<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): December 31, 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)
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Item 5. Other Events
Property Acquisitions. From December 31, 1997 through January 20, 1998, TriNet
Corporate Realty Trust, Inc. (the "Company") acquired 10 properties (the
"Acquired Properties") for an aggregate purchase price of approximately $88.3
million, plus aggregate acquisition costs of approximately $0.8 million. As of
January 20, 1998, the Company's portfolio consisted of 119 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.
TriNet Property Partners Portfolio. On December 31, 1997, TriNet
Property Partners, L.P. ("TPP"), a newly formed partnership, in which a
wholly owned subsidiary of the Company is the sole general partner,
purchased a nine building office/R&D/industrial portfolio comprising
526,436 square feet located in metropolitan Boston, Massachusetts (the
"TriNet Property Partners Portfolio") from a group of private
partnerships (the "Private Partnerships") controlled by a Boston
development firm, Keller/Davis, L.L.C., for a purchase price of
approximately $44.1 million. TPP acquired fee title interests in each
property of the TriNet Property Partners Portfolio. Concurrent with the
acquisition of the TriNet Property Partners Portfolio, the Company
contributed $31.3 million to TPP and the limited partners exchanged
their equity in the Private Partnerships for $765,000 of TPP limited
partnership units. TPP also assumed $11.4 million of debt and $0.6
million of liabilities from the Private Partnerships in the acquisition
transaction. The properties in the TriNet Property Partners Portfolio
are 93 percent leased.
161 Inverness Drive. On January 20, 1998, TriNet Essential Facilities X,
Inc. ("TriNet X"), a wholly-owned subsidiary of the Company, purchased
an office building comprising 239,749 square feet located in Englewood,
Colorado, (the "161 Inverness Drive Property") from ICG Holdings, Inc.,
for a purchase price of approximately $44.2 million. TriNet X acquired a
fee title interest in the 161 Inverness Drive Property. The purchase
price for the 161 Inverness Drive Property was funded by a $41.5 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. The 161 Inverness Drive Property is
100 percent leased to ICG Holdings, Inc.
Resignation and Election of Director. Effective December 31, 1997, Mr. Jay H.
Shidler resigned from the Board of Directors of the Company due to increased
demands on his time. Mr. Shidler, a Director of the Company since 1993 and
formerly Co-Chairman of the Board, is currently Chairman of the Board of both
First Industrial Realty Trust, Inc. and Corporate Office Properties Trust, Inc.
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The Board of Directors has elected Mr. George R. Puskar as a Director of the
Company, effective January 1, 1998, to fill the vacancy caused by Mr. Shidler's
resignation. Mr. Puskar is Chairman of ERE Yarmouth, the U.S. real estate unit
of Lend Lease Corporation, an international financial services and real estate
company based in Sydney, Australia. Mr. Puskar was formerly Chairman and Chief
Executive Officer of Equitable Real Estate Investment Management, Inc. prior to
its acquisition by Lend Lease Corporation and its subsequent combination with
Yarmouth. Mr. Puskar has been elected as a Class III Director and his current
term will expire at the 1998 Annual Meeting of Stockholders of the Company.
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.
Exhibits
None.
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TRINET CORPORATE REALTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Financial Statements:
Unaudited pro forma consolidated balance sheet F-2
as of September 30, 1997
Unaudited pro forma consolidated statement of operations F-3
for the nine months ended September 30, 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
</TABLE>
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TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED - DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Adjustments
----------------------------
Acquired
Historical Properties Offering Pro Forma
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Real estate, at cost:
Land $ 177,165 $ 20,713 A $ -- $ 197,878
Depreciable property 848,249 68,432 A -- 916,681
----------- -------- ----------- -----------
1,025,414 89,145 -- 1,114,559
Less accumulated depreciation (48,473) -- -- (48,473)
----------- -------- ----------- -----------
976,941 89,145 -- 1,066,086
Investment in joint venture 6,981 -- 6,981
----------- -------- ----------- -----------
Total real estate 983,922 89,145 -- 1,073,067
Cash and cash equivalents 3,038 (2,964) A -- 74
Restricted cash and investments 4,995 10,000 B -- 14,995
Deferred rent receivable 19,009 -- -- 19,009
Interest rate protection agreements and loan costs, net 14,595 -- -- 14,595
Other assets, net 2,985 -- -- 2,985
----------- -------- ----------- -----------
$ 1,028,544 $ 96,181 $ -- $ 1,124,725
=========== ======== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Debt $ 402,475 $ 84,613 A $ (87,550) D $ 399,538
Dividends payable 13,131 -- -- 13,131
Other liabilities 33,735 10,803 C -- 44,538
----------- -------- ----------- -----------
Total liabilities 449,341 95,416 (87,550) 457,207
----------- -------- ----------- -----------
Commitments and Contingencies
Minority Interest -- 765 -- 765
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized:
Series A: issued and outstanding: 2,000,000 shares
at September 30, 1997
(aggregate liquidation preference $50,000) 20 -- -- 20
Series B: issued and outstanding: 1,300,000 shares
at September 30, 1997
(aggregate liquidation preference $32,500) 13 -- -- 13
Common stock, $.01 par value, 40,000,000 shares authorized:
issued and outstanding at September 30, 1997:
20,843,058 actual and 23,248,058 pro forma 208 -- 24 D 232
Paid-in-capital 613,981 -- 87,526 D 701,507
Accumulated deficit (35,019) -- -- (35,019)
----------- -------- ----------- -----------
Total stockholders' equity 579,203 -- 87,550 666,753
----------- -------- ----------- -----------
$ 1,028,544 $ 96,181 $ -- $ 1,124,725
=========== ======== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-2
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TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED - DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
----------------------------
Acquired
Historical Properties Offering Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rent $ 75,825 $ 8,123 E $ -- $ 83,948
Joint venture income 628 -- -- 628
Other 759 -- -- 759
------------ ------------ ------------ ------------
Total revenue 77,212 8,123 -- 85,335
Expenses:
Property operating costs 2,412 212 F -- 2,624
General and administrative 4,890 -- -- 4,890
Interest 18,619 4,249 G (4,337) J 18,531
Depreciation and amortization 13,980 1,282 H -- 15,262
------------ ------------ ------------ ------------
Income before minority interest, gain on sale
of real estate and extraordinary item 37,311 2,380 4,337 44,028
Minority Interest -- (37)I -- (37)
------------ ------------ ------------ ------------
Income before gain on sale
of real estate and extraordinary item 37,311 2,343 4,337 43,991
Gain of sale of real estate 985 -- -- 985
------------ ------------ ------------ ------------
Income before extraordinary item 38,296 2,343 4,337 44,976
Extraordinary gain from expropriation of land
by local government 98 -- -- 98
------------ ------------ ------------ ------------
Net income 38,394 2,343 4,337 45,074
Preferred dividend requirement (5,758) -- -- (5,758)
------------ ------------ ------------ ------------
Earnings available to common shares $ 32,636 $ 2,343 $ 4,337 $ 39,316
============ ============ ============ ============
Per common share:
Income available before extraordinary item,
net of preferred dividend requirement $ 1.71 $ 1.83
Extraordinary gain from expropriation of land
by local government 0.01 0.01
------------ ------------
Earnings available $ 1.72 $ 1.84
============ ============
Weighted average number of common
shares outstanding 18,960,202 21,365,202
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-3
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TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED - DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
-----------------------------
Acquired
Historical Properties Offering Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rent $ 75,252 $ 10,831 E $ -- $ 86,083
Joint venture income 455 -- -- 455
Other 1,117 -- -- 1,117
------------ ------------ ------------ ------------
Total revenue 76,824 10,831 -- 87,655
Expenses:
Property operating costs 2,867 283 F -- 3,150
General and administrative 5,196 -- -- 5,196
Interest 20,768 5,980 G (6,160)J 20,588
Depreciation 13,479 1,709 H -- 15,188
Amortization 2,879 -- -- 2,879
Provision for portfolio repositioning 6,800 -- -- 6,800
------------ ------------ ------------ ------------
Income before minority interest, gain on sale and
extraordinary charge 24,835 2,859 6,160 33,854
Minority Interest -- (50)I -- (50)
------------ ------------ ------------ ------------
Income before gain on sale and
extraordinary charge 24,835 2,809 6,160 33,804
Gain on sale of real estate 6,807 -- -- 6,807
------------ ------------ ------------ ------------
Income before extraordinary items 31,642 2,809 6,160 40,611
Extraordinary gain from
casualty loss 3,178 -- -- 3,178
Extraordinary charge from early
extinguishment of debt (2,191) -- -- (2,191)
------------ ------------ ------------ ------------
Net income $ 32,629 $ 2,809 $ 6,160 $ 41,598
Preferred dividend requirement (3,646) -- -- (3,646)
------------ ------------ ------------ ------------
Earnings available to common shares $ 28,983 $ 2,809 $ 6,160 $ 37,952
============ ============ ============ ============
Per common share:
Income available before extraordinary items,
net of preferred dividend requirement $ 2.02 $ 2.26
Extraordinary gain 0.23 0.20
Extraordinary charge (0.16) (0.13)
------------ ------------
Earnings available $ 2.09 $ 2.33
============ ============
Weighted average number of common
shares outstanding 13,864,116 16,269,116
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-4
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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. On January 8, 1998, the
Company completed a public offering of 2,405,000 shares of Common Stock (the
"Offering") which generated proceeds of approximately $87.7 million (before
issuance costs). The accompanying unaudited pro forma consolidated balance
sheet as of September 30, 1997, has been prepared as if the acquisitions
between December 31, 1997 and January 20, 1998 of the TriNet Property
Partners Portfolio and the 161 Inverness Drive Property (collectively, the
"Acquired Properties"), and the Offering had occurred on September 30, 1997.
The unaudited pro forma consolidated statements of operations for the nine
months ended September 30, 1997 and for the year ended December 31, 1996
have been prepared as if the Offering and the acquisitions of the Acquired
Properties 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 nine months ended September 30, 1997 or
for the year ended December 31, 1996 had the completion of the Offering and
the acquisitions of the Acquired Properties 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.
B. Reflects the $10.0 million security deposit received by the Company
from ICG Holdings, Inc. and held as restricted cash. Under the terms
of the lease agreement, the security deposit may be reduced beginning
in 2001.
C. Increase in other liabilities reflects the $10.0 million security
deposit received from ICG Holdings, Inc. as well as deferred rent from
the Acquired Properties and liabilities for future tenant improvements
on the TriNet Property Partners Portfolio properties.
D. Reflects the January 8, 1998 Offering of 2,405,000 shares of Common
Stock which generated net proceeds of approximately $87.6 million. The
proceeds from the Offering were used to pay down the outstanding
balance on the Acquisition Facility.
E. Additional rental revenue is attributable to the Acquired Properties.
F. Additional property operating costs are attributable to the Acquired
Properties.
F-5
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TRINET CORPORATE REALTY TRUST, INC.
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
G. Additional interest expense is calculated to reflect the draw amount
of approximately $73.2 million on the Company's Acquisition Facility
in connection with the acquisition of the Acquired Properties,
computed at a weighted average interest rate in effect under the
Acquisition Facility during the nine months ended September 30, 1997
or the year ended December 31, 1996. The increase in interest expense
also reflects the additional interest charges from $11.4 million of
mortgages assumed during the acquisition of the TriNet Property
Partners Portfolio, computed at fixed rates ranging from 7.5% to 8.8%.
H. 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.
I. Increase represents the minority interest attributable to the limited
partners of the TriNet Property Partners partnership.
J. Decrease in interest expense reflects the use of $87.6 million of
proceeds from the Offering to pay down the Acquisition Facility,
computed at a weighted average interest rate in effect under the
Acquisition Facility during the nine months ended September 30, 1997
or the year ended December 31, 1996.
F-6
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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: January 21, 1998
