UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission file number 1-12618
SIMON DEBARTOLO GROUP, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 35-1901999
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
115 WEST WASHINGTON STREET
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (317) 636-1600
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 [ ]
As of May 12, 1997, 94,380,905 shares of common stock, par value $0.0001 per
share, 3,200,000 shares of Class B common stock, par value $0.0001 per share
and 4,000 shares of Class C common stock, par value $0.0001 were outstanding.
<PAGE>
SIMON DeBARTOLO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and dollars in thousands, except per share amounts)
March 31, December
31,
1997 1996
---------- ----------
ASSETS:
Investment properties, at cost $5,353,235 $5,301,021
Less _ accumulated depreciation 315,572 279,072
---------- ----------
5,037,663 5,021,949
Cash and cash equivalents 41,946 64,309
Restricted cash 4,422 6,110
Tenant receivables and accrued revenue, net 165,863 166,119
Notes and advances receivable from
Management Company and affiliate 90,157 75,452
Investment in partnerships and joint ventures,
at equity 404,192 394,409
Deferred costs, net 87,006 91,925
Other assets 49,579 46,567
Minority interest 28,068 29,070
---------- ----------
Total assets $5,908,896 $5,895,910
========== ==========
LIABILITIES:
Mortgages and other indebtedness $3,746,992 $3,681,984
Accounts payable and accrued expenses 181,711 170,203
Cash distributions and losses in partnerships and
joint ventures, at equity 18,289 17,106
Investment in Management Company and affiliates 7,980 8,567
Other liabilities 68,191 72,876
---------- ----------
Total liabilities 4,023,163 3,950,736
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 10)
LIMITED PARTNERS' INTEREST IN THE OPERATING
PARTNERSHIP 620,267 640,283
SHAREHOLDERS' EQUITY:
Series A convertible preferred stock, 4,000,000
shares authorized, issued and outstanding 99,923 99,923
Series B cumulative redeemable preferred stock,
9,200,000 shares authorized, 8,000,000 issued
and outstanding 192,989 192,989
Common stock, $.0001 par value, 374,796,000 shares
authorized, 94,330,311 and 93,676,415 issued and
outstanding at March 31, 1997 and December 31,
1996, respectively 9 9
Class B common stock, $.0001 par value, 12,000,000
shares authorized, 3,200,000 issued and
outstanding 1 1
Class C common stock, $.0001 par value, 4,000
shares authorized, issued and outstanding - -
Capital in excess of par value 1,204,226 1,189,919
Accumulated deficit (212,094) (172,596)
Unamortized restricted stock award (19,588) (5,354)
---------- ----------
Total shareholders' equity 1,265,466 1,304,891
---------- ----------
Total liabilities, limited partners' equity and
shareholders' equity $5,908,896 $5,895,910
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
SIMON DeBARTOLO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited and dollars in thousands, except per share amounts)
For the Three
Months Ended March 31,
----------------------
1997 1996
--------- ---------
REVENUE:
Minimum rent $148,019 $ 78,454
Overage rent 7,515 4,967
Tenant reimbursements 75,823 46,985
Other income 11,057 9,038
--------- ---------
Total revenue 242,414 139,444
--------- ---------
EXPENSES:
Property operating 42,668 24,847
Depreciation and amortization 43,354 24,672
Real estate taxes 24,761 13,829
Repairs and maintenance 9,949 7,073
Advertising and promotion 5,213 4,194
Provision for credit losses 975 1,497
Other 3,788 2,259
--------- ---------
Total operating expenses 130,708 78,371
--------- ---------
OPERATING INCOME 111,706 61,073
INTEREST EXPENSE 67,918 38,566
--------- ---------
INCOME BEFORE MINORITY INTEREST 43,788 22,507
MINORITY INTEREST (1,484) (503)
GAIN ON SALE OF ASSET, NET 37 --
--------- ---------
INCOME BEFORE UNCONSOLIDATED ENTITIES 42,341 22,004
INCOME FROM UNCONSOLIDATED ENTITIES 721 1,828
--------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS 43,062 23,832
EXTRAORDINARY ITEMS (23,247) (265)
--------- ---------
INCOME OF THE OPERATING PARTNERSHIP 19,815 23,567
LESS--LIMITED PARTNERS' INTEREST IN THE OPERATING
PARTNERSHIP 5,176 8,382
--------- ---------
NET INCOME 14,639 15,185
PREFERRED DIVIDENDS (6,406) (2,031)
--------- ---------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 8,233 $ 13,154
========= =========
EARNINGS PER COMMON SHARE:
Income before extraordinary items $ 0.23 $ 0.23
Extraordinary items (0.15) --
--------- ---------
Net income $ 0.08 $ 0.23
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
SIMON DeBARTOLO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited and dollars in thousands)
For the Three Months
Ended March 31,
------------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
Net income 14,639 15,185
Adjustments to reconcile net income
to net cash provided by operating activities_
Depreciation and amortization 45,322 26,728
Extraordinary items 23,247 265
Gain on sale of assets, net (37) -
Limited partners' interest in the Operating 5,176 8,382
Partnership
Straight-line rent (1,842) 137
Minority interest 1,484 503
Equity in income of unconsolidated entities (721) (1,828)
Changes in assets and liabilities_
Tenant receivables and accrued revenue 3,478 5,883
Deferred costs and other assets (6,238) 115
Accounts payable, accrued expenses and other
liabilities 5,009 (16,122)
---------- ----------
Net cash provided by operating activities 89,517 39,248
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,156) (25,249)
Merger costs -
Decrease in restricted cash 1,688 -
Proceeds from sale of assets 599 -
Investments in and advances to
unconsolidated entities (29,014) (5,093)
Distributions from unconsolidated entities 5,843 11,772
---------- ----------
Net cash used in investing activities (72,040) (18,570)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock, net 2,961 -
Minority interest distributions (1,346) (1,649)
Distributions to shareholders (54,137) (32,263)
Distributions to limited partners (30,030) (18,362)
Mortgage and other note proceeds, net of
transaction costs 117,958 105,568
Mortgage and other note principal payments (54,246) (91,548)
Other refinancing transaction (21,000) -
---------- ----------
Net cash used in financing activities (39,840) (38,254)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (22,363) (17,576)
CASH AND CASH EQUIVALENTS, beginning of period 64,309 62,721
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 41,946 $ 45,145
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
SIMON DEBARTOLO GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - ORGANIZATION
Simon DeBartolo Group, Inc. (the "Company"), formerly known as Simon
Property Group, Inc., is a self-administered and self-managed real estate
investment trust ("REIT"). On August 9, 1996 (the "Merger date"), the Company
acquired, through merger (the "Merger") the national shopping center business
of DeBartolo Realty Corporation ("DRC") (See Note 4).
Simon DeBartolo Group, L.P. ("SDG, LP") is a subsidiary partnership of the
Company. Simon Property Group, L.P. ("SPG, LP") is a subsidiary partnership of
SDG, LP and of the Company. SDG, LP and SPG, LP are hereafter collectively
referred to as the "Operating Partnership." Prior to the Merger date,
references to the Operating Partnership refer to SPG, LP only. The Company,
through the Operating Partnership, is engaged primarily in the ownership,
operation, management, leasing, acquisition, expansion and development of real
estate properties, primarily regional malls and community shopping centers. As
of March 31, 1997, the Operating Partnership owned or held an interest in 186
income-producing properties, consisting of 113 regional malls, 65 community
shopping centers, three specialty retail centers, four mixed-use properties and
one value-oriented super-regional mall in 33 states (the "Properties"). The
Operating Partnership also owns interests in four properties under
construction, seven parcels of land held for future development and
substantially all of the economic interest in M.S. Management Associates, Inc.
(the "Management Company" - See Note 7). The Company owned 61.5% and 61.4% of
the Operating Partnership as of March 31, 1997 and December 31, 1996,
respectively.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements are
unaudited; however, they have been prepared in accordance with generally
accepted accounting principles for interim financial information and in
conjunction with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the disclosures required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation of the consolidated
condensed financial statements for these interim periods have been included.
The results for the interim period ended March 31, 1997 are not necessarily
indicative of the results to be obtained for the full fiscal year. These
unaudited consolidated condensed financial statements should be read in
conjunction with the December 31, 1996 audited financial statements and notes
thereto included in the Simon DeBartolo Group, Inc. Annual Report on Form 10-K.
The accompanying consolidated condensed financial statements of the
Company include all accounts of the Company, its wholly-owned qualified REIT
subsidiaries and the Operating Partnership. All significant intercompany
amounts have been eliminated. The accompanying consolidated condensed
financial statements have been prepared in accordance with generally accepted
accounting principles, which requires management to make estimates and
assumptions that affect the reported amounts of the Company's assets,
liabilities, revenues and expenses during the reported periods. Actual results
could differ from these estimates.
Properties which are wholly-owned or owned less than 100% and are
controlled by the Operating Partnership have been consolidated. The Operating
Partnership's equity interests in certain partnerships and joint ventures which
represent noncontrolling 14.7% to 50.0% ownership interests and the investment
in the Management Company are accounted for under the equity method of
accounting. These investments are recorded initially at cost and subsequently
adjusted for net equity in income (loss) and cash contributions and
distributions. In addition, the Operating Partnership held a 2% noncontrolling
ownership interest in one Property which is accounted for using the cost method
of accounting.
Net operating results of the Operating Partnership are allocated to the
Company based first on the Company's preferred unit preference and then on its
remaining ownership interest in the Operating Partnership during the period.
The Company's weighted average ownership interest in the Operating Partnership
for the three months ended March 31, 1997 and 1996 was 61.4% and 61.1%,
respectively.
<PAGE>
NOTE 3 - RECLASSIFICATIONS
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the 1997 presentation.
NOTE 4 -THE MERGER
On August 9, 1996, the Company acquired the national shopping center
business of DRC for an aggregate value of $3.0 billion. The acquired portfolio
consisted of 49 regional malls, 11 community centers and 1 mixed-use Property.
These Properties included 47,052,267 square feet of retail space gross leasable
area ("GLA") and 558,636 of office GLA. The Merger was accounted for using the
purchase method of accounting. Of these Properties, 40 regional malls, 10
community centers and the mixed-use Property are being accounted for using the
consolidated method of accounting. The remaining Properties are being
accounted for using the equity method of accounting, with the exception of one
regional mall, which is accounted for using the cost method of accounting.
Pro Forma
The following unaudited pro forma summary financial information combines
the consolidated results of operations of the Company as if the Merger and the
issuances of $200,000 of Series B cumulative preferred stock ("Series B"
preferred stock), $100,000 of 6 3/4% putable asset trust securities ("PATS"),
and $250,000 of 6 7/8% unsecured notes (the "Notes"), as
described in the Company's 1996 Form 10-K, had occurred as of January 1, 1996,
and were carried forward through March 31, 1996. Preparation of the pro forma
summary information was based upon assumptions deemed appropriate by the
Company. The pro forma summary information is not necessarily indicative of
the results which actually would have occurred if the Merger and the issuances
of the Series B preferred stock, the PATS, the Notes and had been
consummated at January 1, 1996, nor does it purport to represent the future
financial position and results of operations for future periods.
Three Months
Ended March 31,
1996
---------------
Revenue $ 228,720
Net income available to holders of common units 40,249
===============
Net income available to holders of common stock 24,715
===============
Net income per share $ 0.26
===============
Weighted average number of shares of common stock
outstanding 96,260,141
===============
NOTE 5 - CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized, during the three
months ended March 31, 1997 was $61,366, as compared to $37,612 for the same
period in 1996. All accrued distributions had been paid as of March 31, 1997
and December 31, 1996.
NOTE 6 - PER SHARE DATA
Per share data is based on the weighted average number of shares of common
stock outstanding during the period. The weighted average number of shares of
common stock used in the computation for the three months ended March 31, 1997
and 1996 was 96,977,431 and 58,382,176, respectively. Units of ownership in
the Operating Partnership ("Units") may be exchanged for shares of common stock
of the Company on a one-for-one basis in certain circumstances. Additionally,
shares of the Company's Series A preferred stock are convertible into common
stock of the Company. The outstanding stock options, Units and shares of
Series A preferred stock have not been included in the computations of per
share data as they did not have a dilutive effect. The Company's Series B
preferred stock is not convertible into common stock.
<PAGE>
NOTE 7 - INVESTMENT IN UNCONSOLIDATED ENTITIES
Partnerships and Joint Ventures
Summary financial information of partnerships and joint ventures accounted
for using the equity method of accounting and a summary of the Operating
Partnership's investment in and share of income from such partnerships and
joint ventures follow:
March 31, December 31,
BALANCE SHEETS 1997 1996
ASSETS: ---------- ------------
Investment properties at cost, net $1,905,416 $1,887,555
Cash and cash equivalents 72,536 61,267
Tenant receivables 56,611 58,548
Other assets 74,191 69,365
---------- ------------
Total assets $2,108,754 $2,076,735
========== ============
LIABILITIES AND PARTNERS' EQUITY:
Mortgages and other notes payable $1,175,010 $1,121,804
Accounts payable, accrued expenses and other
liabilities 174,686 213,394
---------- ------------
Total liabilities 1,349,696 1,335,198
Partners' equity 759,058 741,537
---------- ------------
Total liabilities and partners' equity $2,108,754 $2,076,735
========== ============
THE OPERATING PARTNERSHIP'S SHARE OF:
Total assets $ 616,585 $ 602,084
========== ============
Partners' equity $ 155,883 $ 144,376
Add: Excess Investment 230,020 232,927
---------- ------------
Operating Partnership's net Investment
in Joint Ventures $ 385,903 $ 377,303
========== ============
For the Three Months
Ended March 31,
------------------------
STATEMENTS OF OPERATIONS 1997 1996
REVENUE: ---------- ----------
Minimum rent $ 52,455 $ 27,964
Overage rent 1,691 762
Tenant reimbursements 25,232 14,069
Other income 1,697 4,769
---------- ----------
Total revenue 81,075 47,564
OPERATING EXPENSES:
Operating expenses and other 30,794 17,568
Depreciation and amortization 17,999 10,670
---------- ----------
Total operating expenses 48,793 28,238
---------- ----------
OPERATING INCOME 32,282 19,326
INTEREST EXPENSE 21,089 7,847
EXTRAORDINARY LOSS 858 0
---------- ----------
NET INCOME $ 10,335 $ 11,479
THIRD-PARTY INVESTORS' SHARE OF NET INCOME 7,294 10,022
---------- ----------
THE OPERATING PARTNERSHIP'S SHARE OF NET INCOME 3,041 1,457
AMORTIZATION OF EXCESS INVESTMENT (2,907) 0
---------- ----------
INCOME FROM UNCONSOLIDATED ENTITIES $ 134 $ 1,457
========== ==========
As of March 31, 1997 and December 31, 1996, the unamortized excess of the
Operating Partnership's investment over its share of the equity in the
underlying net assets of the partnerships and joint ventures ("Excess
Investment") was approximately $230,020 and $232,927, respectively. This
Excess Investment, which resulted primarily from the Merger, is being amortized
generally over the life of the related Properties. Amortization included in
income from unconsolidated entities for the three months ended March 31, 1997
was $2,907.
<PAGE>
The net income or net loss for each partnership and joint venture is
allocated in accordance with the provisions of the applicable partnership or
joint venture agreement. The allocation provisions in these agreements are not
always consistent with the ownership interest held by each general or limited
partner or joint venturer, primarily due to partner preferences.
The Management Company
The Management Company, including its consolidated subsidiaries, provides
management, leasing, development, accounting, legal, marketing and management
information systems services to 33 non-wholly owned Properties, Melvin Simon &
Associates, Inc. ("MSA"), and certain other nonowned properties. Certain
subsidiaries of the Management Company provide architectural, design,
construction, insurance and other services primarily to certain of the
Properties. The Operating Partnership's share of consolidated net income of
the Management Company, after intercompany profit eliminations, was $587 and
$371 for the three-month periods ended March 31, 1997 and 1996, respectively.
NOTE 8 - DEBT
On January 31, 1997, the Operating Partnership completed a refinancing
transaction involving debt on four consolidated Properties. The transaction
consisted of the payoff of one loan totaling $43,375, a restatement of the
interest rate on the three remaining loans, the acquisition of the contingent
interest feature on all four loans for $21,000, and $3,904 of principal
reductions on two additional loans. This transaction, which was funded using
the Operating Partnership's unsecured revolving credit facility, resulted in an
extraordinary loss of $23,247, including the write-off of deferred mortgage
costs of $2,247.
At March 31, 1997, the Operating Partnership had consolidated debt of
$3,746,992, of which $2,753,668 was fixed-rate debt and $993,324 was variable-
rate debt. The Operating Partnership's pro rata share of indebtedness of the
unconsolidated joint venture Properties as of March 31, 1997 and December 31,
1996 was $464,677 and $448,218, respectively. As of March 31, 1997 and
December 31, 1996, the Operating Partnership had interest-rate protection
agreements related to $652,936 and $524,561 of its pro rata share of
indebtedness, respectively. The agreements are generally in effect until the
related variable-rate debt matures. As a result of the various interest rate
protection agreements, interest savings were $613 and $453 for the three months
ended March 31, 1997 and 1996, respectively.
On April 14, 1997, the Operating Partnership obtained improvements to its
unsecured revolving line of credit (the "Credit Line"). The Credit Line
agreement was amended to reduce the interest rate from LIBOR plus 90 basis
points to LIBOR plus 75 basis points. In addition, the Credit Line's
competitive bid feature, which can further reduce interest costs, was increased
from $150,000 to $300,000.
The Operating Partnership is currently finalizing the allocation of
$300,000 of its debt shelf registration with the Securities and Exchange
Commission to a Medium-Term Note Program, although management has no immediate
plans to issue securities under the program.
<PAGE>
NOTE 9 - SHAREHOLDERS' EQUITY
The following table summarizes the change in the Company's shareholders'
equity since December 31, 1996.
<TABLE>
<CAPTION>
Common
Stock and
Class B Total Share-
Series A Series B and Class Capital Accum- Unamortize holders'
Preferred Preferred C Common in Excess ulated d Equity
Stock Stock Stock of Par Deficit Restricted
Value Stock
Award
--------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 99,923 $ 192,989 $ 10 $1,189,919 $(172,596) $ (5,354) $1,304,891
Stock options exercised
(131,659 shares) 2,961 2,961
Other common stock issued
(14,688 shares) 445 445
Stock incentive program
(507,549 shares) 15,739 (15,739) -
Amortization of stock
incentive 1,505 1,505
Transfer out of limited
partners' interest in the
Operating Partnership (4,838) (4,838)
Net income 14,639 14,639
Distributions (54,137) (54,137)
--------- ---------- --------- ---------- ---------- --------- ----------
Balance at March 31, 1997 $ 99,923 $ 192,989 $ 10 $1,204,226 $(212,094) $(19,588) $1,265,466
========= ========== ========= ========== ========== ========= ==========
</TABLE>
STOCK INCENTIVE PROGRAMS
Under the terms of the Operating Partnership's Stock Incentive Programs
(the "Plans"), eligible executives receive restricted stock, subject to
performance standards, vesting requirements and other terms of the Plans. On
March 26, 1997, the compensation committee of the board of directors of the
Company approved the issuance of 507,549 shares under the Plans. As of March
31, 1997, there were total of 850,890 shares issued under the Plans, with
391,870 shares remaining available for issuance, subject to applicable
performance standards and other terms of the Plans. The value of shares
issued under the Plans is being amortized pro-rata over their respective four-
year vesting periods. Approximately $1,505 and $521 have been amortized for the
three-month periods ended March 31, 1997 and 1996, respectively.
<PAGE>
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Litigation
Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. On October 16,
1996, a complaint was filed in the Court of Common Pleas of Mahoning County,
Ohio, captioned Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. The
named defendants are SD Property Group, Inc., a 99%-owned subsidiary of the
Company, and DeBartolo Properties Management, Inc., and the plaintiffs are 27
former employees of the defendants. In the complaint, the plaintiffs allege
that they were recipients of deferred stock grants under the DRC stock
incentive plan (the "DRC Plan") and that these grants immediately vested under
the DRC Plan's "change in control" provision as a result of the Merger.
Plaintiffs assert that the defendants' refusal to issue them approximately
661,000 shares of DRC common stock, which is equivalent to approximately
450,000 shares of common stock of the Company computed at the 0.68 Exchange
Ratio used in the Merger, constitutes a breach of contract and a breach of the
implied covenant of good faith and fair dealing under Ohio law. Plaintiffs
seek damages equal to such number of shares of DRC common stock, or cash in
lieu thereof, equal to all deferred stock ever granted to them under the DRC
Plan, dividends on such stock from the time of the grants, compensatory damages
for breach of the implied covenant of good faith and fair dealing, and punitive
damages.
The complaint was served on the defendants on October 28, 1996, and
pretrial proceedings have just commenced. The Company is of the opinion that
it has meritorious defenses and accordingly intends to defend this action
vigorously. While it is difficult for the Company to predict the outcome of
this litigation at this stage based on the information known to the Company to
date, the Company does not expect this action will have a material adverse
effect on the Company.
Roel Vento et al v. Tom Taylor et al. An affiliate of the Company is a
defendant in litigation entitled Roel Vento et al v. Tom Taylor et al, in the
District Court of Cameron County, Texas, in which a judgment in the amount of
$7,800 has been entered against all defendants. This judgment includes
approximately $6,500 of punitive damages and is based upon a jury's findings on
four separate theories of liability including fraud, intentional infliction of
emotional distress, tortuous interference with contract and civil conspiracy
arising out of the sale of a business operating under a temporary license
agreement at Valle Vista Mall in Harlingen, Texas. The Company is seeking to
overturn the award and has appealed the verdict. Although the Company is
optimistic that it may be able to reverse or reduce the verdict, there can be
no assurance thereof. Management, based upon the advice of counsel, believes
that the ultimate outcome of this action will not have a material adverse
effect on the Company.
The Company currently is not subject to any other material litigation
other than routine litigation and administrative proceedings arising in the
ordinary course of business. On the basis of consultation with counsel,
management believes that these items will not have a material adverse impact on
the Company's financial position or results of operations.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Operating Partnership to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, which
will, among other things, affect demand for retail space or retail goods,
availability and creditworthiness of prospective tenants, lease rents and the
terms and availability of financing; adverse changes in the real estate markets
including, among other things, competition with other companies and technology;
risks of real estate development and acquisition; governmental actions and
initiatives; and environmental/safety requirements.
OVERVIEW
The financial results reported reflect the Merger of the Company and DRC,
in accordance with the purchase method of accounting utilized to record the
transaction, valued at $3.0 billion. The Merger resulted in the addition of 49
regional malls, 11 community centers and 1 mixed-use Property. These
Properties included 47,052,267 square feet of retail space GLA and 558,636 of
office GLA. Of these Properties, 40 regional malls, 10 community centers and
the mixed-use Property are being accounted for using the consolidated method of
accounting. The remaining Properties are being accounted for using the equity
method of accounting, with the exception of one regional mall, which is
accounted for using the cost method of accounting.
In addition, the Operating Partnership acquired additional interest in two
regional malls and opened one consolidated regional mall during the comparative
periods (the "Property Transactions"). The following is a description of such
transactions. On April 11, 1996, the Operating Partnership acquired the
remaining 50% economic ownership interest in Ross Park Mall in Pittsburgh,
Pennsylvania, and subsequently began accounting for the Property using the
consolidated method of accounting. On July 31, 1996, the Operating Partnership
opened Cottonwood Mall in Albuquerque, New Mexico. The Operating Partnership
owns 100% of this regional mall and accounts for it using the consolidated
method of accounting. On October 4, 1996, the Operating Partnership acquired
the remaining interest in North East Mall and subsequently began accounting for
the Property using the consolidated method of accounting.
RESULTS OF OPERATIONS
For the Three Months Ended March 31, 1997 vs. the Three Months Ended March 31,
1996
Total revenue increased $103.0 million or 73.8% for the three months ended
March 31, 1997, as compared to the same period in 1996. This increase is
primarily the result of the Merger ($93.9 million) and the Property
Transactions ($11.2 million).
Total operating expenses increased $52.3 million, or 66.8%, for the three
months ended March 31, 1997, as compared to the same period in 1996. This
increase is primarily the result of the Merger ($47.8 million) and the Property
Transactions ($6.1 million).
Interest expense increased $29.4 million, or 76.1% for the three months
ended March 31, 1997, as compared to the same period in 1996. This increase is
primarily as a result of the Merger ($26.0 million) and the Property
Transactions ($4.1 million).
Income from unconsolidated entities decreased $1.1 million for the three
months ended March 31, 1997, as compared to the same period in 1996. This
decrease is primarily due to the amortization of the Operating Partnership's
excess investment in unconsolidated joint ventures acquired in the Merger ($2.9
million), partially offset by its share of income from these acquired joint
ventures ($1.9 million).
The loss from extraordinary items in 1997 is the result of the acquisition
of the contingent interest feature on four loans for $21.0 million and the
write-off of mortgage costs associated with these loans.
<PAGE>
Income of the Operating Partnership was $19.8 million for the three months
ended March 31, 1997, as compared to $23.6 million for the same period in 1996,
reflecting a decrease of $3.8 million, for the reasons discussed above, and was
allocated to the Company based on the Company's preferred unit preference and
ownership interest in the Operating Partnership during the period.
Preferred dividends increased by $4.4 million to $6.4 million in 1997 as a
result of the Company's issuance of $200 million of 8 3/4% Series B cumulative
redeemable preferred stock on September 27, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Operating Partnership's balance of unrestricted
cash and cash equivalents was $41.9 million. In addition to its cash balance,
the Operating Partnership has a $750 million Credit Line with $414 million
available after outstanding borrowings and letters of credit. The Company and
the Operating Partnership also have access to public equity and debt markets
through various shelf registrations.
Financing and Debt. The Company's ratio of consolidated debt-to-market
capitalization was 42.4% at March 31, 1997.
At March 31, 1997, the Operating Partnership had consolidated debt of
$3,747 million, of which $2,754 million was fixed-rate debt and $993 million
was variable-rate debt. The Operating Partnership's pro rata share of
indebtedness of the unconsolidated joint venture Properties as of March 31,
1997 and December 31, 1996 was $465 million and $448 million, respectively. As
of March 31, 1997 and December 31, 1996, the Operating Partnership had interest-
rate protection agreements related to $653 million and $525 million of its pro
rata share of indebtedness, respectively. The agreements are generally in
effect until the related variable-rate debt matures.
On April 14, 1997, the Operating Partnership obtained improvements to its
Credit Line. The Credit Line agreement was amended to reduce the interest rate
from LIBOR plus 90 basis points to LIBOR plus 75 basis points. In addition,
the Credit Line's competitive bid feature, which can further reduce interest
costs, was increased from $150 million to $300 million.
The Operating Partnership is currently finalizing the allocation of $300
million of its debt shelf registration with the Securities and Exchange
Commission to a Medium-Term Note Program, although management has no immediate
plans to issue securities under the program.
Development, Expansions and Renovations. The Operating Partnership is
involved in several development, expansion and renovation efforts.
In March 1997, the Operating Partnership opened Indian River Commons, a
265,000 square foot community shopping center in Vero Beach, Florida. This 50%-
owned joint venture is accounted for using the equity method of accounting.
Construction also continues on the following development projects: The
Source, a $150 million value-oriented retail and entertainment development
project containing 730,000 square feet of GLA, is expected to open in August
1997 in Westbury (Long Island), New York. Arizona Mills, a $184 million retail
development project containing 1,230,000 square feet of GLA, is expected to
open in November 1997 in Tempe, Arizona. Grapevine Mills, a $202 million
retail development project containing 1,480,000 square feet of GLA, is expected
to open in October 1997 in Grapevine (Dallas/Fort Worth), Texas. The Shops at
Sunset Place, a $143 million destination-oriented retail and entertainment
project containing approximately 500,000 square feet of GLA, is scheduled to
open in 1998 in South Miami, Florida.
In addition, the Operating Partnership is in the preconstruction
development phase on two new community center projects at an aggregate cost of
$54 million. Each of these projects is immediately adjacent to existing
regional mall Properties.
A key objective of the Operating Partnership is to increase the
profitability and market share of its Properties through the completion of
strategic renovations and expansions. The Operating Partnership currently has
a number of expansion projects under construction and in the preconstruction
development stage. The Operating Partnership's share of the projected costs to
fund these projects in 1997 is approximately $325 million. It is anticipated
that these costs will be financed principally with the Credit Line, project-
specific indebtedness, access to debt and equity markets, and cash flow from
operations.
<PAGE>
Distributions. During the first quarter of 1997, the Company paid a
distribution of $0.4925 per share to shareholders of record on February 7,
1997. On May 6, 1997, the Company declared a distribution of $0.505 per share
of common stock, an increase of $.0125 per share over the previous
distribution. Future common stock distributions will be determined based on
actual results of operations and cash available for distribution. In addition,
preferred dividends of $0.5078 per Series A preferred share and $0.5469 per
Series B preferred share were paid during the first quarter of 1997.
Capital Resources. Management anticipates that cash generated from
operating performance will provide the necessary funds on a short- and long-
term basis for its operating expenses, interest expense on outstanding
indebtedness, recurring capital expenditures, and distributions to shareholders
in accordance with tax requirements applicable to REITs. Sources of capital
for nonrecurring capital expenditures, such as major building renovations and
expansions, as well as for scheduled principal payments, including balloon
payments, on outstanding indebtedness are expected to be obtained from: (i)
excess cash generated from operating performance; (ii) working capital
reserves; (iii) additional debt financing; and (iv) additional equity sold in
the public markets.
Management continues to actively review and evaluate a number of
individual property and portfolio acquisition opportunities. Management
believes that funds on hand, amounts available under the Credit Line, and
existing debt and equity shelf registrations with the Securities and Exchange
Commission, provide the means to finance certain acquisitions. No assurance
can be given that the Company will not be required to, or will not elect to,
even if not required to, obtain funds from outside sources, including through
the sale of debt or equity securities, to finance significant acquisitions, if
any.
INVESTING AND FINANCING ACTIVITIES
Cash flows from investing activities for the three months ended March 31,
1997 included, $51.2 million of capital expenditures, which included $9.2
million for the acquisition of the land for the construction of Northeast
Plaza, construction costs of $8.9 million and $4.8 million at Forum phase II
and The Shops at Sunset Place, respectively, and renovation and expansion costs
of approximately $15 million, with the remainder primarily being made up of
tenant allowances. In addition, investments in unconsolidated entities of
$14.3 million included $7.9 million to Grapevine Mills and $2.6 million to The
Source.
Cash flows from financing activities for the three months ended March 31,
1997 included distributions of $84.2 million, net borrowings of $63.7 million
primarily used to fund development activity, and $21.0 million for the
acquisition of a contingent interest feature on four mortgage loans.
EBITDA-EARNINGS FROM OPERATING RESULTS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
Management believes that there are several important factors that
contribute to the ability of the Operating Partnership to increase rent and
improve profitability of its shopping centers, including aggregate tenant sales
volume, sales per square foot, occupancy levels and tenant costs. Each of
these factors has a significant effect on EBITDA. Management believes that
EBITDA is an effective measure of shopping center operating performance
because: (i) it is industry practice to evaluate real estate properties based
on operating income before interest, taxes, depreciation and amortization,
which is generally equivalent to EBITDA; and (ii) EBITDA is unaffected by the
debt and equity structure of the property owner. EBITDA: (i) does not
represent cash flow from operations as defined by generally accepted accounting
principles; (ii) should not be considered as an alternative to net income as a
measure of operating performance; (iii) is not indicative of cash flows from
operating, investing and financing activities; and (iv) is not an alternative
to cash flows as a measure of liquidity.
Total EBITDA for the Properties increased from $115.7 million for the
three months ended March 31, 1996 to $205.3 million for the same period in
1997, representing a growth rate of 77.4%. This increase is primarily
attributable to the Merger ($84.0 million) and the Properties opened or
acquired during 1996 and 1997 ($8.7 million). During this period, operating
profit margin increased from 61.9% to 63.5%.
<PAGE>
FFO-FUNDS FROM OPERATIONS
FFO, as defined by the National Association of Real Estate Investment
Trusts ("NAREIT"), means the consolidated net income of the Operating
Partnership and its subsidiaries without giving effect to depreciation and
amortization, gains or losses from extraordinary items, gains or losses on
sales of real estate, gains or losses on investments in marketable securities
and any provision/benefit for income taxes for such period, plus the allocable
portion, based on the Operating Partnership's ownership interest, of funds from
operations of unconsolidated joint ventures, all determined on a consistent
basis in accordance with generally accepted accounting principles. Management
believes that FFO is an important and widely used measure of the operating
performance of REITs which provides a relevant basis for comparison among
REITs. FFO is presented to assist investors in analyzing the performance.
FFO: (i) does not represent cash flow from operations as defined by generally
accepted accounting principles; (ii) should not be considered as an alternative
to net income as a measure of operating performance or to cash flows from
operating, investing and financing activities; and (iii) is not an alternative
to cash flows as a measure of liquidity.
The following summarizes FFO of the Operating Partnership and reconciles
net income of the Operating Partnership to FFO for the periods presented:
For the Three Months
Ended March 31,
-------------------------
1997 1996
(In thousands) ------------ ------------
FFO of the Operating Partnership $ 87,939 $ 48,680
============ ============
Reconciliation:
Income of the Operating Partnership before
extraordinary items $ 43,062 $ 23,832
Plus:
Depreciation and amortization from consolidated
Properties 43,312 24,537
The Operating Partnership's share of
depreciation, and amortization from
unconsolidated affiliates 8,858 3,032
Less:
Gain on the sale of real estate (37) N/A
Minority interest portion of depreciation and
amortization (850) (690)
Preferred dividends (6,406) (2,031)
------------ ------------
FFO of the Operating Partnership $ 87,939 $ 48,680
============ ============
FFO allocable to the Company $ 53,992 $ 29,727
============ ============
PORTFOLIO DATA
Operating statistics give effect to the Merger and are based upon the
business and Properties of the Operating Partnership and DRC on a combined
basis for all periods presented. The purpose of this presentation is to
provide a more comparable set of statistics on the portfolio as a whole. The
following statistics exclude Ontario Mills and Charles Towne Square. Ontario
Mills is a new value-oriented super-regional mall in a category by itself. The
Operating Partnership intends to create a separate reporting category for its
Mills Properties in 1997, following the expected openings of Grapevine Mills
and Arizona Mills. The Operating Partnership is converting Charles Towne
Square into a community center.
<PAGE>
Aggregate Tenant Sales Volume. For the three months ended March 31, 1997
compared to the same period in 1996, total reported retail sales for mall and
freestanding stores at the regional malls for GLA owned by the Operating
Partnership ("Owned GLA") increased 3.8% from $1,377 million to $1,429 million.
Total reported sales for all stores at the community shopping centers for Owned
GLA decreased 2.5% from $319 million to $311 million. Retail sales at Owned
GLA affect revenue and profitability levels because they determine the amount
of minimum rent that can be charged, the percentage rent realized, and the
recoverable expenses (common area maintenance, real estate taxes, etc.) the
tenants can afford to pay.
Occupancy Levels. Occupancy levels for regional malls increased 0.8% to
84.3% at March 31, 1997 as compared to 83.5% at March 31, 1996 . Occupancy
levels for community shopping centers decreased slightly from 91.8% at March
31, 1996 to 91.7% at March 31, 1997. Total GLA has increased 4.0 million
square feet from March 31, 1996 to March 31, 1997, primarily as a result of the
July 1996 opening of Cottonwood Mall, the November 1996 openings of Ontario
Mills, the Tower Shops and Indian River Mall, and the March 1997 opening of
Indian River Commons, partially offset by the March 1997 sale of Bristol Plaza.
Average Base Rents. Average base rents per square foot of mall and
freestanding stores at regional mall Owned GLA increased 4.5%, from $19.95 at
March 31, 1996 to $20.84 as of March 31, 1997. In community shopping centers,
average base rents per square foot of Owned GLA increased 4.7%, from $7.37 to
$7.72 during this same period.
INFLATION
Inflation has remained relatively low during the past three years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the tenants' leases contain provisions
designed to lessen the impact of inflation. Such provisions include clauses
enabling the Operating Partnership to receive percentage rentals based on
tenants' gross sales, which generally increase as prices rise, and/or
escalation clauses, which generally increase rental rates during the terms of
the leases. In addition, many of the leases are for terms of less than ten
years, which may enable the Operating Partnership to replace existing leases
with new leases at higher base and/or percentage rentals if rents of the
existing leases are below the then-existing market rate. Substantially all of
the leases, other than those for anchors, require the tenants to pay a
proportionate share of operating expenses, including common area maintenance,
real estate taxes and insurance, thereby reducing the Operating Partnership's
exposure to increases in costs and operating expenses resulting from inflation.
However, inflation may have a negative impact on some of the Operating
Partnership's other operating items. Interest and general and administrative
expenses may be adversely affected by inflation as these specified costs could
increase at a rate higher than rents. Also, for tenant leases with stated rent
increases, inflation may have a negative effect as the stated rent increases in
these leases could be lower than the increase in inflation at any given time.
OTHER
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail
sales are typically at their highest levels. In addition, shopping malls
achieve most of their temporary tenant rents during the holiday season. As a
result of the above, earnings are generally highest in the fourth quarter of
each year.
<PAGE>
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
None.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
4.4 First Amendment to Credit Agreement dated as of April 14, 1997
(b) Reports on Form 8-K
One Form 8-K was filed during the current period.
On March 26, 1997 under Item 5 - Other Events, the Company
reported that it made available additional ownership and
operational information concerning the Company, the Operating
Partnership, and the Properties owned or managed as of December
31, 1996, in the form of a Supplemental Information Package. A
copy of the package was included as an exhibit to the 8-K
filing.
<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.
SIMON DEBARTOLO GROUP, INC.
Date: May 13, 1997 /s/ James R. Giuliano, III
---------------------------
James R. Giuliano, III,
Senior Vice President of Finance
(Principal Financial Officer)
Date: May 13, 1997 /s/ Dennis Cavanagh
--------------------
Dennis Cavanagh,
Senior Vice President of Financial Services
(Principal Accounting Officer)
<PAGE>
EXHIBIT 4.4
FOOTER B CONTAINS FILENAME ONLYFIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") dated as of April 14, 1997
among SIMON PROPERTY GROUP, L.P., a Delaware limited partnership ("SPGLP"),
SIMON DeBARTOLO GROUP, L.P., a Delaware limited partnership ("SDGLP"), the
institutions party hereto as Lenders, the institutions party hereto as Co-
Agents, and UNION BANK OF SWITZERLAND, NEW YORK BRANCH, as Arranger, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Arranger, and THE CHASE MANHATTAN BANK,
as Arranger.
W I T N E S S E T H:
WHEREAS, the parties hereto have previously entered into a Credit
Agreement dated as of September 27, 1996 (the "Credit Agreement"); and
WHEREAS, the parties desire to modify the Credit Agreement upon the
terms and conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
Definitions. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement.
Applicable Margin. With respect to Loans outstanding on, or made to
the Borrower on or after, the Effective Date (as hereinafter defined), the
definition of the term "Applicable Margin" contained on pages 3 and 4 of the
Credit Agreement shall be deleted in its entirety and the following definition
substituted therefor:
" "Applicable Margin" means, with respect to each Loan, the respective
percentages per annum determined, at any time, based on the range into which
Borrower's Credit Rating then falls, in accordance with the following tables.
Any change in the Applicable Margin shall be effective immediately as of the
date on which any of the rating agencies announces a change in the Borrower's
Credit Rating or the date on which the Borrower has no Credit Rating, whichever
is applicable.
(1) The Applicable Margin, from time to time, depending on Borrower's Credit
Rating shall be as follows:
Range of Applicable Applicable
Borrower's Margin for Margin for
Credit Rating Eurodollar Base Rate
S&P/Moody's Loans Loans
Ratings) (% per annum) (% per annum)
- - --------------- ------------- -------------
below BBB-/Baa3 1.350% 0.00%
BBB-/Baa3 1.000% 0.00%
BBB/Baa2 0.875% 0.00%
BBB+/Baa1 0.750% 0.00%
A-/A3 0.625% 0.00%
If at any time the Borrower has an Investment Grade Credit Rating by both
Moody's and S&P which Credit Ratings are split, then: if the difference
between such Credit Ratings is one ratings category (e.g. Baa2 by Moody's
and BBB- by S&P), the Applicable Margin shall be the rate per annum that
would be applicable if the highest of the Credit Ratings were used; and
if the difference between such Credit Ratings is two ratings category
(e.g. Baa1 by Moody's and BBB- by S&P), the Applicable Margin shall be the
rate per annum that would be applicable if the median of the applicable
Credit Ratings is used. The Borrower's "Credit Rating" shall be deemed to
be the higher of (i) the Credit Rating (if any) of SPGLP and (ii) the
Credit Rating (if any) of SDGLP; provided that, in the event that the
Credit Ratings of either entity from Moody's or S&P are split, such
entity's Credit Rating shall be calculated as set forth above."
Leverage Ratio. The definition of "Leverage Ratio" contained on
page 22 of the Credit Agreement shall be deleted in its entirety.
Unused Commitment Fee Percentage. With respect to fees payable
by the Borrower on or after the Effective Date, the definition of the term "Un
used Commitment Fee Percentage" contained on page 34 of the Credit Agreement
shall be deleted in its entirety and the following definition substituted there
for:
" "Unused Commitment Fee Percentage" shall be 0.25%. The Unused
Commitment Fee shall not be payable during the time, from time to time, that
the Borrower maintains an Investment Grade Credit Rating."
Money Market Option.
Section 2.2(a) of the Credit Agreement is deleted in its
entirety and the following substituted therefor:
"(a) The Money Market Option. From time to time during the Revolving
Credit Period, and provided that at such time the Borrower maintains an In
vestment Grade Credit Rating, the Borrower may, as set forth in this Section
2.2, request the Lenders during the Revolving Credit Period to make offers to
make Money Market Loans to the Borrower, not to exceed, at such time, the
lesser of (i) forty percent (40%) of the Maximum Revolving Credit Amount and
(ii) the Revolving Credit Availability. Subject to the provisions of this
Agreement, the Borrower may repay any outstanding Money Market Loan on any day
which is a Business Day and any amounts so repaid may be reborrowed, up to the
amount available under this Section 2.2(a) at the time of such Borrowing, until
the Business Day next preceding the Revolving Credit Termination Date. The
Lenders may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section 2.2."
The last sentence of Section 2.2(b) of the Credit Agreement is
deleted in its entirety and the following sentence is substituted therefor:
"Borrower may not make more than two (2) Money Market Quote Requests
in any thirty-day Eurodollar Interest Period."
Effective Date. This Amendment shall become effective upon
receipt by the Payment and Disbursement Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Payment and
Disbursement Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party) (the date of such receipt being deemed the "Amendment Effective
Date").
Entire Agreement. This Amendment constitutes the entire and final
agreement among the parties hereto with respect to the subject matter hereof
and there are no other agreements, understandings, undertakings, repre
sentations or warranties among the parties hereto with respect to the subject
matter hereof except as set forth herein.
Governing Law. This Amendment shall be governed by, and construed
in accordance with, the law of the State of New York.
Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Amendment by signing
any such counterpart.
Headings, Etc. Section or other headings contained in this
Amendment are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Amendment.
No Further Modifications. Except as modified herein, all of the
terms and conditions of the Credit Agreement, as modified hereby shall remain
in full force and effect and, as modified hereby, the Borrower confirms and
ratifies all of the terms, covenants and conditions of the Credit Agreement in
all respects.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER: SIMON PROPERTY GROUP, L.P.,
a Delaware limited partnership
By:SIMON DeBARTOLO GROUP, INC., as General Partner
By: /s/ David Simon
David Simon
Chief Executive Officer
SIMON DeBARTOLO GROUP, L.P.,
a Delaware limited partnership
(formerly known as Simon-DeBartolo Group, L.P.)
By: SD PROPERTY GROUP, INC.
its managing general partner
By: /s/ David Simon
David Simon
Chief Executive Officer
By: SIMON DeBARTOLO GROUP, INC.
its general partner
By: /s/ David Simon
David Simon
Chief Executive Officer
PAYMENT AND DISBURSEMENT AGENT AND ARRANGER:
UNION BANK OF
SWITZERLAND,
NEW YORK BRANCH
By: /s/Joseph Bassil
Name: Joseph Bassil
Title:Vice President
By: /s/Albert Rabil III
Name: Albert Rabil III
Title: MANAGING DIRECTOR
ARRANGER: MORGAN GUARANTY
TRUST COMPANY
OF NEW YORK
By: /s/Timothy V. O'Donovan
Name: Timothy V. O'Donovan
Title:Vice President
ARRANGER: THE CHASE MANHATTAN BANK
By: /s/Cynthia Lash
Name: Cynthia Lash
Title:Vice President
CO-AGENT: DRESDNER BANK AG
NEW YORK AND GRAND CAYMAN BRANCHES
By: /s/Christopher E. Sarisky
Name: Christopher E. Sarisky
Title: Assistant Treasurer
By: /s/Thomas J. Nadramie
Name: Thomas J. Nadramie
Title:Vice President
CO-AGENT: THE FIRST NATIONAL BANK OF CHICAGO
By: /s/Kevin L. Gille
Name: Kevin L. Gillen
Title: ASSISTANT VICE PRESIDENT
CO-AGENT: NATIONSBANK OF TEXAS, N.A., a
national banking association
By:/s/ Michael A. Ernst
Michael A. Ernst
Senior Vice President
CO-AGENT:BAYERISCHE HYPOTHEKEN- UND WECHSEL-BANK
AKTIENGESELLSCHAFT ACTING THROUGH ITS NEW YORK BRANCH
By:/s/ Andreas Veith
Name: Andreas Veith
Title:Senior Vice President
By:/s/ Larney J. Bisbano
Name: Larney J. Bisbano
Title: Assistant Vice President
CO-AGENT: WELLS FARGO
BANK, N.A.
By:/s/ David Maki
Name:David Maki
Title:Vice President
By:/s/ Ann Marie Beaulieu
Name: Ann Marie Beaulieu
Title: Assistant Vice President
LENDERS: BANK ONE, INDIANA,
N.A., formerly known as Bank One, Indianapolis, N.A.
By:/s/ Daniel H. Hatfield _
Name: Daniel H. Hatfield
Title: Vice President
COMMERZBANK AG, New York Branch
By:/s/ Douglas P. Traynor
Name: Douglas P. Traynor
Title: Vice President
By: /s/ Christine H. Finkel
Name:Christine H. Finkel
Title:Assistant Vice President
FLEET NATIONAL BANK
By: /s/Margaret A. Mulcatty
Name: Margaret A. Mulcatty
Title: Vice President
NATIONAL CITY BANK OF INDIANA
By: /s/Kimberly W. Kord
Name: Kimberly W. Kord
Title: Senior Vice President
FIRST BANK
NATIONAL ASSOCIATION, a
national banking association
By: /s/James P. Hoopes
Name: James P. Hoopes
Title: Assistant Vice President
GUARANTY FEDERAL BANK, F.S.B.
By: /s/Lisa B. Balsley
Name: Lisa B. Balsley
Title: Vice President
CANADIAN
IMPERIAL BANK
OF COMMERCE
By: /s/Maureen M. Slentz
Name: Maureen M. Slentz
Title: Agent
UNION BANK OF CALIFORNIA, N.A.
By: /s/Michael King
Name: Michael King
Title: Vice President
By: /s/Gary Roberts
Name: Gary Roberts
Title: Vice President
THE
SUMITOMO BANK, LTD. Chicago Branch
By: /s/Takeo Yamori
Name: Takeo Yamori
Title: Joint General Manager
BANK OF
MONTREAL
By: /s/Mary Lou Koys
Name: Mary Lou Koys
Title: Director
KEYBANK, NATIONAL ASSOCIATION
By: /s/Laird A. Fairchild
Name: Laird A. Fairchild
Title: Assistant Vice President
PNC BANK,
NATIONAL ASSOCIATION
By: /s/Dina S. Muth
Name: Dina S. Muth
Title: Real Estate Officer
LANDESBANK
HESSEN-THURINGEN GIRONZENTRALE, NEW YORK BRANCH
By: /s/Robert W. Becker
Name: Robert W. Becker
Title: Vice President
By: /s/Michael Shields
Name: Michael Shields
Title: Bank Officer
KREDIETBANK N.V.
By: /s/John E. Thierfelder
Name: John E. Thierfelder
Title: Vice President
By: /s/Robert Snauffer
Name: Robert Snauffer
Title: Vice President
BAYERISCHE
LANDESBANK, CAYMAN ISLANDS BRANCH
By: /s/John A. Wain
Name: John A. Wain
Title: Vice President
By: /s/P. Obermann
Name: P. Obermann
Title: Senior Vice President
Manager Lending Division
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statments.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 41,946
<SECURITIES> 0
<RECEIVABLES> 165,863
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,353,235
<DEPRECIATION> (315,572)
<TOTAL-ASSETS> 5,908,896
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,746,992
0
292,912
<COMMON> 10
<OTHER-SE> 972,544
<TOTAL-LIABILITY-AND-EQUITY> 5,908,896<F2>
<SALES> 0
<TOTAL-REVENUES> 242,414
<CGS> 0
<TOTAL-COSTS> 130,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 975
<INTEREST-EXPENSE> 67,918
<INCOME-PRETAX> 43,062
<INCOME-TAX> 43,062
<INCOME-CONTINUING> 43,062
<DISCONTINUED> 0
<EXTRAORDINARY> (23,247)
<CHANGES> 0
<NET-INCOME> 14,639<F3>
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
<FN>
<F1>The Company does not report using a classified Balance Sheet.
<F2>Includes Limited Partners' interest in the Operating Partnership of $620,267.
<F3>Net of Limited Partner's share of Income of $5,176.
</FN>
</TABLE>
