FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998
-----------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to __________________
(Amended by Exch Act Rel No. 312905. Eff 4/26/93)
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.)
170 West Ridgely Road, Suite 300, Lutherville 21093
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(Address of principal executive offices) (Zip Code)
(410) 684-2000
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(Registrant's telephone number, including area code)
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- --
14,348,133 Common Shares were outstanding as of July 29, 1998.
<PAGE> 1
MID-ATLANTIC REALTY TRUST
AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Item 2. CHANGES IN SECURITIES
Item 3. DEFAULTS UPON SENIOR SECURITIES
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 5. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
<PAGE> 2
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
MID-ATLANTIC REALTY TRUST
Consolidated Balance Sheets
<TABLE>
<CAPTION>
As of
June 30, December 31,
1998 1997
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Properties:
Operating properties .......................$ 332,662,669 306,887,360
Less accumulated depreciation and amortization . 46,038,388 42,781,532
---------------- ----------------
286,624,281 264,105,828
Development operations ........................ 9,923,737 18,812,326
Property held for development or sale ......... 5,417,611 5,559,864
---------------- ----------------
301,965,629 288,478,018
Cash and cash equivalents ...................... 2,392,243 8,427,217
Notes and accounts receivable - tenants and other . 2,265,586 880,414
Prepaid expenses and deposits .................. 740,572 1,928,584
Deferred financing costs ........................ 978,895 1,172,470
---------------- ----------------
$ 308,342,925 300,886,703
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses .........$ 5,038,515 5,721,093
Notes payable ................................. 12,300,000 3,400,000
Construction loan payable ..................... 9,000,044 8,692,916
Mortgages payable ............................. 116,368,124 116,065,741
Convertible subordinated debentures............ 15,372,000 17,502,000
Deferred income ............................... 800,587 666,444
---------------- ----------------
158,879,270 152,048,194
---------------- ----------------
Minority interest in consolidated joint ventures 41,695,494 42,076,946
---------------- ----------------
Shareholders' Equity:
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,
14,657,282 and 14,460,248, respectively ... 146,573 144,602
Additional paid-in capital .................. 133,510,629 131,281,852
Distributions in excess of accumulated earnings (25,889,041) (24,664,891)
---------------- ----------------
107,768,161 106,761,563
---------------- ----------------
$ 308,342,925 300,886,703
================ ================
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE> 3
MID-ATLANTIC REALTY TRUST
Consolidated Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------- ---------------------------------
1998 1997 1998 1997
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Rentals $20,382,171 13,760,586 10,331,084 6,815,341
Tenant recovery 3,465,851 2,489,336 1,804,745 1,287,424
Other ........ 243,708 147,175 131,506 89,564
-------------- ---------------- ---------------- ----------------
24,091,730 16,397,097 12,267,335 8,192,329
-------------- ---------------- ---------------- ----------------
COSTS AND EXPENSES:
Interest ... 5,889,822 5,362,560 3,054,171 2,586,519
Depreciation
/ amortization
of property and
improvements 4,313,290 2,749,266 2,195,011 1,355,273
Operating..... 4,926,993 4,223,257 2,545,373 2,105,070
General and
administrative 1,456,879 1,134,746 755,762 562,092
-------------- ---------------- ---------------- ----------------
16,586,984 13,469,829 8,550,317 6,608,954
-------------- ---------------- ---------------- ----------------
EARNINGS FROM
OPERATIONS BEFORE
BEFORE MINORITY
INTEREST ..... 7,504,746 2,927,268 3,717,018 1,583,375
Minority interest
expense .......(1,491,913) (137,722) (739,222) (70,449)
-------------- ---------------- ---------------- ---------------
EARNINGS FROM
OPERATIONS .... 6,012,833 2,789,546 2,977,796 1,512,926
Gain on
properties .... 92,437 91,172 24,487 15,999
-------------- ---------------- ---------------- ----------------
EARNINGS BEFORE
EXTRAORDINARY
LOSS............6,105,270 2,880,718 3,002,283 1,528,925
Extraordinary loss
from early
extinguishment of
debt.......... (32,984) - - -
NET EARNINGS....$6,072,286 2,880,718 3,002,283 1,528,925
============== ================ ================ ================
NET EARNINGS PER SHARE
-BASIC AND DILUTED
AND BEFORE AND
AFTER EXTRAORDINARY
ITEM $ 0.41 0.37 0.20 0.19
============== ================ ================ ================
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE> 4
MID-ATLANTIC REALTY TRUST
Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings .........................$ 6,072,286 2,880,718
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization .... 4,237,504 2,749,266
Gain on properties ................ (92,437) (91,172)
Stock compensation, net............ 197,868 -
Minority interest in earnings, net. 1,484,564 137,722
Amortization of deferred financing costs 148,974 204,664
Changes in operating assets and liabilities:
(Increase) decrease in operating assets... (197,160) 1,471,760
Decrease in operating liabilities ........ (548,435) (495,177)
---------------- ----------------
Total adjustments .......... 5,230,878 3,977,063
---------------- ----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES .................. 11,303,164 6,857,781
---------------- ----------------
Cash flows from investing activities:
Acquisitions of and additions to properties (13,770,232) (8,089,484)
Proceeds from sales of properties ...... 4,498,017 5,137,111
Receipts from minority partners ......... - 17,607
Payments to minority partners ........... (1,866,016) (658,020)
---------------- ----------------
NET CASH USED IN
INVESTING ACTIVITIES ...................... (11,138,231) (3,592,786)
---------------- ----------------
Cash flows from financing activities:
Proceeds from notes payable ............. 16,300,000 26,200,000
Principal payments on notes payable ..... (7,400,000) (26,600,000)
Principal payments on mortgages payable . (7,920,963) (425,308)
Proceeds from construction loan payable . 307,128 2,829,202
Additions to deferred financing costs .... (9,224) (11,501)
Dividends paid............................ (7,296,436) (3,746,242)
Shares repurchased........................ (153,593) (297)
Other, net ............................... (26,819) 39,026
---------------- ----------------
NET CASH USED IN
FINANCING ACTIVITIES ...................... (6,199,907) (1,715,120)
---------------- ----------------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS ..................... (6,034,974) 1,549,875
CASH AND CASH EQUIVALENTS,
beginning of period ...................... 8,427,217 1,013,838
---------------- ----------------
CASH AND CASH EQUIVALENTS,
end of period ............................$ 2,392,243 2,563,713
================ ================
Schedule of Noncash Investing and Financing Activities:
Mortgages payable assumed in acquisition ...$ 8,299,132 -
Conversion of subordinated debentures,
net of deferred financing costs............$ 2,072,000 10,649,269
================ ================
During the six month periods ended June 30, 1998 and 1997, $587,880 and $81,130,
respectively, of interest costs were capitalized as construction period interest
in development operations.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
MID-ATLANTIC REALTY TRUST
Notes To Consolidated Financial Statements
(UNAUDITED)
ORGANIZATION
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. and qualifies as a real estate investment
trust ("REIT") for Federal income tax purposes. As used herein, the term
"MART" or the "Company" refers to Mid-Atlantic Realty Trust, and entities
owned or controlled by MART, including MART Limited Partnership (the
"Operating Partnership").
DESCRIPTION OF BUSINESS
The Company is a fully integrated, self-administered real estate
investment trust which owns, acquires, develops, redevelops, leases and
manages primarily neighborhood or community shopping centers in the Middle
Atlantic region of the United States.
The Company has an equity interest in 31 operating shopping centers, 26
of which are wholly-owned by the Company and five in which the Company has
interests ranging from 50% to 93%, as well as other commercial properties.
The Company also owns seven undeveloped parcels of land totaling
approximately 125 acres which it is holding for development or sale.
All of MART's interests in properties are held directly or indirectly
by, and substantially all of its operations relating to the properties are
conducted through, the Operating Partnership. Subject to certain conditions,
units of partnership interest in the Operating Partnership ("Units") may be
exchanged by the limited partners for cash or at the option of MART, the
obligation may be assumed by MART and paid either in cash or in common shares
of beneficial interest in MART on a one-for-one basis. MART controls the
Operating Partnership as the sole general partner, and owns approximately 82%
of the Units at June 30, 1998.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1998 and the consolidated
statements of operations for the Company for the six and three month periods
ended June 30, 1998 and June 30, 1997 and the consolidated statements of cash
flows for the six month periods ended June 30, 1998 and June 30, 1997, have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows
have been included. The results of operations for the periods ended June 30,
1998 are not necessarily indicative of the operating results for the full
year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Mid-Atlantic Realty Trust 1997 Annual Report to Shareholders.
NET EARNINGS PER SHARE
Basic earnings per share ("EPS") is computed by dividing earnings
available to common shareholders by the weighted average number of common
shares outstanding. Diluted EPS is computed after adjusting the numerator and
denominator of the basic EPS computation for the effects of all dilutive
potential common shares outstanding during the period. The dilutive effects
of convertible securities are computed using the "if-converted" method and
the dilutive effects of options, warrants and their equivalents (including
fixed awards and nonvested shares issued under share-based compensation
plans) are computed using the "treasury stock" method.
CONTINUED
<PAGE> 6
MID-ATLANTIC REALTY TRUST
Notes To Consolidated Financial Statements - Continued
(UNAUDITED)
NET EARNINGS PER SHARE - Continued
The following table sets forth information relating to the computation
of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
-------------------------------------------------------------------
1998 1997 1998 1997
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Numerator:
Earnings before
extraordinary
loss: $ 6,105,270 2,880,718 3,002,283 1,528,925
Dividends on
unvested
restricted
share awards (153,595) - (76,928) -
-------------- ---------------- ---------------- ----------------
Numerator for
basic earnings
per share-
earnings
available to
common
shareholders 5,951,675 2,880,718 2,925,355 1,528,925
Adjustments to
dividends on
restricted
share awards 3,528 - 194 -
Numerator for
diluted
earnings
per share-
earnings
available to
common
shareholders =========== ================ ================ ================
$ 5,955,203 2,880,718 2,925,549 1,528,925
=========== ================ ================ ================
Denominator: (1)
Denominator for
basic earnings
per share-weighted
average shares
outstanding 14,269,910 7,815,859 14,316,793 7,818,154
Effect of
dilutive
securities:
Unvested portion
of restricted
share awards 7,056 - 10,442 -
Share options 81,856 34,326 73,587 29,643
Denominator for
diluted earnings
per share-
adjusted
weighted
average
shares
outstanding============== ================ ================ ================
14,358,822 7,850,185 14,400,822 7,847,797
============== ================ ================ ================
</TABLE>
(1) The denominator excludes the effect of securities which are antidilutive.
For purposes of this computation at June 30, 1998, the convertible
subordinated debentures, if converted, would produce an additional 1,464,000
shares and the Units, if exchanged, would produce an additional 3,175,771
shares.
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. For the six months ended
June 30, 1998, $2,130,000 in debentures were converted to 202,846 common
shares of beneficial interest. For the six months ended June 30, 1997,
$11,009,000 in debentures were converted to 1,048,452 common shares of
beneficial interest. The balance of the debentures, at June 30, 1998, of
$15,372,000, convertible at $10.50 per share, if fully converted, would
produce an additional 1,464,000 shares. Costs associated with the issuance of
the debentures were approximately $784,826 at June 30, 1998 and are being
amortized through 2003. The debentures are redeemable by the Company at any
time at 100% of the principal amount thereof, together with accrued interest.
The debentures are subordinate to all mortgages payable.
SHAREHOLDERS' EQUITY
During the six months ended June 30, 1998, shareholders' equity changed
for the following items:
- Net earnings of $6,072,286
- Dividend paid of $7,296,436
- Common shares and additional paid-in capital increased by
$2,072,000 due to conversion of $2,130,000 in
debentures
- Other changes, net of $158,748, primarily related to
the restricted share plan and stock repurchases.
RESTRICTED SHARE PLAN
In 1997, the Executive Compensation Committee recommended, and the Board
of Trustees approved, a Restricted Share Plan. The Executive Compensation
Committee believes that the grant of restricted share awards provides a
long-term incentive to persons who contribute to the growth of MART and
establishes a direct link between compensation and shareholder return. In
1997, 400,000 restricted shares were made available for the plan and 368,333
restricted shares with a market value of $13.38 per share were awarded under
the plan. These shares are subject to forfeiture restrictions which lapse at
defined annual rates to 2008, subject to the recipients' continued employment
with the Company. The Company recognizes the amortization of the fair value
of the shares awarded as compensation costs over the terms of the awards.
Such costs were $302,000 for the six months ended June 30, 1998, of which
$155,000 in costs were recorded as general and administrative expenses and
$147,000 in costs were capitalized as additions to properties.
<PAGE> 7
Part I. FINANCIAL INFORMATION
Item 2.
MID-ATLANTIC REALTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the Company's results of operations
for the six and three months ended June 30, 1998, with those for the six and
three months ended June 30, 1997.
Comparison of six months ended June 30, 1998 to six months ended June 30,
1997.
Rental revenues increased by $6,622,000 or 48% to $20,382,000 for the
six months ended June 30, 1998 from $13,761,000 for the six months ended June
30, 1997. The portfolio acquisition of ten properties from partnerships
associated with Jack H. Pechter in July 1997 ("JHP Acquisition") contributed
an increase in rental revenues of approximately $6,490,000 for the period.
Acquisitions of Milford Commons and Arundel Plaza in December 1997, and of
Wayne Heights Plaza in January 1998, and Wayne Avenue Plaza in February 1998
("New Acquisitions") contributed an increase in rental revenues of
approximately $1,288,000. The redevelopment of Lutherville Station, the
development of North East Station, and other occupancy and net rental
increases contributed approximately $872,000 in rental increases. The
increases were partially offset by $2,028,000 in rental revenue decreases
attributable to the March 1997 sale of the Union Hills shopping center, the
sale in May 1997 of the Plaza Del Rio shopping center, the September 1997
sale of the Gateway International Office project, and the April 1998 sale of
Page Plaza shopping center.
Tenant recovery revenues increased by $977,000 to $3,466,000 from
$2,489,000. The increased tenant recoveries were primarily due to the JHP
Acquisition and the New Acquisitions offset by decreases related to the sales
of properties referred to above.
Other revenues increased by $97,000 to $244,000 from $147,000
primarily due to interest income from higher short term investment balances.
As a result of the above changes total revenues increased by
$7,695,000 to $24,092,000 from $16,397,000.
Interest expense increased by $527,000 to $5,890,000 from $5,363,000
primarily due to increases related to debt assumed for the JHP Acquisition
and New Acquisitions of $2,078,000 partly offset by decreases related to the
conversion of debentures $971,000, and the paydown of mortgages and notes
payable, $580,000.
Depreciation and amortization increased by $1,564,000 to $4,313,000
from $2,749,000 primarily due to increases related to the JHP Acquisition .
Operating expenses increased by $704,000 to $4,927,000 from $4,223,000
primarily due to increased operating expenses from JHP and New Acquisition
properties offset by reduced operating expenses related to property sales.
General and administrative expenses increased by $322,000 to
$1,457,000 from $1,135,000 due primarily to increased compensation expenses.
Minority interest expense increased by $1,354,000 to $1,492,000 from
$138,000 due primarily to the addition of minority limited partnership
interests in connection with the JHP Acquisition.
For the six months ended June 30, 1998, earnings from operations
increased by $3,223,000 to $6,013,000 from $2,790,000. MART also recognized a
gain on properties of $92,000 and an extraordinary loss on the early
extinguishment of debt of $33,000. The gain on properties and extraordinary
item, when combined with earnings from operations, resulted in net earnings
of $6,073,000. For the six months ended June 30, 1997, MART recognized a gain
on properties of $91,000. The gain on properties, when combined with earnings
from operations, resulted in net earnings of $2,881,000 for the period.
Comparison of three months ended June 30, 1998 to three months ended June 30,
1997.
Rental revenues increased by $3,516,000 or 52% to $10,331,000 for the
three months ended June 30, 1998 from $6,815,000 for the three months ended
June 30, 1997. The JHP Acquisition contributed an increase in rental revenues
of approximately $3,265,000 for the period. New Acquisitions contributed an
increase in rental revenues of approximately $763,000. The redevelopment of
Lutherville Station, the development of North East Station, and other
occupancy and net rental increases contributed approximately $495,000 in
rental increases. The increases were partially offset by $1,007,000 in rental
revenue decreases attributable to the sale in May 1997 of the Plaza Del Rio
shopping center, the September 1997 sale of the Gateway International Office
project, and the April 1998 sale of Page Plaza shopping center.
Tenant recovery revenues increased by $518,000 to $1,805,000 from
$1,287,000. The increased tenant recoveries were primarily due to the JHP
Acquisition and the New Acquisitions partly offset by decreases related to
the sales of properties referred to above.
CONTINUED
<PAGE> 8
MID-ATLANTIC REALTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Comparison of three months ended June 30, 1998 to three months ended June 30,
1997 - Continued
Other revenues increased by $42,000 to $132,000 from $90,000 primarily
due to interest income from higher short term investment balances.
As a result of the above changes total revenues increased by
$4,075,000 to $12,267,000 from $8,192,000.
Interest expense increased by $467,000 to $3,054,000 from $2,587,000
primarily due to increases related to debt assumed for the JHP Acquisition
and New Acquisitions of $1,304,000 partly offset by decreases related to the
conversion of debentures $415,000, and the paydown of mortgages payable.
Depreciation and amortization increased by $840,000 to $2,195,000 from
$1,355,000 primarily due to increases related to the JHP Acquisition .
Operating expenses increased by $440,000 to $2,545,000 from $2,105,000
primarily due to increased operating expenses from JHP and New Acquisition
properties partly offset by reduced operating expenses related to property
sales.
General and administrative expenses increased by $194,000 to $756,000
from $562,000 due primarily to increased compensation expenses.
Minority interest expense increased by $669,000 to $739,000 from
$70,000 due primarily to the addition of minority limited partnership
interests in connection with the JHP Acquisition.
Cash Flow Comparison
The following discussion compares the statement of cash flows
information for 1998 with the information for 1997.
Net cash flow provided by operating activities was $11,303,000 and
$6,858,000 in the six months ended June 30, 1998 and 1997, respectively. The
changes in cash provided by operating activities were due primarily to the
factors discussed above in the comparisons of operating results. The level of
net cash provided by operating activities is also affected by the timing of
receipt of revenues and the payment of operating and interest expenses.
Net cash flow used in investing activities increased by $7,545,000,
to $11,138,000 in 1998 from $3,593,000 in 1997. The increase was primarily
a result of increased levels of acquisitions and additions to properties
in 1998.
Net cash flow used in financing activities increased by $4,485,000 to
net cash flow used in financing activities of $6,200,000 in 1998 from net
cash flow used in financing activities of $1,715,000 in 1997. The increase
was primarily a result of an increase in dividends paid.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 1998, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus on Issue 98-9 relating to the accounting
for contingent rent in interim financial periods. The consensus requires that
a lessor defer recognition of contingent rental income in interim periods
until the specified target that triggers the contingent rental income is
achieved. The implementation of this pronouncement did not have a material
impact for the three and six month periods ended June 30, 1998.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings - In the ordinary course of business, the Company
is involved in legal proceedings. However, there are no material legal
proceedings pending against the Company.
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
<TABLE>
Item 4. Submission of Matters to a Vote of Security Holders - The Annual
Meeting of Shareholders was held on May 15, 1998. Elected to serve as
trustees for the ensuing year and until the election and qualification of
their successors were: Marc P. Blum, Robert A. Frank, LeRoy E. Hoffberger,
F. Patrick Hughes, M. Ronald Lipman, Daniel S. Stone, David F. Benson,
and Jack H. Pechter.
Matter Voted Upon For Against Withheld
----------------- --- ------- --------
<S> <C> <C> <C>
a. Election of Trustees:
Marc P. Blum 13,901,231 - 47,230
Robert A. Frank 13,902,431 - 46,030
LeRoy E. Hoffberger 13,897,217 - 51,244
F. Patrick Hughes 13,904,525 - 43,936
M. Ronald Lipman 13,903,131 - 45,330
Daniel S. Stone 13,905,389 - 43,072
David F. Benson 13,898,286 - 50,175
Jack H. Pechter 13,897,157 - 51,304
</TABLE>
CONTINUED
<PAGE> 9
MID-ATLANTIC REALTY TRUST
Part II. OTHER INFORMATION - CONTINUED
<TABLE>
Item 4. - Submission of Matters to a Vote of Security Holders ( CONTINUED)
Matter Voted Upon For Against Withheld
----------------- --- ------- --------
<S> <C> <C> <C>
b. Proposal to approve the
appointment of KPMG Peat
Marwick LLP as the
independent certified
public accountants of MART
for the fiscal year
ending December 31, 1998: 13,837,935 45,647 64,879
c. Proposal to amend the
Omnibus Share Plan 8,243,726 1,603,021 4,101,714
d. Proposal to amend
MART's Declaration of Trust 13,656,348 142,742 149,371
</TABLE>
Because the matters voted upon at the meeting required the approval of only a
majority of the votes cast at the meeting, votes withheld, abstentions, and
broker non-votes had no effect upon the ultimate outcome of the vote.
Item 5. Other Information -
Summary Financial Data
The following sets forth summary financial data which has been
prepared by the Company without audit. 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.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
MID-ATLANTIC REALTY TRUST
Summary Financial Data
(In thousands, except per share data)
Six Months Three Months
Ended June 30, Ended June 30,
-------------------------------- ---------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $24,092 16,397 12,267 8,192
Net earnings $6,072 2,881 3,002 1,529
Net earnings
per share
- basic and
diluted $0.41 0.37 0.20 0.19
OTHER FINANCIAL DATA:
-----------------------------------------------------
FFO -
diluted (1) $12,277 7,148 6,133 3,595
Weighted
average
number of
shares
outstanding
- FFO
diluted 19,086 11,756 19,072 11,757
SELECTED CASH FLOW DATA:
-----------------------------------------------------
Net cash
flow provided
by operating
activities $11,303 6,858
Net cash
flow used in
investing
activities (11,138) (3,593)
Net cash
flow used
in financing
activities (6,200) (1,715)
RECONCILIATION OF NET EARNINGS TO FFO - DILUTED
----------------------------------------------------------------------
Net earnings $6,072 2,881 3,002 1,529
Depreciation
and amortization
on real estate
assets 4,313 2,749 2,195 1,355
Gain on
properties (92) (91) (24) (16)
Extraordinary
loss on early
extinguishment
of debt 33 - - -
Operating
Partnership
minority
interest
expense 1,312 - 648 -
Convertible
debenture
interest
expense 639 1,609 312 727
------------- ---------------- ---------------- ----------------
FFO -
diluted $ 12,277 7,148 6,133 3,595
============== ================ ================ ================
</TABLE>
(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 cumulative effects of change in accounting
principles, extraordinary or unusual items, and 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.
---------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8K - None
<PAGE> 10
MID-ATLANTIC REALTY TRUST AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MID-ATLANTIC REALTY TRUST AND
SUBSIDIARIES
(Registrant)
Date: 07/30/98 By: /s/ F. Patrick Hughes
----------------- -------------------------------
F. Patrick Hughes
President
Chief Executive Officer
Date: 07/30/98 By: /s/ Janice C. Robinson
---------------- --------------------------------
Janice C. Robinson
Controller
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,392
<SECURITIES> 0
<RECEIVABLES> 2266
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS><F1> 0
<PP&E> 301,966
<DEPRECIATION> 46,038
<TOTAL-ASSETS> 308,343
<CURRENT-LIABILITIES><F1> 0
<BONDS> 140,740
<COMMON> 147
0
0
<OTHER-SE> 107,621
<TOTAL-LIABILITY-AND-EQUITY> 308,343
<SALES> 0
<TOTAL-REVENUES> 12,267
<CGS> 0
<TOTAL-COSTS> 8,550
<OTHER-EXPENSES> 739
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,054
<INCOME-PRETAX> 3,002
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,002
<DISCONTINUED> 0
<EXTRAORDINARY> 00
<CHANGES> 0
<NET-INCOME> 3,002
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<FN>
<F1> Mid-Atlantic Realty Trust (MART) is in the specialized real estate
<F1> industry for which the current/noncurrent distinction is deemed in
<F1> practice to have little or no relevance. Therefore, MART prepares
<F1> unclassified balance sheets wlhich do not report current assets or
<F1> current liabilities.
</FN>
</TABLE>
