SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ Quarterly Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
OR
/ /Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number: 0-28354
Great Lakes REIT
(Exact name of Registrant as specified in its Charter)
Maryland 36-4238056
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
823 Commerce Drive, Suite 300, Oak Brook, IL 60523
(Address of principal executive offices) (Zip Code)
(630) 368 - 2900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares of the registrant's common stock, $.01 par value,
outstanding as of August 10, 1998: 17,413,951
<PAGE>
Great Lakes REIT
Index to Form 10-Q
June 30, 1998
Page Number
Part I - Financial Information
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets
as of June 30, 1998
and December 31, 1997 2
Consolidated Statements of Income
for the three months
ended June 30, 1998 and 1997 3
Consolidated Statements of Income
for the six months
ended June 30, 1998 and 1997 4
Consolidated Statement of Changes
in Stockholders' Equity
for the six months ended June 30, 1998 5
Consolidated Statements of Cash Flows
for the six months
ended June 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Item 3. Qualitative and Quantitative Disclosures
about Market Risk 14
Part II - Other Information
Item 2. Changes in Securities 15
Item 6. Exhibits and Reports on Form 8-K 16
1
<PAGE>
<TABLE>
Great Lakes REIT
Consolidated Balance Sheets (unaudited)
(Dollars in Thousands)
<CAPTION>
June 30, December 31,
-----------------------------------
1998 1997
Assets
Properties:
<S> <C> <C>
Land $55,010 $46,044
Buildings, improvements, and equipment 356,274 251,353
-----------------------------------
411,284 297,397
Less accumulated depreciation 16,066 11,456
----------------------------------
395,218 285,941
Cash and cash equivalents 2,616 1,437
Real estate tax escrows 305 332
Rents receivable 3,915 3,279
Deferred financing and leasing costs, net of accumulated amortization 4,832 3,444
Goodwill, net of accumulated amortization 1,322 1,359
Other assets 1,184 1,345
-----------------------------------
Total assets $409,392 $297,137
===================================
Liabilities and Stockholders' Equity
Bank loan payable $149,385 $72,500
Mortgage loans payable 29,805 17,568
Bonds payable 4,800 5,030
Accounts payable and accrued liabilities 5,105 3,464
Accrued real estate taxes 9,294 7,777
Prepaid rent 3,690 2,781
Security deposits 997 925
Distributions/dividends payable 14
-----------------------------------
Total liabilities 203,090 110,045
-----------------------------------
Common stock ($0.01 par value, 60,000,000 authorized; 17,435,735 and 174 159
15,862,811 shares issued in 1998 and 1997 respectively)
Paid-in-capital 223,649 196,431
Retained earnings (deficit) (6,342) (4,501)
Employee stock loans (10,851) (4,654)
Deferred compensation (58) (73)
Treasury stock, at cost (21,784 shares) (270) (270)
-----------------------------------
Total stockholders' equity 206,302 187,092
-----------------------------------
Total liabilities and stockholders' equity $409,392 $297,137
===================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
Great Lakes REIT
Consolidated Statements of Income (unaudited)
(Dollars in Thousands, except per share data)
<CAPTION>
Three months ended June 30,
------------------------------------
1998 1997
Revenues:
<S> <C> <C>
Rental $15,174 $8,418
Reimbursements 4,082 2,447
Interest and other 234 209
------------------------------------
Total revenues 19,490 11,074
------------------------------------
Expenses:
Real estate taxes 3,012 1,839
Other property operating 5,105 2,727
General and administrative 1,152 745
Interest 2,878 1,320
Depreciation and amortization 3,182 2,139
------------------------------------
Total expenses 15,329 8,770
------------------------------------
Net income $4,161 $2,304
====================================
Earnings per common share - basic $0.24 $0.19
====================================
Weighted average common shares outstanding - basic 17,267,562 12,350,523
====================================
Diluted earnings per common share $0.24 $0.18
====================================
Weighted average common shares outstanding - diluted 17,499,578 12,482,805
====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
Great Lakes REIT
Consolidated Statements of Income (unaudited)
(Dollars in Thousands, except per share data)
<CAPTION>
Six months ended June 30,
----------------------------------
1998 1997
Revenues:
<S> <C> <C>
Rental $28,038 $16,297
Reimbursements 7,847 5,141
Interest and other 408 279
----------------------------------
Total revenues 36,293 21,717
----------------------------------
Expenses:
Real estate taxes 5,740 3,709
Other property operating 9,340 5,460
General and administrative 2,250 1,675
Interest 4,913 2,924
Depreciation and amortization 5,921 3,837
----------------------------------
Total expenses 28,164 17,605
----------------------------------
Net income $8,129 $4,112
==================================
Earnings per common share - basic $0.49 $0.38
==================================
Weighted average common shares outstanding - basic 16,563,941 10,717,689
==================================
Diluted earnings per common share $0.48 $0.38
==================================
Weighted average common shares outstanding - diluted 16,820,069 10,849,971
==================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Great Lakes REIT
Consolidated Statement of Changes in Stockholders' Equity (unaudited)
For the Six Months Ended June 30, 1998
(Dollars in Thousands)
1998
- -------------------------------------------------------------------------
Common Stock
Balance at beginning of period $158
Net proceeds from the sale of common stock 12
Exercise of stock options 4
Restricted stock awards --
Issuance of shares for property acquisitions --
- -------------------------------------------------------------------------
Balance at end of period 174
Paid-in capital
Balance at beginning of period 196,431
Net proceeds from the sale of common stock 21,013
Exercise of stock options 6,205
Restricted stock awards --
Issuance of shares for property acquisitions --
- -------------------------------------------------------------------------
Balance at end of period 223,649
Retained earnings (deficit)
Balance at beginning of period (4,501)
Net income 8,129
Distributions/dividends (9,970)
- -------------------------------------------------------------------------
Balance at end of period (6,342)
Employee stock loans
Balance at beginning of period (4,654)
Exercise of stock options (6,197)
- -------------------------------------------------------------------------
Balance at end of period (10,851)
Deferred compensation
Balance at beginning of period (72)
Restricted stock award --
Amortization of deferred compensation 14
- -------------------------------------------------------------------------
Balance at end of period (58)
Treasury stock
Balance at beginning of period (270)
Purchase of treasury stock --
- -------------------------------------------------------------------------
Balance at end of period (270)
- -------------------------------------------------------------------------
Total stockholders' equity $206,302
=========================================================================
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
Great Lakes REIT
Consolidated Statements of Cash Flows (unaudited)
(Dollars in Thousands)
<CAPTION>
Six Months Ended June 30,
-------------------------------
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $8,129 $4,112
Adjustments to reconcile net income to cash
flows from operating activities
Depreciation and amortization 5,935 4,001
Net changes in assets and liabilities:
Rents receivable (636) (863)
Real estate tax escrows and other assets 287 967
Accounts payable, accrued expenses and other liabilities 1,733 1,403
Accrued real estate taxes 1,518 (68)
Payment of deferred leasing costs (1,347) (453)
-------------------------------
Net cash provided by operating activities 15,619 9,099
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of properties (96,475) (5,096)
Additions to buildings, improvements and equipment (5,825) (2,901)
Other investing activities 1,210
-------------------------------
Net cash used by investing activities (101,090) (7,997)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 22,500 101,603
Payment of stock offering costs (1,475) (8,564)
Proceeds from exercise of stock options 12 270
Proceeds from bank and mortgage loans payable 149,385 10,800
Distributions / dividends (9,970) (7,329)
Payment of bank and mortgage loans and bonds (72,927) (89,334)
Payment of deferred financing costs (875) (216)
-------------------------------
Net cash provided by financing activities 86,650 7,230
-------------------------------
Net increase (decrease) in cash and cash equivalents 1,179 8,332
Cash and cash equivalents, beginning of year 1,437 1,688
===============================
Cash and cash equivalents, end of quarter $2,616 $10,020
===============================
Supplemental disclosure of cash flow:
Interest paid $4,442 $2,859
===============================
Non cash financing transactions:
Employee stock loans $6,197 $351
===============================
Issuance of shares and units to acquire properties $887 $1,848
===============================
Mortgages assumed to acquire properties $12,435 $2,989
===============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Great Lakes REIT
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
Great Lakes REIT, a Maryland real estate investment trust, formed in 1998,
successor to Great Lakes REIT, Inc., a Maryland corporation, formed in 1992,
owns a limited partnership interest and the sole general partnership interest in
Great Lakes REIT, L.P. (the "Operating Partnership") totaling more than 99% of
the outstanding partnership interests of the Operating Partnership. Great
Lakes REIT, its subsidiaries and the Operating Partnership are referred to
herein collectively as the "Company".
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. These statements should be read in conjunction with the Company's
most recent year-end audited financial statements. In the opinion of management,
the accompanying financial statements contain all adjustments (which are normal
and recurring) necessary for a fair statement of financial results for the
interim periods. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
2. Properties Acquired in 1998
In January 1998, the Company acquired a 196,105 square foot building located in
Columbus, Ohio for a total acquisition cost of $21,939,000. Funds for the
purchase came from a borrowing under the Company's unsecured line of credit.
In April 1998, the Company acquired a 370,000 square foot office building
located in Milwaukee, Wisconsin for a contract price of $46,700,000. Funds for
the purchase came from a borrowing under the Company's unsecured line of credit.
In May 1998, the Company acquired two office buildings totaling 389,000 square
feet in Englewood, Colorado for a contract price of $41,900,000. Funds for the
purchase came from a borrowing under the Company's unsecured line of credit as
well as the assumption of a long-term mortgage loan of $12,435,000 with interest
at 7.11% per annum maturing in December 2007, and the issuance of 48,447
operating partnership units valued at $887,000.
The unaudited pro forma information presents the results of operations as if the
newly acquired Columbus, Ohio, Milwaukee, Wisconsin, and Englewood, Colorado
properties were acquired at the beginning of 1997, after giving effect to
certain adjustments, including increased depreciation and interest expense. The
unaudited pro forma summary information does not necessarily reflect the results
of operations as they would have been if the Company had acquired these
properties on January 1, 1997.
7
<PAGE>
<TABLE>
<CAPTION>
Six months ended Six months ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Revenues $40, 845,115 $39,249,213
Net income $ 7,847,336 $ 7,213,879
Earnings per common share-basic $0.47 $0.44
Diluted earnings per common share $0.47 $0.43
</TABLE>
3. Financing Activities
On January 6, 1998, the Company entered into a $35 million unsecured revolving
loan agreement with a commercial bank. In June 1998, the Company entered into a
$60 million unsecured credit facility which refinanced the $35 million unsecured
revolving loan agreement. Amounts due mature on December 28, 1998 and bear
interest at LIBOR plus 1.45% per annum. At June 30, 1998, $2,166,000 was
outstanding on the loan.
On April 6, 1998, the Company entered into a $150 million unsecured credit
facility with a group of banks, which refinanced its $75 million secured line of
credit. Amounts due mature in April 2001 and bear interest at LIBOR plus 1.1% to
1.3%, depending on overall Company leverage. At June 30, 1998, $147,219,000 was
outstanding on the loan.
On April 24, 1998, the Company closed the sale of common stock to a newly-formed
registered unit investment trust. The Company sold 1,184,211 shares of common
stock with net proceeds of approximately $21.0 million, all of which were used
to repay a portion of its bank lines of credit.
4. Subsequent Events
On July 27, 1998, the Company completed its conversion from a Maryland
corporation to a Maryland real estate investment trust as approved by the
Company's shareholders at the Annual Meeting held July 17, 1998.
On July 30, 1998, the Company acquired Court International I, a 120,734 square
foot interest in the northern half of floors two through four of the Court
International building for a contract price of $9,750,000, consolidating the
ownership of the property located in St. Paul, Minnesota. The Company had
previously acquired the rest of the four-story building (200,114 square feet) in
December 1996.
8
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Year 2000 Issues
In response to issues relating to the Year 2000, the Company is in the process
of evaluating its computerized business systems and the technology embedded in
various systems forming a part of the Company's operations. The Company believes
that its primary financial software is Year 2000 compliant. In addition, the
Company has initiated a program to communicate with its vendors (including
operators of heating and air-conditioning control systems, building security
systems, elevator operating software, and alarm monitoring systems), other
service providers and tenants to determine whether they are actively involved in
projects to ensure that their products, business systems, and embedded
technology will be Year 2000 compliant in a timely manner. The inability of the
Company or its material vendors, service providers, or tenants to effectuate
solutions to their respective Year 2000 issues on a timely and cost-effective
basis could have a material adverse effect on the Company.
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the three and six months ended June 30,
1998. The following should be read in conjunction with the consolidated
financial statements and related notes appearing elsewhere herein and the
consolidated financial statements and related notes contained in the Company's
1997 Form 10-K.
Overview
Great Lakes REIT, a Maryland real estate investment trust formed in 1998,
successor to Great Lakes REIT, Inc., a Maryland corporation, formed in 1992 owns
a limited partnership interest and the sole general partnership interest in
Great Lakes REIT, L.P. (the "Operating Partnership") totaling more than 99% of
the outstanding partnership interests of the Operating Partnership. Great Lakes
REIT, its subsidiaries and the Operating Partnership are referred to herein
collectively as the "Company".
The primary business of the Company is the ownership, management, leasing,
renovation, and acquisition of suburban office properties generally located
within a 500 mile radius of Chicago. At June 30, 1998, the Company owned and
operated properties located in suburban areas of Chicago, Detroit, Milwaukee,
Cincinnati, Columbus, Minneapolis/St. Paul, and Denver. The Company leases space
to over 600 tenants in a variety of businesses.
The Company has expanded its real estate portfolio through the acquisition of
suburban office and office/service center properties. The Company has financed
its growth by the issuance of its common shares and short and long-term debt.
Growth in net income and funds from operations (FFO) for the three and six
months ended June 30, 1998 as compared to June 30, 1997 resulted from a
combination of improved operations of the Company's properties and the inclusion
of the operating results of properties acquired in 1997 and 1998 from the dates
of their respective acquisitions.
Three months ended June 30, 1998 compared to three months ended June 30, 1997
In analyzing the operating results for the quarter ended June 30, 1998 the
changes in rental income, real estate taxes and property operating expenses,
from 1997 are due principally to three factors: (1) the addition of operating
results from properties acquired subsequent to June 30, 1997; (2) the addition
of a full quarter of operating results in 1998 from properties acquired in the
second quarter of 1997 as compared to the partial quarter of operating results
from the dates of their respective acquisitions in 1997, and (3) improved
operations of properties during 1998 as compared to 1997.
The Company acquired three properties during the second quarter of 1998. The
operating results of these properties were included in the Company's financial
statements from the date of their acquisition. In 1997 the Company acquired nine
properties including six properties subsequent to June 30, 1997 and one property
during the second quarter of 1997. In 1998 a full quarter of operations for
these properties is included in the Company's financial statements.
9
<PAGE>
A summary of these changes as they impact rental income, real estate taxes, and
property operating expenses follows:
<TABLE>
<CAPTION>
Rental and Real estate Property
reimbursement taxes operating
income expenses
<S> <C> <C> <C>
Increase due to inclusion
of results of properties
acquired in 1997 $4,456,000 $681,000 $ 1,296,000
Increase due to 1998 acquisitions 3,146,000 422,000 1,031,000
Property dispositions in 1998 (56,000) (1,000) (1,000)
Improved operations in 1998
compared to 1997 845,000 71,000 52,000
------- ------ ------
Total increase in 1998 $8,391,000 $1,173,000 $2,378,000
========== ========== ==========
</TABLE>
Interest expense during the quarter ended June 30, 1998 increased by $1,558,000
as the Company had greater amounts of debt outstanding in 1998. This debt was
used to finance a portion of the cost of properties acquired subsequent to June
30, 1997.
General and administrative expenses increased by $407,000 due primarily to
increased compensation costs ($110,000), certain costs associated with an
abandoned property acquisition ($40,000), increased costs associated with
operating as a public company ($115,000), increased professional fees ($64,000),
and increases in other office costs ($78,000) related to the increased size of
the Company.
Depreciation and amortization increased in 1998 by $1,043,000 as the Company
incurred these expenses on 37 properties as of June 30, 1998 as compared to 28
properties as of June 30, 1997.
Six months ended June 30, 1998 compared to six months ended June 30, 1997.
In analyzing the operating results for the six months ended June 30, 1998,
the changes in rental income, real estate taxes, and property operating expenses
are due principally to three factors: (1) the addition of operating results from
properties acquired subsequent to June 30, 1997; (2) the addition of a full six
months of operating results in 1998 from properties acquired in the first six
months of 1997 as compared to the partial period of the operating results from
the dates of their respective acquisitions in 1997; and (3) improved operations
of properties during 1998 as compared to 1997.
During the six months ended June 30, 1998, the Company acquired four properties.
The operating results of these properties have been included in the Company's
financial statements from the date of their acquisitions. In 1997, the Company
acquired nine properties including six properties subsequent to June 30, 1997.
In 1998 six months of operations for these properties have been included in the
Company's financial statements.
10
<PAGE>
A summary of these changes as they impact rental income, real estate taxes, and
property operating expenses follows:
<TABLE>
<CAPTION>
Rental and Real estate Property
reimbursement taxes operating
income expenses
<S> <C> <C> <C>
Increase due to inclusion
of results of properties
acquired in 1997 $9,100,000 $1,465,000 $2,529,000
Increase due to 1998 acquisitions 3,946,000 544,000 1,261,000
Property dispositions in 1998 (112,000) 11,000 5,000
Improved operations in 1998
compared to 1997 1,513,000 11,000 85,000
--------- ------ ------
Total increase in 1998 $14,447,000 $2,031,000 $3,880,000
=========== ========== ==========
</TABLE>
Interest expense during the six months ended June 30, 1998 increased by
$1,989,000 as the Company had greater amounts of debt outstanding in 1998.
General and administrative expenses increased by $575,000 due primarily to
increased compensation costs ($196,000), costs associated with abandoned
property acquisitions ($55,000), increased costs associated with operating as a
public company ($194,000), increased professional fees ($33,000), and increases
in other office costs ($97,000) related to the increased size of the Company.
Depreciation and amortization increased in 1998 by $2,084,000 as the Company
incurred these expenses on 37 properties as of June 30, 1998 as compared to 28
properties as of June 30, 1997.
Liquidity and Capital Resources
Cash and cash equivalents as of June 30, 1998 were $2,616,000, an increase of
$1,179,000 as compared to December 31, 1997. The increase is primarily due to
increased cash flow from operating activities in 1998 as compared to 1997 and
increased net cash provided by financing activities in 1998 as compared to 1997.
The Company expects to meet its short-term liquidity requirements principally
through its working capital and net cash provided by operating activities. The
Company considers its cash provided by operating activities to be adequate to
meet operating requirements and to fund the payment of dividends in order to
comply with certain federal income tax requirements applicable to real estate
investment trusts ("REITs").
The Company expects to meet its short-term liquidity requirements for property
acquisitions and significant capital improvements through additional borrowings
on its existing $60 million and $150 million unsecured lines of credit which
mature in December 1998 and April 2001, respectively.
The Company expects the lines of credit to be sufficient to provide the required
funds until such time as the short-term debt is replaced with long-term debt or
is repaid with the proceeds of additional equity offerings. So far in 1998 the
Company has acquired or committed to acquire $140 million of property
acquisitions. The ability of the Company to continue to make acquisitions at
this pace is predicated upon the Company's ability to access the public and
private equity and debt markets at acceptable prices and rates.
The Company expects to meet its long-term liquidity requirements (such as
scheduled mortgage debt maturities, property acquisitions, and significant
capital improvements) through long-term collateralized and uncollateralized
borrowings, the issuance of debt or additional equity securities in the Company,
and targeted property dispositions.
11
<PAGE>
On July 17, 1998, the Company's Board approved a plan to sell six properties.
These properties include five office properties and one industrial building. The
specific properties, all in suburban Chicago are:
Property Location
o 565 Lakeview Parkway Vernon Hills
o 2800 River Road Des Plaines
o 1251 Plum Grove Road Schaumburg
o Kensington Corporate Center Mount Prospect
o Court Office Center Markham
o 1675 Holmes Road Elgin
The Company expects to generate proceeds from the sale of these assets in the
range of $30 to $35 million, and plans to formally commence marketing efforts in
September 1998. These proposed dispositions are consistent with the Company's
strategy to seek to enhance shareholder value through strategic dispositions.
The Company currently plans to use the proceeds from sale to reduce outstanding
lines of credit, to acquire additional investment properties, and for working
capital.
Funds from Operations (FFO)
The White Paper on Funds From Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in March
1995 (the "White Paper") defines FFO as net income (loss) (computed in
accordance with generally accepted accounting principles), excluding gains or
losses from debt restructuring and sales of property, plus real estate
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Management considers FFO an appropriate measure
of performance of an equity REIT because it is predicated on cash flow analyses.
The Company computes FFO in accordance with standards established by the White
Paper (except for the amortization of deferred compensation related to
restricted stock awards) which may differ from the methodology for calculating
FFO utilized by other equity REITs and accordingly, may not be comparable to
other such REITs. FFO should not be considered as an alternative to net income
(determined in accordance with generally accepted accounting principles) as an
indicator of the Company's financial performance or to cash flow from operating
activities (determined in accordance with generally accepted accounting
principles) as a measure of the Company's liquidity, nor is it indicative of
funds available to fund the Company's cash needs, including its ability to make
distributions. FFO for the three months ended June 30, 1998 and 1997 is as
follows (Dollars in Thousands):
1998 1997
Net income $ 4,161 $ 2,304
Depreciation and amortization 2,981 1,664
Loan prepayment costs 0 644
--- ---
FFO $7,142 $4,612
====== ======
12
<PAGE>
FFO for the six months ended June 30, 1998 and 1997 is as follows (Dollars
in Thousands):
1998 1997
Net income $ 8,129 $ 4,112
Depreciation and amortization 5,443 3,219
Loan prepayment costs 0 644
--- ---
FFO $13,572 $7,975
======= ======
Forward-Looking Statements
Certain statements in this document constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Acts of 1934, and the Company intends that such
"forward-looking statements" be subject to the safe harbors created thereby. The
words "believe", "expect" and "anticipate" and similar expressions identify
forward-looking statements. In addition, statements regarding the Company's
expectations with respect to its short-term and long-term liquidity requirements
and related sources and compliance with Year 2000 issues are forward-looking
statements. These forwardlooking statements reflect the Company's current views
with respect to future events and financial performance, but are subject to many
uncertainties and factors relating to the Company's operations and business
environment that may cause the actual results of the Company to be materially
different from any future results expressed or implied by such forward-looking
statements. Examples of such uncertainties include, but are not limited to,
changes in interest rates, changes in the equity value of the Company, increased
competition for acquisition of new properties, availability of alternative
financing sources, unanticipated expenses and delays in acquiring properties or
increasing occupancy rates, regional economic and business conditions and the
ability of the Company, its vendors, and its tenants to identify and remediate
Year 2000 issues on a timely and cost-effective basis.
13
<PAGE>
Item 3. Qualitative and Quantitative Disclosures about Market Risk.
Not applicable.
14
<PAGE>
Part II Other Information
Item 2. Changes in Securities
During the quarter ended June 30, 1998, the Company issued 330,833 shares of
common stock pursuant to the exercise of outstanding stock options with an
aggregate exercise price of $5,285,142. These shares were issued to the
optionholders pursuant to exemptions from the registration requirements of the
Securities Act of 1933, as amended (the "Act") provided by Section 4(2) of the
Act or Rule 701 thereunder.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are attached hereto:
Exhibit
Number Description of Document
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
The following reports on Form 8-K and Form 8-K/A were filed during the
quarter ended June 30, 1998:
Current Report on Form 8-K dated April 20, 1998 reporting the following
item:
Item 2. Acquisition or Disposition of Assets
Item 5. Other Events
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
Current Report on Form 8-K dated April 24, 1998 reporting the following
item:
Item 5. Other Events
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
Current Report on Form 8-K dated June 4, 1998 reporting the following
item:
Item 2. Acquisition or Disposition of Assets
Current Report on Form 8-K/A dated June 19, 1998 reporting the
following item:
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Great Lakes REIT
(Registrant)
Date: August 13, 1998 /s/ James Hicks
Senior Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,616,000
<SECURITIES> 0
<RECEIVABLES> 3,915,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,020,000
<PP&E> 411,284,000
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0
0
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