<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): May 1, 1998
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)
One Embarcadero Center, 33rd Floor
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 1, 1998 through August 18, 1998, TriNet
Corporate Realty Trust, Inc and its subsidiaries (the "Company" or "TriNet")
purchased operating properties totalling $151.3 million and invested $27.3
million in a real estate joint venture (the "Acquired Properties") for an
aggregate cost of approximately $178.6 million. As of August 18, 1998, the
Company's portfolio consisted of 151 properties. The Acquired Properties are
described below.
3000 LONGWATER DRIVE AND 76 PANCELLA PARK DRIVE. On May 1, 1998, TriNet
Property Partners ("TPP"), a limited partnership of which TriNet is the
sole general partner, acquired two buildings in the Boston,
Massachusetts metropolitan area from a partnership controlled by
Keller/Davis Company, L.L.C., whose principals are limited partners of
TPP. The building located at 3000 Longwater Drive is a 35,500 square
foot single story office building. The building at 76 Pacella Park
Drive is a combination of office and R&D space consisting of 32,500
square feet on one level, plus a 15,000 square foot mezzanine level.
TriNet purchased the buildings for approximately $8.1 million and
assumed approximately $3.1 million in mortgages on the properties. The
buildings are 100% leased to two tenants.
THE VAZZA PORTFOLIO. On June 18, 1998, TriNet acquired three suburban
office buildings known as the Vazza portfolio in the Boston
metropolitan area from an unrelated real estate developer. The
buildings total approximately 298,000 square feet and are on 18.3 acres
of land. TriNet purchased the portfolio for approximately $45.3 million
and assumed approximately $13.8 million in mortgages on the properties.
The properties are 100% leased to three tenants.
1661 PAGEMILL ROAD. On June 26, 1998, TriNet acquired the property
located at 1661 Page Mill Road in Palo Alto, California from an
unrelated partnership. The building consists of one, two-story suburban
office building with 62,155 rentable square feet on 3.5 acres of land.
Trinet purchased the property for approximately $16.7 million. The
facility is 100% leased to one tenant.
NOKIA. On June 30, 1998, TriNet acquired a 293,890 square foot office
property known as the Nokia property for approximately $45.7 million
from an unrelated limited partnership. The property is located on 11
acres of land in Las Colinas, Texas (a sub-market of Dallas) and is
100% leased to one tenant.
WINDWARD FOREST. On July 22, 1998, TriNet acquired a property in
Alpharetta, Georgia known as Windward Forest from an unrelated company.
The property is a 63,783 square foot single story office building on
6.78 acres of land and is 100% leased to four tenants. TriNet purchased
the property for approximately $8.5 million.
<PAGE> 3
MITRE. On August 11, 1998, TriNet acquired a property in Reston,
Virginia along the Washington, D.C./Baltimore corridor known as the
Mitre building from an unrelated corporation. The property is a 177,415
square foot single story office building on eight acres of land and is
100% leased to one tenant. TriNet purchased the property for
approximately $27.0 million.
GSIC-MILPITAS PORTFOLIO. On August 18, 1998, a joint venture owned 50%
by TriNet and 50% by Prudential Real Estate Investors acquired 12
suburban office/R&D buildings known as the GSIC-Milpitas Portfolio. The
total cost of the portfolio, including Prudential Real Estate
Investors' interest, was approximately $136.5 million. The 12
buildings, which are 100% leased to eight tenants, comprise over
900,000 square feet on 61 acres situated in two business parks in the
Silicon Valley. The properties were purchased by the joint venture from
an unrelated corporation. TriNet made a $27.3 million equity investment
in the joint venture which it will account for under the equity method.
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 Vazza
Portfolio, 1661 Page Mill Road and the GSIC -Milipitas
Portfolio are included on pages F-7 to F-15.
Exhibits
23.1 Consent of Independent Accountants
<PAGE> 4
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 June 30, 1998
Unaudited pro forma consolidated statement of operations F-3
for the six months ended June 30, 1998
Unaudited pro forma consolidated statement of operations F-4
for the year ended December 31, 1997
Notes to the pro forma financial statements F-5
Historical Summary of Gross Income for the Vazza Portfolio:
Report of independent accountants F-7
Historical summary of gross income for the year ended December 31, 1997 F-8
Note to historical summary of gross income F-9
Historical Summary of Gross Income for 1661 Pagemill Road:
Report of independent accountants F-10
Historical summary of gross income for the year ended December 31, 1997 F-11
Note to historical summary of gross income F-12
Historical Summary of Gross Income for the GSIC-Milpitas Portfolio:
Report of independent accountants F-13
Historical summary of gross income for the year ended December 31, 1997 F-14
Note to historical summary of gross income F-15
</TABLE>
<PAGE> 5
TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
Acquired
Historical Properties Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Real estate 1,470,761 $ 62,791(a) $ 1,533,552
Less accumulated depreciation (65,597) -- (65,597)
----------- ----------- -----------
1,405,164 62,791 1,467,955
Cash and cash equivalents 5,707 (5,707)(b) --
Restricted cash and investments 16,475 -- 16,475
Deferred rent receivable 25,274 -- 25,274
Interest rate protection agreements and loan costs, net 13,093 -- 13,093
Other assets, net 16,554 -- 16,554
----------- ----------- -----------
1,482,267 57,084 1,539,351
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Debt 594,190 57,084(c) 651,274
Dividends payable 15,912 -- 15,912
Other liabilities 52,125 -- 52,125
----------- ----------- -----------
Total liabilities 662,227 57,084 719,311
----------- ----------- -----------
Commitments and Contingencies
Minority Interest 2,557 2,557
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized:
Series A: issued and outstanding: 2,000,000 shares
at June 30, 1998
(aggregate liquidation preference $50,000) 20 -- 20
Series B: issued and outstanding: 1,300,000 shares
at June 30, 1998
(aggregate liquidation preference $32,500) 13 -- 13
Series C: 4,000,000 shares issued and outstanding
at June 30, 1998
(aggregate liquidation preference $100,000) 40 -- 40
Common stock, $.01 par value, 40,000,000 shares authorized:
24,871,879 shares issued and outstanding at
at June 30, 1998: 249 -- 249
Paid-in-capital 855,850 -- 855,850
Accumulated deficit (38,689) -- (38,689)
----------- ----------- -----------
Total stockholders' equity 817,483 -- 817,483
----------- ----------- -----------
1,482,267 57,084 1,539,351
=========== =========== ===========
</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 SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
Acquired
Historical Properties Pro Forma
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rent 71,589 7,438(d) 79,027
Joint venture income 1,510 841(d) 2,351
Management fees 596 -- 596
Other 1,844 -- 1,844
------------- ------------- -------------
Total revenue 75,539 8,279 83,818
Expenses:
Property operating costs 2,931 154(d) 3,085
General and administrative 5,355 -- 5,355
Interest 17,569 6,197(e) 23,766
Depreciation and amortization 13,099 1,572(f) 14,671
------------- ------------- -------------
Income before minority interest, gain on sale and
extraordinary item 36,585 356 36,941
Minority Interest (46) (10)(h) (56)
------------- ------------- -------------
Income before gain on sale and
extraordinary charge 36,539 346 36,885
Gain on sale of real estate 1,115 -- 1,115
------------- ------------- -------------
Income before extraordinary items 37,654 346 38,000
Extraordinary loss on extinguishment of debt (1,272) -- (1,272)
------------- ------------- -------------
Net income 36,382 346 36,728
Preferred dividend requirement (7,839) -- (7,839)
------------- ------------- -------------
Earnings available to common shares 28,543 346 28,889
============= ============= =============
Per common share:
Income available before extraordinary items,
net of preferred dividend requirement 1.24 1.26
Extraordinary gain (0.05) (0.05)
------------- -------------
Earnings available 1.19 1.21
============= =============
Per common share, assuming dilution:
Income available before extraordinary items,
net of preferred dividend requirement 1.23 1.25
Extraordinary gain (0.05) (0.05)
------------- -------------
Earnings available 1.18 1.20
============= =============
Weighted average number of common shares outstanding:
Basic: 23,894 23,894
Diluted: 24,141 24,141
</TABLE>
The accompanying notes are an integral
part of these financial statements
F-3
<PAGE> 7
TRINET CORPORATE REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Adjustments
Acquired
Historical Properties Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Rent 106,862 15,587(g) 122,449
Joint venture income 812 1,683(g) 2,495
Management fees 707 -- 707
Other 911 -- 911
------------ ------------ ------------
Total revenue 109,292 17,270 126,562
Expenses:
Property operating costs 3,828 313(g) 4,141
General and administrative 6,589 -- 6,589
Interest 25,845 12,884(e) 38,729
Depreciation and amortization 19,781 3,312(f) 23,093
------------ ------------ ------------
Income before minority interest, gain on sale and
extraordinary item 53,249 761 54,010
Minority Interest -- (31)(h) (31)
------------ ------------ ------------
Income before gain on sale and
extraordinary charge 53,249 730 53,979
Gain on sale of real estate 985 -- 985
------------ ------------ ------------
Income before extraordinary items 54,234 730 54,964
Extraordinary gain on expropriation 98 -- 98
------------ ------------ ------------
Net income 54,332 730 55,062
Preferred dividend requirement (9,522) -- (9,522)
------------ ------------ ------------
Earnings available to common shares 44,810 730 45,540
============ ============ ============
Per common share:
Income available before extraordinary items,
net of preferred dividend requirement 2.30 2.33
Extraordinary gain 0.01 0.01
------------ ------------
Earnings available 2.31 2.34
============ ============
Per common share, assuming dilution:
Income available before extraordinary items,
net of preferred dividend requirement 2.27 2.31
Extraordinary gain 0.01 0.01
------------ ------------
Earnings available 2.28 2.32
============ ============
Weighted average number of common shares outstanding:
Basic: 19,435 19,435
Diluted: 19,626 19,626
</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 June 30, 1998, has been prepared
as if the acquisitions of the properties subsequent to June 30, 1998 had
occurred on June 30, 1998. The unaudited pro forma consolidated statements
of operations for the six months ended June 30, 1998 and for the year ended
December 31, 1997 have been prepared as if the acquisitions of the Acquired
Properties had occurred on January 1, 1997.
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 six months ended June 30, 1998 or
for the year ended December 31, 1997 had the completion of 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) Represents acquisitions of properties subsequent to June
30, 1998 as follows
<TABLE>
<CAPTION>
Acquisition Amount
Name Date (in thousands)
---- ----------- --------------
<S> <C> <C>
Windward Forest July 22, 1998 $ 8,450
Mitre Building August 11, 1998 27,000
GSIC-Milpitas Portfolio August 18, 1998 27,341
-------
$62,791
=======
</TABLE>
(b) Reflects the application of cash on hand to fund pro forma
acquisitions of the properties subsequent to June 30, 1998.
(c) Reflects draw on line of credit to finance acquisitions of the
properties acquired subsequent to June 30, 1998.
(d) Reflects additional revenues and certain expenses of properties
acquired by TriNet between May 1, 1998 and August 18,1998. The
acquisition adjustments reflect the period from January 1, 1998 to the
earlier of the respective dates of acquisition or June 30, 1998 as
applicable (results of operations after the date of acquisition are
included in TriNet's historical operating results).
F-5
<PAGE> 9
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
(e) Reflects additional estimated interest expense on assumed mortgage
notes payable as if assumed by TriNet on January 1, 1997 plus
additional interest expense on additional debt needed to finance the
Acquired Properties using TriNet's weighted average interest rate
during the period.
(f) Reflects depreciation expense for the acquired properties which is
based on Trinet's purchase cost assuming asset lives of 40 years.
Depreciation is computed using the straight-line method.
(g) Reflects additional revenues and certain expenses of properties
acquired by TriNet between May 1, 1998 and August 18,1998. The
acquisition adjustments reflect the period from January 1, 1997 to
December 31, 1997.
(h) Reflects additional minority interest in income attributable to the
limited partners of TPP.
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 Vazza Portfolio (the "Properties") for the year
ended December 31, 1997. The Historical Summary is the responsibility of the
owner of the Properties. 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 gross income and expenses of the Properties 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 Properties,
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
San Francisco, California
June 12, 1998
F-7
<PAGE> 11
VAZZA PORTFOLIO
HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
Gross income $3,915,600
==========
The accompanying note is an integral
part of this historical summary
F-8
<PAGE> 12
VAZZA PORTFOLIO
NOTE TO HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
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 Vazza
Portfolio Properties (the "Portfolio"). The Portfolio consists of three office
buildings comprising 297,868 square feet located in the Boston, Massachusetts
metropolitan area.
The Portfolio is 100% net leased to Mast Industries, Inc., Haemonetics
Corporation and Arbella Capital Corporation under leases that expire in October
2001, August 2002 and February 2006, respectively. The lease agreements provide
for the tenants to pay all operating expenses of the Portfolio.
Deducted from gross income is $294,986 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 1661 Page Mill Road (the "Property") for the year ended
December 31, 1997. The Historical Summary is the responsibility of the owner of
the Property. 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 gross income and expenses of the Property and may not be
comparable to results from proposed future operations of the Property.
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 Property, for
the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
San Francisco, California
June 12, 1998
F-10
<PAGE> 14
1661 PAGE MILL ROAD
HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
Gross income $1,394,622
==========
The accompanying note is an integral
part of this historical summary
F-11
<PAGE> 15
1661 PAGE MILL ROAD
NOTE TO HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
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 1661
Page Mill Road Property (the "Property"). The Property consists of one office
building comprising 62,155 square feet located in Palo Alto, California.
The Property is 100% net leased to Andersen Consulting. The lease expires in
September 2007. The lease agreement provides for the tenant to pay all operating
expenses of the Property.
Deducted from gross income is $28,865 resulting from the straight-line
adjustment for differences between straight-line rents and contractual rent
payments.
F-12
<PAGE> 16
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 GSIC-Milpitas Portfolio (the "Properties") for the
year ended December 31, 1997. The Historical Summary is the responsibility of
the owner of the Properties. 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 gross income and expenses of the Properties 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 Properties,
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
San Francisco, California
July 14, 1998
F-13
<PAGE> 17
GSIC - MILPITAS PORTFOLIO
HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
Gross income $ 5,989,161
===========
The accompanying note is an integral
part of this historical summary
F-14
<PAGE> 18
GSIC - MILPITAS PORTFOLIO
NOTE TO HISTORICAL SUMMARY OF GROSS INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
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 GSIC -
Milpitas Portfolio Properties (the "Properties"). The Properties consist of
twelve office/R&D buildings comprising 911,735 square feet located in Milpitas,
California.
As of December 31, 1997, the Properties were 100% net leased to eight tenants
under leases which expire between July 1998 and April 2005. The lease agreements
provide for the tenants to pay all operating expenses of the Properties.
Deducted from gross income is $229,265 resulting from the straight-line
adjustment for differences between straight-line rents and contractual rent
payments.
F-15
<PAGE> 19
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: September 4, 1998
<PAGE> 20
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
23.1 Consent of PricerwaterhouseCoopers LLP
<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. 333-42717), Form S-3
(File No. 333-29593), Form S-8 (File No. 333-02222), and Form S-8 (File No.
333-35149) of our reports dated June 12, 1998, on our audits of the Historical
Summary of Gross Income of the Vazza Portfolio for the year ended December 31,
1997 and the Historical Summary of Gross Income of 1661 Page Mill Road for the
year ended December 31, 1997, and of our report dated July 14, 1998, on our
audit of the Historical Summary of Gross Income of the GSIC-Milpitas Portfolio
for the year ended December 31, 1997, which reports are included in this Current
Report on Form 8-K.
PricewaterhouseCoopers LLP
San Francisco, California
September 4, 1998
