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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): October 30, 1997
CarrAmerica Realty Corporation
(formerly Carr Realty Corporation)
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(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, DC 20006
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(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
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<PAGE>
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 Historical Summaries of Operating
Revenue and Expenses with accompanying notes and Independent Auditors' Report
for each of the following properties: U.S. West, 2600 W. Olive, Presidential
Circle, Cedar Maple Plaza, Bannockburn IV, CM Capital, Sorenson Research Park,
Draper Park North, Quorum Place and Tollhill East & West. In accordance with
Rule 3-14 of Regulation S-X, financial statements with respect to the listed
properties are being filed because the Company has either (a) already acquired
the properties and the book value of the properties individually by project or
in the aggregate, are significant, or (b) deemed the acquisition to be probable
and the book value of the properties, individually or in the aggregate, are
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 following financial
statements:
(i) Historical Summaries of Operating Revenue and Expenses
for U.S. West for the nine months ended September 30, 1997 (unaudited) and the
year ended December 31, 1996 with accompanying notes and Independent Auditors'
Report;
(ii) Historical Summaries of Operating Revenue and Expenses
for 2600 W. Olive for the nine months ended September 30, 1997 (unaudited) and
the year ended December 31, 1996 with accompanying notes and Independent
Auditors' Report;
(iii) Statement of Revenues and Certain Expenses for
Presidential Circle for the year ended December 31, 1996 with accompanying notes
and Independent Auditors' Report;
(iv) Historical Summary of Operating Revenue and Expenses for
Cedar Maple Plaza for the year ended December 31, 1996 with accompanying notes
and Independent Auditors' Report;
(v) Historical Summaries of Operating Revenue and Expenses
for Bannockburn IV for the three months ended March 31, 1997 (unaudited) and the
year ended December 31, 1996 with accompanying notes and Independent Auditors'
Report;
<PAGE>
(vi) Historical Summaries of Operating Revenue and Expenses
for CM Capital for the six months ended June 30, 1997 (unaudited) and the year
ended December 31, 1996 with accompanying notes and Independent Auditors'
Report;
(vii) Historical Summaries of Operating Revenue and Expenses
for Sorenson Research Park for the three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996 with accompanying notes and Independent
Auditors' Report;
(viii) Historical Summaries of Operating Revenue and Expenses
for Draper Park North for the three months ended March 31, 1997 (unaudited) and
the year ended December 31, 1996 with accompanying notes and Independent
Auditors' Report;
(ix) Historical Summary of Operating Revenue and Expenses for
Quorum Place for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report; and
(x) Historical Summaries of Operating Revenue and Expenses
for Tollhill East & West for the three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996 with accompanying notes and Independent
Auditors' Report.
(b) Pro Forma Financial Information .
None.
(c) Exhibits
Exhibit
Number
-------
99.1 Financial Statements
(i) Historical Summaries of Operating Revenue and
Expenses for U.S. West for the nine months ended
September 30, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(ii) Historical Summaries of Operating Revenue and
Expenses for 2600 W. Olive for the nine months ended
September 30, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(iii) Statement of Revenues and Certain Expenses for
Presidential Circle for the year ended December 31,
1996 with accompanying notes and Independent
Auditors' Report;
(iv) Historical Summary of Operating Revenue and
Expenses for Cedar Maple Plaza for the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(v) Historical Summaries of Operating Revenue and
Expenses for Bannockburn IV for the three months
ended March 31, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
<PAGE>
(vi) Historical Summaries of Operating Revenue and
Expenses for CM Capital for the six months ended
June 30, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(vii) Historical Summaries of Operating Revenue and
Expenses for Sorenson Research Park for the three
months ended March 31, 1997 (unaudited) and the year
ended December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(viii) Historical Summaries of Operating Revenue and
Expenses for Draper Park North for the three months
ended March 31, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(ix) Historical Summary of Operating Revenue and
Expenses for Quorum Place for the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report; and
(x) Historical Summaries of Operating Revenue and
Expenses for Tollhill East & West for the three
months ended March 31, 1997 (unaudited) and the year
ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
ITEM 8. Change in Fiscal Year.
Not applicable.
<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 hereto duly authorized.
Date: October 30, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
-----------------------------
Brian K. Fields
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
99.1 Financial Statements
(i) Historical Summaries of Operating Revenue and Expenses
for U.S. West for the nine months ended September 30, 1997
(unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(ii) Historical Summaries of Operating Revenue and Expenses
for 2600 W. Olive for the nine months ended September 30,
1997 (unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(iii) Statement of Revenues and Certain Expenses Statement of
Revenues and Certain for Presidential Circle for the year
ended December 31, 1996 with accompanying notes and
Independent Auditors' Report;
(iv) Historical Summary of Operating Revenue and Expenses for
Cedar Maple Plaza for the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(v) Historical Summaries of Operating Revenue and Expenses
for Bannockburn IV for the three months ended March 31, 1997
(unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(vi) Historical Summaries of Operating Revenue and Expenses
for CM Capital for the six months ended June 30, 1997
(unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(vii) Historical Summaries of Operating Revenue and Expenses
for Sorenson Research Park for the three months ended March
31, 1997 (unaudited) and the year ended December 31, 1996
with accompanying notes and Independent Auditors' Report;
(viii) Historical Summaries of Operating Revenue and Expenses
for Draper Park North for the three months ended March 31,
1997 (unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report;
(ix) Historical Summary of Operating Revenue and Expenses for
Quorum Place for the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report; and
(x) Historical Summaries of Operating Revenue and Expenses
for Tollhill East & West for the three months ended March 31,
1997 (unaudited) and the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report.
Exhibit 99.1
THE US WEST PORTFOLIO
Historical Summaries
of Operating Revenue and Expenses
Nine Months Ended September 30, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
1
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of The US West Portfolio for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of The US West Portfolio. 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 The US
West Portfolio.
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
The US West Portfolio for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
October 15, 1997
2
<PAGE>
THE US WEST PORTFOLIO
Historical Summaries of Operating Revenue and Expenses
For the nine months ended September 30, 1997 (unaudited) and the year ended
December 31, 1996
(dollars in thousands)
Nine months Year
ended ended
September 30, December 31,
1997 1996
---------- -----------
Operating revenue - Building rental $ 7,286 9,714
Operating expenses - -
---------- ----------
Operating revenue in excess
of operating expenses $ 7,286 9,714
========== ==========
See accompanying notes to historical summaries of operating revenue and
expenses.
3
<PAGE>
THE US WEST PORTFOLIO
Notes to Historical Summaries of Operating Revenue and Expenses
Nine months ended September 30, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
The US West Portfolio consists of four buildings (the Buildings) located
in Phoenix and Tucson, Arizona, and contain approximately 530,000 square
feet of office space available for lease. At September 30, 1997, the
Buildings were 100% leased to US West Business Resources, Inc. under
various triple-net leases.
(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,
L.P. in the proposed future operations of the Buildings, 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 the Buildings 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, 1997 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, 1996. Certain information and 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, 1997,
have been included. The results of operations for the nine-month
period ended September 30, 1997 are not necessarily indicative of
the results for the full year.
(Continued)
4
<PAGE>
THE US WEST PORTFOLIO
Historical Summaries of Operating Revenue and Expenses (Continued)
(dollars in thousands)
(3) Rental Revenue
The Buildings are leased to US West Business Resources, Inc. under
various triple-net leases classified as operating leases. Triple-net
leases require the lessee to directly pay all operating expenses such as,
real estate taxes, insurance and maintenance costs.
Minimum future rental on noncancelable leases are as follows for the
years ending December 31 (in thousands):
1997 $ 8,129
1998 8,457
1999 8,792
2000 9,142
2001 9,501
Thereafter 58,472
------
$ 102,439
=========
(4) 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 the Buildings for the 12 months ended
September 30, 1997, 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 Buildings 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 8,092
Less estimated depreciation and amortization expense 1,752
---------
Pro forma taxable operating income $ 6,340
=========
Pro forma cash available from operations $ 8,092
=========
5
<PAGE>
2600 West Olive
Historical Summaries
of Operating Revenue and Expenses
Nine Months Ended September 30, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
6
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of 2600 West Olive (the Property) for the
year ended December 31, 1996. This historical summary is the responsibility of
the management of the Property. 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 the
Property.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the operating revenue and expenses, as described in note
2(a), of 2600 West Olive for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
September 10, 1997
7
<PAGE>
2600 West Olive
Historical Summaries of Operating Revenue and Expenses
For the nine months ended September 30, 1997 (unaudited) and the
year ended December 31, 1996
(Dollars in thousands)
Nine months
ended Year ended
September 30, December 31,
1997 1996
------------ ------------
Operating revenue:
Rental revenue $ 2,658 3,624
Expense reimbursments 159 189
--------- --------
Total operating revenue 2,817 3,813
--------- --------
Operating expenses:
Utilities 280 394
Repair and maintenance 269 339
Management fees 84 116
Security services 78 99
Administrative and other 46 68
Insurance 25 26
--------- --------
Total operating expenses 782 1,042
--------- --------
Operating revenue in excess of
operating expenses $ 2,035 2,771
========= ========
See accompanying notes to historical summaries
of operating revenue and expenses.
8
<PAGE>
2600 West Olive
Notes to Historical Summaries of Operating Revenue and Expenses
Nine months ended September 30, 1997 (unaudited)
and the year ended December 31, 1996
(1) Description of the Property
2600 West Olive (the Property) is located in Burbank, California, and
contains approximately 143,000 square feet of office space available for
lease. At September 30, 1997, the Property was 100% leased.
(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,
L.P. in the proposed future operations of the Property, have been
excluded. Interest income has been excluded from revenue, and real
estate taxes, interest, depreciation and amortization, and other
costs not directly related to the future operations of the Property
have been excluded from expenses.
In accordance with current California tax law, management expects
that real estate taxes will be reassessed upon transfer of
ownership based on the purchase price of the Property. Therefore,
historical real estate tax expenses are not comparable to those
expected to be incurred by the Property's new owner. Real estate
taxes for the nine months ended September 30, 1997 and the year
ended December 31, 1996 were $167,000 and $221,000 respectively.
Upon reassessment, annual real estate taxes are expected to
increase by approximately $92,000. 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 Property.
(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, 1997 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, 1996. 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
(Continued)
9
<PAGE>
(2) Continued
the historical summaries of operating revenue and expenses for the
nine months ended September 30, 1997, have been included. The
results of operations for the six-month period ended June 30, 1997
are not necessarily indicative of the results for the full year.
(3) Rental Revenue
The Property is leased to tenants under various arrangements classified as
operating leases. The leases generally provide for base rent and
reimbursement of various expenses such as common area maintenance, real
estate taxes and insurance.
Approximately 90% of the net rentable area of the Property is leased to a
corporation which has the option to modify its lease by terminating
portions of the lease, which represent approximately 16% of the net
rentable area of the Property. The option expires in November, 1997.
Minimum future rentals (excluding modification and renewal options) on
noncancelable leases are as follows for the years ending December 31 (in
thousands):
1997 $ 2,816
1998 2,757
1999 2,809
2000 2,809
2001 2,801
6,714
--------
Thereafter $ 20,706
========
(4) 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 2600 West Olive for the 12 months ended
September 30, 1997, 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 buildings is computed
on the modified accelerated cost recovery system method over a 39-year
life based on the anticipated total purchase cost. Real estate taxes
included reflect the anticipated reassessment described in note 2(a).
This statement does not purport to forecast actual operating results for
any period in the future (dollars in thousands).
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 2,550
Less estimated depreciation and amortization expense 793
--------
Pro forma taxable operating income $ 1,757
========
Pro forma cash available from operations $ 2,550
========
10
<PAGE>
Presidential Circle Office Building
Statement of Revenue and Certain Expenses
Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying statement of revenue and certain expenses of
Presidential Circle Office Building for the year ended December 31, 1996. This
statement of revenue and certain expenses is the responsibility of the
management of Presidential Circle Office Building. Our responsibility is to
express an opinion on the statement of revenue and certain expenses 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 statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission. Certain expenses (described in Note 1) that would not be
comparable to those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a complete
presentation of the revenue and expenses of the property.
In our opinion, the statement of revenue and certain expenses of Presidential
Circle Office Building presents fairly, in all material respects, the revenue
and certain expenses, as defined above, of the Presidential Circle Office
Building for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ERNST & YOUNG LLP
Los Angeles, California
March 7, 1997
12
<PAGE>
Presidential Circle Office Building
Statement of Revenue and Certain Expenses
Year ended December 31, 1996
(In Thousands)
Revenue from real estate and improvements $ 5,377
Certain expenses 1,702
--------
Excess of revenue over certain expenses $ 3,675
========
See accompanying notes.
13
<PAGE>
Presidential Circle Office Building
Notes to the Statement of Revenue and Certain Expenses
Year ended December 31, 1996
(In Thousands)
1. Origanization and Basis of Presentation
The accompanying statement of revenues and certain expenses include the
accounts of Presidential Circle Office Building which is owned by a private
limited partnership.
Interest income, depreciation expense, property tax expense, leasing
commissions and expenses, general and administrative expense and asset and
property management fee expense (see Note 4) are not comparable to the
proposed operations of Presidential Circle Office Building and have been
excluded from the accompanying statement of revenues and certain expenses.
Income taxes are not reflected in the statement of revenues and certain
expenses as Presidential Circle Office Building is owned by a partnership
and income of the partnership is included in the partners' respective tax
returns.
2. Summary of Significant Accounting Policies
Revenue Recognition
Revenue from real estate and improvements, primarily rental income is
recorded on the accrual basis as the revenue becomes earned and billable
under the terms of the related leases.
Use of Estimates
The preparation of the statement of revenues and certain expenses in
accordance with generally accepted accounting principals requires management
to make estimates and assumptions that affect the reported amounts of
revenue and certain expenses during the reporting periods. Actual results
could differ from those estimates.
14
<PAGE>
Presidential Circle Office Building
Notes to the Statement of Revenue and Certain Expenses (Continued)
Year ended December 31, 1996
(In Thousands)
3. Property Rentals
Future Minimum rental revenues under noncancelable operating leases as of
December 31, 1996 are as follows:
1997 $ 3,366
1998 3,285
1999 3,089
2000 2,058
2001 1,278
Thereafter 1,763
----------
$ 14,839
==========
These amounts do not include percentage retals that may be received under
certain leases on the basis of tenant sales in excess of stipulated
minimums.
4. Transactions with Related Parties
During 1996 an affiliate of the general partner received fees to provide
asset management services. In addition, an affiliate of one of the limited
partners received property management fees in 1996. The asset management
fees and property management fees are not reflected in the accompanying
statement of revenue and certain expenses since it is not comparable to the
proposed operations of Presidential Circle Office Building.
15
<PAGE>
CEDAR MAPLE PLAZA
Historical Summary
of Operating Revenue and Expenses
Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
16
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Cedar Maple Plaza for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of Cedar Maple Plaza. 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 Cedar
Maple Plaza.
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)
Cedar Maple Plaza for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
August 1, 1997
17
<PAGE>
CEDAR MAPLE PLAZA
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Year
ended
December 31,
1996
------------
Operating revenue:
Building rental $1,771
Recovery of operating expenses 68
------
Total operating revenue 1,839
------
Operating expenses:
Maintenance 107
Utilities 216
Real estate taxes 205
Insurance 9
Management fees 72
General operating 174
Administrative 132
------
Total operating expenses 915
------
Operating revenue in excess of operating expenses $ 924
======
See accompanying notes to historical summary
of operating revenue and expenses.
18
<PAGE>
CEDAR MAPLE PLAZA
Notes to Historical Summary of Operating Revenue and Expenses
Year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Cedar Maple Plaza consists of three buildings located in Dallas, Texas,
containing approximately 113,000 square feet of office space available
for lease. At March 31, 1997, the property was 90% leased.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summary 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,
L.P. in the proposed 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 Cedar Maple Plaza have
been excluded from expenses. Management is not aware of any other
material factors that would cause the historical summary 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.
(Continued)
19
<PAGE>
CEDAR MAPLE PLAZA
Notes to Historical Summary 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 Cedar Maple Plaza for the year ended
December 31, 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 buildings 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 835
Less estimated depreciation and amortization expense 266
---------
Pro forma taxable operating income $ 569
=========
Pro forma cash available from operations $ 835
=========
20
<PAGE>
BANNOCKBURN IV
Historical Summaries
of Operating Revenue and Expenses
Three Months Ended March 31, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
21
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Bannockburn IV for the year ended December
31, 1996. This historical summary is the responsibility of the management of
Bannockburn IV. 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
Bannockburn IV.
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
Bannockburn IV for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
July 31, 1997
22
<PAGE>
BANNOCKBURN IV
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Three months Year
ended ended
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Operating revenue:
Building rental $ 371 $ 1,382
Recovery of operating expenses 154 539
Other -- 17
--------- ---------
Total operating revenue 525 1,938
--------- ---------
Operating expenses:
Maintenance 38 124
Utilities 25 102
Real estate taxes 27 106
Insurance 4 18
Management fees 22 68
General operating 48 103
Administrative 16 67
Food court 19 69
--------- ---------
Total operating expenses 199 657
--------- ---------
Operating revenue in excess of operating expenses $ 326 $ 1,281
========= =========
</TABLE>
See accompanying notes to historical summaries
of operating revenue and expenses.
23
<PAGE>
BANNOCKBURN IV
Notes to Historical Summaries of Operating Revenue and Expenses
Three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Bannockburn IV (the Property) is located in Bannockburn, Illinois, a
suburb of Chicago, and contains approximately 109,000 square feet of
office space available for lease. At March 31, 1997, the Property was 86%
leased.
(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,
L.P. in the proposed 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 the Property 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 Property.
(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 three
months ended March 31, 1997 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, 1996. 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 summaries of operating
revenue and expenses for the three months ended March 31, 1997,
have been included. The results of operations for the three-month
period ended March 31, 1997 are not necessarily indicative of the
results for the full year.
(Continued)
24
<PAGE>
BANNOCKBURN IV
Notes to 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 Bannockburn IV for the 12 months ended
March 31, 1997, 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 buildings 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 1,141
Less estimated depreciation and amortization expense 455
---------
Pro forma taxable operating income $ 686
=========
Pro forma cash available from operations $ 1,141
=========
25
<PAGE>
CM CAPITAL
Historical Summaries
of Operating Revenue and Expenses
Six Months Ended June 30, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
26
<PAGE>
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 CM Capital: Arroyo, Amador and Rinconada
(collectively, the Buildings) for the year ended December 31, 1996. This
historical summary is the responsibility of the management of the Buildings. 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 the
Buildings. 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 the Buildings for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, CA
June 2, 1997
27
<PAGE>
CM CAPITAL
Historical Summaries of Operating Revenue and Expenses
For the six months ended June 30, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
Six months Year
ended ended
June 30, December 31,
1997 1996
------------ ------------
Operating revenue:
Building rental $2,122 3,733
Recovery of operating expenses 379 600
------ -----
Total operating revenue 2,501 4,333
------ -----
Operating expenses:
Maintenance 147 291
Utilities -- 15
Real estate taxes 101 279
Insurance 30 72
Management fees 30 52
General and administrative 83 174
------ -----
Total operating expenses 391 883
------ -----
Operating revenue in excess of
operating expenses $2,110 3,450
====== =====
See accompanying notes to historical summaries of operating revenue
and expenses.
28
<PAGE>
CM CAPITAL
Notes to the Historical Summaries of Operating Revenue and Expenses
Six months ended June 30, 1997 (unaudited)
and year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
The CM Capital buildings: Arroyo, Amador, and Rinconada (collectively,
the Buildings), are located in Pleasanton, California and contain
approximately 322,000 square feet of office space available for lease.
The Buildings were constructed in 1983. At June 30, 1997, the Buildings
were 100% leased.
(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 the Buildings have
been excluded from expenses.
Revenue and expense included for the Rinconada property has been
annualized based on the 9 1/2 months ended December 31, 1996. This
property was occupied by the same tenant for all of 1996.
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 and 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 six
months ended June 30, 1997 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, 1996. 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 adequare to make the
information
29
<PAGE>
CM CAPITAL
Notes to the Historical Summaries of Operating Revenue and Expenses
(dollars in thousands)
(2) (c) Continued
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 six months ended June 30, 1997 have
been included. The results of operations for the six-month period
ended June 30, 1997 are not necessarily indicative of the results
for the full year.
(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 the Buildings for the 12 months ended
June 30, 1997, 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 buildings 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 3,432
Less estimated depreciation and amortization expense (645)
-------
Pro forma taxable operating income $ 2,787
=======
Pro forma cash available from operations $ 3,432
=======
30
<PAGE>
SORENSON RESEARCH PARK
Historical Summaries of Operating Revenue and Expenses
Three Months Ended March 31, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
31
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Sorenson Research Park for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of Sorenson Research Park. 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
Sorenson Research Park.
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 Sorenson Research Park for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Salt Lake City, Utah
March 21, 1997
32
<PAGE>
SORENSON RESEARCH PARK
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
Three months Year
ended ended
March 31, December 31,
1997 1996
----------- ------------
Operating revenue:
Building rental $ 470 $ 1,978
Recovery of operating expenses 34 411
------ -------
Total operating revenue 504 2,389
------ -------
Operating expenses:
Maintenance -- 92
Utilities -- 94
Real estate and other taxes 33 185
Insurance -- 13
General operating 1 27
------ -------
Total operating expenses 34 411
------ -------
Operating revenue in excess of operating expenses $ 470 $ 1,978
====== =======
See accompanying notes to historical summaries
of operating revenue and expenses.
33
<PAGE>
SORENSON RESEARCH PARK
Notes to Historical Summaries of Operating Revenue and Expenses
Three months ended March 31, 1997 (unaudited)
and year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Sorenson Research Park consists of five office buildings located in
Salt Lake City, Utah. One of the five buildings is currently under construction
and is expected to be completed in 1997. The other four operating office
buildings were constructed between 1987 and 1996 and contain approximately
178,000 square feet of office space available for lease. At December 31, 1996,
each of the four operating office buildings were 100% leased under triple-net,
single tenant lease agreements. Management pays certain operating expenses on
behalf of the tenants which are fully reimbursed by the tenants.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summary of operating revenue and expenses
is not representative of the actual operations for the year ended December 31,
1996, as certain revenue and expenses, which may not be comparable to those
expected to be incurred by CarrAmerica Realty Corporation in the proposed 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 Sorenson Research Park
have been excluded from expenses. Management is not aware of any other material
factors that would cause the historical summary 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.
(3) Related Party
A principal of the owner of Sorenson Research Park is also a principal
in a company that leases approximately 58,000 square feet of office space in
Sorenson Research Park. Rental revenue from this lease amounted to $733 thousand
for the year ended December 31, 1996.
(4) Management Fees
Management of Sorenson Research Park is provided by an affiliate and
management fees are not charged to Sorenson Research Park. Therefore, management
fees are not included in the accompanying historical summary.
34
<PAGE>
(5) 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 Sorenson Research Park for the year ended
March 31, 1997, 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 buildings 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $1,830
Less estimated depreciation and amortization expense 672
------
Pro forma taxable operating income $1,158
======
Pro forma cash available from operations $1,830
======
35
<PAGE>
DRAPER PARK NORTH
Historical Summaries
of Operating Revenue and Expenses
Three Months Ended March 31, 1997 (Unaudited)
and Year ended December 31, 1996
(With Independent Auditors' Report Thereon)
36
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Draper Park North for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of Draper Park North. 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 Draper
Park North.
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 Draper Park North for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Salt Lake City, Utah
March 21, 1997
37
<PAGE>
DRAPER PARK NORTH
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1997 (unaudited)
and the year ended December 31, 1996
(dollars in thousands)
Three months Year
ended ended
March 31, December 31,
1997 1996
------------ ------------
Operating revenue:
Building rental $447 $784
Recovery of operating expenses 160 197
---- ----
Total operating revenue 607 981
---- ----
Operating expenses:
Common area maintenance 85 149
Management fees 17 30
Real estate tax, insurance and other 58 18
---- ----
Total operating expenses 160 197
---- ----
Operating revenue in excess of expenses $447 $784
==== ====
See accompanying notes to historical summaries
of operating revenue and expenses.
38
<PAGE>
DRAPER PARK NORTH
Notes to Historical Summaries of Operating Revenue and Expenses
Three months ended March 31, 1997 (unaudited)
and year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Draper Park North consists of three buildings located in Draper, Utah,
containing approximately 179,000 square feet of office space available for
lease. Construction of each of the buildings was completed and operations
commenced in 1996. At December 31, 1996, Draper Park North was 93% leased.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summary of operating revenue and expenses
is not representative of the actual operations for the year ended December 31,
1996, as certain revenue and expenses, which may not be comparable to those
expected to be incurred by CarrAmerica Realty Corporation in the proposed 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 Draper Park North have
been excluded from expenses. Management is not aware of any other material
factors that would cause the historical summary 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. The historical summary for the year ended
December 31, 1996 reflects revenues and expenses for the period since the
buildings' operations commenced.
(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 the Draper Park North for the year ended
March 31, 1997, 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 buildings 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.
Pro forma net operating income (exclusive of interest,
depreciation and amortization expenses) $1,393
Less estimated depreciation and amortization expense 529
------
Pro forma taxable operating income $ 864
======
Pro forma cash available from operations $1,393
======
39
<PAGE>
QUORUM PLACE
Historical Summary
of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
40
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Quorum Place for the year ended December
31, 1996. This historical summary is the responsibility of the management of
Quorum Place. 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 Quorum
Place.
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
Quorum Place for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
June 3, 1997
41
<PAGE>
QUORUM PLACE
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental $ 2,140
Recovery of operating expenses 146
Other operating income 32
-------
Total operating revenue 2,318
-------
Operating expenses:
Maintenance 168
Utilities 327
Real estate taxes 282
Insurance 30
Management fees 65
General operating 44
Administrative 204
-------
Total operating expenses 1,120
-------
Operating revenue in excess of operating expenses $ 1,198
=======
See accompanying notes to historical summary
of operating revenue and expenses.
42
<PAGE>
QUORUM PLACE
Notes to Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Quorum Place is a multi-tenant office building located in suburban
Dallas, Texas. The building contains approximately 177,000 square feet of office
space available for lease. At December 31, 1996, Quorum Place was 96% leased.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summary of operating revenue and expenses
is not representative of the actual operations for 1996 as certain revenue and
expenses, which may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation in the proposed 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 Quorum Place have been excluded from
expenses. Management is not aware of any other material factors that would cause
the historical summary of operating revenue and expenses to not be indicative of
the future operating results of the building.
(b) Revenue Recognition
Revenue from rental operations is recognized straight-line over the
terms of the respective leases.
(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 Quorum Place for the year ended December
31, 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.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 1,037
Less estimated depreciation and amortization expense 366
-------
Pro forma taxable operating income $ 671
=======
Pro forma cash available from operations $ 1,010
=======
43
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying statement of revenue and certain expenses of
Presidential Circle Office Building for the year ended December 31, 1996. This
statement of revenue and certain expenses is the responsibility of the
management of Presidential Circle Office Building. Our responsibility is to
express an opinion on the statement of revenue and certain expenses 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 statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission. Certain expenses (described in Note 1) that would not be
comparable to those resulting from the future operations of the property are
excluded and the statement is not intended to be a complete presentation of the
revenue and expenses of the property.
In our opinion, the statement of revenue and certain expenses of Presidential
Circle Office Building presents fairly, in all material respects, the revenue
and certain expenses, as defined above, of Presidential Circle Office Building
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Los Angeles, California
March 7, 1997
44
<PAGE>
TOLLHILL EAST AND WEST
Historical Summaries
of Operating Revenue and Expenses
Three Months Ended March 31, 1997 (Unaudited)
and Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
45
<PAGE>
Independent Auditors' Report
The Partners
CarrAmerica Realty, L.P.:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Tollhill East and West for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of Tollhill East and West. 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
Tollhill East and West.
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
Tollhill East and West for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
May 16, 1997
46
<PAGE>
TOLLHILL EAST AND WEST
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1997 (unaudited) and the year ended
December 31, 1996
(dollars in thousands)
Three months Year
ended ended
March 31, December 31,
1997 1996
----------- ------------
Operating revenue:
Building rental $ 768 $ 2,464
Recovery of operating expenses 18 35
Other income 8 37
----- -------
Total operating revenue 794 2,536
----- -------
Operating expenses:
Maintenance 89 238
Utilities 114 470
Real estate taxes 70 278
Insurance 8 32
Management fees 38 125
General operating 22 87
Administrative 53 210
----- -------
Total operating expenses 394 1,440
----- -------
Operating revenue in excess of
operating expenses $ 400 $ 1,096
===== =======
See accompanying notes to historical summaries
of operating revenue and expenses.
47
<PAGE>
TOLLHILL EAST AND WEST
Notes to Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1997 (unaudited) and the year ended
December 31, 1996
(dollars in thousands)
(1) Description of the Property
Tollhill East and West consists of two buildings located in Suburban
Dallas, Texas, containing approximately 238,000 square feet of office space
available for lease. At March 31, 1997, Tollhill East and West was 90% leased.
(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 proposed 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 Tollhill East and West 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 three months
ended March 31, 1997 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, 1996. 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 three months ended March 31, 1996, have been
included. The results of operations for the three-month period ended March 31,
1996 are not necessarily indicative of the results for the full year.
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
48
<PAGE>
The unaudited pro forma table reflects the taxable operating results
and cash available from operations of Tollhill East and West for the 12 months
ended March 31, 1997, 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 buildings 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.
Pro forma net operating income
(exclusive of depreciation and amortization expense) $1,151
Less estimated depreciation and amortization expense 499
------
Pro forma taxable operating income $ 652
======
Pro forma cash available from operations $ 954
======
49
