SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to_________
Commission File No. 1-12412
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ARBOR PROPERTY TRUST
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(Exact name of Registrant as specified in its Charter)
Delaware 23-2740383
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 800, One Tower Bridge, W. Conshohocken, PA 19428
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(Address of principal executive offices) (Zip code)
(610) 941-2933
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(Registrant's telephone number, including area code)
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(Former name of registrant if changed since last report)
Indicate by checkmark 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
--- ---
APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING
FIVE YEARS:
Indicate by checkmark whether the Registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes _______ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: 12,154,653 shares as of August
12, 1995.
<PAGE>
ARBOR PROPERTY TRUST
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1995
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of June 30, 1995
and December 31, 1994 3
Condensed Consolidated Statements of Operations for the three and
six month periods ended June 30, 1995 and June 30, 1994 4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1995 and June 30, 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Items 1 through 6. 11
SIGNATURES 12
EXHIBITS 13
</TABLE>
2
<PAGE>
ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Investment in property, at cost:
Land $ 30,295 $ 30,295
Buildings and improvements 139,743 139,249
Capitalized lease 7,125 7,125
Personal property 1,172 1,075
Construction in progress 55 10
----------- -----------
178,390 177,754
Less accumulated depreciation 28,740 26,621
----------- -----------
149,650 151,133
Tenant security deposits 332 315
Cash and short-term investments - -
Accounts receivable (net of allowance for doubtful
accounts of $539 and $898, respectively) 7,414 7,306
Other assets, net 5,484 6,068
----------- -----------
TOTAL ASSETS $162,880 $164,822
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Collateralized floating rate notes (net
of unamortized discounts of $74 and $86,
respectively) $117,926 $117,914
Distributions payable 2,127 3,321
Obligation under capitalized lease 7,001 6,994
Note payable to bank 5,900 4,300
Accounts payable and other liabilities 3,089 3,102
----------- -----------
136,043 135,631
----------- -----------
Commitments and Contingencies:
Shareholders' Equity:
Shares of beneficial interest, without par value:
Authorized: 5,000,000 preferred shares,
45,000,000 common shares, and 50,000,000
excess shares;
Issued and outstanding: 12,154,652 and 12,074,774
common shares, respectively 117,885 117,209
Distributions in excess of accumulated earnings (91,048) (88,018)
----------- -----------
26,837 29,191
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $162,880 $164,822
=========== ===========
</TABLE>
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The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------- ------------------------
1995 1994 1995 1994
------ ------ ------- -------
<S> <C> <C> <C> <C>
Revenues from rental operations $5,727 $5,244 $10,947 $10,472
Operating expenses, net of tenant reimbursements
(including fees to affiliate of $95 and $108 for the
three months, and $188 and $278 for the six months,
ending June 30, 1995 and 1994, respectively) 466 666 824 1,065
Advisory and termination fees paid to
Advisor, discontinued 3/30/94 (including
$3,843 as a result of the termination of
the Advisory Agreement in 1994) - - - 4,107
Provisions for doubtful accounts 3 12 10 73
Depreciation and amortization 1,092 1,046 2,176 2,035
------ ------ ------- -------
Income from rental operations 4,166 3,520 7,937 3,192
Interest expense (includes amortization) 2,597 2,007 5,322 3,799
Other expenses, net of interest income 631 587 1,375 1,093
------ ------ ------- -------
Income (loss) before gain on sale of
real estate 938 926 1,240 (1,700)
Gain on sale of real estate - - - 839
------ ------ ------- -------
Net income (loss) $938 $926 $1,240 $ (861)
====== ====== ======= =======
Income (loss) per weighted average share:
Income (loss) before gain on sale
of real estate $.08 $.08 $.10 $(.15)
Gain on sale of real estate - - - .07
------ ------ ------- -------
Net income (loss) $.08 $.08 $.10 $(.08)
====== ====== ======= =======
Weighted average number
of shares outstanding 12,145,570 11,931,988 12,125,320 11,338,611
========== ========== ========== ==========
</TABLE>
---------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
--------------------
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,240 $ (861)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Gain on sale of real estate - (839)
Depreciation and amortization 2,176 2,035
Amortization of deferred financing costs 596 598
Amortization of floating rate notes discount 12 11
Termination of advisor agreement - 3,843
Changes in assets and liabilities:
Increase in accrued rent receivable (473) (342)
Decrease in accounts receivable
and other assets 267 1,079
Decrease in accounts payable
and other liabilities (13) (1,487)
------- -------
Net cash provided by operating activities 3,805 4,037
------- -------
Cash flows from investing activities:
Proceeds from sale of real estate, net - 1,435
Additions to buildings and improvements
and personal property, net (591) (279)
Construction expenditures (45) (218)
------- -------
Net cash provided by (used in) investing activities (636) 938
------- -------
Cash flows from financing activities:
Distributions paid (5,445) (6,102)
Proceeds from dividend reinvestment 676 448
Borrowing under bank line of credit 1,600 350
------- -------
Net cash used in financing activities (3,169) (5,304)
------- -------
Decrease in cash and
short-term investments 0 (329)
Cash and short-term investments,
beginning of period 0 885
------- -------
Cash and short-term investments,
end of period 0 $ 556
======= =======
Supplemental disclosure of cash
flow information:
Interest paid $4,301 $2,637
======= =======
See Note 1 for disclosure of non-cash investing
and financing activities
</TABLE>
---------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
ARBOR PROPERTY TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS AND MERGER TRANSACTION
Arbor Property Trust (the "Trust"), formed on September 8, 1993 as a
Delaware business trust, has an indefinite life and intends to elect real estate
investment trust ("REIT") status under the Internal Revenue Code of 1986, as
amended, upon the filing of its Federal Income Tax Return for the year ended
December 31, 1994. On February 28, 1994, EQK Green Acres, L.P. (the
"Partnership") merged with and into Green Acres Mall Corp., a wholly-owned
subsidiary of the Trust (the "Merger"). Prior to February 28, 1994, the Trust
did not have significant operations. The Trust and the Partnership are
interchangeably referred to herein as the "Company".
The Partnership had been formed pursuant to an Agreement of Limited
Partnership dated as of June 30, 1986 (and amended and restated as of August 27,
1986) to acquire and operate Green Acres Mall (the "Property" or the "Mall"), a
regional shopping mall located in Nassau County, Long Island, New York. In 1991,
the Partnership completed the conversion of a leased industrial building,
located adjacent to the Property, into a convenience shopping center known as
the Plaza at Green Acres (the "Plaza").
Pursuant to the Merger, Unitholders of the Partnership received 10,172,639
Common Shares of Beneficial Interest of the Trust (the "Common Shares") on
account of their 98.98% percentage interest in the Partnership; the General
Partners of the Partnership received 104,830 Common Shares on account of their
1.02% percentage interest in the Partnership; and the Special General Partner of
the Partnership received 1,316,251 Common Shares in satisfaction of its residual
interest in the Partnership. Pursuant to the termination of the Partnership's
advisory agreement (the "Advisory Agreement"), Equitable Realty Portfolio
Management, Inc. (the "Advisor") received 308,933 Common Shares on March 30,
1994 (see Note 3).
The issuance of 10,277,469 Common Shares to the Unitholders and the General
Partners on account of their respective percentage interests in the Partnership
represented a reorganization of entities under common control and, accordingly,
was accounted for in a manner similar to a pooling of interests. The financial
statements of the Partnership and the Trust have been combined at historical
cost retroactive to January 1, 1994. The issuance of these Common Shares has
been reflected as of this date at an amount that equals the Unitholders' and
General Partners' original contributions to the Partnership.
The issuances of Common Shares to the Special General Partner and the
Advisor have been reflected in the Company's condensed consolidated financial
statements as of March 31, 1994. The issuance of Common Shares to the Special
General Partner has increased the Company's carrying value of land and buildings
and improvements by $3,024,000 and $13,347,000, respectively, representing the
value of the Special General Partner's residual interest in the Partnership in
connection with the Merger. Annual depreciation expense has increased by
approximately $342,000 as a result of the increase in the basis of the Mall. The
issuance of Common Shares to the Advisor was reflected as a charge to earnings
during the first quarter of 1994 in the amount of $3,843,000.
NOTE 2. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the United
States Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
6
<PAGE>
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. The
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and related notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1994.
The condensed consolidated financial statements include the accounts of the
Trust and its wholly-owned subsidiary, Green Acres Mall Corp. All significant
intercompany transactions and balances have been eliminated.
In the opinion of the Company all adjustments, which include only normal
recurring adjustments necessary to present fairly its consolidated financial
position as of June 30, 1995, its results of condensed consolidated operations
for the three and six month periods ended June 30, 1995 and 1994 and its
condensed consolidated cash flows for the six months ended June 30, 1995 and
1994, have been included in the accompanying unaudited condensed consolidated
financial statements.
Net income per share for the six month periods ended June 30, 1995 and 1994
has been computed on the basis of the 12,125,320 and 11,338,611 weighted average
shares outstanding during the respective periods. Net income per share for the
three month periods ended June 30, 1995 and 1994 has been computed using
12,145,570 and 11,931,988 weighted average shares, respectively.
Certain reclassifications have been made to the prior years' condensed
consolidated financial statements in order to conform their presentation to that
used in the current year.
NOTE 3. ADVISORY AND MANAGEMENT AGREEMENTS
Prior to the termination of its Advisory Agreement as previously discussed,
Equitable Realty Portfolio Management, Inc., a wholly owned subsidiary of
Equitable Real Estate Investment Management, Inc. ("Equitable Real Estate"),
acted as "Advisor" to the Company. Fees of $100,000 were paid to the Advisor in
1994.
Pursuant to the Merger discussed in Note 1, on March 30, 1994, upon the
expiration of a 30 day transition period, the agreement with the Advisor was
terminated.
The Company had entered into a property management agreement with Compass
Retail, Inc. ("Compass"), a subsidiary of Equitable Real Estate, effective
January 1, 1991. Pursuant to this agreement, property management fees were based
on 4% of net rental and service income collected from tenants. In connection
with the Merger discussed in Note 1, the agreement with Compass was amended and
restated to extend its termination date by two years to August 31, 1998, and to
limit Compass' scope of responsibilities primarily to accounting and financial
services currently provided in connection with the operations of the Property.
Compass' compensation was reduced on March 1, 1994 from 4% to 2% of net rental
and service income collected from tenants. For the six months ended June 30,
1995 and 1994, management fees earned by Compass were $188,000 and $278,000,
respectively. The amount of such fees for the three months ended June 30, 1995
and 1994 were $95,000 and $108,000, respectively.
NOTE 4. DISTRIBUTIONS
On May 15, 1995, the Trust made a distribution of $.175 per Share (an
aggregate of $2,124,000) to its Shareholders. In the second quarter,
distributions totaling $146,000 were reinvested pursuant to the Company's
Dividend Reinvestment Plan and 18,368 shares were issued under this plan. In
addition, a distribution in the amount of $.175 per share has been declared for
payment on August 15, 1995 to the shareholders of record on June 30, 1995.
7
<PAGE>
NOTE 5. DEBT REFINANCING
The floating rate notes are due August 19, 1998 and are collateralized by a
first mortgage on substantially all of the real property comprising Green Acres
Mall and a first leasehold mortgage on the Plaza. The floating rate notes bear
interest at a rate equal to 78 basis points in excess of the three-month LIBOR,
which is payable on a quarterly basis from November 12, 1993. The interest rate
is subject to reset on such interest payment dates. The initial interest rate,
4.03%, was effective for the period August 19, 1993 to November 11, 1993. The
interest rate at December 31, 1994 was 6.59% and was reset to 7.03% on February
12, 1995 and 6.84% on May 12, 1995. The average rate for the six months ended
June 30, 1995 and 1994 was 6.87% and 4.67%, respectively. The average interest
rate for the three months ending June 30, 1995 and 1994 was 6.84% and 5.03%,
respectively. In connection with the refinancing of the Company's outstanding
debt obligations in August 1993, the Company acquired an interest rate cap which
provides that the effective interest rate applicable to the $118,000,000 face
value of the notes will not exceed 9% per annum through their maturity date.
Should such debt's interest rate rise above 9%, the Company would record amounts
receivable from the counter-party as a reduction to interest expense. In May
1995, the Company entered into a swap transaction with Goldman Sachs Capital
Markets, L.P. which fixed the interest rate on the floating rate notes for the
period of August 12, 1995 through August 12, 1996 at 6.87%. This agreement fixed
the rate for a period of one year and eliminated the risk of increases in the
LIBOR rate. The Company is exposed to certain losses in the event of
non-performance by the counter-party to the interest rate cap and the interest
rate swap. The mortgage and indenture agreement relating to the floating rate
notes limit additional indebtedness that may be incurred by the owner of Green
Acres Mall, namely, Green Acres Mall Corp., a wholly owned subsidiary of the
Company. Those agreements also contain certain other covenants which, among
other matters, prioritize the payment of debt service on the floating rate notes
in relation to distributions from Green Acres Mall Corp. Management believes it
is in compliance with all covenants under the indenture and line of credit
agreements, discussed below, at June 30, 1995.
As part of its comprehensive debt restructuring in 1993, the Company also
obtained a $3,400,000 unsecured line of credit facility from a bank. Effective
August 8, 1994 this line of credit was increased to $5,900,000 and its maturity
extended to April 1995. In April 1995, this line of credit was modified to allow
the Company to elect an interest rate of prime plus 1% or Euro-rate plus 2.5%
and increase the amount available to $6,900,000 and extend the maturity to
December 31, 1995. Beginning January 1, 1996, $3,000,000 of the outstanding
balance of the line of credit at maturity is due in seven equal installments.
The remaining balance is due at the December 31, 1995 maturity date unless the
Company elects to extend the maturity until July 31, 1996. The line of credit
agreement also contains certain covenants which, among other matters, limit the
amount of the Company's annual dividend to an amount that does not exceed
operating cash flow (as defined), and require the Company to maintain a
quarterly debt service coverage ratio (as defined). At June 30, 1995, the
Company had borrowed $5,900,000 under this credit facility. Subsequent to June
30, 1995, the Company paid down $2,400,000 under this credit facility.
NOTE 6. SALE OF PROPERTY
In January 1994, the Company completed the sale to Home Depot of an
approximate two acre parking lot adjacent to the Property and received the final
installment of $1,500,000, and recognized an additional gain on sale of
$839,000, bringing the total gain on the transactions with Home Depot to
$1,279,000. Home Depot opened for business in May 1994.
8
<PAGE>
ARBOR PROPERTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Recent Developments
On February 14, 1995, the Company announced that it had retained Goldman
Sachs & Co. in connection with a possible merger of the Company into another
REIT or a sale of the company's real estate. Subsequently, leadership of the
majority in the New York State Senate submitted a bill to repeal the New York
State Real Property Gains Tax which, in its present state, would burden the
merger of the Company or sale of its real estate by approximately $1.20 per
share. On May 2, 1995, the Company announced that it postponed consideration of
a merger or sale pending resolution of the possible repeal of the Gains Tax.
On March 21, 1995, the Company announced a reduction in its quarterly
dividend from $.275 to $.175 per Common Share, establishing an annual dividend
rate of $.70 per Common Share. In its announcement of the dividend reduction,
the Company noted that the new dividend represents 90% of projected funds
available for distribution for the period April 1, 1995 through December 31,
1996. That estimate was based upon (I) continuation of the current interest rate
on the Company's collateralized floating rate notes; (ii) currently projected
net income from operation of the Green Acres Mall complex; (iii) estimated
overhead expenses for the Company; and (iv) projected capital expenditures.
Cash Flows from Operating, Investing, and Financing Activities
Cash flows from operating activities for the six months ended June 30, 1995
and 1994 were $3,805,000 and $4,037,000, respectively. This decrease is
primarily a result of a higher interest expense of $1,523,000 in 1995 as
compared to 1994 due to increase in the interest rate on the floating rate
notes. The increase in interest expense in 1995 was partially offset by the
decrease in payments to certain affiliates for management and advisory fees.
Additionally, revenue from rental operations increased $475,000 as a result of
the remerchandising program which the Mall commenced in 1992, the purpose of
which was to improve the tenant mix while increasing base rent.
Cash flows from investing activities decreased by $1,574,000 for the six
month period ended June 30, 1995 compared to the same period in 1994, primarily
due to a non-recurrent receipt in the first quarter of 1994 of proceeds from the
completion of the sale of approximately two acres to Home Depot and a modest
increased capital expenditures in 1995 as compared to the same period in 1994.
Cash flows used in financing activities were $3,169,000 and $5,304,000 for
the six month periods ended June 30, 1995 and 1994, respectively. Distributions
paid by the Company in 1995 decreased by $657,000 as a result of the reduction
in the quarterly dividend rate to $.175 per Common Share from $.275 per Common
Share and an increase in proceeds from dividend reinvestment of $228,000. This
activity was supplemented by an increase in borrowings of $1,600,000 from the
existing credit line. For the period May 1994 through February 1995, the
dividends from the Common Shares which were issued in respect of the Special
General Partner's residual interest in the Partnership and the termination of
the Advisory Agreement were obligated to be reinvested in the Company through a
dividend reinvestment plan in newly issued Common Shares. The Company cannot
calculate the number of Common Shares that will participate in the dividend
reinvestment program in the future. After February 1995, no shareholders were
obligated to participate in the dividend reinvestment program.
9
<PAGE>
ARBOR PROPERTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of the Six Month and Three Month Periods
Ended June 30, 1995 and 1994
For the six month period ended June 30, 1995, the Company reported net
income of $1,240,000 or $.10 per weighted average Common Share, compared with a
net loss of $861,000 or $.08 per weighted average Common Share for the
comparable period in 1994. For the three months ended June 30, 1995, net income
was $938,000 or $.08 per weighted average Common Share, compared to net income
of $926,000 or $.08 loss per weighted average Common Share, for the second
quarter in 1994. The 1994 results were impacted by the termination of the
Advisory Agreement which resulted in the issuance of 308,933 Common Shares to
the Advisor. The issuance of these Common Shares was reflected as a charge to
earnings of $3,843,000 during the first quarter of 1994. This charge was
partially offset by the gain on the sale to Home Depot of an approximate two
acre parking lot. The final payment relating to the sale was $1,500,000, and the
gain realized amounted to $839,000.
For the six and three month periods ended June 30, 1995, revenues from
rental operations were $475,000 or 5% and $483,000 or 9%, higher than the
comparable periods in 1994. This increase is a direct result of the
remerchandising program the Mall commenced in 1992. The significant amount of
lease rollovers in 1993 and 1994 enabled management to develop a remerchandising
plan aimed at achieving an improved tenant mix while increasing base rents.
Net operating expenses decreased $241,000 and $200,000 for the six and
three month periods ended June 30, 1995, respectively, as compared to the same
period in 1994. This decrease is attributable to a reduction in management fees
as described in Note 3 and a reduction in nonreimbursable repairs and
maintenance expenses that were a result of the severe weather in 1994.
Interest expense increased in the second quarter of 1995 compared with the
comparable period in 1994. The floating rate notes had a weighted average
interest rate during the second quarter of 1995 of 6.86% as compared to 4.67%
for the second quarter of 1994. The notes have a floating interest rate equal to
78 basis points in excess of three-month LIBOR.
Liquidity and Capital Resources
The Company's commitment to an annual dividend rate of $.70 per Common
Share, and the general concern that interest rates could continue to rise, lead
to the Company fixing the interest rate at an all-in cost of 6.87% for a period
ending August 11, 1996. With the stabilization of the interest rate, as well as
the anticipated improvement in the operating performance resulting from the
remerchandising program, the Company anticipates more than adequate funds from
operations to support such dividend distributions.
The Company's cash position fluctuates considerably during the course of
the year, particularly as a consequence of the periodic expenditures for
quarterly real estate taxes, quarterly interest payments and quarterly dividend
distributions, all of which occur during the months of February, May, August and
November. To accommodate such peak cash requirements, the Company has a
revolving credit facility with a maximum of $6.9 million available. As of August
10, 1995, the outstanding balance on this facility was $3,500,000. Management
believes the revolving credit facility is adequate to provide the Company with
its working capital needs.
Although the Company has been previously unable to expand its portfolio,
and has reduced overhead accordingly, it is currently studying the feasibility
of acquiring and redeveloping, as well as financing, another shopping center.
10
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ARBOR PROPERTY TRUST
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10(ab) - Confirmation of Swap Transaction by and between
Arbor Property Trust and Goldman Sachs Capital Markets, L.P.,
dated as of May 23, 1995.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 10, 1995 ARBOR PROPERTY TRUST
By: /s/ Myles H. Tanenbaum
------------------------------------
Myles H. Tanenbaum
President
(Principal Executive and
Financial Officer)
By: /s/ Dennis J. Harkins
------------------------------------
Dennis J. Harkins
Treasurer and Controller
12
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Exhibit Index
10.(ab) Confirmation of Swap Transaction by and between Arbor Property Trust
and Goldman Sachs Capital Markets, L.P., dated as of May 23, 1995
13
<PAGE>
CONFIRMATION
DATE: May 23, 1995
TO: Arbor Property Trust
Telephone No. :
Facsimile No. : 1 610 941 2991
Attention : Myles Tanenbaum
FROM: Goldman Sachs Capital Markets, L.P.
CC: Goldman Sachs Capital Markets, L.P.
Swap Administration
SUBJECT: Swap Transaction
REF. NO: NUUS505600 (440000000)
The purpose of this communication is to set forth the terms and conditions of
the above referenced transaction entered into on the Trade Date specified below
(the 'Transaction') between Goldman Sachs Capital Markets, L.P. ('GSCM'),
guaranteed by the Goldman Sachs Group, L.P. ('Goldman Group'), and Arbor
Property Trust ('Counterparty'). This communication constitutes a 'Confirmation'
as referred to in the Swap Agreement specified below.
1. This Confirmation is subject to, and incorporates, the 1991 ISDA Definitions
(the '1991 Definitions'), published by the international Swaps and Derivatives
Association, Inc. ('ISDA'). If GSCM and Counterparty are parties to an Interest
Rate and Currency Exchange Agreement, ISDA Master Agreement or other form of
master agreement that sets forth general terms and conditions applicable to swap
transactions between GSCM and Counterparty (the 'Swap Agreement'), this
Confirmation supplements, forms a part of, and is subject to, the Swap
Agreement. If GSCM and Counterparty are not yet parties to the Swap Agreement,
this Confirmation shall supplement, form part of, and be subject to, the Swap
Agreement upon its execution and delivery by GSCM and Counterparty. Prior to the
execution and delivery of such Swap Agreement, this Confirmation alone shall
constitute a complete and binding agreement with respect to the Transaction.
This Confirmation will be read and construed as one with the executed Swap
Agreement and all other outstanding Confirmations between the parties, so that
all such Confirmations and the executed Swap Agreement constitute a single
agreement between the parties.
If the Swap Agreement has not yet been executed and delivered by GSCM and
Counterparty, this Confirmation is also subject to, and incorporates, the
definitions contained in Section 14 of the form of ISDA Master Agreement
(Multicurrency-Cross Border), but without any Schedule or other modifications
thereto (the 'ISDA Agreement'), Paragraph (4) of the May 1989 Addendum to
Schedule to Interest Rate and Currency Exchange Agreement (the 'Cap Addendum')
and Paragraph (5) of the July 1990 Addendum to Schedule to Interest Rate and
Currency Exchange Agreement (the 'Options Addendum'), all as published by ISDA
(except that all references to 'Swap Transactions' in the 1991 Definitions, the
Cap Addendum and the Options Addendum will be deemed to be references to
'Transactions').
All provisions contained in, or incorporated by reference to, the Swap
Agreement will govern this Confirmation except as expressly modified herein.
In the event of any inconsistency between this Confirmation and the 1991
Definitions, the Swap Agreement, the definitions contained in Section 14 of the
ISDA Agreement, Paragraph (4) of the Cap Addendum or Paragraph (5) of the
Options Addendum, as the case may be, this Confirmation will control for the
purpose of the Transaction to which this Confirmation relates.
2. Each party will make each payment specified in this Confirmation as being
payable by it, not later than the due date for value on that date in the place
of the account specified below or otherwise specified in writing, in freely
transferable funds and in the manner customary for payments in the required
currency. If on any date amounts would otherwise be payable in the same currency
by each party to the other in respect of this Transaction, then, on such date,
each party's obligation to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would otherwise have
been payable by one party exceeds the aggregate amount that would
1
<PAGE>
otherwise have been payable by the other party, replaced by an obligation upon
the party by whom the larger aggregate amount would have been payable to pay
to the other party the excess of the larger aggregate amount over the smaller
aggregate amount.
3. The following provisions will govern this Transaction until such time as the
Swap Agreement is executed and delivered by GSCM and Counterparty, whereupon
they shall be replaced by the terms of the Swap Agreement. If at any time, a
party (the 'Defaulting Party') or its guarantor, if any, shall (i) fail to make,
when due, any payment under this Confirmation if such failure is not remedied
within three New York Business Days following written notice of such failure or
(ii) become subject to a Bankruptcy (as defined in Section 5(a)(vii) of the ISDA
Agreement), then the other party (the 'Non-defaulting Party') shall have the
right to early terminate and liquidate this Transaction and all other Specified
Transactions then outstanding between the parties (the 'Terminated
Transactions')and determine a net amount due in respect of the Terminated
Transactions in accordance with the early termination payment calculation
provisions of Section 6(e)(i) of the ISDA Agreement based on a payment measure
of Market Quotation and a payment method of the Second Method. The Non-
defaulting Party may exercise its right to early terminate and liquidate the
Terminated Transactions by written notice to the Defaulting Party, which notice
shall set forth the amount of the termination payment determined by the
Non-defaulting Party as set forth above. Such termination payment shall be due
and payable by no later than 1 New York Business Day following receipt of
written notice by the Defaulting Party. The Non-defaulting Party shall have the
right to set off the value of any collateral in its possession securing the
obligations of the Defaulting Party against amounts owed by the Defaulting Party
to it as determined above.
4. The terms of the particular Transaction to which this Confirmation relates
are as follows:
<TABLE>
<S> <C>
Notional Amount: USD 118,000,000
Trade Date: May 23, 1995
Effective Date: August 12, 1995
Termination Date: August 12, 1996, subject to adjustment in accordance with the Modified
Following Business Day Convention.
Floating Rate Amounts:
---------------------
Floating Rate Payer: GSCM
Floating Rate Payment Dates: Quarterly, on November 12, 1995, February 12, 1996, May 12, 1996 and
the Termination Date, subject to adjustment in accordance with the
Modified Following Business Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Floating Rate Designated Maturity: 3 Months
Floating Rate Spread: None
Floating Rate Reset Dates: The first day of each Calculation Period
Floating Rate Day Count Fraction: Actual/360
Floating Rate Period End Dates: Adjusted in accordance with the Modified Following Business Day
Convention.
Fixed Rate Amounts:
------------------
Fixed Rate Payer: Counterparty
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Fixed Rate Payment Dates: Quarterly, on November 12, 1995, February 12, 1996, May 12, 1996 and
the Termination Date, subject to adjustment in accordance with the
Modified Following Business Day Convention.
Fixed Rate: 6.09%
Fixed Rate Day Count Fraction: Actual/360
Fixed Rate Period End Dates: Adjusted in accordance with the Modified Following Business Day
Convention
Business Days: New York
Calculation Agent: GSCM, unless otherwise specified in the Swap Agreement.
Governing Law: New York law, unless otherwise specified in the Swap Agreement.
5. Documentation: ISDA Master Agreement with GSCM Schedule
6. Additional Provisions: None
7. Credit Support Documents: Standard Guaranty of The Goldman Sachs Group, L.P.
8. Account Details:
Payments to GSCM: The Goldman Sachs Group, L.P., for the benefit of
For the Account of: Goldman Sachs Capital Markets, L.P.
Name of Bank: Citibank N.A. New York
Account No: 4061-6061
Attention: Capital Markets
Fed ABA No: 021000089
GSCM Inquiries: James T. Gavin, Vice President
Goldman Sachs Capital Markets, L.P.
Telephone No: 212-902-1000
Facsimile No: 212-902-0996
Payments to Counterparty: In accordance with the Counterparty's written instructions as set forth
below or otherwise delivered to GSCM. GSCM shall make no payments
without having received (i) such written instructions and (ii) a fully
executed facsimile copy of this Confirmation or other written
acceptance of the terms hereof.
For the Account of:
Name of Bank:
Account No:
Attention:
ABA No.:
SWIFT Code:
9. Offices:
(a) The Office of GSCM for this Transaction is 85 Broad Street, New York, New York 10004.
(b) The Office of Counterparty for the Swap Transaction is (please provide):
ARBOR PROPERTY TRUST
One Tower Bridge, Suite 800
W. Conshohocken, PA 19428
</TABLE>
3
<PAGE>
10. Counterparty hereby agrees (a) to check this Confirmation (Reference No.:
NUUS505600 (440000000)) carefully and immediately upon receipt so that errors or
discrepancies can be promptly identified and rectified and (b) to confirm that
the foregoing correctly sets forth the terms of the agreement between GSCM and
Counterparty with respect to the particular Transaction to which this
Confirmation relates, by manually signing this Confirmation and providing the
other information requested herein and immediately returning an executed copy to
Swap Administration, facsimile No. 212-902-5692.
Very truly yours,
GOLDMAN SACHS CAPITAL MARKETS, L.P.
By: Goldman Sachs Capital Markets, Inc.,
General Partner
By: /s/ AUTHORIZED OFFICER
--------------------------------------
Name:
Title:
Agreed and Accepted By:
Arbor Property Trust
By: /s/ Myles H. Tanenbaum
--------------------------------
Name: Myles H. Tanenbaum
Title: President
4
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,953
<ALLOWANCES> 539
<INVENTORY> 0
<CURRENT-ASSETS> 13,230
<PP&E> 178,390
<DEPRECIATION> 28,740
<TOTAL-ASSETS> 162,880
<CURRENT-LIABILITIES> 11,116
<BONDS> 124,927
<COMMON> 117,885
0
0
<OTHER-SE> (91,048)
<TOTAL-LIABILITY-AND-EQUITY> 162,880
<SALES> 0
<TOTAL-REVENUES> 10,947
<CGS> 0
<TOTAL-COSTS> 3,010
<OTHER-EXPENSES> 1,375
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,322
<INCOME-PRETAX> 1,240
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,240
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
