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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): April 3, 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 File No.) (IRS Employer
of incorporation) 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
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FORM 8-K
ITEM 1. Changes in Control of Registrant.
Not applicable.
ITEM 2. Acquisition or Disposition of Assets.
Not applicable.
ITEM 3. Bankruptcy or Receivership.
Not applicable.
ITEM 4. Changes in Registrant's Certifying Accountant.
Not applicable.
ITEM 5. Other Events.
Not applicable.
ITEM 6. Resignations of Registrant's Directors.
Not applicable.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Attached hereto as Exhibit 99.1 are a pro forma condensed consolidated
balance sheet (unaudited) at December 31, 1997 and pro forma condensed
consolidated statement of operations (unaudited) for the year ended December
31, 1997, relating to the Company.
(c) Exhibits.
Exhibit
Number
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99.1 Pro Forma Financial Information.
Pro forma condensed consolidated balance sheet
(unaudited) at December 31, 1997 and pro forma condensed
consolidated statement of operations (unaudited) for 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: April 3, 1998
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
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Brian K. Fields
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- ------
99.1 Pro Forma Financial Information.
Pro forma condensed consolidated balance sheet (unaudited) at
December 31, 1997 and pro forma condensed consolidated statement of
operations (unaudited) for the year ended December 31, 1997, relating
to the Company.
Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION
The unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if the following transactions occurred on December 31, 1997: (i)
the acquisition and sales of office properties, land, and executive office suite
centers, that have been consummated since December 31, 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 issuance of senior
unsecured notes in February 1998; (iii) the common stock offering and concurrent
forward share purchase agreement during April 1998; and (iv) the repayment of
amounts outstanding under the Company's unsecured revolving credit facility. The
unaudited Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1997 is presented as if the following transactions had been
consummated as of the beginning of the year: (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; (iii) the issuance of senior unsecured notes by
the Company in July 1997 and February 1998; (iv) the common stock offering 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 Statement of Operations should be
read in conjunction with the Consolidated Financial Statements of the Company
and Notes thereto. The unaudited Pro Forma Condensed Consolidated Balance Sheet
is not necessarily indicative of what the actual financial position of the
Company would have been at December 31, 1997, nor does it purport to represent
the future financial position of the Company. The unaudited Pro Forma Condensed
Consolidated Statement of Operations is not necessarily indicative of what the
actual results of operations of the Company would have been assuming the
aforementioned transactions had been consummated as of the beginning of the
year, nor does it purport to represent the results of operations for future
periods.
1
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CarrAmerica Realty Corporation and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
(In Thousands)
<TABLE>
<CAPTION>
At December 31, 1997 (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 $ 95,487 (1) $(24,537)(3) $43,829 (7)
Development property 292,476 66,311 (1) - 2,434 (7)
Restricted and unrestricted cash 41,894 - - -
Other assets 196,933 13,212 (1,2) (8,258)(4) 52,236 (7,8)
---------- -------- -------- -------
Total assets $2,744,060 $175,010 $(32,795) $98,499
========== ======== ======== =======
LIABILITIES
Mortgages, unsecured notes and
credit facilities $ 753,946 $168,484 (2) $(75,532)(5) $94,671 (8)
Senior unsecured notes 275,000 - - -
Other liabilities 87,462 6,526 (2) (1,145)(4) 3,828 (8)
---------- -------- -------- ------
Total liabilities 1,116,408 175,010 (76,677) 98,499
Minority interest 74,955 - - -
STOCKHOLDERS' EQUITY
Preferred stock 96 - - -
Common stock 600 - - -
Additional paid-in capital 1,629,214 - - -
Dividends paid in excess of earnings (77,213) - 43,882(6) -
---------- -------- -------- -------
Total stockholders' equity 1,552,697 - 43,882 -
---------- -------- -------- -------
Total liabilities and stockholders' equity $2,744,060 $175,010 $(32,795) $98,499
========== ======== ========= =======
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1997 (Unaudited)
---------------------------------------------------------------
Pro Forma Adjustments
---------------------------------------------------------------
Common Stock
Offering and Concurrent
Senior Unsecured Forward Share Pro Forma
Notes Offerings(E) Purchase Agreement(F) Consolidated
----------------- -------------------- ------------
<S> <C> <C> <C>
ASSETS
Rental property, net $ - $ - $2,327,536
Development property - - 361,221
Restricted and unrestricted cash - - 41,894
Other assets 8,425 - 262,548
--------- ---------- ----------
Total assets $ 8,425 $ - $2,993,199
========= ========== ==========
LIABILITIES
Mortgages, unsecured notes and
credit facilities $(191,575) $(270,346) $ 479,648
Senior unsecured notes 200,000 - 475,000
Other liabilities - - 96,671
--------- --------- ----------
Total liabilities 8,425 (270,346) 1,051,319
Minority interest - - 74,955
STOCKHOLDERS' EQUITY
Preferred stock - - 96
Common stock - 93 693
Additional paid-in capital - 270,253 1,899,467
Dividends paid in excess of earnings - - (33,331)
--------- --------- ----------
Total stockholders' equity - 270,346 1,866,925
--------- --------- ----------
Total liabilities and stockholders' equity $ 8,425 $ - $2,993,199
========= ========= ==========
2
</TABLE>
<PAGE>
CarrAmerica Realty Corporation and Subsidiaries
Notes to Pro Forma Condensed Consolidated
Balance Sheet
December 31, 1997
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated balance sheet as
of December 31, 1997.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $189,859 ($5,972 related to DMB land,
$17,205 related to Valley Research Centre land, $22,315 related to
Citymark Tower, $28,270 related to Sunnyvale Technology Center, $30,530
related to Hacienda West, $22,484 related to Valley Technology Center
land, $9,537 related to The Commons @ Las Colinas land, $6,277 related
to LaJolla Spectrum land, $4,836 related to Sunset Corporate Park land,
$8,933 related to Waterford Center, and $33,500 related to certain
executive office suite centers); and
(2) the use of the Company's purchase deposits of $14,849, the assumption
of other liabilities totaling $6,526, the assumption of existing debt
of $1,026 related to certain executive office suite centers, and draws
on the Company's unsecured revolving credit facility of $167,458.
(C) Reflects the following pro forma adjustments related to the disposition of
2445 M Street:
(3) total net cost of the property of $24,537;
(4) the transfer of net assets of $7,113 ($8,258 in other assets and
$1,145 in other liabilities) in connection with the disposition;
(5) the repayment of $75,532 on the Company's unsecured revolving
credit facility with the total sales proceeds; and
(6) the $43,882 gain on disposition of the property.
(D) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions:
(7) total acquisition costs of $98,599 ($2,434 related to Jones Tract
land, $17,560 related to 5000 Quorum, $24,176 related to Alton Deere,
and $54,429 related to certain executive office suite centers); and
(8) the use of the Company's purchase deposits of $100, assumption of
existing debt of $154 related to certain executive office suite
centers, the assumption of other liabilities of $3,828, and draws on
the Company's unsecured revolving credit facility of $94,517.
(E) Reflects the issuance of $200,000 of Senior Unsecured Notes due 2005 and
2008, related transaction costs of $1,425, and deferred interest costs of
$7,000 from the Company's interest rate hedging transactions. The Company
used the net proceeds of $191,575 to pay down amounts outstanding under its
unsecured revolving credit facility.
(F) Reflects the proposed sale of 9,285,714 shares of common stock to the
underwriter and Security Capital USRealty and concurrent forward share
purchase agreement at a net price of $270,346, after deduction of
transaction costs of $500. The Company expects to use all of the net
proceeds to pay down amounts outstanding under its unsecured revolving
credit facility.
3
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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 $ 64,460 (1) $(17,905)(6) $ 4,391 (9)
Real estate service income 15,998 - - -
Executive suites revenue 17,865 49,927 (1) - 30,084 (9)
-------- -------- -------- -------
Total revenues 359,365 114,387 (17,905) 34,475
======== ======== ======== =======
Real estate operating expenses:
Property operating expenses 114,826 20,355 (4) (8,313)(6) 1,624 (12)
Interest expense 51,528 45,326 (2) (12,930)(7) 6,823 (10)
Executive suites operating expenses 15,728 42,653 (4) - 25,541 (12)
General and administrative 21,839 - - -
Depreciation and amortization 76,958 18,027 (3) (2,974)(8) 3,713 (11)
-------- ------- -------- -------
Total operating expenses 280,879 126,361 (24,217) 37,701
-------- ------- -------- -------
Real estate operating income 78,486 (11,974) 6,312 (3,226)
Other operating income (expense), net 8,527 - (148)(6) -
-------- ------- -------- -------
Income before minority interest 87,013 (11,974) 6,164 (3,226)
-------- ------- -------- -------
Minority Interest (8,273) (687)(5) - 62 (13)
-------- -------- -------- -------
Income from continuing operations $ 78,740 $(12,661) $ 6,164 $(3,164)
======== ======== ======== =======
Earnings from continuing operations
per common share $ 1.23
========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997 (Unaudited)
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Pro Forma Adjustments
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Common Stock
Offering and Concurrent
Prior Preferred Stock Forward Share
Common Stock, and Senior Purchase Pro Forma
Unsecured Notes Offerings Agreement (F) Consolidated
-------------------------- -------------- -------------
<S> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $376,448
Real estate service income - - 15,998
Executive suites revenue - - 97,876
-------- -------- -------
Total revenues - - 490,322
======== ======== =======
Real estate operating expenses:
Property operating expenses - - 128,492
Interest expense (29,012) (19,195) 42,540
Executive suites operating expenses - - 83,922
General and administrative - - 21,839
Depreciation and amortization - - 95,724
-------- -------- -------
Total operating expenses (29,012) (19,195) 372,517
-------- -------- -------
Real estate operating income 29,012 19,195 117,805
Other operating income (expense), net - - 8,379
------- -------- -------
Income before minority interest 29,012 19,195 126,184
Minority Interest - - (8,898)
-------- -------- --------
Income from continuing operations $ 29,012 $ 19,195 $117,286
======== ======== ========
Earnings from continuing operations
per common share $ 1.18 (G)
========
4
</TABLE>
<PAGE>
CarrAmerica Realty Corporation and Subsidiaries
Notes to Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 1997
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated statements of
operations for 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, at a weighted average interest
rate of 7.1%, incurred for the acquisitions ($43,638 of interest costs
net of $8,160 capitalized for development property), and interest
expense of $9,848 on assumed debt at interest rates ranging from 5.0%
to 9.6%;
(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, OmniOffices and
certain executive office suites centers reduced by the elimination of
management fee expenses that are no longer incurred by the Company
upon purchase of the properties; and
(5) the minority interest share of earnings.
(C) Pro forma adjustments for the dispositions of seven properties during 1997
and 2445 M Street reflect:
(6) the elimination of the historical operating activity of the properties
sold;
(7) the reduction of interest expense from the repayment of debt at a
weighted average interest rate of 7.1%, 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 property acquisitions, and acquisition of 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 debt at a weighted average interest
rate of 7.2%, incurred for and assumed in the acquisitions ($6,996 of
interest costs net of $173 capitalized for development property);
(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;
5
<PAGE>
(12) the historical operating activity of the properties acquired and
certain executive office suites centers 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 losses.
(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.
(F) Pro forma adjustment reflects the change in interest expense associated
with the paydown of amounts outstanding under the unsecured revolving
credit facility with the proceeds from the anticipated proceeds of
the April common stock offering and concurrent forward share purchase
agreement.
(G) Based upon 68,564,745 pro forma shares of common stock outstanding on a
weighted average basis during the year ended December 31, 1997.
6
