Item 1. Business
General: The principal business of Regency Realty Corporation (the "Company") is owning, operating and developing grocery anchored neighborhood shopping centers in targeted infill markets in the Southeast. The Company, a Florida corporation organized in 1993, commenced operations as a real estate investment trust in 1993 with the completion of its Initial Public Offering ("IPO"), and was the successor to the real estate business of The Regency Group, Inc. which had operated since 1963. Unless the context requires otherwise, all references to the "Company" include (1) its wholly owned real estate properties, an operating partnership and two joint ventures and (2) Regency Realty Group, Inc. (the "Management Company").
The Company owns and operates 50 commercial real estate properties, 40 of which are anchored by grocery stores. At December 31, 1996, the properties contained 5.5 million square feet ("GLA") and were 95.4% leased. The properties are all located in the Southeast, primarily in Florida (71% of GLA) and Georgia (11% of GLA). At December 31, 1996, approximately 10.2%, 4.6%, 3.3%, and 3% of annualized total rent pertains to leases with Publix, Winn-Dixie, Wal-Mart, and Kroger, respectively. For more specific data and information about the properties owned by the Company see Item 2.
Item 2. Properties
The Company owns and operates 46 neighborhood shopping centers and 4 suburban office complexes in the Southeast. The properties consist of approximately 5.5 million square feet of Company owned gross leasable area (GLA). At December 31, 1996, the locations of properties by GLA were as follows:
Company Percent Anchor Percent Number Owned of Owned Total of of GLA Total GLA GLA Total Properties
Florida 3,958,423 71.8% 297,481 4,255,904 72.0% 34 Georgia 592,351 10.7% - 592,351 10.0% 6 Alabama 516,080 9.4% 42,848 558,928 9.5% 5 North Carolina 260,094 4.7% - 260,094 4.4% 3 Mississippi 185,061 3.4% 54,962 240,023 4.1% 2 --------- ------ -------- --------- ------ -- Total 5,512,009 100.0% 395,291 5,907,300 100.0% 50 ========= ====== ======== ========= ====== ==
The Company's neighborhood shopping centers generally have one or more anchor tenants, the majority of which are anchored by Publix (17), Winn-Dixie (9), Wal-Mart (7) or Kroger (3), with 37 of the center's having two or more anchor tenants. The average size of the properties is 118,146 sf. Six of the shopping centers are anchored by four grocery stores and two Wal-Mart stores, where the store operator owns its own building. To the extent that the shopping centers are anchored by store space which the Company does not own, the Company can capitalize on the customer drawing power and other advantages provided by these anchor tenants while not bearing the leasing and operating risks associated with leasing space to such a tenant. In most instances, these stores reimburse the Company for their share of common area maintenance expenses.
The following table sets forth, as of December 31, 1996, information as to retail tenants which individually account for 1.0% or more of total rent:
Percent of Company Total Percent of Leased GLA Company Total Total Tenant Stores (Sq. Ft.) GLA Rent (1) Rent (2) - ------ ------ --------- --- -------- --------
Publix 17 723,636 13.1% $ 5,372,770 10.2% Winn Dixie 9 364,393 6.6% 2,432,073 4.6% Wal-Mart 5 393,487 7.1% 1,765,280 3.3% Kroger 3 165,435 3.0% 1,566,150 3.0% Walgreens 9 116,640 2.1% 1,469,878 2.8% AMC Theater 1 72,616 1.3% 1,003,651 1.9% K-Mart 2 168,306 3.1% 987,130 1.9% Eckerd 10 101,095 1.8% 887,746 1.7% Luria's 3 69,855 1.3% 592,686 1.1% Waccamaw 1 87,752 1.6% 538,633 1.0% Jo-Ann Fabrics 4 52,230 .9% 527,396 1.0% -- ------- ---- --------- -----
Total 64 2,315,445 41.9% $17,143,393 32.5% == ========= ===== =========== =====
----------------------- 1) Total rent includes annualized base rent, percentage rent, and reimbursements for common area maintenance, real estate taxes, and insurance. 2) Based on annualized total rent on all properties owned at December 31,1996.
The Company's leases have lease terms generally ranging from three to five years for tenant space under 5,000 square feet. Leases greater than 10,000 square feet generally have lease terms in excess of ten years, mostly comprised of anchor tenants. Many of the anchor leases contain provisions allowing the tenant the option of extending the term of the lease at expiration. The Company's leases provide for the monthly payment in advance of fixed minimum rentals, additional rents calculated as a percentage of the tenant's sales, the tenant's pro rata share of real estate taxes, insurance, and common area maintenance expenses, and reimbursement for utility costs if not directly metered. At December 31, 1996, 42% of the Company's leases have terms of five years or less, which allows the Company the opportunity to increase rents upon lease expiration. Approximately 42% of the Company's leases expire beyond ten years.
The following table sets forth a schedule of lease expirations for the next ten years, assuming that no tenants exercise renewal options:
Percent of Future Total Minimum Percent Lease Company Rent Under of Expiration Expiring Square Expiring Total Year GLA Footage Leases Rent (1) ---------- -------- ---------- ---------- --------
1997 437,545 7.9% 4,966,284 10.7% 1998 616,350 11.2% 6,435,218 13.8% 1999 442,226 8.0% 5,379,912 11.6% 2000 261,023 4.7% 3,334,962 7.2% 2001 334,874 6.1% 3,877,709 8.3% 2002 314,026 5.7% 2,303,083 5.0% 2003 216,386 3.9% 1,565,877 3.4% 2004 133,002 2.4% 1,242,960 2.7% 2005 174,354 3.2% 1,705,906 3.7% 2006 208,155 3.8% 1,562,226 3.4% 2007 40,298 0.7% 512,591 1.1%
------------------ (1)Total rent includes current minimum rent and future contractual rent steps for all properties, but excludes additional rent such as percentage rent, common area maintenance, real estate taxes and insurance reimbursements.
Corporate Headquarters: The Company leases 24,263 square feet in a 10 story office building located at 121 West Forsyth Street in Jacksonville, Florida, which serves as the Company's headquarters. The lease, which expires on October 31, 1999, provides that the Company will pay annual base rent of approximately $286,000. The Company provides property management services to the building's owner, who is unaffi iated with the Company.
Item 2.
The following table describes the Company's properties owned at December 31, 1996:
Item 3.
Item 3. Legal Proceedings
The Company is not presently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company, except for routine litigation arising in the ordinary course of business such as "slip and fall" litigation which is expected to be covered by insurance. In the opinion of management of the Company, such litigation is not expected to have a material adverse effect on the business, financial condition or results of operations of the Company.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART Il
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters
Prior to the Company's IPO there was no public market for the Company's common stock. In connection with its IPO, 5,620,779 shares were sold for cash at the initial offering price of $19.25 per share. The common stock commenced trading on the New York Stock Exchange ("NYSE") under the symbol "REG" on October 29, 1993. There have been no additional public stock offerings since the IPO; however, there have been several private equity transactions since 1994. The high and low sales prices for the common stock on the NYSE during each quarter for the period January 1, 1995 to December 31, 1996 were as follows:
1996 1995 ------------------------ ------------------------- Cash Cash High Low Dividends High Low Dividends Price Price Declared Price Price Declared
March 31 $ 17.500 15.875 .405 17.125 15.250 .395 June 30 21.125 16.500 .405 18.375 15.750 .395 September 30 22.375 19.250 .405 18.125 16.375 .395 December 31 26.250 21.125 .405 17.500 16.375 .395
The approximate number of holders of record of the common stock was 3,000 as of March 20, 1997.
On March 7, 1997, the Company acquired Branch Properties, L.P. ("Branch"), an Atlanta based real estate partnership that owns, operates, and develops shopping centers in the Southeast, for approximately $190 million. At closing, the Company issued 3,373,801 redeemable partnership units ("Redeemable Units") from Regency Retail Partnership, L.P. ("Partnership") and 155,797 shares of common stock in exchange for 100% of the existing partnership units of Branch, and assumed approximately $112 million of debt excluding the minority interest amount. During the next three years, Branch will have the right to earn an additional $23.3 million of Redeemable Units based upon the achievement of increased income levels. Subject to shareholder approval to be held at the Company's 1997 Annual Meeting, the Redeemable Units will be redeemable for Regency common stock.
On June 11, 1996, the Company entered into a Stock Purchase Agreement (the "Agreement") with US Realty. Under the Agreement, the Company has agreed to sell 7,499,400 shares of common stock to US Realty at a price of $17.625 per share representing total maximum proceeds of $132,176,925. During 1996, the Company sold 3,651,800 shares to US Realty for $64,362,975 and the proceeds were used to pay down the Wells Fargo Line. The Company sold 1,475,178 shares to US Realty on March 3, 1997 and the proceeds of $26 million were primarily used to reduce debt assumed as part of the Branch transaction. Not later than June, 1997, the Company intends to sell the remaining shares committed to US Realty, the proceeds of which will be used to further reduce its outstanding debt. As part of the Agreement, US Realty also has participation rights entitling them to purchase additional equity in the Company at the same price as that offered to other purchasers in order to preserve their pro rata ownership in the Company including common stock and Redeemable Units issued as part of the Branch transaction.
In connection with the acquisition of five shopping centers during 1995, the Company completed a $50 million private placement (the "Private Placement") with LaSalle Advisors Limited Partnership (the "Investor") on December 20, 1995 by issuing 2,500,000 shares of non-voting Class B common stock at $20 per share. The Company initially issued $18,250,000 of Series B preferred stock to the Investor on October 26, 1995 to fund an October purchase of one of the shopping centers; however, these shares were subsequently converted into Class B common. The Class B common shares are convertible into 2,975,468 shares of common stock beginning on the third anniversary of the issuance date subject to limitations that the holder may not beneficially own more than 4.9% of the Company's outstanding common stock except in certain circumstances.
In connection with the purchase of a shopping center on June 29, 1994, the Company issued 7,665 shares of Series A nonvoting preferred stock at a liquidation value of $1,000 per share. In 1996, the holder converted all of the remaining preferred stock outstanding into 94,282 shares of common stock. In 1995 and 1994, the preferred stock was converted into 222,465 and 111,411 shares of common stock, respectively.
Future dividends paid by the Company on common and Class B common stock will be at the discretion of the Board of Directors of the Company and will depend on the actual cash flow of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code, limitations imposed by the financial covenants of the Company's outstanding debt, and such other factors as the Board of Directors deem relevant.
Item 6.
Item 6. Selected Consolidated Financial Data (in thousands, except per share data)
The following table sets forth Selected Financial Data on a historical basis for the five years ended December 31, 1996, for the Company and the commercial real estate business of The Regency Group, Inc. ("TRG" or "Regency Properties"), the predecessor of the Company. This information should be read in conjunction with the financial statements of the Company (including the related notes thereto) and Management's Discussion and Analysis of the Financial Condition and Results of Operations, each included elsewhere in this Form 10-K. The historical Selected Financial Data for Regency Realty Corporation for the three year period ended December 31, 1996 and for the period from July 9, 1993 to December 31, 1993, have been derived from the audited financial statements. The historical Selected Financial Data for the Regency Properties as of November 5, 1993 and the year ended December 31, 1992 have been derived from audited financial statements.
Item 6. Selected Consolidated Financial Data (in thousands, except per share data) -continued-
- -----------------
(1) Such Combined Financial Statements have been prepared to reflect the historical combined operations of the Regency Properties associated with the ownership of the properties and the management, leasing, acquisition, development and brokerage business acquired by the Company from TRG on November 5, 1993 in connection with the Company's Initial Public Offering ("IPO") completed November 5, 1993.
(2) 1996 includes 28,848 Partnership Operating Units issued on February 28, 1996, convertible on a one for one basis into shares of common stock after the first anniversary date of the issuance date. 1996 and 1995 include 2,975,468 common shares, or the weighted average impact thereof, that the Class B common stock, issued December 20, 1995, will be convertible into after three years from the issuance date, subject to certain limitations.
Item 7.
Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Realty Corporation (the "Company") appearing elsewhere in this Form 10-K.
Business
The Company's principal business is operating and developing grocery anchored neighborhood shopping centers in targeted infill markets in the Southeast. At December 31, 1996 the Company owned 50 properties or approximately 5.5 million square feet(GLA); 71% of the GLA of the properties are located in Florida, and 40 are grocery anchored. The Company's four largest tenants in order by number of leased store locations are Publix Supermarkets (17), Winn-Dixie Stores (9), Wal-Mart (5), and The Kroger Co. (3).
Acquisition and Development
During 1996, the Company acquired 13 shopping centers (the "1996 Acquisitions") for $107 million (including certain budgeted capital improvements designed to improve the performance of the acquired property) for a total of 1,417,259 square feet. The Company also acquired a parcel of land to begin development of a Winn-Dixie shopping center, and entered into a joint venture to redevelop an existing shopping center. Total estimated cost at completion of these development projects is $15.2 million and both are expected to be completed during the first quarter of 1998.
During 1995, the Company acquired five shopping centers and completed the development or expansion of four shopping centers for a total cost of $62 million (the "1995 Acquisitions").
On March 7, 1997, the Company acquired Branch Properties, L.P. ("Branch"), an Atlanta based real estate partnership that owns, operates, and develops shopping centers in the Southeast, for approximately $190 million. At closing, the Company issued 3,373,801 redeemable partnership units ("Redeemable Units") from Regency Retail Partnership, L.P. ("Partnership") and 155,797 shares of common stock in exchange for 100% of the existing partnership units of Branch, and assumed approximately $112 million of debt excluding the minority interest amount. During the next three years, Branch will have the right to earn an additional $23.3 million of Redeemable Units based upon the achievement of increased income levels. At closing the Company acquired from Branch 18 shopping centers comprising 1.9 million square feet; 8 shopping centers containing 700,000 square feet that are currently under development or redevelopment, and management contracts on over 4 million square feet owned by third parties. Including the completion of the development and redevelopment properties, the three largest tenants in these properties are Publix, Kroger, and Harris Teeter. After the closing, the Company's five largest tenants in order by number of leased store locations are Publix (24), Winn-Dixie (9), Kroger (5) Wal-Mart (5), and Harris Teeter (3). Also at closing, the Company reduced the assumed debt by approximately $25.7 million funded from a $26 million sale of common stock to Security Capital U.S. Realty ("US Realty") further discussed below.
Liquidity and Capital Resources
The Company's total indebtedness at December 31, 1996 and 1995 was $172 million and $116 million, respectively, of which $94 million and $91 million had fixed interest rates averaging 7.6% and 7.5%, respectively. The weighted average interest rate on total debt at December 31, 1996 and 1995 was 7.5% and 7.7%, respectively. Based upon the Company's total market capitalization (total debt and the market value of equity) at December 31, 1996 of $529 million (closing common stock price of $26.25 per share and total common stock and equivalents outstanding of 13,619,221), the Company's debt to total market capitalization ratio was 32.4% vs. 40.6% at December 31, 1996 and 1995, respectively.
During 1996, the Company negotiated an unsecured $90 million revolving line of credit with Wells Fargo Realty Advisors Funding, Incorporated ("Wells Fargo Line") with an interest rate equal to the London Interbank Offered Rate ("LIBOR") plus 1.625%. The proceeds were used to pay off the balance of the secured line of credit and fund the 1996 Acquisitions. The balance of the Wells Fargo Line at December 31, 1996, was $74 million. The unused available commitment on the Wells Fargo Line will be used to finance future acquisition and development activity. The Company increased the Wells Fargo Line commitment amount to $150 million during the first quarter of 1997, and reduced the variable interest rate to LIBOR plus 1.50%.
On June 11, 1996, the Company entered into a Stock Purchase Agreement (the "Agreement") with US Realty. Under the Agreement, the Company has agreed to sell 7,499,400 shares of common stock to US Realty at a price of $17.625 per share representing total maximum proceeds of $132,176,925. During 1996, the Company sold 3,651,800 shares to US Realty for $64,362,975 and the proceeds were used to pay down the Wells Fargo Line. The Company sold 1,475,178 shares to US Realty on March 3, 1997 and the proceeds of $26 million were primarily used to reduce debt assumed as part of the Branch transaction. Not later than June, 1997, the Company intends to sell the remaining shares committed to US Realty, the proceeds of which will be used to further reduce its outstanding debt. As part of the Agreement, US Realty also has participation rights entitling them to purchase additional equity in the Company at the same price as that offered to other purchasers in order to preserve their pro rata ownership in the Company including common stock and Redeemable Units issued as part of the Branch transaction.
The Company funded the 1995 Acquisitions from borrowings on the Line and the proceeds from a $50 million private placement (the "Private Placement"). The Private Placement was completed on December 20, 1995 by issuing 2,500,000 shares of non-voting Class B common stock to a single investor. The Class B common shares are convertible into 2,975,468 shares of common stock beginning on the third anniversary of the issuance date subject to limitations that the holder may not beneficially own more than 4.9% of the Company's outstanding common stock except in certain circumstances.
The Company's principal demands for liquidity are dividends to stockholders, the operation, maintenance and improvement of real estate, and scheduled interest and principal payments. The Company paid common and preferred dividends of $16.2 million and $10.8 million to its stockholders during 1996 and 1995, respectively. The percentage of funds from operations paid out in common dividends, or "dividend payout ratio", was 80.7% and 85.2% at December 31, 1996 and 1995, respectively. In January 1997, the Company increased its quarterly common dividend to $.42 per share or $1.68 annually. Total dividends expected to be paid by the Company during 1997 will increase substantially over 1996 due to the common stock dividend increase, and the Agreement with US Realty; however, the Company expects the dividend payout ratio to remain below 85%.
During 1996 and 1995, the Company's net cash used in investing activities was $109.8 million and $61.5 million, respectively, related primarily to real estate acquisitions, construction and building improvements. The Company invested approximately $2.9 million and $2.0 million for improvements to its properties at December 31, 1996 and 1995, respectively. The Company anticipates that cash provided by operating activities, unused amounts under the Wells Fargo Line, and cash reserves are adequate to meet liquidity requirements. At December 31, 1996, the Company had cash balances of $8.3 million of which $1.8 million was restricted.
The Company has made an election to be taxed, and is operating so as to qualify, as a Real Estate Investment Trust ("REIT") for Federal income tax purposes, and accordingly has paid no Federal income tax subsequent to its Initial Public Offering in 1993. While the Company intends to continue to pay dividends to its stockholders, the Company will reserve such amounts of cash flow as it considers necessary for the proper maintenance and improvement of its real estate, while still maintaining its qualification as a REIT.
The Company's real estate portfolio has grown substantially during 1996 and 1995 as a result of the acquisitions and developments discussed above. In addition to the Branch acquisition, during 1997, the Company expects to exceed the 1996 level of growth and intends to meet the related capital requirements, principally for the acquisition or development of new properties, from borrowings on the Wells Fargo Line, and from additional public equity and debt offerings. Because such acquisition and development activities are discretionary in nature, they are not expected to burden the Company's capital resources currently available for liquidity requirements.
Results of Operations
Comparison of 1996 to 1995
Revenues increased $13.0 million or 38% to $46.9 million in 1996 due to the 1996 Acquisitions providing $3.7 million in revenues in 1996 (partial year ownership), and the 1995 Acquisitions providing $9.5 million in 1996 vs. $2.3 million in 1995 (partial year ownership). At December 31, 1996, the real estate portfolio contained approximately 5.5 million sf, was 95.4% leased and had average rents of $8.73 per sf. Minimum rent increased $9.7 million or 39%, and recoveries from tenants increased $1.9 million or 32%. On a same property basis (excluding the 1996 and 1995 Acquisitions) revenues increased $2.0 million or 6.3%, primarily due to higher occupancy levels, and an increase in average rents. At December 31, 1996, the real estate portfolio on a same property basis was 96.2% leased vs. 95.7% leased at December 31, 1995. Same property average rents grew to $8.13 at December 31, 1996 from $8.08 at December 31, 1995. Revenues from property management, leasing, brokerage, and development services provided on properties not owned by the Company were $3.4 million in 1996 compared to $2.4 million in 1995, the increase due primarily to higher build to suit development activity.
Operating expenses increased $6.9 million or 34% to $26.9 million in 1996. Combined operating and maintenance expense and real estate taxes increased $3.4 million or 39% during 1996 to $12.1 million due to the 1996 Acquisitions generating $1.0 million in operating expenses in 1996 (partial year ownership) and the 1995 Acquisitions producing $2.6 million in operating expenses in 1996 vs. $.5 million in 1995 (partial year ownership). General and administrative expense increased 24% during 1996 to $6.0 million due to hiring new employees during 1996 as part of the development of a "retail operating system" that will ensure that the Company has the resources necessary to acquire and manage properties in the future. Depreciation and amortization was 36% higher than 1995 due to the 1996 and 1995 Acquisitions.
Net interest expense increased to $10.1 million in 1996 from $8.4 million in 1995 or 21% due primarily to increased average outstanding loan balances. Outstanding debt at December 31, 1996 was $172 million vs. $116 million in 1995. Weighted average interest rates were 7.5% in 1996 vs. 7.7% in 1995. Preferred stock dividends declined as a result of the full conversion of the remaining Series A preferred stock into common stock during 1996. Net income for common stockholders was $9.9 million or $.96 per share in 1996 vs. $5.0 million or $.75 per share in 1995.
Comparison of 1995 to 1994
Revenues increased $6.0 million or 21% to $34.0 million in 1995 due to the 1995 Acquisitions providing $2.3 million in revenues in 1995 (partial year ownership), and the 1994 Acquisitions providing $7.6 million in 1995 vs. $5.0 million in 1994 (partial year ownership). At December 31, 1995, the real estate portfolio contained approximately 4 million sf, was 96.2% leased and had average rents of $8.54 per sf. Minimum rent increased $4.3 million or 21%, and recoveries from tenants increased $1.4 million or 33%. On a same property basis (excluding the 1995 and 1994 Acquisitions) revenues increased $1.1 million or 4.8%, primarily due to higher occupancy levels, and an increase in average rents. At December 31, 1995, the real estate portfolio on a same property basis was 95.3% leased vs. 93.7% leased at December 31, 1994. Same property average rents grew to $8.49 at December 31, 1995 from $8.34 at December 31, 1994. Revenues from property management, leasing, brokerage, and development services provided on properties not owned by the Company were $2.4 million in 1995 compared to $2.3 million in 1994.
Operating expenses increased $3.1 million or 18% to $20.0 million in 1995. Combined operating and maintenance expense and real estate taxes increased $1.5 million or 22% during 1995 to $8.7 million due to the 1995 Acquisitions generating $.45 million in operating expenses in 1995 (partial year ownership) and the 1994 Acquisitions producing $1.7 million in operating expenses in 1995 vs. $1.0 million in 1994 (partial year ownership). General and administrative expense increased 8% during 1995 to $4.9 million due to increased staffing requirements related to the acquisitions, and nominal increases in employee compensation. Depreciation and amortization was 22% higher than 1994 due to the 1995 and 1994 Acquisitions.
Net interest expense increased to $8.4 million in 1995 from $5.7 million in 1994 or 47% due primarily to increased average outstanding loan balances and higher interest rates. Outstanding debt at December 31,1995 was $116 million vs. $108 million in 1994. Weighted average interest rates were 7.7% in 1995 vs. 7.2% in 1994. Preferred stock dividends increased from $.28 million in 1994 to $.59 million in 1995 as a result of the Series B preferred stock issued on October 26, 1995 and outstanding through December 20, 1995, partially offset by the conversion of Series A preferred stock into common stock.
Net income for common stockholders was $5.0 million or $.75 per share in 1995 vs. $5.1 million or $.80 per share in 1994. The reduction is primarily due to the increase in net interest expense and depreciation expense discussed above, and additionally, as it pertains to per share amounts, the dilution from the conversion of the Series A and B preferred stock into common and Class B common stock, respectively.
Funds from Operations
The Company considers funds from operations ("FFO") to be one measure of REIT performance and defines it as net income (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring and sales of property, adjusted for certain noncash amounts, primarily depreciation and amortization, and after adjustments for investments in real estate partnerships. Adjustments for investments in real estate partnerships are calculated to reflect FFO on the same basis. FFO as defined above has become a measure used by many industry analysts; however, FFO should not be considered an alternative to net income as an indication of the Company's performance or to cash flow as a measure of liquidity determined in accordance with generally accepted accounting principles.
FFO for the years ended December 31, 1996, 1995 and 1994 are summarized in the following table: 1996 1995 1994 Net income for common stockholders $ 9,907 4,994 5,101 Add: non-cash amounts: Real estate depreciation and amortization 8,049 5,833 4,656 Common stock compensation: Board of directors' fees and 401 (k) contributions 613 451 417 Long-term compensation plans 2,173 815 621 Straight-lining of rents charge 28 208 206 ------ ------ ------ Funds from operations $ 20,770 12,301 11,001 ====== ====== ====== Weighted average shares outstanding 10,341 6,630 6,339 ====== ===== ===== Funds from operations per share $ 2.01 1.86 1.74 ===== ==== ====
In May 1995 the National Association of Real Estate Investment Trusts (NAREIT) amended the definition of FFO and recommended the following changes to become effective for fiscal years ending in 1996: (1) amortization of loan costs and depreciation of office furniture and equipment should not be added back to net income, (2) non-recurring gains (losses) should be excluded from FFO, and (3) gains (losses) from the sale of undepreciated real estate considered to be part of a company's recurring business may be included in FFO. The Company modified its definition of FFO for these changes effective January 1, 1996 and has also restated amounts reported for 1995 and 1994 for comparison purposes.
Environmental Matters
The Company like others in the commercial real estate industry, is subject to numerous environmental laws and regulations and the operation of dry cleaning plants at the Company's shopping centers is the principal environmental concern. The Company believes that the dry cleaners are operating in accordance with current laws and regulations and has established procedures to monitor their operations. Based on information presently available, no additional environmental accruals were made and management believes that the ultimate disposition of currently known matters will not have a material effect on the financial position, liquidity, or operations of the Company. Environmental matters are discussed further in note 10, Contingencies, of the notes to Consolidated Financial Statements.
Economic Conditions
A substantial number of the Company's long-term leases contain provisions designed to mitigate the adverse impact of inflation on the Company's net income. Such provisions include percentage rentals, rental escalation clauses and reimbursements for common area maintenance, insurance, and real estate taxes. In addition, 42% of the Company's leases have terms of five years or less, which allows the Company the opportunity to increase rents upon lease expiration. Approximately 42% of the Company's leases expire beyond 10 years and are generally anchor tenants. Unfavorable economic conditions could result in the inability of certain tenants to meet their lease obligations and otherwise could adversely affect the Company's ability to attract and retain desirable tenants. During 1996, Discovery Zone ("DZ") filed for protection under the bankruptcy laws. DZ had two leases with the Company, both of which have been terminated and no longer pay rent. DZ's annualized minimum rent represented approximately .50% of 1996 minimum rent reported by the Company. Luria's currently has three leases with the Company, one store of which was closed during 1995, but continued to pay rent. During 1996, Luria's defaulted on the lease of the closed store and informed the Company that it intends to close its remaining two stores during 1997. Minimum rent from the three Luria's leases represents approximately 1.2% of 1996 total minimum rent reported by the Company. The three leases with Luria's expire beyond 2007, and the Company considers Luria's to be bound by the lease terms.
At December 31, 1996 approximately 11%, 5%, 3% and 3% of the Company's annualized rent is received from Publix, Winn-Dixie, Wal-Mart and Kroger, respectively (the "Four Major Tenants"). During 1996 no tenant had rents in excess of 10% of the Company's minimum rent. In February, 1996, Wal-Mart closed its store located at The Marketplace in Alexander City, Alabama in order to relocate to a new larger store nearby. Wal-Mart will continue to pay rent due under its lease at The Marketplace which expires in October, 2007. The Marketplace is anchored by a Winn-Dixie which opened during 1995. Although the Company considers the financial condition and its relationship with the Four Major Tenants to be very solid, a significant downturn in business or the non-renewal of expiring leases of the Four Major Tenants could adversely affect the Company. Management also believes that the shopping centers are relatively well positioned to withstand adverse economic conditions since they are typically anchored by supermarkets, drug stores and discount department stores that offer day-to-day necessities rather than luxury goods.
Item 8.
Item 8. Consolidated Financial Statements and Supplementary Data
The Consolidated Financial Statements and supplementary data included in this Report are listed in Part IV, Item 14(a).
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Information concerning the directors of the Company is incorporated herein by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 1997 Annual Meeting of Shareholders.
The following table provides information concerning the executive officers of the Company, all of whom were officers of TRG for five years or more prior to the Company's acquisition of TRG's real estate business in November, 1993.
- -------------------------------------------------------------------------------
Positions with the Company; Name Principal Occupations During (Age) Past Five Years - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Martin E. Stein, Jr. (44) President, Chief Executive Officer and Director of the Company and TRG. - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Bruce M. Johnson (49) Executive Vice President and Chief Financial Officer of the Company and previously Vice President of Investment Management and Acquisitions for TRG. - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Robert C. Gillander, Jr. (43) Executive Vice President of Investments for the Company and previously Vice President of Development for TRG. - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
James D. Thompson (41) Executive Vice President of Operations for the Company and previously Vice President of Asset Management in North and Central Florida regions for TRG. - -------------------------------------------------------------------------------
Item 11.
Item 11. Executive Compensation
Incorporated herein by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 1997 Annual Meeting of Shareholders.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owner and Management
Incorporated herein by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 1997 Annual Meeting of Shareholders.
Item 13.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 1997 Annual Meeting of Shareholders.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements and Financial Statement Schedules:
The Company's 1996 financial statements and financial statement schedule, together with the report of KPMG Peat Marwick LLP dated January 27, 1997, except for Note 11 as to which the date is March 7, 1997 are listed on the index immediately preceding the financial statements at the end of this report.
(b) Reports on Form 8-K:
None
(c) Exhibits:
3. Articles of Incorporation
*** (i) Restated Articles of Incorporation of Regency Realty Corporation as amended to date.
*(ii) Bylaws of Regency Realty Corporation.
4. See exhibits 3(i) and 3(ii) for provisions of the Articles of Incorporation and Bylaws of Regency Realty Corporation defining rights of security holders.
10. Material Contracts
~*(a) Regency Realty Corporation 1993 Long Term Omnibus Plan
~*(b) Form of Stock Purchase Award Agreement
~*(c) Form of Management Stock Pledge Agreement, relating to the Stock Purchase Award Agreement filed as Exhibit 10(b)
~*(d) Form of Promissory Note, relating to the Stock Purchase Award Agreement filed as Exhibit 10(b)
~*(e) Form of Option Award Agreement for Key Employees
~*(f) Form of Option Award Agreement for Non-Employee Directors
~*(g) Annual Incentive for Management Plan
~*(h) Form of Director/Officer Indemnification Agreement
~*(i) Form of Non-Competition Agreement between Regency Realty Corporation and Joan W. Stein, Robert L. Stein, Richard W. Stein, the Martin E. Stein Testamentary Trust A and the Martin E. Stein Testamentary Trust B. ~***
(j) Form of Employment Agreements entered into with the following:
(i) Bruce M. Johnson (ii) Robert C. Gillander, Jr. (iii) James D. Thompson (iv) Richard E. Cook (v) A. Chester Skinner, III (vi) J. Christian Leavitt (vii) Robert L. Miller
~ Management contract or compensatory plan or arrangement filed pursuant to S-K 601(10)(iii)(A).
* Included as an exhibit to the Pre-effective Amendment No. 2 to the Company's S-11 filed October 5,1993, and is incorporated herein by reference
** Included as an exhibit to the Company's Form 10-Q filed December 13, 1993, and is incorporated herein by reference
*** Included as an exhibit to the Company's Form 10-Q filed November 14, 1996, and is incorporated herein by reference
**** Included as an exhibit to the Company's Form 10-Q filed May 12, 1994, and is incorporated herein by reference
***** Filed as appendices to the Registrant's definitive proxy statement dated August 2, 1996 and is incorporated herein by reference.
****** Filed as an exhibit to the Registrant's Form 8-K report filed March 14, 1997 and is incorporated herein by reference.
*(k) Form of Agreement for Right of First Refusal as to stock in Regency Realty Group, Inc. between The Regency Group, Inc. and Regency Realty Corporation.
(l) The following documents, all dated November 5, 1993, relating to a $51 million loan from Salomon Brothers Inc. to corporations and subsidiaries wholly owned by the Company.
** (i) Loan Agreement between RSP IV Criterion, Ltd., Regency Rosewood Temple Terrace, Ltd., Treasure Coast Investors, Ltd., Landcom Regency Mandarin, Ltd., RRC FL SPC, Inc., RRC AL SPC, Inc., RRC MS SPC, Inc., and RRC GA SPC, Inc. (as borrowers) and RRC Lender, Inc. (as lender)
** (ii) Promissory Note in the original principal amount of $51 million
** (iii) Undertaking executed by the Registrant and RRC FL SPC, Inc., RRC AL SPC, Inc., RRC MS SPC, Inc., and RRC GA SPC, Inc.
** (iv) Certificate Purchase Agreement between RRC Lender, Inc. (as seller) and Salomon Brothers, Inc.( as lender)
(m) The following documents relating to the purchase by Security Capital U.S. Realty and Security Capital Holdings, S.A. of up to 45% of the Registrant's outstanding common stock:
***** (i) Stock Purchase Agreement dated June 11, 1996.
***** (ii) Stockholders' Agreement dated July 10, 1996.
****** (A) First Amendment of Stockholders' Agreement dated February 10, 1997.
***** (iii) Registration Rights Agreement dated July 10, 1996.
****(n) Stock Grant Plan adopted on January 31, 1994 to grant stock to employees.
(o) Criteria for Restricted Stock Awards under 1993 Long Term Omnibus Plan.
(p) Form of 1996 Stock Purchase Award Agreement.
(q) Form of 1996 Management Stock Pledge Agreement relating to the Stock Purchase Award Agreement filed as Exhibit 10(p)..
(r) Form of Promissory Note relating to 1996 Stock Purchase Award Agreement filed as Exhibit 10 (p).
- ----------------------------
~ Management contract or compensatory plan or arrangement filed pursuant to S-K 601(10)(iii)(A). * Included as an exhibit to the Pre-effective Amendment No. 2 to the Company's S-11 filed October 5, 1993, and is incorporated herein by reference
** Included as an exhibit to the Company's Form 10-Q filed December 13, 1993, and is incorporated herein by reference
*** Included as an exhibit to the Company's Form 10-Q filed November 14, 1996, and is incorporated herein by reference
**** Included as an exhibit to the Company's Form 10-Q filed May 12, 1994, and is incorporated herein by reference
***** Filed as appendices to the Registrant's definitive proxy statement dated August 2, 1996 and is incorporated herein by reference.
****** Filed as an exhibit to the Registrant's Form 8-K report filed March 14, 1997 and is incorporated herein by reference.
(s) Purchase and Sale Agreement dated July 11, 1996 between RREFF MA-II Cambridge Square, Inc., a Delaware Corporation as ("Seller") and RRC Acquisitions, Inc., a Florida Corporation and wholly-owned subsidiary of the Company as ("Buyer"), relating to the acquisition of Cambridge Square Shopping Center.
(t) Purchase and Sale Agreement dated September 23, 1996 between Real Estate Collateral Management Company, Inc., a Delaware Corporation as ("Seller") and RRC Acquisitions, Inc., a Florida Corporation and wholly-owned subsidiary of the Company as ('Buyer"), relating to the acquisition of Old St. Augustine Plaza.
(u) Purchase and Sale Agreement dated November 7, 1996 between Durham Woodcroft Associates. L.P., a North Carolina limited partnership as ('Seller") and RRC Acquisitions, Inc., a Florida Corporation and wholly-owned subsidiary of the Company as ("Buyer"), relating to the acquisition of Woodcroft Shopping Center.
(v) Purchase and Sale Agreement dated December 10, 1996 between C. M. Wellington Town Square, L.P., an Illinois limited partnership as ('Seller") and RRC Acquisitions, Inc., a Florida Corporation and wholly-owned subsidiary of the Company as ("Buyer"), relating to the acquisition of Wellington Town Square.
(w) Agreement to Purchase Real Estate dated December 27, 1996 between Publix Super Markets, Inc., a Florida Corporation as ('Seller") and RRC Acquisitions, Inc., a Florida Corporation and wholly-owned subsidiary of the Company as ('Buyer"), relating to the acquisition of Town Center at Martin Downs.
~*(x) Form of Employment Agreement with Martin E. Stein, Jr.
21. Subsidiaries of the Registrant
23. Consent of KPMG Peat Marwick LLP
27. Financial Data Table
- --------------------------
~ Management contract or compensatory plan or arrangement filed pursuant to S-K 601(10)(iii)(A).
* Included as an exhibit to the Pre-effective Amendment No.2 to the Company's S-11 filed October 5, 1993, and is incorporated herein by reference
** Included as an exhibit to the Company's Form 10-Q filed December 13, 1993, and is incorporated herein by reference
*** Included as an exhibit to the Company's Form 10-Q filed November 14, 1996, and is incorporated herein by reference
**** Included as an exhibit to the Company's Form 10-Q filed May 12, 1994, and is incorporated herein by reference
***** Filed as appendices to the Registrant's definitive proxy statement dated August 2, 1996 and is incorporated herein by reference.
****** Filed as an exhibit to the Registrant's Form 8-K report filed March 14, 1997 and is incorporated herein by reference.
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.
REGENCY REALTY CORPORATION
Date: March 21, 1997 By: /s/ Martin E. Stein, Jr. --------------------------- Martin E. Stein, Jr. President and Chief Executive Officer
Date: March 21,1997 By: /s/ Bruce M. Johnson ------------------------- Bruce M. Johnson Executive Vice President and Chief Financial Officer
Date: March 21, 1997 By: /s/ J. Christian Leavitt --------------------------- J. Christian Leavitt Secretary and Treasurer Principal Accounting Officer
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:
Date: March 21, 1997 /s/ Joan W. Stein ----------------------------- Joan W. Stein, Chairman
Date: March 21, 1997 /s/ Martin E. Stein, Jr. ------------------------------ Martin E. Stein, Jr., Director
Date: March 21, 1997 /s/ Robert L. Stein ----------------------------- Robert L. Stein, Director
Date: March 21, 1997 /s/ Edward L. Baker ----------------------------- Edward L. Baker, Director
Date: March 21, 1997 /s/ A. R.Carpenter ------------------------------ A. R. Carpenter, Director
Date: March 21, 1997 /s/ J. Dix Druce ------------------------------- J. Dix Druce, Jr., Director
Date: March 21, 1997 /s/ Albert D. Ernest, Jr. -------------------------- Albert D. Ernest, Jr., Director
Date: March 21, 1997 /s/ Douglas S. Luke -------------------------- Douglas S. Luke, Director
Date: March 21, 1997 /s/ J. Marhsall Peck ----------------------------- J. Marshall Peck, Director
Date: March 21, 1997 /s/ Paul E. Szurek ----------------------------- Paul E. Szurek, Director
REGENCY REALTY CORPORATION
Regency Realty Corporation
Independent Auditors' Report Consolidated Balance Sheets as of December 31, 1996 and 1995 Consolidated Statements of Operations for the years ended December 31, 1996, 1995, and 1994 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995, and 1994 Notes to Consolidated Financial Statements
Financial Statement Schedule
Independent Auditors' Report on Financial Statement Schedule S-1
Schedule III - Regency Realty Corporation Combined Real Estate and Accumulated Depreciation - December 31, 1996 S-2
All other schedules are omitted because they are not applicable or because information required therein is shown in the financial statements or notes thereto.
Independent Auditors' Report
The Shareholders and Board of Directors Regency Realty Corporation:
We have audited the accompanying consolidated balance sheets of Regency Realty Corporation as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three year period ended December 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Regency Realty Corporation as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 1996 in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP ----------------------------- KPMG Peat Marwick LLP Certified Public Accountants
Jacksonville, Florida January 27, 1997, except for Note 11, as to which the date is March 7, 1997
REGENCY REALTY CORPORATION Consolidated Balance Sheets December 31, 1996 and 1995
1996 1995 ---- ---- Assets Real estate rental property, at cost (notes 2, 4, 5 and 8): Land $ 84,186,483 61,126,706 Buildings and improvements 304,820,998 217,604,461 Construction in progress 3,360,206 - ----------- ----------- 392,367,687 278,731,167 Less: accumulated depreciation 26,213,225 18,631,310 ----------- ----------- 366,154,462 260,099,857 Investments in real estate partnerships (note 3) 1,035,107 315,389 ----------- ----------- Real estate, net 367,189,569 260,415,246
Cash and cash equivalents (note 4) 8,293,229 3,401,701 Tenant receivables, net of allowance for uncollectible accounts of $832,091 and $474,019 at December 31, 1996 and 1995, respectively 5,281,419 2,620,763 Deferred costs, less accumulated amortization of $2,519,019 and $2,547,765 at December 31, 1996 and 1995, respectively 3,961,439 3,598,011 Other assets 1,798,393 969,676 ----------- --------- $ 386,524,049 271,005,397 =========== ===========
Liabilities and Stockholders' Equity Liabilities: Mortgage loans payable (note 4) 97,906,288 93,277,273 Acquisition and development line of credit (note 5) 73,701,185 22,339,803 Accounts payable and other liabilities 6,300,640 7,405,232 Tenants' security and escrow deposits 1,381,673 976,515 ----------- ----------- Total Liabilities 179,289,786 123,998,823 ----------- ----------- Limited partner's interest in operating partnership (note 6) 508,486 -
Stockholders' Equity (notes 6 and 7) Preferred stock - 1,000,000 shares authorized:Series A 8% cumulative convertible, 1,916 shares issued and outstanding at December 31, 1995 - 1,916,268 Common stock $.01 par value per share: 25,000,000 shares authorized; 10,614,905 and 6,728,723 shares issued and outstanding at December 31, 1996 and 1995, respectively 106,149 67,287 Special common stock - 10,000,000 shares authorized: Class B $.01 par value per share, 2,500,000 shares issued and outstanding 25,000 25,000 Additional paid in capital 223,080,831 155,221,241 Distributions in excess of net income (13,981,770) (8,073,188) Stock loans (2,504,433) (2,150,034) ------------ ------------ Total stockholders' equity 206,725,777 147,006,574 =========== =========== Commitments and contingencies (notes 8 and 10)
$ 386,524,049 271,005,397 See accompanying notes to consolidated =========== =========== financial statements.
REGENCY REALTY CORPORATION Consolidated Statements of Operations Years ended December 31, 1996, 1995 and 1994
1996 1995 1994 ---- ----- ----
Revenues: Minimum rent (note 8) $ 34,705,905 25,044,201 20,716,870 Percentage rent 997,981 672,986 565,711 Recoveries from tenants (note 9) 7,729,404 5,837,773 4,390,894 Management, leasing and brokerage fees 3,444,287 2,425,733 2,331,990 Equity in income of real estate partnership investments (note 3) 69,990 4,226 16,943 ---------- ---------- ----------
Total revenues 46,947,567 33,984,919 28,022,408 ---------- ---------- ----------
Operating expenses: Depreciation and amortization 8,758,067 6,436,092 5,265,947 Operating and maintenance 7,655,934 5,682,967 4,793,231 General and administrative (note 9) 6,048,140 4,894,432 4,530,682 Real estate taxes 4,409,460 3,000,557 2,347,016 ---------- ---------- ----------
Total operating expenses 26,871,601 20,014,048 16,936,876 ---------- ---------- ----------
Interest expense (income): Interest expense 10,777,131 8,840,376 6,065,239 Interest income (666,031) (454,207) (364,105) ----------- ---------- ----------
Net interest expense 10,111,100 8,386,169 5,701,134 ----------- ---------- ----------
Net income 9,964,866 5,584,702 5,384,398
Preferred stock dividends 57,721 590,904 283,071 --------- --------- ---------
Net income for common stockholders $ 9,907,145 4,993,798 5,101,327 ========= ========= =========
Net income per common share outstanding $ .96 .75 .80 === === ===
Weighted average common shares outstanding 10,341,239 6,630,385 6,338,648 ========== ========= =========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994
-continued- Total Stockholders' Equity -------------
Balance at December 31, 1993 97,415,532
Common stock issued as compensation 173,872 Series A Preferred stock issued (note 6) 7,665,132 Series A Preferred stock converted to common stock - Series A Preferred stock converted - partial share payment (14) Partial forgiveness of stock loans (note 7) 126,472 Cash dividends declared: Preferred stock (283,071) Common stock, $1.37 per share (8,716,587) Stock issuance costs (5,775) Net income 5,384,398 -----------
Balance at December 31, 1994 101,759,959
Common stock issued as compensation 831,599 Series B Preferred stock issued (note 6) 18,250,000 Series B Preferred stock converted to Class B common stock - Class B common stock issued (note 6) 31,750,000 Series A Preferred stock converted to common stock - Partial forgiveness of stock loans (note 7) 252,944 Cash dividends declared: Preferred stock (590,904) Common stock, $1.58 per share (10,347,248) Stock issuance costs (484,478) Net income 5,584,702 ------------
Balance at December 31, 1995 147,006,574
Common stock issued (note 6) 64,362,975 Common stock purchased by executive officers (note 7) 67,000 Common stock issued as compensation 1,091,907 Common stock purchased by directors 140,000 Series A Preferred stock converted to common stock - Series A Preferred stock converted - partial share payment 14 Partial forgiveness of stock loans (note 7) 918,601 Cash dividends declared: Preferred stock (57,721) Common stock, $1.62 per share (15,815,727) Stock issuance costs (952,712) Net income 9,964,866 ------------
Balance at December 31, 1996 206,725,777 ===========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION Consolidated Statements of Cash Flows Years ended December 31, 1996, 1995 and 1994
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION Consolidated Statements of Cash Flows Years Ended December 31, 1996, 1995 and 1994 -continued-
1996 1995 1994 ---- ---- ----
Supplemental disclosure of cash flow information cash paid for interest (including capitalized interest of approximately $381,000, $285,000 and $216,000 in 1996, 1995 and 1994, respectively) $ 10,979,841 9,147,175 5,898,287 =========== ========== =========
Supplemental disclosure of non cash transactions: Mortgage loans assumed from sellers of real estate $ 3,918,752 - 10,707,705 =========== ========== ========== Limited partner interest in operating partnership issued to seller of eal estate as partial payment $ 525,332 - - =========== ========== ========== Preferred stock issued to seller of real estate $ - - 7,665,132 ========= ========== ==========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
1. Summary of Significant Accounting Policies
(a) General
Regency Realty Corporation (the Company) was formed for the purpose of managing, leasing, brokering, acquiring, and developing shopping centers. The Company also provides management, leasing, brokerage and development services for real estate not owned by the Company (third parties). The Company commenced operations effective with the completion of its initial public offering on November 5, 1993.
The accompanying consolidated financial statements include the accounts of Regency Realty Group, Inc. (the "Management Company"), its wholly owned real estate properties, an operating partnership, and the Company's two joint ventures. All significant intercompany balances and transactions have been eliminated.
(b) Revenues
The Company leases space to tenants under agreements with varying terms. Leases are accounted for as operating leases with minimum rent recognized on a straight-line basis over the term of the lease regardless of when payments are due. Accrued rents are included in tenant receivables. Minimum rent has been adjusted to reflect the effects of recognizing rent on a straight line basis. Substantially all of the lease agreements contain provisions which provide additional rents based on tenants' sales volume or reimbursement of the tenants' share of real estate taxes and certain common area maintenance (CAM) costs. These additional rents are reflected on the accrual basis.
Management, leasing, brokerage and development fees are recognized as revenue when earned.
(c) Real Estate Rental Property
Land, buildings and improvements are recorded at cost. All direct and indirect costs clearly associated with the acquisition, development and construction of real estate projects owned by the Company are capitalized as buildings and improvements, while maintenance and repairs which do not improve or extend the useful lives of the respective assets are reflected in operating and maintenance expense. The property cost includes the capitalization of interest expense incurred during construction in accordance with generally accepted accounting principles. Included in land is 30 and 8.4 acres of undeveloped land with a cost basis of approximately $2,600,000 and $1,700,000 at December 31, 1996 and 1995, respectively.
Depreciation is computed using the straight line method over estimated useful lives up to forty years for buildings and improvements, term of lease for tenant improvements, and five to seven years for furniture and equipment.
(d) Income Taxes
The Company has made an election to be taxed, and is operating so as to qualify, as a Real Estate Investment Trust (REIT) for Federal income tax purposes. Accordingly, the Company will not pay Federal income tax provided distributions to stockholders equal at least the amount of its REIT taxable income as defined under the Internal Revenue Code.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies, continued
(d) Income Taxes, continued
Regency Realty Group, Inc. files a separate tax return and is subject to Federal and State income taxes. This Management Company had taxable income of $150,674 for the year ended December 31, 1996 and incurred a taxable loss for the years ended December 31, 1995 and 1994. The Management Company had a net operating loss carryforward of $484,000 at December 31, 1995, and accordingly paid no income tax in 1996. No income tax benefit has been recorded for the net operating loss carryforwards.
The tax basis of real estate assets exceeds the net book basis by approximately $1.9 and $7.0 million at December 31, 1996 and 1995, respectively, primarily due to higher depreciation expense for book purposes and differences in accounting for real estate held in the operating partnership.
(e) Deferred Costs
Deferred costs consist of internal and external commissions associated with leasing the rental property and loan costs incurred in obtaining financing which are limited to initial direct and incremental costs. The net leasing commission balance was $1,108,374 and $808,291 at December 31, 1996 and 1995, respectively. The net loan cost balance was $2,853,065 and $2,789,720 at December 31, 1996 and 1995, respectively. Such costs are deferred and amortized using the straight-line method over the terms of the respective leases and loans. Fully amortized deferred leasing costs of $958,398 were removed from the financial statements during 1996.
(f) Fair Value of Financial Instruments
The fair value of the Company's mortgage loans payable and acquisition and development line of credit are estimated based on the current rates available to the Company for debt of the same remaining maturities. Therefore, the Company considers their carrying value to be a reasonable estimation of their fair value.
(g) Per Share Data
Net income per common share outstanding is computed based upon the weighted average shares outstanding during the period. The Company's Class B common stock as well as the redeemable units of the limited partner are convertible into shares of common stock and are included in the weighted average shares calculation as common stock equivalents. The dilutive impact of common stock options is included in the calculation of net income per share when the exercise price falls below the market price. Net income per share on a fully diluted basis is not different from net income per common share outstanding and thus is not disclosed separately.
(h) Cash and Cash Equivalents
Any instruments which have an original maturity of ninety days or less when purchased are considered cash equivalents.
(i) Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies, continued
(j) Impairment of Long-Lived Assets
The Company adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", on January 1, 1996. This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Adoption of this Statement did not have a material impact on the Company's financial position, results of operations, or liquidity.
(k) Stock Option Plan
Prior to January 1, 1996, the Company accounted for its stock option plan in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation", which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
(l) Reclassifications
Certain reclassifications have been made to the 1994 and 1995 amounts to conform to classifications adopted in 1996.
2. Acquisitions of Real Estate Rental Property
During 1996 and 1995, the Company acquired 18 shopping centers (the "Acquisitions") accounted for as purchases with consideration totaling approximately $160.4 million in cash and the assumption of a mortgage loan. The operating results are included in the Company's consolidated financial statements from the date each property was acquired. The following unaudited pro forma information presents the consolidated results of operations as if the Acquisitions had occurred on January 1, 1995, after giving effect to certain adjustments including depreciation expense, additional general and administration costs, interest expense on new debt incurred, and an increase in the weighted average common shares outstanding for Common and Class B common stock issued to acquire shopping centers as if it had been issued on January 1, 1995. Pro forma revenues would have been $57.6 million and $53.5 million in 1996 and 1995, respectively. Pro forma net income for common stockholders would have been $10.6 million and $8.0 million in 1996 and 1995, respectively. Pro forma net income per common share would have been $.98 per share and $.76 per share in 1996 and 1995, respectively. This data does not purport to be indicative of what would have occurred had the acquisitions been made on January 1, 1995, or of results which may occur in the future.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
3. Investments In Real Estate Partnerships
The Company has a 10% investment in Village Commons Shopping Center and during 1996 acquired a 25% investment in Ocean East Mall by contributing $881,307 in cash. These investments are recorded on the equity method of accounting with income being recognized in the year reported by the partnership. The Company's combined investment in these two partnerships was $1,035,107 and $315,389 at December 31, 1996 and 1995, respectively. Net income is allocated in accordance with each of the partnership agreements. The Company's combined proportionate share of net income was $69,990, $4,226 and $16,943 for the years ended December 31, 1996, 1995 and 1994, respectively.
At December 31, 1996 and 1995, the combined total assets of the partnerships were $13,147,083 and $8,345,732, respectively, and total liabilities were $7,109,378 and $5,192,241, respectively. Combined net income was $323,174, $42,260 and $169,432 for the years ended December 31, 1996, 1995 and 1994, respectively.
4. Mortgage Loans Payable
Mortgage loans payable secured by real estate rental property are as follows: 1996 1995 6.72% mortgage loan, held by a trust created for the benefit of investors who purchased mortgage pass-through certificates, non recourse to the Company, interest only paid monthly, due in full November 5, 2000 $ 51,000,000 51,000,000
7.60% mortgage notes payable in monthly principal installments of $26,236 maturing from June 28, 2001 to June 1, 2002 15,932,745 16,238,314
9.80% mortgage note, payable in monthly installments of $73,899, including principal and interest, maturing on February 1, 1999 8,000,421 8,097,910
9.50% mortgage note, payable in monthly installments of $78,633 including principal and interest, maturing on March 1, 2002 8,823,403 8,931,412
8.01% mortgage note, payable in monthly principal installments of $10,411, maturing on August 17, 2002 6,532,665 6,651,967
8.28% mortgage note, payable in monthly installments of $37,598 including principal and interest, maturing on August 1, 1997 3,801,821 -
8.72% mortgage note, rate adjusts annually, payable in monthly installments of $23,105 including principal and interest, maturing on March 1, 1997 2,296,902 2,357,670
Construction note payable, interest only payable monthly at Prime + 1/4% 1,518,331 - ---------- -----------
Total mortgage loans payable $ 97,906,288 93,277,273 ========== ===========
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
4. Mortgage Loans Payable (continued)
Principal maturities on the mortgage loans are as follows:
Year Amount
1997 6,774,592 1998 2,253,663 1999 8,443,866 2000 51,726,556 2001 8,869,856 Thereafter 19,837,755 ---------- $ 97,906,288 ============ As part of their borrowing arrangements, the Company is expected to maintain escrow balances for the payment of real estate taxes on the mortgaged properties, and in the case of the $51,000,000 mortgage loan, also maintain interest, insurance and specified capital improvement escrows. Escrow balances recorded as cash and cash equivalents were $1,069,337 and $1,255,421 at December 31, 1996 and 1995, respectively.
5. Acquisition and Development Line of Credit
The Company negotiated a $90 million unsecured acquisition and development revolving line of credit, the Wells Fargo Line, during 1996 which replaced the existing secured line of credit, the Line. The Wells Fargo Line will be used to finance future real estate acquisitions and developments. The interest rate is based on the LIBOR plus1.625% with interest only for two years, and if then terminated, becomes a two year term loan maturing in May, 2000 with principal due in seven equal quarterly installments. However, the borrower may request a one year extension of the interest only revolving period annually in May of each year beginning in 1997.
6. Stockholders' Equity
On June 11, 1996, the Company entered into a Stock Purchase Agreement (the "Agreement") with Security Capital U.S. Realty and Security Capital Holdings S.A. ( collectively, "US Realty"). Under the Agreement, the Company has agreed to sell 7,499,400 shares of Common Stock to US Realty at $17.625 per share representing total maximum proceeds of $132,176,925. During 1996, the Company sold 3,651,800 shares to US Realty for $64,362,975. Not later than June 1, 1997 ("Subsequent Closing"), the Company may sell up to 3,847,600 shares for a total of $67,813,950. US Realty will have the right, exercisable on a one-time basis in June 1997, to acquire additional shares of common stock to the extent that the shares to be acquired at the Subsequent Closing have not yet been purchased.
In connection with the purchase of a shopping center on February 28, 1996, the Company issued 28,848 Partnership Operating Units to a limited partner convertible on a one for one basis into shares of common stock after the first anniversary of the issuance date.
The Company completed a $50,000,000 private placement by issuing 2,500,000 shares of non-voting Class B common stock to a single investor on December 20, 1995 (the "Private Placement"). The proceeds from the Private Placement were used to acquire five shopping centers. The Company initially issued $18,250,000 of Series B preferred stock on October 26, 1995 to fund the acquisition of a shopping center. These shares were subsequently converted into Class B common stock. The Class B common stock is convertible into 2,975,468 shares of common stock beginning on the third anniversary of the issuance date, subject to certain limitations defined in the agreement. The dividend on each share of Class B common is payable when and if declared by the Board of Directors pari passu with any dividend on the common stock of the Company.
In connection with the purchase of a shopping center on June 29, 1994, the Company issued 7,665 shares of Series A nonvoting preferred stock at a liquidation value of $1,000 per share. In 1996, the holder converted all of the remaining preferred stock outstanding into 94,282 shares of common stock. In 1995 and 1994, the preferred stock was converted into 222,465 and 111,411 shares of common stock, respectively.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
7. Long-term Stock Incentive Plans
In 1993, the Company adopted a Long Term Omnibus Plan (the "Plan") pursuant to which the Board of Directors may grant stock and stock options to officers, directors and other key employees. The Plan provides for the issuance of up to 12% of the Company's common shares outstanding not to exceed 3 million shares of authorized but unissued common stock. Stock options are granted with an exercise price equal to the stock's fair market value at the date of grant. All stock options granted have ten year terms, and with respect to officers and other key employees, become fully exercisable after five years from the date of grant, and with respect to directors, become fully exercisable after one year.
At December 31, 1996, there were approximately 1.1 million shares available for grant under the Plan. The per share weighted-average fair value of stock options granted during 1996 and 1995 was $3.04 and $1.08 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: 1996 - expected dividend yield 6.6%, risk-free interest rate of 5.9%, expected volatility 21%, and an expected life of five years; 1995 - expected dividend yield 9.2%, risk-free interest rate of 5.4%, expected volatility 19%, and an expected life of five years.
The Company applies APB Opinion No. 25 in accounting for its Plan and, accordingly, no compensation cost has been recognized for its stock options in the consolidated financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net income for common stockholders would have been reduced to the pro forma amounts indicated below:
Net income for common stockholders 1996 1995 ------------------- ---- ---- As reported $ 9,907,145 $ 4,993,798 Net income per common share 0.96 0.75
Pro forma 9,896,934 4,993,798 (*) Net income per common share 0.96 0.75
------------------- * The options granted during 1995 were issued on December 31, 1995 and accordingly had no effect to income.
Pro forma net income for common stockholders reflects only options granted in 1996 and 1995. Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma net income for common stockholders amounts presented above because compensation cost is reflected over the options' vesting period and compensation cost for options granted prior to January 1, 1995 is not considered.
Stock option activity during the periods indicated is as follows:
Number of Weighted-Average Shares Exercise Price ---------- ----------------
Outstanding, December 31, 1993 187,000 $19.22 Granted 6,500 $17.33 Forfeited (2,500) $19.25 ---------- Outstanding, December 31, 1994 191,000 $19.16 Granted 6,000 $17.25 Forfeited (11,000) $19.25 ---------- Outstanding, December 31, 1995 186,000 $19.09 Granted 12,000 $24.67 --------- Outstanding, December 31, 1996 198,000 $19.43 =========
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
7. Long-term Stock Incentive Plans (continued)
At December 31, 1996, the range of exercise prices and weighted-average remaining contractual life of the outstanding options was $16.75 - $26.25 and 7.5 years, respectively.
At December 31, 1996 and 1995, the number of options exercisable was 186,000 and 31,500, respectively, and the weighted-average exercise price of those options was $19.09 and $19.16, respectively.
Also as part of the Plan, in 1993 and 1996, certain officers purchased common stock at fair market value directly from the Company, of which 90% and 95%, respectively, was financed by a stock purchase loan provided by the Plan. These recourse loans are fully secured by stock, bear interest at fixed rates of 7.34% to 7.79% and mature after ten years. The Board of Directors may authorize the forgiveness of all or a portion of the principal balance based on the Company's achievement of specified financial objectives, and total stockholder return performance targets. During 1996, 1995 and 1994, $646,598 $379,418 and $252,944 was forgiven, respectively, and is included as a charge to income on the consolidated statements of operations. The Company also has a performance based restricted stock plan for officers whereby a portion of the shares authorized under the Plan may be granted upon the achievement of certain total stockholder return performance targets. Shares granted under the plan become fully vested by December 31, 2000. During 1996, the initial measurement and grant date, the Company charged $809,400 to income on the consolidated statement of operations.
8. Operating Leases
The Company's properties are leased to tenants under operating leases with expiration dates extending to the year 2041. Future minimum rent under noncancelable operating leases as of December 31,1996, excluding tenant reimbursements of operating expenses and excluding additional contingent rentals based on tenants' sales volume are as follows:
Year ending December 31, Amount
1997 41,544,074 1998 36,779,305 1999 31,659,814 2000 27,375,272 2001 22,728,344 Thereafter 146,240,248 ----------- Total $ 306,327,057 ===========
At December 31, 1996, the real estate portfolio as a whole was approximately 95.4% leased.
The shopping centers' tenant base includes primarily national and regional supermarkets, drug stores, discount department stores and other retailers and, consequently, the credit risk is concentrated in the retail industry. There were no tenants which individually represented 10% or more of the Company's combined minimum rent. The combined annualized rent from the Company's four largest retail tenants represented approximately 22% of annualized minimum rent at December 31, 1996.
9. Related Party Transactions
The Company provides management, leasing, and brokerage services for certain commercial real estate properties of The Regency Group, Inc. and its affiliates ("TRG"), a corporation wholly-owned by certain officers and stockholders of the Company. Fees for such services are charged to TRG based on current market rates.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
9. Related Party Transactions (continued)
From time to time, certain personnel of the Company may provide administrative services to TRG, pursuant to an agreement. The cost of such services are reimbursed by TRG based on percentage allocations of management time and general overhead made in compliance with applicable regulations of the Internal Revenue Service. The Company received $95,000, $194,000 and $204,000 during the years ended December 31, 1996, 1995 and 1994, respectively, which has been recorded as a reimbursement to general and administrative expenses.
In connection with and as a condition to the Company's acquisition of University Marketplace, TRG entered into a cash flow support agreement with the Company. The agreement provided that TRG guarantee the monthly gross rental revenue, for a period of three years following the Company's initial public offering for a portion of the anchor space vacated by Phar-Mor in July 1993. The Company received $58,034 and $88,882 during the years ended December 31, 1995 and 1994, respectively, which has been recorded as recoveries from tenants.
10. Contingencies
The Company like others in the commercial real estate industry, is subject to numerous environmental laws and regulations and the operation of dry cleaning plants at the Company's shopping centers is the principal environmental concern. The Company believes that the dry cleaners are operating in accordance with current laws and regulations and has established procedures to monitor their operations. While the Company has registered the plants located in Florida under a state funded program designed to substantially fund the clean up, if necessary, of any environmental issues, the owner or operator is not relieved from the ultimate responsibility for clean up. The Company also has established due diligence procedures to identify and evaluate potential environmental issues on properties under consideration for acquisition. In connection with acquisitions during 1996 and 1995, the Company established environmental reserves of $600,000 and $500,000, respectively. While it is not possible to predict with certainty, management believes that the reserves are adequate to cover future clean-up costs related to these sites. The Company's policy is to accrue environmental clean-up costs when it is probable that a liability has been incurred and that amount is reasonably estimable. Based on information presently available, no additional environmental accruals were made and management believes that the ultimate disposition of currently known matters will not have a material effect on the financial position, liquidity, or operations of the Company.
11. Subsequent Event
On March 7, 1997, the Company acquired Branch Properties, L.P. ("Branch"), an Atlanta based real estate partnership that owns, manages, leases, and develops shopping centers in the Southeastern United States, for approximately $190 million. At the closing, the Company issued 3,373,801 redeemable partnership units ("Redeemable Units") from Regency Retail Partnership, L.P. ("Partnership") and 155,797 shares of common stock in exchange for 100% of the existing partnership units of Branch, and assumed approximately $112 million of debt excluding the minority interest amount. During the next three years, Branch will have the right to earn an additional $23.3 million of Redeemable Units based upon the achievement of increased income levels. At closing the Company acquired from Branch 18 shopping centers comprising 1.9 million square feet; 8 shopping centers containing 700,000 square feet that are currently under development or redevelopment, and management contracts on over 4 million square feet owned by third parties.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
12. Market and Dividend Information (Unaudited)
The Company trades on the New York Stock Exchange under the symbol "REG". The Company currently has approximately 3,000 shareholders. The following table sets forth the high and low prices and the cash dividends declared on the Company's common stock by quarter for 1996 and 1995.
1996 1995 ------------------------ ------------------------- Cash Cash High Low Dividends High Low Dividends Price Price Declared Price Price Declared
March 31 $ 17.500 15.875 .405 17.125 15.250 .395 June 30 21.125 16.500 .405 18.375 15.750 .395 September 30 22.375 19.250 .405 18.125 16.375 .395 December 31 26.250 21.125 .405 17.500 16.375 .395
13. Summary of Quarterly Financial Data (Unaudited)
Presented below is a summary of the consolidated quarterly financial data for the years ended December 31, 1996 and 1995.
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- (amounts in thousands, except per share data) 1996: Revenues $ 10,501 10,952 12,030 13,464 Net income for common stockholders 2,576 2,597 3,025 1,709 Net income per share .26 .26 .28 .16
1995: Revenues $ 7,863 8,102 8,569 9,451 Net income for common stockholders 1,341 1,313 1,213 1,127 Net income per share 0.20 0.20 0.18 0.17
Independent Auditors' Report On Financial Statement Schedule
The Shareholders and Board of Directors Regency Realty Corporation
Under date of January 27, 1997, except for Note 11 as to which the date is March 7, 1997, we reported on the consolidated balance sheets of Regency Realty Corporation as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three year period ended December 31, 1996, as contained in the annual report on Form 10-K for the year 1996. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in the accompanying index on page of the annual report on Form 10-K for the year 1996. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.
In our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP Certified Public Accountants
Jacksonville, Florida January 27, 1997
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REGENCY REALTY CORPORATION
Combined Real Estate and Accumulated Depreciation December 31, 1996
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REGENCY REALTY CORPORATION
Combined Real Estate and Accumulated Depreciation December 31, 1996
-continued- Schedule III
Total Cost, Net of Date of Accumulated Construction (c) Depreciation Mortgages Acquisition (a) ------------ ---------- ---------------
University Marketplace 11,168,422 - 1990 (a) Millhopper 4,186,711 2,401,000 1993 (a) Newberry Square 10,631,171 6,801,694 1994 (a) Bolton Plaza 9,489,920 - 1994 (a) Courtyard 5,120,024 1,378,000 1987 (c) Chasewood Plaza 15,649,873 8,000,000 1992 (a) Aventura 11,013,777 8,823,403 1994 (a) North Miami Shopping Center 2,338,081 1,160,000 1993 (a) Berkshire Commons 9,868,972 8,000,421 1994 (a) Peachland Promenade 6,197,959 4,370,784 1995 (a) Anastasia Shopping Plaza 4,436,165 - 1993 (a) Market Place 5,873,637 - 1995 (a) Martin Downs Shoppes 2,455,825 1,313,000 1992 (a) Martin Downs Village Center 8,620,932 4,150,000 1992 (a) Ocean Breeze 6,323,918 2,805,000 1992 (a) Carriage Gate 3,356,715 2,429,176 1994 (a) Regency Square at Brandon 21,164,277 12,000,000 1986 (c) Seven Springs 8,822,274 - 1994 (a) Terrace Walk 3,746,680 683,000 1990 (c) Village Center 14,354,558 - 1995 (a) Wellington Market Place 18,170,285 - 1995 (a) The Marketplace 7,585,706 4,978,091 1993 (a), 1995 (c) West County Marketplace 6,083,372 3,190,000 1993 (a) Villages in Trussville 3,960,752 1,775,000 1993 (a) Bonner's Point 3,498,471 1,613,000 1993 (a) Country Club 4,531,821 2,264,000 1993 (a) Columbia Marketplace 5,234,133 2,586,000 1993 (a) Lucedale Marketplace 2,638,931 1,390,000 1993 (a) Orchard Square 5,405,848 - 1995 (a) Russell Ridge 8,176,932 6,532,665 1993 (c) LaGrange Marketplace 4,025,578 1,645,000 1993 (a) Fairway Executive Center 2,151,394 - 1985 (a) Quadrant 14,891,470 - 1985 (c) Westland One 1,654,394 - 1988 (c) Paragon Cable Building 2,862,230 2,296,902 1994 (a) Parkway Station 5,373,917 3,801,821 1996 (a) Welleby Plaza 6,921,234 - 1996 (a) Union Square 7,453,595 - 1996 (a) City View 5,503,355 - 1996 (a) Palm Harbour 13,793,947 - 1996 (a) Sandy Plains Village 13,210,870 - 1996 (a) Tequesta Shoppes 8,188,969 - 1996 (a) University Collection 11,495,194 - 1996 (a) Old St. Augustine Plaza 9,386,990 - 1996 (a) Wellington Town Square 9,096,938 - 1996 (a) Woodcroft Shopping Center 6,630,981 - 1996 (a) Cambridge Square 3,708,034 - 1996 (a) Town Center at Martin Downs 6,339,024 - 1996 (a) ----------- ------------ 362,794,256 96,387,957 =========== ============
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REGENCY REALTY CORPORATION
Combined Real Estate and Accumulated Depreciation December 31, 1996
-continued- Schedule III
Depreciation and amortization of the Company's investment in buildings and improvements reflected in the statement of operations is calculated over the estimated useful lives of the assets as follows:
Buildings 40 years Improvements 40 years
The aggregate cost for Federal income tax purposes was approximately $383,644,529 at December 31, 1996.
The changes in total real estate assets for the period ended December 31, 1996 and 1995:
1996 1995 ---- ---- Balance, beginning of period 278,731,167 217,215,307 Developed or acquired properties 107,378,064 59,537,217 Improvements 2,898,250 1,978,643 ------------- ------------ Balance, end of period $ 389,007,481 278,731,167 ============= ============
The changes in accumulated depreciation for the period ended December 31, 1996 and 1995:
1996 1995 ---- ----
Balance, beginning of period 18,631,310 13,117,581 Depreciation for period 7,581,915 5,513,729 ------------ ----------- Balance, end of period $ 26,213,225 18,631,310 ============ ===========
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