CV Reit, Inc. ("CV Reit") is a real estate investment trust ("REIT") which until
December 31, 1997, was principally engaged in investing in mortgage notes
receivable. Effective December 31, 1997, CV Reit and its subsidiaries converted
to an Umbrella Partnership REIT (UPREIT) structure as part of a series of
transactions which closed on that date and which included the following: (1) a
newly created Operating Partnership, Montgomery CV Realty L.P. (together with
its wholly-owned subsidiaries hereinafter collectively referred to as the "OP"),
acquired 100% of the ownership interests in nine shopping centers and an office
building, and a 95% economic interest in Drexel Realty, Inc. ("Drexel"), a real
estate management and leasing company (Note 2) and (2) CV Reit and its
subsidiaries transferred substantially all of their net assets (or the economic
benefit) to the OP. As a result, CV Reit indirectly currently owns 84.5% of the
OP, is the OP's sole general partner and operates as a self-administered,
self-managed equity REIT. As of December 31, 1999, the OP owned twenty
neighborhood or community shopping centers and two office buildings, located in
Pennsylvania, New Jersey and Florida, comprising approximately $1.9 million
square feet (Note 3).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of CV
Reit and all subsidiaries ("the Company"), including the OP. The Company owns
99% of the non-voting common stock of, and a 95% economic interest in Drexel,
and owns 45%-50% interests in certain real estate partnerships, which are
accounted for on the equity method. Significant intercompany accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets 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.
Real Estate - Income Producing ("Real Estate")
Real Estate is carried at cost, net of accumulated depreciation, and is subject
to operating leases. Depreciation is provided over the estimated useful lives of
the assets (7 to 40 years) on the straight-line method.
The Company evaluates its long-lived assets, including its Real Estate, for
impairment based on the undiscounted future cash flows of the asset. If a
long-lived asset is identified as impaired, the value of the asset must be
reduced to its fair value.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the terms of the
leases. Certain leases provide for reimbursement to the Company of the tenants'
share of common area maintenance costs, insurance and real estate taxes, which
are recorded on the accrual basis.
20
Mortgage Notes Receivable, Other Real Estate and Allowance For Losses
Mortgage notes receivable are carried at the lower of cost or estimated net
realizable value. Accrual of interest is discontinued when management believes,
after considering economic and business conditions and collection efforts, that
timely collection is doubtful.
Other real estate principally consists of three parcels of unimproved commercial
land, totaling 38 acres located in southeast Florida, acquired by deed in lieu
of foreclosure and held for resale (Note 3). These properties are carried at the
lower of cost or fair value less selling costs. Carrying costs and subsequent
declines in net realizable value are charged to operations as incurred.
The allowance for losses is established through a provision charged to
operations based upon an evaluation by management of its mortgage notes
receivable and other real estate. In evaluating possible losses, management
takes into consideration appropriate information which may include the
borrower's cash flow projections, historical operating results and financial
strength, pending sales, adverse conditions that may affect the borrower's
ability to repay, appraisals and current economic conditions.
Dividends and Income Taxes
The Company has elected to qualify as a REIT under the provisions of Section
856-860 of the Internal Revenue Code. As a REIT, the Company is currently
required to distribute at least 95% of its ordinary taxable income to
stockholders (90% effective in 2001) and may deduct such distributions from
taxable income. A REIT is not required to distribute capital gain income but to
the extent it does not, it must pay the applicable capital gain income tax
unless it has ordinary losses to offset such capital gain income.
The federal income tax characteristics of dividends paid by the Company
consisted of:
1999 1998 1997
______ ______ ______
Ordinary income 88.3% 65.4% 89.1%
Capital gain distribution 11.7% 34.6% 10.9%
The Company accounts for income taxes based upon SFAS No.109 "Accounting for
Income Taxes", which requires, among other things, a liability approach to
calculating deferred income taxes
As a result of the acquisitions described in Note 2 and the OP structure, the
Company does not expect to be subject to federal income taxes in the future as
it intends to distribute ordinary and capital gain income. Accordingly, during
1998, the Company reversed the existing net deferred tax liability, which arose
from sales reported on the installment method for income tax purposes, and
recorded a deferred tax benefit of $7,041,000.
As of December 31, 1999, the Company has aggregate net operating loss
carryforwards for tax purposes of approximately $15.7 million, expiring $7.1
million in 2007 and $8.6 million in 2006
Net Income Per Common Share
Basic net income per common share is computed using net income divided by the
weighted average number of common shares outstanding. Diluted net income per
common share includes the effect of potentially dilutive securities. During the
years presented, the Company had no dilutive securities since the exercise price
of all outstanding options exceeded the average market price of the Company's
common stock for the year, accordingly, basic and diluted net income per share
are identical.
23
Statements of Cash Flows
For financial statement purposes, the Company considers all highly liquid
investments with initial maturities of three months or less to be cash
equivalents.
Reclassifications
Certain 1998 and 1997 amounts have been reclassified to conform to the 1999
financial statement presentation. These reclassifications had no impact on
operating results previously reported.
New Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133 requires companies to recognize all
derivative contracts as either assets or liabilities in the balance sheet and to
measure them at fair value. SFAS 133 was to become effective for periods
beginning after June 15, 1999; however, SFAS 133 has been amended by SFAS 137,
which delayed the effective date to periods beginning after June 15, 2000. The
adoption of this pronouncement is not expected to have a material impact on the
Company's financial statements or disclosures.
(2) Acquisitions
During 1999, the OP purchased three shopping centers, aggregating 324,000 square
feet, located in Pennsylvania and New Jersey. The aggregate purchase prices
amounted to $33.3 million, including transaction costs, substantially all of
which was financed by mortgage debt. The OP was required to deposit an
additional $1 million with the lender in connection with future capital
improvements.
During 1998, the OP purchased seven shopping centers, aggregating 796,000 square
feet, located in Pennsylvania and New Jersey. The aggregate purchase prices
amounted to $74.6 million, including transaction costs, which consisted of $21.4
million of cash and the incurrence or assumption of $53.2 million of
liabilities, principally mortgage debt.
On December 31, 1997, the OP completed the acquisition of nine shopping centers
and an office building, located in Pennsylvania and New Jersey, from two
separate groups, the Montgomery Parties and the Levy Parties (Note 8), and a 95%
economic interest in Drexel from Louis P. Meshon, Sr. Effective December 31,
1997, Mr. Meshon became President, Chief Executive Officer and a director of CV
Reit. The purchase price amounted to $61.7 million (net of cash acquired),
consisting of 1,787,010 OP units issued to the sellers, valued at $11.88 per OP
unit, or $21.2 million, based on the closing price of the Company's common stock
(into which the OP units were redeemable - Note 12) on April 28, 1997, the date
the acquisition was publicly announced; the assumption of $34.9 million of
liabilities, principally mortgage indebtedness; and, cash in the amount of $5.6
million, including transaction costs.
All of the acquisitions were accounted for under the purchase method;
accordingly, the operating results of the net assets acquired are included in
the consolidated financial statements from their respective purchase dates.
The following unaudited proforma data summarizes the consolidated results of
operations for the years indicated as if the 1999 acquisitions had occurred on
January 1, 1998. The proforma results do not purport to be indicative of the
results of operations which would have actually been reported had the
acquisitions been consummated on those dates, or which may be reported in the
future (in thousands, except per share data):
24
1999 1998
_________ ________
Revenues ............................................... $34,959 $30,312
Net income before tax benefit .......................... $ 7,429 $ 9,167
Net income ............................................. $ 7,429 $16,208
Net income per common share, basic and diluted ......... $ .93 $ 2.03
(3) Recent Developments
Proposed Merger
On December 10, 1999, the Company signed a definitive merger agreement and
reorganization plan with Kranzco Realty Trust ("Kranzco"), a shopping center
REIT, to merge operations and create a new community shopping center UPREIT to
be called Kramont Realty Trust ("Kramont"). Terms of the merger call for common
shareholders of both companies to each receive one share of Kramont common stock
for each outstanding share of CV Reit and Kranzco common stock on a tax-free
basis. The merger agreement is subject to approval by shareholders of both
companies and certain other conditions.
The Company's President and Chief Executive Officer will assume the same titles
and responsibilities at the newly created Kramont with the Company's designees
holding the majority of the board seats. Corporate headquarters will be located
at the OP's existing facilities, in Plymouth Meeting, Pennsylvania.
Kramont is expected to own 84 properties, substantially comprising neighborhood
and community shopping centers, encompassing approximately 11 million square
feet in 16 states with an asset base of approximately $800 million.
The merger will be accounted for as a purchase by the Company of Kranzco.
Accordingly, Kransco's assets and liabilities will be reocrded at their
estimated fair values based on consideration given by the Company.
(4) Real Estate
(a) Real Estate is located in Pennsylvania, New Jersey and Florida and
consists of (in thousands):
December 31,
1999 1998
____________________________
Land ....................................... $ 18,302 $ 14,980
Shopping centers ........................... 156,949 125,670
Office buildings ........................... 4,933 4,900
_________ _________
Totals ..................................... 180,184 145,550
Less accumulated depreciation .............. (7,108) (3,142)
_________ _________
Net Real Estate ............................ $ 173,076 $ 142,408
========= =========
25
(b) Real Estate is leased to tenants under leases expiring at various dates
through 2017, some of which contain renewal options of up to 30 years. Most of
the leases require fixed base rentals payable monthly in advance; additional
rental based on reimbursements of common area maintenance, insurance and real
estate taxes and, in some leases, based on a percentage of tenants' sales; and,
rent increases based on cost-of-living indexes. During 1999 and 1998, the
Company recognized income from reimbursements of common area maintenance,
insurance, real estate taxes and percentage rent of $6.5 million and $4.4
million, respectively. As of December 31, 1999, future minimum rental income
under noncancellable operating leases, excluding rentals from the exercise of
renewal options, is as follows (in thousands):
(c) Real Estate with a net book value of $166.1 million, at December 31, 1999,
is pledged as collateral for borrowings (Note 6).
(d) On May 15, 1998, the Company sold a motel for net cash proceeds of $4.2
million and recognized a gain of $2.3 million.
(5) Mortgage Notes Receivable
At December 31, 1999, the Company's mortgage notes receivable consisted of $24.7
million due from Hilcoast Development Corp. ("Hilcoast") (the "Hilcoast
Recreation Note"), collateralized by first mortgages on the recreation
facilities at a Century Village adult condominium community in southeast
Florida, and $38.7 million, collateralized by first mortgages on the recreation
facilities at three other Century Village communities in southeast Florida
(collectively, the "Recreation Notes"). The Hilcoast Recreation Note provides
for self-amortizing equal monthly principal and interest payments due through
July 31, 2023, bears interest at 11% per annum, and may not be prepaid by
Hilcoast without a prepayment penalty. The remaining Recreation Notes
principally provide for self-amortizing equal monthly principal and interest
payments due through 2012, with interest rates averaging 13% per annum, and
contain certain prepayment prohibitions. The Recreation Notes are pledged as
collateral for certain borrowings (Note 6).
The mortgage notes receivable at December 31, 1999 mature as follows (in
thousands):
One year or less $ 1,649
After one year through five years 9,746
After five years 51,990
________
Totals $ 63,385
========
26
(6) Borrowings
(a) Borrowings consist of (in thousands):
December 31,
1999 1998
_____________________
Mortgage notes payable through
September 2008, interest ranging
from 6.09% to 10.28%, collateralized
by Real Estate (Note 4) ............................ $ 78,720 $ 74,528
Mortgage notes payable through March
2001 under $100 million credit facility,
(the "Line of Credit"), interest
at one month LIBOR (6.48% at December
31, 1999), plus 1.75%, collateralized by
Real Estate (Note 4) and the Hilcoast
Recreation Note (Note 5) ........................... 49,036 16,950
Collateralized Mortgage Obligations,
net of unamortized discount of $439,000
and $553,000 based on an effective interest
rate of 8.84%, collateralized by certain of
the Recreation Notes (Note 5), quarterly
self-amortizing principal and interest
payments required through March 2007 ............... 27,823 30,455
$1 million revolving credit facility,
interest at one month LIBOR plus 1.8%, maturing
June 2000, collateralized by Real Estate............. 750 --
________ ________
Totals ............................................... $156,329 $121,933
======== ========
In March and May 1999, the Company entered into three interest rate swap
contracts with an aggregate notional amount of $28.7 million, which expire in
2004. The interest rate swaps have an effective interest rate of 6.63%.
(b) Effective March 31, 1998, the Company entered into the Line of Credit with a
financial institution which provides the Company with a $100 million three year
non-revolving line of credit. Advances under the Line of Credit: (1) must be
secured by assets based on specified aggregate loan to value and debt service
coverage ratios, (2) bear interest at an annual rate of one month LIBOR plus
1.75% and (3) may be drawn through March 31, 2000 and must be repaid by certain
dates during the twelve months ended March 31, 2001. Additional provisions
include a 1% commitment fee, a minimum net worth covenant and cross-default and
cross-collateralization requirements. Advances under the Line of Credit are used
to fund acquisitions, expansions, renovations, financing and refinancing of real
estate, including reimbursement of equity advances, and require certain
performance covenants. As of December 31, 1999, the unused facility amounted to
approximately $51 million of which $10.3 million was available to be borrowed
based on collateral already pledged under the Line of Credit.
(c) The OP has agreed that it will not make certain prepayments or refinancings
of certain of the mortgage notes prior to various dates not later than July 31,
2002, without the consent of certain of the limited partners of the OP.
(d) Maturities of borrowings are as follows (in thousands):
The Company is subject to various claims and complaints relative to its business
activities. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company's financial
position.
(8) Related Party Transactions
Hilcoast/H. Irwin Levy ("Mr. Levy")
(a) On July 31, 1992, Hilcoast, an affiliate of the Company on that date,
acquired certain assets from a previous borrower of the Company, subject to the
borrower's indebtedness to the Company, principally consisting of the Hilcoast
Recreation Note (Note 5), which as of December 31, 1999, had an outstanding
balance of $24.7 million. Mr. Levy, Chairman of the Board and a principal
stockholder of the Company, is the Chairman of the Board, Chief Executive
Officer and a majority stockholder of Hilcoast. During 1999, 1998 and 1997, the
Company recognized interest income of $2.7 million, $3.1 million and $4.3
million, respectively, from Hilcoast.
(b) Effective July 31, 1992, the Company and Hilcoast entered into a consulting
and advisory agreement under which Hilcoast provides certain investment
advisory, consulting and administrative services to the Company, excluding
matters related to the Hilcoast Recreation Note. The agreement provides for the
payment of $10,000 per month to Hilcoast, plus reimbursement for reasonable out
of pocket expenses. The agreement may be terminated by Hilcoast upon 180 days
notice and by the Company upon 30 days notice. During 1999, 1998 and 1997, the
Company paid $115,000, $110,000 and $120,000, respectively, to Hilcoast under
this agreement, plus expense reimbursement.
(c) Mr. Levy owns the recreation facilities at a Century Village community,
acquired from the Company in 1981, which is collateral for one of the Company's
Recreation Notes, which had an outstanding balance of $10.3 million at December
31, 1999 (Note 5). The note bears interest at 13.25%, requires self-amortizing
equal monthly payments of principal and interest in the aggregate amount of $1.7
million per annum through 2011 and may not be prepaid. During 1999, 1998 and
1997, the Company recognized interest income of $1.4 million, $1.4 million and
$1.5 million, respectively, on this note.
(d) Companies controlled by Mr. Levy and certain members of his family lease,
manage and operate the recreation facilities at four Century Village
communities, which are collateral for the Company's Recreation Notes (Note 5).
(e) Two of the shopping centers purchased by the OP on December 31, 1997 (Note
2) were acquired from the Levy Parties (Mr. Levy and members of his family) in
exchange for 390,717 OP units (valued at approximately $4.6 million), including
78,149 OP units (valued at approximately $900,000) issued to Mr. Levy. The
economic basis used to determine the acquisition price was the same as that used
for the other properties acquired on that date.
(f) The Company leases approximately 2,500 square feet of an office building,
located in West Palm Beach, on a month to month basis, to a company owned by Mr.
Levy and a member of his family at a monthly rental of approximately $2,100,
plus an allocation of utility expenses.
Alan Shulman
On May 15, 1998, the Company sold a motel (Note 4(d)), which had been leased to
a corporation controlled by Alan Shulman, a director of the Company. In 1998 and
1997, the Company recognized rent income of $223,000 and $489,000, respectively,
under the lease.
28
Stanley S. Cohen
Stanley S. Cohen, a director of the Company, is a partner and member of the
Executive Committee of the law firm of Fox, Rothschild, O'Brien & Frankel, LLP.
During 1999 and 1998, we paid $487,487 and $380,093, respectively, to that firm
for legal services.
(9) Major Tenants and Borrowers
During 1999, there were no tenants or borrowers who accounted for 10% or more of
the Company's revenues. During 1998, interest income from one borrower
(Hilcoast) provided 12% of total revenues. During 1997, interest income from
four borrowers provided 33% (Hilcoast), 16%, 14% and 11% (Mr. Levy),
respectively, of total revenues.
(10) Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments are as follows:
December 31,
1999 1998
_________________________________________________
Carrying Carrying
Amount Fair Value Amount Fair Value
_________________________________________________
Real estate mortgage notes
receivable ................. $ 63,385 $ 79,238 $ 64,988 $ 90,835
Cash and cash equivalents .. 4,385 4,385 4,775 4,775
Borrowings ................. (156,329) (156,734) (121,933) (124,274)
Real estate mortgage notes receivable - The fair value of the fixed rate,
Recreation Notes (Note 5) is estimated by discounting the future cash flows
using the current rates at which similar loans would be made with similar credit
ratings and for the same remaining maturities.
Borrowings - Rates currently available to the Company for debt with similar
terms and remaining maturities are used to estimate the fair value of the
Company's borrowings.
(11) Stockholders' Equity
Stock Options
The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees",
and related interpretations in accounting for its three stock option plans - the
Montgomery CV Trust Executive Stock Option Plan (the "CV Plan"), the Drexel
Realty, Inc. 1997 Stock Option Plan (the "Drexel Plan") and the CV Reit, Inc.
Non-Employee Director 1998 Stock Option Plan (the "Director Plan").
Under the CV Plan, the Drexel Plan and the Director Plan, qualified and
nonqualified stock options to purchase up to 150,000 shares, 400,000 shares and
150,000 shares, respectively, of the Company's common stock may be granted to
certain executives, employees and non-employee directors. The maximum term of
the options granted under each of the plans is ten years.
29
Statement of Financial Accounting Standards No.123 (SFAS 123), "Accounting for
Stock-Based Compensation", requires the Company to provide pro forma information
regarding net income and net income per common share as if compensation cost for
stock options granted under the plans, if applicable, had been determined in
accordance with the fair value based method prescribed in SFAS 123.
The Company estimates the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants: expected lives of ten years; dividend yield of
8.51%, volatility at 46%, risk free interest rate of 5.63% for 1999 and dividend
yield of 8.44%, volatility at 46%, risk free interest rate of 5.71% for 1998.
Under accounting provisions of SFAS 123, the Company's net income and net income
per share, would have been reduced to the pro forma amounts indicated below (in
thousands, except per share data):
Year Ended December 31,
1999 1998
______________________________
Net income:
As reported ........................... $ 7,247 $ 15,850
Pro forma ............................. $ 7,095 $ 15,567
Net income per share:
As reported ........................... $ .91 $ 1.99
Pro forma ............................. $ .89 $ 1.95
Changes in options outstanding are summarized as follows:
Weighted
Weighted Average
Average Fair
Exercise Per Share
Price Per of Options
Shares Share Granted
________________________________
1997:
Granted - equal to market value ............. 225,000 $ 13.69 $ 2.94
1998:
Granted - equal to market value ............. 45,000 14.14 3.02
1999:
Granted - equal to market value ............. 25,000 12.50 2.08
_______
Balance December 31, 1999 ..................... 295,000
=======
At December 31, 1999, the weighted average remaining contractual life of the
295,000 options outstanding was 7.54 years. A total of 155,500 of the
outstanding options were exercisable with a weighted average exercise price of
$13.61 per share.
30
Redemption Rights
Holders of the 1,462,406 OP units at December 31, 1999 have the right to require
the OP to redeem their OP units at any time. However, upon a holder giving
notice of the exercise of this right, the Company has the right to acquire such
holder's OP units in exchange for cash or, if certain conditions are satisfied,
an equal number of shares of the Company's common stock.
During 1999, the OP redeemed 43,018 OP units for $546,000 in cash, resulting in
an increase in CV Reit's indirect ownership of the OP from 84.2% to 84.5%.
During 1998, the OP redeemed 302,552 OP units for $3.7 million in cash,
resulting in an increase in CV Reit's indirect ownership of the OP from 81.7% to
84.2%.
(12) Segment Reporting
Effective December 31, 1997, the Company became an equity REIT engaged in the
acquisition, leasing and management of neighborhood or community shopping
centers, located in Pennsylvania, New Jersey and Florida. Prior to 1998, the
Company's only principal business segment consisted of investments in mortgage
notes receivable. Although the Company no longer invests in new mortgage notes
receivable, it continues to hold its Recreation Notes (Note 5) and, as a result,
the following segment disclosure includes information on those investments (in
thousands):
Income
Producing
Real Estate
Principally Mortgage
Shopping Notes
Centers Receivable Other Consolidated
_____________________________________________
Year Ended December 31, 1999:
Total revenues $ 25,480 $7,878 $ 205 $33,563
======== ====== ====== =======
Net operating income before
interest expense $ 18,020 $7,878 $ 44 $25,942
======== ====== ====== =======
Net operating income after
interest expense $ 9,685 $4,470 $ 44 $14,199
======== ====== ====== =======
Net operating income from reportable
segments $14,199
Depreciation and amortization (4,078)
General, administrative and other (1,530)
Minority interests in income of OP (1,344)
_______
Net income $ 7,247
=======
Year Ended December 31, 1998:
Total revenues $ 16,853 $8,471 $ 685 $26,009
======== ====== ====== =======
Net operating income before
interest expense $ 11,868 $8,471 $ 486 $20,825
======== ====== ====== =======
Net operating income after
interest expense $ 6,554 $5,430 $ 486 $12,470
======== ====== ====== =======
Net operating income from reportable
segments $12,470
Depreciation and amortization (2,707)
General, administrative and other (1,446)
Gain on sale of real estate 2,347
Minority interests in income of OP (1,855)
_______
Income before income tax benefit $ 8,809
=======
31
Income
Producing
Real Estate
Principally Mortgage
Shopping Notes
Centers Receivable Other Consolidated
______________________________________________
At December 31, 1999:
Investment in real estate and
mortgage notes receivable . $173,076 (a) $ 63,385 $ 8,893 $245,354
======== ======== ======== ========
Borrowings .................. $119,520 $ 36,809 $ -- $156,326
======== ======== ======== ========
At December 31, 1998:
Investment in real estate and
mortgage notes receivable . $142,708 (a) $ 64,988 $ 8,786 $216,482
======== ======== ======== ========
Borrowings .................. $ 91,478 $ 30,455 $ -- $121,933
======== ======== ======== ========
(a) Includes $34,634 and $75,397 of additions during the years ended December
31, 1999 and 1998, respectively.
(13) Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data follows (in thousands, except per share data):
Quarter Ended
March 31, June 30, Sept. 30, Dec.31,
_______________________________________________
1999:
Revenues ..................... $7,582 $8,488 $8,575 $8,917
Net income ................... 1,829 1,545 1,826 2,047
Per common share ............. .23 .19 .23 .26
1998:
Revenues ..................... $5,248 $5,993 $7,226 $7,542
Net income (a) ............... 1,877 3,680 1,556 8,737
Per common share ............. .24 .46 .20 1.09
(a) The quarter ended June 30, 1998 includes the Company's share of $2.3
million gain on sale of real estate and the quarter ended December 31,
1998 includes $7 million benefit arising from reversal of net deferred tax
liability.
32
CV Reit, Inc. and Subsidiaries
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1999
(in thousands)
Costs
Capitalized Gross Amount at Accum- Depre-
Initial Subsequent Which Carried at ulated ciable
Cost to Company to Close of Year Depre- Date of Date Life
Description Encumbrances Land Building Acquisition Land Building Total ciation Construction Acquired (Years)
-------------------- ------------ ---------------- ----------- ----------------- ------- ------- ------------ --------- --------
Shopping Centers
Pennsylvania
Chalfont Village
Shopping Center $ - $ 157 $ 1,417 $ 7 $ 157 $ 1,424 $1,581 $ 10 1968 1999 40
Cherry Square
Shopping Center 5,100 683 6,148 1 683 6,149 6,832 95 1991 1999 40
Chesterbrook
Village Center 7,788 1,336 12,023 156 1,336 12,179 13,515 633 1980 1997 40
Collegeville
Shopping Center 4,710 718 6,461 46 718 6,507 7,225 232 1978 1998 40
County Line Plaza 5,051 539 4,852 2,405 539 7,257 7,796 399 1970 1997 40
Danville Plaza 805 156 1,400 36 156 1,436 1,592 72 1971 1997 40
Dickson City
Center - 450 3,844 - 450 3,844 4,294 192 1972 1997 40
Gilbertsville
Shopping Center 2,615 382 3,445 121 382 3,566 3,948 133 1974 1998 40
Lakewood Plaza
Shopping Center 18,750 2,459 22,134 289 2,459 22,423 24,882 415 1962 1999 40
Mount Carmel Plaza 807 210 1,892 4 210 1,896 2,106 95 1988 1997 40
New Holland Plaza 934 117 1,051 - 117 1,051 1,168 37 1977 1998 40
North Penn
Marketplace 2,991 532 4,219 137 532 4,356 4,888 164 1983 1998 40
Village at Newtown 22,300 2,766 24,891 71 2,766 24,962 27,728 1,099 1989 1998 40
Whitemarsh
Shopping Center 7,104 1,077 9,694 61 1,077 9,755 10,832 485 1969 1997 40
Woodbourne Square 1,915 427 3,840 38 427 3,878 4,305 194 1985 1997 40
555 Scott
Street Center - 74 662 - 74 662 736 33 1961 1997 40
New Jersey
Marlton Shopping
Center-Phase II 9,300 (1) 1,252 11,272 98 1,252 11,370 12,622 434 1986 1998 40
Marlton Shopping
Center-Phase I 11,650 1,658 14,922 1 1,658 14,923 16,581 560 1985 1998 40
Rio Grande Plaza 7,744 1,442 12,975 20 1,442 12,995 14,437 651 1991 1997 40
Florida
Century Plaza 10,200 (1) 1,429 5,973 340 1,429 6,313 7,742 649 1976 1996 15-39
Office Buildings
Century Village
Administration
Building, Florida - - 750 220 - 970 970 327 1970 1991 5-30
Plymouth Plaza,
Pennsylvania 2,306 438 3,938 28 438 3,966 4,404 199 1974 1997 40
-------- -------- -------- ------ ------- -------- -------- ------
$122,070 $ 18,302 $157,803 $4,079 $18,302 $161,882 $180,184 $7,108
======== ======== ======== ====== ======= ======== ======== ======
(1) These encumbrances are cross collateralized under mortgages in the amount of
$19.5 million at December 31, 1999.
33
CV Reit, Inc. and Subsidiaries
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1999
(in thousands)
The changes in total real estate assets for the three years ended December 31,
1999, are as follows:
1999 1998 1997
_________ _________ _________
Balance, beginning of year ...... $ 145,550 $ 73,748 $ 12,423
New property acquisitions ........ 32,999 73,881 61,266
Capital improvements ............. 1,635 2,069 59
Sale of real estate .............. -- (4,148) --
_________ _________ _________
Balance, end of year ............ $ 180,184 $ 145,550 $ 73,748
========= ========= =========
The changes in accumulated depreciation for the three years ended December 31,
1999, are as follows:
1999 1998 1997
_______ _______ ________
Balance, beginning of year ............ $ 3,142 $ 2,740 $ 2,359
Depreciation for the year .............. 3,966 2,656 381
Sale of real estate .................... -- (2,254) --
_______ _______ _______
Balance, end of year .................. $ 7,108 $ 3,142 $ 2,740
======= ======= =======
34
CV REIT, INC. AND SUBSIDIARIES
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1999
(dollars in thousands)
Carrying
Final Face Amount of
Interest Maturity Amount of Mortgages
Description Rate Date Periodic Payment Terms Mortgages (a)
----------------------- ----------- ---------- -------------------------- ---------- ------------
Permanent -
Recreation Facilities
Century Village at:
Boca Raton, FL 13.25% 12/31/11 Level P & I due monthly $ 12,533 $10,338
West Palm Beach, FL 13.25% 01/15/12 Level P & I due monthly 18,342 15,131
Deerfield Beach, FL
(2nd mortgage) 13.50% 01/15/12 Level P & I due monthly 13,235 10,975
Deerfield Beach, FL 8.84% 03/01/07 Level P & I due monthly 3,485 2,213
Pembroke Pines, FL 11% 07/31/23 Level P & I due monthly 25,000 24,728
-------
$ 63,385 (b)
========
Note: All loans are first mortgages except where noted, there are no prior liens
and no delinquent principal or interest.
(a) The tax carrying value of the notes is approximately $29.5 million.
(b) The changes in the carrying amounts are summarized as follows:
1999 1998 1997
_________ _________ _________
Balance, beginning of period $ 64,988 $ 77,652 $ 84,808
Advances on new mortgage loans - 5,190 16,112
Collections of principal (1,603) (17,854) (23,268)
_________ _________ _________
Balance, end of period $ 63,385 $ 64,988 $ 77,652
========= ========= =========
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