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: February 19, 1998
Date of earliest event reported: February 4, 1998
TriNet Corporate Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland I-11918 94-3175659
(State or other jurisdiction (Commission File (I.R.S. Employer
of organization) Number) Identification No.)
Four Embarcadero Center 94111
Suite 3150 (Zip Code)
San Francisco, CA
(Address of principal executive offices)
(415) 391-4300
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other events.
On February 4, 1998 TriNet Corporate Realty Trust, Inc. (the "Company")
announced its results of operations for the quarter and year ended December 31,
1997.
Attached hereto as Exhibit 99.1 is a copy of the press release announcing
the Company's results of operations.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
99.1 Press Release dated February 4, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
TRINET CORPORATE REALTY TRUST, INC.
By: /s/ Geoffrey Dugan
----------------------------------------
Name: Geoffrey Dugan
Title: Vice President Administration and
General Counsel
Date: February 20, 1998
[LETTERHEAD OF TRINET CORPORATE REALTY TRUST, INC.]
Landlord to Corporations Across America NEWS RELEASE
FOR: TRINET CORPORATE REALTY TRUST, INC.
http://www.tricorp.com FOR RELEASE: IMMEDIATELY
CONTACT: Elizabeth Drucker
Assistant Vice President
Investor Relations
(415) 391-4300
TRINET REPORTS RECORD OPERATING RESULTS FOR 1997
(SAN FRANCISCO) February 4, 1998 - TriNet Corporate Realty Trust, Inc.
(NYSE: TRI) announced today record results for the quarter and year ended
December 31, 1997.
1997 Highlights:
- Acquired 40 properties comprising more than 4.6 million square feet
for $462 million, at an average initial yield of 9.8 percent
- Strengthened presence in target markets of suburban Boston, Dallas,
San Francisco, Denver, Phoenix, Tampa/St. Petersburg, and Washington,
D.C.
- Acquired three build-to-suit projects in 1997 for approximately $30
million, with $97 million in build-to-suits currently closed or under
contract for 1998
- Announced strategic alliance with Trammell Crow Company for
build-to-suits
- Lowered borrowing rate on $200 million unsecured revolving credit
facility by 27.5 b.p. to LIBOR plus 92.5 b.p.
- Received corporate ratings upgrade by Fitch from "BBB" to "BBB+"
- Issued $230 million of common stock
<PAGE>
- Issued $100 million of 8.0 percent Series C cumulative preferred stock
- Issued $100 million of 7.70 percent, 20-year fixed rate unsecured debt
- Formed property management subsidiary and opened on-site offices in
Atlanta and Dallas
- Increased annual FFO by nine percent to $3.27 per share
Rising FFO and Revenues:
The company's Funds From Operations ("FFO") for the year ended December 31,
1997 rose to $63.6 million, or $3.27 per common share, from $41.6 million, or
$3.00 per common share, in 1996. The year-over-year growth in FFO per common
share represents an increase of nine percent and exceeds First Call consensus
analyst estimates. This FFO per share growth was achieved despite an increase in
total shares outstanding. TriNet's weighted average common shares outstanding
increased from 13.9 million at December 31, 1996, to 19.4 million shares at
December 31, 1997. For the year ended December 31, 1997 compared to the prior
year, total revenues increased 41.8 percent to $109.3 million, and earnings
available to common shares rose 54.6 percent to $44.8 million.
The company also announced that 1997 fourth quarter FFO rose to $18.0
million, or $0.86 per common share. This represented a 7.5 percent increase in
FFO per common share from the $0.80 earned in the fourth quarter of 1996. Fourth
quarter 1997 revenues were $31.7 million, and earnings available to common
shares were $12.2 million.
Record Acquisitions and Strategic Build-To-Suit Alliances:
TriNet's record level of property acquisitions was a key source of the
company's increased FFO and revenues. During 1997, TriNet acquired 40 properties
for approximately $462 million, exceeding its $350 million goal by 32 percent
and its 1996 total of $250 million by nearly 85 percent. The newly acquired
office and industrial properties, comprising more than 4.6 million square feet,
are located in improving real estate markets, such as Boston, Massachusetts;
Dallas, Texas; Denver, Colorado; and Northern and Southern California. The
majority of these properties are leased to well-known corporate tenants,
including AlliedSignal, Chrysler, Hewlett-Packard, IBM, Lotus, Northern Telecom,
Wells Fargo and Xerox.
During 1997, TriNet began closing acquisitions through its build-to-suit
program. Three of the 1997 acquisitions which are listed later in this release -
the EDS distribution center, the Frontier headquarters and one of the WellPoint
buildings - were from TriNet's build-to-suit transaction pipeline.
<PAGE>
In October, TriNet further enhanced its build-to-suit program by executing
a memorandum of understanding with Trammell Crow Company regarding a program for
single-tenant office, research and development, and industrial pre-sale
build-to-suit projects. The preliminary agreement is subject to certain
conditions and definitive documentation.
In another significant transaction completed in December, TriNet acquired
nine buildings of an office/R&D/industrial portfolio for approximately $44.5
million from a group of private partnerships controlled by a Boston development
firm, Keller/Davis Company, L.L.C. In a related transaction with the same
sellers, TriNet expects to acquire additional buildings and a land parcel in the
first half of 1998. In addition, TriNet entered into a market-based property
management agreement with Keller/Davis. The transaction was noteworthy since the
consideration for the properties consisted of cash, the assumption of debt and
the issuance of limited partnership interests, or "operating units". The
operating units were issued through a "down-REIT" structure which facilitates
the tax-free exchange of partnership equity interests owned by the sellers for
limited partnership units in a single, newly-formed partnership, in which TriNet
is the sole general partner. These units are ultimately convertible into TriNet
common shares after a certain restricted period and provide the sellers with the
benefits of a tax-deferred structure.
Low Cost Capital:
To fund its record acquisitions, TriNet raised $430 million in the public
capital markets during 1997. Approximately $330 million of equity was issued
through two secondary offerings of common stock totaling $230 million, and the
issuance of $100 million of 8.0 percent Series C cumulative preferred stock.
TriNet also issued $100 million of debt through an offering of investment grade
senior unsecured 20-year fixed rate notes. Just prior to TriNet's senior debt
offering, Fitch Investors Service upgraded the company's senior unsecured debt
rating to "BBB+" from "BBB". Fitch also upgraded TriNet's Series A and Series B
cumulative preferred stock to "BBB" from "BBB-".
In April, TriNet obtained a lower borrowing rate on its $200 million
unsecured revolving credit facility. The facility's new rate is 92.5 basis
points over LIBOR, lowered 27.5 basis points from 120 basis points over LIBOR.
The amended revolver agreement also includes a $100 million competitive bid
facility, which has allowed the banks in the revolver's syndicate to advance
funds, at their option, at rates below the contractual interest rate. During
1997, borrowings under the competitive bid facility have averaged approximately
59.6 basis points over LIBOR.
<PAGE>
Enhanced Property Management:
In July, TriNet formed a property management subsidiary, TriNet Property
Management, Inc. ("TPM"). The subsidiary was created to expand TriNet's
capability to provide property management services on a fee basis for its
corporate tenants. TPM should also provide opportunities for purchase/leaseback
and build-to-suit transactions by enabling TriNet to offer more services to
existing and prospective corporate tenants. Concurrent with its formation, TPM
opened its first on-site office in suburban Atlanta, and then in September,
opened a second on-site office in suburban Dallas.
Asset Sales and New Leases:
In May, the company sold a property in Malvern, Pennsylvania for $5.25
million. The 148,595 square foot office/R&D property was formerly leased to
Unisys Corporation. TriNet realized a gain of approximately $1.0 million on the
sale and used the proceeds to fund second quarter acquisitions.
In December, SGSM Acquisition Company, L.L.C. ("SGSM"), an entity formed by
Kohlberg & Co., L.L.C., signed a new 20-year lease valued in excess of $20
million on one of TriNet's properties in Harvey, Louisiana. The property is one
of four Louisiana retail buildings originally leased to Schwegmann Giant Super
Markets, and the second of TriNet's Schwegmann properties on which SGSM has
signed a direct lease. The other two retail properties are subleased by SGSM
until February 1998 and continue to be leased by Schwegmann through June 2015.
The two properties leased to Schwegmann aggregate 177,580 square feet and
currently represent 1.3 percent of TriNet's total annualized rental revenues.
Forward-Looking Information:
This press release contains certain forward-looking statements within the
meaning of the federal securities laws. A number of factors could cause TriNet's
actual results, performance or achievements to differ materially from those
anticipated, including changes in the general economic climate, the supply of
and demand for office, R&D and industrial properties in TriNet's markets,
increased construction costs, construction delays, the availability of
financing, potential environmental liabilities and other factors affecting the
condition of property to be acquired, the failure of parties to satisfy
conditions described in preliminary agreements between TriNet and other parties,
the failure of parties to execute definitive documentation confirming the terms
of preliminary agreements, and other risks described from time to time in
TriNet's reports and documents filed with the Securities and Exchange
Commission.
<PAGE>
Company Profile:
TriNet Corporate Realty Trust, Inc. is a real estate investment trust which
acquires, owns and manages primarily office and industrial properties leased to
major corporations nationwide. At December 31, 1997 TriNet's total market
capitalization was approximately $1.4 billion, and its portfolio of 118
properties comprised approximately 16.7 million square feet in 25 states.
Currently, TriNet's total market capitalization is approximately $1.5 billion,
and its portfolio of 122 properties comprises more than 17 million square feet
in 25 states. Additional information on TriNet Corporate Realty Trust, Inc. is
available on the company's Web site at http://www.tricorp.com.
<PAGE>
<TABLE>
<CAPTION>
Summary of TriNet's 1997 Acquisitions
Invest-
Property # of ment (in
Location Type Props. Sq. Ft. Major Tenants millions*)
- -------- ---- ------ ------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Dallas, TX Office 1 222,267 IBM Corporation $ 9.9
Atlanta, GA Office 1 444,362 IBM Corporation 60.0
Dallas, TX Office/R&D 1 121,068 Northern Telecom Inc. 9.6
Anaheim, CA Office/R&D 3 309,144 L.A. Cellular Telephone Co. 29.0
Experian, Inc.
Programmed Composites Inc.
Boston, MA Office/R&D 3 442,000 Lotus Development Corp. 40.0
Central National-Gottesman
Baltimore, MD Whse./Dist. Ctr. 1 222,636 Sunbelt Beverage Corp. 9.7
Denver, CO Office 1 62,100 Frontier Corporation 7.9
Denver, CO Land -- -- Frontier Corporation 0.3
Mountain View, CA Office 3 187,380 3Com Corporation 52.3
Sun Microsystems, Inc.
Boston, MA Office 1 88,000 Bay State Gas Company 10.5
Tempe, AZ Office 5 381,712 AlliedSignal Inc. 38.5
Wells Fargo, N.A.
MaxServ, Inc.
Vital Processing Services
St. Petersburg, FL Industrial 2 179,000 Jabil Circuit, Inc. 7.4
MC Graphics, Inc.
San Jose, CA Office/R&D 1 286,330 Xerox Corporation 31.0
Western Digital Corporation
Dallas, TX Whse./Dist. Ctr. 1 261,700 Electronic Data Systems Corp. 11.3
Lanham, MD Office 1 120,000 Computer Sciences Corp. 12.8
Milpitas, CA Office/R&D 1 102,240 Hitachi PC Corporation 16.9
Dallas, TX Office/R&D 1 61,750 ADS Alliance Data Systems 6.5
Dallas, TX Office 1 300,820 Hewlett-Packard Company 32.6
Boston, MA Office 1 77,048 MultiLink, Inc. 9.2
Boston, MA Office/R&D 9 526,436 Chrysler Corporation 44.5
Blue Cross Blue Shield of MA
Serono Laboratories
Pezrow New England
Thousand Oaks, CA Office 2 217,613 WellPoint Health Networks Inc. 21.9
- ----------------- ------ - ------- ------------------------------ ----
TOTALS: 40 4,613,606 $461.8
== ========= ======
* rounded to one decimal place.
</TABLE>
<PAGE>
TRINET CORPORATE REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Rent...................................... $106,862 $75,252 $31,037 $20,210
Joint venture income...................... 812 455 184 217
Management fees........................... 707 244 279 100
Other..................................... 911 1,117 152 592
-------- ------- ------- -------
Total revenues.................... 109,292 77,068 31,652 21,119
------- ------ ------ ------
EXPENSES:
Property operating costs.................. 3,828 2,955 988 1,032
General and administrative................ 6,589 5,352 1,699 1,283
Interest.................................. 25,845 23,623 7,226 5,862
Depreciation and amortization............. 19,781 13,503 5,801 3,642
Provision for portfolio repositioning..... -- 6,800 -- 6,800
-------- ------ ------ ------
Total expenses.................... 56,043 52,233 15,714 18,619
-------- ------ ------ ------
Income before gain on sale of real
estate and extraordinary items............ 53,249 24,835 15,938 2,500
Gain on sale of real estate................. 985 6,807 -- 6,147
-------- ------ ------ ------
Income before extraordinary items........... 54,234 31,642 15,938 8,647
Extraordinary gain on expropriation......... 98 -- -- --
Extraordinary gain from casualty loss....... - 3,178 -- 3,178
Extraordinary charge from early
extinguishment of debt.................... -- (2,191) -- (1,026)
-------- -------- -------- --------
--
Net income.................................. 54,332 32,629 15,938 10,799
Preferred dividend requirement.............. (9,522) (3,646) (3,764) (1,920)
-------- -------- -------- --------
Earnings available to common shares......... $ 44,810 $ 28,983 $ 12,174 $ 8,879
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Average common shares outstanding
Basic..................................... 19,435,398 13,864,116 20,845,490 13,913,692
Diluted................................... 19,625,788 13,955,779 21,092,044 14,068,983
Basic earnings available per common share
before extraordinary items, net of
preferred dividend requirement............ $ 2.30 $ 2.02 $ 2.02 $ 0.48
Extraordinary items....................... 0.01 0.07 0.07 15
---------- ---------- ---------- ---------
Basic earnings available per share........ $ 2.31 $ 2.09 $ 2.09 $ 0.63
========== ========== ========== =========
Diluted earnings available per common
share before extraordinary items, net of
preferred dividend requirement............ $ 2.27 $ 2.01 $ 0.58 $ 0.48
Extraordinary items....................... 0.01 0.07 -- 0.15
---------- ---------- --------- ---------
Diluted earnings available per share...... $ 2.28 $ 2.08 $ 0.58 $ 0.63
========== ========== ========= =========
</TABLE>
<PAGE>
TRINET CORPORATE REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
FUNDS FROM OPERATIONS:
Income before gain on sale of real estate
and extraordinary items........................ $ 53,249 $24,835 $ 15,938 $ 2,500
Real estate depreciation....................... 19,347 13,293 5,679 3,579
Joint venture income........................... (812) (455) (184) (217)
Joint venture funds from operations............ 1,312 724 309 349
Provision for portfolio repositioning.......... -- 6,800 -- 6,800
Preferred dividend requirement................. (9,522) (3,646) (3,764) (1,920)
-------- -------- -------- --------
Total funds from operations.................... $ 63,574 $ 41,551 $ 17,978 $ 11,091
======== ======== ======== ========
Funds from operations per common share.........
Basic....................................... $ 3.27 $ 3.00 $ 0.86 $ 0.80
Diluted..................................... $ 3.24 $ 2.98 $ 0.85 $ 0.79
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
OTHER DATA:
Dividends declared per common share $ 2.53 $ 2.49
Total dividends declared on common shares............... 52,024 34,577
Dividends per Series A preferred share.................. 2.34 1.15
Total dividends on Series A preferred shares............ 4,687 2,304
Dividends per Series B preferred share.................. 2.30 0.79
Total dividends on Series B preferred shares............ 2,990 1,022
Dividends per Series C preferred share.................. 0.38 --
Total dividends on Series C preferred shares............ 1,511 --
Total straight-line rent adjustments.................... 6,529 4,824
Amortization of financing costs......................... 2,513 2,855
<PAGE>
BALANCE SHEET DATA: December 31, 1997 December 31, 1996
----------------- -----------------
Real estate (before accumulated
depreciation) and investment in
joint venture..................................
Deferred rent receivable......................... $1,164,956 $704,329
Total assets..................................... 20,797 14,268
Mortgage loans................................... 1,155,904 708,238
Notes payable, unsecured......................... 66,446 55,013
Total liabilities................................ 367,676 251,918
Minority interest................................ 479,916 342,190
Stockholders' equity............................. 765 --
675,223 366,048
PROPERTY DATA:
Total properties............................... 118 79
Total gross leasable area in sq. ft.
(in thousands)........................................ 16,760 12,295
</TABLE>
