<PAGE>
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 AND EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-5305
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 94-1722214
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, CA 94104-5525
- ------------------------------- ------------------------------
(Address of principal office) (Zip Code)
Registrant's telephone number,
including area code (415) 445-6530
------------------------------
Inapplicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
-------- --------
Number of shares of Class A common stock
outstanding as of April 30, 1996 16,331,305
------------------------------
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BRE PROPERTIES, INC.
- ----------------------------------------------------------------------------------------------------
BALANCE SHEETS (Dollar amounts in thousands) (unaudited)
- ----------------------------------------------------------------------------------------------------
April 30, 1996 July 31, 1995
-------------- --------------
<S> <C> <C>
ASSETS
Equity investments in real estate $694,845 $377,175
Less: Accumulated depreciation and amortization (51,823) (47,811)
-------------- --------------
643,022 329,364
Investments in limited partnerships 2,709 1,181
-------------- --------------
Real estate portfolio 645,731 330,545
Mortgage loans 9,345 7,409
Allowance for possible losses (1,250) (1,250)
-------------- --------------
653,826 336,704
Cash and short-term investments 2,255 4,462
Other assets 8,398 6,720
-------------- --------------
Total assets $664,479 $347,886
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 9,507 $ 4,116
Notes payable and lines of credit 107,500
Mortgage loans payable 134,012 100,828
-------------- --------------
Total liabilities 251,019 104,944
-------------- --------------
Shareholders' equity
Class A common stock, $0.01 par value, 50,000,000
shares authorized. Shares issued and outstanding
16,331,305 at April 30, 1996 and 10,962,065 at
July 31, 1995 163 109
Additional paid-in capital 384,019 212,127
Undistributed net realized gain on sales of properties 29,278 30,706
-------------- --------------
Total shareholders' equity 413,460 242,942
-------------- --------------
Total liabilities and shareholders' equity $664,479 $347,886
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
BRE PROPERTIES, INC.
- ----------------------------------------------------------------------------------------------------
STATEMENTS OF INCOME (unaudited)
(Amounts in thousands, except in per share data)
- ----------------------------------------------------------------------------------------------------
For the Three For the Nine
Months Ended Months Ended
April 30 April 30
----------------------- -----------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE
Rental income $21,136 $15,270 $53,382 $44,589
Other income 803 661 2,351 1,823
-------- -------- -------- --------
Total revenue 21,939 15,931 55,733 46,412
-------- -------- -------- --------
EXPENSES
Real estate expenses 6,648 4,968 17,970 14,328
Provision for depreciation and amortization 2,742 1,958 6,689 5,698
Interest expense 3,152 1,886 7,424 5,226
General and administrative 1,146 1,326 2,921 3,968
-------- -------- -------- --------
Total expenses 13,688 10,138 35,004 29,220
-------- -------- -------- --------
Income before gain on sales of investments 8,251 5,793 20,729 17,192
Net (loss) gain on sales of investments (880) (899) 370
-------- -------- -------- --------
NET INCOME $8,251 $4,913 $19,830 $17,562
-------- -------- -------- --------
-------- -------- -------- --------
Income per share
Primary
Income before gain on sales
of investments $.60 $.53 $1.73 $1.57
Net (loss) gain on sales of investments (.08) (.08) .04
-------- -------- -------- --------
Net income $.60 $.45 $1.65 $1.61
-------- -------- -------- --------
-------- -------- -------- --------
Dividends paid or declared $.679 $.63 $1.939 $1.83
-------- -------- -------- --------
-------- -------- -------- --------
Weighted shares outstanding 13,703 10,937 11,973 10,935
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
BRE PROPERTIES INC.
- ----------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS (Dollar amounts in thousands)
- ----------------------------------------------------------------------------------------------------
For the Nine Months Ended Apr. 30
---------------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $19,830 $17,562
Non-cash revenues and expenses included in income:
Provision for depreciation and amortization 6,689 5,698
Provision for possible investment losses 2,000
Loss on sales of investments 899
Net gain on tax-deferred exchanges (2,370)
(Increase) in other assets (1,678)
Increase (decrease) in accounts payable and other liabilities (297) (148)
Other (increase) (190)
-------- --------
CASH FLOWS GENERATED BY OPERATING ACTIVITIES 25,443 22,552
-------- --------
Cash flows from investing activities:
Equity investments:
Acquisitions of land and buildings (64,402) (18,041)
Cash balances acquired in Merger 164
Proceeds from the sale of land and buildings 13,425
Option payments on apartments being developed (1,140)
Apartment expansion (1,687)
Improvements to apartments (342) (171)
Space preparation and tenant improvements:
Shopping centers (620) (2,466)
Light industrial and warehouse (42) (736)
Funds in escrow for tax-deferred exchange 2,591
Advances on mortgage loans receivable (70) (1,600)
Repayments on mortgage loans receivable 462 383
-------- --------
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (52,565) (21,727)
-------- --------
Cash flows from financing activities:
Mortgage loans payable:
New mortgage loans 12,000
Principal payments (1,017) (759)
Lines of credit:
Advances 39,000
Principal payments (4,700)
Proceeds from exercises of stock options 904 663
Dividends paid (21,272) (19,993)
-------- --------
NET CASH FLOWS GENERATED BY (USED IN) FINANCING ACTIVITIES 24,915 (20,089)
-------- --------
Increase (decrease) in cash and short-term investments (2,207) (19,264)
Balance at beginning of year 4,462 28,938
-------- --------
Balance at end of period $2,255 $9,674
-------- --------
-------- --------
</TABLE>
See notes to financial statements
4
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
April 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and should be read in conjunction with the
company's Annual Report on Form 10-K for the fiscal year ended July 31, 1995,
together with the portions of the company's 1995 Annual Report to shareholders
incorporated therein by reference. In the opinion of management, all
adjustments (consisting of normal recurring adjustments only) have been made
which are necessary for a fair statement of the results for the interim period
presented herein.
Certain reclassifications have been made to the 1995 financial statements to
conform to the presentation of the 1996 financial statements.
Commencing August 1, 1995, BRE began allocating a portion of its salaries,
employee benefits and other personnel costs to the real estate expense of the
properties in the portfolio. While this reclassification does not change the
company's net income or funds from operations, such allocation reduces reported
general and administrative expenses and increases real estate expense by an
equal amount. Management believes that this allocation is consistent with
industry practices and will provide a better matching of the revenue generated
by the properties and the expenses required to generate that revenue. The
amounts reclassified from general and administrative expenses to real estate
expenses under this allocation method were $266,000 and $1,065,000 for the
quarter and nine months ended April 30, 1996 respectively.
NOTE B - NET INCOME PER SHARE
Primary net income per share is based upon the average weighted number of shares
outstanding during the periods, increased for the assumed exercise of vested,
in-the-money stock options.
NOTE C - LITIGATION
The company, because of the nature of its business, is sometimes subject to
various threatened or filed legal claims, including certain environmental
actions. While it is not feasible to predict or determine the ultimate outcome
of these matters, in the opinion of management, none of these actions,
individually or in the aggregate, will have a material effect on the company's
results of operations, cash flows, liquidity or financial position.
5
<PAGE>
NOTE D - COMMITMENTS
BRE has entered into a development and option agreement with Picerne Development
Corporation (Picerne), an Arizona corporation, which is a wholly owned
subsidiary of Picerne Investment Corporation, a privately held apartment
developer headquartered in Rhode Island. Picerne is developing Arcadia Cove, a
432-unit apartment complex in Phoenix, Arizona. The development is being
financed through two loans to Picerne made by Wells Fargo Bank. The amounts
available under the two loans are $4,226,000 (standing loan) and $19,125,000
(construction loan), for a total of $23,351,000. As of April 30, 1996,
$16,450,700 was outstanding under the loans. BRE has guaranteed repayment of the
loans and has the right to acquire the property at or before completion of
construction, which is currently expected in July 1996.
BRE has made, or is commited to make, monthly option payments to Picerne as
follows:
(DOLLAR AMOUNTS IN THOUSANDS):
- --------------------------------------------------------------------------------
December 94 $220
February 95 - July 95 $ 60 x 6 months 360
August 95 - December 95 160 x 5 months 800
January 96 - March 96 100 x 3 months 300
April 96 - August 96 100 x 5 months 500
September 96 - November 96 50 x 3 months 150
--------
Estimated total option payments $2,330
--------
--------
BRE's estimated total cost for the property, including interest expense and
marketing expenses during construction, is approximately $24,300,000.
In addition, BRE has committed to purchase Phase II of Newport Landing
Apartments, in Glendale, Arizona. BRE purchased the adjacent 240-unit Phase I in
September 1995, for $9,235,000. Phase II, also planned for 240 units, is
currently being developed, with construction expected to be completed by the
third calendar quarter end 1996. Picerne, which developed Phase I, is also
developing Phase II for BRE. The cost for Phase II is projected to be
$12,940,000.
The company has also committed to purchase Berkshire Court, an apartment complex
with 266 units under construction near Portland, Oregon at a price of
$16,410,000. Construction is underway, with completion expected in July 1996.
BRE will purchase the property following its completion in accordance with plans
and specifications, plus attainment of certain occupancy levels.
6
<PAGE>
In addition, BRE has committed to purchase Sycamore Valley Apartments, 440 units
located in Fountain Valley, California at a price of $23,593,000. Previously
known as the Shakewood Apartments, BRE owned the land under the improvements
until 1991, when BRE sold the land to the current owners, who own both the land
and the improvements. The owners are a public limited partnership, with
approximately 1,500 investors, whose approval is required for the sale of the
property to BRE. Such approval is anticipated by the third calendar quarter of
1996.
The summary of total commitments outstanding is as follows:
Dollar Amounts in
Units thousands
------ ---------
Arcadia Cove 432 $24,300
Newport Landing II 240 12,940
Berkshire Court 266 16,410
Sycamore Valley 440 23,593
--- ------
1,378 $77,243
----- -------
----- -------
NOTE E - RECENT DEVELOPMENT
On March 15, 1996 (the "Effective Date"), Real Estate Investment Trust of
California, a California real estate investment trust ("RCT"), merged with and
into BRE (the "Merger"). Following consummation of the Merger, BRE changed its
state of domicile from Delaware to Maryland. The Merger was completed in
accordance with the terms and conditions of the Agreement and Plan of Merger
dated October 11, 1995, as amended (the "Merger Agreement"). Under the terms of
the Merger Agreement, upon the Merger, each issued and outstanding share of
beneficial interest of RCT was converted into the right to receive .57 of a
share of BRE common stock. The Merger was unanimously approved by the boards of
both companies and by the requisite vote of the shareholders of both.
Pursuant to the Merger with RCT on March 15, 1996, BRE (i) acquired $274,400,000
in equity investments in real estate, (ii) assumed secured and unsecured RCT
notes payable of $95,400,000, and other liabilities totaling $8,000,000, and
(iii) issued 5,342,218 shares of Class A common stock valued at $171,000,000 for
the conversion of RCT shares of beneficial interest.
Pro forma unaudited results of operations assuming the merger had occurred on
August 1, 1994 are as follows:
FOR THE NINE MONTHS ENDED APRIL 30,
1996 1995
---- ----
(In thousands except per share data)
Total revenue $77,179 $71,387
Income before gain on sales of investments 27,162 25,780
Net gain (loss) on sales of investments 7,972 370
Net income 35,134 26,150
Income per share before gain on sales of
investments 1.66 1.59
Net gain (loss) per share on sales of
investments 0.49 0.02
Net income per share 2.15 1.61
7
<PAGE>
NOTE F - LINES OF CREDIT AND NOTES PAYABLE
Total bank lines of credit and notes payable outstanding increased $107,500,000
during the quarter ended April 30, 1996. Pursuant to the Merger, BRE assumed
RCT unsecured notes payable of $55,000,000, and RCT unsecured lines of credit of
$18,200,000. The unsecured $55,000,000 note payable bears interest at 7.44%
(payable monthly) due in principal installments of $10,000,000 per year
beginning in the year 2000 through the year 2003. A final principal payment of
$15,000,000 is due in 2004. The unsecured $18,200,000 borrowing against the
line of credit bears interest at 7.5%.
BRE also utilized two separate bank lines of credit as part of the proceeds to
acquire the Ballinger Common Apartments and Thrasher's Mill Apartments. One
borrowing against the credit line was for $26,000,000 with interest based on
LIBOR plus 1%. At April 1996 quarter end the interest rate on this loan was
6.72%. The second borrowing was for $13,000,000 of which $4,700,000
was repaid during the third quarter ended 1996. The interest rate on the second
borrowing was 6.5%. At April 30, 1996, total borrowings outstanding against
these two bank lines of credit totaled $52,500,000.
NOTE G - SUBSEQUENT EVENTS
On May 20, 1996, the Directors declared a dividend of $.66 per share, payable
June 27, 1996 to shareholders of record June 7, 1996. Also on May 20, 1996, the
Directors approved a two-for-one stock split to be effected in the form of a
stock dividend to shareholders of record June 7, 1996, payable on June 27, 1996.
Following the stock split, the number of BRE shares outstanding will increase to
approximately 32.7 million. The total shares authorized will remain at 50
million for Class A common stock.
On May 20, 1996, the company announced that it would change its fiscal year-end
to December 31 from July 31. The new accounting period will begin with the
quarter ending June 30, 1996.
8
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
April 30, 1996
LIQUIDITY AND CAPITAL RESOURCES
The company's cash and short-term investments totaled $2,255,000 at April 30,
1996, down from $4,462,000 at July 31, 1995.
During the nine months ended April 30, 1996, BRE borrowed, on a non-recourse
basis, $12,000,000 secured by the Verandas Apartments in Union City, California.
The loan has a 10-year term, with amortization based on 30 years, and a fixed
interest rate of 7.3%. The balloon payment at maturity is $10,372,000. Depending
on market conditions at maturity, the company may choose, among other things, to
renegotiate the terms with the existing lender, refinance the property with
another lender or sell assets to repay the balloon amounts.
Also during the first nine months of fiscal 1996, BRE completed the tax-deferred
exchange of the vacant Pomona Warehouse property in Pomona, California for the
240-unit Phase I of Newport Landing Apartments in Glendale, Arizona. The loss on
the disposition of the Pomona Warehouse was $93,000.
In addition, BRE completed the tax-deferred exchange of the vacant Irvine
Spectrum property for the 189-unit Candlewood North Apartments in Northridge,
California, during the quarter ended April 30, 1996. Candlewood North
Apartments was acquired through proceeds that were previously held in escrow
from the Irvine Spectrum exchange and additional cash of $6,500,000. The
financial statement loss on the disposition of the Irvine Spectrum property
was $819,000.
Pursuant to the Merger with RCT on March 15, 1996, BRE (i) acquired $274,400,000
in equity investments in real estate, (ii) assumed secured and unsecured RCT
notes payable of $95,400,000, and other liabilities totaling $8,000,000, and
(iii) issued 5,342,218 shares of Class A common stock valued at $171,000,000 for
the conversion of RCT shares of beneficial interest.
BRE also purchased two properties in the Northwest during the quarter ended
April 30, 1996. The Ballinger Commons Apartments complex located in North
Seattle with 485 units was acquired for $29,100,000. Thrasher's Mill Apartments
in Bothell, Washington was purchased for $10,152,000 and has 214 units. These
two acquisitions along with the Candlewood North Apartments aggregate $49.8
million and add a total of 888 units to the portfolio.
In conjunction with the acquisition of the Ballinger Commons Apartments and
Thrasher's Mill Apartments, BRE utilized its bank lines of credit by borrowing
$26,000,000 and
9
<PAGE>
$13,000,000 under separate credit facilities.
Cash commitments at April 30, 1996 include the June 27, 1996 dividend payment of
approximately $10,800,000.
In addition, as more fully discussed in Note D of Notes to Financial Statements,
BRE has committed a total of $77,243,000 for the purchase of four apartment
communities. These acquisitions may be funded through a combination of tax-
deferred exchanges, cash and borrowings.
BRE has announced an agreement to sell 47 acres of land under a large apartment
complex in Daly City, California to the owner of the improvements for a cash
purchase price of $58 million. The sale is subject to certain contingencies,
including a five-month due diligence period during which the purchaser may
review the property, seek to arrange financing and, at the purchaser's election
without penalty, terminate the purchase agreement. Assuming satisfaction of
closing conditions, the purchase agreement contemplates a closing of the sale
between June 14 and September 14, 1996, with the sale intended to be treated by
BRE as a series of tax-deferred exchanges into apartment properties. BRE's
basis in the land for both book and tax purposes is $7.4 million; accordingly,
the company would realize a one-time non-recurring gain on sale of $50.6
million.
In addition to cash and short-term investments, the company has available bank
lines of credit totaling $100,000,000. There were borrowings of $52,500,000
outstanding under the lines of credit at April 30, 1996. The company used a
portion of the lines of credit to fund the cash portion of the purchase price
for the apartment acquisitions described above. These credit lines give the
company added flexibility to implement its growth strategy.
RESULTS OF OPERATIONS
Net income for the quarter and nine months ended April 30, 1996 was $8,251,000
($.60 per share) and $19,830,000 ($1.65 per share), compared to $4,913,000 ($.45
per share) and $17,562,000 ($1.61 per share) for the same quarter and nine
months last year. Included in the April 30, 1996 nine months results were net
losses on sales of investments of $899,000 ($.08 per share), compared to net
gains on sales of investments of $370,000 ($.04 per share) for the nine months
ended April 30, 1995.
Funds from operations totaled $10,993,000 and $27,418,000 for the quarter and
nine months ended April 30, 1996, up 12.7% and 9.5% from the same periods last
year on a per share basis. Funds from operations is defined as net income
(computed in accordance with generally accepted accounting principles),
excluding gains (or losses) from debt restructuring and sales of property, plus
provisions for depreciation, amortization and possible investment losses.
Because income-producing properties are typically evaluated without taking into
account non-cash charges such as provisions for depreciation, amortization and
possible investment losses, management believes that funds from
10
<PAGE>
operations is an appropriate supplemental measure of the company's operating
performance.
At April 30, 1996, overall occupancy levels by property asset class were as
follows:
PROPERTY TYPE OVERALL OCCUPANCY
----------------------------------------------------------------------
Apartments 94%
Other Real Estate Assets 96%
The overall occupancy for the apartment portfolio is calculated by multiplying
the occupancy for each property by the number of apartment units and dividing by
the total number of apartment units. The overall occupancy for the other real
estate assets is calculated by multiplying the occupancy for each property by
its square footage and dividing by the total square footage of all the non-core
assets.
REVENUE
Rental income, comprising approximately 96% of total revenue, rose 38.4% for the
quarter and 19.7% for the nine months ended April 30, 1996 from the comparable
periods last year. The increases reflect the properties acquired upon
consummation of the Merger and improved performance of existing apartment
communities.
EXPENSES
Operating expenses of equity investments increased 34% and 25% for the
quarter and nine months ended April 30, 1996 from the year earlier periods,
primarily due to properties added to the portfolio through the Merger and
expenses on the new apartment acquisitions.
For the quarter and nine month period ended April 30, 1995, general and
administrative expenses were $1,326,000 and $3,968,000, before any
reclassifications. General and administrative expenses were $1,146,000 for
the quarter ended April 30, 1996 and $2,921,000 for the nine months ended
April 30, 1996, after making the adjustments and reclassifications described
in the following paragraph.
Commencing August 1, 1995, BRE began allocating a portion of its salaries,
employee benefits and other personnel costs to the real estate expense of the
properties in the portfolio. While this reclassification does not change the
company's net income or funds from operations, such an allocation reduces
reported general and administrative expenses and increases real estate
expense by an equal amount. Management believes that this allocation is
consistent with industry practices and will provide a better matching of the
revenue generated by the properties and the expenses required to generate
that revenue. The amounts reclassified from general and administrative
expenses to real estate expenses under this allocation method were $266,000
and $1,065,000 for the quarter and nine months ended April 30, 1996
respectively.
11
<PAGE>
As more fully discussed in Note E of Notes to Financial Statements, on October
11, 1995, BRE entered into the Merger Agreement with RCT. Through April 30,
1996, BRE incurred or expects to incur investment banking, legal, accounting and
other costs related to the Merger aggregating $5,432,000. This amount was
allocated upon completion of the Merger, with $2,651,000 allocated to land and
building, and $2,781,000 to shareholders equity.
Interest expense was up $1,266,000 and $2,198,000 from the comparable quarter
and nine months last year. This increase reflected the notes assumed as part of
the Merger; utilization of bank credit lines to acquire Ballinger Commons and
Thrasher's Mill Apartments; and new mortgage loans, assumed since August 1,
1994, on Camino Seco Village, Colonia del Rio, Fountain Plaza, Hacienda del Rio,
Oracle Village, SpringHill and Verandas Apartments.
GAIN (LOSS) ON SALES
No gain or loss on sales of investments was recorded during the quarter ended
April 30, 1996. The company has recorded in its financial statements gains
totaling $62,307,000 which have been deferred for tax purposes since the
company's 1970 inception through April 30, 1996.
The losses on the previously discussed sales of Pomona Warehouse and Irvine
Spectrum aggregated $912,000 for the nine months ended April 30, 1996.
Offsetting the losses was the $13,000 increase in the reported gain on Marymoor
Warehouse, sold in November 1994.
DIVIDENDS
The $.66 per share dividend declared for the quarter ended April 30, 1996 was
approximately 83% of funds from operations. The dividend exceeded reportable
net income.
The special dividend of $.049 per share related to the Merger was effectively
declared upon completion of the Merger and paid on March 28, 1996 to
shareholders of record March 14, 1996.
Also on May 20, 1996, the Directors approved a two-for-one stock split to be
effected in the form of a stock dividend to shareholders of record June 7, 1996,
payable on June 27, 1996.
12
<PAGE>
PART II - OTHER INFORMATION
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of shareholders held on March 12, 1996, the shareholders
elected two Directors for three-year terms, and approved five corporate actions
by the following votes:
<TABLE>
<CAPTION>
BROKER
WITH- NON-
FOR AGAINST HELD VOTE
-------------------------------------------- ------- ----- --------
% of
Shares % of
Voted on Out- No. of No. of No. of
No. of Shares this Item standing Shares Shares Shares
------------- --------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
ITEM NO. 1
(Approval of Merger with Real
Estate Investment Trust of
California) 6,490,690 70% 59% 95,005 72,731 2,670,623
ITEM NO. 2
(Approval of Incorporation in
Maryland) 6,454,929 69% 59% 108,140 95,357 2,670,623
ITEM NO. 3
(Election of Directors)
CLASS II
L. Michael Foley 9,209,186 99% 84% 119,863
John McMahan 8,936,557 96% 81% 392,492
ITEM NO. 4
(Approval of Issuance of 5,911,672 63% 54% 613,087 133,666 2,670,624
Preferred Stock)
ITEM NO. 5
(Approval of 1995 Non-Employee
Director Stock Plan) 8,265,264 89% 75% 790,522 233,650 39,613
ITEM NO. 6
(Approval of 9,197,270 99% 84% 54,442 77,357
Auditors)
</TABLE>
The terms of office of the company's four other directors continued after the
Annual Meeting, as follows:
13
<PAGE>
Term Expires Class
------------ -----
C. Preston Butcher 1996 III
Frank C. McDowell 1996 III
Malcolm R. Riley 1997 I
Arthur G. von Thaden 1997 I
Upon completion of the Merger, the Board of Directors was increased from six to
nine members by BRE Board action. The following, each of whom was a trustee of
RCT, was appointed as a Director of BRE:
William E. Borsari 1996 III
Roger P. Kuppinger 1997 I
Gregory M. Simon 1998 II
ITEM 5. OTHER INFORMATION
On April 30, 1996, the company announced the selection of John McMahan
by the Board of Directors of the company to be Chairman of the Board.
Mr. McMahan who has been a member of the Board of Directors since 1993
succeeds Arthur G. von Thaden who will continue to serve as a director
of the company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are submitted herewith:
3(i). Articles of Amendment and Restatement of the Articles
of Incorporation of BRE Properties, Inc.
3(ii). By-laws of BRE Properties, Inc., as amended
10. Amended and Restated Non-Employee Director Stock Option
Plan, as amended December 18, 1995
11. Computation of Earnings Per Share
27. Financial Data Schedule
14
<PAGE>
(b) Reports on Form 8-K. The company filed a Current Report on Form
8-K on April 1, 1996 regarding the merger of Real Estate
Investment trust of California (RCT) into BRE Properties, Inc.,
in accordance with the terms and conditions of the Agreement and
Plan of Merger, dated October 11, 1995, as amended.
The Company filed a Current Report on Form 8-K/A on May 21, 1996
which amended the Report on Form 8-K filed on April 1, 1996.
Included in the amendment was the pro forma financial information
not available at the time of the April 1, 1996 filing of the Form
8-K.
15
<PAGE>
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 thereunto duly authorized.
BRE PROPERTIES, INC.
(Registrant)
Date June 13, 1996 /s/LeRoy E. Carlson
- ---------------------- ------------------------------------
Executive Vice President,
Chief Financial Officer and Secretary
16
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
3(i) Articles of Amendment and Restatement of the Articles of Incorporation
of BRE Properties, Inc. - Incorporated by reference to the Form 8-K
filed by the company on April 1, 1996.
3(ii) By-laws of BRE Properties, Inc., as amended - Incorporated by
reference to the S-4 Registration Statement of BRE Properties, Inc.,
(SEC File No. 33-65365) filed with the Securities and Exchange
Commission on December 22, 1995.
10. Amended and Restated Non-Employee Director Stock Option Plan - as
amended - Incorporate by reference to the S-4 Registration Statement
of BRE Properties, Inc., (SEC File No. 33-65365) filed with the
Securities and Exchange Commission on December 22, 1995.
11. Computation of Earnings Per Share
27 Financial Data Schedule
17
<PAGE>
BRE PROPERTIES, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
- -------------------------------------------------------------------------------
STATEMENT OF EARNINGS PER SHARE
The company issued 5,342,218 shares of BRE Common Stock for the conversion of
RCT shares outstanding pursuant to the merger on March 15, 1996.
Average shares outstanding are computed by adding the shares outstanding at each
month end and dividing that result by the number of months elapsed in the year-
to-date period.
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
April 30 April 30
----------------------------------- ------------------------------------
Primary earnings per share: 1996 1995 1996 1995
---- ---- ---- -----
<S> <C> <C> <C> <C>
Average shares outstanding 13,601,085 10,928,608 11,894,073 10,925,833
Net effect of in-the-money stock options 102,308 8,728 79,294 8,728
---------- ---------- ----------- ------------
Total average shares outstanding 13,703,393 10,937,336 11,973,367 10,934,561
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net income before (loss) gain on
sales of investments $8,251,000 $5,792,420 $20,729,000 $17,191,748
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Computation $.60 $.53 $1.73 $1.57
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net (loss) gain on
sales of investments ------- $ (879,643) $ (899,258) $370,119
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Computation ------- $(.08) $(.08) $.04
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
PRIMARY EARNINGS PER SHARE $.60 $.45 $1.65 $1.61
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
18
<PAGE>
BRE PROPERTIES, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
April 30 April 30
------------------------------------- ----------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 13,601,085 10,928,608 11,894,073 10,925,883
Net effect of in-the-money stock options 102,308 18,103 94,503 20,878
---------- ---------- ----------- -----------
Total shares 13,703,393 10,946,711 11,988,576 10,946,711
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Income before gain on sales of
investments $8,251,000 $5,792,420 $20,729,000 $17,191,748
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
As computed $.60 $.53 $1.73 $1.57
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net (loss) gain on sales of
investments and provision for ---- $(879,643) $(899,258) $370,119
investment losses ---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
As computed ---- $(.08) $(.08) $.04
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Fully diluted earnings
per share $.60 $.45 $1.65 $1.61
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1995
<PERIOD-END> APR-30-1996
<CASH> 2,255
<SECURITIES> 0
<RECEIVABLES> 17,743
<ALLOWANCES> (1,250)
<INVENTORY> 0
<CURRENT-ASSETS> 18,748
<PP&E> 697,554
<DEPRECIATION> (51,823)
<TOTAL-ASSETS> 664,479
<CURRENT-LIABILITIES> 9,507
<BONDS> 241,512
0
0
<COMMON> 163
<OTHER-SE> 413,297
<TOTAL-LIABILITY-AND-EQUITY> 664,479
<SALES> 55,733<F1>
<TOTAL-REVENUES> 55,733
<CGS> 17,970<F2>
<TOTAL-COSTS> 17,970
<OTHER-EXPENSES> 9,610<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,424
<INCOME-PRETAX> 20,729
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,729
<DISCONTINUED> 0
<EXTRAORDINARY> (899)<F4>
<CHANGES> 0
<NET-INCOME> 19,830
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.65
<FN>
<F1>Rental and other revenue
<F2>Real estate expenses
<F3>Includes $6,689 of depreciation expense, a non-cash charge
<F4>Net gain (loss) on sales of investments
</FN>
</TABLE>
