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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 14, 1999
EQUITY OFFICE PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 1-13115 36-4151656
(State or other jurisdiction of (Commission File (I.R.S. Employer Identification No.)
incorporation or organization) Number)
TWO NORTH RIVERSIDE PLAZA, 60606
SUITE 2200, CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive
offices)
</TABLE>
(312) 466-3300
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
As used herein, the term "Company" means either Equity Office Properties
Trust, a Maryland real estate investment trust, alone as an entity, or as the
context may require, the condensed consolidated enterprise consisting of Equity
Office Properties Trust, EOP Operating Limited Partnership, a Delaware limited
partnership (the "Operating Partnership"), and their subsidiaries. Capitalized
terms used but not defined in this Current Report on Form 8-K are as defined in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998,
and the Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999. The Company sold various interests in 12 Office Properties
to Lend Lease Australia/US Realty I, Inc. ("Lend Lease") on December 14, 1999.
Lend Lease acquired its interests in the Office Properties for approximately
$452.5 million cash and assumed mortgage debt of approximately $81.4 million. A
description of each property partially sold to Lend Lease is below.
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<CAPTION>
OCCUPIED AT
SEPTEMBER 30, PURCHASE
OFFICE PROPERTY LOCATION TOTAL SQUARE FEET 1999 PERCENT SOLD PRICE
- --------------- -------- ----------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
10 & 30 South Wacker..... Chicago, IL 2,003,288 96.0% 25%(a) $123,076,300
Bank One Center.......... Indianapolis,
IN 1,057,877 93.7% 75% 119,961,700
SunTrust Center.......... Orlando, FL 640,385 97.4% 75% 97,205,200
Promenade II............. Atlanta, GA 770,840 99.1% 50% 78,618,100
Pasadena Towers.......... Los Angeles, CA 439,367 88.8% 75% 69,324,600
Preston Commons.......... Dallas, TX 418,604 83.8% 50% 26,373,500
Sterling Plaza........... Dallas, TX 302,747 80.9% 50% 19,340,600
--------- ------------
5,633,108 $533,900,000
========= ============
</TABLE>
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(a) Lend Lease has the option to increase its ownership in 10 & 30 South Wacker
by an additional 25% by December 13, 2001 at the greater of 25% of the fair
market value at the time of the exercise or $122.5 million.
After the partial sale of the Office Properties, mortgage debt will be
placed on SunTrust Center and Bank One Center in the amount of approximately
$50.0 and $65.0 million, respectively. The Company's share of the proceeds from
the mortgage debt financing will be approximately $28.8 million prior to payment
of loan fees and costs.
Prior to the partial sale of these Office Properties to Lend Lease, the
Company consolidated the financial condition and results of operations of the
Office Properties. Upon the sale, the Company will retain an equity interest in
the Office Properties and will share equally in the control of the operations
and major decisions of the Office Properties. Therefore, the Company will
account for its remaining interest in the Office Properties under the equity
method of accounting and will classify its net equity investment as investment
in unconsolidated joint ventures on the condensed consolidated balance sheet and
its interest in the net income as income from investment in unconsolidated joint
ventures in the condensed consolidated statements of operations.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro Forma Financial Statements
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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.
EQUITY OFFICE PROPERTIES TRUST
Date: December 14, 1999
By: /s/ STANLEY M. STEVENS
----------------------------------
Stanley M. Stevens
Executive Vice President,
Chief Legal Counsel and Secretary
Date: December 14, 1999
By: /s/ RICHARD D. KINCAID
----------------------------------
Richard D. Kincaid
Executive Vice President,
Chief Financial Officer
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EQUITY OFFICE PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1999 reflects the partial sale of 12 Office Properties to
Lend Lease that occurred on December 14, 1999 as if it had occurred on September
30, 1999.
The accompanying unaudited Pro Forma Condensed Consolidated Statements of
Operations for the nine months ended September 30, 1999 and the year ended
December 31, 1998 reflect the partial sale of the 12 Office Properties as if it
had occurred immediately prior to January 1, 1999 and 1998, respectively.
The accompanying unaudited pro forma condensed consolidated financial
statements have been prepared by management of the Company and do not purport to
be indicative of the results which would actually have been obtained had the
transaction described above been completed on the date indicated or which may be
obtained in the future. The pro forma condensed consolidated financial
statements should be read in conjunction with the accompanying notes to the pro
forma condensed consolidated financial statements and the Company's financial
statements for the nine month period ended September 30, 1999 and for the year
ended December 31, 1998.
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EQUITY OFFICE PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
EQUITY OFFICE
EQUITY OFFICE LEND LEASE PROPERTIES TRUST
PROPERTIES TRUST TRANSACTION PRO FORMA
---------------- ----------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
Investment in real estate, net................ $13,461,973 $(1,021,255)(A) $12,440,718
Cash and cash equivalents..................... 19,749 -- 19,749
Rents and other receivables................... 174,738 (15,960)(A) 158,778
Escrow deposits and restricted cash........... 40,356 (2,909)(A) 37,447
Investment in unconsolidated joint ventures... 404,525 447,989(B) 852,514
Other assets.................................. 301,701 (6,387)(A) 295,314
----------- ----------- -----------
Total Assets.......................... $14,403,042 $ (598,522) $13,804,520
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Mortgage debt................................. $ 1,836,923 $ (140,026)(A) $ 1,696,897
Unsecured notes............................... 3,655,000 -- 3,655,000
Lines of credit............................... 616,900 (479,959)(C) 136,941
Dividend/distributions payable................ 124,478 -- 124,478
Other liabilities............................. 429,010 (28,689)(A) 400,321
----------- ----------- -----------
Total Liabilities..................... 6,662,311 (648,674) 6,013,637
----------- ----------- -----------
Minority Interests:
Operating partnership...................... 895,841 6,340(D) 902,181
Partially owned properties................. 39,343 -- 39,343
----------- ----------- -----------
Total Minority Interests.............. 935,184 6,340 941,524
----------- ----------- -----------
Preferred Shares.............................. 615,000 -- 615,000
Common Shares................................. 2,521 -- 2,521
Additional paid in capital.................... 6,188,026 43,812(E) 6,231,838
----------- ----------- -----------
Total Shareholders' Equity............ 6,805,547 43,812 6,849,359
----------- ----------- -----------
Total Liabilities and Shareholders'
Equity.............................. $14,403,042 $ (598,522) $13,804,520
=========== =========== ===========
</TABLE>
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EQUITY OFFICE PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
EQUITY OFFICE
EQUITY OFFICE PROPERTIES TRUST
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) PROPERTIES TRUST DISPOSITIONS OTHER PRO FORMA
- --------------------------------------------- ---------------- ------------ -------- ----------------
(F)
<S> <C> <C> <C> <C>
Revenues:
Rental................................... $ 1,115,738 $ (82,018) $ -- $ 1,033,720
Tenant reimbursements.................... 210,953 (34,093) -- 176,860
Parking.................................. 85,064 (7,930) -- 77,134
Other.................................... 22,225 (3,270) -- 18,955
Fee income............................... 5,487 -- 1,530(G) 7,017
Interest/dividends....................... 8,303 (72) -- 8,231
------------ --------- -------- ------------
Total revenues................... 1,447,770 (127,383) 1,530 1,321,917
------------ --------- -------- ------------
Expenses:
Interest:
Expense incurred...................... 310,435 (8,368) (22,102)(H) 279,965
Amortization of deferred financing
costs............................... 3,712 4 -- 3,716
Depreciation............................. 250,698 (19,423) -- 231,275
Amortization............................. 9,723 (638) -- 9,085
Real estate taxes........................ 187,326 (23,054) -- 164,272
Insurance................................ 7,142 (482) -- 6,660
Repairs and maintenance.................. 153,622 (11,382) -- 142,240
Property operating....................... 151,089 (11,662) -- 139,427
Ground rent.............................. 5,122 -- -- 5,122
General and administrative............... 57,928 (5) -- 57,923
------------ --------- -------- ------------
Total expenses................... 1,136,797 (75,010) (22,102) 1,039,685
------------ --------- -------- ------------
Income before allocation to minority
interests, income from investment in
unconsolidated joint ventures and net
gain on sales of real estate.......... 310,973 (52,373) 23,632 282,232
Minority Interests:
Operating Partnership................. (31,224) 5,670 (5,211)(I) (30,765)
Partially owned properties............ (1,398) -- -- (1,398)
Income from investment in unconsolidated
joint ventures........................ 8,081 -- 24,507(J) 32,588
Net gain on sales of real estate......... 8,085 -- -- 8,085
------------ --------- -------- ------------
Net income from continuing operations.... 294,517 (46,703) 42,928 290,742
Put option settlement.................... (4,627) -- -- (4,627)
Preferred distributions.................. (32,695) -- -- (32,695)
------------ --------- -------- ------------
Net income from continuing operations
available for Common Shares........... $ 257,195 $ (46,703) $ 42,928 $ 253,420
============ ========= ======== ============
Net income from continuing operations per
weighted average Common Share
outstanding -- Basic.................. $ 1.00 $ 0.98
============ ============
Weighted average Common Shares
outstanding -- Basic.................. 257,348,805 257,348,805
============ ============
Net income from continuing operations per
weighted average Common Share
outstanding -- Diluted................ $ 0.99 $ 0.98
============ ============
Weighted average Common Shares
outstanding -- Diluted................ 291,321,396 291,321,396
============ ============
</TABLE>
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EQUITY OFFICE PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
EQUITY OFFICE
EQUITY OFFICE PROPERTIES TRUST
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) PROPERTIES TRUST DISPOSITIONS OTHER PRO FORMA
- --------------------------------------------- ---------------- ------------ -------- ----------------
(F)
<S> <C> <C> <C> <C>
Revenues:
Rental.................................... $ 1,299,044 $(104,223) $ -- $ 1,194,821
Tenant reimbursements..................... 239,390 (42,617) -- 196,773
Parking................................... 94,241 (10,303) -- 83,938
Other..................................... 25,745 (1,567) -- 24,178
Fee income................................ 9,571 -- 2,011(G) 11,582
Interest/ dividends....................... 11,708 (79) -- 11,629
------------ --------- -------- ------------
Total revenues..................... 1,679,699 (158,789) 2,011 1,522,921
------------ --------- -------- ------------
Expenses:
Interest:
Expense incurred........................ 338,611 (11,302) (29,469)(H) 297,840
Amortization of deferred financing
costs................................ 6,404 6 -- 6,410
Depreciation.............................. 291,213 (25,256) -- 265,957
Amortization.............................. 8,365 (567) -- 7,798
Real estate taxes......................... 203,805 (29,411) -- 174,394
Insurance................................. 7,736 (575) -- 7,161
Repairs and maintenance................... 191,588 (14,691) -- 176,897
Property operating........................ 189,577 (15,129) -- 174,448
Ground rent............................... 7,661 (265) -- 7,396
General and administrative................ 63,564 (8) -- 63,556
------------ --------- -------- ------------
Total expenses..................... 1,308,524 (97,198) (29,469) 1,181,857
------------ --------- -------- ------------
Income before allocation to minority
interests, income from investment in
unconsolidated joint ventures and net
gain on sales of real estate............ 371,175 (61,591) 31,480 341,064
Minority Interests:
Operating Partnership................... (36,996) 6,320 (6,164)(I) (36,840)
Partially owned properties.............. (2,114) -- -- (2,114)
Income from investment in unconsolidated
joint ventures.......................... 11,267 -- 28,595(J) 39,862
Net gain on sales of real estate.......... 12,433 -- -- 12,433
------------ --------- -------- ------------
Net income from continuing operations..... 355,765 (55,271) 53,911 354,405
Preferred distributions................... (32,202) -- -- (32,202)
------------ --------- -------- ------------
Net income from continuing operations
available for Common Shares............. $ 323,563 $ (55,271) $ 53,911 $ 322,203
============ ========= ======== ============
Net income from continuing operations per
weighted average Common Share
outstanding -- Basic.................... $ 1.28 $ 1.27
============ ============
Weighted average Common Shares
outstanding -- Basic.................... 253,167,037 253,167,037
============ ============
Net income from continuing operations per
weighted average Common Share
outstanding -- Diluted.................. $ 1.27 $ 1.26
============ ============
Weighted average Common Shares
outstanding -- Diluted.................. 283,974,532 283,974,532
============ ============
</TABLE>
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EQUITY OFFICE PROPERTIES TRUST
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(A) To reflect the decrease in the Company's balance sheet as if the sale of
the Office Properties occurred as of September 30, 1999. The accounts
related to the Office Properties sold have been deducted from the
historical balance sheet as the Company will account for its remaining
investment in the Office Properties under the equity method of accounting.
(B) To reflect the Company's remaining investment in the net equity of the
Office Properties sold. The Company shares control of the operations and
the major decisions of the Office Properties with Lend Lease, therefore,
the Company will account for its remaining investment in the Office
Properties under the equity method of accounting.
(C) To reflect the paydown on the line of credit with the cash proceeds from
the partial sale of the Office Properties.
<TABLE>
<S> <C>
Purchase price for interest in Office Properties............ $533,900
Less: Lend Lease share of mortgage debt assumed............. (81,691)
The Company's share of proceeds from additional mortgage
debt placed on the Office Properties...................... 28,750
Legal costs and transfer taxes incurred from the sale....... (1,000)
--------
Paydown on the line of credit..................... $479,959
========
</TABLE>
(D) To reflect the portion of the Operating Partnership's share of the net gain
on the partial sale of the Office Properties to Lend Lease that will not be
allocated to the Company.
(E) To reflect the Company's share of the net gain on the partial sale of the
Office Properties to Lend Lease.
(F) To eliminate the operations of the Office Properties sold for the nine
months ended September 30, 1999 and the year ended December 31, 1998.
(G) To reflect management fee income earned by the Company for managing the
portion of the Office Properties owned by Lend Lease.
(H) To reflect the decrease in interest expense incurred on the line of credit
assuming the cash proceeds from the partial sale of the Office Properties
was used to paydown the line of credit at the beginning of each period.
(I) To reflect an adjustment to the net income allocation to the minority
interests in the Operating Partnership as a result of the other pro forma
adjustments.
(J) To reflect the Company's remaining interest in the net earnings of the
Office Properties sold.
<TABLE>
<CAPTION>
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Company's share of net income............................... $24,507 $28,595
======= =======
Company's share of interest expense......................... $ 6,770 $ 9,090
======= =======
Company's share of depreciation and amortization (real
estate related)........................................... $10,545 $13,622
======= =======
</TABLE>
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