SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM 10-K/A
Amendment No. 1 to Form 10-K
-------------------------------------
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________________ to
__________________.
Commission file number 1-8971*
RCPI TRUST
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-7087445
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Tishman Speyer Properties, L.P.
45 Rockefeller Plaza, New York, N.Y. 10111
(Address of principal executive offices) (Zip Code)
(212) 332-6535
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------ ---------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act: None
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant is $0.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2 Trust Ownership Interests as
of March 31, 1997.
Documents Incorporated by Reference
None.
- -----------------------------
* As successor in interest to Rockefeller Center Properties, Inc. (Commission
File No. 1-8971).
<PAGE>
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
RCPI TRUST
RCPI Trust, as successor in interest to Rockefeller Center Properties, Inc.,
hereby amends the following item of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as set forth below (note that the original
pagination of the Form 10-K has been retained):
Item Page
Item 8. Financial Statements and Supplementary Data 23
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
RCPI TRUST
Date: April 29, 1997 By: /s/ David Augarten
------------------
Name: David Augarten
Title: Vice President
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<S> <C>
I. Financial Statements and Reports of Public Accountants
RCPI Trust (the "Company") and Rockefeller Center Properties, Inc. Page No.
(the "Predecessor") --------
1. Reports of Independent Public Accountants
a. Arthur Andersen LLP..........................................................24
b. Ernst & Young LLP............................................................25
2. RCPI Trust (Company)
a. Balance Sheet as of December 31, 1996........................................26
b. Statement of Operations for the period from July 10, 1996 through
December 31, 1996..........................................................27
c. Statement of Changes in Owners' Equity for the period from July 10, 1996
through December 31, 1996....................................................28
d. Statement of Cash Flows for the period from July 10, 1996 through
December 31, 1996............................................................29
3. Rockefeller Center Properties, Inc. (Predecessor)
a. Balance Sheet as of December 31, 1995........................................30
b. Statements of Operations for the period from January 1, 1996 through
July 9, 1996 and for the years ended December 31, 1995 and 1994..............31
c. Statements of Stockholders' Equity for period from January 1, 1996
through July 9, 1996 and for the years ended
December 31, 1995 and 1994...................................................32
d. Statements of Cash Flows for the period from January 1, 1996
through July 9, 1996 and for the years ended
December 31, 1995 and 1994...................................................33
4. Notes to Financial Statements....................................................35
II. Financial Statement Schedules
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1996...........51
</TABLE>
All other schedules in the applicable accounting regulation of the
Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.
23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of RCPI Trust:
We have audited the accompanying balance sheet of RCPI Trust (a Delaware
business trust) as of December 31, 1996, and the related statements of
operations, changes in owners' equity and cash flows for the period from July
10, 1996 (commencement of operations) through December 31, 1996. We have also
audited the statements of operations, changes in stockholders' equity and cash
flows of Rockefeller Center Properties, Inc., as more fully described in Note 1,
for the period from January 1, 1996 through July 9, 1996. These financial
statements, and the schedule referred to below, are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RCPI Trust as of December 31,
1996, and the results of its operations and its cash flows for the period from
July 10, 1996 (commencement of operations) through December 31, 1996 and the
results of operations, changes in stockholders' equity and cash flows for
Rockefeller Center Properties, Inc. for the period January 1, 1996 through July
9, 1996, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements, described above, taken as a whole. The schedule listed in
the accompanying index to financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
New York, New York
February 10, 1997 (except with
respect to the matters discussed
in Note 14 as to which the dates
are March 3, 1997 and March
31, 1997, respectively)
24
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Rockefeller Center Properties, Inc.
We have audited the accompanying balance sheet of Rockefeller Center Properties,
Inc. (the "Company") as of December 31, 1995 and the related statements of
operations, changes in stockholders' equity and cash flows for each of the two
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rockefeller Center Properties,
Inc. at December 31, 1995, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern as more fully described in Note 1 to the
Company's financial statements. The borrowers (collectively, the "Borrower")
under the mortgage loan, the Company's principal asset, filed for protection
under Chapter 11 of the Federal Bankruptcy Code on May 11, 1995. As a result of
these filings and until such time as the Chapter 11 cases have been brought to a
conclusion, the Company does not expect to receive interest payments from the
Borrower, and the Company's ability to enforce its rights under the mortgage
loan has been and will be stayed unless and until the Bankruptcy Court issues an
order permitting the Company to take steps to enforce such rights. The Company
cannot predict either the time it will take to conclude these proceedings or
their ultimate outcome. On November 7, 1995, the Company executed and delivered
an Agreement and Plan of Merger (as amended as of February 12, 1996, the "Merger
Agreement") with an investor group. If the transactions contemplated by the
Merger Agreement are consummated, the stockholders will receive $8.00 in cash
for each of their shares of the Company's Common Stock. Also on November 7,
1995, the Company entered into an agreement that would allow the Company to make
a $200 million publicly registered rights offering should the stockholders not
approve the Merger Agreement. The uncertainties created by the bankruptcy of the
Borrower raise substantial doubt about the Company's ability to continue as a
going concern if the Merger Agreement is not approved by the Company's
stockholders or if the transactions contemplated by the Merger Agreement are not
consummated. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ ERNST & YOUNG LLP
New York, New York
February 29, 1996
25
<PAGE>
RCPI TRUST
BALANCE SHEET
AS OF DECEMBER 31, 1996
($ in thousands)
ASSETS
Real Estate:
Land $158,149
Buildings and improvements 596,880
Tenant improvements 14,405
Furniture and fixtures 3,911
--------
773,345
Less: Accumulated depreciation 6,718
--------
766,627
Cash and cash equivalents 28,765
Restricted cash 10,027
Accounts receivable 20,337
Deferred costs, net of accumulated amortization of $329 5,486
Accrued rent 8,430
--------
Total Assets $839,672
========
LIABILITIES AND OWNERS' EQUITY
Liabilities:
Zero coupon convertible debentures, net of unamortized
discount of $224,030 $362,155
14% debentures (includes premium of $26,155) 101,155
Floating rate notes 10,000
Accrued interest payable 7,234
Accounts payable and accrued expenses 19,383
Tenant security deposits payable 7,279
--------
Total Liabilities 507,206
Contingencies
Owners' Equity 332,466
--------
Total Liabilities and Owners' Equity $839,672
========
See notes to financial statements
26
<PAGE>
RCPI TRUST
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 10, 1996 (COMMENCEMENT
OF OPERATIONS) THROUGH DECEMBER 31, 1996
($ in thousands)
Revenues:
Base rental $ 76,496
Escalations and percentage rents 6,562
Interest and other income 5,430
--------
Total revenues 88,488
--------
Expenses:
Interest 30,508
Real estate taxes 15,585
Payroll and benefits 10,375
Repairs, maintenance and supplies 8,137
Utilities 6,539
Cleaning 7,253
Professional fees 8,735
Insurance 1,451
Management and accounting fees 1,424
General and administration 1,297
Tenant buyout costs 1,779
Depreciation and amortization 7,047
--------
Total expenses 100,130
--------
Net Loss $(11,642)
========
See notes to financial statements
27
<PAGE>
RCPI TRUST
STATEMENT OF CHANGES IN OWNERS' EQUITY
FOR THE PERIOD FROM JULY 10, 1996 (COMMENCEMENT
OF OPERATIONS) THROUGH DECEMBER 31, 1996
($ in thousands)
<TABLE>
<CAPTION>
Balance Balance
Percentage July 10, 1996 December 31,
Interest 1996 Activity 1996
-------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Rockefeller Center Properties, Inc.:
Initial capital contribution 50% $172,054 $ - $172,054
Net loss - (5,821) (5,821)
-------- -------- --------
Total 172,054 (5,821) 166,233
-------- -------- --------
RCPI Investors LLC:
Initial capital contribution 50% 172,054 - 172,054
Net loss - (5,821) (5,821)
-------- -------- --------
Total 172,054 (5,821) 166,233
-------- -------- --------
Total Owners' Equity $344,108 $(11,642) $332,466
======== ======== ========
</TABLE>
See notes to financial statements
28
<PAGE>
RCPI TRUST
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 10, 1996 (COMMENCEMENT
OF OPERATIONS) THROUGH DECEMBER 31, 1996
($ in thousands)
Cash Flows from Operating Activities:
Net loss $ (11,642)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of original issue discount and premium 19,263
Depreciation and amortization 7,047
Increase in restricted cash (3,260)
Increase in accounts receivable (5,138)
Decrease in prepaid expenses 18,169
Increase in accrued rent (8,430)
Decrease in accounts payable and accrued expenses (3,959)
Decrease in accrued interest payable (19,047)
---------
Net cash used in operating activities (6,997)
---------
Cash Flows from Investing Activities:
Repayment on mortgage loan receivable 440,000
Cash acquired as part of Transfer 2,800
Additions to buildings and improvements (2,728)
Additions to tenant improvements (14,405)
Additions to deferred costs (5,815)
---------
Net cash provided by investing activities 419,852
---------
Cash Flows from Financing Activities:
Payment of current coupon debentures (213,170)
Payment of floating rate notes (107,891)
Payment of GSMC facility (63,029)
---------
Net cash used in financing activities (384,090)
---------
Increase in cash and cash equivalents 28,765
Cash and cash equivalents, at July 10, 1996 -
---------
Cash and cash equivalents, at December 31, 1996 $ 28,765
=========
See notes to financial statements
29
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
(Predecessor)
BALANCE SHEET
AS OF DECEMBER 31, 1995
($ in thousands)
ASSETS
Loan receivable and interest receivable,
net of valuation reserve of $74,000 and
net of unamortized discount of $34,906 $1,176,220
Deferred debt issuance costs, net 12,421
Cash and cash equivalents 1,298
Other assets 837
----------
Total Assets $1,190,776
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current coupon convertible debentures due 2000 $ 213,170
Zero coupon convertible debentures due 2000, net of
unamortized discount of $225,902 360,283
Floating rate notes due 2000 116,296
14% debentures due 2007, net of unamortized discount of $4,282 70,718
GSMC loan 10,200
Accrued interest payable 61,914
Stock appreciation rights 13,406
Accounts payable and accrued expenses 3,027
Accrued transaction costs and expenses 25,163
----------
Total Liabilities 874,177
----------
Contingencies
Stockholders' Equity:
Common stock, $.01 par value:
150,000,000 shares authorized;
38,260,704 shares issued and outstanding 383
Additional paid-in capital 707,545
Distributions to stockholders in excess of net income (391,329)
----------
Total Stockholders' Equity 316,599
----------
Total Liabilities and Stockholders' Equity $1,190,776
==========
See notes to financial statements.
30
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
(Predecessor)
STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
<TABLE>
<CAPTION>
For the period from Years Ended
January 1, 1996 through December 31,
July 9, 1996 1995 1994
----------------------- ---- -----
<S> <C> <C> <C>
Revenues:
Loan interest income $ - $ 20,339 $108,732
Other income 38 1,131 553
--------- --------- --------
38 21,470 109,285
--------- --------- --------
Expenses:
Interest expense:
Current coupon convertible debentures 11,642 22,979 22,478
Zero coupon convertible debentures 18,985 33,420 30,320
14% debentures 5,790 10,973 87
Floating rate notes 8,013 17,858 166
GSMC Facility 2,554 153 -
Commercial paper and other - 180 24,450
--------- --------- --------
46,984 85,563 77,501
General and administrative 4,774 11,267 4,170
Amortization of deferred debt issuance costs 12,421 9,258 705
Increase in liability for stock appreciation rights 2,041 10,795 -
Effects of the execution and delivery of the
merger agreement (8,232) 99,163 -
Expenses related to the March 25, 1996 special
meeting of stockholders 422 553 -
Cost of swap terminations related
to debt extinguishment - - 9,855
Cost of evaluating alternative financing - - 1,942
--------- --------- --------
58,410 216,599 94,173
--------- --------- --------
(Loss) income before non-recurring income (58,372) (195,129) 15,112
Non-recurring income (gain on sales of portfolio
securities) - - 31
--------- --------- --------
Net (loss) income ($ 58,372) ($ 195,129) $ 15,143
========= ========= ========
Net (loss) income per share ($ 1.53) ($ 5.10) $ 0.40
========= ========= ========
</TABLE>
See notes to financial statements.
31
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
(Predecessor)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
($ in thousands, except per share data)
FOR THE PERIOD FROM JANUARY 1, 1996 THROUGH JULY 9, 1996 AND FOR
THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Distributions
Additional to stockholders Total
Common Stock paid-in in excess of stockholders'
Shares Amount capital net income equity
------ ------ ---------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 38,260,704 $383 $705,517 ($180,735) $525,165
Issuance of warrants 2,028 2,028
Net income 15,143 15,143
Distributions to
stockholders
($0.65 per share) (24,869) (24,869)
----------- ---- -------- --------- --------
Balance at
December 31, 1994 38,260,704 383 707,545 (190,461) 517,467
Net loss (195,129) (195,129)
Distributions to
stockholders
($0.15 per share) (5,739) (5,739)
----------- ---- -------- --------- --------
Balance at
December 31, 1995 38,260,704 383 707,545 (391,329) 316,599
Net loss (from January 1,
through July 9, 1996) (58,372) (58,372)
----------- ---- -------- --------- --------
Balance at July 9, 1996 38,260,704 $383 $707,545 ($449,701) $258,227
=========== ==== ======== ========= ========
</TABLE>
See notes to financial statements.
32
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
(Predecessor)
STATEMENTS OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
For the period from Years Ended
January 1, 1996 through December 31,
July 9, 1996 1995 1994
-------------------------- -------- ----------
<S> <C> <C> <C>
Cash flow from operating activities:
Loan interest received $ - $ 20,339 $ 105,495
Other interest income received 38 1,131 998
Interest paid on floating rate notes (7,626) (17,114) -
Interest paid on 14% debentures (5,308) (9,917) -
Interest paid on commercial paper and other - (198) (27,020)
Interest paid on current coupon convertible debentures (27,712) - (17,053)
Payments for accounts payable, accrued expenses
and other assets (13,463) (11,947) (5,222)
-------- -------- ---------
Net cash (used in) provided by operating activities (54,071) (17,706) 57,198
-------- -------- ---------
Cash flows from investing activities:
Draw downs on letter of credit support - 50,000 -
Portfolio sales, maturities and redemptions - - 14,331
-------- -------- ---------
Net cash provided by investing activities - 50,000 14,331
-------- -------- ---------
Cash flows from financing activities:
Dividends paid - (5,739) (24,869)
Floating rate note principal repayment - (33,704) -
Interim financing cost - (4,650) -
Net proceeds from GSMC loan 52,829 10,200 -
Proceeds from issuance of floating rate notes,
14% debentures, warrants and SARs net of
issuance costs - - 212,522
Maturities of commercial paper, net - - (246,682)
Payments to terminate interest rate swaps - - (9,855)
-------- -------- ---------
Net cash provided by (used in) financing activities 52,829 (33,893) (68,884)
-------- -------- ---------
Net (decrease) increase in cash and cash equivalents (1,242) (1,599) 2,645
Cash and cash equivalents at the beginning of the year 1,298 2,897 252
-------- -------- ---------
Cash and cash equivalents at the end of the year $ 56 $ 1,298 $ 2,897
======== ======== =========
</TABLE>
(Continued on 34)
See notes to financial statements.
33
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
(Predecessor)
STATEMENTS OF CASH FLOWS (CONT'D)
($ in thousands)
RECONCILIATION OF NET (LOSS) INCOME TO NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES:
<TABLE>
<CAPTION>
For the period from Years Ended
January 1, 1996 through December 31,
July 9, 1996 1995 1994
---------------------- --------- --------
<S> <C> <C> <C>
Net (loss) income ($58,372) ($195,129) $15,143
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Effects of the execution and delivery of the
merger agreement - 99,163 -
Gain on sale of portfolio securities - - (31)
Cost of swap terminations related to
debt extinguishment - - 9,855
Amortization of discount:
Zero coupon convertible debentures 18,985 33,420 30,320
14% debentures 188 357 -
Decrease in deferred debt issuance costs
and other costs, net 12,280 8,270 1,130
Increase in interest receivable and
amortization of loan receivable discount, net - - (2,793)
(Decrease) increase in accrued interest payable and amortized
unpaid discount on commercial paper (12,836) 24,576 3,135
Increase in stock appreciation rights liability 2,041 10,795 -
(Decrease) increase in accounts payable and
accrued expenses (16,357) 842 439
-------- -------- --------
Net cash (used in) provided by operating activities ($54,071) ($ 17,706) $57,198
======== ======== ========
</TABLE>
See notes to financial statements.
34
<PAGE>
RCPI TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND PURPOSE
RCPI Trust (the "Company") was established in the State of Delaware on
March 26, 1996 as a Delaware business trust. The Company was organized
pursuant to the Trust Agreement dated July 10, 1996 (the "Trust Agreement")
between Rockefeller Center Properties, Inc. (the "Predecessor"), a
wholly-owned subsidiary of RCPI Holdings, Inc. ("Holdings") and RCPI
Investors LLC ("LLC"), each owning a 50% undivided beneficial interest.
The primary purpose of the Company is to acquire, manage and operate the
landmarked buildings and public space known as Rockefeller Center (the
"Property") and to be successor in interest to the Predecessor.
The Predecessor was incorporated in Delaware on July 17, 1985. The
Predecessor qualifies and has elected to be treated, for Federal income tax
reporting purposes, as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"). The Predecessor was
originally formed to permit public investment in two convertible,
participating mortgages on the Property. From the proceeds of its offering
of common stock (the "Common Stock") and the offerings of its Current
Coupon Convertible Debentures ("Current Coupons") due December 31, 2000 and
Zero Coupon Convertible Debentures ("Zero Coupons") due December 31, 2000
(collectively, the "Convertible Debentures"), the Predecessor made a $1.3
billion convertible, participating mortgage loan (the "Mortgage Loan") to
two partnerships, Rockefeller Center Properties and RCP Associates
(collectively, the "Previous Owners"). The partners of the Previous Owners
were Rockefeller Group, Inc. ("RGI") and Radio City Music Hall Productions,
Inc. ("RCMHP"), a wholly owned subsidiary of RGI. Mitsubishi Estate
Company, Ltd. controlled an 80% equity interest in RGI, and Rockefeller
Family interests held the remaining 20%.
On July 10, 1996, pursuant to the Merger Agreement (as described below),
Holdings purchased all the outstanding Common Stock of the Predecessor with
approximately $172 million of its own equity and approximately $172 million
obtained through a note payable to LLC. The note payable was then
transferred to the Predecessor prior to the transfer of all the
Predecessor's assets and liabilities to the Company in exchange for a 50%
undivided beneficial ownership interest. At the same time, LLC contributed
its note receivable of $172 million to the Company which was in exchange
for a 50% undivided beneficial ownership interest.
Prior to July 10, 1996, the Company's activities were limited to
organizational matters.
Merger Agreement
Pursuant to an Agreement and Plan of Merger dated November 7, 1995, (the
"Merger Agreement"), entered into between the Predecessor and a group of
investors (the "Investor Group") the members of which are Exor Group S.A.,
Prometheus Investors, L.L.C., Rockprop, L.L.C., Troutlet Investments
Corporation, Gribble Investments (Tortola) BVI, Inc., Weevil Investments
(Tortola) BVI, Inc. and Whitehall Street Real Estate Limited Partnership V
("Whitehall"), RCPI Merger Inc., a wholly owned subsidiary of Holdings, was
merged (the "Merger") with and into the Predecessor. Consequently, the
Predecessor became a subsidiary of Holdings, a Delaware corporation
controlled by the Investor Group.
The Merger Agreement was approved by the stockholders of the Predecessor on
March 25, 1996 and became effective on July 10, 1996 (the "Effective
Date"). Pursuant to the Merger, each share of the Predecessor's Common
Stock outstanding as of the Effective Date (other than (i) shares of Common
Stock held by the Predecessor or any of its subsidiaries, (ii) shares of
Common Stock held by Holdings or any of its subsidiaries
35
<PAGE>
(including RCPI Merger Inc.) and (iii) any shares of Common Stock held by
a stockholder who was entitled to demand, and who properly demanded and has
not withdrawn such demand, appraisal for such shares in accordance with
Section 262 of the Delaware General Corporation Law) was converted into the
right to receive $8.00 in cash, without interest thereon. As of the
Effective Date, the Common Stock of the Predecessor was held by Holdings
and the Warrants and Stock Appreciation Rights (see Note 6), previously
held by Whitehall were contributed through Holdings to the Predecessor and
canceled. Thereafter, on the Effective Date, the Predecessor transferred
substantially all of its assets (including the Mortgage Loan) and
liabilities to the Company and the Company became the successor to the
Predecessor under the Indenture governing the Convertible Debentures (see
Note 6).
Borrower's Chapter 11 Plan
On May 11, 1995, the Previous Owners filed for protection under Chapter 11
of the Federal Bankruptcy Code in the United States Bankruptcy Court in the
Southern District of New York. The Previous Owners and their partners filed
a Chapter 11 reorganization plan (the "Chapter 11 Plan") that contemplated
ownership of the Property being turned over to the Predecessor or its
designee upon consummation of the Chapter 11 Plan. Pursuant to the order of
the Bankruptcy Court, the Chapter 11 Plan was confirmed on May 29, 1996,
and became effective on July 17, 1996, upon the transfer of the Property by
the Previous Owners to the Company in satisfaction of the Mortgage Loan
(the "Transfer").
NBC Sale
Pursuant to the Agreement dated April 23, 1996, among the Investors Group,
General Electric Company ("GE"), National Broadcasting Company, Inc.
("NBC") and NBC Trust No. 1996A ("NBC Trust"), on July 17, 1996,
immediately preceding the transfer of the Property, the Previous Owners
sold to GE, NBC and NBC Trust (the "NBC Sale"), interests in certain
buildings in the Property (the "NBC Space") previously leased by GE or its
affiliates, including NBC. Pursuant to the Chapter 11 Plan, proceeds of
$440 million from the NBC Sale were paid directly to the Company reducing
the outstanding Mortgage Loan. Goldman Sachs Mortgage Company ("GSMC"), an
affiliate of Whitehall, was paid $4.4 million by the Company in connection
with securing the proceeds of the NBC Sale as a partial repayment of the
Mortgage Loan. Upon satisfaction of the Mortgage Loan, this fee was
expensed in the Company's accompanying statement of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles ("GAAP"). 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. Actual results could differ from
those estimates.
The accompanying financial statements present the Company's balance sheet,
as successor to the Predecessor, as of December 31, 1996 and the results of
operations, changes in owners' equity and cash flows for the period from
July 10, 1996 through December 31, 1996. The accompanying financial
statements also present the Predecessor's balance sheet as of December 31,
1995 and the results of operations, changes in stockholders' equity and
cash flows for the period from January 1, 1996 through July 9, 1996 and for
the years ended December 31, 1995 and 1994. Pro forma results of operations
for the Company, as if the acquisition of the Property and the NBC Sale had
occurred as of January 1, 1995, are presented in Note 13 to the financial
statements.
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The Merger was accounted for by the Predecessor under the purchase
accounting method whereby the purchase price was allocated among the assets
acquired and liabilities assumed based on their respective fair market
values on July 10, 1996. These assets and liabilities were then transferred
down to the Company on the same day.
The Transfer on July 17, 1996 was also accounted for under the purchase
method whereby the Company recorded the value of the assets and liabilities
received from the Previous Owners based on their respective fair market
values as of that date.
Real Estate
Buildings and improvements are carried at cost and depreciated using the
straight-line method over their estimated useful lives of forty years.
Significant renovations or improvements which extend the economic useful
life of the assets are capitalized.
The Company evaluates the carrying value of the Property based on the
requirements of the Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long Lived Assets". As of December 31,
1996, there was no impairment in the value of the Property.
Tenant improvements are depreciated over the terms of the respective
leases. Furniture, fixtures and equipment are depreciated using the
straight-line method over their expected useful lives of five to ten years.
Expenditures for maintenance and repairs are expensed as incurred.
Restricted Cash
On July 17, 1996, the Company entered into a Collateral Agreement with
Chase Manhattan Bank, pursuant to certain tenant lease agreements. The
Collateral Agreement establishes five letters of credit, as defined, in the
aggregate amount of approximately $10.4 million. As of December 31, 1996,
three letters of credit remained outstanding and the restricted cash
balance in the Company's cash collateral account was approximately $2.7
million.
The Company also maintains tenant security deposits in a restricted cash
account. At December 31, 1996, the balance in the restricted cash account
for tenant security deposits was approximately $7.3 million.
Deferred Costs
Deferred costs include costs incurred in the successful negotiation of
leases, including brokerage and legal and are being amortized on a
straight-line basis over the terms of the respective leases. Deferred costs
also include costs incurred in connection with the formation of the Company
and are being amortized over a period of five years.
Debt issuance costs include fees and costs incurred by the Predecessor to
obtain long-term financing, and were amortized over the terms of the
respective loans on a basis which approximated the interest method. The
Predecessor had unamortized deferred debt issuance costs related to their
outstanding Convertible Debentures, Floating Rate Notes and 14% Debentures
as of December 31, 1995 of approximately $3.5 million, $5.8 million and
$3.1 million, respectively. On July 9, 1996, the Predecessor fully
amortized the remaining deferred debt issuance costs due to the Merger (see
Note 1).
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Revenue Recognition
Base rental revenue is reported on a straight-line basis over the terms of
the respective leases. Differences between base rental revenue and
contractual amounts are recorded in the accompanying balance sheet as
accrued rent. The impact of the straight-line adjustment increased base
rental revenues for the Company by approximately $8.4 million for the
period ending December 31, 1996. Escalations and percentage rents, which
are provided for in the leases, are recognized as income when earned and
their amounts can be reasonably estimated.
Statements of Cash Flows
The statement of cash flows for the period ending December 31, 1996 is
presented in accordance with the indirect method. The statements of cash
flows for the period from January 1, 1996 through July 9, 1996 and for the
years ended December 31, 1995 and 1996 are presented in accordance with
the direct method.
The Company and the Predecessor consider all highly liquid assets with
original maturities of three months or less to be cash equivalents.
Interest paid by the Company on its debt obligations was approximately
$30.3 million for the period ending December 31, 1996.
On July 10, 1996, pursuant to the Merger Agreement, the Predecessor
transferred all of its assets (including the Mortgage Loan) totaling
approximately $1.220 billion and liabilities (including the note payable
to LLC of approximately $172 million) totaling approximately $1.048
billion to the Company in exchange for its 50% undivided beneficial
ownership interest. Simultaneously, LLC contributed its note receivable of
$172 million for its 50% undivided beneficial ownership interest. These
transactions are considered non cash investing and financing activities.
On July 17, 1996, the Company obtained title to the Property, subsequent
to the NBC Sale, and certain other assets (net of cash acquired of
approximately $2.8 million) totaling approximately $795.4 million and
assumed liabilities totaling approximately $18.8 million in full
satisfaction of the Mortgage Loan. This transaction is considered a non
cash investing activity.
3. THE PROPERTY
Rockefeller Center
The Property consists of twelve landmarked buildings and public space
located in midtown Manhattan, New York City. The Company owns the fee
interest in the entire Property, except for the NBC Space and the land
underlying a portion of the building located at 600 Fifth Avenue which is
subject to a ground lease. The ground lease held by The Minister, Elders
and Deacons of the Reformed Protestant Dutch Church of the City of New
York (the "Church Lease") provides for an annual rent of $650,000 through
the year 2000. Thereafter, the Church Lease provides for three renewal
periods of 21 years each at annual rents of 6%, 7% and 8%, respectively,
of the value of the land (exclusive of improvements and unencumbered by
the Church Lease) appraised for its highest and best use, determined at
the beginning of each such renewal term. The ground rent expense is
included in general and administration in the accompanying statement of
operations.
At December 31, 1996, approximately 4.9 million square feet representing
approximately 83% of total rentable square feet was leased to tenants
under operating leases. Of the total rentable square feet, approximately
23% or 1.4 million square feet is under lease to six tenants in the
financial services, legal or publishing industry. These leases are
scheduled to expire in years 2000 through 2014.
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Future Minimum Rentals
Future minimum rentals to be received under non-cancelable tenant leases
at December 31, 1996 are as follows:
($ in Thousands)
1997 $154,195
1998 145,620
1999 141,578
2000 135,939
2001 127,231
Thereafter 922,069
The Rockefeller Center Tower Condominium
On July 17, 1996, in connection with the NBC Sale, NBC purchased 53.75% of
the office condominium units within 30 Rockefeller Plaza, 1250 Avenue of
the Americas and the Studio Building (collectively known as the
"Condominium Buildings"). The Company amended and restated the Declaration
of The Rockefeller Tower Condominium (the "Condominium") to establish the
ownership rights of the office condominium units between NBC and the
Company. The purpose of the Condominium is to operate and maintain the
Common Elements, as defined in the Operation, Maintenance and Reciprocal
Easement Agreement ("REA") and the Unit Owners Agreement ("UOA"). The
Board, as defined, of the Condominium consists of three members appointed
by the Company and two members appointed by NBC. The Executive Committee,
as defined, within the Board consists of the three members appointed by
the Company. On behalf of the Condominium, the Company is responsible for
determining and collecting all costs pursuant to the REA and UOA
(collectively the "Shared Costs").
For financial reporting purposes, the Company's portion of Shared Costs is
allocated to the respective expense accounts based on the REA and UOA in
the accompanying statement of operations. The following represents the
summary of Shared Costs for the period ending December 31, 1996:
The Rockefeller Center Tower Condominium
Summary of Shared Costs
($ in thousands)
(Unaudited)
Payroll and benefits $ 4,082
Repairs, maintenance and supplies 3,100
Utilities 3,085
Cleaning 2,657
General and administration 2,093
Management and accounting fees 668
--------
Shared Costs, as defined $ 15,685
========
Shared Costs, NBC $ 5,645
Shared Costs, the Company 10,040
--------
$ 15,685
========
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RCP Associates
Effective July 17, 1996, the Company and Rock-Around-The-Block, Inc.
("Rock Block"), an affiliate of the Previous Owner, entered into the
Amended and Restated Agreement of Limited Partnership of RCP Associates
("RCPA"). The Company holds a 45% general partnership interest and Rock
Block holds a 55% limited partnership interest. The purpose of RCPA is to
act as landlord under the Amended and Restated Ground Lease (the "RCPA
Ground Lease"), whereas the Company acts as tenant. The RCPA Ground Lease
has a 200 year term expiring in the year 2196. The net annual ground rent
charged to the Company is $1. Upon commencement of the RCPA Ground Lease,
the Company paid $200 to RCPA in order to satisfy the net annual ground
rent over the term of the lease. The RCPA Ground Lease covers the
underlying land of certain buildings at the Property. Pursuant to the RCPA
Ground Lease, at any time after the Transfer Date, as defined, the Company
shall have the right to purchase for $1 the fee interest of RCPA in the
Property.
As described in the RCPA Partnership Agreement and RCPA Ground Lease, the
Company has the right to develop additional floor area in excess of the
floor area presently constructed at the Property. These excess development
air rights may be transferred to other properties or, with the approval of
the New York City Landmarks Preservation Commission, used to construct
additional floor area over certain buildings at the Property.
4. MORTGAGE LOAN AND INTEREST INCOME
The Mortgage Loan, which was issued in the original face amount of $1.3
billion, was made pursuant to a Mortgage Loan Agreement between the
Predecessor and the Previous Owners on September 19, 1985 (as amended, the
"Mortgage Loan Agreement"), and was evidenced by two notes. Following the
Previous Owners' failure to make the interest payment due on May 31, 1995,
the Predecessor drew down the full amount available under the $50 million
of letters of credit which supported, among other things, payment of Base
Interest, as defined, on the Mortgage Loan. Due to the significant
uncertainties caused by the filing of the Chapter 11 Plan and solely for
accounting purposes, this $50 million was applied to reduce the carrying
value of the Mortgage Loan to $1.25 billion. Subsequent to the Previous
Owners' Chapter 11 Plan filing and prior to the execution and delivery of
the Merger Agreement, the Predecessor had based the value assigned to the
Property and hence to the Mortgage Loan on an independent appraisal as of
December 31, 1994, which was supported by a concurring review. The terms
of the Merger Agreement indicated that the market value of the Property
was less than its carrying value. As such, the Predecessor further reduced
the carrying value of the Mortgage Loan by $74 million as of December 31,
1995. The impact of the writedown is included on the Predecessor's
statement of operations as a component of "effects of the execution and
delivery of the merger agreement", which reflects the economics of the
transactions contemplated by the Merger Agreement.
The Predecessor limited recognition of income on the Mortgage Loan for the
year ended December 31, 1995 and the period from January 1, 1996 through
July 9, 1996 to the cash actually received from the Previous Owners. The
Company continued this income recognition policy of the Predecessor from
the date it received the Mortgage Loan (July 10, 1996) from the
Predecessor to the date it acquired the Property (July 17, 1996) from the
Previous Owners in full satisfaction of the Mortgage Loan.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
In assessing the fair value of financial instruments, at December 31, 1996
and 1995, the Company and the Predecessor, respectively, have used a
variety of methods and assumptions which are based on estimates of market
conditions and risks existing at the time. In cases where quoted market
prices are not available, fair values are based on estimates using present
value and other techniques. Such techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. Derived fair value estimates cannot be substantiated by
comparison to independent markets and may not reflect the values that
could be realized in any immediate settlement of the instrument or
otherwise. The aggregate fair value amounts may not necessarily represent
the underlying value of the Company or the Predecessor.
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The following methods and assumptions were used by the Company and the
Predecessor in estimating their fair value disclosures for financial
instruments:
Cash and cash equivalents
The carrying amounts of cash and cash equivalents approximate their fair
value.
Debt
The fair values of the Zero Coupons and Current Coupons are estimated
using quoted market prices. The fair value of all other debt instruments
are estimated using discount cash flow analysis, based on incremental
borrowing rates currently available to the Company or the Predecessor for
debt with similar terms and maturity.
As of December 31, 1996 and 1995, the estimated fair value of the Zero
Coupons was approximately $373 million and $333 million, respectively, as
compared to its carrying amount of approximately $362 million and $360
million, respectively. As of December 31, 1995, the estimated fair value
of the Current Coupons was approximately $235 million, as compared to its
carrying amount of approximately $213 million. As of December 31, 1996 and
1995, the carrying values of all other debt instruments approximated their
estimated fair values.
Off-balance-sheet financial instruments
Fair values for the Predecessor's off-balance-sheet financial instruments
(interest rate swaps) were based on market quotes. The Predecessor used
interest rate swaps to manage interest rate risk on a portion of its
floating rate debt.
6. DEBT
Convertible Debentures
The Convertible Debentures were issued pursuant to an Indenture, dated as
of September 15, 1985 (as amended, the "Indenture"), between the
Predecessor and Manufacturers Hanover Trust Company (now the United States
Trust Company) as Trustee. The Convertible Debentures were convertible
into shares of Common Stock of the Predecessor on the maturity date,
December 31, 2000 and upon certain other events. On July 10, 1996,
pursuant to the terms of the Indenture, the Indenture was amended in
connection with the Merger to provide that the holder of a Convertible
Debenture shall, after the Effective Date and only at such times as may be
provided by the terms and conditions of the Indenture and such Convertible
Debenture, have the right to convert such Convertible Debenture only into
cash in an amount equal to eight dollars ($8.00) in respect of each share
of Common Stock of the Predecessor into which such Convertible Debenture
could otherwise have been converted at the time of conversion pursuant to
the terms and conditions of the Indenture and such Convertible Debenture.
At such time, the Company became the successor to the Predecessor under
the amended Indenture.
Upon maturity, the Convertible Debentures are also exchangeable into
nonconvertible floating rate notes, at the holder's option. In the event a
holder of a Convertible Debenture fails to timely surrender such
Convertible Debenture for conversion or exchange, such holder shall be
deemed to have elected to exchange such Convertible Debenture, unless the
holders of 90% of the aggregate principal amount of such series of
Convertible Debentures have elected to convert their Convertible
Debentures, in which case such holder shall be deemed to have elected to
convert such Convertible Debenture. After exchange, the floating rate
notes would mature on December 31, 2007 and, would be prepayable anytime
at the Company's option, at par. The notes will bear interest at the
three-month London Interbank Offering Rate ("LIBOR") plus 1/4% or such
greater spread (not in excess of 1%) as would, in the opinion of a major
international investment bank selected by the Company, cause such notes to
trade at par.
Prior to 1994, the Predecessor had repurchased and retired 36.4% of the
original principal amount of the Current Coupons and 38.4% of the face
amount of the Zero Coupons. The Predecessor's repurchase of its
Convertible Debentures was initially funded through floating rate
short-term unsecured bank loans which were later fully repaid when the
Predecessor initiated a commercial paper program. The commercial paper
borrowings were fully repaid in 1994 with proceeds from sales of the
Predecessor's portfolio securities, operating cash flow and the issuance
of 14% Debentures and Floating Rate Notes (see below).
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Interest expense recognized by the Predecessor on the Convertible
Debentures was based on the average yields to the maturity date. The
average yields were computed (using the interest method with semiannual
compounding) by (1) combining the differing coupon rates on the Current
Coupons and (2) amortizing the original issue discount related to the Zero
Coupons. The resulting effective annual interest rates were 9.23% and
10.23% through the Effective Date for the Current Coupons and Zero
Coupons, respectively. Upon consummation of the Merger, the carrying value
of the Zero Coupons were adjusted by the Company to reflect the fair
market value using an imputed interest rate of 12.10%. The face amount of
the Zero Coupons is approximately $586.2 million and, pursuant to the
Amended Indenture, are secured by the Property.
The Current Coupons bore interest from the date of issuance until December
31, 1994 at the rate of 8% per annum, and thereafter at the rate of 13%
per annum payable annually on December 31 of each year. On August 28,
1996, the Current Coupons were redeemed at the principal amount of
$213,170,000 plus accrued interest.
Interest expense recorded by the Company for the Zero Coupons and Current
Coupons was approximately $19.9 million and $3.7 million, respectively,
for the period from July 10, 1996 through December 31, 1996.
GSMC Facility
Pursuant to a Loan Agreement dated December 18, 1994, between the
Predecessor and GSMC (as Agent and as Lender), the Predecessor issued
Floating Rate Notes totaling $150 million. The Predecessor made mandatory
principal payments on the Floating Rate Notes of approximately $33.7
million, which reduced the principal balance to approximately $116.3
million prior to the Effective Date. On July 17, 1996, a total of
approximately $106.3 million of the outstanding principal plus accrued
interest was prepaid by the Company, including a prepayment penalty of
approximately $1.6 million.
Pursuant to the Amended and Restated Loan Agreement (the "GSMC Facility")
dated July 17, 1996, the Company was named as successor in interest to the
Predecessor. The GSMC Facility, among other things, was amended to change
the maturity date of the Floating Rate Notes to February 28, 1997 (see
Note 14) and provides for an Additional Advance, as defined, up to a
maximum outstanding balance of $60 million. As of December 31, 1996, no
amounts have been drawn on the Additional Advance and the balance remains
at $10 million.
The Floating Rate Notes bear interest based on 90-day LIBOR plus 4% which
is reset two business days prior to each interest payment date. At
December 31, 1996 and 1995, the interest rate in effect was 9.28% and
9.88%, respectively. The weighted average interest rate was 9.48% for the
period from July 10, 1996 through December 31, 1996, for the Company, and
9.50%, 10.17% and 10.38% for the period from January 1, 1996 through July
9, 1996 and for the years ended December 31, 1995 and 1994, respectively,
for the Predecessor. Interest is payable quarterly on March 1, June 1,
September 1, and December 1 of each year. Interest expense for the Company
on the Floating Rate Notes was approximately $622,000 for the period from
July 10, 1996 through December 31, 1996. As of July 17, 1996, the GSMC
Facility is secured by a guarantee from the Investor Group.
The Merger Agreement provided that GSMC would make a line of credit (the
"GSMC Loan") available to the Predecessor during the period between
November 7, 1995 and the earlier of (1) the consummation of the Merger as
contemplated by the Merger Agreement or (2) any termination of the Merger
Agreement. The GSMC Loan accrued interest at the rate of 10% per annum
(compounded quarterly) and was prepayable at any time without penalty. The
Predecessor borrowed a total of approximately $63.7 million under the GSMC
Loan which was repaid, along with accrued interest, on July 17, 1996 by
the Company. Interest expense incurred by the Company prior to the
repayment was approximately $110,000.
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14% Debentures
The 14% Debentures were issued pursuant to a Debenture Purchase Agreement
dated as of December 18, 1994 between the Predecessor and Whitehall and
amended effective July 10, 1996 to, among other things, name the Company
as the successor in interest to the Predecessor. The unsecured 14%
Debentures mature on December 31, 2007 and bear interest at a rate of 14%
per annum, payable semi-annually on June 2 and December 2.
The Company's interest expense for the 14% Debentures includes the
amortization of a premium adjustment to reflect the carrying amount of the
14% Debentures at their estimated fair value as of the Effective Date. The
premium on the 14% Debentures is being amortized on the effective interest
method until maturity. Interest expense, net of premium amortization of
$641,000, on the 14% Debentures was approximately $4.5 million for the
period from July 10, 1996 through December 31, 1996.
The Predecessor's interest expense on the 14% Debentures includes the
straight line amortization of the original issue discount related to the
Warrants and SARs (see below) through the maturity date, December 31,
2007.
Under the terms of the 14% Debentures, to the extent that Net Cash Flow,
as defined, is insufficient to pay interest on an interest payment date
(each June and December 2), the Company will not be obligated to pay
interest on the 14% Debentures on such date and such interest will accrue.
If an Event of Default, as defined, were to occur and be continuing, the
14% Debentures would bear interest at 18% per annum. Upon the occurrence
of an Event of Default, the holders of the 14% Debentures may declare the
unpaid principal thereof and accrued interest thereon due and payable. The
14% Debentures are redeemable in whole or in part at any time after
December 30, 2000 provided the Floating Rate Notes have been paid in full.
The Debenture Purchase Agreement provides for decreasing penalties for
early redemption of the 14% Debentures before December 31, 2003.
In connection with the issuance of the 14% Debentures in December 1994,
the Predecessor issued to Whitehall 4,155,927 Warrants, to acquire shares
of newly issued Common Stock of the Predecessor and 5,349,541 Stock
Appreciation Rights ("SARs"),which were exchangeable for 14% Debentures
or, under certain circumstances, for Warrants on a one-for-one basis. The
Predecessor was required to make adjustments to earnings for the
difference between the aggregate principal amount of 14% Debentures
issuable upon exchange of the SARs (SARs liability) and the value at which
the SARs liability was carried. The non cash charge to earnings was
approximately $2.0 million and $10.8 million for the period from January
1, 1996 through July 9, 1996 and for the year ended December 31, 1995,
respectively. In connection with the Merger (see Note 1), all outstanding
Warrants and SARs were contributed by Whitehall through Holdings to the
Predecessor at a value of $4.00 per Warrant and SAR and were then
canceled.
Interest rate swap agreements
In connection with its short term floating rate debt, the Predecessor
entered into interest rate swap agreements with financial institutions
that were intended to fix a portion of the Predecessor's interest rate
risk on floating rate debt. The Predecessor paid a fixed rate of interest
semi-annually and received a variable rate of interest semi-annually based
on 180-day LIBOR. In connection with the issuance of the Floating Rate
Notes and 14% Debentures in December 1994, the Predecessor retired all but
three of its interest rate swap agreements. As a result, the Predecessor
recorded, as a cost of swap terminations, $9.9 million for the year ended
December 31, 1994. The remaining three contracts have an aggregate
notional amount of $105 million and each expires during 1998.
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The amount to be paid or received from interest rate swap agreements is
accrued as floating interest rates are reset semi-annually.
On the Effective Date, the Company assumed the three remaining interest
rate swap agreements and adjusted the carrying value of the swap
liabilities to reflect their estimated fair value of approximately $5.3
million. For each swap, the Company and the Predecessor paid a weighted
average fixed rate of interest semi-annually at 9.64% for the years ended
December 31, 1996 and 1995, respectively. The Company received a weighted
average variable rate as of December 31, 1996 of 5.71%. The Predecessor
received a weighted average variable rate as of December 31, 1995 of
5.89%. As of December 31, 1996 and 1995, the weighted average interest
rate of swaps outstanding for the Company and the Predecessor were 3.93%
and 3.75%, respectively.
The aggregate net interest expense relating to the swap agreements for the
period from July 10, 1996 through December 31, 1996 for the Company and
the period from January 1, 1996 through July 9, 1996 and the years ended
December 31, 1995 and 1994 for the Predecessor were approximately $1.9
million, $ 2.1 million, $3.6 million and $5.5 million, respectively.
The interest rate swaps were used by the Predecessor for hedging purposes,
therefore the fair value of these swaps are not reflected in the
Predecessor's balance sheet and the incremental revenue or expense is
recognized in the Predecessor's statements of operations.
The interest rate swaps are reported in the Company's financial statements
on a mark to market basis. As of December 31, 1996, the carrying amount of
all interest rate swap agreements was reported as a liability by the
Company of approximately $5.2 million, based on information supplied by
the swap counterparties to the swap contracts. The Company recorded an
adjustment of approximately $142,000 to properly mark to market the swaps
as of December 31, 1996 and reflected the adjustment as reduction of
interest expense in the Company's statement of operations.
7. CONTRIBUTIONS, DISTRIBUTION AND NET LOSS PER SHARE
Pursuant to the Stock Subscription and Stockholders Agreement dated July
9, 1996 that organized Holdings and the Limited Liability Company
Agreement dated July 9, 1996 that organized LLC (hereinafter Holdings, and
LLC will be collectively referred to as the "Owners"), the Owners are
required to provide additional contributions up to the Maximum Additional
Mandatory Contribution, as defined, totaling $60 million. The Maximum
Additional Mandatory Contribution shall be used to repay amounts
outstanding under the GSMC Facility and to fund unforeseen capital
expenditures and similar contingencies reasonably necessary to protect and
maintain the value of the Property. No additional contributions were made
to the Company by the Owners since their initial capital contributions on
July 10, 1996.
The Indenture governing the Convertible Debentures limits cash
distributions to the Owners of the Company to the amount of cumulative
Distributable Cash. The Indenture defines Distributable Cash as cash
receipts from operations less operating expenses and interest. The amount
of Distributable Cash, net of dividends paid, at December 31, 1996 was
approximately $63 million. This amount includes cash flows from operating
activities and certain investing activities, net of dividends paid, from
the Predecessor's inception through July 9, 1996 of approximately $70
million and cash flows used in operating activities of the Company for the
period ending December 31, 1996 of approximately $7 million. As interest
income was not received by the Predecessor during the period when the
Previous Owners were under Chapter 11 protection, net cash flows from
operations of the Property, which accrued to the benefit of the Company
during this period, are also included.
Net loss per share for the Predecessor is based upon 38,260,704 average
shares of Common Stock outstanding during the period from January 1, 1996
through July 9, 1996, and for the years ended December 31, 1995 and
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1994. For each of these periods, fully diluted net loss per share is not
presented since the effect of the assumed conversion of the Convertible
Debentures, Warrants and SARs would be anti-dilutive.
8. INCOME TAXES
The Company, formed as a Delaware business trust, is taxable as a
partnership for Federal, state and local income tax reporting purposes. No
provision for income taxes is made in the accompanying financial
statements for the Company since such taxes are liabilities of the Owners
and depend on their respective tax positions. Further, the owners' equity
accounts reflected in the Company's accompanying financial statements
differ from the amounts reported on the Company's Federal income tax
return due to differences in accounting policies adopted for financial and
tax reporting purposes.
No provisions for current or deferred income taxes have been made by the
Predecessor on the basis that it has qualified under the Code as a REIT
and has distributed at least 95% of its annual net income as computed for
tax purposes to stockholders. To the extent that such distributions exceed
such income, the excess will be treated as a return of capital. Net
capital gains generated by the Predecessor are proportionately distributed
to the stockholders as net capital gains dividends. During the period
January 1, 1996 through July 9, 1996, the Predecessor had no taxable
income and did not make any distributions to stockholders. During the
years ended December 31, 1995 and 1994, the Predecessor made per share
distributions to stockholders of $0.15 and $0.65, respectively, of which
approximately $0.15 and $0.26, respectively, represented returns of
capital, and $0 and $0.369, respectively, represented ordinary income, and
$0 and $0.021, respectively, represented a net capital gain dividend.
Through December 31, 1995, the cumulative return of capital paid was $5.25
per share. During 1995, due to the uncertainties created by the Previous
Owners' Chapter 11 Plan, the Predecessor paid only one dividend in April.
Under the terms of the Merger Agreement, the Predecessor was prohibited
from paying additional dividends unless required to do so to maintain REIT
status. During 1994, dividends were paid in April, July, October and
December.
As of December 31, 1995, the aggregate tax basis of the Predecessor's net
assets exceeded the amounts reported on the financial statements by
approximately $113 million. This difference relates primarily to amounts
that will be recognized for tax purposes when paid or realized. For the
year ended December 31, 1994, no significant difference existed between
the aggregate tax basis of the Predecessor's net assets and the amounts
reported on the financial statements.
9. GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES
General and administrative expenses includes compensation and benefits for
the Predecessor's employees, rent and related facility costs, director's
and officers' liability insurance premiums, registrar and transfer agent
fees, debenture trustee fees, legal, audit and financial advisory fees and
stockholder reporting costs. The increase in general and administrative
expenses for 1994 to 1995 is principally due to increased legal fees,
investor relations related expenses and financial advisory fees
principally due to actions taken as a result of the Previous Owners'
Chapter 11 Plan.
During the year ended December 31,1995, the Predecessor incurred
approximately $99.2 million of expenses related to the effects of the
execution and delivery of the Merger Agreement including the writedown of
the Mortgage Loan (as discussed in Note 4) and certain transaction costs
and expenses aggregating approximately $25.2 million. These transaction
costs and expenses included the accrual for the break up fee related to
the termination of the Combination Agreement entered into by the
Predecessor, EOH and ZHL (see Note 10).
For the period from January 1, 1996 through July 9, 1996, these costs were
adjusted by the Predecessor by $8.2 million to more accurately reflect the
amounts actually paid upon consummation of the Merger and amounts
45
<PAGE>
remaining unpaid. As a result, a credit of $8.2 million is reflected on
the accompanying statement of operations of the Predecessor for the period
from January 1, 1996 through July 9, 1996.
10. LEGAL MATTERS
On January 23, 1995, Bear, Stearns & Co., Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation commenced an action against the
Predecessor in the Supreme Court of New York, County of New York. The
plaintiffs alleged that the Predecessor breached a contract relating to
the plaintiffs' provision of investment banking services to the
Predecessor in connection with a proposed 1994 transaction. The plaintiffs
sought $5.1 million, plus costs, attorneys' fees and interest. On October
19, 1995, the Predecessor filed an answer to the complaint which denied
the plaintiffs' allegations and asserted numerous affirmative defenses. On
June 11, 1996, the plaintiffs moved for partial summary judgment on their
claim for $950,000 in advisory fees and reimbursement of expenses incurred
in connection with the underlying proposed transaction. On December 19,
1996, the court granted the plaintiffs' motion, and on February 5, 1997,
the court entered judgment on that claim in the total amount, including
pre-judgment interest, of approximately $1.1 million. The Company
satisfied that judgment prior to trial. The trial regarding the
plaintiffs' claims for its "success fees" and indemnification of legal
fees and expenses was scheduled to commence on February 24, 1997.
On May 24, 1995, Jerry Krim commenced an action encaptioned Krim v.
Rockefeller Center Properties, Inc. and Peter D. Linneman. On June 7,
1995, Kathy Knight and Moishe Malamud commenced an action encaptioned
Knight, et al. v. Rockefeller Center Properties, Inc. and Peter D.
Linneman. Both actions were filed in the United States District Court for
the Southern District of New York and purport to be brought on behalf of a
class of plaintiffs comprised of all persons who purchased the
Predecessor's Common Stock between March 20, 1995 and May 10, 1995. The
complaints allege that the Predecessor and Dr. Linneman violated the
federal securities laws by their purported failure to disclose, prior to
May 11, 1995, that the Previous Owner would file for bankruptcy
protection. The cases have been consolidated. On July 28, 1995, the
Predecessor and Dr. Linneman filed answers to the complaints denying
plaintiffs' substantive allegations and asserting numerous affirmative
defenses. On September 22, 1995, plaintiffs served an Amended Class Action
Complaint adding the Predecessor's remaining directors and its president
as defendants. In addition to the foregoing claims, the Amended Complaint
also asserts a cause of action for breach by the Predecessor's directors
and its president of their fiduciary duties by approving the Agreement and
Plan of Combination dated as of September 11, 1995, between the
Predecessor and Equity Office Holdings, L.L.C. ("EOH") (the "Combination
Agreement"). The plaintiffs are seeking damages in such amount as may be
proved at trial. Plaintiffs are also seeking injunctive relief, plus
costs, attorneys' fees and interest. The Company intends to vigorously
contest these actions.
On July 6, 1995, Charal Investment Company, Inc. commenced a derivative
action against certain of the Predecessor's present and former directors
in the Court of Chancery of the State of Delaware in and for New Castle
County ("Delaware Court of Chancery"). The Predecessor was named as a
nominal defendant. The plaintiff alleged that the directors breached their
fiduciary duties by: (1) using commercial paper proceeds to repurchase
Convertible Debentures in 1987-1992; (2) entering into interest rate
swaps; and (3) making capital distributions to stockholders during the
years 1990 through 1994. The plaintiff filed several amendments to its
complaint and on February 29, 1996, Charal Investment Company, Inc. filed
new actions in the Delaware court of Chancery purporting to assert both
derivative and class counts. On June 5, 1996, Charal filed an amended and
supplemental complaint which repeated the allegations contained in the
February 29, 1996 complaint and added a new class claim against the
individual defendants alleging that they had breached their fiduciary
duties by not including certain information in the proxy statement
disseminated in connection with the Merger. On October 18, 1996, the
defendants, including the Company, moved to dismiss the amended and
supplemental complaint. On December 30, 1996, the plaintiff voluntarily
dismissed the claim without prejudice.
46
<PAGE>
On November 15, 1996, Charal Investment Co., Inc. and C.W. Sommer & Co.
filed a purported class action complaint in the United States District
Court for the District of Delaware against certain former directors and
officers of the Predecessor and against certain of the Company's indirect
shareholders. The action is entitled Charal Investment Co. v. Rockefeller
et. al., Civil Action No. 96-543 ("Charal II"). Plaintiffs alleged that
the defendants violated Section 10(b) of the Securities and Exchange Act
of 1934 (the "Act") and Rule 10b-5 promulgated thereunder, and Section 14
of the Act and Rule 14a-9 promulgated thereunder by allegedly failing to
provide adequate disclosure of the alleged possibility of a sale or lease
financing of a portion of the Property to NBC and its parent corporation,
GE prior to the shareholder vote on the Merger. The complaint sought
unspecified damages, recision of the Merger and/or disgorgement. The
Company may have indemnity obligations with respect to one or more of the
defendants. On December 11, 1996 and December 18, 1996, identical
complaints were filed in the federal court in Delaware by additional
plaintiffs. On January 13, 1997, all these actions were consolidated under
the caption In re Rockefeller Center Properties, Inc. Securities
Litigation, Cons. C.A. No 96-543 (RRM). On January 31, 1997, all
defendants moved to dismiss the complaint for failure to state a claim.
That motion is pending.
On January 21, 1997, an action entitled Flashman v. Goldman, Sachs & Co.,
97 Civ. 0403 (MGC) (S.D.N.Y.), was filed in New York Federal court
containing allegations substantially similar to those in the original
complaint in Charal II. The Company has been advised that plaintiff
intends to dismiss the New York action voluntarily and to join as
plaintiff in the consolidated Delaware federal action described above.
On July 31, 1995, L.L. Capital Partners, L.P. commenced an action against
the Predecessor in the United States District Court in the Southern
District of New York. The plaintiff alleged that, the Predecessor's
prospectus dated November 3, 1993, failed to disclose its purported belief
that the Rockefeller Interests and Mitsubishi Estate would cease to fund
the Previous Owner's cash flow shortfalls. On January 3, 1997, the parties
entered into a settlement agreement and executed and filed stipulations of
dismissals and releases dismissing all claims, counterclaims and third
party claims with prejudice. In connection with the dismissal, the Company
paid L.L. Capital Partners, L.P. the sum of $50,000.
On September 13 and 14, 1995, five class action complaints, captioned
Faegheh Moezinia v. Peter D. Linneman, Benjamin D. Holloway, Peter G.
Peterson, William F. Murdoch, Jr. and Rockefeller Center Properties, Inc.;
Martin Zacharias v. B.D. Holloway, P.G. Peterson, W.F. Murdoch, P.D.
Linneman Rockefeller Center Properties, Inc.; James Cosentino v. Peter D.
Linneman, Benjamin D. Holloway, Peter G. Peterson, William F. Murdoch, Jr.
and Rockefeller Center Properties, Inc.; Mary Millstein v. Peter D.
Linneman, Peter G. Peterson, Benjamin D. Holloway, William F. Murdoch, Jr.
and Rockefeller Center Properties, Inc.; and Robert Markewich v. Peter D.
Linneman and Daniel M. Neidich, et al. were filed in the Delaware Court of
Chancery. On October 11, 1995, an additional complaint captioned Hunter
Hogan v. Rockefeller Center Properties, Inc., et al. was filed in the
Delaware Court of Chancery. Each of the complaints purports to be brought
on behalf of a class of plaintiffs comprised of stockholders of the
Predecessor who have been or will be adversely affected by the Combination
Agreement. All of the plaintiffs allege that the Predecessor's Directors
breached their fiduciary duties by approving the Combination Agreement.
The plaintiffs seek damages in such amount as may be proved at trial.
Plaintiffs also seek injunctive relief, plus costs and attorneys fees. On
November 8, 1995, the Delaware Court of Chancery entered an order
consolidating these actions under the caption In re Rockefeller Center
Properties, Inc. Shareholders Litigation, Consol. C.A. No. 14612. The
Company intends to contest any such application vigorously.
On July 31, 1996, a Petition for Appraisal, captioned Solomon v.
Rockefeller Center Properties, Inc., C.A. No. 15155, was filed in the
Delaware Court of Chancery. The petitioners allege that the consideration
paid to RCPI's stockholders in conjunction with the Merger was inadequate
and they request that the Court determine the fair value of their stock at
the time of the Merger. Predecessor filed its Response to the
47
<PAGE>
Petition for Appraisal on October 7, 1996, in which it asserts that the
fair value of Predecessor common stock at the time of the Merger was not
more than $8.00 per share and asks the Court to so determine.
On November 6, 1996, the parties filed stipulations of dismissal with
prejudice in Zell/Merrill Lynch Real Estate Opportunity Partners Limited
Partnership III ("ZML") v. Rockefeller Center Properties, Inc., 96 Civ.
1445, in the United States District Court for the Southern District of New
York, and Rockefeller Center Properties, Inc. v. Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership III and Equity Office
Holdings, L.L.C. ("EOH"), Index No. 106176/96, in the Supreme Court for
the State of New York, New York County, dismissing all claims,
counterclaims and third-party claims with prejudice. In connection with
the dismissal of the two actions, the Company paid in the aggregate $10.3
million to EOH and ZML.
Although the outcome of claims, litigation and disputes cannot be
predicted with certainty, in the opinion of management based on facts
known at this time, the resolution of such matters are not anticipated to
have a material adverse effect on the financial position or results of
operations of the Company. As these matters continue to proceed through
the process to ultimate resolution, it is reasonably possible that the
Company's estimation of the effect of such matters could change within the
next year.
11. RELATED PARTY TRANSACTIONS
On July 10, 1996, the Company entered into a management agreement (the
"Management Agreement"), with an affiliate of Rockprop, L.L.C., (the
"Agent") which expires on July 17, 1999. The Management Agreement will
automatically renew for additional one year terms unless either party
gives notice of election not to renew. The Agent earns a management fee
based on 1.5% of Gross Revenues, as defined. For the period ending
December 31, 1996, the Agent earned approximately $1.3 million. Of total
management fees earned by the Agent, the Company and NBC incurred
approximately $909,000 and $432,000, respectively.
In addition, the Company pays the Agent an accounting fee pursuant to the
Management Agreement. The payment is equal to $1,134,000 for the first
year to be increased each year by an additional 4% of the sum of $254,000
plus the aggregate amount of the prior year increases. For the period
ending December 31, 1996, the total accounting fee was approximately
$515,000.
The Agent also earns commissions for leasing services provided to the
Company. For the period ending December 31, 1996, total leasing
commissions paid to the Agent were approximately $85,000. As of December
31, 1996, the Company owes approximately $443,000 to the Agent for leasing
commissions.
The Agent also earns fees for cleaning and development fees. For the
period ending December 31, 1996, the Agent earned approximately $291,000
in cleaning fees. Of total cleaning fees earned by the Agent, NBC incurred
approximately $16,000 related to these fees. For the period ending
December 31, 1996, the Company incurred all development fees of
approximately $36,000.
Prior to the commencement of the Management Agreement, the Agent provided
consulting and other services related to the transaction in the amount of
approximately $2.4 million. GSMC also provided consulting and other
services related to the transaction in the amount of approximately
$574,000. These costs were capitalized to the Property as transaction
costs.
48
<PAGE>
12. INTERIM FINANCIAL INFORMATION (Unaudited)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
RCPI TRUST
1996 1Q 2Q 3Q 4Q
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues N/A N/A $38,490 $49,998
Net loss N/A N/A ($11,446) ($ 196)
Net loss per share N/A N/A N/A N/A
---------------------------------------------------------------------------------------------
Rockefeller Center Properties, Inc.
1996 1Q 2Q 3Q 4Q
---------------------------------------------------------------------------------------------
Revenues $14 $22 $2 N/A
Net loss ($28,588) ($18,000) ($11,784) N/A
Net loss per share ($0.75) ($0.47) ($0.31) N/A
---------------------------------------------------------------------------------------------
1995 1Q 2Q 3Q 4Q
---------------------------------------------------------------------------------------------
Revenues $20,446 $339 $556 $129
Net loss ($7,478) ($17,818) ($141,078) ($28,755)
Net loss per share ($0.20) ($0.46) ($3.69) ($0.75)
---------------------------------------------------------------------------------------------
1994 1Q 2Q 3Q 4Q
---------------------------------------------------------------------------------------------
Revenues $27,270 $27,262 $27,417 $27,336
Net income (loss) $6,667 $6,551 $3,321 ($1,396)
Net income (loss) per share $0.17 $0.17 $0.09 ($0.03)
</TABLE>
13. PRO FORMA FINANCIAL INFORMATION
To provide a more meaningful comparison of results of operations, pro forma
statements of operations have been presented for the years ended December 31,
1996 and 1995 as if the acquisition of the Property by the Company had occurred
on January 1, 1995. The pro forma statements of operations are based upon the
Company's statement of operations for the period from July 18, 1996 through
December 31, 1996 and the Previous Owners' statements of operations for the
period from January 1, 1996 through July 17, 1996 and for the year ended
December 31, 1995.
The pro forma statements of operations for the years ended December 31, 1996 and
1995 have been adjusted to show the effect of (i) gross revenues and operating
expenses had the NBC Sale occurred on January 1, 1995; (ii) interest expense had
the GSMC Loan and Current Coupons been repaid in full, and had $106.3 million of
principal on the Floating Rate Notes been paid on January 1, 1995; (iii)
depreciation and amortization expense had the Property been purchased and the
NBC Sale had occurred on January 1, 1995, and (iv) general and administrative
expenses had certain bankruptcy related costs not been incurred by the Previous
Owners and costs related to the NBC Sale had been incurred during 1995.
The pro forma results are for illustrative purposes only, and do not purport to
be indicative of the actual results which would have occurred, nor are they
indicative of future results of operations.
Year Ended
December 31,
1996 1995
--------- ---------
Gross Revenues: $ 179,136 $ 175,495
Less:
Operating expenses (131,803) (124,451)
Interest expense (55,606) (51,166)
--------- ---------
Net Loss ($ 8,273) ($ 122)
========= =========
49
<PAGE>
14. SUBSEQUENT EVENTS
As discussed in Note 10, Bear, Stearns & Co., Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation commenced an action against the
Predecessor in the Supreme Court of New York. The trial regarding the
plaintiffs' claims for its "success fees' and indemnification of legal
fees and expenses commenced on February 24, 1997. On March 3, 1997, during
the course of the trial, the parties agreed to a settlement. Pursuant to
the settlement agreement, the Company paid the plaintiffs $2 million, and
the plaintiffs dismissed the lawsuit with prejudice. The plaintiffs and
the Company executed mutual releases of all claims arising out of the
engagement of plaintiffs in connection with the proposed 1994 transaction.
On March 31, 1997, the GSMC Facility was amended to extend the maturity
date of the Floating Rate Notes to April 30, 1997.
50
<PAGE>
RCPI TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D
-------- -------- -------- --------
Cost Capitalized
Initial Cost Subsequent to Acquisition(1)
------------------------ -----------------------------
Building and Building and
Description Encumbrances Land Improvements Land Improvements
----------- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
GE Building (a) 46,715 165,626 - 1,515
International Building (a) 29,984 106,308 - 4,548
One Rockefeller Plaza (a) 12,890 45,701 - 2,479
600 Fifth Avenue (a) - 33,442 - 39
Ten Rockefeller Plaza (a) 14,835 52,598 - 83
Simon & Schuster (a) 10,535 37,351 - 1,667
Associated Press (a) 10,625 37,669 - 5,866
1270 Ave. of the Americas/Radio City Music Hall (a) 16,636 58,981 - 790
La Maison Francaise (a) 6,449 22,864 - 120
British Empire Building (a) 6,909 24,496 - 26
Additional Property (a) 2,571 9,116
--------- ------------ --------------- -------------
158,149 594,152 0 17,133
========= ============ =============== =============
</TABLE>
<TABLE>
<CAPTION>
Column A Column E Column F
-------- -------- --------
Gross Amount at Which
Carried at Close of Period
-----------------------------------------------
Building and Accumulated
Description Land Improvements Total Depreciation
----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
GE Building 46,715 167,141 213,856 1,738
International Building 29,984 110,856 140,840 1,161
One Rockefeller Plaza 12,890 48,180 61,070 483
600 Fifth Avenue 0 33,481 33,481 349
Ten Rockefeller Plaza 14,835 52,681 67,516 550
Simon & Schuster 10,535 39,018 49,553 421
Associated Press 10,625 43,535 54,160 530
1270 Ave. of the Americas/Radio City Music Hall 16,636 59,771 76,407 300
La Maison Francaise 6,449 22,984 29,433 240
British Empire Building 6,909 24,522 31,431 572
Additional Property 2,571 9,116 11,687 95
---------------- ---------------- ------------ ----------------
158,149 611,285 769,434 6,439
================ ================ ============ ================
</TABLE>
<TABLE>
<CAPTION>
Column A Column G Column H Column I
-------- -------- -------- --------
Life on which
Date of Date Depreciation
Description Construction Acquired is calculated (b)
----------- ------------ -------- -----------------
<S> <C> <C> <C>
GE Building 1933 1996 40 years
International Building 1935 1996 40 years
One Rockefeller Plaza 1937 1996 40 years
600 Fifth Avenue 1952 1996 40 years
Ten Rockefeller Plaza 1939 1996 40 years
Simon & Schuster 1940 1996 40 years
Associated Press 1938 1996 40 years
1270 Ave. of the Americas/Radio City Music Hall 1932 1996 40 years
La Maison Francaise 1933 1996 40 years
British Empire Building 1933 1996 40 years
Additional Property 1996 40 years
</TABLE>
(1) Tenant improvements of $14,405,000 are included and are being depreciated
over the life of the respective lease.
51
<PAGE>
RCPI TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
DECEMBER 31, 1996
(In thousands)
The changes in real estate for the year ended December 31, 1996 are as follows:
July 17, 1996
to
December 31, 1996
-----------------
Real estate balance at beginning
of period $594,152
Improvements 17,133
------------------
Balance at close of period $611,285
==================
The changes in accumulated depreciation, exclusive of amounts relating to
equipment and furniture and fixtures for the year ended December 31, 1996 are as
follows:
July 17, 1996
to
December 31, 1996
------------------
Balance at beginning of period -
Depreciation for period 6,439
------------------
Balance at end of period 6,439
==================
52
