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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1999 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
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS DECLARATION OF TRUST)
MARYLAND 54-1870224
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
1420 SPRING HILL ROAD, SUITE 525 22102
MCLEAN, VIRGINIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(703) 288-3075
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) 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
------------------- -----------------------------------------
COMMON SHARES OF BENEFICIAL INTEREST, NASDAQ NATIONAL MARKET
$.01 PAR VALUE PER SHARE
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 29, 2000 was 20,707,415.
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 29, 2000 was $221,334,138.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of Capital Automotive REIT's Proxy Statement for the Annual
Meeting of shareholders for fiscal year 2000 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, 1999
TABLE OF CONTENTS
PAGE REFERENCE
FORM 10-K
--------------
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 ........................................ 17
Item 8. Financial Statements and Supplementary Data ....................................................... 18
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure .............. 33
PART III
Item 10. Trustees and Executive Officers of the Company .................................................... 34
Item 11. Executive Compensation ............................................................................ 34
Item 12. Security Ownership of Certain Beneficial Owners and Management .................................... 34
Item 13. Certain Relationships and Related Transactions .................................................... 34
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .................................. 34
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PART I
ITEM 1. BUSINESS
COMPANY OVERVIEW
Capital Automotive REIT (the "Company") is a Maryland real estate
investment trust formed in October 1997. The Company owns its property interests
through Capital Automotive L.P. (the "Operating Partnership") and its
subsidiaries. The Company is the sole general partner of the Operating
Partnership. The Company completed its initial public offering of common shares
and began generating rental income in February 1998. References to "we," "us,"
"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 its directly and indirectly owned subsidiaries.
Our primary business purpose is to own and lease real estate properties
(land, buildings and other improvements) to 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. Our
strategy focuses 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, 1999, we invested approximately $935.5 million in
properties. As of December 31, 1999, we owned 230 properties located in 27
states, a total of approximately 1,292 acres of land containing approximately
8.0 million square feet of buildings and improvements. Our tenants operate 349
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.
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
or lessee to refer to the related persons and companies that lease our
properties.
We purchase properties in exchange for cash, units of limited partnership
interest in the Operating Partnership ("Units"), the assumption of existing
debt, new debt, or a combination of any of the four. We generally lease our
properties to established, creditworthy tenants, for an initial term of 10 to 20
years. We usually give the tenant the option to renew the lease on similar terms
and conditions for one or more additional periods of 5 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 dealer groups 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 historical, current and forecasted
financial position and cash flow;
- 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;
- the type of franchises operated by the dealer group;
- the geographic area in which the property is located; and
- the environmental condition of the real estate.
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We have, and will continue to, borrow funds to buy properties. As of
December 31, 1999, we had mortgage indebtedness totaling $501.5 million
(consisting of approximately $491.5 million of fixed rate indebtedness and
approximately $10.0 million of variable rate indebtedness), secured by
approximately 200 properties, and had a $50 million revolving secured credit
facility from a financial institution, under which no amounts were outstanding
at December 31, 1999. In addition, during December 1999, we entered into a
commitment letter with a financial institution for a $100 million secured
revolving credit facility which will provide interim real estate financing. We
continue to have discussions with several financial institutions to obtain
additional unsecured, partially secured or secured loans or credit facilities,
the amount and terms of which have not been determined. We may also issue equity
or debt securities, including preferred equity and senior or subordinated notes.
These securities may be secured by properties or leases. 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, 1999, our debt was
approximately 52% of our assets. This policy may be changed by our Board of
Trustees 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 also is 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 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; and Peter C.
Staaf, Vice President and Treasurer.
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 acquire a diversified portfolio of
real property and improvements throughout the United States used by the
operators of franchised automobile dealerships, motor vehicle service, repair or
parts businesses and related businesses. In addition, we intend to commit to
purchase properties under construction, renovation or expansion upon completion
of such construction, renovation or expansion. We believe that our acquisition
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 opportunities.
We believe that because the improvements used by dealerships are usually
single purpose structures, such properties are a major and discrete sector of
the national retail real estate industry. Industry sources estimate that the
real property and improvements associated with franchised automobile dealerships
represent in excess of $40 billion of real estate. We believe that those
properties present attractive acquisition and financing opportunities because
they generally have locations with frontage on and visibility from major
thoroughfares, and zoning which permits a wide range of alternative uses. In the
event that such properties can no longer be leased to dealerships, we believe
that the land component of the property can be redeveloped for other commercial
uses.
Our primary objective is to own and lease real estate properties used by
dealerships throughout the United States for the primary purpose of generating
rental income in order to provide us with long-term, predictable streams of cash
flow to maximize shareholder value. To achieve this objective, we are:
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- Executing a disciplined acquisition program by purchasing properties
used by dealer groups that operate multi-site, multi-franchised
dealerships that have demonstrated historic growth, are well
managed, have been maintained in good condition, and whose location
and characteristics will be suitable for alternative uses;
- Diversifying geographically by acquiring properties located
predominately in major metropolitan areas throughout the United
States in order to minimize the potential adverse impact of economic
downturns in certain markets;
- Diversifying by franchise to minimize the potential adverse impact
of changes in consumer preferences and manufacturer fortunes;
- Leveraging the contacts and experience of our management to build
and maintain long-term relationships with dealer groups;
- Partnering with dealer groups who are 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;
- Using the Company's "UPREIT" structure to acquire properties in
exchange for Units, thereby giving the sellers the benefit of being
able to defer some or all of their potential 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;
- Leasing back properties to dealer groups on a triple-net basis,
thereby eliminating brokerage, re-leasing and similar costs, and the
risk of high tenant turnover due to the general historic long-term
operation of dealerships at property locations;
- Negotiating lease covenants designed to minimize the likelihood of
loss to us, by permitting us to continually monitor the ability of
our tenants to pay rent through periodic tenant submissions, and our
careful review of financial data;
- Utilizing a variety of financing sources, such as the issuance of
Units, or other equity securities or debt securities, or a
combination thereof; and
- Minimizing interest rate risk by generally matching the average
duration of our leases with the term of our long-term debt.
THE PROPERTIES, LEASES, TYPICAL LEASE TERMS AND DEALERSHIPS
PROPERTIES
As of December 31, 1999, we owned 230 properties located in 27 states, a
total of approximately 1,292 acres of land containing approximately 8.0 million
square feet of buildings and improvements. Our tenants operated 349 motor
vehicle franchises on these properties, representing 39 brands of motor
vehicles. Our interest in each of the properties includes the land, buildings
and improvements, related easements and rights and fixtures. We do not own or
lease any significant amount of personal property, furniture or equipment at any
property.
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, 1999, all of our
230 properties, excluding one parcel, valued at approximately $500,000 (acquired
in connection with one property at no additional cost), were subject to leases
that were performing and in full force and effect. 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 dealer groups, persons or entities related to
the dealer groups or, in some cases, other third parties, which 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 future leases,
which may or may not be on similar terms to the leases described below. Leases
are individually negotiated and do vary from the terms summarized below, at
times in material ways.
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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, 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"). As of February 29, 2000, no tenants had defaulted on any rental
payments.
TERM AND TERMINATION. The leases generally are for initial terms of 10 to
20 years, with options to renew upon the same terms and conditions for one or
more additional periods of five to ten years each exercisable at the option of
the tenant. 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, among the legal remedies that could be available to us is the eviction
of the tenant, which could result in early termination of the lease. Typically,
all leases within a dealer group are cross-guaranteed which helps to ensure the
stability of the rental income from the respective tenant.
INSURANCE. The leases 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 may depend on the tenant's ability to pay those costs or
we may have to bear all or a portion of such costs.
DAMAGE TO, OR CONDEMNATION OF, A PROPERTY. If all or a material portion of
a property is condemned, the lease may be terminated. In certain circumstances,
the tenant may be entitled to share in the condemnation award. Typically, if
there is material damage to or destruction of the property, the tenant is
obligated to repair or rebuild such damage or destruction with insurance
proceeds and rent is not abated during the period of repair or rebuilding.
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 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 OFFER AND OPTION TO PURCHASE PROPERTY. Certain leases
provide the tenant with a right of first offer 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 period of time, after receiving notice from us of our intention to
sell the property and the proposed sales price for the property, to 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
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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 at
various points after the initial lease term, generally at the greater of fair
market value of the property at the time of sale or our purchase price as
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 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. Typically, such
arrangements 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 arrangements usually require the dealer groups 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 require their 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 such arrangement or refuse to renew
the arrangement under certain circumstances such as when a dealer group fails to
meet financial covenants established by the manufacturer. We believe that each
new motor vehicle dealer group 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, 1999, Sonic Automotive, Inc. and its
affiliates ("Sonic") accounted for approximately 11.6% of our total revenue,
approximately 11.8% of our total rental revenue and, as of December 31, 1999,
approximately 22.6% of our annualized total rental revenue, excluding
straight-line rental income. Sonic is the tenant of 56 properties, the majority
of which were acquired in August 1999. Failure of Sonic to pay rent could
materially affect our income if we are not able to re-lease the properties in a
timely manner. There was no other tenant that exceeded 10% of our total revenue
or total rental revenue for the year ended December 31, 1999, or total
annualized rental revenue, excluding straight-line rental income, as of December
31, 1999. For the year ended December 31, 1998, affiliates of the Rosenthal
Automotive Organization ("Rosenthal") accounted for approximately 17.7% of our
total revenue, approximately 22.9% of our total rental revenue and, as of
December 31, 1998, approximately 13.5% of our total annualized rental revenue,
excluding straight-line rental income. Due to the acquisition of properties
during 1999, Rosenthal accounted for approximately 9.4% of our total revenue and
approximately 9.6% of our total rental revenue for the year ended December 31,
1999, and approximately 7.4% of our total annualized rental revenue, excluding
straight-line rental income, as of December 31, 1999. See "Item
2--Properties--Property and Lease Concentrations."
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We invest in properties throughout the United States. As of December 31,
1999, our properties were diversified across 27 states with the largest
"geographic concentration" in Texas, which accounted for approximately 26.0% of
our total annualized rental revenue, excluding straight-line rental income, as
of December 31, 1999. Properties located in Virginia represented approximately
11.4% of our total annualized rental revenue, excluding straight-line rental
income, as of December 31, 1999. No other state's concentration of properties
exceeded 10% of our total annualized rental revenue, excluding straight-line
rental income, as of December 31, 1999.
As of December 31, 1999, 181 of our 230 properties were operated by
franchised automobile dealerships. Properties that are not dealerships, such as
body shops and used vehicle lots, which are operated by franchised automotive
dealers, are generally not subject to any franchise arrangement. As of December
31, 1999, we leased 35 properties that are operated as non-franchised
dealerships or for other motor vehicle uses. The remaining 14 properties,
consisting solely of raw land are leased by various dealer groups, excluding one
parcel, valued at approximately $500,000 (acquired in connection with one
property at no additional cost).
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 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 29, 2000, 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 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 29, 2000, we have not been notified by any governmental authority 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.
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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 first publicly-traded real estate investment
trust to primarily focus on consolidating the properties operated by dealerships
under one ownership structure. 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 or 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 29, 2000, 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, 1999, we acquired 14 dealership
properties, representing 17 automotive franchises, for an aggregate purchase
price of approximately $71.6 million. Consideration for the properties consisted
of approximately $48.0 million in cash (including estimated closing costs
through December 31, 1999); $10.0 million in assumed and amended mortgage debt
and approximately 1.0 million Units (valued at approximately $13.6 million at
the time of acquisition). These properties total approximately 572,000 square
feet of buildings and improvements on approximately 64.4 acres of land and are
located in six states (California, Florida, Louisiana, New Mexico, Texas and
Utah). These properties have initial lease terms ranging from 10 to 15 years
(with an average initial lease term of 14.2 years), and have renewal options
(ranging from a total of 10 to 20 years). The renewal options are exercisable at
the option of the tenant.
1999 ACQUISITIONS
During the year ended December 31, 1999, we acquired 112 dealership
properties, representing 156 automotive franchises, for an aggregate purchase
price of approximately $430.3 million. Consideration for the properties
consisted of approximately $247.5 million in cash (including estimated closing
costs through December 31, 1999), $160 million in assumed and amended mortgage
debt, and approximately 1.75 million Units (valued at approximately $22.8
million at the time of acquisition). These properties total approximately 3.7
million square feet of buildings and improvements on approximately 591 acres of
land and are located in 19 states (Alabama, California, Florida, Georgia,
Illinois, Indiana, Louisiana, Maryland, North Carolina, New Jersey, New Mexico,
New York, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah and Virginia).
These properties have initial lease terms ranging from 10 to 20 years, with an
average initial lease term of approximately 13.7 years, and have renewal options
(ranging from a total of 10 to 40 years). The renewal options are exercisable at
the option of the tenant.
Included in the acquisitions during 1999 are 57 properties acquired
through the acquisition of MMR Holdings, L.L.C., MMR Tennessee, L.L.C., and MMR
Viking Investment Associates, L.P. (collectively, "MMR"), each of which were
affiliates of Sonic. In addition, subsequent to the acquisition of MMR, we
purchased two additional properties through MMR. The aggregate purchase price
for all 59 properties was approximately $207 million. Consideration for the
properties consisted of $150 million in assumed and amended debt, $55 million in
the form of a bridge loan (which has subsequently been repaid with the proceeds
of an $85
7
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million permanent secured loan) and the remainder in cash (including estimated
closing costs through December 31, 1999). The properties total approximately 1.9
million square feet of buildings and improvements on approximately 354 acres of
land and are located in ten states (Alabama, Florida, Georgia, Maryland, North
Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia). In connection
with these acquisitions, we entered into or continued 58 long-term leases for
the 59 properties. Pursuant to these leases, we receive rent from Sonic (in the
case of 50 leases) and five other tenants that operate motor vehicle related
businesses (in the case of eight leases). The Sonic properties have initial
lease terms ranging from 7.6 years to 10 years. The Sonic leases are guaranteed
by Sonic Automotive, Inc. and Sonic has agreed to renew leases representing at
least 75% of the total rental payments due under the Sonic leases for an
additional five-year term.
ITEM 2. PROPERTIES
PROPERTIES
As of December 31, 1999, we had invested approximately $935.5 million in
properties, with individual investments ranging from approximately $57,000 to
approximately $23.8 million. As of December 31, 1999, we owned 230 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 1,292 acres of land containing approximately 8.0
million square feet of buildings and improvements. Our tenants operated 349
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, 1999, 181 of our 230 properties were operated
by franchised automobile dealerships. Properties that are not dealerships, such
as body shops and used vehicle lots, which are operated by franchised automotive
dealers, are generally not subject to any franchise arrangement. As of December
31, 1999, we leased 35 properties that are operated as non-franchised
dealerships or for other motor vehicle uses. The remaining 14 properties,
consisting solely of raw land are leased by various dealer groups, excluding one
parcel, valued at approximately $500,000 (acquired in connection with one
property at no additional cost).
GENERAL DESCRIPTION OF PROPERTIES
As of December 31, 1999, our properties conform generally to the following
specifications for size, cost and type of land, buildings and other
improvements.
Land sizes typically range from less than one acre to over 50 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.
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 an average initial lease term of
approximately 13.3 years. The leases typically have options to renew upon the
same terms and conditions for one or
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more additional periods of five to ten years each exercisable at the option of
the tenant. As of December 31, 1999, the average remaining initial lease term is
approximately 12.3 years. The calculation of average initial lease term and
average remaining initial lease term assumes that Sonic, as required, will renew
for an additional five years, the initial terms of leases representing 75% of
the total rental payments for Sonic leases expiring in any given year.
The following table sets forth the schedule of lease expirations for our
214 leases in place as of December 31, 1999 for each of the ten years beginning
with 2000, assuming that none of the tenants (other than Sonic) exercise or have
exercised renewal options and that Sonic, as required, will renew for an
additional five years, the initial terms of leases representing 75% of the total
rental payments for Sonic leases expiring in any given year.
PERCENTAGE OF
TOTAL RENTAL REVENUE TOTAL COMPANY
NUMBER OF REPRESENTED BY ANNUAL RENTAL REVENUE
EXPIRING EXPIRING LEASES REPRESENTED BY
YEAR OF LEASE EXPIRATION LEASES (IN THOUSANDS) EXPIRING LEASES
---------------------------------------------------------------------------------------------------------
2000 0 $ -- --
2001 0 -- --
2002 0 -- --
2003 1 244 0.3%
2004 0 0 --
2005 0 0 --
2006 1 154 0.2%
2007 6 2,197 2.3%
2008 29 14,730 15.2%
2009 19 10,274 10.6%
2010 and thereafter 158 69,044 71.4%
As of December 31, 1999, all of our 230 properties, excluding one parcel
valued at approximately $500,000 (acquired in connection with one property at no
additional cost), were subject to leases which were performing and in full force
and effect.
PROPERTY AND LEASE CONCENTRATIONS
We invest in properties throughout the United States. As of December 31,
1999, the properties were diversified across 27 states with the largest
"geographic concentration" in Texas, which accounted for approximately 26.0% of
our total annualized rental revenue, excluding straight-line rental income, as
of December 31, 1999. Properties located in Virginia represented approximately
11.4% of our total annualized rental revenue, excluding straight-line rental
income, as of December 31, 1999. No other state's concentration of properties
exceeded 10% of our total annualized rental revenue, excluding straight-line
rental income, as of December 31, 1999.
As of December 31, 1999, the properties were leased to 44 different dealer
groups. Sonic accounted for approximately 11.6% of our total revenue and
approximately 11.8% of our total rental revenue for the year ended December 31,
1999, and approximately 22.6% of our total annualized rental revenue, excluding
straight-line rental income, as of December 31, 1999. Failure of Sonic to pay
rent could materially affect our income if we are not able to re-lease the
properties in a timely manner. There was no other tenant that exceeded 10% of
our total revenue, or total rental revenue for the year ended December 31, 1999
or total annualized rental revenue, excluding straight-line rental income, as of
December 31, 1999. For the year ended December 31, 1998, Rosenthal accounted for
approximately 17.7% of our total revenue, approximately 22.9% of our total
rental revenue and, as of December 31, 1998, approximately 13.5% of our total
annualized rental revenue, excluding straight-line rental income. Due to the
acquisition of properties during 1999, Rosenthal accounted for approximately
9.4% of our total revenue and approximately 9.6% of our total rental revenue for
the year ended December 31, 1999, and approximately 7.4% of our total annualized
rental revenue, excluding straight-line rental income, as of December 31, 1999.
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ITEM 3. LEGAL PROCEEDINGS
Neither we nor any of our properties currently is 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, 1999.
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 ENDING DECEMBER 31, 1999
Fourth fiscal quarter $ 14 $ 11 5/8 $ 0.360
Third fiscal quarter 13 3/4 12 0.350
Second fiscal quarter 13 3/4 11 3/8 0.340
First fiscal quarter 15 3/16 11 1/4 0.330
FISCAL YEAR ENDED DECEMBER 31, 1998
Fourth fiscal quarter $ 14 7/8 $ 8 13/16 $ 0.320
Third fiscal quarter 15 3/4 10 7/8 0.270
Second fiscal quarter 19 3/8 13 1/8 0.210
First fiscal quarter (from February 13,1998) 19 3/4 16 1/4 0.076
On February 29, 2000, the reported closing sales price on the Nasdaq
National Market was $12.50 per share and there were approximately 50 holders of
record of the common shares of the Company. We believe the total number of
beneficial shareholders of the Company to be approximately 2,300 since certain
common shares are held by depositories, brokers and other nominees.
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.
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 95%
(90% for tax years beginning January 1, 2001) of REIT taxable income. Pursuant
to this requirement, we were required to distribute an estimated $24.2 million
for 1999 and approximately $18.4 million for 1998. In order to avoid
substantially all federal income taxes, we elected to distribute at least 100%
of our taxable income for 1999 and 1998. Although we are required to distribute
at least 95% (90% for tax years beginning January 1, 2001) of REIT taxableincome
to maintain our REIT status, we may or may not elect to distribute in excess of
95% (90% for tax years beginning January 1, 2001) in future years. Our estimated
distribution for 1999 was approximately $25.5 million and our actual
distribution for 1998 was approximately $19.4 million. State income taxes are
not significant.
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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. All of our distributions in 1999 and
1998 will be 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 2000 or subsequent years will constitute a return of capital
for federal income tax purposes.
ISSUANCES OF UNREGISTERED SECURITIES. On November 5, 1999, the Operating
Partnership issued 70,658 Units to Mark Miller Pontiac, Inc., 307,342 Units to
Mark Miller, 189,192 Units to the MarKat Company, L.L.C. and 467,276 Units to
the Harver Company L.L.C. as partial consideration for the acquisition of four
parcels of real property and improvements located in Salt Lake City, Utah. The
Units are redeemable beginning on January 31, 2001 by the Partnership for cash,
or at our option, common shares of the Company, on a one-for-one basis. The
offering and sale of the Units was exempt from registration as a private
placement under Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act").
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 1998, 3,184,700 common shares were
repurchased at an average price of $10.51 per common share. There were no common
shares repurchased during 1999. Subsequent to December 31, 1999, we repurchased
900,000 common shares at an average price of $10.96 per common 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 STOCK PURCHASE PLAN. During the second quarter
of 2000, we intend to institute a Dividend Reinvestment and Stock Purchase Plan
under which holders of common shares or Units may elect to automatically
reinvest their distributions to purchase additional common shares and may make
optional cash payments for additional common shares. Under the proposed plan, we
may issue additional common shares or repurchase common shares in the open
market for purposes of financing our obligations under the Dividend Reinvestment
and Stock Purchase Plan. Notwithstanding the foregoing, our Board of Trustees
has full discretion to decide whether or not to implement this plan and thus,
there can be no assurance that we will institute this plan during the second
quarter of 2000 or at any time in the future.
ITEM 6. SELECTED FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31
----------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1997
----------------------------------------
Total Revenue $75,873 $ 34,931 $ --
Net Income (Loss) 21,731 16,491 (650)
Diluted Earnings Per Share 1.01 0.79 --
Annual Cash Dividend Declared Per Share 1.38 0.876 --
AS OF DECEMBER 31,
----------------------------------------
1999 1998 1997
----------------------------------------
Real Estate Before Accumulated Depreciation $935,525 $511,132 $ --
Total Assets 942,559 583,211 1,011
Total Debt 501,510 161,997 1,000
Minority Interest 115,384 93,898 --
Total Shareholders' Equity (Deficit) 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, and the
Financial Statements and Supplementary 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 documents incorporated by
reference, contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Also,
documents that we subsequently file with the Securities and Exchange Commission
and that are incorporated by reference herein 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 following summary of "Business Risks" describes forward-looking
information. The Business Risks that are described are not all inclusive,
particularly with respect to possible future events, and should be read together
with other filings made by the Company under the Securities Act and the Exchange
Act, including the risks and other risk factors contained in the Company's Form
8-K/A filed on January 19, 2000. Other parts of 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 tenants will not pay rent or that our operating costs
will be higher than expected;
- risks of interest rate fluctuations impacting future acquisitions;
- risks that additional acquisitions may not be consummated; and
- environmental and other risks associated with the acquisition and
leasing of automotive properties.
Given these uncertainties readers are cautioned not to place value
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.
OVERVIEW
Our primary business purpose is to own and lease real estate properties
(land, buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. As of December 31, 1999, we owned 230 dealership properties,
representing 349 automotive franchises, with a total investment of approximately
$935.5 million. Consideration for the properties consisted of approximately
$641.9 million in cash (including estimated closing costs through December 31,
1999), $172 million in assumed and amended mortgage debt, and approximately 8.3
million Units (valued at approximately $121.6 million at the time of
acquisition). These properties total approximately 8.0 million square feet of
buildings and improvements on 1,292 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). These properties have initial
lease terms generally ranging from 10 to 20 years with an average initial lease
term of approximately 13.3 years, and have renewal options (ranging from a total
of 10 years to 40 years). The renewal options are exercisable at the option of
the tenant. Our portfolio weighted average initial cap rate at December 31, 1999
was 10.5%, which is calculated as the percentage of the initial annual base rent
over the purchase price paid to the sellers for the related properties.
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 leases are generally for a period
of 10 to 20 years, with options to renew upon the same terms and conditions for
one or more additional periods of 5 to 10 years. The renewal options are
exercisable at the option of the tenant.
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.
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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 staff. 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, 1999, we acquired 14 dealership
properties, representing 17 automotive franchises, for an aggregate purchase
price of approximately $71.6 million. Consideration for the properties consisted
of approximately $48.0 million in cash (including estimated closing costs
through December 31, 1999), $10.0 million in assumed and amended mortgage debt
and approximately 1.0 million Units (valued at approximately $13.6 million at
the time of acquisition). These properties total approximately 572,000 square
feet of buildings and improvements on approximately 64.4 acres of land and are
located in six states (California, Florida, Louisiana, New Mexico, Texas and
Utah). These properties have initial lease terms ranging from 10 to 15 years
(with an average initial lease term of approximately 14.2 years), and have
renewal options (ranging from a total of 10 to 20 years). The renewal options
are exercisable at the option of the tenant.
1999 ACQUISITIONS
During the year ended December 31, 1999, we acquired 112 dealership
properties, representing 156 automotive franchises, for an aggregate purchase
price of approximately $430.3 million. Consideration for the properties
consisted of approximately $247.5 million in cash (including estimated closing
costs through December 31, 1999), $160 million in assumed and amended mortgage
debt, and approximately 1.75 million Units (valued at approximately $22.8
million at the time of acquisition). These properties total approximately 3.7
million square feet of buildings and improvements on approximately 591 acres of
land and are located in 19 states (Alabama, California, Florida, Georgia,
Illinois, Indiana, Louisiana, Maryland, North Carolina, New Jersey, New Mexico,
New York, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah and Virginia).
These properties have initial lease terms ranging from 10 to 20 years, and have
renewal options (ranging from a total of 10 to 40 years). The renewal options
are exercisable at the option of the tenant.
Included in the acquisitions during 1999 are 57 properties acquired
through the acquisition of MMR, which was an affiliate of Sonic. In addition,
subsequent to the acquisition of MMR, we purchased two additional properties
through MMR. The aggregate purchase price for all 59 properties was
approximately $207 million. Consideration for the properties consisted of $150
million in assumed and amended debt, $55 million in the form of a bridge loan
(which has subsequently been repaid with the proceeds of an $85 million
permanent secured loan) and the remainder in cash (including estimated closing
costs through December 31, 1999). The properties total approximately 1.9 million
square feet of buildings and improvements on 354 acres of land and are located
in ten states (Alabama, Florida, Georgia, Maryland, North Carolina, Ohio, South
Carolina, Tennessee, Texas and Virginia). In connection with these acquisitions,
we entered into or continued 58 long-term leases for the 59 properties. Pursuant
to these leases, we receive rent from Sonic (in the case of 50 leases) and five
other tenants that operate motor vehicle related businesses (in the case of
eight leases). The Sonic properties have initial lease terms ranging from 7.6
years to 10 years. The Sonic leases are guaranteed by Sonic Automotive, Inc. and
Sonic has agreed to renew leases representing at least 75% of the total rental
payments due under the Sonic leases for an additional five-year term.
RESULTS OF OPERATIONS
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
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(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 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 consi-dered 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 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 million 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 $11.9 million and $72.1 million at December
31, 1999 and December 31, 1998, respectively. The changes in cash and cash
equivalents during the year ended December 31, 1999 and 1998 were attributable
to operating, investing and financing activities, as described below.
Cash flow provided by operating activities for the year ended December 31,
1999 and 1998 was $39.8 million and $31.2 million, respectively, and represents,
in both years, 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. Cash used in investing
activities for the year ended December 31, 1999 and 1998 was $401.2 million and
$412.6 million, respectively, and primarily reflects the acquisition of
dealership properties during those years. Cash flow from financing activities
for the year ended
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December 31, 1999 and 1998 was $301.2 million and $453.5 million, respectively.
Cash flow from financing activities for the year ended December 31, 1999,
primarily reflects $345 million of proceeds from mortgage loans closed during
the year and $62 million of proceeds from bank borrowings. This was partially
offset by the repayment of bank borrowings and mortgage principal payments and
distributions made to shareholders and limited partners during the year. Cash
flow from financing activities for the year ended December 31, 1998, primarily
reflects net proceeds totaling $342.3 million from a private placement offering
and our IPO including the exercise of the underwriters' over-allotment option,
$162 million of proceeds from mortgage loans closed in 1998 and $63 million from
bank borrowings. This was partially offset by the repayment of bank borrowings
and distributions made to shareholders and limited partners during 1998.
Mortgage Indebtedness. As of December 31, 1999, we had mortgage
indebtedness totaling approximately $501.5 million (consisting of approximately
$491.5 million of fixed rate indebtedness and approximately $10.0 million of
variable rate indebtedness) secured by various properties we owned. The
following is a summary of our mortgage debt at December 31, 1999 (amounts in
thousands):
BALANCES
OUTSTANDING AS OF EFFECTIVE
ORIGINAL DEBT DECEMBER 31, INTEREST AMORTIZATION
DESCRIPTION OF DEBT ISSUED 1999 RATE* SCHEDULE
- -------------------------------------------------------------------------------------------------------------------------------
7.50% Fixed rate debt due 1/20/03(1) $ 12,000 $ 11,730 7.75% 20 year
7.59% Fixed rate debt due 12/1/08(2) 38,050 38,050 7.98% 17 year
7.635% Fixed rate debt due 10/1/14(3) 111,950 107,675 7.92% 15 year
8.05% Fixed rate debt due 10/1/14(4) 85,000 84,528 8.32% 15 year
7.54% Fixed rate debt due 7/6/11(5) 100,000 99,527 7.70% 25 year
8.03% Fixed rate debt due 9/29/11(6) 150,000 150,000 8.08% 25 year
Floating rate debt due 12/22/09(7) 10,000 10,000 7.67% --
----------- -----------
Total $ 507,000 $ 501,510
=========== ===========
* Includes deferred loan fees amortized over the life of the loans.
(1) A 4.25-year, mortgage note payable to a financial institution and assumed
by us as partial consideration for the acquisition of four dealership
properties. The note is secured by the properties acquired, which as of
December 31, 1999 have an aggregate net book value of approximately $22.3
million. Principal and interest are payable monthly with a final payment
at maturity of approximately $10.8 million. There are no financial
covenants required under this note; however, there are negative covenants
relating to customary items such as operation and maintenance of the
properties securing the note and limitations on issuing additional secured
debt at the subsidiary level. As of December 31, 1999, we were in
compliance with the loan covenants.
(2) A ten-year, non-recourse loan with Global Alliance Finance Company, L.L.C.
("GAFCO") that was amended in the first quarter of 1999. The loan requires
monthly payments of interest only for approximately one year. Thereafter,
monthly payments of principal and interest are required with a final
payment at maturity of approximately $24.5 million. The loan is secured by
mortgages on seven of our properties, which as of December 31, 1999 have
an aggregate net book value of approximately $64.0 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. There are no financial covenants required under this loan;
however, there are negative covenants relating to customary items such as
operation and maintenance of the properties securing the loan and
limitations on issuing additional secured debt at the subsidiary level.
As of December 31, 1999, we were in compliance with the loan covenants.
(3) A 15-year, non-recourse loan, evidenced by three separate loans and notes,
with German American Capital Corporation ("GACC") that was amended during
the third quarter of 1999. 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, 1999 have an aggregate net book value of approximately
$185.1 million. The Operating Partnership has provided a guaranty limited
to approximately $26.1 million of these loans, which guaranty is
contingent upon the occurrence of certain circumstances. There are no
financial covenants required under this loan; however, there are negative
covenants relating to customary items such as operation and maintenance of
the properties securing the loan and limitations on issuing additional
secured debt at the subsidiary level. As of December 31, 1999, we were in
compliance with the loan covenants.
(4) A 15-year, non-recourse loan with GACC. 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
approximately 28 of our properties, which as of December 31, 1999 have an
aggregate net book value of approximately $154.2 million. Loan covenants
required under this loan and our compliance with those covenants are
consistent with the above-mentioned loan with GACC. The two loans with
GACC are cross-collateralized.
(5) A 12-year mortgage loan with Ford Motor Credit Company ("FMCC"). 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
approximately 48 of our properties, which as of December 31, 1999 have an
aggregate net book value of approximately $176.5 million. There is one
financial covenant limiting total Company debt to 65% of assets, as
defined in the FMCC loan agreement. There are negative covenants relating
to customary items such as operation and maintenance of the properties
securing the loan and limitations on issuing additional secured debt at
the subsidiary level. As of December 31, 1999, we were in compliance with
the loan covenants.
(6) An assumed and amended 12-year mortgage loan with FMCC, of which the
proceeds were used as partial consideration for the MMR acquisition. The
terms of the loan require quarterly interest-only payments for two years.
Thereafter, payments of principal and interest will be made quarterly with
a final payment at maturity of approximately $124.6 million. The loan is
secured by 59 of our properties, which as of December 31, 1999 have an
aggregate net book value of approximately $206.3 million. Loan covenants
required under this loan and our compliance with those covenants are
consistent with the above-mentioned loan with FMCC.
(7) A ten-year mortgage loan with FMCC. Approximately $6.7 million of the loan
was assumed as partial consideration for the acquisition of three
dealership properties and subsequently was amended and increased to $10.0
million. The loan bears interest at a variable rate equal to 200 basis
points per annum
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above the A1-P1 Commercial Paper Rate. The interest rate as of December
31, 1999 was approximately 7.48%. The terms of the loan require quarterly
principal payments of $100,000 and quarterly interest payments. At
maturity the loan requires a final payment of approximately $6.3 million.
The loan is secured by three properties, which as of December 31, 1999
have an aggregate net book value of approximately $13.2 million. Loan
covenants required under this loan and our compliance with those covenants
are consistent with the above-mentioned loans with FMCC.
As of December 31, 1999, we had a $50 million revolving secured credit
facility from a financial institution, under which no amounts were outstanding.
The facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
facility contains financial covenants, such as debt service coverage ratio and
debt to adjusted net worth requirements, that we must comply with annually. As
of December 31, 1999, we were in compliance with the loan covenants.
COMMITMENTS. On December 16, 1999, we entered into a commitment letter
with a financial institution for a $100 million secured revolving credit
facility which will provide interim real estate financing. The proceeds are to
be used to acquire additional properties, which will be used as collateral for
the credit facility. Borrowings will require monthly interest payments at a
floating rate equal to 225 basis points above the 30-day LIBOR rate and
repayment of principal within 180 days. The facility will have a term of one
year, renewable annually, and will contain customary loan covenants. Final terms
and conditions are currently being negotiated. We also have had discussions with
several financial institutions to obtain additional unsecured, partially secured
or secured loans or credit facilities, the amount and terms of which have not
been determined.
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 capital expenditures, distributions to shareholders and
unitholders, and amounts required for additional property acquisitions. We
expect to meet these requirements (other than amounts required for additional
property acquisitions) through cash flow provided by operating activities. We
anticipate that any additional acquisition of properties during the next 12
months will be funded with amounts available under our existing and committed
secured credit facilities, and with future secured and unsecured debt.
Acquisitions will be made subject to our investment objectives and policies to
maximize both current income and long-term growth in income.
As of December 31, 1999, 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. 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 may be
reduced to the extent that we use Units as consideration for such purchases.
During 1999, our Board of Trustees approved a resolution providing that
our policy shall be to limit debt to approximately 65% of our assets (calculated
as total assets plus accumulated depreciation). This policy may be changed by
the Board of Trustees at any time without shareholder approval. As of December
31, 1999, we had a debt to asset ratio of approximately 52%.
In light of our current debt to asset ratio, we are able to obtain
additional financing for our 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.
YEAR 2000 UPDATE
In 1999, we discussed the nature and progress of our plans to confront
year 2000 issues. In late 1999, we completed our remediation and testing of our
software applications and hardware systems. As a result of those planning and
implementation efforts, we experienced no material information technology or
non-information technology systems problems, and we believe those systems
successfully responded to the year 2000 date change. We did not occur
significant costs in designing and implementing our year 2000 plan, nor did we
incur significant costs in modifying our existing software applications,
replacing hardware or hiring consultants in resolving year 2000 issues. In
addition, we are not aware that any of our tenants or third parties with whom we
conduct business experienced any material systems problems related to year 2000
issues. We will continue to monitor our information technology and
non-information technology systems and those of our tenants and third parties
with whom we conduct business throughout the year 2000 to ensure that any latent
year 2000 matters that may arise are addressed promptly. Although management
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does not anticipate any additional expenditures relating to year 2000 issues,
there can be no assurance as to the magnitude of any future costs until
significant time has passed.
FUNDS FROM OPERATIONS
Funds From Operations ("FFO") is defined under the revised definition
adopted in 1995 by the National Association of Real Estate Investment Trusts
(NAREIT) as net income (loss) (computed in accordance with GAAP) excluding gains
(or losses) from debt restructuring or sales of property plus depreciation and
amortization of assets unique to the real estate industry. 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 of the Operating Partnership for the years ended December 31, 1999 and
1998 is computed as follows (in thousands):
1999 1998
-------------------------
Net Income before Minority Interest $ 29,204 $ 20,886
Real Estate Depreciation and Amortization 15,246 6,161
Straight-line Rental Income (962) --
Gain on Sale of Asset (245) --
--------- ---------
Funds From Operations $ 43,243 $ 27,047
========= =========
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.
Interest rate fluctuations will affect the fair value of our fixed rate
debt instruments. As of December 31, 1999, we had fixed rate indebtedness
totaling approximately $491.5 million. If interest rates on our fixed rate debt
instruments at December 31, 1999 had been one percent higher, the fair value of
those debt instruments on that date would have decreased by approximately $29.7
million. Interest rate fluctuations will affect our annual interest expense on
our variable rate debt. As of December 31, 1999, we had variable rate
indebtedness totaling approximately $10.0 million. If the interest rate on our
variable rate debt instrument outstanding at December 31, 1999 had been one
percent higher, our annual interest expense relating to that debt instrument
would have increased by $100,000, based on balances at December 31, 1999.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE NO.
----------
Report of Independent Public Accountants--Arthur Andersen LLP ...... 19
Consolidated Balance Sheets ........................................ 20
Consolidated Statements of Operations .............................. 21
Consolidated Statements of Changes in Shareholders' Equity (Deficit) 22
Consolidated Statements of Cash Flows .............................. 23
Notes to Consolidated Financial Statements ......................... 24
18
21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To 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, 1999 and 1998, and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for the years ended December 31, 1999 and 1998, and the period from
October 20, 1997 (date of organization) through December 31, 1997. 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, 1999 and 1998, and the
results of their operations and their cash flows for the years ended December
31, 1999 and 1998, and the period from October 20, 1997 (date of organization)
through December 31, 1997 in conformity with accounting principles generally
accepted in the United States.
Our audit was 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 auditng procedures applied in our audit 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 28, 2000
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CAPITAL AUTOMOTIVE REIT
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
AS OF DECEMBER 31,
------------------------------------
1999 1998
------------------------------------
ASSETS
Real estate:
Land .......................................................... $ 423,757 $ 238,970
Buildings and improvements .................................... 511,768 272,162
Accumulated depreciation ...................................... (21,202) (6,145)
--------- ---------
914,323 504,987
Cash and cash equivalents ......................................... 11,886 72,106
Other assets, net ................................................. 16,350 6,118
--------- ---------
TOTAL ASSETS .......................................... $ 942,559 $ 583,211
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage loans ................................................ $ 501,510 $ 161,997
Accounts payable and accrued expenses ......................... 21,298 14,752
Security deposits payable ..................................... 4,768 3,907
--------- ---------
TOTAL LIABILITIES ..................................... 527,576 180,656
--------- ---------
Minority interest ................................................. 115,384 93,898
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value; 20,000,000 shares authorized;
none outstanding .......................................... -- --
Common shares, $.01 par value; 100,000,000 shares authorized;
24,792,115 shares issued and 21,607,415 outstanding ....... 248 248
Additional paid-in-capital .................................... 344,981 345,905
Accumulated deficit ........................................... (12,159) (4,025)
Less treasury shares at cost, 3,184,700 common shares ......... (33,471) (33,471)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY ............................ 299,599 308,657
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............ $ 942,559 $ 583,211
========= =========
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,
------------------------------------------
1999 1998 1997
------------------------------------------
Revenue:
Rental ............................................... $ 74,339 $ 27,027 $ --
Interest and other ................................... 1,534 7,904 --
-------- -------- ---------
Total revenue ................................ 75,873 34,931 --
-------- -------- ---------
Expenses:
Depreciation and amortization ........................ 15,347 6,304 --
General and administrative ........................... 6,781 5,487 649
Interest ............................................. 24,541 2,254 1
-------- -------- ---------
Total expenses ............................... 46,669 14,045 650
-------- -------- ---------
Net income (loss) before minority interest ............... 29,204 20,886 (650)
Minority interest ........................................ (7,473) (4,395) --
-------- -------- ---------
Net income (loss) ........................................ $ 21,731 $ 16,491 $ (650)
======== ======== =========
Shares of common stock outstanding used to compute basic
earnings per share ................................... 21,607 20,927 --
======== ======== =========
Basic earnings per share ................................. $ 1.01 $ 0.79 $ --
======== ======== =========
Shares of common stock outstanding used to compute diluted
earnings per share ................................... 21,629 20,978 --
======== ======== =========
Diluted earnings per share ............................... $ 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 TREASURY
SHARES AMOUNT CAPITAL DEFICIT SHARES TOTAL
-------------------------------------------------------------------------------
BALANCE AT OCTOBER 20, 1997 -- $ -- $ -- $ -- $ -- $ --
Net loss .............................. -- -- -- (650) -- (650)
Capital contribution .................. 10 -- -- -- -- --
---------- -------- -------- -------- -------- --------
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
Purchase of treasury shares ........... (3,184,700) -- -- -- (33,471) (33,471)
Dividend declared or paid ............. -- -- -- (19,866) -- (19,866)
Net income ............................ -- -- -- 16,491 -- 16,491
---------- -------- -------- -------- -------- --------
BALANCE AT DECEMBER 31, 1998 21,607,415 248 345,905 (4,025) (33,471) 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 $ 248 $344,981 $(12,159) $(33,471) $299,599
========== ======== ======== ======== ======== ========
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,
1999 1998 1997
-----------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................................... $ 21,731 $ 16,491 $ (650)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization .............................................. 16,042 6,304 --
Income applicable to minority interest ..................................... 7,473 4,395 --
Increase in other assets ................................................... (11,041) (5,004) (957)
Increase in accounts payable and accrued expenses .......................... 4,732 5,118 661
Increase in security deposits payable ...................................... 861 3,907 --
--------- --------- ---------
Net cash provided by (used in) operating activities .................... 39,798 31,211 (946)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment, net of disposals ...................... (61) (286) (29)
Real estate acquisitions, net of sales ..................................... (401,130) (412,346) --
--------- --------- ---------
Net cash used in investing activities .................................. (401,191) (412,632) (29)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings .............................................. 62,000 63,000 1,000
Proceeds from mortgage loans ............................................... 345,000 162,032 --
Repayment of bank borrowings ............................................... (62,000) (64,000) --
Mortgage principal payments ................................................ (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 ................................................... (28,990) (12,952) --
Payment of partner distribution ............................................ (9,220) (3,357) --
Purchase of treasury shares ................................................ -- (33,471) --
Other fees ................................................................. (130) -- --
--------- --------- ---------
Net cash provided by financing activities .............................. 301,173 453,502 1,000
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ........................... (60,220) 72,081 25
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 72,106 25 --
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 11,886 $ 72,106 $ 25
========= ========= =========
SUPPLEMENTAL DATA:
Real estate acquisitions in exchange for equity issuance ................... $ 23,376 $ 98,786 $ --
Fourth quarter distribution ................................................ $ 10,786(1) $ 8,973(2) $ --
Interest paid during the period ............................................ $ 17,353 $ 2,177 $ --
NOTES:
(1) Declared in fourth quarter 1999, paid in January 2000.
(2) 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 its property interests
through Capital Automotive L.P. (the "Operating Partnership") and its
subsidiaries. The Company is the sole general partner of the Operating
Partnership. As of December 31, 1999, the Company held a 72.2% general
partnership interest in the Operating Partnership. The Company completed its
initial public offering of common shares and began generating rental income in
February 1998. References to "we," "us," "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 its directly and
indirectly owned subsidiaries.
Our primary business purpose is to own and lease real estate properties
(land, buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. 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, tenant or lessee to refer to the related persons and
companies that lease our properties. Our strategy focuses on acquiring real
estate used by multi-site, multi-franchised dealerships located primarily in
major metropolitan areas throughout the United States.
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 10 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 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 consi-dered 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 and amortization
expense by approximately $2.2 million and thus, increased net income before
minority interest by approximately $2.2 million for the year ended December 31,
1999.
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 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,
1999.
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CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
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 are comprised of highly liquid instruments
purchased with original maturities of three months or less.
DEFERRED LOAN COSTS
Included in other assets are costs incurred in connection with obtaining
our revolving secured credit facility and issuance of mortgage notes during 1999
and 1998, which costs are amortized over the terms of the respective credit
facility or notes on a straight-line basis (which approximates the effective
interest method).
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 $748,000 and $490,000 as of
December 31, 1999 and 1998, 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
contract 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% 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 which
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.
During the third quarter of 1999, we began, on a prospective basis,
straight-lining our rents for our leases with fixed minimum escalators.
Straight-line rental revenue favorably impacted net income before minority
interest for the year ended December 31, 1999, by approximately $962,000. The
effect on prior years was not material.
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.
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CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
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,
1999 and 1998.
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 deferred the effective date.
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. We believe that the adoption of SFAS No. 133 will not
have a significant impact on our consolidated financial position, results of
operations or cash flows.
4. ACQUISITIONS OF PROPERTIES
During the year ended December 31, 1999, we acquired 112 dealership
properties, representing 156 automotive franchises, for an aggregate purchase
price of approximately $430.3 million. Consideration for the properties
consisted of approximately $247.5 million in cash (including estimated closing
costs through December 31, 1999), $160 million in assumed and amended mortgage
debt, and approximately 1.75 million Units (valued at approximately $22.8
million at the time of acquisition). These properties total approximately 3.7
million square feet of buildings and improvements on approximately 591 acres of
land and are located in 19 states (Alabama, California, Florida, Georgia,
Illinois, Indiana, Louisiana, Maryland, North Carolina, New Jersey, New Mexico,
New York, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah and Virginia).
These properties have initial lease terms ranging from 10 to 20 years, and have
renewal options (ranging from a total of 10 to 40 years). The renewal options
are exercisable at the option of the tenant.
Included in the acquisitions during 1999 are 57 properties acquired
through the acquisition of MMR Holdings, L.L.C., MMR Tennessee, L.L.C., and MMR
Viking Investment Associates, L.P. (collectively, "MMR"), each of which were
affiliates of Sonic Automotive, Inc. and its affiliates ("Sonic"). In addition,
subsequent to the acquisition of MMR, we purchased two additional properties
through MMR. The aggregate purchase price for all 59 properties was
approximately $207 million. Consideration for the properties consisted of $150
million in assumed and amended debt, $55 million in the form of a bridge loan
(which has subsequently been repaid with the proceeds of an $85 million
permanent secured loan) and the remainder in cash (including estimated closing
costs through December 31, 1999). The properties total approximately 1.9 million
square feet of buildings and improvements on approximately 354 acres of land and
are located in ten states (Alabama, Florida, Georgia, Maryland, North Carolina,
Ohio, South Carolina, Tennessee, Texas and Virginia). In connection with these
acquisitions, we entered into or continued 58 long-term leases for the 59
properties. Pursuant to these leases, we receive rent from Sonic (in the case of
50 leases) and five other tenants that operate motor vehicle related businesses
(in the case of eight leases). The Sonic leases are guaranteed by Sonic
Automotive, Inc. and Sonic has agreed to renew leases representing at least 75%
of the total rental payments due under the Sonic leases for an additional
five-year term.
As of December 31, 1999, we owned 230 dealership properties, representing
349 automotive franchises, with a total investment of approximately $935.5
million. Consideration for the properties consisted of approximately $641.9
million in cash (inclu-ding estimated closing costs through December 31, 1999),
$172 million in assumed and amended mortgage debt, and approxi-
26
29
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
mately 8.3 million Units (valued at approximately $121.6 million at the time of
acquisition). These properties total approximately 8.0 million square feet of
buildings and improvements on 1,292 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). These properties have initial
lease terms generally ranging from 10 to 20 years with an average initial lease
term of approximately 13.3 years, and have renewal options (ranging from a total
of 10 to 40 years). The renewal options are exercisable at the option of the
tenant.
5. RELATED PARTY TRANSACTIONS
As of December 31, 1999, we owned 25 properties that were leased to
entities related to three members of our Board of Trustees and members of their
families. The properties were acquired by us during 1998 for an aggregate
purchase price of approximately $111.9 million and a renovation was funded
during 1999 for approximately $1.4 million. In conjunction with the purchases,
we entered into long-term triple-net lease agreements with two ten-year
extensions exercisable at the option of the tenant. The leases in the aggregate
provide for annualized rental payments as of December 31, 1999 of approximately
$12.4 million.
6. OPERATING LEASES
In connection with the acquisitions discussed in Note 4 above, 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 adjusted
upward periodically, usually based on a factor of the consumer price index
("CPI"). In general, the lease terms establish minimum and maximum periodic
adjustments. A limited number of our leases offer tenant purchase options at
various points after the initial lease term, generally at the greater of fair
market value of the property at the time of sale or our purchase price as
increased by a factor of CPI at the time the option is exercised. Future minimum
rental payments will be received as follows (in thousands):
FOR THE YEAR ENDED DECEMBER 31,
2000............................. $ 96,704
2001............................. 96,870
2002............................. 97,161
2003............................. 97,490
2004............................. 98,211
Thereafter....................... 650,547
-------------
Total............................ $ 1,136,983
=============
As of December 31, 1999, there were four 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, 1999 are as follows:
FOR THE YEAR ENDED DECEMBER 31,
2000............................ $ 206,921
2001............................ 213,129
2002............................ 219,523
2003............................ 226,109
2004............................ 37,869
-------------
Total........................... $ 903,551
=============
27
30
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
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, options and warrants. The weighted average
number of shares outstanding used to compute diluted earnings per share for the
years ended December 31, 1999 and 1998 was approximately 21.6 million, and 21.0
million, respectively. The impact of dilution of common equivalent shares for
the years ended December 31, 1999 and 1998 was approximately 22,000 and 51,000,
respectively.
8. MORTGAGE LOANS
As of December 31, 1999, we had mortgage indebtedness totaling
approximately $501.5 million secured by various properties we owned. The
following is a summary of our mortgage debt at December 31, 1999 and 1998
(amounts in thousands):
BALANCES BALANCES
OUTSTANDING AS OF OUSTANDING AS OF EFFECTIVE
ORIGINAL DEBT DECEMBER 31, DECEMBER 31, INTEREST AMORTIZATION
DESCRIPTION OF DEBT ISSUED 1999 1998 RATE* SCHEDULE
- ----------------------------------------------------------------------------------------------------------------------------------
7.50% Fixed rate debt due 1/20/03(1)... $ 12,000 $ 11,730 $ 11,997 7.75% 20 year
7.59% Fixed rate debt due 12/1/08(2)... 38,050 38,050 38,050 7.98% 17 year
7.635% Fixed rate debt due 10/1/14(3).. 111,950 107,675 111,950 7.92% 15 year
8.05% Fixed rate debt due 10/1/14(4)... 85,000 84,528 -- 8.32% 15 year
7.54% Fixed rate debt due 7/6/11(5).... 100,000 99,527 -- 7.70% 25 year
8.03% Fixed rate debt due 9/29/11(6)... 150,000 150,000 -- 8.08% 25 year
Floating rate debt due 12/22/09(7)..... 10,000 10,000 -- 7.67% --
---------- --------- ----------
Total.............................. $ 507,000 $ 501,510 $ 161,997
========== ========= ==========
* Includes deferred loan fees amortized over the life of the loans.
(1) A 4.25-year, mortgage note payable to a financial institution and assumed
by us as partial consideration for the acquisition of four dealership
properties. The note is secured by the properties acquired, which as of
December 31, 1999 have an aggregate net book value of approximately $22.3
million. Principal and interest are payable monthly with a final payment
at maturity of approximately $10.8 million. There are no financial
covenants required under this note; however, there are negative covenants
relating to customary items such as operation and maintenance of the
properties securing the note and limitations on issuing additional secured
debt at the subsidiary level. As of December 31, 1999, we were in
compliance with the loan covenants.
(2) A ten-year, non-recourse loan with Global Alliance Finance Company, L.L.C.
("GAFCO") that was amended in the first quarter of 1999. The loan requires
monthly payments of interest only for approximately one year. Thereafter,
monthly payments of principal and interest are required with a final
payment at maturity of approximately $24.5 million. The loan is secured by
mortgages on seven of our properties, which as of December 31, 1999 have
an aggregate net book value of approximately $64.0 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. There are no financial covenants required under this loan;
however, there are negative covenants relating to customary items such as
operation and maintenance of the properties securing the loan and
limitations on issuing additional secured debt at the subsidiary level. As
of December 31, 1999, we were in compliance with the loan covenants.
(3) A 15-year, non-recourse loan, evidenced by three separate loans and notes,
with German American Capital Corporation ("GACC") that was amended in the
third quarter of 1999. 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, 1999 have an aggregate net book value of approximately $185.1
million. The Operating Partnership has provided a guaranty limited to
approximately $26.1 million of these loans, which guaranty is contingent
upon the occurrence of certain circumstances. There are no financial
covenants required under this loan; however, there are negative covenants
relating to customary items such as operation and maintenance of the
properties securing the loan and limitations on issuing additional secured
debt at the subsidiary level. As of December 31, 1999, we were in
compliance with the loan covenants.
(4) A 15-year, non-recourse loan with GACC. 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
approximately 28 of our properties, which as of December 31, 1999 have an
aggregate net book value of approximately $154.2 million. Loan covenants
required under this loan and our compliance with those covenants are
consistent with the above-mentioned loan with GACC. The two loans with
GACC are cross-collateralized.
(5) A 12-year mortgage loan with Ford Motor Credit Company ("FMCC"). 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
approximately 48 of our properties, which as of December 31, 1999 have an
aggregate net book value of approximately $176.5 million. There is one
financial covenant limiting total Company debt to 65% of assets, as
defined in the FMCC loan agreement. There are negative covenants relating
to customary items such as operation and maintenance of the properties
securing the loan and limitations on issuing additional secured debt at
the subsidiary level. As of December 31, 1999, we were in compliance with
the loan covenants.
(6) An assumed and amended 12-year mortgage loan with FMCC, of which the
proceeds were used as partial consideration for the MMR acquisition. The
terms of the loan require quarterly interest-only payments for two years.
Thereafter, payments of principal and interest will be made quarterly with
a final
28
31
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
payment at maturity of approximately $124.6 million. The loan is secured
by 59 of our properties, which as of December 31, 1999 have an aggregate
net book value of approximately $206.3 million. Loan covenants required
under this loan and our compliance with those covenants are consistent
with the above-mentioned loan with FMCC.
(7) A ten-year mortgage loan with FMCC. Approximately $6.7 million of the loan
was assumed as partial consideration for the acquisition of three
dealership properties and subsequently was amended and increased to $10.0
million. The loan bears interest at a variable rate equal to 200 basis
points per annum above the A1-P1 Commercial Paper Rate. The interest rate
as of December 31, 1999 was approximately 7.48%. The terms of the loan
require quarterly principal payments of $100,000 and quarterly interest
payments. At maturity the loan requires a final payment of approximately
$6.3 million. The loan is secured by three properties, which as of
December 31, 1999 have an aggregate net book value of approximately $13.2
million. Loan covenants required under this loan and our compliance with
those covenants are consistent with the above-mentioned loans with FMCC.
Aggregate annual principal maturities of mortgage indebtedness as of
December 31, 1999, is as follows (in thousands):
FOR THE YEAR ENDED DECEMBER 31,
2000............................ $ 9,861
2001............................ 11,000
2002............................ 13,831
2003............................ 25,361
2004............................ 15,618
Thereafter...................... 425,839
------------
Total........................... $ 501,510
============
9. SHORT-TERM FINANCING
As of December 31, 1999, we had a $50 million revolving secured credit
facility from a financial institution, under which no amounts were outstanding.
The facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
facility contains financial covenants, such as debt service coverage ratio and
debt to adjusted net worth requirements, that we must comply with annually. As
of December 31, 1999, we were in compliance with the loan covenants.
COMMITMENTS. On December 16, 1999, we entered into a commitment letter
with a financial institution for a $100 million secured revolving credit
facility which will provide interim real estate financing. The proceeds are to
be used to acquire additional properties, which will be used as collateral for
the credit facility. Borrowings will require monthly interest payments at a
floating rate equal to 225 basis points above the 30-day LIBOR rate and
repayment of principal within 180 days. The facility will have a term of one
year, renewable annually, and will contain customary loan covenants. Final terms
and conditions are currently being negotiated.
10. MINORITY INTEREST
Minority interest is calculated at approximately 27.8% and 23.3% of the
Operating Partnership's partners' capital and net income as of December 31, 1999
and 1998, respectively. The ownership of the Operating Partnership as of
December 31, 1999 and 1998 is as follows (Units in thousands):
DECEMBER 31,
---------------------------------------------------------
1999 1998
---------------------------------------------------------
UNITS PERCENT UNITS PERCENT
--------- ----------- --------- -------------
Partners' capital:
Limited Partners...... 8,321.6 27.8% 6,573.3 23.3%
The Company........... 21,607.4 72.2% 21,607.4 76.7%
--------- ----- --------- ----
Total................. 29,929.0 100.0% 28,180.7 100.0%
========= ===== ========= =====
11. 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
29
32
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
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 hire, for
employees. For trustees, Share Options become exercisable in stages, one-third
beginning six months after 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") at a purchase price of
$0.01 per share, to certain employees. The PARS were granted 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 meets 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 will
vest after approximately three years from the effective date of January 1, 1999
and the remainder, still subject to performance acceleration, will vest over
seven years. The Company adjusted the compensation expense related to the PARS
based on the revised vesting schedule in 1999.
As of December 31, 1999, approximately 2.8 million Share Options and
32,000 PARS were outstanding under the Amended Plan, thus leaving approximately
911,000 shares available under the Amended Plan to be granted. On January 17,
2000, the Committee granted an additional 325,000 Share Options under the
Amended Plan to employees. In addition, on January 17, 2000, the Committee
approved a PARS grant of approximately 46,000 shares at a purchase price of
$0.01 per share to employees. These shares are subject to the same terms and
vesting period as the PARS granted during 1999.
The following is a summary of our Share Option activity for the years
ended December 31, 1999 and 1998 (share options in thousands):
NUMBER OF WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
---------------------------------------
Share Options outstanding at December 31, 1997..... - --
Granted....................................... 3,124 $14.95
Forfeited..................................... 22 $15.34
Exercised or expired.......................... -- --
----- ------
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
===== ======
30
33
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
Share Options outstanding at December 31, 1999 have exercise prices
between $12.94 and $18.69, with a weighted average exercise price of $14.67 and
a weighted average remaining contractual life of 9.40 years. At December 31,
1999, there were approximately 1.3 million Share Options exercisable at a
weighted average exercise price of $14.91 and a weighted average remaining
contractual life of 8.20 years.
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, 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, 1999 1998
------------------------------------------------------------------------------------------
Net Income............................
As reported...................... $ 21,731 $16,491
Pro forma........................ $ 20,521 $15,312
Basic Net Income Per Share............
As reported...................... $ 1.01 $ 0.79
Pro forma........................ $ 0.95 $ 0.73
Diluted Net Income Per Share..........
As reported...................... $ 1.01 $ 0.79
Pro forma........................ $ 0.95 $ 0.73
The Black-Scholes option pricing model has been used to estimate the value
of the Share Options granted during 1999 and 1998. For Share Options issued
during 1999 the model uses a risk-free interest rate of 6.67%, a dividend growth
rate of 5.0%, 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 growth rate of 10.0%, stock volatility of
21.75% with an expected Share Option life of 4 years.
12. STOCK WARRANTS
As of December 31, 1999, we had warrants outstanding to acquire a total of
3,141,952 common shares. Warrants for a total of 2,691,952 common shares were
exercisable by the holders on that date. Warrants for a total of 400,000 common
shares became exercisable for 25% of the common shares each year over a
four-year period beginning on January 5, 2000. The warrant for the remaining
50,000 common shares will become exercisable beginning on January 31, 2000. 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 ten 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.
13. 401(k) PLAN
During 1998, we adopted the Capital Automotive L.P. Employee 401(k) Plan
(the "401(k) Plan") available to all employees hired prior to April 1, 1998 who
are at least 21 years of age. Employees hired subsequent to April 1, 1998 are
eligible to participate in the 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 plan at the discretion of
31
34
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
our management. As of December 31, 1999 no matching or discretionary
contributions had been paid. However, during December 1999, we announced that we
intended to make matching contributions for the 2000 plan year to all
participants in the 401(k) Plan. We will match 20% of the participant's elected
deferral contribution during 2000 (subject to maximum limits) and our matching
contributions will vest ratably over five years from each employee's date of
service.
14. 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 1998,
3,184,700 common shares were repurchased at an average price of $10.51 per
common share. There were no common shares repurchased during 1999. Subsequent to
December 31, 1999, through our common share repurchase program, we repurchased
900,000 common shares at an average price of $10.96 per common share. In
conjunction with the common share repurchases, the Operating Partnership
redeemed an equivalent number of Units from the Company for equivalent purchase
prices.
15. DIVIDEND DECLARATION
On December 6, 1999 our Board of Trustees declared a cash dividend of
$0.36 per share for the fourth quarter ended December 31, 1999, to shareholders
of record as of December 31, 1999. The dividend was paid on January 31, 2000.
Dividends declared to shareholders during 1999 and 1998 totaled $1.38 per share
and $0.876 per share, respectively. Of total dividends declared, the amount that
is characterized as ordinary income for tax reporting purposes for 1999 and 1998
is $1.18 per share and $0.861 per share, respectively. None of the amounts
declared in 1999 and 1998 were characterized as return on capital.
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the year ended December 31, 1999
and 1998 is as follows (in thousands, except per share amounts):
QUARTER ENDED
----------------------------------------------------------
MARCH 31* JUNE 30 SEPTEMBER 30 DECEMBER 31
----------------------------------------------------------
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
1998
----
Revenue................... $ 3,321 $ 8,545 $ 10,363 $ 12,702
Net Income................ $ 1,702 $ 4,747 $ 5,221 $ 4,821
Diluted Earnings Per Share* $ 0.14 $ 0.19 $ 0.21 $ 0.22
Weighted Average Number of
Shares--Diluted......... 12,267 24,876 24,713 21,907
*Although the Company was formed prior to January 1, 1998, it did not complete
its initial public offering until February 19, 1998, at which time it began
generating rental income. This resulted in a difference between the sum of
each quarter's diluted earnings per share of $0.76 and the actual diluted
earnings per share calculation for 1998 of $0.79.
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
32
35
CAPITAL AUTOMOTIVE REIT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
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 its directly and indirectly owned subsidiaries.
TENANT CONCENTRATION
Sonic accounted for approximately 11.6% of our total revenue, and
approximately 11.8% of our total rental revenue for the year ended December 31,
1999 and approximately 22.6% of our total annualized rental revenue, excluding
straight-line rental income, as of December 31, 1999. Failure of Sonic to pay
rent could materially affect our income if we are not able to re-lease the
properties in a timely manner. There was no other tenant that exceeded 10% of
our total revenue, or total rental revenue for the year ended December 31, 1999,
or total annualized rental revenue, excluding straight-line rental income, as of
December 31, 1999. For the year ended December 31, 1998, affiliates of the
Rosenthal Automotive Organization ("Rosenthal") accounted for approximately
17.7% of our total revenue, approximately 22.9% of our total rental revenue and,
as of December 31, 1998, approximately 13.5% of our total annualized rental
revenue, excluding straight-line rental income. Due to the acquisition of
properties during 1999, Rosenthal accounted for approximately 9.4% of our total
revenue and approximately 9.6% of our total rental revenue for the year ended
December 31, 1999, and approximately 7.4% of our total annualized rental
revenue, excluding straight-line rental income, as of December 31, 1999.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
33
36
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.
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.
10.2* Form of Indemnification Agreement executed by certain trustees and
officers of Capital Automotive REIT.
10.8* Form of Option Agreement.
10.10* FBR Asset Investment Purchase Agreement.
10.11* FBR Registration Rights Agreement.
10.35* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Thomas D. Eckert.
10.36* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Scott M. Stahr.
10.37* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Donald L. Keithley.
10.38* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and David S. Kay.
10.42** Employment Agreement by and between Capital Automotive L.P. and John M.
Weaver.
10.44- Loan Agreement dated as of July 7, 1999, between CAR CZ L.L.C., CARS-FEN,
L.L.C., CAR
34
37
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.
10.47-- 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.
10.50## Form of 1998 Equity Incentive Plan, as amended.
21.2+ Subsidiaries of Company.
23.1+ Consent of Arthur Andersen LLP.
25.0+ Power of Attorney (included on signature page).
27.0+ Financial Data Schedule.
99.8++ Revolving Loan Agreement dated as of March 4, 1999 among Comerica Bank
and Capital Automotive, L.P., et al.
99.9.. 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.
99.10.. 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 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 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, 1998 filed on November 12, 1998 (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 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, 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.
35
38
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 21st day of March 2000.
Capital Automotive REIT
By: /s/ THOMAS D. ECKERT
------------------------------
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 Executive March 21, 2000
---------------------------- Officer and Trustee (principal
Thomas D. Eckert executive officer)
/s/ DAVID S. KAY Vice President and Chief March 21, 2000
---------------------------- Financial Officer (principal
David S. Kay financial and accounting officer)
/s/ CRAIG L. FULLER Trustee March 21, 2000
----------------------------
Craig L. Fuller
/s/ DAVID GLADSTONE Trustee March 21, 2000
----------------------------
David Gladstone
/s/ WILLIAM E. HOGLUND Trustee March 21, 2000
----------------------------
William E. Hoglund
/s/ R. MICHAEL MCCULLOUGH Trustee March 21, 2000
----------------------------
R. Michael McCullough
/s/ LEE P. MUNDER Trustee March 21, 2000
----------------------------
Lee P. Munder
/s/ JOHN J. POHANKA Chairman of the Board March 21, 2000
----------------------------
John J. Pohanka
/s/ JOHN E. REILLY Trustee March 21, 2000
----------------------------
John E. Reilly
/s/ ROBERT M. ROSENTHAL Trustee March 21, 2000
----------------------------
Robert M. Rosenthal
/s/ VINCENT A. SHEEHY Trustee March 21, 2000
----------------------------
Vincent A. Sheehy
/s/ WILLIAM R. SWANSON Trustee March 21, 2000
----------------------------
William R. Swanson
39
Index to 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.
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.
10.2* Form of Indemnification Agreement executed by certain trustees and
officers of Capital Automotive REIT.
10.8* Form of Option Agreement.
10.10* FBR Asset Investment Purchase Agreement.
10.11* FBR Registration Rights Agreement.
10.35* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Thomas D. Eckert.
10.36* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Scott M. Stahr.
10.37* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and Donald L. Keithley.
10.38* Amended and Restated Employment Agreement by and between Capital
Automotive L.P. and David S. Kay.
10.42** Employment Agreement by and between Capital Automotive L.P. and John M.
Weaver.
10.44- 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.
10.47-- 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.
10.50## Form of 1998 Equity Incentive Plan, as amended.
21.2+ Subsidiaries of Company.
23.1+ Consent of Arthur Andersen LLP.
25.0+ Power of Attorney (included on signature page).
27.0+ Financial Data Schedule.
99.8++ Revolving Loan Agreement dated as of March 4, 1999 among Comerica Bank
and Capital Automotive, L.P., et al.
99.9.. 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.
99.10.. 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 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 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, 1998 filed on November 12, 1998 (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 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, 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.
40
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- -------------------------------------------------------------------------------------------------------
ABRA Auto Body & Glass, LLC ABRA Auto Body & Glass LLC Chattanooga,TN
ABRA AUTO BODY & GLASS, LLC TOTAL
Auffenberg Automotive Group Auffenburg Ford North O'Fallon,IL
Auffenberg Automotive Group St. Clair Auto Mall O'Fallon,IL
Auffenberg Automotive Group Auffenburg Ford Belleville,IL
AUFFENBERG AUTOMOTIVE GROUP TOTAL
AutoNation T-West Sales & Service, Inc. Las Vegas,NV
AutoNation Westgate Chevrolet, Inc. Amarillo,TX
AutoNation Midway Chevrolet, Inc. Amarillo,TX
AutoNation Quality Nissan, Inc. Amarillo,TX
AutoNation Park Place Mercedes - Houston Houston,TX
AutoNation Plains Chevrolet, Inc. Amarillo,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 Toyota of Hollywood Hollywood,FL
Craig Zinn Automotive Group County Line Lexus Hollywood,FL
Craig Zinn Automotive Group Truck Center Hollywood,FL
Craig Zinn Automotive Group Quick Service Center Hollywood,FL
CRAIG ZINN AUTOMOTIVE GROUP TOTAL
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 Motors Group Brad Fenton Motors of Ardmore Ardmore,OK
Fenton Motors Group Ada Ford Lincoln-Mercury Ada,OK
Fenton Motors Group Brad Fenton Motors McAlester,OK
FENTON MOTORS GROUP TOTAL
FirstAmerica Automotive Kramer Honda Santa Monica,CA
FirstAmerica Automotive Kramer Volvo Santa Monica,CA
FirstAmerica Automotive First America San Rafael San Rafael,CA
FIRSTAMERICA AUTOMOTIVE TOTAL
Freightliner of Dothan Freightliner of Dothan Dothan,AL
FREIGHTLINER OF DOTHAN TOTAL
Gross Amount at December 31, 1999
------------------------------------------
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 18,631 08/14/1999 30 years
ABRA AUTO BODY & GLASS, LLC TOTAL 452,668 1,490,413 1,943,081 18,631
Auffenberg Automotive Group 1,816,149 2,310,324 4,126,473 41,714 06/30/1999 30 years
Auffenberg Automotive Group 5,672,561 7,595,913 13,268,473 137,148 06/30/1999 30 years
Auffenberg Automotive Group 663,479 2,124,663 2,788,142 20,656 09/10/1999 30 years
AUFFENBERG AUTOMOTIVE GROUP TOTAL 8,152,189 12,030,899 20,183,088 199,519
AutoNation 5,540,606 8,697,735 14,238,341 631,386 05/19/1998 30 years
AutoNation 1,235,516 3,181,296 4,416,812 270,462 02/25/1998 30 years
AutoNation 871,516 2,245,296 3,116,812 190,887 02/25/1998 30 years
AutoNation 283,516 733,295 1,016,811 62,342 02/25/1998 30 years
AutoNation 9,086,654 10,719,435 19,806,090 600,547 09/28/1998 30 years
AutoNation 1,324,616 3,400,896 4,725,512 289,132 02/25/1998 30 years
AUTONATION TOTAL 18,342,424 28,977,953 47,320,377 2,044,756
Behlmann Automotive 104,005 203,620 307,625 13,938 06/25/1998 30 years
Behlmann Automotive 1,042,674 1,865,812 2,908,485 127,715 06/25/1998 30 years
Behlmann Automotive 4,637,602 4,383,835 9,021,437 300,075 06/25/1998 30 years
BEHLMANN AUTOMOTIVE TOTAL 5,784,281 6,453,267 12,237,548 441,728
Cherner Automotive Group 4,026,275 2,405,880 6,432,155 204,539 02/19/1998 30 years
CHERNER AUTOMOTIVE GROUP TOTAL 4,026,275 2,405,880 6,432,155 204,539
Craig Zinn Automotive Group 3,014,998 2,592,184 5,607,183 68,405 03/05/1999 30 years
Craig Zinn Automotive Group 2,061,645 1,314,700 3,376,345 34,693 03/05/1999 30 years
Craig Zinn Automotive Group 628,115 87,278 715,393 2,303 03/05/1999 30 years
Craig Zinn Automotive Group 423,054 92,339 515,393 2,437 03/05/1999 30 years
CRAIG ZINN AUTOMOTIVE GROUP TOTAL 6,127,812 4,086,501 10,214,313 107,838
Crown Auto World 1,077,838 5,258,691 6,336,529 229,262 12/11/1998 30 years
CROWN AUTO WORLD TOTAL 1,077,838 5,258,691 6,336,529 229,262
Dealer's Auto Auction 1,129,351 8,477,273 9,606,624 404,714 11/25/1998 30 years
DEALER'S AUTO AUCTION TOTAL 1,129,351 8,477,273 9,606,624 404,714
Fenton Motors Group 205,101 1,816,079 2,021,180 79,175 12/29/1998 30 years
Fenton Motors Group 237,123 2,797,228 3,034,351 121,950 12/07/1998 30 years
Fenton Motors Group 356,120 3,678,231 4,034,351 160,359 12/07/1998 30 years
FENTON MOTORS GROUP TOTAL 798,344 8,291,537 9,089,881 361,484
FirstAmerica Automotive 3,830,427 2,882,169 6,712,596 12,011 11/10/1999 30 years
FirstAmerica Automotive 2,560,136 352,460 2,912,596 1,469 11/10/1999 30 years
FirstAmerica Automotive 2,846,834 - 2,846,834 - 01/14/1999
FIRSTAMERICA AUTOMOTIVE TOTAL 9,237,397 3,234,629 12,472,026 13,480
Freightliner of Dothan 490,443 2,193,587 2,684,030 141,066 07/23/1998 30 years
FREIGHTLINER OF DOTHAN TOTAL 490,443 2,193,587 2,684,030 141,066
41
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- -------------------------------------------------------------------------------------------------------
Group 1 Automotive, Inc. Maxwell Chrysler Five Pack Taylor,TX
Group 1 Automotive, Inc. Acura Southwest Houston,TX
Group 1 Automotive, Inc. Clear Lake Lexus Clear Lake,TX
Group 1 Automotive, Inc. Sterling McCall Toyota - Club Creek Drive Houston,TX
Group 1 Automotive, Inc. Sterling McCall Toyota 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. Toyota Body Shop Houston,TX
Group 1 Automotive, Inc. Town North Nissan/Mitsubishi Austin,TX
Group 1 Automotive, Inc. AJ Foyt Honda/Isuzu Houston,TX
Group 1 Automotive, Inc. Round Rock Nissan Round Rock,TX
Group 1 Automotive, Inc. Bohn Brothers Toyota Harvey,LA
Group 1 Automotive, Inc. Sunshine Buick, Pontiac, GMC Truck Albequerque,NM
Group 1 Automotive, Inc. Casa Chevrolet Albequerque,NM
Group 1 Automotive, Inc. Luby Chevrolet Lakewood,CO
Group 1 Automotive, Inc. Don Bohn Ford & Training Ctr Harvey,LA
Group 1 Automotive, Inc. Southwest Freeway Land Houston,TX
Group 1 Automotive, Inc. Town North Nissan/Mitsubishi Land Austin,TX
Group 1 Automotive, Inc. Round Rock Nissan Land Round Rock,TX
GROUP 1 AUTOMOTIVE, INC. TOTAL
Gunn Automotive Group Gunn Pontiac-GMC San Antonio,TX
Gunn Automotive Group Gunn Dodge San Antonio,TX
Gunn Automotive Group Gunn Land Rover San Antonio,TX
Gunn Automotive Group Gunn Chevrolet & Body Shop San Antonio,TX
Gunn Automotive Group Gunn Nissan San Antonio,TX
GUNN AUTOMOTIVE GROUP TOTAL
Gurley-Leep Automotive Group Gurley-Leep Olds-Cadillac &
Saturn of Michiana Mishawaka,IN
Gurley-Leep Automotive Group University Park Chrysler-Plymouth Mishawaka,IN
Gurley-Leep Automotive Group Gurley-Leep Imports Elkhart,IN
Gurley-Leep Automotive Group Gurley-Leep Buick-GMC-Mercedes-Dodge Mishawaka,IN
GURLEY-LEEP AUTOMOTIVE GROUP TOTAL
Hand Automotive Group Saturn Airport Marina Los Angeles,CA
HAND AUTOMOTIVE GROUP TOTAL
Hoz de Vila Automotive Sport Hyundai/Dodge Pleasantville,NJ
Hoz de Vila Automotive Dodge City Burlington,NJ
HOZ DE VILA AUTOMOTIVE TOTAL
Jackson Automotive Group Jackson Mazda Greenville,TX
Jackson Automotive Group Jackson Autoplex Commerce,TX
Jackson Automotive Group Jackson Autoplex-Used Cars Greenville,TX
Jackson Automotive Group Jackson Cadillac-Oldsmobile-Pontiac,
Inc. Sulphur Springs,TX
Jackson Automotive Group Jackson Motor Company Greenville,TX
JACKSON AUTOMOTIVE GROUP TOTAL
Kelley Automotive Group Kelley Buick Atlanta Chamblee,GA
Gross Amount at December 31, 1999
------------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
- -----------------------------------------------------------------------------------------------------------------------------
Group 1 Automotive, Inc. 114,807 1,167,895 1,282,702 50,847 12/30/1998 30 years
Group 1 Automotive, Inc. 2,336,436 2,098,715 4,435,152 91,461 12/30/1998 30 years
Group 1 Automotive, Inc. 1,219,635 4,531,450 5,751,085 56,643 08/26/1999 30 years
Group 1 Automotive, Inc. 1,236,831 1,218,208 2,455,040 53,072 12/30/1998 30 years
Group 1 Automotive, Inc. 4,100,143 5,557,985 9,658,129 177,532 01/06/1999 30 years
Group 1 Automotive, Inc. 223,233 632,551 855,784 20,188 01/06/1999 30 years
Group 1 Automotive, Inc. 3,151,187 5,632,950 8,784,137 179,925 01/06/1999 30 years
Group 1 Automotive, Inc. 216,378 951,547 1,167,925 30,376 01/06/1999 30 years
Group 1 Automotive, Inc. 1,590,983 3,201,370 4,792,353 84,481 03/24/1999 30 years
Group 1 Automotive, Inc. 1,496,005 2,538,835 4,034,841 110,637 12/30/1998 30 years
Group 1 Automotive, Inc. 1,017,942 1,982,518 3,000,460 63,314 01/13/1999 30 years
Group 1 Automotive, Inc. 2,918,814 2,361,344 5,280,159 9,839 11/15/1999 30 years
Group 1 Automotive, Inc. 3,132,901 2,254,275 5,387,175 28,178 08/06/1999 30 years
Group 1 Automotive, Inc. 2,508,727 2,887,770 5,396,497 4,011 12/16/1999 30 years
Group 1 Automotive, Inc. 2,737,284 4,299,889 7,037,174 187,415 12/30/1998 30 years
Group 1 Automotive, Inc. 5,275,280 4,371,263 9,646,543 18,214 11/15/1999 30 years
Group 1 Automotive, Inc. 1,132,586 - 1,132,586 - 12/30/1998
Group 1 Automotive, Inc. 779,333 - 779,333 - 03/24/1999
Group 1 Automotive, Inc. 763,882 - 763,882 - 01/13/1999
GROUP 1 AUTOMOTIVE, INC. TOTAL 35,952,390 45,688,567 81,640,956 1,166,134
Gunn Automotive Group 2,239,624 3,326,606 5,566,230 200,150 08/25/1998 30 years
Gunn Automotive Group 1,964,831 2,051,398 4,016,229 123,425 08/25/1998 30 years
Gunn Automotive Group 1,057,209 759,909 1,817,118 45,721 08/25/1998 30 years
Gunn Automotive Group 3,495,048 5,024,374 8,519,421 302,298 08/25/1998 30 years
Gunn Automotive Group 1,331,537 1,184,692 2,516,228 71,278 08/25/1998 30 years
GUNN AUTOMOTIVE GROUP TOTAL 10,088,248 12,346,979 22,435,227 742,872
Gurley-Leep Automotive Group
2,961,116 3,670,103 6,631,220 175,229 11/05/1998 30 years
Gurley-Leep Automotive Group 1,478,019 920,201 2,398,220 43,930 11/05/1998 30 years
Gurley-Leep Automotive Group 396,114 1,124,106 1,520,220 53,664 11/05/1998 30 years
Gurley-Leep Automotive Group 5,190,840 7,142,324 12,333,164 340,991 11/05/1998 30 years
GURLEY-LEEP AUTOMOTIVE GROUP TOTAL 10,026,090 12,856,734 22,882,824 613,814
Hand Automotive Group 2,341,054 1,502,527 3,843,580 96,625 07/22/1998 30 years
HAND AUTOMOTIVE GROUP TOTAL 2,341,054 1,502,527 3,843,580 96,625
Hoz de Vila Automotive 1,297,432 1,258,745 2,556,177 29,720 04/07/1999 30 years
Hoz de Vila Automotive 636,471 1,795,592 2,432,063 42,396 04/07/1999 30 years
HOZ DE VILA AUTOMOTIVE TOTAL 1,933,904 3,054,336 4,988,240 72,116
Jackson Automotive Group 111,264 549,476 660,739 28,508 10/23/1998 30 years
Jackson Automotive Group 54,129 581,612 635,741 35,139 10/23/1998 20 years
Jackson Automotive Group 279,686 83,943 363,629 4,355 10/23/1998 30 years
Jackson Automotive Group 266,308 1,121,394 1,387,702 58,180 10/23/1998 30 years
Jackson Automotive Group 260,000 - 260,000 - 10/23/1998
JACKSON AUTOMOTIVE GROUP TOTAL 971,387 2,336,424 3,307,811 126,182
Kelley Automotive Group 3,249,737 2,844,383 6,094,119 194,699 06/17/1998 30 years
42
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- -------------------------------------------------------------------------------------------------------
Kelley Automotive Group Kelley Buick Roswell Roswell,GA
Kelley Automotive Group Courtesy Motors Decatur,IN
Kelley Automotive Group Saturn of Gwinnett Duluth,GA
Kelley Automotive Group TST Car/Van Wash Fort Wayne,IN
Kelley Automotive Group Tom Kelley Buick Fort Wayne,IN
Kelley Automotive Group Tom Kelley Pontiac/GMC Fort Wayne,IN
Kelley Automotive Group Tom Kelley Cadillac Fort Wayne,IN
Kelley Automotive Group Northside Chevrolet Evansville,IN
Kelley Automotive Group Kelley Chevrolet Fort Wayne,IN
Kelley Automotive Group Saturn of Fort Wayne Fort Wayne,IN
Kelley Automotive Group Saturn of Fort Wayne Fort Wayne,IN
Kelley Automotive Group Midwest Auto Parts Fort Wayne,IN
KELLEY AUTOMOTIVE GROUP TOTAL
Ken Dixon Automotive Ken Dixon Chevrolet Waldorf,MD
KEN DIXON AUTOMOTIVE TOTAL
Kline Automotive Kline Toyota Greenbrier/
Kline Chevrolet Chesapeake,VA
Kline Automotive Kline Undeveloped Lot Chesapeake,VA
KLINE AUTOMOTIVE TOTAL
Larry H. Miller Group Denver Toyota Denver,CO
LARRY H. MILLER GROUP TOTAL
Lithia Motors Grants Pass Auto Mart Grants Pass,OR
Lithia Motors Lithia Isuzu-Suzuki Medford,OR
Lithia Motors Lithia Toyota/Mazda Medford,OR
Lithia Motors Lithia Dodge Medford,OR
Lithia Motors Lithia Saturn Medford,OR
Lithia Motors Lithia Honda Medford,OR
Lithia Motors Roundtree Chevrolet-Lincoln Boise,ID
LITHIA MOTORS TOTAL
Lynn Alexander Automotive Group Fiesta Dodge Chrysler-Plymouth Jeep Eagle Big Spring,TX
Lynn Alexander Automotive Group Chrysler-Plymouth Jeep-Eagle (Autoplex) San Angelo,TX
Lynn Alexander Automotive Group Dodge Lincoln-Mercury Nissan (Autoplex) San Angelo,TX
Lynn Alexander Automotive Group All-American Chevrolet, Inc. San Angelo,TX
LYNN ALEXANDER AUTOMOTIVE GROUP TOTAL
Mark Miller Automotive Group Mark Miller Toyota Salt Lake City,UT
Mark Miller Automotive Group Mark Miller Pontiac Salt Lake City,UT
Mark Miller Automotive Group Mark Miller Toyota-Used Cars Salt Lake City,UT
Mark Miller Automotive Group Undeveloped Lot Adjacent to Pontiac Salt Lake City,UT
MARK MILLER AUTOMOTIVE GROUP TOTAL
McCluskey Chevrolet McCluskey Chevrolet --555 E. Galbraith Cincinnati,OH
McCluskey Chevrolet McCluskey Chevrolet - 435 E. Galbraith Cincinnati,OH
McCluskey Chevrolet McCluskey Chevrolet -- Reading Rd. Cincinnati,OH
MCCLUSKEY CHEVROLET TOTAL
Gross Amount at December 31, 1999
------------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
- -----------------------------------------------------------------------------------------------------------------------------
Kelley Automotive Group 2,956,057 3,061,851 6,017,908 196,903 07/23/1998 30 years
Kelley Automotive Group 1,207,661 1,826,458 3,034,119 125,021 06/17/1998 30 years
Kelley Automotive Group 3,050,226 1,243,894 4,294,119 85,145 06/17/1998 30 years
Kelley Automotive Group 345,079 863,130 1,208,208 15,584 06/09/1999 30 years
Kelley Automotive Group 1,226,261 3,588,808 4,815,069 230,790 07/23/1998 30 years
Kelley Automotive Group 1,115,426 4,299,643 5,415,069 276,503 07/23/1998 30 years
Kelley Automotive Group 547,361 2,203,906 2,751,267 150,858 06/17/1998 30 years
Kelley Automotive Group 795,030 1,939,090 2,734,119 132,729 06/17/1998 30 years
Kelley Automotive Group 1,499,957 5,211,666 6,711,623 356,740 06/17/1998 30 years
Kelley Automotive Group 263,895 1,158,798 1,422,693 79,320 06/17/1998 30 years
Kelley Automotive Group 631,772 540,340 1,172,112 6,754 08/09/1999 30 years
Kelley Automotive Group 385,416 1,508,703 1,894,119 116,296 06/17/1998 20 years
KELLEY AUTOMOTIVE GROUP TOTAL 17,273,877 30,290,669 47,564,547 1,967,342
Ken Dixon Automotive 3,329,652 3,978,480 7,308,132 288,806 05/22/1998 30 years
KEN DIXON AUTOMOTIVE TOTAL 3,329,652 3,978,480 7,308,132 288,806
Kline Automotive
2,683,823 4,319,163 7,002,986 367,200 02/27/1998 30 years
Kline Automotive 1,529,567 - 1,529,567 - 02/27/1998
KLINE AUTOMOTIVE TOTAL 4,213,390 4,319,163 8,532,553 367,200
Larry H. Miller Group 1,993,036 7,243,001 9,236,037 585,786 03/31/1998 30 years
LARRY H. MILLER GROUP TOTAL 1,993,036 7,243,001 9,236,037 585,786
Lithia Motors 1,248,419 1,371,522 2,619,941 24,764 06/18/1999 30 years
Lithia Motors 1,182,429 557,500 1,739,929 10,066 06/18/1999 30 years
Lithia Motors 2,102,213 3,130,794 5,233,007 56,528 06/18/1999 30 years
Lithia Motors 2,033,425 2,710,753 4,744,178 48,944 06/18/1999 30 years
Lithia Motors 414,453 781,560 1,196,013 14,112 06/18/1999 30 years
Lithia Motors 1,360,759 1,503,668 2,864,427 27,150 06/18/1999 30 years
Lithia Motors 2,588,238 7,227,467 9,815,705 524,656 05/06/1998 30 years
LITHIA MOTORS TOTAL 10,929,936 17,283,265 28,213,200 706,219
Lynn Alexander Automotive Group 159,857 972,371 1,132,228 54,476 09/11/1998 30 years
Lynn Alexander Automotive Group 282,954 1,267,274 1,550,228 70,998 09/11/1998 30 years
Lynn Alexander Automotive Group 788,552 2,015,676 2,804,228 112,926 09/11/1998 30 years
Lynn Alexander Automotive Group 1,597,006 2,672,092 4,269,097 149,702 09/11/1998 30 years
LYNN ALEXANDER AUTOMOTIVE GROUP TOTAL 2,828,369 6,927,412 9,755,781 388,102
Mark Miller Automotive Group 1,133,391 5,119,582 6,252,972 21,332 11/05/1999 30 years
Mark Miller Automotive Group 3,431,993 1,545,979 4,977,972 6,442 11/05/1999 30 years
Mark Miller Automotive Group 3,071,102 1,431,870 4,502,972 5,966 11/05/1999 30 years
Mark Miller Automotive Group 452,972 - 452,972 - 11/05/1999
MARK MILLER AUTOMOTIVE GROUP TOTAL 8,089,459 8,097,431 16,186,890 33,739
McCluskey Chevrolet 457,295 961,450 1,418,745 28,042 02/02/1999 30 years
McCluskey Chevrolet 1,013,496 1,404,046 2,417,542 40,951 02/02/1999 30 years
McCluskey Chevrolet 515,525 1,201,554 1,717,078 35,045 02/02/1999 30 years
MCCLUSKEY CHEVROLET TOTAL 1,986,316 3,567,050 5,553,366 104,039
43
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- --------------------------------------------------------------------------------------------------------
Momentum Automotive Momentum Jaguar/Porsche/Saab Houston,TX
Momentum Automotive Momentum BMW Houston,TX
Momentum Automotive Momentum Volvo Houston,TX
Momentum Automotive Momentum Paint & Body Houston,TX
Momentum Automotive Momentum Used Car Lot Houston,TX
Momentum Automotive Barney Garver Land Rover/VW/Mazda Houston,TX
MOMENTUM AUTOMOTIVE TOTAL
Motorcars Automotive Group Motorcars Honda Cleveland Heights,OH
Motorcars Automotive Group Motorcars Oldsmobile-Pontiac Cleveland Heights,OH
Motorcars Automotive Group Motorcars West North Olmstead,OH
MOTORCARS AUTOMOTIVE GROUP TOTAL
Mulkin Automotive Group Mulkin Parking Lot Brockport,NY
Mulkin Automotive Group Mulkin Chevrolet & Courtesy
Pontiac,Buick,GMC Truck 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 Performance Motors, Inc. Atlanta,TX
Orr Automotive Orr Honda Texarkana,TX
Orr Automotive Orr Mitsubishi Texarkana,TX
Orr Automotive Orr BMW/Infiniti Shreveport,LA
Orr Automotive Orr Acura Shreveport,LA
ORR AUTOMOTIVE TOTAL
Park Place Motorcars PPM Specialists, Inc. Dallas,TX
Park Place Motorcars Park Place Lexus Plano,TX
Park Place Motorcars Park Place Motorcars Dallas,TX
Park Place Motorcars Park Place Motorcars Mid-Cities Bedford,TX
PARK PLACE MOTORCARS TOTAL
Pohanka Automotive Group Towne Toyota Mercedes-Benz Salisbury,MD
Pohanka Automotive Group Good News Mazda Salisbury,MD
Pohanka Automotive Group Pohanka Saturn, Isuzu, & Oldsmobile Marlow Heights,MD
Pohanka Automotive Group Good News Honda Salisbury,MD
Pohanka Automotive Group Pohanka Honda Marlow Heights,MD
Pohanka Automotive Group Pohanka Body Shop Marlow Heights,MD
Pohanka Automotive Group Good News Olds-Cadillac-GMC Salisbury,MD
Pohanka Automotive Group Good News Body Shop Salisbury,MD
Pohanka Automotive Group Good News Nissan Salisbury,MD
Pohanka Automotive Group Pohanka Lexus Chantilly,VA
Pohanka Automotive Group Pohanka Saturn of Bowie Bowie,MD
Gross Amount at December 31, 1999
------------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
- -----------------------------------------------------------------------------------------------------------------------------
Momentum Automotive 7,282,438 11,151,887 18,434,325 624,775 09/01/1998 30 years
Momentum Automotive 3,676,493 8,185,594 11,862,087 261,484 12/04/1998 30 years
Momentum Automotive 1,383,124 3,282,423 4,665,546 183,895 09/01/1998 30 years
Momentum Automotive 1,191,776 3,473,983 4,665,759 194,627 09/01/1998 30 years
Momentum Automotive 638,118 1,654,978 2,293,096 79,008 11/25/1998 30 years
Momentum Automotive 1,062,966 1,455,407 2,518,373 30,321 05/17/1999 30 years
MOMENTUM AUTOMOTIVE TOTAL 15,234,915 29,204,271 44,439,187 1,374,109
Motorcars Automotive Group 818,578 4,279,543 5,098,121 222,031 10/28/1998 30 years
Motorcars Automotive Group 656,210 2,122,204 2,778,414 110,104 10/28/1998 30 years
Motorcars Automotive Group 1,974,998 3,187,807 5,162,804 165,389 10/28/1998 30 years
MOTORCARS AUTOMOTIVE GROUP TOTAL 3,449,785 9,589,554 13,039,339 497,524
Mulkin Automotive Group 30,639 26,769 57,407 706 03/25/1999 30 years
Mulkin Automotive Group 356,033 2,164,438 2,520,471 57,117 03/25/1999 30 years
MULKIN AUTOMOTIVE GROUP TOTAL 386,672 2,191,207 2,577,879 57,824
Nebco of Cleveland, Inc. 581,158 1,891,855 2,473,013 23,648 08/14/1999 30 years
NEBCO OF CLEVELAND, INC. TOTAL 581,158 1,891,855 2,473,013 23,648
Noarus Auto Group 4,898,755 1,950,690 6,849,445 125,446 07/22/1998 30 years
NOARUS AUTO GROUP TOTAL 4,898,755 1,950,690 6,849,445 125,446
O'Rielly Motor Company 4,515,062 5,321,125 9,836,187 386,271 05/22/1998 30 years
O'RIELLY MOTOR COMPANY TOTAL 4,515,062 5,321,125 9,836,187 386,271
Orr Automotive 459,509 2,571,824 3,031,333 46,436 06/30/1999 30 years
Orr Automotive 1,006,979 1,040,405 2,047,384 58,288 09/16/1998 30 years
Orr Automotive 142,496 169,189 311,684 10,179 08/28/1998 30 years
Orr Automotive 497,268 715,262 1,212,531 43,035 08/27/1998 30 years
Orr Automotive 536,735 1,380,648 1,917,383 83,069 08/27/1998 30 years
ORR AUTOMOTIVE TOTAL 2,642,987 5,877,328 8,520,315 241,006
Park Place Motorcars 528,767 1,574,618 2,103,385 88,217 09/28/1998 30 years
Park Place Motorcars 7,318,505 6,483,194 13,801,699 363,215 09/28/1998 30 years
Park Place Motorcars 6,373,615 12,920,058 19,293,674 412,724 01/08/1999 30 years
Park Place Motorcars 1,948,747 5,824,772 7,773,518 40,450 10/12/1999 30 years
PARK PLACE MOTORCARS TOTAL 16,169,634 26,802,642 42,972,276 904,607
Pohanka Automotive Group 406,556 163,715 570,271 13,919 02/27/1998 30 years
Pohanka Automotive Group 246,923 167,699 414,622 14,257 02/27/1998 30 years
Pohanka Automotive Group 2,005,304 2,358,089 4,363,393 200,476 02/19/1998 30 years
Pohanka Automotive Group 428,563 159,768 588,331 13,583 02/27/1998 30 years
Pohanka Automotive Group 771,065 2,934,756 3,705,821 249,502 02/19/1998 30 years
Pohanka Automotive Group 614,767 98,007 712,774 8,332 02/19/1998 30 years
Pohanka Automotive Group 634,419 197,652 832,071 16,804 02/27/1998 30 years
Pohanka Automotive Group 1,122,544 166,184 1,288,728 15,580 02/27/1998 30 years
Pohanka Automotive Group 220,415 230,757 451,172 19,618 02/27/1998 30 years
Pohanka Automotive Group 2,017,383 1,422,902 3,440,285 120,970 02/19/1998 30 years
Pohanka Automotive Group 3,600,517 504,858 4,105,375 42,921 02/19/1998 30 years
44
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- -------------------------------------------------------------------------------------------------------
Pohanka Automotive Group Pohanka Cadillac/Hyundai/Nissan Fredericksburg,VA
Pohanka Automotive Group Pohanka Acura & Chevy Chantilly,VA
Pohanka Automotive Group Pohanka Undeveloped Lot Chantilly,VA
Pohanka Automotive Group Pohanka Hyundai Marlow Heights,MD
POHANKA AUTOMOTIVE GROUP TOTAL
Rosenthal Automotive Group Rosenthal Nissan/Acura/Mazda/Isuzu Gaithersburg,MD
Rosenthal Automotive Group Rosenthal Infiniti-Mazda-Nissan Tyson's Corner,VA
Rosenthal Automotive Group Rosenthal Body Shop Tyson's Corner,VA
Rosenthal Automotive Group Rosenthal Storage Lot Arlington,VA
Rosenthal Automotive Group Rosenthal Mazda Arlington,VA
Rosenthal Automotive Group Rosenthal Chevrolet/Jeep/Eagle Arlington,VA
Rosenthal Automotive Group Rosenthal Honda/Jaguar Tyson's Corner,VA
ROSENTHAL AUTOMOTIVE GROUP TOTAL
Roundtree Automotive Group Champion Mitsubishi Shreveport,LA
Roundtree Automotive Group Roundtree Olds-Cadillac Shreveport,LA
Roundtree Automotive Group Champion Ford Shreveport,LA
Roundtree Automotive Group Roundtree Hyundai-Subaru Shreveport,LA
Roundtree Automotive Group Auto Trim Design (Roundtree) Shreveport,LA
Roundtree Automotive Group Brocks Service Facility Shreveport,LA
Roundtree Automotive Group Roundtree-Car Central Bossier City,LA
Roundtree Automotive Group Roundtree Lake Charles Land Lake Charles,LA
ROUNDTREE AUTOMOTIVE GROUP TOTAL
Saturn Retail Enterprises Saturn of Regency Jacksonville,FL
Saturn Retail Enterprises Saturn of the Avenues Jacksonville,FL
Saturn Retail Enterprises Saturn of Houston-Gulf Freeway Houston,TX
Saturn Retail Enterprises Saturn of Plano Plano,TX
Saturn Retail Enterprises Saturn of Chattanooga Chattanooga,TN
SATURN RETAIL ENTERPRISES TOTAL
Sheehy Auto Stores Sheehy Lincoln-Mercury/Mitsubishi Woodbridge,VA
Sheehy Auto Stores Chapman Ford Sales Philadelphia,PA
Sheehy Auto Stores Sheehy Ford of Marlow Heights Marlow Heights,MD
Sheehy Auto Stores Sheehy Ford of Springfield Springfield,VA
SHEEHY AUTO STORES TOTAL
Sonic Automotive, Inc. Freeland-BMW Nissan Ft. Myers,FL
Sonic Automotive, Inc. HMC Finance Office Building Port Orange,FL
Sonic Automotive, Inc. Tom Williams Used Cars Birmingham,AL
Sonic Automotive, Inc. Tom Williams Buick Birmingham,AL
Sonic Automotive, Inc. Lone Star Ford Houston,TX
Sonic Automotive, Inc. Shottenkirk Honda Pensacola,FL
Sonic Automotive, Inc. Lone Star Nissan Olds The Medows,TX
Sonic Automotive, Inc. Manhattan BMW of Fairfax Fairfax,VA
Sonic Automotive, Inc. Global BMW Atlanta,GA
Sonic Automotive, Inc. Freeland-Mercedes Ft. Myers,FL
Sonic Automotive, Inc. Clearwater Toyota & Mitsubishi Clearwater,FL
Sonic Automotive, Inc. Freeland-Honda Ft. Myers,FL
Gross Amount at December 31, 1999
-----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
- -----------------------------------------------------------------------------------------------------------------------------
Pohanka Automotive Group 1,631,722 3,248,564 4,880,286 160,097 02/19/1998 30 years
Pohanka Automotive Group 3,367,127 4,308,211 7,675,338 366,269 02/19/1998 30 years
Pohanka Automotive Group 2,455,659 6,284 2,461,943 534 02/19/1998 30 years
Pohanka Automotive Group 888,234 683,156 1,571,390 58,079 02/19/1998 30 years
POHANKA AUTOMOTIVE GROUP TOTAL 20,411,198 16,650,603 37,061,801 1,300,941
Rosenthal Automotive Group 6,810,506 4,998,589 11,809,095 424,962 02/19/1998 30 years
Rosenthal Automotive Group 19,396,815 4,446,289 23,843,104 378,207 02/19/1998 30 years
Rosenthal Automotive Group 665,989 419,089 1,085,078 35,629 02/19/1998 30 years
Rosenthal Automotive Group 4,894,106 15,114 4,909,220 1,285 02/19/1998 30 years
Rosenthal Automotive Group 4,874,676 493,251 5,367,927 41,934 02/19/1998 30 years
Rosenthal Automotive Group 5,009,272 1,783,436 6,792,708 151,621 02/19/1998 30 years
Rosenthal Automotive Group 9,281,370 2,167,729 11,449,099 184,293 02/19/1998 30 years
ROSENTHAL AUTOMOTIVE GROUP TOTAL 50,932,735 14,323,497 65,256,232 1,217,932
Roundtree Automotive Group 876,554 1,139,964 2,016,518 78,031 06/04/1998 30 years
Roundtree Automotive Group 1,470,535 1,931,846 3,402,381 132,235 06/04/1998 30 years
Roundtree Automotive Group 2,236,421 4,792,478 7,028,899 328,046 06/04/1998 30 years
Roundtree Automotive Group 364,792 251,726 616,518 19,404 06/04/1998 20 years
Roundtree Automotive Group 123,612 470,906 594,518 32,234 06/04/1998 30 years
Roundtree Automotive Group 232,351 634,167 866,518 43,409 06/04/1998 30 years
Roundtree Automotive Group 406,884 409,627 816,511 28,039 06/04/1998 30 years
Roundtree Automotive Group 2,194,235 - 2,194,235 - 09/01/1998
ROUNDTREE AUTOMOTIVE GROUP TOTAL 7,905,383 9,630,714 17,536,098 661,398
Saturn Retail Enterprises 853,048 1,678,422 2,531,470 6,993 11/15/1999 30 years
Saturn Retail Enterprises 1,154,281 2,116,261 3,270,543 55,846 03/25/1999 30 years
Saturn Retail Enterprises 2,094,123 2,469,920 4,564,043 65,178 03/25/1999 30 years
Saturn Retail Enterprises 2,331,099 2,139,854 4,470,953 56,468 03/25/1999 30 years
Saturn Retail Enterprises 1,433,676 1,752,271 3,185,947 21,903 08/14/1999 30 years
SATURN RETAIL ENTERPRISES TOTAL 7,866,228 10,156,728 18,022,956 206,389
Sheehy Auto Stores 1,756,405 824,206 2,580,611 70,071 02/19/1998 30 years
Sheehy Auto Stores 3,006,604 8,082 3,014,686 687 02/19/1998 30 years
Sheehy Auto Stores 1,212,923 933,763 2,146,686 87,540 02/19/1998 30 years
Sheehy Auto Stores 4,221,356 2,107,330 6,328,686 179,158 02/19/1998 30 years
SHEEHY AUTO STORES TOTAL 10,197,288 3,873,381 14,070,669 337,456
Sonic Automotive, Inc. 4,274,695 1,871,965 6,146,660 7,800 11/04/1999 30 years
Sonic Automotive, Inc. 426,576 202,295 628,870 2,529 08/14/1999 30 years
Sonic Automotive, Inc. 427,565 374,296 801,862 4,679 08/14/1999 30 years
Sonic Automotive, Inc. 2,035,519 2,127,823 4,163,342 26,598 08/14/1999 30 years
Sonic Automotive, Inc. 4,985,549 6,215,450 11,201,000 77,693 08/14/1999 30 years
Sonic Automotive, Inc. 943,985 1,750,263 2,694,248 17,016 09/01/1999 30 years
Sonic Automotive, Inc. 3,013,604 3,266,078 6,279,682 40,826 08/14/1999 30 years
Sonic Automotive, Inc. 3,026,528 2,421,474 5,448,002 30,268 08/14/1999 30 years
Sonic Automotive, Inc. 4,761,991 5,687,137 10,449,129 71,089 08/14/1999 30 years
Sonic Automotive, Inc. 1,549,131 1,464,755 3,013,886 6,103 11/04/1999 30 years
Sonic Automotive, Inc. 4,136,070 3,915,854 8,051,924 219,382 09/18/1998 30 years
Sonic Automotive, Inc. 2,742,915 1,270,971 4,013,886 5,296 11/04/1999 30 years
45
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
- -------------------------------------------------------------------------------------------------------
Sonic Automotive, Inc. Halifax Body Shop-Parcel 12 New Smyrna Beach,FL
Sonic Automotive, Inc. Cleveland Village Honda Cleveland,TN
Sonic Automotive, Inc. Halifax Ford-Mercury New Smyrna Beach,FL
Sonic Automotive, Inc. Lute Riley Honda Richardson,TX
Sonic Automotive, Inc. Halifax Ford Used Cars Edgewater,FL
Sonic Automotive, Inc. Higginbotham Chevrolet-Oldsmobile New Smyrna Beach,FL
Sonic Automotive, Inc. Fred Bondenson Chevrolet-Olds-Cadillac Deland,FL
Sonic Automotive, Inc. Higginbotham Mercedes Daytona Beach,FL
Sonic Automotive, Inc. Clearwater Collision Center Clearwater,FL
Sonic Automotive, Inc. Dyer & Dyer Volvo Duluth,GA
Sonic Automotive, Inc. Newsome Chevrolet World Columbia,SC
Sonic Automotive, Inc. Lake Norman Chrysler-Plymouth-Dodge #2 Cornelius,NC
Sonic Automotive, Inc. Reading Buick, Pontiac, GMC Baytown,TX
Sonic Automotive, Inc. Lake Norman Dodge #2 Cornelius,NC
Sonic Automotive, Inc. Fitzgerald Chevrolet Monroe,NC
Sonic Automotive, Inc. Infiniti of Chattanooga Chattanooga,TN
Sonic Automotive, Inc. Heritage Lincoln-Mercury Greenville,SC
Sonic Automotive, Inc. Century BMW Auto Sales Spartanburg,SC
Sonic Automotive, Inc. Lake Norman Chrysler-Plymouth #1 Cornelius,NC
Sonic Automotive, Inc. Newsome Automotive LLC Florence,SC
Sonic Automotive, Inc. Lake Norman Dodge #1 Cornelius,NC
Sonic Automotive, Inc. Century BMW Greenville,SC
Sonic Automotive, Inc. North Charleston Lincoln-Mercury/Hyundai North Charleston,SC
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. Fort Mill Ford Fort Mill,SC
Sonic Automotive, Inc. VW-Kia of Chattanooga Chattanooga,TN
Sonic Automotive, Inc. Town & Country Ford Cleveland
(Parcels 1 & 3) Cleveland,TN
Sonic Automotive, Inc. Town & Country Ford Cleveland #2 Cleveland,TN
Sonic Automotive, Inc. Infiniti of Charlotte Charlotte,NC
Sonic Automotive, Inc. Volkswagon of Nashville Nashville,TN
Sonic Automotive, Inc. Manhattan Jaguar Lincoln-Mercury Rockville,MD
Sonic Automotive, Inc. Manhattan Nissan Jeep-Eagle Waldorf,MD
Sonic Automotive, Inc. BMW-Volvo of Chattanooga Chattanooga,TN
Sonic Automotive, Inc. Ron Craft Chrysler-Plymouth-Jeep Baytown,TX
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. Superior Olds-Cadillac-GMC Cleveland,TN
Sonic Automotive, Inc. Manhattan BMW of Fairfax-Storage Fairfax,VA
Sonic Automotive, Inc. Infiniti of Chattanooga #2 Chattanooga,TN
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
Gross Amount at December 31, 1999
-----------------------------------------
Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
- -----------------------------------------------------------------------------------------------------------------------------
Sonic Automotive, Inc. 336,834 505,236 842,070 6,315 08/14/1999 30 years
Sonic Automotive, Inc. 687,598 840,154 1,527,752 10,502 08/14/1999 30 years
Sonic Automotive, Inc. 1,443,980 2,392,446 3,836,427 29,906 08/14/1999 30 years
Sonic Automotive, Inc. 6,843,575 4,773,825 11,617,400 59,673 08/14/1999 30 years
Sonic Automotive, Inc. 304,620 424,103 728,723 5,301 08/14/1999 30 years
Sonic Automotive, Inc. 1,354,320 6,266,025 7,620,345 78,325 08/14/1999 30 years
Sonic Automotive, Inc. 1,248,734 2,705,218 3,953,952 33,815 08/14/1999 30 years
Sonic Automotive, Inc. 922,825 1,262,355 2,185,180 15,779 08/14/1999 30 years
Sonic Automotive, Inc. 331,082 316,218 647,300 17,716 09/18/1998 30 years
Sonic Automotive, Inc. 3,291,271 1,515,620 4,806,891 18,945 08/14/1999 30 years
Sonic Automotive, Inc. 1,351,718 2,287,864 3,639,582 28,598 08/14/1999 30 years
Sonic Automotive, Inc. 301,208 794,296 1,095,504 9,929 08/14/1999 30 years
Sonic Automotive, Inc. 500,776 1,442,373 1,943,149 18,030 08/14/1999 30 years
Sonic Automotive, Inc. 537,636 653,550 1,191,186 8,169 08/14/1999 30 years
Sonic Automotive, Inc. 1,095,932 2,666,403 3,762,335 33,330 08/14/1999 30 years
Sonic Automotive, Inc. 1,327,613 1,622,395 2,950,009 20,280 08/14/1999 30 years
Sonic Automotive, Inc. 1,684,188 1,409,824 3,094,013 17,623 08/14/1999 30 years
Sonic Automotive, Inc. 492,922 627,656 1,120,578 7,846 08/14/1999 30 years
Sonic Automotive, Inc. 1,405,770 3,318,291 4,724,062 41,479 08/14/1999 30 years
Sonic Automotive, Inc. 1,300,237 4,002,699 5,302,937 50,034 08/14/1999 30 years
Sonic Automotive, Inc. 1,010,854 2,535,582 3,546,437 31,695 08/14/1999 30 years
Sonic Automotive, Inc. 1,664,632 2,470,617 4,135,249 30,883 08/14/1999 30 years
Sonic Automotive, Inc. 4,273,963 952,326 5,226,289 11,904 08/17/1999 30 years
Sonic Automotive, Inc. 2,092,735 3,808,952 5,901,687 47,612 08/14/1999 30 years
Sonic Automotive, Inc. 1,470,122 3,253,940 4,724,062 40,674 08/14/1999 30 years
Sonic Automotive, Inc. 2,125,937 2,598,124 4,724,062 32,477 08/14/1999 30 years
Sonic Automotive, Inc. 1,331,040 1,626,584 2,957,624 20,332 08/14/1999 30 years
Sonic Automotive, Inc. 1,331,040 1,626,584 2,957,624 20,332 08/14/1999 30 years
Sonic Automotive, Inc. 1,723,276 3,000,786 4,724,062 37,510 08/14/1999 30 years
Sonic Automotive, Inc. 592,846 724,346 1,317,192 9,054 08/14/1999 30 years
Sonic Automotive, Inc. 953,129 1,164,692 2,117,820 14,559 08/14/1999 30 years
Sonic Automotive, Inc. 403,661 493,120 896,780 6,164 08/14/1999 30 years
Sonic Automotive, Inc. 1,913,965 2,339,047 4,253,012 29,238 08/14/1999 30 years
Sonic Automotive, Inc. 655,378 800,774 1,456,152 10,010 08/14/1999 30 years
Sonic Automotive, Inc. 4,296,067 1,774,425 6,070,491 22,180 08/14/1999 30 years
Sonic Automotive, Inc. 1,827,322 2,063,909 3,891,231 25,799 08/14/1999 30 years
Sonic Automotive, Inc. 934,434 1,825,349 2,759,783 22,817 08/14/1999 30 years
Sonic Automotive, Inc. 974,936 1,099,469 2,074,405 13,743 08/14/1999 30 years
Sonic Automotive, Inc. 6,119,289 5,082,461 11,201,750 63,531 08/14/1999 30 years
Sonic Automotive, Inc. 520,786 557,672 1,078,458 6,971 08/14/1999 30 years
Sonic Automotive, Inc. 2,999,555 2,902,131 5,901,687 36,277 08/14/1999 30 years
Sonic Automotive, Inc. 858,566 1,892,706 2,751,271 23,659 08/14/1999 30 years
Sonic Automotive, Inc. - - - - 08/14/1999
Sonic Automotive, Inc. 455,171 - 455,171 - 08/14/1999
SONIC AUTOMOTIVE, INC. TOTAL 99,615,673 114,988,510 214,604,183 1,578,294
Sterling Collision Centers, Inc. 73,602 1,398,430 1,472,031 17,480 08/14/1999 30 years
Sterling Collision Centers, Inc. 432,246 1,334,192 1,766,438 16,677 08/14/1999 30 years
Sterling Collision Centers, Inc. 448,136 1,023,895 1,472,031 12,799 08/14/1999 30 years
STERLING COLLISION CENTERS, INC. TOTAL 953,984 3,756,517 4,710,500 46,956
46
SCHEDULE III
CAPITAL AUTOMOTIVE REIT
SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
Dealer Group Name Dealership Location
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The Price Organization Price Buick-Pontiac Salisbury,MD
THE PRICE ORGANIZATION TOTAL
Town & Country Automotive Town & Country Buick, Pontiac-GMC,
Olds, Cadillac Middletown,CT
Town & Country Automotive Town & Country Super Used Car Store Middletown,CT
Town & Country Automotive Town & Country Lincoln-Mercury, Mazda Middletown,CT
Town & Country Automotive Town & Country Mazda Ivorytown,CT
Town & Country Automotive Town & Country Chrysler/Jeep Middletown,CT
TOWN & COUNTRY AUTOMOTIVE TOTAL
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 Jaguar/Volvo Miami,FL
Warren Henry Automobiles, Inc. Warren Henry Land Rover Miami,FL
Warren Henry Automobiles, Inc. Warren Henry Infiniti Miami,FL
WARREN HENRY AUTOMOBILES, INC. TOTAL
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GRAND TOTAL
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Gross Amount at December 31, 1999
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Building and Accumulated Date Depreciation
Dealer Group Name Land Improvements Total Depreciation Acquired Life
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The Price Organization 649,805 696,792 1,346,597 59,239 02/27/1998 30 years
THE PRICE ORGANIZATION TOTAL 649,805 696,792 1,346,597 59,239
Town & Country Automotive 453,096 1,484,057 1,937,153 114,396 06/09/1998 20 years
Town & Country Automotive 177,770 1,081,524 1,259,294 74,031 06/09/1998 30 years
Town & Country Automotive 542,904 1,238,415 1,781,319 84,770 06/09/1998 30 years
Town & Country Automotive 302,977 905,317 1,208,294 61,969 06/09/1998 30 years
Town & Country Automotive 697,975 765,319 1,463,294 52,386 06/09/1998 30 years
TOWN & COUNTRY AUTOMOTIVE TOTAL 2,174,721 5,474,632 7,649,352 387,552
United Auto Group 548,395 1,088,504 1,636,899 13,606 08/14/1999 30 years
United Auto Group 247,301 - 247,301 - 08/14/1999
UNITED AUTO GROUP TOTAL 795,697 1,088,504 1,884,200 13,606
Warren Henry Automobiles, Inc. 2,560,916 2,430,812 4,991,727 146,253 08/27/1998 30 years
Warren Henry Automobiles, Inc. 958,959 913,176 1,872,135 54,942 08/27/1998 30 years
Warren Henry Automobiles, Inc. 3,279,263 2,562,606 5,841,869 154,183 08/27/1998 30 years
WARREN HENRY AUTOMOBILES, INC. TOTAL 6,799,138 5,906,593 12,705,731 355,378
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GRAND TOTAL $423,756,945 $511,767,809 $935,524,754 $(21,201,569)
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