FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For quarterly period ended June 30, 1996
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _____to_____
Commission File Number 0-10421
CORNERSTONE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
Nevada 74-2170858
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
126 East 56th Street
New York, New York 10022
(Address of principal executive offices)
(212) 605-7100
(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 Common Stock outstanding as of August 14, 1996: 20,309,165
Total pages = 14
Exhibit Index located on page 11
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<CAPTION>
June 30, December 31,
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Investments, at cost:
Land .............................................................. $ 63,351 $ 57,823
Buildings and improvements ........................................ 582,763 546,357
Mortgage note receivable (Note 1) ................................ -- 30,731
Deferred lease costs .............................................. 72,667 72,077
--------- ---------
718,781 706,988
Less: Accumulated depreciation and amortization ................... 187,227 175,167
--------- ---------
Total investments .............................................. 531,554 531,821
Cash and cash equivalents ................................................ 32,856 7,740
Restricted cash .......................................................... 4,358 4,393
Other deferred costs, net of accumulated amortization of $5,627 and $5,301 3,035 2,895
Deferred tenant receivables .............................................. 33,895 32,695
Tenant and other receivables ............................................. 2,542 1,585
Notes receivable ......................................................... 3,651 4,153
Other assets ............................................................. 3,409 807
--------- ---------
Total Assets ............................................................. $ 615,300 $ 586,089
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Long-term debt (Note 2) .................................................. $ 400,515 $ 369,600
Accrued interest payable ................................................. 4,675 4,327
Accrued real estate taxes payable ........................................ 10,527 10,045
Shareholders' distribution payable ....................................... 12,185 --
Accounts payable and accrued expenses .................................... 3,227 3,456
Unearned revenue and other liabilities ................................... 9,604 16,499
--------- ---------
Total Liabilities ........................................................ 440,733 403,927
--------- ---------
Minority Interest ........................................................ (16,786) (7,194)
--------- ---------
Commitments and Contingencies
Shareholders' Investment
Preferred Stock, $16.50 stated value, 15,000,000 shares authorized;
3,030,303 shares issued and outstanding ............................. 50,000 50,000
Common stock, 100,000,000 authorized shares ;
shares issued and outstanding (1996-20,309,165; 1995-19,959,515)
Paid-in capital .......................................................... 174,194 181,477
Accumulated deficit ...................................................... (31,028) (39,885)
Deferred compensation .................................................... (1,813) (2,236)
--------- ---------
Total Shareholders' Investment ........................................... 191,353 189,356
--------- ---------
Total Liabilities and Shareholders' Investment ........................... $ 615,300 $ 586,089
========= =========
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------- -------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES
Office and parking rentals ............ $ 26,994 $ 20,696 $ 52,913 $ 42,079
Interest and other income ............. 1,344 1,110 2,849 1,572
-------- -------- -------- -------
Total Revenues .................... 28,338 21,806 55,762 43,651
-------- -------- -------- -------
EXPENSES
Building operating expenses ........... 5,781 4,526 11,448 9,200
Real estate taxes ..................... 5,425 2,816 9,316 5,622
Interest expense ...................... 8,055 7,652 15,870 15,316
Depreciation and amortization ......... 6,123 5,560 12,114 11,221
Advisory fee .......................... -- 525 -- 1,050
Professional fees ..................... 177 234 371 415
General and administrative ............ 1,316 118 2,497 560
Directors' fees ....................... 34 24 68 48
-------- -------- -------- -------
Total Expenses .................... 26,911 21,455 51,684 43,432
-------- -------- -------- -------
1,427 351 4,078 219
-------- -------- -------- -------
OTHER INCOME (EXPENSES)
Net gain on interest rate swap (Note 3) 671 -- 5,465 --
Minority Interest ..................... (222) (891) (686) (1,776)
-------- -------- -------- -------
Income (loss) before extraordinary item ...... 1,876 (540) 8,857 (1,557)
Extraordinary loss ........................... -- (3,881) -- (3,881)
-------- -------- -------- -------
NET INCOME (LOSS) ............................ $ 1,876 $ (4,421) $ 8,857 $ (5,438)
======== ======== ======== =======
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM PER SHARE ................. $ 0.05 $ (0.04) $ 0.35 $ (0.12)
======== ======== ======== =======
NET INCOME (LOSS) PER SHARE .................. $ 0.05 $ (0.33) $ 0.35 $ (0.41)
======== ======== ======== =======
<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In Thousands)
(Unaudited)
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................................... $ 8,857 $ (5,438)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ................................................. 12,114 11,221
Deferred compensation amortization ............................................ 423 --
Extraordinary loss ............................................................ -- 3,881
Write-off of deferred financing costs ......................................... -- 1,355
Unbilled rental revenue ....................................................... (1,172) (820)
Net gain on interest rate swap ................................................ (5,465) --
Increase (decrease) in accrued interest payable ............................... 347 (3,127)
Minority interest share of income ............................................. 686 1,776
Increase in tenant and other receivables and other assets ..................... (2,510) (705)
Increase (decrease) in accounts payable, accrued expenes and other liabilities 1,325 (4,304)
--------- ---------
Total adjustments ............................................................. 5,748 9,277
--------- ---------
Net cash provided by operating activities ..................................... 14,605 3,839
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property .................................................... (3,211) (203)
Deferred costs incurred on investments .............................................. (392) (275)
Repayment of notes receivable from a related party .................................. 502 453
Loan to a related party ............................................................. -- (228)
--------- ---------
Net cash used in investing activities ......................................... (3,101) (253)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments under lines of credit .................................................... -- (108,098)
Borrowings under mortgage loan ...................................................... 18,000 110,000
Repayments under mortgage loan ...................................................... (11) --
Extraordinary loss .................................................................. -- (3,881)
Payment for swap termination ........................................................ (3,125) --
Debt issuance costs ................................................................. (213) --
Stock issuance costs ................................................................ (97) --
Decrease (increase) in restricted cash .............................................. 35 (433)
Distribution to minority partners ................................................... (977) (1,730)
Distributions to shareholders ....................................................... -- (3,840)
--------- ---------
Net cash provided by (used in) financing activities ........................... 13,612 (7,982)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................................ 25,116 (4,396)
CASH AND CASH EQUIVALENTS, beginning of period .............................................. 7,740 12,506
--------- ---------
CASH AND CASH EQUIVALENTS, end of period .................................................... $ 32,856 $ 8,110
========= =========
<FN>
Non-cash investing activity: Purchase of minority partnership interest through
issuance of $12,926,000 promissory note and 349,650 shares of common stock.
The accompanying notes are an integral part of these consolidated financial statements
</FN>
</TABLE>
<PAGE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(1) NATURE OF THE COMPANY'S BUSINESS
AND SIGNIFICANT ACCOUNTING POLICIES
Nature of the Company's Business: Cornerstone Properties Inc. (formerly known
as ARICO America Realestate Investment Company, prior to September 18, 1995), a
Nevada corporation (Cornerstone or the Company), was formed on May 5, 1981, to
invest in major commercial real estate projects in North America. The following
schedule summarizes the Company's interest, through its wholly owned
subsidiaries, in investments at June 30, 1996:
Net Ownership
Property Location Rentable Interest Notes
square feet
- --------------------------------------------------------------------------------
One Norwest Center Denver, Colorado 1,188,000 100% A
Norwest Center Minneapolis, Minnesota 1,118,000 50%
Washington Mutual Tower Seattle, Washington 1,066,000 50%
125 Summer Street Boston, Massachusetts 464,000 100%
Tower 56 New York, NY 162,000 100% B
(A)Effective January 1, 1996, the Company, through a subsidiary, purchased
the remaining 10 percent interest in 1700 Lincoln Limited, which operates
One Norwest Center, from Hines Colorado Limited (HCL) for a $12,925,976
convertible promissory note and 349,650 newly-issued shares of common
stock of the Company.
(B)On April 24, 1996, Cornerstone, through CStone-New York Inc., a wholly
owned subsidiary, converted its mortgage note receivable (acquired on
December 19, 1995) and obtained title to Tower 56 with the intention of
holding the property for investment purposes.
General: The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. In
the opinion of management of the Company, all adjustments, consisting only of
normal recurring accruals, necessary to summarize fairly the unaudited results
of operations for the three and six month periods presented have been included.
Results for the six months ended June 30, 1996 are not necessarily indicative of
results which may be expected for any other interim period or for the year as a
whole. It is suggested that these financial statements be read in conjunction
with the audited financial statements and notes thereto included in the
Company's latest annual report.
Principles of Consolidation: The accompanying financial statements include
the accounts of Cornerstone and its wholly owned qualified REIT subsidiaries and
controlled partnerships. All significant intercompany balances and transactions
have been eliminated in consolidation.
Interest Rate Swap Agreement: Cornerstone is a party to an interest rate swap
agreement used to hedge its interest rate exposure. The differential to be paid
is recognized in the period incurred and included in interest expense.
Item 1. Financial Statements (continued)
Income (Loss) per Share: Income (Loss) per share is computed based on the
weighted average number of common shares outstanding of 20,309,165 for the six
months ended June 30, 1996 and 15,909,805 for the year ended December 31, 1995.
The dividends in arrears applicable to the preferred stock of $1,750,000 have
been deducted from the net income for the six months ended June 30, 1996 in
computing earnings per share.
(2) LONG-TERM DEBT
Property Description 6/30/96
-----------
One Norwest Center ......... Interest Bearing Notes $98,000,000
HCL Promissory Note 12,926,000
Norwest Center ............. Mortgage Loan 110,000,000
Washington Mutual Tower .... Mortgage Loan 79,100,000
125 Summer Street .......... Mortgage Loan 50,000,000
Tower 56 ................... Mortgage Loan 17,989,000
Corporate .................. Term Loan 32,500,000
=============
Total .......... $400,515,000
=============
Interest Bearing Notes: The Interest-Bearing Notes mature on February 17,
1997, and bear interest at 8.893 percent, payable semi-annually.
The Notes are collateralized by a non-recourse mortgage on One Norwest Center
and an assignment of all leases and rents, and certain other property, rights
and interests related to One Norwest Center. In addition, as of June 30, 1996,
Cornerstone had $4,358,000, recorded as restricted cash, on deposit with the
trustee to meet interest payments on the Notes. On August 2, 1996, the Interest
Bearing Notes were refinanced (Note 5).
Additionally, Cornerstone is obligated to pay to DBNY, for an interest rate swap
agreement used to fix the interest rates on the Notes, an amount equal to 0.752
percent on a notional amount of $107,000,000 throughout the term of the Notes.
This amount has been treated as a yield adjustment on the long-term debt and has
been included in interest expense. Payments on the swap are due January 30 and
July 30 each year until the termination date of July 30, 1998. On August 2,
1996, this swap was terminated at an approximate cost of $1,505,000.
As protection against market interest rates rising prior to the maturity of the
above stated Notes, on September 29, 1993, Cornerstone entered into an interest
rate swap agreement with Deutsche Bank AG with an effective starting date of
February 18, 1997. The interest rate swap agreement is for a fixed rate of 7.14
percent on a notional amount of $98,000,000 for a period of ten years. Effective
March 29, 1996, the start date of this swap was revised to July 1, 2001 and the
notional amount on the remaining five years was reduced to $92,800,000.
Promissory Note: The convertible promissory note payable to HCL (Note 1) is
due on January 1, 2001 and pays interest only at LIBOR plus 50 basis points. The
note is convertible at the option of HCL into shares of common stock at $14.30 a
share after January 1, 1997. At maturity of the note, Cornerstone has the right
to redeem the note in exchange for common shares of the Company at the lower of
market price or $14.30 per share.
Mortgage Loans: The Norwest Center loan matures December 31, 2005 and bears
interest at the rate of 8.74 percent with the full principal due at maturity.
The loan is collateralized by a first mortgage on Norwest Center and assignment
of all leases and rents.
The Washington Mutual Tower loan matures September 30, 2005 and bears interest
at the rate of 7.53 percent with the full principal due at maturity. The loan is
collateralized by a first mortgage on Washington Mutual Tower and assignment of
all leases and rents.
The 125 Summer Street loan bears interest at the rate of 7.20 percent and
matures on January 1, 2003. Payment terms on the loan call for interest only
payments for the first 5 years and a 25 year principal amortization thereafter.
The loan is collateralized by a first mortgage on 125 Summer Street and
assignment of all leases and rents.
The Tower 56 loan bears interest at a rate of 7.674 percent with a 30 year
principal amortization and matures on April 24, 2003. The loan is collateralized
by a first mortgage on Tower 56 and assignment of all leases and rents.
Term Loan: The term loan matures on December 31, 2003, and bears interest at
the rate of 5.00 percent. The loan must be prepaid at par upon the sale of
either Norwest Center or Washington Mutual Tower.
(3) NET GAIN ON INTEREST RATE SWAP
The Company does not trade in derivative instruments but rather uses interest
rate swap agreements to hedge the interest rate risk on its financings with the
intention of obtaining the lowest effective interest cost on its indebtedness.
An unrealized gain of $7,672,000 and realized loss of $3,125,000 were recorded
as part of the $98,000,000 notional amount forward interest rate swap
termination (Note 2). Additionally, an unrealized gain of $918,000 was recorded
representing the amount the Company would receive if the $92,800,000 notional
amount forward interest rate swap agreement were terminated (Note 2). The
Company has not terminated this swap agreement and intends to structure its
future financings in accordance with the policy stated above. The future
unrealized mark to market adjustment on this swap agreement will fluctuate with
market interest rates.
(4) NEW PRONOUNCEMENTS
During 1996, Cornerstone adopted SFAS #123, "Accounting for Stock-Based
Compensation." The Company has elected to adopt the disclosure provisions of the
new standard which require proforma net income and earnings per share
disclosures. Cornerstone has yet to determine the impact on its proforma net
income and earnings per share.
(5) SUBSEQUENT EVENTS
On August 2, 1996, the Company refinanced its $98 million Interest-Bearing Notes
(Note 2) by entering into a $98 million Deed of Trust and Mortgage Notes with
Massachusetts Mutual Life Insurance Company, Connecticut General Life Insurance
Company and American General Life Insurance Company. The Mortgage Notes bear
interest at a rate of 7.50 percent and mature on July 1, 2001. Additionally, the
Company is required to make payments of principal based upon a thirty year
amortization schedule. Upon the closing of the mortgage debt, Cornerstone paid a
prepayment penalty of approximately $2,035,000 to the Interest-Bearing
Noteholders.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996
RESULTS OF OPERATIONS
Consolidation: Cornerstone's principal source of income is rental revenues
received through its investment in three real estate partnerships and two fee
simple investments. The Company's investments in the partnerships are accounted
for using the consolidation method of accounting.
Building Revenues and Expenses: For the three and six month periods ended
June 30, 1996 compared to the same periods in 1995, Office and parking rentals,
Building operating expenses and Real estate taxes increased primarily due to the
purchase of 125 Summer Street and Tower 56 which were acquired in the fourth
quarter of 1995 and debt refinancing at Washington Mutual Tower. Minority
interest decreased as a result of the 10 percent partnership interest purchase
on January 1, 1996.
Interest and Other Income: Interest and other income primarily consists of
earnings from the Tower 56 mortgage note receivable (December 19, 1995 through
April 24, 1996), advisory and management fees and interest earned from
short-term investments. The increase in interest and other income for the three
and six month periods ended June 30, 1996 as compared to the same periods in
1995 is primarily due to earnings on the mortgage note receivable and fees from
advisory and management services. Also included in interest and other income is
interest earned on notes receivable from Hines Colorado Limited (HCL) in the
amount of $205,000 and $265,000 for the six months ended June 30, 1996 and 1995,
respectively.
Interest Expense: Interest expense incurred by Cornerstone relating to its
financing activities increased in 1996 primarily due to the additional financing
incurred related to the purchase of 125 Summer Street and the 10 percent
partnership interest in 1700 Lincoln Limited. Additionally, for the three month
period ended June 30, 1996 as compared to the same period in 1995, interest
expense increased due to the financing of Tower 56.
Administrative Expenses: Aggregate administrative expenses for the six months
ended June 30, 1996 and 1995 were $2,936,000 and $2,073,000, respectively.
Aggregate administrative expenses for the three months ended June 30, 1996 and
1995 were $1,527,000 and $901,000, respectively. The increase is due to the
change to self-administration on July 1, 1995; however, this increase in
administrative expenses should be considered along with the 1996 advisory income
from third party contracts of $691,000.
Net gain on interest rate swap: The Company does not trade in derivative
instruments but rather uses interest rate swap agreements to hedge the interest
rate risk on its financings with the intention of obtaining the lowest effective
interest cost on its indebtedness. For 1996, a net gain of $4,547,000 was
recorded as part of the $98,000,000 notional amount forward interest rate swap
termination. Additionally, for 1996, an unrealized gain of $918,000 was recorded
representing the amount the Company would receive if the $92,800,000 notional
amount forward interest rate swap agreement were terminated. The Company has not
terminated this swap agreement and intends to structure its future financings in
accordance with the policy stated above. The future unrealized mark to market
adjustment on this swap agreement will fluctuate with market interest rates.
LIQUIDITY AND CAPITAL RESOURCES
Capital Stock Transactions: On January 1, 1996, the Company purchased the
remaining 10 percent partnership interest in 1700 Lincoln Limited which operates
One Norwest Center from Hines Colorado Limited (HCL). In exchange for its
interests, HCL received a $12,925,976 convertible promissory note and 349,650
newly-issued shares of common stock of the Company.
Funds From Operations: The Company calculates Funds from Operations (FFO)
based upon guidance from the National Association of Real Estate Investment
Trusts. FFO is defined as net income, excluding gains or losses from debt
restructuring and sales of property, plus real estate investment depreciation
and amortization, and after adjustments for unconsolidated joint ventures. Due
to the unique nature of Cornerstone's leases, a further adjustment to the
standard definition of FFO is made to reduce FFO by the amount of free and
deferred rental revenue which has been recognized in the financial statements.
In the opinion of management, these amounts relate to benefits which will not be
realized, in the form of increased cash flow, until future periods and would
distort the FFO calculation.
Industry analysts generally consider FFO to be an appropriate measure of
performance of an equity Real Estate Investment Trust such as Cornerstone. FFO
does not represent cash generated from operating activities in accordance with
generally accepted accounting principles and, therefore, should not be
considered a substitute for net income as a measure of performance or for cash
flow from operations calculated in accordance with generally accepted accounting
principles as a measure of liquidity.
The table below illustrates the adjustments which were made to the net income
(loss) of Cornerstone in the calculation of FFO for the six months ended June
30, 1996 and 1995, respectively (in thousands):
Funds From Operations
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
------- -------
Net income (loss) $8,857 ($5,438)
Plus:
Depreciation and amortization* 11,801 10,640
Amortization on rent notes 502 453
Extraordinary loss - 3,881
Real estate tax adjustment 1,412 -
Less:
Net gain on swap termination (5,465) -
Free rent and deferred rents (1,172) (820)
Minority adjustments (515) (493)
------- -------
Funds From Operations $15,420 $8,223
======= ======
*Depreciation and amortization has been adjusted for the amortization
of deferred financing costs and depreciation of corporate fixed
assets.
The increase in FFO is primarily attributable to earnings from 125 Summer
Street and Tower 56 which were acquired in the fourth quarter of 1995, an
increased share of earnings from One Norwest Center due to the 10 percent
partnership interest purchase on January 1, 1996 and debt refinancing at
Washington Mutual Tower.
Other Matters: The Company is not aware of any environmental issues at any of
its properties. The Company does not believe inflation will have a significant
effect on its results. The Company believes it has sufficient insurance coverage
at each of its properties.
Shareholders' Distributions: Cornerstone intends to distribute at least 95
percent of its taxable income to maintain its qualification as a Real Estate
Investment Trust. Currently, Cornerstone has no taxable income and anticipates
that FFO will exceed taxable income for the foreseeable future. Cornerstone's
distribution policy is to pay distributions based upon FFO, less prudent
reserves. For the six months ended June 30, 1996, distributions of $0.60 per
share will be paid to common shareholders on August 30, 1996 (to shareholders of
record on June 30, 1996).
Liquidity: At June 30, 1996, the Company had $32,856,000 in cash and cash
equivalents and $4,358,000 in restricted cash. Restricted cash is being held by
the trustee for the One Norwest Center notes payable. In addition, Cornerstone
anticipates it will receive distributions from its real estate partnerships and
rental income from its fee owned properties on a monthly basis which will be
used to cover normal operating expenses and pay distributions to its
shareholders. Based upon its cash reserves and other sources of funds,
Cornerstone has sufficient liquidity to meet its cash requirements for the
foreseeable future.
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
1) Exhibit 11.1: Statement of Computation of Earnings Per Share
2) For EDGAR filing purposes only, this report contains Exhibit 27,
Financial Data Schedule.
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORNERSTONE PROPERTIES INC.
(Registrant)
By: /s/ John S. Moody
John S. Moody, President and CEO
Date: August 14, 1996
By: /s/ Thomas P. Loftus .
Thomas P. Loftus, Vice President and Controller
(Principal Financial Officer)
Date: August 14, 1996
<TABLE>
Exhibit 11.1
Statement of Computation of Earnings Per Share
for the six months ended June 30, 1996
<CAPTION>
Earnings Per Share
Primary Fully Diluted
------------- -------------
<S> <C> <C>
1. Proceeds upon exercise of options $ 12,333,750 $ 12,333,750
2. Proceeds upon conversion
of preferred stock - $ 50,000,000
3. Proceeds upon conversion
of promissory note - $ 12,925,976
3. Market price of shares
Closing: 6/30/96 $ - $ 13.45
Average: 4/1/96-6/30/96 $ 13.34 $ -
4. Treasury shares that could be repurchased (Options) 924,569 917,007
5. Option shares outstanding 862,500 862,500
6. Common stock equivalent shares (Excess antidilutive antidilutive
shares under option over Treasury
shares that could be repurchased)
7. Treasury shares that could be repurchased (Preferred) - 3,717,472
8. Convertible preferred shares outstanding - 3,030,303
9. Common stock equivalent shares (Excess
shares under convertible preferred over Treasury
shares that could be repurchased) - antidilutive
7. Treasury shares that could be repurchased (Promissory note) - 961,039
8. Convertible promissory note shares outstanding 903,914
9. Common stock equivalent shares (Excess
shares under convertible promissory note over Treasury
shares that could be repurchased) - antidilutive
10.Weighted average number of shares outstanding 20,309,165 20,309,165
11.Net income for the period $ 8,857,000 $ 8,857,000
12.Less: Dividends in arrears applicable to
the preferred stock $ (1,750,000) $ (1,750,000)
Plus: Interest expense on convertible note $ - $ -
13.Net income applicable to common shares $ 7,107,000 $ 7,107,000
14.Income per share $ 0.35 $ 0.35
15.Reported income per share $ 0.35 $ 0.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 32,856
<SECURITIES> 0
<RECEIVABLES> 6,193
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 35,398
<PP&E> 646,114
<DEPRECIATION> 187,227
<TOTAL-ASSETS> 615,300
<CURRENT-LIABILITIES> 30,614
<BONDS> 400,515
<COMMON> 174,194
0
50,000
<OTHER-SE> (32,841)
<TOTAL-LIABILITY-AND-EQUITY> 615,300
<SALES> 0
<TOTAL-REVENUES> 55,762
<CGS> 0
<TOTAL-COSTS> 51,684
<OTHER-EXPENSES> 686
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,870
<INCOME-PRETAX> 8,857
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,078
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,857
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
