<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20543
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED June 30, 2000
-------------
COMMISSION FILE NO. 000-22741
---------
CARRAMERICA REALTY, L.P.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 52-1976308
----------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
</TABLE>
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 June 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>
<S> <C>
Page
----
Part I: Financial Information
-----------------------------
Item 1. Financial Statements
Consolidated balance sheets of CarrAmerica Realty, L.P. and subsidiary
as of June 30, 2000 (unaudited) and December 31, 1999...................................... 4
Consolidated statements of operations of CarrAmerica Realty, L.P. and
subsidiary for the three months and six months ended June 30, 2000 and
1999 (unaudited)........................................................................... 5 to 6
Consolidated statements of cash flows of CarrAmerica Realty, L.P. and
subsidiary for the six months ended June 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>
<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 June 30, 2000 and December 31, 1999
--------------------------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- --------------
(unaudited)
Assets
------
Rental property:
<S> <C> <C>
Land $120,105 $120,333
Buildings 592,492 602,552
Tenant improvements 71,281 63,324
Furniture, fixtures, and equipment 1,084 1,036
----------- --------------
784,962 787,245
Less - accumulated depreciation (69,874) (57,733)
----------- --------------
Total rental property 715,088 729,512
Land held for development 9,365 13,084
Construction in progress 27,356 15,638
Cash and cash equivalents 8,223 8,309
Restricted cash and cash equivalents 2,051 2,180
Accounts and notes receivable, net 20,984 21,514
Investments 13,292 9,917
Accrued straight-line rents 12,220 11,949
Tenant leasing costs, net 16,555 15,898
Deferred financing costs, net 256 286
Prepaid expenses and other assets, net 612 912
----------- --------------
$826,002 $829,199
=========== ==============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Mortgages and notes payable $231,144 $297,330
Note payable to affiliate 28,305 28,545
Accounts payable and accrued expenses 12,175 16,131
Due to affiliates 76,011 24,615
Rent received in advance and security deposits 6,856 6,234
----------- --------------
Total liabilities 354,491 372,855
Partners' capital:
General partner 4,783 4,620
Limited partners 466,728 451,724
------------ --------------
Total partners' capital 471,511 456,344
Commitments and contingencies ------------ --------------
$826,002 $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 June 30, 2000 and 1999
------------------------------------------------------------------------------
(Unaudited and in thousands)
2000 1999
---------- -----------
Real estate operating revenue:
Rental revenue:
Minimum base rent $ 28,006 $ 24,218
Recoveries from tenants 5,130 4,495
Other tenant charges 778 437
---------- -----------
Total rental revenue 33,914 29,150
Cost reimbursements 1,869 1,204
Other 4 --
---------- -----------
Total operating revenues 35,787 30,354
Real estate operating expenses:
Property operating expenses:
Operating expenses 8,026 6,763
Real estate taxes 3,474 3,081
Interest expense 6,678 4,358
General and administrative 1,191 1,660
Depreciation and amortization 9,365 7,145
---------- -----------
Total operating expenses 28,734 23,007
---------- -----------
Real estate operating income 7,053 7,347
Other operating income (loss):
Interest income 674 410
Loss of unconsolidated Partnership (81) --
---------- -----------
Total other income 593 410
---------- -----------
Net operating income before gain
on sale of assets 7,646 7,757
Gain on sale of assets 978 247
---------- -----------
Net income $ 8,624 $ 8,004
========== ===========
Net income attributable to
general partner $ 86 $ 80
========== ===========
Net income attributable to
limited partners $ 8,538 $ 7,924
========== ===========
See accompanying notes to consolidated financial statements.
5
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Operations
For the Six Months Ended June 30, 2000 and 1999
--------------------------------------------------------------------------------
(Unaudited and in thousands)
2000 1999
---------- -----------
Real estate operating revenue:
Rental revenue:
Minimum base rent $ 55,501 $ 47,775
Recoveries from tenants 9,518 8,458
Other tenant charges 2,555 1,163
---------- -----------
Total rental revenue 67,574 57,396
Cost reimbursements 1,962 1,880
Other 4 --
---------- -----------
Total operating revenues 69,540 59,276
Real estate operating expenses:
Property operating expenses:
Operating expenses 15,190 13,527
Real estate taxes 6,782 5,883
Interest expense 13,017 8,616
General and administrative 2,377 2,980
Depreciation and amortization 17,607 13,949
---------- -----------
Total operating expenses 54,973 44,955
---------- -----------
Real estate operating income 14,567 14,321
Other operating income (loss):
Interest income 872 676
Loss of unconsolidated Partnership (81) --
---------- -----------
Total other income 791 676
---------- -----------
Net operating income before gain
on sale of assets 15,358 14,997
Gain on sale of assets 978 64
---------- -----------
Net income $ 16,336 $15,061
========== ===========
Net income attributable to
general partner $ 163 $ 151
========== ===========
Net income attributable to
limited partners $ 16,173 $14,910
========== ===========
See accompanying notes to consolidated financial statements.
6
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
--------------------------------------------------------------------------------
(Unaudited and in thousands)
<TABLE>
<S> <C> <C>
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 16,336 $ 15,061
-------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 17,607 13,949
Gain on sale of assets (978) (64)
Loss on write off of assets 49 82
Loss of unconsolidated Partnership 81 --
Change in assets and liabilities, net of acquisitions
and dispositions:
(Increase) decrease in accounts and notes receivable 530 (8,166)
Increase in accrued straight-line rents (271) (1,661)
Additions to tenant leasing costs (1,965) (2,674)
Decrease (increase) in prepaid expenses and other assets 146 (1,011)
Increase in accounts payable and accrued expenses 46,633 29,707
Increase in rent received in advance and security deposits 623 901
-------- --------
Total adjustments 62,455 31,063
-------- --------
Net cash provided by operating activities 78,791 46,124
-------- --------
Cash flows from investing activities:
Acquisitions and additions to rental property (10,345) (47,786)
Additions to land held for development (1,417) (3,146)
Additions to construction in progress (19,704) (11,142)
Distributions from unconsolidated partnerships -- 6,725
Contributions to unconsolidated partnerships (3,428) (2,922)
Increase (decrease) in restricted cash and cash equivalents 129 (35)
Proceeds from sales of rental property 23,484 5,846
-------- --------
Net cash used by investing activities (11,281) (52,460)
-------- --------
Cash flows from financing activities:
Capital distributions (1,169) (1,178)
(Payments) net borrowings on unsecured line of credit (62,000) 10,000
Proceeds from refinance of existing mortgages -- 4,873
Repayments on notes and mortgages payable (4,427) (3,895)
-------- --------
Net cash (used) provided by financing activities (67,596) 9,800
-------- --------
(Decrease) increase in cash and cash equivalents (86) 3,464
Unrestricted cash and cash equivalents, beginning of the period 8,309 3,268
-------- --------
Unrestricted cash and cash equivalents, end of the period $ 8,223 $ 6,732
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest of $1,074
and
$3,787 for the six months ended June 30, 2000 and 1999,
respectively. $ 13,592 $ 7,964
======== ========
</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 June 30, 2000,
the Partnership owned 66 operating properties, four properties under
development and land expected to support the future development of 0.8
million square feet of office space. At December 31, 1999, the
Partnership 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 June 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 86% interest in the Partnership at June 30, 2000 and
December 31, 1999, and various other individuals and entities which
collectively owned an approximate 13% interest in the Partnership at
June 30, 2000 and December 31, 1999.
(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 partnerships not controlled by the Partnership.
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):
June 30, December 31,
2000 1999
------------ ---------------
Fixed rate mortgages $ 152,394 $ 156,580
Fixed rate note payable to affiliate 28,305 28,545
Unsecured credit facility 78,750 140,750
------------ ---------------
$ 259,449 $ 325,875
============ ===============
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.
8
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
--------------------------------------------------------------------------------
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 June 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 (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 June 30, 2000, CarrAmerica and the Partnership had $280.3 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 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 $28.3 million at June 30, 2000 and $28.5 million at December
31, 1999.
The annual maturities of debt as of June 30, 2000 are summarized as follows
(in thousands):
2000........................... $ 11,630
2001........................... 111,361 (1)
2002........................... 9,930
2003........................... 20,421
2004........................... 15,545
2005 and Thereafter............ 90,562 (2)
------
$ 259,449
===========
(1) Includes $78.8 million outstanding as of June 30, 2000
under the $450.0 million unsecured line of credit.
(2) Includes approximately $28.3 million outstanding on the
Partnership's loan from CarrAmerica.
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 June 30, 2000 for properties
under construction were $52.1 million. As of June 30, 2000, the
Partnership had 4 office properties 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.
(In millions) For the three months ended
June 30, 2000
-------------------------------------------
Real Estate
Property Other
Operations Operations Total
---------------- -------------- ---------
Operating revenue $ 33.8 1.9 $ 35.7
Segment expense 11.4 1.2 12.6
---------------- -------------- ---------
Net segment revenue 22.4 0.7 23.1
Interest expense 2.2 4.5 6.7
Other income 0.1 0.4 0.5
---------------- -------------- ---------
Funds from operations $ 20.3 (3.4) 16.9
---------------- --------------
Adjustments:
Depreciation and amortization (9.4)
Gain on sale of assets 1.0
---------
Net income $ 8.6
=========
(In millions) For the three months ended
June 30, 1999
-------------------------------------------
Real Estate
Property Other
Operations Operations Total
---------------- -------------- ---------
Operating revenue $ 29.2 1.2 $ 30.4
Segment expense 9.8 1.7 11.5
---------------- -------------- ---------
Net segment revenue (expense) 19.4 (0.5) 18.9
Interest expense 0.3 4.0 4.3
Other income --- 0.2 0.2
---------------- -------------- ---------
Funds from operations $ 19.1 (4.3) 14.8
---------------- --------------
Adjustments:
Depreciation and amortization (7.0)
Gain on sale of assets 0.2
---------
Net income $ 8.0
=========
10
<PAGE>
CARRAMERICA REALTY, L.P. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
------------------------------------------------------------------------------
(In millions) For the six months ended
June 30, 2000
-------------------------------------------
Real Estate
Property Other
Operations Operations Total
---------------- -------------- ---------
Operating revenue $ 67.5 2.0 $ 69.5
Segment expense 21.9 2.4 24.3
---------------- -------------- ---------
Net segment revenue (expense) 45.6 (0.4) 45.2
Interest expense 5.9 7.1 13.0
Other income 0.1 0.5 0.6
---------------- -------------- ---------
Funds from operations $ 39.8 (7.0) 32.8
---------------- --------------
Adjustments:
Depreciation and amortization (17.5)
Gain on sale of assets 1.0
---------
Net income $ 16.3
=========
(In millions) For the six months ended
June 30, 1999
-------------------------------------------
Real Estate
Property Other
Operations Operations Total
---------------- -------------- ---------
Operating revenue $ 57.4 1.9 $ 59.3
Segment expense 19.4 3.0 22.4
---------------- -------------- ---------
Net segment revenue (expense) 38.0 (1.1) 36.9
Interest expense 4.3 4.3 8.6
Other income -- 0.5 0.5
---------------- -------------- ---------
Funds from operations $ 33.7 (4.9) 28.8
---------------- --------------
Adjustments:
Depreciation and amortization (13.8)
Gain on sale of assets 0.1
---------
Net income $ 15.1
=========
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 June 30, 2000 and December 31, 1999, and for
the three months and six months ended June 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 1999. As of June 30,
2000, the Partnership owned 68 properties compared to 65 properties owned at
June 30, 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 JUNE 30, 2000 AND 1999
Real Estate Property Operations
Operating Revenue. Total real estate property operating revenue increased
$4.6 million, or 16.1%, to $33.8 million for the three months ended June 30,
2000 as compared to $29.2 million for the three months ended June 30, 1999. The
Partnership experienced net growth in its rental revenue as a result of its
acquisitions and development properties placed in service, which together
contributed approximately $3.9 million of additional rental revenue for the
three months ended June 30, 2000. Rental revenue from properties that were
fully operational throughout both periods increased by approximately $0.7
million primarily due to increased occupancy in these properties.
Segment Expense. Real estate property operating expenses increased $1.6
million to $11.4 million for the three months ended June 30, 2000, from $9.8
million for the three months ended June 30, 1999. The Partnership experienced
net growth in its segment expense primarily as a result of property acquisitions
and development properties placed in service, which together contributed
approximately $0.9 million of additional expense for the three months ended June
30, 2000. The Partnership experienced an increase in property operating
expenses from properties that were fully operational in both periods of
approximately $0.7 million.
Other Operations
Operating Revenue. Operating revenue increased $0.7 million to $1.9 million
for the three months ended June 30, 2000, primarily as a result of
reimbursements from an affiliate for services provided to the affiliate by
Partnership personnel.
Segment Expenses. Segment expenses decreased $0.5 million to $1.2 million
for the three months ended June 30, 2000 as compared to three months ended June
30, 1999.
Interest Expense. The $0.5 million increase in other operation's interest
expense resulted from a lower level of capitalized interest resulting from
reduced construction in progress activity between 2000 and 1999.
Other Income. Other income increased $0.2 million for the three months
ended June 30, 2000 as compared to the three months ended June 30, 1999.
12
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Real Estate Property Operations
Operating Revenue. Total real estate property operating revenue increased
$10.1 million, or 17.6%, to $67.5 million for the six months ended June 30, 2000
as compared to $57.4 million for the six months ended June 30, 1999. The
Partnership experienced net growth in its rental revenue as a result of its
acquisitions and development properties placed in service, which together
contributed approximately $8.7 million of additional rental revenue for the six
months ended June 30, 2000. Rental revenue from properties that were fully
operational throughout both periods increased by approximately $1.4 million
primarily due to increased occupancy in these properties.
Segment Expense. Real estate property operating expenses increased $2.5
million to $21.9 million for the six months ended June 30, 2000, from $19.4
million for the six months ended June 30, 1999. The Partnership experienced net
growth in its segment expense primarily as a result of property acquisitions and
development properties placed in service, which together contributed
approximately $2.2 million of additional expense for the six months ended June
30, 2000. The Partnership experienced an increase in property operating expenses
from properties that were fully operational in both periods of approximately
$0.3 million.
Other Operations
Operating Revenue. Operating revenue increased $0.1 million to $2.0
million for the six months ended June 30, 2000 as compared to $1.9 million for
the six months ended June 30, 1999.
Segment Expense. Segment expenses decreased $0.6 million to $2.4 million
for the six months ended June 30, 2000 as compared to $3.0 million for the six
months ended June 30, 1999.
Interest Expense. The $2.8 million increase in other operation's interest
expense resulted from a lower level of capitalized interest due to reduced
construction in progress between 2000 and 1999.
Other Income. Other income was flat for the six months ended June 30, 2000
as compared to the six months ended June 30, 1999.
Liquidity and Capital Resources
The Partnership's total indebtedness at June 30, 2000 was $259.4 million,
of which $78.8 million, or 30.3%, bore a LIBOR-based floating interest rate. The
Partnership's fixed rate indebtedness bore an effective weighted average
interest rate of 8.0% at June 30, 2000 and had a weighted average term to
maturity of 5.3 years. At June 30, 2000, the total book value of the
Partnership's assets was $826.0 million. The Partnership's debt as a percentage
of total book value of its assets was 31.4% at June 30, 2000. CarrAmerica has a
$450.0 million unsecured credit facility with full borrowing capacity under
which the Partnership is jointly and severally liable. The weighted average
interest rate under the unsecured credit facility for the six months ended June
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
13
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Partnership
--------------------------------------------------------------------------------
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 307,886 square feet under leases
expiring in 2000, representing 5.2% of total leased space.
The Partnership will require a substantial amount of capital for
development projects currently underway and planned for the future. As of June
30, 2000, the Partnership had 4 development projects underway, which are
expected to require a total investment by the Partnership of $79.4 million. As
of June 30, 2000, the Partnership had expended $52.1 million of these costs.
The Partnership intends to use cash flow from operations, CarrAmerica's
unsecured revolving line of 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 June 30, 2000, the Partnership had cash of $10.3 million, of which
$2.1 million was restricted.
Net cash provided by operating activities was $78.8 million during the six
months ended June 30, 2000, compared to $46.1 million during the six months
ended June 30, 1999. The increase in net cash provided by operating activities
was primarily a result of a change in amounts due to affiliates. The
Partnership's investing activities used approximately $11.3 million and $52.5
million during the six months ended June 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
$21.1 million during the six months ended June 30, 2000 and $14.3 million during
the six months ended June 30,1999. Additionally, the Partnership invested
approximately $10.3 million and $47.8 million in its existing real estate assets
during the six months ended June 30, 2000 and 1999, respectively. Excluding
distributions, the Partnership's financing activities used net cash of $66.4
million during the six months ended June 30, 2000 and provided $11.0 million
during the six months ended June 30, 1999.
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 June 30, 2000:
<TABLE>
<CAPTION>
Partnership's Net
Effective Rentable
Property Area Percent # of
Property Ownership (square feet)(1) Leased(2) Buildings
-------- --------- ---------------- --------- ---------
Consolidated Properties
-----------------------
<S> <C> <C> <C> <C>
Southern California,
Orange County/Los Angeles:
South Coast Executive Center 100.0% 161,787 100.0% 2
2600 W. Olive 100.0 144,831 100.0 1
Bay Technology Center 100.0 107,481 100.0 2
Southern California,
San Diego:
Jaycor 100.0 105,358 100.0 1
Northern California,
San Francisco Bay Area:
San Mateo I 100.0 70,000 100.0 1
San Mateo II and III 100.0 141,404 100.0 2
Seattle:
Canyon Park Commons 100.0 95,290 100.0 1
Austin, Texas:
Great Hills Plaza 100.0 135,333 100.0 1
City View Centre 100.0 136,183 100.0 3
Riata 2, 3, 4, 5, 6, 8, 9 100.0 582,325 99.9 7
Riata Crossing 1, 2, 3 100.0 265,190 100.0 3
Tower of the Hills 100.0 166,149 99.7 2
City View Center 100.0 128,716 100.0 1
Chicago:
Bannockburn I & II 100.0 209,582 97.8 2
Bannockburn IV 100.0 108,469 100.0 1
Dallas, Texas:
Quorum North 100.0 116,084 92.9 1
Quorum Place 100.0 178,296 100.0 1
Cedar Maple Plaza 100.0 113,588 85.5 3
Commons @ Las Colinas 1, 3 100.0 380,764 100.0 2
Two Mission Park 100.0 78,020 97.1 1
5000 Quorum 100.0 160,763 94.3 1
Royal Ridge A & B 100.0 247,239 100.0 2
Denver:
Harlequin Plaza 100.0 329,210 92.3 2
Quebec Court I & II 100.0 287,294 100.0 2
Quebec Center 100.0 106,865 88.5 3
Panorama Corporate Center I 100.0 100,881 100.0 1
Panorama II 100.0 100,916 100.0 1
Phoenix, Arizona:
US West 100.0 532,506 100.0 4
Concord Place 100.0 133,555 87.2 1
Salt Lake City, Utah:
Sorenson Research Park 100.0 285,144 97.7 5
Sorenson X 100.0 41,288 100.0 1
Wasatch Corporate Center 17,18 100.0 121,654 99.3 2
Wasatch Corporate Center 100.0 178,231 100.0 3
------- ----- -
TOTAL CONSOLIDATED PROPERTIES: 6,050,396 66
========= ==
WEIGHTED AVERAGE 98.2%
====
</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
June 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 June 30, 2000:
Approximate Net
Rentable Percent of Leased
Area Subject to Square Footage
Expiring Leases Represented by
Year of Lease Expiration (square feet) (1) Expiring Leases
------------------------ ----------------- ---------------
2000 307,866 5.2%
2001 576,862 9.7
2002 1,025,829 17.3
2003 676,593 11.4
2004 947,615 16.0
2005 391,956 6.6
2006 187,640 3.2
2007 778,560 13.1
2008 399,346 6.7
2009 476,054 8.0
2010 and thereafter 172,228 2.8
(1) Excludes 109,847 square feet of vacant space.
16
<PAGE>
Quantitative and Qualitative Disclosure About Market Risk
--------------------------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No material changes in the Partnership's market risk have occurred since the
filing of the Partnership's Form Annual Report on 10-K for the year ended
December 31, 1999.
17
<PAGE>
Part II
OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
10.1 Loan Agreement, dated as of April 18, 2000, by and among
CarrAmerica Realty Corporation, the Partnership and The
Chase Manhattan Bank (incorporated by reference to Exhibit
10.6 to the Quarterly Report of CarrAmerica Realty
Corporation on Form 10-Q for the quarter ended June 30,
2000).
27(1) Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
______________
(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: August 14, 2000
19
<PAGE>
Exhibit Index
-------------
Exhibit Description
------- -----------
27 Financial Data Schedule
20
