<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1 to Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 1997
LEXINGTON CORPORATE PROPERTIES, INC.
(Exact Name of Registrant as specified in its charter)
Maryland 1-12386 13-3717318
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
355 Lexington Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 692-7260
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On May 1, 1997, Lexington Corporate Properties, Inc., a real estate investment
trust organized under the laws of the State of Maryland (the "Registrant"),
acquired a property in Rancho Bernardo, California (the "Rancho Bernardo
Property") for $7,725,000. The Rancho Bernardo Property contains 65,755 net
rentable square feet and is leased to Cymer, Inc. under the terms of a net lease
which expires on December 31, 2009. The lease provides for annual rental
payments of $736,872, which will increase to $755,294 on June 1, 1997 and by
approximately 5% every two years thereafter. The average annual net rent payable
during the remaining lease term is $860,419, or approximately 11.1% of the
purchase price.
Additionally, the Registrant has entered into a definitive agreement to acquire,
through a merger, Corporate Realty Income Trust I ("CRIT"). As a result of the
merger, the Registrant will acquire three properties totaling approximately
560,000 square feet. The transaction will be structured as a tax-free stock
merger, and the merger consideration will consist of approximately $17.15
million of the Registrant's common stock to be issued to CRIT shareholders,
subject to certain adjustments, and a cash payment of up to $1.0 million. The
transaction is expected to close in 1997, subject to approval by CRIT's
shareholders and the satisfaction of other customary closing conditions.
Upon completion of the merger, CRIT will cease to exist and the Registrant will
be the surviving entity.
CRIT was formed as a Massachusetts business trust on June 27, 1989.
CRIT, which qualified as a real estate investment trust in 1990, owns three,
triple-net-leased properties (the "Properties"). The first property is a 288,000
square foot Class A office building, leased to Circuit City Stores, Inc. as
their corporate headquarters in Richmond, Virginia ("Circuit City Property").
The second property is a 148,000 square foot regional assembly facility, which
is leased to Dana Corporation in Gordonsville, Tennessee ("Dana Property"). The
third property is a 124,000 square foot regional distribution facility, which is
leased to Allegiance Healthcare Corporation in Bessemer, Alabama ("Allegiance
Property"). The Properties are currently encumbered by mortgage debt.
If the merger were to occur on September 1, 1997, the Properties are expected to
have the following debt terms and outstanding balances: the Circuit City
Property mortgage, maturing March 1, 2000, is expected to have a mortgage
balance of $13.1 million outstanding and an interest rate of 8.875%; the Dana
Property mortgage, maturing October 1, 2002, is expected to have a mortgage
balance of $1.3 million outstanding and an interest rate of 9.5%; and the
Allegiance Property mortgage, maturing September 1, 2001, is expected to have a
mortgage balance of $1.0 million outstanding and an interest rate of 9.5%.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(a) Financial statements of properties acquired.
Corporate Realty Income Trust I Audited Financial Statements for the year ended
December 31, 1996.
<PAGE> 3
(b)Pro forma financial information.
The following unaudited pro forma consolidated financial statements of the
Registrant for the year ended December 31, 1996 and as of and for the three
months ended March 31, 1997 have been prepared from the historical consolidated
financial statements of the Registrant, for the year ended December 31, 1996 and
as of and for the three months ended, as adjusted to give effect to the
following pro forma adjustments: (i) acquisitions consummated since January 1,
1996; (ii) the pending acquisitions of Corporate Realty Income Trust I and a
property located in Phoenix, Arizona leased to Bull HN Information Systems the
("Pending Acquisitions"); (iii) the refinancing on May 30, 1997 of the property
in Salt Lake City leased to Northwest Pipeline Corporation (the "Salt Lake City
Property") (the "Salt Lake City Refinancing"); (iv) the issuance and sale of a
total of 1,325,000 shares of convertible preferred stock; (v) the possible sale
of the Ross Stores Newark Property described in the Registrant's filing on Form
8-K dated February 4, 1997 and (vi) acquisitions consummated in 1996, as such
pro forma financial statements relate to 1996. The accompanying pro forma
statements of income for the year ended December 31, 1996 and the three months
ended March 31, 1997 have been prepared as if the events had been consummated as
of January 1, 1996 and were carried forward through March 31, 1997. The
accompanying pro forma balance sheet has been prepared as if these events had
been consummated on March 31, 1997. The Registrant has not completed all
evaluations necessary to finalize the purchase price allocations for the Pending
Acquisitions and, accordingly, actual adjustments that reflect other evaluations
of the purchased assets and assumed liabilities may differ from the pro forma
adjustments presented herein. There can be no assurance that the Pending
Acquisitions or the sale of the Ross Stores Newark Property will be consummated,
or, if consummated, as to the terms or timing thereof. The unaudited pro forma
financial statements do not purport to be indicative of what the results of the
Registrant would have been had the transactions been completed on the dates
assumed, nor is such financial data necessarily indicative of the results of
operations of the Registrant that may exist in the future. The unaudited pro
forma financial statements must be read in conjunction with the notes thereto
and with the historical consolidated financial statements of the Registrant.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS (1) PRO FORMA
---------- --------------- ---------
(in thousands, except
per share data)
<S> <C> <C> <C>
Revenue:
Rental $31,244 $12,754 $43,998
Interest and other 431 39 470
------- ------- -------
Total revenues 31,675 12,793 44,468
Expenses:
Interest expense 12,818 4,526 17,344
Depreciation 7,627 3,267 10,894
Amortization of deferred expenses 619 98 717
Property operating expenses 686 79 765
General and administrative expenses 3,125 173 3,298
Transactional expenses 644 -- 644
------- ------- -------
Total expenses 25,519 8,143 33,662
------- ------- -------
Income before minority interests 6,156 4,650 10,806
Minority interests 690 908(2) 1,598
------- ------- -------
Net income $ 5,466 $ 3,742 $ 9,208
======= ======= =======
Per share data (3)
Net income
Primary $ 0.58 $ 0.68
Fully diluted 0.58 0.66
Weighted average common shares
outstanding
Primary 9,393 1,751 11,144
Fully diluted 9,393 4,377 13,770
</TABLE>
<PAGE> 4
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) This column reflects (i) the addition of historical results of operations
for the period from January 1 to the respective acquisition dates for the
properties acquired by the Company during 1996 and for a 12-month period
for properties acquired since January 1, 1997 and for the Pending
Acquisitions; (ii) the elimination of the results of operations of the Ross
Stores Newark Property as if the sale had taken place on January 1, 1996;
and (iii) the Salt Lake City Refinancing. The results of operations for
properties acquired during 1996, from their respective acquisition dates
through December 31, 1996 are included in the Company's historical 1996
consolidated statement of income. The results of operations consist
principally of rental revenue, interest expense and depreciation expense.
Rental revenue in these pro forma financial statements (both historical and
pro forma) is generated from leases that are "net leases", under which the
tenant is responsible for substantially all costs of real estate taxes,
insurance and ordinary maintenance. Pro forma rental income represents
straight-line rent as provided by GAAP, calculated as the difference
between the cash rent paid under the lease and the average rent due over
the noncancellable term of the lease.
The pro forma revenue adjustment consists of the effect of the following
transactions as if they had occurred on January 1, 1996. The adjustment for
depreciation expense relates to the depreciation from purchase price
adjustments as if the acquisitions described above had occurred on January
1, 1996.
<TABLE>
<CAPTION>
Rental
Revenue Depreciation
------- ------------
<S> <C> <C>
CRIT Acquisition $ 3,557 $ 922
Acquisition of the Salt Lake City Property 3,264 824
Acquisition of Properties leased to Toys "R" Us,
Inc. (the "Toys Properties") and Liberty House, Inc. 2,595 840
Exel Pennsylvania Properties Acquisition 2,949 601
Bull Information Systems Acquisition 1,023 243
Other acquisitions 2,608 563
Sale of Ross Stores Newark Property (3,242) (726)
-------- -------
$ 12,754 $ 3,267
======== =======
</TABLE>
Applicable pro forma interest expense is calculated based on annual
interest rates on the respective debt as of the acquisition dates. The pro
forma interest expense adjustments includes (i) the impact of the Salt Lake
City Refinancing; (ii) paydown of the Credit Facility with proceeds from
the sale of the Ross Stores Newark Property; (iii) repayment of the Toys
Properties debt with proceeds from the issuance of Convertible Preferred
Stock; and (iv) the impact of interest on acquisitions described above as
if they had occurred on January 1, 1996.
(2) This amount represents the minority interest in the net income of LCIF due
to the issuance of OP Units in the acquisition of the Salt Lake City
Property, the acquisition of the Toys Properties, and the acquisition of
the Exel Pennsylvania Properties.
(3) Primary net income per share is computed by dividing net income (reduced by
preferred dividends) by the weighted average number of common and diluted
common equivalent shares outstanding during the period. Fully diluted net
income per share amounts are similarly computed but include the effect when
dilutive of the Company's other potentially dilutive securities. Fully
dilutive net income excludes preferred dividends and is increased by
minority interest resulting from the assumed conversion of the limited
operating partnership units. The Convertible Preferred Stock and
Exchangeable Notes are excluded from the pro forma computations due to
their anti-dilutive effect during the period
<PAGE> 5
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(in thousands, except
per share data)
<S> <C> <C> <C>
Revenue:
Rental $ 9,699 $1,242(1) $10,941
Interest and other 125 7 132
------- ------ -------
Total revenues 9,824 1,249 11,073
Expenses:
Interest expense 4,240 116(1) 4,356
Depreciation 2,461 298(1) 2,759
Amortization of deferred expense 194 115 309
Property operating expenses 218 -- 218
General and administrative expenses 870 -- 870
Other expenses 69 -- 69
------- ------ -------
Total expenses 8,052 529 8,581
------- ------ -------
Income before minority interests 1,772 720 2,492
Minority interests 262 98(2) 360
------- ------ -------
Net income $ 1,510 $ 622 $ 2,132
======= ====== =======
Per share data: (3)
Net income
Primary $ 0.14 $ 0.15
Fully diluted $ 0.13 $ 0.15
Weighted average common shares
outstanding
Primary 9,932 1,319 11,251
Fully diluted 11,967 1,909 13,876
</TABLE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<S> <C> <C> <C>
Real estate at cost $369,740 $ 20,731(4) $390,471
Less accumulated depreciation 53,803 (6,884)(5) 46,919
-------- -------- --------
Real estate, net 315,937 27,615 343,552
Other assets 24,184 (4,473)(6) 19,711
-------- -------- --------
Total assets $340,121 $ 23,142 $363,263
======== ========
Mortgage loans payable
(including accrued interest) $203,694 $ (1,794)(7) $201,900
Other liabilities 8,046 1,455(8) 9,501
Minority interest 28,429 -- 28,429
Stockholders' equity 99,952 23,481(9) 123,433
-------- -------- --------
Total liabilities and
stockholders' equity $340,121 $ 23,142 363,263
======== ======== ========
</TABLE>
<PAGE> 6
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AND AS OF MARCH 31, 1997
(ALL AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(1) These amounts reflect (i) the addition of historical results of operations
for the period from January 1 to the respective acquisition dates for the
Properties acquired by the Company during 1997 and for a 3-month period for
the Pending Acquisitions, (ii) the elimination of the results of operations
of the Ross Stores Newark Property as if the sale had taken place on
January 1, 1996 and (iii) the Salt Lake City Refinancing. The results of
operations for Properties acquired during 1997, from their respective
acquisition dates through March 31, 1997, are included in the Company's
historical March 31, 1997 consolidated statement of income.
Rental revenue in these pro forma financial statements (both historical and
pro forma) is generated from leases that are "net leases," under which the
tenant is responsible for substantially all costs of real estate taxes,
insurance and ordinary maintenance. Pro forma rental income represents
straight-line rent as provided by GAAP, calculated as the difference
between the cash rent paid under the lease and the average rent due over
the noncancellable term of the lease.
The pro forma rental revenue adjustment consists of the following
transactions as if they had occurred on January 1, 1996 and were carried
forward through March 31, 1997:
<TABLE>
<CAPTION>
RENTAL REVENUE
--------------
<S> <C>
CRIT Acquisition $ 895
Bull Information Systems Acquisition 257
Exel Pennsylvania Properties Acquisition 648
Other Acquisition 253
Sale of Ross Stores Newark Property (811)
-------
$ 1,242
=======
</TABLE>
Applicable pro forma interest expense is calculated based on annual
interest rates on the respective debt as of the acquisition dates. The pro
forma interest expense adjustment includes (i) the impact of the Salt Lake
City Refinancing (ii) repayment of the Credit Facility with proceeds from
the sale of the Ross Stores Newark Property, and (iii) the impact of
interest on acquisitions described above as if they had occurred on January
1, 1997.
The pro forma depreciation expense adjustment consists of the following
transaction as if they had occurred on January 1, 1996 and were carried
forward through March 31, 1997:
<TABLE>
<CAPTION>
DEPRECIATION
------------
<S> <C>
CRIT Acquisition $ 237
Bull Information Systems Acquisition 61
Exel Pennsylvania Properties Acquisition 130
Other Acquisition 52
Sale of Ross Stores Newark Property (182)
-----
$ 298
=====
</TABLE>
(2) This amount represents the minority interest in the net income of LCIF due
to the issuance of OP Units in connection with the acquisition of the
Company's Salt Lake City Property and the Exel Pennsylvania Properties
Acquisition.
(3) Primary net income per share is computed by dividing net income reduced by
preferred dividends by the weighted average number of common and diluted
common equivalent shares outstanding during the period. Fully diluted net
income per share amounts are similarly computed but include the effect when
dilutive of the Company's other potentially dilutive securities. Fully
dilutive net income excluded preferred dividends and is increased by
minority interest resulting from the assumed conversion of the limited
operating partnership units. The company's Convertible Preferred Stock and
Exchangeable Notes are excluded from the pro forma computations due to
their anti-dilutive effect during the period.
<PAGE> 7
(4) This amount consists of the real estate values of the following
transactions as if they had occurred on March 31, 1997:
<TABLE>
<S> <C>
CRIT Acquisition $ 32,945
Bull Information Systems Acquisition 10,905
Sale of Ross Stores Newark Property (30,844)
Rancho Bernardo California Acquisition 7,725
--------
$ 20,731
========
</TABLE>
(5) This adjustment represents the effect of the sale of the Ross Stores Newark
Property as if it occurred on March 31, 1997.
(6) This adjustment includes the cash portion of the acquisitions of properties
described in (4) above and the write off of deferred rent receivable
related to the possible sale of the Ross Stores Newark Property.
(7) This amount reflects the effects of (i) the Salt Lake City Refinancing,
(ii) repayment of the Credit Facility with the proceeds of the sale of the
Ross Stores Newark Property, and (iii) assumption of debt in connection
with the CRIT Acquisition.
(8) This amount primarily includes the effect of the CRIT Acquisition and the
Bull Information Systems Acquisition.
(9) The increase in stockholders' equity is attributable to (i) the issuance of
625 shares of Convertible Preferred Stock at a price of $12.50 per share
and (ii) the issuance of approximately 1,319 shares, of Common Stock at
$13.00 per share in connection with the CRIT Acquisition.
<PAGE> 8
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 hereunto duly authorized.
LEXINGTON CORPORATE PROPERTIES, INC.
By: /s/ T. Wilson Eglin
----------------------------------------
T. Wilson Eglin
President and Chief Operating Officer
Date: June 17, 1997
