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): November 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 UNCERTAINTITIES 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
September 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 September 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 January 1, 1997. 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 September 30,
1998, incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998. These unaudited pro forma
consolidated financial statements are not necessarily indicative of what the
actual consolidated financial position or results of operations of the Company
would have been as of the date or for the period indicated, nor do they
represent the expected consolidated financial position or results of operations
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,
changes in the occupancies of properties, changes in rent which the Company
receives, 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
September 30, 1998
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Recent Proposed
Historical Acquisitions (A) Offering (B) Pro Forma
---------- --------------- ------------ ---------
ASSETS
<S> <C> <C> <C> <C>
Real estate properties, at cost:
Land $ 347,408 $ 29,284 $ - $ 376,692
Buildings and improvements 2,439,848 101,455 - 2,541,303
------------ --------- --------- ------------
2,787,256 130,739 - 2,917,995
Less accumulated depreciation (153,137) - - (153,137)
------------ --------- --------- ------------
2,634,119 130,739 - 2,764,858
Real estate mortgages and notes, net 69,369 - - 69,369
Investment in Hospitality Properties Trust 111,345 - - 111,345
Cash and cash equivalents 46,942 (37,107) - 9,835
Interest and rents receivable 29,557 - - 29,557
Other assets, net 34,764 (132) 2,500 37,132
------------ --------- --------- ------------
$ 2,926,096 $ 93,500 $ 2,500 $ 3,022,096
============ ========= ========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 95,000 $ 93,500 $ (72,500) $ 116,000
Senior notes payable, net 659,402 - 75,000 734,402
Mortgage notes payable 25,399 - - 25,399
Convertible subordinated debentures 204,863 - - 204,863
Accounts payable and accrued expenses 34,780 - - 34,780
Deferred rents 34,696 - - 34,696
Security deposits 18,143 - - 18,143
Due to affiliates 15,245 - - 15,245
Shareholders' equity:
Preferred shares of beneficial interest,
$.01 par value; 50,000,000 shares
authorized; none issued - - - -
Common shares of beneficial interest,
$.01 par value; 150,000,000 shares
authorized and pro forma, 131,547,178
shares issued and outstanding and pro forma 1,315 - - 1,315
Additional paid-in capital 1,964,878 - - 1,964,878
Cumulative net income 525,602 - - 525,602
Dividends (653,227) - - (653,227)
------------ --------- --------- ------------
Total shareholders' equity 1,838,568 - - 1,838,568
------------ --------- --------- ------------
$ 2,926,096 $ 93,500 $ 2,500 $ 3,022,096
============ ========= ========= ============
- - - -
</TABLE>
See accompanying notes.
F-2
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Nine Months Ended September 30, 1998
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
1998 1998
First Quarter 1600 Market Second Quarter 1735 Market
Historical Acquisitions (C) Street (D) Acquisitions (C) Street (E)
---------- --------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 239,045 $ 2,455 $ 4,721 $ 10,184 $ 12,472
Interest and other income 13,158 - - - -
--------- ---------- -------- ---------- --------
Total revenues 252,203 2,455 4,721 10,184 12,472
--------- ---------- -------- ---------- --------
Expenses:
Operating expenses 51,535 338 1,915 2,965 4,098
Interest 45,788 1,028 1,869 3,962 6,641
Depreciation and amortization 43,093 479 650 1,619 2,784
General and administrative 12,354 104 145 361 525
--------- ---------- -------- ---------- --------
Total expenses 152,770 1,949 4,579 8,907 14,048
--------- ---------- -------- ---------- --------
Income (loss) before equity in earnings
of Hospitality Properties Trust 99,433 506 142 1,277 (1,576)
Equity in earnings of Hospitality
Properties Trust 5,541 - - - -
Gain on equity transaction of
Hospitality Properties Trust 2,470 - - - -
--------- ---------- -------- ---------- --------
Income (loss) before extraordinary item $ 107,444 $ 506 $ 142 $ 1,277 $ (1,576)
========= ========== ======== ========== ========
Weighted average shares outstanding 115,931
=========
Basic and diluted earnings per
common share:
Income before extraordinary item $ 0.93
=========
<PAGE>
<CAPTION>
Third
Quarter Recent Proposed
Acquisitions (C) Acquisitions (C) Other (F) Offering (G) Pro Forma
---------------- ---------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 8,915 $ 12,077 $ - $ - $ 289,869
Interest and other income - - - - 13,158
------- -------- -------- -------- ---------
Total revenues 8,915 12,077 - - 303,027
------- -------- -------- -------- ---------
Expenses:
Operating expenses 1,726 3,623 - - 66,200
Interest 3,630 3,681 (12,295) 1,247 55,551
Depreciation and amortization 1,666 1,903 - 125 52,319
General and administrative 370 491 - - 14,350
------- -------- -------- -------- ---------
Total expenses 7,392 9,698 (12,295) 1,372 188,420
------- -------- -------- -------- ---------
Income (loss) before equity in earnings
of Hospitality Properties Trust 1,523 2,379 12,295 (1,372) 114,607
Equity in earnings of Hospitality
Properties Trust - - - - 5,541
Gain on equity transaction of
Hospitality Properties Trust - - - - 2,470
------- -------- -------- -------- ---------
Income (loss) before extraordinary item $ 1,523 $ 2,379 $ 12,295 $ (1,372) $ 122,618
======= ======== ======== ======== =========
Weighted average shares outstanding 131,323
=========
Basic and diluted earnings per
common share:
Income before extraordinary item $ 0.93 $ 0.93
======= =========
</TABLE>
See accompanying notes.
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 Third Quarter
Historical GPI (H) CSMC (I) Acquisitions (J) Acquisitions (J)
---------- ------- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 188,000 $ 11,959 $ 6,831 $ 2,948 $ 3,179
Interest and other income 20,863 (366) - - -
--------- -------- ------- ------- -------
Total revenues 208,863 11,593 6,831 2,948 3,179
--------- -------- ------- ------- -------
Expenses:
Operating expenses 26,765 2,053 1,910 - 954
Interest 36,766 (1,216) 3,232 1,087 1,463
Depreciation and amortization 39,330 4,156 1,119 627 501
General and administrative 11,670 2,105 249 139 111
--------- -------- ------- ------- -------
Total expenses 114,531 7,098 6,510 1,853 3,029
--------- -------- ------- ------- -------
Income (loss) before equity in
earnings of Hospitality
Properties Trust, gain on
sale of properties and
extraordinary item 94,332 4,495 321 1,095 150
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 1,095 150
Gain on sale of properties, net 2,898 - - - -
--------- -------- ------- ------- -------
Income (loss) before extraordinary
item $ 115,102 $ 4,495 $ 321 $ 1,095 $ 150
========= ======== ======= ======= =======
Weighted average shares outstanding 92,168
=========
Basic and diluted earnings per
common share:
Income before extraordinary item $ 1.25
=========
<PAGE>
<CAPTION>
West 34th Bridgepoint Fourth Quarter 1998
Street (K) Franklin Plaza (L) Square (M) Acquisitions (J) Acquisitions (N)
---------- ------------------ ----------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 10,771 $ 9,614 $ 5,599 $ 8,461 $ 72,392
Interest and other income - - - - -
-------- -------- ------- ------- --------
Total revenues 10,771 9,614 5,599 8,461 72,392
-------- -------- ------- ------- --------
Expenses:
Operating expenses 3,641 4,904 2,162 2,634 17,645
Interest 2,876 2,486 3,216 4,338 26,293
Depreciation and amortization 1,869 1,334 1,175 1,269 12,410
General and administrative 415 296 262 283 2,849
-------- -------- ------- ------- --------
Total expenses 8,801 9,020 6,815 8,524 59,197
-------- -------- ------- ------- --------
Income (loss) before equity in
earnings of Hospitality
Properties Trust, gain on
sale of properties and
extraordinary item 1,970 594 (1,216) (63) 13,195
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 1,970 594 (1,216) (63) 13,195
Gain on sale of properties, net - - - - -
-------- -------- ------- ------- --------
Income (loss) before extraordinary
item $ 1,970 $ 594 $ (1,216) $ (63) $ 13,195
======== ======== ======= ======= ========
Weighted average shares outstanding
Basic and diluted earnings per
common share:
Income before extraordinary item
<PAGE>
<CAPTION>
1600 Market 1735 Market Proposed
Street (O) Street (P) Other (Q) Offering (R) Pro Forma
----------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 18,883 $ 29,836 $ - $ - $ 368,473
Interest and other income - - - 20,497
-------- -------- -------- -------- ----------
Total revenues 18,883 29,836 - - 388,970
-------- -------- -------- -------- ----------
Expenses:
Operating expenses 7,659 10,276 - - 80,603
Interest 7,475 15,665 (33,625) 1,662 71,718
Depreciation and amortization 2,601 5,569 - 167 72,127
General and administrative 578 1,238 - - 20,195
-------- -------- -------- -------- ----------
Total expenses 18,313 32,748 (33,625) 1,829 244,643
-------- -------- -------- -------- ----------
Income (loss) before equity in
earnings of Hospitality
Properties Trust, gain on
sale of properties and
extraordinary item 570 (2,912) 33,625 (1,829) 144,327
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 570 (2,912) 33,625 (1,829) 162,199
Gain on sale of properties, net - - - - 2,898
-------- -------- -------- -------- ----------
Income (loss) before extraordinary
item $ 570 $ (2,912) $ 33,625 $ (1,829) $ 165,097
======== ======== ======== ======== ==========
Weighted average shares outstanding 130,725
==========
Basic and diluted earnings per
common share:
Income before extraordinary item $ 1.26
==========
</TABLE>
See accompanying notes
F-4
<PAGE>
HRPT Properties Trust
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands)
Consolidated Balance Sheet Adjustments
A. Represents the Company's acquisitions in October 1998 of developable land
and five commercial office properties located in Texas and a commercial
office property located in Maryland (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 $75,000 8.5% senior notes due 2013
(the "Proposed Offering"). Net proceeds from the Proposed Offering will be
used to repay amounts outstanding under the Company's revolving line of
credit.
Consolidated Statement of Income Adjustments for the Nine Months Ended
September 30, 1998
C. Represents the increases in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from a)
the Recent Acquisitions, b) 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"), c) 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 d) the Company's acquisitions during July 1998, August
1998, and September 1998 of a medical office property located in Texas, a
commercial office property located in Delaware, a commercial office
property located in New Jersey, a commercial office property located in
Virginia, a commercial office property located in Tennessee and a
commercial office property located in Pennsylvania (collectively, "1998
Third 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 and the issuance of 6 7/8% Senior Notes due 2002 in August
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 and amortization 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)
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 Recent Acquisitions, the 1998 First Quarter Acquisitions, the
1998 Second Quarter Acquisitions and the 1998 Third 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.
O. 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.
P. 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.
F-6
<PAGE>
HRPT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands)
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 due
2002 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 and amortization expense as a result of
the Company's Proposed Offering and the application of net proceeds to the
Company's revolving line of credit.
S. The Company has proposed acquisitions, which include a commercial office
property located in California and two commercial office properties located
in Texas (the "Proposed Acquisitions"). Upon the consummation of the
Proposed Acquisitions, adjusted pro forma total assets, total real estate
investments, total borrowings and shareholders' equity at September 30,
1998 would be, $3,032,596, $2,938,585, $1,091,164 and $1,838,568,
respectively. For the nine months ended September 30, 1998, adjusted pro
forma total revenues, total expenses and net income before extraordinary
item would be $305,585, $190,175 and $123,421, respectively. For the year
ended December 31, 1997, adjusted pro forma total revenues, total expenses
and net income before extraordinary item would be $400,600, $251,266 and
$170,104, respectively. The Proposed Acquisitions are subject to various
closing conditions customary in real estate transactions, including, but
not limited to, due diligence and final documentation. No assurances can
be given as to when or if these Proposed Acquisitions will be consummated.
F-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully 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: November 12, 1998
