<PAGE> 1
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) June 26, 1998
EOP OPERATING LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE 1-13625 36-4156801
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
TWO NORTH RIVERSIDE PLAZA, 60606
SUITE 2200, CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive offices)
(312) 466-3300
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITIONS
As used herein, the term "Company" means either EOP Operating Limited
Partnership, a Delaware limited partnership, alone as an entity, or as the
context may require, the consolidated enterprise consisting of Equity Office
Properties Trust, a Maryland real estate investment trust, 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, 1997, as amended by Form 10-K/A, and the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998. The Company
acquired 14 Office Properties and one parking facility during the period from
January 1, 1998 through July 2, 1998. The cash portion of these transactions was
financed through the Company's lines of credit and working capital. Descriptions
of the acquired properties are as follows.
BP TOWER GARAGE
The Company acquired BP Tower Garage located in Cleveland, Ohio from an
unaffiliated party for approximately $10.2 million in cash on January 29, 1998.
100 SUMMER STREET
The Company acquired 100 Summer Street located in Boston, Massachusetts from an
unaffiliated party for approximately $222.7 million in cash on March 18, 1998.
The 32-story building contains approximately 1,037,801 square feet of office
space and was approximately 100% occupied as of June 30, 1998.
THE TOWER AT NEW ENGLAND EXECUTIVE PARK
The Company acquired The Tower at New England Executive Park located in
Burlington, Massachusetts from an unaffiliated party for approximately $27.9
million in cash on March 31, 1998. The 11-story building contains approximately
195,228 square feet of office space and was substantially vacant except for
existing leases, which comprise approximately 36.5% of the building as of June
30, 1998. The Company is currently preparing the vacant space for future
occupancy.
DENVER POST TOWER
The Company acquired Denver Post Tower located in Denver, Colorado from an
unaffiliated party for approximately $52.8 million on April 21, 1998. The
acquisition was paid for with a combination of approximately $52.7 million in
cash and $.1 million in Units. The 22-story office building contains
approximately 579,999 square feet of office space and was approximately 84.0%
occupied as of June 30, 1998.
301 HOWARD STREET AND 215 FREMONT STREET
The Company acquired 301 Howard Street and 215 Fremont Street located in San
Francisco, California from an unaffiliated party for approximately $89.9 million
in cash on April 29, 1998. The 301 Howard Street office building consists of 23
stories and contains approximately 305,891 square feet of space and was
approximately 84.7% occupied as of June 30, 1998. The 215 Fremont Street office
building consists of 10 stories and contains approximately 265,000 square feet.
The building is currently vacant and will undergo a significant renovation and
extensive seismic retrofitting prior to re-tenanting.
2
<PAGE> 3
410 17TH STREET
The Company acquired 410 17th Street located in Denver, Colorado from an
unaffiliated party for approximately $44.6 million in cash on April 30, 1998.
The office building contains approximately 388,953 square feet of office space
and was approximately 87.6% occupied as of June 30, 1998.
ONE TABOR CENTER
The Company acquired One Tabor Center located in Denver, Colorado from an
unaffiliated party for approximately $144.3 million on April 30, 1998. The
acquisition was paid for with a combination of approximately $96.2 million in
cash and $48.1 million in assumed debt. The office building contains
approximately 557,047 square feet of office space in two buildings and was
approximately 91.0% occupied as of June 30, 1998. The building also contains
approximately 117,231 square feet of retail space and was 80.0% occupied as of
June 30, 1998. This property also includes an adjacent development site.
TRINITY PLACE
The Company acquired Trinity Place located in Denver, Colorado from an
unaffiliated party for approximately $19.0 million in cash on April 30, 1998.
The office building contains approximately 189,163 square feet of office space
and was approximately 90.1% occupied as of June 30, 1998.
DOMINION PLAZA
The Company acquired Dominion Plaza located in Denver, Colorado from an
unaffiliated party for approximately $59.8 million on May 14, 1998. The
acquisition was paid for with a combination of approximately $21.9 million in
cash and $37.9 million in purchase money debt. The office building contains
approximately 571,468 square feet of office space and was approximately 88.6%
occupied as of June 30, 1998.
MILLENNIUM PLAZA
The Company acquired Millennium Plaza located in Englewood, Colorado from an
unaffiliated party for approximately $46.1 million in cash on May 19, 1998.
Millennium Plaza is a four- and three-story interconnected office building
containing approximately 330,033 square feet and was approximately 100% occupied
as of June 30, 1998. The acquisition also includes an adjacent 26-acre site of
vacant land.
JAMES K. POLK BUILDING AND THE ZACHARY TAYLOR BUILDING
The Company acquired the remaining 90% interest in the James K. Polk Building
and the Zachary Taylor Building located in Arlington, Virginia from an
unaffiliated party for approximately $158.2 million in cash on May 22, 1998. The
Company previously was a co-general partner and held a combined 10% general and
limited partnership interest in the office buildings. The James K. Polk Building
and the Zachary Taylor Building are twin, 12-story office buildings containing
approximately 902,371 square feet and were approximately 100% occupied as of
June 30, 1998.
WALKER BUILDING
The Company acquired Walker Building located in Washington, D.C. from an
unaffiliated party for approximately $8.6 million in cash on June 1, 1998. The
office building contains approximately 75,456 square feet of office space and
was approximately 76.9% occupied as of June 30, 1998.
3
<PAGE> 4
COLUMBIA SEAFIRST CENTER
The Company acquired Columbia Seafirst Center located in Seattle, Washington
from an unaffiliated party for approximately $401.7 million in cash on June 26,
1998. The 76-story office building contains approximately 1,537,932 square feet
of office and retail space in two buildings, and a 750-space parking garage. The
building was approximately 88.8% occupied as of June 30, 1998.
NORTHLAND PLAZA
The Company acquired Northland Plaza located in Bloomington, Minnesota from an
unaffiliated party for approximately $47.0 million in cash on July 2, 1998. The
15-story office building contains approximately 296,965 square feet of office
space and was approximately 97.8% occupied as of June 30, 1998.
4
<PAGE> 5
ITEM 5. OTHER EVENTS
The Company expects to acquire 11 additional office properties within the next
few months from various unaffiliated parties. The office properties are as
follows.
4949 SOUTH SYRACUSE
The Company expects to acquire 4949 South Syracuse located in Denver, Colorado
from an unaffiliated party for approximately $8.2 million. The office building
contains approximately 62,633 square feet of office space and was approximately
96.4% occupied as of June 30, 1998.
METROPOINT, ONE PARK SQUARE AND THE TERRACE BUILDING
The Company expects to acquire Metropoint located in Denver, Colorado, One Park
Square located in Albuquerque, New Mexico, and The Terrace Building located in
Greenwood Village, Colorado, from an unaffiliated party for approximately $97.3
million. Metropoint contains approximately 263,719 square feet of office space
and was approximately 95.0% occupied as of June 30, 1998. One Park Square
contains approximately 262,020 square feet of office space in four buildings and
was approximately 80.1% occupied as of June 30, 1998. The Terrace Building
contains approximately 115,364 square feet of office space and was approximately
83.9% occupied as of June 30, 1998.
THE SOLARIUM
The Company expects to acquire The Solarium located in Greenwood Village,
Colorado from an unaffiliated party for approximately $19.5 million. The office
building contains approximately 162,851 square feet of office space and was
approximately 95.0% occupied as of June 30, 1998.
COLONNADE I, II AND III
The Company expects to acquire Colonnade I, II and III located in Dallas, Texas
from an unaffiliated party for approximately $150.0 million. The acquisition
will include three office buildings totaling 982,110 square feet. Colonnade I
contains approximately 289,743 square feet of office space and was approximately
98% occupied as of June 30, 1998. Colonnade II contains approximately 317,367
square feet of office space and was approximately 99% occupied as of June 30,
1998. Colonnade I and II will be acquired for approximately $90.0 million.
Colonnade III, which is under construction and expected to be completed in
August 1998, will contain approximately 375,000 square feet and is 37%
pre-leased as of June 30, 1998. The purchase price on Colonnade III will be
determined at the date of close, based on a pre-determined formula factored for
leased and unleased space, and is estimated at approximately $60.0 million.
5
<PAGE> 6
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro Forma Financial Statements
(b) Financial statements for acquired and probable properties.
6
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
EOP OPERATING LIMITED PARTNERSHIP
Date: July 10, 1998 By: /s/ Richard D. Kincaid
----------------------------------
Richard D. Kincaid
Executive Vice President,
Chief Financial Officer
7
<PAGE> 8
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
The accompanying unaudited Pro Forma Condensed Combined Balance Sheet
as of March 31, 1998 reflects the following transactions which all occurred or
are expected to occur subsequent to March 31, 1998: (a) the acquisition or
probable acquisition of 23 office properties and the purchase of the remaining
partnership interests in one of the Company's unconsolidated joint ventures; (b)
the increase in the $600 Million Credit Facility to $1.0 billion; (c) the UIT
Offering; and (d) the $300 million unsecured notes offering and the concurrent
$475 million unsecured notes offering (collectively the "June 1998 Notes
Offering").
The accompanying unaudited Pro Forma Condensed Combined Statement of
Operations for the three months ended March 31, 1998 reflects the following
transactions as if they had occurred on January 1, 1998: (a) the acquisition of
2 office properties, and one parking facility, acquired during the three months
ended March 31, 1998; (b) the acquisition of 12 office properties, acquired
between April 1, 1998 and July 2, 1998; (c) the purchase of the remaining
partnership interests in one of the Company's unconsolidated joint ventures; (d)
the probable acquisition of 11 office properties; (e) the February 1998 Notes
Offering; (f) the Series B Preferred Shares Offering; (g) the increase in the
$600 Million Credit Facility to $1.0 billion; (h) the UIT Offering; and (i) the
June 1998 Notes Offering.
The accompanying unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1997 reflects the following
transactions as if they had occurred on January 1, 1997: (a) the acquisition of
66 office properties, including 20 office properties acquired by Beacon prior to
the Beacon Merger, and seven parking facilities, including an interest in four
parking facilities, acquired during the year ended December 31, 1997; (b) the
disposition of three office properties; (c) the $180 million private debt
offering (the "$180 Million Notes Offering") which occurred on September 3,
1997; (d) the transactions that occurred in connection with the consolidation of
the entities which comprise the predecessors ("Equity Office Predecessors") of
the Company (the "Consolidation") and the initial public offering (the "IPO"),
which closed on July 11, 1997, and the decrease in interest expense resulting
from the use of the net proceeds for the repayment of mortgage debt; (e) the net
change in interest expense from draws on the $1.5 Billion Credit Facility used
to refinance existing mortgage debt; (f) the Beacon Merger; (g) the acquisition
of 14 office properties and one parking facility acquired between January 1,
1998 and July 2, 1998; (h) the purchase of the remaining partnership interest in
one of the Company's unconsolidated joint ventures; (i) the probable acquisition
of 11 office properties; (j) the February 1998 Notes Offering; (k) the Series B
Preferred Shares Offering; (l) the increase in the $600 Million Credit Facility
to $1.0 billion; (m) the UIT Offering; and (n) the June 1998 Notes Offering.
The accompanying unaudited pro forma condensed combined 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
transactions described above been completed on the dates indicated or which may
be obtained in the future. The pro forma condensed combined financial statements
should be read in conjunction with the accompanying notes to the pro forma
condensed combined financial statements as of and for the three months ended
March 31, 1998 and the year ended December 31, 1997, included elsewhere herein.
<PAGE> 9
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998
ACQUIRED EOP
EOP PROPERTIES JUNE OPERATING
OPERATING AND 1998 LIMITED
LIMITED PROBABLE UIT NOTES PARTNERSHIP
PARTNERSHIP ACQUISITIONS OFFERING OFFERING PRO FORMA
----------- ------------ ----------- ----------- ------------
(A) (B)
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENT IN REAL ESTATE, NET $11,200,676 $ 1,362,999 $ -- $ -- $12,563,675
CASH AND CASH EQUIVALENTS 11,681 -- -- -- 11,681
RENTS AND OTHER RECEIVABLES 70,478 -- -- -- 70,478
ESCROW DEPOSITS AND RESTRICTED CASH 29,923 -- -- -- 29,923
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES 359,804 (15,962) -- -- 343,842
OTHER ASSETS 131,432 -- -- 5,981(C) 137,413
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $11,803,994 $ 1,347,037 $ -- $ 5,981 $13,157,012
=========== =========== =========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
MORTGAGE DEBT $ 2,060,105 $ 48,109 $ -- $ -- $ 2,108,214(F)
NOTES PAYABLE 1,684,425 57,362 -- 775,119(D) 2,516,906(F)
REVOLVING LINE OF CREDIT/TERM LOAN 243,000 1,241,466 (44,059) (769,138)(E) 671,269(F)
DISTRIBUTION PAYABLE 92,057 -- -- -- 92,057
OTHER LIABILITIES 284,137 -- -- -- 284,137
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 4,363,724 1,346,937 (44,059) 5,981 5,672,583
MINORITY INTERESTS:
PARTIALLY OWNED PROPERTIES 29,200 -- -- -- 29,200
PREFERRED UNITS 500,000 -- -- -- 500,000
GENERAL PARTNERS 114,838 -- 622 -- 115,460
LIMITED PARTNERS 6,796,232 100 43,437 -- 6,839,769
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $11,803,994 $ 1,347,037 $ -- $ 5,981 $13,157,012
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 10
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
EOP 1988
OPERATING ACQUIRED
LIMITED PROPERTIES FEBRUARY
PARTNERSHIP AND 1998 NOTES
HISTORICAL PROBABLE OFFERING
----------- ---------- ----------
(G) (T)
<S> <C> <C> <C>
REVENUES:
Rental $ 289,213 $ 36,348 $ --
Tenant reimbursements 52,989 4,589 --
Parking 21,214 2,050 --
Other 6,177 589 --
Fees from noncombined affiliates 1,157 -- --
Interest 3,070 -- --
--------- --------- --------
Total revenues 373,820 43,576 --
--------- --------- --------
EXPENSES:
Property operating 137,865 16,026 --
Interest 72,029 24,394 508(U)
Depreciation 64,540 8,109 --
Amortization 1,107 -- --
General and administrative 13,948 -- --
--------- --------- --------
289,489 48,529 508
--------- --------- --------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures 84,331 (4,953) (508)
Minority interests:
Partially owned propertiees (538) -- --
Income from investment in unconsolidated joint ventures 3,634 (434) --
--------- --------- --------
Net income from continuing operations 87,427 (5,387) (508)
--------- --------- --------
Preferred dividends (6,271) -- --
--------- --------- --------
Net income available for Units $ 81,156 $ (5,387) $ (508)
========= ========= ========
Net income available per weighted average Unit outstanding (Basic)
Weighted Average Units Outstanding (Basic)
Net income available per weighted average Unit outstanding (Diluted)
Weighted Average Units Outstanding (Diluted)
<CAPTION>
EOP
OPERATING
SERIES B JUNE LIMITED
PREFERRED UIT 1998 NOTES PARTNERSHIP
OFFERING OFFERING OFFERING PRO FORMA
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Rental $ -- $ -- $ -- $ 325,561
Tenant reimbursements -- -- -- 57,578
Parking -- -- -- 23,264
Other -- -- -- 6,766
Fees from noncombined affiliates -- -- -- 1,157
Interest -- -- -- 3,070
--------- --------- --------- ---------
Total revenues -- -- -- 417,396
--------- --------- --------- ---------
EXPENSES:
Property operating -- -- -- 153,891
Interest (2,774)(V) (760)(X) 1,059(Y) 94,456
Depreciation -- -- -- 72,649
Amortization -- -- -- 1,107
General and administrative -- -- -- 13,948
--------- --------- --------- ---------
(2,774) (760) 1,059 336,051
--------- --------- --------- ---------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures 2,774 760 (1,059) 81,345
Minority interests:
Partially owned propertiees -- -- -- (538)
Income from investment in unconsolidated joint ventures -- -- -- 3,200
--------- --------- --------- ---------
Net income from continuing operations 2,774 760 (1,059) 84,007
--------- --------- --------- ---------
Preferred dividends (2,188)(W) -- -- (8,459)
--------- --------- --------- ---------
Net income available for Units $ 586 $ 760 $ (1,059) $ 75,548
========= ========= ========= =========
Net income available per weighted average Unit outstanding (Basic)
$ 0.27
=========
Weighted Average Units Outstanding (Basic) 280,582
=========
Net income available per weighted average Unit outstanding (Diluted) $ 0.27
=========
Weighted Average Units Outstanding (Diluted) 282,967
=========
</TABLE>
<PAGE> 11
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
EOP
OPERATING
LIMITED 1997
PARTNERSHIP ACQUIRED
HISTORICAL PROPERTIES DISPOSITIONS
----------- ---------- ------------
(G) (H) (I)
<S> <C> <C> <C>
REVENUES:
Rental $ 570,379 $ 245,032 $ (5,645)
Tenant reimbursements 106,437 54,560 (62)
Parking 47,051 17,229 (573)
Other 9,863 4,307 (431)
Fees from noncombined affiliates 4,950 -- --
Interest 13,392 69 --
--------- --------- ---------
Total revenues 752,072 321,197 (6,711)
--------- --------- ---------
EXPENSES:
Property operating 282,964 124,069 (2,710)
Interest 164,105 94,782 (36)
Depreciation 122,074 56,550 (2,071)
Amortization 7,357 -- (54)
General and administrative 34,891 2,185 (283)
--------- --------- ---------
611,391 277,586 (5,154)
--------- --------- ---------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures 140,681 43,611 (1,557)
Minority interests:
Partially owned propertiees (1,701) -- --
Income from investment in unconsolidated joint ventures 5,155 1,581 --
--------- --------- ---------
Net income from continuing operations 144,135 45,192 (1,557)
--------- --------- ---------
Preferred dividends (649) (7,962) --
--------- --------- ---------
Net income available for Units $ 143,486 $ 37,230 $ (1,557)
========= ========= =========
Net income available per weighted average Unit outstanding (Basic)
Weighted Average Units Outstanding (Basic)
Net income available per weighted average Unit outstanding (Diluted)
Weighted Average Units Outstanding (Diluted)
<CAPTION>
BEACON
BEACON MERGER
CONSOLIDATION PROPERTIES AND
FINANCING AND IPO L.P. HISTORICAL
ACTIVITY ADJUSTMENTS HISTORICAL ADJUSTMENTS
-------- ----------- ---------- -----------
(O)
<S> <C> <C> <C> <C>
REVENUES:
Rental $ -- $ 8,983(K) $ 299,196 $ 5,834(P)
Tenant reimbursements -- -- 39,856 --
Parking -- -- -- --
Other -- -- 11,907 --
Fees from noncombined affiliates -- -- 3,090 --
Interest -- -- 10,067 --
--------- --------- --------- ---------
Total revenues -- 8,983 364,116 5,834
--------- --------- --------- ---------
EXPENSES:
Property operating -- -- 107,905 --
Interest 16,606(J) (27,042)(L) 52,344 943(Q)
Depreciation -- 2,737 (M) 65,034 5,374(R)
Amortization -- -- 4,209 --
General and administrative -- 1,800 (N) 37,455 -- (S)
--------- --------- --------- ---------
16,606 (22,505) 266,947 6,317
--------- --------- --------- ---------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures (16,606) 31,488 97,169 (483)
Minority interests:
Partially owned propertiees -- -- -- --
Income from investment in unconsolidated joint ventures -- -- 6,087 --
--------- --------- --------- ---------
Net income from continuing operations (16,606) 31,488 103,256 (483)
--------- --------- --------- ---------
Preferred dividends -- -- (9,349) --
--------- --------- --------- ---------
Net income available for Units $ (16,606) $ 31,488 $ 93,907 $ (483)
========= ========= ========= =========
Net income available per weighted average Unit outstanding (Basic)
Weighted Average Units Outstanding (Basic)
Net income available per weighted average Unit outstanding (Diluted)
Weighted Average Units Outstanding (Diluted)
</TABLE>
<PAGE> 12
EOP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998
ACQUIRED
PROPERTIES FEBRUARY
AND 1998 SERIES B
PROBABLE NOTES PREFERRED
ACQUISITIONS OFFERING OFFERING
------------ ----------- -----------
(T)
<S> <C> <C> <C>
REVENUES:
Rental $ 141,706 $ -- $ --
Tenant reimbursements 20,564 -- --
Parking 7,449 -- --
Other 2,662 -- --
Fees from noncombined affiliates -- -- --
Interest -- -- --
------------ ----------- -----------
Total revenues 172,381 -- --
----------- ----------- -----------
EXPENSES:
Property operating 66,502 -- --
Interest 102,797 3,735(U) (19,976) (V)
Depreciation 33,440 -- --
Amortization -- -- --
General and administrative -- -- --
----------- ----------- -----------
202,739 3,735 (19,976)
----------- ----------- -----------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures (30,358) (3,735) 19,976
Minority interests:
Partially owned propertiees -- -- --
Income from investment in unconsolidated joint ventures (1,847) -- --
----------- ----------- -----------
Net income from continuing operations (32,205) (3,735) 19,976
----------- ----------- -----------
Preferred dividends -- -- (15,750)(W)
----------- ----------- -----------
Net income available for Units $ (32,205) $ (3,735) $ 4,226
=========== =========== ===========
Net income available per weighted average Unit outstanding (Basic)
Weighted Average Units Outstanding (Basic)
Net income available per weighted average Unit outstanding (Diluted)
Weighted Average Units Outstanding (Diluted)
<CAPTION>
EOP
OPERATING
JUNE LIMITED
UIT 1998 NOTES PARTNERSHIP
OFFERING OFFERING PRO FORMA
----------- ------------ -------------
<S> <C> <C> <C>
REVENUES:
Rental $ -- $ -- $ 1,265,485
Tenant reimbursements -- -- 221,355
Parking -- -- 71,156
Other -- -- 28,308
Fees from noncombined affiliates -- -- 8,040
Interest -- -- 23,528
----------- ------------ ------------
Total revenues -- -- 1,617,872
----------- ------------ ------------
EXPENSES:
Property operating -- -- 578,730
Interest (3,040)(X) 391(Y) 385,609
Depreciation -- -- 283,138
Amortization -- -- 11,512
General and administrative -- -- 76,048
----------- ------------ ------------
(3,040) 391 1,335,037
----------- ------------ ------------
Income before allocation to minority interests, income from
investment in unconsolidated joint ventures 3,040 (391) 282,835
Minority interests:
Partially owned propertiees -- -- (1,701)
Income from investment in unconsolidated joint ventures -- -- 10,976
----------- ----------- -----------
Net income from continuing operations 3,040 (391) 292,110
----------- ----------- -----------
Preferred dividends -- -- (33,710)
----------- ----------- -----------
Net income available for Units $ 3,040 $ (391) $ 258,400
=========== =========== ===========
Net income available per weighted average Unit outstanding (Basic) $ 0.92
===========
Weighted Average Units Outstanding (Basic) 280,319
===========
Net income available per weighted average Unit outstanding (Diluted) $ 0.92
===========
Weighted Average Units Outstanding (Diluted) 282,096
===========
</TABLE>
<PAGE> 13
EOP OPERATING LIMITED PARTNERSHIP
NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
A. To reflect the following acquisitions during the period from April 1, 1998
to July 2, 1998 and the Probable Acquisitions:
<TABLE>
<CAPTION>
LIABILITIES VALUE OF RECLASS OF
PURCHASE ASSUMED UNITS HISTORICAL
PROPERTY DATE ACQUIRED COST PAID OR ISSUED ISSUED COST
- -------- ------------- --------- ---------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Denver Post Tower April 21, 1998 $ 52,837 $ 52,737 $ -- $100 $ --
Miller Global Portfolio (1) 392,655 287,184 105,471 -- --
301 Howard and 215 Fremont April 29, 1998 89,928 89,928 -- -- --
Polk & Taylor (2) 174,156 158,194 -- -- 15,962(4)
Millennium Plaza May 19, 1998 46,061 46,061 -- -- --
Walker Building June 1, 1998 8,624 8,624 -- -- --
Columbia Seafirst Center June 26, 1998 401,738 401,738 -- -- --
Northland Plaza July 2, 1998 47,000 47,000 -- -- --
Colonnade I, II and III (3) 150,000 150,000 -- -- --
---------- ---------- -------- ---- -------
Totals $1,362,999 $1,241,466 $105,471 $100 $15,962
========== ========== ======== ==== =======
</TABLE>
(1) This portfolio consists of 13 office properties. The Company acquired 410
17th Street, One Tabor Center and Trinity Place on April 30, 1998 and
Dominion Plaza on May 14, 1998 and expects to acquire 4949 South Syracuse,
Metropoint, One Park Square, The Terrace Building and The Solarium on July
15,1998. In connection with this acquisition, the Company issued $57.4
million of unsecured notes which are payable within 120 days of closing in
either cash or Common Shares.
(2) On May 22, 1998, the Company acquired the remaining 90% interest in the
Polk & Taylor Joint Venture.
(3) Probable acquisition.
(4) To reclassify the Company's 10% interest in the unconsolidated joint
venture to investment in real estate as a result of acquiring the remaining
90% interest (See (2) above).
B. To reflect the UIT Offering and paydown of the Credit Facilities with the
proceeds.
C. To reflect the following costs incurred in connection with the June 1998
Notes Offering:
<TABLE>
<S> <C>
Underwriting fees $5,481
Offering costs 500
------
Total $5,981
======
</TABLE>
D. To reflect the June 1998 Notes Offering, including a $2,400 premium related
to warrants, exercisable in December 1999, to purchase $300 million
unsecured notes, which were issued as part of the June 1998 Notes Offering
and a $2,281 discount related to the $475 million unsecured notes.
<PAGE> 14
E. To reflect the use of proceeds of the June 1998 Notes Offering:
<TABLE>
<S> <C>
Proceeds from the June 1998 Notes, including premium
received in connection with the $300 million unsecured
notes and a discount on the $475 million unsecured notes $775,119
Costs incurred in connection with the June 1998
Notes Offering (see Note C) (5,981)
--------
Net proceeds used to paydown credit facility $769,138
========
</TABLE>
F. Scheduled payments of principal on total indebtedness for each of the next
five years and thereafter, on a pro forma basis are as follows:
<TABLE>
<S> <C>
1998 $ 191,970
1999 52,908
2000 151,236
2001 1,104,266
2002 319,583
Thereafter 3,470,451
----------
Subtotal $5,290,414
Net premium (net of accumulated amortization of
$2.4 million) 5,975
----------
Total $5,296,389
==========
</TABLE>
G. Represents the consolidated historical statement of operations of the
Company for the three months ended March 31, 1998 for the Pro Forma
Condensed Combined Statement of Operations for the three months ended March
31, 1998 and the combined historical statements of operations of the
Company for the period from July 11, 1997 to December 31, 1997 and Equity
Office Predecessors for the period from January 1, 1997 to July 10, 1997,
for the Pro Forma Condensed Combined Statement of Operations for the year
ended December 31, 1997.
H. To reflect the operations and the depreciation expense for properties
acquired in 1997 for the period from January 1, 1997 through the date of
acquisition. Interest expense was also adjusted, where applicable, to a
full year, for the year ended December 31, 1997.
<TABLE>
<CAPTION>
PROPERTY DATE ACQUIRED NOTE REFERENCE
-------- ------------- --------------
<S> <C> <C>
177 Broad Street January 29, 1997
Biltmore Apartments January 29, 1997
Preston Commons March 21, 1997
Oakbrook Terrace Tower April 16, 1997
50% Interest in Civic Parking, L.L.C. April 16, 1997
One Maritime Plaza April 21, 1997
10880 Wilshire Boulevard April 23, 1997 (1)
Smith Barney Tower April 29, 1997
201 Mission Street April 30, 1997
Centerpointe I and II April 30, 1997 (1)
Westbrook Corporate Center May 23, 1997 (1)
225 Franklin Street June 4, 1997 (1)
30 N. LaSalle June 13, 1997
Sunnyvale Business Center July 1, 1997 (1)
Adams--Wabash Parking Facility August 11, 1997
Columbus America Properties September 3, 1997
Civic Opera Building October 1, 1997 (1)
Prudential Properties October 1, 1997
550 South Hope Street October 6, 1997
10 & 30 South Wacker Drive October 7, 1997
Acorn Properties October 7, 1997
200 West Adams October 8, 1997 (1)
One Lafayette Centre October 17, 1997
Lakeside Office Park October 20, 1997 (1)
Acorn Properties November 21, 1997
PPM Properties November 24, 1997
LaSalle Office Plaza November 25, 1997
Stanwix Parking Facility November 25, 1997
101 North Wacker December 11, 1997 (1)
Wright Runstad Properties December 17, 1997
Wright Runstad Associates
Limited Partnership December 17, 1997
</TABLE>
<PAGE> 15
(1) Represents properties acquired during 1997 by Beacon prior to the Beacon
Merger.
The depreciation adjustment of $56.6 million in the "1997 Acquired
Properties" column in the statement of operations for the year ended
December 31, 1997, is based on the cost to acquire the above listed
properties, assuming that 10% of the purchase price is allocated to land
and the depreciable lives are 40 years. Depreciation is computed using the
straight-line method.
I. To eliminate the operations of Barton Oaks Plaza II, Westlakes Office Park
and 8383 Wilshire for the year ended December 31, 1997. Barton Oaks Plaza
II was sold in January and Westlakes Office Park and 8383 Wilshire were
sold in May 1997.
J. To reflect the additional interest expense on debt obtained in the year
ended December 31, 1997 on properties acquired before 1997 and to reflect
the $180 Million Notes Offering which occurred on September 3, 1997, and
the resulting paydown of the revolving credit facility, and to reflect the
$235.3 million of mortgage indebtedness repaid from draws on the $1.5
Billion Credit Facility and the repayment of the revolving credit facility
balance. The adjustment also eliminates amortization expense recorded on
the mark-to-market adjustment on debt repaid from draws on the $1.5 Billion
Credit Facility and reflects amortization related to the fees associated
with the $1.5 Billion Credit Facility for the year ended December 31, 1997,
as follows:
<TABLE>
<S> <C>
Additional interest from debt obtained during
1997 on properties acquired before 1997 $ 1,042
Additional interest on $180 Million Notes Offering 9,218
Additional interest on $1.5 Billion Credit Facility 24,126
Decrease in interest from repayment of mortgage indebtedness (13,263)
Decrease in interest from repayment of the revolving
credit facility (8,052)
Amortization of fees associated with the $1.5 Billion
Credit Facility 5,018
Eliminate amortization expense recorded on mark
to market adjustment on debt repaid with the
$1.5 Billion Credit Facility (1,483)
--------
Total $ 16,606
========
</TABLE>
K. To reflect the adjustment for the straight-line effect of scheduled rent
increases, assuming the Consolidation and the IPO closed on January 1,
1997.
L. To reflect the net decrease in interest expense associated with the $15.0
million of mortgage debt on Denver Corporate Center Towers II and III
repaid in May 1997 and the $598.4 million repaid with the net proceeds of
the IPO and cash held by Equity Office Predecessors. In addition, to
eliminate the $5.9 million of amortization historically recognized as a
result of the write-off of deferred loan costs, net of the $4.1 million
amortization of the discount required to record the mortgage debt at fair
value recorded in connection with the Consolidation and the IPO.
<PAGE> 16
M. To reflect depreciation expense related to the adjustment to record the net
equity value of the investment in real estate for the year ended December
31, 1997, on a straight-line basis, as follows:
<TABLE>
<S> <C>
Historical investment in real estate before accumulated
depreciation at time of IPO $5,022,946
Less: Portion allocated to land estimated to be 10% (502,295)
----------
Depreciable basis $4,520,651
----------
Depreciation expense based on an estimated useful
life of 40 years $ 113,016
Less: Historical depreciation expense related to
properties contributed at the Consolidation and IPO (106,888)
Less: Pro forma depreciation expense on properties
acquired in 1997 prior to the Consolidation and the IPO (3,391)
----------
Depreciation expense adjustment $ 2,737
==========
</TABLE>
N. To reflect additional general and administrative expenses expected to be
incurred as a result of reporting as a public entity as follows:
<TABLE>
<S> <C>
Trustees' and officers' insurance $ 375
Printing and mailing 375
Trustees' fees 225
Investor relations 225
Other 600
------
Total $1,800
</TABLE>
O. Represents Beacon's historical statement of operations prior to the Beacon
Merger for the period from January 1, 1997 to December 18, 1997.
P. To reflect the adjustment for the straight-line effect of scheduled rent
increases, assuming the Beacon Merger closed on January 1, 1997.
Q. To reflect amortization of mark-to-market adjustment of Beacon's mortgage
debt.
R. To reflect the depreciation expense related to the adjustment to record the
net equity value of the investment in real estate and investment in joint
ventures on a straight-line basis for the year ended December 31, 1997
associated with the Beacon Merger, as follows:
<TABLE>
<S> <C>
Investment in real estate for Beacon Properties $4,204,502
Less: Portion allocated to land (515,022)
----------
Pro Forma depreciable basis of Beacon's investment in
real estate, net $3,689,480
==========
Depreciation expense based on an estimated useful
life of 40 years $ 92,237
Less: Historical expense related to the Beacon
Properties, including the period from
December 19, 1997 to December 31, 1997 after
the Beacon Merger (73,393)
Less: Pro Forma depreciation expense on Beacon's
1997 acquired properties (13,470)
----------
Adjustment to depreciation expense $ 5,374
==========
</TABLE>
S. Management has estimated that there will be a reduction of general and
administrative expenses as a result of the Beacon Merger, as follows. The
general and administrative expenses savings have not been included in the
pro forma condensed combined statement of operations. There can be no
assurance that the Company will be successful in realizing such anticipated
cost savings.
<TABLE>
<S> <C>
Salaries and benefits $16,500
Rent 1,200
Office and computer expenses 1,600
Investor relations 1,600
Other 1,100
-------
Total $22,000
=======
</TABLE>
<PAGE> 17
T. To reflect the operations and the depreciation expense for the following
properties acquired in 1998 for (a) the pro forma condensed combined
statement of operations for the three months ended March 31, 1998; for the
period from January 1, 1998 through the earlier of the date of acquisition
or March 31, 1998, as applicable, and (b) the pro forma condensed combined
statement of operations for the year ended December 31, 1997, for the
period from January 1, 1997 to December 31, 1997. Interest expense was also
adjusted, where applicable, to reflect three months and a full year, for
the three months ended March 31, 1998 and the year ended December 31, 1997,
respectively.
<TABLE>
<CAPTION>
PROPERTY DATE ACQUIRED
-------- -------------
<S> <C>
BP Tower Garage January 29, 1998
100 Summer Street March 18, 1998
The Tower at New England Executive Park March 31, 1998
Denver Post Tower April 21, 1998
301 Howard and 215 Fremont April 29, 1998
Miller Global Portfolio (1)
Millennium Plaza May 19, 1998
Polk & Taylor May 22, 1998
Walker Building June 1, 1998
Columbia Seafirst Center June 26, 1998
Northland Plaza July 2, 1998
Colonnade I, II and III Probable Acquisition
</TABLE>
(1) The Company acquired four properties on April 30, 1998 and one property on
May 15, 1998 and expects to acquire the remaining eight properties on July
15, 1998.
The depreciation adjustment of $8,109 million for the three months ended
March 31, 1998 and $33,440 million for the year ended December 31, 1997 is
based on the cost to acquire the properties described above assuming that
10% of the purchase price is allocated to land and the depreciable lives
are 40 years. Depreciation is computed using the straight-line method.
U. To reflect the net increase in interest expense in connection with the
February 1998 Notes Offering and the paydown of the revolving credit
facility and the $1.5 Billion Credit Facility with the net proceeds of the
February 1998 Notes Offering and to reflect amortization of the financing
costs incurred in connection with the February 1998 Notes Offering.
V. To reflect the decrease in interest expense in connection with the paydown
of the Credit Facilities with the net proceeds of the Series B Preferred
Offering.
W. To reflect preferred distributions in connection with the Series B
Preferred Offering of 5.25% per annum.
X. To reflect the decrease in interest in connection with the paydown of the
Credit Facilities with the net proceeds of the UIT Offering (see Note B).
Y. To reflect the net increase in interest expense in connection with the June
1998 Notes Offering and the paydown of the revolving credit facility with
the net proceeds of the June 1998 Notes Offering (see Note E) and to
reflect amortization of the financing cost incurred in connection with the
June 1998 Notes Offering.
<PAGE> 18
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3) and related Prospectus of EOP Operating Limited Partnership for the
registration of debt securities and warrants exercisable for debt securities, of
our reports included in the Current Report of EOP Operating Limited Partnership
on Form 8-K dated June 26, 1998 filed with the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS DATE OF AUDITORS' REPORT
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Statement of Revenue and Certain Expenses of Denver Post Tower for the April 28, 1998
year ended December 31, 1997
Combined Statement of Revenue and Certain Expenses of 301 Howard Street and 215 April 29, 1998
Fremont Street for the year ended October 31, 1997
Combined Statement of Revenue and Certain Expenses of the Mountain Properties April 28, 1998
for the year ended December 31, 1997
Statement of Revenue and Certain Expenses of Millennium Plaza for the year ended June 22, 1998
December 31, 1997
Statement of Revenue and Certain Expenses of Polk & Taylor for the year ended June 18, 1998
December 31, 1997
Combined Statement of Revenue and Certain Expenses of Colonnade I, Colonnade II, June 12, 1998
and the Walker Building for the year ended December 31, 1997
Statement of Revenue and Certain Expenses of Columbia Seafirst Center for the July 1, 1998
year ended December 31, 1997
</TABLE>
ERNST & YOUNG LLP
Chicago, Illinois
July 8, 1998
<PAGE> 19
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Denver Post Tower (the Property) as described in Note 2 for the year ended
December 31, 1997. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1, and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 28, 1998
1
<PAGE> 20
Denver Post Tower
Statements of Revenue and Certain Expenses
(Amounts in thousands)
<TABLE>
<CAPTION>
JANUARY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1997 MARCH 31, 1998
----------------- ---------------
<S> <C> <C>
REVENUE (UNAUDITED)
Base rents $6,685 $1,844
Tenant reimbursements 158 68
Parking income 433 113
Other income 225 36
------ ------
Total revenue 7,501 2,061
------ ------
EXPENSES
Property operating and maintenance 3,039 732
Real estate taxes 555 155
Air rights rent 400 100
Management fee 155 42
Insurance 46 10
------ ------
Total expenses 4,195 1,039
------ ------
Revenue in excess of certain expenses $3,306 $1,022
====== ======
</TABLE>
See accompanying notes.
2
<PAGE> 21
Denver Post Tower
Notes to Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust. The accompanying statements are not representative of
the actual operations of the property, as described in Note 2, for the periods
presented nor indicative of future operations as certain expenses, primarily
depreciation, amortization and interest expense, which may not be comparable to
the expenses expected to be incurred by Equity Office Properties Trust in future
operations of the property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statements of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of the revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
2. DESCRIPTION OF PROPERTY
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the Denver Post Tower, an office building with approximately
580,000 rentable square feet, located in Denver, Colorado (the "Property"). The
Property was acquired for $52.8 million by Equity Office Properties Trust from
an unrelated party on April 21, 1998.
3
<PAGE> 22
Denver Post Tower
Notes to Statements of Revenue and Certain Expenses (continued)
3. RENTALS
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes on a pro rata basis, as defined.
4. RELATED PARTY TRANSACTIONS
The Property was managed by an affiliated party to the seller. The management
agreement provided for a fee of 2.5% of gross receipts and reimbursements of
payroll for on-site personnel.
5. COMMITMENT
The Property is obligated under a 65 year air rights lease agreement expiring in
2047. The lease provides for minimum payments of $400,000 per year, plus
contingent rent based on a percentage of cash flows received from the operations
of the Property, as defined in the lease. No contingent rentals were due for
1997.
4
<PAGE> 23
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of 301 Howard Street and 215 Fremont Street (the Properties) described
in Note 2 for the year ended October 31, 1997. The combined Statement of Revenue
and Certain Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined Statement of Revenue and
Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1, and is not intended to be a
complete presentation of the Properties' combined revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses described in Note 1 of the Properties for the year ended
October 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 29, 1998
<PAGE> 24
301 Howard Street and 215 Fremont Street
Combined Statements of Revenue and Certain Expenses
(Amounts in Thousands)
<TABLE>
<CAPTION>
NOVEMBER 1, 1997
YEAR ENDED THROUGH
OCTOBER 31, 1997 MARCH 31, 1998
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents $5,257 $2,477
Tenant reimbursements 139 18
Parking income 63 46
Other income 90 28
------ ------
Total revenue 5,549 2,569
------ ------
EXPENSES
Property operating and maintenance 2,284 839
Real estate taxes 490 212
Insurance 70 32
------ ------
Total expenses 2,844 1,083
------ ------
Revenue in excess of certain expenses $2,705 $1,486
====== ======
</TABLE>
See accompanying notes.
<PAGE> 25
301 Howard Street and 215 Fremont Street
Notes to Combined Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Current Report on Form 8-K
of Equity Office Properties Trust. The accompanying financial statements are not
representative of the actual operations of the properties, as described in Note
2, for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization and interest expense, which may
not be comparable to the expense expected to be incurred by Equity Office
Properties Trust in future operations of the properties, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the combined Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of the combined
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
<PAGE> 26
301 Howard Street and 215 Fremont Street
Notes to Combined Statements of Revenue and Certain Expenses
(continued)
2. DESCRIPTION OF PROPERTIES
The accompanying combined Statements of Revenue and Certain Expenses relate to
the combined operations of 301 Howard Street and 215 Fremont Street (the
"Properties") which were acquired for $89.9 million by Equity Office Properties
Trust on April 29, 1998. The Properties have been presented on a combined basis
because all of the Properties are under common control and management. The
following Properties are included in the combined financial statements:
<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
PROPERTY NAME LOCATION SQUARE FOOTAGE
- ------------------------------------------------------------------------
<S> <C> <C>
301 Howard Street San Francisco, CA 306,000
215 Fremont Street San Francisco, CA 265,000
-------
571,000
=======
</TABLE>
3. RENTALS
The Properties have entered into tenant leases that provide for tenants to share
in the operating expenses and real estate taxes on a pro rata basis, as defined.
<PAGE> 27
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Mountain Properties (the Properties) as described in Note 2 for
the year ended December 31, 1997. The combined Statement of Revenue and Certain
Expenses is the responsibility of the Properties' management. Our responsibility
is to express an opinion on the combined Statement of Revenue and Certain
Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1 and is not intended to be a
complete presentation of the Properties' combined revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses described in Note 1 of the Properties for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 28, 1998
1
<PAGE> 28
Mountain Properties
Combined Statements Of Revenue And Certain Expenses
(Amounts in thousands)
<TABLE>
<CAPTION>
JANUARY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1997 MARCH 31, 1998
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents $26,228 $ 7,235
Tenant reimbursements 5,290 1,389
Parking revenue 3,595 966
Other income 638 186
------- -------
Total revenue 35,751 9,776
------- -------
EXPENSES
Property operating and maintenance 12,826 3,073
Real estate taxes 3,508 872
Management fee 1,100 281
Insurance 322 84
------- -------
Total expenses 17,756 4,310
------- -------
Revenue in excess of certain expenses $17,995 $ 5,466
======= =======
</TABLE>
See accompanying notes.
2
<PAGE> 29
Mountain Properties
Notes to Combined Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Current Report on Form 8-K
of Equity Office Properties Trust. The accompanying financial statements are not
representative of the actual operations of the Mountain Properties (the
"Properties"), as described in Note 2, for the periods presented nor indicative
of future operations as certain expenses, primarily depreciation, amortization
and interest expense, which may not be comparable to the expenses expected to be
incurred by Equity Office Properties Trust in future operations of the
Properties, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the combined Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of the combined
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
2. DESCRIPTION OF PROPERTIES
The accompanying combined Statements of Revenue and Certain Expenses relate to
the combined operations of the Properties which are to be acquired by Equity
Office Properties Trust from an unrelated third party. The Properties have been
presented on a combined basis because all of the Properties are under common
control and management. The following properties are included in the combined
financial statements:
3
<PAGE> 30
2. DESCRIPTION OF PROPERTIES (CONTINUED)
<TABLE>
<CAPTION>
APPROXIMATE
RENTABLE
PROPERTY NAME LOCATION SQUARE FOOTAGE
------------- -------- --------------
<S> <C> <C>
One Tabor Center (a) Denver, CO 674,000
Dominion Plaza Denver, CO 571,000
410 17th Street Denver, CO 389,000
Trinity Place Denver, CO 189,000
The Solarium Greenwood Village, CO 163,000
4949 South Syracuse Denver, CO 63,000
One Park Square (b) Albuquerque, NM 262,000
=========
2,311,000
=========
</TABLE>
(a) This property consists of two buildings.
(b) This property consists of four buildings.
3. RENTALS
The Properties have entered into tenant leases that provide for tenants to share
in the operating expenses and real estate taxes on a pro rata basis, as defined.
4. RELATED PARTY TRANSACTIONS
The Properties were managed by affiliated parties to the seller. The management
agreements provided for a fee ranging from 2%-5% of gross receipts, as defined
and reimbursements for on-site personnel.
<PAGE> 31
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Millennium Plaza (the Property) as described in Note 2 for the year ended
December 31, 1997. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1, and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 22, 1998
1
<PAGE> 32
Millennium Plaza
Statements of Revenue and Certain Expenses
(Amounts in thousands)
<TABLE>
<CAPTION>
JANUARY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1997 APRIL 30, 1998
----------------- ---------------
(UNAUDITED)
REVENUE
<S> <C> <C>
Base rents $3,885 $1,295
Tenant reimbursements 4,539 1,102
Other income 24 7
------ ------
Total revenue 8,448 2,404
------ ------
EXPENSES
Property operating and maintenance 2,727 807
Real estate taxes 1,182 390
Management fee 248 78
Insurance 34 21
------ ------
Total expenses 4,191 1,296
------ ------
Revenue in excess of certain expenses $4,257 $1,108
====== ======
</TABLE>
See accompanying notes.
2
<PAGE> 33
Millennium Plaza
Notes to Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust. The accompanying financial statements are not
representative of the actual operations of the property, as described in Note 2,
for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization and interest expense, which may
not be comparable to the expenses expected to be incurred by Equity Office
Properties Trust in future operations of the property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statements of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of the revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
3
<PAGE> 34
Millennium Plaza
Notes to Statements of Revenue and Certain Expenses
(continued)
2. DESCRIPTION OF PROPERTY
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Millennium Plaza, an office building with approximately 330,000
rentable square feet, located in Englewood, Colorado (the "Property"). The
Property was 99% occupied by a single tenant, First Data Corporation, as of
December 31, 1997. Equity Office Property Trust acquired the Property on May 19,
1998 for $46.1 million from an unrelated party.
3. RENTALS
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes on a pro rata basis, as defined.
4. RELATED PARTY TRANSACTIONS
The Property was managed by an affiliated party to the seller. The management
agreement provided for a fee of 3.0% of gross receipts, as defined.
4
<PAGE> 35
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees
Equity Office Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Polk & Taylor (the Property) as described in Note 2 for the year ended December
31, 1997. The Statement of Revenue and Certain Expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures made in the Statement of Revenue
and Certain Expenses. An audit also includes assessing the basis of accounting
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1 and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 18, 1998
<PAGE> 36
POLK & TAYLOR
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 MARCH 31, 1998
----------------- ------------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents............................................ $ 22,038 $ 6,109
Tenant reimbursements................................. 1,196 195
Parking income........................................ 1,445 334
Other income.......................................... 73 1
-------- -------
Total revenue...................................... 24,752 6,639
-------- -------
EXPENSES
Property operating and maintenance.................... 4,016 789
Real estate taxes..................................... 1,198 310
Management fee........................................ 969 255
Insurance............................................. 99 21
-------- -------
Total expenses..................................... 6,282 1,375
-------- -------
Revenue in excess of certain expenses..................... $ 18,470 $ 5,264
======== =======
</TABLE>
See accompanying notes.
<PAGE> 37
POLK & TAYLOR
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust. The statements are not representative of the actual
operations of the property, as described in Note 2, for the periods presented
nor indicative of future operations as certain expenses, primarily depreciation,
amortization and interest expense, which may not be comparable to the expenses
expected to be incurred by Equity Office Properties Trust in future operations
of the property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statements of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of the revenue and
certain expenses during the reporting periods. Actual results could differ from
these estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
2. DESCRIPTION OF PROPERTY
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Polk & Taylor, an office building with approximately 902,000
rentable square feet, located in Arlington, Virginia (the "Property"). A single
tenant, the Department of Defense, occupied approximately 95% of the building as
of December 31, 1997. On May 22, 1998, Equity Office Properties Trust, which
previously owned a 10% interest in the Property, acquired the remaining 90%
interest for approximately $158.2 million, from an unrelated party.
3. RENTALS
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes on a pro-rata basis, as defined.
<PAGE> 38
POLK & TAYLOR
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
4. RELATED PARTY TRANSACTIONS
During the year ended December 31, 1997, the Property was managed by an
affiliated party to the seller. The management agreement provided for fees of 4%
of gross receipts, as defined.
<PAGE> 39
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Colonnade I, Colonnade II and the Walker Building (the
Properties) as described in Note 2 for the year ended December 31, 1997. The
combined Statement of Revenue and Certain Expenses is the responsibility of the
Properties' management. Our responsibility is to express an opinion on the
combined Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission, for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1, and is not intended to be a
complete presentation of the Properties' revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses described in Note 1 of the Properties for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 12, 1998
1
<PAGE> 40
Colonnade I, Colonnade II and the Walker Building
Combined Statements of Revenue and Certain Expenses
(Amounts in thousands)
<TABLE>
<CAPTION>
JANUARY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1997 APRIL 30, 1998
----------------- -----------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents $11,250 $3,942
Tenant reimbursements 778 262
Parking income 130 66
Other income 28 -
------- ------
Total revenue 12,186 4,270
------- ------
EXPENSES
Property operating and maintenance 3,363 1,148
Real estate taxes 1,541 487
Insurance 97 32
------- ------
Total expenses 5,001 1,667
------- ------
Revenue in excess of certain expenses $7,185 $2,603
======= ======
</TABLE>
See accompanying notes.
2
<PAGE> 41
Colonnade I, Colonnade II and the Walker Building
Notes to Combined Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Current Report on Form 8-K
of Equity Office Properties Trust. The accompanying financial statements are not
representative of the actual operations of the properties, as described in Note
2, for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization and interest expense, which may
not be comparable to the expenses expected to be incurred by Equity Office
Properties Trust in future operations of the properties, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the combined Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of the combined
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
significant adjustments necessary for a fair presentation of the results of the
interim period. All such adjustments are of a normal, recurring nature.
2. DESCRIPTION OF PROPERTIES
The accompanying combined Statements of Revenue and Certain Expenses relate to
the combined operations of the Colonnade I and Colonnade II, a twin tower office
complex with approximately 607,000 rentable square feet, located in Dallas,
Texas, and the Walker Building, an office building with approximately 75,000
rentable square feet, located in Washington, D.C. (collectively the
"Properties"). The Properties have been presented on a combined basis because
the Properties were under common ownership and management. It is expected that
Colonnade I and Colonnade II will be acquired for $90.0 million by Equity Office
Properties Trust from an unrelated party. The Walker Building was acquired on
June 1, 1998 for $8.6 million by Equity Office Properties Trust from an
unrelated party.
3
<PAGE> 42
Colonnade I, Colonnade II and the Walker Building
Notes to Combined Statement of Revenue and Certain Expenses (continued)
3. RENTALS
The Properties have entered into tenant leases that provide for tenants to share
in the operating expenses and real estate taxes on a pro rata basis, as defined.
4
<PAGE> 43
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Columbia Seafirst Center (the Property) as described in Note 2 for the year
ended December 31, 1997. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust as described in Note 1, and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
July 1, 1998
1
<PAGE> 44
Columbia Seafirst Center
Statements of Revenue and Certain Expenses
(Amounts in thousands)
<TABLE>
<CAPTION>
JANUARY 1, 1998
YEAR ENDED THROUGH
DECEMBER 31, 1997 MAY 31, 1998
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
REVENUE
Base rents $ 26,813 $ 11,642
Tenant reimbursements 625 167
Parking income 1,850 838
Other income 539 256
-------- --------
Total revenue 29,827 12,903
-------- --------
EXPENSES
Property operating and maintenance 6,896 2,761
Real estate taxes 2,499 1,064
Management fee 386 163
Insurance 197 105
-------- --------
Total expenses 9,978 4,093
-------- --------
Revenue in excess of certain expenses $ 19,849 $ 8,810
======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 45
Columbia Seafirst Center
Notes to Statements of Revenue and Certain Expenses
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of Equity
Office Properties Trust. The accompanying statements are not representative of
the actual operations of the property, as described in Note 2, for the periods
presented nor indicative of future operations as certain expenses, primarily
depreciation, amortization and interest expense, which may not be comparable to
the expenses expected to be incurred by Equity Office Properties Trust in future
operations of the property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized on a straight-line basis over the terms of the related
leases. Expenses are recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statements of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of the revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.
Unaudited Interim Statement
In the opinion of management, the interim financial statement reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
2. DESCRIPTION OF PROPERTY
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of the Columbia Seafirst Center, an office building with
approximately 1,500,000 rentable square feet, located in Seattle, Washington
(the "Property"). The Property was acquired on June 26, 1998 for $401.7 million
by Equity Office Properties Trust from an unrelated party.
3
<PAGE> 46
Columbia Seafirst Center
Notes to Statements of Revenue and Certain Expenses (continued)
3. RENTALS
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes on a pro rata basis, as defined.
4. RELATED PARTY TRANSACTIONS
The Property was managed by an affiliated party to the seller. The management
agreement provided for a fixed management fee of $386,279 per year.
4
