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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO THE SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[ ] FOR THE TRANSITION PERIOD FROM _________TO __________
COMMISSION FILE NUMBER: 000-23733
CAPITAL AUTOMOTIVE REIT
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS DECLARATION OF TRUST)
MARYLAND 54-1870224
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(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
1420 SPRING HILL ROAD, SUITE 525 MCLEAN,
VIRGINIA 22102
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(703) 288-3075
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(g) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name Of Each Exchange On Which Registered
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Common Shares of Beneficial Interest, $.01 par
value per share Nasdaq National Market
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The number of Registrant's common shares of beneficial interest outstanding on
February 28, 2001 was 21,493,042.
The aggregate market value of voting stock held by non-affiliates of the
Registrant, based upon the closing sales price of the Registrant's common shares
of beneficial interest on February 28, 2001 was $292,793,328.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of Capital Automotive REIT's Proxy Statement for the Annual
Meeting of shareholders for fiscal year 2001 are incorporated by reference into
Part III of this Annual Report on Form 10-K.
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CAPITAL AUTOMOTIVE REIT
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2000
TABLE OF CONTENTS
PAGE REFERENCE
FORM 10-K
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Part I
Item 1. Business................................................... 1
Item 2. Properties................................................. 8
Item 3. Legal Proceedings.......................................... 10
Item 4. Submission of Matters to a Vote of Shareholders............ 10
Part II
Item 5. Market for the Company's Common Equity and Related
Shareholder Matters........................................ 10
Item 6. Selected Financial Information............................. 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 20
Item 8. Financial Statements and Supplementary Data................ 21
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 39
Part III
Item 10. Trustees and Executive Officers of the Company............. 40
Item 11. Executive Compensation..................................... 40
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 40
Item 13. Certain Relationships and Related Transactions............. 40
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K 40
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PART 1
ITEM 1. BUSINESS
COMPANY OVERVIEW
Capital Automotive REIT (the "Company") is a Maryland real estate investment
trust formed in October 1997. The Company owns interests in real estate through
Capital Automotive L.P. (the "Operating Partnership") and its subsidiaries. The
Company is the sole general partner of the Operating Partnership, and as of
December 31, 2000, owned approximately 71.5% of the units of limited partnership
interest in the Operating Partnership ("Units"). The Company completed its
initial public offering of common shares and began generating rental income in
February 1998. References to "we," "us" and "our" refer to the Company or, if
the context otherwise requires, the Operating Partnership and our business and
operations conducted through the Operating Partnership and/or the Company's and
the Operating Partnership's directly and indirectly owned subsidiaries.
Our primary business strategy is to invest in real estate (land, buildings
and other improvements) and at the same time enter into long-term, triple-net
leases with operators of franchised automobile dealerships, motor vehicle
service, repair or parts businesses and related businesses. In this Annual
Report on Form 10-K, we use the term dealerships to refer to these types of
businesses that are operated on our properties. We focus on acquiring real
estate used by multi-site, multi-franchised dealerships located primarily in
major metropolitan areas throughout the United States. When acquiring real
estate, we target the top 100 dealer groups in the top 50 automobile markets
throughout the country. As part of our acquisition analysis, we utilize
stringent credit underwriting standards for prospective tenants that focus on
liquidity, tangible net worth, historical profitability and rent and other cash
flow coverage ratios. Our real estate analysis stresses location, market
characteristics, retail dynamics and age and condition of improvements. The
objective of this strategy is to provide consistent, stable cash flow for our
shareholders.
As of December 31, 2000, we had invested approximately $1.04 billion in
properties. As of December 31, 2000, we owned 244 properties located in 27
states, a total of approximately 1,518 acres of land containing approximately
8.9 million square feet of buildings and improvements. Our tenants operate 365
motor vehicle franchises on our properties, representing 39 brands of motor
vehicles, which consist of Acura, Audi, BMW, Buick, Cadillac, Chevrolet,
Chrysler, Daewoo, Dodge, Dodge Trucks, Ford, Freightliner, GMC, GMC Truck,
Honda, Hyundai, Infiniti, Isuzu, Jaguar, Jeep, Kia, Land Rover, Lexus,
Lincoln-Mercury, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Oldsmobile, Plymouth,
Pontiac, Porsche, Saab, Saturn, Subaru, Suzuki, Toyota, Volkswagen and Volvo.
We focus on buying properties from third parties that have a long history of
operating multi-site, multi-franchised dealerships. In this Annual Report on
Form 10-K, we use the term "dealer group" to refer to a group of related persons
and companies who sell us properties. We also use the terms "dealer group",
"tenant," "lessee" or "operators of dealerships" to refer to the related persons
and companies that lease our properties.
We purchase properties in exchange for cash, new debt, the assumption of
existing debt, Units, or a combination of any of the four. We generally lease
our properties to established, creditworthy tenants, for a period of 10 to 20
years. We usually give the tenant the option to renew the lease on the same
terms and conditions for one or more additional periods of five to 10 years
each. We typically require our tenants to pay all operating expenses of the
property, including all real estate taxes and assessments, utilities, insurance,
repairs, maintenance and other expenses. This type of lease is commonly known as
a triple-net lease.
When we evaluate prospective tenants and potential properties for purchase,
we consider such factors as:
- the management and operating experience of the dealer group;
- the adequacy of a dealer group's liquidity, tangible net worth,
historical profitability and rent and other cash flow coverage ratios;
- the value of the land, buildings and other improvements;
- the construction quality, condition and design of the dealership
buildings and other improvements located on the property;
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- the type of franchises operated by the dealer group;
- competitive conditions in the vicinity of the property;
- the geographic area in which the property is located; and
- the environmental condition of the real estate.
We have borrowed, and will continue to borrow, funds to buy properties.
As of December 31, 2000, we had total debt outstanding of $585.7 million. Of
this debt, approximately $571.5 million (consisting of $481.9 million of fixed
rate indebtedness and $89.6 million of variable rate indebtedness) was mortgage
indebtedness secured by approximately 210 of our dealership properties. In
addition, we had $14.2 million outstanding on our variable rate revolving credit
facilities. We may issue equity or debt securities, including preferred equity
and senior or subordinated notes. These notes may be secured by properties or
leases. We have adopted a policy limiting debt to approximately 65% of our
assets (calculated as total assets plus accumulated depreciation). As of
December 31, 2000, our debt was approximately 55% of our assets. This policy may
be changed by our Board of Trustees at any time without shareholder approval. In
addition, to minimize interest rate risk, we currently intend to maintain at
least 85% of our total outstanding debt as long-term fixed rate debt or variable
rate debt that is substantially match-funded with the terms of our leases.
Approximately 90% of our debt outstanding as of December 31, 2000 is
substantially match-funded, non-recourse debt. We may change the 85% target at
any time without shareholder approval.
As a real estate investment trust, we acquire properties through our direct
and indirect subsidiaries, including the Operating Partnership, and manage our
business in a manner that is intended to be consistent with the requirements of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
of the Internal Revenue Service that govern taxation of real estate investment
trusts. We have paid, and expect to continue to pay, regular cash dividends to
our shareholders. It is also our objective to provide our shareholders the
opportunity for increased dividends from increasing annual rental income; to
preserve and protect the investments of our shareholders; and to provide our
shareholders with the opportunity to increase the value of their investments.
We are a self-administered and self-managed real estate investment trust,
meaning that our trustees, officers and other employees manage and administer
our business. Our executive officers are Thomas D. Eckert, President and Chief
Executive Officer; David S. Kay, Vice President and Chief Financial Officer;
John M. Weaver, Vice President, Secretary and General Counsel; Peter C. Staaf,
Vice President and Treasurer; and Jay M. Ferriero, Vice President and Director
of Acquisitions.
Our principal executive office is located at 1420 Spring Hill Road, Suite
525, McLean, Virginia 22102 and our telephone number is (703) 288-3075.
STRATEGY
Our primary business strategy is to invest in real estate (land, buildings
and other improvements) and at the same time enter into long-term, triple-net
leases with operators of franchised automobile dealerships, motor vehicle
service, repair or parts businesses and related businesses. We focus on
acquiring real estate used by multi-site, multi-franchised dealerships located
primarily in major metropolitan areas throughout the United States. When
acquiring real estate, we target the top 100 dealer groups in the top 50
automobile markets throughout the country. As part of our acquisition analysis,
we utilize stringent credit underwriting standards for prospective tenants that
focus on liquidity, tangible net worth, historical profitability and rent and
other cash flow coverage ratios. Our real estate analysis stresses location,
market characteristics, retail dynamics and age and condition of improvements.
The objective of this strategy is to provide consistent, stable cash flow for
our shareholders.
We believe that our strategy will provide dealer groups with an opportunity
(1) to achieve liquidity, while maintaining ownership and control of the
operations of the dealerships, (2) to diversify their investments, (3) to obtain
funds to expand operations or remodel the facilities of their dealerships, (4)
to facilitate their estate planning, and (5) to provide attractive tax deferral
solutions. In addition, for existing tenants, we have a program that can fund
significant facility improvements and expansions for properties in our
portfolio. Under this program, the cost of the improvements
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is added to the existing lease, which is reset to the original term when the
funding is completed. We will also provide takeout commitments to purchase
newly-constructed dealerships or will fund new construction.
We believe that because of the unique requirements of dealerships, these
properties are a discrete sector of the national retail real estate industry.
Industry sources estimate that the real property and improvements associated
with franchised automobile dealerships are worth in excess of $40 billion, of
which approximately $15 to $18 billion would likely meet our stringent
acquisition criteria. We believe that these properties present attractive
acquisition and financing opportunities because they generally have locations
with frontage on and visibility from major thoroughfares, and zoning which
permits dealership operations as well as a wide range of alternative uses. In
the event that one of these properties becomes unsuitable for dealership use,
the property could typically be redeveloped for other commercial uses.
To achieve our objective of having long-term, predictable streams of cash flow
to maximize shareholder value, we are:
- Diversifying geographically and acquiring properties located
predominately in major metropolitan areas in order to minimize
the potential adverse impact of economic downturns in certain
markets;
- Diversifying by franchises that are operated by our tenants to
minimize the potential adverse impact of changes in consumer
preferences and manufacturer fortunes;
- Partnering with those dealer groups leading the consolidation
that is occurring in the automotive retail sector. At this time,
these consolidators are not acquiring real estate, which in many
cases, allows us to become their exclusive real estate partner;
- Leveraging the contacts and experience of our management to
build and maintain long-term relationships with dealer groups;
- Leasing back properties to dealer groups on a long-term,
triple-net basis, thereby minimizing brokerage, re-leasing and
similar costs. Further, the long-term operation of dealerships
at property locations increases the likelihood that our tenants
will renew their leases;
- Cross-guaranteeing (or guaranteeing by a parent) all leases
within a dealer group;
- Requiring our tenants to submit financial and other information,
generally quarterly, to ensure compliance with financial
covenants, such as minimum tangible net worth and cash flow
coverage ratios;
- Minimizing interest rate risk by generally matching the average
term of the lease with that of the debt as well as the type of
lease with the type of debt (fixed or variable rate) in order to
maintain an investment spread over the lease term
("match-funding"); and
- Utilizing a variety of financing sources, such as the issuance
of Units, or other equity securities or debt securities, or a
combination thereof. For example, the Company's "UPREIT"
structure allows the Company to acquire properties in exchange
for Units, thereby giving the sellers the benefit of being able
to defer some or all of the taxable gain that otherwise would
have been incurred if the properties were sold for cash. This
structure enhances our ability to consummate transactions and to
structure more competitive acquisitions than other entities in
the market that lack our access to capital and the ability to
acquire properties with Units.
THE PROPERTIES, LEASES, TYPICAL LEASE TERMS AND DEALERSHIPS
PROPERTIES
As of December 31, 2000, we owned 244 properties, representing 365 motor
vehicle franchises, with a total investment of approximately $1.04 billion.
These properties total approximately 8.9 million square feet of buildings and
improvements on approximately 1,518 acres of land and are located in 27 states.
Our interest in each of the properties includes the land, buildings and
improvements, related easements and rights and most fixtures. We do not own or
lease any significant amount of personal property, furniture or equipment at any
property.
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The properties generally consist of the land or a leasehold interest in land
and one or more retail showrooms, office space (which may or may not be
contained in separate buildings), adjacent service and repair facilities, parts
and accessories departments, and in many cases, acreage set aside for used car
sales, body shops and parking for inventory. As of December 31, 2000, all of our
properties (excluding one parcel valued at approximately $500,000 and acquired
in connection with another property at no additional cost), were subject to
leases. All of our leases were performing and in full force and effect at
December 31, 2000. See Item 2 of this Annual Report on Form 10-K for additional
information regarding our properties.
LEASES AND TYPICAL LEASE TERMS
Our properties are leased to tenants who operate dealerships on the
properties. Although there are variations in the terms of our leases, the
following is a summary description of the general terms of a majority of our
leases. We intend to seek favorable terms for all leases with future tenants
which may or may not be on terms similar to those described below. Leases are
individually negotiated and do vary from the terms summarized below, at times in
material ways.
General. Substantially all of the leases are "triple-net," meaning that the
tenant is obligated to pay rent and, typically, all operating expenses of the
property, including, but not limited to, all taxes, assessments and other
governmental charges, insurance, utilities, service, repairs and maintenance. In
addition, the leases generally require the tenants to pay for additions,
repairs, renovations and improvements to the properties undertaken by the
tenant, which, upon expiration or termination of the leases, generally become
our property.
Rent. During the initial lease term and any extensions, each tenant pays
annual base rent in monthly installments. Base rent is typically adjusted upward
periodically, usually based on a factor of the change in the consumer price
index ("CPI"). During the first quarter of 2000, we introduced a variable cap
rate program. Under this program, base rent payments change monthly based upon a
fixed spread over an applicable index, generally LIBOR. In addition, the spread
is adjusted upward periodically based on a factor of the change in the CPI. The
tenant has the ability to fix the base rent during the initial lease term. The
fixed base rent typically continues to be adjusted upward periodically based on
a factor of the change in the CPI. Leases under our variable cap rate program
represented approximately 8% of our total annualized rental revenue as of
December 31, 2000. As of February 28, 2001, no tenants have defaulted on any
rental payments.
Term and Termination. The leases generally are for initial terms of 10 to 20
years, with options to renew, exercisable at the option of the tenant, upon the
same terms and conditions for one or more additional periods of five to 10 years
each. The tenant does not have the right to terminate the lease and vacate the
property before the end of the lease term, except in extraordinary circumstances
such as the taking or condemnation of the property. See "--Damage to, or
Condemnation of, a Property" below. In the event of a default by the tenant, the
legal remedies that could be available to us include the eviction of the tenant,
which could result in early termination of the lease. Typically, all leases
within a dealer group are cross-guaranteed (or guaranteed by a parent) which
helps to ensure the stability of the rental income from the respective tenant.
Insurance. The leases typically provide that the tenants will maintain
insurance on the properties of the type and in the amounts that are usual and
customary. We believe that all of our properties are adequately covered by
insurance, including adequate commercial general liability, fire, flood and
extended loss insurance provided by reputable companies, with commercially
reasonable deductibles and limits. However, it is not possible or commercially
reasonable to insure against all risks, in all cases, due to the cost or the
availability of certain types of insurance. If a property suffers uninsured
damage, the repair of the property is the tenant's responsibility but we may
have to bear all or a portion of these costs if the tenant is unable to pay all
of those costs.
Damage to, or Condemnation of, a Property. The leases generally provide that
if all or a material portion of a property is condemned, the lease may be
terminated and any condemnation award would belong to the Company, provided that
in certain circumstances, the tenant may be entitled to share in the
condemnation award. With respect to damage to or destruction of a property, the
leases usually require the tenant to repair such damage or destruction or to
rebuild with insurance proceeds. Rent is not abated during the period of repair
or rebuilding.
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Assignment. The leases generally provide that the tenants may not, without
our prior written consent (which under certain circumstances may not be
unreasonably withheld) or upon compliance with conditions established by us,
assign or otherwise transfer any lease in whole or in part except to a related
person. Generally, a change of control of the tenant or sale of all or
substantially all of the assets of the tenant will be considered an assignment
of the lease.
Events of Default. If there is an event of default under a lease, we may
terminate the lease, retain possession of the property and/or lease the property
to others. An event of default typically includes, but is not limited to, a
failure to pay rent, a failure to comply with the provisions of the lease, the
occurrence of certain events relating to bankruptcy or insolvency of the tenant,
or certain defaults under a franchise or license agreement.
Indemnification. Generally, a tenant will be required to indemnify us and
our officers, trustees, employees, owners, agents and affiliates from
liabilities, costs and expenses arising from such things as (1) the use,
condition, operation or occupancy of the property, (2) any breach, violation or
nonperformance of the lease or any law, (3) any injury or damage to the person,
property or business of the tenant or any customer of the tenant, and (4) the
violation of environmental laws.
Right of First Negotiation, First Offer and Option to Purchase Property.
Certain leases provide the tenant with a right of first negotiation to purchase
the property if we decide to sell the property. We will notify the tenant of our
intention to sell the property and the tenant will have a period of time to
extend an offer, including specifying the purchase price. We may in our
discretion reject the tenant's offer and sell the property to a third party on
other terms if the purchase price is higher or we reasonably believe such terms
are better than the terms proposed by the tenant. Under the terms of a limited
number of leases, the tenant has a right of first offer, in which, for a period
of time after receiving notice from us of our intention to sell the property and
the proposed sales price for the property, it may advise us that it wishes to
purchase the property at the specified price. If the tenant does not exercise
this right or if the tenant and we cannot agree on the terms and conditions for
the purchase of the property by the tenant, we are free to offer and sell the
property to a third party. In addition, a limited number of our leases offer
tenant purchase options, generally at a pre-determined price or the greater of
the fair market value of the property at the time of sale or our purchase price,
which may be increased by a factor of CPI at the time the option is exercised.
Environmental Matters. The tenants are typically responsible for compliance
with material applicable environmental laws, including, but not limited to, laws
pertaining to hazardous materials, and for correcting material adverse
environmental conditions at or on the properties. Typically, a lease will
require the tenant to indemnify us for liabilities and costs related to
environmental matters.
DEALERSHIPS AND DEALER GROUPS
Typically, new motor vehicle dealer groups operate their dealerships under
franchise arrangements with motor vehicle manufacturers. Such arrangements
typically specify the locations at which the dealer group can sell motor
vehicles and related parts and products and perform certain approved services in
order to serve a specified market area. Manufacturers maintain control over the
designation of market areas and allocation of vehicles among dealer groups. The
manufacturer does not guaranty exclusivity within a specified territory.
Each arrangement typically grants the dealer group the non-exclusive right
to use and display the manufacturer's trademarks, service marks and designs in
the form and manner approved by the manufacturer and imposes a variety of
requirements on the dealer group concerning, for example, the showrooms, the
facilities and equipment for servicing vehicles, the maintenance of vehicles and
parts inventories, the maintenance of minimum net working capital and the
training of personnel. The arrangement usually requires the dealer group to
submit a monthly financial statement of operations. In addition, the
manufacturer's prior approval is required for changes in certain members of
management or transfers of ownership of the dealer group. Pursuant to these
arrangements, several manufacturers have the right to consent to any transfers
of assets or real property considered necessary for conducting the business of
the dealership.
Typically, the manufacturer has the ability to terminate the arrangement
earlier than the expiration of the term of the arrangement or refuse to renew
the arrangement under certain circumstances such as when a dealer group fails to
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meet financial covenants established by the manufacturer. We believe that each
dealer group that sells new motor vehicles generally expects to renew any
expiring arrangements in the ordinary course of business.
In addition to selling and leasing new vehicles, many dealer groups sell and
lease used vehicles. Dealer groups also provide service and parts, primarily for
the vehicle makes and models that they sell or lease, and perform both warranty
and non-warranty service work. In general, parts departments support the sales
and service divisions. Dealers may also sell parts at retail to their customers
or at wholesale to independent repair shops. Dealer groups also arrange
third-party financing for their customers, sell vehicle service contracts and
arrange selected types of credit insurance for which they receive financing
fees.
For the year ended December 31, 2000, Sonic Automotive, Inc. and its
affiliates ("Sonic") accounted for approximately 25% of our total rental revenue
and, as of December 31, 2000, approximately 28% of our total annualized rental
revenue. Sonic is the tenant of 67 properties and numerous facility improvement
projects. If Sonic were to default on its lease obligations or declare
bankruptcy, we could experience significantly reduced rental revenues until the
properties Sonic leases could be leased to a new tenant or tenants. No other
tenant accounted for 8% or more of our total rental revenue for the year ended
December 31, 2000, or total annualized rental revenue as of December 31, 2000.
See "Item 2--Properties--Property and Lease Concentrations."
We invest in properties throughout the United States. As of December 31,
2000, our properties were diversified across 27 states with the largest
"geographic concentration" in Texas, which accounted for approximately 26% of
our total annualized rental revenue as of December 31, 2000. Properties located
in Virginia represented approximately 10% of our total annualized rental revenue
as of December 31, 2000. No other state's concentration of properties exceeded
10% of our total annualized rental revenue as of December 31, 2000.
As of December 31, 2000, 189 of our 244 properties were operated as
franchised automobile dealerships. In addition, we leased 45 properties, such as
body shops, used vehicle lots and wholesale vehicle auction lots, the majority
of which are operated by franchised automobile dealerships, but are not subject
to any franchise agreement. Of the remaining 10 properties, consisting solely of
raw land, nine are leased by franchised automobile dealers. One parcel, valued
at approximately $500,000 and acquired in connection with another property at no
additional cost, is not subject to a lease.
GOVERNMENTAL REGULATIONS AFFECTING THE PROPERTIES
The tenants and we as property owners are subject to a wide range of
federal, state and local laws and regulations, such as local licensing
requirements, consumer protection laws and regulations relating to gasoline
storage, waste treatment and other environmental matters, including:
Environmental Laws. All real property and the operations conducted on real
property are subject to federal, state and local laws and regulations relating
to environmental protection and human health and safety. Certain of these laws
and regulations may impose joint and several liability on certain statutory
classes of persons, including tenants, owners (such as us) or operators, for the
costs of investigation or remediation of contaminated properties, regardless of
fault or the legality of the original disposal. These laws and regulations apply
to past and present business operations of the dealer groups and the use,
storage, handling and contracting for recycling or disposal of hazardous or
toxic substances or wastes. Generally, tenants are obligated to comply with
environmental laws and remediation requirements. Our leases typically impose
obligations on the tenants to indemnify us from all or most compliance costs we
may experience as a result of the environmental conditions on the properties. If
a tenant fails to or cannot comply, we could be forced to pay such costs. As of
February 28, 2001, we are not aware of any environmental condition with respect
to any of the properties that management believes would have a material adverse
effect on our business, financial condition or results of operations. We,
however, cannot predict whether new or more stringent laws relating to the
environment will be enacted in the future or how such laws or the operations of
the dealerships and other businesses on our properties will impact the
properties. Costs associated with an environmental event could be substantial.
Prior to the acquisition of our properties, we typically engage independent
environmental consultants to conduct or update Phase I environmental assessments
(which generally do not involve invasive techniques such as soil or ground water
sampling) on the properties. In many cases we have commissioned independent
environmental consultants to perform Phase II
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environmental testing (which generally involves soil or groundwater testing for
contaminants). Occasionally when a contaminant is detected on a property, we
require as a condition of our acquisition of such property, that the seller post
a cash escrow to secure expected remediation costs. None of these assessments or
updates revealed any adverse environmental condition which management believes
would have a material adverse effect on our business, financial condition or
results of operations. There can be no assurances, however, that the
environmental assessments detected all contamination, that environmental
liabilities have not developed since such environmental assessments were
prepared, or that future uses or conditions (including, without limitation,
changes in applicable environmental laws and regulations) will not result in
imposition of environmental liability.
Americans With Disabilities Act of 1990. The properties, as commercial
facilities, are required to comply with Title III of the Americans with
Disabilities Act of 1990 (the "ADA"). Investigation of a property may reveal
non-compliance with the ADA. The tenants will have primary responsibility for
complying with the ADA but we may incur costs if the tenant does not comply. As
of February 28, 2001, we have not been notified by any governmental authority,
and management is not aware, of any non-compliance with the ADA that management
believes would have a material adverse effect on our business, financial
condition or results of operations.
Other Regulations. State and local fire, life-safety and similar
requirements regulate the use of the properties. The leases generally require
that each tenant will have primary responsibility for complying with
regulations, and failure to comply could result in fines by governmental
authorities, awards of damages to private litigants, or restrictions on the
ability to conduct business on such properties.
COMPETITION
We believe that we are the only publicly-traded real estate investment trust
to primarily focus on acquiring dealership properties. At this time, we are not
aware of any other entity that is pursuing, or intends to pursue, the
acquisition of properties used by motor vehicle dealerships.
We anticipate that the majority of our competition will come from banks and
other finance companies that are offering primarily mortgage debt instruments,
or may, in the future, offer other types of debt financing.
Other public or private entities may decide to pursue our strategy of
acquiring and leasing back properties used by dealerships. Current and future
competitors may have greater financial resources and/or greater general real
estate experience than we do. We believe that competition for properties will
primarily be on the basis of acquisition price and negotiation of rents and
other lease terms. Our tenants may own or operate other properties that are not
owned by us.
EMPLOYEES
As of February 28, 2001, we had 18 employees. None of the employees is
represented by a collective bargaining unit. We believe that the relationship
with our employees is good.
RECENT DEVELOPMENTS
During the three months ended December 31, 2000, we completed approximately
$53.7 million of acquisitions. We acquired five dealership properties for
approximately $48.2 million and facility improvements and expansions on
previously acquired properties totaling approximately $5.5 million.
Consideration for the properties (including facility improvements and
expansions) was approximately $42.8 million in permanent financing and the
remainder from a combination of funds drawn down on the Company's short-term
credit facilities and cash on hand. These properties total approximately 469,000
square feet of buildings and improvements on approximately 117 acres of land and
are located in seven states (California, Georgia, Ohio, South Carolina,
Tennessee, Texas and Virginia). These properties have initial lease terms
ranging from 10 to 20 years (with a weighted average initial lease term of 17.4
years), and have renewal options exercisable at the option of the tenant
(ranging from a total of five to 30 years).
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2000 ACQUISITIONS
During the year ended December 31, 2000, we acquired approximately $106.6
million in total real estate, which included 17 dealership properties, facility
improvements and expansions on eight previously acquired properties and two
construction fundings. Consideration for the properties (including facility
improvements, expansions and construction fundings) consisted of approximately
132,000 Units (valued at approximately $1.9 million at the time of acquisition)
and the remainder from a combination of funds drawn down on the Company's
short-term credit facilities, permanent financing and cash on hand. We
anticipate that the funds drawn down on the Company's short-term credit
facilities will be replaced with permanent financing during the first half of
2001. These properties and improvements added approximately 918,000 square feet
of buildings and improvements on approximately 239 acres of land and are located
in 13 states (Alabama, California, Florida, Georgia, Illinois, Indiana,
Louisiana, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia).
These properties have initial lease terms ranging from 10 to 20 years (with a
weighted average initial lease term of 16.7 years), and have renewal options
exercisable at the option of the tenant (ranging from a total of five to 30
years).
ITEM 2. PROPERTIES
PROPERTIES
As of December 31, 2000, we had invested approximately $1.04 billion in
properties, with individual properties ranging from approximately $57,000 to
approximately $23.8 million. As of December 31, 2000, we owned 244 properties
located in 27 states (Alabama, Arizona, California, Colorado, Connecticut,
Florida, Georgia, Idaho, Illinois, Indiana, Louisiana, Maryland, Missouri,
Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma,
Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah and Virginia), and
a total of approximately 1,518 acres of land containing approximately 8.9
million square feet of buildings and improvements. Our tenants operate 365 motor
vehicle franchises on these properties, representing 39 brands of motor
vehicles, consisting of Acura, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler,
Daewoo, Dodge, Dodge Trucks, Ford, Freightliner, GMC, GMC Truck, Honda, Hyundai,
Infiniti, Isuzu, Jaguar, Jeep, Kia, Land Rover, Lexus, Lincoln-Mercury, Mazda,
Mercedes-Benz, Mitsubishi, Nissan, Oldsmobile, Plymouth, Pontiac, Porsche, Saab,
Saturn, Subaru, Suzuki, Toyota, Volkswagen and Volvo.
All of the properties are owned on a fee simple basis, except that a small
portion of one property is occupied pursuant to a ground lease from the owner of
the property. As of December 31, 2000, 189 of our 244 properties were operated
as franchised automobile dealerships. In addition, we leased 45 properties, such
as body shops, used vehicle lots and wholesale vehicle auction lots, the
majority of which are operated by franchised automobile dealers, but are not
subject to any franchise agreement. Of the remaining 10 properties, consisting
solely of raw land, 9 are leased by franchised automobile dealers. One parcel,
valued at approximately $500,000 and acquired in connection with another
property at no additional cost, is not subject to a lease.
GENERAL DESCRIPTION OF PROPERTIES
As of December 31, 2000, our properties conform generally to the following
specifications for size, cost and type of land, buildings and other
improvements.
Land sizes typically range from one acre to 20 acres. The improvements on
the properties generally consist of one or more retail showrooms, office space
(which may or may not be contained in a separate building), adjacent service and
repair facilities, parts and accessories departments, and in many cases, acreage
set aside for used car sales, body shops, parking for inventory and future
development. The properties generally are zoned for a wide range of commercial
uses and typically have frontage on major transportation arteries with high
traffic patterns, high visibility, signage and ease of ingress and egress.
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LEASES AND LEASE EXPIRATIONS
Substantially all of our properties are leased under triple-net leases,
under which the tenants typically pay all operating expenses of a property,
including, but not limited to, all taxes, assessments and other government
charges, insurance, utilities, service, repairs and maintenance. We believe that
our properties are covered by adequate commercial general, fire, flood and
extended loss insurance provided by reputable companies, with commercially
reasonable deductibles and limits.
Our properties are subject to leases with initial terms that range generally
from 10 to 20 years, with a weighted average initial lease term of approximately
13.6 years. The leases typically have options to renew upon the same terms and
conditions for one or more additional periods of five to 10 years each
exercisable at the option of the tenant (ranging from a total of five to 40
years). With respect to the leases for properties acquired from Sonic during
August 1999, Sonic is required to renew, for an additional five years, the
initial terms of leases representing 75% of the total rental payments for such
Sonic leases expiring in any given year. As of December 31, 2000, the remaining
weighted average initial lease term was approximately 11.7 years. The
calculation of weighted average initial lease term and remaining weighted
average initial lease term assumes that Sonic renews leases as specified above.
The following table sets forth the schedule of lease expirations for our
230 leases in place as of December 31, 2000 for each of the 10 years beginning
with 2001, assuming that none of the tenants (other than Sonic) exercise or have
exercised renewal options and that Sonic renews leases as specified above.
TOTAL RENTAL
REVENUE PERCENTAGE OF TOTAL
REPRESENTED COMPANY ANNUAL
NUMBER OF BY EXPIRING RENTAL REVENUE
YEAR OF LEASE EXPIRING LEASES (IN REPRESENTED BY
EXPIRATION LEASES THOUSANDS) EXPIRING LEASES
---------------------- ---------- ------------------- --------------------
2001 -- $ -- --
2002 -- -- --
2003 1 244 0.2%
2004 -- -- --
2005 -- -- --
2006 1 154 0.1%
2007 6 2,265 2.1%
2008 28 14,499 13.4%
2009 19 10,468 9.7%
2010 7 2,582 2.4%
2011 and thereafter 168 77,881 72.1%
As of December 31, 2000, all of our 244 properties, excluding one parcel
valued at approximately $500,000 and acquired in connection with another
property at no additional cost, were subject to leases which were performing and
in full force and effect. The excluded parcel is not subject to a lease.
PROPERTY AND LEASE CONCENTRATIONS
We invest in properties throughout the United States. As of December 31, 2000,
the properties were diversified across 27 states with the largest "geographic
concentration" in Texas, which accounted for approximately 26% of our total
annualized rental revenue as of December 31, 2000. Properties located in
Virginia represented approximately 10% of our total annualized rental revenue as
of December 31, 2000. No other state's concentration of properties exceeded 10%
of our total annualized rental revenue as of December 31, 2000.
As of December 31, 2000, the properties were leased to 45 different dealer
groups. Sonic accounted for approximately 25% of our total rental revenue for
the year ended December 31, 2000, and approximately 28% of our total annualized
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rental revenue as of December 31, 2000. If Sonic were to default on its lease
obligations or declare bankruptcy, we could experience significantly reduced
rental revenues until the properties could be leased to a new tenant or tenants.
No other tenant accounted for 8% or more of our total rental revenue for the
year ended December 31, 2000 or total annualized rental revenue as of December
31, 2000.
ITEM 3. LEGAL PROCEEDINGS
Neither we nor any of our properties currently are subject to any material
legal proceeding nor, to our knowledge, is any material litigation currently
threatened against us or any of our properties. Under the leases, the tenants
are typically obligated to indemnify us from and against all liabilities, costs
and expenses imposed upon or asserted against us (1) as owner of the properties
on account of certain matters relating to the operation of the properties by the
tenant, and (2) where appropriate, on account of certain matters relating to the
ownership of the properties prior to their acquisition by us. See "Item
1--Business--The Properties, Leases, Typical Lease Terms and Dealerships--Leases
and Typical Lease Terms--Indemnification."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
No matters were submitted to a vote of shareholders during the fourth
quarter of the fiscal year ended December 31, 2000.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market Information and Distributions. The common shares have been trading on
the Nasdaq National Market under the symbol "CARS" since February 13, 1998.
Listed below are the high and low sales prices of the common shares as reported
on the Nasdaq National Market and the distributions declared for the periods
indicated.
HIGH LOW DISTRIBUTION
------ ----- --------------
Fiscal year ended December 31, 2000
Fourth fiscal quarter $14.5625 $12.375 $0.385
Third fiscal quarter 15.625 12.00 0.3775
Second fiscal quarter 16.0625 11.50 0.3725
First fiscal quarter 13.0625 10.625 0.365
Fiscal year ended December 31, 1999
Fourth fiscal quarter $14.00 $11.625 $0.360
Third fiscal quarter 13.75 12.00 0.350
Second fiscal quarter 13.75 11.375 0.340
First fiscal quarter 15.1875 11.25 0.330
Fiscal year ended December 31, 1998
Fourth fiscal quarter $14.875 $8.8125 $0.320
Third fiscal quarter 15.75 10.875 0.270
Second fiscal quarter 19.375 13.125 0.210
First fiscal quarter (from February 13,
1998) 19.75 16.25 0.076
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On February 28, 2001, the reported closing sales price on the Nasdaq
National Market was $14.1875 per share and there were approximately 300 holders
of record of the common shares of the Company. We believe the total number of
beneficial shareholders of the Company to be approximately 3,600 because certain
common shares are held by depositories, brokers and other nominees.
The Company's ongoing operations generally will not be subject to federal
income taxes as long as the Company maintains its REIT status. Under the Code,
real estate investment trusts are subject to numerous organizational and
operational requirements, including the requirement to distribute at least 90%
(95% for tax years beginning prior to January 1, 2001) of REIT taxable income.
Pursuant to this requirement, we were required to distribute an estimated $25.9
million for 2000 and approximately $23.9 million and $18.4 million for 1999 and
1998, respectively. In order to avoid substantially all federal income taxes, we
elected to distribute at least 100% of our taxable income for 2000, 1999 and
1998. Although we are required to distribute at least 90% of taxable income to
maintain our REIT status, we may or may not elect to distribute in excess of 90%
in future years. Our estimated distribution for 2000 was approximately $27.3
million and our actual distributions for 1999 and 1998 were approximately $25.2
million and $19.4 million, respectively. State income taxes are not significant.
We intend to continue to pay regular quarterly distributions to holders of
common shares and Units. However, future distributions will be at the discretion
of our Board of Trustees and will depend on our actual funds from operations,
financial condition, capital requirements, the annual distribution requirements
under the REIT provisions of the Code and such other factors as the Board of
Trustees deems relevant.
Our total annual dividends declared in 2000, 1999 and 1998 were $1.50 per share,
$1.38 per share and $0.876 per share, respectively. The amounts declared are
different from total distributions calculated for tax purposes. Distributions to
the extent of our current and accumulated earnings and profits for federal
income tax purposes generally will be taxable to a shareholder as ordinary
dividend income. Distributions in excess of current and accumulated earnings and
profits will be treated as a nontaxable reduction of the shareholder's basis in
such shareholder's shares, to the extent thereof, and thereafter as taxable
gain. Distributions that are treated as a reduction of the shareholder's basis
in its shares will have the effect of deferring taxation until the sale of the
shareholder's shares. Of our total distributions in 2000, $1.30 per share
represented ordinary income and $0.03 per share represented a return of capital
to our shareholders. All of our distributions in 1999 and 1998 were treated as
ordinary dividend income to our shareholders for federal income tax purposes.
Given the dynamic nature of our long-term acquisition strategy and the extent to
which any future acquisitions would alter this calculation, no assurances can be
given regarding what portion, if any, of distributions in 2001 or subsequent
years will constitute a return of capital for federal income tax purposes.
ITEM 6. SELECTED FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2000 1999 1998 1997
------ --------- ------- ---------
Total Revenue......................... $103,151 $ 75,873 $ 34,931 $ --
Net Income (Loss)..................... 25,812 21,731 16,491 (650)
Diluted Earnings Per Share............ 1.22 1.01 0.79 --
Annual Cash Dividend Declared Per
Share............................... 1.50 1.38 0.876 --
AS OF DECEMBER 31,
(IN THOUSANDS) 2000 1999 1998 1997
------ ------ --------- -------
Real Estate Before Accumulated
Depreciation........................ $1,037,870 $935,525 $511,132 $ --
Total Assets.......................... 1,021,589 942,559 583,211 1,011
Total Debt............................ 585,719 501,510 161,997 1,000
Minority Interest..................... 115,728 115,384 93,898 --
Total Shareholders' Equity (Deficit).. 290,033 299,599 308,657 (650)
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto appearing in Item 8 of this report.
Historical results set forth in Selected Financial Information, the Financial
Statements and Supplemental Data included in Item 6 and Item 8 and this section
should not be taken as indicative of our future operations.
This Annual Report on Form 10-K, including our documents incorporated herein
by reference, contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended. Also, documents which we subsequently file with the Securities
and Exchange Commission (the "Commission") and are incorporated herein by
reference will contain forward-looking statements. When we refer to
forward-looking statements or information, sometimes we use words such as "may,"
"will," "could," "should," "plans," "intends," "expects," "believes,"
"estimates," "anticipates" and "continues." In particular, the risk factors
included or incorporated by reference in our Annual Report on Form 10-K describe
forward-looking information. The risk factors are not all inclusive,
particularly with respect to possible future events. Other parts of, or
documents incorporated by reference into, this Annual Report on Form 10-K may
also describe forward-looking information. Many things can happen that can cause
our actual results to be very different than those described. These factors
include:
- risks that our growth will be limited if we cannot obtain
additional capital;
- risks of financing, such as the ability to meet existing
financial covenants and our ability to consummate additional
financings on terms that are acceptable to us;
- risks that the Company's tenants will not pay rent or that the
Company's operating costs will be higher than expected;
- risks that additional acquisitions may not be consummated;
- risks related to the automotive industry, such as the ability of
our tenants to compete effectively in the automotive retail
industry and the ability of our tenants to perform their lease
obligations as a result of changes in manufacturer's production,
inventory, marketing or other practices;
- environmental and other risks associated with the acquisition
and leasing of automotive properties; and
- risks related to the Company's status as a REIT for federal
income tax purposes, such as the existence of complex
regulations relating to the Company's status as a REIT, the
effect of future changes in REIT requirements as a result of new
legislation and the adverse consequences of a failure to qualify
as a REIT.
Given these uncertainties, readers are cautioned not to place undue reliance
on these forward-looking statements. We also make no promise to update any of
the forward-looking statements, or to publicly release the results if we revise
any of them. You should carefully review the risks and the risk factors
incorporated herein by reference from our Form 8-K/A filed on January 19, 2001,
as well as the other information in this Annual Report on Form 10-K or referred
to in this Annual Report on Form 10-K, before buying our common shares.
OVERVIEW
Our primary business strategy is to invest in real estate (land, buildings
and other improvements) and at the same time enter into long-term, triple-net
leases with operators of franchised automobile dealerships, motor vehicle
service, repair or parts businesses and related businesses. We focus on
acquiring real estate used by multi-site, multi-franchised dealerships located
primarily in major metropolitan areas throughout the United States. As of
December 31, 2000, we owned 244 dealership properties, representing 365
automotive franchises, with a total investment of approximately $1.04 billion.
These properties total approximately 8.9 million square feet of buildings and
improvements on approximately 1,518 acres of land and are located in 27 states
(Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho,
Illinois, Indiana, Louisiana, Maryland, Missouri, Nevada, New Jersey, New
Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South
Carolina, Tennessee, Texas, Utah and Virginia).
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Substantially all our properties are leased pursuant to long-term,
triple-net leases, under which the tenants typically pay substantially all
operating expenses of a property, including, but not limited to, taxes,
assessments and other government charges, insurance, utilities, service,
repairs, maintenance and other expenses. The initial lease terms generally range
from 10 to 20 years, with a weighted average initial lease term of approximately
13.6 years, and have options to renew under the same terms and conditions for
one or more additional periods of five to 10 years exercisable at the option of
the tenant (ranging from a total of five to 40 years).
Substantially all of our revenues are derived from (1) rents received or
accrued under long-term, triple-net leases; and (2) interest earned from the
temporary investment of funds in short-term investments.
We incur general and administrative expenses including, principally,
compensation expense for our executive officers and other employees,
professional fees and various expenses incurred in the process of identifying
and acquiring additional properties. We are self-administered and managed by our
trustees, executive officers and other employees. Our primary non-cash expense
is the depreciation of our properties. We depreciate buildings and improvements
on our properties over a 40-year period for tax purposes and a 20-year to
30-year period for financial reporting purposes. We do not own or lease any
significant personal property, furniture or equipment at any property we
currently own.
RECENT DEVELOPMENTS
During the three months ended December 31, 2000, we completed approximately
$53.7 million of acquisitions. We acquired five dealership properties for
approximately $48.2 million and facility improvements and expansions on
previously acquired properties totaling approximately $5.5 million.
Consideration for the properties (including facility improvements and
expansions) was approximately $42.8 million in permanent financing and the
remainder from a combination of funds drawn down on the Company's short-term
credit facilities and cash on hand. These properties total approximately 469,000
square feet of buildings and improvements on approximately 117 acres of land and
are located in seven states (California, Georgia, Ohio, South Carolina,
Tennessee, Texas and Virginia). These properties have initial lease terms
ranging from 10 to 20 years (with a weighted average initial lease term of 17.4
years), and have renewal options exercisable at the option of the tenant
(ranging from a total of five to 30 years).
2000 ACQUISITIONS
During the year ended December 31, 2000, we acquired approximately $106.6
million in total real estate, which included 17 dealership properties, facility
improvements and expansions on eight previously acquired properties and two
construction fundings. Consideration for the properties (including facility
improvements, expansions and construction fundings) consisted of approximately
132,000 units of limited partnership interest in the Operating Partnership
("Units") (valued at approximately $1.9 million at the time of acquisition) and
the remainder from a combination of funds drawn down on the Company's short-term
credit facilities, permanent financing and cash on hand. We anticipate that the
funds drawn down on the Company's short-term credit facilities will be replaced
with permanent financing during the first half of 2001. These properties and
improvements added approximately 918,000 square feet of buildings and
improvements on approximately 239 acres of land and are located in 13 states
(Alabama, California, Florida, Georgia, Illinois, Indiana, Louisiana, North
Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia). These properties
have initial lease terms ranging from 10 to 20 years (with a weighted average
initial lease term of 16.7 years), and have renewal options exercisable at the
option of the tenant (ranging from a total of five to 30 years).
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RESULTS OF OPERATIONS
Comparison of 2000 to 1999
Rental revenue for the year ended December 31, 2000 increased 37% to $102.1
million, as compared to $74.3 million for 1999. The increase was primarily
attributable to the growth of our real estate portfolio and the timing of our
property acquisitions, from which we generate our rental income. We owned 244
properties as of December 31, 2000, versus 230 properties as of December 31,
1999 (77 of which were acquired in the second half of 1999). In addition,
included in rental revenue for the years ended December 31, 2000 and 1999 were
straight-lined rents totaling $2.4 million and $962,000, respectively. During
the third quarter of 1999, we began, on a prospective basis, straight-lining our
rents for leases with fixed minimum escalators. The effect on periods prior to
the third quarter of 1999 was not material.
Interest and other income for the year ended December 31, 2000 decreased 32% to
$1.1 million from $1.5 million for 1999. The decrease was primarily due to a
decrease in interest earned on temporary investments. There was a timing
difference between when the funds were received on debt issued during 1999 and
the closing of the acquisitions in which the funds were utilized, thereby
causing excess cash on hand during part of the year. These net proceeds were
fully used during 1999. Partially offsetting the decrease in interest income was
an increase in the gain on the sale of properties, which increased 27% to
$311,000 from $245,000 in 1999.
Depreciation and amortization for the year ended December 31, 2000
increased 15% to $17.7 million from $15.3 million for 1999 and consisted
primarily of depreciation on buildings and improvements owned during those
years. The increase is attributable to the growth of our real estate portfolio,
resulting in an increase in our depreciable assets. Partially offsetting the
increase was a change in the depreciable life on the majority of our buildings
and improvements that were acquired prior to 1999 and that were being
depreciated over 20 years. During the third quarter of 1999, we reviewed the age
and estimated remaining useful life of each of our properties in our real estate
portfolio that we acquired prior to 1999. Based on the average age of these
assets, we changed the depreciable life on the majority of our buildings and
improvements that were currently being depreciated over a 20-year life to a
30-year life in order to properly reflect the estimated remaining useful lives.
The change in depreciable life is considered a change in an accounting estimate
and has been recorded on a prospective basis beginning in the third quarter of
1999. This change decreased depreciation expense on the assets acquired prior to
1999 by approximately $2.2 million for the year ended December 31, 2000, as
compared to the same period in 1999.
General and administrative expenses for the year ended December 31, 2000
decreased 3% to $6.6 million, as compared to $6.8 million for 1999. General and
administrative expenses, excluding the write-off of our $300,000 investment in
BBCN, a start-up on-line procurement company for the automotive retail industry,
decreased by approximately $489,000, or 7%, from 1999. During 2000, we wrote off
our investment in BBCN as they ceased operations due to their inability to
secure the necessary capital to fund their business. Excluding the BBCN
write-off, the decrease in general and administrative expenses was primarily due
to a decrease in payroll and related expenses attributable to staffing
reductions that occurred throughout 1999 and a reduction in marketing and
advertising expenses.
Interest expense for the year ended December 31, 2000 increased to $42.7
million from $24.5 million for 1999. The increase was due to interest incurred
for the entire year on debt issued in the second half of 1999 and interest
incurred on our credit facilities and additional new debt issued in 2000 to fund
acquisitions. In addition, as a result of rising interest rates on new debt
issued during 2000, the effective interest rate (including deferred loan fees
amortized over the life of the loans) of the Company's outstanding debt rose
from 8.0% in 1999 to 8.13% in 2000. Interest expense also increased because of
the additional costs incurred to maintain properties in our borrowing base under
our short-term credit facilities. Debt outstanding as of December 31, 2000 was
approximately $585.7 million (consisting of approximately $481.9 million of
fixed rate indebtedness and approximately $103.8 million of variable rate
indebtedness) compared to $501.5 million (consisting of approximately $491.5
million of fixed rate indebtedness and approximately $10.0 million of variable
rate indebtedness) as of December 31, 1999.
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Comparison of 1999 to 1998
Although we were formed prior to January 1, 1998, we did not complete our
initial public offering ("IPO") until February 19, 1998, at which time we
purchased our initial properties and began generating rental income.
Rental revenue for the year ended December 31, 1999 increased 175% to $74.3
million, as compared to $27.0 million for 1998. The increase was primarily
attributable to the growth of our real estate portfolio and the timing of our
property acquisitions (230 properties owned as of December 31, 1999, versus 120
properties as of December 31, 1998), from which we generate our rental income.
In addition, during the third quarter of 1999, we began, on a prospective basis,
straight-lining our rents for leases with fixed minimum escalators. This
increased rental revenue for the year ended December 31, 1999 by approximately
$962,000. The effect on prior years was not material.
Interest and other income for the year ended December 31, 1999 decreased
81% to $1.5 million from $7.9 million for 1998. Interest and other income during
the year ended December 31, 1998 was primarily generated from the investment of
the excess of the net proceeds of a private placement offering and our IPO
including the exercise of the underwriters' over-allotment option (both of which
were completed during the first quarter of 1998). These net proceeds were fully
used during 1998 and therefore did not generate interest income during 1999.
Interest and other income during 1999 was primarily generated from the
investment of the excess of debt issuance proceeds over the amount invested in
properties and a $245,000 gain on the sale of properties during 1999.
Depreciation and amortization for the year ended December 31, 1999
increased 143% to $15.3 million from $6.3 million for 1998 and consisted
primarily of depreciation on buildings and improvements owned during those
years. The increase is attributable to the growth of our real estate portfolio,
resulting in an increase in our depreciable assets. Partially offsetting the
increase was a change in the depreciable life on the majority of our buildings
and improvements that were acquired prior to 1999 that were being depreciated
over 20 years. During the third quarter of 1999, we reviewed the age and
estimated useful life of each of our properties in our real estate portfolio
that we acquired prior to 1999. Based on the average age of these assets, we
changed the depreciable life on the majority of our buildings and improvements
that were currently being depreciated over a 20-year life to a 30-year life to
properly reflect the estimated remaining useful lives. The change in depreciable
life is considered a change in accounting estimate and has been recorded on a
prospective basis beginning in the third quarter of 1999. The impact of this
change decreased depreciation and amortization expense by approximately $2.2
million for the year ended December 31, 1999.
General and administrative expenses for the year ended December 31, 1999
increased 24% to $6.8 million, as compared to $5.5 million for 1998. The
increase is primarily due to increased payroll and related benefits attributable
to personnel additions throughout 1998 and severance payments made in connection
with staffing reductions during the first quarter of 1999. Also contributing to
the increase were increased marketing expenses as well as increased professional
fees and other administrative costs associated with increased public reporting
requirements. These increases were partially offset by the reduction in payroll
and related expenses as a result of staffing reductions throughout 1999 and the
closing of the Chicago office during the second quarter of 1999.
Interest expense for the year ended December 31, 1999 increased to $24.5
million from $2.3 million for 1998. The increase was due to interest charged on
issued debt in late 1998 and throughout 1999 (including mortgage debt and
borrowings under our credit facility). Debt outstanding as of December 31, 1999
was approximately $501.5 million (consisting of approximately $491.5 million of
fixed rate indebtedness and approximately $10.0 of variable rate indebtedness)
compared to $162.0 million (all of which was fixed rate indebtedness) as of
December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $6.3 million and $11.9 million at December
31, 2000 and December 31, 1999, respectively. The changes in cash and cash
equivalents during the years ended December 31, 2000 and 1999 were attributable
to operating, investing and financing activities, as described below.
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Operating Activities
Cash provided by operating activities for the years ended December 31, 2000
and 1999 was $56.3 million and $39.8 million, respectively, and represents, in
each year, cash received from rents under long-term, triple-net leases, plus
interest and other income, less normal recurring general and administrative
expenses and interest payments on debt outstanding.
Investing Activities
Cash used in investing activities for the years ended December 31, 2000 and
1999 was $99.0 million and $401.2 million, respectively, and primarily reflects
the acquisition of dealership properties and facility improvements and
expansions, net of sales, during those years.
Financing Activities
Cash from financing activities for the years ended December 31, 2000 and
1999 was $37.1 million and $301.2 million, respectively. Cash from financing
activities for the year ended December 31, 2000 primarily reflects:
- $80.1 million of proceeds received from mortgage loans closed
during the year;
- $60.4 million of proceeds received from borrowings on our credit
facilities; and
- $6.1 million of proceeds received from the issuance of common
shares, net of fees.
The cash provided by financing activities was partially offset by:
- the repayment of borrowings on our credit facilities totaling
$46.2 million;
- payments of principal on outstanding mortgage loans totaling
$10.1 million;
- distributions made to shareholders and limited partners during
the year totaling $43.4 million; and
- the repurchase of common shares totaling $9.9 million.
Cash from financing activities for the year ended December 31, 1999 primarily
reflects:
- $345.0 million of proceeds from mortgage loans closed during the
year; and
- $62.0 million of proceeds from borrowings on our credit
facilities.
The cash provided by financing activities was partially offset by:
- the repayment of borrowings on our credit facilities totaling
$62.0 million;
- payments of principal on outstanding mortgage loans totaling
$5.5 million; and
- distributions made to shareholders and limited partners during
the year totaling $38.2 million.
Mortgage Indebtedness and Credit Facilities
As of December 31, 2000, we had total debt outstanding of $585.7 million.
Of this debt, approximately $571.5 million (consisting of $481.9 million of
fixed rate indebtedness and $89.6 million of variable rate indebtedness) was
mortgage indebtedness secured by approximately 210 of our dealership properties.
In addition, we had $14.2 million outstanding on our revolving credit
facilities.
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The following is a summary of our total debt outstanding as of December 31, 2000
(dollars in thousands):
ORIGINAL PRINCIPAL
DEBT ISSUED BALANCE AS OF EFFECTIVE TERM/
DECEMBER 31, INTEREST AMORTIZATION
DESCRIPTION OF DEBT 2000 RATE* SCHEDULE
7.59% fixed rate debt due 12/1/08 (1) $38,050 $37,103 7.99% 10 yr/17 yr
7.635% fixed rate debt due 10/1/14 (2) 111,950 103,749 7.93% 15 yr/15 yr
8.05% fixed rate debt due 10/1/14 (3) 85,000 81,560 8.32% 15 yr/15 yr
7.54% fixed rate debt due 7/6/11 (4) 100,000 98,093 7.71% 12 yr/25 yr
8.03% fixed rate debt due 9/29/11 (5) 150,000 150,000 8.08% 12 yr/25 yr
7.50% fixed rate debt due 1/20/03 (6) 12,000 11,421 7.75% 4.25 yr/20 yr
-------------------------------
Total Mortgage Fixed Rate Debt $497,000 $481,926 8.00%
10 to 12 yr/25
to 30 yr, level
Various variable rate debt (7) 90,101 89,593 8.68% principal
-------------------------------
TOTAL MORTGAGE DEBT $587,101 $571,519 8.11%
$50 million revolving partially
secured facility (8) 14,198 8.92% 3 yr
$100 million revolving secured
facility (9) 2 8.94% 1 yr
-----------------
TOTAL CREDIT FACILITIES $14,200 8.90%
-----------------
TOTAL DEBT OUTSTANDING $585,719 8.13%
================= =====
* Includes deferred loan fees amortized over the life of the loans.
(1) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $24.4 million. The loan is secured by
mortgages on seven of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $63.6 million. The Operating
Partnership has provided a guaranty limited to approximately $8.9 million of
this loan, which guaranty is contingent upon the occurrence of certain
circumstances.
(2) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $3.4 million. The loan is secured by
mortgages on 50 of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $181.4 million. The Operating
Partnership has provided a guaranty limited to approximately $26.1 million of
this loan, which guaranty is contingent upon the occurrence of certain
circumstances.
(3) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $2.9 million. The loan is secured by
mortgages on 28 of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $151.0 million. The loan in footnote
(2) and this loan are cross-collateralized.
(4) The loan requires quarterly payments of principal and interest with a final
payment at maturity of approximately $73.3 million. The loan is secured by 48 of
our properties, which as of December 31, 2000 have an aggregate net book value
of approximately $173.1 million.
(5) The terms of the loan require quarterly interest-only payments until January
2002. Thereafter, payments of principal and interest will be made quarterly with
a final payment at maturity of approximately $121.2 million. The loan is secured
by 58 of our properties, which as of December 31, 2000 have an aggregate net
book value of approximately $208.4 million.
17
20
(6) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $10.8 million. The note is secured by four
of our properties, which as of December 31, 2000 have an aggregate net book
value of approximately $21.8 million.
(7) These loans bear interest at variable rates ranging from 200 to 215 basis
points per annum above the A1-P1 Commercial Paper Rate and have maturity dates
ranging from December 22, 2009 to December 18, 2012. The terms of the various
loans require quarterly level principal payments and interest payments. At
maturity the loans require a final payment of approximately $50.7 million.
Excluding $20 million of the variable rate debt, the loans are secured by 16
properties, which as of December 31, 2000 have an aggregate net book value of
approximately $85.9 million. The remaining $20 million of the variable rate debt
is secured by the same properties that secure the loan discussed in footnote
(4).
(8) The facility bears interest equal to the 30-day LIBOR rate plus 175 basis
points and requires the payment of secured borrowings within 12 months and
unsecured borrowings within 150 days. The facility matures on March 3, 2002.
(9) The facility bears interest equal to the 30-day LIBOR rate plus 225 basis
points and requires the repayment of principal within 150 days. The facility has
a one-year term, which terminates on March 21, 2002, and is renewable annually.
The more significant debt covenants related to our mortgage debt and
credit facilities limit the Company's debt to 65% of assets and require the
Company to comply with minimum debt service coverage and maximum debt to
adjusted net worth ratios. Several of our loan agreements contain no financial
covenants; however, there are negative covenants relating to customary items
such as operation and maintenance of the properties securing the loans and
limitations on issuing additional secured debt at those subsidiary levels. As of
December 31, 2000, we were in compliance with all of the loan covenants related
to our mortgage indebtedness and credit facilities.
Liquidity Requirements
Short-term liquidity requirements consist primarily of normal recurring
operating expenses, regular debt service requirements (including debt service
relating to additional and replacement debt), recurring corporate expenditures,
distributions to shareholders and holders of Units ("Unitholders"), and amounts
required for additional property acquisitions and facility improvements and
expansions. We expect to meet these requirements (other than amounts required
for additional property acquisitions and facility improvements and expansions)
through cash provided by operating activities. We anticipate that any additional
acquisition of properties or facility improvements and expansions during the
next 12 months will be funded with amounts available under our existing credit
facilities, future long-term secured and unsecured debt and the issuance of
common or preferred equity or Units. Acquisitions of property and facility
improvements and expansions will be made subject to our investment objectives
and policies with the intention of maximizing both current income and long-term
growth in income.
As of December 31, 2000, long-term liquidity requirements consisted
primarily of maturities under our long-term debt. We anticipate that long-term
liquidity requirements will also include amounts required for acquisition of
properties and facility improvements and expansions. We expect to meet long-term
liquidity requirements through long-term secured and unsecured borrowings and
other debt and equity financing alternatives. The availability and terms of any
such financing will depend upon market and other conditions.
Our liquidity requirements with respect to future acquisitions of properties
and facility improvements and expansions may be reduced to the extent that we
use Units as consideration for such purchases.
We have adopted a policy to limit debt to approximately 65% of our assets
(calculated as total assets plus accumulated depreciation). As of December 31,
2000, our debt was approximately 55% of our assets. This policy may be changed
by our Board of Trustees at any time without shareholder approval. In addition,
to minimize interest rate risk, we generally match the term of the lease with
that of the debt as well as the type of the lease with the type of debt (fixed
or variable) in order to maintain an investment spread over the lease term
("match-funding"). We currently intend to substantially match-fund at least 85%
of our total outstanding long-term debt with long-term leases.
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Approximately 90% of our debt outstanding as of December 31, 2000 is
substantially match-funded, non-recourse debt. We may change the 85% target at
any time without shareholder approval.
In light of our current balance sheet position, we believe that we are able
to obtain additional financing for our short-term and long-term capital needs
without exceeding our debt to asset ratio policy. However, there can be no
assurance that additional financing or capital will be available, or that the
terms will be acceptable or advantageous to us.
Share Repurchase Program
During 1998, we announced that our Board of Trustees had authorized the
repurchase of up to 6.0 million common shares. Purchases have been and will be
made from time to time in open market transactions at prevailing prices or in
negotiated private transactions at the discretion of our management. During
2000, we repurchased 900,000 common shares at an average price of $10.96 per
common share. Since the inception of the share repurchase program, a total of
4,084,700 shares have been repurchased at an average price of $10.61 per share.
In conjunction with the common share repurchases, the Operating Partnership
redeemed an equivalent number of Units from the Company for equivalent purchase
prices.
Dividend Reinvestment and Share Purchase Plan
During April 2000, we implemented a Dividend Reinvestment and Share Purchase
Plan, which was subsequently amended in March 2001 (the "DRIP"). Under the DRIP,
current shareholders and Unitholders are permitted to elect to reinvest all, a
portion or none of their cash dividends or distributions to purchase common
shares. The DRIP also allows both new investors and existing shareholders and
Unitholders to make optional cash payments to purchase common shares.
The DRIP permits current shareholders, Unitholders and new investors to
invest a minimum of $500 up to a maximum of $10,000 in common shares per month.
The DRIP also allows us to raise additional capital by waiving the limitations
on the $10,000 maximum per month, as more fully described in the Prospectus
relating to the DRIP. Shares purchased under the DRIP through reinvestment of
dividends are purchased at a discount (currently 3%). Shares purchased under the
DRIP through optional cash payments of $10,000 or less are purchased at market
price.
Common shares may be purchased directly from the Company or in open market
or privately negotiated transactions, as determined from time to time by the
Company, to fulfill the requirements for the DRIP. For the year ended December
31, 2000, we issued approximately 458,000 additional shares under the DRIP and
received approximately $5.9 million in proceeds.
Shelf Registration Statement
On March 2, 1999, we filed a shelf registration statement (the "Shelf
Registration Statement") with the Commission relating to the future offering of
up to an aggregate of $200 million of common shares, preferred shares, debt
securities and warrants exercisable for common or preferred shares. Management
believes the Shelf Registration Statement will provide the Company with more
efficient and immediate access to capital markets when considered appropriate.
As of December 31, 2000, the Company had not issued any securities pursuant to
the Shelf Registration Statement and, thus, $200 million was available under the
Shelf Registration Statement for the issuance of securities.
FUNDS FROM OPERATIONS
Funds From Operations ("FFO") is defined under the revised definition
adopted in October 1999 by the National Association of Real Estate Investment
Trusts (NAREIT) as net income (loss) before minority interest (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from sales of property plus depreciation and amortization of assets
unique to the real estate industry, and after adjustments for unconsolidated
partnerships and joint ventures. To conform to NAREIT's revised FFO definition
adopted in 1999, we began in the first quarter of 2000 including straight-lined
rents in the calculation of FFO. Prior to the first quarter of 2000, we excluded
straight-lined rents from the FFO calculation. For comparison purposes, we have
included straight-lined rents in the FFO calculation for all periods presented.
We began straight-lining rents on a prospective basis in the third quarter of
1999. The effect of straight-lined rents on prior periods was not material.
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22
NAREIT developed FFO as a relative measure of performance and liquidity of
an equity REIT in order to recognize that income-producing real estate
historically has not depreciated on the basis determined under GAAP. FFO does
not represent cash flows from operating activities in accordance with generally
accepted accounting principles (which, unlike FFO, generally reflects all cash
effects of transactions and other events in the determination of net income) and
should not be considered an alternative to net income as an indication of our
performance or to cash flow as a measure of liquidity or ability to make
distributions. We consider FFO a meaningful, additional measure of operating
performance because it primarily excludes the assumption that the value of the
real estate assets diminishes predictably over time, and because industry
analysts have accepted it as a performance measure. Comparison of our
presentation of FFO, using the NAREIT definition, to similarly titled measures
for other REITs may not necessarily be meaningful due to possible differences in
the application of the NAREIT definition used by such REITs.
FFO for the years ended December 31, 2000 and 1999 is computed as follows
(in thousands):
2000 1999
---- ----
Net Income before Minority Interest $ 36,140 $ 29,204
Real Estate Depreciation and Amortization 17,626 15,246
Gain on Sale of Assets (311) (245)
-------- --------
Funds From Operations $ 53,455 $ 44,205
-------- --------
Weighted Average Number of Common Shares and
Units Used to Compute Basic FFO per Share 29,274 28,774
------ ------
Weighted Average Number of Common Shares and
Units Used to Compute Fully Diluted FFO per
Share 29,476 28,796
------ ------
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates. Interest rate fluctuations are monitored by our
management as an integral part of our overall risk management program, which
recognizes the unpredictability of financial markets and seeks to reduce the
potentially adverse effect on our results of operations.
As of December 31, 2000, we had fixed rate indebtedness totaling
approximately $481.9 million. Interest rate fluctuations may affect the fair
value of our fixed rate debt instruments. If interest rates on our fixed rate
debt instruments at December 31, 2000 had been one percentage point higher or
lower, the fair value of those debt instruments on that date would have
decreased or increased, respectively, by approximately $29.3 million. As of
December 31, 2000, we had variable rate indebtedness totaling approximately
$103.8 million. Interest rate fluctuations may affect our annual interest
expense on our variable rate debt. If the interest rate on our variable rate
debt instruments outstanding at December 31, 2000 had been one percentage point
higher or lower, our annual interest expense relating to those debt instruments
would have increased or decreased, respectively, by approximately $1.0 million,
based on balances at December 31, 2000.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE NO.
--------
Report of Independent Public Accountants..................... 22
Consolidated Balance Sheets.................................. 23
Consolidated Statements of Operations........................ 24
Consolidated Statements of Changes in Shareholders' Equity
(Deficit).................................................. 25
Consolidated Statements of Cash Flows........................ 26
Notes to Consolidated Financial Statements................... 27
21
24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Capital Automotive REIT:
We have audited the accompanying consolidated balance sheets of Capital
Automotive REIT (a Maryland real estate investment trust, the "Company") and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for each of the years in the three year period ended December 31, 2000.
These consolidated financial statements and the schedule referred to below are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 Capital
Automotive REIT and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in the
three year period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The Schedule of Real Estate
and Accumulated Depreciation is presented for purposes of complying with the
rules of the Securities and Exchange Commission and is not a required part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in our audits of the basic consolidated
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic consolidated financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
Vienna, Virginia
January 26, 2001
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25
CAPITAL AUTOMOTIVE REIT
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
AS OF DECEMBER 31,
-------------------
2000 1999
----- -----
ASSETS
Real estate:
Land . ............................................................. $ 446,418 $ 423,757
Buildings and improvements........................................... 591,452 511,768
Accumulated depreciation............................................. (38,644) (21,202)
----------- --------
999,226 914,323
Cash and cash equivalents................................................ 6,298 11,886
Other assets, net........................................................ 16,065 16,350
------------ --------
TOTAL ASSETS......................................................... $1,021,589 $ 942,559
============ =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage loans........................................................... $ 571,519 $ 501,510
Borrowings under credit facilities....................................... 14,200 --
Accounts payable and accrued expenses.................................... 24,254 21,298
Security deposits payable................................................ 5,855 4,768
----------- ----------
TOTAL LIABILITIES.................................................... 615,828 527,576
----------- -----------
Minority interest........................................................ 115,728 115,384
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value; 20,000,000 shares authorized;
none outstanding.................................................. -- --
Common shares, $.01 par value; 100,000,000 shares authorized;
21,185,240 shares issued and outstanding as of December 31, 2000
and 21,607,415 shares issued and outstanding as of December
31, 1999.......................................................... 212 216
Additional paid-in capital........................................... 307,715 311,542
Accumulated deficit.................................................. (17,894) (12,159)
------------ --------
TOTAL SHAREHOLDERS' EQUITY....................................... 290,033 299,599
------------ -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................... $1,021,589 $ 942,559
============ =========
See accompanying Notes to Consolidated Financial Statements.
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CAPITAL AUTOMOTIVE REIT
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998
--------- ---------- -------
Revenue:
Rental........................................................... $102,101 $ 74,339 $ 27,027
Interest and other............................................... 1,050 1,534 7,904
-------- ------ -----
Total revenue................................................ 103,151 75,873 34,931
-------- ------- ------
Expenses:
Depreciation and amortization.................................... 17,725 15,347 6,304
General and administrative....................................... 6,592 6,781 5,487
Interest......................................................... 42,694 24,541 2,254
-------- ------- ------
Total expenses............................................... 67,011 46,669 14,045
-------- ------- -------
Net income before minority interest.................................. 36,140 29,204 20,886
Minority interest.................................................... (10,328) (7,473) (4,395)
-------- ------- -------
Net income........................................................... $ 25,812 $ 21,731 $ 16,491
========== ========= ========
Shares of common stock outstanding used to compute basic earnings per
share................................................................ 20,911 21,607 20,927
========== ========= ========
Basic earnings per share............................................. $ 1.23 $ 1.01 $ 0.79
========== ========= ========
Shares of common stock outstanding used to compute diluted earnings
per share............................................................ 21,113 21,629 20,978
========== ========== =========
Diluted earnings per share........................................... $ 1.22 $ 1.01 $ 0.79
========== ========== =========
See accompanying Notes to Consolidated Financial Statements.
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CAPITAL AUTOMOTIVE REIT
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
COMMON SHARES ADDITIONAL
----------------- ----------
PAID-IN ACCUMULATED
------- -----------
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------- ------- -----
BALANCE AT DECEMBER 31, 1997............... 10 $ -- $ -- $ (650) $ (650)
Repurchase of initial shares............... (10) -- -- -- --
Proceeds from initial public offering...... 20,000,000 200 299,800 -- 300,000
Proceeds from exercise of underwriters'
over-allotment option.................... 3,000,000 30 44,970 -- 45,000
Proceeds from private placement............ 1,792,115 18 24,982 -- 25,000
Payment of underwriting discounts,
commissions and other offering expenses.. -- -- (27,715) -- (27,715)
Adjustment to reflect minority interest
ownership in Operating Partnership....... -- -- 3,868 -- 3,868
Repurchase of common shares................ (3,184,700) (32) (33,439) -- (33,471)
Dividend declared or paid.................. -- -- -- (19,866) (19,866)
Net income................................. -- -- -- 16,491 16,491
--------- ----- --------- -------- -------
BALANCE AT DECEMBER 31, 1998............... 21,607,415 216 312,466 (4,025) 308,657
========== ======= ======== ======== =======
Adjustment to reflect minority interest
ownership in Operating Partnership....... -- -- (1,356) -- (1,356)
Registration fees and other................ -- -- 432 -- 432
Dividend declared or paid.................. -- -- -- (29,865) (29,865)
Net income................................. -- -- -- 21,731 21,731
--------- ----- ------- -------- -------
BALANCE AT DECEMBER 31, 1999............... 21,607,415 216 311,542 (12,159) 299,599
========== ======= ======== ========= =======
Adjustment to reflect minority interest
ownership in Operating Partnership....... -- -- (688) -- (688)
Proceeds from dividend reinvestment and
share purchase plan, net of fees......... 457,835 5 5,870 -- 5,875
Exercise of common stock options........... 19,990 -- 280 -- 280
Registration fees.......................... -- -- (27) -- (27)
Stock compensation expense................. -- -- 592 -- 592
Repurchase of common shares................ (900,000) (9) (9,854) -- (9,863)
Dividend declared or paid.................. -- -- -- (31,547) (31,547)
Net income................................. -- -- -- 25,812 25,812
--------- ----- ----- ------- ------
BALANCE AT DECEMBER 31, 2000............... 21,185,240 $ 212 $307,715 $(17,894) $290,033
========== ====== ======== ========= =======
See accompanying Notes to Consolidated Financial Statements.
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CAPITAL AUTOMOTIVE REIT
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998
-------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................................... $ 25,812 $ 21,731 $ 16,491
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................ 18,844 16,042 6,304
Income applicable to minority interest....................... 10,328 7,473 4,395
Increase in other assets..................................... (1,443) (11,041) (5,004)
Increase in accounts payable and accrued expenses............ 1,693 4,732 5,118
Increase in security deposits payable........................ 1,087 861 3,907
-------- --------- ---------
Net cash provided by operating activities................. 56,321 39,798 31,211
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment, net of disposals........... (33) (61) (286)
Real estate acquisitions, net of sales.......................... (98,952) (401,130) (412,346)
-------- --------- ---------
Net cash used in investing activities..................... (98,985) (401,191) (412,632)
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under credit facilities................ 60,400 62,000 63,000
Proceeds from mortgage loans.................................... 80,101 345,000 162,032
Repayment of borrowings under credit facilities................. (46,200) (62,000) (64,000)
Mortgage principal payments..................................... (10,093) (5,487) (35)
Proceeds from issuance of initial public offering of common
shares and underwriters' over-allotment option, net of
issuance costs............................................... -- -- 317,285
Proceeds from issuance of private placement, net of issuance
costs........................................................ -- -- 25,000
Payment of cash dividend........................................ (31,065) (28,990) (12,952)
Payment of partner distribution................................. (12,309) (9,220) (3,357)
Repurchase of common shares..................................... (9,863) -- (33,471)
Issuance of common shares, net of fees.......................... 6,105 (130) --
-------- --------- ---------
Net cash provided by financing activities................. 37,076 301,173 453,502
-------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS................ (5,588) (60,220) 72,081
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................... 11,886 72,106 25
-------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......................... $ 6,298 $11,886 $ 72,106
-------- --------- ---------
SUPPLEMENTAL DATA:
Real estate acquisitions in exchange for equity issuance........ $ 1,897 $ 23,376 $ 98,786
Fourth quarter distribution..................................... $ 11,411 (1) $ 10,786 (2) $ 8,973 (3)
Interest paid during the period................................. $ 40,778 $ 17,353 $ 2,177
(1) Declared in fourth quarter 2000, paid in January 2001.
(2) Declared in fourth quarter 1999, paid in January 2000.
(3) Declared in fourth quarter 1998, paid in January 1999.
See accompanying Notes to Consolidated Financial Statements.
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CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Capital Automotive REIT (the "Company") is a Maryland real estate investment
trust formed in October 1997. The Company owns interests in real estate through
Capital Automotive L.P. (the "Operating Partnership") and its subsidiaries. The
Company is the sole general partner of the Operating Partnership, and as of
December 31, 2000 owned approximately 71.5% of the units of limited partnership
interest in the Operating Partnership ("Units"). The Company completed its
initial public offering of common shares and began generating rental income in
February 1998. References to "we," "us" and "our" refer to the Company or, if
the context otherwise requires, the Operating Partnership and our business and
operations conducted through the Operating Partnership and/or the Company's and
the Operating Partnership's directly and indirectly owned subsidiaries.
Our primary business strategy is to invest in real estate (land, buildings
and other improvements) and at the same time enter into long-term, triple-net
leases with operators of franchised automobile dealerships, motor vehicle
service, repair or parts businesses and related businesses. We focus on
acquiring real estate used by multi-site, multi-franchised dealerships located
primarily in major metropolitan areas throughout the United States. We use (i)
the term dealerships to refer to these types of businesses that are operated on
our properties, (ii) the term dealer group to refer to a group of related
persons and companies who sell us properties, and (iii) the term dealer group,
tenant, lessee or operator of dealerships to refer to the related persons and
companies that lease our properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") and include
our accounts, net of minority interest as defined in Note 9 herein. All
intercompany balances and transactions have been eliminated in consolidation.
REAL ESTATE AND DEPRECIATION
Real estate assets are recorded at cost. External acquisition costs directly
related to each property are capitalized as a cost of the respective property.
The cost of real estate properties acquired is allocated between land and
buildings based upon estimated market values at the time of acquisition.
Depreciation is computed using the straight-line method over an estimated useful
life of 20 to 30 years for the buildings and improvements.
During 1999, management reviewed the age and estimated remaining useful
life of each of our properties in our real estate portfolio that were acquired
prior to 1999. Based on the average age of these assets, we changed the
depreciable life on the majority of our buildings and improvements that were
acquired prior to 1999 and that were currently being depreciated over a 20-year
life to a 30-year life in order to properly reflect the estimated remaining
useful lives. The change in depreciable life is considered a change in an
accounting estimate and has been recorded on a prospective basis beginning in
the third quarter of 1999. The impact of this change reduced depreciation
expense on the assets acquired prior to 1999 by approximately $2.2 million, and
thus, increased net income by approximately $2.2 million, for both years ended
December 31, 2000 and December 31, 1999, as compared to the same period in the
prior year.
We periodically assess our real estate assets for possible permanent
impairment when certain events or changes in circumstances indicate that the
carrying amount of real estate may not be recoverable. A significant decrease in
the real estate's fair market value, an accumulation of costs significantly
exceeding amounts originally expected to acquire the asset or a tenant's
inability to perform its duties and pay rent under the terms of the lease, may
all affect our ability to
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30
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
recover the carrying amount of the real property. Management considers current
market conditions, tenant credit analysis and third-party valuations in
determining the net realizable value of our rental properties. After completing
this assessment, management believes no material impairment has occurred in our
net property carrying values as of December 31, 2000.
FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment are recorded at cost. Depreciation is
calculated on a straight-line basis over the estimated useful lives of the
assets, ranging from three to five years.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid instruments purchased
with original maturities of three months or less.
DEFERRED LOAN COSTS
Certain costs incurred in connection with obtaining our revolving secured
credit facilities and issuance of mortgage notes through December 31, 2000 are
capitalized and generally amortized over the terms of the respective credit
facilities or notes on a straight-line basis (which approximates the effective
interest method). These costs, net of accumulated amortization, are included in
other assets and total approximately $8.9 million and $9.1 million as of
December 31, 2000 and 1999, respectively.
CAPITALIZED LEASING COSTS
Certain initial direct costs incurred by us in negotiating and consummating
a successful lease are capitalized and generally amortized over the initial base
term of the lease. These costs, net of accumulated amortization, are included in
other assets and total approximately $831,000 and $748,000 as of December 31,
2000 and 1999, respectively. Capitalized leasing costs include employee
compensation and payroll related fringe benefits directly related to time spent
performing leasing related activities. Such activities include evaluating the
prospective tenant's financial condition, evaluating and recording guarantees,
collateral and other security arrangements, negotiating lease terms, preparing
lease documents and closing the transaction.
INCOME TAXES
We are qualified as a real estate investment trust under the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"). As a real estate
investment trust, we are generally not subject to federal income tax to the
extent that we distribute annually at least 95% (90% for tax years beginning
January 1, 2001) of our taxable income to our shareholders and comply with
certain other requirements.
RENTAL REVENUE RECOGNITION
We lease our real estate pursuant to long-term, triple-net leases that
typically require the tenants to pay substantially all expenses associated with
the operations of the real estate, including, but not limited to, taxes,
assessments and other government charges, insurance, utilities, service,
repairs, maintenance and other expenses. All leases are accounted for as
operating leases.
Rental income attributable to leases is recorded when due from tenants.
Certain of the leases provide for fixed minimum escalators, which are recognized
on a straight-line basis over the initial term of the lease. We began, on a
prospective basis, straight-lining our rents for our leases with fixed minimum
escalators during the third quarter of 1999. The effect of straight-lining our
rents with fixed minimum escalators on prior periods was not material. Straight-
28
31
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
lined rents are included in other assets and total approximately $3.3
million and $962,000 as of December 31, 2000 and 1999, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Management compares the carrying value and the estimated fair value of our
financial instruments. Due to the highly liquid and short-term nature of our
investments, the carrying value approximates the fair value. After determining
fair value of long-term debt instruments by discounting future cash flows using
current market rates, management believes there were no material differences in
the carrying value and the fair value of our debt instruments as of December 31,
2000 and 1999.
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement was originally
effective for all fiscal quarters of fiscal years beginning after June 15, 1999;
however, during the second quarter of 1999 the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133," which deferred the effective date
until June 15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," an amendment to
SFAS No. 133, which required that all companies be in compliance with SFAS No.
133 as of January 1, 2001. SFAS No. 133 does not require restatement of
financial statements from prior periods. SFAS No. 133 requires an entity to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The adoption of
SFAS No. 133 and its related amendments has not had a significant impact on our
consolidated financial position, results of operations or cash flows as we
currently do not maintain any derivative instruments.
4. ACQUISITIONS OF PROPERTIES
During the year ended December 31, 2000, we acquired approximately $106.6
million in total real estate, which included 17 dealership properties, facility
improvements and expansions on eight previously acquired properties and two
construction fundings. Consideration for the properties (including facility
improvements, expansions and construction fundings) consisted of approximately
132,000 Units (valued at approximately $1.9 million at the time of acquisition)
and the remainder from a combination of funds drawn down on the Company's
short-term credit facilities, permanent financing and cash on hand. We
anticipate that the funds drawn down on the Company's short-term credit
facilities will be replaced with permanent financing during the first half of
2001. These properties and improvements added approximately 918,000 square feet
of buildings and improvements on approximately 239 acres of land and are located
in 13 states (Alabama, California, Florida, Georgia, Illinois, Indiana,
Louisiana, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia).
These properties have initial lease terms ranging from 10 to 20 years (with a
weighted average initial lease term of 16.7 years), and have renewal options
exercisable at the option of the tenant (ranging from a total of five to 30
years).
29
32
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
During the third quarter, we introduced a program for our tenants that, in
certain circumstances, provides funding for certain facility improvements and
expansions on properties that we own. Under this program, we follow a policy
that resets the lease period back to the original lease term when the funding of
the improvement is complete, thereby ensuring that our returns on the
improvements will be generated over the same period as our original lease term.
Rental payments are increased by applying current cap rates to the amount
advanced, thereby creating a new blended rate on the property lease. We have
structured certain of our underlying debt to allow for the flexibility to
complete these types of transactions and achieve appropriate leverage as well as
fixed investment spreads. During 2000, we funded approximately $9.1 million in
facility improvement projects.
Of the approximately $106.6 million of real estate acquisitions closed
during 2000, approximately $75.7 million of the acquisitions, including the
acquisition of 12 properties and eight of the facility improvement projects,
utilized our variable cap rate program. Under this program, which was introduced
during the first quarter of 2000, base rent payments change monthly based upon a
fixed spread over an applicable index, generally LIBOR. In addition, the spread
is adjusted upward periodically based on a factor of the change in the consumer
price index ("CPI"). The tenant has the ability to fix the base rent during the
initial lease term. The fixed base rent typically continues to be adjusted
upward periodically based on a factor of the change in the CPI. Such leases
generally are or will be financed with long-term, variable rate debt thereby
fixing our minimum investment spread.
As of December 31, 2000, we owned 244 dealership properties, representing 365
automotive franchises, with a total investment of approximately $1.04 billion.
These properties total approximately 8.9 million square feet of buildings and
improvements on approximately 1,518 acres of land and are located in 27 states
(Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho,
Illinois, Indiana, Louisiana, Maryland, Missouri, Nevada, New Jersey, New
Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South
Carolina, Tennessee, Texas, Utah and Virginia). The initial lease terms
generally range from 10 to 20 years with a weighted average initial lease term
of approximately 13.6 years, and have options to renew under the same terms and
conditions for one or more additional periods of five to 10 years exercisable at
the option of the tenant (ranging from a total of five to 40 years).
5. RELATED PARTY TRANSACTIONS
As of December 31, 2000, we owned 24 properties that were leased to entities
related to three members of our Board of Trustees and members of their families.
In conjunction with the purchases of these properties, we entered into
long-term, triple-net lease agreements with two 10-year extensions exercisable
at the option of the tenant. The leases in the aggregate provide for annualized
rental payments as of December 31, 2000 of approximately $12.2 million.
6. OPERATING LEASES
In connection with the acquisitions discussed in Note 4, we entered into
long-term, triple-net lease agreements with the operators of the dealerships who
are our tenants. The leases have initial terms generally ranging from 10 to 20
years and generally include multiple options to renew upon the same terms and
conditions, exercisable at the option of the tenants. Base rent is typically
adjusted upward periodically, usually based on a factor of the change in the
CPI. For variable cap rate leases, base rent payments change monthly based upon
a fixed spread over an applicable index, generally LIBOR. In addition, the
spread is adjusted upward periodically based on a factor of the change in the
CPI. The tenant has the ability to fix the base rent during the initial lease
term. The fixed base rent typically continues to be adjusted upward periodically
based on a factor of the change in the CPI. In general, the lease terms
establish minimum and maximum periodic adjustments. A limited number of our
leases offer tenant purchase options, generally at a pre-determined price or the
greater of the fair market value of the property at the time of sale or our
purchase price, which may be increased by a factor of CPI at the time the option
is exercised.
30
33
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Future minimum rental payments as of December 31, 2000 will be received as
follows (in thousands):
FOR THE YEAR ENDED DECEMBER 31,
2001............................................................. $ 108,207
2002............................................................. 108,530
2003............................................................. 108,963
2004............................................................. 109,954
2005............................................................. 110,759
Thereafter....................................................... 731,666
-----------
Total............................................................ $ 1,278,079
===========
As of December 31, 2000, there were three years and two months remaining on
a six-year lease agreement for our current office space. The office lease is
accounted for as an operating lease. Future minimum lease payments at December
31, 2000 are as follows:
FOR THE YEAR ENDED DECEMBER 31,
$
2001............................... 213,129
2002............................... 219,523
2003............................... 226,109
2004............................... 37,869
2005............................... -
-------
Total.............................. $696,630
=======
7. EARNINGS PER SHARE
Basic earnings per share is computed as net income divided by the weighted
average common shares outstanding for the period. Diluted earnings per share is
computed as net income divided by the weighted average common shares outstanding
for the period plus the effect of dilutive common equivalent shares outstanding
for the period, based on the treasury stock method. Dilutive common equivalent
shares include restricted shares, restricted phantom shares, options and
warrants. The weighted average number of shares outstanding used to compute
diluted earnings per share for the years ended December 31, 2000, 1999 and 1998
was approximately 21.1 million, 21.6 million and 21.0 million, respectively. The
impact of dilution of common equivalent shares for the years ended December 31,
2000, 1999 and 1998 was approximately 202,000, 22,000 and 51,000, respectively.
8. MORTGAGE LOANS AND CREDIT FACILITIES
As of December 31, 2000, we had total debt outstanding of $585.7 million.
Of this debt, approximately $571.5 million (consisting of $481.9 million of
fixed rate indebtedness and $89.6 million of variable rate indebtedness) was
mortgage indebtedness secured by approximately 210 of our dealership properties.
In addition, we had $14.2 million outstanding on our revolving credit
facilities.
31
34
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following is a summary of our total debt outstanding as of December 31, 2000
and 1999 (dollars in thousands):
PRINCIPAL PRINCIPAL
ORIGINAL BALANCE AS OF BALANCE AS OF EFFECTIVE TERM/
DEBT DECEMBER 31, DECEMBER 31, INTEREST AMORTIZATION
ISSUED 2000 1999 RATE* SCHEDULE
DESCRIPTION OF DEBT
7.59% fixed rate debt due 12/1/08 (1) $38,050 $37,103 $38,050 7.99% 10 yr/17 yr
7.635% fixed rate debt due 10/1/14 (2) 111,950 103,749 107,675 7.93% 15 yr/15 yr
8.05% fixed rate debt due 10/1/14 (3) 85,000 81,560 84,528 8.32% 15 yr/15 yr
7.54% fixed rate debt due 7/6/11 (4) 100,000 98,093 99,527 7.71% 12 yr/25 yr
8.03% fixed rate debt due 9/29/11 (5) 150,000 150,000 150,000 8.08% 12 yr/25 yr
7.50% fixed rate debt due 1/20/03 (6) 12,000 11,421 11,730 7.75% 4.25 yr/20 yr
---------------------------------
Total Mortgage Fixed Rate Debt $497,000 $481,926 $491,510 8.00%
10 to 12 yr/25 to 30
Various variable rate debt (7) 90,101 89,593 10,000 8.68% yr, level principal
---------------------------------
TOTAL MORTGAGE DEBT $587,101 $571,519 $501,510 8.11%
$50 million revolving partially
secured facility (8) 14,198 -- 8.92% 3 yr
$100 million revolving secured
facility (9) 2 -- 8.94% 1 yr
------------------------
TOTAL CREDIT FACILITIES $14,200 - 8.90%
------------------------
TOTAL DEBT OUTSTANDING $585,719 $501,510 8.13%
=========== ============ =========
* Includes deferred loan fees amortized over the life of the loans.
(1) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $24.4 million. The loan is secured by
mortgages on seven of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $63.6 million. The Operating
Partnership has provided a guaranty limited to approximately $8.9 million of
this loan, which guaranty is contingent upon the occurrence of certain
circumstances.
(2) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $3.4 million. The loan is secured by
mortgages on 50 of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $181.4 million. The Operating
Partnership has provided a guaranty limited to approximately $26.1 million of
this loan, which guaranty is contingent upon the occurrence of certain
circumstances.
(3) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $2.9 million. The loan is secured by
mortgages on 28 of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $151.0 million. The loan in footnote
(2) and this loan are cross-collateralized.
(4) The loan requires quarterly payments of principal and interest with a final
payment at maturity of approximately $73.3 million. The loan is secured by 48 of
our properties, which as of December 31, 2000 have an aggregate net book value
of approximately $173.1 million.
(5) The terms of the loan require quarterly interest-only payments until January
2002. Thereafter, payments of principal and interest will be made quarterly with
a final payment at maturity of approximately $121.2 million. The
32
35
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
loan is secured by 58 of our properties, which as of December 31, 2000 have an
aggregate net book value of approximately $208.4 million.
(6) The loan requires monthly payments of principal and interest with a final
payment at maturity of approximately $10.8 million. The note is secured by four
of our properties, which as of December 31, 2000 have an aggregate net book
value of approximately $21.8 million.
(7) These loans bear interest at variable rates ranging from 200 to 215 basis
points per annum above the A1-P1 Commercial Paper Rate and have maturity dates
ranging from December 22, 2009 to December 18, 2012. The terms of the various
loans require quarterly level principal payments and interest payments. At
maturity the loans require a final payment of approximately $50.7 million.
Excluding $20 million of the variable rate debt, the loans are secured by 16
properties, which as of December 31, 2000 have an aggregate net book value of
approximately $85.9 million. The remaining $20 million of the variable rate debt
is secured by the same properties that secure the loan discussed in footnote
(4).
(8) The facility bears interest equal to the 30-day LIBOR rate plus 175 basis
points and requires the payment of secured borrowings within 12 months and
unsecured borrowings within 150 days. The facility matures on March 3, 2002.
(9) The facility bears interest equal to the 30-day LIBOR rate plus 225 basis
points and requires the repayment of principal within 150 days. The facility has
a one-year term, which terminates on March 21, 2002, and is renewable annually.
The more significant debt covenants related to our mortgage debt and credit
facilities limit the Company's debt to 65% of assets and require the Company to
comply with minimum debt service coverage and maximum debt to adjusted net worth
ratios. Several of our loan agreements contain no financial covenants; however,
there are negative covenants relating to customary items such as operation and
maintenance of the properties securing the loans and limitations on issuing
additional secured debt at those subsidiary levels. As of December 31, 2000, we
were in compliance with all of the loan covenants related to our mortgage
indebtedness and credit facilities.
Aggregate annual principal maturities of mortgage indebtedness as of
December 31, 2000 are as follows (in thousands):
FOR THE YEAR ENDED DECEMBER 31,
2001............................ $ 13,309
2002............................ 16,910
2003............................ 28,410
2004............................ 18,694
2005............................ 20,031
Thereafter...................... 474,165
----------
Total........................... $ 571,519
=========
9. MINORITY INTEREST
Minority interest is calculated at approximately 28.5 percent and 27.8
percent of the Operating Partnership's partners' capital as of December 31, 2000
and 1999, respectively. Minority interest is calculated at approximately 28.6
percent and 25.6 percent of the Operating Partnership's partners' net income for
the years ended December 31, 2000 and
33
36
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1999, respectively. The ownership of the Operating Partnership as of
December 31, 2000 and 1999 is as follows (Units in thousands):
DECEMBER 31,
----------------------------------------------
2000 1999
----------------------------------------------
UNITS PERCENT UNITS PERCENT
----- ------- ----- -------
Partners' capital:
Limited Partners.. 8,453.3 28.5% 8,321.6 27.8%
The Company...... 21,185.2 71.5% 21,607.4 72.2%
-------- ----- -------- -----
Total........ 29,638.5 100.0% 29,929.0 100.0%
======== ====== ======== ======
10. STOCK-BASED COMPENSATION
During 1998, we adopted the Capital Automotive Group 1998 Equity Incentive
Plan (the "Plan"). Under the Plan, the Executive Compensation Committee of the
Board of Trustees (the "Committee") was authorized to grant up to approximately
2.8 million options to our employees, non-employee trustees and certain other
service providers, to purchase common shares of the Company ("Share Options")
and/or Units of the Operating Partnership ("Unit Options").
In February 1999, the Committee and the Board of Trustees approved
amendments to the Plan and subsequently received shareholder approval on May 7,
1999 (the "Amended Plan"). The Amended Plan (i) eliminated Unit Options, (ii)
provided that the Committee could make grants of restricted shares or restricted
phantom shares, and (iii) increased the number of shares the Committee may grant
under the Amended Plan to approximately 3.8 million. In May 1999, all
outstanding Unit Options were exchanged for an equal number of Share Options.
The exchanged Share Options were granted at the same exercise price and on the
same exercise schedule, terms and conditions on which the Unit Options were
originally granted.
Share Options granted under the Amended Plan have exercise prices equal to
or greater than the fair market value of a common share at the date of the grant
and typically become exercisable at a rate of 25% per year over a four-year
period, generally commencing on the first anniversary of the date of grant for
employees, except for the initial grant of Share Options which commences on the
first anniversary of the date of hire. For trustees, Share Options become
exercisable in stages, one-third beginning six months after the date of grant,
two-thirds beginning on the first anniversary of the date of grant and 100%
beginning on the second anniversary of the date of grant. Share Options expire
no later than the tenth anniversary of the date of grant or, if earlier, within
certain time limits for employment termination.
On May 7, 1999, the Committee approved the granting of approximately 37,000
Performance Accelerated Restricted Shares ("PARS") to certain employees at a
purchase price of $0.01 per share. The PARS were issued under the Amended Plan
and are subject in all respects to the applicable provisions of the Amended
Plan. The PARS originally had a vesting period of approximately seven years from
the effective date of January 1, 1999 with the opportunity to accelerate the
vesting period if the Company achieved certain specified performance targets. On
January 17, 2000, the Committee approved a change in the vesting period on all
PARS granted on May 7, 1999 to reflect that one half (1/2) of such PARS would
vest after approximately three years from the effective date of January 1, 1999
and the remainder, still subject to performance acceleration, would vest over
seven years. The Company adjusted the compensation expense related to the PARS
based on the revised vesting schedule in 1999. On January 17, 2000, the
Committee approved the granting of approximately 46,000 PARS to certain
employees at a purchase price of $0.01 per share. On May 11, 2000, the Committee
amended the vesting schedule on all PARS granted in 1999 and 2000 to eliminate
the "performance accelerated" feature and to generally provide that all
restricted shares will vest on the third anniversary of the date of grant. The
Company adjusted the compensation expense related to the restricted shares based
on the revised vesting schedule in 2000. In addition, on May 11, 2000, the
Committee approved an additional grant of 77,500 restricted shares to certain
employees at a purchase price of $0.01 per share. Restricted shares have no
voting rights,
34
37
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
but receive dividend equivalents that are equal to the value of any dividends
paid with respect to the Company's common shares.
In January 2000, the Company instituted a Phantom Share Purchase Program
requiring mandatory, and authorizing voluntary, purchases of restricted phantom
shares upon the deferral of a portion of certain employees' annual bonus. Under
this program, 20% of any annual bonus payable to an executive officer must be
deferred, and the executive officer may elect to defer up to an additional 30%
of any annual bonus payable to him. In addition, certain other employees may
elect to defer up to 20% of their annual bonus. The restricted phantom shares
are purchased at a price equal to 80% of the fair market value of the Company's
common shares on the date of grant. The restricted phantom shares awarded upon
the deferral of a portion of annual bonuses generally vest on the third
anniversary from the date of grant. In January 2000, annual bonuses earned in
1999 totaling $410,000 were deferred into approximately 44,000 restricted
phantom shares at a price of $9.2752 per share. Included in the $410,000 was
100% of the Chief Executive Officer's annual bonus, which deferral was approved
by the Committee. Restricted phantom shares have no voting rights, but receive
dividend equivalents that are equal to the value of any dividends paid with
respect to the Company's common shares.
As of December 31, 2000, approximately 3.2 million Share Options, 154,000
restricted shares, and 47,000 restricted phantom shares were outstanding under
the Amended Plan, thus leaving approximately 390,000 shares available under the
Amended Plan to be granted. On January 24, 2001, the Committee approved a
restricted share grant of approximately 77,000 shares at a purchase price of
$0.01 per share to certain employees. Of the total, approximately 61,000
restricted shares granted to executive officers will vest over five years. Of
the remaining 16,000 restricted shares granted to employees, approximately half
will vest over three years with the remaining vesting over five years. On
January 24, 2001, annual bonuses earned in 2000 totaling $497,100 were deferred
into approximately 43,000 restricted phantom shares at a price of $11.65 per
share. Included in the $497,100 was 100% of the Chief Executive Officer's and
another executive officer's annual bonus, which deferral was approved by the
Committee. The restricted phantom shares will vest generally after three years.
The following is a summary of our Share Option activity for the years ended
December 31, 2000 and 1999 (Share Options in thousands):
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
OPTIONS PRICE
------- -----
Share Options outstanding at December 31, 1998.......... 3,102 $ 14.95
Granted........................................... 438 13.14
Forfeited......................................... 712 14.94
Exercised or expired.............................. -- --
--------- -------
Share Options outstanding at December 31, 1999.......... 2,828 $ 14.67
========= =======
Granted........................................... 447 11.75
Forfeited......................................... 96 13.19
Exercised or expired.............................. 20 14.02
---------- -------
Share Options outstanding at December 31, 2000.......... 3,159 $ 14.31
========= =======
Share Options outstanding at December 31, 2000 have exercise prices between
$11.59 and $18.69, with a weighted average exercise price of $14.31 and a
weighted average remaining contractual life of 7.59 years. At December 31, 2000,
there were approximately 1.9 million Share Options exercisable at a weighted
average exercise price of $14.85 and a weighted average remaining contractual
life of 7.29 years.
35
38
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
We apply APB Opinion 25 in accounting for our stock-based compensation
and accordingly recognized no compensation expense related to the grant of Share
Options during the years ended December 31, 2000, 1999 and 1998. Had
compensation cost been determined using the fair value method of accounting
prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation," our net
income and earnings per share would have been changed to the following pro forma
amounts (in thousands, except per share amounts) (unaudited):
For the year ended December 31, 2000 1999 1998
----- ----- ----
Net Income
As reported...............................$ 25,812 $ 21,731 $ 16,491
Pro forma.................................$ 24,430 $ 20,521 $ 15,312
Basic Net Income Per Share
As reported...............................$ 1.23 $ 1.01 $ 0.79
Pro forma.................................$ 1.17 $ 0.95 $ 0.73
Diluted Net Income Per Share
As reported...............................$ 1.22 $ 1.01 $ 0.79
Pro forma.................................$ 1.16 $ 0.95 $ 0.73
The Black-Scholes option pricing model has been used to estimate the value
of the Share Options granted during 2000, 1999 and 1998. For Share Options
issued during 2000, the model uses a risk-free interest rate of 4.825%, dividend
growth of 5.0%, and stock volatility of 41.07%, with an expected Share Option
life of 4.0 years. For Share Options issued during 1999, the model uses a
risk-free interest rate of 6.67%, dividend growth of 5.0%, and stock volatility
of 34.96%, with an expected Share Option life of 4.0 years. For Share Options
issued during 1998, the model uses a risk-free interest rate of 4.625%, a
dividend yield of 10.0%, and stock volatility of 21.75%, with an expected Share
Option life of 4.0 years.
11. STOCK WARRANTS
As of December 31, 2000, we had warrants outstanding to acquire a total of
3,141,952 common shares. Warrants for a total of 2,841,952 common shares were
exercisable by the holders on that date. Warrants for a total of 400,000 common
shares become exercisable for 25% of the common shares each year over a
four-year period beginning on January 5, 2000. As of December 31, 2000, 100,000
of these warrants were exercisable. We have issued the warrants under written
warrant agreements. The exercise price of our common shares issuable under each
outstanding warrant is $15.00 per common share. Warrants for a total of
2,741,952 common shares are for terms of five years. Warrants for a total of
400,000 common shares are for terms of 10 years. Under each warrant agreement,
we are obligated to file a registration statement, after the warrant has been
exercised by the holder, to register the common shares issued when the holder
exercises the warrant if the holder so requests or if we file a registration
statement for our own shares.
12. 401(k) PLAN
During 1998, we adopted the Capital Automotive L.P. Employee 401(k) Plan
(the "401(k) Plan"). Employees who are at least 21 years of age are eligible to
participate in the 401(k) Plan after three months of service. Participants may
contribute up to 20% of their earnings, on a pre-tax basis, subject to annual
limitations imposed by the Code. We may make matching or discretionary
contributions to the 401(k) Plan at the discretion of our management. These
contributions will vest ratably over five years from each employee's date of
service. During December 1999 and 2000, we approved a 20% match of the
participant's elected deferral contribution during 2000 and 2001, respectively
(subject to maximum limits). For the year ended December 31, 2000, the Company
made matching contributions of approximately $25,000.
36
39
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
13. COMMON SHARE REPURCHASE PROGRAM
During 1998, we announced that our Board of Trustees had authorized the
repurchase of up to 6.0 million common shares. Purchases have been and will be
made from time to time in open market transactions at prevailing prices or in
negotiated private transactions at the discretion of management. During 2000, we
repurchased 900,000 common shares at an average price of $10.96 per common
share. There were no common share repurchases in 1999. Since the inception of
the share repurchase program, a total of 4,084,700 shares as of December 31,
2000 have been repurchased at an average price of $10.61 per share. In
conjunction with the common share repurchases, the Operating Partnership
redeemed an equivalent number of Units from the Company for equivalent purchase
prices.
14. DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
During April 2000, the Company implemented a Dividend Reinvestment and
Share Purchase Plan, which was subsequently amended in March 2001 (the "DRIP").
Under the DRIP, current shareholders and holders of Units ("Unitholders") are
permitted to elect to reinvest all, a portion or none of their cash dividends or
distributions to purchase common shares. The DRIP also allows both new investors
and existing shareholders and Unitholders to make optional cash payments to
purchase common shares.
The DRIP permits current shareholders, Unitholders and new investors to
invest a minimum of $500 up to a maximum of $10,000 in common shares per month.
The DRIP also allows us to raise additional capital by waiving the limitations
on the $10,000 maximum per month, as more fully described in the Prospectus
relating to the DRIP. Shares purchased under the DRIP through reinvestment of
dividends are purchased at a discount (currently 3%). Shares purchased under the
DRIP through optional cash payments of $10,000 or less are purchased at market
price.
Common shares may be purchased directly from the Company or in open market or
privately negotiated transactions, as determined from time to time by the
Company, to fulfill the requirements for the DRIP. For the year ended December
31, 2000, we issued approximately 458,000 common shares under the DRIP and
received approximately $5.9 million in proceeds.
15. DIVIDEND DECLARATION
On December 5, 2000, our Board of Trustees declared a cash dividend of
$0.385 per share for the fourth quarter ended December 31, 2000 to shareholders
of record as of December 31, 2000. The dividend was paid on January 31, 2001.
Dividends declared to shareholders during 2000 and 1999 totaled $1.50 per share
and $1.38 per share, respectively. The amounts declared are different from total
distributions calculated for tax purposes as detailed below.
37
40
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Of the total dividends calculated for tax purposes, the amounts
characterized as ordinary income and return on capital for 2000 and 1999 are as
follows:
2000
TOTAL
DISTRIBUTION PER TAXABLE
RECORD DATE PAYMENT DATE SHARE ORDINARY INCOME RETURN ON CAPITAL
11/10/00 11/21/00 $0.3775 $0.3690 $0.0085
8/10/00 8/18/00 0.3725 0.3641 0.0084
5/10/00 5/18/00 0.3650 0.3568 0.0082
12/31/99 1/31/00 * 0.3600 0.2102 0.0048
------ ------
TOTALS FOR 2000 $1.3000 $0.0300
1999
TOTAL
DISTRIBUTION PER TAXABLE
RECORD DATE PAYMENT DATE SHARE ORDINARY INCOME RETURN ON CAPITAL
12/31/99 1/31/00 * $0.3600 $0.1450 -
11/10/99 11/19/99 0.3500 0.3500 -
8/10/99 8/20/99 0.3400 0.3400 -
5/10/99 5/20/99 0.3300 0.3300 -
12/31/98 1/29/99 ** 0.3200 0.0150 -
------- ----------
TOTALS FOR 1999 $1.1800 -
* The fourth quarter 1999 distribution, payable on January 31, 2000, was $0.36
per share and included a "spillover" distribution with $0.145 per share taxable
in 1999, $0.2102 per share taxable in 2000, and $0.0048 per share a return on
capital in 2000.
** The fourth quarter 1998 distribution, payable on January 29, 1999, was $0.32
per share and included a "spillover" distribution with $0.305 per share taxable
in 1998 and $0.015 per share taxable in 1999.
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 2000
and 1999 is as follows (in thousands, except per share amounts):
QUARTER ENDED
---------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ---------- ------------ -----------
2000
----
Revenue......................................... $ 25,175 $ 25,265 $ 25,768 $ 26,943
Net Income...................................... $ 6,393 $ 6,345 $ 6,487 $ 6,587
Diluted Earnings Per Share...................... $ 0.30 $ 0.30 $ 0.31 $ 0.31
Weighted Average Number of Shares--Diluted...... 21,148 20,931 21,096 21,268
1999
----
Revenue......................................... $ 14,788 $ 15,898 $ 20,757 $ 24,430
Net Income...................................... $ 4,389 $ 4,965 $ 6,182 $ 6,195
Diluted Earnings Per Share...................... $ 0.20 $ 0.23 $ 0.29 $ 0.29
Weighted Average Number of Shares--Diluted...... 21,607 21,630 21,640 21,640
38
41
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
17. SEGMENT INFORMATION
We adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" during 1998. SFAS No. 131 provides standards for public
companies relating to the reporting of financial and descriptive information
about their operating segments in financial statements. Operating segments are
defined as components of an enterprise for which separate financial information
is available and is evaluated regularly by the chief operating decision maker or
decision making group in deciding how to allocate resources and in assessing
performance. Our management is our chief decision making group.
All of our operations are derived from one operating segment. This operating
segment engages in the purchase and lease back, pursuant to long-term,
triple-net leases, of the real property and improvements used by multi-site,
multi-franchised automotive dealerships and related businesses. These automotive
dealerships and related businesses are located predominately in major
metropolitan areas throughout the United States. The purchase and lease back is
performed through the Company's ownership interest in the Operating Partnership
and/or the Company's and the Operating Partnership's directly and indirectly
owned subsidiaries.
TENANT CONCENTRATION
Sonic accounted for approximately 25% of our total rental revenue for the
year ended December 31, 2000 and approximately 28% of our total annualized
rental revenue as of December 31, 2000. If Sonic were to default on its lease
obligations or declare bankruptcy, we could experience significantly reduced
revenue until the properties could be leased to a new tenant or tenants. There
was no other tenant that exceeded 8% of our total rental revenue for the year
ended December 31, 2000 or total annualized rental revenue as of December 31,
2000.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
39
42
PART III
Certain information required in Part III is omitted from this Report but is
incorporated herein by reference from our Proxy Statement for the Annual Meeting
of Shareholders for fiscal year 2000 (the "Proxy Statement").
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE COMPANY
The information contained in the Proxy Statement under the captions "The
Board of Trustees" and "Executive Officers" is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the Proxy Statement under the captions
"Executive Compensation" and "Executive Compensation Committee Report on
Executive Compensation" is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the Proxy Statement under the caption "Share
Ownership" is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the Proxy Statement under the caption "Certain
Relationships and Related Transactions" is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) See Index to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedule III. Schedule of Real Estate and Accumulated Depreciation
(3) Exhibits
EXHIBIT
NO. DESCRIPTION
------- ------------
2.1- Acquisition Agreement dated as of June 30, 1999, as amended, by and among CAR MMR
L.L.C., O. Bruton Smith, Sonic Financial Corporation, MMR Holdings L.L.C., MMR Viking
Investment Associates, L.P. and MMR Tennessee, L.L.C.
2.2- Sonic Agreement made and entered into as of June 30, 1999, by and among (i) Sonic
Automotive, Inc., (ii) certain subsidiaries or affiliates of Sonic Automotive, Inc.,
and (iii) CAR MMR L.L.C., in connection with that certain Acquisition Agreement dated
of even date.
3.1* Amended and Restated Declaration of Trust of Capital Automotive REIT.
40
43
EXHIBIT
NO. DESCRIPTION
--------- ------------
3.2++ Amended and Restated Bylaws of Capital Automotive REIT, as amended.
4.1* Specimen Common Share certificate.
4.2# Form of Share Warrant.
4.3* Form of Underwriting Warrant issued to Friedman, Billings, Ramsey & Co., Inc.
4.4# Form of Dealers' Warrant.
4.5# Second Amended and Restated Partnership Agreement of Capital Automotive L.P.
10.1* Form of Indemnification Agreement executed by certain trustees and officers of Capital
Automotive REIT.
10.2* Form of Option Agreement.
10.3* FBR Asset Investment Purchase Agreement.
10.4* FBR Registration Rights Agreement.
10.5+ Amended and Restated Employment Agreement by and between Capital Automotive L.P. and
Thomas D. Eckert.
10.6+ Amended and Restated Employment Agreement by and between Capital Automotive L.P. and
David S. Kay.
10.7+ Amended and Restated Employment Agreement by and between Capital Automotive L.P. and
John M. Weaver.
10.8+ Letter Agreement by and between Capital Automotive L.P. and Jay M. Ferriero.
10.9- Loan Agreement dated as of July 7, 1999, between CAR CZ L.L.C., CARS-FEN, L.L.C., CAR
HDV L.L.C., CAR Alexander L.P., Capital Automotive L.P., CAR MOT II, L.L.C., CAR MOT
L.L.C., CAR AUF L.L.C., CAR I Jackson L.P., and CAR MUL L.L.C., as Borrower and Ford
Motor Credit Company as Lender.
10.10-- Amended and Restated Loan Agreement dated August 13, 1999, between MMR Holdings,
L.L.C., MMR Tennessee, L.L.C., MMR Viking Investment Associates, L.P. and Ford Motor
Credit Company.
10.11## Form of 1998 Equity Incentive Plan, as amended.
10.12** Credit Agreement dated as of March 22, 2000 by and among General
Motors Acceptance Corporation, as Lender and Capital Automotive, L.P.
and certain of its subsidiaries, as Borrowers.
21.1+ Subsidiaries of Company.
23.1+ Consent of Arthur Andersen LLP.
25.0+ Power of Attorney (included on signature page).
99.1/\/\ Revolving Loan Agreement dated as of March 4, 1999 among Comerica Bank and Capital
Automotive, L.P., et al.
99.2. . Form of Lease Agreement for 50 separate leases, each between an affiliate of Capital
Automotive REIT, as landlord, and an affiliate of Sonic Automotive, Inc., as tenant.
99.3. . Form of Lease Guaranty from Sonic Automotive, Inc., relating to 50 separate leases
with affiliates of Sonic Automotive, Inc., in favor of affiliates of Capital
Automotive REIT, as landlord.
---------
+ Filed herewith.
++ Previously filed as an Exhibit to Annual Report on Form 10-K for the year
ended December 31, 1999 filed on March 21, 2000 (File No. 000-23733) and
incorporated herein by reference.
- Previously filed as an Exhibit to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 filed on August 12, 1999 (File No. 000-23733)
and incorporated herein by reference. Confidential portions of Exhibits 2.1
and 2.2 omitted pursuant to a request for confidential treatment and
supplied separately to the Securities
41
44
and Exchange Commission. Exhibits and Schedules omitted but will be
furnished supplementally to the Securities and Exchange Commission upon
request.
* Previously filed as an Exhibit to Registration Statement on Form S-11 (File
No. 333-41183) and incorporated herein by reference.
# Previously filed as an Exhibit to Registration Statement on Form S-3 (File
No. 333-73183) filed on March 2, 1999 and incorporated herein by
reference.
-- Previously filed as an Exhibit to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 filed on November 12, 1999 (File No.
000-23733) and incorporated herein by reference.
## Previously filed as an Exhibit to Registration Statement on Form S-8 (File
No. 333-78215) filed on May 11, 1999 and incorporated herein by reference.
** Previously filed as an Exhibit to Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000 filed on May 11, 2000 (File No. 000-23733)
and incorporated herein by reference.
/\/\Previously filed as an Exhibit to Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999 filed on May 11, 1999 (File No. 000-
23733) and incorporated herein by reference.
. . Previously filed as an Exhibit to Current Report on Form 8-K filed on
August 30, 1999 (File No. 000-23733) and incorporated herein by reference.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Item 14(a)(3) above.
(d) Other Financial Information
The Company is required to file audited financial information of one of its
tenants, Sonic Automotive, Inc. and its affiliates ("Sonic"), as a result of
Sonic leasing more than 20 percent of the Company's total assets for the year
ended December 31, 2000. Sonic is a public company and as of the date hereof,
had not filed their Form 10-K; therefore, the financial statements are not
available to the Company to include in this filing. The Company will file this
financial information under cover of a Form 10-K/A as soon as it is available.
42
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized this 23rd day of March, 2001.
Capital Automotive REIT
/S/ THOMAS D. ECKERT
By:
----------------------------------------
THOMAS D. ECKERT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons in the
capacities indicated. Each person whose signature appears below hereby
constitutes and appoints each of Thomas D. Eckert and David S. Kay as his
attorney-in-fact and agent, with full power of substitution and resubstitution
for him in any and all capacities, to sign any or all amendments to this Report
and to file same, with exhibits thereto and other documents in connection
therewith, granting unto such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
in connection with such matters and hereby ratifying and confirming all that
such attorney-in-fact and agent or his substitutes may do or cause to be done by
virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ THOMAS D. ECKERT President and Chief March 23, 2001
------------------------------------------------ Executive Officer and
THOMAS D. ECKERT Trustee (principal
executive officer)
/S/ DAVID S. KAY Vice President and Chief March 23, 2001
------------------------------------------------ Financial Officer
DAVID S. KAY (principal financial and
accounting officer)
/S/ CRAIG L. FULLER Trustee March 23, 2001
------------------------------------------------
CRAIG L. FULLER
/S/ DAVID GLADSTONE Trustee March 23, 2001
------------------------------------------------
DAVID GLADSTONE
/S/ WILLIAM E. HOGLUND Trustee March 23, 2001
------------------------------------------------
WILLIAM E. HOGLUND
/S/ R. MICHAEL MCCULLOUGH Trustee March 23, 2001
------------------------------------------------
R. MICHAEL MCCULLOUGH
43
46
/S/ LEE P. MUNDER Trustee March 23, 2001
------------------------------------------------
LEE P. MUNDER
/S/ JOHN J. POHANKA Chairman of the Board and March 23, 2001
------------------------------------------------ Trustee
JOHN J. POHANKA
/S/ JOHN E. REILLY Trustee March 23, 2001
------------------------------------------------
JOHN E. REILLY
/S/ ROBERT M. ROSENTHAL Trustee March 23, 2001
------------------------------------------------
ROBERT M. ROSENTHAL
/S/ VINCENT A. SHEEHY Trustee March 23, 2001
------------------------------------------------
VINCENT A. SHEEHY
44
47
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2000
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
ABRA Auto Body & Glass LLC ABRA Auto Body & Glass LLC Chattanooga, TN
ABRA Auto Body & Glass, LLC Total
Auction Broadcasting Company ABC Indianapolis Indianapolis, IN
Auction Broadcasting Company ABC Nashville Nashville, TN
Auction Broadcasting Company Total
Auffenberg Automotive Group St. Clair Auto Mall O'Fallon, IL
Auffenberg Automotive Group Auffenburg Ford North O'Fallon, IL
Auffenberg Automotive Group Auffenburg Ford Belleville, IL
Auffenberg Automotive Group Auffenberg Volkswagen O'Fallon, IL
Auffenberg Automotive Group Auffenberg Nissan-Kia O'Fallon, IL
Auffenberg Automotive Group Auffenberg Nationwide Rental Car O'Fallon, IL
Auffenberg Automotive Group Total
AutoNation Westgate Chevrolet, Inc. Amarillo, TX
AutoNation T-West Sales & Service, Inc. Las Vegas, NV
AutoNation Plains Chevrolet, Inc. Amarillo, TX
AutoNation Midway Chevrolet, Inc. Amarillo, TX
AutoNation Quality Nissan, Inc. Amarillo, TX
AutoNation Park Place Mercedes - Houston Houston, TX
AutoNation Total
Behlmann Automotive Behlmann Wholesale Florissant, MO
Behlmann Automotive Behlmann Carnection Florissant, MO
Behlmann Automotive Behlmann Pontiac-GMC (Main) Hazelwood, MO
Behlmann Automotive Total
Cherner Automotive Group Cherner Lincoln Mercury Annandale, VA
Cherner Automotive Group Total
Craig Zinn Automotive Group County Line Lexus Hollywood, FL
Craig Zinn Automotive Group Toyota of Hollywood Hollywood, FL
Craig Zinn Automotive Group Truck Center Hollywood, FL
Craig Zinn Automotive Group Quick Service Center Hollywood, FL
Craig Zinn Automotive Group Total
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
ABRA Auto Body & Glass LLC $ 452,668 $ 1,490,413 $ 1,943,081 $ 68,314 08/13/99 30 years
ABRA Auto Body & Glass, LLC Total 452,668 1,490,413 1,943,081 68,314
Auction Broadcasting Company 1,093,349 8,437,331 9,530,680 57,846 09/29/00 30 years
Auction Broadcasting Company 1,032,817 8,640,927 9,673,745 12,001 12/14/00 30 years
Auction Broadcasting Company Total 2,126,166 17,078,258 19,204,424 69,847
Auffenberg Automotive Group 5,672,561 7,595,913 13,268,473 390,346 06/30/99 30 years
Auffenberg Automotive Group 1,816,149 2,310,324 4,126,473 118,725 06/30/99 30 years
Auffenberg Automotive Group 658,019 2,127,238 2,785,257 91,589 09/10/99 30 years
Auffenberg Automotive Group 851,782 2,189,609 3,041,391 39,535 06/08/00 30 years
Auffenberg Automotive Group 1,027,623 1,674,119 2,701,741 30,227 06/08/00 30 years
Auffenberg Automotive Group 1,459,408 2,255,120 3,714,528 28,189 08/24/00 30 years
Auffenberg Automotive Group Total 11,485,542 18,152,322 29,637,864 698,611
AutoNation 1,235,516 3,181,296 4,416,812 373,959 02/25/98 30 years
AutoNation 5,540,606 8,697,735 14,238,341 915,663 05/19/98 30 years
AutoNation 1,324,616 3,400,896 4,725,512 399,772 02/25/98 30 years
AutoNation 871,516 2,245,296 3,116,812 263,933 02/25/98 30 years
AutoNation 283,516 733,295 1,016,811 86,198 02/25/98 30 years
AutoNation 9,086,654 10,719,435 19,806,090 953,019 09/28/98 30 years
AutoNation Total 18,342,424 28,977,953 47,320,377 2,992,543
Behlmann Automotive 104,005 203,620 307,625 20,603 06/25/98 30 years
Behlmann Automotive 1,042,674 1,865,812 2,908,485 188,790 06/25/98 30 years
Behlmann Automotive 4,637,602 4,383,835 9,021,437 443,574 06/25/98 30 years
Behlmann Automotive Total 5,784,281 6,453,267 12,237,548 652,968
Cherner Automotive Group 4,026,275 2,405,880 6,432,155 282,809 02/19/98 30 years
Cherner Automotive Group Total 4,026,275 2,405,880 6,432,155 282,809
Craig Zinn Automotive Group 2,061,645 1,314,700 3,376,345 78,517 03/05/99 30 years
Craig Zinn Automotive Group 3,014,998 2,592,184 5,607,183 154,811 03/05/99 30 years
Craig Zinn Automotive Group 628,115 87,278 715,393 5,212 03/05/99 30 years
Craig Zinn Automotive Group 423,054 92,339 515,393 5,515 03/05/99 30 years
Craig Zinn Automotive Group Total 6,127,812 4,086,501 10,214,313 244,055
48
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Crown Auto World Crown Motors BMW/Buick Tulsa, OK
Crown Auto World Total
Dealer's Auto Auction Dealer's Auto Auction Oklahoma City, OK
Dealer's Auto Auction Total
Fenton Motor Group Brad Fenton Motors McAlester, OK
Fenton Motor Group Ada Ford Lincoln-Mercury Ada, OK
Fenton Motor Group Brad Fenton Motors of Ardmore Ardmore, OK
Fenton Motor Group Total
Freightliner of Dothan Freightliner of Dothan Dothan, AL
Freightliner of Dothan Total
Group 1 Automotive, Inc. Round Rock Nissan Round Rock, TX
Group 1 Automotive, Inc. Round Rock Nissan Land Round Rock, TX
Group 1 Automotive, Inc. AJ Foyt Honda/Isuzu Houston, TX
Group 1 Automotive, Inc. Town North Nissan/Mitsubishi Austin, TX
Group 1 Automotive, Inc. Town North Nissan/Mitsubishi Land Austin, TX
Group 1 Automotive, Inc. Acura Southwest Houston, TX
Group 1 Automotive, Inc. Southwest Freeway Land Houston, TX
Group 1 Automotive, Inc. Maxwell Chrysler Five Pack Taylor, TX
Group 1 Automotive, Inc. Luby Chevrolet Lakewood, CO
Group 1 Automotive, Inc. Clear Lake Lexus Clear Lake, TX
Group 1 Automotive, Inc. Sterling McCall Toyota - Club Creek Houston, TX
Group 1 Automotive, Inc. Sterling McCall Toyota Houston, TX
Group 1 Automotive, Inc. Toyota Body Shop Houston, TX
Group 1 Automotive, Inc. Sterling McCall Lexus Body Shop Houston, TX
Group 1 Automotive, Inc. Sterling McCall Lexus Houston, TX
Group 1 Automotive, Inc. Sunshine Buick, Pontiac, GMC Truck Albequerque, NM
Group 1 Automotive, Inc. Casa Chevrolet Albequerque, NM
Group 1 Automotive, Inc. Don Bohn Ford & Training Ctr Harvey, LA
Group 1 Automotive, Inc. Bohn Brothers Toyota Harvey, LA
Group 1 Automotive, Inc. Total
Gunn Automotive Group Gunn Land Rover San Antonio, TX
Gunn Automotive Group Gunn Nissan San Antonio, TX
Gunn Automotive Group Gunn Chevrolet & Body Shop San Antonio, TX
Gunn Automotive Group Gunn Dodge San Antonio, TX
Gunn Automotive Group Gunn Pontiac-GMC San Antonio, TX
Gunn Automotive Group Total
Gurley-Leep Automotive Group Gurley-Leep Olds-Cadillac & Saturn Mishawaka, IN
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Crown Auto World 1,077,838 5,258,691 6,336,529 402,940 12/11/98 30 years
Crown Auto World Total 1,077,838 5,258,691 6,336,529 402,940
Dealer's Auto Auction 1,129,351 8,477,273 9,606,624 684,294 11/25/98 30 years
Dealer's Auto Auction Total 1,129,351 8,477,273 9,606,624 684,294
Fenton Motor Group 356,120 3,678,231 4,034,351 281,839 12/07/98 30 years
Fenton Motor Group 237,123 2,797,228 3,034,351 214,334 12/07/98 30 years
Fenton Motor Group 205,101 1,816,079 2,021,180 139,154 12/29/98 30 years
Fenton Motor Group Total 798,344 8,291,537 9,089,881 635,328
Freightliner of Dothan 490,443 2,193,587 2,684,030 212,979 07/23/98 30 years
Freightliner of Dothan Total 490,443 2,193,587 2,684,030 212,979
Group 1 Automotive, Inc. 1,017,942 1,982,518 3,000,460 129,398 01/13/99 30 years
Group 1 Automotive, Inc. 763,882 - 763,882 - 01/13/99
Group 1 Automotive, Inc. 1,496,005 2,538,835 4,034,841 194,487 12/30/98 30 years
Group 1 Automotive, Inc. 1,590,983 3,201,370 4,792,353 191,193 03/24/99 30 years
Group 1 Automotive, Inc. 779,333 - 779,333 - 03/24/99
Group 1 Automotive, Inc. 2,336,436 2,098,715 4,435,152 160,775 12/30/98 30 years
Group 1 Automotive, Inc. 1,132,586 - 1,132,586 - 12/30/98
Group 1 Automotive, Inc. 114,807 1,167,895 1,282,702 89,419 12/30/98 30 years
Group 1 Automotive, Inc. 2,737,284 4,299,889 7,037,174 329,427 12/30/98 30 years
Group 1 Automotive, Inc. 1,219,635 4,531,450 5,751,085 207,691 08/25/99 30 years
Group 1 Automotive, Inc. 1,236,831 1,218,208 2,455,040 93,306 12/30/98 30 years
Group 1 Automotive, Inc. 4,100,143 5,557,985 9,658,129 362,798 01/06/99 30 years
Group 1 Automotive, Inc. 216,378 951,547 1,167,925 62,094 01/06/99 30 years
Group 1 Automotive, Inc. 223,233 632,551 855,784 41,273 01/06/99 30 years
Group 1 Automotive, Inc. 3,151,187 5,632,950 8,784,137 367,690 01/06/99 30 years
Group 1 Automotive, Inc. 3,132,901 2,254,275 5,387,175 103,321 08/06/99 30 years
Group 1 Automotive, Inc. 2,518,774 2,891,422 5,410,196 100,447 12/16/99 30 years
Group 1 Automotive, Inc. 5,187,029 4,397,058 9,584,087 164,890 11/12/99 30 years
Group 1 Automotive, Inc. 2,951,396 2,387,074 5,338,470 89,515 11/12/99 30 years
Group 1 Automotive, Inc. Total 35,906,766 45,743,744 81,650,510 2,687,726
Gunn Automotive Group 1,057,209 759,909 1,817,118 70,671 08/24/98 30 years
Gunn Automotive Group 1,331,537 1,184,692 2,516,228 110,175 08/24/98 30 years
Gunn Automotive Group 3,495,048 5,024,374 8,519,421 467,261 08/24/98 30 years
Gunn Automotive Group 1,964,831 2,051,398 4,016,229 190,778 08/24/98 30 years
Gunn Automotive Group 2,239,624 3,326,606 5,566,230 309,371 08/24/98 30 years
Gunn Automotive Group Total 10,088,248 12,346,979 22,435,227 1,148,256
Gurley-Leep Automotive Group 2,961,641 3,670,103 6,631,745 296,265 11/05/98 30 years
49
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Gurley-Leep Automotive Group Gurley-Leep Mishawaka, IN
Gurley-Leep Automotive Group Gurley-Leep Imports Elkhart, IN
Gurley-Leep Automotive Group University Park Chrysler-Plymouth Mishawaka, IN
Gurley-Leep Automotive Group Total
Hand Automotive Group Saturn Airport Marina Los Angeles, CA
Hand Automotive Group Total
Hoz de Vila Automotive Dodge City Burlington, NJ
Hoz de Vila Automotive Sport Hyundai/Dodge Pleasantville, NJ
Hoz de Vila Automotive Total
Jackson Automotive Group Jackson Motor Company Greenville, TX
Jackson Automotive Group Jackson Cadillac-Oldsmobile-Pontiac, Sulphur Springs, TX
Jackson Automotive Group Jackson Autoplex-Used Cars Greenville, TX
Jackson Automotive Group Jackson Autoplex Commerce, TX
Jackson Automotive Group Jackson Nissan Greenville, TX
Jackson Automotive Group Total
Kelley Automotive Group Saturn of Gwinnett Duluth, GA
Kelley Automotive Group Tom Kelley Cadillac Fort Wayne, IN
Kelley Automotive Group Courtesy Motors Decatur, IN
Kelley Automotive Group Kelley Buick Atlanta Chamblee, IN
Kelley Automotive Group Midwest Auto Parts Fort Wayne, IN
Kelley Automotive Group Northside Chevrolet Evansville, IN
Kelley Automotive Group Kelley Chevrolet Fort Wayne, IN
Kelley Automotive Group Kelley Volvo Fort Wayne, IN
Kelley Automotive Group Tom Kelley Pontiac/GMC Fort Wayne, IN
Kelley Automotive Group Tom Kelley Buick Fort Wayne, IN
Kelley Automotive Group TST Car/Van Wash Fort Wayne, IN
Kelley Automotive Group Saturn of Fort Wayne Fort Wayne, IN
Kelley Automotive Group Total
Ken Dixon Automotive Ken Dixon Chevrolet Waldorf, MD
Ken Dixon Automotive Total
Kline Automotive Group Kline Undeveloped Lot Chesapeake, VA
Kline Automotive Group Kline Toyota Greenbrier/ Kline Chesapeake, VA
Kline Automotive Group Total
Larry H. Miller Group Denver Toyota Denver, CO
Larry H. Miller Group Total
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Gurley-Leep Automotive Group 5,191,365 7,142,324 12,333,689 576,536 11/05/98 30 years
Gurley-Leep Automotive Group 396,639 1,124,106 1,520,745 90,736 11/05/98 30 years
Gurley-Leep Automotive Group 1,478,543 920,201 2,398,745 74,277 11/05/98 30 years
Gurley-Leep Automotive Group Total 10,028,188 12,856,734 22,884,923 1,037,813
Hand Automotive Group 2,341,054 1,502,527 3,843,580 145,883 07/22/98 30 years
Hand Automotive Group Total 2,341,054 1,502,527 3,843,580 145,883
Hoz de Vila Automotive 636,471 1,795,592 2,432,063 102,249 04/07/99 30 years
Hoz de Vila Automotive 1,297,432 1,258,745 2,556,177 71,678 04/07/99 30 years
Hoz de Vila Automotive Total 1,933,904 3,054,336 4,988,240 173,927
Jackson Automotive Group 260,000 - 260,000 - 10/23/98
Jackson Automotive Group 266,308 1,121,394 1,387,702 95,108 10/23/98 30 years
Jackson Automotive Group 279,686 83,943 363,629 7,119 10/23/98 30 years
Jackson Automotive Group 54,129 581,612 635,741 64,220 10/23/98 20 years
Jackson Automotive Group 111,264 549,476 660,739 46,602 10/23/98 30 years
Jackson Automotive Group Total 971,387 2,336,424 3,307,811 213,049
Kelley Automotive Group 3,050,226 1,243,894 4,294,119 125,862 06/17/98 30 years
Kelley Automotive Group 547,361 2,203,906 2,751,267 223,000 06/17/98 30 years
Kelley Automotive Group 1,207,661 1,826,458 3,034,119 184,808 06/17/98 30 years
Kelley Automotive Group 3,249,737 2,844,383 6,094,119 287,806 06/17/98 30 years
Kelley Automotive Group 385,416 1,508,703 1,894,119 191,731 06/17/98 20 years
Kelley Automotive Group 795,030 1,939,090 2,734,119 196,203 06/17/98 30 years
Kelley Automotive Group 1,499,957 5,211,666 6,711,623 527,338 06/17/98 30 years
Kelley Automotive Group 263,895 1,158,798 1,422,693 117,252 06/17/98 30 years
Kelley Automotive Group 1,115,426 4,299,643 5,415,069 417,460 07/23/98 30 years
Kelley Automotive Group 1,226,261 3,588,808 4,815,069 348,444 07/23/98 30 years
Kelley Automotive Group 345,079 863,130 1,208,208 44,355 06/09/99 30 years
Kelley Automotive Group 634,218 2,585,702 3,219,921 17,956 08/09/99 30 years
Kelley Automotive Group Total 14,320,267 29,274,180 43,594,447 2,682,215
Ken Dixon Automotive 3,329,652 3,978,480 7,308,132 418,838 05/22/98 30 years
Ken Dixon Automotive Total 3,329,652 3,978,480 7,308,132 418,838
Kline Automotive Group 1,529,567 - 1,529,567 - 02/27/98
Kline Automotive Group 2,684,078 4,319,163 7,003,241 507,714 02/27/98 30 years
Kline Automotive Group Total 4,213,645 4,319,163 8,532,807 507,714
Larry H. Miller Group 1,993,036 7,243,001 9,236,037 821,792 03/31/98 30 years
Larry H. Miller Group Total 1,993,036 7,243,001 9,236,037 821,792
50
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Lithia Motors Lithia Honda Medford, OR
Lithia Motors Lithia Saturn Medford, OR
Lithia Motors Lithia Dodge Medford, OR
Lithia Motors Lithia Toyota/Mazda Medford, OR
Lithia Motors Lithia Isuzu-Suzuki Medford, OR
Lithia Motors Grants Pass Auto Mart Grants Pass, OR
Lithia Motors Roundtree Chevrolet-Lincoln Boise, ID
Lithia Motors Total
Lynn Alexander Automotive Group All-American Chevrolet, Inc. San Angelo, TX
Lynn Alexander Automotive Group Dodge Lincoln-Mercury Nissan San Angelo, TX
Lynn Alexander Automotive Group Chrysler-Plymouth Jeep-Eagle San Angelo, TX
Lynn Alexander Automotive Group Fiesta Dodge Chrysler-Plymouth Jeep Big Spring, TX
Lynn Alexander Automotive Group Total
Mark Miller Automotive Group Mark Miller Pontiac Salt Lake City, UT
Mark Miller Automotive Group Undeveloped Lot Adjacent to Pontiac Salt Lake City, UT
Mark Miller Automotive Group Mark Miller Toyota Salt Lake City, UT
Mark Miller Automotive Group Mark Miller Toyota-Used Cars Salt Lake City, UT
Mark Miller Automotive Group Total
McCluskey Chevrolet McCluskey Chevrolet - 435 E. Cincinnati, OH
McCluskey Chevrolet McCluskey Chevrolet --555 E. Cincinnati, OH
McCluskey Chevrolet McCluskey Chevrolet -- Reading Rd. Cincinnati, OH
McCluskey Chevrolet Total
Midwestern Auto Group Midwestern Auto Group Dublin, OH
Midwestern Auto Group Total
Momentum Automotive Group Momentum Jaguar/Porsche/Saab Houston, TX
Momentum Automotive Group Momentum BMW Houston, TX
Momentum Automotive Group Momentum Volvo Houston, TX
Momentum Automotive Group Momentum Paint & Body Houston, TX
Momentum Automotive Group Momentum Used Car Lot Houston, TX
Momentum Automotive Group Barney Garver Land Rover/VW Houston, TX
Momentum Automotive Group Momentum/Advantage BMW League City, TX
Momentum Automotive Group Momentum Volvo Parking Lot Houston, TX
Momentum Automotive Group Total
Motorcars Automotive Group Motorcars Honda Cleveland Heights, OH
Motorcars Automotive Group Motorcars Oldsmobile-Pontiac Cleveland Heights, OH
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Lithia Motors 1,360,759 1,503,668 2,864,427 77,272 06/22/99 30 years
Lithia Motors 414,453 781,560 1,196,013 40,164 06/22/99 30 years
Lithia Motors 2,033,425 2,710,753 4,744,178 139,303 06/22/99 30 years
Lithia Motors 2,102,213 3,130,794 5,233,007 160,888 06/22/99 30 years
Lithia Motors 1,182,429 557,500 1,739,929 28,649 06/22/99 30 years
Lithia Motors 1,248,419 1,371,522 2,619,941 70,481 06/22/99 30 years
Lithia Motors 2,588,238 7,227,467 9,815,705 760,879 05/06/98 30 years
Lithia Motors Total 10,929,936 17,283,265 28,213,200 1,277,635
Lynn Alexander Automotive Group 1,597,006 2,672,092 4,269,097 237,564 09/11/98 30 years
Lynn Alexander Automotive Group 788,552 2,015,676 2,804,228 179,205 09/11/98 30 years
Lynn Alexander Automotive Group 282,954 1,267,274 1,550,228 112,668 09/11/98 30 years
Lynn Alexander Automotive Group 159,857 972,371 1,132,228 86,449 09/11/98 30 years
Lynn Alexander Automotive Group Total 2,828,369 6,927,412 9,755,781 615,887
Mark Miller Automotive Group 3,439,460 1,549,000 4,988,460 58,088 11/05/99 30 years
Mark Miller Automotive Group 463,711 - 463,711 - 11/05/99
Mark Miller Automotive Group 1,135,915 5,127,546 6,263,460 192,283 11/05/99 30 years
Mark Miller Automotive Group 3,078,497 1,434,963 4,513,460 53,811 11/05/99 30 years
Mark Miller Automotive Group Total 8,117,582 8,111,509 16,229,091 304,182
McCluskey Chevrolet 1,013,496 1,404,046 2,417,542 87,753 02/01/99 30 years
McCluskey Chevrolet 457,295 961,450 1,418,745 60,091 02/01/99 30 years
McCluskey Chevrolet 515,525 1,201,554 1,717,078 75,097 02/01/99 30 years
McCluskey Chevrolet Total 1,986,316 3,567,050 5,553,366 222,941
Midwestern Auto Group 2,621,288 1,782,556 4,403,844 2,476 12/15/00 30 years
Midwestern Auto Group Total 2,621,288 1,782,556 4,403,844 2,476
Momentum Automotive Group 7,285,191 11,151,887 18,437,078 991,467 09/01/98 30 years
Momentum Automotive Group 3,679,246 8,185,594 11,864,840 534,337 01/22/99 30 years
Momentum Automotive Group 1,385,877 3,282,423 4,668,299 291,826 09/01/98 30 years
Momentum Automotive Group 1,194,529 3,473,983 4,668,512 308,857 09/01/98 30 years
Momentum Automotive Group 640,871 1,654,978 2,295,849 133,587 11/25/98 30 years
Momentum Automotive Group 1,065,719 1,455,407 2,521,126 78,835 05/17/99 30 years
Momentum Automotive Group 1,665,071 1,856,924 3,521,995 28,370 07/27/00 30 years
Momentum Automotive Group 1,151,995 - 1,151,995 - 07/27/00
Momentum Automotive Group Total 18,068,498 31,061,196 49,129,694 2,367,278
Motorcars Automotive Group 818,578 4,279,543 5,098,121 362,957 10/28/98 30 years
Motorcars Automotive Group 656,210 2,122,204 2,778,414 179,989 10/28/98 30 years
51
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Motorcars Automotive Group Total
Mulkin Automotive Group Mulkin Chevrolet & Courtesy Brockport, NY
Mulkin Automotive Group Mulkin Parking Lot Brockport, NY
Mulkin Automotive Group Total
Nebco of Cleveland, Inc. Toyota of Cleveland Cleveland, TN
Nebco of Cleveland, Inc. Total
Noarus Auto Group Airport Marina Ford Los Angeles, CA
Noarus Auto Group Total
O'Rielly Motor Company O'Rielly Chevrolet Tucson, AZ
O'Rielly Motor Company Total
Orr Automotive Group Orr Acura Shreveport, LA
Orr Automotive Group Orr Mitsubishi Texarkana, TX
Orr Automotive Group Orr BMW/Infiniti Shreveport, LA
Orr Automotive Group Orr Honda Texarkana, TX
Orr Automotive Group Performance Motors, Inc. Atlanta, TX
Orr Automotive Group Total
Park Place Motorcars Park Place Motorcars Dallas,TX
Park Place Motorcars Park Place Lexus Plano, TX
Park Place Motorcars PPM Specialists, Inc. Dallas,TX
Park Place Motorcars Park Place Motorcars Mid-Cities Bedford, TX
Park Place Motorcars Total
Pohanka Automotive Group Good News Nissan Salisbury, MD
Pohanka Automotive Group Good News Body Shop Salisbury, MD
Pohanka Automotive Group Good News Olds-Cadillac-GMC Salisbury, MD
Pohanka Automotive Group Good News Honda Salisbury, MD
Pohanka Automotive Group Towne Toyota Mercedes-Benz Salisbury, MD
Pohanka Automotive Group Good News Mazda Salisbury, MD
Pohanka Automotive Group Pohanka Cadillac/Hyundai/Nissan Fredericksburg, VA
Pohanka Automotive Group Pohanka Saturn, Isuzu, & Oldsmobile Marlow Heights, MD
Pohanka Automotive Group Pohanka Acura & Chevy Chantilly, VA
Pohanka Automotive Group Pohanka Lexus Chantilly, VA
Pohanka Automotive Group Pohanka Undeveloped Lot Chantilly, VA
Pohanka Automotive Group Pohanka Body Shop Marlow Heights, MD
Pohanka Automotive Group Pohanka Hyundai Marlow Heights, MD
Pohanka Automotive Group Pohanka Honda Marlow Heights, MD
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Motorcars Automotive Group Total 1,474,787 6,401,747 7,876,534 542,946
Mulkin Automotive Group 356,033 2,164,438 2,520,471 129,265 03/25/99 30 years
Mulkin Automotive Group 30,639 26,769 57,407 1,599 03/25/99 30 years
Mulkin Automotive Group Total 386,672 2,191,207 2,577,879 130,864
Nebco of Cleveland, Inc. 581,158 1,891,855 2,473,013 86,710 08/13/99 30 years
Nebco of Cleveland, Inc. Total 581,158 1,891,855 2,473,013 86,710
Noarus Auto Group 4,898,755 1,950,690 6,849,445 189,396 07/22/98 30 years
Noarus Auto Group Total 4,898,755 1,950,690 6,849,445 189,396
O'Rielly Motor Company 4,515,062 5,321,125 9,836,187 560,187 05/22/98 30 years
O'Rielly Motor Company Total 4,515,062 5,321,125 9,836,187 560,187
Orr Automotive Group 536,735 1,380,648 1,917,383 128,399 08/27/98 30 years
Orr Automotive Group 142,496 169,189 311,684 15,734 08/28/98 30 years
Orr Automotive Group 497,268 967,075 1,464,344 79,646 08/27/98 30 years
Orr Automotive Group 1,006,979 1,040,405 2,047,384 92,498 09/16/98 30 years
Orr Automotive Group 459,509 2,571,824 3,031,333 132,163 06/30/99 30 years
Orr Automotive Group Total 2,642,987 6,129,141 8,772,128 448,441
Park Place Motorcars 6,373,615 12,920,058 19,293,674 843,393 01/08/99 30 years
Park Place Motorcars 7,318,505 6,483,194 13,801,699 576,393 09/28/98 30 years
Park Place Motorcars 528,767 1,574,618 2,103,385 139,993 09/28/98 30 years
Park Place Motorcars 1,949,201 5,825,357 7,774,558 234,632 10/12/99 30 years
Park Place Motorcars Total 16,170,088 26,803,227 42,973,315 1,794,411
Pohanka Automotive Group 220,415 230,757 451,172 27,125 02/19/98 30 years
Pohanka Automotive Group 1,122,544 166,184 1,288,728 23,889 02/19/98 20 years
Pohanka Automotive Group 634,419 197,652 832,071 23,234 02/19/98 30 years
Pohanka Automotive Group 428,563 159,768 588,331 18,781 02/19/98 30 years
Pohanka Automotive Group 406,556 163,715 570,271 19,245 02/19/98 30 years
Pohanka Automotive Group 246,923 167,699 414,622 19,713 02/19/98 30 years
Pohanka Automotive Group 1,631,722 3,248,564 4,880,286 266,931 02/19/98 30 years
Pohanka Automotive Group 2,005,304 2,358,089 4,363,393 277,191 02/19/98 30 years
Pohanka Automotive Group 3,367,127 4,308,211 7,675,338 506,426 02/19/98 30 years
Pohanka Automotive Group 2,017,383 1,422,902 3,440,285 167,261 02/19/98 30 years
Pohanka Automotive Group 2,455,659 6,284 2,461,943 739 02/19/98 30 years
Pohanka Automotive Group 614,767 98,007 712,774 11,521 02/19/98 30 years
Pohanka Automotive Group 888,234 683,156 1,571,390 80,304 02/19/98 30 years
Pohanka Automotive Group 771,065 2,934,756 3,705,821 344,978 02/19/98 30 years
52
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Pohanka Automotive Group Pohanka Saturn of Bowie Bowie, MD
Pohanka Automotive Group Total
Rosenthal Automotive Group Rosenthal Honda/Jaguar Tyson's Corner, VA
Rosenthal Automotive Group Rosenthal Nissan/Acura/Mazda/Isuzu Gaithersburg, MD
Rosenthal Automotive Group Rosenthal Chevrolet/Jeep/Eagle Arlington, VA
Rosenthal Automotive Group Rosenthal Mazda Arlington, VA
Rosenthal Automotive Group Rosenthal Storage Lot Arlington, VA
Rosenthal Automotive Group Rosenthal Body Shop Tyson's Corner, VA
Rosenthal Automotive Group Rosenthal Infiniti-Mazda-Nissan Tyson's Corner, VA
Rosenthal Automotive Group Total
Roundtree Automotive Group Auto Trim Design (Roundtree) Shreveport, LA
Roundtree Automotive Group Champion Ford Shreveport, LA
Roundtree Automotive Group Brocks Service Facility Shreveport, LA
Roundtree Automotive Group Roundtree Olds-Cadillac Shreveport, LA
Roundtree Automotive Group Roundtree-Car Central Bossier City, LA
Roundtree Automotive Group Champion Mitsubishi Shreveport, LA
Roundtree Automotive Group Roundtree Hyundai-Subaru Shreveport, LA
Roundtree Automotive Group Total
Saturn Retail Enterprises Saturn of Plano Plano, TX
Saturn Retail Enterprises Saturn of Houston-Gulf Freeway Houston, TX
Saturn Retail Enterprises Saturn of the Avenues Jacksonville, FL
Saturn Retail Enterprises Saturn of Regency Jacksonville, FL
Saturn Retail Enterprises Saturn of Chattanooga Chattanooga, TN
Saturn Retail Enterprises Total
Sheehy Auto Stores Sheehy Ford of Springfield Springfield, VA
Sheehy Auto Stores Chapman Ford Sales Philadelphia, PA
Sheehy Auto Stores Sheehy Ford of Marlow Heights Marlow Heights, MD
Sheehy Auto Stores Total
Sonic Automotive, Inc. Lexus of Marin San Rafael, CA
Sonic Automotive, Inc. Kramer Volvo Santa Monica, CA
Sonic Automotive, Inc. Kramer Honda Santa Monica, CA
Sonic Automotive, Inc. Clearwater Toyota & Mitsubishi Clearwater, FL
Sonic Automotive, Inc. Clearwater Collision Center Clearwater, FL
Sonic Automotive, Inc. Town & Country Ford Charlotte, NC
Sonic Automotive, Inc. Town & Country Ford RAC Charlotte, NC
Sonic Automotive, Inc. Town & Country Toyota Charlotte, NC
Sonic Automotive, Inc. Infiniti of Charlotte Charlotte, NC
Sonic Automotive, Inc. Lake Norman Chrysler-Plymouth #1 Cornelius, NC
Sonic Automotive, Inc. Lake Norman C/P Dodge Used Cars Cornelius, NC
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Pohanka Automotive Group 3,600,517 504,858 4,105,375 59,346 02/19/98 30 years
Pohanka Automotive Group Total 20,411,198 16,650,603 37,061,801 1,846,683
Rosenthal Automotive Group 9,281,370 2,167,729 11,449,099 254,816 02/19/98 30 years
Rosenthal Automotive Group 6,810,506 4,998,589 11,809,095 587,580 02/19/98 30 years
Rosenthal Automotive Group 5,009,272 1,783,436 6,792,708 209,641 02/19/98 30 years
Rosenthal Automotive Group 4,874,676 493,251 5,367,927 57,981 02/19/98 30 years
Rosenthal Automotive Group 4,894,106 15,114 4,909,220 1,776 02/19/98 30 years
Rosenthal Automotive Group 665,989 419,089 1,085,078 49,264 02/19/98 30 years
Rosenthal Automotive Group 19,396,815 4,446,289 23,843,104 522,657 02/19/98 30 years
Rosenthal Automotive Group Total 50,932,735 14,323,497 65,256,232 1,683,715
Roundtree Automotive Group 123,612 470,906 594,518 47,648 06/04/98 30 years
Roundtree Automotive Group 2,236,421 4,792,478 7,028,899 484,922 06/04/98 30 years
Roundtree Automotive Group 232,351 634,167 866,518 64,168 06/04/98 30 years
Roundtree Automotive Group 1,470,535 1,931,846 3,402,381 195,472 06/04/98 30 years
Roundtree Automotive Group 406,884 409,627 816,511 41,448 06/04/98 30 years
Roundtree Automotive Group 876,554 1,139,964 2,016,518 115,346 06/04/98 30 years
Roundtree Automotive Group 364,792 251,726 616,518 31,990 06/04/98 20 years
Roundtree Automotive Group Total 5,711,149 9,630,714 15,341,863 980,995
Saturn Retail Enterprises 2,331,099 2,139,854 4,470,953 127,797 03/25/99 30 years
Saturn Retail Enterprises 2,094,123 2,469,920 4,564,043 147,509 03/25/99 30 years
Saturn Retail Enterprises 1,154,281 2,116,261 3,270,543 126,388 03/25/99 30 years
Saturn Retail Enterprises 860,346 1,678,422 2,538,768 62,941 11/15/99 30 years
Saturn Retail Enterprises 1,433,676 1,752,271 3,185,947 80,312 08/13/99 30 years
Saturn Retail Enterprises Total 7,873,526 10,156,728 18,030,254 544,947
Sheehy Auto Stores 4,221,356 2,107,330 6,328,686 247,715 02/19/98 30 years
Sheehy Auto Stores 3,006,604 8,082 3,014,686 950 02/19/98 30 years
Sheehy Auto Stores 1,177,402 933,763 2,111,165 134,231 02/19/98 20 years
Sheehy Auto Stores Total 8,405,362 3,049,175 11,454,537 382,895
Sonic Automotive, Inc. 2,867,234 3,491,926 6,359,160 7,275 01/14/99 30 years
Sonic Automotive, Inc. 2,562,559 353,329 2,915,888 13,250 11/10/99 30 years
Sonic Automotive, Inc. 3,833,129 2,885,258 6,718,388 108,199 11/10/99 30 years
Sonic Automotive, Inc. 4,136,070 3,915,854 8,051,924 348,142 09/18/98 30 years
Sonic Automotive, Inc. 331,082 316,218 647,300 28,114 09/18/98 30 years
Sonic Automotive, Inc. 6,119,289 5,082,461 11,201,750 232,946 08/13/99 30 years
Sonic Automotive, Inc. 520,786 557,672 1,078,458 25,560 08/13/99 30 years
Sonic Automotive, Inc. 2,999,555 3,431,422 6,430,977 139,880 08/13/99 30 years
Sonic Automotive, Inc. 1,913,965 2,755,675 4,669,640 112,594 08/13/99 30 years
Sonic Automotive, Inc. 1,723,276 3,000,786 4,724,062 137,536 08/13/99 30 years
Sonic Automotive, Inc. 1,095,504 1,104,671 2,200,175 50,631 08/13/99 30 years
53
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Sonic Automotive, Inc. Lake Norman Dodge #1 Cornelius, NC
Sonic Automotive, Inc. Lake Norman Dodge #2 Cornelius, NC
Sonic Automotive, Inc. Fitzgerald Chevrolet (Freedom) Monroe, NC
Sonic Automotive, Inc. Westside Dodge Columbus, OH
Sonic Automotive, Inc. Toyota West Columbus, OH
Sonic Automotive, Inc. Hatfield Hyundai Columbus, OH
Sonic Automotive, Inc. Hatfield Lincoln-Mercury Columbus, OH
Sonic Automotive, Inc. Hatfield VW-Jeep West Columbus, OH
Sonic Automotive, Inc. Ron Craft Chrysler-Plymouth-Jeep Baytown, TX
Sonic Automotive, Inc. Reading Buick, Pontiac, GMC Baytown, TX
Sonic Automotive, Inc. Lute Riley Honda Richardson, TX
Sonic Automotive, Inc. Lone Star Ford Houston, TX
Sonic Automotive, Inc. Lone Star Nissan Olds The Meadows, TX
Sonic Automotive, Inc. Higginbotham Mercedes Daytona Beach, FL
Sonic Automotive, Inc. Fred Bondenson Deland, FL
Sonic Automotive, Inc. Halifax Ford Used Cars Edgewater, FL
Sonic Automotive, Inc. Halifax Ford-Mercury New Smyrna, FL
Sonic Automotive, Inc. Halifax Body Shop-Parcel 12 New Smyrna, FL
Sonic Automotive, Inc. Higginbotham Chevrolet-Oldsmobile New Smyrna, FL
Sonic Automotive, Inc. HMC Finance Office Building Port Orange, FL
Sonic Automotive, Inc. Shottenkirk Honda Pensacola, FL
Sonic Automotive, Inc. Dyer & Dyer Volvo Duluth, GA
Sonic Automotive, Inc. Global BMW Atlanta, GA
Sonic Automotive, Inc. Infiniti of Chattanooga Chattanooga, TN
Sonic Automotive, Inc. Infiniti of Chattanooga #2 Chattanooga, TN
Sonic Automotive, Inc. BMW-Volvo of Chattanooga Chattanooga, TN
Sonic Automotive, Inc. VW-Kia of Chattanooga Chattanooga, TN
Sonic Automotive, Inc. Town & Country Ford Cleveland Cleveland, TN
Sonic Automotive, Inc. Town & Country Ford Cleveland #2 Cleveland, TN
Sonic Automotive, Inc. Cleveland Village Honda Cleveland, TN
Sonic Automotive, Inc. Volkswagon of Nashville Nashville, TN
Sonic Automotive, Inc. Superior Olds-Cadillac-GMC Cleveland, TN
Sonic Automotive, Inc. Tom Williams Buick Birmingham, AL
Sonic Automotive, Inc. Tom Williams Used Cars Birmingham, AL
Sonic Automotive, Inc. Manhattan Jaguar Lincoln-Mercury Rockville, MD
Sonic Automotive, Inc. Manhattan Nissan Jeep-Eagle Waldorf, MD
Sonic Automotive, Inc. North Charleston North Charleston, SC
Sonic Automotive, Inc. Century BMW Greenville, SC
Sonic Automotive, Inc. Newsome Chevrolet World Columbia, SC
Sonic Automotive, Inc. Newsome Automotive LLC Florence, SC
Sonic Automotive, Inc. Fort Mill Ford Fort Mill, SC
Sonic Automotive, Inc. Heritage Lincoln-Mercury Greenville, SC
Sonic Automotive, Inc. Manhattan BMW of Fairfax Fairfax, VA
Sonic Automotive, Inc. Manhattan BMW of Fairfax-Storage Fairfax, VA
Sonic Automotive, Inc. Freeland-Mercedes Ft. Myers, FL
Sonic Automotive, Inc. Freeland-BMW Nissan Ft. Myers, FL
Sonic Automotive, Inc. Freeland-Honda Ft. Myers, FL
Sonic Automotive, Inc. Blount Strange Ford Lincoln Mercury Montgomery, AL
Sonic Automotive, Inc. Cobb Pontiac Cadillac Montgomery, AL
Gross Amount at December 31, 2000
----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ----------- ------------ -------- ------------
Sonic Automotive, Inc. 1,010,854 2,535,582 3,546,437 116,214 08/13/99 30 years
Sonic Automotive, Inc. 537,636 653,550 1,191,186 29,954 08/13/99 30 years
Sonic Automotive, Inc. 1,095,932 2,666,403 3,762,335 122,210 08/13/99 30 years
Sonic Automotive, Inc. 2,092,735 3,808,952 5,901,687 174,577 08/13/99 30 years
Sonic Automotive, Inc. 1,470,122 3,253,940 4,724,062 149,139 08/13/99 30 years
Sonic Automotive, Inc. 2,125,937 2,598,124 4,724,062 119,081 08/13/99 30 years
Sonic Automotive, Inc. 1,331,040 1,626,584 2,957,624 74,552 08/13/99 30 years
Sonic Automotive, Inc. 1,331,040 1,626,584 2,957,624 74,552 08/13/99 30 years
Sonic Automotive, Inc. 974,936 1,099,469 2,074,405 50,392 08/13/99 30 years
Sonic Automotive, Inc. 500,776 1,442,373 1,943,149 66,109 08/13/99 30 years
Sonic Automotive, Inc. 6,843,575 4,773,825 11,617,400 218,800 08/13/99 30 years
Sonic Automotive, Inc. 4,985,549 6,215,450 11,201,000 284,875 08/13/99 30 years
Sonic Automotive, Inc. 3,013,604 3,266,078 6,279,682 149,695 08/13/99 30 years
Sonic Automotive, Inc. 922,825 1,262,355 2,185,180 57,858 08/13/99 30 years
Sonic Automotive, Inc. 1,248,734 2,705,218 3,953,952 123,989 08/13/99 30 years
Sonic Automotive, Inc. 304,620 424,103 728,723 19,438 08/13/99 30 years
Sonic Automotive, Inc. 1,443,980 2,392,446 3,836,427 109,654 08/13/99 30 years
Sonic Automotive, Inc. 336,834 505,236 842,070 23,157 08/13/99 30 years
Sonic Automotive, Inc. 1,354,320 6,566,716 7,921,036 291,081 08/13/99 30 years
Sonic Automotive, Inc. 426,576 202,295 628,870 9,272 08/13/99 30 years
Sonic Automotive, Inc. 943,985 1,750,263 2,694,248 75,359 09/01/99 30 years
Sonic Automotive, Inc. 3,291,271 1,515,620 4,806,891 69,466 08/13/99 30 years
Sonic Automotive, Inc. 4,761,991 7,610,236 12,372,228 263,331 08/13/99 30 years
Sonic Automotive, Inc. 1,327,613 2,313,330 3,640,944 83,294 08/13/99 30 years
Sonic Automotive, Inc. 455,171 - 455,171 - 08/13/99
Sonic Automotive, Inc. 934,434 1,825,349 2,759,783 83,662 08/13/99 30 years
Sonic Automotive, Inc. 592,846 724,346 1,317,192 33,199 08/13/99 30 years
Sonic Automotive, Inc. 953,129 1,952,896 2,906,025 61,045 08/13/99 30 years
Sonic Automotive, Inc. 403,661 493,120 896,780 22,601 08/13/99 30 years
Sonic Automotive, Inc. 687,598 840,154 1,527,752 38,507 08/13/99 30 years
Sonic Automotive, Inc. 655,378 800,774 1,456,152 36,702 08/13/99 30 years
Sonic Automotive, Inc. 858,566 1,892,706 2,751,271 86,749 08/13/99 30 years
Sonic Automotive, Inc. 2,035,519 2,127,823 4,163,342 97,525 08/13/99 30 years
Sonic Automotive, Inc. 427,565 374,296 801,862 17,155 08/13/99 30 years
Sonic Automotive, Inc. 4,296,067 1,774,425 6,070,491 81,328 08/13/99 30 years
Sonic Automotive, Inc. 1,827,322 2,063,909 3,891,231 94,596 08/13/99 30 years
Sonic Automotive, Inc. 4,273,963 952,326 5,226,289 43,648 08/17/99 30 years
Sonic Automotive, Inc. 1,664,632 2,470,617 4,135,249 113,237 08/13/99 30 years
Sonic Automotive, Inc. 1,351,718 2,287,864 3,639,582 104,860 08/13/99 30 years
Sonic Automotive, Inc. 1,300,237 4,002,699 5,302,937 183,457 08/13/99 30 years
Sonic Automotive, Inc. 1,405,770 3,318,291 4,724,062 152,088 08/13/99 30 years
Sonic Automotive, Inc. 1,684,188 1,409,824 3,094,013 64,617 08/13/99 30 years
Sonic Automotive, Inc. 3,026,528 2,421,474 5,448,002 110,984 08/13/99 30 years
Sonic Automotive, Inc. - 1,351,564 1,351,564 5,632 08/13/99 30 years
Sonic Automotive, Inc. 1,550,567 1,467,684 3,018,251 55,038 11/04/99 30 years
Sonic Automotive, Inc. 4,277,225 1,873,800 6,151,025 70,267 11/04/99 30 years
Sonic Automotive, Inc. 2,745,372 1,272,879 4,018,251 47,733 11/04/99 30 years
Sonic Automotive, Inc. 2,642,944 3,230,264 5,873,208 85,243 03/03/00 30 years
Sonic Automotive, Inc. 2,460,559 3,182,925 5,643,483 83,994 03/03/00 30 years
54
Dealer Group Name Dealership Location
----------------------------------- ------------------------------------------------------
Sonic Automotive, Inc. Lake Norman Body Shop Cornelius, NC
Sonic Automotive, Inc. Fort Myers Raw Land (Parking Lot) Fort Myers, FL
Sonic Automotive, Inc. Pensacola Raw Land Parcel Pensacola, FL
Sonic Automotive, Inc. Capital Chevrolet Montgomery, AL
Sonic Automotive, Inc. Volvo of Dallas Carrollton, TX
Sonic Automotive, Inc. Baytown Auto Mall Baytown, TX
Sonic Automotive, Inc. Fort Mill Auto Mall Fort Mill, SC
Sonic Automotive, Inc. Total
Sterling Collision Centers, Inc. JSI Collision Center - Bedford Bedford, OH
Sterling Collision Centers, Inc. JSI Collision Center - CF Cuyahoga Falls, OH
Sterling Collision Centers, Inc. JSI Collision Center - CL Cleveland, OH
Sterling Collision Centers, Inc. Total
The Price Organization Price Buick-Pontiac Salisbury, MD
The Price Organization Total
Town & Country Automotive Town & Country Super Used Car Middletown, CT
Town & Country Automotive Town & Country Lincoln-Mercury, Middletown, CT
Town & Country Automotive Town & Country Chrysler/Jeep Middletown, CT
Town & Country Automotive Town & Country Mazda Ivorytown, CT
Town & Country Automotive Town & Country Buick, Pontiac-GMC, Middletown, CT
Town & Country Automotive Total
United Auto Group Kelley Buick Roswell Roswell, GA
United Auto Group Motorcars West North Olmstead, OH
United Auto Group Citrus Chrysler-Plymouth Dodge Dade City, FL
United Auto Group Citrus Chrysler Used Car Lot Dade City, FL
United Auto Group Total
Warren Henry Automobiles, Inc. Warren Henry Infiniti Miami, FL
Warren Henry Automobiles, Inc. Warren Henry Land Rover Miami, FL
Warren Henry Automobiles, Inc. Warren Henry Jaguar/Volvo Miami, FL
Warren Henry Automobiles, Inc. Total
Gross Amount at December 31, 2000
------------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
----------------------------------- ----------- ------------- ------------- ------------ -------- ------------
Sonic Automotive, Inc. 999,449 3,797,984 4,797,433 36,925 09/15/00 30 years
Sonic Automotive, Inc. 836,830 306,162 1,142,991 2,977 09/15/00 30 years
Sonic Automotive, Inc. 382,789 104,064 486,853 982 09/20/00 30 years
Sonic Automotive, Inc. 2,846,361 2,599,287 5,445,648 25,271 09/28/00 30 years
Sonic Automotive, Inc. 1,759,838 4,676,196 6,436,034 32,474 10/06/00 30 years
Sonic Automotive, Inc. 2,104,810 14,296,558 16,401,368 19,856 12/19/00 30 years
Sonic Automotive, Inc. 1,370,897 9,922,981 11,293,878 13,782 12/19/00 30 years
Sonic Automotive, Inc. Total 124,590,867 169,525,247 294,116,115 5,866,309
Sterling Collision Centers, Inc. 73,602 1,398,430 1,472,031 64,095 08/13/99 30 years
Sterling Collision Centers, Inc. 432,246 1,334,192 1,766,438 61,150 08/13/99 30 years
Sterling Collision Centers, Inc. 448,136 1,023,895 1,472,031 46,928 08/13/99 30 years
Sterling Collision Centers, Inc. Total 953,984 3,756,517 4,710,500 172,174
The Price Organization 649,805 696,792 1,346,597 81,907 02/27/98 30 years
The Price Organization Total 649,805 696,792 1,346,597 81,907
Town & Country Automotive 177,770 1,081,524 1,259,294 109,433 06/09/98 30 years
Town & Country Automotive 542,904 1,238,415 1,781,319 125,308 06/09/98 30 years
Town & Country Automotive 697,975 765,319 1,463,294 77,438 06/09/98 30 years
Town & Country Automotive 302,977 905,317 1,208,294 91,604 06/09/98 30 years
Town & Country Automotive 453,096 1,484,057 1,937,153 188,599 06/09/98 20 years
Town & Country Automotive Total 2,174,721 5,474,632 7,649,352 592,381
United Auto Group 2,956,057 3,061,851 6,017,908 297,280 07/23/98 30 years
United Auto Group 1,974,998 3,187,807 5,162,804 270,365 10/28/98 30 years
United Auto Group 548,395 1,088,504 1,636,899 49,890 08/13/99 30 years
United Auto Group 247,301 - 247,301 - 08/13/99
United Auto Group Total 5,726,751 7,338,161 13,064,913 617,535
Warren Henry Automobiles, Inc. 3,279,263 2,562,606 5,841,869 238,320 08/27/98 30 years
Warren Henry Automobiles, Inc. 958,959 913,176 1,872,135 84,924 08/27/98 30 years
Warren Henry Automobiles, Inc. 2,560,916 2,430,812 4,991,727 226,063 08/27/98 30 years
Warren Henry Automobiles, Inc. Total 6,799,138 5,906,593 12,705,731 549,307
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TOTAL $446,418,023 $591,451,889 $1,037,869,912 $38,644,100
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