<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(Date of earliest event reported): July 15, 1996 (January 3, 1996)
SPIEKER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 1-12528 94-3185802
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
(Address of principal executive offices) (Zip code)
(415) 854-5600
(Registrant's telephone number, including area code)
This Document consists of 21 pages.
1
<PAGE> 2
SPIEKER PROPERTIES, INC.
CURRENT REPORT
ON
FORM 8-K
ITEM 5. OTHER EVENTS
The following operating properties and mortgages secured by operating properties
were acquired by Spieker Properties, L.P. from unrelated parties between January
1, 1996 and July 11, 1996. Spieker Properties, Inc. (the "Company") owns an
approximate 84.9% general partners' interest in Spieker Properties, L.P. (the
"Operating Partnership" and collectively referred to as the "Company"):
Six Acquired Properties and Two Investments in Mortgages
Bayside Corporate Center, an 84,925 square foot two-building office project in
Foster City, California, on January 3, 1996 for $10.0 million.
San Jose Airport Office Center and 1735 North First Street, two mortgages
secured by four office buildings in San Jose, California, on January 31, 1996
for $14.3 million.
Everett Industrial, a 150,154 square foot industrial building in Everett,
Washington, on March 20, 1996 for $7.4 million.
Carmel Valley Centre I & II, a 106,921 square foot two-building office project
in San Diego, California, on April 1, 1996 for $14.0 million.
2290 North First Street, a 75,680 square foot office building in San Jose,
California, on May 1, 1996 for $6.0 million.
Everett 526, a 97,523 square foot two-building light industrial project in
Everett, Washington, on May 21, 1996 for $4.3 million.
10700 Northup Building, a 55,854 square foot office building in Bellevue,
Washington, on May 28, 1996 for $4.6 million.
Three Acquired Properties
Benicia Industrial I & II, a 1,827,269 square foot seventeen-building industrial
project in Benicia, California, on January 31, 1996 for $41.1 million.
Port of Oakland, a 199,733 square foot light industrial building in Oakland,
California, on May 22, 1996 for $6.8 million.
Doolittle Drive, a 113,196 square foot industrial building in San Leandro,
California, on May 23, 1996 for $3.5 million.
Two Acquired Properties
Dove Street, a 78,052 square foot office building in Newport Beach, California,
on June 27, 1996 for $7.9 million.
Fidelity Plaza, a 77,453 square foot two building office project in Sacramento,
California, on July 1, 1996 for $5.0 million.
City Portfolio
The City, a 595,056 square foot four building office project in Orange,
California, on July 11, 1996 for $34.4 million. One of the four buildings
representing 165,300 square feet was vacant during 1995 and at the time of
acquisition. The Company anticipates rehabilitating the building and
subsequently leasing the space.
2
<PAGE> 3
ITEM 5. OTHER EVENTS (CONTINUED)
The properties were acquired using funds provided by the Company's unsecured
revolving line of credit, funds raised through the issuance of Common Stock and
Class C Common Stock, and the issuance of unsecured investment grade debt.
The costs shown above for each acquisition represent the initial cost at the
time of acquisition.
The Company believes these acquisitions are consistent with the Company's
objective of becoming the preeminent real estate operating company focusing on
industrial, suburban office and neighborhood retail property in California and
the Pacific Northwest. In assessing the properties acquired, the Company
considered current operations, including occupancy levels, rental rates,
expenses and ongoing capital requirements. Further, the Company's management
considered the rental market for the type and location of the acquired property
and, where applicable, the cost of building improvements.
Although no single acquisition is considered a "significant acquisition"
pursuant to the rules governing the reporting of transactions on Form 8-K,
pursuant to Rule 3-14 of Regulation S-X, these acquisitions in the aggregate,
are considered to be material in nature. Certain audited and unaudited
historical and pro forma financial information concerning these properties is
provided in Item 7 of this Current Report on Form 8-K.
In aggregate, the Company acquired three properties during the period from May
29, 1996 to July 11, 1996. The financial statement of the "City Portfolio" for
the year ended December 31, 1995 has been audited, whereas the statement for the
three months ended March 31, 1996 has not been audited. The unaudited financial
statements of the "Two Acquired Properties" reflects the remainder of properties
acquired by the Company during the period from May 29, 1996 to July 11, 1996.
The audited combined financial statement of the "Six Acquired Properties and Two
Investments in Mortgages" for the year ended December 31, 1995 and the unaudited
statements for the period from January 1, 1996 to the earlier of March 31, 1996
or date of acquisition included in the Company's Current Report on Form 8-K
dated June 18, 1996 are incorporated by reference into this Current Report on
Form 8-K.
The unaudited combined financial statements of the "Three Acquired Properties"
included in the Company's Current Report on Form 8-K dated June 18,1996 are
incorporated by reference into this Current Report on Form 8-K.
3
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
<TABLE>
<CAPTION>
(a) (i) Statements of Revenues and Certain Expenses for The
City Portfolio
Page
----
<S> <C>
Report of Independent Public Accountants......................................... 5
Statements of Revenues and Certain Expenses for the three
months ended March 31, 1996 (unaudited) and for the year
ended December 31, 1995........................................................ 6
Notes to Statements of Revenues and Certain Expenses for the
three months ended March 31, 1996 (unaudited) and for the
year ended December 31, 1995................................................... 7
(ii) Combined Statements of Revenues and Certain Expenses for the Two Acquired
Properties
Unaudited Combined Statements of Revenues and Certain
Expenses for the three months ended March 31, 1996 and for
the year ended December 31, 1995............................................... 9
Notes to Unaudited Combined Statements of Revenues and Certain
Expenses for the three months ended March 31, 1996 and for
the year ended December 31, 1995............................................... 10
(b) Pro Forma Financial Information.................................................. 12
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1996.............. 13
Pro Forma Condensed Consolidated Statements of Operations
for the Three Months ended March 31, 1996 and for the year
ended December 31, 1995........................................................ 14
Notes and adjustments to Pro Forma Condensed Consolidated Financial
Statements..................................................................... 16
As Adjusted Condensed Consolidated Statement of Operations for the
year ended December 31, 1995................................................... 18
Notes and adjustments to As Adjusted Condensed Consolidated Statement
of Operations.................................................................. 19
(c) Exhibits
23.1 Consent of Independent Public Accountants.................................. 21
</TABLE>
4
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenues and certain
expenses of the City Portfolio, as defined in Note 1, for the year ended
December 31, 1995. This financial statement is the responsibility of management
of the Company. Our responsibility is to express an opinion on this financial
statement 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
The accompanying statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Company's Current Report
on Form 8-K dated July 15, 1996, and is not intended to be a complete
presentation of the revenues and expenses of the City Portfolio.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the City
Portfolio for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
San Francisco, California ARTHUR ANDERSEN LLP
July 11, 1996
5
<PAGE> 6
SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE CITY PORTFOLIO
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (Unaudited)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
-------------- -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUES $ 1,454 $ 5,298
CERTAIN EXPENSES
Rental Expenses 610 2,592
Real estate taxes 132 509
-------- --------
742 3,101
-------- --------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 712 $ 2,197
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE CITY PORTFOLIO
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (Unaudited)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
1. Basis of Presentation and Summary of Significant Accounting Policies:
Property Acquired
The statements of revenues and certain expenses (see "Basis of
Presentation" below) include the operations of the City Portfolio (the
"Property") acquired by Spieker Properties, L.P. on July 11, 1996. Spieker
Properties, Inc. (the "Company") owns an approximate 84.9% general
partners' interest in Spieker Properties, L.P. (the "Operating Partnership"
collectively referred to as the "Company").
<TABLE>
<CAPTION>
Property Name Location Description
------------- -------- -----------
<S> <C>
The City Orange, California Four multi-tenant office buildings totaling 595,056
square feet
</TABLE>
Basis of Presentation
The accompanying statements of revenues and certain expenses are not
representative of the actual operations of the Property for the periods
presented. Certain expenses may not be comparable to the expenses expected
to be incurred by the Company in the proposed future operations of the
Property; however, the Company is not aware of any material factors
relating to this acquired property that would cause the reported financial
information not to be indicative of future operating results. Excluded
expenses consist primarily of property management fees, interest expense,
depreciation and amortization and other costs not directly related to the
future operations of the Property.
The financial information presented for the three months ended March 31,
1996 is unaudited. In the opinion of management, the unaudited financial
information contains all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the statements of revenues
and certain expenses for the Property.
Revenue Recognition
All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.
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 revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
7
<PAGE> 8
2. Leasing Activity:
The minimum future rental revenues due under noncancelable operating leases
in effect as of April 1, 1996, for the remainder of 1996 and annually
thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1996 (nine months) $ 4,018
1997 5,116
1998 4,664
1999 4,588
2000 4,527
Thereafter 6,413
-------
$29,326
=======
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $59
for the three months ended March 31, 1996 (unaudited) and $173 for the year
ended December 31, 1995. Certain leases contain options to renew.
8
<PAGE> 9
SPIEKER PROPERTIES, INC.
UNAUDITED COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE TWO ACQUIRED PROPERTIES
FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
REVENUES
Rental income $480 $1,720
Interest and other income 8 33
---------- ----------
488 1,753
CERTAIN EXPENSES
Rental expenses 263 1,033
Real estate taxes 34 143
---------- ----------
297 1,176
---------- ----------
RENTAL REVENUE IN EXCESS OF CERTAIN EXPENSES $ 191 $ 577
========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited,
combined statements.
9
<PAGE> 10
SPIEKER PROPERTIES, INC.
NOTES TO UNAUDITED COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE TWO ACQUIRED PROPERTIES
FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
1. Basis of Presentation and Summary of Significant Accounting Policies:
Properties Acquired
The combined statements of revenues and certain expenses (see "Basis of
Presentation" below) include the combined operations of two properties (the
"Properties") acquired by Spieker Properties, L.P. during the period from
May 29, 1996 to July 11, 1996. Spieker Properties, Inc. (the "Company")
owns an approximate 84.9% general partners' interest in Spieker Properties,
L.P. (the "Operating Partnership" collectively referred to as the
"Company").
<TABLE>
<CAPTION>
Property Name Location Description
------------- -------- -----------
<S> <C> <C>
Dove Street Newport Beach, California One multi-tenant office building totaling 78,052
square feet
Fidelity Plaza Sacramento, California Two multi-tenant office buildings totaling 77,453
square feet
</TABLE>
Basis of Presentation
The accompanying combined statements of revenue and certain expenses are
not representative of the actual operations of the Properties for the
periods presented. Certain expenses may not be comparable to the expenses
expected to be incurred by the Company in the proposed future operations of
the Properties; however, the Company is not aware of any material factors
relating to the Properties that would cause the reported financial
information not to be indicative of future operating results. Excluded
expenses consist primarily of property management fees, interest expense,
depreciation and amortization and other costs not directly related to the
future operations of the Properties.
In the opinion of management, the unaudited financial information contains
all adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the combined statements of revenues and certain
expenses for the Properties.
Revenue Recognition
All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.
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 revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
10
<PAGE> 11
2. Leasing Activity:
The minimum future rental revenues, due under noncancelable operating
leases in effect as of April 1, 1996, for the remainder of 1996 and
annually thereafter are as follows:
<TABLE>
<CAPTION>
Year Amounts
---- -------
<S> <C>
1996 (9 months) $ 961
1997 1,738
1998 1,551
1999 815
2000 380
Thereafter 208
-------
Total $ 5,653
=======
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $4
for the three months ended March 31, 1996 and $24 for the year ended
December 31, 1995. Certain leases contain options to renew.
11
<PAGE> 12
SPIEKER PROPERTIES, INC.
PRO FORMA FINANCIAL INFORMATION
The unaudited, pro forma condensed consolidated balance sheet as of March 31,
1996 reflects the incremental effect of the Acquired Properties and Mortgages
(collectively, the "Acquired Properties and Mortgages") described in Item 5 as
if the acquisitions occurring after March 31, 1996 had occurred on March 31,
1996. The accompanying unaudited, pro forma condensed consolidated statements of
operations for the three months ended March 31, 1996 and the year ended December
31, 1995 reflect the incremental effect of (i) the January 19, 1996 unsecured
investment grade debt issuance (the "Notes Offering") during 1996, (ii) the
February 28, 1996 Common Stock offering and concurrent offering (collectively,
the "Offerings"), and the application of the net proceeds therefrom and (iii)
the Acquired Properties and Mortgages described in Item 5 as if such
acquisitions had occurred on January 1, 1995. These statements should be read in
conjunction with respective consolidated financial statements and notes thereto
included in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 and its Annual Report on Form 10-K for the year ended December
31, 1995. In the opinion of management, the unaudited, pro forma condensed
consolidated financial information provides for all adjustments necessary to
reflect the effects of the Acquired Properties and Mortgages, Offerings and
Notes Offering.
The accompanying unaudited, as adjusted condensed consolidated statement of
operations for the year ended December 31, 1995 has been prepared to reflect (i)
the Offerings and the application of the net proceeds therefrom, (ii) the
incremental effect of the acquisition of 17 properties during 1995 and three
properties and two mortgages in January 1996, (iii) the conversion of the
secured line of credit to an unsecured facility in November 1995, (iv) the Notes
Offerings during 1995 and 1996 and (v) the issuance of Series B Preferred Stock
during 1995, as if such transactions had all occurred on January 1, 1995. This
unaudited statement should be read in conjunction with the respective
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995. In the opinion
of management, the unaudited as adjusted condensed consolidated financial
information provides for all adjustments necessary to reflect the effects of the
Offerings, the property acquisitions, the Notes Offerings and the preferred
stock offering.
These pro forma and as adjusted statements may not necessarily be indicative of
the results that would have actually occurred if the acquisitions had been in
effect on the date indicated, nor does it purport to represent the financial
position, results of operations or cash flows for future periods.
12
<PAGE> 13
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Acquired
Historical (a) Properties Pro Forma
-------------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Investment in real estate, net $ 1,054,196 $ 86,506 (b) $ 1,140,702
Cash and cash equivalents 16,833 - 16,833
Deferred financing and leasing
costs, net 15,055 - 15,055
Other assets 14,770 - 14,770
----------- ----------- -----------
Total assets $ 1,100,854 $ 86,506 $ 1,187,360
=========== =========== ===========
LIABILITIES
Unsecured notes $ 360,000 $ - $ 360,000
Mortgage loans 61,696 - 61,696
Unsecured line of credit 4,000 86,506 (c) 90,506
Other liabilities 62,461 - 62,461
----------- ----------- -----------
Total liabilities 488,157 86,506 574,663
----------- ----------- -----------
MINORITY INTEREST 46,394 - 46,394
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Series A Preferred Stock 23,949 - 23,949
Series B Preferred Stock 102,064 - 102,064
Common Stock 3 - 3
Class B Common Stock - - -
Class C Common Stock - - -
Additional paid-in capital 441,042 - 441,042
Deferred compensation (755) - (755)
Retained earnings - - -
----------- ----------- -----------
Total stockholders' equity 566,303 - 566,303
----------- ----------- -----------
$ 1,100,854 $ 86,506 $ 1,187,360
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
13
<PAGE> 14
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(unaudited, dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Acquired
Properties
Historical (a) Notes Offering Offerings and Mortgages
-------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 44,345 $ - $ - $ 4,663 (f)
Interest and other income 823 - - 90 (f)
----------- ----------- ----------- -----------
Total revenue 45,168 - - 4,753
----------- ----------- ----------- -----------
OPERATING EXPENSES
Rental expenses 7,236 - - 1,334 (f)
Real estate taxes 3,446 - - 413 (f)
Interest expense, including amortization
of finance costs 8,837 366 (d) (1,329) (e) 1,503 (g)
Depreciation and amortization 8,538 - - 529 (h)
General and administrative and other expenses 2,282 - - -
----------- ----------- ----------- -----------
Total operating expenses 30,339 366 (1,329) 3,779
----------- ----------- ----------- -----------
Income from operations before minority interests 14,829 (366) 1,329 974
----------- ----------- ----------- -----------
Minority interests share in net income (2,061) - - -
----------- ----------- ----------- -----------
Net income, excluding extraordinary item 12,768 (366) 1,329 974
----------- ----------- ----------- -----------
Series A Preferred Stock dividends (524) - - -
Series B Preferred Stock dividends (2,510) - - -
----------- ----------- ----------- -----------
Net income available to common stockholders $ 9,734 $ (366) $ 1,329 $ 974
=========== =========== =========== ===========
Net income per common share $ 0.31
===========
Weighted average common shares outstanding 31,336,055
===========
</TABLE>
<TABLE>
<CAPTION>
Other
Adjustments Pro Forma
----------- ---------
<S> <C> <C>
REVENUES
Rental income $ - $ 49,008
Interest and other income - 913
----------- -----------
Total revenue - 49,921
----------- -----------
OPERATING EXPENSES
Rental expenses - 8,570
Real estate taxes - 3,859
Interest expense, including amortization
of finance costs - 9,377
Depreciation and amortization - 9,067
General and administrative and other expenses - 2,282
----------- -----------
Total operating expenses - 33,155
----------- -----------
Income from operations before minority interests - 16,766
----------- -----------
Minority interests share in net income (466) (2,527)
----------- -----------
Net income, excluding extraordinary item (466) 14,239
----------- -----------
Series A Preferred Stock dividends - (524)
Series B Preferred Stock dividends - (2,510)
----------- -----------
Net income available to common stockholders $ (466) $ 11,205
=========== ===========
Net income per common share $ 0.31
===========
Weighted average common shares outstanding 35,631,130
===========
</TABLE>
The accompanying notes are an integral part of these unaudited,
pro forma condensed consolidated financial statements.
14
<PAGE> 15
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(unaudited, dollars in thousands, except share data)
<TABLE>
<CAPTION>
Acquired Other
As Adjusted (j) Properties Adjustments Pro Forma
--------------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 168,088 $ 14,068(f) $ - $ 182,156
Interest and other income 5,860 33(f) - 5,893
----------- ----------- ----------- -----------
Total Revenues 173,948 14,101 - 188,049
----------- ----------- ----------- -----------
OPERATING EXPENSES
Rental expenses 28,769 4,893(f) - 33,662
Real estate taxes 13,506 1,168(f) - 14,674
Interest expense 32,438 6,012(g) - 38,450
Depreciation and amortization 34,516 1,855(h) - 36,371
General and administrative and other expenses 8,533 - - 8,533
----------- ----------- ----------- -----------
Total operating expenses 117,762 13,928 - 131,690
----------- ----------- ----------- -----------
Income from operations before minority interests 56,186 173 - 56,359
----------- ----------- ----------- -----------
Minority interests share of net income (8,641) - 151 (i) (8,490)
----------- ----------- ----------- -----------
Net income 47,545 173 151 47,869
----------- ----------- ----------- -----------
Series A Preferred Stock dividends (2,048) - - (2,048)
Series B Preferred Stock dividends (10,041) - - (10,041)
----------- ----------- ----------- -----------
Net income allocable to common stockholders $ 35,456 $ 173 $ 151 $ 35,780
=========== =========== =========== ===========
Net income per common share $ 1.02 $ 1.00
=========== ===========
Weighted average common shares outstanding 34,876,387 35,604,343
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited,
pro forma condensed consolidated financial statements.
15
<PAGE> 16
SPIEKER PROPERTIES, INC.
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands)
(a) Reflects historical financial information of the Company as of March 31,
1996 and for the three months ended March 31, 1996, excluding extraordinary
items.
(b) Reflects the cost basis of the properties acquired subsequent to March 31,
1996.
<TABLE>
<CAPTION>
Property Acquisition Date Cost
-------- ---------------- ----
<S> <C> <C>
Carmel Valley Centre I & II April 1, 1996 $13,956
2290 North First Street May 1, 1996 6,012
Everett 526 May 21, 1996 4,349
Port of Oakland May 22, 1996 6,761
Doolittle Drive May 23, 1996 3,459
10700 Northup Building May 28, 1996 4,641
Dove Street June 27, 1996 7,846
Fidelity Plaza July 1, 1996 5,035
The City July 11, 1996 34,447
-------
$86,506
=======
</TABLE>
(c) Represents draws on the Company's unsecured line of credit to fund the
acquisitions subsequent to March 31, 1996.
(d) Represents the incremental interest expense resulting from the $100,000
Notes Offering in January 1996. The net proceeds were used to repay
borrowings on the Company's unsecured line of credit. The notes bear
interest at 6.9%.
(e) Reflects a reduction of interest expense resulting from the Offerings. The
reduction in interest expense represents actual interest paid on the
Company's unsecured line of credit and certain mortgage loans which were
repaid in full with the net proceeds from the Offerings of approximately
$151,332.
(f) Reflects incremental effect of the Acquired Properties and Mortgages.
<TABLE>
<CAPTION>
January 1, 1996 to the Earlier of March 31, 1996
------------------------------------------------
or Date of Acquisition
----------------------
Six
Acquired
Properties and Three Two
Two Investments Acquired Acquired
in Mortgages City Portfolio Properties Properties Adjustment
------------ -------------- ---------- ---------- ----------
Revenues
<S> <C> <C> <C> <C> <C>
Rental revenues $ 1,294 $ 1,454 $ 1,435 $ 480 $ 4,663
Interest and other income 82 - - 8 90
-------- ------- ------- ------- -------
1,376 1,454 1,435 488 4,753
-------- ------- ------- ------- -------
Certain Expenses
Rental expenses 311 610 150 263 1,334
Real estate taxes 106 132 141 34 413
-------- ------- ------- ------- -------
417 742 291 297 1,747
-------- ------- ------- ------- -------
Revenues in excess of certain expenses $ 959 $ 712 $ 1,144 $ 191 $ 3,006
======== ======= ======= ======= =======
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
Six Acquired Less
Properties and Three Previously Two
Two Investments Acquired Reported City Acquired
in Mortgages Properties Acquisitions Portfolio Properties Adjustment
------------ ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Rental revenues $ 6,787 $ 5,335 $(5,072) $ 5,298 $ 1,720 $14,068
Interest and other income 1,777 - (1,777) - 33 33
---------- ------- -------- ------- ------- -------
8,564 5,335 (6,849) 5,298 1,753 14,101
---------- ------- -------- ------- ------- -------
Certain Expenses
Rental expenses 1,534 601 (867) 2,592 1,033 4,893
Real estate taxes 558 568 (610) 509 143 1,168
---------- ------- -------- ------- ------- -------
2,092 1,169 (1,477) 3,101 1,176 6,061
---------- ------- -------- ------- ------- -------
Revenues in excess of certain expenses $ 6,472 $ 4,166 $(5,372) $ 2,197 $ 577 $ 8,040
========== ======= ======== ======= ======= =======
</TABLE>
The previously reported acquisitions consist of two properties and two
investments in mortgages acquired prior to the Offerings. The revenues and
certain expenses of the properties and mortgages are included in the "As
Adjusted" column. See the as adjusted condensed consolidated statement of
operations for the year ended December 31, 1995.
(g) Reflects an incremental increase in interest expense from assumed
borrowings of $86,506 on the unsecured line of credit to fund acquisitions
subsequent to March 31, 1996 at an average rate of 6.95%
(h) Reflects the incremental depreciation of the Acquired Properties based upon
asset lives of 40 years.
(i) Reflects the allocation of the pro forma adjustment to minority interests
based upon pro forma minority ownership in the Operating Partnership of
approximately 15.1%.
(j) See the unaudited, as adjusted condensed consolidated statement of
operations of the Company for the year Ended December 31, 1995 contained
herein. This statement corresponds to the unaudited, pro forma condensed
consolidated statement of operations to the year ended December 31, 1995
presented in the Prospectus Supplement dated February 28, 1996.
(k) The Company's pro forma taxable income for the 12 month period ended March
31, 1996 is approximately $74,000, which has been calculated as pro forma
income from operations before minority interests for the same period of
approximately $59,000 plus GAAP depreciation and amortization of
approximately $36,000 less tax basis depreciation and amortization and
other tax differences of approximately $21,000.
17
<PAGE> 18
SPIEKER PROPERTIES, INC.
AS ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(unaudited, in thousands, except share data)
<TABLE>
<CAPTION>
Series B
Notes Preferred Stock
Historical (1) Acquisitions (2) Offerings (3) Issuance (4)
-------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 149,308 $ 18,780 $ - $ -
Interest and other income 4,083 1,777 - -
----------- ----------- ----------- -----------
Total Revenues $ 153,391 $20,557 - -
----------- ----------- ----------- -----------
OPERATING EXPENSES
Rental expenses 24,601 4,168 - -
Real estate taxes 11,934 1,572 - -
Interest expense 46,386 - 24,139 -
Depreciation and amortization 31,602 2,914 - -
General and administrative and other 8,533 - - -
----------- ----------- ----------- -----------
Total operating expenses 123,056 8,654 24,139 -
----------- ----------- ----------- -----------
Income from operations before minority interests 30,335 11,903 (24,139) -
----------- ----------- ----------- -----------
Minority interests (5,669) - - -
----------- ----------- ----------- -----------
Net income 24,666 11,903 (24,139) -
----------- ----------- ----------- -----------
Series A Preferred Stock dividends (2,048) - - -
Series B Preferred Stock dividends (586) - - (9,455)
----------- ----------- ----------- -----------
Net income allocable to common stockholders $ 22,032 $ 11,903 $ (24,139) $ (9,455)
=========== =========== =========== ===========
Net income per common share $ 0.84
===========
Weighted average common shares outstanding 26,140,488
===========
<CAPTION>
Repayment Repayment of
of Secured Unsecured Line Other
Debt (5) of Credit (6) Adjustments (7) As Adjusted
---------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ - $ - $ - $ 168,088
Interest and other income - - - 5,860
----------- ----------- ----------- -----------
Total Revenues - - - $ 173,948
----------- ----------- ----------- -----------
OPERATING EXPENSES
Rental expenses - - - 28,769
Real estate taxes - - - 13,506
Interest expense (29,761) (5,472) (2,854) 32,438
Depreciation and amortization - - - 34,516
General and administrative and other - - - 8,533
----------- ----------- ----------- -----------
Total operating expenses (29,761) (5,472) (2,854) 117,762
----------- ----------- ----------- -----------
Income from operations before minority interests 29,761 5,472 2,854 56,186
----------- ----------- ----------- -----------
Minority interests - - (2,972) (8,641)
----------- ----------- ----------- -----------
Net income 29,761 5,472 (118) 47,545
----------- ----------- ----------- -----------
Series A Preferred Stock dividends - - - (2,048)
Series B Preferred Stock dividends - - - (10,041)
----------- ----------- ----------- -----------
Net income allocable to common stockholders $29,761 $5,472 $ (118) $ 35,456 (8)
=========== =========== =========== ===========
Net income per common share $ 1.02
===========
Weighted average common shares outstanding 34,876,387 (9)
===========
</TABLE>
18
<PAGE> 19
SPIEKER PROPERTIES, INC.
NOTES AND ADJUSTMENTS TO AS ADJUSTED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(unaudited, dollars in thousands)
(1) Reflects the historical consolidated statement of operations of the Company
for the year ended December 31, 1995, excluding extraordinary items.
(2) Reflects the incremental effect of the acquisition of 17 properties during
1995 and three of the Acquired Properties and the Two Mortgages acquired by
the Company prior to the Offerings, which represents the operations of the
acquired properties and interest earned on the mortgages prior to
acquisition by the Company. Also reflects depreciation and amortization for
periods prior to acquisition. Estimated depreciation and amortization has
been based upon asset lives of 3 to 40 years.
(3) Reflects the incremental effect of the $260,000 Notes Offering in December
1995 and the $100,000 Notes Offering in January 1996 which includes cash
interest expense of approximately $23,625 at a weighted average interest
rate of 6.943% and amortization of deferred financing fees of approximately
$514. The estimated amortization is based upon capitalized fees of
approximately $3,481 over the term of the notes.
(4) Reflects the incremental effect of Series B Preferred Stock dividends at a
rate of 9.45%.
(5) Reflects the reduction of interest expense resulting from the repayment of
approximately $347,272 of secured debt in December 1995. The reduction,
based upon actual amounts incurred, is comprised of the following:
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
Cash interest payments $ (22,920)
Amortization of debt discount and deferred financing costs (6,841)
----------
$ (29,761)
==========
</TABLE>
(6) Reflects the repayment of the Company's unsecured line of credit using the
net proceeds of approximately $98,900 from the Notes Offering in January
1996 and a portion of the net proceeds from the Offerings which results in
a reduction of cash interest of approximately $4,296. Also, reflects the
conversion of the Company's secured line of credit to an unsecured
facility. The unsecured line of credit bears interest at LIBOR plus 1.5%,
requires interest only payments and has a two year term. The conversion
resulted in a net reduction of interest expense due to a net decrease in
amortization of deferred financing fees of approximately $1,176.
The Company's unsecured line of credit is subject to changes in LIBOR.
(7) Reflects the repayment of certain mortgage loans using a portion of the net
proceeds from the Offerings resulting in a reduction of interest expense of
approximately $2,854 based upon actual amounts incurred. Also reflects the
minority interests' share of the pro forma adjustments to the net income of
the Operating Partnership.
(8) The pro forma taxable income for the Company for the year ended December
31, 1995 was approximately $71,000 which has been calculated as pro forma
net income from operations before minority interests for the year ended
December 31, 1995 of approximately $57,000 plus GAAP depreciation and
amortization of approximately $35,000 less tax basis depreciation and
amortization and other tax differences of approximately $21,000.
(9) Includes the Class B Common Stock and Class C Shares.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPIEKER PROPERTIES, INC.
(Registrant)
Date: July 15, 1996 By: /s/ Elke Strunka
------------------------------ --------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
20
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this current report on Form 8-K of Spieker Properties, Inc. dated
July 15, 1996 of our report dated June 14, 1996 on the combined statements of
revenues and certain expenses of the six acquired properties and two investments
in mortgages for the year ended December 31, 1995.
San Francisco, California ARTHUR ANDERSEN LLP
July 15, 1996
