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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): February 18, 1998
CarrAmerica Realty Corporation
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(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
Maryland 1-11706 52-1796339
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006
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(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
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<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.
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 September 30, 1997 and pro forma condensed
consolidated statements of operations (unaudited) for the nine months ended
September 30, 1997 and the year ended December 31, 1996, relating to the
Company.
(c) Exhibits.
Exhibit
Number
------
99.1 Pro Forma Financial Information.
Pro forma condensed consolidated balance
sheet (unaudited) at September 30, 1997 and
pro forma condensed consolidated statements
of operations (unaudited) for the nine
months ended September 30, 1997 and the year
ended December 31, 1996, 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: February 18, 1998
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
------------------------
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
September 30, 1997 and pro forma condensed consolidated
statements of operations (unaudited) for the nine months ended
September 30, 1997 and the year ended December 31, 1996
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 September 30, 1997: (i)
the acquisition and sales of office properties and land that have been
consummated since September 30, 1997 and the acquisition of other office
properties and land and the lending transaction that the Company expects to
consummate in the near future; (ii) the Series C Preferred Stock Offering, the
Series D Preferred Stock Offering, and the offerings of Common Stock which
occurred after September 30, 1997; (iii) the issuance of $200,000 of Senior
Unsecured Notes in February 1998; and (iv) the repayment of amounts outstanding
under the Company's line of credit. The unaudited Pro Forma Condensed
Consolidated Statements of Operations for the nine months ended September 30,
1997 and the year ended December 31, 1996 are presented as if the following
transactions had been consummated as of the beginning of the periods presented:
(i) the acquisition and sales of office properties, land and OmniOffices that
have been consummated since the beginning of 1996 and the acquisition of other
office properties and land and the lending transaction that the Company expects
to consummate in the near future; (ii) the sales of common stock and preferred
stock during 1996 and 1997; (iii) the issuance of the senior unsecured notes by
the Company in July 1997; (iv) the issuance of the $200,000 of Senior Unsecured
Notes by the Company in February 1998; and (v) the repayment of amounts
outstanding under the Company's line of credit.
In management's opinion, all material adjustments necessary to reflect
the transactions described above are presented in the pro forma adjustments
columns, which are further described in the notes to the unaudited pro forma
financial information.
The unaudited Pro Forma Condensed Consolidated Balance Sheet and the
unaudited Pro Forma Condensed Consolidated 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, 1997, 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 does it purport to represent the results of operations
for future periods.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
At September 30, 1997 (Unaudited)
--------------------------------------------------------------------------------------------
Pro Forma Adjustments
-------------------------------------------------------------------
Probable
Acquired Disposed Acquisitions and
Historical(A) Properties(B) Properties(C) Lending Transaction (D)
--------------- -------------- --------------- -----------------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 1,926,846 $ 409,219 (1) $ (75,619)(4) $ 8,933 (8)
Development property 214,761 79,028 (1) (4,952)(4) 13,684 (8)
Restricted and unrestricted cash 37,990 - - -
Other assets 171,420 (10,818)(2) (9,868)(5) 50,750 (9)
----------- --------- ---------- ---------
Total assets $ 2,351,017 $ 477,429 $ (90,439) $ 73,367
=========== ========= ========== =========
LIABILITIES
Mortgages, unsecured notes and
credit facilities $ 628,058 $ 427,646 (2) $(137,947)(6) 73,367 (10)
Senior unsecured notes 275,000 - - -
Other liabilities 72,514 5,398 (2) (2,584)(5) -
----------- --------- ---------- ---------
Total liabilities 975,572 433,044 (140,531) 73,367
Minority interest 67,331 44,385 (3) - -
STOCKHOLDERS' EQUITY
Preferred stock 88 - - -
Common stock 582 - - -
Additional paid-in capital 1,381,214 - - -
Dividends paid in excess
of earnings (73,770) - 50,092 (7) -
------------ ---------- --------- --------
Total stockholders'
equity 1,308,114 - 50,092 -
----------- --------- --------- --------
Total liabilities and
stockholders' equity $ 2,351,017 $ 477,429 $ (90,439) $ 73,367
=========== ========= ========== =========
<PAGE>
<CAPTION>
At September 30, 1997 (Unaudited)
-----------------------------------------------------------
Pro Forma Adjustments
-----------------------------------------
Prior Preferred
and Common Offering of Senior Pro Forma
Stock Offerings (E) Unsecured Notes(F) Consolidated
------------------ ------------------ ------------
<S> <C> <C> <C>
ASSETS
Rental property, net $ - $ - $ 2,269,379
Development property - - 302,521
Restricted and unrestricted cash - - 37,990
Other assets - 8,425 209,909
----------- ------------ -----------
Total assets $ - $ 8,425 $ 2,819,799
=========== ============ ===========
LIABILITIES
Mortgages, unsecured notes and
credit facilities $ (246,016) $ (191,575) $ 553,533
Senior unsecured notes - 200,000 475,000
Other liabilities - - 75,328
------------ ------------ -----------
Total liabilities (246,016) 8,425 1,103,861
Minority interest - - 111,716
STOCKHOLDERS' EQUITY
Preferred stock 80 - 168
Common stock 18 - 600
Additional paid-in capital 245,918 - 1,627,132
Dividends paid in excess
of earnings - - (23,678)
------------ ------------ -------------
Total stockholders'
equity 246,016 - 1,604,222
------------ ------------ ------------
Total liabilities and
stockholders' equity $ - $ 8,425 $ 2,819,799
============ ============ ============
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
September 30, 1997
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated balance sheet as of
September 30, 1997.
(B) Reflects the following pro forma adjustments related to the acquired
properties:
(1) total acquisition costs of $488,247 ($28,714 related to 2600 W.
Olive, $14,746 related to San Mateo I, $42,262 related to
Presidential Circle, $12,286 related to Tract 17, $11,762 related
to Cigna Healthcare, $4,061 related to Marriott Tract Land, $7,542
related to Reston Crossing Land, $20,876 related to Century Park
II, $81,014 related to the East Hamilton Buildings, $87,779
related to the US West Portfolio, $5,697 related to Hamilton Land,
$15,161 related to Tower of the Hills, $2,612 related to Rocky
Point Land, $13,506 related to Bay Technology Center, $3,916
related to Panorama IV and West Land, $5,972 related to DMB land,
$17,205 related to Watkins Johnson Land, $22,315 related to
Citymark Tower, $28,270 related to Sunnyvale Technology Center,
$30,530 related to CM Capital-Hacienda, $22,484 related to Valley
Tech Center Land, and $9,537 related to Rosewood Land);
(2) the assumption of existing debt of $101,862 ($19,370 related to
2600 W. Olive, $23,483 related to Presidential Circle, $5,838
related to Tract 17 and $53,171 related to the US West Portfolio),
the use of the Company's purchase deposits of $10,950 (net of
other assets acquired of $132), the assumption of other
liabilities totaling $5,398, and draws on the Company's line of
credit of $325,784; and
(3) the issuance of operating partnership units with a total value of
$44,385 related to the acquisitions of 2600 W. Olive, San Mateo I,
and the US West Portfolio
(C) Reflects the following pro forma adjustments related to the dispositions
of First State Bank, Norwood Tower, The Quorum, Littlefield Building,
2445 M Street, and ASIS land:
(4) total net cost of properties of $80,571;
(5) the transfer of net assets of $7,284 ($9,868 in other assets and
$2,584 in other liabilities) in connection with the dispositions;
(6) the repayment of debt of $9,508 and the repayment of $128,439 on
the Company's line of credit with the total sales proceeds; and
(7) the $50,092 gain on dispositions of the properties.
(D) Reflects the following pro forma adjustments related to the anticipated
effects of probable acquisitions and lending transaction:
(8) total acquisition costs of $22,617 ($6,334 related to LaJolla
Spectrum Land, $4,916 related to Evergreen Land, $8,933 related to
Waterford, and $2,434 related to Jones Tract land);
(9) the funding of the construction loan for Ellis-Middlefield of
$51,000 and the use of the Company's purchase deposits of $250;
and
(10) draws on the Company's line of credit of $73,367.
(E) Reflects the sales of 6,000,000 shares of Series C Cumulative Redeemable
Preferred Stock at a net price of $144,875, 2,000,000 shares of Series D
Cumulative Redeemable Preferred Stock at a net price of $48,275, and
1,767,067 shares of Common Stock at a net price of $52,866. The Company
used all of the proceeds to pay down amounts outstanding under its line
of credit.
(F) 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
expects to use the net proceeds of $191,575 to pay down amounts
outstanding under its line of credit.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months ended September 30, 1997 (Unaudited)
--------------------------------------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------------------
Probable
Acquired Disposed Acquisitions and
Historical (A) Properties (B) Properties (C) Lending Transaction (D)
--------------- -------------- -------------- -----------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 231,832 $ 55,876 (1) $ (14,082)(6) $ 833 (9)
Real estate service income 11,512 - - -
Executive suites revenue 5,000 29,084 (1) - -
-------------- ------------ ---------- ---------
Total revenues 248,344 84,960 (14,082) 833
-------------- ------------ ---------- ---------
Real estate operating expenses:
Property operating expenses 81,920 17,748 (4) (6,452)(6) 323 (12)
Interest expense 37,266 37,703 (2) (7,498)(7) 3,300 (10)
Executive suites operating expenses 4,124 24,573 (4) - -
General and administrative 15,777 - - -
Depreciation and amortization 54,561 14,256 (3) (2,323)(8) 194 (11)
-------------- ------------ ---------- ---------
Total operating expenses 193,648 94,280 (16,273) 3,817
-------------- ------------ ---------- ---------
Real estate operating income 54,696 (9,320) 2,191 (2,984)
Other operating income (expense), net 2,333 - - 3,060 (13)
-------------- ------------ ---------- ---------
Income before minority interest 57,029 (9,320) 2,191 76
-------------- ------------ ---------- ---------
Minority Interest (5,758) (2,245)(5) -
-------------- ------------ ---------- ---------
Income from continuing operations $ 51,271 $ (11,565) $ 2,191 $ 76
============== ============ ========== =========
Earnings from continuing operations
per common share $ 0.87
==============
<PAGE>
<CAPTION>
For the nine months ended September 30, 1997 (Unaudited)
------------------------------------------------------------
Pro Forma Adjustments
-------------------------------------------
Prior Preferred
and Common Offering of Senior Pro Forma
Stock Offerings (E) Unsecured Notes (F) Consolidated
------------------- ------------------- ------------
<S> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $ 274,459
Real estate service income - - 11,512
Executive suites revenue - - 34,084
--------- --------- -----------
Total revenues - - 320,055
--------- --------- -----------
Real estate operating expenses:
Property operating expenses - - 93,539
Interest expense (27,498) 331 43,604
Executive suites operating expenses - - 28,697
General and administrative - - 15,777
Depreciation and amortization - - 66,688
--------- --------- -----------
Total operating expenses (27,498) 331 248,305
--------- --------- -----------
Real estate operating income 27,498 (331) 71,750
Other operating income (expense), net - - 5,393
--------- --------- -----------
Income before minority interest 27,498 (331) 77,143
--------- --------- -----------
Minority Interest - - (8,003)
--------- --------- -----------
Income from continuing operations $ 27,498 $ (331) $ 69,140
========= ========= ============
Earnings from continuing operations
per common share $ 0.71 (G)
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the year ended December 31, 1996 (Unaudited)
--------------------------------------------------------------------------------
Pro Forma Adjustments
--------------------------------------------------------------
Probable
Acquired Disposed Acquisitions and
Historical (A) Properties (B) Properties (C) Lending Transaction (D)
--------------- -------------- -------------- -----------------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 154,165 $ 184,788 (1) $ (14,638)(6) $ 1,281 (9)
Real estate service income 12,512 - - -
Executive suites revenue - 42,019 (1) - -
-------------- ------------ ---------- ---------
Total revenues 166,677 226,807 (14,638) 1,281
-------------- ------------ ---------- ---------
Real estate operating expenses:
Property operating expenses 51,927 58,764 (4) (6,071)(6) 486 (12)
Interest expense 31,630 90,052 (2) (9,928)(7) 4,495 (10)
Executive suites operating expenses - 36,718 (4) - -
General and administrative 15,228 2,300 (4) - -
Depreciation and amortization 38,264 44,357 (3) (1,817)(8) 259 (11)
-------------- ------------ ---------- ---------
Total operating expenses 137,049 232,191 (17,816) 5,240
-------------- ------------ ---------- ---------
Real estate operating income 29,628 (5,384) 3,178 (3,959)
Other operating income (expense), net (94) 7 (1) - 4,080 (13)
-------------- ------------ ---------- ---------
Income before minority interest 29,534 (5,377) 3,178 121
-------------- ------------ ---------- ---------
Minority Interest (4,732) (3,823)(5) - -
-------------- ------------ ---------- ---------
Income from continuing operations $ 24,802 $ (9,200) $ 3,178 $ 121
============== ============ ========== =========
Earnings from continuing operations
per common share $ 0.90
==============
<PAGE>
<CAPTION>
For the year ended December 31, 1996 (Unaudited)
-------------------------------------------------------------
Pro Forma Adjustments
-------------------------------------------------------------
Prior Preferred
and Common Offering of Senior Pro Forma
Stock Offerings (E) Unsecured Notes (F) Consolidated
------------------- ------------------- ------------
<S> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ - $ - $ 325,596
Real estate service income - - 12,512
Executive suites revenue - - 42,019
--------- --------- -----------
Total revenues - - 380,127
--------- --------- -----------
Real estate operating expenses:
Property operating expenses - - 105,106
Interest expense (58,765) 135 57,619
Executive suites operating expenses - - 36,718
General and administrative - - 17,528
Depreciation and amortization - - 81,063
--------- --------- -----------
Total operating expenses (58,765) 135 298,034
--------- --------- -----------
Real estate operating income 58,765 (135) 82,093
Other operating income (expense), net - - 3,993
--------- --------- -----------
Income before minority interest 58,765 (135) 86,086
--------- --------- -----------
Minority Interest - - (8,555)
--------- --------- -----------
Income from continuing operations $ 58,765 (135) $ 77,531
========= ========= ===========
Earnings from continuing operations
per common share $ 0.70 (G)
===========
</TABLE>
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1997 and
the Year Ended December 31, 1996
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical condensed consolidated statements of
operations for the nine months ended September 30, 1997 and the year
ended December 31, 1996.
(B) Pro forma adjustments for the purchases of the acquired properties
reflect:
(1) the historical operating activity of the properties and
OmniOffices;
(2) the additional interest expense on outstanding amounts on the line
of credit at weighted average interest rates ranging from 7.3% to
7.5%, incurred for the acquisitions ($35,797 of interest costs net
of $6,542 capitalized for development property for the nine months
ended September 30, 1997 and $82,010 of interest costs net of
$14,173 capitalized for development property for 1996) and
interest expense on assumed debt at interest rates ranging from
5.0% to 9.6% ($8,448 for the nine months ended September 30, 1997
and $22,215 for 1996);
(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 based on useful lives ranging from 5 to 30 years;
(4) the historical operating activity of the properties and
OmniOffices reduced by the elimination of management fee expenses
that are no longer incurred by the Company upon purchase of the
properties and increased by $2,300 in 1996 for incremental general
and administrative costs associated with the Company's asset
growth; and
(5) the minority interest share of earnings.
(C) Pro forma adjustments for the dispositions of First State Bank, Norwood
Tower, The Quorum, Littlefield Building, 2445 M Street, and ASIS land
reflect:
(6) the elimination of the historical operating activity of the
properties sold;
(7) the reduction of interest expense from the repayment debt at a
weighted average interest rates ranging from 7.3% to 7.5%, 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 the Company's lending
transaction:
(9) the historical operating activity of the operating property to be
acquired;
(10) the additional interest expense on debt at weighted average
interest rates ranging from 7.3% to 7.5%, incurred for the
acquisitions ($4,039 of interest costs net of $739 capitalized for
development property for the nine months ended September 30, 1997
and $5,502 of interest costs net of $1,007 capitalized for
development property for 1996);
(11) the depreciation expense based on the new accounting basis for the
rental properties based on a 30 year useful life;
(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 interest income from the Company's construction financing
transaction.
(E) Pro forma adjustment reflects the reduction in interest expense
associated with the pay down of amounts outstanding under the Company's
line of credit with the proceeds from sales of common stock in January,
April, and December of 1997, and the sale 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 line of
credit with the proceeds from the issuance of $275 million of senior
unsecured notes in July 1997.
(F) Pro forma adjustment reflects the change in interest expense associated
with the paydown of amounts outstanding under the line of credit with the
proceeds from the anticipated issuance of the $200 million of Senior
Unsecured Notes.
(G) Based upon 59,767,709 and 59,594,532 pro forma shares of common stock
outstanding on a weighted average basis during the nine months ended
September 30, 1997 and during 1996, respectively.
