<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):
June 18, 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 20 pages. No Exhibits are being filed with the Form
8-K.
<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 May 28, 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"):
Bayside Corporate Center, an 84,925 square foot two-building office project in
Foster City, California, on January 3, 1996 for $10.0 million.
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.
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.
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.
10700 Northup Building, a 55,854 square foot office building in Bellevue,
Washington, on May 28, 1996 for $4.6 million.
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.
2
<PAGE> 3
ITEM 5. OTHER EVENTS (CONTINUED)
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 nine properties and two investments in
mortgages during the period from January 1, 1996 to May 28, 1996. The combined
financial statements of the "Six Acquired Properties and Two Investments in
Mortgages" for the year ended December 31, 1995 have been audited, whereas
statements for the period from January 1, 1996 to the earlier of March 31, 1996
or date of acquisition, have not been audited. The "Three Acquired Properties"
reflects the remainder of properties acquired by the Company during 1996 and
statements related to these properties have not been audited.
3
<PAGE> 4
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
(a) (i) Combined Statements of Revenues and Certain Expenses for the Six Acquired
Properties and Two Investments in Mortgages
Page
----
Report of Independent Public Accountants......................................... 5
Combined Statements of Revenues and Certain Expenses for the period from
January 1, 1996 to the earlier of March 31, 1996 or date of acquisition
(unaudited) and for the year ended December 31, 1995........................... 6
Notes to Combined Statements of Revenues and Certain
Expenses for the period from January 1, 1996 to the
earlier of March 31, 1996 or date
of acquisition (unaudited) and for the year ended December 31, 1995 ........... 7
(ii) Combined Statements of Revenues and Certain Expenses for the Three Acquired
Properties
Unaudited Combined Statements of Revenues and Certain Expenses for the period from
January 1, 1996 to the earlier of March 31, 1996 or date of acquisition
and for the year ended December 31, 1995....................................... 9
Notes to Unaudited Combined Statements of Revenues and Certain
Expenses for the period from January 1, 1996 to the
earlier of March 31, 1996 or date
of acquisition 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
There are no exhibits filed with this Form 8-K.
</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 combined statements of revenues and
certain expenses of the Six Acquired Properties and the Two Investments in
Mortgages, as defined in Note 1, for the year ended December 31, 1995. These
financial statements are the responsibility of management of the Company. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 combined statements of revenues and certain expenses
were 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 June 18, 1996, and are not intended to be a complete
presentation of the revenues and expenses of the Six Acquired Properties and the
Two Investments in Mortgages.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the revenues and certain expenses of the Six
Acquired Properties and the Two Investments in Mortgages for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
June 14, 1996
5
<PAGE> 6
SPIEKER PROPERTIES, INC.
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE SIX ACQUIRED PROPERTIES AND TWO INVESTMENTS IN MORTGAGES
FOR THE PERIOD FROM JANUARY 1, 1996 TO THE EARLIER OF
MARCH 31, 1996 OR DATE OF ACQUISITION (Unaudited)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
January 1, 1996
to the Earlier of
March 31, 1996 or Year Ended
Date of Acquisition December 31, 1995
------------------- -----------------
(unaudited)
<S> <C> <C>
REVENUES:
Rental revenues $1,294 $6,787
Interest and other income 82 1,777
------ ------
1,376 8,564
------ ------
CERTAIN EXPENSES:
Rental expenses 311 1,534
Real estate taxes 106 558
------ ------
417 2,092
------ ------
REVENUES IN EXCESS OF CERTAIN
EXPENSES $ 959 $6,472
====== ======
</TABLE>
The accompanying notes are an integral part of these combined statements.
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE SIX ACQUIRED PROPERTIES AND TWO INVESTMENTS IN MORTGAGES
FOR THE PERIOD FROM JANUARY 1, 1996 TO THE EARLIER OF
MARCH 31, 1996 OR DATE OF ACQUISITION (Unaudited)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
1. Basis of Presentation and Summary of Significant Accounting Policies:
Properties and Mortgages Acquired
The combined statements of revenues and certain expenses (see "Basis of
Presentation" below) include the combined operations of six properties (the
"Properties") and interest income related to the two mortgage investments
(the "Mortgages") acquired by Spieker Properties, L.P. during 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>
Bayside Corporate Center Foster City, California One multi-tenant and one single-tenant office
building totaling 84,925 square feet
San Jose Airport Office Center San Jose, California Two mortgages maturing in December, 1999
& 1735 North First Street and secured by four multi-tenant office
Mortgages buildings totaling 201,903 square feet
Everett Industrial Everett, Washington One single-tenant industrial building totaling
150,154 square feet
Everett 526 Everett, Washington Two multi-tenant light industrial buildings
totaling 97,523 square feet
10700 Northup Building Bellevue, Washington One multi-tenant office building totaling
55,854 square feet
Carmel Valley Centre I & II San Diego, California Two multi-tenant office buildings totaling
106,921 square feet
2290 North First Street San Jose, California One multi-tenant office building totaling
75,680 square feet
</TABLE>
Basis of Presentation
The accompanying combined statements of revenues and certain expenses are
not representative of the actual operations of the Properties and Mortgages
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 and Mortgages; however, the Company is not
aware of any material factors relating to these acquired 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 and
Mortgages.
The financial information presented for the period from January 1, 1996 to
the earlier of March 31, 1996 or date of acquisition 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 combined statements of revenues and certain expenses
for the Properties and Mortgages.
7
<PAGE> 8
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.
Interest income is recorded based upon the terms of the Mortgages.
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.
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) $ 4,864
1997 5,543
1998 4,410
1999 3,500
2000 2,844
Thereafter 7,011
---------
$ 28,172
=========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to
$265 for the period from January 1, 1996 to the earlier of March 31, 1996
or date of acquisition (unaudited) and $1,061 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 THREE ACQUIRED PROPERTIES
FOR THE PERIOD FROM JANUARY 1, 1996 TO THE EARLIER OF
MARCH 31, 1996 OR DATE OF ACQUISITION
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
January 1, 1996 to
the Earlier of
March 31, 1996 or Year Ended
Date of Acquisition December 31, 1995
------------------- -----------------
<S> <C> <C>
RENTAL REVENUES $ 1,435 $ 5,335
---------- ----------
CERTAIN EXPENSES:
Rental expenses 150 601
Real estate taxes 141 568
---------- ----------
291 1,169
---------- ----------
RENTAL REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 1,144 $ 4,166
========== ==========
</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 THREE ACQUIRED PROPERTIES
FOR THE PERIOD FROM JANUARY 1, 1996 TO THE EARLIER OF
MARCH 31, 1996 OR DATE OF ACQUISITION
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 three properties
(the "Properties") acquired by Spieker Properties, L.P. during 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>
Benicia Industrial I & II Benicia, California Seventeen multi-tenant industrial warehouse/office
buildings totaling 1,827,569 square feet
Port of Oakland Oakland, California One multi-tenant light industrial building totaling
199,733 square feet
Doolittle Drive San Leandro, California One multi-tenant industrial building totaling 113,196
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.
10
<PAGE> 11
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.
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) $ 4,506
1997 4,289
1998 3,508
1999 2,288
2000 1,712
Thereafter 3,657
--------
Total $ 19,960
========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $76 for the period
from January 1, 1996 to the earlier of March 31, 1996 or date of acquisition
and $314 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, 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
-------------- ---------- ---------
ASSETS:
<S> <C> <C> <C>
Investment in real estate, net $ 1,054,196 $ 39,178(b) $ 1,093,374
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 $ 39,178 $ 1,140,032
=========== ============ ===========
LIABILITIES:
Unsecured notes $ 360,000 $ -- $ 360,000
Mortgage loans 61,696 -- 61,696
Unsecured line of credit 4,000 39,178(c) 43,178
Other liabilities 62,461 -- 62,461
----------- ------------ -----------
Total liabilities 488,157 39,178 527,335
----------- ------------ -----------
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 $ 39,178 $ 1,140,032
=========== ============ ===========
</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
Historical Notes Properties Other
(a) Offering Offerings and Mortgages Adjustments Pro Forma
---------- -------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 44,345 $ - $ - $ 2,729(f) $ - $ 47,074
Interest and other income 823 - - 82(f) - 905
----------- -------- --------- --------- -------- -----------
Total revenue 45,168 - - 2,811 - 47,979
----------- -------- --------- --------- -------- -----------
OPERATING EXPENSES
Rental expenses 7,236 - - 461(f) - 7,697
Real estate taxes 3,446 - - 247(f) - 3,693
Interest expense, including amortization
of finance costs 8,837 366(d) (1,329)(e) 681(g) - 8,555
Depreciation and amortization 8,538 - - 295(h) - 8,833
General and administrative and other
expenses 2,282 - - - - 2,282
----------- -------- --------- --------- -------- -----------
Total operating expenses 30,339 366 (1,329) 1,684 - 31,060
----------- -------- --------- --------- -------- -----------
Income from operations before minority
interests 14,829 (366) 1,329 1,127 - 16,919
----------- -------- --------- --------- -------- -----------
Minority interests share in net income (2,061) - - - (489)(i) (2,550)
----------- -------- --------- --------- -------- -----------
Net income, excluding extraordinary item 12,768 (366) 1,329 1,127 (489) 14,369
----------- -------- --------- --------- -------- -----------
Series A Preferred Stock dividends (524) - - - - (524)
Series B Preferred Stock dividends (2,510) - - - - (2,510)
----------- -------- --------- --------- -------- -----------
Net income available to common stockholders $ 9,734 $ (366) $ 1,329 $ 1,127 $ (489) $ 11,335
=========== ======== ========= ========= ======== ===========
Net income per common share $ 0.31 $ 0.32
=========== ===========
Weighted average common shares outstanding 31,336,055 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 $ 7,050(f) $ -- $ 175,138
Interest and other income 5,860 - (f) -- 5,860
------------ ----------- ----------- ------------
Total Revenues 173,948 7,050 -- 180,998
------------ ----------- ----------- ------------
OPERATING EXPENSES
Rental expenses 28,769 1,268(f) -- 30,037
Real estate taxes 13,506 516(f) -- 14,022
Interest expense 32,438 2,723(g) -- 35,161
Depreciation and amortization 34,516 917(h) -- 35,433
General and administrative and other expenses 8,533 -- -- 8,533
------------ ----------- ----------- ------------
Total operating expenses 117,762 5,424 -- 123,186
------------ ----------- ----------- ------------
Income from operations before minority interests 56,186 1,626 -- 57,812
------------ ----------- ----------- ------------
Minority interests share of net income (8,641) -- (69)(i) (8,710)
------------ ----------- ----------- ------------
Net income 47,545 1,626 (69) 49,102
------------ ----------- ----------- ------------
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 $ 1,626 $ (69) $ 37,013
============ =========== =========== ============
Net income per common share $ 1.02 $ 1.04
=========== ============
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
------------
$ 39,178
============
</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 Two Three
Investments in Acquired
Mortgages Properties Adjustment
--------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental revenues $1,294 $1,435 $2,729
Interest and other income 82 -- 82
------ ------ ------
1,376 1,435 2,811
------ ------ ------
Certain Expenses:
Rental expenses 311 150 461
Real estate taxes 106 141 247
------ ------ ------
417 291 708
------ ------ ------
Revenues in excess of certain expenses $ 959 $1,144 $2,103
====== ====== ======
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
Six Acquired Less
Properties and Three Previously
Two Investments Acquired Reported
in Mortgages Properties Acquisitions Adjustment
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues:
Rental revenues $6,787 $ 5,335 ($5,072) $7,050
Interest and other income 1,777 -- (1,777) --
------ ------- ------- ------
8,564 5,335 (6,849) 7,050
------ ------- ------- ------
Certain Expenses:
Rental expenses 1,534 601 (867) 1,268
Real estate taxes 558 568 (610) 516
------ ------- ------- ------
2,092 1,169 (1,477) 1,784
------ ------- ------- ------
Revenues in excess of certain expenses $6,472 $ 4,166 ($5,372) $5,266
====== ======= ======= ======
</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 $39,178 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 for 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 $75,000 which has been calculated as pro forma
income from operations before minority interests for the same period of
approximately $60,000 plus GAAP depreciation and amortization of
approximately $35,000 less tax basis depreciation and amortization and
other tax differences of approximately $20,000.
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>
REPAYMENT
SERIES B OF
PREFERRED REPAYMENT UNSECURED
NOTES STOCK OF SECURED LINE OF
HISTORICAL(1) ACQUISITIONS(2) OFFERINGS ISSUANCE(4) DEBT(5) CREDIT(6)
------------- --------------- ----------- ----------- ------- ---------
<S> <C> <C> <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 -- (29,761) (5,472)
Depreciation and
amortization ..... 31,602 2,914 -- -- -- --
General and
administrative
and other ........ 8,533 -- -- -- -- --
------------ ----------- -------- ------- -------- -------
Total
operating
expenses ... 123,056 8,654 24,139 -- (29,761) (5,472)
------------ ----------- -------- ------- -------- -------
Income from
operations before
minority
interests ........ 30,335 11,903 (24,139) -- 29,761 5,472
Minority
interests ........ (5,669) -- -- -- -- --
------------ ----------- -------- ------- -------- -------
Net income ......... 24,666 11,903 (24,139) -- 29,761 5,472
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) $ 29,761 $ 5,472
============ =========== ======== ======= ======== =======
Net income per
common share $ 0.84
============
Weighted average
common shares
outstanding ...... 26,140,488
============
</TABLE>
<TABLE>
<CAPTION>
OTHER AS
ADJUSTMENTS(7) ADJUSTED
-------------- ----------
<S> <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 ... (2,854) 32,438
Depreciation and
amortization ..... -- 34,516
General and
administrative
and other ........ -- 8,533
------------ -----------
Total
operating
expenses ... (2,854) 117,762
------------ -----------
Income from
operations before
minority
interests ........ 2,854 56,186
Minority
interests ........ (2,972) (8,641)
------------ -----------
Net income ......... (118) 47,545
Series A Preferred
Stock dividends .. -- (2,048)
Series B Preferred
Stock dividends .. -- (10,041)
------------ -----------
Net income allocable
to common
stockholders ..... $ (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: June 18, 1996 By: /S/ ELKE STRUNKA
- ----------------------- --------------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
20
