<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (date of earliest event reported): December 18, 1996
CARRAMERICA REALTY CORPORATION
(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
Maryland 1-11706 52-1796339
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
<PAGE> 2
FORM 8-K
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Attached hereto as Exhibit 99.1 are the historical summaries of operating
revenue and expenses for the nine months ended September 30, 1996 (unaudited)
and for the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report for Unisys Center, located in Lombard, Illinois.
In accordance with Rule 3-14 of Regulation S-X, financial statements with
respect to the property are being filed because the Company has deemed the
acquisition to be probable and the book value of the property is significant.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Attached hereto as Exhibit 99.1 are the historical summaries of
operating revenue and expenses for Unisys Center for the nine months ended
September 30, 1996 (unaudited) and for the year ended December 31, 1995,
with accompanying notes and Independent Auditors' Report.
(b) Pro forma financial information.
<PAGE> 3
Attached hereto as Exhibit 99.2 is unaudited pro forma
condensed consolidated balance sheet and condensed consolidated statements of
operations for the Company as of and for the nine months ended September 30,
1996 and for the year ended December 31, 1995, as described more fully therein.
(c) Exhibits
Exhibit
Number
------
99.1 Financial Statements - Historical summaries of
Operating Revenue and Expenses for Unisys Center for the nine
months ended September 30, 1996 (unaudited) and for the year
ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
99.2 Pro Forma Financial Information - Unaudited pro forma
condensed consolidated balance sheet and condensed
consolidated statements of operations for the Company as of
and for the nine months ended September 30, 1996 and for the
year ended December 31, 1995, as described more fully therein.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
<PAGE> 4
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 hereto duly authorized.
Date: December 18, 1996
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
---------------------------------------
Brian K. Fields
Chief Financial Officer
<PAGE> 5
EXHIBIT INDEX
Exhibit
Number
- ------
99.1 Financial Statements - Historical summaries of Operating Revenue and
Expenses for Unisys Center for the nine months ended September 30, 1996
(unaudited) and for the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
99.2 Pro Forma Financial Information - Unaudited pro forma condensed
consolidated balance sheet and condensed consolidated statements of operations
for the Company as of and for the nine months ended September 30, 1996 and for
the year ended December 31, 1995, as described more fully therein.
<PAGE> 1
EXHIBIT 99.1
UNISYS CENTER
Historical Summaries
of Operating Revenue and Expenses
Nine Months Ended September 30, 1996 (Unaudited)
and Year Ended December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Unisys Center for the year ended December
31, 1995. This historical summary is the responsibility of the management of
Unisys Center. Our responsibility is to express an opinion on the historical
summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the historical summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical summary. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was 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 revenue and expenses of
Unisys Center.
In our opinion, the historical summary referred to above presents fairly, in
all material respects, the operating revenue and expenses described in note
2(a) of Unisys Center for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
November 8, 1996
<PAGE> 3
UNISYS CENTER
Historical Summaries of Operating Revenue and Expenses
For the nine months ended September 30, 1996 (unaudited)
and the year ended December 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Nine months Year
ended ended
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Operating revenue:
Building rental $ 3,691 5,044
Recovery of operating expenses 1,325 1,631
------- -------
Total operating revenue 5,016 6,675
------- -------
Operating expenses:
Maintenance 512 697
Utilities 359 464
Real estate taxes 520 688
Insurance 17 47
Management fees 177 216
General operating 236 244
Administrative 237 285
------- -------
Total operating expenses 2,058 2,641
------- -------
Operating revenue in excess of operating expenses $ 2,958 4,034
======= =======
</TABLE>
See accompanying notes to historical summaries of operating revenue and
expenses.
<PAGE> 4
UNISYS CENTER
Notes to the Historical Summaries of Operating Revenue and Expenses
Nine months ended September 30, 1996 (unaudited)
and year ended December 31, 1995
(dollars in thousands)
(1) DESCRIPTION OF THE PROPERTY
Unisys Center consists of 2 buildings located in Lombard, Illinois
containing approximately 387,000 square feet of office space available
for lease. The buildings were constructed in 1984 and 1985. At September
30, 1996, Unisys Center was approximately 97% leased.
From July 31, 1995 through September 30, 1996, the property was managed
by Hines Interests Limited Partnership. Prior to July 31, 1995, the
property was managed by HD Delaware Properties.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses are not representative of the actual operations for the
periods presented as certain revenue and expenses, which may not be
comparable to those expected to be incurred by CarrAmerica Realty
Corporation in the future operations of the property, have been
excluded. Interest income has been excluded from revenue, and
interest, depreciation and amortization, and other costs not
directly related to the future operations of Unisys Center have
been excluded from expenses. Management is not aware of any other
material factors that would cause the historical summaries of
operating revenue and expenses to not be indicative of the future
operating results of the buildings.
(b) Revenue Recognition
Revenue from rental operations is recognized straight-line over the
terms of the respective leases.
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information for the nine
months ended September 30,1996 has been prepared consistent with
the rules and regulations of the Securities and Exchange Commission
governing the preparation of the amounts for the year ended
December 31, 1995. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management,
all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the historical summary of operating
revenue and expenses for the nine months ended September 30, 1996
have been included. The results of operations for the nine-month
period ended September 30, 1996 are not necessarily indicative of
the results for the full year.
(Continued)
<PAGE> 5
UNISYS CENTER
Notes to the Historical Summaries of Operating Revenue and Expenses
(dollars in thousands)
(3) PRO FORMA TAXABLE OPERATING RESULTS AND CASH AVAILABLE FROM OPERATIONS
(UNAUDITED)
The unaudited pro forma table reflects the taxable operating results and
cash available from operations of Unisys Center for the 12 months ended
September 30, 1996, as adjusted for certain items which can be factually
supported. For purposes of presenting pro forma net taxable operating
income, revenue is recognized when it is either collectible under the
lease terms or collected. Tax depreciation for the building is computed
on the modified accelerated cost recovery system method over a 39-year
life. This statement does not purport to forecast actual operating
results for any period in the future.
<TABLE>
<S> <C>
Pro forma net operating income (exclusive of depreciation and
amortization expense) $ 4,823
Less estimated depreciation and amortization expense 1,159
--------
Pro forma taxable operating income $ 3,664
========
Pro forma cash available from operations $ 4,823
========
</TABLE>
<PAGE> 1
EXHIBIT 99.2
PRO FORMA FINANCIAL INFORMATION
The following tables set forth unaudited pro forma financial
information for the Company as of and for the nine months ended September 30,
1996 and for the year ended December 31, 1995 after giving effect to (i) the
acquisition of office properties and land that have been consummated since the
beginning of the periods presented and the acquisition of other office
properties and land that the Company expects to consummate in the near future,
(ii) the sale of 11,627,907 shares of Common Stock to USRealty in April 1996,
(iii) the completion of the July 1996 offering of 10,260,714 shares of Common
Stock (the "July 1996 Offering"), (iv) the completion of the Offering and
Concurrent USRealty Purchase of 7,142,857 shares of Common Stock (the "offering
and Concurrent USReality Purchase"), (v) the completion of the Offering of
1,071,429 Additional Shares of Common Stock, (vi) the completion of the October
1996 Offering of 1,740,000 shares of Series A Cumulative Convertible Redeemable
Preferred Stock (the "Series A Preferred Stock Offering"), (vii) the sale of
2550 M Street in downtown Washington, D.C., and (viii) the repayment of draws
on the Line of Credit.
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the following transactions had been consummated on September
30, 1996: (a) the purchase of the Peterson Portfolio; (b) the purchase of the
NELO/Orchard Portfolio; (c) the purchase of the Greyhound Building; (d) the
purchase of Pointe Corridor Centre IV; (e) the purchase of the Camelback Lakes
Corporate Center; (f) the purchase of Rio Robles Technology Center; (g) the
purchase of Search Plaza; (h) the purchase J.D. Edwards; (i) the purchase of
Del Mar Corporate Plaza; (j) the purchase of Quorum North; (k) the purchase of
South Coast Executive Center; (l) the purchase of Data I/O Willows; (m) the
purchase of Unisys Center; (n) the sale of 2550 M Street; (o) the completion of
the Offering and Concurrent USRealty Purchase (p) the completion of the
Offering of the Additional Shares of Common Stock; (q) the completion of the
Series A Preferred Stock Offering; and (r) the repayment of draws on the Line of
Credit.
The unaudited Pro Forma Condensed Consolidated Statements of
Operations are presented as if the following transactions had been consummated
as of the beginning of the respective periods: (a) the purchase of One Rock
Spring Plaza; (b) the purchase of Tycon Courthouse; (c) the purchase of an
additional 7.58% ownership interest in Square 24 Associates, the partnership
owning 2445 M Street, Washington, D.C.; (d) the purchase of the Scenic Business
Park; (e) the purchase of the Harbor Corporate Park; (f) the purchase of AT&T
Center; (g) the purchase of Reston Quadrangle; (h) the purchase of Harlequin
Plaza North and South and Quebec Court I and II; (i) the purchase of The
Quorum; (j) the purchase of Parkway North Center; (k) the purchase of the
Redmond East Business Campus; (l) the purchase of the Plaza PacifiCare
Building; (m) the purchase of Parkway One; (n) the purchase of Norwood Tower;
(o) the purchase of the Warner Center Business Park; (p) the purchase of the
Littlefield Portfolio; (q) the purchase of Riata Land; (r) the purchase of
Katella Corporate Center; (s) the purchase of Greenwood Centre; (t) the
purchase of Panorama Corporate Center; (u) the purchase of Quebec Centre; (v)
the purchase of the Sunnyvale Research Plaza; (w) the purchase of the Peterson
Portfolio; (x) the purchase of the NELO/Orchard Portfolio; (y) the purchase of
the Greyhound Building; (z) the purchase of Pointe Corridor Centre IV; (aa) the
purchase of the Camelback Lakes Corporate Center; (bb) the purchase of Rio
Robles Technology Center; (cc) the purchase of Search Plaza; (dd) the purchase
of J.D. Edwards; (ee) the purchase of Del Mar Corporate Plaza; (ff) the purchase
of Quorum North; (gg) the purchase of South Coast Executive Center; (hh) the
purchase of Data I/O Willows; (ii) the purchase of Unisys Center; (jj) the sale
of 2550 M Street; (kk) the sale of shares of Common Stock to USRealty in April
1996; (ll) the completion of the July 1996 Offering; (mm) the Completion of the
Offering and
<PAGE> 2
Concurrent USRealty Purchase; (nn) the completion of the Offering of Additional
Shares of Common Stock; (oo) the Series A Preferred Stock Offering; and (pp)
the repayment of draws on the Line of Credit.
In management's opinion, all material adjustments necessary to reflect
the transactions described above are presented in the pro forma adjustments
columns, which are further described in the notes to the unaudited pro forma
financial information.
The unaudited Pro Forma Condensed Consolidated Balance Sheet and the
unaudited Pro Forma Condensed Consolidated Statements of Operations should be
read in conjunction with the Consolidated Financial Statements of the Company
and Notes thereto. The unaudited Pro Forma Condensed Consolidated Balance
Sheet is not necessarily indicative of what the actual financial
position of the Company would have been at September 30, 1996, had the
aforementioned transactions occurred on such date, nor does it purport to
represent the future financial position of the Company. The unaudited Pro
Forma Condensed Consolidated Statements of Operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the aforementioned transactions had been consummated as of the
beginning of the respective periods, nor do they purport to represent the
results of operations for future periods.
<PAGE> 3
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
At September 30, 1996 (Unaudited)
--------------------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------------------
Acquired Probable Sale of
Historical (A) Properties (B) Acquisitions (C) 2550 M St. (D)
-------------- -------------- ------------------ -----------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 906,342 $ 374,967 (1) $ 91,257 (4) $ (10,642)
Development property 40,449 5,955 (1) 12,664 (4) -
Restricted and unrestricted cash 22,882 - - -
Other assets 74,235 (1,096)(1)(2) (242)(5) (4,512)
-------------- -------------- ------------------ -----------------
Total assets $ 1,043,908 $ 379,826 $ 103,679 $ (15,154)
============== ============== ================== =================
LIABILITIES
Mortgages and notes payable $ 426,069 $ 369,515 (2) $ 103,579 (5) $ (38,500)
Other liabilities 20,480 8,811 (2) - -
-------------- -------------- ------------------ -----------------
Total liabilities 446,549 378,326 103,579 (38,500)
Minority interest 51,611 - 100 (6) 5,930
-------------- -------------- ------------------ -----------------
STOCKHOLDERS' EQUITY
Preferred stock - - - -
Common stock 355 1 (3) - -
Additional paid-in capital 588,684 1,499 (3) - -
Dividends paid in excess of earnings (43,291) - - 17,416
-------------- -------------- ------------------ -----------------
Total stockholders' equity 545,748 1,500 - 17,416
-------------- -------------- ------------------ -----------------
Total liabilities and stockholders'
equity $ 1,043,908 $ 379,826 $ 103,679 $ (15,154)
============== ============== ================== =================
</TABLE>
<TABLE>
<CAPTION>
At September 30, 1996 (Unaudited)
--------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------
Offering and
Series A Concurrent Offering of
Preferred Stock USRealty Additional Pro Forma
Offering (E) Purchase (F) Shares (G) Consolidated
----------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ - $ - $ - $ 1,361,924
Development property - - - 59,068
Restricted and unrestricted cash - - - 22,882
Other assets - - - 68,385
----------------- --------------- ------------- ---------------
Total assets $ - $ - $ - $ 1,512,259
================= =============== ============= ===============
LIABILITIES
Mortgages and notes payable $ (42,915) $ (178,364) $ (26,780) $ 612,604
Other liabilities - - - 29,291
----------------- --------------- ------------- ---------------
Total liabilities (42,915) (178,364) (26,780) 641,895
Minority interest - - - 57,641
----------------- --------------- ------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock 17 - - 17
Common stock - 71 11 438
Additional paid-in capital 42,898 178,293 26,769 838,143
Dividends paid in excess of earnings - - - (25,875)
----------------- --------------- ------------- ---------------
Total stockholders' equity 42,915 178,364 26,780 812,723
----------------- --------------- ------------- ---------------
Total liabilities and stockholders'
equity $ - $ - $ - $ 1,512,259
================= =============== ============= ===============
</TABLE>
<PAGE> 4
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
ADJUSTMENTS (DOLLARS IN THOUSANDS):
(A) Reflects the Company's historical consolidated balance sheet as of
September 30, 1996.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $381,176 ($128,466 related to the
Peterson Portfolio, $123,850 related to the NELO/Orchard Portfolio;
$9,350 related to the Greyhound Building, $15,100 related to Pointe
Corridor Center IV, $26,900 related to Camelback Lakes Corporate
Center, $46,250 related to Rio Robles Technology Center, $15,143
related to Search Plaza, and $16,117 related to Del Mar Corporate
Plaza);
(2) the assumption of existing debt of $63,167 ($22,240 related to the
Peterson Portfolio and $40,927 related to the NELO/Orchard
Portfolio) and other liabilities of $8,811 ($1,288 related to the
Peterson Portfolio, $7,170 related to the NELO/Orchard Portfolio,
$197 related to Search Plaza, and $156 related to Del Mar Corporate
Plaza), use of the Company's purchase deposits ($1,350) net of other
assets acquired ($254), and a draw on the Company's Line of Credit
($306,348); and
(3) the issuance of 62,696 shares of Common Stock in connection with the
purchase of the Peterson Portfolio.
(C) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions:
(4) total acquisition costs of $103,921 ($7,138 related to J.D. Edwards,
$10,720 related to Quorum North, $20,650 related to South Coast
Executive Center, $14,193 related to Data I/O Willows, and
$51,220 related to Unisys Center);
(5) the assumption of existing debt ($10,000) related to South Coast
Executive Center, a draw on the Company's Line of Credit ($93,579)
and use of the Company's purchase deposits ($242) towards the
acquisitions; and
(6) the value of 4,000 dividend-paying units in CarrAmerica Realty, L.P.
to be issued in connection with the purchase of South Coast
Executive Center.
(D) Reflects the anticipated sale of the building located at 2550 M Street in
Washington D.C. for $40,250 less estimated transaction costs of $1,750.
(E) Reflects the issuance of 1,740,000 shares of Series A Preferred Stock at
the price of $25 per share. Transaction costs of $585 were incurred. The
Company used all of the proceeds to pay down amounts outstanding under
its Line of Credit.
<PAGE> 5
(F) Reflects the issuance of 7,142,857 shares of Common Stock at the price
of $26 per share. Transaction costs of $7,350 were incurred. The
Company used all of the proceeds to pay down amounts outstanding under
its Line of Credit.
(G) Reflects the issuance of 1,071,429 additional shares of Common Stock at
the price of $26 per share. Transaction costs of $1,077 are expected to
be incurred. The Company expects to use all of the proceeds to pay down
amounts outstanding under its Line of Credit.
<PAGE> 6
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
---------------------------------------------------------------------------------------------
Pro Forma Adjustments
---------------------------------------------------------------------------
Series A
Acquired Probable Sale of Preferred Stock
Historical (A) Properties (B) Acquisitions (C) 2550 M St.(D) Offering (E)
-------------- ---------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 100,639 $ 66,207 (1) $ 9,161 (6) $ (4,560) $ -
Real estate service income 9,265 - - - -
-------------- ---------------- ---------------- -------------- ----------------
Total revenues 109,904 66,207 9,161 (4,560) -
-------------- ---------------- ---------------- -------------- ----------------
Real estate operating expenses:
Property operating expenses 33,371 22,596 (4) 3,225 (8) (1,696) -
Interest expense 21,857 24,923 (2) 5,114 (9) (2,166) (2,413)
General and administrative 10,661 - - - -
Depreciation and amortization 25,744 13,754 (3) 1,994 (7) (813) -
-------------- ---------------- ---------------- -------------- ----------------
Total operating expenses 91,633 61,273 10,333 (4,675) (2,413)
-------------- ---------------- ---------------- -------------- ----------------
Real estate operating income 18,271 4,934 (1,172) 115 2,413
Other operating income (expense) 1,610 4 (1) - (20) -
-------------- ---------------- ---------------- -------------- ----------------
Income before minority interest 19,881 4,938 (1,172) 95 2,413
-------------- ---------------- ---------------- -------------- ----------------
Minority interest (3,895) (526)(5) (117)(10) (24) -
-------------- ---------------- ---------------- -------------- ----------------
Income from continuing operations $ 15,986 $ 4,412 $ (1,289) $ 71 $ 2,413
============== ================ ================ ============== ================
Earnings from continuing operations
per common share (H) $ 0.70
==============
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
-------------------------------------------------------
Pro Forma Adjustments
------------------------------
Offering and
Concurrent Offering of
USRealty Additional Pro Forma
Purchase (F) Shares (G) Consolidated
-------------- ------------- --------------
<S> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $ 171,447
Real estate service income - - 9,265
-------------- ------------- --------------
Total revenues - - 180,712
-------------- ------------- --------------
Real estate operating expenses:
Property operating expenses - - 57,496
Interest expense (10,034) (1,506) 35,775
General and administrative - - 10,661
Depreciation and amortization - - 40,679
-------------- ------------- --------------
Total operating expenses (10,034) (1,506) 144,611
-------------- ------------- --------------
Real estate operating income 10,034 1,506 36,101
Other operating income (expense) - - 1,594
-------------- ------------- --------------
Income before minority interest 10,034 1,506 37,695
-------------- ------------- --------------
Minority interest - - (4,562)
-------------- ------------- --------------
Income from continuing operations $ 10,034 $ 1,506 $ 33,133
============== ============= ==============
Earnings from continuing operations
per common share (H) $ 0.71
==============
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
---------------------------------------------------------------------------------------------
Pro Forma Adjustments
----------------------------------------------------------------------------
Series A
Acquired Probable Sale of Preferred Stock
Historical (A) Properties (B) Acquisitions (C) 2550 M St.(D) Offering (E)
--------------- ---------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 89,539 $ 128,125 (1) $ 12,086 (6) $ (5,686) $ -
Real estate service income 11,315 - - - -
--------------- ---------------- ----------------- -------------- -----------------
Total revenues 100,854 128,125 12,086 (5,686) -
--------------- ---------------- ----------------- -------------- -----------------
Real estate operating expenses:
Property operating expenses 31,579 41,819 (4) 4,263 (8) (2,312) -
Interest expense 21,873 38,171 (2) 7,095 (9) (3,005) (3,349)
General and administrative 10,711 - - - -
Depreciation and amortization 18,495 31,458 (3) 2,658 (7) (1,023) -
--------------- ---------------- ----------------- -------------- -----------------
Total operating expenses 82,658 111,448 14,016 (6,340) (3,349)
--------------- ---------------- ----------------- -------------- -----------------
Real estate operating income 18,196 16,677 (1,930) 654 3,349
Other operating income (expense) (912) 81 (1) - (39) -
--------------- ---------------- ----------------- -------------- -----------------
Income before minority interest 17,284 16,758 (1,930) 615 3,349
--------------- ---------------- ----------------- -------------- -----------------
Minority interest (5,217) (638)(5) (136)(10) (163) -
--------------- ---------------- ----------------- -------------- -----------------
Income from continuing operations $ 12,067 $ 16,120 $ (2,066) $ 452 $ 3,349
=============== ================ ================= ============== =================
Earnings from continuing operations
per common share (H) $ 0.90
===============
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
------------------------------------------------
Pro Forma Adjustments
-----------------------------
Offering and
Concurrent Offering of
USRealty Additional Pro Forma
Purchase (F) Shares (G) Consolidated
-------------- ------------ --------------
<S> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $ 224,064
Real estate service income - - 11,315
-------------- ------------ --------------
Total revenues - - 235,379
-------------- ------------ --------------
Real estate operating expenses:
Property operating expenses - - 75,349
Interest expense (13,923) (2,090) 44,772
General and administrative - - 10,711
Depreciation and amortization - - 51,588
-------------- ------------ --------------
Total operating expenses (13,923) (2,090) 182,420
-------------- ------------ --------------
Real estate operating income 13,923 2,090 52,959
Other operating income (expense) - - (870)
-------------- ------------ --------------
Income before minority interest 13,923 2,090 52,089
-------------- ------------ --------------
Minority interest - - (6,154)
-------------- ------------ --------------
Income from continuing operations $ 13,923 $ 2,090 $ $45,935
============== ============ ==============
Earnings from continuing operations
per common share (H) $ 0.98
==============
</TABLE>
<PAGE> 7
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND THE YEAR ENDED DECEMBER 31,
1995
(UNAUDITED)
ADJUSTMENTS (DOLLARS IN THOUSANDS):
(A) Reflects the Company's historical consolidated statements of operations
for the nine months ended September 30, 1996 and the year ended December
31, 1995.
(B) Pro forma adjustments for the purchases of the acquired properties
reflect:
(1) the historical operating activity of the properties acquired;
(2) the additional interest expense on the Line of Credit ($19,120 of
interest costs net of $1,871 capitalized for the nine months ended
September 30, 1996 and $25,703 of interest costs net of $3,329
capitalized in 1995) and interest expense on debt assumed in certain
acquisitions ($7,674 for the nine months ended September 30, 1996
and $15,797 in 1995);
(3) the depreciation expense for the acquisitions based on the new
accounting basis for the rental property acquired;
(4) the historical operating activity of the rental property ($24,619
for the nine months ended September 30, 1996 and $45,475 in 1995)
reduced by the elimination of management fee expenses that are no
longer incurred by the Company upon purchase of the properties
($2,023 for the nine months ended September 30, 1996 and $3,656 in
1995); and
(5) the minority interest share of earnings.
(C) Pro forma adjustments for the probable acquisitions reflect:
(6) the historical operating activity of the properties to be acquired;
(7) the depreciation expense for the probable acquisitions based on the
new accounting basis for the rental property to be acquired;
(8) the historical operating activity of the rental property to be
acquired ($3,551 for the nine months ended September 30, 1996 and
$4,679 in 1995) reduced by the elimination of management fee
expenses that will not be incurred by the Company upon purchase of
the properties ($326 for the nine months ended September 30, 1996
and $416 in 1995);
(9) the additional interest expense on the Line of Credit ($5,263 of
interest costs net of $712 capitalized for the nine months ended
September 30, 1996 and $7,334 of interest costs net of $989
capitalized in 1995) and interest expense on debt assumed in the
anticipated acquisition of South Coast Executive Center ($563 for
the nine months ended September 30, 1996 and $750 for 1995); and
(10) the minority interest share of earnings.
(D) Reflects the elimination of the operating activity and effect on minority
interest of the building expected to be sold located at 2550 M Street in
Washington, D.C. and the reduction in interest expense associated with the
pay down of the Line of Credit with the
<PAGE> 8
sales proceeds. The estimated gain on the anticipated sale of $23,346 is
not reflected in the pro forma condensed consolidated statements of
operations.
(E) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the Series A Preferred Stock Offering.
(F) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the Offering and Concurrent USRealty Purchase.
(G) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the offering of additional shares.
(H) Based upon 49,246,221 and 49,223,779 pro forma shares of Common Stock
outstanding and common stock equivalents on a weighted average basis
during the nine months ended September 30, 1996 and the year ended
December 31, 1995, respectively. Net income and weighted average shares
outstanding have been adjusted for certain minority interests which have
a dilutive effect on earnings per share.
