UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1994
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 1-12286
Mid-Atlantic Realty Trust
(Exact name of registrant as specified in its charter)
Maryland
52-1832411
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
1306 Concourse Drive, Suite 200 - Linthicum, Maryland
21090
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code (410) 684-2000
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Shares of Beneficial Interest, $.01 par value
(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.
X Yes 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 the Form 10-K. [ ]
As of February 16, 1995, 6,291,407 common shares of beneficial
interest of Mid-Atlantic Realty Trust were outstanding and the
aggregate value of common stock (based upon the $8.125 closing price
on that date) held by non-affiliates was approximately $51,118,000.
Documents Incorporated by Reference
The definitive proxy statement with respect to the 1995 annual
meeting of Mid-Atlantic Realty Trust shareholders (to be filed).
9
<PAGE>
PART I
ITEM 1
BUSINESS
Mid-Atlantic Realty Trust was incorporated June 29, 1993 and
commenced operations effective with the completion of its initial
public share offering on September 11, 1993. Mid-Atlantic Realty
Trust is the successor to the operations of BTR Realty, Inc. (the
predecessor to Mid-Atlantic Realty Trust), and qualifies as a real
estate investment trust, "REIT", for Federal income tax purposes. As
used herein, the term "MART" refers to Mid-Atlantic Realty Trust, the
term "Company" refers to MART and its subsidiaries, the successor
company, and "BTR" refers to BTR Realty, Inc. and its subsidiaries,
the predecessor to the Company.
The Company is a fully integrated, self managed real estate
investment trust which owns, leases, develops, redevelops and manages
its retail shopping center facilities and commercial properties. The
Company's primary objective is to manage the properties for long-term
cash flow growth. The Company's principal strategies are to grow the
portfolio through the selective acquisition of additional properties
in the Mid-Atlantic region, redeveloping or developing retail
properties on a selective basis, and, when appropriate, divesting
through sale or exchange of non-strategic properties.
The Company's financial strategy is to continue to refocus the
portfolio through the selective acquisition of retail properties
utilizing (1) proceeds from divestitures, (2) issuance of equity or
debt securities, when appropriate, and (3) arranging bank or other
borrowings for short term needs. The Company intends to maintain the
conservative ratio of secured debt to total estimated property value
below 50%.
The Company has an equity interest in twenty two operating
shopping centers, sixteen of which are wholly-owned by the Company,
and six others in which the Company has an interest ranging from 50%
to 80%, as well as other commercial properties. The operating
properties have a gross leasable area of approximately 3,022,000
square feet, of which approximately 94% was leased at December 31,
1994. Total gross leasable area includes 2,786,000 square feet of
established operating properties, of which approximately 97% was
leased at December 31, 1994 and approximately 236,000 square feet of
a shopping center acquired in October, 1993, currently under
redevelopment, of which 64% was leased at December 31, 1994. Of these
properties, approximately 83% of the gross leasable area is in the
states of Maryland, New York and Virginia, 11% in Arizona and 6% in
other states. The Company also owns one land parcel being developed
into a shopping center and has 8 undeveloped parcels of commercial
and residential zoned land totaling approximately 173 acres and
varying in size from 3 to 56 acres.
The business of the Company is not materially affected by
seasonal factors. Although construction may be affected to some
extent by inclement weather conditions, usually during winter months,
property sales and revenue from income producing properties held for
investment are usually not so affected.
The commercial real estate development and investment industry is
subject to widespread competition for desirable sites, tenants and
favorable financing. The industry is extremely fragmented and there
are no principal methods of competition. However, the ability to
compete is dependent in part upon the ability to find and complete
appropriate real estate investments in a timely manner. While many
competitors have fewer assets and financial resources than the
Company, there are many competitors with greater financial resources
competing for similar business activities. Accordingly, it is not
possible to estimate the Company's position in the industry. In
addition, certain of the Company's real estate projects are near
unimproved sites that could be developed commercially and would
provide further competition to the Company. The management of the
Company believes, however, that the Company competes favorably in the
industry due to the quality of its developments, its ability to take
advantage of opportunities as they arise, its access to capital, and
its reputation in the industry.
The Company has 45 full time employees and believes that its
relationship with its employees is good.
10
<PAGE>
ITEM 2
PROPERTIES
The following schedule describes the Company's commercial and
residential properties as of December 31, 1994:
I. SHOPPING CENTERS
A. In Operation (1)
Percentage of Type of land Area in Leasable Percentage Principal
Lease
ownership ownership acres square feet leased tenants
expirations
Name and Location
Harford Mall 100% Fee(2) 38.0 557,000(3) 99% Hecht's,
1995-2008
U.S. Route 1 Montgomery
Ward,
Bel Air Woolworth
Patriots Plaza 50% Long-term 6.1 39,000 92% Denny's,
1995-2005
Ritchie Highway of lease (4) Dunkin
Donuts
Anne Arundel County Partnership
Rolling Road Plaza 100% Fee 6.5 63,000 100% Fair
Lanes, 1995-2009
Rolling Road Firestone
Baltimore County
Rosedale Plaza 100% Fee 9.2 73,000 86% Valu
Food, 1995-1999
Rite Aid
Chesaco and Weyburn Avenue
Baltimore County
Shoppes at Easton 100% Fee 13.9 113,000 99% Giant
Food,
1997-2024
Route 50 Fashion
Bug
Easton
Wilkens Beltway Plaza 75% Fee 7.1 65,000 100% Giant
Food, 1995-2014
Wilkens Avenue of Partnership Provident
Bank,
Baltimore County Radio
Shack,
Carrollton
Bank
York Road Plaza 100% Fee 7.5 52,000 100% Giant
Food, 1995-2000
York Road Firestone
Baltimore County
VIRGINIA PROPERTIES:
Burke Town Plaza 100% Long-term 12.6 114,000 100% Safeway,
1995-2002
Old Keene Mill Road lease(5) CVS
Drugs
Burke
Skyline Village 100% Fee 14.6 127,000 100% Sears,
1995-2009
US Route 33 Richfood
Harrisonburg
Smoketown Plaza 60% Fee 27.0 176,000 98% Shoppers
Food 1995-2011
Davis Ford and of Partnership Warehouse, CVS
Drugs,
Smoketown Roads Frank's Nursery &
Crafts
Prince William County
Spotsylvania Crossing 80% Fee 11.2 142,000 100% K-Mart,
CVS 1996-2007
Route 3 & Bragg Road of Partnership Drugs
Fredericksburg
11<PAGE>
ITEM 2. Properties (Continued)
I. SHOPPING CENTERS (continued)
A. In Operation (continued)
Percentage of Type of land Area in Leasable Percentage Principal
Lease
ownership ownership acres square feet leased tenants
expirations
VIRGINIA PROPERTIES (continued):
Sudley Towne Plaza 100% Fee 9.6 108,000 96% Burlington
Coat 1995-2009
Route 234 & Sudley Manor Dr. Factory, CVS
Manassas Drug Store
ARIZONA PROPERTIES:
Dobson-Guadalupe 100% Fee 3.2 22,000 84% Nevada
Bob's 1995-2001
Shopping Center
Dobson & Guadalupe Roads
Mesa
Fair Lanes Chandler 50% Fee 1.1 10,000 100% No
principal 1996
Plaza of Partnership tenants
selected
Arizona & Warner Roads
Chandler
Fair Lanes Union 50% Fee 5.9 17,000 88% No
principal 1995-1999
Hills Plaza of Partnership tenants
selected
Union Hills Drive
Phoenix
Gateway Park 100% Fee 10.5 82,000 98% Bashas',
1995-2011
Page Corral
West
McRay Plaza 100% Fee 4.9 35,000 100%
Mountainside 1996-2004
McClintock & Ray Roads Fitness
Chandler
Park Sedona 100% Fee 11.4 99,000 99% Safeway,
1995-2011
Highway 89 A Payless Drug
Store
Sedona
Plaza Del Rio 100% Fee 11.8 60,000 100% Payless
Drug 1995-2009
16th Street and Avenue B Store
Yuma
NEW YORK PROPERTIES:
Colonie Plaza 100% Fee 18.7 140,000 98% Price
Chopper, 1995-2010
Central Avenue RX Place,
Colonie Paper
Cutter
Columbia Plaza 100% Fee 16.0 117,000 98% Price
Chopper, 1995-2008
Columbia Turnpike Ben
Franklin
East Greenbush
B. Under Development
MARYLAND PROPERTIES:
Timonium Mall 100% Long-term 12.9 236,000 64% Caldor,
2001-2011
York & Ridgely Roads lease (6) Circuit
City
Timonium
(1) Shopping centers in operation are subject to mortgage
financing aggregating $50,086,463 at December 31, 1994.
(2) Subject to the following long-term ground leases: (i)
150,000 square feet on 10 acres for Montgomery Ward's
department store, (ii) 10,200 square feet on one acre for
Montgomery Ward's auto accessory store. The Harford Mall
property is subject to a mortgage principal balance at
December 31, 1994 of $19,821,030. The Harford Mall mortgage
has an interest rate of 9.78%, a 30 year amortization, with
a 10 year balloon payment of $18,148,848 due at the maturity
date of July, 2003. The mortgage's prepayment
provision prohibits prepayment until June, 1997, after
which the penalty is the greater of 1% of the outstanding
principal balance or yield maintenance.
(3) Includes 302,000 square feet occupied by department stores.
(4) Remaining term of 13 years plus two 10 year options.
(5) Remaining term of 37 years plus three 15 year renewal
options.
(6) Remaining term of 22 years plus five 10 year options.
12
<PAGE>
ITEM 2. Properties (Continued)
II. OFFICE BUILDINGS
A. In Operation (7)
Percentage of Type of land Area in Leasable Percentage Principal
Lease
ownership ownership acres square feet leased tenants
expirations
Gateway International I 100% Fee 7.0 84,000 91% Browning
Ferris, 1995-2003
Elkridge Landing & Daughters of
Charity
Winterson Roads Health System,
Anne Arundel County US Healthcare,
Tandem
Computers
Gateway International II 100% Fee 15.5 119,000 90% Digital
Equip. 1995-2004
Elkridge Landing & Corporation,
Winterson Roads Price
Waterhouse,
Anne Arundel County MART, AT&T,
American
Express
Patriots Plaza 50% Long-term 0.5 28,000 24% No principal
1996-2004
Office Building of Partnership lease (8) tenants
selected
Ritchie Highway
Anne Arundel County
Wilkens Beltway Plaza 75% Fee 3.9 53,000 100% Ryder Truck
1995-2000
Office Park of Partnership Rental Inc.,
Freestate
Buildings I, II & III Health, Prudential
Wilkens Avenue and Maiden Choice Lane Health System
Baltimore County
III. OTHER DEVELOPED PROPERTIES
A. In Operation
Leasable Per-
Principal
Name and Percentage of Type of land Area in square centage
Lease
Location ownership ownership acres Improvements feet leased
tenants expirations
MARYLAND PROPERTIES:
The Business Center at 100% Fee 5.4 One-story 27,000 96% No
principal 1995-1998
Harford Mall Warehouse tenants
selected
Harford County
Clinton Property 100% Long-term 2.9Bowling Center 29,000 100%Fair
Lanes 1995-1996
Prince George's lease (9) and Bank
County
Southwest Property 100% Fee (10) 3.2 One-story 25,000 100% Shell
Oil,
1995-1999
Anne Arundel Office Building, One-story Carrier/Otis
County Warehouse and Gas Station Potomac Air
Gas
Waldorf Property 100% Fee 3.6 Bowling Center 30,000 100%Fair
Lanes, 1997-1998
Waldorf and Tire Center
Firestone
ILLINOIS PROPERTIES:
Illinois Properties 100% 2 parcels 5.0 2 Bowling 71,000 100% Fair
Lanes 1995-1998
Chicago in fee Centers
TEXAS PROPERTIES:
Regal Center (11) 100% Fee 6.0 One-story 109,000 93% Berger
Allied 1995-1997
Dallas Warehouse
(7) Office buildings in operation are subject to mortgage financing
aggregating $3,164,677 as of December 31, 1994.
(8) Remaining term of 13 years plus two 10 year options.
(9) Remaining term of 32 years plus a 45 year renewal option.
(10) Ground Lease was purchased by BTR Realty, Inc. in August, 1993.
(11) Regal Center was sold on February 17, 1995 for $1,800,480,
generating a loss on the sale of approximately $370,000.
13<PAGE>
ITEM 2. Properties (Continued)
IV. DEVELOPMENT OPERATIONS
Leasable Per-
Principal
Name and Percentage of Type of land Area in square centage
Lease
Location ownership ownership acres Improvements feet leased
tenants expirations
Owings Mills 100% Fee 12.5 Neighborhood 125,000 76%
Giant
1998-2020
New Town Village Shopping Center
Food
Lakeside Blvd.
Owings Mills
V. UNDEVELOPED PROPERTIES
Percentage of Type of land Area in
Name and Location ownership ownership acres Zoning
MARYLAND PROPERTIES:
Dorsey Property 100% Fee 19.4
Commercial
Anne Arundel County
Gateway International III 100% Fee 6.5
Commercial
Anne Arundel County
Harford Property 100% Fee 3.0 Light
Industrial
(Adjacent to Harford Mall)
Harford County
North East Property 100% Fee 56.0
Commercial/
North East
Residential
Northwood Industrial Park 67% Fee 24.4
Industrial
Salisbury of Partnership
Pulaski Property 100% Fee 3.0
Industrial
Baltimore County
NORTH CAROLINA PROPERTIES:
Burlington Commerce Park(12)100% Fee 46.8
Commercial
Burlington
Hillsborough Crossing 100% Fee 13.9
Commercial
Hillsborough
(12) Lot #10, 1.2 Acres, at Burlington Commerce Park was sold on
January 6, 1995 for $40,000.
Management believes the Company's properties are adequately
covered by insurance.
ITEM 3
LEGAL PROCEEDINGS
In the ordinary course of business, the Company is involved in legal
proceedings. However, there are no material legal proceedings
presently pending against the Company.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
14
<PAGE>
PART II
ITEM 5
Market for the Registrant's Common Stock And Related Stockholder
Matters
MART's common shares of beneficial interest, par value $.01 per
share, ("shares"), are listed on the American Stock Exchange
(symbol: MRR), which reports high, low and last sales prices. The
table below lists high and low sales prices for MART for the periods
indicated.
1994 High Low
First Quarter 10 3/8 8 1/2
Second Quarter 9 3/4 8 7/8
Third Quarter 9 1/4 8 1/2
Fourth Quarter 9 1/4 7 3/8
1993 High Low
September 11 (Inception) - September 30 10 3/4 10 1/4
Fourth Quarter 11 9
Cash dividends paid to holders of MART's shares during the
periods indicated are as follows:
1994 Cash Dividend Paid
First Quarter $0.21
Second Quarter $0.21
Third Quarter $0.21
Fourth Quarter $0.22
Total 1994 $0.85
1993 Cash Dividend Paid
Fourth Quarter $0.05
For record shareholders of MART during the entire year, 1994, it
was determined that the $.85 per share dividend for 1994 is taxable
as follows:
Per Share
Ordinary Dividend - taxable as ordinary income $0.55
Capital Gain Distribution - taxable as capital gain $0.06
Non-taxable Distribution - return of capital
or taxable gain - (depending on a shareholder's
basis in MART shares) $0.24
Total Gross Dividend - 1994 $0.85
For record shareholders of MART during the entire year, 1993, it was
determined that the $.05 per share dividend for 1994 is taxable as
follows:
Per Share
Ordinary Dividend - taxable as ordinary income $0.05
On February 14, 1995, MART declared a quarterly cash dividend of
$.22 per share payable March 15, 1995 to shareholders of record
February 28, 1995.
The number of holders of record of the MART shares as of February
16, 1995 was 1,292.
15<PAGE>
ITEM 6
SELECTED FINANCIAL DATA
The following table sets forth the consolidated financial data for
the Company and should be read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in this
report. The table consists of the Consolidated Financial Statements
of Mid-Atlantic Realty Trust as of December 31, 1994 and December 31,
1993, and for the year ended December 31, 1993 and for the period
September 11, 1993 (commencement of operations) through December 31,
1993, and also includes the Consolidated Financial Statements of BTR
Realty, Inc. as of December 31, 1992, 1991, 1990 and for the periods
January 1, 1993 through September 10, 1993, and for the years ended
December 31, 1992, 1991, and 1990. Mid-Atlantic Realty Trust, a Real
Estate Investment Trust, was merged with BTR Realty, Inc. on
September 11, 1993. The consolidated financial data of BTR, the
predecessor company, are presented for comparative purposes.
Mid-Atlantic Realty Trust
|| ----------------------------------------------||
Year ended September 11,
1993 to || December 31, 1994 December
31, 1993 ||
||
Revenues $22,848,881 6,576,684
|| ============== ============
||
Net Earnings (Loss)
||
Before Cumulative
||
Effect of Change In
||
Accounting Principle and
||
Extraordinary Item $2,916,286 467,474
||
Cumulative Effect of Change
||
In Accounting Principle - -
|| -------------- ------------
||
Net Earnings (Loss) Before
||
Extraordinary Item 2,916,286 467,474
||
Extraordinary Item - -
|| -------------- ------------
||
Net Earnings (Loss) $2,916,286 467,474
|| ============== ============
||
|| Net Earnings (Loss) Per
||
Share Before Cumulative
||
Effect of Change In
||
Accounting Principle
||
and Extraordinary Item $0.46 0.07
|| Cumulative Effect of Change
||
In Accounting Principle - -
|| ------------- ------------
||
Net Earnings (Loss) Per
||
Share Before
||
Extraordinary Item $0.46 0.07
|| Extraordinary Item - -
||
------------- ------------
||
Net Earnings (Loss)
||
Per Share $0.46 0.07
||
============= ============
||
||
Weighted Average Shares
||
Outstanding,
||
Including Common
||
Share Equivalents (1) 6,291,407 6,291,407
||
============= ============
||
||
Total Assets $162,842,567 148,563,052
||
============= ============
||
Indebtedness:
||
Total mortgages, convertible
||
debentures, construction
||
loans and notes payable $133,390,553 116,494,372
||
============= ============
||
||
Net cash provided by
||
(used in) operating
||
activities $7,766,044 3,479,346
|| ============= ============
||
||
Cash Dividends
||
Paid Per Share $0.85 0.05
|| ============= ============
||
<PAGE>
BTR Realty, Inc.
------------------------------------------------
January 1, 1993
to September 10, Years ended December 31,
1993 1992 1991
1990
Revenues 15,912,211 22,655,133 22,779,812
20,366,006
Net Earnings (Loss)
Before Cumulative
Effect of Change In
Accounting Principle and
Extraordinary Item (2,057,106) (1,118,957) (4,688,646)
(6,374,172)
Cumulative Effect of Change
In Accounting Principle - 1,286,000 - -
------------------------------------------------
Net Earnings (Loss) Before
Extraordinary Item (2,057,106) 167,043 (4,688,646)
(6,374,172)
Extraordinary Item (548,323) - - -
------------------------------------------------
Net Earnings (Loss) (2,605,429) 167,043 (4,688,646)
(6,374,172)
================================================
Net Earnings (Loss) Per Share
Before Cumulative
Effect of Change In
Accounting Principle and
Extraordinary Item (0.24) (0.13) (0.55)
(0.74)
Cumulative Effect of Change In
Accounting Principle - 0.15 - -
------------------------------------------------
Net Earnings (Loss) Per
Share Before
Extraordinary Item (0.24) 0.02 (0.55)
(0.74)
Extraordinary Item (0.06) - - -
------------------------------------------------
Net Earnings (Loss)
Per Share (0.30) 0.02 (0.55)
(0.74)
================================================
Weighted Average Shares
Outstanding,
Including Common
Share Equivalents (1) 8,512,718 8,503,916 8,527,036
8,600,395
================================================
Total Assets 147,869,512 153,212,133 159,879,954
166,319,506
================================================
Indebtedness:
Total mortgages,
convertible
debentures,
construction
loans and notes
payable 150,666,971 149,168,632 153,024,838
151,677,634
================================================
Net cash provided by
(used in) operating
activities 4,129,635 1,249,138 (961,065)
1,091,144
================================================
Cash Dividends
Paid Per Share 0.58 - -
0.08
================================================
(1) In September, 1993, MART issued 3,450,000 shares in its
initial public offering, and as part of the merger, exchanged for
every 3 shares of BTR, 1 share of MART totaling approximately
8,526,000 shares of BTR for approximately 2,842,000 shares of MART.
Continued
16
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA - CONTINUED
Pro Forma Data
The following sets forth summary financial data on a pro forma
basis. Management believes the following data should be used as a
supplement to the historical statements of operations. The data
should be read in conjunction with the historical financial
statements and the Notes thereto for MART included in Item 8. The
pro forma financial data is unaudited and is not necessarily
indicative of the results which actually would have occurred if the
transactions had been consummated at January 1, 1992, nor does it
purport to represent the financial position and results of operations
for future periods. The following assumes the MART public offering
took place on January 1, 1992.
Summary Pro Forma Financial Data
In thousands, except per share data
Years ended December 31,
1994 1993
1992
ACTUAL PRO
FORMA
Revenues $22,849 20,777
20,051
Earnings $2,916 1,217
494
Earnings per share $0.46 0.19
0.08
Funds from operations (FFO)(1):
Primary $6,797 6,034
5,398
Fully diluted $11,400 10,609
9,973
Weighted average number of shares
outstanding:
Primary 6,291 6,291
6,291
Fully diluted 12,005 12,005
12,005
(1) Funds from operations as defined by the National Association
of Real Estate Investment Trusts, Inc. (NAREIT) -funds from
operations means net income (computed in accordance with generally
accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures. FFO does not represent cash flows from
operations as defined by generally accepted accounting principles
(GAAP). FFO is not indicative that cash flows are adequate to fund
all cash needs and is not to be considered as an alternative to net
income as defined by GAAP. The presentation of FFO is not normally
included in financial statements prepared in accordance with GAAP.
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited combined quarterly results of operations for MART
for 1994 are summarized as follows:
Quarter ended
1994 March 31, June 30, September 30, December
31,
Revenues $5,556,016 5,868,272 5,444,666
5,979,927
Net earnings $ 700,334 750,505 317,461
1,147,986
=================================================
Net earnings per share $0.11 0.12 0.05
0.18
=================================================
The unaudited combined quarterly results of operations for MART
and BTR for 1993 are summarized as follows:
Quarter ended
>--1/1/93(BTR)-9/10/93---<>9/11/93-(MART)12/31/93<
1993 March 31, June 30, September 30, December
31,
Revenues $5,267,903 5,710,208 6,024,780
5,486,004
(Loss) earnings before
extraordinary item ($383,355)(1,154,053) (481,077)
428,853
Extraordinary item - early
extinguishment of debt - - (548,323) -
--------------------------------------------------
Net (loss) earnings ($383,355)(1,154,053) (1,029,400)
428,853
==================================================
(Loss) earnings per
share before
extraordinary item ($0.05) (0.13) (0.05)
0.06
Extraordinary item - early
extinguishment of debt - - (0.06) -
-------------------------------------------------
Net (loss) earnings
per share ($0.05) (0.13) (0.11)
0.06
=================================================
Quarterly results are influenced by a number of factors including
timing of settlements of property sales, completion of operating
projects, write-offs of unrecoverable development costs, and tax
benefits.
17
<PAGE>
ITEM 7
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the Company's operations for the
year ended December 31, 1994, with the year ended December 31, 1993,
which includes the summation of the Company's and BTR's results of
operations. The discussion also compares the operations for the year
ended December 31, 1993, which includes the summation of the
Company's and BTR's results of operations, with the operations of BTR
for the year ended December 31, 1992.
Comparison of 1994 to 1993
Rental revenues increased by $1,209,000, or 6%, to $21,891,000 for
the year ended December 31, 1994 from $20,682,000 for the year ended
December 31, 1993. Net increases in occupancy and CPI rental rates
resulted in rental increases of approximately $1,125,000.
Additionally, two acquisitions, Timonium Mall in October, 1993 and
Easton Shoppes in September, 1994, contributed to rental increases of
$600,000 and $374,000, respectively. The rental increases were offset
by a $732,000 loss of rental attributable to operating properties
sold or discontinued in 1993, a $74,000 loss of rental attributable
to the redevelopment of York Road Plaza in 1994, and $84,000 in other
net rental decreases.
Sales of residential property decreased by $1,032,000 due to the
discontinuation and final sellout of BTR's residential assets in
July, 1993.
Gains on sales of properties held for sale increased by $50,000 to
$81,000 in 1994 from $31,000 in 1993 due to higher profit margins on
properties sold in 1994.
Other income increased by $133,000 to $877,000 in 1994 from
$744,000 in 1993 primarily as a result of $424,000 in interest income
increases from partners' notes receivables added in September, 1993,
and increases due to a $166,000 loss included in BTR's other income
in September, 1993 related to a provision for losses on notes
receivable. The increases were offset by decreases due to a $210,000
decrease in income from a lease termination payment recorded as other
income in December, 1993 and $247,000 in net decreases primarily
related to higher tenant lease cancellation charges & fees in 1993.
As a result of the above changes, total revenues increased by
$360,000 to $22,849,000 in 1994 from $22,489,000 in 1993.
Interest expense decreased by $2,011,000 to $10,343,000 in 1994
from $12,354,000 in 1993 primarily due to the payoff in September,
1993 of higher fixed rate mortgage debt which was replaced by the
sale of lower interest convertible subordinated debentures and the
sale of common shares. Approximately $1,839,000 in interest expense
decreases can be attributable to the payoff of mortgage debt and
replacement with debentures and common shares. A decrease in interest
expense of $409,000 can be attributable to the discontinuation of
operations in September, 1993 of a residential operating property
sold in February, 1994. Other net decreases of $100,000 in interest
expense are generally related to projects terminated in 1993 and
principal paydowns. Additionally, the interest expense decreases were
offset by increases from the two new acquisitions, Timonium Mall in
October, 1993 and Easton Shoppes in September, 1994, which
contributed to interest increases of $106,000 and $231,000,
respectively.
Depreciation and amortization increased by $347,000 to $5,083,000
in 1994 from $4,736,000 in 1993, primarily due to the following
increases: amortization of debentures sold in September, 1993,
$204,000, new acquisitions - Timonium, $99,000, and Easton, $57,000,
new tenant improvements Gateway I and II, $64,000, and new
redevelopment, Rolling Road Plaza $28,000. The increases were offset
by a $111,000 decrease in depreciation expense due to the
discontinuation of operations in September, 1993 of a residential
property sold in February, 1994.
(Continued)
18
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Comparison of 1994 to 1993 - Continued
Operating expenses decreased by $417,000 to $3,337,000 in 1994
from $3,754,000 in 1993, primarily due to the discontinuation in
September, 1993 of a residential operating property sold in February,
1994 which decreased operating expenses by $321,000. In addition,
operating expense decreased $117,000 as a result of the sale of
certain projects, Harbour Island and Plantation Bowl, which were sold
in July, 1993 and January, 1994, respectively. Some operating expense
decreases were due to projects with additional occupancy in 1994,
which included Columbia Plaza, $68,000, Sedona, $57,000, and McRay,
$49,000. Other projects had operating decreases due to various gross
expense decreases, such as Burke Town, $43,000 (primarily legal fees
decreased) and York Road Plaza $28,000 (primarily real estate taxes
decreased). These major decreases in operating expenses were offset
by increases in operating expenses primarily related to the new
acquisition of Timonium of $173,000 and additional legal fees related
to the Smoketown Plaza project of $101,000.
Cost of residential property sold decreased by $1,008,000 due to
the discontinuation of the residential sales in July, 1993.
General and administrative expenses increased by $397,000 to
$1,751,000 in 1994 from $1,354,000 in 1993 due to an increase of
$120,000 in payroll expenses which was due to the adoption, in 1994,
of an incentive based compensation plan. In addition, payroll
expenses increased by $158,000 primarily due to fewer payroll costs
capitalized in 1994. Other increases in general and administrative
expenses were related to additional shareholder related costs of
$52,000, an increase in 401K Plan expense of $45,000 due to a one
time downward expense adjustment in December, 1993, and various other
net increases totaling $104,000. The increases were offset by
decreases in general and administrative expenses related to lower
outside professional fees of $33,000 and a decrease of $49,000 in
stock compensation expense.
Unrecoverable development costs decreased by $1,279,000 due to
write-downs in 1993 to net realizable value of two residential
properties under contract of sale pursuant to a divestiture plan and
the write-down in 1993 to net realizable value of a property held for
sale.
Minority interest expense increased by $539,000 to $541,000 in
1994 from $2,000 in 1993 generally due to higher earnings in minority
interest ventures.
Earnings from operations increased by $3,792,000 to $1,794,000 in
1994 from a loss from operations of $1,998,000 in 1993. At September
10, 1993, BTR recorded an extraordinary loss of $548,000 due to an
early extinguishment of debt. A net income tax benefit of $408,000
was recognized by BTR for the period January 1 to September 10, 1993.
The 1993 extraordinary item and income tax benefit for the combined
year ended December 31, 1993, offset the loss from operations for the
period resulting in a $2,138,000 net loss for the combined year ended
1993 for BTR and the Company. For the year ended December 31, 1994,
the Company recorded a gain on the sales of operating properties of
$1,122,000, and, when combined with the earnings from operations for
the period, resulted in net earnings of $2,916,000 for the year ended
December 31, 1994.
(Continued)
19
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Comparison of 1993 to 1992
Rental revenues increased by $465,000, or 2%, to $20,682,000 for
the year ended December 31, 1993 from $20,217,000 for the year ended
December 31, 1992. Net increases in occupancy and CPI rental rates
resulted in rental increases of approximately $1,255,000, and the
acquisition of Timonium Mall contributed to a rental increase of
$149,000, which were offset by a $433,000 loss of rental attributable
to operating properties sold in 1992 or discontinued in 1993, a
$450,000 loss of rental due to vacancies and reserves, and other
rental changes.
Sales of residential property in BTR decreased by $89,000 to
$1,032,000 in 1993 from $1,121,000 in 1992 due to the discontinuation
and final sellout of residential assets in July, 1993.
Gains on properties held for sale decreased in BTR by $250,000 to
$31,000 in 1993 from $281,000 in 1992 due to higher profit margins on
properties sold in 1992.
Other income decreased by $292,000 to $744,000 in 1993 from
$1,036,000 in 1992 primarily as a result of income of $329,000 from
the sale of development rights and $119,000 of income from bankruptcy
settlement in 1992 and a $166,000 loss included in BTR's other income
in September, 1993 related to a provision for losses on notes
receivable. The decreases were offset by increases due to a $210,000
increase in income from a lease termination payment in December,
1993 and $187,000 in interest income increases from partners notes
receivables added in September, 1993, as well as other minimal
changes in other income.
As a result of the above changes total revenues decreased by
$166,000 to $22,489,000 in 1993 from $22,655,000 in 1992.
Interest expense decreased by $1,678,000 to $12,354,000 in 1993
from
$14,032,000 in 1992 primarily due to the payoff in September, 1993 of
higher fixed rate mortgage debt which was replaced by the sale of
lower interest convertible subordinated debentures and the sale of
common shares, as well as a decrease in interest expense attributable
to the refinancing in 1992 and discontinuation of operations in 1993
of a residential operating property and to favorable reduction in
interest rates. Approximately $1,155,000 in interest expense
decreases for the period September 10, 1993 through December 31, 1993
can be attributable to the payoff of mortgage debt and replacement
with debentures and common shares. A decrease in interest cost of
$304,000 can be attributable to the refinancing in 1992 and
discontinuation of operations in September, 1993 of a residential
operating property sold in February, 1994.
Depreciation and amortization decreased by $42,000 to $4,736,000
in 1993 from $4,778,000 in 1992, primarily due to the sale in 1992 of
two operating properties and the discontinuation in September, 1993
of the residential operating property sold in February, 1994.
Operating expenses decreased by $232,000 to $3,754,000 in 1993
from
$3,986,000 in 1992, primarily due to the sale in 1992 of two
operating
properties and the discontinuation in September, 1993 of the
residential
operating property sold in February, 1994.
Cost of residential property sold decreased by $60,000 to
$1,008,000 in 1993 from $1,068,000 in 1992 due to the discontinuation
of the residential sales in July, 1993.
General and administrative expenses increased by $131,000 to
$1,354,000 in 1993 from $1,223,000 in 1992 due to an increase in
insurance expense of $35,000 and an increase of $318,000 in stock
compensation expense resulting from a $269,000 adjustment to accrued
expense in 1992, due to a decrease in the value of BTR stock. The
increases were offset by a decrease in professional fees of $36,000,
a decrease in net payroll costs of $107,000, a decrease of $50,000 in
401K Plan expenses and changes in other categories.
Unrecoverable development costs increased by $1,017,000 in BTR to
$1,279,000 in 1993 from $262,000 in 1992 due to write-downs to net
realizable value of two residential properties under contract of sale
pursuant to a divestiture plan and the write-down in 1993 to net
realizable value of a property held for sale.
(Continued)
20
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Comparison of 1993 to 1992 - Continued
Minority interest decreased by $158,000 to an expense of $2,000 in
1993 from a benefit of $156,000 in 1992 generally due to lower losses
in minority interest ventures.
Loss from operations decreased by $540,000 to $1,998,000 in 1993
from
$2,538,000 in 1992. At January 1, 1992, BTR recognized the positive,
cumulative effect of a change in accounting for income taxes of
$1,286,000. At September 10, 1993, BTR recorded an extraordinary loss
of $548,000 due to an early extinguishment of debt. A net income tax
benefit of $408,000 and $127,000 was recognized by BTR for the
periods ended 1993 and 1992, respectively. The 1992 accounting
change, combined with a 1992 $48,000 loss on the sale of operating
properties, a $1,340,000 gain on fire damage in 1992, the 1993
extraordinary item and income tax benefits for both periods, offset
the loss from operations for the periods, resulting in net earnings
of $167,000 for the year ended 1992 and a $2,138,000 net loss for the
combined year ended 1993 for BTR and the Company.
Cash Flow comparison
The following discussion compares the statements of cash flows of
the Company for the year ended December 31, 1994 with the statements
of cash flows for the year ended December 31, 1993, which includes
the summation of the Company's and BTR's cash flows. The discussion
also compares the statements of cash flows for the year ended
December 31, 1993, which includes the summation of the Company's and
BTR's cash flows, with the statements of cash flows of BTR for the
year ended December 31, 1992.
Cash Flow comparison of 1994 to 1993
Net cash flow provided by operating activities increased by
$157,000, to $7,766,000 for the year endedDecember 31, 1994 from
$7,609,000 for the year ended December 31, 1993. Net cash flow
increased generally due to the following: An increase in net earnings
of $5,054,000 (described above), an increase of $886,000 due to
increases in depreciation and minority interest expense adjustments,
an increase of $611,000 due to increased lease cancellation fees deferred in
1994, an increase of $461,000 due to deferred income tax
liability for 1993 (See Note L), and the balance of the increases,
$31,000, was an increase in operating assets. The increases were
offset by decreases of $4,138,000 related to reductions in operating
liabilities. Other major decreases in net cash flow were due to
$1,279,000 in unrecoverable development cost decreases, a $1,122,000
decrease related to the gain on the sales of operating properties in
1994, and other decreases totaling $347,000 primarily related to the
extraordinary loss on early extinguishment of debt in 1993.
Net cash flow used in investing activities increased by
$13,680,000, to $19,630,000 from $5,950,000. The increase was
primarily a result of the following: acquisitions and additions to
properties which resulted in an increase of $14,644,000 (primarily
the Shoppes at Easton acquisition in September, 1994), a decrease in
cash flow used in investing activities related to an increase in
proceeds from sales of properties of $1,617,000 (primarily due to
sales of land held for sale and operating properties in 1994), and an
increase of $653,000 related to an increase in payments to minority
partners in 1994.
Net cash flow provided by or used in financing activities increased
by $12,591,000, to net cash provided by financing activities of
$11,521,000 from net cash used in financing activities of $1,070,000.
The increase was primarily three major net cash increases: (1)
$18,369,000 in cash increases due to net additions to notes payable
primarily in 1994 for the acquisition of the Shoppes at Easton in
September, 1994 and the land for the new Owings Mills New Town
shopping center under development purchased in December, 1994, (2)
net reductions in 1993 in construction loans payable, and mortgages
payable of $84,560,000, (3) 1993 additions to deferred debenture
costs of $3,063,000. The increases were offset by a decrease in cash
flow provided by financing activities resulting from the net cash
flow provided by the net proceeds in 1993 from the sale of debentures
and common shares of $93,453,000. Other net increases for the period
totaled $52,000.
(Continued)
21
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Cash Flow comparison - Continued
Cash Flow comparison of 1993 to 1992
Net cash flow provided by operating activities increased by
$6,360,000, to $7,609,000 for the year ended December 31, 1993 from
$1,249,000 for the year ended December 31, 1992. Net cash flow
increased generally due to the following: An increase in operating
liabilities of $4,634,000 primarily consisting of $1,394,000 in 1993
accrued interest expense on newly issued debentures (See Note K), an
increase of $1,865,000 due to a reduction in deferred income tax
liability for 1993 and 1992 (See Note L), and the balance of the
increase, $1,375,000, was primarily a decrease in 1992 in accounts
payable and accrued expenses primarily due to a reduction in 1992
development activity. Other net cash flow increases of $2,626,000
were due to two non-recurring events in 1992, a cumulative effect of
change in accounting principle, and a gain on fire damage of an
operating property. Another major increase in net cash flow was due
to $1,017,000 in unrecoverable development cost increases (described
above). The increases were offset by a decrease in net earnings of
$2,305,000 (described above) and other changes in net cash flow.
Net cash flow used in or provided by investing activities decreased
by
$8,532,000, to net cash used in investing activities of $5,950,000
from net cash provided by investing activities of $2,582,000. The
decrease was primarily a result of the following: an additions to
properties increase of $4,586,000 (primarily the Timonium Mall
purchase in October, 1993). A reduction in proceeds from sales of
properties of $3,150,000 (primarily due to more sales of land held
for sale and residential property in 1992), and a reduction due to
the transfer or sale of investments in 1992 of $626,000.
Net cash flow used in financing activities decreased by $2,861,000,
to
$1,070,000 from $3,931,000. The decrease was primarily due to the net
cash flow provided by the net proceeds from the sale of debentures
and common shares of $93,453,000 offset by 3 major net cash uses: (1)
net reductions in construction loans payable, and mortgages payable
of $82,387,000, (2) dividends paid in 1993 of $5,259,000, and (3)
1993 additions to deferred debenture costs of $3,063,000.
Liquidity and Capital Resources
Historically, BTR's principal source of capital consisted of
acquisition and development loans, with recourse to the borrower,
which funded land and construction costs. As development projects
were completed, acquisition and development loans were replaced with
permanent mortgages which typically bore higher rates of interest but
were secured by the project only, with no recourse to the borrower.
BTR also utilized bank lines and internal funds for equity in its
real estate projects, replacing such sources with permanent financing
when rates and terms were deemed favorable. BTR had paid its
shareholders a modest dividend, retaining excess cash flows to invest
in additional projects. In 1990, the dividend was discontinued and
cash flows in excess of operating requirements were used for paying
or curtailing outstanding debt, primarily bank lines and construction
and acquisition loans. BTR improved its liquidity in September, 1993
with the conversion into MART. The initial public share and debenture
offering on September 10, 1993 replaced higher fixed rate mortgage
debt with lower interest convertible subordinated debentures and the
sale of common shares.
In order to qualify as a REIT for Federal income tax purposes, MART
is
required to pay dividends to its shareholders of at least 95% of its
REIT taxable income. MART intends to pay these dividends from
operating cash flows which have increased due to the reduction in
debt service resulting from the repayment of indebtedness with the
proceeds of the offering, and from future growth in rental revenues
and other sources, such as the leasing of currently vacant space and
development of undeveloped parcels. While MART intends to distribute
to its shareholders a substantial portion of its cash flows from
operating activities, MART also intends to retain or reserve such
amounts as it considers necessary from time to time for the
acquisition or development of new properties as suitable
opportunities arise and for the expansion and renovation of its
shopping centers. Also, MART currently has and will continue to
maintain a line of credit of at least $35,000,000 from
a commercial bank (See Footnote I).
The Company anticipates material commitments for capital
expenditures
to include, in the next two years, the redevelopment or development
of five Baltimore area projects at an estimated cost between $14 and
$25 million. The Company expects to fund the development projects and
other capital expenditures with (i) available net cash flows from
operating activities, (ii) if necessary, construction loan financing,
(iii) if necessary, long term mortgage financing on unencumbered
operating properties, and (iv) if necessary, the use of its
$35,000,000 line of credit from a commercial bank (See Footnote I).
22 (Continued)
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
COMPANY)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Liquidity and Capital Resources - Continued
It is management's intention that MART continually have access to
the
capital resources necessary to expand and develop its business.
Management cannot practically quantify MART's 1995 cash requirements,
but, expects to meet its short-term liquidity requirements generally
through available net cash flow provided by operations and short-term
borrowings. To meet its long-term liquidity requirements, MART
intends to obtain funds through additional equity offerings or
long-term debt financing in a manner consistent with its intention to
operate with a conservative debt capitalization policy. MART
anticipates that the cash flow available from operations, together
with cash from borrowings, will be sufficient to meet the capital and
liquidity needs of MART in both the short and long term.
Changes in Accounting Principles
Effective April 1, 1994 the Company adopted a new accounting
treatment regarding lease cancellation fees received from tenants who
want to discontinue their remaining lease term obligations. Prior to
April 1, 1994, the lease termination payments for major tenants were
recognized as other income in the period when the termination
agreement was executed. Under the new treatment, the entire amount of
the cancellation or termination fee on the date of the lease
termination is deferred and then amortized into income on a straight-line
basis over the remaining original lease term as minimum rent.
The Company believes that this change is preferable since it provides
a better matching of revenues and expenses. During 1994,
approximately $687,000 of termination fees were deferred, and $56,000
was amortized.
Effective January 1, 1995 the Company changed its accounting
treatment for percentage rent. Percentage rent revenues are based on
store sales for certain periods and are charged according to a
percentage over a breakpoint amount of sales for the period according
to the lease agreement. During the year ended December 31, 1994 and
previously, percentage rent was recognized as rental revenues in the
period when the actual percentage rent was billed and received. The
new method will recognize percentage rent as rental revenues in the
period when the actual percentage rent is earned. The Company will
begin on January 1, 1995 estimating the percentage rent earned from
major tenants and record the amounts monthly as receivable. The
cumulative effect of this change on January 1, 1995, was
approximately $675,000.
Inflation
The majority of all of the leases at the shopping center properties
contain provisions which may entitle MART to receive percentage rents
based on the tenants' gross sales. Such percentage rents ameliorate
the
risk to MART of the adverse effects of inflation. Percentage rent
received by BTR and MART remained stable in the year ended December
31, 1994 compared to the year ended December 31, 1993. If a recession
were to begin and continue for a prolonged time, funds from
operations could decline as some tenants may have trouble meeting
their lease obligations. Most of the leases at the properties require
the tenants to pay a substantial share of operating expenses, such as
real estate taxes, insurance and common area maintenance costs, and
thereby reduce MART's exposure to increased costs. In addition, many
of the leases at the properties are for terms of less than 10 years,
which may enable MART to seek increased rents upon renewal of
existing leases if rents are below the then-existing market value.
Stock Repurchase Plan
On February 14, 1995 the MART Board of Trustees approved a stock
repurchase plan. Under this plan, MART may, from time to time,
repurchase shares of its common stock either in the open market or in
privately negotiated transactions upon such prices and other terms as
the Company deems appropriate. The aggregate number of shares
authorized for repurchase will not exceed 5% of the number of shares
currently outstanding, or approximately 310,000.
23
<PAGE>
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MID-ATLANTIC REALTY TRUST & SUBSIDIARIES, &
BTR REALTY, INC. & SUBSIDIARIES (PREDECESSOR COMPANY)
Financial Statements:
Independent auditors' report ......................25
Consolidated Balance Sheets -
as of December 31, 1994 and 1993 ................26
Consolidated Statements of Operations -
For the Year ended December 31, 1994 and the
Periods ended December 31, 1993 and September 10,
1993 and for the Year ended December 31, 1992 ...27
Consolidated Statements of Shareholders' Equity -
For the Year ended December 31, 1994 and the
Periods ended December 31, 1993 and
September 10, 1993 and for the Year ended
December 31, 1992 ...............................28
Consolidated Statements of Cash Flows -
For the Year ended December 31, 1994 and the
Periods ended December 31, 1993 and September 10,
1993 and for the Year ended December 31, 1992 ...29
Notes to Consolidated Financial Statements ........31
Exhibits, Financial Statement Schedule, and Reports on Form 8-K are
included in Part IV - Item 14.
Schedule:
Schedule VI - Real Estate and Accumulated
Depreciation ..................................42
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Trustees and Shareholders
Mid-Atlantic Realty Trust :
We have audited the accompanying consolidated balance sheets of
Mid-Atlantic Realty Trust and subsidiaries as of December 31, 1994
and 1993 and the related consolidated statements of operations,
shareholders' equity and cash flows for the year ended December 31,
1994, and the period ended December 31, 1993 and the consolidated
statements of operations, shareholders' equity and cash flows of BTR
Realty, Inc. and subsidiaries for the period ended September 10, 1993
and for the year ended December 31, 1992. In connection with our
audits of the consolidated financial statements, we have also audited
the financial statement schedule as listed in the accompanying index.
These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Mid-Atlantic Realty Trust and subsidiaries as of December
31, 1994 and 1993, and the results of their operations and their cash
flows for the year ended December 31, 1994, and for the period ended
December 31, 1993 and the results of BTR Realty, Inc. and
subsidiaries' operations and their cash flows for the period ended
September 10, 1993 and for the year ended December 31, 1992, in
conformity with generally accepted accounting principles. Also in
our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in note A to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1992 to
adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Also, as discussed in note A, the Company changed its
method of accounting for lease termination payments in 1994.
KPMG PEAT MARWICK LLP
Baltimore, Maryland
February 16, 1995
25
<PAGE>
MID-ATLANTIC REALTY TRUST & SUBSIDIARIES
Consolidated Balance Sheets
As of
December 31,
1994 1993
ASSETS
Properties:
Operating properties
(Notes C and D)............$ 140,062,761
127,713,850 Development operations
(Note E)................... 6,354,947
2,128,434 Property held for
development or sale ....... 8,630,465
9,169,232 -------------
-------------
155,048,173
139,011,516
Cash and cash equivalents .... 344,522
687,108 Notes and accounts
receivable - tenants
and other (Note F).......... 1,688,194
2,357,791 Due from joint venture
partners ................... 1,937,019
1,701,708 Prepaid expenses and deposits. 402,283
403,075 Refundable income taxes ...... -
24,045 Net assets of properties to
be sold (Note G) ........... -
449,219
Deferred financing costs
(Note H) ................... 3,422,376
3,928,590 -------------
------------- $ 162,842,567
148,563,052
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable (Note I).......$ 20,139,413
2,800,000 Accounts payable and accrued
expenses (Note J).......... 3,534,277
4,377,411 Mortgages payable (Note D) .. 53,251,140
53,694,372 Convertible subordinated
debentures (Note K)........ 60,000,000
60,000,000
Deferred income ............. 730,466
133,468 Minority interest in
consolidated joint ventures 330,893
250,432
Income taxes currently payable -
state (Note L).......... -
19,581 -------------
- - ------------ 137,986,189
121,275,264
Commitments (Notes M & O)
Shareholders' Equity (Note N):
Preferred shares of beneficial
interest, $.01 par value, authorized
2,000,000 shares, issued and
outstanding, none .......... - -
Common shares of beneficial
interest, $.01 par value,
authorized 100,000,000, issued and
outstanding, 6,291,407...... 62,914
62,914 Additional paid-in capital .. 42,602,505
42,602,505 Accumulated deficit ......... (17,809,041)
(15,377,631)
------------- -------------
24,856,378
27,287,788 -------------
------------- $ 162,842,567
148,563,052 =============
=============
See accompanying notes to consolidated financial statements.
26
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
Consolidated Statements of Operations
Mid-Atlantic Realty Trust || BTR Realty, Inc.
Year Ended September 11 to||January 1 to Year Ended
December 31, December 31, ||September 10, December
31, 1994 1993 || 1993
1992
||
REVENUES: ||
Rentals ........$ 21,890,446 6,061,175 || 14,620,418
20,217,251 Gain on sales of ||
properties held ||
for sale, net 81,313 - || 31,501
281,511 Sales of residential ||
property ..... - - || 1,032,000
1,120,750 Other (Note P) 877,122 515,509 || 228,292
1,035,621 ------------ ----------- ||------------
------------ 22,848,881 6,576,684 ||
15,912,211 22,655,133 ------------ -----------
||------------ ------------
COSTS AND EXPENSES: ||
Interest ....... 10,342,725 3,076,060 || 9,278,198
14,032,352 Depreciation and ||
amortization of property ||
and improvements 5,083,384 1,502,449 || 3,233,530
4,778,432 Operating ...... 3,336,415 1,104,193 || 2,649,341
3,985,439 General and ||
administrative 1,751,101 300,625 || 1,053,295
1,223,319 Cost of residential ||
property sold . - - || 1,008,475
1,067,806 Unrecoverable ||
development costs - - || 1,278,817
262,147 ------------ ----------- ||------------
- - ------------ 20,513,625 5,983,327 ||
18,501,656 25,349,495 ------------ -----------
||------------ ------------
EARNINGS (LOSS) FROM ||
OPERATIONS BEFORE ||
MINORITY INTEREST 2,335,256 593,357 || (2,589,445)
(2,694,362) Minority interest ||
(expense) benefit (540,744) (125,883) || 124,129
156,460 ------------ ----------- ||------------
- - ------------
EARNINGS (LOSS) FROM ||
OPERATIONS ..... 1,794,512 467,474 || (2,465,316)
(2,537,902) Gain on Fire ||
Damage ......... - - || -
1,340,000
Gain (loss) on ||
sales of operating ||
properties 1,121,774 - || -
(47,573) ------------ ----------- ||------------
- - ------------
EARNINGS (LOSS) BEFORE INCOME ||
TAXES, CUMULATIVE EFFECT OF ||
CHANGE IN ACCOUNTING ||
PRINCIPLE & EXTRAORDINARY ||
ITEM 2,916,286 467,474 || (2,465,316)
(1,245,475)
Income tax benefit, ||
net (Note L) .. - - || 408,210
126,518 ------------ ----------- ||------------
- - ------------
EARNINGS (LOSS) BEFORE ||
CUMULATIVE EFFECT OF ||
CHANGE IN ACCOUNTING ||
PRINCIPLE AND ||
EXTRAORDINARY ||
ITEM ........... 2,916,286 467,474 || (2,057,106)
(1,118,957) Cumulative effect ||
of change in accounting ||
for income taxes - - || -
1,286,000
------------ ----------- ||------------ ------------
EARNINGS (LOSS) ||
BEFORE EXTRAORDINARY ||
ITEM ........... 2,916,286 467,474 || (2,057,106)
167,043 Extraordinary item - ||
Loss on early ||
extinguishment ||
of debt ........ - - || (548,323) -
------------ ----------- ||------------ ------------
NET EARNINGS ||
(LOSS) .........$ 2,916,286 467,474 || (2,605,429)
167,043 ============ =========== ||============
============
||
Earnings (loss) per share ||
before cumulative effect ||
of change in accounting ||
principle and extraordinary ||
item ...........$ 0.46 0.07 || (0.24)
(0.13) Cumulative effect of ||
change in accounting ||
principle - - || -
0.15
------------ ----------- ||------------ ------------
Earnings (loss) per ||
share before extraordinary ||
item ............ 0.46 0.07 || (0.24)
0.02 Extraordinary item - ||
early extinguishment ||
of debt ........ - - || (0.06) -
------------ ----------- ||------------ ------------
NET EARNINGS (LOSS) ||
PER SHARE ......$ 0.46 0.07 || (0.30)
0.02 ============ =========== ||============
============
See accompanying notes to consolidated financial statements.
27
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1994, 1993 and 1992
Retained
Additional Earnings Total
Common Par Paid-in (Accumulated
Shareholders' Shares Value Capital
Deficit) Equity
BTR REALTY, INC.
BALANCE,
January 1,
1992 8,503,916 $85,039 9,078,718 (8,147,270)
1,016,487
Net earnings - - - 167,043
167,043
----------- -------- ----------- ------------ -----------
BALANCE,
December 31,
1992 8,503,916 85,039 9,078,718 (7,980,227)
1,183,530
----------- -------- ----------- ------------ -----------
Stock issued through
the exercise of
options pursuant to
the BTR stock
compensation
plan 78,286 783 224,475 -
225,258 Stock canceled for
repayment of a note
receivable from
a former
employee (56,554) (566) (176,485) -
(177,051)
Dividend Paid -
$.58 per share - - - (4,944,879)
(4,944,879)
Net loss - - - (2,605,429)
(2,605,429)
----------- -------- ----------- ------------ -----------
BALANCE,
September 10,
1993 8,525,648 85,256 9,126,708 (15,530,535)
(6,318,571)
----------- -------- ----------- ------------ -----------
========================================================================
MID-ATLANTIC REALTY TRUST
Conversion of 3 shares
of BTR for 1 share of
MART (5,683,765) (56,837) 56,837 - -
Acquisition of
Fractional
Shares (476) (5) (5,024) -
(5,029)
Initial sale of
Common Shares of
Beneficial
Interest 3,450,000 34,500 33,423,984 -
33,458,484 Dividend Paid -
$.05 per share - - - (314,570)
(314,570)
Net Earnings - - - 467,474
467,474
BALANCE,
December 31,
1993 6,291,407 62,914 42,602,505 (15,377,631)
27,287,788
Dividends Paid -
$.85 per share - - - (5,347,696)
(5,347,696)
Net Earnings - - - 2,916,286
2,916,286
----------- -------- ------------ ------------ -----------
BALANCE,
December 31,
1994 6,291,407 $62,914 42,602,505 (17,809,041)
24,856,378
=========== ======== ============ ============
===========
See accompanying notes to consolidated financial
statements.
28
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
Consolidated Statements of Cash Flows
Mid-Atlantic Realty Trust || BTR Realty, Inc.
Year Ended September 11 to||January 1 to Year
Ended
December 31, December 31, ||September 10, December
31, 1994 1993 || 1993
1992
||
Cash flows from ||
operating activities: ||
Net earnings ||
(loss) $2,916,286 467,474 || (2,605,429)
167,043
Adjustments to reconcile ||
net earnings (loss) ||
to net cash provided ||
by operating activities: ||
Depreciation and ||
amortization 5,083,384 1,502,449 || 3,233,530
4,778,432 Minority interest ||
in earnings (loss), ||
net ......... 540,744 125,883 || (124,129)
(156,460) (Gain) loss on sales ||
of operating ||
properties .(1,121,774) - || -
47,573 Gain on sales of ||
residential properties ||
and properties held ||
for sale, net (81,313) - || (7,976)
(334,455)
Unrecoverable ||
development ||
costs - - || 1,278,817
262,147 Loss on early ||
extinguishment ||
of debt - ||
capitalized .. - - || 273,308 -
Deferred income ||
taxes benefit .. - - || (460,570)
(118,000)
Gain on fire damage of ||
operating ||
property - - || -
(1,340,000)
Cumulative effect of ||
change in accounting ||
principle ... - - || -
(1,286,000)
Stock compensation ||
plan accrual .. - - || -
(268,900) Changes in operating ||
assets and liabilities: ||
Decrease in operating ||
assets .... 694,434 108,480 || 555,067
869,252 Increase (decrease) ||
in deferred rental ||
income ..... 610,678 (974,173) || 974,173 -
(Decrease) increase ||
in operating ||
liabilities (876,395) 2,249,233 || 1,012,844
(1,371,494) ----------- ------------ || -----------
----------- Total ||
adjust- ||
ments... 4,849,758 3,011,872 || 6,735,064
1,082,095 ----------- ------------ || -----------
----------- NET CASH PROVIDED BY ||
OPERATING ||
ACTIVITIES 7,766,044 3,479,346 || 4,129,635
1,249,138 ----------- ------------ || -----------
----------- ||
Cash flows from ||
investing activities: ||
Additions to ||
properties (22,197,577) (6,173,532) || (1,379,710)
(2,967,398) Proceeds from ||
sales of ||
properties. 3,263,444 - || 1,646,748
4,796,907
Payments to ||
minority partners ||
....... (792,394) (256,009) || (117,382) (202,433)
Receipts from ||
minority partners ||
....... 96,800 42,253 || 287,606 350,272
Purchases of ||
investments.. - - || -
(21,753) Transfer or sale of ||
investments.... - - || -
625,921 ----------- ------------ || -----------
----------- NET CASH (USED IN) ||
PROVIDED BY ||
INVESTING ||
ACTIVITIES (19,629,727) (6,387,288) || 437,262
2,581,516
------------ ----------- || ----------- -----------
(CONTINUED)
29
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
Consolidated Statements of Cash Flows - (Continued)
Mid-Atlantic Realty Trust || BTR Realty, Inc.
Year Ended September 11 to||January 1 to Year
Ended December 31, December 31, ||September 10,
December 31, 1994 1993 || 1993
1992
||
Cash flows from ||
financing activities: ||
Proceeds from ||
notes payable $39,456,366 3,100,000 || 90,832,649
7,044,500 Principal ||
payments on ||
on notes ||
payable (22,116,953) (87,486,651) || (7,475,452)
(8,285,036)
Proceeds from ||
mortgages payable - - || 2,682,600
1,076,444 Principal payments ||
on mortgages ||
payable ...... (443,232) (3,143,953) ||(46,709,513)
(2,446,767)
Proceeds from ||
construction ||
loans payable .. - - || -
1,087,244 Payments on ||
construction ||
loans payable .. - - ||(37,831,945)
(2,332,591)
Additions to deferred ||
finance costs - ||
other......... (27,388) (171,954) || (45,149)
(33,807) Proceeds from sale ||
of convertible ||
debentures .. - 60,000,000 || - -
Additions to deferred ||
finance costs - ||
debentures..... - (3,063,274) || - -
Net proceeds from ||
sale of common ||
shares ....... - 33,453,455 || - -
Sinking fund ||
payments - - || -
(41,083)
Stock issued - ||
options exercised ||
in compensation ||
plan ........ - - || 225,258 -
Stock canceled - ||
employee note ||
payment ...... - - || (177,051) -
Dividends paid .(5,347,696) (314,570) || (4,944,879) -
----------- ----------- || ----------- ----------
|| NET CASH PROVIDED
|| BY (USED IN) ||
FINANCING ||
ACTIVITIES 11,521,097 2,373,053 || (3,443,482)
(3,931,096)
----------- ----------- || ----------- -----------
NET (DECREASE) ||INCREASE IN CASH
||AND CASH ||
EQUIVALENTS (342,586) (534,889) || 1,123,415
(100,442)
CASH AND CASH ||
EQUIVALENTS, ||
beginning of ||
period 687,108 1,221,997 || 98,582
199,024 ---------- ----------- || -----------
------------ ||
CASH AND CASH ||
EQUIVALENTS, ||
end of period ... $344,522 687,108 || 1,221,997
98,582 =========== =========== || ===========
===========
||
Supplemental disclosures of ||
cash flow information: ||
Cash paid for: ||
Interest (net of amounts ||
capitalized) $10,404,859 1,659,428 || 9,218,811
14,009,774 Income taxes .. - 20,560 || 16,813
48,588
=========== =========== || ===========
============
Supplemental schedule of noncash investing and financing activities:
During 1994, $2,832,641 in assets were transferred from Development
Operations to Operating Properties.
At December 31, 1993, MART recorded an asset on the balance sheet,
Net assets of properties to be sold (Note G) of $449,219. The
reclassification of the assets and liabilities consisted of the
following; a decrease in operating properties of $6,505,807, a
decrease in operating assets of $304,377, a decrease in deferred
financing costs of $323,449, a decrease in operating liabilities of
$42,419, and a decrease in mortgages payable of $6,641,995. Proceeds
from sales of properties for the year ended December 31, 1994
included net proceeds of $504,820 from the sale, in February 1994, of
net assets of properties to be sold which included proceeds of
$7,146,815 reduced by the payoff of the mortgage payable of
$6,641,995.
On September 10, 1993, BTR reported a loss on an early
extinguishment of debt of $548,323. The loss included prepayment
penalties and loan fee expenses amounting to $275,015, and a
reduction of net amortized financing costs capitalized as costs of
the related operating properties of $273,308.
In August, 1993, a former Officer of BTR surrendered 56,544 shares
of BTR stock as full repayment of his note receivable.
In December, 1992, BTR reported a gain on sale of property that had
fire damage. The effect of the $1,340,000 gain increased operating
assets by the insurance recovery expected of $1,826,000 and decreased
operating properties by $486,000. The decrease in operating assets
ended September 10, 1993 includes a partial collection of the
insurance recovery of $1,328,000.
See accompanying notes to consolidated financial statements.
30
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1994, 1993, 1992
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Mid-Atlantic Realty Trust, "the Company", was incorporated on June
29, 1993 and commenced operations effective with the completion of
its initial public share offering on September 11, 1993. The Company
is the successor to the operations of BTR Realty, Inc. (the
predecessor to the company), "BTR". The Consolidated Financial
Statements of BTR Realty, Inc. are presented for comparative
purposes.
Principles of Consolidation
The consolidated financial statements include all wholly-owned
subsidiaries and majority-owned partnerships. Investments in
unconsolidated joint ventures are carried on the equity method. All
significant intercompany balances and transactions have been
eliminated.
The Company owns 100% majority interests in corporate subsidiaries
which are general managing partners as well as limited partners of
several partnerships which have outside partners with 50% interests.
Based upon the structure of the respective partnership management
agreements the Company has control (as defined by the Statement of
Financial Accounting Standards No. 94, "Consolidation of All
Majority- Owned Subsidiaries", which describes the full consolidation
method as preferable to the equity method where there is a 50% or
less financial interest but control) over the 50% owned partnerships.
The Company uses the full consolidation method to record the 50%
owned partnerships.
In September, 1993, MART loaned to outside partners funds to cover
their respective partner share of partnership mortgage paydowns using
their respective equity interests in the partnerships as collateral
for the notes receivable. The company eliminates the notes receivable
against what is due from joint venture partners. The interest on the
partner notes is recognized as interest income.
Recognition Of Revenue From Rentals
The Company earns rental income under operating leases with
tenants. Minimum rental payments are recognized as rental revenues
in the period when they are earned according to the applicable lease
term. Percentage rents are recognized as rental revenues in the
period when the actual percentage rent was billed and received.
Recognition Of Revenue From Property Sales
The sale of residential property and any resulting gain or loss on
properties held for sale are recorded upon settlement. Properties
held for sale are primarily outparcels of operating properties or
undeveloped commercial land.
Net Earnings (Loss) Per Share
Earnings (loss) per share are computed by dividing net earnings
(loss) by the weighted average number of common shares and common
share equivalent shares outstanding during each year. The effect on
earnings per share assuming conversion of the convertible
subordinated debentures would be anti-dilutive.
Capitalization Policy and Net Realizable Value
Acquisition costs, interest and other carrying costs, as well as
construction and start-up costs of commercial property are
capitalized and charged to related undeveloped land, construction in
progress or deferred costs. In addition, costs incurred in the
financing and leasing of shopping centers and other commercial
properties are deferred until the project is completed and are then
amortized over the term of the related mortgage or lease. Management
ceases to capitalize or defer these costs when the carrying value
equals the net realizable value of the property or costs are unlikely
to be recoverable. Net realizable value is determined primarily by
the application of the principles of valuation of operating
properties. The basis for determining the value of operating
properties is the lower of historical cost or the net realizable
value. The net realizable value of operating properties is based on
the present value of each property's anticipated net cash flow,
before debt service payments, calculated using prevailing industry
discount and capitalization rates. Anticipated net cash flow is
based upon an analysis of the history and future of the property,
existing and prospective tenant leases, occupancy rates, and
estimated operating expenses. The discount factor, capitalization
rates or reversion rates used to arrive at the net realizable value
of each property are based on the risk associated with the property
as well as the prevailing rates at the end of the reporting period.
Risk variations reflect differences in quality, age, location and
market conditions of each property.
31
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Properties
Operating properties and property held for development or sale are
carried at the lower of historical cost or, where appropriate, an
amount not to exceed estimated net realizable value. Depreciation of
buildings and leaseholds is provided using the straight-line method
over the estimated useful lives or lease terms of the properties.
Improvements for tenants are amortized on a straight- line basis over
the terms of the related tenant leases. Expenditures for normal
maintenance and repairs are charged against income as incurred.
Changes in Accounting Principles
Effective April 1, 1994 the Company adopted a new accounting
treatment regarding lease cancellation fees received from tenants who
want to discontinue their remaining lease term obligations. Prior to
April 1, 1994, the lease termination payments for major tenants were
recognized as other income in the period when the termination
agreement was executed. Under the new treatment, the entire amount of
the cancellation or termination fee on the date of the lease
termination is deferred and then amortized into income on a straight-line
basis over the remaining original lease term as minimum rent.
The Company believes that this change is preferable since it provides
a better matching of revenues and expenses. During 1994,
approximately $687,000 of termination fees were deferred, and $56,000
was amortized.
Effective January 1, 1995 the Company changed its accounting
treatment for percentage rent. Percentage rent revenues are based on
store sales for certain periods and are charged according to a
percentage over a breakpoint amount of sales for the period according
to the lease agreement. During the year ended December 31, 1994 and
previously, percentage rent was recognized as rental revenues in the
period when the actual percentage rent was billed and received. The
new method will recognize percentage rent as rental revenues in the
period when the actual percentage rent is earned. The Company will
begin on January 1, 1995 estimating the percentage rent earned from
major tenants and record the amounts monthly as receivable. The
cumulative effect of this change on January 1, 1995 was approximately
$675,000.
Income Taxes
The Company has elected to qualify, and intends to continue to
qualify as a real estate investment trust, "REIT", pursuant to the
Internal Revenue Code Sections 856 through 860, as amended. In
general, under such Code provisions a trust which, in any taxable
year, meets certain requirements and distributes to its shareholders
at least 95% of its REIT taxable income will not be subject to
Federal income tax to the extent of the income which it distributes.
Effective January 1, 1992, BTR adopted Statement of Financial
Accounting Standards No. 109,"Accounting for Income Taxes",
(Statement 109), which requires an asset and liability method of
accounting for income taxes. The Company reported the cumulative
effect of that change in the method of accounting for income taxes in
the consolidated statement of operations for 1992. The Company
continues to apply the standard which did not have a material effect
on the year ended December 31, 1994 and the period September 11
through December 31, 1993.
Cash and Cash Equivalents
All highly liquid unrestricted investments with original
maturities of three months or less are considered cash equivalents
for purposes of the statements of cash flows.
Deferred Finance Costs
Costs associated with the issuance of debt are capitalized and
recorded as deferred finance costs and amortized on a straight-line
basis, which is not materially different from the interest method,
over the term of the related debt.
32
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
B. PUBLIC OFFERINGS
On September 11, 1993, the Company completed a public offering of
3,450,000 common shares of beneficial interest at $10.50 per share
and $60,000,000 in convertible subordinated debentures at 7.625%.
Net proceeds from these offerings totaled approximately $90,390,000.
C. OPERATING PROPERTIES
Operating properties consist of the following:
December 31,
1994 1993
Land $17,993,243 15,781,566
Land improvements 21,123,172 19,819,368
Buildings 107,030,436 95,771,668
Improvements for tenants 6,013,294 5,280,554
Development costs on
completed projects 16,577,892 16,739,579
Furniture, fixtures and
equipment 2,181,109 2,177,423
Deferred lease costs 5,592,584 4,794,044
------------ -----------
176,511,730 160,364,202
Less accumulated depreciation
and amortization 36,448,969 32,650,352
------------ -----------
$140,062,761 127,713,850
============ ===========
D. PROPERTIES AND RELATED ACCUMULATED DEPRECIATION AND
AMORTIZATION
AND
MORTGAGES PAYABLE
A summary of all of the Company's properties and related mortgages
payable at December 31, 1994 follows:
Accumulated Cost of
Depreciation
Classi- Mortgages Initial Subsequent Total and
fication Payable Cost Improvements Cost Amortization
Net Cost
Shopping
centers $50,086,463 117,544,194 20,116,163 137,660,357 28,634,598
109,025,759
Bowling
centers - 2,866,998 64,383 2,931,381 1,320,174
1,611,207
Office
buildings 3,164,677 26,415,163 3,230,125 29,645,288 4,709,584
24,935,704
Other rental
properties - 4,782,560 919,046 5,701,606 1,387,953
4,313,653
Other property - 573,098 - 573,098 396,660
176,438 --------------------------------------------
- - --------------------------- Operating
proper-
ties 53,251,140 152,182,013 24,329,717 176,511,730 36,448,969
140,062,761
Development
operations - 6,354,947 - 6,354,947 -
6,354,947
Property held for
development
or sale - 8,630,465 - 8,630,465 -
8,630,465 ------------------
- - ------------------------------------------------------
$53,251,140 167,167,425 24,329,717 191,497,142 36,448,969
155,048,173=====================================================================
Mortgages payable aggregating $53,251,140 at December 31, 1994
bear interest at 9.54% to 11.75% and mature in installments through
2003. Aggregate annual principal payments applicable to mortgages
payable for the five years subsequent to December 31, 1994 are:
1995 $ 7,197,969
1996 5,835,477
1997 5,241,874
1998 14,045,689
1999 253,258
Thereafter 20,676,873
===========
33
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
E. DEVELOPMENT OPERATIONS
Development operations consist of the following:
December 31,
1994 1993
Land $5,072,696 -
Construction in progress 953,456 1,749,886
Pre-construction costs 328,795 378,548
---------- ---------
$6,354,947 2,128,434
========== =========
Development operations are transferred to operating property
costs
when a project is completed, at which time depreciation and
amortization
commences.
F. NOTES AND ACCOUNTS RECEIVABLE
Included in notes and accounts receivable at December 31, 1994
are significant concentrations of amounts due from tenants in two
primary geographical areas: the mid-Atlantic region of the United
States and Arizona. Although improved for 1994 and 1993, the economic
condition of the Arizona real estate market has been weak as
evidenced by increased vacancies in the Company's projects,
particularly in the Phoenix market. The Company's accounts receivable
at December 31, 1994 included $673,000 and $379,000 due from tenants
in the mid-Atlantic region and Arizona, respectively. Management
believes adequate provision has been made for the Company's credit
risk for all receivables.
G. NET ASSETS OF PROPERTIES TO BE SOLD
Net assets of properties to be sold consist of net assets and
liabilities (only liabilities assumed by the purchasers) of an
operating
property, Orchard Landing, under contract for sale at December 31,
1993. MART sold its partnership interest in this property on
February 1, 1994 for $7.2 million. The property was part of a
divestiture plan to facilitate the merger of BTR and MART. On
September 10, 1993 BTR decided to sell this property and discontinue
reporting operating results in its consolidated statement of
operations. The amount of losses from the discontinued segment was
de-minimus.
The remaining assets and liabilities reported on the balance
sheet at December 31, 1993 consists of:
Operating property $6,505,807
Cash 268,879
Accounts receivable 10,404
Prepaid expenses and deposits 25,094
Deferred financing costs 323,449
---------
Total assets 7,133,633
----------
Tenant accounts payable 42,419
Mortgage payable 6,641,995
----------
Total liabilities
(assumed by purchaser) 6,684,414
----------
Net assets $449,219
==========
H. DEFERRED FINANCING COSTS
As of December 31,
Deferred financing costs 1994 1993
consist of the following:
Deferred costs related to
the debentures $3,063,274 3,063,274
Deferred costs of new line of credit 198,972 171,584
Deferred financing costs capitalized
related to operating properties 1,720,827 1,720,827
----------- -----------
4,983,073 4,955,685
Less accumulated amortization (1,560,697) (1,027,095)
----------- -----------
Deferred financing costs $3,422,376 3,928,590
=========== ===========
34
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
I. NOTES PAYABLE
Notes payable consist of the following: As of December 31,
1994 1993
Line of credit 20,100,000 2,800,000
Notes payable, bearing
interest at 8.71% 39,413 -
---------- ---------
20,139,413 2,800,000
========== =========
At December 31, 1994, the Company has amended the existing
agreement with its primary bank for an additional $10,000,000 to its
$25,000,000 secured line of credit. This amendment also provides that
as long as the Company is in compliance with all loan covenants, the
loan maturity date, which at December 31, 1994 was December 31, 1997,
will be extended one year automatically each year. Under the amended
agreement, the Bank must give the Company two years notice should it
decide to terminate the loan. Availability under the agreement is
determined by the amount of collateral provided. At December 31,
1994, $35,000,000 was fully collateralized. The line bears interest
at the prime rate. However, the Company has the option to fix the
rate at LIBOR plus 1.125% under certain circumstances. A stand-by fee
is required by the bank for any unused portion of the line. The
agreement contains covenants which provide for the maintenance of
specified debt service ratios and minimum levels of net worth, and
other requirements, among which is the requirement that the Company
maintain its status as a REIT, and other normal conditions consistent
with bank lines of credit.
At December 31, 1994, the unused line of credit available to the
Company, subject to compliance with all terms and conditions of the
agreement and net of outstanding letters of credit of $715,500, was
$14,184,500. The maximum level of borrowings under the line of credit
was $20,100,000, $4,633,130 and $4,663,000 in 1994, 1993 and 1992,
respectively. The average amounts of borrowings were approximately
$6,131,000, $1,888,000, and $3,566,000, with weighted average
interest approximating 6.5%, 5.6%, and 6.3%, in 1994, 1993 and 1992,
respectively.
Aggregate annual principal maturities of notes payable subsequent
to December 31, 1994 are as follows:
1995 $ 9,270
1996 9,270
1997 20,109,270
1998 9,270
1999 2,333
==========
J. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
December 31,
1994 1993
Trade accounts payable 1,195,143 1,289,204
Retainage on construction
in progress 61,117 146,774
Accrued debenture interest expense 1,334,375 1,394,435
Accrued expenses 943,642 1,546,998
--------- ---------
3,534,277 4,377,411
========= =========
35
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
K. CONVERTIBLE SUBORDINATED DEBENTURES
Effective September 11, 1993 the Company issued $60,000,000 of
convertible subordinated debentures at 7.625% scheduled to mature in
September, 2003. Interest on the debentures is paid semi-annually on
March 15 and September 15. The debentures are convertible, unless
previously redeemed, at any time prior to maturity into common shares
of beneficial interest of the Company at $10.50 per share, subject to
certain adjustments. As of December 31, 1994 no debentures have been
converted. Costs associated with the issuance of the debentures were
approximately $3,063,000 and are being amortized through 2003. The
debentures are redeemable by the Company at any time on or after
September 15, 1996, or at any time for certain reasons intended to
protect the Company's REIT status, at 100% of the principal amount
thereof, together with accrued interest. The debentures are
subordinate to all mortgages payable.
L. INCOME TAXES
As discussed in Note A, the Company plans to maintain its status
as a REIT, and be taxed under Sections 856-860 of the Internal
Revenue Code of 1986, as amended. In general terms, under such Code
provisions a trust or corporation which, in any taxable year, meets
certain requirements and distributes to its shareholders at least 95%
of its taxable income will not be subject to Federal income tax to
the extent of the income which it distributes.
A REIT will generally not be subject to federal income taxation
for the portion of its income that qualifies as REIT taxable income
to the extent that it distributes at least 95 percent of its taxable
income to its shareholders and complies with certain other
requirements. Accordingly, no provision has been made for federal
income taxes for the Company and certain of its subsidiaries in the
accompanying consolidated financial statements. At December 31, 1994,
the income tax basis of the Company's assets was approximately
$151,000,000 and liabilities was approximately $ 137,000,000.
As discussed, BTR adopted Statement 109, as of January 1, 1992.
The cumulative effect at January 1, 1992 of this change in accounting
for income taxes was to increase net earnings for 1992 by $1,286,000
or $.15 per share. The effect of the change in 1992, excluding the
change in accounting principle, was not material.
The income taxes benefit, net, in BTR, for the period January 1,
1993 through September 10, 1993 included a currently payable income
tax expense of $52,360, offset by a deferred income tax benefit of
$460,570, including the balance of deferred income taxes payable of
$466,570 in BTR which was recognized as an income tax benefit. It was
determined by BTR that it was more likely than not that there would
be no payment in the future of any deferred tax temporary differences
due to the expected merger with the Company. This was in accordance
with Statement 109 adopted by BTR as of January 1, 1992.
The net benefit for income taxes consists of the following:
Jan. 1, 1993 thru Year ended
September 10, December 31,
1993 1992
Current taxes: Federal $ - -
State 52,360 (8,518)
-----------------------------
52,360 (8,518)
-----------------------------
Deferred: Federal 118,430 (265,000)
State (579,000) 147,000
-----------------------------
(460,570) (118,000)
-----------------------------
$ (408,210) (126,518)
=============================
36
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
M. COMMITMENTS
Lease Commitments
Minimum rental commitments for operating land leases as of
December 31, 1994 are as follows:
1995 $220,000
1996 222,000
1997 222,000
1998 222,000
1999 222,000
Thereafter 4,908,000
=========
Certain of the leases contain renewal or purchase options. All
of the leases require the Company to pay real estate taxes. Total
annual minimum lease payments amounted to $219,000 in 1994, $176,000
in 1993 and $164,000 in 1992.
N. SHAREHOLDERS' EQUITY AND STOCK COMPENSATION PLAN
Preferred Shares
At its inception on September 11, 1993, Mid-Atlantic Realty
Trust authorized 2,000,000 preferred shares of beneficial interest at
a par value of $.01 per share. At December 31, 1994, none of these
shares were issued and outstanding.
BTR Stock Compensation Plan
Under the BTR Executive Stock Compensation Plan, certain
officers had been awarded shares of BTR's stock to be issued at a
rate of 20% of the shares awarded for each year of continued
employment. A charge was made to general and administrative expense
at the time of such awards.
During 1992, BTR adjusted the recorded value of the awarded but
unissued shares to reflect the downward movement in the market value
of the BTR's stock from the measurement date of the awards, resulting
in a reduction of general and administrative expenses of
approximately $269,000. In 1993, the 78,286 remaining shares were
exercised and issued prior to the merger on September 11, 1993. For
the period January 1, 1993 through September 10, 1993, BTR recorded
general and administrative expenses of approximately $49,000
representing the increase in recorded value of the awarded shares of
BTR stock.
MART Incentive Stock Option Plan
MART has an Omnibus Share Plan, "Plan", under which Trustees,
officers and employees may be granted awards of stock options, stock
appreciation rights, performance shares and restricted stock. The
purpose of the Plan is to provide equity-based incentive compensation
based on long-term appreciation in value of MART's shares and to
promote the interests of MART and its shareholders by encouraging
greater management ownership of MART's shares. Pursuant to the Plan,
the Company authorized on February 1, 1994 the availability of
300,000 shares for the Plan. At February 1, 1994, trustees, officers
and key employees were granted 256,000 option shares at an option
price of $10.50 per share with 89,333 shares vesting February 1, 1994
and 83,333 vesting in 1995 & 1996. The closing price of MART shares
at December 31, 1994 was $8.25 per share. No options were exercised
during the year ended December 31, 1994 and based on the market value
of MART shares, the options, if converted, would be anti-dilutive
producing fewer weighted average shares for the year ended December
31, 1994.
Acquisition of Outstanding Shares
On February 14, 1995 the MART Board of Trustees approved a stock
repurchase plan which authorizes the repurchase of up to
approximately 310,000 shares.
In 1993, BTR retired 56,544 shares of BTR stock held as
collateral for a note receivable from a former officer of the
Company.
37
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
O. LEASES
The Company owns shopping centers and other commercial property
which are leased, generally on a long-term basis. All leases are
classified as operating leases. Future minimum lease payments
receivable under noncancelable operating leases are as follows:
1995 $19,590,863
1996 17,897,043
1997 15,273,182
1998 12,272,911
1999 10,229,882
Thereafter 63,868,068
===========
The minimum future lease payments do not include contingent
rentals which may be paid under certain leases on the basis of a
percentage of sales in excess of stipulated amounts. Contingent
rentals amounted to $1,206,000 in 1994, $1,259,000 in 1993 and
$1,235,000 in 1992.
P. OTHER INCOME
Other income consists of the following:
MART BTR Realty, Inc.
Year ended Sept. 11 thru Jan. 1, thru Year
ended Dec. 31, Dec. 31, Sept. 10,
Dec. 31,
1994 1993 1993
1992
Interest and
dividends $727,249 266,141 93,312
262,069 Miscellaneous 149,873 249,368 134,980
439,285
Sale of development
rights - - -
334,267
-----------------------------------------------
$877,122 515,509 228,292
1,035,621
===============================================
Q. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments" (Statement 107) requires
the Company to disclose estimated fair values for certain on- and
off-balance sheet financial instruments. Fair value estimates,
methods, and assumptions are set forth below for the Company's
financial instruments as of December 31, 1994 and 1993.
Cash and Cash Equivalents
The carrying amount for cash and cash equivalents approximates
fair value due to the short maturity of these instruments.
Notes and Accounts Receivable
The carrying amount for notes and accounts receivable
approximates fair value due to the short maturity of these
instruments.
Notes Payable
The carrying amount for the line of credit approximates fair
value due to its adjustable interest rate.
Mortgages Payable
The fair value of mortgages payable was based on the discounted
value of contractual cash flows. The discount rate for
mortgages payable was estimated using the rate currently
offered for borrowings of similar remaining maturities.
The carrying amount and estimated fair value of mortgages
payable at December 31, 1994 was $53,251,140 and $53,641,000
respectively, and at December 31, 1993 was $53,694,372 and
$58,071,000, respectively.
Convertible Subordinated Debentures
The fair value of convertible subordinated debentures was based
on the discounted value of contractual cash flows. The
discount rate for convertible subordinated debentures was
estimated using the rate currently offered for borrowings of
similar remaining maturities. The carrying amount and
estimated fair value of convertible subordinated
debentures at December 31, 1994 was $60,000,000 and
$52,119,000 respectively, and at December 31, 1993 was
$60,000,000 and $58,522,000, respectively.
38
<PAGE>
ITEM 9
Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III
ITEM 10
Directors and Executive Officers of the Registrant
The information with respect to the identity and business
experience
of the directors of MART and their remuneration, in the definitive
proxy statement (to be filed pursuant to Regulation 14A) with respect
to the
election of directors at the 1994 annual meeting of stockholders, is
incorporated herein by reference.
The Executive Officers of MART are as follows:
Position and
Name Age Business Experience
LeRoy E. Hoffberger 69 Chairman of the Board of MART
since
September, 1993.Director of BTR
from 1963 to September
1993.President of CPC, Inc.,
President and Director of
Keystone Realty Co., Vice President
and director of MP Commercial Inc.,
Director of the following public
mutual funds - New York Venture
Fund, Venture Income (+) Plus,
Venture Muni (+) Plus, and the
Retirement Planning Funds of
America. President and director of
the Hoffberger Foundation, Vice
President and director of Hoffberger
Family Fund
F. Patrick Hughes 47 President, Principal Executive
Officer, and CEO of MART since
1993. President of BTR from
November, 1990
to September, 1993. Senior Vice
President BTR from May, 1989
to November, 1990. Vice
President, Controller and
Secretary of BTR for more than
five years.
Paul F. Robinson 41 Vice President of MART since
September, 1993. Vice
President of BTR from May, 1992
to September, 1993. Secretary
and General Counsel of MART
since September, 1993.
Secretary and General Counsel of BTR
from May 1989 to September, 1993;
General Counsel since August, 1985.
Eugene T. Grady 46 Treasurer of MART since
September, 1993. Treasurer of
BTR since May, 1989.
Paul G. Bollinger 35 Controller and Principal
Financial Officer of MART since
September, 1993. Controller of
BTR since June, 1992. Assistant
Treasurer & Assistant
Secretary since May, 1992
Principal Financial Officer of
Financial Associates of Maryland,
(BTR Related Residential development
partnership), for more than five
years
Each executive officer is elected for a term expiring at the next
regular annual meeting of the Board of Directors of the Company or
until his successor is duly elected and qualified.
ITEM 11 Executive Compensation
The information required by this item is incorporated by reference
from the Registrant's Proxy Statement filed with respect to the 1995
annual meeting of stockholders.
39<PAGE>
ITEM 12
Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by
reference
from the Registrant's Proxy Statement filed with respect to the
1995
annual meeting of stockholders.
ITEM 13
Certain Relationships and Related Transactions
The information required by this item is incorporated by
reference from the Registrant's Proxy Statement filed with respect to
the 1995 annual meeting of stockholders.
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements of Mid-Atlantic Realty
Trust and Subsidiaries and BTR Realty, Inc. (Predecessor
Company) are included in Part II Item 8:
Independent auditors' report
Consolidated balance
sheets at December 31, 1994 and 1993
Consolidated statements of operations for
the year ended December 31, 1994 for the
periods ended December 31, 1993 and
September 10, 1993 and the year ended
December 31, 1992
Consolidated statements of shareholders' equity
for year ended December 31, 1994 for
the periods ended December 31, 1993 and
September 10, 1993 and the year ended
December 31, 1992
Consolidated statements of cash flows for
the year ended December 31, 1994 for the
periods ended December 31, 1993 and
September 10, 1993 and the year ended
December 31, 1992
Notes to consolidated financial statements
(a) 2. Financial Statement Schedule
Schedule VI - Real estate and accumulated
depreciation and amortization
All other schedules are omitted because they are not
applicable, or not required, or because the required
information is included in the consolidated financial
statements or notes thereto.
(a) 3. Exhibits
Exhibit No.
3. Articles of Incorporation and by-laws.
None.
4. Instrument Defining the Right of Shareholders.
None.
9. Voting Trust Agreement.
None.
11. Computations of net earnings per common share.
See Summary of Significant Accounting Policies
under Notes to Financial Statements appearing on
page 31 of this report.
12. Statement re: computation of ratios.
Not applicable.
13. Annual Report to Shareholders.
Not applicable.
40
<PAGE>
ITEM 14 - (Continued)
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
18. Letter regarding change in accounting principles.
See Summary of Significant Accounting Policies
under Notes to Financial Statements appearing on
page 31 and 32 of this report and letter from KPMG
Peat Marwick LLP.
19. Previously unfiled documents.
Not applicable.
21. List of subsidiaries of registrant.
Filed herewith
23. Published report regarding matters submitted to vote
of security holders.
Not applicable.
24. Consents of experts and counsel.
Not applicable.
25. Power of Attorney.
Not applicable.
27. Financial Data Schedule.
Filed thru EDGAR
28. Additional exhibits.
Not applicable.
(b) Reports on Form 8-K.
None.
41
<PAGE>
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Cost capitalized
subsequent
Year ended Initial cost to Company to acquisition
December 31, 1994
Mortgages Buildings and
Description Payable Land Improvements
Improvements
Shopping Centers
Harford Mall $19,821,030 158,085 8,457,331
12,027,287
Easton Shoppes, Inc. - 2,600,000 10,379,069
Smoketown Plaza - 516,312 10,095,077
622,540
Park Sedona - 2,376,739 8,590,146
232,741
Colonie Plaza 5,497,128 1,137,567 7,755,095
572,837
Columbia Plaza 4,970,228 999,739 6,887,711
1,445,476
Spotsylvania Crossing - 1,544,314 6,600,616
268,225
Skyline Village 5,569,526 555,295 6,240,003
914,776
Page Plaza - 464,375 5,777,369
119,705
Plaza Del Rio - 1,291,324 3,938,734
382,813
Sudley Town Plaza - 789,881 3,736,837
445,857
Burke Town Plaza 7,262,534 - 2,936,134
1,691,996 Rosedale Plaza 1,906,018 1,024,712 3,217,926
299,037
Wilkens Avenue 5,059,999 - 3,601,891
337,436
Timonium Shopping Ctr - - 4,031,809
246,212
York Road Plaza - 1,243,860 2,102,575
170,369
Patriots Plaza (A) - - 1,709,846
482,321 McRay Plaza - 1,182,596 2,565,290
284,739
Rolling Road Plaza (B) - 338,791 1,632,268
1,997,587
Union Hills Plaza - 274,920 679,863
138,031
Dobson-Guadalupe - 69,146 791,347
89,268
Chandler Plaza - 160,671 565,298
64,310
----------------------------------------------------
50,086,463 16,728,327 102,292,235
22,833,563
Office Buildings
Gateway II - 364,982 12,376,977
1,204,111
Gateway I - 82,396 8,271,751
1,373,259
Patriots Plaza - - 1,522,943
239,890
Wilkens Office II 1,946,154 - 1,644,370
141,706
Wilkens Office I 1,218,523 - 1,383,102
229,433
Wilkens Office III - - 768,642
41,726
-----------------------------------------------------
3,164,677 447,378 25,967,785
3,230,125
Bowling Centers
Freestate - 307,656 1,279,278
22,793
Waldorf - 243,139 579,161
5,690
Clinton - - 457,764
35,900
-----------------------------------------------------
- 550,795 2,316,203
64,383
(Continued)
<PAGE>
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Cost capitalized subsequent Amount at which
carried
Year ended to acquisition at close of period
December 31, 1994
Carrying Costs Land Buildings and
Total
Description Land Improvements Improvements
Shopping Centers
Harford Mall 158,085 20,484,618
20,642,703
Easton Shoppes, Inc. 2,600,000 10,379,069
12,979,069
Smoketown Plaza 516,312 10,717,617
11,233,929
Park Sedona (309,000) (1,095,141) 2,067,739 7,727,746
9,795,485
Colonie Plaza 1,137,567 8,327,932
9,465,499
Columbia Plaza 999,739 8,333,187
9,332,926 Spotsylvania Crossing 1,544,314
6,868,841 8,413,155 Skyline Village 555,295
7,154,779 7,710,074 Page Plaza
464,375 5,897,074 6,361,449 Plaza Del Rio
1,291,324 4,321,547 5,612,871 Sudley Town Plaza
789,881 4,182,694 4,972,575 Burke Town Plaza
- 4,628,130 4,628,130 Rosedale Plaza
1,024,712 3,516,963 4,541,675
Wilkens Avenue 475,481 475,481 3,939,327
4,414,808 Timonium Shopping Ctr -
4,278,021 4,278,021 York Road Plaza 1,243,860
2,272,944 3,516,804
Patriots Plaza (A) - 2,192,167
2,192,167
McRay Plaza (679,840) (1,397,337) 502,756 1,452,692
1,955,448 Rolling Road Plaza (B) (837,931) 338,791
2,791,924 3,130,715
Union Hills Plaza 274,920 817,894
1,092,814
Dobson-Guadalupe 69,146 880,615
949,761
Chandler Plaza (86,450) (263,550) 74,221 366,058
440,279
- - -------------------------------------------------------
(599,809) (3,593,959)16,128,518 121,531,839137,660,357
Office Buildings
Gateway II 364,982 13,581,088
13,946,070
Gateway I 82,396 9,645,010
9,727,406
Patriots Plaza - 1,762,833
1,762,833
Wilkens Office II - 1,786,076
1,786,076
Wilkens Office I - 1,612,535
1,612,535
Wilkens Office III - 810,368
810,368
----------------------------------------------------------
- - 447,378 29,197,910
29,645,288
Bowling Centers
Freestate 307,656 1,302,071
1,609,727
Waldorf 243,139 584,851
827,990
Clinton - 493,664
493,664
----------------------------------------------------------
- - 550,795 2,380,586
2,931,381
(Continued)
<PAGE>
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Life on
which
Year ended depreciation
on
December 31, 1994 latest
income
Accumulated Date of Date statement
is Description Depreciation Construction Acquired
computed
Shopping Centers
Harford Mall 9,094,042 12/73 5-50
yrs.
Easton Shoppes, Inc. 57,618 9/94 5-50
yrs.
Smoketown Plaza 2,285,058 4/87 5-50
yrs.
Park Sedona 816,801 11/90 5-50
yrs.
Colonie Plaza 1,740,904 12/87 5-50
yrs.
Columbia Plaza 1,568,587 6/88 5-50
yrs.
Spotsylvania Crossing 1,569,597 5/87 5-50
yrs.
Skyline Village 1,403,267 5/88 5-50
yrs.
Page Plaza 559,127 8/91 5-50
yrs.
Plaza Del Rio 574,815 2/89 5-50
yrs.
Sudley Town Plaza 1,156,252 7/84 5-50
yrs.
Burke Town Plaza 1,707,113 7/79-7/82 5-50
yrs.
Rosedale Plaza 450,680 10/89 5-50
yrs.
Wilkens Avenue 1,301,922 5/81 5-50
yrs.
Timonium Shopping Ctr 137,734 10/93 5-50
yrs.
York Road Plaza 1,378,772 11/85 5-50
yrs.
Patriots Plaza (A) 831,328 6/84 5-50
yrs.
McRay Plaza 252,268 6/89 5-50
yrs.
Rolling Road Plaza (B) 966,345 6/73 5-50
yrs.
Union Hills Plaza 304,780 11/83 5-50
yrs.
Dobson-Guadalupe 296,651 9/85 5-50
yrs.
Chandler Plaza 180,937 3/84 5-50
yrs.
--------------
28,634,598
Office Buildings
Gateway II 1,395,534 7/89 5-50
yrs. Gateway I 1,932,085 4/87
5-50 yrs.
Patriots Plaza 464,579 8/85 5-50
yrs.
Wilkens Office II 355,713 1/87 5-50
yrs.
Wilkens Office I 470,634 1/85 5-50
yrs.
Wilkens Office III 91,039 1/91 5-50
yrs.
-----------------
4,709,584
Bowling Centers
Freestate 871,924 3/78 5-50
yrs.
Waldorf 207,114 3/79 5-50
yrs.
Clinton 241,136 8/71 5-50
yrs.
------------------
1,320,174
42
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Cost capitalized
subsequent
Year ended Initial cost to Company to acquisition
December 31, 1994
Mortgages Buildings and
Description Payable Land Improvements
Improvements
(Continued)
Other Rental Properties
Regal Row - 416,606 2,192,259
212,846
Business Center - 395,536 1,190,692
59,403
Southwest - - 283,039
596,738
Waldorf Firestone - 9,261 161,543
4,910
Ocean City - - 133,624 -
-------------------------------------------------------
- 821,403 3,961,157
873,897
Development Operations - 5,072,696 1,282,251 -
Property Held - 8,630,465 - -
Other Property - - 573,098 -
-------------------------------------------------------
$53,251,140 32,251,064 136,392,729
27,001,968
=======================================================
(Continued)
<PAGE>
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Cost capitalized subsequent Amount at which
carried
Year ended to acquisition at close of period
December 31, 1994
Carrying Costs Land Buildings and
Total
Description Land Improvements Improvements
(Continued)
Other Rental Properties
Regal Row 416,606 2,405,105
2,821,711
Business Center 395,536 1,250,095
1,645,631
Southwest 45,149 45,149 879,777
924,926
Waldorf Firestone 9,261 166,453
175,714
Ocean City - 133,624
133,624
--------------------------------------------------------
45,149 866,552 4,835,054
5,701,606
Development
Operations - - 5,072,696 1,282,251
6,354,947
Property Held - - 8,630,465 -
8,630,465
Other Property - - - 573,098
573,098
--------------------------------------------------------
(554,660)(3,593,959) 31,696,404 159,800,738
191,497,142
========================================================
(Continued)
<PAGE>
Schedule VI - Real Estate and Accumulated Depreciation
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
Life on
which
Year ended depreciation
on
December 31, 1994 latest
income
Accumulated Date of Date statement
is Description Depreciation Construction Acquired
computed
(Continued)
Other Rental Properties
Regal Row 725,244 7/84 5-45
yrs.
Business Center 131,664 4/90 5-50
yrs. Southwest 421,051 4/68
5-50 yrs.
Waldorf Firestone 57,658 9/78 5-50
yrs. Ocean City 52,336 12/87
5-50 yrs. -------------
1,387,953
Development Operations - 91-94
Property Held - 7/73-12/94
Other Property 396,660 9/82-12/94 3-10
yrs.
-------------
36,448,969
=============
(A) The mortgage payable of $2,585,984 is owed by the owner Southdale
LP to Southdale Mortgage Inc., a wholly owned subsidiary of MART and
is eliminated in consolidation.
(B) This property was damaged by fire in December, 1992 producing a
net reduction in value of $486,000, which is included in Cost
capitalized subsequent to acquisition, Carrying Costs -
Improvements, $837,931 was deducted, and Accumulated depreciation
was adjusted for $351,931.
43
<PAGE>
MID-ATLANTIC REALTY TRUST (COMPANY) & BTR REALTY, INC. (PREDECESSOR
TO THE COMPANY)
SCHEDULE VI - REAL ESTATE AND ACCUMULATED DEPRECIATION -
Continued
(1) The changes in total cost of properties for the three years
ended December 31, 1994 are as follows:
Years ended December 31,
1994 1993 1992
Balance beginning of year $171,661,868 174,593,579
177,052,733
Additions during year:
Acquisitions 18,051,765 4,076,958
285,234
Improvements 2,159,354 5,308,235
2,199,913
Development operations 1,986,458 1,448,303
571,759
-----------------------------------------
22,197,577 10,833,496
3,056,906
Deductions during year:
Write-downs to
net realizable value (2)(a) - (1,318,314)
(742,147)
Cost of real estate sold (2,304,214) (1,637,772)
(4,655,851)
Transfers (4) - (9,416,190)
(33,807)
Retirements and disposals (58,089) (1,392,931)
(84,255)
------------------------------------------
(2,362,303) (13,765,207)
(5,516,060)
------------------------------------------
Balance end of year $191,497,142 171,661,868
174,593,579
==========================================
(2) Write-downs to net realizable value are reported in the
statement of operations as follows:
Year ended
BTR Realty, Inc. January 1 thru December 31,
Sep. 10, 1993 1992
Gain on Fire Damage
(Note F) $ - 486,000
Under Costs and Expenses:
Unrecoverable development costs 1,278,817 256,147
--------------------------------
$ 1,278,817 742,147
================================
(a) In the period 1/1/93 thru 9/10/93 BTR reduced total cost of
properties by $1,318,314 and reduced related accumulated
depreciation by $39,497 resulting in a net write-down of
$1,278,817.
(3) The changes in accumulated depreciation for the three years
ended December 31, 1994 are as follows:
Years ended December 31,
1994 1993 1992
Balance beginning of year ($32,650,352) (29,168,658)
(24,909,903)
Depreciation and amortization (4,549,782) (4,735,979)
(4,778,432)
Transfers (4) - 96,041
290,378
Retirements and disposals 751,165 1,158,244
229,299
------------------------------------------
Balance end of year ($36,448,969) (32,650,352)
(29,168,658)
==========================================
(4) Transfers include assets originally in operating properties
reclassified on the balance sheet to the following:
Years ended December 31,
1993 1992
Total Cost
Net assets of properties
to be sold ($7,030,232) -
Deferred financing costs (2,385,958) (33,807)
---------------------------
(9,416,190) (33,807)
Accumulated Depreciation
Net assets of properties
to be sold $524,425 -
Deferred financing costs:
- Reclassification of asset (765,192) -
- Reclassification of
amortization 336,808 290,378
---------------------------
$96,041 290,378
---------------------------
Net transfers ($9,320,149) 256,571
===========================
(5) The aggregate basis of properties for Federal income tax
purposes is approximately $143,000,000 at December 31, 1994.
(6) See Item 2 for geographic location of properties.
(7) Freestate includes 2 bowling centers in Illinois.
44
<PAGE>
EXHIBIT 21. PARENT AND SUBSIDIARIES OF REGISTRANT
The subsidiaries of MART are listed below. All are engaged in the
ownership and/or development of commercial or residential real estate
in the United States. All are included in the consolidated financial
statements filed as part of this Annual Report.
State of
Incorporation
Name or Formation Interest
CORPORATIONS:
BTR Arkor, Inc. Maryland 100%
BTR Atlanta Daycare, Inc. Maryland 100%
BTR Business Center, Inc. Maryland 100%
BTR Chandler, Inc. Maryland 100%
BTR Delmar, Inc. Maryland 100%
BTR East Greenbush, Inc. Maryland 100%
BTR Fallston, Inc. Maryland 100%
BTR Fallston Corner, Inc. Maryland 100%
BTR Fallston Management, Inc. Maryland 100%
BTR Financial, Inc. Maryland 100%
BTR Free State Bowls, Inc. Maryland 100%
BTR Gateway, Inc. Maryland 100%
BTR Hillside, Inc. Maryland 100%
BTR Holdings, Inc.
(Formerly Diamond Alley, Inc.) Maryland 100%
BTR Ironfield, Inc. Maryland 100%
BTR Manassas, Inc. Maryland 100%
BTR Marigot, Inc. Maryland 100%
BTR Marina, Inc. Maryland 100%
BTR McClintock, Inc. Maryland 100%
BTR New Ridge, Inc. Maryland 100%
BTR Northwood Properties, Inc. Maryland 100%
BTR Odenton Properties, Inc. Maryland 100%
BTR Park Sedona, Inc. Maryland 100%
BTR Ray Road, Inc. Maryland 100%
BTR Real Estate Enterprises, Inc. Maryland 100%
BTR Rockburn, Inc. Maryland 100%
BTR Salisbury, Inc. Maryland 100%
BTR Southdale, Inc. Maryland 100%
BTR Union Hills, Inc. Maryland 100%
BTR Waldorf Development Corporation Maryland 100%
BTR Waldorf Tire, Inc. Maryland 100%
BTR Yuma, Inc. Maryland 100%
(Continued)
45
<PAGE>
EXHIBIT 21. PARENT AND SUBSIDIARIES OF REGISTRANT - (Continued)
State of
Name Incorporation
CORPORATIONS:(Continued) or Formation Interest
Burke Town Plaza, Inc. Maryland 100%
Burlington Commerce Park, Inc. Maryland 100%
Christiansburg Plaza, Inc. Maryland 100%
Clinton Development Company, Inc. Maryland 100%
Cobleskill Plaza, Inc. Maryland 100%
Colonie Plaza, Inc. Maryland 100%
Columbia Plaza, Inc. Maryland 100%
Commonwealth Plaza, Inc. Maryland 100%
Concourse Realty Management, Inc. Maryland 100%
Cypress Square, Inc. Maryland 100%
Davis Ford Properties, Inc. Maryland 100%
Essanwy, Inc. Maryland 100%
Easton Shoppes, Inc. Maryland 100%
Fredericksburg Plaza, Inc. Maryland 100%
Greenbush Residential, Inc. Maryland 100%
Greencastle Plaza, Inc. Maryland 100%
Hampstead Plaza, Inc. Maryland 100%
Harrisonburg Plaza, Inc. Maryland 100%
Kingsbrook Funding, Inc. Maryland 100%
Kingston Crossing, Inc. Maryland 100%
Lynchburg Plaza, Inc. Maryland 100%
MART Acquisition, Inc. Maryland 100%
Madison Plaza, Inc. Maryland 100%
Millers Plaza, Inc. Maryland 100%
New Town Village, Inc. Maryland 100%
North East Station, Inc. Maryland 100%
Orchard Landing Apartments, Inc. Maryland 100%
Orchard Landing Limited, Inc. Maryland 100%
Page Plaza Associates, Inc. Maryland 100%
Park Sedona, Inc. Maryland 100%
Parkway Pond, Inc. Maryland 100%
Ridgewood Funding, Inc. Maryland 100%
Rolling Road Plaza, Inc. Maryland 100%
Rosedale Partners, Inc. Maryland 100%
Rosedale Plaza, Inc. Maryland 100%
Route 642 Properties, Inc. Maryland 100%
Scotia Crossing, Inc. Maryland 100%
Senate Properties, Inc. Maryland 100%
Southdale Mortgage Inc. Maryland 100%
Southwest Development Properties, Inc. Maryland 100%
Timonium Shopping Center, Inc. Maryland 100%
Tempe Auto Center, Inc. Maryland 100%
Wake Plaza, Inc. Maryland 100%
Wyaness, Inc. Maryland 100%
(Continued)
46
<PAGE>
EXHIBIT 21. PARENT AND SUBSIDIARIES OF REGISTRANT - (Continued)
The following are partnerships in which Mid-Atlantic Realty Trust,
BTR Realty, Inc. or Financial Associates of Maryland have partnership
interests:
State of
Incorporation
Name or Formation Interest
Arizona & Warner Limited Partnership Maryland 50%
BBG Joint Venture Maryland 60%
BBG Properties Limited Partnership Maryland 60%
Cypress Square Limited Partnership Maryland 55%
Fredericksburg Plaza Limited
Partnership Maryland 80%
Gateway International Limited
Partnership Maryland 100%
Harbour Island Associates Maryland 100%
Hillside at Seminary Joint Venture Maryland 100%
Kensington Associates Maryland 75%
North Greenbrier Limited Partnership Maryland 100%
Northwood Limited Partnership Maryland 67%
Ridgewood Associates Maryland 100%
Rockburn Associates Maryland 100%
Rosedale Plaza Limited Partnership Maryland 100%
Route 642 Limited Partnership Maryland 60%
Scotia Associates Limited Partnership Maryland 50%
Southdale Limited Partnership Maryland 50%
Union Hills Limited Partnership Maryland 50%
Wyaness Associates Maryland 100%
SIGNATURES
Pursuant to the requirements of Section 13 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.
MID-ATLANTIC REALTY TRUST
Date 3/13/95 /s/s F. Patrick Hughes
F. Patrick Hughes, President
47
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons in
the capacities and on the dates indicated:
Date: 3/15/95 /s/s LeRoy E. Hoffberger
LeRoy E. Hoffberger, Chairman
Date: 3/13/95 /s/s F. Patrick Hughes
F. Patrick Hughes, Trustee,
Principal Executive Officer
Date: 3/13/95 /s/s Paul G. Bollinger
Paul G. Bollinger, Controller,
Principal Financial Officer
Date: 3/13/95 /s/s Eugene T. Grady
Eugene T. Grady, Treasurer
Date:
Robert A. Frank, Trustee
Date: 3/15/95 /s/s Marc P. Blum
Marc P. Blum, Trustee
Date: 3/15/95 /s/s M. Ronald Lipman
M. Ronald Lipman, Trustee
Date: 3/14/95 /s/s Stanley J. Moss, Esquire
Stanley J. Moss, Esquire, Trustee
Date:
Daniel S. Stone, Trustee
Date: 3/16/95 /s/s David F. Benson
David F. Benson, Trustee
48
SIGNATURES
Pursuant to the requirements of Section 13 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.
MID-ATLANTIC REALTY TRUST
Date 7/27/95 /s/s F. Patrick Hughes
F. Patrick Hughes, President
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons in
the capacities and on the dates indicated:
Date:
LeRoy E. Hoffberger, Chairman
Date: 7/27/95 /s/s F. Patrick Hughes
F. Patrick Hughes, Trustee,
Principal Executive Officer
Date: 7/27/95 /s/s Paul G. Bollinger
Paul G. Bollinger, Controller,
Principal Financial Officer
Date:
Eugene T. Grady, Treasurer
Date:
Robert A. Frank, Trustee
Date:
Marc P. Blum, Trustee
Date:
M. Ronald Lipman, Trustee
Date:
Stanley J. Moss, Esquire, Trustee
Date:
Daniel S. Stone, Trustee
Date:
David F. Benson, Trustee
49 <PAGE>
