Excel announces master lease and option agreement for 11 shopping centers.

SAN DIEGO--(BUSINESS WIRE)--Jan. 26, 1995--Excel Realty Trust Inc. (NYSE:XEL) Thursday announced that it has entered into a master lease and option agreement to purchase 11 shopping centers located in North Carolina.

These properties were originally scheduled to close as part of a partnership joint venture wherein the seller would initially receive an 8 percent return ($1.72 dividend divided by $21.50 share price equals 8 percent) for their equity. The transaction was restructured as a master lease and an option agreement to purchase the 11 properties.

The master lease also calls for a payment equal to 8 percent of the lessor/sellers equity. Excel will immediately take over all management and operating responsibilities for the 11 shopping centers and receive all cash flow in excess of the master lease payment. As a result of this transaction, the company has established a new regional management and leasing office in Raleigh-Durham, N.C.

The master lease has a term of five years. The option agreement calls for Excel to purchase the properties during the next 13 months. The option agreement is based on a capitalization rate of 10.25 percent after deducting a 5 percent vacancy factor for non-anchor tenants, a structural reserve of 15 cents per foot and a 4 percent management fee.

The estimated purchase price for the 11 properties is $73.7 million. Upon exercise of the option agreement, Excel will receive the benefit of all principal amortization occurring from the beginning date of the master lease until the time of purchase.

Since the purchase price is not based on income from any currently vacant space, the seller has the right for 18 months to lease vacant space in excess of 5 percent of the non-anchor space in exchange for cash and shares valued at $21.50 per share based upon the same 10.25 percent purchase capitalization rate.

Any shares issued hereunder are subject to adjustment after 12 months to the then-prevailing market price. The seller would be responsible for all tenant improvements and leasing commissions on any such space. Any new tenants must be approved by Excel prior to the execution of their leases.

The 11 properties are neighborhood or power strip shopping centers, seven of which are anchored by Walmart and a grocery store, drug store and/or a junior department store, small shop space and out parcels. The four remaining shopping centers are anchored by grocery stores, drug stores and/or junior department stores.

The centers range from four to 8 years in age, and in most cases are the dominant centers in their geographical area.

Excel intends to purchase these properties using the proceeds from the sale of certain properties which are currently under contract or being offered for sale. The properties to be sold are part of a strategy for the redeployment of approximately one-third of the company's assets over the next 24 months.

The properties being redeployed are primarily the company's smaller single-tenant properties that the company does not intend to hold as part of its core properties. The company has sold five properties and expects to sell several more in the next few months. The sales will be effected utilizing tax-deferred exchanges for the above optioned properties.

Separately, the company announced it had hired S. Eric Ottesen as general counsel. Ottesen had previously been a senior partner in a San Diego law firm.

Excel's continuing business plan calls for the company to purchase and manage neighborhood or regional shopping centers anchored by major retail tenants or single-tenant retail properties leased to a major retail tenant. The current transaction will add 1.5 million square feet to the current portfolio, resulting in 8.7 million total square footage under management.

CONTACT: Excel Realty Trust Inc., San Diego

Graham R. Bullick, 619/485-9400, ext. 203