percentage Rents:
Anchors $ 846 $ 726 $ 1,331 $ 1,411
Mall shops and ground leases 1,203 707 2,503 1,290
Total percentage rents $ 2,049 $ 1,433 $ 3,834 $ 2,701
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
SECOND QUARTER 2000
OTHER FINANCIAL AND OPERATING DATA
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(in thousnds, except as noted)
<S> <C> <C> <C> <C>
EBITDA: earnings (including gain
on sale of outparcel land)
before interest, taxes and all $ 27,914 $ 25,919 $ 55,824 $ 51,461
depreciation and amortization
Debt and Interest:
Fixed rate debt at period end $ 590,692 $ 597,801 $590,692 $597,801
Variable rate debt at period end 127,723 90,471 127,723 90,471
Total debt at period end $ 718,415 $ 688,272 $718,415 $688,272
Weighted avg. interest rate on fixed 7.6% 7.6% 7.6% 7.6%
rate debt for the period
Weighted avg. interest rate on 9.1% 7.0% 8.9% 7.1%
variable rate debt for the period
Total interest expense for period $ 14,175 $ 12,525 $ 28,078 $ 24,731
Amort. of deferred debt cost for 617 356 1,231 708
period (incl. in interest exp)
Capitalized interest costs during 297 393 564 716
period
Capital Expenditures Incurred:
Allowances for mall shop tenants
Allowances for anchor/ big box $ 3,218 $ 2,987 $ 10,708 $ 7,881
tenants
Leasing costs and commissions 5,452 641 7,430 1,041
Expansions and major renovations, 633 595 1,256 1,393
including escrow deposits
All other capital expenditures 249 9,519 4,169 14,764
(included in Other Assets)
126 520 1,019 666
Total Capital Expenditures during $ 9,678 $ 14,262 $ 24,582 $ 25,745
the period
OPERATING DATA:
Mall shop GLA at period end 5,768 5,743
000 sq. ft.)
Mall shop Occupancy percentage at 85% 82%
period end
Comp. Store Mall shop sales - 6 months $ 111.41 $ 106.90
($ per sq. ft.)
Mall shop occupancy cost percentage at 9.9% 10.1%
period end
Average mall shop base rent at period $ 19.01 $ 18.07
end ($ per sq. ft.)
Mall shop leasing for the period:
New leases - sq. feet (000) 137 168 271 270
New leases - $ per sq. ft. $ 21.01 $ 21.92 $ 21.01 $ 22.02
Number of new leases signed. 58 79 114 141
Net effective rent for new leases $ 16.87 $ 18.17 $ 17.53 $ 18.61
signed in the period (per sq. ft.)
Renewal leases - sq. feet (000) 59 75 150 198
Renewal leases - $ per sq. ft. $ 33.35 $ 19.75 $ 24.17 $ 16.32
Number of renewal leases signed. 54 42 96 83
Tenant Allowances for leases signed
during the period:
First Generation Space - per sq. $ 89.96 $ 14.32 $ 13.65 $ 33.96
ft.
Second Generation Space - per sq. $ 19.54 $ 20.39 $ 17.09 $ 12.80
ft.
Leases Signed during the period by:
First Generation Space - sq. feet 1 13 8 31
(000)
Second Generation Space - sq. feet 195 230 413 437
(000)
Theater and free-standing leasing for
the period:
New leases - sq. feet (000) - 53 4 53
New leases - $ per sq. ft. $ - $ 12.61 $ 12.54 $ 12.61
Tenant allowances -- $ per sq. ft. $ - $ 59.43 $ 8.75 $ 59.43
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
TOP 25 REVENUE-GENERATING TENANTS
LISTED IN ORDER OF SQUARE FEET OCCUPIED
FOR THE TWELVE MONTHS ENDED JUNE 30, 2000
PERCENT NUMBER
OF OF OPEN TOTAL
TOTAL STORES SQ FT
TENANT NOTES REVENUES AT JUNE 30 OCCUPIED
<S> <C> <C> <C> <C>
Sears, Roebuck and Co. 5.4% 21 2,119,718
J C Penney Inc. (1) 4.1% 25 1,879,559
May Department Stores Co. 1.1% 12 1,395,525
The Bon-Ton 3.1% 17 1,212,922
Wal-Mart Stores 1.1% 3 405,465
Value City Department 1.1% 5 372,713
Stores
The Limited Stores Inc. (2) 3.4% 38 281,374
The Gap 2.2% 22 214,209
Venator Group (3) 2.7% 51 184,538
Fashion Bug 1.3% 18 163,798
Intimate Brands Inc. (6) 2.2% 40 131,986
Shoe Show of Rocky Mt. 1.7% 27 127,295
Inc.
Transworld Entertainment (5) 2.0% 30 112,834
Consolidated Stores (4) 1.4% 26 107,509
Hallmark-Owned Stores 1.7% 29 107,286
Deb Shops Inc. 0.9% 15 91,755
Payless Shoesource Inc. 1.1% 24 78,458
Borders (12) 1.5% 22 78,279
The Finish Line Inc. 1.3% 15 76,656
American Outfitters 0.9% 14 74,998
American Eagle Outfitters (11) 1.3% 17 69,958
Tandy Corporation (8) 0.9% 26 64,973
Regis Stores (10) 0.9% 42 46,999
Claires (7) 0.9% 42 37,052
Sterling Jewelers (9) 1.0% 19 23,318
45.2% 9,459,177
Notes:
(1) Includes J.C. Penney department stores and Eckerd stores.
(2) Includes Limited Express, Lane Bryant, Lerner Shops, The Limited (core
division), and Structures.
(3) Includes Kinney, Footlocker, Lady Footlocker, Champs, and Northern
Reflections
(4) Includes Kay-Bee Toys.
(5) Includes Camelot Music and Wall Stores.
(6) Spun off by the Limited. Includes Victoria Secrets and Bath & Body.
(7) Operates as Claires Boutique, Topkapi, The Icing. Also includes recent
purchase of Afterthoughts.
(8) Operates as Radio Shack.
(9) Operates as Kay Jewelers, Belden Jewelers and Shaw Jewelers.
(10) Operates as Master Cuts, Trade Secrets, Cost Cutters, Super Cuts, and Regis
Salons.
(11) American Eagle Outfitters is publicly traded on the Nasdaq Exchange (AEOS).
(12) These stores are operating under the Walden Book Division of Borders.
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(reclass (reclass
ified) * ified) *
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Rental operations:
Revenues:
Minimum rent $ 26,340 $ 25,331 $ 53,268 $ 50,245
Percentage rent 2,049 1,433 3,834 2,701
Property operating cost recoveries 8,474 7,772 17,922 16,356
Temporary and promotional leasing 2,048 1,885 4,111 3,808
Net utility income 858 752 1,837 1,648
Miscellaneous income 296 132 486 397
Net 40,065 37,305 81,458 75,155
Property operating costs:
Recoverable operating costs 11,201 10,360 23,382 21,663
Property administrative costs 610 586 1,217 1,114
Other operating costs 566 494 1,123 994
Depreciation and amortization 11,941 11,358 23,764 22,326
Net 24,318 22,798 49,486 46,097
Net 15,747 14,507 31,972 29,058
Other expenses:
General and administrative 1,215 1,171 2,431 2,228
Restructuring costs - - 369 1,039
Interest 14,175 12,525 28,078 24,731
Net 15,390 13,696 30,878 27,998
Net 357 811 1,094 1,060
Property sales, disposals and
adjustments:
Gain on sale of assets 17 - 17 -
Gain on sale of outparcel land 354 100 354 100
Income before minority interest in 728 911 1,465 1,160
Operating Partnership
Minority interest in (income) loss 751 659 1,497 1,582
of Operating Partnership
Net income 1,479 1,570 2,962 2,742
Dividends on preferred shares (3,437) (3,437) (6,875) (6,875)
Net (loss) applicable to common $ (1,958) $(1,867) $(3,913) $(4,133)
Per common share information:
Basic and Diluted EPS:
Net (loss) per share $ (0.07) $ (0.07) $ (0.15) $ (0.16)
Weighted average shares 26,208 26,208 26,208 26,208
outstanding (000)
FFO per share $ 0.31 $ 0.29 $ 0.61 $ 0.56
*Certain reclassifications have been made to prior year amounts to conform to
the current year presentation.
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
Consolidated Balance Sheets
June 30, December 31,
2000 1999
(Unaudited)
(in thousands, except share
and per share data)
<S> <C> <C>
Assets
Income-producing properties:
Land $ 153,207 $ 154,341
Buildings and improvements 1,007,508 986,042
Deferred leasing and other charges 44,880 44,313
Net 1,205,595 1,184,696
Accumulated depreciation and amortization (410,087) (388,965)
Net 795,508 795,731
Minority interest in Operating Partnership 2,463 -
Investment in joint venture 4,661 5,055
Cash and cash equivalents, unrestricted 9,550 17,171
Restricted cash and escrow deposits 12,930 15,635
Tenant and other receivables 15,478 15,859
Deferred charges and other assets 19,514 25,757
Net $ 860,104 $ 875,208
Liabilities and Shareholders' Equity
Debt on income-producing properties $ 718,415 $ 709,000
Accounts payable and other liabilities 29,501 37,630
Net 747,916 746,630
Minority interest in Operating Partnership - 2,727
Commitments and contingencies
Shareholders' equity:
Non-redeemable senior preferred shares, 11%
cumulative, $.01 par value, 2,500,000 shares
issued and outstanding 25 25
Common shares, par value $.01 per share,
120,000,000 shares authorized, 27,742,317 shares
issued at both June 30, 2000 and December 31, 1999 277 277
Additional paid-in capital 317,482 316,421
Accumulated deficit (190,944) (176,220)
Net 126,840 140,503
Less common shares held in treasury at cost;
1,534,398 shares at both June 30, 2000 and
December 31, 1999 (14,652) (14,652)
Net 112,188 125,851
Net $ 860,104 $ 875,208
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL FINANCIAL AND OPERATIONAL INFORMATION PACKAGE
CROWN AMERICAN REALTY TRUST
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2000 1999
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,962 $ 2,742
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in Operating Partnership (1,497) (1,582)
Equity earnings in joint venture (78) (209)
Depreciation and amortization 26,943 25,061
Restructuring costs 369 1,039
Net changes in:
Tenant and other receivables 290 3,814
Deferred charges and other assets 3,028 1,925
Restricted cash and escrow deposits (1,644) (1,907)
Accounts payable and other liabilities (8,503) (7,972)
Net cash provided by operating activities 21,870 22,911
Cash flows from investing activities:
Investment in income-producing properties (23,563) (25,079)
Proceeds from asset sales 4,646 -
Distributions from joint venture 288 550
Net cash (used in) investing activities (18,629) (24,529)
Cash flows from financing activities:
Net proceeds from exercise of stock options and - 5
dividend
reinvestment plan
Proceeds from issuance or assumption of debt, net of 18,851 23,434
deposits
Cost of issuance of debt (19) (433)
Debt repayments (9,435) (5,157)
Dividends and distributions paid on common shares and (14,919) (14,646)
partnership units
Dividends paid on senior preferred shares (6,875) (6,875)
Cash flow support payments 1,535 1,572
Net cash (used in) provided by financing activities (10,862) (2,100)
Net (decrease) in cash and cash equivalents (7,621) (3,718)
Cash and cash equivalents, beginning of period 17,171 13,512
Cash and cash equivalents, end of period $ 9,550 $ 9,794
Supplemental Cash Flow Data:
Interest paid (net of capitalized amounts) $ 26,847 $ 24,023
Interest capitalized $ 564 $ 716
</TABLE>
