<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended MARCH 31, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from _____________to________________
Commission file number 1-12514
--------------
KEYSTONE PROPERTY TRUST
-------------------------------------------------------------------
(Exact name of registrant as specified in its declaration of trust)
MARYLAND 84-1246585
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Four Falls Corporate Center, Suite 208, West Conshohocken, PA 19428
-----------------------------------------------------------------------
(Address of principal executive offices)
(484) 530-1800
-------------------------------
(Registrant's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
A total of 9,283,935 Common Shares of the Registrant's common equity were
outstanding as of May 12, 2000.
<PAGE>
KEYSTONE PROPERTY TRUST
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000
(unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
PART II. OTHER INFORMATION
Items 1 through 6 20
SIGNATURES 21
</TABLE>
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
KEYSTONE PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
<TABLE>
<CAPTION>
AS OF
---------------------------------
ASSETS MARCH 31, 2000 DECEMBER 31, 1999
------ -------------- -----------------
(UNAUDITED)
<S> <C> <C>
INVESTMENT IN REAL ESTATE:
Land and land improvements ....................................... $ 112,863 $ 106,279
Buildings and improvements ....................................... 598,223 574,466
Assets held for sale ............................................. 158,507 160,361
Development and construction-in-progress ......................... 21,723 17,770
Investment in direct financing lease ............................. 1,399 1,460
----------- -----------
892,715 860,336
Less - Accumulated depreciation .................................. (20,981) (16,559)
Accumulated depreciation - assets held for sale ............. (5,837) (5,837)
----------- -----------
Total accumulated depreciation .................. (26,818) (22,396)
----------- -----------
Total investment in real estate, net ............ 865,897 837,940
----------- -----------
CASH AND CASH EQUIVALENTS ............................................. 3,292 4,144
RESTRICTED CASH AND CASH ESCROWS ...................................... 3,842 3,470
ACCOUNTS RECEIVABLE, including straight-line rent receivable of $3,858
and $3,029 in 2000 and 1999, respectively ........................... 6,454 5,966
DEFERRED FINANCING COSTS, net of accumulated amortization of $2,488 and
$2,078 in 2000 and 1999, respectively ............................... 6,379 6,522
DEFERRED LEASING COSTS, net of accumulated amortization of $1,055 and
$776 in 2000 and 1999, respectively ................................. 4,328 3,672
INVESTMENT IN KEYSTONE REALTY SERVICES, INC., at equity ............... 5,651 4,423
OTHER ASSETS .......................................................... 9,642 8,939
----------- -----------
Total assets .................................... $ 905,485 $ 875,076
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable and revolving credit facility, including
unamortized premium on assumed indebtedness of $3,521 and
$3,691 in 2000 and 1999, respectively ........................ $ 548,572 $ 522,112
Accounts payable ................................................. 2,614 2,551
Dividends and distributions payable .............................. 2,027 1,999
Accrued interest payable ......................................... 1,596 2,698
Accrued expenses and other liabilities ........................... 9,536 11,347
Deferred rent revenue ............................................ 3,338 2,708
----------- -----------
Total liabilities ............................................ 567,683 543,415
----------- -----------
MINORITY INTEREST, 7,652,577 and 7,326,853 units outstanding in 2000
and 1999, respectively .............................................. 96,814 91,310
CONVERTIBLE PREFERRED UNITS ........................................... 54,621 54,621
COMMITMENTS AND CONTINGENCIES ......................................... -- --
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock, Series A; $.001 par value; 800,000
shares authorized, issued and outstanding, liquidation
preference of $20,000 .............................................. 1 1
Convertible Preferred Stock, Series B; $.001 par value; 1,600,000
shares authorized, issued and outstanding; liquidation preference
of $40,000 ......................................................... 1 1
Convertible Preferred Stock, Series C; $.001 par value; 800,000
shares authorized, issued and outstanding; liquidation preference
of $20,000 ......................................................... 1 1
Common Shares, $.001 par value; 65,000,000 authorized; 9,091,941 and
8,906,943 shares issued and outstanding in 2000 and 1999,
respectively ....................................................... 9 9
Warrants ......................................................... -- 125
Additional paid-in capital ....................................... 186,441 185,079
Loans to executive officers to purchase Common Shares ............ (1,489) (1,536)
Deferred compensation ............................................ (212) (282)
Cumulative net income ............................................ 22,565 20,620
Cumulative distributions ......................................... (20,950) (18,288)
----------- -----------
Total shareholders' equity ................................... 186,367 185,730
----------- -----------
Total liabilities and shareholders' equity ................... $ 905,485 $ 875,076
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
<PAGE>
KEYSTONE PROPERTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
2000 1999
---------------- ----------
<S> <C> <C>
REVENUE:
Rents ...................................................................... $ 25,075 $ 16,302
Reimbursement revenue and other income ..................................... 3,481 1,731
------------ ------------
Total revenue .......................................................... 28,556 18,033
------------ ------------
OPERATING EXPENSES:
Property operating expenses ................................................ 5,012 3,475
Management fees paid to affiliate .......................................... 1,000 527
General and administrative ................................................. 1,073 613
Depreciation and amortization .............................................. 4,708 3,292
Interest expense ........................................................... 10,332 6,447
------------ ------------
Total operating expenses ............................................... 22,125 14,354
------------ ------------
Income (loss) before equity in income (losses) from equity method investments,
gains on sales of assets, distributions to preferred unitholders, minority
interest of unitholders in Operating Partnership, and net income allocated
to preferred shareholders ................................................... 6,431 3,679
Equity in income (losses) from equity method investments ....................... 249 (486)
Gains on sales of assets ....................................................... 140 1,284
------------ ------------
Income before distributions to preferred unitholders, minority interest of
unitholders in Operating Partnership, and net income allocated to preferred
shareholders ................................................................ 6,820 4,477
Distributions to preferred unitholders ......................................... (1,317) (169)
------------ ------------
Income before minority interest of unitholders in Operating Partnership, and
net income allocated to preferred shareholders .............................. 5,503 4,308
Minority interest of unitholders in Operating Partnership ...................... (1,628) (1,813)
------------ ------------
NET INCOME BEFORE NET INCOME ALLOCATED TO PREFERRED SHAREHOLDERS ............... 3,875 2,495
NET INCOME ALLOCATED TO PREFERRED SHAREHOLDERS ................................. (1,930) (450)
------------ ------------
NET INCOME ALLOCATED TO COMMON SHAREHOLDERS .................................... $ 1,945 $ 2,045
============ ============
BASIC EARNINGS PER COMMON SHARE ................................................ $ .21 $ .28
============ ============
WEIGHTED AVERAGE COMMON SHARES - BASIC ......................................... 9,067,959 7,392,644
============ ============
DILUTED EARNINGS PER COMMON SHARE .............................................. $ .21 $ .27
============ ============
WEIGHTED AVERAGE COMMON SHARES - DILUTED ....................................... 16,682,329 14,507,257
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
-4-
<PAGE>
KEYSTONE PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income allocated to common shareholders ...................................................... $ 1,945 $ 2,045
Adjustments to reconcile net income allocated to common shareholders to net cash
provided by operating activities:
Depreciation and amortization ................................................................ 5,118 3,629
Amortization of debt premiums ................................................................ (170) (212)
Amortization of deferred compensation costs and loan forgiveness
on executive stock loans.................................................................... 117 68
Gain on sales of assets ...................................................................... (140) (1,284)
Increase in straight-line rents .............................................................. (829) (320)
Decrease in investment in direct financing lease ............................................. 61 62
Equity in losses (income) from equity method investments ..................................... (249) 486
Income allocated to preferred shareholders and preferred unitholders ......................... 3,247 619
Minority interest ............................................................................ 1,628 1,813
Cash provided by (used in)
Restricted cash ............................................................................ (372) (718)
Accounts receivable ........................................................................ 341 (654)
Other assets ............................................................................... (703) 905
Accrued interest ........................................................................... (1,102) 469
Accounts payable, accrued expenses and other liabilities .................................. (1,748) (674)
Deferred rent revenue ...................................................................... 630 372
-------- --------
Net cash provided by operating activities ................................................ $ 7,774 $ 6,606
-------- --------
INVESTING ACTIVITIES:
Properties acquired, net of cash acquired ........................................................ $ (3,252) $(11,711)
Advances to Keystone Realty Services, Inc. ....................................................... (979) (387)
Capital expenditures ............................................................................. (671) (516)
Development and construction in progress expenditures ............................................ (3,969) --
Payment of leasing commissions ................................................................... (993) (357)
Proceeds from sales of assets, net ............................................................... 920 9,538
-------- --------
Net cash used in investing activities .................................................... $ (8,944) $ (3,433)
-------- --------
FINANCING ACTIVITIES:
Issuances of Common Shares for stock options exercised ........................................... $ -- $ 22
Issuances of Common Shares, net of issuance costs ................................................ 1,487 --
Distributions paid on Common Shares .............................................................. (2,661) (1,959)
Distributions paid on Convertible Preferred Stock and Convertible Preferred Units................. (3,219) (374)
Distributions paid on OP Units ................................................................... (2,152) (1,754)
Proceeds from mortgage notes payable ............................................................. 2,690 --
Repayment of mortgage notes payable .............................................................. (1,060) (769)
Payments of deferred financing costs ............................................................. (267) (94)
Net borrowings under Credit Facility ............................................................. 5,500 1,544
-------- --------
Net cash provided by (used in) financing activities ............................................ $ 318 $ (3,384)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS ........................................................... (852) (211)
CASH AND CASH EQUIVALENTS, beginning of period ...................................................... 4,144 3,247
-------- --------
CASH AND CASH EQUIVALENTS, end of period ............................................................ $ 3,292 $ 3,036
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ..................................................................... $ 11,599 $ 5,853
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
-5-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS:
Keystone Property Trust is a self-administered and self-managed real estate
investment trust ("REIT") which was organized as a Maryland corporation in 1994
under the name of American Real Estate Investment Corporation (the
"Predecessor"). On October 13, 1999, the Company reorganized as a Maryland REIT
through the merger of the Predecessor with and into Keystone Property Trust (the
"Company"). Simultaneously, the name of its operating partnership, American Real
Estate Investment, L.P., was changed to Keystone Operating Partnership, L.P.
(the "Operating Partnership"), and the name of its management company, American
Real Estate Management, Inc. was changed to Keystone Realty Services, Inc. (the
"Management Company"). The Company also changed its ticker symbol on the
American Stock Exchange from "REA" to "KTR" effective October 13, 1999.
As of May 5, 2000, the Company owns 133 industrial and office properties
aggregating 20.8 million square feet, and an investment in a direct financing
lease (the "Properties"). The Properties are located in Central Pennsylvania,
New York State, Northern New Jersey, Ohio, Indianapolis, Indiana and
Greenville, South Carolina and have an overall occupancy of 98.35%. The
Company conducts all of its service operations, including leasing, property
management and other services through the Management Company. The Operating
Partnership owns 100% of the preferred stock of the Management Company, which
entitles the Operating Partnership to receive 95% of the amounts paid as
dividends by the Management Company.
2. GENERAL:
BASIS OF PRESENTATION
The financial statements have been prepared by the Company without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. Accordingly, these financial statements should be read in
conjunction with the Company's consolidated financial statements and
footnotes thereto included in the Annual Report on Form 10-K for the year
ended December 31, 1999. In the opinion of management, all adjustments
consisting solely of normal recurring adjustments necessary to fairly present
the financial position of the Company as of March 31, 2000 and 1999, and the
results of its operations for the three months ended March 31, 2000 and 1999,
and its cash flows for the three month periods ended March 31, 2000 and 1999
have been included. The results of operations for such interim periods are
not necessarily indicative of the results for a full year.
-6-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PRINCIPLES OF CONSOLIDATION
The Company is the sole general partner of the Operating Partnership
with an ownership interest of approximately 55% at March 31, 2000. The Company
is also the sole stockholder of several other subsidiary entities. The
accompanying consolidated financial statements include the account balances of
the Company, the Operating Partnership and the Company's wholly owned
subsidiaries and their operations for the three month periods ended March 31,
2000 and 1999, respectively, on a consolidated basis. All significant
intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES
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 assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates.
ASSETS HELD FOR SALE
The Company accounts for properties as assets held for sale when a
commitment has been made to a formal plan of disposition. The Company reports
its assets to be disposed of at the lower of carrying value or fair value less
the cost to sell the related asset. At March 31, 2000, the Company has
classified $158.5 million of real estate, at net carrying value, as assets held
for sale. At March 31, 2000, assets held for sale consists of 15 office
properties and 10 industrial properties. In accordance with Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", the Company has suspended depreciation
charges on assets held for sale as of the date disposition plans were adopted.
CAPITALIZATION POLICY
The Company capitalizes all direct and indirect costs, including
interest costs and payroll costs, associated with real estate assets under
construction and land under development by the Company and real estate assets
under construction and land under development, which are held in joint ventures.
EQUITY METHOD INVESTMENTS
The equity method of accounting is used to account for the Company's
non-controlling interest in 100% of the non-voting preferred stock of the
Management Company and the Company's 50% non-controlling interest in a joint
venture to develop 457 acres of land in Indianapolis, Indiana. At March 31,
2000, the Company has an investment of approximately $864,000 in this joint
venture which is included in other assets in the accompanying financial
statements.
-7-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
IMPACT OF ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
Statement of Financial Accounting Standard No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133") is effective for
fiscal years beginning after June 15, 2000. SFAS No. 133 expands the definition
of derivatives and requires every derivative to be recorded on the balance sheet
as either an asset or liability measured at its fair value. It requires that
companies must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. SFAS No. 133 requires that changes
in the fair value of derivatives be recognized in the applicable financial
reporting period in earnings unless specific hedge criteria are met. At March
31, 2000, the Company does not have any investments in derivative products, as a
result, the impact of adopting SFAS No. 133, is not determinable. The Company is
planning to adopt SFAS No. 133 beginning January 1, 2001.
EARNINGS PER SHARE
The Company reports Earnings Per Share ("EPS") in accordance with
Statement of Financial Accounting Standard No. 128, "Earnings per Share" ("SFAS
No. 128"), which established simplified standards for computing and presenting
EPS and supercedes the standards in APB Opinion No.15, making them more
comparable to international EPS standards. It requires the dual presentation of
basic and diluted EPS on the income statement and requires a reconciliation of
the numerator and denominator of basic EPS to diluted EPS.
The following is a reconciliation of the numerators and denominators of
the basic and diluted EPS computations for the three-month periods ended March
31 (amounts in thousands, except share and per share data):
<TABLE>
<CAPTION>
2000 1999
------------------------- -------------------------
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C>
Net income $ 1,945 $ 1,945 $ 2,045 $ 2,045
Add: Minority interest allocation -- 1,628 -- 1,813
----------- ----------- ----------- -----------
$ 1,945 $ 3,573 $ 2,045 $ 3,858
=========== =========== =========== ===========
Weighted average number of shares outstanding
Stock equivalents (1): 9,067,959 9,067,959 7,392,644 7,392,644
Options and warrants (2) -- 4,028 -- 126,071
Convertible OP Units -- 7,610,342 -- 6,988,542
----------- ----------- ----------- -----------
9,067,959 16,682,329 7,392,644 14,507,257
=========== =========== =========== ===========
Earnings per Share $ .21 $ .21 $ .28 $ .27
=========== =========== =========== ===========
</TABLE>
(1) Excludes Convertible Preferred Stock and Convertible Preferred Units as
these instruments were anti-dilutive at March 31, 2000 and 1999.
(2) Computed in accordance with the treasury stock method.
-8-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RECLASSIFICATIONS
Certain amounts in the March 31, 1999 financial statements have been
reclassified in order to conform with the March 31, 2000 presentation.
3. ACQUISITIONS AND DISPOSITIONS OF INVESTMENTS IN REAL ESTATE
2000 TRANSACTIONS
In January 2000, the Company acquired its 50% joint venture
partners' ownership interest in a limited partnership, which constructed a
500,000 square foot industrial building in Indianapolis, Indiana, for $8.9
million. The consideration for this acquisition was $5.9 million of units of
limited partnership interest ("OP Units") (valued at $16.36 per unit) in the
Operating Partnership and $3.0 million in cash.
In January 2000, the Company sold a 15,000 square foot industrial
building located at 245 Nicholas Avenue in South Plainfield, New Jersey for net
proceeds of approximately $920,000. This sale resulted in a gain of
approximately $140,000.
The Company completed construction in May 2000 of an 80,000 square foot
office building in Allentown, Pennsylvania, of which approximately 66,000 square
feet will be occupied by Aetna, Inc.
1999 TRANSACTIONS
During 1999, the Company acquired 35 properties (34 industrial
properties and one office property) and 112 acres of land for an aggregate
purchase price of approximately $322.1 million. These properties contained an
aggregate of approximately 6.8 million square feet consisting of 6.5 million
square feet of industrial space and 290,000 square feet of office space.
Consideration for these acquisitions consisted of cash of approximately
$198.5 million, future cash payments of $5.2 million, $27.6 million of debt
assumed (including debt premiums of $850,000), $40.0 million of Convertible
Preferred Stock with a conversion price of $16.00, $47.1 million of
Convertible Preferred Units of limited partnership interest ("Convertible
Preferred Units") in the Operating Partnership issued with conversion prices
ranging from $16.00 to $16.50 per unit, $2.2 million OP Units in the
Operating Partnership issued at prices ranging from $15.26 to $17.50 per unit
and the issuance of $1.5 million of Common Shares at a price of $14.44 per
share. The Convertible Preferred Stock and OP Units issued as part of these
transactions require a quarterly dividend or guaranteed payment at an annual
rate ranging from 9% to 9.75%.
In August 1999, the Company agreed, as part of a phased transaction, to
acquire certain industrial properties from Reckson Morris Operating Partnership,
L.P. ("RMOP") and Reckson Morris Industrial Trust ("RMIT"). The first phase of
this transaction was consummated on September 27, 1999 and involved the
acquisition of RMOP from RMIT. RMOP owned 22 industrial properties aggregating
3.9 million square feet and 105 acres of land. The second phase of this
transaction closed in the second quarter of 2000 (Note 7). In addition, the
Company has acquired options to purchase an additional 259 acres of land in New
Jersey on which the Company can develop an additional 2.8 million square feet of
industrial properties.
-9-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In March 1999, the Company sold Urban Farms Shopping Center for $10.0
million, which resulted in a gain of approximately $1.3 million. The net
proceeds from this asset sale were reinvested in the acquisition of an
industrial property in 1999.
PRO FORMA OPERATING RESULTS
Assuming the completion of acquisitions and dispositions which occurred
in 2000 and fiscal year 1999, and the completion of the private placement
offerings in 2000 and 1999, as of January 1, 1999, pro forma operating results
are presented as follows (amounts in thousands):
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR YEAR ENDED
MARCH 31, 2000 DECEMBER 31, 1999
----------------------------- ------------------------
<S> <C> <C>
TOTAL REVENUE $ 28,287 $ 107,433
OPERATING INCOME (1) 6,337 21,639
EQUITY IN INCOME (LOSS) FROM EQUITY METHOD INVESTMENTS 249 (62)
MINORITY INTEREST (1,469) (3,815)
PREFERRED DIVIDENDS (3,247) (12,906)
--------- ---------
NET INCOME ALLOCATED TO COMMON SHAREHOLDERS $ 1,870 $ 4,856
========= =========
EARNINGS PER SHARE
BASIC $ .20 $ .53
========= =========
DILUTED $ .20 $ .52
========= =========
</TABLE>
(1) Net of $4,661 and $20,953 in depreciation expense for the three-month
period ended March 31, 2000 and the year ended December 31, 1999,
respectively.
The pro forma operating results combine the Company's historical
operating results with the incremental rental income and operating expenses of
the properties acquired in 2000 and 1999, including adjustments for depreciation
(based upon the acquisition prices associated with the property acquisitions),
and interest costs assuming the borrowings to finance the property acquisitions
had occurred at the beginning of the period.
These pro forma amounts are not necessarily indicative of what the
actual results of the Company would have been assuming the above property
acquisitions and dispositions and other transactions had been consummated on
January 1, 1999, nor do they purport to represent the future results of the
Company.
4. INDEBTEDNESS
REVOLVING CREDIT FACILITY
On April 30, 1998 the Company obtained a three year $150 million senior
secured revolving credit facility ("Credit Facility"). Borrowings under the
Credit Facility enable the Company to fund acquisitions and development of real
estate, as well as provide working capital and funds for capital improvements at
a variable rate which was equal to a LIBOR rate plus 2.25% (8.16%) at March 31,
2000 or the prime rate, at the Company's option. In addition, a fee ranging from
.25% to .375% per annum, depending on the level of outstanding borrowings, on
the unused amount of the Credit Facility is payable quarterly. On June 30, 1999,
-10-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the terms of the Credit Facility were amended and restated. As a result, the
maturity of the Credit Facility was extended to April 29, 2002 and several
financial covenants were modified. The Eurodollar interest rate was modified to
a sliding scale based on the Company's leverage. The scale ranges from LIBOR
+1.625% to LIBOR +2.25%. Based on the Company's leverage, the rate currently in
effect is LIBOR +2.25%. The Company is also able to elect to increase the amount
available under the Credit Facility to $250 million, subject to the syndication
of the additional $100 million.
At March 31, 2000, the Company had $147.5 million outstanding related
to the Credit Facility. The Credit Facility is recourse to the Company and the
Operating Partnership and is secured by cross-collateralized and cross-defaulted
first mortgage loans on 63 properties. The weighted average balance outstanding
and weighted average interest rate for the three months ended March 31, 2000 and
1999 for borrowings under the Credit Facility were $145.6 million and $124.1
million and 8.14% and 6.67%, respectively. The Credit Facility requires the
Company to meet certain financial covenants on a quarterly, annual and ongoing
basis. The Company is in compliance with these debt covenants at March 31, 2000.
MORTGAGE NOTES
Mortgages notes of $397.6 million encumbered 60 properties as of March
31, 2000. At March 31, 2000, interest rates on the mortgage loans ranged from
fixed rates of 6.88% to 9.75%. Mortgage notes had weighted average interest
rates of 7.63% and 7.75% at March 31, 2000 and 1999, respectively. The
maturities for these notes range from September 2000 through October 2022. The
weighted average maturity was 8.3 years at March 31, 2000.
5. SEGMENTS
The Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information,"
in 1999. The Company considers its reportable segments to be office,
industrial, and other. The other properties segment consists of an investment
in a direct financing lease and, for 1999, Urban Farms Shopping Center which
was sold in March 1999. Summarized financial information concerning the
Company's reportable segments is shown in the following table as of March 31,
2000 and 1999, unless otherwise noted (amounts in thousands).
<TABLE>
<CAPTION>
BUSINESS SEGMENTS 2000 1999
- ----------------- ---- ----
<S> <C> <C>
REVENUES
Industrial properties $ 18,450 $ 9,387
Office properties 9,945 8,216
Other properties 70 396
Other (1) 91 34
-------- --------
$ 28,556 $ 18,033
======== ========
PROPERTY OPERATING INCOME
Industrial properties $ 12,064 $ 6,188
Office properties 5,615 4,262
Other properties 66 255
-------- --------
$ 17,745 $ 10,705
======== ========
</TABLE>
-11-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
CAPITAL EXPENDITURES
Industrial properties $ 202 $ 151
Office properties 469 365
Other properties -- --
-------- --------
$ 671 $ 516
======== ========
DEPRECIATION AND AMORTIZATION EXPENSE
Industrial properties $ 3,573 $ 1,934
Office properties 1,135 1,358
Other properties -- --
-------- --------
$ 4,708 $ 3,292
======== ========
INVESTMENT IN REAL ESTATE, At Cost (2)
Industrial properties $634,440 $604,710
Office properties 256,876 254,166
Other properties 1,399 1,460
-------- --------
$892,715 $860,336
======== ========
</TABLE>
The following is a reconciliation of segment property operating income
as shown above to the accompanying consolidated statement of operations for each
of the three month periods ended March 31 (amounts in thousands):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Segment property operating income as shown above $ 17,745 $ 10,705
General and administrative expense (1,073) (613)
Interest expense (10,332) (6,447)
Other income (1) 91 34
-------- --------
Income before equity in losses from equity method investments,
gains on sales of assets, distributions to preferred
unitholders and net income allocated to preferred shareholders,
and minority interest of unitholders in Operating Partnership $ 6,431 $ 3,679
======== ========
</TABLE>
(1) Amount consists of interest and other income not allocated to a specific
business segment.
(2) Amounts for 1999 are as of December 31, 1999.
6. DIVIDENDS
On April 28, 2000, the Company paid a dividend of $.295 per share
for the first quarter of 2000 which paid on April 28, 2000 to shareholders of
record on April 19, 2000.
In January 2000, the Company declared a dividend of $.295 per share for
the fourth quarter of 2000 which was paid on January 31, 2000 to shareholders of
record on January 18, 2000.
-12-
<PAGE>
KEYSTONE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company and the Operating Partnership paid distributions to
holders of Convertible Preferred Stock and Convertible Preferred Units which
are each entitled to a preferred dividend or a guaranteed payment which range
from 9.0% to 9.75%. These distributions are paid on a quarterly basis.
Distributions paid to holders of Convertible Preferred Stock and Convertible
Preferred Units were approximately $1.9 million and $1.3 million,
respectively, during the three months ended March 31, 2000. In April 2000,
the Company and the Operating Partnership paid distributions to the holders
of the Convertible Preferred Stock and Convertible Preferred Units which
aggregated $3.2 million.
7. SUBSEQUENT EVENTS
On May 5, 2000, the Company acquired a portfolio of five warehouse
and distribution facilities in New Jersey which aggregate approximately 1.8
million square feet and six acres of land adjacent to one of the facilities
for approximately $91 million as part of the second phase of the RMIT
transaction. These buildings are currently 76.5% occupied (100% leased) under
leases which expire between 2001 and 2014. This acquisition was funded by
$59.0 million of mortgage debt with a 5.5 year term and an interest rate of
8.12%, $25.7 million of Convertible Preferred Units which require a
guaranteed payment at an annual rate of 9.75% and are convertible to Common
Shares at $16.00 per share, and the remaining consideration was funded by
senior recourse secured term debt from First Union National Bank (the "First
Union Facility") with a 3 year term and a variable interest rate of LIBOR +
2.25%. The First Union Facility allows the Company to borrow up to $30
million. This debt is also collateralized by mortgages on certain properties.
The interest rate is also subject to reduction to LIBOR + 1.80% in the event
the outstanding balance is below certain thresholds.
On May 2, 2000, the Company sold distribution facilities located in
New Jersey for approximately $8.1 million. This sale resulted in a gain of
approximately $100,000.
In April 2000, the Company acquired a 214,600 square foot industrial
facility, which was also part of the second phase of the RMIT transaction, in
East Brunswick, New Jersey for $8.5 million in cash, including closing costs,
and simultaneously sold it for $9.3 million which resulted in a gain of
approximately $800,000.
In April 2000, Neuman Distributors, Inc., one of the Company's
tenants which occupies 332,000 square feet in a distribution facility in New
Jersey, notified the Company that it filed for protection under Chapter 11 of
the Bankruptcy Code. Annual rent under this lease is approximately $2.2
million which is approximately 2.0% of the Company's current aggregate
annualized in place base rents from all of its existing tenants. This tenant
has continued to pay and is current on all post-petition rent, however, no
certainty exists that this tenant will continue to pay rent in accordance
with the terms of its lease. The tenant has indicated to the Company that it
is pursuing the sale of its business under which sale it is believed that the
lease would be reaffirmed by the potential purchaser. However, no certainty
exists that the business will be sold and the lease will ultimately be
reaffirmed. The Company believes that in the event this tenant ceases to pay
rent under the terms of their lease, that it will be able to re-lease the
space within a reasonable period of time at a rental rate which exceeds the
current rate of $6.62 per square foot given the current market conditions in
the Northern New Jersey industrial market and the quality and location of
this building.
-13-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words "believe", "expect", "anticipate",
"intend", "estimate" and other expressions which are predictions of or
indicate future events and trends and which do not relate to historical
matters identify forward-looking statements. The Company's actual results
could differ materially from those set forth in the forward-looking
statements. Certain factors that might cause such a difference include but
are not limited to the following: real estate investment considerations, such
as the effect on the Company's cash flows and property values, of economic
and other conditions in the market areas in which the Company owns
properties; the need to renew leases or relet space upon the expiration of
current leases, and the ability of the properties to generate revenues
sufficient to meet debt service payments and other operating expenses; and
risks associated with borrowings, such as the possibility that the Company
will not have sufficient funds available to make principal payments on
outstanding debt, outstanding debt may be refinanced at higher interest rates
or otherwise on terms less favorable to the Company and interest rates under
the Credit Facility may increase.
The following discussion compares the operations and activities of the
Company for the three-month periods ended March 31, 2000 and 1999 and should be
read in conjunction with the accompanying financial statements and notes
thereto.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Net income for the three-month period ended March 31, 2000 was $1.9
million, or $.21 per diluted share, as compared with net income of $2.0 million,
or $.27 per diluted share, for the same period ended March 31, 1999. Net income
for the three-month period ended March 31, 2000 included a gain on a sale of a
warehouse of $140,000 or approximately $0.01 per diluted share. Net income for
the same period in 1999 included a gain on the sale of a retail shopping center
of $1.3 million or $0.09 per diluted share. Excluding the impact of asset sales
in both periods, net income for the quarter ended March 31, 2000 and the
comparable prior period would have been $1.9 million and $1.4 million or $0.21
and $0.18 per diluted share, respectively.
Revenues for the three-month period ended March 31, 2000 increased to
$28.6 million as compared with $18.0 million for the same period in 1999,
respectively, primarily as a result of property acquisitions.
-14-
<PAGE>
Operating expenses increased to $22.1 million from $14.3 million,
respectively, in the three-month period ended March 31, 2000 over the same
period in 1999. This overall increase of $7.8 million or 54.5% is a result of
property acquisitions and is primarily the result of increases in
depreciation and interest expense associated with increases in the Company's
investment in real estate assets and mortgage debt from $547.1 million and
$346.7 million at March 31, 1999, respectively, to $892.7 million and $548.6
million respectively, at March 31, 2000. General and administrative expenses
increased for the three month period ended March 31, 2000 to $1.1 million in
comparison to $613,000 for the same period in 1999. This increase was
primarily the result of an increase of approximately $300,000 for certain
Company expenses, primarily payroll expenses, which were previously paid by
the Management Company in addition to other increases in costs which resulted
from the growth of the Company.
Equity in earnings from investments increased by $735,000, from a
loss of $486,000 in the three-month period ended March 31,1999 to income of
$249,000 in the same period in 2000. This increase is the result of increases
in third party fee income generated by the Management Company as a result of
increases in transaction activity and a $300,000 increase in reimbursed costs
by the Company over the amount of reimbursements in the same period last year.
Property level operating income for the three-month periods ended
March 31, 2000 and 1999 for the Properties owned since January 1, 1999 (the
"Same Store Properties") increased to approximately $14.6 million from $14.2
million, respectively. This increase of approximately 3.1% is primarily due
to increases in rental revenue of approximately 2.6% in the Same Store
Properties. Operating expenses for these properties decreased by
approximately $99,000 or 5.2% and this decrease was offset by increases in
real estate tax expense which were largely reimbursed by tenants. The Same
Store Properties consist of 64 industrial and 33 office properties and one
other property which aggregate approximately 11.8 million square feet.
Set forth below is a schedule comparing the property level operating
income for the Same Store Properties for the three-month periods ended March 31,
2000 and 1999 (amounts in thousands).
<TABLE>
<CAPTION>
2000 1999 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenue
Rental revenue $15,868 $15,745 .8%
Tenant reimbursement and other 1,926 1,606 19.9%
------- -------
Total revenue $17,794 $17,351 2.6%
======= =======
Operating Expenses
Property operating expenses 1,817 1,916 (5.2%)
Real estate taxes 1,351 1,246 8.4%
------- -----
Total operating expenses 3,168 3,162 .2%
------- -----
Property Net Operating Income $14,626 $14,189 3.1%
======= =======
Occupancy at March 31 96.3% 98.9%
======= =======
</TABLE>
BUSINESS SEGMENTS
Revenue and property net operating income in both the industrial and
office properties segments increased significantly in the three month period
ended March 31, 2000 as compared to the same period in the prior year as a
result of the property acquisitions consummated in 1999.
-15-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
During the three months ended March 31, 2000, the Company generated
$7.8 million in cash flow from operating activities as compared to cash flow
generated of $6.6 million during the same period in 1999. This increase in
operating cash flow is a result of the cash flow generated from the various
acquisitions consummated by the Company during 1999.
Cash used in investing activities in the three months ended March
31, 2000 was $8.9 million as compared to $3.4 million of cash used during the
same period in 1999. The increase in cash used is primarily a result of the
on-going construction expenditures in 2000 for the building for AETNA, Inc.,
along with the impact of the sale of the Urban Farms Shopping Center in 1999.
Cash provided by financing activities was $318,000 in 2000 as compared to
$3.4 million of cash used in financing activities in the same period in 1999.
CAPITALIZATION
As of March 31, 2000, the Company had $545.1 million of mortgage
debt outstanding, excluding unamortized debt premiums, at a weighted average
interest rate of 7.8 % and a weighted average maturity of 6.6 years.
Approximately $2.6 million of this debt is scheduled to mature in 2000. The
Company has a $150,000,000 Credit Facility with a group of commercial lenders
led by Bank Boston, N.A. which expires on April 29, 2002. The Credit Facility
bears interest at a variable rate at the Company's option of either a LIBOR
rate plus 2.25% per annum or the prime rate. The LIBOR interest rate is on a
sliding scale based on the Company's leverage. The scale ranges from LIBOR +
1.625% to LIBOR + 2.25%. The Company's outstanding borrowings under this
Credit Facility are $147.5 million at March 31, 2000 at an interest rate of
8.16%. The Company is able to elect to increase the amount available under
the Credit Facility to $250 million, subject to the syndication of an
additional $100 million.
The Company's market capitalization and debt-to-market
capitalization ratios were $986.9 million and 61.3%, respectively, as of May
5, 2000 based upon the closing price of the Company's common stock of $13.00
per share as of that date.
SHORT AND LONG TERM LIQUIDITY
Cash flow from operating activities is the Company's principal
source of funds to fund debt service, common and preferred distributions,
recurring capital expenditures and certain upfront costs associated with the
Company's development activities. We expect to meet our short-term (one year
or less) liquidity requirements generally through working capital and net
cash provided by operating activities along with borrowings from the Credit
Facility and the First Union Facility. Further, the Company anticipates that
it will selectively dispose of certain office and non-core industrial assets
in 2000. The Company believes all of these sources will be available in 2000
in order to fund short-term liquidity needs.
-16-
<PAGE>
Our long-term liquidity needs generally include the funding of existing
and future development activity, selective asset acquisitions and the retirement
of mortgage debt and amounts outstanding under the Credit Facility. We expect to
meet our long-term liquidity needs through a combination of the following: (i)
the issuance of equity securities by the Company and its Operating Partnership,
(ii) the selective disposition of our office and certain industrial assets, and
(iii) the sale or contribution of certain of our wholly-owned, non-core
properties to strategic joint ventures to be formed, which could allow the
Company to generate additional capital. Finally, the Company expects that
certain of the sources described above in short-term liquidity will be an
additional source of capital for long-term liquidity. In July 1998, the Company
filed with the Securities and Exchange Commission a Form S-3 Shelf Registration
Statement under which the Company from time to time may issue Common Shares, or
preferred stock and depository shares representing preferred stock with an
aggregate value of up to $500 million. As of March 31, 2000, the Company has
issued $20.0 million under this Registration Statement.
The Company believes that our available cash and cash equivalents and
cash flows from operating activities included with cash available from
borrowings and other sources, will be adequate to meet our capital and liquidity
needs in both the short and the long-term.
IMPACT OF RECENT ACCOUNTING STANDARDS
See Note 2 to the March 31, 2000 consolidated financial statements.
FUNDS FROM OPERATIONS AND FUNDS AVAILABLE FOR DISTRIBUTION
Funds From Operations ("FFO"), which is a commonly used measurement
of the performance of an equity REIT, as defined by the National Association
of Real Estate Investment Trusts, Inc. ("NAREIT"), is net income (computed in
accordance with generally accepted accounting principles), excluding gains
(or losses) from debt restructuring and sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect FFO on the same basis. Management
believes the presentation of FFO is a useful disclosure as a general
measurement of its performance in the real estate industry, although the
Company's FFO may not necessarily be comparable to similarly titled measures
of other REITs which do not follow the NAREIT definition. Effective January
1, 2000, the Company adopted NAREIT's recent clarifications related to the
presentation of FFO, and in accordance with these clarifications, re-stated
FFO for all periods presented to reflect FFO in accordance with these
clarifications. Accordingly, the Company's FFO presentation is in accordance
with NAREIT's FFO definition. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund cash
needs and should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flow as a measure of liquidity. Funds available for distribution ("FAD") is
defined as FFO reduced by straight-line rent adjustments; non-revenue
enhancing capital expenditures for building and tenant improvements and
leasing commissions; and increased by amortization of deferred of financing
costs and amortization of restricted stock awards.
-17-
<PAGE>
FFO, FAD and cash flows for the three-month periods ended March 31,
2000 and 1999 are summarized in the following table (in thousands, except share
data):
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
MARCH 31,
--------------------------------
2000 1999
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Income before distributions to preferred unitholders and income allocated
to preferred shareholders and minority interest of unitholders in Operating
Partnership $ 6,820 $ 4,477
(Less) Plus:
Gains on sales of assets (140) (1,284)
Depreciation and amortization related to real estate 4,708 3,292
Equity in loss from equity method investments (249) 486
FFO contribution from equity investments 292 (444)
------------ ------------
Funds from Operations $ 11,431 $ 6,527
============ ============
(Less) Plus:
Rental income from straight-line rents $ (829) $ (320)
Amortization of deferred financing costs 410 338
Amortization of restricted stock awards 68 68
Building improvements (223) (55)
Tenant improvements (448) (228)
Leasing commissions (895) (211)
------------ ------------
Funds Available for Distribution $ 9,514 $ 6,119
------------ ------------
Cash flow from operating activities $ 7,774 $ 6,377
Cash flow from investing activities (8,944) (3,480)
Cash flow from financing activities 318 (3,108)
------------ ------------
Net decrease in cash and cash equivalents $ (852) $ (211)
============ ============
Weighted average number of common and convertible preferred shares and
units-diluted (1) 25,042,553 16,173,923
============ ============
</TABLE>
(1) Includes the shares of Convertible Preferred Stock and Convertible
Preferred Units issuable assuming conversion at conversion prices which
range from $15.75 to $16.50 per share and unit.
INFLATION
The Company's leases for commercial office and industrial properties
generally require tenants to pay either their share of operating expenses,
including common area maintenance, real estate taxes and insurance or pay 100%
of these costs directly (for triple net leases). As a result, the Company's
exposure to increases in costs and operating expenses is reduced. The Company
does not anticipate that inflation will have a significant impact on its
operating results in the near future.
-18-
<PAGE>
THE YEAR 2000 READINESS DISCLOSURE
The Company has experienced no problems or issues relating to the Year
2000 problem on or after January 1, 2000. The Company has fully implemented its
Year 2000 compliance program and as part of that program intends to maintain its
contingency plans until the Company is satisfied that business operations will
not be adversely impacted by the possibility of a Year 2000 problem. Based upon
the Company's experience of no Year 2000 problems to-date, the Company believes
that this approach will adequately compensate for any Year 2000 problems which
may still arise.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary exposure to market risk is to changes in
interest rates. The Company is exposed to market risk related to its Credit
Facility as interest on the Credit Facility is subject to fluctuations in the
market. Currently, the Company does not have any interest rate hedge
contracts in place to protect against interest rate increases on the Credit
Facility. The amount outstanding under the Credit Facility represents
approximately 27% of debt outstanding as of March 31, 2000. In May 2000, the
Company entered into the First Union Facility which is also variable rate
debt under which $14.7 million was borrowed in May 2000. The Company also
utilizes mortgage debt with fixed rates as a source of capital. The weighted
average maturity and interest rate for fixed rate debt, excluding the Credit
Facility, was 8.3 years and 7.63% at March 31, 2000. As these debt
instruments mature, the Company typically refinances such debt at then
existing market interest rates which may be more or less than the interest
rate on the maturing debt.
If the interest rate for the Credit Facility was 100 basis points
higher or lower during the first quarter of 2000, the Company's interest expense
for the first quarter would have been increased or decreased by approximately
$368,000. Approximately $2.6 million of the Company's fixed rate debt matures in
2000. The Company currently intends to refinance this maturing obligation in
2000. If interest rates for this fixed rate debt maturing and to be refinanced
in 2000 is 100 basis points higher or lower than its current rate of 8.25%, the
Company's annual interest expense would be increased or decreased by
approximately $26,000.
Due to the uncertainty of fluctuations in interest rates, the specific
actions that might be taken by management to mitigate the impact of such
fluctuations and their possible effects, this sensitivity analysis assumes no
changes in the Company's financial structure.
-19-
<PAGE>
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor the Properties are presently subject to any
litigation which the Company believes will result in any liability that will be
material to the Company, other than routine litigation arising in the ordinary
course of business, substantially all of which is expected to be covered by
liability insurance.
ITEM 2. CHANGES IN SECURITIES
The Company hereby incorporates by refereence disclosure from the
Company's proxy statement for the 2000 Annual Meeting of Shareholders, filed on
April 28, 2000, related to issuances of Common Shares to certain trustees in
the three-month period ended March 31, 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K:
During the three month period ended March 31, 2000, the Company filed the
following:
(i) A Current Report on Form 8-K, dated December 10, 1999, was filed on
January 5, 2000 (reporting under Items 5 and 7) regarding the
completed issuance of an aggregate of 658,173 Common Shares of the
Company's, par value $.001 per share, under the Company's existing
shelf registration statement and the exchange of an aggregate of
550,000 outstanding warrants to purchase Common Shares and OP Units
for 231,655 OP Units.
(ii) A Current Report on Form 8-K, dated January 18, 2000, was filed on
January 27, 2000 (reporting under Items 5 and 7) regarding the
completed issuance of an aggregate of 33,545 Common Shares of the
Company's, par value $.001 per share, under the Company's existing
shelf registration statement.
-20-
<PAGE>
SIGNATURES OF REGISTRANT
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: May 15, 2000 By: /S/ JEFFREY E. KELTER
---------------------
Jeffrey E. Kelter
President and Chief Executive Officer
Date: May 15, 2000 By: /S/ TIMOTHY A. PETERSON
-----------------------
Timothy A. Peterson
Executive Vice President and
Chief Financial Officer
Date: May 15, 2000 By: /S/ TIMOTHY E. MCKENNA
----------------------
Timothy E. McKenna
Senior Vice President - Finance
and Corporate Controller
(Principal Accounting Officer)
-21-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MARCH 31, 2000 FINANCIAL STATEMENTS FILED HEREIN AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 7,134
<SECURITIES> 0
<RECEIVABLES> 6,454
<ALLOWANCES> 0
<INVENTORY> 26,000<F1>
<CURRENT-ASSETS> 0
<PP&E> 892,715
<DEPRECIATION> (26,818)
<TOTAL-ASSETS> 905,485
<CURRENT-LIABILITIES> 19,111
<BONDS> 548,572
151,435<F2>
3
<COMMON> 9
<OTHER-SE> 186,355
<TOTAL-LIABILITY-AND-EQUITY> 905,485
<SALES> 28,556
<TOTAL-REVENUES> 28,556
<CGS> 11,793
<TOTAL-COSTS> 11,793
<OTHER-EXPENSES> 1,379<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,579<F4>
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 140<F5>
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,945
<EPS-BASIC> .21
<EPS-DILUTED> .21
<FN>
<F1>DEFERRED ITEMS AND OTHER ASSETS
<F2>REPRESENTS MINORITY INTEREST AND CONVERTIBLE PREFERRED UNITS
<F3>REPRESENTS INCOME FROM EQUITY METHOD INVESTMENT AND MINORITY INTEREST
<F4>REPRESENTS INTEREST EXPENSE AND PREFERRED ITEMS
<F5>REPRESENTS GAINS ON PROPERTY SALES
</FN>
</TABLE>
