<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-98372-01
SPIEKER PROPERTIES, L.P.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3188774
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
(Address of principal executive offices) (Zip code)
(415) 854-5600
(Registrant's telephone number, including area code)
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
--- ---
<PAGE> 2
SPIEKER PROPERTIES, L.P.
QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements...........................................................
Consolidated Balance Sheets as of September 30, 1996, and
December 31, 1995.........................................................
Consolidated Statements of Operations for the Three and Nine
Month Periods Ended September 30, 1996, and September 30, 1995............
Consolidated Statement of Partners' Capital for the Nine Month
Period Ended September 30, 1996...........................................
Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 30, 1996 and September 30, 1995...................
Notes to Consolidated Financial Statements.....................................
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..............................................................
PART II. OTHER INFORMATION
Item 2. Changes in Securities..........................................................
Item 6. Exhibits and Reports on Form 8-K...............................................
Signatures..............................................................................
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following financial statements of Spieker Properties,
L.P. (the Operating Partnership):
(i) Consolidated Balance Sheets as of September 30, 1996, and
December 31, 1995
(ii) Consolidated Statements of Operations for the Three and Nine Month
Periods Ended September 30, 1996, and September 30, 1995
(iii) Consolidated Statement of Partners' Capital for the
Nine Month Period Ended September 30, 1996
(iv) Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 30, 1996 and September 30, 1995
(v) Notes to Consolidated Financial Statements
The financial statements referred to above should be read in conjunction with
the Operating Partnership's Annual Report on Form 10-K/A for the year ended
December 31, 1995.
<PAGE> 4
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996, AND DECEMBER 31, 1995
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
(unaudited)
<S> <C> <C>
INVESTMENTS IN REAL ESTATE
Properties:
Land, land improvements and leasehold interests $ 357,280 $ 303,157
Buildings and improvements 947,005 756,734
Construction in progress 31,901 38,980
----------- -----------
1,336,186 1,098,871
Less - Accumulated depreciation (135,592) (124,612)
----------- -----------
Net investment in properties 1,200,594 974,259
Investments in mortgages 14,342 --
----------- -----------
Net investments in real estate 1,214,936 974,259
CASH AND CASH EQUIVALENTS 24,541 7,573
ACCOUNTS RECEIVABLE 3,353 3,351
DEFERRED RENT RECEIVABLE 4,391 4,698
RECEIVABLE FROM RELATED PARTY 109 386
DEFERRED FINANCING AND LEASING COSTS, net of
accumulated amortization of $8,834
and $9,586 as of September 30, 1996,
and December 31, 1995, respectively 16,686 13,485
FURNITURE, FIXTURES AND EQUIPMENT, net 2,225 1,678
PREPAID EXPENSES AND OTHER ASSETS 3,649 6,067
----------- -----------
$ 1,269,890 $ 1,011,497
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 5
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996, AND DECEMBER 31, 1995
(dollars in thousands)
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
(unaudited)
<S> <C> <C>
DEBT
Unsecured notes $ 510,000 $ 260,000
Unsecured line of credit 39,000 117,700
Mortgage loans 47,301 112,702
----------- -----------
Total Debt 596,301 490,402
----------- -----------
ASSESSMENT BONDS PAYABLE 12,176 12,140
ACCOUNTS PAYABLE 3,619 3,804
ACCRUED REAL ESTATE TAXES 5,018 506
ACCRUED INTEREST 9,658 2,510
UNEARNED RENTAL INCOME 6,410 6,972
PARTNER DISTRIBUTIONS PAYABLE 18,655 15,588
OTHER ACCRUED EXPENSES AND LIABILITIES 14,918 12,202
----------- -----------
Total liabilities 666,755 544,124
----------- -----------
MINORITY INTERESTS (1,257) (1,203)
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
PARTNERS' CAPITAL
General Partners, including a liquidation preference of $131,250 558,367 419,847
Limited Partners 46,025 48,729
----------- -----------
Total Partners' Capital 604,392 468,576
----------- -----------
$ 1,269,890 $ 1,011,497
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996, AND 1995
(dollars in thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE
Rental income $ 51,079 $ 38,627 $ 142,131 $ 110,529
Interest and other income 1,064 397 3,026 1,521
--------- --------- --------- ---------
52,143 39,024 145,157 112,050
--------- --------- --------- ---------
OPERATING EXPENSES
Rental expenses 9,578 6,177 24,351 17,556
Real estate taxes 3,989 3,132 11,292 8,822
Interest expense, including amortization of finance costs 9,761 10,690 26,443 35,711
Depreciation and amortization 10,033 8,100 27,373 23,384
General and administrative and other expenses 2,686 2,114 7,491 6,335
--------- --------- --------- ---------
36,047 30,213 96,950 91,808
--------- --------- --------- ---------
Income from operations before disposal of real estate
properties and minority interests 16,096 8,811 48,207 20,242
--------- --------- --------- ---------
DISPOSAL OF REAL ESTATE PROPERTIES
Loss on sale (1,483) - (1,483) -
--------- --------- --------- ---------
Income from operations before minority interests 14,613 8,811 46,724 20,242
--------- --------- --------- ---------
MINORITY INTERESTS' SHARE IN NET (INCOME) LOSS (4) 7 (6) 18
--------- --------- --------- ---------
Net income $ 14,609 $ 8,818 $ 46,718 $ 20,260
========= ========= ========= =========
General Partner 12,787 7,255 40,603 16,357
Limited Partner 1,822 1,563 6,115 3,903
--------- --------- --------- ---------
Totals $ 14,609 $ 8,818 $ 46,718 $ 20,260
========= ========= ========= =========
Net income per Operating Partnership unit
Net income $ .34 $ .24 $ 1.11 $ .62
========= ========= ========= =========
Distributions per Operating Partnership Unit
General Partners $ .43 $ .42 $ 1.34 $ 1.32
========= ========= ========= =========
Limited Partners $ .43 $ .42 $ 1.29 $ 1.26
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
(dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
General Limited
Partner Partner General Limited
Units Units Partner Partner Total
----- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 30,475,232 6,565,356 $ 419,847 $ 48,729 $ 468,576
Contribution-Proceeds from
sale of Common Stock 5,022,500 -- 121,368 -- 121,368
Contribution-Proceeds from
sale of Class C Common Stock 1,176,470 -- 29,963 -- 29,963
Conversion of limited partners' 15,537 (15,537) 386 (386) --
interests
Non-cash compensation merit fund -- -- 75 15 90
Restricted stock grant 8,000 -- -- -- --
Exercise of stock options 41,750 -- 856 -- 856
Amortization of deferred
compensation -- -- 291 -- 291
Partner Distributions -- -- (55,022) (8,448) (63,470)
Net income -- -- 40,603 6,115 46,718
---------- ---------- ---------- ---------- ----------
BALANCE AT SEPTEMBER 30, 1996 36,739,489 6,549,819 $ 558,367 $ 46,025 $ 604,392
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996, AND 1995
(dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 46,718 $ 20,260
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization 27,373 23,384
Amortization of prepaid interest and deferred financing costs 956 7,418
Non-cash compensation 381 276
Minority interests' share of net income (net loss) 6 (18)
Loss of sale on real estate 1,483 --
Decrease (increase) in deferred rent receivable 307 (275)
(Increase) decrease in accounts receivable (2) 1,002
Decrease in receivable from related party 277 65
Decrease (increase) in prepaid expenses and other assets 1,239 (994)
Decrease in assessment bonds payable (573) (342)
(Decrease) increase in accounts payable (185) 5,155
Increase in accrued real estate taxes 4,512 3,390
Increase (decrease) in accrued interest 7,148 (480)
Increase in other accrued expenses and liabilities 2,520 2,294
(Decrease) increase in unearned rental income (562) (1,181)
Increase in payable to related party -- (1,186)
--------- ---------
Net cash provided by operating activities 91,598 58,768
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (253,374) (128,401)
Additions to leasing costs (4,288) (2,994)
Additions to investment in mortgages (14,342) --
Proceeds from disposal of property 2,001 --
--------- ---------
Net cash used for investing activities (270,003) (131,395)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 513,050 139,431
Payments on debt (407,151) (196,755)
Payment of financing fees (2,250) (303)
Payment of distributions (60,463) (38,201)
Capital contributions - stock offerings 151,331 167,119
Capital contributions - stock options exercised 856 645
--------- ---------
Net cash provided by financing activities 195,373 71,936
--------- ---------
Net increase in cash and cash equivalents 16,968 (691)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,573 9,663
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,541 $ 8,972
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest 20,181 29,119
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Debt assumed in relation to property acquisitions -- 22,827
Increase to land and assessment bonds payable 609 4,034
Minority interest capital recorded in relation to property acquisitions -- 10,113
Write-off of fully depreciated property 12,979 3,369
Write-off of fully amortized deferred financing and leasing costs 4,098 1,847
Conversion of operating partnership units into Common Stock with resulting reduction
in minority interest and increase in additional paid-in-capital 386 343
Restricted Stock Grants 200 --
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 9
SPIEKER PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(dollars in thousands, except per share amounts)
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Spieker Properties, L.P.
Spieker Properties, L.P. (the "Operating Partnership") was formed on
November 10, 1993 and commenced operations on November 19, 1993 when
Spieker Properties, Inc. ("the Company") completed an initial public
offering ("IPO") and issued 20,400,000 Shares of Common Stock at $20.50 per
share, or $418,200. Net proceeds of $386,800 were used to purchase an
approximate 77.6 percent general partnership interest in the Operating
Partnership. In addition, the individual partners in Spieker Partners
transferred their interests in certain properties to the Operating
Partnership in exchange for an approximate 22.4 percent limited partnership
interest in the Operating Partnership.
The transaction was accounted for as a business combination using the
purchase method for the acquisition of the separate properties and the
interest of the unaffiliated limited partners. The predecessor cost basis
was maintained to the extent of the 22.4 percent interest in those
properties received from the former partners of Spieker Partners.
The Operating Partnership is primarily engaged in the ownership, operation,
management, leasing, acquisition, expansion and development of industrial,
suburban office, and retail income-producing properties. As of September
30, 1996, the Operating Partnership owned (i) 100 percent of 134
properties, (ii) an effective 100 percent general partner interest in
Spieker Washington Interest Partners ("SWIP"), a California general
partnership, which owns 100 percent of 13 properties, (iii) a 90 percent
interest in one property, (iv) a 92.5 percent interest with SWIP in one
property, and (v) 95 percent of the Series A Preferred Stock of Spieker
Northwest, Inc., which provides fee management and other services for
properties not owned by the Operating Partnership. The Operating
Partnership's 149 stabilized properties, aggregating approximately 20.4
million leasable square feet, are comprised of 80 industrial properties, 54
office properties, and 15 retail properties. All of the properties are
located in California and the Pacific Northwest.
As a result of a number of stock offerings and contribution of capital to
the Operating Partnership by the Company, the Company owns approximately
84.9 percent general partner interest in the Operating Partnership as of
September 30, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the consolidated financial
position of the Operating Partnership and SWIP as of September 30, 1996,
and December 31, 1995, its consolidated results of operations for the three
and nine month periods ended September 30, 1996 and 1995, and its
consolidated cash flows for the nine month periods ended September 30, 1996
and 1995. The Operating Partnership's investment in Spieker Northwest, Inc.
is accounted for under the equity method. The carrying value of Spieker
Northwest, Inc. of $53 at September 30, 1996, and December 31, 1995, is
included in prepaid expenses and other assets. All significant intercompany
balances and transactions have been eliminated in the consolidated
financial statements.
Interim Financial Information
The Consolidated Financial Statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC")
and, in management's opinion, include all adjustments necessary for a fair
statement of results for such interim periods. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules or regulations; however, the
Company believes that the disclosures made are adequate to make the
information presented not misleading.
<PAGE> 10
The interim results for the three and nine month periods ended September
30, 1996 and 1995, are not necessarily indicative of results for the full
year. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Operating Partnership's Annual Report on Form 10-K/A for the year ended
December 31, 1995.
Investments in Real Estate
Properties are recorded at cost and are depreciated using the straight-line
method over the estimated useful lives of the properties. The estimated
lives are as follows:
Land improvements and leasehold interests 18 to 40 years
Buildings and improvements 10 to 40 years
Tenant improvements Term of the related lease
Investments in real estate are stated at the lower of depreciated cost or
estimated fair value. Fair value for financial reporting purposes is
evaluated periodically by the Operating Partnership on a property by
property basis using undiscounted cash flow. If a potential impairment is
identified, it is measured by the property's fair value based on either
sales comparables or the net cash expected to be generated by the property,
less estimated carrying costs (including interest) during the anticipated
holding period, plus the estimated cash proceeds from the ultimate
disposition of the property. To the extent that the carrying value exceeds
the estimated fair value, a provision for decrease in net realizable value
is recorded. Estimated fair value is not necessarily an indication of a
property's current value or the amount that will be realized upon the
ultimate disposition of the property. As of September 30, 1996, and
December 31, 1995, none of the carrying values of the properties exceeded
their estimated fair values.
As of September 30, 1996, and December 31, 1995, the properties are located
primarily in California, Oregon and Washington. As a result of this
geographic concentration, the operations of these properties could be
adversely affected by a recession or general economic downturn in the areas
where these properties are located.
The Operating Partnership is considering the sale of certain retail
properties, though as of September 30, 1996, the Company's Board of
Directors had not yet approved a plan of disposition.
Project costs clearly associated with the development and construction of a
real estate project are capitalized as construction in progress. In
addition, interest and real estate taxes are capitalized during the period
in which activities necessary to get the property ready for its intended
use are in progress.
In January 1996, the Operating Partnership acquired two mortgage loans for
the initial cost of $14,333. The mortgages are secured by real estate, have
an aggregate face value of $21,000, require monthly principal and interest
payments of $163, and mature in December 1999. The Operating Partnership
assesses possible impairment of these loans on a quarterly basis by
reviewing the fair value of the underlying real estate. At September 30,
1996, the value of the underlying real estate was in excess of the carrying
value of the mortgage loans.
The land on which three of the Operating Partnership's properties are
located is owned by Stanford University and is subject to ground leases.
The ground leases expire in 2039 or 2040, and unless the leases are
extended, the use of the land, together with all improvements, will revert
back to Stanford University. The former owners of the three properties
prepaid the ground leases through 2011, 2012 and 2017; thereafter, the
Operating Partnership will be responsible for the ground lease payments, as
defined under the terms of the leases. These ground lease payments have
been segregated from the total purchase price of the properties,
capitalized as leasehold interests in the accompanying consolidated balance
sheet, and are being amortized ratably over the terms of the related
original prepayment periods (18 to 24 years).
Cash and Cash Equivalents
Highly liquid investments with an original maturity of three months or less
when purchased are classified as cash equivalents.
<PAGE> 11
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized and
amortized on a straight-line basis over the term of the related loan or
lease for periods ranging from 2 to 25 years. Unamortized leasing costs are
charged to expense upon the early termination of the lease.
Fair Value of Financial Investments
Based on the borrowing rates currently available to the Operating
Partnership, the carrying amount of debt approximates fair value. Cash and
cash equivalents consist of demand deposits, certificates of deposit,
overnight repurchase agreements and investments in money market funds, with
financial institutions. The carrying amount of cash and cash equivalents
approximates fair value.
Minority Interest
Minority interest in the Operating Partnership represents a 10 percent
interest in one property and a 7.5 percent interest in a second property
held by outside interests.
Revenues
All leases are classified as operating leases. Rental income is recognized
on the straight-line basis over the terms of the leases. Deferred rent
receivable represents the excess of rental revenue recognized on a
straight-line basis over cash received under the applicable lease
provisions.
Interest and Other Income
Interest and other income includes interest income on cash, cash
equivalents and mortgage investments, management fee income and a $150
extraordinary gain on the early extinguishment of debt.
Net Income Per Unit
Per unit amounts for the Operating Partnership are computed using the
weighted average units outstanding during the period, including the
dilutive effect of vested stock options. The weighted average general
partner units and limited partner units outstanding for the three and nine
month periods ended September 30, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
General Partner Units Limited Partner Units
--------------------- ---------------------
<S> <C> <C>
Three Months Ended:
September 30, 1996 36,947,829 6,549,819
September 30, 1995 30,467,455 6,560,088
Nine months Ended:
September 30, 1996 35,499,627 6,549,819
September 30, 1995 26,240,923 6,360,115
</TABLE>
Reclassifications
Certain items in the 1995 financial statements have been reclassified to
conform to the 1996 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
<PAGE> 12
3. RELATED PARTY TRANSACTIONS
Receivable From Related Party
The receivable from related party at September 30, 1996, and December 31,
1995, represents management fees and reimbursements from Spieker Partners
related entities.
4. DEBT
Unsecured Notes
On July 19 and 22, 1996, the Operating Partnership issued unsecured notes
totaling $150,000 in principal, consisting of $100,000 of notes maturing in
2005 with an 8.00% interest rate and $50,000 of notes maturing in 2001 with
a 7.58% interest rate. Net proceeds were used to repay borrowings on the
unsecured line of credit.
As of September 30, 1996, the Operating Partnership has outstanding
$510,000 in investment grade rated unsecured notes with varying interest
rates from 6.65% to 8.00% payable semi-annually. The notes are due on
various dates from 2000 to 2005.
Unsecured Line of Credit
The maximum amount available under the Operating Partnership's unsecured
line of credit facility is $150,000. The facility carries interest at LIBOR
plus 1.25% and matures in November 1997. The facility also includes a fee
on average unused funds which varies between 0.125% and 0.20% based on the
average outstanding balance. As of September 30, 1996, the amount drawn on
the facility was $39,000.
Mortgage Loans
Mortgage loans of $47,301 as of September 30, 1996, are secured by a first
or second deed of trust on related properties. The mortgage loans carry
interest rates ranging from 7.5% to 13.75%, require monthly principal and
interest payments, and mature on various dates from 1996 to 2012.
5. PARTNER DISTRIBUTIONS PAYABLE
The dividends and distributions payable at September 30, 1996, and December
31, 1995, represent amounts payable to the partners for the quarters then
ended.
6. PARTNERS' CAPITAL
General Partner Capital Contributions
On February 28, 1996, the Company concurrently sold 4,887,500 shares of
Common Stock, through an underwritten public offering, and directly placed
1,176,470 shares of Class C Common Stock and 135,000 shares of Common Stock
with a limited number of institutional investors at $25.50 per share. Net
proceeds of $151,332 were contributed to the Operating Partnership and were
used primarily to repay floating rate debt.
In December 1995, the Company sold 4,250,000 shares of Series B Preferred
Stock at $25.00 per share and concurrently sold $260,000 of unsecured
investment grade rated notes through underwritten public offerings
(collectively referred to as the "December 1995 Offerings"). Net proceeds
of $358,900 were contributed to the Operating Partnership and were used to
prepay cross-collateralized mortgage obligations outstanding and certain
fees to Prudential Insurance Company.
On May 11, 1995, the Company sold 5,750,000 shares of Common Stock for
$19.75 per share through an underwritten public offering. Concurrently, the
Company sold 506,329 shares of Common Stock at $19.75 per share and
2,000,000 shares of Class B Common Stock at $25.00 per share to a limited
number of institutional investors (collectively referred to as the
"Concurrent Offerings"). Net proceeds from the underwritten public offering
and the Concurrent Offerings totaling $167,119 were contributed to the
Operating Partnership and were used to repay indebtedness incurred by the
Operating Partnership to fund acquisition and development activities.
<PAGE> 13
7. EMPLOYEE STOCK INCENTIVE POOL
At the time of the Company's initial public offering, the Senior Officers
of the Company reserved a portion of their Operating Partnership Units for
awards to personnel employed by the Company at the time of the IPO. The
units are converted into Common Stock at the time of grant. The aggregate
amount of interests reserved for the Employee Stock Incentive Pool is
equivalent to 69,990 shares of Common Stock. The participants in the Pool
were granted 25% of their respective allocations on January 1, 1994,
January 1, 1995, and January 1, 1996, resulting in a total of 75% of stock
awards having been granted. The remainder of the employees' allocations
will be granted on January 1, 1997, provided that the employee has not
previously terminated employment.
The initial deferred compensation of $1,320 pertaining to the 69,990 units
was recorded on the books of the Company, and is being amortized annually
based on the vesting period. The initial value was calculated by
converting the 69,990 partnership units into shares of Common Stock and
multiplying by the Company's Common Stock price on the date of the grant.
For the nine month period ended September 30, 1996, non-cash compensation
expense recognized for such awards was $291.
8. ACQUISITIONS
The Operating Partnership acquired the following properties during the nine
month period ended September 30, 1996:
<TABLE>
<CAPTION>
Total Rentable
Project Name Location Property Type (1) Square Feet Date Acquired Initial Cost
- ------------ -------- ---------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Bayside Corporate Center Foster City, CA O 84,925 Jan '96 $ 10,000
Benicia Industrial Benicia, CA I 1,822,788 Jan '96 $ 41,100
Everett Industrial Everett, WA I 150,154 Mar '96 $ 7,400
Carmel Valley Centre I & II San Diego, CA O 106,921 Apr '96 $ 14,000
2290 North First Street San Jose, CA O 75,680 May '96 $ 6,000
Everett 526 Everett, WA I 97,523 May '96 $ 4,300
Port of Oakland Oakland, CA I 199,733 May '96 $ 6,800
Doolittle Drive San Leandro, CA I 113,196 May '96 $ 3,500
10700 Northup Building Bellevue, WA O 55,854 May '96 $ 4,600
Dove Street Newport Beach, CA O 78,052 June '96 $ 7,900
Fidelity Plaza Sacramento, CA O 77,453 July '96 $ 5,000
The City Orange, CA O 595,056 July '96 $ 34,400
MacArthur Park Santa Ana, CA I 93,158 Aug '96 $ 6,200
Fairchild Corporate Center Irvine, CA O 104,973 Aug '96 $ 10,100
Stadium Plaza Anaheim, CA I 769,003 Aug '96 $ 38,400
</TABLE>
(1) "O" indicates office property; "I" indicates industrial property.
Additionally, the Operating Partnership acquired two mortgages secured by
two office properties in San Jose, California for the initial cost of
$14,333.
9. DEVELOPMENTS
During the nine month period ended September 30, 1996, the Operating
Partnership acquired five parcels of land for development. The total
initial cost of these five parcels was $7,243.
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Statements contained in this Item 2, "Management's Discussion and Analysis
of Financial Conditions and Results of Operations," and elsewhere in this
Quarterly Report on Form 10-Q which are not historical facts may be
forward-looking statements. Such statements are subject to certain risks
and uncertainties which could cause actual results to differ materially
from those projected, including, but not limited to, those risks and
special considerations set forth in the Operating Partnership's other SEC
filings. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Operating Partnership undertakes no obligation to publicly release any
revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
The following comparison is of the Operating Partnership's consolidated
operations for the three and nine month periods ended September 30, 1996,
as compared to the corresponding periods ended September 30, 1995.
Rental revenues for the third quarter of 1996 increased by $12.5 million or
32.4% to $51.1 million, as compared with $38.6 million for the quarter
ended September 30, 1995. Of this increase, $3.5 million was generated by
properties acquired during 1995 (the "1995 Acquisitions"). During 1995, the
Operating Partnership invested $164.8 million to acquire properties
totaling 2.3 million square feet. As used herein, the terms "invested" and
"total investment" represent the initial purchase price of acquisitions,
plus the projected cost of certain repositioning capital expenditures
anticipated at the time of purchase.
$2.5 million of the rental revenue increase in the third quarter of 1996
was generated by property developments (the "Developments"). During the
nine month period ended September 30, 1996, seven properties totaling 0.9
million square feet have been completed and added to the Operating
Partnership's portfolio of stabilized properties. The total cost of such
properties, including the estimated cost to complete initial tenant
improvements, is $63.0 million. The Operating Partnership also has a
current development pipeline consisting of eleven properties representing a
total projected cost of $82.3 million and 1.3 million square feet. Certain
of the properties in the development pipeline are shell complete and
partially occupied.
$6.1 million of the rental revenue increase in the third quarter of 1996
was generated by properties acquired during the nine month period ended
September 30, 1996. During the first three quarters of 1996, the Operating
Partnership acquired properties totaling 3.4 million square feet, net of
1.0 million square feet, in two properties acquired, undergoing substantial
repositioning (the "1996 Acquisitions"). The Operating Partnership
estimates the total investment in the 1996 Acquisitions completed as of
September 30, 1996, will be $227.9 million.
The remaining $0.4 million of the increase in rental revenues is
attributable to revenue increases in the properties owned at January 1,
1995, (the "Core Portfolio"). The revenue increase in the Core Portfolio is
due to increased rental rates realized on the renewal and re-leasing of
second-generation space. During the first nine months of 1996, the
Operating Partnership completed 470 lease transactions for the renewal or
re-leasing of 2.7 million square feet of second-generation space. On
average, the new effective rates were 10.8% higher than the expiring rent.
For the nine month period ended September 30, 1996, rental revenues
increased by $31.6 million or 28.6% to $142.1 million, as compared to
$110.5 million for the corresponding period ended September 30, 1995. The
increase was attributable to revenues in the amount of $14.0 million from
the 1995 Acquisitions, $5.3 million from the Developments, $10.0 million
from the 1996 Acquisitions, and $2.3 million from the Core Portfolio.
As a result of the 1995 Acquisitions, 1996 Acquisitions, and the
Developments, the Operating Partnership's rentable square footage increased
by 4.8 million square feet or 30.8% to 20.4 million square feet on
September 30, 1996, from 15.6 million on September 30, 1995. At September
30, 1996, the portfolio of stabilized properties was 94.9% leased. By
property type, the office portfolio was 93.4% leased, the industrial
portfolio was 95.8% leased and the retail portfolio was 93.7% leased.
Interest and other income increased by $0.7 million and $1.5 million or
175.0% and 100.0% for the three and nine month periods ended September 30,
1996, respectively, as compared to the same periods in 1995. The net
increases in interest and other income were primarily due to $0.5 million
and $1.3 million in interest income earned on investments in mortgages
during the three and nine month periods ended September 30, 1996,
respectively.
Rental expenses increased by $3.4 million or 54.8% for the three month
period ended September 30, 1996, as compared with the same period in 1995.
Real estate taxes increased by $0.9 million or 29.0% for the three month
period ended September 30, 1996, as compared with the same period in 1995.
The overall increase in rental expenses and real estate
<PAGE> 15
taxes (collectively referred to as "property operating expenses") is
primarily a result of the growth in the total square footage of the
Operating Partnership's portfolio of properties. On a percentage basis,
property operating expenses were 26.6% and 24.1% of rental revenues for the
quarters ended September 30, 1996, and September 30, 1995, respectively.
The total increase in property operating expenses is due to a $1.2 million
increase attributable to the 1995 Acquisitions, a $0.6 million increase
attributable to the Developments, a $2.1 million increase attributable
to the 1996 Acquisitions, and a $0.4 million increase attributable to the
Core Portfolio.
For the nine month period ended September 30, 1996, rental expenses
increased by $6.8 million or 38.6% to $24.4 million, as compared to $17.6
million for the corresponding period ended September 30, 1995. Real estate
taxes increased by $2.5 million or 28.4% to $11.3 million for the nine
month period ended September 30, 1996, as compared to $8.8 million for the
corresponding period ended September 30, 1995. The total increase in
property operating expenses is due to a $4.6 million increase attributable
to the 1995 Acquisitions, a $1.5 million increase attributable to the
Developments, a $0.3 million increase attributable to the Core Portfolio,
and a $2.9 million increase attributable to the 1996 Acquisitions. On a
percentage basis, property operating expenses were 25.1% and 23.9% of
rental revenues for the nine month periods ended September 30, 1996 and
1995, respectively.
Interest expense decreased by $0.9 million or 8.4% to $9.8 million for the
three month period ended September 30, 1996, from $10.7 million for the
same period in 1995. For the nine month period ended September 30, 1996,
interest expense decreased by $9.3 million or 26.1% to $26.4 million, from
$35.7 million for the same period in 1995. The decrease in interest expense
is due to the elimination of the amortization of debt discount as a result
of the December 1995 refinancing of $347 million of secured mortgage debt
(the "Prudential Debt"). The Prudential Debt was prepaid with the net
proceeds from the concurrent underwritten public offering of $260.0 million
of investment grade rated unsecured notes and 4.25 million shares of Series
B Preferred Stock. The prepayment of the Prudential Debt resulted in the
write-off of approximately $28.1 million in debt discount which was
previously being amortized over the remaining term of the loans and
recorded as interest expense.
Depreciation and amortization expenses increased by $1.9 million or 23.5%
and $4.0 million or 17.1% for the three and nine month periods ended
September 30, 1996, respectively, as compared with the same periods in 1995
due to the 1995 and 1996 Acquisitions and the Developments.
General and administrative expenses and other expenses increased by $0.6
and $1.2 million for the three and nine month periods ended September 30,
1996, respectively, as compared with the same periods in 1995, primarily as
a result of the increased number of employees. On a percentage basis,
general and administrative expenses were 5.3% and 5.3% of rental revenues
for the three and nine month periods ended September 30, 1996,
respectively, as compared with 5.4% and 5.7%, respectively, for the same
periods in 1995.
Net income before minority interests and disposal of real estate properties
increased by $7.3 million or 83.0% to $16.1 million for the three month
period ended September 30, 1996, from $8.8 million for the same period in
1995. For the nine month period ended September 30, 1996, net income before
minority interests and disposal of real estate properties increased by
$28.0 million or 138.6% to $48.2 million from the amount for the same
period in 1995. The increase in net income is principally due to (i) the
increase in income from the 1995 and 1996 Acquisitions, the Developments
and the increased property operating income (rental revenue less property
operating expenses) generated by the Core Portfolio as a result of
increased rental rates realized on the renewal and re-leasing of
second-generation space and (ii) the decrease in interest expense.
LIQUIDITY AND CAPITAL RESOURCES
For the nine month period ended September 30, 1996, cash provided by
operating activities increased by $32.8 million or 55.8% to $91.6 million,
as compared to $58.8 million for the same period in 1995. The increase is
primarily due to the increase in net income resulting from the 1995 and
1996 Acquisitions, the Developments, increased property operating income
generated by the Core Portfolio and a decrease in interest expense. Cash
used for investing activities increased by $138.6 million or 105.5% to
$270.0 million for the first nine months of 1996, as compared to $131.4
million for the same period in 1995. The increase is attributable to the
Operating Partnership's ongoing acquisition and development of suburban
office, industrial and retail properties. Cash provided by financing
activities increased by $123.5 million or 171.8% to $195.4 million for the
first nine months of 1996, as compared to $71.9 million for the same period
in 1995. During the first nine months of 1996, cash provided by financing
activities consisted, primarily, of $152.2 million in net proceeds from the
sale of Common Stock and Class C Common Stock, and $248.1 million in net
proceeds from the issuance of unsecured notes, which was offset by net
payments of $78.7 million on the
<PAGE> 16
line of credit and net payments of $65.4 million on mortgage loans.
Additionally, payments of distributions increased by $22.3 million to $60.5
million for the first nine months of 1996, as compared with $38.2 million
for the same period in 1995. The increase is due to the greater number of
shares outstanding and a 2.4% increase in the distribution rate.
The principal sources of funding for acquisitions, development, expansion
and renovation of the properties are an unsecured line of credit,
construction and permanent secured debt financings, public and privately
placed equity financing, public unsecured debt financing, the issuance of
partnership units in the Operating Partnership, and cash flow provided by
operations. The Operating Partnership believes that its liquidity and
capital resources are adequate to continue to meet liquidity requirements
for the foreseeable future.
At September 30, 1996, the Operating Partnership had no material
commitments for capital expenditures related to the renewal or re-leasing
of space. The Operating Partnership believes that the cash provided by
operations and its line of credit provide sufficient sources of liquidity
to fund capital expenditure costs associated with the renewal or re-leasing
of space.
The Operating Partnership has a $150.0 million unsecured line of credit
facility (the "Facility") with interest at London Interbank Offered Rates
("LIBOR") plus 1.25%. The Facility matures in November 1997 and the
Operating Partnership has an option to extend the Facility for one year
upon payment of a fee equal to 0.12% of the total Facility. The Facility
also includes a fee on average unused funds, which varies between 0.125%
and 0.20% based on the average outstanding balance. At September 30, 1996,
the Operating Partnership had $39.0 million outstanding under the Facility.
In December 1995, the Operating Partnership issued in a public offering
$260.0 million of unsecured investment grade rated notes (the "Unsecured
Notes") and the Company issued $106.3 million of Series B Preferred Stock
(the offering of the Unsecured Notes and the offering of the Series B
Preferred Stock are collectively referred to as the "December Offerings").
The Unsecured Notes were issued in three tranches as follows: $100.0
million of 6.65% notes due December 15, 2000, priced to yield 6.683%, $50.0
million of 6.80% notes due December 15, 2001, priced to yield 6.823%, and
$110.0 million of 6.95% notes due December 15, 2002, priced at par. The
Series B Preferred Stock was issued at $25.00 per share and a dividend
yield of 9.45%.
The proceeds from the December Offerings of $358.9 million were used to
prepay a cross-collateralized mortgage obligation outstanding to Prudential
Insurance Company. The amount paid to Prudential Insurance Company included
the repayment of principal, interest due through December 10, 1995, and a
negotiated prepayment penalty of $11.8 million. The prepayment resulted in
the unencumbrance of 55 of the Operating Partnership's properties.
On January 19, 1996, the Operating Partnership issued $100.0 million of
investment grade rated unsecured notes. The notes carry an interest rate of
6.90%, were priced to yield 6.97%, and mature on January 15, 2004. Net
proceeds of $98.9 million were used to repay borrowings on the unsecured
line of credit. In June 1996, the Operating Partnership commenced a $200.0
million medium-term note program. In July 1996, the Operating Partnership
issued $100.0 million of 8.00% medium-term notes due July 19, 2005 and
$50.0 million of 7.58% medium-term notes due December 17, 2001 (the "July
Notes"). The net proceeds of $149.2 million from the issuance of the July
Notes were used to repay borrowings on the line of credit and to fund
ongoing acquisition and development projects. As of September 30, 1996,
$50.0 million of debt securities remained available for issuance under the
medium-term note program.
As of September 30, 1996, the Operating Partnership had $510.0 million of
investment grade rated unsecured notes outstanding. The notes have interest
rates which vary from 6.65% to 8.00%, and various maturity dates which
range from 2000 to 2005.
In addition to the Unsecured Notes and the Facility, the Operating
Partnership has $47.3 million of secured indebtedness (the "Mortgages") at
September 30, 1996. The Mortgages have interest rates varying from 7.5% to
13.75% and maturity dates from 1996 to 2012. The Mortgages are secured by a
first or second deed of trust on the related properties and generally
require monthly principal and interest payments. The Operating Partnership
also has $12.2 million of assessment bonds outstanding as of September 30,
1996.
On February 28, 1996, the Company concurrently sold 4,887,500 shares of
Common Stock (including 637,500 shares sold pursuant to the underwriters'
exercise of their over-allotment option) through an underwritten public
offering and directly placed 1,176,470 shares of Class C Common Stock and
135,000 shares of Common Stock with a limited number of institutional
investors at $25.50 per share. The net proceeds of $151.3 million were used
primarily to repay floating rate debt.
<PAGE> 17
In January 1996, the Company filed a shelf registration statement (the
"January 1996 Shelf Registration Statement") with the SEC to register
1,407,005 shares of Common Stock issuable by the Company upon conversion of
shares of Series A Preferred Stock and upon conversion of partnership units
in the Operating Partnership by certain holders thereof. The January 1996
Shelf Registration Statement was declared effective by the SEC on February
28, 1996. The Company will receive no proceeds from the sale of Common
Stock under the January 1996 Shelf Registration Statement.
In May 1996, the Company and the Operating Partnership filed a shelf
registration statement (the "May 1996 Shelf Registration Statement") with
the SEC which registered $250.0 million of equity securities of the Company
and $250.0 million of debt securities of the Operating Partnership. The May
1996 Shelf Registration Statement was declared effective by the SEC on June
20, 1996.
After completion of the issuance of the July Notes, the Company has the
capacity pursuant to the October 1995 Shelf Registration Statement and the
May 1996 Shelf Registration Statement to issue up to approximately $392.0
million in equity securities and the Operating Partnership has the capacity
pursuant to the October 1995 Shelf Registration Statement and the May 1996
Shelf Registration Statement to issue up to $240.0 million in debt
securities (including the $50.0 million of medium-term notes available
under the medium-term note program).
In August 1996, the Company filed a shelf registration statement (the
"August 1996 Shelf Registration Statement") with the SEC to register 50,000
shares of Common Stock issuable by the Company upon exchange of partnership
units in the Operating Partnership by certain holders thereof. In October
1996, the Company filed a registration statement (the "October 1996 Shelf
Registration Statement") with the SEC to register 245,738 shares of Common
Stock issuable by the Company upon exchange of partnership units in the
Operating Partnership by certain holders thereof. The Company will receive
no proceeds from the sale of Common Stock under the August 1996 Shelf
Registration Statement and the October 1996 Shelf Registration Statement.
FUNDS FROM OPERATIONS
The Operating Partnership considers Funds from Operations to be a useful
financial measure of the operating performance of an equity REIT because,
together with net income and cash flows, Funds from Operations provides
investors with an additional basis to evaluate the ability of a REIT to
incur and service debt and to fund acquisitions, developments, and other
capital expenditures. Funds from Operations does not represent net income
or cash flows from operations as defined by generally accepted accounting
principles ("GAAP") and Funds from Operations should not be considered as
an alternative to net income as an indicator of the Operating Partnership's
operating performance or as an alternative to cash flows as a measure of
liquidity. Funds from Operations does not measure whether cash flow is
sufficient to fund all of the Operating Partnership's cash needs including
principal amortization, capital improvements, and distributions to
stockholders. Funds from Operations does not represent cash flows from
operating, investing, or financing activities as defined by GAAP. Further,
Funds from Operations as disclosed by other REITs may not be comparable to
the Operating Partnership's calculation of Funds from Operations, as
described below.
Pursuant to the National Association of Real Estate Investment Trusts
("NAREIT") revised definition of Funds from Operations, beginning with the
quarter ended March 31, 1996, the Operating Partnership calculated Funds
from Operations by adjusting net income before minority interest,
calculated in accordance with GAAP, for certain non-cash items, principally
the amortization and depreciation of real property and for dividends on
shares and other equity interests that are not convertible into shares of
Common Stock. The Operating Partnership does not add back the depreciation
of corporate items, such as computers or furniture and fixtures, or the
amortization of deferred financing costs or debt discount. However, the
Operating Partnership includes an adjustment for the straight-lining of
rent under GAAP, as management believes this presents a more meaningful
picture of rental income over the reporting period.
Funds from Operations per share is calculated based on weighted average
shares equivalents outstanding, assuming the conversion of all shares of
Series A Preferred Stock, Class B Common Stock, Class C Common Stock and
all partnership units in the Operating Partnership into shares of Common
Stock. Assuming such conversion, the average number of shares outstanding
for the three and nine month periods ended September 30, 1996, are
43,497,648 and 42,049,446, respectively, and 37,027,543 and 32,601,038 for
the same periods in 1995.
<PAGE> 18
STATEMENT OF FUNDS FROM OPERATIONS
(based on the new NAREIT definition)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income before minority interest and
disposal of real estate properties $ 16,096 $ 8,811 $ 48,207 $ 20,242
Add:
Depreciation and Amortization 9,938 8,081 27,135 23,275
Dividends on Series B Preferred Stock (2,510) -- (7,530) --
Other, net 116 107 201 247
Straight-lined rent 252 (12) 307 (275)
-------- -------- -------- --------
Funds from Operations $ 23,892 $ 16,987 $ 68,320 $ 43,489
======== ======== ======== ========
</TABLE>
Because of the impact of the December Offerings on the Operating
Partnership's balance sheet and result of operations, the Operating
Partnership believes that an adjusted calculation of 1995 Funds from
Operations, based on the new NAREIT definition and reflecting the effect of
the December Offerings and the conversion of the secured line of credit
into an unsecured facility, as if such transactions had occurred on January
1, 1995, provides a helpful basis for analyzing the impact of the new
NAREIT definition. The table below sets forth the Operating Partnership's
calculation of Funds from Operations for the three and nine month periods
ended September 30, 1995, based on the new NAREIT definition and adjusted
to reflect the December Offerings and the conversion of the secured line of
credit into an unsecured facility.
STATEMENT OF FUNDS FROM OPERATIONS
1995 New NAREIT Definition Adjusted
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
------------------ ------------------
<S> <C> <C>
Funds From Operations - New Definition $ 16,987 $ 43,489
Add:
Amortization of Discount and Deferred Financing Fees 2,443 7,417
-------- --------
Funds From Operations - Old Definition 19,430 50,906
Less:
Restructuring of Secured Debt (1) (958) (2,874)
Amortization of Discount and Deferred Financing Fees (2) (299) (985)
-------- --------
Funds From Operations - Pro Forma New Definition $ 18,173 $ 47,047
======== ========
</TABLE>
(1) Adjustment reflects interest cost of unsecured notes and dividend cost of
Series B Preferred Stock less previously recorded cash interest cost on
$347 million of prepaid debt.
(2) Adjustment reflects amortization of discount and deferred financing fees
added back in calculating FFO based on old NAREIT definition less
amortization on the $347 million of prepaid debt and the previous secured
line of credit and adding in amortization on the new unsecured line of
credit.
<PAGE> 19
PART II. OTHER INFORMATION
Item 2. Changes in Securities
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
The exhibits listed below are filed or incorporated by reference as part of
this quarterly report on Form 10-Q.
Exhibit Number
--------------
12.1 Statement of Computation of Ratio of
Earnings to Fixed Charges
27.1 Article 5 Financial Data Schedule
(B) Reports on Form 8-K
The Operating Partnership filed a current report on Form 8-K dated June
18, 1996, containing combined statements of revenue and certain expenses for
the six acquired properties and two investments in mortgages.
The Operating Partnership filed a current report on Form 8-K dated July
15, 1996, containing combined statements of revenue and certain expenses for
the City Portfolio.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Spieker Properties, L.P.
Registrant)
Dated: November 8, 1996 /s/ Elke Strunka
------------------
Elke Strunka,
Vice President
Principal Accounting Officer
<PAGE> 21
EXHIBIT INDEX
Exhibit Number Page Number
-------------- -----------
12.1 Statement of Computation of Ratio of
Earnings to Fixed Charges
27.1 Article 5 Financial Data Schedule
<PAGE> 1
Exhibit 12.1
Spieker Properties, L.P. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(in thousands, except ratios)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-----------------------------------------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings:
Income from operations before disposal of real
estate properties and minority interest $16,096 $ 8,811 $48,207 $20,242
Interest expense(1) 9,761 10,690 26,443 35,711
Amortization of capitalized interest 61 52 182 156
-----------------------------------------------------------------------
Total earnings $25,918 $19,553 $74,832 $56,109
=======================================================================
Fixed charges:
Interest expense(1) $ 9,761 $10,690 $26,443 $35,711
Capitalized interest 640 325 1,842 976
-----------------------------------------------------------------------
Total fixed charges $10,401 $11,015 $28,285 $36,687
=======================================================================
Ratio of earnings to fixed charges 2.49 1.78 2.65 1.53
=======================================================================
Fixed charges in excess of earnings $ -- $ -- $ -- $ --
=======================================================================
</TABLE>
Notes:
(1) Includes amortization of debt discount and deferred financing fees.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001002575
<NAME> SPIEKER PROPERTIES, L.P.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 24,541
<SECURITIES> 0
<RECEIVABLES> 3,353
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,336,186
<DEPRECIATION> 135,592
<TOTAL-ASSETS> 1,269,890
<CURRENT-LIABILITIES> 0
<BONDS> 596,301
0
0
<COMMON> 0
<OTHER-SE> 604,392
<TOTAL-LIABILITY-AND-EQUITY> 1,269,890
<SALES> 0
<TOTAL-REVENUES> 145,157
<CGS> 0
<TOTAL-COSTS> 35,643
<OTHER-EXPENSES> 34,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,443
<INCOME-PRETAX> 48,207
<INCOME-TAX> 0
<INCOME-CONTINUING> 46,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,718
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 0.00
</TABLE>
