Trustreet
Properties, Inc.
|
_____________________________________________________________________________________________
|
(Exact
name of registrant as specified in its
charter)
|
Maryland
|
75-2687420
|
|
(State
or other jurisdiction
|
(IRS
Employer
|
|
of
incorporation)
|
Identification
No.)
|
450
South Orange Avenue
Orlando,
Florida
|
32801
|
_________________________________________
|
______________________________
|
(Address
of principal executive offices)
|
(Zip
Code)
|
_____________________________________________________________________________________________
|
Large
accelerated filer x
|
Accelerated
filer ¨
|
Non-accelerated
Filer ¨
|
Part
I - Financial Information
|
Page
|
Item
1. Financial
Statements:
|
|
Condensed
Consolidated Balance Sheets
|
3-4
|
Condensed
Consolidated Statements of Income
|
5
|
Condensed
Consolidated Statement of
|
|
Stockholders’
Equity and Comprehensive Income
|
6
|
Condensed
Consolidated Statements of Cash Flows
|
7-8
|
Notes
to Condensed Consolidated Financial
|
|
Statements
|
9-18
|
Item
2. Management’s
Discussion and Analysis of Financial
|
19-36
|
Condition
and Results of Operations
|
|
Item
3. Quantitative
and Qualitative Disclosures About
|
37
|
Market
Risk
|
|
Item
4. Controls
and Procedures
|
37
|
Part
II - Other Information
|
|
Item
1. Legal
Proceedings
|
38
|
Item
1A. Risk
Factors
|
38
|
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds
|
38
|
Item
3. Defaults
Upon Senior Securities
|
38
|
Item
4. Submission
of Matters to a Vote of Security Holders
|
38
|
Item
5. Other
Information
|
38
|
Item
6. Exhibits
|
39-41
|
March
31, 2006
|
December
31, 2005
|
||||||
ASSETS
|
|||||||
Real
estate investment properties
|
$
|
1,738,317
|
$
|
1,728,783
|
|||
Net
investment in capital leases
|
148,058
|
149,627
|
|||||
Real
estate held for sale
|
247,739
|
238,686
|
|||||
Mortgage,
equipment and other notes receivable, net of allowance
of
$3,423 and $5,706, respectively
|
84,748
|
88,239
|
|||||
Cash
and cash equivalents
|
18,415
|
20,459
|
|||||
Restricted
cash
|
25,219
|
32,465
|
|||||
Receivables,
less allowance for doubtful accounts
of
$2,286 and $2,394, respectively
|
9,555
|
7,665
|
|||||
Accrued
rental income
|
39,011
|
35,122
|
|||||
Intangible
lease costs, net of accumulated amortization of $12,442
and
$9,628, respectively
|
77,133
|
77,499
|
|||||
Goodwill
|
235,895
|
235,895
|
|||||
Other
assets
|
70,862
|
69,456
|
|||||
$
|
2,694,952
|
$
|
2,683,896
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Revolver
|
$
|
78,000
|
$
|
55,000
|
|||
Notes
payable
|
576,934
|
579,002
|
|||||
Mortgage
warehouse facilities
|
139,600
|
122,722
|
|||||
Bonds
payable
|
723,145
|
742,201
|
|||||
Below
market lease liability, net of accumulated amortization of
$4,996
and $3,772, respectively
|
30,886
|
32,065
|
|||||
Due
to related parties
|
798
|
232
|
|||||
Other
payables
|
57,377
|
56,097
|
|||||
Total
liabilities
|
$
|
1,606,740
|
$
|
1,587,319
|
March
31,
2006
|
December
31,
2005
|
||||||
Minority
interests
|
$
|
3,769
|
$
|
4,077
|
|||
Commitments
and contingencies (Note 11)
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $0.001 par value per share: 84,500 shares authorized and
unissued
|
—
|
—
|
|||||
Preferred
stock, $0.001 par value per share: Series A Cumulative Convertible
Preferred Stock - 8,000 shares authorized, 7,834 shares issued and
outstanding (aggregate liquidation value of $195,855)
|
8
|
8
|
|||||
Preferred
stock, $0.001 par value per share: Series C Redeemable
Convertible Preferred Stock - 7,500 shares authorized, 7,244 shares
issued
and outstanding (aggregate liquidation value of $181,101)
|
7
|
7
|
|||||
Excess
shares, $0.001 par value per share. 400,000 shares authorized and
unissued
|
—
|
—
|
|||||
Common
stock, $0.001 par value per share; 300,000 shares authorized,
67,548 and 67,375 shares issued at March 31, 2006 and December 31,
2005,
respectively, and 67,527 and 67,357 shares outstanding at March
31,
2006 and December 31, 2005, respectively
|
67
|
67
|
|||||
Capital
in excess of par value
|
1,489,599
|
1,489,405
|
|||||
Accumulated
other comprehensive income
|
6,762
|
3,547
|
|||||
Accumulated
distributions in excess of net income
|
(412,000
|
)
|
(400,534
|
)
|
|||
Total
stockholders’ equity
|
1,084,443
|
1,092,500
|
|||||
$
|
2,694,952
|
$
|
2,683,896
|
Quarter
ended March 31,
|
|||||||
2006
|
2005
|
||||||
Revenues:
|
|||||||
Rental
income from operating leases
|
$
|
47,416
|
$
|
22,748
|
|||
Earned
income from capital leases
|
3,089
|
2,683
|
|||||
Interest
income from mortgage, equipment and
other
notes receivables
|
1,983
|
6,281
|
|||||
Investment
and interest income
|
271
|
546
|
|||||
Other
income
|
3,508
|
1,056
|
|||||
56,267
|
33,314
|
||||||
Expenses:
|
|||||||
General
operating and administrative
|
7,810
|
10,961
|
|||||
Interest
expense
|
25,004
|
16,891
|
|||||
Property
expenses, state and other taxes
|
3,483
|
1,151
|
|||||
Depreciation
and amortization
|
10,500
|
5,043
|
|||||
Impairment
provisions on assets
|
732
|
—
|
|||||
47,529
|
34,046
|
||||||
Income/(loss)
from continuing operations before minority interest and equity in
earnings
of unconsolidated joint ventures
|
8,738
|
(732
|
)
|
||||
Minority
interest
|
(232
|
)
|
(815
|
)
|
|||
Equity
in earnings of unconsolidated joint ventures
|
36
|
30
|
|||||
Income/(loss)
from continuing operations
|
8,542
|
(1,517
|
)
|
||||
Income
from discontinued operations, after income taxes
|
8,755
|
4,966
|
|||||
Gain
on sale of assets
|
659
|
—
|
|||||
Net
income
|
17,956
|
3,449
|
|||||
Dividends
to preferred stockholders
|
(7,176
|
)
|
(2,923
|
)
|
|||
Net
income allocable to common stockholders
|
$
|
10,780
|
$
|
526
|
|||
Basic
and diluted net income per share:
|
|||||||
Income/(loss)
from continuing operations allocable to
common
stockholders
|
$
|
0.03
|
$
|
(0.10
|
)
|
||
Income
from discontinued operations
|
0.13
|
0.11
|
|||||
Basic
and diluted net income per share
|
$
|
0.16
|
$
|
0.01
|
|||
Weighted
average number of shares of common stock
outstanding
|
|||||||
Basic
|
67,243
|
43,858
|
|||||
Diluted
|
67,343
|
43,858
|
Preferred
Stock
Series
A
|
Preferred
Stock
Series
C
|
Common
Stock
|
Capital
in
|
Accumulated
distributions
in
excess
|
Accumulated
other
compre-
|
Compre-
|
||||||||||||||||||||||||||||
Number
of
shares
|
Par
value
|
Number
of
shares
|
Par
value
|
Number
of
Shares
|
Par
value
|
excess
of
par
value
|
of
net
income
|
hensive
income
|
Total
|
hensive
income
|
||||||||||||||||||||||||
Balance
at December 31, 2005
|
7,834
|
$
|
8
|
7,244
|
$
|
7
|
67,357
|
$
|
67
|
$
|
1,489,405
|
$
|
(400,534
|
)
|
$
|
3,547
|
$
|
1,092,500
|
||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
17,956
|
—
|
17,956
|
$
|
17,956
|
||||||||||||||||||||||
Reclassification
of other than temporary loss on
statement
of
income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
347
|
347
|
347
|
|||||||||||||||||||||||
Current
period adjustment to recognize change in fair value of cash flow
hedges
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
2,868
|
2,868
|
2,868
|
|||||||||||||||||||||||
Total
comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
$
|
21,171
|
||||||||||||||||||||||
Dividends
declared on common stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(22,246
|
)
|
—
|
(22,246
|
)
|
||||||||||||||||||||||
Dividends
declared on preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,176
|
)
|
—
|
(7,176
|
)
|
||||||||||||||||||||||
Issuance
of restricted stock to directors and
employees,
net of forfeitures
|
—
|
—
|
—
|
—
|
170
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
176
|
—
|
—
|
176
|
||||||||||||||||||||||||
Stock
issuance cost adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
18
|
—
|
—
|
18
|
||||||||||||||||||||||||
Balance
at March 31, 2006
|
7,834
|
$
|
8
|
7,244
|
$
|
7
|
67,527
|
$
|
67
|
$
|
1,489,599
|
$
|
(412,000
|
)
|
$
|
6,762
|
$
|
1,084,443
|
Quarter
ended March 31,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
17,956
|
$
|
3,449
|
|||
Adjustments
to reconcile net income to net cash
provided
by operating activities, net of effects of business
acquisitions:
|
|||||||
Depreciation
and amortization on real estate assets
|
10,054
|
5,072
|
|||||
Depreciation
and amortization on non-real estate assets
|
537
|
385
|
|||||
Amortization
of above and below market leases
|
70
|
14
|
|||||
Amortization
of deferred financing costs
|
2,371
|
1,968
|
|||||
Impairments
and provisions on assets
|
853
|
207
|
|||||
Gain
on sales of assets
|
(3,723
|
)
|
(180
|
)
|
|||
Stock
based compensation
|
176
|
2,053
|
|||||
Increase
in accrued rental income
|
(3,265
|
)
|
(1,291
|
)
|
|||
Amortization
of investment in capital leases
|
1,580
|
895
|
|||||
Changes
in inventories of real estate held for sale
|
(19,121
|
)
|
34,185
|
||||
Changes
in other assets
|
(2,309
|
)
|
5,216
|
||||
Changes
in other payables and due to related parties
|
1,230
|
7,609
|
|||||
Net
cash provided by operating activities
|
6,409
|
59,582
|
|||||
Cash
flows from investing activities:
|
|||||||
Additions
to real estate investment properties and intangibles
|
(20,612
|
)
|
(26,331
|
)
|
|||
Proceeds
from sale of assets
|
10,946
|
—
|
|||||
Decrease
in restricted cash
|
7,246
|
1,462
|
|||||
Acquisition
of Income Funds
|
—
|
(449,997
|
)
|
||||
Cash
acquired through merger
|
—
|
43,473
|
|||||
Payment
of merger costs for USRP reverse merger
|
—
|
(11,927
|
)
|
||||
Collection
on mortgage, equipment and other notes receivable
|
5,635
|
2,887
|
|||||
Other
|
34
|
—
|
|||||
Net
cash provided by/(used in) investing activities
|
3,249
|
(440,433
|
)
|
Quarter
ended March 31,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from borrowings on revolver, term loan and note payable
|
$
|
59,521
|
$
|
762,000
|
|||
Payment
on revolver and note payable
|
(38,553
|
)
|
(767,507
|
)
|
|||
Proceeds
from borrowings on mortgage warehouse facilities
|
44,758
|
7,892
|
|||||
Payments
on mortgage warehouse facilities
|
(27,880
|
)
|
(41,574
|
)
|
|||
Proceeds
from issuance of senior notes
|
—
|
250,000
|
|||||
Proceeds
from issuance of bonds
|
—
|
275,000
|
|||||
Retirement
of bonds payable
|
(19,115
|
)
|
(20,381
|
)
|
|||
Payment
of bond issuance and debt refinancing costs
|
(405
|
)
|
(22,456
|
)
|
|||
Proceeds
from termination of hedge
|
—
|
1,685
|
|||||
Proceeds
from exercised stock options
|
—
|
273
|
|||||
Retirement
of convertible preferred stock
|
—
|
(32,500
|
)
|
||||
Acquisition
of minority interest
|
—
|
(655
|
)
|
||||
Distributions
to minority interest
|
(642
|
)
|
(755
|
)
|
|||
Reimbursement/(payment)
of stock issuance costs
|
18
|
(1,493
|
)
|
||||
Distributions
to common stockholders
|
(22,228
|
)
|
(17,849
|
)
|
|||
Distributions
to preferred stockholders
|
(7,176
|
)
|
(4,912
|
)
|
|||
Net
cash provided by/(used in) financing activities
|
(11,702
|
)
|
386,768
|
||||
Net
increase/(decrease) in cash and cash equivalents
|
(2,044
|
)
|
5,917
|
||||
Cash
and cash equivalents at beginning of period
|
20,459
|
22,744
|
|||||
Cash
and cash equivalents at end of period
|
$
|
18,415
|
$
|
28,661
|
|||
Supplemental
disclosures of cash flow information:
|
|||||||
Interest
paid
|
$
|
18,379
|
$
|
14,183
|
|||
Income
taxes paid
|
$
|
2,876
|
$
|
—
|
|||
Supplemental
disclosures of non-cash investing and financing
activities:
|
|||||||
Redemption
of minority interest in lieu of payment on accounts
receivable
|
$
|
—
|
$
|
1,798
|
|||
Note
receivable accepted in exchange for sale of property
|
$
|
1,483
|
$
|
—
|
|||
Distributions
declared and unpaid at March 31
|
$
|
7,428
|
$
|
6,369
|
1.
|
Organization
and Nature of Business:
|
2.
|
Basis
of Presentation:
|
2.
|
Basis
of Presentation - Continued:
|
Quarter
Ended March 31,
|
|||||||
2006
|
2005
|
||||||
Revenues
|
$
|
56,267
|
$
|
53,857
|
|||
Net
income/(loss)
|
$
|
17,956
|
$
|
(1,975
|
)
|
||
Dividends
to preferred stockholders
|
(7,176
|
)
|
(7,157
|
)
|
|||
Net
income allocable to common stockholders
|
10,780
|
(9,132
|
)
|
||||
Basic
and diluted earnings/(loss) per share
|
$
|
0.16
|
$
|
(0.16
|
)
|
||
Basic
weighted average shares outstanding
|
67,243
|
57,668
|
|||||
Diluted
weighted average shares outstanding
|
67,343
|
57,668
|
During
the quarter ended March 31, 2005, the Company recorded non-recurring
charges of approximately $13.7 million. These one-time expenses consisted
of a non-cash tax charge of $5 million and $8.7 million of expenses
related to the Merger.
|
3.
|
Adoption
of New Accounting Standards:
|
4.
|
Real
Estate Held for Sale:
|
(In
thousands)
|
|||||||
Quarters
ended March 31,
|
|||||||
2006
|
2005
|
||||||
Rental
income
|
$
|
3,921
|
$
|
3,051
|
|||
Food,
beverage and retail revenues
|
—
|
5,245
|
|||||
Food,
beverage and retail expenses
|
—
|
(4,634
|
)
|
||||
Other
property related income/(expenses)
|
8
|
(860
|
)
|
||||
Interest
expense
|
(2,026
|
)
|
(827
|
)
|
|||
Impairment
provisions
|
(97
|
)
|
(192
|
)
|
|||
Earnings
from discontinued operations
|
1,806
|
1,783
|
|||||
Sales
of real estate
|
54,794
|
56,954
|
|||||
Cost
of real estate sold
|
(47,238
|
)
|
(47,177
|
)
|
|||
Gain
on disposal of discontinued operations
|
7,556
|
9,777
|
|||||
Income
tax provision
|
(607
|
)
|
(6,594
|
)
|
|||
Income
from discontinued operations, after income tax
|
$
|
8,755
|
$
|
4,966
|
5.
|
Borrowings:
|
6.
|
Income
Tax:
|
7.
|
Related
Party Transactions:
|
8.
|
Flexible
Incentive Plan:
|
Number
of
shares
(in
thousands)
|
Weighted
average fair value at grant date
|
||||||
Non-vested
shares at beginning of period
|
120
|
$
|
16.98
|
||||
Granted
|
172
|
14.78
|
|||||
Vested
|
(41
|
)
|
16.56
|
||||
Forfeited
|
(2
|
)
|
17.20
|
||||
Non-vested
shares at March 31, 2006
|
249
|
$
|
15.53
|
9.
|
Earnings
Per Share:
|
For
the quarters ended March 31, 2006 and 2005, basic and diluted earnings
per
common share for income (loss) from continuing operations available
to
common shareholders has been computed as
follows:
|
Quarter
ended March 31,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Numerator:
|
|||||||||||||
Income/(loss)
from continuing operations
|
$
|
8,542
|
$
|
(1,517
|
)
|
||||||||
Gain
on sale of assets
|
659
|
—
|
|||||||||||
Less:
Preferred stock dividends
|
(7,176
|
)
|
(2,923
|
)
|
|||||||||
Income/(loss)
from continuing operations available to common
stockholders
|
$
|
2,025
|
$
|
(4,440
|
)
|
||||||||
Denominator:
|
|||||||||||||
Basic
weighted average number of shares outstanding
|
67,243
|
43,858
|
|||||||||||
Effect
of dilutive securities:
|
|||||||||||||
Stock
option
|
1
|
—
|
(2) |
|
|
||||||||
Restricted
stock
|
99
|
—
|
(2) |
|
|
||||||||
Warrants
|
—
|
(1) |
|
|
—
|
(2) |
|
|
|||||
Convertible
preferred stock
|
—
|
(1) |
|
|
—
|
(2) |
|
|
|||||
Diluted
weighted average shares outstanding
|
67,343
|
43,858
|
|||||||||||
Basic
and diluted income/(loss) from continuing operations allocable to
common
stockholders per share
|
$
|
0.03
|
$
|
(0.10
|
)
|
||||||||
(1)
|
For
the quarter ended March 31, 2006, the Company excluded Series A and
Series
C Preferred Stock convertible into 16.6 million shares of common
stock and
approximately 0.1 million shares of restricted common stock and warrants
to purchase 0.4 million shares of common stock from the computation
of
diluted earnings per share as these common stock equivalents were
anti-dilutive.
|
(2)
|
For
the quarter ended March 31, 2005, the Company excluded stock options
to
purchase approximately 0.012 million shares of common stock, warrants
to
purchase 0.4 million shares of common stock, approximately 0.12 million
shares of restricted common stock and Series A and Series C Preferred
Stock convertible into 16.6 million shares of common stock from the
computation of diluted earnings per share as these common stock
equivalents were anti-dilutive.
|
9.
|
Earnings
Per Share - Continued:
|
(In
thousands)
|
|||||||
Quarters
ended
March
31,
|
|||||||
2006
|
2005
|
||||||
Historical
income (loss) from continuing operations and gain on sale of assets
less
preferred stock dividends
|
$
|
2,025
|
$
|
(4,440
|
)
|
||
Proforma
adjustment for Series C Preferred Stock dividends
|
—
|
(2,264
|
)
|
||||
Proforma
income (loss) from continuing operations allocable to common
stockholders
|
$
|
2,025
|
$
|
(6,704
|
)
|
||
Basic
and diluted proforma earnings (loss) per share:
|
|||||||
From
continuing operations
|
$
|
0.03
|
$
|
(0.15
|
)
|
||
From
discontinued operations
|
0.13
|
0.11
|
|||||
Total
|
$
|
0.16
|
$
|
(0.04
|
)
|
10.
|
Segment
Information:
|
10.
|
Segment
Information - Continued:
|
Quarter
ended March 31, 2006
(In
thousands)
|
|||||||||||||
Real
estate segment
|
Specialty
finance segment
|
Other
|
Consolidated
Totals
|
||||||||||
Revenues
|
$
|
54,186
|
$
|
3,328
|
$
|
(1,247
|
)
|
$
|
56,267
|
||||
Expenses:
|
|||||||||||||
General
operating and administrative
|
3,494
|
5,473
|
(1,157
|
)
|
7,810
|
||||||||
Interest
expense
|
23,062
|
2,032
|
(90
|
)
|
25,004
|
||||||||
Property
expenses, state and other taxes
|
3,495
|
(12
|
)
|
—
|
3,483
|
||||||||
Depreciation
and amortization
|
10,000
|
500
|
—
|
10,500
|
|||||||||
Impairments
and provisions on assets
|
732
|
—
|
—
|
732
|
|||||||||
Minority
interest net of equity in earnings
|
200
|
(4
|
)
|
—
|
196
|
||||||||
40,983
|
7,989
|
(1,247
|
)
|
47,725
|
|||||||||
Discontinued
operations:
|
|||||||||||||
Income
from discontinued operations, net of income tax
|
3,185
|
5,570
|
—
|
8,755
|
|||||||||
Gain
on sale of assets
|
659
|
—
|
—
|
659
|
|||||||||
Net
income
|
$
|
17,047
|
$
|
909
|
$
|
—
|
$
|
17,956
|
|||||
Assets
at March 31, 2006
|
$
|
2,303,764
|
$
|
393,070
|
$
|
(1,882
|
)
|
$
|
2,694,952
|
||||
Investments
accounted for under the equity method at March 31, 2006
|
$
|
824
|
$
|
—
|
$
|
—
|
$
|
824
|
|||||
10.
|
Segment
Information - (Continued):
|
Quarter
ended March 31, 2005
(In
thousands)
|
|||||||||||||
Real
estate segment
|
Specialty
finance segment
|
Other
|
Consolidated
Totals
|
||||||||||
Revenues
|
$
|
27,348
|
$
|
6,586
|
$
|
(620
|
)
|
$
|
33,314
|
||||
Expenses:
|
|||||||||||||
General
operating and administrative
|
3,283
|
8,221
|
(543
|
)
|
10,961
|
||||||||
Interest
expense
|
12,514
|
4,452
|
(75
|
)
|
16,891
|
||||||||
Property
expenses, state and other taxes
|
1,109
|
136
|
(94
|
)
|
1,151
|
||||||||
Depreciation
and amortization
|
4,770
|
273
|
—
|
5,043
|
|||||||||
Minority
interest net of equity in earnings
|
36
|
749
|
—
|
785
|
|||||||||
21,712
|
13,831
|
(712
|
)
|
34,831
|
|||||||||
Discontinued
operations:
|
|||||||||||||
Income
from discontinued operations, net of income tax
|
345
|
4,621
|
—
|
4,966
|
|||||||||
Net
income/(loss)
|
$
|
5,981
|
$
|
(2,624
|
)
|
$
|
92
|
$
|
3,449
|
||||
Assets
at March 31, 2005
|
$
|
2,289,860
|
$
|
306,119
|
$
|
4,540
|
$
|
2,600,519
|
|||||
Investments
accounted for under the equity
method at March 31, 2005
|
$
|
1,203
|
$
|
—
|
$
|
—
|
$
|
1,203
|
|||||
11.
|
Commitments
and Contingencies:
|
·
|
changes
in general economic conditions;
|
·
|
general
risks affecting the real estate industry (including, without limitation,
the inability to enter into or renew leases on favorable terms, dependence
on tenants’ financial condition, and competition from other developers,
owners and operators of real
estate);
|
·
|
general
risks affecting the restaurant industry (including, without limitation,
any disruption in the supply or quality of ingredients, the availability
of labor, and the continued demand for restaurant
dining);
|
·
|
financing
may not be available on favorable terms or at all, and our cash flow
from
operations and access to attractive capital may be insufficient to
fund
existing operations, or growth in new acquisitions and
developments;
|
·
|
changes
in interest rates;
|
·
|
our
ability to refinance existing financial obligations at favorable
terms;
|
·
|
our
ability to locate suitable tenants for our properties;
|
·
|
our
ability to resolve any tenant defaults that could lead to a decline
in
value in and as a result, subject us to impairment
charges;
|
·
|
the
ability of tenants and borrowers to make payments under their agreements
with us;
|
·
|
possible
adverse changes in tax and environmental laws, as well as the impact
of
newly adopted accounting principles on our accounting policies and
on
period-to-period comparisons of financial
results;
|
·
|
risks
associated with our potential failure to qualify as a REIT under
the
Internal Revenue Code of 1986, as
amended;
|
·
|
our
ability to re-lease or sell properties that are currently vacant
or that
may become vacant;
|
·
|
our
ability to sell properties through our investment property sales
program
as a result of any possible elimination of capital gains taxes or
changes
in interest rates;
|
·
|
our
ability to continue to make distributions at historical
rates;
|
·
|
our
ability to manage our debt levels that could adversely affect our
cash
flow, limit our flexibility to raise additional capital and prevent
us
from making distributions on the outstanding shares of common stock;
and
|
·
|
the
loss of certain members of our management team that could adversely
affect
our business.
|
1.
|
restaurant
operators of major national and regional
chains;
|
2.
|
restaurant
property investors; and
|
3.
|
retail
real estate developers.
|
1.
|
financing
free-standing restaurant and retail real
estate;
|
2.
|
maximizing
the potential of our real estate
portfolio;
|
3.
|
sale
of real estate to investors; and
|
4.
|
real
estate development and
redevelopment.
|
·
|
ability
to execute transactions in excess of $100 million as committed, including
properties with a single concept;
|
·
|
review
and approval by our investment committee that includes senior executives,
including the CEO and CFO, separate from the marketing
team.
|
·
|
We
have lost certain lease transactions to competitors offering mortgage
debt
financing. With continued historically low long-term interest rates,
large
national and regional banks have offered less expensive mortgage
financing
that many restaurant operators find more attractive than leases.
We do not
currently originate mortgage financing as a primary line of business.
Instead, we maintain a relationship with a large financial institution
to
provide mortgage financing to our clients. We are in the process
of
developing additional relationships with other major financial
institutions to do the same. Through this relationship, we provide
the net
lease financing and the financial institution provides the senior
debt on
those transactions requiring a combination of debt and net lease
in the
target capital structure.
|
·
|
Various
real estate brokerage firms compete against us and receive a brokerage
fee
upon the sale of the restaurant properties. Generally the
brokers serve as an intermediary and do not have appropriate capital
to
ensure certainty of close for the restaurant operator. Broker competition
exists more in the market for smaller transaction sizes than our
typical prospects although new entrants (now commonly referred to
as “flip
shops”) continue to squeeze the margin between wholesale and retail cap
rates. Through our borrowing capacity, we are able to provide assurance
of
closing which to date has mitigated this competitive threat, particularly
on larger transactions.
|
Concept
|
Number
of Properties
|
Percentage
of Total Properties
|
Percentage
of Total Annualized Base Rent (*)
|
Average
Remaining Lease Term (Years)
|
||||
Wendy’s
(*)
|
189
|
9.4%
|
8.1%
|
10.7
|
||||
Burger
King
|
169
|
8.4%
|
7.2%
|
11.4
|
||||
Golden
Corral
|
83
|
4.1%
|
7.0%
|
6.5
|
||||
Jack
in the Box
|
114
|
5.7%
|
6.7%
|
8.5
|
||||
Arby’s
|
150
|
7.5%
|
6.2%
|
10.5
|
||||
International
House of Pancakes
|
63
|
3.1%
|
4.2%
|
13.4
|
||||
Captain
D’s
|
101
|
5.0%
|
3.9%
|
17.0
|
||||
Bennigan’s
|
26
|
1.3%
|
3.0%
|
11.0
|
||||
Denny’s
|
47
|
2.3%
|
2.6%
|
8.1
|
||||
Pizza
Hut
|
120
|
6.0%
|
2.5%
|
7.3
|
(*)
|
Includes
contingent rent for units with leases where rent is based on actual
store
sales, generally, without a minimum
threshold.
|
Tenant
|
Number
of Properties
|
Percentage
of Total Properties
|
Percentage
of Total Annualized Base Rent (*)
|
Average
Remaining Lease Term (Years)
|
||||
Jack
in the Box, Inc.
|
114
|
5.7%
|
6.7%
|
8.5
|
||||
Golden
Corral Corporation
|
71
|
3.5%
|
6.0%
|
6.0
|
||||
IHOP
Properties, Inc.
|
60
|
3.0%
|
4.0%
|
13.7
|
||||
Captain
D’s, LLC
|
92
|
4.6%
|
3.7%
|
17.4
|
||||
Sybra
Inc.
|
84
|
4.2%
|
3.4%
|
11.5
|
||||
S&A
Properties Corp.
|
31
|
1.5%
|
3.1%
|
12.3
|
||||
Texas
Taco Cabana, LP
|
31
|
1.5%
|
2.1%
|
11.2
|
||||
Carrols
Corporation
|
42
|
2.1%
|
2.0%
|
10.5
|
||||
El
Chico Restaurants, Inc.
|
23
|
1.1%
|
1.9%
|
10.4
|
||||
The
Restaurant Company
|
18
|
0.9%
|
1.8%
|
19.4
|
(*)
|
Includes
contingent rent for units with leases where rent is based on actual
store
sales, generally, without a minimum
threshold.
|
State
|
Number
of Properties
|
Percentage
of Total Properties
|
Percentage
of Total Annualized Base Rent (*)
|
Average
Remaining Lease Term (Years)
|
||||
Texas
|
409
|
20.4%
|
19.6%
|
9.3
|
||||
Florida
|
193
|
9.6%
|
10.9%
|
10.8
|
||||
Georgia
|
128
|
6.4%
|
5.9%
|
11.8
|
||||
Tennessee
|
96
|
4.8%
|
3.8%
|
10.5
|
||||
Illinois
|
63
|
3.1%
|
3.8%
|
10.1
|
||||
California
|
55
|
2.7%
|
3.7%
|
11.0
|
||||
North
Carolina
|
94
|
4.7%
|
3.7%
|
9.7
|
||||
Ohio
|
92
|
4.6%
|
3.5%
|
9.2
|
||||
Missouri
|
52
|
2.6%
|
2.8%
|
11.2
|
||||
South
Carolina
|
56
|
2.8%
|
2.5%
|
11.1
|
(*)
|
Includes
contingent rent for units with leases where rent is based on actual
store
sales, generally, without a minimum
threshold.
|
Debt
|
Balance
(in
millions)
|
Approximate
Interest
Rates
|
Expected
Maturity Date
|
Type
|
||||
Mortgage
Warehouse Facility (c)
|
$
54.8
|
LIBOR
+ 1.25%
|
Mar-07
|
Collateralized
|
||||
Mortgage
Warehouse Facility (c)
|
84.8
|
LIBOR
+ .90%
|
May-06
|
Collateralized
|
||||
Series
2001-A Bonds (a)
|
126.9
|
LIBOR
+ .98%
|
Aug-06
|
Collateralized
|
||||
Series
2001 Bonds (a)
|
91.4
|
LIBOR
+ .94%
|
Oct-06
|
Collateralized
|
||||
Notes
Payable
|
0.8
|
7.16%
|
2006-2007
|
Collateralized
|
||||
Revolver
|
78.0
|
LIBOR
+ 2.25%
|
April-08
|
Uncollateralized
|
(d)
|
|||
Term
Loan (a)
|
275.0
|
LIBOR
+ 2.00%
|
April-10
|
Uncollateralized
|
(d)
|
|||
Series
2003 Bonds (a)
|
2.0
|
LIBOR
+ 5.00%
|
2006-2007
|
Collateralized
|
||||
Series
2001-4 Bonds
|
23.8
|
8.90%
|
2009-2013
|
Collateralized
|
||||
Series
2005 Bonds
|
262.4
|
4.67%
|
2012
|
Collateralized
|
||||
Senior
Unsecured Notes (b)
|
301.1
|
7.50%
|
April-15
|
Uncollateralized
|
||||
Series
2000-A Bonds
|
216.7
|
7.97%
|
2009-2017
|
Collateralized
|
||||
Total
Debt
|
$
1,517.7
|
(a)
|
We
have entered into hedging transactions to reduce our sensitivity
to
floating rate debt in the form of swaps and caps, as described further
under “Market Risk”.
|
(b)
|
Balance
includes a premium of $1.1 million at March 31,
2006.
|
(c)
|
We
also pay exit fees to the lenders upon the sale of properties financed
by
the warehouse facilities which we record as interest expense. We
paid exit
fees of $0.2 million and $0.3 million during the quarters ended March
31,
2006 and 2005, respectively. Effective March 31, 2006, we eliminated
the
exit fee under the $160 million Mortgage Warehouse Facility as part
of
renewing it through March 2007.
|
(d)
|
The
Revolver and Term Loan are subject to borrowing base asset
requirements.
|
(In
millions)
|
||||
Mortgage
Warehouse Facilities
|
$
|
120.4
|
||
Revolver
|
97.0
|
|||
Cash
and Cash Equivalents
|
18.4
|
|||
$
|
235.8
|
a.
|
On
January 18, 2005, Robert Lewis and Sutter Acquisition Fund, LLC,
two
limited partners in several of the Income Funds, filed a purported
class
action lawsuit on behalf of the limited partners against the general
partners of the Income Funds, CNLRP and USRP. The complaint alleges
that
the general partners breached their fiduciary duties in connection
with
the Mergers and that the parties to the Merger aided and abetted
in the
alleged breaches of fiduciary duties. The complaint further alleges
that
the general partners violated provisions of the Income Fund partnership
agreements and demands an accounting as to the affairs of the Income
Funds. The plaintiffs are seeking unspecified compensatory and exemplary
damages and equitable relief, which also included an injunction preventing
the defendants from proceeding with the Mergers, which was unsuccessful.
On April 26, 2005, a supplemental plea to jurisdiction hearing was
held.
On May 2, 2005, the plaintiffs amended their lawsuit to add allegations
that the general partners of the Income Funds, with CNLRP and USRP,
prepared and distributed a false and misleading final proxy statement
filing to the limited partners of the Income Funds and the stockholders
of
CNLRP and USRP. On May 26, 2005, the Court entered a Final Order
Dismissing Action for lack of subject matter jurisdiction. On June
22,
2005, the plaintiffs filed a Notice of Appeal of the Order of Dismissal.
On September 7, 2005, the plaintiffs filed an appellants’ brief. On
November 7, 2005, the Company and the other defendants filed an appellees’
brief. On December 12, 2005, the plaintiffs filed a brief in reply.
The
court has granted a request for postponement of oral argument on
the
appeal that was originally scheduled for May 3, 2006. The Court has
not
yet set a new date. We believe the lawsuit, including the request
for
certification, is without merit and intend to defend vigorously against
its claims.
|
b.
|
During
2004, Management Strategies, Inc. filed a lawsuit against USRP. The
complaint alleges that we owe approximately $3 million in sales and
fuel
tax liabilities to the State of Georgia. We believe the claims against
us
are without merit and intend to defend vigorously against such claims.
|
Quarter
ended March 31,
|
|||||||
(in
millions)
|
|||||||
2006
|
2005
|
||||||
Cash
flows provided by operating activities
|
$
|
6.4
|
$
|
59.5
|
|||
Cash
flows provided by/(used in) investing activities
|
3.3
|
(440.4
|
)
|
||||
Cash
flows provided by/(used in) financing activities
|
(11.7
|
)
|
386.8
|
||||
Net
increase (decrease) in cash and cash equivalents
|
(2.0
|
)
|
5.9
|
||||
Cash
and cash equivalents at beginning of year
|
20.4
|
22.8
|
|||||
Cash
and cash equivalents at end of period
|
$
|
18.4
|
$
|
28.7
|
Mortgage
loans
|
Bonds
outstanding
|
||||||
in
pool at par
|
at
face value
|
||||||
(in
millions)
|
|||||||
Loans
and debt supporting 1998-1 Certificates
|
$
|
127.8
|
$
|
127.8
|
|||
Loans
and debt supporting 1999-1 Certificates
|
187.4
|
187.4
|
|||||
$
|
315.2
|
$
|
315.2
|
||||
Type
of Hedge
|
Notional
Amount
at
March
31, 2006
(in
millions)
|
LIBOR
Cap Strike Price or Swap Rate
|
Trade
Date
|
Maturity
Date
|
Estimated
Value
at
March
31, 2006
(in
millions)
|
|||||||||||
Interest
Rate Cap
|
$
|
140.0
|
6.000
|
%
|
08/13/01
|
08/26/06
|
$
|
—
|
||||||||
Interest
Rate Cap
|
$
|
104.6
|
4.500
|
%
|
09/28/01
|
10/25/06
|
$
|
0.3
|
||||||||
Interest
Rate Swap
|
$
|
175.0
|
4.202
|
%
|
05/16/05
|
04/01/10
|
$
|
6.0
|
||||||||
Interest
Rate Cap
|
$
|
20.6
|
3.500
|
%
|
12/17/03
|
02/01/11
|
$
|
0.8
|
Quarter
ended March 31,
(in
millions)
|
|||||||
2006
|
2005
|
||||||
Revenues:
|
|||||||
Real
estate
|
$
|
54.2
|
$
|
27.3
|
|||
Specialty
finance
|
3.3
|
6.6
|
|||||
Other*
|
(1.2
|
)
|
(0.6
|
)
|
|||
Total
revenues
|
56.3
|
33.3
|
|||||
Expenses:
|
|||||||
Operating
expenses excluding interest, depreciation, and
amortization:**
|
|||||||
Real
estate
|
7.9
|
4.4
|
|||||
Specialty
finance
|
5.5
|
9.1
|
|||||
Other*
|
(1.2
|
)
|
(0.6
|
)
|
|||
Total
operating expenses excluding interest, depreciation, and
amortization**
|
12.2
|
12.9
|
|||||
Depreciation
and amortization expense:
|
|||||||
Real
estate
|
10.0
|
4.8
|
|||||
Specialty
finance
|
0.5
|
0.3
|
|||||
Total
depreciation and amortization expense
|
10.5
|
5.1
|
|||||
Interest
expense:
|
|||||||
Real
estate
|
23.1
|
12.5
|
|||||
Specialty
finance
|
2.0
|
4.4
|
|||||
Other*
|
(0.1
|
)
|
—
|
||||
Total
interest expense
|
25.0
|
16.9
|
|||||
Total
expenses
|
47.7
|
34.9
|
|||||
Income/(loss)
from continuing operations
|
8.6
|
(1.6
|
)
|
||||
Income
from discontinued operations, after income taxes:
|
|||||||
Real
estate
|
3.2
|
0.4
|
|||||
Specialty
finance
|
5.6
|
4.6
|
|||||
Total
income from discontinued operations, after income taxes
|
8.8
|
5.0
|
|||||
Gain
on sale of assets - Real estate segment
|
0.6
|
—
|
|||||
Net
income
|
$
|
18.0
|
$
|
3.4
|
**
|
also
includes the minority interest in earnings of consolidated joint
ventures
net of the equity in earnings of unconsolidated joint
ventures
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
Rental
income
|
$
50.0
|
92%
|
$
25.4
|
93%
|
|||||
Interest
income
|
1.3
|
2%
|
1.6
|
6%
|
|||||
Other
|
2.9
|
6%
|
0.3
|
1%
|
|||||
Total
Revenues
|
$
54.2
|
100%
|
$
27.3
|
100%
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
Rental
income
|
$
0.6
|
18%
|
$
—
|
0%
|
|||||
Interest
income
|
1.0
|
30%
|
5.3
|
80%
|
|||||
Other
|
1.7
|
52%
|
1.3
|
20%
|
|||||
Total
Revenues
|
$
3.3
|
100%
|
$
6.6
|
100%
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
General
operating and administrative
|
$
3.5
|
44%
|
$
3.3
|
75%
|
|||||
Property
expenses, state and other taxes
|
3.5
|
44%
|
1.1
|
25%
|
|||||
Other
|
0.9
|
12%
|
—
|
—
|
|||||
$
7.9
|
100%
|
$
4.4
|
100%
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
General
operating and administrative
|
$
5.5
|
100%
|
$
8.2
|
90%
|
|||||
Property
expenses, state and other taxes
|
—
|
—
|
0.1
|
1%
|
|||||
Other
|
—
|
—
|
0.8
|
9%
|
|||||
$
5.5
|
100%
|
$
9.1
|
100%
|
·
|
During
2005, expenses in this segment includes a one time charge of $2 million
resulting from a grant of non-restricted stock and related cash
compensation to members of our Board of Directors and
employees.
|
·
|
During
2005, we incurred certain costs related to the upgrade of our property
management software to account for leasing transactions and to capture
other tenant and lease information. We also incurred certain costs
to
in-source the information technology, human resources and other functions
previously outsourced to related parties.
|
·
|
In
2005 we incurred additional expenses with the integration of the
merged
portfolios. While our servicing fee income in this segment for the
management of the larger portfolio increased after the Merger, we
incurred
various one-time setup expenses during 2005 to add new properties
creating
an excess of new expenses over new revenues that have stabilized
in 2006.
The Income Fund portfolio had been previously serviced by the specialty
finance segment and did not create significant additional integration
costs.
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
Real
estate
|
$
23.1
|
92%
|
$
12.5
|
74%
|
|||||
Specialty
finance
|
2.0
|
8%
|
4.4
|
26%
|
|||||
Other
|
(0.1
|
)
|
—
|
—
|
—
|
||||
$
25.0
|
100%
|
$
16.9
|
100%
|
Quarter
ended March 31,
(in
millions)
|
|||||||||
2006
|
%
of Total
|
2005
|
%
of Total
|
||||||
Real
estate
|
$
10.0
|
95%
|
$
4.8
|
94%
|
|||||
Specialty
finance
|
0.5
|
5%
|
0.3
|
6%
|
|||||
$
10.5
|
100%
|
$
5.1
|
100%
|
Quarter
Ended March 31,
(in
millions)
|
|||||||||||||
2006
|
2005
|
||||||||||||
Real
Estate
Segment
|
Specialty
Finance
Segment
|
Real
Estate
Segment
|
Specialty
Finance
Segment
|
||||||||||
Sale
of real estate
|
$
|
14.1
|
$
|
40.7
|
$
|
—
|
$
|
57.0
|
|||||
Cost
of real estate sold
|
11.0
|
36.2
|
—
|
47.2
|
|||||||||
Gain
on sale of real estate
|
3.1
|
4.5
|
—
|
9.8
|
|||||||||
Net
other income
|
0.1
|
1.7
|
0.4
|
0.8
|
|||||||||
Earnings
from real estate
discontinued
operations
before
tax
|
3.2
|
6.2
|
0.4
|
10.6
|
|||||||||
Retail
operations revenue
|
—
|
—
|
—
|
5.2
|
|||||||||
Retail
cost of sales
|
—
|
—
|
—
|
4.6
|
|||||||||
Earnings
from retail
discontinued
operations
before
tax
|
—
|
—
|
—
|
0.6
|
|||||||||
Income
tax provision
|
—
|
0.6
|
—
|
6.6
|
|||||||||
Income
from discontinued
operations,
after income taxes
|
$
|
3.2
|
$
|
5.6
|
$
|
0.4
|
$
|
4.6
|
On
January 18, 2005, Robert Lewis and Sutter Acquisition Fund, LLC,
two
limited partners in several Income Funds, filed Plaintiffs’ Corrected
Original Petition for Class Action, Cause No. 05-00083-F, a purported
class action lawsuit on behalf of the limited partners of the Income
Funds
against the Company, USRP, the Income Funds and the general partners
(Mr.
Seneff, Mr. Bourne and CNL Realty Corporation) of the Income Funds,
and
subsidiaries of the Company in the District Court of Dallas County,
Texas
(the “Court”). The complaint alleged that the general partners of the
Income Funds breached their fiduciary duties in connection with the
proposed Mergers between the Income Funds and USRP and that the Company,
subsidiaries of the Company and USRP aided and abetted in the alleged
breaches of fiduciary duties. The complaint further alleged that
the
Income Fund general partners violated provisions of the Income Fund
partnership agreements and demanded an accounting as to the affairs
of the
Income Funds. On April 26, 2005, a supplemental plea to jurisdiction
was
held. On May 2, 2005, the plaintiffs filed their First Amended Petition
for Class Action. In the Amended Petition the plaintiffs did not
add any
parties or claims, but they did add allegations that the general
partners
of the Income Funds, with CNLRP and USRP, prepared and distributed
a false
and misleading final proxy statement filing to the limited partners
of the
Income Funds and the shareholders of CNLRP and USRP. The plaintiffs
are
seeking unspecified compensatory and exemplary damages and equitable
relief, which also included an injunction preventing the defendants
from
proceeding with the Mergers. On May 26, 2005, the Court entered a
Final
Order Dismissing Action for lack of subject matter jurisdiction.
On June
22, 2005, the plaintiffs filed a Notice of Appeal of the Order of
Dismissal. On September 7, 2005, the plaintiffs filed an appellants’
brief. On November 7, 2005, the Company and the other defendants
filed an
appellees’ brief. On December 12, 2005, the plaintiffs filed a brief in
reply. The Court has granted a request for postponement of oral argument
on the appeal that was originally scheduled for May 3, 2006. The
Court has
not yet set a new date. Management of the Company believes the claims
against the Company are without merit and intends to vigorously defend
against such claims.
|
During
2004, Management Strategies, Inc. filed a lawsuit against USRP. The
complaint alleges that the Company owes approximately $3 million
in sales
and fuel tax liabilities to the State of Georgia. The management
of the
Company believes the claims against the Company are without merit
and
intends to defend vigorously against such claims.
|
Item
1A.
|
Risk
Factors. There have been no material changes in the risk factors
previously disclosed in our Annual Report on Form
10-K.
|
2.1
|
Agreement
and Plan of Merger by and between the Registrant and CNL Restaurant
Properties, Inc., dated as of August 9, 2004 (previously filed as
Exhibit
2.1 to the Registrant’s current report on Form 8-K filed on August 10,
2004 and incorporated herein by
reference).
|
2.2
|
Agreements
and Plans of Merger by and among the Registrant, a separate, wholly-owned
subsidiary of the operating partnership of the Registrant and each
of the
18 CNL Income Funds (previously filed as Exhibits 2.2 - 2.19 to the
Registrant’s current report on Form 8-K filed on August 10, 2004 and
incorporated herein by reference).
|
3.1
|
Restated
Articles of Incorporation of the Registrant dated November 11, 1997,
as
amended by the Articles of Amendment to the Articles of Restatement
of the
Registrant dated February 24, 2005 and the Articles of Amendment
to the
Articles of Restatement of the Registrant dated February 24, 2005
(previously filed as Exhibit 3.1 to the Registrant’s quarterly report on
Form 10-Q for the fiscal quarter ended March 31, 2005 and incorporated
herein by reference).
|
3.2
|
Third
Amended and Restated Bylaws (previously filed as Exhibit 3.1 to the
Company’s current report on Form 8-K filed on August 15, 2005 and
incorporated herein by reference).
|
4.1
|
Specimen
of Common Stock Certificate (previously filed as Exhibit 4.1 to the
Registrant’s Registration Statement on Form S-4 (File No. 333-21403) and
incorporated herein by reference).
|
4.2
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
Series A Cumulative Convertible Preferred Stock (previously filed
as
Exhibit 3.2 to the Registrant’s current report on Form 8-K filed on
November 14, 1997 and incorporated herein by
reference).
|
4.3
|
Amendment
to Articles Supplementary Classifying and Designating a Series of
Preferred Stock as Series A Cumulative Convertible Preferred Stock
(previously filed as Exhibit 3.2 to the Registrant’s current report on
Form 8-K filed on February 25, 2005 and incorporated herein by
reference).
|
4.4
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
8% Series B Convertible Preferred Stock (previously filed as Exhibit
4.01
to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003
and incorporated herein by
reference).
|
4.5
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
8% Series B-1 Convertible Preferred Stock (previously filed as Exhibit
99.5 to the Registrant’s current report on Form 8-K filed on September 16,
2004 and incorporated herein by
reference).
|
4.6
|
Articles
Supplementary Establishing and Fixing The Rights and Preferences
of 7.5%
Series C Redeemable Convertible Preferred Stock (previously filed
as
Exhibit 4.1 to the Registrant’s registration statement on Form 8-A (File
No. 001-13089) and incorporated herein by
reference).
|
4.7
|
Specimen
of 7.5% Series C Redeemable Convertible Preferred Stock Certificate
(previously filed as Exhibit 4.2 to the Registrant’s registration
statement on Form 8-A (File No. 001-13089) and incorporated herein
by
reference).
|
4.8
|
Indenture
dated as of March 4, 2005, among Net Lease Funding 2005, LP, MBIA
Insurance Corporation and Wells Fargo Bank, N.A., as indenture trustee
relating to $275,000,000 Triple Net Lease Mortgage Notes, Series
2005
(previously filed as Exhibit 99.1 to the Registrant’s current report on
Form 8-K filed on March 10, 2005 and incorporated herein by
reference).
|
4.9
|
Securities
Purchase Agreement relating to the Series B Preferred Stock (previously
filed as Exhibit 4.02 to the Registrant’s Form 10-Q for the fiscal quarter
ended June 30, 2003 and incorporated herein by
reference).
|
4.10
|
Registration
Rights Agreement relating to Series B Preferred Stock (previously
filed as
Exhibit 4.03 to the Registrant’s Form 10-Q for the fiscal quarter ended
June 30, 2003 and incorporated herein by
reference).
|
4.11
|
Stock
Purchase Warrant - Omnicron Master Trust (previously filed as Exhibit
4.04
to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003
and incorporated herein by
reference).
|
4.12
|
Stock
Purchase Warrant - The Riverview Group, LLC (previously filed as
Exhibit
4.05 to the Registrant’s Form 10-Q for the fiscal quarter ended June 30,
2003 and incorporated herein by
reference).
|
4.13
|
Indenture,
dated as of March 23, 2005, between the Registrant and Wells Fargo
Bank,
National Association, as trustee, relating to the Registrant’s 7 ½% Senior
Notes due 2015 (previously filed as Exhibit 4.1 to the Registrant’s
current report on Form 8-K filed on March 28, 2005 and incorporated
herein
by reference).
|
4*
|
Pursuant
to Regulation S-K Item 601(b)(4)(iii), the Registrant by this filing
agrees, upon request, to furnish to the Securities and Exchange Commission
a copy of instruments defining the rights of holders of long-term
debt of
the Registrant.
|
10.6
|
Registrant
Flexible Incentive Plan, as amended, (previously filed as Exhibit
10.1 to
the Registrant’s Current Report on Form 8-K filed on March 20, 2006 and
incorporated herein by reference).
|
10.7
|
Credit
Agreement, dated as of April 8, 2005, by and among the Registrant,
as
borrower, certain subsidiaries of the Registrant, as guarantors,
Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender,
Bank of America Securities LLC, as Sole Lead Arranger and Sole Book
Manager, Key Bank, National Association, as Syndication Agent, Credit
Suisse First Boston, Societe Generale, and Wachovia Bank National
Association, as Co-Documentation Agents, and the lenders party thereto
(previously filed as Exhibit 10.1 to the Registrant’s current report on
Form 8-K filed on April 13, 2005 and incorporated herein by
reference).
|
10.8
|
Pledge
Agreement, dated as of April 8, 2005, by substantially all of the
Borrower’s domestic subsidiaries, in favor of Bank of America, N.A., in
its capacity as Administrative Agent (previously filed as Exhibit
10.2 to
the Registrant’s current report on Form 8-K filed on April 13, 2005 and
incorporated herein by reference).
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) as adopted
pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) as adopted
pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
Date:
May 9, 2006
|
TRUSTREET
PROPERTIES, INC.
|
|
By:
|
||
/s/
CURTIS B. MCWILLIAMS
|
||
Curtis
B. McWilliams
|
||
Chief
Executive Officer
|
||
By:
|
||
/s/
STEVEN D. SHACKELFORD
|
||
Steven
D. Shackelford
|
||
Chief
Financial Officer
|
||
2.1
|
Agreement
and Plan of Merger by and between the Registrant and CNL Restaurant
Properties, Inc., dated as of August 9, 2004 (previously filed as
Exhibit
2.1 to the Registrant’s current report on Form 8-K filed on August 10,
2004 and incorporated herein by
reference).
|
2.2
|
Agreements
and Plans of Merger by and among the Registrant, a separate, wholly-owned
subsidiary of the operating partnership of the Registrant and each
of the
18 CNL Income Funds (previously filed as Exhibits 2.2 - 2.19 to the
Registrant’s current report on Form 8-K filed on August 10, 2004 and
incorporated herein by reference).
|
3.1
|
Restated
Articles of Incorporation of the Registrant dated November 11, 1997,
as
amended by the Articles of Amendment to the Articles of Restatement
of the
Registrant dated February 24, 2005 and the Articles of Amendment
to the
Articles of Restatement of the Registrant dated February 24, 2005
(previously filed as Exhibit 3.1 to the Registrant’s quarterly report on
Form 10-Q for the fiscal quarter ended March 31, 2005 and incorporated
herein by reference).
|
3.2
|
Third
Amended and Restated Bylaws (previously filed as Exhibit 3.1 to the
Company’s current report on Form 8-K filed on August 15, 2005 and
incorporated herein by reference).
|
4.1
|
Specimen
of Common Stock Certificate (previously filed as Exhibit 4.1 to the
Registrant’s Registration Statement on Form S-4 (File No. 333-21403) and
incorporated herein by reference).
|
4.2
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
Series A Cumulative Convertible Preferred Stock (previously filed
as
Exhibit 3.2 to the Registrant’s current report on Form 8-K filed on
November 14, 1997 and incorporated herein by
reference).
|
4.3
|
Amendment
to Articles Supplementary Classifying and Designating a Series of
Preferred Stock as Series A Cumulative Convertible Preferred Stock
(previously filed as Exhibit 3.2 to the Registrant’s current report on
Form 8-K filed on February 25, 2005 and incorporated herein by
reference).
|
4.4
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
8% Series B Convertible Preferred Stock (previously filed as Exhibit
4.01
to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003
and incorporated herein by
reference).
|
4.5
|
Articles
Supplementary Classifying and Designating a Series of Preferred Stock
as
8% Series B-1 Convertible Preferred Stock (previously filed as Exhibit
99.5 to the Registrant’s current report on Form 8-K filed on September 16,
2004 and incorporated herein by
reference).
|
4.6
|
Articles
Supplementary Establishing and Fixing The Rights and Preferences
of 7.5%
Series C Redeemable Convertible Preferred Stock (previously filed
as
Exhibit 4.1 to the Registrant’s registration statement on Form 8-A (File
No. 001-13089) and incorporated herein by
reference).
|
4.7
|
Specimen
of 7.5% Series C Redeemable Convertible Preferred Stock Certificate
(previously filed as Exhibit 4.2 to the Registrant’s registration
statement on Form 8-A (File No. 001-13089) and incorporated herein
by
reference).
|
4.8
|
Indenture
dated as of March 4, 2005, among Net Lease Funding 2005, LP, MBIA
Insurance Corporation and Wells Fargo Bank, N.A., as indenture trustee
relating to $275,000,000 Triple Net Lease Mortgage Notes, Series
2005
(previously filed as Exhibit 99.1 to the Registrant’s current report on
Form 8-K filed on March 10, 2005 and incorporated herein by
reference).
|
4.9
|
Securities
Purchase Agreement relating to the Series B Preferred Stock (previously
filed as Exhibit 4.02 to the Registrant’s Form 10-Q for the fiscal quarter
ended June 30, 2003 and incorporated herein by
reference).
|
4.10
|
Registration
Rights Agreement relating to Series B Preferred Stock (previously
filed as
Exhibit 4.03 to the Registrant’s Form 10-Q for the fiscal quarter ended
June 30, 2003 and incorporated herein by
reference).
|
4.11
|
Stock
Purchase Warrant - Omnicron Master Trust (previously filed as Exhibit
4.04
to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 2003
and incorporated herein by
reference).
|
4.12
|
Stock
Purchase Warrant - The Riverview Group, LLC (previously filed as
Exhibit
4.05 to the Registrant’s Form 10-Q for the fiscal quarter ended June 30,
2003 and incorporated herein by
reference).
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4.13
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Indenture,
dated as of March 23, 2005, between the Registrant and Wells Fargo
Bank,
National Association, as trustee, relating to the Registrant’s 7 ½% Senior
Notes due 2015 (previously filed as Exhibit 4.1 to the Registrant’s
current report on Form 8-K filed on March 28, 2005 and incorporated
herein
by reference).
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4*
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Pursuant
to Regulation S-K Item 601(b)(4)(iii), the Registrant by this filing
agrees, upon request, to furnish to the Securities and Exchange Commission
a copy of instruments defining the rights of holders of long-term
debt of
the Registrant.
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10.6
|
Registrant
Flexible Incentive Plan, as amended, (previously filed as Exhibit
10.1 to
the Registrant’s Current Report on Form 8-K filed on March 20, 2006 and
incorporated herein by reference).
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10.7
|
Credit
Agreement, dated as of April 8, 2005, by and among the Registrant,
as
borrower, certain subsidiaries of the Registrant, as guarantors,
Bank of
America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender,
Bank of America Securities LLC, as Sole Lead Arranger and Sole Book
Manager, Key Bank, National Association, as Syndication Agent, Credit
Suisse First Boston, Societe Generale, and Wachovia Bank National
Association, as Co-Documentation Agents, and the lenders party thereto
(previously filed as Exhibit 10.1 to the Registrant’s current report on
Form 8-K filed on April 13, 2005 and incorporated herein by
reference).
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10.8
|
Pledge
Agreement, dated as of April 8, 2005, by substantially all of the
Borrower’s domestic subsidiaries, in favor of Bank of America, N.A., in
its capacity as Administrative Agent (previously filed as Exhibit
10.2 to
the Registrant’s current report on Form 8-K filed on April 13, 2005 and
incorporated herein by reference).
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31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) as adopted
pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) as adopted
pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
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32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
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