<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(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, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee required]
For the transition period from ______________________ to _______________________
Commission File Number 1-12386
LEXINGTON CORPORATE PROPERTIES TRUST
------------------------------------
(Exact name of Registrant as specified in its charter)
Maryland 13-3717318
----------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
355 Lexington Avenue
New York, NY 10017
----------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 692-7260
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
--------------------------- -------------------
Common Shares, par value $.0001 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of the voting shares held by non-affiliates of the
Registrant as of February 27, 1998 was $236,478,000.
Number of common shares outstanding as of February 27, 1998 was 16,520,248.
Number of preferred shares outstanding as of February 27, 1998 was 2,000,000.
Documents incorporated by reference: The Definitive Proxy Statement for
Registrant's 1998 Annual Meeting of Shareholders is incorporated herein by
reference into Part III.
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<PAGE> 2
PART I.
Forward-Looking Statements
When used in this Form 10-K Report, the words "believes," "expects," "estimates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially. In particular, among the factors that could
cause actual results to differ materially are continued qualification as a real
estate investment trust, general business and economic conditions, competition,
increases in real estate construction costs, interest rates, accessibility of
debt and equity capital markets and other risks inherent in the real estate
business including tenant defaults, potential liability relating to
environmental matters and illiquidity of real estate investments. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
ITEM 1. BUSINESS
General
Lexington Corporate Properties Trust (the "Company"), formerly Lexington
Corporate Properties, Inc., is a Maryland statutory real estate investment trust
that acquires, owns, and manages a diverse portfolio of office, industrial and
retail properties. The real properties owned by the Company are, with one
exception, subject to triple net leases to corporate tenants. References herein
to the "Company" shall include references to the Company, two affiliated
partnerships (the "Partnerships") and the Company's predecessor, Lexington
Corporate Properties, Inc., a Delaware corporation which was organized in
October 1993, reincorporated in Maryland in June 1994 and was merged into the
Company on December 31, 1997.
As of December 31, 1997, the Company's real property portfolio consisted of
fifty properties (or interests therein) (the "Properties") located in
twenty-five states, including warehousing, distribution and manufacturing
facilities, office buildings and retail properties containing an aggregate of
approximately 6.95 million net rentable square feet of space. This does not
include the Newark, California property held for sale. All of the Company's
Properties, with one exception, are subject to triple net leases, which are
generally characterized as leases in which the tenant bears all, or
substantially all, of the costs and cost increases for real estate taxes,
insurance and ordinary maintenance. The Company also has ownership interests of
33.85% and 19% in two partnerships whose real estate assets each consist of a
property subject to a triple net lease. These two properties consist of an
aggregate of 217,000 square feet of net rentable space. For the years ended
December 31, 1997, 1996 and 1995, the Company's Properties generated
consolidated rental revenue of approximately $42.5 million, $31.2 million and
$24.5 million, respectively. The Properties are more fully described in Item 2
below.
Of the fifty-one Properties indirectly or directly owned by the Company, the
three following properties accounted for 10% or more of consolidated rental
revenues for the years ended December 31:
<TABLE>
<CAPTION>
Property 1997 1996 1995
-------- ---- ---- ----
<S> <C> <C> <C>
Glendale, Arizona 4% 8% 13%
Newark, California 6% 10% 13%
Salt Lake City, Utah 20% 16% -
</TABLE>
Objectives and Strategy
The Company's primary objectives are to increase Funds From Operations (as
defined in Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations) and cash available for distribution to its
shareholders. Since 1995, management has principally focused on:
o effectively managing assets through lease extensions, revenue
enhancing property expansions, opportunistic property sales and
redeployment of assets, when advisable;
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<PAGE> 3
o acquiring portfolios and individual net lease properties from third
parties, completing sale/leaseback transactions, acquiring
build-to-suit properties and acquiring properties from affiliated
net lease partnerships; and
o refinancing existing indebtedness at lower average interest rates
and increasing the Company's access to capital to finance property
acquisitions and expansions.
Internal Growth; Effectively Managing Assets
Tenant Relations and Lease Compliance. The Company maintains close contact
with its tenants in order to understand their future real estate needs. The
Company monitors the financial, property maintenance and other lease obligations
of its tenants through a variety of means, including periodic reviews of
financial statements and physical inspections of the Properties. The Company
performs annual inspections of those Properties where it has an ongoing
obligation with respect to the maintenance of the Property and for all
Properties during each of the last three years immediately prior to lease
expiration. Biannual physical inspections are undertaken for all other
Properties.
Extending Lease Maturities. The Company seeks to extend its leases in
advance of their expiration in order to maintain a balanced lease rollover
schedule. Since February 1994, the Company has entered into lease extensions of
three years or more on ten of its Properties.
Revenue Enhancing Property Expansions. The Company undertakes expansions
of its Properties based on tenant requirements. The Company believes that
selective property expansions can provide it with attractive rates of return and
actively seeks such opportunities.
Property Sales and Redeployment of Assets. The Company may determine to
sell a Property, either to the Property's existing tenant or to a third party,
if it deems such disposition to be in the Company's best interest. As of
December 31, 1997, the Company had sold two Properties. The restrictions
applicable to REITs may limit the Company's ability to dispose of a property.
Acquisition Strategies
The Company seeks to enhance its net lease property portfolio through
acquisitions of general purpose, efficient, well-located buildings in growing
markets. Management has diversified the Company's portfolio by geographical
location, tenant industry segment, lease term expiration and property type with
the intention of providing steady internal growth with low volatility.
Management believes that such diversification should help insulate the Company
from regional recession, industry specific downturns and price fluctuations by
property type. Prior to effecting any acquisitions, management analyzes the (i)
property's design, construction quality, efficiency, functionality and location
with respect to the immediate sub-market, city and region; (ii) lease integrity
with respect to term, rental rate increases, corporate guarantees and property
maintenance provisions; (iii) present and anticipated conditions in the local
real estate market; and (iv) prospects for selling or releasing the property on
favorable terms in the event of a vacancy. Management also evaluates each
potential tenant's financial strength, growth prospects, competitive position
within its respective industry and a property's strategic location and function
within a tenant's operations or distribution systems. Management believes that
its comprehensive underwriting process is critical to the assessment of
long-term profitability of any investment by the Company.
Operating Partnership Structure. The operating partnership structure
enables the Company to acquire properties by issuing to a seller, as a form of
consideration, Operating Partnership Units ("OP Units"). Management believes
that this structure facilitates the Company's ability to raise capital and to
acquire portfolio and individual properties by enabling the Company to structure
transactions which may defer tax gains for a contributor of property while
preserving the Company's available cash for other purposes, including the
payment of distributions. The Company has used OP Units as a form of
consideration in connection with the acquisition of 15 of the 32 Properties or
the interests therein acquired by the Company since January 1, 1995 (including
the 2 properties in the 2 unconsolidated partnerships).
Acquisitions of Portfolio and Individual Net Lease Properties. The Company
seeks to acquire portfolio and individual properties that are leased to
creditworthy tenants under long-term net leases.
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Management believes there is significantly less competition for the acquisition
of property portfolios containing a number of net leased properties located in
more than one geographic region. Management also believes that the Company's
geographical diversification, acquisition experience and access to capital will
allow it to compete effectively for the acquisition of such net leased
properties.
Sale/Leaseback Transactions. The Company seeks to acquire portfolio and
individual net lease properties in sale/leaseback transactions. The Company
selectively pursues sale/leaseback transactions with creditworthy
sellers/tenants with respect to properties that are integral to the
sellers'/tenants' ongoing operations.
Build-to-suit Properties. The Company may also acquire, after construction
has been completed, "build-to-suit" properties that are entirely pre-leased to
their intended corporate users before construction. As a result, the Company
does not assume the risk associated with the construction phase of a project.
Acquisitions from Affiliated Net Lease Partnerships. Management believes
that net lease partnerships affiliated with the Company provide it with an
opportunity to acquire properties with which management is already familiar. As
of December 31, 1997, the Company had acquired ten Properties and minority
interests in two additional properties from its affiliated limited partnerships.
On January 29, 1998, the Company completed the acquisition of partnership
interests in two limited partnerships, one of which was an affiliate of an
officer of the Company, in exchange for the Company's operating partnership
units. The assets of the partnerships acquired included approximately $23.5
million in cash. The units are exchangeable for an equal number of Common Shares
and are entitled to receive distributions at the same dividend rate as the
common shares.
The LCP Group, L.P. ("LCP"), an affiliate of E. Robert Roskind, Chairman of the
Board of Directors and Co-Chief Executive Officer of the Company, has granted
the Company an option (the "Option"), exercisable at any time, to acquire
general partnership interests ("General Partnership Interests") currently owned
by LCP in two limited partnerships, Net 1, L.P. and Net 2, L.P. (together, the
Net Partnerships"), which own net leased office, industrial and retail
properties. The Net Partnerships own a total of 61 single-tenant properties
located in 16 states which contain approximately 1.4 million net rentable square
feet. The tenants of such properties include Alco Standard Corporation,
Ameritech Services, Honeywell, Inc. and Wal-Mart Stores, Inc. Under the terms of
the Option, the Company, subject to review of any such transaction by the
independent members of its Board of Directors, may acquire the General
Partnership Interests at their fair market value based upon a formula relating
to partnership cash flows, with the Company retaining the option of paying such
fair market value in securities of the Company, OP Units, cash or a combination
thereof. The Company has not yet determined whether to exercise the Option.
Refinancing Existing Indebtedness and Increasing Access to Capital
As a result of the Company's financing activities, the weighted average
interest rate on the Company's outstanding indebtedness has been reduced from
approximately 10.00% as of December 31, 1994 to approximately 8.17% as of
December 31, 1997. In addition, management is constantly pursuing opportunities
to increase the Company's access to public and private capital in order to
achieve maximum operating flexibility.
Competition. The real estate business is highly competitive and the Company
competes with numerous established companies having significant resources and
experience.
Environmental Matters. Under various federal, state and local environmental
laws, statutes, ordinances, rules and regulations, an owner of real property may
be liable for the costs of removal or redemption of certain hazardous or toxic
substances at, on, in or under such property as well as certain other potential
costs relating to hazardous or toxic substances (including government fines and
penalties and damages for injuries to persons and adjacent property). Such laws
often impose liability without regard to whether the owner knew of, or was
responsible for, the presence or disposal of such substances. Although the
Company's tenants are primarily responsible for any environmental damage and
claims related to the leased premises, in the event of the bankruptcy or
inability of the tenant of such premises to satisfy any obligations with respect
thereto, the Company may be required to satisfy such obligations. In addition,
under certain environmental laws, the Company, as the owner of such properties,
may be held directly liable for any such damages or claims irrespective of the
provisions of any lease.
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From time to time, in connection with the conduct of the Company's business, and
prior to the acquisition of any property from a third party or as required by
the Company's financing sources, the Company authorizes the preparation of Phase
I environmental reports with respect to its properties. Based upon such
environmental reports and management's ongoing review of its properties, as of
the date of this Report, management was not aware of any environmental condition
with respect to any of the Company's Properties which management believed would
be reasonably likely to have a material adverse effect on the Company. There can
be no assurance, however, that (i) the discovery of environmental conditions,
the existence or severity of which were previously unknown, (ii) changes in law,
(iii) the conduct of tenants or (iv) activities relating to properties in the
vicinity of the Company's Properties will not expose the Company to material
liability in the future. Changes in laws increasing the potential liability for
environmental conditions existing on properties or increasing the restrictions
on discharges or other conditions may result in significant unanticipated
expenditures or may otherwise adversely affect the operations of the Company's
tenants, which would adversely affect the Company's funds from operations.
Employees. As of December 31, 1997, the Company had a total of twenty-three
employees.
Industry Segments. The Company operates in one industry segment, investment in
net leased real property.
ITEM 2. PROPERTIES
As of December 31, 1997, the net book value of the Company's real property
portfolio totaled approximately $415.4 million, not including the Newark,
California property held for sale. The Company does not believe that historical
book value is necessarily indicative of current fair market value. As of
December 31, 1997, forty-one of the fifty-one Properties were subject to
outstanding mortgages, including accrued and unpaid interest as of such date, of
approximately $220.6 million. This debt includes the amount outstanding under
the Company's secured revolving credit facility and the REMIC financing.
1997 Property Acquisitions
During 1997, the Company made the following acquisitions:
<TABLE>
<CAPTION>
Annualized
Base Rent
Date of Purchase 12-31-97 Lease Square
Acquisition Tenant Location Price ($M) ($000's) Expires Feet
- ----------- ------ -------- ---------- -------- ------- ----
<C> <S> <C> <C> <C> <C> <C>
February 20 Johnson Controls, Inc. Cottondale, AL $ 2.910 $ 289 02-07 58,800
March 19 Exel Logistics, Inc. Various * 27.428 2,772 11-06 761,200
May 1 Cymer, Inc. Rancho Bernardo, CA 7.707 755 12-09 65,755
July 9 Bull HN Info. Systems, Inc. Phoenix, AZ 10.990 972 10-05 137,058
July 22 Lockheed Martin Corporation Marlborough, MA 15.541 1,671 12-06 126,000
September 4 FirstPlus Financial Group, Inc. Dallas, TX 32.645 3,224 08-12 247,968
October 31 Ryder Integrated Logistics, Inc. Waterloo, IA 9.321 891 07-12 276,480
December 31 Stevens-Arnold, Inc. Milpitas, CA 22.138 2,006 12-05 100,026
December 31 Allied Holdings, Inc. Decatur, GA 14.633 1,351 12-07 112,248
December 31 Circuit City Stores, Inc. Richmond, VA 27.234 2,478 02-10 288,562
December 31 Dana Corp. Gordonsville, TN 4.902 325 08-07 148,000
December 31 Allegiance Healthcare Bessemer, AL 3.377 473 11-01 123,924
----- --- -------
TOTAL $ 178.826 $17,207 2,446,021
========== ======= =========
</TABLE>
* Consists of three properties; two located in New Kingston, PA, one in
Mechanicsburg, PA.
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<PAGE> 6
Information Regarding Properties Representing in Excess of 10% of Rental Revenue
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Glendale, Arizona Property
Occupancy 100% 100% 100%
Number of tenants 1 1 1
Annual straight-line rental revenue ($000) $1,892 $2,649 $3,249
Rent per square foot $ 7.50 $10.50 $12.88
Percentage of consolidated rental revenue 4% 8% 13%
Newark, California Property
Occupancy 100% 100% 100%
Number of tenants 1 1 1
Annual straight-line rental revenue ($000)(for the
period January 1 to September 30, 1997) $2,432 $3,242 $3,242
Rent per square foot $ 6.37 $ 6.37 $ 6.37
Percentage of consolidated rental revenue 6% 10% 13%
Salt Lake City, Utah Property
Occupancy 100% 100% N/A
Number of tenants 1 1
Annual straight-line rental revenue ($000)
(for 1996 from acquisition date,
May 22, 1996 to December 31, 1996) $8,469 $5,103
Rent per square foot $28.71 $27.68
Percentage of consolidated rental revenue 20% 16%
</TABLE>
Additional information regarding the Glendale Property, the Newark Property and
the Salt Lake City Property is set forth in the table below and in Schedule III
to this report on Form 10-K.
Minimum Future Rent
Minimum future rents receivable under non-cancelable operating leases during the
base terms for the Properties owned by the Company at December 31, 1997 are as
follows (in $000's):
<TABLE>
<CAPTION>
Year ending
December 31 Amount
----------- ------
<S> <C>
1998 $ 48,944
1999 49,179
2000 49,301
2001 47,007
2002 43,774
2003-2007 187,725
2008-2012 61,225
2013-2014 645
---------
$ 487,800
=========
</TABLE>
Currently, only one of the Properties, the property located in Memphis,
Tennessee is vacant and being marketed for re-leasing. The marketing program has
included a national mailing to brokers.
Table Regarding Real Estate Holdings
The table on the following pages sets forth certain information relating to the
Company's real property portfolio as of December 31, 1997, not including the
Newark, California property held for sale:
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<TABLE>
<CAPTION>
===========================================================================================================================
Land Net
Tenant Property Type/ Area Rentable
Property Location (Guarantor) Year Constructed (acres) Square Feet
===========================================================================================================================
<S> <C> <C> <C> <C>
3350 Miac Cove Road Federal Express Corp. Office/Industrial 10.92 141,359
Memphis, TN 1987
904 Industrial Road Walker Manufacturing Company Office/Industrial 20.00 195,640
Marshall, MI (Tenneco Automotive, Inc.) 1968 & 1972
1601 Pratt Avenue Walker Manufacturing Company Office/Industrial 8.26 53,600
Marshall, MI (Tenneco Automotive, Inc.) 1979
19019 No. 59th Avenue Honeywell, Inc. Research/ 51.79 252,300
Glendale, AZ Development
1985
567 South Riverside Drive Crown Cork & Seal Co., Inc. Warehouse/ 5.80 146,000
Modesto, CA Manufacturing
1970 & 1976
1800 Third Avenue North Allegiance Healthcare Corp. (1) Industrial 10.16 123,924
Bessemer, AL (Baxter International, Inc.) 1991
Tappan Park White Consolidated Industries Warehouse/ 26.57 296,720
22 Chambers Road Distribution
Mansfield, OH 1970
10419 North 30th Street Time, Inc. Office 14.38 132,981
Tampa, FL 1986
3102 Queen Palm Drive Time Customer Service, Inc. Office/Warehouse 15.02 229,605
Tampa, FL (Time, Inc.) 1986
109 Stevens Street Unisource Worldwide, Inc. Warehouse/ 7.00 168,800
Jacksonville, FL Industrial
1958 & 1969
3615 North 27th Avenue Bank One, Arizona, N.A. (2) Office 10.26 179,280
Phoenix, AZ 1960 & 1979
9580 Livingston Road GFS Realty, Inc. Retail 10.60 107,337
Oxon Hill, MD (Giant Food, Inc.) 1976
<CAPTION>
==================================================================================================================================
Base Lease Term 1998 (E)
and Annual Rents 1998 Straight-Line
per Net Rentable Renewal Minimum Rental
Property Location Square Foot Options Rent ($000) Revenue ($000)
==================================================================================================================================
<S> <C> <C> <C> <C>
3350 Miac Cove Road 02/01/88 - 01/31/98 * $107 $99
Memphis, TN 02/01/93 - 01/31/98: $9.09
904 Industrial Road 08/18/87 - 08/17/00 None $487 $487
Marshall, MI 08/18/97 - 08/17/00: $2.49
1601 Pratt Avenue 08/18/87 - 08/17/00 None $167 $167
Marshall, MI 08/18/97 - 08/17/00: $3.11
19019 No. 59th Avenue 07/16/86 - 07/15/01 (4) 5 year $1,892 $1,892
Glendale, AZ 07/16/96 - 07/15/01: $7.50
567 South Riverside Drive 09/26/86 - 09/25/01 (1) 5 year $293 $293
Modesto, CA 09/26/96 - 09/25/01: $2.01
1800 Third Avenue North 11/01/91 - 11/01/01 (2) 5 year $473 $473
Bessemer, AL 11/01/91 - 11/01/01: $3.81
Tappan Park 12/31/86 - 12/31/01 (2) 5 year $593 $593
22 Chambers Road 01/01/97 - 12/31/01: $2.00
Mansfield, OH
10419 North 30th Street 04/01/87 - 03/31/02 (4) 5 Year $1,168 $1,099
Tampa, FL 01/01/97 - 12/31/97: $8.29
01/01/98 - 12/31/98: $8.78
01/01/99 - 12/31/99: $9.31
01/01/00 - 12/31/00: $9.87
01/01/01 - 12/31/01: $10.46
01/01/02 - 03/31/02: $11.09
3102 Queen Palm Drive 08/01/87 - 07/31/02 (1) 5 year $931 $957
Tampa, FL 08/1/96 - 07/31/98: $3.98
08/1/98 - 07/31/01: $4.16
08/1/01 - 07/31/02: $4.39
109 Stevens Street 10/01/87 - 09/30/02 None $380 $380
Jacksonville, FL 10/01/97 - 09/30/02: $2.25
3615 North 27th Avenue 11/30/88 - 11/30/03 (1) 5 year $1,961 $1,961
Phoenix, AZ 06/01/96 - 11/30/98 $10.97
12/01/98 - 11/30/03: $10.60
9580 Livingston Road 01/03/77 - 02/29/04 (6) 5 year $408 $407
Oxon Hill, MD 03/01/77 - 02/29/04: $3.80
</TABLE>
(E) Estimated
* The tenant did not renew its lease and the property is currently vacant. The
Company is marketing the property for re-lease.
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<TABLE>
<CAPTION>
===========================================================================================================================
Land Net
Tenant Property Type/ Area Rentable
Property Location (Guarantor) Year Constructed (acres) Square Feet
===========================================================================================================================
<S> <C> <C> <C> <C>
Amigoland Shopping Center Montgomery Ward & Co., Inc. (1) Retail 7.61 115,000
(Mexico St. & Palm Blvd.) 1973
Brownsville, TX
Rockshire Village Center GFS Realty, Inc. (1) Retail 7.32 51,682
West Ritchie Parkway (Giant Food, Inc.) 1977
Rockville, MD
13430 Black Canyon Fwy. Bull HN Information Systems, Inc. (3) Office 13.37 137,058
Phoenix, AZ 1985 & 1994
1301 California Circle Stevens-Arnold, Inc. Office/Research 6.34 100,026
Milpitas, CA (BICC Public Ltd. Co.) & Development
1985
200 Southington The Hartford Fire Insurance Co. Office 12.40 153,364
Executive Park 1983
Southington, CT
24100 Laguna Hills Mall Federated Department Stores, Inc. (1) Retail 11.00 160,000
Laguna Hills, CA 1974
6910 S. Memorial Highway Toys "R" Us, Inc. (1) Retail 4.44 43,123
Tulsa, OK 1981
12535 SE 82nd Avenue Toys "R" Us, Inc. (1) Retail 5.85 42,842
Clackamas, OR 1981
18601 Alderwood Mall Blvd. Toys "R" Us, Inc. (1) Retail 3.64 43,105
Lynnwood, WA 1981
<CAPTION>
==================================================================================================================================
Base Lease Term 1998 (E)
and Annual Rents 1998 Straight-Line
per Net Rentable Renewal Minimum Rental
Property Location Square Foot Options Rent ($000) Revenue ($000)
==================================================================================================================================
<S> <C> <C> <C> <C>
Amigoland Shopping Center 11/01/74 - 10/31/04 (3) 5 year $153 $152
(Mexico St. & Palm Blvd.) 11/01/74 - 10/31/04: $1.33
Brownsville, TX
Rockshire Village Center 01/01/78 - 02/28/05 (1) 12 year $224 $224
West Ritchie Parkway 01/01/78 - 02/28/05: $4.33 (2) 10 year
Rockville, MD
13430 Black Canyon Fwy. 10/11/94 - 10/10/05 None $972 $1,028
Phoenix, AZ 10/11/94 - 10/10/00: $7.35
10/11/00 - 10/10/01: $7.70
10/11/01 - 10/10/02: $7.90
10/11/02 - 10/10/03: $8.10
10/11/03 - 10/10/04: $8.30
10/11/04 - 10/10/05: $8.50
1301 California Circle 12/10/85 - 12/09/05 (9) 5 year $2,158 $2,548
Milpitas, CA 12/01/95 - 05/31/98: $20.04
06/01/98 - 11/31/00: $22.68
12/01/00 - 05/31/03: $25.56
06/01/03 - 12/09/05: $28.92
200 Southington 09/01/91 - 12/31/05 (1) 5 year $2,166 $2,009
Executive Park 01/01/95 - 12/31/05: $14.12
Southington, CT
24100 Laguna Hills Mall 02/01/76 - 01/31/06 (1) 8 year $677 $673
Laguna Hills, CA 02/01/80 - 01/31/06: $4.23 (2) 15 year
(1) 6 year
6910 S. Memorial Highway 06/01/81 - 05/31/06 (5) 5 year $354 $356
Tulsa, OK 06/01/86 -01/31/98: $7.58
02/01/98 - 05/31/01: $8.26
06/01/01 - 05/31/06: $8.40
12535 SE 82nd Avenue 06/01/81 - 05/31/06 (5) 5 year $414 $417
Clackamas, OR 07/01/94 - 01/31/98: $8.93
02/01/98 - 05/31/01: $9.74
06/01/01 - 05/31/06: $9.91
18601 Alderwood Mall Blvd. 06/01/81 - 05/31/06 (5) 5 year $387 $389
Lynnwood, WA 06/01/86 - 01/31/98: $8.29
02/01/98 - 05/31/01: $9.03
06/01/01 - 05/31/06: $9.18
</TABLE>
(E) Estimated
8
<PAGE> 9
<TABLE>
<CAPTION>
===========================================================================================================================
Land Net
Tenant Property Type/ Area Rentable
Property Location (Guarantor) Year Constructed (acres) Square Feet
===========================================================================================================================
<S> <C> <C> <C> <C>
West Wingfoot Road Toys "R" Us, Inc. (1) Industrial 7.56 123,293
Houston, TX 1981
245 Salem Church Road Exel Logistics Inc. Warehouse 12.52 252,000
Mechanicsburg, PA (NFC plc) 1985
6 Doughton Road Exel Logistics Inc. Warehouse 24.38 330,000
New Kingston, PA (NFC plc) 1989
34 East Main Street Exel Logistics Inc. Warehouse 9.66 179,200
New Kingston, PA (NFC plc) 1981
401 Elm Street Lockheed Martin Corp. Office/Research 36.94 126,000
Marlborough, MA (Honeywell) & Development
1960 & 1988
46600 Port Street Johnson Controls, Inc. Industrial 24.00 134,160
Plymouth, MI 1996
450 Stern Street Johnson Controls, Inc. Industrial 25.20 111,160
Oberlin, OH 1996
15911 Progress Drive Johnson Controls, Inc. Industrial 22.20 58,800
Cottondale, AL 1996
5917 S. La Grange Road Bally Total Fitness Corp. Retail/Health Club 2.73 25,250
Countryside, IL 1987
1160 White Horse Road Physical Fitness Centers of Retail/Health Club 2.87 31,750
Voorhees, NJ Philadelphia, Inc. 1987
(Bally Total Fitness Corp.)
5801 Bridge Street Bally Total Fitness Corp. Retail/Health Club 3.66 24,990
DeWitt, NY 1977 & 1987
<CAPTION>
==================================================================================================================================
Base Lease Term 1998 (E)
and Annual Rents 1998 Straight-Line
per Net Rentable Renewal Minimum Rental
Property Location Square Foot Options Rent ($000) Revenue ($000)
==================================================================================================================================
<S> <C> <C> <C> <C>
West Wingfoot Road 09/01/81 - 08/31/06 (5) 5 year $461 $478
Houston, TX 09/01/87 - 04/30/98: $3.25
05/01/98 - 08/31/06: $3.98
245 Salem Church Road 11/15/91 - 11/30/06 (2) 5 year $924 $1,000
Mechanicsburg, PA 12/01/97 - 11/30/00: $3.67
12/01/00 - 11/30/03: $4.01
12/01/03 - 11/30/06: $4.38
6 Doughton Road 11/15/91 - 11/30/06 (2) 5 year $1,245 $1,349
New Kingston, PA 12/01/97 - 11/30/00: $3.77
12/01/00 - 11/30/03: $4.12
12/01/03 - 11/30/06: $4.51
34 East Main Street 11/15/91 - 11/30/06 (2) 5 year $603 $654
New Kingston, PA 12/01/97 - 11/30/00: $3.37
12/01/00 - 11/30/03: $3.68
12/01/03 - 11/30/06: $4.02
401 Elm Street 07/22/97 - 12/17/06 (6) 5 year $1,671 $1,671
Marlborough, MA 07/22/97 - 12/17/01: $13.26
12/18/01 - 12/17/06:
75% of cumulative increase in CPI
46600 Port Street 12/23/96 - 12/22/06 (2) 5 year $678 $678
Plymouth, MI 12/23/97 - 12/22/06: CPI
450 Stern Street 12/23/96 - 12/22/06 (2) 5 year $513 $513
Oberlin, OH 12/23/97 - 12/22/06: CPI
15911 Progress Drive 02/19/97 - 02/18/07 (2) 5 year $300 $300
Cottondale, AL 02/19/97 - 02/18/98: $4.91
02/19/98 - 02/18/07:
3x CPI annual escalations not to
exceed 4.5%
5917 S. La Grange Road 07/13/87 - 07/12/07 (2) 5 year $574 $542
Countryside, IL 07/13/97 - 07/12/02: $22.73
07/13/02 - 07/12/07: $26.14
1160 White Horse Road 07/14/87 - 07/13/07 (2) 5 year $713 $673
Voorhees, NJ 07/14/97 - 07/13/02: $22.45
07/14/02 - 07/13/07: $25.82
5801 Bridge Street 08/19/87 - 08/18/07 (2) 5 year $444 $419
DeWitt, NY 08/19/97 - 08/18/02: $17.78
08/19/02 - 08/18/07: $20.45
</TABLE>
(E) Estimated
9
<PAGE> 10
<TABLE>
<CAPTION>
===========================================================================================================================
Land Net
Tenant Property Type/ Area Rentable
Property Location (Guarantor) Year Constructed (acres) Square Feet
===========================================================================================================================
<S> <C> <C> <C> <C>
One Spricer Drive Dana Corp. Industrial 20.95 148,000
Gordonsville, TN 1983 & 1985
160 Clairemont Avenue Allied Holdings, Inc. Office 2.98 112,248
Decatur, GA 1983
2655 Shasta Way Fred Meyer, Inc. Retail 13.90 178,204
Klamath Falls, OR 1986
7272 55th Street Circuit City Stores, Inc. Retail 3.93 45,308
Sacramento, CA 1988
6405 South Viriginia St Circuit City Stores, Inc. Retail 2.72 31,400
Reno, NV 1988
5055 West Sahara Avenue Circuit City Stores, Inc. Retail 2.57 36,053
Las Vegas, NV 1988
4733 Hills & Dales Scandinavian Health Spa, Inc. Retail/Health Club 3.32 37,214
Canton, OH (Bally Total Fitness Holding Corp.) 1987
Highway 21 South Wal-Mart Stores, Inc. Retail 5.21 56,132
Jacksonville, AL 1982
295 Chipeta Way Northwest Pipeline Corp. (1) Office 19.79 295,000
Salt Lake City, UT 1982
King St. (Fort Street Mall) Liberty House, Inc. (1) Retail 1.22 85,610
Honolulu, HI 1980
<CAPTION>
==================================================================================================================================
Base Lease Term 1998 (E)
and Annual Rents 1998 Straight-Line
per Net Rentable Renewal Minimum Rental
Property Location Square Foot Options Rent ($000) Revenue ($000)
==================================================================================================================================
<S> <C> <C> <C> <C>
One Spricer Drive 01/01/84 - 08/31/07 (2) 5 year $325 $341
Gordonsville, TN 08/01/96 - 07/31/99: $2.20 (1) 4.11 year
08/01/99 - 07/31/02: $2.26
08/01/02 - 07/31/05: $2.33
08/01/05 - 08/31/07: $2.40
160 Clairemont Avenue 01/01/98 - 12/31/07 (2) 5 year $1,351 $1,530
Decatur, GA 01/01/98 - 12/31/98: $12.03
01/01/98 - 12/31/07:
2.75% annual escalations
2655 Shasta Way 03/10/88 - 03/31/08 (3) 10 year $1,009 $1,009
Klamath Falls, OR 03/10/88 - 03/31/08: $5.66
7272 55th Street 10/28/88-10/27/08 (3) 10 year $358 $376
Sacramento, CA 10/28/93-10/27/98: $7.78
10/28/98-10/27/03: $8.54
10/28/03-10/27/08: $9.30
6405 South Viriginia St 12/16/88 - 12/15/08 (3) 10 year $306 $325
Reno, NV 12/16/93 - 12/15/98: $9.71
12/16/98 - 12/15/03: $10.65
12/16/03 - 12/15/08: $11.60
5055 West Sahara Avenue 12/16/88 - 12/15/08 (3) 10 year $261 $278
Las Vegas, NV 12/16/93 - 12/15/98: $7.23
12/16/98 - 12/15/03: $7.93
12/16/03 - 12/15/08: $8.64
4733 Hills & Dales 01/01/89 - 12/31/08 (2) 5 year $626 $685
Canton, OH 01/01/97 - 12/31/97: $16.46
01/01/98 - 12/31/98: $16.82
01/01/99 - 12/31/08:
2.2% annual escalations
Highway 21 South 08/31/83 - 01/31/09 (5) 5 year $146 $146
Jacksonville, AL 09/01/87 - 01/31/09: $2.60
295 Chipeta Way 10/01/82 - 09/30/09 (1) 9 year $8,571 $8,571
Salt Lake City, UT 10/01/97 - 09/30/09: $29.06 (1) 10 year
subject to a CPI adjustment on a
portion of the rent.
King St. (Fort Street Mall) 10/01/80 - 09/30/09 (1) 9.7 year $963 $971
Honolulu, HI 10/01/95 - 09/30/05: $11.25 (1) 2 year
10/01/05 - 09/30/09: $11.56 (3) 5 year
</TABLE>
(E) Estimated
10
<PAGE> 11
<TABLE>
<CAPTION>
===========================================================================================================================
Land Net
Tenant Property Type/ Area Rentable
Property Location (Guarantor) Year Constructed (acres) Square Feet
===========================================================================================================================
<S> <C> <C> <C> <C>
16275 Technology Drive Cymer, Inc. Office/Research 2.73 65,755
Rancho Bernardo, CA & Development
1989
9950 Mayland Drive Circuit City Stores, Inc. (1) Office Headquarters 19.71 288,562
Richmond, VA 1990
7055 Highway 85 South Wal-Mart Stores, Inc. Retail 8.61 81,911
Riverdale, GA 1985
Highway 101 Fred Meyer, Inc. Retail 8.81 118,179
Newport, OR 1986
6345 Brackbill Boulevard Exel Logistics, Inc. Warehouse/ 29.01 507,000
Mechanicsburg, PA (NFC plc) Distribution
1985 & 1991
2280 Northeast Drive Ryder Integrated Logistics, Inc. Warehouse 25.70 276,480
Waterloo, IA (Ryder Systems. Inc.) 1996 & 1997
1600 Viceroy Drive FirstPlus Financial Group, Inc. Office 8.17 247,968
Dallas, TX 1986
Industrial Boulevard SKF USA, Inc. Manufacturing 21.13 72,868
Franklin, NC 1996
----------------------
634.91 6,954,241
======================
<CAPTION>
==================================================================================================================================
Base Lease Term 1998 (E)
and Annual Rents 1998 Straight-Line
per Net Rentable Renewal Minimum Rental
Property Location Square Foot Options Rent ($000) Revenue ($000)
==================================================================================================================================
<S> <C> <C> <C> <C>
16275 Technology Drive 06/01/96 - 12/31/09 None $755 $860
Rancho Bernardo, CA 06/01/97 - 05/31/99: $11.26
06/01/99 - 05/31/01: $11.82
06/01/01 - 05/31/03: $12.42
06/01/03 - 05/31/05: $13.04
06/01/05 - 05/31/07: $13.69
06/01/07 - 12/31/09: $14.26
9950 Mayland Drive 02/28/90 - 02/29/10 4) 10 year $2,478 $2,791
Richmond, VA 01/01/98 - 02/29/00: $8.59 1) 5 year
03/01/00 - 02/29/10: $9.91
7055 Highway 85 South 12/04/85 - 01/31/11 (5) 5 year $270 $270
Riverdale, GA 12/04/85 - 01/31/11: $3.29
Highway 101 06/01/86 - 05/31/11 (3) 5 year $826 $826
Newport, OR 06/01/86 - 05/31/11: $6.99
plus .5% of gross sales over
$20M ($61,000 in 1997)
6345 Brackbill Boulevard 10/29/90 - 03/19/12 2) 10 year $1,771 $1,933
Mechanicsburg, PA 3/20/97 - 03/19/02: $3.49
3/20/02 - 03/19/07: $4.02
3/20/07 - 03/19/12:
greater of $4.62 or fair market rent as
specified in lease
2280 Northeast Drive 08/01/97 - 07/31/12 (3) 5 year $891 $1,002
Waterloo, IA 08/01/97 - 07/31/02: $3.22
08/01/02 - 07/31/07: $3.61
08/01/07 - 07/31/12: $4.04
1600 Viceroy Drive 09/04/97 - 08/31/12 (4) 5 year $3,224 $3,557
Dallas, TX 09/04/97 - 08/31/02: $13.00
09/01/02 - 08/31/07: $14.30
09/01/07 - 08/31/12: $15.73
Industrial Boulevard 12/23/96 - 12/31/14 (3) 10 year $322 $322
Franklin, NC 12/23/96 - 12/31/99: $4.42
01/01/00 - 12/31/14: CPI
--------------------------------
$48,944 $50,674
================================
(E) Estimated
______________
(1) The Company holds leasehold interests in the land on which these buildings
are situated. The Company owns in fee simple the land on which all other
buildings are situated.
(2) Effective December 1, 2000, tenant may cancel lease upon 12 months notice
and payment of a cancellation fee equal to approximately $2.9 million.
(3) Assumes the tenant pays its rent annually in advance, resulting in a prompt
payment discount of 3.5% per year.
</TABLE>
11
<PAGE> 12
INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
<TABLE>
<CAPTION>
===================================================================================================================================
Base Lease Term
Net and Annual Rents
% Tenant Property Type/ Land Rentable per Net Rentable
Owned Property Location (Guarantor) Year Constructed Area Square Feet Square Foot
(acres)
===================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
19.00% 4450 California Street Mervyn's Retail 11.00 122,000 02/23/77 - 12/31/02
Bakersfield, CA (Dayton Hudson Corp.) 1976 01/01/78 - 12/31/02: $3.34
33.85% 7111 Westlake Terrace Hechinger & Co. (1) Retail 7.61 95,000 05/01/81 - 04/30/06
Bethesda, MD 1980 05/01/96 - 04/30/06: $8.13
---------- ---------------
18.61 217,000
========== ===============
<CAPTION>
===============================================================================
1998 (E)
1998 Straight-Line
% Renewal Minimum Rental
Owned Property Location Options Rent ($000) Revenue ($000)
===============================================================================
<C> <S> <C> <C> <C>
19.00% 4450 California Street (5) 5 year $407 $397
Bakersfield, CA
33.85% 7111 Westlake Terrace (1) 10 year $772 $648
Bethesda, MD (3) 5 year
----------------- ----------------
$1,179 $1,045
================= ================
</TABLE>
(E) Estimated.
- ----------
(1) The Company holds a leasehold interest in the land on which this building is
situated. The Company owns in fee simple the land on which the other building is
situated.
12
<PAGE> 13
ITEM 3. LEGAL PROCEEDINGS
The Company was sued in the United States District Court for the Northern
District of Illinois on May 31, 1995, by United Municipal Leasing Corporation.
The complaint filed in this case alleged that the Company breached a letter of
intent by failing to execute definitive documentation and close a transaction in
which the plaintiff proposed to sell property to the Company. The complainant
sought $800,000 in monetary damages. During 1997, the Court ruled in favor of
the Company. No monetary damages were incurred by the Company in connection with
this matter.
On August 26, 1996, Ross Stores, Inc., the tenant in the Newark Property,
exercised an option to purchase such Property for its fair market value. In
connection with this negotiation the Company was required to post a bond in an
amount equivalent to one year's rent. After some deliberation the parties have
negotiated to sell the property on or about April 1, 1998 for $24.55 million.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during the
last quarter of the calendar year ended December 31, 1997.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth certain information relating to the executive officers
of the Company:
NAME BUSINESS EXPERIENCE
E. ROBERT ROSKIND Mr. Roskind has served as the Chairman of the Board
Age 53 of Directors and Co-Chief Executive Officer of the
Company since October 1993. He founded The LCP Group,
L.P. ("LCP") in 1973 and has been its Chairman since
1976. LCP has acted as general partner in limited
partnerships in which the Company has had prior
dealings. Prior to founding LCP, Mr. Roskind headed
the net-leasing financing area of Lehman Brothers
Inc. He is also a general partner for a variety of
entities which serve as the general partner of
various partnerships that hold net leased real
properties or interests therein. Mr. Roskind is a
director of Berkshire Realty Company, Inc., Krupp
Government Income Trust I and Krupp Government Income
Trust II. Mr. Roskind received his B.S. in 1966 from
the University of Pennsylvania and is a 1969 Harlan
Fiske Stone Graduate of the Columbia Law School. He
has been a member of the Bar of the State of New York
since 1970.
RICHARD J. ROUSE Mr. Rouse has served as Co-Chief Executive Officer
Age 52 and a director of the Company since October 1993. He
served as the President of the Company from October
1993 to April 1996, and since April 1996 has served
as the Vice Chairman. Mr. Rouse was also a managing
director of LCP. He had been associated with LCP
since 1979 and had been engaged there in all aspects
of net lease finance, acquisition and syndication and
corporate financing transactions. Mr. Rouse graduated
from Michigan State University in 1968 and received
his M.B.A. in 1970 from the Wharton School of Finance
and Commerce of the University of Pennsylvania.
T. WILSON EGLIN Mr. Eglin has served as Chief Operating Officer of
Age 33 the Company since October 1993 and a director since
May 1994. He served as Executive Vice President from
October 1993 to April 1, 1996, and since April 1996
has served as the President. Prior to his current
position with the Company, Mr. Eglin had been
associated with LCP from 1987 to 1993 and had been
its Vice President-Acquisitions from 1990 to 1993. In
connection with his responsibilities with LCP, Mr.
Eglin was an officer of affiliated companies that own
and manage over 400 net leased real
13
<PAGE> 14
properties and was involved in all aspects of real
estate acquisition and finance, principally in net
leased transactions. Mr. Eglin received his B.A.
from Connecticut College in 1986.
ANTONIA G. TRIGIANI Ms. Trigiani has served as the Chief Financial
Age 37 Officer and Treasurer of the Company since October
1993. She had been associated with LCP since 1989 and
had been its Vice President - Asset Management since
1990 until resigning from her position with LCP in
April 1996. Prior to joining LCP, she was associated
with HRE Properties, a REIT listed on the New York
Shares Exchange, and Merrill Lynch, Hubbard Inc., a
real estate division of Merrill Lynch & Co., Inc. In
1982, Ms. Trigiani received her B.A. in business
administration from Saint Mary's College at Notre
Dame University.
PAUL R. WOOD Mr. Wood has served as the Vice President, Chief
Age 38 Accounting Officer and Secretary of the Company since
October 1993. He had been associated with LCP from
1988 to 1993 and from 1990 to 1993 had been
responsible for all accounting activities relating to
the net leased properties managed by LCP and its
affiliates. Prior to joining LCP, Mr. Wood was, from
1987 to 1988, associated with E. F. Hutton & Company
Inc. as a senior accountant. Mr. Wood received his
B.B.A. from Adelphi University in 1982 and has been a
Certified Public Accountant since 1985.
STEPHEN C. HAGEN Mr. Hagen has served as Senior Vice President of the
Age 55 Company since October 1996. Mr. Hagen had been
associated with LCP from 1995 to 1996. Prior to
joining LCP, Mr. Hagen was a principal of Pharus
Realty Investments, a money manager focused on real
estate sharess, and also served as Chief Operating
Officer of HRE Properties, a New York Shares Exchange
listed REIT. Mr. Hagen received his B.S. from the
University of Kansas in 1965 and his M.B.A. from the
Wharton School of Finance and Commerce in 1968.
PHILIP L. KIANKA Mr. Kianka joined the Company in 1997 as Vice
Age 41 President of Asset Management. Prior to joining
Lexington, from 1985 through 1997, Mr. Kianka served
as a Vice President and Senior Asset Manager at
Merrill Lynch Hubbard, Inc., a real estate division
of Merrill Lynch & Co., Inc. Mr. Kianka was involved
in real estate acquisitions, development and asset
management for a national portfolio of diversified
properties. Mr. Kianka received his B.A. from Clemson
University in 1978 and his M.A. from Clemson
University in 1981.
JANET M. KAZ Ms. Kaz has served as Vice President of the Company
Age 34 since May 1995 and as Asset Manager since October
1993. Prior to that, Ms. Kaz was a member of LCP's
property acquisition team from 1986 to 1990 and a
member of LCP's asset management team from 1991 to
1993. Ms. Kaz received her B.A. from Muhlenberg
College in 1985.
14
<PAGE> 15
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The Common Shares of the Company are listed for trading on the New York Stock
Exchange ("NYSE") under the symbol "LXP." The following table sets forth the
high and low sales prices as reported by the NYSE for the Common Shares of the
Company for each of the periods indicated below:
<TABLE>
<CAPTION>
For the Quarters Ended: High Low Cash Dividend
----------------------- ---- --- -------------
<S> <C> <C> <C>
December 31, 1997 $16.8125 $13.7500 $ 0.29
September 30, 1997 15.7500 13.8125 $ 0.29
June 30, 1997 14.5000 12.1250 $ 0.29
March 31, 1997 15.0000 12.1250 $ 0.29
December 31, 1996 15.0000 12.1250 $ 0.29
September 30, 1996 13.3750 11.5000 $ 0.28
June 30, 1996 12.3750 11.1250 $ 0.28
March 31, 1996 12.1250 10.5000 $ 0.27
</TABLE>
The closing price of the shares of the Company's Common Shares was $14.625 on
February 27, 1998.
As of February 27, 1998, the Company had 2,549 shareholders of record.
The Company's annualized dividend rate for the years ended December 31, 1997 and
1996 was $1.16 and $1.12 per share respectively. The Company's current
annualized dividend rate is $1.16 per share.
On February 13, 1998, the Company paid a dividend of $.29 per share to
shareholders of record on January 30, 1998.
Following is a summary of the taxable nature of the Company's dividends for the
three years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Total dividends per share $ 1.16 $ 1.10 $ 1.08
==== ==== ====
Percent taxable as
ordinary income 68.91% 95.46% 41.36%
Percent taxable as
long-term capital gains - - 24.71%
Percent non-taxable as
return of capital 31.09% 4.54% 33.93%
------- ------- ------
100.00% 100.00% 100.00%
====== ====== ======
</TABLE>
Dividends per share of $0.73, $1.00 and $0.68 were required for the Company to
maintain its REIT status in 1997, 1996 and 1995, respectively.
15
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth selected consolidated financial data for the Company as
of and for each of the years in the five-year period ended December 31, 1997.
The selected consolidated financial data for the Company should be read in
conjunction with the Consolidated Financial Statements and the related notes
appearing elsewhere in this report. (All amounts, except per share data, in
$000's.)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total revenue $ 43,569 $ 31,675 $ 25,002 $ 26,038 $ 25,871
Expenses, including minority interest (35,304) (25,565) (19,983) (20,559) (18,902)
Gain on sale of properties 3,517 -- 1,514 -- --
Proceeds from lease termination -- -- 1,600 -- --
Expenses of the mergers -- -- -- -- (2,441)
Transactional expenses -- (644) -- -- --
Loss on extinguishment of debt(1) (3,189) -- (4,849) -- --
--------- --------- --------- --------- ---------
Net income 8,593 5,466 3,284 5,479 4,528
========= ========= ========= ========= =========
Net income per common share - basic 0.33 0.58 0.35 0.59 0.48
========= ========= ========= ========= =========
Net income per common share - diluted 0.32 0.56 0.35 0.59 0.48
========= ========= ========= ========= =========
Cash dividends declared per common share 1.16 1.12 1.08 1.08 0.24
========= ========= ========= ========= =========
Net cash provided by operating activities 23,820 14,972 7,216 12,423 11,151
Net cash (used in)
provided by investing activities (110,764) (16,952) 7,887 -- --
Net cash provided by
(used in) financing activities 88,116 1,859 (15,610) (12,304) (12,780)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents 1,172 (121) (507) 119 (1,629)
========= ========= ========= ========= =========
Total assets 467,115 309,126 221,216 216,019 222,467
========= ========= ========= ========= =========
Long-term obligations (including related
accrued interest) 227,160 192,540 123,664 112,038 114,410
========= ========= ========= ========= =========
Funds from operations(2) 21,483 14,371 12,049 11,486 12,959
========= ========= ========= ========= =========
Rent received above
(below) straight line rent (924) (105) 400 569 420
========= ========= ========= ========= =========
</TABLE>
- ----------
(1) Loss on extinguishment of debt is reported as an extraordinary item on the
consolidated statements of income.
(2) The Company believes that Funds From Operations enhances an investor's
understanding of the Company's financial condition, results of operations and
cash flows. The Company believes that Funds From Operations is an appropriate
measure of the performance of an equity REIT, and that it can be one measure of
a REIT's ability to make cash distributions. Funds From Operations is defined by
the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as
"net income (or loss) (computed in accordance with generally accepted accounting
principles ("GAAP")), excluding gains (or losses) from debt restructuring and
sales of property, plus real estate depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures." The Company's
method of calculating Funds From Operations excludes other non-recurring revenue
and expense items and may be different from methods used by other REITs and
accordingly, is not comparable to such other REITs. Funds From Operations should
not be considered an alternative to net income, as an indicator of the Company's
operating performance or to cash flows from operating activities as determined
in accordance with GAAP, or as a measure of liquidity to other consolidated
income or cash flow statement data as determined in accordance with GAAP.
16
<PAGE> 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Company, which has elected to qualify as a real estate investment trust
under the Internal Revenue Code of 1986, acquires and manages net-leased
commercial properties. The Company has operated as a REIT since October 1993
when it initially issued 9.3 million shares of its Common Shares, approximately
169,000 units of special limited partnership units (which are exchangeable for
an equivalent number common shares shares) and approximately $1.877 million in
principal amount of 7.75% Subordinated Notes due 2000.
As of December 31, 1997, the Company was the indirect or direct owner of
fifty-one triple net leased real estate properties (or interests therein)
(including the Newark, California property held for sale).
On December 31, 1997, the Company completed a reorganization, becoming a
Maryland statutory real estate investment trust. Immediately prior to the
reorganization, the Company had been a Maryland corporation. The reorganization
did not result in any material change in the Company's business or operations.
Liquidity and Capital Resources
Real Estate Assets. As of December 31, 1997, the Company's real estate
assets consisted of the Properties. The Properties are located in twenty-five
states and contain an aggregate of approximately 7.5 million square feet of net
rentable space. With one exception, each Property is subject to a single tenant
triple net lease, which is generally characterized as a lease in which the
tenant pays all or substantially all of the cost and cost increases for real
estate taxes, capital expenditures, insurance and ordinary maintenance of the
Property.
During 1997, the Company acquired fourteen properties in ten states at a cost of
approximately $178.8 million. For further information reference is made to the
chart on page 5, Item 2.
The Company's principal sources of liquidity are revenue generated from the
Properties, interest on cash balances, amounts available under its Credit
Facility and amounts that may be raised through the sale of securities in
private or public offerings. For the year ended December 31, 1997, such leases
on the Properties generated approximately $42.5 million in revenue compared to
$31.2 million in 1996. On the basis of the leases in place as of December 31,
1997, minimum annual rent receivable under non-cancelable leases is $48.9
million for 1998.
Dividends. The Company has made quarterly distributions since October,
1986 without interruption. The Company paid a dividend of $.27 per share to
shareholders in respect of each of the calendar quarters of 1995; a dividend of
$.27 per share to shareholders in respect of the first quarter of 1996; $.28 per
share in respect of the second and third quarters of 1996; and $.29 per share in
respect of the fourth quarter of 1996 and the first, second and third quarters
of 1997. The dividend paid in respect of the fourth quarter of 1997, in the
amount of $.29 per share, was paid on February 13, 1998 to shareholders of
record as of January 30, 1998. The Company's annualized dividend rate is
currently $1.16 per share.
UPREIT Structure. The Company's UPREIT structure permits the Company to
effect acquisitions by issuing to a seller, as a form of consideration,
interests in partnerships controlled by the Company. All of such interests are
redeemable at certain times for Common Shares on a one-for-one basis and all of
such interests require the Company to pay certain distributions to the holders
of such interests. The Company accounts for these interests in a manner similar
to a minority interest holder. The number of Common Shares that will be
outstanding in the future should be expected to increase, and minority interest
expense should be expected to decrease, from time to time, as such partnership
interests are redeemed for Common Shares. The table set forth below provides
certain information with respect to such partnership interests as of December
31, 1997 (assuming the Company's dividend rate remains at $1.16 per share).
17
<PAGE> 18
<TABLE>
<CAPTION>
Total
1998 Annual
Redeemable Annualized Distribution
for Shares of Number Per Unit in 1998
Common Shares as of: of Units Distribution ($000's)
- -------------------- -------- ------------ --------
<S> <C> <C> <C>
At any time 169,109 $ 1.160 $ 196
May 1998 1,715,294 0.975 1,672
May 1998 114,006 1.080 123
January 1999 147,246 1.120 165
April 1999 480,028 1.160 557
January 2003 7,441 -- --
March 2004 52,335 0.270 14
November 2004 35,400 -- --
March 2005 36,825 -- --
January 2006 207,728 -- --
February 2006 23,267 -- --
May 2006 11,766 0.290 3
--------- ---------
Total 3,000,445 $ 2,730
========= =========
</TABLE>
Of the total number of units, 313,435 are owned by affiliates of the Company.
Financing
Exchangeable Redeemable Secured Notes. In March 1997, in connection with
the acquisition of certain properties leased to Exel, LCIF sold $25 million of
8% Exchangeable Redeemable Secured Notes (the "Notes") to an institutional
investor in a private placement. The Notes require interest only payments at 8%
per annum, payable semi-annually in arrears, and have a seven year term. The
Notes are secured by first mortgage liens on the Exel Properties, are guaranteed
by Lexington, and can be exchanged by the holders for Lexington common shares at
$13 per share beginning in the year 2000, subject to adjustment. The Notes may
be redeemed at Lexington's option after three years at a price of 103.2% of the
principal amount, declining to par after five years. The Notes are subordinated
to obligations under Lexington's Credit Facility.
Partnership Mergers. In connection with the acquisition of the Exel
Properties, an unaffiliated partnership (the "Exel Partnership") merged into a
subsidiary of the Company, Lepercq Corporate Income Fund L.P., ("LCIF"). As a
result of the merger, LCIF issued 480,028 partnership units redeemable for the
Company's Common Shares, which units are entitled to distributions at the same
dividend rate as Common Shares. At the time of the merger, the Exel
Partnership's sole assets were approximately $6.0 million of cash from the prior
sale of a property and the right to acquire the Exel Properties in a tax-free
exchange under Internal Revenue Code Section 1031.
On January 29, 1998 two affiliated partnerships merged into LCIF. As a result of
the merger, LCIF issued 1,454,906 partnership units redeemable for the Company's
Common Shares, which units are entitled to distributions at the same dividend
rate as common shares. At the time of the merger, the partnerships' sole assets
were approximately $23.5 million in cash from prior property sales and the right
to acquire properties in tax free exchanges under Internal Revenue Code Section
1031. The Company is currently in the process of completing such tax free
exchanges.
Revolving Credit Facility. In February 1997, the Company's secured
revolving credit facility (the "Credit Facility") was amended to extend the
maturity date to June 1999 and to increase the maximum borrowing availability to
$60.0 million. The Credit Facility bears interest at 1.5% over LIBOR and has an
interest rate period of one month, three months, or six months, at the option of
the Company. The Credit Facility contains various leverage, debt service
coverage, net worth maintenance and other customary covenants. Due to these
covenants, approximately $30 million was available to the Company at December
31, 1997. The Credit Facility matures on June 1, 1999, but will automatically
renew for successive two year terms unless the lender notifies the Company at
least twelve months in advance of the scheduled or extended maturity date of its
intention to terminate the Credit Facility. As of December
18
<PAGE> 19
31, 1997, the Company had borrowed $12 million. As the Credit Facility is
collateralized by seven of the Company's Properties, this amount is included in
the balance of mortgage notes payable as of December 31, 1997.
Preferred Shares Sale. On December 31, 1996, the Company entered into an
agreement with Five Arrows Realty Securities L.L.C ("Five Arrows") providing for
the sale of up to 2,000,000 shares of Senior Cumulative Convertible Preferred
Shares ("Preferred Shares") for an aggregate price of $25 million. In connection
with such sale, the Company has entered into certain related agreements with
Five Arrows, providing, among other things, for certain registration rights with
respect to such shares and the right to designate a member of the Board of
Directors under certain circumstances. The Preferred Shares, which are
convertible at any time at the holder's option into Common Shares on a
one-for-one basis, are entitled to quarterly distributions equal to the greater
of $.295 per share or 105% of the quarterly common share dividend.
On January 21, 1997, the Company sold 700,000 shares of Preferred Shares to Five
Arrows and used the proceeds of $8.75 million to repay approximately $8.0
million of mortgage debt, including prepayment premiums of $520,000. Such
mortgage debt had been bearing interest at 12.625% per annum and would have
required interest and principal payments of approximately $1.45 million in 1997.
On April 28, 1997, the Company sold an additional 625,000 shares of Convertible
Preferred Shares to Five Arrows. Net proceeds to the Company were approximately
$7.8 million. On May 1, 1997, the Company used the net proceeds to acquire the
Rancho Bernardo Property for $7.7 million.
On December 31, 1997, the Company sold an additional 675,000 shares of
Convertible Preferred Shares to Five Arrows. Net proceeds to the Company were
approximately $8.4 million. The Company used the net proceeds to satisfy a
portion of the purchase price of the Decatur, Georgia Property.
Debt Service Requirements. The Company's principal liquidity needs are the
payment of interest and principal on outstanding mortgage debt. As of December
31, 1997, a total of forty-one properties were subject to outstanding mortgages
which had an aggregate principal amount, including accrued interest, of $220.56
million. The weighted average interest rate on the Company's debt on such date
was approximately 8.17%. Approximate balloon payment amounts for the next five
calendar years are due as follows: $10.01 million in 1998; $17.56 million in
1999 (including the $12 million Credit Facility which may be extended); $13.09
million in 2000; $1.00 million in 2001 and $771,000 in 2002. See Note 5 of the
Company's Consolidated Financial Statements. The ability of the Company to make
such balloon payments will depend upon its ability to refinance the mortgage
related thereto, sell the related property, have available amounts under its
credit facility or access to other capital sufficient to satisfy such balloon
payments. The ability of the Company to accomplish such goals will be affected
by numerous economic factors affecting the real estate industry, including the
available mortgage rates at the time, the Company's equity in the mortgaged
properties, the financial condition of the Company, the operating history of the
mortgaged properties, the then current tax laws and the general national,
regional and local economic conditions at the time. The Company intends to repay
balloon payments due in 1998 with amounts available under the Credit Facility.
As of December 31, 1997, the Company's total consolidated indebtedness
(including subordinated notes payable and origination fees payable and the
respective related accrued interest) was approximately $227 million. See also
"Funds From Operations" below.
Lease Obligations. Because the Company's tenants bear all or substantially
all of the cost of property maintenance and capital improvements, the Company
does not anticipate significant needs for cash for property maintenance or
repairs. The Company generally funds property expansions with additional secured
borrowings, the repayment of which is funded out of rental increases under the
leases covering the expanded properties.
Shares Repurchase. On November 15, 1994, the Company announced that its
Board of Directors had authorized the Company to repurchase, from time to time,
up to 1,000,000 shares of its outstanding Common Shares, depending on market
conditions and other factors. As of December 31, 1997, the Company had
repurchased 172,100 shares, at an average price of approximately $9.80 per
share, all of which have been retired. There has been no repurchase of shares
since 1995.
Impact of Year 2000
The Company is evaluating its computer and communication systems to identify the
systems that could be affected by the "Year 2000" issue. The Year 2000 problem
is the result of computer programs being written using two digits rather than
four to define the applicable year. Any of the Company's systems
19
<PAGE> 20
that have time-sensitive software may recognize a date using "00"as the year
1900 rather than the year 2000. This could result in a major system failure or
miscalculations. The Company presently believes that the Year 2000 problem will
not pose operational problems for the Company's computer and communication
systems and will not have a material impact on the operations of the Company.
<TABLE>
<CAPTION>
Results of Operations ($000)
- ---------------------------- Increase(Decrease)
Selected Income Statement Data 1997 1996 1995 1997-1996 1996-1995
------ ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenues $43,569 31,675 25,002 $11,894 $ 6,673
Total expenses $32,862 25,519 19,890 $ 7,343 $ 5,629
Interest 16,644 12,818 10,295 3,826 2,523
Depreciation & amortization 10,608 7,627 5,817 2,981 1,810
General & administrative 3,920 3,125 2,694 795 431
Net Income $ 8,593 5,466 3,284 $ 3,127 $ 2,182
</TABLE>
Changes in the results of operations for the Company are primarily due to the
growth of its portfolio and costs associated with such growth. The increase in
interest expense due to the growth of the Company's portfolio has been offset
in 1997 by a reduction in the weighted average interest rate from 9.04% as of
December 31, 1996 to 8.17% as of December 31, 1997, due to debt refinancings
and repayments. The Company's general and administrative expenses have
decreased as a percentage of rental revenue to 9% in 1997 from 10% in 1996 and
11% in 1995 due to the growth of the Company's portfolio relative to these
expenses. Other expenses in 1996 included $644,000 of expenses which were
comprised of costs associated with a proposed equity offering which was
abandoned in favor of the completed private equity placement, and expenses
incurred in connection with transactions in progress for which expenses are
required to be charged to current operations.
The increase in net income for the year ended December 31, 1997 was primarily
attributable to the gain on sale of the Stratus Property in the amount of $3.517
million offset by extraordinary losses on extinguishment of debt (net of
minority interest) including $1.667 million in connection with the Stratus
Property mortgage repayment and $1.466 million in connection with the Salt Lake
City debt refinancing.
The increase in net income for the year ended December 31, 1996 was primarily
atrributable to a loss on extinguishment of debt incurred in 1995 in the amount
of approximately $4.849 million offset by items relating to the sale of the
Eagan, Minnesota property, a gain on the sale of approximately $1.5 million and
proceeds from lease termination of $1.6 million, less the related write-off of
deferred rent receivable of approximately $678,000.
Funds From Operations
Management believes that Funds From Operations enhances an investor's
understanding of the Company's financial condition, results of operations and
cash flows and believes it is an appropriate performance measure for an equity
REIT which provides an indication of a REIT's ability to make cash
distributions. Funds From Operations is defined by the National Association of
Real estate Investment Trusts, Inc. (NAREIT) as "net income (or loss) (computed
in accordance with generally accepted accounting principles ("GAAP")), excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures." The Company's method of calculating Funds From
Operations excludes other non-recurring revenue and expense items and may be
different from methods used by other REITs and, accordingly, is not comparable
to such other REITs. Funds From Operations should not be considered an
alternative to net income as an indicator of operating performance or to cash
flows from operating activities as determined in accordance with GAAP, or as a
measure of liquidity to other consolidated income or cash flow statement data as
determined in accordance with GAAP.
20
<PAGE> 21
The following table reflects the calculation of the Company's FFO and cash flow
activities for the years ended December 31, 1997, 1996 and 1995 ($000).
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Net income $ 8,593 $ 5,466 $ 3,284
Add back:
Depreciation and amortization of real estate 10,608 7,627 5,817
Minority interest's share of net income 2,442 690 93
Loss from debt restructuring 3,189 -- 4,849
Property arbitration litigation expense 168 -- --
Less:
Gain on sale of property (3,517) -- (1,514)
Write off of deferred rent receivable
related to property sale -- -- 678
Proceeds from lease termination -- -- (1,600)
--------- --------- ---------
Funds from operations before items below 21,483 13,783 11,607
Adjustments of other non-recurring items(1)
Non-recurring shares compensation -- 588 442
--------- --------- ---------
Funds From Operations $ 21,483 $ 14,371 $ 12,049
========= ========= =========
Cash flows from operating activities $ 23,820 $ 14,972 $ 7,216
Cash flows from investing activities (110,764) (16,952) 7,887
Cash flows from financing activities 88,116 1,859 (15,610)
========= ========= =========
</TABLE>
The Company's dividends paid to shareholders and distributions paid to
unitholders amounted to approximately 73.5%, 77.9% and 84.6% of the Company's
Funds From Operations for the years ended December 31, 1997, 1996 and 1995
respectively.
Accounting Standards
In June 1997, SFAS No. 130, "Reporting Comprehensive Income", and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, were
issued. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the accumulated
balance of other comprehensive income to be displayed separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. SFAS No. 131 establishes standards for reporting information about
operating segments in annual and interim financial statements. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. Categories required to be reported as well as reconciled to the
financial statements are segment profit or loss, certain specific revenue and
expense items, and segment assets. SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997. These standards will have no
impact on the Company's operations.
- ----------
(1) For purposes of the calculation of Funds From Operations ("FFO"), the
Company has added back to net income amounts for non-recurring shares
compensation which management believes to be appropriate adjustments based on
the non-recurring and unusual nature of such amounts. The Company's method of
calculating FFO may be different from methods used by other REITs. Non-recurring
shares compensation represents the expense of a simultaneous exercise and
re-granting of options to the Company's management during the period between
July 1995 and January 1996, which was intended to increase management's
ownership in the Company (a practice which has been discontinued). The Board of
Directors has determined that the Company will not engage in such practices in
the future. In 1996 transactional expenses of $644 were incurred. Management
believes such expenses were of an unusual and significant nature for the Company
at the time they were incurred. If such amount was added back to net income, FFO
for 1996 would have been $15.015 million.
21
<PAGE> 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
(formerly Lexington Corporate Properties, Inc.)
INDEX
Page
----
Independent Auditors' Report 23
Consolidated Balance Sheets as of December 31, 1997 and 1996 24
Consolidated Statements of Income
for the years ended December 31, 1997, 1996 and 1995 25
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1997, 1996 and 1995 26
Consolidated Statements of Cash Flows
for the years ended December 31, 1997, 1996 and 1995 27-28
Notes to Consolidated Financial Statements 29-44
Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation 45-47
- ----------
All other schedules have been omitted because the required financial information
is not applicable or the information is shown in the consolidated financial
statements or notes thereto.
22
<PAGE> 23
Independent Auditors' Report
The Shareholders
Lexington Corporate Properties Trust:
We have audited the consolidated financial statements of Lexington Corporate
Properties Trust, formerly Lexington Corporate Properties, Inc., and
consolidated subsidiaries as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we also have 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 consolidated financial statements and the 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 Lexington Corporate
Properties Trust and consolidated subsidiaries as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1997 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.
KPMG Peat Marwick LLP
New York, New York
January 22, 1998
23
<PAGE> 24
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
($000 except share and per share amounts)
December 31, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1997 1996
---- ----
<S> <C> <C>
Real estate, at cost (notes 3 and 5):
Buildings and building improvements $ 407,403 $ 287,534
Land and land estates 47,769 38,372
Land improvements 2,831 2,831
Fixtures and equipment 8,345 10,674
--------- ---------
466,348 339,411
Less: accumulated depreciation 50,993 51,343
--------- ---------
415,355 288,068
Property held for sale (note 10) 24,501 --
Cash and cash equivalents (note 5) 3,640 2,468
Restricted cash (note 4) 5,499 3,750
Deferred expenses (net of accumulated amortization
of $2,543 in 1997 and $2,955 in 1996) 4,283 3,734
Rent receivable (note 2) 7,638 7,843
Escrow deposits 1,249 104
Other assets, net 4,950 3,159
--------- ---------
$ 467,115 $ 309,126
========= =========
Liabilities and Shareholders' Equity
Mortgage notes payable, including accrued interest (note 5) $ 220,560 $ 186,188
Subordinated notes payable, including accrued interest (note 6) 1,973 1,973
Origination fees payable, including accrued interest and
accumulated accretion (note 13) 4,627 4,379
Accounts payable and other liabilities 4,880 1,394
--------- ---------
232,040 193,934
Minority interests (note 8) 28,240 22,533
--------- ---------
260,280 216,467
--------- ---------
Commitments and Contingencies (notes 3 and 10)
Preferred shares, par value $0.0001 per share; authorized
10,000,000 shares. Class A Senior Cumulative
Convertible Preferred, liquidation preference $25,000,
2,000,000 issued and outstanding at December 31, 1997 (note 9) 24,369 --
Shareholders' equity (note 1):
Excess shares, par value $0.0001 per share; authorized
40,000,000 shares, issued none -- --
Common shares, par value $0.0001 per share, authorized
40,000,000 shares, 16,509,610 and 9,426,900 shares
issued and outstanding in 1997 and 1996, respectively 2 1
Additional paid-in-capital 235,469 136,956
Accumulated distributions in excess of net income (53,005) (44,298)
--------- ---------
Total shareholders' equity 182,466 92,659
--------- ---------
$ 467,115 $ 309,126
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE> 25
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Income
($000 except share and per share amounts)
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues:
Rental (note 7) $ 42,493 $ 31,244 $ 24,523
Interest and other 1,076 431 479
------------ ------------ ------------
43,569 31,675 25,002
------------ ------------ ------------
Expenses:
Interest expense (notes 5 and 6) 16,644 12,818 10,295
Depreciation and amortization of real estate 10,608 7,627 5,817
Amortization of deferred expenses 876 619 464
General and administrative expenses
(notes 7, 11, 12 and 13) 3,920 3,125 2,694
Other expenses 814 1,330 620
------------ ------------ ------------
32,862 25,519 19,890
------------ ------------ ------------
Income before gain on sale of properties,
lease termination proceeds, minority interests
and extraordinary item 10,707 6,156 5,112
Gain on sale of properties (note 3) 3,517 -- 1,514
Proceeds from lease termination (note 3) -- -- 1,600
------------ ------------ ------------
Income before minority interests and extraordinary item 14,224 6,156 8,226
Minority interests (note 8) 2,442 690 93
------------ ------------ ------------
Income before extraordinary item 11,782 5,466 8,133
Extraordinary item - loss on extinguishment of
debt (note 5) 3,189 -- 4,849
------------ ------------ ------------
Net income $ 8,593 $ 5,466 $ 3,284
============ ============ ============
Net income per common share - basic: (note 2)
Income before extraordinary item, per common share $ 0.61 $ 0.58 $ 0.88
Extraordinary item - loss on extinguishment
of debt, per common share (0.28) -- (0.53)
------------ ------------ ------------
Basic net income per common share $ 0.33 $ 0.58 $ 0.35
============ ============ ============
Weighted average common shares outstanding 11,444,589 9,392,727 9,263,169
============ ============ ============
Net income per common share - diluted (note 2):
Income before extraordinary item, per common share $ 0.59 $ 0.56 $ 0.86
Extraordinary item - loss on extinguishment
of debt, per common share (0.27) -- (0.51)
------------ ------------ ------------
Diluted net income per common share $ 0.32 $ 0.56 $ 0.35
============ ============ ============
Weighted average common shares outstanding 11,639,683 10,897,011 9,502,355
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE> 26
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
($000 except share and per share amounts)
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Distributions
Number Additional Paid in
of paid-in Excess of Total
shares Amount Capital Net Income Equity
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 9,288,360 $ 1 $ 133,929 $ (32,710) $ 101,220
Net income -- -- -- 3,284 3,284
Dividends paid to shareholders ($1.08 per share) -- -- -- (10,011) (10,011)
Exchange of special limited
partnership units for partnership interests -- -- 1,503 -- 1,503
Common shares issued 185,622 -- 1,937 -- 1,937
Common shares repurchased and retired (142,000) -- (1,415) -- (1,415)
----------- ------------ ------------ ------------ ------------
Balance at December 31, 1995 9,331,982 1 135,954 (39,437) 96,518
Net income -- -- -- 5,466 5,466
Dividends paid to shareholders ($1.10 per share) -- -- -- (10,327) (10,327)
Common shares issued, net of offering costs 94,918 -- 1,002 -- 1,002
----------- ------------ ------------ ------------ ------------
Balance at December 31, 1996 9,426,900 1 136,956 (44,298) 92,659
Net income -- -- -- 8,593 8,593
Dividends paid to common shareholders
($1.16 per share) -- -- -- (12,836) (12,836)
Dividends paid to preferred shareholders
($0.91 per share) -- -- -- (916) (916)
Deemed dividend related to issuance of
preferred shares -- -- 3,548 (3,548) --
Common shares issued, net of offering costs 7,082,710 1 94,965 -- 94,966
----------- ------------ ------------ ------------ ------------
Balance at December 31, 1997 16,509,610 $ 2 $ 235,469 $ (53,005) $ 182,466
=========== ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE> 27
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
($000)
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 8,593 $ 5,466 $ 3,284
Adjustments to reconcile net income to net cash
provided by operating activities net of effects
of acquisitions:
Depreciation and amortization 11,484 8,247 6,281
Minority interests 2,442 690 93
Gain on sale of properties (3,517) -- (1,514)
Extraordinary item - loss on extinguishment of debt 3,189 -- --
Increase (decrease) in accounts
payable and other liabilities 3,280 746 (364)
Other adjustments (net) (1,651) (177) (564)
--------- --------- ---------
Total adjustments 15,227 9,506 3,932
--------- --------- ---------
Net cash provided by operating activities 23,820 14,972 7,216
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sale of properties 21,362 -- 16,347
Acquisitions of real estate properties and partnerships,
net of issuance of limited partnership units and
common shares, cash received and liabilities assumed (132,129) (16,955) (8,460)
Distributions from unconsolidated partnerships 3 3 --
--------- --------- ---------
Net cash (used in) provided by
investing activities (110,764) (16,952) 7,887
--------- --------- ---------
Cash flows from financing activities:
Proceeds of mortgage notes payable $ 130,942 $ 19,619 $ 84,514
Dividends to common and preferred shareholders (13,752) (10,327) (10,011)
Repayments on mortgage notes (118,401) (7,534) (83,196)
Common shares issued, net of offering costs 75,133 1,002 1,937
Preferred shares issued, net of offering costs 24,369 -- --
Prepayment premium on early retirement of debt (3,560) -- --
Cash distributions to minority interests (2,034) (871) (183)
(Increase) decrease in escrow deposits (1,145) 550 (550)
Increase in deferred expenses (1,687) (294) (3,242)
(Increase) decrease in restricted cash (1,749) (286) (3,464)
Common shares repurchased -- -- (1,415)
--------- --------- ---------
Net cash provided by (used in) financing activities 88,116 1,859 (15,610)
--------- --------- ---------
Increase (decrease) in cash and
cash equivalents 1,172 (121) (507)
Cash and cash equivalents at beginning of year 2,468 2,589 3,096
--------- --------- ---------
Cash and cash equivalents at end of year $ 3,640 $ 2,468 $ 2,589
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 15,801 $ 12,828 $ 10,161
========= ========= =========
Cash paid during the year for taxes $ 106 $ 156 $ 182
========= ========= =========
(continued)
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE> 28
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Supplemental disclosure of non-cash investing and financing activities:
On December 31, 1997, the Company issued 1,284,725 common shares in exchange for
all the shares of another company. The transaction was valued at $19.8 million
and consisted of the acquisition of three properties for $35.1 million less
$15.3 million of mortgage indebtedness assumed.
On July 9, 1997, in connection with a property acquisition, the Company assumed
approximately $5.9 million of first mortgage financing and issued a $600 note to
the seller.
On March 19, 1997, in connection with an acquisition of properties involving a
partnership, the Company issued partnership units as partial satisfaction of the
aggregate purchase price of $27.4 million. The issuance of these partnership
units have been recorded as minority interest in the amount of $6.0 million in
the accompanying consolidated financial statements.
On December 31, 1996, the Company completed an acquisition transaction involving
a partnership, whereby five properties were acquired in exchange for special
limited partnership units, following which the selling partnership was
dissolved. Total assets acquired and total liabilities assumed in the exchanges
were $22.2 million and $18.4 million, respectively.
On May 22, 1996, the Company completed an acquisition transaction involving a
partnership, whereby a property was acquired in exchange for special limited
partnership units, following which the selling partnership was dissolved. Total
assets acquired and total liabilities assumed in the exchange were approximately
$56.9 million and $38.5 million, respectively.
On August 1, 1995, the Company acquired ownership interests in six partnerships
in exchange for special limited partnership units. The financial position of
four of these partnerships is included in the consolidated balance sheets as of
December 31, 1996 and 1995. Total assets and total liabilities acquired in the
exchange were $10.2 million and $10.2 million, respectively. The Company's
proportionate share of the remaining two partnerships is included in investment
in partnerships.
See accompanying notes to consolidated financial statements.
28
<PAGE> 29
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997, 1996 and 1995
(1) The Company
Lexington Corporate Properties Trust, formally Lexington Corporate
Properties, Inc. (the "Company"), is a Maryland statutory real estate
investment trust that acquires, owns, and manages a diverse portfolio of
office, industrial and retail properties. The real properties owned by the
Company are, with one exception, subject to triple net leases to corporate
tenants. References herein to the "Company" shall include references to
the Company, two affiliated partnerships (the "Partnerships") and the
Company's predecessor, Lexington Corporate Properties, Inc., a Delaware
corporation which was organized in October 1993, reincorporated in
Maryland in June 1994 and was merged into the Company on December 31,
1997.
The total number of shares of all classes of capital shares that the
Company has authority to issue is 90,000,000 shares, consisting of
40,000,000 shares of common shares with a par value of $.0001 per share,
40,000,000 shares of excess shares with a par value of $.0001 per share
and 10,000,000 shares of preferred shares with a par value of $.0001 per
share.
The excess shares are not entitled to receive dividends, except upon
liquidation of the Company. Such shares vote as a single class with
holders of shares of the Company's Common Shares. The excess shares and
Common Shares are considered equal for purposes of liquidation of the
Company.
On November 15, 1994, the Company announced that its Board of Directors
had authorized the Company to repurchase, from time to time, up to
1,000,000 shares of its outstanding Common Shares, depending on market
conditions and other factors. As of December 31, 1997, the Company had
repurchased 172,100 shares at an average price of approximately $9.80 per
share, all of which have been retired. There has been no repurchase of
shares since 1995.
(2) Summary of Significant Accounting Policies
Basis Of Presentation and Consolidation. The Company's consolidated
financial statements are prepared on the accrual basis of accounting for
financial and Federal income tax reporting purposes. The financial
statements reflect the accounts of the Company and its majority-owned
subsidiaries, including, Lepercq Corporate Income Fund L.P. ("LCIF") and
Lepercq Corporate Income Fund II L.P. ("LCIF II"). The Company is the sole
general partner and majority limited partner of LCIF and LCIF II as well
as general partner and majority limited partner in four other partnerships
and, accordingly, accounts for them on a consolidated basis. Entities in
which the Company has an interest of less than 50% are accounted for under
the equity method and the investments in these partnerships are included
in other assets in the accompanying consolidated balance sheets.
Real Estate. The Company adopted the provisions of SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, on January 1, 1996. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of
the assets exceed the fair value of the assets. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs
to sell. Adoption of this Statement in 1996 and its application in 1997
did not have any impact on the Company's financial position or results of
operations.
Depreciation for financial reporting purposes is determined by the
straight-line method over the remaining estimated economic useful lives of
the properties. The Company depreciates buildings and building
improvements over a 40-year period or the remaining useful lives from the
dates of acquisition, land improvements over a 20-year period, and
fixtures and equipment over a 12-year period. Acquisition fees incurred in
connection with properties acquired have been capitalized as a
29
<PAGE> 30
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(2), Continued
cost of the properties upon acquisition. Depreciation for tax purposes is
determined in accordance with the Modified Accelerated Cost Recovery
System.
Revenue. The Company has determined that the leases relating to the
properties are operating leases. Rental revenue is recognized on a
straight-line basis over the minimum lease terms. The Company's rent
receivable primarily represents the amounts of the excess of rental
revenues recognized on a straight-line basis over the annual rents
collectible under the leases.
Deferred Financing Fees And Expenses. Deferred expenses are composed
principally of debt placement, mortgage loan and other loan fees, and are
amortized using the straight-line method, which approximates the interest
method, over the terms of the mortgages.
Origination Fees. Origination fees payable obligations have been
discounted using an annual rate of 13%.
Tax Status. The Company has qualified as a real estate investment trust
under the Code. A real estate investment trust is generally not subject to
Federal income tax on that portion of its real estate investment trust
taxable income ("Taxable Income") which is distributed to its
shareholders, provided that at least 95% of Taxable Income is distributed.
No provision for Federal income taxes has been made in the consolidated
financial statements, as the Company believes it is in compliance with the
Code and has distributed all of its taxable income.
A summary of the taxable nature of the Company's dividends for the three
years ended December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Total dividends per share $ 1.16 $ 1.10 $ 1.08
Percent taxable as ordinary income 68.91% 95.46% 41.36%
Percent taxable as long-term capital gains - - 24.71%
Percent non-taxable as return of capital 31.09% 4.54% 33.93%
------- ------- ------
100.00% 100.00% 100.00%
======= ======= =======
</TABLE>
The Company and its consolidated subsidiaries are required to file tax
returns in various states. States vary with respect to the taxation of
REITs. Some states have a tax based on capital within the state; other
states, not recognizing the REIT dividends paid deduction, have a tax
based on apportioned income as it would any corporation. There are states
that tax under both methods as well as states that have no additional
taxes other than the minimum state tax requirement. The provision for
state taxes is included in general and administrative expenses in the
consolidated statements of income. There are no significant temporary
differences giving rise to deferred taxes.
Earnings Per Share. In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 128, Earnings
Per Share ("SFAS No. 128"). SFAS No. 128 supersedes Accounting Principles
Board Opinion No. 15, Earnings Per Share ("APB 15") and specifies the
computation, presentation, and disclosure requirements for earnings per
share ("EPS") for entities with publicly held common shares or potential
common shares. SFAS No. 128 replaces the presentation of primary EPS with
a presentation of basic EPS and fully diluted EPS with diluted EPS. This
statement was adopted as required for the period ended December 31, 1997;
the corresponding 1996 and 1995 per share data has been restated. Basic
net income per share is computed by dividing net income reduced by
preferred dividends and the "deemed dividends" described in note 9 by the
weighted average number of common shares outstanding during the period.
Reported basic per share amounts are based on 11,444,589, 9,392,727 and
9,263,169 common shares for the years ended December 31, 1997, 1996 and
1995, respectively.
30
<PAGE> 31
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(2), Continued
Diluted net income per share amounts are similarly computed but include
the effect, when dilutive, of the Company's other potentially dilutive
securities. Diluted net income attributable to common shares is computed
after giving effect to preferred dividends. The Company's Convertible
Preferred Shares, OP Units and Exchangeable Notes are excluded from the
1997 computation due to their anti- dilutive effect during that period.
The Company's Operating Partnership Units are included in the 1996 and
1995 computations due to their dilutive effect. Reported diluted per
share amounts are based on 11,639,683, 10,897,011 and 9,502,355 common
and common equivalent shares for the years ended December 31, 1997, 1996
and 1995, respectively.
Fair Value of Financial Instruments. The Financial Accounting Standards
Board's Statement of Financial Accounting Standards ("SFAS") No. 107,
Disclosures about Fair Value of Financial Instruments, defines fair value
of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. The Company's
cash and cash equivalents, mortgage notes payable, subordinated notes
payable, and accounts payable and other liabilities are carried at cost,
which approximates fair value.
Cash and Cash Equivalents. For purposes of the statements of cash flows,
the Company considers all highly liquid instruments to be cash
equivalents. Cash and cash equivalents on the balance sheets at December
31, 1997 and 1996 includes $3.64 million and $2.18 million of money market
instruments, respectively.
Stock Based Compensation. Prior to January 1, 1996, the Company accounted
for its shares option plan in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation expense
would be recorded on the date of grant only if the current market price of
the underlying shares exceeded the exercise price. On January 1, 1996, the
Company adopted SFAS No. 123, Accounting for Stock-Based Compensation,
which permits entities to recognize as expense over the vesting period the
fair value of all shares-based awards on the date of grant. Alternatively,
SFAS No. 123 also allows entities to continue to apply the provisions of
APB Opinion No. 25 and provide pro forma net income and pro forma earnings
per share disclosures for employee shares option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had
been applied. The Company has elected to continue to apply the provisions
of APB Opinion No. 25 and provide the pro forma disclosure provisions of
SFAS No. 123.
Use of Estimates. Management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
Reclassifications. Certain amounts included in the prior years' financial
statements have been reclassified to conform with the current year's
presentation.
(3) Investments in Real Estate
The Company's real property portfolio as of December 31, 1997 consists of
fifty-one properties (or interests therein) (the "Properties") located in
twenty-five states, including warehousing, distribution and manufacturing
facilities, office buildings and retail properties. All of the Company's
properties, with one exception, are subject to triple net leases, which
are generally characterized as leases in which the tenant bears all, or
substantially all, of the costs and cost increase for real estate taxes,
insurance and ordinary maintenance.
The purchase prices on the Properties were satisfied with existing cash,
proceeds of mortgage and equity financings, issuance of the Company's
common shares, and the issuance of special limited partnership units of
one of the Partnerships.
31
<PAGE> 32
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(3), Continued
On September 2, 1997, the Company sold its property leased to Stratus
Computer, Inc. in Marlborough, Massachusetts for approximately $21.36
million, realizing a gain of approximately $3.5 million. The Company also
repaid a first mortgage loan with a balance of approximately $9.97 million
and a related prepayment premium of approximately $1.86 million. The
Company also incurred a write-off of unamortized loan costs of
approximately $171,000.
On March 31, 1995, the Company sold the Eagan, Minnesota Property for
$16.55 million, realizing a gain of approximately $1.5 million.
Additionally, the Company received lease termination proceeds of $1.6
million in connection with this transaction. The Company also incurred a
write-off of deferred rent receivable in the amount of approximately
$678,000 which is recorded as a reduction of rental revenue on the
consolidated statements of income.
During 1997, 1996 and 1995 the Company made the following acquisitions:
<TABLE>
<CAPTION>
Annualized Net
Base Rent Rentable
Date of Acquisition 12-31-97 Lease Square
Acquisition Tenant Location Cost ($M) ($000's) Expires Feet
---------------- -------------------------------- -------------------- ------------ ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
February 20 Johnson Controls, Inc. Cottondale, AL $ 2.910 $ 289 02-07 58,800
March 19 Exel Logistics, Inc. Various * 27.428 2,772 11-06 761,200
May 1 Cymer, Inc. Rancho Bernardo, CA 7.707 755 12-09 65,755
July 9 Bull HN Info. Systems, Inc. Phoenix, AZ 10.990 972 10-05 137,058
July 22 Lockheed Martin Corporation Marlborough, MA 15.541 1,671 12-06 126,000
September 4 FirstPlus Financial Group, Inc. Dallas, TX 32.645 3,224 08-12 247,968
October 31 Ryder Integrated Logistics, Inc. Waterloo, IA 9.321 891 07-12 276,480
December 31 Stevens-Arnold, Inc. Milpitas, CA 22.138 2,006 12-05 100,026
December 31 Allied Holdings, Inc. Decatur, GA 14.633 1,351 12-07 112,248
December 31 Circuit City Stores, Inc. Richmond, VA 27.234 2,478 02-10 288,562
December 31 Dana Corp. Gordonsville, TN 4.902 325 08-07 148,000
December 31 Allegiance Healthcare Bessemer, AL 3.377 473 11-01 123,924
------------ ---------- ---------
TOTAL $ 178.826 $ 17,207 2,446,021
============ ========== =========
1996
May 22 Northwest Pipeline Corp. Salt Lake City, UT $ 55.396 $ 8,571 09-09 295,000
May 31 Wal-Mart Stores, Inc. Jacksonville, AL 2.049 146 02-07 56,132
December 23 Johnson Controls, Inc. Plymouth, MI 6.329 678 12-06 134,160
December 23 Johnson Controls, Inc. Oberlin, OH 4.791 513 12-06 111,160
December 23 SKF USA, Inc. Franklin, NC 3.448 322 12-14 72,868
December 31 Toys "R" Us, Inc. Tulsa, OK 2.711 327 05-06 43,123
December 31 Toys "R" Us, Inc. Clackamas, OR 3.173 383 05-06 42,842
December 31 Toys "R" Us, Inc. Lynwood, WA 2.963 357 05-06 43,105
December 31 Toys "R" Us, Inc. Houston, TX 3.793 400 08-06 123,293
December 31 Liberty House, Inc. Honolulu, HI 10.608 963 09-09 85,610
------------ ---------- ---------
TOTAL $ 95.261 $ 12,660 1,007,293
============ ========== =========
1995
August 1 GFS Realty, Inc. Rockville, MD $ 1.726 $ 224 02-05 51,682
August 1 GFS Realty, Inc. Oxon Hill, MD 2.534 408 02-04 107,337
August 1 Montgomery Ward & Co., Inc. Brownsville, TX 1.242 153 10-04 115,000
August 1 Federated Dept. Stores, Inc. Laguna Hills, CA 4.529 677 01-06 160,000
December 1 Wal-Mart Stores, Inc. Riverdale, CA 2.596 270 01-11 81,911
December 7 Scandinavian Health Spa, Inc. Canton, OH 4.421 626 12-08 37,214
------------ ---------- ---------
TOTAL $ 17.048 $ 2,358 553,144
============ ========== =========
</TABLE>
* Consists of three properties; two located in New Kingston, PA, one
in Mechanicsburg, PA.
32
<PAGE> 33
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(3), Continued
The acquisitions made during 1997, 1996 and 1995 have been accounted for
using the purchase method of accounting.
The following unaudited pro forma operating information for the years
ended December 31, 1997 and 1996 has been prepared as if the acquisitions
in 1997 and 1996 had been consummated as of January 1, 1996 and were
carried forward through December 31, 1997. The information does not
purport to be indicative of what the operating results of the Company
would have been had the acquisitions been consummated on that date. Pro
forma amounts are as follows:
<TABLE>
<CAPTION>
($000's, except per share data)
Unaudited Unaudited
Pro forma Pro forma
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Revenues $ 56,947 $ 58,017
Net income 12,345 12,443
Net income per common share-basic 0.59 1.17
Net income per common share-diluted 0.58 1.15
</TABLE>
The Company is committed to purchase a 103,000 square foot light
industrial facility in Auburn Hills, Michigan (the "Auburn Hills
Property") for approximately $13.875 million. The Auburn Hills Property
will be leased to General Motors Corporation for eight years. The existing
building will be renovated and an 81,000 square foot expansion completed
in the third quarter of 1998 when the Company will acquire the property.
On the basis of a project cost of $13.875 million, the annual net rent
during the first four years would be $1.326 million and would escalate at
the end of the fourth year by 6%.
The Company is committed to purchase a 179,300 square foot office facility
in Florence, South Carolina (the "Florence Property") for approximately
$15.02 million. The Florence Property will be leased to Fleet Mortgage
Group, Inc. for ten years. On the basis of a project cost of $15.02
million, the annual net rent during the first five years would be
$1,520,464 and would escalate at the end of the fifth year by 17%.
Construction of the property is scheduled for completion in the third
quarter of 1998. The Company expects to close shortly thereafter subject
to certain contingencies including the acceptance of the property by the
tenant.
(4) Restricted Cash
On May 19, 1995, the Company, through its wholly owned subsidiary, LXP
Funding Corp., completed a $70 million secured debt offering (the "REMIC
Financing") by issuing commercial mortgage pass-through certificates. As a
condition of the REMIC Financing, the trustee, established as part of the
REMIC Financing, maintains a restricted cash account. Rent from the
fifteen properties securing the debt is required to be deposited into this
account. Additionally, there are certain reserves that are required to be
funded and maintained in this account. The monthly debt service payments
are made from the account and, after considering reserve requirements, any
excess funds are transferred to the Company.
33
<PAGE> 34
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Mortgage Notes Payable
The Company's aggregate consolidated mortgage notes payable and related
accrued interest as of December 31, 1997 was $220.56 million which
consists of indebtedness outstanding under the REMIC Financing, borrowings
outstanding under the Company's Credit Facility, and outstanding mortgage
indebtedness related to nineteen of the Properties. Except as noted, all
such debt bears interest at fixed rates. All of the Company's mortgages
are nonrecourse and are secured by first mortgage liens on the properties
and by collateral assignments of the leases.
The following table sets forth certain information regarding the Company's
aggregate mortgage indebtedness (including accrued interest) as of
December 31, 1997 and 1996 (in $000's):
<TABLE>
<CAPTION>
Mortgage Indebtedness Scheduled
as of December 31, Interest Balloon Debt Service
Property Location 12-31-97 12-31-96 Rate Maturity Payment in 1998 (i)
- ----------------- -------- -------- ---- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
REMIC Financing (a) $ 68,202 $ 68,988 8.100% 05-25-05 $ 60,001 $ 6,353
Credit Facility (b) 12,044 25,072 8.130% 06-01-99 12,000 976
Individually encumbered properties:
Tampa, FL (Queen Palm Dr) (c) 4,322 4,322 9.125% 05-01-98 4,290 163
Tampa, FL (North 30th) (c) 5,902 6,172 8.600% 06-01-98 5,717 392
Phoenix, AZ (Bank One) 5,630 5,713 10.750% 05-01-99 5,563 693
Richmond, VA 13,093 -- 8.875% 03-01-00 13,093 1,162
Bessemer, AL 1,000 -- 9.500% 09-01-01 1,000 95
Gordonsville, TN 1,248 -- 9.500% 10-01-02 771 194
Oxon Hill, MD 1,967 2,217 6.250% 03-01-04 -- 381
Mechanicsburg, PA (3 Exel props) (d) 25,641 -- 8.000% 03-20-04 25,000 2,000
Brownsville, TX 934 1,004 8.375% 11-01-04 260 150
Rockville, MD 1,183 1,294 8.820% 03-01-05 -- 221
Phoenix, AZ (Bull Promissory Note) 610 -- 6.380% 09-30-05 592 38
Phoenix, AZ (Bull) 5,845 -- 8.120% 10-01-05 4,245 621
Salt Lake City, UT 12,092 13,185 7.870% 10-01-05 -- 2,099
Laguna Hills, CA 4,451 4,735 8.375% 02-01-06 1,020 666
Canton, OH 2,664 2,792 9.490% 02-28-09 -- 388
Salt Lake City, UT (e) 22,401 22,446 7.610% 10-01-09 -- 2,901
Honolulu, HI 6,252 6,468 10.250% 10-01-10 -- 841
Dallas, TX 22,800 -- 7.490% 12-31-12 15,961 1,708
Franklin, NC (f) 2,279 2,835 8.500% 04-01-15 -- 222
Tulsa, OK (g) -- 1,913 -- -- -- --
Clackamas, OR (g) -- 2,212 -- -- -- --
Lynwood, WA (g) -- 2,090 -- -- -- --
Houston, TX (g) -- 2,342 -- -- -- --
Marlborough, MA (h) -- 10,388 -- -- -- --
-------- ------- --------
Subtotal 140,314 92,128 14,935
-------- ------- --------
Total (including accrued interest) $220,560 186,188 $ 22,264
======== ======= ========
</TABLE>
34
<PAGE> 35
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(5), Continued
(a) The REMIC Financing is secured by mortgages on the following fifteen
Properties: Modesto, California; Mansfield, Ohio; Marshall, Michigan (904
Industrial Road); Marshall, Michigan (1601 Pratt Avenue); Memphis,
Tennessee; Mechanicsburg, Pennsylvania; Newark, California; Countryside,
Illinois; Voorhees, New Jersey; Dewitt, New York; Newport, Oregon;
Sacramento, California; Reno, Nevada; Las Vegas, Nevada; and Klamath
Falls, Oregon. Due to the impending sale of the Newark, California
Property (see Note 10), the Company is currently working to substitute
that property with another pursuant to the terms of the agreement.
(b) In February 1997, the Company's secured revolving credit facility (the
"Credit Facility") was amended to extend the maturity to June 1, 1999 and
to increase the maximum borrowing availibility to $60 million. The
Company's Credit Facility bears interest at 1.5% over LIBOR and has an
interest rate period of one, three or six months, at the option of the
Company. The Credit Facility contains various leverage, debt service
coverage, net worth maintenance and other customary covenants. Due to
these covenants, approximately $30 million was available to the Company at
December 31, 1997. The Credit Facility matures on June 1, 1999, but will
automatically renew for successive two-year terms unless the lender
notifies the Company at least twelve months in advance of the scheduled or
extended maturity date of its intention to terminate the Credit Facility.
As of December 31, 1997, the amount outstanding under the Credit Facility
was $12 million, with a weighted average interest rate of approximately
8.13% per annum. Based on the weighted average interest rate in effect as
of December 31, 1997, debt service payments on the Credit Facility in 1998
would total $976,000.
The Credit Facility is secured by first mortgage liens on the following
seven Properties: Glendale, Arizona; Southington, Connecticut; Riverdale,
Georgia; Jacksonville, Alabama; Plymouth, Michigan; Oberlin, Ohio; and
Cottondale, Alabama. The Credit Facility requires compensating balances of
$250,000.
The Credit Facility contains various leverage, debt service coverage, net
worth maintenance, and other customary covenants. The Company is in
compliance with such covenants.
(c) The mortgages on the two Tampa, Florida Properties are
cross-collateralized. The Company intends to repay balloon payments due on
these properties in 1998 with amounts available under the Credit Facility.
(d) In March 1997, in connection with the acquisition of these properties,
LCIF sold $25 million of Notes to an institutional investor in a private
placement. The Notes require interest only payments at 8% per annum,
payable semi-annually in arrears, and have a seven year term. The Notes
are secured by these properties, are guaranteed by the Company, and can be
exchanged by the holders for the Company's common shares at $13 per share
beginning in the year 2000, subject to adjustment. The Notes may be
redeemed at the Company's option after three years at a price of 103.2% of
the principal amount, declining to par after five years. The Notes are
subordinated to obligation under the Company's Credit Facility.
(e) As of December 31, 1996, this note on the Salt Lake City, Utah
Property was bearing interest at a rate of 12.9% per annum and had a
maturity date of October 1, 2005. This note was refinanced on May 30,
1997, with a new note bearing interest at 7.61% per annum and having a
maturity date of October 1, 2009.
(f) As of December 31, 1996, the mortgage on the Franklin, North Carolina
Property consisted of temporary bridge financing bearing interest at 8.25%
per annum. On March 31, 1997, the bridge financing was repaid in full with
proceeds from permanent financing, bearing interest at 8.50% per annum and
having a maturity date of April 1, 2015.
35
<PAGE> 36
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(5), Continued
(g) On January 22, 1997, the mortgages encumbering these four properties
were paid in full. The aggregate principal amount paid was $7,997,000 and
the aggregate prepayment premiums were approximately $520,000. The stated
interest rate on each of the four mortgages was 12.625% per annum. The
loans were assumed in December 1996 in connection with an acquisition and
assigned a fair value such that the prepayment premiums were included in
the carrying value on the balance sheet at acquisition.
(h) The mortgage was paid off in conjunction with the sale of this
property (see Note 3).
(i) Principal paydowns of the mortgage notes payable for the succeeding
fifteen years are as follows (in 000's):
<TABLE>
<CAPTION>
Years ending
December 31 Amount
----------- ------
<S> <C>
1998 $ 14,924
1999 22,654
2000 18,913
2001 7,302
2002 7,569
2003-2007 120,028
2008-2012 27,446
</TABLE>
On September 2, 1997, the Company sold its property leased to Stratus
Computers, Inc. In connection with the sale, the Company, after repaying a
first mortgage loan, realized a prepayment premium of approximately $1.86
million and incurred a write-off of unamortized loan costs of
approximately $171,000.
On May 30, 1997, the Company completed the refinancing of $22.1 million of
mortgage debt secured by the Salt Lake City, Utah Property. In connection
with the refinancing, the Company realized a prepayment premium of
approximately $1.67 million and incurred a write-off of unamortized loan
costs of approximately $130,000.
The amounts shown as extraordinary item - loss on extinguishment of debt
for the above transactions are recorded net of the minority interests in
the consolidated statements of income.
On May 19, 1995, the Company completed the $70 million REMIC Financing by
issuing commercial mortgage pass-through certificates. Of the fifteen
properties securing the REMIC Financing, eight properties had been
encumbered by mortgage debt of approximately $50.83 million in the
aggregate, which had been repaid out of the proceeds from the REMIC
Financing. In connection with this repayment, the Company incurred
prepayment premiums totaling approximately $4.068 million and the
write-off of unamortized deferred expenses and other related costs of
approximately $510,000.
On November 15, 1995, the Company closed on a revolving credit facility
with a maximum committed amount of $25 million. Upon the closing of the
revolving credit facility, the Company borrowed approximately $8.4 million
and repaid an existing mortgage loan secured by its property in
Southington, Connecticut. In connection with this repayment, a prepayment
premium of approximately $271,000 was incurred.
36
<PAGE> 37
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Subordinated Notes Payable
Unitholders of the Partnerships who denied consent to the mergers
described in Note 1 and qualified as dissenters received, in lieu of
Common Shares, Subordinated Notes of the Company having a principal amount
equal to the net asset value of the Units exchanged for such notes. The
notes were issued under an indenture between the Company and The Bank of
New York, as Trustee. The notes bear interest at 7.75% per annum, payable
semi-annually on January 1 and July 1 of each year, and are due on October
12, 2000. The Subordinated Notes are redeemable at the Company's option,
in whole or in part at a redemption price equal to 100% of the principal
amount plus all accrued and unpaid interest through the date of
redemption.
(7) Leases
Minimum future rents receivable under noncancellable operating leases as
of December 31, 1997 are as follows (in 000's):
<TABLE>
<CAPTION>
Year ending
December 31 Amount
----------- ------
<S> <C>
1998 $ 48,944
1999 49,179
2000 49,301
2001 47,007
2002 43,774
2003-2007 187,725
2008-2012 61,225
2013-2014 645
---------
$ 487,800
=========
</TABLE>
The leases are triple net leases which generally require the lessee to pay
all or substantially all taxes, insurance, maintenance, and all other
similar charges and expenses relating to the Properties and their use and
occupancy.
Each of the following properties accounted for 10% or more of consolidated
rental revenues for the years ended December 31:
<TABLE>
<CAPTION>
Property 1997 1996 1995
--------------- ---- ---- ----
<S> <C> <C> <C>
Glendale, AZ 4% 8% 13%
Newark, CA 6% 10% 13%
Salt Lake City, UT 20% 16% -
</TABLE>
In addition, the Company leases office space under a non-cancelable lease.
Minimum future rental payments under this lease as of December 31, 1997
are approximately as follows (in $000's):
<TABLE>
<CAPTION>
Year Ending
December 31 Amount
----------- --------
<S> <C>
1998 $ 233
1999 233
2000 233
2001 233
2002 233
thereafter 350
---------
$ 1,515
=========
</TABLE>
Rental expense under this lease for the years ended December 31, 1997,
1996 and 1995 was (in $000's) $202, $126, and $114, respectively.
37
<PAGE> 38
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) Minority Interests
In conjunction with several of the Company's acquisitions, sellers were
given interests in Partnerships controlled by the Company as a form of
consideration. All of such interests are redeemable at certain times for
Common Shares on a one-for-one basis at various dates through May 2006.
The total number of special limited partnership units outstanding as of
December 31, 1997 was 3,000,445. These units, subject to certain
adjustments through the date of conversion, have distributions per unit in
varying amounts up to $1.16 per unit. Minority interests in the
accompanying consolidated financial statements relates to interests in the
Partnerships held by parties other than the Company.
(9) Preferred Shares
On December 31, 1996, the Company entered into a definitive agreement with
Five Arrows Realty Securities L.L.C. ("Five Arrows") providing for the
sale of up to 2,000,000 shares of Senior Cumulative Convertible Preferred
Shares (" Preferred Shares"). In connection with this transaction, the
Company designated 2,000,000 shares as "Excess Class A Preferred Shares"
and reserved for issuance up to 2,000,000 shares of its Common Shares upon
the conversion of the Preferred Shares. In connection with such sale, the
Company has entered into certain related agreements with Five Arrows,
providing, among other things, for certain registration rights with
respect to such shares and the right to designate a member of the Board of
Directors under certain circumstances. The Preferred Shares, which is
convertible at any time at the holder's option into common shares on a
one-for-one basis, is entitled to quarterly dividends equal to the greater
of $.295 per share or 105% of the quarterly common shares dividend.
During 1997, all of the Preferred Shares were sold. Based on the market
price of the Company's common shares on the dates of issuance, the
Preferred Shares were deemed to have a beneficial conversion feature equal
to the difference between the market price per share and $12.50 per share.
This difference, which is non-cash and was non-recurring, amounted to
approximately $3.5 million for the year ended December 31, 1997 and has
been recorded as a dividend, with an offset to additional paid-in capital,
in the accompanying statements of changes in shareholders' equity.
The Preferred Shares may be redeemed by the Company after December 31,
2001 at a premium of 6% over the liquidation preference of $12.50 per
share, with such premium declining to zero on or after December 31, 2011.
Each share is entitled to one vote.
In certain instances, including a change of control of the Company (as
defined in the agreement), the holder of the Preferred Shares may require
the Company to redeem its shares at a price equal to $13.75 per share plus
any accrued dividends.
(10) Legal Proceedings
The Company was sued in the United States District Court for the Northern
District of Illinois on May 31, 1995, by United Municipal Leasing
Corporation. The complaint filed in this case alleged that the Company
breached a letter of intent by failing to execute definitive documentation
and close a transaction in which the plaintiff proposed to sell property
to the Company. The complainant sought $800,000 in monetary damages. In
1997, the Court ruled in favor of the Company. No monetary damages were
incurred by the Company.
On August 26, 1996, Ross Stores, Inc., the tenant in the Newark Property,
exercised an option to purchase such Property for its fair market value.
In connection with this negotiation the Company was required to post a
bond in an amount equivalent to one year's rent. After some deliberation
the parties have negotiated to sell the property on or about April 1, 1998
for $24.55 million.
38
<PAGE> 39
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Continued,
The Company is involved in various legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition
of these matters will not have a material adverse effect on the Company's
consolidated financial position, results of operations or liquidity.
(11) Stock Option Plan
On June 17, 1993, the Company's Board of Directors adopted a stock option
plan (the "Plan") pursuant to which stock options may be granted to
officers and key employees. The Plan authorized grants of options to
purchase up to 800,000 shares of authorized but unissued common shares.
The Plan was amended on May 23, 1996 to increase by 800,000 the number of
Common Shares available for the grant of options thereunder, subject to
certain limitations. Stock options are granted with an exercise price
equal to the shares' fair market value at the date of grant.
All stock options are exercisable over five-year terms and, with the
exception of those shown below, vest immediately.
In 1997, the Compensation Committee granted 221,897 options to key
employees. Those options will vest on the fourth anniversary of the grant.
Vesting will accelerate upon an executive's retiring (as defined by the
Compensation Committee), death or disability. In addition, 25% of the
options will vest in any year in which Funds From Operations ("FFO")
increases by an amount equal to or greater than 10% over the FFO achieved
in the preceding year.
Additionally, each independent trustee of the Company receives options
each year to purchase 2,500 common shares at the fair market value as of
the date of grant. Such grants automatically occur on each January 1. All
options granted to the directors are exercisable, after a one-year holding
period, for a period not to exceed five years from the date of grant.
At December 31, 1997, there were 560,803 additional options available for
grant under the Plan. The per share weighted-average fair value of share
options granted at market during 1997, 1996 and 1995 was $3.75, $2.60 and
$1.85 on the date of grant using the Black Scholes option-pricing model.
The per share weighted average fair value of share options granted with
an exercise price less than market during 1997 was $5.83. The following
weighted-average assumptions were used: risk-free interest rate of 6.5%
and an expected life of five years for all years and volatility factors of
17.09%, 16.29% and 15.02% for the years 1997, 1996 and 1995, respectively.
The model was based on actual dividends paid, which, on an annualized
basis were $1.16, $1.10 and $1.08 per share for the years ended December
31, 1997, 1996 and 1995, respectively.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its share
options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its share
options under SFAS No. 123, the Company's net income would have been
reduced to the pro forma amounts below (in $000's):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net income As reported $ 8,593 $ 5,466 $ 3,284
Pro forma 8,276 4,994 3,270
Pro forma net income per share:
Basic $ 0.30 $ 0.52 $ 0.35
Diluted 0.29 0.50 0.35
====== ====== ======
</TABLE>
39
<PAGE> 40
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Continued,
Pro forma net income reflects only options granted in 1997, 1996 and 1995.
Therefore, the full impact of calculating compensation cost for shares
options under SFAS No. 123 is not reflected in the pro forma net income
amounts presented above because compensation cost for options granted
prior to January 1, 1995 is not considered.
Share option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
Number of Weighted-Average
Shares Exercise Price
---------- -----------------
<S> <C> <C>
Balance at December 31, 1994 407,500 $ 10.00
Granted(1) 587,500 10.46
Exercised(1) (392,500) 10.00
Forfeited (-) -
Expired (-) -
--------- -------
Balance at December 31, 1995 602,500 10.45
Granted(1) 370,600 11.56
Exercised(1) (192,500) 9.15
Forfeited (5,300) 11.39
Expired (-) -
--------- -------
Balance at December 31, 1996 775,300 11.30
Granted 276,397 12.50
Exercised (10,000) 10.09
Forfeited (2,500) 14.25
Expired (-) (-)
--------- -------
Balance at December 31, 1997 1,039,197 $ 11.62
========== =======
</TABLE>
(1) In 1996 and 1995, certain officers and employees exchanged existing
options for new options with exercise prices equal to the fair market
value of the common shares at that time. These options are reflected in
the amounts exercised and granted in the table above. The difference
between the exercise prices of the original and the new options, which
amounted to $588,000 and $442,000 in 1996 and 1995, respectively, has been
reflected in general and administrative expenses in the accompanying
financial statements.
At December 31, 1997, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $9.00 to $14.50 and
3.18 years, respectively.
At December 31, 1997, 1996 and 1995, the number of options exercisable was
837,300, 767,800, and 405,000, respectively, and the weighted-average
exercise price of those options was $11.45, $11.29 and $11.09,
respectively.
40
<PAGE> 41
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(12) Employee Benefit Plan
Effective January 1, 1994, the Company established a 401(k) retirement
savings plan covering all eligible employees. The Company will match 25%
of the first 4% of employee contributions. In addition, based on its
profitability, the Company may make a discretionary contribution at each
fiscal year end to all eligible employees. The matching and discretionary
contributions are subject to vesting under a schedule providing for 25%
annual vesting starting with the first year of employment and 100% vesting
after four years of employment. Approximately $80,000, $75,000 and $59,000
were contributed in 1997, 1996 and 1995, respectively.
(13) Related Party Transactions
The Company has been granted an option by the LCP Group, L.P. ("LCP"),
exercisable any time, to acquire the general partnership interests
currently owned by LCP in two limited partnerships, Net 1 L.P. and Net 2
L.P. (collectively, the "Net Partnerships"), which own net leased office,
industrial and retail properties. Under the terms of the option, the
Company, subject to review of any such transaction by the independent
members of its Board of Trustees, may acquire the general partnership
interests in either or both of the Net Partnerships at their fair market
value based upon a formula relating to partnership cash flows, with the
Company retaining the option of paying such fair market value in
securities of the Company, units representing interests in partnerships
controlled by the Company or cash (or a combination thereof). The Chairman
of the Company is a partner in LCP.
The Company currently provides administrative and acquisition support to
the Net Partnerships and is reimbursed for the costs of such services. The
reimbursements amounted to $279,000 and $197,000 for the years ended
December 31, 1997 and 1996, respectively, and are shown net of the
Company's general and administrative expenses in the accompanying
statements of income. There were no reimbursements for 1995.
In connection with the origination fees payable obligations, the Company
is obligated to pay LCP an aggregate principal amount of $1,778,000 for
rendering services in connection with the original acquisitions of certain
properties. Simple interest is payable monthly from available net cash
flow of the respective original properties on the various unpaid principal
portions of the fees, at annual rates ranging from 12.25% to 19%. Monthly
installment payments are to commence at various dates to satisfy principal
and current interest payments as well as any unpaid accrued interest
outstanding. The original principal amounts have been discounted at an
annual rate of thirteen percent.
A member of the Company's Board of Trustees is a partner in the firm that
serves as general counsel to the Company. The Company intends to continue
to retain the services of this firm for general, corporate and other
matters.
(14) Subsequent Events (Unaudited)
On January 29, 1998, the Company completed the acquisition of partnership
interests in two limited partnerships in exchange for the Company's
operating partnership units. The assets of the partnerships acquired
included approximately $23.5 million in cash. The units are exchangeable
for an equal number of Common Shares and are entitled to receive
distributions at the same dividend rate as the Company's common shares.
On February 13, 1998, the Company paid a dividend of $.29 per share to
shareholders of record on January 30, 1998.
On March 27, 1998, the Company completed the acquisition of an 81,744
square foot two-story office facility in Hebron, Kentucky (the "Hebron
Property") for approximately $8.045 million. The Hebron Property is leased
to Fidelity Corporate Real Estate, LLC under a lease expiring April 2007.
The current annual net rent is $776,568 and will increase by 14.5% on May
1, 2002.
41
<PAGE> 42
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(14) Continued,
On March 27, 1998, the Company completed the acquisition of a 419,205
office/warehouse facility in Bristol, Pennsylvania (the "Bristol
Property") for approximately $12.5 million. The Bristol Property is leased
to Jones Apparel Group for 15 years. The annual net rent is $1.15 million
and will increase in years 2003 and 2008 by 10%.
On March 27, 1998, the Company completed the acquisition of two properties
in Livonia, Michigan (the "Livonia Properties") for approximately $16.4
million. The Livonia Properties are leased to Kelsey-Hayes Corporation and
are subject to net leases which expire in April 2007. The current annual
net rents are approximately $1.52 million and escalate at various rates
over the term of the lease.
42
<PAGE> 43
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(15) Quarterly Financial Data (Unaudited) ($000 except per share data)
<TABLE>
<CAPTION>
Three months ended
---------------------------------------
March 31 June 30,
---------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 9,824 6,799 10,638 7,682
Expenses 7,984 5,072 8,504 5,907
------- ------- ------- -------
Income before minority interests and extraordinary item 1,840 1,727 2,134 1,775
Minority interests 274 54 364 147
------- ------- ------- -------
Income before extraordinary item 1,566 1,673 1,770 1,628
Extraordinary item - loss on extinguishment of debt * 56 -- 1,466 --
------- ------- ------- -------
Net income $ 1,510 1,673 304 1,628
======= ======= ======= =======
Net income per common share - basic:
Income (loss) before extraordinary
item, per common share $ (0.01) 0.18 0.14 0.17
Extraordinary item - loss on extinguishment
of debt, per common share (0.01) -- (0.15) --
------- ------- ------- -------
Basic net income (loss) per common share$ (0.02) 0.18 (0.01) 0.17
======= ======= ======= =======
Net income per common share - diluted:
Income (loss) before extraordinary item,
per common share $ (0.01) 0.18 0.13 0.17
Extraordinary item - loss on extinguishment
of debt, per common share (0.01) -- (0.14) --
------- ------- ------- -------
Diluted net income (loss) per common share $ (0.02) 0.18 (0.01) 0.17
======= ======= ======= =======
</TABLE>
* This item has been reclassified from Expenses, as shown in the First
Quarter report.
<TABLE>
<CAPTION>
Three months ended
------------------------------------------
September 30, December 31,
------------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 11,405 8,655 11,702 8,539
Expenses 8,210 6,840 8,164 7,700
-------- -------- -------- --------
Income before gain on sale of properties,
minority interests and extraordinary item 3,195 1,815 3,538 839
Gain on sale of properties 3,517 -- -- --
-------- -------- -------- --------
Income before minority interests and extraordinary item 6,712 1,815 3,538 839
Minority interests 1,220 260 584 229
-------- -------- -------- --------
Income before extraordinary item 5,492 1,555 2,954 610
Extraordinary item - loss on extinguishment of debt 1,667 -- -- --
-------- -------- -------- --------
Net income $ 3,825 1,555 2,954 610
======== ======== ======== ========
Net income per common share - basic:
Income before extraordinary item, per common share $ 0.40 0.17 0.04 0.06
Extraordinary item - loss on extinguishment
of debt, per common share (0.13) -- -- --
-------- -------- -------- --------
Basic net income per common share $ 0.27 0.17 0.04 0.06
======== ======== ======== ========
Net income per common share - diluted:
Income before extraordinary item, per
common share $ 0.37 0.15 0.04 0.06
Extraordinary item - loss on extinguishment
of debt, per common share (0.10) -- -- --
-------- -------- -------- --------
Diluted net income per common share $ 0.27 0.15 0.04 0.06
======== ======== ======== ========
</TABLE>
43
<PAGE> 44
LEXINGTON CORPORATE PROPERTIES TRUST
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
(15) Continued,
The reported amounts for minority interest and for extraordinary items in
the quarters ended March 30, June 30, and September 30, 1997 have been
adjusted by offsetting amounts from those reported in the Company's
quarterly filings on Form 10-Q. As a result, income before extraordinary
items per common share has been restated by $0.00, ($0.03) and ($0.03),
respectively. Net income and net income per common share for those periods
were not affected by these adjustments.
In addition, as described in notes 2 and 9, to compute earnings per share,
net income attributed to common shareholders was reduced by the deemed
dividend relating to the sales of the Preferred Shares. Income per common
share data for the quarters ended March 31 and June 30, 1997 has been
restated by ($0.16) and ($0.01), respectively , to reflect the deemed
dividend of the beneficial conversion feature of the Preferred Shares.
44
<PAGE> 45
LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciated and Amortization
Schedule III ($000)
Initial cost to Company and Gross Amount at which carried at End of Year (A)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Land
and Buildings
Land and
Description Location Encumbrances Estates Improvements Total
(B) (C)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Warehouse & Manufacturing Modesto, CA $ 2,133 $ 257 $ 3,809 $ 4,066
Office Southington, CT 3,336 3,240 20,415 23,655
Research & Development Glendale, AZ 4,378 4,996 24,392 29,388
Health Club Countryside, IL 2,417 628 3,722 4,350
Health Club Voorhees Township, NJ 3,057 577 4,820 5,397
Health Club DeWitt, NY 1,849 445 3,043 3,488
Warehouse & Distribution Mansfield, OH 3,342 120 4,597 4,717
Office & Industrial Marshall, MI 2,240 33 3,378 3,411
Office & Industrial Marshall, MI 853 14 926 940
Warehouse & Office (1) Newark, CA 15,589 5,000 25,844 30,844
Retail Newport, OR 6,257 1,400 7,270 8,670
Publishing Memphis, TN 6,754 1,053 10,908 11,961
Warehouse & Distribution Mechanicsburg, PA 10,309 1,439 13,987 15,426
Office, Warehouse &
Manufacturing Tampa, FL 4,322 1,389 7,563 8,952
Retail Klamath Falls, OR 7,110 727 9,160 9,887
Office North Tampa, FL 5,902 1,900 9,736 11,636
Warehouse Jacksonville, FL - 157 3,034 3,191
Retail Sacramento, CA 2,382 885 2,705 3,590
Office Complex Phoenix, AZ 5,630 2,804 13,921 16,725
Retail Reno, NV 2,062 1,200 1,904 3,104
Retail Las Vegas, NV 1,849 900 1,759 2,659
Retail Rockville, MD 1,183 - 1,726 1,726
Retail Oxon Hill, MD 1,967 403 2,131 2,534
Retail Brownsville, TX 934 - 1,242 1,242
Retail Laguna Hills, CA 4,451 255 4,274 4,529
Retail Riverdale, GA 567 363 2,233 2,596
Health Club Canton, OH 2,664 602 3,819 4,421
Office Salt Lake City, UT 34,493 - 55,396 55,396
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Accumulated Useful life computing
Depreciation depreciation in
and Date Date latest income
Description Amortization Acquired Constructed statements
(D) (years)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warehouse & Manufacturing $ 1,075 Sept. 1986 1970 & 1976 40 & 12
Office 6,896 Oct. 1986 1983 40 & 12
Research & Development 9,088 Nov. 1986 1985 40 & 12
Health Club 1,334 Jul. 1987 1987 40 & 12
Health Club 1,633 Jul. 1987 1987 40 & 12
Health Club 1,061 Aug. 1987 1977 & 1987 40 & 12
Warehouse & Distribution 1,364 Jul. 1987 1970 40, 20 & 12
Office & Industrial 1,084 Aug. 1987 1968 & 1972 40, 20 & 12
Office & Industrial 298 Aug. 1987 1979 40, 20 & 12
Warehouse & Office (1) 7,327 Aug. 1987 1984-1985 40 & 12
Retail 2,181 Sept. 1987 1986 40, 20 & 12
Publishing 2,693 Feb. 1988 1987 40
Warehouse & Distribution 2,211 Oct. 1990 1985 & 1991 40
Office, Warehouse &
Manufacturing 2,075 Nov. 1987 1986 40 & 20
Retail 2,242 Mar. 1988 1986 40
Office 2,294 Jul. 1988 1986 40
Warehouse 727 Jul. 1988 1958 & 1969 40 & 20
Retail 831 Oct. 1988 1988 40, 20 & 12
Office Complex 3,161 Nov. 1988 1960 & 1979 40
Retail 568 Dec. 1988 1988 40, 20 & 12
Retail 523 Dec. 1988 1988 40, 20 & 12
Retail 299 Aug. 1995 1977 22.375, 16.583 & 15.583
Retail 338 Aug. 1995 1976 21.292
Retail 162 Aug. 1995 1973 18.542
Retail 512 Aug. 1995 1974 20 & 20.5
Retail 112 Dec. 1995 1985 40
Health Club 191 Dec. 1995 1987 40
Office 3,479 May 1996 1982 25.958
</TABLE>
45
<PAGE> 46
LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciated and Amortization
Schedule III ($000)
(continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Land
and Buildings
Land and
Description Location Encumbrances Estates Improvements Total
(B) (C)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Retail Jacksonville, FL 417 286 1,763 2,049
Manufacturing Franklin, NC 2,279 386 3,062 3,448
Industrial Plymouth, MI 1,532 1,461 4,868 6,329
Industrial Oberlin, OH 1,063 276 4,515 4,791
Retail Tulsa, OK - 447 2,264 2,711
Retail Clackamas, OR - 523 2,650 3,173
Retail Lynwood, WA - 488 2,475 2,963
Industrial Houston, TX - 217 3,576 3,793
Retail Honolulu, HI 6,251 - 10,608 10,608
Warehouse New Kingston, PA
Industrial Cottondale, AL 750 720 2,190 2,910
Warehouse New Kingston, PA
(Silver Springs) 5,641 674 5,360 6,034
Warehouse New Kingston, PA
(Cumberland) 11,539 1,380 10,963 12,343
Warehouse Mechanicsburg, PA
(Hampden IV) 8,462 1,012 8,039 9,051
Office/ Research
& Development San Diego, CA - 693 7,014 7,707
Office/ Research
& Development Marlborough, MA - 1,707 13,834 15,541
Office Phoenix, AZ 6,455 1,872 9,118 10,990
Office Dallas, TX 22,800 3,582 29,063 32,645
Warehouse Waterloo, IA - 1,025 8,296 9,321
Office/ Research
& Development Milipitas, CA - 3,542 18,596 22,138
Industrial Gordonsville, TN 1,248 52 3,325 3,377
Office Decatur, GA - 975 13,658 14,633
Office Richmond, VA 13,093 - 27,234 27,234
Warehouse & Distribution Bessemer, AL 1,000 664 4,238 4,902
------------------------------------------------------------
Subtotal $ 220,560 52,769 444,423 497,192
=================
(1) Less property held for sale:
Warehouse & Office Newark, CA (5,000) (25,844) (30,844)
-------------------------------------------
Total $ 47,769 $ 418,579 $ 466,348
===========================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Accumulated Useful life computing
Depreciation depreciation in
and Date Date latest income
Description Amortization Acquired Constructed statements
(D) (years)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail 72 May 1996 1982 40
Manufacturing 76 Dec. 1996 1996 40
Industrial 122 Dec. 1996 1996 40
Industrial 113 Dec. 1996 1996 40
Retail 129 Dec. 1996 1981 23.583 & 13.583
Retail 151 Dec. 1996 1981 23.583 & 13.583
Retail 141 Dec. 1996 1981 23.583 & 13.583
Industrial 161 Dec. 1996 1981 24.5 & 14.5
Retail 440 Dec. 1996 1980 24.33
Warehouse
Industrial 48 Feb. 1997 1996 & 1997 40
Warehouse
106 Mar. 1997 1981 40
Warehouse
217 Mar. 1997 1989 40
Warehouse
159 Mar. 1997 1985 40
Office/ Research
& Development 110 May 1997 1989 40
Office/ Research
& Development 158 Jul. 1997 1960 & 1988 40
Office 104 Jul. 1997 1985 & 1994 40
Office 211 Sept. 1997 1986 & 1997 40
Warehouse 43 Oct. 1997 1996 & 1997 40
Office/ Research
& Development - Dec. 1997 1985 40
Industrial - Dec. 1997 1983 34.75
Office - Dec. 1997 1983 40
Office - Dec. 1997 1990 32.25
Warehouse & Distribution - Dec. 1997 1991 33.75
---------
58,320
(1) Less property held for sale:
Warehouse & Office (7,327)
---------
$ 50,993
=========
</TABLE>
46
<PAGE> 47
LEXINGTON CORPORATE PROPERTIES TRUST AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciated and Amortization
Schedule III ($000)
(continued)
(A) The initial cost includes the purchase price paid by the Company and
acquisition fees and expenses. The total cost basis of the Company's
Properties at December 31, 1997 for Federal income tax purposes was
$337,491 (not including the Newark, CA property held for sale). The total
costs of the properties acquired may exceed the initial costs due to the
Company's or Partnership's subsequent incurrence of other costs related to
the acquisition, however such amounts have not been significant.
(B) Balances include accrued interest payable at December 31, 1997 in the
amount of $1,007.
(C) Reconciliation of real estate owned:
<TABLE>
<CAPTION>
1997 1996 1995
===================================
<S> <C> <C> <C>
Balance at the beginning of the year $ 339,411 $ 244,223 $ 243,281
Additions during year 179,257 95,188 18,555
Properties sold during year (21,476) -- (17,613)
Property reclassed to held for sale (30,844) -- --
-----------------------------------
Balance at end of year $ 466,348 $ 339,411 $ 244,223
===================================
</TABLE>
(D) Reconciliation of accumulated depreciation and amortization:
<TABLE>
<S> <C> <C> <C>
Balance at beginning of year $ 51,343 $ 43,716 $ 40,679
Depreciation and amortization expense 10,608 7,627 5,817
Accumulated depreciation of
properties sold during year (3,631) -- (2,780)
Accumulated depreciation of
property reclassed to held for sale (7,327) -- --
-----------------------------------
Balance at end of year $ 50,993 $ 51,343 $ 43,716
===================================
</TABLE>
47
<PAGE> 48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors of the Company required to be furnished
pursuant to this item is set forth under the caption "Election of Trustees" in
the Proxy Statement and is incorporated herein by reference. The information
regarding executive officers of the Company required to be furnished pursuant to
this item is set forth in Item 4A of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required to be furnished pursuant to this item is set forth
under the caption "Compensation of Executive Officers" in the Proxy Statement,
and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required to be furnished pursuant to this item is set forth
under the captions "Principal Security Holders" and "Share Ownership of
Trustees and Executive Officers" in the Proxy Statement, and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished pursuant to this item is set forth
under the caption "Election of Trustees - Certain Relationships and Related
Transactions" in the Proxy Statement, and is incorporated herein by reference.
Note, the Definitive Proxy Statement will be filed with the Securities and
Exchange Commission on or about April 17, 1998.
48
<PAGE> 49
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
----
(a)(1) Financial Statements 23-44
(2) Financial Statement Schedules 45-47
(3) Exhibits
Exhibit No. Exhibit
- ----------- -------
2.1 -- Form of Agreement and Plan of Merger by and among Lexington
Corporate Properties, Inc. (the "Company"), Lepercq Corporate Income
Fund L.P. ("LCIF I") and Lex M-1, L.P. (filed as Appendix C-I to the
Company's Registration Statement of Form S-4 (File No. 33-66858)
(the "Form S-4"))*
2.2 -- Form of Agreement and Plan of Merger by and among the Company,
Lepercq Corporate Income Fund II L.P. ("LCIF II"), and Lex M-2, L.P.
(filed as Appendix C-II to the Form S-4)*
2.3 -- Form of Agreement and Articles of Merger between the Company and
Lexington Corporate Properties - Maryland, Inc. (filed as Exhibit
2.3 to Report on 10-K for year ended December 31, 1993 (the "1993
10-K"))*
2.4 -- Agreement and Plan of Merger between the Company and Lexington
Corporate Properties Trust (filed as Exhibit 2.1 to Form 8-K filed
1-16-98.)*
3.1 -- Declaration of Trust of the Company, dated December 31, 1997 (filed
as Exhibit 3.1 to Form 8K filed 1-16-98)*
3.2 -- By-Laws of the Company
4.1 -- Specimen of Common Shares Certificate of the Trust
4.2 -- Form of Indenture between the Company and The Bank of New York, as
Trustee, including the form of 7.75% Subordinated Note due 2000
(filed as Exhibit 4.2 to the Form S-4)*
10.7 -- Form of Incentive Stock Option Agreement by and between the Company
and E. Robert Roskind (filed as Exhibit 10.7 to the Form S-4)*
10.8 -- Form of 1994 Outside Director Shares Plan of the Company (filed as
Exhibit 10.8 to 1993 10-K)*
10.9 -- Form of Incentive Stock Option Agreement by and between the Company
and Richard J. Rouse (filed as Exhibit 10.8 to the Form S-4)*
10.10 -- Form of Incentive Stock Option Agreement by and between the Company
and T. Wilson Eglin (filed as Exhibit 10.10 to the Form S-4)*
10.11 -- Form of Incentive Stock Option Agreement by and between the
Company and Antonia G. Trigiani (filed as Exhibit 10.11 to the Form
S-4)*
10.12 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and E. Robert Roskind (filed as Exhibit 10.12 to the Form
S-4)*
10.13 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and Richard J. Rouse (filed as Exhibit 10.13 to the Form
S-4)*
10.14 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and T. Wilson Eglin (filed as Exhibit 10.14 to the
Form S-4)*
10.15 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and Antonia G. Trigiani (filed as Exhibit 10.15 to the Form
S-4)*
49
<PAGE> 50
Exhibit No. Exhibit
- ----------- -------
10.16 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and E. Robert Roskind, Director and Co-Chief Executive
Officer (filed as Exhibit 10.15 to the Form S-4)*
10.17 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Richard J. Rouse, Director and Co-Chief Executive
Officer (filed as Exhibit 10.16 to the Form S-4)*
10.18 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and T. Wilson Eglin, Executive Officer (filed as Exhibit
10.17 to the Form S-4)*
10.19 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Antonia G. Trigiani, Executive Officer (filed as
Exhibit 10.18 to the Form S-4)*
10.20 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Paul R. Wood, Executive Officer (filed as Exhibit
10.19 to the Form S-4)*
10.21 -- Form of Indemnification Agreement by and between the Company and
Seth M. Zachary, Director (filed as Exhibit 10.20 to the Form S-4)*
10.24 -- Class A Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$34,000,000 (filed as Exhibit 10.24 to Report on 10-K for year ended
December 31, 1995 (the "1995 10-K"))*
10.25 -- Class B Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$18,500,000 (filed as Exhibit 10.25 to the 1995 10-K)*
10.26 -- Class C Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$17,500,000 (filed as Exhibit 10.26 to the 1995 10-K)*
10.28 -- Indenture of Mortgage, Deed of Trust, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and
Security Deposits to First American Title Insurance Company and
Pacific Mutual Life Insurance Company and Lexington Mortgage Company
dated May 19, 1995 (filed as Exhibit 10.28 to the 1995 10-K)*
10.29 -- Assignment of Leases, Rents, and Security Deposits to Pacific Mutual
Life Insurance Company and Lexington Mortgage Company dated May 19,
1995 (filed as Exhibit 10.29 to the 1995 10-K)*
10.30 -- Cash Collateral Account, Security, Pledge and Assignment Agreement
with the Bank of New York, as agent and Pacific Mutual Life
Insurance Company and Lexington Mortgage Company dated May 19, 1995
(filed as Exhibit 10.30 to the 1995 10-K)*
10.31 -- Trust and Servicing Agreement with Pacific Mutual Life Insurance
Company, LaSalle National Bank and ABN AMRO Bank N.V. dated May 19,
1995 (filed as Exhibit 10.31 to the 1995 10-K)*
10.32 -- Revolving Credit and Term Loan Agreement with Fleet National Bank
dated November 14, 1995 in the amount of $25,000,000 (filed as
Exhibit 10.32 to the 1995 10-K)*
10.33 -- Investment Agreement dated as of December 31, 1996 with Five Arrows
Realty Securities L.L.C.*
10.34 -- Operating Agreement dated as of January 21, 1997 with Five Arrows
Realty Securities L.L.C.*
10.35 -- Articles Supplementary Classifying 2,000,000 shares of Preferred
Shares as Class A Senior Cumulative Convertible Preferred Shares and
2,000,000 shares of Excess Shares as Excess Class A Preferred Shares
of the Company*
50
<PAGE> 51
Exhibit No. Exhibit
- ----------- -------
10.36 -- Amended and Restated Revolving Credit Agreement with Fleet National
Bank dated February 20, 1997 in the amount of $60,000,000 (filed as
Exhibit 10.36 to Report on 10-K for year ended December 31, 1996)*
11 -- Schedule of Computations of Per Share Earnings
12 -- Statement of Computation of Ratio of Earnings to Fixed Charges
(filed as Exhibit 12 to the Form S-4)*
21 -- List of Subsidiaries of the Company
23 -- Consent of KPMG Peat Marwick LLP
27.1 -- Financial Data Schedule as of and for the year ended December
31, 1997
27.2 -- Financial Data Schedule -- restated earnings per share for the year
ended December 31, 1996
27.3 -- Financial Data Schedule -- restated earnings per share for the year
ended December 31, 1995
(b) Reports on Form 8-K and Form 8-K/A
Issuance and sale of up to 2.875 million shares of Common Stock in a
public offering - filed November 14, 1997.
Acquisition of property on May 1, 1997, and announcement of a definitive
agreement to acquire three properties through a merger with CRIT - filed
June 17, 1997, and Amendment No. 1 thereto, containing pro forma financial
statements for the Registrant for the year ended December 31, 1996 - filed
November 17, 1997.
Acquisition of property on September 4, 1997 - filed September 19, 1997,
and Amendment No. 1 thereto, containing pro forma financial statements for
the Registrant for the year ended December 31, 1996 - filed November 21,
1997.
- ----------
* Incorporated by reference.
51
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LEXINGTON CORPORATE PROPERTIES TRUST
By:/s/ E. Robert Roskind
-------------------
E. Robert Roskind
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date indicated.
Signature Title
--------- -----
___________________________
E. Robert Roskind Chairman of the Board of Trustees and Co-Chief
Executive Officer
___________________________
Richard J. Rouse Vice Chairman of the Board of Trustees and
Co-Chief Executive Officer
___________________________
T. Wilson Eglin President and Chief Operating Officer and Trustee
___________________________
Antonia G. Trigiani Chief Financial Officer and Treasurer
___________________________
Paul R. Wood Vice President, Chief Accounting Officer and
Secretary
___________________________
Carl D. Glickman Trustee
___________________________
Kevin W. Lynch Trustee
___________________________
John D. McGurk Trustee
___________________________
Seth M. Zachary Trustee
DATE: March 31, 1998
52
<PAGE> 53
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
2.1 -- Form of Agreement and Plan of Merger by and among Lexington
Corporate Properties, Inc. (the "Company"), Lepercq Corporate Income
Fund L.P. ("LCIF I") and Lex M-1, L.P. (filed as Appendix C-I to the
Company's Registration Statement of Form S-4 (File No. 33-66858)
(the "Form S-4"))*
2.2 -- Form of Agreement and Plan of Merger by and among the Company,
Lepercq Corporate Income Fund II L.P. ("LCIF II"), and Lex M-2, L.P.
(filed as Appendix C-II to the Form S-4)*
2.3 -- Form of Agreement and Articles of Merger between the Company and
Lexington Corporate Properties - Maryland, Inc. (filed as Exhibit
2.3 to Report on 10-K for year ended December 31, 1993 (the "1993
10-K"))*
2.4 -- Agreement and Plan of Merger between the Company and Lexington
Corporate Properties Trust (filed as Exhibit 2.1 to Form 8-K filed
1-12-98.)*
3.1 -- Declaration of Trust of the Company, dated December 31, 1997 (filed
as Exhibit 3.1 to Form 8K filed 1-16-98)*
3.2 -- By-Laws of the Company
4.1 -- Specimen of Common Shares Certificate of the Trust
4.2 -- Form of Indenture between the Company and The Bank of New York, as
Trustee, including the form of 7.75% Subordinated Note due 2000
(filed as Exhibit 4.2 to the Form S-4)*
10.7 -- Form of Incentive Stock Option Agreement by and between the Company
and E. Robert Roskind (filed as Exhibit 10.7 to the Form S-4)*
10.8 -- Form of 1994 Outside Director Shares Plan of the Company (filed as
Exhibit 10.8 to 1993 10-K)*
10.9 -- Form of Incentive Stock Option Agreement by and between the Company
and Richard J. Rouse (filed as Exhibit 10.8 to the Form S-4)*
10.10 -- Form of Incentive Stock Option Agreement by and between the Company
and T. Wilson Eglin (filed as Exhibit 10.10 to the Form S-4)*
10.11 -- Form of Incentive Stock Option Agreement by and between the
Company and Antonia G. Trigiani (filed as Exhibit 10.11 to the Form
S-4)*
10.12 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and E. Robert Roskind (filed as Exhibit 10.12 to the Form
S-4)*
10.13 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and Richard J. Rouse (filed as Exhibit 10.13 to the Form
S-4)*
10.14 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and T. Wilson Eglin (filed as Exhibit 10.14 to the Form
S-4)*
10.15 -- Form of Non-Qualified Stock Option Agreement by and between the
Company and Antonia G. Trigiani (filed as Exhibit 10.15 to the Form
S-4)*
<PAGE> 54
Exhibit No. Exhibit
- ----------- -------
10.16 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and E. Robert Roskind, Director and Co-Chief Executive
Officer (filed as Exhibit 10.15 to the Form S-4)*
10.17 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Richard J. Rouse, Director and Co-Chief Executive
Officer (filed as Exhibit 10.16 to the Form S-4)*
10.18 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and T. Wilson Eglin, Executive Officer (filed as Exhibit
10.17 to the Form S-4)*
10.19 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Antonia G. Trigiani, Executive Officer (filed as
Exhibit 10.18 to the Form S-4)*
10.20 -- Indemnification Agreement, dated as of July 19, 1993, by and between
the Company and Paul R. Wood, Executive Officer (filed as Exhibit
10.19 to the Form S-4)*
10.21 -- Form of Indemnification Agreement by and between the Company and
Seth M. Zachary, Director (filed as Exhibit 10.20 to the Form S-4)*
10.24 -- Class A Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$34,000,000 (filed as Exhibit 10.24 to Report on 10-K for year ended
December 31, 1995 (the "1995 10-K"))*
10.25 -- Class B Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$18,500,000 (filed as Exhibit 10.25 to the 1995 10-K)*
10.26 -- Class C Mortgage Note to Pacific Mutual Life Insurance Company and
Lexington Mortgage Company dated May 19, 1995 in the amount of
$17,500,000 (filed as Exhibit 10.26 to the 1995 10-K)*
10.28 -- Indenture of Mortgage, Deed of Trust, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and
Security Deposits to First American Title Insurance Company and
Pacific Mutual Life Insurance Company and Lexington Mortgage Company
dated May 19, 1995 (filed as Exhibit 10.28 to the 1995 10-K)*
10.29 -- Assignment of Leases, Rents, and Security Deposits to Pacific Mutual
Life Insurance Company and Lexington Mortgage Company dated May 19,
1995 (filed as Exhibit 10.29 to the 1995 10-K)*
10.30 -- Cash Collateral Account, Security, Pledge and Assignment Agreement
with the Bank of New York, as agent and Pacific Mutual Life
Insurance Company and Lexington Mortgage Company dated May 19, 1995
(filed as Exhibit 10.30 to the 1995 10-K)*
10.31 -- Trust and Servicing Agreement with Pacific Mutual Life Insurance
Company, LaSalle National Bank and ABN AMRO Bank N.V. dated May 19,
1995 (filed as Exhibit 10.31 to the 1995 10-K)*
10.32 -- Revolving Credit and Term Loan Agreement with Fleet National Bank
dated November 14, 1995 in the amount of $25,000,000 (filed as
Exhibit 10.32 to the 1995 10-K)*
10.33 -- Investment Agreement dated as of December 31, 1996 with Five Arrows
Realty Securities L.L.C.*
10.34 -- Operating Agreement dated as of January 21, 1997 with Five Arrows
Realty Securities L.L.C.*
10.35 -- Articles Supplementary Classifying 2,000,000 shares of Preferred
Shares as Class A Senior Cumulative Convertible Preferred Shares and
2,000,000 shares of Excess Shares as Excess Class A Preferred Shares
of the Company*
<PAGE> 55
Exhibit No. Exhibit
- ----------- -------
10.36 -- Amended and Restated Revolving Credit Agreement with Fleet National
Bank dated February 20, 1997 in the amount of $60,000,000 (filed as
Exhibit 10.36 to Report on 10-K for year ended December 31, 1996)*
11 -- Schedule of Computations of Per Share Earnings
12 -- Statement of Computation of Ratio of Earnings to Fixed Charges
(filed as Exhibit 12 to the Form S-4)*
21 -- List of Subsidiaries of the Company
23 -- Consent of KPMG Peat Marwick LLP
27.1 -- Financial Data Schedule as of and for the year ended December 31,
1997
27.2 -- Financial Data Schedule -- restated earning per share for the year
ended December 31, 1996
27.3 -- Financial Data Schedule -- restated earnings per sharefor the year
ended December 31, 1995
* Incorporated by reference.
<PAGE> 1
LEXINGTON CORPORATE PROPERTIES TRUST
BY-LAWS
ARTICLE I.
SHAREHOLDERS
SECTION 1.01. Annual Meeting. The Company shall hold an annual
meeting of its shareholders to elect trustees and transact any other business
within its powers, either at 10:00 a.m. on the first day of May in each year if
not a legal holiday, or at such other time on such other day falling on or
before the 30th day thereafter as shall be set by the Board of Trustees. Except
as the Declaration of Trust or statute provides otherwise, any business may be
considered at an annual meeting without the purpose of the meeting having been
specified in the notice. Failure to hold an annual meeting does not invalidate
the Company's existence or affect any otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between
annual meetings, a special meeting of the shareholders may be called by the
Chairman of the Board of Trustees or the President or by a majority of the Board
of Trustees by vote at a meeting or in writing (addressed to the Secretary of
the Company) with or without a meeting. Special meetings of the shareholders
shall be called as may be required by law.
SECTION 1.03. Place of Meetings. Meetings of shareholders shall be
held at such place in the United States as is set from time to time by the Board
of Trustees.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than
ten nor more than 90 days before each shareholders' meeting, the Secretary shall
give written notice of the meeting to each shareholder entitled to vote at the
meeting and each other shareholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting is a special
meeting or notice of the purpose is required by statute, the purpose of the
meeting. Notice is given to a shareholder when it is personally delivered to
him, left at his residence or usual place of business, or mailed to him at his
address as it appears on the records of the Company. Notwithstanding the
foregoing provisions, each person who is entitled to notice waives notice if he
before or after the meeting signs a waiver of the notice which is filed with the
records of shareholders' meetings, or is present at the meeting in person or by
proxy.
SECTION 1.05. Quorum Voting. Unless statute or the Declaration of
Trust provides otherwise, at a meeting of shareholders the presence in person or
by proxy of shareholders entitled to cast a majority of all the votes entitled
to be cast at the meeting
<PAGE> 2
constitutes a quorum, and a majority of all the votes cast at a meeting at which
a quorum is present is sufficient to approve any matter which properly comes
before the meeting, except that a plurality of all the votes cast at a meeting
at which a quorum is present is sufficient to elect a trustee.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a
meeting of shareholders convened on the date for which it was called may be
adjourned from time to time without further notice by a majority vote of the
shareholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted at
the meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. General Right to Vote; Proxies. Unless the Declaration
of Trust provides for a greater or lesser number of votes per share or limits or
denies voting rights, each outstanding share of beneficial interest, regardless
of class, is entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. In all elections for trustees, each share of beneficial
interest may be voted for as many individuals as there are trustees to be
elected and for whose election the share is entitled to be voted. A shareholder
may vote the beneficial interest he owns of record either in person or by
written proxy signed by the shareholder or by his duly authorized attorney in
fact. Unless a proxy provides otherwise, it is not valid more than 11 months
after its date.
SECTION 1.08. List of Shareholders. At each meeting of shareholders,
a full, true and complete list of all shareholders entitled to vote at such
meeting, showing the number and class of shares held by each and certified by
the transfer agent for such class or by the Secretary, shall be furnished by the
Secretary.
SECTION 1.09. Conduct of Business and Voting. At all meetings of
shareholders, unless the voting is conducted by an inspector, the proxies and
ballots shall be received, and all questions touching the qualification of
voters and the validity of proxies, the acceptance or rejection of votes and
procedures for the conduct of business not otherwise specified by these By-Laws,
the Declaration of Trust or law, shall be decided or determined by the chairman
of the meeting. If demanded by shareholders, present in person or by proxy,
entitled to cast 10% in number of votes entitled to be cast, or if ordered by
the chairman of the meeting, the vote upon any election or question shall be
taken by ballot and, upon like demand or order, the voting shall be conducted by
an inspector, in which event the proxies and ballots shall be received, and all
questions touching the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspector. Unless
so demanded or ordered, no vote need be by ballot and voting need not be
conducted by an inspector. The shareholders at any meeting may choose an
inspector to act at such meeting, and in
-2-
<PAGE> 3
default of such election, the chairman of the meeting may appoint an inspector.
No candidate for election as trustee at a meeting shall serve as an inspector
thereat.
SECTION 1.10. Informal Action by Shareholders. Any action required
or permitted to be taken at a meeting of shareholders may be taken without a
meeting if there is filed with the records of shareholder's meetings a unanimous
written consent which sets forth the action and is signed by each shareholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each shareholder entitled to notice of the meeting but not entitled to
vote at it.
SECTION 1.11. Shareholder Proposals. For any shareholder proposal to
be presented in connection with an annual meeting of shareholders of the
Company, including any proposal relating to the nomination of a trustee to be
elected to the Board of Trustees of the Company, the shareholders must have
given timely notice thereof in writing to the Secretary of the Company. To be
timely, a shareholder's proposal shall be delivered to the Secretary at the
principal executive offices of the Company not less than 120 days in advance of
the release date of the Company's proxy statement to shareholders in connection
with the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced by more than 30 days or delayed
by more than 60 days from such anniversary date, notice by the shareholder to be
timely must be so delivered not earlier than the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such shareholders'
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or re-election as a trustee all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of trustees, or is otherwise required, in each case, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a trustee if elected); (b) as to
any other business that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (i) the name and address of such shareholder, as they appear on the
Company's books, and of such beneficial owner and (ii) the class and number of
shares of beneficial interest of the Company which are owned beneficially and of
record by such shareholders and such beneficial owner. For the 1995 annual
meeting the previous year's meeting shall be deemed to have taken place on May
12, 1994; provided that this sentence shall cease to be a part of these By-Laws
after the holding of the 1995 annual meeting and any adjournments thereof.
-3-
<PAGE> 4
ARTICLE II.
BOARD OF TRUSTEES
SECTION 2.01. Function of Trustees. The business and affairs of the
Company shall be managed under the direction of its Board of Trustees. All
powers of the Company may be exercised by or under authority of the Board of
Trustees, except as conferred on or reserved to the shareholders by statute or
by the Declaration of Trust or By-Laws.
SECTION 2.02. Number of Trustees. The Company shall have at least
three trustees; provided that, if there are no shares of beneficial interest
outstanding, the number of Trustees may be less than three but not less than
one, and, if there are shares of beneficial interest outstanding and so long as
there are less than three shareholders, the number of Trustees may be less than
three but not less than the number of shareholders. The Company shall have the
number of Trustees provided in the Declaration of Trust until changed as herein
provided. Except as the Declaration of Trust provides otherwise, a majority of
the entire Board of Trustees may alter the number of trustees set by the
Declaration of Trust to not exceeding nine nor less than the minimum number then
permitted herein, but the action may not affect the tenure of office of any
trustee.
SECTION 2.03. Election and Tenure of Trustees. At each annual
meeting the shareholders shall elect trustees to hold office until the next
annual meeting and until their successors are elected and qualify.
SECTION 2.04. Removal of Trustee. Any trustee or the entire Board of
Trustees may be removed only in accordance with the provisions of the
Declaration of Trust.
SECTION 2.05 Vacancy on Board of Trustees. The shareholders shall
elect a successor to fill a vacancy on the Board of Trustees which results from
the removal of a trustee. A trustee elected by the shareholders to fill a
vacancy which results from the removal of a trustee serves for the balance of
the term of the removed trustee. A majority of the remaining Trustees, whether
or not sufficient to constitute a quorum, may fill a vacancy on the Board of
Trustees which results from any increase in the authorized number of Trustees,
or death, resignation, retirement or other cause. A trustee elected by the Board
of Trustees to fill a vacancy serves until the next annual meeting of
shareholders and until his successor is elected and qualifies.
SECTION 2.06. Regular Meetings. After each meeting of shareholders
at which trustees shall have been elected, the Board of Trustees shall meet as
soon as
-4-
<PAGE> 5
practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board of Trustees, the President or the Chairman of the Board of
Trustees, with notice in accordance with Section 2.08, the Board of Trustees
shall meet immediately following the close of, and at the place of, such
shareholders' meeting. Any other regular meeting of the Board of Trustees shall
be held on such date and at any place as may be designated from time to time by
the Board of Trustees.
SECTION 2.07. Special Meetings. Special meetings of the Board of
Trustees may be called at any time by the Chairman of the Board of Trustees or
the President or by a majority of the Board of Trustees by vote at a meeting or
in writing with or without a meeting. A special meeting of the Board of Trustees
shall be held on such date and at any place as may be designated from time to
time by the Board of Trustees. In the absence of designation such meeting shall
be held at such place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06,
the Secretary shall give notice to each trustee of each regular and special
meeting of the Board of Trustees. The notice shall state the time and place of
the meeting. Notice is given to a trustee when it is delivered personally to
him, left at his residence or usual place of business, or sent by telegraph,
facsimile transmission or telephone, at least 24 hours before the time of the
meeting or, in the alternative by mail to his address as it shall appear on the
records of the Company, at least 72 hours before the time of the meeting. Unless
these By-Laws or a resolution of the Board of Trustees provides otherwise, the
notice need not state the business to be transacted at or the purposes of any
regular or special meeting of the Board of Trustees. No notice of any meeting of
the Board of Trustees need be given to any trustee who attends except where a
trustee attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened, or to any trustee who, in writing executed and filed with the records
of the meeting either before or after the holding thereof, waives such notice.
Any meeting of the Board of Trustees, regular or special, may adjourn from time
to time to reconvene at the same or some other place, and no notice need be
given of any such adjourned meeting other than by announcement.
SECTION 2.09. Action by Trustees. Unless statute, the Declaration of
Trust or these By-Laws requires a greater proportion, the action of a majority
of the trustees present at a meeting at which a quorum is present is action of
the Board of Trustees. A majority of the entire Board of Trustees shall
constitute a quorum for the transaction of business. In the absence of a quorum,
the trustees present by majority vote and without notice other than by
announcement may adjourn the meeting from time to time until a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
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<PAGE> 6
meeting as originally notified. Any action required or permitted to be taken at
a meeting of the Board of Trustees may be taken without a meeting, if a
unanimous written consent which sets forth the action is signed by each member
of the Board of Trustees and filed with the minutes of proceeding of the Board
of Trustees
SECTION 2.10. Meeting by Conference Telephone. Members of the Board
of Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. Compensation. By resolution of the Board of Trustees a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Trustees or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Trustees, may be paid to trustees. Trustees who are full-time employees of the
Company need not be paid for attendance at meetings of the Board of Trustees or
committees thereof for which fees are paid to other trustees. A trustee who
serves the Company in any other capacity also may receive compensation for such
other services, pursuant to a resolution of the Board of Trustees.
SECTION 2.12. Advisory Trustees. The Board of Trustees may by
resolution appoint advisory trustees to the Board of Trustees, who may also
serve as trustees emeriti, and shall have such authority and receive such
compensation and reimbursement as the Board of Trustees shall provide. Advisory
trustees or trustees emeriti shall not have the authority to participate by vote
in the transaction of business.
ARTICLE III.
COMMITTEES
SECTION 3.01. Committees. The Board of Trustees may appoint from
among its members an Audit Committee, a Compensation Committee and other
committees composed of two or more trustees and delegate to these committees any
of the powers of the Board of Trustees, except the power to declare dividends or
other distributions on beneficial interest, elect Trustees, issue beneficial
interest other than as provided in the next sentence, recommend to the
shareholders any action which requires shareholder approval, amend these
By-Laws, or approve any merger or share exchange which does not require
shareholder approval. The entire Audit Committee shall be trustees who are
independent of management. The entire Compensation Committee shall be trustees
who are "disinterested persons" within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, as amended. If the Board of Trustees has given
general
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<PAGE> 7
authorization for the issuance of beneficial interest, a committee of the Board
of Trustees, in accordance with a general formula or method specified by the
Board of Trustees by resolution or by adoption of a beneficial interest option
or other plan, may fix the terms of beneficial interest subject to
classification or reclassification and the terms on which any beneficial
interest may be issued, including all terms and conditions required or permitted
to be established or authorized by the Board of Trustees.
SECTION 3.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a trustee to act in the place of an absent
member. Any action required or permitted to be taken at a meeting of a committee
may be taken without a meeting, if a unanimous written consent which sets forth
the action is signed by each member of the committee and filed with the minutes
of the committee. The members of a committee may conduct any meeting thereof by
conference telephone in accordance with the provisions of Section 2.10.
SECTION 3.03. Emergency. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its trustees and officers as contemplated by the
Declaration of Trust and these By-Laws, the available trustees shall elect a
Special Executive Committee consisting of any two members of the Board of
Trustees, whether or not they be officers of the Company, which two members
shall constitute the Special Executive Committee for the full conduct and
management of the affairs of the Company in accordance with the foregoing
provisions of this Section. This Section shall be subject to implementation by
resolution of the Board of Trustees passed from time to time for that purpose,
and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary resolutions shall be suspended until it
shall be determined by any Special Executive Committee acting under this Section
that it shall be to the advantage of the Company to resume the conduct and
management of its affairs and business under all the other provisions of these
By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. Executive and Other Officers. The Company shall have a
President, a Secretary, and a Treasurer. It may also have a Chairman of the
Board of
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<PAGE> 8
Trustees. The Board of Trustees shall designate who shall serve as chief
executive officer, who shall have general supervision of the business and
affairs of the Company, and may designate a chief operating officer, who shall
have supervision of the operations of the Company. In the absence of any
designation, the Chairman of the Board of Trustees, if there be one, shall serve
as chief executive officer and the President shall serve as chief operating
officer. In the absence of the Chairman of the Board of Trustees, or if there be
none, the President shall be the chief executive officer. The same person may
hold both offices. The Company may also have one or more Vice-Presidents,
assistant officers, and subordinate officers as may be established by the Board
of Trustees. A person may hold more than one office in the Company except that
no person may serve concurrently as both President and a Vice-President of the
Company. The Chairman of the Board of Trustees shall be a trustee; the other
officers may be trustees.
SECTION 4.02. Chairman of the Board of Trustees. The Chairman of the
Board of Trustees, if one be elected, shall preside at all meetings of the Board
of Trustees and of the shareholders at which he shall be present. Unless
otherwise specified by the Board of Trustees, he shall be the chief executive
officer of the Company and perform the duties customarily performed by chief
executive officers, and may perform any duties of the President. In general, he
shall perform all such duties as are from time to time assigned to him by the
Board of Trustees.
SECTION 4.03. President. Unless otherwise provided by resolution of
the Board of Trustees, the President, in the absence of the Chairman of the
Board of Trustees, shall preside at all meetings of the Board of Trustees and of
the shareholders at which he shall be present. Unless otherwise specified by the
Board of Trustees, the President shall be the chief operating officer of the
Company and perform the duties customarily performed by chief operating
officers. He may sign and execute, in the name of the Company, all authorized
deeds, mortgages, bonds, contracts or other instruments, except in cases in
which the signing and execution thereof shall have been expressly delegated to
some other officer or agent of the Company. In general, he shall perform such
other duties usually performed by a president of a Company and such other duties
as are from time to time assigned to him by the Board of Trustees or the chief
executive officer of the Company.
SECTION 4.04. Vice-Presidents. The Vice-President or
Vice-Presidents, at the request of the chief executive officer or the President,
or in the President's absence or during his inability to act, shall perform the
duties and exercise the functions of the President, and when so acting shall
have the powers of the President. If there be more than one Vice-President, the
Board of Trustees may determine which one or more of the Vice-Presidents shall
perform any of such duties or exercise any of such functions, or if such
determination is not made by the Board of Trustees, the chief executive officer,
or the President may make such determination; otherwise any of the
Vice-Presidents may
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<PAGE> 9
perform any of such duties or exercise any of such functions. The Vice-President
or Vice-Presidents shall have such other powers and perform such other duties,
and have such additional descriptive designations in their titles (if any), as
are from time to time assigned to them by the Board of Trustees, the chief
executive officer, or the President.
SECTION 4.05. Secretary. The Secretary shall keep the minutes of the
meetings of the shareholders, of the Board of Trustees and of any committees, in
books provided for the purpose; he shall see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; he shall
be custodian of the records of the Company; he may witness any document on
behalf of the Company, the execution of which is duly authorized, see that the
corporate seal is affixed where such document is required or desired to be under
its seal, and, when so affixed, may attest the same; and, in general, he shall
perform all duties incident to the office of a secretary of a Company, and such
other duties as are from time to time assigned to him by the Board of Trustees,
the chief executive officer or the President.
SECTION 4.06. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Company, and shall deposit, or cause to be deposited, in the name of the
Company, all moneys or other valuable effects in such banks, trust companies or
other depositories as shall, from time to time, be selected by the Board of
Trustees; he shall render to the President and to the Board of Trustees,
whenever requested, an account of the financial condition of the Company; and,
in general, he shall perform all the duties incident to the office of a
treasurer of a Company, and such other duties as are from time to time assigned
to him by the Board of Trustees, the chief executive officer, or the President.
The Treasurer shall also be the Chief Financial Officer of the Company.
SECTION 4.07. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Company are all officer below the office of
Vice-President, Secretary or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Trustees, the chief executive officer, or the President.
SECTION 4.08. Election; Tenure and Removal of Officers. The Board of
Trustees shall elect the officers. The Board of Trustees may from time to time
authorize any committee or officer to appoint assistant and subordinate
officers. Election or appointment of an officer, employee or agent shall not of
itself create contract rights. All officers shall be appointed to hold their
offices, respectively, at the pleasure of the Board of Trustees. The Board of
Trustees (or, as to any assistant or subordinate officer, any committee or
officer authorized by the Board of Trustees) may remove an officer at any time.
The removal of an officer does not prejudice any of his contract rights. The
Board of Trustees (or, as to any assistant or subordinate officer, any committee
or officer authorized by the Board of Trustees) may fill a vacancy which occurs
in any office for the unexpired portion of the term.
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<PAGE> 10
SECTION 4.09. Compensation. The Board of Trustees shall have power
to fix the salaries and other compensation and remuneration, of whatever kind,
of all officers of the Company. No officer shall be prevented from receiving
such salary by reason of the fact that he is also a trustee of the Company. The
Board of Trustees may authorize any committee or officer, upon whom the power of
appointing assistant and subordinate officers may have been conferred, to fix
the salaries, compensation and remuneration of such assistant and subordinate
officers.
ARTICLE V.
DIVISIONAL TITLES
SECTION 5.01. Conferring Divisional Titles. The Board of Trustees
may from time to time confer upon any employee of a division of the Company the
title of President, Vice President, Treasurer or Secretary of such division or
any other title or titles deemed appropriate, or may authorize the Chairman of
the Board of Trustees or the President to do so. Any such titles so conferred
may be discontinued and withdrawn at any time by the Board of Trustees, or by
the Chairman of the Board of Trustees or the President if so authorized by the
Board of Trustees. Any employee of a division designated by such a divisional
title shall have the powers and duties with respect to such division as shall be
prescribed by the Board of Trustees, the Chairman of the Board of Trustees or
the President.
SECTION 5.02. Effect of Divisional Titles. The conferring of
divisional titles shall not create an office of the Company under Article IV
unless specifically designated as such by the Board of Trustees; but any person
who is an officer of the Company may also have a divisional title.
ARTICLE VI .
BENEFICIAL INTEREST
SECTION 6.01. Certificates for Beneficial interest. Each shareholder
is entitled to certificates which represent and certify the shares of beneficial
interest he holds in the Company. Each beneficial interest certificate shall
include on its face the name of the Company, the name of the shareholder or
other person to whom it is issued, and the class of beneficial interest and
number of shares it represents. It shall be in such form, not inconsistent with
law or with the Declaration of Trust, as shall be approved by the Board of
Trustees or any officer or officers designated for such purpose by resolution of
the Board of Trustees. Each beneficial interest certificate shall be signed by
the Chairman of the Board of Trustees, the President, or a Vice-President, and
countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an
Assistant Treasurer. Each certificate may be sealed with the actual corporate
seal or a facsimile of
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<PAGE> 11
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued.
SECTION 6.02. Transfers. The Board of Trustees shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates of beneficial interest; and
may appoint transfer agents and registrars thereof. The duties of transfer agent
and registrar may be combined.
SECTION 6.03. Record Dates and Closing of Transfer Books. The Board
of Trustees may set a record date or direct that the beneficial interest
transfer books be closed for a stated period for the purpose of making any
proper determination with respect to shareholders, including which shareholders
are entitled to notice of a meeting, vote at a meeting, receive a dividend or be
allotted other rights. The record date may not be prior to the close of business
on the day the record date is fixed nor, subject to Section 1.06, more than 90
days before the date on which the action requiring the determination will be
taken; the transfer books may not be closed for a period longer than 20 days;
and, in the case of a meeting of shareholders, the record date or the closing of
the transfer books shall be at least ten days before the date of the meeting.
SECTION 6.04. Beneficial Interest Ledger. The Company shall maintain
a beneficial interest ledger which contains the name and address of each
shareholder and the number of shares of beneficial interest of each class which
the shareholder holds. The beneficial interest ledger may be in written form or
in any other form which can be converted within a reasonable time into written
form for visual inspection. The original or a duplicate of the beneficial
interest ledger shall be kept at the offices of a transfer agent for the
particular class of beneficial interest, or, if none, at the principal office in
the State of Maryland or the principal executive offices of the Company.
SECTION 6.05. Certification of Beneficial Owners. The Board of
Trustees may adopt by resolution a procedure by which a shareholder of the
Company may certify in writing to the Company that any shares of beneficial
interest registered in the name of the shareholder are held for the account of a
specified person other than the shareholder. The resolution shall set forth the
class of shareholders who may certify; the purpose for which the certification
may be made; the form of certification and the information to be contained in
it; if the certification is with respect to a record date or closing of the
beneficial interest transfer books, the time after the record date or closing of
the beneficial interest transfer books within which the certification must be
received by the Company; and any other provisions with respect to the procedure
which the Board of Trustees considers necessary or desirable. On receipt of a
certification which complies with the procedure adopted by the Board of Trustees
in accordance with this Section, the person specified in the certification is,
for the purpose set forth in the certification, the holder of record of the
specified beneficial interest in place of the shareholder who makes the
certification.
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<PAGE> 12
SECTION 6.06. Lost Beneficial Interest Certificates. The Board of
Trustees of the Company may determine the conditions for issuing a new
beneficial interest certificate in place of one which is alleged to have been
lost, stolen, or destroyed, or the Board of Trustees may delegate such power to
any officer or officers of the Company. In their discretion, the Board of
Trustees or such officer or officers may refuse to issue such new certificate
save upon order of some court having jurisdiction in the premises.
ARTICLE VII.
FINANCE
SECTION 7.01. Checks, Drafts, Etc. All checks, drafts and orders for
the payment of money, notes and other evidences of indebtedness, issued in the
name of the Company, shall, unless otherwise provided by resolution of the Board
of Trustees, be signed by the President, a Vice-President or an Assistant
Vice-President and countersigned by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary.
SECTION 7.02. Annual Statement of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Company, to include a balance sheet and a financial statement of
operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the shareholders and, within 20 days after
the meeting, placed on file at the Company's principal.
SECTION 7.03. Fiscal Year. The fiscal year of the Company shall be
the twelve calendar months ending December 31 in each year, unless otherwise
provided by the Board of Trustees.
SECTION 7.04. Dividends. If declared by the Board of Trustees at any
meeting thereof, the Company may pay dividends on its shares in cash, property,
or in shares of the capital beneficial interest of the Company, unless such
dividend is contrary to law or to a restriction contained in the Declaration of
Trust.
SECTION 7.05. Contracts. To the extent permitted by applicable law,
and except as otherwise prescribed by the Declaration of Trust or these By-Laws
with respect to certificates for shares, the Board of Trustees may authorize any
officer, employee, or agent of the Company to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Company. Such
authority may be general or confined to specific instances.
ARTICLE VIII.
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<PAGE> 13
INDEMNIFICATION
SECTION 8.01. Procedure. Any indemnification, or payment of expenses
in advance of the final disposition of any proceeding, shall be made promptly,
and in any event within 60 days, upon the written request of the trustee or
officer entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the Indemnified
Party in any court of competent jurisdiction, if (i) the Company denies such
request, in whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such action shall also be reimbursed by the Company. It shall be a defense
to any action for advance of expenses that (a) a determination has been made
that the facts then known to those making the determination would preclude
indemnification or (b) the Company has not received either (i) an undertaking as
required by law to repay such advances in the event it shall ultimately be
determined that the standard of conduct has not been met or (ii) a written
affirmation by the Indemnified Party of such Indemnified Party's good faith
belief that the standard of conduct necessary for indemnification by the Company
has been met.
SECTION 8.02. Exclusivity; Etc. The indemnification and advance of
expenses provided by the Declaration of Trust and these By-Laws shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or advance of expenses may be entitled under any law (common or statutory), or
any agreement, vote of shareholders or disinterested trustees or other provision
that is consistent with law, both as to action in his official capacity and as
to action in another capacity while holding office or while employed by or
acting as agent for the Company, shall continue in respect of all events
occurring while a person was a trustee or officer after such person has ceased
to be a trustee or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of such person. All rights to indemnification and
advance of expenses under the Declaration of Trust of the Company and hereunder
shall be deemed to be a contract between the Company and each trustee or officer
of the Company who serves or served in such capacity at any time while this
By-Law is in effect. Nothing herein shall prevent the amendment of this By-Law,
provided that no such amendment shall diminish the rights' of any person
hereunder with respect to events occurring or claims made before its adoption or
as to claims made after its adoption in respect of events occurring before its
adoption. Any repeal or modification of this By-Law shall not in any way
diminish any rights to indemnification or advance of expenses of such trustee or
officer or the obligations of the Company arising hereunder with respect to
events occurring, or claims made, while this By-Law or any provision hereof is
in force.
SECTION 8.03. Severability: Definitions. The invalidity or
unenforceability of any provision of this Article VIII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
By-Law" in this Article VIII means this Article VIII in its entirety.
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<PAGE> 14
ARTICLE IX.
SUNDRY PROVISIONS
SECTION 9.01. Books and Records. The Company shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its shareholders and Board of Trustees and of any committee when
exercising any of the powers of the Board of Trustees. The books and records of
a Company may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. Minutes shall
be recorded in written form but may be maintained in the form of a reproduction.
The original or a certified copy of these By-Laws shall be kept at the principal
office of the Company.
SECTION 9.02. Corporate Seal. The Board of Trustees shall provide a
suitable seal, bearing the name of the Company, which shall be in the charge of
the Secretary. The Board of Trustees may authorize one or more duplicate seals
and provide for the custody thereof. If the Company is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any
law, rule, or regulation relating to a corporate seal to place the word "Seal"
adjacent to the signature of the person authorized to sign the document on
behalf of the Company.
SECTION 9.03. Bonds. The Board of Trustees may require any officer,
agent or employee of the Company to give a bond to the Company, conditioned upon
the faithful discharge of his duties, with one or more sureties and in such
amount as may be satisfactory to the Board of Trustees.
SECTION 9.04. Voting Upon Shares in Other Companies. Beneficial
interest of other Companies or associations, registered in the name of the
Company, may be voted by the President, a Vice-President, or a proxy appointed
by either of them. The Board of Trustees, however, may by resolution appoint
some other person to vote such shares, in which case such person shall be
entitled to vote such shares upon the production of a certified copy of such
resolution.
SECTION 9.05. Mail. Any notice or other document which is required
by these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 9.06. Execution of Documents. A person who holds more than
one office in the Company may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.
SECTION 9.07. Amendments. Subject to the special provisions of
Section 2.02, in accordance with the Declaration of Trust, these By-Laws may be
repealed, altered, amended or
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<PAGE> 15
rescinded (a) by the shareholders of the Company only by vote of not less than
80% of the outstanding shares of beneficial interest of the Company entitled to
vote generally in the election of trustees (considered for this purpose as one
class) cast at any meeting of the shareholders called for that purpose (provided
that notice of such proposed repeal, alteration, amendment or rescission is
included in the notice of such meeting) or (b) by vote of two-thirds of the
Board of Trustees at a meeting held in accordance with the provisions of these
By-Laws.
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<PAGE> 1
Exhibit 4.1
Specimen of Common Stock Certificate
COMMON COMMON
PAR VALUE $.0001 PAR VALUE $.0001
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 529043 10 1
THE CITIES OF DENVER OR NEW YORK
SEE RESTRICTIVE LEGEND ON REVERSE SEE REVERSE FOR CERTAIN DEFINITIONS
LEXINGTON CORPORATE PROPERTIES TRUST
This certifies that
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Lexington Corporate Properties Trust transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of the
Certificate properly endorsed. This certificate is not valid until countersigned
by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES
TRANSFER AGENT AND REGISTRAR
PRESIDENT BY
SECRETARY AUTHORIZED SIGNATURE
<PAGE> 1
Exhibit 11
Schedule of Computations of Per Share Earnings
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
------------- ------------- -------------
BASIC
-----
<S> <C> <C> <C>
Calculation of income for basic earnings per common share purposes:
Income before extraordinary item $ 11,782 $ 5,466 $ 8,133
Less:
Preferred dividends paid or declared (1,322) -- --
Deemed additional preferred dividends (non-cash) (3,549) -- --
------------- ------------- -------------
Income before extraordinary item attributable to common shares,
for basic earnings per common share 6,911 5,466 8,133
Extraordinary item - loss on extinguishment of debt (3,189) -- (4,849)
------------- ------------- -------------
Net income for basic earnings per common share $ 3,722 $ 5,466 $ 3,284
============= ============= =============
Weighted average number of common shares outstanding 11,444,589 9,392,727 9,263,169
============= ============= =============
Basic earnings per common share:
Income before extraordinary item $ 0.61 $ 0.58 $ 0.88
Extraordinary item - loss on extinguishment of debt (0.28) -- (0.53)
------------- ------------- -------------
Net income $ 0.33 $ 0.58 $ 0.35
============= ============= =============
DILUTED
-------
Income before extraordinary item attributable to common shares,
for basic earnings per common share $ 6,911 $ 5,466 $ 8,133
Add:
Minority interests attributable to limited partnership units
assuming conversion of such units -- 588 59
------------- ------------- -------------
Income before extraordinary item attributable to common shares,
for diluted earnings per share 6,911 6,054 8,192
Extraordinary item - loss on extinguishment of debt (3,189) -- (4,849)
------------- ------------- -------------
Net income for fully diluted earnings per common share $ 3,722 $ 6,054 $ 3,343
============= ============= =============
Weighted average number of common shares outstanding 11,444,589 9,392,727 9,263,169
Add incremental shares representing:
Additional common share equivalents relating to employee shares options 195,094 50,513 60
Assumed conversion of limited partnership interests -- 1,453,771 239,126
------------- ------------- -------------
Weighted average number of common shares used in calculation of
diluted earnings per share 11,639,683 10,897,011 9,502,355
============= ============= =============
Diluted earnings per share:
Income before extraordinary item $ 0.59 $ 0.56 $ 0.86
Extraordinary item - loss on extinguishment of debt (0.27) -- (0.51)
------------- ------------- -------------
Net income $ 0.32 $ 0.56 $ 0.35
============= ============= =============
</TABLE>
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF LEXINGTON CORPORATE PROPERTIES TRUST
(JURISDICTION OR ORGANIZATION)
Lepercq Corporate Income Fund L.P. (Delaware)
Lepercq Corporate Income Fund II L.P. (Delaware)
Lex GP-1, Inc. (Delaware)
Lex LP-1, Inc. (Delaware)
Lexington Phoenix Corp. (Arizona)
LXP Canton, Inc. (Delaware)
LXP Funding Corp. (Delaware)
LXP I, L.P. (Delaware)
LXP I, Inc. (Delaware)
LXP II, L.P. (Delaware)
LXP II, Inc. (Delaware)
North Tampa Associates (Florida)
Union Hills Associates (Arizona)
Union Hills Associates II (Arizona)
Barnes Rockshire Associates Limited Partnership (Maryland)
Barngiant Livingston Associates Limited Partnership (Maryland)
Barnhale Modesto Properties (New York)
Barnhech Montgomery Associates Limited Partnership (Maryland)
Barnvyn Bakersfield Associates L. P. (California)
Barnward Brownsville Properties (New York)
<PAGE> 1
Exhibit 23
Accountants' Consent
The Board of Trustees
Lexington Corporate Properties Trust:
We consent to incorporation by reference in the registration statement (No.
1-12386) on Form S-3 of Lexington Corporate Properties Trust of our report dated
January 22, 1998, relating to the consolidated balance sheets of Lexington
Corporate Properties Trust and subsidiaries as of December 31, 1997 and 1996,
and the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1997, and the related schedule, which report appears in the
December 31, 1997 annual report on Form 10-K of Lexington Corporate Properties
Trust.
KPMG PEAT MARWICK LLP
New York, New York
March 26, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income for the year ended December 31, 1997 and the
consolidated balance sheet as of December 31, 1997 as contained in the Company's
Form 10-K for December 31, 1997 and is qualified in its entirety by reference to
such Form 10-K. Dollars are in thousands, except per share data.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 9,139
<SECURITIES> 0
<RECEIVABLES> 7,638
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 466,348
<DEPRECIATION> (50,993)
<TOTAL-ASSETS> 467,115
<CURRENT-LIABILITIES> 0
<BONDS> 227,160
24,369
0
<COMMON> 2
<OTHER-SE> 182,464
<TOTAL-LIABILITY-AND-EQUITY> 467,115
<SALES> 0
<TOTAL-REVENUES> 43,569
<CGS> 0
<TOTAL-COSTS> 11,422
<OTHER-EXPENSES> 876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,644
<INCOME-PRETAX> 10,707
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,782
<DISCONTINUED> 0
<EXTRAORDINARY> (3,189)
<CHANGES> 0
<NET-INCOME> 8,593
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income for the years ended December 31, 1997, 1996
and 1995 as contained in the Company's Form 10-K for December 31, 1997 and is
qualified in its entirety by reference to such Form 10-K. In accordance with
Rule 601(c)(2)iii of Regulation S-K, due to the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
128, Earnings Per Share ("SFAS 128"), which is effective for financial
statements for periods ending after December 31, 1997, the Company has restated
its earnings per share accordingly, as indicted above.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income for the years ended December 31, 1997, 1996
and 1995 as contained in the Company's Form 10-K for December 31, 1997 and is
qualified in its entirety by reference to such Form 10-K.
In accordance with Rule 601(c)(2)iii of Regulation S-K, due to the provisions of
the Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128"), which is effective for
financial statements for periods ending after December 31, 1997, the Company has
restated its earnings per share accordingly, as indicted above.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
