<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 JUNE 30, 1997
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 1 of 21
Exhibit Index is located on Page 20.
<PAGE> 2
SPIEKER PROPERTIES, L.P.
QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
<S> <C>
Item 1. Financial Statements......................................................... 3
Consolidated Balance Sheets as of June 30, 1997, and December 31, 1996....... 4
Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 1997 and 1996............................................... 6
Consolidated Statement of Partners' Capital for the Six Months
Ended June 30, 1997........................................................ 7
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1997 and 1996............................................... 8
Notes to Consolidated Financial Statements................................... 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................... 15
PART II. OTHER INFORMATION
Item 2. Changes in Securities........................................................ 20
Item 6. Exhibits and Reports on Form 8-K............................................. 20
Signatures........................................................................... 21
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following financial statements of Spieker Properties, L.P.
(the "Operating Partnership"):
<TABLE>
<S> <C>
(i) Consolidated Balance Sheets as of June 30, 1997, and December 31, 1996
(ii) Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1997 and 1996
(iii) Consolidated Statement of Partners' Capital for the Six Months Ended June 30, 1997
(iv) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996
(v) Notes to Consolidated Financial Statements
</TABLE>
The financial statements referred to above should be read in conjunction with
the Operating Partnership's Annual Report on the Form 10-K for the year ended
December 31, 1996.
3
<PAGE> 4
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997, AND DECEMBER 31, 1996
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
----------- -----------
(unaudited)
<S> <C> <C>
INVESTMENTS IN REAL ESTATE
Land, land improvements and leasehold interests $ 471,846 $ 338,445
Buildings and improvements 1,382,276 944,646
Construction in progress 65,429 31,969
----------- -----------
1,919,551 1,315,060
Less - Accumulated depreciation (145,572) (127,701)
----------- -----------
1,773,979 1,187,359
Investments in mortgages 14,381 14,381
Property held for disposition, net 56,340 117,732
----------- -----------
Net investments in real estate 1,844,700 1,319,472
CASH AND CASH EQUIVALENTS 9,249 29,336
ACCOUNTS RECEIVABLE 3,748 3,799
DEFERRED RENT RECEIVABLE 3,713 3,242
RECEIVABLE FROM AFFILIATES 3,050 117
DEFERRED FINANCING AND LEASING COSTS, net of
accumulated amortization of $8,745 and $7,682
as of June 30, 1997, and December 31, 1996, 16,935 15,860
respectively
FURNITURE, FIXTURES AND EQUIPMENT, net 2,717 2,386
PREPAID EXPENSES AND OTHER ASSETS 8,392 16,102
----------- -----------
$ 1,892,504 $ 1,390,314
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997, AND DECEMBER 31, 1996
(dollars in thousands)
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
June 30, 1997 December 31,1996
----------- -----------
(unaudited)
<S> <C> <C>
DEBT
Unsecured notes $ 635,000 $ 635,000
Unsecured line of credit 57,000 39,000
Mortgage loans 94,745 45,997
----------- -----------
Total debt 786,745 719,997
----------- -----------
ASSESSMENT BONDS PAYABLE 5,321 4,758
ACCOUNTS PAYABLE 10,324 3,258
ACCRUED REAL ESTATE TAXES 828 731
ACCRUED INTEREST 11,154 10,471
UNEARNED RENTAL INCOME 9,747 6,345
PARTNER DISTRIBUTIONS PAYABLE 26,199 18,660
OTHER ACCRUED EXPENSES AND LIABILITIES 22,478 16,406
----------- -----------
Total liabilities 872,796 780,626
----------- -----------
MINORITY INTERESTS (1,249) (1,240)
----------- -----------
COMMITMENTS AND CONTINGENCIES - -
PARTNERS' CAPITAL
General Partners, including a liquidation preference
of 131,250 947,243 563,928
Limited Partners 73,714 47,000
----------- -----------
Total Partners' Capital 1,020,957 610,928
----------- -----------
$ 1,892,504 $ 1,390,314
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 and 1996
(dollars in thousands, except unit amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 74,459 $ 46,707 $138,921 $ 91,052
Interest and other income 1,419 989 3,374 1,962
-------- -------- -------- --------
75,878 47,696 142,295 93,014
-------- -------- -------- --------
OPERATING EXPENSES
Rental expenses 15,411 7,537 27,083 14,774
Real estate taxes 5,785 3,858 11,039 7,304
Interest expense, including amortization of 12,687 7,845 24,700 16,682
finance costs
Depreciation and amortization 12,416 8,801 23,015 17,339
General and administrative and other expenses 3,468 2,524 6,535 4,805
-------- -------- -------- --------
49,767 30,565 92,372 60,904
-------- -------- -------- --------
Income from operations before disposition of
property and minority interests 26,111 17,131 49,923 32,110
-------- -------- -------- --------
GAIN ON DISPOSITION OF PROPERTY 12,691 - 14,180 -
-------- -------- -------- --------
Income from operations before minority interests 38,802 17,131 64,103 32,110
-------- -------- -------- --------
MINORITY INTERESTS' SHARE IN NET INCOME (5) (4) (9) (1)
-------- -------- -------- --------
Net income $ 38,797 $ 17,127 $ 64,094 $ 32,109
======== ======== ======== ========
General Partner $ 34,080 $ 14,923 $ 56,284 $ 27,816
Limited Partner 4,717 2,204 7,810 4,293
-------- -------- -------- --------
Totals $ 38,797 $ 17,127 $ 64,094 $ 32,109
======== ======== ======== ========
NET INCOME PER OPERATING PARTNERSHIP UNIT $ .69 $ .39 $ 1.18 $ .78
========= ========= ========= =========
DISTRIBUTIONS PER OPERATING PARTNERSHIP UNIT
General Partner $ .47 $ .50 $ .98 $ 1.06
========= ========= ========= =========
Limited Partner $ .47 $ .43 $ .94 $ .86
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(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, 1996 36,749,489 6,549,819 $ 563,928 $ 47,000 $ 610,928
Contribution-Proceeds from sale
of Common Stock 11,500,000 - 374,835 - 374,835
Acquisition of limited
partnership interests - 756,855 - 26,072 26,072
Conversion of Operating
Partnership Units to Common Stock 78,790 (78,790) - - -
Conversion of Operating
Partnership Units - Employee 14,984 (14,984) 524 (524) -
Stock Incentive Pool
Sale of Operating Partnership - 775 - 25 25
Units
Non-cash compensation merit fund - - 118 18 136
Restricted stock grant 25,913 - - - -
Exercise of stock options 91,375 - 1,871 - 1,871
Amortization of deferred - - 262 - 262
compensation
Partner Distributions - - (50,579) (6,687) (57,266)
Net income - - 56,284 7,810 64,094
----------- ----------- ----------- ----------- -----------
BALANCE AT JUNE 30, 1997 48,460,551 7,213,675 $ 947,243 $ 73,714 $ 1,020,957
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 and 1996
(dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended June 30
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 64,094 $ 32,109
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 23,015 17,339
Amortization of prepaid interest and deferred financing costs 532 729
Non-cash compensation 398 255
Minority share of net income 9 1
Gain on disposition of property (14,180) -
(Increase) decrease in deferred rent receivable (471) 55
Decrease in accounts receivable 51 511
Increase in receivable from affiliates (2,933) (15)
Decrease in prepaid expenses and other assets 6,611 636
Decrease in assessment bonds payable (486) (385)
Increase (decrease) in accounts payable 7,066 (168)
Increase in accrued real estate taxes 97 253
Increase in accrued interest 683 2,078
Increase in other accrued expenses and liabilities 6,072 378
Increase (decrease) in unearned rental income 3,402 (3,299)
-------- --------
Net cash provided by operating activities 93,960 50,477
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (529,445) (138,535)
Additions to leasing costs (3,200) (2,829)
Additions to investment in mortgages - (14,334)
Proceeds from disposal of property 76,862 -
-------- --------
Net cash used for investing activities (455,783) (155,698)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 127,000 265,550
Payments on debt (112,104) (269,518)
Payment of financing fees (146) (1,422)
Partner distributions (49,745) (36,758)
Capital contributions - stock offerings 374,835 151,332
Capital contributions - stock options exercised 1,871 404
Proceeds from the sale of limited partnership units 25 -
-------- --------
Net cash provided by financing activities 341,736 109,588
-------- --------
Net (decrease) increase in cash and cash equivalents (20,087) 4,367
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,336 7,573
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,249 $ 11,940
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest 26,014 15,399
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Debt assumed in relation to property acquisitions 51,852 -
Increase to land and assessment bonds payable 1,049 600
Limited partnership interest recorded in relation to property 26,072 -
acquisitions
Write-off of fully depreciated property 3,103 10,266
Write-off of fully amortized deferred financing and leasing costs 1,170 3,217
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE> 9
SPIEKER PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 and 1996
(in thousands, except unit data)
(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 its initial public
offering ("IPO") on November 18, 1993. The Company qualifies as a real
estate investment trust ("REIT") under the Internal Revenue Code of
1986 (the "Code"), as amended. As of June 30, 1997, the Company owned
an approximate 87.0 percent general partnership interest in the
Operating Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries as
of June 30, 1997, and December 31, 1996, and its consolidated results
of operations for the three and six months ended June 30, 1997 and 1996
and its consolidated cash flows for the six months ended June 30, 1997
and 1996. 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 presentation 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 Operating Partnership believes that adequate
disclosures have been made.
The interim results for the three and six months ended June 30, 1997
and 1996, are not necessarily indicative of results for the full year.
It is suggested that these financial statements be read in conjunction
with the consolidated financial statements and notes thereto included
in the Operating Partnership's Annual Report on Form 10-K for the year
ended December 31, 1996.
Properties
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:
<TABLE>
<S> <C>
Land improvements and leasehold interests 18 to 40 years
Buildings and improvements 10 to 40 years
Tenant improvements Term of the related lease
</TABLE>
The cost of buildings and improvements includes the purchase price of
the property or interests in property, legal fees, acquisition costs
and interest, property taxes and other costs incurred during the period
of construction.
9
<PAGE> 10
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments which extend the
economic useful life of assets are capitalized.
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)
throughout 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 June 30, 1997, and December 31, 1996, none of the
carrying values of the properties exceeded their estimated fair values.
As of June 30, 1997, and December 31, 1996, 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 owns two mortgage loans that are secured by
real estate. The Operating Partnership assesses possible impairment of
these loans by reviewing the fair value of the underlying real estate.
As of June 30, 1997, the fair value of the underlying real estate was
in excess of the Operating Partnership's book value of the mortgage
loans.
Construction in Progress
Project costs clearly associated with the development and construction
of a real estate project are capitalized as construction in progress.
In addition, interest, real estate taxes and other costs are
capitalized during the period in which activities necessary to get the
property ready for its intended use are in progress.
Ground Leases
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.
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 1 to 23 years. Unamortized
financing and leasing costs are charged to expense upon the early
termination of the lease or upon early payment of financing.
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,
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<PAGE> 11
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 10.0
percent interest in one property and a 7.5 percent interest in another
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, investments in mortgages, and management fee income.
Net Income (Loss) Per Operating Partnership Unit
Per unit amounts for the Operating Partnership are computed using the
weighted average units outstanding during the period, including the
dilutive effect of stock options. The weighted average units
outstanding for the three and six months ended June 30, 1997 and 1996,
are as follows:
<TABLE>
<CAPTION>
General Partner Units Limited Partner Units
--------------------- ---------------------
<S> <C> <C>
Three months ended:
June 30, 1997 49,138,960 7,213,675
June 30, 1996 36,888,313 6,549,819
Six months ended:
June 30, 1997 47,342,428 7,123,689
June 30, 1996 34,721,955 6,549,819
</TABLE>
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128 ("SFAS No. 128"),
Earnings Per Share. SFAS No. 128 requires the disclosure of basic
earnings per share and modifies existing guidance for computing fully
diluted earnings per share. Under the new standard, basic earnings per
share is computed as earnings divided by weighted average shares,
excluding the dilutive effects of stock options and other potentially
dilutive securities. The effective date of SFAS No. 128 is December 15,
1997, and early adoption is not permitted. The Operating Partnership
intends to adopt SFAS No. 128 during the quarter and year ended
December 31, 1997. Had the provisions of SFAS No. 128 been applied to
the Operating Partnership's results of operations for the three months
ended June 30, 1997 and 1996, the Operating Partnership's basic
earnings per unit would have been $.70 and $.40 per unit, respectively,
and its fully diluted earnings per unit would have been $.69 and $.39
per unit, respectively. Had the provisions of SFAS No. 128 been applied
to the Operating Partnership's results of operations for the six months
ended June 30, 1997 and 1996, the Operating Partnership's basic
earnings per unit would have been $1.19 and $.78 per unit,
respectively, and its fully diluted earnings per unit would have been
$1.18 and $.78 per unit, respectively.
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<PAGE> 12
Reclassifications
Certain items in the 1996 financial statements have been reclassified
to conform to the 1997 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.
3. TRANSACTIONS WITH AFFILIATES
Receivable From Affiliates
The receivable from affiliates at June 30, 1997, and December 31, 1996,
is summarized as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Note receivable from Spieker
Northwest, Inc. secured by real 3,033 -
property
Management fees and reimbursements
due from Spieker Partners
related entities (certain 17 117
officers of Spieker Properties,
Inc., are partners in Spieker
Partners)
</TABLE>
4. PROPERTY HELD FOR DISPOSITION
The Operating Partnership has determined to focus exclusively on office
and industrial properties. The Operating Partnership has therefore
decided to divest itself of its retail properties (thirteen properties
at the time of the determined divestiture) and to reinvest the proceeds
from these properties in office and industrial properties.
In December 1996, the Operating Partnership entered into agreements to
dispose of nine retail properties located in California, Oregon, and
Washington to a third party for $106,500. Three of the nine properties
closed on December 20, 1996. Of the remaining six properties, one
closed on January 6, 1997, resulting in a gain on disposition of
$1,489; four properties closed on April 9, 1997, resulting in a gain on
disposition of $9,640; and the final property is scheduled to close by
December 31, 1997.
In addition, the Operating Partnership is in the process of divesting
itself of four other retail properties. Two of the four other
properties closed on April 9, 1997. The gain on disposition of these
two properties located in Fresno, California, was $3,051. The
divestiture of the two remaining properties is subject to the
identification of a purchaser, negotiation of acceptable terms and
other customary conditions.
The net carrying amount of the three remaining retail properties held
for disposition as of June 30, 1997, is $56,340.
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5. DEBT
Unsecured Notes
As of June 30, 1997, the Operating Partnership has outstanding $635,000
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 2016.
Unsecured Line of Credit
As of June 30, 1997, the maximum amount available under the Operating
Partnership's unsecured line of credit facility was $150,000. The
facility carries interest at LIBOR plus 1.25%. The line of credit
matures in November 1997 and the Operating Partnership has an option to
extend it for one year upon payment of a fee equal to 0.12% of the
total amount available. 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 June 30, 1997, the amount drawn on the
facility was $57,000.
Mortgage Loans
Mortgage loans of $94,745 as of June 30, 1997, are secured by deeds of
trust on related properties. The mortgage loans carry interest rates
ranging from 7.37% to 9.75%, require monthly principal and interest
payments, and mature on various dates from 1997 to 2012.
6. PARTNER DISTRIBUTIONS PAYABLE
The partner distributions payable at June 30, 1997, and December 31,
1996, represent amounts payable to partners for the quarters then
ended.
7. PARTNERS' CAPITAL
Equity Offerings
On January 21, 1997, the Company sold 11,500,000 shares of Common Stock
at $34.50 per share through an underwritten public offering, including
the underwriters' exercise of their over-allotment option. The
aggregate net proceeds of $374,835 were contributed to the Operating
Partnership and used primarily to acquire properties under contract at
the time of the offering.
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<PAGE> 14
8. ACQUISITIONS
The Operating Partnership acquired the following properties during the
six months ended June 30, 1997:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type (1) Square Feet Initial Cost
-------------------------------- ------------------ -------- ------------ -----------
<S> <C> <C> <C> <C>
Southcenter West Business Park(2) Tukwila, WA I 286,921 $ 6,300
Mission West Portfolio San Diego, CA O 619,935 44,800
Emeryville Portfolio (3) Emeryville, CA O 946,385 125,400
Brea Park Centre Brea, CA O 141,837 10,800
555 Twin Dolphin Drive Redwood Shores, CA O 198,494 41,000
North Creek Parkway Centre (4) Bothell, WA O 204,871 22,600
Riverside Centre Portland, OR O 98,434 9,300
Metro Plaza San Jose, CA O 411,288 73,900
1740 Technology (5) San Jose, CA O 194,538 31,300
Fountaingrove Santa Rosa, CA O 160,808 16,100
Pasadena Financial Pasadena, CA O 145,702 26,700
Century Square Pasadena, CA O 205,653 41,500
Point West Corporate Center Sacramento, CA O 145,184 17,200
Sierra Point Brisbane, CA O 99,150 10,300
Brea Corporate Plaza Brea, CA O 119,406 10,800
McKesson Building Pasadena, CA O 150,951 19,100
Coral Tree Commerce Center Vista, CA I 130,866 8,400
Progress Industrial Park Vista, CA I 123,275 7,500
Lafayette Terrace Lafayette, CA O 47,392 7,500
</TABLE>
<TABLE>
<S> <C>
(1) "O" indicates office property; "I" indicates industrial property.
(2) Previously identified as Andover Park in the January 1997 Equity
Offering Prospectus.
(3) The Operating Partnership paid cash and issued Operating Partnership
Units to the sellers of this portfolio.
(4) Previously identified as Quadrant Corporate Center in the January 1997
Equity Offering Prospectus.
(5) Previously identified as Kodak Center in the January 1997 Equity
Offering Prospectus.
</TABLE>
6. DEVELOPMENTS
During the six months ended June 30, 1997, the Operating Partnership
acquired five parcels of land for development. The total initial cost
of these five parcels was $17,126.
10. SUBSEQUENT EVENTS
On July 14, 1997, the Operating Partnership sold $150,000 of unsecured
investment grade rated notes bearing interest at 7.125% and due July 1,
2009. Net proceeds of $146,112 were used principally to repay
borrowings on the unsecured line of credit and to fund ongoing
acquisition and development of property.
The Company has amended the line of credit facility. Effective August
8, 1997, the amount available under the facility has been increased to
$250,000, the interest rate has been reduced to LIBOR plus 0.80% and
the facility will mature in August 2001. In addition the facility
includes a competitive bid option.
In July 1997 the Company purchased one office and one industrial
property. These properties combined represent 665,000 square feet of
rentable space at an initial acquisition cost of $68,800.
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<PAGE> 15
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 six month periods ended June 30, 1997, as compared
to the corresponding periods ended June 30, 1996.
Rental revenues for the second quarter of 1997 increased by $27.8 million or
59.5% to $74.5 million, as compared with $46.7 million for the quarter ended
June 30, 1996. Of this increase, $17.7 million was generated by properties
acquired during the first six months of 1997 (the "1997 Acquisitions"). In the
second quarter of 1997 the Operating Partnership acquired properties totaling
1.2 million square feet for a total investment of $152.6 million. During the
first six months of 1997 the Operating Partnership acquired properties totaling
4.4 million square feet for a total investment of $560.5 million. As used
herein, the terms "invested" and "total investment" represent the initial
purchase price of acquisitions, plus projected cost of certain repositioning and
rehab capital expenditures anticipated at the time of purchase. The properties
acquired in the second quarter were acquired on various dates throughout the
quarter and, as such, a full quarter's revenue and expenses was not recognized
during the quarter.
$9.1 million of the rental revenue increase in the second quarter of 1997 was
generated by properties acquired during 1996. During 1996, the Operating
Partnership invested $329.3 million to acquire properties totaling 4.7 million
square feet (the "1996 Acquisitions").
$2.5 million of the increase in rental revenues is attributable to revenue
increases in properties owned at January 1, 1996, and still owned at June 30,
1997 (the "Core Portfolio"). This increase in the Core Portfolio is due to
increased rental rates realized on the renewal and re-leasing of
second-generation space and contractual rent increases in existing leases.
During the quarter ended June 30, 1997, the Operating Partnership completed 221
lease transactions for the renewal or re-leasing of 1.2 million square feet of
second-generation space. On average for the quarter, the new effective rates
were 33.8% higher than the expiring coupon rent. This brings the total
second-generation activity for the first half of 1997 to 399 completed lease
transactions for 2.4 million square feet at a 21.3% increase in effective rates,
over expiring coupon rents.
$2.1 million of the rental revenue increase in the second quarter of 1997 was
generated by properties developed by the Operating Partnership (the
"Developments"). The Developments include both properties completed and added to
the Operating Partnership's portfolio of stabilized properties during 1996 and
1997, as well as properties currently under development. During the six months
ended June 30, 1997, three properties totaling 236,100 square feet have been
completed and added to the Operating Partnership's portfolio of stabilized
properties. The total cost of these properties, including the estimated cost to
complete initial tenant improvements, is $17.5 million. The Operating
Partnership also has a current development pipeline of 3.2 million square feet
representing a total projected cost of $168.6 million. Certain of the properties
in the development pipeline are shell complete and partially occupied.
The increases in rental revenue are partially offset by a decrease of $3.6
million attributable to the disposition of properties which were owned by the
Operating Partnership during the quarter ended June 30, 1996 (the "Property
Dispositions").
15
<PAGE> 16
Rental revenues for the six month period ended June 30, 1997, increased by $47.8
million or 52.5% to $138.9 million as compared to $91.1 million for the same
period ended June 30, 1996. $25.3 million and $19.5 million, respectively, of
this increase was attributable to the 1997 and 1996 Acquisitions; $4.2 million
relates to the Core Portfolio, $3.8 million is attributable to the Developments,
with the remainder attributable to a $5.0 million decrease from Property
Dispositions.
In December 1996, the Operating Partnership announced the strategic decision to
divest itself of its retail properties and focus exclusively on office and
industrial properties. As such, the following analysis of the office and
industrial properties (i.e. non-retail properties) is presented: Rental revenues
net of property operating expenses increased by $21.1 million or 69.6% to $51.4
million, as compared to $30.3 million for the quarter ended June 30, 1996. Of
this increase, $11.5 million and $5.9 million relates to the 1997 and 1996
Acquisitions, $1.7 million is attributable to the Developments, and $2.0 million
is attributable to the Core Portfolio. For the six month period ended June 30,
1997, rental revenues net of property operating expenses increased by $35.6
million or 59.6% from $59.7 million to $95.3 million at June 30, 1997. $16.8
million and $13.2 million related to the 1997 and 1996 Acquisitions, $3.0
million is attributed to the Developments, and $2.6 million is related to the
Core Portfolio.
As a result of the 1997 Acquisitions, the 1996 Acquisitions, and the
Developments, the Operating Partnership's rentable square footage, not including
retail properties, increased by 7.7 million square feet or 45.0% to 24.8 million
square feet on June 30, 1997, from 17.1 million on June 30, 1996. At June 30,
1997, the portfolio of stabilized properties was 95.8% occupied. By property
type, the office portfolio was 95.1% occupied and the industrial portfolio was
96.2% occupied.
Interest and other income increased by $0.4 million and $1.4 million or 40.0%
and 70.0% for the three and six month periods ended June 30, 1997, over the same
respective periods ended June 30, 1996. The net increase in interest and other
income is due to higher average cash balances of $29.9 million and $57.9 million
for the three and six month periods ended June 30, 1997, as compared to $9.5
million and $9.4 million for the corresponding periods in 1996.
Rental expenses increased by $7.9 million or 105.3% for the three months ended
June 30, 1997, as compared with the same period in 1996. Real estate taxes
increased by $1.9 million or 48.7% for the three months ended June 30, 1997, as
compared with the same period in 1996. The overall increase in rental expenses
and real estate 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. Of the total $9.8 million
increase in property operating expenses $6.2 million is attributable to the 1997
Acquisitions, $3.2 million is attributable to the 1996 Acquisitions, $0.6
million is attributable to the Core Portfolio, $0.4 million is attributable to
the Developments, and there is a $0.6 million decrease attributable to the
Property Dispositions. On a percentage basis, property operating expenses were
28.5% and 24.4% of rental revenues for the quarters ended June 30, 1997, and
June 30, 1996, respectively. The increase in property operating expenses as a
percentage of rental revenues is attributable to the increased percentage of
office properties in the Operating Partnership's portfolio. For the quarter
ended June 30, 1997, 60.6% of the Operating Partnership's net operating income
(rental revenues less property operating expenses) was generated by office
properties as compared with 45.6% during the same period in 1996.
For the six month period ended June 30, 1997, rental expenses increased by $12.3
million from $14.8 million for the six months ended June 30, 1996. This
represents a 83.1% increase year over year. Real estate taxes increased by $3.7
million or 50.7% to $11.0 million for the first half of 1997 as compared to $7.3
million for the same period in 1996. The total increase in the property
operating expenses is attributable to a $8.5 million increase for the 1997
Acquisitions, a $6.3 million increase for the 1996 Acquisitions, a $1.2 million
increase in the Core Portfolio, a $0.8 million increase for the Developments,
and a $0.8 reduction attributable to the Property Dispositions. On a percentage
basis property operating expenses were 27.4% and 24.3% of rental revenues for
the six months ended June 30, 1997, and 1996, respectively.
Interest expense increased by $4.9 million or 62.8% to $12.7 million for the
three months ended June 30, 1997, from $7.8 million for the same period in 1996.
For the six month period ended June 30, 1997, interest expense
16
<PAGE> 17
increased by $8.0 million or 47.9% to $24.7 million from $16.7 million for the
same period in 1996. These increases in interest expense are due to increases in
the total average outstanding debt balances. The average outstanding debt for
the three months ended June 30, 1997, and 1996 was $755.1 million and $459.4
million respectively. The average balance outstanding for the six months ended
June 30, 1997, was $728.2 million and $494.5 million for the same period in
1996. The increases in the average outstanding debt balances are consistent with
the increases in the size of the Operating Partnership's portfolio of
properties.
Depreciation and amortization expenses increased by $3.6 million and $5.7
million or 40.9% and 32.9% for the three and six month periods ended June 30,
1997, as compared with the same periods in 1996, due to the 1997 and 1996
Acquisitions and the completed Developments.
General and administrative expenses and other expenses increased by $1.0 million
and $1.7 million for the three and six month periods ended June 30, 1997,
respectively, as compared with the same periods in 1996, primarily as a result
of the increased number of employees. On a percentage basis, general and
administrative expenses were 4.7% of rental revenues for both the three and six
month periods ended June 30, 1997, respectively, as compared with 5.4% and 5.3%
for the same periods in 1996.
During the second quarter of 1997, the Operating Partnership disposed of an
additional six retail properties resulting in a gain on disposition of $12.7
million. This brings the total gain on disposition of property for the first
half of 1997 to $14.2 million on seven retail properties sold.
Net income before minority interests and disposition of property increased by
$9.0 million or 52.6% to $26.1 million for the three month period ended June 30,
1997, from $17.1 million for the same period in 1996. For the six month period
ended June 30, 1997, net income before minority interests and disposition of
property increased by $17.8 million or 55.5% to $49.9 million, from $32.1
million for the same period in 1996. The increase in net income is principally
due to the 1997 and 1996 Acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period ended June 30, 1997, cash provided by operating
activities increased by $43.5 million or 86.1% to $94.0 million, as compared to
$50.5 million for the same period in 1996. The increase is primarily due to the
increase in net income resulting from the 1996 and 1997 Acquisitions, a decrease
in prepaid expenses and other assets, and an increase in unearned rental income.
Cash used for investing activities increased by $300.1 million or 192.7% to
$455.8 million for the first six months of 1997, as compared to $155.7 million
for the same period in 1996. The increase is attributable to the Operating
Partnership's ongoing acquisition and development of suburban office and
industrial properties. Cash provided by financing activities increased by $232.1
million or 211.8% to $341.7 million for the first six months of 1997, as
compared to $109.6 million for the same period in 1996. During the first six
months of 1997, cash provided by financing activities consisted, primarily, of
$374.8 million in net proceeds from the sale of Common Stock, net borrowings of
$18.0 million on the line of credit and net payments of $3.1 million on mortgage
loans. Additionally, payments of distributions increased by $12.9 million to
$49.7 million for the first six months of 1997, as compared with $36.8 million
for the same period in 1996. The increase is due to the greater number of units
outstanding and a 9.3% 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, public and
privately placed equity financing, public unsecured debt financing, the issuance
of partnership units in the Operating Partnership, the assumption of secured
debt on properties acquired 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 June 30, 1997, 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.
17
<PAGE> 18
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 June 30, 1997, the Operating Partnership had $57.0 million
outstanding under the Facility.
Subsequent to the end of the quarter, the Operating Partnership amended the
current unsecured line of credit facility, increasing the available funds to
$250.0 million and reducing the interest rate to LIBOR plus 0.8%. The amended
facility matures in August 2001. This increased facility has a competitive bid
option that allows the Operating Partnership to request bids from the Lenders
for advances up to $150.0 million.
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.
In December 1996, the Operating Partnership issued $100.0 million of 7.125%
investment grade rated unsecured notes, priced to yield 7.14% and maturing on
December 1, 2006, and $25.0 million of 7.875% investment grade rated unsecured
notes, priced to yield 7.91% and maturing on December 1, 2016. The net proceeds
of $123.9 million were used to pay down borrowings on the line of credit and to
fund the ongoing acquisition and development of properties. As of June 30, 1997,
$50.0 million of debt securities remained available for issuance under the
medium-term note program.
As of June 30, 1997, the Operating Partnership had $635 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
2016.
On July 14, 1997, the Operating Partnership issued $150.0 million of investment
grade rated unsecured notes. The notes carry an interest rate of 7.125%, were
priced to yield 7.183%, and mature on July 1, 2009. Net proceeds of $146.1
million were used to repay borrowings on the unsecured line of credit and to
fund the ongoing acquisition and development of properties.
In addition to the Unsecured Notes and the Facility, the Operating Partnership
has $94.7 million of secured indebtedness (the "Mortgages") at June 30, 1997.
The Mortgages have interest rates varying from 7.37% to 9.75% and maturity dates
from 1997 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 $5.3 million of assessment bonds
outstanding as of June 30, 1997.
In January 1997, the Company sold 11,500,000 shares of Common Stock (including
1,500,000 shares sold to the underwriters in the exercise of their
over-allotment option in February 1997) through an underwritten public offering
at $34.50 per share. The net proceeds of $374.8 million were used to purchase
properties during the first quarter of 1997, many of which were under contract
or letter of intent at the time of the offering, and to repay indebtedness.
Also, in January 1997, the Operating Partnership and the Operating Partnership
filed a shelf registration statement (the "January 1997 Shelf Registration
Statement") with the SEC which registered $500.0 million of equity securities of
the Operating Partnership and $500.0 million of debt securities of the Operating
Partnership and became effective in January 1997.
After completion of the January 1997 equity offering and the July 1997 notes
offering, the Operating Partnership has the capacity pursuant to the January
1997 Shelf Registration Statement to issue up to approximately $500.0 million in
equity securities and the Operating Partnership has the capacity pursuant to the
January 1997 Shelf Registration Statement to issue up to $465.0 million in debt
securities (including the $50.0 million of medium-term notes available under the
Operating Partnership's existing medium-term note program).
18
<PAGE> 19
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 partners. 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 unit is calculated based on weighted average Operating
Partnership units outstanding including the dilutive effect of stock options.
The average number of units outstanding for the three and six months ended June
30, 1997, are 56,352,635 and 54,466,117, respectively, and 43,438,132 and
41,271,774 for the same periods in 1996.
STATEMENT OF FUNDS FROM OPERATIONS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income before
disposition of property $ 26,111 $ 17,131 $ 49,923 $ 32,110(1)
and minority interest
Add:
Depreciation and Amortization 12,276 8,723 22,753 17,197
Dividends on Series B (2,510) (2,510) (5,020) (5,020)
Preferred Stock
Other, net 187 120 375 86(1)
Straight-lined rent (579) 125 (576) 55
-------- -------- -------- --------
Funds from Operations $ 35,485 $ 23,589 $ 67,455 $ 44,428
======== ======== ======== ========
</TABLE>
(1) Includes reclassification of extraordinary gain realized on the early
extinguishment of debt of $150.
19
<PAGE> 20
PART II. OTHER INFORMATION
Item 2. Changes in Securities
In connection with the acquisition of the Emeryville Portfolio in January
1997, the Operating Partnership issued 756,855 units to the seller of such
properties with an aggregate value of $26.0 million, based on the average
stock price of Spieker Properties, Inc. Common Stock during a specified
period of time prior to closing. Such units were issued in a private
negotiated transaction to four partnerships and a trust, pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act.
Such units are convertible on a one for one basis into shares of Common
Stock of the Company after January 1998.
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 Combined Fixed
Charges
27.1 Article 5 Financial Data Schedule (EDGAR Filing Only)
(B) Reports on Form 8-K
The Operating Partnership filed a current report on form 8-K dated June
27, 1997, containing combined statements of revenue and certain expenses
for the Pasadena Portfolio, Metro Plaza and the Three Property
Transactions.
20
<PAGE> 21
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: August 13, 1997 /s/ ELKE STRUNKA
--------------------------- -------------------
Elke Strunka
Vice President and Principal
Accounting Officer of Spieker
Properties, Inc., general partner of
Spieker Properties, L.P.
21
<PAGE> 22
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBITS
- ------- --------
12.1 Statement of Computation of Ratio of Earnings
to Combined Fixed Charges
27.1 Financial Data Schedules
<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 Six Months Ended
--------------------------------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
--------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings:
Income from operations before disposition of
property and minority interest $26,111 $17,131 $49,923 $32,110
Interest expense(1) 12,687 7,845 24,700 16,682
Amortization of capitalized interest 79 60 158 115
--------------------------------------------------------
Total earnings $38,877 $25,036 $74,781 $48,907
========================================================
Fixed charges:
Interest expense(1) $12,687 $ 7,845 $24,700 $16,682
Capitalized interest 1,407 620 2,641 1,201
--------------------------------------------------------
Total fixed charges $14,094 $ 8,465 $27,341 $17,883
========================================================
Ratio of earnings to fixed charges 2.76 2.96 2.74 2.73
========================================================
Fixed charges in excess of earnings $ -- $ -- $ -- $ --
========================================================
</TABLE>
Notes:
(1) Includes amortization of deferred financing fees.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001002575
<NAME> SPIEKER PROPERTIES L.P.
<MULTIPLIER> 1000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 9,249
<SECURITIES> 0
<RECEIVABLES> 3,748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,975,891
<DEPRECIATION> 145,572
<TOTAL-ASSETS> 1,892,504
<CURRENT-LIABILITIES> 0
<BONDS> 786,745
0
0
<COMMON> 0
<OTHER-SE> 1,020,957
<TOTAL-LIABILITY-AND-EQUITY> 1,892,504
<SALES> 0
<TOTAL-REVENUES> 142,295
<CGS> 0
<TOTAL-COSTS> 38,122
<OTHER-EXPENSES> 29,550
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,700
<INCOME-PRETAX> 49,923
<INCOME-TAX> 0
<INCOME-CONTINUING> 64,094
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,094
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 0
</TABLE>
