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 September 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 November 14, 1996: 20,609,754
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>
September 30, December 31,
1996 1995
--------- ---------
(Unaudited)
ASSETS
<S> <C> <C>
Investments, at cost:
Land .............................................................. $ 63,351 $ 57,823
Buildings and improvements ........................................ 583,469 546,357
Mortgage note receivable (Note 1) ................................ -- 30,731
Deferred lease costs .............................................. 74,878 72,077
--------- ---------
721,698 706,988
Less: Accumulated depreciation and amortization ................... 193,421 175,167
--------- ---------
Total investments .............................................. 528,277 531,821
Cash and cash equivalents ................................................ 19,519 7,740
Restricted cash .......................................................... -- 4,393
Other deferred costs, net of accumulated amortization of $1,055 and $5,301 3,293 2,895
Deferred tenant receivables .............................................. 34,219 32,695
Tenant and other receivables ............................................. 3,533 1,585
Notes receivable ......................................................... 3,339 4,153
Other assets ............................................................. 9,418 807
--------- ---------
Total Assets ............................................................. $ 601,598 $ 586,089
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Long-term debt (Note 2) .................................................. $ 400,405 $ 369,600
Accrued interest payable ................................................. 2,101 4,327
Accrued real estate taxes payable ........................................ 14,242 10,045
Accounts payable and accrued expenses .................................... 3,806 3,456
Unearned revenue and other liabilities ................................... 7,670 16,499
--------- ---------
Total Liabilities ........................................................ 428,224 403,927
--------- ---------
Minority Interest ........................................................ (16,899) (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 (1996-20,609,754; 1995-19,959,515)
Paid-in capital .......................................................... 174,710 181,477
Accumulated deficit ...................................................... (32,835) (39,885)
Deferred compensation .................................................... (1,602) (2,236)
--------- ---------
Total Shareholders' Investment ........................................... 190,273 189,356
--------- ---------
Total Liabilities and Shareholders' Investment ........................... $ 601,598 $ 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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three MonthsThree Months Nine Months Nine Months
Ended Ended Ended Ended
September 30September 30September 30September 30
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
REVENUES
Office and parking rentals ............ $ 27,774 $ 22,132 $ 80,687 $ 64,211
Interest and other income ............. 1,227 1,135 4,076 2,707
-------- -------- -------- ---------
Total Revenues .................... 29,001 23,267 84,763 66,918
-------- -------- -------- ---------
EXPENSES
Building operating expenses ........... 6,092 4,431 17,540 13,631
Real estate taxes ..................... 4,870 2,943 14,186 8,565
Interest expense ...................... 7,845 6,717 23,715 22,033
Depreciation and amortization ......... 6,167 5,566 18,281 16,787
Advisory fee .......................... -- -- -- 1,050
Professional fees ..................... 204 525 575 940
General and administrative ............ 1,416 901 3,913 1,461
Directors' fees ....................... 33 16 101 64
-------- -------- -------- ---------
Total Expenses .................... 26,627 21,099 78,311 64,531
-------- -------- -------- ---------
2,374 2,168 6,452 2,387
-------- -------- -------- ---------
OTHER INCOME (EXPENSES)
Net gain on interest rate swap (Note 3) (64) -- 5,401 --
Minority Interest ..................... (331) (781) (1,017) (2,557)
-------- -------- -------- ---------
Income (loss) before extraordinary item ...... 1,979 1,387 10,836 (170)
Extraordinary loss (Note 2) .................. (3,786) (646) (3,786) (4,527)
-------- -------- -------- ---------
NET INCOME (LOSS) ............................ $ (1,807) $ 741 $ 7,050 $ (4,697)
======== ======== ======== =========
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM PER SHARE ................. $ 0.05 $ 0.06 $ 0.40 $ (0.05)
======== ======== ======== =========
NET INCOME (LOSS) PER SHARE .................. $ (0.13) $ 0.01 $ 0.22 $ (0.36)
======== ======== ======== =========
<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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(In Thousands)
(Unaudited)
<CAPTION>
September 30, September 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................................... $ 7,050 $ (4,697)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ................................................. 18,281 16,787
Deferred compensation amortization ............................................ 635 173
Extraordinary loss ............................................................ 3,786 4,527
Unbilled rental revenue ....................................................... (1,482) (1,177)
Net gain on interest rate swap ................................................ (5,401) --
Minority interest share of income ............................................. 1,017 2,557
Decrease in accrued interest payable .......................................... (2,226) (5,979)
Increase in tenant and other receivables and other assets ..................... (5,070) (2,140)
Increase (decrease) in accounts payable, accrued expenses,and other liabilities 3,831 (6,000)
Write-off of deferred financing costs ......................................... -- 1,355
--------- ---------
Total adjustments ............................................................. 13,371 10,103
--------- ---------
Net cash provided by operating activities ..................................... 20,421 5,406
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property .................................................... (6,128) (626)
Earnest deposits .................................................................... (4,508) (5,791)
Deferred costs incurred on investments .............................................. (406) (344)
Repayment of notes receivable from a related party .................................. 813 983
Loan to a related party ............................................................. -- (247)
--------- ---------
Net cash used in investing activities ......................................... (10,229) (6,025)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under mortgage loan ...................................................... 116,000 189,100
Repayments under mortgage loan ...................................................... (98,121) --
Payments for swap termination ....................................................... (6,665) (4,094)
Dividend reinvestment proceeds ...................................................... 4,016 --
Debt issuance costs ................................................................. (832) --
Stock issuance costs ................................................................ (97) (6,047)
Decrease in restricted cash ......................................................... 4,393 1,827
Distribution to minority partners ................................................... (1,422) (2,579)
Distributions to shareholders ....................................................... (15,685) (9,004)
Repayments under lines of credit .................................................... -- (236,467)
Proceeds from common stock offering ................................................. -- 90,448
Proceeds from preferred stock offering .............................................. -- 50,000
--------- ---------
Net cash provided by financing activities ..................................... 1,587 73,184
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS ....................................................... 11,779 72,565
CASH AND CASH EQUIVALENTS, beginning of period .............................................. 7,740 12,506
--------- ---------
CASH AND CASH EQUIVALENTS, end of period .................................................... $ 19,519 $ 85,071
========= =========
<FN>
Supplemental cash flow information: (Note 4)
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
SEPTEMBER 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 September 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 1700 Lincoln Inc., a
wholly owned 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 nine month periods presented have been included.
Results for the nine months ended September 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 a forward interest
rate swap agreement used to hedge its interest rate exposure.
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 20,344,270 for the nine
months ended September 30, 1996 and 15,909,805 for the year ended December 31,
1995. Dividends applicable to the preferred stock of $2,625,000 have been
deducted from the net income for the nine months ended September 30, 1996 in
computing earnings per share.
(2) LONG-TERM DEBT
Property Description 9/30/96
-------------
One Norwest Center Mortgage Loans $97,927,000
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 17,952,000
Corporate Term Loan 32,500,000
=============
Total $400,405,000
=============
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: On August 2, 1996, the Company refinanced its $98 million
Interest-Bearing Notes, collateralized by One Norwest Center, 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. Unamortized
financing costs of $247,000 were written-off in connection with the refinancing.
Under the Interest Bearing Notes, Cornerstone was 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 was treated as a yield adjustment on the
long-term debt and has been included in interest expense. 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
Interest Bearing Notes, on September 29, 1993, Cornerstone entered into a
forward interest rate swap agreement with Deutsche Bank AG. The interest rate
swap agreement was revised as part of the refinancing on the Notes. The interest
rate swap agreement is for a fixed rate of 7.14 percent on a notional amount of
$92,800,000 for a period of five years starting July 1, 2001.
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 Interest Bearing Note swap revision (Note 2). Additionally, an
unrealized gain of $854,000 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) SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest was approximately $25,941,000 and $28,012,000 for the
nine months ended September 30, 1996 and 1995, respectively. Non-cash investing
and financing activity: Purchase of minority partnership interest through
issuance of $12,926,000 promissory note and 349,650 shares of common stock.
(5) IMPACT OF NEW ACCOUNTING STANDARDS
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.
(6) SUBSEQUENT EVENTS
On November 8, 1996, through a merger of subsidiaries, the Company issued
$66,500,000 of 8% Cumulative Convertible Preferred Stock Series A to Hexalon
Real Estate, Inc. in a transaction exempt from registration under Section 4(2)
of the Securities Act of 1933. The result of the transaction is that the Company
acquired $40,000,000 cash and the Frick Building located in Pittsburgh,
Pennsylvania. The Frick Building is a twenty story, Class A landmark building,
containing 341,421 square feet of rentable area. Hexalon, a large real estate
investment trust, took the preferred shares (which are legended) for investment.
The preferred shares are convertible into the Company's Common Stock at a
conversion price of $14.50 per share, subject to antidilution provisions.
Also on November 8, 1996, the Company acquired One Lincoln Centre, located in
Oakbrook Terrace, Illinois for a purchase price of approximately $49,950,000.
One Lincoln Centre is a Class A, sixteen story office building with 297,330
square feet of rentable area and a 1,056 stall, five level parking garage.
Cornerstone used the proceeds from the Preferred Stock placement discussed above
and general corporate funds to finance the purchase of One Lincoln Centre.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 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 nine month periods ended
September 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. 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 nine month periods ended September 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 $296,000 and $387,000 for the nine months ended September 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, Tower 56 and the 10
percent partnership interest in 1700 Lincoln Limited.
Administrative Expenses: Aggregate administrative expenses for the nine
months ended September 30, 1996 and 1995 were $4,589,000 and $3,515,000
respectively. Aggregate administrative expenses for the three months ended
September 30, 1996 and 1995 were $1,653,000 and $1,442,000 respectively. The
nine month 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 $915,000.
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 gain of $4,547,000 was recorded
as part of the One Norwest Center interest rate swap modification. Additionally,
for 1996, an unrealized gain of $854,000 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. On August 30, 1996, through
a dividend reinvestment plan available to all shareholders, Cornerstone received
proceeds of approximately $4,016,000 and issued an additional 300,589 shares of
common stock to shareholders.
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 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 nine months ended
September 30, 1996 and 1995, respectively (in thousands):
Funds From Operations
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---------- ----------
Net income (loss) $7,050 ($4,697)
Plus:
Depreciation and amortization* 17,869 16,015
Amortization on rent notes 813 733
Extraordinary loss 3,786 4,527
Real estate tax adjustment 2,107 -
Less:
Net gain on swap termination (5,401) -
Free rent and deferred rents (1,482) (1,249)
Minority adjustments (664) (703)
Funds From Operations $24,078 $14,626
======= =======
*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. Distributions of $0.60 per share were paid to common shareholders on
August 30, 1996 (to shareholders of record on June 30, 1996). Distributions of
$3,500,000 were paid to preferred shareholders on August 30, 1996.
Liquidity: At September 30, 1996, the Company had $19,519,000 in cash and
cash equivalents. 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 5. OTHER INFORMATION
See Note (6) to the Consolidated Financial Statements.
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: November 14, 1996
By: /s/ Thomas P.Loftus
Thomas P. Loftus, Vice President and Controller
(Principal Financial Officer)
Date: November 14, 1996
<TABLE>
Exhibit 11.1
Statement of Computation of Earnings Per Share
for the nine months ended September 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. Market price of shares
Closing: 9/30/96 ............................. $ -- $ 14.70
Average: 7/1/96-9/30/96 ...................... $ 14.42 $ --
3. Treasury shares that could be repurchased (Options) 855,322 839,031
4. Option shares outstanding ......................... 862,500 862,500
5. Common stock equivalent shares (Excess 7,178 23,469
shares under option over Treasury
shares that could be repurchased)
6. Weighted average number of shares outstanding ..... 20,344,270 21,271,653
7. Net income for the period ......................... $ 7,050,000 $ 7,050,000
8. Less: Dividends applicable to
the preferred stock .............................. $ (2,625,000) $ (2,625,000)
Plus: Interest expense on convertible note ....... $ -- $ 578,519
9. Net income applicable to common shares ............ $ 4,425,000 $ 5,003,519
10.Income per share .................................. $ 0.22 $ 0.24
11.Reported income per share ......................... $ 0.22 antidilutive
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 19,519
<SECURITIES> 0
<RECEIVABLES> 6,872
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,052
<PP&E> 646,820
<DEPRECIATION> 193,421
<TOTAL-ASSETS> 601,598
<CURRENT-LIABILITIES> 20,149
<BONDS> 400,405
<COMMON> 174,710
0
50,000
<OTHER-SE> (34,437)
<TOTAL-LIABILITY-AND-EQUITY> 601,598
<SALES> 0
<TOTAL-REVENUES> 84,763
<CGS> 0
<TOTAL-COSTS> 78,311
<OTHER-EXPENSES> 4,803
<LOSS-PROVISION> 0
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</TABLE>
