UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) April 10, 1997
ARDEN REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12193 95-4578533
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
9100 Wilshire Boulevard, East Tower, Suite 700 90212
Beverly Hills, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 271-8600
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired
535 Brand
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the Years Ended
December 31, 1996, 1995 and 1994
Notes to Statements of Revenue and Certain Expenses
Whittier Financial Center, Clarendon Crest and California Twin Centre
Combined Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Combined Statement of Revenue and Certain Expenses for the
Year Ended December 31, 1996
Notes to Combined Statement of Revenue and Certain Expenses
10780 Santa Monica
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
Noble Professional Center
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
South Bay Centre
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
8383 Wilshire
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
(b) Pro forma financial information.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statements of revenue and
certain expenses of 535 Brand for each of the three years in the
period ended December 31, 1996. This statement of revenue and
certain expenses is the responsibility of the management of 535
Brand. Our responsibility is to express an opinion on the
statements of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statements of revenue and certain expenses 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 financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
The accompanying statements of revenue and certain expenses
were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statements are not intended to be a
complete presentation of the revenue and expenses of the
property.
In our opinion, the statements of revenue and certain
expenses of 535 Brand present fairly, in all material respects,
the revenue and certain expenses, as defined above, of 535 Brand
for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Los Angeles, California
March 4, 1997
<TABLE>
535 BRAND
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(In thousands)
<S> <C> <C> <C>
Year ended December 31,
1996 1995 1994
Revenue:
Rental $707 $799 $870
Tenant reimbursements 74 86 102
Parking-net of expenses 90 92 84
Total revenue 871 977 1,056
Certain Expenses:
Property operating and maintenance 350 359 404
Real estate taxes 75 74 71
Insurance 34 27 27
Total certain expenses 459 460 502
Excess of revenue over
certain expenses $412 $517 $554
</TABLE>
See accompanying notes to statements of revenue and certain expenses.
535 BRAND
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
For the years ended December 31, 1996, 1995 and 1994
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statements of revenue and certain expenses
include the operations of 535 Brand (the "Property") located in
Southern California which was acquired by Arden Realty, Inc. (the
"Company"), from Arthur Gilbert, a minority interest OP Unit
holder and former member of the Board of Directors of the
Company. The Property was acquired for $10,175,000 and has
109,187 rentable square feet.
Basis of Presentation
The accompanying statements have been prepared to comply
with rules and regulations of the Securities and Exchange
Commission.
The accompanying statements are not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization and property general and
administrative costs not directly comparable to the future
operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $ 372,000
1998 298,000
1999 248,000
2000 221,000
2001 215,000
Thereafter 342,000
$1,696,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts. At December
31, 1996, two of the Property's tenants accounted for
approximately 55% of the Property's aggregate annualized base
rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying combined statement of
revenue and certain expenses of the Whittier Financial Center,
Clarendon Crest and California Twin Centre (the "Properties") for
the year ended December 31, 1996. This combined statement of
revenue and certain expenses is the responsibility of the
management of the Properties. Our responsibility is to express an
opinion on the combined statement of revenue and certain expenses
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the combined statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statement. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenue and certain
expenses was prepared for the purpose of complying with the rules
and regulations of the Securities and Exchange Commission.
Certain expenses (described in Note 1) that would not be
comparable to those resulting from the proposed future operations
of the property are excluded and the statement is not intended to
be a complete presentation
of the revenue and expenses of the Properties.
In our opinion, the combined statement of revenue and
certain expenses of Whittier Financial Center, Clarendon Crest
and California Twin Centre presents fairly, in all material
respects, the revenue and certain expenses, as defined above, of
the Properties for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 24, 1997
WHITTIER FINANCIAL CENTER, CLARENDON CREST
AND CALIFORNIA TWIN CENTRE
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $5,580
Tenant reimbursements 225
Parking-net of expenses 228
Other 15
Total revenue 6,048
Certain Expenses:
Property operating and maintenance 1,243
Real estate taxes 350
Insurance 164
Total certain expenses 1,757
Excess of revenue over certain expenses $4,291
See accompanying notes to statement of revenue and certain
expenses.
WHITTIER FINANCIAL CENTER, CLARENDON CREST
AND CALIFORNIA TWIN CENTRE
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying combined statement of revenue and certain
expenses include the operations of three commercial office
properties located in Southern California (the "Properties")
which were acquired by Arden Realty, Inc., a Maryland corporation
(the "Company") from the same nonaffiliated third party.
<TABLE>
The Properties acquired are as follows:
<S> <C> <C> <C>
Property Name Southern California Approximate
Location Rentable Acquisition
Square Footage Price
Whittier Financial Center Whittier 135,415 $14,327,000
Clarendon Crest Woodland Hills 43,063 5,222,000
California Twin Centre Bakersfield 155,189 19,528,000
$39,077,000
</TABLE>
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement was prepared on a combined basis
because the properties were acquired from a single owner. There
are no interproperty accounts to be eliminated.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the
Properties have been excluded. Excluded expenses consist of
interest, depreciation and amortization and property general and
administrative costs not directly comparable to
the future operation of the Properties.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Properties
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as
follows:
1997 $ 5,650,000
1998 5,406,000
1999 5,214,000
2000 4,959,000
2001 3,507,000
Thereafter 4,000,000
$28,736,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Properties is generally leased to
tenants under lease terms which provide for the tenants to pay
increases in operating expenses in excess of specified amounts.
At December 31, 1996, five of the Properties' tenants accounted
for approximately 60% of the Properties' aggregate annualized
base rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of 10780 Santa Monica for the year ended
December 31, 1996. This statement of revenue and certain expenses
is the responsibility of the management of 10780 Santa Monica.
Our responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of
the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of 10780 Santa Monica presents fairly, in all material
respects, the revenue and certain expenses, as defined above, of
10780 Santa Monica for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 28, 1997
10780 SANTA MONICA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $1,455
Tenant reimbursements 57
Parking-net of expenses 136
Other 2
Total revenue 1,650
Certain Expenses:
Property operating and maintenance 303
Real estate taxes 88
Insurance 26
Total certain expenses 417
Excess of revenue over certain expenses $1,233
See accompanying notes to statement of revenue and certain expenses.
10780 SANTA MONICA
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting
Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of 10780 Santa Monica (the "Property")
located in Southern California which was acquired by Arden
Realty, Inc. (the "Company"), from a nonaffiliated third party.
The Property was acquired for $10,533,000 and has 92,486 rentable
square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization and property general and
administrative costs not directly comparable to the future
operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $1,024,000
1998 679,000
1999 481,000
2000 315,000
2001 155,000
Thereafter -
$2,654,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of Noble Professional Center for the year ended
December 31, 1996. This statement of revenue and certain expenses
is the responsibility of the management of Noble Professional
Center. Our responsibility is to express an opinion on the
statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of
the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of Noble Professional Center presents fairly, in all
material respects, the revenue and certain expenses, as defined
above, of Noble Professional Center for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
March 7, 1997
NOBLE PROFESSIONAL CENTER
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $794
Tenant reimbursements 5
Parking-net of expenses 51
Total revenue 850
Certain Expenses:
Property operating and maintenance 258
Real estate taxes 59
Insurance 30
Total certain expenses 347
Excess of revenue over certain expenses $503
See accompanying notes to statement of revenue and certain expenses.
NOBLE PROFESSIONAL CENTER
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of Noble Professional Center (the
"Property") located in Southern California which was acquired by
Arden Realty, Inc. (the "Company"), from a nonaffiliated third
party. The Property was acquired for $6,720,000 and has
approximately 51,828 rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
the rules and regulations of the Securities and Exchange
Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization and property general and
administrative costs not directly comparable to the future
operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $ 848,000
1998 868,000
1999 554,000
2000 301,000
2001 135,000
Thereafter 25,000
$2,731,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts. At December
31, 1996, three of the Property's tenants accounted for
approximately 54% of the Property's aggregate annualized base
rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of South Bay Centre for the year ended December
31, 1996. This statement of revenue and certain expenses is the
responsibility of the management of South Bay Centre. Our
responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of South Bay Centre presents fairly, in all material
respects, the revenue and certain expenses, as defined above, of
South Bay Centre for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
May 7, 1997
SOUTH BAY CENTRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $2,691
Tenant reimbursements 143
Other 26
Total revenue 2,860
Certain Expenses:
Property operating and maintenance 974
Real estate taxes 190
Insurance 106
Total certain expenses 1,270
Excess of revenue over certain expenses $1,590
See accompanying notes to statement of revenue and certain expenses.
SOUTH BAY CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of South Bay Centre (the "Property")
located in Southern California which was acquired by Arden
Realty, Inc. (the "Company"), from a nonaffiliated third party.
The Property was acquired for $19,100,000 and has 202,830
rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization, land lease expense, and property
general and administrative costs not directly comparable to the
future operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $11,521,000
1998 10,622,000
1999 9,466,000
2000 7,718,000
2001 5,362,000
Thereafter 6,774,000
$51,463,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts. At
December 31, 1996, two of the Property's tenants accounted for
approximately 54% of the Property's aggregate annualized base rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of 8383 Wilshire for the year ended December 31,
1996. This statement of revenue and certain expenses is the
responsibility of the management of 8383 Wilshire. Our
responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of 8383 Wilshire presents fairly, in all material
respects, the revenue and certain expenses, as defined above, of
8383 Wilshire for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
April 24, 1997
8383 WILSHIRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $6,628
Parking-net of expenses 832
Other income 31
Total revenue 7,491
Certain Expenses:
Property operating and maintenance 2,003
Real estate taxes 634
Insurance 230
Total certain expenses 2,867
Excess of revenue over certain expenses $4,624
See accompanying notes to statement of revenue and certain expenses.
8383 WILSHIRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of 8383 Wilshire (the "Property") located
in Southern California which was acquired by Arden Realty, Inc.
(the "Company"), from a nonaffiliated third party. The Property
was acquired for approximately $59,000,000 and has 417,463
rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization and property general and
administrative costs not directly comparable to
the future operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $ 5,881,000
1998 4,654,000
1999 3,981,000
2000 3,238,000
2001 2,448,000
Thereafter 3,784,000
$23,986,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts.
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed consolidated
balance sheet as of March 31, 1997 is presented as if the
acquisition of properties acquired subsequent to March 31, 1997
and on or prior to May 12, 1997, including the properties
described in Item 2 of the related Form 8-K filed on May 22, 1997
(the "Second Quarter 1997 Acquisitions"), had been consummated on
March 31, 1997. The following unaudited pro forma condensed
consolidated statements of operations for the three months ended
March 31, 1997 and for the year ended December 31, 1996 are
presented as if: (i) the consummation of the initial public
offering of common stock in October 1996 (the "IPO"), and related
formation transactions in connection with the IPO; (ii) the
acquisition of properties acquired during 1996 (the "1996
Acquisitions"); and (iii) the acquisition of properties acquired
during 1997 (the "1997 Acquisitions") had occurred at January 1, 1996.
The pro forma condensed consolidated financial statements
are not necessarily indicative of what the actual financial
position or results of operations would have been had the Company
completed the transactions described above, nor do they purport
to represent the future financial position of the Company.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1997
(Unaudited)
(in thousands)
<S> <C> <C> <C>
Pro Forma
Arden Second Quarter Arden Realty,
Realty, Inc. 1997 Inc. Pro Forma
Acquisitions(A)
ASSETS
Commercial office properties, net $580,636 $100,800 $681,436
Cash and cash equivalents 822 (750) 72
Rents and other receivables 2,093 -- 2,093
Deferred rent 6,609 -- 6,609
Prepaid financing and leasing
costs, net 4,485 -- 4,485
Prepaid expenses and other assets 4,693 (850) 3,843
Total $599,338 $ 99,200 $698,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans payable $137,800 $37,200 $175,000
Unsecured lines of credit 60,000 62,000 122,000
Accounts payable and accrued
expenses 9,243 -- 9,243
Security deposits 3,958 -- 3,958
Dividends and distributions payable 8,677 -- 8,677
Total liabilities 219,678 99,200 318,878
Minority interests in
Operating Partnership 47,563 -- 47,563
Stockholders' equity:
Common Stock 217 -- 217
Additional paid-in capital 331,880 -- 331,880
Retained earnings -- -- --
Total stockholders' equity 332,097 -- 332,097
Total liabilities and
stockholders' equity $599,338 $99,200 $698,538
</TABLE>
See accompanying notes.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Pro Forma Adjustments
Arden Pre-Acquisition Other Arden Realty
Realty, Inc. Period for the Adjustments Inc. Pro Forma
1997 Acquisitions(C)
Revenues
Rental $21,892 $4,592 $155(D) $26,639
Tenant reimbursements 958 89 -- 1,047
Parking-net 1,490 344 -- 1,834
Other 576 28 -- 604
24,916 5,053 155 30,124
Other income 54 -- -- 54
Total revenue 24,970 5,053 155 30,178
Expenses
Property expenses 7,894 1,905 113(F) 9,912
REIT general
and administrative 918 -- 82(G) 1,000
Interest 3,024 -- 2,485(H) 5,509
Depreciation
and amortization 3,562 -- 653(I) 4,215
Total expenses 15,398 1,905 3,333 20,636
Income before
minority interests 9,572 3,148 (3,178) 9,542
Minority interests (1,134) -- 3(J) (1,131)
Net income $8,438 $3,148 $(3,175) $ 8,411
Weighted average
common shares
outstanding before
the conversion of
OP Units 21,921 21,921
Net income per common share $0.38 $0.38
</TABLE>
See accompanying notes.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Adjustments
Arden Realty, Arden Predecessors Equity in Net Loss Pre-acquisition Arden
Inc. Consolidated Combined Jan. 1, of Noncombined Period for the Realty,
Oct. 9, 1996 to 1996 to Oct. 8, Entities Jan. 1, 1996 1996 1997 Other Inc. Pro
Dec. 31, 1996 1996 to Oct. 8, 1996 Acquisitions(B) Acquisitions Adjustments Forma
Revenues
Rental $17,041 $32,287 $12,828 $23,095 $18,387 $767 (D) $104,405
Tenant
reimbursements 803 2,031 243 733 530 -- 4,340
Parking-net 1,215 3,692 846 1,161 1,337 -- 8,251
Other 375 1,125 357 606 79 -- 2,542
19,434 39,135 14,274 25,595 20,333 767 119,538
Other income 138 1,330 -- -- -- (1,253)(E) 215
Total revenues 19,572 40,465 14,274 25,595 20,333 (486) 119,753
Expenses
Property expenses 6,005 14,224 6,053 11,449 7,602 559(F) 45,892
General and
administrative 753 1,758 -- -- -- 1,489(G) 4,000
Interest 1,280 24,521 7,356 -- -- (11,124)(H) 22,033
Depreciation and
amortization 3,108 5,264 2,705 -- -- 5,423(I) 16,500
Total expenses 11,146 45,767 16,114 11,449 7,602 (3,653) 88,425
Equity in net
(loss) of
noncombined
entities -- (336) 336 -- -- -- --
Income (loss)
before minority
interests and
extraordinary
items 8,426 (5,638) (1,504) 14,146 12,731 3,167 31,328
Minority interests (993) 721 (721) -- -- (2,719)(J) (3,712)
Income (loss)
before
extraordinary
items 7,433 (4,917) (2,225) 14,146 12,731 448 27,616
Extraordinary
(loss) gain on
early
extinguishment of
debt, net of
minority interests
share (13,105) 1,877 -- -- -- 11,228(K) --
Net (loss) income $(5,672) $(3,040) $(2,225) $14,146 $12,731 $11,676 $27,616
Weighted average
common shares
outstanding
before conversion
of OP Units 21,680 21,680
Net (loss) income
per common share $(0.26) $1.27
</TABLE>
See accompanying notes.
ARDEN REALTY, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet
The adjustments to the Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1997 are as follows:
A. Acquisition of the Second Quarter 1997 Acquisitions with $1,600,000 of
cash and deposits and with proceeds of $37,200,000 of mortgage loans
payable and $62,000,000 on the unsecured lines of credit
Purchase price and actual and estimated additional closing costs of the
Second Quarter 1997 Acquisitions are as follows:
Second Quarter 1997 Acquisitions Purchase Price
10780 Santa Monica $ 10,550
Clarendon Crest 5,250
Noble Professional Center 6,750
South Bay Centre 19,150
8383 Wilshire 59,100
Total $100,800
2. Adjustments to the Pro Forma Condensed Consolidated Statements of Operations
The pro forma adjustments reflected in the Pro Forma Condensed Consolidated
Statements of Operations for the three months ended March 31, 1997 and the year
ended December 31, 1996 are set forth below:
B. Represents the preacquisition period for the 17 properties acquired
in 1996.
<TABLE>
1996 Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
400 Imperial 10351
Corporate 5832 9665 Bank 100 303 Santa 2730 Grand
Pointe Bolsa Wilshire Tower Broadway Norwalk Glenoaks Monica Wilshire Avenue
Revenue
Rental $390 $80 $548 $1,351 $1,554 $1,387 $1,980 $1,134 $ 960 $ --
Tenant
reimbursements 103 -- 19 29 107 40 48 11 -- --
Parking, net 28 10 58 124 88 66 129 99 43 --
Other 23 -- 32 15 74 4 138 7 12 --
Total revenues 544 90 657 1,519 1,823 1,497 2,295 1,251 1,015 --
Property expenses 123 8 203 574 581 578 956 551 451 --
Excess of revenue
over certain
expenses $421 $82 $454 $ 945 $1,242 $ 919 $1,339 $ 700 $ 564 $ --
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Burbank Los
Executive Plaza Angeles Sumitomo 10350
and California Center Corporate 5200 Bank Santa
Federal Building Promenade Center Century Building Monica Total
Revenue
Rental $2,156 $2,097 $5,882 $1,021 $1,926 $629 $23,095
Tenant
reimbursements -- 51 128 115 79 3 733
Parking, net 164 -- -- 40 254 58 1,161
Other -- -- 288 2 9 2 606
Total revenues 2,320 2,148 6,298 1,178 2,268 692 25,595
Property expenses 976 982 2,881 1,188 1,070 327 11,449
Excess of revenue
over certain
expenses $1,344 $1,166 $3,417 $ (10) $1,198 $365 $14,146
</TABLE>
C. Represents the actual preacquisition results for the 1997 Acquisitions:
<TABLE>
The 1997 Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> c> <C> <C>
Whittier
Financial,
Clarendon
10780 Crest, and Noble South
535 Santa California 6800 Professional Bay 8383
Brand Monica Twin Centre Owensmouth Center Center Wilshire Total
Revenue
Rental $707 $1,455 $5,580 $532 $794 $2,691 $6,628 $18,387
Tenant
reimbursements 74 57 225 26 5 143 -- 530
Parking, net 90 136 228 -- 51 -- 832 1,337
Other -- 2 15 5 -- 26 31 79
Total revenues 871 1,650 6,048 563 850 2,860 7,491 20,333
Property expenses 459 417 1,757 485 347 1,270 2,867 7,602
Excess of revenue
over certain
expenses $412 $1,233 $4,291 $ 78 $503 $1,590 $4,624 $12,731
</TABLE>
<TABLE>
Pre-Acquisition Period For the 1997 Acquisitions
For the Three Months Ended March 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Whittier
Financial,
Clarendon
10780 Crest, and Noble South
535 Santa California 6800 Professional Bay 8383
Brand Monica Twin Centre Owensmouth Center Centre Wilshire Total
Revenue
Rental $147 $385 $1,265 $153 $258 $696 $1,688 $4,592
Tenant
reimbursements 3 4 51 1 1 29 -- 89
Parking, net 14 36 58 -- -- -- 236 344
Other -- -- 3 -- -- 3 22 28
Total revenues 164 425 1,377 154 259 728 1,946 5,053
Property expenses 98 115 395 121 125 277 774 1,905
Excess of revenue
over certain
expenses $66 $310 $982 $33 $134 $451 $1,172 $3,148
</TABLE>
D. Increase in rental revenue to adjust the 1996 Acquisitions and the
1997 Acquisitions to straightline rental revenue calculated as though
the properties were purchased at January 1, 1996
E. Decrease in other income to eliminate nonrecurring construction fees which
would not have been realized by the Company and certain management fees
that will not be earned.
F. Increase in property general and administrative expenses related to
additional property payroll costs relating to the 1997 Acquisitions for
the period ended March 31, 1997 and to the 1996 Acquisitions and 1997
Acquisitions for the period ended December 31, 1996.
G. Increase in general and administrative expenses related to
expected level of operations as a public real estate investment
trust and the incremental increase relating to the management of
additional properties.
H. Increase (decrease) in interest expense:
Incremental increase (decrease) in interest expense associated with the
acquisitions of properties acquired during 1997 and 1996, net of mortgage
debt repaid in connection with the IPO for the year ended December 31, 1996
Three Months Ended Year Ended
March 31, 1997 December 31, 1997
I. Increase in depreciation expense:
Increase in depreciation expense to
reflect a full quarter of depreciation
for the 1997 Acquisitions for the three
months ended March 31, 1997 and a full
year of depreciation for the 1996
Acquisitions and 1997 Acquisitions for
the year ended December 31, 1996,
utilizing a 40 year useful life for
buildings and a 10 year useful life
for improvements $ 653 $ 5,293
Increase in depreciation due to the
fair value of consideration paid in
excess of book value of interests
in properties acquired from nonaffiliates
in connection with the completion of the IPO -- 130
Net increase in depreciation expense $ 653 $ 5,423
J. To reflect adjustment for minority interest of 11.85% in the
Operating Partnership.
K. To eliminate net extraordinary loss related to early
extinguishment of debt.
(c) Exhibits.
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 hereunto duly authorized.
ARDEN REALTY, INC.
Date: July 8, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
