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): June 30, 1998
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.)
1850 K Street, N.W., Washington, D.C. 20006
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 729-7500
<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, 1997 with accompanying
notes and Independent Auditors' Report for the following properties: Sunnyvale
Technology Park and Golden Gate Commons, and Historical Summaries of Operating
Revenue and Expense for the three months ended March 31, 1998 (unaudited) and
the year ended December 31, 1997 with accompanying notes and Independent
Auditor's Report for the following properties: Checkfree Corporate Campus and
Hacienda West. In accordance with Rule 3-14 of Regulation S-X, financial
statements with respect to the listed properties are being filed because the
Company has either (a) already acquired the properties and the book value of the
properties individually by project or in the aggregate, are significant, or (b)
deemed the acquisition to be probable and the book value of the properties,
individually or in the aggregate, are significant.
ITEM 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:
<PAGE>
(i) Historical Summary of Operating Revenue and Expenses for
Sunnyvale Technology Park for the year ended December 31, 1997 with accompanying
notes and Independent Auditors' Report.
(ii) Historical Summary of Operating Revenue and Expenses for
Golden Gateway Commons for the year ended December 31, 1997 with accompanying
notes and Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and Expenses
for Checkfree Corporate Campus for the three months ended March 31, 1998
(unaudited) and the year ended December 31, 1997 with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and Expenses
for Hacienda West for the three months ended March 31, 1998 (unaudited) and the
year ended December 31, 1997 with accompanying notes and Independent Auditors'
Report.
(v) Historical Summaries of Operating Revenue and Expenses for
Palomar Oaks Technology Park for the three months ended March 31, 1998
(unaudited) and the year ended December 31, 1997 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 March 31, 1998 and a pro forma
condensed consolidated statements of operations (unaudited) for the three months
ended March 31, 1998 and the year ended December 31, 1997 relating to the
Company.
<PAGE>
(c) Exhibits
Exhibit
Number
---------
3.1 Articles of Amendment of Amendment and Restatement of Articles
of Incorporation of the Company dated June 16, 1998
99.1 Financial Statements
(i) Historical Summary of Operating Revenue and Expenses for
Sunnyvale Technology Park for the year ended December
31, 1997 with accompanying notes and Independent
Auditors' Report.
(ii) Historical Summary of Operating Revenue and Expenses for
Golden Gateway Commons for the year ended December 31,
1997 with accompanying notes and Independent Auditors'
Report.
(iii) Historical Summaries of Operating Revenue and Expenses
for Checkfree Corporate Campus for the three months
ended March 31, 1998 (unaudited) and the year ended
December 31, 1997 with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and Expenses
for Hacienda West for the three months ended March 31,
1998 (unaudited) and the year ended December 31, 1997
with accompanying notes and Independent Auditors'
Report.
(v) Historical Summaries of Operating Revenue and Expenses
for Palomar Oaks Technology Park for the three months
ended March 31, 1998 (unaudited) and the year ended
December 31, 1997 with accompanying notes and
Independent Auditors' Report.
99.2 Pro Forma Financial Information.
Attached hereto as Exhibit 99.2 are a pro forma condensed
consolidated balance sheet (unaudited) at March 31, 1998
and a pro forma condensed consolidated statements of
operations (unaudited) for the three months ended March 31,
1998 and the year ended December 31, 1997 relating to the
Company.
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: July 1, 1998
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
-----------------------
Brian K. Fields
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
3.1 Articles of Amendment of Amendment and Restatement of Articles
of Incorporation of the Company dated June 16, 1998
23.1 Consent of Independent Accountants.
99.1 Financial Statements
(i) Historical Summary of Operating Revenue and Expenses for
Sunnyvale Technology Park for the year ended December
31, 1997 with accompanying notes and Independent
Auditors' Report.
(ii) Historical Summary of Revenue and Direct Operating
Expenses for Golden Gateway Commons for the year ended
December 31, 1997 with accompanying notes and
Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and Expenses
for Checkfree Corporate Campus for the three months
ended March 31, 1998 (unaudited) and the year ended
December 31, 1997 with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and Expenses
for Hacienda West for the three months ended March 31,
1998 (unaudited) and the year ended December 31, 1997
with accompanying notes and Independent Auditors'
Report.
(v) Historical Summaries of Operating Revenue and Expenses
for Palomar Oaks Technology Park for the three months
ended March 31, 1998 (unaudited) and the year ended
December 31, 1997 with accompanying notes and
Independent Auditors' Report.
99.2 Pro Forma Financial Information.
Attached hereto as Exhibit 99.2 are a pro forma condensed
consolidated balance sheet (unaudited) at March 31, 1998 and a
pro forma condensed consolidated statements of operations
(unaudited) for the three months ended March 31, 1998 and the
year ended December 31, 1997 relating to the Company.
Exhibit 3.1
ARTICLES OF AMENDMENT
OF
AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
CARRAMERICA REALTY CORPORATION
CarrAmerica Realty Corporation, a Maryland corporation, having its
principal office in Maryland in Baltimore, Maryland (the "Corporation"), and
having The Corporation Trust, Incorporated as its resident agent located at 23
South Street, Baltimore, Maryland, hereby certifies to the State Department of
Assessment and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking in
its entirety Section 4.1 and by inserting in lieu thereof the following:
"Section 4.1 Shares and Par Value. The total number of shares
of all classes of stock that the Corporation shall have authority to
issue is 215,000,000, consisting of 180,000,000 shares of Common Stock
having a par value of one cent ($.01) per share, amounting in the
aggregate to par value of $1,800,000, and 35,000,000 shares of
Preferred Stock having a par value of one cent ($.01) per share,
amounting in the aggregate to par value of $350,000."
SECOND: The total number of shares of all classes of stock that the
Corporation was heretofore authorized to issue is 105,000,000, consisting of
90,000,000 shares of Common Stock having a par value of one cent ($.01) per
share, amounting in the aggregate to par value of $900,000, and 15,000,000
shares of Preferred Stock having a par value of one cent ($.01) per share,
amounting in the aggregate to par value of $150,000. The shares are not divided
into classes.
THIRD: The charter of the Corporation is hereby amended by striking in
its entirety Section 5.1(v) and by inserting in lieu thereof the following:
"(v) "Special Shareholder" shall mean (i) Security Capital
U.S. Realty S.A., Security Capital Holdings S.A. and any affiliate of
either such Person who shall acquire any shares of Stock either
directly pursuant to the Stock Purchase Agreement or from either such
Person (or another affiliate thereof) in accordance with the provisions
of such Stock Purchase Agreement or the Stockholders Agreement, (ii)
any Person who is considered a Beneficial Owner of shares of Stock as a
result of the actual ownership of shares of Stock by any of the Persons
identified in clause (i) above, and (iii) any bona fide financial
<PAGE>
institution that Acquires Beneficial Ownership of shares of Stock
either (x) as a result of an exercise of rights as a pledgee or
otherwise in connection with bona fide indebtedness of any of the
Persons identified in clause (i) above or (y) as a result of any such
Person's default under any such bona fide indebtedness (it being
understood that no pledge or other assignment of such shares of Stock
as collateral for bona fide indebtedness shall in and of itself result
in the pledgee or assignee being deemed to have Beneficial Ownership of
the pledged or assigned shares of Stock unless and until a default with
respect to such indebtedness shall have occurred and the lender
therefore has a current right to exercise its rights as pledgee or
assignee with respect to such shares of Stock), subject in each case to
the condition that such bona fide financial institution's Beneficial
Ownership of Stock would not result in the Special Shareholders as a
group exceeding the Special Shareholder Limit; provided, that, as a
condition to a bona fide financial institution's qualifying under
clause (iii) above, (p) each of Security Capital U.S. Realty S.A. and
Security Capital Holdings S.A. shall agree in writing (and each such
agreement shall be reasonably acceptable to the Corporation) that each
such bona fide financial institution shall be deemed a Special
Shareholder and the shares of Stock owned by each such financial
institution shall be included (without duplication) with the shares of
Stock owned by persons otherwise deemed Special Shareholders in
determining the Special Shareholder Limit, and (q) such bona fide
financial institution shall agree in writing (and such agreement shall
be reasonably acceptable to the Corporation), in advance or promptly
following acquisition of Beneficial Ownership of any shares of Stock as
described in clause (iii) above, to be bound by the Stockholders
Agreement (including, without limitation, the provisions to the effect
that shares of Stock cannot be transferred if the transfer would
violate the restrictions set forth in Section 5.2 of the Charter)."
FOURTH: On February 5, 1998 and March 5, 1998, respectively, the board
of directors of the Corporation duly approved the foregoing amendments to the
charter of the Corporation, subject to, among other things, the approval thereof
by the stockholders of the Corporation.
FIFTH: Notice of the 1998 annual meeting of stockholders of the
Corporation to, among other things, take action on certain proposals, including
the foregoing amendments, was given to each stockholder entitled to vote on the
foregoing amendments.
SEVENTH: The stockholders of the Corporation on May 7, 1998 duly
approved the foregoing amendments to the charter of the Corporation at the 1998
annual meeting of the stockholders of the Corporation.
- 2 -
<PAGE>
IN WITNESS WHEREOF, CarrAmerica Realty Corporation has caused these
presents to be signed in its name and on its behalf by its Senior Vice Present,
General Counsel and Secretary and attested by its Assistant Secretary on June
16, 1998. The undersigned hereby certifies, under penalties of perjury, that to
the best of his or her knowledge, information and belief the matters and facts
set forth herein are true and correct in all material respects.
CARRAMERICA REALTY CORPORATION
By: /s/ Linda A Madrid
---------------------------
Linda A. Madrid
Senior Vice President, General Counsel
and Secretary
Attest: /s/ Kelly S. Holdcraft
---------------------------
Kelly S. Holdcraft
Assistant Secretary
- 3 -
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
CarrAmerica Realty Corporation on Form S-3 (File No. 333-50019), Form S-3 (File
No. 333-53751), and on Form S-4 (File No. 333-50805) of our report dated June 9,
1998, on our audit of the Historical Summary of Revenue and Direct Operating
Expenses of Golden Gateway Commons for the year ended December 31, 1997, which
report is included in this Current Report on Form 8-K.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 30, 1998
Exhibit 99.1
SUNNYVALE TECHNOLOGY PARK
Historical Summary
of Operating Revenue and Expenses
Year Ended December 31, 1997
(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 Sunnyvale Technology Park for the year
ended December 31, 1997. This historical summary is the responsibility of the
management of Sunnyvale Technology 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 Sunnyvale Technology 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 Sunnyvale Technology Park for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 23, 1998
<PAGE>
SUNNYVALE TECHNOLOGY PARK
Historical Summary of Operating Revenue and Expenses
Year ended December 31, 1997
Operating Revenue:
Rental Revenue $ 1,013,665
Operating expense recoveries 176,228
------------
Total operating revenue 1,189,893
------------
Operating expenses:
Repairs and maintenance 5,424
Utilities 47,960
Operating services 29,611
Property management fees 60,000
Insurance 37,329
Real estate taxes 82,863
----------
Total operating expenses 263,187
----------
Operating revenue in excess of operating expenses $ 926,706
==========
See accompanying notes to historical summary.
2
<PAGE>
SUNNYVALE TECHNOLOGY PARK
Notes to Historical Summary of Operating Revenue and Expenses
Year ended December 31, 1997
(1) Description of the property
Sunnyvale Technology Park (the Buildings) consists of five buildings
located in the City of Sunnyvale, CA. The property serves the Silicon
Valley Market. The Buildings contain approximately 166,000 square feet
of leasable office space. As of December 31, 1997, three of the
buildings were 100% leased. The remaining two buildings were under
construction during 1997 and were 100% leased as of February 1, 1998.
CarrAmerica Realty Corporation acquired the Buildings on January 29,
1998.
(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 period
presented as certain revenue and expenses, which may not be
comparable to those expected to be incurred by CarrAmerica Realty
Corporation in the proposed future operations of the Buildings have
been excluded. Interest income has been excluded from revenue, and
interest, depreciation and amortization, and other costs not directly
related to the future operations of Sunnyvale Technology Park have
been excluded from expenses. Management is not aware of any material
factors relating to Sunnyvale Technology Park that would cause the
historical summary of operating revenue and expenses not to be
indicative of future operating results of the Buildings.
(b) Revenue Recognition
Rental revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(Continued)
3
<PAGE>
SUNNYVALE TECHNOLOGY PARK
Notes to Historical Summary of Operating Revenue and Expenses, continued
(3) Rental Revenue
Minimum future rentals for all five buildings (excluding modifications
and renewal options) on noncancelable leases are as follows for the
years ending December 31:
1998 $ 2,249,502
1999 2,624,581
2000 2,684,505
2001 2,802,628
2002 2,785,724
Thereafter 7,556,830
------------
$ 20,703,770
============
(4) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited pro forma table reflects the pro forma taxable operating
results and pro forma cash available from operations of Sunnyvale
Technology Park for the twelve months ended December 31, 1997 (includes
the three buildings that were occupied during 1997), as adjusted for
certain items which can be factually supported. For purposes of
presenting pro forma net taxable operating income, revenue is recognized
when it is either collectible under the lease terms or collected. Tax
depreciation and amortization have been calculated based on the new cost
basis for the Buildings, assuming the purchase by CarrAmerica Realty
Corporation was made on January 1, 1997. Tax depreciation for the
buildings are 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.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 1,007,893
Less - estimated depreciation and amortization
expense 409,230
-----------
Proforma taxable operating income $ 598,663
===========
Proforma cash available from operations $ 1,007,893
===========
4
<PAGE>
GOLDEN GATEWAY COMMONS
Historical Summary
of Revenue and Direct Operating Expenses
Year Ended December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying Historical Summary of Revenue and Direct
Operating Expenses (the "Historical Summary") of Golden Gateway Commons (the
"Property") for the year ended December 31, 1997. The Historical Summary is the
responsibility of the owner of the Property. Our responsibility is to express an
opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summary. An audit also includes
assessing the basis of the accounting 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 as described in Note A. The Historical Summary is not intended to be
a complete presentation of the Property's revenue and expenses and may not be
comparable to results from proposed future operations of the Property.
In our opinion, the Historical Summary referred to above presents fairly,
in all material respects, the revenue and direct operating expenses as described
in Note A, of the Property, for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 9, 1998
<PAGE>
GOLDEN GATEWAY COMMONS
HISTORICAL SUMMARY OF REVENUE AND
DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue:
Rental revenue $5,894,488
Expense reimbursements 244,485
Garage revenue 1,212,778
----------
Total revenue 7,351,751
----------
Direct operating expenses:
Real estate taxes 458,989
Cleaning 507,340
Utilities 565,293
Elevators 50,725
Engineers 159,175
Repairs and maintenance 399,176
General building 297,325
Administration 323,665
Insurance 104,389
Garage expenses 236,708
----------
Total direct operating expenses 3,102,785
----------
Revenue in excess of direct operating expenses $4,248,966
==========
The accompanying note is an integral part of this financial statement.
<PAGE>
GOLDEN GATEWAY COMMONS
NOTE TO HISTORICAL SUMMARY OF INCOME
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
A. Property and Basis of Accounting:
The accompanying Historical Summary of Income and Direct Operating Expenses
(the "Historical Summary") has been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission and relates to the
operations of Golden Gateway Commons (the "Property"). In accordance with Rule
3-14, direct operating expenses exclude depreciation expense, interest expense
and management fees. The Property is a three building mixed-use complex located
in San Francisco, California. Included in rental income is $1,204,631 resulting
from the straight-line adjustment for differences between straight-line rents
and contractual rent payments.
<PAGE>
CHECKFREE CORPORATE CAMPUS
Historical Summaries
of Operating Revenue and Expenses
Three months ended March 31, 1998 (Unaudited)
and the Year Ended December 31, 1997
(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 CheckFree Corporate Campus for the
year ended December 31, 1997. This historical summary is the responsibility of
the management of CheckFree Corporate Campus. 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 CheckFree Corporate Campus.
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 CheckFree Corporate Campus for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 23, 1998
<PAGE>
CHECKFREE CORPORATE CAMPUS
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998
and the year ended December 31, 1997
<TABLE>
<CAPTION>
Three
Months Year
ended ended
March 31, December 31,
1998 1997
(Unaudited)
----------- -----------
<S> <C> <C>
Rental and operating expense pass-through revenue $ 1,076,944 $ 4,282,995
Operating expenses:
Repairs and maintenance 63,661 243,080
Utilities 146,752 552,415
Operating services 138,881 570,519
Property management fees 24,005 96,075
Administrative 83,431 340,051
---------- ---------
Total operating expenses 456,730 1,802,140
---------- ---------
Operating revenue in excess of operating expenses $ 620,214 $ 2,480,855
============ ============
</TABLE>
See accompanying notes to historical summaries.
2
<PAGE>
CHECKFREE CORPORATE CAMPUS
Notes to Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998
and the year ended December 31, 1997
(1) Description of the property
CheckFree Corporate Campus (the Buildings) consists of five buildings
on approximately 50 acres of land located in Norcross, Georgia, a
submarket of Atlanta, and an additional 50 acres of undeveloped land
immediately adjacent to the Buildings. The Buildings contain
approximately 121,000 square feet of leasable office space. As of
March 31, 1998, the buildings were 100% leased to CheckFree
Corporation.
(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 revenues and expenses, which may not be
comparable to those expected to be incurred by CarrAmerica Realty
Corporation in the proposed future operations of the Buildings have
been excluded. Interest income has been excluded from revenue, and
interest, depreciation and amortization, and other costs not directly
related to the future operations of CheckFree Corporate Campus have
been excluded from expenses. Real estate taxes have also been
excluded since they are paid directly by the tenant, CheckFree
Corporation. Management is not aware of any material factors relating
to CheckFree Corporate Campus that would cause the historical
summaries of operating revenue and expenses not to be indicative of
future operating results of the buildings.
(b) Revenue Recognition
Rental revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information for the three months
ended March 31, 1998 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, 1997.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the
historical summary of operating revenue and expenses for the three
months ended March 31, 1998, have been included. The results of
operations for the three-month period ended March 31, 1998 are not
necessarily indicative of the results for the full year.
(Continued)
3
<PAGE>
CHECKFREE CORPORATE CAMPUS
Notes to Historical Summaries of Operating Revenue and Expenses, continued
(3) Rental Revenue
Minimum future rentals (excluding modifications and renewal options)
on noncancelable leases are as follows for the years ending December
31:
1998 $ 2,026,044
1999 2,564,316
2000 2,585,472
2001 2,585,472
2002 2,585,472
Thereafter 5,507,670
------------
$ 17,854,446
============
(4) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited pro forma table reflects the pro forma taxable operating
results and pro forma cash available from operations of CheckFree
Corporate Campus for the twelve months ended March 31, 1998, 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 and amortization have been calculated based on the new cost
basis for the Buildings, assuming the purchase by CarrAmerica Realty
Corporation was made on April 1, 1997. 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.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 2,026,044
Less - estimated depreciation and amortization
expense 569,231
-----------
Proforma taxable operating income $ 1,456,813
============
Proforma cash available from operations $ 2,026,044
============
4
<PAGE>
HACIENDA WEST
Historical Summaries
of Operating Revenue and Expenses
Three months ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
(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 Hacienda West for the year ended
December 31, 1997. This historical summary is the responsibility of the
management of Hacienda West. Our responsibility is to express an opinion on this
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 purposes 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 Hacienda West.
In our opinion, the historical summary referred to above, presents fairly,
in all material respects, the operating revenue and expenses described in note
2(a) Hacienda West for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 26, 1998
<PAGE>
HACIENDA WEST
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998 (unaudited)
and the year ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Three
Months Year
ended ended
March 31, December 31,
1998 1997
(unaudited)
----------- ----------
<S> <C> <C>
Operating Revenues:
Rental revenue $1,120 $3,757
Recovery of operating expenses 16 (41)
Other 3
------ ------
Total operating revenue 1,139 3,716
----- -----
Operating expenses:
Cleaning 56 188
Utilities 101 476
Repairs and maintenance 192 180
General operating 61 296
Administrative 9 7
Property management fees 21 64
Insurance 15 31
Real estate taxes 141 582
----- -----
Total operating expenses 596 1,824
------ ------
Operating revenue in excess of operating expenses $ 543 $1,892
====== ======
</TABLE>
See accompanying notes to historical summaries.
2
<PAGE>
HACIENDA WEST
Notes to Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998 (unaudited)
and the year ended December 31, 1997
(1) Description of the property
Hacienda West (the Buildings) consists of two buildings located in
Pleasanton, California, a submarket of San Francisco. The Buildings
contain approximately 208,000 square feet of leaseable office space. As
of March 31, 1998, the Buildings were 95% 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 revenues and expenses, which may not be
comparable to those expected to be incurred by CarrAmerica Realty
Corporation in the proposed future operations of the buildings have
been excluded. Interest income has been excluded from revenue, and
interest, depreciation and amortization, and other costs not directly
related to the future operations of Hacienda West have been excluded
from expenses. Management is not aware of any material factors
relating to Hacienda West that would cause the historical summaries
of operating revenue and expenses not to be indicative of future
operating results of the buildings.
(b) Revenue Recognition
Rental revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information for the three months
ended March 31, 1998 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, 1997.
Certain information and footnote disclosures normally included in
historical summaries prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the
historical summary of operating revenue and expenses for the three
months ended March 31, 1998, have been included. The results of
operations for the three-month period ended March 31, 1998 are not
necessarily indicative of the results for the full year.
(Continued)
3
<PAGE>
HACIENDA WEST
Notes to Historical Summaries of Operating Revenue and Expenses, continued
(3) Rental Revenue
Minimum future rentals (excluding modifications and renewal options)
on noncancelable leases are as follows for the years ending December
31:
(in thousands)
1998 $ 3,938
1999 3,792
2000 3,215
2001 2,256
2001 1,261
Thereafter 136
-------
$14,598
=======
(4) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited proforma table reflects the proforma taxable operating
results and proforma cash available from operations of Hacienda West
for the twelve months ended March 31, 1998, 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 and amortization have been calculated based on the new
cost basis for the Buildings, assuming the purchase by CarrAmerica
Realty Corporation was made on April 1, 1997. 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.
(in thousands)
Proforma net operating income (exclusive of
depreciation and amortization expense) $1,961
Less - estimated depreciation and
amortization expense 617
------
Proforma taxable income $1,344
======
Proforma cash available from operations $1,961
======
4
<PAGE>
PALOMAR OAKS TECHNOLOGY PARK
Historical Summaries
of Operating Revenue and Expenses
Three months ended March 31, 1998 (Unaudited)
and the Year Ended December 31, 1997
(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 Palomar Oaks Technology Park for the year
ended December 31, 1997. This historical summary is the responsibility of the
management of Palomar Oaks Technology 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
Palomar Oaks Technology 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 Palomar Oaks Technology Park for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 23, 1998
<PAGE>
PALOMAR OAKS TECHNOLOGY PARK
Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998
and the year ended December 31, 1997
Three
Months
ended Year
March 31, ended
1998 December 31,
(Unaudited) 1997
----------- ----
Revenue:
Rental revenue $520,563 $1,810,355
Operating expense pass-through revenue 61,228 218,171
Other income 3,057 10,745
-------- -----------
Total Revenue 584,848 2,039,271
-------- -----------
Operating expenses:
Repairs and Maintenance 7,132 44,569
Utilitie 7,546 41,695
Real estate taxes 37,211 126,563
Insuranc 2,865 17,730
Operating services 18,917 72,210
Management fees 18,691 67,255
Association dues 14,577 52,540
Administrative 532 6,365
-------- -----------
Total Operating expenses 107,471 428,927
-------- -----------
Operating revenue in excess of operating expenses $477,377 $1,610,344
======== ==========
See accompanying notes to historical summaries.
2
<PAGE>
PALOMAR OAKS TECHNOLOGY PARK
Notes to Historical Summaries of Operating Revenue and Expenses
For the three months ended March 31, 1998
and the year ended December 31, 1997
(1) Description of the property
Palomar Oaks Technology Park (the Buildings) consists of five
industrial buildings and one office building located in Carlsbad,
California, a submarket of north suburban San Diego. The Buildings
contain approximately 170,000 square feet of leasable space. As of
March 31, 1998, the Buildings were 100% leased.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses are not representative of the actual operations for the
periods presented as certain revenues and expenses, which may not be
comparable to those expected to be incurred by CarrAmerica Realty
Corporation in the proposed future operations of the Buildings have
been excluded. Interest income has been excluded from revenue, and
interest, depreciation and amortization, and other costs not directly
related to the future operations of Palomar Oaks Technology Park have
been excluded from expenses. Management is not aware of any material
factors relating to Palomar Oaks Technology Park that would cause the
historical summaries of operating revenue and expenses not to be
indicative of future operating results of the Buildings.
(b) Revenue Recognition
Rental revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information for the three months
ended March 31, 1998 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, 1997.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the
historical summary of operating revenue and expenses for the three
months ended March 31, 1998, have been included. The results of
operations for the three-month period ended March 31, 1998 are not
necessarily indicative of the results for the full year.
(Continued)
3
<PAGE>
PALOMAR OAKS TECHNOLOGY PARK
Notes to Historical Summaries of Operating Revenue and Expenses, continued
(3) Rental Revenue
Minimum future rentals (excluding modifications and renewal options) on
noncancelable leases are as follows for the years ending December 31:
1998 $ 1,858,619
1999 1,679,430
2000 1,542,709
2001 1,014,013
2002 2,585,472
Thereafter 76,081
-----------
$ 8,756,324
===========
(4) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited pro forma table reflects the pro forma taxable operating
results and pro forma cash available from operations of Palomar Oaks
Technology Park for the twelve months ended March 31, 1998, 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 and amortization were calculated assuming the purchase by
CarrAmerica Realty Corporation was made on April 1, 1997. 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.
Proforma net operating income (exclusive of
depreciation and amortization expense) $1,685,135
Less - estimated depreciation and amortization
expense 319,609
----------
Proforma taxable income $1,365,526
==========
Proforma cash available from operations $1,685,135
==========
4
Exhibit 99.2
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PROFORMA FINANCIAL INFORMATION
March 31, 1998
Unaudited
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the following transactions occurred on March 31, 1998: (i) the
acquisition and sales of office properties, land, and executive office suite
centers, that have been consummated since March 31, 1998 and the acquisition of
other office properties, land, and executive office suite centers that the
Company expects to consummate in the near future; (ii) the common stock
offerings and concurrent forward share purchase agreement during April 1998; and
(iii) the net draws on the Company's unsecured revolving credit facility. The
unaudited Pro Forma Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 and the year ended December 31, 1997 are
presented as if the following transactions had been consummated as of the
beginning of each period: (i) the acquisition and sales of office properties,
land, OmniOffices and other executive office suite centers that have been
consummated since the beginning of 1997 and the acquisition of other office
properties, land, and executive office suite centers that the Company expects to
consummate in the near future; (ii) the sales of common stock and preferred
stock during 1997 and 1998; (iii) the issuance of senior unsecured notes by the
Company in July 1997 and February 1998; (iv) the common stock offerings and
concurrent forward share purchase agreement during April 1998; and (v) the
repayment of amounts outstanding under the Company's unsecured revolving credit
facility.
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 March 31, 1998, 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 each
period, 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 March 31, 1998 (Unaudited)
------------------------------------------------------------------
Pro Forma Adjustments
------------------------------------------------------------------
Acquired Disposed Probable
Historical(A) Properties(B) Properties(C) Acquisitions(D)
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 2,212,757 $ 171,520 (1) $ - $ 65,349 (6)
Development property 292,476 1,928 (1) (2,733)(3) 80,459 (6)
Restricted and unrestricted cash 41,894 - - -
Other assets 196,933 162,554 (1),(2) - 15,430 (6),(7)
------------ ---------- ---------- -----------
Total assets $ 2,744,060 $ 336,002 $ (2,733) $ 161,238
============ ========== ========== ===========
LIABILITIES
Mortgages, unsecured notes and
credit facilities $ 753,946 $ 334,317 (2) $ (3,374)(4) $ 145,477 (7)
Senior unsecured notes 275,000 - - -
Other liabilities 87,462 1,685 (2) - -
------------ ---------- ---------- -----------
Total liabilities 1,116,408 336,002 (3,374) 145,477
Minority interest 74,955 - - 15,761 (8)
STOCKHOLDERS' EQUITY
Preferred stock 96 - - -
Common stock 600 - - -
Additional paid-in capital 1,629,214 - - -
Dividends paid in excess of earnings (77,213) - 641 (5) -
------------ ---------- ---------- -----------
Total stockholders' equity 1,552,697 - 641 -
------------ ---------- ---------- -----------
Total liabilities and
stockholders' equity $ 2,744,060 $ 336,002 $ (2,733) $ 161,238
============ ========== ========== ===========
</TABLE>
At March 31, 1998 (Unaudited)
--------------------------------------
Pro Forma Adjustments
--------------------------------------
Common Stock
Offerings and
Forward Share Pro Forma
Purchase Agreement(E) Consolidated
-------------------- -------------
ASSETS
Rental property, net $ - $ 2,449,626
Development property - 372,130
Restricted and unrestricted cash - 41,894
Other assets - 374,917
---------- -----------
Total assets $ - $ 3,238,567
========== ===========
LIABILITIES
Mortgages, unsecured notes and
credit facilities $ (335,991) $ 894,375
Senior unsecured notes - 275,000
Other liabilities - 89,147
---------- -----------
Total liabilities (335,991) 1,258,522
Minority interest - 90,716
STOCKHOLDERS' EQUITY
Preferred stock - 96
Common stock 116 716
Additional paid-in capital 335,875 1,965,089
Dividends paid in excess of earnings - (76,572
---------- ------------
Total stockholders' equity 335,991 1,889,329
---------- ------------
Total liabilities and
stockholders' equity $ - $ 3,238,567
========== ============
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the three month period ended March 31, 1998 (Unaudited)
-------------------------------------------------------------------------------
Pro Forma Adjustments
-------------------------------------------------------------------------------
Acquired Disposed Probable
Historical(A) Properties(B) Properties(C) Acquisitions(D)
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 100,329 $ 17,907 (1) $ (685) (6) $ 3,733 (9)
Real estate service income 2,990 - - -
Executive suites revenue 15,648 7,307 (1) - 556 (9)
--------- -------- ------ -------
Total revenues 118,967 25,214 (685) 4,289
--------- -------- ------ -------
Real estate operating expenses:
Property operating expenses 32,516 79 (4) (236) (6) 793 (12)
Interest expense 17,161 5,861 (1),(2) (309) (7) 1,131 (10)
Executive suites operating expenses 13,854 18,323 (1) - 1,684 (9)
General and administrative 6,439 - - -
Depreciation and amortization 23,643 3,297 (3) (81) (8) 748 (11)
--------- -------- ------ -------
Total operating expenses 93,613 27,560 (626) 4,356
--------- -------- ------ -------
Real estate operating income 25,354 (2,346) (59) (67)
Other operating income (expense), net 27,702 124 - -
--------- -------- ------ -------
Income before minority interest 53,056 (2,222) (59) (67)
--------- --------- ------ -------
Minority Interest (8,547) 38 (5) - (69)(13)
--------- --------- ------ -------
Income from continuing operations $ 44,509 $ (2,184) $ (59) $ (136)
========= ======== ====== =======
Earnings from continuing operations
per common share $ 0.60
=========
</TABLE>
<TABLE>
<CAPTION>
For the three month period ended March 31, 1998 (Unaudited)
-----------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------------
Common Stock
Offerings and
Forward Share Pro Forma
Purchase Agreement(E) Consolidated
--------------------- ------------
<S> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ 121,284
Real estate service income - 2,990
Executive suites revenue - 23,511
-------- ---------
Total revenues - 147,785
-------- ---------
Real estate operating expenses:
Property operating expenses - 33,152
Interest expense (5,462) 18,382
Executive suites operating expenses - 33,861
General and administrative - 6,439
Depreciation and amortization - 27,607
-------- ---------
Total operating expenses (5,462) 119,441
-------- ---------
Real estate operating income 5,462 28,344
Other operating income (expense), net - 27,826
-------- ---------
Income before minority interest 5,462 56,170
-------- ---------
Minority Interest - (8,578)
-------- ---------
Income from continuing operations $ 5,462 $ 47,592
======== =========
Earnings from continuing operations
per common share $ 0.54 (F)
=========
</TABLE>
<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, 1997 (Unaudited)
-----------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------------------------------------
Acquired Disposed Probable
Historical(A) Properties(B) Properties(C) Acquisitions(D)
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 325,502 $ 139,557 (1) $ (17,905)(6) $ 14,527 (9)
Real estate service income 15,998 - - -
Executive suites revenue 17,865 60,364 (1) - 2,222 (9)
--------- --------- --------- --------
Total revenues 359,365 199,921 (17,905) 16,749
--------- --------- --------- --------
Real estate operating expenses:
Property operating expenses 114,826 26,863 (4) (8,313)(6) 3,317 (12)
Interest expense 51,528 67,989 (1),(2) (8,894)(7) 4,849 (10)
Executive suites operating expenses 15,728 97,863 (1) - 6,737 (9)
General and administrative 21,839 - - -
Depreciation and amortization 76,958 29,534 (3) (2,974)(8) 2,988 (11)
--------- --------- --------- --------
Total operating expenses 280,879 222,249 (20,181) 17,891
--------- --------- --------- --------
Real estate operating income 78,486 (22,328) 2,276 (1,142)
Other operating income (expense), net 8,527 - (148) -
--------- --------- --------- --------
Income before minority interest 87,013 (22,328) 2,128 (1,142)
--------- --------- --------- --------
Minority Interest (8,273) (866)(5) - (274)(13)
--------- --------- --------- --------
Income from continuing operations $ 78,740 $ (23,194) $ 2,128 $ (1,416)
========= ========= ========= ========
Earnings from continuing operations
per common share $ 1.23
=========
</TABLE>
For the year ended December 31, 1997 (Unaudited)
-------------------------------------------------
Pro Forma Adjustments
-------------------------------------------------
Common Stock
Offerings and
Forward Share Pro Forma
Purchase Agreement(E) Consolidated
---------------------- ------------------
Real estate operating revenue:
Rental revenue $ - $ 461,681
Real estate service income - 15,998
Executive suites revenue - 80,451
------- --------
Total revenues - 558,130
------- --------
Real estate operating expenses:
Property operating expenses - 136,693
Interest expense (52,881) 62,591
Executive suites operating expenses - 120,328
General and administrative - 21,839
Depreciation and amortization - 106,506
------- --------
Total operating expenses (52,881) 447,957
------- --------
Real estate operating income 52,881 110,173
Other operating income (expense), net - 8,379
------- --------
Income before minority interest 52,881 118,552
------- --------
Minority Interest - (9,413)
------- --------
Income from continuing operations $ 52,881 $ 109,139
======== =========
Earnings from continuing operations
per common share $ 1.03 (F)
=========
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
March 31, 1998
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated balance sheet as
of March 31, 1998.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $338,202 ($23,749 related to Alton Deere,
$36,778 related to Techmart, $72,797 related to Golden Gateway
Commons, $21,655 related to Santa Anna Technology Park, $1,928
related to Panarama IX land, and $181,295 related to certain
executive office suite centers); and
(2) the use of the Company's purchase deposits of $2,200, the assumption
of other liabilities totaling $1,685, and draws on the Company's
unsecured revolving credit facility of $334,317.
(C) Reflects the following pro forma adjustments related to the disposition
of Rocky Point Land:
(3) total net cost of the property of $2,733;
(4) the repayment of $3,374 on the Company's unsecured revolving credit
facility with the total sales proceeds; and
(5) the $641 gain on disposition of the property.
(D) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions:
(6) total acquisition costs of $161,482 ($27,300 related to CheckFree
building and land, $19,575 related to Concord, $17,549 related to
Palomar, $6,498 related to Benecia, $19,165 related to Orchard
Bayside land, $4,513 related to Parmer Lane land, $7,518 related to
Point South land, $7,528 related to Royal Ridge II & III land, $7,736
related to Tanasbourne land, $19,400 related to an option to purchase
1201 F Option land, $9,500 related to Junction Road land, and $15,200
related to certain executive office suite centers); and
(7) the use of the Company's purchase deposits of $244, assumption of
existing debt of $17,850, and draws on the Company's unsecured
revolving credit facility of $127,627.
(8) the issuance of 564,117 units in connection with the acquisition of
CheckFree Corporate Campus.
(E) Reflects the sale of 11,612,781 shares of common stock through sales to
underwriters and Security Capital USRealty and through a forward share
purchase agreement at a net price of $335,991, after deduction of
transaction costs. The Company expects to use all of the net proceeds to
pay down amounts outstanding under its line of credit.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS For the three month period ended
March 31, 1998 and
the year ended December 31, 1997
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated statements of
operations for the three month period ended March 31, 1998 and the year
ended December 31, 1997.
(B) Pro forma adjustments for the purchases of the acquired properties reflect:
(1) the historical operating activity of the properties, OmniOffices,
and certain executive office suites centers;
(2) the additional interest expense on outstanding amounts on the
unsecured revolving credit facility (weighted average interest
rate 6.5% for 1998 and 7.1% for 1997) and assumed debt incurred
for the acquisitions ($6,160 of interest costs net of $299
capitalized for development property in 1998 and $76,271 of
interest costs net of $8,282 capitalized for development property
in 1997);
(3) the depreciation expense based on the new accounting basis of the
rental properties based on a 30 year useful life and the assets of
OmniOffices and certain executive office suites centers based on
useful lives ranging from 5 to 30 years;
(4) the historical operating activity of the properties, 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 operations.
(C) Pro forma adjustments for the dispositions of two properties during 1998
and five properties during 1997 reflect:
(6) the elimination of the historical operating activity of the
properties sold;
(7) the reduction of interest expense from the repayment of debt
(weighted average interest rate of 6.5 % for 1998 and 7.1% for
1997) using the sales proceeds; and
(8) the elimination of the historical depreciation expense of the
properties sold.
(D) Reflects the following pro forma adjustments related to the anticipated
effects of the probable acquisitions of properties and certain
executive office suites centers:
(9) the historical operating activity of the properties and certain
executive office suites centers;
(10) the additional interest expense on outstanding amounts on the
unsecured revolving credit facility (weighted average interest
rate of 6.5% for 1998 and 7.1% for 1997) incurred for acquisitions
($2,046 of interest costs net of $1,288 capitalized for
development property in 1998 and $9,061 of interest costs net of
$5,705 capitalized for development property in 1997) and interest
expense of $373 for 1998 and $1,493 for 1997 on assumed debt at
interest rates ranging from 7.75% to 8.85%;
<PAGE>
(11) the depreciation expense based on the new accounting basis of the
rental properties based on a 30 year useful life and the assets of
certain executive office suites centers based on useful lives
ranging from 5 to 30 years;
(12) the historical operating activity of the properties acquired
reduced by the elimination of management fee expenses that are no
longer incurred by the Company upon purchase of the properties;
and
(13) the minority interest share of earnings.
(E) Pro forma adjustment reflects the reduction in interest expense
associated with the pay down of amounts outstanding under the Company's
unsecured revolving credit facility with the proceeds from sales of
common stock in January, April, and December of 1997, and the sales of
preferred stock in August, November, and December of 1997 and the change
in interest expense associated with the paydown of amounts outstanding
under the unsecured revolving credit facility with the proceeds from the
issuance of senior unsecured notes in July 1997 and February 1998, and
the proceeds from the April 1998 sales of common stock and forward share
purchase agreement.
(F) Based upon 71,609,786 and 70,891,812 pro forma shares of common stock
outstanding on a weighted average basis for the three months ended March
31, 1998 and the year ended December 31, 1997, respectively.
