SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 16, 2002
LEXINGTON CORPORATE PROPERTIES TRUST
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(Exact Name of Registrant as specified in its charter)
Maryland 1-12386 13-3717318
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
355 Lexington Avenue, New York, New York 10017
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 692-7260
Not Applicable
(Former name or former address, if changed since last report)
Subsequent to June 30, 2002, Lexington Corporate Properties Trust (the
"Company") has (i) acquired either for itself or through non-consolidated
entities, five properties (collectively, the "Property Acquisitions"),
comprising approximately 2.2 million square feet of gross leasable area, (ii)
entered into agreements to acquire and/or develop three properties comprising
929,000 square feet of gross leaseable area (collectively, the "Probable
Property Acquisitions"), and (iii) sold one property, comprising 115,000 square
feet of gross leasable area (the "Property Disposition"). The total acquisition
price for the Property Acquisitions and the Probable Property Acquisitions,
collectively, is approximately $110.9 million. All of the tenants (or their
parent guarantors) at the Property Acquisitions and the Probable Property
Acquisitions, with the exception of Wells Fargo Home Mortgage, are publicly
registered companies subject to the Securities Exchange Act of 1934, as amended
and accordingly file financial information with the Securities and Exchange
Commission.
The Company has included the Probable Property Acquisitions in preparing the
Item 7 pro forma information being filed because they are deemed to be probable.
Although the Company believes the Probable Property Acquisitions are probable
future events, certain contingencies remain to be satisfied and there can be no
assurance that all or any of them will be consummated.
PROPERTY ACQUISITIONS ARE AS FOLLOWS:
In August 2002, the Company's joint venture with The Comptroller of the State of
New York as Trustee of the Common Retirement Fund acquired two industrial
properties, in Laurens, South Carolina and Temperance, Michigan, for an
aggregate cost of $45.9 million. The properties are net leased to TNT Logistics
North America, Inc. through August 2012 for annual net rent of $5.4 million. The
purchases were partially funded through $30.2 million non-recourse mortgage
notes which bear interest at a fixed annual interest rate of 6.0%, provide for
annual debt service of $2.3 million and mature September 2012 when balloon
payments of $23.4 million are due. The two mortgage notes are not cross
collateralized. These properties were purchased from a seller who had used the
properties in their distribution operations and therefore there are no
historical operating statements for these properties.
In August 2002, Lexington Realty Advisors, Inc. ("LRA"), a non-consolidated
entity in which the Company has a 99% economic interest, acquired an industrial
property in Alberta, Canada for $2.9 million. The property is net leased to TNT
Canada, Inc. through August 2012 for annual net rent of $0.3 million. LRA did
not incur any property-specific debt in connection with this acquisition. This
property was purchased from a seller who had used the property in their
distribution operations and therefore there are no historical operating
statements for this property.
In August 2002, the Company also purchased an office property in Valley Forge,
Pennsylvania for $19.5 million. The property is net leased to Quest Diagnostics,
Inc. through April 2011 for annual net rent of $2.2 million. The Company also
assumed a $13.4 million, 7.12% fixed-rate non-recourse mortgage note which
matures February 2011 and requires $1.2 million in annual debt service and a
balloon payment of $10.9 million at maturity.
In August 2002, the Company also purchased an office property in Knoxville,
Tennessee for $8.1 million. The property is net leased to AdvancePCS through May
2013 for annual net rent of $0.8 million. The acquisition was partially funded
through a $5.3 million, non-recourse, 5.95% fixed-rate mortgage note which
matures September 2013 and requires annual payments of interest only through May
2003, annual debt service payments of $0.4 million thereafter and a balloon
payment of $4.5 million at maturity. This property was purchased directly from
the developer upon completion, and therefore there are no historical operating
statements for this property.
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PROBABLE PROPERTY ACQUISITIONS:
In June 2002, the Company entered into an agreement to purchase a
newly-constructed office facility in Fort Mill, South Carolina for $17.9
million. The property will be net leased to Wells Fargo Home Mortgage through
January 2013 for average annual net rent of $2.1 million. In connection with the
acquisition of this property, the Company has arranged non-recourse first
mortgage financing in the amount of $11.7 million. This loan will have a fixed
interest rate of 6.00%, mature ten years from the date of closing and require
annual payments of $0.8 million and a balloon payment of $9.8 million at
maturity. The Company expects the closing of this acquisition to occur in
December 2002. This property will be purchased directly from the developer upon
completion, and therefore there are no historical operating statements for this
property.
In July 2002, the Company entered into an agreement to purchase a newly
constructed warehouse/distribution facility in Groveport, Ohio for $11.8
million. The property is net leased to Anda Pharmaceuticals, Inc. through April
2012 for average annual net rent of $1.2 million. In connection with the
acquisition of this property, the Company has arranged non-recourse mortgage
financing in the amount of $7.8 million. This loan will have a fixed interest
rate of 6.03%, mature in September 2012 and require annual payments of $0.6
million and a balloon payment of $6.8 million at maturity. The Company expects
the closing of this acquisition to occur in September 2002. This property will
be purchased directly from the developer who completed the property in April
2002.
In August 2002, the Company entered into an agreement to purchase and
develop an outdoor storage facility and an industrial building in Minneapolis,
Minnesota. The property will be net leased to Owens Corning for twelve years
beginning upon completion of construction for average annual net rent of $0.6
million. The Company will purchase the land and fund construction costs for an
anticipated total investment of approximately $4.8 million based on a fixed
price development agreement and construction contract. The Company expects the
closing of this acquisition to occur in September 2002 and construction to be
completed in November 2002.
PROPERTY DISPOSITION:
In August 2002, a purchaser bought the Company's property, in Brownsville,
Texas, by assuming the outstanding mortgage of $0.6 million. This resulted in an
insignificant gain to the Company.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
[a][b] Financial Statements and Pro Forma Financial Information
The pro forma financial information filed herewith is as
follows:
Pro Forma Condensed Consolidated Balance Sheet as of June 30,
2002.
Pro Forma Condensed Consolidated Statements of Income for the
Year Ended December 31, 2001 and the Six Months Ended June 30,
2002.
Notes to Pro Forma Condensed Consolidated Financial
Statements.
[c] Exhibits
None
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Lexington Corporate Properties Trust
Pro Forma Condensed Consolidated Balance Sheet and Statements of Income
The accompanying Pro Forma Condensed Consolidated Balance Sheet as of June 30,
2002 gives effect to the Property Acquisitions, the Probable Property
Acquisitions and the Property Disposition as if these transactions had been
consummated as of June 30, 2002.
The accompanying Pro Forma Condensed Consolidated Statements of Income for the
year ended December 31, 2001 and the six months ended June 30, 2002 assume that
the Property Acquisitions, the Probable Property Acquisitions, the Property
Disposition and all other 2001 and 2002 property acquisitions and dispositions
had been consummated as of January 1, 2001. In 2001 the Company, including its
non-consolidated entities, purchased 28 properties, 23 of which were acquired on
November 28, 2001 as part of the Net 1 L.P. and Net 2 L.P. merger. In addition
to assuming mortgage debt and paying cash, the Company issued approximately 2.1
million common shares to effect this merger. The pro forma information is based
on the historical financial statements of the Company after giving effect to all
such transactions.
The Pro Forma Condensed Consolidated Balance Sheet and the Statements of Income
have been prepared by the management of the Company. These pro forma statements
may not be indicative of the results that would have actually occurred if the
Property Acquisitions, the Probable Property Acquisitions, the Property
Disposition and all other 2001 and 2002 property acquisitions and dispositions
had been in effect on the dates indicated. Also, they may not be indicative of
the results that may be achieved in the future. The Pro Forma Condensed
Consolidated Balance Sheet and Statements of Income should be read in
conjunction with the Company's audited financial statements as of December 31,
2001 and for the year then ended (which are contained in the Company's Form 10-K
for the year ended December 31, 2001), and the unaudited condensed consolidated
financial statements as of June 30, 2002 and for the six months then ended
(which are contained in the Company's Form 10-Q for the period ended June 30,
2002) and the accompanying notes thereto.
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Lexington Corporate Properties Trust
Pro Forma Condensed Consolidated Balance Sheet
June 30, 2002
(Unaudited and in thousands, except share and per share data)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
ASSETS:
Real estate, net $ 693,960 $ 61,534 (a) $ 755,494
Investment in non-consolidated entities 49,162 8,133 (b) 57,295
Cash and cash equivalents 14,888 (12,388) (c) 2,500
Restricted cash 1,903 -- 1,903
Rent receivable - current 3,518 -- 3,518
Rent receivable - deferred 18,833 -- 18,833
Other assets, net 24,517 -- 24,517
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$ 806,781 $ 57,279 $ 864,060
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Mortgage notes payable $ 440,091 $ 37,583 (d) $ 477,674
Credit facility -- 19,645 (e) 19,645
Origination fees payable, including accrued interest 6,569 -- 6,569
Accounts payable and other liabilities 6,313 51 (f) 6,364
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452,973 57,279 510,252
Minority interests 57,009 -- 57,009
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509,982 57,279 567,261
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Common shares, par value $0.0001 per share;
liquidation preference $3,886; 287,888 shares
issued and outstanding 3,809 -- 3,809
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Shareholders' equity 292,990 -- 292,990
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$ 806,781 $ 57,279 $ 864,060
========= ========= =========
The accompanying notes are an integral part of these pro forma financial
statements.
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Lexington Corporate Properties Trust
Notes to Pro Forma Condensed Consolidated Balance Sheet
(Unaudited)
Pro Forma Adjustments
(a) Reflects the aggregate purchase price of the Property Acquisitions and the
Probable Property Acquisitions ($62,100) less the net basis of the Property
Disposition ($566).
(b) Reflects the increase investment in non-consolidated entities for the
Property Acquisitions.
(c) Assumed cash used to fund acquisitions and investments in non-consolidated
entities.
(d) Reflects the aggregate property specific mortgage debt associated with the
Property Acquisitions and the Probable Property Acquisitions ($38,200) less
the mortgage encumbering the Property Disposition ($617).
(e) Estimated line of credit borrowings necessary to fund the Property
Acquisitions and the Probable Property Acquisitions.
(f) Miscellaneous costs incurred in property acquisition and sales.
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Lexington Corporate Properties Trust
Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2001
(Unaudited and in thousands, except per share data)
Pro Forma
Historical Adjustments Pro Forma
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REVENUES:
Rental $ 78,402 $ 19,966 (a) $ 98,368
Equity in earnings of non-consolidated entities 3,328 1,516 (b) 4,844
Interest and other 1,132 -- 1,132
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82,862 21,482 104,344
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EXPENSES:
Interest expense 29,732 9,116 (c) 38,848
Depreciation and amortization of real estate 18,312 4,158 (d) 22,470
Amortization of deferred expenses 1,640 9 (e) 1,649
General and administrative expenses 4,952 -- 4,952
Property operating expenses 1,636 -- 1,636
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56,272 13,283 69,555
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Income before minority interests and
extraordinary item 26,590 8,199 34,789
Minority interests 5,384 872 (f) 6,256
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Income before extraordinary item 21,206 7,327 28,533
Extraordinary item 3,144 -- 3,144
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Net income $ 18,062 $ 7,327 $ 25,389
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Income per common share - basic:
Income before extraordinary item $ 0.95 $ 1.20
Extraordinary item (0.16) (0.14)
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Net income $ 0.79 $ 1.06
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Weighted average common shares outstanding 19,522,323 21,470,698
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Income per common share - diluted:
Income before extraordinary item $ 0.93 $ 1.17
Extraordinary item (0.16) (0.11)
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Net income $ 0.77 $ 1.06
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Weighted average common shares outstanding 19,862,880 28,175,944
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The accompanying notes are an integral part of these pro forma financial
statements.
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Lexington Corporate Properties Trust
Pro Forma Condensed Consolidated Statement of Income
For the six months ended June 30, 2002
(Unaudited and in thousands, except per share data)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- -----------
REVENUES:
Rental $ 45,932 $ 3,185 (a) $ 49,117
Equity in earnings of non-consolidated entities 2,363 439 (b) 2,802
Interest and other 1,004 -- 1,004
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49,299 3,624 52,923
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EXPENSES:
Interest 16,336 1,748 (c) 18,084
Depreciation and amortization of real estate 10,375 567 (d) 10,942
General and administrative expenses 2,771 -- 2,771
Property operating 1,248 -- 1,248
Amortization of deferred expenses 946 (2) (e) 944
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31,676 2,313 33,989
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Income before gain on sale of properties and minority
interests 17,623 1,311 18,934
Gain on sale of properties 1,134 (1,134) (g) --
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Income before minority interests 18,757 177 18,934
Minority interests 2,917 148 (f) 3,065
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Net income $ 15,840 $ 29 $ 15,869
=========== =========== ===========
Net income per common share - basic: $ 0.59 $ 0.59
=========== ===========
Weighted average common shares outstanding 25,552,478 25,552,478
=========== ===========
Net income per common share - diluted: $ 0.58 $ 0.58
=========== ===========
Weighted average common shares outstanding 31,120,910 31,120,910
=========== ===========
The accompanying notes are an integral part of
these pro forma financial statements.
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Lexington Corporate Properties Trust
Notes to Pro Forma Condensed Consolidated Statements of Income
(Unaudited)
Pro Forma Adjustments
For the year ended For the six months
December 31, 2001 ended June 30, 2002
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(a) Reflects the following:
Rental revenues recognized on the
straight line method for acquisitions $ 22,619 $ 3,765
Elimination of rental revenue
recognized for properties sold (2,653) (580)
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$ 19,966 $ 3,185
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(b) Increase in earnings from non-consolidated
entities $ 1,516 $ 439
============== ==============
(c) Reflects the following:
Interest expense on property specific
mortgage debt and interest expense on
assumed line of credit borrowings to
fund equity commitments $ 9,938 $ 1,802
Elimination of interest expense on
properties sold (822) (54)
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$ 9,116 $ 1,748
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(d) Reflects the following:
Depreciation expense on acquisitions
based upon 80% of purchase price
allocated to 40 year depreciable life assets $ 4,696 $ 679
Elimination of depreciation expense
on properties sold (538) (112)
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$ 4,158 $ 567
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(e) Amortization of deferred financing fees, net $ 9 $ (2)
============== ==============
(f) Impact on minority interest relating to
pro forma adjustments $ 872 $ 148
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(g) Elimination of gain on sale of properties $ -- $ (1,134)
============== ==============
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Lexington Corporate Properties Trust
Unaudited Pro Forma Income Statement
For the Year Ended December 31, 2001 and the Six Months Ended June 30, 2002
Earnings Per Share Calculations
The following is a reconciliation of numerators and denominators of the pro
forma basic and diluted earnings per share computations for each of the periods
presented ($000's except per share data):
12/31/01 6/30/02
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BASIC
Income before extraordinary item $ 28,533 $ 15,869
Less dividends attributable to preferred shares (2,709) (693)
------------ ------------
Income attributed to common shareholders before
extraordinary item 25,824 15,176
Extraordinary item (3,144) --
------------ ------------
Net income attributed to common shareholders $ 22,680 $ 15,176
============ ============
Weighted average number of common shares
outstanding 21,470,698 25,552,478
============ ============
Income per common share - basic:
Income before extraordinary item $ 1.20 $ 0.59
Extraordinary item (0.14) --
------------ ------------
Net income $ 1.06 $ 0.59
============ ============
DILUTED
Income attributed to common shareholders before
extraordinary item $ 25,824 $ 15,176
Add incremental income attributed to assumed
conversion of dilutive securities 7,088 2,953
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Income attributed to common shareholders before
extraordinary item 32,912 18,129
Extraordinary item (3,144) --
------------ ------------
Net income attributed to common shareholders $ 29,768 $ 18,129
============ ============
Weighted average number of shares used in
calculation of basic earnings per share 21,470,698 25,552,478
Add incremental shares representing:
Shares issuable upon exercise of employee
stock options 340,557 276,020
Shares issuable upon conversion of dilutive
securities 6,364,689 5,292,412
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Weighted average number of shares used in
calculation of diluted earnings per common share 28,175,944 31,120,910
============ ============
Income per common share - diluted:
Income before extraordinary item $ 1.17 $ 0.58
Extraordinary item (0.11) --
------------ ------------
Net income $ 1.06 $ 0.58
============ ============
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Lexington Corporate Properties Trust
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Registrant
September 16, 2002 By:/s/ Patrick Carroll
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Patrick Carroll
Chief Financial Officer
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