-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsuuOAUcDNaTR60Fj8hCeZavU0xIXyP/6V8PJ7pQUKfF6/BuGwt/7H1D0vyb3P0N tZagmDYn7fi4w94at0c7sw== 0000950123-99-004862.txt : 19990518 0000950123-99-004862.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950123-99-004862 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW PLAN REALTY TRUST CENTRAL INDEX KEY: 0000071519 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 131995781 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08459 FILM NUMBER: 99628171 BUSINESS ADDRESS: STREET 1: 1120 AVE OF THE AMERICAS STREET 2: 12TH FL CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2128693000 MAIL ADDRESS: STREET 1: 1120 AVENUE OF THE AMERICAS STREET 2: 1120 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 10-Q 1 NEW PLAN REALTY TRUST 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number 1-8459 NEW PLAN REALTY TRUST (Exact name of registrant as specified in its charter) MASSACHUSETTS 13-1995781 (State or other Jurisdiction of (IRS Employer Incorporation) Identification No.) 1120 Avenue of the Americas, New York, New York 10036 (Address of Principal Executive Office) (Zip Code) 212-869-3000 Registrant's Telephone Number Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of April 27, 1999 the sole outstanding share of beneficial interest of the registrant was held by New Plan Excel Realty Trust, Inc. The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. 2 NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME and COMPREHENSIVE INCOME For the Three Months Ended March 31, 1999 and April 30, 1998 (Unaudited) (In thousands)
March 31, 1999 April 30, 1998 -------------- -------------- Revenues: Rental income and related revenues $ 67,070 $ 62,424 Interest, dividend and other income 703 1,057 -------- -------- Total revenues 67,773 63,481 Expenses: Operating costs 19,446 15,354 Real estate and other taxes 6,367 5,874 Interest 9,890 9,754 Depreciation and amortization 8,862 7,921 Provision for doubtful accounts 1,185 968 General and administrative 1,030 719 -------- -------- Total expenses 46,780 40,590 -------- -------- Income before sale of real estate and securities 20,993 22,891 Gain on sale of real estate and securities -- 8 -------- -------- Net income 20,993 22,899 Change in unrealized gain (loss) on securities (71) 5 -------- -------- Comprehensive income $ 20,922 $ 22,904 ======== ========
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a presentation of the financial statements of New Plan Excel Realty Trust, Inc., see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999 which New Plan Excel Realty Trust, Inc. has filed separately with the SEC. The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- 3 NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited) ----------- March 31, 1999 December 31, 1998 -------------- ----------------- ASSETS Real estate: Land $ 280,935 $ 281,352 Building and improvements 1,214,812 1,210,202 Accumulated depreciation (159,892) (151,189) ----------- ----------- Net real estate 1,335,855 1,340,365 Cash and cash equivalents 21,310 12,536 Marketable securities 1,628 1,700 Receivables: Trade, less allowance for bad debts of $9,690 and $9,212 at 16,592 15,049 March 31, 1999 and December 31, 1998, respectively Other 1,264 1,236 Mortgage and notes receivable 13,358 13,399 Prepaid expenses and deferred charges 13,742 6,181 Other assets 4,632 4,232 ----------- ----------- $ 1,408,381 $ 1,394,698 =========== =========== LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Mortgages payable $ 115,815 $ 116,913 Notes payable, net of unamortized discount of $1,088 and $1,141 at March 31, 1999 and December 31, 1998, respectively 413,912 413,859 Due to New Plan Excel Realty Trust, Inc. 24,437 40,886 Other liabilities 41,456 31,311 Tenant security deposits 5,780 5,670 ----------- ----------- Total liabilities 601,400 608,639 ----------- ----------- Commitments and contingencies -- -- Shareholder's equity: Additional paid-in capital 837,002 837,002 Loans receivable for purchase of shares of beneficial interest (2,022) (2,022) Accumulated other comprehensive income 655 726 Accumulated distributions in excess of net income (28,654) (49,647) ----------- ----------- Total shareholder's equity 806,981 786,059 ----------- ----------- $ 1,408,381 $ 1,394,698 =========== ===========
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a presentation of the financial statements of New Plan Excel Realty Trust, Inc., see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999 which New Plan Excel Realty Trust, Inc. has filed separately with the SEC. The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- 4 NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1999 and April 30, 1998 (Unaudited) (In thousands)
March 31, 1999 April 30, 1998 -------------- -------------- Cash flows from operating activities: Net income $ 20,993 $ 22,899 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 8,862 7,918 Provision for doubtful accounts 1,185 832 Gain on sale of real estate and securities, net -- (8) Changes in operating assets and liabilities, net: Change in trade and notes receivable (2,729) 591 Change in other receivables (28) 260 Change in other liabilities 10,145 1,488 Change in sundry assets and liabilities (7,955) 1,976 -------- -------- Net cash provided by operating activities 30,473 35,956 -------- -------- Cash flows from investing activities: Real estate acquisitions and building improvements (4,192) (42,739) Repayments of mortgage notes receivable 41 10,163 Sales of marketable securities -- 2 Purchases of marketable securities -- (1) -------- -------- Net cash used in investing activities (4,151) (32,575) -------- -------- Cash flows from financing activities: Proceeds from mortgages and notes payable Principal payments of mortgages and notes payable (1,099) (631) Distributions paid -- (23,464) Proceeds from dividend reinvestment plan -- 4,545 Issuance of shares of beneficial interest upon exercise of stock options -- 649 Due to/from New Plan Excel Realty Trust, Inc. (16,449) -- Repayment of loans receivable for the purchase of shares of beneficial interest -- 75 -------- -------- Net cash used in financing activities (17,548) (18,826) -------- -------- Net increase (decrease) in cash and cash equivalents 8,774 (15,445) Cash and cash equivalents at beginning of year 12,536 49,381 -------- -------- Cash and cash equivalents at end of year $ 21,310 $ 33,936 ======== ========
New Plan Realty Trust is a wholly owned subsidiary of New Plan Excel Realty Trust, Inc., whose common stock is traded on the New York Stock Exchange. For a presentation of the financial statements of New Plan Excel Realty Trust, Inc., see the Quarterly Report on Form 10-Q for the three months ended March 31, 1999 which New Plan Excel Realty Trust, Inc. has filed separately with the SEC. The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- 5 NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A: Financial Statement Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by New Plan Realty Trust (the "Trust"), pursuant to the rules of the Securities and Exchange Commission ("SEC") and, in the opinion of the Trust, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules. The Trust believes that the disclosures made are adequate to make the information presented not misleading. The consolidated statements of income for the three-month periods ended March 31, 1999 and April 30, 1998 are not necessarily indicative of the results expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Trust's latest annual report on Form 10-K. New Plan Realty Trust was organized in 1972 as a Massachusetts business trust. Excel Realty Trust, Inc. ("Excel") was formed in 1985 and subsequently reincorporated as a Maryland corporation. On September 28, 1998, 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"). Immediately following the Merger, the Trust changed its fiscal year end from July 31 to December 31. Accordingly, comparative information reported in this Form 10-Q for 1998 represents information previously reported by the Trust for the three month period ended April 30, 1998. The Trust has continued to prepare its financial statements pursuant to the Securities and Exchange Act of 1934 and the reporting requirements of the indenture under which certain outstanding Notes have been issued. Note B: Supplemental Cash Flow Information State and local income taxes paid for the three months ended March 31, 1999 were $92,000 and no taxes were paid for the three months ended April 30, 1998. Interest paid for the three months ended March 31, 1999 and April 30, 1998 was approximately $8.2 million and $9.3 million, respectively. - -------------------------------------------------------------------------------- 5 - -------------------------------------------------------------------------------- 6 Note C: Segment Information The Trust's two reportable business segments are retail and residential properties. At March 31, 1999, 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 (in thousands):
Retail Residential Other Total ------ ----------- ----- ----- For Three Months Ended March 31, 1999 Revenue $ 47,928 $ 19,142 $ 703 $ 67,773 Operating expenses 16,531 10,467 1,030 28,028 Interest expense 9,890 9,890 Depreciation and amortization 6,692 2,170 8,862 ----------- ----------- ----------- ----------- Net income $ 24,705 $ 6,505 $ (10,217) $ 20,993 =========== =========== =========== =========== Real Estate Assets, net $ 986,672 $ 349,183 $ 1,335,855 =========== =========== =========== For Three Months Ended April 30, 1998 Revenue $ 44,699 $ 17,725 $ 1,057 $ 63,481 Operating expenses 12,598 9,598 719 22,915 Interest expense 9,754 9,754 Depreciation and amortization 6,020 1,901 7,921 Gain on sale of securities/properties 8 8 ----------- ----------- ----------- ----------- Net income $ 26,081 $ 6,226 $ (9,408) $ 22,899 =========== =========== =========== =========== Real Estate Assets, net $ 950,869 $ 329,323 $ 1,280,192 =========== =========== ===========
- -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS I. Liquidity and Capital Resources On March 31, 1999, the Trust had approximately $22.9 million in available cash, cash equivalents and marketable securities. Debt as of March 31, 1999 consisted of $115.8 million of mortgages payable and $413.9 million of notes payable. In connection with the Merger, on September 28, 1998, the Trust guaranteed the borrowings of New Plan Excel under New Plan Excel's $250 million revolving credit facility ($188 million of which was outstanding as of March 31, 1999) as well as New Plan Excel's $50 million revolving credit facility ($50 million of which was outstanding as of March 31, 1999). II. Results of operations for the three months ended March 31, 1999 and April 30, 1998 The Trust acquired 9 properties between May 1, 1998 and December 31, 1998, including 7 retail and 2 residential properties. These acquisitions produced revenue increases of $1.2 million and $1.0 million between the three months ended April 30, 1998 and the three months ended March 31, 1999 for the retail and residential portfolios, respectively. The remaining $2.1 million and $.4 million increases represent 4.6% and 2.1% improvements in rentals on the remainder of the retail and residential properties, respectively. Property acquisitions resulted in $1.7 million of the $6.2 million increase in total expenses, including a $.7 million increase in operating costs, $.3 million in additional depreciation, $.2 million in additional real estate and taxes, and $.5 million in interest expense. Increases in snow removal, professional fees, utilities and turnover costs account for the major portions of the remaining $3.4 million increase in operating costs. The $.3 million increase in general and administrative costs relate primarily to increases in personnel costs. III. 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 March 31, 1999. See "Year 2000 Compliance Detail" below. In addition, the Trust has completed the identification and review of major 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 - -------------------------------------------------------------------------------- 7 - -------------------------------------------------------------------------------- 8 (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 May 31, 1999. The Trust is requesting that all responses to the inquiries be returned to it no later than June 30, 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 personal computers are Year 2000 compliant in all material respects. Any personal computers that are not currently Year 2000 compliant will be replaced with Year 2000 compliant personal computers. 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 Trust's data collection networks are Year 2000 compliant. The Trust will be replacing the New York office phone system (including the voicemail system) with a Year 2000 compliant system, which replacement is scheduled to occur by June 30, 1999. Phone systems at other than the New York office and the Trust's apartment communities 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. All of the Trust's shopping centers are "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, the number of which is small, 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. 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 - -------------------------------------------------------------------------------- 8 - -------------------------------------------------------------------------------- 9 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. - -------------------------------------------------------------------------------- 9 - -------------------------------------------------------------------------------- 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 12.1 - Ratio of Earnings to Fixed Charges Exhibit 27 - Financial Data Schedule (This exhibit is filed for EDGAR filing purposes only.) (b) During the period covered by this report the Trust filed the following reports on Form 8-K: Form 8-K filed on February 3, 1999 relating to the filing of certain exhibits to the Trust's Registration Statement on Form S-3 (No. 333-67511) in connection with the establishment of a medium-term note program. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 17, 1999 NEW PLAN REALTY TRUST By: /s/Jeffrey D. Egertson ---------------------- Jeffrey D. Egertson Senior Vice President Chief Financial Officer - -------------------------------------------------------------------------------- 10 - -------------------------------------------------------------------------------- 11 EXHIBIT INDEX Number Description Page - ------ ----------- ---- 12.1 Ratio of Earnings to Fixed Charges 12 27 Financial Data Schedule (Included only in EDGAR filing) - -------------------------------------------------------------------------------- 11 - -------------------------------------------------------------------------------- EX-12.1 2 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12.1 RATIO OF EARNINGS TO FIXED CHARGES The ratio of earnings to fixed charges for the three months ended March 31, 1999 is: 3.1:1 For purposes of computing these ratios, earnings have been calculated by adding fixed charges (excluding capitalized interest) to income before extraordinary items. Fixed charges consist of interest costs, whether expensed or capitalized, preferred stock dividend requirements, the interest component of rental expense, if any, and amortization of debt discounts and issue costs, whether expensed or capitalized. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES THREE MONTHS ENDED MARCH 31, 1999 (DOLLAR AMOUNTS IN THOUSANDS) EARNINGS: Net income $20,993 Interest expense (including debt discount and debt issuing costs) 9,890 Capitalized interest 126 Other adjustments 268 ------- $31,277 ======= FIXED CHARGES: Interest expense (including debt discount and debt issuing costs) $ 9,890 Capitalized interest 126 Other adjustments 83 ------- $10,099 ======= RATIO OF EARNINGS TO FIXED CHARGES 3.1:1 - -------------------------------------------------------------------------------- 12 - -------------------------------------------------------------------------------- EX-27 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 3-MOS 21,310 1,628 16,592 9,690 0 0 1,495,747 159,892 1,408,381 0 529,727 0 0 0 806,981 1,408,381 0 67,773 0 35,705 0 1,185 9,890 20,993 0 20,993 0 0 0 20,993 0 0
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