<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File Number 333-21873
FIRST INDUSTRIAL, L.P.
(Exact name of Registrant as specified in its Charter)
DELAWARE 36-3924586
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
(312) 344-4300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 .
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FIRST INDUSTRIAL, L.P.
TABLE OF CONTENTS
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PAGE
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PART I.
<S> <C> <C>
Item 1. Business ............................................................................... 3
Item 2. The Properties ......................................................................... 7
Item 3. Legal Proceedings....................................................................... 22
Item 4. Submission of Matters to a Vote of Security Holders .................................... 22
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters .................. 22
Item 6. Selected Financial Data ................................................................ 22
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .. 25
Item 8. Financial Statements and Supplementary Data ............................................ 31
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures .. 31
PART III
Item 10. Directors and Executive Officers of the Registrant ..................................... 32
Item 11. Executive Compensation ................................................................. 32
Item 12. Security Ownership of Certain Beneficial Owners and Management ......................... 32
Item 13. Certain Relationships and Related Transactions ......................................... 32
PART IV.
Item 14. Exhibits, Financial Statements, Financial Statement Schedule and Reports on Form 8-K ... 32
SIGNATURES ............................................................................................ 36
</TABLE>
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This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1993, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. First Industrial, L.P.
(the "Operating Partnership") intends such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Reform Act of 1995, and is including this statement
for purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Operating Partnership, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "project," or similar expressions. The Operating Partnership's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on the
operations and future prospects of the Operating Partnership on a consolidated
basis include, but are not limited to, changes in: economic conditions generally
and the real estate market specifically, legislative/regulatory changes
(including changes to laws governing the taxation of REITs), availability of
capital, interest rates, competition, supply and demand for industrial
properties in the Operating Partnership's current and proposed market areas and
general accounting principles, policies and guidelines applicable to REITs.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Operating Partnership and its business, including
additional factors that could materially affect the Operating Partnership's
financial results, is included herein and in the Operating Partnership's other
filings with the Securities and Exchange Commission.
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PART I
ITEM 1. BUSINESS
THE COMPANY
GENERAL
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial Realty Trust, Inc. (the "Company") with an
approximate 86% ownership interest at December 31, 1997. The Company also owns a
preferred general partnership interest in the Operating Partnership ("Preferred
Units") with an aggregate liquidation priority of $150.0 million. The Company is
a real estate investment trust ("REIT") as defined in the Internal Revenue Code.
The Company's operations are conducted primarily through the Operating
Partnership. The limited partners of the Operating Partnership own, in the
aggregate, approximately a 14% interest in the Operating Partnership at
December 31, 1997.
The Operating Partnership owns 100% of FR Development Services, LLC, a
95% economic interest in FR Development Services, Inc. as well as a 99% limited
partnership interest (subject in one case as described below to a preferred
limited partnership interest) in First Industrial Financing Partnership, L.P.
(the "Financing Partnership"), First Industrial Securities, L.P. (the
"Securities Partnership"), First Industrial Mortgage Partnership, L.P (the
"Mortgage Partnership"), First Industrial Pennsylvania Partnership, L.P. (the
"Pennsylvania Partnership"), First Industrial Harrisburg Partnership, L.P. (the
"Harrisburg Partnership"), First Industrial Indianapolis, L.P. (the
"Indianapolis Partnership") and First Industrial Development Services Group,
L.P. (together, the "Other Real Estate Partnerships"). As of December 31,
1997, the Operating Partnership directly owned 522 in-service properties,
containing an aggregate of approximately 34.5 square feet of gross leasable
area ("GLA"). On a combined basis, as of December 31, 1997, the Other Real
Estate Partnerships owned 247 in-service properties containing an aggregate of
approximately 22.1 million square feet of GLA. Of the 247 properties owned by
the Other Real Estate Partnerships at December 31, 1997, 193 are owned by the
Financing Partnership, 19 are owned by the Securities Partnership, 23 are
owned by the Mortgage Partnership, six are owned by the Pennsylvania
Partnership, five are owned by the Harrisburg Partnership and one is owned by
the Indianapolis Partnership.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with a one percent general partnership interest in the Other
Real Estate Partnerships. Each general partner of the Other Real Estate
Partnerships is a wholly owned subsidiary of the Company. The general partner of
the Securities Partnership, First Industrial Securities Corporation, also owns a
preferred limited partnership interest in the Securities Partnership which
entitles it to receive a fixed quarterly distribution, and results in it being
allocated income in the same amount, equal to the fixed quarterly dividend the
Company pays on its 9.5% Series A Cumulative Preferred Stock.
The Operating Partnership is continuing and expanding the midwestern
industrial property business of The Shidler Group, a national organization with
over 20 years experience in the industrial real estate business. The Operating
Partnership utilizes an operating approach which combines the effectiveness of
locally based, or decentralized, property management, acquisition and
development functions with the cost efficiencies of centralized acquisition and
development support, capital markets expertise, asset management and fiscal
control systems. At March 26, 1998, the Operating Partnership had 315 employees.
The Operating Partnership has grown and will seek to continue to grow
through the acquisition of additional industrial properties and businesses, and
through the development, primarily on a pre-leased basis, of build-to-suit
properties.
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BUSINESS OBJECTIVES AND GROWTH PLANS
The Operating Partnership's fundamental business objective is
to maximize the total return to its partners through increases in per
unit distributions and increases in the value of the Operating
Partnership's properties and operations. The Operating Partnership's
growth plan includes the following elements:
- - - Internal Growth. The Operating Partnership seeks to grow internally by
(i) increasing revenues by renewing or re-leasing spaces subject to
expiring leases at higher rental levels; (ii) increasing occupancy
levels at properties where vacancies exist and maintaining occupancy
elsewhere; (iii) controlling and minimizing operating expenses; and
(iv) renovating existing properties.
- - - External Growth. The Operating Partnership seeks to grow externally
through (i) the acquisition of portfolios of industrial properties,
industrial property businesses or individual properties which meet the
Operating Partnership's investment parameters; (ii) the development of
primarily build-to-suit properties; and (iii) the expansion of its
properties.
BUSINESS STRATEGIES
The Operating Partnership utilizes the following seven
strategies in connection with the operation of its business:
- - - Organization Strategy. The Operating Partnership implements its
decentralized property operations strategy through the use of
experienced regional management teams and local property managers.
Each operating region is headed by a senior regional director, who is
a senior executive officer of, and has an equity interest in, the
Company. The Operating Partnership provides acquisition, development
and financing assistance, asset management oversight and financial
reporting functions from its headquarters in Chicago to support its
regional operations. The Operating Partnership believes the size of its
portfolio enables it to realize operating efficiencies by spreading
overhead over many properties and by negotiating quantity purchasing
discounts.
- - - Market Strategy. The Operating Partnership invests in markets where it
can achieve size and economies of scale. By focusing on specific
markets, properties can be added without incurring appreciable
increases in overhead. Based on the size of the Operating
Partnership's and the Other Real Estate Partnerships' portfolios in
their current markets, which as of December 31, 1997 averaged
approximately 2.4 million square feet per market, and the experience
of its senior regional directors, the Operating Partnership believes
that it has sufficient market presence and resources to compete
effectively. As of December 31, 1997, the Operating Partnership and
the Other Real Estate Partnerships owned portfolios in the
metropolitan areas of Atlanta, Georgia; Chicago, Illinois; Cincinnati,
Ohio; Cleveland, Ohio; Columbus, Ohio; Dallas, Texas; Dayton, Ohio;
Denver, Colorado; Des Moines, Iowa; Detroit, Michigan; Grand Rapids,
Michigan; Houston, Texas; Indianapolis, Indiana; Milwaukee, Wisconsin;
Minneapolis/St. Paul, Minnesota; Nashville, Tennessee; New Orleans,
Louisiana; Phoenix, Arizona; Salt Lake City, Utah; St. Louis, Missouri
and Tampa, Florida, as well as the regional areas of Central
Pennsylvania, Long Island, New York and New Jersey.
- - - Leasing and Marketing Strategy. The Operating Partnership has an
operational management strategy designed to enhance tenant satisfaction
and portfolio performance. The Operating Partnership pursues an active
leasing strategy, which includes aggressively marketing available
space, renewing existing leases at higher rents per square foot and
seeking leases which provide for the pass-through of property-related
expenses to the tenant. The Operating Partnership also has local and
national marketing programs which focus on the business and brokerage
communities and national tenants.
- - - Acquisition Strategy. The Operating Partnership's acquisition strategy
is to acquire properties in its current markets to capitalize on local
market expertise and maximize operating effectiveness and efficiencies
and, as appropriate opportunities arise, acquire additional properties
in other markets where it can achieve sufficient size and scale as well
as hire top-quality management.
- - - Development Strategy. Of the 769 properties in the Operating
Partnership's and the Other Real Estate Partnership's portfolio at
December 31, 1997, 197 have been developed by its current or former
management. The Operating Partnership will continue to leverage the
development capabilities of its management, many of
4
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whom are leading developers in their respective markets. In 1996, the
Operating Partnership formed a new subsidiary partnership, First
Industrial Development Services Group, L.P., of which, the Operating
Partnership has a 99% limited partnership interest, to focus on
development activities.
- - - Disposition Strategy. The Operating Partnership continually evaluates
local market conditions and property-related factors and will sell a
property when it believes it is to the Operating Partnership's
advantage to do so.
- - - Financing Strategy. The Operating Partnership believes that the size of
its portfolio, the diversity of its buildings and tenants and the
financial strength of the Operating Partnership allow its general
partner, the Company, access to the public capital markets which are
not generally available to smaller, less diversified property owners
because of the portfolio size and diversity requirements.
RECENT DEVELOPMENTS
In 1997, the Operating Partnership acquired or completed development of
388 properties for a total estimated investment of approximately $855.1 million
($115.2 million of which was issued as limited partnership interests in the
Operating Partnership together with general partnership Units) ("the Units") to
expand the in-service portfolio 96 percent. The Operating Partnership also
sold three in-service properties and one property held for redevelopment for
approximately $16.1 million of gross proceeds. At December 31, 1997, the
Operating Partnership owned 522 in-service properties containing approximately
34.5 million square feet.
The Operating Partnership improved its capital structure through the
following activities:
- - - The Operating Partnership continued to pay down and retire secured debt
and replace it with senior unsecured debt at lower interest rates.
- - - The Operating Partnership issued senior unsecured debt with staggered
maturity dates. During 1997, the Operating Partnership, issued $650.0
million of senior unsecured debt with maturity dates ranging from 2005 to
2027.
- - - The Operating Partnership terminated its $200.0 million unsecured
revolving credit facility (the "1996 Unsecured Acquisition Facility") and
entered into a $300.0 million unsecured revolving credit facility (the
"1997 Unsecured Acquisition Facility"). The 1997 Unsecured Acquisition
Facility initially bears interest at the London Interbank Offered Rate
("LIBOR") plus .80% which is .20% less than the 1996 Unsecured Acquisition
Facility for LIBOR borrowings.
- - - The Operating Partnership issued Preferred Units. On May 14, 1997, the
Company issued 4,000,000 depositary shares, representing 1/100th of a
share of the Company's 8 3/4%, $.01 par value, Series B Cumulative
Preferred Stock ("Series B Preferred Stock"), at an initial offering price
of $25 per depositary share. The net proceeds of $96.3 million received
from the Series B Preferred Stock were contributed to the Operating
Partnership in exchange for 8 3/4% Series B Cumulative Preferred Units (the
"Series B Preferred Units") and are reflected in the Operating
Partnership's financial statements as a preferred contribution. On June
6, 1997, the Company issued 2,000,000 depositary shares, representing
1/100th of a share of the Company's 8 5/8%, $.01 par value, Series C
Cumulative Preferred Stock ("Series C Preferred Stock"), at an initial
offering price of $25 per depositary share. The net proceeds of $48.0
million received from the Series C Preferred Stock were contributed to the
Operating Partnership in exchange for 8 5/8% Series C Cumulative Preferred
Units (the "Series C Preferred Units") and are reflected in the Operating
Partnership's financial statements as a preferred contribution.
- - - The Operating Partnership issued Units. On September 16, 1997, the Company
issued 637,440 shares of $.01 par value common stock (the "September 1997
Equity Offering"). The net proceeds of $18.9 million received from the
September 1997 Equity Offering were contributed to the Operating
Partnership in exchange for 637,440 Units and are reflected in the
Operating Partnership's financial statements as a general partner
contribution. On October 15, 1997, the Company issued 5,400,000 shares of
$.01 par value common stock ("October 1997 Equity Offering"). The net
proceeds of $176.6 million received from the October 1997 Equity Offering
were contributed to the Operating Partnership in exchange for 5,400,000
Units and are reflected in the Operating Partnership's financial statements
as a general partner contribution. During 1997, the Operating Partnership
issued 3,634,148 Units valued, in the aggregate, at $115.2 million in
exchange for interests in certain properties. These contributions are
reflected in the Operating Partnership's financial statements as a limited
partners contribution.
During the period January 1, 1998 though March 26, 1998, the Operating
Partnership purchased 51 properties containing an aggregate of 3.1 million
square feet of GLA for approximately $111.7 million, or $36.44 per square foot.
The purchase price consisted of approximately $109.8 million cash and Units
valued at approximately $1.9 million.
On January 27, 1998, the Operating Partnership registered $400.0
million of debt securities.
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On February 4, 1998, the Company issued 5,000,000 Depositary shares,
each representing 1/100th of a share of the Company's 7.95%, $.01 par value,
Series D Cumulative Preferred Stock ("Series D Preferred Stock") at an initial
offering price of $25 per depositary share. The net proceeds of $120.6 million
received from the Series D Preferred Stock were contributed to the
Operating Partnership in exchange for 7.95% Series D Cumulative Preferred Units
("the "Series D Preferred Units") and are reflected in the Operating
Partnership's financial statements as a preferred contribution.
On March 18, 1998, the Company issued 3,000,000 Depositary shares, each
representing 1/100th of a share of the Company's 7.90%, $.01 par value, Series E
Cumulative Preferred Stock ("Series E Preferred Stock") at an initial offering
price of $25 per depositary share. The net proceeds of $72.1 million received
from the Series E Preferred Stock were contributed to the Operating Partnership
in exchange for 7.90% Series E Cumulative Preferred Units (the "Series E
Preferred Units") and are reflected in the Operating Partnership's financial
statements as a preferred contribution.
On March 26, 1998, the Operating Partnership entered into an
underwriting agreement with J.P. Morgan Securities Inc. ("J.P. Morgan") and
certain other underwriters named therein (the "Underwriters"), pursuant to
which the Operating Partnership agreed to issue and sell $100.0 million of its
6 1/2% Dealer remarketable securities due April 5, 2011 (the "Drs."). The Drs.
will bear interest at 6 1/2% from the date of issuance through April 5,
2001. On April 5, 2001, the Drs. will be subject to mandatory tender to J.P.
Morgan, as the remarketing dealer, if they elect to remarket the Drs. If J.P.
Morgan elects not to remarket the Drs., the Operating Partnership will be
required to repurchase the Drs. on April 5, 2001 at 100% of the principal
amount thereof plus accrued and unpaid interest.
FUTURE ACQUISITIONS AND DEVELOPMENT
The Operating Partnership has an active acquisition and development
program through which it is continually engaged in identifying, negotiating and
consummating portfolio and individual industrial property acquisitions and
developments. As a result, the Operating Partnership is currently engaged in
negotiations relating to the possible acquisitions and developments of a number
of properties located in the Operating Partnership's current markets and other
markets into which the Operating Partnership may expand.
When evaluating potential acquisitions, the Operating Partnership will
consider such factors as: (i) the geographic area and type of property; (ii) the
location, construction quality, condition and design of the property; (iii) the
potential for capital appreciation of the property; (iv) the ability of the
Operating Partnership to improve the property's performance through renovation;
(v) the terms of tenant leases, including the potential for rent increases; (vi)
the potential for economic growth and the tax and regulatory environment of the
area in which the property is located; (vii) the potential for expansion of the
physical layout of the property and/or the number of sites; (viii) the occupancy
and demand by tenants for properties of a similar type in the vicinity; and (ix)
competition from existing properties and the potential for the construction of
new properties in the area.
INDUSTRY
Industrial properties are typically used for the design, assembly,
packaging, storage and distribution of goods and/or the provision of services.
As a result, the demand for industrial space in the United States is related to
the level of economic output. Historically, occupancy rates for industrial
property in the United States have been higher than those for other types of
commercial property. The Operating Partnership believes that the higher
occupancy rate in the industrial property sector is a result of the
construction-on-demand nature of, and the comparatively short development time
required for, industrial property. The following table summarizes the occupancy
rates by region for industrial properties for the past five years:
INDUSTRIAL SPACE OCCUPANCY RATES BY REGION
<TABLE>
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DECEMBER 31,
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<S> <C> <C> <C> <C> <C> <C>
Region 1993 1994 1995 1996 1997
------ ---- ---- ---- ---- ----
Midwest....................................... 92.8% 93.9% 95.1%. 94.3% 93.3%
East.......................................... 91.6 91.7 92.1 91.6 90.4
South......................................... 91.4 91.7 90.9 90.5 90.4
West.......................................... 91.0 92.5 93.0 93.3 91.7
United States................................. 91.7 92.6 93.1 92.7 91.6
</TABLE>
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Source: CB Commercial Real Estate Group, Inc.
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Item 2. THE PROPERTIES
GENERAL
At December 31, 1997, the Operating Partnership and the Other Real
Estate Partnerships owned 769 in-service properties (522 of which were owned by
the Operating Partnership and 247 of which were owned by the Other Real Estate
Partnerships) containing an aggregate of approximately 56.6 million square feet
of GLA in 22 states (34.5 million square feet of which comprised the properties
owned by the Operating Partnership and 22.1 million square feet of which
comprised the properties owned by the Other Real Estate Partnerships), with a
diverse base of more than 2,500 tenants engaged in a wide variety of
businesses, including manufacturing, retail, wholesale trade, distribution and
professional services. The properties are generally located in business parks
which have convenient access to interstate highways and rail and air
transportation. The median age of the Operating Partnership's and the Other
Real Estate Partnership's on a combined basis as of December 31, 1997 was
approximately 13 years.
The Operating Partnership and the Other Real Estate Partnerships
classify their properties into two industrial categories: bulk warehouse and
light industrial. The bulk warehouse properties are generally used for bulk
storage of materials and manufactured goods and the light industrial properties
are generally used for the design, assembly, packaging and distribution of goods
and, in some cases, the provision of services.
The following table summarizes certain information as of December 31,
1997 with respect to the properties owned by the Operating Partnership, each of
which is wholly owned by the Operating Partnership. Information in the table
excludes properties under development at December 31, 1997.
<TABLE>
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OPERATING PARTNERSHIP
PROPERTY SUMMARY
BULK WAREHOUSE LIGHTINDUSTRIAL TOTAL
------------------------- ------------------------- -----------------------------------------------------
GLA AS A %
NUMBER OF NUMBER OF NUMBER OF OCCUPANCY OF TOTAL
METROPOLITAN AREA GLA PROPERTIES GLA PROPERTIES GLA PROPERTIES AT 12/31/97 PORTFOLIO
- - ----------------------- ----------- ------------ ----------- ------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta 2,436,374 9 361,789 6 2,798,163 15 91% 8%
Chicago 2,367,110 12 1,118,411 13 3,485,521 25 94% 10%
Cincinnati 951,080 3 681,375 6 1,632,455 9 90% 5%
Cleveland - - 355,141 8 355,141 8 67% 1%
Columbus 1,608,804 4 56,849 1 1,665,653 5 99% 5%
Dallas 1,088,017 10 482,313 10 1,570,330 20 99% 5%
Dayton - - 322,746 6 322,746 6 98% 1%
Denver - - 3,651,688 95 3,651,688 95 94% 11%
Detroit 1,334,854 27 471,306 12 1,806,160 39 97% 5%
Houston 1,959,956 17 514,064 7 2,474,020 24 99% 7%
Indianapolis 1,273,580 7 1,073,780 26 2,347,360 33 95% 7%
Long Island 924,385 8 2,507,387 42 3,431,772 50 94% 10%
Milwaukee - - 331,119 7 331,119 7 98% 1%
Minneapolis/St. Paul 534,527 6 1,364,471 20 1,898,998 26 92% 6%
Nashville 538,811 3 480,118 8 1,018,929 11 98% 3%
New Jersey 344,176 3 1,567,596 47 1,911,772 50 95% 6%
New Orleans - - 557,453 15 557,453 15 89% 1%
Phoenix - - 535,394 5 535,394 5 100% 1%
Salt Lake - - 498,233 36 498,233 36 88% 1%
St. Louis 377,213 4 35,114 1 412,327 5 80% 1%
Tampa 153,377 2 919,841 28 1,073,218 30 93% 3%
Other (a) 535,700 4 141,601 4 677,301 8 99% 2%
----------- ------------ ----------- ------------- ------------ ------------ ------------
Total 16,427,964 119 18,027,789 403 34,455,753 522 94% 100%
============ ============ =========== ============= ============ ============ ============
</TABLE>
(a) Properties are located in Green Bay, Wisconsin; Shreveport and
Baton Rouge, Louisiana and Clarion, Iowa.
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The following table summarizes certain information as of December 31,
1997 with respect to the properties owned by the Other Real Estate Partnerships,
each of which is wholly owned by the Other Real Estate Partnerships. Information
in the table excludes properties under development at December 31, 1997.
Other Real Estate Partnerships
Property Summary
<TABLE>
<CAPTION>
BULK WAREHOUSE LIGHT INDUSTRIAL TOTAL
------------------------- ------------------------- -----------------------------------------------------
GLA as a %
NUMBER OF NUMBER OF NUMBER OF OCCUPANCY OF TOTAL
METROPOLITAN AREA GLA PROPERTIES GLA PROPERTIES GLA PROPERTIES AT 12/31/97 PORTFOLIO
- - ----------------------- ----------- ------------ ----------- ------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta 1,010,161 9 213,467 5 1,223,628 14 91% 5%
Central Pennsylvania 3,397,351 18 844,207 15 4,241,558 33 100% 19%
Chicago 1,602,251 13 528,740 8 2,130,991 21 94% 10%
Des Moines 879,043 5 54,000 1 933,043 6 100% 4%
Detroit 1,517,203 32 1,979,564 47 3,496,767 79 97% 16%
Grand Rapids 2,786,591 22 40,400 3 2,826,991 25 96% 13%
Indianapolis 976,273 1 514,539 3 1,490,812 4 99% 7%
Milwaukee - - 133,173 3 133,173 3 100% 1%
Minneapolis/St. Paul 1,330,460 10 1,877,522 25 3,207,982 35 99% 15%
Nashville 760,229 4 - - 760,229 4 100% 3%
St. Louis 601,108 10 385,713 3 986,821 13 99% 4%
Other (a) 301,355 4 378,603 6 679,958 10 100% 3%
----------- ------------ ----------- ------------- ------------ ------------ ------------
Total 15,162,025 128 6,949,928 119 22,111,953 247 98% 100%
============ ============ =========== ============= ============ ============ ============
</TABLE>
(a) Properties are located in Denton and Abilene, Texas; Wichita,
Kansas and West Lebanon, New Hampshire.
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PROPERTY ACQUISITION ACTIVITY
During 1997, the Operating Partnership completed 49 separate property
acquisition transactions totaling approximately 21.0 million square feet of GLA
at a total purchase price of approximately $817.1 million, or $38.91 per square
foot. The 380 properties acquired in the 49 separate property acquisition
transactions have the following characteristics:
<TABLE>
<CAPTION>
OCCUPANCY
METROPOLITAN AREA GLA PROPERTY TYPE AT 12/31/97 ACQUISITION DATE
--------------------------- ----------- ----------------------------------- ----------- --------------------
<S> <C> <C> <C> <C>
Indianapolis, IN 482,400 Bulk Warehouse 100% January 9, 1997
Long Island, NY 2,733,751 Bulk Warehouse/Light Industrial 94% January 31, 1997
Dayton, OH 58,746 Light Industrial 100% February 20, 1997
Detroit, MI 179,400 Bulk Warehouse 99% March 21, 1997
Buffalo Grove, IL 84,956 Light Industrial 100% March 28, 1997
New Brighton, MN 112,082 Light Industrial 100% March 31, 1997
Brooklyn Park, MN 79,675 Light Industrial 82% March 31, 1997
Minneapolis, MN 49,190 Light Industrial 100% April 3, 1997
Columbus, OH 243,000 Bulk Warehouse 93% April 4, 1997
Alsip, IL 320,171 Bulk Warehouse 97% May 29, 1997
West Allis, WI 92,815 Light Industrial 100% June 2, 1997
Wauwatosa, WI 25,150 Light Industrial 100% June 5, 1997
Green Bay, WI 25,254 Light Industrial 100% June 13, 1997
LaGrange, IL 59,075 Light Industrial 100% June 20, 1997
Wauwatosa, WI 39,800 Light Industrial 100% June 26, 1997
Elk Grove, IL 212,040 Light Industrial 100% June 30, 1997
New Jersey 697,778 Bulk Warehouse/Light Industrial 96% June 30, 1997
Oakland, NJ 52,402 Light Industrial 100% July 11, 1997
New Jersey 75,000 Light Industrial 93% July 18, 1997
New Jersey 458,666 Light Industrial 98% July 31, 1997
New Jersey 110,000 Light Industrial 100% August 1, 1997
New Jersey 118,750 Light Industrial 96% August 29, 1997
New Jersey 117,108 Light Industrial 100% August 29, 1997
Independence, OH 169,116 Light Industrial 92% September 19, 1997
Taylor, MI 102,400 Bulk Warehouse 100% September 23, 1997
Atlanta, GA 97,518 Bulk Warehouse 100% September 26, 1997
Hazelwood, MO 35,114 Light Industrial 100% September 30, 1997
Florence, KY 570,000 Light Industrial 100% September 30, 1997
Cleveland, OH 51,525 Light Industrial 100% October 1, 1997
Ford City, IL 563,458 Bulk Warehouse/Light Industrial 68% October 11, 1997
Nashville, TN 480,118 Light Industrial 96% October 17, 1997
Hicksville, NY 68,635 Light Industrial 89% October 23, 1997
Ford City, IL 391,470 Bulk Warehouse/Light Industrial 93% October 23, 1997
Cleveland, OH 32,000 Light Industrial 100% October 28, 1997
Denver, CO 3,573,495 Light Industrial 94% October 30, 1997
Eden Prairie, MN 89,456 Light Industrial 100% October 31, 1997
Indianapolis, IN 100,000 Bulk Warehouse 92% November 19, 1997
Denver, CO 71,344 Light Industrial 100% December 4, 1997
New Jersey 175,820 Bulk Warehouse/Light Industrial 79% December 5, 1997
Phoenix, AZ 437,342 Light Industrial 100% December 5, 1997
Hicksville, NY 100,000 Light Industrial 100% December 9, 1997
Multiple Markets (a) 4,751,077 Bulk Warehouse/Light Industrial 98% December 9, 1997
Tampa, FL 919,841 Bulk Warehouse/Light Industrial 92% December 11, 1997
Phoenix, AZ 98,052 Light Industrial 100% December 19, 1997
Salt Lake City, UT 498,233 Light Industrial 88% December 23, 1997
Houston, TX 346,819 Light Industrial 95% December 23, 1997
Hilliard, OH 255,470 Bulk Warehouse 100% December 29, 1997
Hauppauge, NY 21,900 Light Industrial 0% December 29, 1997
Ronkonkoma, NY 613,040 Light Industrial 94% December 29, 1997
----------
Total 21,040,452
==========
</TABLE>
(a) Markets include Atlanta, Georgia; Dallas, Texas; Houston, Texas;
New Orleans, Louisiana and Tampa, Florida.
9
<PAGE> 11
During 1997, the Other Real Estate Partnerships completed seven
separate property acquisition transactions totaling approximately 1.8 million
square feet of GLA at a total purchase price of approximately $45.3 million, or
$24.54 per square foot. The nine properties acquired in the seven separate
property acquistion transactions have the following
characteristics:
<TABLE>
<CAPTION>
Occupancy
Metropolitan Area GLA Property Type at 12/31/97 Acquisition Date
--------------------------- ----------- ----------------------------------- ----------- --------------------
<S> <C> <C> <C> <C>
York, PA 312,500 Bulk Warehouse 100% March 17, 1997
Mechanicsburg, PA 162,500 Light Industrial 100% March 24, 1997
Mechanicsburg, PA 178,600 Bulk Warehouse 100% June 2, 1997
Indianapolis, IN 161,539 Light Industrial 100% July 30, 1997
Polk, IA 54,000 Light Industrial 100% August 29, 1997
Indianapolis, IN 353,000 Light Industrial 100% September 23, 1997
Denver, PA 623,832 Bulk Warehouse 100% December 23, 1997
----------
Total 1,845,971
==========
</TABLE>
Property Development Activity
During 1997, the Operating Partnership completed eight developments
totaling approximately 1.2 million square feet of GLA at a total cost of
approximately $38.0 million, or $32.75 per square foot. The developed properties
have the following characteristics:
<TABLE>
<CAPTION>
Occupancy
Metropolitan Area GLA Property Type at 12/31/97 Completion Date
- - --------------------------- ------------ ------------------ ------------------- -----------------------
<S> <C> <C> <C> <C>
Livonia, MI 140,365 Bulk Warehouse 100% March 1, 1997
Atlanta, GA 181,200 Bulk Warehouse (a) March 10, 1997
Indianapolis, IN 10,000 Bulk Warehouse 100% April 1, 1997
Livonia, MI 127,800 Bulk Warehouse 100% November 21, 1997
Shreveport, LA 250,000 Bulk Warehouse 100% December 1, 1997
St. Louis, MO 178,800 Bulk Warehouse 100% December 12, 1997
Clarion, IA 126,900 Bulk Warehouse 100% December 16, 1997
Livonia, MI 145,232 Bulk Warehouse 100% December 31, 1997
===========
Total 1,160,297
===========
</TABLE>
(a) Property was sold on June 30, 1997.
During 1997, the Other Real Estate Partnerships completed two
developments and two expansions totaling approximately .6 million square feet of
GLA at a total cost of approximately $12.2 million, or $21.06 per square foot.
The developed properties have the following characteristics:
<TABLE>
<CAPTION>
OCCUPANCY
METROPOLITAN AREA GLA PROPERTY TYPE AT 12/31/97 COMPLETION DATE
- - --------------------------- ------------ ------------------ ------------------ ---------------------
<S> <C> <C> <C> <C>
Middleton, PA 216,387 Bulk Warehouse 100% March 1, 1997
Grand Rapids, MI 17,000 (a) Bulk Warehouse 100% April 1, 1997
Middleton, PA 321,333 Bulk Warehouse 100% June 1, 1997
Atlanta, GA 24,660 (a) Light Industrial 100% December 8, 1997
============
Total 579,380
============
</TABLE>
(a) Expansion.
At December 31, 1997, the Operating Partnership had four projects under
development with an estimated completion GLA of .5 million square feet and an
estimated completion cost of approximately $17.7 million.
At December 31, 1997, the Other Real Estate Partnerships had eight
projects under development, with an estimated completion GLA of 2.0 million
square feet and an estimated completion cost of approximately $72.7 million.
10
<PAGE> 12
PROPERTY SALES
During 1997, the Operating Partnership sold three in-service properties
totaling approximately .4 million square feet of GLA, one property held for
redevelopment and parcels of land. Total gross sales proceeds approximated
$16.1 million. The sold in-service properties have the following
characteristics:
<TABLE>
<CAPTION>
METROPOLITAN AREA GLA PROPERTY TYPE SALE DATE
- - ------------------------- ------------- -------------------- --------------------
<S> <C> <C> <C>
Atlanta, GA 202,880 Bulk Warehouse June 30, 1997
Atlanta, GA 181,200 Bulk Warehouse June 30, 1997
Plymouth, MI 27,990 Light Industrial December 18, 1997
------------
Total 412,070
============
</TABLE>
During 1997, the Other Real Estate Partnerships sold seven in-service
properties totaling approximately .4 million square feet of GLA and several land
parcels. Total gross sales proceeds approximated $17.6 million. The sold
in-service properties have the following characteristics:
<TABLE>
Metropolitan Area GLA Property Type Sale Date
- - ------------------------- ------------- -------------------- -------------------
<S> <C> <C> <C>
Nashville, TN (a) 227,267 Light Industrial June 30, 1997
Maryland Heights, MO 42,090 Light Industrial September 16, 1997
Farmington Hills, MI 17,564 Bulk Warehouse October 29, 1997
Troy, MI 54,675 Light Industrial December 15, 1997
Maryland Heights, MO 31,484 Bulk Warehouse December 22, 1997
-------------
Total 373,080
=============
</TABLE>
(a) Comprised of three properties.
Property Acquisitions Subsequent to Year End
During the period January 1, 1998 through March 26, 1998, the Operating
Partnership completed 16 separate property transactions totaling approximately
3.1 million square feet of GLA for approximately $111.7 million, or $36.44 per
square foot, with the following characteristics:
<TABLE>
Metropolitan Area GLA Property Type Acquisition Date
- - --------------------------- ------------- --------------------------------------- -----------------------
<S> <C> <C> <C>
Chicago, IL 53,500 Light Industrial January 9, 1998
Chicago, IL 149,500 Light Industrial January 12, 1998
Chicago, IL 203,548 Bulk Warehouse/Light Industrial January 12, 1998
Minneapolis, MN 318,013 Light Industrial January 15, 1998
Chicago, IL 288,000 Bulk Warehouse January 16, 1998
West Valley, UT 183,772 Light Industrial January 28, 1998
Chicago, IL 309,386 Bulk Warehouse/Light Industrial January 30, 1998
Denver, CO 448,186 Light Industrial January 30, 1998
Springboro, OH 69,220 Light Industrial February 11, 1998
Garden City, NY 42,700 Light Industrial March 3, 1998
Detroit, MI 75,200 Light Industrial March 12, 1998
Chicago, Il 200,000 Bulk Warehouse March 17, 1998
Farmingdale, NY 60,000 Light Industrial March 23, 1998
Columbus, OH 217,612 Light Industrial March 24, 1998
Sterling Heights, MI 66,132 Light Industrial March 24, 1998
Detroit, MI 382,063 Light Industrial March 25, 1998
------------
3,066,832
============
</TABLE>
During the period January 1, 1998 through March 26, 1998, the Other Real
Estate Partnerships completed two separate property transactions totaling
approximately .7 million square feet of GLA for approximately $24.1 million, or
$33.63 per square foot, with the following characteristics:
<TABLE>
Metropolitan Area GLA Property Type Acquisition Date
- - --------------------------- ------------- --------------------------------------- -----------------------
<S> <C> <C> <C>
Indianapolis, IN 181,950 Light Industrial March 4, 1998
Exton, PA 534,360 Light Industrial March 12, 1998
-------------
716,310
=============
</TABLE>
11
<PAGE> 13
Detail Property Listing
The following table lists all of the Operating Partnership's properties
as of December 31, 1997, by geographic market area.
PROPERTY LISTING
<TABLE>
<CAPTION>
LOCATION YEAR BUILT- LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ --------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta
- - -------
700 Westlake Parkway Atlanta, GA 1990 Light Industrial 3.50 56,400 82%
800 Westlake Parkway Atlanta, GA 1991 Bulk Warehouse 7.40 132,400 80%
4050 Southmeadow Parkway Atlanta, GA 1991 Light Industrial 6.60 87,328 100%
4051 Southmeadow Parkway Atlanta, GA 1989 Bulk Warehouse 11.20 171,671 0%
4071 Southmeadow Parkway Atlanta, GA 1991 Bulk Warehouse 17.80 209,918 100%
4081 Southmeadow Parkway Atlanta, GA 1989 Bulk Warehouse 12.83 254,172 100%
1875 Rockdale Industrial Conyers, GA 1966 Bulk Warehouse 5.70 121,600 100%
Blvd.
370 Great Southwest Pkwy Atlanta, GA 1986 Light Industrial 8.06 150,536 81%
(g)
955 Cobb Place Kennesaw, GA 1991 Bulk Warehouse 8.73 97,518 100%
6105 Boatrock Boulevard Atlanta, GA 1972 Light Industrial 1.79 32,000 100%
1640 Sands Place Marietta, GA 1977 Light Industrial 1.97 35,525 100%
3312 N. Berkeley Lake Road Duluth, GA 1969 Bulk Warehouse 52.11 1,040,276 100%
3495 Bankhead Highway (g) Atlanta, GA 1986 Bulk Warehouse 20.50 408,819 100%
--------- -------
SUBTOTAL OR AVERAGE 2,798,163 91%
--------- -------
CHICAGO
- - -------
7200 S. Leamington Bedford Park, IL 1950 Bulk Warehouse 12.24 310,752 100%
305-311 Era Drive Northbrook, IL 1978 Light Industrial 1.82 27,549 100%
700-714 Landwehr Road Northbrook, IL 1978 Light Industrial 1.99 41,835 100%
4330 South Racine Avenue Chicago, IL 1978 Bulk Warehouse 5.57 168,000 100%
13040 S. Crawford Avenue Alsip, IL 1976 Bulk Warehouse 15.12 400,076 100%
11241 Melrose Street Franklin Park, 1969 Bulk Warehouse 2.47 77,031 100%
IL
12301-12325 S. Laramie Alsip, IL 1975 Bulk Warehouse 8.83 204,586 100%
Avenue
6300 West Howard Street Niles, IL 1956/64 Light Industrial 19.50 364,000 100%
301 Hintz Wheeling, IL 1960 Light Industrial 2.51 43,636 100%
301 Alice Wheeling, IL 1965 Light Industrial 2.88 65,450 100%
1001 Commerce Court Buffalo Grove, 1989 Light Industrial 5.37 84,956 100%
IL
11939 South Central Avenue Alsip, IL 1972 Bulk Warehouse 12.60 320,171 97%
405 East Shawmut La Grange, IL 1965 Light Industrial 3.39 59,075 100%
2201 Lunt Elk Grove 1963 Light Industrial 7.98 212,040 100%
Village, IL
1010-50 Sesame Street Bensenville, IL (d) 1976 Bulk Warehouse 8.00 252,000 100%
5555 West 70th Place Bedford Park, IL 1973 Light Industrial 2.50 41,531 100%
3200-3250 South St. Louis Chicago, IL 1968 Light Industrial 8.66 74,685 64%
(g)
3110-3130 South St. Louis Chicago, IL 1968 Light Industrial 4.00 23,254 100%
7301 South Hamlin Chicago, IL 1975/86 Bulk Warehouse 1.49 56,017 43%
3740 West 74th Street Chicago, IL 1975/86 Light Industrial 2.14 80,400 100%
7401 South Pulaski Chicago, IL 1975/86 Bulk Warehouse 5.36 201,420 97%
3900 West 74th Street Chicago, IL 1975/86 Bulk Warehouse 2.13 79,907 100%
7501 South Pulaski Chicago, IL 1975/86 Bulk Warehouse 3.88 145,714 0%
410 West 169th Street South Holland, IL 1974 Bulk Warehouse 6.40 151,536 100%
--------- -----
SUBTOTAL OR AVERAGE 3,485,521 94%
--------- -----
CINCINNATI
- - ----------
9900-9970 Cincinnati, OH (a) 1970 Bulk Warehouse 10.64 185,580 97%
Princeton-Glendale
2940 Highland Avenue Cincinnati, OH (a) 1969/74 Bulk Warehouse 17.08 500,500 75%
4700-4750 Creek Road Blue Ash, OH (a) 1960 Bulk Warehouse 15.32 265,000 96%
4860 Duff Drive Cincinnati, OH 1979 Light Industrial 1.02 15,986 100%
4866 Duff Drive Cincinnati, OH 1979 Light Industrial 1.02 16,000 100%
4884 Duff Drive Cincinnati, OH 1979 Light Industrial 1.59 25,000 60%
4890 Duff Drive Cincinnati, OH 1979 Light Industrial 1.59 25,018 100%
9636-9643 Interocean Drive Cincinnati, OH 1983 Light Industrial 4.13 29,371 86%
7600 Empire Drive Florence, KY 1964 Light Industrial 38.73 570,000 100%
--------- -------
SUBTOTAL OR AVERAGE 1,632,455 90%
--------- -------
Cleveland
21510-21600 Alexander Oakwood, OH 1985 Light Industrial 5.70 106,721 98%
Rd. (h)
5405 & 5505 Valley Belt Independence, OH 1983 Light Industrial 6.23 62,395 83%
Rd. (g)
10145 Philipp Parkway Streetsboro, OH 1994 Light Industrial 4.00 51,525 100%
4410 Hamann Willoughby, OH 1975 Light Industrial 1.40 32,000 100%
6675 Parkland Boulevard Solon, OH 1991 Light Industrial 10.41 102,500 0%
-------- -----
SUBTOTAL OR AVERAGE 355,141 67%
-------- -----
COLUMBUS
- - --------
6911 Americana Parkway Columbus, OH 1980 Light Industrial 4.05 56,849 89%
3800 Lockbourne Columbus, OH 1986 Bulk Warehouse 43.60 404,734 100%
Industrial Pky
1819 North Walcutt Road Columbus, OH 1973 Bulk Warehouse 11.33 243,000 93%
3880 Groveport Road Obetz, OH 1986 Bulk Warehouse 22.13 705,600 100%
4300 Cemetery Road Hilliard, OH 1968 Bulk Warehouse 62.71 255,470 100%
99%
--------- -----
SUBTOTAL OR AVERAGE 1,665,653 99%
--------- -----
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
LOCATION YEAR BUILT- LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ --------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
DALLAS
- - ------
1275-1281 Roundtable Drive Dallas, TX 1966 Light Industrial 1.75 30,642 100%
2406-2416 Walnut Ridge Dallas, TX 1978 Light Industrial 1.76 44,000 100%
12750 Perimeter Drive Dallas, TX 1979 Light Industrial 6.72 178,200 100%
1324-1343 Roundtable Drive Dallas, TX 1972 Light Industrial 2.09 47,000 100%
1405-1409 Avenue II East Grand Prairie, 1969 Light Industrial 1.79 36,000 100%
TX
2651-2677 Manana Dallas, TX 1966 Bulk Warehouse 2.55 82,229 100%
2401-2419 Walnut Ridge Dallas, TX 1978 Light Industrial 1.20 30,000 100%
4248-4252 Simonton Farmers Ranch, 1973 Bulk Warehouse 8.18 205,693 100%
TX
900-906 Great Southwest Arlington, TX 1972 Bulk Warehouse 3.20 69,761 100%
Pkwy
2179 Shiloh Road Garland, TX 1982 Bulk Warehouse 3.63 65,700 100%
2159 Shiloh Road Garland, TX 1982 Light Industrial 1.15 20,800 100%
2701 Shiloh Road Garland, TX 1981 Bulk Warehouse 8.20 214,650 100%
12784 Perimeter Drive (h) Dallas, TX 1981 Light Industrial 4.57 95,671 86%
3000 West Commerce Dallas, TX 1980 Bulk Warehouse 11.23 128,478 100%
3030 Hansboro Dallas, TX 1971 Bulk Warehouse 3.71 100,000 100%
5222 Cockrell Hill Dallas, TX 1973 Bulk Warehouse 4.79 96,506 100%
405-407 113th Arlington, TX 1969 Bulk Warehouse 2.75 60,000 100%
816 111th Street Arlington, TX 1972 Bulk Warehouse 2.89 65,000 100%
--------- -----
SUBTOTAL OR AVERAGE 1,570,330 99%
--------- -----
DAYTON
- - ------
6094-6104 Executive Huber Heights, 1975 Light Industrial 3.33 43,200 100%
Boulevard OH
6202-6220 Executive Huber Heights, 1996 Light Industrial 3.79 64,000 100%
Boulevard OH
6268-6294 Executive Huber Heights, 1989 Light Industrial 4.03 60,800 100%
Boulevard OH
5749-5753 Executive Huber Heights, 1975 Light Industrial 1.15 12,000 50%
Boulevard OH
2200-2224 Sandridge Road Moriane, OH 1983 Light Industrial 2.96 58,746 100%
6230-6266 Executive Huber Heights, 1979 Light Industrial 5.30 84,000 100%
--------- -----
Boulevard OH SUBTOTAL OR AVERAGE 322,746 98%
--------- -----
DENVER
- - ------
7100 North Broadway - Denver, CO 1978 Light Industrial 16.80 32,269 100%
Bldg. 1
7100 North Broadway - Denver, CO 1978 Light Industrial 16.90 32,500 98%
Bldg. 2
7100 North Broadway - Denver, CO 1978 Light Industrial 11.60 22,259 84%
Bldg. 3
7100 North Broadway - Denver, CO 1978 Light Industrial 15.00 28,789 57%
Bldg. 5
7100 North Broadway - Denver, CO 1978 Light Industrial 22.50 38,255 91%
Bldg. 6
10691 East Bethany Drive Aurora, CO 1979 Light Industrial 1.84 25,026 91%
20100 East 32nd Avenue Aurora, CO 1997 Light Industrial 4.10 51,300 90%
Parkway
15700 - 15820 West 6th Golden, CO 1978 Light Industrial 1.92 52,758 96%
Avenue
12850-15884 West 6th Golden, CO 1978 Light Industrial 1.92 31,856 100%
Avenue
5454 Washington Denver, CO 1985 Light Industrial 4.00 34,740 88%
5801 West 6th Avenue Lakewood, CO 1980 Light Industrial 1.03 15,500 60%
5805 West 6th Avenue Lakewood, CO 1980 Light Industrial 1.03 20,358 93%
5815 West 6th Avenue Lakewood, CO 1980 Light Industrial 1.03 20,765 100%
5825 West 6th Avenue Lakewood, CO 1980 Light Industrial 1.03 20,748 100%
5835 West 6th Avenue Lakewood, CO 1980 Light Industrial 1.03 20,490 100%
525 East 70th Street Denver, CO 1985 Light Industrial 5.18 12,000 100%
565 East 70th Street Denver, CO 1985 Light Industrial 5.18 29,990 88%
605 East 70th Street Denver, CO 1985 Light Industrial 5.18 34,000 88%
625 East 70th Street Denver, CO 1985 Light Industrial 5.18 24,000 100%
665 East 70th Street Denver, CO 1985 Light Industrial 5.18 24,000 100%
700 West 48th Street Denver, CO 1984 Light Industrial 5.40 53,471 100%
702 West 48th Street Denver, CO 1984 Light Industrial 5.40 130,426 22%
3370 North Peoria Street Aurora, CO 1978 Light Industrial 1.64 26,993 100%
3390 North Peoria Street Aurora, CO 1978 Light Industrial 1.46 22,699 100%
3508-3538 North Peoria Aurora, CO 1978 Light Industrial 2.61 40,653 100%
Street
3568 North Peoria Street Aurora, CO 1978 Light Industrial 2.24 34,775 85%
3350 North Peoria Street Aurora, CO 1978 Light Industrial 2.16 33,573 100%
4785 Elati Denver, CO 1972 Light Industrial 3.34 34,777 100%
4770 Fox Street Denver, CO 1972 Light Industrial 3.38 26,565 100%
1550 West Evans Denver, CO 1975 Light Industrial 3.92 78,788 100%
12401-41 East 37th Avenue Denver, CO 1980 Light Industrial 1.19 26,922 77%
3751 - 71 Revere Street Denver, CO 1980 Light Industrial 2.41 54,666 100%
3871 Revere Street Denver, CO 1980 Light Industrial 3.19 75,625 100%
5454 Havana Street Denver, CO 1980 Light Industrial 2.68 42,504 100%
5500 Havana Street Denver, CO 1980 Light Industrial 2.19 34,776 100%
4570 Ivy Street Denver, CO 1985 Light Industrial 1.77 31,355 100%
5855 Stapleton Drive North Denver, CO 1985 Light Industrial 2.33 41,268 100%
5885 Stapleton Drive North Denver, CO 1985 Light Industrial 3.05 53,893 100%
5200-5280 North Broadway Denver, CO 1977 Light Industrial 1.54 31,780 100%
5977-5995 North Broadway Denver, CO 1978 Light Industrial 4.96 50,280 100%
2952-5978 North Broadway Denver, CO 1978 Light Industrial 7.91 88,977 100%
6400 North Broadway Denver, CO 1982 Light Industrial 4.51 69,430 100%
875 Parfer Street Lakewood, CO 1975 Light Industrial 3.06 49,216 100%
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
LOCATION YEAR BUILT- LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ --------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
DENVER (CON'T.)
- - ---------------
4721 Ironton Street Denver, CO 1969 Light Industrial 2.84 50,160 100%
833 Parfer Street Lakewood, CO 1974 Light Industrial 2.57 24,800 100%
11005 West 8th Avenue Lakewood, CO 1974 Light Industrial 2.57 25,672 100%
7100 North Broadway - 7 Denver, CO 1985 Light Industrial 2.30 24,822 97%
7100 North Broadway - 8 Denver, CO 1985 Light Industrial 2.30 9,107 100%
6804 East 48th Avenue Denver, CO 1973 Light Industrial 2.23 46,464 100%
15350 East Hinsdale Drive Denver, CO 1987 Light Industrial 3.18 20,800 100%
15353 East Hinsdale Drive Englewood, CO 1987 Light Industrial 2.28 15,600 100%
15373 East Hinsdale Drive Englewood, CO 1987 Light Industrial 0.85 6,240 100%
4611 East 46th Avenue Denver, CO 1974 Light Industrial 1.20 28,600 100%
East 47th Drive -A Denver, CO 1997 Light Industrial 3.00 51,200 100%
East 47th Drive - B Denver, CO 1997 Light Industrial 2.50 43,720 100%
Centennial Airport Denver, CO 1997 Light Industrial 3.20 59,270 100%
Business Pk.
9500 W. 49th Street - A Wheatridge, CO 1997 Light Industrial 1.74 19,217 100%
9500 W. 49th Street - B Wheatridge, CO 1997 Light Industrial 1.74 15,441 100%
9500 W. 49th Street - C Wheatridge, CO 1997 Light Industrial 1.74 29,174 100%
9500 W. 49th Street - D Wheatridge, CO 1997 Light Industrial 1.74 41,615 100%
8100 South Park Way - A Littleton, CO 1997 Light Industrial 3.33 52,160 100%
8100 South Park Way - B Littleton, CO 1984 Light Industrial 0.78 12,259 100%
8100 South Park Way - C Littleton, CO 1984 Light Industrial 4.28 67,520 100%
451-591 East 124th Avenue Littleton, CO 1979 Light Industrial 4.96 59,711 100%
14100 East Jewell Aurora, CO 1980 Light Industrial 3.67 58,553 100%
14190 East Jewell Aurora, CO 1980 Light Industrial 1.84 29,442 92%
608 Garrison Street Lakewood, CO 1984 Light Industrial 2.17 25,000 86%
610 Garrison Street Lakewood, CO 1984 Light Industrial 2.17 25,000 89%
1111 West Evans (A&C) Denver, CO 1986 Light Industrial 2.00 36,894 100%
1111 West Evans (B) Denver, CO 1986 Light Industrial 0.50 4,725 100%
15000 West 6th Avenue Golden, CO 1985 Light Industrial 5.25 69,583 85%
14998 West 6th Avenue E Golden, CO 1995 Light Industrial 2.29 42,832 100%
14998 West 6th Avenue F Englewood, CO 1995 Light Industrial 2.29 20,424 100%
12503 East Euclid Drive Denver, CO 1986 Light Industrial 10.90 97,871 100%
6547 South Racine Circle Englewood, CO 1996 Light Industrial 3.92 60,112 59%
7800 East Iliff Avenue Denver, CO 1983 Light Industrial 3.06 22,296 96%
2369 South Trenton Way Denver, CO 1983 Light Industrial 4.80 33,267 100%
2370 South Trenton Way Denver, CO 1983 Light Industrial 3.27 22,735 100%
2422 South Trenton Way Denver, CO 1983 Light Industrial 3.94 27,413 73%
2452 South Trenton Way Denver, CO 1983 Light Industrial 6.78 47,931 100%
8122 South Park Lane - A Littleton, CO 1986 Light Industrial 5.09 46,182 95%
8122 South Park Lane - B Littleton, CO 1986 Light Industrial 2.28 20,389 100%
1600 South Abilene Aurora, CO 1986 Light Industrial 3.53 47,930 100%
1620 South Abilene Aurora, CO 1986 Light Industrial 2.04 27,666 100%
1640 South Abilene Aurora, CO 1986 Light Industrial 2.80 37,948 100%
13900 East Florida Avenue Aurora, CO 1986 Light Industrial 1.44 19,493 86%
4301 South Federal Englewood, CO 1997 Light Industrial 2.80 35,381 100%
Boulevard
14401-14492 East 33rd Aurora, CO 1979 Light Industrial 4.75 100,100 100%
Place
11701 East 53rd Avenue Denver, CO 1985 Light Industrial 4.19 81,981 100%
5401 Oswego Street Denver, CO 1985 Light Industrial 2.80 53,838 100%
2630 West 2nd Avenue Denver, CO 1970 Light Industrial 0.50 8,260 100%
2650 West 2nd Avenue Denver, CO 1970 Light Industrial 2.80 36,081 100%
14818 West 6th Avenue Golden, CO 1985 Light Industrial 2.54 39,776 100%
Bldg. A
14828 West 6th Avenue Golden, CO 1985 Light Industrial 2.54 41,925 91%
Bldg. B
2075 South Valentia Denver, CO 1981 Light Industrial 2.42 22,093 86%
--------- -----
Subtotal or Average 3,651,688 94%
--------- -----
Detroit
- - -------
21477 Bridge Street Southfield, MI 1986 Light Industrial 3.10 41,500 100%
32450 N. Avis Drive Madison Heights, 1974 Light Industrial 3.23 55,820 100%
MI
32200 N. Avis Drive Madison Heights, 1973 Light Industrial 6.15 88,700 100%
MI
32440-32442 Industrial Madison Heights, 1979 Light Industrial 1.41 19,200 63%
Drive MI
32450 Industrial Drive Madison Heights, 1979 Light Industrial 0.76 10,350 100%
MI
11813 Hubbard Livonia, MI 1979 Light Industrial 1.95 33,300 100%
11844 Hubbard Livonia, MI 1979 Light Industrial 2.16 38,500 100%
11866 Hubbard Livonia, MI 1979 Light Industrial 2.32 41,380 100%
12050-12190 Hubbard Livonia, MI 1981 Light Industrial 6.10 85,086 100%
(g)
38200 Plymouth Livonia, MI 1997 Bulk Warehouse 11.43 140,365 100%
38220 Plymouth Livonia, MI 1988 Bulk Warehouse 13.14 145,232 100%
38300 Plymouth Livonia, MI 1997 Bulk Warehouse 6.95 127,800 100%
12707 Eckles Road Plymouth, MI 1990 Light Industrial 2.62 42,300 100%
9300-9328 Harrison Rd. Romulus, MI 1978 Bulk Warehouse 2.53 29,280 75%
9330-9358 Harrison Rd. Romulus, MI 1978 Bulk Warehouse 2.53 29,280 63%
28420-28448 Highland Rd Romulus, MI 1979 Bulk Warehouse 2.53 29,280 100%
28450-28478 Highland Rd Romulus, MI 1979 Bulk Warehouse 2.53 29,340 100%
28421-28449 Highland Rd Romulus, MI 1980 Bulk Warehouse 2.53 29,280 88%
28451-28479 Highland Rd Romulus, MI 1980 Bulk Warehouse 2.53 29,280 100%
28825-28909 Highland Rd Romulus, MI 1981 Bulk Warehouse 2.53 29,284 100%
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
LOCATION YEAR BUILT- LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBERANCES RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------- --------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
DETROIT (CON'T.)
- - ----------------
28933-29017 Highland Rd Romulus, MI 1982 Bulk Warehouse 2.53 29,280 100%
28824-28908 Highland Rd Romulus, MI 1982 Bulk Warehouse 2.53 29,280 100%
28932-29016 Highland Rd Romulus, MI 1982 Bulk Warehouse 2.53 29,280 100%
9710-9734 Harrison Road Romulus, MI 1987 Bulk Warehouse 2.22 25,925 100%
9740-9772 Harrison Road Romulus, MI 1987 Bulk Warehouse 2.53 29,414 50%
9840-9868 Harrison Road Romulus, MI 1987 Bulk Warehouse 2.53 29,280 100%
9800-9824 Harrison Road Romulus, MI 1987 Bulk Warehouse 2.22 25,620 100%
29265-29285 Airport Drive Romulus, MI 1983 Bulk Warehouse 2.05 23,707 100%
29185-29225 Airport Drive Romulus, MI 1983 Bulk Warehouse 3.17 36,658 100%
29149-29165 Airport Drive Romulus, MI 1984 Bulk Warehouse 2.89 33,440 100%
29101-29115 Airport Drive Romulus, MI 1985 Bulk Warehouse 2.53 29,287 100%
29031-29045 Airport Drive Romulus, MI 1985 Bulk Warehouse 2.53 29,280 100%
29050-29062 Airport Drive Romulus, MI 1986 Bulk Warehouse 2.22 25,620 100%
29120-29134 Airport Drive Romulus, MI 1986 Bulk Warehouse 2.53 29,282 100%
29200-29214 Airport Drive Romulus, MI 1985 Bulk Warehouse 2.53 29,280 100%
9301-9339 Middlebelt Road Romulus, MI 1983 Light Industrial 1.29 15,170 100%
21405 Trolley Industrial Taylor, MI 1971 Bulk Warehouse 11.25 179,400 99%
Road
26980 Trolley Industrial Taylor, MI 1997 Bulk Warehouse 5.43 102,400 100%
Drive
---------- -------
Subtotal or Average 1,806,160 97%
---------- -------
HOUSTON
- - -------
2102-2314 Edwards Street Houston, TX 1961 Bulk Warehouse 5.02 115,248 100%
4545 Eastpark Drive Houston, TX 1972 Bulk Warehouse 3.80 81,295 100%
3351 Ranch Street Houston, TX 1970 Bulk Warehouse 4.04 82,500 100%
3851 Yale Street Houston, TX 1971 Bulk Warehouse 5.77 132,554 100%
3337-3347 Ranch Street Houston, TX 1970 Bulk Warehouse 2.29 60,085 100%
8505 North Loop East Houston, TX 1981 Bulk Warehouse 4.99 107,769 100%
4749-4799 Eastpark Dr. Houston, TX 1979 Bulk Warehouse 7.75 182,563 100%
4851 Homestead Road Houston, TX 1973 Bulk Warehouse 3.63 142,250 90%
3365-3385 Ranch Street Houston, TX 1970 Bulk Warehouse 3.31 82,140 100%
5050 Campbell Road Houston, TX 1970 Bulk Warehouse 6.10 121,875 100%
4300 Pine Timbers Houston, TX 1980 Bulk Warehouse 4.80 113,400 100%
10600 Hampstead Houston, TX 1974 Light Industrial 1.26 19,063 100%
2300 Fairway Park Drive Houston, TX 1974 Light Industrial 1.25 19,008 100%
7969 Blakenship Houston, TX 1972 Light Industrial 2.27 48,140 100%
8001 Kempwood Houston, TX 1972 Light Industrial 1.45 33,034 100%
7901 Blankenship Houston, TX 1972 Light Industrial 2.17 48,000 100%
2500-2530 Fairway Park Houston, TX 1974 Bulk Warehouse 8.72 213,638 100%
6550 Longpointe Houston, TX 1980 Bulk Warehouse 4.13 97,700 100%
1815 Turning Basin Drive Houston, TX 1980 Bulk Warehouse 6.34 139,630 100%
1819 Turning Basin Drive Houston, TX 1980 Bulk Warehouse 2.85 65,494 100%
4545 Mossford Drive Houston, TX 1975 Bulk Warehouse 3.56 66,565 100%
1805 Turning Basin Drive Houston, TX 1980 Bulk Warehouse 7.60 155,250 100%
7000 Empire Drive Houston, TX (f) 1980 Light Industrial 6.25 94,781 94%
9777 West Gulfbank Drive Houston, TX (f) 1980 Light Industrial 15.45 252,038 96%
--------- -----
Subtotal or Average 2,474,020 99%
--------- -----
INDIANAPOLIS
- - ------------
1445 Brookville Way Indianapolis, IN (a) 1989 Light Industrial 8.79 115,200 100%
1440 Brookville Way Indianapolis, IN (a) 1990 Bulk Warehouse 9.64 166,400 100%
1240 Brookville Way Indianapolis, IN (a) 1990 Bulk Warehouse 3.50 63,000 100%
1220 Brookville Way Indianapolis, IN (a) 1990 Light Industrial 2.10 10,000 100%
1345 Brookville Way Indianapolis, IN (b) 1992 Light Industrial 5.50 132,000 100%
1350 Brookville Way Indianapolis, IN (a) 1994 Bulk Warehouse 2.87 38,460 100%
1315 Sadlier Circle East Indianapolis, IN (b) 1970/1992 Light Industrial 1.33 14,000 100%
Drive
1341 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 2.03 32,400 100%
Drive
1322-1438 Sadlier Circle Indianapolis, IN (b) 1971/1992 Light Industrial 3.79 36,000 100%
East Dr
1327-1441 Sadlier Circle Indianapolis, IN (b) 1992 Light Industrial 5.50 54,000 100%
West Dr
1304 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 2.42 17,600 100%
Drive
1402 Sadlier Circle East Indianapolis, IN (b) 1970/1992 Light Industrial 4.13 40,800 100%
Drive
1504 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 4.14 54,000 100%
Drive
1311 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 1.78 13,200 100%
Drive
1365 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 2.16 30,000 100%
Drive
1352-1354 Sadlier Circle Indianapolis, IN (b) 1970/1992 Light Industrial 3.50 44,000 55%
E. Drive
1335 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 1.20 20,000 100%
Drive
1327 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 1.20 12,800 100%
Drive
1425 Sadlier Circle East Indianapolis, IN (b) 1971/1992 Light Industrial 2.49 5,000 100%
Drive
1230 Brookville Way Indianapolis, IN (a) 1995 Light Industrial 1.96 15,000 100%
6951 East 30th Street Indianapolis, IN 1995 Light Industrial 3.81 44,000 100%
6701 East 30th Street Indianapolis, IN 1995 Light Industrial 3.00 7,820 100%
6737 East 30th Street Indianapolis, IN 1995 Bulk Warehouse 11.01 87,500 100%
1225 Brookville Way Indianapolis, IN 1997 Light Industrial 1.00 10,000 100%
6555 East 30th Street Indianapolis, IN 1969/1981 Bulk Warehouse 37.00 331,826 78%
2432-2436 Shadeland Indianapolis, IN 1968 Light Industrial 4.57 70,560 100%
8402-8440 East 33rd Street Indianapolis, IN 1977 Light Industrial 4.70 55,200 100%
8520-8630 East 33rd Street Indianapolis, IN 1976 Light Industrial 5.30 81,000 83%
8710-8768 East 33rd Street Indianapolis, IN 1979 Light Industrial 4.70 43,200 100%
3316-3346 North Pagosa Indianapolis, IN 1977 Light Industrial 5.10 81,000 100%
Court
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
LOCATION YEAR BUILT- LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ --------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INDIANAPOLIS (CON'T.)
- - ---------------------
3331 Raton Court Indianapolis, IN 1979 Light Industrial 2.80 35,000 100%
4430 Airport Expressway Indianapolis, IN 1970 Bulk Warehouse 32.00 486,394 100%
6751 East 30th Street Indianapolis, IN 1997 Bulk Warehouse 6.34 100,000 92%
--------- -----
Subtotal or Average 2,347,360 95%
--------- -----
Long Island
- - -----------
1140 Motor Parkway Huppauge, NY 1978 Bulk Warehouse 8.00 153,500 100%
10 Edison Street Amityville, NY 1971 Light Industrial 1.40 34,400 100%
120 Secatogue Avenue Farmingdale, NY 1957 Bulk Warehouse 2.60 63,571 66%
100 Lauman Lane Hicksville, NY 1968 Bulk Warehouse 1.90 36,700 74%
200 Finn Court Farmingdale, NY 1965 Bulk Warehouse 5.00 105,000 100%
243 Dixon Avenue Amityville, NY 1978 Light Industrial 1.30 22,250 100%
717 Broadway Avenue Holbrook, NY 1967 Bulk Warehouse 12.30 150,000 100%
725 Broadway Avenue Holbrook, NY 1967 Bulk Warehouse 8.00 122,160 82%
270 Duffy Avenue Hicksville, NY 1956 Light Industrial 8.40 134,382 97%
280 Duffy Avenue Hicksville, NY 1956 Light Industrial 2.60 49,200 100%
575 Underhill Boulevard Syosset, NY 1967 Light Industrial 16.60 233,424 97%
5 Sidney Court Lindenhurst, NY 1962 Light Industrial 1.70 29,300 100%
7 Sidney Court Lindenhurst, NY 1964 Light Industrial 5.10 34,000 100%
450 Commack Road Deer Park, NY 1964 Light Industrial 5.10 60,005 96%
99 Layfayette Drive Syosset, NY 1964 Bulk Warehouse 10.90 221,454 99%
65 East Bethpage Road Plainview, NY 1960 Light Industrial 1.40 27,276 93%
171 Milbar Boulevard Farmingdale, NY 1961 Light Industrial 2.30 62,600 99%
95 Horseblock Road Yaphank, NY 1971 Light Industrial 20.00 180,906 79%
151-171 East 2nd Street Huntington, NY 1968 Light Industrial 2.70 42,725 100%
171-175 East 2nd Street Huntington, NY 1969 Light Industrial 2.60 42,374 100%
35 Bloomingdale Road Hicksville, NY 1962 Light Industrial 1.40 32,850 100%
15-39 Tec Street Hicksville, NY 1965 Light Industrial 1.10 17,350 100%
100 Tec Street Hicksville, NY 1965 Light Industrial 1.20 25,000 100%
51-89 Tec Street Hicksville, NY 1965 Light Industrial 1.20 21,850 85%
502 Old Country Road Hicksville, NY 1965 Light Industrial 0.50 10,000 100%
80-98 Tec Street Hicksville, NY 1965 Light Industrial 0.75 13,050 100%
201-233 Park Avenue Hicksville, NY 1962 Light Industrial 1.70 36,917 100%
6851 Jericho Turnpike Syosset, NY 1969 Light Industrial 11.80 134,991 91%
One Fairchild Court Plainview, NY 1959 Light Industrial 5.75 57,420 93%
79 Express Street Plainview, NY 1972 Light Industrial 4.70 72,146 79%
92 Central Avenue Farmingdale, NY 1961 Bulk Warehouse 4.70 72,000 92%
160 Engineer Drive Hicksville, NY 1966 Light Industrial 1.90 29,500 100%
260 Engineers Drive Hicksville, NY 1966 Light Industrial 2.80 52,900 100%
87-119 Engineers Drive (g) Hicksville, NY 1966 Light Industrial 1.70 36,800 100%
950-970 South Broadway Hicksville, NY 1966 Light Industrial 2.65 55,146 90%
290 Duffy Avenue Hicksville, NY (c) 1974 Light Industrial 3.00 55,050 100%
185 Price Parkway Farmingdale, NY 1969 Light Industrial 6.40 100,000 100%
62 Alpha Plaza Hicksville, NY 1968 Light Industrial 2.64 34,600 100%
90 Alpha Plaza Hicksville, NY 1969 Light Industrial 1.36 34,035 78%
325 Duffy Avenue Hicksville, NY 1970 Light Industrial 6.64 100,000 100%
939 Motor Parkway Hauppauge, NY 1977 Light Industrial 1.50 21,900 0%
2070 5th Avenue Ronkonkoma, NY 1975 Light Industrial 3.66 50,296 100%
200 13th Avenue Ronkonkoma, NY 1979 Light Industrial 4.70 72,089 100%
100 13th Avenue Ronkonkoma, NY 1979 Light Industrial 4.14 62,898 100%
1 Comac Loop Ronkonkoma, NY 1980 Light Industrial 5.18 63,765 73%
80 13th Avenue Ronkonkoma, NY 1983 Light Industrial 6.22 87,102 87%
90 13th Avenue Ronkonkoma, NY 1982 Light Industrial 6.95 105,519 100%
33 Comac Loop Ronkonkoma, NY 1983 Light Industrial 5.37 71,904 92%
101-125 Comac Street Ronkonkoma, NY 1985 Light Industrial 8.42 99,467 95%
--------- -----
Subtotal or Average 3,431,772 94%
--------- -----
Milwaukee
- - ---------
6523 North Sidney Place Glendale, WI 1978 Light Industrial 4.00 43,440 83%
8800 West Bradley Milwaukee, WI 1982 Light Industrial 8.00 78,000 100%
1435 North 113th Street Wauwatosa, WI 1993 Light Industrial 4.69 51,950 100%
11217-43 West Becher West Allis, WI 1979 Light Industrial 1.74 29,099 100%
Street
2152 South 114th Street West Allis, WI 1980 Light Industrial 3.30 63,680 100%
4560 North 124th Street Wauwatosa, WI 1976 Light Industrial 1.31 25,150 100%
12221 West Feerick Street Wauwatosa, WI 1971 Light Industrial 1.90 39,800 100%
--------- ------
Subtotal or Average 331,119 98%
--------- ------
Minneapolis/St. Paul
- - --------------------
10120 West 76th Street Eden Prairie, MN 1987 Light Industrial 4.52 57,798 100%
7615 Golden Triangle Eden Prairie, MN 1987 Light Industrial 4.61 52,820 100%
7625 Golden Triangle Drive Eden Prairie, MN 1987 Light Industrial 4.61 73,125 97%
2605 Fernbrook Lane North Plymouth, MN 1987 Light Industrial 6.37 80,769 90%
12155 Nicollet Avenue Burnsville, MN 1995 Bulk Warehouse 5.80 48,000 100%
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
LOCATION YEAR BUILT LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES -RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ ---------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
MINNEAPOLIS/ST. PAUL (CON'T.)
- - -----------------------------
6701 Parkway Circle Brooklyn Center, MN 1987 Light Industrial 4.44 75,000 100%
6601 Shingle Creek Brooklyn Center, 1985 Light Industrial 4.59 68,899 99%
MN
9401 73rd Avenue North Brooklyn Park, MN 1995 Light Industrial 4.46 59,782 100%
1905 West Country Road C Roseville, MN 1993 Light Industrial 4.60 47,735 100%
2720 Arthur Street Roseville, MN 1995 Light Industrial 6.06 74,337 100%
10205 51st Avenue North Plymouth, MN 1990 Light Industrial 2.00 30,476 100%
4100 Peavey Road Chaska, MN 1988 Light Industrial 8.27 78,029 64%
11300 Hampshire Avenue Bloomington, MN 1983 Bulk Warehouse 9.94 125,950 54%
South
375 Rivertown Drive Woodbury, MN 1996 Bulk Warehouse 11.33 172,800 100%
5205 Highway 169 Plymouth, MN 1960 Light Industrial 7.92 97,770 95%
6451-6595 Citywest Parkway Eden Prairie, MN 1984 Light Industrial 6.98 83,189 99%
7100-7198 Shady Oak Road Eden Prairie, MN 1982 Bulk Warehouse 14.44 187,777 100%
(h)
1565 First Avenue NW New Brighton, MN 1978 Light Industrial 8.87 112,082 100%
7125 Northland Terrace Brooklyn Park, MN 1996 Light Industrial 5.89 79,675 82%
6900 Shady Oak Road Eden Prairie, MN 1980 Light Industrial 4.60 49,190 100%
7550-7588 Washington Eden Prairie, MN 1975 Light Industrial 2.70 29,739 100%
Square
7500-7546 Washington Eden Prairie, MN 1975 Light Industrial 5.40 44,600 100%
Square
5240-5300 Valley Shakopee, MN 1973 Light Industrial 9.06 80,000 88%
Industrial Blvd
6477-6525 City West Parkway Eden Prairie, MN 1984 Light Industrial 7.00 89,456 64%
--------- ------
Subtotal or Average 1,898,998 92%
--------- ------
Nashville
- - ---------
3099 Barry Drive Portland, TN 1995 Bulk Warehouse 6.20 109,058 100%
3150 Barry Drive Portland, TN 1993 Bulk Warehouse 26.32 268,253 100%
1650 Elm Hill Pike Nashville, TN 1984 Light Industrial 3.46 41,228 100%
1821 Air Lane Drive Nashville, TN 1984 Light Industrial 2.54 25,300 100%
1102 Appleton Drive Nashville, TN 1984 Light Industrial 1.73 28,022 82%
1920 Air Lane Drive Nashville, TN 1985 Light Industrial 3.19 49,912 81%
1931 Air Lane Drive Nashville, TN 1984 Light Industrial 10.11 87,549 95%
470 Metroplex Drive (g) Nashville, TN 1986 Light Industrial 8.11 102,052 99%
1150 Antiock Pike Nashville, TN 1987 Light Industrial 9.83 146,055 100%
5599 Highway 31 West Portland, TN 1995 Bulk Warehouse 20.00 161,500 100%
---------- -----
Subtotal or Average 1,018,929 98%
---------- -----
New Jersey
- - ----------
116 Lehigh Drive Fairfield, NJ 1986 Bulk Warehouse 5.00 106,184 100%
60 Ethel Road West Piscataway, NJ 1982 Light Industrial 3.93 42,802 100%
70 Ethel Road West Piscataway, NJ 1979 Light Industrial 3.78 61,500 100%
105 Neptune Boulevard Neptune, NJ 1989 Light Industrial 10.00 20,440 80%
140 Hanover Avenue Hanover, NJ 1964/1988 Light Industrial 2.95 25,261 72%
601-629 Montrose Avenue South 1974 Light Industrial 5.83 75,000 93%
Plainfield, NJ
3 Marlen Hamilton, NJ 1981 Light Industrial 1.11 13,174 100%
5 Marlen Hamilton, NJ 1981 Light Industrial 1.56 21,000 100%
7 Marlen Hamilton, NJ 1982 Light Industrial 2.05 28,400 100%
8 Marlen Hamilton, NJ 1982 Light Industrial 4.36 60,001 100%
15 Marlen Hamilton, NJ 1982 Light Industrial 1.19 13,562 100%
17 Marlen Hamilton, NJ 1981 Light Industrial 1.32 20,030 100%
1 South Gold Drive Hamilton, NJ 1973 Light Industrial 1.50 20,009 95%
2 South Gold Drive Hamilton, NJ 1974 Light Industrial 1.15 33,928 62%
5 South Gold Drive Hamilton, NJ 1974 Light Industrial 1.97 24,000 100%
6 South Gold Drive Hamilton, NJ 1975 Light Industrial 1.00 13,580 100%
7 South Gold Drive Hamilton, NJ 1976 Light Industrial 1.00 10,218 100%
8 South Gold Drive Hamilton, NJ 1977 Light Industrial 1.14 16,907 100%
9 South Gold Drive Hamilton, NJ 1980 Light Industrial 1.00 13,566 100%
11 South Gold Drive Hamilton, NJ 1979 Light Industrial 1.97 33,114 100%
12 South Gold Drive Hamilton, NJ 1980 Light Industrial 1.29 20,240 100%
9 Princess Road Lawrenceville, NJ 1985 Light Industrial 2.36 24,375 100%
11 Princess Road Lawrenceville, NJ 1985 Light Industrial 5.33 55,000 82%
15 Princess Road Lawrenceville, NJ 1986 Light Industrial 2.00 20,625 100%
17 Princess Road Lawrenceville, NJ 1986 Light Industrial 1.82 18,750 100%
220 Hanover Avenue Hanover, NJ 1987 Bulk Warehouse 29.27 158,242 100%
244 Shefield Street Mountainside, NJ 1965/1986 Light Industrial 2.20 23,000 100%
30 Troy Road Hanover, NJ 1972 Light Industrial 1.31 17,345 100%
15 Leslie Court Hanover, NJ 1971 Light Industrial 3.08 18,000 100%
20 Leslie Court Hanover, NJ 1974 Light Industrial 1.38 17,997 100%
25 Leslie Court Hanover, NJ 1975 Light Industrial 1.30 70,755 100%
130 Algonquin Parkway Hanover, NJ 1973 Light Industrial 5.50 29,008 100%
150 Algonquin Parkway Hanover, NJ 1973 Light Industrial 2.47 17,531 100%
55 Locust Avenue Roseland, NJ 1980 Bulk Warehouse 13.63 79,750 100%
31 West Forest Street (g) Englewood, NJ 1978 Light Industrial 6.00 110,000 100%
25 World's Fair Drive Franklin, NJ 1986 Light Industrial 1.81 20,000 100%
14 World's Fair Drive Franklin, NJ 1980 Light Industrial 4.53 60,000 100%
16 World's Fair Drive Franklin, NJ 1981 Light Industrial 3.62 43,400 100%
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
LOCATION YEAR BUILT LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES -RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ ---------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
New Jersey (con't.)
- - ---------------------
18 World's Fair Drive Franklin, NJ 1982 Light Industrial 1.12 12,809 100%
23 World's Fair Drive Franklin, NJ 1982 Light Industrial 1.20 15,540 100%
12 World's Fair Drive Franklin, NJ 1981 Light Industrial 3.85 65,000 100%
1 World's Fair Drive Franklin, NJ 1983 Light Industrial 3.85 53,372 100%
2 World's Faire Drive Franklin, NJ 1982 Light Industrial 2.06 59,310 75%
49 Napoleon Court Franklin, NJ 1982 Light Industrial 2.06 32,487 0%
50 Napoleon Court Franklin, NJ 1982 Light Industrial 1.52 20,158 100%
22 World's Fair Drive Franklin, NJ 1983 Light Industrial 3.52 50,000 90%
26 World's Fair Drive Franklin, NJ 1984 Light Industrial 3.41 47,000 100%
24 World's Fair Drive Franklin, NJ 1984 Light Industrial 3.45 47,000 100%
12 Wright Way Oakland, NJ 1981 Light Industrial 6.52 52,402 100%
--------- -----
Subtotal or Average 1,911,772 95%
--------- -----
New Orleans
- - -----------
520-524 Elmwood Park Jefferson, LA 1986 Light Industrial 5.32 102,209 81%
Blvd. (g)
125 Mallard St. St. Rose, LA (e) 1984 Light Industrial 1.38 23,436 33%
107 Mallard St. Rose, LA (e) 1985 Light Industrial 1.48 23,436 94%
125 James Drive West St. Rose, LA (e) 1990 Light Industrial 3.30 38,692 100%
161 James Drive West St. Rose, LA 1986 Light Industrial 2.80 47,474 93%
150 James Drive East St. Rose, LA 1986 Light Industrial 3.60 49,275 100%
115 James Drive West St. Rose, LA (e) 1986 Light Industrial 2.07 21,408 100%
100 James Drive St. Rose, LA (e) 1980 Light Industrial 6.66 48,000 100%
143 Mallard St. St. Rose, LA (e) 1982 Light Industrial 1.48 23,436 100%
160 James Drive East St. Rose, LA (e) 1981 Light Industrial 3.66 25,772 23%
190 James Drive East St. Rose, LA (e) 1987 Light Industrial 4.47 36,357 100%
120 Mallard St. St. Rose, LA (e) 1981 Light Industrial 3.41 53,440 100%
110 James Drive West St. Rose, LA (e) 1983 Light Industrial 1.57 24,018 96%
150 Canvasback Drive St. Rose, LA 1986 Light Industrial 2.80 40,500 100%
--------- ------
Subtotal or Average 557,453 89%
--------- -----
Phoenix
- - -------
7340 South Kyrene Road Tempe, AZ 1996 Light Industrial 7.20 63,720 100%
7350 S. Kyrene Road Tempe, AZ 1996 Light Industrial 5.36 99,384 100%
7360 South Kyrene Road Tempe, AZ 1996 Light Industrial 5.42 99,384 100%
7343 South Hardy Drive Tempe, AZ 1997 Light Industrial 7.84 174,854 100%
7333 South Hardy Drive Tempe, AZ 1997 Light Industrial 7.90 98,052 100%
--------- ------
Subtotal or Average 535,394 100%
--------- -----
Salt Lake
- - ---------
2255 South 300 West (i) Salt Lake City, UT 1980 Light Industrial 4.56 102,942 100%
512 Lawndale Drive (j) Salt Lake City, UT 1981 Light Industrial 35.00 395,291 85%
--------- -----
Subtotal or Average 498,233 88%
--------- -----
St. Louis
- - ---------
2337 Centerline Drive Maryland Heights, MO 1967 Bulk Warehouse 3.46 75,600 100%
6951 North Hanley Road (g) Hazelwood, MO 1965 Bulk Warehouse 9.50 122,813 33%
4560 Anglum Road Hazelwood, MO 1970 Light Industrial 2.60 35,114 98%
2760 South 1st Street St. Louis, MO 1997 Bulk Warehouse 11.00 178,800 100%
--------- -----
Subtotal or Average 412,327 80%
-------- -----
Tampa
- - -----
6614 Adamo Drive Tampa, FL 1967 Bulk Warehouse 2.78 41,377 100%
202 Kelsey Tampa, FL 1989 Bulk Warehouse 6.30 112,000 100%
6202 Benjamin Road Tampa, FL 1981 Light Industrial 2.04 29,845 100%
6204 Benjamin Road Tampa, FL 1982 Light Industrial 4.16 60,975 72%
6206 Benjamin Road Tampa, FL 1983 Light Industrial 3.94 57,708 100%
6302 Benjamin Road Tampa, FL 1983 Light Industrial 2.03 29,747 100%
6304 Benjamin Road Tampa, FL 1984 Light Industrial 2.04 29,845 100%
6306 Benjamin Road Tampa, FL 1984 Light Industrial 2.58 37,861 99%
6308 Benjamin Road Tampa, FL 1984 Light Industrial 3.22 47,256 80%
5313 Johns Road Tampa, FL 1991 Light Industrial 1.36 25,690 100%
5602 Thompson Center Court Tampa, FL 1972 Light Industrial 1.39 14,914 100%
5411 Johns Road Tampa, FL 1997 Light Industrial 1.98 30,204 100%
5525 Johns Road Tampa, FL 1993 Light Industrial 1.46 24,139 100%
5607 Johns Road Tampa, FL 1991 Light Industrial 1.34 13,500 50%
5709 Johns Road Tampa, FL 1990 Light Industrial 1.80 25,480 100%
5711 Johns Road Tampa, FL 1990 Light Industrial 1.80 25,455 100%
4410 East Adamo Drive Tampa, FL 1990 Light Industrial 5.60 101,744 100%
4420 East Adamo Drive Tampa, FL 1990 Light Industrial 1.40 26,650 100%
4430 East Adamo Drive Tampa, FL 1987 Light Industrial 3.75 64,551 79%
4440 East Adamo Drive Tampa, FL 1988 Light Industrial 3.75 64,800 100%
4450 East Adamo Drive Tampa, FL 1969 Light Industrial 4.00 46,462 48%
5453 West Waters Avenue Tampa, FL 1987 Light Industrial 0.66 7,200 63%
5455 West Waters Avenue Tampa, FL 1987 Light Industrial 2.97 32,424 100%
5553 West Waters Avenue Tampa, FL 1987 Light Industrial 2.97 32,424 100%
5501 West Waters Avenue Tampa, FL 1990 Light Industrial 1.53 15,870 100%
5503 West Waters Avenue Tampa, FL 1990 Light Industrial 0.68 7,060 100%
5555 West Waters Avenue Tampa, FL 1990 Light Industrial 2.31 23,947 100%
5557 West Waters Avenue Tampa, FL 1990 Light Industrial 0.57 5,860 100%
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
LOCATION YEAR BUILT LAND AREA OCCUPANCY AT
BUILDING ADDRESS CITY/STATE ENCUMBRANCES -RENOVATED BUILDING TYPE (ACRES) GLA 12/31/97
---------------- ---------- ------------ ---------- ------------- ------- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Tampa (con't)
- - -----
5903 Johns Road Tampa, FL 1987 Light Industrial 1.20 11,600 100%
4107 North Himes Avenue Tampa, FL 1990 Light Industrial 1.86 26,630 92%
--------- -----
Subtotal or Average 1,073,218 93%
--------- -----
Other
- - -----
931 Discovery Road Green Bay, WI 1997 Light Industrial 4.22 25,254 100%
11200 Industriplex Baton Rouge, LA 1986 Light Industrial 3.00 42,355 100%
Boulevard
11441 Industriplex Baton Rouge, LA 1987 Light Industrial 2.40 35,596 77%
Boulevard
11301 Industriplex Baton Rouge, LA 1985 Light Industrial 2.50 38,396 100%
Boulevard
6565 Exchequer Drive Baton Rouge, LA 1986 Bulk Warehouse 5.30 108,800 100%
2675 Valley View Drive Shreveport, LA 1997 Bulk Warehouse 12.00 250,000 100%
300 10th Street NW Clarion, IA 1997 Bulk Warehouse 8.63 126,900 100%
9580 Interport Drive Shreveport, LA 1989 Bulk Warehouse 3.00 50,000 100%
--------- -----
Subtotal or Average 677,301 99%
--------- -----
TOTAL 34,455,753 94%
========== =====
</TABLE>
(a) These properties collateralize the CIGNA Loan (hereinafter defined).
(b) These properties collateralize the Assumed Loans (hereinafter defined).
(c) This property collateralizes the LB Mortgage Loan II (hereinafter
defined).
(d) This property collateralizes the Acquisition Mortgage Loan I
(hereinafter defined).
(e) These properties collateralize the Acquisition Mortgage Loan II
(hereinafter defined).
(f) These properties collateralize the Acquisition Mortgage Loan III
(hereinafter defined).
(g) Comprised of two properties.
(h) Comprised of three properties.
(i) Comprised of seven properties.
(j) Comprised of 29 properties.
19
<PAGE> 21
TENANT AND LEASE INFORMATION
The Operating Partnership has a diverse base of approximately 2,000
tenants engaged in a wide variety of businesses including manufacturing, retail,
wholesale trade, distribution and professional services. Most leases have an
initial term of between three and five years and provide for periodic rental
increases that are either fixed or based on changes in the Consumer Price
Index. Industrial tenants typically have net or semi-net leases and pay as
additional rent their percentage of the property's operating costs, including
the costs of common area maintenance, property taxes and insurance. As of
December 31, 1997, approximately 94% of the GLA of the Operating Partnership's
properties was leased, and no single tenant or group of related tenants
accounted for more than 2.4% of the Operating Partnership's rent revenues, nor
did any single tenant or group of related tenants occupy more than 2.0%, of
the Operating Partnership's total GLA as of December 31, 1997.
The following table shows scheduled lease expirations for all leases for
the Operating Partnership's properties as of December 31, 1997.
<TABLE>
<CAPTION>
Annual Base Rent
Number of Percentage of Under Expiring Percentage of Total
Year of Leases GLA GLA Leases Annual Base Rent
Expiration (1) Expiring Expiring (2) Expiring (In thousands) Expiring (2)
-------------- -------- ------------ -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
1998 560 6,349,533 19.6% $ 28,537 20.0%
1999 444 7,069,000 21.8% 30,637 21.5%
2000 406 5,110,544 15.7% 22,642 15.8%
2001 229 3,967,218 12.2% 18,080 12.7%
2002 201 3,494,242 10.8% 16,321 11.5%
2003 55 1,094,200 3.4% 5,517 3.9%
2004 31 1,633,262 5.0% 6,009 4.2%
2005 17 615,226 1.9% 3,501 2.5%
2006 13 698,114 2.1% 2,652 1.9%
2007 12 1,108,237 3.4% 3,979 2.8%
Thereafter 14 1,340,351 4.1% 4,526 3.2%
============ =============== ================ ==================== =====================
Total 1,982 32,479,927 100.0% $ 142,401 100.0%
============ =============== ================ ==================== =====================
</TABLE>
- - --------------
(1) Lease expirations as of December 31, 1997 assuming tenants do not
exercise existing renewal, termination, or purchase options.
(2) Does not include existing vacancies of 1,975,826 aggregate square feet.
The Other Real Estate Partnerships have a diverse base of more than 500
tenants engaged in a wide variety of businesses including manufacturing,
retail, wholesale trade, distribution and professional services. Most leases
have an initial term of between three and five years and provide for periodic
rental increases that are either fixed or based on changes in the Consumer
Price Index. Industrial tenants typically have net or semi-net leases and pay
as additional rent their percentage of the property's operating costs,
including the costs of common area maintenance, property taxes and insurance.
As of December 31, 1997, approximately 98% of the GLA of the Other Real Estate
Partnerships' properties was leased, and no single tenant or group of related
tenants accounted for more than 2.8% of the Other Real Estate Partnerships'
rent revenues, nor did any single tenant or group of related tenants occupy
more than 3.5%, of the Other Real Estate Partnerships' total GLA as of
December 31, 1997.
20
<PAGE> 22
The following table shows scheduled lease expirations for all leases for
the Other Real Estate Partnerships' properties as of December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL BASE RENT
NUMBER OF PERCENTAGE OF UNDER EXPIRING PERCENTAGE OF TOTAL
YEAR OF LEASES GLA GLA LEASES ANNUAL BASE RENT
EXPIRATION (1) EXPIRING EXPIRING (2) EXPIRING (IN THOUSANDS) EXPIRING (2)
-------------- ------------ --------------- ---------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C>
1998 211 4,118,502 19.1% $ 17,931 19.7%
1999 139 3,235,946 15.0% 14,334 15.8%
2000 127 3,999,504 18.5% 17,406 19.2%
2001 66 3,358,465 15.5% 12,399 13.7%
2002 52 2,251,027 10.4% 8,860 9.7%
2003 23 1,742,797 8.1% 6,848 7.5%
2004 10 768,707 3.5% 3,147 3.5%
2005 9 924,187 4.3% 3,916 4.3%
2006 6 8,980 0.0% 933 1.0%
2007 7 514,981 2.4% 1,309 1.4%
Thereafter 3 683,210 3.2% 3,846 4.2%
============ =============== ================ ==================== =====================
Total 653 21,606,306 100.0% $ 90,929 100.0%
============ =============== ================ ==================== =====================
</TABLE>
- - --------------
(1) Lease expirations as of December 31, 1997 assuming tenants do not
exercise existing renewal, termination, or purchase options.
(2) Does not include existing vacancies of 505,647 aggregate square feet.
MORTGAGE LOANS
On March 20, 1996, the Operating Partnership and the Indianapolis
Partnership entered into a $36.8 million mortgage loan (the "CIGNA Loan") that
is collateralized by first mortgage liens on seven properties in Indianapolis,
Indiana and three properties in Cincinnati, Ohio. The CIGNA Loan matures on
April 1, 2003. The CIGNA Loan may be prepaid only after April 30, 1999 in
exchange for the greater of a 1% prepayment fee or a yield maintenance premium.
On March 20, 1996, the Operating Partnership assumed a $6.4 million
mortgage loan and a $3.0 million mortgage loan (together, the "Assumed Loans")
that are collateralized by 13 properties in Indianapolis, Indiana and one
property in Indianapolis, Indiana, respectively. The Assumed Loans mature on
January 1, 2013. The Assumed Loans may be prepaid only after December 22, 1999
in exchange for the greater of a 1% prepayment fee or a yield maintenance
premium.
On January 31, 1997, the Operating Partnership assumed a mortgage loan
in the amount of $.7 million (the "LB Mortgage Loan II"), which is
collateralized by a property located in Long Island, New York. The LB Mortgage
Loan II matures 180 days after the completion of a contingent event relating to
the environmental status of the property collaterizing the loan.
On October 23, 1997, the Operating Partnership assumed a $4.2 million
mortgage loan (the "Acquisition Mortgage Loan I") which is collateralized by a
property in Bensenville, Illinois. The Acquisition Mortgage Loan I matures on
August 1, 2008. The Acquisition Mortgage Loan I may be prepaid after July 15,
1998 in exchange for a prepayment fee.
On December 9, 1997, the Operating Partnership assumed an $8.0 million
mortgage loan (the "Acquisition Mortgage Loan II") that is collateralized by ten
properties in St. Charles, Louisiana. The Acquisition Mortgage Loan II matures
on April 1, 2006. The Acquisition Mortgage Loan II may be prepaid only after
April 9, 1999 in exchange for the greater of a 1% prepayment fee or a yield
maintenance premium.
On December 23, 1997, the Operating Partnership assumed a $3.6 million
mortgage loan (the "Acquisition Mortgage Loan III") that is collateralized by
two properties in Houston, Texas. The Acquisition Mortgage Loan III matures on
June 1, 2003. The Acquisition Mortgage Loan III may be prepaid only after June
30, 1998 in exchange for the greater of a 2% prepayment fee or a yield
maintenance premium.
21
<PAGE> 23
PROPERTY MANAGEMENT
At December 31, 1997, the Operating Partnership employees managed 514
of the Operating Partnership's 522 properties and eight properties were managed
at the local level by parties other than the Operating Partnership, with
oversight by the Operating Partnership's Senior Regional Directors. In each of
these cases, the Operating Partnership retains control over all leasing,
capital investment decisions, rent collection, accounting and most operational
decisions, allowing its local third-party managers limited operational
authority.
ITEM 3. LEGAL PROCEEDINGS
The Operating Partnership is involved in legal proceedings arising in
the ordinary course of business. All such proceedings, taken together, are not
expected to have a material impact on the Operating Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Units and the
Preferred Units. As of March 26, 1998, there were 231 holders of record of
Units and one holder of record (the Company) of Preferred Units.
Beginning with the third quarter of 1994, the Operating Partnership
has made consecutive quarterly distributions to its partners with respect to
Units since the initial public offering of the Company in June 1994. The
Operating Partnership has made consecutive quarterly distributions to the
Company with respect to Preferred Units since the issuance of each such
Preferred Units. The current indicated annual distribution rate with respect to
Units is $2.12 per Unit ($.53 per Unit per quarter). The annual distribution
rate with respect to Preferred Units is $218.75000 per Series B Unit ($54.68750
per Series B Unit per quarter), $215.62400 per Series C Unit ($53.90600 per
Series C Unit per quarter), $198.75000 per Series D Unit ($49.68750 per Series
D Unit per quarter) and $197.50000 per Series E Unit ($49.37500 per Series E
Unit per quarter). The Operating Partnership's ability to make distributions
depends on a number of factors, including its net cash provided by operating
activities, capital commitments and debt repayment schedules. Holders of Units
are entitled to receive distributions when, as and if declared by the Board of
Directors of the Company, its general partner, after the priority distributions
required under the Operating Partnership's partnership agreement have been
made with respect to Preferred Units, out of any funds legally available for
that purpose.
The following table sets forth the distributions per Unit paid by the
OP during the periods noted:
Calendar Period Distribution
1998:
First Quarter...................... $.5300
1997:
First Quarter...................... $.5300
Second Quarter..................... $.5050
Third Quarter...................... $.5050
Fourth Quarter..................... $.5050
1996:
First Quarter...................... $.5050
Second Quarter..................... $.4875
Third Quarter...................... $.4875
Fourth Quarter..................... $.4875
In 1995, the Operating Partnership issued no Units. In 1996, the
Operating Partnership issued an aggregate of 1,038,712 Units having an
aggregate value of $23.9 million in exchange for property. In 1997, the
Operating Partnership issued an aggregate of 3,634,148 Units having a
aggregate value of $115.2 million in exchange for property. As of March 26,
1998, the Operating Partnership has issued in 1998 an aggregate of 54,347 Units
having an aggregate value of $1.9 million in exchange for property.
All of the above Units were issued in private placements in reliance
on Section 4(2) of the Securities Act of 1933, as amended, including Regulation
D Promulgated thereunder, to individuals or entities holding real property or
interests therein. No underwriters were used in connection with such issuances.
Subject to lock-up periods and certain adjustments, Units are generally
convertible into common stock, par value $.01, of the Company on a one-for-one
basis.
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth selected financial and operating data for the
Operating Partnership on a historical basis and the Contributing Businesses on a
historical combined basis. The following data should be read in conjunction with
the financial statements and notes thereto and Management's Discussion and
Analysis of Financial Condition and Results of Operations included elsewhere in
this Form 10-K. The historical statements of operations for the years ended
December 31, 1997, 1996 and 1995 and the six months ended December 31, 1994
include the results of operations of the Operating Partnership as derived from
the Operating Partnership's audited financial statements. The historical balance
sheet data and other data as of December 31, 1997, 1996, 1995 and 1994 include
the balances of the Operating Partnership as derived from the Operating
Partnership's audited financial Statements. The historical balance sheet data as
of June 30, 1994 and December 31, 1993 and the combined statements of operations
for the six months ended June 30, 1994 and the year ended December 31, 1993 have
been derived from the historical financial statements of the Contributing
Businesses. In the opinion of management, financial data as of and for the
periods ended June 30, 1994 and December 31, 1993 include all adjustments
necessary to present fairly the information set forth therein.
22
<PAGE> 24
<TABLE>
<CAPTION>
==========================================================================================================================
CONTRIBUTING BUSINESSES
THE OPERATING PARTNERSHIP (COMBINED)
----------------------------------------------------- -------------------------
SIX
YEAR YEAR YEAR SIX MONTHS MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94 6/30/94 12/31/93
----------- ---------- ---------- ------------ ----------- --------
(In thousands, except per unit, ratio and property data)
<S> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total Revenues ............. $ 98,566 $ 37,587 $ 27,442 $ 9,604 $ 22,816 $ 33,237
Property Expenses ........... 29,183 9,935 7,478 2,120 6,036 8,832
General & Administrative
Expense .................... 5,820 4,014 3,792 1,047 795 1,416
Interest Expense............. 25,099 4,685 6,581 807 11,773 18,187
Amortization of Interest Rate
Protection Agreements and
Deferred Financing Cost .. 369 196 222 187 858 997
Depreciation & Other
Amortization ............. 15,873 6,310 5,087 1,916 4,744 7,105
Management and Construction
Income (Loss), Net ....... -- -- -- -- (81) (99)
Disposition of Interest Rate
Protection Agreements .... 4,038 -- -- -- -- --
Gain on Sales of Properties.. 728 4,344 -- -- -- --
Equity in Income of Other
Real Estate Partnerships.. 31,297 20,130 7,841 6,767 -- --
------------- ----------- ------------ ------------ ----------- -----------
Income (Loss) Before
Extraordinary Items ...... 58,285 36,921 12,123 10,294 (1,471) (3,399)
Extraordinary Loss (a) ...... (4,666) (2,273) -- -- (1,449) --
------------- ----------- ------------ ------------ ----------- -----------
Net Income (Loss)............ 53,619 34,648 12,123 10,294 $ (2,920) $ (3,339)
Preferred Unit Distributions. (7,936) -- -- -- =========== ===========
------------- ----------- ------------ ------------
Net Income Available to
Unitholders............... $ 45,683 $ 34,648 $ 12,123 $ 10,294
============= =========== ============ ============
Net Income Available to
Unitholders Before
Extraordinary Loss
Per Unit (Basic).......... $ 1.41 $ 1.38 $ .59 $ .50
============= =========== ============ ============
Net Income Available to
Unitholders Before
Extraordinary Loss
Per Unit (Diluted)........ $ 1.40 $ 1.38 $ .59 $ .50
============= =========== ============ ============
Net Income Available
to Unitholders
Per Unit (Basic).......... $ 1.28 $ 1.29 $ .59 $ .50
============= =========== ============ ============
Net Income Available
to Unitholders
Per Unit (Diluted)........ $ 1.27 $ 1.29 $ .59 $ .50
============= =========== ============ ============
Distributions Per Unit....... $ 2.045 $ 1.9675 $ 1.905 $ .945
============= =========== ============ ============
Weighted Average Number of
Units Outstanding (Basic).. 35,682 26,763 20,419 20,419
============= ============ ============ ============
Weighted Avenge Number of
Units Outstanding (Diluted). 35,987 26,849 20,419 20,419
============= ============ ============ ============
Balance Sheet Data (end of
period):
Net Investment in Real Estate.. $ 1,178,741 $ 345,648 $ 91,540 $ 159,056 $ 556,902 $ 171,162
Investment in Other Real
Estate Partnerships........ 643,621 258,411 241,918 208,274 --- ---
Total Assets.................. 1,870,183 622,122 356,060 375,220 616,767 189,789
Mortgage Loans, Acquisition
Facilities Payable, Senior
Unsecured Debt,
Construction
Loans and Promissory Notes
Payable.................... 839,592 59,897 53,108 48,700 305,000 179,568
Mortgage Loans
(affiliated)................. --- --- --- --- --- 7,624
Total Liabilities............. 904,006 86,890 69,291 61,676 323,703 227,553
Partners' Capital/ (Net
Deficit).................... 966,177 535,232 286,769 313,544 269,326 (37,764)
Other Data:
Cash Flows From Operating
$ 30,760 $ 18,871 $ 4,182 $ (10,299) $ 4,911 $ 8,700
Activities....................
Cash Flows From Investing
Activities (1,052,705) (202,673) (40,906) (61,352) (374,757) (17,124)
Cash Flows From Financing
Activities................... 1,022,645 181,604 43,182 66,232 374,152 9,093
Ratio of Earnings to Fixed
Charges and Preferred
Unit Distributions 2.29 x 6.96 x 2.68 x 1.65 x --- (c) --- (c)
(b)...........................
Total Properties
(d)........................... 522 137 30 50 226 124
Total GLA in sq. ft 34,455,753 12,650,986 3,488,921 4,857,281 17,393,813 6,376,349
(d)........................
Occupancy %
(d)............................ 94% 97% 97% 97% 97% 94%
==============================================================================================================================
</TABLE>
23
<PAGE> 25
(a) Upon consummation of the Initial Offering in June 1994, certain
Contributing Businesses' loans were repaid and the related unamortized
deferred financing fees totaling $1.5 million were written off. In 1996,
the Operating Partnership terminated certain revolving credit facilities.
The Operating Partnership recorded an extraordinary loss of $2.3 million
which is comprised of the write-off of unamortized deferred financing
fees, legal costs and other expenses. In 1997, the Operating Partnership
terminated an unsecured loan and a revolving credit facility. The
Operating Partnership recorded an extraordinary loss of $4.7 million which
is comprised of the write-off of unamortized deferred financing fees,
legal costs and other expenses.
(b) For purposes of computing the ratios of earnings to fixed charges and
preferred unit distributions earnings have been calculated by adding
fixed charges (excluding capitalized interest) to income (loss) before
disposition of interest rate protection agreement, gain on sales of
properties and extraordinary items. Fixed charges consist of interest
costs, whether expensed or capitalized, and amortization of interest rate
protection agreement(s) and deferred financing costs.
(c) Earnings were inadequate to cover fixed charges by approximately $1.4
million and $3.4 million for the six months ended June 30, 1994 and the
year ended December 31, 1993 respectively.
(d) As of end of period.
24
<PAGE> 26
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Financial and Operating Data" and the historical Consolidated and Combined
Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
At December 31, 1997, the Operating Partnership owned 522 in-service
properties containing approximately 34.5 million square feet of GLA, compared to
137 in-service properties with approximately 12.7 million square feet of GLA at
December 31, 1996. During 1997, the Operating Partnership acquired 380
properties containing approximately 21.0 million square feet of GLA, completed
development of eight properties totaling 1.2 million square feet of GLA and sold
three in-service properties totaling .4 million square feet of GLA and one
property held for redevelopment.
Rental income and tenant recoveries and other income increased in 1997
over 1996 by $61.0 million or 162% due primarily to the properties acquired
after December 31, 1995. Revenues from properties owned prior to January 1, 1996
remained relatively unchanged.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased in 1997 over 1996 by $19.2 million or 193.7% due primarily to
properties acquired after December 31, 1995. For properties owned prior to
January 1, 1996, property expenses remained relatively unchanged.
General and administrative expense increased in 1997 over 1996 by $1.8
million due primarily to the additional expenses associated with managing the
Operating Partnership's growing operations including additional professional
fees relating to additional properties owned and personnel to manage and expand
the Operating Partnership's business.
Interest expense increased by $20.4 million for the year ended December
31, 1997 compared to the year ended December 31, 1996 due primarily to a higher
average debt balance to fund a capital contribution to the Financing
Partnership for the purchase of U.S. Government securities to legally
defease a $300.0 million mortgage loan and to fund the acquisition and
development of additional properties.
Depreciation and amortization increased in 1997 over 1996 by $9.6
million due primarily to the additional depreciation and amortization related to
the properties acquired and placed in service after December 31, 1995.
The $4.0 million gain on the disposition of interest rate protection
agreements represents the sale of the Operating Partnership's interest rate
protection agreements in April 1997. These interest rate protection agreements,
together with the interest rate protection agreements of the Financing
Partnership, effectively fixed the annual interest rate on the Financing
Partnership's $300 million mortgage loan.
The $.7 million gain on sales of properties resulted from the sale of
three in-service properties. Gross proceeds for these property sales totaled
approximately $16.1 million.
Equity in income of Other Real Estate Partnerships increased in 1997
over 1996 by $11.2 million due primarily to interest income earned on U.S.
Government securities and the reinvestment cash proceeds from such securities
upon maturity that were pledged as collateral by the Financing Partnership to
legally defease the $300 million mortgage loan (the "1994 Defeased Mortgage
Loan"), additional net operating income (defined as revenues less property
related expenses) from properties acquired after December 31, 1995 and a gain
from the sales of real estate offset by an extraordinary loss and a loss from
the disposition of interest rate protection agreements.
The $4.7 million extraordinary loss in 1997 represents the write-off
of unamortized deferred financing costs, legal fees and other costs incurred to
terminate an unsecured loan and a revolving line of credit.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
At December 31, 1996, the Operating Partnership owned 137 in-service
properties containing approximately 12.7 million square feet of GLA, compared to
30 in-service properties with approximately 3.5 million square feet of GLA at
December 31, 1995. During 1996, the Operating Partnership acquired 111
properties containing approximately 9.4 million square feet of GLA, completed
development of two properties totaling .2 million square feet of GLA and sold
six properties totaling .4 million square feet of GLA.
Rental income and tenant recoveries and other income increased in 1996
over 1995 by 10.1 million or 37.0% due primarily to the properties acquired
after December 31, 1994. Revenues from properties owned prior to January
25
<PAGE> 27
1, 1995 increased in 1996 over 1995 by $.5 million or 7.4% due primarily to a
lease termination fee, an increase in rental rates and an increase in tenant
recovery income.
Property expenses, which include real estate taxes, repairs and
maintenance, property management, utilities, insurance and other expenses,
increased in 1996 over 1995 by $2.5 million or 32.9% due primarily to properties
acquired after December 31, 1994. For properties owned prior to January 1, 1995,
property expenses remained unchanged.
General and administrative expense increased in 1996 over 1995 by $.2
million due primarily to the additional expenses associated with managing the
Operating Partnership's growing operations including additional professional
fees relating to additional properties owned and personnel to manage and expand
the operating Partnership's business.
Interest expense decreased by $1.9 million for the year ended December
31, 1996 compared to the year ended December 31, 1995 due primarily to a lower
average debt balance due to capital contributions from the general partner of
the Operating Partnership that were used to pay down debt.
Depreciation and amortization increased in 1996 over 1995 by $1.2
million due primarily to the additional depreciation and amortization related to
the properties acquired after December 31, 1994.
The $4.3 million gain on sales of properties in 1996 resulted from the
sale of six properties. Gross proceeds for these property sales totaled
approximately $15.0 million.
Equity in income of Other Real Estate Partnerships increased in 1996
over 1995 by $12.3 million or 156.7% due primarily to four of the Other Real
Estate Partnerships having a full year of operations in 1996 compared to a
partial year of operations in 1995 as well as on of the Other Real Estate
Partnerships incurring a loss from the disposition of an interest rate
protection agreement in 1995.
The $2.3 million extraordinary loss in 1996 represents the write-off of
unamortized deferred financing costs and a prepayment fee incurred to
terminate certain revolving credit facilities.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997 the Operating Partnership's unrestricted cash and
cash equivalents totaled $5.0 million.
Net cash provided by operating activities was $30.8 million for the
year ended December 31, 1997 compared to $18.9 million for the year ended
December 31, 1996 and $4.2 million for the year ended December 31, 1995. The
increases are primarily due to increased net operating income as discussed in
the "Results of Operations" above.
Net cash used in investing activities was $1,052.7 million for the year
ended December 31, 1997 compared to $202.7 million for the year ended December
31, 1996 and $40.9 million for the year ended December 31, 1995. The majority of
the cash used in investing activities was for the acquisition of new properties
and contributions to the Other Real Estate Partnerships netted against
distributions received from Other Real Estate Partnerships and proceeds from the
sales of real estate.
Net cash provided by financing activities for the year ended December
31, 1997 increased to $1,022.6 million from $181.6 million for the year ended
December 31, 1996, reflecting the issuance of Units and Preferred Units and an
increase in net borrowings of senior unsecured debt partially offset by
increased Unit distributions and Preferred Unit Distributions. Net cash
provided by financing activities for the year ended December 31, 1996 was$181.6
million, compared to $43.2 million for the year ended December 31, 1995,
reflecting capital contributions from the general partner and proceeds from the
CIGNA Loan, offset in part by increased distributions, repayment of certain
construction loans and a net pay down on the Operating Partnership's
acquisition facilities.
26
<PAGE> 28
The ratio of earnings to fixed charges and preferred stock dividends
was 2.29 for the year ended December 31, 1997 compared to 6.96 for the year
ended December 31, 1996 and 2.56 for the year ended December 31, 1995. The
decrease in earnings to fixed charges and preferred Unit distributions is
primarily due to additional interest expense and Preferred Unit distributions
incurred in fiscal year 1997 from additional debt and Preferred Units issued in
fiscal year 1997 to fund property acquisitions and a capital contribution to the
Financing Partnership to fund the legal defeasance of its $300 million mortgage
loan. The increase in the earnings to fixed charges and preferred Unit
distributions between fiscal year 1996 and 1995 is primarily due to increased
net operating income as discussed in "Results of Operations" above.
In 1997, the Operating Partnership acquired 380 industrial properties
comprising approximately 21.0 million square feet of GLA for a total purchase
price of approximately $817.1 million, completed the development of eight
properties comprising approximately 1.2 million square feet of GLA at a cost of
approximately $38.0 million and sold three in-service properties comprising
approximately .4 million square feet of GLA and one property held for
redevelopment for gross proceeds of $16.1 million.
The Operating Partnership has committed to the construction of four
development projects with an estimated completion GLA of approximately .5
million square feet. The estimated total construction costs are approximately
$17.7 million. These developments are expected to be funded with cash flow from
operations as well as borrowings under the 1997 Unsecured Acquisition Facility.
In 1997, the Operating Partnership paid a quarterly distribution of
$.505 per Unit related to each of the first, second and third quarters. In
addition, the Operating Partnership paid a fourth quarter 1997 distribution of
$.53 per Unit on January 20, 1998. The total distributions paid to the Operating
Partnership's limited partners related to 1997 totaled $73.8 million.
In 1997, the Operating Partnership paid a period prorated Preferred
Unit distribution of $27.95 per preferred unit on its Series B Preferred Units
related to the second quarter and a $54.688 per Preferred Unit for each of the
third and fourth quarters. The total Preferred Unit distributions paid to the
Operating Partnership's Series B Preferred Unit unitholders related to 1997
totaled $5.5 million.
In 1997, the Operating Partnership paid a period prorated Preferred
Unit distribution of $68.123 per preferred unit on its Series C Preferred Units
related to each of the second and third quarters and $53.906 per Preferred Unit
for the fourth quarter. The total Preferred Unit distributions paid to the
Operating Partnership's Series C Preferred Unit unitholders related to 1997
totaled $2.4 million.
In conjunction with an acquisition of a portfolio of properties on
January 31, 1997, the Operating Partnership assumed two mortgage loans in the
amount of $3.8 million (the "LB Mortgage Loan I") and $.7 million (the "LB
Mortgage Loan II"). The LB Mortgage Loan I, which was collateralized by a
property located in Long Island, New York and provided for interest only
payments prior to its maturity date of July 11, 1998, was paid off and retired
by the Operating Partnership on December 19, 1997. The LB Mortgage Loan II,
which is collateralized by a property located in Long Island, New York, is
interest free until February, 1998, at which time the LB Mortgage Loan II bears
interest at 8.00% and provides for interest only payments prior to maturity. The
LB Mortgage Loan II matures 180 days after the completion of a contingent event
relating to the environmental status of the property collateralizing the loan.
In conjunction with the acquisition of a portfolio of properties on
October 23, 1997, the Operating Partnership assumed a mortgage loan in the
amount of $4.2 million (the "Acquisition Mortgage Loan I"). The Acquisition
Mortgage Loan I is collateralized by a property in Bensenville, Illinois, bears
interest at a fixed rate of 8.50% and provides for monthly principal and
interest payments based on a 15-year amortization schedule. The Acquisition
Mortgage Loan I matures on August 1, 2008. The Acquisition Mortgage Loan I may
be prepaid after July 15, 1998 in exchange for a prepayment fee.
In conjunction with the acquisition of a portfolio of properties on
December 9, 1997, the Operating Partnership assumed a mortgage loan in the
amount of $8.0 million (the "Acquisition Mortgage Loan II"). The Acquisition
Mortgage Loan II is collateralized by ten properties in St. Charles, Louisiana,
bears interest at a fixed rate of 7.75% and provides for monthly principal and
interest payments based on a 22-year amortization schedule. The Acquisition
Mortgage Loan II matures April 1, 2006. The Acquisition Mortgage Loan II may be
prepaid only after April 9, 1999 in exchange for the greater of a 1% prepayment
fee or a yield maintenance premium.
27
<PAGE> 29
In conjunction with the acquisition of a portfolio of properties on
December 23, 1997, the Operating Partnership assumed a Mortgage Loan in the
amount of $3.6 million (the "Acquisition Mortgage Loan III"). The Acquisition
Mortgage Loan III is collateralized by two properties in Houston, Texas, bears
interest at a fixed interest rate of 8.875% and provides for monthly principal
and interest payments based on a 20-year amortization schedule. The Acquisition
Mortgage Loan III matures on June 1, 2003. The Acquisition Mortgage Loan III may
be prepaid only after June 30, 1998 in exchange for the greater of a 2%
prepayment fee or a yield maintenance premium.
On April 4, 1997, the Operating Partnership entered into a $309.8
million unsecured loan (the "Defeasance Loan"). The Defeasance Loan bore
interest at LIBOR plus 1% and had a scheduled maturity of July 1, 1999. The
gross proceeds from the Defeasance Loan were contributed to the Financing
Partnership who used the contribution to purchase U.S. Government Securities as
substitute collateral to execute a legal defeasance of its $300.0 million
mortgage loan. The Defeasance Loan was paid off and retired in May, 1997.
On May 13, 1997, the Operating Partnership issued $150.0 million of
senior unsecured debt which matures on May 15, 2007 and bears a coupon interest
rate of 7.60% (the "2007 Notes"). The issue price of the 2007 Notes was 99.965%.
Interest is paid semi-annually in arrears on May 15 and November 15. The
Operating Partnership also entered into an interest rate protection agreement
which was used to fix the interest rate on the 2007 Notes prior to issuance. The
debt issue discount and the settlement amount of the interest rate protection
agreement are being amortized over the life of the 2007 Notes as an adjustment
to interest expense. The 2007 Notes contain certain covenants including
limitation on incurrence of debt and debt service coverage.
On May 13, 1997, the Operating Partnership issued $100.0 million of
senior unsecured debt which matures on May 15, 2027, and bears a coupon interest
rate of 7.15% (the "2027 Notes"). The issue price of the 2027 Notes was 99.854%.
The 2027 Notes are redeemable, at the option of the holders thereof, on May 15,
2002. Interest is paid semi-annually in arrears on May 15 and November 15. The
Operating Partnership also entered into an interest rate protection agreement
which was used to fix the interest rate on the 2027 Notes prior to issuance. The
debt issue discount and the settlement amount of the interest rate protection
agreement are being amortized over the life of the 2027 Notes as an adjustment
to interest expense. The 2027 Notes contain certain covenants including
limitation on incurrence of debt and debt service coverage.
On May 22, 1997, the Operating Partnership issued $100.0 million of
senior unsecured debt which matures on May 15, 2011 and bears a coupon interest
rate of 7.375% (the "2011 Notes"). The issue price of the 2011 Notes was
99.348%. Interest is paid semi-annually in arrears on May 15 and November 15.
The 2011 Notes are redeemable, at the option of the holder thereof, on May 15,
2004 (the "Put Option"). The Operating Partnership received approximately $1.8
million of proceeds from the holder of the 2011 Notes as consideration for the
Put Option. The Operating Partnership amortizes the Put Option amount over the
life of the Put Option as an adjustment to interest expense. The Operating
Partnership also entered into an interest rate protection agreement which was
used to fix the interest rate on the 2011 Notes prior to issuance. The debt
issue discount and the settlement amount of the interest rate protection
agreement are being amortized over the life of the 2011 Notes as an adjustment
to interest expense. The 2011 Notes contain certain covenants including
limitation on incurrence of debt and debt service coverage.
On November 20, 1997, the Operating Partnership issued $50.0 million
of senior unsecured debt which matures on November 21, 2005 and bears a coupon
interest rate of 6.90% (the "2005 Notes"). The issue price of the 2005 Notes was
100%. Interest is paid semi-annually in arrears on May 21 and November 21. The
2005 Notes contain certain covenants including limitation on incurrence of debt
and debt service coverage.
On November 24, 1997, the Operating Partnership entered into a $25.0
million unsecured loan (the "November 1997 Unsecured Loan"). The November 1997
Unsecured Loan bore interest at LIBOR plus .80% and had a scheduled maturity
date of December 31, 1997. The November 1997 Unsecured Loan was paid off and
retired on December 5, 1997.
On December 8, 1997, the Operating Partnership issued $150.0 million of
senior unsecured debt which matures on December 1, 2006 and bears a coupon
interest rate of 7.0% (the "2006 Notes"). The issue price of the 2006 Notes was
100%. Interest is paid semi-annually in arrears on June 1 and December 1. The
Operating Partnership also entered into an interest rate protection agreement
which was used to fix the interest rate on the 2006 Notes prior to issuance. The
settlement amount of the interest rate protection agreement is being amortized
over the life of the 2006
28
<PAGE> 30
Notes as an adjustment to interest expense. The 2006 Notes contain certain
covenants including limitation on incurrence of debt and debt service coverage.
On December 8, 1997, the Operating Partnership, issued $100.0 million
of senior unsecured debt which matures on December 1, 2017 and bears a coupon
interest rate of 7.5% (the "2017 Notes"). The issue price of the 2017 Notes was
99.808%. Interest is paid semi-annually in arrears on June 1 and December 1.
The Operating Partnership will amortize the debt issue discount over the life
of the 2017 Notes as an adjustment to interest expense. The 2017 Notes may be
redeemed at any time at the option of the Operating Partnership, in whole or in
part, at a redemption price equal to the sum of the principal amount of the
2017 Notes being redeemed plus accrued interest thereon to the redemption date
and any make-whole amount, as defined in the Prospectus Supplement relating to
the 2017 Notes.
In December 1997, the Operating Partnership terminated the 1996
Unsecured Acquisition Facility and entered into a $300.0 million unsecured
revolving credit facility (the "1997 Unsecured Acquisition Facility") which
initially bears interest at LIBOR plus .80% or a "Corporate Base Rate" and
provides for interest only payments until maturity. The Operating Partnership
may borrow under the facility to finance the acquisition of additional
properties and for other corporate purposes, including to obtain additional
working capital. The 1997 Unsecured Acquisition Facility contains certain
financial covenants relating to debt service coverage, market value net worth,
dividend payout ratio and total funded indebtedness.
On September 16, 1997, the Company issued 637,440 shares of $.01 par
value common stock (the "September 1997 Equity Offering"). The net proceeds of
$18.9 million received from the September 1997 Equity Offering were contributed
to the Operating Partnership in exchange for 637,440 Units and are reflected in
the Operating Partnership's financial statements as a general partner
contribution.
On October 15, 1997, the Company issued 5,400,000 shares of $.01 par
value common stock (the "October 1997 Equity Offering"). The net proceeds of
$176.6 million received from the October 1997 Equity Offering were contributed
to the Operating Partnership in exchange for 5,400,000 Units and are reflected
in the Operating Partnership's financial statements as a general partner
contribution.
During 1997, the Operating Partnership issued 3,634,148 Units
valued, in the aggregate, at $115,231 in exchange for interests in certain
properties. These contributions are reflected in the Operating Partnership's
financial statements as limited partner contribution.
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 3/4%, $.01 par value, Series
B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an initial
offering price of $25 per Depositary Share. The net proceeds of $96.3 million
received from the Series B Preferred Stock were contributed to the Operating
Partnership in exchange for 8 3/4% Series B Cumulative Preferred Units and are
reflected in the Operating Partnership's financial statements as a general
partner preferred unit contribution.
On June 6, 1997, the Company issued 2,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 5/8%, $.01 par value, Series
C Cumulative Preferred Stock (the "Series C Preferred Stock"), at an initial
offering price of $25 per Depositary Share. The net proceeds of $48.0 million
received from the Series C Preferred Stock were contributed to the Operating
Partnership in exchange for 8 5/8% Series C Cumulative Preferred Units and are
reflected in the Operating Partnership's financial statements as a general
partner preferred unit contribution.
On February 4, 1998, the Company issued 5,000,000 Depositary Shares,
each representing 1/100th of a share of the Company's 7.95%, $.01 par value,
Series D Cumulative Preferred Stock (the "Series D Preferred Stock"), at an
initial offering price of $25 per Depositary Share. The net proceeds of $120.6
million received from the Series D Preferred Stock were contributed to the
Operating Partnership in exchange for 7.95% Series D Cumulative Preferred Units
in the Operating Partnership.
On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.90%, $.01 par value, Series E
Cumulative Preferred Stock (the "Series E Preferred Stock"), at an initial
offering price of $25 per Depositary Share. The net proceeds of $72.1 million
received from the Series E Preferred Stock were contributed to the Operating
Partnership in exchange for 7.90% Series E Cumulative Preferred Units in the
Operating Partnership.
29
<PAGE> 31
In March, 1998, the Operating Partnership declared a first quarter
distribution of $.53 per Unit which is payable on April 20, 1998. The Operating
Partnership also declared a first quarter distribution of $54.688 per Series B
Preferred Unit, $53.906 per Series C Preferred Unit and a period prorated
Preferred Unit distribution of $30.365 per Series D Preferred Unit which is
payable on March 31, 1998.
On March 26, 1998, the Operating Partnership entered into an
underwriting agreement with J.P. Morgan Securities Inc. ("J.P. Morgan") and
certain other underwriters named therein (the "Underwriters"), pursuant to
which the Operating Partnership agreed to issue and sell $100.0 million of its
6 1/2% Dealer remarketable securities due April 5, 2011 (the "Drs."). The Drs.
will bear interest at 6 1/2% from the date of issuance through April 5,
2001. On April 5, 2001, the Drs. will be subject to mandatory tender to J.P.
Morgan, as the remarketing dealer, if they elect to remarket the Drs. If J.P.
Morgan elects not to remarket the Drs., the Operating Partnership will be
required to repurchase the Drs. on April 5, 2001 at 100% of the principal
amount thereof plus accrued and unpaid interest.
The Operating Partnership has considered its short-term (one year or
less) liquidity needs and the adequacy of its estimated cash flow from
operations and other expected liquidity sources to meet these needs. The
Operating Partnership believes that its principal short-term liquidity needs are
to fund normal recurring expenses, debt service requirements and the minimum
distribution required by the Company to maintain the Company's REIT
qualification under the Internal Revenue Code. The Operating Partnership
anticipates that these needs will be met with cash flows provided by operating
activities.
The Operating Partnership expects to meet long-term (greater than one
year) liquidity requirements such as property acquisitions, scheduled debt
maturities, major renovations, expansions and other non-recurring capital
improvements through long-term unsecured indebtedness and the issuance of
additional Units and preferred units. On January 27, 1998, the Operating
Partnership registered under the Securities Act of 1933, as amended (the
"Securities Act"), $400.0 million of debt securities. As of March 26, 1998,
$400.0 million of debt securities remained registered under the Securities Act
and were unissued (exclusive of the issuents of the Drs.). The Operating
Partnership may also finance the acquisition or development of additional
properties through borrowings under the 1997 Unsecured Acquisition Facility. At
December 31, 1997, borrowings under the 1997 Unsecured Acquisition Facility
bore interest at a weighted average interest rate of 6.77%. As of March 26,
1998, the Operating Partnership had $202.6 million available in additional
borrowings under the 1997 Unsecured Acquisition Facility. While the Operating
Partnership may sell properties if property or market conditions make it
desirable, the Operating Partnership does not expect to sell assets in the
foreseeable future to satisfy its liquidity requirements.
ENVIRONMENTAL
The Operating Partnership incurred environmental costs of $.15 million
and $ .1 million in 1997 and 1996, respectively. The Operating Partnership
estimates 1998 costs of approximately $.12 million. The Operating Partnership
estimates that the aggregate cost which needs to be expended in 1998 and beyond
with regard to currently identified environmental issues will not exceed
approximately $.15 million, a substantial amount of which will be the primary
responsibility of the tenant, the seller to the Operating Partnership or another
responsible party. This estimate was determined by a third party evaluation.
YEAR 2000 CONCERNS
The Operating Partnership believes, based on discussions with its
current systems' vendor, that its software applications and operational programs
will properly recognize calendar dates beginning in the Year 2000. In addition,
the Operating Partnership is discussing with its major vendors and customers the
possibility of any interface difficulties relating to the Year 2000 which may
affect the Operating Partnership. To date, no significant concerns have been
identified, however, there can be no assurance that there will not be any Year
2000-related operating problems or expenses that will arise with the Operating
Partnership's computer systems and software or in connection with the Operating
Partnership's interface with the computer systems and software of its vendors
and customers.
OTHER
In June 1997, the Financial Accounting Standards Board (the "FASB")
FASB issued Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income." This statement, effective for fiscal years beginning
after December 15, 1997, requires the Operating Partnership to report
components of comprehensive income in a financial statement that is displayed
with the same prominence as other financial statements. Comprehensive income is
defined by Concepts Statement No. 6, " Elements of Financial Statements" as the
change in the equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. The Operating Partnership has not yet
determined its comprehensive income.
30
<PAGE> 32
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This statement, effective for financial statements for periods
beginning after December 15, 1997, requires that a public business enterprise
report financial and descriptive information about its reportable operating
segments. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments. The Operating Partnership has not yet
determined the impact of this statement on its financial statements.
INFLATION
For the last several years, inflation has not had a significant impact
on the Operating Partnership because of the relatively low inflation rates in
the Operating Partnership's markets of operation. Most of the Operating
Partnership's leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Operating Partnership's exposure to increases in costs and
operating expenses resulting from inflation. In addition, many of the
outstanding leases expire within five years which may enable the Operating
Partnership to replace existing leases with new leases at higher base rentals if
rents of existing leases are below the then-existing market rate.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedule on page
F-1 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
31
<PAGE> 33
PART III
ITEM 10, 11, 12, 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,
EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Operating Partnership has no directors or executive officers;
instead it is managed by its sole general partner, the Company.
The information with respect to the sole general partner of the Operating
Partnership required by Item 10, Item 11, Item 12 and Item 13 is
incorporated herein by reference to parts of the Company's definitive
proxy statement in connection with its 1998 Annual Meeting of
Stockholders (filed herewith as Exhibit 99) captioned "Information
Regarding Nominees and Directors", "Executive Officers and Other Senior
Management", "Director Compensation", "Executive Compensation",
"Compliance with Section 16(a) of the Securities Exchange Act of 1934",
"Certain Relationships and Transactions" and "Security Ownership of
Management and Certain Beneficial Owners". Information contained in the
part of such proxy statement captioned "Stock Performance Graph" is
specifically not incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND EXHIBITS
(1 & 2) See Index to Financial Statements and Financial Statement
Schedule on page F-1 of this Form 10-K
(3) Exhibits:
32
<PAGE> 34
Exhibit No. Description
4.1 Indenture, dated as of May 13, 1997, between First Industrial,
L.P. and First Trust National Association, as Trustee
(incorporated by reference to Exhibit 4.2 of the Form 10-Q of
the Operating Partnership for the fiscal quarter ended March 31,
1997, as amended by Form 10-Q/A No. 1 of the Operating
Partnership filed May 30, 1997, File No. 333-21873)
4.2 Supplemental Indenture No. 1, dated as of May 13, 1997, between
First Industrial, L.P. and First Trust National Association as
Trustee relating to $150 million of 7.60% Notes due 2007 and
$100 million of 7.15% Notes due 2027 (incorporated by reference
to Exhibit 4.3 of the Form 10-Q of the Operating Partnership for
the fiscal quarter ended March 31, 1997, as amended by Form
10-Q/A No. 1 of the Operating Partnership filed May 30, 1997,
File No. 333-21873)
4.3 Supplemental Indenture No. 2, dated as of May 22, 1997, between
First Industrial, L.P. and First Trust National Association as
Trustee relating to $100 million of 7 3/8% Notes due 2011
(incorporated by reference to Exhibit 4.4 of the Form 10-Q of
the Operating Partnership for the fiscal quarter ended March 31,
1997, File No. 333-21873)
4.4 Supplemental Indenture No. 3 dated October 28, 1997 between First
Industrial, L.P. and First Trust National Association providing
for the issuance of Medium-term Notes due Nine Months or more
from Date of Issue (incorporated by reference to Exhibit 4 of
Form 8-K of the Operating Partnership dated November 3, 1997, as
filed November 3, 1997, File No. 333-21873)
4.5 6.90% Medium-Term Note due 2005 in principal amount of $50
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.17 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.6 7.00% Medium-Term Note due 2006 in principal amount of $150
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.18 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.7 7.50% Medium-Term Note due 2017 in principal amount of $100
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.19 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
33
<PAGE> 35
Exhibit No. Description
4.8 Trust Agreement, dated as of May 16, 1997, between First
Industrial, L.P. and First Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.5 of the Form 10-Q of the
Operating Partnership for the fiscal quarter ended March 31,
1997, File No. 333-21873)
4.9 Unsecured Revolving Credit Agreement (the "Unsecured Revolving
Credit Agreement"), dated as of December 15, 1997, by and among
the Operating Partnership, First Industrial Realty Trust, Inc.
and The First National Bank of Chicago, Union Bank of
Switzerland, New York Branch and certain other banks
(incorporated by reference to Exhibit 4.22 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1997, File No. 1-13102)
4.11 Sixth Amended and Restated Limited Partnership Agreement of
First Industrial, L.P., dated March 18, 1998 (incorporated by
reference to Exhibit 10.1 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.12* Form of Supplemental Indenture No. 4 between First Industrial,
L.P. and First Trust National Association as Trustee
4.13* Form of Note with respect to Dealer remarketable securities
4.14* Form of Remarketing Agreement between First Industrial, L.P.
and J.P. Morgan Securities Inc.
12.1* Computation of Earnings to Fixed Charges and Preferred Unit
Distributions of First Industrial, L.P.
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, File No. 1-13102)
23 * Consent of Coopers & Lybrand L.L.P.
27.1* Financial Data Schedule of First Industrial, L.P.
27.2* Financial Data Schedule of the Other Real Estate Partnerships
99 * Definitive Proxy Statement of First Industrial Realty Trust,
Inc. with respect to its 1998 Annual Meeting of Stockholders
* Filed herewith.
(b) REPORTS ON FORM 8-K AND FORM 8-K/A
Report on Form 8-K/A No. 2 filed October 16, 1997, dated June 30, 1997,
relating to the acquisition of 64 properties, one parking lot and land parcels
for future development. The reports include Combined Historical Statements of
Revenues and Certain Expenses for the acquired properties and Pro Forma
Statements of Operations for First Industrial, L.P.
Report on Form 8-K filed November 3, 1997, dated October 28, 1997, relating to
the Operating Partnership's Medium-Term Note Program. The report includes as
exhibits the Distribution Agreement dated October 28, 1997 between the Company
and J.P. Morgan Securities, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, First Chicago
Capital Markets, Inc. and UBS Securities, LLC, the Supplemental Indenture No. 3
dated October 28, 1997 between the Company and First Trust National Association
providing for the issuance of Medium-Term Notes due Nine Months or More from
Date of Issue, the Form of Fixed Rate Medium-Term Note and the Form of Floating
Rate Medium-Term Note.
Report on Form 8-K filed November 14, 1997, dated October 30, 1997, relating
to the acquisition of 123 properties, the negotiations to acquire an additional
79 properties and the acquisition of land parcels for future development. The
reports include Combined Historical Statements of Revenues and Certain Expenses
for the acquired and to be acquired properties and Pro Forma Statements of
Operations for First Industrial, L.P.
Report on Form 8-K filed December 23, 1997, dated December 11, 1997, as amended
by the report on Form 8-K/A No.1 filed January 22, 1998, as further amended by
the report on Form 8-K/A No. 2 filed February 26, 1998, relating to the
acquisition of 84 properties, the negotiations to acquire an additional
property and the acquisition of land parcels for future development. The
reports include Combined Historical Statements of Revenues and Certain Expenses
for the acquired and to be acquired properties and Pro Forma Balance Sheet and
Pro Forma Statements of Operations for First Industrial, L.P.
34
<PAGE> 36
- - -------------------------------------------------------------------------------
The Company has prepared supplemental financial and operating
information which is available without charge upon request to the Company.
Please direct requests as follows:
First Industrial Realty Trust, Inc.
311 S. Wacker, Suite 4000
Chicago, IL 60606
Attention: Investor Relations
35
<PAGE> 37
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.
FIRST INDUSTRIAL, L.P.
By: FIRST INDUSTRIAL REALTY TRUST, INC.,
as general partner
Date: March 31, 1998 By: /s/ Michael T. Tomasz
----------------------------
Michael T. Tomasz
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: March 31, 1998 By: /s/ Michael J. Havala
----------------------------
Michael J. Havala
Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ Jay H. Shidler Chairman of the Board of Directors March 31, 1998
- - -------------------------------
Jay H. Shidler
/s/ Michael T. Tomasz President, Chief Executive Officer March 31, 1998
- - ------------------------------- and Director
Michael T. Tomasz
/s/ Michael W. Brennan Chief Operating Officer and Director March 31, 1998
- - -------------------------------
Michael W. Brennan
/s/ Michael G. Damone Director of Strategic Planning March 31, 1998
- - ------------------------------- and Director
Michael G. Damone
/s/ John L. Lesher Director March 31, 1998
- - -------------------------------
John L. Lesher
/s/ Kevin W. Lynch Director March 31, 1998
- - -------------------------------
Kevin W. Lynch
/s/ John E. Rau Director March 31, 1998
- - -------------------------------
John E. Rau
/s/ Robert J. Slater Director March 31, 1998
- - -------------------------------
Robert J. Slater
/s/ J. Steven Wilson Director March 31, 1998
- - -------------------------------
J. Steven Wilson
</TABLE>
36
<PAGE> 38
FIRST INDUSTRIAL, L.P.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
PAGE
FINANCIAL STATEMENTS
Report of Independent Accountants.............................F-2
Consolidated Balance Sheets of First Industrial, L.P.
(the "Operating Partnership") as of December 31, 1997 and
1996..........................................................F-3
Consolidated Statements of Operations of the Operating
Partnership for the Years Ended December 31, 1997, 1996
and
1995..........................................................F-4
Consolidated Statements of Changes in Partners' Capital
of the Operating Partnership for the Years Ended
December 31, 1997, 1996 and 1995..............................F-5
Consolidated Statements of Cash Flows of the Operating
Partnership for the Years Ended December 31, 1997, 1996
and
1995..........................................................F-6
Notes to Consolidated Financial Statements....................F-7
FINANCIAL STATEMENT SCHEDULE
Schedule III: Real Estate and Accumulated Depreciation.......S-1
F-1
<PAGE> 39
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
First Industrial, L.P.
We have audited the consolidated financial statements and the financial
statement schedule of First Industrial, L.P. (the "Operating Partnership") as
listed on page F-1 of this Form 10-K. These financial statements and the
financial statement schedule are the responsibility of the Operating
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of First
Industrial, L.P. as of December 31, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 17, 1998
F-2
<PAGE> 40
FIRST INDUSTRIAL, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
----------------- ----------------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate:
Land.............................................................................. $ 184,704 $ 55,425
Buildings and Improvements........................................................ 1,012,145 291,942
Construction in Progress.......................................................... 4,211 6,414
Less: Accumulated Depreciation.................................................... (22,319) (8,133)
---------------- ---------------
Net Investment in Real Estate................................................ $ 1,178,741 345,648
Investment in Other Real Estate Partnerships...................................... 643,621 258,411
Cash and Cash Equivalents......................................................... 4,995 4,295
Tenant Accounts Receivable, Net................................................... 2,944 1,021
Deferred Rent Receivable.......................................................... 2,584 1,280
Interest Rate Protection Agreements, Net.......................................... --- 1,723
Deferred Financing Costs, Net..................................................... 6,808 1,140
Prepaid Expenses and Other Assets, Net............................................ 30,490 8,604
---------------- ---------------
Total Assets................................................................ $ 1,870,183 $ 622,122
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable............................................................ $ 61,198 $ 45,578
Senior Unsecured Debt............................................................. 648,994 ---
Acquisition Facility Payable...................................................... 129,400 4,400
Promissory Notes Payable.......................................................... --- 9,919
Accounts Payable and Accrued Expenses............................................. 32,629 8,770
Rents Received in Advance and Security Deposits................................... 9,775 1,942
Distributions Payable............................................................. 22,010 16,281
---------------- ---------------
Total Liabilities........................................................... 904,006 86,890
---------------- ---------------
Commitments and Contingencies...................................................... --- ---
Partners' Capital:
General Partner Preferred Units................................................... 144,290 ---
General Partner Units............................................................. 674,191 496,169
Limited Partners Units............................................................ 147,696 39,063
---------------- ---------------
Total Partners' Capital..................................................... 966,177 535,232
---------------- ---------------
Total Liabilities and Partners' Capital..................................... $ 1,870,183 $ 622,122
================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 41
FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
Revenues:
<S> <C> <C> <C>
Rental Income................................................... $ 77,204 $ 29,166 $ 22,094
Tenant Recoveries and Other Income.............................. 21,362 8,421 5,348
------------ ------------ ------------
Total Revenues.............................................. 98,566 37,587 27,442
------------ ------------ ------------
Expenses:
Real Estate Taxes............................................... 16,970 6,109 4,863
Repairs and Maintenance......................................... 3,772 1,071 848
Property Management............................................. 3,789 1,153 904
Utilities....................................................... 2,723 1,047 235
Insurance....................................................... 249 271 279
Other........................................................... 1,680 284 349
General and Administrative...................................... 5,820 4,014 3,792
Interest........................................................ 25,099 4,685 6,581
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs....................................... 369 196 222
Depreciation and Other Amortization............................. 15,873 6,310 5,087
------------ ------------ ------------
Total Expenses.............................................. 76,344 25,140 23,160
------------ ------------ ------------
Income Before Disposition of Interest Rate Protection
Agreements, Gain on Sales of Real Estate, Equity in Income of
Other Real Estate Partnerships and Extraordinary Loss........... 22,222 12,447 4,282
Disposition of Interest Rate Protection Agreements............... 4,038 --- ---
Gain on Sales of Real Estate..................................... 728 4,344 ---
------------ ------------ ------------
Income Before Equity in Income of Other Real Estate
Partnerships and Extraordinary Loss............................. 26,988 16,791 4,282
Equity in Income of Other Real Estate Partnerships............... 31,297 20,130 7,841
------------ ------------ ------------
Income Before Extraordinary Loss................................. 58,285 36,921 12,123
Extraordinary Loss............................................... (4,666) (2,273) ---
------------ ------------ ------------
Net Income....................................................... 53,619 34,648 12,123
Preferred Unit Distributions..................................... (7,936) --- ---
------------ ------------ ------------
Net Income Available to
Unitholders................................................. $ 45,683 $ 34,648 $ 12,123
============ ============ ============
Net Income Available to Unitholders Before Extraordinary Loss
Per Weighted Average Unit Outstanding
Basic....................................................... $ 1.41 $ 1.38 $ .59
============ ============ ============
Diluted..................................................... $ 1.40 $ 1.38 $ .59
============ ============ ============
Extraordinary Loss Per Weighted Average Unit Outstanding
Basic....................................................... $ (.13) $ (.09) $ ---
============ ============ ============
Diluted..................................................... $ (.13) $ (.09) $ ---
============ ============ ============
Net Income Available to Unitholders Per Weighted Average
Unit Outstanding
Basic....................................................... $ 1.28 $ 1.29 $ .59
============ ============ ============
Diluted..................................................... $ 1.27 $ 1.29 $ .59
============ ============ ============
</TABLE>
See accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 42
FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................... $ 53,619 $ 34,648 $ 12,123
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation................................................. 14,660 5,115 4,092
Amortization of Interest Rate Protection Agreements and 369 196 222
Deferred Financing Costs....................................
Other Amortization........................................... 1,497 1,195 995
Disposition of Interest Rate Protection Agreements........... (4,038) --- ---
Gain on Sales of Real Estate................................. (728) (4,344) ---
Equity in Income of Other Real Estate Partnerships........... (31,297) (20,130) (7,841)
Extraordinary Loss........................................... 4,666 2,273 ---
Provision for Bad Debts...................................... 779 35 158
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets................................. (23,582) (965) (3,903)
Increase in Deferred Rent Receivable......................... (1,350) (1,179) (606)
Increase in Accounts Payable and Accrued Expenses and
Rents Received in Advance and Security Deposits............ 16,195 (498) 2,295
Organization Costs........................................... (30) (32) (115)
Decrease (Increase) in Restricted Cash....................... --- 2,557 (3,238)
----------------- ----------------- -----------------
Net Cash Provided by Operating Activities................. 30,760 18,871 4,182
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and Additions to Investment in Real Estate......... (714,643) (221,282) (67,605)
Contributions to Investment in Other Real Estate
Partnerships............................................... (419,869) (25,473) (6,664)
Distributions from Investment in Other Real Estate
Partnerships................................................. 65,956 29,110 33,363
Proceeds from Sales of Investment in Real Estate............. 16,084 14,972 ---
Funding of Mortgage Loans Receivable......................... (4,827) --- ---
Repayment of Mortgage Loans Receivable....................... 4,594 --- ---
----------------- ----------------- -----------------
Net Cash Used in Investing Activities..................... (1,052,705) (202,673) (40,906)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Unit Contributions........................................... 199,340 244,269 ---
Unit Distributions........................................... (68,107) (47,991) (38,592)
Preferred Contributions...................................... 144,290 --- ---
Preferred Unit Distributions................................. (7,936) --- ---
Proceeds from Acquisition Facilities Payable................. 540,100 103,523 83,943
Repayments on Acquisition Facilities Payable................. (415,100) (147,358) (2,958)
Proceeds from Mortgage Loans Payable......................... --- 36,750 ---
Repayments on Mortgage Loans Payable......................... (4,652) (589) ---
Proceeds from Construction Loans Payable..................... --- --- 4,873
Repayments on Construction Loans Payable..................... --- (4,873) ---
Repayment of Promissory Notes Payable........................ (9,919) --- ---
Proceeds from Senior Unsecured Debt.......................... 983,757 --- ---
Repayment of Senior Unsecured Debt........................... (334,800) --- ---
Proceeds from Sale of Interest Rate Protection Agreements.... 6,440 --- ---
Other Proceeds from Senior Unsecured Debt.................... 2,377 --- ---
Other Costs of Senior Unsecured Debt......................... (2,294) --- ---
Debt Issuance Costs.......................................... (10,851) (2,127) (4,084)
----------------- ----------------- -----------------
Net Cash Provided by Financing Activities................. 1,022,645 181,604 43,182
----------------- ----------------- -----------------
Net Increase (Decrease)in Cash and Cash Equivalents.......... 700 (2,198) 6,458
Cash and Cash Equivalents, Beginning of Period............... 4,295 6,493 35
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Period..................... $ 4,995 $ 4,295 $ 6,493
================= ================= ===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 43
FIRST INDUSTRIAL, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
General Partner Unamortized
----------------------- Value of
Preferred General Partner Limited
Units Units Restricted Units Partners Units Total
------------ --------- ---------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994................ $ --- $ 293,140 --- $ 20,404 $ 313,544
Distributions............................. --- (36,003) --- (2,895) (38,898)
Unit Conversions.......................... --- 1,005 --- (1,005) ---
Net Income................................ --- 11,215 --- 908 12,123
-------- --------- -------------- ---------- -----------
Balance at December 31, 1995................ --- 269,357 --- 17,412 286,769
Contributions............................. --- 244,269 --- 23,864 268,133
Distributions............................. --- (50,418) --- (3,900) (54,318)
Unit Conversions.......................... --- 943 --- (943) ---
Net Income................................ --- 32,018 --- 2,630 34,648
-------- --------- -------------- ---------- -----------
Balance at December 31, 1996................ --- 496,169 --- 39,063 535,232
Contributions............................. 144,290 199,340 --- 115,230 458,860
Issuance of General Partner Restricted
Units.................................... --- 3,655 (3,655) --- ---
Amortization of General Partner Restricted
Units.................................... --- --- 238 --- 238
Distributions............................. (7,936) (65,322) --- (8,514) (81,772)
Unit Conversions.......................... --- 3,395 --- (3,395) ---
Net Income................................ 7,936 40,371 --- 5,312 53,619
-------- --------- -------------- ---------- -----------
Balance at December 31, 1997................ $144,290 $ 677,608 $ (3,417) $ 147,696 $ 966,177
======== ========= ============== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 44
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
1. ORGANIZATION AND FORMATION OF PARTNERSHIP
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial realty Trust, Inc. (the "Company") with an
approximate 86% ownership interest at December 31, 1997. The Company also owns
preferred units with an aggregate liquidation priority of $150,000. The Company
is a real estate investment trust ("REIT") as defined in the Internal Revenue
Code. The Company's operations are conducted primarily through the Operating
Partnership. The limited partners of the Operating Partnership own
approximately a 14% aggregate ownership interest at December 31, 1997.
The Operating Partnership owns 100% of FR Development Services, LLC, a 95%
economic interest in FR Development Services, Inc. as well as a 99% limited
partnership interest (subject in one case as described below to a preferred
limited partnership interest) in First Industrial Financing Partnership, L.P.
(the "Financing Partnership"), First Industrial Securities, L.P. (the
"Securities Partnership"), First Industrial Mortgage Partnership, L.P (the
"Mortgage Partnership"), First Industrial Pennsylvania Partnership, L.P. (the
"Pennsylvania Partnership"), First Industrial Harrisburg Partnership, L.P. (the
"Harrisburg Partnership"), First Industrial Indianapolis, L.P. (the
"Indianapolis Partnership") and First Industrial Development Services Group,
L.P. (together, the "Other Real Estate Partnerships"). The minority ownership
interest in FR Development Services, Inc. is not reflected in the consolidated
financial statements due to its immateriality. As of December 31, 1997, the
Operating Partnership directly owned 522 in-service properties, containing an
aggregate of approximately 34.5 million square feet (unaudited) of gross
leasable area ("GLA"). On a combined basis, as of December 31, 1997, the Other
Real Estate Partnerships owned 247 in-service properties containing an
aggregate of approximately 22.1 million square feet (unaudited) of GLA. Of the
247 properties owned by the Other Real Estate Partnerships at December 31,
1997, 193 are owned by the Financing Partnership, 19 are owned by the
Securities Partnership, 23 are owned by the Mortgage Partnership, six are owned
by the Pennsylvania Partnership, five are owned by the Harrisburg Partnership
and one is owned by the Indianapolis Partnership.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with a one percent general partnership interest in the Other
Real Estate Partnerships. Each general partner of the Other Real Estate
Partnerships is a wholly owned subsidiary of the Company. The general partner
of the Securities Partnership, First Industrial Securities Corporation, also
owns a preferred limited partnership interest in the Securities Partnership
which entitles it to receive a fixed quarterly distribution, and results in it
being allocated income in the same amount, equal to the fixed quarterly
dividend the Company pays on its 9.5% Series A Cumulative Preferred Stock.
Profits, losses and distributions of the Operating Partnership are
allocated to the general partner and the limited partners in accordance with
the provisions contained within its restated and amended partnership agreement.
2. BASIS OF PRESENTATION
The accompanying financial statements as of December 31, 1997 and 1996
and for the years ended December 31, 1997, 1996 and 1995 present the
consolidated ownership and operating results of the Operating Partnership, FR
Development Services, LLC and FR Development Services, Inc. Such financial
statements present the Operating Partnership's limited partnership interests in
each of the Other Real Estate Partnerships under the equity method of
accounting.
F-7
<PAGE> 45
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In order to conform with generally accepted accounting principles,
management, in preparation of the Operating Partnership's financial statements,
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
and the reported amounts of revenues and expenses. Actual results could
differ from those estimates.
Cash and Cash Equivalents:
Cash and cash equivalents include all cash and liquid investments with an
initial maturity of three months or less. The carrying amount approximates
fair value due to the short maturity of these investments.
Investment in Real Estate and Depreciation:
Purchase accounting has been applied when ownership interests in
properties were acquired for cash. The historical cost basis of properties has
been carried over when the The Shidler Group and the properties and businesses
contributed by three other contributing businesses ownership interests' were
exchanged for limited partnership units in the Operating Partnership on July 1,
1994 and purchase accounting has been used for all other properties that were
subsequently acquired for Units.
The Operating Partnership reviews its properties on a quarterly basis for
impairment and provides a provision if impairments are determined. First, to
determine if impairment may exist, the Operating Partnership reviews its
properties and identifies those which have had either an event of change or
event of circumstances warranting further assessment of recoverability. Then,
the Operating Partnership estimates the fair value of those properties on an
individual basis by capitalizing the expected net operating income. Such
amounts are then compared to the property's depreciated cost to determine
whether an impairment exists.
Interest expense, real estate taxes and other directly related expenses
incurred during construction periods are capitalized and depreciated commencing
with the date placed in service, on the same basis as the related assets.
Depreciation expense is computed using the straight-line method based on the
following useful lives:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Buildings and Improvements................................... 31.5 to 40
Land Improvements............................................ 15
Furniture, Fixtures and Equipment............................ 5 to 10
</TABLE>
Construction expenditures for tenant improvements and leasing commissions
are capitalized and amortized over the terms of each specific lease. Repairs
and maintenance are charged to expense when incurred. Expenditures for
improvements are capitalized.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from the accounts with the resulting gains or losses
reflected in net income or loss.
Investment in Other Real Estate Partnership:
Investment in Other Real Estate Partnerships represents the Operating
Partnership's limited partnership interests in the Other Real Estate
Partnerships. The Operating Partnership accounts for its Investment in Other
Real Estate Partnerships under the equity method of accounting. Under the
equity method of accounting, the Operating Partnership's share of earnings or
losses of the Other Real Estate Partnerships is reflected in income as earned
and contributions or distributions increase or decrease, respectively, the
Operating Partnership's Investment in Other Real Estate Partnerships as paid or
received, respectively.
F-8
<PAGE> 46
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Deferred Financing Costs:
Deferred financing costs include fees and costs incurred to obtain
long-term financing. These fees and costs are being amortized over the terms of
the respective loans. Accumulated amortization of deferred financing costs was
$212 and $32 at December 31, 1997 and 1996, respectively. Unamortized deferred
financing costs are written-off when debt is retired before the maturity date
(see Note 10).
Revenue Recognition:
Rental income is recognized on a straight-line method under which
contractual rent increases are recognized evenly over the lease term. Tenant
recovery income includes payments from tenants for taxes, insurance and other
property operating expenses and is recognized as revenue in the same period the
related expenses are incurred by the Operating Partnership.
The Operating Partnership provides an allowance for doubtful accounts
against the portion of tenant accounts receivable which is estimated to be
uncollectible. Accounts receivable in the consolidated balance sheets are
shown net of an allowance for doubtful accounts of $1,000 and $221 as of
December 31, 1997 and December 31, 1996, respectively.
Income Taxes:
In accordance with partnership taxation, each of the partners are
responsible for reporting their shares of taxable income or loss.
The Operating Partnership is subject to certain state and local income,
excise and franchise taxes. The provision for such state and local taxes has
been reflected in general and administrative expense in the statement of
operations and has not been separately stated due to its insignificance.
Earnings Per Unit:
As of December 31, 1997 & 1996, there were 42,348,467 and 32,392,543
general partnership and limited partnership units outstanding, respectively.
As of December 31, 1997 & 1996, there were 60,000 and 0 general partner
preferred units outstanding.
The Operating Partnership has adopted the Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("FAS 128"). Net income per weighted average general
partnership and limited partnership unit (the "Units") - basic is based on the
weighted average Units outstanding. Net income per weighted average Unit -
diluted is based on the weighted average Units outstanding plus the effect of
in-the-money employee stock options that result in the issuance of general
partnership units. See Note 11 for the disclosure required under FAS 128.
Fair Value of Financial Instruments:
The Operating Partnership's financial instruments include short-term
investments, tenant accounts receivable, accounts payable, other accrued
expenses, mortgage loans payable, acquisition facility payable, senior
unsecured debt and interest rate protection agreements. The fair value of the
short-term investments, tenant accounts receivable, accounts payable and other
accrued expenses were not materially different from their carrying or contract
values. See Note 5 for the fair values of the mortgage loans payable,
acquisition facility payable, senior unsecured debt and interest rate
protection agreements.
F-9
<PAGE> 47
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Derivative Financial Instruments:
The Operating Partnership's interest rate protection agreements (the
"Agreements") are used to limit the interest rate on the Financing Partnership's
$300,000 mortgage loan and fix the interest rate on anticipated offerings of
senior unsecured debt. Receipts or payments resulting from the Agreements used
to limit the interest rate on the Financing Partnership's $300,000 mortgage loan
are recognized as adjustments to equity in income of Other Real Estate
Partnerships (specifically, the Financing Partnership).
In the event that the Operating Partnership terminates these Agreements,
the Operating Partnership would recognize a gain (loss) from the
disposition of the Agreements equal to the amount of cash received or paid at
termination less the carrying value of the Agreements on the Operating
Partnership's balance sheet. Receipts or payments resulting from the settlement
of Agreements used to fix the interest rate on anticipated offerings of senior
unsecured debt are amortized over the life of the senior unsecured debt that
the Agreements were used to hedge as an adjustment to interest expense using
the effective interest method (or the straight line method if this method is
not materially different from the effective interest method). The credit risks
associated with the Agreements are controlled through the evaluation and
monitoring of the creditworthiness of the counterparty. In the event that the
counterparty fails to meet the terms of the Agreements, the Operating
Partnership's exposure is limited to the current value of the interest rate
differential, not the notional amount, and the Operating Partnership's carrying
value of the Agreements on the balance sheet. The Agreements have been
executed with creditworthy financial institutions. As such, the Operating
Partnership considers the risk of nonperformance to be remote.
Recent Accounting Pronouncements:
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". This statement, effective
for fiscal years beginning after December 15, 1997, requires the Operating
Partnership to report components of comprehensive income in a financial
statement that is displayed with the same prominence as other financial
statements. Comprehensive income is defined by Concepts Statement No. 6,
"Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. It includes all changes in equity during a period
except those resulting from investments by owners and distributions to owners.
The Operating Partnership has not yet determined its comprehensive income.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information". This statement, effective for financial statements for periods
beginning after December 15, 1997, requires that a public business enterprise
report financial and descriptive information about its reportable operating
segments. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The Operating Partnership has
not yet determined the impact of this statement on its financial statements.
Reclassification:
Certain 1996 items have been reclassified to conform to the 1997
presentation.
F-10
<PAGE> 48
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
4. INVESTMENT IN OTHER REAL ESTATE PARTNERSHIPS
The Investment in Other Real Estate Partnerships reflects the Operating
Partnership's 99% limited partnership equity interest in the entities described
in Note 1 to these financial statements.
Summarized condensed financial information as derived from the financial
statements of the Other Real Estate Partnerships is presented below:
Condensed Combined Balance Sheets:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
----------------- -----------------
<S> <C> <C>
ASSETS
Assets:
Investment in Real Estate, Net...................................... $ 694,926 $ 613,685
Other Assets........................................................ 355,726 48,602
----------------- -----------------
Total Assets.................................................... $ 1,050,652 $ 662,287
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable............................................. $ 40,000 $ 346,504
Defeased Mortgage Loan Payable...................................... 300,000 ---
Other Liabilities................................................... 23,317 13,326
----------------- -----------------
Total Liabilities............................................... 363,317 359,830
----------------- -----------------
Partners' Capital................................................... 687,335 302,457
----------------- -----------------
Total Liabilities and Partners' Capital......................... $ 1,050,652 $ 662,287
================= =================
</TABLE>
Condensed Combined Statements of Operations:
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
December 31, December 31, December 31,
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Total Revenues.......................................................... $ 124,406 $ 102,322 $ 79,032
Property Expenses....................................................... (30,569) (28,933) (20,824)
Interest Expense........................................................ (24,760) (24,268) (22,010)
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs........................... (2,443) (3,090) (4,216)
Depreciation and Other Amortization..................................... (23,310) (21,737) (17,177)
Loss on Disposition of Interest Rate Protection Agreements.............. (2,608) --- (6,410)
Gain on Sales of Real Estate............................................. 4,275 --- ---
Extraordinary Loss...................................................... (9,458) --- ---
------------ ----------- -----------
Net Income.............................................................. $ 35,533 $ 24,294 $ 8,395
============ =========== ===========
</TABLE>
F-11
<PAGE> 49
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES ,
PROMISSORY NOTES PAYABLE AND INTEREST RATE PROTECTION AGREEMENTS
Mortgage Loans:
On March 20, 1996, the Operating Partnership and the Indianapolis
Partnership entered into a $36,750 mortgage loan (the "CIGNA Loan") that is
collateralized by seven properties in Indianapolis, Indiana and three
properties in Cincinnati, Ohio. The CIGNA Loan bears interest at a fixed
interest rate of 7.50% and provides for monthly principal and interest payments
based on a 25-year amortization schedule. The CIGNA Loan matures on April 1,
2003. The CIGNA Loan may be prepaid only after April 30, 1999 in exchange for
the greater of a 1% prepayment fee or a yield maintenance premium.
On March 20, 1996, the Operating Partnership assumed a $6,424 mortgage
loan and a $2,993 mortgage loan (together, the "Assumed Loans") that are
collateralized by 13 properties in Indianapolis, Indiana and one property in
Indianapolis, Indiana, respectively. The Assumed Loans bear interest at a
fixed rate of 9.25% and provide for monthly principal and interest payments
based on a 16.75-year amortization schedule. The Assumed Loans mature on
January 1, 2013. The Assumed Loans may be prepaid only after December 22, 1999
in exchange for the greater of a 1% prepayment fee or a yield maintenance
premium.
In conjunction with an acquisition of a portfolio of properties on January
31, 1997, the Operating Partnership assumed two mortgage loans in the amount of
$3,800 (the "LB Mortgage Loan I") and $705 (the "LB Mortgage Loan II"). The LB
Mortgage Loan I, which was collateralized by a property located in Long Island,
New York and provided for interest only payments prior to its maturity date
of July 11, 1998, was paid off and retired by the Operating Partnership
on December 19, 1997. The LB Mortgage Loan II, which is collateralized by a
property located in Long Island, New York, is interest free until February,
1998, at which time the LB Mortgage Loan II bears interest at 8.00% and
provides for interest only payments prior to maturity. The LB Mortgage Loan II
matures 180 days after the completion of a contingent event relating to the
environmental status of the property collateralizing the loan.
In conjunction with the acquisition of a portfolio of properties on
October 23, 1997, the Operating Partnership assumed a mortgage loan in the
amount of $4,153 (the "Acquisition Mortgage Loan I"). The Acquisition Mortgage
Loan I is collateralized by a property in Bensenville, Illinois, bears interest
at a fixed rate of 8.50% and provides for monthly principal and interest
payments based on a 15-year amortization schedule. The Acquisition Mortgage
Loan I matures on August 1, 2008. The Acquisition Mortgage Loan I may be
prepaid after July 15, 1998 in exchange for a prepayment fee.
In conjunction with the acquisition of a portfolio of properties on
December 9, 1997, the Operating Partnership assumed a mortgage loan in the
amount of $7,997 (the "Acquisition Mortgage Loan II"). The Acquisition
Mortgage Loan II is collateralized by ten properties in St. Charles, Louisiana,
bears interest at a fixed rate of 7.75% and provides for monthly principal and
interest payments based on a 22-year amortization schedule. The Acquisition
Mortgage Loan II matures on April 1, 2006. The Acquisition Mortgage Loan II
may be prepaid only after April 9, 1999 in exchange for the greater of a 1%
prepayment fee or a yield maintenance premium.
In conjunction with the acquisition of a portfolio of properties on
December 23, 1997, the Operating Partnership assumed a mortgage loan in the
amount of $3,598 (the "Acquisition Mortgage Loan III"). The Acquisition
Mortgage Loan III is collateralized by two properties in Houston, Texas, bears
interest at a fixed interest rate of 8.875% and provides for monthly principal
and interest payments based on a 20-year amortization schedule. The
Acquisition Mortgage Loan III matures on June 1, 2003. The Acquisition
Mortgage Loan III may be prepaid only after June 30, 1998 in exchange for the
greater of a 2% prepayment fee or a yield maintenance premium.
F-12
<PAGE> 50
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES, PROMISSORY
NOTES PAYABLE AND INTEREST RATE
PROTECTION AGREEMENTS, CONTINUED
Senior Unsecured Debt:
On April 4, 1997, the Operating Partnership entered into a $309,800
unsecured loan (the "Defeasance Loan"). The Defeasance Loan bore interest at
LIBOR plus 1% and had a scheduled maturity of July 1, 1999. The gross proceeds
from the Defeasance Loan were contributed to the Financing Partnership which
used the contribution to purchase U.S. Government Securities as substitute
collateral to execute a legal defeasance of its $300,000 mortgage loan. The
Defeasance Loan was paid off and retired in May, 1997 (See Note 10).
On May 13, 1997, the Operating Partnership issued $150,000 of senior
unsecured debt which matures on May 15, 2007 and bears a coupon interest rate
of 7.60% (the "2007 Notes"). The issue price of the 2007 Notes was 99.965%.
Interest is paid semi-annually in arrears on May 15 and November 15. The
Operating Partnership also entered into an interest rate protection agreement
which was used to fix the interest rate on the 2007 Notes prior to issuance.
The debt issue discount and the settlement amount of the interest rate
protection agreement are being amortized over the life of the 2007 Notes as an
adjustment to the interest expense. The 2007 Notes contain certain covenants
including limitation on incurrence of debt and debt service coverage.
On May 13, 1997, the Operating Partnership issued $100,000 of senior
unsecured debt which matures on May 15, 2027, and bears a coupon interest rate
of 7.15% (the "2027 Notes"). The issue price of the 2027 Notes was 99.854%.
The 2027 Notes are redeemable, at the option of the holders thereof, on May 15,
2002. Interest is paid semi-annually in arrears on May 15 and November 15.
The Operating Partnership also entered into an interest rate protection
agreement which was used to fix the interest rate on the 2027 Notes prior to
issuance. The debt issue discount and the settlement amount of the interest
rate protection agreement are being amortized over the life of the 2027 Notes
as an adjustment to interest expense. The 2027 Notes contain certain covenants
including limitation on incurrence of debt and debt service coverage.
On May 22, 1997, the Operating Partnership issued $100,000 of senior
unsecured debt which matures on May 15, 2011 and bears a coupon interest rate
of 7.375% (the "2011 Notes"). The issue price of the 2011 Notes was 99.348%.
Interest is paid semi-annually in arrears on May 15 and November 15. The 2011
Notes are redeemable, at the option of the holder thereof, on May 15, 2004 (the
"Put Option"). The Operating Partnership received approximately $1,781 of
proceeds from the holder of the 2011 Notes as consideration for the Put Option.
The Operating Partnership amortizes the Put Option amount over the life of the
Put Option as an adjustment to interest expense. The Operating Partnership also
entered into an interest rate protection agreement which was used to fix the
interest rate on the 2011 Notes prior to issuance. The debt issue discount and
the settlement amount of the interest rate protection agreement are being
amortized over the life of the 2011 Notes as an adjustment to interest expense.
The 2011 Notes contain certain covenants including limitation on incurrence of
debt and debt service coverage.
On November 20, 1997, the Operating Partnership issued $50,000 of senior
unsecured debt which matures on November 21, 2005 and bears a coupon interest
rate of 6.90% (the "2005 Notes"). The issue price of the 2005 Notes was 100%.
Interest is paid semi-annually in arrears on May 21 and November 21. The 2005
Notes contain certain covenants including limitation on incurrence of debt and
debt service coverage.
On November 24, 1997, the Operating Partnership entered into a $25,000
unsecured loan (the "November 1997 Unsecured Loan"). The November 1997
Unsecured Loan bore interest at LIBOR plus .80% and had a scheduled maturity
date of December 31, 1997. The November 1997 Unsecured Loan was paid off and
retired on December 5, 1997.
F-13
<PAGE> 51
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES, PROMISSORY
NOTES PAYABLE AND INTEREST RATE PROTECTION AGREEMENTS, CONTINUED
On December 8, 1997, the Operating Partnership issued $150,000 of senior
unsecured debt which matures on December 1, 2006 and bears a coupon interest
rate of 7.00% (the "2006 Notes"). The issue price of the 2006 Notes was 100%.
Interest is paid semi-annually in arrears on June 1 and December 1. The
Operating Partnership also entered into an interest rate protection agreement
which was used to fix the interest rate on the 2006 Notes prior to issuance.
The settlement amount of the interest rate protection agreement is being
amortized over the life of the 2006 Notes as an adjustment to interest expense.
The 2006 Notes contain certain covenants including limitation on incurrence of
debt and debt service coverage.
On December 8, 1997, the Operating Partnership issued $100,000 of senior
unsecured debt which matures on December 1, 2017 and bears a coupon interest
rate of 7.50% (the "2017 Notes"). The issue price of the 2017 Notes was
99.808%. Interest is paid semi-annually in arrears on June 1 and December 1.
The Operating Partnership will amortize the debt issue discount over the life
of the 2017 Notes as an adjustment to interest expense. The 2017 Notes may be
redeemed at any time at the option of the Operating Partnership, in whole or in
part, at a redemption price equal to the sum of the principal amount of the
2017 Notes being redeemed plus accrued interest thereon to the redemption date
and any make-whole amount, as defined in the Prospectus Supplement Relating to
the 2017 Notes.
Acquisition Facilities:
In connection with the Initial Offering, the Operating Partnership,
entered into a $100,000 collateralized revolving credit facility (the "1994
Acquisition Facility"). During the quarter ended June 30, 1995, the capacity
of the 1994 Acquisition Facility was increased to $150,000. Borrowings under
the 1994 Acquisition Facility bore interest at a floating rate equal to LIBOR
plus 2.00% or a "Corporate Base Rate" plus .50%, at the Operating Partnership's
election. Effective July 12, 1996, the lenders reduced the interest rate to
LIBOR plus 1.75%. In December 1996, the Operating Partnership terminated the
1994 Acquisition Facility (see Note 10) and entered into a $200,000 unsecured
revolving credit facility (the "1996 Unsecured Acquisition Facility") which
initially bore interest at LIBOR plus 1.10% or a "Corporate Base Rate" plus
.25% and provided for interest only payments until the maturity date. In
December 1997, the Operating Partnership terminated the 1996 Unsecured
Acquisition Facility (see Note 10) and entered into a $300,000 unsecured
revolving credit facility (the "1997 Unsecured Acquisition Facility") which
initially bears interest at LIBOR plus .80% or a "Corporate Base Rate", at the
Operating Partnership's election, and provides for interest only payments until
maturity. The Operating Partnership may borrow under the facility to finance
the acquisition of additional properties and for other corporate purposes,
including to obtain additional working capital. The 1997 Unsecured Acquisition
Facility contains certain financial covenants relating to debt service
coverage, market value net worth, dividend payout ratio and total funded
indebtedness.
In December 1995, the Operating Partnership entered into a $24,219
collateralized revolving credit facility (the "1995 Credit Line"). The 1995
Credit Line bore interest at a floating rate of LIBOR plus 2.45%. The Operating
Partnership terminated the 1995 Credit Line in February 1996 (see Note 10).
In May 1996, the Operating Partnership entered into a $10,000
collateralized revolving credit facility (the "1996 Credit Line"). The 1996
Credit Line bore interest at a floating rate from LIBOR plus 2.45% to
LIBOR plus
F-14
<PAGE> 52
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES, PROMISSORY
NOTES PAYABLE AND INTEREST RATE PROTECTION AGREEMENTS, CONTINUED
2.75%, depending on the term of the interest rate option. The Operating
Partnership terminated the 1995 Credit Line in November 1996 (see Note 10).
In September 1996, the Operating Partnership entered into a $40,000
revolving credit facility (the "1996 Acquisition Facility"). Borrowings under
the 1996 Acquisition Facility bore interest at a floating rate equal to LIBOR
plus 2.00% or a "Corporate Base Rate" plus .50%, at the Operating Partnership's
election. The Operating Partnership terminated the 1996 Acquisition Facility
in November 1996 (see Note 10).
Promissory Notes Payable:
On September 30, 1996, the Operating Partnership entered into a $6,489
promissory note and a $3,430 promissory note (collectively referred to as
"Promissory Notes") as partial consideration for the purchase of two properties
in Columbus, Ohio. Both Promissory Notes bore interest at 8.00%. The
Promissory Notes were paid off and retired on January 6, 1997.
The following table discloses certain information regarding the Operating
Partnership's mortgage loans, senior unsecured debt, acquisition facility and
promissory notes payable:
<TABLE>
<CAPTION>
OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT INTEREST RATE AT
------------------------------- --------------------------------- ----------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, MATURITY
1997 1996 1997 1996 1997 DATE
------------- ------------- ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE
CIGNA Loan....................... $ 35,813 $ 36,363 $ --- $ --- 7.50% 4/01/03
Assumed Loans.................... 8,950 9,215 --- --- 9.25% 1/01/13
LB Mortgage Loan II.............. 705 --- --- --- (1) (1)
Acquisition Mortgage Loan I...... 4,135 --- 29 --- 8.50% 8/01/08
Acquisition Mortgage Loan II..... 7,997 --- 52 --- 7.75% 4/01/06
Acquisition Mortgage Loan III.... 3,598 --- 27 --- 8.875% 6/01/03
------------ ---------- ---------- ------------
Total............................ $ 61,198 $ 45,578 $ 108 $ ---
============ ========== ========== ============
SENIOR UNSECURED DEBT
- - ---------------------
2005 Notes....................... $ 50,000 $ --- $ 393 $ --- 6.90% 11/21/05
2006 Notes....................... 150,000 --- 671 --- 7.00% 12/01/06
2007 Notes....................... 149,951 (2) --- 1,457 --- 7.60% 5/15/07
2011 Notes....................... 99,377 (2) --- 942 --- 7.375% 5/15/11 (3)
2017 Notes....................... 99,809 (2) --- 479 --- 7.50% 12/01/17 (4)
2027 Notes ...................... 99,857 (2) --- 914 --- 7.15% 5/15/27 (5)
------------ ---------- ---------- ------------
Total............................ $ 648,994 $ --- $ 4,856 $ ---
============ ========== ========== ============
ACQUISITION FACILITY PAYABLE
- - ----------------------------
1996 Unsecured Acquisition
Facility....................... $ --- $ 4,400 $ --- $ 3 N/A N/A
1997 Unsecured Acquisition
Facility....................... 129,400 --- 297 --- 6.77% 4/30/01
------------ ---------- ---------- ------------
Total............................ $ 129,400 $ 4,400 $ 297 $ 3
============ ========== ========== ============
PROMISSORY NOTES PAYABLE
- - ------------------------
Promissory Notes................. $ --- $ 9,919 $ --- $ 68 N/A 1/06/97
============ ========== ========== ============
</TABLE>
(1) The LB Mortgage Loan II is interest free until February 1998 at which
time the mortgage loan bears interest at 8%. The loan matures as
described above.
(2) The 2007 Notes, 2011 Notes, 2017 Notes and 2027 Notes are net of
unamortized discounts of $49, $623, $191 and $143, respectively.
(3) The 2011 Notes are redeemable at the option of the holder thereof, on May
15, 2004.
(4) The 2017 notes are redeemable at the option of the Operating Partnership
at any time based upon a predetermined formula.
(5) The 2027 Notes are redeemable at the option of the holders thereof, on
May 15, 2002.
F-15
<PAGE> 53
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES, PROMISSORY
NOTES PAYABLE AND INTEREST RATE
PROTECTION AGREEMENTS, CONTINUED
Fair Value:
At December 31, 1996 the fair value of the Operating Partnership's
mortgage loans payable, acquisition facility payable and promissory
notes payable were not materially different from their carrying values. The
value of the interest rate protection agreements was approximately $4,101. At
December 31, 1997, the fair value of the Operating Partnership's mortgage loans
payable , senior unsecured debt, acquisition facility payable and interest rate
protection agreements were as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
------------ -----------
<S> <C> <C>
Mortgage Loans Payable.......... $ 61,198 $ 65,031
Senior Unsecured Debt........... 648,994 666,954
Acquisition Facility Payable.... 129,400 129,400
Interest Rate Protection
Agreements.................... -- (4,974)
----------- ----------
Total........................... $ 839,592 $ 856,411
=========== ==========
</TABLE>
The following is a schedule of maturities of the mortgage loans, senior
unsecured debt and acquisition facility payable for the next five years ending
December 31, and thereafter:
<TABLE>
<CAPTION>
Amount
-----------
<S> <C>
1998 $ 1,407
1999 1,527
2000 1,657
2001 131,198
2002 1,950
Thereafter 702,154
--------
Total $839,893
========
</TABLE>
Interest Rate Protection Agreements:
On July 1, 1995, the Operating Partnership entered into interest rate swap
agreements (the "1995 Interest Rate Protection Agreements") with a notional
value of $300,000, which, together with the interest rate protection agreements
the Financing Partnership owned, effectively fixed the annual interest rate on
the Financing Partnership's $300,000 mortgage loan at 6.97% for six years
through June 30, 2001. The costs of the 1995 Interest Rate Protection
Agreements had been capitalized and were being amortized over the
respective terms of the 1995 Interest Rate Protection Agreements. On May
16, 1997, the Operating Partnership sold the 1995 Interest Rate Protection
Agreements (see Note 9).
F-16
<PAGE> 54
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
5. MORTGAGE LOANS, SENIOR UNSECURED DEBT, ACQUISITION FACILITIES, PROMISSORY
NOTES PAYABLE AND INTEREST RATE PROTECTION AGREEMENTS, CONTINUED
The Operating Partnership, from time to time, enters into interest rate
protection agreements which are used to lock into a fixed interest rate on an
anticipated offering of senior unsecured debt. At December 31, 1997, the
following interest rate protection agreements were outstanding:
Notional Value Interest Rate Valuation Basis Settlement Date
--------------- --------------- ---------------- ---------------
$100,000 6.037% 10-Year Treasury July 1, 1998
$100,000 6.317% 30-Year Treasury July 1, 1998
$100,000 5.999% 30-Year Treasury January 4, 1999
6. PARTNERS' CAPITAL
The Operating Partnership has issued general partnership units, limited
partnership units and preferred general partnership units. The general
partnership units resulted from capital contributions from the Company. The
limited partnership units are issued in conjunction with the acquisition of
certain properties (See discussion below). The preferred general partnership
units result from preferred capital contributions from the Company. The
Operating Partnership will be required to make all required distributions on
the preferred general partnership units prior to any distribution of cash or
assets to the holders of the general and limited partnership units except for
distributions required to enable the Company to maintain its qualification as a
Real Estate Investment Trust.
Contributions:
On February 2, 1996, the Company issued 5,175,000 shares of $.01 par value
Common Stock (the "February 1996 Equity Offering") inclusive of the
underwriters' over-allotment option. The net proceeds of $106,343 received
from the February 1996 Equity Offering were contributed to the Operating
Partnership in exchange for 5,175,000 Operating Partnership units (the "Units")
and are reflected in the Operating Partnership's financial statements as a
general partner contribution.
On October 25, 1996, the Company issued 5,750,000 shares of $.01 par value
Common Stock (the "October 1996 Equity Offering") inclusive of the
underwriters' over-allotment option. The net proceeds of $137,697 received from
the October 1996 Equity Offering were contributed to the Operating Partnership
in exchange for 5,750,000 Units and are reflected in the Operating Partnership's
financial statements as a general partner contribution.
During 1996, the Operating Partnership issued 1,038,712 Units valued, in
the aggregate, at $23,863 in exchange for interests in certain properties.
These contributions are reflected in the Operating Partnership's financial
statements as limited partners contributions.
On September 16, 1997, the Company issued 637,440 shares of $.01 par value
common stock (the "September 1997 Equity Offering"). The net proceeds of
$18,900 received from the September 1997 Equity Offering were contributed to
the Operating Partnership in exchange for 637,440 Units in the Operating
Partnership and are reflected in the Operating Partnership's financial
statements as a general partner contribution.
On October 15, 1997, the Company issued 5,400,000 shares of $.01 par value
common stock (the "October 1997 Equity Offering"). The net proceeds of $176,556
received from the October 1997 Equity Offering were contributed to the
Operating Partnership in exchange for 5,400,000 Units and are reflected in the
Operating Partnership's financial statements as a general partner contribution.
During 1997, the Operating Partnership issued 3,634,148 Units valued, in
the aggregate, at $115,231 in exchange for interests in certain properties.
These contributions are reflected in the Operating Partnership's financial
statements as limited partners contributions.
Preferred Contributions:
On May 14, 1997, the Company issued 4,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 3/4%, $.01 par value,
Series B Cumulative Preferred Stock (the "Series B Preferred Stock"), at an
initial offering price of $25 per Depositary Share. The net proceeds of
$96,292 million received from the Series B Preferred Stock were contributed to
the Operating Partnership in exchange for 8 3/4% Series B Cumulative Preferred
Units (the "Series B Preferred Units") and are reflected in the Operating
Partnership's financial statements as a general partner preferred unit
contribution.
On June 6, 1997, the Company issued 2,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 8 5/8%, $.01 par value,
Series C Cumulative Preferred Stock (the "Series C Preferred Stock"), at an
F-17
<PAGE> 55
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
6. PARTNERS' CAPITAL, CONTINUED
initial offering price of $25 per Depositary Share. The net proceeds of $47,997
million received from the Series C Preferred Stock were contributed to the
Operating Partnership in exchange for 8 5/8% Series C Cumulative Preferred
Units (the "Series C Preferred Units") and are reflected in the Operating
Partnership's financial statements as a general partner preferred unit
contribution.
7. ACQUISITION AND DEVELOPMENT OF REAL ESTATE
In 1997, the Operating Partnership acquired 380 industrial properties
comprising approximately 21.0 million square feet (unaudited) of GLA for a
total purchase price of approximately $817,058 and completed the development of
eight properties comprising approximately 1.2 million square feet (unaudited)
of GLA at a cost of approximately $38,008.
8. SALES OF REAL ESTATE
In 1996, the Operating Partnership sold six in-service properties.
Gross proceeds from these sales totaled approximately $14,972. The gain on
sales totaled approximately $4,344.
In 1997, the Operating Partnership sold three in-service properties, one
property held for redevelopment and land parcels. Gross proceeds from these
sales totaled approximately $16,083. The gain on sales totaled approximately
$728.
9. DISPOSITION OF INTEREST RATE PROTECTION AGREEMENTS
In May 1997, the Operating Partnership sold the 1995 Interest Rate
Protection Agreements. The gross proceeds from the sale of the Interest Rate
Protection Agreements were approximately $6,440. The gain on disposition of
the interest rate protection agreements totaled approximately $4,038.
10. EXTRAORDINARY ITEMS
In 1996, the Operating Partnership terminated the 1994 Acquisition
Facility, the 1995 Credit Line, the 1996 Credit Line and the 1996 Acquisition
Facility before their contractual maturity date. As a result of these early
retirements, the Operating Partnership recorded an extraordinary loss of $2,273
comprised of a prepayment fee, the write-off of unamortized deferred financing
fees, legal costs and other expenses.
In 1997, the Operating Partnership terminated the Defeasance Loan and the
1996 Unsecured Acquisition Facility before their contractual maturity date.
As a result of these early retirements, the Operating Partnership recorded an
extraordinary loss of $4,666 comprised of the write off of unamortized deferred
financing fees, legal costs and other expenses.
F-18
<PAGE> 56
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
11. EARNINGS PER UNIT
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("FAS 128"), effective for financial
statements ending after December 15, 1997. As required by this statement, the
Operating Partnership adopted the new standard for computing and presenting
earnings per Unit (EPU) for the year ended December 31, 1997, and for all
prior-periods' EPU data is presented herein. The computation of basic and
diluted EPU, as prescribed by FAS 128, is presented below:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Numerator:
- - ----------
Income Before Extraordinary Loss................................ $ 58,285 $ 36,921 $ 12,123
Less: Preferred Unit Distributions........................... (7,936) --- ---
------------ ------------ -------------
Net Income Available to
Unitholders before Extraordinary
Loss - For Basic and Diluted EPU........................... 50,349 36,921 12,123
Extraordinary Loss............................................. (4,666) (2,273) ---
------------ ------------ -------------
Net Income Available to Unitholders - For Basic
and Diluted EPU.............................................. $ 45,683 $ 34,648 $ 12,123
============ ============ =============
Denominator:
- - ------------
Weighted Average Units Outstanding at
December 31, 1997, 1996 and 1995, respectively-Basic.......... 35,681,562 26,762,731 20,418,832
Effect of Dilutive Securities:
Employee Common Stock Options of the Company that result in the
issuance of general partnership units........................ 305,686 86,447 ---
------------ ------------ -------------
Weighted Average Units Outstanding at December 31, 1997,
1996 and 1995, respectively-Diluted.......................... 35,987,248 26,849,178 20,418,832
============ ============ =============
Basic EPU:
- - ----------
Net Income Available to Unitholders Before Extraordinary
Loss........................................................... $ 1.41 $ 1.38 $ .59
============ ============ =============
Extraordinary Loss.............................................. $ (.13) $ (.09) $ ---
============ ============ =============
Net Income Available to Unitholders............................. $ 1.28 $ 1.29 $ .59
============ ============ =============
Diluted EPS:
Net Income Available to Unitholders Before Extraordinary
Loss........................................................... $ 1.40 $ 1.38 $ .59
============ ============ =============
Extraordinary Loss.............................................. $ (.13) $ (.09) $ ---
============ ============ =============
Net Income Available to Unitholders............................. $ 1.27 $ 1.29 $ .59
============ ============ =============
</TABLE>
F-19
<PAGE> 57
0
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
12. FUTURE RENTAL REVENUES
The Operating Partnership's properties are leased to tenants under net and
semi-net operating leases. Minimum lease payments receivable, excluding tenant
reimbursements of expenses, under noncancelable operating leases in effect as
of December 31, 1997 are approximately as follows:
<TABLE>
<S> <C> <C>
1998 $ 138,488
1999 112,412
2000 83,551
2001 64,776
2002 47,439
Thereafter 107,459
---------------
Total $ 554,125
===============
</TABLE>
13. EMPLOYEE BENEFIT PLANS
The Company maintains two stock incentive plans (the "Stock Incentive
Plans") which are administered by the Compensation Committee of the Board of
Directors of the Company. The exercise of employee stock options results in a
contribution from the general partner to the Operating Partnership. Only
officers and other employees of the Company and its affiliates generally are
eligible to participate in the Stock Incentive Plans. However, independent
Directors of the Company receive automatic annual grants of options to purchase
10,000 shares at a per share exercise price equal to the fair market value of a
share on the date of grant.
The Stock Incentive Plans authorize (i) the grant of stock options that
qualify as incentive stock options under Section 422 of the Code, (ii) the
grant of stock options that do not so qualify, (iii) restricted stock awards,
(iv) performance share awards and (v) dividend equivalent rights. The exercise
price of stock options will be determined by the Compensation Committee, but
may not be less than 100% of the fair market value of the shares on the date of
grant. Special provisions apply to awards granted under the Stock Incentive
Plans in the event of a change in control in the Company. As of January 30,
1998, the Company has authorized 7.7 million shares for issuance under the
Stock Incentive Plans, of which 1.7 million shares are available for future
grants. The outstanding stock options generally vest over one to two year
periods and have lives of ten years. Stock option transactions are summarized
as follows:
<TABLE>
<CAPTION>
Weighted Average
Exercise Price per Exercise
Share Share Price Per Share
----------- ------------------ ---------------
<S> <C> <C> <C>
Granted at Initial Offering................................... 637,500 $23.50 $23.50
-----------
Outstanding at December 31, 1994.............................. 637,500 $23.50 $23.50
Granted.................................................... 274,500 $19.98 $18.25-$20.25
Expired or Terminated...................................... (54,000) $23.50 $23.50
-----------
Outstanding at December 31, 1995.............................. 858,000 $22.37 $18.25-$23.50
Granted.................................................... 263,500 $22.94 $22.75-$25.63
Exercised.................................................. (16,000) $23.50 $23.50
Expired or Terminated...................................... (12,000) $23.50 $23.50
-----------
Outstanding at December 31, 1996.............................. 1,093,500 $22.49 $18.25-$25.63
Granted.................................................... 538,000 $30.32 $28.50-$30.375
Exercised.................................................. (300,000) $22.50 $18.25-$23.50
-----------
Outstanding at December 31, 1997.............................. 1,331,500 $25.67 $18.25-$30.375
===========
</TABLE>
F-20
<PAGE> 58
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
13. EMPLOYEE BENEFIT PLANS, CONTINUED
The following table summarizes currently outstanding and exercisable
options as of December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------- ---------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Exercise Price Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- - ----------------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$18.25-$25.63 793,500 7.28 $22.52 793,500 $ 22.52
$28.50-$30.50 538,000 9.37 $30.32 229,000 $30.375
</TABLE>
The Operating Partnership applies Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," in accounting for the Company's
Stock Incentive Plans. Accordingly, no compensation expense has been
recognized in the consolidated statements of operations. Had compensation cost
for the Company's Stock Incentive Plans been determined based upon the fair
value at the grant date for awards under the Stock Incentive Plans consistent
with the methodology prescribed under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", net income and
earnings per Unit would have been the pro forma amounts indicated in the
table below:
<TABLE>
<CAPTION>
For the Year Ended
----------------------------------------------------
1997 1996 1995
-------------- ----------------- -----------------
<S> <C> <C> <C>
Net Income Available to Unitholders-as reported....................... $ 45,683 $ 34,648 $ 12,123
Net Income Available to Unitholders-pro forma......................... $ 44,403 $ 34,142 $ 12,123
Net Income Available to Unitholders-per Unit as reported- Basic....... $ 1.28 $ 1.29 $ .59
Net Income Available to Unitholders-per Unit pro forma- Basic......... $ 1.24 $ 1.28 $ .59
Net Income Available to Unitholders-per Unit - as reported - diluted.. $ 1.27 $ 1.29 $ .59
Net Income Available to Unitholders-per Unit - pro forma
- diluted........................................................... $ 1.23 $ 1.27 $ .59
The fair value of each option grant is estimated on the
date of grant using the Black-Scholes
option pricing model with the following weighted
average assumptions:
Expected dividend yield........................................... 8.15% 7.16% 7.16%
Expected stock price volatility................................... 20.01% 18.12% 18.12%
Risk-free interest rate........................................... 6.48% 6.81% 6.05%
Expected life of options.......................................... 3.78 7.37 5.51
</TABLE>
The weighted average fair value of options granted during 1997, 1996 and 1995
is $2.72, $2.43 and $1.84 per option, respectively.
In September 1994, the Board of Directors of the Company approved and the
Company adopted a 401(k)/Profit Sharing Plan. Under the Company's 401(k)/Profit
Sharing Plan, all eligible employees may participate by making voluntary
contributions. The Company may make, but is not required to make, matching
contributions. For the years ended December 31, 1996 and 1995, the Company did
not make any matching contributions. For the year ended December 31, 1997, the
Company made a matching contribution of approximately $108. In March 1996, the
Board of Directors approved and the Company adopted a Deferred Income Plan (the
"Plan"). Under the Plan, 194,164 unit awards and 138,500 unit awards were
granted for the years ended December 31, 1997 and 1996, respectively, providing
the recipients with deferred income benefits which vest in three equal annual
installments. The expense related to these deferred income benefits is included
in general and administrative expenses in the consolidated statements of
operations of the Operating Partnership.
During 1997, the Company awarded 59,946 shares of restricted Common Stock
to certain employees, 1,274 of restricted common stock to certain Directors
and certain other employees of the Company converted
F-21
<PAGE> 59
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
13. EMPLOYEE BENEFIT PLANS, CONTINUED
certain employee stock options to 54,936 shares of restricted common stock. The
Operating Partnership issued Units to the Company in the same amount. These
restricted shares of common stock had a fair value of $3,655 on the date of
grant. The restricted common stock vests over a period from two to ten years.
Compensation expense will be charged to earnings in the Operating Partnership's
consolidated statemetns of operations over the vesting period.
14. RELATED PARTY TRANSACTIONS
The Operating Partnership often obtains title insurance coverage for its
properties from an entity for which an independent Director of the Company
became the President, Chief Executive Officer and a Director in 1996.
On November 19, 1997, the Operating Partnership exercised an option that
was granted on March 19, 1996 to purchase a 100,000 square foot (unaudited)
bulk warehouse property located in Indianapolis, Indiana for approximately
$3,338. The property was purchased from a partnership in which one of the
Operating Partnership's Senior Regional Directors was a limited partner.
From time to time, the Operating Partnership utilizes real estate
brokerage services from CB Commercial for which a relative of one of the
Company's senior executive officers is an employee.
15. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Interest paid, net of
capitalized interest......................... $ 19,909 $ 5,069 $ 6,255
========== ========== ==========
Interest capitalized........................... $ 1,151 $ 501 $ 266
========== ========== ==========
Supplemental schedule of noncash investing and financing activities:
Distribution payable on Units.................. $ 22,010 $ 16,281 $ 9,954
========== ========== ==========
Exchange of limited partner units for general partner units:
Limited Partnership Interest................. $ (3,395) $ (943) $ (1,005)
General Partnership Interest................. 3,395 943 1,005
---------- ---------- ----------
$ --- $ --- $ ---
========== ========== ==========
Sale of interest rate
protection agreement......................... $ --- $ --- $ (4,380)
Purchase of interest rate
protection and swap
agreements................................... --- --- 4,380
---------- ---------- ----------
$ --- $ --- $ ---
========== ========== ==========
In conjunction with the property acquisitions, the following assets and liabilities were assumed:
Purchase of real estate........................ $ 817,058 $ 252,991 $ 63,855
Mortgage loans................................. (20,272) (9,417) ---
Promissory notes............................... --- (9,919) ---
Operating partnership units.................... (115,230) (23,863) ---
Accounts receivable............................ --- --- 153
Accounts payable and
accrued expenses............................. (11,064) (2,626) (1,115)
---------- ---------- ----------
Acquisition of real estate..................... $ 670,492 $ 207,166 $ 62,893
========== ========== ==========
In conjunction with the capitalization of the Other Real Estate Partnerships in 1995, the following
assets and liabilities were contributed:
Land .............................................. $ 20,151
Building and improvements ......................... 115,192
Accumulated depreciation .......................... (3,446)
Restricted cash ................................... 802
Deferred rent receivable .......................... 387
Deferred financing costs .......................... 854
Prepaid expenses and other assets ................. 579
Acquisition facilities payable .................... (81,450)
Accounts payable and accrued expenses ............. (513)
-------
Investment in affiliates ..................... $52,556
=======
</TABLE>
F-22
<PAGE> 60
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
16. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Operating Partnership is involved in
legal actions arising from the ownership of its properties. In management's
opinion, the liabilities, if any, that may ultimately result from such legal
actions are not expected to have a materially adverse effect on the
consolidated financial position, operations or liquidity of the Operating
Partnership.
Sixteen properties have leases granting the tenants options to purchase
the property. Such options are exercisable at various times and at appraised
fair market value or at a fixed purchase price generally in excess of the
Operating Partnership's net book value of the asset. The Operating Partnership
has no notice of any exercise of any tenant purchase option.
The Operating Partnership has committed to the construction of four
development projects totaling approximately .5 million square feet (unaudited)
of GLA. The estimated total construction costs are approximately $17,689
(unaudited). These developments are expected to be funded with cash flow from
operations as well as borrowings under the 1997 Unsecured Acquisition
Facility.
At December 31, 1997, the Operating Partnership had two letters of credit
outstanding in the amounts of $980 and $329. The $980 letter of credit was
required under the Company's original issuance of the Series A Preferred Stock
to guarantee the payment of one quarter's dividend on the Series A Preferred
Stock. The Guarantee Agent of the Series A Preferred Stock is the beneficiary
of this letter of credit which expires on June 29, 1998. The $329 letter of
credit is pledged to a municipality to guarantee the completion of certain site
improvements at one of the Other Real Estate Partnerships property developments.
It expires on August 31, 1998.
17. SUBSEQUENT EVENTS (UNAUDITED)
During the period January 1, 1998 thorugh March 26, 1998, the Operating
Partnership purchased 49 industrial properties containing an aggregate of 3.1
million square feet of GLA for approximately $111,744, or $36.44 per square
foot. The aggregate purchase price consisted of approximately $109,773 million
in cash and Units valued at approximately $1,971.
On January 2, 1998, the Operating Partnership entered into an interest
rate protection agreement to lock into a fixed interest rate on an anticipated
offering of senior unsecured debt. The interest rate protection agreement had
a notional value of $50,000, an interest rate of 5.937% and a settlement date
of October 2, 1998. This interest rate protection agreement's value is based on
the 30-year treasury.
On January 27, 1998, the Operating Partnership filed Amendment No. 1 to
Form S-3 which registered approximately $400,000 of debt securities.
On February 4, 1998, the Company issued 5,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.95%, $.01 par value, Series
D Cumulative Preferred Stock (the "Series D Preferred Stock"), at an initial
offering price of $25 per Depositary Share. The net proceeds of approximately
$120,563 were contributed to the Operating Partnership in exchange for 7.95%
Series D Cumulative Preferred Units.
On March 18, 1998, the Company issued 3,000,000 Depositary Shares, each
representing 1/100th of a share of the Company's 7.90%, $.01 par value, Series
E Cumulative Preferred Stock ("Series E Preferred Stock") at an initial
offering price of $25 per depositary share. The net proceeds of $72,138 were
contributed to the Operating Partnership in exchange for 7.90% Series E
Cumulative Preferred Units.
In March, 1998, the Operating Partnership declared a first quarter
distribution of $.53 per Unit which is payable on April 20, 1998. The
Operating Partnership also declared a first quarter distribution of
$54.688 per
F-23
<PAGE> 61
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
17. SUBSEQUENT EVENTS (UNAUDITED), CONTINUED
Series B Preferred Unit, $53.906 Series C Preferred Unit and a period prorated
preferred unit distribution of $30.365 per Series D Preferred Unit which is
payable on March 31, 1998.
On March 26, 1998, the Operating Partnership entered into an
underwriting agreement with J.P. Morgan Securities Inc. ("J.P. Morgan") and
certain other underwriters named therein (the "Underwriters"), pursuant to
which the Operating Partnership agreed to issue and sell $100.0 million of its
6 1/2% Dealer remarketable securities due April 5, 2011 (the "Drs."). The Drs.
will bear interest at 6 1/2% from the date of issuance through April 5, 2001.
On April 5, 2001, the Drs. will be subject to mandatory tender to J.P. Morgan,
as the remarketing dealer, if they elect to remarket the Drs. If J.P. Morgan
elects not to remarket the Drs., the Operating Partnership will be required to
repurchase the Drs. on April 5, 2001 at 100% of the principal amount thereof
plus accrued and unpaid interest.
18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ----------
<C> <C> <C> <C> <C>
Total Revenues.........................................................$ 18,899 $ 21,379 $ 24,032 $34,256
Income Before Disposition of Interest Rate Protection
Agreements, Gain on Sales of Real Estate, Equity in Income
of Other Real Estate Partnerships and Extraordinary Loss............. 6,386 3,709 4,836 7,291
Disposition of Interest Rate Protection Agreements..................... --- 4,038 --- ---
Gain on Sales of Properties............................................ --- 460 77 191
Income Before Equity in Income of Other Real Estate Partnerships
and Extraordinary Loss............................................... 6,386 8,207 4,913 7,482
Equity in Income of Other Real Estate Partnerships..................... 5,834 2,196 11,472 11,795
Income Before Extraordinary Loss....................................... 12,220 10,403 16,385 19,277
Extraordinary Loss..................................................... --- (3,428) --- (1,238)
----------- ---------- --------- -------
Net Income............................................................. 12,220 6,975 16,385 18,039
Preferred Unit Distributions........................................... --- 1,405 3,265 3,266
----------- ---------- --------- -------
Net Income Available to Unitholders....................................$ 12,220 $ 5,570 $ 13,120 $14,773
=========== ========== ========= =======
Earnings Per Unit:
Net Income Available to Unitholders Before Extraordinary Loss per
Weighted Average Unit Outstanding:
Basic......................................................$ .37 $ .26 $ .38 $ .39
=========== ========== ========= =======
Diluted....................................................$ .36 $ .26 $ .38 $ .39
=========== ========== ========= =======
Net Income Available to Unitholders per Weighted Average and Unit
Outstanding:
Basic......................................................$ .37 $ .16 $ .38 $ .36
=========== ========== ========= =======
Diluted....................................................$ .36 $ .16 $ .38 $ .36
=========== ========== ========= =======
YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ----------
Total Revenues.........................................................$ 5,920 $ 9,283 $ 9,881 $12,503
Income Before Gain on Sales of Real Estate, Equity in Income
of Other Real Estate Partnerships and Extraordinary Loss............. 1,630 2,425 3,125 5,267
Gain on Sales of Properties............................................ --- 4,320 --- 24
Income Before Equity in Income of Other Real Estate Partnerships
and Extraordinary Loss............................................... 1,630 6,745 3,125 5,291
Equity in Income of Other Real Estate Partnerships..................... 4,496 5,123 5,127 5,384
Income Before Extraordinary Loss....................................... 6,126 11,868 8,252 10,675
Extraordinary Loss..................................................... (821) --- --- (1,452)
----------- ---------- --------- -------
Net Income............................................................. 5,305 11,868 8,252 9,223
Preferred Unit Distributions........................................... --- --- --- ---
----------- ---------- --------- -------
Net Income Available to Unitholders....................................$ 5,305 $ 11,868 $ 8,252 $ 9,223
=========== ========== ========= =======
Earnings Per Unit:
Net Income Available to Unitholders Before Extraordinary Loss per Weighted Average
Unit Outstanding:
Basic......................................................$ .26 $ .45 $ .31 $ .35
=========== ========== ========= =======
Diluted....................................................$ .26 $ .45 $ .31 $ .35
=========== ========== ========= =======
Net Income Available to Unitholders per Weighted Average Unit
Outstanding:
Basic......................................................$ .22 $ .45 $ .31 $ .30
=========== ========== ========= =======
Diluted....................................................$ .22 $ .45 $ .31 $ .30
=========== ========== ========= =======
</TABLE>
F-24
<PAGE> 62
FIRST INDUSTRIAL, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
19. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following Pro Forma Condensed Statements of Operations for the years
ended December 31, 1997 and 1996 are presented as if the acquisition of 491
properties between January 1, 1996 and December 31, 1997 had been acquired on
either January 1, 1996 or the lease commencement date if the property was
developed and as if the February 1996 Equity Offering, the October 1996 Equity
Offering, the Series B Preferred Units, the Series C Preferred Units, the
September 1997 Equity Offering, the October 1997 Equity Offering, the
assumption of $66.5 million of secured debt, the issuance of the 2005 Notes,
the issuance of the 2006 Notes and the issuance of the 2017 Notes had been
completed on January 1, 1996.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
----------------------------
December 31, December 31,
1997 1996
------------ -------------
<C> <C> <C>
Total Revenues................................................. 168,175 $ 157,338
Property Expenses.............................................. 49,553 46,783
General and Administrative Expense............................. 5,820 4,014
Interest Expense............................................... 37,375 23,114
Depreciation and Other Amortization............................ 369 25,285
Amortization of Interest Rate Protection Agreements
and Deferred Financing Costs.................................. 27,122 196
----------- ------------
Income Before Disposition of Interest Rate Protection
Agreements, Gain on Sales of Properties,
Minority Interest and Extraordinary Item...................... 47,936 57,946
Disposition of Interest Rate Protection Agreements............. 4,038 ---
Gain on Sales of Properties.................................... 728 4,344
----------- ------------
Income Before Equity in Income of Other Real Estate
Partnerships.................................................. 52,702 62,290
Equity in Income of Other Real Estate Partnerships............. 31,668 21,667
----------- ------------
Income Before Preferred Distributions.......................... 84,370 83,957
Preferred Distributions........................................ (13,066) (13,066)
----------- ------------
Income Available to Unitholders................................ $ 71,304 $ 70,891
=========== ============
Income Available to Unitholders Per Weighted Average
Unit - Basic.................................................. $ 1.69 $ 1.68
=========== ============
Income Available to Uniteholders Per Weighted Average
Unit - Diluted................................................ $ 1.68 $ 1.68
=========== ============
</TABLE>
F-25
<PAGE> 63
OTHER REAL ESTATE PARTNERSHIPS
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Report of Independent Accountants...................................................... F-27
Combined Balance Sheets of the Other Real Estate Partnerships as of December 31,
1997 and 1996.......................................................................... F-28
Combined Statements of Operations of the Other Real Estate Partnerships for the Years
Ended December 31, 1997, 1996 and 1995................................................. F-29
Combined Statements of Changes in Partners' Capital of the Other Real Estate
Partnerships for the Years Ended December 31, 1997, 1996 and 1995...................... F-30
Combined Statements of Cash Flows of the Other Real Estate Partnerships for the Years
Ended December 31, 1997, 1996 and 1995................................................. F-31
Notes to Combined Financial Statements................................................. F-32
</TABLE>
F-26
<PAGE> 64
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
the Other Real Estate Partnerships
We have audited the combined financial statements of the Other Real
Estate Partnerships as listed on page F-26 of this Form 10-K. These financial
statements are the responsibility of the Other Real Estate Partnerships'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the combined financial position of the Other
Real Estate Partnerships as of December 31, 1997 and 1996, and the combined
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 17, 1998
F-27
<PAGE> 65
OTHER REAL ESTATE PARTNERSHIPS
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ ------------
ASSETS
<S> <C> <C>
Assets:
Investment in Real Estate:
Land............................................................. $ 114,329 $ 97,965
Buildings and Improvements....................................... 651,569 588,993
Furniture, Fixtures and Equipment................................ 1,385 1,662
Construction in Progress........................................ 25,947 8,389
Less: Accumulated Depreciation................................... (98,304) (83,324)
---------- ----------
Net Investment in Real Estate............................... 694,926 613,685
Cash and Cash Equivalents........................................ 3,972 3,314
Restricted Cash.................................................. 313,060 11,837
Tenant Accounts Receivable, Net.................................. 5,022 3,637
Deferred Rent Receivable......................................... 7,560 7,010
Interest Rate Protection Agreements, Net......................... --- 6,653
Deferred Financing Costs, Net.................................... 1,787 6,302
Prepaid Expenses and Other Assets, Net........................... 24,325 9,849
---------- ----------
Total Assets................................................ $1,050,652 $ 662,287
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable........................................ $ 40,000 $ 346,504
Defeased Mortgage Loan Payable ............................... 300,000 ---
Accounts Payable and Accrued Expenses......................... 18,988 9,144
Rents Received in Advance and Security Deposits............... 4,329 4,182
---------- ----------
Total Liabilities........................................... 363,317 359,830
---------- ----------
Commitments and Contingencies.................................... --- ---
Partners' Capital 687,335 302,457
---------- ----------
Total Liabilities and Partners' Capital..................... $1,050,652 $ 662,287
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-28
<PAGE> 66
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Revenues:
Rental Income................................................. $ 87,184 $ 79,947 $ 61,428
Tenant Recoveries and Other Income............................ 24,436 22,375 17,604
Interest Income-Defeasance.................................... 12,786 -- --
---------- --------- ----------
Total Revenues...................................... 124,406 102,322 79,032
---------- --------- ----------
Expenses:
Real Estate Taxes............................................. 17,684 17,261 12,135
Repairs and Maintenance....................................... 4,506 4,337 3,024
Property Management........................................... 4,045 3,558 2,635
Utilities..................................................... 3,078 2,535 1,825
Insurance..................................................... 319 605 624
Other......................................................... 937 637 581
Interest...................................................... 24,760 24,268 22,010
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs................................... 2,443 3,090 4,216
Depreciation and Other Amortization........................... 23,310 21,737 17,177
---------- --------- ----------
Total Expenses..................................... 81,082 78,028 64,227
---------- --------- ----------
Income Before Disposition of Interest Rate Protection
Agreements, Gain on Sales of Real Estate and Extraordinary
Loss.......................................................... 43,324 24,294 14,805
Loss on Disposition of Interest Rate Protection
Agreements.................................................... (2,608) --- (6,410)
Gain on Sales of Real Estate..................................... 4,275 --- ---
---------- --------- ----------
Income Before Extraordinary Loss................................. 44,991 24,294 8,395
Extraordinary Loss............................................... (9,458) --- ---
---------- --------- ----------
Net Income....................................................... $ 35,533 $ 24,294 $ 8,395
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-29
<PAGE> 67
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Total
--------------
<S> <C>
Balance at December 31, 1994........ $ 210,906
Contributions................... 100,468
Distributions................... (34,168)
Net Income...................... 8,395
--------------
Balance at December 31, 1995........ 285,601
--------------
Contributions................... 25,874
Distributions................... (33,312)
Net Income...................... 24,294
--------------
Balance at December 31, 1996........ 302,457
--------------
Contributions................... 419,104
Distributions................... (69,759)
Net Income...................... 35,533
--------------
Balance at December 31, 1997........ $ 687,335
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-30
<PAGE> 68
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income......................................................... $ 35,533 $ 24,294 $ 8,395
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Depreciation..................................................... 20,626 19,427 15,232
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs..................................... 2,443 3,090 4,216
Other Amortization............................................... 2,684 2,310 1,945
Disposition of Interest Rate Protection Agreements............... 2,608 --- 6,410
Gain on Sales of Real Estate..................................... (4,275) --- ---
Extraordinary Loss............................................... 9,458 --- ---
Provision for Bad Debts.......................................... 71 65 194
Increase in Tenant Accounts Receivable and Prepaid
Expenses and Other Assets.................................... (4,776) (2,956) (3,339)
Increase in Deferred Rent Receivable............................. (725) 308 (978)
Increase in Accounts Payable and Accrued Expenses and
Rents Received in Advance and Security Deposits.............. 2,460 2,424 (2,931)
Organization Costs............................................... (155) (37) (27)
(Decrease) Increase in Restricted Cash........................... 2,035 (4,275) 546
----------------- ----------------- -----------------
Net Cash Provided by Operating Activities.............. 67,987 44,650 29,663
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and Additions to Investment in Real Estate............. (113,228) (35,697) (19,341)
Proceeds from Sales of Investment in Real Estate................. 17,574 --- ---
Funding of Mortgage Loans Receivable............................. (13,958) --- ---
Repayment of Mortgage Loans Receivable........................... 157 --- ---
Decrease in Restricted Cash...................................... 2,742 1,613 3,749
----------------- ----------------- -----------------
Net Cash Used in Investing Activities................... (106,713) (34,084) (15,592)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions.................................................... 419,104 25,556 47,915
Distributions.................................................... (69,759) (33,312) (34,168)
Repayments on Acquisition Facilities Payable..................... --- --- (81,450)
Proceeds from Mortgage Loans Payable............................. --- --- 46,850
Repayments on Mortgage Loans Payable............................. (6,504) (346) ---
Increase in Restricted Cash ..................................... (306,000) --- ---
Purchase of U.S. Government Securities........................... (300,000) --- ---
Proceeds from Maturity of U.S. Government Securities............. 300,000 --- ---
Purchase of Interest Rate Protection Agreements.................. (150) --- ---
Proceeds from Sale of Interest Rate Protection................... 3,510 --- ---
Debt Issuance Costs.............................................. (817) (1,030) (289)
----------------- ----------------- -----------------
Net Cash Provided by Financing Activities.............. 39,384 (9,132) (21,142)
----------------- ----------------- -----------------
Net Increase (Decrease) in Cash and Cash Equivalents............. 658 1,434 (7,071)
Cash and Cash Equivalents, Beginning of Period................... 3,314 1,880 8,951
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Period......................... $ 3,972 $ 3,314 $ 1,880
================= ================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-31
<PAGE> 69
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND FORMATION OF PARTNERSHIPS
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial Realty Trust, Inc. (the "Company") with an
approximate 86% ownership interest at December 31, 1997. The Company is a real
estate investment trust ("REIT") as defined in the Internal Revenue Code. The
Company's operations are conducted primarily through the Operating Partnership.
The limited partners own approximately a 14% aggregate ownership interest in the
Operating Partnership at December 31, 1997.
The Operating Partnership, among other things, owns a 99% limited
partnership interest (subject in one case as described below to a preferred
limited partnership interest) in First Industrial Financing Partnership, L.P.
(the "Financing Partnership"), First Industrial Securities, L.P. (the
"Securities Partnership"), First Industrial Mortgage Partnership, L.P (the
"Mortgage Partnership"), First Industrial Pennsylvania Partnership, L.P. (the
"Pennsylvania Partnership"), First Industrial Harrisburg Partnership, L.P. (the
"Harrisburg Partnership"), First Industrial Indianapolis, L.P. (the
"Indianapolis Partnership") and First Industrial Development Services Group,
L.P. (together, the "Other Real Estate Partnerships"). On a combined basis, as
of December 31, 1997, the Other Real Estate Partnerships owned 247 in-service
properties containing an aggregate of approximately 22.1 million square
(unaudited) feet of gross leasable area. Of the 247 properties owned by the
Other Real Estate Partnerships at December 31, 1997, 193 are owned by the
Financing Partnership, 19 are owned by the Securities Partnership, 23 are owned
by the Mortgage Partnership, six are owned by the Pennsylvania Partnership,
five are owned by the Harrisburg Partnership and one is owned by the
Indianapolis Partnership.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with a one percent general partnership interest in the Other
Real Estate Partnerships. Each general partner of the Other Real Estate
Partnerships is a wholly owned subsidiary of the Company. The general partner of
the Securities Partnership, First Industrial Securities Corporation, also owns a
preferred limited partnership interest in the Securities Partnership which
entitles it to receive a fixed quarterly distribution, and results in it being
allocated income in the same amount, equal to the fixed quarterly dividend the
Company pays on its 9.5% Series A Cumulative Preferred Stock.
Profits, losses and distributions of the Other Real Estate Partnerships
are allocated to the general partner and the limited partner in accordance with
the provisions contained within the partnership agreements of the Other Real
Estate Partnerships.
2. BASIS OF PRESENTATION
The Combined Balance Sheets as of December 31, 1997 and 1996 and the
Combined Statements of Operations, Changes in Partners' Capital and Cash Flows
for the years ended December 31, 1997, 1996 and 1995 reflect the operations,
capital and cash flows of the Other Real Estate Partnerships on a combined
basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In order to conform with generally accepted accounting principles,
management, in preparation of the Other Real Estate Partnerships' financial
statements, is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities and the reported amounts of revenues and expenses. Actual
results could differ from those estimates.
Cash and Cash Equivalents:
Cash and cash equivalents include all cash and liquid investments with
an initial maturity of three months or less. The carrying amount approximates
fair value due to the short maturity of these investments.
F-32
<PAGE> 70
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Investment in Real Estate and Depreciation:
Purchase accounting has been applied when ownership interests in
properties were acquired for cash. The historical cost basis of properties has
been carried over when the properties and businesses contributed by The Shidler
Group and the properties and businesses contributed by three other contributing
businesses' ownership interests were exchanged for units in the Operating
Partnership (the "Units") on July 1, 1994 and purchase accounting has been used
for all other properties that were acquired for Units.
The Other Real Estate Partnerships review their properties on a
quarterly basis for impairment and provide a provision if impairments are
determined. First, to determine if impairment may exist, the Other Real Estate
Partnerships review their properties and identify those which have had either an
event of change or event of circumstances warranting further assessment of
recoverability. Then, the Other Real Estate Partnerships estimate the fair value
of those properties on an individual basis by capitalizing the expected net
operating income. Such amounts are then compared to the property's depreciated
cost to determine whether an impairment exists.
Interest expense, real estate taxes and other directly related expenses
incurred during construction periods are capitalized and depreciated commencing
with the date placed in service, on the same basis as the related assets.
Depreciation expense is computed using the straight-line method based on the
following useful lives:
Years
-----
Buildings and Improvements.............. 31.5 to 40
Land Improvements....................... 15
Furniture, Fixtures and Equipment....... 5 to 10
Construction expenditures for tenant improvements and leasing
commissions are capitalized and amortized over the terms of each specific lease.
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are capitalized.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from the accounts with the resulting gains or losses
reflected in net income or loss.
Deferred Financing Costs:
Deferred financing costs include fees and costs incurred to obtain
long-term financing. These fees and costs are being amortized over the terms of
the respective loans. Accumulated amortization of deferred financing costs was
$1,460 and $4,517 at December 31, 1997 and 1996, respectively. Unamortized
deferred financing fees are written-off when debit is retired before the
maturity date (see Note 8).
Revenue Recognition:
Rental Income is recognized on a straight-line method under which
contractual rent increases are recognized evenly over the lease term. Tenant
recovery income includes payments from tenants for taxes, insurance and other
property operating expenses and is recognized as revenues in the same period the
related expenses are incurred by the Other Real Estate Partnerships.
The Other Real Estate Partnerships provide an allowance for doubtful
accounts against the portion of tenant accounts receivable which is estimated to
be uncollectible. Accounts receivable in the combined balance sheets
F-33
<PAGE> 71
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
3. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES, CONTINUED
are shown net of an allowance for doubtful accounts of $450 and $379 as of
December 31, 1997 and December 31, 1996, respectively.
Income Taxes:
In accordance with partnership taxation, each of the partners are
responsible for reporting their share of taxable income or loss.
The Other Real Estate Partnerships are subject to certain state and
local income, excise and franchise taxes. The provision for such state and local
taxes has been reflected in general and administrative expense in the statement
of operations and has not been separately stated due to its insignificance.
Fair Value of Financial Instruments:
The Other Real Estate Partnerships' financial instruments include
short-term investments, tenant accounts receivable, accounts payable, other
accrued expenses, mortgage loans payable and interest rate protection
agreements. The fair value of the short-term investments, tenant accounts
receivable, accounts payable and other accrued expenses were not materially
different from their carrying or contract values. See Note 4 for the fair values
of the mortgage loans payable and interest rate protection agreements.
Derivative Financial Instruments:
The Other Real Estate Partnerships' interest rate protection agreements
(the "Agreements") are used to limit the interest rate on the Financing
Partnership's $300,000 mortgage loan. Receipts or payments resulting from the
Agreements are recognized as adjustments to interest expense. In the event that
the Other Real Estate Partnerships terminate these Agreements, the Other Real
Estate Partnerships would recognize a gain (loss) from the disposition of the
Agreements equal to the amount of cash received or paid at termination less the
carrying value of the Agreements on the Other Real Estate Partnerships' balance
sheet. The credit risks associated with the Agreements are controlled through
the evaluation and monitoring of the creditworthiness of the counterparty. In
the event that the counterparty fails to meet the terms of the Agreements, the
Other Real Estate Partnerships' exposure is limited to the current value of the
interest rate differential, not the notional amount, and the Other Real Estate
Partnerships' carrying value of the Agreements on the balance sheet. The
Agreements have been executed with creditworthy financial institutions. As such,
the Other Real Estate Partnerships consider the risk of nonperformance to be
remote.
Recent Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income". This statement, effective for fiscal years beginning
after December 15, 1997, requires the Other Real Estate Partnerships' to report
components of comprehensive income in a financial statement that is displayed
with the same prominence as other financial statements. Comprehensive income is
defined by Concepts Statement No. 6, "Elements of Financial Statements" as the
change in the equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. The Other Real Estate Partnerships have not
yet determined its comprehensive income.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information". This statement, effective for financial statements for periods
beginning after December 15, 1997, requires that a public business enterprise
report financial and descriptive information about its reportable operating
segments. Generally, financial information is required to be reported on
F-34
<PAGE> 72
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
3. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES, CONTINUED
the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The Other Real Estate
Partnerships have not yet determined the impact of this statement on its
financial statements.
4. MORTGAGE LOANS
On June 30, 1994, the Other Real Estate Partnerships, through the
Financing Partnership, entered into a $300,000 mortgage loan (the "1994
Mortgage Loan"). On April 4, 1997, the Other Real Estate Partnerships purchased
U.S. Government securities as substitute collateral to execute a legal
defeasance of a $300,000 mortgage loan (the "1994 Defeased Mortgage Loan") (See
Note 8). Upon the execution of the legal defeasance, 180 of the 195 properties
collateralizing the 1994 Defeased Mortgage Loan were released leaving 15
properties and the U.S. Government securities as collateral. On January 2,
1998, the Other Real Estate Partnerships used the gross proceeds from the
maturity of the U.S. Government securities to pay off and retire the 1994
Defeased Mortgage Loan. Due to the retirement of the 1994 Defeased Mortgage
Loan, the remaining 15 properties were released on January 2, 1998. The 1994
Defeased Mortgage Loan provided for interest only payments at a floating
interest rate of LIBOR plus 1.40% which such interest rate had been limited to
7.2% through the use of an interest rate protection agreement from June 30,
1994 through June 30, 1995. From July 1, 1995 through May 15, 1997, the 1994
Defeased Mortgage Loan's interest rate had been effectively fixed at the rate
of 6.97% through the use of interest rate protection agreements. From May 16,
1997 through December 31, 1997, the 1994 Defeased Mortgage Loan's interest rate
had been limited to 7.2% through the use of interest rate protection
agreements.
Under the terms of the 1994 Defeased Mortgage Loan, certain cash
reserves were required to be and had been set aside for payment of tenant
improvements, capital expenditures, interest, real estate taxes, insurance and
potential environmental costs as well as certain other cash reserves to pay off
and retire the 1994 Defeased Mortgage Loan. The amount of cash reserves for
payment of potential environmental costs was determined by the lender and was
established at the closing of the 1994 Defeased Mortgage Loan. The amounts
included in the cash reserves relating to payments of tenant improvements,
capital expenditures, interest, real estate taxes and insurance were determined
by the lender and approximated the next periodic payment of such items. At
December 31, 1997 and 1996, these reserves totaled $310,943 and $10,223,
respectively, and are included in Restricted Cash. Such cash reserves were
invested in a money market fund at December 31, 1997. The maturity of these
investments is one day, accordingly, cost approximates fair market value. On
January 2, 1998, $300,000 of these cash reserves were used to pay down and
retire the 1994 Defeased Mortgage Loan, $6,000 of these cash reserves were used
to pay a prepayment fee on the 1994 Defeased Mortgage Loan and the remaining
cash reserves were returned to the Financing Partnership.
On December 29, 1995, the Other Real Estate Partnerships, through the
Mortgage Partnership, entered into a $40,200 mortgage loan (the "1995 Mortgage
Loan"). In the first quarter of 1996, the Other Real Estate Partnerships made a
paydown of $200 on the 1995 Mortgage Loan which decreased the outstanding
balance to $40,000. The 1995 Mortgage Loan matures on January 11, 2026 and
provides for interest only payments through January 11, 1998, after which
monthly principal and interest payments are required based on a 28-year
amortization schedule. The interest rate under the 1995 Mortgage Loan is fixed
at 7.22% per annum through January 11, 2003. After January 11, 2003, the
interest rate adjusts through a predetermined formula based on the applicable
Treasury rate. The 1995 Mortgage Loan is collateralized by 23 properties held
by the Other Real Estate Partnerships. The 1995 Mortgage Loan may be prepaid
after January 11, 2003.
Under the terms of the 1995 Mortgage Loan, certain cash reserves are
required to be and have been set aside for refunds of security deposits and
payment of capital expenditures, interest, real estate taxes and insurance. The
amount of cash reserves segregated for security deposits is adjusted as tenants
turn over. The amounts included in the cash reserves relating to payments of
capital expenditures, interest, real estate taxes and insurance were determined
by the lender and approximate the next periodic payment of such items. At
December 31, 1997 and 1996, these reserves totaled $2,117 and $1,614,
respectively, and are included in Restricted Cash. Such cash reserves were
F-35
<PAGE> 73
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS, CONTINUED
invested in a money market fund at December 31, 1997. The maturity of these
investments is one day, accordingly, cost approximates fair market value.
On December 14, 1995, the Other Real Estate Partnerships, through the
Harrisburg Partnership, entered into a $6,650 mortgage loan (the "Harrisburg
Mortgage Loan") that was collateralized by first mortgage liens on three
properties in Harrisburg, Pennsylvania. The Harrisburg Mortgage Loan bore
interest at a rate based on LIBOR plus 1.5% or prime plus 2.25%, at the Other
Real Estate Partnership's option, and provided for interest only payments
through May 31, 1996, with monthly principal and interest payments required
subsequently based on a 26.5-year amortization schedule. On December 15, 1997,
the Other Real Estate Partnerships paid off and retired the Harrisburg
Mortgage Loan (see Note 8).
The following table discloses certain information regarding the Other
Real Estate Partnerships' mortgage loans:
<TABLE>
<CAPTION>
OUTSTANDING BALANCE AT ACCRUED INTEREST PAYABLE AT INTEREST RATE AT
---------------------------- ----------------------------- ----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, MATURITY
1997 1996 1997 1996 1997 DATE
------------ ------------ ------------ ------------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS PAYABLE
1994 Mortgage Loan........... $ --- $ 300,000 $ --- $ 1,750 N/A N/A
1995 Mortgage Loan........... 40,000 40,000 168 168 7.22% 1/11/26
Harrisburg Mortgage Loan..... --- 6,504 --- 39 N/A N/A
---------- ---------- -------------- -----------
Total........................ $ 40,000 $ 346,504 $ 168 $ 1,957
========== ========== ============== ===========
DEFEASED MORTGAGE LOAN
1994 Defeased Mortgage
Loan (formerly defined
as the 1994 Mortgage
Loan)........................ $ 300,000 $ --- $ 1,831 $ --- 7.09% 1/2/98
========== ========== ============== ===========
</TABLE>
Fair Value:
At December 31, 1996 the fair value of the Other Real Estate
Partnerships' mortgage loans payable was not materially different from their
carrying values and the fair value of the interest rate protection agreements
was $4,536. At December 31, 1997, the fair value of the Other Real Estate
Partnerships' mortgage loan payable and defeased mortgage loan payable was
$340,807. The interest rate protection agreements expired on December 31, 1997,
as a result, their fair value was $0.
The following is a schedule of maturities of the mortgage loans for the
next five years ending December 31, and thereafter:
<TABLE>
<CAPTION>
Amount
----------------
<S> <C>
1998 $ 300,435
1999 509
2000 547
2001 566
2002 608
Thereafter 37,335
-------------
Total $ 340,000
=============
</TABLE>
The above table presents the 1994 Defeased Mortgage Loan maturing in
1998 due to its prepayment on January 2, 1998.
F-36
<PAGE> 74
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
5. ACQUISITION AND DEVELOPMENT OF REAL ESTATE
In 1997, the Other Real Estate Partnerships acquired nine properties
comprising approximately 1.8 million square feet (unaudited) of GLA for a total
purchase price of approximately $45,292 and completed the development of ten
properties and two expansions comprising approximately .6 million square feet
(unaudited) of GLA at a cost of approximately $12,238.
6. SALES OF REAL ESTATE
In 1997, the Other Real Estate Partnerships sold seven in-service
properties and several parcels of land. Gross proceeds from these sales totaled
approximately $17,574. The gain on sales totaled approximately $4,275.
7. DISPOSITION OF INTEREST RATE PROTECTION AGREEMENTS
In July 1995, the Financing Partnership sold an interest rate
protection agreement for approximately $12,852. The loss on disposition of the
interest rate protection agreement totaled approximately $6,410.
In May 1997, the Financing Partnership sold interest rate protection
agreements for approximately $3,510. The loss on disposition of the interest
rate protection agreements totaled approximately $2,608.
8. EXTRAORDINARY ITEMS
In 1997, the Other Real Estate Partnerships terminated the Harrisburg
Mortgage Loan before its contractual maturity date. Also, the Other Real Estate
Partnerships entered into a commitment to pay down and retire the 1994 Defeased
Mortgage Loan on January 2, 1998. As a result of the early retirement of the
Harrisburg Mortgage Loan and the commitment for early retirement of the 1994
Defeased Mortgage Loan, the Other Real Estate Partnerships recorded an
extraordinary loss of $9,458 comprised of prepayment fees, the write off of
unamortized deferred financing fees, legal costs and other expenses.
9. FUTURE RENTAL REVENUES
The Other Real Estate Partnerships' properties are leased to tenants
under net and semi-net operating leases. Minimum lease payments receivable,
excluding tenant reimbursements of expenses, under noncancelable operating
leases in effect as of December 31, 1997 are approximately as follows:
<TABLE>
<S> <C>
1998 $ 90,741
1999 77,903
2000 61,524
2001 43,447
2002 31,127
Thereafter 79,830
--------------------
Total $ 384,572
====================
</TABLE>
F-37
<PAGE> 75
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
10. RELATED PARTY TRANSACTIONS
The Other Real Estate Partnerships often obtain title insurance
coverage for its properties from an entity for which an independent Director of
the Company became the President, Chief Executive Officer and a Director in
1996.
11. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
--------------- ---------------- -----------------
<S> <C> <C> <C>
Interest paid, net of
capitalized interest.......... $ 24,718 $ 24,240 $ 21,993
============== =============== ================
Interest
capitalized...................... $ --- $ --- $ 58
============== =============== ================
Supplemental schedule of noncash investing and financing activities:
Sale of interest rate
protection agreement $ --- $ --- $ 8,472
Purchase of interest rate
protection agreements --- --- (8,472)
-------------- --------------- ----------------
$ --- $ --- $ ---
============== ================ ================
</TABLE>
In conjunction with the property acquisitions, the following assets and
liabilities were assumed:
<TABLE>
<S> <C> <C> <C>
Purchase of real estate, net $ 45,292 $ --- $ 131,897
Deferred rent receivable --- 318 387
Restricted Cash --- --- 388
Deferred financing costs --- --- 854
Other assets --- --- 993
Accounts Receivable --- --- ---
Accounts payable and accrued expenses (350) --- (513)
Mortgage loans --- --- ---
Acquisition facilities payable --- --- (81,450)
Limited partnership interest --- (318) (52,556)
-------------- --------------- ---------------
Acquisition of Real Estate $ 44,942 $ --- $ ---
============== =============== ===============
</TABLE>
12. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Other Real Estate Partnerships
are involved in legal actions arising from the ownership of its properties. In
management's opinion, the liabilities, if any, that may ultimately result from
such legal actions are not expected to have a materially adverse effect on the
combined financial position, operations or liquidity of the Other Real
Estate Partnerships.
Eighteen properties have leases granting the tenants options to
purchase the property. Such options are exercisable at various times and at
appraised fair market value or at a fixed purchase price generally in excess of
the Other Real Estate Partnerships' purchase price. The Other Real Estate
Partnerships have no notice of any exercise of any tenant purchase option.
F-38
<PAGE> 76
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
12. COMMITMENTS AND CONTINGENCIES, CONTINUED
The Other Real Estate Partnerships have committed to the construction
of eight development projects totaling approximately 2.0 million square feet
(unaudited) of GLA. The estimated total construction costs are approximately
$72,699 (unaudited). These developments are expected to be funded with capital
contributions from the Operating Partnership.
13. SUBSEQUENT EVENTS (UNAUDITED)
During the period January 1, 1998 through March 26, 1998,the Other
Real Estate Partnerships purchased 17 industrial properties containing an
aggregate of .7 million square feet (unaudited) of GLA for approximately
$24,087, or $33.63 per square foot.
F-39
<PAGE> 77
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
(B) SUBSEQUENT TO
LOCATION (A) INITIAL COST ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
ATLANTA
700 Westlake Parkway Atlanta, GA 213 1,551 510
800 Westlake Parkway Atlanta, GA 450 2,645 402
4050 Southmeadow Parkway Atlanta, GA 401 2,813 158
4051 Southmeadow Parkway Atlanta, GA 697 3,486 686
4071 Southmeadow Parkway Atlanta, GA 750 4,460 715
4081 Southmeadow Parkway Atlanta, GA 1,012 5,450 611
1875 Rockdale Industrial Blvd. Conyers, GA 386 2,264 30
370 Great Southwest Parkway (i) Atlanta, GA 527 2,984 214
955 Cobb Place Kennesaw, GA 780 4,420 167
6105 Boatrock Blvd Atlanta, GA 89 504 14
1640 Sands Place Marietta, GA 162 920 35
3312 N. Berkeley Lake Road Duluth, GA 2,937 16,644 789
3495 Bankhead Highway (i) Atlanta, GA 983 5,568 184
CHICAGO
305-311 Era Drive Northbrook, IL 200 1,154 144
700-714 Landwehr Road Northbrook, IL 357 2,052 207
4330 South Racine Avenue Chicago, IL 448 1,893 239
13040 S. Crawford Ave. Alsip, IL 1,073 6,193 24
11241 Melrose Street Franklin Park, IL 332 1,931 1,072
7200 S Leamington Bedford Park, IL 798 4,595 466
12301-12325 S Laramie Ave Alsip, IL 650 3,692 424
6300 W Howard Street Niles, IL 743 4,208 343
301 Hintz Wheeling, IL 160 905 71
301 Alice Wheeling, IL 218 1,236 58
1001 Commerce Court Buffalo Grove, IL 615 3,485 99
11939 S Central Avenue Alsip, IL 1,208 6,843 140
405 East Shawmut La Grange, IL 368 2,083 104
2201 Lunt Elk Grove Village, IL 469 2,656 1,145
1010-50 Sesame Street Bensenville, IL (f) 979 5,546 171
5555 West 70th Place Bedford Park, IL 146 829 78
3200-3250 South St. Louis (i) Chicago, IL 110 625 47
3110-3130 South St. Louis Chicago, IL 115 650 53
7301 South Hamlin Chicago, IL 149 846 55
3740 West 74th Street Chicago, IL 190 1,075 50
7401 South Pulaski Chicago, IL 664 3,763 450
3900 West 74th Street Chicago, IL 137 778 40
7501 S. Pulaski Chicago, IL 360 2,038 86
410 W 169th Street South Holland, IL 462 2,618 124
CINCINNATI
9900-9970 Princeton-Glendale Cincinnati, OH (c) 545 3,088 750
2940 Highland Avenue Cincinnati, OH (c) 1,717 9,730 706
4700-4750 Creek Road Blue Ash, OH (c) 1,080 6,118 288
4860 Duff Drive Cincinnati, OH 67 378 11
4866 Duff Drive Cincinnati, OH 67 379 10
4884 Duff Drive Cincinnati, OH 104 591 16
4890 Duff Drive Cincinnati, OH 104 592 21
9636-9643 Interocean Drive Cincinnati, OH 123 695 28
7600 Empire Drive Florence, KY 900 5,100 104
CLEVELAND
21510-21600 Alexander Road (j) Oakwood, OH 509 2,883 122
5405 & 5505 Valley Belt Road (i) Independence, OH 371 2,101 107
10145 Philipp Parkway Streetsboro, OH 334 1,891 55
4410 Hamann Willoughby, OH 138 782 49
6675 Parkland Blvd Solon, OH 548 3,103 172
COLUMBUS
6911 Americana Parkway Columbus, OH 314 1,777 122
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97 ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ATLANTA
700 Westlake Parkway Atlanta, GA 223 2,051 2,274 227 1990 (m)
800 Westlake Parkway Atlanta, GA 479 3,018 3,497 285 1991 (m)
4050 Southmeadow Parkway Atlanta, GA 425 2,947 3,372 276 1991 (m)
4051 Southmeadow Parkway Atlanta, GA 726 4,143 4,869 399 1989 (m)
4071 Southmeadow Parkway Atlanta, GA 828 5,097 5,925 479 1991 (m)
4081 Southmeadow Parkway Atlanta, GA 1,157 5,916 7,073 542 1989 (m)
1875 Rockdale Industrial Blvd. Conyers, GA 386 2,294 2,680 202 1966 (m)
370 Great Southwest Parkway (i) Atlanta, GA 546 3,179 3,725 87 1986 (m)
955 Cobb Place Kennesaw, GA 804 4,563 5,367 38 1991 (m)
6105 Boatrock Blvd Atlanta, GA 91 516 607 1 1972 (m)
1640 Sands Place Marietta, GA 166 951 1,117 2 1977 (m)
3312 N. Berkeley Lake Road Duluth, GA 3,047 17,323 20,370 822 1969 (m)
3495 Bankhead Highway (i) Atlanta, GA 1,005 5,730 6,735 150 1986 (m)
CHICAGO
305-311 Era Drive Northbrook, IL 205 1,293 1,498 123 1978 (m)
700-714 Landwehr Road Northbrook, IL 357 2,259 2,616 201 1978 (m)
4330 South Racine Avenue Chicago, IL 468 2,112 2,580 1,206 1978 (m)
13040 S. Crawford Ave. Alsip, IL 1,073 6,217 7,290 517 1976 (m)
11241 Melrose Street Franklin Park, IL 469 2,866 3,335 249 1969 (m)
7200 S Leamington Bedford Park, IL 818 5,041 5,859 249 1950 (m)
12301-12325 S Laramie Ave Alsip, IL 659 4,107 4,766 208 1975 (m)
6300 W Howard Street Niles, IL 782 4,512 5,294 226 1956/1964 (m)
301 Hintz Wheeling, IL 167 969 1,136 48 1960 (m)
301 Alice Wheeling, IL 225 1,287 1,512 64 1965 (m)
1001 Commerce Court Buffalo Grove, IL 626 3,573 4,199 75 1989 (m)
11939 S Central Avenue Alsip, IL 1,224 6,967 8,191 115 1972 (m)
405 East Shawmut La Grange, IL 379 2,176 2,555 31 1965 (m)
2201 Lunt Elk Grove Village, IL 560 3,710 4,270 42 1963 (m)
1010-50 Sesame Street Bensenville, IL (f) 1,003 5,693 6,696 35 1976 (m)
5555 West 70th Place Bedford Park, IL 157 896 1,053 6 1973 (m)
3200-3250 South St. Louis (i) Chicago, IL 116 666 782 4 1968 (m)
3110-3130 South St. Louis Chicago, IL 120 698 818 4 1968 (m)
7301 South Hamlin Chicago, IL 154 896 1,050 7 1975/86 (m)
3740 West 74th Street Chicago, IL 196 1,119 1,315 3 1975/86 (m)
7401 South Pulaski Chicago, IL 685 4,192 4,877 28 1975/86 (m)
3900 West 74th Street Chicago, IL 142 813 955 7 1975/86 (m)
7501 S. Pulaski Chicago, IL 371 2,113 2,484 11 1975/86 (m)
410 W 169th Street South Holland, IL 476 2,728 3,204 124 1974 (m)
CINCINNATI
9900-9970 Princeton-Glendale Cincinnati, OH (c) 566 3,817 4,383 167 1970 (m)
2940 Highland Avenue Cincinnati, OH (c) 1,773 10,380 12,153 478 1969/1974 (m)
4700-4750 Creek Road Blue Ash, OH (c) 1,109 6,377 7,486 290 1960 (m)
4860 Duff Drive Cincinnati, OH 68 388 456 11 1979 (m)
4866 Duff Drive Cincinnati, OH 68 388 456 10 1979 (m)
4884 Duff Drive Cincinnati, OH 106 605 711 16 1979 (m)
4890 Duff Drive Cincinnati, OH 107 610 717 17 1979 (m)
9636-9643 Interocean Drive Cincinnati, OH 125 721 846 20 1983 (m)
7600 Empire Drive Florence, KY 915 5,189 6,104 43 1964 (m)
CLEVELAND
21510-21600 Alexander Road (j) Oakwood, OH 526 2,988 3,514 25 1985 (m)
5405 & 5505 Valley Belt Road (i) Independence, OH 385 2,194 2,579 18 1983 (m)
10145 Philipp Parkway Streetsboro, OH 342 1,938 2,280 12 1994 (m)
4410 Hamann Willoughby, OH 145 824 969 5 1975 (m)
6675 Parkland Blvd Solon, OH 571 3,252 3,823 101 1991 (m)
COLUMBUS
6911 Americana Parkway Columbus, OH 321 1,892 2,213 87 1980 (m)
</TABLE>
S-1
<PAGE> 78
<TABLE>
<CAPTION>
COSTS
(B) CAPITALIZED
LOCATION (A) INITIAL COST SUBSEQUENT TO
---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C>
3800 Lockbourne Industrial Parkway Columbus, OH 1,133 6,421 184
1819 North Walcutt Road Columbus, OH 810 4,590 140
3800 Groveport Road Obetz, OH 2,145 12,154 205
4300 Cemetery Road Hilliard, OH 1,103 6,248 80
DALLAS
1275-1281 Roundtable Drive Dallas, TX 148 839 37
2406-2416 Walnut Ridge Dallas, TX 178 1,006 40
12750 Perimiter Drive Dallas, TX 638 3,618 138
1324-1343 Roundtable Drive Dallas, TX 178 1,006 41
1405-1409 Avenue II East Grand Prairie, TX 118 671 29
2651-2677 Manana Dallas, TX 266 1,510 59
2401-2419 Walnut Ridge Dallas, TX 148 839 35
4248-4252 Simonton Farmers Ranch, TX 888 5,032 209
900-906 Great Southwest Pkwy Arlington, TX 237 1,342 54
2179 Shiloh Road Garland, TX 251 1,424 34
2159 Shiloh Road Garland, TX 108 610 17
2701 Shiloh Road Garland, TX 818 4,636 696
12784 Perimeter Drive (j) Dallas, TX 350 1,986 66
3000 West Commerce Dallas, TX 456 2,584 88
3030 Hansboro Dallas, TX 266 1,510 74
5222 Cockrell Hill Dallas, TX 296 1,677 68
405-407 113th Arlington, TX 181 1,026 27
816 111th Street Arlington, TX 251 1,421 49
DAYTON
6094-6104 Executive Blvd Huber Heights, OH 181 1,025 75
6202-6220 Executive Blvd Huber Heights, OH 268 1,521 96
6268-6294 Executive Blvd Huber Heights, OH 255 1,444 97
5749-5753 Executive Blvd Huber Heights, OH 50 282 46
2200-2224 Sandridge Road Moriane, OH 218 1,233 103
6230-6266 Executive Blvd Huber Heights, OH 271 1,534 99
DENVER
7100 North Broadway - 1 Denver, CO 201 1,141 13
7100 North Broadway - 2 Denver, CO 203 1,150 12
7100 North Broadway - 3 Denver, CO 139 787 8
7100 North Broadway - 5 Denver, CO 180 1,018 22
7100 North Broadway - 6 Denver, CO 269 1,526 17
10691 East Bethany Drive Aurora, CO 186 1,054 12
20100 East 32nd Avenue Parkway Aurora, CO 333 1,888 73
15700-15820 West 6th Avenue Golden, Co 333 1,887 31
12850-15884 West 6th Avenue Golden, Co 201 1,139 13
5454 Washington Denver, CO 154 873 13
5801 West 6th Avenue Lakewood, CO 74 418 -
5805 West 6th Avenue Lakewood, CO 97 549 -
5815 West 6th Avenue Lakewood, CO 99 560 -
5825 West 6th Avenue Lakewood, CO 99 559 -
5835 West 6th Avenue Lakewood, CO 97 552 -
525 East 70th Street Denver, CO 68 384 5
565 East 70th Street Denver, CO 169 960 12
605 East 70th Street Denver, CO 192 1,089 13
625 East 70th Street Denver, CO 136 768 9
665 East 70th Street Denver, CO 136 768 9
700 West 48th Street Denver, CO 302 1,711 31
702 West 48th Street Denver, CO 135 763 33
3370 North Peoria Street Aurora, CO 163 924 10
3390 North Peoria Street Aurora, CO 145 822 8
3508-3538 North Peoria Street Aurora, CO 260 1,472 29
3568 North Peoria Street Aurora, CO 222 1,260 18
3350 North Peoria Street Aurora, CO 215 1,216 12
4785 Elati Denver, CO 173 981 13
4770 Fox Street Denver, CO 132 750 10
1550 W. Evans Denver, CO 388 2,200 46
12401-41 East 37th Ave Denver, CO 129 732 10
3751-71 Revere Street Denver, CO 262 1,486 31
3871 Revere Street Denver, CO 361 2,047 41
5454 Havana Street Denver, CO 204 1,156 15
5500 Havana Street Denver, CO 167 946 12
4570 Ivy Street Denver, CO 219 1,239 11
5855 Stapleton Drive North Denver, CO 288 1,630 15
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97
--------------------------- ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
3800 Lockbourne Industrial Parkway 1,155 6,583 7,738 214 1986 (m)
1819 North Walcutt Road 830 4,710 5,540 88 1973 (m)
3800 Groveport Road 2,166 12,338 14,504 405 1986 (m)
4300 Cemetery Road 1,160 6,271 7,431 13 1968 (m)
DALLAS
1275-1281 Roundtable Drive 154 870 1,024 2 1966 (m)
2406-2416 Walnut Ridge 184 1,040 1,224 2 1978 (m)
12750 Perimiter Drive 659 3,735 4,394 8 1979 (m)
1324-1343 Roundtable Drive 184 1,041 1,225 2 1972 (m)
1405-1409 Avenue II East 123 695 818 1 1969 (m)
2651-2677 Manana 275 1,560 1,835 3 1966 (m)
2401-2419 Walnut Ridge 153 869 1,022 2 1978 (m)
4248-4252 Simonton 919 5,210 6,129 11 1973 (m)
900-906 Great Southwest Pkwy 245 1,388 1,633 3 1972 (m)
2179 Shiloh Road 256 1,453 1,709 3 1982 (m)
2159 Shiloh Road 110 625 735 1 1982 (m)
2701 Shiloh Road 923 5,227 6,150 11 1981 (m)
12784 Perimeter Drive (j) 360 2,042 2,402 4 1981 (m)
3000 West Commerce 469 2,659 3,128 6 1980 (m)
3030 Hansboro 276 1,574 1,850 3 1971 (m)
5222 Cockrell Hill 306 1,735 2,041 4 1973 (m)
405-407 113th 185 1,049 1,234 2 1969 (m)
816 111th Street 258 1,463 1,721 3 1972 (m)
DAYTON
6094-6104 Executive Blvd 187 1,094 1,281 43 1975 (m)
6202-6220 Executive Blvd 275 1,610 1,885 63 1996 (m)
6268-6294 Executive Blvd 262 1,534 1,796 60 1989 (m)
5749-5753 Executive Blvd 53 325 378 12 1975 (m)
2200-2224 Sandridge Road 226 1,328 1,554 30 1983 (m)
6230-6266 Executive Blvd 281 1,623 1,904 55 1979 (m)
DENVER
7100 North Broadway - 1 203 1,152 1,355 7 1978 (m)
7100 North Broadway - 2 205 1,160 1,365 7 1978 (m)
7100 North Broadway - 3 140 794 934 5 1978 (m)
7100 North Broadway - 5 181 1,039 1,220 7 1978 (m)
7100 North Broadway - 6 272 1,540 1,812 10 1978 (m)
10691 East Bethany Drive 188 1,064 1,252 7 1979 (m)
20100 East 32nd Avenue Parkway 338 1,956 2,294 13 1997 (m)
15700-15820 West 6th Avenue 338 1,913 2,251 12 1978 (m)
12850-15884 West 6th Avenue 203 1,150 1,353 7 1978 (m)
5454 Washington 156 884 1,040 5 1985 (m)
5801 West 6th Avenue 74 418 492 3 1980 (m)
5805 West 6th Avenue 97 549 646 3 1980 (m)
5815 West 6th Avenue 99 560 659 3 1980 (m)
5825 West 6th Avenue 99 559 658 3 1980 (m)
5835 West 6th Avenue 97 552 649 3 1980 (m)
525 East 70th Street 69 388 457 2 1985 (m)
565 East 70th Street 171 970 1,141 6 1985 (m)
605 East 70th Street 194 1,100 1,294 7 1985 (m)
625 East 70th Street 137 776 913 5 1985 (m)
665 East 70th Street 137 776 913 5 1985 (m)
700 West 48th Street 307 1,737 2,044 11 1984 (m)
702 West 48th Street 140 791 931 5 1984 (m)
3370 North Peoria Street 165 932 1,097 6 1978 (m)
3390 North Peoria Street 146 829 975 5 1978 (m)
3508-3538 North Peoria Street 263 1,498 1,761 9 1978 (m)
3568 North Peoria Street 224 1,276 1,500 8 1978 (m)
3350 North Peoria Street 216 1,227 1,443 8 1978 (m)
4785 Elati 175 992 1,167 6 1972 (m)
4770 Fox Street 134 758 892 5 1972 (m)
1550 W. Evans 395 2,239 2,634 14 1975 (m)
12401-41 East 37th Ave 131 740 871 5 1980 (m)
3751-71 Revere Street 267 1,512 1,779 9 1980 (m)
3871 Revere Street 367 2,082 2,449 13 1980 (m)
5454 Havana Street 206 1,169 1,375 7 1980 (m)
5500 Havana Street 169 956 1,125 6 1980 (m)
4570 Ivy Street 220 1,249 1,469 8 1985 (m)
5855 Stapleton Drive North 290 1,643 1,933 10 1985 (m)
</TABLE>
S-2
<PAGE> 79
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
(B) SUBSEQUENT TO
LOCATION (A) INITIAL COST ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
5885 Stapleton Drive North Denver, CO 376 2,129 35
5200-5280 North Broadway Denver, CO 169 960 11
5977-5995 North Broadway Denver, CO 268 1,518 28
2952-5978 North Broadway Denver, CO 414 2,346 49
6400 North Broadway Denver, CO 318 1,804 38
875 Parfer Street Lakewood, CO 288 1,633 28
4721 Ironton Street Denver, CO 232 1,313 27
833 Parfer Street Lakewood, CO 196 1,112 17
11005 West 8th Avenue Lakewood, CO 102 580 9
7100 North Broadway - 7 Denver, CO 215 1,221 11
7100 North Broadway - 8 Denver, CO 79 448 4
6804 East 48th Avenue Denver, CO 253 1,435 18
15350 East Hindsdale Drive Denver, CO 129 732 8
15353 East Hinsdale Drive Englewood, CO 97 549 6
15373 East Hinsdale Drive Englewood, CO 39 219 3
4611 East 46th Avenue Denver, CO 129 732 11
East 47th Drive - A Denver, CO 474 2,689 165
East 47th Drive - B Denver, CO 405 2,296 7
Centenial Airport Business Pk. Denver, CO 640 3,629 98
9500 West 49th Street - A Wheatridge, CO 432 2,448 14
9500 West 49th Street - B Wheatridge, CO 235 1,330 8
9500 West 49th Street - C Wheatridge, CO 602 3,409 226
9500 West 49th Street - D Wheatridge, CO 271 1,537 9
8100 South Park Way - A Littleton, CO 442 2,507 31
8100 South Park Way - B Littleton, CO 103 582 130
8100 South Park Way - C Littleton, CO 568 3,219 39
451-591 East 124th Avenue Littleton, CO 386 2,188 34
14100 East Jewell Aurora, CO 395 2,240 34
14190 East Jewell Aurora, CO 199 1,126 11
608 Garrison Street Lakewood, CO 265 1,501 12
610 Garrison Street Lakewood, CO 264 1,494 11
1111 West Evans (A&C) Denver, CO 233 1,321 14
1111 West Evans (B) Denver, CO 30 169 2
15000 West 6th Avenue Golden, Co 913 5,174 57
14998 West 6th Avenue Bldg E Golden, Co 565 3,199 21
14998 West 6th Avenue Bldg F Englewood, CO 269 1,525 11
12503 East Euclid Drive Denver, CO 1,219 6,905 65
6547 South Racine Circle Englewood, CO 748 4,241 40
7800 East Iliff Avenue Denver, CO 196 1,110 9
2369 South Trenton Way Denver, CO 292 1,656 14
2370 South Trenton Way Denver, CO 200 1,132 9
2422 South Trenton Way Denver, CO 241 1,364 12
2452 South Trenton Way Denver, CO 421 2,386 29
8122 South Park Lane - A Littleton, CO 394 2,232 28
8122 South Park Lane - B Littleton, CO 186 1,054 9
1600 South Abilene Aurora, CO 465 2,633 30
1620 South Abilene Aurora, CO 268 1,520 27
1640 South Abilene Aurora, CO 368 2,085 20
13900 East Florida Ave Aurora, CO 189 1,071 8
4301 South Federal Boulevard Englewood, CO 237 1,341 14
14401-14492 East 33rd Place Aurora, CO 445 2,519 171
11701 East 53rd Avenue Denver, CO 416 2,355 43
5401 Oswego Street Denver, CO 273 1,547 28
2630 West 2nd Avenue Denver, CO 53 299 3
2650 West 2nd Avenue Denver, CO 221 1,252 14
14818 West 6th Avenue Bldg A Golden, Co 494 2,799 47
14828 West 6th Avenue Bldg B Golden, Co 519 2,942 20
2075 South Valentia Denver, CO 131 743 10
DETROIT
21477 Bridge Street Southfield, MI 244 1,386 219
32450 N Avis Drive Madison Heights, MI 281 1,590 63
32200 N Avis Drive Madison Heights, MI 408 2,311 94
32440-32442 Industrial Drive Madison Heights, MI 120 679 83
32450 Industrial Drive Madison Heights, MI 65 369 36
11813 Hubbard Livonia, MI 177 1,001 42
11844 Hubbard Livonia, MI 189 1,069 72
11866 Hubbard Livonia, MI 189 1,073 28
12050-12190 Hubbard (i) Livonia, MI 425 2,410 275
38200 Plymouth Road Livonia, MI 1,215 - 4,610
38220 Plymouth Road Livonia, MI 756 - 2,487
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97 ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
5885 Stapleton Drive North 380 2,160 2,540 13 1985 (m)
5200-5280 North Broadway 171 969 1,140 6 1977 (m)
5977-5995 North Broadway 272 1,542 1,814 10 1978 (m)
2952-5978 North Broadway 421 2,388 2,809 15 1978 (m)
6400 North Broadway 324 1,836 2,160 11 1982 (m)
875 Parfer Street 292 1,657 1,949 10 1975 (m)
4721 Ironton Street 236 1,336 1,572 8 1969 (m)
833 Parfer Street 199 1,126 1,325 7 1974 (m)
11005 West 8th Avenue 104 587 691 4 1974 (m)
7100 North Broadway - 7 217 1,230 1,447 8 1985 (m)
7100 North Broadway - 8 80 451 531 3 1985 (m)
6804 East 48th Avenue 256 1,450 1,706 9 1973 (m)
15350 East Hindsdale Drive 130 739 869 5 1987 (m)
15353 East Hinsdale Drive 98 554 652 3 1987 (m)
15373 East Hinsdale Drive 39 222 261 1 1987 (m)
4611 East 46th Avenue 131 741 872 5 1974 (m)
East 47th Drive - A 477 2,851 3,328 7 1997 (m)
East 47th Drive - B 406 2,302 2,708 5 1997 (m)
Centenial Airport Business Pk. 646 3,721 4,367 24 1997 (m)
9500 West 49th Street - A 434 2,460 2,894 15 1997 (m)
9500 West 49th Street - B 236 1,337 1,573 8 1997 (m)
9500 West 49th Street - C 605 3,632 4,237 28 1997 (m)
9500 West 49th Street - D 273 1,544 1,817 10 1997 (m)
8100 South Park Way - A 447 2,533 2,980 16 1997 (m)
8100 South Park Way - B 103 712 815 6 1984 (m)
8100 South Park Way - C 574 3,252 3,826 20 1984 (m)
451-591 East 124th Avenue 391 2,217 2,608 14 1979 (m)
14100 East Jewell 400 2,269 2,669 14 1980 (m)
14190 East Jewell 200 1,136 1,336 7 1980 (m)
608 Garrison Street 267 1,511 1,778 10 1984 (m)
610 Garrison Street 265 1,504 1,769 9 1984 (m)
1111 West Evans (A&C) 235 1,333 1,568 8 1986 (m)
1111 West Evans (B) 30 171 201 1 1986 (m)
15000 West 6th Avenue 920 5,224 6,144 33 1985 (m)
14998 West 6th Avenue Bldg E 568 3,217 3,785 20 1995 (m)
14998 West 6th Avenue Bldg F 271 1,534 1,805 10 1995 (m)
12503 East Euclid Drive 1,228 6,961 8,189 43 1986 (m)
6547 South Racine Circle 754 4,275 5,029 27 1996 (m)
7800 East Iliff Avenue 197 1,118 1,315 7 1983 (m)
2369 South Trenton Way 294 1,668 1,962 10 1983 (m)
2370 South Trenton Way 201 1,140 1,341 7 1983 (m)
2422 South Trenton Way 243 1,374 1,617 9 1983 (m)
2452 South Trenton Way 425 2,411 2,836 15 1983 (m)
8122 South Park Lane - A 398 2,256 2,654 14 1986 (m)
8122 South Park Lane - B 187 1,062 1,249 7 1986 (m)
1600 South Abilene 469 2,659 3,128 17 1986 (m)
1620 South Abilene 270 1,545 1,815 10 1986 (m)
1640 South Abilene 370 2,103 2,473 13 1986 (m)
13900 East Florida Ave 190 1,078 1,268 7 1986 (m)
4301 South Federal Boulevard 239 1,353 1,592 8 1997 (m)
14401-14492 East 33rd Place 452 2,683 3,135 16 1979 (m)
11701 East 53rd Avenue 422 2,392 2,814 15 1985 (m)
5401 Oswego Street 277 1,571 1,848 10 1985 (m)
2630 West 2nd Avenue 53 302 355 2 1970 (m)
2650 West 2nd Avenue 223 1,264 1,487 8 1970 (m)
14818 West 6th Avenue Bldg A 497 2,843 3,340 18 1985 (m)
14828 West 6th Avenue Bldg B 522 2,959 3,481 18 1985 (m)
2075 South Valentia 133 751 884 5 1981 (m)
DETROIT
21477 Bridge Street 253 1,596 1,849 119 1986 (m)
32450 N Avis Drive 286 1,648 1,934 78 1974 (m)
32200 N Avis Drive 411 2,402 2,813 113 1973 (m)
32440-32442 Industrial Drive 123 759 882 44 1979 (m)
32450 Industrial Drive 66 404 470 19 1979 (m)
11813 Hubbard 180 1,040 1,220 50 1979 (m)
11844 Hubbard 191 1,139 1,330 85 1979 (m)
11866 Hubbard 191 1,099 1,290 52 1979 (m)
12050-12190 Hubbard (i) 428 2,682 3,110 131 1981 (m)
38200 Plymouth Road 1,268 4,557 5,825 93 1997 (m)
38220 Plymouth Road 756 2,487 3,243 1 1988 (m)
</TABLE>
S-3
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<TABLE>
<CAPTION>
COSTS
CAPITALIZED
(B) SUBSEQUENT TO
LOCATION (A) INITIAL COST ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
38300 Plymouth Road Livonia, MI 729 - 3,268
12707 Eckles Road Plymouth, MI 255 1,445 106
9300-9328 Harrison Rd Romulus, MI 147 834 118
9330-9358 Harrison Rd Romulus, MI 81 456 90
28420-28448 Highland Rd Romulus, MI 143 809 122
28450-28478 Highland Rd Romulus, MI 81 461 180
28421-28449 Highland Rd Romulus, MI 109 617 186
28451-28479 Highland Rd Romulus, MI 107 608 98
28825-28909 Highland Rd Romulus, MI 70 395 112
28933-29017 Highland Rd Romulus, MI 112 634 117
28824-28908 Highland Rd Romulus, MI 134 760 189
28932-29016 Highland Rd Romulus, MI 123 694 99
9710-9734 Harrison Rd Romulus, MI 125 706 131
9740-9772 Harrison Rd Romulus, MI 132 749 120
9840-9868 Harrison Rd Romulus, MI 144 815 112
9800-9824 Harrison Rd Romulus, MI 117 664 88
29265-29285 Airport Dr Romulus, MI 140 794 163
29185-29225 Airport Dr Romulus, MI 140 792 226
29149-29165 Airport Dr Romulus, MI 216 1,225 233
29101-29115 Airport Dr Romulus, MI 130 738 214
29031-29045 Airport Dr Romulus, MI 124 704 96
29050-29062 Airport Dr Romulus, MI 127 718 91
29120-29134 Airport Dr Romulus, MI 161 912 150
29200-29214 Airport Dr Romulus, MI 170 963 240
9301-9339 Middlebelt Rd Romulus, MI 124 703 111
21405 Trolley Industrial Drive Taylor, MI 758 4,293 127
26980 Trolley Industrial Drive Taylor, MI 450 2,550 96
HOUSTON
2102-2314 Edwards Street Houston, TX 348 1,973 72
4545 Eastpark Drive Houston, TX 235 1,331 34
3351 Ranch St Houston, TX 272 1,541 39
3851 Yale St Houston, TX 413 2,343 72
3337-3347 Ranch Street Houston, TX 227 1,287 37
8505 N Loop East Houston, TX 439 2,489 67
4749-4799 Eastpark Dr Houston, TX 594 3,368 108
4851 Homestead Road Houston, TX 491 2,782 90
3365-3385 Ranch Street Houston, TX 284 1,611 39
5050 Campbell Road Houston, TX 461 2,610 62
4300 Pine Timbers Houston, TX 489 2,769 70
10600 Hampstead Houston, TX 105 597 26
2300 Fairway Park Dr Houston, TX 86 488 23
7969 Blakenship Houston, TX 174 987 32
8001 Kempwood Houston, TX 98 558 21
7901 Blankenship Houston, TX 136 772 27
2500-2530 Fairway Park Drive Houston, TX 766 4,342 170
6550 Longpointe Houston, TX 362 2,050 54
1815 Turning Basin Dr Houston, TX 487 2,761 291
1819 Turning Basin Dr Houston, TX 231 1,308 134
4545 Mossford Dr Houston, TX 237 1,342 55
1805 Turning Basin Drive Houston, TX 564 3,197 342
7000 Empire Drive Houston, TX (h) 450 2,552 23
9777 West Gulfbank Drive Houston, TX (h) 1,217 6,899 60
INDIANAPOLIS
1445 Brookville Way Indianapolis, IN (c) 459 2,603 266
1440 Brookville Way Indianapolis, IN (c) 665 3,770 248
1240 Brookville Way Indianapolis, IN (c) 247 1,402 190
1220 Brookville Way Indianapolis, IN (c) 223 40 31
1345 Brookville Way Indianapolis, IN (d) 586 3,321 268
1350 Brookville Way Indianapolis, IN (c) 205 1,161 80
1315 Sadlier Circle E Dr Indianapolis, IN (d) 57 322 48
1341 Sadlier Circle E Dr Indianapolis, IN (d) 131 743 50
1322-1438 Sadlier Circle E Dr Indianapolis, IN (d) 145 822 104
1327-1441 Sadlier Circle E Dr Indianapolis, IN (d) 218 1,234 101
1304 Sadlier Circle E Dr Indianapolis, IN (d) 71 405 50
1402 Sadlier Circle E Dr Indianapolis, IN (d) 165 934 84
1504 Sadlier Circle E Dr Indianapolis, IN (d) 219 1,238 74
1311 Sadlier Circle E Dr Indianapolis, IN (d) 54 304 84
1365 Sadlier Circle E Dr Indianapolis, IN (d) 121 688 57
1352-1354 Sadlier Circle E Dr Indianapolis, IN (d) 178 1,008 88
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97 ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
38300 Plymouth Road 729 3,268 3,997 1 1997 (m)
12707 Eckles Road 267 1,539 1,806 54 1990 (m)
9300-9328 Harrison Rd 154 945 1,099 26 1978 (m)
9330-9358 Harrison Rd 85 542 627 15 1978 (m)
28420-28448 Highland Rd 149 925 1,074 26 1979 (m)
28450-28478 Highland Rd 85 637 722 15 1979 (m)
28421-28449 Highland Rd 114 798 912 21 1980 (m)
28451-28479 Highland Rd 112 701 813 19 1980 (m)
28825-28909 Highland Rd 73 504 577 14 1981 (m)
28933-29017 Highland Rd 117 746 863 22 1982 (m)
28824-28908 Highland Rd 140 943 1,083 25 1982 (m)
28932-29016 Highland Rd 128 788 916 22 1982 (m)
9710-9734 Harrison Rd 130 832 962 27 1987 (m)
9740-9772 Harrison Rd 138 863 1,001 26 1987 (m)
9840-9868 Harrison Rd 150 921 1,071 27 1987 (m)
9800-9824 Harrison Rd 123 746 869 21 1987 (m)
29265-29285 Airport Dr 147 950 1,097 26 1983 (m)
29185-29225 Airport Dr 146 1,012 1,158 26 1983 (m)
29149-29165 Airport Dr 226 1,448 1,674 39 1984 (m)
29101-29115 Airport Dr 136 946 1,082 27 1985 (m)
29031-29045 Airport Dr 130 794 924 22 1985 (m)
29050-29062 Airport Dr 133 803 936 22 1986 (m)
29120-29134 Airport Dr 168 1,055 1,223 29 1986 (m)
29200-29214 Airport Dr 178 1,195 1,373 31 1985 (m)
9301-9339 Middlebelt Rd 130 808 938 23 1983 (m)
21405 Trolley Industrial Drive 774 4,404 5,178 91 1971 (m)
26980 Trolley Industrial Drive 463 2,633 3,096 22 1997 (m)
HOUSTON
2102-2314 Edwards Street 359 2,034 2,393 4 1961 (m)
4545 Eastpark Drive 240 1,360 1,600 3 1972 (m)
3351 Ranch St 278 1,574 1,852 3 1970 (m)
3851 Yale St 424 2,404 2,828 5 1971 (m)
3337-3347 Ranch Street 233 1,318 1,551 3 1970 (m)
8505 N Loop East 449 2,546 2,995 5 1981 (m)
4749-4799 Eastpark Dr 611 3,459 4,070 7 1979 (m)
4851 Homestead Road 504 2,859 3,363 6 1973 (m)
3365-3385 Ranch Street 290 1,644 1,934 3 1970 (m)
5050 Campbell Road 470 2,663 3,133 6 1970 (m)
4300 Pine Timbers 499 2,829 3,328 6 1980 (m)
10600 Hampstead 109 619 728 1 1974 (m)
2300 Fairway Park Dr 90 507 597 1 1974 (m)
7969 Blakenship 179 1,014 1,193 2 1972 (m)
8001 Kempwood 102 575 677 1 1972 (m)
7901 Blankenship 140 795 935 2 1972 (m)
2500-2530 Fairway Park Drive 792 4,486 5,278 9 1974 (m)
6550 Longpointe 370 2,096 2,466 4 1980 (m)
1815 Turning Basin Dr 531 3,008 3,539 6 1980 (m)
1819 Turning Basin Dr 251 1,422 1,673 3 1980 (m)
4545 Mossford Dr 245 1,389 1,634 3 1975 (m)
1805 Turning Basin Drive 616 3,487 4,103 7 1980 (m)
7000 Empire Drive 454 2,571 3,025 5 1980 (m)
9777 West Gulfbank Drive 1,226 6,950 8,176 14 1980 (m)
INDIANAPOLIS
1445 Brookville Way 476 2,852 3,328 138 1989 (m)
1440 Brookville Way 685 3,998 4,683 181 1990 (m)
1240 Brookville Way 258 1,581 1,839 86 1990 (m)
1220 Brookville Way 226 68 294 3 1990 (m)
1345 Brookville Way 601 3,574 4,175 166 1992 (m)
1350 Brookville Way 211 1,235 1,446 56 1994 (m)
1315 Sadlier Circle E Dr 61 366 427 16 1970/1992 (m)
1341 Sadlier Circle E Dr 134 790 924 36 1971/1992 (m)
1322-1438 Sadlier Circle E Dr 152 919 1,071 44 1971/1992 (m)
1327-1441 Sadlier Circle E Dr 225 1,328 1,553 66 1992 (m)
1304 Sadlier Circle E Dr 75 451 526 22 1971/1992 (m)
1402 Sadlier Circle E Dr 171 1,012 1,183 46 1970/1992 (m)
1504 Sadlier Circle E Dr 226 1,305 1,531 59 1971/1992 (m)
1311 Sadlier Circle E Dr 57 385 442 26 1971/1992 (m)
1365 Sadlier Circle E Dr 126 740 866 33 1971/1992 (m)
1352-1354 Sadlier Circle E Dr 184 1,090 1,274 49 1970/1992 (m)
</TABLE>
S-4
<PAGE> 81
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
(B) SUBSEQUENT TO
LOCATION (A) INITIAL COST ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
1335 Sadlier Circle E Dr Indianapolis, IN (d) 81 460 49
1327 Sadlier Circle E Dr Indianapolis, IN (d) 52 295 25
1425 Sadlier Circle E Dr Indianapolis, IN (d) 21 117 24
1230 Brookville Way Indianapolis, IN (c) 103 586 46
6951 E 30th St Indianapolis, IN 256 1,449 93
6701 E 30th St Indianapolis, IN 78 443 40
6737 E 30th St Indianapolis, IN 385 2,181 143
1225 Brookville Way Indianapolis, IN 60 - 396
6555 E 30th St Indianapolis, IN 840 4,760 427
2432-2436 Shadeland Indianapolis, IN 212 1,199 178
8402-8440 E 33rd St Indianapolis, IN 222 1,260 55
8520-8630 E 33rd St Indianapolis, IN 326 1,848 249
8710-8768 E 33rd St Indianapolis, IN 175 993 37
3316-3346 N. Pagosa Court Indianapolis, IN 325 1,842 140
3331 Raton Court Indianapolis, IN 138 802 40
6751 E 30th St Indianapolis, IN 728 2,837 106
LONG ISLAND
1140 Motor Parkway Hauppauge, NY 1,034 5,861 158
10 Edison Street Amityville, NY 183 1,036 74
120 Secatogue Ave Farmingdale, NY 375 2,123 65
100 Lauman Lane Hicksville, NY 216 1,226 66
200 Finn Court Farmingdale, NY 619 3,506 132
243 Dixon Avenue Amityville, NY 93 527 44
717 Broadway Avenue Holbrook, NY 790 4,474 135
725 Broadway Avenue Holbrook, NY 643 3,644 118
270 Duffy Avenue Hicksville, NY 1,305 7,393 156
280 Duffy Avenue Hicksville, NY 478 2,707 47
575 Underhill Boulevard Syosset, NY 2,714 15,382 302
5 Sidney Court Lindenhurst, NY 148 840 63
7 Sidney Court Lindenhurst, NY 172 975 46
450 Commack Road Deer Park, NY 304 1,720 80
99 Layfayette Drive Syosset, NY 1,607 9,106 221
65 East Bethpage Road Plainview, NY 198 1,122 44
171 Milbar Boulevard Farmingdale, NY 454 2,574 88
95 Horseblock Road Yaphank, NY 1,313 7,439 227
151-171 East 2nd Street Huntington, NY 497 2,815 66
171-175 East 2nd Street Huntington, NY 493 2,792 80
35 Bloomingdale Road Hicksville, NY 190 1,076 61
15-39 Tec Street Hicksville, NY 164 930 54
100 Tec Street Hicksville, NY 237 1,340 33
51-89 Tec Street Hicksville, NY 207 1,171 38
502 Old Country Road Hicksville, NY 95 536 20
80-98 Tec Street Hicksville, NY 123 700 23
201-233 Park Avenue Hicksville, NY 349 1,979 70
6851 Jericho Turnpike Syosset, NY 1,570 8,896 231
One Fairchild Court Plainview, NY 315 1,786 80
79 Express Street Plainview, NY 417 2,363 69
92 Central Avenue Farmingdale, NY 837 4,745 111
160 Engineer Drive Hicksville, NY 148 836 45
260 Engineers Drive Hicksville, NY 264 1,494 58
87-119 Engineers Dr (i) Hicksville, NY 181 1,023 57
950-970 South Broadway Hicksville, NY 250 1,418 117
290 Duffy Avenue Hicksville, NY (e) 383 2,171 258
185 Price Parkway Farmingdale, NY 611 3,464 98
62 Alpha Plaza Hicksville, NY 155 877 29
90 Alpha Plaza Hicksville, NY 127 717 31
325 Duffy Avenue Hicksville, NY 480 2,720 53
939 Motor Parkway Hauppauge, NY 105 596 47
2070 5th Avenue Ronkonkoma, NY 383 2,171 18
200 13th Avenue Ronkonkoma, NY 313 1,776 18
100 13th Avenue Ronkonkoma, NY 348 1,973 19
1 Comac Loop Ronkonkoma, NY 348 1,973 19
80 13th Avenue Ronkonkoma, NY 418 2,368 22
90 13th Avenue Ronkonkoma, NY 383 2,171 24
33 Comac Loop Ronkonkoma, NY 383 2,171 20
101-125 Comac Streer Ronkonkoma, NY 905 5,131 43
MILWAUKEE
6523 N. Sydney Place Glendale, WI 172 976 140
8800 W Bradley Milwaukee, WI 375 2,125 130
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97 ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
1335 Sadlier Circle E Dr 85 505 590 23 1971/1992 (m)
1327 Sadlier Circle E Dr 55 317 372 15 1971/1992 (m)
1425 Sadlier Circle E Dr 23 139 162 6 1971/1992 (m)
1230 Brookville Way 109 626 735 28 1995 (m)
6951 E 30th St 265 1,533 1,798 70 1995 (m)
6701 E 30th St 82 479 561 22 1995 (m)
6737 E 30th St 398 2,311 2,709 106 1995 (m)
1225 Brookville Way 68 388 456 5 1997 (m)
6555 E 30th St 484 5,543 6,027 209 1969/1981 (m)
2432-2436 Shadeland 230 1,359 1,589 50 1968 (m)
8402-8440 E 33rd St 230 1,307 1,537 41 1977 (m)
8520-8630 E 33rd St 336 2,087 2,423 75 1976 (m)
8710-8768 E 33rd St 187 1,018 1,205 33 1979 (m)
3316-3346 N. Pagosa Court 335 1,972 2,307 61 1977 (m)
3331 Raton Court 144 836 980 26 1979 (m)
6751 E 30th St 741 2,930 3,671 12 1997 (m)
LONG ISLAND
1140 Motor Parkway 1,051 6,002 7,053 149 1978 (m)
10 Edison Street 188 1,105 1,293 27 1971 (m)
120 Secatogue Ave 382 2,181 2,563 54 1957 (m)
100 Lauman Lane 222 1,286 1,508 32 1968 (m)
200 Finn Court 630 3,627 4,257 89 1965 (m)
243 Dixon Avenue 96 568 664 14 1978 (m)
717 Broadway Avenue 805 4,594 5,399 114 1967 (m)
725 Broadway Avenue 656 3,749 4,405 93 1967 (m)
270 Duffy Avenue 1,319 7,535 8,854 188 1956 (m)
280 Duffy Avenue 483 2,749 3,232 68 1956 (m)
575 Underhill Boulevard 2,741 15,657 18,398 383 1967 (m)
5 Sidney Court 152 899 1,051 22 1962 (m)
7 Sidney Court 176 1,017 1,193 25 1964 (m)
450 Commack Road 310 1,794 2,104 44 1964 (m)
99 Layfayette Drive 1,629 9,305 10,934 226 1964 (m)
65 East Bethpage Road 202 1,162 1,364 29 1960 (m)
171 Milbar Boulevard 461 2,655 3,116 66 1961 (m)
95 Horseblock Road 1,331 7,648 8,979 192 1971 (m)
151-171 East 2nd Street 503 2,875 3,378 71 1968 (m)
171-175 East 2nd Street 498 2,867 3,365 71 1969 (m)
35 Bloomingdale Road 194 1,133 1,327 30 1962 (m)
15-39 Tec Street 167 981 1,148 26 1965 (m)
100 Tec Street 240 1,370 1,610 34 1965 (m)
51-89 Tec Street 210 1,206 1,416 35 1965 (m)
502 Old Country Road 97 554 651 14 1965 (m)
80-98 Tec Street 126 720 846 18 1965 (m)
201-233 Park Avenue 354 2,044 2,398 50 1962 (m)
6851 Jericho Turnpike 1,586 9,111 10,697 240 1969 (m)
One Fairchild Court 322 1,859 2,181 47 1959 (m)
79 Express Street 425 2,424 2,849 60 1972 (m)
92 Central Avenue 846 4,847 5,693 120 1961 (m)
160 Engineer Drive 152 877 1,029 21 1966 (m)
260 Engineers Drive 270 1,546 1,816 38 1966 (m)
87-119 Engineers Dr (i) 185 1,076 1,261 27 1966 (m)
950-970 South Broadway 256 1,529 1,785 40 1966 (m)
290 Duffy Avenue 389 2,423 2,812 59 1974 (m)
185 Price Parkway 622 3,551 4,173 88 1969 (m)
62 Alpha Plaza 159 902 1,061 6 1968 (m)
90 Alpha Plaza 130 745 875 5 1969 (m)
325 Duffy Avenue 488 2,765 3,253 6 1970 (m)
939 Motor Parkway 112 636 748 1 1977 (m)
2070 5th Avenue 386 2,186 2,572 5 1975 (m)
200 13th Avenue 316 1,791 2,107 4 1979 (m)
100 13th Avenue 351 1,989 2,340 4 1979 (m)
1 Comac Loop 351 1,989 2,340 4 1980 (m)
80 13th Avenue 421 2,387 2,808 5 1983 (m)
90 13th Avenue 387 2,191 2,578 5 1982 (m)
33 Comac Loop 386 2,188 2,574 5 1983 (m)
101-125 Comac Streer 912 5,167 6,079 11 1985 (m)
MILWAUKEE
6523 N. Sydney Place 176 1,112 1,288 57 1978 (m)
8800 W Bradley 388 2,242 2,630 88 1982 (m)
</TABLE>
S-5
<PAGE> 82
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
(B) SUBSEQUENT TO
LOCATION (A) INITIAL COST ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C>
1435 North 113th St Wauwatosa, WI 300 1,699 99
11217-43 W. Becher St West Allis, WI 148 841 59
2152 S 114th Street West Allis, WI 326 1,846 97
4560 N. 124th Street Wauwatosa, WI 118 667 84
12221 W. Feerick Street Wauwatosa, WI 210 1,190 81
MINNEAPOLIS
6701 Parkway Circle Brooklyn Center, MN 350 2,131 344
6601 Shingle Creek Parkway Brooklyn Center, MN 411 2,813 495
10120 W 76th Street Eden Prairie, MN 315 1,804 98
7615 Golden Triangle Eden Prairie, MN 268 1,532 342
7625 Golden Triangle Eden Prairie, MN 415 2,375 143
2605 Fernbrook Lane North Plymouth, MN 443 2,533 315
12155 Nicollet Ave. Burnsville, MN 286 - 1,678
9401 73rd Avenue North Brooklyn Park, MN 504 2,856 73
1905 W Country Road C Roseville, MN 402 2,278 65
2720 Arthur Street Roseville, MN 824 4,671 77
10205 51st Avenue North Plymouth, MN 180 1,020 69
4100 Peavey Road Chaska, MN 399 2,261 124
11300 Hamshire Ave South Bloomington, MN 527 2,985 223
375 Rivertown Drive Woodbury, MN 1,083 6,135 676
5205 Highway 169 Plymouth, MN 446 2,525 2,157
6451-6595 Citywest Parkway Eden Prairie, MN 525 2,975 237
7100-7198 Shady Oak Rd (m) Eden Prairie, MN 1,118 6,333 485
1565 First Avenue NW New Brighton, MN 485 2,750 173
7125 Northland Terrace Brooklyn Park, MN 660 3,740 96
7102 Winnetka Brooklyn Park, MN 1,334 - -
6900 Shady Oak Road Eden Prairie, MN 310 1,756 219
7550-7588 Washington Square Eden Prairie, MN 153 867 28
7500-7546 Washington Square Eden Prairie, MN 229 1,300 39
5240-5300 Valley Industrial Blvd S Shakopee, MN 362 2,049 92
6477-6525 City West Parkway Eden Prairie, MN 810 4,590 70
NASHVILLE
3099 Barry Drive Portland, TN 418 2,368 52
3150 Barry Drive Portland, TN 941 5,333 329
1650 Elm Hill Pike Nashville, TN 329 1,867 39
1821 Air Lane Drive Nashville, TN 151 858 12
1102 Appleton Drive Nashville, TN 154 873 9
1920 Air Lane Drive Nashville, TN 250 1,415 18
1931 Air Lane Drive Nashville, TN 491 2,785 49
470 Metroplex Drive (i) Nashville, TN 619 3,507 44
1150 Antiock Pike Nashville, TN 667 3,748 45
5599 Highway 31 West Portland, TN 564 3,196 64
NEW JERSEY
116 Lehigh Drive Fairfield, NJ 851 4,823 98
60 Ethel Road West Piscataway, NJ 252 1,426 126
70 Ethel Road West Piscataway, NJ 431 2,443 143
105 Neptune Boulevard Neptune, NJ 245 1,386 70
140 Hanover Avenue Hanover, NJ 457 2,588 325
601-629 Montrose Avenue South Plainfield, NJ 487 2,762 186
3 Marlen Hamilton, NJ 71 404 32
5 Marlen Hamilton, NJ 116 655 40
7 Marlen Hamilton, NJ 128 728 52
8 Marlen Hamilton, NJ 230 1,302 41
15 Marlen Hamilton, NJ 53 302 31
17 Marlen Hamilton, NJ 104 588 44
1 South Gold Drive Hamilton, NJ 106 599 43
2 South Gold Drive Hamilton, NJ 200 1,131 67
5 South Gold Drive Hamilton, NJ 106 602 54
6 South Gold Drive Hamilton, NJ 59 332 32
7 South Gold Drive Hamilton, NJ 32 182 26
8 South Gold Drive Hamilton, NJ 103 584 43
9 South Gold Drive Hamilton, NJ 60 342 34
11 South Gold Drive Hamilton, NJ 183 1,039 65
12 South Gold Drive Hamilton, NJ 84 475 65
9 Princess Road Lawrenceville, NJ 221 1,254 72
11 Princess Road Lawrenceville, NJ 491 2,780 152
15 Princess Road Lawrenceville, NJ 234 1,328 270
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97 ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
1435 North 113th St 310 1,788 2,098 56 1993 (m)
11217-43 W. Becher St 155 893 1,048 13 1979 (m)
2152 S 114th Street 339 1,930 2,269 28 1980 (m)
4560 N. 124th Street 129 740 869 11 1976 (m)
12221 W. Feerick Street 221 1,260 1,481 16 1971 (m)
MINNEAPOLIS
6701 Parkway Circle 377 2,448 2,825 238 1987 (m)
6601 Shingle Creek Parkway 502 3,217 3,719 338 1985 (m)
10120 W 76th Street 318 1,899 2,217 136 1987 (m)
7615 Golden Triangle 268 1,874 2,142 265 1987 (m)
7625 Golden Triangle 415 2,518 2,933 223 1987 (m)
2605 Fernbrook Lane North 445 2,846 3,291 265 1987 (m)
12155 Nicollet Ave. 288 1,676 1,964 89 1995 (m)
9401 73rd Avenue North 512 2,921 3,433 128 1995 (m)
1905 W Country Road C 409 2,336 2,745 102 1993 (m)
2720 Arthur Street 832 4,740 5,572 206 1995 (m)
10205 51st Avenue North 187 1,082 1,269 49 1990 (m)
4100 Peavey Road 415 2,369 2,784 93 1988 (m)
11300 Hamshire Ave South 541 3,194 3,735 213 1983 (m)
375 Rivertown Drive 1,503 6,391 7,894 206 1996 (m)
5205 Highway 169 739 4,389 5,128 122 1960 (m)
6451-6595 Citywest Parkway 538 3,199 3,737 129 1984 (m)
7100-7198 Shady Oak Rd (m) 1,149 6,787 7,936 203 1982 (m)
1565 First Avenue NW 496 2,912 3,408 60 1978 (m)
7125 Northland Terrace 673 3,823 4,496 79 1996 (m)
7102 Winnetka 1,334 - 1,334 1 (o)
6900 Shady Oak Road 340 1,945 2,285 36 1980 (m)
7550-7588 Washington Square 157 891 1,048 24 1975 (m)
7500-7546 Washington Square 235 1,333 1,568 36 1975 (m)
5240-5300 Valley Industrial Blvd S 371 2,132 2,503 58 1973 (m)
6477-6525 City West Parkway 820 4,650 5,470 29 1984 (m)
NASHVILLE
3099 Barry Drive 424 2,414 2,838 75 1995 (m)
3150 Barry Drive 987 5,616 6,603 175 1993 (m)
1650 Elm Hill Pike 333 1,902 2,235 12 1984 (m)
1821 Air Lane Drive 153 868 1,021 5 1984 (m)
1102 Appleton Drive 153 883 1,036 6 1984 (m)
1920 Air Lane Drive 252 1,431 1,683 9 1985 (m)
1931 Air Lane Drive 497 2,828 3,325 18 1984 (m)
470 Metroplex Drive (i) 625 3,545 4,170 22 1986 (m)
1150 Antiock Pike 669 3,791 4,460 24 1987 (m)
5599 Highway 31 West 571 3,253 3,824 101 1995 (m)
NEW JERSEY
116 Lehigh Drive 862 4,910 5,772 122 1986 (m)
60 Ethel Road West 264 1,540 1,804 19 1982 (m)
70 Ethel Road West 451 2,566 3,017 32 1979 (m)
105 Neptune Boulevard 255 1,446 1,701 18 1989 (m)
140 Hanover Avenue 475 2,895 3,370 37 1964/1988 (m)
601-629 Montrose Avenue 514 2,921 3,435 36 1974 (m)
3 Marlen 74 433 507 1 1981 (m)
5 Marlen 121 690 811 8 1981 (m)
7 Marlen 135 773 908 9 1982 (m)
8 Marlen 234 1,339 1,573 3 1982 (m)
15 Marlen 57 329 386 4 1982 (m)
17 Marlen 110 626 736 8 1981 (m)
1 South Gold Drive 112 636 748 8 1973 (m)
2 South Gold Drive 209 1,189 1,398 15 1974 (m)
5 South Gold Drive 113 649 762 8 1974 (m)
6 South Gold Drive 63 360 423 4 1975 (m)
7 South Gold Drive 36 204 240 2 1976 (m)
8 South Gold Drive 109 621 730 8 1977 (m)
9 South Gold Drive 65 371 436 4 1980 (m)
11 South Gold Drive 192 1,095 1,287 13 1979 (m)
12 South Gold Drive 89 535 624 6 1980 (m)
9 Princess Road 231 1,316 1,547 13 1985 (m)
11 Princess Road 510 2,913 3,423 31 1985 (m)
15 Princess Road 244 1,588 1,832 23 1986 (m)
</TABLE>
S-6
<PAGE> 83
<TABLE>
<CAPTION>
COSTS
(B) CAPITALIZED
LOCATION (A) INITIAL COST SUBSEQUENT TO
---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
17 Princess Road Lawrenceville, NJ 342 1,936 105
220 Hanover Avenue Hanover, NJ 1,361 7,715 410
244 Shefield Street Mountainside, NJ 201 1,141 63
30 Troy Road Hanover, NJ 128 727 38
15 Leslie Court Hanover, NJ 126 716 42
20 Leslie Court Hanover, NJ 84 474 32
25 Leslie Court Hanover, NJ 512 2,899 112
130 Algonquin Parkway Hanover, NJ 157 888 46
150 Algonquin Parkway Hanover, NJ 85 479 31
55 Locust Avenue Roseland, NJ 535 3,034 171
31 West Forest Street (i) Englewood, NJ 941 5,333 239
25 World's Fair Drive Franklin, NJ 285 1,616 82
14 World's Fair Drive Franklin, NJ 483 2,735 206
16 World's Fair Drive Franklin, NJ 174 988 75
18 World's Fair Drive Franklin, NJ 123 699 44
23 World's Fair Drive Franklin, NJ 134 758 47
12 World's Fair Drive Franklin, NJ 572 3,240 150
1 World's Fair Drive Franklin, NJ 632 3,581 156
2 World's Fair Drive Franklin, NJ 625 3,539 192
49 Napoleon Court Franklin, NJ 230 1,306 49
50 Napoleon Court Franklin, NJ 149 842 40
22 World's Fair Drive Franklin, NJ 364 2,064 77
26 World's Fair Drive Franklin, NJ 361 2,048 113
24 World's Fair Drive Franklin, NJ 347 1,968 108
12 Wright Way Oakland, NJ 410 2,321 107
NEW ORLEANS
520-524 Elmwood Park Blvd (i) Jefferson, LA 926 5,248 150
125 Mallard St St. Rose, LA (g) 103 586 34
107 Mallard St. Rose, LA (g) 164 928 50
125 James Drive West St. Rose, LA (g) 246 1,392 77
161 James Drive West St. Rose, LA 298 1,687 41
150 James Drive East St. Rose, LA 399 2,258 71
115 James Drive West St. Rose, LA (g) 163 922 54
100 James Drive St. Rose, LA (g) 430 2,435 138
143 Mallard St St. Rose, LA (g) 143 812 50
160 James Drive East St. Rose, LA (g) 102 580 38
190 James Drive East St. Rose, LA (g) 205 1,160 65
120 Mallard St St. Rose, LA (g) 348 1,971 114
110 James Drive West St. Rose, LA (g) 143 812 46
150 Canvasback Dr St. Rose, LA 165 937 31
PHOENIX
7340 South Kyrene Rd Tempe, AZ 1,495 8,469 29
7350 S Kyrene Road Tempe, AZ 818 4,634 24
7360 South Kyrene Rd Tempe, AZ 508 2,876 21
7343 South Hardy Drive Tempe, AZ 1,119 6,341 48
SALT LAKE
2255 South 300 West (k) Salt Lake City, UT 618 3,504 27
512 Lawndale Drive (l) Salt Lake City, UT 2,779 15,749 114
ST. LOUIS
2337 Centerline Drive Maryland Heights, MO 216 1,242 111
6951 N Hanley (i) Hazelwood, MO 405 2,295 562
4560 Anglum Road Hazelwood, MO 150 849 86
2760 South 1st Street St. Louis, MO 800 - 4,087
TAMPA
6614 Adamo Drive Tampa, FL 177 1,005 20
202 Kelsey Tampa, FL 602 3,409 94
6202 Benjamin Road Tampa, FL 203 1,151 37
6204 Benjamin Road Tampa, FL 432 2,445 103
6206 Benjamin Road Tampa, FL 397 2,251 80
6302 Benjamin Road Tampa, FL 214 1,212 39
6304 Benjamin Road Tampa, FL 201 1,138 36
6306 Benjamin Road Tampa, FL 257 1,457 54
6308 Benjamin Road Tampa, FL 345 1,958 70
5313 Johns Road Tampa, FL 204 1,159 38
5602 Thompson Center Court Tampa, FL 115 652 24
5411 Johns Road Tampa, FL 230 1,304 41
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97
--------------------------- ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
17 Princess Road 353 2,030 2,383 23 1986 (m)
220 Hanover Avenue 1,419 8,067 9,486 100 1987 (m)
244 Shefield Street 210 1,195 1,405 15 1965/1986 (m)
30 Troy Road 133 760 893 8 1972 (m)
15 Leslie Court 132 752 884 9 1971 (m)
20 Leslie Court 88 502 590 6 1974 (m)
25 Leslie Court 526 2,997 3,523 31 1975 (m)
130 Algonquin Parkway 163 928 1,091 9 1973 (m)
150 Algonquin Parkway 89 506 595 6 1973 (m)
55 Locust Avenue 559 3,181 3,740 39 1980 (m)
31 West Forest Street (i) 974 5,539 6,513 57 1978 (m)
25 World's Fair Drive 297 1,686 1,983 21 1986 (m)
14 World's Fair Drive 503 2,921 3,424 39 1980 (m)
16 World's Fair Drive 183 1,054 1,237 13 1981 (m)
18 World's Fair Drive 129 737 866 9 1982 (m)
23 World's Fair Drive 140 799 939 10 1982 (m)
12 World's Fair Drive 593 3,369 3,962 42 1981 (m)
1 World's Fair Drive 654 3,715 4,369 46 1983 (m)
2 World's Fair Drive 650 3,706 4,356 47 1982 (m)
49 Napoleon Court 238 1,347 1,585 3 1982 (m)
50 Napoleon Court 154 877 1,031 2 1982 (m)
22 World's Fair Drive 375 2,130 2,505 4 1983 (m)
26 World's Fair Drive 377 2,145 2,522 27 1984 (m)
24 World's Fair Drive 361 2,062 2,423 26 1984 (m)
12 Wright Way 424 2,414 2,838 30 1981 (m)
NEW ORLEANS
520-524 Elmwood Park Blvd (i) 949 5,375 6,324 11 1986 (m)
125 Mallard St 109 614 723 1 1984 (m)
107 Mallard 171 971 1,142 2 1985 (m)
125 James Drive West 257 1,458 1,715 3 1990 (m)
161 James Drive West 304 1,722 2,026 4 1986 (m)
150 James Drive East 409 2,319 2,728 5 1986 (m)
115 James Drive West 171 968 1,139 2 1986 (m)
100 James Drive 451 2,552 3,003 5 1980 (m)
143 Mallard St 151 854 1,005 2 1982 (m)
160 James Drive East 108 612 720 1 1981 (m)
190 James Drive East 215 1,215 1,430 3 1987 (m)
120 Mallard St 365 2,068 2,433 4 1981 (m)
110 James Drive West 150 851 1,001 2 1983 (m)
150 Canvasback Dr 170 963 1,133 2 1986 (m)
PHOENIX
7340 South Kyrene Rd 1,499 8,494 9,993 18 1996 (m)
7350 S Kyrene Road 821 4,655 5,476 10 1996 (m)
7360 South Kyrene Rd 511 2,894 3,405 6 1996 (m)
7343 South Hardy Drive 1,126 6,382 7,508 13 1997 (m)
SALT LAKE
2255 South 300 West (k) 622 3,527 4,149 7 1980 (m)
512 Lawndale Drive (l) 2,797 15,845 18,642 33 1981 (m)
ST. LOUIS
2337 Centerline Drive 216 1,353 1,569 124 1967 (m)
6951 N Hanley (i) 419 2,843 3,262 72 1965 (m)
4560 Anglum Road 161 924 1,085 8 1970 (m)
2760 South 1st Street 821 4,066 4,887 1 1997 (m)
TAMPA
6614 Adamo Drive 180 1,022 1,202 2 1967 (m)
202 Kelsey 616 3,489 4,105 7 1989 (m)
6202 Benjamin Road 209 1,182 1,391 2 1981 (m)
6204 Benjamin Road 445 2,535 2,980 6 1982 (m)
6206 Benjamin Road 409 2,319 2,728 5 1983 (m)
6302 Benjamin Road 220 1,245 1,465 3 1983 (m)
6304 Benjamin Road 206 1,169 1,375 2 1984 (m)
6306 Benjamin Road 265 1,503 1,768 3 1984 (m)
6308 Benjamin Road 356 2,017 2,373 4 1984 (m)
5313 Johns Road 210 1,191 1,401 2 1991 (m)
5602 Thompson Center Court 119 672 791 1 1972 (m)
5411 Johns Road 236 1,339 1,575 3 1997 (m)
</TABLE>
S-7
<PAGE> 84
<TABLE>
<CAPTION>
COSTS
(B) CAPITALIZED
LOCATION (A) INITIAL COST SUBSEQUENT TO
---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION
- - ---------------- ------------ ------------ ------ ----------- ---------------
<S> <C> <C> <C> <C>
5525 Johns Road Tampa, FL 192 1,086 36
5607 Johns Road Tampa, FL 102 579 23
5709 Johns Road Tampa, FL 192 1,086 36
5711 Johns Road Tampa, FL 243 1,376 64
4410 E Adamo Drive Tampa, FL 523 2,962 129
4420 E Adamo Drive Tampa, FL 127 718 34
4430 E Adamo Drive Tampa, FL 333 1,885 87
4440 E Adamo Drive Tampa, FL 348 1,975 91
4450 E Adamo Drive Tampa, FL 253 1,436 73
5453 W Waters Avenue Tampa, FL 71 402 20
5455 W Waters Avenue Tampa, FL 307 1,742 78
5553 W Waters Avenue Tampa, FL 307 1,742 76
5501 W Waters Avenue Tampa, FL 154 871 48
5503 W Waters Avenue Tampa, FL 71 402 20
5555 W Waters Avenue Tampa, FL 213 1,206 47
5557 W Waters Avenue Tampa, FL 59 335 18
5903 Johns Road Tampa, FL 88 497 29
4107 N Himes Avenue Tampa, FL 568 3,220 140
OTHER
931 Discovery Road Green Bay, WI 121 685 117
11200 Industiplex Blvd Baton Rouge, LA 463 2,624 83
11441 Indsutriplex Blvd Baton Rouge, LA 331 1,874 60
11301 Industriplex Blvd Baton Rouge, LA 265 1,499 50
6565 Exchequer Drive Baton Rouge, LA 461 2,614 79
2675 Valley View Drive Shreveport, LA 144 - 4,482
300 10th Street NW Clarion, IA 35 - 2,058
9580 Interport Dr Shreveport, LA 113 639 16
DEVELOPMENTS / REDEVELOPMENTS / VACANT LAND 1,088 - 9,324
---------- ----------- ----------------
$ 173,055 $ 942,448 $ 81,346
========== =========== ================
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNTS CARRIED
AT CLOSE OF PERIOD 12/31/97
--------------------------- ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
LAND IMPROVEMENTS TOTAL 12/31/97 RENOVATED LIVES (YEARS)
---- ------------ ----- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
5525 Johns Road Tampa, FL 197 1,117 1,314 2 1993 (m)
5607 Johns Road Tampa, FL 106 598 704 1 1991 (m)
5709 Johns Road Tampa, FL 197 1,117 1,314 2 1990 (m)
5711 Johns Road Tampa, FL 252 1,431 1,683 3 1990 (m)
4410 E Adamo Drive Tampa, FL 542 3,072 3,614 6 1990 (m)
4420 E Adamo Drive Tampa, FL 132 747 879 2 1990 (m)
4430 E Adamo Drive Tampa, FL 346 1,959 2,305 4 1987 (m)
4440 E Adamo Drive Tampa, FL 362 2,052 2,414 4 1988 (m)
4450 E Adamo Drive Tampa, FL 264 1,498 1,762 3 1969 (m)
5453 W Waters Avenue Tampa, FL 74 419 493 1 1987 (m)
5455 W Waters Avenue Tampa, FL 319 1,808 2,127 4 1987 (m)
5553 W Waters Avenue Tampa, FL 319 1,806 2,125 4 1987 (m)
5501 W Waters Avenue Tampa, FL 161 912 1,073 2 1990 (m)
5503 W Waters Avenue Tampa, FL 74 419 493 1 1990 (m)
5555 W Waters Avenue Tampa, FL 220 1,246 1,466 3 1990 (m)
5557 W Waters Avenue Tampa, FL 62 350 412 1 1990 (m)
5903 Johns Road Tampa, FL 92 522 614 1 1987 (m)
4107 N Himes Avenue Tampa, FL 589 3,339 3,928 7 1990 (m)
OTHER
931 Discovery Road Green Bay, WI 138 785 923 11 1997 (m)
11200 Industiplex Blvd Baton Rouge, LA 476 2,694 3,170 6 1986 (m)
11441 Indsutriplex Blvd Baton Rouge, LA 340 1,925 2,265 4 1987 (m)
11301 Industriplex Blvd Baton Rouge, LA 272 1,542 1,814 3 1985 (m)
6565 Exchequer Drive Baton Rouge, LA 473 2,681 3,154 6 1986 (m)
2675 Valley View Drive Shreveport, LA 276 4,350 4,626 1 1997 (m)
300 10th Street NW Clarion, IA 162 1,931 2,093 1 1997 (m)
9580 Interport Dr Shreveport, LA 115 653 768 1 1989 (m)
DEVELOPMENTS / REDEVELOPMENTS / VACANT LAND 7,545 2,867 10,412 - (n)
-------- ---------- ---------- --------
$184,704 $1,012,145 $1,196,849 $ 22,319
======== ========== ========== ========
</TABLE>
NOTES:
(a) See description of encumbrances in Note 4 to Notes to Consolidated
Financial statements.
(b) Initial cost for each respective property is total acquisition costs
associated with its purchase.
(c) These properties collateralize the CIGNA Loan.
(d) These properties collateralize the Assumed Loans.
(e) This property collateralizes the LB Mortgage Loan II.
(f) This property collateralizes the Acquisition Mortgage Loan I.
(g) These properties collateralize the Acquisition Mortgage Loan II.
(h) These properties collateralize the Acquisition Mortgage Loan III.
(i) Comprised of two properties.
(j) Comprised of three properties.
(k) Comprised of seven properties.
(l) Comprised of 29 properties.
(m) Depreciation is computed based upon the following estimated lives:
Buildings, Improvements 31.5 to 40 years
Tenant Improvements, Leasehold Improvements Life of lease
Furniture, Fixtures and equipment 5 to 10 years
(n) These properties represent vacant land, developments and
redevelopments that haven't been placed in service.
(o) Parking Lot
(p) Excludes $4,211 of Construction in Progress
At December 31, 1997, the aggregate cost of land and buildings and
equipment for federal income tax purpose was approximately $985.2
million.
S-8
<PAGE> 85
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
The changes in total real estate assets for the three years ended December 31,
1997 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Balance, Beginning of Year .............................. $ 353,781 $ 96,392 $ 163,168
Transfer of Assets Between Contributing Businesses ...... --- --- ---
Transfer of Assets Between Other Real Estate Partnerships --- --- (135,343)
Acquisition, Construction Costs and Improvements ........ 862,103 269,279 68,567
Disposition of Assets ................................... (14,824) (11,890) ---
----------- --------- ---------
Balance, End of Year .................................... $ 1,201,060 $ 353,781 $ 96,392
=========== ========= =========
</TABLE>
The changes in accumulated depreciation for the three years ended December 31,
1997 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Balance, Beginning of Year .............................. $ 8,133 $ 4,852 $ 4,112
Transfer of Assets Between Contributing Businesses ...... --- --- ---
Transfer of Assets Between Other Real Estate
Partnerships........................................... --- --- (3,352)
Depreciation for Year ................................... 14,660 5,115 4,092
Disposition of Assets ................................... (474) (1,834) ---
-------- ------- -------
Balance, End of Year .................................... $ 22,319 $ 8,133 $ 4,852
======== ======= =======
</TABLE>
S-9
<PAGE> 86
EXHIBIT INDEX
Exhibit No. Description
4.1 Indenture, dated as of May 13, 1997, between First Industrial,
L.P. and First Trust National Association, as Trustee
(incorporated by reference to Exhibit 4.2 of the Form 10-Q of
the Operating Partnership for the fiscal quarter ended March 31,
1997, as amended by Form 10-Q/A No. 1 of the Operating
Partnership filed May 30, 1997, File No. 333-21873)
4.2 Supplemental Indenture No. 1, dated as of May 13, 1997, between
First Industrial, L.P. and First Trust National Association as
Trustee relating to $150 million of 7.60% Notes due 2007 and
$100 million of 7.15% Notes due 2027 (incorporated by reference
to Exhibit 4.3 of the Form 10-Q of the Operating Partnership for
the fiscal quarter ended March 31, 1997, as amended by Form
10-Q/A No. 1 of the Operating Partnership filed May 30, 1997,
File No. 333-21873)
4.3 Supplemental Indenture No. 2, dated as of May 22, 1997, between
First Industrial, L.P. and First Trust National Association as
Trustee relating to $100 million of 7 3/8% Notes due 2011
(incorporated by reference to Exhibit 4.4 of the Form 10-Q of
the Operating Partnership for the fiscal quarter ended March 31,
1997, File No. 333-21873)
4.4 Supplemental Indenture No. 3 dated October 28, 1997 between First
Industrial, L.P. and First Trust National Association providing
for the issuance of Medium-term Notes due Nine Months or more
from Date of Issue (incorporated by reference to Exhibit 4 of
Form 8-K of the Operating Partnership dated November 3, 1997, as
filed November 3, 1997, File No. 333-21873)
4.5 6.90% Medium-Term Note due 2005 in principal amount of $50
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.17 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.6 7.00% Medium-Term Note due 2006 in principal amount of $150
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.18 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.7 7.50% Medium-Term Note due 2017 in principal amount of $100
million issued by First Industrial, L.P. (incorporated by
reference to Exhibit 4.19 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.8 Trust Agreement, dated as of May 16, 1997, between First
Industrial, L.P. and First Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.5 of the Form 10-Q of the
Operating Partnership for the fiscal quarter ended March 31,
1997, File No. 333-21873)
4.9 Unsecured Revolving Credit Agreement (the "Unsecured Revolving
Credit Agreement"), dated as of December 15, 1997, by and among
the Operating Partnership, First Industrial Realty Trust, Inc.
and The First National Bank of Chicago, Union Bank of
Switzerland, New York Branch and certain other banks
(incorporated by reference to Exhibit 4.22 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1997, File No. 1-13102)
4.11 Sixth Amended and Restated Limited Partnership Agreement of
First Industrial, L.P., dated March 18, 1998 (incorporated by
reference to Exhibit 10.1 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-13102)
4.12* Form of Supplemental Indenture No. 4 between First Industrial,
L.P. and First Trust National Association as Trustee
4.13* Form of Note with respect to Dealer remarketable securities
4.14* Form of Remarketing Agreement between First Industrial, L.P.
and J.P. Morgan Securities Inc.
12.1* First Industrial, L.P. and Contributing Businesses Computation
of Ratios of Earnings to fixed charges and preferred unit
distributions (a)
21.1 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, File No. 1-13102)
23 * Consent of Coopers & Lybrand L.L.P.
27.1* Financial Data Schedule of First Industrial, L.P.
27.2* Financial Data Schedule of the Other Real Estate Partnership
99 * Definitive Proxy Statement of First Industrial Realty Trust,
Inc. with respect to its 1998 Annual Meeting of Stockholders
* Filed herewith.
<PAGE> 1
EXHIBIT 4.12
================================================================================
FIRST INDUSTRIAL, L.P.
Issuer
to
FIRST TRUST NATIONAL ASSOCIATION
Trustee
-------------------------
Supplemental Indenture No. 4
Dated as of March 26, 1998.
-------------------------
$100,000,000
of
6 1/2% Dealer remarketable securities due April 5, 2011
================================================================================
<PAGE> 2
SUPPLEMENTAL INDENTURE NO. 4, dated as of March 26, 1998 (the
"Supplemental Indenture"), between FIRST INDUSTRIAL, L.P., a limited
partnership duly organized and existing under the laws of the State of Delaware
(herein called the "Operating Partnership"), and First Trust National
Association, a national organization duly organized and existing under the laws
of the United States of America, as Trustee (herein called the "Trustee").
RECITALS OF THE OPERATING PARTNERSHIP
The Operating Partnership has heretofore delivered to the Trustee an
Indenture dated as of May 13, 1997 (the "Indenture"), a form of which has been
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, as an exhibit incorporated by reference to the Operating
Partnership's Registration Statement on Form S-3 (Registration No. 333-43641),
providing for the issuance from time to time of Debt Securities of the
Operating Partnership (the "Securities").
Section 301 of the Indenture provides for various matters with respect
to any series of Securities issued under the Indenture to be established in an
indenture supplemental to the Indenture.
Section 901(7) of the Indenture provides for the Operating Partnership
and the Trustee to enter into an indenture supplemental to the Indenture to
establish the form or terms of Securities of any series as provided by Sections
201 and 301 of the Indenture.
All the conditions and requirements necessary to make this Supplemental
Indenture, when duly executed and delivered, a valid and binding agreement in
accordance with its terms and for the purposes herein expressed, have been
performed and fulfilled.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of each of
the series of Securities provided for herein by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Notes or of either series thereof, as follows:
ARTICLE ONE
RELATION TO SENIOR INDENTURE; DEFINITIONS
SECTION 1.1. Relation to Senior Indenture.
This Supplemental Indenture constitutes an integral part of the
Indenture.
SECTION 1.2. Definitions.
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided for or unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Indenture; and
<PAGE> 3
(2) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at
the time such Person becomes a Subsidiary or (ii) assumed in connection with
the acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means (i) the aggregate interest
expense for such period in respect of, and the amortization during such period
of any original issue discount of, Indebtedness of the Operating Partnership
and its Subsidiaries and the amount of dividends which are payable during such
period in respect of any Disqualified Stock and (ii) so long as First
Securities, L.P. ("Securities, L.P.") is a Subsidiary of the Operating
Partnership, distributions which are payable during such period in respect of
any preference equity interests of Securities, L.P.
"Base Rate" means 5.67%.
"Business Day" means any day, other than a Saturday or Sunday, or a day
on which banking institutions in the City of New York or the City of Chicago
are authorized or obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights (other
than debt securities convertible into or exchangeable for corporate stock),
warrants or options to purchase any thereof.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Remarketing Dealer as having an actual maturity on the
Determination Date (or the United States Treasury securities selected by the
Remarketing Dealer to derive an interpolated maturity on such Determination
Date) comparable to the remaining term of the Drs.
"Comparable Treasury Price" means (a) the offer price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
on the Determination Date, as set forth on Telerate Page 500, adjusted to
reflect settlement on the Remarketing Date if prices quoted on Telerate Page
500 are for settlement on any date other than the Remarketing Date, or (b) if
such page (or any successor page) is not displayed or does not contain such
offer prices on such Business Day, then (i) if the Remarketing Dealer obtains
four or five Reference Treasury Dealer Quotations, the average of such
Reference Treasury Dealer Quotations for such Remarketing Date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations (unless
there is more than one highest or lowest quotation, in which case only one such
highest and/or lowest quotation shall be excluded), or (ii) if the Remarketing
Dealer obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations. The Remarketing
2
<PAGE> 4
Dealer shall have the discretion to select the time at which the Comparable
Treasury Price is determined on the Determination Date.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Operating Partnership and its Subsidiaries plus
amounts which have been deducted, and minus amounts which have been added, for
the following (without duplication): (i) interest on Indebtedness of the
Operating Partnership and its Subsidiaries, (ii) provision for taxes of the
Operating Partnership and its Subsidiaries based on income, (iii) amortization
of debt discount, (iv) provisions for gains and losses on properties and
property depreciation and amortization, (v) the effect of any noncash charge
resulting from a change in accounting principles in determining Earnings from
Operations for such period, (vi) amortization of deferred charges and (vii)
interest income related to investments irrevocably deposited with an agent of
the Operating Partnership or any of its Subsidiaries, as the case may be, for
the purpose of defeasing any indebtedness or any other obligation (whether
through a covenant defeasance or otherwise) pursuant to the terms of such
indebtedness or other obligation or the terms of any instrument creating or
evidencing it.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at One Illinois
Center, 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for Capital
Stock which is not Disqualified Stock or the maturity price or redemption price
of which may, at the option of such Person, be paid in Capital Stock which is
not Disqualified Stock), (ii) is convertible into or exchangeable or
exercisable for Indebtedness or Disqualified Stock or (iii) is redeemable at
the option of the holder thereof, in whole or in part (other than Capital Stock
which is redeemable solely in exchange for Capital Stock which is not
Disqualified Stock or the redemption price of which may, at the option of such
Person, be paid in Capital Stock which is not Disqualified Stock), in each case
on or prior to the Stated Maturity Date of the Drs.
"Determination Date" has the meaning specified in Section 2.6(a)
hereof.
"Dollar Price" means the discounted present value to the Remarketing
Date of the cash flows on a bond (x) with a principal amount equal to the
aggregate principal amount of the initially issued Drs., (y) maturing on the
Stated Maturity Date and (z) bearing interest from the Remarketing Date,
payable semi-annually (assuming a 360-day year consisting of twelve 30-day
months) on the interest payment dates of the Drs. at a rate equal to the Base
Rate, using a discount rate equal to the Treasury Rate.
"Drs." has the meaning specified in Section 2.1 hereof.
"DTC" means The Depository Trust Company or its successor.
3
<PAGE> 5
"Earnings from Operations" for any period means net income excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, net as reflected in the financial statements of the Operating
Partnership and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP (except that for purposes hereof, each Subsidiary
of the Operating Partnership shall be treated as if such Subsidiary were a
subsidiary under GAAP).
"Encumbrance" means any mortgage, lien, charge, pledge, encumbrance or
security interest of any kind; provided, however, that the term "Encumbrance"
shall not include any mortgage, lien, charge, pledge or security interest
securing any indebtedness or any other obligation which has been defeased
(whether a covenant defeasance or otherwise) pursuant to the terms of such
indebtedness or other obligation or the terms of any instrument creating or
evidencing it.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the Commission.
"GAAP" means generally accepted accounting principles as used in the
United States applied on a consistent basis as in effect from time to time;
provided that solely for purposes of any calculation required by the financial
covenants contained herein, "GAAP" shall mean generally accepted accounting
principles as used in the United States on the date hereof, applied on a
consistent basis.
"Indebtedness" of the Operating Partnership or any of its Subsidiaries
means any indebtedness of the Operating Partnership or any of its Subsidiaries,
whether or not contingent, in respect of (a) borrowed money or evidenced by
bonds, notes, debentures or similar instruments whether or not such
indebtedness is secured by any Encumbrance existing on property owned by the
Operating Partnership or any of its Subsidiaries, (b) indebtedness for borrowed
money of a Person other than the Operating Partnership or a Subsidiary of the
Operating Partnership which is secured by any Encumbrance existing on property
owned by the Operating Partnership or any of its Subsidiaries, to the extent of
the lesser of (x) the amount of indebtedness so secured and (y) the fair market
value of the property subject to such Encumbrance, (c) the reimbursement
obligations, contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance deferred and unpaid of the
purchase price of any property or services, except any such balance that
constitutes an accrued expense or trade payable, and all conditional sale
obligations or obligations under any title retention agreement, (d) the
principal amount of all obligations of the Operating Partnership or any of its
Subsidiaries with respect to redemption, repayment or other repurchase of any
Disqualified Stock, (e) any lease of property by the Operating Partnership or
any of its Subsidiaries as lessee which is reflected on the Operating
Partnership's consolidated balance sheet determined in accordance with GAAP
(except that for the purposes hereof, each Subsidiary of the Operating
Partnership shall be treated as if such Subsidiary were a subsidiary under
GAAP) as a capitalized lease, or (f) interest rate swaps, caps or similar
agreements and foreign exchange contracts, currency swaps or similar
agreements, and (ii) the liquidation preference on any issued and outstanding
preferred equity interests of Securities, L.P., to the extent, in the case of
items of indebtedness under (I)(a) through (c) above, that any such items
(other than letters of credit) would appear as a liability on the Operating
Partnership's consolidated balance sheet determined in accordance with GAAP
(except that for the purposes hereof, each Subsidiary of the Operating
Partnership shall
4
<PAGE> 6
be treated as if such Subsidiary were a subsidiary under GAAP), and also
includes, to the extent not otherwise included, any obligation by the Operating
Partnership or any of its Subsidiaries to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Operating
Partnership or any of its Subsidiaries) (it being understood that Indebtedness
shall be deemed to be incurred by the Operating Partnership or any of its
Subsidiaries whenever the Operating Partnership or such Subsidiary shall
create, assume, guarantee or otherwise become liable in respect thereof)
provided, however, that the term "Indebtedness" shall not include any
indebtedness or any other obligation that has been defeased (whether a covenant
defeasance or otherwise) pursuant to the terms of such indebtedness or other
obligation or the terms of any instrument creating or evidencing it.
"Interest Payment Date" shall have the meaning set forth in Section
2.3.
"Notification Date" shall have the meaning specified in Section 2.6(a).
"Principal Repayment Date" means the date on which all principal and
interest in respect of the Drs. would have been payable to a holder if such
redemption had not been made, namely (i) in the case of a redemption of Drs. at
any time prior to the Remarketing Date, the Remarketing Date, and (ii) in the
case of a redemption of Drs. at any time after the Remarketing Date, the Stated
Maturity Date.
"Reference Corporate Dealer" means J.P. Morgan Securities Inc. and four
other leading dealers of publicly-traded debt securities of the Operating
Partnership acceptable to J.P. Morgan Securities Inc. and the Operating
Partnership.
"Reference Treasury Dealer" means a primary U.S. Government securities
dealer in The City of New York (which may include the Remarketing Dealer)
selected by the Remarketing Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer, the offer price for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) for settlement
on the Remarketing Date, quoted in writing to the Remarketing Dealer by such
Reference Treasury Dealer by 3:30 p.m., New York City time, on the
Determination Date.
5
<PAGE> 7
"Regular Record Date" shall have the meaning specified in Section 2.3.
"Remarketing Agreement" means the Remarketing Agreement dated as of
March , 1998 between the Operating Partnership and J.P. Morgan Securities Inc.,
as Remarketing Dealer, as such agreement may be amended from time to time.
"Remarketing Date" shall have the meaning specified in Section 2.3
hereof.
"Remarketing Dealer" means J.P. Morgan Securities Inc. or its successor
and assigns under the Remarketing Agreement.
"Stated Maturity Date" should have the meaning specified in Section
2.3.
"Subsidiary" means, (i) with respect to any Person, any corporation,
partnership or other entity of which a majority of (a) the voting power of the
voting equity securities or (b) the outstanding equity interests of which are
owned, directly or indirectly, by such Person and (ii) with respect to the
Operating Partnership, Securities, L.P., so long as the Operating Partnership
owns, directly or indirectly, a majority of the outstanding non-preference
equity interests thereof. For the purposes of this definition, "voting equity
securities" means equity securities having voting power for the election of
directors, whether at all times or only so long as no senior class of security
has such voting power by reason of any contingency.
"Telerate Page 500" means the display designated as "Telerate Page 500"
on Dow Jones Markets Limited (or such other page as may replace Telerate Page
500 on such service) or such other service displaying the offer price specified
in clause (a) of the definition of Comparable Treasury Price, as may replace
Dow Jones Markets Limited.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Operating Partnership and
its Subsidiaries determined in accordance with GAAP (except that for the
purposes hereof, each Subsidiary of the Operating Partnership shall be treated
as if such Subsidiary were a subsidiary under GAAP), but excluding accounts
receivable and intangibles; provided, however, that the term "Total Assets"
shall not include any assets which have been deposited in trust to defease any
indebtedness or any other obligation (whether through a covenant defeasance or
otherwise) pursuant to the terms of such indebtedness or other obligation or
the terms of any instrument creating or evidencing it.
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii)
all other assets of the Operating
6
<PAGE> 8
Partnership and its Subsidiaries not subject to an Encumbrance for borrowed
money, determined in accordance with GAAP (except that for the purposes hereof,
each Subsidiary of the Operating Partnership shall be treated as if such
Subsidiary were a subsidiary under GAAP), but excluding accounts receivable and
intangibles; provided, however, that the term "Total Unencumbered Assets" shall
not include any assets which have been deposited in trust to defease any
indebtedness or any other obligation (whether through a covenant defeasance or
otherwise) pursuant to the terms of such indebtedness or other obligation or
the terms of any instrument creating or evidencing it.
"Treasury Rate" means the annual rate equal to the semi-annual
equivalent yield to maturity or interpolated (on a 30/360 day count basis)
yield to maturity on the Determination Date of the Comparable Treasury Issue
for value on the Remarketing Date, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price.
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Operating Partnership and its Subsidiaries on such date, before depreciation
and amortization, determined on a consolidated basis in accordance with GAAP
(except for the purposes hereof, each Subsidiary of the Operating Partnership
shall be treated as if such Subsidiary were a subsidiary under GAAP).
"Unsecured Indebtedness" means Indebtedness which is not secured by any
Encumbrance upon any of the properties of the Operating Partnership or any of
its Subsidiaries.
ARTICLE TWO
THE SERIES OF SECURITIES
SECTION 2.1. Title of the Securities.
There shall be Securities designated the "6 1/2% Dealer remarketable
securities due April 5, 2011" (the "Drs.")
SECTION 2.2. Limitation on Aggregate Principal Amount.
The aggregate principal amount of the Drs. shall be limited to
$100,000,000, and, except as provided in this Section and in Section 306 of the
Indenture, the Operating Partnership shall not execute and the Trustee shall
not authenticate or deliver Drs. in excess of such aggregate principal amount.
Nothing contained in this Section 2.2 or elsewhere in this Supplemental
Indenture, or in the Drs., is intended to or shall limit execution by the
Operating Partnership or authentication or delivery by the Trustee of Drs.
under the circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107
and 1305 of the Indenture.
7
<PAGE> 9
SECTION 2.3. Interest and Interest Rates; Maturity Date of Drs.
The Drs. will bear interest from March 31, 1998 or from the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for, payable semi-annually in arrears on April 5 and October 5 of each
year, commencing October 5, 1998 (each, an "Interest Payment Date"), to the
Persons in whose name such Drs. are registered on the fifteenth calendar
(whether or not a Business Day), immediately preceding the related Interest
Payment Date (each, a "Regular Record Date"). Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. The interest so
payable on any Drs. which is not punctually paid or duly provided for on any
Interest Payment Date shall be payable to the Person in whose name such Drs. is
registered on the relevant Regular Record Date, at the close of business by
notice by or on behalf of the Operating Partnership to the holders of the Drs.,
mailed by first class mail not less than 15 days prior to the Regular Record
Date to their last address as they shall appear upon the Securities Register
not less than five days preceding the date of payment. Payment may be made by
check mailed to the holder's address as it appears on the Securities Register.
The Drs. will bear interest at the rate of 6 1/2% per annum to April 5,
2001 (the "Remarketing Date"). If pursuant to the Remarketing Agreement, the
Remarketing Dealer elects to remarket the Drs., then except as otherwise
provided (i) the Drs. shall be subject to mandatory tender to the Remarketing
Dealer at 100% of the principal amount thereof for remarketing on the
Remarketing Date subject to the terms and conditions provided for in Section
2.5 herein and (ii) on and after the Remarketing Date, the Drs. shall bear
interest at a rate determined by the Remarketing Dealer in accordance with the
procedures set forth in Section 2.6 herein.
If any Interest Payment Date or the Stated Maturity Date falls on a day
that is not a Business Day, the required payment shall be made on the next
Business Day as if it were made on the date such payment was due and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date or Stated Maturity Date, as the case may be.
The Drs. will mature on April 5, 2011 (the "Stated Maturity Date").
SECTION 2.4. Limitations on Incurrence of Indebtedness.
(a) The Operating Partnership will not, and will not permit any of its
Subsidiaries to, incur any Indebtedness, other than intercompany Indebtedness
(representing Indebtedness to which the only parties are the Operating
Partnership and any of its Subsidiaries (but only so long as such Indebtedness
is held solely by any of the Operating Partnership and any of its
Subsidiaries)), if, immediately after giving effect to the incurrence of such
additional Indebtedness and the application of the proceeds thereof, the
aggregate principal amount of all outstanding Indebtedness of the Operating
Partnership and its Subsidiaries on a consolidated basis determined in
accordance with GAAP (except that for purposes hereof, each Subsidiary of the
Operating Partnership shall be treated as if such Subsidiary were a subsidiary
under GAAP) is greater than 60% of the sum of (without duplication) (i) the
Total Assets as of the end of the calendar quarter covered in the Operating
Partnership's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
the case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Ex-
8
<PAGE> 10
change Act, with the Trustee) prior to the incurrence of such additional
Indebtedness and (ii) the purchase price of any real estate assets or mortgages
receivable acquired, and the amount of any securities offering proceeds
received (to the extent such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Indebtedness), by the
Operating Partnership or any of its Subsidiaries since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of
such additional Indebtedness.
(b) The Operating Partnership will not, and will not permit any of its
Subsidiaries to, incur any Indebtedness if the ratio of Consolidated Income
Available for Debt Service to the Annual Service Charge for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Indebtedness is to be incurred shall have been less than 1.5:1, on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (i) such Indebtedness
and any other Indebtedness incurred by the Operating Partnership and its
Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other
Indebtedness, had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Indebtedness by the Operating Partnership and its
Subsidiaries since the first day of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such period); (iii) in the case of Acquired Indebtedness or Indebtedness
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the first day
of such period with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation; and (iv) in the case
of any acquisition or disposition by the Operating Partnership or its
Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Indebtedness had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition being
included in such pro forma calculation.
(c) The Operating Partnership will not, and will not permit any of its
Subsidiaries to, incur Indebtedness secured by any Encumbrance upon any of the
property of the Operating Partnership or any of its Subsidiaries if,
immediately after giving effect to the incurrence of such additional
Indebtedness and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Indebtedness of the Operating Partnership
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
(except that for the purposes hereof, each Subsidiary of the Operating
Partnership shall be treated as if such Subsidiary were a subsidiary under
GAAP) which is secured by any Encumbrance on property of the Operating
Partnership or any of its Subsidiaries is greater than 40% of the sum of
(without duplication) (i) the Total Assets as of the end of the calendar
quarter covered in the Operating Partnership's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if such filing is not permitted under the Exchange Act, with
the Trustee) prior to the incurrence of such additional Indebtedness and (ii)
the purchase price of any real estate assets or mortgages receivable acquired,
and the amount of any securities offering proceeds received (to the extent that
such proceeds were not used to acquire real estate assets or mortgages
receivable or used to reduce Indebtedness), by the Operating Partnership or any
of its Subsidiaries since the end of such calendar
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<PAGE> 11
quarter, including those proceeds obtained in connection with the incurrence of
such additional Indebtedness.
(d) The Operating Partnership and its Subsidiaries may not at any time
own Total Unencumbered Assets equal to or less than 150% of the aggregate
outstanding principal amount of the Unsecured Indebtedness of the Operating
Partnership and its Subsidiaries on a consolidated basis determined in
accordance with GAAP (except that for the purposes hereof, each Subsidiary of
the Operating Partnership shall be treated as if such Subsidiary were a
subsidiary under GAAP).
(e) For purposes of this Section 2.4, Indebtedness shall be deemed to
be "incurred" by the Operating Partnership or a Subsidiary of the Operating
Partnership whenever the Operating Partnership or such Subsidiary shall create,
assume, guarantee or otherwise become liable in respect thereof.
SECTION 2.5. Mandatory Tender on Remarketing Date; Purchase and
Settlement.
(a) On a Business Day not later than five Business Days prior to the
Remarketing Date (the "Notification Date"), the Remarketing Dealer will notify
the Operating Partnership and the Trustee as to whether it elects to purchase
all of the outstanding Drs. on the Remarketing Date. If, and only if, the
Remarketing Dealer so elects, the Drs. shall be subject to mandatory tender to
the Remarketing Dealer for purchase and remarketing on the Remarketing Date,
upon the terms and subject to the conditions described herein and in the
Remarketing Agreement. The purchase price of the Drs. shall be equal to 100%
of the principal amount thereof. No holder or beneficial owner of the Drs.
shall have any rights or claims under the Remarketing Agreement or against the
Operating Partnership or the Remarketing Dealer as a result of the Remarketing
Dealer not purchasing such Drs.
(b) The tender and settlement procedures with respect to the Drs. set
forth in the Remarketing Agreement shall be subject to modification, without
the consent of the holders of the Drs., to the extent required by DTC or, if
the book-entry system is no longer available for the Drs. at the time of the
remarketing, to the extent required to facilitate the tendering and remarketing
of Drs. in certificated form. In addition, the Remarketing Dealer may modify
the settlement procedures without the consent of the holders of the Drs. in
order to facilitate the settlement process.
(c) The Operating Partnership hereby agrees with the Trustee and the
holders of Drs. that (i) at all times, it will use its best efforts to maintain
the Drs. in book-entry form with DTC or any successor thereto and to appoint a
successor depository to the extent necessary to maintain the Drs. in book-entry
form and (ii) it waives any discretionary right that it otherwise may have
under the Indenture to cause the Drs. to be issued in certificated form.
SECTION 2.6. Determination of Interest Rate to Maturity.
(a) The Remarketing Dealer shall determine the interest rate the Drs.
will bear from the Remarketing Date to the Stated Maturity Date (the "Interest
Rate to Maturity") on the third
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<PAGE> 12
Business Day immediately preceding the Remarketing Date (the "Determination
Date") by soliciting by 3:30 p.m., New York City time, the Reference Corporate
Dealers (defined below) for firm, com mitted bids to purchase all outstanding
Drs. at the Dollar Price, and by selecting the lowest such firm, committed bid
(regardless of whether each of the Reference Corporate Dealers actually submits
a bid). Each bid shall be expressed in terms of the Interest Rate to Maturity
that the Drs. would bear (quoted as a spread over the Base Rate) based on the
following assumptions:
(i) the Drs. would be sold to the Reference Corporate Dealer on
the Remarketing Date for settlement on the same day;
(ii) the Drs. would mature on the Stated Maturity Date; and
(iii) the Drs. would bear interest from the Remarketing Date at a
stated rate equal to the Interest Rate to Maturity bid by such Reference
Corporate Dealer, payable semi-annually on the interest payment dates for
the Drs.
The Interest Rate to Maturity announced by the Remarketing Dealer as a
result of such process will be quoted to the nearest one hundred-thousandth
(0.00001) of one percent per annum and, absent manifest error, will be binding
and conclusive upon holders of the Drs., the Operating Partnership and the
Trustee. The Remarketing Dealer shall have the discretion to select the time
at which the Comparable Treasury Price is determined on the Determination Date.
(b) The Remarketing Dealer shall have the right in its sole discretion
to either (i) remarket the Drs. for its own account or (ii) sell the Drs. to
the Reference Corporate Dealer submitting the lowest firm, committed, bid
pursuant to this Section 2.6. If two or more Reference Corporate Dealers
submit equivalent bids which constitute the lowest firm, committed bid, the
Remarketing Dealer may in its sole discretion elect to sell the Drs. to any
such Reference Corporate Dealer.
(c) If the Remarketing Dealer has elected to remarket the Drs. as
provided herein, then it shall notify the Operating Partnership, the Trustee
and DTC by telephone, confirmed in writing (which may include facsimile or
other electronic transmission), by 5:00 p.m., New York City time, on the
Determination Date of the Interest Rate to Maturity applicable to the Drs.
effective from and including the Remarketing Date.
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<PAGE> 13
SECTION 2.7. Repurchase.
If the Remarketing Dealer (i) does not elect to exercise its right to a
mandatory tender of the Drs., (ii) shall not have received by the required time
on the Determination Date any firm, committed bids to purchase all of the Drs.
in accordance with Section 2.6 of this Supplemental Indenture or (iii) for any
other reason does not purchase all of the Drs. on the Remarketing Date, then
the Operating Partnership shall repurchase on the Remarketing Date, at a price
equal to 100% of the principal amount of the Drs. plus all accrued interest, if
any, on the Drs. to (but excluding) the Remarketing Date, any Drs. that have
not been purchased by the Remarketing Dealer on the Remarketing Date.
SECTION 2.8. Redemption.
If the Remarketing Dealer has elected to remarket the Drs. on the
Remarketing Date, the Operating Partnership shall have the right to redeem the
Drs., in whole but not in part, from the Remarketing Dealer on the Remarketing
Date at a redemption price equal to the greater of (i) 100% of the aggregate
principal amount of the Drs. and (ii) the Dollar Price, by giving written
notice of such redemption to the Remarketing Dealer
(x) no later than the Business Day immediately prior to the
Determination Date or
(y) if fewer than three Reference Corporate Dealers submit firm,
committed bids to the Remarketing Dealer on the Determination
Date in accordance with Section 2.6 of this Supplemental
Indenture, immediately after the deadline set by the Remarketing
Dealer for receiving such bids has passed.
In either such case, the Operating Partnership shall pay such
redemption price for the Drs. in same-day funds by wire transfer on the
Remarketing Date to an account designated by the Remarketing Dealer.
Notice of any such redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of the Drs. to be
redeemed. Unless the Operating Partnership defaults in payment of the
redemption price, on and after the redemption date, interest will cease to
accrue on the Drs. or portions thereof called in connection with a redemption.
If less than all the Drs. are to be redeemed at the option of the Operating
Partnership, the Operating Partnership will notify the Trustee at least 45 days
prior to the redemption date (or such shorter period as is satisfactory to the
Trustee) of the aggregate principal amount of Drs. to be redeemed and their
redemption date. The Trustee shall select, in such manner as it shall deem
fair and appropriate, the Drs. to be redeemed in whole or in part. Drs. may be
redeemed in part in the minimum authorized denomination of the Drs. or in any
integral multiple thereof.
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<PAGE> 14
SECTION 2.9. Places of Payment.
The Places of Payment where the Drs. may be presented or surrendered
for payment, where the Drs. may be surrendered for registration of transfer or
exchange and where notices and demands to and upon the Operating Partnership in
respect of the Drs. and the Indenture may be served shall be in (i) the Borough
of Manhattan, The City of New York, New York, and the office or agency for such
purpose shall initially be located at First Trust National Association, 100
Wall Street, Suite 2000, New York, New York 10005 and (ii) the City of Chicago,
Illinois and the office or agency for such purpose shall initially be located
at First Trust National Association, One Illinois Center, 111 East Wacker
Drive, Suite 3000, Chicago, Illinois 60601.
SECTION 2.10. Method of Payment.
Payment of the principal of and interest on the Drs. will be made at
the office or agency of the Operating Partnership maintained for that purpose
in the Borough of Manhattan, The City of New York (which shall initially be an
office or agency of the Trustee), in immediately available funds, in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Operating Partnership, payments of principal and interest on the
Drs. (other than payments of principal and interest due on the Stated Maturity
Date) may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer to an account maintained by the Person entitled thereto located within
the United States.
SECTION 2.11. Registered Securities; Global Form.
The Drs. shall be issuable and transferable in fully registered form as
Registered Securities, without coupons in denominations of $1,000 and any
integral multiple thereof. The Drs. shall each be issued in the form of one or
more permanent Global Securities. The depository for the Drs. shall be DTC.
The Drs. shall not be issuable in definitive form except as provided in Section
305 of the Indenture. The Drs. shall be substantially in the form attached as
Exhibit A hereto.
SECTION 2.12. Registrar and Paying Agent.
The Trustee shall initially serve as Registrar and Paying Agent for the
Drs.
SECTION 2.13. Defeasance.
The provisions of Sections 1402 and 1403 of the Indenture, together
with the other provisions of Article Fourteen of the Indenture, shall be
applicable to the Drs. The provisions of Section 1403 of the Indenture shall
apply to the covenants set forth in Sections 2.4 and 2.15 of this Supplemental
Indenture.
SECTION 2.14. Acceleration of Maturity; Rescission and Annulment.
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<PAGE> 15
The provisions of the first paragraph of Section 502 of the Senior
Indenture as applicable with respect to the Drs. shall be deemed to be amended
and restated in their entirety to read as follows:
If an Event of Default with respect to the Securities at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities may declare the principal (or, if any Securities are Original Issue
Discount Securities or Indexed Securities, such portion of the principal as may
be specified in the terms thereof) of, and the Make-Whole Amount, if any, on,
all the Securities to be due and payable immediately, by a notice in writing to
the Operating Partnership (and to the Trustee if given by the Holders), and
upon any such declaration such principal or specified portion thereof shall
become immediately due and payable. If an Event of Default with respect to the
Securities of any series set forth in Section 501(6) of the Senior Indenture
occurs and is continuing, then in every such case all the Securities of that
series shall become immediately due and payable, without notice to the
Operating Partnership, at the principal amount thereof (or, if any Securities
are Original Issue Discount Securities or Indexed Securities, such portion of
the principal as may be specified in the terms thereof) plus accrued interest
to the date the Securities are paid plus the Make-Whole Amount, if any, on the
Securities.
SECTION 2.15. Provision of Financial Information.
Whether or not the Operating Partnership is subject to Section 13 or
15(d) of the Exchange Act, the Operating Partnership will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Operating Partnership would
have been required to file with the Commission pursuant to such Section 13 or
15(d) if the Operating Partnership were so subject, such documents to be filed
with the Commission on or prior to the respective dates (the "Required Filing
Dates") by which the Operating Partnership would have been required so to file
such documents if the Operating Partnership were so subject.
The Operating Partnership will also in any event (x) within 15 days of
each Required Filing Date (i) if the Operating Partnership is not then subject
to Section 13 or 15(d) of the Exchange Act, transmit by mail to all Holders of
the Drs., as their names and addresses appear in the Security Register, without
cost to such Holders, copies of the annual reports and quarterly reports which
the Operating Partnership would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Operating
Partnership were subject to such Sections and (ii) file with the Trustee copies
of annual reports, quarterly reports and other documents which the Operating
Partnership is required to file with the Commission or would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Operating Partnership were subject to such Sections and (y) if filing
such documents by the Operating Partnership with the Commission is not
permitted under the Exchange Act, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder.
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<PAGE> 16
SECTION 2.16. Waiver of Certain Covenants.
Notwithstanding the provisions of Section 1009 of the Indenture, the
Operating Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1008, inclusive, of
the Indenture, with Sections 2.4 and 2.15 of this Supplemental Indenture and
with any other term, provision or condition with respect to the Drs. (except
any such term, provision or condition which could not be amended without the
consent of all Holders of the Drs.), if before or after the time for such
compliance the Holders of at least a majority in principal amount of all
outstanding Drs., by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition. Except
to the extent so ex pressly waived, and until such waiver shall become
effective, the obligations of the Operating Partnership and the duties of the
Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE THREE
MISCELLANEOUS PROVISIONS
SECTION 3.1. Ratification of Indenture.
Except as expressly modified or amended hereby, the Indenture continues
in full force and effect and is in all respects confirmed and preserved.
SECTION 3.2. Governing Law.
This Supplemental Indenture and each Drs. shall be governed by and
construed in accordance with the laws of the State of New York. This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, and shall, to the extent applicable, be governed by such
provisions.
SECTION 3.3. Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first written above.
FIRST INDUSTRIAL, L.P.
By: First Industrial Realty Trust, Inc.,
its general partner
By:___________________________________
Name:
Title:
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.13
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
FIRST INDUSTRIAL, L.P.
6 1/2% DEALER REMARKETABLE SECURITY_ ("DRS._")
DUE APRIL 5, 2011
No. 1
$100,000,000 CUSIP: 322055RAD9
First Industrial, L.P., a Delaware limited partnership (hereinafter called
the "COMPANY"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of ONE HUNDRED MILLION U.S. DOLLARS on
April 5, 2011, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, State of New York, in such coin or currency of
the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest, semi-annually
on April 5 and October 5 of each year (each, an "INTEREST PAYMENT DATE"), on
said principal sum at the rate per annum specified below, at such office or
agency, in like coin or currency, from the April 5 or October 5, as the case
may be, to which interest on the Securities has been paid preceding the date
hereof (unless the date hereof is an April 5 or an October 5 to which interest
has been paid, in which case from the date hereof, or unless the date hereof is
prior to any interest having been paid, in which case from March 31, 1998)
until payment of said principal sum has been made or duly provided for. If the
Company shall default in the payment of interest when due on such April 5 or
October 5, then this Security shall bear interest from the next preceding date
to which interest has been paid, or, if no interest has been paid, from March
31, 1998. The interest so payable on any April 5 or October 5 shall be paid to
the person in whose name this Security shall be registered at the close of
business on the fifteenth calendar day (whether or not a Business Day)
immediately preceding the related Interest Payment Date (each, a "REGULAR
RECORD DATE"). For purposes of this Security, "BUSINESS DAY" means any day
other than a Saturday, a Sunday or a day on which banking institutions in the
City of New York or the City of Chicago are authorized or obligated by law,
regulation or executive order to be closed.
- - ---------------
"Dealer remarketable security" and "Drs." are service marks of J.P. Morgan
Securities Inc.
<PAGE> 2
If and to the extent the Company shall default in the payment of the
interest due on any interest payment date, such defaulted interest shall be
paid to the person in whose name this Security is registered at the close of
business on a record date established for such payment by notice by or on
behalf of the Company to the holders of the Securities mailed by first-class
mail not less than fifteen days prior to such record date to their last address
as they shall appear upon the Security register, such record date to be not
less than five days preceding the date of payment of such defaulted interest.
The Company may pay interest by check mailed to the holder's address as it
appears on the Security register.
The rate of interest on this Security shall be 6 1/2% per annum to April
5, 2001 (the "REMARKETING DATE"). If the Remarketing Dealer elects to remarket
the Securities pursuant to the Remarketing Agreement dated as of March 31, 1998
(the "REMARKETING AGREEMENT") between J.P. Morgan Securities Inc., as
Remarketing Dealer (the "REMARKETING DEALER"), and the Company, then, except as
otherwise set forth on the reverse hereof, (i) this Security shall be subject
to mandatory tender to the Remarketing Dealer for remarketing on the
Remarketing Date, on the terms and subject to the conditions set forth on the
reverse hereof, and (ii) on and after the Remarketing Date, this Security shall
bear interest at the rate determined by the Remarketing Dealer in accordance
with the procedures set forth in Section 4 on the reverse hereof (the "INTEREST
RATE TO MATURITY"). If the Remarketing Dealer does not remarket the Securities
pursuant to the Remarketing Agreement, this Security shall be subject to
mandatory tender to the Company for repurchase on the Remarketing Date, on the
terms and subject to the conditions set forth on the reverse hereof.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been executed by the
Trustee under the Indenture referred to on the reverse hereof.
2
<PAGE> 3
IN WITNESS WHEREOF, First Industrial, L.P. has caused this Security to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
FIRST INDUSTRIAL, L.P.
By: First Industrial Realty Trust, Inc.,
Attest: its General Partner
_________________________ By: ____________________________________
Secretary Title:
Certificate of Authentication
This is one of the Securities of the series designated therein and
described in the withinmentioned Indenture.
First Trust National Association
as Trustee
By: Authorized Signatory
--------------------------------
<PAGE> 4
First Industrial, L.P.
6 1/2% Dealer remarketable security_ ("Drs._")
due April 5, 2011
1. Indenture. (a) This Security is one of the duly authorized issue of
debt securities of the Company (herein referred to as the "DEBT SECURITIES") of
the series hereinafter specified, all issued or to be issued under and pursuant
to an indenture dated as of May 13, 1997 (as supplemented, including the
Supplemental Indenture dated as of March 26, 1998 in respect of this series of
Securities, the "INDENTURE") between the Company and First Trust National
Association, as Trustee (herein referred to as the "TRUSTEE"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders (the words
"HOLDERS", "HOLDER", "SECURITYHOLDERS" or "SECURITYHOLDER" mean the registered
holder(s)) of the Debt Securities.
(b) The Debt Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may
be denominated in different currencies, may be subject to different redemption
provisions, if any, may be subject to different sinking funds, if any, may be
subject to additional covenants and Events of Default and may otherwise vary as
provided in the Indenture. This Security is one of the series designated as the
6 1/2% Dealer remarketable securities_ ("DRS._") due April 5, 2011 of the
Company and such series is limited in aggregate principal amount to
$100,000,000. References herein to "SECURITIES" or "DRS." shall mean the Debt
Securities of said series.
(c) All capitalized terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
2. Mandatory Tender on Remarketing Date; Purchase and Settlement. On a
Business Day not later than five Business Days prior to the Remarketing Date
(the "NOTIFICATION DATE"), the Remarketing Dealer will notify the Company and
the Trustee as to whether it elects to purchase all (but not less than all) of
the outstanding Drs. on the Remarketing Date. If, and only if, the Remarketing
Dealer so elects, the Drs. shall be subject to mandatory tender to the
Remarketing Dealer for purchase and remarketing on the Remarketing Date, upon
the terms and subject to the conditions described herein and in the Remarketing
Agreement. The purchase price of the Drs. shall be equal to 100% of the
principal amount thereof. No holder or beneficial owner of any Securities
shall have any rights or claims under the Remarketing Agreement or against the
Company or the Remarketing Dealer as a result of the Remarketing Dealer not
purchasing such Securities.
3. Maintenance of Book-Entry System. (a) The tender and settlement
procedures with respect to the Securities set forth in the Remarketing
Agreement shall be subject to modification, without the consent of the holders
of the Securities, to the extent required by DTC or, if the book-entry system
is no longer available for the Securities at the time of the remarketing, to
the extent required to facilitate the tendering and remarketing of Securities
in certificated form. In addition, the
R-1
<PAGE> 5
Remarketing Dealer may modify the settlement procedures without the
consent of the holders of the Securities in order to facilitate the settlement
process.
(b) The Company hereby agrees with the Trustee and the holders of
Securities that (i) at all times, it will use its best efforts to maintain the
Securities in book-entry form with DTC or any successor thereto and to appoint
a successor depository to the extent necessary to maintain the Securities in
book-entry form and (ii) it waives any discretionary right that it otherwise
may have under the Indenture to cause the Securities to be issued in
certificated form.
4. Determination of Interest Rate to Maturity; Notification Thereof. The
Remarketing Dealer shall determine the interest rate the Drs. will bear from
the Remarketing Date to the Stated Maturity Date (the "INTEREST RATE TO
MATURITY") on the third Business Day immediately preceding the Remarketing Date
(the "DETERMINATION DATE") by soliciting by 3:30 p.m., New York City time, the
Reference Corporate Dealers for firm, committed bids to purchase all
outstanding Drs. at the Dollar Price, and by selecting the lowest such firm,
committed bid (regardless of whether each of the Reference Corporate Dealers
actually submit bids). Each bid shall be expressed in terms of the Interest
Rate to Maturity that the Drs. would bear (quoted as a spread over 5.67% per
annum (the "BASE RATE")) based on the following assumptions:
(i) the Drs. would be sold to the Reference Corporate Dealer on the
Remarketing Date for settlement on the same day;
(ii) the Drs. would mature on the Stated Maturity Date; and
(iii) the Drs. would bear interest from the Remarketing Date at a
stated rate equal to the Interest Rate to Maturity bid by such Reference
Corporate Dealer, payable semi-annually on the interest payment dates for
the Drs.
The Interest Rate to Maturity announced by the Remarketing Dealer as a result
of such process will be quoted to the nearest one hundred-thousandth (0.00001)
of one percent per annum and, absent manifest error, will be binding and
conclusive upon holders of the Drs., the Company and the Trustee. The
Remarketing Dealer shall have the discretion to select the time at which the
Interest Rate to Maturity is determined on the Determination Date.
The Remarketing Dealer shall have the right in its sole discretion to
either (i) remarket the Drs. for its own account (at a price equal to the
lowest firm, committed bid, as described above) or (ii) sell the Drs. to the
Reference Corporate Dealer submitting the lowest firm, committed, bid. If two
or more Reference Corporate Dealers submit equivalent bids which constitute the
lowest firm, committed bid, the Remarketing Dealer may in its sole discretion
elect to sell the Drs. to any such Reference Corporate Dealer.
If the Remarketing Dealer has elected to remarket the Drs. as provided
herein, then it shall notify the Company, the Trustee and DTC by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), by 5:00 p.m., New York City time, on the Determination
R-2
<PAGE> 6
Date of the Interest Rate to Maturity applicable to the Drs. effective
from and including the Remarketing Date.
5. Repurchase. If the Remarketing Dealer for any reason does not purchase
all of the Drs. on the Remarketing Date, then all holders will be required to
tender, and the Company shall repurchase, on the Remarketing Date, at a price
equal to 100% of the principal amount of the Drs. plus all accrued interest, if
any, on the Drs. to (but excluding) the Remarketing Date, all Drs. that have
not been purchased by the Remarketing Dealer on the Remarketing Date.
6. Redemption. If the Remarketing Dealer has elected to remarket the Drs.
on the Remarketing Date, the Company shall have the right to redeem the Drs.,
in whole but not in part, from the Remarketing Dealer on the Remarketing Date
at a redemption price equal to the greater of (i) 100% of the aggregate
principal amount of the Drs. and (ii) the Dollar Price, by giving written
notice of such redemption to the Remarketing Dealer no later than
(x) the Business Day immediately prior to the Determination Date or
(y) if fewer than three Reference Corporate Dealers submit firm,
committed bids for all outstanding Drs. to the Remarketing Dealer on the
Determination Date in accordance with Section 4 of this Security,
immediately after the deadline set by the Remarketing Dealer for receiving
such bids has passed.
In either such case, the Company shall pay such redemption price for the Drs.
in same-day funds by wire transfer on the Remarketing Date to an account
designated by the Remarketing Dealer.
7. Certain Covenants. The Indenture restricts the Company's ability to
merge, consolidate or sell substantially all of its assets. In addition, the
Company is obliged to abide by certain covenants, including covenants limiting
the amount of indebtedness it may incur, a covenant compelling it to disclose
certain financial information, covenants requiring it to maintain its material
properties and adequate insurance thereon, and a covenant requiring it to pay
or discharge all taxes, all as more fully described in the Indenture. All of
such covenants are subject to the covenant defeasance procedures outlined in
the Indenture.
8. Effect of Event of Default. If an Event of Default shall have occurred
and be continuing under the Indenture, the principal hereof may be declared,
and upon such declaration shall become, due and payable, in the manner, with
the effect and subject to the conditions provided in the Indenture.
9. Tax Treatment; Agreement to Tender. The Company and the holders of this
Security (and each holder of a beneficial interest herein) by accepting this
Security, agree to treat the Drs. as fixed rate debt instruments that mature on
the Remarketing Date for United States Federal income tax purposes.
Furthermore, each holder of this Security (and each holder of a beneficial
interest herein) irrevocably agrees that this Security shall automatically be
tendered on the Remarketing Date (a) to the Remarketing Dealer if the
Remarketing Dealer elects to remarket the Securities on the
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<PAGE> 7
terms and conditions set forth herein or (b) to the Company if the
Remarketing Dealer does not remarket the Securities on the terms and conditions
set forth herein.
10. Amendments and Waivers. Modifications and amendments of the Indenture
will be permitted to be made only with the consent of the holders of not less
than a majority in principal amount of all outstanding Debt Securities issued
under the Indenture that are affected by such modification or amendment;
provided, however, that no such modification or amendment may, without the
consent of the holder of each such Debt Security affected thereby, (a) change
the stated maturity of the principal of, or any installment of interest (or
premium or Make-Whole Amount, if any) on, any such Debt Security; (b) reduce
the principal of, or the rate or amount of interest on, or any premium or
Make-Whole Amount payable on redemption of, any such Debt Security, or reduce
the amount of principal of an Original Issue Discount security that would be
due and payable upon declaration of acceleration of the maturity thereof or
would be provable in bankruptcy, or adversely affect any right of repayment of
the holder of any such Debt Security; (c) change the place of payment, or the
coin or currency, for payment of principal of, premium or Make-Whole Amount, if
any, or interest on any such Debt Security; (d) impair the right to institute
suit for the enforcement of any payment on or with respect to any such Debt
Security; (e) reduce the above-stated percentage of outstanding Debt Securities
of any series necessary to modify or amend the Indenture, to waive compliance
with certain provisions thereof or certain defaults and consequences thereunder
or to reduce the quorum or voting requirements set forth in the Indenture; (f)
change the currency or currency unit in which any Debt Security or any premium
or interest thereon is payable; or (g) modify any of the foregoing provisions
or any of the provisions relating to the waiver of certain past defaults or
certain covenants, except to increase the required percentage to effect such
action or to provide that certain other provisions may not be modified or
waived without the consent of the holder of such Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive covenants of the applicable Indenture.
Modifications and amendments of the Indenture will be permitted to be made
by the Company and the Trustee without the consent of any holder of Debt
Securities for any of the following purposes: (a) to evidence the succession of
another person to the Company as obligor under the Indenture; (b) to add to the
covenants of the Company for the benefit of the holders of all or any series of
Debt Securities or to surrender any right or power conferred upon the Company
in the Indenture; (c) to add events of default for the benefit of the holders
of all or any series of Debt Securities; (d) to add or change any provisions of
the Indenture to facilitate the issuance of, or to liberalize certain terms of,
Debt Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action shall not
adversely affect the interests of the holders of the Debt Securities of any
series in any material respect; (e) to change or eliminate any provisions of
the Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (f)
to secure the Debt Securities; (g) to establish the form or terms of Debt
Securities of any series; (h) to provide for the acceptance of appointment by a
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<PAGE> 8
successor Trustee or facilitate the administration of the trusts under the
Indenture by more than one Trustee; (i) to cure any ambiguity, defect or
inconsistency in the Indenture, provided that such action shall not adversely
affect the interests of holders of Debt Securities of any series issued under
the Indenture; or (j) to supplement any of the provisions of the Indenture to
the extent necessary to permit or facilitate defeasance and discharge of any
series of such Debt Securities, provided that such action shall not adversely
affect the interests of the holders of the outstanding Debt Securities of any
series in any material respect.
11. Denominations; Transfer. (a) The Securities are issuable in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof.
(b) A certificate in global form representing all or a portion of the
Securities may not be transferred except as a whole by the Depositary for such
series to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such Securities or a nominee of
such successor Depositary.
12. No Liability of Certain Persons. No past, present or future
stockholder, employee, officer or director of the Company or any successor
thereof shall have any liability for any obligation, covenant or agreement of
the Company contained under this Security or the Indenture. Each holder by
accepting this Security waives and releases all such liability. This waiver and
release are part of the consideration for the issue of this Security.
13. Governing Law. The laws of the State of New York govern the Indenture
and this Security.
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<PAGE> 9
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto:
PLEASE INSERT TAXPAYER
IDENTIFICATION NUMBER OF ASSIGNEE
__________________________________
__________________________________
______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
the within Security of First Industrial, L.P. and all rights thereunder
and hereby irrevocably constitutes and appoints ______________________ attorney
to transfer said Security on the books of the Company, with full power of
substitution in the premises
--------------------------
Dated: Signature
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER. THE SIGNATURE(S) SHOULD BE GUARANTEED BY A COMMERCIAL
BANK OR TRUST COMPANY, A MEMBER ORGANIZATION OF A NATIONAL STOCK
EXCHANGE OR BY SUCH OTHER ENTITY WHOSE SIGNATURE IS ON FILE WITH
AND ACCEPTABLE TO THE TRANSFER AGENT.
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<PAGE> 1
Exhibit 4.14
EXECUTION COPY
REMARKETING AGREEMENT
between
FIRST INDUSTRIAL, L.P.
and
J.P. MORGAN SECURITIES INC.
as Remarketing Dealer
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Definitions 2
SECTION 2. Representations and Warranties 5
SECTION 3. Covenants of the Company 7
SECTION 4. Appointment and Obligations of the Remarketing Dealer 10
SECTION 5. Fees and Expenses 13
SECTION 6. Resignation of the Remarketing Dealer 14
SECTION 7. Dealing in the Drs.; Purchase of Drs. by the Company 14
SECTION 8. Conditions to Remarketing Dealer's Obligations 14
SECTION 9. Indemnification 18
SECTION 10. Termination of Remarketing Agreement 21
SECTION 11. Remarketing Dealer's Performance; Duty of Care 22
SECTION 12. Governing Law 23
SECTION 13. Term of Agreement 23
SECTION 14. Successors and Assigns 23
SECTION 15. Headings 24
SECTION 16. Severability 24
SECTION 17. Counterparts 24
SECTION 18. Amendments; Waivers 24
SECTION 19. Notices 24
</TABLE>
<PAGE> 3
REMARKETING AGREEMENT dated as of March 31, 1998
(the "AGREEMENT") between First Industrial, L.P., a
Delaware limited partnership (the "COMPANY"), and J.P.
Morgan Securities Inc. ("JPMSI" and, in its capacity
as the remarketing dealer hereunder, the "REMARKETING
DEALER").
WHEREAS, the Company has issued $100,000,000
aggregate principal amount of its 6 1/2% Dealer
remarketable securities1("DRS."_) pursuant to an
Indenture dated as of May 13, 1997, as supplemented
(the "INDENTURE"), from the Company to First Trust,
National Association, as trustee (the "TRUSTEE"); and
WHEREAS, the Drs. are being sold initially
pursuant to an Underwriting Agreement dated as of
March 26, 1998 (the "UNDERWRITING AGREEMENT") between
the Company and JPMSI, Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch, Pierce, Fenner
& Smith Incorporated and UBS Securities LLC, as
Underwriters; and
WHEREAS, the Company has filed with the
Securities and Exchange Commission (the "COMMISSION")
a registration statement (No. 333-43641) under the
Securities Act of 1933, as amended (the "SECURITIES
ACT"), in connection with the offering of debt
securities, including the Drs., which registration
statement was declared effective by order of the
Commission, and has filed such amendments thereto and
such amended or supplemented prospectuses as may have
been required to the date hereof, and will file such
additional amendments and supplements thereto and such
additional amended or supplemented prospectuses as may
hereafter be required (such registration statement,
including any amendments and supplements thereto, and
all documents incorporated therein by reference, as
from time to time amended or supplemented pursuant to
the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), the Securities Act, or otherwise, are
referred to herein as the "REGISTRATION STATEMENT");
all preliminary and final prospectuses relating to
such Registration Statement used in connection with
the offering of Drs., including the documents
incorporated by reference therein, are referred to
herein collectively as the "PROSPECTUS"; provided
that, if any new or revised prospectus shall be
provided to the Remarketing Dealer by the Company for
use in connection with the remarketing of the Drs.
which differs from the Prospectus filed with the
Commission at the time of the initial issuance of the
Drs. (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule
424(b) under the Securities Act), the term
"PROSPECTUS" shall refer to such new or revised
prospectus from and after the time it is first
provided to the Remarketing Dealer for such use, and
"REGISTRATION STATEMENT" shall refer to the
Registration
- - ------------------------
"Dealer remarketable securities" and "Drs." are service marks of J.P. Morgan
Securities Inc.
<PAGE> 4
Statement as deemed amended by the prospectus so
provided or any new registration statement of which
such prospectus is a part; and
WHEREAS, JPMSI is prepared to act as the
Remarketing Dealer with respect to the remarketing of
the Drs. on April 5, 2001 (the "REMARKETING DATE")
pursuant to the terms of, but subject to the
conditions set forth in, this Agreement;
NOW, THEREFORE, for and in consideration of the
covenants herein made, and subject to the conditions
herein set forth, the parties hereto agree as follows:
SECTION 1. Definitions
(a) The following terms have the following meanings:
"BASE RATE" means 5.67% per annum.
"BUSINESS DAY" means any day other than a
Saturday or Sunday or other day on which banking
institutions in the City of New York or Chicago are
authorized or obligated by law, executive order or
governmental decree to be closed.
"CALL PRICE" means the fair market value of the
embedded interest rate option implicit in the
Remarketing Dealer's right to purchase and remarket on
the Remarketing Date, pursuant to this Agreement, the
Unremarketable Drs. The Call Price in respect of any
Unremarketable Drs. shall equal:
(i) if the Remarketing Dealer's request for
a Call Price payment is made prior to the
Determination Date, the Commercially Reasonable
Option Value on the date of such request.
(ii) if the Remarketing Dealer's request
for a Call Price payment is made on or after the
Determination Date, an amount (if positive) equal
to (x) the Dollar Price less (y) the aggregate
principal amount of the Drs. originally issued.
"COMMERCIALLY REASONABLE OPTION VALUE" means, on
any date, the amount determined by the Remarketing
Dealer on such date under Section 6(e) of the Master
Agreement on a "Market Quotation" basis in respect of
the embedded interest rate option implicit in the
Remarketing Dealer's option to purchase, at 100% of
the aggregate principal amount thereof, the
Unremarketable Drs. as if a "Termination Event" had
occurred on such date under such interest rate option
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<PAGE> 5
with respect to the Company under the Master Agreement
and the Company was the "Affected Party".
"COMPARABLE TREASURY ISSUE" means the United
States Treasury security selected by the Remarketing
Dealer as having an actual maturity on the
Determination Date (or the United States Treasury
securities selected by the Remarketing Dealer to
derive an interpolated maturity on such Determination
Date) comparable to the remaining term of the Drs.
"COMPARABLE TREASURY PRICE" means (a) the offer
price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) on the
Determination Date, as set forth on Telerate Page 500
(as defined below), adjusted to reflect settlement on
the Remarketing Date if prices quoted on Telerate Page
500 are for settlement on any date other than the
Remarketing Date, or (b) if such page (or any
successor page) is not displayed or does not contain
such offer prices on such Business Day, then (i) if
the Remarketing Dealer obtains four or five Reference
Treasury Dealer Quotations, the average of such
Reference Treasury Dealer Quotations for such
Remarketing Date, after excluding the highest and
lowest of such Reference Treasury Dealer Quotations
(unless there is more than one highest or lowest
quotation, in which case only one such highest and/or
lowest quotation shall be excluded), or (ii) if the
Remarketing Dealer obtains fewer than four such
Reference Treasury Dealer Quotations, the average of
all such Reference Treasury Dealer Quotations. The
Remarketing Dealer shall have the discretion to select
the time at which the Comparable Treasury Price is
determined on the Determination Date.
"DOLLAR PRICE" means the discounted present value
to the Remarketing Date of the cash flows on a bond
(x) with a principal amount equal to the aggregate
principal amount of the initially issued Drs., (y)
maturing on the Stated Maturity Date and (z) bearing
interest from the Remarketing Date, payable
semi-annually (assuming a 360-day year consisting of
twelve 30-day months) on the interest payment dates of
the Drs. at a rate equal to the Base Rate, using a
discount rate equal to the Treasury Rate.
"REFERENCE CORPORATE DEALER" means J.P. Morgan
Securities Inc., and four other leading dealers of
publicly-traded debt securities of the Company
acceptable to JPMSI and the Company.
"REFERENCE TREASURY DEALER" means a primary U.S.
Government securities dealer in The City of New York
(which may include the Remarketing Dealer) selected by
the Remarketing Dealer.
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<PAGE> 6
"REFERENCE TREASURY DEALER QUOTATIONS" means,
with respect to each Reference Treasury Dealer, the
offer price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount)
for settlement on the Remarketing Date, quoted in
writing to the Remarketing Dealer by such Reference
Treasury Dealer by 3:30 p.m., New York City time, on
the Determination Date.
"STATED MATURITY DATE" means April 5, 2011.
"TELERATE PAGE 500" means the display designated
as "Telerate Page 500" on Dow Jones Markets Limited
(or such other page as may replace Telerate Page 500
on such service) or such other service displaying the
offer price specified in clause (a) of the definition
of Comparable Treasury Price as may replace Dow Jones
Markets Limited.
"TREASURY RATE" means the annual rate equal to
the semi-annual equivalent yield to maturity or
interpolated (on a 30/360 day count basis) yield to
maturity on the Determination Date of the Comparable
Treasury Issue for value on the Remarketing Date,
assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price.
"UNREMARKETABLE DRS." means any Drs. that are
unavailable for any reason for remarketing by the
Remarketing Dealer on the Remarketing Date (whether
due to termination of this Agreement according to its
terms, purchase of Drs. by the Company prior to the
Remarketing Date, or otherwise).
(b) The following additional terms are defined in
the following Sections:
<TABLE>
<CAPTION>
Defined Term Section
- - ------------ -------
<S> <C>
Commission Preamble
Company Preamble
Determination Date 4(d)
Drs. Preamble
DTC 4(e)
Exchange Act Preamble
Exchange Act Documents 2(a)
Indemnified Person 9(c)
Indemnifying Person 9(c)
Indenture Preamble
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
Defined Term Section
- - ------------ -------
<S> <C>
Interest Rate to Maturity 4(d)
Investment Grade 8(c)
JPMSI Preamble
Master Agreement 8(c)
Notification Date 4(c)
Prospectus Preamble
Registration Statement Preamble
Remarketing Date Preamble
Remarketing Dealer Preamble
Remarketing Materials 3(c)
Representation Date 2(a)
Securities Act Preamble
Trustee Preamble
Underwriting Agreement Preamble
</TABLE>
SECTION 2. Representations and Warranties
(a) The Company represents and warrants to the
Remarketing Dealer as of the date hereof, the
Notification Date (as defined below), the
Determination Date (as defined below) and the
Remarketing Date (each of the foregoing dates being
hereinafter referred to as a "REPRESENTATION DATE"),
as follows:
(i) It has filed all reports and any
definitive proxy or information statements
required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act (collectively, the
"EXCHANGE ACT DOCUMENTS").
(ii) The applicable Remarketing Materials (as
defined below) will not, as of their date or the
Remarketing Date, include an untrue statement of
a material fact or omit to state a material fact
required to be stated therein or necessary in
order to make the statements therein, in the
light of the circumstances under which they were
made, not misleading.
(iii) The representations and warranties
contained in the Underwriting Agreement are true
and correct with the same force and effect as
though expressly made at and as of each
Representation Date; except that for purposes of
this Agreement, representations and warranties in
the Underwriting Agreement relating to the
Registration Statement and
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<PAGE> 8
the Prospectus (as defined therein) shall be
made with respect to such documents as deemed modified
by the Exchange Act Documents, as well as any new or
revised registration statement and new or revised
prospectus required by subsection 3(f) herein, and the
date as of which such representations and warranties are
made shall include each Representation Date.
(iv) Since the respective dates as of which
information is given in the Remarketing Materials or the
Exchange Act Documents, there has not been any material
adverse change, or any development involving a
prospective material adverse change, in or affecting the
general affairs, business, prospects, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as
a whole, otherwise than as set forth or contemplated in
the Remarketing Materials or the Exchange Act Documents.
(v) This Agreement has been duly authorized, executed
and delivered by the Company.
(vi) The issue and sale of the Drs. and the performance by
the Company of all of its obligations under the Drs.,
the Indenture and this Agreement and the consummation of
the transactions herein and therein contemplated will
not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of
its subsidiaries is subject, except for such conflicts,
breaches or defaults which individually or in the
aggregate would not have a Material Adverse Effect (as
defined in the Underwriting Agreement) nor will any such
action result in any violation of the provisions of the
Partnership Agreement of the Company or any applicable
law or statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction
over the Company, its subsidiaries or any of their
respective properties. No consent, approval,
authorization, order, license, registration or
qualification of or with any such court or governmental
agency or body is required for the issue and sale of the
Drs. or the consummation by the Company of the
transactions contemplated by this Agreement or the
Indenture, except such as have already been obtained and
except as may be required under the blue sky laws of any
jurisdiction.
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<PAGE> 9
(b) Additional Certifications. Any
certificate signed by any director or officer of the
Company and delivered to the Remarketing Dealer or to
counsel for the Remarketing Dealer in connection with
the remarketing of the Drs. shall be deemed a
representation and warranty by the Company to the
Remarketing Dealer as to the matters covered thereby.
SECTION 3. Covenants of the Company
The Company covenants with the Remarketing Dealer
as follows:
(a) The Company will provide prompt notice by
telephone, confirmed in writing (which may include
facsimile or other electronic transmission), to the
Remarketing Dealer of the occurrence:
(i) at any time, of any event set forth in
clause (i) or (ii) of subsection 8(c) or of any
amendment of any kind to the Indenture (including
the Drs.); and
(ii) on or after the Notification Date, of any
event set forth in clauses (i) or (ii) of
subsection 8(d).
(b) The Company will furnish to the Remarketing
Dealer upon request:
(i) each Registration Statement and the
Prospectus relating to the Drs. (including in
each case any amendment or supplement thereto and
each document incorporated therein by reference),
other than Exchange Act Documents publicly
available on the Commission's internet website,
and
(ii) in connection with the remarketing of
Drs. such other publicly available written
information as the Remarketing Dealer may reasonably
request from time to time, other than Exchange Act
Documents publicly available on the Commission's
internet website.
The Company agrees to provide the Remarketing
Dealer with as many copies of the foregoing written
materials and other Company-approved information as
the Remarketing Dealer may reasonably request for use
in connection with the remarketing of Drs. and
consents to the use thereof for such purpose.
(c) If, at any time within three months of the
Remarketing Date, any event or condition known to the
Company relating to or affecting the Company, any
subsidiary thereof or the Drs. shall occur which could
reasonably be expected to cause any of the materials
or information referred to in subsection 3(b) above,
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<PAGE> 10
any Exchange Act Documents or any document
incorporated therein by reference (collectively, the
"REMARKETING MATERIALS") to contain an untrue
statement of a material fact or omit to state a
material fact, the Company shall promptly notify the
Remarketing Dealer in writing of the circumstances and
details of such event or condition.
(d) So long as the Drs. are outstanding, the
Company will file all documents required to be filed
with the Commission pursuant to the Exchange Act
within the time periods required by the Exchange Act
and the rules and regulations thereunder.
(e) The Company will comply with the Securities
Act, the Exchange Act, the Trust Indenture Act and the
rules and regulations of the Commission thereunder so
as to permit the completion of the remarketing of the
Drs. as contemplated in () this Agreement, () the
Prospectus first used to confirm sales of the Drs.
when the Drs. were originally issued, and () the
prospectus, if any, used in connection with the
remarketing.
(f) If a new or amended Registration Statement in
respect of the Drs. is in the opinion of counsel for
the Remarketing Dealer or for the Company necessary to
sell Drs. on an unrestricted basis on the Remarketing
Date, then the Company, at its expense, will, on or
before such date:
(i) prepare and file with the Commission such
amended or new Registration Statement (including
a Prospectus) covering such sale of Drs. by the
Remarketing Dealer, and cause such Registration
Statement to become effective on or prior to the
Remarketing Date;
(ii) furnish to the Remarketing Dealer such
number of copies of such Prospectus as the
Remarketing Dealer may reasonably request;
(iii) furnish to the Remarketing Dealer an
officers' certificate, an opinion, including a
statement as to the absence of material
misstatements in or omissions from the
Registration Statement and the Prospectus, of
Cahill Gordon & Reindel or such other counsel to
the Company reasonably satisfactory to the
Remarketing Dealer and a "comfort letter" from
the Company's independent accountants, in each
case dated as of the Remarketing Date and in form
and substance satisfactory to the Remarketing
Dealer, of the same tenor as the officers'
certificate, opinion and comfort letter,
respectively, delivered to satisfy the closing
conditions of the Underwriting Agreement, but
modified to relate to such new or amended
Registration Statement and the Prospectus; and
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<PAGE> 11
(iv) provide to the Remarketing Dealer and any
other securities dealer participating in the
remarketing of the Drs. the opportunity to
conduct an underwriters' due diligence
investigation of the Company in a scope
customarily provided in connection with a public
offering of the Company's debt securities.
Furthermore, if at any time when, in the opinion
of counsel for the Remarketing Dealer, a prospectus is
required by the Securities Act to be delivered in
connection with remarketing of the Drs., any event
shall occur or condition shall exist as a result of
which it is necessary to amend the Registration
Statement or amend or supplement the Prospectus in
order that such Prospectus will not include any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements therein not misleading in the light of the
circumstances existing at the time it is delivered to
a purchaser, or if it is necessary to amend or
supplement the Prospectus to comply with law, the
Company, at its expense, will promptly furnish to the
Remarketing Dealer such amendments or supplements to
the Prospectus as may be needed so that the statements
in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading
or so that the Prospectus will comply with law.
The Company agrees to reimburse the Remarketing
Dealer, to a maximum of $25,000, for half of its
reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel) incurred
in connection with any remarketing under circumstances
described in this subsection 3(f). Notwithstanding
the preceding sentence, if at the time of such
remarketing, the Company or its affiliates hold Drs.
which would not have had to have been registered but
for the fact that the Company or such affiliates hold
such Drs., then the Company shall pay all of the
Remarketing Dealer's reasonable out-of-pocket expenses
in connection with the remarketing of the Drs.
(g) The Company agrees that neither it nor any of
its subsidiaries or affiliates shall purchase or
otherwise acquire, or enter into any agreement to
purchase or otherwise acquire, any of the Drs. prior
to the Remarketing Date, other than
(i) a repurchase of the Drs. in accordance
with subsection 4(g);
(ii) a redemption of the Drs. in accordance with
subsection 4(h); or
(iii) a purchase by the Company of Drs.;
provided that if the Company purchases Drs.
pursuant to this subsection (g), it agrees (x) to
ensure that such Drs. remain at all times
outstanding and held through the
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<PAGE> 12
facilities of DTC, (y) to ensure that none of such Drs.
are at any time subject to any liens or encumbrances of any
nature whatsoever and (z) if the Remarketing Dealer elects
to remarket the Drs. on the Remarketing Date, to tender
such Drs. to the Remarketing Dealer on the Remarketing Date
in accordance with the procedures described in this
Agreement.
(h) The Company will comply with each of the
covenants set forth in the Underwriting Agreement.
(i) In connection with the remarketing, the
Company will use its best efforts to qualify the Drs.
for sale under the laws of such jurisdictions as the
Remarketing Dealer may designate, and will maintain
such qualifications in effect so long as required for
the remarketing of the Drs.; provided, however, the
Company will not be required to qualify as a foreign
limited partnership, file a general consent to service
of process in any such jurisdiction, subject itself to
taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject,
or provide any undertaking or make any change in its
partnership agreement that the general partner of the
Company reasonably determines to be contrary to the
best interests of the Company and its unitholders.
The Company will pay all expenses in connection with
such qualification, including the fees and
disbursements of counsel for any dealers participating
in the remarketing in connection with such
qualification and in connection with blue sky and
legal investment surveys.
(j) During the five Business Day period ending on
the Remarketing Date, the Company will not, without
the consent of the Remarketing Dealer, offer, sell or
contract to sell, or otherwise dispose of, directly or
indirectly, or announce the public offering of, any
debt securities issued or guaranteed by the Company.
SECTION 4. Appointment and Obligations of the
Remarketing Dealer
(a) Unless this Agreement is otherwise terminated
in accordance with Section 10 hereof, the Company
hereby appoints JPMSI, and JPMSI hereby accepts such
appointment, in accordance with the terms but subject
to the conditions of this Agreement, as the exclusive
Remarketing Dealer with respect to the Drs.
(b) The obligations of the Remarketing Dealer
hereunder to purchase the tendered Drs. on the
Remarketing Date, to determine the Interest Rate to
Maturity pursuant to subsection 4(d) and to remarket
the Drs. are conditioned on:
(i) the issuance and delivery of such Drs.
pursuant to the terms and conditions of the
Underwriting Agreement;
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(ii) the Remarketing Dealer's election on the
Notification Date to purchase the Drs. for
remarketing on the Remarketing Date and
(iii) the fact that the conditions set forth in
Section 8 hereof shall have been fully and
completely met to the satisfaction of the
Remarketing Dealer.
(c) On a Business Day not later than five Business
Days prior to the Remarketing Date (the "NOTIFICATION
DATE"), the Remarketing Dealer will notify the Company
and the Trustee as to whether it elects to purchase
the Drs. on the Remarketing Date. If, and only if, the
Remarketing Dealer so elects, the Drs. shall be
subject to mandatory tender to the Remarketing Dealer
for purchase and remarketing on the Remarketing Date,
upon the terms and subject to the conditions described
herein. The purchase price of the Drs. shall be equal
to 100% of the principal amount thereof.
(d) The Remarketing Dealer shall determine a new
stated interest rate on the Drs. as of the Remarketing
Date (the "INTEREST RATE TO MATURITY") on the third
Business Day immediately preceding the Remarketing
Date (the "DETERMINATION DATE") by soliciting by 3:30
p.m., New York City time, the Reference Corporate
Dealers for firm, committed bids to purchase all
outstanding Drs. at the Dollar Price, and by selecting
the lowest such firm, committed bid (regardless of
whether each of the Reference Corporate Dealers
actually submits a bid). Each bid shall be expressed
in terms of the Interest Rate to Maturity that the
Drs. would bear (quoted as a spread over the Base
Rate) based on the following assumptions:
(i) the Drs. would be sold to such Reference
Corporate Dealer on the Remarketing Date for
settlement on the same day;
(ii) the Drs. would mature on the Stated
Maturity Date;
(iii) the Drs. would bear interest from the
Remarketing Date at a stated rate equal to the
Interest Rate to Maturity bid by such Reference
Corporate Dealer, payable semi-annually on the
interest payment dates for the Drs.
The Interest Rate to Maturity announced by the
Remarketing Dealer as a result of such process will be
quoted to the nearest one hundred-thousandth (0.00001)
of one percent per annum and, absent manifest error,
will be binding and conclusive upon holders of the
Drs., the Company and the Trustee. Subject only to
subsection
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<PAGE> 14
4(e), below, the Remarketing Dealer shall
have the discretion to select the time at which the
Interest Rate to Maturity is determined on the
Determination Date.
(e) If the Remarketing Dealer has elected to
remarket the Drs. as provided in subsections 4(c) and
4(d), then it shall notify the Company, the Trustee
and The Depository Trust Company ("DTC") by telephone,
confirmed in writing (which may include facsimile or
other electronic transmission), by 5:00 p.m., New York
City time, on the Determination Date of the Interest
Rate to Maturity applicable to the Drs. effective from
and including the Remarketing Date.
(f) If the Drs. are remarketed as provided herein,
then, subject to Section 8 hereof, the Remarketing
Dealer will make, or cause the Trustee to make,
payment to DTC by the close of business on the
Remarketing Date against delivery through DTC of the
tendered Drs., of the purchase price for all of the
tendered Drs. The purchase price of the tendered Drs.
will be equal to 100% of the principal amount thereof
and shall be paid in immediately available funds.
(g) If the Remarketing Dealer () does not elect to
purchase the Drs. for remarketing pursuant to
subsection 4(c), () determines in its sole discretion
that one or more of the conditions in Section 8 hereof
have not been fulfilled by the required time, or (iii)
for any other reason does not remarket the Drs., then
the Company shall repurchase on the Remarketing Date
all then outstanding Drs. at a price equal to 100% of
the principal amount of such Drs. plus all accrued
interest, if any, on such Drs. to (but excluding) the
Remarketing Date.
(h) If the Remarketing Dealer has elected to
remarket the Drs. on the Remarketing Date in
accordance with subsection 4(c) hereof, the Company
may irrevocably elect to exercise its right to redeem
the Drs., in whole but not in part, from the
Remarketing Dealer on the Remarketing Date at the
greater of (x) 100% of the aggregate principal amount
of the Drs. and (y) the Dollar Price, by giving notice
of such election to the Remarketing Dealer
(i) no later than the Business Day
immediately prior to the Determination Date or
(ii) if fewer than three Reference Corporate
Dealers submit firm, committed bids in accordance
with subsection 4(d) hereof, immediately after
the deadline set by the Remarketing Dealer for
receiving such bids has passed.
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In either such case, the Company shall pay such
redemption price for the Drs. in same-day funds by
wire transfer on the Remarketing Date to an account
designated by the Remarketing Dealer.
If the Company exercises its right to redeem the
Drs. pursuant to clause 4(h)(ii) above, it shall
promptly reimburse the Remarketing Dealer for any and
all expenses (including any and all hedge losses
resulting from intra-day hedging associated with the
determination of the Dollar Price on the Determination
Date by the Remarketing Dealer) incurred by the
Remarketing Dealer in connection with its having to
break such associated intra-day hedging transactions
to enable the Company to exercise such redemption
right. If any such broken hedges result in a profit
to the Remarketing Dealer, the Remarketing Dealer
shall promptly pay such profit over to the Company.
The amount of any hedge losses or profits shall be
determined solely by the Remarketing Dealer, on a
reasonable basis.
(i) In accordance with the terms and provisions of
the Drs., the tender and settlement procedures set
forth in this Section 4, shall be subject to
modification without the consent of the holders of the
Drs., to the extent required by DTC or, if the
book-entry system is no longer available for the Drs.
at the time of the remarketing, to the extent required
to facilitate the tendering and remarketing of Drs. in
certificated form. In addition, the Remarketing Dealer
may, without the consent of the holders of the Drs.,
modify the settlement procedures set forth in the
Indenture and/or the Drs. in order to facilitate the
settlement process.
(j) In accordance with the terms and provisions of
the Drs., the Company hereby (i) agrees that at all
times, it will use its best efforts to maintain the
Drs. in book-entry form with DTC or any successor
thereto and to appoint a successor depositary to the
extent necessary to maintain the Drs. in book-entry
form and (ii) waives any discretionary right it
otherwise may have under the Indenture to cause the
Drs. to be issued in certificated form.
SECTION 5. Fees and Expenses
Subject to subsection 3(f), the last paragraph of
subsection 4(h), and Section 10 hereof, the
Remarketing Dealer will not receive any fees or
reimbursement of expenses from the Company for its
remarketing services set forth herein.
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<PAGE> 16
SECTION 6. Resignation of the Remarketing Dealer
The Remarketing Dealer may resign and be
discharged from its duties and obligations hereunder
at any time prior to its giving notice of its
intention to remarket the Drs., such resignation to be
effective ten Business Days after delivery of a
written notice to the Company and the Trustee of such
resignation. The Remarketing Dealer also may resign
and be discharged from its duties and obligations
hereunder at any time, such resignation to be
effective immediately, upon termination of this
Agreement in accordance with subsection 10(b) hereof.
The Company shall have the right, but not the
obligation, to appoint a successor Remarketing Dealer.
SECTION 7. Dealing in the Drs.; Purchase of Drs.
by the Company
(a) JPMSI, when acting as the Remarketing Dealer
or in its individual or any other capacity, may, to
the extent permitted by law, buy, sell, hold and deal
in any of the Drs. JPMSI, as holder or beneficial
owner of the Drs., may exercise any vote or join as a
holder or beneficial owner, as the case may be, in any
action which any holder or beneficial owner of Drs.
may be entitled to exercise or take pursuant to the
Indenture with like effect as if it did not act in any
capacity hereunder. The Remarketing Dealer, in its
capacity either as principal or agent, may also engage
in or have an interest in any financial or other
transaction with the Company as freely as if it did
not act in any capacity hereunder.
(b) The Company may purchase Drs. in the
remarketing, provided that the Interest Rate to
Maturity established with respect to Drs. in the
remarketing is not different from the Interest Rate to
Maturity that would have been established if the
Company had not purchased such Drs.
SECTION 8. Conditions to Remarketing Dealer's
Obligations
The obligations of the Remarketing Dealer to
purchase the Drs. on the Remarketing Date in
accordance with the provisions of this Agreement, to
determine the Interest Rate to Maturity pursuant to
subsection 4(d), and to remarket the Drs. have been
undertaken in reliance on, and are subject to, the
following conditions:
(a) the due performance in all material respects
by the Company of its obligations and agreements as
set forth in this Agreement and the accuracy of the
representations and warranties in this Agreement and
any certificate delivered pursuant hereto;
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<PAGE> 17
(b) the due performance in all material respects
by the Company of its obligations and agreements set
forth in, and the accuracy as of the dates specified
therein of the representations and warranties
contained in, the Underwriting Agreement;
(c) none of the following events shall have
occurred at any time on or prior to the Remarketing
Date:
(i) an Event of Default (as defined in the
Indenture), or any event which, with the giving
of notice or passage of time, or both, would
constitute an Event of Default thereunder, with
respect to the Drs. shall have occurred and be
continuing;
(ii) an Event of Default or a Termination
Event (each as defined in the form of ISDA Master
Agreement attached as Exhibit A hereto (the
"MASTER AGREEMENT")) shall have occurred and be
continuing under the Master Agreement; or
(iii) without the prior written consent of the
Remarketing Dealer, the Indenture (including the
Drs.) shall have been amended in any manner, or
otherwise contain any provision not contained
therein as of the date hereof, that in either
case in the judgment of the Remarketing Dealer
materially changes the nature of the Drs. or the
remarketing procedures;
(d) none of the following events shall have
occurred after the Remarketing Dealer elects on the
Notification Date to purchase the Drs.:
(i) there shall have occurred any
downgrading, or any notice shall have been given
of (A) any downgrading, (B) any intended or
potential downgrading or (C) any review or
possible change that does not indicate an
improvement, in the rating accorded any debt
securities of, or guaranteed by, the Company by
any "nationally recognized statistical rating
organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities
Act;
(ii) trading of any securities of, or
guaranteed by, the Company shall have been
suspended on any exchange or in any
over-the-counter market;
(iii) a material adverse change, or any
development involving a prospective material
adverse change, in or affecting the general
affairs, business, prospects, management,
financial position, stockholders' equity or
results of operations of the Company and its
subsidiaries, taken as a
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<PAGE> 18
whole, in each case otherwise than as set forth
or contemplated in the Prospectus the effect of which is
such as to make it, in the judgment of the Remarketing
Dealer, impracticable or inadvisable to remarket the
Drs.;
(iv) if a prospectus is required under the
Securities Act to be delivered in connection with
the remarketing of the Drs., the Company shall
fail to furnish to the Remarketing Dealer on the
Remarketing Date the officers' certificate,
opinion and comfort letter referred to in
subsection 3(f) of this Agreement and such other
documents and opinions as Davis Polk & Wardwell,
as special counsel for the Remarketing Dealer may
reasonably require for the purpose of enabling
such counsel to pass upon the sale of Drs. in the
remarketing as herein contemplated and related
proceedings, or in order to evidence the accuracy
and completeness of any of the representations
and warranties, or the fulfillment of any of the
conditions, herein contained;
(v) trading generally shall have been
suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange,
the American Stock Exchange, the National
Association of Securities Dealers, Inc.; or a
general moratorium on commercial banking
activities in New York shall have been declared
by either Federal or New York State authorities;
(vi) there shall have occurred any outbreak or
escalation of hostilities or any change in
financial markets or any calamity or crisis that,
in the judgment of the Remarketing Dealer, is
material and adverse and which, in the judgment
of the Remarketing Dealer, makes it impracticable
to remarket the Drs. or to enforce contracts for
the sale of the Drs.;
(vii) the Treasury Rate used to determine the
Dollar Price on the Determination Date exceeds
the Base Rate; or
(viii) the Remarketing Dealer shall not have
received by the required time on the
Determination Date any firm, committed bids to
purchase all of the Drs. in accordance with
subsection 4(d) hereof;
(e) the Remarketing Dealer shall have received (as
soon as practicable following notification by the
Remarketing Dealer to the Company on the Notification
Date of its election to purchase the Drs. and in any
event prior to the Determination Date) a certificate
of any of the Chairman of the Board of Directors,
President, Chief Operating Officer or Chief Financial
or Accounting Officer of the Company, satisfactory to
the Remarketing Dealer, dated as of the Notification
Date, to the following effect:
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<PAGE> 19
(i) the Company has, prior to the Remarketing
Dealer's election on the Notification Date to
remarket the Drs., provided the Remarketing
Dealer with notice of all events as required
under subsection 3(a) of this Agreement;
(ii) the representations and warranties in
this Agreement are true and correct in all
material respects at and as of the Notification
Date; and
(iii) the Company has complied with all
agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to
the Notification Date; and
(f) the Remarketing Dealer shall have received on
the Remarketing Date a certificate of any of the Chief
Financial Officer, the Treasurer or the Controller of
the Company, satisfactory to the Remarketing Dealer,
dated as of the Remarketing Date, to the following
effect:
(i) the representations and warranties in
this Agreement are true and correct in all
material respects with the same force and effect
as though made at and as of the Remarketing Date;
(ii) the Company has complied in all material
respects with all agreements and satisfied all
conditions on its part to be performed or
satisfied at or prior to the Remarketing Date;
(iii) no material adverse change, or any
development involving a prospective material
adverse change, in or affecting the general
affairs, business prospects, management,
financial position, stockholders' equity or
results of operations of the Company and its
subsidiaries, taken as a whole, shall have
occurred since the date of the most recent
financial statements of the Company filed with
the Commission; and
(iv) the conditions specified in clauses
8(c)(i) and 8(c)(ii) and clauses 8(d)(i) and
8(d)(ii) of this Agreement have been satisfied.
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SECTION 9. Indemnification.
(a) The Company agrees to indemnify and hold
harmless the Remarketing Dealer and each person, if
any, who controls the Remarketing Dealer within the
meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal
fees and other expenses incurred in connection with
any suit, action or proceeding or any claim asserted):
(i) arising out of the failure to have an
effective registration statement under the
Securities Act relating to the Drs., if required,
or the failure to satisfy the prospectus delivery
requirements of the Securities Act because the
Company failed to provide the Remarketing Dealer
with a prospectus for delivery,
(ii) caused by any untrue statement or alleged
untrue statement of a material fact contained in
any of the Remarketing Materials or caused by any
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, except insofar as such losses,
claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue
statement or omission made in reliance upon and
in conformity with information relating to the
Remarketing Dealer furnished to the Company in
writing by the Remarketing Dealer expressly for
use therein, or
(iii) the acts or omissions of the Remarketing
Dealer in connection with its duties and
obligations hereunder, except to the extent
finally judicially determined to be due primarily
to its gross negligence or willful misconduct.
(b) The Remarketing Dealer agrees to indemnify and
hold harmless the Company, its directors and its
officers and each person who controls the Company
within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to the
Remarketing Dealer in subsection 9(a)(ii) of this
Agreement, but only with reference to information
relating to such Remarketing Dealer furnished to the
Company in writing by such Remarketing Dealer
expressly for use in any of the Remarketing Materials.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or
demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such person
(the "INDEMNIFIED PERSON") shall promptly
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<PAGE> 21
notify the person against whom such indemnity may be sought
(the "INDEMNIFYING PERSON") in writing, and the
Indemnifying Person, upon request of the Indemnified
Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees
and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless
(i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to
the contrary,
(ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding
(including any impleaded parties) include both
the Indemnifying Person and the Indemnified
Person and representation of both parties by the
same counsel would be inappropriate due to actual
or potential differing interests between them.
It is understood that the Indemnifying Person
shall not, in connection with any proceeding or
related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred.
Any such separate firm for the Remarketing Dealer and
its directors and officers shall be designated in
writing by it and any such separate firm for the
Company, its directors and its officers who sign the
Registration Statement and such control persons of the
Company or authorized representatives shall be
designated in writing by the Company. The
Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its
written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or
liability by reason of such settlement or judgment.
(d) Notwithstanding the foregoing subsection 9(c),
if at any time an Indemnified Person shall have
requested an Indemnifying Person to reimburse the
Indemnified Person for fees and expenses of counsel as
contemplated by such subsection 9(c), the Indemnifying
Person agrees that it shall be liable for any
settlement of any proceeding effected without its
written consent if (i) such settlement is entered into
more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such
Indemnifying Person shall not have
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<PAGE> 22
reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying
Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which
any Indemnified Person is or could have been a party
and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from
all liability on claims that are the subject matter of
such proceeding.
(e) If the indemnification provided for in
subsections 9(a) and 9(b) is unavailable to an
Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to,
then each Indemnifying Person, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute
to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company,
on the one hand, and the Remarketing Dealer, on the
other, from the remarketing of the Drs. or (ii) if the
allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the
Remarketing Dealer, on the other, in connection with
the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and
the Remarketing Dealer, on the other, shall be deemed
to be in the same respective proportions as the
aggregate principal amount of the Drs. bears to the
amount, if any, by which the price at which the Drs.
are sold by the Remarketing Dealer in the remarketing
exceeds the price paid by the Remarketing Dealer for
the Drs. tendered on the Remarketing Date. The
relative fault of the Company on the one hand and the
Remarketing Dealer on the other shall be determined by
reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
relates to information supplied by the Company or by
the Remarketing Dealer and the parties' relative
intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission.
(f) The Company and the Remarketing Dealer agree
that it would not be just and equitable if
contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other
method of allocation that does not take account of the
equitable considerations referred to in the
immediately preceding paragraph. The amount paid or
payable by an Indemnified Person as a result of the
losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above,
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<PAGE> 23
any legal or other expenses incurred by such
Indemnified Person in connection with investigating or
defending any such action or claim.
(g) Notwithstanding the provisions of this Section
9, in no event shall the Remarketing Dealer be
required to contribute any amount in excess of the
amount by which the total price at which the Drs.
remarketed by it and distributed to the public were
offered to the public exceeds the amount of any
damages that such Remarketing Dealer has otherwise
been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to
contribution from any person who was not guilty of
such fraudulent misrepresentation. The remedies
provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law
of in equity.
(h) The indemnity and contribution agreements
contained in this Section 9 and the representations
and warranties of the Company set forth in this
Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this
Agreement and (ii) any investigation made by or on
behalf of the Remarketing Dealer or any person
controlling the Remarketing Dealer or by or on behalf
of the Company, its officers or directors or any other
person controlling the Company.
SECTION 10. Termination of Remarketing Agreement.
(a) This Agreement shall terminate as to the
Remarketing Dealer on the earliest of
(i) the effective date of the resignation of
the Remarketing Dealer pursuant to Section 6
hereof;
(ii) the occurrence of any event described in
clause (i) or (ii) of subsection 4(g) hereof; or
(iii) the date the Company gives notice of its
intention to redeem all of the outstanding Drs. in
accordance with subsection 4(h).
(b) In addition, the Remarketing Dealer may
terminate all of its obligations under this Agreement
immediately by notifying the Company and the Trustee
of its election to do so, at any time on or before the
Remarketing Date, if:
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(i) any of the conditions referred to or set
forth in subsection 8(a) or (b) hereof have not
been met or satisfied in full or any of the
events set forth in subsection 8(c) or 8(d) shall
have occurred; or
(ii) the Remarketing Dealer determines, in its
sole discretion, after consultation with the
Company, that there is material, non-public
information about the Company that is not
available to the Remarketing Dealer which is
necessary for it to fulfill its obligations under
this Agreement.
(c) If this Agreement is terminated pursuant to
this Section 10, such termination shall be without
liability of any party to any other party, except
that, in the case of a termination resulting from a
failure to observe the conditions set forth in
subsections 8(a) or 8(b), or the occurrence of any of
the events set forth in subsection 8(c) or clauses
8(d)(i) through 8(d)(iv), the Company shall reimburse
the Remarketing Dealer for all of its reasonable
out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the Remarketing
Dealer. Section 9 and subsections 3(f), 4(h), 10(c)
and 10(d) shall survive such termination and remain in
full force and effect.
(d) Upon the termination of this Agreement
pursuant to subsection 10(b) (except as a result of an
event described in subsection 8(d)(vii)), then, upon
the request of the Remarketing Dealer, the Company
shall pay to the Remarketing Dealer, in same-day funds
by wire transfer to an account designated by the
Remarketing Dealer, the Call Price. The Call Price
shall be paid as soon as practicable after the
Remarketing Dealer has determined the Call Price and
notified the Company of the Call Price, but in any
case no later than the earlier of (x) three Business
Days after written notification to the Company and (y)
the Remarketing Date.
The Remarketing Dealer shall promptly notify the
Company of the Call Price by telephone, confirmed in
writing (which may include facsimile or other
electronic transmission). The Call Price, absent
manifest error, shall be binding and conclusive upon
the parties hereto.
(e) This Agreement shall not be subject to
termination by the Company.
SECTION 11. Remarketing Dealer's Performance; Duty of Care.
The duties and obligations of the Remarketing
Dealer shall be determined solely by the express
provisions of this Agreement and the Indenture. No
implied covenants or obligations of or against the
Remarketing Dealer shall be read into this Agreement
or the Indenture. In the absence of bad faith on the
part of the
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Remarketing Dealer, the Remarketing Dealer
may conclusively rely upon any document furnished to
it, which purports to conform to the requirements of
this Agreement and the Indenture, as to the truth of
the statements expressed in any of such documents. The
Remarketing Dealer shall be protected in acting upon
any document or communication reasonably believed by
it to have been signed, presented or made by the
proper party or parties. The Remarketing Dealer shall
incur no liability to the Company or to any beneficial
owner or holder of Drs. in its individual capacity or
as Remarketing Dealer for any action or failure to act
in connection with the remarketing or otherwise,
except as a result of its gross negligence or willful
misconduct.
SECTION 12. Governing Law.
This agreement shall be governed by and construed
in accordance with the laws of the State of New York,
without giving effect to the conflicts of laws
provisions thereof.
SECTION 13. Term of Agreement.
Unless otherwise terminated in accordance with
the provisions hereof, this Agreement shall remain in
full force and effect from the date hereof until the
earlier of the first day thereafter on which no Drs.
are outstanding or the completion of the remarketing
of the Drs.
Regardless of any termination of this Agreement
pursuant to any of the provisions hereof, the
obligations of each of the parties pursuant to Section
9 and of the Company pursuant to subsections 3(f),
4(h), 10(c) and 10(d) hereof shall remain operative
and in full force and effect until fully satisfied.
SECTION 14. Successors and Assigns.
The rights and obligations of the Company
hereunder may not be assigned or delegated to any
other person without the prior written consent of the
Remarketing Dealer. The rights and obligations of the
Remarketing Dealer hereunder may not be assigned or
delegated to any other person (other than an affiliate
of the Remarketing Dealer) without the prior written
consent of the Company. This Agreement shall inure to
the benefit of and be binding upon the Company and the
Remarketing Dealer and their respective successors and
assigns, and will not confer any benefit upon any
other person, partnership, association or corporation
other than persons, if any, controlling the
Remarketing Dealer within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act
or any other indemnified party to the extent provided
in Section 9 hereof. The
23
<PAGE> 26
terms "successors" and "assigns" shall not include any
purchaser of any Drs. merely because of such purchase.
SECTION 15. Headings.
Section headings have been inserted in this
Agreement as a matter of convenience of reference
only, and it is agreed that such section headings are
not a part of this Agreement and will not be used in
the interpretation of any provisions of this
Agreement.
SECTION 16. Severability.
If any provision of this Agreement shall be held
or deemed to be or shall, in fact, be invalid,
inoperative or unenforceable as applied in any
particular case in any or all jurisdictions because it
conflicts with any provision of any constitution,
statute, rule or public policy or for any other
reason, such circumstances shall not have the effect
of rendering the provision in question invalid,
inoperative or unenforceable in any other case,
circumstance or jurisdiction, or of rendering any
other provision or provisions of this Agreement
invalid, inoperative or unenforceable to any extent
whatsoever.
SECTION 17. Counterparts.
This Agreement may be executed in several
counterparts, each of which shall be regarded as an
original and all of which shall constitute one and the
same document.
SECTION 18. Amendments; Waivers.
This Agreement may be amended or portions thereof
may be waived by any instrument in writing signed by
each of the parties hereto so long as this Agreement
as amended or the provisions as so waived are not
inconsistent with the Indenture in effect as of the
date of any such amendment or waiver.
SECTION 19. Notices.
Unless otherwise specified, any notices,
requests, consents or other communications given or
made hereunder or pursuant hereto shall be made in
writing (which may include facsimile or other
electronic transmission) and shall be deemed to have
been validly given or made when delivered or, if
earlier, three days after it was mailed, registered or
certified mail, return receipt requested and postage
prepaid, addressed as follows:
24
<PAGE> 27
(a) to the Company:
First Industrial, L.P.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Michael T. Tomasz
Facsimile No.: (312) 922-9851
(b) to JPMSI:
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Syndicate Department
Facsimile No.: (212) 648-5909
or to such other address as the Company or the
Remarketing Dealer shall specify in writing.
25
<PAGE> 28
IN WITNESS WHEREOF, each of the Company and the
Remarketing Dealer has caused this Remarketing
Agreement to be executed in its name and on its behalf
by one of its duly authorized officers as of the date
first above written.
FIRST INDUSTRIAL, L.P.
By: First Industrial Realty Trust, Inc.
its sole General Partner
By _________________________________________
Name:
Title:
J.P. MORGAN SECURITIES INC.
By _________________________________________
Name:
Title:
<PAGE> 1
Exhibit 12.1
FIRST INDUSTRIAL, L.P. AND CONTRIBUTING BUSINESSES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED UNIT DISTRIBUTIONS (a)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION> FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Income (loss) before disposition of
interest rate protection agreements,
gain on sales of properties and
extraordinary items..................... $ 53,519 $ 32,577 $ 12,123 $ 8,823 $ (3,999)
Plus interest expense and amortization
of deferred financing costs and interest
rate protection agreements.............. $ 25,468 $ 4,881 $ 6,803 $ 13,625 $ 19,184
------------- -------------- -------------- ----------- ----------
Earnings before disposition of interest
rate protection agreements, gain on sales
of properties, extraordinary items and
fixed charges........................... $ 78,987 $ 37,458 $ 18,926 $ 22,448 $ 15,785
============= ============= ============== ============ ==========
Fixed charges and Preferred Unit
distributions(b)........................ $ 34,555 $ 5,382 $ 7,069 $ 13,645 $ 19,197
============= ============= ============== ============ ==========
Ration of earnings to fixed charges and
preferred Unit distribution (c)......... 2.29x 6.96x 2.68x 1.65x ---(c)
============= ============= ============== ============ ==========
</TABLE>
(a) Information prior to June 30, 1994
includes the operations and accounts of
the Operating Partnership's predecessor
businesses and information subsequent
to the initial public offering includes
the historical operations and accounts
of the Operating Partnership.
(b) There were no preferred limited partnership
distributions in respect of any period prior
to the fiscal quarter ending June 30, 1997.
(c) Earnings represent earnings before disposition
of interest rate protection agreements, gain
on sales of properties, extraordinary items
and fixed charges. Fixed charges consist of
interest expense, capitalized interest and
amortization of interest rate protection
agreements and deferred financing costs. For
the fiscal year ended December 31, 1993, earnings
were not sufficient to cover fixed charges.
Additional earnings of $3.4 million would have
been required to achieve a ratio of 1.0 for such
period.
Page 1
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Form 10-K and the incorporation by reference
into the Registrant's previously filed Registration Statement on Form S-3
(File No. 333-43641) of our report dated February 17, 1998, on our audits of the
consolidated financial statements and the financial statement schedule of First
Industrial, L.P. and our report dated February 17, 1998 on our audits of the
combined financial statements of the Other Real Estates Partnerships.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 31, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of First Industrial, L.P. for the year ended December 31,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001033128
<NAME> FIRST INDUSTRIAL, L.P.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 27,442
<TOTAL-REVENUES> 27,442
<CGS> 0
<TOTAL-COSTS> 7,478
<OTHER-EXPENSES> 9,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,581
<INCOME-PRETAX> 4,282
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,123
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,123
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of First Industrial, L.P. for the year ended December 31,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001033128
<NAME> FIRST INDUSTRIAL, L.P.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,295
<SECURITIES> 0
<RECEIVABLES> 1,242
<ALLOWANCES> (221)
<INVENTORY> 0
<CURRENT-ASSETS> 5,316
<PP&E> 353,781
<DEPRECIATION> (8,133)
<TOTAL-ASSETS> 622,122
<CURRENT-LIABILITIES> 25,051
<BONDS> 59,897
0
0
<COMMON> 0
<OTHER-SE> 535,232
<TOTAL-LIABILITY-AND-EQUITY> 622,122
<SALES> 37,587
<TOTAL-REVENUES> 37,587
<CGS> 0
<TOTAL-COSTS> (9,935)
<OTHER-EXPENSES> (10,520)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,685)
<INCOME-PRETAX> 36,921
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,921
<DISCONTINUED> 0
<EXTRAORDINARY> (2,273)
<CHANGES> 0
<NET-INCOME> 34,648
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of First Industrial, L.P. for the year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001033128
<NAME> FIRST INDUSTRIAL, L.P.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 4,995
<SECURITIES> 0
<RECEIVABLES> 3,944
<ALLOWANCES> (1,000)
<INVENTORY> 0
<CURRENT-ASSETS> 7,939
<PP&E> 1,201,060
<DEPRECIATION> (22,319)
<TOTAL-ASSETS> 1,870,183
<CURRENT-LIABILITIES> 51,009
<BONDS> 839,592
0
0
<COMMON> 0
<OTHER-SE> 966,177
<TOTAL-LIABILITY-AND-EQUITY> 1,870,183
<SALES> 98,566
<TOTAL-REVENUES> 98,566
<CGS> 0
<TOTAL-COSTS> (29,183)
<OTHER-EXPENSES> (22,062)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (25,099)
<INCOME-PRETAX> 58,285
<INCOME-TAX> 0
<INCOME-CONTINUING> 53,619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,619
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.27
</TABLE>
<PAGE> 1
FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
________________
TO BE HELD ON MAY 14, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of First Industrial Realty Trust, Inc. (the "Company") will
be held on Thursday, May 14, 1998 at 9:00 a.m. at the Sears Tower Conference
Center, Lincoln Room, 233 South Wacker Drive, 33rd Floor, Chicago, Illinois
60606 for the following purposes:
1. To elect three Class I directors of the Company to serve until the 2001
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified;
2. To ratify the Board of Directors' selection of Coopers & Lybrand L.L.P.
as the Company's independent auditors for the fiscal year ending December 31,
1998; and
3. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.
The Board of Directors has fixed the close of business on March 13, 1998
as the record date for the Annual Meeting. Only stockholders of record of the
Company's common stock, $.01 par value per share, at the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting and
at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may
vote in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Chicago, Illinois Michael J. Havala
April 9, 1998 Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU
WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
1
<PAGE> 2
FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
________________
PROXY STATEMENT
________________
FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Industrial Realty Trust, Inc. (the
"Company") for use at the 1998 Annual Meeting of Stockholders of the Company to
be held on Thursday, May 14, 1998, and at any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to vote on the election of three Class I directors of the Company, to
ratify the Board of Directors' selection of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the current fiscal year and to act on any
other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April 9, 1998.
The Board of Directors has fixed the close of business on March 13, 1998 as
the record date for the Annual Meeting (the "Record Date"). Only stockholders
of record of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, there were
36,551,087 shares of Common Stock outstanding and entitled to vote at the
Annual Meeting. Holders of Common Stock outstanding as of the close of
business on the Record Date will be entitled to one vote for each share held by
them on each matter presented to the Stockholders at the Annual Meeting.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY CARD RECEIVED PRIOR
TO THE VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL
MEETING AS DIRECTED ON THE PROXY CARD. IF A PROPERLY EXECUTED PROXY CARD IS
SUBMITTED AND NO INSTRUCTIONS ARE GIVEN, THE PERSONS DESIGNATED AS PROXY
HOLDERS ON THE PROXY CARD WILL VOTE (I) FOR THE ELECTION OF THE THREE NOMINEES
FOR CLASS I DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, (II) FOR
THE RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF COOPERS & LYBRAND
L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR AND
(III) IN THEIR OWN DISCRETION WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
PROPERLY COME BEFORE THE STOCKHOLDERS AT THE ANNUAL MEETING OR AT ANY
ADJOURNMENTS OR POSTPONEMENTS
<PAGE> 3
THEREOF. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN
THE PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a majority of the votes cast
with a quorum present at the Annual Meeting is required for the election of
Class I directors and the ratification of the selection of the Company's
auditors. Abstentions and broker non-votes will not be counted as votes cast
and, accordingly, will have no effect on the majority vote required.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 1997 Annual Report, including financial statements for the
fiscal year ended December 31, 1997, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not
part of the proxy solicitation material.
PROPOSAL I
ELECTION OF A CLASS OF DIRECTORS
Pursuant to the Articles of Amendment and Restatement of the Company (the
"Articles"), the maximum number of members allowed to serve on the Company's
Board of Directors is twelve (12). Currently, the Board of Directors of the
Company consists of nine members and is divided into three classes, with the
directors in each class serving for a term of three years and until their
successors are duly elected and qualified. The term of one class expires at
each annual meeting of stockholders.
At the Annual Meeting, three directors will be elected to serve until the
2001 annual meeting of stockholders and until their successors are duly elected
and qualified. The Board of Directors has nominated Jay H. Shidler, John L.
Lesher, and J. Steven Wilson to serve as Class I directors (the "Nominees").
Each of the Nominees is currently serving as a Class I director of the Company
and has consented to be named as a nominee in this Proxy Statement. The Board
of Directors anticipates that each of the Nominees will serve as a director if
elected. However, if any person nominated by the Board of Directors is unable
to accept election, the proxies will vote for the election of such other person
or persons as the Board of Directors may recommend.
2
<PAGE> 4
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following biographical descriptions set forth certain information with
respect to the three Nominees for election as Class I directors at the Annual
Meeting, the continuing directors whose terms expire at the annual meetings of
stockholders in 1999 and 2000 and certain executive officers, based on
information furnished to the Company by such persons. The following
information is as of March 13, 1998, unless otherwise specified.
CLASS I NOMINEES FOR ELECTION AT 1998 ANNUAL MEETING - TERM TO EXPIRE IN 2001
JAY H. SHIDLER Director since 1993
Mr. Shidler, 51, has been Chairman of the Board of Directors since the
formation of the Company in August 1993. He is the founder and managing
partner of The Shidler Group. A nationally acknowledged expert in the
field of real estate investment and finance, Mr. Shidler has over 25 years
of experience in real estate investment and has acquired and managed
properties involving several billion dollars in aggregate value. Since
1970, Mr. Shidler has been directly involved in the acquisition and
management of over 1,000 properties in 40 states and Canada. Mr. Shidler
is the Chairman of the Board of Directors of Corporate Office Properties
Trust, Inc. Mr. Shidler is also a founder and Chairman of the Board of
Directors of CGA Group, Ltd., a holding company whose subsidiary is a
AAA-rated financial guarantor based in Bermuda. He serves on the boards of
directors of several private companies and is active as a trustee of
several charitable organizations, including The Shidler Family Foundation.
Mr. Shidler is a member of the Urban Land Institute and the National
Association of Real Estate Investment Trusts ("NAREIT").
JOHN L. LESHER Director since 1994
Mr. Lesher, 64, has been a director of the Company since June 1994. Mr.
Lesher was President of Resource Evaluation, Inc., a consulting firm
specializing in working capital management, from 1994 to July 1997, at
which time he became the Chairman. He is a director of REL Consultancy
Group, the parent of Resource Evaluation, Inc., and a director of The
Sound Shore Fund. From 1990 to 1993, he was a Managing Director of
Korn/Ferry International, an executive recruiting organization. From 1985
to 1989, he was Vice President of the New York financial services practice
of Cresap, McCormick & Paget, a management consulting organization;
President of Home Group Financial Services, a subsidiary of Home Insurance
Company; and President of Mars & Company, an international strategic
planning
3
<PAGE> 5
and consulting firm. Prior to 1985, he served for 24 years in various
capacities at Booz, Allen & Hamilton, including from 1976 to 1985 as its
President.
J. STEVEN WILSON Director since 1994
Mr. Wilson, 54, has been a director of the Company since June 1994. Since
1991, Mr. Wilson has been Chairman of the Board of Directors, President
and Chief Executive Officer and a director of Wickes Inc., which is one of
the largest lumber yard chains in the United States. Since 1985, Mr.
Wilson has been President, Chief Executive Officer and a director of
Riverside Group, Inc., an insurance holding company with operations in
real estate and mortgage banking. He is also a director of Atlantic
Group, Inc., a supplier of building materials, a director of Circle
Investors, Inc., and President and Chief Executive Officer of Wilson
Financial Corp., a real estate and investment firm.
CLASS II CONTINUING DIRECTORS - TERM TO EXPIRE IN 1999
MICHAEL G. DAMONE Director since 1994
Mr. Damone, 63, is Director of Strategic Planning for the Company and has
been a director of the Company since June 1994. Between 1973 and 1994,
Mr. Damone was Chief Executive Officer of Damone/Andrew, a full service
real estate organization, which developed several million square feet of
industrial, warehouse, distribution and research and development
buildings. Prior to co-founding Damone/Andrew in 1973, Mr. Damone was for
over six years the executive vice president of a privately-held, Michigan
based real estate development and construction company, where he was
responsible for the development of industrial business parks. His
professional affiliations include the Society of Industrial and Office
Realtors, the National Association of Realtors, the Michigan Association
of Realtors and the South Oakland County Board of Realtors.
KEVIN W. LYNCH Director since 1994
Mr. Lynch, 45, has been a director of the Company since June 1994. Mr.
Lynch is the co-founder and Principal of The Townsend Group ("Townsend"),
an institutional real estate consulting firm, which provides real estate
consulting for pension funds and institutional investors. In his capacity
as Principal, Mr. Lynch is responsible for strategic development and
implementation of client real estate portfolios. Mr. Lynch is also
responsible for new product development. Prior to founding Townsend, Mr.
Lynch was associated with Stonehenge Capital Corporation, where he was
involved in the acquisition of institutional real estate properties and
the structuring of institutional real estate transactions. Since 1996,
Mr. Lynch has served on the Board of Directors for Lexington Corporate
Properties. He is a member of the National Real Estate Advisory Board for
the Real Estate Center at New York University,
4
<PAGE> 6
the National Council of Real Estate Investment Fiduciaries, the Pension
Real Estate Association, the American Society for Real Estate Research,
the Urban Land Institute and NAREIT.
MICHAEL W. BRENNAN Director since 1996
Mr. Brennan, 41, has been a director since March 1996. He has been Chief
Operating Officer
of the Company since December 1995, prior to which time he was Senior Vice
President--Asset Management of the Company since April 1994. He was a
partner of The Shidler Group between 1988 and 1994 and the President of
the Brennan/Tomasz/Shidler Investment Corporation and was in charge of
asset management, leasing, project finance, accounting and treasury
functions for The Shidler Group's Chicago operations. Between 1986 and
1988, Mr. Brennan served as The Shidler Group's principal acquisition
executive in Chicago. Prior to joining The Shidler Group, Mr. Brennan was
an investment specialist with CB Commercial (formerly Coldwell Banker).
His professional affiliations include the Urban Land Institute, the
National Association of Industrial and Office Properties ("NAIOP"),
NAREIT, National Association of Manufacturers, the Council for Logistic
Management and the Chicago Union League Club Real Estate Group.
CLASS III CONTINUING DIRECTORS - TERM TO EXPIRE IN 2000
JOHN RAU Director since 1994
Mr. Rau, 49, has been a director of the Company since June 1994. Mr. Rau
is President and Chief Executive Officer of Chicago Title and Trust Co.
and Chicago Title Insurance Co., and President and Chief Executive Officer
of Ticor Title Insurance Co. and Security Union Title Insurance Co., both
companies being subsidiaries of Chicago Title and Trust Co. Mr. Rau is a
member of the combined Board of Directors of Chicago Title and Trust Co.
and Chicago Title Insurance Co., as well as Chairman of the Board of
Directors of Ticor Title Insurance Co. and Security Union Title Insurance
Co. He is also a Director of LaSalle National Bank, Borg-Warner
Automotive, Inc. and Nicor Inc., and is a member of the Board of Overseers
of the CARE Foundation. From July 1993 until November 1996, Mr. Rau was
Dean of the Indiana University School of Business. From 1991 to 1993, Mr.
Rau served as Chairman of the Illinois Economic Development Board and as
special advisor to Illinois Governor James Edgar. From 1990 to 1993, he
was Chairman of the Banking Research Center Board of Advisors and a
Visiting Scholar at Northwestern University's J.L. Kellogg Graduate School
of Management. During that time he also served as Special Consultant to
McKinsey & Company, a worldwide strategic consulting firm. From 1989 to
1991, Mr. Rau served as President and Chief Executive Officer of LaSalle
National Bank. From 1979 to 1989, he was associated with The Exchange
National Bank, serving as President from 1983 to 1989, at which time The
Exchange National Bank merged with LaSalle National Bank. Prior to 1979,
he was associated with
5
<PAGE> 7
First National Bank of Chicago. Mr. Rau also served as Chairman of the Board
of Trustees of the CARE Foundation.
ROBERT J. SLATER Director since 1994
Mr. Slater, 60, has been a director of the Company since June 1994. Since
1985, Mr. Slater has been President of Jackson Consulting, Inc., a private
consulting company specializing in advising basic industries. Mr. Slater
is presently a director of Southdown, Inc., a major cement and cement
product manufacturing company.
MICHAEL T. TOMASZ Director since 1994
Mr. Tomasz, 55, has been President, Chief Executive Officer and a director
of the Company since April 1994. He joined The Shidler Group in 1986,
where he was managing partner of the Chicago office and was involved in
the acquisition, financing, leasing, managing and disposition of several
hundred million dollars of commercial property. Prior to joining The
Shidler Group, Mr. Tomasz was a commercial real estate broker with CB
Commercial from 1974 to 1985, in which capacity he was involved in the
sale and leasing of several hundred million dollars of industrial
property. In 1979, Mr. Tomasz was named the "Commercial Salesperson of
the Year" by the Chicago Real Estate Board and, in 1996, he was named
"Industrial Property Executive of the Year" by Commercial Property News.
His professional affiliations include the Society of Industrial and Office
Realtors, the Urban Land Institute, the Association of Industrial Real
Estate Brokers and NAREIT.
EXECUTIVE OFFICERS AND OTHER SENIOR MANAGEMENT
MICHAEL J. HAVALA
Mr. Havala, 38, has been Chief Financial Officer, Treasurer and Secretary
of the Company since April 1994. He joined The Shidler Group in 1989, and
was Chief Financial Officer for The Shidler Group's midwest region with
responsibility for accounting, finance and treasury functions. With The
Shidler Group, Mr. Havala structured joint ventures, obtained and
refinanced project financing, developed and implemented management
information systems and coordinated all financial aspects of a several
million square foot portfolio located in various states throughout the
Midwest. Prior to joining The Shidler Group, Mr. Havala was a Senior Tax
Consultant with Arthur Andersen & Company, where he specialized in real
estate, banking and corporate finance. Mr. Havala is a certified public
accountant. His professional affiliations include NAREIT, NAIOP and the
Illinois CPA Society.
6
<PAGE> 8
GARY H. HEIGL
Mr. Heigl, 42, has been Senior Vice President--Capital Markets of the
Company since January 1996. Over the last 20 years, Mr. Heigl has
specialized in commercial real estate finance. During 1994 and 1995, Mr.
Heigl was Senior Vice President--Director of New Business Development for
ITT Real Estate Services, Inc. From 1991 through 1993, he operated his
own real estate consulting firm. From 1984 through 1990, Mr. Heigl
served in various project finance capacities at VMS Realty Partners
culminating as Senior Vice President--Finance and Dispositions. Prior to
1984, he served in lending officer positions for the commercial real
estate groups of ITT Financial and Aid Association for Lutherans. Mr.
Heigl's professional affiliations include the Urban Land Institute and
NAREIT.
JOHANNSON L. YAP
Mr. Yap, 35, has been the Chief Investment Officer of the Company since
February 1997. From April 1994 to February 1997, he was Senior Vice
President--Acquisitions of the Company. During this time, he oversaw
and implemented the Company's investment strategy and initiatives. In
addition to participating in over one billion dollars of investment
volume, Mr. Yap has extensive experience in entity acquisitions using the
UPREIT structure. Prior to joining the Company, Mr. Yap joined the
Shidler Group in 1988 as an acquisitions associate, and became Vice
President in 1991, with responsibility for acquisitions, property
management, leasing, project financing, sales and construction management
functions. Between 1988 and 1994, he participated in the acquisition,
underwriting and due diligence of several hundred million dollars of
commercial properties. His professional affiliations include the Urban
Land Institute, the Chicago Real Estate Council, NAREIT, NAIOP and the
Real Estate Investment Advisory Council.
ANTHONY MUSCATELLO
Mr. Muscatello, 49, has been the senior officer of the Company in charge
of development activities, as President of FI Development Services
Corporation, since September 1996, prior to which he had served as a
Senior Regional Director for Pennsylvania, Nashville and Atlanta since
June 1994. Over the last 25 years, he has been responsible for the
leasing, management and/or development of several million square feet of
office, industrial and residential real estate. From 1987 to 1994, he
served as Managing General Partner of the central Pennsylvania operations
of Rouse & Associates, where he was responsible for day-to-day operations,
including profit and loss, marketing, leasing, acquisition, financing,
construction and asset management functions. From 1982 to 1987, he served
in various capacities with Rouse & Associates. From 1969 to 1982, Mr.
Muscatello worked for several real estate development firms, where his
responsibilities included land acquisition, market analysis and
7
<PAGE> 9
marketing, sales, financing and construction of single family and
multi-family homes. He is an active member in NAIOP and the Industrial
Real Estate Brokers of Metropolitan New York.
JAN A. BURMAN
Mr. Burman, 46, has been a Senior Regional Director of the Company for
Long Island and northern New Jersey since January 1997. He oversees
acquisitions, developments, asset management and lease negotiations for a
several million square foot portfolio in his region. Mr. Burman has 19
years of experience in real estate executive management. Prior to joining
the Company, he was a partner and president of Lazarus Burman Associates,
a full service real estate company with in-house leasing, management,
construction and design capabilities that First Industrial acquired
through an UPREIT transaction in January 1997. Under Mr. Burman's
leadership, Lazarus Burman Associates tripled in size and dramatically
expanded the scope of its activities and operations. Before joining
Lazarus Burman Associates, Mr. Burman began his career as a certified
public accountant working in the tax and audit departments of Touche Ross
& Co. He is president of the Association for a Better Long Island and a
member of Syracuse University's School of Management Corporate Advisory
Council.
J. CRAIG COSGROVE
Mr. Cosgrove, 36, has been a Senior Regional Director of the Company for
Pennsylvania and Georgia since December 1997. Mr. Cosgrove joined the
Company in 1994 as a Regional Director, upon the Company's acquisition of
Rouse & Associates through an UPREIT transaction. From 1991 to 1994, Mr.
Cosgrove was an asset manager with Rouse & Associates, where he was
responsible for managing and leasing Rouse & Associates' industrial real
estate portfolio. Mr. Cosgrove's professional affiliations include the
Building Owners and Managers Association (BOMA) and NAIOP. He is also
chairperson for Project Mercy's Advisory Board.
DAVID F. DRAFT
Mr. Draft, 46, has been a Senior Regional Director of the Company for the
Michigan and Northern Ohio regions since March 1996. He oversees
acquisitions, developments, construction, asset management and lease
negotiations for the several million square foot regional portfolio. He
has 24 years experience in real estate brokerage, sales, leasing and asset
management. Between 1994 and March 1996, Mr. Draft was Co-Founder and
Principal of Draft & Gantos Properties, L.L.C., where he was responsible
for real estate management, construction and development. From 1990 to
1994, Mr. Draft was Director of Development and Operations for Robert
Grooters Development Company where he was responsible for land
acquisitions, development project planning, financing and construction of
industrial property. From 1977 to 1990, he was with First Real Estate,
Inc. serving in the capacity of chief
8
<PAGE> 10
operating officer. Mr. Draft is a licensed real estate broker and a
member of the National Association of Realtors and the Michigan
Association of Realtors.
TIMOTHY GALLAGHER
Mr. Gallagher, 47, has been a Senior Regional Director of the Company for
the Midwest region, which includes Chicago, St. Louis, Des Moines and
Milwaukee, since April 1997. He oversees acquisitions, sales,
construction, asset management and lease negotiations for a several
million square foot regional portfolio. Mr. Gallagher has 24 years of
corporate experience and has been involved in industrial real estate
leasing, buying, selling, development and tenant representation for the
last 18 years of his career. Prior to joining the Company, Mr. Gallagher
was Executive Vice President and a Principal and Director of Hiffman
Shaffer Associates, Inc., from 1994 to April 1997. From 1985 to 1994, he
was President of Darwin Realty and Development Corp. Mr. Gallagher is a
past member of the Board of Directors of the Association of Industrial
Real Estate Brokers and is an active member of the Society of Industrial
and Office Realtors.
DUANE H. LUND
Mr. Lund, 34, has been a Senior Regional Director of the Company since
April 1994 and is responsible for the Minneapolis, St. Paul, Denver,
Phoenix and Salt Lake City regions. In 1989, he joined The Shidler
Group's Minneapolis office, where he was involved in coordinating the
underwriting and due diligence for the acquisition of several hundred
million dollars of commercial property. In 1991 and 1992, Mr. Lund served
as Senior Vice President of Asset Management, where he oversaw the
management and leasing of a real estate portfolio of three million square
feet located in four states. Prior to joining The Shidler Group's
Minneapolis office, Mr. Lund was a tax consultant with Peat Marwick Main &
Company from 1986 to 1988. He is a certified public accountant. His
professional affiliations include NAREIT, NAIOP, the Minneapolis Area
Association of Realtors and the Urban Land Institute. He is also on the
Board of Directors of the Wisconsin Real Estate Alumni Association and the
KPMG Peat Marwick Alumni Association, and serves on advisory boards for
the Minnesota Real Estate Journal and Midwest Real Estate News.
PETER F. MURPHY
Mr. Murphy, 32, has been a Senior Regional Director of the Company for
Indiana and Ohio since March 1996. Between 1991 and March 1996, Mr.
Murphy was a Vice President of First Highland Management and Development
Corporation where he was responsible for the acquisition, development,
management and leasing activities for a portfolio of properties consisting
of several million square feet in Indiana and Ohio. Mr. Murphy is a
member of the Indianapolis Economic Development Commission.
9
<PAGE> 11
SCOTT P. SEALY, SR.
Mr. Sealy, 51, has been a Senior Regional Director of the Company for
Texas, Louisiana, Oklahoma, Mississippi and Florida since December 1997.
In 1968, Mr. Sealy joined The Sealy Companies where, serving in several
capacities, including Chairman of the Board and President from 1990 to
1997, he was responsible for The Sealy Companies' real estate portfolio
management, financial management and selling and leasing activities. Mr.
Sealy has been active with the Shreveport Chamber of Commerce, the Greater
Shreveport Economic Development Foundation and the Louisiana Realtor
Association and is a member of the Board of Directors of Industrial and
Office Realtors.
DONALD C. THOMPSON
Mr. Thompson, 54, has been a Senior Regional Director of the Company for
the Tampa Bay area, Orlando and Southwest Florida since December 1997. In
1980, Mr. Thompson founded Thompson-Rubin Associates (predecessor to
Thompson-Kirk Properties), where, serving as Managing General Partner, he
was responsible for real estate design, development, building, leasing,
management and acquisition in the Southeastern United States. Mr.
Thompson is a member of the Committee of 100 of the Greater Tampa Chamber
of Commerce and NAIOP.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company is currently managed by a nine member Board of Directors, a
majority of whom are independent of both The Shidler Group and the Company's
management. The current independent directors are Messrs. Lesher, Wilson,
Lynch, Rau and Slater. Pursuant to the terms of the Company's Articles, the
directors are divided into three classes. Class I directors hold office for a
term expiring at this Annual Meeting. Class II directors hold office for a
term expiring at the Annual Meeting of Stockholders to be held in 1999. Class
III directors hold office for a term expiring at the Annual Meeting of
Stockholders to be held in 2000. Each director will hold office for the term
to which he is elected and until his successor is duly elected and qualified.
At each Annual Meeting of Stockholders, the successors to the class of
directors whose terms expire at that meeting will be elected to hold office for
a term continuing until the annual meeting of stockholders held in the third
year following the year of their election and the election and qualification of
their successors.
The Board of Directors held seven meetings during the fiscal year of 1997.
Each of the directors attended at least 75% of the total number of meetings of
the Board of Directors and of the respective committees of the Board of
Directors of which he was a member.
The Board of Directors has appointed an Audit Committee, a Compensation
Committee, an Investment Committee and a Nominating Committee.
10
<PAGE> 12
Audit Committee. The Audit Committee, which consists of Messrs. Rau,
Lynch and Wilson, makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of the Company's internal accounting controls. The
Audit Committee met two times in 1997.
Compensation Committee. The Compensation Committee, which consists of
Messrs. Slater and Lesher, makes recommendations and exercises all powers of
the Board of Directors in connection with certain compensation matters,
including incentive compensation and benefit plans. The Compensation Committee
administers, and has authority to grant awards under, the First Industrial
Realty Trust, Inc. 1994 Stock Incentive Plan (the "1994 Stock Plan"), the First
Industrial Realty Trust, Inc. 1997 Stock Incentive Plan (the "1997 Stock Plan")
and the First Industrial Realty Trust, Inc. Deferred Income Plan (the "Deferred
Income Plan"). The Compensation Committee met six times in 1997.
Investment Committee. The Investment Committee, which consists of Messrs.
Shidler, Tomasz, Brennan and Damone, provides oversight and discipline to the
acquisition and new investment process. New investment opportunities are
described in written reports based on detailed research and analyses in a
standardized format applying appropriate underwriting criteria. The Investment
Committee meets with the Company's acquisition personnel, reviews each
submission thoroughly and approves acquisitions and development projects having
a total investment of less than $30 million. The Investment Committee makes a
formal recommendation to the Board of Directors for all acquisitions and
development projects with a total investment in excess of $30 million. The
Investment Committee met 18 times during 1997.
Nominating Committee. The Nominating Committee proposes individuals for
election as directors at the Annual Meeting of Stockholders of the Company and
in connection with any vacancy that may develop on the Board of Directors. The
Board of Directors, in turn, as a whole by a majority vote either approves all
of the nominations so proposed by the Nominating Committee or rejects all of
the nominations in whole, but not in part. In the event that the Board of
Directors as a whole by a majority vote rejects the proposed nominations, the
Nominating Committee develops a new proposal. The Nominating Committee will
consider nominees recommended by stockholders of the Company. Such
recommendations shall be submitted in writing to the Secretary of the Company.
The membership of the Nominating Committee consists of a total of four
directors which includes (i) the Chairman of the Board of the Company, (ii) the
President of the Company, and (iii) two other directors selected by the entire
Board of Directors of the Company from among those directors who are not
officers of the Company and whose term is not expiring in the calendar year
that the Nominating Committee is making its proposal. The Nominating Committee
that made the proposals approved by the Board of Directors and set forth in
this Proxy Statement consisted of Messrs. Shidler, Tomasz, Rau
11
<PAGE> 13
and Slater. The Nominating Committee met once in March 1998 to determine its
nominations for this Proxy Statement.
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as a director. Non-employee directors of the
Company receive an annual director's fee equivalent in value to $20,000. At
least 50% of the value of such fee must be taken in the form of Restricted
Stock. Each non-employee director also receives $1,000 for each regular
quarterly meeting of the Board of Directors attended, $1,000 for each special
meeting of the Board attended, $1,000 for each substantive special telephonic
Board meeting participated in and $1,000 for each committee meeting attended.
Following the Annual Meeting of Stockholders held in 1997, each of the
Company's non-employee directors received options under the 1997 Stock Plan to
purchase 10,000 shares at the market price of the shares on the date of grant.
Such options granted to non-employee directors vest one year after the date of
grant. Following this Annual Meeting the Company intends to grant 10,000
options under the 1997 Stock Plan to each of the Company's non-employee
directors. Such options will be granted at the market price of the shares on
the date of grant and will vest one year after the date of grant.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation, including cash
compensation and option awards, paid by the Company with respect to the fiscal
years ended December 31, 1995, 1996 and 1997 to the Company's Chief Executive
Officer and the five other most highly compensated executive officers of the
Company (the "Named Executive Officers").
12
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Shares All Other
Name and Annual Restricted Stock Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) Awards($)(2) Options(#) ($)(5)
- - ------------------ ---- --------- ----------- -------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Tomasz 1997 $300,000 $450,000 $222,656 300,000(4) $128,608
President and 1996 250,000 375,000 249,037 90,000(3) 51,136
Chief Executive Officer 1995 200,000 290,000 -- 70,000(3) 11,924
Michael W. Brennan 1997 $225,000 $337,500 $178,125 250,000(4) $59,112
Chief Operating Officer 1996 190,000 285,000 200,366 65,000(3) 19,148
1995 145,000 155,000 -- 30,000(3) 1,717
Michael J. Havala 1997 $195,000 $292,500 $142,500 180,000(4) $52,511
Chief Financial 1996 175,000 236,241 154,135 44,000(3) 17,529
Officer, Treasurer and 1995 145,000 109,000 -- 30,000(3) 2,032
Secretary
Gary H. Heigl 1997 $185,000 $277,500 $142,500 180,000(4) $38,157
Senior Vice President, 1996 150,000 184,375 129,115 62,000(3) 10,030
Capital Markets
Johannson L. Yap 1997 $150,000 $300,000 $199,500 225,000(4) $38,157
Chief Investment Officer 1996 140,000 238,510 144,139 42,500(3) 10,432
1995 100,000 100,000 -- 20,000(3) 263
Anthony Muscatello 1997 $165,000 $300,000 $124,688 200,000(4) $37,489
President of FI 1996 125,000 209,250 89,250 30,000(3) 14,688
Development Services 1995 100,000 125,000 -- 20,000(3) 3,687
Corporation
</TABLE>
13
<PAGE> 15
- - ---------------
(1) Amounts for 1995 represent bonuses awarded in February 1996 based on
performance for the year ended December 31, 1995. Amounts for 1996
represent bonuses awarded in February 1997 based on performance for the
year ended December 31, 1996 and include bonus amounts awarded in 1996 in
conjunction with the Company's profitability incentive plan. Amounts for
1997 represent bonuses awarded in February 1998 based on performance for
the year ended December 31, 1997.
(2) Amounts for 1996 represent restricted Common Stock awarded (but not
issued until September 1997) in February 1997 as part of the annual bonus
with respect to 1996 performance. Amounts for 1997 represent restricted
Common Stock awarded in February 1998 as part of the annual bonus with
respect to 1997 performance. The dollar amount shown is approximately
equal to the product of the number of shares of restricted Common Stock
granted multiplied by the closing price of the Common Stock as reported by
the New York Stock Exchange on the date of grant ($29.75 on February 14,
1997 for 1996 amounts; $35.625 on February 18, 1998 for 1997 amounts).
This valuation does not take into account any diminution in value which
results from the restrictions applicable to such Common Stock. From and
after the date of issuance, holders of the restricted Common Stock will be
entitled to vote such Common Stock and receive dividends at the same rate
applicable to unrestricted shares of Common Stock; however, with respect
to the restricted Common Stock awarded from time to time in 1997, but
issued in September and October 1997, the Named Executive Officers earned
amounts equal to the dividends that would have been payable if such
restricted Common Stock had been issued when dividends thereon were first
payable (such amounts equalled as follows: Mr. Tomasz - $8,455, Mr.
Brennan - $6,802, Mr. Havala - $5,232, Mr. Heigl - $8,929, Mr. Yap -
$4,893 and Mr. Muscatello - $3,030). The total number of shares, and the
value, of restricted Common Stock awarded to each Named Executive Officer
as of December 31, 1997 is as follows: Mr. Tomasz - 8,371 shares
($302,402), Mr. Brennan - 6,735 shares ($243,302), Mr. Havala - 5,181
shares ($187,164), Mr. Heigl - 8,840 shares ($319,389), Mr. Yap - 4,845
shares ($175,026) and Mr. Muscatello - 3,000 shares ($108,390).
(3) Amounts for 1995 represent options granted on July 17, 1995 under the
1994 Stock Plan at an exercise price equal to $20.25 per share. These
options vested in two equal installments on the six-month and first year
anniversary of the date of grant. Amounts for 1996 represent (a) an
aggregate of 98,500 options granted on July 11, 1996 under the 1994 Stock
Plan at an exercise price equal to $22.75 per share, (b) an aggregate of
215,000 options granted to the Named Executive Officers on May 13, 1997
under the 1994 and 1997 Stock Plans at an exercise price equal to $30.38
per share and (c) 20,000 options granted to Mr. Heigl on July 10, 1997
under the 1997 Stock Plan at an exercise price equal to $28.50 per share.
These options vest in two equal installments on the six-month and first
year anniversary of the date of grant.
(4) Amounts for 1997 represent options granted under the 1997 Stock Plan on
January 2, 1998 at an exercise price equal to $35.8125 per share and which
vest primarily in accordance with certain performance measures
established by the Compensation Committee.
(5) Includes premiums paid by the Company on term life insurance for the
benefit of the Named Executive Officers. Amounts reported for 1996 also
include benefits accrued on units awarded in 1996 to the Named Executive
Officers under the Deferred Income Plan. Generally, amounts accrued under
the Deferred Income Plan vest in equal quarterly installments over three
years and are paid out (in cash or Common Stock at the discretion of the
Compensation Committee) in three annual installments, commencing on the
January 31st after the date of grant. Amounts accrued under the Deferred
Income Plan to each Named Executive Officer in 1996 were used to acquire
Common Stock having an aggregate value to each such officer as follows:
Mr. Tomasz - $34,971, Mr. Brennan - $16,173, Mr. Havala - $14,974, Mr.
Heigl - $10,030, Mr. Yap - $9,861 and Mr. Muscatello - $10,646. Amounts
accrued under the Deferred Income Plan to each Named Executive Officer in
1997 were used to acquire Common Stock having an aggregate value to each
such officer as follows: Mr. Tomasz - $112,443, Mr. Brennan - $56,137,
Mr. Havala - $49,956, Mr. Heigl - $37,424, Mr. Yap - $37,424 and Mr.
Muscatello - $33,303.
14
<PAGE> 16
OPTION GRANTS AND EXERCISES
Option Grants. The following table sets forth the options granted in
the fiscal year ended December 31, 1997 to the Named Executive Officers.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
Percent of
Number of Total Options
Options Granted to Exercise or Total Present
Granted Employees in Base Price Expiration Value as of
Name (#)(1) 1997 (%)(2) ($/sh)(3) Date(s) Grant Date(4)
- - ---- ---------- ------------ ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Michael T. Tomasz 60,000 12.5 $30.38 5/13/07 $163,800
Michael W. Brennan 45,000 9.4 30.38 5/13/07 122,850
Michael J. Havala 30,000 6.2 30.38 5/13/07 81,900
Gary H. Heigl 50,000 10.4 (5) (5) (5)
Johannson L. Yap 30,000 6.2 30.38 5/13/07 81,900
Anthony Muscatello 20,000 4.2 30.38 5/13/07 54,600
</TABLE>
- - ---------------
(1) Represents an aggregate of 215,000 options granted on May 13, 1997 to the
Named Executive Officers and an additional 20,000 options granted to Mr.
Heigl on July 10, 1997. Of such options, 90,000 were granted under the
1994 Stock Plan and the balance were granted under the 1997 Stock Plan.
All of such options vest in two equal installments on the six-month and
first year anniversary of the date of grant.
(2) Percentages do not take into account 60,000 options in the aggregate
granted to non-employee Directors of the Company.
(3) The $30.38 exercise price reported represents the closing price per share
as reported on the New York Stock Exchange on May 13, 1997.
(4) Based on the Black-Scholes option pricing model adapted for use in
valuing stock options. The actual value, if any, that the named officer
may receive will depend on the excess of the stock price at the time of
exercise over the exercise or base price on the date the option is
exercised. There is no assurance that the value realized by the named
officer will be at or near the value estimated by the Black-Scholes model.
The estimated values under the model are based on certain assumptions,
such as interest rates, stock price volatility and future dividend yields.
(5) Mr. Heigl received a grant of 30,000 options on May 13, 1997 which expire
on May 13, 2007, have an exercise price of $30.38 (see footnote 3 above)
and had a total present value as of the grant date of $81,900. Mr. Heigl
received a second grant of 20,000 options on July 10, 1997 which expire on
July 10, 2007, have an exercise price of $28.50 (representing the closing
price per share as reported on the New York Stock Exchange on July 10,
1997) and had a total present value as of the grant date of $48,200.
15
<PAGE> 17
Option Exercises and Year-End Holdings. No options were exercised in 1997
by the Named Executive Officers. During such period an aggregate of 142,000
vested options were converted into restricted Common Stock by certain of the
Named Executive Officers. The following table sets forth the value of options
held at the end of 1997 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options at
Shares at Fiscal Year-End (#) December 31, 1997(2)
Acquired on Value ------------------------------ ----------------------------
Name Exercise(#)(1) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - ---- -------------- ------------ ------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Tomasz 0 0 212,000 30,000 $2,607,410 $172,500
Michael W. Brennan 0 0 97,500 22,500 1,140,375 129,375
Michael J. Havala 0 0 102,000 15,000 1,244,310 86,250
Gary H. Heigl 0 0 47,000 15,000 399,410 86,250
Johannson L. Yap 0 0 67,500 15,000 791,200 86,250
Anthony Muscatello 0 0 70,000 10,000 887,800 57,500
</TABLE>
(1) No options were exercised in 1997 by the Named Executive Officers.
During such period, certain of the Named Executive Officers converted an
aggregate of 142,000 vested options into restricted Common Stock. The
number of shares of restricted Common Stock received by each Named
Executive Officer in 1997 as a result of such conversion were as follows:
Mr. Tomasz - 17,220, Mr. Brennan - 15,212, Mr. Havala - 10,786 and Mr.
Yap - 4,451.
(2) Based on the closing price per share of Common Stock as reported on the New
York Stock Exchange on December 31, 1997 ($36.13).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and "greater than ten-percent" stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
so filed.
Based solely on review of the copies of such forms furnished to the
Company for 1997, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten-percent" stockholders were
complied with, except that (i) Michael Damone filed one Form 4 late with
respect to a transaction in April 1997, (ii) Michael Tomasz filed one Form 4
late with respect to a transaction in July 1997 and (iii) each of Steven
Wilson, John Lesher and Peter Murphy filed one Form 4 late with respect to a
transaction in September 1997. In April 1998, each of Michael Brennan and
Johannson Yap filed one Form 4 late with respect to transactions in October
1994 and July 1995.
16
<PAGE> 18
EMPLOYMENT AGREEMENTS
In December 1996, the Company entered into a written employment agreement
with Michael T. Tomasz, its Chief Executive Officer. The agreement provides
for an initial annual salary of $250,000, subject to annual review by the
Compensation Committee, and an annual bonus at the discretion of the
Compensation Committee. The agreement provides for an initial term of three
years and subsequent three-year periods unless otherwise terminated; provided,
however, that the agreement will expire on Mr. Tomasz's 70th birthday. Upon
certain changes in control of the Company or a termination without cause, Mr.
Tomasz is entitled to severance in an amount equal to three times his annual
salary, plus three times his average bonus over the prior three years. In
addition, upon termination, Mr. Tomasz's options and awards under the 1994
Stock Plan, the 1997 Stock Plan and the Deferred Income Plan will fully vest
and his other benefits will continue for a period of three years. Severance
amounts payable to Mr. Tomasz upon termination will be reduced if such amounts
become payable after Mr. Tomasz's 67th birthday. Mr. Tomasz has agreed to a
three-year covenant not to compete after termination.
In February 1997, the Company entered into a written employment agreement
with Michael W. Brennan, its Chief Operating Officer. The agreement provides
for an initial annual salary of $195,000, subject to annual review by the
Compensation Committee, and an annual bonus at the discretion of the
Compensation Committee. The agreement provides for an initial term of two
years and subsequent two year periods unless otherwise terminated; provided,
however, that the agreement will expire on Mr. Brennan's 70th birthday. Upon
certain changes in control of the Company or a termination without cause, Mr.
Brennan is entitled to severance in an amount equal to two times his annual
salary, plus two times his average bonus over the prior two years. In
addition, upon termination, Mr. Brennan's options and awards under the 1994
Stock Plan, the 1997 Stock Plan and Deferred Income Plan will fully vest and
his other benefits will continue for a period of two years. Severance amounts
payable to Mr. Brennan upon termination will be reduced if such amounts become
payable after Mr. Brennan's 67th birthday. Mr. Brennan has agreed to a
two-year covenant not to compete after termination.
STOCK PERFORMANCE GRAPH
The incorporation by reference of this Proxy Statement into any document
filed with the SEC by the Company shall not be deemed to include the following
performance graph unless such graph is specifically stated to be incorporated
by reference into such document.
The following graph provides a comparison of the cumulative total
stockholder return among the Company, the Standard & Poor's 500 Index ("S&P
500") and the NAREIT Equity REIT Total Return Index (the "NAREIT Index"), an
industry index of 172 tax-qualified equity REITs (including the Company). The
comparison is for the period from May 31, 1994 (for the S&P 500 and the NAREIT
Index) and June 23, 1994 (for the Company, the date of the Initial Public
Offering) to December 31,
17
<PAGE> 19
1997 and assumes the reinvestment of any dividends. The initial price of the
Company's Common Stock shown in the graph below is based upon the price to the
public of $23.50 per share in the Initial Public Offering on June 23, 1994.
The Common Stock of the Company was first listed for quotation on the New York
Stock Exchange on June 24, 1994. The closing price quoted on the New York
Stock Exchange at the close of business on June 24, 1994 was $23-5/8 per share.
The NAREIT Index includes REITs with 75% or more of their gross invested book
value of assets invested directly or indirectly in the equity ownership of real
estate. Upon written request, the Company will provide stockholders with a
list of the REITs included in the NAREIT Index. The historical information set
forth below is not necessarily indicative of future performance. The following
graph was prepared at the Company's request by Research Holdings Limited, San
Francisco, California.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPHIC]
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------------
6/24/94 12/31/94 12/31/95 12/31/96 12/31/97
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Company $100 $87 $110 $161 $204
S&P 500 $100 $102 $133 $173 $231
NAREIT Index $100 $96 $106 $150 $180
</TABLE>
18
<PAGE> 20
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of two of
the Company's independent outside directors, Messrs. Slater and Lesher. The
Compensation Committee is responsible for administering the policies which
govern the Company's executive compensation.
Objectives of Executive Compensation. The Compensation Committee has
designed its compensation policy to provide the proper incentives to management
to maximize the Company's performance in order to serve the best interests of
its stockholders. As a result, the Compensation Committee intends to focus on
incentive awards, such as stock option grants, restricted stock awards and
deferred income awards (as described below), as opposed to large salary
increases, to emphasize performance related incentive compensation. The
Compensation Committee currently grants stock option and other incentive awards
under the 1997 Stock Plan and the Deferred Income Plan .
The bonuses and incentive awards awarded for 1997 performance to the Chief
Executive Officer and the other executive officers were based on the Company's
Funds from Operations ("FFO"), an industry recognized measure of a REIT's
performance, and officer specific performance objectives, such as individual
performance related to same property net operating income growth and investment
goals.
The Company maintains the philosophy that compensation of its executive
officers and others should be directly and materially linked to operating
performance. To achieve this linkage, executive compensation is weighted
towards bonuses paid and incentive awards granted on the basis of the Company's
performance. Thus, while annual salary increases are based on personal
performance of the executive officers and general economic conditions, annual
bonuses and incentive award grants are directly tied to the Company's actual
economic performance during the applicable fiscal year.
Stock options, together with other incentive awards (e.g., restricted
stock), are granted to the executives under the provisions of the 1997 Stock
Plan. In addition, incentive awards are granted under the Deferred Income
Plan. Such incentive awards are granted to provide incentive to improve
stockholder value over the long-term and to encourage and facilitate executive
stock ownership. Stock options are granted at the market price of the Common
Stock at the date of grant to ensure that executives can only be rewarded for
appreciation in the price of the Common Stock when the Company's stockholders
are similarly benefitted. The Compensation Committee determines those
executives who will receive incentive award grants and the size of such awards.
Compensation Committee Procedures. The Compensation Committee will
annually evaluate the personal performance of the Chief Executive Officer and
the other executive officers of the
19
<PAGE> 21
Company, as well as the Company's performance. In setting the salary levels
for compensation, the Compensation Committee compares the total annual
compensation and stock ownership of the Chief Executive Officer and the other
executive officers to the executive compensation of executive officers of other
publicly-held REITs. Personal performance can include such qualitative factors
as organizational and management development exhibited from year to year.
Generally the Compensation Committee will meet prior to the beginning of each
fiscal year to establish base salary and performance targets for the upcoming
year and will meet again at the beginning of each year to review performance
and approve incentive awards for the preceding fiscal year.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility on the Company's tax return of compensation over $1 million
to any of the named executive officers of the Company unless, in general, the
compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been approved by the Company's stockholders. The
Compensation Committee's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance.
The Compensation Committee believes that it has designed and implemented a
compensation structure which provides appropriate awards and incentives for the
Company's executive officers as they work to sustain and improve the Company's
overall performance.
Submitted by the Compensation Committee:
Robert J. Slater John L. Lesher
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Slater and Lesher. Neither
of them has served as an officer of the Company or has any other business
relationship or affiliation with the Company, except his service as a director.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On November 19,1997, the Company exercised an option that was granted on
March 19, 1996 to purchase a 100,000 square foot bulk warehouse property
located in Indianapolis, Indiana for approximately $3.3 million. The property
was purchased from Shadeland III Associates Limited Partnership, of which, one
of the Company's Senior Regional Directors was a limited partner. Management
of the Company believes the terms of this acquisition were as favorable or more
favorable to the Company as could be obtained in an arm's length transaction.
20
<PAGE> 22
The Company often obtains title insurance coverage for its properties from
Chicago Title Insurance Company ("CTIC"). Mr. Rau, a Director of the Company,
became the President, Chief Executive Officer and a Director of CTIC in 1996.
Management of the Company believes the terms of the title insurance provided by
CTIC to the Company and the premiums therefor are as favorable to the Company
as could be obtained from other title insurance companies.
In 1997, the Company engaged in two transactions for which CB Commercial
acted as a broker. The brother of Michael W. Brennan, the Chief Operating
Officer and a Director of the Company, is an employee of CB Commercial and
received a portion of each brokerage commission paid by the Company to CB
Commercial in connection with such transactions. In one transaction, the
Company sold a property for total consideration of approximately $12.2 million,
of which Mr. Brennan's brother received $13,300. In the other transaction, the
Company purchased a portfolio of properties for total consideration of
approximately $47.2 million, of which Mr. Brennan's brother received $46,596.
On April 22, 1993, the Florida Department of Insurance filed a court
petition seeking the appointment of a receiver for the liquidation of
Dependable Insurance Company, Inc. ("Dependable"), a subsidiary of Riverside
Group, Inc., of which Mr. Wilson is the President, Chief Executive Officer and
a director. The petition was withdrawn on January 11, 1994, pursuant to a
settlement between the Florida Department of Insurance and Dependable. On
August 23, 1995, 109 Industrial Company LLC commenced proceedings under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the Eastern District of New York. Mr. Jan Burman, a Senior Regional
Director, was the managing member of such entity, which owned three parcels of
improved real estate. Such entity was successfully reorganized through such
proceedings in December 1996.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table presents information concerning the ownership of
Common Stock of the Company and limited partnership units ("Units") of First
Industrial, L.P. (which generally are exchangeable on a one-for-one basis,
subject to adjustments, for Common Stock) by all directors, the Named Executive
Officers, the directors and executive officers as a group and persons or
entities known to the Company to be beneficial owners of more than 5% of the
Company's Common Stock on March 13, 1998, unless otherwise indicated, based on
representations of officers and directors of the Company and filings received
by the Company on Schedules 13D and 13G or Form 13F under the Exchange Act.
21
<PAGE> 23
<TABLE>
<CAPTION>
Common Stock/Units
Beneficially
Owned
-------------------
Percent
Number of Class
------ --------
Names and Addresses of
5% Stockholders
---------------
<S> <C> <C>
Cohen & Steers Capital
Management, Inc.(1)
757 Third Avenue
New York, New York 10017... 3,756,600 10.3%
FMR Corp.(2)
82 Devonshire Street
Boston, Massachusetts 02109 2,454,500 6.7%
Glickenhaus & Co.(3)
Six East 43rd Street
New York, New York 10017... 3,694,500 10.1%
Names and Addresses of
Directors and Officers*
- - -----------------------
Jay H. Shidler(4)........... 1,288,443 3.5%
Michael T. Tomasz(5)........ 441,514 1.2%
John L. Lesher(6)........... 32,728 **
Kevin W. Lynch(7)........... 25,746 **
Michael G. Damone(8)........ 217,905 **
John Rau(9)................. 34,728 **
Robert J. Slater(10)........ 18,495 **
J. Steven Wilson(11)........ 32,956 **
Michael W. Brennan(12)...... 217,454 **
Michael J. Havala(13)....... 155,693 **
</TABLE>
22
<PAGE> 24
<TABLE>
<CAPTION>
Common Stock/Units
Beneficially
Owned
-------------------
Percent
Number of Class
------ --------
<S> <C> <C>
Gary H. Heigl(14)...................... 77,217 **
Johannson L. Yap(15)................... 115,037 **
Anthony Muscatello(16)................. 165,916 **
All directors, Named Executive
Officers and other executive officers
as a group (21 persons)(17)........... 3,985,616 10.2%
</TABLE>
- - -----------------
* The business address for each of the Directors and executive officers of
the Company is 311 South Wacker Drive, Suite 4000, Chicago, Illinois
60606.
** Less than 1%
(1) Pursuant to a Schedule 13G dated November 5, 1997 filed by Cohen & Steers
Capital Management, Inc. ("CSCM"), CSCM has the sole power to dispose of
all 3,756,600 shares reported, but has the sole power to vote only
3,316,700 of such shares.
(2) Pursuant to a Schedule 13G dated February 10, 1998 filed by FMR Corp.,
FMR Corp. has the sole power to dispose of all 2,454,500 shares reported,
but has the sole power to vote only 888,600 of such shares.
(3) Includes 750,700 shares for which Glickenhaus & Co., an investment
advisor, has no voting power, as reported in a Schedule 13G dated January
26, 1998.
(4) Includes 910,660 shares held by Shidler Equities L.P., a Hawaii limited
partnership owned by Mr. Shidler and Wallette Shidler, 66,984 Units held
by Mr. Shidler directly, 254,541 Units held by Shidler Equities, L.P.,
1,223 Units held by Mr. and Mrs. Shidler jointly, and 22,079 Units held by
Holman/Shidler Investment Corporation. Also includes 15,000 shares which
may be acquired by Mr. Shidler upon the exercise of vested options
granted under the 1994 Stock Plan at an exercise price of $23,50 per
share, an additional 7,500 shares which may be acquired upon the exercise
of vested options granted under the 1994 Stock Plan at an exercise price
of $18.25 per share, and 10,000 shares which may be acquired upon the
exercise of options (which will vest in May 1998) granted under the 1997
Stock Plan at an exercise price of $30.50 per share. Also includes 456
shares of restricted Common Stock issued under the 1997 Stock Plan.
(5) Includes 4,000 shares held by a trust for the benefit of Mr. Tomasz's
spouse and 6,200 shares held by a trust for the benefit of Mr. Tomasz's
daughters. A relative of Mr. Tomasz is the sole trustee of each of such
trusts. Includes 182,000 shares which may be acquired by Mr. Tomasz upon
the exercise of vested options granted under the 1994 Stock Plan,
consisting of 117,000 shares at an exercise price of $23.50 per share,
35,000 shares at an exercise price of $20.25 per share and 30,000 shares
at an exercise price of $22.75 per share. Also includes 60,000 shares
which may be acquired by Mr. Tomasz upon the exercise of vested options
granted under the 1997 Stock Plan at an exercise price of $30.38. Also
includes 25,847 Units. Also includes 25,591 shares of restricted Common
Stock issued under the 1997 Stock Plan.
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<PAGE> 25
(6) Includes 15,000 shares which may be acquired by Mr. Lesher upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $23.50 per share, an additional 7,500 shares which may
be acquired upon the exercise of vested options granted under the 1994
Stock Plan at an exercise price of $18.25 per share, and 10,000 shares
which may be acquired upon the exercise of options (which will vest in May
1998) granted under the 1997 Stock Plan at an exercise price of $30.50.
Also includes 228 shares of restricted Common Stock under the 1997 Stock
Plan.
(7) Includes 15,000 shares which may be acquired by Mr. Lynch upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $23.50 per share and 10,000 shares which may be acquired
upon the exercise of options (which will vest in May 1998) granted under
the 1997 Stock Plan at an exercise price of $30.50 per share. Also
includes 228 shares of restricted Common Stock issued under the 1997 Stock
Plan.
(8) Includes 3,000 shares held by a trust for the benefit of Mr. Damone's
wife. Also includes 57,500 shares which may be acquired by Mr. Damone
upon the exercise of vested options granted under the 1994 Stock Plan,
consisting of 30,000 shares at an exercise price of $23.50 per share,
20,000 shares at an exercise price of $20.25 per share and 7,500 shares at
an exercise price of $22.75 per share. Also includes 10,000 shares which
may be acquired upon the exercise of vested options granted under the 1997
Stock Plan at an exercise price of $30.38. Also includes 144,296 Units.
Also includes 1,000 shares of restricted Common Stock issued under the
1997 Stock Plan.
(9) Includes 15,000 shares which may be acquired by Mr. Rau upon the exercise
of vested options granted under the 1994 Stock Plan at an exercise price
of $23.50 per share, an additional 7,500 shares which may be acquired upon
the exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $18.25 per share and 10,000 shares which may be acquired
upon the exercise of options (which will vest in May 1998) granted under
the 1997 Stock Plan at an exercise price of $30.50 per share. Also
includes 228 shares of restricted Common Stock issued under the 1997 Stock
Plan.
(10) Includes 10,000 shares which may be acquired by Mr. Slater upon the
exercise of options (which will vest in May 1998) granted under the 1997
Stock Plan at an exercise price of $30.50 per share. Also includes 7,495
shares of restricted Common Stock issued under the 1997 Stock Plan.
(11) Includes 15,000 shares which may be acquired by Mr. Wilson upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $23.50 per share, an additional 7,500 shares which may
be acquired upon the exercise of vested options granted under the 1994
Stock Plan at an exercise price of $18.25 per share, and 10,000 shares
which may be acquired upon the exercise of options (which will vest in May
1998) granted under the 1997 Stock Plan at an exercise price of $30.50 per
share. Also includes 456 shares of restricted Common Stock issued under
the 1997 Stock Plan.
(12) Includes 65,000 shares which may be acquired by Mr. Brennan upon the
exercise of options granted under the 1994 Stock Plan, consisting of
30,000 shares at an exercise price of $23.50 per share, 15,000 shares at
an exercise price of $20.25 per share and 20,000 shares at an exercise
price of $22.75 per share. Also includes 45,000 shares which may be
acquired by Mr. Brennan upon the exercise of options granted under the
1997 Stock Plan at an exercise price of $30.38. Also includes 3,806 Units
and 25,712 shares of restricted Common Stock issued under the 1997 Stock
Plan. Does not include 380 shares of Preferred Stock.
(13) Includes 834 shares held in custodial accounts for Mr. Havala's children.
Also includes 87,000 shares which may be acquired by Mr. Havala upon the
exercise of options granted under the 1994 Stock Plan, consisting of
58,000 shares at an exercise price of $23.50 per share, 15,000 shares at
an exercise price of $20.25 per share
24
<PAGE> 26
and 14,000 shares of which at an exercise price of $22.75 per share. Also
includes 30,000 shares which may be acquired by Mr. Havala upon the
exercise of options granted under the 1997 Stock Plan at an exercise price
of $30.38. Also includes 15,967 shares of restricted Common Stock issued
under the 1997 Stock Plan. Does not include 500 shares of Preferred Stock.
(14) Includes 12,000 shares which may be acquired by Mr. Heigl upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $22.75 per share. Also includes 50,000 shares which may
be acquired upon the exercise of vested options granted under the 1997
Stock Plan, consisting of 30,000 shares at an exercise price of $30.38 per
share and 20,000 at an exercise price of $28.50 per share. Also includes
8,840 shares of restricted Common Stock issued under the 1997 Stock Plan.
(15) Includes 1,390 shares held in a custodial account for the benefit of Mr.
Yap's children. Also includes 52,500 shares which may be acquired by Mr.
Yap upon the exercise of options granted under the 1994 Stock Plan,
consisting of 30,000 shares at an exercise price of $23.50 per share,
10,000 shares at an exercise price of $20.25 per share and 12,500 shares
at an exercise price of $22.75 per share. Also includes 30,000 shares
which may be acquired by Mr. Yap upon the exercise of options granted
under the 1997 Stock Plan at an exercise price of $30.38. Also includes
1,680 Units. Also includes 9,296 shares of restricted Common Stock to be
issued under the 1997 Stock Plan.
(16) Includes 60,000 shares which may be acquired by Mr. Muscatello upon the
exercise of options granted under the 1994 Stock Plan, consisting of
30,000 shares at an exercise price of $23.50 per share, 20,000 shares at
an exercise price of $20.25 per share and 10,000 shares at an exercise
price of $22.75 per share. Includes 20,000 shares which may be required
by Mr. Muscatello upon the exercise of options granted under the 1997
Stock Plan at an exercise price of $30.38. Also includes 81,654 Units.
Also includes 3,000 shares of restricted Common Stock issued under the
1997 Stock Plan.
(17) Includes 692,000 shares in the aggregate which may be acquired by
directors or executive officers upon the exercise of options granted under
the 1994 Stock Plan, consisting of 400,000 shares at an exercise price of
$23.50 per share, 30,000 shares at an exercise price of $18.25 per share,
135,000 shares at an exercise price of $20.25 per share and 127,000 shares
at an exercise price of $22.75 per share. Includes 395,000 shares in the
aggregate which may be acquired by directors and executive officers upon
the exercise of options granted under the 1997 Stock Plan, consisting of
315,000 shares at an exercise price of $30.38, 60,000 shares at an
exercise price of $30.50 and 20,000 shares at an exercise price of $28.50.
Also includes 1,567,944 Units. Also includes 111,248 shares of
restricted Common Stock issued under the 1997 Stock Plan. Does not
include 880 shares of Preferred Stock in the aggregate owned by certain
executive officers and directors of the Company.
PROPOSAL II
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Coopers & Lybrand L.L.P. has served as the
Company's independent auditors since the Company's formation in August 1993.
On March 5, 1998, the Board of Directors voted to appoint Coopers & Lybrand
L.L.P. as the Company's independent auditors for the current fiscal year. A
representative of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting, will
25
<PAGE> 27
be given the opportunity to make a statement if he or she so desires and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR FISCAL 1998.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares
in their names or in the names of their nominees, which are beneficially owned
by others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual Meeting
of Stockholders must be received by the Secretary of the Company no later than
December 11, 1998, in order to be considered for inclusion in the proxy
statement and on the proxy card that will be solicited by the Board of
Directors in connection with the 1999 Annual Meeting of Stockholders.
In addition, the Bylaws of the Company provide that in order for a
stockholder to nominate a candidate for election as a director at an annual
meeting or propose business for consideration at such annual meeting, notice
must generally be given to the Secretary of the Company not more than 180 days
nor less than 75 days prior to the first anniversary of the preceding year's
annual meeting. The fact that the Company may not insist upon compliance with
these requirements should not be construed as a waiver by the Company of its
right to do so at any time in the future.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, it is the intention of the
persons named as proxies in the accompanying Proxy Card to vote in their
discretion all shares represented by validly executed proxies.
26
<PAGE> 28
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
27
