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): March 26, 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>
FORM 8-K
ITEM 1. Changes in Control of Registrant
Not applicable
ITEM 2. Acquisition or Disposition of Assets.
Attached hereto as Exhibit 99.1 are Historical Summaries of Operating
Revenue and Expenses for the year ended December 31, 1996 with accompanying
notes and Independent Auditors' Report for the following properties: The
Crossings; Fortran Court; Draper Park North; Embassy Row; Bannockburn Lake
Office Plaza and Sorenson Research Park. 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 3. Bankruptcy or Receivership.
Not applicable.
ITEM 4. Changes in Registrant's Certifying Accountant.
Not applicable.
ITEM 5. Other Events.
None.
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 Summary of Operating Revenue and Expenses for The
Crossings for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
<PAGE>
(ii) Historical Summary of Operating Revenue and Expenses for Fortran
Court for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(iii) Historical Summary of Operating Revenue and Expenses for Draper
Park North for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summary of Operating Revenue and Expenses for Embassy
Row for the year ended December 31, 1996 with accompanying notes and Independent
Auditors' Report.
(v) Historical Summary of Operating Revenue and Expenses for
Bannockburn Lake Office Plaza for the year ended December 31, 1996 with
accompanying notes and Independent Auditors' Report.
(vi) Historical Summary of Operating Revenue and Expenses for Sorenson
Research Park for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(b) Pro Forma Financial Information.
Attached hereto as Exhibit 99.2 are a pro forma condensed consolidated
balance sheet (unaudited) at December 31, 1996 and a pro forma condensed
consolidated statement of operations (unaudited) for the year ended December 31,
1996 relating to the Company.
<PAGE>
(c) Exhibits
Exhibit
Number
99.1 Financial Statements
(i) Historical Summary of Operating Revenue
and Expenses for The Crossings for the year ended December 31,
1996 with accompanying notes and Independent Auditors' Report.
(ii) Historical Summary of Operating Revenue
and Expenses for Fortran Court for the year ended December 31,
1996 with accompanying notes and Independent Auditors' Report.
(iii) Historical Summary of Operating
Revenue and Expenses for Draper Park North for the year ended
December 31, 1996 with accompanying notes and Independent
Auditors' Report.
(iv) Historical Summary of Operating Revenue
and Expenses for Embassy Row for the year ended December 31,
1996 with accompanying notes and Independent Auditors' Report.
(v) Historical Summary of Operating Revenue
and Expenses for Bannockburn Lake Office Plaza for the year
ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(vi) Historical Summary of Operating Revenue
and Expenses for Sorenson Research Park for the year ended
December 31, 1996 with accompanying notes and Independent
Auditors' Report.
99.2 Pro Forma Financial Information
Pro forma condensed consolidated balance
sheet (unaudited) at December 31, 1996 and pro forma condensed
consolidated statements of operations (unaudited) for the year
ended December 31, 1996 relating to the Company.
ITEM 8. Change in Fiscal Year.
Not applicable.
<PAGE>
EXHIBIT INDEX
Exhibit
Number
99.1 Financial Statements
(i) Historical Summaries of Operating Revenue and Expenses for
The Crossings for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(ii) Historical Summaries of Operating Revenue and Expenses
for Fortran Court for the year ended December 31, 1996 with accompanying notes
and Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and Expenses
for Draper Park North for the year ended December 31, 1996 with accompanying
notes and Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and Expenses
for Embassy Row for the year ended December 31, 1996 with accompanying notes and
Independent Auditors' Report.
(v) Historical Summaries of Operating Revenue and Expenses for
Sorenson Research Park for the year ended December 31, 1996 with accompanying
notes and Independent Auditors' Report.
99.2 Pro Forma Financial Information
Pro forma condensed consolidated balance sheet (unaudited) at
December 31, 1996 and pro forma condensed consolidated statements of operations
(unaudited) for the year ended December 31, 1996 relating to the Company.
<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: March 26, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
_____________________________
Brian K. Fields
Chief Financial Officer
SORENSON RESEARCH PARK
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
<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 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
<PAGE>
SORENSON RESEARCH PARK
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $1,978
Recovery of operating expenses .......................... 411
------
Total operating revenue ......................... 2,389
------
Operating expenses:
Maintenance ............................................. 92
Utilities ............................................... 94
Real estate and other taxes ............................. 185
Insurance ............................................... 13
General operating ....................................... 27
------
Total operating expenses ........................ 411
------
Operating revenue in excess of operating expenses $1,978
======
See accompanying notes to historical summary of operating revenue and expenses.
<PAGE>
SORENSON RESEARCH PARK
Notes to Historical Summary of Operating Revenue and Expenses
(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.
<PAGE>
SORENSON RESEARCH PARK
Notes to Historical Summary of Operating Revenue and Expenses--(Continued)
(dollars in thousands)
(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 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 interest,
depreciation and amortization expenses) .................. $1,093
Less estimated depreciation and amortization expense ....... 672
------
Pro forma taxable operating income .......... $ 421
======
Pro forma cash available from operations..... $1,093
======
<PAGE>
EMBASSY ROW
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
<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 Embassy Row for the year ended December
31, 1996. This statement is the responsibility of the management of Greystone
Realty Management, Inc. 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
Embassy Row.
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 Embassy Row for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
March 20, 1997
<PAGE>
EMBASSY ROW
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $6,733
Recovery of operating expenses .......................... 276
Other ................................................... 146
------
Total operating revenue ........................ 7,155
------
Operating expenses:
Maintenance ............................................. 260
Utilities ............................................... 829
Real estate taxes ....................................... 685
Insurance - related party ............................... 49
Management fees - related party ......................... 285
General operating ....................................... 710
Administrative .......................................... 427
------
Total operating expenses ........................ 3,245
------
Operating revenue in excess of operating expenses $3,910
======
<PAGE>
EMBASSY ROW
Notes to the Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Embassy Row consists of three office buildings, a restaurant and
approximately 10.65 acres of undeveloped land located in Atlanta,
Georgia. The three office buildings contain approximately 161,000,
150,000, and 152,000 square feet of office space, respectively, with
approximately 4,000 square feet of restaurant space. Greystone Realty
Corporation is the asset manager and their subsidiary, Greystone Realty
Management, Inc., is the property manager for the buildings.
(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
Embassy Row 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) 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 Embassy Row 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
<PAGE>
EMBASSY ROW
Notes to the Historical Summary of Operating Revenue and Expenses -- (Continued)
(dollars in thousands)
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited) - Continued
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) .................... $3,755
Less estimated depreciation and amortization expense ......... 993
------
Pro forma taxable operating income .......... $2,762
======
Pro forma cash available from operations .... $3,755
======
<PAGE>
DRAPER PARK NORTH
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors'Report Thereon)
<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 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
<PAGE>
DRAPER PARK NORTH
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $784
Recovery of operating expenses .......................... 197
----
Total operating revenue ......................... 981
----
Operating expenses:
Common area maintenance ................................. 149
Management fees ......................................... 30
Insurance and other ..................................... 18
----
Total operating expenses ........................ 197
----
Operating revenue in excess of operating expenses $784
====
See accompanying notes to historical summary of operating revenue and expenses.
<PAGE>
DRAPER PARK NORTH
Notes to Historical Summary of Operating Revenue and Expenses
For the 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 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
<PAGE>
DRAPER PARK NORTH
Notes to Historical Summary of Operating Revenue and Expenses -- (Continued)
(dollars in thousands)
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited) -- (Continued)
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) .................... $666
Less estimated depreciation and amortization expense ......... 529
----
Pro forma taxable operating income ........... $137
====
Pro forma cash available from operations ..... $666
====
<PAGE>
BANNOCKBURN LAKE OFFICE PLAZA
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
<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 Bannockburn Lake Office Plaza for the year
ended December 31, 1996. This historical summary is the responsibility of the
management of Bannockburn Lake Office 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
Bannockburn Lake Office 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),
of Bannockburn Lake Office Plaza for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
March 19, 1997
<PAGE>
BANNOCKBURN LAKE OFFICE PLAZA
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $2,889
Recovery of operating expenses .......................... 931
------
Total operating revenue ........................ 3,820
Operating expenses:
Maintenance ............................................. 371
Utilities ............................................... 189
Real estate taxes ....................................... 209
Insurance ............................................... 32
Management fees - related party ......................... 183
General operating ....................................... 194
Administrative .......................................... 196
------
Total operating expenses ........................ 1,374
------
Operating revenue in excess of operating expenses $2,446
======
See accompanying notes to historical summary of operating revenue and expenses.
<PAGE>
BANNOCKBURN LAKE OFFICE PLAZA
Notes to Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Bannockburn Lake Office Plaza consists of two buildings located in
Northbrook, Illinois, a suburb of Chicago, containing approximately
212,000 square feet of office space available for lease. At December 31,
1996, Bannockburn Lake Office Plaza was 97% 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 Bannockburn Lake Office 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.
(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 Lake Office 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 interest
depreciation and amortization expense) ............ $1,738
Less estimated depreciation and amortization expense ... 615
------
Pro forma taxable operating income ..... $1,123
======
Pro forma cash available from operations $1,738
======
<PAGE>
FORTRAN COURT
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
<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 Fortran Court for the year ended December
31, 1996. This historical summary is the responsibility of management of Fortran
Court. 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
Fortran Court.
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 Fortran Court for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
March 21, 1997
<PAGE>
FORTRAN COURT
Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $2,025
Recovery of operating expenses .......................... 387
Other ................................................... 31
------
Total operating revenue ........................ 2,443
Operating expenses:
Maintenance ............................................. 36
Utilities ............................................... 243
Real estate taxes ....................................... 140
Insurance ............................................... 70
Management fees ......................................... 64
General operating ....................................... 48
Administrative .......................................... 14
------
Total operating expenses ........................ 615
------
Operating revenue in excess of operating expenses $1,828
======
See accompanying notes to historical summary of operating revenue and expenses.
<PAGE>
FORTRAN COURT
Notes to Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
Fortran Court consists of five buildings located in San Jose, California
containing approximately 298,000 square feet of office space available for
lease. The construction of the buildings was completed in 1995 and 1996
and the buildings were 100% leased at December 31, 1996.
(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 Fortran Court 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) 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 Fortran Court 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
<PAGE>
FORTRAN COURT
Notes to Historical Summary of Operating Revenue and Expenses -- (Continued)
(dollars in thousands)
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited) -- (Continued)
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) .................... $1,988
Less estimated depreciation and amortization expense ......... 558
------
Pro forma taxable operating income .......... $1,430
======
Pro forma cash available from operations .... $1,988
======
<PAGE>
THE CROSSINGS
Historical Summary of Operating Revenue and Expenses
For the Year Ended December 31, 1996
(With Independent Auditors' Report Thereon)
<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 The Crossings for the year ended December
31, 1996. This historical summary is the responsibility of the management of The
Crossings. 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
Crossings.
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 Crossings for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
March 19, 1997
<PAGE>
THE CROSSINGS
Notes to Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
Operating revenue:
Building rental ......................................... $4,748
Recovery of operating expenses .......................... 937
------
Total operating revenue ........................ 5,685
------
Operating expenses:
Maintenance ............................................. 587
Utilities ............................................... 376
Real estate taxes ....................................... 340
Insurance ............................................... 37
Management fees ......................................... 191
General operating ....................................... 179
Administrative .......................................... 147
------
Total operating expenses ........................ 1,857
------
Operating revenue in excess of operating expenses $3,828
======
See accompanying notes to historical summary of operating revenue and expenses.
<PAGE>
THE CROSSINGS
Notes to Historical Summary of Operating Revenue and Expenses
For the year ended December 31, 1996
(dollars in thousands)
(1) Description of the Property
The Crossings consists of two buildings located in Westmont, Illinois, a
suburb of Chicago, containing approximately 298,000 square feet of office
space available for lease. At December 31, 1996, The Crossings was 100%
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 The Crossings 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) 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 Crossings 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
<PAGE>
THE CROSSINGS
Notes to Historical Summary of Operating Revenue and Expenses -- (Continued)
(dollars in thousands)
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited) -- (Continued)
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) .................... $3,729
Less estimated depreciation and amortization expense ......... 899
------
Pro forma taxable operating income .......... $2,830
======
Pro forma cash available from operations ..... $3,729
======
PRO FORMA FINANCIAL INFORMATION
The following tables set forth unaudited pro forma financial
information for the Company as of and for the year ended December 31, 1996 after
giving effect to: (i) the acquisition of office properties and land that have
been consummated since the beginning of 1996 and the acquisition of other office
properties and land that the Company expects to consummate in the near future;
(ii) the sales of common and preferred stock during 1996 and the sale of common
stock in January 1997; and, (iii) the repayment of amounts outstanding under the
Company's line of credit.
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the following transactions occurred on December 31, 1996: (i)
the acquisition of office properties and land that have been consummated since
December 31, 1996, and the acquisition of other office properties and land that
the Company expects to consummate; (ii) the offering of common stock in January
1997 (the "January Offering"); and, (iii) the repayment of amounts outstanding
under the Company's line of credit. The unaudited Pro Forma Condensed
Consolidated Statement of Operations for the year ended December 31, 1996 is
presented as if the following transactions had been consummated as of the
beginning of 1996: (i) the acquisition of office properties and land that have
been consummated since the beginning of 1996 and the acquisition of other office
properties and land that the Company expects to consummate in the near future;
(ii) the sales of common and preferred stock during 1996 and the January
Offering; and, (iii) the repayment of amounts outstanding under the Company's
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 Statement 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 December 31, 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 Statement of Operations is 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 1996,
nor does it purport to represent the results of operations for future periods.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
At December 31, 1996 (Unaudited)
-----------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------
Acquired Probable January Pro Forma
Historical(A) Properties(B) Acquisitions(C) Offering D) Consolidated
-------------- -------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Rental property, net $1,356,341 $ 114,028(1) $ 202,044(3) $ -- $ 1,672,413
Development property 64,000 18,765(1) 15,895(3) -- 98,660
Restricted and unrestricted cash 35,866 -- -- -- 35,866
Other assets 80,357 (1,279)(1)(2) 9(3)(4) -- 79,087
----------- ----------- -------------- ------------- ------------
Total assets $1,536,564 $ 131,514 $ 217,948 $ -- $ 1,886,026
=========== =========== ============== ============= ============
LIABILITIES
Mortgages and notes payable $ 655,449 $ 130,021(2) $ 199,065(4) (136,000) 848,535
Other liabilities 43,040 1,493(2) 1,025(4) -- 45,558
----------- ------------ ------------- ------------ ------------
Total liabilities 698,489 131,514 200,090 (136,000) 894,093
Minority interest 50,597 -- 17,858(5) -- 68,455
----------- ------------ ------------- ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 17 -- -- -- 17
Common stock 438 -- -- 49 487
Additional paid-in capital 837,355 -- -- 135,951 973,306
Dividends paid in excess of
earnings (50,332) -- -- -- (50,332)
----------- ------------ ------------- ------------ -----------
Total stockholders' equity 787,478 -- -- 136,000 923,478
----------- ------------ ------------- ------------ -----------
Total liabilities and
stockholders' equity $1,536,564 $ 131,514 $ 217,948 $ -- $1,886,026
=========== ============== ============= ============ ==========
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
December 31, 1996
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical consolidated balance sheet as of December
31, 1996.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $132,914 ($9,491 related to the Warner
Premier, $3,417 related to the Gateway Plaza; $16,296 related to the
Quorum Place, $40,089 related to the Crossings, $12,664 related to
Cedar Maple, $10,603 related Quorum North, $8,268 related to the
Comdisco Building, $1,054 related to ASIS, $14,294 related to Baytech
Center, $6,383 related to Wateridge Pavilion, and $10,355 related to
Mission Plaza); and
(2) the assumption of existing debt of $18,106 ($7,821 related to Quorum
Place, $6,743 related to Quorum North, and $3,542 related to
Wateridge Pavilion) and other liabilities for each acquisition
totaling $1,493, the use of the Company's purchase deposits of $1,400
(net of other assets acquired of $121) and a draw on the Company's
line of credit of $111,915;
(C) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions:
(3) total acquisition costs of $218,191 ($30,535 related to Sorenson
Research Park, $9,763 related to RadiSys Corporate Headquarters,
$14,405 related to Data I/O Willows, $22,637 related to Draper Park
North, $1,716 related to Tollway Plaza Building I, $11,600 related to
Scottsdale Place, $7,495 related to 2400 Lake Park Drive, $4,350
related to 680 Engineering Drive, $50,977 related to Embassy Row,
$6,217 related to Westlake Corporate Center, $27,575 related to
Bannockburn Lake Office Plaza, and $30,921 related to Fortran Court);
(4) the assumption of existing debt of $46,200 ($12,000 related to
Sorenson Research Park, $13,000 related to Draper Park North, and
$21,200 related to Bannockburn Lake Office Plaza) and other
liabilities for certain of the probable acquisitions totaling $1,025,
the use of the Company's purchase deposits of $243 (net of other
assets acquired of $252) and a draw on the Company's line of credit
of $152,865; and
(5) the issuance of 403,388 units and 159,055 units in connection with
the acquisitions of Sorenson Research Park and Bannockburn Lake
Office Plaza, respectively.
(D) Reflects the sale of 4,928,570 shares of common stock to the underwriter
and Security Capital USRealty at a net price of $136,000, after deduction
of transaction costs of $150. The Company used all of the proceeds to pay
down amounts outstanding under its line of credit.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the year ended December 31, 1996 (Unaudited)
---------------------------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------------------------------------
Acquired Probable January Pro Forma
Historical(A) Properties(B) Acquisitions(C) Offering(D) Consolidated
-------------- --------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 154,165 $ 95,223(1) $ 23,141(6) $ -- $ 272,529
Real estate service income 12,512 -- -- -- 12,512
------------ ----------- ---------- ------------- -----------
Total revenues 166,677 95,223 23,141 -- 285,041
------------ ----------- ---------- ------------- -----------
Real estate operating expenses:
Property operating expenses 51,927 33,638(4) 7,230(8) -- 92,795
Interest expense 31,630 25,900(2) 14,042(9) (10,200) 61,372
General and administrative 15,228 -- -- -- 15,228
Depreciation and amortization 38,264 20,173(3) 5,489(7) 63,926
------------ ----------- ----------- -------------- ----------
Total operating expenses 137,049 79,711 26,761 (10,200) 233,321
------------ ----------- ----------- -------------- ----------
Real estate operating income 29,628 15,512 (3,620) 10,200 51,720
Other operating income (expense), net (94) 8(1) -- -- (86)
------------- ---------- ----------- -------------- ----------
Income before minority interest 29,534 15,520 (3,620) 10,200 51,634
------------ ---------- ----------- -------------- ----------
Minority interest (4,732) (636)(6) (271)(10) -- (5,639)
------------- ---------- ----------- -------------- ----------
Income from continuing operations $ 24,802 14,884 $ (3,891) $ 10,200 45,995
============ ========== =========== ============== ==========
Earnings from continuing operations
per common share $ 0.90 $ 0.88(E)
============ ==========
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical consolidated statement of operations
for the year ended December 31, 1996.
(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 of $15,711 on the line of credit
($19,427 of interest costs net of $3,716 capitalized) and interest
expense of $10,189 on debt assumed in certain acquisitions;
(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 properties acquired
reduced by the elimination of management fee expenses that are no
longer incurred by the Company upon purchase of the properties; 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 properties to be
acquired reduced by the elimination of management fee expenses that
will not be incurred by the Company upon purchase of the properties;
(9) the additional interest expense of $10,273 on the line of credit
($11,465 of interest costs net of $1,192 capitalized) and interest
expense of $3,769 on debt assumed in certain acquisitions; and
(10) the minority interest share of earnings.
(D) 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 January Offering.
(E) Based upon 54,809,502 pro forma shares of common stock outstanding and
common stock equivalents on a weighted average basis during the year
ended December 31, 1996. Net income and weighted average shares
outstanding have been adjusted for certain minority interests which have
a dilutive effect on earnings per share.
<PAGE>
CarrAmerica Realty Corporation
Calculation of EPS Assuming Conversion of Units
March Offering
PRIMARY EPS
1996
----
Net income per pro forma ............................... 45,836,000
Change to NI assuming all minority unitholders of
CRLP convert (actual) ................................ 4,286,000
Change to NI assuming all minority unitholders of
CARLP convert (pro forma) ............................ 1,249,000
Less: Preferred dividends in 10.96 offering............. (3,045,000)
----------
New net income assuming all units converted............. 48,326,000
----------
Weighted average shares outstanding (pro forma basis)... 48,717,055
Add mniority units re: CRLP (actual).................... 4,628,734
Add mniority units re: CARLP (pro forma)................ 1,463,713
----------
New weighted average shares outstanding................. 54,809,502
----------
Primary EPS ............................................ 0.88
==========
FULLY DILUTED EPS
Net income from above .................................. 48,326,000
Add back: Preferred dividends (assume convert to CS).... 3,045,000
----------
= net income used for fully diluted purposes............ 51,371,000
----------
Weighted average shares outstanding from above.......... 54,809,502
Add: preferred shares (assume convert to CS)............ 1,740,000
----------
= weighted average shares o/s for fully diluted purposes 56,549,502
----------
Fully diluted EPS - ANTIDILUTIVE / NOT PRESENTED......... 0.91
==========
1996
Weighted average shares outstanding per 10-K........... 26,931,929
Stock options adjustment............................... 63,875
Security Capital Transaction (11,627,907*120/366)...... 3,812,429
July Offering (10,260,714 x 194/366)................... 5,438,739
Shares issued related to Peterson (62,696*10/12)....... 52,247
November Offering (7,142,857 x 322/366)................ 6,479,313
December Shoe (1,071,429 x 349/366).................... 1,009,954
January Offering....................................... 4,928,570
----------
48,717,055
----------
Estimated dividends to preferred shareholders:
Number of convertible preferred shares ............... 1,740,000
* dividends per share (@.4375 per quarter)............. 0.4375
----------
= 1996 pro forma dividends to preferred shareholders.. $3,045,000
==========
<PAGE>
CarrAmerica
CARLP Pro Forma Minority Interest Calculation -- March Offering
<TABLE>
<CAPTION>
CARLP Stock Minority
Units Equity Price CARC Unitholders Total
- ----- ------ ----- ---- ----------- -----
<S> <C> <C> <C> <C> <C>
Historical at 12/31/96....... -- -- 6,619,131 901,270 7,520,401
Add Acquired:
Cedar Maple (CARC only).... $12,532,526 $28.25 443,629 -- 443,629
Quorum North (CARC only)... $ 3,745,073 $29.13 128,586 -- 128,586
Quorum Place (CARC only)... $ 8,318,206 $30.38 273,850 -- 273,850
Subtotal.................. -- -- 7,465,197 901,270 8,336,467
89.23% 10.77% 100.00%
Add Probable:
Tollway Plaza (CARC only).. $ 1,715,954 $31.75 54,046 -- 54,046
Sorenson (CARC)............ $ 5,727,536 $31.75 180,395 -- 180,395
Sorenson (Minority)........ $12,807,577 $31.75 -- 403,388 403,388
Bannockburn (CARC)......... $ 300,000 $31.75 9,449 -- 9,449
Bannockburn (Minority)..... $ 5,050,000 $31.75 -- 159,055 159,055
Total..................... -- -- 7,709,086 1,463,713 9,172,800
84.04% 15.96% 100.00%
</TABLE>
<TABLE>
<CAPTION>
In
Inocme Thousands
- ------ --------
<S> <C> <C>
Hisotrical CARLP Income -- 1996 ................... $ 1,435
Less: Second Qtr. Historical Activity for Second
Qtr. Acquisitions............................... (296)
Less: Third Qtr. Historical Activity for Third
Qtr. Acquisitions .............................. (287)
Less: Fourth Qtr. Historical Activity for Fourth
Qtr. Acquisitions............................... (197) (y/e Consolidation -- Grey, Search, South Cst)
Add: Six Month Pro Forma For Second Qtr.
Acquisitions.................................... 1,905
Add: Nine Month Pro Forma for Third Qtr.
Acquisitions.................................... 2,375
Add: 1996 Pro Form for Fourth Qtr. Acquisitions... 2,054
Add: Post 1996 Acquired CARLP (Vedar, QN, QP)..... 617
Subtotal -- Acquired......................... $ 7,606
Add: Probale CARLP (Sorenson, Bannockburn)........ 224
Pro Forma CARLP Inocme -- 1996.................... $ 7,830
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MI for Acquired Properties MI for Probable Properties
Pro forma CARLP NI -- Acquired................. $7,606 Pro forma CARLP NI -Probable.......... $ 7,830
Pro forma MI percentage........................ 10.77% Pro forma MI percentage .............. 15.96%
Pro Forma MI -- Acquired....................... $ 819 Pro Forma MI -- Probable ............. $ 1,249
Less: Actual 1996 MI .......................... $ (183) Less: PF Acquired 1996 MI ............ $ (819)
Pro Forma MI Adjustment -- Acquired............ $ 636 Pro Forma MI Adjustment -- Probable.. $ 430
</TABLE>
