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): January 27, 1997
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.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
a. New and Probable Acquisitions
Suburban Chicago. As described in a Current Report on Form 8-K filed
with the Commission on January 3, 1997, in December 1996, the Company acquired
Unisys Center located in the Oak Brook submarket of Chicago, for a purchase
price of approximately $51 million. The two buildings comprising Unisys Center
contain an aggregate of approximately 387,000 square feet. As of January 1,
1997, the property was 97% leased.
The Company has entered into an agreement to acquire two office
buildings containing an aggregate of approximately 298,000 square feet in the
East-West Corridor submarket of Chicago's Oakbrook submarket and which is
referred to as The Crossings. The aggregate purchase price is approximately $40
million. As of September 30, 1996, the property was 100% leased. The closing of
this transaction is subject to the Company's due diligence and certain other
closing conditions, and there can be no assurance that this transaction will be
consummated. Closing of this transaction is currently scheduled for late January
1997.
Phoenix, Arizona. In December 1996, the Company acquired Pointe
Corridor Center IV, located in the Squaw Peak submarket of Phoenix, and
Camelback Lakes Corporate Center, located in the Camelback Corridor submarket of
Phoenix. The purchase price for Point Corridor Center IV was approximately $15
million. The building contains approximately 179,000 square feet. As of December
31, 1996, 96% of the rentable square footage of the property, excluding storage,
was leased. The purchase price for Camelback Lakes Corporate Center was
approximately $21 million. The two buildings comprising Camelback Lakes
Corporate Center contain an aggregate of
<PAGE>
approximately 201,000 square feet. As of December 31, 1996, 87% of the rentable
square footage of Camelback Lakes Corporate Center, excluding storage, was
leased.
Suburban Dallas. In November 1996, the Company acquired The Greyhound
Building, located in the Far North Dallas submarket, for a purchase price of
approximately $9 million. The building contains approximately 93,000 square
feet. The property is 100% leased to Greyhound Lines, Inc. through 2004.
In December 1996, the Company acquired Search Plaza, located in the
North Central Expressway submarket of Dallas, for a purchase price of
approximately $15 million. The building contains approximately 153,000 square
feet. As of December 31, 1996, 99% of the rentable square footage of the
property, excluding storage, was leased.
The Company has entered into an agreement to acquire three office
buildings containing an aggregate of approximately 113,000 square feet in the
Oaklawn/Turtle Creek sub-market of Dallas and which is referred to as Cedar
Maple Plaza. The aggregate purchase price is approximately $13 million. As of
December 31, 1996, the property was 95% leased. The closing of this transaction
is subject to the Company's due diligence and certain other closing conditions,
and there can be no assurance that this transaction will be consummated. Closing
of this transaction is currently scheduled for late January 1997.
The Company has also entered into an agreement to acquire an office
building containing approximately 116,000 square feet in the LBJ/Quorum
sub-market of Dallas and which is referred to as Quorum North. The aggregate
purchase price is approximately $11 million. As of January 1997, the property
was 90% leased. The closing of this transaction is subject to the Company's due
diligence and certain other closing conditions, and there can be no assurance
that this transaction will be consummated. Closing of this transaction is
currently scheduled for early February 1997.
Northern California. As reported in a Current Report on Form 8-K filed
with the Commission on January 23, 1997, in November 1996, the Company acquired
Rio Robles Technology Center, located in the Silicon Valley for a purchase price
of approximately $46 million. The seven buildings contain an aggregate of
approximately 368,000 square feet. As of December 31, 1996, the property was
100% leased.
Southern California. In December 1996, the Company acquired South Coast
Executive Center, located in the Greater Orange County Airport submarket, for a
purchase price of approximately $21 million. The consideration for this
transaction was paid through a combination of cash, the assumption of
indebtedness, the issuance of limited partnership interests and options to
acquire shares of the Company's Common Stock. The two buildings comprising South
Coast Executive Center contain an aggregate of approximately 162,000 square
feet. As of December 31, 1996, the property was 95% leased.
In December 1996, the Company acquired Del Mar Corporate Center,
located in the Del Mar Heights submarket of San Diego, for a purchase price of
approximately $16
<PAGE>
million. The two buildings comprising Del Mar Corporate Center contain an
aggregate of approximately 123,000 square feet. As of December 31, 1996, the
property was 100% leased to two tenants.
The Company has entered into an agreement to acquire an office building
containing approximately 62,000 square feet in the West San Fernando Valley
sub-market in the Los Angeles metropolitan area and which is referred to as
Warner Premier. The aggregate purchase price is approximately $9.3 million. As
of December 31, 1996, the property was 100% leased. The closing of this
transaction is subject to the Company's due diligence and certain other closing
conditions, and there can be no assurance that this transaction will be
consummated. Closing of this transaction is currently scheduled for late January
1997.
b. Development and Land Held for Development
As of December 31, 1996, the Company owned land and options to acquire
land in four of its target markets: suburban Seattle; southeast Denver; Austin,
Texas; and suburban Chicago. In the aggregate, this land (including land subject
to purchase options) will support development of up to 3.2 million square feet
of office space. In addition, as of December 31, 1996, the Company had three
properties under construction: 128,000 square feet in suburban Atlanta; and an
aggregate of 321,000 square feet in southeast Denver (including 217,000 square
feet of build-to-suit development). The Company has also entered into agreements
to acquire land for three additional development projects: a 300,000 square foot
build-to-suit project in North San Jose; land which will support the development
of up to 335,000 square feet in suburban Seattle; and a 58,000 square foot
build-to-suit project in suburban Washington, D.C. The closing of these
transactions is subject to the Company's due diligence and certain other closing
conditions, and there can be no assurance that these transactions will be
consummated.
<PAGE>
c. Markets
The Company now owns operating properties in the following markets:
Number Approximate
Market of Properties(1)(2) Square Feet
- ------ ------------- -----------
Northern California 37 2,590,000
Downtown Washington, D.C. 11 2,588,000
Suburban Washington, D.C. 8 1,495,000
Suburban Atlanta 38 1,275,000
Southern California 26 1,100,000
Southeast Denver 11 1,025,000
Austin, Texas 11 989,000
Suburban Chicago 4 901,000
Suburban Seattle 10 400,000
Phoenix, Arizona 3 379,000
Suburban Dallas 2 245,000
Suburban Florida 1 162,000
------------------ ----------
TOTALS 162 13,149,000
(1) Excludes three properties currently under construction: 128,000 square feet
in suburban Atlanta; and an aggregate of 321,000 square feet in Southeast
Denver.
(2) Excludes five properties in downtown Washington, D.C. containing
approximately 1,300,000 square feet of office space in which the Company owns
less than a 50% interest and which are not consolidated in the Company's
financial statements. Includes two properties in the Washington, D.C.
metropolitan area containing an aggregate of approximately 407,000 square feet
of office space in which the Company owns a 50% interest but which are not
consolidated in the Company's financial statements.
d. Historical Financial Statements
Attached hereto as Exhibit 99.1 are historical summaries of operating
revenue and expenses for the nine months ended September 30, 1996 (unaudited)
and for the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report for The Crossings. In accordance with Rule 3-14 of
Regulation S-X, financial statements with respect to The Crossings are being
filed because the Company has deemed the acquisition to be probable and the book
value of The Crossings, relative to the Company's acquisitions, in the aggregate
is significant.
e. Financing Activity
The Company intends to enter into a secured credit agreement with
Morgan Guaranty Trust of New York (the "Bank") pursuant to which the Company
would be permitted to borrow up to a maximum of $150 million (the "Secured
Facility"). The Secured Facility would bear interest on the amount outstanding
at an annual interest rate of either the prime lending rate plus 50 basis points
or 162.5 basis points over LIBOR. The Secured Facility has a term of 6 months,
with an option for two 6 month extensions. The Company intends, initially, to
grant the Bank a first priority security interest in Rio Robles Technology
Center located in
<PAGE>
the Silicon Valley and in Unisys Center located in Lombard, Illinois, a suburb
of Chicago and, accordingly, expects to be able to borrow up to $63 million. The
Company intends, from time to time, to grant additional first priority security
interests in other of its suburban office properties to increase the amount
available to it under the Secured Facility. The closing of the Secured Facility
is subject to certain closing conditions, and there can be no assurance that it
will be consummated. Closing of the Secured Facility is currently scheduled for
late January 1997.
In July 1996, the Company consummated a public offering and a
concurrent private placement to a wholly-owned subsidiary of Security Capital
U.S. Realty (together with Security Capital U.S. Realty, "US Realty") of common
stock that raised net proceeds of approximately $216 million. In October 1996,
the Company consummated an offering of Series A Cumulative Convertible
Redeemable Preferred Stock that raised net proceeds of approximately $43
million. In November and December 1996, the Company consummated a public
offering and concurrent offering to US Realty of common stock that raised net
proceeds of approximately $206 million. The net proceeds of all of these
offerings were used to pay down indebtedness under the Company's unsecured line
of credit and to acquire properties.
f. Pro Forma Financial Information
Attached hereto as Exhibit 99.2 are a pro forma condensed consolidated
balance sheet (unaudited) at September 30, 1996 and pro forma condensed
consolidated statements of operations (unaudited) for the nine months ended
September 30, 1996 and for the year ended December 31, 1995.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
None.
(b) Pro Forma Financial Information .
None.
<PAGE>
(c) Exhibits.
99.1 Historical summaries of Operating Revenue and Expenses
for The Crossings for the nine months ended September 30, 1996
(unaudited) and for the year ended December 31, 1995, with
accompanying notes and Independent Auditors' Report.
99.2 Pro forma condensed consolidated balance sheet
(unaudited) at September 30, 1996 and pro forma condensed
consolidated statements of operations (unaudited) for the nine
months ended September 30, 1996 and for the year ended
December 31, 1995.
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: January 27, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
-------------------------------
Brian K. Fields
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
99.1 Historical summaries of Operating Revenue and Expenses for The
Crossings for the nine months ended September 30, 1996 (unaudited) and
for the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
99.2 Pro forma condensed consolidated balance sheet (unaudited) at
September 30, 1996 and pro forma condensed consolidated statements of
operations (unaudited) for the nine months ended September 30, 1996
and for the year ended December 31, 1995.
THE CROSSINGS
Historical Summaries
of Operating Revenue and Expenses
Nine Months Ended September 30, 1996 (Unaudited)
and Year Ended December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
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, 1995. 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, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
January 23, 1997
<PAGE>
THE CROSSINGS
Historical Summaries of Operating Revenue and Expenses
For the nine months ended September 30, 1996 (unaudited)
and the year ended December 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Operating revenue:
Building rental, including lease termination fee of $448 in 1995 $ 3,517 4,972
Recovery of operating expenses 698 664
--------- ---------
Total operating revenue 4,215 5,636
--------- ---------
Operating expenses:
Maintenance 452 489
Utilities 280 363
Real estate taxes 273 348
Insurance 27 39
Management fees 140 200
General operating 113 194
Administrative 101 126
--------- ---------
Total operating expenses 1,386 1,759
--------- ---------
Operating revenue in excess of operating expenses $ 2,829 3,877
========= =========
</TABLE>
See accompanying notes to historical summaries of operating revenue and
expenses.
<PAGE>
THE CROSSINGS
Notes to Historical Summaries of Operating Revenue and Expenses
Nine months ended September 30, 1996 (unaudited)
and the year ended December 31, 1995
(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 September 30, 1996, The Crossings 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 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 summaries of operating revenue and expenses to not be
indicative of the future operating results of the buildings.
(b) Revenue Recognition
Revenue from rental operations is recognized straight-line over
the terms of the respective leases.
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information for the nine
months ended September 30, 1996 has been prepared consistent with
the rules and regulations of the Securities and Exchange
Commission governing the preparation of the amounts for the year
ended December 31, 1995. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations,
although management believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of
management, all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the historical summaries of
operating revenue and expenses for the nine months ended September
30, 1996, have been included. The results of operations for the
nine-month period ended September 30, 1996 are not necessarily
indicative of the results for the full year.
(Continued)
<PAGE>
THE CROSSINGS
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 The Crossings for the 12 months ended
September 30, 1996, as adjusted for certain items which can be factually
supported. For purposes of presenting pro forma net taxable operating
income, revenue is recognized when it is either collectible under the
lease terms or collected. Tax depreciation for the 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.
<TABLE>
<CAPTION>
<S> <C>
Pro forma net operating income (exclusive of
depreciation and amortization expense) $ 3,935
Less estimated depreciation and amortization expense 893
---------
Pro forma taxable operating income $ 3,042
=========
Pro forma cash available from operations $ 3,935
=========
</TABLE>
PRO FORMA FINANCIAL INFORMATION
The following tables set forth unaudited pro forma financial
information for the Company as of and for the nine months ended September 30,
1996 and for the year ended December 31, 1995 after giving effect to: (i) the
acquisition of office properties and land that have been consummated since the
beginning of the periods presented and the acquisition of other office
properties and land that the Company expects to consummate in the near future;
(ii) the sale of shares of Common Stock to USRealty in April 1996; (iii) the
completion of the July 1996 Offering; (iv) the completion of the November 1996
Offering; (v) the completion of the December 1996 Offering of the Additional
Shares; (vi) the completion of the October 1996 Offering of the Series A
Preferred Shares (the "Series A Preferred Stock Offering"); (vii) the completion
of the Offering and Concurrent USRealty Purchase; and (viii) the repayment of
draws on the Line of Credit.
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the following transactions had been consummated on September 30,
1996: (a) the purchase of the Peterson Portfolio; (b) the purchase of the
NELO/Orchard Portfolio; (c) the purchase of the Greyhound Building; (d) the
purchase of Pointe Corridor Centre IV; (e) the purchase of the Camelback Lakes
Corporate Center; (f) the purchase of Rio Robles Technology Center; (g) the
purchase of Search Plaza; (h) the purchase J.D. Edwards; (i) the purchase of Del
Mar Corporate Plaza; (j) the purchase of South Coast Executive Center; (k) the
purchase of Unisys Center; (l) the purchase of Redmond Hilltop Land; (m) the
purchase of Quorum North; (n) the purchase of Cedar Maple; (o) the purchase of
Data I/O Willows; (p) the purchase of The Crossings; (q) the purchase of Baytech
Center; (r) the purchase of ASIS; (s) the purchase of Warner Premier; (t) the
completion of the Offering and Concurrent USRealty Purchase; (u) the completion
of the November 1996 Offering; (v) the completion of the December 1996 Offering
of the Additional Shares; (w) the completion of the Series A Preferred Stock
Offering; and (x) the repayment of draws on the Line of Credit.
The unaudited Pro Forma Condensed Consolidated Statements of
Operations are presented as if the following transactions had been consummated
as of the beginning of the respective periods: (a) the purchase of One Rock
Spring Plaza; (b) the purchase of Tycon Courthouse; (c) the purchase of an
additional 7.58% ownership interest in Square 24 Associates, the partnership
owning 2445 M Street, Washington, D.C.; (d) the purchase of the Scenic Business
Park; (e) the purchase of the Harbor Corporate Park; (f) the purchase of AT&T
Center; (g) the purchase of Reston Quadrangle; (h) the purchase of Harlequin
Plaza North and South and Quebec Court I and II; (i) the purchase of The Quorum;
(j) the purchase of Parkway North Center; (k) the purchase of the Redmond East
Business Campus; (l) the purchase of the Plaza PacifiCare Building; (m) the
purchase of Parkway One; (n) the purchase of Norwood Tower; (o) the purchase of
the Warner Center Business Park; (p) the purchase of the Littlefield Portfolio;
(q) the purchase of Riata Land; (r) the purchase of Katella Corporate Center;
(s) the purchase of Greenwood Centre; (t) the purchase of Panorama Corporate
Center; (u) the purchase of Quebec Centre; (v) the purchase of the Sunnyvale
Research Plaza; (w) the purchase of the Peterson Portfolio; (x) the purchase of
the NELO/Orchard Portfolio; (y) the purchase of the Greyhound Building; (z) the
purchase of Pointe Corridor Centre IV; (aa) the purchase of the Camelback Lakes
Corporate Center; (bb) the purchase of Rio Robles Technology Center; (cc) the
purchase of Search Plaza; (dd) the purchase J.D. Edwards; (ee) the purchase of
Del Mar Corporate Plaza; (ff) the purchase of South Coast Executive Center; (gg)
the purchase of Unisys Center; (hh) the purchase of Redmond Hilltop Land; (ii)
the purchase of Quorum North; (jj) the purchase of Cedar Maple; (kk) the
purchase of Data I/O Willows; (ll) the purchase of
<PAGE>
The Crossings; (mm) the purchase of Baytech Center; (nn) the purchase of ASIS;
(oo) the purchase of Warner Premier; (pp) the completion of the Offering and
Concurrent USRealty Purchase; (qq) the completion of the November 1996 Offering;
(rr) the completion of the December 1996 Offering of the Additional Shares; (ss)
the completion of the Series A Preferred Stock Offering; and (tt) the repayment
of draws on the Line of Credit.
In management's opinion, all material adjustments necessary to
reflect the transactions described above are presented in the pro forma
adjustments columns, which are further described in the notes to the unaudited
pro forma financial information.
The unaudited Pro Forma Condensed Consolidated Balance Sheet and the
unaudited Pro Forma Condensed Consolidated Statements of Operations should be
read in conjunction with the Consolidated Financial Statements of the Company
and Notes thereto. The unaudited Pro Forma Condensed Consolidated Balance Sheet
is not necessarily indicative of what the actual financial position of the
Company would have been at September 30, 1996, had the aforementioned
transactions occurred on such date, nor does it purport to represent the future
financial position of the Company. The unaudited Pro Forma Condensed
Consolidated Statements of Operations are not necessarily indicative of what the
actual results of operations of the Company would have been assuming the
aforementioned transactions had been consummated as of the beginning of the
respective periods, nor do they purport to represent the results of operations
for future periods.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
At September 30, 1996 (Unaudited)
----------------------------------------------------------------------------------
Pro Forma Adjustments
----------------------------------------------------------------------------------
Series A
Acquired Probable Preferred Stock
Historical (A) Properties (B) Acquisitions (C) Offering (D)
----------------- -------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 906,342 445,918(1) 81,576(5) -
Development property 40,449 14,693(1) 20,626(5) -
Restricted and unrestricted cash 22,882 - - -
Other assets 74,235 (993)(1)(2) (242)(6) -
----------------- -------------------- ------------------- -------------
Total assets $ 1,043,908 459,618 101,960 -
================= ==================== =================== =============
LIABILITIES
Mortgages and notes payable $ 426,069 448,926(2) 101,960(6) (42,915)
Other liabilities 20,480 9,092(2) - -
----------------- -------------------- ------------------- -------------
Total liabilities 446,549 458,018 101,960 (42,915)
Minority interest 51,611 100(3) - -
----------------- -------------------- ------------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock - - - 17
Common stock 355 1(4) - -
Additional paid-in capital 588,684 1,499(4) - 42,898
Dividends paid in excess of earnings (43,291) - - -
----------------- -------------------- ------------------- -------------
Total stockholders' equity 545,748 1,500 - 42,915
----------------- -------------------- ------------------- -------------
Total liabilities and stockholders' equity $ 1,043,908 459,618 101,960 -
================= ==================== =================== =============
</TABLE>
<TABLE>
<CAPTION>
At September 30, 1996 (Unaudited)
-------------------------------------------------------------------------------
Pro Forma Adjustments
-------------------------------------------------------------------------------
December Offering and
November Offering of Concurrent
Common Stock Additional USRealty Pro Forma
Offering (E) Shares (F) Purchase (G) Consolidated
--------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net - - - 1,433,836
Development property - - - 75,768
Restricted and unrestricted cash - - - 22,882
Other assets - - - 73,000
----------------- --------------- ------------------ --------------------
Total assets - - - 1,605,486
================= =============== ================== ====================
LIABILITIES
Mortgages and notes payable (178,364) (26,780) (108,908) 619,988
Other liabilities - - - 29,572
----------------- --------------- ------------------ --------------------
Total liabilities (178,364) (26,780) (108,908) 649,560
Minority interest - - - 51,711
----------------- --------------- ------------------ --------------------
STOCKHOLDERS' EQUITY
Preferred stock - - - 17
Common stock 71 11 39 477
Additional paid-in capital 178,293 26,769 108,869 947,012
Dividends paid in excess of earnings - - - (43,291)
----------------- --------------- ------------------ --------------------
Total stockholders' equity 178,364 26,780 108,908 904,215
----------------- --------------- ------------------ --------------------
Total liabilities and stockholders' equity - - - 1,605,486
================= =============== ================== ====================
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
September 30, 1996
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical consolidated balance sheet as of September
30, 1996.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $460,968 ($128,466 related to the
Peterson Portfolio, $123,850 related to the NELO/Orchard
Portfolio; $9,350 related to the Greyhound Building, $15,100
related to Pointe Corridor Center IV, $26,900 related to
Camelback Lakes Corporate Center, $46,003 related to Rio Robles
Technology Center, $15,143 related to Search Plaza, $16,117
related to Del Mar Corporate Plaza, $7,138 related to J.D.
Edwards, $20,650 related to South Coast Executive Center, $50,651
related to Unisys Center, and $1,600 related to Redmond Hilltop
Land);
(2) the assumption of existing debt of $73,167 ($22,240 related to
the Peterson Portfolio and $40,927 related to the NELO/Orchard
Portfolio, and $10,000 related to South Coast Executive Center)
and other liabilities of $9,092 ($1,288 related to the Peterson
Portfolio, $7,170 related to the NELO/Orchard Portfolio, $281
related to Rio Robles Technology Center, $197 related to Search
Plaza, and $156 related to Del Mar Corporate Plaza), use of the
Company's purchase deposits ($1,350) net of other assets acquired
($357), and a draw on the Company's Line of Credit ($375,759);
(3) the value of 3,781 dividend-paying units in CarrAmerica Realty,
L.P. to be issued in connection with the purchase of South Coast
Executive Center.
(4) the issuance of 62,696 shares of Common Stock in connection with
the purchase of the Peterson Portfolio.
(C) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions:
(5) total acquisition costs of $102,202 ($10,720 related to Quorum
North, $14,192 related to Data I/O Willows, $13,000 related to
Cedar Maple, $39,820 related to The Crossings, $14,060 related to
Baytech Center, $1,040 related to ASIS, and $9,370 related to
Warner Premier); and
(6) the assumption of existing debt ($6,750) related to Quorum North,
a draw on the Company's Line of Credit ($95,210), and use of the
Company's purchase deposits ($242) towards the acquisitions.
(D) Reflects the issuance of 1,740,000 shares of Series A Preferred Stock
at the price of $25 per share. Transaction costs of $585 were incurred.
The Company used all of the proceeds to pay down amounts outstanding
under its Line of Credit.
<PAGE>
(E) Reflects the issuance of 7,142,857 shares of Common Stock at the price
of $26 per share. Transaction costs of $7,350 were incurred. The
Company used all of the proceeds to pay down amounts outstanding under
its Line of Credit.
(F) Reflects the issuance of 1,071,429 additional shares of Common Stock at
the price of $26 per share. Transaction costs of $1,077 were incurred.
The Company used all of the proceeds to pay down amounts outstanding
under its Line of Credit.
(G) Reflects the sale of 2,750,000 and 1,178,570 shares of Common Stock to
the underwriter and Security Capital USRealty, respectively, at a net
price of $108,908, after deduction for transaction costs of $150. The
Company expects to use all of the proceeds to pay down amounts
outstanding under its Line of Credit.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
--------------------------------------------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------------------------------------------
Series A
Acquired Probable Preferred Stock
Historical (A) Properties (B) Acquisitions (C) Offering (D)
---------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 100,639 $ 73,462 (1) $ 8,704 (6) $ -
Real estate service income 9,265 - - -
---------------- ------------------ ------------------ ---------------------
Total revenues 109,904 73,462 8,704 -
---------------- ------------------ ------------------ ---------------------
Real estate operating expenses:
Property operating expenses 33,371 25,318 (4) 2,823 (8) -
Interest expense 21,857 28,876 (2) 4,605 (9) (2,413)
General and administrative 10,661 - - -
Depreciation and amortization 25,744 15,760 (3) 1,765 (7) -
---------------- ------------------ ------------------ ---------------------
Total operating expenses 91,633 69,954 9,193 (2,413)
---------------- ------------------ ------------------ ---------------------
Real estate operating income 18,271 3,508 (489) 2,413
Other operating income (expense) 1,610 4 (1) - -
---------------- ------------------ ------------------ ----------------------
Income before minority interest 19,881 3,512 (489) 2,413
---------------- ------------------ ------------------ ----------------------
Minority interest (3,895) (574)(5) - -
---------------- ------------------ ------------------ ----------------------
Income from continuing operations $ 15,986 $ 2,938 $ (489) $ 2,413
================ ================== =================== =====================
Earnings from continuing operations
per common share (H) $ 0.70
================
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
--------------------------------------------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------------------------------------------
December Offering and
November Offering of Concurrent
Common Stock Additional USRealty Pro Forma
Offering (E) Shares (F) Purchase (G) Consolidated
---------------- ----------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue - $ - $ - $ 182,805
Real estate service income - - - 9,265
Total revenues - - - 192,070
---------------- ----------------- ---------------------- --------------------
Real estate operating expenses:
Property operating expenses - - - 61,512
Interest expense (10,034) (1,506) (6,126) 35,259
General and administrative - - - 10,661
Depreciation and amortization - - - 43,269
---------------- ----------------- ---------------------- -------------------
Total operating expenses (10,034) (1,506) (6,126) 150,701
---------------- ----------------- ---------------------- --------------------
Real estate operating income 10,034 1,506 6,126 41,369
Other operating income (expense) - - - 1,614
---------------- ----------------- ---------------------- --------------------
Income before minority interest 10,034 1,506 6,126 42,983
---------------- ----------------- ---------------------- --------------------
Minority interest - - - (4,469)
---------------- ----------------- ---------------------- --------------------
Income from continuing operations $ 10,034 $ 1,506 $ 6,126 $ 38,514
================= ================= ====================== ====================
Earnings from continuing operations
per common share (H) $ 0.76
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Series A
Acquired Probable Preferred Stock
Historical (A) Properties (B) Acquisitions (C) Offering (D)
---------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 89,539 $ 137,661 (1) $ 11,592 (6) $ -
Real estate service income 11,315 - - -
---------------- ----------------- ----------------- ----------------
Total revenues 100,854 137,661 11,592 -
---------------- ----------------- ----------------- ----------------
Real estate operating expenses:
Property operating expenses 31,579 45,401 (4) 3,629 (8) -
Interest expense 21,873 43,626 (2) 6,390 (9) (3,349)
General and administrative 10,711 - - -
Depreciation and amortization 18,495 34,132 (3) 2,352 (7) -
---------------- ----------------- ----------------- ----------------
Total operating expenses 82,658 123,159 12,371 (3,349)
---------------- ----------------- ----------------- ----------------
Real estate operating income 18,196 14,502 (779) 3,349
Other operating income (expense) (912) 81(1) - -
---------------- ----------------- ----------------- ----------------
Income before minority interest 17,284 14,583 (779) 3,349
---------------- ----------------- ----------------- ----------------
Minority interest (5,217) (682)(5) - -
---------------- ----------------- ----------------- ----------------
Income from continuing operations $ 12,067 $ 13,901 $ (779) $ 3,349
================ ================= ================= ================
Earnings from continuing operations
per common share (H) $ 0.90
================
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
------------------------------------------------------------------------------------
Pro Forma Adjustments
------------------------------------------------------------------------------------
December Offering and
November Offering of Concurrent
Common Stock Additional USRealty Pro Forma
Offering (E) Shares (F) Purchase (G) Consolidated
------------
------------------------ --------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $ - $ 238,792
Real estate service income - - - 11,315
-------------------- ---------------- ------------------ -----------------
Total revenues - - - 250,107
-------------------- ---------------- ------------------ -----------------
Real estate operating expenses:
Property operating expenses - - - 80,609
Interest expense (13,923) (2,090) (8,500) 44,027
General and administrative - - - 10,711
Depreciation and amortization - - - 54,979
-------------------- ---------------- ------------------ -----------------
Total operating expenses (13,923) (2,090) (8,500) 190,326
-------------------- ---------------- ------------------ -----------------
Real estate operating income 13,923 2,090 8,500 59,781
Other operating income (expense) - - - (831)
-------------------- ---------------- ------------------ -----------------
Income before minority interest 13,923 2,090 8,500 58,950
-------------------- ---------------- ------------------ -----------------
Minority interest - - - (5,899)
-------------------- ---------------- ------------------ -----------------
Income from continuing operations $ 13,923 $ 2,090 $ 8,500 $ 53,051
==================== ================ ================== =================
Earnings from continuing operations
per common share (H) $ 1.04
=================
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1996 and the Year Ended
December 31, 1995
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical consolidated statements of operations for
the nine months ended September 30, 1996 and the year ended December 31,
1995.
(B) Pro forma adjustments for the purchases of the acquired properties reflect:
(1) the historical operating activity of the properties acquired;
(2) the additional interest expense on the Line of Credit ($23,022 of
interest costs net of $2,383 capitalized for the nine months ended
September 30, 1996 and $31,120 of interest costs net of $4,041
capitalized in 1995) and interest expense on debt assumed in certain
acquisitions ($8,237 for the nine months ended September 30, 1996 and
$16,547 in 1995);
(3) the depreciation expense for the acquisitions based on the new
accounting basis for the rental property acquired;
(4) the historical operating activity of the rental property ($27,612 for
the nine months ended September 30, 1996 and $49,404 in 1995) reduced
by the elimination of management fee expenses that are no longer
incurred by the Company upon purchase of the properties ($2,294 for
the nine months ended September 30, 1996 and $4,003 in 1995); and
(5) the minority interest share of earnings.
(C) Pro forma adjustments for the probable acquisitions reflect:
(6) the historical operating activity of the properties to be acquired;
(7) the depreciation expense for the probable acquisitions based on the
new accounting basis for the rental property to be acquired;
(8) the historical operating activity of the rental property to be
acquired ($3,127 for the nine months ended September 30, 1996 and
$4,014 in 1995) reduced by the elimination of management fee expenses
that will not be incurred by the Company upon purchase of the
properties ($304 for the nine months ended September 30, 1996 and $385
in 1995); and
(9) the additional interest expense on the Line of Credit ($5,765 of
interest costs net of $1,160 capitalized for the nine months ended
September 30, 1996 and $8,000 of interest costs net of $1,610
capitalized in 1995).
(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 Series A Preferred Stock Offering.
<PAGE>
(E) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the common stock offering in November 1996.
(F) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the offering of additional shares in December 1996.
(G) Pro forma adjustment reflects the reduction in interest expense associated
with the pay down of amounts outstanding under the Line of Credit with the
proceeds from the Offering and Concurrent USRealty Purchase.
(H) Based upon 53,187,107 and 53,164,665 pro forma shares of Common Stock
outstanding and common stock equivalents on a weighted average basis during
the nine months ended September 30, 1996 and the year ended December 31,
1995, respectively. Net income and weighted average shares outstanding have
been adjusted for certain minority interests which have a dilutive effect
on earnings per share.
