<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
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 1-8971
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RCPI Trust
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-7087445
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
c/o Tishman Speyer Properties, L.P.
45 Rockefeller Plaza, New York, N.Y. 10011
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(Address of principal executive offices) (Zip Code)
(212) 332-6500
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(Registrant's telephone number, including area code)
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(Former name, former address, and former fiscal year, if
changed since last report)
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
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<PAGE> 2
RCPI TRUST
<TABLE>
<CAPTION>
INDEX
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PART I--FINANCIAL INFORMATION PAGE
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<S> <C>
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited, interim financial statements have been prepared in
accordance with the instructions to Form 10-Q. In the opinion of management, all
adjustments necessary for a fair presentation have been included.
RCPI Trust, Balance Sheets as of September 30, 2000 (unaudited) and
December 31, 1999 1
RCPI Trust, Statements of Operations for the quarters and nine months
ended September 30, 2000 and 1999 (unaudited) 2
RCPI Trust, Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 (unaudited) 3
Notes to Financial Statements (unaudited) 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11
PART II--OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
</TABLE>
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
Except for historical information contained herein, the Report on Form 10-Q
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 which involve certain risks and
uncertainties. The Company's actual results or outcomes may differ materially
from those anticipated. In assessing forward-looking statements contained
herein, readers are urged to carefully read those statements. When used in the
Report on Form 10-Q, the words "estimate", "anticipate", "expect", "believe"
and similar expressions are intended to identify forward-looking statements.
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. Financial Statements
RCPI TRUST
(a Delaware business trust)
BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
As of
September 30, 2000 As of
(Unaudited) December 31, 1999
------------------ -------------------
<S> <C> <C>
ASSETS
Real estate:
Land $ 158,149 $ 158,149
Buildings and improvements 651,721 651,154
Buildings and improvements - construction in progress 42,248 25,212
Tenant improvements 79,369 69,388
Tenant improvements - construction in progress 14,432 11,802
Furniture, fixtures and equipment 9,262 8,187
----------- -----------
955,181 923,892
Less: Accumulated depreciation and amortization (85,816) (67,512)
----------- -----------
869,365 856,380
Cash and cash equivalents 33,248 45,967
Restricted cash 9,876 10,803
Accounts receivable 9,450 7,454
Prepaid expenses 10,460 1,392
Deferred costs, net of accumulated
amortization of $9,926 and $10,726, respectively 55,536 50,524
Accrued rent 122,455 114,851
----------- -----------
Total Assets $ 1,110,390 $ 1,087,371
=========== ===========
LIABILITIES AND OWNERS' EQUITY
Liabilities:
Zero coupon convertible debentures, net of unamortized
discount of $17,374 and $66,484, respectively $ 568,811 $ 519,701
14% debentures, includes premium of $19,983 and $21,393,
respectively 94,983 96,393
NationsBank loans 67,000 95,000
Accrued interest payable 1,962 4,708
Accounts payable and accrued expenses 16,008 21,312
Tenant security deposits payable 9,252 10,234
----------- -----------
Total Liabilities 758,016 747,348
Commitments and Contingencies
Owners' Equity 352,374 340,023
----------- -----------
Total Liabilities and Owners' Equity $ 1,110,390 $ 1,087,371
=========== ===========
</TABLE>
See notes to the financial statements.
1
<PAGE> 4
RCPI TRUST
(a Delaware business trust)
STATEMENTS OF OPERATIONS
($ in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Quarters Ended For the Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues:
Base rental $ 58,770 $ 58,635 $174,288 $172,330
Escalations and percentage rents 2,027 1,445 7,521 4,443
Interest and other income 1,902 1,084 5,230 3,468
-------- -------- -------- --------
Total Revenues 62,699 61,164 187,039 180,241
-------- -------- -------- --------
Expenses:
Interest 20,876 19,715 62,811 56,356
Real estate taxes 9,367 8,923 26,261 26,414
Payroll and benefits 5,197 5,900 17,267 16,023
Repairs, maintenance and supplies 2,323 2,668 9,537 9,425
Utilities 6,289 4,823 13,893 11,006
Cleaning 3,617 3,283 11,319 10,140
Professional fees 222 210 1,244 1,208
Insurance 493 402 1,274 851
Management and accounting fees 1,185 1,143 3,442 3,050
General and administration 722 1,095 4,590 2,925
Depreciation and amortization 7,888 6,833 23,050 21,018
-------- -------- -------- --------
Total Expenses 58,179 54,995 174,688 158,416
-------- -------- -------- --------
Net Income $ 4,520 $ 6,169 $ 12,351 $ 21,825
======== ======== ======== ========
</TABLE>
See notes to the financial statements.
2
<PAGE> 5
RCPI TRUST
(a Delaware business trust)
STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 12,351 $ 21,825
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of original issue discount and premium 47,700 42,258
Depreciation and amortization 24,581 22,662
Decrease (increase) in restricted cash 927 (856)
Increase in accounts receivable (1,996) (3,732)
Increase in prepaid expenses (9,068) (9,138)
Increase in accrued rent (7,604) (27,983)
Decrease in accounts payable, accrued expenses
and tenant security deposits payable (3,321) (29)
Decrease in accrued interest payable (2,746) (2,756)
-------- --------
Net cash provided by operating activities 60,824 42,251
-------- --------
Cash Flows from Investing Activities:
Additions to building and improvements (18,334) (25,746)
Additions to tenant improvements (14,589) (17,939)
Additions to furniture, fixtures and equipment (1,075) (1,493)
Additions to deferred costs (11,316) (11,713)
-------- --------
Net cash used in investing activities (45,314) (56,891)
-------- --------
Cash Flows from Financing Activities:
Proceeds from NationsBank loans - 40,000
Repayment of NationsBank loans (28,000) (18,750)
Payment of deferred financing fees (229) (1,783)
-------- --------
Net cash (used in) provided by financing activities (28,229) 19,467
-------- --------
(Decrease) increase in cash and cash equivalents (12,719) 4,827
Cash and cash equivalents at beginning of period 45,967 31,270
-------- --------
Cash and cash equivalents at end of period $ 33,248 $ 36,097
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period $ 16,065 $ 15,209
======== ========
</TABLE>
See notes to the financial statements.
3
<PAGE> 6
RCPI TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENTS
The balance sheet as of September 30, 2000 and the statements of
operations and cash flows for the quarters ended and for the nine months
ended September 30, 2000 and 1999 are unaudited, but in the opinion of
the management of RCPI Trust (the "Company"), reflect all adjustments,
consisting only of normal recurring adjustments, which are necessary to
present fairly the financial condition and results of operations at
those dates and for those periods. The results of operations for the
interim periods are not necessarily indicative of results for a full
year. It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes thereto
included in the Company's Form 10-K for the year ended December 31,
1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred Costs
The Company adopted the provisions of Statement of Position 98-5
"Reporting on the Costs of Start-up Activities" effective January 1,
1999. The effect of adopting this statement was an additional charge of
$1.34 million related to the write off of the unamortized balance of
organizational costs and is included as a component of depreciation and
amortization in the accompanying statement of operations for the nine
months ended September 30, 1999.
Reclassifications
Certain prior period amounts have been reclassified to conform with
current period presentation.
New Accounting Pronouncement
During 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which provides that all derivative
instruments should be recognized as either assets or liabilities
depending on the rights and obligations under the contract and that all
derivative instruments be measured at fair value. This pronouncement is
required to be adopted by January 1, 2001. Management has not yet
quantified the impact that adoption of this pronouncement will have on
the Company's financial statements.
3. DEBT
NationsBank Credit Facility
On May 16, 1997, the Company entered into a credit agreement (the
"Original NationsBank Credit Agreement") with NationsBank N.A.
("NationsBank"), pursuant to which NationsBank agreed to make term loans
(the "Original NationsBank Loans") to the Company in an aggregate
principal amount of up to $100 million. The Company may elect interest
periods based on one, two, three or six month LIBOR. Interest accrued at
LIBOR plus 1.75% for the initial term (i.e., through May 16, 2000). The
maximum amount of the Original NationsBank Loans which may be
outstanding at any time reduced quarterly
4
<PAGE> 7
RCPI TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
(UNAUDITED)
commencing March 31, 1998 through the original May 16, 2000 maturity
date. As of December 31, 1999, the outstanding balance on the Original
NationsBank Loans was $55 million. On March 31, 2000, the Company repaid
$10 million bringing the outstanding balance of the Original NationsBank
Loans down to $45 million. On September 29, 2000, the Company repaid $10
million, bringing the outstanding balance of the Original NationsBank
Loans down to $35 million.
On April 13, 2000, the Company exercised its option to extend the maturity
date of the Original NationsBank Loans to December 31, 2000. Commencing
May 16, 2000, such loans bear interest based on LIBOR plus 2.125% during
the extension period. Pursuant to the Original NationsBank Credit
Agreement, the Company was required to make principal payments of $10
million on each of June 30, 2000 and September 30, 2000 and a final
principal payment of $25 million on December 31, 2000. On June 29, 2000,
the Company entered into a waiver agreement with Bank of America, N.A.
("BOA", formerly NationsBank), whereby BOA waived the provision of the
Original NationsBank Credit Agreement that required the Company to make
principal payments on June 30, 2000 and September 30, 2000. Under this
agreement, the Company was only required to make a principal payment of
$45 million on December 31, 2000. On October 10, 2000, the Company entered
into an amendment to waiver agreement with BOA, whereby the Company agreed
to make a principal payment of $10 million on September 30, 2000 and will
be required to make a final payment of $35 million on December 31, 2000.
In connection with the extension of the Original NationsBank Loans, the
Company purchased an interest rate protection agreement from Goldman
Sachs Capital Markets, L.P. ("Goldman Sachs"), an affiliate of a member
of the Investor Group (as defined in the December 31, 1999 Form 10-K),
capping LIBOR at 8.0%.
New NationsBank Credit Facility
The Company entered into a second credit agreement (the "New NationsBank
Credit Agreement") as of April 12, 1999, with NationsBank, pursuant to
which NationsBank agreed to make additional term loans (the "New
NationsBank Loans") to the Company in an aggregate principal amount of
up to $47 million. Similar to the Original NationsBank Credit Agreement,
the Company may elect interest periods based on one, two, three, or six
month LIBOR. Interest accrued at LIBOR plus 2.50% for the initial term
and is payable at the end of each interest period. The maximum amount of
the New NationsBank Loans which may be outstanding at any time reduced
quarterly commencing December 31, 1999 through the original May 16, 2000
maturity date. As of December 31, 1999, the outstanding balance on the
New NationsBank Loans was $40 million. On March 31, 2000, the Company
repaid $8 million, bringing the outstanding balance of the New
NationsBank Loans down to $32 million.
As a condition to making the New NationsBank Loans, the holder of the
14% Debentures (as defined in the December 31, 1999 Form 10-K) and the
Company amended the intercreditor and subordination agreement, executed
as part of the Original NationsBank Loans to include the New NationsBank
Loans (the Original NationsBank Loans and the New NationsBank Loans are
hereafter collectively referred to as the "NationsBank Loans"). The
intercreditor and subordination agreement provides that the holder of
the 14% Debentures agrees (i) to subordinate payment on the 14%
Debentures to the NationsBank Loans, (ii) that in certain circumstances
interest would accrue but not be paid on the 14% Debentures, and (iii)
that NationsBank may take certain actions on behalf of the holder of the
14% Debentures upon the occurrence of certain bankruptcy-related events
in respect of the Company.
5
<PAGE> 8
RCPI TRUST
NOTES TO FINANCIAL STATEMENTS (CONT'D)
(UNAUDITED)
In addition, certain members of the Investor Group (as defined in the
December 31, 1999 Form 10-K) and/or certain of their affiliates entered
into a Limited Recourse Agreement dated as of April 12, 1999, in favor
of NationsBank.
On April 13, 2000, the Company exercised its option to extend the maturity
date of the New NationsBank Loans to December 31, 2000. Such loans bear
interest based on LIBOR plus 2.5% during the extension period. Pursuant to
the New NationsBank Credit Agreement, the Company was required to make
principal payments of $10 million on each of June 30, 2000 and September
30, 2000 and a final principal payment of $12 million on December 31,
2000. On June 29, 2000, the Company entered into a waiver agreement with
BOA, whereby BOA waived the provision of the New NationsBank Credit
Agreement that required the Company to make a principal payment on June
30, 2000. Under this agreement, the Company was only required to make a
principal payment of $10 million on September 30, 2000, and a final
principal payment of $22 million on December 31, 2000. On October 10,
2000, the Company entered into an amendment to waiver agreement with BOA,
whereby BOA waived the provision of the New NationsBank Credit Agreement
that required the Company to make a principal payment on September 30,
2000. Under this amended agreement, the Company is now only required to
make a principal payment of $32 million on December 31, 2000.
In connection with the extension of the New NationsBank Loans, the
Company purchased an interest rate protection agreement from Goldman
Sachs capping LIBOR at 7.5%.
6
<PAGE> 9
RCPI TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES - RCPI TRUST
Land and Building
At September 30, 2000, Rockefeller Center (the "Property"), exclusive of 1.5
million square feet owned directly by the National Broadcasting Company, Inc.
and NBC Trust No. 1996A, was approximately 96.0% occupied. Occupancy rates for
the Property at various dates are presented in the following table:
<TABLE>
<S> <C> <C> <C>
June 30, 2000 95.1% September 30, 1999 93.2%
March 31, 2000 95.1% June 30, 1999 92.5%
December 31, 1999 94.0% March 31, 1999 92.4%
</TABLE>
The following table shows selected lease expirations and vacancy of the
Property as of September 30, 2000. Area, as presented below and discussed
above, is measured based on standards promulgated by the New York Real Estate
Board in 1987. Lease turnover could offer an opportunity to increase the
revenue of the Property or might have a negative impact on the Property's
revenue. Actual renewal and rental income will be affected significantly by
market conditions at the time and by the terms at which the Company can then
lease space.
<TABLE>
<CAPTION>
Square Feet Percent
Year Expiring Expiring
---- -------- --------
<S> <C> <C>
2000 332,546 5.6%
2001 162,587 2.8%
2002 261,316 4.4%
2003 175,481 3.0%
2004 545,098 9.3%
Thereafter 4,414,079 74.9%
--------- -----
Total 5,891,107 100.0%
========= ======
</TABLE>
Consideration of Possible Sale or Recapitalization of the Property
On May 22, 2000, the Company announced that it had decided to explore a
possible sale or recapitalization of the Property. The Company has retained
Goldman, Sachs & Co. to identify and evaluate possible alternatives and
potential purchasers, and Goldman, Sachs & Co. is in the process of
identifying and receiving indications of interest from potential purchasers.
The Company has not made any decision about when such a possible transaction
may occur or about whether such a transaction would be a sale,
recapitalization or other type of transaction. There is no assurance that the
Company will either sell or recapitalize the Property.
Debt
The Zero Coupon Convertible Debentures (the "Zero Coupons") due December 31,
2000, accrete to a face value of approximately $586.2 million at an effective
annual interest rate of 12.10%. At September 30, 2000 and December 31, 1999,
the carrying value of the Zero Coupons, net of unamortized discount, was
approximately $568.8 million and $519.7 million, respectively.
7
<PAGE> 10
RCPI TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
The Zero Coupons were issued under an Indenture, dated as of September 15,
1985 (as supplemented, the "Indenture"), between Rockefeller Center
Properties, Inc. ("RCPI") and The United States Trust Company of New York (as
successor to Manufacturers Hanover Trust Company), as Trustee. As of July 10,
1996, the Company became the successor to RCPI under the Indenture. The Zero
Coupons were originally convertible into shares of common stock of RCPI on
December 31, 2000 (the "Conversion Date") and upon the occurrence of certain
other events specified in the Indenture. Holders of the Zero Coupons also
originally had the right to exchange their Zero Coupons on the Conversion Date
for nonconvertible floating rate notes of the Company (the "Floating Rate
Notes") in an equal aggregate principal amount.
On July 10, 1996, the Indenture was amended to provide that instead of being
convertible into RCPI common stock as described above, each Zero Coupon is
convertible, on the Conversion Date and upon the other events specified in the
Indenture, only into cash in an amount equal to eight dollars ($8.00) for each
share of common stock of RCPI into which the Zero Coupon was originally
convertible. Under this formula, each $1,000 principal amount of Zero Coupons
became convertible on the Conversion Date into $368.48 (the "Conversion
Payment"), subject to the holder's giving notice of election to convert his
Zero Coupons into cash not more than 180 days nor less than 150 days prior to
the Conversion Date. The amendment of the Indenture did not change the right
of holders of Zero Coupons to exchange the Zero Coupons upon maturity for
Floating Rate Notes as described above. Holders were required under the terms
of the Indenture to give notice of their election either to convert their Zero
Coupons into cash or to exchange their Zero Coupons for Floating Rate Notes,
and to surrender their Zero Coupons for such conversion or exchange, by August
3, 2000.
Under the terms of the Indenture, a holder of a Zero Coupon who failed to
timely surrender the Zero Coupon for conversion or exchange will be deemed to
have elected to exchange the Zero Coupon for Floating Rate Notes on the
Conversion Date. As a result of the foregoing, all Zero Coupons will be
exchanged for Floating Rate Notes on the Conversion Date except for Zero
Coupons whose holders elected by August 3, 2000 to convert their Zero Coupons
into the Conversion Payment. As of August 3, 2000, certain holders of the Zero
Coupons representing a face value of $9,234,000 elected to tender their Zero
Coupons for a cash payment of approximately $3.4 million on the Conversion
Date.
The Floating Rate Notes to be exchanged for the Zero Coupons will mature on
December 31, 2007. The Company will have the right to prepay the Floating Rate
Notes at any time, at par. The Floating Rate Notes will bear interest at the
three-month LIBOR plus a spread of 1.00%.
The 14% Debentures have a principal balance of $75 million and mature on
December 31, 2007. At the time the Property was acquired by the Company, the
carrying value of the 14% Debentures was adjusted to reflect their estimated
fair value at that date, resulting in a premium. The effective interest rate,
which is net of the amortization of this premium, is approximately 9.03%.
Interest payments are made semi-annually on July 31 and January 31. As of
September 30, 2000 and December 31, 1999, the carrying value of the 14%
Debentures was approximately $95.0 million and $96.4 million, respectively.
As of September 30, 2000, the Original NationsBank Loans have an aggregate
principal balance of $35 million and mature on December 31, 2000. The Company
may elect interest periods based on one, two, three or six month LIBOR.
Interest accrues at LIBOR plus 2.125% and is payable monthly in arrears.
8
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RCPI TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
As of September 30, 2000, the New NationsBank Loans have an aggregate
principal balance of $32 million and mature on December 31, 2000. The Company
may elect interest periods based upon one, two, three or six month LIBOR.
Interest accrues at LIBOR plus 2.50% and is payable monthly in arrears.
Cash Flow
During the nine months ended September 30, 2000, the Company received cash
flows of approximately $60.8 million from operations of the Property. The
Company used this cash flow from operations to fund tenant improvements,
building improvements and other leasing costs totaling approximately $45.3
million. The Company also used a portion of its existing working capital to
make an $18 million and a $10 million principal payment on the NationsBank
Loans on March 31, 2000 and September 29, 2000, respectively.
The Company believes that its current cash balance and future cash flows from
operations will be sufficient to fund its capital and debt service
requirements for the foreseeable future. Deficiencies, if any, are expected to
be covered by additional financing or equity contributions.
Inflation
Inflation and changing prices during the current period did not significantly
affect the markets in which the Company conducts its business. In view of the
moderate rate of inflation, its impact on the Company's business has not been
significant.
RESULTS OF OPERATIONS - RCPI TRUST
Base rent for the nine months ended September 30, 2000 increased approximately
$2.0 million from the nine months ended September 30, 1999 and is due mainly
to higher rental rates on new leases, which did not exist in the prior year.
Additionally, the Company signed several new retail leases which had lease and
rent commencement dates after the first nine months of 1999, and the occupancy
level for the Property increased to 96.0%, as compared to 93.2% as of
September 30, 1999.
Interest expense increased by approximately $1.2 million and $6.5 million for
the quarter and nine months ended September 30, 2000, as compared to the
quarter and nine months ended September 30, 1999, primarily due to the
increase in the outstanding debt balance. Total outstanding debt as of
September 30, 2000 was approximately $730.8 million, as compared to $702.4
million as of September 30, 1999. The increase is due primarily to accretion
of the Zero Coupons.
Utilities expense for the quarter and the nine months ended September 30, 2000
increased by approximately $1.5 million and $2.9 million, as compared to the
quarter and the nine months ended September 30, 1999, respectively, primarily
due to an increase in fuel prices.
General and administrative costs have increased for the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999,
by approximately $1.7 million. The increase is primarily due to a one-time
negotiated retail consulting fee.
9
<PAGE> 12
RCPI TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
The increase in payroll and benefits of approximately $1.2 million during the
nine months ended September 30, 2000, as compared to the nine months ended
September 30, 1999, is a result of increased security and mechanical services.
The increase in depreciation and amortization expense of approximately $2.0
million from the first nine months of 1999 to the first nine months of 2000 is
primarily due to additional capital expenditures being placed into service at
the Property between the first nine months of 1999 and the first nine months
of 2000. Additionally, amortization expense for the first nine months of 1999
included the adoption of the provisions of SOP 98-5 "Reporting on the Costs of
Start-up Activities". This required the write-off of the Company's remaining
organizational costs of approximately $1.34 million.
10
<PAGE> 13
RCPI TRUST
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no material exposure to market risk sensitive instruments
other than the NationsBank Loans. The market risk associated with this
floating rate loan is minimized by an interest rate protection agreement which
capped the floating rate on the Original NationsBank Loans at 7.69% during the
first two years of the initial term and 8.69% thereafter. The floating rate on
the New NationsBank Loans was capped at 7.85% during the initial term by an
interest rate protection agreement. In connection with the extension of the
NationsBank Loans, the Company purchased additional interest rate protection
agreements, capping LIBOR at 8.0% and 7.5% on the Original NationsBank Credit
Agreement and the New NationsBank Credit Agreement, respectively, for the
extension term. The Company enters into derivative instruments only to hedge
its exposure to changes in interest rates on some of its outstanding
indebtedness, not for speculative or trading purposes, and does not enter into
leveraged derivatives. See Note 5 to the Financial Statements included in the
Company's Form 10-K for the year ended December 31, 1999 for additional
information about the Company's interest rate protection agreements.
11
<PAGE> 14
RCPI TRUST
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The following is an update on the In re Rockefeller Center Properties Inc.
Securities Litigation Cons. C.A. No. 96-543(RRM):
On July 18, 2000, the District Court granted plaintiff's motion to file a
second amended complaint. Plaintiffs thereafter filed a second amended
complaint, which purported to add new details concerning their claims
involving the disclosures relating to the transaction with National
Broadcasting Company, Inc. and General Electric Company. Defendants moved to
dismiss the second amended complaint on July 24, 2000, and plaintiffs moved to
strike defendants' motion. The motions are pending.
Aside from the aforementioned, there has been no material change to the status
of existing litigation as reported in the Company's Form 10-K for the year
ended December 31, 1999.
12
<PAGE> 15
<TABLE>
<CAPTION>
ITEM 6. (a) EXHIBITS
<S> <C> <C>
(3.1) Certificate of Trust of RCPI Trust, dated March 22, 1996
is incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996.
(4.1) Amended and Restated Debenture Purchase Agreement dated
as of July 17, 1996 between the Company and WHRC Real
Estate Limited Partnership is incorporated by reference
to Exhibit 4.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "1996
10-K").
(4.2) Indenture dated as of September 15, 1985 between the
Predecessor and Manufacturers Hanover Trust Company, as
Trustee, including the forms of Current Coupon
Convertible Debenture, Zero Coupon Convertible Debenture
and Floating Rate Note, is incorporated by reference to
Exhibit 4 to Rockefeller Center Properties, Inc.'s
Quarterly Report on Form 10-Q for the period ended
September 30, 1985.
(4.3) First Supplemental Indenture dated as of December 15,
1985 between the Predecessor and the Trustee, is
incorporated by reference to the Predecessor's Annual
Report on Form 10-K for the year ended December 31, 1985.
(4.4) Second Supplemental Indenture dated as of July 10, 1996
between the Company and the United States Trust Company
of New York, as Trustee, is incorporated by reference to
Exhibit 4.4 to the 1996 10-K.
(4.5) Instrument of Resignation, Appointment and Acceptance
dated as of December 1, 1993 among the Predecessor,
Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company, and United States Trust Company of
New York is incorporated by reference to Exhibit 4.21 to
the Predecessor's Annual Report on Form 10-K for the year
ended December 31, 1993.
(10.1) Amended and Restated Loan Agreement dated as of July 17,
1996 among the Company, the lenders parties thereto and
Goldman Sachs Mortgage Company, as agent, is incorporated
by reference to Exhibit 10.1 to the 1996 10-K.
(10.2) Guarantee dated July 17, 1996 by Whitehall Street Real
Estate Limited Partnership V, Exor Group S.A., Tishman
Speyer Crown Equities, David Rockefeller, Troutlet
Investments Corporation, Gribble Investments (Tortola)
BVI, Inc. and Weevil Investments (Tortola) BVI, Inc., as
guarantors in favor of GSMC, as agent and lender, is
incorporated by reference to Exhibit 10.2 to the 1996
10-K.
(10.3) Agreement and Plan of Merger dated as of November 7, 1995
among the Predecessor, RCPI Holdings Inc., RCPI Merger
Inc., Whitehall Street Real Estate Limited Partnership V,
Rockprop, L.L.C., David Rockefeller, Exor Group S.A. and
Troutlet Investments Corporation is incorporated by
reference to Exhibit 10.28 to the Predecessor's Current
Report on Form 8-K dated November 13, 1995.
</TABLE>
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<TABLE>
<CAPTION>
ITEM 6. (a) EXHIBITS
<S> <C> <C>
(10.4) Amendment No. 1 dated as of February 12, 1996 to the
Agreement and Plan of Merger dated as of November 7, 1995
among the Predecessor, RCPI Holdings Inc., RCPI Merger
Inc., Whitehall Street Real Estate Limited Partnership V,
Rockprop, L.L.C., David Rockefeller, Exor Group S.A. and
Troutlet Investments Corporation is incorporated by
reference to Exhibit 10.31 to the Predecessor's Current
Report on Form 8-K dated February 22, 1996.
(10.5) Amendment No. 2 to the Agreement and Plan of Merger,
dated as of April 25, 1996 is incorporated herein by
reference to the Predecessor's Current Report on Form
8-K, filed on April 25, 1996.
(10.6) Amendment No. 3 to the Agreement and Plan of Merger,
dated as of May 29, 1996 is incorporated herein by
reference to the Predecessor's Current Report on Form
8-K, filed on May 29, 1996.
(10.7) Amendment No. 4 to the Agreement and Plan of Merger,
dated as of June 30, 1996 is incorporated herein by
reference to the Predecessor's Current Report on Form
8-K, filed on July 1, 1996.
(10.8) Credit Agreement, dated as of May 16, 1997, between the
Company and NationsBank of Texas, N.A. is incorporated by
reference to Exhibit 4.6 to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1997.
(10.9) Intercreditor and Subordination Agreement, dated as of
May 16, 1997, between the Company and Whitehall is
incorporated by reference to Exhibit 4.7 to the Company's
Quarterly Report on Form 10-Q for the period ended June
30, 1997.
(10.10) Limited Recourse Agreement, dated as of May 16, 1997, is
incorporated by reference to Exhibit 4.8 to the Company's
Quarterly Report on Form 10-Q for the period ended June
30, 1997.
(10.11) Amendment to the May 16, 1997 Credit Agreement, dated as
of April 12, 1999, between the Company and NationsBank,
N.A. is incorporated by reference to Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1999.
(10.12) Credit Agreement, dated as of April 12, 1999, between the
Company and NationsBank, N.A. is incorporated by
reference to Exhibit 10.12 to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1999.
(10.13) Amended and Restated Intercreditor and Subordination
Agreement, dated as of April 12, 1999, between the
Company and WHRC Real Estate Limited Partnership is
incorporated by reference to Exhibit 10.13 to the
Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1999.
(27.1) Company's Financial Data Schedule.
(b) REPORTS ON FORM 8-K
</TABLE>
No Current Reports on Form 8-K have been filed during the last
fiscal quarter.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RCPI TRUST
Date: November 14, 2000 By: /s/ David Augarten
----------------------------
David Augarten
Vice President
(Principal Financial Officer)
15
