UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 1-9317
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 04-6558834
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
400 Centre Street, Newton, Massachusetts 02458
(Address of principal executive offices) (Zip Code)
617-332-3990
(Registrant's telephone number, including area code)
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 [ ]
Number of Common Shares outstanding at May 12, 1999:
131,894,237 shares of beneficial interest, $.01 par value.
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
FORM 10-Q
MARCH 31, 1999
INDEX
Page
<S> <C> <C>
PART I Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1999 and December 31, 1998 1
Consolidated Statements of Income - Three Months Ended March 31,
1999 and 1998 2
Consolidated Statements of Cash Flows - Three Months Ended March
31, 1999 and 1998 3
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II Other Information
Item 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(unaudited)
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Real estate properties, at cost (including properties leased to
affiliates with a cost of $38,270 and $113,594, respectively):
Land $ 364,228 $ 369,770
Buildings and improvements 2,501,146 2,586,712
----------- -----------
2,865,374 2,956,482
Less accumulated depreciation 167,501 169,811
----------- -----------
2,697,873 2,786,671
Real estate mortgages and notes, net (including note from an affiliate
of $1,000 in 1998) 125,827 69,228
Investment in Hospitality Properties Trust 109,842 110,554
Cash and cash equivalents 32,575 15,643
Interest and rents receivable 34,305 36,229
Other assets, net 50,263 45,732
----------- -----------
$ 3,050,685 $ 3,064,057
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $-- $ 100,000
Senior notes payable, net 892,476 802,439
Mortgage notes payable 24,611 24,779
Convertible subordinated debentures 204,863 204,863
Accounts payable and accrued expenses 39,547 44,446
Deferred rents 33,957 34,162
Security deposits 18,435 18,383
Due to affiliates 11,145 7,192
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, 131,893,126 shares and
131,547,178 shares issued and outstanding, respectively 1,319 1,315
Additional paid-in capital 1,971,146 1,964,878
Cumulative net income 612,417 564,814
Dividends (753,592) (703,214)
Unrealized holding losses on investments (5,639) --
----------- -----------
Total shareholders' equity 1,825,651 1,827,793
----------- -----------
$ 3,050,685 $ 3,064,057
=========== ===========
See accompanying notes
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
-------------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Rental income $101,313 $ 66,894
Interest and other income 3,090 5,058
-------- --------
Total revenues 104,403 71,952
-------- --------
Expenses:
Operating expenses 24,006 13,502
Interest 19,437 13,651
Depreciation and amortization 18,831 12,658
General and administrative 4,841 3,619
-------- --------
Total expenses 67,115 43,430
-------- --------
Income before equity in earnings of Hospitality Properties
Trust and gain on sale of properties 37,288 28,522
Equity in earnings of Hospitality Properties Trust 2,008 1,327
Gain on equity transaction of Hospitality Properties Trust -- 1,532
-------- --------
Income before gain on sale of properties 39,296 31,381
Gain on sale of properties 8,307 --
-------- --------
Net income $ 47,603 $ 31,381
======== ========
Weighted average shares outstanding 131,660 101,471
======== ========
Basic and diluted earnings per common share:
Income before gain on sale of properties $ 0.30 $ 0.31
======== ========
Net income $ 0.36 $ 0.31
======== ========
See accompanying notes
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
----------------------------------
1999 1998
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 47,603 $ 31,381
Adjustments to reconcile net income to cash provided by operating
activities:
Gain on sale of properties (8,307) --
Gain on equity transaction of Hospitality Properties Trust -- (1,532)
Equity in earnings of Hospitality Properties Trust (2,008) (1,327)
Dividends from Hospitality Properties Trust 2,720 2,560
Depreciation 18,217 12,128
Amortization 614 530
Amortization of bond discount 37 6
Change in assets and liabilities:
Increase in interest and rents receivable and other assets (6,828) (6,554)
(Decrease) increase in accounts payable and accrued expenses (265) 4,506
(Decrease) increase in deferred rents (205) 3,359
Increase (decrease) in security deposits 52 (949)
Increase in due to affiliates 5,266 3,078
--------- ---------
Cash provided by operating activities 56,896 47,186
--------- ---------
Cash flows from investing activities:
Real estate acquisitions and improvements (2,814) (278,647)
Proceeds from repayment of notes and mortgage loans, net 2,618 18,678
Proceeds from sale of real estate 22,177 5,565
Loans to affiliate 1,000 1,365
--------- ---------
Cash provided by (used for) investing activities 22,981 (253,039)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common shares -- 133,073
Proceeds from borrowings 131,500 334,945
Payments on borrowings (141,668) (225,172)
Deferred finance costs incurred (2,399) (1,070)
Dividends paid (50,378) (36,600)
--------- ---------
Cash (used for) provided by financing activities (62,945) 205,176
--------- ---------
Increase (decrease) in cash and cash equivalents 16,932 (677)
Cash and cash equivalents at beginning of period 15,643 22,355
--------- ---------
Cash and cash equivalents at end of period $ 32,575 $ 21,678
========= =========
Supplemental cash flow information:
Interest paid $ 22,797 $ 13,775
========= =========
See accompanying notes
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
-----------------------------
1999 1998
------- --------
<S> <C> <C>
Non-cash investing activities:
Investment in real estate mortgages $60,000 $--
Issuance of common shares 4,959 5,705
Non-cash financing activities:
Issuance of common shares $ 1,313 $ 2,828
Conversion of convertible subordinated debentures, net -- (1,788)
See accompanying notes
</TABLE>
4
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 1. Basis of Presentation
The financial statements of HRPT Properties Trust and its subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the full year.
The Financial Accounting Standards Board issued Financial Accounting
Standards Board Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities ("FAS 133") in 1998. FAS 133 must be adopted for our year
2000 financial statements. We anticipate that FAS 133 will have no impact on our
reported financial condition or results of operations.
Note 2. Comprehensive Income
The following is a reconciliation of net income to comprehensive income
for the three months ended March 31, 1999 and 1998:
1999 1998
--------- --------
Net income $47,603 $31,381
Other comprehensive loss:
Unrealized holding losses (5,639) --
--------- --------
Comprehensive income $41,964 $31,381
========= ========
Note 3. Shareholders' Equity
During the three months ended March 31, 1999, we issued 256,246 common
shares in connection with the 1997 acquisition of office properties leased to
agencies of the United States government and issued 89,702 common shares as the
incentive advisory fee for the year ended December 31, 1998.
On April 12, 1999, our trustees declared a dividend on our common
shares with respect to the quarter ended March 31, 1999 of $0.38 per share, or
approximately $50,100, which will be distributed on or about May 22, 1999 to
shareholders of record as of April 26, 1999.
Note 4. Real Estate Properties
During the three months ended March 31, 1999, we disposed of 14
healthcare properties, including 12 healthcare properties leased to an
affiliate, for $82,737 and recognized a gain of $8,307. As part of the sale of
12 healthcare properties, we provided a $60,000 mortgage loan secured by the 12
healthcare properties.
During the three months ended March 31, 1999, we funded $2,814 of
improvements to our existing properties. At March 31,1999, we had outstanding
commitments aggregating approximately $18,507 to acquire properties or to
provide financing. The acquisition of these properties is subject to various
closing conditions customary in real estate transactions and no assurances can
be given as to when or if these properties will be acquired.
Note 5. Investment in Hospitality Properties Trust
At March 31, 1999, we owned four million shares of the common stock of
Hospitality Properties Trust ("HPT") with a carrying value of $109,842 and a
quoted market value of $108,250. As of March 31, 1999, our percentage ownership
of HPT was 8.8%.
5
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 6. Real Estate Mortgages and Notes Receivable, net
During the three months ended March 31, 1999, we received regularly
scheduled principal payments of $154, and principal repayments of mortgages
secured by two healthcare properties totaling $2,973 and principal repayment of
$1,000 from a loan to an affiliate.
Note 7. Indebtedness
During March 1999, we issued $90,000 unsecured 7 7/8% Senior Notes due
2009. Net proceeds of $87,275 were used to repay amounts outstanding under our
revolving credit facility. These notes are callable at par on April 15, 2002.
Note 8. Segment Information
The following is a summary of our reportable segments as of and for the
three months ended March 31, 1999 and 1998:
Three Months Ended March 31, 1999
--------------------------------------------
Healthcare Office Total
--------------------------------------------
Revenues $ 26,131 $ 77,661 $ 103,792
Operating expenses -- 24,006 24,006
--------------------------------------------
Net operating income $ 26,131 $ 53,655 $ 79,786
============================================
Real estate investments $ 858,128 $2,133,073 $2,991,201
Three Months Ended March 31, 1998
--------------------------------------------
Healthcare Office Total
--------------------------------------------
Revenues $ 28,155 $ 43,606 $ 71,761
Operating expenses -- 13,502 13,502
--------------------------------------------
Net operating income $ 28,155 $ 30,104 $ 58,259
============================================
Real estate investments $ 910,091 $1,421,819 $2,331,910
6
<PAGE>
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
The following tables reconcile the reported segment information to the
consolidated financial statements for the three months ended March 31, 1999 and
1998:
Three Months Ended March 31,
-----------------------------
1999 1998
-----------------------------
Revenues:
Total per reportable segment $ 103,792 $ 71,761
Unallocated other income 611 191
-----------------------------
Total consolidated revenues $ 104,403 $ 71,952
=============================
Net operating income:
Total per reportable segment $ 79,786 $ 58,259
Unallocated amounts:
Other net income 611 191
Interest expense (19,437) (13,651)
Depreciation and amortization expense (18,831) (12,658)
General and administrative expenses (4,841) (3,619)
-----------------------------
Total consolidated income before equity
in earnings of HPT and gain on sale
of properties $ 37,288 $ 28,522
=============================
7
<PAGE>
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Versus 1998
Total revenues for the three months ended March 31, 1999 increased
$32.5 million to $104.4 million from $72.0 million for the three months ended
March 31, 1998. Revenues from our office segment increased $34.1 million and
revenues from our healthcare segment decreased $2.0 million. The increase in
revenues from our office segment is due to our increased real estate investment
in office properties subsequent to March 31, 1998. The decrease in revenues from
our healthcare segment is due to the reduced real estate investment in
healthcare properties subsequent to March 31, 1998. Rental income increased by
$34.4 million and interest and other income decreased by $2.0 million. Rental
income increased primarily because of new real estate investments subsequent to
March 31, 1998. Interest and other income decreased primarily as a result of a
decrease in mortgage interest income as our mortgage loan investments are
repaid.
Total expenses for the three months ended March 31, 1999 increased to
$67.1 million from $43.4 million for the three months ended March 31, 1998.
Operating expenses increased by $10.5 million as a result of our increased
investment in "gross leased" real estate assets subsequent to March 31, 1998.
Interest expense increased by $5.8 million as a result of higher borrowings
outstanding during the 1999 period. Depreciation and amortization, and general
and administrative expense increased by $6.2 million and $1.2 million,
respectively, primarily as a result of new real estate investments subsequent to
March 31, 1998.
Net income increased to $47.6 million, or $0.36 per basic and diluted
common share, for the 1999 period from $31.4 million, or $0.31 per basic and
diluted common share, for the 1998 period. The change in net income is due
primarily to the increase in new real estate investments since March 31, 1998
and the gain on sale of properties recognized in 1999.
Funds from operations for the three months ended March 31, 1999 were
$59.7 million, or $0.45 per basic common share, and $44.3 million, or $0.44 per
basic common share, for the 1998 period. Diluted funds from operations for the
three months ended March 31, 1999 were $63.7 million, or $0.45 per diluted
common share, and $48.4 million, or $0.43 per diluted common share, for the 1998
period. The dividends declared which relate to the three months ended March 31,
1999 and 1998 were $50.1 million, or $0.38 per common share, and $40.4 million,
or $0.38 per common share, respectively. The weighted average shares outstanding
were 131.7 million in 1999 and 101.5 million in 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1999, we disposed of 14
healthcare properties for $82.7 million and recognized a gain of $8.3 million.
As part of the sale of 12 healthcare properties, we provided a $60.0 million
mortgage loan secured by the 12 healthcare properties.
During the three months ended March 31, 1999, we funded $2.8 million of
improvements to our existing properties, received $154,000 of regularly
scheduled principal payments, received $3.0 million representing principal
repayment of a mortgage secured by two healthcare properties, and received $1.0
million from a loan to an affiliate.
In May 1999, we purchased one office property for $22.0 million plus
closing costs, using cash on hand.
At March 31, 1999, we owned 4.0 million, or 8.8%, of the common shares
of beneficial interest of HPT with a carrying value of $109.8 million and a
market value of $108.3 million. In May 1999, HPT completed a public offering of
common shares and our ownership percentage was reduced to 7.1%.
During the three months ended March 31, 1999, we issued 256,246 common
shares in connection with the 1997 acquisition of office properties leased to
agencies of the United States government and 89,702 common shares as the
incentive advisory fee for the year ended December 31, 1998.
8
<PAGE>
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - continued
At March 31, 1999, we had $32.6 million of cash and cash equivalents,
as well as no amounts outstanding and $500.0 million available for borrowing
under our bank credit facility.
During March 1999, we issued $90.0 million of unsecured 7 7/8% senior
notes due 2009. Net proceeds of approximately $87.3 million were used to repay
amounts outstanding under our revolving credit facility. These notes are
callable by us at par on April 15, 2002.
At March 31, 1999, we had outstanding commitments to purchase
properties or provide financing totaling approximately $18.5 million. We intend
to fund these commitments with a combination of cash on hand and amounts
available under our existing credit facility. The acquisition of these
properties is subject to various closing conditions customary in real estate
transactions, and no assurances can be given as to when and if these properties
will be acquired.
We continue to seek new investments to expand and diversify our
portfolio of leased real estate. As of March 31, 1999, our debt as a percentage
of total market capitalization was approximately 39%.
Year 2000
Our in-house computer systems environment is limited to software and
hardware developed by third parties and installed, operated and monitored by our
investment advisor and property manager. All of our computer systems (which are
limited to financial reporting, property management and accounting systems) were
installed within the last two years and management believes these systems are
year 2000 compliant. All costs associated with our computer systems are borne by
our investment advisor and property manager.
All of our healthcare properties are leased on a triple net lease basis
and are not managed by us. These triple net leased properties are dependent upon
the efforts of our third party tenants and their affiliates, which operate these
properties. Our leases and other contractual relationships require these
operators to conduct the daily operations of our properties and the scope of the
operators' responsibilities includes ensuring preparedness for the year 2000.
Because of this leasing arrangement, the only actions that we can take with
respect to these properties is to inquire about and monitor public operators'
SEC filings and evaluate our operators' year 2000 preparedness plans. The
majority of our triple net leased operators have responded to our inquiries
regarding their preparedness for issues related to the year 2000. Based on
operator responses to our inquiries, we believe that these operators are in the
process of studying their systems and the systems of their vendors, suppliers
and service providers to ensure preparedness. Current levels of preparedness are
varied and include partially completed inventory and assessment of potential
risks, testing, implementation of plans for remediation and reprogramming and
compliance. While we believe the efforts of our tenants described in their
responses will be or are adequate to address year 2000 concerns, there can be no
guarantee that all tenant systems will be year 2000 compliant on a timely basis
and will not have a material effect on us.
Most of our commercial office properties and properties leased to the
U.S. Government are leased on a gross lease or modified gross lease basis and
are managed by us. In early 1998, we set out to identify issues associated with
year 2000 compliance for these managed properties. We have been contacting and
will continue to contact vendors to gather information to assess vendor
readiness. In addition, managers and engineers at each of our properties are
responsible for gathering and assessing year 2000 issues affecting specific
building systems including life safety, elevator, garage, security, and energy
management systems. We have also requested our major tenants to provide us with
updates of their year 2000 readiness. We expect to complete an overall
assessment of year 2000 issues by the end of the second quarter of 1999 and
perform necessary system replacements or upgrades, including testing, by third
or fourth quarter of 1999. Overall financial risk associated with year 2000
readiness for these properties is not expected to be material, and most of the
costs associated with correcting non-compliance are expected to be classified as
operating expense that may be reimbursable to us under most tenant leases.
9
<PAGE>
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - continued
If our efforts and the efforts of our vendors, customers and tenants to
prepare for the year 2000 were ineffective, our properties could be subject to
significant adverse effects, including, but not limited to, loss of business and
growth opportunities, reduced revenues and increased expenses which might cause
operating losses to our tenants as well as operating losses at our gross leased
properties. Continued or severe operating losses may cause one or more of our
tenants to default on their leases. Numerous lease defaults could jeopardize our
ability to maintain our financial results of operations and meet our financial,
operating and capital obligations.
We do not currently have a contingency plan in place in the event we,
or our operators, do not successfully remedy year 2000 compliance issues that
are identified in a timely manner or fail to identify any year 2000 issues. We
will evaluate the status of our year 2000 compliance plan in mid 1999 and
determine whether a plan is necessary.
10
<PAGE>
HRPT PROPERTIES TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to risks associated with interest rate changes. We
manage our exposure to this market risk through our monitoring of available
financing alternatives. Our strategy to manage exposure to changes in interest
rates is unchanged from December 31, 1998. Furthermore, we do not foresee any
significant changes in our exposure to fluctuations in interest rates or in how
such exposure is managed in the near future. At March 31, 1999, our total
outstanding debt for fixed rate notes consisted of the following:
Amount Coupon Maturity
Unsecured senior notes:
$40.0 million 7.25% 2001
$160.0 million 6.875% 2002
$150.0 million 6.75% 2002
$164.9 million 7.50% 2003
$100.0 million 6.7% 2005
$90.0 million 7.875% 2009
$143.0 million 8.5% 2013
Secured notes:
$13.1 million 8.00% 2008
$11.5 million 7.66% 2009
No principal repayments are due under the unsecured senior notes until
maturity. If, at maturity, the unsecured senior notes were to be refinanced at
interest rates which are 1/2 percentage point higher than shown above, our per
annum interest cost would increase by approximately $4.2 million. The secured
notes are secured by three of our office properties and require principal and
interest payments through maturity.
As of March 31, 1999, we had two series of senior unsecured notes that
were subject to floating interest rates; a $500.0 million bank credit facility
and another series of unsecured senior notes totaling $250.0 million. Our bank
credit facility bears interest at floating rates and matures in 2002. At March
31, 1999, no amounts were outstanding and $500.0 million was available for
drawing under our line of credit. Our line of credit is available to finance our
acquisition commitments. As of March 31, 1999, our acquisition commitments
required approximately $18.5 million (plus closing costs) of cash. Assuming
these commitments were all funded with borrowings under our bank credit
facility, and assuming interest rates increased 1/2 percentage point, our
annualized interest cost would increase by approximately $92,500. Our unsecured
senior notes totaling $250.0 million bear interest at floating rates and mature
in 2007. Assuming interest rates increase 1/2 percentage point, our annualized
interest costs would increase by approximately $1.3 million.
Each of our obligations for borrowed money has provisions that allow us
to make repayments earlier than the stated maturity date. In some cases, we are
not allowed to make early repayment prior to a cutoff date and in other cases we
are allowed to make prepayments only at a premium to face value. In any event,
these prepayment rights may afford us the opportunity to mitigate the risk of
refinancing at maturity at higher rates, by refinancing at lower rates prior to
maturity.
From time to time, we may enter into contracts to hedge our interest
rate risk. As of March 31, 1999, we have not entered into any of these
contracts.
The market prices, if any, of each of our fixed rate obligations as of
March 31, 1999 are sensitive to changes in interest rates. Typically, if market
rates of interest increase, the current market price of a fixed rate obligation
will decrease. Conversely, if market rates of interest decrease, the current
market price of a fixed rate obligation typically will increase. Based on the
balances outstanding at March 31, 1999, a hypothetical immediate one percentage
point change in interest rates would change the fair value of our fixed rate
debt obligations by approximately $41.7 million (based on discounted cash flow
analysis).
11
<PAGE>
HRPT PROPERTIES TRUST
Part II Other Information
Item 2. Changes in Securities.
In February 1999, we issued an aggregate of 256,246 common shares of
beneficial interest, par value $.01 per share ("Common Shares") in connection
with the previously disclosed acquisition of office properties leased to
agencies of the United States Federal Government and in connection with certain
post-closing adjustments, in both cases pursuant to the Merger Agreement dated
February 17, 1997 between the Company and Government Property Investors, Inc.,
as amended. The issuance of such Common Shares was made pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act").
In March 1999, we issued 89,702 Common Shares as an incentive fee of
$1.3 million for services rendered during 1998, based upon a per Common Share
price of $14.642. These restricted securities were issued pursuant to the
exemption from registration provided under Section 4(2) of the Securities Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
1. Current Report on Form 8-K, dated March 5, 1999 relating to
(a) the Company's annual audited consolidated financial
statements and management's discussion and analysis of
financial condition and results of operations for the year
ended December 31, 1998, and (b) the issuance of 256,246
common shares to Government Property Investors, Inc. (Items
5 and 7).
2. Current Report on Form 8-K, dated March 11, 1999 relating to
(a) the unaudited pro forma consolidated financial
statements of the Company as of and for the year ended
December 31, 1998, and (b) filing as exhibits, (1) Form of
Common Share Certificate, (2) Supplemental Indenture No. 5,
dated as of November 30, 1998, by and between the Company
and State Street Bank and Trust Company, relating to
$130,000,000 in aggregate principal amount of 8 1/2% Monthly
Income Senior Notes due 2013, including form thereof, (3)
Note Modification Agreement, dated as of June 30, 1998, by
and between Connecticut Subacute Corporation and the
Company, (4) Second Amendment to Master Lease Agreement
General Terms and Conditions and Leases Entered Into
Pursuant Thereto, dated as of October 5, 1998, by and
between the Company and Connecticut Subacute Corporation,
(5) consent of Ernst & Young LLP and (6) consents of Arthur
Andersen LLP (Item 7).
3. Current Report on Form 8-K, dated March 19, 1999 relating to
(a) the unaudited pro forma consolidated financial
statements of the Company as of and for the year ended
December 31, 1998, and (b) filing as exhibits, (1) Purchase
Agreement, dated as of March 19, 1999, by and among HRPT
Properties Trust and the several Underwriters named therein
pertaining to $90,000,000 in aggregate principal amount of 7
7/8% Monthly Income Senior Notes due 2009, (2) Form of
Supplemental Indenture No. 6, dated as of March 24, 1999, by
and between HRPT Properties Trust and State Street Bank and
Trust Company, relating to $90,000,000 in aggregate
principal amount of 7 7/8% Monthly Income Senior Notes due
2009, including form thereof, (3) opinion of counsel re: tax
matters and (4) Computation of Ratio of Earnings to Fixed
Charges (Item 7).
12
<PAGE>
HRPT PROPERTIES TRUST
CERTAIN IMPORTANT FACTORS
This Quarterly Report on Form 10-Q contains statements which constitute
forward looking statements within the meaning of the Securities Exchange Act of
1934, as amended. Those statements appear in a number of places in this Form
10-Q and include statements regarding our intent, belief or expectations with
respect to the declaration or payment of dividends, the consummation of
additional acquisitions, policies and plans regarding investments, financings or
other matters, our qualification and continued qualification as a real estate
investment trust or trends affecting our or any of our property's financial
condition or results of operations. Readers are cautioned that any such forward
looking statements are not guarantees of future performance and involve risks
and uncertainties, and that actual results may differ materially from those
contained in the forward looking statements as a result of various factors. Such
factors include without limitation changes in financing terms, our ability or
inability to complete acquisitions and financing transactions, results of
operations of our properties and general changes in economic conditions not
presently contemplated. The information contained in this Form 10-Q and our
Annual Report on Form 10-K for the year ended December 31, 1998, including the
information under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations", identifies other important factors that
could cause such differences.
The Amended and Restated Declaration of Trust establishing the Company,
dated July 1, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is duly filed in the Office of the Department of Assessments and
Taxation of the State of Maryland, provides that the name "HRPT Properties
Trust" refers to the trustees under the Declaration collectively as trustees,
but not individually or personally, and that no trustee, officer, shareholder,
employee or agent of the Company shall be held to any personal liability,
jointly or severally, for any obligation of, or claim against, the Company. All
persons dealing with the Company, in any way, shall look only to the assets of
the Company for the payment of any sum or the performance of any obligation.
13
<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/ David J. Hegarty
David J. Hegarty
President and Chief Operating Officer
Dated: May 14, 1999
By: /s/ Ajay Saini
Ajay Saini
Treasurer and Chief Financial Officer
Dated: May 14, 1999
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 32,575
<SECURITIES> 0
<RECEIVABLES> 125,827
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,865,374
<DEPRECIATION> 167,501
<TOTAL-ASSETS> 3,050,685
<CURRENT-LIABILITIES> 0
<BONDS> 1,121,950
0
0
<COMMON> 1,319
<OTHER-SE> 1,824,332
<TOTAL-LIABILITY-AND-EQUITY> 3,050,685
<SALES> 0
<TOTAL-REVENUES> 104,403
<CGS> 0
<TOTAL-COSTS> 67,115
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,437
<INCOME-PRETAX> 39,296
<INCOME-TAX> 0
<INCOME-CONTINUING> 39,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,603
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
