SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
[X] Current Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
March 13, 1997
(Date of Report)
Commission file number: 0-28354
Great Lakes REIT, Inc.
(Exact name of Registrant as specified in its Charter)
Maryland 36-3844714
(State or other jurisdiction (I.R.S. Employer identification no.)
of incorporation organization)
823 Commerce Drive, Suite 300, Oak Brook, IL 60521
(Address of principal executive offices) (Zip Code)
(630) 368 - 2900
(Registrant's telephone number, including area code)
2311 West 22nd St., Suite 109, Oak Brook, IL 60521
(Former address of principal executive offices) (Zip 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
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITIONS
As previously reported in a Current Report on Form 8-K filed January 3, 1997, on
December 27, 1997, Great Lakes REIT, Inc. (the "Company") acquired a 270,000
square foot twelve-story, class A office building located at 1900 East Golf
Road, Schaumburg, Illinois ("Centennial Center"). Originally constructed in
1980, Centennial Center affords not only a distinctive Skidmore, Owings &
Merrill setback design, but also a Z-shaped service core which give maximum
flexibility in space planning. Centennial Center is situated on East Golf Road,
directly across the street from the 2.7 million square foot Woodfield Mall, one
of the country's premier super regional malls. The property features a two-story
main lobby with imported Italian marble walls and terrazzo flooring. The
building contains 259,730 rentable square feet and is currently 96% leased.
TERMS OF PURCHASE
Centennial Center was purchased from an unaffiliated third party for
approximately $24 million. Funds for the purchase came from a borrowing under
the Company's existing secured line of credit with the First National Bank of
Boston (as agent).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
No information is required under Items 1,3,4, and 6, and these items
have therefore been omitted.
By: /s/ Richard L. Rasley
Richard L. Rasley, Secretary
<PAGE>
Statement of Revenue and
Certain Expenses
Centennial Center
For the period from January 1, 1996
to December 27, 1996 and the year
ended December 31, 1995
with Report of Independent Auditors
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Chief Financial Officer
Great Lakes REIT, Inc.
We have audited the Statements of Revenues and Certain Expenses of Centennial
Center (the Property) as described in Note 2 for the period from January 1, 1996
to December 27, 1996 and the year ended December 31, 1995. The Statement of
Revenue and Certain Expenses is the responsibility of the Property's management.
Our responsibility is to express an opinion on the Statement of Revenue and
Certain Expenses based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the Statements of Revenue and Certain
Expenses are free from material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures made in the
Statement of Revenue and Certain Expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Statement of Revenue and Certain
Expenses. We believe that our audits provide a reasonable basis for our opinion.
The accompanying Statements of Revenues and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Property's revenue and expenses.
In our opinion, the Statements of Revenues and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 2 for the period from January 1, 1996 to December 27,
1996 and the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
January 10, 1997
Chicago, Illinois
<PAGE>
<TABLE>
CENTENNIAL CENTER
STATEMENT OF REVENUE AND CERTAIN EXPENSES
<CAPTION>
January 1, 1996 Year Ended
to December 31
December 27, 1996 1995
------------------------------- ----------------------
<S> <C> <C>
Revenue
Base rents $1,851,893 $1,924,251
Tenant reimbursements 2,229,351 2,147,287
Other income 126,054 86,786
------- ------
Total revenue 4,207,298 4,158,324
---------------------- ----------------------
Expenses
Real estate taxes 1,437,064 1,384,046
General operating 182,502 128,580
Utilities 276,459 284,434
Cleaning and landscaping 423,437 401,636
Repairs and maintenance 279,191 265,113
Management fee 62,753 149,311
Insurance 35,566 42,229
------ ------
Total expenses 2,696,972 2,655,349
---------------------- ----------------------
Revenue in excess of certain expenses $1,510,326 $1,502,975
====================== ======================
</TABLE>
See accompanying notes.
<PAGE>
CENTENNIAL CENTER
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
Note 1 Business
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Centennial Center (the Property). The Property was acquired on
December 27, 1996, by Great Lakes REIT, Inc. (Great Lakes).
As of December 27, 1996, and December 31, 1995, the Property had eighteen and
sixteen tenants, respectively. Three tenants (United Health Care Group, Crawford
& Company, and Metropolitan Life Insurance) account for approximately 72% of
total revenue in 1996 and two tenants (Metropolitan Life Insurance and Crawford
& Company) account for approximately 62% of total revenue in 1995.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission. The statements are not representative of the actual
operations of the Property for the periods presented nor indicative of future
operations as certain expenses, primarily depreciation and amortization, which
may not be comparable to the expenses expected to be incurred by Great Lakes in
future operations of the Property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized in the period in which it is earned. Expenses are
recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statement of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Note 3 Rentals
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes in relation to their pro rata share
as defined.
<PAGE>
CENTENNIAL CENTER
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
Note 4 Management Agreement
During the period from January 1, 1996 to December 27, 1996 and the year ended
December 31, 1995, the Property was managed by a third-party management company.
The management agreement provided for a fee of 5% of gross receipts collected
per year through August 15, 1995 (management company paid employee salaries),
and 1.5% of gross receipts collected per year thereafter (property paid employee
salaries).
<PAGE>
<TABLE>
Great Lakes REIT, Inc.
Consolidated Pro Forma Statement of Income
Year ended December 31, 1996
<CAPTION>
Previous Centennial
Historical (1) Advisor (1) Acquisitions (2) Center (2)
<S> <C> <C> <C> <C>
Revenues
Rental $20,249,565 $8,329,517 1,851,893
Reimbursements 4,814,005 1,966,791 2,229,351
Interest and other 168,739 567,620 346,525 126,054
-----------------------------------------------------------------------------
Total revenues 25,232,309 567,620 14,850,131 4,207,298
-----------------------------------------------------------------------------
Expenses
Real estate taxes 3,954,144 1,416,203 1,437,064
Other property operating 6,548,057 144,436 3,004,834 1,259,908
General and administrative 2,242,165 339,220 0
Interest 3,778,065 0
Depreciation and amortization 4,000,736 1,266,386 499,758
-----------------------------------------------------------------------------
Total expenses 20,523,167 483,656 8,884,153 3,196,730
-----------------------------------------------------------------------------
Income before gain on sale of
properties 4,709,142 83,964 5,965,978 1,010,568
Gain on sale of properties 3,139,892
-----------------------------------------------------------------------------
Net income $7,849,034 $83,964 $5,965,978 $1,010,568
=============================================================================
Earnings per common share and
common share equivalent $1.32
===================
Weighted average number of
common shares and common
share equivalents outstanding 5,927,208
===================
</TABLE>
<TABLE>
Great Lakes REIT, Inc.
Consolidated Pro Forma Statement of Income
Year ended December 31, 1996
<CAPTION>
Pro forma Pro forma
Dispositions (3) Adjustments 12/31/96
<S> <C> <C> <C>
Revenues
Rental ($1,522,795) $28,908,180
Reimbursements (172,833) 8,837,314
Interest and other 0 (562,847) (4) 646,091
------------------------------------------------------------------
Total revenues (1,695,628) (562,847) 38,391,585
------------------------------------------------------------------
Expenses
Real estate taxes (160,166) 6,647,245
Other property operating (449,311) (217,971) (5) 10,289,953
General and administrative 0 (203,697) (5) 2,377,688
Interest (105,902) 2,882,725 (7) 6,554,888
Depreciation and amortization (221,246) (37,715) (6) 5,507,918
------------------------------------------------------------------
Total expenses (936,625) 2,423,342 31,377,692
------------------------------------------------------------------
Income before gain on sale of
properties (759,003) (2,986,189) 7,013,893
Gain on sale of properties (3,139,892) (8) 0
------------------------------------------------------------------
Net income ($759,003) ($6,126,081) $7,013,893
==================================================================
Earnings per common share and common share equivalent $0.79
===================
Weighted average number of common shares and
common share equivalents outstanding 8,871,484
===================
</TABLE>
See accompanying notes
GREAT LAKES REIT, INC.
NOTES TO CONSOLIDATED PRO FORMA STATEMENT OF INCOME
(Unaudited)
1. Represents the historical operations of the Company and the Advisor for the
period described.
2. Represents the historical operations of properties acquired during 1996 as if
the properties were acquired by the Company at the beginning of 1996.
Depreciation is computed on a straight-lined basis over 40 years based on the
purchase price paid by the Company for the properties. Additionally, based on
preacquisition discussions with local assessors and tax counsel, the Company has
concluded that no adjustment to historical real estate taxes is appropriate.
3. Represents the actual historical results of the properties sold in 1996 for
the period prior to disposition.
4. On April 1, 1996, the Company acquired all of the outstanding shares of the
Advisor in exchange for 100,000 shares of its Common Stock. Income earned in
1996 by the Advisor from the Company prior to the Merger is eliminated from the
pro forma income statement:
Acquisition fees $15,750
Advisory fees 203,696
Property management fees 217,971
Construction fees 107,717
Other 17,712
-----------------
$562,847
=================
Amounts not eliminated represent income earned by the Advisor from third parties
which would have been earned by the Company had the Merger occurred at the
beginning of 1996.
5. Expenses incurred by the Company which were paid to the Advisor prior to the
Merger are eliminated from the pro forma income statement:
1996
Other property operating expenses:
Property management fees: $217,971
==============
General and administrative costs:
Advisory fees: $203,697
==============
As a consequence of this elimination, the accompanying consolidated pro forma
statement of income includes the property operating and general and
administrative expenses of the Advisor for the period prior to the Merger.
6. Acquisition, construction, and certain other fees paid by the Company to the
Advisor were capitalized by the Company into buildings and improvements. If the
Merger had occurred on January 1, 1996, these fees would not have been incurred
and depreciation and amortization expenses would have decreased by $56,328 in
1996. Costs incurred by the Advisor for acquisition and construction activities
during 1996 are primarily salary costs and are reflected as general and
administrative expenses in the historical operation of the Advisor.
Goodwill amortization is increased by $18,613 in 1996 as the Merger is assumed
to have occurred on January 1, 1996 in this consolidated pro forma statement of
income which represents an additional three months of goodwill amortization.
7. As the acquisitions subsequent to December 31, 1995, the dispositions in
1996, and the 1996 private equity offering are all assumed to have occurred on
January 1, 1996, the Company would need to borrow approximately $38,436,335 to
fund the property acquisitions calculated as follows:
Cost of properties acquired in 1996 $97,563,034
less: Proceeds of 1996 private equity offering 47,419,261
less: Proceeds of property sales 11,707,438
------------------
Borrowings needed to acquire properties $38,436,335
==================
Interest expense is calculated on this amount at 7.5% per annum, which is the
average interest rate for 1996 as this debt is assumed to have a variable rate,
resulting in additional interest expense in 1996 of $2,882,725.
8. The Consolidated Pro Forma Statement of Income excludes gains on sale of
properties of $3,139,892.
