<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 MARCH 31, 1999
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)
(650) 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 22
Exhibit Index is located on Page 21.
<PAGE> 2
SPIEKER PROPERTIES, L.P.
QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
<S> <C>
Item 1. Financial Statements (unaudited) ......................................... 3
Consolidated Balance Sheets as of March 31, 1999, and December 31, 1998 .. 4
Consolidated Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 ................................................ 6
Consolidated Statement of Partners' Capital for the Three Months Ended
March 31, 1999 ......................................................... 7
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 ................................................ 8
Notes to Consolidated Financial Statements ............................... 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................... 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk ............... 21
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ......................................... 21
Signatures ....................................................................... 22
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following unaudited financial statements of Spieker Properties,
L.P. (the "Operating Partnership"):
(i) Consolidated Balance Sheets as of March 31, 1999, and December 31,
1998
(ii) Consolidated Statements of Operations for the Three Months Ended
March 31, 1999 and 1998
(iii) Consolidated Statement of Partners' Capital for the Three Months
Ended March 31, 1999
(iv) Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998
(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 for the year ended
December 31, 1998.
3
<PAGE> 4
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999, AND DECEMBER 31, 1998
(unaudited, dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENTS IN REAL ESTATE
Land, land improvements and leasehold interests $ 810,156 $ 770,670
Buildings and improvements 2,998,750 2,924,290
Construction in progress 269,067 255,710
----------- -----------
4,077,973 3,950,670
Less - accumulated depreciation (262,581) (240,778)
----------- -----------
3,815,392 3,709,892
----------- -----------
Land held for investment 109,450 131,530
Investment in mortgages 28,069 28,069
Property held for disposition, net 36,254 72,537
----------- -----------
Net investments in real estate 3,989,165 3,942,028
CASH AND CASH EQUIVALENTS 19,628 4,916
ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts of
$1,220 as of March 31, 1999 and $894 at December 31, 1998 5,473 9,416
DEFERRED RENT RECEIVABLE 15,294 12,746
RECEIVABLE FROM AFFILIATES 184 183
DEFERRED FINANCING AND LEASING COSTS, net of accumulated
amortization of $16,165 as of March 31, 1999 and $14,539 at
December 31, 1998 46,445 44,607
FURNITURE, FIXTURES AND EQUIPMENT, net 4,582 4,495
PREPAID EXPENSES, DEPOSITS ON PROPERTIES AND OTHER ASSETS 17,974 17,616
INVESTMENT IN AFFILIATE 20,479 20,863
----------- -----------
$ 4,119,224 $ 4,056,870
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999, AND DECEMBER 31, 1998
(unaudited, dollars in thousands)
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
DEBT
Unsecured notes $1,436,500 $1,436,500
Unsecured short-term borrowings 355,000 300,000
Mortgage loans 110,171 110,698
---------- ----------
Total debt 1,901,671 1,847,198
---------- ----------
ASSESSMENT BONDS PAYABLE 11,196 11,339
ACCOUNTS PAYABLE 16,130 24,938
ACCRUED REAL ESTATE TAXES 12,763 2,251
ACCRUED INTEREST 32,472 25,263
UNEARNED RENTAL INCOME 20,400 22,635
PARTNER DISTRIBUTIONS PAYABLE 48,871 44,728
OTHER ACCRUED EXPENSES AND LIABILITIES 55,263 56,704
---------- ----------
Total liabilities 2,098,766 2,035,056
---------- ----------
PARTNERS' CAPITAL
General Partners, including a liquidation preference of $381,250
as of March 31, 1999 and $281,250 for 1998 1,723,845 1,723,462
Limited Partners 296,613 298,352
---------- ----------
Total Partners' Capital 2,020,458 2,021,814
---------- ----------
$4,119,224 $4,056,870
========== ==========
</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 MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited, dollars in thousands, except unit amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
REVENUES
Rental income $ 149,214 $ 117,637
Interest and other income 1,434 7,670
--------- ---------
150,648 125,307
--------- ---------
OPERATING EXPENSES
Rental expenses 31,641 24,389
Real estate taxes 11,554 9,300
Interest expense, including amortization of finance 28,805 29,267
costs
Depreciation and amortization 25,404 19,586
General and administrative and other expenses 5,650 4,822
--------- ---------
103,054 87,364
--------- ---------
Income from operations before disposition of property 47,594 37,943
--------- ---------
GAIN ON DISPOSITION OF PROPERTY 5,166 9,026
--------- ---------
Income from operations before minority interests 52,760 46,969
--------- ---------
Net income 52,760 46,969
--------- ---------
Preferred Operating Partnership Unit Distributions (2,527) (1,266)
--------- ---------
Preferred Dividends
Series A Preferred Stock (744) (695)
Series B Preferred Stock (2,510) (2,510)
Series C Preferred Stock (2,953) (2,953)
Series E Preferred Stock (2,000) --
--------- ---------
Net income available to general and limited partners $ 42,026 $ 39,545
========= =========
General Partner $ 36,857 $ 35,069
--------- ---------
Limited Partners 5,169 4,476
--------- ---------
Total $ 42,026 $ 39,545
========= =========
NET INCOME PER COMMON OPERATING PARTNERSHIP UNIT
Basic earnings per unit $ .58 $ .58
========= =========
Diluted earnings per unit $ .58 $ .58
========= =========
DISTRIBUTIONS PER COMMON OPERATING PARTNERSHIP UNIT
General Partner $ .61 $ .58
========= =========
Limited Partners $ .61 $ .57
========= =========
</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 THREE MONTHS ENDED MARCH 31, 1999
(unaudited, dollars in thousands, except unit data)
<TABLE>
<CAPTION>
General Limited General Limited
Partner Units Partner Units Partner Partners Total
------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 63,092,929 8,902,915 $ 1,723,462 $ 298,352 $ 2,021,814
Conversion of Operating Partnership Units
to Common Stock 32,000 (32,000) --
Conversion of Operating Partnership
Units - Employee Stock Incentive Pool (751) 751 --
Restricted Stock Grant 99,820 --
Exercise of stock options 14,200 319 319
Amortization of deferred compensation 336 336
Allocation of Operating Partnership 3,666 (3,666) --
interest
Partner distributions (48,230) (6,541) (54,771)
Net income 45,043 7,717 52,760
----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1999 63,238,949 8,870,915 $ 1,723,845 $ 296,613 $ 2,020,458
=========== =========== =========== =========== ===========
</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 THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 52,760 $ 46,969
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 25,404 19,586
Amortization of discount and deferred financing costs 599 519
Non-cash compensation 246 21
Gain on disposition of property (5,166) (9,026)
Increase (decrease) in accounts receivable and other assets 807 (1,947)
Increase in receivable from related parties (1) (349)
Decrease in assessment bonds payable (226) (236)
(Decrease) increase in accounts payable, accrued expenses and (10,775) 14,413
other liabilities
Increase in accrued real estate taxes 10,512 6,324
Increase in accrued interest 7,209 9,962
--------- ---------
Net cash provided by operating activities 81,369 86,236
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (106,943) (572,021)
(Additions) reductions to deposits on properties, net (175) 23,029
Additions to investment in mortgages -- (11,610)
Additions to leasing costs (4,269) (3,476)
Proceeds from disposition of property 41,268 40,257
Proceeds from investment in mortgages -- 26,462
Proceeds from investment in affiliate 384 5,174
--------- ---------
Net cash used for investing activities (69,735) (492,185)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 65,000 765,500
Payments on debt (10,527) (368,483)
Payments of financing fees -- (2,690)
Payments of distributions (51,714) (44,612)
Capital contributions - stock offerings -- 52,183
Capital contributions - stock options exercised 319 2,465
--------- ---------
Net cash provided by financing activities 3,078 404,363
--------- ---------
Net increase (decrease) in cash and cash equivalents 14,712 (1,586)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,916 22,628
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,628 $ 21,042
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest $ 26,003 $ 21,759
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Debt assumed in relation to property acquisitions -- 23,514
Units issued in connection with property acquisitions -- 22,230
Increase to land and assessment bonds payable 82 --
Write-off of fully depreciated property 1,451 1,988
Write-off of fully amortized deferred financing and leasing costs 281 1,337
Conversion of operating partnership units to Common Stock with
resulting reduction in Limited Partner's interest and
increase in General Partner's interest 751 --
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 and 1998
(unaudited, dollars in thousands, except share and unit data)
1. ORGANIZATION AND BASIS OF PRESENTATION
Spieker Properties, L.P. (the "Operating Partnership"), a California limited
partnership, was formed on November 10, 1993 and commenced operations on
November 19, 1993, when Spieker Properties, Inc. (the "Company"), the general
partner in the Operating Partnership, completed its initial public offering
("IPO") on November 18, 1993. As of March 31, 1999, the Company owned an
approximate 87.8% general and limited partnership interest in the Operating
Partnership. The Operating Partnership specializes in the acquisition,
development, management and leasing of office and industrial properties in
California and Washington, Oregon and Idaho (the "Pacific Northwest").
Substantially all of the business activities of the Company are conducted
through the Operating Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The Operating Partnership's consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries as of March 31, 1999, and December 31, 1998, and its consolidated
results of operations and cash flows for the three months ended March 31, 1999
and 1998. The Operating Partnership's investment in Spieker Northwest, Inc. (an
unconsolidated Preferred Stock subsidiary) and its investment in Spieker
Griffin/W9 Associates, LLC are accounted for under the equity method. 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 months ended March 31, 1999 and 1998, 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, 1998.
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 the property, legal fees, acquisition costs,
capitalized interest, property taxes and other costs incurred during the period
of construction. All acquisitions are recorded using the purchase method of
accounting.
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 March 31, 1999,
and December 31, 1998, none of the carrying values of the properties exceeded
their estimated fair values. As of March 31, 1999, and December 31, 1998, the
properties are located primarily in California and the Pacific Northwest. As a
result of this geographic concentration, the operations of these properties
could be adversely affected by a recession or general economic downturn where
these properties are located.
The Operating Partnership owns mortgage loans that are secured by real estate.
Certain loans are with an affiliate of the Operating Partnership (see note 4).
The Operating Partnership assesses possible impairment of these loans by
reviewing the fair value of the underlying real estate. As of March 31, 1999,
the estimated 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 the property is under construction and until all costs related to the
property's development are complete.
Land Held for Investment
The Operating Partnership has costs related to land parcels that are either held
for investment or are in a design and approval process. There were no material
construction in process costs associated with these land parcels.
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.
Unamortized financing and leasing costs are charged to expense upon the early
termination of the lease or upon the early payment of financing.
Fair Value of Financial Instruments
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 and overnight repurchase
agreements with financial institutions. The carrying amount of cash and cash
equivalents approximates fair value.
10
<PAGE> 11
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 investments in mortgages and management fee income.
Net Income Per Unit
Per unit amounts for the Operating Partnership are computed using the weighted
average units outstanding during the period. Additionally, earnings used in the
calculation are reduced by dividends owed to Series A, B, C and E preferred unit
holders. The diluted weighted average units outstanding include the dilutive
effect of stock options and the conversion of Preferred A. The computation of
the diluted earnings per unit for the quarters ended March 31, 1999 and 1998
does not include WCB Preferred units due to their antidilutive effect. The basic
and diluted weighted average general partner units and limited partners' units
outstanding for the three months ended March 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
Basic Weighted Average Basic Weighted Average
General Partner Units Limited Partner Units
---------------------- ----------------------
<S> <C> <C>
Three months ended:
March 31, 1999 63,223,217 8,870,915
March 31, 1998 60,002,677 7,651,281
</TABLE>
<TABLE>
<CAPTION>
Diluted Weighted Average Diluted Weighted Average
General Partner Units Limited Partner Units
------------------------ ------------------------
<S> <C> <C>
Three months ended:
March 31, 1999 65,048,670 8,870,915
March 31, 1998 62,151,189 7,651,281
</TABLE>
Reclassifications
Certain items in the 1998 financial statements have been reclassified to conform
to the 1999 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. ACQUISITIONS AND DISPOSITIONS
The Operating Partnership acquired the following properties (the "1999
Acquisitions") during the three months ended March 31, 1999:
<TABLE>
<CAPTION>
Property Total Rentable Initial
Project Name Location Type(1) Square Feet Cost(2)
-------------------- ---------------- -------- -------------- --------
<S> <C> <C> <C> <C>
Oakbrook Plaza Laguna Hills, CA O 119,847 $18,517
Eastgate Office Park Bellevue, WA O 273,892 $40,384
</TABLE>
- ---------
(1) "O" indicates office property.
(2) Represents the initial acquisition costs of the properties excluding any
additional repositioning costs.
11
<PAGE> 12
During the three months ended March 31, 1998, the Operating Partnership acquired
4,006,135 square feet of office and industrial property at an initial cost of
$541,965 (the "1998 Acquisitions"). The 1999 and 1998 Acquisitions were recorded
using the purchase method of accounting.
During the three months ended March 31, 1998, the Operating Partnership acquired
eight parcels of land for development. The total initial cost of these eight
parcels was $32,866.
The Operating Partnership disposed of the following property (the "1999
Dispositions") during the three months ended March 31, 1999. The property was
included in assets held for sale as of December 31, 1998:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type(1) Square Feet Sales Price
------------------------ ----------- -------- -------------- -----------
<S> <C> <C> <C> <C>
Biltmore Commerce Center Phoenix, AZ O 262,875 $37,300
</TABLE>
- --------------
(1) "O" indicates office property.
During the three months ended March 31, 1998, the Operating Partnership disposed
of one retail property for $40,928 (the "1998 Dispositions").
4. TRANSACTIONS WITH AFFILIATES
Revenues and Expenses
The Operating Partnership received $337 for three months ended March 31, 1999
and $724 for 1998, for management services provided to certain properties that
are controlled and operated by either Spieker Northwest, Inc. or Spieker
Partners related entities (collectively, "Spieker Partners") and Spieker
Griffin/W9 Associates, LLC. Certain officers of Spieker Properties, Inc. are
partners in Spieker Partners.
Receivable From Affiliates
The $184 receivable from affiliates at March 31, 1999, and the $183 at December
31, 1998, represents management fees and reimbursements due from Spieker
Northwest, Inc., Spieker Griffin/W9 Associates, LLC and Spieker Partners.
Investments in Mortgages
Included in Investments in Mortgages are $18,725 at March 31, 1999 and December
31, 1998 of loans to Spieker Northwest, Inc. (SNI). The loans are secured by
deeds of trust on real property, bear interest at 8.5%, and mature in 2012.
Interest income of $342 is included in interest and other income for the three
months ended March 31, 1999 and $5,433 for 1998.
Investment in Affiliate
The investment in affiliate represents an investment in SNI. The Operating
Partnership owns 95% of the Preferred Stock of SNI. Certain senior officers of
the Company own 100% of the voting stock of SNI. At March 31, 1999, SNI owned
225,815 square feet of office and industrial property located in various states.
In addition, SNI owns 6 parcels of land totaling 24.6 acres. Certain of these
properties are held for sale at March 31, 1999. In addition to property
ownership, SNI provides property management services to certain properties owned
by Spieker Partners.
Additionally, investment in affiliates represents the 12.5% common interest and
37.5% preferred interest in Spieker Griffin/W9 Associates, LLC. Spieker
Griffin/W9, LLC Associates purchased in April 1998 a 535,000 square foot office
complex, which is managed by the Company, located in Orange County, California
for an initial cost of $100,000.
12
<PAGE> 13
5. PROPERTY HELD FOR DISPOSITION
The Operating Partnership continues to review its portfolio and its long-term
strategy for properties. The Operating Partnership will dispose, over time,
assets that do not have a strategic fit with the portfolio. Included in property
held for disposition of $36,254 at March 31, 1999, are nine properties. Three
industrial properties are located in Northern California, four industrial
properties and two land parcels are located in Southern California. The
divestiture of the properties held for sale is subject to identification of a
purchaser, negotiation of acceptable terms and other customary conditions.
The following summarizes the condensed results of operations of the properties
held for disposition at March 31, 1999 for the three months ended March 31, 1999
and 1998. Some properties held for disposition were acquired during the periods
presented, therefore the Net Operating Income for these periods presented may
not be comparable.
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Income $ 1,240 $ 1,107
Property Operating Expenses (256) (230)
------- -------
Net Operating Income $ 984 $ 877
======= =======
</TABLE>
6. DEBT
As of March 31, 1999, debt consists of the following:
<TABLE>
<CAPTION>
1999
----------
<S> <C>
Unsecured investment grade notes, varying fixed interest rates
from 6.65% to 8.00% payable semi-annually, due from 2000 to 2027 $1,436,500
Unsecured short-term borrowings 355,000
Mortgage loans, varying interest rates from 7.37% to 9.88%, due
1999 to 2013 110,171
----------
$1,901,671
==========
</TABLE>
The Operating Partnership has an Unsecured Line of Credit Facility (the
"Facility"). The maximum amount available under the Facility is $250,000. The
Facility carries interest at LIBOR (London Interbank Offered Rate) plus 0.80%,
matures in August 2001, includes an annual administrative fee of $50 and an
annual Facility fee of .20%. The one-month LIBOR at March 31, 1999 was 5.1%. As
of March 31, 1999, the amount drawn on the Facility was $155,000. In addition,
the Operating Partnership has $200,000 short-term bank facility (the "Bank
Facility") outstanding at March 31, 1999. This short-term Bank Facility carries
interest at LIBOR plus .65% and matures November 1999. The line of credit
Facility and the Bank Facility are subject to financial covenants concerning
leverage, interest coverage and certain other ratios. The Operating Partnership
is currently in compliance with all of the covenants in the line of credit
Facility and the Bank Facility concerning its indebtedness.
Mortgage loans generally require monthly principal and interest payments. The
mortgage loans of $110,171 at March 31, 1999 are secured by deeds of trust on
related properties. The mortgage loans carry interest rates ranging from 7.37%
to 9.88% and mature on various dates from 1999 to 2013.
The unsecured notes are subject to financial covenants concerning leverage,
interest coverage and certain other ratios. The Operating Partnership is
currently in compliance with all of the covenants in the unsecured note
agreements governing its indebtedness.
Interest capitalized for the three months ended March 31, 1999 was $5,022 and
$2,972 for 1998.
13
<PAGE> 14
7. PARTNERS' DISTRIBUTIONS PAYABLE
The partner distributions payable at March 31, 1999, and December 31, 1998,
represent amounts payable to partners of record. The unit holders of record as
of March 31, 1999, and December 31, 1998, are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- -----------
<S> <C> <C>
Units:
General Partner 63,238,949 61,916,459
Limited Partners 8,870,915 8,902,915
Series A Preferred Units 1,000,000 1,000,000
Series B Preferred Units 4,250,000 4,250,000
Series C Preferred Units 6,000,000 6,000,000
Series D Preferred Units 1,500,000 1,500,000
Series E Preferred Units 4,000,000 4,000,000
WCB Preferred Units 1,721,831 1,721,831
</TABLE>
8. PARTNERS' EQUITY
In March 1999, 1,176,470 shares of Class C Common Stock were converted into
1,176,470 shares of Common by the shareholder.
9. COMMITMENTS AND CONTINGENCIES
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).
10. GAIN ON DISPOSITION OF PROPERTY
Gain on disposition of property for the three months ended March 31, 1999,
represents the gain on dispositions of one office property located in Phoenix,
Arizona and four office properties condemned in San Jose, California.
14
<PAGE> 15
11. SEGMENT INFORMATION
The Operating Partnership has four reportable segments: Pacific Northwest;
North-East Bay, San Francisco/Sacramento, CA; Silicon Valley; and Southern
California. Each region has a Regional Senior Vice President who is directly
responsible for managing all phases of the region's operations including
acquisition, development, leasing and property management. Each reportable
segment includes both office and industrial properties which are leased to
tenants engaged in various types of businesses. The accounting policies of the
four regions are the same as those described in the summary of significant
accounting policies. The Operating Partnership evaluates performance based upon
net operating income from the combined properties in each segment. Each of the
four operating regions consists of differing mixes of office and industrial
properties. The following table may not be comparable by the regions listed
below given the differing mixes of properties within the regions. Significant
information used by the Operating Partnership for the reportable segments is as
follows at March 31, 1999:
<TABLE>
<CAPTION>
Pacific North-East Bay/ Silicon Southern
Northwest Sacramento, CA Valley California Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 Revenue $ 32,147 $ 39,061 $ 34,633 $ 43,373 $149,214
1998 Revenue 27,277 30,094 29,143 31,123 117,637
1999 Net Operating Income(1) 23,078 26,926 27,316 28,699 106,019
1998 Net Operating Income(1) 20,017 21,205 22,372 20,354 83,948
</TABLE>
- --------------
(1) Net operating income (NOI) for the properties is calculated by subtracting
property related rental expenses and real estate taxes from rental income.
12. SUBSEQUENT EVENTS
In April 1999, the Operating Partnership acquired one land parcel totaling
approximately 320,000 square feet for an initial acquisition cost of $35,500
located in Redwood City, California. This acquisition was funded by proceeds
from borrowing from short-term unsecured bank facilities.
On May 11, 1999, the Operating Partnership issued $400,000 of investment grade
rated unsecured notes. The company issued $200,000 of 6.80% notes due May 1,
2004 priced to yield 6.83% and $200,000 of 7.25% notes due May 1, 2009 priced to
yield 7.27%. Net proceeds of approximately $397,000 from the offering were used
to repay short-term floating rate borrowings.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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 month period ended March 31, 1999, as compared to the
corresponding period ended March 31, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------
1999 1998 $ CHANGE % CHANGE
-------------------------------------------------------
<S> <C> <C> <C> <C>
Rental Revenues
1998 Core Portfolio $ 112.7 $ 105.2 $ 7.5 7.1%
1998 Acquisitions 27.3 9.1 18.2 200.0
1999 Acquisitions 0.6 -- 0.6 --
Developments 7.7 1.6 6.1 381.3
Dispositions 0.9 1.7 (0.8) (47.1)
-------------------------------------------------------
$ 149.2 $ 117.6 $ 31.6 26.9%
-------------------------------------------------------
</TABLE>
Rental revenues increased by $31.6 million primarily due to revenues generated
by properties acquired during 1998. During 1998, the Operating Partnership
invested $884.8 million for properties totaling 6.3 million square feet (the
"1998 Acquisitions").
The increase in the "1998 Core Portfolio", defined as properties owned at
January 1, 1998 and still owned at March 31, 1999, was attributable to higher
roll-over rental rates realized on the renewal and re-leasing of second
generation space and increases in occupancies. During the quarter ended March
31, 1999, the Operating Partnership completed 387 lease transactions for the
renewal and re-lease of 1.8 million square feet of second-generation space. On
average, for the quarter, the new effective rates were 45.0% higher than the
expiring coupon rent.
Properties developed by the Operating Partnership (the "Developments")
contributed $6.1 million to the rental revenue growth for the quarter. The
Developments include both properties completed and added to the Operating
Partnership's portfolio of stabilized properties, as well as properties
currently under development. During the three months ended March 31, 1999 the
Operating Partnership added two properties totaling 288,980 square feet for an
estimated final cost of $21.9 million to the Operating Partnership's portfolio
of stabilized properties. Properties are considered stabilized when either a
95.0% occupancy rate has been achieved or eighteen months after shell
completion, whichever is sooner. At March 31, 1999, the Operating Partnership
has a current development pipeline of 3.1 million square feet representing a
total projected cost of $383.2 million. Certain properties in the development
pipeline are shell complete and are partially occupied but are not yet
considered stabilized.
For the quarter ended March 31, 1999 the Operating Partnership acquired two
office properties totaling 393,739 square feet for a total investment of $60.9
million (the "1999 Acquisitions"), which contributed $0.6 million to rental
revenues. These properties were acquired on various dates throughout the quarter
and, as such, a full quarters revenue and expense was not recognized during the
period. As used herein, the term "total investment" represents the initial
purchase price of acquisitions, plus projected costs of certain repositioning
and rehab capital expenditures anticipated at the time of purchase.
16
<PAGE> 17
The increases in rental revenues are partially offset by a decrease of $0.8
million attributable to properties which the Operating Partnership has
subsequently disposed of during the three months ended March 31, 1999 or during
the year ended December 31, 1998 (the "Dispositions").
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------
1999 1998 $ CHANGE % CHANGE
-----------------------------------------------
<S> <C> <C> <C> <C>
Interest and Other Income $ 1.4 $ 7.7 $ (6.3) (81.8)%
</TABLE>
Interest and other income decreased due primarily to the reduction in interest
income from mortgage loans made to SNI in relation to SNI's acquisition of
non-core assets. These assets were disposed of during 1998. Additionally,
interest earned decreased due to lower cash balances period over period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------
1999 1998 $ CHANGE % CHANGE
-------------------------------------------------
<S> <C> <C> <C> <C>
Rental Expenses $ 31.6 $ 24.4 $ 7.2 29.5%
Real Estate Tax 11.6 9.3 2.3 24.7
-------------------------------------------------
Property Operating Expenses $ 43.2 $ 33.7 $ 9.5 28.2%
=================================================
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------
1999 1998 $ CHANGE % CHANGE
-------------------------------------------------------
<S> <C> <C> <C> <C>
Property Operating Expenses
1998 Core Portfolio $ 30.0 $ 28.8 $ 1.2 4.2%
1998 Acquisitions 10.3 3.6 6.7 186.1
1999 Acquisitions 0.2 -- 0.2 --
Developments 2.4 0.8 1.6 200.0
Dispositions 0.3 0.5 (0.2) (40.0)
-------------------------------------------------------
$ 43.2 $ 33.7 $ 9.5 28.2%
=======================================================
</TABLE>
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. On a percentage basis, property operating expenses were 29.0% of
rental revenues for 1999 and 28.7% for 1998.
Rental revenues net of property operating expenses, referred to as "net
operating income," is presented in the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------
1999 1998 $ CHANGE % CHANGE
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net Operating Income
1998 Core Portfolio $ 82.7 $ 76.4 $ 6.3 8.2%
1998 Acquisitions 17.0 5.5 11.5 209.1
1999 Acquisitions 0.4 -- 0.4 --
Developments 5.3 0.8 4.5 562.5
Dispositions 0.6 1.2 (0.6) (50.0)
-------- -------- -------- --------
$ 106.0 $ 83.9 $ 22.1 26.3%
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------
1999 1998 $ CHANGE % CHANGE
------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Expense $ 28.8 $ 29.3 $ (0.5) (1.7)%
Depreciation Expense 25.4 19.6 5.8 29.6
General and Administrative Expense 5.6 4.8 0.8 16.7
</TABLE>
Interest expense decreased slightly, even as average debt balances increased.
This decrease is the net effect of additions to interest expense from
additional note offerings which occurred during 1998, offset by an increase in
interest capitalized in relation to Developments that the Operating Partnership
had in process during the three months ended March 31, 1999 and 1998 and lower
average interest rates on borrowings on the Operating Partnership's short-term
bank facility. Average outstanding debt was $1.9 million for the quarter
17
<PAGE> 18
ended March 31, 1999 and $1.7 million for the quarter ended March 31, 1998.
Capitalized interest was $5.0 million for the quarter ended March 31, 1999 and
$3.0 million for the quarter ended March 31, 1998.
The increase in depreciation and amortization expense of $5.8 million is
primarily due to the 1999 and 1998 Acquisitions and the Developments.
General and administrative expenses increased by $0.8 million for the first
quarter of 1999, as a result of the increased number of employees. On a
percentage basis, general and administrative expenses were 3.8% of rental
revenues for 1999, as compared with 4.1% for the first quarter of 1998.
During the first quarter of 1999, the Operating Partnership disposed of one
office property resulting in a gain on disposition of $0.5 million. The
remainder of the gain, $4.6 million, is attributable to income recognized in
relation to the condemnation of a strip of land that was previously a part of a
property that the Operating Partnership owns located in San Jose, California.
Net income before minority interests and disposition of property increased by
$9.7 million or 25.6% to $47.6 million for the first quarter of 1999, from $37.9
million for the first quarter of 1998. The increase in net income is principally
due to the 1998 Acquisitions and the 1998 Core Portfolio.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------
1999 1998 $ CHANGE % CHANGE
--------------------------------------------------------
<S> <C> <C> <C> <C>
Cash provided by operating activities $ 81.4 $ 86.2 $ (4.8) (5.6)%
Cash used for investing activities (69.7) (492.2) 422.5 85.8
Cash provided by financing activities 3.1 404.4 (401.3) (99.2)
</TABLE>
Increases in cash provided by operating activities are from net income provided
by the 1998 and 1999 Acquisitions, the Developments and the 1998 Core Portfolio,
and are offset by a decrease in accounts payable and unearned rental income.
This decrease is due to timing differences in the pay down of accounts payable
balances and receipt of rental revenue at the end of each comparable quarter.
Cash used for investing activities and cash required for financing activities
was significantly lower due to the decrease in the number of acquisitions
completed. During the first three months of 1999, cash provided by financing
activities consisted of net borrowings of $65.0 million under a short-term bank
facility and net payments of $10.5 million on mortgage loans. Additionally,
payments of distributions increased by $7.1 million from $44.6 million to $51.7
million for the first quarter of 1999 and 1998. The distribution payment
increase is due to the greater number of common and preferred shares outstanding
and the 7.0% increase in the common share distribution rate of $.61 per share
for the first three months of 1999 from $.57 per share in 1998.
The principal sources of funding for acquisitions, development, expansion and
renovation of the properties are unsecured short-term borrowings, 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 its ability to access capital and
proceeds from disposition of non-strategic assets are adequate to continue to
meet liquidity requirements for the foreseeable future.
At March 31, 1999, 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.
As of March 31, 1999, the Operating Partnership had $1.4 billion of investment
grade rated unsecured debt securities outstanding. The debt securities have
interest rates which vary from 6.65% to 8.0%, and maturity dates which range
from 2000 to 2027.
18
<PAGE> 19
The Operating Partnership has a $250.0 million unsecured line of credit facility
(the "Facility") with interest at London Interbank Offered Rate ("LIBOR") plus
.80%. The Facility matures in August 2001 and has a competitive bid option that
allows the Operating Partnership to request bids from the lenders for advances
up to $150.0 million. At March 31, 1999, the Operating Partnership had $155.0
million outstanding under the Facility. In addition, the Operating Partnership
had $200.0 million outstanding under a separate short-term bank facility (the
"Bank Facility") at March 31, 1999. The Bank Facility carries interest at LIBOR
plus 0.65% and matures in November 1999.
In addition to the unsecured debt securities, the Facility and the Bank
Facility, the Operating Partnership has $110.2 million of secured indebtedness
(the "Mortgages") at March 31, 1999. The Mortgages have interest rates varying
from 7.37% to 9.88% and maturity dates from 1999 to 2013. 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 $11.2 million of assessment bonds outstanding as of March
31, 1999.
In May 1999, the Operating Partnership issued $400.0 million of investment grade
rated unsecured notes in two tranches as follows: $200.0 million of 6.8% notes
due May 1, 2004 priced to yield 6.83% and $200.0 million of 7.25% notes due May
1, 2009 priced to yield 7.27%. The Company will use the net proceeds of
approximately $397.0 million from this offering to reduce amounts outstanding
under the Facility and Bank Facility.
The Company has the capacity pursuant to shelf registration statements to issue
up to approximately $663.8 million in equity securities and the Operating
Partnership has the capacity to issue up to $413.5 million in debt securities.
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 Company'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, the Operating Partnership
calculates 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 eliminates the effect of straight-line rents, as defined
under GAAP, in its FFO calculation, as management believes this presents a more
meaningful picture of rental income over the reporting period.
19
<PAGE> 20
Funds from Operations per share is calculated based on weighted average shares
outstanding, assuming the conversion of all shares of Series A Preferred Stock,
Class B and Class C Common Stock, and all Operating Partnership units
outstanding into shares of Common Stock and including the dilutive effect of
stock option equivalents computed using the treasury stock method. During the
third and fourth quarters of 1998, the Class B Common Stock was converted into
shares of Common Stock. During the first quarter of 1999, the Class C Common
Stock was converted into shares of Common Stock.
STATEMENT OF FUNDS FROM OPERATIONS
(amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 31, March 31,
1999 1998
-------- --------
<S> <C> <C>
Income from operations before disposition of property
and minority interests: $ 47,594 $ 37,943
Dividends on Series B Preferred Stock (2,510) (2,510)
Dividends on Series C Preferred Stock (2,953) (2,953)
Dividends on Series E Preferred Stock (2,000) --
Distributions on Preferred Operating Partnership Units (2,527) (1,266)
-------- --------
Income from operations after Series B, C and E dividends,
and Preferred Operating Partnership Unit distributions 37,604 31,214
-------- --------
Add:
Depreciation and Amortization 25,102 19,366
Other, net 38 (14)
-------- --------
Funds from Operations before Straight-line rent 62,744 50,566
-------- --------
Straight-line rent (2,548) (1,640)
-------- --------
Funds from Operations $ 60,196 $ 48,926
======== ========
Weighted average diluted share equivalents outstanding 73,919 69,795
======== ========
</TABLE>
20
<PAGE> 21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Operating Partnership uses fixed and variable rate debt to finance its
operations. The information below summarizes the Operating Partnership's market
risks associated with debt outstanding as of March 31, 1999. The following table
presents principal cash flows and related weighted average interest rates by
year of maturity.
EXPECTED MATURITY DATE
(in millions)
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER TOTAL
------- ------- ------- ------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Debt $ 15.5 $ 100.0 $ 133.0 $ 122.4 $ -- $ 1,175.8 $ 1,546.7
Average Interest Rate 8.99% 6.65% 7.25% 7.21% -- 7.28% 7.24%
Variable Rate Debt $ 200.0 -- $ 155.0 -- -- -- $ 355.0
Average Interest Rate 5.96% -- 5.91% -- -- -- 5.90%
</TABLE>
The carrying amount of the Operating Partnership's debt approximates fair value.
The Operating Partnership's fixed and variable rate debt is described in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." At March 31, 1999, the Operating Partnership had no interest rate
caps or swaps. All of the Operating Partnership's debt is denominated in United
States dollars. The Operating Partnership's risk management policies do not
provide for the utilization of financial instruments for trading purposes and
only minimal use for hedging purposes.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
The exhibits listed below are filed as part of this quarterly report on
Form 10-Q.
Exhibit
Number
27.1 Article 5 Financial Data Schedule (EDGAR Filing Only).
(B) Reports on Form 8-K
None.
21
<PAGE> 22
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: May 13, 1999 /s/ Elke Strunka
-----------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
22
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> MAR-31-1998 MAR-31-1999
<CASH> 21,042 19,628
<SECURITIES> 0 0
<RECEIVABLES> 9,158 5,473
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 3,570,822 4,223,677
<DEPRECIATION> 183,639 262,581
<TOTAL-ASSETS> 3,780,131 4,119,224
<CURRENT-LIABILITIES> 0 0
<BONDS> 1,847,854 1,901,671
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2,016,148 2,098,766
<TOTAL-LIABILITY-AND-EQUITY> 3,780,131 4,119,224
<SALES> 0 0
<TOTAL-REVENUES> 125,307 150,648
<CGS> 0 0
<TOTAL-COSTS> 33,689 43,195
<OTHER-EXPENSES> 24,408 31,054
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29,267 28,805
<INCOME-PRETAX> 37,943 47,594
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 46,969 52,760
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 39,545 42,026
<EPS-PRIMARY> 0.69 0.58
<EPS-DILUTED> 0.69 0.58
</TABLE>
