<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 27, 1997 (January 6, 1997)
---------------------------------------------
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
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(Registrant's telephone number, including area code)
1
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SPIEKER PROPERTIES, INC.
CURRENT REPORT
ON
FORM 8-K
ITEM 5. OTHER EVENTS
The following operating properties were acquired by Spieker Properties, L.P.
from unrelated parties between January 1, 1997, and June 27, 1997. Spieker
Properties, Inc. owns an approximate 87.0% general partners' interest in Spieker
Properties, L.P. (the "Operating Partnership" and collectively with Spieker
Properties, Inc. referred to as the "Company"):
AUDITED PROPERTY ACQUISITIONS
Mission West Portfolio, a 619,935 square foot office and industrial portfolio
located in San Diego, Carlsbad and Riverside, California, was acquired on
January 22, 1997 for $44.8 million.
Emeryville Portfolio, a 946,385 square foot office and industrial portfolio
located in Emeryville, California, was acquired on January 28, 1997 for $125.4
million.
1740 Technology Drive, a 196,444 square foot office building located in San
Jose, California, was acquired on March 4, 1997 for $31.3 million.
Metro Plaza, a 414,737 square foot three-building office complex located in San
Jose, California, was acquired on March 5, 1997, for $73.9 million.
Pasadena Portfolio, which consists of two office buildings totaling 352,441
square feet located in Pasadena, California, was acquired on April 10, 1997, for
$68.3 million.
UNAUDITED PROPERTY ACQUISITIONS
Southcenter West Business Park, a 286,921 square foot industrial project located
in Tukwila, Washington, was acquired on January 13, 1997, for $6.3 million.
Brea Park Center, a 141,837 square foot two-building office project located in
Brea, California, was acquired on January 31, 1997, for $10.8 million.
555 Twin Dolphin Plaza, a 198,941 square foot office building located in Redwood
Shores, California, was acquired on February 11, 1997, for $41.0 million.
North Creek Parkway Centre, a 204,871 square foot six-building office project
located in Bothell, Washington, was acquired on February 14, 1997, for $22.6
million.
Riverside Centre, a 98,434 square foot office building located in Portland,
Oregon, was acquired on February 21, 1997, for $9.3 million.
Fountaingrove, a 160,808 square foot three-building office complex located in
Santa Rosa, California, was acquired on March 31, 1997, for $16.1 million.
Point West Corporate Center, a 145,184 square foot office building located in
Sacramento, California was acquired on May 1, 1997, for $17.2 million.
Sierra Point, a 99,150 square foot office building located in Brisbane,
California, was acquired on May 6, 1997, for $10.3 million.
Brea Corporate Plaza, a 119,406 square foot three-building office complex
located in Brea, California, was acquired on May 14, 1997, for $10.8 million.
2
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McKesson Building, a 150,951 square foot office building located in Pasadena,
California, was acquired on June 3, 1997, for $19.1 million.
Coral Tree Commerce Center, a four-building industrial project totaling 130,866
square feet located in Vista, California, was acquired on June 16, 1997, for
$8.4 million.
Progress Industrial Park, a 123,275 square foot two-building industrial project
located in Vista, California, was acquired on June 16, 1997, for $7.5 million.
The costs shown above for each acquisition represent the initial cost at the
time of acquisition.
ACQUISITIONS - GENERAL
The properties were acquired using funds from an offering of 11,500,000 shares
of Common Stock in January 1997, which raised net proceeds of approximately $375
million, $14 million from borrowings on the Company's unsecured revolving line
of credit and proceeds of $78.4 million from the disposition of certain retail
properties.
The Company believes these acquisitions are consistent with the Company's
objective of becoming the preeminent real estate operating company focusing on
industrial and suburban office 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, under
Rule 3-14 of Regulation S-X, these acquisitions in the aggregate, may be
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 has acquired seventeen properties totaling 4.4
million square feet of rentable space during the period from January 1, 1997, to
June 27, 1997, for $523.1 million. The financial statements for Metro Plaza and
the Pasadena Portfolio for the year ended December 31, 1996 have been audited
whereas the financial statements for the three months ended March 31, 1997, have
not been audited. The financial statements for the remaining properties listed
above have not been audited.
The combined financial statements of the Three Property Transactions, which
consist of the Emeryville Portfolio, the Mission West Portfolio and 1740
Technology Drive, for the year ended December 31, 1995, have been audited,
whereas the financial statements for the nine months ended September 30, 1996
have not been audited. Such financial statements were previously included in the
Company's prospectus supplement financial statements dated January 21, 1997, and
have also been included herein.
DISPOSITIONS
The following retail properties were disposed of by Spieker Properties, L.P. to
unrelated parties between January 1, 1997, and June 27, 1997:
Totem Hill, a 25,250 square foot shopping center located in Kirkland,
Washington, was disposed of on January 6, 1997, for $4.1 million.
South Point Plaza, a 188,945 square foot shopping center located in Everett,
Washington, was disposed of on April 9, 1997, for $14.6 million.
Woodside Central Plaza, a 80,598 square foot shopping center located in Redwood
City, California, was disposed of on April 9, 1997, for $12.0 million.
3
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West Park Plaza, a 88,136 square foot shopping center located in San Jose,
California, was disposed of on April 9, 1997, for $10.1 million.
Walker Center, a 89,624 square foot shopping center located in Beaverton,
Oregon, was disposed of on April 9, 1997, for $10.0 million.
Arbor Faire, a 199,986 square foot shopping center located in Fresno,
California, was disposed of on April 9, 1997, for $18.5 million.
Broadway Faire, a 60,383 square foot shopping center located in Fresno,
California, was disposed of on April 9, 1997, for $9.1 million.
The Company disposed of seven properties totaling 0.7 million square feet of net
rentable space during the period from January 1, 1997, to June 27, 1997, for
$78.4 million.
As of the date hereof, the Company owns 25.3 million square feet of properties,
consisting of 10.1 million square feet of office properties, 14.6 million square
feet of industrial properties and 0.6 million square feet of retail properties.
4
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) (i) Statements of Revenues and Certain Expenses for the Pasadena
Portfolio
Report of Independent Public Accountants
Statements of Revenues and Certain Expenses for the three months
ended March 31, 1997, (unaudited) and for the year ended December
31, 1996
Notes to Statements of Revenues and Certain Expenses for the three
months ended March 31, 1997, (unaudited) and for the year ended
December 31, 1996
(ii) Statements of Revenues and Certain Expenses for Metro Plaza
Report of Independent Public Accountants
Statements of Revenues and Certain Expenses for the three months
ended March 31, 1997, (unaudited) and for the year ended December
31, 1996
Notes to Statements of Revenues and Certain Expenses for the three
months ended March 31, 1997, (unaudited) and for the year ended
December 31, 1996
(iii) Combined Statements of Revenues and Certain Expenses for the Three
Property Transactions
Report of Independent Public Accountants
Combined Statements of Revenues and Certain Expenses for the nine
months ended September 30, 1996, (unaudited) and for the year
ended December 31, 1995
Notes to Combined Statements of Revenues and Certain Expenses for the
nine months ended September 30, 1996, (unaudited) and for the
year ended December 31, 1995
(iv) Combined Statements of Revenues and Certain Expenses for the 1997
Acquisitions
Unaudited Combined Statements of Revenues and Certain Expenses for
the period from January 1, 1997, to the earlier of March 31,
1997, or date of acquisition and for the year ended December 31,
1996
Notes to Unaudited Combined Statements of Revenues and Certain
Expenses for the period from January 1, 1997, to the earlier of
March 31, 1997, or date of acquisition and for the year ended
December 31, 1996
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997
Pro Forma Condensed Consolidated Statements of Operations for the
three months ended March 31, 1997, and for the year ended
December 31,1996
Notes and adjustments to Pro Forma Condense Consolidated Financial
Statements
(c) Exhibits
None
5
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenue and certain
expenses of the Pasadena Portfolio, as defined in Note 1, for the year ended
December 31, 1996. This financial statement is the responsibility of the
management of Spieker Properties, Inc. (the "Company"). Our responsibility is to
express an opinion on these financial statements 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.
We believe that our audit provides a reasonable basis of our opinion.
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 June 27, 1997, and is not intended to be a complete presentation of
the revenues and expenses of the Pasadena Portfolio.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the
Pasadena Portfolio for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
April 29, 1997
6
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SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE
PASADENA PORTFOLIO FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUE $ 2,366 $ 9,526
CERTAIN EXPENSES:
Rental expenses 588 2,283
Real estate taxes 170 677
-------- --------
758 2,960
-------- --------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 1,608 $ 6,566
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
7
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SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE
PASADENA PORTFOLIO FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PROPERTIES ACQUIRED
The accompanying statements of revenues and certain expenses include the
operations (see "Basis of Presentation" below) of the Pasadena Portfolio
(the "Properties") acquired by Spieker Properties, L.P. (the "Company") on
April 10, 1997. Spieker Properties, Inc. owns an approximate 87.0% general
partners' interest in Spieker Properties, L.P. (the "Operating Partnership"
collectively with Spieker Properties, Inc. referred to as the "Company").
<TABLE>
<CAPTION>
Property Name Location
------------- --------
<S> <C>
Pasadena Financial Pasadena, California
Century Square Pasadena, California
</TABLE>
BASIS OF PRESENTATION
The accompanying statements of revenues 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 property that would cause the reported financial information
not to be indicative of future operating results. Excluded expenses consist
of property management fees, interest, depreciation and amortization and
other costs not directly related to the future operations of the Properties.
The financial information presented for the three months ended March 31,
1997, is not audited. 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.
Actual results could differ from those estimates.
8
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2. LEASING ACTIVITY:
The minimum future rental revenues from leases in effect as of April 1,
1997, for the remainder of 1997 and annually thereafter are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ---------
<S> <C>
1997 (nine months) $ 6,011
1998 7,619
1999 7,397
2000 7,014
2001 6,292
2002 6,142
Thereafter 43,615
---------
$ 84,090
=========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their
pro rata share of specified operating expenses, which amounted to $51 for
the three months ended March 31, 1997 (unaudited) and $116 for the year
ended December 31, 1996. Certain leases contain options to renew.
9
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenue and certain
expenses of Metro Plaza, as defined in Note 1, for the year ended December 31,
1996. This financial statement is the responsibility of the management of
Spieker Properties, Inc. (the "Company"). Our responsibility is to express an
opinion on these financial statements 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.
We believe that our audit provides a reasonable basis of our opinion.
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 June 27, 1997, and is not intended to be a complete presentation of
the revenues and expenses of Metro Plaza.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of Metro
Plaza for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
April 29, 1997
10
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SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
METRO PLAZA FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1997 December 31, 1996
------------------- -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUE $ 2,112 $ 7,484
CERTAIN EXPENSES:
Rental expenses 554 2,432
Real estate taxes 80 400
-------- --------
634 2,832
-------- --------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 1,478 $ 4,652
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
11
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SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
METRO PLAZA FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PROPERTIES ACQUIRED
The accompanying statements of revenues and certain expenses include the
operations (see "Basis of Presentation" below) of Metro Plaza (the
"Property") located in San Jose, California acquired by Spieker Properties,
L.P. (the "Company") on March 5, 1997. Spieker Properties, Inc. owns an
approximate 87.0% general partners' interest in Spieker Properties, L.P.
(the "Operating Partnership" collectively with Spieker Properties, Inc.
referred to as the "Company").
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 the property that would cause the reported financial information not to
be indicative of future operating results. Excluded expenses consist of
property management fees, interest, 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,
1997 is not audited. 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 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.
Actual results could differ from those estimates.
12
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2. LEASING ACTIVITY:
The minimum future rental revenues from leases in effect as of April 1,
1997, for the remainder of 1997 and annually thereafter are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ---------
<S> <C>
1997 (nine months) $ 5,246
1998 5,706
1999 4,385
2000 3,549
2001 2,948
Thereafter 8,496
---------
$ 30,330
=========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their
pro rata share of specified operating expenses, which amounted to $256 for
the three months ended March 31, 1997 (unaudited) and $1,135 for the year
ended December 31, 1996. Certain leases contain options to renew.
13
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Spieker Properties, Inc.:
We have audited the accompanying combined statement of revenues and
certain expenses of the Three Property Transactions, as defined in Note 1, for
the year ended December 31, 1995. This financial statement is the responsibility
of management of Spieker Properties, Inc. (the "Company"). Our reponsibility 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.
We believe that our audit provides a reasonable basis of our opinion.
The accompanying combined 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 June 27, 1997, and is not intended to be a complete
presentation of the combined revenues and expenses of the Three Property
Transactions.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the combined revenues and certain expenses of the
Three Property Transactions for the year ended December 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
December 20, 1996
14
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SPIEKER PROPERTIES, INC.
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE THREE PROPERTY TRANSACTIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
------------------ -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUES $ 23,928 $ 31,530
CERTAIN EXPENSES:
Rental expenses 5,713 7,928
Real estate taxes 1,178 1,575
-------- --------
6,891 9,503
-------- --------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 17,037 $ 22,027
======== ========
</TABLE>
The accompanying notes are an integral part of these combined statements.
15
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SPIEKER PROPERTIES, INC.
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES FOR
THE THREE PROPERTY TRANSACTIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
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 operations of three properties (the
"Properties") acquired by the Company during the first quarter of 1997
(the "Three Property Transactions"). Spieker Properties, Inc. owns an
approximate 87.0% general partners' interest in Spieker Properties, L.P.
(the "Operating Partnership" collectively with Spieker Properties, Inc.
referred to as the "Company").
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION
------------- --------
<S> <C>
Emeryville Portfolio Emeryville, California
Mission West Portfolio San Diego, California
1740 Technology Drive San Jose, California
</TABLE>
BASIS OF PRESENTATION
The accompanying combined statements of revenues 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.
The financial information presented for the nine months ended September
30, 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 combined
statements of revenues and certain expenses for the Properties.
The financial information for the Mission West Portfolio is for the nine
months ended August 31, 1996 (unaudited) and the year ended November 30,
1995. In the opinion of management, the fiscal year basis financial
information of the Mission West Portfolio is not materially different
than the calendar year basis financial information.
REVENUE RECOGNITION
All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the term 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.
16
<PAGE> 17
2. LEASING ACTIVITY:
The minimum future rental revenues due under noncancelable operating
leases in effect as of October 1, 1996, for the remainder of 1996 and
annually thereafter are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- -------
<S> <C>
1996 (three months) $ 6,293
1997 21,136
1998 16,007
1999 9,473
2000 4,831
2001 217
Thereafter 7,784
-------
$65,741
=======
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their
pro rata share of specified operating expenses, which amounted to $418 for
the nine months ended September 30,1996, (unaudited) and $584 for the year
ended December 31, 1995. Certain leases contain options to renew.
17
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SPIEKER PROPERTIES, INC.
UNAUDITED COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE 1997 ACQUISITIONS
FOR THE PERIOD FROM JANUARY 1, 1997, TO THE EARLIER OF
MARCH 31, 1997, OR DATE OF ACQUISITION
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
January 1, 1997,
to the earlier of
March 31, 1997, or Year Ended
Date of Acquisition December 31, 1996
------------------- -----------------
<S> <C> <C>
RENTAL REVENUES $ 4,668 $ 25,049
CERTAIN EXPENSES
Rental expenses 1,049 6,261
Real estate taxes 317 1,661
-------- --------
1,366 7,922
-------- --------
RENTAL REVENUE IN EXCESS OF CERTAIN EXPENSES $ 3,302 $ 17,127
======== ========
</TABLE>
The accompanying notes are an integral part of these
unaudited, combined statements.
18
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SPIEKER PROPERTIES, INC.
NOTES TO UNAUDITED COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE 1997 ACQUISITIONS
FOR THE PERIOD FROM JANUARY 1, 1997, TO THE EARLIER OF
MARCH 31, 1997, OR DATE OF ACQUISITION
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(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 the properties (the
"Properties") acquired by Spieker Properties, L.P. during the period from
January 1, 1997, to June 27, 1997 (the "1997 Property Acquisitions").
Spieker Properties, Inc. owns an approximate 87.0% general partners'
interest in Spieker Properties, L.P. (the "Operating Partnership"
collectively with Spieker Properties, Inc. referred to as the "Company").
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION
------------- --------
<S> <C>
Southcenter West Business Park Tukwila, WA
Brea Park Center Brea, CA
555 Twin Dolphin Plaza Redwood Shores, CA
North Creek Parkway Centre Bothell, WA
Riverside Centre Portland, OR
Fountaingrove Santa Rosa, CA
Point West Corporate Center Sacramento, CA
Sierra Point Brisbane, CA
Brea Corporate Plaza Brea, CA
McKesson Building Pasadena, CA
Coral Tree Commerce Center Vista, CA
Progress Industrial Park Vista, CA
</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.
19
<PAGE> 20
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, 1997, for the remainder of 1997 and annually
thereafter are as follows:
<TABLE>
<CAPTION>
Year Amounts
---- --------
<S> <C>
1997 (nine months) $17,082
1998 21,116
1999 17,584
2000 12,826
2001 9,204
Thereafter 6,219
-------
Total $84,031
=======
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their
pro rata share of specified operating expenses, which amounted to $181 for
the period from January 1, 1997, to the earlier of March 31, 1997, or date
of acquisition and $1,025 for the year ended December 31, 1996. Certain
leases contain options to renew.
20
<PAGE> 21
SPIEKER PROPERTIES, INC.
PRO FORMA FINANCIAL INFORMATION
The unaudited, pro forma condensed consolidated balance sheet as of March 31,
1997 reflects the incremental effect of the acquired properties and disposed
properties (collectively, the "Acquired Properties and Disposed Properties")
described in Item 5 as if such transactions occurring after March 31, 1997 had
all occurred on March 31, 1997. The accompanying unaudited, pro forma condensed
consolidated statements of operations for the three months ended March 31, 1997
and the year ended December 31, 1996 reflect (i) the incremental effect of the
Acquired Properties and Disposed Properties described in Item 5; (ii) the
incremental effect of the acquisition of 4.7 million net rentable square feet of
property and two mortgages during 1996 and (iii) certain other adjustments as if
such transactions and adjustments had all occurred on January 1, 1996.
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, 1997, and its Annual Report
on Form 10-K for the year ended December 31, 1996. 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 Disposed Properties.
These pro forma 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.
21
<PAGE> 22
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Acquired Property
Historical (a) Properties (b) Dispositions (c) Pro Forma
------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investment in real estate, net $ 1,727,512 $ 141,538 $ (61,123) $ 1,807,927
Cash and cash equivalents 52,825 (122,334) 74,247 4,738
Deferred financing and
leasing costs, net 16,676 -- -- 16,676
Other assets 21,636 -- -- 21,636
------------- ------------- ------------- -------------
Total assets $ 1,818,649 $ 19,204 $ 13,124 $ 1,850,977
============= ============= ============= =============
LIABILITIES
Mortgage loans $ 89,979 $ 5,204 $ -- $ 95,183
Unsecured line of credit -- 14,000 -- 14,000
Unsecured notes 635,000 -- -- 635,000
Other liabilities 85,745 -- -- 85,745
------------- ------------- ------------- -------------
Total liabilities 810,724 19,204 -- 829,928
------------- ------------- ------------- -------------
MINORITY INTEREST 71,112 -- -- 71,112
------------- ------------- ------------- -------------
STOCKHOLDERS' EQUITY
Series A Preferred Stock 23,949 -- -- 23,949
Series B Preferred Stock 102,064 -- -- 102,064
Common Stock 4 -- -- 4
Class B Common Stock -- -- -- --
Additional paid-in capital 811,680 -- -- 811,680
Deferred compensation (884) -- -- (884)
Retained earnings -- -- 13,124 13,124
------------- ------------- ------------- -------------
Total stockholders' equity 936,813 -- 13,124 949,937
------------- ------------- ------------- -------------
$ 1,818,649 $ 19,204 $ 13,124 $ 1,850,977
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these
unaudited, pro forma condensed consolidated financial statements.
22
<PAGE> 23
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997
Acquired Property Other
Historical(a) Properties(e) Dispositions(f) Adjustments Pro Forma
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 64,461 $ 11,882 $ (2,364) $ -- $ 73,979
Interest and other income 1,956 -- -- -- 1,956
------------ ------------ ------------ ------------ ------------
Total revenue 66,417 11,882 (2,364) -- 75,935
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Rental expenses 11,672 2,763 (312) -- 14,123
Real estate taxes 5,254 764 (194) -- 5,824
Interest expense, including
amortization of finance costs 12,013 -- -- 557 (g) 12,570
Depreciation and amortization 10,599 1,572 -- -- 12,171
General and administrative and other expenses 3,067 -- -- -- 3,067
------------ ------------ ------------ ------------ ------------
Total operating expenses 42,605 5,099 (506) 557 47,755
------------ ------------ ------------ ------------ ------------
Income from operations before
disposition of property and minority interests 23,812 6,783 (1,858) (557) 28,180
------------ ------------ ------------ ------------ ------------
GAIN ON DISPOSITION OF PROPERTY 1,489 -- (1,489) -- --
------------ ------------ ------------ ------------ ------------
Income from operations before
minority interests 25,301 6,783 (3,347) (557) 28,180
------------ ------------ ------------ ------------ ------------
Minority interests share in net income (3,097) -- -- (561) (h) (3,658)
------------ ------------ ------------ ------------ ------------
Net income 22,204 6,783 (3,347) (1,118) 24,522
------------ ------------ ------------ ------------ ------------
Series A Preferred Stock dividends (573) -- -- -- (573)
Series B Preferred Stock dividends (2,510) -- -- -- (2,510)
------------ ------------ ------------ ------------ ------------
Net income available to common stockholders $ 19,121 $ 6,783 $ (3,347) $ (1,118) $ 21,439
============ ============ ============ ============ ============
Net income per common share $ .43 $ .45
============ ============
Weighted average common shares outstanding 44,301,170 47,878,386
============ ============
</TABLE>
The accompanying notes are an integral part of these
unaudited, pro forma condensed consolidated financial statements.
23
<PAGE> 24
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 Acquired 1997
Properties and Acquired Property Other
Historical(a) Mortgages(d) Properties(e) Dispositions(f) Adjustments Pro Forma
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 196,471 $ 27,526 $ 73,963 $ (15,276) $ -- $ 282,684
Interest and other income 4,228 90 -- -- -- 4,318
------------ ------------ ------------ ------------ ------------ ------------
Total Revenues 200,699 27,616 73,963 (15,276) -- 287,002
------------ ------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Rental expenses 34,690 7,216 18,594 (1,441) -- 59,059
Real estate taxes 15,510 2,188 4,309 (1,261) -- 20,746
Interest expense 37,235 -- -- 15,140(g) 52,375
Depreciation and
amortization 37,385 3,723 10,433 (2,306) -- 49,235
General and
administrative and
other expenses 10,115 -- -- -- -- 10,115
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 134,935 13,127 33,336 (5,008) 15,140 191,530
------------ ------------ ------------ ------------ ------------ ------------
Income from operations
before disposition or
property and
minority interests 65,764 14,489 40,627 (10,268) (15,140) 95,472
------------ ------------ ------------ ------------ ------------ ------------
GAIN ON DISPOSITION OF
PROPERTY 8,350 -- -- (8,350) -- --
------------ ------------ ------------ ------------ ------------ ------------
Income from operations
before minority
interest 74,114 14,489 40,627 (18,618) (15,140) 95,472
------------ ------------ ------------ ------------ ------------ ------------
Minority interests
share of net income (9,924) -- -- -- (2,482)(h) (12,406)
------------ ------------ ------------ ------------ ------------ ------------
Net income 64,190 14,489 40,627 (18,618) (17,622) 83,066
------------ ------------ ------------ ------------ ------------ ------------
Series A Preferred
Stock dividends (2,098) -- -- -- -- (2,098)
Series B Preferred
Stock dividends (10,041) -- -- -- -- (10,041)
------------ ------------ ------------ ------------ ------------ ------------
Net income allocable to
common stockholders $ 52,051 $ 14,489 $ 40,627 $ (18,618) $ (17,622) $ 70,927
============ ============ ============ ============ ============ ============
Net income per
common share $ 1.52 $ 1.48
============ ============
Weighted average
common shares
outstanding 34,280,115 47,878,386
============ ============
</TABLE>
The accompanying notes are an integral part of these
unaudited, pro forma condensed consolidated financial statements.
24
<PAGE> 25
SPIEKER PROPERTIES, INC.
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN THOUSANDS)
(a) Reflects historical consolidated balance sheet of the Company as of March
31, 1997, and the historical consolidated statements of operations for the
three months ended March 31, 1997, and for the year ended December 31, 1996.
(b) Reflects the acquisition of 1.1 million square feet of net rentable property
subsequent to March 31, 1997, at an aggregate acquisition cost of $141,538,
including acquisition costs. The acquisitions were funded with cash on hand,
net proceeds from the sale of Common Stock and property dispositions,
borrowings on the unsecured line of credit and an assumption of a mortgage.
<TABLE>
<CAPTION>
Property Acquisition Date Cost
-------- ---------------- ----
<S> <C> <C>
Pasadena Portfolio April 10, 1997 $ 68,264
Point West Corporate Center May 1, 1997 17,246
Sierra Point May 6, 1997 10,274
Brea Corporate Plaza May 14, 1997 10,762
McKesson Building June 3, 1997 19,075
Coral Tree Commerce Park June 16, 1997 8,460
Progress Industrial Park June 16, 1997 7,457
--------
$141,538
========
</TABLE>
(c) Reflects the disposition of six properties subsequent to March 31, 1997:
<TABLE>
<CAPTION>
Property Disposal Price Cost Basis
-------- -------------- ----------
<S> <C> <C>
South Point Plaza $ 14,619 $ 10,946
Woodside Central Plaza 11,974 11,392
West Park Plaza 10,082 7,954
Walker Center 9,972 6,290
Arbor Faire 18,536 16,345
Broadway Faire 9,064 8,196
-------- --------
$ 74,247 $ 61,123
======== ========
</TABLE>
In connection with the property dispositions, the Company recognized a gain
of $1,489.
(d) Reflects the incremental effect on the Company's revenues, rental expenses
and real estate taxes from the acquisition of 4.7 million square feet of net
rentable property and two investments in mortgages during 1996. Such amounts
represent the operations of the acquired properties and interest earned on
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.
(e) Reflects the incremental effect of the Company's revenues, rental expenses
and real estate taxes from the acquisition of 4.4 million square feet of net
rentable property during 1997. Such amounts represent the operations of the
properties 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.
(f) Reflects the elimination of the operations of (i) 4 properties sold in 1996
and (ii) 7 properties sold in 1997 included in the historical statements of
operations and the elimination of the gain on disposition of the properties.
25
<PAGE> 26
(g) Reflects an adjustment of historical interest expense to reflect pro forma
interest expense which is based upon pro forma debt outstanding as of March
31, 1997, using the actual interest rate for fixed rate debt and assumes an
interest rate of 6.95% on the line of credit.
(h) Reflects the allocation of the pro forma adjustment to minority interests
based upon pro forma minority ownership in the Operating Partnership of
approximately 87.0%.
(i) The Company's pro forma taxable income for the 12 month period ended March
31, 1997, is approximately $113,000, which has been calculated as pro forma
income from operations before minority interests for the same period of
approximately $100,000 plus GAAP depreciation and amortization of
approximately $49,000 less tax basis depreciation and amortization and other
tax differences of approximately $36,000.
26
<PAGE> 27
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 27, 1997 By: /s/ Elke Strunka
---------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
27
<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
June 27, 1997, of our reports dated April 29, 1997, on the statements of
revenues and certain expenses of the Pasadena Portfolio for the year ended
December 31, 1996.
San Francisco, California ARTHUR ANDERSEN LLP
June 25, 1997
28
<PAGE> 1
EXHIBIT 23.2
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
June 27, 1997, of our reports dated April 29, 1997, on the statements of
revenues and certain expenses of the Metro Plaza Property for the year ended
December 31, 1996.
San Francisco, California ARTHUR ANDERSEN LLP
June 25, 1997
29
<PAGE> 1
EXHIBIT 23.3
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
June 27, 1997, of our reports dated December 20, 1996, on the statements of
revenues and certain expenses of the Three Property Transactions for the year
ended December 31, 1995.
San Francisco, California ARTHUR ANDERSEN LLP
June 25, 1997
30
