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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 Exchange Act of 1934
Date of Report (date of earliest event reported): December 16, 1997
CARRAMERICA REALTY CORPORATION
(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
Maryland 1-11706 52-1796339
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1700 Pennsylvania Avenue, N.W., Washington, DC 20006
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
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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 Presidential Circle and 900-910 East Hamilton. 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) Statements of Revenue and Certain Expenses for
Presidential Circle for the nine months ended September
30, 1997 (unaudited) and the year ended December 31,
1996 with accompanying notes and Report of Independent
Auditors and
(ii) Historical Summaries of Operating Revenue and Expenses
for 900-910 East Hamilton for the nine months ended
September 30, 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) Statements of Revenue and Certain Expenses for
Presidential Circle for the nine months ended September
30, 1997 (unaudited) and the year ended December 31,
1996 with accompanying notes and Report of Independent
Auditors and
(ii) Historical Summaries of Operating Revenue and Expenses
for 900-910 East Hamilton for the nine months ended
September 30, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
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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 16, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
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Brian K. Fields
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number
99.1 Financial Statements
(i) Statements of Revenue and Certain Expenses for
Presidential Circle for the nine months ended September
30, 1997 (unaudited) and the year ended December 31,
1996 with accompanying notes and Report of Independent
Auditors and
(ii) Historical Summaries of Operating Revenue and Expenses
for 900-910 East Hamilton for the nine months ended
September 30, 1997 (unaudited) and the year ended
December 31, 1996 with accompanying notes and
Independent Auditors' Report.
Exhibit 99.1
Presidential Circle
Statements of Revenue and Certain Expenses
Nine Months Ended September 30, 1997 (Unaudited) and the
Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
1
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REPORT OF INDEPENDENT AUDITORS
The Buyers
We have audited the accompanying statement of revenue and certain expenses of
Presidential Circle for the year ended December 31, 1996. This statement of
revenue and certain expenses is the responsibility of the management of
Presidential Circle. 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 presents fairly, in all material respects, the revenue and certain
expenses, as defined above, of Presidential Circle for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Los Angeles, California
March 7, 1997
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Presidential Circle
Statements of Revenue and Certain Expenses
(In Thousands)
For the Nine
Months Ended Year Ended
September 30, December 31,
1997 1996
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(UNAUDITED)
Revenue from real estate and improvements $ 4,233 $ 5,377
Certain expenses 1,104 1,390
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Excess of revenue over certain expenses $ 3,129 $ 3,987
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See accompanying notes to statements of revenue and certain expenses.
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Presidential Circle
Notes to Statements of Revenue and Certain Expenses
For the Nine Months Ended September 30, 1997 (Unaudited) and the
Year Ended December 31, 1996
(In Thousands)
1. Organization and Basis of Presentation
The accompanying statements of revenue and certain expenses include the
accounts of Presidential Circle which is owned by a private limited
partnership.
Interest income, depreciation expense, property tax expense, leasing
commissions, general and administrative expense (including marketing and
advertising, legal, allowance for doubtful accounts, and administrative
salaries), and management fee expense (see Note 4) are not comparable to the
proposed operations of Presidential Circle and have been excluded from the
accompanying statements of revenue and certain expenses.
The period presented for the nine months ended September 30, 1997 is
unaudited. In the opinion of management, the information presented reflects
all adjustments necessary for a fair presentation of the results of the
interim period and all such adjustments are of a normal, recurring nature.
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.
Income Taxes
Income taxes are not reflected in the statements of revenue and certain
expenses as Presidential Circle is currently owned by the partnership and
income of the Partnership is included in the partners' respective tax
returns.
Use of Estimates
The preparation of the statements of revenue and certain expenses in
accordance with generally accepted accounting principles 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.
4
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Presidential Circle
Notes to the Statements of Revenue and Certain Expenses-(Continued)
For the Nine Months Ended September 30, 1997 (Unaudited) and the
Year Ended December 31, 1996
(In Thousands)
3. Property Rentals
Minimum future rental receipts, which exclude any reimbursement of expenses
or contingent rents, under non-cancelable leases of building premises as of
December 31, 1996 are as follows (in thousands):
1997 $ 3,366
1998 3,285
1999 3,089
2000 2,058
2001 1,278
Thereafter 1,763
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$ 14,839
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4. Transactions with Related Parties
During the nine months ended September 30, 1997 and the year ended December
31, 1996 an affiliate of the general partner received fees to provide asset
management services. In addition, an affiliate of the limited partner
received property management fees during the nine months ended September 30,
1997 and the year ended December 31, 1996. The asset management fees and
property management fees are not reflected in the accompanying statements of
revenue and certain expenses since they are not comparable to the proposed
operations of Presidential Circle.
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900-910 EAST HAMILTON
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)
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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 900-910 East Hamilton for the year ended
December 31, 1996. This historical summary is the responsibility of the
management of the 900-910 East Hamilton. 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
900-910 East Hamilton.
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
900-910 East Hamilton for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
December 11, 1997
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900-910 EAST HAMILTON
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
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Operating revenue:
Building rental $ 4,568 $ 6,377
Recovery of operating expenses 1,022 1,411
Other income - 6
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Total operating revenue 5,590 7,794
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Operating expenses:
Repairs and maintenance 172 184
Utilities 9 14
Real estate taxes 604 817
Insurance 87 117
Management fees 120 160
Landscaping and other 18 29
Administrative 60 93
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Total operating expenses 1,070 1,414
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Operating revenue in excess
of operating expenses $ 4,520 $ 6,380
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See accompanying notes to historical summaries of
operating revenue and expenses.
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Historical Summaries of Operating Revenue and Expenses-(Continued)
For the Nine Months Ended September 30, 1997 (unaudited)
and the Year Ended December 31, 1996
(1) DESCRIPTION OF THE PROPERTY
900-910 East Hamilton (the Buildings) consists of two buildings
containing approximately 175,000 square feet of office space available
for lease in each building, located in Campbell, California, a submarket
of Silicon Valley. As of September 30, 1997, one building was 100% leased
by one tenant and the other building was 21% leased by another tenant.
(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
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
Portfolio have been excluded from expenses.
In accordance with California tax law, management expects that
real estate taxes will be reassessed upon transfer of ownership
based on the purchase price of the Buildings. Therefore,
historical real estate tax expenses may not be comparable to those
expected to be incurred by CarrAmerica Realty Corporation.
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 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, 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.
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Historical Summaries of Operating Revenue and Expenses-(Continued)
For the Nine Months Ended September 30, 1997 (unaudited)
and the Year Ended December 31, 1996
(3) RENTAL REVENUE
Minimum future rentals (excluding modifications and renewal options) on
noncancelable leases as of December 31, 1996 are as follows (in
thousands):
1997 $ 5,159
1998 2,709
1999 2,709
2000 2,483
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$ 13,060
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(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) $ 6,115
Less estimated depreciation and amortization expense 1,354
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Pro forma taxable operating income $ 4,761
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Pro forma cash available from operations $ 6,115
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