<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
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 5, 2000
KEYSTONE PROPERTY TRUST
(Exact Name of Registrant as Specified in its Declaration of Trust)
<TABLE>
<CAPTION>
<S> <C> <C>
------------------------------------------- --------------------------------------- ------------------------------------------
Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
------------------------------------------------------------------------------------------------------------------------------
200 Four Falls Corporate Center, Suite 208
West Conshohocken, PA 19428
(Address of Principal Executive Offices)(Zip Code)
------------------------------------------------------------------------------------------------------------------------------
Registrant's telephone number, including area code:
(484) 530-1800
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
In a Current Report on Form 8-K dated September 27, 1999 and filed with
the Securities and Exchange Commission on October 12, 1999, Keystone Property
Trust (the "Company") reported the completion on September 27, 1999 of the first
phase of a three phase acquisition of entities owning 28 "big box" industrial
facilities in New Jersey (the "Reckson Morris Industrial Portfolio"). On May 5,
2000 the Company completed the final two phases of the Reckson Morris Industrial
Portfolio transaction and on May 19, 2000 the Company filed a Current Report on
Form 8-K to report such event. The purpose of this filing is to report Item 7
information regarding the second and third phases of the Reckson Morris
Industrial Portfolio. Defined terms herein are the same as indicated in the
Current Report on Form 8-K filed on October 12, 1999 unless otherwise noted.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The audited statements of revenue and certain operating expenses of the
Reckson Morris Industrial Portfolio-Phase II and III for the year ended
December 31, 1999 and for the three-month period ended March 31, 2000
(unaudited) are included on pages F-17 to F-21.
(b) PRO FORMA FINANCIAL INFORMATION
Unaudited pro forma condensed consolidating financial information which
reflects the Company's acquisition of interests in entities owning
the Reckson Morris Industrial Portfolio--Phase II and III as of and for
the three-month period ended March 31, 2000 and for the year ended
December 31, 1999 are included on pages F-1 to F-16.
(c) EXHIBITS
23.1 Consent of Independent Public Accountants
Page 2
<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, thereunto duly authorized.
KEYSTONE PROPERTY TRUST
Date: July 17, 2000 By /s/ Jeffrey E. Kelter
---------------------
Jeffrey E. Kelter
President and Chief Executive Officer
Date: July 17, 2000 By /s/ Timothy A. Peterson
-----------------------
Timothy A. Peterson
Executive Vice President and
Chief Financial Officer
Date: July 17, 2000 By /s/ Timothy E. Mckenna
----------------------
Timothy E. McKenna
Senior Vice President-Finance
and Corporate Controller
(Principal Accounting Officer)
Page 3
<PAGE>
<TABLE>
<CAPTION>
KEYSTONE PROPERTY TRUST
INDEX
<S> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
- Pro Forma Condensed Consolidating Balance Sheet as of March 31, 2000 .......................... F-4
- Pro Forma Condensed Consolidating Statement of Operations for the
three-month period ended March 31, 2000 ...................................................... F-5
- Pro Forma Condensed Consolidating Statement of Operations for the
year ended December 31, 1999 ................................................................. F-6
- Notes to Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information .......................................................... F-7
II. RECKSON MORRIS INDUSTRIAL PORTFOLIO--PHASE II AND III
- Report of Independent Public Accountants ...................................................... F-17
- Combined Statement of Revenue and Certain Expenses for the three-month period
ended March 31, 2000 (unaudited) and year ended December 31, 1999 ............................ F-18
- Notes to Combined Statement of Revenue and Certain Expenses ................................... F-19
</TABLE>
F-1
<PAGE>
KEYSTONE PROPERTY TRUST
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following sets forth the unaudited pro forma condensed
consolidating balance sheet at March 31, 2000 and the unaudited pro forma
condensed consolidating statements of operations for Keystone Property Trust
(the "Company") for the three months ended March 31, 2000 and the year ended
December 31, 1999.
The pro forma condensed consolidating financial information should be
read in conjunction with the historical financial statements of the Company and
those acquisitions deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
The unaudited pro forma consolidating financial information is
presented as if the following events occurred on March 31, 2000 for balance
sheet purposes and on January 1, 1999 for purposes of the statements of
operations:
- The Company acquired the properties described in Note 1 to
these pro forma financial statements.
- The sale of 243 St. Nicholas Street on January 18, 2000 for
approximately $930,000, the sale on May 2, 2000 of
18 Madison Road, 24 Madison Road, 26 Madison Road, and
535 Secaucus Road for approximately $8,100,000 and the sale
of Six Johanna on April 11, 2000 for approximately
$9,335,000.
- The Company acquired the second and third phases of the
Reckson Morris Industrial Portfolio, which consisted of six
entities owning an aggregate of six warehouse buildings
containing approximately 2.1 million square feet and
approximately six acres of ground which can accommodate an
additional 130,000 square feet of development. The total
consideration for these phases (excluding 6 Joanna Court,
which was acquired and simultaneously sold on April 11, 2000)
was approximately $90 million, including closing costs. In
accordance with the terms of the Contribution Agreement,
ownership interests in these entities were contributed to
Keystone Operating Partnership, L.P., the Company's operating
partnership (hereafter referred to as the "Operating
Partnership"), in exchange for the following:
- The issuance to Reckson Construction Group, Inc.,
Reckson Operating Partnership, L.P., Robert Morris,
Joseph D. Morris and certain of their related
entities of approximately $25.7 million of the
Company's 9.75% Series C Convertible Preferred Units.
- Approximately $62.4 million of cash proceeds. The
cash proceeds were financed with $59.0 million of
fixed rate debt, which has an interest rate of 8.12%
and matures in October 2005, and $4.6 million of net
proceeds from the sales of 18 Madison Road, 24
Madison Road, 26 Madison Road, and 535 Secaucus Road.
- The assumption of obligations of approximately $1.9
million to complete certain improvements and pay
certain leasing commissions related to the
properties.
F-2
<PAGE>
The acquisition transactions described in Note 1 to these pro forma
financial statements were accounted for in the pro forma financial statements
using the purchase method of accounting.
The statements contained in this filing may include forward-looking
statements within the meaning of the Federal Securities Law. Although the
Company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be achieved. As forward-looking statements, these
statements involve risks and uncertainties that could cause actual results to
differ materially from the expected results. These risks and uncertainties
include, but are not limited to, uncertainties affecting real estate businesses
generally, risks relating to acquisition activities and risks relating to
leasing and re-leasing activities. Additional information on factors which could
impact the Company and the forward-looking statements contained herein are
detailed in the Company's filings with the Securities and Exchange Commission.
F-3
<PAGE>
KEYSTONE PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET--AS OF MARCH 31, 2000
(UNAUDITED--IN THOUSANDS)
<TABLE>
<CAPTION>
The Company Pro Forma Pro Forma The Company
Historical Events Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments in real estate, net $ 865,897 $ 82,288(A) $ --- $ 948,185
Investment in management company 5,651 --- --- 5,651
Cash and cash equivalents 3,292 272(A) --- 3,564
Restricted cash 3,842 --- --- 3,842
Accounts and other receivables 6,454 --- --- 6,454
Other assets, net 20,349 315(A) --- 20,664
---------- ------------- ----------- -----------
Total assets $ 905,485 $ 82,875 $ --- $ 988,360
============ =============== =============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $ 548,572 $ 57,201(A) $ --- $ 605,773
Accrued expenses and other liabilities 19,111 --- --- 19,111
Minority interest 96,814 --- (8,093)(C) 88,721
Convertible Preferred Units 54,621 25,674(A) --- 80,295
Convertible Redeemable Preferred Stock --- 19,923(B) --- 19,923
Shareholders' equity:
Preferred Stock 3 --- --- 3
Common stock 9 --- --- 9
Warrants --- --- --- ---
Additional paid-in capital 184,740 (19,923)(B) 8,093(C) 172,910
Cumulative net income 22,565 --- --- 22,565
Cumulative dividends (20,950) --- --- (20,950)
----------- ------------- --------------- ------------
Total shareholders' equity 186,367 (19,923) 8,093 174,537
---------- ------------- --------------- -----------
Total liabilities and shareholders' equity $ 905,485 $ 82,875 --- $ 988,360
============ =============== =============== =============
</TABLE>
F-4
<PAGE>
KEYSTONE PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
(UNAUDITED--IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
2000 Property Acquisitions
The ---------------------------
The Company 2000 Company Historical Pro Forma
Historical Dispositions(a) As Adjusted Operations(b) Adjustments
---------- --------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Rents $ 25,075 $ (334) $ 24,741 $ 1,873 $ ---
Reimbursement revenue and other income 3,481 (49) 3,432 318 ---
---------- ----------- ---------- -------- -------
Total revenue 28,556 (383) 28,173 2,191 ---
OPERATING EXPENSES:
Property operating expenses 6,012 (144) 5,868 516 (78)(c)
General and administrative 1,073 --- 1,073 --- ---
Interest 10,332 --- 10,332 --- 978(c)
Depreciation 4,708 --- 4,708 --- 388(c)
---------- ----------- ----------- -------- ----------
Total operating expenses 22,125 (144) 21,981 516 1,288
INCOME (LOSS) BEFORE EQUITY IN LOSSES FROM
INVESTMENT IN MANAGEMENT COMPANY, GAINS ON SALES
OF ASSETS, DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST, AND INCOME
ALLOCATED PREFERRED SHARES 6,431 (239) 6,192 1,675 (1,288)
EQUITY IN INCOME (LOSSES) FROM INVESTMENT IN
MANAGEMENT COMPANY 249 --- 249 --- ---
GAINS ON SALE OF ASSETS 140 --- 140 --- (140)(d)
---------- ---------- ---------- -------- -----------
INCOME (LOSS) BEFORE DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 6,820 (239) 6,581 1,675 (1,428)
DISTRIBUTIONS TO PREFERRED UNITHOLDERS (1,317) --- (1,317) --- (626)(e)
----------- ---------- ----------- -------- -----------
INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 5,503 (239) 5,264 1,675 (2,054)
MINORITY INTEREST (1,628) --- (1,628) --- 254(f)
----------- ---------- ----------- -------- ----------
NET INCOME 3,875 (239) 3,636 1,675 (1,800)
NET INCOME ALLOCATED TO PREFERRED SHARES (1,930) --- (1,930) --- ---
----------- ---------- ----------- -------- -------
NET INCOME ALLOCATED TO COMMON SHARES $ 1,945 $ (239) $ 1,706 $ 1,675 $(1,800)
========= ========== ========= ======= =======
BASIC EARNINGS PER COMMON SHARE $ 0.21
=========
DILUTED EARNINGS PER COMMON SHARES $ 0.21
=========
WEIGHTED AVERAGE SHARES
OUTSTANDING--BASIC 9,067,959
=========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--DILUTED 16,682,329
==========
</TABLE>
<TABLE>
<CAPTION>
The Company
Pro Forma
-----------
<S> <C>
REVENUE:
Rents $ 26,614
Reimbursement revenue and other income 3,750
----------
Total revenue 30,364
OPERATING EXPENSES:
Property operating expenses 6,306
General and administrative 1,073
Interest 11,310
Depreciation 5,096
----------
Total operating expenses 23,785
INCOME (LOSS) BEFORE EQUITY IN LOSSES FROM
INVESTMENT IN MANAGEMENT COMPANY, GAINS ON SALES
OF ASSETS, DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST, AND INCOME
ALLOCATED PREFERRED SHARES 6,579
EQUITY IN INCOME (LOSSES) FROM INVESTMENT IN
MANAGEMENT COMPANY 249
GAINS ON SALE OF ASSETS ---
----------
INCOME (LOSS) BEFORE DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 6,828
DISTRIBUTIONS TO PREFERRED UNITHOLDERS (1,943)
-----------
INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 4,885
MINORITY INTEREST (1,374)
-----------
NET INCOME 3,511
NET INCOME ALLOCATED TO PREFERRED SHARES (1,930)
-----------
NET INCOME ALLOCATED TO COMMON SHARES $ 1,581
=========
BASIC EARNINGS PER COMMON SHARE $ 0.17
==========
DILUTED EARNINGS PER COMMON SHARE $ 0.17
=========
WEIGHTED AVERAGE SHARES
OUTSTANDING--BASIC 9,091,941
=========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--DILUTED 16,749,518
==========
</TABLE>
The accompanying notes and management's assumptions
are an integral part of this statement.
F-5
<PAGE>
KEYSTONE PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 1999
(UNAUDITED--IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1999 Events 2000 Events
-------------------------- --------------------------
The Historical
Company Historical Pro Forma Operations Pro Forma
Historical Operations Adjustments Subtotal (g) Adjustments
---------- ------------ ----------- -------- -- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Rents $ 75,769 $ 20,743(a) $ 285(c) $96,797 $ 4,613 ---
Reimbursement revenue and other income 8,757 2,971(a) --- 11,728 864 ---
-------- ------------ -------- ------- -------- -------
Total revenue 84,526 23,714 285 108,525 5,477 ---
OPERATING EXPENSES:
Property operating expenses 18,144 3,837(a) (336)(c) 21,645 1,104 (239)(h)
General and administrative 3,650 --- 200(d) 3,850 --- ---
Interest 30,307 --- 9,180(c) 39,487 --- 3,910(f)
Depreciation and amortization 16,359 --- 4,799(c) 21,158 --- 1,538(h)
-------- --------- ----------- ------- -------- ----------
Total operating expenses 68,460 3,837 13,843 86,140 1,104 5,209
INCOME (LOSS) BEFORE EQUITY IN LOSSES FROM
INVESTMENT IN MANAGEMENT COMPANY, GAINS ON
SALES OF ASSETS, DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST, AND INCOME
ALLOCATED PREFERRED SHARES 16,066 19,877 (13,558) 22,385 4,373 (5,209)
EQUITY IN INCOME LOSSES FROM INVESTMENT IN
MANAGEMENT COMPANY (62) --- --- (62) --- ---
GAINS ON SALES OF ASSETS 1,284 (1,284)(b) --- --- --- ---
-------- ------------- -------- ------- -------- -------
INCOME (LOSS) BEFORE DISTRIBUTIONS TO PREFERRED
UNITHOLDERS AND MINORITY INTEREST 17,288 18,593 (13,558) 23,323 4,373 (5,209)
DISTRIBUTIONS TO PREFERRED UNITHOLDERS (2,040) --- (3,151)(e) (5,191) --- (2,503)(i)
--------- --------- ------------ -------- -------- -----------
INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 15,248 18,593 (16,709) 17,132 4,373 (7,712)
MINORITY INTEREST (5,592) --- --- (5,592) --- 2,766(j)
--------- --------- -------- -------- -------- ----------
NET INCOME 9,656 18,593 (16,709) 11,540 4,373 (4,946)
NET INCOME ALLOCATED TO PREFERRED SHARES (3,328) --- (4,387)(f) (7,715) --- ---
--------- --------- ------------ -------- -------- -------
NET INCOME ALLOCATED TO COMMON SHARES $ 6,328 $ 18,593 $(21,096) $ 3,825 $ 4,373 $(4,946)
======== ========= ========= ======= ======== ========
BASIC EARNINGS PER COMMON SHARE $ 0.83
=========
DILUTED EARNINGS PER COMMON SHARE $ 0.80
=========
WEIGHTED AVERAGE SHARES
OUTSTANDING--BASIC 7,622,010
==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--DILUTED 14,810,817
==========
</TABLE>
<TABLE>
<CAPTION>
The
Company
Pro Forma
---------
<S> <C>
REVENUE:
Rents $ 101,410
Reimbursement revenue and other income 12,592
---------
Total revenue 114,002
OPERATING EXPENSES:
Property operating expenses 22,510
General and administrative 3,850
Interest 43,397
Depreciation and amortization 22,696
---------
Total operating expenses 92,453
INCOME (LOSS) BEFORE EQUITY IN LOSSES FROM
INVESTMENT IN MANAGE-MENT COMPANY, GAINS ON
SALES OF ASSETS, DISTRIBUTIONS TO PREFERRED
UNITHOLDERS, MINORITY INTEREST, AND INCOME
ALLOCATED PREFERRED SHARES 21,549
EQUITY IN INCOME LOSSES FROM INVESTMENT IN
MANAGEMENT COMPANY (62)
GAINS ON SALES OF ASSETS ---
---------
INCOME (LOSS) BEFORE DISTRIBUTIONS TO PREFERRED
UNITHOLDERS AND MINORITY INTEREST 21,487
DISTRIBUTIONS TO PREFERRED UNITHOLDERS (7,694)
----------
INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME
ALLOCATED TO PREFERRED SHARES 13,793
MINORITY INTEREST (2,826)
----------
NET INCOME 10,967
NET INCOME ALLOCATED TO PREFERRED SHARES (7,715)
----------
NET INCOME ALLOCATED TO COMMON SHARES $ 3,252
=========
BASIC EARNINGS PER COMMON SHARE $ 0.35
==========
DILUTED EARNINGS PER COMMON SHARE $ 0.35
==========
WEIGHTED AVERAGE SHARES
OUTSTANDING--BASIC 9,091,941
===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING--DILUTED 16,749,518
===========
</TABLE>
F-6
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
1. BASIS OF PRESENTATION
Keystone Property Trust (the "Company") is a self-administered and
self-managed equity real estate investment trust is organized in the state of
Maryland. As of July 13, 2000, the Company owned 99 industrial and 35 office
properties aggregating approximately 18.5 million and 2.3 million square feet,
respectively and an investment in a direct financing lease. The Company is the
sole general partner of Keystone Operating Partnership, L.P. (the "Operating
Partnership") and as of March 31, 2000, owned approximately 56% of the Operating
Partnership.
These pro forma financial statements should be read in conjunction with
the historical financial statements and notes thereto of the Company, the
BMG Property, the Polyfoam Properties, the Lemoyne Property, the Reckson Morris
Industrial Portfolio and the Reckson Morris Industrial Portfolio--Phase II
and III. In management's opinion, all adjustments necessary to reflect the
acquisitions of the BMG Property, the Polyfoam Properties, the Lemoyne Property,
the Reckson Morris Industrial Portfolio and the Reckson Morris Industrial
Portfolio-Phase II and III have been made. The operating results reflected
herein include the historical results and related pro forma adjustments to
reflect the period January 1, 1999, through the earlier of the respective
acquisition date or March 31, 2000 or December 31, 1999. Operating results from
those dates forward are included in the historical results of the Company.
2. ADJUSTMENTS TO PRO FORMA CONSOLIDATING BALANCE SHEET AT MARCH 31, 2000
(A) Reflects the Company's recent property acquisitions and dispositions as
follows (in 000's):
<TABLE>
<CAPTION>
Cost Consideration
----------------- ----------------------------------------------------------------------
Series C
Convertible
Acquisition Purchase Price Mortgage Debt Cash Other Assets Preferred Units
----------- -------------- ------------- ---- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Reckson Morris Industrial
Portfolio--Phase II and III $ 90,144 $ 60,197 $ (4,588) $ 315 $ 25,674
Dispositions
------------
18, 24, 26 Madison Road
and 535 Secaucus Road (7,856) (2,996) 4,860 --- ---
-------------- ------------- ------------ -------------- -----------------
Total $ 82,288 $ 57,201 $ 272 315 25,674
============= ============ ============ ============== =================
</TABLE>
F-7
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
(B) In accordance with the terms of the Contribution Agreement
(dated as of August 6, 1999), ROP, the successor to RMIT, is able to
redeem any aggregate amount of Convertible Preferred Stock or
Convertible Preferred Units which is outstanding and in excess of $40.0
million. As a result of the closing of Phase II and III of the RMIT
transaction, approximately $19.9 million of Convertible Preferred Stock
and Convertible Preferred Units issued in Phases I through III of the
RMIT transaction is redeemable. This adjustment reflects the
reclassification of $19.9 million of Convertible Preferred Stock as
Convertible Redeemable Preferred Stock.
(C) Adjustment to reflect the Company's 53.5% ownership of the Operating
Partnership after the consummation of the Reckson Morris Industrial
Portfolio--Phase II and III acquisitions.
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF
OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
(a) 2000 DISPOSITIONS
On January 18, 2000, the Company sold 243 St. Nicholas Avenue.
This 15,000 square foot office building was sold for
approximately $930,000 and resulted in a gain of $140,000.
On April 11, 2000, the Company simultaneously acquired and
disposed of 6 Joanna Court. This property was acquired for
approximately $8.6 million and was sold for approximately
$9.3 million which resulted in a gain of approximately $700,000.
On May 2, 2000, the Company sold four industrial buildings
(18 Madison Road, 24 Madison Road, 26 Madison Road, and
535 Secaucus Road) in New Jersey. These assets which totaled
243,095 square feet were sold for gross proceeds of $8,100,000
and resulted in a loss of approximately $170,000.
F-8
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
<TABLE>
<CAPTION>
(In 000's)
--------------------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
------------------------------------------------- ---------------------------------
Tenant
Minimum Reimbursements Property Operating
Rent and Other Income Total and Other Expenses Subtotal
---- ---------------- ----- ------------------ --------
<S> <C> <C> <C> <C> <C>
243 St. Nicholas $ 4 $ 1 $ 5 $ 2 $ 3
18 Madison Road 24 5 29 6 23
24 Madison Road 58 12 70 13 57
26 Madison Road 44 9 53 12 41
535 Secaucus Road 90 22 112 36 76
6 Joanna Court 114 --- 114 75 39
----------- ------------------ --------- ----------- ----------
TOTAL $ 334 $ 49 $ 383 $ 144 $ 239
=========== ================== ========= =========== ==========
</TABLE>
(b) 2000 EVENTS--HISTORICAL OPERATIONS:
Reflects the historical operations of the Reckson Morris
Industrial Portfolio--Phases II and III through the earlier of
the respective acquisition dates, or March 31, 2000. Operating
results from those dates forward are included in the
historical results of the Company.
<TABLE>
<CAPTION>
(In 000's)
--------------------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
------------------------------------------------- ---------------------------------
Tenant Property Operating
Minimum Reimbursements And Other
Acquisition Rent and Other Income Total Expenses Subtotal
----------- ---- ---------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Reckson Morris Industrial
Portfolio--Phases II and III $ 1,873 $ 318 $ 2,191 $ 516 $ 1,675
=========== =============== ============== =============== ==========
</TABLE>
(c) 2000 PRO FORMA ADJUSTMENTS:
Reflects the Company's pro forma adjustments relative to the
sale of 243 St. Nicholas Street, 18 Madison Road, 24 Madison Road,
26 Madison Road, 535 Secaucus Road and the acquisitions of the
Reckson Morris Industrial Portfolio--Phases II and III for
the three months ended March 31, 2000.
F-9
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
<TABLE>
<CAPTION>
(In 000's)
-----------------------------------------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
----------------------------------------- --------------------------------------------------------------
Tenant Property
Minimum Reimbursements Operating and Interest Depreciation and
Rent and Other Income Total Other Expenses Expense(i) Amortization(ii) Total
---- ---------------- ----- -------------- ------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
243 St. Nicholas $ --- $ --- $ --- $ --- $ $ (1) $ (1)
18 Madison Road (11) (6) (17)
24 Madison Road (26) (11) (37)
26 Madison Road (22) (9) (31)
535 Secaucus Road (20) (20)
Amortization of
deferred finance
costs 31 31
Reckson Morris
Industrial Portfolio--
Phases II and III (78)(iii) 1,006 435 1,363
--------- ----------- ------ --------------- ------- ---------- ---------
$ --- $ --- $ --- $ (78)(iii) $ 978 $ 388 $ 1,288
========= ============ ======== ================= ========= ============ =========
</TABLE>
Footnotes:
---------
(i) Pro forma interest expense is presented
assuming an effective rate of 8.0% on borrowings or
repayments under the Company's $150 million revolving
credit facility (the "Credit Facility"). Interest on
mortgage debt from the Reckson Morris Industrial
Portfolio-Phases II and III is shown net of
capitalized interest of $216,000 for properties
acquired which were under construction. Also included
in interest expense is the amortization of deferred
finance fees of $31,000 related to the financing of
the Reckson Morris Industrial Portfolio--Phases II
and III.
(ii) Pro forma depreciation expense is presented assuming
a useful life of 35 years. Depreciation expense is
not presented on properties not yet placed in service
as of March 31, 2000.
(iii) Adjustment to reduce management fees to the actual
management fee levels as a result of the Company's
acquisition.
(d) To reflect the pro forma adjustment deducting the $140,000
gain on sale for the 243 St. Nicholas property which was sold
on January 18, 2000, and is included in the historical
operating results of the Company.
F-10
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
(e) To reflect the preferred distributions on 1,026,958 Series C
Convertible Preferred Units issued as partial consideration in
the acquisition of the Reckson Morris Industrial
Portfolio--Phases II and III. These units have an aggregate
liquidation value of approximately $25.7 million and are
entitled to a preferred distribution at a rate equal to 9.75%,
and are convertible into Common Shares at a conversion price
of $16.00.
(f) To adjust the minority interest's share of income in the
Operating Partnership. The Company owns approximately 53.5% of
the Operating Partnership after the consummation of
acquisition of the Reckson Morris Industrial Portfolio--
Phases II and III. The adjustment to record the income effect
of the minority interest share for the three months ended
March 31, 2000 in the pro forma statement of operations was
computed as follows (in 000's):
<TABLE>
<S> <C>
Pro forma Revenue $ 30,364
Pro forma Operating Expenses (23,785)
Pro forma Preferred Dividends and Distributions (3,873)
Pro forma Equity in Income from Equity Investment 249
---------------
Pro forma Income before Minority Interest $ 2,955
===============
Minority Interest (46.5%) $ 1,374
Minority Interest at March 31, 2000 1,628
---------------
Adjustment Required $ 254
===============
</TABLE>
4. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
(a) 1999 EVENTS--HISTORICAL OPERATIONS:
Reflects the historical operations of the BMG Property,
Polyfoam Properties--Phases I and II, 10th Street-Office Works
Building, One Park Place, the Reckson Morris Industrial
Portfolio, the Lemoyne Property, the Hidden Lake Facility, and
the 21 Roadway Property for the year ended December 31, 1999.
Also reflected is the elimination of the historical operations
of the Urban Farms Shopping Center which was sold by the
Company in March 1999.
F-11
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
<TABLE>
<CAPTION>
(In 000's)
----------------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
------------------------------------------------- ----------------------
Tenant Property
Acquisition/ Reimbursements Operating And
Disposition Minimum Rent and Other Income Subtotal Other Expenses Total
----------- ------------ ---------------- -------- -------------- -----
<S> <C> <C> <C> <C> <C>
BMG Property $ 250 $ 3 $ 253 $ 3 $ 250
Polyfoam Properties--Phase I and II 590 4 594 4 590
10th Street-Office Works Building 104 --- 104 4 100
One Park Place 2,749 602 3,351 948 2,403
Reckson Morris Industrial Portfolio 13,292 2,103 15,395 2,591 12,804
Urban Farms Shopping Center (276) (51) (327) (152) (175)
Lemoyne Property 2,207 310 2,517 324 2,193
Hidden Lake Facility 505 --- 505 20 485
21 Roadway Property 1,322 --- 1,322 95 1,227
----------- --------------- ---------- ------------- --------
Total $ 20,743 $ 2,971 $ 23,714 $ 3,837 $ 19,877
=========== =============== ========== ============= ========
</TABLE>
(b) To reflect the pro forma adjustment deducting the $1,284,000
gain on sale for Urban Farms Shopping Center which was sold in
March 1999.
(c) 1999 PRO FORMA ADJUSTMENTS:
Reflects the Company's pro forma adjustments relative to
the acquisitions of the BMG Property, Polyfoam Properties--
Phases I and II, 10th Street-Office Works Building,
One Park Place, the Reckson Morris Industrial Portfolio,
the Lemoyne Property, the Hidden Lake Facility, and the
21 Roadway Property for the year ended December 31, 1999.
Also reflected is a pro forma adjustment to eliminate the
interest expense associated with the Urban Farms Shopping
Center which was sold by the Company in March 1999.
<TABLE>
<CAPTION>
(In 000's)
-----------------------------------------------------------------------------------------------------
REVENUE OPERATING
EXPENSES
----------------------------------------- -----------------------------------------------------------
Tenant Property
Acquisition/ Minimum Reimbursements Operating and Interest Depreciation and
Disposition Rent and Other Income Subtotal Other Expenses Expense(i) Amortization(ii) Total
----------- ---- ---------------- -------- -------------- ---------- ----------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BMG Property $ --- $ --- $ --- $ --- $ 90 $ 56 $ 146
Polyfoam Properties--
Phase I and II --- --- --- --- 217 234 451
10th Street-Office
Works Building --- --- --- --- 69 399 468
One Park Place --- --- --- --- 490 301 791
Reckson Morris
Industrial Portfolio --- --- --- (336)(iii) 5,480 2,768 7,912
Urban Farms (iv) --- --- --- --- (90)(iv) --- (90)
Lemoyne Property --- --- --- --- 1,752 576 2,328
Hidden Lake
Property --- --- --- --- 309 103 412
21 Roadway
Property 285(v) --- 285 --- 863 362 940
------------------------- -------- ----------- -------- ------------- ---------
Total $ 285 $ --- $ 285 $ (336) $ 9,180 $ 4,799 $ 13,358
========= ============= ======== ============ ======== ============= =========
</TABLE>
F-12
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
Footnotes:
(i) Pro forma interest expense is presented assuming an
effective rate of 8.0% on borrowings under the
Company's $150 million revolving credit facility (the
"Credit Facility"), and interest rates on assumed
mortgage debt ranging from 6.88% to 8.75%. Interest
on mortgage debt from the Reckson Morris Industrial
Portfolio is shown net of approximately $920,000 in
interest capitalized on land under development.
(ii) Pro forma depreciation expense is presented assuming
a useful life of 35 years.
(iii) Adjustment to reduce management fees to the actual
management fee levels as a result of the Company's
acquisition.
(iv) Pro forma interest savings from the sale of Urban
Farms Shopping Center on March 26, 1999.
Approximately $5.5 million of proceeds were utilized
to repay Credit Facility borrowings which this
property had secured.
(v) Adjustment to reflect additional rent associated with
a lease executed by the seller with the tenant prior
to the Company's acquisition of this property.
(d) To reflect additional general and administrative expense
associated with the Company's management of the acquired
properties.
(e) To reflect the preferred distributions on:
(i) the 1,434,136 Series C Convertible Preferred Units
issued as partial consideration in the acquisition of
the Reckson Morris Industrial Portfolio. These
Convertible Preferred Units have an aggregate
liquidation value of approximately $35.9 million and
are entitled to a preferred distribution at a rate
equal to 9.75%.
(ii) the 450,700 Series D Convertible Preferred Units
issued as partial consideration in the acquisition of
One Park Place. These Convertible Preferred Units
have an aggregate liquidation value of approximately
$11.3 million and are entitled to a preferred
dividend at a rate equal to 9%.
F-13
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
(f) To reflect the income allocated to:
(i) the 1,600,000 shares of Series B Convertible
Preferred Stock issued as partial consideration in
the acquisition of the Reckson Morris Industrial
Portfolio. These Convertible Preferred shares have a
liquidation value of $40,000,000, and are entitled to
a preferred dividend at a rate equal to 9.75%.
(ii) the 800,000 shares of Series C Convertible Preferred
Stock issued to the Investors. These Convertible
Preferred shares have a liquidation value of
$20,000,000, and entitled to a preferred dividend at
a rate equal to 9.75%.
(g) 2000 EVENTS--HISTORICAL OPERATIONS:
Reflects the historical operations of 243 St. Nicholas,
18 Madison Road, 24 Madison Road, 26 Madison Road,
535 Secaucus Road, and the Reckson Morris Industrial
Portfolio--Phases II and III.
On April 11, 2000, the Company simultaneously acquired and
disposed of 6 Joanna Court. This property was acquired for
approximately $8.6 million, and was sold for net proceeds of
approximately $9.3 million and resulted in a gain of
approximately $700,000.
<TABLE>
<CAPTION>
(In 000's)
-----------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
----------------------------------------------- --------------------------
Tenant Property
Acquisition/ Reimbursements Operating And
Disposition Minimum Rent and Other Income Subtotal Other Expenses Total
----------- ------------ ---------------- -------- -------------- -----
<S> <C> <C> <C> <C> <C>
243 St. Nicholas $ (78) $ (24) $ (102) $ (20) $ (82)
18 Madison Road (72) (20) (92) (24) (68)
24 Madison Road (226) (44) (270) (50) (220)
26 Madison Road (170) (40) (210) (52) (158)
535 Secaucus Road (314) (104) (418) (140) (278)
6 Joanna Court (228) --- (228) (115) (113)
Reckson Morris Industrial
Portfolio--Phases II and III 5,701 1,096 6,797 1,505 5,292
----------- --------------- ---------- ------------- --------
Total $ 4,613 $ 864 $ 5,477 $ 1,104 $ 4,373
=========== =============== ========== ============= ========
</TABLE>
(h) 2000 EVENTS--PRO FORMA ADJUSTMENTS:
Reflects the Company's pro forma adjustments relative to the
243 St. Nicholas, 18 Madison Road, 24 Madison Road,
26 Madison Road, 535 Secaucus Road, and the Reckson Morris
Industrial Portfolio--Phases II and III.
F-14
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
<TABLE>
<CAPTION>
(In 000's)
-----------------------------------------------------------------------------------------------------
REVENUE OPERATING EXPENSES
---------------------------------------- -----------------------------------------------------------
Tenant Property
Acquisition/ Minimum Reimbursements Operating And Interest Depreciation and
Disposition Rent and Other Income Subtotal Other Expenses Expense(i) Amortization(ii) Total
------------ ---- ---------------- -------- -------------- ----------- ----------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
243 St. Nicholas $ --- $ --- $ --- $ --- $ --- $ (19) $ (19)
18 Madison Road (46) (24) (70)
24 Madison Road (104) (46) (150)
26 Madison Road (90) (35) (125)
535 Secaucus Road --- (81) (81)
First Union Deferred
Finance Costs 126 --- 126
Reckson Morris
Industrial Portfolio
Phases II and III (239)(iii) 4,024 1,743 5,528
--------- ------------- -------- ----------------- ---------- ------------- ---------
Total $ --- $ --- $ --- $ (239) $ 3,910 $ 1,538 $ 5,209
========= ============= ======== ============ ========== ============= =========
</TABLE>
Footnotes:
---------
(i) Pro forma interest expense and savings is presented
assuming an effective rate of 8.0% on borrowings or
repayments under the Company's $150 million revolving
credit facility (the "Credit Facility"). Interest on
mortgage debt from the Reckson Morris Industrial
Portfolio--Phases II and III is shown net of
capitalized interest of $863,000 for properties
acquired which were under construction. Also included
in interest expense is the amortization of deferred
finance fee of $126,000 related to the financing of
the Reckson Morris Industrial Portfolio--Phases II
and III.
(ii) Pro forma depreciation expense is presented assuming
a useful life of 35 years. No depreciation expense is
presented on properties not yet placed in service.
(iii) Adjustment to reduce management fees to the actual
management fee levels as a result of the Company's
acquisition.
(i) To reflect preferred distributions on 1,026,958 units of
Series C Convertible Preferred Units issued as partial
consideration in the acquisition of the Reckson Morris
Industrial Portfolio--Phases II and III. These units have an
aggregate liquidation value of approximately $25.7 million and
are entitled to a preferred distribution at a rate equal to
9.75%, and are convertible into Common Shares at a conversion
price of $16.00.
(j) To adjust the minority interest's share of income in the
Operating Partnership. The Company owns approximately 53.5% of
the Operating Partnership after the consummation of the
Reckson Morris Industrial Portfolio transaction--Phases II
and III. The adjustment to record the income effect of the
minority interest share for the year ended December 31, 1999
in the pro forma statement of operations was computed as
follows:
F-15
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO MANAGEMENT'S ASSUMPTIONS TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATING INCOME STATEMENT
<TABLE>
<S> <C>
Pro forma Revenue $ 114,002
Pro forma Operating Expenses (92,453)
Pro forma Preferred Dividends and Distributions (15,409)
Pro forma Equity in Loss from Equity Investments (62)
-----------------
Pro forma Income before Minority Interest $ 6,078
=================
Minority Interest (46.5%) 2,826
Minority Interest at December 31, 1999 5,592
-----------------
Adjustment Required $ 2,766
=================
</TABLE>
F-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Keystone Property Trust:
We have audited the accompanying combined statement of revenue and
certain expenses of Reckson Morris Industrial Portfolio--Phase II and Phase III
(the "Portfolio") for the year ended December 31, 1999. This financial statement
is the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statement
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K/A of Keystone
Property Trust as described in Note 1 and is not intended to be a complete
presentation of the Portfolio's revenue and expenses.
In our opinion, the combined financial statement referred to above
presents fairly, in all material respects, the revenue and certain expenses of
Reckson Morris Industrial Portfolio--Phase II and III for the year ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
/s/ Arthur Andersen, LLP
Philadelphia, Pa.,
June 15, 2000
F-17
<PAGE>
RECKSON MORRIS INDUSTRIAL PORTFOLIO--PHASE II AND III
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
For the Three Months For the Year Ended
Ended March 31, 2000 December 31, 1999
---------------------- ------------------
(unaudited)
<S> <C> <C>
REVENUE:
Minimum rent (Note 2) $ 1,873,000 $ 5,701,000
Tenant reimbursements 318,000 1,096,000
------------------- ------------------
Total revenue 2,191,000 6,797,000
------------------- ------------------
CERTAIN EXPENSES:
Maintenance and other operating expenses 93,000 71,000
Management fees 86,000 259,000
Real estate taxes 332,000 1,155,000
Insurance 5,000 20,000
------------------- ------------------
Total certain expenses 516,000 1,505,000
------------------- ------------------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 1,675,000 $ 5,292,000
=================== ==================
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-18
<PAGE>
RECKSON MORRIS INDUSTRIAL PORTFOLIO--PHASE II AND III
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1999
1. BASIS OF PRESENTATION:
The statement of revenue and certain expenses reflects the operations
of Reckson Morris Industrial Portfolio--Phase II and III (the "Portfolio"). The
Phase I properties were acquired by Keystone Property Trust (the "Company") in
September 1999. Phase II and III properties were acquired in April (Six Joanna
Court) and May 2000. The Phase II and III properties and their respective owners
are identified in the following table:
PHASE II AND III PROPERTIES (AS OF DECEMBER 31, 1999):
<TABLE>
<CAPTION>
Aggregate
Net Rentable
Property Address Location Type Owner Sq. Ft.
---------------- -------- ---- ----- ------------
<S> <C> <C> <C> <C>
400 Cabot Drive Hamilton Township, NJ Operating Reckson/Matrix
Cabot Drive J.V. 585,510
Four Applegate Drive Washington, NJ Operating Reckson/Matrix
7A Venture 265,000
Five Henderson Road West Caldwell, NJ Operating Reckson Operating
Partnership, L.P. 210,530
Nixon Park Edison, NJ Operating Reckson Morris Operating,
Partnership, L.P. 851,907
Six Joanna Court East Brunswick, NJ Operating Reckson Morris Operating,
Partnership, L.P. 214,000
30 Stults Road South Brunswick, NJ Development Reckson Morris Operating,
Partnership, L.P. 64,285
--------------
2,191,232
===============
</TABLE>
The property in development at December 31, 1999 had not generated
revenue or incurred expenses during the year ended December 31, 1999 or the
period through March 31, 2000.
This combined statement of revenue and certain expenses is to be
included in the Company's Current Report on Form 8-K/A, as the above described
transaction has been deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
F-19
<PAGE>
The accounting records of the Portfolio are maintained on an accrual
basis. The accompanying financial statement excludes certain expenses such as
interest, depreciation and amortization, professional fees, and other costs not
directly related to the future operations of the Portfolio.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenue and expenses during the
reporting period. The ultimate results could differ from those estimates.
The combined statement of revenue and certain expenses for the three
months ended March 31, 2000 is unaudited; however, in the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary
for the fair presentation of the combined statement of revenue and certain
expenses for the interim period have been included. The results of the interim
periods are not necessarily indicative of the results for the full year.
2. OPERATING LEASES:
Minimum rent presented for the year ended December 31, 1999 includes
straight-line adjustments for rental revenue increases in accordance with
generally accepted accounting principles. The aggregate rental revenue increase
resulting from the straight-line adjustment for the year ended December 31, 1999
was $503,000 and for the three months ended March 31, 2000 was $153,000
(unaudited).
The following tenants account for greater than 10% of annual minimum
rent for the year ended December 31, 1999:
<TABLE>
<CAPTION>
Property Tenant Minimum Rent
--------------------------------- --------------------------------- -----------------------
<S> <C> <C>
400 Cabot Drive Nestle Food Company $ 2,683,000
Four Applegate Drive C&I Promotions, Inc. 1,365,000
Five Henderson Road Vestcom Mid-Atlantic, Inc. 834,000
</TABLE>
The Nestle Food Company lease expires December 31, 2000.
The Portfolio is leased to tenants under operating leases with
expiration dates extending to 2014. Future minimum rentals under non-cancelable
operating leases, excluding tenant reimbursements of operating expenses, as of
December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000 $ 8,060,000
2001 5,800,000
2002 5,800,000
2003 5,869,000
2004 5,995,000
2005 and thereafter 31,627,000
</TABLE>
3. RELATED PARTY TRANSACTIONS:
The Portfolio paid management fees of $259,000 and $86,000 (unaudited)
to Reckson Morris Management Inc., a related party, representing 5% of base
rental revenue for various properties as of December 31, 1999 and March 31,
2000, respectively.
F-20
<PAGE>
4. SUBSEQUENT EVENTS:
On April 11, 2000 the Company simultaneously purchased and sold Six
Joanna Court for a total purchase price of $8,600,000 and a sale price of
approximately $9,300,000. Revenue for this property included in the above
statements for December 31, 1999 and March 31, 2000 was $228,000 and $114,000
(unaudited), respectively. Expenses for this property included in the above
statements for December 31, 1999 and March 31, 2000 were $115,000 and $75,000
(unaudited) respectively.
On May 5, 2000 the Company purchased the remaining properties in the
Portfolio for a total purchase price of approximately $90 million consisting
of approximately $25.7 million consisting of convertible preferred units of
interest in the Company's operating partnership, cash and the assumption of
certain liabilities aggregating approximately $1.9 million.
F-21
