<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-----------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1997
TRINET CORPORATE REALTY TRUST, INC.
(Exact name of Registrant as specified in its charter)
Maryland
(State of Incorporation)
1-11918 94-3175659
(Commission File Number) (IRS Employer ID Number)
Four Embarcadero Center, Suite 3150
San Francisco, CA 94111
(Address of principal executive offices) (Zip Code)
(415) 391-4300
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events
Property Acquisitions. From May 19, 1997 through June 30, 1997, TriNet Corporate
Realty Trust, Inc. (the "Company") acquired ten properties (the "Acquired
Properties") for an aggregate purchase price of approximately $113.8 million,
plus aggregate acquisition costs of approximately $1.2 million. As of June 30,
1997, the Company's portfolio consisted of 97 properties. The Acquired
Properties are described below. Neither the Company, any subsidiary of the
Company, nor any director or officer of the Company was affiliated with or had a
material relationship with the seller of any property described below.
Sunbelt. On May 19, 1997, TriNet Essential Facilities XXIV, Inc. ("TriNet
XXIV"), a wholly-owned subsidiary of the Company, purchased a 222,636
square foot regional distribution center leased to Sunbelt Beverage
Corporation ("SunBelt") located in Baltimore, Maryland (the "Sunbelt
Property") from Sierra Capital Corporate Advisors, a California
Corporation, for a purchase price of approximately $9.7 million. TriNet
XXIV holds a fee title interest in the Sunbelt Property. The purchase
price for the Sunbelt Property was funded by an $8.5 million draw on the
Company's $200.0 million unsecured revolving credit facility (the
"Acquisition Facility") with a group of 11 banks for which Morgan Guaranty
Trust Company of New York is the lead agent and The First National Bank of
Boston is the managing co-agent, with the remainder being funded from
working capital.
Frontier II. On June 6, 1997, TriNet Essential Facilities X, Inc. ("TriNet
X"), a wholly-owned subsidiary of the Company, purchased a 62,100 square
foot build-to-suit office complex, located in Westminster, Colorado and
leased to Frontier Corporation (the "Frontier II Property") from Pacifica
Confertech LLC, for a purchase price of approximately $7.8 million. The
Frontier II Property is the second building of a two-building complex
owned by the Company and leased to Frontier Corporation. TriNet X acquired
a fee title interest in the Frontier II Property. The purchase price for
the Frontier II Property was funded by a $5.2 million draw on the
Company's Acquisition Facility, with the remainder being funded from
working capital.
Charleston Place. On June 17, 1997, TriNet Essential Facilities XXV, Inc.
("TriNet XXV") and TriNet Essential Facilities XXVI, Inc. ("TriNet
XXVI"), both wholly-owned subsidiaries of the Company, purchased three
two-story office buildings comprised of 187,380 square feet located in
Mountain View, California (the "Charleston Place Properties") from
Charleston Place Associates, a California General Partnership, for a
purchase price of approximately $52.3 million. TriNet XXV and TriNet XXVI
acquired fee title interests in the Charleston Place Properties. The
purchase price was funded by a $51.9 million draw on the Acquisition
Facility, with the remainder being funded from working capital. The
Charleston Place Properties are 100% leased to the following two tenants:
U.S. Robotics Access Corp., a subsidiary of U.S. Robotics Corporation
(which recently merged with 3Com Corporation) and Sun Microsystems, Inc.
<PAGE> 3
Bay State Gas. On June 30, 1997, TriNet Essential Facilities XXIII, Inc.
("TriNet XXIII"), a wholly-owned subsidiary of the Company, purchased an
88,000 square foot office facility, located in Westborough, Massachusetts
(the "Bay State Gas Property"), for a purchase price of $10.5 million. The
property was purchased from, and simultaneously 100% net leased to, Bay
State Gas Company. TriNet XXIII acquired a fee title interest in the Bay
State Gas Property. The purchase price for the Bay State Gas Property was
funded by a $10.2 million draw on the Acquisition Facility, with the
remainder being funded from working capital.
Warner Crossing. On June 30, 1997, TriNet Essential Facilities XXVII, Inc.
("TriNet XXVII"), a wholly-owned subsidiary of the Company, purchased a
four-property office complex totaling 330,663 square feet, located in
Tempe, Arizona (the "Warner Crossing Properties"), from Ryan Companies US,
Inc. for a purchase price of $33.5 million. TriNet XXVII acquired fee
title interests in the Warner Crossing Properties. The purchase price was
funded by a $32.6 million draw on the Acquisition Facility with the
remainder being funded from working capital. The Warner Crossing
Properties are 100% leased to the following three tenants: AlliedSignal
Inc., Vital Processing Services, L.L.C. and MaxServ, Inc.
Property Disposition. On May 20, 1997, TriNet Essential Facilities I, Inc.
("TriNet I"), a wholly-owned subsidiary of the Company, sold a property located
in Malvern, Pennsylvania for approximately $5.3 million. TriNet I recognized a
gain of approximately $986,000 on this transaction. Neither the Company, any
subsidiary of the Company nor any director or officer of the Company was
affiliated with or had a material relationship with the buyer of the property.
Item 7. Financial Statements and Exhibits
Financial Statements
Pro Forma Financial Statements
The pro forma financial statements of the Company reflecting the
above transactions are included on pages F-2 to F-6.
Historical Financial Statements
The Historical Summary of Gross Income for the Sunbelt Property is
not included since this property was not occupied by Sunbelt
Beverage Corporation until construction was completed on the
building in March 1997. The Historical Summary of Gross Income for
the Frontier II Property is not included since Frontier Corporation
did not occupy the building until construction was completed in May
1997. The Historical Summary of Gross Income for the Charleston
Place Properties is included on pages F-7 to F-9. The Bay State Gas
Property was a purchase-leaseback and therefore no historical
financial information is available for this property. The Historical
Summary of Gross Income for the Warner Crossing Properties is
included on pages F-10 to F-12.
Exhibits
23.1 Consent of Independent Accountants
<PAGE> 4
TRINET CORPORATE REALTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Pro Forma Financial Statements:
Unaudited pro forma consolidated balance sheet F-2
as of March 31, 1997
Unaudited pro forma consolidated statement of operations F-3
for the three months ended March 31, 1997
Unaudited pro forma consolidated statement of operations F-4
for the year ended December 31, 1996
Notes to the pro forma financial statements F-5
Historical Summary of Gross Income for the Charleston Place Properties:
Report of independent accountants F-7
Historical summary of gross income for the period October 30, 1996
through December 31, 1996 F-8
Note to historical summary of gross income F-9
Historical Summary of Gross Income for the Warner Crossing Properties:
Report of independent accountants F-10
Historical summary of gross income for the period July 9, 1996
through December 31, 1996 F-11
Note to historical summary of gross income F-12
<PAGE> 5
TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Adjustments
----------------------------
Acquired Disposition
Historical Properties Property Pro Forma
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate, at cost:
Land $ 138,373 $ 24,227 A $ (595) B $ 162,005
Depreciable property 703,496 90,807 A (4,797) B 789,506
---------- ---------- ---------- ---------
841,869 115,034 (5,392) 951,511
Less accumulated depreciation (38,661) - 1,554 B (37,107)
---------- ---------- ---------- ---------
803,208 115,034 (3,838) 914,404
Investment in joint venture 7,050 - - 7,050
Real estate held for sale 3,866 - - 3,866
---------- ---------- ---------- ---------
Total real estate 814,124 115,034 (3,838) 925,320
Cash and cash equivalents 5,205 (5,008) A 5,013 B 5,210
Restricted cash and investments 4,813 - - 4,813
Deferred rent receivable 15,675 - - 15,675
Interest rate protection agreements and loan costs, net 13,296 - - 13,296
Other assets, net 2,523 - - 2,523
---------- ---------- ---------- ---------
$ 855,636 $ 110,026 $ 1,175 $ 966,837
========== ========== ========== =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Debt $ 248,243 $ 108,400 A $ - $ 356,643
Dividends payable 12,774 - - 12,774
Other liabilities 32,785 1,626 A 189 B 34,600
---------- ---------- ---------- ---------
Total liabilities 293,802 110,026 189 404,017
========== ========== ========== =========
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized
Series A: issued and outstanding: 2,000,000 shares
at March 31, 1997
(aggregate liquidation preference $50,000) 20 - - 20
Series B: issued and outstanding: 1,300,000 shares
at March 31, 1997
(aggregate liquidation preference $32,500) 13 - - 13
Common stock, $.01 par value, 40,000,000 shares authorized
20,275,338 issued and outstanding at March 31, 1997 203 - - 203
Paid-in-capital 594,724 - - 594,724
Accumulated deficit (33,126) - 986 (32,140)
---------- ---------- ---------- ---------
Total stockholders' equity 561,834 - 986 562,820
---------- ---------- ---------- ---------
$855,636 $ 110,026 $ 1,175 $ 966,837
========== ========== ========== =========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-2
<PAGE> 6
TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
---------------------------
Acquired Disposition
Historical Properties Property Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rent $ 21,979 $ 2,998 C $(131) F $ 24,846
Joint venture income 238 - - 238
Other 223 - - 223
--------- --------- --------- ---------
Total revenue 22,440 2,998 (131) 25,307
Expenses:
Property operating costs 806 - - 806
General and administrative 1,554 - - 1,554
Interest 5,720 1,845 D (86) G 7,479
Depreciation and amortization 3,915 568 E (41) H 4,442
--------- --------- --------- ---------
Income before extraordinary item 10,445 585 (4) 11,026
Extraordinary gain from expropriation of land
by local government 98 - - 98
--------- --------- --------- ---------
Net income 10,543 585 (4) 11,124
Preferred dividend requirement (1,919) - - (1,919)
--------- --------- --------- ---------
Earnings available to common shares $ 8,624 $ 585 $ (4) $ 9,205
========= ========= ========= =========
Per common share:
Income available before extraordinary item,
net of preferred dividend requirement $0.52 $0.56
Extraordinary gain from expropriation of land
by local government 0.01 0.01
--------- ---------
Earnings available $0.53 $0.57
========= =========
Weighted average number of common
shares outstanding 16,191,472 16,191,472
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-3
<PAGE> 7
TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
---------------------------
Acquired Disposition
Historical Properties Property Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rent $ 75,252 $ 11,992 C $ (525)F $ 86,719
Joint venture income 455 - - 455
Other 1,117 - - 1,117
---------- ---------- ----------- ---------
Total revenue 76,824 11,992 (525) 88,291
Expenses:
Property operating costs 2,867 - - 2,867
General and administrative 5,196 - - 5,196
Interest 20,768 7,628 D (354)G 28,042
Depreciation 13,479 2,270 E (164)H 15,585
Amortization 2,879 - - 2,879
Provision for portfolio repositioning 6,800 - - 6,800
---------- ---------- ----------- ---------
Income before gain on sale and
extraordinary charge 24,835 2,094 (7) 26,922
Gain on sale of real estate 6,807 - - 6,807
---------- ---------- ----------- ---------
Income before extraordinary items 31,642 2,094 (7) 33,729
Extraordinary gain from
casualty loss 3,178 - - 3,178
Extraordinary charge from early
extinguishment of debt (2,191) - - (2,191)
---------- ---------- ----------- ---------
Net income $ 32,629 $ 2,094 $ (7) $ 34,716
========== ========== =========== =========
Preferred dividend requirement (3,646) - - (3,646)
Earnings available to common shares $ 28,983 $ 2,094 $ (7) $ 31,070
========== ========== =========== =========
Per common share:
Income available before extraordinary items,
net of preferred dividend requirement $ 2.02 $ 2.17
Extraordinary gain 0.23 0.23
Extraordinary charge (0.16) (0.16)
---------- ---------
Earnings available $ 2.09 $ 2.24
========== =========
Weighted average number of common
shares outstanding 13,864,116 13,864,116
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-4
<PAGE> 8
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation.
The pro forma financial statements of TriNet Corporate Realty Trust, Inc. (the
"Company"), which are unaudited, have been prepared based on the historical
financial statements of the Company. The accompanying unaudited pro forma
consolidated balance sheet as of March 31, 1997, has been prepared as if the
acquisitions between May 19, 1997 and June 30, 1997 of the Sunbelt Property, the
Frontier II Property, the Charleston Place Properties, the Bay State Gas
Property, and the Warner Crossing Properties, (collectively, the "Acquired
Properties"), and the sale of a property located in Malvern, Pennsylvania (the
"Disposition Property") on May 20, 1997, had occurred on March 31, 1997. The pro
forma consolidated statements of operations for the three months ended March 31,
1997 and for the year ended December 31, 1996 have been prepared as if the
acquisitions of the Acquired Properties and the sale of the Disposition Property
had occurred on January 1, 1996.
In management's opinion, all adjustments necessary to reflect the effects of
these transactions have been made. The pro forma financial statements should be
read in conjunction with the historical financial statements of the Company. The
pro forma financial statements are not necessarily indicative of what the
financial condition or results of operations of the Company would have been as
of and for the three months ended March 31, 1997 or for the year ended December
31, 1996 had the acquisitions of the Acquired Properties and the sale of the
Disposition Property actually occurred on the dates indicated, nor do they
purport to represent the financial condition or results of operations for future
periods.
2. Pro Forma Adjustments.
A. Reflects the purchase of the Acquired Properties that occurred
subsequent to March 31, 1997.
B. Reflects the sale of the Disposition Property.
C. Additional rental revenue is attributable to the Acquired
Properties.
D. Additional interest expense is calculated to reflect the draw amount
of approximately $108.4 million on the Company's Acquisition
Facility in connection with the acquisition of the Acquired
Properties, computed at the weighted average interest rate in effect
under the Acquisition Facility during the year ended December 31,
1996 or three months ended March 31, 1997.
E. Additional depreciation expense is calculated to reflect
depreciation attributable to the Acquired Properties. Depreciation
is computed using the straight-line method of cost recovery over 40
years for building and improvements.
F. Decreased rental revenue is attributable to the sale of the
Disposition Property.
F-5
<PAGE> 9
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
G. Decrease in interest expense is attributable to the use of the
proceeds from the sale of the Disposition Property to pay-down the
Acquisition Facility, computed at the weighted average interest rate
in effect under the Acquisition Facility during the year ended
December 31, 1996 or three months ended March 31, 1997.
H. Decreased depreciation is attributable to the sale of the
Disposition Property. Depreciation is computed using the
straight-line method of cost recovery over 40 years for building and
improvements.
F-6
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
TriNet Corporate Realty Trust, Inc.
We have audited the accompanying Historical Summary of Gross Income (the
"Historical Summary") of the Charleston Place Properties, Mountain View,
California (the "Properties") for the period October 30, 1996 through December
31, 1996. The Historical Summary is the responsibility of the Properties' owner.
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 Properties' gross income and expenses and may not be
comparable to results from proposed future operations of the Properties.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the gross income as described in Note A, of the Charleston
Place Properties, Mountain View, California, for the period October 30, 1996
through December 31, 1996, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
San Francisco, California
July 7, 1997
F-7
<PAGE> 11
CHARLESTON PLACE PROPERTIES
HISTORICAL SUMMARY OF GROSS INCOME
FOR THE PERIOD OCTOBER 30, 1996 THROUGH DECEMBER 31, 1996
<TABLE>
<S> <C>
Gross Income $ 915,660
=============
</TABLE>
The accompanying note is an integral
part of this historical summary
F-8
<PAGE> 12
CHARLESTON PLACE PROPERTIES
NOTE TO HISTORICAL SUMMARY OF GROSS INCOME
FOR THE PERIOD OCTOBER 30, 1996 THROUGH DECEMBER 31, 1996
A. Property and Basis of Accounting
The accompanying Historical Summary of Gross Income (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
the Charleston Place Properties (the "Properties"). The Properties consist
of three two-story office buildings comprising 187,380 square feet
located in Mountain View, California.
The Properties are 100% net leased to U.S. Robotics Access Corp., a
subsidiary of U.S. Robotics Corporation (which recently merged with 3Com
Corporation) and Sun Microsystems, Inc. The two leases expire in October
2006. U.S. Robotics Access Corp. has occupied two of the buildings since
October 30, 1996, and accordingly, the Historical Summary presents only
the period October 30, 1996 through December 31, 1996. The lease
agreement with Sun Microsystems, Inc. commenced November 1, 1996. The
lease agreements provide for both tenants to pay all expenses associated
with their respective properties.
Included in gross income is $88,908 resulting from the straight-line
adjustment for differences between straight-line rents and contractual
rent payments.
F-9
<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
TriNet Corporate Realty Trust, Inc.
We have audited the accompanying Historical Summary of Gross Income (the
"Historical Summary") of the Warner Crossing Properties, Tempe, Arizona (the
"Properties") for the period July 9, 1996 through December 31, 1996. The
Historical Summary is the responsibility of the Properties' owner. 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 Properties' gross income and expenses and may not be
comparable to results from proposed future operations of the Properties.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the gross income as described in Note A, of the Warner
Crossing Properties, Tempe, Arizona, for the period July 9, 1996 through
December 31, 1996, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
San Francisco, California
July 7, 1997
F-10
<PAGE> 14
WARNER CROSSING PROPERTIES
HISTORICAL SUMMARY OF GROSS INCOME
FOR THE PERIOD JULY 9, 1996 THROUGH DECEMBER 31, 1996
<TABLE>
<S> <C>
Gross Income $ 709,551
==========
</TABLE>
The accompanying note is an integral
part of this historical summary
F-11
<PAGE> 15
WARNER CROSSING PROPERTIES
NOTE TO HISTORICAL SUMMARY OF GROSS INCOME
FOR THE PERIOD JULY 9, 1996 THROUGH DECEMBER 31, 1996
A. Property and Basis of Accounting
The accompanying Historical Summary of Gross Income 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 the Warner Crossing Properties
(the "Properties"). The Properties comprise an office complex, consisting
of three single-story buildings and one two-story building, comprising
330,663 square feet, located in Tempe, Arizona.
The Properties are 100% net leased to the following three tenants:
AlliedSignal Inc., MaxServ, Inc., and Vital Processing Services, L.L.C.
The three leases expire in September 2001, May 2007, and May 2007,
respectively. AlliedSignal Inc. has occupied three of the buildings since
July 9, 1996, and accordingly, the Historical Summary presents only the
period July 9, 1996 through December 31, 1996. The lease agreements with
MaxServ, Inc. and Vital Processing Services, L.L.C. commenced in 1997. The
lease agreements provide for all tenants to pay all expenses associated
with their respective properties.
Included in gross income is $51,510 resulting from the straight-line
adjustment for differences between straight-line rents and contractual
rent payments.
F-12
<PAGE> 16
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 thereunto duly authorized.
TRINET CORPORATE REALTY TRUST, INC.
By: /s/A. William Stein
-------------------------------------------
A. William Stein
Executive Vice President and
Chief Financial Officer
(Authorized Officer of the Registrant
and Principal Financial Officer)
Dated: July 8, 1997
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of TriNet Corporate Realty Trust, Inc. on Form S-3 (File No. 333-29593), Form
S-3 (File No. 333-19137), Form S-3 (File No. 33-79746), Form S-8 (File No.
33-79748) and Form S-8 (File No. 333-02222) of our reports dated July 7, 1997
on our audits of the Historical Summary of Gross Income for the Charleston
Place Properties for the period October 30, 1996 to December 31, 1996, and
the Historical Summary of Gross Income for the Warner Crossing Properties for
the period July 9, 1996 to December 31, 1996, which reports are included in
this Current Report on Form 8-K.
COOPERS & LYBRAND L.L.P.
San Francisco, California
July 7, 1997
