<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-98372-01
SPIEKER PROPERTIES, L.P.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<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)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] . No [ ].
Page 1 of 21
Exhibit Index is located on Page 20.
<PAGE> 2
SPIEKER PROPERTIES, L.P.
QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
<S> <C>
Item 1. Financial Statements (unaudited) ........................................................ 3
Consolidated Balance Sheets as of June 30, 2000, and December 31, 1999 .................. 4
Consolidated Statements of Operations for the Three months and Six months ended
June 30, 2000 and 1999 ................................................................ 6
Consolidated Statement of Partners' Capital for the Six months ended June 30, 2000 ...... 7
Consolidated Statements of Cash Flows for the Six months ended
June 30, 2000 and 1999 ................................................................ 8
Notes to Consolidated Financial Statements .............................................. 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ... 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk .............................. 19
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................................................ 20
Signatures ...................................................................................... 21
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following unaudited consolidated financial statements of
Spieker Properties, L.P. (the "Operating Partnership"):
(i) Consolidated Balance Sheets as of June 30, 2000, and December
31, 1999
(ii) Consolidated Statements of Operations for the Three months and
Six months ended June 30, 2000 and 1999
(iii) Consolidated Statement of Partners' Capital for the Six months
ended June 30, 2000
(iv) Consolidated Statements of Cash Flows for the Six months ended
June 30, 2000 and 1999
(v) Notes to Consolidated Financial Statements
The financial statements referred to above should be read in conjunction with
the Operating Partnership's Annual Report on Form 10-K for the year ended
December 31, 1999, and report on Form 10-Q for the quarterly period ended March
31, 2000.
3
<PAGE> 4
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000, AND DECEMBER 31, 1999
(unaudited, dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
INVESTMENTS IN REAL ESTATE
Land, land improvements and leasehold interests $ 829,464 $ 816,136
Buildings and improvements 3,286,873 3,174,430
Construction in progress 192,974 180,407
----------- -----------
4,309,311 4,170,973
Less - Accumulated depreciation (353,110) (316,240)
----------- -----------
3,956,201 3,854,733
----------- -----------
Land held for investment 109,664 125,356
Investments in mortgages 11,154 18,725
Properties held for disposition, net 132,148 89,220
----------- -----------
Net investments in real estate 4,209,167 4,088,034
CASH AND CASH EQUIVALENTS 52,820 17,114
ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts of
$1,998 as of June 30, 2000 and $2,139 as of December 31, 1999 5,392 4,846
DEFERRED RENT RECEIVABLE 28,753 22,911
RECEIVABLE FROM AFFILIATES 31 144
DEFERRED FINANCING AND LEASING COSTS, net of accumulated amortization of $25,339
as of June 30, 2000 and $20,901 as of December 31, 1999 64,294 59,655
FURNITURE, FIXTURES AND EQUIPMENT, net 5,572 5,107
PREPAID EXPENSES, DEPOSITS ON PROPERTIES AND OTHER ASSETS 22,791 50,091
INVESTMENT IN AFFILIATES 20,506 20,583
----------- -----------
$ 4,409,326 $ 4,268,485
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 5
SPIEKER PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000, AND DECEMBER 31, 1999
(unaudited, dollars in thousands)
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
DEBT
Unsecured notes $1,836,500 $1,836,500
Short-term borrowings 145,494 63,012
Mortgage loans 89,175 97,331
---------- ----------
Total debt 2,071,169 1,996,843
---------- ----------
ASSESSMENT BONDS PAYABLE 8,754 10,172
ACCOUNTS PAYABLE 16,382 13,548
ACCRUED REAL ESTATE TAXES 2,824 2,628
ACCRUED INTEREST 34,418 28,634
UNEARNED RENTAL INCOME 35,411 33,244
PARTNERS' DISTRIBUTIONS PAYABLE 54,797 46,977
OTHER ACCRUED EXPENSES AND LIABILITIES 78,062 76,192
---------- ----------
Total liabilities 2,301,817 2,208,238
---------- ----------
PARTNERS' CAPITAL:
General Partner, $381,250 preferred liquidation preference
as of June 30, 2000 and December 31, 1999 1,835,436 1,793,445
Limited Partners, $75,000 preferred liquidation preference 272,073 266,802
---------- ----------
Total Partners' Capital 2,107,509 2,060,247
---------- ----------
$4,409,326 $4,268,485
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 6
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited, dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 182,097 $ 156,895 $ 349,511 $ 306,109
Interest and other income 1,932 1,838 4,031 3,272
--------- --------- --------- ---------
184,029 158,733 353,542 309,381
--------- --------- --------- ---------
OPERATING EXPENSES:
Rental expenses 37,902 35,773 73,412 67,414
Real estate taxes 12,958 11,493 25,455 23,047
Interest expense, including amortization of
deferred financing costs 33,423 29,905 64,687 58,710
Depreciation and amortization 31,404 27,100 61,820 52,504
General and administrative expenses 7,006 5,746 13,575 11,396
--------- --------- --------- ---------
122,693 110,017 238,949 213,071
--------- --------- --------- ---------
Income from operations before disposition of
real estate 61,336 48,716 114,593 96,310
--------- --------- --------- ---------
GAIN ON DISPOSITION OF REAL ESTATE 15,468 4,665 37,677 9,831
--------- --------- --------- ---------
Net Income 76,804 53,381 152,270 106,141
--------- --------- --------- ---------
Preferred Operating Partnership Unit
Distributions (1,442) (2,397) (2,883) (4,924)
Preferred Dividends:
Series A Preferred Stock (853) (744) (1,707) (1,488)
Series B Preferred Stock (2,510) (2,510) (5,020) (5,020)
Series C Preferred Stock (2,953) (2,953) (5,906) (5,906)
Series E Preferred Stock (2,000) (2,000) (4,000) (4,000)
--------- --------- --------- ---------
Net income available to General and Limited
Partners $ 67,046 $ 42,777 $ 132,754 $ 84,803
========= ========= ========= =========
General Partner $ 58,995 $ 37,509 $ 116,803 $ 74,345
Limited Partners 8,051 5,268 15,951 10,458
--------- --------- --------- ---------
Total $ 67,046 $ 42,777 $ 132,754 $ 84,803
========= ========= ========= =========
NET INCOME PER COMMON OPERATING PARTNERSHIP UNIT
Net Income - basic $ .90 $ .59 $ 1.79 $ 1.17
========= ========= ========= =========
Net Income - diluted $ .88 $ .59 $ 1.76 $ 1.16
========= ========= ========= =========
DISTRIBUTION PER COMMON OPERATING PARTNERSHIP UNIT
General Partner $ .70 $ .61 $ 1.40 $ 1.22
========= ========= ========= =========
Limited Partners $ .70 $ .61 $ 1.40 $ 1.22
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE> 7
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
General Limited
Partner Partners General Limited
Units Units Partner Partners Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1999 64,961,052 8,822,915 $ 1,793,445 $ 266,802 $ 2,060,247
Conversion of Operating Partnership
Units to Common Stock 184,406 (184,406) 7,533 (4,095) 3,438
Acquisition of property with Operating
Partnership Units - 222,888 - 8,638 8,638
Restricted Stock Grant 86,004 - 3,179 - 3,179
Restricted Stock Grant - Deferred
Compensation - - (3,179) - (3,179)
Exercise of Stock Options 156,029 - 4,466 - 4,466
Amortization of deferred compensation - - 1,836 - 1,836
Allocation to Operating Partnership
interest - - 2,716 (2,716) -
Partner common and preferred
distributions - - (107,996) (15,390) (123,386)
Net Income - - 133,436 18,834 152,270
----------- ----------- ----------- ----------- -----------
BALANCE AT JUNE 30, 2000 65,387,491 8,861,397 $ 1,835,436 $ 272,073 $ 2,107,509
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
<PAGE> 8
SPIEKER PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 152,270 $ 106,141
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 61,820 52,504
Amortization of deferred financing costs 1,087 1,204
Loss from affiliate 77 99
Non-cash compensation 1,836 492
Gain on disposition of real estate (37,677) (9,831)
(Increase) decrease in accounts receivable and other assets (5,337) 14
Decrease (increase) in receivable from affiliates 112 (45)
Decrease in assessment bonds payable (506) (472)
Increase (decrease) in accounts payable and other accrued
expenses and liabilities 5,872 (12,648)
Increase in accrued real estate taxes 196 348
Increase in accrued interest 5,784 7,856
--------- ---------
Net cash provided by operating activities 185,534 145,662
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to properties (217,747) (168,396)
Reductions (additions) to deposits on properties, net 28,596 (14,142)
Proceeds from investments in mortgages 7,571 -
Additions to leasing costs (11,792) (6,718)
Proceeds from disposition of real estate 80,394 63,615
Distributions from affiliates - 134
--------- ---------
Net cash used for investing activities (112,978) (125,507)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 102,493 535,000
Payments of financing fees, net of hedging proceeds - (1,279)
Payments on debt (28,242) (430,859)
Payments of distributions (115,567) (109,548)
Capital contributions - stock options exercised 4,466 2,069
--------- ---------
Net cash used for financing activities (36,850) (4,617)
--------- ---------
Net increase in cash and cash equivalents 35,706 15,538
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 17,114 4,916
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 52,820 $ 20,454
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest $ 67,788 $ 49,617
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
8
<PAGE> 9
SPIEKER PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(unaudited, dollars in thousands)
1. ORGANIZATION AND BASIS OF PRESENTATION
As used herein, the terms "we", "us", "our", or the "Operating
Partnership" refer to Spieker Properties, L.P., a California limited
partnership, was formed on November 10, 1993 and commenced operations on
November 19, 1993, when Spieker Properties, Inc., the general partner in
the Operating Partnership, completed its initial public offering on
November 18, 1993. As of June 30, 2000, Spieker Properties, Inc. owned
an approximate 88.1% general and limited partnership interest in the
Operating Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
Our consolidated financial statements include the consolidated financial
position of the Operating Partnership and its subsidiaries as of June
30, 2000, and December 31, 1999, and its consolidated results of
operations and cash flows for the three and six months ended June 30,
2000 and 1999. Our investment in Spieker Northwest, Inc., an
unconsolidated Preferred Stock subsidiary, and our investment in Spieker
Griffin/W9 Associates, LLC are accounted for under the equity method.
All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
Interim Financial Information
The consolidated financial statements as of, and for the three and six
months ended June 30, 2000 and 1999, have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission and in
management's opinion, include all adjustments necessary for a fair
presentation of results for such interim periods. Certain information
and note disclosures normally included in annual financial statements,
prepared in accordance with accounting principles generally accepted in
the United States, have been condensed or omitted pursuant to SEC rules
or regulations; however, we believe that adequate disclosures have been
made.
The interim results for the three and six months ended June 30, 2000 and
1999, are not necessarily indicative of results for the full year. We
suggest that these financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in our
Annual Report on Form 10-K for the year ended December 31, 1999 and Form
10-Q for the three month period ended March 31, 2000.
Land Held for Investment
Construction in progress costs related to land parcels that are either
held for investment or are in the design and approval process as of June
30, 2000, were approximately $22.6 million.
9
<PAGE> 10
Net Income Per Unit
Per unit amounts 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 stockholders, and Preferred Operating Partnership unit
holders. The diluted weighted average units outstanding include the
dilutive effect of options and Series A Preferred Stock. The Series A
Preferred Stock was dilutive in all periods except for the six months
period ended June 30, 1999 when it was antidilutive. The basic and
diluted weighted average general partner units and limited partner units
outstanding for the three and six months ended June 30, 2000 and 1999
are as follows:
<TABLE>
<CAPTION>
Basic Weighted Average Diluted Weighted Average
General Partner Units General Partner Units
---------------------- ------------------------
<S> <C> <C>
Three Months Ended:
June 30, 2000 65,302,786 67,977,790
June 30, 1999 63,322,217 65,363,882
Six Months Ended:
June 30, 2000 65,187,053 67,612,848
June 30, 1999 63,272,990 65,206,549
</TABLE>
<TABLE>
<CAPTION>
Basic Weighted Average Diluted Weighted Average
Limited Partner Units Limited Partner Units
---------------------- ------------------------
<S> <C> <C>
Three Months Ended:
June 30, 2000 8,911,970 8,911,970
June 30, 1999 8,869,267 8,869,267
Six Months Ended:
June 30, 2000 8,902,511 8,902,511
June 30, 1999 8,870,087 8,870,087
</TABLE>
Reclassifications
Certain items in the 1999 financial statements have been reclassified to
conform to the 2000 presentation with no effect on results of
operations.
Use of Estimates
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3. ACQUISITIONS AND DISPOSITIONS
Acquisitions
We acquired the following properties, referred to as the "2000
Acquisitions", during the six months ended June 30, 2000.
<TABLE>
<CAPTION>
Property Total Rentable Initial
Project Name Region - Location Type (1) Square Feet Cost (2)
---------------- ---------------------------------- --------- -------------- --------
<S> <C> <C> <C> <C>
Larkspur Landing Peninsula/North Bay - Larkspur, CA O 189,040 $42,173
Quadrant Plaza Pacific Northwest - Bellevue, WA O 145,585 33,465
I-90 Bellevue I&II Pacific Northwest - Bellevue, WA O 134,235 27,745
------- --------
468,860 $103,383
======= ========
</TABLE>
(1) "O" indicates office property.
(2) Represents the initial acquisition costs of the properties
excluding any additional repositioning costs.
10
<PAGE> 11
In addition to the projects listed above, we acquired an asset to be
redeveloped in Southern California at an initial cost of $11,500 during
the first quarter of 2000. In the second quarter of 2000 we acquired one
parcel of land for development in the East Bay at an initial cost of
$2,952.
During the six months ended June 30, 1999, we acquired three office
properties totaling 445,935 square feet at an initial cost of $67,164.
In addition, we acquired one parcel of land for development at an
initial cost of $35,565.
Dispositions
We disposed of the following properties, referred to as the
"Dispositions", during the six months ended June 30, 2000.
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Region - Location Type (1) Square Feet
-------------------------------- ------------------------------------ ---------- --------------
<S> <C> <C> <C>
12 Upper Ragsdale Silicon Valley - Monterey, CA I 17,592
Cascade Commerce Park Pacific Northwest - Seattle, WA I 340,125
City Commerce Park Pacific Northwest - Seattle, WA I 179,413
Commerce Park West East Bay/Sacramento - Sacramento, CA I 75,000
Commerce Park West III East Bay/Sacramento - Sacramento, CA L - (2)
Front Street East Bay/Sacramento - Sacramento, CA I 47,322
Sea Tac Industrial Park Pacific Northwest - Seattle, WA I 186,259
Vasco Landing East Bay/Sacramento - Livermore, CA L - (3)
Woodinville Corporate Center I Pacific Northwest - Woodinville, WA I 170,793
Woodinville Corporate Center III Pacific Northwest - Woodinville, WA I 250,502
</TABLE>
(1) I- Industrial; L- Land.
(2) Represents sale of approximately 4.7 acres.
(3) Represents sale of approximately 0.8 acres.
The gross proceeds for land and property dispositions were $36,831 for
the three months ended June 30, 2000, and $82,649 for the six months
ended June 30, 2000. Cash proceeds, net of closing costs, received from
the dispositions were $35,810 for the three months ended June 30, 2000
and $80,394 for the six months ended June 30, 2000. These proceeds were
used to fund our recent acquisitions. Gain recognized on disposition of
real estate was $15,468 for the three months ended June 30, 2000, and
$37,677 for the six months ended June 30, 2000.
During the three months ended June 30, 1999, the gross proceeds for the
land and property dispositions were $28,423 and $70,843 for the six
months ended June 30, 1999. Included in the proceeds were $5,170
recognized in the first quarter of 1999 for a condemnation gain. Cash
proceeds, net of closing costs, received from the disposition of the
properties and land were $22,347 for the three months ended June 30,
1999 and $63,615 for the six months ended June 30, 1999.
4. TRANSACTIONS WITH AFFILIATES
Revenues and Expenses
We received $132 for the three months and $445 for the six months ended
June 30, 2000, and $263 for the three months and $600 for the six months
ended June 30, 1999, for management services provided to certain
properties that are controlled and operated by either Spieker Northwest,
Inc., Spieker Griffin/W9 Associates, LLC, or Spieker Partners. Certain
officers of Spieker Properties, Inc. are partners in Spieker Partners.
Receivable From Affiliates
The $31 receivable from affiliates at June 30, 2000, and the $144 at
December 31, 1999, represent management fees and reimbursements due from
Spieker Northwest, Inc., Spieker Griffin/W9 Associates, LLC, and Spieker
Partners.
Investments in Mortgages
Investments in Mortgages of $11,154 at June 30, 2000 and $18,725 at
December 31, 1999, are loans to Spieker Northwest, Inc., or SNI. The
loans are secured by deeds of trust on real property, bear interest at
8.5%, and mature in 2012. Interest income on the notes of $342 for the
three months ended and $684 for the six months ended June 30, 2000, are
included in interest and other income.
11
<PAGE> 12
Investment in Affiliates
The investment in affiliates includes an investment in SNI. We own 95%
of the non-voting Preferred Stock of SNI. Certain senior officers and
one former officer of the Operating Partnership own 100% of the voting
stock of SNI. At June 30, 2000, SNI owned 153,209 square feet of office
and industrial property located in California. SNI also 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.
Additionally, investment in affiliates includes the 50.0% common
interest in Spieker Griffin/W9 Associates, LLC. During the second
quarter of 2000, our 37.5% preferred interest in Spieker Griffin/W9
Associates, LLC. was converted to common interest. This conversion
brings our total common interest in Spieker Griffin/W9 Associates, LLC.
to 50%. Spieker Griffin/W9, Associates LLC. owns a 535,000 square foot
office complex, located in Orange County, California, which we manage.
5. PROPERTIES HELD FOR DISPOSITION
We continue to review our portfolio and our long-term strategy for
properties. Over time, we will dispose of assets that do not have a
strategic fit within the portfolio. Included in properties held for
disposition of $132,148 at June 30, 2000, are fourteen properties and
three land parcels. One industrial property is located in the Pacific
Northwest. Three industrial properties, one office property, and one
land parcel are located in Southern California. Nine industrial
properties and two land parcels are located in Northern California.
The following summarizes the condensed results of operations for the
properties held for disposition at June 30, 2000 for the six months
ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenues $ 10,021 $ 9,282
Property Operating Expenses (1) 2,190 2,212
------------ ------------
Net Operating Income $ 7,831 $ 7,070
============ ============
</TABLE>
(1) Property Operating Expenses includes property related
rental expenses and real estate taxes.
6. DEBT
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
Unsecured investment grade notes, fixed interest rates varying
from 6.65% to 8.00%, payable semi-annually, due from 2000 to 2027 $ 1,836,500 $ 1,836,500
Short-term borrowings, variable interest rates ranging from LIBOR
plus 0.80% to LIBOR plus 1.25%, due 2001 to 2003 145,494 63,012
Mortgage loans, fixed interest rates varying from 7.00% to 9.88%,
due 2001 to 2013 (1) 89,175 97,331
------------ ------------
$ 2,071,169 $ 1,996,843
============ ============
</TABLE>
(1) Mortgage loans generally require monthly principal and
interest payments.
Short-term borrowings include a $250,000 unsecured Line of Credit, or
the Facility, which matures in August 2001. The Facility carries
interest at the London Interbank Offering Rate, referred to as LIBOR,
plus 0.80%. The one-month LIBOR at June 30, 2000, was 6.65%. The
Facility also includes an annual administrative fee of $50 and an annual
Facility fee of 0.20%. As of June 30, 2000, the amount drawn on the
Facility was $133,000.
As of June 30, 2000, the short-term borrowings also include a $100,000
secured Development Facility, which matures in May 2003. The Development
Facility carries interest at the London Interbank Offering Rate plus
1.25%. The Development Facility includes an annual administrative fee of
$35 and an unused Facility fee of 0.25%. As of June 30, 2000, the amount
drawn on the Development Facility was $12,494.
Both the Facility and the Development Facility are subject to financial
covenants concerning leverage, interest coverage and certain other
ratios. We are currently in compliance with all of the covenants on both
the Facilities.
12
<PAGE> 13
Our unsecured investment grade notes are subject to financial covenants
concerning leverage, interest coverage and certain other ratios. We are
currently in compliance with all of the covenants in the unsecured note
agreements governing this indebtedness.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Capitalized Interest $ 4,055 $ 5,652 $ 9,444 $10,674
</TABLE>
7. PARTNERS' DISTRIBUTIONS PAYABLE
The distributions payable at June 30, 2000, and December 31, 1999,
represent amounts payable to the partners of record. The unit holders of
record are as follows:
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Units:
General Partner 65,387,491 64,961,052
Limited Partner 8,861,397 8,822,915
Series A Preferred 1,000,000 1,000,000
Series B Preferred 4,250,000 4,250,000
Series C Preferred 6,000,000 6,000,000
Series D Preferred 1,500,000 1,500,000
Series E Preferred 4,000,000 4,000,000
</TABLE>
8. SEGMENT INFORMATION
We have five reportable segments: Pacific Northwest; East
Bay/Sacramento, California; Peninsula/North Bay, California; Silicon
Valley, California; 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 for the five regions are
the same as those described in the summary of significant accounting
policies. We evaluate performance based upon the combined net operating
income of the properties in each segment. Each of the five operating
regions consists of differing mixes of office and industrial properties.
The rental income and net operating income for the regions are not
comparable, given the differing mixes of properties within the regions.
During the first quarter of 2000, the North-East Bay/Sacramento region
was split into two regions. The two new regions are now called East
Bay/Sacramento and Peninsula/North Bay. The 1999 rental income and net
operating income disclosure below has been restated to reflect these new
regions. Significant information for the reportable segments for the six
months ended June 30, 2000 and 1999, is as follows:
<TABLE>
<CAPTION>
Pacific East Bay/ Peninsula/ Silicon Southern
Northwest Sacramento(1) North Bay(1) Valley California Total
--------- ------------- ------------ ------ ---------- -----
<S> <C> <C> <C> <C> <C> <C>
2000 Rental Income $ 67,521 $ 58,768 $ 42,490 $ 82,528 $ 98,204 $ 349,511
1999 Rental Income 65,964 45,919 34,700 71,356 88,170 306,109
2000 Net Operating Income (2) 47,673 42,014 30,335 65,533 65,089 250,644
1999 Net Operating Income (2) 47,050 31,758 24,163 55,707 56,970 215,648
2000 Additions to Properties (3)(4) 61,210 -- 42,173 -- -- 103,383
2000 Reductions to Properties (3) (34,257) (6,869) -- (864) -- (41,990)
</TABLE>
(1) The basis of the assets transferred from the split of the
North-Eastbay/Sacramento region was approximately $803,710 to
the East Bay/Sacramento region and $477,242 to the
Peninsula/NorthBay Region.
(2) 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.
(3) See Note 3 to the consolidated financial statements for the
related square footage by region of the additions and reductions
to properties.
(4) Represents the initial acquisition costs of the properties
excluding any additional repositioning costs.
13
<PAGE> 14
9. SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Increase to land and assessment bonds payable $ 34 $ 82
Write-off of fully depreciated property 9,376 3,476
Write-off of fully depreciated furniture, fixtures and equipment 487 191
Write-off of fully amortized deferred financing and leasing costs 1,576 767
Restricted Stock grants, net of amortization 1,343 3,473
Issuance of Limited Partnership Units for property acquisitions 8,638 -
Debt assumed in relation to property acquisitions - 29,475
Operating Partnership unit conversion to Common Stock 7,533 -
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Statements contained in this Item 2, "Management's Discussion and
Analysis of Financial Conditions and Results of Operations," and
elsewhere in this Quarterly Report on Form 10-Q which are not historical
facts may be forward-looking statements. Such statements are subject to
certain risks and uncertainties which could cause actual results to
differ materially from those projected, including, but not limited to,
those risks and special considerations set forth in our other SEC
filings. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. We
undertake no obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
The following comparison is of our consolidated operations for the three
and six month periods ended June 30, 2000, as compared to the
corresponding periods ended June 30, 1999 (amounts in tables are
presented in millions).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------------
Rental Revenues CHANGE
--------------------
2000 1999 $ %
----------------------------------------------
<S> <C> <C> <C> <C>
1999 Core Portfolio $162.3 $146.7 $ 15.6 10.6%
1999 Acquisitions 4.3 1.8 2.5 138.9
2000 Acquisitions 2.7 - 2.7
Developments 12.1 2.4 9.7 404.2
Dispositions 0.7 6.0 (5.3) (88.3)
----------------------------------------------
$182.1 $156.9 $ 25.2 16.1%
==============================================
Average Occupancy Rate 96.9% 96.1%
====== ======
</TABLE>
For the quarter ended June 30, 2000, rental revenues increased by $25.2
million. $15.6 million, or 61.9%, of the rental revenue increase is
generated by the "1999 Core Portfolio", defined as properties owned at
January 1, 1999 and still owned at June 30, 2000. The increase in the
1999 Core Portfolio revenue was attributable to higher rental rates
realized on the renewal and re-leasing of our rentable space and a
slight increase in occupancies. During the quarter, we completed 414
lease transactions for the renewal and re-lease of approximately 2.5
million square feet of second generation space. Rollover effective rent
growth on these leases was, on average, 68.1% higher than the previous
rents received on those same spaces. This rent growth is the measurement
of the difference between effective (average) rents on new and renewed
leases as compared to the expiring coupon rent on those same spaces.
Lease terms on leases signed during the quarter were 69.1 months on a
weighted average basis.
The Developments contributed $9.7 million, or 38.5%, to the rental
revenue increase over the same period last year. The Developments
include both properties completed and added to our portfolio of
stabilized properties, as well as properties currently in the
development pipeline. We consider properties "stabilized" at the earlier
of eighteen months after shell completion or when a 95.0% occupancy rate
has been reached. During the three months ended June 30, 2000 we
stabilized
14
<PAGE> 15
eight properties consisting of approximately 1.2 million square feet at
estimated final costs of $197.5 million. Three of these properties
stabilized earlier than planned and contributed to the increase in
revenues. Our development pipeline at June 30, 2000, consists of eleven
properties totaling approximately 2.1 million square feet and represents
an estimated total cost of $461.2 million. The Developments were 73.0%
preleased at June 30, 2000. Although certain properties in the
development pipeline are shell complete and are partially occupied, they
are not yet considered stabilized.
The 2000 Acquisitions contributed $2.7 million of the increase in rental
revenues over the same period last year. For the three months ended June
30, 2000, the Operating Partnership acquired one office property
totaling 134,235 square feet for a total investment of $28.7 million.
The property was acquired during the quarter and, as such, a full
quarter's revenue and expense was not recognized during the period. As
used herein, the term "total investment" represents the initial purchase
price of acquisitions, plus projected costs of certain repositioning and
rehab capital expenditures anticipated at the time of purchase.
The 1999 Acquisitions contributed $2.5 million to the rental revenue
increase over the same period last year. During 1999, we acquired five
office properties totaling 807,037 square feet for a total investment of
$134.3 million. The properties were acquired at various dates throughout
the year therefore a full quarter's worth of revenue and expense may
not be reflected in the three months ended June 30, 1999.
The increases in rental revenues are partially offset by a decrease of
$5.3 million attributable to properties which we disposed of during the
three months ended June 30, 2000. The Dispositions took place at various
dates during the quarter, therefore a full quarter's worth of revenues
and expenses may not be reflected in the 2000 rental revenues. During
the quarter we disposed of four properties totaling 618,976 square feet
(See Note 3 to the consolidated statements). Two properties totaling
526,384 square feet represent the continuing disposition of
approximately 3.6 million square feet of the Seattle industrial
portfolio. To date, 3.3 million square feet of this portfolio have been
disposed.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------
CHANGE
----------------------
Rental Revenues 2000 1999 $ %
--------------------------------------------------
<S> <C> <C> <C> <C>
1999 Core Portfolio $ 316.3 $ 288.1 $ 28.2 9.8%
1999 Acquisitions 8.4 2.4 6.0 250.0
2000 Acquisitions 3.6 - 3.6 -
Developments 19.1 2.3 16.8 730.4
Dispositions 2.1 13.3 (11.2) (84.2)
--------------------------------------------------
$ 349.5 $ 306.1 $ 43.4 14.2%
==================================================
Average Occupancy Rate 96.9% 96.1%
==== ====
</TABLE>
Rental revenues for the six months ended June 30, 2000 increased by
$43.4 million. $28.2 million, or 65.0%, of the rental revenue increase
is due to revenues generated by the 1999 Core Portfolio. The increase in
the 1999 Core Portfolio revenue during the last six months was
attributed to higher roll over rental rates realized on the renewal and
re-leasing of second generation space and increases in occupancies.
During the six months ended June 30, 2000, we completed 762 lease
transactions for the renewal and re-lease of 4.7 million square feet of
second generation space. On average, year-to-date, the new effective
rates were 64.5% higher than the expiring coupon rent.
The Developments contributed $16.8 million, or 38.7%, to the rental
revenue increase for the six months ended June 30, 2000. The 1999
Acquisitions contributed $6.0 million to the rental revenue increase,
and the 2000 Acquisitions contributed $3.6 million. During the six
months ended June 30, 2000 we have acquired three office properties
totaling 468,860 square feet for a total investment of $108.2 million.
These increases in rental revenues are partially offset by a decrease of
$11.2 million attributable to the Dispositions.
15
<PAGE> 16
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------- ----------------------------------
CHANGE CHANGE
-------------- --------------
2000 1999 $ % 2000 1999 $ %
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and other Income $1.9 $1.8 $0.1 5.6% $4.0 $3.3 $0.7 21.2%
</TABLE>
Interest and other income during the comparable six month periods
increased due to additional management fees collected from outside
parties, and from interest income on deposits held in escrow from
disposed properties. Average cash balances for the three month and six
month periods ended June 30, 2000, were $30.2 million and $25.7, million
and for 1999 were $27.6 million and $24.8 million.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------------------- ---------------------------------------
CHANGE CHANGE
----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Property Operating
Expenses 2000 1999 $ % 2000 1999 $ %
--------------------------------------- ---------------------------------------
Rental Expenses $37.9 $35.8 $ 2.1 5.9% $73.4 $67.4 $ 6.0 8.9%
Real Estate Taxes 13.0 11.5 1.5 13.0 25.5 23.1 2.4 10.4
--------------------------------------- ---------------------------------------
$50.9 $47.3 $ 3.6 7.6% $98.9 $90.5 $ 8.4 9.3%
======================================= =======================================
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------------------- --------------------------------------------
CHANGE CHANGE
-------------------- --------------------
Property Operating Expenses 2000 1999 $ % 2000 1999 $ %
--------------------------- ---------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 Core Portfolio $ 45.7 $ 44.5 $ 1.2 2.7% $ 89.6 $ 85.5 $ 4.1 4.8%
1999 Acquisitions 1.3 0.6 0.7 116.7 2.6 0.7 1.9 271.4
2000 Acquisitions 0.7 - 0.7 - 1.1 - 1.1 -
Developments 3.0 1.0 2.0 200.0 5.1 1.7 3.4 200.0
Dispositions 0.2 1.2 (1.0) (83.3) 0.5 2.6 (2.1) (80.8)
---------------------------------------------- --------------------------------------------
$ 50.9 $ 47.3 $ 3.6 7.6% $ 98.9 $ 90.5 $ 8.4 9.3%
============================================== ============================================
Property Operating Expenses
as % Of Rental Revenues 28.0% 30.1% 28.3% 29.6%
====== ====== ==== =====
</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 square footage of our portfolio of office
properties, as well as higher compensation costs included in rental
expenses. These increases are consistent with the increases in rental
revenue.
Rental revenues net of property operating expenses, referred to as "net
operating income," are presented in the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- --------------------------------------------
CHANGE CHANGE
-------------------------------------------- --------------------------------------------
Net Operating Income 2000 1999 $ % 2000 1999 $ %
-------------------- -------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 Core Portfolio $116.6 $102.2 $ 14.4 14.1% $226.7 $202.6 $ 24.1 11.9%
1999 Acquisitions 3.0 1.2 1.8 150.0 5.8 1.7 4.1 241.2
2000 Acquisitions 2.0 - 2.0 - 2.5 - 2.5 -
Developments 9.1 1.4 7.7 550.0 14.0 0.6 13.4 2233.3
Dispositions 0.5 4.8 (4.3) (89.6) 1.6 10.7 (9.1) (85.0)
-------------------------------------------- --------------------------------------------
$131.2 $109.6 $ 21.6 19.7% $250.6 $215.6 $ 35.0 16.2%
============================================ ============================================
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------------------
CHANGE CHANGE
------------------- -----------------
Other Expenses 2000 1999 $ % 2000 1999 $ %
-------------- ----------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Expense, including
Amortization of Deferred
Financing Costs $33.4 $29.9 $ 3.5 11.7% $64.6 $58.7 $ 5.9 10.1%
Depreciation and
Amortization Expense 31.4 27.1 4.3 15.9 61.8 52.5 9.3 17.7
G & A Expenses 7.0 5.7 1.3 22.8 13.6 11.4 2.2 19.3
G & A Expenses as %
of Rental Revenues 3.8% 3.6% 3.9% 3.7%
Capitalized Interest $ 4.1 $ 5.7 $ 9.4 $10.7
</TABLE>
Interest expense increased due to the net effect of; additions to
interest expense from additional note offerings, which occurred during
the second quarter of 1999, offset by lower balances in our unsecured
short-term borrowings and a slight decrease in interest capitalized in
relation to the Developments we had in process. The average outstanding
debt for the three and six months ended June 30, 2000, was $2.0 billion
and $2.0 billion, which was comparative to the three months in 1999
while for the six months ended June 30, 1999, the average outstanding
debt was $1.9 billion.
Depreciation and amortization expense increased by $4.3 million for the
three month period and $9.3 million for the six month period ended June
30, 2000, compared with the same periods in 1999, due primarily to the
1999 Acquisitions and the Developments.
General and administrative expenses increased by $1.3 million for the
three month and $2.2 million for the six month period ended June 30,
2000, as compared with the same periods in 1999, primarily as a result
of increases in salaries given current wage pressures experienced on the
West Coast. General and administrative expenses during 2000 have,
however, remained relatively consistent with 1999 levels on a percentage
of revenue basis.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------------ ------------------------------------------
CHANGE CHANGE
------------------ ------------------
2000 1999 $ % 2000 1999 $ %
------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from operations
before Disposition of Real Estate $ 61.3 $ 48.7 $ 12.6 25.9% $114.6 $ 96.3 $ 18.3 19.0%
</TABLE>
The increase in income from operations before disposition of real estate
of $12.6 million for the three month period and $18.3 million for the
six month period ended June 30, 2000 is principally due to rent
increases in the 1999 Core Portfolio, 1999 Acquisitions and the
Developments.
During the first six months of 2000, we recorded gains on the
dispositions of two land parcels and eight industrial properties
totaling $37.7 million (see Note 3 to the consolidated statements).
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 2000, we generated $185.5 million in
cash flows from operating activities. These cash flows were primarily
generated by net income provided by our operating properties. The cash
flows from investing activities of ($112.9) million was the net effect
of the cost of additions of real estate assets offset by proceeds from
the disposition of assets. The cash flows from financing activities of
($36.9) million can be attributed to the payments of dividends and
distributions offset by additional borrowings. During the first six
months of 2000, net cash used by financing activities included net
borrowings of approximately $70.0 million under our Facility, $12.5
million under our Development Facility and principal payments of $8.2
million on mortgage loans. Payments
17
<PAGE> 18
of dividends and distributions increased by $6.0 million due to a 14.8%
increase in common share dividends and operating partnership unit
distributions to $1.40 per share and unit for the first six months in
2000 from $1.22 per share and unit in 1999, as well as a higher number
of common shares outstanding.
Our principal sources of funding for acquisitions, development,
expansion and renovation of the properties and debt maturities are
unsecured and secured 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. We believe that our liquidity and our
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 June 30, 2000, we had no material commitments for capital
expenditures related to the renewal or re-leasing of space. We believe
that the cash provided by operations and our Facilities provide
sufficient sources of liquidity to fund capital expenditure costs
associated with the renewal or re-leasing of space.
As of June 30, 2000, the Operating Partnership had $1.8 billion of
investment grade rated, unsecured debt securities outstanding. The debt
securities have fixed interest rates which vary from 6.65% to 8.00%, and
maturity dates which range from 2000 to 2027. We are currently in
compliance with all of the covenants in the unsecured note agreements.
We have a $250.0 million unsecured Line of Credit Facility, or the
Facility, bearing interest at the London Interbank Offering Rate plus
0.80%. The Facility matures in August 2001 and has a competitive bid
option that allows us to request bids from the lenders for advances up
to $150.0 million. At June 30, 2000, we had $133.0 million outstanding
under the Facility.
During the quarter ended June 30, 2000, the Operating Partnership
obtained additional short-term borrowings of $100.0 million in the form
of a secured Development Facility. The Development Facility carries
interest at the London Interbank Offering Rate plus 1.25% and matures in
May 2003. At June 30, 2000, the amount drawn on the Development Facility
was $12.5 million.
The Facility and the Development Facility are subject to financial
covenants concerning leverage, interest coverage and certain other
ratios. We are currently in compliance with all of the covenants of the
Facilities.
In addition to the unsecured debt securities and the Facilities, we have
$89.2 million of secured indebtedness (the "Mortgages") outstanding at
June 30, 2000. 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. We also have $8.8
million of assessment bonds payable as of June 30, 2000.
We have 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
We consider 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 our operating
performance or as an alternative to cash flows as a measure of
liquidity. Funds from Operations does not measure whether cash flow is
sufficient to fund all of our cash needs including principal
amortization, capital improvements, and distributions to stockholders.
Funds from Operations does not represent cash flows from operating,
investing, or financing activities as defined by GAAP. Further, Funds
from Operations as disclosed by other REITs may not be comparable to our
calculation of Funds from Operations, as described below.
Pursuant to the National Association of Real Estate Investment Trust's
revised definition of Funds from Operations, the Operating Partnership
calculates Funds from Operations by adjusting income from operations
before disposition of real estate, calculated in accordance with GAAP,
for certain non-cash items, principally the amortization and
depreciation of
18
<PAGE> 19
real property and for dividends and distributions on shares and other
equity interests that are not convertible into shares of Common Stock.
We do 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, we eliminate the effect of
straight-line rents, as defined under GAAP, in our Funds from Operations
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 dilutive
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.
STATEMENT OF FUNDS FROM OPERATIONS
(amounts in thousands)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Income from operations before disposition of
real estate $ 114,593 $ 96,310
Dividends on Series B Preferred Stock (5,020) (5,020)
Dividends on Series C Preferred Stock (5,906) (5,906)
Dividends on Series E Preferred Stock (4,000) (4,000)
Distributions on Preferred Operating
Partnership Units (2,883) (4,924)
--------- ---------
Income from Operations after Preferred
dividends and distributions 96,784 76,460
--------- ---------
Add:
Depreciation and Amortization 61,127 51,830
Other, net 1,030 328
--------- ---------
Funds from Operations before Straight-line rent 158,941 128,618
--------- ---------
Straight-line rent (5,907) (5,223)
--------- ---------
Funds from Operations $ 153,034 $ 123,395
========= =========
Weighted average diluted unit equivalents outstanding 76,515 74,077
========= =========
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information below summarizes our market risks associated with our fixed and
variable rate debt outstanding as of June 30, 2000. 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 (1) $ 100.0 $ 147.6 $ 110.0 - $ 300.0 $ 1,268.1 $ 1,925.7
Average Interest Rate 6.65% 7.22% 6.95% - 6.83% 7.29% 7.16%
Variable Rate Debt (2) - $ 133.0 - $ 12.5 - - $ 145.5
Average Interest Rate - 7.21% - 8.06% - - 7.28%
</TABLE>
(1) Represents 93.0% of all debt outstanding.
(2) Represents 7.0% of all debt outstanding.
The carrying amount of our debt approximates fair value. Our fixed and
variable rate debt is described in "Management's Discussion and Analysis
of Financial Condition and Results of Operations." At June 30, 2000, we
had no interest rate caps or swaps.
19
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
The exhibits listed below are filed as part of this quarterly report on
Form 10-Q.
Exhibit Number
27.1 Article 5 Financial Data Schedule (EDGAR Filing Only)
(B) Reports on Form 8-K
None.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Spieker Properties, L.P.
(Registrant)
Dated: August 14, 2000 /s/ CARY ANDERSON
-------------------------------
Cary Anderson
Vice President and
Principal Accounting Officer
21
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
27.1 Article 5 Financial Data Schedule (EDGAR Filing Only)
</TABLE>
