<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 30, 1998
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
TEXAS 1-9016 75-6335572
<S> <C> <C>
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (972) 756-6000
<PAGE> 2
The undersigned Registrant hereby amends its Current Report on Form 8-K dated
July 30, 1998, which was filed with the Securities and Exchange Commission on
August 5, 1998, to include the financial statements for the Developers
Diversified Realty Corporation properties (the "DDR Portfolio" or the
"Properties") required by Item 7 (a) and the pro forma financial information
required by Item 7 (b).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements: See Index to Financial Statements and Pro Forma
Financial Information appearing on page F-1 of this Form 8-K/A.
(b) Pro Forma Financial Information: See Index to Financial Statements and
Pro Forma Financial Information appearing on page F-1 of this Form
8-K/A.
(c) Exhibits
The following exhibit is filed with this report:
Exhibit
Number Description
23.1 Consent of PricewaterhouseCoopers LLP
<PAGE> 3
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 hereunto duly authorized.
AMERICAN INDUSTRIAL PROPERTIES REIT
By: /s/ CHARLES W. WOLCOTT
-----------------------------------------
Charles W. Wolcott
President and Chief Executive
Officer
October 2, 1998
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
<S> <C>
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES
Report of Independent Accountants...................................................... F-2
Combined Statement of Revenue and Certain Expenses..................................... F-3
Notes to Combined Statement of Revenue and Certain Expenses............................ F-4
PRO FORMA FINANCIAL INFORMATION................................................................. F-6
Pro forma condensed consolidated balance sheet as of June 30, 1998..................... F-8
Pro forma condensed consolidated statements of operations for the year
ended December 31, 1997................................................................ F-10
Pro forma condensed consolidated statements of operations for the six
months ended June 30, 1998............................................................. F-13
</TABLE>
F-1
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
August 31, 1998
To the Board of Trust Managers and Shareholders of
American Industrial Properties REIT
We have audited the accompanying combined statement of revenue and certain
expenses of the Developers Diversified Realty Corporation Properties, described
in Note 1, for the year ended December 31, 1997. This historical statement is
the responsibility of management. Our responsibility is to express an opinion on
this historical statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined historical statement is prepared on the basis
described in Note 2, for the purpose of complying with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission (for inclusion in Form 8-K/A of
American Industrial Properties REIT) and is not intended to be a complete
presentation of the combined revenues and expenses of the Developers Diversified
Realty Corporation Properties.
In our opinion, the combined historical statement referred to above presents
fairly, in all material respects, the combined revenue and certain expenses of
the Developers Diversified Realty Corporation Properties, on the basis described
in Note 2, for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Cleveland, Ohio
F-2
<PAGE> 6
AMERICAN INDUSTRIAL PROPERTIES REIT
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTH YEAR ENDED
PERIOD ENDED DECEMBER 31,
JUNE 30, 1998 1997
------------- -----------
<S> <C> <C>
Revenue:
Minimum rents $ 760,059 $1,502,317
Recoveries from tenants 94,478 190,184
Other income 175 855
---------- ----------
854,712 1,693,356
---------- ----------
Certain expenses:
Operating and maintenance 48,837 116,669
Real estate taxes 73,189 146,381
---------- ----------
122,026 263,050
---------- ----------
Revenue in excess of certain expenses $ 732,686 $1,430,306
---------- ----------
</TABLE>
The accompanying notes are an integral part of this combined statement of
revenue and certain expenses.
F-3
<PAGE> 7
AMERICAN INDUSTRIAL PROPERTIES REIT
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
- -------------------------------------------------------------------------------
1. OPERATIONS
For purposes of the accompanying combined statement of revenue and
certain expenses, the Developers Diversified Realty Corporation
Properties represent five business centers ("Properties"), which American
Industrial Properties REIT (the "Trust") acquired in July 1998. A summary
of the Properties is as follows:
<TABLE>
<CAPTION>
Name of Property Location Year Built
---------------- -------- ----------
<S> <C> <C>
Heritage VSA Building Twinsburg, OH 1989
Hardline Services Building Aurora, OH 1988
STERIS Building Mentor, OH 1987
Heritage Business Center Twinsburg, OH 1989
Alumax Building Streetsboro, OH 1989
</TABLE>
A combined statement of revenue and certain expenses has been presented
because the Properties have commonality of ownership, are under common
control and management and have been purchased through a single
transaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined statement of revenue and certain expenses has
been prepared on the accrual basis of accounting.
The accompanying combined financial statement is not representative of
the actual operations for the periods presented as certain revenues and
expenses, which may not be comparable to the revenues and expenses
expected to be earned or incurred by the Trust in the future operations
of the Properties, have been excluded. Revenues excluded consist of other
revenues unrelated to the continuing operations of the Properties.
Expenses excluded consist of depreciation on the building and
amortization of leasing commissions.
Income Recognition
Rental income is recorded on the straight line basis.
Concentration of Risk
The Properties are concentrated in the Cleveland, Ohio area. The
principal competitive factors in this market are price, location, quality
of space, and amenities. The Properties represent a small portion of the
total similar space in the market and compete with other properties for
tenants. For the year ended December 31, 1997, four of the properties
were occupied by a single tenant. Base rents derived from the Properties'
largest tenants; VSA Inc., STERIS Corporation, Reynolds Metals Company,
and Federal Wholesale Company of Pennsylvania, Inc. were 19.9%, 12.2%,
15.1% and 40.9%, respectively, for the year ended December 31, 1997.
F-4
<PAGE> 8
AMERICAN INDUSTRIAL PROPERTIES REIT
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
- -------------------------------------------------------------------------------
Interim Statements
The interim financial data for the six months ended June 30, 1998 is
unaudited; however, in the opinion of the Trust, the interim data
includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not necessarily
indicative of the results for the full year.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Related Party Transactions
Developers Diversified Realty Corporation charged a property management
fee to the one property which is occupied by more than one tenant.
Management fees approximated $10,000 and $5,000 (unaudited) for the year
ended December 31, 1997 and the six months ended June 30, 1998,
respectively.
3. ACQUISITION OF PROPERTIES BY THE TRUST
On August 3, 1998, the Trust entered into a definitive agreement
providing for a strategic investment by Developers Diversified Realty
Corporation ("DDRC") in the Trust. Under the terms of the Share Purchase
and Merger Agreements, dated to be effective as of July 30, 1998, the
Trust issued 1,258,478 common shares in exchange for the Properties
previously owned by DDRC. This transaction was valued at approximately
$19.5 million.
F-5
<PAGE> 9
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
The following Pro Forma Condensed Consolidated Balance Sheet of the Trust
as of June 30, 1998 has been prepared as if each of the following transactions
had occurred as of June 30, 1998: (i) the acquisition of Norfolk Commerce Park
(a 323,731 square foot light industrial project consisting of three buildings in
Norfolk, Virginia) ("Norfolk"), (ii) the recently completed sale to Developers
Diversified Realty Corporation ("DDR") of 949,147 Common Shares at $15.50 per
share, described in the Trust's Current Report on Form 8-K dated July 30, 1998;
and (iii) the acquisition of the five properties (as defined in the Combined
Statement of Revenue and Certain Expenses included elsewhere herein) (the
"Acquired Properties") valued at $19,506 through the merger with a subsidiary of
DDR (the "Merger") and issuance of 1,258,471 Common Shares to DDR.
The following Pro Forma Condensed Consolidated Statement of Operations of
the Trust for the year ended December 31, 1997 has been prepared as if each of
the following transactions had occurred as of January 1, 1997: (i) the
acquisition of 15 industrial real estate properties; (ii) the sale of 2
industrial real estate properties; (iii) the merger with four publicly traded
real estate limited partnerships; (iv) the acquisition of the Spieker Portfolio;
(v) the acquisition of North Austin; and (vi) the acquisition, through AIP
Operating, L.P., a limited partnership in which the Trust has a 99% controlling
ownership interest, of Spring Valley #6 (together with North Austin, the "1998
Acquisitions"), all of which transactions listed in clauses (i) through (vi) are
defined and described in Amendment No. 1 to the Current Report on Form 8-K/A of
the Trust dated April 30, 1998 and filed with the SEC on July 13, 1998 (the
"April 30 Form 8-K/A"), which is incorporated herein by reference; (vii) the
acquisition of Norfolk, described above; (viii) the recently completed sale to
DDR of 949,147 Common Shares at $15.50 per share, described herein; and (ix) the
acquisition of the Acquired Properties, described herein, through the Merger
with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR.
The following Pro Forma Condensed Consolidated Statement of Operations of
the Trust for the six months ended June 30, 1998 has been prepared as if each of
the following transactions had occurred as of January 1, 1998: (i) the 1998
Acquisitions, described above; (ii) the acquisition of the Spieker Portfolio,
described in the April 30 Form 8-K/A; (iii) the acquisition of Norfolk,
described above; (iv) the recently completed sale to DDR of 949,147 Common
Shares at $15.50 per share, described herein; and (v) the acquisition of the
Acquired Properties, described herein, through the Merger with a subsidiary of
DDR and issuance of 1,258,471 Common Shares to DDR.
The Pro Forma Financial Information of the Trust has been prepared using
the purchase method of accounting for the acquisition of the Acquired Properties
and other property acquisitions, whereby the assets and liabilities of the
properties were adjusted to estimated fair market value, based upon preliminary
estimates, which are subject to change as additional information is obtained.
The allocations of purchase costs are subject to final determination based upon
estimates and other evaluations of fair market value. Therefore, the allocations
F-6
<PAGE> 10
reflected in the following Pro Forma Financial Information may differ from the
amounts ultimately determined.
Such Pro Forma Financial Information is based in part upon (i) the
Consolidated Financial Statements of the Trust for the year ended December 31,
1997 included in the Trust's Annual Report on Form 10-K for the year ended
December 31, 1997; (ii) the Consolidated Financial Statements of the Trust for
the six months ended June 30, 1998 included in the Trust's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998; (iii) the Combined Statement of
Revenue and Certain Expenses of Developers Diversified Realty Corporation
Properties for the year ended December 31, 1997 and the six months ended June
30, 1998 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K,
dated July 30, 1998; and (iv) the Pro Forma Financial Information presented in
the April 30 Form 8-K/A.
The Pro Forma Financial Information is presented for information purposes
only and is not necessarily indicative of the financial position or results of
operations of the Trust that would have occurred if such transactions had been
completed on the dates indicated, nor does it purport to be indicative of future
financial position or results of operations. In the opinion of the Trust's
management, all material adjustments necessary to reflect the effect of these
transactions have been made.
F-7
<PAGE> 11
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DDR
Trust Recent Recent Pro
Historical (A) Transactions (B) Transactions (C) Forma
---------- ------------- ------------ ---------
ASSETS
<S> <C> <C> <C> <C> <C>
Real estate, net $ 320,456 $ 21,244 $ 19,506 (D) $ 361,206
Cash - unrestricted 10,107 -- 14,712 (E)
(14,712) (E) 10,107
Cash - restricted 3,926 -- -- 3,926
Other assets, net 7,536 -- -- 7,536
---------- ------------- ------------ ---------
$ 342,025 $ 21,244 $ 19,506 $ 382,775
========== ============= ============ =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $ 189,519 $ -- $ -- $ 189,519
Notes payable to affiliates -- 21,244 (14,712) (E) 6,532
Accrued interest payable 1,098 -- -- 1,098
Accounts payable, accrued
expenses and other 6,680 -- 1,711 (D),(E) 8,391
Tenant security deposits 1,414 -- 1,414
---------- ------------- ------------ ---------
198,711 21,244 (13,001) 206,954
Minority interests 7,268 -- -- 7,268
Shareholders' equity:
Shares of beneficial interest
($0.10 par value) 1,124 -- 221 (D),(E) 1,345
Additional paid-in capital 242,415 -- 32,286 (D),(E) 274,701
Less Shares in treasury, at cost (1,888) -- -- (1,888)
Accumulated distributions (62,686) -- -- (62,686)
Accumulated loss from operations
and extraordinary gains (losses) (46,230) -- -- (46,230)
Accumulated net realized gain
on sales of real estate 3,311 -- -- 3,311
---------- ------------- ------------ ---------
136,046 -- 32,507 168,553
---------- ------------- ------------ ---------
$ 342,025 $ 21,244 $ 19,506 $ 382,775
========== ============= ============ =========
</TABLE>
F-8
<PAGE> 12
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(A) Represents the historical financial position of the Trust as of June 30,
1998.
(B) Represents adjustments for the acquisition of Norfolk. The acquisition was
financed with borrowings on the Trust's demand note with DDR (the "DDR
Note"). The DDR Note bears interest at 10.25%.
(C) Represents adjustments for the recently completed transactions with DDR,
including the sale to DDR of 949,147 Common Shares at $15.50 per share and
the acquisition of the Acquired Properties.
(D) Represents adjustments for the acquisition of the Acquired Properties
valued at $19,506 through the Merger with a subsidiary of DDR and the
issuance of 1,258,471 Common Shares, net of estimated costs of issuance of
$975, which have been accrued.
(E) Represents adjustments for the sale to DDR of 949,147 Common Shares at
$15.50 per share, net of estimated costs of issuance of $736, which have
been accrued. The cash proceeds were applied to the DDR Note.
F-9
<PAGE> 13
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Pro forma DDR
Total from Recent Recent Pro Forma
8-K/A (A) Transactions (B) Transactions (C) Total
------------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
INCOME
Rents and tenant reimbursements $ 41,239 $ 3,120 $ 1,693 (E)$ 46,052
Interest and other income 500 0 0 500
------------- ------------- -------------- -----------
41,739 3,120 1,693 46,552
------------- ------------- -------------- -----------
EXPENSES
Property operating expenses 15,262 1,117 263 (E) 16,642
Depreciation and amortization 7,605 462 430 (E) 8,497
Interest expense 15,462 -- --
2,178 (D) (1,508) (F) 16,132
General and administrative 3,964 -- -- 3,964
------------- ------------- -------------- -----------
Total expenses 42,293 3,757 (815) 45,235
------------- ------------- -------------- -----------
Gain (loss) from operations before
minority interest (554) (637) 2,508 1,317
Minority interest 208 -- 0 208
------------- ------------- -------------- -----------
Income (loss) from operations $ (346) $ (637) $ 2,508 $ 1,525
============= ============= ============== ===========
Income (loss) from operations per share:
Basic and diluted $ (0.03) $ 0.11
============= ===========
Weighted average number of
Common Shares outstanding 11,193 2,208 13,401 (G)
============= ============== ============
</TABLE>
F-10
<PAGE> 14
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
(UNAUDITED)
(A) Reference is made to the April 30 Form 8-K/A, which is incorporated by
reference, for the source of the Trust's pro forma statement of operations
for the year ended December 31, 1997, which gives pro forma effect to the
following transactions as if the transactions had occurred on January 1,
1997:
(i) the acquisition of 15 industrial real estate properties;
(ii) the sale of two industrial real estate properties;
(iii) the merger with four publicly traded real estate limited
partnerships;
(iv) the acquisition of the Spieker Portfolio;
(v) the acquisition of North Austin; and
(vi) the acquisition, through AIP Operating, L. P., a limited
partnership in which the Trust has a 99% controlling ownership
interest, of Spring Valley #6.
(B) Represents adjustments for acquisition of Norfolk, based on historical
operating results. Depreciation is based on the allocation of the purchase
price, with buildings depreciated using the straight-line method over a 40
year period.
(C) Represents adjustments for the recently completed transactions with DDR,
including the sale to DDR of 949,147 Common Shares at $15.50 per share and
the acquisition of the Acquired Properties.
(D) Represents adjustment for interest expense related to Norfolk on the DDR
Note at the interest rate of 10.25%.
(E) Represents adjustments for the acquisition of the Acquired Properties
through the Merger, based on historical operating results. Depreciation is
based on the allocation of the value of the properties, with buildings
depreciated using the straight-line method over a 40 year period.
(F) Represents adjustment for the reduction in interest expense related to
Norfolk resulting from the application of $14,712 of cash received from
DDR to the DDR Note at the interest rate of 10.25%.
(G) The pro forma weighted average shares outstanding - basic represents (i)
11,193,416 Pro Forma Common Shares outstanding for the year ended December
31,1997 (reference is made to the April 30 Form 8-K/A, which is
incorporated by reference); and (ii) 1,258,471 Common Shares issued to DDR
in the Merger and 949,147 Common Shares sold to DDR. Not included in the
weighted average shares outstanding - diluted are outstanding options to
acquire Common Shares which have an exercise price greater than the
average market price
F-11
<PAGE> 15
per Common Share during the period and, therefore, their effect would be
antidilutive; nor are partnership units in the operating partnerships
included in the weighted average shares outstanding - diluted as their
effect would be antidilutive.
F-12
<PAGE> 16
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
DDR
Trust Recent Recent Pro Forma
Historical (A) Transactions (B) Transactions (C) Total
-------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Rents and tenant reimbursements $ 19,403 $ 5,086 $ 855 (E) $ 25,344
Interest and other income 398 27 -- 425
-------------- ----------------- ---------------- ---------------
19,801 5,113 855 25,769
-------------- ----------------- ---------------- ---------------
EXPENSES
Property operating expenses 6,039 1,651 122 (E) 7,812
Depreciation and amortization 3,553 664 215 (E) 4,432
Interest expense 6,142 1,335 --
1,089 (D) (754) (F) 7,812
General and administrative 1,749 55 -- 1,804
-------------- ----------------- ---------------- ---------------
Total expenses 17,483 4,794 (417) 21,860
-------------- ----------------- ---------------- ---------------
Gain (loss) from operations before
minority interest 2,318 319 1,272 3,909
Minority interest (119) -- -- (119)
-------------- ----------------- ---------------- ---------------
Income (loss) from operations $ 2,199 $ 319 $ 1,272 $ 3,790
============== ================= ================ ===============
Income (loss) from operations per share:
Basic and diluted $ 0.20 $ 0.29
============== ===============
Weighted average number of
Common Shares outstanding - basic 10,849 2,208 13,057 (G)
============== ================ ===============
Weighted average number of
Common Shares outstanding - diluted 10,862 2,208 13,070 (G)
============== ================ ===============
</TABLE>
F-13
<PAGE> 17
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(A) Represents the historical results of operations of the Trust for the six
months ended June 30, 1998. Certain reclassifications have been made to the
historical statements of operations of the Trust to conform to the pro
forma financial information presentation.
(B) Represents adjustments for the 1998 Acquisitions, the acquisition of the
Spieker Portfolio and the acquisition of Norfolk based on historical
operating results. Depreciation is based on the allocation of the purchase
price, with buildings depreciated using the straight-line method over a 40
year period. Interest expense is based on the borrowings incurred at the
related interest rates, which range from 7.28% (fixed rate under mortgage
notes payable) to 7.43% (the average 30-day LIBOR rate plus 1.75% during
the six months ended June 30, 1998).
(C) Represents adjustments for the recently completed transactions with DDR,
including the sale to DDR of 949,147 Common Shares at $15.50 per share and
the acquisition of the Acquired Properties.
(D) Represents adjustment for interest on the DDR Note necessary to fund the
purchase of Norfolk at the related interest rate of 10.25%.
(E) Represents adjustments for the acquisition of the Acquired Properties
through the Merger, based on historical operating results. Depreciation is
based on the allocation of the value of the properties, with buildings
depreciated using the straight-line method over a 40 year period.
(F) Represents adjustment for the reduction in interest expense related to
Norfolk resulting from the application of $14,712 cash received from DDR
for the sale of 949,147 Common Shares to the DDR Note at the interest rate
of 10.25%.
(G) The pro forma weighted average shares outstanding - basic represents (i)
10,849,035 Common Shares outstanding at June 30, 1998; and (ii) 1,258,471
Common Shares issued to DDR in the Merger and 949,147 Common Shares sold to
DDR. Not included in the weighted average shares outstanding - diluted are
outstanding options to acquire Common Shares which have an exercise price
greater than the average market price per Common Share during the period
and, therefore, their effect would be antidilutive; nor are partnership
units in the operating partnerships included in the weighted average shares
outstanding - diluted as their effective would be antidilutive.
F-14
<PAGE> 18
INDEX TO EXHIBITS
Exhibit
Number Description
23.1 Consent of PricewaterhouseCoopers LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 333-46699),
Form S-3 (No. 333-48555) and Form S-3 (No. 333-52879) of American Industrial
Properties REIT of our report dated August 31, 1998 relating to the statement
of revenue and certain expenses of The Developers Diversified Realty
Corporation Properties which appear in the Current Report on Form 8-K/A of
American Industrial Properties REIT dated July 30, 1998.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Cleveland, Ohio
October 2, 1998
