<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED September 30, 2000
------------------
COMMISSION FILE NO. 000-22741
---------
CARRAMERICA REALTY, L.P.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1976308
---------------------------------- -----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1850 K Street, N.W., Washington, D.C. 20006
--------------------------------------------------------------------------------
(Address or principal executive office) (Zip code)
Registrant's telephone number, including area code (202) 729-7500
--------------
N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Number of Partnership Units outstanding of each of the registrant's
classes of Partnership Units as of September 30, 2000:
(# of shares) 14,362,971
--------------------------------------------------------------------------------
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 twelve (12) months (or such shorter period that the Registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past ninety (90) days.
YES X NO
----- ----
<PAGE>
Index
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I: Financial Information
-----------------------------
Item 1. Financial Statements
Consolidated balance sheets of CarrAmerica Realty, L.P. and subsidiary as
of September 30, 2000 (unaudited) and December 31, 1999..................... 4
Consolidated statements of operations of CarrAmerica Realty, L.P. and
subsidiary for the three months and nine months ended September 30, 2000
and 1999 (unaudited)........................................................ 5 to 6
Consolidated statements of cash flows of CarrAmerica Realty, L.P. and
subsidiary for the nine months ended September 30, 2000 and 1999
(unaudited)................................................................. 7
Notes to consolidated financial statements (unaudited)...................... 8 to 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 12 to 16
Item 3: Quantitative and Qualitative Disclosures About Market Risk.................. 17
Part II: Other Information
---------------------------
Item 6. Exhibits and Reports on Form 8-K............................................ 18
</TABLE>
2
<PAGE>
Part I
------
Item 1. Financial Information
---------------------
The information furnished in the accompanying consolidated balance sheets,
consolidated statements of operations and consolidated statements of cash flows
of CarrAmerica Realty, L.P. and subsidiary (the "Partnership") reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the aforementioned financial statements for the interim periods.
The aforementioned financial statements should be read in conjunction with the
notes to such financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
3
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Balance Sheets
As of September 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
September 30, December 31,
2000 1999
------------- ------------
(In thousands) (unaudited)
<S> <C> <C>
Assets
Rental property:
Land $ 102,102 $ 120,333
Buildings 493,083 602,552
Tenant improvements 46,754 63,324
Furniture, fixtures, and equipment 910 1,036
----------- -----------
642,849 787,245
Less - accumulated depreciation (62,804) (57,733)
----------- -----------
Total rental property 580,045 729,512
Land held for development 6,372 13,084
Construction in progress 25,419 15,638
Cash and cash equivalents 3,919 8,309
Restricted cash and cash equivalents 3,795 2,180
Accounts and notes receivable, net 15,738 21,514
Investments in unconsolidated entities 86,300 9,917
Accrued straight-line rents 10,863 11,949
Tenant leasing costs, net 10,732 15,898
Deferred financing costs, net 241 286
Prepaid expenses and other assets, net 1,415 912
----------- -----------
Total assets $ 744,839 $ 829,199
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Mortgages and notes payable $ 151,238 $ 297,330
Note payable to affiliate 28,180 28,545
Accounts payable and accrued expenses 22,895 16,131
Due to affiliates 51,797 24,615
Rent received in advance and security deposits 4,023 6,234
----------- -----------
Total liabilities 258,133 372,855
Partners' capital:
General partner 4,878 4,620
Limited partners 481,828 451,724
----------- -----------
Total partners' capital 486,706 456,344
Commitments and contingencies
----------- -----------
$ 744,839 $ 829,199
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Operations
For the Three Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
(Unaudited and in thousands) 2000 1999
----------- ----------
<S> <C> <C>
Real estate operating revenues:
Rental revenues:
Minimum base rent $ 24,612 $ 26,655
Recoveries from tenants 4,133 3,764
Other tenant charges 838 3,294
---------- ----------
Total rental revenues 29,583 33,713
Cost reimbursements 1,202 1,083
---------- ----------
Total operating revenues 30,785 34,796
---------- ----------
Real estate operating expenses:
Property operating expenses:
Operating expenses 7,565 7,841
Real estate taxes 2,003 3,290
Interest expense 8,156 5,747
General and administrative 1,403 1,723
Depreciation and amortization 7,866 9,916
---------- ----------
Total operating expenses 26,993 28,517
---------- ----------
Real estate operating income 3,792 6,279
Other operating income:
Interest income 310 498
Equity in earnings of unconsolidated entities 379 -
---------- ----------
Total other operating income 689 498
---------- ----------
Net operating income before gain on sale of assets 4,481 6,777
Gain on sale of assets 11,352 1,614
---------- ----------
Net income $ 15,833 $ 8,391
========== ==========
Net income attributable to general partner $ 159 $ 84
========== ==========
Net income attributable to limited partners $ 15,674 $ 8,307
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Operations
For the Nine Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
(Unaudited and in thousands) 2000 1999
---------- ----------
<S> <C> <C>
Real estate operating revenues:
Rental revenues:
Minimum base rent $ 80,113 $ 74,431
Recoveries from tenants 13,651 12,222
Other tenant charges 3,393 4,457
---------- -----------
Total rental revenues 97,157 91,110
Cost reimbursements 3,168 2,963
---------- -----------
Total operating revenues 100,325 94,073
---------- -----------
Real estate operating expenses:
Property operating expenses:
Operating expenses 22,755 21,368
Real estate taxes 8,785 9,173
Interest expense 21,173 14,363
General and administrative 3,780 4,703
Depreciation and amortization 25,473 23,866
---------- -----------
Total operating expenses 81,966 73,473
---------- -----------
Real estate operating income 18,359 20,600
Other operating income:
Interest income 1,182 1,174
Equity in earnings of unconsolidated entities 298 -
---------- -----------
Total other operating income 1,480 1,174
---------- -----------
Net operating income before gain on sale of assets 19,839 21,774
Gain on sale of assets 12,329 1,678
---------- -----------
Net income $ 32,168 $ 23,452
========== ===========
Net income attributable to general partner $ 322 $ 235
========== ===========
Net income attributable to limited partners $ 31,846 $ 23,217
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
(Unaudited and in thousands) 2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 32,168 $ 23,452
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 25,473 23,866
Gain on sale of assets (12,329) (1,678)
Equity in earnings of unconsolidated entities (298) -
Other 340 -
Change in assets and liabilities, net of acquisitions and dispositions:
Decrease (Increase) in accounts and notes receivable 5,777 (9,990)
Decrease (increase) in accrued straight-line rents 1,085 (1,851)
Additions to tenant leasing costs (2,853) (649)
(Decrease)(increase) decrease in prepaid expenses and other assets (712) 819
Increase in accounts payable, accrued expenses and due to affiliates 24,426 25,417
(Decrease) increase in rent received in advance and security deposits (2,210) 434
--------- ---------
Total adjustments 38,699 36,368
--------- ---------
Net cash provided by operating activities 70,867 59,820
--------- ---------
Cash flows from investing activities:
Acquisitions and additions to rental property (14,830) (4,460)
Additions to land held for development (3,146) (6,980)
Additions to construction in progress (27,422) (67,129)
Distributions from unconsolidated entities - 6,725
Contributions to unconsolidated entities (4,546) (5,521)
Increase in restricted cash and cash equivalents (1,615) (662)
Proceeds from sales of properties 124,565 27,426
--------- ---------
Net cash provided (used) by investing activities 73,006 (50,601)
--------- ---------
Cash flows from financing activities:
Capital distributions (1,806) (1,774)
Payments on unsecured line of credit (140,250) -
Proceeds from refinancing of existing mortgages - 5,058
Repayments on notes and mortgages payable (6,207) (6,088)
--------- ---------
Net cash used by financing activities (148,263) (2,804)
--------- ---------
(Decrease) increase in cash and cash equivalents (4,390) 6,415
Unrestricted cash and cash equivalents, beginning of the period 8,309 3,268
--------- ---------
Unrestricted cash and cash equivalents, end of the period $ 3,919 $ 9,683
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest of $1,646 and
$4,460 for the nine months ended September 30, 2000 and 1999, respectively. $ 19,853 $ 13,851
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
-------------------------------------------------------------------------------
(1) Description of Business and Summary of Significant Accounting Policies
(a) Business
CarrAmerica Realty, L.P. (the "Partnership") is a Delaware
limited partnership formed on March 6, 1996 to own, acquire,
develop, and operate office buildings across the United
States. At September 30, 2000, the Partnership directly owned
51 operating properties, one property under development and
land expected to support the future development of 0.7 million
square feet of office space. At December 31, 1999, the
Partnership directly owned 66 operating properties and four
properties under development. The properties are located in
Austin, Denver, Dallas, Salt Lake City, Chicago, Phoenix,
Seattle, San Diego, San Francisco Bay Area and Orange
County/Los Angeles.
The Partnership's general partner is CarrAmerica Realty GP
Holdings, Inc. (the "General Partner"), a wholly-owned
subsidiary of CarrAmerica Realty Corporation ("CarrAmerica"),
a self-administered and self-managed real estate investment
trust. The General Partner owned a 1% interest in the
Partnership at September 30, 2000 and December 31, 1999. The
Partnership's limited partners are CarrAmerica Realty LP
Holdings, Inc., a wholly-owned subsidiary of CarrAmerica,
which owned an approximate 89% and 86% interest in the
Partnership at September 30, 2000 and December 31, 1999,
respectively, and various other individuals and entities which
collectively owned an approximate 10% and 13% interest in the
Partnership at September 30, 2000 and December 31, 1999,
respectively.
(b) Basis of Presentation
The accounts of the Partnership and its wholly-owned
subsidiary are consolidated in the accompanying financial
statements. The Partnership uses the equity method of
accounting for its investments in unconsolidated entities not
controlled by it. Management of the Partnership has made a
number of estimates and assumptions relating to the reporting
of assets and liabilities, revenues and expenses, and the
disclosure of contingent assets and liabilities to prepare
these financial statements in conformity with generally
accepted accounting principles. Actual results could differ
from those estimates.
(2) Mortgages and Notes Payable
The Partnership's mortgages, note payable, and credit facility are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------------- ------------
<S> <C> <C>
Fixed rate mortgages $ 150,738 $ 156,580
Fixed rate note payable to affiliate 28,180 28,545
Unsecured credit facility 500 140,750
------------- ------------
$ 179,418 $ 325,875
============= ============
</TABLE>
Fixed rate mortgages payable are collateralized by certain rental
properties and generally require monthly principal and/or interest
payments. The mortgages mature at various dates from November 2000
through May 2017.
CarrAmerica and the Partnership have a $450 million unsecured credit
facility payable to Morgan Guaranty Trust Company of New York, as agent
for a group of banks. The credit facility matures in August 2001. At
September 30, 2000, the credit facility bore interest, as selected by
CarrAmerica, at either (i) the higher of the prime rate or the Federal
Funds Rate for such day, or
8
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
-------------------------------------------------------------------------------
(ii) an interest rate equal to 90 basis points above the 30-day London
Interbank Offer Rate ("LIBOR"). CarrAmerica has predominantly selected
interest rates equal to 90 basis points above the 30-day LIBOR rate. At
September 30, 2000, CarrAmerica and the Partnership had $330.3 million
available for draw under the credit facility.
The unsecured credit facility contains a number of financial and other
covenants with which the Partnership must comply including, but not
limited to, covenants relating to ratios of annual EBITDA (earnings
before interest, taxes, depreciation and amortization) to interest
expense, annual EBITDA to debt service, and total debt to tangible fair
market value of CarrAmerica and the Partnership's assets, and
restrictions on the ability of CarrAmerica to make dividend
distributions in excess of 90% of funds from operations. Availability
under the unsecured credit facility is also limited to a specified
percentage of the Partnership's unsecured properties.
On May 24, 1996, the Partnership entered into a $30 million borrowing
agreement with CarrAmerica. The related note bears interest at 8.5% and
requires monthly principal and interest payments of $242,000. The note
matures on May 31, 2011. The note is secured by certain office
properties and other assets of the Partnership. The outstanding balance
of the note payable to affiliate was $28.2 million at September 30,
2000 and $28.5 million at December 31, 1999.
The annual maturities of debt as of September 30, 2000 are summarized
as follows (in thousands):
2000 $ 9,612
2001 33,103 (1)
2002 9,922
2003 20,482
2004 15,569
2005 and Thereafter 90,730
---------
$ 179,418
=========
(1) Includes $0.5 million outstanding as of September 30,
2000 under the $450.0 million unsecured line of
credit.
Restricted cash and cash equivalents consists primarily of escrow
deposits required by lenders to be used for future building
renovations, tenant improvements, or as collateral for letters of
credit.
(3) Development Activities
Costs incurred through September 30, 2000 for the property under
construction were $25.4 million. As of September 30, 2000, the
Partnership had one office property under construction.
9
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
-------------------------------------------------------------------------------
(4) Segment Information
The Partnership's reportable operating segment is real estate property
operations. Business activity and operating segments that are not
reportable are included in other operations.
The Partnership's operating segment performance is measured using funds
from operations. Funds from operations represents net income excluding
depreciation and amortization on real estate assets and gain on sale of
assets.
Operating results of the segments for the three and nine months ended
September 30, 2000 and 1999 are summarized and reconciled to net income
for the applicable periods as follows:
<TABLE>
<CAPTION>
For the three months ended September 30, 2000
----------------------------------------------
Real Estate
Property Other
(In millions) Operations Operations Total
---------- ---------- ----------
<S> <C> <C> <C>
Operating revenue $ 29.6 1.2 $ 30.8
Segment expense 9.6 1.4 11.0
---------- ---------- ----------
Net segment revenue (expense) 20.0 (0.2) 19.8
Interest expense 3.1 5.1 8.2
Other income 0.1 0.5 0.6
---------- ---------- ----------
Funds from operations $ 17.0 (4.8) 12.2
========== ==========
Adjustments:
Depreciation and amortization (7.7)
Gain on sale of assets 11.3
----------
Net income $ 15.8
==========
</TABLE>
<TABLE>
<CAPTION>
For the three months ended September 30, 1999
----------------------------------------------
Real Estate
Property Other
(In millions) Operations Operations Total
---------- ---------- ----------
<S> <C> <C> <C>
Operating revenue $ 33.7 1.1 $ 34.8
Segment expense 11.1 1.7 12.8
---------- ---------- ----------
Net segment revenue (expense) 22.6 (0.6) 22.0
Interest expense 2.7 3.0 5.7
Other income - 0.4 0.4
---------- ---------- ----------
Funds from operations $ 19.9 (3.2) 16.7
========== ==========
Adjustments:
Depreciation and amortization (9.9)
Gain on sale of assets 1.6
----------
Net income $ 8.4
==========
</TABLE>
10
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
For the nine months ended September 30, 2000
----------------------------------------------
Real Estate
Property Other
(In millions) Operations Operations Total
---------- ---------- ---------
<S> <C> <C> <C>
Operating revenue $ 97.2 3.1 $ 100.3
Segment expense 31.5 3.8 35.3
---------- ---------- ---------
Net segment revenue (expense) 65.7 (0.7) 65.0
Interest expense 9.0 12.2 21.2
Other income 0.2 1.0 1.2
---------- ---------- ---------
Funds from operations $ 56.9 (11.9) 45.0
========== ==========
Adjustments:
Depreciation and amortization (25.1)
Gain on sale of assets 12.3
---------
Net income $ 32.2
=========
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended September 30, 1999
----------------------------------------------
Real Estate
Property Other
(In millions) Operations Operations Total
---------- ---------- -----------
<S> <C> <C> <C>
Operating revenue $ 91.1 3.0 $ 94.1
Segment expense 30.5 4.7 35.2
--------- --------- -----------
Net segment revenue (expense) 60.6 (1.7) 58.9
Interest expense 7.0 7.4 14.4
Other income - 0.9 0.9
--------- --------- -----------
Funds from operations $ 53.6 (8.2) 45.4
========= =========
Adjustments:
Depreciation and amortization (23.6)
Gain on sale of assets 1.7
-----------
Net income $ 23.5
===========
</TABLE>
(5) Carr Office Park, L.L.C.
On August 17, 2000, the Partnership and CarrAmerica closed on a joint
venture transaction with New York State Teachers' Retirement System
("NYSTRS"). At closing, the Partnership, CarrAmerica, and certain
affiliates contributed properties to the joint venture, Carr Office
Park, L.L.C., and NYSTRS contributed cash of approximately $255.1
million. The venture encompasses five suburban office parks in four
markets.
In connection with the transaction, the Partnership received
approximately $101.1 million and a 20% interest in the joint venture in
exchange for the properties contributed and recognized a gain on the
partial sale of approximately $18.9 million, net of income taxes of
$7.8 million.
11
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
-------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is based primarily on the consolidated financial
statements of the Partnership as of September 30, 2000 and December 31, 1999,
and for the three months and nine months ended September 30, 2000 and 1999. This
information should be read in conjunction with the accompanying consolidated
financial statements and notes thereto. These financial statements include all
adjustments, which are in the opinion of management, necessary to reflect a fair
presentation of the results for the interim periods, and all such adjustments
are of a normal, recurring nature. The comparability of these periods is
impacted by acquisitions and dispositions made during 2000 and 1999.
The Partnership's reportable operating segment is real estate property
operations. Business activities and operating segments that are not reportable
are included in other operations.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Real Estate Property Operations
Operating Revenue. Total real estate property operating revenue decreased $4.1
million, or 12.2%, to $29.6 million for the three months ended September 30,
2000 as compared to $33.7 million for the three months ended September 30, 1999.
The decrease in rental revenue was due primarily to the contribution of
properties to Carr Office Park, L.L.C (see Note 5, Notes to Consolidated
Financial Statements). Rental revenue from properties that were fully
operational throughout both periods increased by approximately $0.9 million
primarily due to increased rental rates for some of these properties.
Segment Expense. Real estate property operating expenses decreased $1.5 million
to $9.6 million for the three months ended September 30, 2000, from $11.1
million for the three months ended September 30, 1999. The decrease was
primarily due to the contribution of properties to Carr Office Park, L.L.C.
Other Operations
Interest Expense. Interest expense increased $2.1 million to $5.1 million for
the three months ended September 30, 2000 compared to the three months ended
September 30, 1999. The increase in interest expense was due to a lower level of
capitalized interest resulting from reduced construction in progress activity in
2000.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Real Estate Property Operations
Operating Revenue. Total real estate property operating revenue increased $6.1
million, or 6.7%, to $97.2 million for the nine months ended September 30, 2000
as compared to $91.1 million for the nine months ended September 30, 1999. The
increase was primarily due to acquisitions and development properties placed in
service. Rental revenue from properties that were fully operational throughout
both periods increased by approximately $2.3 million primarily due to increased
rental rates for some of these properties.
Segment Expense. Real estate property operating expenses increased $1.0 million
to $31.5 million for the nine months ended September 30, 2000, from $30.5
million for the nine months ended September 30, 1999. The increase was primarily
due to property acquisitions and development properties placed in service.
Property operating expenses from properties that were fully operational in both
periods decreased by approximately $0.5 million.
12
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
-------------------------------------------------------------------------------
Other Operations
Interest Expense. Interest expense increased $4.8 million to $12.2 million for
the nine months ended September 30, 2000 compared to the nine months ended
September 30, 1999. The increase in interest expense was due to a lower level of
capitalized interest due to reduced construction in progress in 2000.
Liquidity and Capital Resources
The Partnership's total indebtedness at September 30, 2000 was $179.4 million,
of which $0.5 million, or 0.3%, bore a LIBOR-based floating interest rate. The
Partnership's fixed rate indebtedness bore an effective weighted average
interest rate of 7.9% at September 30, 2000 and had a weighted average term to
maturity of 5.3 years. At September 30, 2000, the total book value of the
Partnership's assets was $786.1 million. The Partnership's debt as a percentage
of total book value of its assets was 22.8% at September 30, 2000. CarrAmerica
has a $450.0 million unsecured credit facility with full borrowing capacity
under which the Partnership is jointly and severally liable. There was $330.3
million available for draw as of September 30, 2000 on the unsecured credit
facility. The weighted average interest rate under the unsecured credit facility
for the nine months ended September 30, 2000 was 7.3%.
The Partnership will require capital to invest in its existing portfolio of
operating assets for major capital projects such as large-scale renovations,
routine capital expenditures, deferred maintenance on certain properties
recently acquired, and tenant related capital expenditures, such as tenant
improvements and allowances and leasing commissions. The Partnership's capital
requirements for tenant related capital expenditures are dependent upon a number
of factors, including square feet of expiring leases, tenant retention ratios
and whether the expiring leases are in central business district properties or
suburban properties. The Partnership has 140,936 square feet under leases
expiring in 2000, representing 3.1% of total leased space.
The Partnership will also require capital for development projects currently
underway and planned for the future. As of September 30, 2000, the Partnership
had one development project underway, which is expected to require a total
investment by the Partnership of $43.7 million. As of September 30, 2000, the
Partnership had expended $25.4 million of these costs.
The Partnership is responsible for its proportionate share of development
costs incurred by Carr Office Park, L.L.C. As of September 30, 2000, Carr Office
Park, L.L.C. had five properties under development whose total costs are
expected to be $66.9 million, with $26.2 million expended as of September 30,
2000.
The Partnership intends to use cash flow from operations, CarrAmerica's
unsecured credit facility and the proceeds from the disposition of assets to
meet its working capital needs for its existing portfolio of operating assets.
The Partnership anticipates that adequate cash will be available to fund its
operating and administrative expenses, continuing debt service obligations, and
the payment of distributions in both the short term and long term. Management
believes that the Partnership will have access to the capital resources
necessary to expand and develop its business. However, the Partnership's ability
to access additional capital necessary to support the current development
program is largely dependent on CarrAmerica's ability to access additional
capital. Current market conditions make CarrAmerica's traditional sources of
such capital, the equity markets, currently unattractive. CarrAmerica believes
that the alternative sources, namely refinancings, joint ventures and asset
dispositions, will provide it with the necessary capital until such time as the
equity and public debt markets improve. However, there can be no assurance that
such an improvement will occur in the near term. If CarrAmerica is not able to
access capital at attractive rates and the Partnership is not able to meet its
cash requirements through traditional means, it may have to rely on working
capital advances from CarrAmerica at a time when CarrAmerica's cost of capital
causes such advances to be made at unattractive rates. As of September 30, 2000,
the Partnership had cash and cash equivalents of $7.7 million, of which $3.8
million was restricted.
Net cash provided by operating activities was $70.9 million during the nine
months ended September 30, 2000, compared to $59.8 million during the nine
months ended September 30, 1999. The increase in net
13
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
-------------------------------------------------------------------------------
cash provided by operating activities was primarily a result of a decrease in
accounts receivable. The Partnership's investing activities provided
approximately $73.0 million and used approximately $50.6 million during the nine
months ended September 30, 2000 and 1999, respectively. The Partnership's
investing activities included capital expenditures for land held for future
development and additions to construction in progress aggregating $30.6 million
during the nine months ended September 30, 2000 and $74.1 million during the
nine months ended September 30,1999. Additionally, the Partnership invested
approximately $14.8 million and $4.5 million in its existing real estate assets
during the nine months ended September 30, 2000 and 1999, respectively. Finally,
the Partnership received net proceeds from the sales of properties, including
properties contributed to Carr Office Park, L.L.C., of $124.6 million for the
nine months ended September 30, 2000 compared to $27.4 million for the nine
months ended September 30, 1999. Excluding distributions, the Partnership's
financing activities used net cash of $146.5 million during the nine months
ended September 30, 2000 and $1.0 million during the nine months ended September
30, 1999. During the nine months ended September 30, 2000, the Partnership
repaid $140.3 million on the unsecured credit facility.
The Partnership's distributions are paid quarterly. Amounts accumulated for
distribution are primarily invested by the Partnership in short-term investments
that are collateralized by securities of the United States Government or certain
of its agencies.
14
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
--------------------------------------------------------------------------------
Building and Lease Information
The following table sets forth certain information about each operating property
owned by the Partnership as of September 30, 2000:
<TABLE>
<CAPTION>
Net
Rentable
Area
(square Percent Number
Consolidated Properties feet)(1) Leased(2) of Buildings
----------------------- -------- -------- ------------
<S> <C> <C> <C>
Southern California, Orange County/Los Angeles
South Coast Executive Center 161,692 100.0 2
2600 W. Olive 144,831 99.8 1
Bay Technology Center 107,481 100.0 2
Southern California, San Diego
Jaycor 105,358 100.0 1
Northern California, San Francisco Bay Area
San Mateo I 70,000 100.0 1
San Mateo II and III 141,404 98.1 2
Seattle
Canyon Park Commons 95,290 100.0 1
Austin, Texas
Great Hills Plaza 135,333 100.0 1
City View Centre 136,183 100.0 3
Tower of the Hills 166,149 99.7 2
City View Center 128,716 100.0 1
Chicago
Bannockburn I & II 209,582 97.4 2
Bannockburn IV 108,469 96.0 1
Dallas, Texas
Quorum North 116,084 92.9 1
Quorum Place 178,296 100.0 1
Cedar Maple Plaza 112,682 84.7 3
Commons @ Las Colinas 1, 3 380,764 100.0 2
Two Mission Park 77,232 100.0 1
5000 Quorum 160,763 95.9 1
Denver
Harlequin Plaza 329,210 88.4 2
Quebec Court I & II 287,294 100.0 2
Quebec Center 106,865 88.5 3
Phoenix, Arizona.
US West 532,506 100.0 4
Concord Place 133,555 76.7 1
Salt Lake City, Utah.
Sorenson Research Park 285,144 94.9 5
Wasatch Corporate Center 299,885 100.0 5
TOTAL CONSOLIDATED PROPERTIES 4,710,768 51
WEIGHTED AVERAGE 97.1%
</TABLE>
(1) Includes office and retail space but excludes storage space.
(2) Includes space for leases that have been executed and have commenced as of
September 30, 2000.
15
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
--------------------------------------------------------------------------------
The following table sets outs a schedule of the lease expirations at the
Partnership's properties as of September 30, 2000:
Approximate Net Percent of Leased
Rentable Area Subject Square Footage
to Expiring Lease Represented by
Year of Lease Expiration (square feet) (1) Expiring Leases
------------------------ ------------------ ---------------
2000 140,936 3.1
2001 574,019 12.5
2002 626,203 13.7
2003 554,258 12.1
2004 738,454 16.2
2005 440,996 9.6
2006 118,633 2.6
2007 624,259 13.7
2008 162,970 3.6
2009 476,054 10.4
2010 and thereafter 115,305 2.5
(1) Excludes 138,681 square feet of vacant space.
16
<PAGE>
Quantitative and Qualitative Disclosure About Market Risk
-------------------------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Significant changes in the Partnership's market risk that have occurred since
the filing of the Partnership's Form Annual Report on 10-K for the year ended
December 31, 1999 are summarized in the Liquidity and Capital Resources section
of the Management's Discussion and Analysis of Financial Condition and Results
of Operations.
17
<PAGE>
Part II
OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
10.1 Amended and Restated Limited Liability Company
Agreement of Carr Office Park, L.L.C., dated as of
August 15, 2000 (incorporated by reference to Exhibit
10.1 to the Partnership's Current Report on Form 8-K
filed on September 1, 2000).
10.2 Contribution and Purchase/Sale Agreement, dated as of
August 15, 2000, among CarrAmerica Realty
Corporation, CarrAmerica Realty L.P., CarrAmerica
Development, Inc., Carr Development & Construction,
L.P., Carr Parkway North I Corporation and New York
State Teachers' Retirement System (incorporated by
reference to Exhibit 10.2 to the Partnership's
Current Report on Form 8-K filed on September 1,
2000).
10.3 Supplemental Agreement (Amending and Supplementing
the Contribution Agreement and the LLC Agreement),
dated as of August 15, 2000, among CarrAmerica Realty
Corporation, CarrAmerica Realty L.P., CarrAmerica
Development, Inc., Carr Development & Construction,
L.P., Carr Parkway North I Corporation and New York
State Teachers' Retirement System (incorporated by
reference to Exhibit 10.3 to the Partnership's
Current Report on Form 8-K filed on September 1,
2000).
27/(1)/ Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Current Report on Form 8-K filed on September 1, 2000,
regarding the Partnership's transaction with Carr Office Park,
L.L.C.
_______________
(1) Filed as an exhibit to the electronic filing only.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARRAMERICA REALTY, L.P.
a Delaware Limited Partnership
By: CarrAmerica Realty GP Holdings, Inc.,
its general partner
/s/ Thomas A. Carr
-------------------------------------------------------
Thomas A. Carr, President
/s/ Philip L. Hawkins
-------------------------------------------------------
Philip L. Hawkins, Managing Director and Vice President
/s/ Richard F. Katchuk
-------------------------------------------------------
Richard F. Katchuk, Chief Financial Officer
Date: November 14, 2000
19
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
------- ----------- ----
27 Financial Data Schedule
20
