ITEM 1. BUSINESS
(a) General Development of Business
From August 1, 1998 to September 28, 1998, the Trust was a self-administered and self-managed equity real estate investment trust. The Trust was organized on July 31, 1972 as a business trust under the laws of the Commonwealth of Massachusetts. The Trust is the successor to the original registrant (Reg. No. 2-19671), New Plan Realty Corporation, which was incorporated under the laws of the State of Delaware on December 4, 1961.
Since September 28, 1998, in connection with the Merger, the Trust has been a wholly owned subsidiary of New Plan Excel Realty Trust, Inc. ("New Plan Excel"), a self-administered and self-managed equity real estate investment trust. New Plan Excel, known as Excel Realty Trust, Inc. immediately prior to the Merger, was incorporated in 1985 and subsequently reincorporated as a Maryland corporation. See " -- Narrative Description of Business -- Developments from August 1998 to December 1998 -- The Merger" below.
(b) Financial Information About Industry Segments
From August 1, 1998 to September 28, 1998, the Trust was in the business of managing, operating, leasing, acquiring, developing and investing in shopping centers, factory outlet centers and apartment communities. See the Consolidated Financial Statements and Notes thereto included in Item 8 of this Transition Report on Form 10-K for certain information required by Item 1.
Since September 28, 1998, the Trust has been in the business of managing, operating and leasing its existing portfolio of shopping centers, factory outlet centers and apartment communities. See " -- Narrative Description of the Business -- Acquisition, Financing and Operating Strategies" below.
(c) Narrative Description of Business
General
As of December 31, 1998, the Trust owned, directly or through its subsidiaries, fee or leasehold interests in 139 shopping centers containing an aggregate of approximately 19.5 million square feet of gross leasable area, six factory outlet centers containing an aggregate of approximately 1.9 million square feet of gross leasable area and 54 garden apartment communities containing approximately 13,000 units, primarily in the eastern half of the United States. The average occupancy rates as of December 31, 1998 for the shopping centers, factory outlet centers and apartment communities were approximately 90%, 90% and 91%, respectively. In addition, the Trust owned mortgage interests in five shopping centers as of December 31, 1998.
The Trust maintains its principal executive offices at 1120 Avenue of the Americas, New York, New York 10036, and its telephone number is (212) 869-3000.
Acquisition, Financing and Operating Strategies
From August 1, 1998 to September 28, 1998, the Trust's primary investment strategy was to identify and purchase well-located income-producing shopping centers and apartment communities at a discount to replacement cost. The Trust also purchased or developed selected factory outlet centers. The Trust sought to achieve income growth and enhance the cash flow potential of its properties through a program of expansion, renovation, leasing, re-leasing and improving the tenant mix. The Trust minimized development risks by generally purchasing existing income-producing properties. The Trust regularly reviewed its portfolio and from time to time considered the disposition of certain of its properties.
As a result of the Merger on September 28, 1998, the Trust currently seeks to achieve income growth and enhance the cash flow potential of its properties through a program of expansion, renovation, leasing, re-leasing and improving the tenant mix. It is expected that future acquisitions and developments of, and investments in, shopping centers, factory outlet centers and apartment communities will be undertaken by New Plan Excel directly or indirectly, rather than through the Trust (although the Trust is not precluded from undertaking future acquisitions or developments of, or investments in, properties).
The Trust regularly reviews its portfolio and from time to time considers the disposition of certain of its properties.
The Trust has generally acquired properties for cash. In a few instances, properties were acquired subject to existing mortgages. Long-term debt of the Trust as of December 31, 1998 consisted of $116.9 million of mortgages having a weighted average interest rate of 7.7%, as well as $413.9 million aggregate principal amount of unsecured notes having a weighted average interest rate of 7.0%. The Trust's short-term debt consists of normal trade accounts payable and the current portion of mortgages payable. In connection with the Merger, as of September 28, 1998, the Trust guaranteed the borrowings of New Plan Excel under New Plan Excel's $300 million revolving credit facilities. As of December 31, 1998, New Plan Excel had a total of approximately $201 million outstanding under its revolving credit facilities, of which $50 million is reflected in the Trust's balance sheet as of December 31, 1998 as due to New Plan Excel Realty Trust, Inc. In addition, it is expected that the Trust will guarantee any debt issued in the future by New Plan Excel under New Plan Excel's recently established medium-term notes program. See " -- Recent Developments" below.
From August 1, 1998 to September 28, 1998, virtually all operating and administrative functions, such as leasing, data processing, finance, accounting, construction and legal, were centrally managed at the Trust's headquarters. In addition, the Trust maintained regional offices located near its various properties. On-site functions such as security, maintenance, landscaping and other similar activities were either performed by the Trust or subcontracted. The cost of these functions was passed through to tenants to the extent permitted by the respective leases.
As a result of the Merger on September 28, 1998, virtually all operating and administrative functions, such as leasing, data processing, finance, accounting, construction and legal, are now managed at the Trust's executive and operational headquarters in New York, New York and the Trust's operational headquarters in San Diego, California. The Trust continues to maintain field offices and regional offices located near its various properties. On-site functions such as security, maintenance, landscaping and other similar activities are either performed by the Trust or subcontracted. The cost of these functions are passed through to tenants to the extent permitted by the respective leases.
Developments from August 1998 to December 1998
Acquisitions. From August 1, 1998 to September 28, 1998, the Trust paid approximately $17.1 million to acquire three shopping centers containing approximately 152,000 gross leasable square feet and one apartment property containing 279 units.
Funds from Operations. Funds from operations applicable to common shares of beneficial interest, no par value, of the Trust ("Shares of Beneficial Interest"), defined as net income plus depreciation and amortization of real estate, less gains from sales of assets and securities, was approximately $55.3 million from August 1, 1998 through December 31, 1998.
The Merger. On September 28, 1998, Excel Realty Trust, Inc. ("Excel") and the Trust consummated a merger pursuant to an Agreement and Plan of Merger dated as of May 14, 1998, as amended as of August 7, 1998 (the "Merger Agreement"), whereby ERT Merger Sub, Inc., a wholly owned subsidiary of Excel, was merged with and into the Trust with the Trust surviving as a wholly owned subsidiary of Excel (the "Merger"). The Merger was approved by the stockholders of Excel
and the shareholders of the Trust at special meetings held on September 25, 1998. In connection with the Merger, Excel changed its name to "New Plan Excel Realty Trust, Inc."
As provided in the Merger Agreement, Excel paid a 20% stock dividend prior to the Merger. In connection with the Merger, each Share of Beneficial Interest of the Trust was converted into one share of common stock, par value $.01 per share, of New Plan Excel ("New Plan Excel Common Stock"), and each 7.8% Series A Cumulative Step-Up Premium Rate Preferred Share, par value $1.00 per share, of the Trust was converted into one share of 7.8% Series D Cumulative Voting Step-Up Premium Rate Preferred Stock, par value $.01 per share, of New Plan Excel ("New Plan Excel Series D Preferred Stock"). New Plan Excel issued an aggregate of approximately 60,000,000 shares of New Plan Excel Common Stock and 150,000 shares of New Plan Excel Series D Preferred Stock (represented by 1,500,000 depositary shares, each of which represents a one-tenth fractional interest in a share of New Plan Excel Series D Preferred Stock) to the Trust's shareholders in the Merger. As a result of the Merger, the shareholders of the Trust immediately prior to the Merger owned approximately 65% of New Plan Excel's common stock outstanding immediately following the Merger. Since the Merger, New Plan Excel has held the sole issued and outstanding Share of Beneficial Interest of the Trust. The New Plan Excel Common Stock is listed for trading on the New York Stock Exchange under the symbol "NXL."
As further provided in the Merger Agreement, since September 28, 1998, the Board of Trustees of the Trust and the Board of Directors of New Plan Excel have consisted of the six former members of Excel's Board and the nine former members of the Trust's Board. As of March 26, 1999, the senior management of the Trust and New Plan Excel was as follows:
The Trust and New Plan Excel intend and expect that Mr. Laubich will eventually succeed Mr. Newman as Chairman of the Board of the Trust and New Plan Excel, at such time as Mr. Newman is no longer serving in such capacity, and that Mr. Sabin will eventually succeed Mr. Laubich as Chief Executive Officer of the Trust and New Plan Excel, at such time as Mr. Laubich is no longer serving in such capacity.
Recent Developments
On February 3, 1999, New Plan Excel established a program for the sale of up to $500 million aggregate principal amount of medium-term notes due nine months or more from date of issue. It is expected that future medium-term notes will be issued by New Plan Excel through this program, rather than by the Trust under its existing medium-term notes program (although the Trust is not precluded from undertaking future debt issuances). The Trust will guarantee any debt issued in the future by New Plan Excel under New Plan Excel's medium-term notes program.
Competition
The success of the Trust depends upon, among other factors, the trends of the economy, including interest rates, income tax laws, increases or decreases in operating expenses, governmental regulations and legislation, including environmental requirements, real estate fluctuations, retailing trends, population trends, zoning laws, the financial condition and stability of tenants, the availability of financing and capital on satisfactory terms, the ability of the Trust to compete with others for tenants and keep its properties leased at profitable levels and construction costs.
Adverse changes in general or local economic conditions could result in the inability of some existing tenants of the Trust to meet their lease obligations and could otherwise adversely affect the Trust's ability to attract or retain tenants. Management believes, however, that the Trust's financial strength and operating practices, particularly its ability to implement renovation, expansion and leasing programs, will enable it to maintain and increase rental income from its properties.
Employees
As of December 31, 1998, New Plan Excel and its subsidiaries (including the Trust) employed approximately 750 individuals (including executive, administrative and field personnel).
Federal Income Tax Status
From August 1, 1998 to September 28, 1998, the Trust met the qualification requirements of a real estate investment trust under the Internal Revenue Code. See Item 5 below. In order to maintain its qualification as a real estate investment trust ("REIT") during that period, the Trust was required, among other things, to distribute at least 95% of its REIT taxable income to its shareholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Trust was not subject to federal income tax with respect to that portion of its income which met certain criteria and was distributed annually to its shareholders.
As a result of the Merger, since September 28, 1998, the Trust has been a wholly owed subsidiary of New Plan Excel, which for 1998 met the qualification requirements of a real estate investment trust under the Internal Revenue Code. As a result, from September 28, 1998 to December 31, 1998, the Trust was a disregarded entity for federal income tax purposes.
(d) Risk Factors
For a discussion of the risks that the Trust believes are material to investors who purchase or own the securities of the Trust or New Plan Excel that are not otherwise described in this Form 10-K, see the information contained under the caption "Risk Factors" in New Plan Excel's Annual Report on Form 10-K for the year ended December 31, 1998, which is hereby incorporated by reference.
ITEM 2.
ITEM 2. PROPERTIES
The location, general character and primary occupancy information with respect to the Trust's properties as of December 31, 1998 are set forth on the Summary of Properties Schedule on the pages immediately following.
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES Summary of Properties As of December 31, 1998
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Trust is not presently involved in any material pending legal proceedings nor, to its knowledge, is any material litigation threatened against the Trust or its properties, other than litigation arising in the ordinary course of business.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders of the Trust during the fourth quarter of 1998.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information
The following table shows the high and low sales price for the Trust's Shares of Beneficial Interest on the New York Stock Exchange, as well as cash distributions paid, for the periods indicated.
(1) Represents the quarters in the fiscal year ended July 31, 1997 or July 31, 1998, as appropriate.
For the period from August 1, 1998 to September 28, 1998, the high and low sales price for the Trust's Shares of Beneficial Interest on the New York Stock Exchange was $23.25 and $19.31, respectively. During that period, the Trust paid a cash distribution of $.375 per Share of Beneficial Interest.
In connection with the Merger, on September 28, 1998, the Trust became a wholly owned subsidiary of New Plan Excel, and the Trust's Shares of Beneficial Interest ceased trading on the New York Stock Exchange after the close of trading on that date. As a result, there is currently no established public trading market for the Shares of Beneficial Interest.
(b) Distributions
Prior to the Merger, the Trust paid regular and uninterrupted cash distributions on its Shares of Beneficial Interest since it commenced operations as a REIT in 1972. From the inception of the Trust to the Merger, each distribution was either equal to or greater than the distribution immediately preceding it, and the distributions increased in each of the last 77 consecutive quarters during that period.
During the period from August 1, 1998 to September 28, 1998, the Trust made distributions to shareholders aggregating $23.9 million. As a result of the Merger, since September 28, 1998, the Trust has been a wholly owned subsidiary of New Plan Excel. During the period from September 28, 1998 through December 31, 1998, the Trust did not make any distributions to its sole shareholder (i.e., New Plan Excel). The Trust may in the future make distributions to New Plan Excel as, if and when declared by the Board of Trustees of the Trust.
During the period from August 1, 1998 to September 28, 1998, the Trust had a Dividend Reinvestment and Share Purchase Plan which allowed shareholders to acquire additional Shares of Beneficial Interest by automatically reinvesting distributions. In connection with the Merger, on September 28, 1998, the Trust became a wholly owned subsidiary of New Plan Excel, and, as a result, the Plan was effectively terminated.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The financial data included in this table have been selected by the Trust and have been derived from the consolidated financial statements for the periods indicated and should be read in conjunction with the audited financial statements included in Item 14(a) of this Transition Report on Form 10-K.
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(1) Since the Merger on September 28, 1998, there has been only one outstanding Share of Beneficial Interest of the Trust. See "Business -- Narrative Description of Business -- Developments from August 1998 to December 1998 -- The Merger."
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(a) Liquidity and Capital Resources
On December 31, 1998, the Trust had approximately $27.6 million in available cash, cash equivalents, mortgages and notes receivable and marketable securities.
During the five-month period ended December 31, 1998, the Trust paid approximately $17.1 million to acquire three shopping centers containing approximately 152,000 gross leasable square feet and one apartment property containing 279 units.
Debt as of December 31, 1998 consisted of $116.9 million of mortgages payable having a weighted average interest rate of 7.7%, as well as $413.9 million of notes payable with a weighted average interest rate of 7.0%. The $2.8 million increase from August 1, 1998 to December 31, 1998 in mortgages payable was the net result of the assumption of a $4.7 million mortgage in connection with the purchase of a property and the repayment of $1.9 of existing mortgages. The reduction from August 1, 1998 to December 31, 1998 of $49 million of notes payable was the result of the repayment of two issues of unsecured notes and the issuance of one series of new notes. In connection with the Merger, on September 28, 1998, the Trust guaranteed the borrowings of New Plan Excel under New Plan Excel's $300 million revolving credit facilities.
During the five-month period, the Trust made distributions to shareholders of $23.9 million and paid $17.3 million for improvements to existing properties.
Other sources of funds are available to the Trust. Based on management's internal valuation of the Trust's properties, most of which are free and clear of mortgages, the estimated value is considerably in excess of the outstanding mortgage indebtedness totaling $116.9 million. Accordingly, management believes that potential exists for additional mortgage financing as well as unsecured borrowing capacity from banks and other lenders.
The Trust holds debt instruments which are sensitive to changes in interest rates and marketable equity securities which are sensitive to market price changes. With respect to the Trust's debt instruments, the maturity, weighted average interest rates and fair value are presented in Notes D, E and K to the Consolidated Financial Statements. With respect to the Trust's marketable equity securities, the cost and fair value are presented in Note B to the Consolidated Financial Statements.
In the normal course of business, the Trust also faces risks that are either non-financial or non-qualitative. Such risks principally include credit risks and legal risks and are not included in the aforementioned notes.
(b) Year 2000 Compliance
Year 2000 Compliance Readiness
The Trust's centralized corporate business and technical information systems have been assessed as to Year 2000 compliance and functionality. Year 2000 compliance issues with respect to the Trust's internal business and technical information systems were substantially remediated as of December 31, 1998. See " -- Year 2000 Compliance Detail" below. In addition, the Trust has
completed the identification and review of computer hardware and software suppliers and has verified the Year 2000 preparedness of these suppliers.
Year 2000 Compliance Detail
The Trust addressed the Year 2000 issue with respect to the following: (i) the Trust's information technology and operating systems, including its billing, accounting and financial reporting systems; (ii) the Trust's non-information technology systems, including building access, parking lot light and energy management, equipment and other infrastructure systems that may contain or use computer systems or embedded micro controller technology; and (iii) certain systems of the Trust's major suppliers and material service providers (insofar as such systems relate to the Trust's business activities such as payroll, health services and alarm systems). As described below, the Trust's Year 2000 review involves (a) an assessment of the Year 2000 problems that may affect the Trust, (b) the development of remedies to address the problems discovered in the assessment phase, to the extent practical or feasible, (c) the testing of such remedies and (d) the preparation of contingency plans to deal with worst case scenarios.
Assessment Phase
As part of the internal assessment phase, the Trust has attempted to substantially identify all the major components of the systems described above. In determining the extent to which such systems are vulnerable to the Year 2000 issue, the Trust is evaluating internally developed and/or purchased software applications and property operational control systems (e.g., heating ventilation and air conditioning (HVAC), lighting timers, alarms, fire, sewage and access). In addition, in October 1998, the Trust began sending letters to or making inquiries of certain of its major suppliers and service providers, requesting them to provide the Trust with assurance of existing or anticipated Year 2000 compliance by their systems insofar as the systems relate to their activities with the Trust. The Trust expects that it will complete its distribution of these inquiries by April 30, 1999. The Trust is requesting that all responses to the inquiries be returned to it no later than May 31, 1999.
Remediation and Testing Phase
Based upon the assessment and remediation efforts to date, the Trust has completed, tested and put on line the Year 2000 compliance modification in all the internally developed software for its accounting and property management applications. The Trust's computer terminals or personal computers are Year 2000 compliant in all material respects. The Trust has secured software to upgrade that part of the computer that will make it compliant. That part is called the BIOS chip or Basic Input Output System. If there is any unforeseen problem with a particular unit it will be replaced. Replacements are readily available. Based on an inventory by model type of the Trust's personal computers, BIOS chip Year 2000 issues are not expected to be material. A conservative, "worst case" scenario is included in the cost estimate. The versions of the purchased software that the Trust uses for spread sheet analysis, database applications, word processing systems and its apartment rent collection system have been tested and are compliant. The outsourced payroll service and the integrated internal input system are compliant. The New York corporate office phone, communication and data collection networks are Year 2000 compliant; however, based on the expanded needs of the Trust, replacement of the phone system (including the voicemail system) is scheduled to occur by June 30, 1999. Phone systems at other than corporate office locations are Year 2000 compliant. Phone systems at the apartment communities are 87% Year 2000 compliant. The balance of the phone systems at the apartment communities are scheduled to be reviewed and be Year 2000 compliant by June 1999. The
cost estimates derived from this assessment are treated as worst case. The Trust's shopping centers are all "open air" type and are simple and very limited in terms of technology. Field systems for shopping center HVAC, sprinkler and lighting are more than 95% reviewed and Year 2000 compliant for those systems supplied by the Trust (some are supplied by tenants). The systems not supplied by the Trust are being reviewed and are projected to not have a material impact. All of the 54 apartment communities have had reviews completed and, except for phone systems (as discussed above), are Year 2000 compliant. All of the six factory outlets had reviews completed and, except for one minor item, are Year 2000 compliant. This one item is an electronic variable message sign at one property, which is expected to be Year 2000 compliant by the second quarter of 1999.
Costs Related to the Year 2000 Issue
The total historical or anticipated remaining costs for the Year 2000 remediation are estimated to be immaterial to the Trust's financial condition. The costs to date have been expensed as incurred and consist of immaterial internal staff costs and other expenses such as telephone and mailing costs. The Trust currently estimates that to have all systems Year 2000 compliant will require certain additional expenditures. At this time, the expenditures are expected to range from a total of $60,000 to a "worst case" of $260,000.
Risks and Contingency Plans
Considering the substantial progress made to date, the Trust does not anticipate delays in finalizing internal Year 2000 remediation within remaining time schedules. However, third parties having a material relationship with the Trust (e.g., utilities, financial institutions, major tenants, suppliers, governmental agencies and municipalities) may be a potential risk based on their individual Year 2000 preparedness which may not be within the Trust's reasonable control. The failure of critical third parties' computer software programs and operating systems to achieve Year 2000 compliance may result in system malfunctions or failures. Such an occurrence would potentially affect the ability of the third party to operate its business and thereby raise adequate revenue to meet its contractual obligations to the Trust or provide services to the Trust. In that event, the Trust may not receive revenue or services that it had otherwise expected to receive pursuant to existing leases and contracts. The failure of critical third parties to achieve Year 2000 compliance may have a material adverse impact on the Trust's business, operating results and financial condition.
The Trust is in the process of identifying and reviewing the Year 2000 preparedness of critical third parties. Anticipated completion of this review is May 31, 1999. Pending the results of that review, the Trust will determine what course of action and contingencies, if any, will need to be made.
Although the Trust's Year 2000 efforts are intended to minimize the adverse effects of the Year 2000 issue on the Trust's business, operating results and financial condition, the actual effects of the issue and the success or failure of the Trust's efforts cannot be known until the year 2000. At this point, the Trust believes that the most likely external sources of a material adverse impact on the Trust's business, operating results and financial condition as a result of Year 2000 issues are utilities (i.e., electricity, natural gas, telephone service and water) furnished by third parties to the Trust and a wide universe of other customers, none of which utilities are readily available from alternate sources. The reasonably likely worst case scenario that could affect the Trust's business, operating results and financial condition would be a widespread prolonged power failure affecting a substantial number of the geographic regions in which the Trust's properties are located. In the event of such a widespread prolonged power failure, a significant number of tenants may not be able to operate their stores and, as
a result, their ability to pay rent could be substantially impaired. The Trust is not aware of an economically feasible contingency plan which could be implemented to prevent such a power failure from having a material adverse effect on the Trust's business, operating results and financial condition.
(c) The Merger
Immediately following the Merger on September 28, 1998, approximately 88.2 million shares of New Plan Excel Common Stock were outstanding and former holders of the Trust's Shares of Beneficial Interest held approximately 65% of those shares. As further provided in the Merger Agreement, since September 28, 1998, the Board of Trustees of the Trust and the Board of Directors of New Plan Excel have consisted of the six former members of Excel's Board and the nine former members of the Trust's Board. The Merger has, for financial accounting purposes, been accounted for as a purchase by the Trust of Excel using the purchase method of accounting. The transaction was completed on September 28, 1998.
(d) New Accounting Standards
During 1998, the Financial Accounting Standards Board issued (a) No. 130 "Reporting Comprehensive Income" ("SFAS 130"), which is effective for fiscal years beginning after December 15, 1997, (b) No. 131 "Disclosures About Segments of an Enterprise and Related Information" ("SFAS 131"), which is effective for fiscal years beginning after December 15, 1997, (c) No. 132 "Employers Disclosure About Pensions and Other Postretirement Benefits" ("SFAS 132"), which is effective for fiscal years beginning after December 15, 1997, and (d) No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which is effective for fiscal years beginning after June 15, 1999. Management adopted SFAS 130, 131, 132 and 133 for the five months ended December 31, 1998.
In addition, during 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"), and Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), each of which is effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires that certain costs incurred in conjunction with start-up activities be expensed. SOP 98-1 provides guidance on whether the costs of computer software developed or obtained for internal use should be capitalized or expensed. Management believes that, when adopted, SOP 98-5 and SOP 98-1 will not have a significant impact on the Trust's financial statement.
(e) Results of Operations
Results of Operations for the Five Months Ended December 31, 1998 and
The following table presents the Income Statements for the five months ended December 31, 1998 and 1997 (in thousands).
Revenues
Total revenues increased approximately $12.9 million to $113.3 million. The increase in rental revenues was primarily the result of the acquisition of 18 properties since December 1997 and revenue increases in properties owned more than one year. The decrease of $685,000 in investment revenue was due to lower balances available for investment.
Operating Expenses
Total operating expenses increased $8.5 million to $71.4 million. Operating costs increased $1.4 million to $26.8 million. The increase was due to newly acquired properties. Real estate and other taxes increased $1.3 million to $10.3 million. The principal reason for this increase was the larger portfolio of properties. Interest expense increased approximately $3.1 million to $17.4 million. This increase was due to the issuance, in January 1998, of $50 million of notes, which were used to fund the Trust's property acquisition program, and the assumption of $56.7 million of mortgage debt in connection with property acquisitions. Depreciation and amortization of properties increased approximately $1.9 million to $14.5 million because of the acquisition of properties. Provision for doubtful accounts, net of recoveries, increased $.8 million to $2.4 million. This was due to an increase in delinquencies and a higher level of revenue.
Administrative Expenses, as a percentage of revenue, decreased slightly to 1% compared to 1.1% in last year's comparable period.
Funds from operations ("FFO"), defined as net income plus depreciation and amortization of real estate, less gains from sales of assets and securities, increased $6.3 million to $55.3 million from $49.0 million in the prior year's comparable five-month period. FFO is presented because industry analysts and the Trust consider FFO to be an appropriate supplemental measure of performance of REITs. FFO is not a substitute for cash funds generated from operating activities or net income as determined in accordance with generally accepted accounting principles, as a measure of profitability or liquidity. FFO as defined by the Trust may not be comparable to the definition used by other REITs.
Fiscal Year Ended July 31, 1998 Compared to Fiscal Year Ended July 31,
In fiscal 1998, total revenues increased $43.4 million to $250.3 million. The increase was in rental income and related revenues and came from all categories of properties. Interest and dividend income decreased approximately $800,000 because of lower average investment balances.
Operating expenses increased $29.3 million to $156.9 million. Operating costs, real estate and other taxes, and depreciation and amortization increased primarily because of property acquisitions. Interest expense increased $8.6 million to $36.8 million primarily due to a higher level of outstanding unsecured notes and mortgage debt during fiscal 1998. The increase in the provision for doubtful accounts reflects a larger revenue base and a higher level of receivables. Administrative expenses as a percentage of revenue remained constant at 1.1% of revenue compared to fiscal 1997.
Net income applicable to Shares of Beneficial Interest increased $8.1 million to $84.7 million and earnings per Share of Beneficial Interest increased to $1.42 per share (on a diluted basis) from $1.30 per share (on a diluted basis). The increase is net of $5.9 million of distributions to holders of preferred shares of the Trust.
FFO, defined as net income plus depreciation and amortization of real estate, less gains from sales of assets and securities, increased $20.2 million to $122.2 million. FFO is presented because industry analysts and the Trust consider FFO to be an appropriate supplemental measure of performance of REITs. FFO is not a substitute for cash funds generated from operating activities or net income as determined in accordance with generally accepted accounting principles, as a measure of profitability or liquidity. FFO as defined by the Trust may not be comparable to the definition used by other REITs.
During the twelve months ended July 31, 1998, distributions declared and paid were $1.475 per Share of Beneficial Interest, a $.04 per share increase over fiscal 1997. The most recent distribution declaration for Shares of Beneficial Interest was $.3725 per share ($1.49 on an annualized basis).
Fiscal Year Ended July 31, 1997 Compared to Fiscal Year Ended July 31,
In fiscal 1997, total revenues increased $39.2 million to $206.8 million. The increase was in rental income and related revenues and came from properties in the portfolio which were acquired in fiscal 1997 or were owned for less than a full year in fiscal 1996. Interest and dividend income decreased slightly.
Operating expenses increased $32.7 million to $127.6 million. Operating costs, real estate and
other taxes, and depreciation and amortization increased primarily because of property acquisitions. Interest expense increased $10.7 million to $28.3 million due to a higher level of outstanding debt during fiscal 1997. The increase in the provision for doubtful accounts reflects a larger revenue base and a higher level of receivables. Administrative expenses as a percentage of revenue declined to 1.1% from 1.6% due to increased revenue from newly acquired properties; these costs do not increase in direct proportion to revenue due to economies of scale.
Income before (loss)/gain on sale of properties and securities increased $6.9 million to $77 million. During fiscal 1997, three former Nichols stores, in Annville and Hanover, Pennsylvania and Lumberton, North Carolina, were sold.
Net income applicable to Shares of Beneficial Interest increased $6.1 million to $77 million and earnings per Share of Beneficial Interest increased to $1.30 per share (on a diluted basis) from $1.25 per share. The increase is net of $461,000 of distributions to holders of preferred shares of the Trust.
FFO, defined as net income plus depreciation and amortization of real estate, less gains from sales of assets and securities, increased $11.9 million to $102 million. FFO is presented because industry analysts and the Trust consider FFO to be an appropriate supplemental measure of performance of REITs. FFO is not a substitute for cash funds generated from operating activities or net income as determined in accordance with generally accepted accounting principles, as a measure of profitability or liquidity. FFO as defined by the Trust may not be comparable to the definition used by others REITs.
During fiscal 1997, distributions declared and paid were $1.435 per Share of Beneficial Interest, a $.04 per share increase over fiscal 1996. The most recent distribution declaration for Shares of Beneficial Interest was $.365 per share, which is $1.46 per share on an annualized basis.
Fiscal Year Ended July 31, 1996 Compared to Fiscal Year Ended July 31,
In fiscal 1996, total revenues increased $37 million to $167.6 million. Rental income and related revenues increased $36.4 million to $162.8 million. The increase in rental revenue came primarily from properties in the portfolio which were acquired in fiscal 1996 or were owned for less than a full year in fiscal 1995. In addition, increased revenue from all property categories, apartments, factory outlets and shopping centers, owned prior to fiscal 1995 contributed to the rental revenue increase.
Interest and dividend income increased $.7 million due to higher average investment balances.
Operating expenses increased $29.3 million to $94.9 million. Operating costs, real estate and other taxes, and depreciation and amortization increased primarily because of property acquisitions. Interest expense increased $10.4 million to $17.6 million due to a higher level of outstanding debt during fiscal 1996. The increase in the provision for doubtful accounts reflects a much larger revenue base and a higher level of receivables. Administrative expenses as a percentage of revenue declined to 1.6% from 1.9% due to increased revenue from newly acquired properties; these costs do not increase in direct proportion to revenue due to economies of scale.
Income before gain/(loss) on the sale of properties and securities increased $7.6 million to $70.1 million. During fiscal 1996, a shopping center in Chinoe, Kentucky and two former Nichols stores in Harrisonburg, Virginia and New Bern, North Carolina were sold for a net gain of $.5 million. The $.1 million loss on the sale of securities was due to bonds being called which had been issued at a premium.
Net income applicable to Shares of Beneficial Interest increased $7.8 million to $70.5 million and earnings per Share of Beneficial Interest increased to $1.25 per share (on a diluted basis) from $1.18 per share.
FFO, defined as net income plus depreciation and amortization of real estate less net gains from the sale of assets, increased $12.6 million to $90.1 million. FFO is presented because industry analysts and the Trust consider FFO to be an appropriate supplemental measure of performance of REITs. FFO is not a substitute for cash funds generated from operating activities or net income as determined in accordance with generally accepted accounting principles, as a measure of profitability or liquidity. FFO as defined by the Trust may not be comparable to the definition used by others REITs.
During fiscal 1996, distributions declared and paid were $1.395 per Share of Beneficial Interest, a $.04 per share increase over the preceding year.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of December 31, 1998, the Trust had approximately $108.6 million of outstanding floating rate debt and had guaranteed approximately $200.5 million of outstanding floating rate debt of New Plan Excel. The Trust does not believe that the interest rate risk represented by its floating rate debt, together with the floating rate debt of New Plan Excel guaranteed by the Trust, is material as of that date in relation to the approximately $580.8 million of outstanding total debt of the Trust and the approximately $1.4 billion of total assets of the Trust as of that date.
The Trust was not a party to any hedging agreements with respect to its floating rate debt as of December 31, 1998. In the event of a significant increase in interest rates, the Trust would consider entering into hedging agreements with respect to all or a portion of its floating rate debt. Although hedging agreements would enable the Trust to convert floating rate liabilities into fixed rate liabilities, such agreements would expose the Trust to the risk that the counterparties to such hedge agreements may not perform, which could increase the Trust's exposure to rising interest rates. Generally, however, the counterparties to hedging agreements that the Trust would enter into would be major financial institutions. The Trust may borrow additional money with floating interest rates in the future. Increases in interest rates, or the loss of the benefits of any hedging agreements that the Trust may enter into in the future, would increase the Trust's interest expense, which would adversely affect cash flow and the ability of the Trust to service its debt. If the Trust enters into any hedging agreements in the future, decreases in interest rates thereafter would increase the Trust's interest expenses as compared to the underlying floating rate debt and could result in the Trust making payments to unwind such agreements.
As of December 31, 1998, the Trust had no other material exposure to market risk (including foreign currency exchange risk, commodity price risk or equity price risk).
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements required by this item appear with an Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules, starting on page of this report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST
As of December 31, 1998, the Board of Trustees consisted of nine trustees. In connection with the Merger on September 28, 1998, the Board of Trustees was expanded to consist of 15 trustees. See "Business -- Narrative Description of Business -- Developments from August 1998 to December 1998 -- The Merger." The trustees are divided into three classes which consist of five trustees whose terms expire at the 1999 annual meeting of shareholders (Messrs. Bernstein, Bottorf, Lindquist, Parsons and White), five trustees whose terms expire at the 2000 annual meeting of shareholders (Messrs. Sabin, Steuterman, Staller, Melvin Newman and Wetzler) and five trustees whose terms expire at the 2001 annual meeting of shareholders (Messrs. William Newman, Laubich, Muir, Gold and Wilmot). At each of the respective annual meetings, five trustees will be elected, each to hold office for a specified term and until his successor is elected and qualified.
In addition, information with respect to certain of the trustees includes service as a member of the board of directors of ERT Development Corporation ("EDV") and the board of directors of Excel Legacy Corporation ("Excel Legacy"). EDV is an affiliate of New Plan Excel. Excel Legacy was spun-off by Excel in March 1998 through the distribution, on a pro-rata basis, to the holders of Excel's common stock of all of the common stock of Excel Legacy held by Excel.
Biographical Information of the Trustees
William Newman, age 72, has been Chairman of the Board of Directors of New Plan Excel since September 1998 and Chairman of the Board of Trustees of the Trust since its organization in 1972. He served as Chief Executive Officer of the Trust from 1972 to September 1998 and as President of the Trust from 1972 to 1988. He served as President and Chief Executive Officer of the Trust's predecessor corporation, New Plan Realty Corporation, from the corporation's organization in 1961 through its reorganization into the Trust in 1972. He is a past Chairman of the National Association of Real Estate Investment Trusts and has been actively involved in real estate for over 50 years.
Arnold Laubich, age 69, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1988. He has been Chief Executive Officer of New Plan Excel and the Trust since September 1998. He was President and Chief Operating Officer of the Trust from 1988 to September 1998. From 1972 to 1988, Mr. Laubich was President of Dover Management Corporation, which, during that period, managed the Trust's properties.
Gary B. Sabin, age 44, has been a director of New Plan Excel since 1989 and a trustee of the Trust since September 1998. He has served as President of New Plan Excel since 1989 and of the Trust since September 1998. He served as Chairman of the Board of Directors and Chief Executive Officer of New Plan Excel from 1989 to September 1998. Mr. Sabin has served as Chairman of the Board, President and Chief Executive Officer of Excel Legacy since April 1998. Since founding
Excel's predecessor corporation in 1977, Mr. Sabin also has served as Chief Executive Officer and a director of various affiliated companies, including EDV.
James M. Steuterman, age 42, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1990. He has served as Co-Chief Operating Officer of New Plan Excel and the Trust since September 1998. He has also served as Executive Vice President of New Plan Excel since September 1998 and of the Trust since 1994. Mr. Steuterman has been associated with the Trust since 1984 as a property acquisitions specialist, becoming Director of Acquisitions in 1986, a Vice President in 1988 and a Senior Vice President in 1989.
Richard B. Muir, age 43, has been as a director of New Plan Excel since 1989 and a trustee of the Trust since September 1998. He has served as Co-Chief Operating Officer of New Plan Excel and the Trust since September 1998. He has also served as Executive Vice President of New Plan Excel since 1989 and of the Trust since September 1998. He served as Secretary of New Plan Excel from 1989 to September 1998. Mr. Muir has served as director, Executive Vice President and Secretary of Excel Legacy since April 1998. Mr. Muir has also served as an officer and director since 1978 of various affiliates of New Plan Excel, including EDV, primarily in executive capacities, including asset acquisition, financing and management.
Dean Bernstein, age 41, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1992. He has been Senior Vice President -- Finance and Multifamily of New Plan Excel and the Trust since September 1998. He served as Vice President -- Administration and Finance of the Trust from 1994 to September 1998 and as Assistant Vice President of the Trust from 1991 to 1994. Mr. Bernstein is the son-in-law of William Newman.
Raymond H. Bottorf, age 57, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1991. Mr. Bottorf has been the Managing Director of the New York office of the Global Property Team of ABN-AMRO, Inc., an investment bank, since 1997. From 1990 to 1997, he was the President and sole director of U.S. Alpha, Inc., New York, New York, a wholly owned subsidiary of Stichting Pensioenfonds (formerly Algemeen Burgerlijk Pensioenfonds), a Dutch pension fund.
Norman Gold, age 68, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since its organization in 1972. He has been active in the practice of law for 44 years and a partner of the law firm of Altheimer & Gray for over 35 years. He is also a trustee of Banyan Strategic Realty Trust, primarily an industrial and office REIT, which is not in any way related to or competitive with New Plan Excel.
Boyd A. Lindquist, age 62, has been a director of New Plan Excel since 1992 and a trustee of the Trust since September 1998. Mr. Lindquist was the President, Chief Executive Officer and a director of Republic Bank, Torrance, California from July 1991 to October 1998. He currently is President and Chief Executive Officer of Republic Bank, Inc. (in organization). Mr. Lindquist has over 30 years' experience in managing financial institutions.
Melvin Newman, age 57, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1983. From 1972 to 1982, he was Vice President and General Counsel of the Trust. Mr. Newman is a private investor. Mr. Newman is the brother of William Newman.
Robert E. Parsons, Jr., age 43, has been a director of New Plan Excel since 1989 and a trustee of the Trust since September 1998. He has served as a director of Excel Legacy since April 1998. Mr. Parsons is presently Executive Vice President and Chief Financial Officer of Host Marriott Corporation, a company he joined in 1981. He also serves as a director and an officer of several subsidiaries of Host Marriott Corporation, and as a director of Merrill Financial Corporation, a privately held real estate company. None of the companies for which Mr. Parsons serves as a director or executive officer is in any way related to or competitive with New Plan Excel.
Bruce A. Staller, age 62, has been a director of New Plan Excel since 1989 and a trustee of the Trust since September 1998. Mr. Staller served as a director of Excel's predecessor corporation from 1987 to 1989. Prior to establishing Bruce Atwater Staller, Registered Investment Advisor in 1995, Mr. Staller served from 1988 to 1995 as President and director of First Wilshire Securities Management, Inc., a privately held investment advisor. Mr. Staller is also a founder and director of the Monrovia Schools Foundation, Inc., a private tax-exempt educational foundation which provides financial support to the Monrovia Unified School District.
John Wetzler, age 53, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1994. Mr. Wetzler has been President of Nautica Retail U.S.A., Inc., a subsidiary of Nautica Enterprises, Inc., the international men's apparel maker and marketer, since July 1994. From December 1988 to June 1994, he was the Executive Vice President of Nautica Retail U.S.A., Inc.
Gregory White, age 42, has been a director of New Plan Excel since September 1998 and a trustee of the Trust since 1994. Mr. White has served as Senior Vice President of Conning Asset Management Company, an investment advisory firm, since August 1998. From 1992 to August 1998, Mr. White was a founding partner and Managing Director of Schroder Mortgage Associates in New York, New York. From 1988 to 1992, he was Managing Director of the Salomon Brothers Inc. real estate finance department. Mr. White also serves as a director of Acadia Realty Trust, primarily a neighborhood and community shopping center REIT, which is competitive with New Plan Excel and the Trust in certain markets.
John H. Wilmot, age 56, has served as a director of New Plan Excel since 1989 and a trustee of the Trust since September 1998. He has served as a director of Excel Legacy since April 1998 and a director of EDV since April 1995. Mr. Wilmot, individually and through his wholly owned corporations, develops and manages real property, primarily in the Phoenix/Scottsdale area, and has been active in such business since prior to 1989.
Meetings of the Board of Trustees
From August 1, 1998 to December 31, 1998, the Board of Trustees held two meetings (including telephonic meetings) and took action by unanimous written consent five times. None of the trustees who served as a trustee attended during his period of service fewer than 75% of the aggregate of the total number of meetings of the Board of Trustees and of any meetings of committees on which he served during such period of service.
Committees of the Board of Trustees
As of August 1, 1998, the Board of Trustees had an Audit Committee. As of that date, the Audit Committee consisted of four trustees, Messrs. Gold, Wetzler, White and Bottorf, none of whom
were employees of the Trust. The Audit Committee recommended to the Board of Trustees the selection of the independent auditors to be employed by the Trust and reviewed generally the Trust's internal and external audits and the results thereof. In connection with the Merger, since September 28, 1998, the Trust has not had an Audit Committee. The Audit Committee did not meet from August 1, 1998 to September 28, 1998.
The Board of Trustees does not have a nominating committee or a compensation committee, nor does it have a committee performing the functions of a nominating committee or a compensation committee; the trustees perform the functions of those committees. However, from August 1, 1998 to September 28, 1998, the Board of Trustees had a Special Compensation Committee, which consisted of four of the Trust's non-employee trustees (Messrs. Bottorf, Gold, Wetzler and White). The Special Compensation Committee reviewed the compensation arrangements of Messrs. William Newman, Laubich, Steuterman and Bernstein, the trustees who also were, during that period, executive officers of the Trust. In connection with the Merger, since September 28, 1998, the Trust has not had a Special Compensation Committee.
The Board of Trustees has four Stock Option Committees. As of December 31, 1998, the Trust had three Stock Option Committees to administer the Trust's 1997 Stock Option Plan: (i) a committee consisting of Messrs. Bottorf, Gold, Wetzler and White, which administers grants under the plan with respect to the trustees of the Trust who are executive officers of the Trust; (ii) a committee consisting of the entire Board of Trustees, which administers grants under the plan to certain designated executive officers of the Trust; and (iii) a committee consisting of Messrs. William Newman and Laubich, which administers grants under the plan to all other individuals who are employees of the Trust. The Trust's 1991 Stock Option Plan, the Trust's Amended and Restated 1985 Incentive Stock Option Plan and the Trust's Non-Qualified Stock Option Plan are administered by a stock option committee consisting of Messrs. William Newman, Gold and Laubich. The Trust's March 1991 Stock Option Plan is administered by a committee consisting of the entire Board of Trustees. None of these committees met between August 1, 1998 and December 31, 1998.
In connection with the Merger, as of September 28, 1998, all outstanding options under the Trust's five stock option plans, whether or not then exercisable, were assumed by New Plan Excel and now represent an option to purchase the same number of shares of New Plan Excel Common Stock, at an exercise price per share equal to the per share exercise price of the Trust's Shares of Beneficial Interest subject to such options immediately prior to the Merger. Each such assumed option is exercisable upon the same terms and conditions as were applicable to the related options under the stock option plans of the Trust. Since the Merger, no stock options have been granted under any of the Trust's stock option plans. In the future, it is expected that no stock options will be granted under any of the Trust's stock option plans.
Trustees' Compensation
From August 1, 1998 to September 28, 1998, the trustees of the Trust who were not employees of the Trust each received $12,500 in annual trustee fees and $500 per meeting. In addition, the Trust reimbursed the trustees for travel expenses incurred in connection with their activities on behalf of the Trust. In connection with the Merger, since September 28, 1998, the trustees of the Trust no longer receive any trustee or meeting fees, although they continue to receive expense reimbursements.
Executive Officers of the Trust
The executive officers of the Trust and their principal functions are as follows:
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION TABLES
The following tables contain certain compensation information for the two persons who served as Chief Executive Officer of the Trust during 1998 and the four other most highly compensated executive officers of the Trust (the "Named Executive Officers"):
(a) SUMMARY COMPENSATION TABLE(1)
(1) Includes compensation paid by New Plan Excel and/or the Trust during the applicable period.
(2) Includes the 401(k) plan contribution for executive officers and the amount by which premiums exceeded the increase in cash surrender value for split dollar life insurance for the Chairman of the Board. The annual premiums paid for such insurance were $150,000. Excludes certain other personal benefits, the total value of which was less than the lesser of $50,000 or ten percent of the total salary and bonus paid or accrued by New Plan Excel and/or the Trust for services rendered by each executive officer during the fiscal year indicated.
(3) William Newman served as Chief Executive Officer of the Trust from January 1, 1998 through the Merger. In connection with the Merger, Arnold Laubich became Chief Executive Officer of the Trust.
(4) Prior to the Merger, the Trust had a July 31 fiscal year end. Therefore, the compensation shown with respect to 1997 and 1996 for executive officers of the Trust who were executive officers of the Trust prior to the Merger (i.e., Messrs. Newman, Laubich, Steuterman and Siegel) is for the twelve-month periods ended July 31, 1997 and July 31, 1996, respectively. In connection with the Merger, the Trust changed to a December 31 fiscal year end. Therefore, compensation shown for executive officers with respect to 1998 is for the twelve-month period ended December 31, 1998. As a result, information is not shown for such executive officers with respect to the five-month period ended December 31, 1997.
For the twelve-month period ended July 31, 1998 (which includes the five-month period ended December 31, 1997), (i) Mr. William Newman received $517,115 in salary, $125,000 in bonus, 112,500 stock options and $4,800 of other compensation, (ii) Mr. Laubich received $517,115 in salary, $250,000 in bonus, 112,500 stock options and $4,800 of other compensation, (iii) Mr. Steuterman received $319,268 in salary, $60,000 in bonus, 150,000 stock options and $4,800 of other compensation, and (iv) Mr. Siegel received $170,390 in salary, $22,500 in bonus, 112,500 stock options and $4,800 of other compensation.
(5) Under the terms of certain agreements between New Plan Excel and Excel Legacy, Excel Legacy is obligated to pay to New Plan Excel 23% of the salary and bonus of certain executive officers of New Plan Excel, including Messrs. Sabin and Muir, as compensation for their services to Excel Legacy.
(b) OPTION GRANTS IN 1998 (1)
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(1) Includes options granted by New Plan Excel and/or the Trust in 1998.
(2) Reflects the percentage of total options granted in 1998 to employees of both New Plan Excel and the Trust.
(3) Adjusted to reflect a 20% stock dividend paid by New Plan Excel to its stockholders in connection with, and immediately prior to, the Merger.
(4) The 5% and 10% rates of appreciation were set by the SEC and are not intended to forecast future appreciation, if any, of the New Plan Excel Common Stock.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In connection with the Merger, on September 28, 1998, each Share of Beneficial Interest of the Trust was converted into one share of New Plan Excel Common Stock. As a result of the Merger, New Plan Excel is the record holder of the only issued and outstanding Share of Beneficial Interest of the Trust.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Trustees and Executive Officers
Norman Gold is a partner in the law firm of Altheimer & Gray. His firm has rendered various legal services to the Trust during 1998 and is continuing to render legal services to the Trust.
John Wetzler is the president of Nautica Retail U.S.A., Inc., affiliates of which are tenants at some of the Trust's properties.
The following loans were made over a number of years by the Trust, primarily to assist certain executive officers of the Trust in their purchase of Shares of Beneficial Interest of the Trust, all of which were converted in the Merger into shares of New Plan Excel Common Stock. Such loans are unsecured except as specifically noted. As of December 31, 1998, William Kirshenbaum was indebted to the Trust in the aggregate amount of $378,398 (the maximum loan amount during 1998 was $436,892). The amount owed is represented by (i) four demand notes in the aggregate amount of $191,398, each bearing interest at 5% per annum, (ii) two demand notes in the aggregate amount of $17,000, each bearing interest at 8.375% per annum, and (iii) a $170,000 note bearing interest at 6% per annum and due January 31, 2000 (which is collateralized by a mortgage). Mr. Kirshenbaum is Vice President and Treasurer of the Trust. During 1998, James M. Steuterman was indebted to the Trust in the aggregate amount of $575,505 (which represented the maximum loan amount during 1998). The amount owed is represented by (i) three demand notes in the aggregate amount of $289,170, each bearing interest at 5% per annum, and (ii) two demand notes in the aggregate amount of $286,335, each bearing interest at 6% per annum. Mr. Steuterman is Executive Vice President and Co-Chief Operating Officer of the Trust and a trustee of the Trust. During 1998, Dean Bernstein was indebted to the Trust in the aggregate amount of $95,062 (which represented the maximum loan amount during 1998), represented by a demand note bearing interest at a rate of 5% per annum. Mr. Bernstein is Senior Vice President--Finance and Multifamily of the Trust and a trustee of the Trust. During 1998, Steven F. Siegel was indebted to the Trust in the aggregate amount of $111,881 (which represented the maximum loan amount during 1998). The amount owed is represented by two demand notes, each bearing interest at 5% per annum. Mr. Siegel is Senior Vice President and General Counsel of the Trust. During 1998, James DeCicco was indebted to the Trust in the aggregate amount of $144,818 (the maximum loan amount during 1998 was $145,174). The amount owed is represented by (i) two demand notes in the aggregate amount of $9,700, each bearing interest at 6% per annum, and (ii) a $135,474 note bearing interest at 8.5% per annum and due October 1, 2024 (which is collateralized by a mortgage). Mr. DeCicco is Senior Vice President--Leasing of the Trust.
Pursuant to an agreement dated June 3, 1982, William Newman, as nominee for the Trust, purchased a cooperative apartment at 114 East 72nd Street to be used to further business purposes of the Trust for a price of $290,000. The Trust has paid assessment, taxes and all other payments with respect to the use and upkeep of the apartment, which has primarily been used by Mr. Newman. Such payments totaled approximately $20,000 in 1998. On September 24, 1998, Mr. Newman exercised his option pursuant to the June 3, 1982 agreement to purchase the apartment for the original $290,000
purchase price. As a result, the Trust no longer makes any payments with respect to the use and upkeep of the apartment.
The Trust leases an office building from Page Associates on a net lease basis for a current rent of approximately $186,000 per year (rental payments of approximately $184,000 were made to Page Associates in 1998). The Trust has leased this building from Page Associates since 1974. Page Associates is a partnership owned in equal proportions by William Newman, Melvin Newman, the estate of Joseph Newman and Arnold Laubich. The Trust subleases the office building which it leases from Page Associates and has received rent in excess of all payments made to Page Associates and other real estate expenses in each of the years it has rented the building from Page Associates.
(b) Compensation Committee Interlocks and Insider Participation
The Board of Trustees does not have a Compensation Committee. Consequently, the Board of Trustees performs the functions of such committee; however, from August 1, 1998 to September 28, 1998, the Special Compensation Committee of the Board of Trustees performed these functions with respect to Messrs. William Newman, Laubich, Steuterman and Bernstein. The amount of compensation paid by the Trust to its officers and the respective terms of employment of such officers from August 1, 1998 to September 28, 1998 were, with the exception of the four above-mentioned officers, determined primarily by Messrs. William Newman and Laubich, each of whom served during that period both as a trustee and as an executive officer of the Trust. In addition, the number of options granted to the trustees of the Trust under the terms of the Trust's option plans from August 1, 1998 to September 28, 1998 was determined by the administrators of the option plans during that period, Messrs. William Newman, Laubich and Gold.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Consolidated Financial Statements. The following documents are filed as a part of this report:
The response to this portion of Item 14 is submitted as a separate section of this report.
(b) Reports on Form 8-K filed during the three months ended December 31, 1998.
1. Form 8-K dated October 13, 1998 containing items 2, 7 and 8.
(c) Exhibits. The following documents are filed as exhibits to this report:
*3.1 Amended and Restated Declaration of Trust of New Plan Realty Trust dated as of January 15, 1996 filed as Exhibit 99.3 to the Registrant's Form 8-K dated May 24, 1996.
*3.2 Certificate of Amendment of Amended and Restated Declaration of Trust of New Plan Realty Trust dated September 25, 1998 filed as Exhibit 3.2 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*4.1 Specimen Certificate for Shares of Beneficial Interest filed as Exhibit 4.1 to the Registrant's Form 10-K for the fiscal year ended July 31, 1997.
*4.2 Certificate of Designation Supplementing the Amended and Restated Declaration of Trust of New Plan Realty Trust filed as Exhibit 4.1 to the Registrant's Form 8-K dated July 2, 1997.
*10.1 Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of November 21, 1997, filed as Exhibit 10.26 to the Form 10-K of New Plan Excel Realty Trust, Inc. for the fiscal year ended December 31, 1998.
*10.2 Assignment and Assumption Agreement dated December 1, 1997 by and among New Plan Realty Trust, Bank Hapoalim B.M. and The Bank of New York filed as Exhibit 10.2 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.3 Waiver and Amendment to Credit Agreement dated as of September 25, 1998 by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, filed as Exhibit 10.3 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.4 Assumption and Substitution Agreement dated as of September 28, 1998 by and among New Plan Excel Realty Trust, Inc., New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, filed as Exhibit 10.4 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
10.5 Guaranty, dated September 28, 1998, by New Plan Realty Trust.
*10.6 Unconditional Guaranty of Payment and Performance dated as of September 28, 1998 by and between New Plan Realty Trust and BankBoston N.A. filed as Exhibit 10.5 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.7 Senior Securities Indenture between New Plan Realty Trust and The First National Bank of Boston, as Trustee, dated as of March 29, 1995, filed as Exhibit 4.2 to Registration Statement No. 33-60045.
*10.8 7.75% Senior Note Due April 6, 2005 filed as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended July 31, 1995.
*10.9 6.8% Senior Note Due May 15, 2002 filed as Exhibit 10.8 to the Registrant's Form 10-K for the fiscal year ended July 31, 1995.
*10.10 Agreement and Plan of Merger, dated May 14, 1998, as amended as of August 7, 1998, among Excel Realty Trust, Inc., ERT Merger Sub, Inc. and New Plan Realty Trust filed as Exhibit 2.1 to the Registrant's Form 8-K dated October 13, 1998.
*10.11 Senior Securities Indenture among New Plan Excel Realty Trust, Inc., New Plan Realty Trust, as guarantor, and State Street Bank and Trust Company, as Trustee, dated as of February 3, 1999 filed as Exhibit 4.1 to the Current Report on Form 8-K of New Plan Excel Realty Trust, Inc. dated February 3, 1999.
*10.12 New Plan Realty Trust 1997 Stock Option Plan filed as Exhibit 4.1 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.13 New Plan Realty Trust 1991 Stock Option Plan, as amended, filed as Exhibit 4.2 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.14 Amended and Restated New Plan Realty Trust 1985 Incentive Stock Option Plan filed as Exhibit 4.3 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.15 New Plan Realty Trust March 1991 Stock Option Plan and Non-Qualified Stock Option Plan filed as Exhibit 4.4 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
12 Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers LLP.
27(1) Financial Data Schedule.
99.1 "Risk Factors" contained in New Plan Excel Realty Trust, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
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*Incorporated herein by reference as above indicated.
(1) Filed as exhibit to electronic filing only.
(d) Financial Statement Schedules. The following documents are filed as a part of this report:
The response to this portion of Item 14 is submitted as a separate section of this report.
ANNUAL REPORT ON FORM 10-K
ITEM 8 AND ITEM 14(a)(1), (a)(2) AND (d)
LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES
NEW YORK, NEW YORK NEW PLAN REALTY TRUST AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
All other schedules for which provision is made in the applicable regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders of New Plan Realty Trust:
We have audited the consolidated financial statements and financial statement schedules of New Plan Realty Trust and Subsidiaries listed in Item 14(a) of this Form 10-K. These financial statements and financial statement schedules are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of New Plan Realty Trust and Subsidiaries as of December 31, 1998 and July 31, 1998 and 1997, and the consolidated results of their operations and their cash flows for the five months ended December 31, 1998 and for each of the three years in the period ended July 31, 1998, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
PricewaterhouseCoopers LLP
New York, New York February 5, 1999
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998, JULY 31, 1998 AND JULY 31, 1997 (In Thousands)
See Notes to Consolidated Financial Statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998, JULY 31, 1998 AND JULY 31, 1997 (In Thousands)
See Notes to Consolidated Financial Statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE FIVE MONTHS ENDED DECEMBER 31, 1998 AND YEARS ENDED JULY 31, 1998, 1997 AND 1996 (In Thousands Except For Per Share Amounts)
See Notes to Consolidated Financial Statements.
NEW PLAN REALTY TRUST CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Five Months Ended December 31, 1998 and the Years Ended July 31, 1998, 1997 and 1996 (In Thousands)
See Notes to Consolidated Financial Statements
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FIVE MONTHS ENDED DECEMBER 31, 1998 AND YEARS ENDED JULY 31, 1998, 1997 AND 1996 (In Thousands)
See Notes to Consolidated Financial Statements
(Continued on next page)
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FIVE MONTHS ENDED DECEMBER 31, 1998 AND YEARS ENDED JULY 31, 1998, 1997 AND 1996 (CONTINUED FROM PREVIOUS PAGE) (In Thousands)
See Notes to Consolidated Financial Statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Income Taxes: New Plan Realty Trust was organized on July 31, 1972 as a business trust under the laws of the Commonwealth of Massachusetts. Prior to the Merger, New Plan Realty Trust and subsidiaries (the "Trust") met the qualification requirements of a real estate investment trust (a "REIT") under the applicable provisions of the Internal Revenue Code of 1986 (the "Code"). Accordingly, during that period, the Trust did not pay Federal income taxes on REIT taxable income (including net capital gains) that it distributed currently to shareholders. During that period, the Trust may have been subject to tax by certain states that did not recognize REIT tax treatment. Provision for such taxes was included in real estate and other taxes.
As a result of the consummation of the Merger, since September 28, 1998, the Trust has been a wholly owed subsidiary of New Plan Excel, which for 1998 met the qualification requirements of a REIT under the Code. As a result, from September 28, 1998 to December 31, 1998, the Trust was a disregarded entity for federal income tax purposes. The Trust may be subject to tax by certain states that do not recognize REIT tax treatment. Provision for such taxes has been included in real estate and other taxes.
Basis of Consolidation: The consolidated financial statements include the accounts of New Plan Realty Trust and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform to the current year presentation.
Real Estate: Real estate is carried at cost less accumulated depreciation and amortization. For financial reporting purposes, depreciation is calculated on the straight-line method based on the estimated useful lives of the assets. Buildings and building improvements are depreciated over 40 years and other assets over useful lives ranging from 5 to 20 years. Amortization of leasehold improvements is calculated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the asset. If there is an event or a change in circumstances that indicates that the basis of the Trust's property may not be recoverable the Trust's policy is to assess any impairment in value by making a comparison of the current and projected operating cash flows (excluding interest and income taxes) of the property over its remaining useful life, on an undiscounted basis, to the carrying amount of the property. Such carrying amounts would be adjusted, if necessary, to reflect an impairment in the value of the property.
The Trust records sales of properties when, among other criteria, the parties are bound by the terms of a contract, all consideration has been exchanged and all conditions precedent to closing have been performed. These conditions are usually met at the time of closing. The cost and related accumulated depreciation of assets sold are removed from the respective accounts and any gain or loss is recognized in income.
New Accounting Standards: During 1998, the Financial Accounting Standards Board issued (a) No. 130 "Reporting Comprehensive Income" ("SFAS 130"), which is effective for fiscal years beginning after December 15, 1997, (b) No. 131 "Disclosures About Segments of an Enterprise and Related Information" ("SFAS 131"), which is effective for fiscal years beginning after December 15, 1997, (c) No. 132 "Employers Disclosure About Pensions and
Other Postretirement Benefits" ("SFAS 132"), which is effective for fiscal years beginning after December 15, 1997, and (d) No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which is effective for fiscal years beginning after June 15, 1999. Management adopted SFAS 130, 131, 132 and 133 for the five months ended December 31, 1998.
Cash Equivalents: Cash equivalents consist of short-term, highly liquid debt instruments with original maturities of three months or less. Items classified as cash equivalents include insured bank certificates of deposit and commercial paper. At times cash balances at a limited number of banks may exceed insurable amounts. The Trust believes it mitigates its risk by investing in or through major financial institutions. Recoverability of investments is dependent upon the performance of the issuer.
Revenue Recognition: Lease agreements between the Trust and retail tenants generally provide for additional rentals based on such factors as percentage of tenants' sales in excess of specified volumes, increases in real estate taxes, increases in Consumer Price Indices and common area maintenance charges. These additional rentals are generally included in income when reported to the Trust or when billed to tenants.
The Trust recognizes rental income from leases with scheduled rent increases on a straight-line basis over the lease term. Deferred rent receivable, included in trade and notes receivable, represents the difference between the straight-line rent and amounts currently due.
Concentration of Credit Risk: No tenant or single property accounts for more than 5% of the Trust's revenues.
Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The most significant assumptions and estimates relate to depreciable lives, valuation of real estate and the recoverability of mortgage notes and trade accounts receivable.
Internal Software Costs: Any costs associated with modifying computer software for the year 2000 are expensed as incurred, as well as any other normal software costs.
NOTE B - MARKETABLE SECURITIES
The Trust has classified all investments in equity securities as available-for-sale. All investments are recorded at current market value with an offsetting adjustment to shareholders' equity (in thousands).
The net decrease in unrealized holding gains that has been included as a separate component of shareholders' equity is $87,000 for the five months ended December 31, 1998. The weighted average cost method is used to determine realized gain or loss on securities sold. The market value of marketable securities is based on quoted market prices as of December 31, 1998, July 31, 1998 and July 31, 1997.
NOTE C - MORTGAGES & NOTES RECEIVABLE
Mortgages and Notes Receivable are collateralized principally by real property and consist of the following (in thousands):
NOTE D - MORTGAGES AND CREDIT FACILITY
Mortgages are collateralized by real property with aggregate carrying amounts of approximately $245.2 million before accumulated depreciation and amortization. As of December 31, 1998, mortgages payable bear interest at rates ranging from 3.5% to 10.75%, having a weighted average rate of 7.7% per annum and mature from 1999 to 2010.
Scheduled principal payments during each of the next five fiscal years and thereafter are approximately as follows (in thousands):
New Plan Excel Realty Trust, Inc. has two revolving credit facilities which provide for a total of up to $300 million of debt. As of December 31, 1998, New Plan Excel Realty Trust, Inc. had a total of approximately $201 million outstanding under its revolving credit facilities, of which $50 million is reflected in the Trust's balance sheet as due to New Plan Excel Realty Trust, Inc.
Interest costs capitalized for the five months ended December 31, 1998 and for the years ended July 31, 1998, 1997 and 1996 were approximately $159, $12, $868 and $203, respectively.
NOTE E - NOTES PAYABLE
Notes Payable consists of the following (in thousands):
The Notes are unsecured and subordinate to mortgages payable and rank equally with debt under the revolving credit facility. Where applicable, the discount is being amortized over the life of the respective Notes using the effective interest method. Interest is payable semi-annually or quarterly and the principal is due at maturity. Among other restrictive covenants, there is a restrictive covenant that limits the amount of total indebtedness to 65% of total assets. For the five months ended December 31, 1998, $170 of amortized discount and issuing costs were included in interest expense.
NOTE F - OTHER LIABILITIES (in thousands)
NOTE G - LEASE AGREEMENTS
The Trust has entered into leases, as lessee, in connection with ground leases for shopping centers which it operates, an office building which it sublets and administrative office space for the Trust. These leases are accounted for as operating leases. The minimum annual rental commitments during the next five fiscal years and thereafter are approximately as follows (in thousands):
For the year ended July 31, 1998, the lease for office space included contingent rentals for real estate tax escalations and operating expense in the amount of $10. There were no contingent rentals for the five months ended December 31, 1998 and for the years ended July 31, 1998 and 1997. In addition, ground leases provide for fixed rent escalations and renewal options.
NOTE H - RENTAL INCOME UNDER OPERATING LEASES
Minimum future rentals to be received during the next five fiscal years and thereafter
with initial or remaining noncancellable lease terms in excess of one year are approximately as follows (in thousands):
The above table assumes that all leases which expire are not renewed, therefore neither renewal rentals nor rentals from replacement tenants are included.
Minimum future rentals do not include contingent rentals, which may be received under certain leases on the basis of percentage of reported tenants' sales volume, increases in Consumer Price Indices, common area maintenance charges and real estate tax reimbursements. Contingent rentals included in income for the five months ended December 31, 1998 and for the years ended July 31, 1998, 1997 and 1996 amounted to approximately $15,044, $34,421, $28,933 and $26,173, respectively.
NOTE I - SUPPLEMENTAL CASH FLOW INFORMATION
The Trust entered into the following non-cash investing and financing activities (in thousands):
State and local income taxes paid for the five months ended December 31, 1998 and year ended July 31, 1998, 1997 and 1996 were $100, $156, $872 and $0, respectively. Interest paid for the five months ended December 31, 1998 and for the years ended July 31, 1998, 1997 and 1996 was $20,344, $34,876, $24,642, and $17,085, respectively.
NOTE J - RETIREMENT SAVINGS PLAN
The Trust has a Retirement Savings Plan (the "Savings Plan"). Participants in the Savings Plan may elect to contribute a portion of their earnings to the Savings Plan and the
Trust may, at the discretion of the Board of Trustees, make a voluntary contribution to the Savings Plan. For the five months ended December 31, 1998 and the years ended July 31, 1998, 1997 and 1996, the Trust's expense for the Savings Plan was $159, $317, $250 and $228, respectively.
NOTE K - FINANCIAL INSTRUMENTS
The estimated fair values of the Trust's financial instruments are as follows (in thousands):
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable:
Cash and cash equivalents, other receivables, amounts due from New Plan Excel Realty Trust, Inc. and payables: The carrying amount approximates fair value because of the short maturity of those instruments.
Marketable securities: Fair value is based on quoted market prices.
Mortgages and Notes receivable: The fair value is estimated based on discounting the future cash flows at a year-end risk adjusted lending rate that the Trust would utilize for loans of similar risk and duration.
Mortgages payable and Notes payable: The fair value is estimated based on discounting future cash flows at a year-end adjusted borrowing rate which reflects the risks associated with mortgages and notes of similar risk and duration.
NOTE L - SEGMENT INFORMATION
The Trust's two primary business segments are retail and residential rental properties. At December 31, 1998, the retail segment consists of 145 shopping centers and the residential segment consists of 54 garden apartment communities. Selected financial information for each segment is as follows:
NOTE M - TRANSITION PERIOD COMPARATIVE DATA
The following table presents certain financial information for the five months ended December 31, 1998 and 1997 (in thousands):
NOTE N - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (in thousands, except per share data)
NEW PLAN REALTY TRUST AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (Amounts in Thousands) SCHEDULE II
(1) Trade receivables charged to the reserve.
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1998
NEW PLAN REALTY TRUST REAL ESTATE AND ACCUMULATED DEPRECIATION (Amounts in Thousands) SCHEDULE III
(continued)
Reconciliation of Real Estate and Accumulated Depreciation
NEW PLAN REALTY TRUST AND SUBSIDIARIES MORTGAGE LOANS AND NOTES RECEIVABLE ON REAL ESTATE (Amounts in Thousands) SCHEDULE IV
December 31, 1998
Note: Column H is not applicable
NEW PLAN REALTY TRUST AND SUBSIDIARIES MORTGAGE LOANS AND NOTES RECEIVABLE ON REAL ESTATE
(Amounts in Thousands) SCHEDULE IV
(continued)
Year Ended
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NEW PLAN REALTY TRUST (Registrant)
By: /s/ Arnold Laubich ----------------------- Arnold Laubich Chief Executive Officer
Dated: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ William Newman Chairman of the Board March 29, 1999 - ------------------------ William Newman
/s/ Arnold Laubich Chief Executive Officer March 29, 1999 - ------------------------ and Trustee Arnold Laubich
/s/ Gary B. Sabin President and Trustee March 29, 1999 - ------------------------ Gary B. Sabin
/s/ James M. Steuterman Executive Vice President, March 29, 1999 - ------------------------ Co-Chief Operating Officer James M. Steuterman and Trustee
/s/ Richard B. Muir Executive Vice President, March 29, 1999 - ------------------------ Co-Chief Operating Officer Richard B. Muir and Trustee
/s/ Jeffrey D. Egertson Chief Financial Officer, Chief March 29, 1999 - ------------------------ Accounting Officer and Jeffrey D. Egertson Senior Vice President
/s/ Dean Bernstein Senior Vice President--Finance March 29, 1999 - ------------------------ and Multifamily and Trustee Dean Bernstein
/s/ Raymond A. Bottorf Trustee March 29, 1999 - ------------------------ Raymond A. Bottorf
/s/ Norman Gold Trustee March 29, 1999 - ------------------------ Norman Gold /s/ BOYD A. LINDQUIST - ------------------------ Trustee March 29, 1999 Boyd A. Lindquist
/s/ MELVIN NEWMAN - ------------------------ Trustee March 29, 1999 Melvin Newman
/s/ ROBERT E. PARSONS, JR. - ------------------------ Trustee March 29, 1999 Robert E. Parsons, Jr.
/s/ BRUCE A. STALLER - ------------------------ Trustee March 29, 1999 Bruce A. Staller
/s/ JOHN WETZLER - ----------------------- Trustee March 29, 1999 John Wetzler
/s/ GREGORY WHITE - ----------------------- Trustee March 29, 1999 Gregory White
/s/ JOHN H. WILMOT - ----------------------- Trustee March 29, 1999 John H. Wilmot
EXHIBIT INDEX
Exhibit No. Description
*3.1 Amended and Restated Declaration of Trust of New Plan Realty Trust dated as of January 15, 1996 filed as Exhibit 99.3 to the Registrant's Form 8-K dated May 24, 1996.
*3.2 Certificate of Amendment of Amended and Restated Declaration of Trust of New Plan Realty Trust dated September 25, 1998 filed as Exhibit 3.2 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*4.1 Specimen Certificate for Shares of Beneficial Interest filed as Exhibit 4.1 to the Registrant's Form 10-K for the fiscal year ended July 31, 1997.
*4.2 Certificate of Designation Supplementing the Amended and Restated Declaration of Trust of New Plan Realty Trust filed as Exhibit 4.1 to the Registrant's Form 8-K dated July 2, 1997.
*10.1 Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of November 21, 1997, filed as Exhibit 10.26 to the Form 10-K of New Plan Excel Realty Trust, Inc. for the fiscal year ended December 31, 1998.
*10.2 Assignment and Assumption Agreement dated December 1, 1997 by and among New Plan Realty Trust, Bank Hapoalim B.M. and The Bank of New York filed as Exhibit 10.2 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.3 Waiver and Amendment to Credit Agreement dated as of September 25, 1998 by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, filed as Exhibit 10.3 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.4 Assumption and Substitution Agreement dated as of September 28, 1998 by and among New Plan Excel Realty Trust, Inc., New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, filed as Exhibit 10.4 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
10.5 Guaranty, dated September 28, 1998, by New Plan Realty Trust.
*10.6 Unconditional Guaranty of Payment and Performance dated as of September 28, 1998 by and between New Plan Realty Trust and BankBoston N.A. filed as Exhibit 10.5 to the Registrant's Form 10-K for the fiscal year ended July 31, 1998.
*10.7 Senior Securities Indenture between New Plan Realty Trust and The First National Bank of Boston, as Trustee, dated as of March 29, 1995, filed as Exhibit 4.2 to Registration Statement No. 33-60045. *10.8 7.75% Senior Note Due April 6, 2005 filed as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended July 31, 1995.
*10.9 6.8% Senior Note Due May 15, 2002 filed as Exhibit 10.8 to the Registrant's Form 10-K for the fiscal year ended July 31, 1995.
*10.10 Agreement and Plan of Merger, dated May 14, 1998, as amended as of August 7, 1998, among Excel Realty Trust, Inc., ERT Merger Sub, Inc. and New Plan Realty Trust filed as Exhibit 2.1 to the Registrant's Form 8-K dated October 13, 1998.
*10.11 Senior Securities Indenture among New Plan Excel Realty Trust, Inc., New Plan Realty Trust, as guarantor, and State Street Bank and Trust Company, as Trustee, dated as of February 3, 1999 filed as Exhibit 4.1 to the Current Report on Form 8-K of New Plan Excel Realty Trust, Inc. dated February 3, 1999.
*10.12 New Plan Realty Trust 1997 Stock Option Plan filed as Exhibit 4.1 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.13 New Plan Realty Trust 1991 Stock Option Plan, as amended, filed as Exhibit 4.2 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.14 Amended and Restated New Plan Realty Trust 1985 Incentive Stock Option Plan filed as Exhibit 4.3 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
*10.15 New Plan Realty Trust March 1991 Stock Option Plan and Non-Qualified Stock Option Plan filed as Exhibit 4.4 to the Registration Statement of New Plan Excel Realty Trust, Inc. on Form S-8, File No. 333-65221, on October 1, 1998.
12 Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers LLP.
27(1) Financial Data Schedule.
99.1 "Risk Factors" contained in New Plan Excel Realty Trust, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
- ------------------------------ *Incorporated herein by reference as above indicated.
(1) Filed as exhibit to electronic filing only.