<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 30, 1997
/ / 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 1-9524
BURNHAM PACIFIC PROPERTIES, INC.
--------------------------------
(Exact name of Registrant as specified in its Charter)
Maryland 33-0204162
- --------------------------------------------- ---------------------------------
(State of other jurisdiction of incorporation) (IRS Employer Identification No.)
610 West Ash Street, San Diego, California 92101
- ------------------------------------------ ---------------------------------
(Address of principal executive offices) (Zip Code)
(619) 652-4700
------------------------------
Registrant's telephone number, including area code
NA
----------------------------------------------
Former name, former address and former fiscal year if changed since last report.
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 shares of the Registrant's common stock outstanding at August 14,
1997: 23,432,852
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, 1997 December 31, 1996
------------- ------------------
<S> <C> <C>
Real Estate $560,744 $389,634
Less Accumulated Depreciation (52,711) (48,978)
-------- --------
Real Estate-Net 508,033 340,656
-------- --------
Investment in Unconsolidated Subsidiary 2,387 --
Cash and Cash Equivalents 5,447 4,095
Receivables-Net 5,008 4,860
Other Assets 9,094 6,584
-------- --------
Total $529,969 $356,195
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $ 4,520 $ 2,655
Tenant Security Deposits 1,323 929
Notes Payable 142,286 105,552
Line of Credit Advances 139,437 72,900
-------- --------
Total Liabilities 287,566 182,036
-------- --------
Commitments and Contingencies
Minority Interest 457 434
-------- --------
Stockholders' Equity:
Par Value $.01/share
Preferred Stock, 5,000,000 Shares
Authorized; No Shares Issued or Outstanding
Common Stock, $.01 Par Value,
95,000,000 Shares Authorized;
23,432,852 and 17,096,452 Shares
Outstanding at June 30, 1997, and
December 31, 1996, Respectively 335,666 262,340
Dividends Paid in Excess of Net Income (93,720) (88,615)
-------- --------
Total Stockholders' Equity 241,946 173,725
-------- --------
Total $529,969 $356,195
-------- --------
See the Accompanying Notes
</TABLE>
2
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
REVENUES THREE MONTHS ENDED SIX MONTHS ENDED
6/30/97 6/30/96 6/30/97 6/30/96
-------------------------------------------------------
<S> <C> <C> <C> <C>
Rents $ 16,798 $ 12,058 $ 29,601 $ 24,192
Interest 189 109 363 220
--------- --------- --------- ---------
Total Revenues 16,987 12,167 29,964 24,412
--------- --------- --------- ---------
EXPENSES
Interest 4,725 2,821 8,056 5,689
Rental Operating 4,636 3,202 8,140 6,326
General and Administrative 712 600 1,555 1,087
Provision for Bad Debt 121 108 246 210
Depreciation and Amortization 3,387 2,650 6,929 5,270
--------- --------- --------- ---------
Total Costs and Expenses 13,581 9,381 24,926 18,582
--------- --------- --------- ---------
Income From Operations Before
Distribution to Minority Interest
Holders, Income from Unconsolidated
Subsidiary, Extraordinary Item and
Gain on Sale
of Real Estate 3,406 2,786 5,038 5,830
Distribution to Minority Interest Holders (11) (10) (22) (10)
Income from Unconsolidated Subsidiary 49 -- 64 --
Gain on Sale of Real Estate -- 9 -- 9
--------- --------- --------- ---------
Income before Extraordinary Item 3,444 2,785 5,080 5,829
Loss from Early Extinguishment of Debt -- -- (52) --
--------- --------- --------- ---------
Net Income $ 3,444 $ 2,785 $ 5,028 $ 5,829
--------- --------- --------- ---------
--------- --------- --------- ---------
EARNINGS PER SHARE:
Income before Extraordinary Item $0.16 $0.16 $0.27 $0.34
Extraordinary Item -- -- ( 0.01) --
--------- --------- --------- ---------
Net Income $0.16 $0.16 $0.26 $0.34
--------- --------- --------- ---------
Weighted Average Number of Shares 21,203,276 17,081,518 19,161,209 17,081,512
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See the Accompanying Notes
3
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
CASH FLOWS FROM OPERATING ACTIVITIES June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Net Income $ 5,028 $ 5,829
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating Activities:
Depreciation and Amortization 6,929 5,270
Provision for Bad Debt 246 210
Common Stock - Directors' Fees 151
Gain on Sale of Real Estate (9)
Changes in Other Assets and Liabilities:
Receivables and Other Assets (2,571) (746)
Accounts Payable and Other 1,923 (1,698)
Tenant Security Deposits 394 48
-------- -------
Net Cash Provided By Operating Activities 12,100 8,904
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for Acquisitions of Real Estate and
Capital Improvements (173,328) (13,064)
Proceeds from Sales of Real Estate 7,852 8,801
Principal Payments on Notes Receivable 17 --
-------- -------
Net Cash Used For Investing Activities (165,459) (4,263)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings Under Line of Credit Agreements 140,683 16,150
Repayments Under Line of Credit Agreements (74,146) (12,401)
Principal Payments of Notes Payable (36,231) (943)
Proceeds from Issuance of Notes Payable 61,363
Payment of Notes Receivable-Stock Purchase Plan 197
Net Proceeds from Sale of Stock 73,175
Dividends Paid (10,133) (8,543)
-------- -------
Net Cash Provided (Used) for Financing Activities 154,711 (5,540)
-------- -------
Net Increase in Cash and Cash Equivalents 1,352 (899)
Cash and Cash Equivalents at Beginning Of Period 4,095 1,543
-------- -------
Cash and Cash Equivalents at End Of Period $ 5,447 $ 644
-------- -------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During Six Months For Interest $ 9,306 $6,121
-------- -------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Notes Payable Assumed $ 15,517
Operating Partnership Units Issued in Connection with
Real Estate Acquisition 23
Proceeds from Notes Payable 25,400
Cash Paid For Real Estate 41,607
--------
Fair Value of Real Estate Acquired $ 82,547
--------
--------
</TABLE>
See the Accompanying Notes
4
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997, DECEMBER 31, 1996, AND JUNE 30, 1996
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements are unaudited but, in
the opinion of management, reflect all normal recurring adjustments
necessary for a fair presentation of operating results. These financial
statements should be read in conjunction with the audited financial
statements of Burnham Pacific Properties, Inc. for the year ended December
31, 1996. Certain of the 1996 amounts have been reclassified to conform
to the 1997 presentation.
Dividends Per Share - Dividends of 25 cents per share were paid on June
30,1997 to shareholders of record on June 23, 1997.
2. NET INCOME PER SHARE
Net income per share is computed by dividing net income for the respective
periods by the weighted average number of shares outstanding during the
applicable period.
In February of 1997, the Financial Accounting Standards Boards (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS
PER SHARE (EPS). This statement requires the presentation of earnings per
share to reflect both "Basic EPS" as well as "Diluted EPS" on the face of
the income statement. In general, Basic EPS excludes dilution created by
stock equivalents and is a function of the weighted average number of
common shares outstanding for the period. Diluted EPS does reflect the
potential dilution created by stock equivalents if such equivalents are
converted into common stock and is calculated in the same manner as fully
Diluted EPS illustrated in APB #15.
The Company will be required to adopt the new method of reporting EPS for
the year ending December 31, 1997. The Company's EPS as reflected in this
document includes Basic EPS for 1997 and 1996. Based on the Company's
current capital structure, the anticipated results of implementing SFAS No.
128 would reflect EPS essentially the same as currently reported.
3. SALE OF COMMON STOCK
On May 2, 1997, the Company issued 6,325,000 shares of its Common Stock at
a public offering price of $12.375 per share. The shares were sold
pursuant to a previously filed $200 million shelf registration statement.
The net proceeds of the offering were used to pay-off the Bridge Financing
(See Note 4) and reduce borrowings under the Company's Credit Facility.
(See Note 6 as to subsequent increase in shelf registration).
5
<PAGE>
4. REAL ESTATE
Real Estate is summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Retail Centers $446,830 $287,675
Office/Industrial Buildings 57,740 57,740
Retail Centers Under Development 53,326 41,297
Other 2,848 2,922
-------- --------
Total Real Estate 560,744 389,634
Accumulated Depreciation (52,711) (48,978)
-------- --------
Real Estate-Net $508,033 $340,656
-------- --------
-------- --------
</TABLE>
On January 31, 1997, the Company purchased a portfolio of four retail
shopping centers. The purchase price of the portfolio was approximately
$52,100,000. The acquisition of the portfolio was financed by the
assumption of a $3,693,000 mortgage loan bearing interest at 9.75%, due in
July 1998, secured by one of the properties; a new $25,400,000, 7.98%, 7-
year mortgage loan, secured by another of the properties; with the balance
coming from borrowings under the Company's Credit Facility. The issuer of
the $25,400,000 mortgage note is a bankruptcy remote, special purpose,
partnership in which the Company has substantially all economic benefits.
On January 31, 1997, the Company sold a portion of Plaza Rancho Carmel for
$735,000. No gain or loss resulted from such sale. Proceeds were used to
reduce borrowings under the Company's Credit Facility.
On February 28, 1997, the Company purchased a retail shopping center for
approximately, $6,202,000. The acquisition was financed with borrowings
under the Company's Credit Facility.
On April 3, 1997, the Company purchased a retail shopping center for
approximately, $9,080,000. The acquisition was financed by the assumption
of an approximately $5,287,000 mortgage loan bearing interest at 8.8%,
maturity in 2020, with the remainder financed with borrowings under the
Company's Credit Facility.
On April 4, 1997, the Company purchased a portfolio of three retail
shopping centers. The purchase price of the portfolio was approximately
$69,800,000. In order to facilitate the closing of this acquisition, the
Company obtained a temporary increase in its Credit Facility of $70,000,000
(the "Bridge Financing"). Of the total amount, $42,000,000 was secured by
mortgages on the three properties so acquired and $28,000,000 was
unsecured. The secured and unsecured portions of the Bridge Financing
accrued interest at LIBOR (London Inter-Bank Offer Rate), plus 1.65% and
LIBOR plus 2.50%, respectively. The Bridge Financing was repaid with
proceeds from the Company's stock offering. (See Note 3).
6
<PAGE>
On May 30, 1997, the Company purchased a portfolio of two retail shopping
centers. The purchase price of the portfolio was approximately
$25,300,000. The acquisition of the portfolio was financed by the
assumption of a $6,536,902 mortgage loan, bearing interest at 7.875%, due
in September 2005, secured by one of the properties, with the remainder
financed with borrowings under the Company's Credit Facility.
On June 11, 1997, title of Village Station was passed on to the mortgagee
of the $3.9 million non-recourse mortgage secured by the property. No gain
or loss resulted from such transfer.
On June 26, 1997, the Company purchased a retail shopping center for
approximately $10,200,000. The acquisition was effected with borrowings
under the Company's Credit Facility and the issuance of partnership units
by a newly-organized partnership of which the Company is the general
partner and the seller is the limited partner, which units are exchangeable
for approximately 151 shares of common stock of the Company.
5. REINCORPORATION
Effective May 31, 1997, pursuant to approval at the 1997 Annual Meeting of
Shareholders, the Company reincorporated from a California Corporation to a
Maryland Corporation. The Maryland Corporation acquired all of the assets
and assumed all of the liabilities of the California Corporation and, for
both financial reporting purposes and Federal income tax purposes, is
considered to be a continuation of the California Corporation.
6. SUBSEQUENT EVENTS
On July 18, 1997, the Company filed with the Securities and Exchange
Commission a further shelf registration statement on Form S-3 covering
$200 million of common stock, preferred stock and debt securities. As a
result of this and the Company's previous shelf registration statement
(see Note 3), the Company has registered an aggregate of $321,728,125 of
unissued securities.
On August 1, 1997, the Company's joint venture investor in Ladera Center
Associates, LLC (the "LLC") funded its 75% interest in the Ladera
Shopping Center. The LLC in turn distributed the other member's
contribution to the Company, leaving the Company with an unconsolidated 25%
interest in the LLC. Proceeds were used to reduce borrowings under the
Company's Credit Facility.
On July 21, 1997, the Company obtained an increase in its Credit Facility
capacity from $135,000,000 to $205,000,000, of which $135,000,000 is to be
secured by various mortgages and $75,000,000 is to be unsecured.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
June 30, 1997 and 1996:
During the three months ended June 30, 1997, net income increased $659,000 or
24%, to $3,444,000 ($0.16 per share) compared to $2,785,000 ($0.16 per share)
for the same period in 1996. For the six months ended June 30, 1997, net income
decreased $801,000 or 14% to $5,028,000 ($0.26 per share) compared to $5,829,000
($0.34 per share) for the same period in 1996. The principal reasons for these
changes are discussed in the following paragraphs.
Compared to the same period in 1996, revenues increased $4,820,000 for the three
month period and $5,552,000 for the six month period. These increases were
primarily due to the improved operating results from the Company's existing
portfolio of properties and the acquisition of approximately $172,000,000 of
retail properties during December 1996 and the first six months of 1997. These
increases were offset by the sale of the McDonnell Douglas Building in June
1996 and from lower rents received on the Anacomp Building following the
renegotiation of the Anacomp lease during the first quarter of 1996.
Interest expense increased $1,904,000 for the 1997 three month period and
$2,367,000 for the 1997 six month period, as compared to the same period in
1996. The increase is attributable to higher average outstanding balances under
the Company's Credit Facility and new mortgages placed or assumed in connection
with the acquisition of retail properties.
Rental operating expenses increased over 1996 by $1,434,000 for the 1997 three
month period and $1,814,000 for the 1997 six month period. This increase
reflects the acquisition of retail properties and the Company's responsibility
for the operating expenses related to the vacant portion of the Anacomp
Building. In addition, expenses increased as a result of the opening of offices
in Los Angeles, San Francisco, and the Pacific Northwest.
General and administrative expenses increased $112,000 and $468,000 for the 1997
three and six month periods, respectively, as compared to the same period in
1996. These increases reflect the opening of offices in Los Angeles, San
Francisco and the Pacific Northwest.
Compared to the same period in 1996, depreciation and amortization expense
increased $737,000 for the 1997 three month period and $1,659,000 for the 1997
six month period. This increase reflects the acquisition of retail properties
and depreciation taken on two retail structures undergoing renovation at two
centers.
The Company considers Funds From Operations (FFO) to be a relevant supplemental
measure of the performance of an equity REIT since such measure does not
recognize depreciation and certain amortization expenses as operating expenses.
Management believes that reductions for these charges are not meaningful in
evaluating income-producing real estate, which historically
8
<PAGE>
has not depreciated. FFO does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs and should not
be considered as an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
liquidity.
For the three and six months ended June 30, 1997, FFO increased $1,294,000 and
$764,000, respectively, compared to the same period in 1996. The primary
reasons for these increases include improved operating results from the
Company's existing portfolio of properties and the acquisition of retail
properties during December 1996 and the first six months of 1997. These
increases were partially offset by the sale of the McDonnell Douglas Building in
June of 1996, lower rents received on the Anacomp Building following the
renegotiation of the Anacomp lease during the first quarter of 1996, and higher
general and administrative expenses related to the opening of regional offices
in Los Angeles, San Francisco, and the Pacific Northwest.
The calculation of FFO for the respective periods is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Income $3,444 $2,785 $5,028 $5,829
Adjustments:
Gain on Sale of Real Estate -- (9) -- (9)
Depreciation of Real Estate and
Tenant Improvements 3,023 2,336 6,256 4,603
Amortization of Leasing Costs 118 179 208 357
Early Extinguishment of Debt -- -- 52 --
------ ------ ------ ------
Funds from Operations $6,585 $5,291 $11,544 $10,780
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
MATERIAL CHANGES IN FINANCIAL CONDITION
June 30, 1997 compared to December 31, 1996:
On January 31, 1997, the Company purchased a portfolio of four retail shopping
centers. The purchase price of the portfolio was approximately $52,100,000.
The acquisition of the portfolio was financed by the assumption of a $3,693,000
mortgage loan bearing interest at 9.75%, due in July 1998, secured by one of the
properties; a new $25,400,000, 7.98%, 7-year mortgage loan, secured by another
of the properties; with the balance coming from borrowings under the Company's
Credit Facility. The issuer of the $25,400,000 mortgage note is a bankruptcy
remote, special purpose, partnership in which the Company has substantially all
economic benefits.
On January 31, 1997, the Company sold a portion of Plaza Rancho Carmel for
$735,000. No gain or loss resulted from such sale. Proceeds were used to
reduce borrowings under the Company's Credit Facility.
On February 28, 1997, the Company purchased a retail shopping center for
approximately, $6,202,000. The acquisition was financed with borrowings under
the Company's Credit Facility.
9
<PAGE>
On April 3, 1997, the Company purchased a retail shopping center for
approximately, $9,080,000. The acquisition was financed by the assumption of an
approximately $5,287,000 mortgage loan bearing interest at 8.8%, maturity in
2020, with the remainder financed with borrowings under the Company's Credit
Facility.
On April 4, 1997, the Company purchased a portfolio of three retail shopping
centers. The purchase price of the portfolio was approximately $69,800,000.
In order to facilitate the closing of this acquisition, the Company obtained a
temporary increase in its Credit Facility of $70,000,000 (the "Bridge
Financing"). Of the total amount, $42,000,000 was secured by mortgages on the
three properties so acquired and $28,000,000 was unsecured. The secured and
unsecured portions of the Bridge Financing accrued interest at LIBOR (London
Inter-Bank Offer Rate), plus 1.65% and LIBOR plus 2.50%, respectively. The
Bridge Financing was repaid with proceeds from the Company's Common Stock
offering on May 2, 1997.
On May 30, 1997, the Company purchased a portfolio of two retail shopping
centers. The purchase price of the portfolio was approximately $25,300,000.
The acquisition of the portfolio was financed by the assumption of a $6,536,902
mortgage loan, bearing interest at 7.875%, due in September 2005, secured by one
of the properties, with the remainder financed with borrowings under the
Company's Credit Facility.
On June 11, 1997, title of Village Station was passed on to the mortgagee of the
$3.9 million non-recourse mortgage secured by the property. No gain or loss
resulted from such transfer.
On June 26, 1997, the Company purchased a retail shopping center for
approximately $10,200,000. The acquisition was effected with borrowings under
the Company's Credit Facility and the issuance of partnership units by a newly-
organized partnership of which the Company is the general partner and the seller
is the limited partner, which units are exchangeable for approximately 151
shares of common stock of the Company.
As of June 30, 1997, and December 31, 1996 approximately $2,876,000 and
$2,460,000, respectively, of straight-lined rent is included in other assets.
As of June 30, 1997, the Company had a $135,000,000 Credit Facility of which
$90,000,000 was secured or to be secured by mortgages on various of the
Company's properties and $45,000,000 was unsecured. On July 21, 1997, the
Company obtained an increase in the capacity of its Credit Facility from
$135,000,000 to $205,000,000. Of the total amount $135,000,000 is to be secured
by mortgages on various of the Company's properties and $70,000,000 is to be
unsecured. Prior to June 30, 1997, in anticipation of the increased facility,
the Company obtained a temporary increase in its secured facility of $4,437,000
to accommodate the acquisition of a retail shopping center. Borrowings under
the secured and unsecured portions of the Credit Facility bear interest at rates
of LIBOR (London Inter-Bank Offer Rate) plus 1.65% or LIBOR plus 1.75%,
respectively. The Credit Facility is scheduled to mature in November 1998, with
a one year extension option available. At June 30, 1997, borrowings of
approximately $139,437,000 were outstanding under the Credit Facility, of which
$94,437,000 was secured and $45,000,000 was unsecured.
At June 30, 1997, the Company had $18,138,000 outstanding under a $28,800,000
construction loan, secured by one of the Company's development properties. The
remaining availability of $10,662,000 is expected to be used to fund the
completion of a 250,000 square foot retail shopping center in Richmond,
California. Borrowings under this loan bear interest at the bank's
10
<PAGE>
eurodollar base rate plus 2.50% or at its prime rate. The loan is scheduled
to mature in November 1997, and the Company has the right to extend for an
additional year.
At June 30, 1997, the Company's capitalization consisted of $281,723,000 of
debt and $322,202,000 of market equity (market equity is defined as shares of
common stock outstanding multiplied by the closing price on the New York Stock
Exchange, which was $13.75 at June 30, 1997) resulting in a debt to total market
capitalization ratio of .47 to 1. At June 30, 1997, the Company's total debt
consisted of $124,148,000 of fixed rate debt and $157,575,000 of variable rate
debt. The average rates of interest on the fixed and variable rate debt were
8.5% and 7.5%, respectively, at June 30, 1997.
The Company anticipates that cash flow from operating activities will
continue to provide adequate capital for required payments on notes payable,
recurring tenant improvements, and dividend payments in accordance with REIT
requirements through the end of 1997. However, the Company will require
additional sources of capital to finance the acquisition and development of
additional properties. It is management's intention that the Company have
access to the capital resources necessary to expand and develop its business.
Sources of additional capital may include borrowings under credit facilities
and mortgage indebtedness, proceeds from sales of non-strategic assets, the
sale of interests in certain properties to third parties and, to the extent
market conditions permit, the public or private issuance of debt or equity
securities. There can be no assurances that capital necessary to finance
future acquisitions and development will be available on acceptable terms or
at all.
At June 30, 1997, the Company had on file with the Securities and Exchange
Commission a shelf registration statement on Form S-3 covering $121,728,125
of unissued common stock and debt securities. On July 18, 1997, the
Company filed with the Securities and Exchange Commission an additional $200
million shelf registration on Form S-3 covering common stock, preferred stock
and debt securities. As a result, the Company has effective shelf
registration statements on file covering an aggregate of $321,728,125 of
unissued securities.
FORWARD LOOKING STATEMENTS
The preceding comments in this Form 10-Q contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Reference is made to the
Company's Form 10-K Report for the year ended December 31, 1996 under the
caption "Risk Factors" for a discussion of certain factors which could cause
the Company's actual results to differ materially from those set forth in the
forward-looking statements.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
The Corporation was not a party to any material legal proceedings during the
period covered by this report or subsequently.
ITEM 2. CHANGES IN SECURITIES:
On May 31, 1997 the reincorporation merger of Burnham Pacific Properties,
Inc., a California corporation, (the "California Corporation") into Burnham
Pacific Properties, Inc., a Maryland corporation, (the "Maryland
Corporation") became effective pursuant to Articles of Merger filed with
appropriate state offices in Maryland and California. As a result of such
reincorporation, each share of Common Stock, no par value, of the California
Corporation was automatically converted into a share of Common Stock, $.01
par value, of the Maryland Corporation. References are made to the Form 8B
Registration Statement of the Maryland Corporation, filed June 2, 1997, for a
description of the Common Stock of the Maryland Corporation and to the Proxy
Statement of the California Corporation dated March 31, 1997 for a description
comparing the rights of shareholders of the California Corporation with those
of stockholders of the Maryland Corporation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
On May 6, 1997, the Company held its regular Annual Meeting of Shareholders.
Proxies for such meeting were solicited pursuant to Regulation 14 under the
Act. At such meeting, three matters were presented for vote. The matters
were the election of nine directors, the approval to change the Company's
state of incorporation from California to Maryland and the approval of
amendments to the Company's stock option plan. There was no solicitation in
opposition to the nominated Directors and all such directors were elected for
a one-year term.
Shares were voted as follows:
WITHHELD/ BROKER
FOR AGAINST ABSTAINED NON-VOTES
---------- ------- --------- ---------
(1) Election of Directors
Malin Burnham 14,898,192 0 145,257 0
James D. Harper, Jr. 14,892,915 0 150,534 0
James D. Klingbeil 14,901,400 0 142,049 0
J. David Martin 14,902,452 0 140,997 0
Donne P. Moen 14,902,913 0 140,536 0
Thomas A. Page 14,893,914 0 149,535 0
Philip S. Schlein 14,898,848 0 144,601 0
Richard R. Tartre 14,904,710 0 138,739 0
Robin Wolaner 14,886,483 0 156,966 0
(2) Reincorporation 10,678,894 385,547 174,612 3,804,396
(3) Stock Option Plan 13,334,705 1,455,198 253,546 0
ITEM 5. OTHER INFORMATION:
Not Applicable.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following Exhibits are part of this report:
The contracts filed as Exhibits to the Form 8-K and 8-K(a) reports
described in (b) below are incorporated by reference herein.
27.0 Financial Data Schedule.
(b) The following reports on Form 8-K and 8-K(a) were filed during or with
respect to matters occurring within the period covered by this report:
Form 8-K(a) Report filed April 15, 1997, (earliest event reported January 31,
1997): Item 2, regarding the Downey Portfolio and BRE Portfolio acquisitions;
Item 5, regarding Foothill Plaza and Crenshaw Imperial acquisitions; and Item 7,
regarding Financial Statements and Pro Forma financial information.
Form 8-K Report filed June 2, 1997, (earliest event reported May 31, 1997): Item
5, regarding reincorporation as a Maryland Corporation.
Form 8-K Report filed August 7, 1997, (earliest event reported May 30, 1997):
Item 5, regarding various individually insignificant acquisitions; and Item 7,
regarding Financial Statements and Pro Forma financial information.
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.
BURNHAM PACIFIC PROPERTIES, INC.
Date: August 14, 1997 By: /s/ J. David Martin
----------------- ----------------------------------------
J. David Martin, Chief Executive Officer
Date: August 14, 1997 By: /s/ Daniel B.Platt
----------------- ----------------------------------------
Daniel B. Platt, Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,447
<SECURITIES> 0
<RECEIVABLES> 6,730
<ALLOWANCES> 1,722
<INVENTORY> 0
<CURRENT-ASSETS> 21,936<F1><F2>
<PP&E> 560,744
<DEPRECIATION> 52,711
<TOTAL-ASSETS> 529,969
<CURRENT-LIABILITIES> 5,843
<BONDS> 281,723
0
457
<COMMON> 335,624
<OTHER-SE> (93,678)
<TOTAL-LIABILITY-AND-EQUITY> 529,969
<SALES> 29,601
<TOTAL-REVENUES> 29,964
<CGS> 8,140
<TOTAL-COSTS> 8,140
<OTHER-EXPENSES> 8,484
<LOSS-PROVISION> 246
<INTEREST-EXPENSE> 8,056
<INCOME-PRETAX> 5,080
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,080
<DISCONTINUED> 0
<EXTRAORDINARY> (52)
<CHANGES> 0
<NET-INCOME> 5,028
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
<FN>
<F1>Includes 2,387 of Investment in Unconsolidated Subsidiary
<F2>Also includes 9,094 of Other Assets and 5,008 of Receivables-Net
</FN>
</TABLE>
