FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 1-12298
REGENCY REALTY CORPORATION
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Florida 59-3191743
REGENCY REALTY CORPORATION
121 West Forsyth Street
Suite 200
Jacksonville, Florida 32202
(904) 356-7000
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
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ____ No ____
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. As of May 8, 1996,
there were 6,848,699 shares outstanding of the registrant's common stock, $.01
par value.
Part I. Financial Information
Item 1. Financial Statements.
REGENCY REALTY CORPORATION
Consolidated Balance Sheets
March 31, December 31,
1996 1995
---- ----
Assets
Real estate rental property, at cost $ 283,966,491 278,731,167
Less: accumulated depreciation 20,267,810 18,631,310
---------- -----------
Real estate rental property, net 263,698,681 260,099,857
Construction in progress 4,532,116 0
Investment in unconsolidated real
estate partnerships 1,135,619 315,389
----------- -----------
Total investments in real estate, net 269,366,416 260,415,246
Cash and cash equivalents 5,393,306 3,401,701
Accounts receivable, net of allowance for
uncollectible accounts of $451,945
and $474,019 at March 31, 1996 and
December 31, 1995, respectively 1,623,741 2,620,763
Deferred costs, less accumulated amortization
of $2,703,676 and $2,547,765 at March 31,
1996 and December 31, 1995, respectively 3,546,475 3,598,011
Other assets 909,517 969,676
----------- -----------
$ 280,839,455 271,005,397
=========== ===========
Liabilities and Stockholders' Equity
Mortgage loans payable 98,448,036 93,277,273
Secured line of credit 27,107,923 22,339,803
Tenant security and escrow deposits 980,296 976,515
Accrued expenses 1,612,351 936,695
Accounts payable and other liabilities 4,965,397 6,468,537
----------- -----------
Total liabilities 133,114,003 123,998,823
----------- -----------
Convertible operating partnerships units 169,852 0
Stockholders' Equity
Preferred stock -
10,000,000 shares authorized:
Series A 8% cumulative convertible, 1,916
shares issued and outstanding at March 31,
1996 and December 31, 1995, respectively 1,916,268 1,916,268
Common stock $.01 par value per share:
25,000,000 shares authorized; 6,844,059
and 6,728,723 shares issued and outstanding
at March 31, 1996 and December 31, 1995, 68,441 67,287
respectively
Special common stock -
10,000,000 shares authorized:
Class B $.01 par value per share, 2,500,000
shares issued and outstanding at March 31,
1996 and December 31, 1995, respectively 25,000 25,000
Additional paid in capital 157,147,895 155,221,241
Distributions in excess of net income (8,431,915) (8,073,188)
Stock loans (3,170,089) (2,150,034)
----------- -----------
Total stockholders' equity 147,555,600 147,006,574
----------- -----------
$ 280,839,455 271,005,397
=========== ===========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Three Month
Period Ended
03-31-96 03-31-95
-------- --------
Real estate operation revenues:
Minimum rent $ 7,903,455 5,894,764
Percentage rent 189,880 156,851
Recoveries from tenants 1,613,202 1,161,333
Other recoveries and income 84,184 143,122
Leasing and brokerage 574,086 259,058
Management fees 136,931 247,585
---------- ---------
Total real estate operation revenues 10,501,738 7,862,713
---------- ---------
Real estate operation expenses:
Depreciation and amortization 1,884,451 1,499,636
Operating and maintenance 1,702,535 1,335,204
General and administrative 1,265,320 1,036,066
Real estate taxes 920,065 648,396
--------- ---------
Total real estate operation expenses 5,772,371 4,519,302
--------- ---------
Interest expense (income):
Interest expense 2,244,805 1,984,552
Interest income (116,717) (97,375)
--------- ---------
Net interest expense 2,128,088 1,887,177
--------- ---------
Net income 2,601,279 1,456,234
Preferred stock dividends 25,550 114,975
--------- ---------
Net income for common stockholders $ 2,575,729 1,341,259
========= =========
Net income per common share outstanding $ 0.26 0.21
========= =========
Weighted average common shares outstanding 9,766,149 6,465,710
========= =========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 2,601,279 1,456,234
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 1,884,451 1,499,636
Equity in income of unconsolidated
real estate partnership investments (7,453) (1,366)
Changes in assets and liabilities:
Decrease in accounts receivable 997,022 1,087,349
(Increase) in deferred leasing commissions (96,268) (30,148)
Decrease (increase) in other assets 23,699 (407,191)
Increase in tenants' security
and escrow deposits 3,781 25,040
Increase in accrued expenses 956,969 537,471
Decrease in accounts payable
and other liabilities (595,388) (322,689)
---------- ---------
Net cash provided by operating activities 5,768,092 3,844,336
---------- ---------
Cash flows from investing activities:
Investment in real estate (5,074,322) (9,177,444)
Investment in unconsolidated
real estate partnership (818,975) 0
Capital expenditures (161,002) (308,968)
Construction in progress (4,532,116) (2,390,753)
Distribution received from unconsolidated
real estate partnership investment 6,199 0
----------- -----------
Net cash used in investing (10,580,216) (11,877,165)
----------- -----------
Cash flows from financing activities:
Dividends paid in cash (3,241,319) (2,556,055)
Proceeds (repayments) from secured
line of credit, net 4,768,120 (750,000)
Proceeds from mortgage loans payable 3,918,750 11,400,000
Net proceeds from construction loans 1,441,214 1,996,600
Principal payments on mortgage loans payable (189,202) (37,541)
Issuance of convertible operating partnership units 169,852 0
Payment of loan closing costs (63,686) 0
---------- ----------
Net cash provided by financing activities 6,803,729 10,053,004
---------- ----------
Net increase in cash and cash equivalents 1,991,605 2,020,175
---------- ----------
Cash and cash equivalents at beginning of period 3,401,701 2,860,837
--------- ---------
Cash and cash equivalents at end of period $ 5,393,306 4,881,012
========== ==========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
1. The Company
Regency Realty Corporation (the Company) was incorporated in the State
of Florida for the purpose of managing, leasing, brokering, acquiring,
and developing shopping centers. At March 31, 1996, the Company owned 34
shopping centers and 4 office complexes in four states in the
southeastern United States. The Company also provides management,
leasing, brokerage and development services for real estate not owned by
the Company (third parties). The Company commenced operations effective
with the completion of its initial public offering on November 5, 1993.
The accompanying consolidated financial statements include the accounts
of Regency Realty Group, Inc. (the "Management Company"), it's wholly
owned or controlled shopping centers and office complexes and its joint
ventures. All significant intercompany balances and transactions
have been eliminated.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form
10-K filed with the Securities and Exchange Commission on March 19,
1996. Certain amounts for 1995 have been reclassified to conform to the
presentation adopted in 1996.
2. Basis of Presentation
The accompanying interim unaudited financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission, and reflect all adjustments which are of a normal
recurring nature, and in the opinion of management, are necessary to
properly state the results of operations and financial position. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although management believes that the disclosures are
adequate to make the information presented not misleading.
3. Acquisition and Expansion
Through March 31, 1996, the Company has completed the acquisition of two
shopping centers and one parcel of land for a new shopping center. These
properties are 100% owned unless noted otherwise and are summarized as
follows:
Date Acquired Company
Shopping Center Location Year Built by the Company GLA
Parkway Station Warner Robbins, GA 1983/1987 02-28-96 94,290
Ocean East Mall (1) Stuart, FL - 01-31-96 104,772
South Monroe (2) Tallahassee, FL - 03-21-96 -
(1) Redevelopment project to be completed in 1997.
The Company acquired a 25% interest.
(2) New shopping center development to be completed in 1997.
4. Secured Line of Credit
The Company has a commitment from a financial institution for a $75
million unsecured acquisition and development line of credit, the
proceeds of which will be used to pay off the existing secured line of
credit and provide financing for new acquisition and development
activity. The interest rate on the loan will be Libor + 162.5 basis
points with an initial term of two years with extension options.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
(dollar amounts in thousands except per share data)
The following discussion should be read in conjunction with the
accompanying Consolidated Financial Statements and Notes thereto of Regency
Realty Corporation (the "Company") appearing elsewhere in this Form 10-Q.
Business
The Company's principal business is owning, managing, and developing
neighborhood and community shopping centers in Florida and the Southeast. At
March 31, 1996 the Company owned and managed 34 shopping centers and 4 suburban
office buildings. Of the total 38 properties owned, 27 are located in Florida,
and 28 are anchored by supermarkets. The Company's three largest tenants in
order by number of store locations are Publix Supermarkets (12), Winn-Dixie
Stores (7), and Wal-Mart (7).
Capital Resources
Following the Company's $108,200 initial public offering completed in
November 1993, the Company closed a $45,000 secured line of credit (the "Line")
maturing in December 1996, for the purpose of acquiring and developing real
estate. At March 31, 1996 and 1995, the balance outstanding under the Line was
$27,108 and $40,326, respectively. During 1995, the Company refinanced several
properties with longer term maturities and fixed interest rates, the net
proceeds of which were used to reduce the Line. At March 31, 1996 and 1995,
fixed rate loans represented 75% and 57% of total debt, respectively, and had
average fixed interest rates of 7.6% and 7.5%, respectively. The Company has
received a commitment from Wells Fargo National Bank for a $75 million unsecured
line of credit ("Wells Line"). The proceeds from the Wells Line will be used to
pay off the existing balance of the Line, and to acquire and develop real
estate. The interest rate on the Wells Line will be Libor plus 1.625%, matures
in 2 years and has extension options. The Company expects to close on the loan
during the second quarter of 1996. Upon payoff of the Line, the available amount
under the Wells Line will be approximately $47 million.
During 1995, the Company acquired five shopping centers and completed
the development or expanded four shopping centers for a total cost of $62,142
(the "1995 Acquisitions"). Approximately $9,101 of these acquisitions were
completed during the 1st quarter of 1995. The Company funded the 1995
Acquisitions from borrowings on the Line, origination of new mortgage loans, and
the proceeds from a $50,000 private placement (the "Private Placement"). The
Private Placement was completed on December 20, 1995 by issuing 2,500 shares of
non-voting Class B common stock to a single investor. The Class B common shares
are convertible into 2,975 shares of common stock beginning on the third
anniversary of the issuance date subject to limitations that the holder may not
beneficially own more than 4.9% of the Company's outstanding common stock except
in certain circumstances.
During 1996, the Company acquired a shopping center for $5,225 financed
with the remaining proceeds from the Private Placement (the "1996 Acquisition").
The Company also acquired a parcel of land to begin development of a new
shopping center, and entered into a joint venture to redevelop an existing
shopping center. Total cost at completion of these two development projects will
be $12,271 and are expected to be completed during the second quarter of 1997.
Liquidity
The Company's principal demands for liquidity are dividends to
stockholders, the operations, maintenance and improvement of real estate, and
scheduled interest and principal payments. The Company paid common and preferred
dividends of $3,241 and $2,556 to its stockholders during the 1st quarter of
1996 and 1995, respectively. In January 1996, the Company increased its
quarterly common dividend to $.405 per share or $1.62 annually. As a result of
the Private Placement, the Company has outstanding 2,500 shares of Class B
common with a current annual dividend rate of $1.9845 ($1.6674 on a converted
common stock basis). Accordingly, dividends anticipated to be paid by the
Company during 1996 will increase substantially over 1995 due to the common
stock dividend increase and the Private Placement. During the 1st quarter of
1996 and 1995, the Company's net cash used in investing activities was $10,580
and $11,877, respectively, related to real estate acquisitions, leasing and
renewal activity, and building improvements. The Company anticipates that cash
provided by operating activities, unused amounts under the Line, and cash
reserves are adequate to meet liquidity requirements.
The Company has made an election to be taxed, and is operating so as to
qualify, as a Real Estate Investment Trust ("REIT") for Federal income tax
purposes, and accordingly has paid no Federal income tax subsequent to its IPO
in 1993. While the Company intends to continue to pay dividends to its
stockholders, the Company will reserve such amounts of cash flow as it considers
necessary for the proper maintenance and improvement of its real estate, while
still maintaining its qualification as a REIT.
The Company's real estate portfolio grew substantially during 1995 as a
result of the acquisitions and developments discussed above. The Company expects
to continue this level of growth during 1996 and intends to meet the related
capital requirements, principally for the acquisition or development of new
properties, from borrowings on the Wells Line, new mortgage loans and from
additional public or private equity offerings. Because such acquisition and
development activities are discretionary in nature, they are not expected to
burden the Company's capital resources currently available for liquidity
requirements.
Results of Operations
Comparison of Three Months Ended March 31, 1996 to 1995
Real estate operation revenues were $10,502 in 1996 or 34% higher than
1995 due primarily to the 1995 Acquisitions providing revenues for a full
quarter in 1996 vs. a partial quarter in 1995. Minimum rent increased $2,009 or
34% during 1996, and recoveries from tenants increased $452 or 39%. On a same
property basis, excluding the 1996 Acquisition and the 1995 Acquisitions
acquired after June 30, 1995, and including the 1995 Acquisitions acquired
before June 30, 1995 as if they had occurred on January 1, 1995, real estate net
operating income increased 4.7% during 1996. At March 31, 1996, the real estate
portfolio was 95.9% leased and 95.5% rent paying, the difference being
pre-leases awaiting completion of improvements prior to occupancy. The portfolio
was 94.3% leased at March 31, 1995. Average rents per SF were $8.57 at March 31,
1996 vs. $8.22 per SF at March 31, 1995 the increase due primarily from the 1995
Acquisitions which had higher average rents than the average of the portfolio
prior to the 1995 Acquisitions. Revenues from property management, leasing,
brokerage, and development services provided on properties not owned by the
Company were $711 vs. $507 for the period ending March 31, 1996 and 1995,
respectively.
Real estate operation expenses were $5,772 in 1996 or 28% higher than
1995 due primarily to the 1996 and 1995 acquisition and development activity
described above. Operating, maintenance and real estate taxes were $2,623 or 32%
higher than 1995; however, on a per SF basis, operating, maintenance, and real
estate taxes for the three months ended averaged $0.66 per SF and $0.63 per SF
in 1996 and 1995, respectively. The increase per SF of 4.8% was due primarily to
higher real estate taxes per SF on the 1995 Acquisitions than the average of the
portfolio prior to the 1995 Acquisitions and also to increases in the assessed
value of the portfolio as a whole by various taxing authorities. General and
administrative expense increased 22% during 1996 to $1,265 due to accruing
higher amounts for performance based deferred compensation that potentially
could be earned vs. the same period in 1995. Performance based compensation
earned in 1995 was primarily accrued during the third and fourth quarters of
1995 when the Company determined (primarily as a result of the Private
Placement) that such compensation could potentially be earned. Depreciation and
amortization was $1,884 or 26% higher than 1995 due to a full quarter of
depreciation on the 1995 Acquisitions vs. a partial quarter in 1995, combined
with a partial quarter of depreciation for the 1996 Acquisition.
Interest expense increased to $2,245 in 1996 from $1,985 in 1995 or 13%
due primarily to increased average outstanding loan balances as a result of the
1995 Acquisitions. Average outstanding debt during 1996 was $121,000 vs.
$114,000 in 1995. Preferred stock dividends decreased from $115 in 1995 to $26
in 1996 as a result of the conversion of 75% of the Series A preferred stock
into common stock since December 29, 1994.
Net income for common stockholders was $2,576 or $.26 per share in 1996
vs. $1,341 or $.21 per share in 1995. The increase is due primarily to the 1996
Acquisition and the 1995 Acquisitions that resulted in a $2,435 or 34% increase
in real estate operation revenues, a $639 or 32% increase in operating,
maintenance and real estate taxes, a $385 increase in depreciation expense and a
$241 increase in interest expense.
Funds from Operations
The Company considers funds from operations ("FFO") to be one measure
of REIT performance and defines it as net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses) from debt
restructuring and sales of property, adjusted for certain noncash amounts,
primarily depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect FFO on the same basis.
FFO as defined above has become a measure used by many industry analysts;
however, FFO should not be considered an alternative to net income as an
indication of the Company's performance or to cash flow as a measure of
liquidity determined in accordance with generally accepted accounting
principles.
FFO for the three months ended March 31, 1996 and 1995 are summarized
in the following table:
1996 1995
---- ----
Net income for common stockholders $ 2,576 1,341
Add non-cash amounts:
Real estate depreciation and amortization 1,724 1,357
Common stock compensation:
Board of directors' fees and
401 (k) compensation 109 96
Long-term compensation plans 290 63
Straight-lining of rents charge 7 46
----- -----
Funds from operations $ 4,706 2,903
===== =====
Weighted average shares outstanding 9,766 6,466
===== =====
Funds from operations per share $ 0.48 0.45
===== =====
In May 1995 the National Association of Real Estate Investment Trusts
(NAREIT) amended the definition of FFO and recommended the following changes to
become effective for fiscal years ending in 1996: (1) amortization of loan costs
and depreciation of office furniture and equipment should not be added back to
net income, (2) non-recurring gains (losses) should be excluded from FFO, and
(3) gains (losses) from the sale of undepreciated real estate considered to be
part of a company's recurring business may be included in FFO. The Company
modified its definition of FFO for these changes effective January 1, 1996 and
also has restated amounts reported for 1995 for comparison purposes.
Environmental Matters
The Company like others in the commercial real estate industry, is subject to
numerous environmental laws and regulations including the operation of dry
cleaning plants by tenants at several of its shopping centers. The Company
believes that these dry cleaners are operating in accordance with current laws
and regulations. Based on information presently available, no environmental
accruals were made and management believes that the ultimate disposition of
currently known matters will not have a material effect on the financial
position, liquidity, or operations of the Company.
Economic Conditions
A substantial number of the Company's long-term leases contain
provisions designed to mitigate the adverse impact of inflation on the Company's
net income. Such provisions include percentage rentals, rental escalation
clauses and reimbursements for common area maintenance, insurance, and real
estate taxes. In addition, 48% of the Company's leases have terms of five years
or less, which allows the Company the opportunity to increase rents upon lease
expiration. Approximately 31% of the Company's leases expire beyond 10 years and
are generally anchor tenants. Unfavorable economic conditions could result in
the inability of certain tenants to meet their lease obligations and otherwise
could adversely affect the Company's ability to attract and retain desirable
tenants. Recently, several national and regional retailers have publicized their
financial difficulties and several have filed for protection under the
bankruptcy laws. National or regional tenants of which the Company has leases
that have filed for bankruptcy protection are Pic N Pay Shoes ("PNP") and
Discovery Zone ("DZ"). Total annual rent from PNP is $108 or less than one
percent of total annual rent from all tenants, and all stores continue to
operate and pay rent. Total rent from DZ is $289 or less than one percent of
total annual rent from all tenants. The Company has two leases with DZ of which
the store located at Regency Square in Brandon has closed and the other remains
open and has guarantees extending to Blockbuster Entertainment. Regency Square,
the Company's only "Power Center" containing approximately 341 SF is currently
94% occupied. The Company has had no other significant tenant bankruptcies.
At March 31, 1996 approximately 9%, 5% and 5% of the Company's total
rent is received from Publix, Winn-Dixie, and Wal-Mart, respectively (the "Three
Major Tenants"). In February, 1996, Wal-Mart closed its store located at The
Marketplace in Alexander City, Alabama in order to relocate to a new larger
store nearby. Wal-Mart will continue to pay rent due under its lease at The
Marketplace which expires in October, 2007. During 1995, the Company added a new
Winn-Dixie store to The Marketplace. Although the Company considers the
financial condition and its relations with the Three Major Tenants to be very
solid, a significant downturn in business or the non-renewal of expiring leases
of the Three Major Tenants could adversely effect the Company. Management also
believes that the shopping centers are relatively well positioned to withstand
adverse economic conditions since they typically are anchored by supermarkets,
drug stores and discount department stores that offer day-to-day necessities
rather than luxury goods.
Part II. Other Information
Item 1. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
A Special Meeting of Shareholders of Regency Realty Corporation was
held on March 20, 1996 at the office of the Company at 121 West Forsyth Street,
Suite 200, Jacksonville, Florida to vote on a proposed amendment to the
Company's Articles of Incorporation that would increase the number of authorized
shares of Preferred Stock from 1 million to 10 million shares. Regarding this
proposal, proxy votes were cast as follows: 4,338,519 Common stock votes For,
84,700 votes Against, and 36,530 votes Abstained. Also, 1,916 shares or 100% of
the Series A Preferred stock voted For the proposal. Accordingly, the proposal
passed.
Item 6. Exhibits and Reports on Form 8-K.
1. Exhibit 4. Defining rights of security holders.
2. Exhibit 27. Financial Data Schedule
A report on Form 8-K was filed on January 4, 1996, reporting the acquisition of
three shopping centers under Item 2.
A) Financial Statements:
Wellington Market Place:
Independent Auditors' Report
Statement of Revenue and Certain Expenses
for the year ended December 31, 1994
Publix Market Place:
Independent Auditors' Report
Statement of Revenue and Certain Expenses
for the year ended December 31, 1994
The Village Center:
Independent Auditors' Report
Statement of Revenue and Certain Expenses
for the year ended December 31, 1994
B) Pro Forma Financial Information:
Regency Realty Corporation:
Pro Forma Condensed Consolidated Balance Sheet
at September 30, 1995 (unaudited)
Pro Forma Condensed Statement of Operations
for the Nine Months ended September 30, 1995 (unaudited)
Pro Forma Condensed Statement of Operations
for the year ended December 31, 1994 (unaudited)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REGENCY REALTY CORPORATION
By:/s/ J. Christian Leavitt
J. Christian Leavitt
Vice President and Treasurer
Date: May 8, 1996
ITEM 6, EXHIBIT 4
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
of
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF
CLASS B NON-VOTING COMMON STOCK
$0.01 PAR VALUE
---------------
Pursuant to Section 607.0602 of the
Florida Business Corporation Act
----------------
The undersigned, Bruce M. Johnson, the Executive Vice President
of Regency Realty Corporation, a Florida corporation (the "Corporation"),
DOES HEREBY CERTIFY:
That, pursuant to the authority expressly conferred upon the Board of
Directors by Section 4.4 of the Restated Articles of Incorporation of the
Corporation, as amended, in accordance with the provisions of Section 607.0602
of the Florida Business Corporation Act, the Board of Directors, at meetings
duly held on October 23, 1995 and December 14, 1995, duly adopted the following
resolution providing for an issue of a class of the Corporation's Special Common
Stock to be designated Class B Special Common Stock, $0.01 par value.
Shareholder action was not required with respect to such Designation.
"RESOLVED, that pursuant to the authority expressly granted to the
Corporation's Board of Directors by Section 4.4 of the Restated Articles of
Incorporation of the Corporation, as amended, the Board of Directors hereby
establishes a class of the Corporation's Special Common Stock, $0.01 par value
per share, and hereby fixes the designation, the number of shares and the
relative rights, preferences and limitations thereof as follows:
1. Designation. The designation of the class of Special Common
Stock created by this resolution shall be Class B Non-Voting Convertible Common
Stock, $0.01 par value (hereinafter referred to as "Class B Common Stock"), and
the number of shares constituting such class shall be two million five hundred
thousand (2,500,000) shares.
1. Dividend Rights.
(a) Subject to the rights of classes or series of Preferred Stock now in
existence or which may from time to time come into existence, the holders of
shares of Class B Common Stock shall be entitled to receive dividends, when, as
and if declared by the Board of Directors, out of any assets legally available
therefor, pari passu with any dividend (payable other than in voting common
stock of the Corporation (hereinafter referred to as the "Common Stock")) on the
Common Stock of the Corporation, in the amount per share equal to the Class B
Dividend Amount, as in effect from time to time. The initial per share Class B
Dividend Amount per annum shall be equal to 1.9369. Each calendar quarter
hereafter (or if the Original Issue Date is not on the first day of a calendar
quarter, the period beginning on the date of issuance and ending on the last day
of the calendar quarter of issuance) is referred to hereinafter as a "Dividend
Period." The amount of dividends payable with respect to each full Dividend
Period for the Class B Common Stock shall be computed by dividing the Class B
Dividend Amount by four. The amount of dividends on the Class B Common Stock
payable with respect to the initial Dividend Period, or any other period shorter
or longer than a full Dividend Period, shall be computed ratably on the basis of
the actual number of days in such Dividend Period. In the event of any change in
the quarterly cash dividend per share applicable to the Common Stock after the
date of these Articles of Amendment, the quarterly cash dividend per share on
the Class B Common Stock shall be adjusted for the same dividend period by an
amount computed by (1) multiplying the amount of the change in the Common Stock
dividend (2) times the Conversion Ratio (as defined in Section 0).
(a) In the event the Corporation shall declare a distribution payable in (i)
securities of other persons, (ii) evidences of indebtedness issued by the
Corporation or other persons, (iii) assets (excluding cash dividends) or (iv)
options or rights to purchase capital stock or evidences of indebtedness in the
Corporation or other persons, then, in each such case for the purpose of this
Section 0, the holders of the Class B Common Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Class B Common Stock are or would be convertible (assuming such shares of
Class B Common Stock were then convertible).
2. Liquidation Preference. The holders of record of Class B
Common Stock shall not be entitled to any liquidation preference. In the event
of any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the holders of record of Class B Common Stock
shall be treated pari passu with the holders of record of Common Stock, with
each holder of record of Class B Common Stock being entitled to receive that
amount which such holder would be entitled to receive if such holder had
converted all its Class B Common Stock into Common Stock immediately prior to
the liquidating distribution in question.
3. Conversion.
(a) Conversion Date and Conversion Ratio. Beginning on the three-year
anniversary date of the Original Issue Date thereof (the "Third Anniversary"),
the holders of shares of Class B Common Stock shall have the right, at their
option, at any time and from time to time, to convert each such shares into
1.1901872 (hereinafter referred to as "Conversion Ratio", which shall be subject
to adjustment as hereinafter provided) shares of fully paid and nonassessable
shares of Common Stock; provided, however, that no holder of Class B Common
Stock shall be entitled to convert shares of Class B Common Stock into Common
Stock pursuant to the foregoing provision, if, as a result of such conversion
such person (x) would become the Beneficial Owner of more than 4.9% of the
Corporation's outstanding Common Stock (the "Percentage Limit"), or (y) would
acquire upon such conversion during any consecutive three-month period more than
495,911 shares of Common Stock (the "Share Limit," which shall be subject to
adjustment as hereinafter provided). Beneficial Owner shall have the meaning set
forth in Rule 13d-3 under the Securities Exchange Act of 1934 (or any successor
provision thereto). Notwithstanding the foregoing, such conversion right may be
exercised from time to time after the Third Anniversary irrespective of the
Percentage Limit or the Share Limit (and no conversion limit shall apply) as
follows:
(A) If the holder duly exercises piggyback registration rights
in connection with an underwritten public offering pursuant to a
Registration Rights Agreement executed by the Corporation on August 25,
1995, the holder shall be entitled to convert shares of Class B Common
Stock effective at the closing of the offering in an amount sufficient
to enable the holder to honor its sale obligations to the underwriters
at such closing, even though the amount so converted exceeds the
Percentage Limit or the Share Limit; and
(B) If (x) the holder arranges for the sale of Common Stock
issuable upon conversion of Class B Common Stock in a transaction that
complies with applicable securities laws and with the Corporation's
Amended and Restated Articles of Incorporation as then in effect which
transaction will not be effected on a securities exchange or through an
established quotation system or in the over-the-counter market, and (y)
the holder provides the Corporation with copies of written
documentation relating to the transaction sufficient to enable the
Corporation to determine whether the transaction meets the requirements
of the preceding clause, the holder shall be entitled to convert shares
of Class B Common Stock effective at the closing of the sale in an
amount sufficient for the holder to effect the transaction at such
closing, even though the amount so converted exceeds the Percentage
Limit or the Share Limit.
In addition, notwithstanding the foregoing, the conversion right set
forth above may be exercised without regard to the Percentage Limit or the Share
Limit (and no conversion limit shall apply) before the Third Anniversary if one
of the following conditions has occurred:
(i) For any two consecutive fiscal quarters, the aggregate amount outstanding as
of the end of the quarter under (1) all mortgage indebtedness of the Corporation
and its consolidated entities and (2) unsecured indebtedness of the Corporation
and its consolidated entities for money borrowed that has not been made
generally subordinate to any other indebtedness for borrowed money of the
Corporation or any consolidated entity exceeds sixty five percent (65%) of the
amount arrived at by (A) taking the Corporation's consolidated gross revenues
less property-related expenses, including real estate taxes, insurance,
maintenance and utilities, but excluding depreciation, amortization and
corporate general and administrative expenses, for the quarter in question and
the immediately preceding quarter, (B) multiplying the amount in clause A by two
(2), and (C) dividing the resulting product in clause B by nine percent (9%)
(all as such items of indebtedness, revenues and expenses are reported in
consolidated financial statements contained in the Corporation's Form 10-Ks and
Form 10-Qs as filed with the Securities and Exchange Commission); or
(ii) In the event that (1) Martin E. Stein, Jr. has ceased to be an executive
officer of the Corporation, or (2) Bruce M. Johnson and any one of (a) Richard
E. Cook, (b) Robert C. Gillander, Jr. or (c) James D. Thompson have ceased to be
executive officers of the Corporation, or (3) all of Richard E. Cook, Robert C.
Gillander, Jr., and James. D. Thompson have ceased to be executive officers of
the Corporation; or
(iii) If (A) the Corporation shall be party to, or shall have announced or
entered into an agreement for, any transaction (including, without limitation, a
merger, consolidation, statutory share exchange or sale of all or substantially
all of its assets (each of the foregoing being referred to herein as a
"Transaction")), in each case as a result of which shares of Common Stock shall
have been or will be converted into the right to receive stock, securities or
other property (including cash or any combination thereof) or which has resulted
or will result in the holders of Common Stock immediately prior to the
Transaction owning less than 50% of the Common Stock after the Transaction, or
(B) a "change of control" as defined in the next sentence occurs with respect to
the Corporation. A change of control shall mean the acquisition (including by
virtue of a merger, share exchange or other business combination) by one
stockholder or a group of stockholders acting in concert of the power to elect a
majority of the Corporation's board of directors. The Corporation shall notify
the holder of Class B Common Stock promptly if any of the events listed in
this Section 0 shall occur.
Calculations set forth in Section 0 shall be made without regard to
unconsolidated indebtedness incurred as a joint venture partner, and the effect
of any unconsolidated joint venture, including any income from such
unconsolidated joint venture, shall be excluded for purposes of the calculation
set forth in Section 0.
(b) Procedure for Conversion. In order to convert shares of Class B Common Stock
into Common Stock, the holder thereof shall surrender the certificate(s)
therefor, duly endorsed if the Corporation shall so require, or accompanied by
appropriate instruments of transfer satisfactory to the Corporation, at the
office of any transfer agent for the Class B Common Stock, or if there is no
such transfer agent, at the principal offices of the Corporation, or at such
other office as may be designated by the Corporation, together with written
notice that such holder irrevocably elects to convert such shares. Such notice
shall also state the name(s) and address(es) in which such holder wishes the
certificate(s) for the shares of Common Stock issuable upon conversion to be
issued. As soon as practicable thereafter, the Corporation shall issue and
deliver at said office a certificate or certificates for the number of shares of
Common Stock issuable upon conversion of the shares of Class B Common Stock duly
surrendered for conversion, to the person(s) entitled to receive the same.
Shares of Class B Common Stock shall be deemed to have been converted
immediately prior to the close of business on the date on which the certificates
therefor and notice of election to convert the same are duly received by the
Corporation in accordance with the foregoing provisions, and the person(s)
entitled to receive the Common Stock issuable upon such conversion shall be
deemed for all purposes as record holder(s) of such Common Stock as of the close
of business on such date.
(c) No Fractional Shares. No fractional shares shall be issued upon conversion
of the Class B Common Stock into Common Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Class B Common Stock the holder is
at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
(d) Payment of Adjusted Accrued Dividends Upon Conversion. On the next dividend
payment date (or such later date as is permitted in this Section 0 following any
conversion hereunder, the Corporation shall pay in cash Adjusted Accrued
Dividends (as defined below) on shares of Class B Common Stock so converted. The
holder shall be entitled to receive accrued and unpaid dividends accrued to and
including the conversion date on the shares of Class B Common Stock converted
(assuming that such dividends accrue ratably each day that such shares are
outstanding), less an amount equal to the pre-conversion portion of the
dividends paid on the shares of Common Stock issued upon such conversion the
record date for which such Common Stock dividend occurs on or after the
conversion date but before the three-month anniversary date of the conversion
date (the "Subsequent Record Date"). The pre-conversion portion of such Common
Stock dividend means that portion of such dividend as is attributable to the
period ending on the conversion date, assuming that such dividend accrues
ratably during the period that (i) begins on the day after the last Common Stock
dividend record date occurring before such Subsequent Record Date and (ii) ends
on such Subsequent Record Date. The term "Adjusted Accrued Dividends" means the
amount arrived at through the application of the foregoing formula. Adjusted
Accrued Dividends shall not be less than zero. The formula for Adjusted Accrued
Dividends shall be applied to effectuate the Corporation's intent that the
holder converting shares of Class B Common Stock to Common Stock shall be
entitled to receive dividends on such shares of Class B Common Stock up to and
including the conversion date and shall be entitled to the dividends on the
shares of Common Stock issued upon such conversion which are deemed to accrue
beginning on the first day after the conversion date, but shall not be entitled
to dividends attributable to the same period for both the shares of Class B
Common Stock converted and the shares of Common Stock issued upon such
conversion. The Corporation shall be entitled to withhold (to the extent
consistent with the intent to avoid double dividends for overlapping portions of
Class B Common Stock and Common Stock dividend periods) the payment of Adjusted
Accrued Dividends until the Common Stock dividend declaration date for the
applicable Subsequent Record Date, even though such date occurs after the
applicable dividend payment date with respect to the Class B Common Stock, in
which event the Corporation shall mail to each holder who converted Class B
Common Stock a check for the Adjusted Accrued Dividends thereon within five (5)
business days after such Common Stock dividend declaration date. Adjusted
Accrued Dividends shall be accompanied by an explanation of how such Adjusted
Accrued Dividends have been calculated. Adjusted Accrued Dividends shall not
bear interest.
4. Adjustments.
(a) In the event the Corporation shall at any time (i) pay a dividend or make a
distribution to holders of Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a larger number of shares,
or (iii) combine its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Ratio and the Share Limit shall be adjusted on the
effective date of the dividend, distribution, subdivision or combination by
multiplying the Conversion Ratio or the Share Limit (as the case may be) by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such dividend, distribution, subdivision or
combination and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such dividend, distribution, subdivision or
combination.
(b) Whenever the Conversion Ratio and the Share Limit shall be adjusted as
herein provided, the Corporation shall cause to be mailed by first class mail,
postage prepaid, as soon as practicable to each holder of record of shares of
Class B Common Stock a notice stating that the Conversion Ratio and the Share
Limit has been adjusted and setting forth the adjusted Conversion Ratio and the
Share Limit, together with an explanation of the calculation of the same.
(c) If the Corporation shall be party to any Transaction in each case as a
result of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any combination
thereof), the holder of each share of Class B Common Stock shall have the right,
after such Transaction to convert such share pursuant to the conversion
provisions hereof, into the number and kind of shares of stock or other
securities and the amount and kind of property receivable upon such Transaction
by a holder of the number of shares of Common Stock issuable upon conversion of
such share of Class B Common Stock immediately prior to such Transaction. The
Corporation shall not be party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this Section 0, and it shall
not consent to or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Class B Common
Stock, thereby enabling the holders of the Class B Common Stock to receive the
benefits of this Section 0 and the other provisions of these Articles of
Amendment. Without limiting the generality of the foregoing, provision shall be
made for adjustments in the Conversion Ratio which shall be as nearly equivalent
as may be practicable to the adjustments provided for in Section 0. The
provisions of this Section 0 shall similarly apply to successive Transactions.
In the event that the Corporation shall propose to effect any Transaction which
would result in an adjustment under Section 0, the Corporation shall cause to be
mailed to the holders of record of Class B Common Stock at least 20 days prior
to the applicable date hereinafter specified a notice stating the date on which
such Transaction is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such Transaction. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such Transaction.
5. Other.
(a) The Corporation shall at all times reserve and keep available out of its
authorized but unissued Common Stock the maximum number of shares of Common
Stock issuable upon the conversion of all shares of Class B Common Stock then
outstanding and if, at any time, the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Class B Common Stock, in addition to such other
remedies as shall be available to the holder of such Class B Common Stock, the
Corporation shall take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
(b) The Corporation shall pay any taxes that may be payable in respect of the
issuance of shares of Common Stock upon conversion of shares of Class B Common
Stock, but the Corporation shall not be required to pay any taxes which may be
payable in respect of any transfer of shares of Class B Common Stock or any
transfer involved in the issuance of shares of Common Stock in a name other than
that in which the shares of Class B Common Stock so converted are registered,
and the Corporation shall not be required to transfer any such shares of Class B
Common Stock or to issue or deliver any such shares of Common Stock unless and
until the person(s) requesting such transfer or issuance shall have paid to the
Corporation the amount of any such taxes, or shall have established to the
satisfaction of the Corporation that such taxes have been paid.
(c) The Corporation will not, by amendment of the Articles of Incorporation or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in carrying out of all the provisions of these Articles of
Amendment and in the taking of all such action as may be necessary or
appropriate to protect the conversion rights of the holders of the Class B
Common Stock against impairment.
(d) Holders of Class B Common Stock shall be entitled to receive copies of all
communications by the Corporation to its holders of Common Stock, concurrently
with the distribution to such shareholders.
6. Voting Rights. The holders of record of Class B Common Stock shall not be
entitled to vote on any matter on which the holders of record of Common Stock
are entitled to vote, except where a separate vote of the Class B Common Stock
is required by law.
7. Reacquired Shares. Shares of Class B Common Stock converted, redeemed or
otherwise purchased or acquired by the Corporation shall be restored to the
status of authorized but unissued shares of Non-Voting Common Stock without
designation as to class or series.
IN WITNESS WHEREOF, the undersigned Executive Vice President of this
Corporation has executed these Articles of Amendment this 20th day of
December, 1995.
/s/ Bruce M. Johnson
Bruce M. Johnson Executive Vice President
5
1
3-MOS
DEC-31-1996
MAR-31-1996
5,393,306
0
2,075,686
451,945
0
0
289,634,226
(20,267,810)
280,839,455
0
0
0
1,916,268
68,441
145,570,891
280,839,455
0
10,501,738
0
2,622,600
1,884,451
0
2,128,088
2,575,729
0
2,575,729
0
0
0
2,575,729
0.26
0.26
