<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] 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)
<TABLE>
<S> <C>
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)
</TABLE>
(650) 854-5600
----------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicated 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 [ ]
Indicated by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
<PAGE> 2
TABLE OF CONTENTS
FORM 10-K
<TABLE>
<CAPTION>
PART I Page No.
<S> <C> <C>
Item 1 Business ................................................................. 16
Item 2 Properties ............................................................... 16
Item 3 Legal Proceedings ........................................................ 16
Item 4 Submission of Matters to a Vote of Security Holders ...................... 16
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters ..... 16
Item 6 Selected Financial Data .................................................. 17
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations ............................................................... 18
Item 7A Quantitative and Qualitative Disclosures about Market Risk ............... 28
Item 8 Financial Statements and Supplementary Data .............................. 28
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ............................................................... 28
PART III
Item 10 Directors and Executive Officers of the Registrant ....................... 29
Item 11 Executive Compensation ................................................... 29
Item 12 Security Ownership of Certain Beneficial Owners and Management ........... 29
Item 13 Certain Relationships and Related Transactions ........................... 29
PART IV
Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K ........ 29
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE:
PART III: Portions of the registrant's definitive proxy statement to be issued
in conjunction with the registrant's annual stockholders' meeting to be held on
June 7, 2000.
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV herein
on page number 29.
This document consists of 78 pages, plus exhibits attached hereto.
2
<PAGE> 3
PART I
This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Operating Partnership's actual
results could differ materially from those set forth in the forward-looking
statements as a result of various factors, including general real estate
investment risks, competition, risks associated with acquisition and development
activities and financing, environmental matters, general uninsured losses and
seismic activity.
OVERVIEW
Spieker Properties, L.P. is one of the largest owners and operators of office
and industrial properties located in selected West Coast markets. These markets
are primarily located in greater Seattle, Washington; greater Portland, Oregon;
Northern California and Southern California. The Operating Partnership is a
self-managed and self-administrated real estate investment trust or REIT. The
Operating Partnership was formed to continue and expand the real estate
activities, including the acquisition, development, management and leasing of
the properties of its predecessor firm, Spieker Partners, which launched in
1970. With the contributions of the properties from Spieker Partners the Company
commenced operations with the completion of its initial public offering in
November 1993. Substantially all of the business activities of Spieker
Properties, Inc. are conducted through Spieker Properties, L.P. in which the
Company owned an approximate 88.0% general partnership interest at December 31,
1999. Unless the context otherwise requires, Spieker Properties, Inc., is
referred to as the Company, Spieker Properties, L.P., is referred to as the
Operating Partnership and they are collectively referred to as the Company.
As of December 31, 1999, the Operating Partnership owned 40.7 million square
feet of commercial real estate, which was 96.3% occupied at year-end. The
portfolio mix consists of 22.0 million square feet of office property and 18.7
million square feet of industrial property. The Operating Partnership acquired
five office properties totaling 807,037 square feet and completed eleven
development properties totaling 1.9 million square feet during the year. In the
development pipeline at year-end, the Operating Partnership had fifteen offices
and three industrial properties totaling 2.7 million square feet, which were
76.1% pre-leased.
BUSINESS STRATEGY
The Operating Partnership's principal objective is to achieve sustainable,
long-term growth in funds from operations per share through maximizing the
return on each dollar of capital invested and building value in the portfolio by
the following focused and consistent business strategies.
Quality Office and Industrial Properties
With approximately 30 years of experience in owning and operating commercial
properties, the Operating Partnership's management team possesses the in-depth
knowledge necessary to assess the attributes that determine a property's
long-term viability. The Operating Partnership owns and invests in high quality
office and industrial properties that possess attributes that are competitive in
the marketplace in both the short and long-term.
The Operating Partnership focuses on differentiating its properties from those
of nearby competitors, so as to maximize their attractiveness to potential
customers. Important differentiating characteristics in office buildings include
efficient suite layouts, ample glass line per square foot of office space, well
designed and maintained common areas, elevators, and convenient parking. Further
differentiation is achieved through amenities and services provided such as
on-site management, conference rooms and health clubs. Distribution properties
are designed with ample clear heights, multiple dock facilities, appropriate
truck staging and high-capacity sprinkler systems. In its light industrial and
R&D properties the Operating Partnership also uses landscaping and exterior
glass walls to increase attractiveness.
Flexible, Multi-Tenant Properties
The Operating Partnership focuses on properties which will appeal to a broad
range of potential tenants. These properties are easily divisible and can
accommodate new tenants of various sizes. This flexibility also enables the
Operating Partnership to meet the needs of existing tenants by accommodating
their expansion and contraction needs. In addition to flexibility, the Operating
Partnership also focuses on multi-tenant usage of its properties. The Operating
Partnership's experience is that multi-tenant properties help maintain high
occupancy rates, particularly when market conditions are less favorable, and
help control the cost of re-tenanting space.
3
<PAGE> 4
Invest in Growing Regions
The Operating Partnership seeks to invest in regions with diverse and active
economies that possess strong prospects for sustained long-term economic growth.
The Operating Partnership believes that California and the Pacific Northwest
possess attributes - high concentration of technology industries, growing
populations with a well-educated employee base, ability to attract new capital,
excellent universities, quality of life and well-developed infrastructures -
that will contribute to continued economic growth. Within these growing regions
the Operating Partnership focuses its activities in the major metropolitan areas
of Seattle, Portland, San Francisco, San Jose, Sacramento, Los Angeles County,
Orange County and San Diego, which have proven to be desired locations for a
large number of businesses.
Submarket Concentration
In the specific local submarkets in which it operates, the Operating Partnership
generally seeks to own a number of properties and to be one of the more
significant commercial landlords in that submarket. The Operating Partnership
believes that it has achieved significant market penetration within a number of
submarkets in which it operates. By achieving concentrated market positions, the
Operating Partnership can offer prospective tenants a variety of property
options and can accommodate the growth of existing tenants. This strategy also
gives it a measure of control over the rental rates achieved and capital
expenditures incurred in leasing space.
Superior Level of Service
The Operating Partnership believes in providing a superior level of service to
its customers which will allow them to focus on their business rather than on
property issues. To achieve this level of service, the Operating Partnership's
office property managers and customer service personnel are located on-site,
providing tenants with convenient direct access to a team which can respond
quickly to the customer's needs. These on-site teams enable the properties to be
well maintained and convey a sense of quality, order and security. This superior
level of service and ultimate customer satisfaction translates to lower customer
turnover, higher occupancy levels and higher rental rates.
Operating Efficiencies
The Operating Partnership recognizes the importance of creating operating
efficiencies that add additional value to the portfolio and to the shareholder
by utilizing opportunities created by its submarket concentrations as well as
leveraging its relative size and scale.
By integrating properties in its submarkets, the Operating Partnership has been
able to pool its resources and maximize economies of scale to allow its key
operating personnel to concentrate their expertise on those specific markets and
their particular local conditions. Minimizing project personnel requirements
with the centralization of these properties has created additional cost savings.
During 1999, the Operating Partnership utilized its relative size and purchasing
ability to put in place several vendor related efficiency programs. These
programs were designed to ensure consistency in the quality products purchased
and services provided, to create operational cost savings, and to allow for
tracking purchasing trends for future purchasing consolidation opportunities.
These programs significantly reduce the number of vendors with which the
Operating Partnership now does business and puts cost and time saving
efficiencies in place that the project teams can utilize in managing their
projects. Additional efficiencies have been created in the Operating
Partnership's accounting processes by limiting the number of vendor's invoices
that must be managed.
Rent Growth
The strength in the West Coast economy continued to fuel the demand for quality
commercial space in the Operating Partnership's markets. Healthy demand pared
with modest levels of new supply has translated to an upward pressure on market
rents. These increases provided the Operating Partnership with the opportunity
to generate positive rent growth during the year. This rent growth, measured as
the difference between effective (average) rents on new and renewed leases as
compared to the expiring coupon rent on those same spaces, was 36.5% for 1999.
4
<PAGE> 5
The Operating Partnership estimates that the embedded rent growth, as measured
is the difference between existing in-place rents and current market rents, in
the Operating Partnership's operating portfolio is approximately $1.60 per share
at year-end. As of December 31, 1999, 74.3% of all leases in-place during the
next four years are set to expire. The Operating Partnership expects to
capitalize on embedded rent growth as these leases and future leases, expire and
as the spaces are either renewed or re-leased. There can be no assurances,
however that market rents will not erode in the future or that the Operating
Partnership will realize all of the embedded rent growth.
Investment Activity
The Operating Partnership strategically invests in real estate either through
the acquisition of existing properties or through the development of new
properties. When evaluating potential investments, in addition to both the
physical and location attributes, the Operating Partnership also considers short
and long-term returns on capital, total cost compared to replacement cost, the
level of in-place rents compared to current market rents and tenant mix. In
assessing the viability of a potential development, the Operating Partnership
also considers market demand and competitive supply.
Acquisitions
During 1999, the Operating Partnership acquired five office properties. These
acquisitions were primarily funded by the redeployment of capital from the
disposition of non-strategic assets (see Note 3 to the consolidated financial
statements for further discussion of the Operating Partnership's asset
dispositions).
1999 ACQUISITIONS
<TABLE>
<CAPTION>
Total Rentable Total
Property Location Square Feet(1) Investment(2)
-------- -------- --------------- --------------
<S> <C> <C> <C>
Pacific Northwest
Eastgate Office Park Bellevue, WA 273,892 $ 42.0
Lincoln Executive Center Bellevue, WA 280,696 54.4
------- --------
554,588 $ 96.4
------- --------
Southern California
First Financial Center Ontario, CA 80,406 $ 10.1
Governor Executive Center San Diego, CA 52,196 8.8
Oakbrook Plaza Laguna Hills, CA 119,847 19.0
------- --------
252,449 $ 37.9
------- --------
Total Acquisitions 807,037 $ 134.3
======= ========
</TABLE>
- ----------------
(1) Average initial occupancies of these acquisitions were 93.0%.
(2) The Operating Partnership uses the terms "total investment" and
"invested" to represent total expected capitalized acquisition cost,
including closing, and repositioning/rehab costs.
5
<PAGE> 6
Stabilized Developments
During 1999, the Operating Partnership stabilized eleven property developments.
The Operating Partnership considers properties stabilized at the earlier of
eighteen months after shell completion or when a 95.0% occupancy rate has been
reached. Each of the stabilized development properties listed below are included
in the Operating Partnership's operating portfolio.
STABILIZED DEVELOPMENTS AND REDEVELOPMENTS
<TABLE>
<CAPTION>
Rentable Total Investment Percent
Property Location Square Feet ($000s) Occupied
-------- -------- ----------- ----------------- --------
<S> <C> <C> <C> <C>
OFFICE
North-East Bay/Sacramento
Parkshore Plaza Phase I Folsom, CA 114,356 $ 14,421 100.0%
Gateway Oaks IV Sacramento, CA 81,482 11,518 97.6
---------- ---------- -----
195,838 25,939 99.0
---------- ---------- -----
Silicon Valley
Gateway Office III San Jose, CA 123,400 23,460 98.0
---------- ---------- -----
123,400 23,460 98.0
---------- ---------- -----
Southern California
Bridge Pointe Corporate Center San Diego, CA 215,800 23,928 100.0
City Plaza(1) Orange County, CA 318,651 37,993 99.0
---------- ---------- -----
534,451 61,921 99.4
---------- ---------- -----
Total Office 853,689 $ 111,320 99.1%
========== ========== =====
INDUSTRIAL
Pacific Northwest
158th Commerce Park Portland, OR 381,750 $ 16,861 92.7%
---------- ---------- -----
381,750 16,861 92.7
---------- ---------- -----
North-East Bay/Sacramento
Riverside Business Center Sacramento, CA 174,624 7,430 100.0
Seaport Distribution Center Sacramento, CA 199,553 7,185 100.0
Vasco Business Center Livermore, CA 95,574 8,043 100.0
Concord N. Commerce Center II Concord, CA 64,125 3,943 100.0
---------- ---------- -----
533,876 26,601 100.0
---------- ---------- -----
Silicon Valley
Dixon Landing North Phase I Milpitas, CA 118,290 12,085 80.0
---------- ---------- -----
118,290 12,085 80.0
---------- ---------- -----
Total Industrial 1,033,916 $ 55,547 95.0%
========== ========== =====
Total Stabilized Developments 1,887,605 $ 166,867 96.9%
========== ========== =====
</TABLE>
6
<PAGE> 7
Developments in Process
At the end of 1999, the Operating Partnership had fifteen office properties and
three industrial properties under development that will add approximately 2.7
million square feet to the Operating Partnership's operating portfolio. Of the
eight development projects added to the pipeline in 1999, five were 100%
pre-leased. The nine projects that were a part of the 1998 pipeline and are
still a part of the 1999 pipeline, are approximately 73.1% leased. It can be
expected that these projects, totaling 1.3 million square feet, will stabilize
and will be added to the Operating Partnership's operating portfolio in 2000.
DEVELOPMENTS IN PROCESS
<TABLE>
<CAPTION>
Actual or Total
Estimated Shell Rentable Investment Percent
Property Location Completion Date Square Feet ($000s) Leased
-------- -------- --------------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
OFFICE
Pacific Northwest
4800 Meadows Lake Oswego, OR January 1999 73,527 $ 13,297 93.0%
Kruse Oaks I Lake Oswego, OR October 2000 92,290 18,497 --
--------- --------- -----
165,817 31,794 41.2
--------- --------- -----
North-East Bay/Sacramento
Johnson Ranch Corp. Center II Roseville, CA December 1998 39,892 5,868 100.0
Roseville Corporate Center Roseville, CA June 1999 108,388 15,384 89.5
Parkshore Plaza Phase II Folsom, CA August 1999 152,133 20,808 91.3
Watergate Tower IV Emeryville, CA February 2001 328,375 69,304 69.0
Treat Towers Walnut Creek, CA June 1999 362,146 70,035 75.1
Skyway Landing I San Carlos, CA January 2000 116,017 27,500 100.0
Skyway Landing II San Carlos, CA August 2000 121,171 28,500 100.0
--------- --------- -----
1,228,122 237,399 82.2
--------- --------- -----
Silicon Valley
Ryan Oaks Phase I Monterey, CA September 1998 35,276 4,946 100.0
Concourse V San Jose, CA July 1999 143,006 38,460 70.3
Concourse VI San Jose, CA August 2000 210,677 54,669 100.0
--------- --------- -----
388,959 98,075 89.1
--------- --------- -----
Southern California
Arboretum Courtyard Santa Monica, CA June 1999 137,701 38,724 100.0
Bridge Pointe II San Diego, CA May 2000 159,200 22,115 100.0
Pacific Ridge Corporate Centre Carlsbad, CA June 1999 116,947 18,600 88.3
--------- --------- -----
413,848 79,439 96.7
--------- --------- -----
Total Office 2,196,746 $ 446,707 83.1%
========= ========= =====
INDUSTRIAL
Pacific Northwest
Kelley Point Phase II Portland, OR March 2000 125,000 $ 4,752 100.0%
--------- --------- -----
125,000 4,752 100.0
--------- --------- -----
North-East Bay/Sacramento
Airway Business Park Livermore, CA October 1999 147,116 12,335 8.6
Benicia Commerce Center II Benicia, CA January 1999 220,549 9,960 37.6
--------- --------- -----
367,665 22,295 26.0
--------- --------- -----
Total Industrial 492,665 $ 27,047 44.8%
========= ========= =====
Total Developments in Process 2,689,411 $ 473,754 76.1%
========= ========= =====
</TABLE>
7
<PAGE> 8
Employees
As of December 31, 1999, the Operating Partnership had 568 employees.
Fully-Integrated Real Estate Management Capabilities
The Operating Partnership has had, and will continue to have, a philosophy of
maintaining in-house resources to add value to its properties through the entire
cycle of acquisition, development and ownership. The Operating Partnership
believes its key in-house resource is its fully integrated sub-regional teams.
These teams led by an officer with extensive real estate experience, have the
collective ability to design, construct, market, lease and manage the Operating
Partnership's properties. This eliminates the need for the Operating Partnership
to use third-party managers and limits the utilization of outside parties to
list its properties. The Operating Partnership believes this integrated team
approach gives it a significant advantage in depth of experience and a detailed
knowledge of its markets.
Training and Retention
The Operating Partnership's training and retention of a talented group of
officers and employees has been an important factor in its success. The
Operating Partnership expends significant efforts in the training of new
employees in fundamental real estate skills as well as in the continuing
education of existing employees. The Operating Partnership's officers, including
the executive officers, are also involved in the education program, which
reinforces the program's importance to the Operating Partnership and its
personnel.
In addition to training, the Operating Partnership also provides its employees
with profit sharing, 401(k) contribution matches and competitive health plans.
The Operating Partnership also understands the importance of having up to date
technology available for its employees to perform their jobs efficiently and
effectively. The Operating Partnership provides employees with leading edge
computer resources, including modern hardware/software, high speed connection to
corporate data sources, internet connections, and internally designed interfaces
to aid the employees in timely decision making.
Compensation
The Operating Partnership's officer compensation program includes cash bonuses,
stock options, and restricted stock payments tied largely to growth in net
operating income from existing properties under their management, as well as
increased funds from operations from new acquisitions and developments in their
regions and other contributions. Non-officer compensation includes subjective
bonuses based upon employee performance factors including tenant satisfaction
and leasing and releasing success. The Operating Partnership also grants stock
options to all full-time employees upon the completion of one year of service
with the Operating Partnership.
Accountability
The Operating Partnership has a philosophy of holding one senior officer or a
small group of senior officers accountable, under the supervision and direction
of the Operating Partnership's executive officers, for all phases of a
property's development, from purchase, design and construction, through
budgeting, leasing and ongoing management. The Operating Partnership believes
that this approach increases the likelihood of a project's success because of
the senior officer's accountability, continuity of involvement in the project
and resulting detailed knowledge of the property and its tenants, particularly
as compared to a compartmentalized approach to the real estate business where
individuals are responsible for only certain limited areas of a project.
8
<PAGE> 9
PROPERTIES
OVERVIEW
The following table sets forth the rentable square feet of the Operating
Partnership's properties as of December 31, 1999. The properties are managed in
four reportable segments. These four segments have been broken down into the
Operating Partnership's nine identifiable markets. Significant information used
by the Operating Partnership in the reportable segments can also be found in
Note 13 of the Operating Partnership's Financial Statements.
RENTABLE SQUARE FOOTAGE OF PROPERTIES
<TABLE>
<CAPTION>
Office Industrial Total % of Total
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Pacific Northwest
Seattle, WA/Boise, ID 2,553,706 1,531,885 4,085,591 10.0 %
Portland, OR 2,472,880 3,782,280 6,255,160 15.4
---------- ---------- ---------- -----
5,026,586 5,314,165 10,340,751 25.4
---------- ---------- ---------- -----
North - East Bay/Sacramento
Sacramento, CA 1,671,390 1,947,803 3,619,193 8.9
East Bay - San Francisco, CA 1,170,346 5,498,160 6,668,506 16.4
Peninsula - San Francisco, CA 2,113,332 148,694 2,262,026 5.6
---------- ---------- ---------- -----
4,955,068 7,594,657 12,549,725 30.9
---------- ---------- ---------- -----
Silicon Valley
Silicon Valley - San Francisco, CA 3,833,124 4,186,524 8,019,648 19.7
---------- ---------- ---------- -----
3,833,124 4,186,524 8,019,648 19.7
---------- ---------- ---------- -----
Southern California
Los Angeles County, CA 2,526,617 - 2,526,617 6.2
Orange County, CA 4,160,708 967,474 5,128,182 12.6
San Diego, CA 1,472,812 620,787 2,093,599 5.2
---------- ---------- ---------- -----
8,160,137 1,588,261 9,748,398 24.0
---------- ---------- ---------- -----
Total 21,974,915 18,683,607 40,658,522 100.0 %
========== ========== ========== =====
54.0% 46.0% 100.0%
</TABLE>
9
<PAGE> 10
Occupancy Rates
The Operating Partnership continues to operate at consistently high occupancy
levels. Occupancy levels are indicative of the strength of the Operating
Partnership's local real estate markets, the continuing demand for space and the
abilities of the Operating Partnership's local management teams to keep their
projects leased.
5-YEAR HISTORICAL YEAR END OCCUPANCY
<TABLE>
<CAPTION>
Total Rentable Year End
Year Square Footage (1) Occupancy
---- ------------------ ---------
<S> <C> <C>
1999 40,658,522 96.3 %
1998 40,843,473 96.4
1997 34,543,280 94.5
1996 21,429,732 96.6
1995 16,282,278 96.9
</TABLE>
(1) Historical rental square footage may include occupancies for properties
that have been sold.
AVERAGE OCCUPANCY RATES
<TABLE>
<CAPTION>
Office Industrial Total
------ ---------- -----
<S> <C> <C> <C>
Pacific Northwest
Seattle, WA/Boise, ID 94.2% 97.7% 95.5%
Portland, OR 97.3 98.3 97.9
----- ----- -----
95.7 98.1 97.0
----- ----- -----
North - East Bay/Sacramento
Sacramento, CA 92.8 93.1 92.9
East Bay - San Francisco, CA 94.8 98.2 97.6
Peninsula - San Francisco, CA 98.1 100.0 98.2
----- ----- -----
95.5 96.9 96.3
----- ----- -----
Silicon Valley
Silicon Valley - San Francisco, CA 97.4 95.9 96.6
----- ----- -----
97.4 95.9 96.6
----- ----- -----
Southern California
Los Angeles County, CA 95.0 - 95.0
Orange County, CA 94.8 99.6 95.7
San Diego, CA 96.7 89.5 94.5
----- ----- -----
95.2 95.6 95.3
----- ----- -----
Total 95.8% 96.9% 96.3%
===== ===== =====
</TABLE>
10
<PAGE> 11
Lease Expirations
The following tables set forth the lease expirations in summary and by product
type for leases in-place as of January 1, 2000, assuming tenant renewal or
termination options are not exercised.
LEASE EXPIRATIONS
<TABLE>
<CAPTION>
Annual Base
Rentable Square Percent of Rentable Rents Expiring(2) Percentage of Base
Year Footage Expiring(1) Square Footage Expiring (000's) Rents Expiring
---- ---------------- ----------------------- ----------- --------------
ALL PROPERTIES
<S> <C> <C> <C> <C>
2000 8,240,019 21.0% $ 113,584 19.0%
2001 7,642,434 19.5 98,185 16.4
2002 7,400,642 18.9 112,916 18.9
2003 5,845,282 14.9 91,458 15.3
2004 4,361,901 11.2 77,682 13.0
2005 1,549,872 4.0 20,256 3.4
2006 1,303,283 3.3 26,692 4.5
2007 703,572 1.8 14,232 2.4
2008 784,862 2.0 12,042 2.0
Thereafter 1,324,609 3.4 30,196 5.1
---------- ---------- ---------- ----------
Total 39,156,476 100.0% $ 597,243 100.0%
========== ========== ========== ==========
OFFICE PROPERTIES
2000 4,606,660 21.9% $ 89,643 19.0%
2001 3,595,751 17.1 75,909 16.1
2002 4,433,240 21.1 95,533 20.2
2003 2,896,242 13.8 68,710 14.5
2004 2,301,230 10.9 60,866 12.9
2005 590,258 2.8 14,917 3.2
2006 911,484 4.3 23,080 4.9
2007 529,245 2.5 12,493 2.6
2008 345,217 1.6 7,926 1.7
Thereafter 840,235 4.0 23,199 4.9
---------- ---------- ---------- ----------
Total 21,049,562 100.0% $ 472,276 100.0%
========== ========== ========== ==========
INDUSTRIAL PROPERTIES
2000 3,633,359 20.1% $ 23,941 19.0%
2001 4,046,683 22.3 22,276 17.8
2002 2,967,402 16.4 17,383 13.9
2003 2,949,040 16.3 22,748 18.2
2004 2,060,671 11.4 16,816 13.5
2005 959,614 5.3 5,339 4.3
2006 391,799 2.1 3,612 2.9
2007 174,327 1.0 1,739 1.4
2008 439,645 2.4 4,116 3.3
Thereafter 484,374 2.7 6,997 5.5
---------- ---------- ---------- ----------
Total 18,106,914 100.0 % $ 124,967 100.0 %
========== ========== ========== ==========
</TABLE>
- ------------
(1) Does not include month-to-month leases.
(2) Base rent represents amounts contractually due, adjusted for contractual
increases, which may include taxes, insurance and common area maintenance.
11
<PAGE> 12
Leasing Activity/Releasing Costs
The Operating Partnership continues to aggressively manage the cost of leasing
commissions and tenant improvements, collectively referred to as capital
expenditures associated with the renewal and releasing of space. The relative
strength of the local real estate market, the type of property being leased, the
length of the leases signed and the total value of the leases signed impact the
amount of capital expenditures spent on leasing second generation space. Average
capital expenditures per square foot of space leased has shown moderate growth
over time. These increases, specifically related to higher labor, material
costs, and higher leasing commissions are directly correlated to a shift in the
Operating Partnership's portfolio towards office properties, rapidly increasing
market rents, which result in higher leasing commissions, and longer average
lease terms. The following table highlights 1999 leasing activity and releasing
costs by property type.
SUMMARY OF 1999 LEASING ACTIVITY
<TABLE>
<CAPTION>
Weighted
Total 1st Generation Space(1) 2nd Generation Space(2) Average 2nd Gen.
---------------------- -------------------- --------------------- Lease TI/Comm
Type # Leases Sq. Feet # Leases Sq. Feet # Leases Sq. Feet Term(mo) PSF (3)
- -------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office 1,249 6,230,694 172 1,717,097 1,077 4,513,597 52 $6.56
Industrial 276 4,037,080 27 580,492 249 3,456,588 77 2.35
----- ---------- --- --------- ----- --------- -- -----
Total 1,525 10,267,774 199 2,297,589 1,326 7,970,185 59 $4.66
===== ========== === ========= ===== ========= == =====
</TABLE>
(1) 1st Generation is defined as previously unleased shell space.
(2) Net of short-term leases.
(3) Calculated based on 2nd generation space, excluding short-term and
repositioning leases of 552,373 square feet for 1999.
Tenant Profiles
The Operating Partnership has over 3,500 tenants, with the average tenant
occupying approximately 11,421 square feet and paying an annual net rent of
approximately $132,453. The tenant base is extremely diversified, as
demonstrated below, based on the business sectors in which they operate. The
Operating Partnership's largest tenant, Xerox, represents approximately 1.1% of
the Operating Partnership's 1999 net rental income. A sample of the Company's
top fifty tenants includes: Applied Materials, Sony Computer Entertainment,
Microsoft, Countrywide Credit, Nextel Communications, SAP America and Gilead
Sciences. The top fifty tenants represent less than 21.7% of the Operating
Partnership's 1999 net rental income.
TENANT PROFILE BASED ON 1999 NET RENTS
<TABLE>
<CAPTION>
Percentage of
Business Sector Net Rents(1)
---------------------- --------------
<S> <C>
Professional Services 10.7 %
Hardware 8.0
Software 7.8
Telecom 7.6
Securities 6.8
Banking 5.9
Insurance 5.4
Computer Services 4.9
Research & Development 4.0
</TABLE>
(1) The calculated percentages are based on net rents contributed by the defined
sectors. Sector analysis is based on NAICS codes assigned to the
tenants and the Company's grouping of related NAICS codes.
Other Business Opportunities
Although the Operating Partnership's primary business objective is to own,
operate, acquire and develop property, it will continue to pursue other business
opportunities which will maximize shareholder value. These opportunities may be
available as a result of our building and tenant base and the depth of and
experience of the Operating Partnership's employees.
As an example, after surveying the growing telecommunications needs of our
tenants, the Operating Partnership, together with eight other real estate firms
and leading venture capital firm, Kleiner Perkins Caulfied & Byers,
12
<PAGE> 13
formed a national telecommunications company, Broadband Office, Inc. Broadband
Office will provide voice and data communications services to both the Operating
Partnership's tenants and to other tenants in their respective office buildings
across the country. By giving the tenants the ability to have direct, single
point access to advanced telecommunication services, the Operating Partnership
will not only generate greater tenant satisfaction, obtain higher rents and a
higher rate of renewal, but the Operating Partnership will generate an
additional source of revenue.
Competition
The Operating Partnership competes with other real estate firms in its markets
in attracting tenants, primarily on the basis of location, rental rates,
services provided and the design and condition of the improvements. These
competitors include domestic and foreign financial institutions, other REITs,
life insurance companies, pension funds, trust funds, partnerships and
individual investors.
The number of competitive commercial properties in a particular area could have
a material effect on the Operating Partnership's ability to lease space in its
properties or at newly developed or acquired properties and on the rents
charged. Since the Operating Partnership is also acquiring and actively
developing properties in its markets it also faces competition in its efforts to
acquire or develop desirable real estate.
CAPITAL STRUCTURE AND WORKING CAPITAL
The Operating Partnership's principal sources of funding for its ongoing
operations, which include the leasing and build-out of existing space as well as
the acquisition, development, expansion and renovation of additional properties
and debt maturities, are cash flows provided by operations, unsecured short-term
borrowings, public and privately placed equity financing, public unsecured debt
financing, the issuance of partnership units in the Operating Partnership,
proceeds from the disposition of non-strategic assets and the assumption of
secured debt on properties acquired. The Operating Partnership believes that its
ability to access a variety of capital sources enables it to reduce its overall
cost of capital and maintain a prudent capital structure. The Operating
Partnership's fixed rate debt has interest rates for the unsecured investment
grade notes between 6.65% and 8.00% and maturity dates ranging from 2000 to
2027.
CAPITAL STRUCTURE AT DECEMBER 31, 1999
DEBT
<TABLE>
<CAPTION>
Principal
Amount
----------
<S> <C>
Unsecured Notes $1,836,500
Unsecured Short-Term Borrowings 63,012
Mortgage Loans 97,331
----------
Total Debt $1,996,843
----------
</TABLE>
EQUITY
<TABLE>
<CAPTION>
Shares Conversion Common Stock $ Value
Outstanding Ratio Equivalents(1) Equivalent
----------- ------ ------------ ----------
<S> <C> <C> <C> <C>
Series A Convertible Preferred Stock 1,000 1:22:1 1,220 $ 44,454
Series B Cumulative Redeemable Preferred Stock 4,250 N/A N/A 106,250(2)
Series C Cumulative Redeemable Preferred Stock 6,000 N/A N/A 150,000(2)
Series E Cumulative Redeemable Preferred Stock 4,000 N/A N/A 100,000(2)
Common Stock 64,961 N/A 64,961 2,367,049
Operating Partnership Units 8,823 1:1 8,823 321,492
Series D Cumulative Redeemable Preferred OP Units 1,500 N/A N/A 75,000(3)
---------- ----------
Total Equity 75,004 3,164,245
========== ----------
Total Market Capitalization (total debt plus total equity) $5,161,088
==========
</TABLE>
(1) Value based on December 31, 1999 closing stock price of $36.438.
(2) Value based on $25.00 per share liquidation preference.
(3) Value based on $50.00 per share, units were convertible beginning in April
1998.
13
<PAGE> 14
OTHER DISCLOSURES
Environmental Matters
Compliance with laws and regulations relating to the protection of the
environment, including those regarding the discharge of materials into the
environment, has not had any material effect upon the financial condition or
results of operations of the Operating Partnership.
The 97 properties owned by the Operating Partnership at December 31, 1993, were
each subject to a Phase I environmental audit or update during the twelve-month
period ended during December 31, 1993. Certain of these properties were subject
to Phase II environmental investigations and all buildings on such properties
constructed prior to 1985 have been subject to asbestos detection
investigations. In addition, for each of the properties acquired subsequent to
December 31, 1993, and for each parcel of land purchased for development, a
Phase I environmental audit or update was completed as part of the acquisition
due diligence process. These investigations have not revealed any environmental
condition that the Operating Partnership believes would have a material effect
on its business, assets or results of operations.
Site assessments have revealed soil and ground water contamination at the
Stender Way II property in Santa Clara, California. A third party is primarily
bearing the costs relating to this environmental condition and the Operating
Partnership believes that its exposure, if any, is not material. Additionally,
three properties located in Stanford Research Park in Palo Alto, California are
subject to varying degrees of known environmental contamination. The remediation
costs associated with this contamination have also been, and are expected to
continue to be, borne by other parties. Furthermore, the Operating Partnership
has entered into indemnification agreements whereby the Operating Partnership
has been, and is to be, indemnified for liabilities arising from clean-up costs
relating to these three properties.
Environmental contamination has been found to have originated at Walsh at
Lafayette, an industrial development project site in Santa Clara, California
that was acquired by the Operating Partnership in 1995. The Company has since
developed a 320,505 square feet industrial building on this site. The relevant
government agency has identified a third party as responsible for remediation,
and the remediation process is continuing. The Operating Partnership is
being indemnified for environmental contamination on the Walsh at Lafayette
property by a third party that was the former owner of the property.
Site assessments have revealed that soil and groundwater at the Operating
Partnership's Montgomery Ward property in Pleasant Hill, California, have been
contaminated with volatile organic compounds. The likely sources of this
contamination are on-site underground storage tanks and a potential off-site
contamination source. To date, no government agency has issued any directives
requiring that a remediation plan be filed or the contamination be cleaned up.
The Spieker partnership that transferred this property, referred to as the
transferor, to the Operating Partnership previously filed a lawsuit against the
seller to enforce an indemnity agreement and against certain other potentially
responsible parties to have those parties bear any clean-up costs. Settlement
has been reached with certain of the defendants in the lawsuit, resulting in
cash payments to the transferor. A trial involving the remaining defendants
ended without any additional cash awards being made. Due to the nature of this
environmental condition and the Operating Partnership's expectation that other
parties will be primarily responsible for the clean-up costs, the Operating
Partnership believes that its exposure, if any, for clean-up costs would not
have a material adverse effect on the Operating Partnership's financial
condition, results of operations or liquidity.
14
<PAGE> 15
Site assessments have revealed soil and groundwater contamination at the Arden
Square property in Sacramento, California, and the Woodside Central property in
Woodside, California, which have since been sold to Pacific Retail Trust. The
Operating Partnership agreed to indemnify the buyer for the contamination.
However, the Operating Partnership believes that the liabilities and clean-up
costs associated with this contamination are covered by the Operating
Partnership's pollution insurance policy, except to the extent of the deductible
under such policy.
Property owned by GAF Corporation and/or Mattel, Inc. in the vicinity of the
Nimbus Corporate Center property in Beaverton, Oregon was discovered to have
very high levels of soil and groundwater contamination. Monitoring is currently
being conducted to determine the extent, if any, that such contamination may
have affected the Nimbus Corporate Center property and whether any remedial
action will be required. The Operating Partnership believes the GAF, Mattel
and/or other third parties will bear the liabilities and remediation costs
associated with this contamination, and that, if any event, any exposure the
Operating Partnership might have, would be covered by the Operating
Partnership's pollution insurance policy, except to the extent of the deductible
under such policy.
Site assessments have revealed soil and groundwater contamination at the
Georgetown Center property in Seattle, Washington, and the City Commerce Park
property in Seattle, Washington, which properties have since been sold to
CalWest Industrial Properties, LLC, a California limited liability company. The
Operating Partnership agreed to indemnify the buyer for the contamination.
Monitoring will be conducted to determine the extent, if any, that such
contamination may have affected the Georgetown Center property and the City
Commerce Park property, and whether any remedial action will be required.
Although the environmental investigations conducted to date have not revealed
any environmental liability that the Operating Partnership believes would have a
material adverse effect on the Operating Partnership's business, assets or
results of operations, and the Operating Partnership is not aware of any such
liability, it is possible that these investigations did not reveal all
environmental liabilities or that there are material environmental liabilities
of which the Operating Partnership is unaware. No assurances can be given that
(1) future laws, ordinances, or regulations will not impose any material
environmental liability, or (2) the current environmental condition of the
Properties has not been, or will not be affected by tenants and occupants of the
Properties, by the condition of properties in the vicinity of the Properties, or
by third parties unrelated to the Operating Partnership.
15
<PAGE> 16
ITEM 1. BUSINESS
Information related to this Item is located on pages 3-8.
ITEM 2. PROPERTIES
Information related to this Item is located on pages 9-13.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which either the Operating
Partnership or the Properties are a party, or to which any of the assets of the
Operating Partnership or the Properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Operating Partnership did not submit any matters to a vote of security
holders in the fourth quarter of the fiscal year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
None.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth:
- Consolidated operating data presented for the years ended December 31,
1999, 1998, 1997, 1996, and 1995.
- Consolidated balance sheet data presented as of December 31, 1999, 1998,
1997, 1996 and 1995.
16
<PAGE> 17
This selected financial data should be read in conjunction with the consolidated
financial statements (including the notes thereto) of the Operating Partnership
included in Item 8.
SUMMARY FINANCIAL INFORMATION
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues $ 643,829 $ 561,097 $ 331,313 $ 200,699 $ 153,391
Income from operations before disposition of
real estate, extraordinary items 195,516 163,924 110,134 65,764 30,355
Income before extraordinary items 253,970 185,939 130,386 74,091 30,444
Net Income (loss) 253,970 185,939 130,386 74,091 (10,361)
Net Income (loss) available to General Partners 187,322 130,431 99,890 54,149 (8,837)
Net Income (loss) available to Limited Partners 25,915 17,731 14,980 9,901 (1,524)
Net income (loss) per Common Operating Unit
before extraordinary items (1) 2.89 2.07 2.04 1.74 .90
Net income (loss) per Common Operating Unit (1) 2.89 2.07 2.04 1.74 (.31)
Distribution per Common Unit:
General Partners (1) 2.44 2.29 2.09 1.78 1.76
Limited Partners (1) 2.44 2.29 2.09 1.72 1.68
BALANCE SHEET DATA:
Investment in real estate (before accumulated
depreciation) $ 4,404,274 $ 4,182,806 $ 3,252,572 $ 1,447,173 $ 1,098,871
Net investment in real estate 4,088,034 3,942,028 3,083,521 1,319,472 974,259
Total assets 4,268,485 4,056,870 3,242,934 1,390,314 1,011,497
Mortgage loans, net 97,331 110,698 96,502 45,997 112,702
Unsecured debt 1,899,512 1,736,500 1,335,000 674,000 377,700
Total debt 1,996,843 1,847,198 1,431,502 719,997 490,402
Partners' Capital 2,060,247 2,021,814 1,679,841 610,928 468,576
OTHER DATA:
Funds from Operations (2) $ 258,828 $ 215,064 $ 147,912 $ 93,293 $ 61,428
Cash flow provided (used) by:
Operating activities 315,357 293,989 191,450 112,581 76,471
Investing activities (205,847) (786,502) (1,697,885) (387,567) (200,515)
Financing activities (97,312) 474,801 1,499,727 296,749 121,954
Total rentable square footage of properties at
end of period 40,658 40,843 34,543 21,430 16,282
Occupancy rate at end of period 96.3% 96.4% 94.5% 96.6% 96.9%
</TABLE>
(1) Per unit amounts for the Operating Partnership are computed using the
weighted average units outstanding during the period. The weighted average
general partner units and limited partner units outstanding for the years
ended December 31, 1999, 1998, 1997, 1996 and 1995, were as follows:
<TABLE>
<CAPTION>
Diluted Weighted Average Diluted Weighted Average
Year Ended General Partner Units Limited Partner Units
---------- ------------------------ ------------------------
<S> <C> <C>
1999 64,983,415 8,865,039
1998 62,877,995 8,429,646
1997 48,968,905 7,209,418
1996 35,910,652 6,547,819
1995 27,192,655 6,409,742
</TABLE>
(2) Refer to "Funds of Operations" in Item-7 Management's Discussion and
Analysis of Financial Condition and Results of Operations for discussion
and definition of the Operating Partnership's Funds from Operations. In
February 1995; the National Association of Real Estate Investment Trusts
("NAREIT") established its definition of Funds from Operations and
requested that REITs adopt this new definition beginning in 1996. The new
definition provided that the amortization of debt discount and deferred
financing costs is no longer to be added back to net income to calculate
Funds from Operations. In 1996, the Operating Partnership substantially
implemented the new NAREIT definition for calculating Funds from
Operations. The amount presented above for the year ended December 31,
1995, was $70,790 based on the old NAREIT definition.
17
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements contained in this Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and elsewhere in this Form
10-K, which are not historical facts, may be forward-looking statements. These
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
Overview
In 1999, the Operating Partnership focused on maximizing the value of its real
estate portfolio by increasing the cash flow from its properties, by increasing
effective rents and maintaining high occupancy levels, as well as completing
strategic value added asset acquisition, development and disposition
transactions. The Operating Partnership also continued to focus on maintaining a
capital structure that allows the Operating Partnership to execute its business
strategy.
The Operating Partnership continued to experience solid rent growth in its
portfolio of properties. For the year ended December 31, 1999, net effective
rents on average were 36.5% higher than the expiring coupon rent on the 8.0
million square feet of second generation space renewed or re-leased. For the
year ended December 31, 1998, rollover rents grew by 37.4% on approximately 8.3
million square feet of second generation space.
During 1999, the availability of assets that would meet the Operating
Partnership's stringent acquisition requirements were limited. Accordingly, the
Operating Partnership purchased significantly fewer assets in 1999 than in 1998.
Of the 807,037 square feet of office property added to its portfolio during 1999
(the "1999 Acquisitions"), two office properties were added in the Pacific
Northwest totaling 554,588 square feet for a total investment of $96.4 million
and three were added in Southern California totaling 252,449 square feet for a
total investment of $37.9 million.
The Operating Partnership continues to review its portfolio to identify assets
whose value has been fully realized. During 1999, the Operating Partnership
identified approximately 2.9 million square feet of property that was
subsequently disposed of and the proceeds were either traded into new properties
or used to fund the Operating Partnership's developments in process.
The Operating Partnership continued to increase its level of development
activity during 1999. During 1999, the Operating Partnership added eight
projects totaling 1.3 million square feet to its development pipeline for a
total investment of approximately $237.7 million while it completed eleven
properties, adding 1.9 million square feet to its stabilized portfolio for a
total investment of $166.9 million. At December 31, 1999 the Operating
Partnership had developments and redevelopments in process of approximately 2.7
million square feet of office and industrial properties for a total investment
of $473.8 million. Further breakdown of the Operating Partnership's developments
and redevelopments in process can be found in Part I of this Form 10-K. The
developments completed during 1999 and the developments in process at December
31, 1999, are collectively referred to as the "Developments". A few of the
developments in process, though not yet completed, were partially leased and
occupied during 1999 and, accordingly, revenue and expense amounts for these
developments are included in the Operating Partnership's operating results for
the year ended December 31, 1999.
The Operating Partnership continued to maintain a strong balance sheet. In 1999,
the Operating Partnership issued $400.0 million of investment grade rated
unsecured notes in two tranches with maturities ranging from four to ten years.
18
<PAGE> 19
Comparison of 1999 to 1998
The following comparison is of the Operating Partnership's consolidated
operations for the year ended December 31, 1999 to the year ended December 31,
1998 (amounts are presented in millions).
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
Rental Revenues Change
---------------------
1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
1998 Core Portfolio $456.9 $424.4 $ 32.5 7.7%
1998 Acquisitions 116.6 86.5 30.1 34.8
1999 Acquisitions 8.1 -- 8.1 --
Developments 42.3 14.4 27.9 193.8
1999 Dispositions 13.9 17.1 (3.2) (18.7)
------ ------ ------ ------
$637.8 $542.4 $ 95.4 17.6%
====== ====== ====== ======
</TABLE>
Rental revenues for 1999 increased by $95.4 million. $32.5 million, or 34.1%, of
the rental revenue increase is due to revenues generated by the "1998 Core
Portfolio", defined as properties owned at January 1, 1998 and still owned at
December 31, 1999. Properties acquired during 1998 contributed $30.1 million, or
31.6%, to the rental revenue increase for the year. During 1998, the Operating
Partnership invested $884.8 million in acquiring properties totaling 6.3 million
square feet (the "1998 Acquisitions"). The properties were acquired at various
dates throughout the year and as such the Operating Partnership recognized a
full year's results in 1999 as compared to a partial year's results in the year
of acquisition. Increases in the 1998 Core Portfolio rental revenues and to some
extent the 1998 Acquisitions rental revenues during 1999 were attributable to
higher rollover rental rates realized on the renewal and releasing of second
generation space and built in rent increases. During 1999, the Operating
Partnership completed 1,326 lease transactions for the renewal and re-lease of
8.0 million square feet of second generation space. Rollover effective rent
growth on these leases was on average, 36.5% higher than the previous rents
received on those same spaces.
The Developments contributed $27.9 million, or 29.2%, to the rental revenue
increases for 1999. The increase in income is due to the increases in occupancy
on the developments either completed or still in the development pipeline. The
Developments include both properties completed and added to the Operating
Partnership's portfolio of stabilized properties, as well as properties
currently under development. The Operating Partnership considers properties
"stabilized" at the earlier of eighteen months after shell completion or when a
95.0% occupancy rate has been reached.
The 1999 Acquisitions contributed $8.1 million of the rental revenues for 1999.
For the year, the Operating Partnership acquired five office properties totaling
807,037 square feet for a total investment of $134.3 million.
Consistent with the Operating Partnership's strategy to maintain the highest
quality portfolio, the Operating Partnership sold properties in 1999 that did
not meet its stringent investment criteria. During 1999, the Operating
Partnership disposed of fifteen properties and two land parcels ("1999
Dispositions"), for a total sales price of $184.8 million recognizing a book
gain of $48.6. Increases in rental revenues for the Operating Partnership were
partially offset by a decrease of $3.2 million attributable to the 1999
Dispositions (see Note 3 to the consolidated financial statements). The gains
generated from these sales were re-deployed into the purchase of the 1999
Acquisitions into assets purchased subsequent to December 31, 1999 and to fund
the development pipeline. The Operating Partnership also recognized income from
the sale of a mortgage and a gain on condemnation of a land parcel of $20.2
million.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
Change
------------------
1999 1998 $ %
----- ----- ------ -----
<S> <C> <C> <C> <C>
Interest and Other Income $ 6.0 $18.7 $(12.7) (67.9)%
</TABLE>
Interest and other income decreased due to the reduction in interest income from
mortgage loans made to SNI in relation to SNI's 1997 acquisition of non-core
assets. The majority of these assets were disposed of during 1998. Additionally,
interest earned decreased slightly due to lower cash balances year over year and
from the reduction of mortgage interest income due to the payoff on a mortgage
held by the Operating Partnership, which was
19
<PAGE> 20
repaid by the borrower. Average cash balances for the year ended December 31,
1999 were $27.3 million as compared to $33.9 million in 1998.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
Change
------------------------
Property Operating Expenses 1999 1998 $ %
- --------------------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
Rental Expenses $144.8 $124.8 $ 20.0 16.0%
Real Estate Taxes 47.9 42.2 5.7 13.5
------ ------ ------ ------
$192.7 $167.0 $ 25.7 15.4%
====== ====== ====== ====
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
--------------------------
Property Operating Expenses 1999 1998 $ %
- --------------------------- ------ ------ -------- ------
<S> <C> <C> <C> <C>
1998 Core Portfolio $128.3 $121.7 $ 6.6 5.4%
1998 Acquisitions 44.9 36.2 8.7 24.0
1999 Acquisitions 2.7 -- 2.7 --
Developments 14.1 5.9 8.2 139.0
1999 Dispositions 2.7 3.2 (0.5) (15.6)
------ ------ ------ ------
$192.7 $167.0 $ 25.7 15.4%
====== ====== ====== ======
Property Operating Expenses as % of
Rental Revenues 30.2% 30.8%
====== ======
</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. The increased number of employees, as well as higher compensation
costs were the principal drivers of the increase in rental expenses. The
increases experienced are consistent with the increase in rental revenue.
Rental revenues net of property operating expenses, referred to as "net
operating income," is presented in the following tables:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Change
-------------------------
Net Operating Income 1999 1998 $ %
- ------------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
1998 Core Portfolio $328.6 $302.7 $ 25.9 8.6%
1998 Acquisitions 71.7 50.3 21.4 42.5
1999 Acquisitions 5.4 -- 5.4 --
Developments 28.2 8.5 19.7 231.8
1999 Dispositions 11.2 13.9 (2.7) (19.4)
------ ------ ------ ------
$445.1 $375.4 $ 69.7 18.6%
====== ====== ====== ======
</TABLE>
For the year ended December 31, 1999, 74.1% of the Operating Partnership's net
operating income was generated by office properties as compared with 69.1% for
1998 (for further breakdown of rental revenue and net operating income at
segment levels refer to Note 13 to the consolidated financial statements).
20
<PAGE> 21
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
Change
------------------------
Other Expenses 1999 1998 $ %
- -------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
Interest Expense, including
Amortization of Finance Costs $120.7 $116.3 $ 4.4 3.8%
Depreciation and Amortization Expense 111.4 94.5 16.9 17.9
G & A Expenses 23.5 19.3 4.2 21.8
G & A Expenses as % of
Rental Revenues 3.7% 3.6%
Capitalized Interest $ 21.0 $ 16.5
</TABLE>
Interest expense increased due to a higher total average outstanding debt
balance in 1999. This increase is the net effect of additions to interest
expense from additional note offerings which occurred during 1999, offset by
lower balances outstanding under the Facility, the payoff of the Bank Facility
combined with an increase in interest capitalized in relation to the
Developments that the Operating Partnership had in process during the year. The
average outstanding debt was $2.0 billion in 1999 and $1.8 billion in 1998.
Depreciation and amortization expenses increased by $16.9 million for 1999 as
compared with 1998, due primarily to the 1999 and 1998 Acquisitions and the
Developments.
General and administrative expenses increased by $4.2 million for 1999 as
compared with 1998, primarily as a result of the increased number of employees,
wage pressures experienced on the west coast. However, 1999 general and
administrative expenses were consistent with 1998 levels on a percentage of
revenue basis.
During 1999, the Operating Partnership recorded gains on disposition of real
estate of $58.5 million. The gain includes $5.2 million of gain recognized on a
mortgage held by the Operating Partnership, which was repaid by the borrower, a
$4.7 million condemnation gain and $48.6 million on the disposition of fifteen
properties and two land parcels.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
-------------------------
1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
Income from Operations before
Disposition of Real Estate and
Minority Interests $195.5 $163.9 $ 31.6 19.3%
</TABLE>
The increase in income from operations before disposition of real estate and
minority interests of $31.6 million for the year ended December 31, 1999 is
principally due to rent increases in the 1998 Core Portfolio and the 1998
Acquisitions, the 1999 Acquisitions, and the Developments coming on line during
the year.
21
<PAGE> 22
Comparison of 1998 to 1997
The following comparison is of the Operating Partnership's consolidated
operations for the year ended December 31, 1998 to the year ended December 31,
1997 (amounts are presented in millions).
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
-------------------------
Rental Revenues 1999 1998 $ %
- ------------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
1997 Core Portfolio $217.6 $203.9 $ 13.7 6.7%
1997 Acquisitions 209.5 91.9 117.6 128.0
1998 Acquisitions 86.5 -- 86.5 --
Developments 26.3 8.7 17.6 202.3
1998 Dispositions 2.5 17.1 (14.6) (85.4)
------ ------ ------ ------
$542.4 $321.6 $220.8 68.7%
====== ====== ====== ======
</TABLE>
Rental revenues for 1998 increased by $220.8 million. Of this increase, $117.6
million was generated by the properties acquired during 1997 (the "1997
Acquisitions"), for which the Operating Partnership recognized a full year's
results in 1998 as compared to a partial year's results in the year of
acquisition. $86.5 million was generated by the 1998 Acquisitions, which were
acquired on various dates throughout 1998. $17.6 million is attributable to the
Developments and $13.7 million is attributable to the 1997 Core Portfolio. The
"1997 Core Portfolio" is defined as properties owned at January 1, 1997 and
still owned at December 31, 1998. Increases in the 1997 Core Portfolio can be
attributed to higher rents on rollovers, contractual rent increases and
increased occupancy. The increases in rental revenue are partially offset by a
decrease of $14.6 million attributable to the disposition of properties which
were owned by the Operating Partnership during the year ended December 31, 1997
(the "1998 Dispositions").
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
-------------------------
1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
Interest and Other Income $ 18.7 $ 9.7 $ 9.0 92.8%
</TABLE>
The increase in interest and other income is due to interest income from
mortgage loans made to SNI in relation to SNI's acquisition of non-core assets.
These assets have subsequently been sold. This increase is slightly offset by a
decrease in interest earned on cash balances. Average cash balances for the year
ended December 31, 1998 were $33.9 million compared to $56.4 million in 1997.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
-------------------------
Property Operating Expenses 1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
Rental Expenses $124.8 $ 66.7 $ 58.1 87.1%
Real Estate Taxes 42.2 24.6 17.6 71.5%
------ ------ ------ ------
$167.0 $ 91.3 $ 75.7 83.0%
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
Change
-------------------------
Property Operating Expenses 1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
1997 Core Portfolio $ 56.0 $ 54.1 $ 1.90 3.5%
1997 Acquisitions 66.3 30.4 35.9 118.1
1998 Acquisitions 36.2 -- 36.2 --
Developments 7.8 2.2 5.6 254.5
1998 Dispositions 0.7 4.6 (3.9) (84.8)
------ ------ ------ ------
$167.0 $ 91.3 $ 75.7 83.0%
====== ====== ====== ======
Property Operating Expenses as % of
Rental Revenues 30.8% 28.4%
------ ------
</TABLE>
22
<PAGE> 23
The overall increase in property operating expenses is primarily a result of the
growth in the total square footage of the Operating Partnership's portfolio of
properties. 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 year ended December 31, 1998,
69.1% of the Operating Partnership's net operating income (rental revenues less
property operating expenses) was generated by office properties as compared with
60.1% for 1997.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Change
-----------------------
Net Operating Income 1999 1998 $ %
- -------------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
1997 Core Portfolio $161.6 $149.9 $ 11.7 7.8%
1997 Acquisitions 143.2 61.5 81.7 132.8
1998 Acquisitions 50.3 -- 50.3 --
Developments 18.5 6.5 12.0 184.6
1998 Dispositions 1.8 12.4 (10.6) (85.5)
------ ------ ------ ------
$375.4 $230.3 $145.1 63.0%
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Change
-----------------------
Other Expenses 1999 1998 $ %
- -------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
Interest Expense, including
Amortization of Finance Costs $116.3 $ 62.3 $ 54.0 86.7%
Depreciation and Amortization Expense 94.5 52.8 41.7 79.0
G & A Expenses 19.3 14.8 4.5 30.4
G & A Expenses as % of
Rental Revenues 3.6% 4.6%
Capitalized Interest $ 16.5 $ 6.3
</TABLE>
The increase in interest expense of $54.0 million is due to increases in the
total average outstanding debt balances. The average outstanding debt was $1.8
billion for 1998 and $936.0 million in 1997 and is consistent with the increase
in the size of the Operating Partnership's portfolio of properties.
Depreciation and amortization expenses increased by $41.7 million for 1998 as
compared with 1997, due to the 1998 and 1997 Acquisitions and the completed
Developments.
General and administrative expenses increased by $4.5 million for 1998 as
compared with 1997, primarily as a result of the increased number of employees.
On a percentage basis, general and administrative expenses were 3.6% of rental
revenues for 1998, as compared with 4.6% for 1997 reflecting economies of scale
associated with the growth of the Operating Partnership.
During 1998, the Operating Partnership disposed of one retail property, two
office properties, four industrial properties and two land parcels resulting in
a gain of $20.1 million.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Change
-----------------------
1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
Income from Operations before
Disposition of Real Estate and
Minority Interests $163.9 $110.1 $ 53.8 48.9 %
</TABLE>
23
<PAGE> 24
Income from Operations before disposition of real estate and minority interests
increased by $53.8 million or 48.9%. The increase in income from operations
before disposition of real estate and minority interests is principally due to
the 1998 and 1997 Acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Change
-----------------------
1999 1998 $ %
------ ------ ------- ------
<S> <C> <C> <C> <C>
Cash Provided by Operating Activities $315.4 $294.2 $ 21.2 7.2%
Cash Used for Investing Activities (205.8) (786.7) 580.9 73.8
Cash (Used for) Provided by Financing
Activities (97.3) 474.8 (572.1) (120.5)
</TABLE>
The increase in cash provided by operating activities is primarily due to the
net income resulting from the 1998 and 1999 Acquisitions, the Developments and
the 1998 Core Portfolio partially offset by a decrease in accounts payable. The
decrease in accounts payable is due to timing differences in the payment of
accounts payable balances at the end of each comparable period. Cash used for
investing activities was significantly lower due to the decrease in the number
of acquisitions completed. Cash used for/provided by financing activities
decreased by $572.1 million for 1999, as compared to the same period in 1998.
The change is consistent with the Operating Partnership's decreased investment
activity and the Operating Partnership's ability to fund part of its investment
activity with the proceeds from asset dispositions. During 1999, cash provided
by financing activities consisted primarily of $400.0 million in gross proceeds
from the issuance of unsecured notes (see below). The increases were offset by
the payment of $200.0 million on the Company's short-term bank facility (the
"Bank Facility"), net payments of $37.0 million on the Facility, re-payment of
$34.0 million in mortgage loans and principal payments of $8.9 million on
mortgage loans. Additionally, re-payments of dividends and distributions
increased by $23.0 million from $195.9 million in 1998 to $218.9 million for
1999. This increase is due to the greater number of common and preferred shares
outstanding and the 7.0% increase in the common share and operating partnership
unit distribution rate of $2.44 per share and unit for 1999 from $2.28 per share
in 1998.
The principal sources of funding for acquisitions, development, expansion and
renovation of properties and debt maturities are unsecured short-term
borrowings, public and privately placed equity financing, public unsecured debt
financing, the issuance of partnership units in the Operating Partnership,
proceeds from dispositions, 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 December 31, 1999, the Company had no material commitments for capital
expenditures related to the renewal or re-leasing of space. The Company believes
that the cash provided by operations and its Bank Facility provide sufficient
sources of liquidity to fund capital expenditure costs associated with the
renewal or re-leasing of space.
In February, March and April 1998, the Company placed 710,832 shares, 608,828
shares and 1,166,144 shares, respectively, of Common Stock at prices of $42.25,
$41.06 and $39.88 in Unit Investment Trusts along with other publicly traded
REITs. Additionally, in July 1998, there was a private offering for 173,664
shares at $38.39. The net proceeds of these transactions of $96.3 million were
used to pay down borrowings on the line of credit and to fund the ongoing
acquisition and development of properties.
In April 1998, the Company sold 1,500,000 Series D Cumulative Redeemable
Preferred Units (the "Series D Preferred Units") to an institutional investor
for $50.00 per unit. Dividends are payable at an annual rate of 7.6875%. The
Series D Preferred Units may be called by the Company at par on or after April
20, 2003, and have no stated maturity or mandatory redemption. The Series D
Preferred Units are exchangeable for the Series D Cumulative Redeemable
Preferred Stock of the Operating Partnership on or after April 20, 2008. The net
proceeds of $73.1 million for the Series D Preferred Units were used to pay down
the line of credit and to fund future growth of the Company.
In June 1998, the Company sold 4,000,000 shares of Series E Cumulative
Redeemable Preferred Stock for $25.00 per share. These shares are redeemable at
the option of the Operating Partnership. Dividends are payable at an annual rate
of 8.00% of the redeemable liquidation preference of $100.0 million. Net
proceeds of $96.4 million were used principally to repay borrowings on the
unsecured line of credit and to fund the ongoing acquisition and development of
property.
24
<PAGE> 25
In 1998, the Operating Partnership issued $301.5 million of investment grade
rated unsecured notes in four tranches as follows: $150.0 million of 6.75% notes
due January 15, 2008; $125.0 million of 6.875% notes due February 1, 2005; $1.5
million of 7.0% notes due February 2, 2007 and $25.0 million of 6.880% notes due
April 30, 2007. Net proceeds of $299.1 million were used to repay borrowings on
the unsecured line of credit and to fund the acquisition and development of
properties.
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 used the net proceeds of
approximately $397.0 million from this offering to reduce amounts outstanding
under the Facility and the Bank Facility.
In conjunction with the issuance of the May 1999 Notes, the Company hedged its
exposure to pricing benchmarks so that the net cost to the Operating Partnership
was 6.74% for the 2004 notes and 7.18% for the 2009 notes. The Company was
released from any further obligations under the hedge transaction upon issuance
of the May 1999 Notes.
As of December 31, 1999, the Operating Partnership had $1.8 billion of
investment grade rated unsecured debt securities outstanding. The debt
securities have interest rates that vary from 6.65% to 8.0% and maturity dates
that range from 2000 to 2027.
The Operating Partnership has a $250.0 million Unsecured Line of Credit Facility
with interest at London Interbank Offering Rate ("LIBOR") plus .80%. This
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 December 31, 1999, the Operating Partnership had $63.0
million outstanding under the Facility. The Facility is 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 Facility concerning its indebtedness. During the quarter ended June 30, 1999
the Operating Partnership paid down the Bank Facility which had an outstanding
balance of $200.0 million. The Bank Facility carried interest at LIBOR plus
0.65% and was to mature in November 1999.
In addition to the unsecured debt securities and the Facility, the Operating
Partnership has $97.3 million of secured indebtedness (the "Mortgages") at
December 31, 1999. The Mortgages have interest rates varying from 7.00% to 9.88%
and maturity dates from 2001 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 $10.2
million of assessment bonds outstanding as of December 31, 1999.
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, or 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
do 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 do not represent cash
flows from operating, investing, or financing activities as defined by GAAP.
Further, Funds from Operations, as disclosed by other REIT's 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, or
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
25
<PAGE> 26
Operating Partnership eliminates the effect of straight-lined 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.
Funds from Operations per share is calculated based on weighted average shares
outstanding, assuming the conversion of all shares of Series A Preferred 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.
26
<PAGE> 27
The tables below set forth the Operating Partnership's calculation of Funds from
Operations for 1999 and 1998.
<TABLE>
<CAPTION>
STATEMENT OF FUNDS FROM OPERATIONS
(amounts in thousands)
1999 Quarter Ended
------------------------------------------------------------- Year Ended
March 31, June 30, September 30, December 31, December 31,
--------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from operations before disposition
of property and minority interests: $ 47,594 $ 48,716 $ 47,954 $ 51,252 $ 195,516
Less:
Dividends on Series B Preferred Stock (2,510) (2,510) (2,510) (2,510) (10,041)
Dividends on Series C Preferred Stock (2,953) (2,953) (2,953) (2,953) (11,812)
Dividends on Series E Preferred Stock (2,000) (2,000) (2,000) (2,000) (8,000)
Distributions on Preferred
Operating Partnership Units (2,527) (2,397) (1,538) (1,441) (7,904)
--------- --------- --------- --------- ---------
Income from Operations after Series B, C,
and E dividends, and Preferred Operating
Partnership Unit distributions 37,604 38,856 38,953 42,348 157,759
Add:
Depreciation and amortization 25,102 26,727 28,981 29,191 110,003
Other, net 38 289 153 780 1,261
--------- --------- --------- --------- ---------
Funds from Operations before
Straight-line rent 62,744 65,872 68,087 72,319 269,023
Straight-line rent (2,548) (2,675) (2,345) (2,626) (10,195)
--------- --------- --------- --------- ---------
Funds from Operations $ 60,196 $ 63,197 $ 65,742 $ 69,693 $ 258,828
========= ========= ========= ========= =========
Weighted average diluted share
equivalents outstanding 73,919 74,233 75,329 75,547 74,763
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF FUNDS FROM OPERATIONS
(amounts in thousands)
1998 Quarter Ended
-------------------------------------------------------------- Year Ended
March 31, June 30, September 30, December 31, December 31,
--------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from operations before disposition
of property and minority interests: $ 37,943 $ 40,630 $ 43,262 $ 42,088 $ 163,924
Less:
Dividends on Series B Preferred Stock (2,510) (2,510) (2,510) (2,510) (10,041)
Dividends on Series C Preferred Stock (2,953) (2,953) (2,953) (2,953) (11,813)
Dividends on Series E Preferred Stock -- (600) (2,000) (2,000) (4,600)
Distributions on Preferred Operating
Partnership Units (1,266) (2,223) (2,527) (2,527) (8,542)
--------- --------- --------- --------- ---------
Income from Operations after Series B, C,
and E dividends, and Preferred Operating
Partnership Unit distributions 31,214 32,344 33,272 32,098 128,928
Add:
Depreciation and amortization 19,366 22,404 23,924 27,813 93,512
Other, net (14) (14) 105 36 112
--------- --------- --------- --------- ---------
Funds from Operations before
Straight-line rent 50,566 54,734 57,301 59,947 222,552
Straight-line rent (1,640) (1,508) (2,408) (1,932) (7,488)
--------- --------- --------- --------- ---------
Funds from Operations $ 48,926 $ 53,226 $ 54,893 $ 58,015 $ 215,064
========= ========= ========= ========= =========
Weighted average diluted share
equivalents outstanding 69,795 72,883 73,639 73,733 72,528
========= ========= ========= ========= =========
</TABLE>
The sum of quarterly funds from operations data in 1999 and 1998 varies from the
annual data due to rounding.
27
<PAGE> 28
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 December 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>
2000 2001 2002 2003 2004 Thereafter Total
------------ ------------ ------------ ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Debt $ 100.0 $ 155.0 $ 110.0 $ -- $ 300.0 $ 1,268.8 $ 1,933.8
Average Interest Rate 6.65% 7.21% 6.95% -- 6.83% 7.29% 7.16%
Variable Rate Debt -- $ 63.0 -- -- -- -- $ 63.0
Average Interest Rate -- 6.66% -- -- -- -- 6.66%
</TABLE>
The variable rate debt represents 3.2% and the fixed rate debt represents 96.8%
of all the debt outstanding. 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 December 31, 1999, the Operating
Partnership had no interest rate caps or swaps. In conjunction with the issuance
of the May 1999 Notes, the Operating Partnership hedged its exposure to pricing
benchmarks so that the net cost to the Operating Partnership was 6.74% for the
2004 notes and 7.18% for the 2009 Notes. The Operating Partnership was released
from any further obligations under the hedge upon issuance of the May 1999
Notes. 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K.
See Item 14.
ITEM 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
28
<PAGE> 29
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
Operating Partnership's definitive proxy statement for its annual stockholders'
meeting to be held on June 7, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
Operating Partnership's definitive proxy statement for its annual stockholders'
meeting to be held on June 7, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the
Operating Partnership's definitive proxy statement for its annual stockholders'
meeting to be held on June 7, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
Operating Partnership's definitive proxy statement for its annual stockholders'
meeting to be held on June 7, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) 1. FINANCIAL STATEMENTS AND REPORT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS
Report of Independent Public Accountants 33
Consolidated Financial Statements:
Balance Sheets:
Spieker Properties, L.P. Consolidated as of December 31, 1999 and 1998 34
Statements of Operations:
Spieker Properties, L.P. Consolidated for the years ended December 31, 1999,
December 31, 1998 and December 31, 1997 36
Statements of Partners' Capital:
Spieker Properties, L.P. Consolidated for the years ended December 31, 1999,
December 31, 1998 and December 31, 1997 37
Statements of Cash Flows:
Spieker Properties, L.P. Consolidated for the years ended December 31, 1999
December 31, 1998 and December 31, 1997 38
Notes to Consolidated Financial Statements 39
2. FINANCIAL STATEMENTS SCHEDULES
Schedule III- Real Estate and Accumulated Depreciation as of December 31, 1999 53
All other schedules are omitted because they are not required or the
required information is shown in the consolidated financial statements
or notes thereto.
(b) REPORTS ON FORM 8-K
None.
(c) EXHIBITS
The exhibits cited in the following Index to Exhibits are filed
herewith or are incorporated by reference to exhibits previously
filed.
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBITS (enclosed attachments are sequentially numbered) Page No.
=========================================================================================
<S> <C> <C>
3.1 Articles of Incorporation of Spieker Properties, Inc. (1)
3.1A Articles of Amendment of Spieker Properties, Inc. (incorporated by
reference to Exhibit 3.1A to Spieker Properties, Inc.'s Report on Form
10-K for the year ended December 31, 1996) 65
3.2 Amended and Restated Bylaws of Spieker Properties, Inc.
3.3 Articles Supplementary of Spieker Properties, Inc. for the Series A
Preferred Stock (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended March 31,
1994)
3.4 Articles Supplementary of Spieker Properties, Inc. for the Class B
Common Stock (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended March 31,
1995)
3.5 Articles Supplementary of Spieker Properties, Inc. for the Series B
Preferred Stock (2)
3.6 Articles Supplementary of Spieker Properties, Inc. for the Class C
Common Stock (2)
3.7 Articles Supplementary of Spieker Properties, Inc. for the Series C
Preferred Stock (incorporated by reference to Exhibit 3.1 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended September
30, 1997)
3.8 Articles Supplementary of Spieker Properties, Inc. for the Series D
Preferred Stock (incorporated by reference to Exhibit 3.8 to Spieker
Properties, Inc.'s Annual Report on the Form 10-K for the year ended
December 31, 1998).
3.9 Articles Supplementary of Spieker Properties, L.P. for the Series E
Preferred Stock (incorporated by reference to Exhibit 3.1 to Spieker
Properties, Inc.'s Report on Form 8-K dated June 4, 1998)
3.10 Rights agreement, which includes as Exhibit A the Form of Rights
Certificate and Election to Exercise and as Exhibit B the Form of
Articles Supplementary (incorporated by reference to Exhibit 4 to
Spieker Properties, Inc.'s Report on Form 8-K dated September 22, 1998)
4.1 Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K (1)
4.2 Intentionally omitted
4.3 Series A Preferred Stock Purchase Agreement, ( incorporated by reference
to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q Report for the
quarter ended March 31, 1994)
4.4 Investor Rights Agreement relating to A Series Preferred Stock
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)
4.5 Indenture dated as December 6, 1995, among Spieker Properties, Inc.,
Spieker Properties, Inc. and State Bank and Trust, as Trustee (2)
4.6 First Supplemental Indenture relating to the 2000 Notes, the 2000 Note
and Guarantee (2)
4.7 Second Supplemental Indenture relating to the 2001 Notes, the 2001 Note
and Guarantee (2)
4.8 Third Supplemental Indenture relating to the 2002 Notes, the 2002 Note
and Guarantee (2)
4.9 Fourth Supplemental Indenture relating to the 2004 Notes and the 2004
Note (2)
4.10 Class B Common Stock Purchase Agreement (incorporated by reference to
Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q Report for the
quarter ended March 31, 1994)
4.11 Investor's Rights Agreement relating to Class B Common Stocks
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)
4.12 Class C Common Stock Purchase Agreement (2)
4.13 Investor's Rights Agreement relating to Class C Common Stock (2)
4.14 Fifth Supplemental Indenture relating to the Medium Term Note Program
and Forms of Medium Term Notes (incorporated by reference to Exhibit 4.1
to Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)
4.15 Sixth Supplemental Indenture relating to the 7 1/8% Notes Due 2006
(incorporated by reference to Exhibit 4.1 of Spieker Properties, Inc.'s
Current Report on Form 8-K filed with the Commission on December 19,
1996)
4.16 Seventh Supplemental Indenture relating to the 7 7/8% Notes Due 2016
(incorporated by reference to Exhibit 4.2 of Spieker Properties, Inc.'s
Current Report on Form 8-K filed with the Commission on December 19,
1996)
</TABLE>
- -----------------
* Indicates management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Registration Statement on Form S-11 (Registration
No. 33-67906), which became effective November 10, 1993.
(2) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1995.
30
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBITS (enclosed attachments are sequentially numbered)
================================================================================
<S> <C>
4.17 Eighth Supplemental Indenture relating to the 7.125% Notes Due 2009
(incorporated by reference to Exhibit 4.9 of Spieker Properties, Inc.'s
Registration statement on Form S-3 (File No. 333-35997))
4.18 Ninth Supplemental Indenture relating to the 7.50% Debentures Due 2027
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Report on Form 10-Q for the quarter ended September 30, 1997)
4.19 Tenth Supplemental Indenture relating to the 7.35% Debentures Due 2017
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.20 Eleventh Supplemental Indenture relating to the 6.75% Notes Due 2008
(incorporated by reference to Exhibit 4.2 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.21 Twelfth Supplemental Indenture relating to the 6.875% Notes Due 2006
(incorporated by reference to Exhibit 4.3 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.22 Thirteenth Supplemental Indenture relating to the 7% Notes Due 2007
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.23 Fourteenth Supplemental Indenture relating to the 6.88% Notes due 2007
(incorporated by reference to Exhibit 4.15 to Spieker Properties, Inc.
Registration Statement on Form S-3 (File No. 333-51269))
4.24 Fifteenth Supplemental Indenture relating to the 6.8% Notes Due 2004 and
the 7.25% Notes due 2009 (incorporated by reference to Exhibit 4.1
Spieker Properties, Inc.'s Current Report on Form 8-K dated May 11,
1999)
10.1 Second Amendment and Restated Agreement of Limited Partnership of
Spieker Properties, Inc. (incorporated by reference to Exhibit 10.1
Spieker Properties, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1997)
10.2 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 10.2 Spieker Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1997)
10.3 Credit Agreement among Spieker Properties, Inc., as borrower, Wells
Fargo Bank, as Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and the lenders named therein, dated as of August
8, 1997, and Loan Notes pursuant to such Credit Agreement (incorporated
by reference to Exhibit 10.16 to Spieker Properties, Inc.'s Current
Report on Form 8-K dated September 22, 1997)
10.4* Form of Employment Agreement between the Operating Partnership and each
of Warren E. Spieker, Jr., John K. French, Bruce E. Hosford, and Dennis
E. Singleton (2)
10.5* Form of Spieker Merit Plan (1)
10.6* Amended and Restated Spieker Properties, Inc. 1993 Stock Incentive Plan
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996)
10.7 Form to Indemnification Agreement between Spieker Properties, Inc. and
its directors and officers (incorporated by reference to Exhibit 10.21
to Spieker Properties, Inc.'s Registration Statement on Form S-11 (File
No. 33-67906))
10.8 Form of Land Holding Agreement among Spieker Properties, Inc., Spieker
Northwest, Inc., Spieker Properties, L.P. and owner of the applicable
Land Holding (incorporated by reference to Exhibit 10.22 to Spieker
Properties, Inc.'s Registration Statement on Form S-11 (File No.
33-67906))
10.9* Form of Employee Stock Incentive Pool (incorporated by reference to
Exhibit 10.35 to Spieker Properties, Inc.'s Registration Statement on
Form S-11 (File No. 33-67906))
10.10 Form of Excluded Property Agreement between the Operating Partnership
and certain of the Senior Officers (incorporated by reference to Exhibit
10.36 to Spieker Properties, Inc.'s Registration Statement on Form S-11
(File No. 33-67906))
10.11* Amended and Restated Spieker Properties, Inc. 1993 Directors' Stock
Option Plan (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996)
10.12 Second Amendment to Second Amended and Restated Agreement of United
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 3.1 to Spieker Properties, Inc.'s Report on Form -Q/A for the
quarterly period ended June 30, 1998)
</TABLE>
- -----------------
* Indicates management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Registration Statement on Form S-11 (Registration
No. 33-67906), which became effective November 10, 1993.
(2) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1995.
31
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBITS (enclosed attachments are sequentially numbered) Page No.
========================================================================================
<S> <C> <C>
10.13 Third Amendment to Second Amended and Restated Agreement to Limited
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 10.13 Spieker Properties, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1998)
21.1 List of Subsidiaries of Spieker Properties, Inc. (incorporated by
reference to Exhibit 21.1 Spieker Properties, Inc. Annual Report on
Form 10-K for the year ended December 31, 1997)
23.1 Consent of Independent Public Accountants (filed herewith) 78
27.1 Article 5 Financial Data Schedule (Edgar Filing Only)
</TABLE>
32
<PAGE> 33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Spieker Properties, L.P.:
We have audited the accompanying consolidated balance sheets of Spieker
Properties, L.P. (a California limited partnership) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, Partners' Capital and cash flows for the years ended December 31,
1999, 1998 and 1997. These financial statements and the schedule referred to
below are the responsibility of the management of Spieker Properties, L.P. Our
responsibility is to express an opinion on these financial statements and the
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spieker Properties, L.P. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for the years ended December 31, 1999, 1998 and
1997 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying schedule listed in the
index to the financial statements is presented for purposes as complying with
the Securities and Exchange Commission rules and is not a required part of the
basic financial statements. This information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Francisco, California
January 31, 2000
33
<PAGE> 34
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENTS IN REAL ESTATE:
Land, land improvements and leasehold interests $ 816,136 $ 770,670
Buildings and improvements 3,174,430 2,924,290
Construction in progress 180,407 255,710
----------- -----------
4,170,973 3,950,670
Less-accumulated depreciation (316,240) (240,778)
----------- -----------
3,854,733 3,709,892
Land held for investment 125,356 131,530
Investment in mortgages 18,725 28,069
Property held for disposition, net 89,220 72,537
----------- -----------
Net investments in real estate 4,088,034 3,942,028
CASH AND CASH EQUIVALENTS 17,114 4,916
ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts
of $2,139 and $894 as of December 31, 1999 and 1998 4,846 9,416
DEFERRED RENT RECEIVABLE 22,911 12,746
RECEIVABLE FROM AFFILIATES 144 183
DEFERRED FINANCING AND LEASING COSTS, net of accumulated
amortization of $20,901 and $14,539 as of December 31, 1999 and 1998 59,655 44,607
FURNITURE, FIXTURES and EQUIPMENT, net of accumulated
depreciation of $3,283 and $2,455 as of December 31, 1999 and 1998 5,107 4,495
PREPAID EXPENSES, DEPOSITS ON PROPERTIES AND OTHER ASSETS 50,091 17,616
INVESTMENTS IN AFFILIATES 20,583 20,863
----------- -----------
$ 4,268,485 $ 4,056,870
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
34
<PAGE> 35
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,1999 AND 1998
(dollars in thousands, except share data)
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
DEBT:
Unsecured notes $1,836,500 $1,436,500
Unsecured short-term borrowings 63,012 300,000
Mortgage loans 97,331 110,698
---------- ----------
Total debt 1,996,843 1,847,198
---------- ----------
ASSESSMENT BONDS PAYABLE 10,172 11,339
ACCOUNTS PAYABLE 13,548 24,938
ACCRUED REAL ESTATE TAXES 2,628 2,251
ACCRUED INTEREST 28,634 25,263
UNEARNED RENTAL INCOME 33,244 22,635
DIVIDENDS AND DISTRIBUTIONS PAYABLE 46,977 44,728
OTHER ACCRUED EXPENSES AND LIABILITIES 76,192 56,704
---------- ----------
Total liabilities 2,208,238 2,035,056
---------- ----------
PARTNERS' CAPITAL
General Partner, including a liquidation preference of $381,250 as of
December 31, 1999 and December 31, 1998 1,793,445 1,723,462
Limited Partners 266,802 298,352
---------- ----------
Total Partners' Capital 2,060,247 2,021,814
---------- ----------
$4,268,485 $4,056,870
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
35
<PAGE> 36
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999,1998 AND 1997
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Rental income $ 637,844 $ 542,430 $ 321,609
Interest and other income 5,985 18,667 9,704
--------- --------- ---------
643,829 561,097 331,313
OPERATING EXPENSES:
Rental expenses 144,826 124,847 66,654
Real estate taxes 47,920 42,196 24,644
Interest expense, including amortization of financing costs 120,726 116,335 62,266
Depreciation and amortization 111,370 94,512 52,779
General and administrative expenses 23,471 19,283 14,836
--------- --------- ---------
448,313 397,173 221,179
--------- --------- ---------
Income from operations before disposition of real estate 195,516 163,924 110,134
--------- --------- ---------
GAIN ON DISPOSITION OF REAL ESTATE 58,454 22,015 20,252
--------- --------- ---------
Net Income 253,970 185,939 130,386
Preferred Operating Partnership Unit Distributions (7,904) (8,543) (402)
--------- --------- ---------
Preferred Dividends:
Series A Preferred Stock (2,975) (2,780) (2,415)
Series B Preferred Stock (10,041) (10,041) (10,041)
Series C Preferred Stock (11,813) (11,813) (2,658)
Series E Preferred Stock (8,000) (4,600) --
--------- --------- ---------
Net income available to General and Limited Partners $ 213,237 $ 148,162 $ 114,870
========= ========= =========
General Partners $ 187,322 $ 130,431 $ 99,890
Limited Partners $ 25,915 $ 17,731 $ 14,890
--------- --------- ---------
$ 213,237 $ 148,162 $ 114,780
========= ========= =========
NET INCOME PER COMMON OPERATING
PARTNERSHIP UNIT
Net income-basic $ 2.93 $ 2.10 $ 2.07
========= ========= =========
Net income-diluted $ 2.89 $ 2.07 $ 2.04
========= ========= =========
DISTRIBUTIONS PER COMMON OPERATING
PARTNERSHIP UNIT
General Partner $ 2.44 $ 2.29 $ 2.09
========= ========= =========
Limited Partners $ 2.44 $ 2.29 $ 2.09
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
36
<PAGE> 37
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(dollars in thousands)
<TABLE>
<CAPTION>
General Limited
Partner Partner General Limited
Units Units Partner Partner Total
---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 35,529,977 $ 6,549,819 $ 563,928 $ 47,000 $ 610,928
Contribution-Proceeds from sale of Series C Preferred Stock -- -- 145,959 -- 145,959
Contribution-Proceeds from sale of Common Stock 23,573,134 -- 822,636 -- 822,636
Sale of Operating Units -- 775 -- 25 25
Conversion of Operating Partnership units to Common Stock 155,380 (155,380) -- -- --
Conversion of Operating Partnership units-Employee Stock
Incentive Pool 14,984 (14,984) 524 (524) --
Contribution of property -- 941,896 -- 97,164 97,164
Restricted Stock grant 41,073 -- -- -- --
Non-cash Compensation Merit Fund -- -- 236 36 272
Contributions-Exercise of stock options 166,200 -- 3,425 -- 3,425
Amortization of deferred compensation -- -- 593 -- 593
Allocation to Operating Partnership interest -- -- (42,855) 42,855 --
Partner Distributions -- -- (115,622) (14,647) (130,269)
Consolidation Minority interest to Limited Partner -- -- -- (1,257) (1,257)
Net Income -- -- 115,004 15,361 130,365
---------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1997 59,480,929 7,322,126 $ 1,493,828 $ 186,013 $ 1,679,841
========== =========== =========== ========= ===========
Contribution-Proceeds from sale of Series E Preferred Stock -- -- 96,401 -- 96,401
Contribution-Proceeds from sale of Common Stock 2,659,467 -- 102,391 -- 102,391
Contribution-Common Stock issued for property 165,984 -- 6,900 -- 6,900
Contribution-Proceeds from Sale of Preferred Operating Units -- -- -- 73,124 73,124
Conversion of Preferred Operating units to Common Stock 259,694 -- -- -- --
Conversion of Operating Partnership units to Common Stock 109,032 (109,032) -- -- --
Conversion of Operating Partnership units-Employee Stock
Incentive Pool -- -- 10,840 (10,840) --
Contribution of property for Operating Partnership units -- 1,689,821 -- 69,404 69,404
Restricted Stock grant 103,256 -- -- -- --
Non-cash Compensation Merit Fund -- -- -- -- --
Exercise of stock options 314,748 -- 6,578 -- 6,578
Amortization of deferred compensation -- -- 730 -- 730
Allocation to Operating Partnership interest -- -- 17,885 (17,885) --
Partner Distributions -- -- (171,756) (27,738) (199,494)
Net Income -- -- 159,665 26,274 185,939
---------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1998 63,092,929 8,902,915 $ 1,723,462 $ 298,352 $ 2,021,814
========== =========== =========== ========= ===========
Conversion of Operating Partnership units and
Preferred Operating Partnership Interest to Common Stock 1,645,229 (80,000) 60,499 (61,966) (1,467)
Restricted Stock grant 100,559 -- 3,515 -- 3,515
Restricted Stock grant-Deferred Compensation -- -- (3,515) -- (3,315)
Exercise of Stock options 122,265 -- 2,755 -- 2,755
Amortization of deferred compensation -- -- 2,031 -- 2,031
Allocation to Operating Partnership interest -- -- (26,165) 26,165 --
Partner Distributions -- -- (189,288) (29,568) (218,856)
Net Income -- -- 220,151 33,819 253,970
---------- ----------- ----------- --------- -----------
BALANCE AT DECEMBER 31, 1999 64,961,052 8,822,915 $ 1,793,445 $ 266,802 $ 2,060,247
========== =========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
37
<PAGE> 38
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998 1997
--------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 253,970 $ 185,939 $ 130,365
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 111,370 94,512 52,779
Amortization of discount and deferred financing costs 2,292 2,283 1,426
Loss from affiliate 280 190 --
Non-cash compensation 983 84 865
Gain on disposition of real estate (58,454) (22,015) (20,252)
Increase in accounts receivable and other assets (14,340) (15,077) (11,914)
Decrease (increase) in receivable from related parties 39 111 (177)
Decrease in assessment bonds payable (1,268) (1,012) (1,070)
Increase in accounts payable and other accrued expenses and
liabilities 16,737 44,194 28,086
Increase in accrued real estate taxes 377 1,248 272
Increase in accrued interest 3,371 3,722 11,070
--------- ----------- -----------
Net cash provided by operating activities 315,357 294,179 191,450
--------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to properties (359,827) (1,141,633) (1,483,866)
Reductions (additions) to deposits on properties, net (26,000) 37,920 (31,473)
Additions to investment in mortgages -- (11,610) (257,294)
Additions to investments in affiliates -- (13,574) (37,256)
Additions to leasing costs (19,206) (18,300) (8,231)
Proceeds from disposition of real estate 199,186 73,538 120,235
Proceeds from investment in mortgages -- 257,142 --
Distributions from affiliates -- 29,825 --
--------- ----------- -----------
Net cash used for investing activities (205,847) (786,692) (1,697,885)
--------- ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from debt 605,000 1,096,500 1,368,000
Payments on debt (484,900) (700,922) (720,435)
Payments of financing fees, net of hedging proceeds (1,311) (3,395) (12,026)
Payments of distributions (218,856) (195,877) (107,857)
Capital Contributions-Preferred Stock, net of issuance costs -- 96,401 145,959
Capital Contributions-Common Stock, net of issuance costs -- 102,391 822,636
Capital Contributions-Stock Options exercised 2,755 6,578 3,425
Proceeds from Sale of Operating Partnership Units -- 73,125 25
--------- ----------- -----------
Net cash (used for) provided by financing activities (97,312) 401,676 1,499,727
--------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 12,198 (17,712) (6,708)
--------- ----------- -----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,916 22,628 29,336
--------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,114 $ 4,916 $ 22,628
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
38
<PAGE> 39
SPIEKER PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(dollars in thousands, except share 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 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 December 31, 1999, the Company owned an approximate
88.0 percent general partnership interest in 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 December 31, 1999 and 1998, and its consolidated results
of operations and cash flows for the years ended December 31, 1999, 1998 and
1997. The Operating Partnership's investment in Spieker Northwest, Inc. (an
unconsolidated Preferred Unit 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.
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.
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 comparable 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 December 31, 1999 and 1998, none
of the carrying values of the properties exceeded their estimated fair
values. As of December 31, 1999 and 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.
39
<PAGE> 40
The Operating Partnership owns mortgage loans that are secured by real
estate. Certain loans are with an affiliate of the Company (see Note 4). The
Company assesses possible impairment of these loans by reviewing the fair
value of the underlying real estate. As of December 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 the design and approval process. As of
December 31, 1999, approximately $19,500 million of construction in process
is associated with these land parcels.
Property Held for Disposition
The Operating Partnership includes in property held for disposition, certain
properties that do not have a strategic fit in which management has decided
to sell. Included in the value of the properties are all costs associated
with acquiring the property, any construction in progress plus any direct
assessments less the accumulated depreciation.
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 payment of financing or upon the early termination of the lease.
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.
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 investment 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 stock holders and preferred operating partnership unit holders .
The diluted weighted average units outstanding include the dilutive effect
of options and other unit equivalents. The computation of the diluted
earnings per unit for the years ended
40
<PAGE> 41
December 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 years ended December
31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Basic Weighted Average Diluted Weighted Average
General Partner Units General Partner Units
---------------------- ------------------------
<S> <C> <C>
Year ended:
December 31, 1999 63,984,711 64,983,415
December 31, 1998 62,113,712 62,877,995
December 31, 1997 48,207,141 48,968,905
</TABLE>
<TABLE>
<CAPTION>
Basic Weighted Average Diluted Weighted Average
Limited Partner Units Limited Partner Units
---------------------- ------------------------
<S> <C> <C>
Year ended:
December 31, 1999 8,865,039 8,865,039
December 31, 1998 8,429,646 8,429,646
December 31, 1997 7,209,418 7,209,418
</TABLE>
Reclassifications
Certain items in the 1998 and 1997 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, 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 year ended December 31, 1999:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type (1) Square Feet Initial Cost (2)
------------ -------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Eastgate Office Park Bellevue, WA O 273,892 $40,392
First Financial Center Ontario, CA O 80,406 8,711
Governor Executive Center San Diego, CA O 52,196 8,263
Lincoln Executive Center Bellevue, WA O 280,696 53,298
Oakbrook Plaza Laguna Hills, CA O 119,847 18,527
</TABLE>
(1) "O" indicates office property.
(2) Represents the initial acquisition costs of the properties excluding any
additional repositioning costs.
During 1999, the Operating Partnership acquired five land parcels, three are
located in Northern California, one is in Southern California and one is in
Oregon, totaling 60.0 acres at an initial cost of $48,800 to be used for
future development.
During the year ended December 31, 1998, the Operating Partnership acquired
6,257,233 square feet of office and industrial property at an initial cost
of $847,680 (the "1998 Acquisitions"). The 1999 and 1998 Acquisitions were
recorded using the purchase method of accounting.
41
<PAGE> 42
The Operating Partnership disposed of the following properties (the "1999
Dispositions") during the year ended December 31, 1999:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type (1) Square Feet
------------ ----------- -------- --------------
<S> <C> <C> <C>
Biltmore Commerce Center Phoenix, AZ O 262,875
Benicia Industrial Park Benicia, CA I 43,776
Commerce Pointe Ontario, CA I 113,631
Coral Tree Commerce Center San Diego, CA I 130,866
Everett 526 Everett, WA I 97,523(2)
Everett Industrial Center Everett, WA I 149,412(2)
Grandview Drive South San Francisco, CA I 36,400
Georgetown Center Seattle, WA I 130,151(2)
Millcreek Distribution Center Seattle, WA I 226,840(2)
Progress Industrial Park San Diego, CA I 123,275
Ryan Ranch Industrial Monterey, CA I 26,500
West Valley Business Center Seattle, WA I 152,610(2)
Woodinville Corporate Center II Woodinville, WA I 331,580(2)
Valley Freeway Business Center Kent, WA I 133,215(2)
Valley Industrial Park Seattle, WA I 955,089(2)
Ontario Commerce Land II Ontario, CA L - (3)
Overland Court Land Sacramento, CA L - (4)
</TABLE>
(1) "O" indicates office property, "L" indicates land, and "I" indicates
industrial properties.
(2) These properties represent the initial sale of approximately
3,600,000 square feet of the Seattle industrial portfolio.
(3) Represents sale of approximately 13.6 acres of land.
(4) Represents sale of approximately 1.7 acres of land.
The aggregated disposition proceeds for land and properties were $184,788
for the year ended December 31, 1999. In addition to the disposition of land
and properties there was $5,170 of proceeds recognized for a condemnation
gain in the first quarter of 1999, and $15,031 on a mortgage held by the
Operating Partnership which was repaid by the borrower.
The total cash proceeds, net of closing costs, received from the disposition
of all the properties, land and mortgages was $199,186.
During the year ended December 31, 1998, the Operating Partnership disposed
of one retail property, two office properties, four industrial properties,
and two parcels of land for total proceeds of $75,357 (the "1998
Dispositions")
4. TRANSACTIONS WITH AFFILIATES
Revenues and Expenses
The Operating Partnership received $1,178 in 1999, $2,848 in 1998, and $919
in 1997, 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 the Spieker Properties, Inc.
are partners in Spieker Partners.
Receivable from Affiliates
The $144 receivable from affiliates at December 31, 1999 and $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 Investment in Mortgages are $18,725 at December 31, 1999 and
$28,069 at December 31, 1998 of loans to Spieker Northwest, Inc. (SNI). The
loans are secured by deeds of trust on real property, bear interest at
42
<PAGE> 43
8.5%, and mature in 2012. Interest income of $1,369 is included in interest
and other income for the year ended December 31, 1999 and $10,748 for the
year ended December 31, 1998 in relation to these loans.
Investments in Affiliates
The investments in affiliates represents an investment in SNI. The Operating
Partnership owns 95% of the non-voting Preferred Stock of SNI. Certain
senior officers and one former officer of the Operating Partnership owns
100% of the voting stock of SNI. At December 31, 1999 SNI owned 225,815
thousand square feet of office and industrial property located in
California. In addition, SNI owns 1 parcel of land totaling 3.4 acres. In
addition to property ownership, SNI provides property management services to
certain properties owned by Spieker Partners.
Summarized condensed financial information of SNI is presented as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Balance Sheet:
Investments in real estate, net $18,208 $17,984
Other assets 2,781 33,501
------- -------
$20,989 $51,485
------- -------
Mortgages and other $19,224 $19,219
Shareholders' equity 1,765 32,266
------- -------
$20,989 $51,485
======= =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Results of Operations:
Revenues $ 3,238 $ 20,688 $ 6,703
Interest expense (1,369) (10,748) (3,108)
Other expense (1,849) (8,812) (3,684)
-------- -------- --------
Net Income Before Depreciation $ 20 $ 1,128 $ (89)
======== ======== ========
</TABLE>
Additionally, investments in affiliates represents the 12.5% common interest
and 37.5% preferred interest in Spieker Griffin/W9 Associates, LLC. Spieker
Griffin/W9 Associates, LLC owns a 535,000 square foot office complex,
located in Orange County, California, which is managed by the Company.
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
of, over time, assets that do not have a strategic fit in the portfolio.
Included in property held for disposition of $89,220 at December 31, 1999,
are twelve properties. One office property and six industrial properties are
located in the Pacific Northwest. One land parcel and one industrial
property are located in Southern California. One land parcel and two
industrial properties are located in Northern California. The divestitures
of the properties held for disposition are subject to identification of a
purchaser, negotiation of acceptable terms and other customary conditions.
Property held for disposition at December 31, 1998, of $72,537 consisted of
one office property located in Arizona, four industrial properties in
Northern California, and six industrial properties and two land parcels in
Southern California.
43
<PAGE> 44
The following summarizes the condensed results of operations of the
properties held for disposition at December 31, 1999 for the years ended
December 31, 1999, 1998 and 1997. 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 1997
-------- -------- --------
<S> <C> <C> <C>
Income $ 15,360 $ 14,665 $ 9,960
Property Operating Expenses(1) (4,085) (3,795) (2,150)
-------- -------- --------
Net Operating Income $ 11,275 $ 10,870 $ 7,810
======== ======== ========
</TABLE>
(1) Property Operating Expenses includes property related rental expenses
and real estate taxes.
6. DEBT
As of December 31, 1999 and 1998, debt consists of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Unsecured investment grade notes, varying fixed
interest rates from 6.65% to 8.00% payable
semi-annually, due from 2000 to 2027 $1,836,500 $1,436,500
Unsecured short-term borrowings
(see "Facility" below), due 2001 63,012 300,000
Mortgage loans, varying interest rates from
7.00% to 9.88%, due 2001 to 2013(1) 97,331 110,698
---------- ----------
$1,996,843 $1,847,198
========== ==========
</TABLE>
- --------------------
(1) Mortgage loans generally require monthly principal and interest
payments.
The Operating Partnership has a $250,000 Unsecured Line of Credit Facility
(the "Facility"), which matures in August 2001. The Facility carries
interest at the London Interbank Offering Rate (LIBOR) plus 0.80%. The
one-month LIBOR at December 31, 1999 was 6.66%. As of December 31, 1999, the
amount drawn on the Facility was $63,012. During 1999, the Operating
Partnership paid down the short-term bank facility (the "Bank Facility")
which had an outstanding balance of $200,000. The Bank Facility carried
interest at LIBOR plus 0.65% and the maturity date was November 1999. The
Facility is subject to financial covenants concerning leverage, interest
coverage and certain other ratios. The Operating Partnership is currently in
compliance with all of the covenants of the Facility concerning its
indebtedness.
The mortgage loans are secured by deeds of trust on related properties. The
gross book value of real estate assets pledged as collateral under deeds of
trust for mortgage loans at December 31, 1999 was $210,030 and $286,995 at
December 31, 1998.
The Operating Partnership's unsecured investment grade 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.
The Operating Partnership capitalized interest of $21,034 for the year ended
December 31, 1999, $16,482 in 1998 and $6,338 in 1997.
44
<PAGE> 45
Future Minimum Debt Schedule
The scheduled future minimum debt payments of all debt outstanding including
short-term borrowings as of December 31, 1999, are as follows:
Year Amount
---- ----------
2000 $ 116,605
2001 204,382
2002 111,669
2003 1,823
2004 301,991
Thereafter 1,260,373
----------
$1,996,843
==========
7. LEASING ACTIVITY
Future minimum rentals due under non-cancelable operating leases in effect
at December 31, 1999 with tenants are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ----------
<S> <C>
2000 $ 563,896
2001 510,156
2002 409,232
2003 313,055
2004 225,075
Thereafter 603,700
----------
$2,625,114
==========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their
pro rata share of specified operating expenses, which amounted to $166,826
for the year ended December 31, 1999, $147,850 in 1998 and $83,170 in 1997.
These amounts are included as rental revenue and rental expense in the
accompanying consolidated statements of operations. Certain of the leases
also provide for the payment of additional rent based on a percentage of the
tenant's revenues. Additional rents under these leases were $380 for the
year ended December 31, 1999, $528 for 1998 and $254 for 1997. Certain
leases contain options to renew.
8. PARTNERS' DISTRIBUTIONS PAYABLE
The distributions payable at December 31, 1999, and December 31, 1998,
represent amounts payable to partners of record. The unit holders of record
are as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Units:
General Partner 64,961,052 61,916,459
Limited Partner 8,822,915 8,902,915
Series A Preferred Stock 1,000,000 1,000,000
Series B Preferred Stock 4,250,000 4,250,000
Series C Preferred Stock 6,000,000 6,000,000
Series D Preferred Units 1,500,000 1,500,000
Series E Preferred Stock 4,000,000 4,000,000
Preferred Operating Partnership Units -- 1,721,831
</TABLE>
9. PREFERRED OPERATING PARTNERSHIP UNITS
During 1999, 1,721,831 of Convertible Preferred Operating Partnership Units
were converted into 1,565,299 Common Partnership Units.
45
<PAGE> 46
10. INCOME TAXES
The Company has elected to be taxed as a REIT pursuant to Section 856(c)(1)
of the Code. As a REIT, the Company generally will not be subject to federal
income tax to the extent that it distributes at least 95 percent of its
taxable income to its stockholders. Additionally, REITs are subject to a
number of organizational and operational requirements. If the Company fails
to qualify as a REIT in any taxable year, the Company will be subject to
federal and state income taxes (including any applicable alternative minimum
taxes) based on its taxable income using respective corporate income tax
rates. Even if the Company qualifies for taxation as a REIT, the Company may
be subject to certain state and local taxes on its income and property. The
Company may also be subject to federal income and excise taxes on its
undistributed taxable income.
Taxable income allocable to the Company, excluding minority interests, was
$196,800 for the year ended December 31, 1999, $149,600 for 1998 and
$103,300 for 1997. The taxable income allocable to the preferred unit
holders was $32,829 for the year ended December 31, 1999, $29,234 for 1998
and $13,144 for 1997.
Differences between book and taxable income primarily result from timing
differences. The timing differences include depreciation of tenant
improvements, unearned rental income, non-cash compensation and certain
property dispositions structured as tax-free exchanges.
For the year ended December 31, 1999, approximately 2.87% of the dividends
paid, represents a dividend taxable as a long-term capital gain and
approximately 1.28% represents a dividend taxable as an Unrecaptured Section
1250 Gain.
11. PARTNERS' CAPITAL
Preferred Units
The 1,000,000 shares of Series A Cumulative Convertible Preferred Stock rank
senior to the Operating Partnership's Common Stock as to dividends and
liquidation rights. The shares are convertible into 1,219,512 shares of the
Operating Partnership's Common Stock and have voting rights equal to
1,219,512 shares of Common Stock. The dividend per share, calculated on the
converted numbers of shares, is equal to the Common Stock dividend, provided
that the dividend yield on the preferred stock may not be less than the
initial dividend rate thereof. Dividends are paid quarterly in arrears. With
respect to the payment of dividends and amounts upon liquidation, the Series
A Preferred Stock ranks on parity with the Operating Partnership's Series B,
Series C and Series E Preferred Stocks and ranks senior to the Operating
Partnership's Common Stock, Class B and Class C Common Stock.
The Series B Preferred Stock dividends are paid quarterly in arrears at
9.45% of the initial liquidation preference per annum. The Series B
Preferred Stock is redeemable on or after December 11, 2000 at the option of
the Operating Partnership in whole or in part at a redemption price of
$25.00 per share, plus accrued and unpaid dividends. With respect to the
payments of dividends and amounts upon liquidation, the Series B Preferred
Stock ranks on parity with Company's Series A, Series C and Series E
Preferred Stocks and ranks senior to the Operating Partnership's Common
Stock, Class B and Class C Common Stock.
The Series C Preferred Stock dividends are payable quarterly in arrears at
an annual rate of 7.88% of the initial liquidation preference of $150,000.
The Series C Preferred shares are redeemable after October 10, 2002 at the
option of the Operating Partnership, in whole or in part, at a redemption
price of $25.00 per share, plus accrued and unpaid dividends. With respect
to the payments of dividends and amounts upon liquidation the Series C
Preferred shares rank on parity to the Operating Partnership's Series A,
Series B and Series E Preferred Stocks and ranks senior to the Operating
Partnership's Common Stock, Class B and Class C Common Stock.
In June 1998, the Operating Partnership sold 4,000,000 shares of Series E
Cumulative Redeemable Preferred Stock for $25.00 per share. These shares are
redeemable at the option of the Operating Partnership. Dividends are payable
at an annual rate of 8.00% of the redeemable liquidation preference of
$100,000. Net proceeds of $96,401 were used principally to repay borrowings
on the unsecured line of credit and to fund the ongoing acquisition and
development of property.
46
<PAGE> 47
Ownership Limitations
To maintain its qualification as a REIT, not more than 50 percent of the
value of the outstanding shares of the Operating Partnership may be owned,
directly or indirectly, by five or fewer individuals (defined to include
certain entities), applying certain constructive ownership rules. To help
ensure that the Company will not fail this test, the Company Charter
provides for certain restrictions on the transfer of the Common Stock to
prevent further concentration of stock ownership. Moreover, to evidence
compliance with these requirements, the Company must maintain records that
disclose the actual ownership of its outstanding Common Stock and will
demand written statements each year from the record holders of designated
percentages of its Common Stock disclosing the actual owners of such Common
Stock.
Stockholders Rights Agreement
On September 30, 1998, the Company paid a dividend of one right for each
outstanding share of Common Stock of the Company held of record at the close
of business on September 30, 1998 or issued thereafter prior to the
Separation Time, as defined in the Rights Agreement referred to below. The
rights were issued pursuant to the Stockholders' Protection Rights
Agreement, dated as of September 30, 1998 between the Company and the Bank
of New York, as Rights Agent.
12. EMPLOYMENT RETIREMENT AND STOCK PLANS
Retirement Savings Plan
Effective January 1, 1994, the Operating Partnership adopted a retirement
savings plan pursuant to Section 401(k) of the Internal Revenue Code,
whereby participants may contribute a percentage of compensation, but not in
excess of the maximum allowed under the Code. The plan provides for a
matching contribution by the Company, which amounted to $840 for the year
ended December 31, 1999, $597 for 1998 and $393 for 1997. In addition, the
Company may make additional contributions at the discretion of management.
Management authorized additional contributions of $853 for the year ended
December 31, 1999, $582 for 1998 and $337 for 1997.
Stock Incentive Plan
The Company has adopted the Spieker Properties, L.P. 1993 Stock Incentive
Plan (the "Stock Incentive Plan") to provide incentives to attract and
retain officers and key employees. Under the Plan as amended on May 22,
1996, the number of shares available for option grant is 9.9% of the number
of shares of Common Stock, on a fully converted basis, outstanding as of the
last day of the immediately preceding quarter, reduced by the number of
shares of Common Stock reserved for issuance through other stock
compensation plans of the Company. The strike price on the shares granted is
equal to the market price of the Company's stock at the grant date. Shares
granted under this plan vest over four or five years.
47
<PAGE> 48
Information relating to the employee Stock Incentive Plan from January 1,
1997 through December 31, 1999, is as follows:
<TABLE>
<CAPTION>
Weighted Average
Option Price Option Price
Options Per Share Per Share
--------- ---------------- ------------
<S> <C> <C> <C>
Shares under option at January 1, 1997 3,053,500 25.51 20.50-31.63
Granted 1,237,500 35.54 35.19-41.38
Exercised (163,950) 20.62 20.50-29.25
Forfeited (24,000) 24.88 20.50-29.25
--------- ----- -----------
Shares under option at December 31, 1997 4,103,050 28.95 20.50-35.19
Granted 1,405,000 38.73 34.63-38.75
Exercised (300,750) 21.06 20.50-29.25
Forfeited (119,800) 31.68 20.50-38.75
--------- ----- -----------
Shares under option at December 31, 1998 5,087,500 32.05 20.50-38.75
Granted 659,500 38.28 35.00-41.00
Exercised (125,465) 23.87 20.50-35.19
Forfeited (183,835) 36.54 35.19-38.81
--------- ----- -----------
Shares under option at December 31, 1999 5,437,700 32.89 20.50-41.00
Options exercisable at December 31, 1999 2,497,350 28.59 20.50-41.38
Shares available for grant at December 31, 1999 1,088,941
</TABLE>
Directors Stock Option Plan
On May 22, 1996, the Directors' Stock Option Plan was amended to increase
the number of shares of Common Stock subject to automatic annual option
grants to the Operating Partnership's independent directors from 500 shares
to 4,000 shares, to increase the number of shares of Common Stock available
for option grant from 30,000 to 150,000, and to provide that, in the event
of a Change in Control, outstanding options will become fully vested. To
date, 78,000 shares have been granted under the plan and 7,250 shares have
been exercised.
Stock Options
The Operating Partnership applies APB 25 and related interpretations in
accounting for its stock option plan. Accordingly, no compensation cost has
been recognized. Had compensation cost for the plan been determined based on
the fair value at the grant dates for awards under the plan consistent with
the method prescribed by Statement of Financial Accounting Standard ("SFAS")
No. 123, "Accounting for Stock-Based Compensation," the Operating
Partnership's pro forma net income available to common stockholders would
have been reduced by $2,761, $2,090 and $1,943 and pro forma basic and
diluted earnings per share would have been reduced to $2.90, $2.85 and
$2.08, and $2.05, $2.04 and $2.01, respectively, for the years ended
December 31, 1999, 1998 and 1997.
For these disclosure purposes, the fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions used for grants in 1999 and
1998, respectively; dividend yield of 6.1% and 6.6%; expected volatility of
19.3% and 18.1%; expected lives of ten and six years; and risk-free interest
rates of 5.8% and 4.6%.
Restricted Stock
Effective June 9, 1999, the Board of Directors passed a resolution
authorizing the issuance of up to 3,164,935 restricted shares of common
stock of the Company pursuant to Restricted Stock Agreements, and
immediately issued 201,610 of the newly authorized shares in exchange for
previously outstanding unvested restricted shares granted in 1997, 1998 and
1999 under the Stock Incentive Plan. For the year ended on December 31,
1999, a total of 202,711 restricted shares have been issued.
48
<PAGE> 49
13. COMMITMENTS AND CONTINGENCIES
Environmental Matters
The Operating Partnership follows the policy of monitoring its properties
for the presence of hazardous or toxic substances. The Operating Partnership
is not aware of any environmental liability with respect to the properties
that would have a material adverse effect on the Operating Partnership's
business, assets or results of operations. There can be no assurance that
such a material environmental liability does not exist. The existence of any
such material environmental liability would have an adverse effect on the
Operating Partnership's results of operations and cash flow.
Lease Commitments
The Operating Partnership has entered into operating ground leases on
certain land parcels with periods ranging from 16 to 88 years. Future
minimum rental payments required under non-cancelable operating ground
leases in effect at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
2000 $ 7,994
2001 8,000
2002 8,024
2003 8,041
2004 8,032
Thereafter 367,665
--------
$407,756
========
</TABLE>
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 prepayment periods (18
to 24 years).
General Uninsured Losses
The Operating Partnership carries commercial general liability, fire, flood,
extended coverage and rental loss insurance with policy specifications,
limits and deductibles customarily carried for similar properties. There
are, however, certain types of extraordinary losses, which may be either
uninsurable, or not economically insurable. Should an uninsured loss occur,
the Operating Partnership could lose its investment in, and anticipated
profits and cash flows from, a property.
Certain of the properties are located in areas that are subject to
earthquake activity; the Operating Partnership has therefore obtained excess
earthquake insurance for those properties in higher risk earthquake areas.
In the event of an earthquake, the Operating Partnership is insured for
$300,000 of loss (less a deductible of 5% of total insured value per
occurrence capped at $35,000 million), any losses in excess of $300,000 will
be borne by the Operating Partnership.
14. SEGMENT INFORMATION
The Operating Partnership has four reportable segments: Pacific Northwest;
North-East Bay/Sacramento, California; Silicon Valley and Southern
California. Each region has a Regional 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
49
<PAGE> 50
those described in the summary of significant accounting policies. The
Operating Partnership evaluates performance based upon the combined net
operating income of the properties in each segment. Each of the four
operating regions consists of differing mixes of office and industrial
properties. The revenue and net operating income for the regions is not
comparable, given the differing mixes of properties within the regions.
Significant information used by the Operating Partnership in the reportable
segments for the twelve months ended December 31, 1999, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
Pacific North-East Bay/ Silicon Southern
Northwest Sacramento, CA Valley California Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1999 Revenue $ 135,068 $ 171,841 $ 147,955 $ 182,980 $ 637,844
1998 Revenue 117,920 139,126 127,756 157,628 542,430
1997 Revenue 66,029 103,703 86,792 65,085 321,609
1999 Net Operating Income(1) 96,317 119,120 114,532 115,129 445,098
1998 Net Operating Income 84,843 95,163 97,326 98,055 375,387
1997 Net Operating Income 48,249 72,552 66,898 42,612 230,311
1999 Additions to properties(2) 102,985 91,362 70,963 95,992 361,302
1998 Additions to properties 131,707 204,129 387,085 495,941 1,218,862
1997 Additions to properties 505,943 715,651 124,338 454,411 1,800,343
1999 Deployable Assets(3) 938,597 1,238,869 963,464 1,244,619 4,385,549
1998 Deployable Assets 903,047 1,150,197 894,281 1,207,212 4,154,737
1997 Deployable Assets 771,340 975,414 507,196 726,947 2,980,897
</TABLE>
(1) Net operating income for the properties is calculated by subtracting
property related rental expenses and real estate taxes from rental income on
the accompanying consolidated statements of operations.
(2) Represents cost incurred during the year for land, building, building
improvements, tenant improvements, leasing costs and other related real
estate costs. Amounts are before divestiture of properties of $130,490 for
the year ended December 31, 1999, $45,022 for 1998 and $102,537 for 1997.
(3) Calculated by taking Net investments in real estate, adding back the
accumulated depreciation, and deducting the investment in mortgages on the
accompanying consolidated balance sheets.
15. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest $136,033 $128,612 $ 56,108
SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS:
Debt assumed in relation to property acquisitions 29,475 19,394 63,940
Units issued in connection with property acquisitions -- 69,405 97,164
Increase to land and assessment bonds payable 308 4,344 8,984
Write-off of fully depreciated property 5,824 11,027 3,179
Write-off of fully depreciated furniture, fixtures
and equipment 538 320 17
Write-off of fully amortized deferred financing and
leasing costs 1,973 2,342 2,359
Restricted Stock grants, net of amortization 1,484 -- --
Property acquired through the issuance of Common Stock -- 6,900 --
</TABLE>
50
<PAGE> 51
16. QUARTERLY FINANCIAL DATA (unaudited)
Summarized quarterly 1999 and 1998 data is as follows:
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------------------
1999 March 31, June 30, September 30, December 31, Total
-------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Revenues $150,648 $158,733 $164,600 $169,848 $643,829
Income from operations before disposition
of real estate 47,594 48,716 47,954 51,252 195,516
Net Income available to General and Limited Partners 42,026 42,777 44,368 84,032 213,203
Income per Common Operating
Partnership Unit $ .58 $ .59 $ .60 $ 1.12 $ 2.89
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------------------------
1998 March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Revenues $125,307 $138,616 $145,790 $151,383 $561,097
Income from operations before disposition
of real estate 37,943 40,630 43,262 42,088 163,924
Net Income available to General and Limited Partners 39,545 38,338 33,994 36,285 148,162
Income per Common Operating
Partnership Unit $ .58 $ .53 $ .47 $ .50 $ 2.07
</TABLE>
The sum of quarterly financial data in 1999 and 1998 varies from the annual
data due to rounding.
17. NEW ACCOUNTING PRONOUNCEMENT
On June 15, 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities. The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as
either an asset or liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
Statement No. 133 may become effective for the Operating Partnership
beginning with the 2001 fiscal year and may not be applied retroactively.
Management does not expect the impact of Statement No. 133 to be material to
the consolidated financial statements. However, the Statement could increase
volatility in earnings and other comprehensive income.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial
Statements. SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements.
The Operating Partnership will adopt SAB 101 as required in the first
quarter 2000. Management does not expect the impact of SAB 101 to be
material to the consolidated financial statements.
18. SUBSEQUENT EVENTS
Subsequent to December 31, 1999, the Operating Partnership acquired two West
Coast office properties totaling 335,000 square feet for a total investment
of $74,500 million. These acquisitions were funded with a portion of the
proceeds from the recent sale of the Operating Partnership's $193,000
million industrial portfolio in Seattle, Washington. To date the Operating
Partnership has closed on $156,000 million of the multi-phased sale of its
$193,000 industrial portfolio in Seattle.
51
<PAGE> 52
On March 8, 2000 the Company announced that the Board of Directors declared
a dividend of $0.70 per share of Common Stock. The dividend will be paid on
April 20, 2000, to shareholders of record as of March 31, 2000. This is
equivalent to an annualized dividend of $2.80 per share and represents a
14.8 percent increase from the previous annualized dividend of $2.44.
52
<PAGE> 53
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
NORTH-EAST BAY/SACRAMENTO
10091 Terminal Street Warehouse Sacramento, CA -- 198,113 1,184,102 383,628
10181 455 University Avenue Sacramento, CA -- 993,704 1,511,113 1,075,709
10211 8880 Cal Center Drive Sacramento, CA -- 3,804,401 10,148,482 80,306
10231 740 University Avenue Sacramento, CA -- 261,250 798,220 153,210
10261 Front Street Warehouse Sacramento, CA -- 294,674 607,467 231,819
10281 Gateway Oaks II Sacramento, CA -- 1,516,168 4,276,153 1,149,829
10291 Gateway Oaks I Sacramento, CA -- 2,938,968 9,892,545 651,390
10311 701 University Avenue Sacramento, CA -- 1,055,714 3,252,825 903,284
10341 The Orchard Sacramento, CA -- 1,505,937 4,521,812 1,068,574
10351 555 University Avenue Sacramento, CA -- 1,472,559 4,417,677 670,366
10361 575 University Avenue Sacramento, CA -- -- 687,723 513,261
10362 601 University Avenue Sacramento, CA -- 1,684,489 5,053,468 863,895
10381 Livermore Commerce Center Livermore, CA -- 1,499,807 4,126,060 407,917
10391 655 University Avenue Sacramento, CA -- 1,152,108 3,456,325 548,893
10401 Fairfield Business Center Sacramento, CA -- 439,350 1,788,373 1,155,821
10481 Huntwood Business Park Hayward, CA -- 339,688 1,111,061 296,370
10491 Independent Road Warehouse Oakland, CA -- 293,743 875,262 498,251
10511 BayCenter Business Park Ph II Hayward, CA -- 1,625,067 4,307,152 553,817
10521 Keebler Warehouse Hayward, CA -- 605,637 1,676,194 174,395
10591 Dubuque Business Center So. San Fran, CA -- 3,491,267 4,865,732 1,425,774
10601 Cabot Boulevard Warehouse Hayward, CA -- 1,559,831 4,560,064 568,669
10611 Benicia Commerce Center Benicia, CA -- 673,762 4,529,951 80,523
10621 Montgomery Ward Pleasant Hill, CA -- 717,750 3,489,402 248,953
10631 Eden Landing Business Center Hayward, CA -- 1,158,197 1,958,841 --
10641 The Good Guys Distrib. Ctr Hayward, CA -- 4,936,467 9,293,846 502,573
10651 Fleetside Commerce Center Benicia, CA -- 1,080,303 2,955,837 182,488
10681 Point West III- River Park Dr Sacramento, CA -- 1,530,286 3,572,566 880,681
10691 Point West I - Response Road Sacramento, CA -- 1,007,734 2,379,740 334,646
10711 Redwood Shores Redwood City, CA -- 3,766,122 4,687,615 635,673
10741 BayCenter Business Park Ph I Hayward, CA -- 1,500,000 4,105,976 363,526
10751 Point West Commercentre Sacramento, CA -- 3,443,730 9,025,615 1,158,262
10821 732-834 Striker Avenue Sacramento, CA -- 1,009,601 2,767,658 275,432
10891 Gateway Oaks III Sacramento, CA -- 1,151,181 3,344,582 1,036,882
10931 Northgate (Industrial Bldgs.) Sacramento, CA -- 1,298,391 3,944,076 475,173
10941 Doolittle Business Center San Leandro, CA -- 866,075 2,618,714 235,396
10951 Benicia Ind I (539 Stone) Benicia, CA -- 835,613 2,547,110 154,365
10952 Benicia Ind I (533/537 Stone) Benicia, CA -- 924,191 2,793,050 11,883
10953 Benicia Ind I (500/518 Stone) Benicia, CA -- 431,668 1,295,004 77,584
10954 Benicia Ind I (437 Industrial) Benicia, CA -- 745,177 3,097,032 387,315
10955 Benicia Ind I (360 Indust Ct) Benicia, CA -- 507,991 1,523,974 17,165
10956 Benicia Ind I (601 Stone) Benicia, CA -- 384,662 1,153,986 --
10957 Benicia Ind I (524 Stone) Benicia, CA -- 661,336 1,984,009 28,832
10961 Benicia Ind I (531 Getty Ct) Benicia, CA -- 497,934 1,493,802 17,061
10962 Benicia Ind I (535 Getty Ct) Benicia, CA -- 636,278 1,908,833 13,157
10971 Northgate (Office Building) Foster City, CA -- 555,706 1,667,481 95,283
11021 Bayside Corporate Center Foster City, CA -- 2,455,163 7,693,285 280,476
11041 Concord North Commerce Center Concord, CA -- 2,340,139 5,039,328 1,415,265
11051 3600 American River Drive Sacramento, CA -- 1,059,222 4,274,450 567,841
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
NORTH-EAST BAY/SACRAMENTO
10091 Terminal Street Warehouse 198,113 1,567,730 1,765,844 750,187
10181 455 University Avenue 993,704 2,586,822 3,580,527 626,556
10211 8880 Cal Center Drive 3,804,401 10,228,788 14,033,189 2,800,075
10231 740 University Avenue 261,250 951,430 1,212,680 286,357
10261 Front Street Warehouse 294,674 839,287 1,133,960 --
10281 Gateway Oaks II 1,516,168 5,425,982 6,942,150 1,132,550
10291 Gateway Oaks I 2,938,968 10,543,934 13,482,903 2,390,718
10311 701 University Avenue 1,055,714 4,156,109 5,211,823 841,718
10341 The Orchard 1,505,937 5,590,386 7,096,323 1,331,572
10351 555 University Avenue 1,472,559 5,088,043 6,560,602 1,261,556
10361 575 University Avenue -- 1,200,984 1,200,984 218,542
10362 601 University Avenue 1,684,489 5,917,363 7,601,853 1,443,112
10381 Livermore Commerce Center 1,499,807 4,533,976 6,033,783 1,196,580
10391 655 University Avenue 1,152,108 4,005,218 5,157,326 978,850
10401 Fairfield Business Center 439,350 2,944,194 3,383,544 --
10481 Huntwood Business Park 339,688 1,407,431 1,747,119 657,841
10491 Independent Road Warehouse 293,743 1,373,513 1,667,256 564,848
10511 BayCenter Business Park Ph II 1,625,067 4,860,969 6,486,036 1,815,520
10521 Keebler Warehouse 605,637 1,850,589 2,456,226 613,261
10591 Dubuque Business Center 3,491,267 6,291,506 9,782,773 1,630,620
10601 Cabot Boulevard Warehouse 1,559,831 5,128,734 6,688,565 2,103,233
10611 Benicia Commerce Center 673,762 4,610,474 5,284,236 1,206,644
10621 Montgomery Ward 717,750 3,738,355 4,456,105 971,531
10631 Eden Landing Business Center 1,158,197 1,958,841 3,117,038 599,596
10641 The Good Guys Distrib. Ctr 4,936,467 9,796,419 14,732,885 1,839,689
10651 Fleetside Commerce Center 1,080,303 3,138,325 4,218,628 1,016,860
10681 Point West III- River Park Dr 1,530,286 4,453,247 5,983,533 673,598
10691 Point West I - Response Road 1,007,734 2,714,386 3,722,120 488,939
10711 Redwood Shores 3,766,122 5,323,288 9,089,410 1,285,310
10741 BayCenter Business Park Ph I 1,500,000 4,469,502 5,969,502 617,258
10751 Point West Commercentre 3,443,730 10,183,877 13,627,607 1,627,287
10821 732-834 Striker Avenue 1,009,601 3,043,091 4,052,692 460,380
10891 Gateway Oaks III 1,151,181 4,381,464 5,532,646 756,276
10931 Northgate (Industrial Bldgs.) 1,298,391 4,419,249 5,717,640 584,197
10941 Doolittle Business Center 866,075 2,854,110 3,720,185 291,984
10951 Benicia Ind I (539 Stone) 835,613 2,701,475 3,537,088 256,271
10952 Benicia Ind I (533/537 Stone) 924,191 2,804,933 3,729,124 274,675
10953 Benicia Ind I (500/518 Stone) 431,668 1,372,588 1,804,256 131,139
10954 Benicia Ind I (437 Industrial) 745,177 3,484,346 4,229,523 342,844
10955 Benicia Ind I (360 Indust Ct) 507,991 1,541,139 2,049,130 156,874
10956 Benicia Ind I (601 Stone) 384,662 1,153,986 1,538,648 118,458
10957 Benicia Ind I (524 Stone) 661,336 2,012,841 2,674,178 194,821
10961 Benicia Ind I (531 Getty Ct) 497,934 1,510,862 2,008,796 161,109
10962 Benicia Ind I (535 Getty Ct) 636,278 1,921,990 2,558,268 192,594
10971 Northgate (Office Building) 555,706 1,762,764 2,318,470 193,641
11021 Bayside Corporate Center 2,455,163 7,973,761 10,428,924 915,110
11041 Concord North Commerce Center 2,340,139 6,454,593 8,794,732 918,144
11051 3600 American River Drive 1,059,222 4,842,290 5,901,512 535,871
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
NORTH-EAST BAY/SACRAMENTO
10091 Terminal Street Warehouse 1975 3-40
10181 455 University Avenue 1987 3-40
10211 8880 Cal Center Drive 1989 3-40
10231 740 University Avenue 1987 3-40
10261 Front Street Warehouse 1988 3-40
10281 Gateway Oaks II 1992 3-40
10291 Gateway Oaks I 1990 3-40
10311 701 University Avenue 1991 3-40
10341 The Orchard 1990 3-40
10351 555 University Avenue 1990 3-40
10361 575 University Avenue 1990 3-40
10362 601 University Avenue 1990 3-40
10381 Livermore Commerce Center 1988 3-40
10391 655 University Avenue 1990 3-40
10401 Fairfield Business Center 1990 3-40
10481 Huntwood Business Park 1979 3-40
10491 Independent Road Warehouse 1972 3-40
10511 BayCenter Business Park Ph II 1984 3-40
10521 Keebler Warehouse 1985 3-40
10591 Dubuque Business Center 1986 3-40
10601 Cabot Boulevard Warehouse 1988 3-40
10611 Benicia Commerce Center 1989 3-40
10621 Montgomery Ward 1989 3-40
10631 Eden Landing Business Center 1990 3-40
10641 The Good Guys Distrib. Ctr 1990 3-40
10651 Fleetside Commerce Center 1990 3-40
10681 Point West III- River Park Dr 1994 3-40
10691 Point West I - Response Road 1994 3-40
10711 Redwood Shores 1987 3-40
10741 BayCenter Business Park Ph I 1994 3-40
10751 Point West Commercentre 1995 3-40
10821 732-834 Striker Avenue 1995 3-40
10891 Gateway Oaks III 1995 3-40
10931 Northgate (Industrial Bldgs.) 1995 3-40
10941 Doolittle Business Center 1996 3-40
10951 Benicia Ind I (539 Stone) 1996 3-40
10952 Benicia Ind I (533/537 Stone) 1996 3-40
10953 Benicia Ind I (500/518 Stone) 1996 3-40
10954 Benicia Ind I (437 Industrial) 1996 3-40
10955 Benicia Ind I (360 Indust Ct) 1996 3-40
10956 Benicia Ind I (601 Stone) 1996 3-40
10957 Benicia Ind I (524 Stone) 1996 3-40
10961 Benicia Ind I (531 Getty Ct) 1996 3-40
10962 Benicia Ind I (535 Getty Ct) 1996 3-40
10971 Northgate (Office Building) 1996 3-40
11021 Bayside Corporate Center 1996 3-40
11041 Concord North Commerce Center 1995 3-40
11051 3600 American River Drive 1995 3-40
</TABLE>
53
<PAGE> 54
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
11052 3610 American River Drive Sacramento, CA -- 490,859 1,963,435 309,496
11053 3620 American River Drive Sacramento, CA -- 1,033,387 4,133,548 294,600
11071 Benicia Ind II (521-531 Stone) Benicia, CA -- 774,812 2,765,041 620,757
11072 Benicia Ind II (Iowa/Stone) Benicia, CA -- 859,140 3,359,450 622,528
11073 Benicia Ind II (Iowa/Indiana) Benicia, CA -- 1,113,044 3,339,284 827,562
11074 Benicia Ind II(363 Industrial) Benicia, CA -- 891,542 2,674,143 1,069,786
11081 Benicia Ind Land (4.83 acres) Benicia, CA -- -- -- --
11091 Benicia Ind Land (2.25 acres) Benicia, CA -- -- -- --
11101 Benicia Ind Land (080-250-350) Benicia, CA -- 287,699 -- 57,820
11111 Benicia Ind Land (080-040-69) Benicia, CA -- 252,839 -- 88,621
11161 Port of Oakland Oakland, CA -- 1,693,760 5,091,125 114,519
11241 Airport Service Center San Jose, CA -- 668,283 2,013,558 44,192
11281 BayCenter Business Park Ph III Hayward, CA -- 1,248,216 3,804,797 1,550,042
11291 Riverside Business Center Sac Sacramento, CA -- 1,471,099 4,425,208 2,101,061
11301 Fidelity Plaza Sacramento, CA -- 1,354,983 3,739,440 709,197
11331 Wood Island Office Complex Larkspur, CA -- 3,796,146 10,143,999 1,171,351
11471 Emeryville Tower I Emeryville, CA -- 4,255,014 17,020,647 5,289,374
11472 Emeryville Tower II Emeryville, CA -- 5,178,975 20,716,620 5,294,612
11473 Emeryville Tower III Emeryville, CA -- 13,556,596 54,227,878 3,545,774
11474 Baybridge Office Plaza Emeryville, CA -- 1,467,077 5,870,708 90,608
11475 Christie Industrial Building Emeryville, CA -- 451,156 1,354,069 119,367
11476 Chevy's Restaurant Emeryville, CA -- 210,319 491,015 57,735
11477 Shellmound Industrial Bldg. Emeryville, CA -- 225,341 676,376 96,314
11478 Tower I Parking Lot (H/C) Emeryville, CA -- -- -- 1,228,864
11479 Emeryville Tower IV Emeryville, CA -- 4,351,336 4,043,363 109,086
11511 555 Twin Dolphin Plaza Redwood City, CA -- 8,181,629 35,193,266 1,509,294
11541 Fountaingrove Center Santa Rosa, CA -- 4,391,945 11,960,753 836,959
11551 Seaport Distribution Center W Sacramento, CA -- 1,180,994 4,350,334 462,170
11561 Sierra Point Brisbane, CA -- 2,429,943 8,222,689 1,749,412
11621 Point West Corporate Center I Sacramento, CA -- 4,388,722 11,879,068 1,212,665
11651 Point West Corporate Center II Sacramento, CA -- 1,000,000 4,023 1,350
11681 Lafayette Terrace Lafayette, CA -- 2,037,282 5,525,912 128,354
11761 Huntwood Business Center Hayward, CA -- 2,929,335 8,839,070 28,929
11801 Gateway Oaks IV Sacramento, CA -- 1,180,174 7,580,784 2,016,503
11831 San Mateo BayCenter I San Mateo, CA -- 2,464,154 10,422,627 261,036
11841 Treat Towers Walnut Creek, CA -- 4,089,868 51,627,302 3,530,714
11851 Johnson Ranch Corp Centre I Roseville, CA -- 4,899,345 13,328,722 621,136
11852 Johnson Ranch Corp Centre II Roseville, CA -- 808,265 3,860,867 836,840
12031 Roseville Corporate Center Roseville, CA -- 1,563,207 10,245,823 2,406,847
12041 W. North Market Sacramento, CA -- 1,150,545 3,456,822 111,071
12051 Overland Court I W Sacramento, CA -- 1,098,823 2,600,442 --
12052 Overland Court II W Sacramento, CA -- 1,898,609 4,671,029 420,650
12081 Vintage Park Office - Bldg. 1 Foster City, CA -- 2,819,393 7,143,194 105,880
12082 Vintage Park Office - Bldg. 2 Foster City, CA -- 2,247,790 5,691,142 28,067
12083 Vintage Park Office - Bldg. 3 Foster City, CA -- 2,071,388 5,018,257 390,472
12091 Vintage Park Industrial Foster City, CA -- 25,531,280 70,993,759 405,386
12111 Douglas Corporate Center Roseville, CA -- 1,645,319 10,987,967 873,688
12112 Douglas Corporate Center II Roseville, CA -- 1,822,812 198,079 452,808
12121 San Mateo BayCenter II San Mateo, CA 10,650,879 3,307,761 15,306,123 133,133
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
11052 3610 American River Drive 490,859 2,272,932 2,763,790 270,862
11053 3620 American River Drive 1,033,387 4,428,148 5,461,535 509,077
11071 Benicia Ind II (521-531 Stone) 774,812 3,385,798 4,160,611 481,776
11072 Benicia Ind II (Iowa/Stone) 859,140 3,981,977 4,841,118 404,956
11073 Benicia Ind II (Iowa/Indiana) 1,113,044 4,166,847 5,279,891 414,385
11074 Benicia Ind II(363 Industrial) 891,542 3,743,929 4,635,471 353,134
11081 Benicia Ind Land (4.83 acres) -- -- -- --
11091 Benicia Ind Land (2.25 acres) -- -- -- --
11101 Benicia Ind Land (080-250-350) 287,699 57,820 345,519 --
11111 Benicia Ind Land (080-040-69) 252,839 88,621 341,460 --
11161 Port of Oakland 1,693,760 5,205,644 6,899,403 496,641
11241 Airport Service Center 668,283 2,057,750 2,726,034 176,528
11281 BayCenter Business Park Ph III 1,248,216 5,354,839 6,603,055 493,428
11291 Riverside Business Center Sac 1,471,099 6,526,270 7,997,369 573,577
11301 Fidelity Plaza 1,354,983 4,448,637 5,803,620 479,137
11331 Wood Island Office Complex 3,796,146 11,315,350 15,111,496 851,429
11471 Emeryville Tower I 4,255,014 22,310,021 26,565,035 1,319,501
11472 Emeryville Tower II 5,178,975 26,011,232 31,190,208 1,698,318
11473 Emeryville Tower III 13,556,596 57,773,652 71,330,248 4,270,455
11474 Baybridge Office Plaza 1,467,077 5,961,316 7,428,394 494,305
11475 Christie Industrial Building 451,156 1,473,435 1,924,592 113,927
11476 Chevy's Restaurant 210,319 548,749 759,068 35,803
11477 Shellmound Industrial Bldg. 225,341 772,690 998,031 56,395
11478 Tower I Parking Lot (H/C) -- 1,228,864 1,228,864 --
11479 Emeryville Tower IV 4,351,336 4,152,450 8,503,786 --
11511 555 Twin Dolphin Plaza 8,181,629 36,702,560 44,884,189 2,472,554
11541 Fountaingrove Center 4,391,945 12,797,712 17,189,657 947,011
11551 Seaport Distribution Center 1,180,994 4,812,504 5,993,498 228,415
11561 Sierra Point 2,429,943 9,972,101 12,402,043 640,948
11621 Point West Corporate Center I 4,388,722 13,091,732 17,480,454 983,252
11651 Point West Corporate Center II 1,000,000 5,373 1,005,373 --
11681 Lafayette Terrace 2,037,282 5,654,266 7,691,548 350,169
11761 Huntwood Business Center 2,929,335 8,867,999 11,797,334 535,967
11801 Gateway Oaks IV 1,180,174 9,597,288 10,777,461 466,800
11831 San Mateo BayCenter I 2,464,154 10,683,663 13,147,818 3,824,626
11841 Treat Towers 4,089,868 55,158,016 59,247,884 1,217,593
11851 Johnson Ranch Corp Centre I 4,899,345 13,949,858 18,849,204 889,070
11852 Johnson Ranch Corp Centre II 808,265 4,697,706 5,505,971 127,979
12031 Roseville Corporate Center 1,563,207 12,652,670 14,215,877 187,697
12041 W. North Market 1,150,545 3,567,893 4,718,438 182,697
12051 Overland Court I 1,098,823 2,600,442 3,699,265 135,060
12052 Overland Court II 1,898,609 5,091,679 6,990,289 243,108
12081 Vintage Park Office - Bldg. 1 2,819,393 7,249,074 10,068,467 376,961
12082 Vintage Park Office - Bldg. 2 2,247,790 5,719,209 7,966,999 296,511
12083 Vintage Park Office - Bldg. 3 2,071,388 5,408,729 7,480,118 284,332
12091 Vintage Park Industrial 25,531,280 71,399,146 96,930,426 3,713,807
12111 Douglas Corporate Center 1,645,319 11,861,654 13,506,973 594,518
12112 Douglas Corporate Center II 1,822,812 650,887 2,473,699 --
12121 San Mateo BayCenter II 3,307,761 15,439,256 18,747,018 3,781,745
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
11052 3610 American River Drive 1995 3-40
11053 3620 American River Drive 1995 3-40
11071 Benicia Ind II (521-531 Stone) 1996 3-40
11072 Benicia Ind II (Iowa/Stone) 1996 3-40
11073 Benicia Ind II (Iowa/Indiana) 1996 3-40
11074 Benicia Ind II(363 Industrial) 1996 3-40
11081 Benicia Ind Land (4.83 acres) 1996 3-40
11091 Benicia Ind Land (2.25 acres) 1996 3-40
11101 Benicia Ind Land (080-250-350) 1996 3-40
11111 Benicia Ind Land (080-040-69) 1996 3-40
11161 Port of Oakland 1996 3-40
11241 Airport Service Center 1996 3-40
11281 BayCenter Business Park Ph III 1996 3-40
11291 Riverside Business Center Sac 1996 3-40
11301 Fidelity Plaza 1996 3-40
11331 Wood Island Office Complex 1996 3-40
11471 Emeryville Tower I 1997 3-40
11472 Emeryville Tower II 1997 3-40
11473 Emeryville Tower III 1997 3-40
11474 Baybridge Office Plaza 1997 3-40
11475 Christie Industrial Building 1997 3-40
11476 Chevy's Restaurant 1997 3-40
11477 Shellmound Industrial Bldg. 1997 3-40
11478 Tower I Parking Lot (H/C) 1997 3-40
11479 Emeryville Tower IV 1997 3-40
11511 555 Twin Dolphin Plaza 1997 3-40
11541 Fountaingrove Center 1997 3-40
11551 Seaport Distribution Center 1997 3-40
11561 Sierra Point 1997 3-40
11621 Point West Corporate Center I 1997 3-40
11651 Point West Corporate Center II 1997 3-40
11681 Lafayette Terrace 1997 3-40
11761 Huntwood Business Center 1997 3-40
11801 Gateway Oaks IV 1997 3-40
11831 San Mateo BayCenter I 1995 3-40
11841 Treat Towers 1997 3-40
11851 Johnson Ranch Corp Centre I 1997 3-40
11852 Johnson Ranch Corp Centre II 1997 3-40
12031 Roseville Corporate Center 1997 3-40
12041 W. North Market 1997 3-40
12051 Overland Court I 1997 3-40
12052 Overland Court II 1997 3-40
12081 Vintage Park Office - Bldg. 1 1997 3-40
12082 Vintage Park Office - Bldg. 2 1997 3-40
12083 Vintage Park Office - Bldg. 3 1997 3-40
12091 Vintage Park Industrial 1997 3-40
12111 Douglas Corporate Center 1997 3-40
12112 Douglas Corporate Center II 1997 3-40
12121 San Mateo BayCenter II 1997 3-40
</TABLE>
54
<PAGE> 55
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
12161 Port Plaza Land W Sacramento, CA -- 1,853,178 -- 4,224
12171 Concord N. Commerce Center II Concord, CA -- 912,711 2,218,895 652,162
12381 Hayward Business Park Hayward, CA -- 8,453,559 25,236,562 1,224,929
12401 Metro Center Tower Foster City, CA -- -- 77,837,220 234,429
12402 Metro Center (919) Foster City, CA -- -- 25,965,490 26,496
12403 Metro Center (989) Foster City, CA -- -- 25,312,193 26,496
12404 Metro Center Retail Foster City, CA -- -- 5,770,366 34,218
12421 Benicia Commerce Center II Benicia, CA -- 1,722,991 6,462,063 296,705
12471 Enterprise Business Park I W. Sacramento, CA -- 3,266,000 9,649,107 24,332
12472 Enterprise Business Park II W. Sacramento, CA -- 1,701,619 5,104,857 145,836
12481 Commerce Park West I W. Sacramento, CA -- 1,156,345 3,358,313 267,250
12482 Commerce Park West II W. Sacramento, CA -- 1,170,230 13,084 --
12483 Commerce Park West III W. Sacramento, CA -- 808,664 10,107 --
12491 Vasco Business Center Livermore, CA -- 1,308,220 4,320,507 2,422,280
12521 Parkshore Plaza - Phase I Folsom, CA -- 1,578,273 10,353,400 2,928,954
12531 San Mateo BayCenter III San Mateo, CA -- 3,214,450 12,853,512 237,052
12541 Skyway Landing San Carlos, CA -- 18,385,512 11,094,619 --
12561 Parkshore Plaza - Phase II Folsom, CA -- 1,634,925 13,414,430 3,114,120
12571 Airway Business Park Livermore, CA -- 3,862,102 5,384,496 49,528
12601 TheTowers@ShoresCenter Redwood Shores, CA 22,477,586 35,577,387 2,181,211 --
12621 Parkshore Plaza - Phase III Folsom, CA -- 2,940,116 1,402,596 --
---------- ----------- ------------- -----------
33,128,465 283,223,644 877,168,359 78,477,254
========== =========== ============= ===========
SILICON VALLEY
10001 Santa Clara Office Center I Santa Clara, CA 1,062,799 806,700 3,250,467 613,032
10011 Stender Way II Santa Clara, CA -- 410,687 1,717,408 --
10021 Santa Clara Office Center II Santa Clara, CA -- 745,099 4,297,184 672,041
10022 Santa Clara Office Center II Santa Clara, CA -- -- -- 168,769
10031 Gateway Office - Phase I San Jose, CA -- 1,206,811 11,404,195 1,948,357
10032 Gateway Office - Phase I Pkg San Jose, CA -- -- 53,241 --
10041 Scott Boulevard Santa Clara, CA -- 554,191 1,860,159 469,286
10051 Santa Clara Office Center III Santa Clara, CA -- 457,272 3,461,470 419,895
10081 Gateway Office Phase II - A San Jose, CA -- 480,385 6,852,031 2,673,779
10082 Gateway Office Phase II - B San Jose, CA -- 337,128 5,133,951 2,095,959
10083 Gateway Office Phase II - C San Jose, CA -- 419,107 7,558,654 1,941,246
10084 Gateway Office Phase II - HC San Jose, CA -- -- -- --
10085 Gateway Office Phase II San Jose, CA -- 2,268,772 6,806,316 18,695
10101 Stender Way Santa Clara, CA -- 152,000 696,177 --
10111 2727 Augustine Santa Clara, CA -- 381,686 1,629,197 --
10121 Sunnyvale Business Center Santa Clara, CA -- 241,207 804,608 457,497
10131 The Alameda San Jose, CA -- 966,236 4,854,382 237,955
10141 Creekside Phase I San Jose, CA -- 5,626,480 5,617,095 1,294,214
10142 Creekside Phase II San Jose, CA -- 5,338,940 4,640,485 814,726
10151 North First Office Center San Jose, CA -- 6,961,583 6,689,305 1,426,893
10161 Cupertino Business Center Cupertino, CA -- 4,069,866 4,549,676 167,710
10191 North American Van Lines San Jose, CA -- 2,199,551 5,023,269 18,000
10241 2685 Augustine Santa Clara, CA 1,325,093 587,358 1,901,082 581,179
10242 2695 Augustine Santa Clara, CA -- 462,074 2,683,989 735,572
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
12161 Port Plaza Land 1,853,178 4,224 1,857,402 --
12171 Concord N. Commerce Center II 912,711 2,871,058 3,783,768 82,051
12381 Hayward Business Park 8,453,559 26,461,491 34,915,050 1,494,664
12401 Metro Center Tower -- 78,071,650 78,071,650 3,216,960
12402 Metro Center (919) -- 25,991,985 25,991,985 1,094,921
12403 Metro Center (989) -- 25,338,689 25,338,689 1,014,006
12404 Metro Center Retail -- 5,804,583 5,804,583 243,102
12421 Benicia Commerce Center II 1,722,991 6,758,768 8,481,759 191,054
12471 Enterprise Business Park I 3,266,000 9,673,439 12,939,439 442,251
12472 Enterprise Business Park II 1,701,619 5,250,692 6,952,311 233,973
12481 Commerce Park West I 1,156,345 3,625,563 4,781,908 153,923
12482 Commerce Park West II 1,170,230 13,084 1,183,314 --
12483 Commerce Park West III 808,664 10,107 818,771 --
12491 Vasco Business Center 1,308,220 6,742,787 8,051,007 300,256
12521 Parkshore Plaza - Phase I 1,578,273 13,282,353 14,860,627 316,340
12531 San Mateo BayCenter III 3,214,450 13,090,563 16,305,014 484,025
12541 Skyway Landing 18,385,512 11,094,619 29,480,131 --
12561 Parkshore Plaza - Phase II 1,634,925 16,528,550 18,163,475 145,843
12571 Airway Business Park 3,862,102 5,434,024 9,296,126 --
12601 TheTowers@ShoresCenter 35,577,387 2,181,211 37,758,597 --
12621 Parkshore Plaza - Phase III 2,940,116 1,402,596 4,342,712 --
----------- ------------- ------------- -----------
283,223,644 955,645,613 1,238,869,257 84,842,613
=========== ============= ============= ===========
SILICON VALLEY
10001 Santa Clara Office Center I 806,700 3,863,499 4,670,199 1,300,989
10011 Stender Way II 410,687 1,717,408 2,128,095 674,063
10021 Santa Clara Office Center II 745,099 4,969,224 5,714,323 1,906,217
10022 Santa Clara Office Center II -- 168,769 168,769 47,687
10031 Gateway Office - Phase I 1,206,811 13,352,551 14,559,362 5,116,599
10032 Gateway Office - Phase I Pkg -- 53,241 53,241 --
10041 Scott Boulevard 554,191 2,329,446 2,883,637 740,277
10051 Santa Clara Office Center III 457,272 3,881,364 4,338,636 1,423,618
10081 Gateway Office Phase II - A 480,385 9,525,810 10,006,195 4,088,708
10082 Gateway Office Phase II - B 337,128 7,229,911 7,567,038 3,275,512
10083 Gateway Office Phase II - C 419,107 9,499,900 9,919,006 3,772,758
10084 Gateway Office Phase II - HC -- -- -- --
10085 Gateway Office Phase II 2,268,772 6,825,011 9,093,783 1,400,441
10101 Stender Way 152,000 696,177 848,177 326,853
10111 2727 Augustine 381,686 1,629,197 2,010,884 1,010,229
10121 Sunnyvale Business Center 241,207 1,262,105 1,503,311 433,608
10131 The Alameda 966,236 5,092,337 6,058,572 1,803,324
10141 Creekside Phase I 5,626,480 6,911,309 12,537,789 2,378,141
10142 Creekside Phase II 5,338,940 5,455,211 10,794,151 1,666,330
10151 North First Office Center 6,961,583 8,116,198 15,077,782 2,888,997
10161 Cupertino Business Center 4,069,866 4,717,386 8,787,253 1,557,043
10191 North American Van Lines 2,199,551 5,041,269 7,240,820 1,457,698
10241 2685 Augustine 587,358 2,482,261 3,069,619 1,200,768
10242 2695 Augustine 462,074 3,419,561 3,881,635 1,725,480
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
12161 Port Plaza Land 1997 3-40
12171 Concord N. Commerce Center II 1997 3-40
12381 Hayward Business Park 1998 3-40
12401 Metro Center Tower 1998 3-40
12402 Metro Center (919) 1998 3-40
12403 Metro Center (989) 1998 3-40
12404 Metro Center Retail 1998 3-40
12421 Benicia Commerce Center II 1998 3-40
12471 Enterprise Business Park I 1998 3-40
12472 Enterprise Business Park II 1998 3-40
12481 Commerce Park West I 1998 3-40
12482 Commerce Park West II 1998 3-40
12483 Commerce Park West III 1998 3-40
12491 Vasco Business Center 1998 3-40
12521 Parkshore Plaza - Phase I 1998 3-40
12531 San Mateo BayCenter III 1998 3-40
12541 Skyway Landing 1998 3-40
12561 Parkshore Plaza - Phase II 1998 3-40
12571 Airway Business Park 1998 3-40
12601 TheTowers@ShoresCenter 1999 3-40
12621 Parkshore Plaza - Phase III 1999 3-40
SILICON VALLEY
10001 Santa Clara Office Center I 1977 3-40
10011 Stender Way II 1978 3-40
10021 Santa Clara Office Center II 1980 3-40
10022 Santa Clara Office Center II 1980 3-40
10031 Gateway Office - Phase I 1981 3-40
10032 Gateway Office - Phase I Pkg 1981 3-40
10041 Scott Boulevard 1976 3-40
10051 Santa Clara Office Center III 1981 3-40
10081 Gateway Office Phase II - A 1983 3-40
10082 Gateway Office Phase II - B 1983 3-40
10083 Gateway Office Phase II - C 1983 3-40
10084 Gateway Office Phase II - HC 1983 3-40
10085 Gateway Office Phase II 1983 3-40
10101 Stender Way 1978 3-40
10111 2727 Augustine 1975 3-40
10121 Sunnyvale Business Center 1987 3-40
10131 The Alameda 1984 3-40
10141 Creekside Phase I 1985 3-40
10142 Creekside Phase II 1985 3-40
10151 North First Office Center 1985 3-40
10161 Cupertino Business Center 1985 3-40
10191 North American Van Lines 1988 3-40
10241 2685 Augustine 1979 3-40
10242 2695 Augustine 1989 3-40
</TABLE>
55
<PAGE> 56
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
10251 Santa Clara Ofc Ctr IV Dennys Santa Clara, CA -- 181,634 564,349 --
10271 Aspect Telecommunications San Jose, CA -- 2,229,772 2,283,005 257,644
10301 Cadillac Court Milpitas, CA -- 959,042 1,494,977 349,387
10321 Ryan Ranch Office Ctr - A Monterey, CA -- -- -- 335,656
10322 Ryan Ranch Office Ctr - B Monterey, CA -- -- -- --
10323 Ryan Ranch Office Ctr - C Monterey, CA -- -- -- 151,482
10324 Ryan Ranch Office Ctr - Admin Monterey, CA -- 1,048,740 3,955,342 1,044,615
10371 Fremont Bayside Fremont, CA 5,893,421 1,247,069 2,708,494 283,620
10421 Patrick Henry Drive San Jose, CA -- 933,058 2,704,351 2,674,706
10431 COG Warehouse Milpitas, CA -- 2,616,039 1,911,130 1,082,839
10451 Okidata Distribution Center Milpitas, CA -- 1,854,892 1,753,601 355,238
10461 Pro-Log Monterey, CA -- 780,000 1,149,758 341,136
10531 Fremont Commerce Center Ph III Fremont, CA -- 708,494 1,870,577 216,483
10541 Lockheed Building Palo Alto, CA -- -- 6,264,357 2,862,702
10551 Xerox Campus Palo Alto, CA -- -- 29,360,411 14,427,212
10563 Foothill Research Ctr-4009 Palo Alto, CA -- -- -- 7,541,469
10565 Foothill Research Ctr-Common Palo Alto, CA -- -- 30,819,577 5,544,055
10571 Montague Industrial Center Palo Alto, CA -- 2,820,461 9,147,282 685,332
10661 Industrial Drive Warehouse Fremont, CA 2,186,269 1,822,496 3,796,757 168,564
10671 2180 Sand Hill Road Menlo Park, CA -- 466,525 1,283,016 510,122
10701 1900 McCarthy Milpitas, CA -- 845,039 4,219,348 560,699
10761 2905-2909 Stender Santa Clara, CA -- 385,992 1,174,719 274,725
10781 Meier Central South - Bldg. 1 Santa Clara, CA -- 325,333 1,105,604 22,631
10782 Meier Central South - Bldg. 2 Santa Clara, CA -- 479,495 1,296,413 42,600
10783 Meier Central South - Bldg. 3 Santa Clara, CA -- 402,482 1,088,191 37,069
10784 Meier Central South - Bldg. 4 Santa Clara, CA -- 425,639 1,150,801 34,000
10785 Meier Central South - Bldg. 11 Santa Clara, CA -- 440,013 1,189,665 --
10786 Meier Central South - Bldg. 12 Santa Clara, CA -- 498,150 1,346,850 228,605
10791 Meier Mountain View - Bldg. 5 Santa Clara, CA 276,678 552,438 1,493,628 36,000
10792 Meier Mountain View - Bldg. 6 Santa Clara, CA -- 526,249 1,422,822 --
10793 Meier Mountain View - Bldg. 7 Santa Clara, CA -- 594,552 1,607,492 162,906
10794 Meier Mountain View - Bldg. 8 Santa Clara, CA -- 631,004 1,706,047 --
10795 Meier Mountain View - Bldg. 9 Santa Clara, CA -- 650,822 1,759,630 19,704
10796 Meier Mountain View - Bldg. 10 Santa Clara, CA -- 584,407 1,580,063 37,644
10797 Meier Mountain View - Bldg. 17 Santa Clara, CA -- 562,748 1,521,503 --
10798 Meier Mountain View - Bldg. 20 Santa Clara, CA -- 1,163,131 3,144,978 20,048
10801 Meier Central North - Bldg. 13 Santa Clara, CA -- 233,085 630,193 --
10802 Meier Central North - Bldg. 14 Santa Clara, CA -- 233,085 630,193 --
10803 Meier Central North - Bldg. 15 Santa Clara, CA -- 228,496 617,786 50,426
10804 Meier Central North - Bldg. 16 Santa Clara, CA -- 324,000 876,000 --
10805 Meier Central North - Bldg. 19 Santa Clara, CA -- 734,695 1,986,398 --
10811 Meier Sunnyvale - Bldg. 18 Santa Clara, CA -- 352,776 953,800 --
10851 Ryan Ranch Office - Phase II Monterey, CA -- 565,580 2,012,002 257,912
10871 Walsh @ Lafayette Indust Park Santa Clara, CA -- 3,359,291 7,788,617 1,382,535
10881 Ridder Park San Jose, CA -- 1,794,057 4,443,925 2,012,184
10901 Ryan Ranch - Lot 14B Monterey, CA -- 311,835 746,295 260,181
10911 Cadillac Court II Milpitas, CA -- 845,833 1,166,712 667,138
11031 Ryan Ranch Office II - Bldg. D Monterey, CA -- 420,000 2,172,501 485,978
11151 2290 North First Street San Jose, CA -- 1,222,335 4,963,553 621,965
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
10251 Santa Clara Ofc Ctr IV Dennys 181,634 564,349 745,983 163,349
10271 Aspect Telecommunications 2,229,772 2,540,649 4,770,421 791,116
10301 Cadillac Court 959,042 1,844,364 2,803,406 428,577
10321 Ryan Ranch Office Ctr - A -- 335,656 335,656 157,101
10322 Ryan Ranch Office Ctr - B -- -- -- --
10323 Ryan Ranch Office Ctr - C -- 151,482 151,482 126,235
10324 Ryan Ranch Office Ctr - Admin 1,048,740 4,999,958 6,048,697 1,068,520
10371 Fremont Bayside 1,247,069 2,992,113 4,239,182 862,096
10421 Patrick Henry Drive 933,058 5,379,058 6,312,116 1,871,615
10431 COG Warehouse 2,616,039 2,993,969 5,610,008 1,020,069
10451 Okidata Distribution Center 1,854,892 2,108,839 3,963,731 403,707
10461 Pro-Log 780,000 1,490,893 2,270,893 274,811
10531 Fremont Commerce Center Ph III 708,494 2,087,060 2,795,554 633,440
10541 Lockheed Building -- 9,127,059 9,127,059 2,464,658
10551 Xerox Campus -- 43,787,623 43,787,623 10,949,221
10563 Foothill Research Ctr-4009 -- 7,541,469 7,541,469 2,456,972
10565 Foothill Research Ctr-Common -- 36,363,632 36,363,632 10,207,077
10571 Montague Industrial Center 2,820,461 9,832,615 12,653,075 4,595,962
10661 Industrial Drive Warehouse 1,822,496 3,965,320 5,787,817 728,643
10671 2180 Sand Hill Road 466,525 1,793,138 2,259,663 878,828
10701 1900 McCarthy 845,039 4,780,046 5,625,085 720,372
10761 2905-2909 Stender 385,992 1,449,444 1,835,437 293,519
10781 Meier Central South - Bldg. 1 325,333 1,128,235 1,453,568 131,101
10782 Meier Central South - Bldg. 2 479,495 1,339,013 1,818,508 163,953
10783 Meier Central South - Bldg. 3 402,482 1,125,261 1,527,742 147,403
10784 Meier Central South - Bldg. 4 425,639 1,184,801 1,610,440 165,689
10785 Meier Central South - Bldg. 11 440,013 1,189,665 1,629,678 233,310
10786 Meier Central South - Bldg. 12 498,150 1,575,455 2,073,605 168,187
10791 Meier Mountain View - Bldg. 5 552,438 1,529,628 2,082,066 192,480
10792 Meier Mountain View - Bldg. 6 526,249 1,422,822 1,949,071 171,925
10793 Meier Mountain View - Bldg. 7 594,552 1,770,398 2,364,950 194,239
10794 Meier Mountain View - Bldg. 8 631,004 1,706,047 2,337,050 206,148
10795 Meier Mountain View - Bldg. 9 650,822 1,779,334 2,430,156 228,385
10796 Meier Mountain View - Bldg. 10 584,407 1,617,707 2,202,115 197,198
10797 Meier Mountain View - Bldg. 17 562,748 1,521,503 2,084,251 183,848
10798 Meier Mountain View - Bldg. 20 1,163,131 3,165,026 4,328,158 382,664
10801 Meier Central North - Bldg. 13 233,085 630,193 863,278 76,149
10802 Meier Central North - Bldg. 14 233,085 630,193 863,278 76,149
10803 Meier Central North - Bldg. 15 228,496 668,212 896,708 86,954
10804 Meier Central North - Bldg. 16 324,000 876,000 1,200,000 105,850
10805 Meier Central North - Bldg. 19 734,695 1,986,398 2,721,093 240,023
10811 Meier Sunnyvale - Bldg. 18 352,776 953,800 1,306,576 115,251
10851 Ryan Ranch Office - Phase II 565,580 2,269,914 2,835,494 354,503
10871 Walsh @ Lafayette Indust Park 3,359,291 9,171,152 12,530,443 1,473,905
10881 Ridder Park 1,794,057 6,456,109 8,250,165 868,765
10901 Ryan Ranch - Lot 14B 311,835 1,006,476 1,318,311 219,991
10911 Cadillac Court II 845,833 1,833,850 2,679,683 455,600
11031 Ryan Ranch Office II - Bldg. D 420,000 2,658,479 3,078,479 424,248
11151 2290 North First Street 1,222,335 5,585,517 6,807,852 571,502
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
10251 Santa Clara Ofc Ctr IV Dennys 1988 3-40
10271 Aspect Telecommunications 1988 3-40
10301 Cadillac Court 1991 3-40
10321 Ryan Ranch Office Ctr - A 1992 3-40
10322 Ryan Ranch Office Ctr - B 1992 3-40
10323 Ryan Ranch Office Ctr - C 1992 3-40
10324 Ryan Ranch Office Ctr - Admin 1992 3-40
10371 Fremont Bayside 1990 3-40
10421 Patrick Henry Drive 1991 3-40
10431 COG Warehouse 1992 3-40
10451 Okidata Distribution Center 1993 3-40
10461 Pro-Log 1993 3-40
10531 Fremont Commerce Center Ph III 1993 3-40
10541 Lockheed Building 1993 3-40
10551 Xerox Campus 1993 3-40
10563 Foothill Research Ctr-4009 1993 3-40
10565 Foothill Research Ctr-Common 1993 3-40
10571 Montague Industrial Center 1993 3-40
10661 Industrial Drive Warehouse 1995 3-40
10671 2180 Sand Hill Road 1973 3-40
10701 1900 McCarthy 1994 3-40
10761 2905-2909 Stender 1994 3-40
10781 Meier Central South - Bldg. 1 1995 3-40
10782 Meier Central South - Bldg. 2 1995 3-40
10783 Meier Central South - Bldg. 3 1995 3-40
10784 Meier Central South - Bldg. 4 1995 3-40
10785 Meier Central South - Bldg. 11 1995 3-40
10786 Meier Central South - Bldg. 12 1995 3-40
10791 Meier Mountain View - Bldg. 5 1995 3-40
10792 Meier Mountain View - Bldg. 6 1995 3-40
10793 Meier Mountain View - Bldg. 7 1995 3-40
10794 Meier Mountain View - Bldg. 8 1995 3-40
10795 Meier Mountain View - Bldg. 9 1995 3-40
10796 Meier Mountain View - Bldg. 10 1995 3-40
10797 Meier Mountain View - Bldg. 17 1995 3-40
10798 Meier Mountain View - Bldg. 20 1995 3-40
10801 Meier Central North - Bldg. 13 1995 3-40
10802 Meier Central North - Bldg. 14 1995 3-40
10803 Meier Central North - Bldg. 15 1995 3-40
10804 Meier Central North - Bldg. 16 1995 3-40
10805 Meier Central North - Bldg. 19 1995 3-40
10811 Meier Sunnyvale - Bldg. 18 1995 3-40
10851 Ryan Ranch Office - Phase II 1995 3-40
10871 Walsh @ Lafayette Indust Park 1995 3-40
10881 Ridder Park 1995 3-40
10901 Ryan Ranch - Lot 14B 1995 3-40
10911 Cadillac Court II 1995 3-40
11031 Ryan Ranch Office II - Bldg. D 1996 3-40
11151 2290 North First Street 1996 3-40
</TABLE>
56
<PAGE> 57
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
11231 Charcot Business Center San Jose, CA -- 2,988,923 9,140,711 365,216
11251 Dixon Landing North - Phase I Milpitas, CA -- 3,014,782 5,414,490 2,578,317
11252 Dixon Landing North - Phase 2 Milpitas, CA -- 3,239,369 3,121,887 1,525,463
11261 Kifer Road Industrial Park Sunnyvale, CA -- 3,530,775 11,072,470 106,852
11311 Central Park Plaza Santa Clara, CA -- 9,492,940 25,257,704 1,984,275
11361 Ravendale at Central Mountain View, CA -- 2,018,673 6,082,044 43,877
11521 Metro Plaza (Office) San Jose, CA 24,214,128 14,036,475 56,402,244 1,411,105
11522 Metro Plaza (Retail) San Jose, CA -- 752,657 3,011,222 88,396
11531 1740 Technology San Jose, CA 20,029,551 7,918,598 31,710,229 2,240,873
11661 Gateway Office Phase III - D San Jose, CA -- -- 14,784,208 3,459,547
11662 Gateway Office Phase III - PS San Jose, CA -- -- 6,994,064 --
11771 Fremont Commerce Center I Fremont, CA -- 3,040,601 9,276,540 142,080
11772 Fremont Commerce Center II Fremont, CA -- 1,275,000 3,856,826 43,862
11861 100 Moffett Mountain View, CA -- 1,140,758 3,129,014 890,458
11871 Oak Creek I Milpitas, CA -- 962,558 2,924,792 53,936
11872 Oak Creek II Milpitas, CA -- 1,078,081 3,274,337 91,276
11881 Milmont R&D Fremont, CA -- 1,806,606 5,433,395 --
11891 Kato R&D Fremont, CA -- 2,002,504 6,101,872 --
11911 California Circle II Milpitas, CA -- 2,555,551 7,911,555 28,473
12011 Borregas Avenue Sunnyvale, CA -- 780,376 2,417,727 115,946
12101 Ryan Ranch Oaks I Monterey, CA -- 743,333 3,536,136 520,577
12102 Ryan Ranch Oaks II Monterey, CA -- 743,333 220,828 --
12191 Concourse I San Jose, CA -- 6,785,119 27,140,801 1,441,646
12192 Concourse II San Jose, CA -- 5,139,102 25,192,000 933,063
12193 Concourse III San Jose, CA -- 8,333,235 33,335,518 987,191
12194 Concourse IV San Jose, CA -- 8,426,150 33,707,177 1,033,222
12195 Concourse V San Jose, CA -- 8,046,318 15,546,395 61,358
12196 Concourse VI San Jose, CA -- 8,046,318 17,085,231 --
12197 Concourse Garage I San Jose, CA -- 4,023,110 160,220 48,461
12198 Concourse Garage II San Jose, CA -- 2,011,604 7,256,776 --
12199 Concourse Retail San Jose, CA -- 1,158,817 1,162,279 --
12391 Skyport Plaza San Jose, CA -- 8,456,246 25,372,374 --
12392 Skyport Plaza Land San Jose, CA -- 23,062,963 4,893,048 --
Other -- 287,045 695,277 566,261
----------- ----------- ----------- -----------
54,987,939 218,931,837 660,968,444 83,563,746
=========== =========== =========== ===========
SOUTHERN CALIFORNIA
10071 Airport Commerce Center Bakersfield, CA -- 893,648 2,744,526 509,579
10981 La Jolla Centre II San Diego, CA -- 3,252,653 13,070,059 1,014,343
10991 One Pacific Heights San Diego, CA -- 3,089,433 8,365,526 260,646
11001 Carlsbad Airport Plaza Carlsbad, CA -- 1,532,406 4,609,834 220,887
11011 Pacific Point San Diego, CA -- 3,111,202 9,333,605 88,839
11061 Inwood Park Irvine, CA -- 1,517,776 8,964,270 805,371
11062 Inwood Park II Irvine, CA -- 714,993 564,156 --
11141 Carmel Valley Centre I San Diego, CA -- 1,406,969 5,685,484 560,676
11142 Carmel Valley Centre II San Diego, CA -- 1,385,190 5,557,998 316,065
11171 Dove Street Newport Beach, CA -- 1,569,792 6,313,218 627,085
11191 Stadium Plaza (Multi-Tenant) Anaheim, CA -- 1,873,119 7,528,919 664,271
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
11231 Charcot Business Center 2,988,923 9,505,927 12,494,850 800,484
11251 Dixon Landing North - Phase I 3,014,782 7,992,807 11,007,589 449,113
11252 Dixon Landing North - Phase 2 3,239,369 4,647,350 7,886,719 461,819
11261 Kifer Road Industrial Park 3,530,775 11,179,322 14,710,097 871,707
11311 Central Park Plaza 9,492,940 27,241,979 36,734,918 2,159,194
11361 Ravendale at Central 2,018,673 6,125,921 8,144,594 458,110
11521 Metro Plaza (Office) 14,036,475 57,813,349 71,849,824 4,077,011
11522 Metro Plaza (Retail) 752,657 3,099,619 3,852,275 216,952
11531 1740 Technology 7,918,598 33,951,102 41,869,700 2,487,666
11661 Gateway Office Phase III - D -- 18,243,755 18,243,755 775,470
11662 Gateway Office Phase III - PS -- 6,994,064 6,994,064 185,692
11771 Fremont Commerce Center I 3,040,601 9,418,621 12,459,222 569,395
11772 Fremont Commerce Center II 1,275,000 3,900,688 5,175,688 233,182
11861 100 Moffett 1,140,758 4,019,472 5,160,230 227,030
11871 Oak Creek I 962,558 2,978,728 3,941,286 152,538
11872 Oak Creek II 1,078,081 3,365,613 4,443,694 172,637
11881 Milmont R&D 1,806,606 5,433,395 7,240,000 282,634
11891 Kato R&D 2,002,504 6,101,872 8,104,377 315,319
11911 California Circle II 2,555,551 7,940,028 10,495,579 422,659
12011 Borregas Avenue 780,376 2,533,673 3,314,049 138,391
12101 Ryan Ranch Oaks I 743,333 4,056,713 4,800,046 174,225
12102 Ryan Ranch Oaks II 743,333 220,828 964,161 --
12191 Concourse I 6,785,119 28,582,446 35,367,566 1,398,318
12192 Concourse II 5,139,102 26,125,063 31,264,165 1,302,094
12193 Concourse III 8,333,235 34,322,708 42,655,944 1,728,860
12194 Concourse IV 8,426,150 34,740,399 43,166,549 1,773,567
12195 Concourse V 8,046,318 15,607,753 23,654,071 129,117
12196 Concourse VI 8,046,318 17,085,231 25,131,549 18,178
12197 Concourse Garage I 4,023,110 208,681 4,231,791 4,006
12198 Concourse Garage II 2,011,604 7,256,776 9,268,380 90,759
12199 Concourse Retail 1,158,817 1,162,279 2,321,096 --
12391 Skyport Plaza 8,456,246 25,372,374 33,828,620 1,215,678
12392 Skyport Plaza Land 23,062,963 4,893,048 27,956,011 --
Other 287,045 1,261,538 1,548,583 298,402
------------- ------------- ----------- -----------
218,931,837 744,532,191 963,464,027 112,716,859
============= ============= =========== ===========
SOUTHERN CALIFORNIA
10071 Airport Commerce Center 893,648 3,254,105 4,147,753 1,235,977
10981 La Jolla Centre II 3,252,653 14,084,402 17,337,054 1,585,803
10991 One Pacific Heights 3,089,433 8,626,172 11,715,605 895,245
11001 Carlsbad Airport Plaza 1,532,406 4,830,721 6,363,127 528,193
11011 Pacific Point 3,111,202 9,422,444 12,533,646 1,001,647
11061 Inwood Park 1,517,776 9,769,641 11,287,418 1,107,470
11062 Inwood Park II 714,993 564,156 1,279,149 --
11141 Carmel Valley Centre I 1,406,969 6,246,160 7,653,129 614,842
11142 Carmel Valley Centre II 1,385,190 5,874,063 7,259,253 608,173
11171 Dove Street 1,569,792 6,940,303 8,510,095 597,762
11191 Stadium Plaza (Multi-Tenant) 1,873,119 8,193,191 10,066,309 704,754
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
11231 Charcot Business Center 1996 3-40
11251 Dixon Landing North - Phase I 1996 3-40
11252 Dixon Landing North - Phase 2 1996 3-40
11261 Kifer Road Industrial Park 1996 3-40
11311 Central Park Plaza 1996 3-40
11361 Ravendale at Central 1996 3-40
11521 Metro Plaza (Office) 1997 3-40
11522 Metro Plaza (Retail) 1997 3-40
11531 1740 Technology 1997 3-40
11661 Gateway Office Phase III - D 1997 3-40
11662 Gateway Office Phase III - PS 1997 3-40
11771 Fremont Commerce Center I 1997 3-40
11772 Fremont Commerce Center II 1997 3-40
11861 100 Moffett 1997 3-40
11871 Oak Creek I 1997 3-40
11872 Oak Creek II 1997 3-40
11881 Milmont R&D 1997 3-40
11891 Kato R&D 1997 3-40
11911 California Circle II 1997 3-40
12011 Borregas Avenue 1997 3-40
12101 Ryan Ranch Oaks I 1997 3-40
12102 Ryan Ranch Oaks II 1997 3-40
12191 Concourse I 1998 3-40
12192 Concourse II 1998 3-40
12193 Concourse III 1998 3-40
12194 Concourse IV 1998 3-40
12195 Concourse V 1998 3-40
12196 Concourse VI 1998 3-40
12197 Concourse Garage I 1998 3-40
12198 Concourse Garage II 1998 3-40
12199 Concourse Retail 1998 3-40
12391 Skyport Plaza 1998 3-40
12392 Skyport Plaza Land 1998 3-40
Other
SOUTHERN CALIFORNIA
10071 Airport Commerce Center 1982 3-40
10981 La Jolla Centre II 1995 3-40
10991 One Pacific Heights 1995 3-40
11001 Carlsbad Airport Plaza 1995 3-40
11011 Pacific Point 1995 3-40
11061 Inwood Park 1995 3-40
11062 Inwood Park II 1995 3-40
11141 Carmel Valley Centre I 1996 3-40
11142 Carmel Valley Centre II 1996 3-40
11171 Dove Street 1996 3-40
11191 Stadium Plaza (Multi-Tenant) 1996 3-40
</TABLE>
57
<PAGE> 58
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
11201 Stadium Plaza (Free Standing) Anaheim, CA -- 7,261,847 21,906,189 1,685,217
11211 Sorrento Vista San Diego, CA -- 2,745,889 6,190,718 854,137
11221 Fairchild Corporate Center Irvine, CA -- 2,011,443 8,094,547 808,827
11271 One Pacific Plaza (Office) Huntington Beach, CA -- 1,610,777 6,484,450 1,000,855
11272 One Pacific Plaza (Retail) Huntington Beach, CA -- 410,194 1,642,540 3,651
11321 Corona Corporate Center Corona, CA -- 743,147 3,009,125 22,708
11341 One Lakeshore Centre Ontario, CA -- 3,899,948 15,441,528 439,188
11351 Pacific View Plaza San Diego, CA -- 1,404,336 3,823,864 381,399
11371 Centerpark Plaza One San Diego, CA -- 1,367,014 5,515,305 372,932
11381 La Place Court Carlsbad, CA -- 1,467,057 5,910,944 565,652
11391 Carmel View Office Plaza San Diego, CA -- 1,426,649 5,747,218 466,991
11401 The City - 500 City Parkway Orange, CA -- 827,126 3,322,703 1,129,396
11402 The City - 505 City Parkway Orange, CA -- 2,275,956 9,153,959 471,068
11403 The City - 600 City Parkway Orange, CA -- 2,483,655 9,983,812 2,411,337
11421 Centerpark Plaza Two (Ind) San Diego, CA -- 1,340,092 4,163,060 262,718
11431 Centerpark Plaza Two (Office) San Diego, CA -- 882,852 3,560,615 142,938
11451 Camino West Carlsbad, CA -- 980,334 3,945,707 100,474
11461 Western Metal Lath Riverside, CA -- 1,383,776 4,973,535 --
11481 Brea Park Centre - Bldg A Brea, CA -- 1,010,580 2,751,901 370,128
11482 Brea Park Centre - Bldg. B Brea, CA -- 1,894,490 5,127,552 561,361
11483 Brea Park Centre - Bldg. C Brea, CA -- 620,267 1,681,852 100,515
11491 Bridge Pointe Corp. Centre I La Jolla, CA -- 2,641,893 15,141,008 2,950,545
11492 Bridge Pointe Corp. Centre II La Jolla, CA -- 2,641,893 11,844,473 --
11493 Bridge Pointe Corp. Centre III La Jolla, CA -- 587,087 595,344 --
11501 The City - 3800 Chapman Blvd. Orange County, CA -- 1,309,617 5,300,831 5,609,783
11571 Pasadena Financial Pasadena, CA -- 5,353,401 21,466,845 71,481
11581 Century Square Pasadena, CA -- 8,318,792 33,360,239 46,702
11591 Brea Corporate Plaza Brea, CA -- 2,958,418 8,023,239 996,343
11641 McKesson Building Pasadena, CA -- 5,159,033 13,979,316 153,768
11671 Arboretum Courtyard Santa Monica, CA -- 5,718,678 24,851,070 1,032,046
11691 Brea Financial Commons (100) Brea, CA -- 2,844,943 7,691,884 391,747
11692 Brea Financial Commons (140) Brea, CA -- 2,409,582 6,514,795 134,670
11711 Sepulveda Center Los Angeles, CA -- 5,046,469 20,297,866 949,399
11721 Brea Corporate Place (135) Brea, CA -- 425,083 21,827,118 153,807
11722 Brea Corporate Place (145) Brea, CA -- 445,271 19,349,200 143,867
11741 BPA - Land Site B (150) Brea, CA -- 1,517,805 2,000 12,916
11742 BPA - Land Sites G & H Brea, CA -- -- 652,550 69,502
11743 BPA - Land Site J Brea, CA -- -- 25,237 --
11744 BPA - Land Sites L & M Brea, CA -- -- 108,184 22,316
11781 790 Colorado Pasadena, CA -- 3,868,533 15,557,914 235,195
11791 Tower Seventeen Irvine, CA -- 4,006,406 36,233,312 1,373,094
11811 Nobel Corporate Plaza San Diego, CA -- 4,511,165 12,269,908 432,801
11821 Pacific Ridge Corporate Centre Carlsbad, CA -- 3,873,656 10,565,524 1,685,494
11921 East Hills Office Park Anaheim, CA -- 2,166,615 5,876,550 1,570,590
11931 Stadium Towers Plaza Anaheim, CA -- 3,910,743 35,196,106 598,689
11932 Stadium Towers - Retail Anaheim, CA -- 867,429 -- 349,600
11934 Stadium Towers Vacant Retail Anaheim, CA -- 409,368 -- --
11941 Pacific Corporate Park San Diego, CA -- 2,757,590 8,298,808 177,186
11951 Sorrento Tech I, II & III San Diego, CA -- 2,686,323 7,285,739 32,645
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
11201 Stadium Plaza (Free Standing) 7,261,847 23,591,406 30,853,252 2,250,688
11211 Sorrento Vista 2,745,889 7,044,855 9,790,744 689,532
11221 Fairchild Corporate Center 2,011,443 8,903,375 10,914,818 727,178
11271 One Pacific Plaza (Office) 1,610,777 7,485,305 9,096,082 663,818
11272 One Pacific Plaza (Retail) 410,194 1,646,191 2,056,385 129,939
11321 Corona Corporate Center 743,147 3,031,834 3,774,981 224,833
11341 One Lakeshore Centre 3,899,948 15,880,717 19,780,664 1,335,507
11351 Pacific View Plaza 1,404,336 4,205,263 5,609,600 372,672
11371 Centerpark Plaza One 1,367,014 5,888,237 7,255,251 528,785
11381 La Place Court 1,467,057 6,476,596 7,943,654 570,800
11391 Carmel View Office Plaza 1,426,649 6,214,209 7,640,858 453,652
11401 The City - 500 City Parkway 827,126 4,452,099 5,279,225 333,814
11402 The City - 505 City Parkway 2,275,956 9,625,026 11,900,982 819,893
11403 The City - 600 City Parkway 2,483,655 12,395,148 14,878,803 1,413,763
11421 Centerpark Plaza Two (Ind) 1,340,092 4,425,778 5,765,870 358,224
11431 Centerpark Plaza Two (Office) 882,852 3,703,553 4,586,405 285,412
11451 Camino West 980,334 4,046,181 5,026,515 304,599
11461 Western Metal Lath 1,383,776 4,973,535 6,357,311 --
11481 Brea Park Centre - Bldg A 1,010,580 3,122,029 4,132,609 300,764
11482 Brea Park Centre - Bldg. B 1,894,490 5,688,914 7,583,404 562,198
11483 Brea Park Centre - Bldg. C 620,267 1,782,368 2,402,635 97,761
11491 Bridge Pointe Corp. Centre I 2,641,893 18,091,552 20,733,445 311,348
11492 Bridge Pointe Corp. Centre II 2,641,893 11,844,473 14,486,365 --
11493 Bridge Pointe Corp. Centre III 587,087 595,344 1,182,431 --
11501 The City - 3800 Chapman Blvd. 1,309,617 10,910,614 12,220,231 1,084,666
11571 Pasadena Financial 5,353,401 21,538,326 26,891,727 1,475,236
11581 Century Square 8,318,792 33,406,941 41,725,733 2,291,437
11591 Brea Corporate Plaza 2,958,418 9,019,582 11,978,000 629,423
11641 McKesson Building 5,159,033 14,133,084 19,292,117 920,467
11671 Arboretum Courtyard 5,718,678 25,883,116 31,601,794 --
11691 Brea Financial Commons (100) 2,844,943 8,083,631 10,928,575 545,550
11692 Brea Financial Commons (140) 2,409,582 6,649,465 9,059,046 397,915
11711 Sepulveda Center 5,046,469 21,247,265 26,293,734 1,295,223
11721 Brea Corporate Place (135) 425,083 21,980,925 22,406,008 1,324,116
11722 Brea Corporate Place (145) 445,271 19,493,067 19,938,338 1,196,564
11741 BPA - Land Site B (150) 1,517,805 14,916 1,532,720 --
11742 BPA - Land Sites G & H -- 722,052 722,052 --
11743 BPA - Land Site J -- 25,237 25,237 --
11744 BPA - Land Sites L & M -- 130,500 130,500 --
11781 790 Colorado 3,868,533 15,793,109 19,661,642 908,893
11791 Tower Seventeen 4,006,406 37,606,406 41,612,811 2,241,751
11811 Nobel Corporate Plaza 4,511,165 12,702,709 17,213,874 821,418
11821 Pacific Ridge Corporate Centre 3,873,656 12,251,018 16,124,674 75,087
11921 East Hills Office Park 2,166,615 7,447,139 9,613,754 316,320
11931 Stadium Towers Plaza 3,910,743 35,794,795 39,705,538 1,842,644
11932 Stadium Towers - Retail 867,429 349,600 1,217,029 --
11934 Stadium Towers Vacant Retail 409,368 -- 409,368 --
11941 Pacific Corporate Park 2,757,590 8,475,993 11,233,583 474,244
11951 Sorrento Tech I, II & III 2,686,323 7,318,385 10,004,707 380,384
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
11201 Stadium Plaza (Free Standing) 1996 3-40
11211 Sorrento Vista 1996 3-40
11221 Fairchild Corporate Center 1996 3-40
11271 One Pacific Plaza (Office) 1996 3-40
11272 One Pacific Plaza (Retail) 1996 3-40
11321 Corona Corporate Center 1996 3-40
11341 One Lakeshore Centre 1996 3-40
11351 Pacific View Plaza 1996 3-40
11371 Centerpark Plaza One 1997 3-40
11381 La Place Court 1997 3-40
11391 Carmel View Office Plaza 1997 3-40
11401 The City - 500 City Parkway 1996 3-40
11402 The City - 505 City Parkway 1996 3-40
11403 The City - 600 City Parkway 1996 3-40
11421 Centerpark Plaza Two (Ind) 1997 3-40
11431 Centerpark Plaza Two (Office) 1997 3-40
11451 Camino West 1997 3-40
11461 Western Metal Lath 1997 3-40
11481 Brea Park Centre - Bldg A 1997 3-40
11482 Brea Park Centre - Bldg. B 1997 3-40
11483 Brea Park Centre - Bldg. C 1997 3-40
11491 Bridge Pointe Corp. Centre I 1997 3-40
11492 Bridge Pointe Corp. Centre II 1997 3-40
11493 Bridge Pointe Corp. Centre III 1997 3-40
11501 The City - 3800 Chapman Blvd. 1996 3-40
11571 Pasadena Financial 1997 3-40
11581 Century Square 1997 3-40
11591 Brea Corporate Plaza 1997 3-40
11641 McKesson Building 1997 3-40
11671 Arboretum Courtyard 1997 3-40
11691 Brea Financial Commons (100) 1997 3-40
11692 Brea Financial Commons (140) 1997 3-40
11711 Sepulveda Center 1997 3-40
11721 Brea Corporate Place (135) 1997 3-40
11722 Brea Corporate Place (145) 1997 3-40
11741 BPA - Land Site B (150) 1997 3-40
11742 BPA - Land Sites G & H 1997 3-40
11743 BPA - Land Site J 1997 3-40
11744 BPA - Land Sites L & M 1997 3-40
11781 790 Colorado 1997 3-40
11791 Tower Seventeen 1997 3-40
11811 Nobel Corporate Plaza 1997 3-40
11821 Pacific Ridge Corporate Centre 1997 3-40
11921 East Hills Office Park 1997 3-40
11931 Stadium Towers Plaza 1997 3-40
11932 Stadium Towers - Retail 1997 3-40
11934 Stadium Towers Vacant Retail 1997 3-40
11941 Pacific Corporate Park 1997 3-40
11951 Sorrento Tech I, II & III 1997 3-40
</TABLE>
58
<PAGE> 59
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
11961 Westridge I San Diego, CA -- 1,712,464 4,652,442 --
11971 Centerpointe Irvine I Irvine, CA -- 1,292,562 3,512,219 128,350
11973 Centerpointe Irvine III Irvine, CA -- -- -- 11,121
12061 Park Plaza San Diego, CA -- 2,550,500 6,916,063 401,503
12071 La Jolla Centre I La Jolla, CA -- 2,958,803 26,758,880 672,347
12131 Stadium Towers II (Land) Anaheim, CA -- 2,087,266 1,340,459 --
12132 Stadium Towers II - PS2 Anaheim, CA -- 288,000 -- --
12141 East Hills Land Anaheim, CA -- 1,720,330 11,294 --
12151 Commerce Pointe Land Ontario, CA -- -- -- --
12181 11999 San Vicente Los Angeles, CA -- 3,391,136 9,200,378 537,378
12251 City Tower Orange, CA -- 6,617,782 59,562,582 1,744,508
12261 City Plaza Orange, CA -- 5,526,355 22,105,420 9,930,708
12271 Marina Business Center Bldg 1 Marina Del Rey, CA -- 7,731,927 20,904,840 492,051
12281 Marina Business Center Bldg 2 Marina Del Rey, CA -- -- -- 112,081
12282 Marina Business Center Bldg 3 Marina Del Rey, CA -- -- -- 412,065
12283 Marina Business Center Bldg 4 Marina Del Rey, CA -- -- -- 60,823
12291 Cerritos Towne Center I Cerritos, CA -- -- 6,535,981 359,315
12292 Cerritos Towne Center II Cerritos, CA -- -- 18,023,008 696,719
12293 Cerritos Towne Center III Cerritos, CA -- -- 18,161,432 591,816
12294 Cerritos Towne Center IV Cerritos, CA -- -- 11,486,424 5,603
12295 Cerritos Towne Center V Cerritos, CA -- -- 5,097,491 1,499,362
12296 Cerritos Towne Center Admin Cerritos, CA -- -- -- 1,578
12331 2600 Michelson Irvine, CA -- 5,800,810 52,213,830 1,702,027
12341 18581 Teller Irvine, CA -- 1,764,831 4,771,580 326,564
12351 SMBP 3420 Ocean Park Blvd Santa Monica, CA -- -- 94,075,974 918,736
12352 SMBP 3340 Ocean Park Blvd Santa Monica, CA -- -- -- 448,755
12353 SMBP 3350 Ocean Park Blvd Santa Monica, CA -- -- -- 221,294
12354 SMBP 3330 Ocean Park Blvd Santa Monica, CA -- -- -- 15,433
12356 SMBP 3250 Ocean Park Blvd Santa Monica, CA -- -- -- 190,711
12361 SMBP 3200 Ocean Park Blvd Santa Monica, CA -- -- -- 417,206
12362 SMBP 3150 Ocean Park Blvd Santa Monica, CA -- -- -- 31,373
12365 SMBP 3100 Ocean Park Blvd Santa Monica, CA -- -- -- 1,210,239
12366 SMBP 3000 Ocean Park Blvd Santa Monica, CA -- -- -- 182,888
12367 SMBP 2900 31st Street Santa Monica, CA -- -- -- 73,966
12368 SMBP 2950 31st Street Santa Monica, CA -- -- -- 590,426
12369 SMBP 2901 28th Street Santa Monica, CA -- -- -- 141,101
12371 SMBP 2850 Ocean Park Blvd Santa Monica, CA 8,444,640 4,710,231 12,735,067 955,924
12372 Santa Monica Bus. Park ADMIN Santa Monica, CA -- -- -- 2,337
12373 Santa Monica Admin II Santa Monica, CA -- -- -- 1,753,211
12431 California Federal Land Orange, CA -- 130,102 -- --
12441 City North Land Orange, CA -- 2,270,052 83,848 --
12451 City South Land Orange, CA -- 1,115,732 90,072 --
12461 Ontario Gateway I Ontario, CA -- 1,402,128 3,790,939 664,099
12501 Ontario Corporate Center Ontario, CA -- 2,097,546 8,390,436 364,854
12511 Carlsbad Centerpointe Carlsbad, CA -- 4,776,886 874,285 --
12551 Ontario Gateway II Ontario, CA -- 1,328,829 3,579,153 32,168
12581 Oakbrook Plaza Laguna Hills, CA -- 5,001,979 13,525,066 288,620
12591 Governor Executive Centre San Diego, CA -- 2,230,825 6,031,895 332,878
12611 Empire Corporate Center Ontario, CA -- 1,742,594 6,968,746 399,950
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
11961 Westridge I 1,712,464 4,652,442 6,364,906 242,448
11971 Centerpointe Irvine I 1,292,562 3,640,569 4,933,131 192,212
11973 Centerpointe Irvine III -- 11,121 11,121 4,170
12061 Park Plaza 2,550,500 7,317,566 9,868,066 439,060
12071 La Jolla Centre I 2,958,803 27,431,227 30,390,029 1,540,880
12131 Stadium Towers II (Land) 2,087,266 1,340,459 3,427,725 --
12132 Stadium Towers II - PS2 288,000 -- 288,000 --
12141 East Hills Land 1,720,330 11,294 1,731,624 --
12151 Commerce Pointe Land -- -- -- --
12181 11999 San Vicente 3,391,136 9,737,757 13,128,892 529,452
12251 City Tower 6,617,782 61,307,090 67,924,872 3,109,314
12261 City Plaza 5,526,355 32,036,128 37,562,483 1,448,368
12271 Marina Business Center Bldg 1 7,731,927 21,396,891 29,128,818 1,031,146
12281 Marina Business Center Bldg 2 -- 112,081 112,081 9,175
12282 Marina Business Center Bldg 3 -- 412,065 412,065 --
12283 Marina Business Center Bldg 4 -- 60,823 60,823 --
12291 Cerritos Towne Center I -- 6,895,296 6,895,296 341,735
12292 Cerritos Towne Center II -- 18,719,727 18,719,727 806,241
12293 Cerritos Towne Center III -- 18,753,247 18,753,247 747,874
12294 Cerritos Towne Center IV -- 11,492,027 11,492,027 310,876
12295 Cerritos Towne Center V -- 6,596,853 6,596,853 10,894
12296 Cerritos Towne Center Admin -- 1,578 1,578 --
12331 2600 Michelson 5,800,810 53,915,857 59,716,667 2,418,953
12341 18581 Teller 1,764,831 5,098,144 6,862,975 208,757
12351 SMBP 3420 Ocean Park Blvd -- 94,994,710 94,994,710 4,546,216
12352 SMBP 3340 Ocean Park Blvd -- 448,755 448,755 --
12353 SMBP 3350 Ocean Park Blvd -- 221,294 221,294 --
12354 SMBP 3330 Ocean Park Blvd -- 15,433 15,433 --
12356 SMBP 3250 Ocean Park Blvd -- 190,711 190,711 3,697
12361 SMBP 3200 Ocean Park Blvd -- 417,206 417,206 --
12362 SMBP 3150 Ocean Park Blvd -- 31,373 31,373 --
12365 SMBP 3100 Ocean Park Blvd -- 1,210,239 1,210,239 --
12366 SMBP 3000 Ocean Park Blvd -- 182,888 182,888 14,492
12367 SMBP 2900 31st Street -- 73,966 73,966 --
12368 SMBP 2950 31st Street -- 590,426 590,426 36,864
12369 SMBP 2901 28th Street -- 141,101 141,101 30,808
12371 SMBP 2850 Ocean Park Blvd 4,710,231 13,690,991 18,401,221 667,855
12372 Santa Monica Bus. Park ADMIN -- 2,337 2,337 --
12373 Santa Monica Admin II -- 1,753,211 1,753,211 --
12431 California Federal Land 130,102 -- 130,102 --
12441 City North Land 2,270,052 83,848 2,353,901 --
12451 City South Land 1,115,732 90,072 1,205,804 --
12461 Ontario Gateway I 1,402,128 4,455,037 5,857,165 228,007
12501 Ontario Corporate Center 2,097,546 8,755,289 10,852,835 426,713
12511 Carlsbad Centerpointe 4,776,886 874,285 5,651,171 --
12551 Ontario Gateway II 1,328,829 3,611,321 4,940,150 111,849
12581 Oakbrook Plaza 5,001,979 13,813,686 18,815,665 283,838
12591 Governor Executive Centre 2,230,825 6,364,773 8,595,598 87,965
12611 Empire Corporate Center 1,742,594 7,368,697 9,111,291 58,035
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
11961 Westridge I 1997 3-40
11971 Centerpointe Irvine I 1997 3-40
11973 Centerpointe Irvine III 1997 3-40
12061 Park Plaza 1997 3-40
12071 La Jolla Centre I 1997 3-40
12131 Stadium Towers II (Land) 1997 3-40
12132 Stadium Towers II - PS2 1997 3-40
12141 East Hills Land 1997 3-40
12151 Commerce Pointe Land 1997 3-40
12181 11999 San Vicente 1997 3-40
12251 City Tower 1998 3-40
12261 City Plaza 1998 3-40
12271 Marina Business Center Bldg 1 1998 3-40
12281 Marina Business Center Bldg 2 1998 3-40
12282 Marina Business Center Bldg 3 1998 3-40
12283 Marina Business Center Bldg 4 1998 3-40
12291 Cerritos Towne Center I 1998 3-40
12292 Cerritos Towne Center II 1998 3-40
12293 Cerritos Towne Center III 1998 3-40
12294 Cerritos Towne Center IV 1998 3-40
12295 Cerritos Towne Center V 1998 3-40
12296 Cerritos Towne Center Admin 1998 3-40
12331 2600 Michelson 1998 3-40
12341 18581 Teller 1998 3-40
12351 SMBP 3420 Ocean Park Blvd 1998 3-40
12352 SMBP 3340 Ocean Park Blvd 1998 3-40
12353 SMBP 3350 Ocean Park Blvd 1998 3-40
12354 SMBP 3330 Ocean Park Blvd 1998 3-40
12356 SMBP 3250 Ocean Park Blvd 1998 3-40
12361 SMBP 3200 Ocean Park Blvd 1998 3-40
12362 SMBP 3150 Ocean Park Blvd 1998 3-40
12365 SMBP 3100 Ocean Park Blvd 1998 3-40
12366 SMBP 3000 Ocean Park Blvd 1998 3-40
12367 SMBP 2900 31st Street 1998 3-40
12368 SMBP 2950 31st Street 1998 3-40
12369 SMBP 2901 28th Street 1998 3-40
12371 SMBP 2850 Ocean Park Blvd 1998 3-40
12372 Santa Monica Bus. Park ADMIN 1998 3-40
12373 Santa Monica Admin II 1998 3-40
12431 California Federal Land 1998 3-40
12441 City North Land 1998 3-40
12451 City South Land 1998 3-40
12461 Ontario Gateway I 1998 3-40
12501 Ontario Corporate Center 1998 3-40
12511 Carlsbad Centerpointe 1998 3-40
12551 Ontario Gateway II 1998 3-40
12581 Oakbrook Plaza 1999 3-40
12591 Governor Executive Centre 1999 3-40
12611 Empire Corporate Center 1999 3-40
</TABLE>
59
<PAGE> 60
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
12631 HighPark Executive Centre Mission Viejo, CA -- 5,154,169 165,501 --
---------- ----------- ------------- -----------
8,444,640 210,234,238 969,049,086 65,335,527
========== =========== ============= ===========
PACIFIC NORTHWEST
20011 Cascade Commerce Park Kent, WA -- 2,754,719 4,469,233 412,719
20021 Federal Way Office Building Fed Way, WA -- 297,202 765,990 182,405
20041 Bellevue Gateway I Bellevue, WA -- 4,203,004 10,623,529 1,050,322
20051 Bellevue Gateway II Bellevue, WA -- 1,723,224 6,430,022 612,871
20061 11040 Main Street Building Bellevue, WA -- 1,918,096 1,389,065 752,729
20071 Woodinville Corporate Center I Woodinville, WA -- 1,322,639 2,510,306 503,658
20121 City Commerce Park Seattle, WA -- 2,086,658 2,197,463 437,322
20161 Sea-Tac Industrial Park SeaTac, WA -- 1,953,528 4,865,408 153,675
20181 North Creek Parkway Centre Bothell, WA -- 6,186,779 16,551,463 397,808
20211 Bellefield Office Park Bellevue, WA -- 6,573,539 29,829,459 9,621,718
20221 Woodinville Corp Ctr III Bellevue, WA -- 2,588,694 4,693,458 3,088,429
20241 10700 Building Bellevue, WA -- 24,384 4,668,923 289,255
20261 Southcenter West Business Park Tukwila, WA -- -- 6,058,157 168,345
20271 Kirkland 118 Commerce Center Kirkland, WA -- 1,195,205 2,932,332 1,998,678
20281 ABAM Building Federal Way, WA -- 1,332,001 3,634,366 245,640
20311 Washington Park I Federal Way, WA -- 1,491,366 4,057,714 64,515
20312 Washington Park II Federal Way, WA -- 625,424 286,950 --
20321 Redmond Heights Tech Center Redmond, WA -- 3,136,545 9,324,393 173,152
20341 Southgate Office Plaza I Renton, WA -- 1,234,960 10,933,198 1,481,097
20342 Southgate Office Plaza II Renton, WA -- 1,678,521 15,172,632 407
20343 Southgate Office Plaza III Renton, WA -- 2,058,800 280,015 --
20351 Plaza Center Bellevue, WA -- 8,118,890 72,519,863 4,237,999
20352 US Bank Plaza Bellevue, WA -- -- -- 1,432,244
20353 Plaza Center Parking Garage Bellevue, WA -- -- -- 165,824
20371 Gateway 405 Bellevue, WA -- 1,331,101 3,592,591 167,809
20381 Eastgate Office Park Bellevue, WA -- 10,905,980 29,486,365 369,531
20391 Lincoln Executive Center I Bellevue, WA -- 4,316,873 11,671,545 --
20392 Lincoln Executive Center II Bellevue, WA -- 4,296,764 11,617,176 --
20393 Lincoln Executive Center III Bellevue, WA -- 3,619,398 9,785,781 --
20394 Lincoln Executive Center - A Bellevue, WA -- 985,537 2,664,600 --
20395 Lincoln Executive Center - B Bellevue, WA -- 1,171,990 3,168,713 --
30001 Park 217 Phase I Portland, OR -- 2,003,424 4,277,281 1,227,198
30011 Park 217 Phase II Portland, OR -- 713,478 2,430,579 627,830
30021 Park 217 Phase III Portland, OR -- 60,054 186,475 348,113
30022 Louis Building Portland, OR -- 42,162 416,818 11,747
30041 Swan Island Portland, OR 769,485 369,011 994,237 191,167
30051 Columbia Commerce Park Portland, OR -- 2,517,055 7,965,992 684,199
30071 Nelson Business Center Tigard, OR -- 4,167,647 8,044,405 1,421,482
30081 Southwest Commerce Center Portland, OR -- 614,545 1,736,624 362,280
30091 5550 Macadam Building Portland, OR -- 765,082 3,649,924 295,269
30101 Columbia Commerce Park IV Portland, OR -- 889,345 4,430,444 37,876
30111 River Forum I & II Portland, OR -- 2,462,767 16,637,177 1,186,476
30121 4000 Kruse Way Portland, OR -- 2,785,451 7,911,320 1,392,042
30131 4004 SW Kruse Way Place Lake Oswego, OR -- 981,486 4,012,304 1,430,555
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
12631 HighPark Executive Centre 5,154,169 165,501 5,319,669 --
----------- ------------- ------------- -----------
210,234,238 1,034,384,613 1,244,618,851 59,724,277
=========== ============= ============= ===========
PACIFIC NORTHWEST
20011 Cascade Commerce Park 2,754,719 4,881,952 7,636,671 --
20021 Federal Way Office Building 297,202 948,395 1,245,597 280,453
20041 Bellevue Gateway I 4,203,004 11,673,851 15,876,855 3,627,186
20051 Bellevue Gateway II 1,723,224 7,042,893 8,766,117 2,001,515
20061 11040 Main Street Building 1,918,096 2,141,794 4,059,890 604,279
20071 Woodinville Corporate Center I 1,322,639 3,013,964 4,336,603 --
20121 City Commerce Park 2,086,658 2,634,786 4,721,444 --
20161 Sea-Tac Industrial Park 1,953,528 5,019,083 6,972,611 --
20181 North Creek Parkway Centre 6,186,779 16,949,271 23,136,050 1,325,238
20211 Bellefield Office Park 6,573,539 39,451,177 46,024,716 4,145,512
20221 Woodinville Corp Ctr III 2,588,694 7,781,887 10,370,581 --
20241 10700 Building 24,384 4,958,178 4,982,562 579,073
20261 Southcenter West Business Park -- 6,226,502 6,226,502 --
20271 Kirkland 118 Commerce Center 1,195,205 4,931,010 6,126,215 423,800
20281 ABAM Building 1,332,001 3,880,006 5,212,007 201,276
20311 Washington Park I 1,491,366 4,122,229 5,613,595 241,176
20312 Washington Park II 625,424 286,950 912,374 --
20321 Redmond Heights Tech Center 3,136,545 9,497,545 12,634,090 550,483
20341 Southgate Office Plaza I 1,234,960 12,414,294 13,649,254 625,324
20342 Southgate Office Plaza II 1,678,521 15,173,039 16,851,560 851,475
20343 Southgate Office Plaza III 2,058,800 280,015 2,338,815 --
20351 Plaza Center 8,118,890 76,757,861 84,876,752 4,043,156
20352 US Bank Plaza -- 1,432,244 1,432,244 6,218
20353 Plaza Center Parking Garage -- 165,824 165,824 2,937
20371 Gateway 405 1,331,101 3,760,400 5,091,501 97,296
20381 Eastgate Office Park 10,905,980 29,855,896 40,761,876 625,550
20391 Lincoln Executive Center I 4,316,873 11,671,545 15,988,418 24,316
20392 Lincoln Executive Center II 4,296,764 11,617,176 15,913,939 24,202
20393 Lincoln Executive Center III 3,619,398 9,785,781 13,405,180 20,387
20394 Lincoln Executive Center - A 985,537 2,664,600 3,650,137 5,551
20395 Lincoln Executive Center - B 1,171,990 3,168,713 4,340,703 6,601
30001 Park 217 Phase I 2,003,424 5,504,479 7,507,903 2,164,374
30011 Park 217 Phase II 713,478 3,058,409 3,771,887 1,214,704
30021 Park 217 Phase III 60,054 534,587 594,641 77,964
30022 Louis Building 42,162 428,565 470,727 198,852
30041 Swan Island 369,011 1,185,404 1,554,415 496,286
30051 Columbia Commerce Park 2,517,055 8,650,192 11,167,247 2,284,793
30071 Nelson Business Center 4,167,647 9,465,887 13,633,534 2,155,151
30081 Southwest Commerce Center 614,545 2,098,904 2,713,449 680,509
30091 5550 Macadam Building 765,082 3,945,193 4,710,274 981,399
30101 Columbia Commerce Park IV 889,345 4,468,320 5,357,664 635,982
30111 River Forum I & II 2,462,767 17,823,653 20,286,420 2,713,586
30121 4000 Kruse Way 2,785,451 9,303,361 12,088,812 1,364,130
30131 4004 SW Kruse Way Place 981,486 5,442,859 6,424,344 1,111,386
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
12631 HighPark Executive Centre 1999 3-40
PACIFIC NORTHWEST
20011 Cascade Commerce Park 1989 3-40
20021 Federal Way Office Building 1989 3-40
20041 Bellevue Gateway I 1985 3-40
20051 Bellevue Gateway II 1988 3-40
20061 11040 Main Street Building 1990 3-40
20071 Woodinville Corporate Center I 1988 3-40
20121 City Commerce Park 1988 3-40
20161 Sea-Tac Industrial Park 1994 3-40
20181 North Creek Parkway Centre 1997 3-40
20211 Bellefield Office Park 1995 3-40
20221 Woodinville Corp Ctr III 1995 3-40
20241 10700 Building 1996 3-40
20261 Southcenter West Business Park 1997 3-40
20271 Kirkland 118 Commerce Center 1997 3-40
20281 ABAM Building 1997 3-40
20311 Washington Park I 1997 3-40
20312 Washington Park II 1997 3-40
20321 Redmond Heights Tech Center 1997 3-40
20341 Southgate Office Plaza I 1997 3-40
20342 Southgate Office Plaza II 1997 3-40
20343 Southgate Office Plaza III 1997 3-40
20351 Plaza Center 1997 3-40
20352 US Bank Plaza 1997 3-40
20353 Plaza Center Parking Garage 1997 3-40
20371 Gateway 405 1997 3-40
20381 Eastgate Office Park 1999 3-40
20391 Lincoln Executive Center I 1999 3-40
20392 Lincoln Executive Center II 1999 3-40
20393 Lincoln Executive Center III 1999 3-40
20394 Lincoln Executive Center - A 1999 3-40
20395 Lincoln Executive Center - B 1999 3-40
30001 Park 217 Phase I 1980 3-40
30011 Park 217 Phase II 1981 3-40
30021 Park 217 Phase III 1981 3-40
30022 Louis Building 1981 3-40
30041 Swan Island 1978 3-40
30051 Columbia Commerce Park 1988 3-40
30071 Nelson Business Center 1990 3-40
30081 Southwest Commerce Center 1989 3-40
30091 5550 Macadam Building 1990 3-40
30101 Columbia Commerce Park IV 1994 3-40
30111 River Forum I & II 1994 3-40
30121 4000 Kruse Way 1994 3-40
30131 4004 SW Kruse Way Place 1995 3-40
</TABLE>
60
<PAGE> 61
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COSTS
INITIAL COST CAPITALIZED
--------------------------- SUBSEQUENT
ENCUMB- BUILDING & TO
PROJECT LOCATION RANCES LAND IMPROVEMENTS ACQUISITION
------- -------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
30141 Marine Drive Distribution Ctr Portland, OR -- 1,166,743 3,509,787 1,519,766
30151 Marine Drive Distrib. Ctr II Portland, OR -- 622,307 1,958,595 519,262
30161 Airport Way Commerce Park Portland, OR -- 1,800,430 3,818,965 2,248,383
30162 Airport Way Commerce Park II Portland, OR -- 333,822 4,978 136,925
30171 4949 Meadows Building Lake Oswego, OR -- 2,661,561 11,341,806 3,140,142
30181 Marine Drive Distrib. Ctr III Portland, OR -- 1,760,241 4,483,043 1,926,941
30191 RiverSide Centre (Oregon) Portland, OR -- -- 9,310,826 294,456
30201 158th Commerce Park Portland, OR -- 2,871,441 7,550,234 6,023,983
30211 Nimbus Corp Ctr - Ph I,II,III Beaverton, OR -- 17,750,006 53,160,364 3,031,776
30212 Nimbus Corporate Center Ph IV Beaverton, OR -- -- -- 410,970
30213 Nimbus Corporate Center Ph V Beaverton, OR -- -- -- 137,538
30221 Parkway Industrial Wilsonville, OR -- 1,878,731 5,646,396 46,336
30231 Kelley Point Distribution Ctr Portland, OR -- 2,096,122 12,428,464 630,134
30232 Kelley Point Dist Ctr II Portland, OR -- 1,264,597 1,655,298 2,676
30233 Kelley Point Dist Ctr III Portland, OR -- 3,629,049 241,299 205,800
30241 One Pacific Square Portland, OR -- 3,612,427 30,932,911 741,874
30251 Wilsonville Business Ctr I Wilsonville, OR -- 7,376,850 19,747,622 266,568
30252 Wilsonville Business Ctr II Wilsonville, OR -- -- -- 92,712
30253 Wilsonville Business Ctr III Wilsonville, OR -- -- -- 192,653
30254 Wilsonville Business Ctr IV Wilsonville, OR -- -- -- 357,047
30255 Wilsonville Land Wilsonville, OR -- 3,007,221 93,494 --
30261 Kruseway Plaza I Lake Oswego, OR -- 2,077,892 5,618,754 402,606
30262 Kruseway Plaza II Lake Oswego, OR -- 2,062,788 5,576,918 311,757
30271 Kruse Woods I Lake Oswego, OR -- 5,140,818 13,877,631 667,382
30272 Kruse Woods II Lake Oswego, OR -- 5,300,771 14,311,996 2,021,762
30273 Kruse Woods III Lake Oswego, OR -- 4,021,541 10,282,177 210,987
30274 Kruse Woods IV Lake Oswego, OR -- 3,860,963 10,434,899 61,619
30275 4900 Meadows Lake Oswego, OR -- 2,536,740 6,270,698 717,541
30276 5000 Meadows Lake Oswego, OR -- 3,810,198 9,449,111 128,549
30277 Kruse Woods V Lake Oswego, OR -- 4,611,862 2,399,240 --
30281 4800 Meadows Lake Oswego, OR -- 1,838,615 9,046,331 1,352,258
30291 Kruse Oaks Phase I Lake Oswego, OR -- 3,241,670 2,093,966 --
30292 Kruse Oaks Phase II Lake Oswego, OR -- 3,963,357 586,898 --
30293 Kruse Oaks Phase III Lake Oswego, OR -- 3,702,880 582,465 --
30294 Kruse Oaks Phase IV Lake Oswego, OR -- 2,317,382 464,598 --
30301 Benjamin Franklin Plaza Portland, OR -- 5,009,308 45,084,342 1,947,120
30311 181st Commerce Park Gresham, OR -- 7,582,642 979,192 --
40001 Key Financial Center Boise, ID -- 243,210 2,885,062 5,313,078
40011 Cole Road Warehouse Boise, ID -- 114,465 449,049 388,441
---------- ----------- ------------- -----------
Total 769,485 210,771,974 655,151,700 72,673,428
========== =========== ============= ===========
Grand Total 97,330,529 923,161,693 3,162,337,589 300,049,955
========== =========== ============= ===========
<CAPTION>
GROSS AMOUNTS AT WHICH CARRIED
AT CLOSE OF PERIOD
-------------------------------------------
BUILDING & ACCUMULATED
PROJECT LAND IMPROVEMENTS TOTAL DEPRECIATION
------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
30141 Marine Drive Distribution Ctr 1,166,743 5,029,553 6,196,296 977,362
30151 Marine Drive Distrib. Ctr II 622,307 2,477,857 3,100,164 231,277
30161 Airport Way Commerce Park 1,800,430 6,067,349 7,867,778 1,046,784
30162 Airport Way Commerce Park II 333,822 141,904 475,726 --
30171 4949 Meadows Building 2,661,561 14,481,948 17,143,509 1,236,418
30181 Marine Drive Distrib. Ctr III 1,760,241 6,409,984 8,170,225 694,853
30191 RiverSide Centre (Oregon) -- 9,605,283 9,605,283 686,623
30201 158th Commerce Park 2,871,441 13,574,217 16,445,657 1,089,419
30211 Nimbus Corp Ctr - Ph I,II,III 17,750,006 56,192,140 73,942,145 3,555,278
30212 Nimbus Corporate Center Ph IV -- 410,970 410,970 171,451
30213 Nimbus Corporate Center Ph V -- 137,538 137,538 22,745
30221 Parkway Industrial 1,878,731 5,692,732 7,571,463 346,392
30231 Kelley Point Distribution Ctr 2,096,122 13,058,597 15,154,719 862,229
30232 Kelley Point Dist Ctr II 1,264,597 1,657,974 2,922,571 --
30233 Kelley Point Dist Ctr III 3,629,049 447,099 4,076,147 2,573
30241 One Pacific Square 3,612,427 31,674,784 35,287,211 --
30251 Wilsonville Business Ctr I 7,376,850 20,014,190 27,391,040 1,110,627
30252 Wilsonville Business Ctr II -- 92,712 92,712 18,814
30253 Wilsonville Business Ctr III -- 192,653 192,653 47,077
30254 Wilsonville Business Ctr IV -- 357,047 357,047 67,073
30255 Wilsonville Land 3,007,221 93,494 3,100,715 --
30261 Kruseway Plaza I 2,077,892 6,021,360 8,099,252 352,391
30262 Kruseway Plaza II 2,062,788 5,888,676 7,951,464 319,125
30271 Kruse Woods I 5,140,818 14,545,013 19,685,831 776,748
30272 Kruse Woods II 5,300,771 16,333,758 21,634,530 853,174
30273 Kruse Woods III 4,021,541 10,493,164 14,514,705 613,923
30274 Kruse Woods IV 3,860,963 10,496,518 14,357,481 544,866
30275 4900 Meadows 2,536,740 6,988,239 9,524,979 381,806
30276 5000 Meadows 3,810,198 9,577,660 13,387,859 521,475
30277 Kruse Woods V 4,611,862 2,399,240 7,011,102 --
30281 4800 Meadows 1,838,615 10,398,589 12,237,204 368,912
30291 Kruse Oaks Phase I 3,241,670 2,093,966 5,335,636 --
30292 Kruse Oaks Phase II 3,963,357 586,898 4,550,255 --
30293 Kruse Oaks Phase III 3,702,880 582,465 4,285,345 --
30294 Kruse Oaks Phase IV 2,317,382 464,598 2,781,980 --
30301 Benjamin Franklin Plaza 5,009,308 47,031,462 52,040,771 2,163,020
30311 181st Commerce Park 7,582,642 979,192 8,561,834 --
40001 Key Financial Center 243,210 8,198,140 8,441,351 3,185,779
40011 Cole Road Warehouse 114,465 837,490 951,954 315,432
----------- ------------- ------------- -----------
210,771,974 727,825,127 938,597,102 58,955,770
=========== ============= ============= ===========
923,161,693 3,462,387,544 4,385,549,237 316,239,519
=========== ============= ============= ===========
<CAPTION>
DATE OF DEPREC-
CONST- IABLE
RUCTION/ LIVES
PROJECT ACQUIRED (YEARS)
------- -------- -------
<S> <C> <C>
30141 Marine Drive Distribution Ctr 1995 3-40
30151 Marine Drive Distrib. Ctr II 1996 3-40
30161 Airport Way Commerce Park 1996 3-40
30162 Airport Way Commerce Park II 1996 3-40
30171 4949 Meadows Building 1996 3-40
30181 Marine Drive Distrib. Ctr III 1996 3-40
30191 RiverSide Centre (Oregon) 1997 3-40
30201 158th Commerce Park 1997 3-40
30211 Nimbus Corp Ctr - Ph I,II,III 1997 3-40
30212 Nimbus Corporate Center Ph IV 1997 3-40
30213 Nimbus Corporate Center Ph V 1997 3-40
30221 Parkway Industrial 1997 3-40
30231 Kelley Point Distribution Ctr 1997 3-40
30232 Kelley Point Dist Ctr II 1999 3-40
30233 Kelley Point Dist Ctr III 1999 3-40
30241 One Pacific Square 1997 3-40
30251 Wilsonville Business Ctr I 1997 3-40
30252 Wilsonville Business Ctr II 1997 3-40
30253 Wilsonville Business Ctr III 1997 3-40
30254 Wilsonville Business Ctr IV 1997 3-40
30255 Wilsonville Land 1997 3-40
30261 Kruseway Plaza I 1997 3-40
30262 Kruseway Plaza II 1997 3-40
30271 Kruse Woods I 1997 3-40
30272 Kruse Woods II 1997 3-40
30273 Kruse Woods III 1997 3-40
30274 Kruse Woods IV 1997 3-40
30275 4900 Meadows 1997 3-40
30276 5000 Meadows 1997 3-40
30277 Kruse Woods V 1997 3-40
30281 4800 Meadows 1997 3-40
30291 Kruse Oaks Phase I 1998 3-40
30292 Kruse Oaks Phase II 1998 3-40
30293 Kruse Oaks Phase III 1998 3-40
30294 Kruse Oaks Phase IV 1998 3-40
30301 Benjamin Franklin Plaza 1998 3-40
30311 181st Commerce Park 1998 3-40
40001 Key Financial Center 1977 3-40
40011 Cole Road Warehouse 1976 3-40
</TABLE>
61
<PAGE> 62
REAL ESTATE AND ACCUMULATED DEPRECIATION SUMMARY
A summary of activity for real estate and accumulated depreciation is as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
REAL ESTATE:
Balance at beginning of year $ 4,154,737 $ 2,980,897 $ 1,352,246
Acquisition of properties and limited
partners' interest 359,827 1,141,633 1,526,012
Improvements 191,407 137,659 127,889
Cost of real estate disposed of (141,828) (18,549) (15,804)
Property held for disposition (172,770) (75,556) (6,250)
Disposition of and write-off of fully
depreciated property (5,824) (11,347) (3,196)
----------- ----------- -----------
Balance at end of year $ 4,385,549 $ 4,154,737 $ 2,980,897
=========== =========== ===========
ACCUMULATED DEPRECIATION:
Balance at beginning of year $ 240,778 $ 169,051 $ 127,701
Depreciation expense 101,636 87,638 48,536
Disposal of property (2,626) (2,152) (3,834)
Property held for disposition (17,724) (2,412) (156)
Disposition of and write-off of fully
depreciated property (5,824) (11,347) (3,196)
----------- ----------- -----------
Balance at end of year $ 316,240 $ 240,778 $ 169,051
=========== =========== ===========
</TABLE>
The aggregate cost for federal income tax purposes of real estate as of
December 31, 1999, was $3,874,999.
62
<PAGE> 63
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPIEKER PROPERTIES, L.P. (Registrant)
Dated: March 17, 2000 /s/ Warren E. Spieker, Jr.
---------------------------------------
Warren E. Spieker, Jr.
Chairman of the Board
Dated: March 17, 2000 /s/ Dennis E. Singleton
---------------------------------------
Dennis E. Singleton
Vice Chairman of the Board
Dated: March 17, 2000 /s/ John K. French
---------------------------------------
John K. French
Vice Chairman of the Board
Dated: March 17, 2000 /s/ John A. Foster
---------------------------------------
John A. Foster
Co-Chief Executive Officer
Dated: March 17, 2000 /s/ Craig G. Vought
---------------------------------------
Craig G. Vought
Co-Chief Executive Officer
Dated: March 17, 2000 /s/ Stuart A. Rothstein
---------------------------------------
Stuart A. Rothstein
Chief Financial Officer
Dated: March 17, 2000 /s/ Harold M. Messmer
---------------------------------------
Harold M. Messmer
Director
Dated: March 17, 2000 /s/ Elke Strunka
---------------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
63
<PAGE> 64
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in Menlo Park, California
on the 14th day of March, 2000.
SPIEKER PROPERTIES, L.P.
By: /s/ Elke Strunka
------------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
64
<PAGE> 65
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
===============================================================================
<S> <C>
3.1 Articles of Incorporation of Spieker Properties, Inc. (1)
3.1A Articles of Amendment of Spieker Properties, Inc. (incorporated by
reference to Exhibit 3.1A to Spieker Properties, Inc.'s Report on Form
10-K for the year ended December 31, 1996)
3.2 Amended and Restated Bylaws of Spieker Properties, Inc.
3.3 Articles Supplementary of Spieker Properties, Inc. for the Series A
Preferred Stock (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended March 31,
1994)
3.4 Articles Supplementary of Spieker Properties, Inc. for the Class B
Common Stock (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended March 31,
1995)
3.5 Articles Supplementary of Spieker Properties, Inc. for the Series B
Preferred Stock (2)
3.6 Articles Supplementary of Spieker Properties, Inc. for the Class C
Common Stock (2)
3.7 Articles Supplementary of Spieker Properties, Inc. for the Series C
Preferred Stock (incorporated by reference to Exhibit 3.1 to Spieker
Properties, Inc.'s Report on Form 10-Q for the quarter ended September
30, 1997)
3.8 Articles Supplementary of Spieker Properties, Inc. for the Series D
Preferred Stock (incorporated by reference to Exhibit 3.8 to Spieker
Properties, Inc.'s Annual Report on the Form 10-K for the year ended
December 31, 1998).
3.9 Articles Supplementary of Spieker Properties, L.P. for the Series E
Preferred Stock (incorporated by reference to Exhibit 3.1 to Spieker
Properties, Inc.'s Report on Form 8-K dated June 4, 1998)
3.10 Rights agreement, which includes as Exhibit A the Form of Rights
Certificate and Election to Exercise and as Exhibit B the Form of
Articles Supplementary (incorporated by reference to Exhibit 4 to
Spieker Properties, Inc.'s Report on Form 8-K dated September 22, 1998)
4.1 Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K (1)
4.2 Intentionally omitted
4.3 Series A Preferred Stock Purchase Agreement, ( incorporated by reference
to Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q Report for the
quarter ended March 31, 1994)
4.4 Investor Rights Agreement relating to A Series Preferred Stock
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)
4.5 Indenture dated as December 6, 1995, among Spieker Properties, Inc.,
Spieker Properties, Inc. and State Bank and Trust, as Trustee (2)
4.6 First Supplemental Indenture relating to the 2000 Notes, the 2000 Note
and Guarantee (2)
4.7 Second Supplemental Indenture relating to the 2001 Notes, the 2001 Note
and Guarantee (2)
4.8 Third Supplemental Indenture relating to the 2002 Notes, the 2002 Note
and Guarantee (2)
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
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<S> <C>
4.9 Fourth Supplemental Indenture relating to the 2004 Notes and the 2004
Note (2)
4.10 Class B Common Stock Purchase Agreement (incorporated by reference to
Exhibit 4.1 to Spieker Properties, Inc.'s Form 10-Q Report for the
quarter ended March 31, 1994)
4.11 Investor's Rights Agreement relating to Class B Common Stocks
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)
4.12 Class C Common Stock Purchase Agreement (2)
4.13 Investor's Rights Agreement relating to Class C Common Stock (2)
4.14 Fifth Supplemental Indenture relating to the Medium Term Note Program
and Forms of Medium Term Notes (incorporated by reference to Exhibit 4.1
to Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)
4.15 Sixth Supplemental Indenture relating to the 7 1/8% Notes Due 2006
(incorporated by reference to Exhibit 4.1 of Spieker Properties, Inc.'s
Current Report on Form 8-K filed with the Commission on December 19,
1996)
4.16 Seventh Supplemental Indenture relating to the 7 7/8% Notes Due 2016
(incorporated by reference to Exhibit 4.2 of Spieker Properties, Inc.'s
Current Report on Form 8-K filed with the Commission on December 19,
1996)
4.17 Eighth Supplemental Indenture relating to the 7.125% Notes Due 2009
(incorporated by reference to Exhibit 4.9 of Spieker Properties, Inc.'s
Registration statement on Form S-3 (File No. 333-35997))
4.18 Ninth Supplemental Indenture relating to the 7.50% Debentures Due 2027
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Report on Form 10-Q for the quarter ended September 30, 1997)
4.19 Tenth Supplemental Indenture relating to the 7.35% Debentures Due 2017
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.20 Eleventh Supplemental Indenture relating to the 6.75% Notes Due 2008
(incorporated by reference to Exhibit 4.2 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.21 Twelfth Supplemental Indenture relating to the 6.875% Notes Due 2006
(incorporated by reference to Exhibit 4.3 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.22 Thirteenth Supplemental Indenture relating to the 7% Notes Due 2007
(incorporated by reference to Exhibit 4.1 Spieker Properties, Inc.'s
Current Report on Form 8-K dated January 30, 1998)
4.23 Fourteenth Supplemental Indenture relating to the 6.88% Notes due 2007
(incorporated by reference to Exhibit 4.15 to Spieker Properties, Inc.
Registration Statement on Form S-3 (File No. 333-51269))
4.24 Fifteenth Supplemental Indenture relating to the 6.8% Notes Due 2004 and
the 7.25% Notes due 2009 (incorporated by reference to Exhibit 4.1
Spieker Properties, Inc.'s Current Report on Form 8-K dated May 11,
1999)
10.1 Second Amendment and Restated Agreement of Limited Partnership of
Spieker Properties, Inc. (incorporated by reference to Exhibit 10.1
Spieker Properties, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1997)
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
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<S> <C>
10.2 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 10.2 Spieker Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1997)
10.3 Credit Agreement among Spieker Properties, Inc., as borrower, Wells
Fargo Bank, as Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and the lenders named therein, dated as of August
8, 1997, and Loan Notes pursuant to such Credit Agreement (incorporated
by reference to Exhibit 10.16 to Spieker Properties, Inc.'s Current
Report on Form 8-K dated September 22, 1997)
10.4* Form of Employment Agreement between the Operating Partnership and each
of Warren E. Spieker, Jr., John K. French, Bruce E. Hosford, and Dennis
E. Singleton (2)
10.5* Form of Spieker Merit Plan (1)
10.6* Amended and Restated Spieker Properties, Inc. 1993 Stock Incentive Plan
(incorporated by reference to Exhibit 4.3 to Spieker Properties, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996)
10.7 Form to Indemnification Agreement between Spieker Properties, Inc. and
its directors and officers (incorporated by reference to Exhibit 10.21
to Spieker Properties, Inc.'s Registration Statement on Form S-11 (File
No. 33-67906))
10.8 Form of Land Holding Agreement among Spieker Properties, Inc., Spieker
Northwest, Inc., Spieker Properties, L.P. and owner of the applicable
Land Holding (incorporated by reference to Exhibit 10.22 to Spieker
Properties, Inc.'s Registration Statement on Form S-11 (File No.
33-67906))
10.9* Form of Employee Stock Incentive Pool (incorporated by reference to
Exhibit 10.35 to Spieker Properties, Inc.'s Registration Statement on
Form S-11 (File No. 33-67906))
10.10 Form of Excluded Property Agreement between the Operating Partnership
and certain of the Senior Officers (incorporated by reference to Exhibit
10.36 to Spieker Properties, Inc.'s Registration Statement on Form S-11
(File No. 33-67906))
10.11* Amended and Restated Spieker Properties, Inc. 1993 Directors' Stock
Option Plan (incorporated by reference to Exhibit 4.2 to Spieker
Properties, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996)
10.12 Second Amendment to Second Amended and Restated Agreement of United
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 3.1 to Spieker Properties, Inc.'s Report on Form -Q/A for the
quarterly period ended June 30, 1998)
10.13 Third Amendment to Second Amended and Restated Agreement to Limited
Partnership of Spieker Properties, Inc. (incorporated by reference to
Exhibit 10.13 Spieker Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998)
21.1 List of Subsidiaries of Spieker Properties, Inc. (incorporated by
reference to Exhibit 21.1 Spieker Properties, Inc. Annual Report on Form
10-K for the year ended December 31, 1997)
23.1 Consent of Independent Public Accountants (filed herewith)
27.1 Article 5 Financial Data Schedule (Edgar Filing Only)
</TABLE>
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* Indicates management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Registration Statement on Form S-11 (Registration
No. 33-67906), which became effective November 10, 1993.
(2) Incorporated by reference to the identically numbered exhibit to the
Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1995.
<PAGE> 1
EXHIBIT 3.2
SPIEKER PROPERTIES, INC.
BYLAWS
(AS AMENDED AND RESTATED THROUGH MARCH 8, 2000)
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETING. The Corporation shall hold an annual meeting of
its stockholders to elect directors and transact any other business within its
powers, either at 10:00 a.m. on the last Thursday of May in each year if not a
legal holiday, or at such other time on such other day falling on or before the
30th day thereafter as shall be set by the Board of Directors. Except as the
Charter or statute provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having been specified in the
notice. Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
SECTION 1.02. SPECIAL MEETING. At any time in the interval between annual
meetings, a special meeting of the stockholders may be called by the Chairman of
the Board or the President or by a majority of the Board of Directors by vote at
a meeting or in writing (addressed to the Secretary of the Corporation) with or
without a meeting. Subject to the procedures set forth in Section 1.11 and this
Section, special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders
entitled to cast at least a majority of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. The
Board of Directors shall have sole power to fix the date and time of the special
meeting.
SECTION 1.03. PLACE OF MEETINGS. Unless the Charter provides otherwise, meetings
of stockholders shall be held at such place as is set from time to time by the
Board of Directors.
SECTION 1.04. NOTICE OF MEETINGS; WAIVER OF NOTICE. Not less than ten nor more
than 90 days before each stockholders' meeting, the Secretary shall give written
notice of the meeting to each stockholder entitled to vote at the meeting and
each other stockholder entitled to notice of the meeting. The notice shall state
the time and place of the meeting and, if the meeting is a special meeting or
notice of the purpose is required by statute, the purpose of the meeting. Notice
is given to a stockholder when it is personally delivered to him or her, left at
his or her residence or usual place of business, or mailed to him or her at his
or her address as it appears on the records of the Corporation or transmitted to
the stockholder by electronic mail to any electronic mail address of the
stockholder or by any other electronic means. Notwithstanding the foregoing
provisions, each person who is entitled to notice waives notice if he or she
before or after the meeting signs a waiver of the notice which is filed with the
records of stockholders' meetings, or is present at the meeting in person or by
proxy.
SECTION 1.05. QUORUM; VOTING. Unless any statute or the Charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the meeting constitutes a quorum, and a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes cast
at a meeting at which a quorum is present is sufficient to elect a director.
SECTION 1.06. ADJOURNMENTS. Whether or not a quorum is present, a meeting of
stockholders convened on the date for which it was called may be adjourned from
time to time without further notice by a majority vote of the stockholders
present in person or by proxy to a date not more than 120 days after the
original record date. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
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<PAGE> 2
SECTION 1.07. GENERAL RIGHT TO VOTE; PROXIES. Unless the Charter provides for a
greater or lesser number of votes per share or limits or denies voting rights,
each outstanding share of stock, regardless of class, is entitled to one vote on
each matter submitted to a vote at a meeting of stockholders; however, a share
is not entitled to be voted if any installment payable on it is overdue and
unpaid. In all elections for directors, each share of stock may be voted for as
many individuals as there are directors to be elected and for whose election the
share is entitled to be voted. A stockholder may vote the stock the stockholder
owns of record either in person or by proxy. A stockholder may sign a writing
authorizing another person to act as proxy. Signing may be accomplished by the
stockholder or the stockholder's authorized agent signing the writing or causing
the stockholder's signature to be affixed to the writing by any reasonable
means, including facsimile signature. A stockholder may authorize another person
to act as proxy by transmitting, or authorizing the transmission of, an
authorization by a telegram, cablegram, datagram, electronic mail or any other
electronic or telephonic means to the person authorized to act as proxy or to
any other person authorized to receive the proxy authorization on behalf of the
person authorized to act as the proxy, including a proxy solicitation firm or
proxy support service organization. Unless a proxy provides otherwise, it is not
valid more than 11 months after its date. A proxy is revocable by a stockholder
at any time without condition or qualification unless the proxy states that it
is irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
SECTION 1.08. LIST OF STOCKHOLDERS. At each meeting of stockholders, a full,
true and complete list of all stockholders entitled to vote at such meeting,
showing the number and class of shares held by each and certified by the
transfer agent for such class or by the Secretary, shall be furnished by the
Secretary.
SECTION 1.09. CONDUCT OF BUSINESS. Nominations of persons for election to the
Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation (i) who was a stockholder
of record at the time of giving notice(s) provided for in Section 1.11 and
Section 1.12, (ii) who is entitled to vote at the meeting and (iii) who complied
with the notice(s) procedures set forth in Section 1.11 and Section 1.12.
Nominations of persons for election to the Board of Directors and the proposal
of business to be considered by the stockholders may be made at a special
meeting of stockholders (a) only pursuant to the Corporation's notice of meeting
and (b), in the case of nominations of persons for election to the Board of
Directors, (i) by or at the direction of the Board of Directors or (ii) by any
stockholder of the Corporation (A) who was a stockholder of record at the time
of giving notice provided for in Section 1.11, (B) who is entitled to vote at
the meeting and (C) who complied with the notice procedures set forth in Section
1.11. The chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in Section 1.11, Section
1.12 and this Section and, if any proposed nomination or business is not in
compliance with Section 1.11, Section 1.12 and this Section, to declare that
such defective nomination or proposal be disregarded.
SECTION 1.10. CONDUCT OF VOTING. At all meetings of stockholders, unless the
voting is conducted by inspectors, the proxies and ballots shall be received,
and all questions touching the qualification of voters and the validity of
proxies, the acceptance or rejection of votes and procedures for the conduct of
business not otherwise specified by these Bylaws, the Charter or law, shall be
decided or determined by the chairman of the meeting. If demanded by
stockholders, present in person or by proxy, entitled to cast 10% in number of
votes entitled to be cast, or if ordered by the chairman of the meeting, the
vote upon any election or question shall be taken by ballot. Before any meeting
of the stockholders, the Board of Directors may appoint persons to act as
inspectors of election at the meeting and any adjournment thereof. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of stockholders, present in person or by proxy, entitled to cast 10%
in number of votes entitled to be cast, shall, appoint inspectors of election at
the meeting. The number of inspectors shall be either one or three. If
inspectors are appointed at a meeting on the request of stockholders, the
holders of a majority of shares present in person or by proxy shall determine
whether one or three inspectors are to be appointed. No candidate for election
as a director at a meeting shall serve as an inspector thereat. If any person
appointed as inspector fails to appear or fails or refuses to act, the chairman
of the meeting may, and upon the request of any stockholder shall, appoint a
person to fill that vacancy. The inspectors shall determine the number of shares
outstanding and the voting power of each,
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<PAGE> 3
the shares represented at the meeting, the existence of a quorum, and the
authenticity, validity and effect of proxies; receive votes, ballots or
consents; hear and determine all challenges and questions in any way arising in
connection with the right to vote; count and tabulate all votes or consents;
determine when polls shall close; determine the result; and do any other acts
that may be proper to conduct the election or vote with fairness to all
stockholders. Unless so demanded or ordered, no vote need be by ballot and
voting need not be conducted by inspectors.
SECTION 1.11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS. Only persons
who are nominated in accordance with the following procedures shall be eligible
for election as directors of the Corporation. Nominations of persons for
election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section and on the record date for the determination
of stockholders entitled to vote at such meeting and (ii) who complies with the
notice procedures set forth in this Section. A stockholder's notice must be
delivered to or mailed and received by the Secretary at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
60 days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder must be so delivered not
earlier than the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of such
meeting is first made; and (b) in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close of
business on the tenth day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of the special
meeting was made, whichever first occurs. A stockholder's notice to the
Secretary must be in writing and set forth (a) as to each person whom the
stockholder proposes to nominate for election as a director, all information
relating to such person that is required to be disclosed in connection with
solicitations of proxies for election of directors pursuant to Regulation 14A of
the Exchange Act, and the rules and regulations promulgated thereunder; and (b)
as to the stockholder giving the notice (i) the name and address of such
stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the nomination is made, (ii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iii) a
description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Regulation 14A of
the Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed nominee to be
named as a nominee and to serve as a director if elected. No person shall be
eligible for election as a director of the Corporation unless nominated in
accordance with the procedures set forth in this Section. If the chairman of the
meeting determines that a nomination was not made in accordance with the
foregoing procedures, the chairman of the meeting shall declare to the meeting
that the nomination was defective and such defective nomination shall be
disregarded. No adjournment or postponement of a meeting of stockholders shall
commence a new period for the giving of notice of a stockholder proposal
hereunder.
SECTION 1.12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT ANNUAL
MEETING. No business may be transacted at an annual meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (c) otherwise properly brought before
the annual meeting by any stockholder of the Corporation (i) who is stockholder
of record on the date of the giving of the notice provided for in this Section
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section. A stockholder's notice must be delivered to or mailed and
received by the Secretary at the principal executive offices of the Corporation
not less than 60 days nor more than 90 days prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced by more than 30 days or delayed by
more
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<PAGE> 4
than 60 days from such anniversary date, notice by the stockholder must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. A stockholder's notice to the
Secretary must in writing and set forth as to each matter such stockholder
proposes to bring before the annual meeting (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address of
such stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting. No business shall be conducted at the annual
meeting of stockholders except business brought before the annual meeting in
accordance with the procedures set forth in Section 1.11 or in this Section,
provided, however, that once business has been properly brought before the
annual meeting in accordance with such procedures, nothing in Section 1.11 nor
in this Section shall be deemed to preclude discussion by any stockholder of any
such business. If the chairman of an annual meeting determines that business was
not properly brought before the annual meeting in accordance with the foregoing
procedures, the chairman of the meeting shall declare to the meeting that the
business was not properly brought before the meeting and such business shall not
be transacted. No adjournment or postponement of a meeting of stockholders shall
commence a new period for the giving of notice of a stockholder proposal
hereunder.
SECTION 1.13. INFORMAL ACTION BY STOCKHOLDERS. Any action required or permitted
to be taken at a meeting of stockholders may be taken without a meeting if there
is filed with the records of stockholders meetings an unanimous written consent
which sets forth the action and is signed by each stockholder entitled to vote
on the matter and a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote at it.
SECTION 1.14. MEETING BY CONFERENCE TELEPHONE. Stockholders may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means constitutes presence in person
at a meeting.
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ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. FUNCTION OF DIRECTORS. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors. All powers of
the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or Bylaws.
SECTION 2.02. NUMBER OF DIRECTORS. The Corporation shall have at least three
directors; provided that, if there is no stock outstanding, the number of
directors may be less than three but not less than one, and, if there is stock
outstanding and so long as there are less than three stockholders, the number of
directors may be less than three but not less than the number of stockholders.
The Corporation shall have the number of directors provided in the Charter until
changed as herein provided. Two-thirds of the entire Board of Directors may
alter the number of directors set by the Charter to not exceeding 25 nor less
than the minimum number then permitted herein, but the action may not affect the
tenure of office of any director.
SECTION 2.03. ELECTION AND TENURE OF DIRECTORS. The directors shall be divided
into three classes as nearly equal in number as possible. At each successive
annual meeting of stockholders, the holders of stock present in person or by
proxy at such meeting and entitled to vote thereat shall elect members of each
successive class to serve for three year terms and until their successors are
elected and qualify. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional director
of any class shall, subject to Section 2.05, hold office for a term that shall
coincide with the remaining term of that class, but in no case shall a decrease
in the number of directors shorten the term of any incumbent director.
SECTION 2.04. REMOVAL OF DIRECTOR. Any director or the entire Board of Directors
may be removed only in accordance with the provisions of the Charter. For
purposes of the foregoing, "cause," shall mean only (i) conviction of a felony,
(ii) declaration of unsound mind by order of a court, (iii) gross dereliction of
duty, (iv) conviction of any act involving moral turpitude or (v) commission of
an act that constitutes intentional misconduct or a knowing violation of law if
such action in either event results both in an improper substantial personal
benefit to the director and in a material injury to the Corporation.
SECTION 2.05. VACANCY ON BOARD OF DIRECTORS. Subject to the rights of the
holders of any class or series of stock separately entitled to elect one or more
directors, the stockholders may elect a successor to fill a vacancy on the Board
of Directors which results from the removal of a director. A director elected by
the stockholders to fill a vacancy which results from the removal of a director
serves for the balance of the term of the removed director. Subject to the
rights of the holders of any class of stock separately entitled to elect one or
more directors, a majority of the remaining directors, whether or not sufficient
to constitute a quorum, may fill a vacancy on the Board of Directors which
results from any cause except an increase in the number of directors, and a
majority of the entire Board of Directors may fill a vacancy which results from
an increase in the number of directors. A director elected by the Board of
Directors to fill a vacancy serves until the next annual meeting of stockholders
and until his or her successor is elected and qualifies.
SECTION 2.06. REGULAR MEETINGS. After each meeting of stockholders at which
directors shall have been elected, the Board of Directors shall meet as soon
thereafter as practicable for the purpose of organization and the transaction of
other business. In the event that no other time and place are specified by
resolution of the Board of Directors or announced by the President or the
Chairman of the Board at such stockholders meeting, the Board of Directors shall
meet immediately following the close of, and at the place of, such stockholders
meeting. Any other regular meeting of the Board of Directors shall be held on
such date and time and at such place as may be designated from time to time by
the Board of Directors. No notice of such meeting following a stockholders
meeting or any other regular meeting shall be necessary if held as hereinabove
provided.
SECTION 2.07. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board or the President or by a
majority of the Board of Directors by vote at a meeting, or in writing
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with or without a meeting. A special meeting of the Board of Directors shall be
held on such date and at any place as may be designated from time to time by the
Board of Directors. In the absence of designation such meeting shall be held at
such place as may be designated in the call.
SECTION 2.08. NOTICE OF MEETING. Except as provided in Section 2.06, the
Secretary shall give notice to each director of each regular and special meeting
of the Board of Directors. The notice shall state the time and place of the
meeting. Notice is given to a director when it is delivered personally to him or
her, left at his or her residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative by mail to his or her address as it
shall appear on the records of the Corporation, at least 72 hours before the
time of the meeting. Unless these Bylaws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened, or to any director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement.
SECTION 2.09. QUORUM; ACTION BY DIRECTORS. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the directors present by majority vote and without notice
other than by announcement may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally notified. Unless statute or the Charter or Bylaws requires
a greater proportion, the action of a majority of the directors present at a
meeting at which a quorum is present is action of the Board of Directors. Any
action required or permitted to be taken at a meeting of the Board of Directors
may be taken without a meeting, if an unanimous written consent which sets forth
the action is signed by each member of the Board of Directors and filed with the
minutes of proceedings of the Board of Directors.
SECTION 2.10. MEETING BY CONFERENCE TELEPHONE. Members of the Board of Directors
may participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. COMPENSATION. By resolution of the Board of Directors a fixed sum
and expenses, if any, for attendance at each regular or special meeting of the
Board of Directors or of committees thereof, and other compensation for their
services as such or on committees of the Board of Directors, may be paid to
directors. Directors who are full-time employees of the Corporation need not be
paid for attendance at meetings of the Board of Directors or committees thereof
for which fees are paid to other directors. A director who serves the
Corporation in any other capacity also may receive compensation for such other
services, pursuant to a resolution of the directors.
SECTION 2.12. RESIGNATION. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein such resignation shall take effect upon receipt thereof by the
Chairman of the Board or the President.
SECTION 2.13. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who votes in favor of such action or fails
to make his dissent known at the meeting.
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SECTION 2.14. ADVISORY DIRECTORS. The Board of Directors may by resolution
appoint advisory directors to the Board of Directors, who may also serve as
directors emeriti, and shall have such authority and receive such compensation
and reimbursement as the Board of Directors shall provide. Advisory directors or
directors emeriti shall not have the authority to participate by vote in the
transaction of business.
ARTICLE III.
COMMITTEES
SECTION 3.01. COMMITTEES. The Board of Directors may appoint from among its
members an Executive Committee and other committees composed of one or more
directors and delegate to these committees any of the powers of the Board of
Directors, except the power to authorize dividends on stock, elect directors,
issue stock other than as provided in the next sentence, recommend to the
stockholders any action which requires stockholder approval, amend these Bylaws,
or approve any merger or share exchange which does not require stockholder
approval. If the Board of Directors has given general authorization for the
issuance of stock providing for or establishing a method or procedure for
determining the maximum number of shares to be issued, a committee of the Board
of Directors, in accordance with that general authorization or any stock option
or other plan or program adopted by the Board of Directors, may authorize or fix
the terms of stock subject to classification or reclassification and the terms
on which any stock may be issued, including all terms and conditions required or
permitted to be established or authorized by the Board of Directors.
SECTION 3.02. COMMITTEE PROCEDURE. Each committee may fix rules of procedure for
its business. A majority of the members of a committee shall constitute a quorum
for the transaction of business and the act of a majority of those present at a
meeting at which a quorum is present shall be the act of the committee. The
members of a committee present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of an absent member. Any
action required or permitted to be taken at a meeting of a committee may be
taken without a meeting, if an unanimous written consent which sets forth the
action is signed by each member of the committee and filed with the minutes of
the committee. The members of a committee may conduct any meeting thereof by
conference telephone in accordance with the provisions of Section 2.10.
SECTION 3.03. EMERGENCY. In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Corporation by its directors and officers as contemplated by the Charter and
these Bylaws, any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Corporation in accordance with the
provisions of Section 3.01. In the event of the unavailability, at such time, of
a minimum of two members of the then incumbent Executive Committee, the
available directors shall elect an Executive Committee consisting of any two
members of the Board of Directors, whether or not they be officers of the
Corporation, which two members shall constitute the Executive Committee for the
full conduct and management of the affairs of the Corporation in accordance with
the foregoing provisions of this Section. This Section shall be subject to
implementation by resolution of the Board of Directors passed from time to time
for that purpose, and any provisions of these Bylaws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary resolutions shall be suspended until it
shall be determined by any interim Executive Committee acting under this Section
that it shall be to the advantage of the Corporation to resume the conduct and
management of its affairs and business under all the other provisions of these
Bylaws.
ARTICLE IV.
OFFICERS
SECTION 4.01. EXECUTIVE AND OTHER OFFICERS. The Corporation shall have a
President, a Secretary, and a Treasurer. It may also have a Chairman of the
Board. The Board of Directors shall designate who shall serve as chief executive
officer, who shall have general supervision of the business and affairs of the
Corporation, and may designate a chief operating officer, who shall have
supervision of the operations of the Corporation. In the absence
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of any designation the Chairman of the Board, if there be one, shall serve as
chief executive officer and the President shall serve as chief operating
officer. In the absence of the Chairman of the Board, or if there be none, the
President shall be the chief executive officer. The same person may hold both
offices, and two or more persons may share an office. The Corporation may also
have one or more Vice-Presidents, assistant officers, and subordinate officers
as may be established by the Board of Directors. A person may hold more than one
office in the Corporation except that no person may serve concurrently as both
President and Vice-President of the Corporation. The Chairman of the Board shall
be a director, and the other officers may be directors.
SECTION 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one be
elected, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. Unless otherwise specified by
the Board of Directors, he or she shall be the chief executive officer of the
Corporation. In general, he or she shall perform such duties as are customarily
performed by the chief executive officer of a corporation and may perform any
duties of the President and shall perform such other duties and have such other
powers as are from time to time assigned to him or her by the Board of
Directors.
SECTION 4.03. PRESIDENT. Unless otherwise provided by resolution of the Board of
Directors, the President, in the absence of the Chairman of the Board, shall
preside at all meetings of the Board of Directors and of the stockholders at
which he or she shall be present. Unless otherwise specified by the Board of
Directors, the President shall be the chief operating officer of the Corporation
and perform the duties customarily performed by chief operating officers. He or
she may execute, in the name of the Corporation, all authorized deeds,
mortgages, bonds, contracts or other instruments, except in cases in which the
signing and execution thereof shall have been expressly delegated to some other
officer or agent of the Corporation. In general, he or she shall perform such
other duties customarily performed by a president of a corporation and shall
perform such other duties and have such other powers as are from time to time
assigned to him or her by the Board of Directors or the chief executive officer
of the Corporation.
SECTION 4.04. VICE-PRESIDENTS. The Vice-President or Vice-Presidents, at the
request of the chief executive officer or the President, or in the President's
absence or during his or her inability to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice-President, the Board of
Directors may determine which one or more of the Vice-Presidents shall perform
any of such duties or exercise any of such functions, or if such determination
is not made by the Board of Directors, the chief executive officer, or the
President may make such determination; otherwise any of the Vice-Presidents may
perform any of such duties or exercise any of such functions. Each
Vice-President shall perform such other duties and have such other powers, and
have such additional descriptive designations in their titles (if any), as are
from time to time assigned to them by the Board of Directors, the chief
executive officer, or the President.
SECTION 4.05. SECRETARY. The Secretary shall keep the minutes of the meetings of
the stockholders, of the Board of Directors and of any committees, in books
provided for the purpose; he or she shall see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; he or she
shall be custodian of the records of the Corporation; he or she may witness any
document on behalf of the Corporation, the execution of which is duly
authorized, see that the corporate seal is affixed where such document is
required or desired to be under its seal, and, when so affixed, may attest the
same. In general, he or she shall perform such other duties customarily
performed by a secretary of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.06. TREASURER. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
moneys or other valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by the Board of Directors;
he or she shall render to the President and to the Board of Directors, whenever
requested, an account of the financial condition of the Corporation. In general,
he or she shall perform such other duties customarily performed by a treasurer
of a corporation, and shall perform such other duties and have such other powers
as are from time to time assigned to him or her by the Board of Directors, the
chief executive officer, or the President.
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SECTION 4.07. ASSISTANT AND SUBORDINATE OFFICERS. The assistant and subordinate
officers of the Corporation are all officers below the office of Vice-President,
Secretary, or Treasurer. The assistant or subordinate officers shall have such
duties as are from time to time assigned to them by the Board of Directors, the
chief executive officer, or the President.
SECTION 4.08. ELECTION, TENURE AND REMOVAL OF OFFICERS. The Board of Directors
shall elect the officers of the Corporation. The Board of Directors may from
time to time authorize any committee or officer to appoint assistant and
subordinate officers. Election or appointment of an officer, employee or agent
shall not of itself create contract rights. All officers shall be appointed to
hold their offices, respectively, during the pleasure of the Board of Directors.
The Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board of Directors) may remove an officer
at any time. The removal of an officer does not prejudice any of his or her
contract rights. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board of Directors) may fill
a vacancy which occurs in any office for the unexpired portion of the term.
SECTION 4.09. COMPENSATION. The Board of Directors shall have power to fix the
salaries and other compensation and remuneration, of whatever kind, of all
officers of the Corporation. No officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers.
ARTICLE V.
DIVISIONAL TITLES
SECTION 5.01. CONFERRING DIVISIONAL TITLES. The Board of Directors may from time
to time confer upon any employee of a division of the Corporation the title of
President, Vice President, Treasurer or Controller of such division or any other
title or titles deemed appropriate, or may authorize the Chairman of the Board
or the President to do so. Any such titles so conferred may be discontinued and
withdrawn at any time by the Board of Directors, or by the Chairman of the Board
or the President if so authorized by the Board of Directors. Any employee of a
division designated by such a divisional title shall have the powers and duties
with respect to such division as shall be prescribed by the Board of Directors,
the Chairman of the Board or the President.
SECTION 5.02. EFFECT OF DIVISIONAL TITLES. The conferring of divisional titles
shall not create an office of the Corporation under Article IV unless
specifically designated as such by the Board of Directors; but any person who is
an officer of the Corporation may also have a divisional title.
ARTICLE VI.
STOCK
SECTION 6.01. CERTIFICATES FOR STOCK. The Board of Directors may determine to
issue certificated or uncertificated shares of capital stock and other
securities of the Corporation. For certificated stock, each stockholder is
entitled to certificates which represent and certify the shares of stock he or
she holds in the Corporation. Each stock certificate shall include on its face
the name of the Corporation, the name of the stockholder or other person to whom
it is issued, and the class of stock and number of shares it represents. It
shall also include on its face or back (a) a statement of any restrictions on
transferability and a statement of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the stock
of each class which the Corporation is authorized to issue, of the differences
in the relative rights and preferences between the shares of each series of a
preferred or special class in series which the Corporation is authorized to
issue, to the extent they have been set, and of the authority of the Board of
Directors to set the relative rights and preferences of subsequent series of a
preferred or special class of stock or (b) a statement
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which provides in substance that the Corporation will furnish a full statement
of such information to any stockholder on request and without charge. Such
request may be made to the Secretary or to its transfer agent. Except as
provided in the Maryland Uniform Commercial Code - Investment Securities, the
fact that a stock certificate does not contain or refer to a restriction on
transferability that is adopted after the date of issuance does not mean that
the restriction is invalid or unenforceable. Upon the issuance of uncertificated
shares of capital stock, the Corporation shall send the stockholder a written
statement of the same information required above on the certificate and by the
Maryland Uniform Commercial Code Investment Securities. It shall be in such
form, not inconsistent with law or with the Charter, as shall be approved by the
Board of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed by
the Chairman of the Board, the President, or a Vice-President, and countersigned
by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant
Treasurer. Each certificate may be sealed with the actual corporate seal or a
facsimile of it or in any other form and the signatures may be either manual or
facsimile signatures. A certificate is valid and may be issued whether or not an
officer who signed it is still an officer when it is issued. A certificate may
not be issued until the stock represented by it is fully paid.
SECTION 6.02. TRANSFERS. The Board of Directors shall have power and authority
to make such rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates of stock; and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
SECTION 6.03. RECORD DATES OR CLOSING OF TRANSFER BOOKS. The Board of Directors
may, and shall have the sole power to, set a record date or direct that the
stock transfer books be closed for a stated period for the purpose of making any
proper determination with respect to stockholders, including which stockholders
are entitled to request a special meeting of stockholders, notice of a meeting
of stockholders, vote at a meeting of stockholders, receive a dividend, or be
allotted other rights. The record date may not be prior to the close of business
on the day the record date is fixed nor, subject to Section 1.06, more than 90
days before the date on which the action requiring the determination will be
taken; the transfer books may not be closed for a period longer than 20 days;
and, in the case of a meeting of stockholders, the record date or the closing of
the transfer books shall be at least ten days before the date of the meeting.
Any shares of the Corporation's own stock acquired by the Corporation between
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders and the time of the meeting may be voted at the
meeting by the holder of record as of the record date and shall be counted in
determining the total number of outstanding shares entitled to be voted at the
meeting.
SECTION 6.04. STOCK LEDGER. The Corporation shall maintain a stock ledger which
contains the name and address of each stockholder and the number of shares of
stock of each class which the stockholder holds. The stock ledger may be in
written form or in any other form which can be converted within a reasonable
time into written form for visual inspection. The original or a duplicate of the
stock ledger shall be kept at the offices of a transfer agent for the particular
class of stock, or, if none, at the principal office in the State of Maryland or
the principal executive offices of the Corporation.
SECTION 6.05. CERTIFICATION OF BENEFICIAL OWNERS. The Board of Directors may
adopt by resolution a procedure by which a stockholder of the Corporation may
certify in writing to the Corporation that any shares of stock registered in the
name of the stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class of stockholders
who may certify; the purpose for which the certification may be made; the form
of certification and the information to be contained in it; if the certification
is with respect to a record date or closing of the stock transfer books, the
time after the record date or closing of the stock transfer books within which
the certification must be received by the Corporation; and any other provisions
with respect to the procedure which the Board of Directors considers necessary
or desirable. On receipt of a certification which complies with the procedure
adopted by the Board of Directors in accordance with this Section, the person
specified in the certification is, for the purpose set forth in the
certification, the holder of record of the specified stock in place of the
stockholder who makes the certification.
SECTION 6.06. LOST STOCK CERTIFICATES. The Board of Directors may determine the
conditions for issuing a new stock certificate in place of one which is alleged
to have been lost, stolen, or destroyed, or the Board of Directors may delegate
such power to any officer or officers of the Corporation. In their discretion,
the Board of Directors or
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such officer or officers may require the owner of the certificate to give bond,
with sufficient surety, to indemnify the Corporation against any loss or claim
arising as a result of the issuance of a new certificate. In their discretion,
the Board of Directors or such officer or officers may refuse to issue such new
certificate save upon the order of some court having jurisdiction in the
premises.
SECTION 6.07. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE. The provisions
of Sections 3-701 to 3-709 of the Maryland General Corporation Law shall not
apply to any share of the capital stock of the Corporation. Such shares of
capital stock are exempted from such Sections to the fullest extent permitted by
Maryland law.
ARTICLE VII.
FINANCE
SECTION 7.01. CHECKS, DRAFTS, ETC. All checks, drafts and orders for the payment
of money, notes and other evidences of indebtedness, issued in the name of the
Corporation, shall, unless otherwise provided by resolution of the Board of
Directors, be signed by the Chairman of the Board, the President, a
Vice-President, an Assistant Vice-President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary.
SECTION 7.02. ANNUAL STATEMENT OF AFFAIRS. The President or chief accounting
officer shall prepare annually a full and correct statement of the affairs of
the Corporation, to include a balance sheet and a financial statement of
operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the stockholders and, within 20 days after
the meeting, placed on file at the Corporation's principal office.
SECTION 7.03. FISCAL YEAR. The fiscal year of the Corporation shall be the 12
calendar months period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION 7.04. DIVIDENDS. If declared by the Board of Directors at any meeting
thereof, the Corporation may pay dividends on its shares in cash, property, or
in shares of the capital stock of the Corporation, unless such dividend is
contrary to law or to a restriction contained in the Charter.
SECTION 7.06. LOANS. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
the Board of Directors. Such authority may be general or confined to specific
instances.
SECTION 7.07. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in any of
its duly authorized depositories as the Board of Directors may select.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01. PROCEDURE. Any indemnification, or payment of expenses in advance
of the final disposition of any proceeding, shall be made promptly, and in any
event within 60 days, upon the written request of the director or officer
entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the Indemnified
Party in any court of competent jurisdiction, if (i) the Corporation denies such
request, in whole or in part, or (ii) no disposition thereof is made within 60
days. The Indemnified Party's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be reimbursed by the Corporation. It shall
be a defense to any action for advance for expenses that (a) a determination has
been made that the facts then known to those making the determination would
preclude indemnification or (b) the Corporation has not received both (i) an
undertaking as required by law to repay such advances in the event it shall
ultimately be determined that the standard of conduct has not been met and (ii)
a written affirmation by the Indemnified Party of such Indemnified Party's good
faith belief that the standard of conduct necessary for indemnification by the
Corporation has been met.
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SECTION 8.02. EXCLUSIVITY, ETC. The indemnification and advance of expenses
provided by the Charter and these Bylaws shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advance of expenses
may be entitled under any law (common or statutory), or any agreement, vote of
stockholders or disinterested directors or other provision that is consistent
with law, both as to action in his or her official capacity and as to action in
another capacity while holding office or while employed by or acting as agent
for the Corporation, shall continue in respect of all events occurring while a
person was a director or officer after such person has ceased to be a director
or officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. The Corporation shall not be liable for any
payment under this Bylaw in connection with a claim made by a director or
officer to the extent such director or officer has otherwise actually received
payment under insurance policy, agreement, vote or otherwise, of the amounts
otherwise indemnifiable hereunder. All rights to indemnification and advance of
expenses under the Charter of the Corporation and hereunder shall be deemed to
be a contract between the Corporation and each director or officer of the
Corporation who serves or served in such capacity at any time while this Bylaw
is in effect. Nothing herein shall prevent the amendment of this Bylaw, provided
that no such amendment shall diminish the rights of any person hereunder with
respect to events occurring or claims made before its adoption or as to claims
made after its adoption in respect of events occurring before its adoption. Any
repeal or modification of this Bylaw shall not in any way diminish any rights to
indemnification or advance of expenses of such director or officer or the
obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this Bylaw or any provision hereof is in force.
SECTION 8.03. SEVERABILITY; DEFINITIONS. The invalidity or unenforceability of
any provision of this Article VIII shall not affect the validity or
enforceability of any other provision hereof. The phrase "this Bylaw" in this
Article VIII means this Article VIII in its entirety.
ARTICLE IX.
SUNDRY PROVISIONS
SECTION 9.01. BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of these Bylaws
shall be kept at the principal office of the Corporation.
SECTION 9.02. CORPORATE SEAL. The Board of Directors shall provide a suitable
seal, bearing the name of the Corporation, which shall be in the charge of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any
law, rule, or regulation relating to a corporate seal to place the word "(seal)"
adjacent to the signature of the person authorized to sign the document on
behalf of the Corporation.
SECTION 9.03. BONDS. The Board of Directors may require any officer, agent or
employee of the Corporation to give a bond to the Corporation, conditioned upon
the faithful discharge of his or her duties, with one or more sureties and in
such amount as may be satisfactory to the Board of Directors.
SECTION 9.04. VOTING STOCK IN OTHER CORPORATIONS. Stock of other corporations or
associations, registered in the name of the Corporation, may be voted by the
President, a Vice-President, or a proxy appointed by either of them. The Board
of Directors, however, may by resolution appoint some other person to vote such
shares, in which case such person shall be entitled to vote such shares upon the
production of a certified copy of such resolution.
SECTION 9.05. MAIL. Any notice or other document which is required by these
Bylaws to be mailed shall be deposited in the United States mails, postage
prepaid.
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SECTION 9.06. CONTRACTS AND AGREEMENTS. To the extent permitted by applicable
law, and except as otherwise prescribed by the Charter or these Bylaws, the
Board of Directors may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation. Such authority may be general or
confined to specific instances. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge, or
verify an instrument required by law to be executed, acknowledged, or verified
by more than one officer.
SECTION 9.07. RELIANCE. Each director and officer of the Corporation shall, in
the performance of his or her duties with respect to the Corporation, be
entitled to rely on any information, opinion report or statement, including
financial statement or other financial data, prepared or presented by an officer
or employee of the Corporation whom the director or officer reasonably believes
to be reliable and competent in the matters presented, by a lawyer, certified
public accountant or other person as to a matter which the director or officer
reasonably believes to be within the person's professional or expert competence
or by a committee of the Board of Directors on which the director does not
serve, as to a matter within its designated authority, if the director believes
the committee to merit confidence.
SECTION 9.08. AMENDMENTS. In accordance with the Charter, these Bylaws may be
repealed, altered, amended or rescinded and new bylaws may be adopted (a) by the
stockholders of the Corporation (considered for this purpose as one class) by
the affirmative vote of not less than 80% of all the votes entitled to be cast
by the outstanding shares of capital stock of the Corporation generally in the
election of directors which are cast on the matter at any meeting of the
stockholders called for that purpose (provided that notice of such proposal is
included in the notice of such meeting) or (b) by the Board of Directors by the
affirmative vote of not less than two-thirds of the Board of Directors at a
meeting held in accordance with the provisions of these Bylaws.
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CERTIFICATE OF SECRETARY
THE UNDERSIGNED, Secretary of SPIEKER PROPERTIES, INC., a Maryland
corporation (the "Corporation"), hereby certifies that the foregoing is a full,
true and correct copy of the Bylaws of the Corporation as amended to the date of
this Certificate.
WITNESS the signature of the undersigned on March 8, 2000.
-------------------------------
Sara R. Steppe,
Secretary
-78-
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Registration Statement File No.'s 333-00346, 333-09425, 333-14325, 333-21709,
333-35997, 333-43707, 333-51269, 333-51249, 333-75871 and 333-88717.
/s/ ARTHUR ANDERSEN LLP
--------------------------
Arthur Andersen LLP
San Francisco, California
March 29, 2000
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