<PAGE>
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1999
or
|_| 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 1-12861
-----------
CORNERSTONE PROPERTIES INC.
(Exact name of Registrant as specified in its Charter)
NEVADA 74-2170858
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation and organization)
126 EAST 56TH STREET
NEW YORK, NEW YORK
(Address of principal executive offices)
10022
(Zip Code)
(212) 605-7100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange On Which Registered:
- -------------------- ------------------------------------------
Common Stock, no par value New York Stock Exchange
Dusseldorf Stock Exchange
Frankfurt Stock Exchange
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 (no par value) outstanding as of May 10, 1999:
128,210,784.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Investments, at cost:
Land $ 729,323 $ 729,323
Buildings, leasehold interests and improvements 3,476,158 3,466,288
Investment in joint ventures 31,804 31,500
Deferred lease costs 154,824 144,838
----------- -----------
4,392,109 4,371,949
Less: Accumulated depreciation and amortization 312,368 288,448
----------- -----------
Total investments 4,079,741 4,083,501
Cash and cash equivalents 44,088 61,869
Restricted cash 14,006 9,114
Other deferred costs, net of accumulated amortization of $2,113 and $932 43,492 45,572
Deferred tenant receivables 60,782 53,802
Tenant and other receivables, net 22,891 10,557
Other assets 17,226 17,569
----------- -----------
Total Assets $ 4,282,226 $ 4,281,984
=========== ===========
LIABILITIES
Long-term debt, inclusive of $23,842 and $25,031 of unamortized premium $ 1,504,148 $ 1,532,474
Credit facility 479,000 465,000
Accrued interest 12,095 10,933
Accrued real estate taxes 29,324 16,395
Accounts payable and accrued expenses 40,898 51,454
Distributions payable -- 38,163
Unearned revenue and other liabilities 37,100 23,890
----------- -----------
Total Liabilities 2,102,565 2,138,309
----------- -----------
MINORITY INTEREST
Minority interest in operating partnership 287,861 283,388
Minority interest in joint ventures 23,508 23,420
----------- -----------
Total Minority Interest 311,369 306,808
----------- -----------
Commitments and contingencies
Redeemable preferred stock; 344,828 shares authorized;
0 shares issued and outstanding -- --
STOCKHOLDERS' EQUITY
7% Cumulative convertible preferred stock, $16.50 stated value;
65,000,000 shares authorized; 3,030,303 shares issued and outstanding 50,000 50,000
Common stock, no par value; 250,000,000 shares authorized;
128,210,784 shares issued and outstanding -- --
Paid-in capital 1,790,157 1,788,567
Retained earnings 29,032 --
Accumulated other comprehensive income 2,085 --
Deferred compensation (2,982) (1,700)
----------- -----------
Total Stockholders' Equity 1,868,292 1,836,867
----------- -----------
Total Liabilities and Stockholders' Equity $ 4,282,226 $ 4,281,984
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollar amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Revenues
Office and parking rentals $ 149,476 $ 75,183
Earnings (loss) in joint ventures 305 (925)
Interest and other income 1,984 7,298
--------- ---------
Total Revenues 151,765 81,556
--------- ---------
Expenses
Building operating expenses 31,077 17,089
Real estate taxes 19,524 11,177
Interest expense 34,358 15,915
Depreciation and amortization 25,085 10,645
General and administrative 6,136 2,586
--------- ---------
Total Expenses 116,180 57,412
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35,585 24,144
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Other expenses
Loss on sale of real estate assets -- (212)
--------- ---------
Total Other expenses -- (212)
--------- ---------
Minority interest
Minority interest in operating partnership (4,473) (136)
Minority interest in joint ventures (1,450) (1,042)
--------- ---------
Total Minority interest (5,923) (1,178)
--------- ---------
--------- ---------
Income before cumulative effect of a change in accounting principle 29,662 22,754
--------- ---------
Cumulative effect of a change in accounting principle (630) --
--------- ---------
Net income $ 29,032 $ 22,754
========= =========
Income applicable to preferred stock $ (875) $ (875)
========= =========
Income applicable to common stock $ 28,157 $ 21,879
========= =========
Income before cumulative effect of a change in accounting
principle per common share $ 0.22 $ 0.24
========= =========
Cumulative effect of a change in accounting
principle per common share $ -- $ --
========= =========
Basic income per common share $ 0.22 $ 0.24
========= =========
Diluted income per common share $ 0.22 $ 0.23
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
------- -------
<S> <C> <C>
Net income $29,032 $22,754
======= =======
Other comprehensive income:
Unrealized gain on interest rate swaps
during the period 2,085 --
------- -------
Other comprehensive income 2,085 --
------- -------
Comprehensive income $31,117 $22,754
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
Item 1. Financial Statements (continued)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 29,032 $ 22,754
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,533 10,689
Deferred compensation amortization 478 233
Share of net (income) loss in real estate joint ventures (305) 925
Cumulative effect of a change in accounting principle 630 --
Unbilled rental revenue (6,980) (2,950)
Increase in accrued interest 1,162 2,207
Minority interest share of income 5,923 1,178
Loss on sale of real estate assets -- 212
(Increase) decrease in tenant and other receivables and other assets (9,940) 1,157
Increase in accounts payable, accrued expenses
and other liabilities 17,748 8,024
--------- ---------
Total adjustments 33,249 21,675
--------- ---------
Net cash provided by operating activities 62,281 44,429
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (22,022) (140,179)
Repayment of notes receivable 134 365
Investments in real estate joint ventures -- (5,065)
Proceeds from sale of real estate assets -- 18,790
--------- ---------
Net cash used in investing activities (21,888) (126,089)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock offering -- 262,344
Borrowings under mortgage loans -- 80,000
Borrowings under credit facility 29,000 --
Repayments under credit facility (15,000) (187,000)
Repayments under mortgage loans (27,137) (448)
Proceeds from dividend reinvestment plan -- 2,010
Increase in restricted cash (4,892) (3,621)
Debt refinancing deposits (450) --
Stock and debt issuance costs (170) (14,516)
Distributions to minority partners (5,034) (1,593)
Distributions to common stockholders (34,491) (25,050)
--------- ---------
Net cash (used in) provided by financing activities (58,174) 112,126
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,781) 30,466
CASH AND CASH EQUIVALENTS, beginning of period 61,869 24,730
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 44,088 $ 55,196
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
1. NATURE OF COMPANY'S BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE COMPANY'S BUSINESS
Cornerstone Properties Inc. (together with its subsidiaries,
"Cornerstone" or the "Company") is a self-administered equity real estate
investment trust ("REIT") which owns, through subsidiaries, interests in 96
Class A office buildings comprising nearly 21 million rentable square feet, a
shopping center, a hotel and developable land (collectively, the "Properties,"
and each interest, a "Property"). The Properties are primarily located in twelve
major metropolitan areas throughout the United States: Atlanta, Boston,
Charlotte, suburban Chicago, Denver, Minneapolis, New York City, Phoenix, San
Francisco Bay Area, Seattle, Southern California and Washington, D.C. and
surrounding suburbs. The Company's strategy is to own Class A office properties
in prime Central Business District locations and major suburban office markets
in U.S. metropolitan areas. Class A office properties are generally considered
to be those that have the most favorable locations and physical attributes,
command premium rents and experience the highest tenant retention rates within
their markets. In January 1998, Cornerstone converted its corporate structure
into an umbrella limited partnership REIT ("UPREIT"). Under the UPREIT
structure, Cornerstone owns all of its properties and conducts all of its
business through Cornerstone Properties Limited Partnership, a Delaware limited
partnership (the "Operating Partnership"), of which the Company is the sole
general partner. As of March 31, 1999, Cornerstone owned, directly or
indirectly, approximately 86.3% of the common units of partnership interest
("UPREIT Units") in the Operating Partnership.
GENERAL
The unaudited condensed consolidated financial statements included
herein have been prepared by the Company 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 ("GAAP") 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 month periods presented have been included. Results for the three
months ended March 31, 1999 are not necessarily indicative of results which
may be expected for any other interim periods or for the year as a whole.
These condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included
in the Company's latest annual report on Form 10-K.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of
Cornerstone, its wholly-owned qualified REIT subsidiary, the Operating
Partnership and controlled partnerships. The Company has consolidated the
following partnerships because it has a majority interest in the economic
benefits and is or has the right to become the managing general partner at its
sole discretion: the Operating Partnership; NWC Limited Partnership ("NWC");
Third and University Limited Partnership ("Third Partnership"); Two Twenty Two
Berkeley Venture ("222 Berkeley"); Five Hundred Boylston West Venture ("500
Boylston"); One Ninety One Peachtree Associates ("191 Peachtree"); Avenue
Associates Limited Partnership ("Market Square"); and 120 Montgomery Associates,
LLC ("120 Montgomery"). The Company's investments in the One Post Property and
WCP Services, Inc. are accounted for as equity investments (see Note 3). All
significant intercompany balances and transactions have been eliminated in
consolidation.
6
<PAGE>
REAL ESTATE HELD FOR SALE
Included in Investments is Charlotte Plaza, which was held for sale by
the Company as of November 1, 1998. The Property is valued at approximately
$78.1 million, the lower of the carrying amount or the fair value less estimated
cost to sell. Beginning on November 1, 1998, the Company discontinued the
recognition of depreciation on Charlotte Plaza.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the
March 31, 1999 financial statement presentation.
OTHER DEFERRED COSTS
Costs incurred in the underwriting and issuance of long-term debt
and revolving lines of credit. The costs incurred in connection with the
long-term debt are being amortized over the term of the debt. As part of the
acquisition of the DIHC Portfolio (see Note 2), the Company purchased several
management contracts to which Stichting Pensioenfonds Voor de Gezondheid
Geestelijke en Maatschappelijke Belangen ("PGGM") was a party. The price paid
for these contracts is being amortized over four years. Included in Other
Deferred Costs is the purchase price for the intangible management and
development company assets that were acquired as part of the Wilson Acquisition
(see Note 2).
OTHER ASSETS
The Company records costs incurred for potential investments as Other
Assets. Upon consummation of an investment, the Company capitalizes all such
costs as an adjustment to the purchase price and depreciates these costs over
the useful life of the asset. All such costs are expensed at the time it is
determined that a potential investment will not be consummated. In addition,
the Company expenses all internal acquisition costs.
MINORITY INTEREST
Minority interest in the Operating Partnership relates to the interest
in the Operating Partnership that the Company does not own, which as of March
31, 1999 amounted to 13.7%. The Company allocates income to the minority
interest in the Operating Partnership based on the weighted-average percentage
ownership in the Operating Partnership through the year. Persons who contributed
assets to the Operating Partnership received UPREIT Units, shares of
Cornerstone's common stock (the "Common Stock"), cash or a combination thereof.
At the request of a unitholder, the Company will be obligated to redeem each
UPREIT Unit held by such unitholder for one share of Common Stock or, at the
option of the Company, cash equal to the fair market value of one share of
Common Stock at the time of redemption. Such redemptions will cause the
Company's percentage ownership in the Operating Partnership to increase. As of
March 31, 1999, the number of issued and outstanding UPREIT Units held by
unitholders other than the Company was 20,333,607 and as of such date, no UPREIT
Units have been redeemed for shares of Common Stock.
Minority interest in real estate joint ventures represents the minority
partner's or venturer's capital account balances in NWC, Third Partnership, 222
Berkeley, 500 Boylston, 191 Peachtree, Market Square and 120 Montgomery. Debit
balances in certain of these capital accounts originated through special cash
distributions in excess of the partner's share of income in accordance with
certain provisions of the respective partnership and joint venture agreements.
Realizability of the debit balances is continually monitored by calculating pro
forma sales proceeds under the respective agreements.
7
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS
During the first quarter of 1999, the Company adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. At March 31, 1999, the Company was party to swaps that
effectively fixed the rate on $250.0 million of the amount outstanding on the
Company's Revolving Credit Facility at 6.47%. The swaps have been designated
as "cash flow hedges" within the meaning defined in SFAS 133. The $250.0
million is comprised of four separate swaps, all of which will contractually
mature in November 2001, coterminous with the Company's $550.0 million
Revolving Credit Facility. Per the applicable requirements of SFAS 133, the
swaps were marked to fair value and recorded as assets on the Company's
balance sheet. A corresponding adjustment was posted to a separate component
of stockholder's equity through Other Comprehensive Income as defined in
Statement of Financial Accounting Standards No. 130. These swaps are
considered hedges for federal income tax purposes.
During the first quarter of 1999, the Company also adopted Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP
98-5 requires that certain costs incurred in conjunction with start-up and
organizational activities be expensed. Pursuant to the requirements of SOP 98-5,
the Company has written off all unamortized organizational costs and has
recorded a cumulative effect of a change in accounting principle of $630,044.
In addition, during the first quarter of 1999, the Company adopted
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance
on whether the costs of computer software developed or obtained for internal use
should be capitalized or expensed. The adoption of SOP 98-1 did not have a
significant effect on the Company's financial statements.
ESTIMATES AND RISKS
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The most significant risks,
estimates and assumptions are related to the recoverability and depreciable
lives of investment property, the recoverability of deferred tenant
receivables, unforeseen Year 2000 risks and the qualification of the Company as
a REIT. Actual results could differ from those estimates.
8
<PAGE>
2. PROPERTIES
<TABLE>
<CAPTION>
The following table summarizes Cornerstone's interest in real estate investments at March 31, 1999:
Market Name Total Rentable Cornerstone
Property Square Feet Interest (A) Year Constructed Occupancy Notes
- ------------------------------------------- ------------------- ---------------- ----------------- --------------- -------
<S> <C> <C> <C> <C> <C>
BOSTON, MASSACHUSETTS
Sixty State Street 823,014 100.0% 1979 100% B
500 Boylston Street 714,513 91.5% 1988 100% D
222 Berkeley Street 530,884 91.5% 1991 100% D
125 Summer Street 463,691 100.0% 1989 94%
One Memorial Drive 352,764 100.0% 1985 100% C
------- ----
MARKET TOTAL 2,884,866 99%
SAN MATEO COUNTY, CALIFORNIA
Bayhill (4 buildings) 514,704 100.0% 1982-1987 87% E
Peninsula Office Park (7 buildings) 492,044 100.0% 1971-1998 98% E
Seaport Centre 463,019 100.0% 1988 91% E
Bay Park Plaza (2 buildings) 257,058 100.0% 1985-1998 98% E
One Bay Plaza 176,533 100.0% 1979 100% E
Belmont Shores 141,643 100.0% 1983 97% E
1300 South El Camino 84,441 100.0% 1986 99% E
66 Bovet 43,968 100.0% 1968 89% E
------ ---
MARKET TOTAL 2,173,410 94%
EAST BAY, CALIFORNIA
Corporate Centre (2 buildings) 329,357 100.0% 1985-1987 96% E
ADP Plaza (2 buildings) 299,627 100.0% 1987-1989 97% E
PeopleSoft Plaza 279,931 100.0% 1984 99% E
Norris Tech Center (3 buildings) 260,513 100.0% 1984-1990 96% E
Golden Bear Center 160,587 100.0% 1986 100% E
2700 Ygnacio Valley Road 103,214 100.0% 1984 86% E
Park Plaza 87,040 100.0% 1986 100% E
1600 South Main 83,277 100.0% 1983 100% E
Foothill Corporate Center 70,355 100.0% 1982 97% E
------ ---
MARKET TOTAL 1,673,901 97%
ATLANTA, GEORGIA
191 Peachtree Street 1,215,288 80.0% 1991 97% D,F
200 Galleria 432,698 100.0% 1985 95% D
------- ---
MARKET TOTAL 1,647,986 97%
SEATTLE, WASHINGTON
Washington Mutual Tower (3 buildings) 1,154,560 50.0% 1988 100% G
110 Atrium Place 214,081 100.0% 1981 99% E
Island Corporate Center 100,075 100.0% 1987 95% E
------- ---
MARKET TOTAL 1,468,716 99%
SANTA CLARA COUNTY, CALIFORNIA
Pruneyard Office (3 buildings) 354,910 100.0% 1971-1999 99% E,H
10 Almaden 299,684 100.0% 1989 98% E
Pruneyard Shopping Center 252,210 100.0% 1970s 94% E
Embarcadero Place (4 buildings) 192,081 100.0% 1984 100% E
Pruneyard Inn 90,000 100.0% 1989 E,I
First American Plaza 82,596 100.0% 1971 93% E
490 California 24,539 100.0% 1985 100% E
------ ----
MARKET TOTAL 1,296,020 98%
DENVER, COLORADO
One Norwest Center 1,187,852 100.0% 1983 97%
--------- ---
MARKET TOTAL 1,187,852 97%
SAN FRANCISCO, CALIFORNIA
120 Montgomery Street 415,202 66.7% 1955 93% E
One Post 388,055 50.0% 1969 99% E
201 California Street 240,230 100.0% 1980 100% J
188 Embarcadero 85,183 100.0% 1985 99% E
------ ---
MARKET TOTAL 1,128,670 97%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Market Name Total Rentable Cornerstone
Property Square Feet Interest (A) Year Constructed Occupancy Notes
- ------------------------------------------- ------------------- ---------------- ----------------- --------------- -------
<S> <C> <C> <C> <C> <C>
MINNEAPOLIS, MINNESOTA
Norwest Center 1,117,439 50.0% 1988 100% K
--------- ----
MARKET TOTAL 1,117,439 100%
WASHINGTON, D.C./ALEXANDRIA, VIRGINIA
Market Square (2 buildings) 688,709 70.0% 1990 98% D,L
99 Canal Center 137,945 100.0% 1986 98% D
TransPotomac Plaza 5 96,278 100.0% 1983 96% D
11 Canal Center 70,365 100.0% 1986 96% D
------ ---
MARKET TOTAL 993,297 98%
SUBURBAN CHICAGO, ILLINOIS
Corporate 500 Centre (4 buildings) 679,039 100.0% 1986/1990 96% M
One Lincoln Centre 297,040 100.0% 1986 92%
------- ---
MARKET TOTAL 976,079 94%
SANTA MONICA/WEST LOS ANGELES, CALIFORNIA
West Wilshire (2 buildings) 235,703 100.0% 1960-1976 94% E
Wilshire Palisades 186,714 100.0% 1981 100% J
Janss Court 125,709 100.0% 1989 97% E,N
Searise Office Tower 122,302 100.0% 1975 95% E
Commerce Park 94,441 100.0% 1977 74% E,O
429 Santa Monica 80,539 100.0% 1982 84% E
------ ---
MARKET TOTAL 845,408 93%
ORANGE COUNTY, CALIFORNIA
Bixby Ranch 277,289 100.0% 1987 98% E
18301 Von Karman 219,508 100.0% 1991 77% E
2677 North Main 213,089 100.0% 1987 81% E
------- ---
MARKET TOTAL 709,886 86%
CHARLOTTE, NORTH CAROLINA
Charlotte Plaza 612,728 100.0% 1982 99% D
------- ---
MARKET TOTAL 612,728 99%
ARIZONA
Gateway (2 buildings) 212,257 100.0% 1984-1985 100% E
Biltmore Lakes 207,270 100.0% 1982 97% E
Scottsdale Centre 166,382 100.0% 1985 89% E
------- ---
MARKET TOTAL 585,909 96%
SAN DIEGO, CALIFORNIA
Centerside II 286,949 100.0% 1987 90% E
Crossroads 133,650 100.0% 1983 100% E
------- ----
MARKET TOTAL 420,599 93%
LOS ANGELES, CALIFORNIA
700 North Brand 202,531 100.0% 1981 93% E
Tri-Center Plaza 141,732 100.0% 1990 100% E
Warner Park Center 57,366 100.0% 1986 100% E
------ ----
MARKET TOTAL 401,629 97%
NEW YORK CITY, NEW YORK
527 Madison Avenue 215,332 100.0% 1986 94%
Tower 56 163,633 100.0% 1983 99% P
------- ---
MARKET TOTAL 378,965 96%
CONEJO VALLEY (VENTURA), CALIFORNIA
Westlake Spectrum (2 buildings) 119,501 100.0% 1990 100% E
Agoura Hills 115,265 100.0% 1987 87% E
------- ---
MARKET TOTAL 234,766 94%
OTHER REGIONS
U.S. West (Murray, Utah) 136,608 100.0% 1985 91% E
Exposition Centre (Sacramento, California) 72,971 100.0% 1984 70% E
------ ---
MARKET TOTAL 209,579 84%
------------------
---------------
TOTAL PORTFOLIO 20,947,705 96%
Minority Interest Adjustment (Q) (723,234)
------------------ ---------------
CORNERSTONE PORTFOLIO 20,224,471 96%
Adjustment For Pruneyard Inn (90,000)
------------------
CORNERSTONE OFFICE PORTFOLIO 20,134,471
==================
</TABLE>
10
<PAGE>
- ----------
(A) Unless noted below, cash flow and residual proceeds will be distributed
to Cornerstone according to its percentage interest.
(B) On December 31, 1997, the Company purchased the second mortgage on
Sixty State Street. The mortgage is a cash flow mortgage through which
all the economic benefits/risks (subject to the first mortgage) inure
to the Company. The Company controls all major decisions regarding
management and leasing. The total purchase price for the second
mortgage was $131.5 million and is consolidated in buildings due to
the above factors. The $78.4 million first mortgage on the Property
was originally recorded by the Company as an $89.6 million liability
due to its above-market interest rate.
The second mortgage, which the Company holds, is collateralized only
by the improvements on Sixty State Street. Title to the improvements is
owned by Sixty State Street Trust, the ground lessee under a ground
lease that expires on December 28, 2067. The lease payments on the
ground lease are $398,896 per annum throughout the term.
(C) On April 28, 1998, the Company purchased One Memorial Drive in
Cambridge, Massachusetts. The total purchase price for the Property was
approximately $112.5 million, approximately $23.5 million of which was
paid in cash, approximately $29.0 million of which was paid in UPREIT
Units valued at $17.50 per unit and approximately $60.0 million of
which was paid in Common Stock valued at $17.50 per share.
(D) On October 27, 1997, the Company acquired interests in nine Class A
office properties comprising approximately 4.5 million rentable square
feet in Alexandria, Virginia (3 properties), Atlanta (2 properties),
Boston (2 properties), Charlotte and Washington, D.C., as well as an
undeveloped parcel of land in Chicago (collectively, "the DIHC
Portfolio"). The Company acquired the DIHC Portfolio for a purchase
price of approximately $1.06 billion, consisting of approximately 34.2
million shares of Common Stock valued and recorded at $16.00 per share,
approximately $260.0 million in cash and $250.0 million in promissory
notes. The cash portion of the acquisition was financed with proceeds
from the Company's initial public offering in April 1997 and $54.0
million from its Revolving Credit Facility.
(E) Property was acquired as a result of the Wilson Acquisition in
December 1998. After receiving stockholder approval on December 14,
1998, the Company acquired substantially all of the properties and
real estate operations of William Wilson & Associates and related
entities ("WW&A") (the "Wilson Acquisition"). As part of the Wilson
Acquisition, the Company acquired interests in 69 Class A office
Properties, comprising approximately 9.2 million rentable square feet
primarily in the San Francisco Bay Area and in Southern California, a
shopping center consisting of approximately 252,000 rentable square
feet in Santa Clara, California, a hotel consisting of 90,000 square
feet in Santa Clara, California and 12.8 acres of developable land in
the San Francisco Bay Area.
The Company acquired WW&A for a purchase price of approximately $1.8
billion, consisting of approximately 14.9 million shares of Common
Stock valued at $17.25 per share (recorded at $16.25 per share for GAAP
purposes), approximately 16.2 million UPREIT Units valued at $17.25 per
unit (recorded at $16.25 per unit for GAAP purposes), approximately
$465.0 million in cash and the assumption of approximately $760.0
million of property and construction related debt (recorded at $773.7
million for GAAP purposes). The cash portion of the transaction was
financed primarily from the Company's Revolving Credit Facility and the
sale of $200.0 million of Common Stock to PGGM, an approximate 33.6%
stockholder prior to the Wilson Acquisition, priced at $17.25 per
share.
11
<PAGE>
(F) While the Company's stated interest in the partnership that owns 191
Peachtree Street is 80.0%, its economic interest is significantly
larger since it has acquired the first mortgage note on the Property in
the amount of $145.0 million, which earns interest at 9.375% and will
receive a priority distribution on its acquired capital base. In 1998,
the partner in the transaction, CH Associates, Ltd., received an annual
Incentive Distribution (as defined) of $250,000, which the Company
expects it will continue to receive under the partnership agreement
through February 28, 2000, with the Company receiving the remainder of
the cash flow of the Property.
The partnership that owns 191 Peachtree Street leases a portion of the
land upon which the project is located pursuant to a ground lease
agreement. The agreement requires annual payments of $45,000 through
January 31, 2002 and $75,000 through January 31, 2008. Thereafter, the
annual rent increases $2,500 per year until the expiration date of
January 31, 2087. The partnership records ground rental expense
relating to this agreement on a straight-line basis. The ground lease
is renewable for an additional 99 years.
(G) While the Company's stated interest in the partnership that owns
Washington Mutual Tower is 50.0%, its economic interest in the Property
is significantly larger due to priority distributions it receives on
its invested capital base. For the three months ended March 31, 1999,
the Company received 100% of the cash distributions from the
partnership that owns Washington Mutual Tower.
(H) Pruneyard Place construction was completed and occupied on April 1,
1999. The building was entirely pre-leased.
(I) The Pruneyard Inn is a 118-room, three-story hotel. The Property is
currently undergoing a 25,000-square foot expansion, which will add 54
new rooms. The Company has commitments for approximately $1.8 million
related to this construction.
(J) On June 3, 1998, the Company purchased 201 California Street and
Wilshire Palisades. The total purchase price for the Properties was
approximately $121.5 million, approximately $29.5 million of which was
paid in cash, approximately $29.1 million of which was paid in UPREIT
Units valued at $17.50 per unit and approximately $62.9 million of
assumed debt (recorded at $64.6 million for GAAP purposes).
(K) While the Company's stated interest in the partnership that owns
Norwest Center is 50.0%, its economic interest in the Property is
significantly larger due to priority distributions it receives on its
invested capital base. For the three months ended March 31, 1999, the
Company's share of earnings and cash distributions from the partnership
that owns Norwest Center was 74.5%.
(L) During 1998, through a series of transactions, the Company acquired
partnership interests with a stated interest of approximately 70.0% in
the partnerships that own Market Square. The Company's economic
interest is significantly larger since it has acquired the first
mortgage note on the Property in the amount of $181.0 million which
earns interest at 9.75% and will receive a priority distribution on its
acquired capital base. In addition, the Company acquired a "buffer
loan", with accrued principal and interest of $49.0 million at
purchase, which accrues interest at a rate of Prime plus 1.25% and is
payable from cash flow, refinancing or sales proceeds in excess of the
first mortgage. During the three months ended March 31, 1999, the
Company received 100% of the cash flow from the Property. On
November 14, 1998, the Company purchased an additional interest in
the partnerships that own Market Square which enabled it to gain
sufficient control in order to consolidate the investment.
(M) On January 28, 1998, the Company purchased Corporate 500 Centre in
Deerfield, Illinois. This Property consists of four Class A office
buildings with approximately 679,000 rentable square feet. The
consideration paid for this Property was approximately $135.0 million
in cash and approximately $15.0 million in UPREIT Units valued at
$18.50 per unit, for a total purchase price of approximately $150.0
million. The Company financed a portion of the purchase price with an
$80.0 million mortgage loan from Bankers Trust Company; this mortgage
was subsequently refinanced in October 1998.
12
<PAGE>
(N) Janss Court is a seven-story, 125,000-square foot Class A mixed-use
building. In addition to 92,000 square feet of retail and office space,
Janss Court offers 32 apartments for a total of 33,000 rentable square
feet of residential space.
(O) The Property is subject to a ground lease agreement. The agreement
requires annual payments of $115,000 through March 31, 2002 and
$121,000 from April 1, 2002 through March 31, 2007. The lease payment
increases every ten years thereafter according to a formula based on
the Consumer Price Index. The ground lease expires on March 31, 2041.
(P) On January 5, 1998, the Company purchased for approximately $5.5
million, the remaining participation rights in the cash flow and
residual value of Tower 56 from the former participants for 307,692
shares of Common Stock. As a result, all of the cash flow and the
residual value of Tower 56 inure to the Company.
(Q) Rentable square feet includes an adjustment for the interest of a joint
venture or minority partner. Calculations are based on the partners'
percentage interest in the cash flows of the Property.
On March 31, 1998, the Company sold the Dearborn Land (an undeveloped
parcel of land in Chicago that was acquired as part of the acquisition of the
DIHC Portfolio in October 1997) for gross proceeds of approximately $19,000,000,
resulting in a loss of $212,228.
On April 29, 1998, the Company sold the Frick Building, located in
Pittsburgh, Pennsylvania, for gross proceeds of approximately $26,748,000,
resulting in a loss of $2,111,540.
On December 29, 1998, Avenue Associates Limited Partnership sold a
condominium unit in Market Square, located in Washington D.C., for gross
proceeds of $326,154, resulting in a gain of $247,972.
3. INVESTMENT IN REAL ESTATE JOINT VENTURES
Investment in real estate joint ventures represents the Company's
two investments that are accounted for using the equity method of accounting.
The first investment is the Company's 50.0% interest in a co-tenancy
agreement with Crocker Plaza Company for One Post, a 38-story, Class A office
tower in San Francisco, California. The Company and Crocker co-manage and
lease the Property. The second equity investment is the Company's interest in
WCP Services, Inc. The Company owns 1% of the voting common stock and 100% of
the non-voting common stock of WCP Services, Inc. The remaining shares of
voting common stock of WCP Services, Inc. are owned by certain executive
officers of the Company. The Company's ownership of voting and nonvoting
common stock together represents a 95% economic interest in the earnings of
WCP Services, Inc. WCP Services, Inc. provides property management,
development and tenant construction supervision services to third parties.
WCP Services, Inc. also provides tenant construction supervision services to
tenants in Properties owned by Cornerstone.
4. LONG-TERM DEBT
The following table sets forth certain information regarding the
consolidated debt obligations of the Company as of March 31, 1999, including
mortgage obligations relating to the Properties. All of this debt, with the
exception of the Convertible Promissory Note due 2001, is nonrecourse to the
Company. However, notwithstanding the nonrecourse indebtedness, the lender may
have the right to recover deficiencies from the Company in certain
circumstances, including fraud, misappropriation of funds and environmental
liabilities (Dollar amounts in thousands).
<TABLE>
<CAPTION>
PROPERTY AMORTIZATION INTEREST RATE (A) MATURITY DATE 3/31/99 12/31/98
- -------- ------------ ----------------- ------------- ------- --------
<S> <C> <C> <C> <C> <C>
188 Embarcadero .............. 25 year 6.90% Jun-1999 $ 9,044 $ 9,135
One and Two Gateway .......... 25 year 6.90% Dec-1999 8,605 8,679
Seaport Centre ............... Interest only LIBOR plus 1.50% Dec-1999 58,000 58,000
The Pruneyard ................ 24 year LIBOR plus 2.00% Mar-2000 55,266 49,384
18301 Von Karman ............. 25 year 6.90% Apr-2000 10,558 10,647
Centerside II ................ 25 year 6.90% Jun-2000 13,689 13,818
Scottsdale Centre ............ 25 year 6.90% Jul-2000 7,703 7,745
TransPotomac Plaza 5 and
Charlotte Plaza (B) ........ Interest only 7.28% Oct-2000 65,000 65,000
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PROPERTY AMORTIZATION INTEREST RATE (A) MATURITY DATE 3/31/99 12/31/98
- -------- ------------ ----------------- ------------- ------- --------
<S> <C> <C> <C> <C> <C>
1600 South Main .............. 25 year 6.90% Dec-2000 5,011 5,038
Convertible Promissory
Note due 2001 (C) .......... Interest only 8.11%max (D) Jan-2001 12,926 12,926
Biltmore Lakes ............... 25 year 6.90% Apr-2001 11,411 11,468
Belmont Shores ............... 25 year 6.90% Apr-2001 9,778 9,839
700 North Brand .............. 25 year 6.90% May-2001 18,021 18,108
2677 North Main .............. 25 year 6.90% May-2001 10,711 10,774
2700 Ygnacio Valley Road ..... 25 year 6.90% Aug-2001 5,006 5,035
Westlake Spectrum ............ 25 year 6.90% Aug-2001 3,970 3,993
Park Plaza ................... 25 year 6.90% Oct-2001 4,912 4,940
Warner Park Center ........... 25 year 6.90% Dec-2001 5,184 5,213
West Wilshire Office and
Medical .................... 25 year 6.90% Jan-2002 17,210 17,301
Searise Office Tower ......... 25 year 6.90% Jan-2002 11,801 11,864
Golden Bear Center ........... 25 year 6.90% Mar-2002 15,676 15,753
Exposition Centre ............ 25 year 6.90% May-2002 5,176 5,200
Bixby Ranch .................. 25 year 6.90% May-2002 20,127 20,243
Wilshire Palisades ........... 22 year 6.70% Jul-2002 29,692 29,902
120 Montgomery Street ........ 24 year LIBOR plus 1.40% Nov-2002 47,569 46,930
1300 South El Camino ......... 23 year 6.90% Dec-2002 3,981 4,007
125 Summer Street ............ Interest only (E) 7.20% Jan-2003 50,000 50,000
429 Santa Monica ............. 25 year 6.90% Mar-2003 10,139 10,176
Crossroads ................... 25 year 6.90% Mar-2003 7,312 7,339
Westlake Spectrum II ......... 25 year 6.90% Mar-2003 5,265 5,284
Tower 56 ..................... 30 year 7.67% May-2003 17,509 17,548
Two ADP Plaza ................ Interest only 6.90% Dec-2003 - (F) 13,400
Two Corporate Centre ......... Interest only 6.90% Dec-2003 - (F) 18,600
Norris Tech Center ........... 25 year LIBOR plus 1.65% Dec-2003 16,317 16,392
Peninsula Office Park 4 ...... 25 year 6.90% Feb-2004 5,407 5,436
Peninsula Office Park
1,3,5,6,8 & 9 .............. 25 year 6.90% Feb-2004 55,818 54,806
110 Atrium Place ............. 30 year 6.90% Mar-2004 21,656 21,838
10 Almaden ................... 25 year 6.90% Apr-2004 33,712 33,885
Embarcadero Place ............ 20 year 6.90% Apr-2004 25,867 26,061
527 Madison Avenue and
One Lincoln Centre (B) ..... Interest only 7.47% Oct-2004 65,000 65,000
Sixty State Street ........... 30 year 6.84% Jan-2005 87,104 87,627
201 California Street ........ 30 year 6.70% Mar-2005 32,963 33,071
Island Corporate Center ...... 30 year 6.90% Apr-2005 13,273 13,294
Washington Mutual Tower ...... Interest only 7.53% Nov-2005 79,100 79,100
Norwest Center ............... Interest only 8.74% Dec-2005 110,000 110,000
Agoura Hills ................. 25 year 6.90% Dec-2005 12,270 12,328
Janss Court .................. 30 year 6.90% Dec-2005 18,634 18,723
Bayhill 4,5,6 & 7 ............ 25 year 6.90% Dec-2006 58,753 59,071
66 Bovet ..................... 22 year 6.90% Apr-2007 3,914 3,939
Market Square (G) and 200
Galleria (B) ............... Interest only 7.54% Oct-2007 120,000 120,000
One Norwest Center ........... 30 year 6.90% Oct-2008 98,083 98,252
Corporate 500 Centre ......... 25 year 6.66% Nov-2008 89,527 89,765
Other loans .................. Various Various Various 498 597
--------------- -------- ---------- ----------
Total Debt 7.13% (H) 5.3yrs (H) $1,504,148 $1,532,474
========== ==========
</TABLE>
- ----------
(A) The interest rate is the stated interest rate (for Cornerstone
originated debt) or the mark to market rate at the time of acquisition
(for debt assumed as part of an acquisition).
(B) The three notes arising from the acquisition of several properties in
the DIHC Portfolio are cross-collateralized, having the effect of
forming a "collateral pool" for the underlying notes.
(C) The lender, Hines Colorado Limited, has the right to convert the note
into common stock at a conversion price of $14.30 per share. At
maturity, the Company is entitled to repay the principal of the note
with Common Stock priced at the lesser of $14.30 per share or the then
existing share price.
14
<PAGE>
(D) Lesser of 30-day LIBOR plus 0.5% or 8.11%.
(E) Interest only payments through January 1, 2001, with a 25-year
amortization schedule thereafter.
(F) On January 4, 1999, in connection with the Wilson Acquisition, the
Company prepaid the notes on Two ADP Plaza and Two Corporate Centre.
(G) The collateral for this loan is a pledge of the $181.0 million first
mortgage loan on Market Square that the Company purchased as part of
the DIHC Portfolio acquisition.
(H) Weighted-average interest rate and maturity of the Company's long-term
debt.
The combined aggregate amount of maturities for all long-term
borrowings for 1999 through 2003 are $75,649,000, $157,227,000, $81,919,000,
$151,232,000 and $106,542,000, respectively.
Since most of the long-term debt is property related, there are
restrictive covenants that limit the total amount of indebtedness that can be
placed on individual properties.
5. CREDIT FACILITY
The Company has a $550.0 million Revolving Credit Facility with a syndicate
of 17 banks led by Bankers Trust Company, The Chase Manhattan Bank and
NationsBank for acquisitions and general working capital purposes as well as the
issuance of letters of credit (the "Revolving Credit Facility"). The interest
rate on the facility depends on the Company's ratio of total debt to asset value
(as defined) at the time of borrowing and will be at a spread of 1.10% to 1.40%
over the applicable LIBOR or the Prime Rate at the borrower's option. The
letters of credit will be priced at the applicable Eurodollar credit spread. The
Revolving Credit Facility expires on November 3, 2001. As of March 31, 1999,
$479.0 million of the facility was outstanding at a rate of approximately 6.3%.
Of this amount, approximately $250 million is fixed with interest rate swaps,
which effectively fix the rate at 6.47%. In addition, at March 31, 1999, there
were three letters of credit totaling approximately $8.2 million outstanding at
a rate of 1.40%. The Revolving Credit Facility contains certain restrictive
covenants including: (i) a limitation on the Company's dividend to 90.0% of
funds from operations and 110.0% of funds available for distribution, both as
defined in the agreement; (ii) the percentage of total liabilities to total
property asset value (as defined) cannot exceed 55.0%; (iii) the ratio of
adjusted EBITDA to interest expense may not be less than 2.00 to 1.00 through
July 1, 1999 and 2.25 to 1.00 thereafter; (iv) the fixed charge coverage ratio
may not be less than 1.75 to 1.00; and (v) the ratio of total property asset
value (as defined) to secured indebtedness may not be less than 2.50 to 1.00.
6. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is subject to tenant and
property related claims and other litigation. It is the opinion of management,
after consultation with outside counsel, that the resolution of these claims
will not have a material effect on the financial position, results of
operations or cash flows of the Company.
The Company has entered into an agreement to purchase a 927,000 square-foot
Class A office building, currently under development, in downtown Minneapolis,
Minnesota. Approximately $49.4 million has been spent on the construction. The
project is scheduled to be completed in the year 2000 and is approximately 50.0%
pre-leased. The development is being financed through a construction loan by
U.S. Bank. Upon completion, the Company will retire the construction loan and
acquire the property from the developer for an amount to be determined by
applying a negotiated formula to in-place net operating income.
15
<PAGE>
7. STOCKHOLDERS' EQUITY
The 7% Cumulative Convertible Preferred Stock is convertible into
Common Stock at $16.50 per share at any time after August 4, 2000.
On February 6, 1998, Cornerstone completed a secondary public offering
of 14,375,000 shares of Common Stock at a price of $18.25 per share. The shares
were placed in the U.S. through a syndicate of seven investment banks led by
Merrill Lynch & Co. Net proceeds to the Company were approximately $247.9
million (approximately $262.3 million gross proceeds less an underwriting
discount of approximately $13.7 million and expenses of approximately $0.7
million). The net proceeds were used to repay outstanding borrowings under the
Revolving Credit Facility and for working capital purposes.
The following tables summarize the stock options and restricted stock
grants for certain employees of the Company as of March 31, 1999:
STOCK OPTIONS
<TABLE>
<CAPTION>
Options Granted Exercise Price Options Options
Date of Grant (No. of shares) (per share) Vesting Exercised Exercisable
------------- --------------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
August, 1995.... 637,500 $14.30 33.3%/yr, 10yr 0 637,500
October, 1995 .. 150,000 $14.30 33.3%/yr, 10yr 10,500 139,500
March, 1997..... 880,000 $14.50 33.3%/yr, 10yr 0 586,666
November, 1997.. 70,000 $18.44 33.3%/yr, 10yr 0 23,333
February, 1998.. 70,000 $18.13 33.3%/yr, 10yr 0 23,333
February, 1998.. 595,000 $18.25 33.3%/yr, 10yr 0 198,333
March, 1998..... 200,000 $18.25 33.3%/yr, 10yr 0 66,666
December, 1998.. 3,000,000 $17.25 33.3%/yr, 10yr 0 0
March, 1999..... 10,000 $17.25 33.3%/yr, 10yr 0 0
</TABLE>
RESTRICTED STOCK GRANTS
<TABLE>
<CAPTION>
Shares Granted Value at Grant
Date of Grant (No. of shares) Date (per share) Vesting (A)
------------- --------------- ---------------- -----------
<S> <C> <C> <C>
August, 1995.......... 167,622 $14.30 The grant will fully vest with respect to 13.333% on June 30, 1996,
1997, 1998, 1999 and with respect to 46.668% on June 30, 2000.
March, 1997........... 100,000 $16.40 The grant will fully vest with respect to 13.333% on June 30, 1998,
1999, 2000, 2001 and with respect to 46.668% on June 30, 2002.
November, 1997........ 12,500 $18.44 The grant will fully vest with respect to 13.333% on June 30, 1998,
1999, 2000, 2001 and with respect to 46.668% on June 30, 2002.
March, 1998........... 12,500 $18.13 The grant will fully vest with respect to 13.333% on March 15,
1999, 2000, 2001, 2002 and with respect to 46.668% on March 15, 2003.
March, 1998........... 19,178 $18.25 The grant will fully vest with respect to 13.333% on March 15, 1999
and with respect to 86.667% on December 31, 1999.
February, 1999........ 113,550 $15.50 The grant will fully vest on February 1, 2004.
</TABLE>
- ----------
(A) Deferred compensation of approximately $6,252,000 is being amortized
according to the respective amortization schedule for each vesting period
noted above, with the unamortized balance shown as a deduction from
stockholders' equity. Regular distributions are paid on restricted stock.
16
<PAGE>
8. NET INCOME PER COMMON SHARE
The table below sets forth the calculation of net income per common
share for the three months ended March 31, 1999 and 1998 (Dollar amounts in
thousands, except per share amounts):
<TABLE>
<CAPTION>
MARCH 31,1999 MARCH 31, 1998
----------------------- ---------------------
BASIC DILUTED BASIC DILUTED
----------------------- ---------------------
<S> <C> <C> <C> <C>
Proceeds upon exercise of options $ -- $ 23,871 $ -- $ 30,081
Market price of shares
Average for the respective period $ -- $ 15.24 $ -- $ 18.43
Treasury shares that could be
Repurchased
(options) -- 1,566 -- 1,632
Option shares outstanding -- 1,657 -- 1,997
Weighted common stock equivalent
shares (excess shares under option
over Treasury shares that could be
repurchased) -- 91 -- 363
Weighted average common shares
Outstanding 128,211 128,211 92,802 92,802
----------------------- ---------------------
Adjusted weighted average common
Shares outstanding 128,211 128,302 92,802 93,165
Net income for the period $ 29,032 $ 29,032 $ 22,754 $ 22,754
Income applicable to Preferred stock $ (875) $ (875) $ (875) $ (875)
----------------------- ---------------------
Net income applicable to
Common shares $ 28,157 $ 28,157 $ 21,879 $ 21,879
Income per common share $ 0.22 $ 0.22 $ 0.24 $ 0.23
</TABLE>
The stock options issued in November 1997, February 1998, March 1998,
December 1998 and March 1999 were not included in the calculation of diluted
earnings per share as such options were anti-dilutive during the period. The 7%
Cumulative Preferred Stock issued in August 1995 and the Convertible Promissory
Note due 2001 entered into January 1996 were not included in the calculation of
diluted earnings per share as such instruments were anti-dilutive during the
period. In addition, the Company will be obligated to redeem each UPREIT Unit
held by such unitholder for one share of Common Stock or, at the option of the
Company, cash equal to the fair market value of one share of Common Stock at the
time of redemption.
9. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest was approximately $34,263,000 and $13,725,000
for the three months ended March 31, 1999 and 1998, respectively.
NON-CASH INVESTING AND FINANCING ACTIVITIES
On January 5, 1998, the Company purchased for approximately $5.5
million, the participation rights in the cash flow and residual value of Tower
56 from the former participants for 307,692 shares of Common Stock.
On January 28, 1998, the Company purchased Corporate 500 Centre. As
part of the total purchase price of approximately $150.0 million, the Company
issued 822,794 UPREIT Units valued at $18.50 per unit.
17
<PAGE>
10. SEGMENT REPORTING
The Company has one reportable segment - real estate. The Company
does not have any foreign operations. The accounting policies of the segment
are the same as those described in Note 1.
The Company evaluates performance based on net operating income from
the individual properties in the segment. Selected results of operations for the
three months ended March 31, 1999 and 1998 and selected asset information as of
March 31, 1999 and December 31, 1998 regarding the Company's operating segment
are as follows (Dollar amounts in thousands):
<TABLE>
<CAPTION>
CORPORATE & COMPANY
TOTAL SEGMENT OTHER(A) TOTAL
------------- ----------- -------
<S> <C> <C> <C>
TOTAL REVENUES (B):
Three months ended:
March 31, 1999 $ 150,786 $ 979 $ 151,765
March 31, 1998 75,674 5,882 81,556
TOTAL OPERATING AND INTEREST EXPENSE (C):
Three months ended:
March 31, 1999 $ 51,858 $ 39,237 $ 91,095
March 31, 1998 28,266 18,501 46,767
NET OPERATING INCOME (D):
Three months ended:
March 31, 1999 $ 98,928 $ (38,258) $ 60,670
March 31, 1998 47,408 (12,619) 34,789
TOTAL LONG-LIVED ASSETS (E):
March 31, 1999 $4,140,523 $ 52,923 $4,193,446
December 31, 1998 4,137,302 54,782 4,192,084
TOTAL ASSETS:
March 31, 1999 $4,158,539 $ 123,687 $4,282,226
December 31, 1998 4,198,099 83,885 4,281,984
</TABLE>
- ----------
(A) Corporate and Other represents all corporate-level items (including
interest income, interest expense and general and administrative
expenses) as well as intercompany eliminations necessary to reconcile
to consolidated Company totals.
(B) Total revenues represents all revenues during the period (including
the Company's earnings (loss) in real estate joint ventures). All
interest income is excluded from the segment amounts and is
classified in Corporate and Other for all periods.
(C) Total operating and interest expense represents the sum of building
operating expenses, real estate taxes, interest expense and general and
administrative expenses. All interest expense (including property level
mortgages) is excluded from the segment amounts and is classified in
Corporate and Other for all periods. Amounts presented exclude
depreciation and amortization of $25,085,000 and $10,645,000 for
March 31, 1999 and 1998, respectively.
(D) Net operating income represents total revenues (as defined in note (B)
above) less total operating and interest expense (as defined in note
(C) above) for the period.
(E) Long-lived assets is composed of total investments, other deferred
costs, deferred tenant receivables and certain other assets.
18
<PAGE>
11. SUBSEQUENT EVENTS
On April 12, 1999, the Company declared a distribution of $0.30 per
share/unit to be paid to all stockholders and unitholders on May 28, 1999 (to
stockholders and unitholders of record as of April 30, 1999).
During May 1999, the Company entered into an agreement to
restructure approximately $163.0 million of property related debt with two
lenders. The restructuring involves retiring the individual property related
debts and creating a single $180.0 million loan which will be
cross-collateralized by six of the Company's properties. The loan will have a
ten year term and will bear interest at 7.26% per annum.
19
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the Condensed Consolidated
Financial Statements and Notes included herein.
When used in the following discussion, the words "believes",
"anticipates", and similar expressions are intended to identify
"forward-looking statements". The Company intends such forward looking
statements to be covered by the safe harbor provisions in Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements are subject to
certain risks and uncertainties, which could cause actual results to differ
materially from those projected. Readers are cautioned not to place undue
reliance on these "forward-looking statements", which speak only as of the
date hereof. The Company undertakes no obligation to publicly release the
result of any revisions of these "forward-looking statements", which may be
made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
RESULTS OF OPERATIONS
Cornerstone's principal source of income is rental revenues received
through its investment in 87 fee simple investments, six real estate
partnerships, one limited liability company, one co-tenancy agreement and one
mortgage. NWC Limited Partnership ("NWC"), Third and University Limited
Partnership ("Third Partnership"), One Ninety One Peachtree Associates ("191
Peachtree"), Two Twenty Two Berkeley Associates ("222 Berkeley"), Five Hundred
Boylston West Venture ("500 Boylston") and Avenue Associates Limited Partnership
("Market Square") (since November 1, 1998) have been consolidated because
Cornerstone has the majority interest in the economic benefits and is or has the
right to become managing general partner at its sole discretion. 120 Montgomery
Associates, LLC ("120 Montgomery") has been consolidated because the Company has
the majority interest in the economic benefits and control of the major
decisions of the limited liability company. The Company has accounted for its
investment in Market Square (from February 1, 1998 through October 31, 1998) and
One Post using the equity method of accounting because it did or does not have
sufficient control of the day to day operations of the investment.
PROPERTY RESULTS. For the three months ended March 31, 1999 and 1998,
property results can be summarized as follows (in thousands):
<TABLE>
<CAPTION>
For the three months For the three months
ended March 31, 1999 ended March 31, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Office and Parking Rentals $149,476 $75,183
Less:
Building Operating Expenses 31,077 17,089
Real Estate Taxes 19,524 11,177
Depreciation and Amortization 25,085 10,645
-------- -------
Total Operating Expenses 75,686 38,911
-------- -------
Total Property Income $73,790 $36,272
======== =======
</TABLE>
20
<PAGE>
The increase in property income of $37.5 million for the three months
ended March 31, 1999 as compared to the same period in 1998 was due to $29.1
million derived from the interests in 69 properties acquired as part of the
Wilson Acquisition on December 16, 1998; $4.0 million from Market Square, which
was consolidated starting November 1998; $3.7 million from three properties
acquired subsequent to March 1998 (One Memorial Drive, $1.8 million; Wilshire
Palisades, $1.2 million; and 201 California Street, $0.7 million); and a $1.5
million increase in income from Corporate 500 Centre, which was purchased at the
end of January 1998. These amounts were offset by a $0.7 million decrease in
income from the Frick Building, which was sold in April 1998, and by a $0.1
million decrease caused by slight variances in property income at the remaining
properties.
EARNINGS (LOSS) IN JOINT VENTURES. The earnings in joint ventures
of $0.3 million for the three months ended March 31, 1999 is comprised of the
Company's investments in One Post and WCP Services, Inc., which were acquired
as part of the Wilson Acquisition.
The loss in joint ventures of $0.9 million for the three months ended
March 31, 1998 was due to the acquisition of the partnership interest in Market
Square in January 1998. The investment in Market Square was accounted for under
the equity method of accounting from February 1998 through October 1998 due to
the lack of sufficient control of the day to day operations of the investment.
In November 1998, the Company gained sufficient control of the investment and
began consolidating this investment.
INTEREST AND OTHER INCOME. Interest and other income decreased to
approximately $2.0 million for the three months ended March 31, 1999 from
approximately $7.3 million for the three months ended March 31, 1998. The
decrease was due to a $5.3 million decrease in interest income from the
mortgage loan and "buffer loan" on Market Square and a $0.8 million decrease
in tenant alteration income. These decreases were offset by a $0.4 million
increase in management and other income; a $0.2 million increase in
management fee income; and a $0.2 million increase in interest earned from
short-term investments.
INTEREST EXPENSE. Interest expense incurred by Cornerstone was
$34,358,000 and $15,915,000 for the three months ended March 31, 1999 and
1998, respectively. The increase in interest expense was due to an increase
of $10.6 million from the property mortgages assumed as part of the Wilson
Acquisition; an increase of $6.1 million on the Revolving Credit Facility due
to increased borrowings; an increase of $0.6 million on the Corporate 500
Centre loan due mainly to the property being acquired on January 28, 1998; an
increase of $1.0 million on the 201 California Street and Wilshire Palisades
loans due to these properties being acquired on June 3, 1998; an increase of
$0.2 million on the DIHC Portfolio loans due to the sale of the Dearborn land
in March 1998; and an increase of $0.1 in amortization of deferred financing
costs. These increases were offset by a $0.2 million decrease in interest on
the One Norwest Center loan due to the refinancing of this loan in September
1998.
GENERAL AND ADMINISTRATIVE. The aggregate amount of Cornerstone's
general and administrative expenses increased to $6,136,000 for the three
months ended March 31, 1999 from $2,586,000 for the three months ended
March 31, 1998. The increase in 1999 from 1998 of $3.6 million is due to the
additional employees, space, systems and other support necessary to manage
the substantial growth in the Company since March 31, 1998, especially the
increase in employees due to the Wilson Acquisition.
LOSS ON SALE OF REAL ESTATE ASSETS. On March 31, 1998, the Company sold
the Dearborn Land (an undeveloped parcel of land in Chicago that was acquired as
part of the acquisition of the DIHC Portfolio in October 1997) for gross
proceeds of approximately $19.0 million, resulting in a loss of approximately
$0.2 million).
21
<PAGE>
MINORITY INTEREST. The increase in minority interest from 1998 to
1999 of $4.7 million is due to the allocation of the Company's income to the
unitholders due to the UPREIT Units issued subsequent to March 1998 for the
purchase of properties as well as part of the Wilson Acquisition.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE. During the first
quarter of 1999, the Company adopted Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires that certain
costs incurred in conjunction with start-up and organizational activities be
expensed. Pursuant to the requirements of SOP 98-5, the Company has written off
all unamortized organizational costs and has recorded a cumulative effect of a
change in accounting principle of $0.6 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW (DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
For the three months ended For the three months ended
Cash flow provided by (used in): March 31, 1999 March 31, 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities $ 62,281 $ 44,429
Investing activities (21,888) (126,089)
Financing activities (58,174) 112,126
Earnings to fixed charges ratio 1.78 2.30
</TABLE>
Cash provided by operating activities increased to approximately $62.3
million for the three months ended March 31, 1999 from $44.4 million for the
three months ended March 31, 1998. The increase is primarily due to the cash
flows from the interests in 72 properties acquired since the end of the first
quarter of 1998.
Cash used in investing activities decreased to approximately
$21.9 million for the three months ended March 31, 1999 from $126.1 million
for the three months ended March 31, 1998. The decrease was primarily due to
$135.0 million in cash that was paid as part of the purchase of Corporate 500
Centre on January 28, 1998, and the acquisition of the partnership interest
in Market Square for $5.1 million during the first quarter of 1998. These
amounts were offset by $18.8 million in net proceeds received from the sale
of the Dearborn land on March 31, 1998; an increase in investments in
additions to existing properties of $16.9 million versus the first quarter of
1998; and a $0.2 million decrease in the repayment of a note receivable from
a related party (the note was paid off in January 1999).
$58.2 million of cash was used in financing activities during the
three months ended March 31, 1999, whereas $112.1 million of cash was
provided by financing activities for the three months ended March 31, 1998.
The net decrease in cash provided by financing activities of $170.3 million
is due to the following: in the first quarter of 1998, the Company's
secondary offering provided net cash of $247.9 million; the Company
originated an $80.0 million mortgage in connection with its acquisition of
Corporate 500 Centre in January 1998; mortgage loan repayments increased by
$26.7 million, as the Company prepaid two property mortgages on January 4,
1999 in connection with the Wilson Acquisition; distributions to stockholders
increased by $12.9 million; the Company received $2.0 million in proceeds
from a dividend reinvestment plan in the first quarter of 1998; restricted
cash increased by $1.3 million, as several of the property loans assumed as
part of the Wilson Acquisition require payments of taxes and other deposits
into escrow accounts; debt refinancing deposits increased $0.4 million;
and stock and debt issuance costs increased $0.1 million. These decreases
were offset by a decrease in credit facility repayments of $172.0 million and
an increase in credit facility borrowings of $29.0 million.
The ratio of earnings to fixed charges and dividends on preferred stock
decreased to 1.78 at March 31, 1999 from 2.30 at March 31, 1998 due to the
increase in the Company's leverage ratio.
22
<PAGE>
FUNDS FROM OPERATIONS
The Company calculates Funds from Operations ("FFO") based upon
guidance from the National Association of Real Estate Investment Trusts
("NAREIT"). FFO is defined as net income, excluding gains or losses from debt
restructuring and sales of property, plus depreciation and amortization and
after adjustments for unconsolidated joint ventures.
Industry analysts generally consider FFO to be an appropriate measure
of performance of a REIT such as Cornerstone. FFO does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles ("GAAP") and, therefore, should not be considered a
substitute for net income as a measure of performance or a substitute for cash
flow from operations as a measure of liquidity calculated in accordance with
GAAP.
The Company believes that FFO is helpful to investors as a measure
of the performance of an equity REIT because, along with cash flows from
operating activities, financing activities and investing activities, it
provides investors an understanding of the ability of the Company to generate
earnings from its recurring operations, after the payment of all
administrative costs and interest expense. For cash flows from operating,
financing, and investing activities in accordance with GAAP see the Condensed
Consolidated Statements of Cash Flows included in the Condensed Consolidated
Financial Statements which are part of this report.
The Company no longer reports free and deferred rental income as an
adjustment to FFO because this is not part of the industry standard.
Therefore, included in FFO for the three months ended March 31, 1999 and 1998
is approximately $6,870,000 and $3,146,000, respectively, for free and
deferred rental income (after adjustment for minority interest).
The table below sets forth the adjustments which were made to the net
income of the Company in the calculation of FFO for the three-month period ended
March 31, 1999 and 1998, respectively (in thousands):
<TABLE>
<CAPTION>
FUNDS FROM OPERATIONS (1)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
Net income $ 29,032 $ 22,754
NAREIT adjustments:
Depreciation and amortization (2) 25,085 10,645
Minority adjustments (677) (467)
Unconsolidated depreciation (3) 373 863
Cumulative effect of a change in
accounting principle 630 0
Loss on sale of real estate assets 0 212
Other adjustments:
Amortization on rent notes -- 368
Severance payments 247 --
Minority interest allocated to unitholders 4,473 136
-------- --------
FUNDS FROM OPERATIONS $ 59,163 $ 34,511
======== ========
Interest expense on convertible note 200 205
-------- --------
FUNDS FROM OPERATIONS
(ADJUSTED FOR CONVERTIBLE DEBT) $ 59,363 $ 34,716
======== ========
</TABLE>
23
<PAGE>
- ----------
(1) Although the Company believes that this table is a full and fair
presentation of the Company's FFO, similarly captioned items may be
defined differently by other REITs, in which case direct comparisons
may not be possible.
(2) The depreciation and amortization adjustment does not include
amortization of deferred financing costs and depreciation of non-real
estate assets in accordance with guidance from NAREIT. Depreciation and
amortization includes $1,003,000 of amortization relating to the
intangible management and development company assets purchased as part
of the Wilson Acquisition.
(3) The unconsolidated depreciation adjustment includes $169,000 of
amortization relating to the intangible management and development
company assets that were acquired as part of the Wilson Acquisition.
The increase in FFO for the three months ended March 31, 1999 as
compared to the same period in 1998 is primarily due to the acquisition of
interests in 69 properties as part of the Wilson Acquisition and the acquisition
of three additional properties (One Memorial Drive, 201 California Street and
Wilshire Palisades) subsequent to the first quarter of 1998.
24
<PAGE>
OTHER INDEBTEDNESS
On November 3, 1998, a syndicate of 17 banks led by Bankers Trust
Company, The Chase Manhattan Bank and NationsBank provided the Company with a
$550.0 million line of credit for acquisitions and general working capital
purposes (the "Revolving Credit Facility"). The facility is also available
for the issuance of letters of credit. The interest rate on the Revolving
Credit Facility depends on the Company's ratio of total debt to total asset
value (as defined) at the time of borrowing and will be at a spread of 1.10%
to 1.40% over the applicable LIBOR or the Prime Rate at the borrower's
option. The letters of credit will be priced at the applicable Eurodollar
credit spread. The Revolving Credit Facility expires on November 3, 2001. As
of March 31, 1999, $479.0 million of the facility was outstanding at a rate
of approximately 6.3%. Of this amount, approximately $250 million is fixed
with interest rate swaps, which effectively fix the rate at 6.47%. These
swaps are considered hedges for federal income tax purposes. In addition, at
March 31, 1999, there were three letters of credit totaling approximately $8.2
million outstanding at a rate of 1.40%.
STOCKHOLDERS' AND UNITHOLDERS' DISTRIBUTIONS
Cornerstone intends to distribute at least 95.0% of its taxable income
to maintain its qualification as a REIT. The Company anticipates that cash flow
will exceed taxable income for the foreseeable future. Cornerstone's
distribution policy is to pay distributions based upon cash flow, less prudent
reserves. On December 7, 1998, in connection with the Wilson Acquisition, the
Company declared a distribution of $0.15 per share/unit to all stockholders
and unitholders of record as of December 15, 1998 and a distribution of $0.15
per share/unit to all stockholders and unitholders of record as of January 29,
1999. Both distributions were paid on February 26, 1999. On April 12, 1999,
the Company declared a distribution of $0.30 per share/unit to be paid to all
stockholders and unitholders on May 28, 1999 (to stockholders and unitholders
of record as of April 30, 1999).
At the present time, the Company is current in the payment of all
preferred dividends.
LIQUIDITY
At March 31, 1999, the Company had approximately $44,088,000 in cash
and cash equivalents and approximately $14,006,000 in restricted cash.
Restricted cash includes prepaid rents and security deposits for some of the
Company's office properties and escrow and reserve funds for real estate
taxes, property insurance, capital improvements, tenant improvements and
leasing costs. These funds were established pursuant to certain mortgage and
construction financing arrangements. Cornerstone also had $62.8 million
available under its Revolving Credit Facility for general corporate purposes.
In addition, Cornerstone anticipates it will receive distributions from its
real estate partnerships, rental income from its fee owned properties and
interest income from its mortgages on a monthly basis that will cover normal
operating expenses and pay distributions to its stockholders and unitholders.
Based upon its cash reserves and other sources of funds, including its $550.0
million Revolving Credit Facility, management believes Cornerstone has
sufficient liquidity to meet its cash requirements for the remainder of 1999.
OTHER MATTERS
GENERAL
The Company is not aware of any environmental issues at any of its
Properties that would have a material adverse impact on the Company's operating
results or financial condition. The Company believes it has sufficient insurance
coverage at each of its Properties. A majority of the Company's leases with the
majority of its tenants require the tenants to pay most operating expenses and
increases in common area maintenance expenses, which reduces the Company's
exposure to increases in costs and operating expenses resulting from inflation.
RECENTLY ISSUED ACCOUNTING STANDARDS
During the first quarter of 1999, the Company adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction.
25
<PAGE>
During the first quarter of 1999, the Company also adopted SOP 98-5.
SOP 98-5 requires that certain costs incurred in conjunction with start-up and
organizational activities be expensed. Pursuant to the requirements of SOP 98-5,
the Company has written off all unamortized organizational costs and has
recorded a cumulative effect of a change in accounting principle of $630,044.
In addition, during the first quarter of 1999, the Company adopted
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance
on whether the costs of computer software developed or obtained for internal use
should be capitalized or expensed. The adoption of SOP 98-1 did not have a
significant effect on the Company's financial statements.
SUBSEQUENT EVENTS
During May 1999, the Company entered into an agreement to
restructure approximately $163.0 million of property related debt with two
lenders. The restructuring involves retiring the individual property related
debts and creating a single $180.0 million loan which will be
cross-collateralized by six of the Company's properties. The loan will have a
ten year term and will bear interest at 7.26% per annum.
YEAR 2000 COMPLIANCE
GENERAL
The Year 2000 compliance issue concerns the inability of computerized
information systems to accurately calculate, store or use a date after December
31, 1999. This could result in a system failure or miscalculations causing
disruptions of operations. The Year 2000 issue affects virtually all companies
and all organizations. Management recognizes the importance of ensuring that its
business and operational systems are not disrupted as a result of Year 2000
issues.
READINESS
Cornerstone Properties Inc. has created a Year 2000 task force to
evaluate and take the appropriate actions regarding Year 2000 compliance. The
Company's plan is divided into three major sections: (i) compliance of
information systems at the corporate offices in New York and Atlanta ("Home
Office"); (ii) compliance of information and real estate operating systems at
the corporate offices in California and the Wilson Projects ("Wilson"); and
(iii) assessment of compliance of significant service providers including third
party managers and the buildings they manage, vendors and customers ("External
Agents"). The plan covers the following major tasks: (i) inventory of all
systems; (ii) analysis of inventory including assessment of risk; (iii)
verification of compliance of inventory with vendors; (iv) testing of critical
equipment and processes; and (v) replacement or modification of systems.
The first section of the plan, Home Office, is complete. The Wilson and
External Agents sections of the plan are proceeding according to schedule with
expected completions before December 31, 1999. The plan also includes
questionnaires that will be sent to tenants in order to attempt to determine the
effect of Year 2000 on their businesses and ultimately the Company's income
stream.
COST
The total historical and anticipated remaining costs for the Year 2000
remediation are estimated to be immaterial to the Company's financial condition.
The costs to date consist of recurring systems upgrades and replacements,
immaterial internal staff costs and other expenses such as telephone and mailing
costs. The information and real estate operating systems that have thus far been
identified as non-compliant are at or approaching the end of their useful lives
and have been or will be replaced or upgraded as a part of the normal operations
of the Company.
26
<PAGE>
RISKS AND CONTINGENCY PLANS
The Company does not anticipate significant delays in finalizing the
first two sections of its Year 2000 remediation plan. However, External Agents
having a material relationship with the Company (e.g., property managers,
utilities, financial institutions, governmental agencies, municipalities and
major tenants) may be a potential risk based on their individual Year 2000
preparedness, which may not be within the Company's reasonable control. The
Company is in the process of identifying, reviewing and logging the Year 2000
preparedness of critical External Agents.
While the Company is not aware of any matters with regard to its major
tenants which could give rise to a material default, there may be a potential
risk with regard to their Year 2000 preparedness which may be outside the
Company's reasonable control. The Company is currently in the process of
surveying its tenants to try to predetermine the risk of defaults due to Year
2000 issues.
Currently, there has been no indication or expectation of material
risks in the compliance of the first two sections of the plan. Pending
unfavorable results, the Company will determine what course of action and
contingencies will need to be made. There can be no assurance that external Year
2000 issues will be resolved. Noncompliance of External Agents as well as the
Company's major tenants could have a material adverse impact on the Company's
business, operating results and financial condition.
YEAR 2000 COMPLIANCE DETAIL
HOME OFFICE
I. Inventory of all systems: The Company has inventoried all
information systems at its corporate offices in New York and
Atlanta. The hardware systems primarily consist of desktop and
laptop computers, server computers, printers, phone systems
and local area and wide area network infrastructures. The
software applications primarily consist of commercial off the
shelf software ("COTS") products for spreadsheet analysis,
word processing, accounting, cash flow analysis and other
office automation tasks.
II. Analysis of inventory and assessment of risk: The systems
inventory has been analyzed as to its compliance via vendor
certifications. All of the Home Office systems are Year 2000
compliant.
III. Verification of compliance with vendors: The Company has
verified compliance of systems through systems' documentation,
mail correspondences and vendor web sites.
IV. Testing of critical equipment and processes: The Home Office
primarily uses COTS products and does not significantly rely
on any proprietary or customized systems. The Company has
performed no testing and has relied upon vendor certifications
and vendor internal testing processes.
V. Replacement or modification of systems: The Company has
replaced or modified non-compliant systems in the ordinary
course of business.
27
<PAGE>
WILSON
I. Inventory of all systems: The Company continues to inventory
all information and real estate operating systems at its
offices and Properties, the majority of which are located in
California. The information systems primarily consist of
desktop and laptop computers, server computers, printers,
phone systems, local area and wide area network
infrastructures, and COTS products for spreadsheet analysis,
word processing, accounting, cash flow analysis and other
office automation tasks. The real estate operating systems
primarily consist of heating ventilation and air conditioning
("HVAC") systems, elevator systems, electrical systems, fire
and life safety systems and security control systems.
II. Analysis of inventory and assessment of risk: The systems
inventory has been analyzed as to its compliance via vendor
certifications. Substantially all of the information and real
estate operating systems are Year 2000 compliant. Those
systems identified as non-compliant will be upgraded or
replaced in the normal course of business by December 31,
1999. A component of the accounting system used by Wilson has
been identified as non-compliant. An upgrade has been
purchased and will be installed by the end of the second
quarter of 1999. The cost of the upgrade was approximately
$10,000.
III. Verification of compliance with vendors: The Company has
verified compliance of systems through systems' documentation,
mail correspondences and vendor web sites.
IV. Testing of critical equipment and processes: Wilson primarily
uses COTS products and does not significantly rely on any
proprietary or customized systems. The Company has performed
no testing and has relied upon vendor certifications and
vendor internal testing processes.
V. Replacement or modification of systems: The Company has and
will continue to replace or modify non-compliant systems in
the ordinary course of business.
EXTERNAL AGENTS
As part of the Company's Year 2000 compliance plan, significant service
providers, vendors and customers have been identified and steps are being
undertaken to reasonably ascertain their stage of Year 2000 readiness. Through
questionnaires, web sites, interviews, on site visits and other available means,
the Company is assessing the Year 2000 risk of its third party property
managers, financial institutions, significant tenants and other significant
business partners.
Of the External Agents, the Company has focused attention on assessing
the Year 2000 risk of its third party property managers and the associated real
estate operating systems (HVAC systems, elevator systems, electrical systems,
fire and life safety systems and security control systems). Currently, through
the process of surveys, interviews and on site visits, there has been no
indication of material Year 2000 risks at the Company's third-party property
managers. Non-compliant systems will be upgraded or replaced in the normal
course of business before December 31, 1999 or will be addressed with a
contingency plan.
There can be no assurance that external Year 2000 issues will be
resolved. Should non-compliance of External Agents not be discovered, such
non-compliance could have a material adverse impact on the Company's business,
operating results and financial condition. Where possible, the Company will
terminate any vendor relationships should it find any material Year 2000 issues
with that vendor.
28
<PAGE>
DEVELOPMENT PROJECTS
The Company has entered into an agreement to purchase a 927,000
square-foot Class A office building, currently under development, in downtown
Minneapolis, Minnesota. Approximately $49.4 million has been spent on the
construction. The project is scheduled to be completed in the year 2000 and
is approximately 50% pre-leased. The development is being financed through a
construction loan by U.S. Bank. Upon completion, the Company will retire the
construction loan and acquire the property from the developer for an amount
to be determined by applying a negotiated formula to in-place net operating
income.
29
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Approximately $1.3 billion of the Company's long-term debt bears
interest at fixed rates, and therefore the fair value of these instruments is
affected by changes in market interest rates. The following table
presents principal cash flows (dollar amounts in thousands) based upon
expected maturity dates of the debt obligations and the related
weighted-average interest rates by expected maturity dates for the fixed rate
debt. The interest rate on the variable rate debt as of March 31, 1999 ranged
from LIBOR plus 0.5% to LIBOR plus 2.0%.
Annual rates on advances from the Revolving Credit Facility depends on
the Company's ratio of total debt to asset value (as defined) at the time of
borrowing and will be at a spread of 1.10% to 1.40% over the applicable LIBOR or
the Prime Rate at the Company's option. Of the total advances outstanding under
the facility at March 31, 1999, $250.0 million is fixed with interest rate
swaps, which effectively fix the rate at 6.47%.
<TABLE>
<CAPTION>
FAIR
1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT:
Fixed rate 17,649 101,961 68,993 103,663 90,225 931,579 1,314,070 1,321,149
Average interest rate 6.90% 7.14% 6.90% 6.84% 7.22% 7.26%
Variable rate 58,000 55,266 491,926 47,569 16,317 - 669,078 669,078
INTEREST RATE SWAPS:
Variable to Fixed - - 250,000 - - - - -
Average pay rate - - 5.07% - - - - -
Average receive rate - - 4.94% - - - - -
</TABLE>
30
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Note 6 to the Condensed Consolidated Financial
Statements, which is specifically incorporated by reference herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
1) Exhibit 12.1: Statement of Computation of Earnings to
Fixed Charges
2) For EDGAR filing purposes only, this report contains
Exhibit 27, Financial Data Schedule
3) Exhibit 99.1: Supplemental Information to Quarterly
Earnings Release
(b) Reports on Form 8-K:
1. Form 8-K/A dated March 1, 1999
Item 7 - Financial Statements, Pro Forma Financial
Information and Exhibits. Pro forma financial
statements regarding the Wilson Acquisition as of and
for the period ending September 30, 1998.
2. Form 8-K dated March 24, 1999
Item 5 - Supplemental information package distributed in
conjunction with the Fourth Quarter 1998 Earnings
Release of Cornerstone Properties Inc.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C>
CORNERSTONE PROPERTIES INC.
(Registrant)
By: /s/ JOHN S. MOODY
------------------------------
John S. Moody, President & CEO
Date: May 17, 1999
By: /s/ KEVIN P. MAHONEY
------------------------------
Kevin P. Mahoney, Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: May 17, 1999
</TABLE>
32
<PAGE>
Exhibit 12.1
------------
Statement of Computation of Earnings to Fixed Charges and Preferred Stock
Dividend Requirements for the three month periods ended March 31, 1999 and
March 31, 1998
<TABLE>
<CAPTION>
For the three months ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net income $ 29,032 $ 22,754
Interest expense 34,358 15,915
Amortization of capitalized interest 23 --
-------- --------
Earnings before interest 63,413 38,669
Interest expense 34,358 15,915
Interest capitalized 311 --
Interest portion of rentals 88 --
Preferred dividends 875 875
-------- --------
Fixed charges 35,632 16,790
Earnings to fixed charges and preferred
stock dividend requirements 1.78 2.30
======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 44,088
<SECURITIES> 0
<RECEIVABLES> 83,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 80,985
<PP&E> 4,205,481
<DEPRECIATION> 312,368
<TOTAL-ASSETS> 4,282,226
<CURRENT-LIABILITIES> 82,317
<BONDS> 0
0
50,000
<COMMON> 1,790,157
<OTHER-SE> (897)
<TOTAL-LIABILITY-AND-EQUITY> 4,282,226
<SALES> 0
<TOTAL-REVENUES> 151,765
<CGS> 0
<TOTAL-COSTS> 116,180
<OTHER-EXPENSES> (5,923)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,358
<INCOME-PRETAX> 29,662
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (630)
<NET-INCOME> 29,032
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
<PAGE>
Exhibit 99.1
CORNERSTONE
PROPERTIES
FIRST QUARTER
1999
SUPPLEMENTAL PACKAGE
MAY 4, 1999
<PAGE>
Cornerstone Properties Inc.
Supplemental Information to Quarterly Earnings Release
1) First Quarter 1999
- Balance Sheet
- Income Statement
2) Press Release
3) Quarterly Fact Sheet
4) FFO Calculation
5) Table of Properties
6) Top Ten Tenants Schedule
7) Historical Occupancy Schedule
8) Net Rent and Net Effective Rent Schedule
9) Lease Expiration Schedule
10) Tenant Retention Schedule
11) Leasing Costs and Capital Expenditures
12) Debt Schedule
13) Equity Schedule
14) Minority Sharing in Cash Flows and Residual Proceeds
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- BALANCE SHEET
- INCOME STATEMENT
<PAGE>
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Investments, at cost:
Land $ 729,323 $ 729,323
Buildings, leasehold interests and improvements 3,476,158 3,466,288
Investment in joint ventures 31,804 31,500
Deferred lease costs 154,824 144,838
----------- -----------
4,392,109 4,371,949
Less: Accumulated depreciation and amortization 312,368 288,448
----------- -----------
Total investments 4,079,741 4,083,501
Cash and cash equivalents 44,088 61,869
Restricted cash 14,006 9,114
Other deferred costs, net of accumulated amortization of $940 and $762 5,075 6,153
Deferred tenant receivables 60,782 53,802
Tenant and other receivables, net 22,891 10,557
Other assets 53,558 56,988
----------- -----------
TOTAL ASSETS $ 4,280,141 $ 4,281,984
----------- -----------
----------- -----------
LIABILITIES
Long-term debt, inclusive of $23,842 and $25,031 of unamortized premium $ 1,504,148 $ 1,532,474
Credit facility 479,000 465,000
Accrued interest 12,095 10,933
Accrued real estate taxes 29,324 16,395
Accounts payable and accrued expenses 40,898 51,454
Common stockholders' distributions payable - 38,163
Unearned revenue and other liabilities 37,100 23,890
----------- -----------
TOTAL LIABILITIES 2,102,565 2,138,309
----------- -----------
MINORITY INTEREST
Minority interest in operating partnership 287,861 283,388
Minority interest in joint ventures 23,508 23,420
----------- -----------
TOTAL MINORITY INTEREST 311,369 306,808
----------- -----------
Commitments and contingencies
Redeemable preferred stock; 344,828 shares authorized;
0 shares issued and outstanding -- --
STOCKHOLDERS' EQUITY
7% Cumulative convertible preferred stock, $16.50 stated value;
65,000,000 shares authorized; 3,030,303 shares issued and outstanding 50,000 50,000
Common stock, no par value; 250,000,000 shares authorized;
128,210,784 shares issued and outstanding
Paid-in capital 1,790,157 1,788,567
Retained earnings 29,032 -
Deferred compensation (2,982) (1,700)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,866,207 1,836,867
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,280,141 $ 4,281,984
----------- -----------
----------- -----------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
---- ----
<S> <C> <C>
REVENUES
Office and parking rentals $ 149,476 $ 75,183
Earnings in joint ventures 305 (925)
Interest and other income 1,984 7,298
------- ------
TOTAL REVENUES 151,765 81,556
------- ------
EXPENSES
Building operating expenses 31,077 17,089
Real estate taxes 19,524 11,177
Interest expense 34,358 15,915
Depreciation and amortization 25,085 10,645
General and administrative 6,136 2,586
------- ------
TOTAL EXPENSES 116,180 57,412
------- ------
35,585 24,144
------- ------
Other income (expenses)
Loss on sale of real estate assets -- (212)
Minority interest (5,923) (1,178)
------- ------
Income before cumulative effect of a change in accounting principle 29,662 22,754
------- ------
------- ------
Cumulative effect of a change in accounting principle (630) --
NET INCOME $ 29,032 $ 22,754
------- ------
------- ------
Income applicable to preferred stock $ (875) $ (875)
------- ------
Income applicable to common stock $ 28,157 $ 21,879
------- ------
------- ------
Income before cumulative effect of a change in accounting
principle per common share $ 0.22 $ 0.24
------- ------
------- ------
Cumulative effect of a change in accounting
principle per common share $ -- $ --
------- ------
------- ------
Basic income per common share $ 0.22 $ 0.24
------- ------
------- ------
DILUTED INCOME PER COMMON SHARE $ 0.22 $ 0.23
------- ------
------- ------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- PRESS RELEASE
<PAGE>
FOR IMMEDIATE RELEASE
May 3, 1999
FOR ADDITIONAL INFORMATION, CONTACT:
Kevin P. Mahoney Thomas P. Loftus
Chief Financial Officer Investor Relations
(212) 605-7142 (212) 605-7131
CORNERSTONE PROPERTIES INC.
ANNOUNCES FIRST QUARTER 1999 RESULTS
FIRST QUARTER 1999 HIGHLIGHTS
- - Same store net operating income up 5.97% year-to-date over the same period in
1998.
- - FFO per share for the 1999 first quarter increased more than 9.46% over
the first quarter of 1998.
- - Year-to-date property net operating income rose 97% over the same
period in 1998.
- - Occupancy Increases to 96.4%
NEW YORK, NEW YORK (MAY 3, 1999) -- Cornerstone Properties Inc. (NYSE: CPP), a
real estate investment trust, announced today results for its first quarter
ended March 31, 1999. Funds from operations (FFO) allocated to share/unit
holders amounted to $59,363,000, or $0.39 per share/unit calculated on
152,569,000 average diluted total shares/units outstanding, compared to
$34,716,000, or $0.36 per share/unit on 97,666,000 average diluted total
shares/units outstanding for the three months ended March 31, 1998. The increase
in FFO per share/unit was due to internal growth and the accretive impact of the
Company's acquisitions over the past twelve months. As defined by NAREIT, funds
from operations is net income excluding expenses from debt restructuring, gains
(or losses) on sale of property, plus depreciation and amortization.
Year-to-date net operating income before depreciation from Cornerstone
Properties' real estate assets increased 97% to $99,636,000 for the 3 months
ended March 31, 1999, from $50,525,000 for the comparable period in 1998.
Net income for the first quarter of 1999 grew to $29,032,000 compared to
$22,754,000 in the first quarter of 1998.
"While the downturn in the REIT capital market has been hard felt by equity
investors, we continue to deliver solid earnings which meet or exceed
expectations" said John S. Moody, President and CEO.
<PAGE>
"Our leasing activity and strong property operations have continually given rise
to strong reliable earnings since our IPO in 1997."
QUARTERLY DIVIDEND DECLARED
The Company declared a quarterly dividend of $0.30 per common share payable on
May 28, 1999 for common stockholders of record as of April 30, 1999.
"SAME STORE" REVENUE GROWTH CONTINUES
The Company achieved year-to-date "same store" net operating income growth of
5.97% at the 16 properties owned over the same period. This increase is due to a
4.65% increase in revenues while expenses increased only 2.32% and reflects the
strengthening of fundamentals in the Company's core markets.
PROPERTY MANAGEMENT TAKEOVER COMPLETED
During 1999, the Company completed the internalization of property management at
125 Summer Street and Sixty State Street in Boston and One Memorial Drive in
Cambridge. Property Management had previously been outsourced at all three of
these properties.
OCCUPANCY INCREASES TO 96.4%
During the first quarter of 1999, the Company leased approximately 660,000
square feet, increasing occupancy from 95.6% to 96.4%. The major portion of the
increase in occupancy came from the assets purchased in the William Wilson
Transaction, where occupancy increased from 92.3% to 94.4%.
Major transactions included approximately 120,000 square feet at Seaport Centre
in Redwood City, California, and over 50,000 square feet of positive absorption
in Orange County, California.
NATIONAL MANAGEMENT ORGANIZATION ANNOUNCED
John S. Moody, President and CEO announced a new management structure had been
implemented for Cornerstone on a national basis.
H. Lee Van Boven, formerly Chief Operating Officer and General Counsel of
William Wilson and Associates, has been named Chief Operating Officer of
Cornerstone in addition to General Counsel and will oversee Management and
Leasing as well as Human Resources and Legal.
Executive Vice President Rodney C. Dimock will oversee Investor Relations and
Public Relations as well as assume responsibility for Corporate Strategy,
Communications and Private Equity Finance. Mr. Dimock will also spearhead our
efforts to develop alternative revenue sources and manage expenses.
Senior Vice President Stephen J. Pilch has been named national Director of
Management and Leasing. Senior Vice President A. Robert Paratte has been named
national Director of Leasing.
Senior Vice President and Chief Financial Officer Kevin P. Mahoney will be
responsible for all Finance functions nationally, including MIS and property
accounting.
<PAGE>
"We believe this management structure will help us achieve a true integration
and provide a consistent and uniform approach for the conduct of our business on
a national basis," commented John S. Moody, President and CEO.
SUPPLEMENTAL EARNINGS RELEASE AVAILABLE AT WWW.CSTONEPROP.COM
The First Quarter 1999 Supplemental Earnings Release is available in PDF-format
at WWW.CSTONEPROP.COM (click on Investor Relations).
Cornerstone Properties Inc. is a self-administered equity real estate investment
trust (REIT) investing in Class A office properties in prime locations in major
suburban markets and prime central business districts. The Company, through its
subsidiaries, currently owns interests in 96 Class A office properties
throughout the United States totaling approximately 21 million square feet.
Headquartered in New York City, Cornerstone's stock is traded on the New York
Stock Exchange under the ticker symbol CPP.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT TO
RISKS AND UNCERTAINTIES, MANY OF WHICH CANNOT BE PREDICTED WITH ACCURACY, THAT
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF CORNERSTONE TO
DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS.
INFORMATION CONTAINED IN THIS PRESS RELEASE REGARDING CURRENT AND FUTURE MARKET
CONDITIONS IS BASED ON CORNERSTONE'S ASSESSMENT OF REAL ESTATE MARKETS AS OF
THIS DATE AND IS SUBJECT TO THE UNCERTAINTIES INHERENT IN SUCH AN ASSESSMENT. IN
PARTICULAR, BUT NOT EXCLUSIVELY, NATIONAL AND REGIONAL ECONOMIC CONDITIONS, THE
RATE OF NEW CONSTRUCTION, AND DEMAND AND SUPPLY IN A GIVEN MARKET WILL AFFECT
LEASING ACTIVITY, PROJECTED RENTS AND THE COST OF LEASE RENEWALS.
[Tables to Follow]
# # #
FOR MORE INFORMATION ON CORNERSTONE PROPERTIES VISIT CORNERSTONE PROPERTIES' WEB
SITE AT HTTP://WWW.CSTONEPROP.COM
<PAGE>
CORNERSTONE PROPERTIES INC.
FUNDS FROM OPERATIONS
MARCH 31, 1999
<TABLE>
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED
3/31/99 3/31/98
------- -------
(in thousands, except per share amounts)
<S> <C> <C>
Rental Income (1) $ 150,798 $ 80,351
Building Operating Expenses (1) 51,162 29,826
--------- --------
Building Net Operating Income 99,636 50,525
--------- --------
Corporate General and Administrative (1) (2) (7,317) (2,586)
Interest and Other Income 3,632 3,628
--------- --------
EBITDA 95,951 51,567
--------- --------
Interest Expense (1) (34,660) (15,915)
Minority Adjustments (2,128) (1,509)
Rent Notes - 368
--------- --------
Funds From Operations 59,163 34,511
Interest on Convertible Debt 200 205
--------- --------
Funds From Operations (Adjusted for
convertible debt) $ 59,363 $ 34,716
--------- --------
Weighted Average Diluted Shares/Units 152,569 97,666
FFO PER SHARE/UNIT (DILUTED) $ 0.39 $ 0.36
Less: Capital Expenditures Per Share/Unit 0.04 0.02
--------- --------
AFFO Per Share/Unit $ 0.35 $ 0.34
--------- --------
Funds From Operations $ 59,163 $ 34,511
Less: Preferred Dividends (875) (875)
Less: Recurring Lease Costs and
Capital Expenditures (3) (5,462) (1,885)
Less: Straight Line Rents Adjusted For
Minority Interest (6,870) (3,146)
--------- --------
Funds Available for Distribution $ 45,956 $ 28,605
--------- --------
Weighted Average Common Shares and Units
Outstanding 148,544 93,369
Funds Available for Distribution Per Share/Unit $ 0.31 $ 0.31
Distribution Per Share/Unit $ 0.30 $ 0.30
</TABLE>
(1) For the three months ended March 31, 1999 rental income has been increased
by $1,322,000, building operating expenses have been increased by $561,000,
corporate general and administrative expense has been increased by $1,428,000,
interest and other income has been increased by $1,648,000 and interest expense
has been increased by $302,000 in order to show Cornerstone's equity investments
had they been consolidated. For the three months ended March 31, 1998 rental
income has been increased by $5,168,000, building expenses have been increased
by $1,560,000 and interest and other income has been reduced by $3,670,000 in
order to show Cornerstone's equity investments had they been consolidated.
(2) Non-recurring merger severance costs of $247,000 have been deducted from
general and administrative expenses.
(3) Based on a five year 1995-1999 average of recurring (non revenue generating)
tenant leasing costs of $8.53 per square foot leased times the five year
(1999-2003) average quarterly lease expiration (adjusted for minority interest)
of 563,266 square feet or $4,804,659, plus a capital expenditure reserve
(adjusted for minority interest) of $0.13 per square foot ($657,295).
Year to date the Company has incurred $3,379,304 in recurring tenant costs
(adjusted for minority interest) in leasing 423,705 square feet or a cost of
$7.98 per square foot. Year to date the Company has incurred $917,086 in
recurring capital costs (adjusted for minority interest) or $0.18 per square
foot on an annualized basis.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- FACT SHEET
<PAGE>
CORNERSTONE PROPERTIES INC.
QUARTERLY FACT SHEET
<TABLE>
<CAPTION>
1999 COMMON DIVIDENDS RECORD DATE PAYMENT DATE
- --------------------- ----------- ------------
<S> <C> <C>
2nd Quarter 1999 4/30/99 5/28/99
3rd Quarter 1999 7/30/99 8/31/99
4th Quarter 1999 10/29/99 11/30/99
1st Quarter 2000 1/31/00 2/29/00
EARNINGS RELEASE/ QUARTERLY CONFERENCE CALL
2nd Quarter 1999 8/3/99
3rd Quarter 1999 11/2/99
4th Quarter 1999 2/24/00
1st Quarter 2000 5/2/00
</TABLE>
<TABLE>
<CAPTION>
CURRENT QUARTER
1ST QUARTER RESULTS 1999 1998
- ------------------- ---- ----
<S> <C> <C>
FFO Per Share $ 0.39 $ 0.36
AFFO Per Share $ 0.35 $ 0.34
FAD Per Share $ 0.31 $ 0.31
FFO Payout Ratio 77% 84%
AFFO Payout Ratio 86% 89%
FAD Payout Ratio 97% 98%
Same Store NOI Growth 5.97% 1.19%
EBITDA Interest Coverage 2.74 3.19
Fixed Charge Coverage 2.65 3.02
Recurring Leasing Costs Per Square Foot Leased(1) $ 7.98 $ 6.83
Non-Recurring Leasing Costs Per Square Foot Leased(1) $ 21.95 $ 14.95
Recurring Capital Expenditures Per Square Foot(1)(2) $ 0.18 $ 0.05
Non-Recurring Capital Expenditures Per Square Foot(1)(2) $ 0.06 $ 0.06
Parking Revenues (included in Office and Parking) $7,007,187 $ 4,859,522
Parking Expense (included in Building Operating Expense) $ 698,341 $ 638,930
Net Parking Income $6,308,846 $ 4,220,592
Straight Line Rents (adjusted for minority interest) $6,870,000 $ 3,146,000
Expiring Rents $ 23.45 NA
Rents on New leases $ 29.41 NA
Percentage Increase 25% NA
</TABLE>
(1) Leasing and capital expenditures for 1998 have been restated to reflect the
sale of The Frick Building in April of 1998.
(2) Capital expenditures per square foot are reported on an annualized basis.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- FFO CALCULATION
<PAGE>
CORNERSTONE PROPERTIES INC.
FUNDS FROM OPERATIONS
MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---- ----
(in thousands, except per share amounts)
<S> <C> <C>
Net Income $ 29,032 $ 22,754
NAREIT Adjustments:
Depreciation and Amortization (1) 25,085 10,645
Minority Adjustments (677) (467)
Unconsolidated Depreciation (2) 373 863
Cumulative Effect of a Change in
Accounting Principle 630 -
Loss on Sale of Assets - 212
Other Adjustments:
Amortization on Rent Notes - 368
Severance Payments 247 -
Minority Interest Allocated to Unitholders 4,473 136
-------- --------
Funds From Operations $ 59,163 $34,511
Interest Expense On Convertible Note 200 205
-------- --------
Funds From Operations $ 59,363 $34,716
-------- --------
-------- --------
Weighted Average Diluted Shares/Units Outstanding 152,569 97,666
FFO Per Share/Unit $ 0.39 $ 0.36
-------- --------
-------- --------
</TABLE>
(1) The depreciation and amortization adjustment includes $1,003,000 of
amortization relating to the intangible management and development company
assets that were acquired as part of the Wilson Acquistion.
(2) The unconsolidated depreciation adjustment includes $169,000 of
amortization relating to the intangible management and development company
assets that were acquired as part of the Wilson Acquistion.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- TABLE OF PROPERTIES
<PAGE>
CORNERSTONE PROPERTIES INC.
TABLE OF PROPERTIES
AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
REMAINING
REGION PROPERTY TOTAL RENTABLE CORNERSTONE YEAR CURRENT TOTAL AVG TERM
NAME NAME SQUARE FEET INTEREST (1) CONSTRUCTED OCCUPANCY LEASES (IN YEARS)
---- ---- ----------- ------------ ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BOSTON, MASSACHUSETTS
(2)Sixty State Street 823,014 100.0% 1979 100.0% 34 8.4
500 Boylston Street 714,513 91.5% 1988 100.0% 16 5.9
222 Berkeley Street 530,884 91.5% 1991 100.0% 28 6.0
125 Summer Street 463,691 100.0% 1989 94.0% 23 3.8
(3)One Memorial Drive 352,764 100.0% 1985 99.8% 12 5.7
------------- ------ ----- ----
REGION TOTAL 2,884,866 99.0% 113 6.3
SAN MATEO COUNTY, CALIFORNIA
(10)Bayhill (4 buildings) 514,704 100.0% 1982 - 1987 87.4% 37 4.2
(4)Peninsula Office Park (7 buildings) 492,044 100.0% 1971 - 1998 97.7% 36 5.6
(4)Seaport Centre 463,019 100.0% 1988 91.1% 12 6.5
(4)Bay Park Plaza (2 buildings) 257,058 100.0% 1985 - 1998 98.2% 15 5.5
(4)One Bay Plaza 176,533 100.0% 1979 100.0% 45 2.6
(4)Belmont Shores 141,643 100.0% 1983 96.5% 13 3.8
(4)1300 South El Camino 84,441 100.0% 1986 98.8% 10 3.8
(4)66 Bovet 43,968 100.0% 1968 89.3% 15 1.8
------------- ------ ----- ----
REGION TOTAL 2,173,410 93.9% 183 5.0
EAST BAY, CALIFORNIA
(10)Corporate Centre (2 buildings) 329,357 100.0% 1985 - 1987 96.2% 56 3.7
(4)ADP Plaza (2 buildings) 299,627 100.0% 1987 - 1989 96.5% 27 3.1
(4)PeopleSoft 279,931 100.0% 1984 99.1% 6 7.7
(4)Norris Tech (3 buildings) 260,513 100.0% 1984 - 1990 96.3% 6 5.7
(4)Golden Bear Center 160,587 100.0% 1986 99.6% 20 4.6
(4)2700 Ygnacio Valley Road 103,214 100.0% 1984 86.0% 22 2.6
(4)Park Plaza 87,040 100.0% 1986 100.0% 9 4.8
(4)1600 South Main 83,277 100.0% 1983 100.0% 18 2.7
(4)Foothill Corporate Center 70,355 100.0% 1982 96.7% 21 1.6
------------- ------ ----- ----
REGION TOTAL 1,673,901 96.9% 185 4.5
ATLANTA, GEORGIA
(5)191 Peachtree Street 1,215,288 80.0% 1991 97.3% 33 7.3
200 Galleria 432,698 100.0% 1985 95.0% 56 3.1
------------- ------ ----- ----
REGION TOTAL 1,647,986 96.7% 89 6.2
SEATTLE, WASHINGTON
(6)Washington Mutual Tower 1,154,560 50.0% 1988 99.5% 89 6.0
(4)110 Atrium Place 214,081 100.0% 1981 99.0% 29 3.7
(4)Island Corporate Center 100,075 100.0% 1987 95.0% 21 3.1
------------- ------ ----- ----
REGION TOTAL 1,468,716 99.1% 139 5.5
SANTA CLARA COUNTY, CALIFORNIA
(4)(7)Pruneyard Office (3 buildings) 354,910 100.0% 1971 - 1999 99.2% 68 4.7
(4)10 Almaden 299,684 100.0% 1989 98.2% 23 7.0
(4)Pruneyard Shopping Center 252,210 100.0% 1970s 94.2% 50 7.1
(4)Embarcadero Place (4 buildings) 192,081 100.0% 1984 100.0% 8 3.8
(4)(8)Pruneyard Inn 90,000 100.0% 1989
(4)First American Plaza 82,596 100.0% 1971 93.0% 18 3.6
(4)490 California 24,539 100.0% 1985 100.0% 3 5.0
------------- ------ ----- ----
REGION TOTAL 1,296,020 97.6% 170 5.5
DENVER, COLORADO
One Norwest Center 1,187,852 100.0% 1983 97.2% 51 7.4
------------- ------ ----- ----
REGION TOTAL 1,187,852 97.2% 51 7.4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REMAINING
REGION PROPERTY TOTAL RENTABLE CORNERSTONE YEAR CURRENT TOTAL AVG TERM
NAME NAME SQUARE FEET INTEREST (1) CONSTRUCTED OCCUPANCY LEASES (IN YEARS)
---- ---- ----------- ------------ ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SAN FRANCISCO, CALIFORNIA
(4)120 Montgomery 415,202 66.7% 1955 93.1% 91 3.1
(4)One Post 388,055 50.0% 1969 99.1% 33 6.6
(9)201 California 240,230 100.0% 1980 100.0% 8 2.4
(4)188 Embarcadero 85,183 100.0% 1985 98.9% 12 3.9
------------- ------ ----- ----
REGION TOTAL 1,128,670 97.1% 144 4.3
MINNEAPOLIS, MINNESOTA
(10)Norwest Center 1,117,439 50.0% 1988 99.7% 33 10.7
------------- ------ ----- ----
REGION TOTAL 1,117,439 99.7% 33 10.7
WASHINGTON, D.C. / ALEXANDRIA, VIRGINIA
(11)Market Square 688,709 70.0% 1990 98.1% 53 7.5
99 Canal Center 137,945 100.0% 1986 98.4% 17 3.1
TransPotomac Plaza 96,278 100.0% 1983 96.4% 11 5.6
11 Canal Center 70,365 100.0% 1986 95.5% 7 7.1
------------- ------ ----- ----
REGION TOTAL 993,297 97.8% 88 6.7
SUBURBAN CHICAGO, ILLINOIS
(12)Corporate 500 Centre 679,039 100.0% 1986/1990 95.5% 40 5.3
One Lincoln Centre 297,040 100.0% 1986 91.6% 42 2.5
------------- ------ ----- ----
REGION TOTAL 976,079 94.3% 82 4.5
SANTA MONICA/WEST LOS ANGELES, CALIFORNIA
(10)West Wilshire (2 buildings) 235,703 100.0% 1960 - 1976 94.2% 51 3.8
(9)Wilshire Palisades 186,714 100.0% 1981 99.5% 15 3.9
(4)(13)Janss Court 125,709 100.0% 1989 96.5% 19 6.1
(4)Searise Office Tower 122,302 100.0% 1975 95.1% 25 5.0
(4)Commerce Park 94,441 100.0% 1977 73.9% 11 5.0
(4)429 Santa Monica 80,539 100.0% 1982 83.8% 33 1.8
------------- ------ ----- ----
REGION TOTAL 845,408 92.6% 154 4.3
ORANGE COUNTY, CALIFORNIA
(4)Bixby Ranch 277,289 100.0% 1987 97.8% 47 3.1
(4)18301 Von Karman 219,508 100.0% 1991 77.4% 30 4.1
(4)2677 North Main 213,089 100.0% 1987 80.7% 20 2.7
------------- ------ ----- ----
REGION TOTAL 709,886 86.4% 97 3.3
CHARLOTTE, NORTH CAROLINA
Charlotte Plaza 612,728 100.0% 1982 99.2% 47 6.0
------------- ------ ----- ----
REGION TOTAL 612,728 99.2% 47 6.0
ARIZONA
(10)Gateway (2 buildings) 212,257 100.0% 1984 - 1985 99.5% 35 3.2
(4)Biltmore Lakes 207,270 100.0% 1982 97.1% 42 2.9
(4)Scottsdale Centre 166,382 100.0% 1985 88.5% 44 3.0
------------- ------ ----- ----
REGION TOTAL 585,909 95.5% 121 3.1
SAN DIEGO, CALIFORNIA
(4)Centerside II 286,949 100.0% 1987 89.5% 40 3.5
(4)Crossroads 133,650 100.0% 1983 100.4% 12 4.3
------------- ------ ----- ----
REGION TOTAL 420,599 93.0% 52 3.8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REMAINING
REGION PROPERTY TOTAL RENTABLE CORNERSTONE YEAR CURRENT TOTAL AVG TERM
NAME NAME SQUARE FEET INTEREST (1) CONSTRUCTED OCCUPANCY LEASES (IN YEARS)
---- ---- ----------- ------------ ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
LOS ANGELES, CALIFORNIA
(4)700 North Brand 202,531 100.0% 1981 93.1% 16 4.6
(4)Tri-Center Plaza 141,732 100.0% 1990 100.0% 12 4.7
(4)Warner Park Center 57,366 100.0% 1986 100.0% 8 2.0
------------- ------ ----- ----
REGION TOTAL 401,629 96.5% 36 4.2
NEW YORK CITY, NEW YORK
527 Madison Avenue 215,332 100.0% 1986 94.2% 20 4.8
Tower 56 163,633 100.0% 1983 98.5% 43 2.8
------------- ------ ----- ----
REGION TOTAL 378,965 96.1% 63 3.9
CONEJO VALLEY (VENTURA), CALIFORNIA
(10)Westlake Spectrum (2 buildings) 119,501 100.0% 1990 100.0% 10 2.8
(4)Agoura Hills 115,265 100.0% 1987 86.8% 9 2.9
------------- ------ ----- ----
REGION TOTAL 234,766 93.5% 19 2.8
OTHER REGIONS
(4)U.S. West (Murray, Utah) 136,608 100.0% 1985 90.8% 15 3.6
(4)Exposition Centre (Sacramento, CA) 72,971 100.0% 1984 70.3% 13 3.4
------------- ------ ----- ----
REGION TOTAL 209,579 83.6% 28 3.6
------------- ------ ----- ----
TOTAL PORTFOLIO 20,947,705 96.4% 1,894 5.6
(14)Minority Interest Adjustment (723,234)
------------- ------
CORNERSTONE PORTFOLIO 20,224,471 96.3%
Adjustment For Pruneyard Inn (90,000)
------------- ------
CORNERSTONE OFFICE PORTFOLIO 20,134,471
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
TABLE OF PROPERTIES
FOOTNOTES
- -----------------------
(1) Unless noted below, cash flow and residual proceeds will be distributed to
Cornerstone according to its percentage interest.
(2) On December 31, 1997, the Company purchased the second mortgage on Sixty
State Street. The mortgage is a cash flow mortgage through which all the
economic benefits/risks (subject to the first mortgage) will inure to the
Company. The Company controls all major decisions regarding management and
leasing. The total purchase price for the second mortgage was $131.5
million.
(3) The Property was acquired by the Company in April 1998.
(4) Property acquired as a result of the Wilson acquisition in December 1998.
(5) While the Company's stated interest in the partnership that owns 191
Peachtree Street is 80%, its economic interest is significantly larger
since it has acquired the first mortgage note on the Property in the amount
of $145 million, which earns interest at 9.375%, and will receive a
priority distribution on its acquired capital base. The partner in the
transaction, CH Associates, Ltd., receives an annual incentive distribution
of $250,000 which the Company expects it will continue to receive under the
partnership agreement through February 28, 2000, with the Company receiving
the remainder of the cash flow of the property.
(6) While the Company's stated interest in the partnership which owns
Washington Mutual Tower is 50%, its economic interest in the Property is
significantly larger because of priority distributions it receives on its
invested capital base. For the quarter ended March 31, 1999, the Company
received 100% of the cash distributions from the partnership that owns
Washington Mutual Tower.
(7) Pruneyard Place construction was completed and occupied on April 1, 1999.
The building was entirely pre-leased.
(8) The Pruneyard Inn is a 118-room three-story hotel. The property is
currently undergoing a 25,000 square foot expansion, which will accommodate
54 new rooms.
(9) The Property was acquired by the Company in June 1998.
(10) While the Company's stated interest in the partnership which owns Norwest
Center is 50%, its economic interest in the Property is significantly
larger because of priority distributions it receives on its invested
capital base. For the quarter ended March 31, 1999, the Company's share of
earnings and cash distributions from the partnership that owns Norwest
Center was 74.5%.
(11) During 1998, through a series of transactions, the Company acquired
partnership interests with a stated interest of approximately 70% in the
partnerships that own Market Square. The Company's economic interest is
significantly larger since it has acquired the first mortgage note on the
Property in the amount of $181 million which earns interest at 9.75%, and
will receive a priority distribution on its acquired capital base. In
addition, the Company acquired a "buffer loan", with accrued principal and
interest of $49.0 million at purchase, which accrues interest at a rate of
11% per annum and is payable from cash flow, refinancing or sales proceeds
from Market Square in excess of the first mortgage. During the quarter
ended March 31, 1999, the Company received 100% of the cash flow from the
Property.
(12) The Property was acquired by the Company in January 1998.
(13) Janss Court is a seven-story, 125,000 square foot Class A mixed-use
building. Along with 92,000 square feet of retail and office space, Janss
Court offers 32 apartments for a total of 33,000 rentable square feet of
residential space.
(14) Rentable square feet include an adjustment for the interest of a joint
venture or minority partner. Calculations are based on the partners'
percentage interest in the cash flows of the property.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- TOP TEN TENANTS SCHEDULE
<PAGE>
CORNERSTONE PROPERTIES INC.
TOP TEN TENANTS SCHEDULE
AS OF MARCH 31, 1999
The Company's tenants include local, regional, and international companies
engaged in a wide variety of businesses. The following table sets forth, as of
March 31, 1999, information concerning the ten largest tenants (ranked by Full
Service Straight-Line Rent, adjusted for the interest of a joint venture or
minority partner, as of that date) occupying the Properties. "Full Service
Straight-Line Rent" is Straight-Line Rent plus annual operating expense
recoveries. "Straight-Line Rent" means the annual average of all actual
rent required to be paid through the term of the lease calculated in
accordance with GAAP. Full Service Straight-Line Rent does not reflect
the cost of any leasing commissions or tenant improvements.
<TABLE>
<CAPTION>
STRAIGHT-LINE EXPENSE FULL SERVICE PERCENT SCHEDULED RENTABLE
TENANT RENT RECOVERIES STRAIGHT-LINE RENT OF TOTAL EXPIRATION SQUARE FEET
------ ---- ---------- ------------------ ------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(1)(3)(4)Norwest Corporation [Wells Fargo] $ 18,754,426 $ 9,701,507 $ 28,455,933 5% May-00 14,019
Aug-01 7,200
Oct-01 1,796
Jan-02 12,898
Feb-03 12,601
Jul-03 143,103
Aug-04 29,810
Oct-04 13,692
Jul-13 401,735
Aug-18 336,054
-----------
972,908
(1)(4)Massachusetts Financial Services 9,015,212 4,378,355 13,393,567 2% Feb-03 328,540
(1)Hale & Dorr 8,596,109 4,454,436 13,050,545 2% Feb-04 1,066
Jun-13 318,435
-----------
319,501
(1)Wachovia Bank 9,061,416 3,276,000 12,337,416 2% Sep-03 7,730
Dec-08 380,442
-----------
388,172
(1)King & Spalding 8,168,292 2,744,076 10,912,368 2% Mar-06 314,443
(1)Deloitte & Touche 6,126,432 2,710,866 8,837,298 2% Oct-99 129,614
Jun-08 84,947
-----------
214,561
(1)(4)The New England Life 4,730,952 2,656,627 7,387,579 1% Aug-07 4,085
Sep-08 194,969
-----------
199,054
(2)Perkins Coie 6,678,717 540,058 7,218,775 1% Jul-03 6,811
Jul-04 23,775
Dec-11 209,541
-----------
240,127
(2)First Union 6,263,184 151,824 6,415,008 1% Jun-00 27,210
Aug-00 22,884
Mar-01 22,520
Aug-01 46,097
Feb-02 23,421
Sep-02 22,366
Mar-04 23,190
Aug-08 46,072
Mar-09 23,105
Mar-10 46,768
Mar-11 47,542
Apr-14 3,905
-----------
355,080
(1)(4)Houghton Mifflin 3,161,276 2,995,724 6,157,000 1% Feb-07 225,883
----------- ----------- ----------- --- ----------
TOTAL TOP 10 TENANTS $ 80,556,016 $ 33,609,473 $ 114,165,489 20% 3,558,269
----------- ----------- ----------- --- ----------
----------- ----------- ----------- --- ----------
----------- ----------- ----------- ----------
(4)TOTAL PORTFOLIO $ 463,644,093 $ 104,476,094 $ 568,120,187 19,392,131
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
TOP TEN TENANTS SCHEDULE
FOOTNOTES
- ----------------------------
(1) Net Lease.
(2) Gross Lease.
(3) Norwest Corporation [Wells Fargo] includes all space associated with
Norwest Corporation, Norwest Bank Denver N.A. and Wells Fargo Bank.
(4) Straight-Line Rent and rentable square feet include an adjustment for the
interest of a joint venture or minority partner. Calculations are based on
the partners' 1999 percentage participation in the cash flows of the
property. Note: Supplemental packages prior to the Fourth Quarter 1998
package did not include an adjustment for minority interest in the schedule
of Top Ten Tenants.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- HISTORICAL OCCUPANCY SCHEDULE
<PAGE>
CORNERSTONE PROPERTIES INC.
Historical Occupancy Schedule
As of March 31, 1999
<TABLE>
<CAPTION>
REGION TOTAL RENTABLE
NAME SQUARE FEET 1995 1996 1997 1998 1999
- ---- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts 2,884,866 94% 100% 99% 99% 99%
San Mateo County, California 2,173,410 -- -- -- 88% 94%
East Bay, California 1,673,901 -- -- -- 96% 97%
Atlanta, Georgia 1,647,986 -- -- 94% 97% 97%
Seattle, Washington 1,468,716 97% 97% 97% 99% 99%
(1)Santa Clara County, California 1,206,020 -- -- -- 99% 98%
Denver, Colorado 1,187,852 98% 99% 99% 97% 97%
San Francisco, California 1,128,670 -- -- -- 98% 97%
Minneapolis, Minnesota 1,117,439 100% 100% 98% 100% 100%
Washington, D.C./Alexandria, Virginia 993,297 -- -- 95% 96% 98%
Suburban Chicago, Illinois 976,079 -- 91% 96% 95% 94%
Santa Monica/West Los Angeles, California 845,408 -- -- -- 92% 93%
Orange County, California 709,886 -- -- -- 82% 86%
Charlotte, North Carolina 612,728 -- -- 94% 99% 99%
Arizona 585,909 -- -- -- 94% 96%
San Diego, California 420,599 -- -- -- 95% 93%
Los Angeles, California 401,629 -- -- -- 95% 97%
New York City, New York 378,965 91% 96% 99% 96% 96%
Conejo Valley (Ventura), California 234,766 -- -- -- 94% 94%
(2)Other Regions 209,579 -- -- -- 79% 84%
---------- -- -- -- -- --
(3)TOTAL PORTFOLIO 20,857,705 98% 98% 97% 96% 96%
</TABLE>
(1) The rentable area associated with the Pruneyard Inn (90.000sf) is not
included in the occupancy calculation.
(2) Other Regions include the U.S. West building in Murray,
Utah and the Exposition Centre in Sacramento, CA.
(3) 1996 and 1997 occupancy has been restated to reflect the 1998 sale of
the Frick Building.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- NET RENT AND NET EFFECTIVE RENT SCHEDULE
<PAGE>
CORNERSTONE PROPERTIES INC.
NET RENT SCHEDULE
AS OF MARCH 31, 1999
The following tables show the average annual Net Rent (as defined below) per
square foot occupied for each of the Properties for the periods presented during
which such Property was owned by the Company. "Net Rent" as used herein means
actual billed rent less Recoveries. Recoveries includes base stops in gross
leases. Amounts do not include the properties acquired as a result of the Wilson
acquisition on 12/16/98 and held for 16 days during the period ended 12/31/98.
<TABLE>
<CAPTION>
REGION OCCUPIED YTD
NAME SQUARE FEET 1995 1996 1997 1998 1999
---- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts 2,856,044 $22.48 $23.24 $21.78 $21.22 $22.19
San Mateo County, California 2,041,493 -- -- -- -- $22.65
East Bay, California 1,621,363 -- -- -- -- $14.56
Atlanta, Georgia 1,593,994 -- -- $18.93 $19.17 $18.35
Seattle, Washington 1,455,913 $16.17 $15.98 $15.77 $15.83 $16.06
(1)Santa Clara County, California 1,177,509 -- -- -- -- $20.58
Denver, Colorado 1,154,456 $11.78 $12.08 $12.46 $12.54 $13.05
San Francisco, California 1,095,583 -- -- -- $11.57 $12.82
Minneapolis, Minnesota 1,114,402 $17.82 $17.94 $18.29 $18.91 $19.19
Washington, D.C./Alexandria, Virginia 971,237 -- -- $13.80 $22.60 $22.80
Suburban Chicago, Illinois 920,438 -- $18.56 $19.60 $20.84 $20.22
Santa Monica/West Los Angeles, California 782,671 -- -- -- $24.36 $21.17
Orange County, California 612,998 -- -- -- -- $15.41
Charlotte, North Carolina 607,762 -- -- $9.35 $9.66 $10.40
Arizona 559,592 -- -- -- -- $12.13
San Diego, California 391,160 -- -- -- -- $11.44
Los Angeles, California 387,692 -- -- -- -- $18.76
New York City, New York 364,091 -- $28.98 $30.60 $27.80 $28.57
Conejo Valley (Ventura), California 219,558 -- -- -- -- $15.40
(2)Other Regions 175,306 -- -- -- -- $10.99
---------- ------ ------ ------ ------ ------
(3)TOTAL PORTFOLIO 20,103,262 $16.06 $17.42 $17.74 $18.77 $18.30
</TABLE>
(1) The rentable area associated with the Pruneyard Inn (90,000sf) is not
included in the occupancy calculation.
(2) Other Regions include the U.S. West building in Murray, Utah and the
Exposition Centre in Sacramento, CA.
(3) 1996 and 1997 amounts has been restated to reflect the 1998 sale of the
Frick Building.
<PAGE>
CORNERSTONE PROPERTIES INC.
Net Effective Rent Schedule
As of March 31, 1999
The following tables show the average annual Net Effective Rent (as defined
below) per square foot occupied for each of the Properties for the periods
presented during which such Property was owned by the Company. "Net Effective
Rent" as used herein means (i) rent determined for each year on a straight-line
basis through the term of the lease, less (ii) Recoveries and the amortization
of deferred leasing costs (tenant improvements, leasing commissions, and other
tenant inducements). Recoveries includes base stops in gross leases. Amounts
do not include the properties acquired as a result of the Wilson
acquisition on 12/16/98 and held for 16 days during the period.
<TABLE>
<CAPTION>
REGION OCCUPIED YTD
NAME SQUARE FEET 1995 1996 1997 1998 1999
- ---- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts 2,856,044 $23.33 $22.27 $21.95 $22.56 $23.04
San Mateo County, California 2,041,493 -- -- -- -- $25.00
East Bay, California 1,621,363 -- -- -- -- $15.50
Atlanta, Georgia 1,593,994 -- -- $21.44 $21.52 $20.21
Seattle, Washington 1,455,913 $11.83 $11.80 $12.02 $15.10 $16.27
(1)Santa Clara County, California 1,177,509 -- -- -- -- $23.13
Denver, Colorado 1,154,456 $10.56 $10.80 $11.66 $11.96 $11.93
San Francisco, California 1,095,583 -- -- -- $11.73 $13.33
Minneapolis, Minnesota 1,114,402 $17.31 $17.43 $17.23 $17.73 $18.60
Washington, D.C./Alexandria, Virginia 971,237 -- -- $14.72 $24.40 $25.55
Suburban Chicago, Illinois 920,438 -- $19.70 $19.76 $21.65 $20.66
Santa Monica/West Los Angeles, California 782,671 -- -- -- $26.04 $22.15
Orange County, California 612,998 -- -- -- -- $16.07
Charlotte, North Carolina 607,762 -- -- $9.76 $10.00 $10.65
Arizona 559,592 -- -- -- -- $13.13
San Diego, California 391,160 -- -- -- -- $13.41
Los Angeles, California 387,692 -- -- -- -- $20.20
New York City, New York 364,091 -- $26.75 $30.27 $28.45 $27.76
Conejo Valley (Ventura), California 219,558 -- -- -- -- $15.86
(2)Other Regions 175,306 -- -- -- -- $11.78
---------- ------ ------ ------ ------ ------
(3)TOTAL PORTFOLIO 20,103,262 $14.37 $15.71 $17.55 $19.50 $19.29
</TABLE>
(1) The rentable area associated with the Pruneyard Inn (90,000sf) is not
included in the occupancy calculation.
(2) Other Regions include the U.S. West building in Murray, Utah and the
Exposition Centre in Sacramento, CA.
(3) 1996 and 1997 amounts has been restated to reflect the 1998 sale of the
Frick Building.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- LEASE EXPIRATION SCHEDULE
<PAGE>
Cornerstone Properties Inc.
Lease Expiration Schedule
The following table sets forth certain categories of information relating to
lease expirations for all of the Properties owned as of March 31, 1999.
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Portfolio - All Properties Total (7) Square feet expiring (1) 1,405,932 sf 1,695,920 sf 1,952,483 sf
Full service St-Line rent (2) $ 36,562,966 $ 42,503,242 $ 57,825,064
Minority Interest Adjustment (3) Square feet expiring (1) 29,612 sf 60,238 sf 26,152 sf
Full service St-Line rent (2) $ 715,794 $ 1,687,133 $ 757,433
Cornerstone Portfolio Square feet expiring (1) (3) 1,376,320 sf 1,635,682 sf 1,926,331 sf
Full service St-Line rent (2) (3) $ 35,847,172 $ 40,816,109 $ 57,067,631
Full service St-Line rent per sq. ft. $ 26.05 $ 24.95 $ 29.63
% Full service St-Lined rent 6.31% 7.18% 10.04%
No. of tenant leases expiring (4) 281 309 299
Asking market rent per sq. ft. (5) $ 34.42
Operating Expenses per sq. ft. (6) $ 10.22
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Boston, Massachusetts Square feet expiring (1) 164,259 sf 69,535 sf 125,429 sf
Full service St-Line rent (2) $ 6,853,635 $ 2,473,689 $ 4,888,780
Minority Interest Adjustment (3) Square feet expiring (1) 1,117 sf 1,379 sf 5,664 sf
Full service St-Line rent (2) $ 32,062 $ 49,108 $ 238,621
Cornerstone Portfolio Square feet expiring (1) (3) 163,142 sf 68,156 sf 119,765 sf
Full service St-Line rent (2) (3) $ 6,821,573 $ 2,424,581 $ 4,650,159
Full service St-Line rent per sq. ft. $ 41.81 $ 35.57 $ 38.83
% Full service St-Lined rent 6.76% 2.40% 4.61%
No. of tenant leases expiring (4) 8 8 14
Asking market rent per sq. ft. (5) $ 50.68
Operating Expenses per sq. ft. (6) $ 13.70
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Mateo County, California Square feet expiring (1) 276,202 sf 170,536 sf 105,668 sf
Full service St-Line rent (2) $ 7,275,383 $ 4,463,508 $ 3,297,745
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 276,202 sf 170,536 sf 105,668 sf
Full service St-Line rent (2) (3) $ 7,275,383 $ 4,463,508 $ 3,297,745
Full service St-Line rent per sq. ft. $ 26.34 $ 26.17 $ 31.21
% Full service St-Lined rent 10.66% 6.54% 4.83%
No. of tenant leases expiring (4) 36 25 20
Asking market rent per sq. ft. (5) $ 36.57
Operating Expenses per sq. ft. (6) $ 8.81
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Portfolio - All Properties Total (7) Square feet expiring (1) 2,769,085 sf 3,207,772 sf 1,772,062 sf
Full service St-Line rent (2) $ 72,312,478 $ 96,485,221 $ 50,706,537
Minority Interest Adjustment (3) Square feet expiring (1) 60,087 sf 153,052 sf 56,681 sf
Full service St-Line rent (2) $ 1,610,322 $ 5,027,043 $ 1,837,557
Cornerstone Portfolio Square feet expiring (1) (3) 2,708,998 sf 3,054,720 sf 1,715,381 sf
Full service St-Line rent (2) (3) $ 70,702,156 $ 91,458,177 $ 48,868,980
Full service St-Line rent per sq. ft. $ 26.10 $ 29.94 $ 28.49
% Full service St-Lined rent 12.44% 16.10% 8.60%
No. of tenant leases expiring (4) 295 311 146
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Boston, Massachusetts Square feet expiring (1) 477,309 sf 606,726 sf 228,127 sf
Full service St-Line rent (2) $ 15,595,895 $ 23,659,585 $ 7,761,388
Minority Interest Adjustment (3) Square feet expiring (1) 9,655 sf 39,401 sf 1,367 sf
Full service St-Line rent (2) $ 333,774 $ 1,595,053 $ 44,116
Cornerstone Portfolio Square feet expiring (1) (3) 467,654 sf 567,325 sf 226,760 sf
Full service St-Line rent (2) (3) $ 15,262,121 $ 22,064,532 $ 7,717,273
Full service St-Line rent per sq. ft. $ 32.64 $ 38.89 $ 34.03
% Full service St-Lined rent 15.12% 21.86% 7.65%
No. of tenant leases expiring (4) 20 20 16
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Mateo County, California Square feet expiring (1) 220,100 sf 273,430 sf 202,421 sf
Full service St-Line rent (2) $ 7,095,490 $ 10,491,561 $ 7,147,161
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 220,100 sf 273,430 sf 202,421 sf
Full service St-Line rent (2) (3) $ 7,095,490 $ 10,491,561 $ 7,147,161
Full service St-Line rent per sq. ft. $ 32.24 $ 38.37 $ 35.31
% Full service St-Lined rent 10.39% 15.37% 10.47%
No. of tenant leases expiring (4) 29 26 14
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Portfolio - All Properties Total (7) Square feet expiring (1) 712,100 sf 1,161,023 sf 1,319,773 sf
Full service St-Line rent (2) $ 24,327,617 $ 37,941,301 $ 38,592,465
Minority Interest Adjustment (3) Square feet expiring (1) 7,637 sf 638 sf 148,935 sf
Full service St-Line rent (2) $ 259,332 $ 14,682 $ 4,166,359
Cornerstone Portfolio Square feet expiring (1) (3) 704,463 sf 1,160,385 sf 1,170,838 sf
Full service St-Line rent (2) (3) $ 24,068,285 $ 37,926,619 $ 34,426,106
Full service St-Line rent per sq. ft. $ 34.17 $ 32.68 $ 29.40
% Full service St-Lined rent 4.24% 6.68% 6.06%
No. of tenant leases expiring (4) 57 37 42
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Boston, Massachusetts Square feet expiring (1) 26,547 sf 35,537 sf 368,014 sf
Full service St-Line rent (2) $ 720,771 $ 1,165,222 $ 11,496,375
Minority Interest Adjustment (3) Square feet expiring (1) sf sf 24,962 sf
Full service St-Line rent (2) $ -- $ -- $ 741,046
Cornerstone Portfolio Square feet expiring (1) (3) 26,547 sf 35,537 sf 343,052 sf
Full service St-Line rent (2) (3) $ 720,771 $ 1,165,222 $ 10,755,329
Full service St-Line rent per sq. ft. $ 27.15 $ 32.79 $ 31.35
% Full service St-Lined rent 0.71% 1.15% 10.66%
No. of tenant leases expiring (4) 2 2 14
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Mateo County, California Square feet expiring (1) 182,619 sf 224,379 sf 89,286 sf
Full service St-Line rent (2) $ 6,912,547 $ 7,486,829 $ 3,290,241
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 182,619 sf 224,379 sf 89,286 sf
Full service St-Line rent (2) (3) $ 6,912,547 $ 7,486,829 $ 3,290,241
Full service St-Line rent per sq. ft. $ 37.85 $ 33.37 $ 36.85
% Full service St-Lined rent 10.13% 10.97% 4.82%
No. of tenant leases expiring (4) 9 5 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
Portfolio - All Properties Total (7) Square feet expiring (1) 1,424,001 sf 2,683,111 sf
Full service St-Line rent (2) $ 45,764,492 $ 87,902,615
Minority Interest Adjustment (3) Square feet expiring (1) 25,237 sf 142,861 sf
Full service St-Line rent (2) $ 935,865 $ 5,792,292
Cornerstone Portfolio Square feet expiring (1) (3) 1,398,764 sf 2,540,250 sf
Full service St-Line rent (2) (3) $ 44,828,627 $ 82,110,323
Full service St-Line rent per sq. ft. $ 32.05 $ 32.32
% Full service St-Lined rent 7.89% 14.45%
No. of tenant leases expiring (4) 36 81
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Boston, Massachusetts Square feet expiring (1) 218,826 sf 535,735 sf
Full service St-Line rent (2) $ 8,313,052 $ 21,900,564
Minority Interest Adjustment (3) Square feet expiring (1) 18,600 sf 3,696 sf
Full service St-Line rent (2) $ 706,609 $ 173,799
Cornerstone Portfolio Square feet expiring (1) (3) 200,226 sf 532,039 sf
Full service St-Line rent (2) (3) $ 7,606,443 $ 21,726,766
Full service St-Line rent per sq. ft. $ 37.99 $ 40.84
% Full service St-Lined rent 7.54% 21.53%
No. of tenant leases expiring (4) 2 7
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
San Mateo County, California Square feet expiring (1) 178,014 sf 118,838 sf
Full service St-Line rent (2) $ 6,735,865 $ 4,073,138
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 178,014 sf 118,838 sf
Full service St-Line rent (2) (3) $ 6,735,865 $ 4,073,138
Full service St-Line rent per sq. ft. $ 37.84 $ 34.27
% Full service St-Lined rent 9.87% 5.97%
No. of tenant leases expiring (4) 6 11
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
Portfolio - All Properties Total (7) Square feet expiring (1) 20,103,262 sf 20,857,705 sf
Full service St-Line rent (2) $ 590,923,999
Minority Interest Adjustment (3) Square feet expiring (1) 711,131 sf 723,234 sf
Full service St-Line rent (2) $ 22,803,812
Cornerstone Portfolio Square feet expiring (1) (3) 19,392,131 sf 20,134,471 sf
Full service St-Line rent (2) (3) $ 568,120,187
Full service St-Line rent per sq. ft. $ 29.30
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 1,894
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Boston, Massachusetts Square feet expiring (1) 2,856,044 sf 2,884,866 sf
Full service St-Line rent (2) $ 104,828,958
Minority Interest Adjustment (3) Square feet expiring (1) 105,843 sf 105,859 sf
Full service St-Line rent (2) $ 3,914,188
Cornerstone Portfolio Square feet expiring (1) (3) 2,750,201 sf 2,779,007 sf
Full service St-Line rent (2) (3) $ 100,914,770
Full service St-Line rent per sq. ft. $ 36.69
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 113
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
San Mateo County, California Square feet expiring (1) 2,041,493 sf 2,173,410 sf
Full service St-Line rent (2) $ 68,269,467
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 2,041,493 sf 2,173,410 sf
Full service St-Line rent (2) (3) $ 68,269,467
Full service St-Line rent per sq. ft. $ 33.44
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 183
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
East Bay, California Square feet expiring (1) 118,512 sf 239,560 sf 181,498 sf
Full service St-Line rent (2) $ 2,404,303 $ 4,929,872 $ 5,050,977
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 118,512 sf 239,560 sf 181,498 sf
Full service St-Line rent (2) (3) $ 2,404,303 $ 4,929,872 $ 5,050,977
Full service St-Line rent per sq. ft. $ 20.29 $ 20.58 $ 27.83
% Full service St-Lined rent 6.36% 13.04% 13.36%
No. of tenant leases expiring (4) 30 36 39
Asking market rent per sq. ft. (5) $ 26.79
Operating Expenses per sq. ft. (6) $ 8.35
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Atlanta, Georgia Square feet expiring (1) 22,656 sf 68,137 sf 201,435 sf
Full service St-Line rent (2) $ 434,532 $ 1,417,692 $ 5,133,648
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 22,656 sf 68,137 sf 201,435 sf
Full service St-Line rent (2) (3) $ 434,532 $ 1,417,692 $ 5,133,648
Full service St-Line rent per sq. ft. $ 19.18 $ 20.81 $ 25.49
% Full service St-Lined rent 0.92% 3.02% 10.92%
No. of tenant leases expiring (4) 3 19 19
Asking market rent per sq. ft. (5) $ 26.20
Operating Expenses per sq. ft. (6) $ 8.15
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Seattle, Washington Square feet expiring (1) 73,701 sf 77,204 sf 89,207 sf
Full service St-Line rent (2) $ 1,545,668 $ 1,518,923 $ 1,952,974
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 73,701 sf 77,204 sf 89,207 sf
Full service St-Line rent (2) (3) $ 1,545,668 $ 1,518,923 $ 1,952,974
Full service St-Line rent per sq. ft. $ 20.97 $ 19.67 $ 21.89
% Full service St-Lined rent 4.34% 4.27% 5.49%
No. of tenant leases expiring (4) 21 23 16
Asking market rent per sq. ft. (5) $ 35.81
Operating Expenses per sq. ft. (6) $ 8.48
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
East Bay, California Square feet expiring (1) 316,119 sf 150,016 sf 107,847 sf
Full service St-Line rent (2) $ 7,288,758 $ 3,489,623 $ 2,800,195
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 316,119 sf 150,016 sf 107,847 sf
Full service St-Line rent (2) (3) $ 7,288,758 $ 3,489,623 $ 2,800,195
Full service St-Line rent per sq. ft. $ 23.06 $ 23.26 $ 25.96
% Full service St-Lined rent 19.27% 9.23% 7.40%
No. of tenant leases expiring (4) 29 23 11
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Atlanta, Georgia Square feet expiring (1) 185,230 sf 88,700 sf 54,516 sf
Full service St-Line rent (2) $ 4,137,516 $ 2,222,400 $ 1,587,204
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 185,230 sf 88,700 sf 54,516 sf
Full service St-Line rent (2) (3) $ 4,137,516 $ 2,222,400 $ 1,587,204
Full service St-Line rent per sq. ft. $ 22.34 $ 25.06 $ 29.11
% Full service St-Lined rent 8.80% 4.73% 3.38%
No. of tenant leases expiring (4) 12 14 9
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Seattle, Washington Square feet expiring (1) 256,863 sf 374,942 sf 188,654 sf
Full service St-Line rent (2) $ 5,833,223 $ 9,032,916 $ 5,054,495
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 256,863 sf 374,942 sf 188,654 sf
Full service St-Line rent (2) (3) $ 5,833,223 $ 9,032,916 $ 5,054,495
Full service St-Line rent per sq. ft. $ 22.71 $ 24.09 $ 26.79
% Full service St-Lined rent 16.39% 25.38% 14.20%
No. of tenant leases expiring (4) 19 32 14
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
East Bay, California Square feet expiring (1) 65,497 sf 110,770 sf 116,772 sf
Full service St-Line rent (2) $ 1,664,334 $ 1,743,573 $ 2,590,660
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 65,497 sf 110,770 sf 116,772 sf
Full service St-Line rent (2) (3) $ 1,664,334 $ 1,743,573 $ 2,590,660
Full service St-Line rent per sq. ft. $ 25.41 $ 15.74 $ 22.19
% Full service St-Lined rent 4.40% 4.61% 6.85%
No. of tenant leases expiring (4) 2 2 5
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Atlanta, Georgia Square feet expiring (1) 21,508 sf 452,089 sf sf
Full service St-Line rent (2) $ 547,872 $ 15,691,056 $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 21,508 sf 452,089 sf sf
Full service St-Line rent (2) (3) $ 547,872 $ 15,691,056 --
Full service St-Line rent per sq. ft. $ 25.47 $ 34.71 $ --
% Full service St-Lined rent 1.17% 33.38% 0.00%
No. of tenant leases expiring (4) 5 4 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Seattle, Washington Square feet expiring (1) 29,707 sf 8,087 sf 137,888 sf
Full service St-Line rent (2) $ 442,317 $ 210,681 $ 3,384,388
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 29,707 sf 8,087 sf 137,888 sf
Full service St-Line rent (2) (3) $ 442,317 $ 210,681 $ 3,384,388
Full service St-Line rent per sq. ft. $ 14.89 $ 26.05 $ 24.54
% Full service St-Lined rent 1.24% 0.59% 9.51%
No. of tenant leases expiring (4) 6 2 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
East Bay, California Square feet expiring (1) 206,116 sf 8,656 sf
Full service St-Line rent (2) $ 5,856,346 $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 206,116 sf 8,656 sf
Full service St-Line rent (2) (3) $ 5,856,346 $ --
Full service St-Line rent per sq. ft. $ 28.41 $ --
% Full service St-Lined rent 15.49% 0.00%
No. of tenant leases expiring (4) 1 7
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Atlanta, Georgia Square feet expiring (1) 495,739 sf 3,984 sf
Full service St-Line rent (2) $ 15,839,172 $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 495,739 sf 3,984 sf
Full service St-Line rent (2) (3) $ 15,839,172 $ --
Full service St-Line rent per sq. ft. $ 31.95 $ --
% Full service St-Lined rent 33.69% 0.00%
No. of tenant leases expiring (4) 4 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Seattle, Washington Square feet expiring (1) 366 sf 219,294 sf
Full service St-Line rent (2) $ 9,842 $ 6,603,422
Minority Interest Adjustment (3) Square feet expiring (1) sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 366 sf 219,294 sf
Full service St-Line rent (2) (3) $ 9,842 $ 6,603,422
Full service St-Line rent per sq. ft. $ 26.89 $ 30.11
% Full service St-Lined rent 0.03% 18.55%
No. of tenant leases expiring (4) 1 4
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
East Bay, California Square feet expiring (1) 1,621,363 sf 1,673,901 sf
Full service St-Line rent (2) $ 37,818,641
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 1,621,363 sf 1,673,901 sf
Full service St-Line rent (2) (3) $ 37,818,641
Full service St-Line rent per sq. ft. $ 23.33
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 185
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Atlanta, Georgia Square feet expiring (1) 1,593,994 sf 1,647,986 sf
Full service St-Line rent (2) $ 47,011,092
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 1,593,994 sf 1,647,986 sf
Full service St-Line rent (2) (3) $ 47,011,092
Full service St-Line rent per sq. ft. $ 29.49
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 89
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Seattle, Washington Square feet expiring (1) 1,455,913 sf 1,468,716 sf
Full service St-Line rent (2) $ 35,588,848
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 1,455,913 sf 1,468,716 sf
Full service St-Line rent (2) (3) $ 35,588,848
Full service St-Line rent per sq. ft. $ 24.44
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 139
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Clara County, California (7) Square feet expiring (1) 119,040 sf 95,773 sf 165,644 sf
Full service St-Line rent (2) $ 3,501,072 $ 2,507,815 $ 4,745,130
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 119,040 sf 95,773 sf 165,644 sf
Full service St-Line rent (2) (3) $ 3,501,072 $ 2,507,815 $ 4,745,130
Full service St-Line rent per sq. ft. $ 29.41 $ 26.18 $ 28.65
% Full service St-Lined rent 9.90% 7.09% 13.41%
No. of tenant leases expiring (4) 26 36 33
Asking market rent per sq. ft. (5) $ 35.87
Operating Expenses per sq. ft. (6) $ 9.03
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Denver, Colorado Square feet expiring (1) 44,969 sf 121,233 sf 60,785 sf
Full service St-Line rent (2) $ 708,896 $ 1,847,978 $ 1,049,018
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 44,969 sf 121,233 sf 60,785 sf
Full service St-Line rent (2) (3) $ 708,896 $ 1,847,978 $ 1,049,018
Full service St-Line rent per sq. ft. $ 15.76 $ 15.24 $ 17.26
% Full service St-Lined rent 3.15% 8.22% 4.67%
No. of tenant leases expiring (4) 10 6 7
Asking market rent per sq. ft. (5) $ 26.25
Operating Expenses per sq. ft. (6) $ 6.50
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Francisco, California Square feet expiring (1) 196,431 sf 80,661 sf 92,181 sf
Full service St-Line rent (2) $ 4,994,384 $ 1,949,065 $ 2,155,799
Minority Interest Adjustment (3) Square feet expiring (1) 26,793 sf 25,962 sf 18,511 sf
Full service St-Line rent (2) 654,848 $ 619,848 $ 453,332
Cornerstone Portfolio Square feet expiring (1) (3) 169,639 sf 54,699 sf 73,670 sf
Full service St-Line rent (2) (3) $ 4,339,536 $ 1,329,217 $ 1,702,467
Full service St-Line rent per sq. ft. $ 25.58 $ 24.30 $ 23.11
% Full service St-Lined rent 20.34% 6.23% 7.98%
No. of tenant leases expiring (4) 28 20 17
Asking market rent per sq. ft. (5) $ 40.97
Operating Expenses per sq. ft. (6) $ 12.37
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Clara County, California (7) Square feet expiring (1) 52,431 sf 184,119 sf 124,561 sf
Full service St-Line rent (2) $ 1,425,479 $ 6,991,549 $ 3,410,068
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 52,431 sf 184,119 sf 124,561 sf
Full service St-Line rent (2) (3) $ 1,425,479 $ 6,991,549 $ 3,410,068
Full service St-Line rent per sq. ft. $ 27.19 $ 37.97 $ 27.38
% Full service St-Lined rent 4.03% 19.76% 9.64%
No. of tenant leases expiring (4) 18 23 11
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Denver, Colorado Square feet expiring (1) 138,702 sf 182,284 sf 129,071 sf
Full service St-Line rent (2) $ 2,174,053 $ 3,569,775 $ 2,458,712
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 138,702 sf 182,284 sf 129,071 sf
Full service St-Line rent (2) (3) $ 2,174,053 $ 3,569,775 $ 2,458,712
Full service St-Line rent per sq. ft. $ 15.67 $ 19.58 $ 19.05
% Full service St-Lined rent 9.67% 15.88% 10.94%
No. of tenant leases expiring (4) 15 6 4
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Francisco, California Square feet expiring (1) 118,041 sf 284,570 sf 25,230 sf
Full service St-Line rent (2) $ 3,244,393 $ 8,378,846 $ 760,511
Minority Interest Adjustment (3) Square feet expiring (1) 37,182 sf 66,687 sf 10,469 sf
Full service St-Line rent (2) $ 965,351 $ 1,892,598 $ 312,812
Cornerstone Portfolio Square feet expiring (1) (3) 80,859 sf 217,884 sf 14,761 sf
Full service St-Line rent (2) (3) $ 2,279,042 $ 6,486,248 $ 447,699
Full service St-Line rent per sq. ft. $ 28.19 $ 29.77 $ 30.33
% Full service St-Lined rent 10.68% 30.40% 2.10%
No. of tenant leases expiring (4) 24 40 5
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Clara County, California (7) Square feet expiring (1) 16,770 sf 52,249 sf 2,780 sf
Full service St-Line rent (2) $ 603,100 $ 1,582,561 $ 88,963
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 16,770 sf 52,249 sf 2,780 sf
Full service St-Line rent (2) (3) $ 603,100 $ 1,582,561 $ 88,963
Full service St-Line rent per sq. ft. $ 35.96 $ 30.29 $ 32.00
% Full service St-Lined rent 1.70% 4.47% 0.25%
No. of tenant leases expiring (4) 3 5 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Denver, Colorado Square feet expiring (1) sf sf 75,677 sf
Full service St-Line rent (2) $ -- $ -- $ 1,621,691
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf sf 75,677 sf
Full service St-Line rent (2) (3) $ -- $ -- $ 1,621,691
Full service St-Line rent per sq. ft. $ -- $ -- $ 21.43
% Full service St-Lined rent 0.00% 0.00% 7.21%
No. of tenant leases expiring (4) 0 0 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Francisco, California Square feet expiring (1) 25,116 sf 1,915 sf 247,946 sf
Full service St-Line rent (2) $ 921,495 $ 44,046 $ 6,850,627
Minority Interest Adjustment (3) Square feet expiring (1) 2,829 sf 638 sf 123,973 sf
Full service St-Line rent (2) $ 98,383 $ 14,682 $ 3,425,313
Cornerstone Portfolio Square feet expiring (1) (3) 22,287 sf 1,277 sf 123,973 sf
Full service St-Line rent (2) (3) $ 823,112 $ 29,364 $ 3,425,313
Full service St-Line rent per sq. ft. $ 36.93 $ 23.00 $ 27.63
% Full service St-Lined rent 3.86% 0.14% 16.05%
No. of tenant leases expiring (4) 5 1 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
Santa Clara County, California (7) Square feet expiring (1) 33,908 sf 330,234 sf
Full service St-Line rent (2) $ 676,440 $ 9,847,250
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 33,908 sf 330,234 sf
Full service St-Line rent (2) (3) $ 676,440 $ 9,847,250
Full service St-Line rent per sq. ft. $ 19.95 $ 29.82
% Full service St-Lined rent 1.91% 27.83%
No. of tenant leases expiring (4) 4 10
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Denver, Colorado Square feet expiring (1) sf 401,735 sf
Full service St-Line rent (2) $ -- $ 9,052,248
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 401,735 sf
Full service St-Line rent (2) (3) $ -- $ 9,052,248
Full service St-Line rent per sq. ft. $ -- $ 22.53
% Full service St-Lined rent 0.00% 40.26%
No. of tenant leases expiring (4) 0 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
San Francisco, California Square feet expiring (1) 19,911 sf 3,581 sf
Full service St-Line rent (2) $ 687,766 $ 33,771
Minority Interest Adjustment (3) Square feet expiring (1) 6,637 sf 1,436 sf
Full service St-Line rent (2) $ 229,255 $ 16,885
Cornerstone Portfolio Square feet expiring (1) (3) 13,274 sf 2,145 sf
Full service St-Line rent (2) (3) $ 458,511 $ 16,885
Full service St-Line rent per sq. ft. $ 34.54 $ 7.87
% Full service St-Lined rent 2.15% 0.08%
No. of tenant leases expiring (4) 1 3
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
Santa Clara County, California (7) Square feet expiring (1) 1,177,509 sf 1,206,020 sf
Full service St-Line rent (2) $ 35,379,427
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 1,177,509 sf 1,206,020 sf
Full service St-Line rent (2) (3) $ 35,379,427
Full service St-Line rent per sq. ft. $ 30.05
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 170
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Denver, Colorado Square feet expiring (1) 1,154,456 sf 1,187,852 sf
Full service St-Line rent (2) $ 22,482,372
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 1,154,456 sf 1,187,852 sf
Full service St-Line rent (2) (3) $ 22,482,372
Full service St-Line rent per sq. ft. $ 19.47
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 51
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
San Francisco, California Square feet expiring (1) 1,095,583 sf 1,128,670 sf
Full service St-Line rent (2) $ 30,020,702
Minority Interest Adjustment (3) Square feet expiring (1) 321,116 sf 332,428 sf
Full service St-Line rent (2) $ 8,683,308
Cornerstone Portfolio Square feet expiring (1) (3) 774,467 sf 796,242 sf
Full service St-Line rent (2) (3) $ 21,337,394
Full service St-Line rent per sq. ft. $ 27.55
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 144
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Minneapolis, Minnesota Square feet expiring (1) 6,675 sf 129,005 sf 7,752 sf
Full service St-Line rent (2) $ 113,267 $ 3,992,850 $ 256,785
Minority Interest Adjustment (3) Square feet expiring (1) 1,702 sf 32,896 sf 1,977 sf
Full service St-Line rent (2) $ 28,883 $ 1,018,177 $ 65,480
Cornerstone Portfolio Square feet expiring (1) (3) 4,973 sf 96,109 sf 5,775 sf
Full service St-Line rent (2) (3) $ 84,384 $ 2,974,673 $ 191,305
Full service St-Line rent per sq. ft. $ 16.97 $ 30.95 $ 33.13
% Full service St-Lined rent 0.28% 9.98% 0.64%
No. of tenant leases expiring (4) 5 5 4
Asking market rent per sq. ft. (5) $ 34.65
Operating Expenses per sq. ft. (6) $ 15.70
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Washington, D.C./Alexandria, Virginia Square feet expiring (1) 20,023 sf 60,323 sf 119,717 sf
Full service St-Line rent (2) $ 396,924 $ 1,996,940 $ 4,110,308
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 20,023 sf 60,323 sf 119,717 sf
Full service St-Line rent (2) (3) $ 396,924 $ 1,996,940 $ 4,110,308
Full service St-Line rent per sq. ft. $ 19.82 $ 33.10 $ 34.33
% Full service St-Lined rent 1.09% 5.49% 11.29%
No. of tenant leases expiring (4) 10 10 15
Asking market rent per sq. ft. (5) $ 38.69
Operating Expenses per sq. ft. (6) $ 12.37
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Suburban Chicago, Illinois Square feet expiring (1) 68,277 sf 93,208 sf 54,570 sf
Full service St-Line rent (2) $ 1,747,237 $ 2,855,740 $ 1,829,736
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 68,277 sf 93,208 sf 54,570 sf
Full service St-Line rent (2) (3) $ 1,747,237 $ 2,855,740 $1,829,736
Full service St-Line rent per sq. ft. $ 25.59 $ 30.64 $33.53
% Full service St-Lined rent 6.43% 10.51% 6.74%
No. of tenant leases expiring (4) 13 15 9
Asking market rent per sq. ft. (5) $ 28.27
Operating Expenses per sq. ft. (6) $ 9.14
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Minneapolis, Minnesota Square feet expiring (1) 51,959 sf 184,176 sf 175,867 sf
Full service St-Line rent (2) $ 1,220,380 $ 6,036,834 $ 5,806,388
Minority Interest Adjustment (3) Square feet expiring (1) 13,250 sf 46,965 sf 44,846 sf
Full service St-Line rent (2) $ 311,197 $ 1,539,393 $ 1,480,629
Cornerstone Portfolio Square feet expiring (1) (3) 38,709 sf 137,211 sf 131,021 sf
Full service St-Line rent (2) (3) $ 909,183 $ 4,497,441 $ 4,325,759
Full service St-Line rent per sq. ft. $ 23.49 $ 32.78 $ 33.02
% Full service St-Lined rent 3.05% 15.08% 14.51%
No. of tenant leases expiring (4) 3 3 10
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Washington, D.C./Alexandria, Virginia Square feet expiring (1) 59,327 sf 63,312 sf 41,940 sf
Full service St-Line rent (2) $ 1,467,241 $ 1,894,550 $ 1,631,292
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 59,327 sf 63,312 sf 41,940 sf
Full service St-Line rent (2) (3) $ 1,467,241 $ 1,894,550 $ 1,631,292
Full service St-Line rent per sq. ft. $ 24.73 $ 29.92 $ 38.90
% Full service St-Lined rent 4.03% 5.20% 4.48%
No. of tenant leases expiring (4) 8 9 6
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Suburban Chicago, Illinois Square feet expiring (1) 139,370 sf 216,158 sf 18,576 sf
Full service St-Line rent (2) $ 4,264,024 $ 6,364,656 $ 552,792
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 139,370 sf 216,158 sf 18,576 sf
Full service St-Line rent (2) (3) $ 4,264,024 $ 6,364,656 $ 552,792
Full service St-Line rent per sq. ft. $ 30.59 $ 29.44 $ 29.76
% Full service St-Lined rent 15.70% 23.43% 2.04%
No. of tenant leases expiring (4) 15 21 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Minneapolis, Minnesota Square feet expiring (1) 18,856 sf sf sf
Full service St-Line rent (2) $ 631,174 $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) 4,808 sf sf sf
Full service St-Line rent (2) $ 160,949 $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 14,048 sf sf sf
Full service St-Line rent (2) (3) $ 470,224 $ -- $ --
Full service St-Line rent per sq. ft. $ 33.47 $ -- $ --
% Full service St-Lined rent 1.58% 0.00% 0.00%
No. of tenant leases expiring (4) 1 0 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Washington, D.C./Alexandria, Virginia Square feet expiring (1) 188,151 sf 65,093 sf 69,661 sf
Full service St-Line rent (2) $ 8,138,820 $ 3,161,580 $ 1,878,660
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 188,151 sf 65,093 sf 69,661 sf
Full service St-Line rent (2) (3) $ 8,138,820 $ 3,161,580 $ 1,878,660
Full service St-Line rent per sq. ft. $ 43.26 $ 48.57 $ 26.97
% Full service St-Lined rent 22.36% 8.69% 5.16%
No. of tenant leases expiring (4) 6 2 6
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Suburban Chicago, Illinois Square feet expiring (1) sf 148,938 sf 43,140 sf
Full service St-Line rent (2) $ -- $ 4,690,791 $ 1,250,280
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 148,938 sf 43,140 sf
Full service St-Line rent (2) (3) $ -- $ 4,690,791 $ 1,250,280
Full service St-Line rent per sq. ft. $ -- $ 31.49 $ 28.98
% Full service St-Lined rent 0.00% 17.27% 4.60%
No. of tenant leases expiring (4) 0 3 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
Minneapolis, Minnesota Square feet expiring (1) sf 540,112 sf
Full service St-Line rent (2) $ -- $ 21,967,088
Minority Interest Adjustment (3) Square feet expiring (1) sf 137,729 sf
Full service St-Line rent (2) $ -- $ 5,601,607
Cornerstone Portfolio Square feet expiring (1) (3) sf 402,383 sf
Full service St-Line rent (2) (3) $ -- $ 16,365,481
Full service St-Line rent per sq. ft. $ -- $ 40.67
% Full service St-Lined rent 0.00% 54.88%
No. of tenant leases expiring (4) 0 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Washington, D.C./Alexandria, Virginia Square feet expiring (1) 36,561 sf 247,129 sf
Full service St-Line rent (2) $ 1,187,340 $ 10,538,028
Minority Interest Adjustment (3) Square feet expiring (1) sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 36,561 sf 247,129 sf
Full service St-Line rent (2) (3) $ 1,187,340 $ 10,538,028
Full service St-Line rent per sq. ft. $ 32.48 $ 42.64
% Full service St-Lined rent 3.26% 28.95%
No. of tenant leases expiring (4) 6 10
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Suburban Chicago, Illinois Square feet expiring (1) 110,201 sf 28,000 sf
Full service St-Line rent (2) $ 3,606,461 $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 110,201 sf 28,000 sf
Full service St-Line rent (2) (3) $ 3,606,461 $ --
Full service St-Line rent per sq. ft. $ 32.73 $ --
% Full service St-Lined rent 13.28% 0.00%
No. of tenant leases expiring (4) 2 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
Minneapolis, Minnesota Square feet expiring (1) 1,114,402 sf 1,117,439 sf
Full service St-Line rent (2) $ 40,024,767
Minority Interest Adjustment (3) Square feet expiring (1) 284,173 sf 284,947 sf
Full service St-Line rent (2) $ 10,206,315
Cornerstone Portfolio Square feet expiring (1) (3) 830,229 sf 832,492 sf
Full service St-Line rent (2) (3) $ 29,818,451
Full service St-Line rent per sq. ft. $ 35.92
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 33
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Washington, D.C./Alexandria, Virginia Square feet expiring (1) 971,237 sf 993,297 sf
Full service St-Line rent (2) $ 36,401,683
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 971,237 sf 993,297 sf
Full service St-Line rent (2) (3) $ 36,401,683
Full service St-Line rent per sq. ft. $ 37.48
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 88
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Suburban Chicago, Illinois Square feet expiring (1) 920,438 sf 976,079 sf
Full service St-Line rent (2) $ 27,161,715
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 920,438 sf 976,079 sf
Full service St-Line rent (2) (3) $ 27,161,715
Full service St-Line rent per sq. ft. $ 29.51
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 82
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Monica/West Los Angeles, Square feet expiring (1) 64,189 sf 82,313 sf 112,045 sf
California Full service St-Line rent (2) 1,674,867 $ 2,409,151 $ 5,061,423
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 64,189 sf 82,313 sf 112,045 sf
Full service St-Line rent (2) (3) $ 1,674,867 $ 2,409,151 $ 5,061,423
Full service St-Line rent per sq. ft. $ 26.09 $ 29.27 $ 45.17
% Full service St-Lined rent 7.09% 10.19% 21.42%
No. of tenant leases expiring (4) 29 26 23
Asking market rent per sq. ft. (5) $ 33.33
Operating Expenses per sq. ft. (6) $ 11.78
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Orange County, California Square feet expiring (1) 71,238 sf 98,426 sf 91,783 sf
Full service St-Line rent (2) $ 1,619,922 $ 2,486,946 $ 2,022,067
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 71,238 sf 98,426 sf 91,783 sf
Full service St-Line rent (2) (3) $ 1,619,922 $ 2,486,946 $ 2,022,067
Full service St-Line rent per sq. ft. $ 22.74 $ 25.27 $ 22.03
% Full service St-Lined rent 11.26% 17.29% 14.06%
No. of tenant leases expiring (4) 20 16 13
Asking market rent per sq. ft. (5) $ 26.55
Operating Expenses per sq. ft. (6) $ 8.08
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Charlotte, North Carolina Square feet expiring (1) 10,393 sf 53,325 sf 70,116 sf
Full service St-Line rent (2) $ 41,940 $ 983,772 $ 1,257,312
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 10,393 sf 53,325 sf 70,116 sf
Full service St-Line rent (2) (3) $ 41,940 $ 983,772 $ 1,257,312
Full service St-Line rent per sq. ft. $ 4.04 $ 18.45 $ 17.93
% Full service St-Lined rent 0.39% 9.18% 11.73%
No. of tenant leases expiring (4) 4 5 3
Asking market rent per sq. ft. (5) $ 24.15
Operating Expenses per sq. ft. (6) $ 6.90
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Monica/West Los Angeles, Square feet expiring (1) 178,864 sf 69,820 sf 46,987 sf
California Full service St-Line rent (2) $ 4,806,384 $ 1,927,696 $ 1,443,042
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 178,864 sf 69,820 sf 46,987 sf
Full service St-Line rent (2) (3) $ 4,806,384 $ 1,927,696 $ 1,443,042
Full service St-Line rent per sq. ft. $ 26.87 $ 27.61 $ 30.71
% Full service St-Lined rent 20.34% 8.16% 6.11%
No. of tenant leases expiring (4) 19 20 10
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Orange County, California Square feet expiring (1) 191,912 sf 82,875 sf 7,057 sf
Full service St-Line rent (2) $ 4,422,853 $ 2,002,416 $ 182,071
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 191,912 sf 82,875 sf 7,057 sf
Full service St-Line rent (2) (3) $ 4,422,853 $ 2,002,416 $ 182,071
Full service St-Line rent per sq. ft. $ 23.05 $ 24.16 $ 25.80
% Full service St-Lined rent 30.75% 13.92% 1.27%
No. of tenant leases expiring (4) 24 17 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Charlotte, North Carolina Square feet expiring (1) 74,711 sf 38,762 sf 140,429 sf
Full service St-Line rent (2) $ 1,384,308 $ 744,072 $ 2,453,832
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 74,711 sf 38,762 sf 140,429 sf
Full service St-Line rent (2) (3) $ 1,384,308 $ 744,072 $ 2,453,832
Full service St-Line rent per sq. ft. $ 18.53 $ 19.20 $ 17.47
% Full service St-Lined rent 12.92% 6.94% 22.90%
No. of tenant leases expiring (4) 11 7 6
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Santa Monica/West Los Angeles, Square feet expiring (1) 68,209 sf 7,736 sf 45,539 sf
California Full service St-Line rent (2) $ 1,898,591 $ 281,745 $ 1,981,598
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 68,209 sf 7,736 sf 45,539 sf
Full service St-Line rent (2) (3) $ 1,898,591 $ 281,745 $ 1,981,598
Full service St-Line rent per sq. ft. $ 27.83 $ 36.42 $ 43.51
% Full service St-Lined rent 8.03% 1.19% 8.39%
No. of tenant leases expiring (4) 10 2 3
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Orange County, California Square feet expiring (1) 14,749 sf sf sf
Full service St-Line rent (2) $ 348,383 $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 14,749 sf sf sf
Full service St-Line rent (2) (3) $ 348,383 $ -- $ --
Full service St-Line rent per sq. ft. $ 23.62 $ -- $ --
% Full service St-Lined rent 2.42% 0.00% 0.00%
No. of tenant leases expiring (4) 1 0 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Charlotte, North Carolina Square feet expiring (1) 17,787 sf 1,222 sf 9,889 sf
Full service St-Line rent (2) $ 318,456 $ 23,652 $ 217,560
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 17,787 sf 1,222 sf 9,889 sf
Full service St-Line rent (2) (3) $ 318,456 $ 23,652 $ 217,560
Full service St-Line rent per sq. ft. $ 17.90 $ 19.36 $ 22.00
% Full service St-Lined rent 2.97% 0.22% 2.03%
No. of tenant leases expiring (4) 2 1 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
Santa Monica/West Los Angeles, Square feet expiring (1) 41,766 sf 65,203 sf
California Full service St-Line rent (2) $ 1,245,290 $ 902,428
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 41,766 sf 65,203 sf
Full service St-Line rent (2) (3) $ 1,245,290 $ 902,428
Full service St-Line rent per sq. ft. $ 29.82 $ 13.84
% Full service St-Lined rent 5.27% 3.82%
No. of tenant leases expiring (4) 5 7
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Orange County, California Square feet expiring (1) 11,000 sf 43,958 sf
Full service St-Line rent (2) $ 275,482 $ 1,024,573
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 11,000 sf 43,958 sf
Full service St-Line rent (2) (3) $ 275,482 $ 1,024,573
Full service St-Line rent per sq. ft. $ 25.04 $ 23.31
% Full service St-Lined rent 1.92% 7.12%
No. of tenant leases expiring (4) 1 4
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Charlotte, North Carolina Square feet expiring (1) 71,593 sf 119,535 sf
Full service St-Line rent (2) $ 1,331,436 $ 1,960,104
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 71,593 sf 119,535 sf
Full service St-Line rent (2) (3) $ 1,331,436 $ 1,960,104
Full service St-Line rent per sq. ft. $ 18.60 $ 16.40
% Full service St-Lined rent 12.42% 18.29%
No. of tenant leases expiring (4) 3 4
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
Santa Monica/West Los Angeles, Square feet expiring (1) 782,671 sf 845,408 sf
California Full service St-Line rent (2) $ 23,632,215
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 782,671 sf 845,408 sf
Full service St-Line rent (2) (3) $ 23,632,215
Full service St-Line rent per sq. ft. $ 30.19
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 154
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Orange County, California Square feet expiring (1) 612,998 sf 709,886 sf
Full service St-Line rent (2) $ 14,384,712
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 612,998 sf 709,886 sf
Full service St-Line rent (2) (3) $ 14,384,712
Full service St-Line rent per sq. ft. $ 23.47
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 97
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Charlotte, North Carolina Square feet expiring (1) 607,762 sf 612,728 sf
Full service St-Line rent (2) $ 10,716,444
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 607,762 sf 612,728 sf
Full service St-Line rent (2) (3) $ 10,716,444
Full service St-Line rent per sq. ft. $ 17.63
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 47
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Arizona Square feet expiring (1) 60,206 sf 74,645 sf 133,669 sf
Full service St-Line rent (2) $ 1,272,209 $ 1,454,919 $ 3,121,292
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 60,206 sf 74,645 sf 133,669 sf
Full service St-Line rent (2) (3) $ 1,272,209 $ 1,454,919 $ 3,121,292
Full service St-Line rent per sq. ft. $ 21.13 $ 19.49 $ 23.35
% Full service St-Lined rent 10.69% 12.22% 26.22%
No. of tenant leases expiring (4) 15 27 29
Asking market rent per sq. ft. (5) $ 23.77
Operating Expenses per sq. ft. (6) $ 7.93
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Diego, California Square feet expiring (1) 29,278 sf 13,539 sf 41,748 sf
Full service St-Line rent (2) $ 512,800 $ 274,544 $ 678,513
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 29,278 sf 13,539 sf 41,748 sf
Full service St-Line rent (2) (3) $ 512,800 $ 274,544 $ 678,513
Full service St-Line rent per sq. ft. $ 17.51 $ 20.28 $ 16.25
% Full service St-Lined rent 6.81% 3.65% 9.02%
No. of tenant leases expiring (4) 10 5 8
Asking market rent per sq. ft. (5) $ 22.05
Operating Expenses per sq. ft. (6) $ 7.52
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Los Angeles, California Square feet expiring (1) 14,040 sf 64,867 sf 78,716 sf
Full service St-Line rent (2) $ 343,147 $ 1,878,609 $ 2,026,470
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 14,040 sf 64,867 sf 78,716 sf
Full service St-Line rent (2) (3) $ 343,147 $ 1,878,609 $ 2,026,470
Full service St-Line rent per sq. ft. $ 24.44 $ 28.96 $ 25.74
% Full service St-Lined rent 3.31% 18.11% 19.54%
No. of tenant leases expiring (4) 3 7 8
Asking market rent per sq. ft. (5) $ 25.45
Operating Expenses per sq. ft. (6) $ 9.39
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Arizona Square feet expiring (1) 97,180 sf 113,453 sf 58,645 sf
Full service St-Line rent (2) $ 2,030,024 $ 2,437,696 $ 1,261,212
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 97,180 sf 113,453 sf 58,645 sf
Full service St-Line rent (2) (3) $ 2,030,024 $ 2,437,696 $ 1,261,212
Full service St-Line rent per sq. ft. $ 20.89 $ 21.49 $ 21.51
% Full service St-Lined rent 17.05% 20.48% 10.59%
No. of tenant leases expiring (4) 21 17 7
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Diego, California Square feet expiring (1) 44,536 sf 153,010 sf 106,992 sf
Full service St-Line rent (2) $ 855,061 $ 3,012,932 $ 2,191,901
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 44,536 sf 153,010 sf 106,992 sf
Full service St-Line rent (2) (3) $ 855,061 $ 3,012,932 $ 2,191,901
Full service St-Line rent per sq. ft. $ 19.20 $ 19.69 $ 20.49
% Full service St-Lined rent 11.36% 40.03% 29.13%
No. of tenant leases expiring (4) 7 13 7
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Los Angeles, California Square feet expiring (1) 42,729 sf 26,000 sf 79,287 sf
Full service St-Line rent (2) $ 990,062 $ 649,496 $ 1,986,802
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 42,729 sf 26,000 sf 79,287 sf
Full service St-Line rent (2) (3) $ 990,062 $ 649,496 $ 1,986,802
Full service St-Line rent per sq. ft. $ 23.17 $ 24.98 $ 25.06
% Full service St-Lined rent 9.55% 6.26% 19.16%
No. of tenant leases expiring (4) 4 5 5
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Arizona Square feet expiring (1) sf 14,100 sf sf
Full service St-Line rent (2) $ -- $ 327,765 $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 14,100 sf sf
Full service St-Line rent (2) (3) $ -- $ 327,765 $ --
Full service St-Line rent per sq. ft. $ -- $ 23.25 $ --
% Full service St-Lined rent 0.00% 2.75% 0.00%
No. of tenant leases expiring (4) 2 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
San Diego, California Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf sf sf
Full service St-Line rent (2) (3) $ -- $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ -- $ --
% Full service St-Lined rent 0.00% 0.00% 0.00%
No. of tenant leases expiring (4) 0 0 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Los Angeles, California Square feet expiring (1) sf 11,834 sf 68,751 sf
Full service St-Line rent (2) $ -- $ 407,092 $ 2,089,600
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 11,834 sf 68,751 sf
Full service St-Line rent (2) (3) $ -- $ 407,092 $ 2,089,600
Full service St-Line rent per sq. ft. $ -- $ 34.40 $ 30.39
% Full service St-Lined rent 0.00% 3.93% 20.15%
No. of tenant leases expiring (4) 0 1 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
Arizona Square feet expiring (1) sf 7,694 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 7,694 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 3
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
San Diego, California Square feet expiring (1) sf 2,057 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 2,057 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Los Angeles, California Square feet expiring (1) sf 1,468 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 1,468 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
Arizona Square feet expiring (1) 559,592 sf 585,909 sf
Full service St-Line rent (2) $ 11,905,116
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 559,592 sf 585,909 sf
Full service St-Line rent (2) (3) $ 11,905,116
Full service St-Line rent per sq. ft. $ 21.27
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 121
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
San Diego, California Square feet expiring (1) 391,160 sf 420,599 sf
Full service St-Line rent (2) $ 7,525,752
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 391,160 sf 420,599 sf
Full service St-Line rent (2) (3) $ 7,525,752
Full service St-Line rent per sq. ft. $ 19.24
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 52
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Los Angeles, California Square feet expiring (1) 387,692 sf 401,629 sf
Full service St-Line rent (2) $ 10,371,279
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 387,692 sf 401,629 sf
Full service St-Line rent (2) (3) $ 10,371,279
Full service St-Line rent per sq. ft. $ 26.75
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 36
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Q2 - Q4
REGION NAME CATEGORY 1999 2000 2001
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
New York City, New York Square feet expiring (1) 10,651 sf 27,887 sf 127,306 sf
Full service St-Line rent (2) $ 484,316 $ 1,281,084 $ 7,219,637
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 10,651 sf 27,887 sf 127,306 sf
Full service St-Line rent (2) (3) $ 484,316 $ 1,281,084 $ 7,219,637
Full service St-Line rent per sq. ft. $ 45.47 $ 45.94 $ 56.71
% Full service St-Lined rent 2.55% 6.75% 38.05%
No. of tenant leases expiring (4) 4 10 13
Asking market rent per sq. ft. (5) $ 56.00
Operating Expenses per sq. ft. (6) $ 22.20
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Conejo Valley (Ventura), California Square feet expiring (1) 3,004 sf 70,498 sf 28,099 sf
Full service St-Line rent (2) $ 62,181 $ 1,673,120 $ 624,545
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 3,004 sf 70,498 sf 28,099 sf
Full service St-Line rent (2) (3) $ 62,181 $ 1,673,120 $ 624,545
Full service St-Line rent per sq. ft. $ 20.70 $ 23.73 $ 22.23
% Full service St-Lined rent 1.24% 33.38% 12.46%
No. of tenant leases expiring (4) 2 7 2
Asking market rent per sq. ft. (5) $ 23.69
Operating Expenses per sq. ft. (6) $ 8.01
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Other Regions Square feet expiring (1) 32,188 sf 5,245 sf 65,115 sf
Full service St-Line rent (2) $ 576,282 $ 107,024 $ 1,342,905
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 32,188 sf 5,245 sf 65,115 sf
Full service St-Line rent (2) (3) $ 576,282 $ 107,024 $ 1,342,905
Full service St-Line rent per sq. ft. $ 17.90 $ 20.40 $ 20.62
% Full service St-Lined rent 16.88% 3.14% 39.34%
No. of tenant leases expiring (4) 4 3 7
Asking market rent per sq. ft. (5) $ 19.52
Operating Expenses per sq. ft. (6) $ 7.39
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2002 2003 2004
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
New York City, New York Square feet expiring (1) 46,181 sf 50,590 sf 29,700 sf
Full service St-Line rent (2) $ 2,354,935 $ 2,165,719 $ 2,107,450
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 46,181 sf 50,590 sf 29,700 sf
Full service St-Line rent (2) (3) $ 2,354,935 $ 2,165,719 $ 2,107,450
Full service St-Line rent per sq. ft. $ 50.99 $ 42.81 $ 70.96
% Full service St-Lined rent 12.41% 11.41% 11.11%
No. of tenant leases expiring (4) 11 8 6
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Conejo Valley (Ventura), California Square feet expiring (1) 70,168 sf 32,260 sf 3,158 sf
Full service St-Line rent (2) $ 1,569,494 $ 765,292 $ 48,175
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 70,168 sf 32,260 sf 3,158 sf
Full service St-Line rent (2) (3) $ 1,569,494 $ 765,292 $ 48,175
Full service St-Line rent per sq. ft. $ 22.37 $ 23.72 $ 15.26
% Full service St-Lined rent 31.31% 15.27% 0.96%
No. of tenant leases expiring (4) 3 2 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Other Regions Square feet expiring (1) 7,353 sf 32,569 sf 2,997 sf
Full service St-Line rent (2) $ 152,905 $ 647,607 $ 61,846
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 7,353 sf 32,569 sf 2,997 sf
Full service St-Line rent (2) (3) $ 152,905 $ 647,607 $ 61,846
Full service St-Line rent per sq. ft. $ 20.79 $ 19.88 $ 20.64
% Full service St-Lined rent 4.48% 18.97% 1.81%
No. of tenant leases expiring (4) 3 5 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY 2005 2006 2007
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
New York City, New York Square feet expiring (1) 11,566 sf 27,074 sf 32,929 sf
Full service St-Line rent (2) $ 616,071 $ 1,124,710 $ 1,620,918
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 11,566 sf 27,074 sf 32,929 sf
Full service St-Line rent (2) (3) $ 616,071 $ 1,124,710 $ 1,620,918
Full service St-Line rent per sq. ft. $ 53.27 $ 41.54 $ 49.22
% Full service St-Lined rent 3.25% 5.93% 8.54%
No. of tenant leases expiring (4) 2 5 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Conejo Valley (Ventura), California Square feet expiring (1) 12,126 sf sf sf
Full service St-Line rent (2) $ 269,825 $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 12,126 sf sf sf
Full service St-Line rent (2) (3) $ 269,825 $ -- $ --
Full service St-Line rent per sq. ft. $ 22.25 $ -- $ --
% Full service St-Lined rent 5.38% 0.00% 0.00%
No. of tenant leases expiring (4) 1 0 0
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
Other Regions Square feet expiring (1) 12,892 sf sf 11,501 sf
Full service St-Line rent (2) $ 293,862 $ -- $ 230,905
Minority Interest Adjustment (3) Square feet expiring (1) sf sf sf
Full service St-Line rent (2) $ -- $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) 12,892 sf sf 11,501 sf
Full service St-Line rent (2) (3) $ 293,862 $ -- $ 230,905
Full service St-Line rent per sq. ft. $ 22.79 $ -- $ 20.08
% Full service St-Lined rent 8.61% 0.00% 6.76%
No. of tenant leases expiring (4) 2 0 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
- ------------------------------------- ------------------------------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
2009 and
REGION NAME CATEGORY 2008 Beyond
- ------------------------------------- ------------------------------------- --------------- ---------------
<S> <C> <C> <C>
New York City, New York Square feet expiring (1) sf 207 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 207 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Conejo Valley (Ventura), California Square feet expiring (1) sf 245 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 245 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 1
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
Other Regions Square feet expiring (1) sf 5,446 sf
Full service St-Line rent (2) $ -- $ --
Minority Interest Adjustment (3) Square feet expiring (1) sf
Full service St-Line rent (2) $ -- $ --
Cornerstone Portfolio Square feet expiring (1) (3) sf 5,446 sf
Full service St-Line rent (2) (3) $ -- $ --
Full service St-Line rent per sq. ft. $ -- $ --
% Full service St-Lined rent 0.00% 0.00%
No. of tenant leases expiring (4) 0 2
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- --------------- ---------------
- ------------------------------------- ------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REGION NAME CATEGORY Total NRA
- ------------------------------------- ------------------------------------- ---------------- -------------
<S> <C> <C> <C>
New York City, New York Square feet expiring (1) 364,091 sf 378,965 sf
Full service St-Line rent (2) $ 18,974,840
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 364,091 sf 378,965 sf
Full service St-Line rent (2) (3) $ 18,974,840
Full service St-Line rent per sq. ft. $ 52.12
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 63
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Conejo Valley (Ventura), California Square feet expiring (1) 219,558 sf 234,766 sf
Full service St-Line rent (2) $ 5,012,633
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 219,558 sf 234,766 sf
Full service St-Line rent (2) (3) $ 5,012,633
Full service St-Line rent per sq. ft. $ 22.83
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 19
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
Other Regions Square feet expiring (1) 175,306 sf 209,579 sf
Full service St-Line rent (2) $ 3,413,336
Minority Interest Adjustment (3) Square feet expiring (1) sf sf
Full service St-Line rent (2) $ --
Cornerstone Portfolio Square feet expiring (1) (3) 175,306 sf 209,579 sf
Full service St-Line rent (2) (3) $ 3,413,336
Full service St-Line rent per sq. ft. $ 19.47
% Full service St-Lined rent 100.00%
No. of tenant leases expiring (4) 28
Asking market rent per sq. ft. (5)
Operating Expenses per sq. ft. (6)
- ------------------------------------- ------------------------------------- ---------------- -------------
- ------------------------------------- ------------------------------------- ---------------- -------------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
LEASE EXPIRATION SCHEDULE
FOOTNOTES
- ----------------------------
(1) The total square footage expiring in any particular year.
(2) Full Service Straight-line rent is the annual average of all lease payments
required to be made through the term of the lease as required under
Generally Accepted Accounting Principles plus the annualized recovery of
operating expenses.
(3) Full Service Straight-line rent and square feet expiring include an
adjustment for the interest of a joint venture or minority partner.
Calculations are based on the partners' 1999 percentage participation in
the cash flows of the property.
(4) The number of tenant leases expiring in each year.
(5) Asking market rent is the average initially quoted rent to prospective
tenants in each building. All market rents shown are on full service basis.
(6) Operating Expenses are the projected recoverable expenses quoted to
prospective tenants in each building.
(7) The rentable area associated with the Pruneyard Inn (90,000 sf) is not
included in the portfolio NRA.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- TENANT RETENTION SCHEDULE
<PAGE>
Cornerstone Properties Inc.
Tenant Retention Schedule
As of March 31, 1999
The attached table sets forth the Company's tenant retention on expiring leases
since January 1, 1995. The analysis is based upon the percentage of expiring
leases in the applicable building with a tenant or subtenant being retained in
the expiring space, or an existing tenant expanding into the expiring space. A
tenant's lease is added to the retention schedule at the time a lease extension
is signed with the tenant, or the tenant notifies the Company of an option being
exercised.
<TABLE>
<CAPTION>
1995 1996
---------------------------- -----------------------------
sq ft sq ft sq ft sq ft
Region retained expired ret % retained expired ret %
------- ------- -- ------- ------- --
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts -- -- -- 95,816 96,658 99%
San Mateo County, California -- -- -- -- -- --
East Bay, California -- -- -- -- -- --
Atlanta, Georgia -- -- -- -- -- --
Seattle, Washington 29,547 44,742 66% 86,956 106,250 82%
Santa Clara County, California -- -- -- -- -- --
Denver, Colorado 64,627 71,364 91% 43,601 72,903 60%
San Francisco, California -- -- -- -- -- --
Minneapolis, Minnesota 22,762 23,792 96% 4,336 9,777 44%
Washington, D.C./Alexandria, Virginia -- -- -- -- -- --
Suburban Chicago, Illinois -- -- -- -- -- --
Santa Monica/West Los Angeles, CA -- -- -- -- -- --
Orange County, California -- -- -- -- -- --
Charlotte, North Carolina -- -- -- -- -- --
Arizona -- -- -- -- -- --
San Diego, California -- -- -- -- -- --
Los Angeles, California -- -- -- -- -- --
New York City, New York -- -- -- 46,003 53,762 86%
Conejo Valley (Ventura), California -- -- -- -- -- --
Other Regions -- -- -- -- -- --
------- ------- -- ------- ------- --
(1) TOTAL PORTFOLIO 116,936 139,898 84% 276,712 339,350 82%
</TABLE>
<TABLE>
<CAPTION>
1997 1998
---------------------------- --------------------------------
sq ft sq ft sq ft sq ft
Region retained expired ret % retained expired ret %
------- ------- -- --------- --------- --
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts 41,252 65,223 63% 482,864 523,936 92%
San Mateo County, California -- -- -- 1,730 9,757 18%
East Bay, California -- -- -- -- 17,601 0%
Atlanta, Georgia 10,672 21,725 49% 65,397 177,393 37%
Seattle, Washington 182,194 207,738 88% 394,746 417,094 95%
Santa Clara County, California -- -- -- -- -- --
Denver, Colorado 266,021 313,612 85% 78,144 106,249 74%
San Francisco, California -- -- -- -- 311 0%
Minneapolis, Minnesota 205,749 234,260 88% 101,382 114,447 89%
Washington, D.C./Alexandria, Virginia -- 8,889 0% 128,611 169,699 76%
Suburban Chicago, Illinois 35,320 42,099 84% 75,006 178,898 42%
Santa Monica/West Los Angeles, CA -- -- -- 15,975 18,897 85%
Orange County, California -- -- -- 1,149 12,801 9%
Charlotte, North Carolina 2,974 6,390 47% 35,239 59,158 60%
Arizona -- -- -- 991 991 100%
San Diego, California -- -- -- -- -- --
Los Angeles, California -- -- -- -- -- --
New York City, New York 43,007 71,266 60% 37,448 52,025 72%
Conejo Valley (Ventura), California -- -- -- -- -- --
Other Regions -- -- -- 12,343 25,870 48%
------- ------- -- --------- --------- --
(1) TOTAL PORTFOLIO 787,189 971,202 81% 1,431,025 1,885,127 76%
</TABLE>
<TABLE>
<CAPTION>
1999 YTD TOTAL
---------------------------- --------------------------------
sq ft sq ft sq ft sq ft
Region retained expired ret % retained expired ret %
------- ------- -- --------- --------- --
<S> <C> <C> <C> <C> <C> <C>
Boston, Massachusetts 563 563 100% 620,495 686,380 90%
San Mateo County, California 3,335 58,146 6% 5,065 67,903 7%
East Bay, California 54,797 65,145 84% 54,797 82,746 66%
Atlanta, Georgia 6,219 19,308 32% 82,288 218,426 38%
Seattle, Washington 31,798 36,479 87% 725,241 812,303 89%
Santa Clara County, California 8,442 14,787 57% 8,442 14,787 57%
Denver, Colorado -- 3,242 0% 452,393 567,370 80%
San Francisco, California 46,576 50,783 92% 46,576 51,094 91%
Minneapolis, Minnesota 21,238 21,238 100% 355,467 403,514 88%
Washington, D.C./Alexandria, Virginia 1,403 1,403 100% 130,014 179,991 72%
Suburban Chicago, Illinois 22,247 52,097 43% 132,573 273,094 49%
Santa Monica/West Los Angeles, CA 31,639 47,166 67% 47,614 66,063 72%
Orange County, California -- 7,897 0% 1,149 20,698 6%
Charlotte, North Carolina 24,680 29,483 84% 62,893 95,031 66%
Arizona 19,798 26,758 74% 20,789 27,749 75%
San Diego, California 6,759 18,150 37% 6,759 18,150 37%
Los Angeles, California 2,032 2,032 100% 2,032 2,032 100%
New York City, New York 15,984 15,984 100% 142,442 193,037 74%
Conejo Valley (Ventura), California 7,153 9,555 75% 7,153 9,555 75%
Other Regions 9,245 21,588 43% 21,588 47,458 45%
------- ------- -- --------- --------- --
(1) TOTAL PORTFOLIO 313,908 501,804 63% 2,925,770 3,837,381 76%
</TABLE>
- ----------
(1) 1996 and 1997 retention has been restated to reflect the 1998 sale of the
Frick Building.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- LEASING COSTS AND CAPITAL EXPENDITURES
\<PAGE>
CORNERSTONE PROPERTIES INC.
NON-REVENUE GENERATING CAPITAL
(RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(1)PORTFOLIO TOTAL
Weighted Average Square Footage Owned 4,986,856 sf 11,085,545 sf 5,121,760 sf 3,832,635 sf 3,290,776 sf 5,663,514 sf
Capital Expenditures $ 921,250 $ 1,671,684 $ 487,956 $ 518,632 $ -- $ 719,904
Minority Interest Adjustment $ 4,164 $ -- $ 2,195 $ -- $ -- $ 1,272
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 917,086 $ 1,671,684 $ 485,761 $ 518,632 $ -- $ 718,633
Total Per Square Foot $ 0.18 $ 0.15 $ 0.09 $ 0.14 $ -- $ 0.13
Total Square Feet Leased 423,705 sf 1,768,939 sf 958,815 sf 376,197 sf 154,819 sf 3,682,475 sf
Total Tenant Lease Costs $3,532,479 $15,876,813 $7,127,582 $4,344,926 $ 576,381 $31,458,181
Minority Interest Adjustment $ 153,175 $ -- $ -- $ -- $ -- $ 30,635
--------------------------------------------------------------------------------------------
Total Cornerstone Share $3,379,304 $15,876,813 $7,127,582 $4,344,926 $ 576,381 $31,427,546
Total Per Square Foot $ 7.98 $ 8.98 $ 7.43 $ 11.55 $ 3.72 $ 8.53
</TABLE>
(1)1996 and 1997 leasing and capital costs have been restated to reflect
the 1998 sale of the Frick Building.
- --------------------------------------------------------------------------------
The following table shows Historical Non-Incremental Revenue Generating Leasing
Costs, which are the leasing costs (tenant improvements and leasing
commissions), in total and on a per square foot basis, to re-lease expiring
leases or renew or extend existing leases. The Company believes that its ability
to renew and extend existing tenants at a high percentage has substantially
reduced its overall leasing costs on a per square foot basis. Additionally, the
table shows Historical Non-Incremental Revenue Generating Capital Expenditures,
which are Capital Expenditures expended to maintain a property in a Class A
manner and do not give rise to additional earnings capacity, but rather allow
the property to maintain its competitive position within its market. The Company
believes that its focus on continuing high level of maintenance of its assets
has greatly reduced the amount of Capital Expenditures required at its
buildings.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
BOSTON, MASSACHUSETTS
Weighted Average Square Footage Owned 685,235 sf 2,666,317 sf 672,069 sf 463,691 sf 77,494 sf 912,961 sf
Capital Expenditures $ 43,885 $ 476,741 $ 53,185 $ 518,632 $ -- $ 218,489
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 43,885 $ 476,741 $ 53,185 $ 518,632 $ -- $ 218,489
Total Per Square Foot $ 0.06 $ 0.18 $ 0.08 $ 1.12 $ -- $ 0.24
Total Square Feet Leased 5,888 sf 506,584 sf 68,110 sf 117,794 sf sf 698,376 sf
Total Tenant Lease Costs $ 15,975 $ 6,935,065 $1,349,047 $2,158,339 $ -- $10,458,426
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 15,975 $ 6,935,065 $1,349,047 $2,158,339 $ -- $10,458,426
Total Per Square Foot $ 2.71 $ 13.69 $ 19.81 $ 18.32 $ -- $ 14.98
SAN MATEO COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 535,909 sf 95,295 sf sf sf sf 126,241 sf
Capital Expenditures $ 317,435 $ 81,080 $ -- $ -- $ -- $ 79,703
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 317,435 $ 81,080 $ -- $ -- $ -- $ 79,703
Total Per Square Foot $ 0.59 $ 0.85 $ -- $ -- $ -- $ 0.63
Total Square Feet Leased 49,099 sf 1,730 sf sf sf sf 50,829 sf
Total Tenant Lease Costs $ 699,692 $ -- $ -- $ -- $ -- $ 699,692
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 699,692 $ -- $ -- $ -- $ -- $ 699,692
Total Per Square Foot $ 14.25 $ -- $ -- $ -- $ -- $ 13.77
EAST BAY, CALIFORNIA
Weighted Average Square Footage Owned 412,743 sf 73,386 sf sf sf sf 97,226 sf
Capital Expenditures $ 171,296 $ 13,500 $ -- $ -- $ -- $ 36,959
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 171,296 $ 13,500 $ -- $ -- $ -- $ 36,959
Total Per Square Foot $ 0.42 $ 0.18 $ -- $ -- $ -- $ 0.38
Total Square Feet Leased 67,783 sf sf sf sf sf 67,783 sf
Total Tenant Lease Costs $ 458,401 $ -- $ -- $ -- $ -- $ 458,401
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 458,401 $ -- $ -- $ -- $ -- $ 458,401
Total Per Square Foot $ 6.76 $ -- $ -- $ -- $ -- $ 6.76
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
NON-REVENUE GENERATING CAPITAL
(RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTA, GEORGIA
Weighted Average Square Footage Owned 406,353 sf 1,647,986 sf 297,992 sf sf sf 470,466 sf
Capital Expenditures $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
Total Square Feet Leased 14,008 sf 170,672 sf 13,269 sf sf sf 197,949 sf
Total Tenant Lease Costs $ 261,715 $ 1,280,053 $ 269,265 $ -- $ -- $ 1,811,033
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 261,715 $ 1,280,053 $ 269,265 $ -- $ -- $ 1,811,033
Total Per Square Foot $ 18.68 $ 7.50 $ 20.29 $ -- $ -- $ 9.15
SEATTLE, WASHINGTON
Weighted Average Square Footage Owned 362,149 sf 1,168,321 sf 1,154,560 sf 1,154,560 sf 1,154,560 sf 998,830 sf
Capital Expenditures $ 64,638 $ 59,337 $ 21,922 $ -- $ -- $ 29,179
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 64,638 $ 59,337 $ 21,922 $ -- $ -- $ 29,179
Total Per Square Foot $ 0.18 $ 0.05 $ 0.02 $ -- $ -- $ 0.03
Total Square Feet Leased 35,806 sf 432,547 sf 208,875 sf 124,474 sf 53,894 sf 855,596 sf
Total Tenant Lease Costs $ 216,365 $ 2,177,172 $1,204,606 $ 793,361 $ 290,971 $ 4,682,475
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 216,365 $ 2,177,172 $1,204,606 $ 793,361 $ 290,971 $ 4,682,475
Total Per Square Foot $ 6.04 $ 5.03 $ 5.77 $ 6.37 $ 5.40 $ 5.47
SANTA CLARA COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 319,567 sf 56,510 sf sf sf sf 75,215 sf
Capital Expenditures $143,487 $ 36,389 $ -- $ -- $ -- $ 35,975
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $143,487 $ 36,389 $ -- $ -- $ -- $ 35,975
Total Per Square Foot $ 0.45 $ 0.64 $ -- $ -- $ -- $ 0.48
Total Square Feet Leased 9,428 sf sf sf sf sf 9,428 sf
Total Tenant Lease Costs $ 68,856 $ -- $ -- $ -- $ -- $ 68,856
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 68,856 $ -- $ -- $ -- $ -- $ 68,856
Total Per Square Foot $ 7.30 $ -- $ -- $ -- $ -- $ 7.30
DENVER, COLORADO
Weighted Average Square Footage Owned 292,895 sf 1,187,752 sf 1,187,752 sf 1,187,752 sf 1,187,752 sf 1,008,781 sf
Capital Expenditures $ -- $ -- $ 102,000 $ -- $ -- $ 20,400
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ 102,000 $ -- $ -- $ 20,400
Total Per Square Foot $ -- $ -- $ 0.09 $ -- $ -- $ 0.02
Total Square Feet Leased 3,147 sf 85,110 sf 308,697 sf 81,445 sf 75,939 sf 554,338 sf
Total Tenant Lease Costs $ -- $ 201,233 $1,823,664 $1,009,006 $ 141,135 $ 3,175,038
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 201,233 $1,823,664 $1,009,006 $ 141,135 $ 3,175,038
Total Per Square Foot $ -- $ 2.36 $ 5.91 $ 12.39 $ 1.86 $ 5.73
SAN FRANCISCO, CALIFORNIA
Weighted Average Square Footage Owned 196,334 sf 163,815 sf sf sf sf 72,030 sf
Capital Expenditures $ 67,513 $ 12,773 $ -- $ -- $ -- $ 16,057
Minority Interest Adjustment $ 4,164 $ -- $ -- $ -- $ -- $ 833
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 63,349 $ 12,773 $ -- $ -- $ -- $ 15,224
Total Per Square Foot $ 0.32 $ 0.08 $ -- $ -- $ -- $ 0.21
Total Square Feet Leased 32,169 sf sf sf sf sf 32,169 sf
Total Tenant Lease Costs $327,013 $ -- $ -- $ -- $ -- $ 327,013
Minority Interest Adjustment $153,175 $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $173,838 $ -- $ -- $ -- $ -- $ 327,013
Total Per Square Foot $ 5.40 $ -- $ -- $ -- $ -- $ 10.17
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
NON-REVENUE GENERATING CAPITAL
(RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MINNEAPOLIS, MINNESOTA
Weighted Average Square Footage Owned 205,272 sf 870,970 sf 870,970 sf 870,970 sf 870,970 sf 737,830 sf
Capital Expenditures $ -- $ -- $ 10,974 $ -- $ -- $ 2,195
Minority Interest Adjustment $ -- $ -- $ 2,195 $ -- $ -- $ 439
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ 8,779 $ -- $ -- $ 1,756
Total Per Square Foot $ -- $ -- $ 0.01 $ -- $ -- $ 0.00
Total Square Feet Leased 21,238 sf 125,966 sf 212,795 sf 6,629 sf 24,986 sf 391,614 sf
Total Tenant Lease Costs $ -- $ 513,054 $ 569,103 $ 42,237 $ 144,275 $ 1,268,669
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 513,054 $ 569,103 $ 42,237 $ 144,275 $ 1,268,669
Total Per Square Foot $ -- $ 4.07 $ 2.67 $ 6.37 $ 5.77 $ 3.24
WASHINGTON, D.C. / ALEXANDRIA, VIRGINIA
Weighted Average Square Footage Owned 244,923 sf 989,999 sf 177,548 sf sf sf 282,494 sf
Capital Expenditures $ -- $ 75,218 $ -- $ -- $ -- $ 15,044
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 75,218 $ -- $ -- $ -- $ 15,044
Total Per Square Foot $ -- $ 0.08 $ -- $ -- $ -- $ 0.05
Total Square Feet Leased 8,834 sf 151,775 sf sf sf sf 160,609 sf
Total Tenant Lease Costs $396,025 $ 3,291,744 $ -- $ -- $ -- $ 3,687,769
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $396,025 $ 3,291,744 $ -- $ -- $ -- $ 3,687,769
Total Per Square Foot $ 44.83 $ 21.69 $ -- $ -- $ -- $ 22.96
SUBURBAN CHICAGO, ILLINOIS
Weighted Average Square Footage Owned 240,677 sf 923,873 sf 297,067 sf 43,136 sf sf 300,951 sf
Capital Expenditures $ -- $ (61,733) $ 154,646 $ -- $ -- $ 18,583
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ (61,733) $ 154,646 $ -- $ -- $ 18,583
Total Per Square Foot $ -- $ (0.07) $ 0.52 $ -- $ -- $ 0.06
Total Square Feet Leased 41,250 sf 149,705 sf 42,826 sf 3,652 sf sf 237,433 sf
Total Tenant Lease Costs $555,721 $ 447,825 $ 287,758 $ 2,859 $ -- $ 1,294,163
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $555,721 $ 447,825 $ 287,758 $ 2,859 $ -- $ 1,294,163
Total Per Square Foot $ 13.47 $ 2.99 $ 6.72 $ 0.78 $ -- $ 5.45
SANTA MONICA/WEST LOS ANGELES,
CALIFORNIA
Weighted Average Square Footage Owned 208,457 sf 137,348 sf sf sf sf 69,161 sf
Capital Expenditures $ 200 $ 293,641 $ -- $ -- $ -- $ 58,768
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 200 $ 293,641 $ -- $ -- $ -- $ 58,768
Total Per Square Foot $ 0.00 $ 2.14 $ -- $ -- $ -- $ 0.85
Total Square Feet Leased 40,499 sf 19,106 sf sf sf sf 59,605 sf
Total Tenant Lease Costs $100,116 $ 111,078 $ -- $ -- $ -- $ 211,194
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $100,116 $ 111,078 $ -- $ -- $ -- $ 211,194
Total Per Square Foot $ 2.47 $ 5.81 $ -- $ -- $ -- $ 3.54
ORANGE COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 175,040 sf 31,096 sf sf sf sf 41,227 sf
Capital Expenditures $ 228 $ 897 $ -- $ -- $ -- $ 225
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 228 $ 897 $ -- $ -- $ -- $ 225
Total Per Square Foot $ 0.00 $ 0.03 $ -- $ -- $ -- $ 0.01
Total Square Feet Leased 4,682 sf 1,149 sf sf sf sf 5,831 sf
Total Tenant Lease Costs $ 32,794 $ 9,192 $ -- $ -- $ -- $ 41,986
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 32,794 $ 9,192 $ -- $ -- $ -- $ 41,986
Total Per Square Foot $ 7.00 $ 8.00 $ -- $ -- $ -- $ 7.20
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
NON-REVENUE GENERATING CAPITAL
(RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHARLOTTE, NORTH CAROLINA
Weighted Average Square Footage Owned 151,084 sf 612,728 sf 110,795 sf sf sf 174,921 sf
Capital Expenditures $ -- $ 5,086 $ 15,039 $ -- $ -- $ 4,025
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 5,086 $ 15,039 $ -- $ -- $ 4,025
Total Per Square Foot $ -- $ 0.01 $ 0.14 $ -- $ -- $ 0.02
Total Square Feet Leased 26,802 sf 59,318 sf 9,139 sf sf sf 95,259 sf
Total Tenant Lease Costs $173,693 $ 519,787 $ 154,044 $ -- $ -- $ 847,524
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $173,693 $ 519,787 $ 154,044 $ -- $ -- $ 847,524
Total Per Square Foot $ 6.48 $ 8.76 $ 16.86 $ -- $ -- $ 8.90
ARIZONA
Weighted Average Square Footage Owned 144,471 sf 25,608 sf sf sf sf 34,016 sf
Capital Expenditures $ 21,731 $ -- $ -- $ -- $ -- $ 4,346
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 21,731 $ -- $ -- $ -- $ -- $ 4,346
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ 0.13
Total Square Feet Leased 21,899 sf sf sf sf sf 21,899 sf
Total Tenant Lease Costs $103,056 $ -- $ -- $ -- $ -- $ 103,056
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $103,056 $ -- $ -- $ -- $ -- $ 103,056
Total Per Square Foot $ 4.71 $ -- $ -- $ -- $ -- $ 4.71
SAN DIEGO, CALIFORNIA
Weighted Average Square Footage Owned 103,709 sf 18,450 sf sf sf sf 24,432 sf
Capital Expenditures $ 901 $ 20,145 $ -- $ -- $ -- $ 4,209
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 901 $ 20,145 $ -- $ -- $ -- $ 4,209
Total Per Square Foot $ 0.01 $ 1.09 $ -- $ -- $ -- $ 0.17
Total Square Feet Leased 6,759 sf 991 sf sf sf sf 7,750 sf
Total Tenant Lease Costs $ 5,522 $ -- $ -- $ -- $ -- $ 5,522
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 5,522 $ -- $ -- $ -- $ -- $ 5,522
Total Per Square Foot $ 0.82 $ -- $ -- $ -- $ -- $ 0.71
LOS ANGELES, CALIFORNIA
Weighted Average Square Footage Owned 99,032 sf 17,689 sf sf sf sf 23,344 sf
Capital Expenditures $ 32,929 $ -- $ -- $ -- $ -- $ 6,586
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 32,929 $ -- $ -- $ -- $ -- $ 6,586
Total Per Square Foot $ 0.33 $ -- $ -- $ -- $ -- $ 0.28
Total Square Feet Leased 2,032 sf 2,917 sf sf sf sf 4,949 sf
Total Tenant Lease Costs $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
NEW YORK CITY, NEW YORK
Weighted Average Square Footage Owned 93,443 sf 378,965 sf 353,007 sf 112,526 sf sf 187,588 sf
Capital Expenditures $ 33,313 $ 658,610 $ 130,190 $ -- $ -- $ 164,423
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 33,313 $ 658,610 $ 130,190 $ -- $ -- $ 164,423
Total Per Square Foot $ 0.36 $ 1.74 $ 0.37 $ -- $ -- $ 0.88
Total Square Feet Leased 15,984 sf 49,026 sf 95,104 sf 42,203 sf sf 202,317 sf
Total Tenant Lease Costs $ 95,788 $ 390,610 $1,470,095 $ 339,124 $ -- $ 2,295,617
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 95,788 $ 390,610 $1,470,095 $ 339,124 $ -- $ 2,295,617
Total Per Square Foot $ 5.99 $ 7.97 $ 15.46 $ 8.04 $ -- $ 11.35
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
NON-REVENUE GENERATING CAPITAL
(RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONEJO VALLEY (VENTURA), CALIFORNIA
Weighted Average Square Footage Owned 57,888 sf 10,269 sf sf sf sf 13,631 sf
Capital Expenditures $ 9,842 $ -- $ -- $ -- $ -- $ 1,968
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 9,842 $ -- $ -- $ -- $ -- $ 1,968
Total Per Square Foot $ 0.17 $ -- $ -- $ -- $ -- $ 0.14
Total Square Feet Leased 7,153 sf sf sf sf sf 7,153 sf
Total Tenant Lease Costs $ 21,748 $ -- $ -- $ -- $ -- $ 21,748
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 21,748 $ -- $ -- $ -- $ -- $ 21,748
Total Per Square Foot $ 3.04 $ -- $ -- $ -- $ -- $ 3.04
OTHER REGIONS
Weighted Average Square Footage Owned 51,677 sf 9,168 sf sf sf sf 12,169 sf
Capital Expenditures $ 13,850 $ -- $ -- $ -- $ -- $ 2,770
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 13,850 $ -- $ -- $ -- $ -- $ 2,770
Total Per Square Foot $ 0.27 $ -- $ -- $ -- $ -- $ 0.23
Total Square Feet Leased 9,245 sf 12,343 sf sf sf sf 21,588 sf
Total Tenant Lease Costs $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
REVENUE GENERATING CAPITAL
(NON-RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(1)PORTFOLIO TOTAL
Weighted Average Square Footage Owned 4,986,856 sf 11,085,545 sf 5,121,760 sf 3,832,635 sf 3,290,776 sf 5,663,514 sf
Capital Expenditures $ 309,349 $ 1,483,545 $ 367,262 $ 25,500 $ 135,194 $ 464,170
Minority Interest Adjustment $ 969 $ 8,490 $ -- $ -- $ -- $ 1,892
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 308,379 $ 1,475,055 $ 367,262 $ 25,500 $ 135,194 $ 462,278
Total Per Square Foot $ 0.06 $ 0.13 $ 0.07 $ 0.01 $ 0.04 $ 0.08
Total Square Feet Leased 216,754 sf 198,025 sf 83,682 sf 188,709 sf sf 687,170 sf
Total Tenant Lease Costs $ 4,775,484 $ 4,452,292 $ 690,658 $1,196,934 $ -- $11,115,368
Minority Interest Adjustment $ 18,366 $ -- $ -- $ -- $ -- $ 3,673
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 4,757,118 $ 4,452,292 $ 690,658 $1,196,934 $ -- $11,111,695
Total Per Square Foot $ 21.95 $ 22.48 $ 8.25 $ 6.34 $ -- $ 16.17
</TABLE>
(1)1996 and 1997 leasing and capital costs have been restated to reflect
the 1998 sale of the Frick Building.
- --------------------------------------------------------------------------------
The following table shows Historical Incremental Revenue Generating Leasing
Costs, which are the leasing costs (tenant improvements and leasing commissions)
required to lease (i) first generation space on development properties and (ii)
space which was vacant at the time of the acquisition of a property which will
increase the overall return on the property. Additionally, the table shows
Historical Incremental Revenue Generating Capital Expenditures, which are
Capital Expenditures expended to increase the profitability of the building
either through the generation of higher earnings capability, or by improving
building system efficiency, thus producing lower operating expenses
prospectively.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
BOSTON, MASSACHUSETTS
Weighted Average Square Footage Owned 685,235 sf 2,666,317 sf 672,069 sf 463,691 sf 77,494 sf 912,961 sf
Capital Expenditures $ -- $ 4,238 $ -- $ -- $ -- $ 848
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 4,238 $ -- $ -- $ -- $ 848
Total Per Square Foot $ -- $ 0.00 $ -- $ -- $ -- $ 0.00
Total Square Feet Leased 1,404 sf sf sf 33,136 sf sf 34,540 sf
Total Tenant Lease Costs $ 14,040 $ -- $ -- $ 369,727 $ -- $ 383,767
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 14,040 $ -- $ -- $ 369,727 $ -- $ 383,767
Total Per Square Foot $ 10.00 $ -- $ -- $ 11.16 $ -- $ 11.11
SAN MATEO COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 535,909 sf 95,295 sf sf sf sf 126,241 sf
Capital Expenditures $ 1,506 $ 4,053 $ -- $ -- $ -- $ 1,112
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 1,506 $ 4,053 $ -- $ -- $ -- $ 1,112
Total Per Square Foot $ 0.00 $ 0.04 $ -- $ -- $ -- $ 0.01
Total Square Feet Leased 85,981 sf 3,752 sf sf sf sf 89,733 sf
Total Tenant Lease Costs $ 1,993,770 $ 29,116 $ -- $ -- $ -- $ 2,022,886
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 1,993,770 $ 29,116 $ -- $ -- $ -- $ 2,022,886
Total Per Square Foot $ 23.19 $ 7.76 $ -- $ -- $ -- $ 22.54
EAST BAY, CALIFORNIA
Weighted Average Square Footage Owned 412,743 sf 73,386 sf sf sf sf 97,226 sf
Capital Expenditures $ 72,287 $ 31,633 $ -- $ -- $ -- $ 20,784
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 72,287 $ 31,633 $ -- $ -- $ -- $ 20,784
Total Per Square Foot $ 0.18 $ 0.43 $ -- $ -- $ -- $ 0.21
Total Square Feet Leased 26,997 sf 1,333 sf sf sf sf 28,330 sf
Total Tenant Lease Costs $ 311,851 $ 13,330 $ -- $ -- $ -- $ 325,181
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 311,851 $ 13,330 $ -- $ -- $ -- $ 325,181
Total Per Square Foot $ 11.55 $ 10.00 $ -- $ -- $ -- $ 11.48
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
REVENUE GENERATING CAPITAL
(NON-RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTA, GEORGIA
Weighted Average Square Footage Owned 406,353 sf 1,647,986 sf 297,992 sf sf sf 470,466 sf
Capital Expenditures $ 130,112 $ 586,718 $ -- $ -- $ -- $ 143,366
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 130,112 $ 586,718 $ -- $ -- $ -- $ 143,366
Total Per Square Foot $ 0.32 $ 0.36 $ -- $ -- $ -- $ 0.30
Total Square Feet Leased 1,299 sf 60,834 sf 2,139 sf sf sf 64,272 sf
Total Tenant Lease Costs $ 45,220 $ 1,919,820 $ 24,132 $ -- $ -- $ 1,989,172
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 45,220 $ 1,919,820 $ 24,132 $ -- $ -- $ 1,989,172
Total Per Square Foot $ 34.81 $ 31.56 $ 11.28 $ -- $ -- $ 30.95
SEATTLE, WASHINGTON
Weighted Average Square Footage Owned 362,149 sf 1,168,321 sf 1,154,560 sf 1,154,560 sf 1,154,560 sf 998,830 sf
Capital Expenditures $ 7,181 $ 212,549 $ 88,401 $ 25,500 $ 135,194 $ 93,765
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 7,181 $ 212,549 $ 88,401 $ 25,500 $ 135,194 $ 93,765
Total Per Square Foot $ 0.02 $ 0.18 $ 0.08 $ 0.02 $ 0.12 $ 0.09
Total Square Feet Leased 638 sf sf 69,727 sf 146,517 sf sf 216,882 sf
Total Tenant Lease Costs $ 357 $ -- $ 404,988 $ 643,235 $ -- $ 1,048,580
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 357 $ -- $ 404,988 $ 643,235 $ -- $ 1,048,580
Total Per Square Foot $ 0.56 $ -- $ 5.81 $ 4.39 $ -- $ 4.83
SANTA CLARA COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 319,567 sf 56,510 sf sf sf sf 75,215 sf
Capital Expenditures $ 45,145 $ 86,662 $ -- $ -- $ -- $ 26,361
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 45,145 $ 86,662 $ -- $ -- $ -- $ 26,361
Total Per Square Foot $ 0.14 $ 1.53 $ -- $ -- $ -- $ 0.35
Total Square Feet Leased 1,597 sf 6,614 sf sf sf sf 8,211 sf
Total Tenant Lease Costs $ 15,970 $ 66,140 $ -- $ -- $ -- $ 82,110
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 15,970 $ 66,140 $ -- $ -- $ -- $ 82,110
Total Per Square Foot $ 10.00 $ 10.00 $ -- $ -- $ -- $ 10.00
DENVER, COLORADO
Weighted Average Square Footage Owned 292,895 sf 1,187,752 sf 1,187,752 sf 1,187,752 sf 1,187,752 sf 1,008,781 sf
Capital Expenditures $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
Total Square Feet Leased sf 1,497 sf sf sf sf 1,497 sf
Total Tenant Lease Costs $ -- $ 24,169 $ -- $ -- $ -- $ 24,169
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 24,169 $ -- $ -- $ -- $ 24,169
Total Per Square Foot $ -- $ 16.14 $ -- $ -- $ -- $ 16.14
SAN FRANCISCO, CALIFORNIA
Weighted Average Square Footage Owned 196,334 sf 163,815 sf sf sf sf 72,030 sf
Capital Expenditures $ 26,817 $ 21,786 $ -- $ -- $ -- $ 9,721
Minority Interest Adjustment $ 969 $ 8,490 $ -- $ -- $ -- $ 1,892
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 25,848 $ 13,296 $ -- $ -- $ -- $ 7,829
Total Per Square Foot $ 0.13 $ 0.08 $ -- $ -- $ -- $ 0.11
Total Square Feet Leased 2,472 sf 20,678 sf sf sf sf 23,150 sf
Total Tenant Lease Costs $ 55,097 $ 501,187 $ -- $ -- $ -- $ 556,284
Minority Interest Adjustment $ 18,366 $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 36,731 $ 501,187 $ -- $ -- $ -- $ 556,284
Total Per Square Foot $ 14.86 $ 24.24 $ -- $ -- $ -- $ 24.03
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
REVENUE GENERATING CAPITAL
(NON-RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MINNEAPOLIS, MINNESOTA
Weighted Average Square Footage Owned 205,272 sf 870,970 sf 870,970 sf 870,970 sf 870,970 sf 737,830 sf
Capital Expenditures $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
Total Square Feet Leased sf sf sf sf sf sf
Total Tenant Lease Costs $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
WASHINGTON, D.C. / ALEXANDRIA,
VIRGINIA
Weighted Average Square Footage Owned 244,923 sf 989,999 sf 177,548 sf sf sf 282,494 sf
Capital Expenditures $ -- $ 139,501 $ 216,984 $ -- $ -- $ 71,297
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 139,501 $ 216,984 $ -- $ -- $ 71,297
Total Per Square Foot $ -- $ 0.14 $ 1.22 $ -- $ -- $ 0.25
Total Square Feet Leased 8,288 sf 32,227 sf sf sf sf 40,515 sf
Total Tenant Lease Costs $ 159,568 $ 1,146,914 $ -- $ -- $ -- $ 1,306,482
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 159,568 $ 1,146,914 $ -- $ -- $ -- $ 1,306,482
Total Per Square Foot $ 19.25 $ 35.59 $ -- $ -- $ -- $ 32.25
SUBURBAN CHICAGO, ILLINOIS
Weighted Average Square Footage Owned 240,677 sf 923,873 sf 297,067 sf 43,136 sf sf 300,951 sf
Capital Expenditures $ -- $ -- $ 61,877 $ -- $ -- $ 12,375
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ 61,877 $ -- $ -- $ 12,375
Total Per Square Foot $ -- $ -- $ 0.21 $ -- $ -- $ 0.04
Total Square Feet Leased sf 34,637 sf 11,816 sf 1,941 sf sf 48,394 sf
Total Tenant Lease Costs $ -- $ 495,310 $ 261,538 $ 9,706 $ -- $ 766,554
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 495,310 $ 261,538 $ 9,706 $ -- $ 766,554
Total Per Square Foot $ -- $ 14.30 $ 22.13 $ 5.00 $ -- $ 15.84
SANTA MONICA/WEST LOS ANGELES,
CALIFORNIA
Weighted Average Square Footage Owned 208,457 sf 137,348 sf sf sf sf 69,161 sf
Capital Expenditures $ 18,018 $ 12,980 $ -- $ -- $ -- $ 6,200
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 18,018 $ 12,980 $ -- $ -- $ -- $ 6,200
Total Per Square Foot $ 0.09 $ 0.09 $ -- $ -- $ -- $ 0.09
Total Square Feet Leased 7,106 sf sf sf sf sf 7,106 sf
Total Tenant Lease Costs $ 288,177 $ -- $ -- $ -- $ -- $ 288,177
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 288,177 $ -- $ -- $ -- $ -- $ 288,177
Total Per Square Foot $ 40.55 $ -- $ -- $ -- $ -- $ 40.55
ORANGE COUNTY, CALIFORNIA
Weighted Average Square Footage Owned 175,040 sf 31,096 sf sf sf sf 41,227 sf
Capital Expenditures $ 897 $ -- $ -- $ -- $ -- $ 179
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 897 $ -- $ -- $ -- $ -- $ 179
Total Per Square Foot $ 0.01 $ -- $ -- $ -- $ -- $ 0.00
Total Square Feet Leased 54,308 sf 1,311 sf sf sf sf 55,619 sf
Total Tenant Lease Costs $ 1,521,367 $ 6,555 $ -- $ -- $ -- $ 1,527,922
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 1,521,367 $ 6,555 $ -- $ -- $ -- $ 1,527,922
Total Per Square Foot $ 28.01 $ 5.00 $ -- $ -- $ -- $ 27.47
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
REVENUE GENERATING CAPITAL
(NON-RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHARLOTTE, NORTH CAROLINA
Weighted Average Square Footage Owned 151,084 sf 612,728 sf 110,795 sf sf sf 174,921 sf
Capital Expenditures $ -- $ 375,043 $ -- $ -- $ -- $ 75,009
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 375,043 $ -- $ -- $ -- $ 75,009
Total Per Square Foot $ -- $ 0.61 $ -- $ -- $ -- $ 0.43
Total Square Feet Leased sf 28,587 sf sf sf sf 28,587 sf
Total Tenant Lease Costs $ -- $ 163,143 $ -- $ -- $ -- $ 163,143
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 163,143 $ -- $ -- $ -- $ 163,143
Total Per Square Foot $ -- $ 5.71 $ -- $ -- $ -- $ 5.71
ARIZONA
Weighted Average Square Footage Owned 144,471 sf 25,608 sf sf sf sf 34,016 sf
Capital Expenditures $ 5,935 $ -- $ -- $ -- $ -- $ 1,187
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 5,935 $ -- $ -- $ -- $ -- $ 1,187
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ 0.03
Total Square Feet Leased 16,977 sf 1,124 sf sf sf sf 18,101 sf
Total Tenant Lease Costs $ 223,712 $ 1,124 $ -- $ -- $ -- $ 224,836
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 223,712 $ 1,124 $ -- $ -- $ -- $ 224,836
Total Per Square Foot $ 13.18 $ 1.00 $ -- $ -- $ -- $ 12.42
SAN DIEGO, CALIFORNIA
Weighted Average Square Footage Owned 103,709 sf 18,450 sf sf sf sf 24,432 sf
Capital Expenditures $ 422 $ 422 $ -- $ -- $ -- $ 169
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 422 $ 422 $ -- $ -- $ -- $ 169
Total Per Square Foot $ 0.00 $ 0.02 $ -- $ -- $ -- $ 0.01
Total Square Feet Leased sf 5,431 sf sf sf sf 5,431 sf
Total Tenant Lease Costs $ -- $ 85,484 $ -- $ -- $ -- $ 85,484
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 85,484 $ -- $ -- $ -- $ 85,484
Total Per Square Foot $ -- $ 15.74 $ -- $ -- $ -- $ 15.74
LOS ANGELES, CALIFORNIA
Weighted Average Square Footage Owned 99,032 sf 17,689 sf sf sf sf 23,344 sf
Capital Expenditures $ 0 $ 7,960 $ -- $ -- $ -- $ 1,592
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ 7,960 $ -- $ -- $ -- $ 1,592
Total Per Square Foot $ -- $ 0.45 $ -- $ -- $ -- $ 0.07
Total Square Feet Leased 2,440 sf sf sf sf sf 2,440 sf
Total Tenant Lease Costs $ 20,994 $ -- $ -- $ -- $ -- $ 20,994
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 20,994 $ -- $ -- $ -- $ -- $ 20,994
Total Per Square Foot $ 8.60 $ -- $ -- $ -- $ -- $ 8.60
NEW YORK CITY, NEW YORK
Weighted Average Square Footage Owned 93,443 sf 378,965 sf 353,007 sf 112,526 sf sf 187,588 sf
Capital Expenditures $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
Total Square Feet Leased sf sf sf 7,115 sf sf 7,115 sf
Total Tenant Lease Costs $ -- $ -- $ -- $ 174,266 $ -- $ 174,266
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ 174,266 $ -- $ 174,266
Total Per Square Foot $ -- $ -- $ -- $ 24.49 $ -- $ 24.49
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
REVENUE GENERATING CAPITAL
(NON-RECURRING CAPITAL)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REGION 1999 YTD 1998 1997 1996 1995 TOTAL/AVERAGE
---------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONEJO VALLEY (VENTURA), CALIFORNIA
Weighted Average Square Footage Owned 57,888 sf 10,269 sf sf sf sf 13,631 sf
Capital Expenditures $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
Total Square Feet Leased sf sf sf sf sf sf
Total Tenant Lease Costs $ -- $ -- $ -- $ -- $ -- $ --
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ -- $ -- $ -- $ -- $ -- $ --
Total Per Square Foot $ -- $ -- $ -- $ -- $ -- $ --
OTHER REGIONS
Weighted Average Square Footage Owned 51,677 sf 9,168 sf sf sf sf 12,169 sf
Capital Expenditures $ 1,029 $ -- $ -- $ -- $ -- $ 206
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 1,029 $ -- $ -- $ -- $ -- $ 206
Total Per Square Foot $ 0.02 $ -- $ -- $ -- $ -- $ 0.02
Total Square Feet Leased 7,247 sf sf sf sf sf 7,247 sf
Total Tenant Lease Costs $ 125,361 $ -- $ -- $ -- $ -- $ 125,361
Minority Interest Adjustment $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------
Total Cornerstone Share $ 125,361 $ -- $ -- $ -- $ -- $ 125,361
Total Per Square Foot $ 17.30 $ -- $ -- $ -- $ -- $ 17.30
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- DEBT SCHEDULE
<PAGE>
CORNERSTONE PROPERTIES INC.
Debt Schedule
March 31, 1999
The following table sets forth certain information regarding the consolidated
debt obligations of the Company as of March 31, 1999, including mortgage
obligations relating to the Properties. All of this debt, with the exception of
the Convertible Promissory Note due 2001, is nonrecourse to the Company.
However, notwithstanding the nonrecourse indebtedness, the lender may have the
right to recover deficiencies from the Company in certain circumstances,
including fraud, misappropriation of funds and environmental liabilities.
<TABLE>
<CAPTION>
Maturity
Property Amortization Interest Rate (A) Date 3/31/99 12/31/98
- --------------------------------- ----------------- ------------------ --------------- -------------------- -----------------
<S> <C> <C> <C> <C> <C>
188 Embarcadero 25 year 6.90% Jun-99 $ 9,044,000 $ 9,135,000
One and Two Gateway 25 year 6.90% Dec-99 8,605,000 8,679,000
Seaport Centre Interest only LIBOR plus 1.50% Dec-99 58,000,000 58,000,000
The Pruneyard 24 year LIBOR plus 2.00% Mar-00 55,266,000 49,384,000
18301 Von Karman 25 year 6.90% Apr-00 10,558,000 10,647,000
Centerside II 25 year 6.90% Jun-00 13,689,000 13,818,000
Scottsdale Centre 25 year 6.90% Jul-00 7,703,000 7,745,000
TransPotomac Plaza and
Charlotte Plaza (B) Interest only 7.28% Oct-00 65,000,000 65,000,000
1600 South Main 25 year 6.90% Dec-00 5,011,000 5,038,000
Convertible Promissory
Note due 2001 (C) Interest only 8.11%max (D) Jan-01 12,926,000 12,926,000
Biltmore Lakes 25 year 6.90% Apr-01 11,411,000 11,468,000
Belmont Shores 25 year 6.90% Apr-01 9,778,000 9,839,000
700 North Brand 25 year 6.90% May-01 18,021,000 18,108,000
2677 North Main 25 year 6.90% May-01 10,711,000 10,774,000
2700 Ygnacio Valley Road 25 year 6.90% Aug-01 5,006,000 5,035,000
Westlake Spectrum 25 year 6.90% Aug-01 3,970,000 3,993,000
Park Plaza 25 year 6.90% Oct-01 4,912,000 4,940,000
Warner Park Center 25 year 6.90% Dec-01 5,184,000 5,213,000
West Wilshire Office and Medical 25 year 6.90% Jan-02 17,210,000 17,301,000
Searise Office Tower 25 year 6.90% Jan-02 11,801,000 11,864,000
Golden Bear Center 25 year 6.90% Mar-02 15,676,000 15,753,000
Exposition Centre 25 year 6.90% May-02 5,176,000 5,200,000
Bixby Ranch 25 year 6.90% May-02 20,127,000 20,243,000
Wilshire Palisades 22 year 6.70% Jul-02 29,692,000 29,902,000
120 Montgomery 24 year LIBOR plus 1.40% Nov-02 47,569,000 46,930,000
1300 South El Camino 23 year 6.90% Dec-02 3,981,000 4,007,000
125 Summer Street Interest only (E) 7.20% Jan-03 50,000,000 50,000,000
429 Santa Monica 25 year 6.90% Mar-03 10,139,000 10,176,000
Crossroads 25 year 6.90% Mar-03 7,312,000 7,339,000
Westlake Spectrum II 25 year 6.90% Mar-03 5,265,000 5,284,000
Tower 56 30 year 7.67% May-03 17,509,000 17,548,000
Two ADP Plaza Interest only 6.90% Dec-03 - (F) 13,400,000
Two Corporate Centre Interest only 6.90% Dec-03 - (F) 18,600,000
Norris Tech Center 25 year LIBOR plus 1.65% Dec-03 16,317,000 16,392,000
Peninsula Office Park 4 25 year 6.90% Feb-04 5,407,000 5,436,000
Peninsula Office
Park 1,3,5,6,8 & 9 25 year 6.90% Feb-04 55,818,000 54,806,000
110 Atrium Place 30 year 6.90% Mar-04 21,656,000 21,838,000
10 Almaden 25 year 6.90% Apr-04 33,712,000 33,885,000
Embarcadero Place 20 year 6.90% Apr-04 25,867,000 26,061,000
527 Madison Avenue and
One Lincoln Centre (B) Interest only 7.47% Oct-04 65,000,000 65,000,000
Sixty State Street 30 year 6.84% Jan-05 87,104,000 87,627,000
201 California Street 30 year 6.70% Mar-05 32,963,000 33,071,000
Island Corporate Center 30 year 6.90% Apr-05 13,273,000 13,294,000
Washington Mutual Tower Interest only 7.53% Nov-05 79,100,000 79,100,000
Norwest Center Interest only 8.74% Dec-05 110,000,000 110,000,000
Agoura Hills 25 year 6.90% Dec-05 12,270,000 12,328,000
Janss Court 30 year 6.90% Dec-05 18,634,000 18,723,000
Bayhill 4,5,6 & 7 25 year 6.90% Dec-06 58,753,000 59,071,000
66 Bovet 22 year 6.90% Apr-07 3,914,000 3,939,000
Market Square (G) and
200 Galleria (B) Interest only 7.54% Oct-07 120,000,000 120,000,000
One Norwest Center 30 year 6.90% Oct-08 98,083,000 98,252,000
Corporate 500 Centre 25 year 6.66% Nov-08 89,527,000 89,765,000
Other loans Various Various Various 498,000 597,000
------------------ --------------- -------------------- -----------------
Total Cornerstone Debt
before adjustments 7.13% (H) 6.4yrs (H) $ 1,504,148,000 $ 1,532,474,000
Adjustments:
One Post 25 year 6.90% Dec-02 17,250,000 17,250,000
120 Montgomery 24 year LIBOR plus 1.40% Nov-02 (15,840,477) (15,646,000)
Norwest Center Interest only 8.74% Dec-05 (28,050,000) (24,310,000)
------------------------------------ -------------------- -----------------
Total Cornerstone Share of Debt 7.10% (H) 6.3yrs (H) $ 1,477,507,523 $ 1,509,768,000
----------------- --------------- -------------------- -----------------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
DEBT SCHEDULE
MARCH 31, 1999
(A) The interest rate is the stated interest rate (for
Cornerstone-originated debt) or the mark to market rate at the time of
acquisition (for debt assumed as part of a property acquisition).
(B) The three notes arising from the acquisition of several properties from
PGGM are cross-collateralized, having the effect of forming a
"collateral pool" for the underlying notes.
(C) The lender, Hines, has the right to convert the note into common stock
at a conversion price of $14.30 per share. At maturity, the Company is
entitled to repay the principal of the note with common stock priced at
the lesser of $14.30 per share or the then existing share price.
(D) Lesser of 30-day LIBOR plus 0.5% or 8.11%.
(E) Interest only payments through January 1, 2001, with a 25-year
amortization schedule thereafter.
(F) On January 4, 1999, in connection with the Wilson acquisition, the
Company prepaid the notes on Two ADP Plaza and Two Corporate Centre.
(G) The collateral for this loan is a pledge of the $181.0 million first
mortgage loan on Market Square that the Company purchased from PGGM.
(H) Weighted-average interest rate and maturity of the Company's long-term
debt.
The combined aggregate amount of maturities for all long-term borrowings for
1999 through 2003 are $75,649,000, $157,226,000, $81,919,000, $103,663,000 and
$106,542,000, respectively.
REVOLVING CREDIT FACILITY
The Company has a $550.0 million Revolving Credit Facility with a syndicate of
17 banks led by Bankers Trust Company, The Chase Manhattan Bank and NationsBank
for acquisitions and general working capital purposes as well as the issuance of
letters of credit (the "Revolving Credit Facility"). The interest rate on the
facility depends on the Company's ratio of total debt to asset value (as
defined) at the time of borrowing and will be at a spread of 1.10% to 1.40% over
the applicable LIBOR or the Prime Rate at the borrower's option. The letters of
credit will be priced at the applicable Eurodollar credit spread. The Revolving
Credit Facility expires on November 3, 2001. As of March 31, 1999, $479.0
million of the facility was outstanding at a rate of approximately 6.3%. Of this
amount, approximately $250.0 million is fixed with interest rate swaps, which
effectively fixes the rate at 6.47%. In addition, at March 31, 1999, there were
three letters of credit totaling $8.15 million outstanding at a rate of 1.40%.
The Revolving Credit Facility contains certain restrictive covenants including:
(i) a limitation on the Company's dividend to 90.0% of funds from operations and
110.0% of funds available for distribution, both as defined in the agreement;
(ii) the percentage of total liabilities to total property asset value (as
defined) cannot exceed 55.0%; (iii) the ratio of adjusted EBITDA to interest
expense may not be less than 2.00 to 1.00 through July 1, 1999 and 2.25 to 1.00
thereafter; (iv) fixed charge coverage may not be less than 1.75 to 1.00; and
(v) the ratio of total property asset value (as defined) to secured indebtedness
may not be less than 2.50 to 1.00.
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- EQUITY SCHEDULE
<PAGE>
CORNERSTONE PROPERTIES INC.
EQUITY ACTIVITY SCHEDULE
AS OF MARCH 31, 1999
- --------------------------------------------------------------------------------
The following table shows the equity activity that has occurred since January 1,
1998 and the calculation of diluted Common shares and Units outstanding:
<TABLE>
<CAPTION>
ITEM DATE DESCRIPTION NUMBER OF SHARES/UNITS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
01/01/98 Beginning balance 83,191,819
01/05/98 Tower 56 residual value acquisition 307,692
02/02/98 Public secondary equity offering 14,375,000
02/17/98 Management stock grants 12,500
02/27/98 Dividend reinvestment 109,007
03/02/98 Management stock grants 19,178
04/28/98 One Memorial Drive acquisition 3,428,571
05/29/98 Dividend reinvestment 98,487
08/31/98 Dividend reinvestment 94,610
11/30/98 Dividend reinvestment 95,300
12/16/98 PGGM investment 11,594,203
12/16/98 Wilson Acquisition 14,884,417
------------
128,210,784
------------
OUTSIDE UPREIT UNITS
01/01/98 Beginning balance -
01/29/98 Corporate 500 Centre acquisition 822,794
04/28/98 One Memorial Drive acquisition 1,657,426
06/03/98 201 California Street and Wilshire Palisades acquisition 1,665,663
12/16/98 Wilson Acquisition 16,187,724
------------
20,333,607
------------
DILUTIVE ISSUES
Convertible Preferred Stock 3,030,303
Convertible Promissory Note 903,914
Dilutive effect of "in the money" options 90,655
------------
4,024,872
------------
------------
03/31/99 Total diluted common shares and units outstanding 152,569,263
------------
------------
Year to date weighted average diluted common
shares and units outstanding 152,569,263
------------
------------
Quarter to date weighted average diluted common
shares and units outstanding 152,569,263
------------
------------
</TABLE>
<PAGE>
CORNERSTONE PROPERTIES INC.
SUPPLEMENTAL INFORMATION TO
QUARTERLY EARNINGS RELEASE
- MINORITY SHARING IN CASH FLOWS AND
RESIDUAL PROCEEDS
<PAGE>
MINORITY SHARING IN CASH FLOWS AND RESIDUAL PROCEEDS
Seven of the Company's properties are held in partnerships which allow
the Company's partners to participate in the cash flows of their respective
properties. The following discussion provides the details of partner's
participation in the cash flow of each of the respective properties.
Norwest Center
Under the partnership agreement, cash flow is used first to pay
operating and capital expenditures, then debt service on the mortgage note. The
remaining cash flow is paid first to Cornerstone, as a 7% cumulative preference
return on its capital base of $92.3 million ($6,461,000), and then any remaining
cash flow is split 50% to Cornerstone and 50% to their partner, Sixth &
Marquette Limited Partnership ("S&M"). Should cash flow be insufficient to pay
the preference return ("Preference Deficit"), it will accumulate and earn
interest at 7%. Any Preference Deficit will be paid as the first priority
payment after debt service. Cash flow and earnings for the three months of 1999
were split 74.5% to Cornerstone and 25.5% to S&M. Sales proceeds from Norwest
Center will be split as follows as of March 31, 1999:
1) To Debt $110.0 million
2) To Cornerstone 92.3 million
3) To Cornerstone 9.3 million
4) To Cornerstone 1.0 million
5) To S&M 24.5 million
6) The remaining proceeds will be split 50/50 among the two partners.
Washington Mutual Tower
Under the partnership agreement, cash flow is used first to pay
operating and capital expenditures, then debt service on the mortgage note. The
remaining cash flow is paid first to Cornerstone as a 9.53% preference return on
its capital base of $47.0 million ($4,479,000); next to pay the Preference
Deficit on the second preference return (currently $10.2 million); then to
Cornerstone as an 8% second preference return on its capital base of $100.0
million ($8,000,000). Any remaining cash flow is split 50% to Cornerstone and
50% to 1212 Partnership, Cornerstone's partner. The cumulative Preference
Deficit earns interest at a rate of 8% until it is repaid. 1212 Partnership does
not currently share in the cash flow from Washington Mutual Tower. With regard
to the sale of the building, the Company will receive the first $157.2 million
of proceeds after repayment of the $79.1 million mortgage ($236.3 million in
total proceeds). Any proceeds above this amount will be split 50/50 with
Cornerstone's partners.
<PAGE>
MINORITY SHARING IN CASH FLOWS AND RESIDUAL PROCEEDS (continued)
191 Peachtree Street
Under the partnership agreement, cash flow is used first to pay
operating and capital expenditures, then debt service on the mortgage note. In
addition, the partner in the transaction, CH Associates, Ltd., will receive an
annual incentive distribution of $250,000 which Cornerstone expects it will
receive under the partnership agreement through February 28, 2000. Cornerstone
receives the remaining cash flow until such time as its cumulative undistributed
preferred return ($159.3 million as of 3/31/99) has been reimbursed. Excess cash
flow will be split 80% to Cornerstone and 20% to CH Associates, Ltd. Sales
proceeds from 191 Peachtree Street will be split as follows as of March 31,
1999:
<TABLE>
<S> <C>
1) To Debt $ 1.8 million
2) To Cornerstone (as partial holder
of the debt) $158.4 million
3) To Cornerstone for its undistributed
preferred return $ 14.3 million
4) To Cornerstone for its priority capital
contribution $145.0 million
</TABLE>
500 Boylston and 222 Berkeley Street
Distributions of cash flows and sales proceeds are shared in proportion
to Cornerstone's 91.5% partnership interest and Hines' 8.5% partnership
interest.
One Post Street, San Francisco
Distributions of cash flows and sales proceeds are shared in proportion
to Cornerstone's 50.0% interest and McKesson Corporation's 50.0% interest. This
property is accounted for using the equity method of accounting.
120 Montgomery Street, San Francisco
Distributions of cash flows and sales proceeds are shared in proportion
to Cornerstone's 66.7% partnership interest and Sansome Partners III, L.P.'s
33.3% partnership interest.
