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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
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PURSUANT TO SECTION 13 or 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): December 29, 1998
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CABOT INDUSTRIAL TRUST
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(Exact Name of Registrant as Specified in Charter)
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Maryland 1-13829 04-3397866
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Two Center Plaza, Suite 200
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Boston, Massachusetts 02108
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code (617) 723-0900
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Cabot Industrial Trust (the "Company") acquired the Arizona Property from
RREEF on December 29, 1998. The Arizona Property consists of a single 201,600
square foot warehouse located in Phoenix, Arizona. The Company purchased the
Arizona Property for approximately $6.8 million.
The Company is in negotiations with various affiliates of the Paul Hemmer
Construction Company to purchase 25 warehouse buildings located primarily in
Ohio and Kentucky (the "Hemmer Properties Group"). These properties comprise
approximately 833,000 square feet. The Company expects to purchase the Hemmer
Properties Group for approximately $33 million; however, there are a number of
items which need to be completed prior to closing. Therefore, there is no
assurance that the Company will actually purchase the Hemmer Properties Group.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired or To Be Acquired.
The Arizona Property
The Hemmer Properties Group
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
None
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SIGNATURES
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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 hereunto duly authorized.
CABOT INDUSTRIAL TRUST
Date: January 28, 1999 By: /s/ Neil E. Waisnor
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Neil E. Waisnor
Senior Vice President--Finance
Treasurer and Secretary
<PAGE>
Report of Independent Public Accountants
To Cabot Industrial Trust:
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Arizona Property 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 accounting principles
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 the Form 8-K of Cabot Industrial Trust to
be filed on or about January 29, 1999, as described in Note 2 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 of
the Property described in Note 2 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
January 28, 1999
<PAGE>
Arizona Property
Statement of Revenue and Certain Expenses
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1998 1997
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(Unaudited)
<S> <C> <C>
REVENUES:
Base Rent $506,113 $500,625
Tenant Reimbursements 17,963 3,700
Other Income 47 43
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Total revenues $524,123 504,368
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EXPENSES:
Management Fees 17,963 22,134
Property Operating Costs 9,071 1,725
Insurance 2,077 2,582
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Total expenses 29,111 26,441
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REVENUE IN EXCESS OF CERTAIN EXPENSES $495,012 $477,927
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</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
Arizona Property
Notes to Statement of Revenue and Certain Expenses
December 31, 1997
1. Business
The Arizona Property consists of a single, 201,600 square-foot warehouse located
in Phoenix, Arizona. The property is occupied by two tenants who each occupy
half of the building.
2. Summary of Significant Accounting Policies
Basis of Presentation
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 the Form 8-K of Cabot Industrial Trust to
be filed on or about January 29, 1999. The statement is not representative of
the actual operations of the Arizona Property for the period presented nor
indicative of future operations as certain expenses, primarily depreciation,
amortization and interest expenses, which may not be comparable to the expenses
expected to be incurred by Cabot Industrial Trust in future operations of the
Property, have been excluded. Real estate taxes, which are paid directly by the
tenants, have also been excluded.
The financial statement, and information included in these notes to the
financial statement for the nine months ended September 30, 1998, is unaudited.
In the opinion of management, such financial statement and information reflect
all adjustments necessary for a fair presentation of the results of the interim
period. All adjustments are of a normal, recurring nature.
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 Statement 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 revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
3. Rental Revenue
All leases are classified as operating leases.
<PAGE>
Arizona Property
Notes to Statement of Revenue and Certain Expenses
December 31, 1997
4. Future Minimum Rental Receipts
Future minimum rental receipts due on noncancelable operating leases for the
Property as of December 31, 1997 were as follows:
1998 602,784
1999 624,960
2000 655,200
2001 665,280
2002 672,336
Thereafter 3,746,736
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$6,967,296
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The above amounts do not include additional rental receipts that will become due
as a result of the expense pass-through and escalation provisions in the leases.
The Arizona Property is subject to the usual business risks associated with the
collection of the above scheduled rents.
<PAGE>
Report of Independent Public Accountants
To The Owners of the
Hemmer Properties Group:
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of Hemmer Properties Group (the Portfolio) for the year ended December
31, 1998. The combined Statement of Revenue and Certain Expenses is the
responsibility of the Portfolio's 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 combined 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 combined Statement
of Revenue and Certain Expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the combined 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 the Form 8-K of Cabot Industrial Trust
to be filed on or about January 29, 1999 as described in Note 2 and is not
intended to be a complete presentation of the Portfolio's revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the revenue and certain
expenses of the Portfolio described in Note 2 for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
January 28, 1999
<PAGE>
HEMMER PROPERTIES GROUP
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Year Ended
December 31
1998
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<S> <C>
Revenues:
Base Rent $3,812,092
Tenant Reimbursements 259,988
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Total revenues 4,072,080
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Expenses:
Management Fee 146,600
Insurance 65,037
Maintenance 147,931
Property Taxes 259,071
Gas and Electricity 115,225
Water and Sewage 19,462
Janitor/Trash 40,200
Fire Alarm Monitoring 1,235
Legal and Professional 12,216
Miscellaneous 10,180
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Total expenses 817,157
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Revenue in Excess of
Certain Expenses $3,254,923
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</TABLE>
The accompanying notes are an integral part of this combined financial
statement.
<PAGE>
HEMMER PROPERTIES GROUP
NOTES TO STATEMENT OF COMBINED REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1998
(1) Business
Hemmer Properties Group (the Portfolio) is not a legal entity but rather a
combination of the operations for 25 warehouse buildings that are managed
by the Paul Hemmer Construction Company. These properties comprise
approximately 833,000 square feet and are located primarily in Ohio and
Kentucky, with one building in Indiana. As of December 31, 1998, they were
occupied by a total of 62 tenants. The accompanying combined financial
statement includes all of the direct costs of the business of the
Portfolio.
(2) Summary of Significant Accounting Policies
Basis of Presentation
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 the Form 8-K of Cabot
Industrial Trust to be filed on or about January 29, 1999. The statement is
not representative of the actual operations of the Portfolio for the period
presented nor indicative of future operations as certain expenses,
primarily depreciation, amortization and interest expenses, which may not
be comparable to the expenses expected to be incurred by Cabot Industrial
Trust in future operations of the Portfolio, 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 Statement 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 revenue and expenses during the reporting period. Actual results
could differ from those estimates.
<PAGE>
HEMMER PROPERTIES GROUP
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1998
(CONTINUED)
(3) RENTALS
All leases are classified as operating leases.
(4) FUTURE MINIMUM RENTAL RECEIPTS
Future minimum rental receipts due on noncancelable operating leases for
the Hemmer Properties Group as of December 31, 1998 were as follows:
1999 $3,530,050
2000 2,805,282
2001 1,488,449
2002 760,700
2003 492,277
Thereafter 98,315
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$9,175,073
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The above amounts do not include additional rental receipts that will
become due as a result of the expense pass-through and escalation
provisions in the leases. The Portfolio is subject to the usual business
risks associated with the collection of the above scheduled rents.
(4) RELATED PARTY TRANSACTIONS
The Paul Hemmer Construction Company (Hemmer Construction) provides
property management services to all of the properties at rates ranging
from 2.5% to 5% of gross revenues. The financial statement includes
mangement fee expense of $ 146,600.
Hemmer Construction also provides maintenance services to all of the
properties. Maintenance expense includes approximately $52,000 of
services provided by Hemmer Construction for the year ended December 31,
1998.
