SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): December 16, 1999
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland 1-9317 04-6558834
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 Centre Street, Newton, Massachusetts 02458
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-796-8350
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Item 5. Other Events.
(a) Election of New Trustee and Senior Vice President
As previously announced, on December 16, 1999, HRPT Properties Trust
(the "Company") elected Frederick N. Zeytoonjian, age 64, to its Board of
Trustees as a Group I Trustee to fill the vacancy created by the resignation of
Dr. Bruce Gans in October 1999 to become a Trustee of Senior Housing Properties
Trust, a former wholly-owned subsidiary of the Company, a majority of the common
shares of which were distributed in a spin-off to the Company's shareholders on
October 12, 1999. Mr. Zeytoonjian will serve until the Company's 2002 annual
shareholders meeting. Mr. Zeytoonjian's principal occupation is, and for the
last five years has been, as a real estate investor and the founder and Chief
Executive Officer of Turf Products Corporation. He is also Chairman of the Board
of Yardmart.com, inc.
In addition, Jennifer B. Clark, age 38, was elected as a Senior Vice
President of the Company. Ms. Clark is a Vice President of REIT Management and
Research, Inc., the investment advisor and property manager to the Company. From
October 1994 through July 1999 Ms. Clark was a partner, and prior to October
1994, an associate, of the Boston law firm of Sullivan & Worcester LLP. Ms.
Clark will be primarily responsible for leasing the Company's office properties.
(b) Possible Sale of Properties and Share Buy Back Program
The Company has decided to explore the possible sale of up to ten of
its office properties containing approximately 900,000 square feet. Negotiations
for the sale of some of these properties have begun on a preliminary basis and
the Company intends to select brokers to market the other properties in early
2000. If all of these properties are sold, the Company currently expects the
aggregate proceeds to be approximately $150 to $160 million. There is no
assurance, however, that these sales will occur, or if they occur when or at
what price and on what terms they will occur.
In addition, the Company has commenced discussions regarding two
separate joint ventures in which part interests in some of its larger properties
may be sold to investors. The discussions are currently in the preliminary
stages, and the Company has not disclosed the identity of the properties
involved or the possible joint venture partners at this time. If these joint
ventures are successfully concluded, the Company based on the preliminary
discussions would expect to realize between $200 million and $400 million in
aggregate net proceeds for both transactions. There is no assurance however that
these joint ventures will occur, or if they occur when or at what price and on
what terms they will occur
If the above described dispositions do occur, the Company expects to
use the net proceeds to prepay debt, to selectively purchase new investments and
to fund the share buy back program described below.
The Company's Board of Trustees recently authorized a share buy back
program for up to ten per cent of its fully diluted common shares outstanding,
or approximately 14 million common shares. Under the program, if commenced,
shares would be purchased in open market transactions or in privately negotiated
transactions during the calendar year 2000 at prices acceptable to the Company
in its discretion.
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The Company does not intend to increase debt leverage to purchase shares, but,
instead, intends to use proceeds of asset sales or joint ventures, if any, to
fund share purchases.
(c) Amendment to the Company's Advisory Agreement
On October 12, 1999, the Company entered into Amendment No 1. to its
Advisory Agreement with REIT Management & Research, Inc. ("RMR") to modify the
terms of the advisory fees due by the Company to RMR in connection with the
Transaction Agreement dated as of September 21, 1999 between the Company and
Senior Housing Properties Trust and the Company's spin-off of shares of Senior
Housing Properties Trust in October 1999. By the terms of the Amendment, the
Company's historical cost of real estate assets used to calculate the advisory
fees payable by the Company to RMR excludes the Company's investment in Senior
Housing Properties Trust following the spin off of Senior Housing Properties
Trust in October 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
10.1 Amendment No. 1 to Advisory Agreement, dated as of October 12, 1999,
between HRPT Properties Trust and REIT Management & Research, Inc.
FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K contains statements and information
that constitute forward looking statements within the meaning of the Securities
Exchange Act of 1934, as amended. These statements appear in a number of places
in this Form 8-K and include statements regarding strategies, plans, beliefs and
current expectations of the Company's management. Readers are cautioned that any
such forward looking statements are not guarantees of future events and involve
risks and uncertainties that could cause actual results to differ materially
from those in the forward looking statements. Such risks and uncertainties
include, but are not limited to, the Company's operating performance may
decline, the Company may be unable to conclude sales or joint ventures on
satisfactory terms, the Company may be unable to fund a share buy back program
or to complete a share buy back program before its share price materially
increases, and the factors discussed in this Form 8-K.
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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.
HRPT PROPERTIES TRUST
By: /s/ John Popeo
John Popeo, Treasurer and Chief Financial
Officer
Date: December 27, 1999
EXHIBIT 10.1
Amendment No. 1 to Advisory Agreement
This Amendment No. 1 dated as of October 12, 1999 to Advisory Agreement
(the "Advisory Agreement") dated effective as of January 1, 1998 by and between
HRPT Properties Trust, a Maryland real estate investment trust (the "Company"),
and REIT Management and Research, Inc., a Delaware corporation (the "Advisor").
WHEREAS, on October 12, 1999 the Company effected a spin-off of Senior
Housing Properties Trust ("Senior Housing") a wholly owned subsidiary of the
Company, by transferring to Senior Housing 93 senior housing properties and
distributing 13.2 million of Senior Housing's 26 million common shares of
beneficial interest, to the Company's shareholders (as further described in the
Company's Report on Form 8-K dated September 21, 1999 and the notes to the
unaudited pro forma consolidated financial statements of the Company therein,
filed with the Securities and Exchange Commission) (the "Spin-Off"); and
WHEREAS, effective October 12, 1999 Senior Housing entered an advisory
agreement with the Advisor to perform certain real estate investment, management
and administrative services for Senior Housing; and
WHEREAS, the Company and the Advisor are desirous of amending the
Advisory Agreement to modify the fees payable to the Advisor by the Company as a
result of the spin-off.
NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
1. Section 9 of the Advisory Agreement shall be amended by deleting
such Section in its entirety and substituting the following in its place:
"9. Compensation. The Advisor shall be paid, for the services rendered by it to
the Company pursuant to this Advisory Agreement, an annual advisory fee (the
"Advisory Fee") equal to 0.7 percent of the Average Invested Capital (as defined
below) computed as of the last day of the Company's fiscal year up to
$250,000,000, plus 0.5 percent of the Average Invested Capital exceeding
$250,000,000. In addition, the Advisor shall be paid an annual incentive fee
(the "Incentive Fee") consisting of a number of shares of the Company's common
shares of beneficial interest ("Common Shares") with a value (determined as
provided below) equal to fifteen percent 15% of the product of (i) the weighted
average Common Shares of the Company outstanding on a fully diluted basis during
such year and (ii) the excess if any of "FFO Per Share" (as defined below) for
such year over the FFO Per Share for the preceding year. However, in no event
shall the Incentive Fee payable in respect of any year exceed $.01 multiplied by
the weighted average number of Common Shares outstanding on a fully diluted
basis during such year. (The Advisory Fee and Incentive Fee are hereinafter
collectively referred to as the "Fees").
For purposes of this Agreement: "Average Invested Capital" of the Company shall
mean the average of the aggregate book value of the assets of the Company
invested, directly or indirectly, in equity interests in and loans secured by
real estate and personal property owned in connection with such real estate, all
before reserves for depreciation or bad debts or other similar noncash
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reserves, computed by taking the average of such values at the end of each month
during such period minus the average of the aggregate book value (calculated as
described above) of (i) the assets transferred by the Company to Senior Housing
in connection with the Spin-Off, for all periods from October 12, 1999 through
December 31, 1999, and (ii)all of the assets of Senior Housing for all periods
after January 1, 2000. "Cash Available for Distribution to Shareholders" shall
mean, for any period, the net cash flow from operations of the Company's
investments for such period less preferred dividends, if any, and such amounts
as the Trustees, in their sole discretion, shall determine are necessary or
appropriate to discharge current debts and liabilities of the Company and to
provide reasonable reserves for the payment of non-current debts and liabilities
of the Company and for the operations of the Company, including reserves for
replacements and capital improvements and reserves, if any, required in
connection with the ownership of the Company's properties and investments.
Calculation of Average Invested Capital and Cash Available for Distribution to
Shareholders shall be made annually by the Company's independent certified
public accountants.
The Advisory Fee shall be computed and paid within thirty (30) days following
the end of each fiscal month by the Company, and the Incentive Fee shall be
computed and paid within thirty (30) days following the public availability of
the Company's annual audited financial statements for each fiscal year. Such
computations shall be based upon the Company's monthly or quarterly financial
statements, as the case may be, and shall be in reasonable detail. A copy of
such computations shall promptly be delivered to the Advisor accompanied by
payment of the Fees shown thereon to be due and payable.
The payment of the aggregate annual Fees paid for any fiscal year shall be
subject to adjustment as of the end of each fiscal year. On or before the 30th
day after public availability of the Company's annual audited financial
statements for each fiscal year, the Company shall deliver to the Advisor an
Officer's Certificate (a "Certificate") reasonably acceptable to the Advisor and
certified by an authorized officer of the Company setting forth (i) the Average
Invested Capital and Cash Available for Distribution to Shareholders for the
Company's fiscal year ended upon the immediately preceding December 31, and (ii)
the Company's computation of the Fees payable for said fiscal year.
If the aggregate annual Fees payable for said fiscal year as shown in such
Certificate exceed the aggregate amounts previously paid with respect thereto by
the Company, the Company shall include its check for such deficit and deliver
the same to the Advisor with such Certificate.
If the aggregate annual Fees payable for said fiscal year as shown in such
Certificate are less than the aggregate amounts previously paid with respect
thereto by the Company, the Company shall specify in such Certificate whether
the Advisor should (i) remit to the Company its check in an amount equal to such
difference or (ii) grant the Company a credit against the Fees next coming due
in the amount of such difference until such amount has been fully paid or
otherwise discharged.
For purposes of this Agreement: "FFO Per Share" shall mean (i) the Company's
consolidated net income, computed in accordance with generally accepted
accounting principles, before gain or loss on sale of properties and
extraordinary items, depreciation and other non-cash items,
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including the Company's pro rata share of the funds from operations (determined
in accordance with this clause) for such year of (A) any unconsolidated
subsidiary and (B) any entity for which the Company accounts by the equity
method of accounting, divided by (ii) the weighted average number of Common
Shares outstanding on a fully diluted basis during such year. For purposes of
calculating the Incentive Fee for the fiscal year ending December 31, 1999, FFO
Per Share for the Company's fiscal year ending December 31, 1999 shall be
calculated on a pro forma basis adjusted as if the Spin-Off had occurred as of
January 1, 2000. For purposes of calculating the Incentive Fee for years after
the fiscal year ending December 31, 1999, FFO Per Share for the Company's fiscal
year ending December 31, 1999 shall be calculated on a pro forma basis adjusted
as if the Spin-Off had occurred as of December 31, 1998.
Payment of the Incentive Fee shall be made by issuance of Common Shares of
Beneficial Interest under the Company's 1992 Incentive Share Award Plan. The
number of shares to be issued in payment of the Incentive Fee shall be the whole
number of shares (disregarding any fraction) equal to the value of the Incentive
Fee, as provided above, divided by the average closing price of the Company's
Common Shares of Beneficial Interest on the New York Stock Exchange during the
month of December in the year for which the computation is made."
2. Except as provided herein, each of the provisions of the Advisory
Agreement shall remain in full force and effect and this Amendment No. 1 shall
not constitute a modification, acceptance or waiver of any other provision of
the Advisory Agreement except as provided herein. Each of the parties hereto
ratifies and confirms all of its obligations under the Advisory Agreement, as
amended by this Amendment No. 1.
3. This Amendment No. 1 may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to Advisory Agreement to be executed by their duly authorized officers, under
seal, as of the day and year first above written.
ATTEST: HRPT PROPERTIES TRUST
/s/ Susan M. Barnard By: /s/ John Popeo
Its: Treasurer
ATTEST: REIT MANAGEMENT & RESEARCH, INC.
/s/ Susan M. Barnard By: /s/ Thomas M. O'Brien
Its: Vice President
