SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 1998
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-9317 04-6558834
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
400 Centre Street, Newton, Massachusetts 02458
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-332-3990
<PAGE>
THIS CURRENT REPORT CONTAINS FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED OR PROJECTED.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE REGISTRANT UNDERTAKES NO
OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Unaudited Pro Forma Consolidated Financial Statements (set forth beginning
on page F-1)
<PAGE>
HRPT PROPERTIES TRUST
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet at June 30,
1998 is intended to present the consolidated financial position of the Company
as if the transactions described in the notes hereto were consummated at June
30, 1998. The following unaudited pro forma consolidated statements of income
are intended to present the consolidated results of operations of the Company as
if the transactions were consummated as of the beginning of the periods
presented. These unaudited pro forma consolidated financial statements should be
read in conjunction with, and are qualified in their entirety by reference to,
the separate consolidated financial statements of the Company for the year ended
December 31, 1997, incorporated herein by reference to the Company's Current
Report on Form 8-K dated February 27, 1998 and the Company's unaudited
consolidated financial statements for the quarter ended June 30, 1998,
incorporated herein by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998. These unaudited pro forma consolidated
financial statements are not necessarily indicative of the expected consolidated
financial position or results of operations of the Company for any future
period. Differences would result from, among other considerations, future
changes in the Company's portfolio of investments, changes in interest rates,
changes in the capital structure of the Company, delays in the acquisition of
certain properties and changes in property level operating expenses.
F-1
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Balance Sheet
June 30, 1998
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Recent Proposed
Historical Acquisitions (A) Offering (B) Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 330,641 $ 7,138 $ -- $ 337,779
Buildings and improvements 2,335,897 64,238 -- 2,400,135
------------ --------- ----------- ------------
2,666,538 71,376 -- 2,737,914
Less accumulated depreciation (137,248) -- -- (137,248)
------------ --------- ----------- ------------
2,529,290 71,376 -- 2,600,666
Real estate mortgages and notes, net 83,927 -- -- 83,927
Investment in Hospitality Properties Trust 111,909 -- -- 111,909
Cash and cash equivalents 27,608 (16,376) 13,150 24,382
Interest and rents receivable 24,894 -- -- 24,894
Deferred interest and finance costs, net,
and other assets 26,714 -- 1,850 28,564
------------ --------- ----------- ------------
$ 2,804,342 $ 55,000 $ 15,000 $ 2,874,342
============ ========= =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 130,000 $ 55,000 $ (185,000) $ -
Senior notes payable, net 499,858 -- 200,000 699,858
Mortgage notes payable 25,561 -- -- 25,561
Convertible subordinated debentures 204,863 -- -- 204,863
Accounts payable and accrued expenses 36,539 -- -- 36,539
Deferred rents 33,824 -- -- 33,824
Security deposits 17,969 -- -- 17,969
Due to affiliates 7,535 -- -- 7,535
Shareholders' equity:
Preferred shares of beneficial interest,
$.01 par value; 50,000,000 authorized;
none issued -- -- -- --
Common shares of beneficial interest,
$.01 par value; 150,000,000 shares
authorized and pro forma, 131,533,678
shares issued and outstanding and pro forma 1,315 -- -- 1,315
Additional paid-in capital 1,964,627 -- -- 1,964,627
Cumulative net income 485,490 -- -- 485,490
Dividends (603,239) -- -- (603,239)
------------ --------- ----------- ------------
Total shareholders' equity 1,848,193 -- -- 1,848,193
------------ --------- ----------- ------------
$ 2,804,342 $ 55,000 $ 15,000 $ 2,874,342
============ ========= =========== ============
</TABLE>
F-2
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Six Months Ended June 30, 1998
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
1998 1998
First Quarter 1600 Market Second Quarter
Historical Acquisitions (C) Street (D) Acquisitions (C)
------------ ----------------- -------------- ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 145,744 $ 2,455 $ 4,721 $ 10,184
Interest and other income 9,499 -- -- --
------------- ---------------- -------------- ------------------
Total revenues 155,243 2,455 4,721 10,184
------------ ---------------- -------------- ------------------
Expenses:
Operating expenses 30,086 338 1,915 2,965
Interest 29,433 1,028 1,869 3,962
Depreciation and amortization 26,727 479 650 1,619
General and administrative 7,600 104 145 361
------------ ---------------- -------------- ------------------
Total expenses 93,846 1,949 4,579 8,907
------------ ---------------- -------------- ------------------
Income (loss) before equity in earnings of
Hospitality Properties Trust 61,397 506 142 1,277
Equity in earnings of Hospitality Properties Trust 3,465 -- -- --
Gain on equity transaction of Hospitality Properties Trust 2,470 -- -- --
------------ ---------------- -------------- ------------------
Income (loss) before extraordinary item $ 67,332 $ 506 $ 142 $ 1,277
============ ================ ============== ==================
Weighted average shares outstanding 107,994
============
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 0.62
============
<CAPTION>
1735 Market Recent
Street (E) Acquisitions (C) Other (F) Offering (G) Pro Forma
-------------- ---------------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 12,472 $ 3,679 $ -- $ -- $ 179,255
Interest and other income -- -- -- -- 9,499
-------------- -------------- ----------- ----------- ----------
Total revenues 12,472 3,679 -- -- 188,754
-------------- -------------- ----------- ----------- ----------
Expenses:
Operating expenses 4,098 291 -- -- 39,693
Interest 6,641 1,788 (13,431) 987 32,277
Depreciation and amortization 2,784 803 -- -- 33,062
General and administrative 525 179 -- -- 8,914
-------------- -------------- ----------- ------------ ----------
Total expenses 14,048 3,061 (13,431) 987 113,946
-------------- -------------- ----------- ------------ ----------
Income (loss) before equity in earnings of
Hospitality Properties Trust (1,576) 618 13,431 (987) 74,808
Equity in earnings of Hospitality Properties Trust -- -- -- -- 3,465
Gain on equity transaction of Hospitality Properties Trust -- -- -- -- 2,470
-------------- -------------- ----------- ------------ ----------
Income (loss) before extraordinary item $ (1,576) $ 618 $ 13,431 $ (987) $ 80,743
============== ============== =========== ============ ==========
Weighted average shares outstanding 131,210
==========
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 0.62
==========
</TABLE>
F-3
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 1997
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Second Quarter
Historical GPI (H) CSMC (I) Acquisitions (J)
------------- ------------ --------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 188,000 $ 11,959 $ 6,831 $ 2,948
Interest and other income 20,863 (366) -- --
------------- ------------ -------------- -------------
Total revenues 208,863 11,593 6,831 2,948
------------- ------------ -------------- -------------
Expenses:
Operating expenses 26,765 2,053 1,910 --
Interest 36,766 (1,216) 3,232 1,087
Depreciation and amortization 39,330 4,156 1,119 627
General and administrative 11,670 2,105 249 139
------------- ------------ -------------- -------------
Total expenses 114,531 7,098 6,510 1,853
------------- ------------ -------------- -------------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item 94,332 4,495 321 1,095
Equity in earnings of Hospitality Properties Trust 8,590 -- -- --
Gain on equity transaction of Hospitality Properties Trust 9,282 -- -- --
------------- ------------ -------------- -------------
Income (loss) before gain on sale of properties and
extraordinary item 112,204 4,495 321 1,095
Gain on sale of properties, net 2,898 -- -- --
------------- ------------ -------------- -------------
Income (loss) before extraordinary item $ 115,102 $ 4,495 $ 321 $ 1,095
============= ============ ============== =============
Weighted average shares outstanding 92,168
=============
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 1.25
=============
<CAPTION>
Third Quarter West 34th
Acquisitions (J) Street (K) Franklin Plaza (L)
------------------ --------------- --------------------
<S> <C> <C> <C>
Revenues:
Rental income $ 3,179 $ 10,771 $ 9,614
Interest and other income -- -- --
------------------ --------------- --------------------
Total revenues 3,179 10,771 9,614
------------------ --------------- --------------------
Expenses:
Operating expenses 954 3,641 4,904
Interest 1,463 2,876 2,486
Depreciation and amortization 501 1,869 1,334
General and administrative 111 415 296
------------------ --------------- --------------------
Total expenses 3,029 8,801 9,020
------------------ --------------- --------------------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item 150 1,970 594
Equity in earnings of Hospitality Properties Trust - -- --
Gain on equity transaction of Hospitality Properties Trust - -- --
------------------ --------------- --------------------
Income (loss) before gain on sale of properties and
extraordinary item 150 1,970 594
Gain on sale of properties, net -- -- --
------------------ --------------- --------------------
Income (loss) before extraordinary item $ 150 $ 1,970 $ 594
================== =============== ====================
Weighted average shares outstanding
Basic and diluted earnings per common share:
Income (loss) before extraordinary item
<CAPTION>
Bridgepoint Fourth Quarter 1998 1600 Market
Square (M) Acquisitions(J) Acquisitions (P) Street (N)
-------------- ------------------ ----------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 5,599 $ 8,461 $ 49,645 $ 18,883
Interest and other income -- -- -
-------------- ------------------ ------------ --------------
Total revenues 5,599 8,461 49,645 18,883
-------------- ------------------ ------------ --------------
Expenses:
Operating expenses 2,162 2,634 10,820 7,659
Interest 3,216 4,338 19,110 7,475
Depreciation and amortization 1,175 1,269 8,827 2,601
General and administrative 262 283 1,962 578
-------------- ------------------ ------------ --------------
Total expenses 6,815 8,524 40,719 18,313
-------------- ------------------ ------------ --------------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item (1,216) (63) 8,926 570
Equity in earnings of Hospitality Properties Trust -- -- - --
Gain on equity transaction of Hospitality Properties Trust -- -- - --
-------------- ------------------ ------------ --------------
Income (loss) before gain on sale of properties and
extraordinary item (1,216) (63) 8,926 570
Gain on sale of properties, net -- -- - --
-------------- ------------------ ------------ --------------
Income (loss) before extraordinary item $ (1,216) $ (63) $ 8,926 $ 570
============== ================== ============ ==============
Weighted average shares outstanding
Basic and diluted earnings per common share:
Income (loss) before extraordinary item
<CAPTION>
1735 Market
Street (O) Other (Q) Offering (R) Pro Forma
-------------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 29,836 $ -- $ -- $ 345,726
Interest and other income -- -- -- 20,497
-------------- ------------ --------------- --------------
Total revenues 29,836 -- -- 366,223
-------------- ------------ --------------- --------------
Expenses:
Operating expenses 10,276 -- -- 73,778
Interest 15,665 (35,531) 1,975 62,942
Depreciation and amortization 5,569 -- -- 68,377
General and administrative 1,238 -- -- 19,308
-------------- ------------ --------------- --------------
Total expenses 32,748 (35,531) 1,975 224,405
-------------- ------------ --------------- --------------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item (2,912) 35,531 (1,975) 141,818
Equity in earnings of Hospitality Properties Trust -- -- -- 8,590
Gain on equity transaction of Hospitality Properties Trust -- -- -- 9,282
-------------- ------------ --------------- --------------
Income (loss) before gain on sale of properties and
extraordinary item (2,912) 35,531 (1,975) 159,690
Gain on sale of properties, net -- -- -- 2,898
-------------- ------------ --------------- --------------
Income (loss) before extraordinary item $ (2,912) $ 35,531 $ (1,975) $ 162,588
============== ============ =============== ==============
Weighted average shares outstanding 130,725
==============
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 1.24
==============
</TABLE>
F-4
<PAGE>
HRPT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Balance Sheet Adjustments
A. Represents the Company's acquisitions in July 1998 of a medical office
property located in Texas, a commercial office property located in Delaware
and a commercial office property located in New Jersey (the "Recent
Acquisitions"). These acquisitions were funded with available cash and by
drawings under the Company's revolving line of credit.
B. Represents the proposed debt offering of $200,000 7% senior notes due 2003
(the "Proposed Offering"). Net proceeds from the Proposed Offering will be
used, in part, to repay amounts outstanding under the Company's revolving
line of credit.
Consolidated Statement of Income Adjustments for the Six Months Ended
June 30, 1998
C. Represents the increases in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Recent Acquisitions, the Company's acquisitions during January 1998,
February 1998 and March 1998 of two medical office properties and three
commercial office properties located in Pennsylvania, two commercial office
properties and two medical office properties located in Texas, a medical
office property located in Massachusetts, a commercial office property
located in Maryland, three commercial office properties located in
Minnesota and three medical office properties and a commercial office
property located in Florida (collectively, "1998 First Quarter
Acquisitions") and the Company's acquisitions during April 1998, May 1998
and June 1998 of three commercial office properties located in
Massachusetts, one medical office property located in California, three
commercial office properties located in New Jersey, one commercial office
property located in Connecticut, one commercial office property located in
Pennsylvania, one commercial office property located in Ohio, one
commercial office property located in Washington, D.C., and one commercial
office property located in New York (collectively, "1998 Second Quarter
Acquisitions"), and the increase in interest expense from the use of the
Company's revolving line of credit to fund these acquisitions.
D. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition on March 30, 1998 of a commercial office property
located at 1600 Market Street in Philadelphia, Pennsylvania ("1600 Market
Street") and the increase in interest expense from the use of the Company's
revolving line of credit to fund this acquisition.
E. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition on May 22, 1998 of a mortgage secured by, and
subsequent acquisition on June 30, 1998 of a controlling interest in, a
commercial office property located in Philadelphia, Pennsylvania ("1735
Market Street"), as well as the increase in interest expense from the use
of the Company's revolving line of credit to fund this acquisition.
F. Represents the net decrease in interest expense relating to the issuance of
additional Remarketed Reset Notes and 6.7% Senior Notes due 2005 in
February 1998 (collectively the "1998 Notes") and the issuance of
31,977,575 common shares in February 1998, March 1998 and June 1998. The
proceeds of these offerings were used to repay amounts then outstanding on
the Company's revolving credit facility.
G. Reflects the increase in interest expense as a result of the Proposed
Offering and the application of the net proceeds to the Company's revolving
line of credit.
F-5
<PAGE>
HRPT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Statement of Income Adjustments for the Year Ended December 31,
1997
H. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of the government office properties ("Government
Office Properties") from Government Property Investors, Inc ("GPI"). Also
reflects the decrease in interest expense arising from the Company's
issuance of common shares in a March 1997 offering, the proceeds of which
were used in part to repay amounts then outstanding under the Company's
revolving line of credit, net of an increase in interest expense related to
the Company's assumption of certain debt in connection with the acquisition
of the Government Office Properties.
I. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of two medical office properties and two parking
structures located in Los Angeles, California ("CSMC"), as well as the
increase in interest expense due to the use of the Company's revolving line
of credit to fund this acquisition.
J. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of a) a 200 unit retirement housing property located
in Spokane, Washington and 20 medical office clinics and ancillary
structures located in Massachusetts during the second quarter ("Second
Quarter Acquisitions"), b) three medical and two commercial office
buildings located in Pennsylvania during the third quarter ("Third Quarter
Acquisitions") and c) a medical office property located in Colorado, a
medical office property located in Maryland, a medical office property
located in Rhode Island, three medical office properties located in
California, and a medical office property located in Washington, D.C.
during the fourth quarter ("Fourth Quarter Acquisitions"), as well as the
increase in interest expense due to the use of the Company's revolving line
of credit to fund these acquisitions.
K. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of West 34th Street in New York City ("West 34th
Street"), as well as the increase in interest expense due to the use of the
Company's revolving line of credit to fund the acquisition.
L. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Franklin Plaza in Philadelphia, Pennsylvania
("Franklin Plaza"), as well as the increase in interest expense due to the
use of the Company's revolving line of credit to fund the acquisition.
M. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Bridgepoint Square, Austin, Texas ("Bridgepoint
Square"). Bridgepoint Square consists of five properties, of which one
property was under construction at September 30, 1997 and one property was
completed in July 1997. Also represents the increase in interest expense
due to the use of the Company's revolving line of credit to fund the
acquisition.
N. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of 1600 Market Street, as well as the increase in
interest expense due to the use of the Company's revolving line of credit
to fund the acquisition.
O. Represents the increase in rental income, depreciation and amortization and
general and administrative expenses arising from the Company's acquisition
of 1735 Market Street, as well as the increase in interest expense due to
the use of the Company's revolving line of credit to fund the acquisition.
P. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's Recent Acquisitions, the 1998 First Quarter Acquisitions and the
1998 Second Quarter Acquisitions (collectively, "1998 Acquisitions"), as
well as the increase in interest expense due to the use of the Company's
revolving line of credit to fund these acquisitions.
F-6
<PAGE>
HRPT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Statement of Income Adjustments for the Year Ended
December 31, 1997 - continued
Q. Represents the net decrease in interest expense relating to the issuance of
Remarketed Reset Notes in July 1997, the issuance of 6.75% Senior Notes in
December 1997, the issuance of the 1998 Notes, the prepayment of Floating
Rate Senior Notes in July 1997 and the issuance of common shares in
February 1998, March 1998 and June 1998.
R. Reflects the increase in interest expense as a result of the Company's
Proposed Offering and the application of net proceeds to the Company's
revolving line of credit.
F-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HRPT PROPERTIES TRUST
By: /s/ Ajay Saini
-------------------------------------------------
Ajay Saini, Treasurer and Chief Financial Officer
Date: August 12, 1998
