SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 10, 1997
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
Maryland 1-12222 68-0306514
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
270 Lafayette Circle, Lafayette, California 94549
(Address of principal executive offices)
Registrant telephone number, including area code: (510) 283-8910
The undersigned Registrant hereby amends its Report on Form 8-K, filed
July 23, 1997, as follows:
Item 5. Other Events
On January 15, 1997, Bedford Property Investors, Inc. (the
Company) acquired 6500 Kaiser Drive, a 78,611 square foot
research and development building located in Fremont, California
from AB REO IV, L.L.C. for $7,845,000. On March 12, 1997, the
Company acquired Executive Center at South Bank, a seven-
building, 140,157 square foot office complex in Phoenix,
Arizona, from Robertson Stephens Commercial Property Fund,
L.L.C. for $11,900,000. On March 14, 1997, the Company acquired
Bedford Fremont Business Center, a five-building, 146,509 square
foot service flex/office complex in Fremont, California, from
Metropolitan Life Insurance Company for $12,400,000. On May 8,
1997, the Company acquired Spinnaker Court, a 98,500 square foot
research and development/manufacturing building located in
Fremont, California, from T. G. Exchange, Inc. for $8,400,000.
On May 9, 1997, the Company acquired U.S. Bank Centre, a 104,324
square foot, five-story office building in Reno, Nevada, from
Duffel Financial and Construction Company for $12,175,000. On
May 29, 1997, the Company acquired the 9737 Great Hills Trail
Building, a three-story 82,680 square foot suburban office
building in Austin, Texas, from R. S. Property Fund I, L.P. for
$9,650,000. On June 4, 1997, the Company acquired the Troika
Building, a 52,000 square foot office building in Tucson,
Arizona, from Metropolitan Life Insurance Company for
$3,900,000. On June 19, 1997, the Company acquired 2277 Pine
View Way, a 120,480 square foot research and development
facility in Petaluma, California, from MIP Properties, Inc. for
$8,800,000. On June 27, 1997, the Company acquired Scripps
Wateridge Corporate Center, a two-building 123,853 square foot
office complex in San Diego, California, from Scripps Wateridge
Property Limited Partnership for $17,000,000. The purchase
included an adjacent parcel of land on which the Company plans
to develop a 25,000 square foot office building. On July 10,
1997, the Company acquired Orillia Office Park, a five-building,
334,255 square foot suburban office complex in Renton,
Washington, from David Sabey and Sandra Sabey for $32,500,000.
On July 15, 1997, the Company acquired 2601 West Broadway, a
44,244 square foot research and development building in Tempe,
Arizona, from First Exchange of Arizona f/b/o Broadway Hi-Tech
84 for $3,420,000. On July 22, 1997, the Company acquired
Phoenix Airport Center, a five-building, 213,854 square foot
office complex in Phoenix, Arizona, from Sky Harbor Associates,
an Arizona joint venture, for $19,100,000.
The acquisitions in 1997 were financed with borrowing from the
Company's credit facility with Bank of America, except for the
purchase of Executive Center at South Bank and Bedford Fremont
Business Center which were financed with proceeds from the
common stock offering which was completed on February 12, 1997,
and the purchase of U.S. Bank Centre which was financed in part
through the assumption of an $8,914,000 mortgage and in part with
borrowings from the Company's credit facility.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits:
The registrant hereby amends Item 7 by deleting sub parts (a)
and (b) in their entirety and replacing such sections with:
(a) Financial Statements
The Historical Summary of Gross Income and Direct Operating
Expenses of Orillia Office Park for the year ended December
31, 1996 (see Attachment A) and the Combined Historical
Summary of Gross Income and Direct Operating Expenses of
Executive Center at South Bank, Bedford Fremont Business
Center, U. S. Bank Centre, Scripps Wateridge Corporate
Center, and Phoenix Airport Center for the Year Ended
December 31, 1996 (see Attachment B).
(b) Pro forma Financial Information
The pro forma consolidated balance sheet as of June 30, 1997
and pro forma consolidated income statements for the six
months ended June 30, 1997 and the year ended December 31,
1996, showing the effect of the acquisitions of Laguna Hills
Square, Westech Business Center, 100 View Street, Fourier
Avenue, Lenexa land, Lundy Avenue, Phoenix land, Kenyon
Center, 115 Mason Circle, 47600 Westinghouse Drive, Napa
Valley Corporate Way, Carroll Tech Center, 47633 Westinghouse
Drive, Westinghouse land, Vista Buildings 1 and 2, Napa lots
10A and 12J and K, Doherty Avenue, O'Toole Business Center,
Panorama Business Center, Signal Systems Building, 6500
Kaiser Drive, Executive Center at South Bank, Bedford
Fremont Business Center, Spinnaker Court, U.S. Bank Centre,
9737 Great Hills Trail Building, Troika Building, 2277 Pine
View Way, Scripps Wateridge Corporate Center, Orillia Office
Park, 2601 West Broadway, and Phoenix Airport Center and the
sales of St. Paul East and West, 1000 Town Center and
Mariner Court (see Attachment C).
(c) Exhibit
23.1 Consent of KPMG Peat Marwick LLP
SIGNATURE
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, hereunto duly authorized.
BEDFORD PROPERTY INVESTORS, INC.
By: /s/ Scott R. Whitney
Scott R. Whitney
Senior Vice President and
Chief Financial Officer
Date: September 19, 1997
<PAGE>
Attachment A
Orillia Office Park
HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
CONTENTS
Independent Auditors' Report 1
Historical Summary of Gross
Income and Direct Operating Expenses 2
Notes to Historical Summary of
Gross Income and Direct Operating Expenses 2-3
<PAGE>
Independent Auditors' Report
The Board of Directors
Bedford Property Investors, Inc.:
We have audited the accompanying historical summary of gross income
and direct operating expenses (the Summary) of Orillia Office Park
(the Property) for the year ended December 31, 1996. The Summary is
the responsibility of management. Our responsibility is to express an
opinion on the Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Summary is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Summary. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall Summary presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying Summary was prepared to comply with the rules and
regulations of the Securities and Exchange Commission and excludes
certain expenses, described in note A, that would not be comparable to
those resulting from the proposed future operations of the Property.
In our opinion, the Summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses,
exclusive of expenses described in note A, of the Property for the
year ended December 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
August 1, 1997
<PAGE>
Orillia Office Park
Historical Summary of Gross Income
and Direct Operating Expenses
Year Ended December 31, 1996
Gross income:
Rental income $ 3,593,241
Direct operating expenses:
Repairs and maintenance 8,381
Insurance 7,620
Administrative 10,257
26,258
Operating income $ 3,566,983
Notes to Historical Summary of Gross Income and Direct Operating
Expenses
A. Property and Basis of Accounting
The historical summary of gross income and direct operating
expenses has been prepared in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission and
relates to the operations of Orillia Office Park (the Property).
In accordance with Rule 3-14, direct operating expenses are
presented exclusive of depreciation, interest, management fees and
income taxes as these expenses would not be comparable to the
proposed future operations of the property.
Certain property operating expenses, including property taxes,
are paid directly by the tenant.
Rental income of the Property is recognized on a straight line
basis over the term of the related leases. For 1996, rental
income on a straight-line basis was equal to contractual income.
<PAGE>
B. Leases
Minimum future rents of the Property as of December 31,
1996 are as follows (in thousands):
1997 $ 3,203
1998 3,125
1999 3,125
2000 3,446
2001 3,510
Thereafter 8,273
$ 24,682
C. Estimated Taxable Operating Results and Cash to be Made Available
by Operations (unaudited)
Pro forma cash available from operations and pro forma taxable
income for 1996 are shown below. Pro forma taxable operating
results are derived by deducting depreciation over 39 years;
however, Bedford Property Investors, Inc., as a Real Estate
Investment Trust (REIT), intends to pay dividends in amounts that
exceed taxable income and, therefore, will pay no taxes. Dividends
paid to the REIT shareholders are classified as return of capital,
dividend income or capital gains.
Revenues $3,593,241
Operating expenses 26,258
Pro forma cash available from
operations 3,566,983
Depreciation expense 589,110
Pro forma taxable income $2,977,873
<PAGE>
Attachment B
Executive Center at South Bank, Bedford Fremont Business Center,
U.S. Bank Centre, Scripps Wateridge Corporate Center and Phoenix
Airport Center
COMBINED HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
CONTENTS
Independent Auditors' Report 1
Combined Historical Summary of Gross
Income and Direct Operating Expenses 2
Notes to Combined Historical Summary of
Gross Income and Direct Operating Expenses 2-3
<PAGE>
Independent Auditors' Report
The Board of Directors
Bedford Property Investors, Inc.:
We have audited the accompanying combined historical summary of gross
income and direct operating expenses (the Summary) of Executive Center
at South Bank, Bedford Fremont Business Center, U.S. Bank Centre,
Scripps Wateridge Corporate Center and Phoenix Airport Center (the
Properties) for the year ended December 31, 1996. The Summary is the
responsibility of management. Our responsibility is to express an
opinion on the Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Summary is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Summary. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall Summary presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying Summary was prepared to comply with the rules and
regulations of the Securities and Exchange Commission and excludes
certain expenses, described in note A, that would not be comparable to
those resulting from the proposed future operations of the Properties.
In our opinion, the Summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses,
exclusive of expenses described in note A, of the Properties for the
year ended December 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
August 1, 1997
<PAGE>
Executive Center at South Bank, Bedford Fremont Business Center,
U.S. Bank Centre, Scripps Wateridge Corporate Center, and Phoenix
Airport Center
Combined Historical Summary of Gross Income
and Direct Operating Expenses
Year Ended December 31, 1996
Gross income:
Rental income $ 5,912,462
Common are reimbursement 843,436
Other 62,058
6,817,956
Direct operating expenses:
Real property tax 642,460
Repairs and maintenance 709,471
Utilities 319,310
Insurance 86,453
Administrative 185,601
Miscellaneous 73,092
2,016,387
Operating income $ 4,801,569
Notes to Combined Historical Summary of Gross Income and Direct
Operating Expenses
A. Property and Basis of Accounting
The combined historical summary of gross income and direct
operating expenses has been prepared in accordance with Rule 3-14
of Regulation S-X of the Securities and Exchange Commission and
relates to the operations of Executive Center at South Bank,
Bedford Fremont Business Center, U.S. Bank Centre, Scripps
Wateridge Corporate Center and Phoenix Airport Center (the
Properties).
In accordance with Rule 3-14, direct operating expenses are
presented exclusive of depreciation, interest, management fees and
income taxes as these expenses would not be comparable to the
proposed future operations of the property.
The acquisition of the Properties may result in new valuations for
purposes of determining future property tax assessments.
Rental income of the Properties is recognized on a straight-line
basis over the term of the related leases. For 1996, aggregate
rental income on a straight-line basis exceeded contractual
rentals by $309,405.
B. Leases
Minimum future rents of the Properties as of December
31, 1996 are as follows (in thousands):
1997 $ 6,467
1998 6,270
1999 5,746
2000 4,357
2001 2,891
Thereafter 4,315
$ 30,046
The minimum future rents shown above do not include
tenants obligations for reimbursement of operating expenses,
insurance and real estate taxes.
C. Estimated Taxable Operating Results and Cash to be Made Available
by Operations (unaudited)
Pro forma cash available from operations and pro forma taxable
income for 1996 are shown below. Pro forma taxable operating
results are derived by deducting depreciation over 39 years;
however, Bedford Property Investors, Inc., as a Real Estate
Investment Trust (REIT), intends to pay dividends in amounts that
exceed taxable income and, therefore, will pay no taxes. Dividends
paid to the REIT shareholders are classified as return of capital,
dividend income or capital gains.
Revenues (1) $6,508,551
Operating expenses 2,016,387
Pro forma cash available from
operations 4,492,164
Depreciation expense 1,322,463
Pro forma taxable income $ 3,169,701
(1) Excludes $309,405 which represents the excess of aggregate
straight-line rents over rental income on a contractual basis.
<PAGE>
Attachment C
The pro forma financial information is presented for illustrative purposes
only and is not necessarily indicative of operating results or financial
position that would have been achieved if the transactions described in
the footnotes had been consummated as of the beginning of the periods
presented, nor are they necessarily indicative of the future operating
results or financial position of the Company. These statements should
be read in conjunction with the financial statements and accompanying
notes included in the Company's Forms 10-K and 10-Q.
BEDFORD PROPERTY INVESTORS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997 (Unaudited)
(in thousands, except share and per share amounts)
<TABLE>
<S> <C> <C> <C> <C>
Consolidated Properties Properties Consolidated
Historical Acquired (1) Sold (2) Pro Forma
ASSETS:
Real estate investments:
Industrial buildings $201,326 $ 3,475 $ - $204,801
Office buildings 96,164 52,394 - 148,558
Operating properties held for sale 20,767 - (14,486) 6,281
Industrial properties under development 10,304 - - 10,304
328,561 55,869 (14,486) 369,944
Less accumulated depreciation 7,126 - (1,199) 5,927
321,435 55,869 (13,287) 364,017
Cash 1,075 - - 1,075
Other assets 10,180 - (888) 9,292
$332,690 $ 55,869 $(14,175) $374,384
LIABILITIES AND STOCKHOLDERS' EQUITY:
Bank loan payable $ 58,350 $ 54,937 $(25,144) $ 88,143
Mortgage loans payable 60,584 - - 60,584
Accounts payable and accrued expenses 4,531 922 386 5,839
Dividend and distributions payable 4,163 - - 4,163
Other liabilities 3,525 10 (205) 3,330
Total liabilities 131,153 55,869 (24,963) 162,059
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
Minority interest in consolidated partnership 1,497 - - 1,497
Common stock and other stockholders' equity:
Common stock, par value $0.02 per share;
authorized 50,000,000 shares; issued
and outstanding 11,155,950 shares 223 223
Additional paid-in capital 223,454 223,454
Accumulated losses and distributions
in excess of net income (73,637) - 10,788 (62,849)
Total common stock
and other stockholders' equity 150,040 - 10,788 160,828
Total liabilities and stockholders' equity $332,690 $ 55,869 $(14,175) $374,384
</TABLE>
See accompanying notes to pro forma financial statements.
BEDFORD PROPERTY INVESTORS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
(in thousands, except share and per share amounts)
<TABLE>
<S> <C> <C> <C> <C> <C>
Consolidated Properties Properties Pro Forma Pro Forma
Historical Acquired (3) Sold (4) Adjustments Consolidated
Property operations:
Rental income $19,683 $5,476 $(1,960) $23,199
Rental expenses:
Operating expenses 3,023 789 (582) 3,230
Real estate taxes 1,715 444 (131) 2,028
Depreciation and amortization 2,374 895 (227) 3,042
Income from property operations 12,571 3,348 (1,020) 14,899
General and administrative expenses (1,117) - - (1,117)
Interest income 144 - - 144
Interest expense (3,032) - - (2,790) (5) (5,822)
Income before minority interest and
gain on sale 8,566 3,348 (1,020) (2,790) 8,104
Gain on sale of real estate
investments - - 10,595 10,595
Minority interest (51) - - - (51)
Net income $ 8,515 $3,348 $ 9,575 (2,790) $18,648
Net income applicable to common
stockholders* $ 6,265 $3,348 $ 9,575 (2,790) $16,398
Primary earnings per common and
common equivalent share $ 0.61 $ 1.45
Primary weighted average number of
common and common
equivalent shares 10,243,123 11,330,584 (6)
Earnings per common share - assuming
full dilution $ 0.59 $ 1.19
Weighted average number of common
shares - assuming full dilution 14,546,136 15,633,597 (6)
</TABLE>
* Reflects reduction for quarterly dividends of $1,125 on the $50,000
Series A convertible preferred stock.
See accompanying notes to pro forma financial statements.
BEDFORD PROPERTY INVESTORS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(in thousands, except share and per share amounts)
<TABLE>
<S> <C> <C> <C> <C> <C>
Consolidated Properties Properties Pro Forma Pro Forma
Historical Acquired (7) Sold (8) Adjustments Consolidated
Property operations:
Rental income $27,541 $22,610 $(5,354) - $44,797
Rental expenses:
Operating expenses 5,352 3,067 (1,603) - 6,816
Real estate taxes 2,595 2,096 (605) - 4,086
Depreciation and amortization 3,030 3,342 (611) - 5,761
Income from property operations 16,564 14,105 (2,535) - 28,134
General and administrative expenses (1,752) - - - (1,752)
Interest income 150 - - - 150
Interest expense (4,347) - - (8,185) (9) (12,532)
Income before minority interest and gain on sale 10,615 14,105 (2,535) (8,185) 14,000
Gain on sale of real estate investments 406 - 10,255 - 10,661
Minority interest - - - (106) (10) (106)
Net income $11,021 $14,105 $ 7,720 $ (8,291) $24,555
Net income applicable to common stockholders $ 6,516 * $14,105 $ 7,720 $ (8,291) $20,050
Primary earnings per common and common
equivalent share $ 1.18 ** $ 1.79
Primary weighted average number of common
and common equivalent shares 5,531,438 ** 11,175,123 (11)
Earnings per common share - assuming
full dilution $ 1.13 ** $ 1.59
Weighted average number of common shares -
assuming full dilution 9,765,303 ** 15,513,100 (11)
</TABLE>
* Reflects dividends and distributions of $4,505.
** Reflects the one-for-two reverse stock split effective March 29, 1996.
See accompanying notes to pro forma financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997
(1) The unaudited pro forma consolidated balance sheet reflects the
acquisition of (i) Orillia Office Park located in Renton,
Washington, (ii) 2601 West Broadway located in Tempe, Arizona, and
(iii) Phoenix Airport Center located in Phoenix, Arizona as if
such acquisitions had occurred on June 30, 1997. The Company
acquired Orillia Office Park on July 10, 1997, 2601 West Broadway
on July 15, 1997, and Phoenix Airport Center on July 22, 1997.
The combining balance sheet for these acquisitions as of June 30,
1997 is as follows (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
Phoenix
Orillia 2601 West Airport
Office Park Broadway Center Total
Assets:
Real estate investment:
Industrial buildings $ - $3,475 $ - $ 3,475
Office buildings 32,996 - 19,398 52,394
$32,996 $3,475 $19,398 $ 55,869
Liabilities and stockholders'
equity:
Bank loan payable $32,508 $3,394 $19,035 $ 54,937
Accounts payable and
accrued expenses 488 77 357 922
Other liabilities - 4 6 10
Total liabilities $32,996 $3,475 $19,398 $ 55,869
</TABLE>
Consolidated pro forma real estate investments as of June 30,
1997 include capitalized fees of $825,300 paid by the Company to
Bedford Acquisitions, Inc. (BAI or Bedford Acquisitions), a
corporation wholly owned by Mr. Bedford, in connection with the
Company's acquisition of Orillia Office Park, 2601 West Broadway
and Phoenix Airport Center.
(2) The unaudited pro forma consolidated balance sheet reflects the
sale of 1000 Town Center and Mariner Court as if such transaction
had occurred on June 30, 1997. The Company sold these properties
on July 31, 1997. The proceeds of the sale, net of a sale
commission of $386,500 payable to BAI, were used to pay down the
credit facility.
PROFORMA CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1997
(3) The unaudited pro forma consolidated statement of income reflects
the property acquisitions through July 31, 1997 as if they had
occurred on January 1, 1997. The Company acquired (i) 6500 Kaiser
Drive on January 15, 1997, (ii) Executive Center at South Bank on
March 12, 1997, (iii) Bedford Fremont Business Center on March 14,
1997, (iv) Spinnaker Court on May 8, 1997, (v) U.S. Bank Centre on
May 9, 1997, (vi) Great Hills Trail Building on May 29, 1997,
(vii) Troika Building on June 4, 1997, (viii) 2277 Pine View Way
on June 19, 1997, (ix) Scripps Wateridge Corporate Center on June
27, 1997, (x) Orillia Office Park on July 10, 1997, (xi) 2601 West
Broadway on July 15, 1997, and (xii) Phoenix Airport Center on
July 22, 1997.
The combining historical statement of income for the period from
January 1, 1997 through the date of acquisition for the properties
acquired from January 1 through June 30, 1997 is as follows (in
thousands):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Bedford
Fremont Great Subtotal
6500 Kaiser Exec. Center Business Spinnaker U. S. Bank Hills Trail carried
Drive South Bank Center Court Centre Building forward
Rental income $30 $295 $324 $352 $634 $311 $1,946
Rental expenses:
Operating expenses 3 66 52 40 166 31 358
Real estate taxes 6 29 28 46 37 61 207
Depreciation and amortization - 26 33 44 76 65 244
Income from property operations $21 $174 $211 $222 $355 $154 $1,137
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Total
properties
Subtotal Scripps acquired from
brought Troika 2277 Pine Wateridge Jan. 1 through
forward Building View Way Corp. Ctr. June 30, 1997
Rental income $1,946 $291 $309 $149 $2,695
Rental expenses:
Operating expenses 358 44 27 53 482
Real estate taxes 207 51 29 39 326
Depreciation and amortization 244 24 66 129 463
Income from property operations $1,137 $172 $187 $(72) $1,424
</TABLE>
The combining historical statement of income for the first six
months of 1997 for properties acquired after June 30, 1997 and
the statement summarizing all the acquisitions are as follows (in
thousands):
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total Total properties
Orillia Phoenix properties acquired from Total
Office 2601 West Airport acquired after Jan. 1 through properties
Park Broadway Center June 30, 1997 June 30, 1997 acquired
Rental income $1,796 $108 $877 $2,781 $2,695 $5,476
Rental expenses:
Operating expenses 49 20 238 307 482 789
Real estate taxes - 24 94 118 326 444
Depreciation and amortization 255 26 151 432 463 895
Income from property operations $1,492 $38 $394 $1,924 $1,424 $3,348
</TABLE>
The pro forma amounts are generally based on historical data.
Depreciation and amortization expense is calculated on a
pro forma basis, based on acquisition costs. Incremental costs of
managing the acquired properties are reflected in the property
operating expenses.
(4) The unaudited pro forma consolidated statement of income reflects
the elimination of the actual results of the operations of 1000
Town Center and Mariner Court from January 1 through June 30,
1997. The statement also reflects the gain on the sale as if the
sale had occurred on January 1, 1997. The Company sold 1000 Town
Center and Mariner Court on July 31, 1997.
(5) The unaudited pro forma consolidated statement of income reflects
the effects of the sale of 4,600,000 shares of common stock at
$17.375 per share and the assumption of the mortgage loan of
$8,914,000 as if they had occurred on January 1, 1997. Net
proceeds from the common stock sale and the sale of 1000 Town
Center and Mariner Court; borrowings of $42,000,000 on the credit
facility; and the assumption of the $8,914,000 mortgage were
utilized to finance the Company's acquisition of real estate
investments during the first six months of 1997. The sale of
4,600,000 shares of common stock was completed on February 12,
1997. The acquisition of U.S. Bank Centre was financed with
borrowings from the credit facility and the assumption of the
$8,914,000 mortgage on May 9, 1997.
The pro forma consolidated interest expense consists of the
amortization of loan fees (including fees incurred for the
amendment and expansion of the credit facility to $150,000,000)
and interest expense incurred on borrowings on the credit
facility and the mortgage loans.
(6) The weighted average number of shares outstanding shown on the
proforma consolidated statement of income reflects the sale of
4,600,000 shares of common stock as if it had occurred on January
1, 1997.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER
31, 1996
(7) The unaudited pro forma consolidated statement of income reflects
the property acquisitions in 1996 as if they had occurred on
January 1, 1996. The Company acquired (i) Laguna Hills Square on
March 27, 1996, (ii) Westech Business Center on April 15, 1996,
(iii) 100 View Street on May 3, 1996, (iv) Fourier Avenue on May
30, 1996, (v) Lenexa land on June 5, 1996 (vi) Lundy Avenue on
July 9, 1996, (vii) Phoenix land on July 31, 1996, (viii) Kenyon
Center, 115 Mason Circle and 47600 Westinghouse Drive on
September 5, 1996, (ix) Napa Valley Corporate Way on September
19, 1996, (x) Carroll Tech Center on October 7, 1996, (xi) 47633
Westinghouse Drive and Westinghouse land on October 15, 1996,
(xii) Vista Buildings 1 and 2 on October 17, 1996, (xiii) Napa
lots 10A and 12J and K on December 10, 1996, (xiv) Doherty Avenue
on December 17, 1996, (xv) O'Toole Business Center and Panorama
Business Center on December 18, 1996, and (xvi) Signal Systems
Building on December 31, 1996.
The combining historical statement of income for the period from
January 1, 1996 through the date of acquisition for these
properties is as follows (in thousands):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Westech Subtotal
Laguna Hills Business 100 View Fourier Lenexa Lundy carried
Square Center Street Avenue Land Avenue forward
Rental income . . . . . . . . $ 294 $374 $306 $434 $ - $274 $1,682
Rental expenses
Operating expenses . . . . 74 63 83 21 - 34 275
Real estate taxes. . . . . 9 28 17 33 3 29 119
Depreciation and amortization 20 33 23 65 - 24 165
Income from property operations $ 191 $250 $183 $315 $ (3) $187 $1,123
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
860-870
Subtotal 47600 Napa Valley Subtotal
brought Phoenix Kenyon 115 Mason Westinghouse Corporate carried
forward Land Center Circle Drive Way forward
Rental income . . . . . . . . $1,682 $ - $788 $142 $119 $399 $3,130
Rental expenses
Operating expenses 275 - 26 21 14 61 397
Real estate taxes. . . . . 119 6 - 14 10 74 223
Depreciation and amortization 165 - 107 13 16 52 353
Income from property operations $1,123 $ (6) $655 $ 94 $ 79 $212 $2,157
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
47633
Subtotal Carroll Westing- Westing- Vista Napa Subtotal
brought Tech house house Buildings Lots 10A and carried
forward Center Drive Land 1 and 2 12J & K forward
Rental income . . . . . . . . $3,130 $ 823 $498 $ - $415 $ - $4,866
Rental expenses
Operating expenses 397 79 15 - 11 - 502
Real estate taxes. . . . . 223 60 42 12 - 114 451
Depreciation and amortization 353 84 57 - 70 - 564
Income from property operations $2,157 $ 600 $384 $ (12) $334 $ (114) $3,349
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total
Subtotal O'Toole Panorama Signal Properties
brought Doherty Business Business Systems Acquired
forward Avenue Center Center Building in 1996
Rental income . . . . . . . . $4,866 $521 $1,090 $699 $1,003 $8,179
Rental expenses
Operating expenses 502 33 153 147 57 892
Real estate taxes. . . . . 451 55 91 113 99 809
Depreciation and amortization 564 69 124 67 161 985
Income from property operations $3,349 $364 $ 722 $372 $ 686 $5,493
</TABLE>
The unaudited pro forma consolidated statement of income reflects
the property acquisitions through July 31, 1997 as if they had
occurred on January 1, 1996. The Company acquired (i) 6500
Kaiser Drive on January 15, 1997, (ii) Executive Center at South
Bank on March 12, 1997, (iii) Bedford Fremont Business Center on
March 14, 1997, (iv) Spinnaker Court on May 8, 1997, (v) U.S.
Bank Centre on May 9, 1997, (vi) Great Hills Trail Building on
May 29, 1997, (vii) Troika Building on June 4, 1997, (viii) 2277
Pine View Way on June 19, 1997, (ix) Scripps Wateridge Corporate
Center on June 27, 1997, (x) Orillia Office Park on July 10,
1997, (xi) 2601 West Broadway on July 15, 1997, and (xii) Phoenix
Airport Corporate Center on July 22, 1997.
The combining historical statement of income for the twelve
months of 1996 for these properties is as follows (in thousands):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Bedford Great
6500 Executive Fremont U.S. Hills Subtotal
Kaiser Center at Business Spinnaker Bank Trail carried
Drive South Bank Center Court Centre Building forward
Rental income . . . . . . . . $713 $1,417 $1,553 $994 $1,792 $757 $7,226
Rental expenses
Operating expenses 66 320 251 113 471 75 1,296
Real estate taxes. . . . . 138 138 132 129 105 149 791
Depreciation and amortization 143 159 200 133 228 156 1,019
Income from property operations $366 $ 800 $ 970 $619 $ 988 $377 $4,120
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Scripps
Subtotal Wateridge Orillia Subtotal
brought Troika 2277 Pine Corporate Office carried
forward Building View Way Center Park forward
Rental income . . . . . . . . $7,226 $680 $659 $ 303 $3,593 $12,461
Rental expenses
Operating expenses 1,296 101 58 107 98 1,660
Real estate taxes. . . . . 791 118 62 79 - 1,050
Depreciation and amortization 1,019 59 157 258 511 2,004
Income from property operations $4,120 $402 $382 $(141) $2,984 $ 7,747
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Total properties
Subtotal Phoenix acquired from
brought 2601 West Airport January 1, 1997
forward Broadway Center through July 31, 1997
Rental income . . . . . . . . $12,461 $217 $1,753 $14,431
Rental expenses
Operating expenses 1,660 40 475 2,175
Real estate taxes. . . . . 1,050 49 188 1,287
Depreciation and amortization 2,004 52 301 2,357
Income from property operations $ 7,747 $ 76 $ 789 $ 8,612
The statement summarizing the operating results for the twelve
months of 1996 for all of the above acquisitions is as follows
(in thousands):
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Total Properties
Properties Acquired Total
Acquired from Jan. 1, 1997 Properties
in 1996 to July 31, 1997 Acquired
Rental income . . . . . . . . . . . . $8,179 $14,431 $22,610
Rental expenses:
Operating expenses . . . . . . . . 892 2,175 3,067
Real estate taxes. . . . . . . . . 809 1,287 2,096
Depreciation and amortization 985 2,357 3,342
Income from property operations $5,493 $ 8,612 $14,105
The pro forma amounts are generally based on historical data.
Depreciation and amortization expense is calculated on a pro
forma basis, based on acquisition costs. Incremental costs of
managing the acquired properties are reflected in the property
operating expenses.
(8) The unaudited pro forma consolidated statement of income reflects
the elimination of the actual results of operations of St. Paul
East and West from January 1, 1996 through the date of sale. The
statement reflects the elimination of the actual results of
operations of 1000 Town Center and Mariner Court from January 1,
1996 to December 31, 1996. The statement also reflects the loss
on the sale of St. Paul East and West, and gain on the sale of
1000 Town Center and Mariner Court as if the sales had occurred
on January 1, 1996. The Company sold St. Paul East and West on
December 31, 1996 and 1000 Town Center and Mariner Court on July
31, 1997.
The combining historical statement of income from January 1, 1996
through the date of sale for St. Paul East and West and for 1996
for 1000 Town Center and Mariner Court is as follows (in
thousands):
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
St. Paul 1000 Mariner
East and West Town Center Court Total
Rental income . . . . . . . . . . . . $1,462 $2,057 $1,835 $5,354
Rental expenses:
Operating expenses . . . . . . . . 301 645 657 1,603
Real estate taxes. . . . . . . . . 341 176 88 605
Depreciation and amortization 84 361 166 611
Income from property operations . . . $ 736 $ 875 $ 924 $2,535
</TABLE>
(9) The unaudited pro forma consolidated statement of income reflects
the effects of the sale of 3,350,000 shares of common stock at
$13.00 per share, the mortgage loan financings of $60,764,000 and
the sale of the 4,600,000 shares of common stock at $17.375 per
share as if they had occurred on January 1, 1996. Net proceeds
from the sale of common stock; proceeds from the sales of St.
Paul East and West, 1000 Town Center and Mariner Court; the
mortgage loan financings; and borrowings of $45,000,000 on the
credit facility were utilized to finance the Company's
acquisitions of real estate investments during 1996 and 1997.
The sales of the 3,350,000 shares and 4,600,000 shares of common
stock were completed on April 24, 1996 and February 12, 1997,
respectively; the mortgage loan financing from Prudential
Insurance Company of America was completed on May 31, 1996;
and the mortgage loan financing from Union Bank was completed
on December 31, 1996. The acquisition of Doherty Avenue was
financed with a $1,850,000 mortgage loan and the issuance of
partnership units convertible to 108,495 shares of common stock.
The acquisition of U.S. Bank Centre was financed with borrowings
on the credit facility and the assumption of an $8,914,000 mortgage
in May 1997.
The pro forma consolidated interest expense consists of the
amortization of loan fees incurred for the amendment and
expansion of the credit facility to $150,000,000, amortization of
loan fees incurred to secure the mortgage loans, and interest
expense incurred on the mortgage loans and borrowings on the
credit facility.
(10) Minority interest shown on the pro forma consolidated statement
of income reflects the income allocated to the owners of the
partnership units as if the units had been issued on January 1,
1996. The units were issued on December 17, 1996 in connection
with the acquisition of Doherty Avenue.
(11) The weighted average number of shares outstanding shown on the
pro forma consolidated statement of income reflects the sale of
3,350,000 shares and 4,600,000 shares of common stock as if the
sales had occurred on January 1, 1996.
<PAGE>
Exhibit 23.1
Consent of Independent Certified Public Accountants
The Board of Directors
Bedford Property Investors, Inc.:
We consent to the incorporation by reference in the registration
statements (No. 333- and 333- ) on Form S-3 and the related
prospectuses of Bedford Property Investors, Inc. of our reports dated
August 1, 1997 with respect to the historical summary of gross income
and direct operating expenses of Orillia Office Park for the year ended
December 31, 1996 and the combined historical summary of gross income and
direct operating expenses of Executive Center at South Bank, Bedford
Fremont Business Center, U. S. Bank Centre, Scripps Wateridge
Corporate Center and Phoenix Airport Center for the year ended
December 31, 1996, which reports appear in the Form 8-K/A of Bedford
Property Investors, Inc. filed on September 19, 1997.
KPMG, Peat Marwick LLP
San Francisco, California
September 19, 1997
