SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended March 31, 1996.
___ Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
________________ to _______________.
Commission File Number 1-12222
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 68-0306514
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
270 Lafayette Circle, Lafayette, CA 94549
(Address of principal executive offices)
Registrant's telephone number, including area code (510)283-8910
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months or for such shorter period
that Registrant was required to file such reports and (2) has been
subject to such filing requirements for the past 90 days. Yes x No___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class Outstanding as of April 30, 1996
Common Stock, $0.02 par value 6,396,325
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Statement 1
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 2
Consolidated Statements of Income for the three months ended
March 31, 1996 and 1995 3
Consolidated Statements of Stockholders' Equity for the
three months ended March 31, 1996 and the year ended
December 31, 1995 4
Consolidated Statements of Cash Flows for the three months ended
March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's Discussion and Analysis of Results of Operations
and Financial Condition 11-13
PART II. OTHER INFORMATION
ITEMS 1 - 6 14-16
SIGNATURES 16
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENT
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished reflects
all adjustments which are, in the opinion of management, necessary for
a fair presentation of results of operations for the interim periods.
Such adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the notes to financial
statements appearing in the annual report to stockholders for the year
ended December 31, 1995.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share and per share amounts)
March 31, December 31,
1996 1995
ASSETS:
Real estate investments:
Industrial buildings $ 96,139 $ 94,897
Office buildings 36,261 30,025
Retail buildings 6,280 6,261
138,680 131,183
Less accumulated depreciation 2,773 2,219
135,907 128,964
Cash 1,021 1,027
Other assets 4,816 3,487
Total assets $141,744 $133,478
LIABILITIES AND STOCKHOLDERS' EQUITY:
Bank loan payable 30,416 43,250
Mortgage loan payable 20,200 -
Accounts payable and accrued expenses 1,891 1,451
Dividend payable 1,856 1,765
Acquisition payable 3,000 3,000
Other liabilities 1,716 1,577
Total liabilities 59,079 51,043
Redeemable preferred stock:
Series A convertible preferred stock,
par value $0.01 per share; authorized
10,000,000 shares; issued and outstanding
8,333,334 shares; aggregate redemption
amount $50,000; aggregate liquidation
preference $52,500. 50,000 50,000
Common stock and other
stockholders' equity:
Common stock, par value $0.02 per share;
authorized 15,000,000 shares, issued
and outstanding, 3,046,325 shares in
1996; 3,045,325 shares in 1995 61 61
Additional paid-in capital 107,347 107,214
Accumulated losses and distributions
in excess of net income (74,743) (74,840)
Total common stock and other
stockholders' equity 32,665 32,435
Total liabilities and stockholders'
equity $141,744 $133,478
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
(in thousands, except share and per share amounts)
1996 1995
Property operations:
Rental income $5,709 $2,662
Rental expenses:
Operating expenses 1,086 662
Real estate taxes 565 232
Depreciation and amortization 608 341
Income from property operations 3,450 1,427
General and administrative expenses (505) (370)
Interest income 18 11
Interest expense (1,010) (462)
Net income $ 1,953 $ 606
Net income applicable to common
stockholders (1) $ 828 $ 606
Net income per common and common
equivalent share (1)(2) $ 0.26 $ 0.20
Weighted average number of common
and common equivalent shares(2) 3,168,944 3,069,265
See accompanying notes to consolidated financial statements.
(1) Reflects dividend of $1,125 accrued during the first quarter of
1996 on $50,000 of preferred stock issued on September 18, 1995.
(2) Reflects the one-for-two reverse stock split effective March 29,
1996. The 1996 per share data reflects earnings per share on a
primary and diluted basis.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND THE YEAR ENDED DECEMBER 31, 1995 (Unaudited)
(in thousands, except per share data)
<TABLE>
<S> <C> <C> <C> <C>
Total
Accumulated common
losses and stock and
Additional distributions other stock-
Common paid-in in excess of holders'
stock capital net income equity
Balance, December 31, 1994 $60 $107,151 $(70,279) $36,932
Issuance of common stock 1 63 - 64
Costs of issuance of
preferred stock - - (3,631) (3,631)
Redemption of rights - - (60) (60)
Net income - - 2,895 2,895
Dividends to common
stockholders ($0.82 per
share) - - (2,477) (2,477)
Dividends to preferred
stockholders (9%) - - (1,288) (1,288)
Balance, December 31, 1995 61 107,214 (74,840) 32,435
Issuance of common stock - 133 - 133
Net income - - 1,953 1,953
Dividends to common
stockholders ($0.24
per share) - - (731) (731)
Dividends to preferred
stockholders (9%) - - (1,125) (1,125)
Balance March 31, 1996 $61 $107,347 $(74,743) $32,665
</TABLE>
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
(in thousands)
1996 1995
Operating Activities:
Net income $ 1,953 $ 606
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 769 406
Change in other assets (1,544) (94)
Change in accounts payable and
accrued expenses 440 151
Change in other liabilities 139 (14)
Net cash provided by operating
activities 1,757 1,055
Investing Activities:
Investments in real estate (7,497) (75)
Net cash used by investing
activities (7,497) (75)
Financing Activities:
Proceeds from bank loan 7,700 750
Proceeds from mortgage loan 20,200 -
Repayments of bank loan (20,534) (4,877)
Issuance of common stock 133 -
Payment of dividends (1,765) (568)
Net cash provided (used) by
financing activities 5,734 (4,695)
Net decrease in cash (6) (3,715)
Cash at beginning of period 1,027 4,733
Cash at end of period $ 1,021 $ 1,018
Supplemental disclosure of
cash flow information:
Cash paid during the period
for interest $ 756 $ 409
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Basis of Presentation
The Company
Bedford Property Investors Inc. (the "Company") is an equity real estate
investment trust with investments primarily in industrial and suburban
office properties concentrated in the Western United States. On July 1,
1993, the Company (formerly known as ICM Property Investors Incorporated)
reincorporated from the State of Delaware to the State of Maryland under
a new name, Bedford Property Investors, Inc. As of and since July 1,
1993, the Company's Common Stock traded under the symbol "BED" on both
the New York and Pacific Stock Exchanges.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation
of financial condition, results of operations, and cash flows in
conformity with generally accepted accounting principles. When
necessary, reclassifications have been made to prior period balances to
conform to current period presentation.
Per Share Data
Per share data is based on the weighted average number of common and
common equivalent shares outstanding during the period. Per share data
reflects the retroactive application of the one-for-two reverse stock
split effective March 29, 1996. The 1996 per share data reflects
earnings per share on a primary and diluted basis. Stock options issued
under the Company's stock option plans are considered common stock
equivalents and are included in the calculation of per share data if,
upon exercise, they would have a dilutive effect. Dividends accrued on
the Series A Convertible Preferred Stock are deducted from net income for
purposes of determining net income applicable to common stockholders.
<PAGE>
Note 2. Real Estate Investments
As of March 31, 1996, the Company's real estate investments (net of
accumulated depreciation) were diversified by property type as follows
(in thousands):
Number of Investment
Properties Amount % of Total
Industrial Buildings 24 $ 94,598 70
Office Buildings 6 35,051 26
Retail Buildings 1 6,258 4
Total 31 $ 135,907 100
As of March 31, 1996, the Company's real estate investments (net of
accumulated depreciation) were diversified by geographic region as
follows:
Number of Investment
Properties Amount % of Total
San Francisco Bay Area,
California 13 $ 46,700 34
Greater Los Angeles Area,
California 5 40,955 30
Kansas City, Kansas 5 13,712 10
Denver Metropolitan Area,
Colorado 3 11,262 8
Greater Portland Area,
Oregon 2 10,416 8
Salt Lake City, Utah 1 6,686 5
Minneapolis/St. Paul,
Minnesota 2 6,176 5
Total 31 $135,907 100
<PAGE>
The following table sets forth the Company's real estate investments as
of March 31, 1996 (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
Less
Accumulated
Land Building Depreciation Total
INDUSTRIAL
Greater San Francisco Bay Area, California
Building 3
Contra Costa Diablo Industrial Park, Concord $ 495 $ 1,236 $ 150 $ 1,581
Building 8
Contra Costa Diablo Industrial Park, Concord 877 1,690 192 2,375
Building 18
Mason Industrial Park, Concord 610 1,310 165 1,755
Milpitas Town Center, Milpitas 1,935 6,122 164 7,893
Auburn Court, Fremont 1,414 2,514 16 3,912
Westinghouse Drive, Fremont 271 909 6 1,174
350 E. Plumeria Drive, San Jose 3,683 4,792 53 8,422
301 East Grand, South San Francisco 2,070 975 6 3,039
342 Allerton, South San Francisco 2,557 1,568 10 4,115
400 Grandview, South San Francisco 3,299 3,594 23 6,870
410 Allerton, South San Francisco 1,356 904 6 2,254
417 Eccles, South San Francisco 661 520 3 1,178
Subtotal 19,228 26,134 794 44,568
Greater Los Angeles Area, California
Dupont Industrial Center, Ontario 3,588 6,141 293 9,436
3002 Dow Business Center, Tustin 4,305 7,497 56 11,746
Subtotal 7,893 13,638 349 21,182
Kansas City, Kansas
Ninety-Ninth Street #3, Lenexa 360 2,172 257 2,275
Ninety-Ninth Street #1, Lenexa 410 1,571 17 1,964
Ninety-Ninth Street #2, Lenexa 183 564 6 741
Lackman Business Center, Lenexa 628 1,663 19 2,272
Subtotal 1,581 5,970 299 7,252
Denver, Colorado
Bryant St. Annex, Denver 495 880 5 1,370
Bryant St. Quad, Denver 1,416 2,233 15 3,634
Subtotal 1,911 3,113 20 5,004
Greater Portland Area, Oregon
Twin Oaks Tech. Center, Beaverton 1,468 4,921 32 6,357
Twin Oaks Business Park, Beaverton 1,183 2,895 19 4,059
Subtotal 2,651 7,816 51 10,416
Minneapolis/St. Paul, Minnesota
St. Paul Business Center - East, Maplewood 766 1,792 12 2,546
St. Paul Business Center - West, Maplewood 1,236 2,410 16 3,630
Subtotal 2,002 4,202 28 6,176
Total Industrial 35,266 60,873 1,541 94,598
SUBURBAN OFFICE
Greater San Francisco Bay Area, California
Village Green, Lafayette 743 1,452 63 2,132
Greater Los Angeles Area, California
1000 Town Center Drive, Oxnard 1,785 4,813 444 6,154
Mariner Court, Torrance 3,221 4,557 250 7,528
Laguna Hills Square, Laguna Hills 2,436 3,655 - 6,091
Subtotal 7,442 13,025 694 19,773
Kansas City, Kansas
6600 College Blvd., Overland Park 2,518 3,986 44 6,460
Salt Lake City, Utah
Woodlands Tower II, Salt Lake City 945 6,150 409 6,686
Total Suburban Office 11,648 24,613 1,210 35,051
RETAIL
Academy Place Shopping Center,
Colorado Springs 2,889 3,391 22 6,258
Total $49,803 $88,877 $2,773 $135,907
</TABLE>
<PAGE>
350 East Plumeria Drive
The property, a suburban research and development facility located in San
Jose, California, was purchased for $8,325,000 or $58 per square foot on
September 19, 1995. The Company recorded acquisition costs of $125,000
paid to Bedford Acquisitions, Inc. ("BAI"), a company wholly-owned by Mr.
Bedford.
Lackman Business Center
The property, a single-story service center industrial project located
in Lenexa, Kansas, was purchased for $2,250,000 or $49 per square foot
on September 19, 1995. The Company recorded acquisition costs of $34,000
paid to BAI.
Ninety-Ninth Street Buildings 1 and 2
The properties, two service industrial buildings located in Lenexa,
Kansas, were purchased for $2,685,000 or $55 per square foot on September
20, 1995. The Company recorded acquisition costs of $40,000 paid to BAI.
Cody Street Park, Building 6
In the third quarter 1995, the Company decided to sell the Cody Street
Park, Building 6. The sale was completed on September 20, 1995, and
resulted in a loss of $12,000.
6600 College Boulevard
The property, a suburban service center industrial complex located in
Overland Park, Kansas, was purchased for $6,360,000 or $80 per square
foot, on October 6, 1995. The property was acquired from AEW #25 Trust,
an affiliate of BED Preferred No. 1 Limited Partnership which purchased
$50 million of the Company's Series A Convertible Preferred Stock in
September 1995. The directors of the Company who are affiliated with BED
Preferred No. 1 Limited Partnership, however, played no role in this
acquisition. The Company recorded acquisition costs of $95,000 paid to
BAI.
IBM Building
During 1995, the Company continued to offer for sale the IBM Building
located in Jackson, Mississippi. This property was first offered for
sale in 1991, at which time the Company's investment in the property was
written down by $2,113,000. On October 2, 1995, the Company completed
the sale of the IBM Building for a cash sale price of $6,500,000,
resulting in a loss of $630,000.
3002 Dow Business Center
The property, a five-building industrial project located in Tustin,
California, was purchased for $11,500,000 or $60 per square foot on
December 5, 1995. The Company recorded acquisition costs of $172,500
paid to BAI.
The Landsing Pacific Portfolio
On December 14, 1995, the Company acquired the Landsing Pacific Portfolio
which consists of thirteen industrial properties and one retail property
aggregating approximately one million rentable square feet located in
Maplewood, Minnesota; Denver and Colorado Springs, Colorado; South San
Francisco and Fremont, California; and Beaverton, Oregon. The Company
paid $49,700,000 for the Landsing Pacific Portfolio or $50 per square
foot. The acquisition was financed with $4,000,000 cash, borrowings of
$42,700,000 under the Company's credit facility and a $3,000,000 payable
secured by a letter of credit due one year from the date of issuance.
The Company recorded acquisition costs of $594,000 paid to BAI.
The Landsing Pacific Portfolio comprised substantially all of the real
estate assets of the Landsing Pacific Fund, Inc., a publicly-traded REIT
based in San Mateo, California. At all times relevant to the
transaction, Martin I. Zankel, a director and stockholder of the Company,
was Chairman of the Board of Directors, Chief Executive Officer and
President of the Landsing Pacific Fund, Inc. Mr. Zankel had no role on
behalf of the Company in this acquisition.
Laguna Hills Square
The property, a suburban three-building office complex located in Laguna
Hills, California, was purchased for $5,998,000 or $117 per square foot
on March 27, 1996. The Company recorded acquisition costs of $90,000
paid to BAI.
Westech Business Center
The property, a five-building service industrial project located in
Phoenix, Arizona, was purchased for $7,677,000 or $53 per square foot on
April 25, 1996. The Company recorded acquisition costs of 115,000 paid
to BAI.
Woodlands Tower II
On April 8, 1996, the Company sold 3.6 acres of entitled land adjacent
to its suburban office property in Salt Lake City, Utah for $1,000,000,
consisting of $950,000 of cash and a note of $50,000 due in April 1997,
with 10% interest payable monthly. The sale resulted in a gain of
$359,000.
There has been no significant development in environmental matters or
proceedings since the filing of the Company's 1995 Annual Report on Form
10-K.
The Company internally manages the majority of its properties and
maintains centralized financial record-keeping. For all the properties
located outside of California and Kansas, the Company has subcontracted
on-site maintenance to local firms.
Note 3. Stock Options
In September 1995, the Company established a Management Stock Acquisition
program. Under the program, options exercised by key members of
management within thirty days of the grant date may be exercised either
in cash or with a note payable to the Company. Such note bears interest
at 7.5% or the Applicable Federal Rate as defined by the Internal Revenue
Service, whichever is higher. The note is due in five years or within
ninety days from termination of employment, with interest payable
quarterly. During 1995, options for 50,000 shares of Common Stock were
exercised in exchange for two notes payable to the Company. The notes
of $287,500 each bear interest at 7.5%. The unpaid balance of the notes
is included in the accompanying consolidated balance sheet as a reduction
of additional paid-in capital.
Note 4. Debt
Bank Loan Payable
The daily weighted average amounts owing to the Bank of America under the
Company's credit facility were $43,189,000 and $15,003,000 for the three
months ending March 31, 1996 and 1995, respectively. The weighted
average interest rates in these periods were 8.26% and 8.65%,
respectively. The effective interest rate at March 31, 1996 was 7.67%.
In April 1996, the Company received a commitment from Bank of America to
amend its existing credit facility. The amended facility will increase
the commitment amount from $60 million to $100 million, and will extend
the term and reduce the interest rates.
Mortgage Loans
In March 1996, the Company obtained $20,200,000 in mortgage loans which
are secured by Woodlands Tower II, Dupont Industrial Center and 3002 Dow
Business Center. The loans bear interest at 7.02% per annum and have a
seven year term. Interest is due and payable monthly. The proceeds of
the mortgage loans were used to pay down a portion of the outstanding
borrowings under the credit facility.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
When used in the following discussion, the words "believes,"
"anticipates" and similar expressions are intended to identify forward-
looking statements. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from
those projected, including, but not limited to, those set forth in the
section entitled "Potential Factors Affecting Future Operating Results,"
below. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Results of Operations - Three Months Ended March 31, 1996, Compared with
Three Months Ended March 31, 1995.
Income
Income from property operations (defined as rental income less rental
expenses) for the three months ended March 31, 1996, increased $2,023,000
or 142% compared to income from property operations for the same period
in 1995. This is due primarily to an increase in rental income of
$3,047,000 for the first three months in 1995 compared to the first three
months in 1995, offset by an increase in rental expenses of $1,024,000.
The increase in rental income and expenses is primarily attributable to
the acquisition of real estate investments in the third and fourth
quarters of 1995. The Company acquired the Landsing Pacific Portfolio
and 3002 Dow Business Center in December 1995; 6600 College Boulevard in
October 1995; 350 East Plumeria Drive, Lackman Business Center, Ninety-
Ninth Street #1 and Ninety-Ninth Street #2 in September 1995. These
acquisitions increased rental income and rental expenses by $3,300,000
and $1,121,000, respectively.
The effect of these acquisitions was partially offset by the sales of the
IBM Building and Cody Street Park, Building 6 in October and September
1995, respectively, generating a reduction in rental income and rental
expenses of approximately $354,000 and $136,000, respectively.
Expenses
Interest expense, which includes amortization of loan fees, increased
$548,000 or 119% for the first three months of 1996 compared with the
same period in 1995. The increase is attributable to the Company's
higher level of borrowings on its credit facility to finance the
acquisition of properties in 1995, and higher financing costs incurred
in connection with the amended and restated line of credit of $60
million. The amortization of loan fees was $144,000 and $56,000 in the
first three months of 1996 and 1995, respectively. General and
administrative expenses increased $135,000 or 36% for the first three
months of 1996 compared with the same period in 1995, a result of
managing a larger real estate portfolio.
Liquidity and Capital Resources
On September 18, 1995, the Company completed the sale of $50,000,000 of
Series A Convertible Preferred Stock to an entity beneficially owned by
an investment fund managed by Aldrich Eastman Waltch. The Series A
Convertible Preferred Stock contains financial covenants and conditions
that if the Company fails to maintain or achieve, its holders have the
right to cause the Company to redeem all of the outstanding shares of
Series A Convertible Preferred Stock at a redemption price of $6.00 per
share plus all accrued dividends payable. In that case, the Company
could experience substantial difficulty in financing such redemption and
may be required to liquidate a substantial portion of its properties.
In March 1996, the Company obtained $20,200,000 in mortgage loans which
are secured by Woodlands Tower II, Dupont Industrial Center and 3002 Dow
Business Center. The loans bear interest at 7.02% per annum and have a
seven year term. Interest is due and payable monthly. The proceeds of
the mortgage loans were used to pay down a portion of the outstanding
borrowings under the credit facility.
On April 24, 1996, the Company completed the sale of 3,350,000 shares of
common stock at $13.00 per share. A portion of the net cash proceeds
from the common stock was used to pay off the outstanding borrowings
under the $60 million credit facility. The facility, obtained in
December 1993 for $20 million and increased to $23 million in August
1994, was restated and amended to $60 million on September 18, 1995. The
facility was used, in part, to finance the acquisitions of Mariner Court,
Dupont Industrial Center, Village Green, and Milpitas Town Center during
the first nine months of 1994, the Landsing Pacific Fund Portfolio in
1995 and Laguna Hills in 1996. At March 31, 1996, the Company was in
compliance with the covenants and requirements of its revolving credit
facility. In April of 1996, the Company received a commitment from Bank
of America to amend its existing credit facility. The amended facility
will increase the commitment amount to $100 million and will extend the
term and reduce the interest rates.
The Company anticipates that the cash flow generated by its real estate
investments and funds available under the above credit facility will be
sufficient to meet its short-term liquidity requirements.
The Company expects to fund the cost of acquisitions, capital
expenditures, costs associated with lease renewals and reletting of
space, repayment of indebtedness, and development of properties from (i)
cash flow from operations, (ii) borrowings under the credit facility and,
if available, other indebtedness (which may include indebtedness assumed
in acquisitions), (iii) the sale of real estate investments, and (iv) the
sale of equity securities and, possibly, the issuance of equity
securities in connection with acquisitions.
The ability to obtain mortgage loans on income producing property is
dependent upon the ability to attract and retain tenants and the
economics of the various markets in which the properties are located, as
well as the willingness of mortgage-lending institutions to make loans
secured by real property. The ability to sell real estate investments
is partially dependent upon the ability of purchasers to obtain financing
at commercially reasonable rates.
Potential Factors Affecting Future Operating Results
At the present time, borrowings under the Company's credit facility bear
interest at a floating rate. The Company anticipates that its results
from operations may be impacted negatively by future increases in
interest rates and substantial borrowings to finance additional property
acquisitions.
While the Company has historically been successful in renewing and
releasing space, the Company will be subject to the risk that certain
leases expiring in 1996 may not be renewed or the terms of renewal may
be less favorable to the Company than current lease terms. The Company
expects to incur costs in making improvements or repairs to its portfolio
of properties required by new or renewing tenants and expects to incur
expenses associated with brokerage commissions payable in connection with
the reletting of space.
Many other factors affect the Company's actual financial performance and
may cause the Company's future results to be markedly outside of the
Company's current expectations.
Inflation
Most of the leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in costs
and operating expenses resulting from inflation. Inflation, however,
could result in an increase in the Company's borrowing costs.
Dividends
Dividends declared for the first quarter of 1996 were $0.24 per share of
common stock. Consistent with the Company's policy, the dividend
declared for the last quarter of 1995 was paid in 1996; as a result, the
Company's statement of cash flows for the period ended March 31, 1996
reflects dividends paid for the fourth quarter of 1995. Similarly, the
Company's statement of cash flows for the period ended March 31, 1995
reflects dividends paid for the fourth quarter
of 1994. The dividends declared for the fourth quarter of 1995 and 1994
were $0.21 and $0.19 per share of common stock, respectively. As of
March 31, 1996, dividends of $1,125,000 were accrued on the Series A
Convertible Preferred Stock. They are due and payable 45 days after the
quarter end.
Government Regulations
The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes that the Properties are currently in
substantial compliance with all applicable regulatory requirements,
although expenditures at its properties may be required to comply with
changes in these laws. No material expenditures are contemplated at this
time in order to comply with any such laws or regulations.
All of the Company's properties have had Phase I environmental site
assessments (which involve inspection without soil sampling or
groundwater analysis) by independent environmental consultants and have
been inspected for hazardous materials as part of the Company's
acquisition inspections. None of these Phase I assessments has revealed
any environmental conditions requiring material expenditures for
remediation.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any of
its present or former properties. The Company does not anticipate that
compliance with federal, state and local environmental protection
regulations will have any material adverse impact on the financial
position, results of operations or liquidity of the Company.
Financial Condition
During the three months ended March 31, 1996, the Company's operating
activities provided cash flow of $1,757,000. Investing activities
utilized cash of $7,497,000 for real estate acquisitions. Financing
activities provided cash flow of $5,734,000.
Management considers Funds From Operations (FFO) to be one measure of the
performance of an equity REIT. FFO during the three months ended March
31, 1996 and 1995 amounted to $2,561,000 and $947,000, respectively. FFO
was determined in accordance with the National Association of Real Estate
Investment Trusts' interpretation published in March 1995. FFO is
defined as net income, excluding gains or losses from debt restructuring
and sales of property, plus depreciation and amortization of assets
related to real estate, after adjustments for unconsolidated ventures.
FFO, therefore, does not represent cash generated from operating
activities in accordance with generally accepted accounting principles
and should not be considered an alternative to net income as an
indication of the Company's performance or to cash flow as a measure of
liquidity or its ability to pay distributions.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
At the Company's special stockholders' meeting on March 28, 1996,
the Company's stockholders approved the Company's one-for-two reverse
stock split of the Company's common stock. The split, in which every two
issued and outstanding shares of common stock of the Company, par value
$0.01 per share, were changed into one share of common stock of the
Company, par value $0.02, was effective as of March 29, 1996. The Company's
common stock began trading on the New York Stock Exchange and the Pacific
Stock Exchange on a post-reverse stock split basis on April 1, 1996.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Company held its special stockholders' meeting on March 28, 1996, to
consider the following proposals:
1. To amend the Charter to delete in its entirety Article VIII,
relating to certain business combinations.
2. To approve the Company's one-for-two reverse stock split.
Following are the results of the meetings:
For Against Abstain
Amendment of the Charter to
delete Article VIII, relating
to certain business combinations 12,201,899 325,523 51,468
One-for-two reverse stock split 4,984,827 228,591 28,551
Since the Company obtained more than the required affirmative vote of 80%
on proposal 1 and 50% on proposal 2, both proposals were approved.
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit No. Exhibit
3.1 Charter of the Company, as amended, is incorporated herein by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-2, Registration No. 333-921.
3.2 Amended and Restated Bylaws of the Company are incorporated
herein by reference to Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995.
10.1 The Company's Automatic Dividend Reinvestment and Share
Purchase Plan, as adopted by the Company, is incorporated
herein by reference to Exhibit 4.1 to Amendment No. 2 to
Registration Statement No. 2-94354 of ICM Property Investors
Incorporated.
10.2 The Company's Employee Stock Option Plan, as amended and
restated, is incorporated herein by reference to Exhibit 10.2
to the Company's Registration Statement on Form S-2,
Registration No. 333-921.
10.3 The Company's 1992 Directors' Stock Option Plan, as amended and
restated, is incorporated herein by reference to Exhibit 10.3
to the Company's Registration Statement on Form S-2,
Registration No. 333-921.
10.4 Amended and Restated Credit Agreement for $60 million revolving
line of credit dated as of September 14, 1995, by and between
the Company, as Borrower, and Bank of America National Trust
and Savings Association is incorporated herein by reference to
Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
10.5 Sale and Option Agreement dated as of August 26, 1995, by and
between Kemper Investors Life Insurance Company, on behalf of
itself and Participants (as defined therein), as Lender, the
Company, as Purchaser, and Tustin Properties, as Owner, for
3002 Dow Business Center is incorporated herein by reference to
Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
10.6 BPIA Agreement dated as of January 1, 1995, by and between
Westminster Holdings, Inc., a California corporation and the
Company is incorporated herein by reference to Exhibit 10.14 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
10.7 Employment Agreement made as of February 17, 1993, by and
between ICM Property Investors Incorporated and Peter B.
Bedford is incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, as amended by Form 10-K/A filed on May 1,
1995, and Form 10-K/A-2 filed on August 8, 1995.
10.8 Amendment No. 1 to Employment Agreement dated as of September
18, 1995, by and between Peter B. Bedford and the Company is
incorporated herein by reference to Exhibit 10.10 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
10.9 Series A Convertible Preferred Stock Purchase Agreement, among
the Company, AEW Partners, L.P. and Peter B. Bedford dated as
of May 18, 1995, is incorporated herein by reference to Exhibit
10.15 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995.
10.10 Amendment No. 1 to the Series A Convertible Preferred Stock
Purchase Agreement dated September 11, 1995, among the Company,
AEW Partners, L.P. and Peter B. Bedford, is incorporated herein
by reference to Exhibit 10.12 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995.
10.11 Standstill Agreement dated as of September 18, 1995, by and
between the Company and Peter B. Bedford is incorporated herein
by reference to Exhibit 10.13 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995.
10.12 Purchase and Sale Agreement dated as of October 19, 1995,
between Landsing Pacific Fund, Inc., a Maryland corporation as
Seller, and the Company, the Buyer, as amended, is incorporated
herein by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on December 27, 1995.
10.13 Promissory Note dated March 20, 1996 executed by the Company
and payable to the order of Prudential Insurance Company of
America is incorporated herein by reference to Exhibit 10.13 to
the Company's Registration Statement on Form S-2, Registration
No. 333-921.
27* Financial Data Schedule
* Filed herewith
B. Reports on Form 8-K
During the quarter ended March 31, 1996, the Company filed on
February 15, 1995, a report on Form 8-K/A dated December 5, 1995, which
supplemented Item 7 on Form 8-K dated December 5, 1995 regarding the
acquisition of 3002 Dow Business Center. The following financial
statements were filed: (i) Historical Summary and
Gross Income and Direct Operating Expenses of 3002 Dow Business Center
for the year ended December 31, 1994 and (ii) pro forma financial
statements showing the effect resulting from the acquisition of 3002 Dow
Business Center.
During the quarter ended March 31, 1996, the Company filed on
February 23, 1996, a report on Form 8-K/A dated December 14, 1995, which
supplemented Item 7 on Form 8-K dated December 14, 1995, regarding the
acquisition of the Landsing Pacific Portfolio. The following financial
statements were filed: (i) Historical Summary and Gross Income and
Direct Operating Expenses of the Landsing Pacific Portfolio for the year
ended December 31, 1994 and (ii) pro forma financial statements showing
the effect resulting from the acquisition of the Landsing Pacific
Portfolio.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Sections 13 or 15(a), Registrant has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized.
Dated: May 8, 1996
BEDFORD PROPERTY INVESTORS, INC.
(Registrant)
By: /s/ PETER B. BEDFORD
Peter B. Bedford
Chairman of the Board and
Chief Executive Officer
By: /s/ DONALD A. LORENZ
Donald A. Lorenz
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ HANH KIHARA
Hanh Kihara
Controller
(Principal Accounting Officer)
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