<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):
November 28, 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)
(650) 854-5600
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
THIS DOCUMENT CONSISTS OF 23 PAGES.
<PAGE> 2
SPIEKER PROPERTIES, INC.
CURRENT REPORT
ON
FORM 8-K
Item 5. Other Events
The following operating properties were or are to be acquired by Spieker
Properties, L.P. from unrelated parties between September 23, 1997, and November
28, 1997, or expected date of acquisition. 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"):
Unaudited Pending Property Acquisitions
The City Office Portfolio, a 730,000 square foot office portfolio located in
Orange, California, is expected to be acquired in the first quarter of 1998 for
$97.2 million.
San Jose Concourse, a 541,000 square foot office complex located in San Jose,
California, is expected to be acquired in the first quarter of 1998. The
purchase price of $170.1 million also includes 6.6 acres of entitled land which
will accommodate an additional 331,000 square foot office building and a 960
stall parking garage.
ABAM Building, a 50,000 square foot office building located in Federal Way,
Washington, is expected to be acquired in December 1997 for $4.9 million.
Douglas Center, a 100,000 square foot office building located in Roseville,
California, is expected to be acquired in December 1997 for $12.0 million.
11999 San Vicente, a 55,457 square foot office building located in Brentwood,
California, is expected to be acquired in December 1997 for $12.5 million.
Unaudited Property Acquisitions
Tower 17, a 227,781 square foot office building located in Irvine, California,
was acquired on September 25, 1997, for $40.1 million.
Johnson Ranch Corporate Center, a 127,059 square foot office complex located in
Roseville, California, was acquired on October 1, 1997, for $20.5 million.
San Mateo Baycenter II, a 119,152 square foot office building located in San
Mateo, California, was acquired on October 1, 1997, for $24.9 million from a
Spieker Partners related entity (certain officers of the Company are partners in
Spieker Partners).
Southgate Office Plaza, a 268,347 square foot office complex located in Renton,
Washington, was acquired on October 10, 1997, for $31.0 million.
Borregas Avenue, a 39,899 square foot industrial building located in Sunnyvale,
California, was acquired on October 15, 1997, for $3.1 million.
California Circle, a 95,545 square foot industrial complex located in Milpitas,
California, was acquired on October 16, 1997, for $10.2 million.
La Jolla Centre I, a 154,320 square foot office building located in La Jolla,
California, was acquired on October 24, 1997, for $29.5 million.
2
<PAGE> 3
Park Plaza, a 66,745 square foot office building located in San Diego,
California, was acquired on October 24, 1997, for $9.5 million.
Audited Property Acquisitions
Plaza Center/U.S. Bank Center, a 458,000 square foot office complex located in
Bellevue, Washington, was acquired on November 4, 1997, for $80.5 million.
WCB Portfolio, a 6,354,450 square foot portfolio consisting primarily of office
and industrial properties located in California, Oregon, Washington, Colorado,
Arizona, New Mexico, Texas, Florida, Massachusetts, Michigan and Pennsylvania
the majority of which was acquired November 17, 1997, for $725.0 million. The
remainder is expected to close in December 1997.
The costs shown above for each acquisition represent the initial cost at the
time of acquisition.
Acquisitions - General
The properties were or are to be acquired using funds provided by the Company's
unsecured line of credit, short-term floating rate bridge financing, the
issuance of unsecured investment grade rated debt, the assumption of mortgages,
operating partnership units, convertible preferred operating partnership units
issued to certain of the sellers, common stock and preferred stock.
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 selected western United States
markets. 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.
The pending acquisitions of The City Office Portfolio and San Jose Concourse
involve a significant amount of assets, defined by rule 3-14 of regulation S-X
to be an amount in excess of 10% of the total assets of the Company based on the
last audited balance sheet (i.e. December 31, 1996). Additional acquisitions,
while not considered individually "significant", may in the aggregate be
significant. Certain unaudited historical and pro forma financial information
concerning The City Office Portfolio, San Jose Concourse and other properties
referred to herein is provided in Item 7 of this Current Report on Form 8-K.
Audited financial statements of the Plaza Center/U.S. Bank Center were
previously reported in the November 21, 1997, Report on Form 8-K. Audited
financial statements of the WCB Portfolio were previously reported in the
October 10, 1997, Report on Form 8-K/A.
In aggregate, the Company has or will have acquired 13 properties and two
portfolios totaling 9.4 million square feet of rentable space during the period
from September 23, 1997, to November 28, 1997, or expected date of acquisition,
for $1.3 billion.
3
<PAGE> 4
Dispositions
The following operating properties and investments in mortgages were or are to
be disposed of by Spieker Properties, L.P. to unrelated parties subsequent to
September 23, 1997:
Arden Square, a 100,162 square foot retail center located in Sacramento,
California, is currently under contract and is expected to be disposed of by
December 31, 1997, for $10.3 million.
Arden Office, a 52,313 square foot office building located in Sacramento,
California, is currently under contract and is expected to be disposed of in
early December 1997 for $3.4 million.
Howe Avenue Office, a 118,473 square foot office complex located in Sacramento,
California is currently under contract and is expected to be disposed of in
early December 1997 for $8.8 million.
Two investments in mortgages with Spieker Northwest, Inc. an affiliate of the
Company were repaid in the amount of $16.7 million in October and November 1997.
Other
As previously reported on Form 8-K dated June 27, 1997, the Company acquired
seventeen properties totaling 4.4 million square feet of net rentable space for
$523.1 million and disposed of seven properties totaling 0.7 million square feet
of net rentable space for $78.4 million during the period from January 1, 1997,
to June 27, 1997.
As previously reported on Form 8-K dated September 22, 1997, the Company
acquired eight properties and two portfolios totaling 9.3 million square feet of
rentable space for $996.3 million and disposed of one property totaling 49,750
square feet for $2.4 million during the period from June 28, 1997, to September
22, 1997.
The acquired properties, pending acquisitions, disposed properties and the
properties previously reported in the June 27, 1997, Form 8-K and the September
22, 1997, Form 8-K represent the Acquired Properties, Pending Acquisitions and
Disposed Properties included in the pro forma financials included in Item 7 of
this Current Report on Form 8-K.
As of November 28, 1997, including pending acquisitions and pending
dispositions, the Company owns or will own 38.4 million square feet of
properties, consisting of 18.1 million square feet of office properties, 19.6
million square feet of industrial properties and .7 million square feet of
retail properties.
4
<PAGE> 5
Item 7. Financial Statements and Exhibits.
(a) (i) Statements of Revenues and Certain Expenses for San Jose Concourse
Unaudited Statements of Revenues and Certain Expenses for the nine
months ended September 30, 1997, and for the year ended
December 31, 1996
Notes to Unaudited Statements of Revenues and Certain Expenses for
the nine months ended September 30, 1997, and for the year
ended December 31, 1996
(ii) Statements of Revenues and Certain Expenses for The City Office
Portfolio
Unaudited Statements of Revenues and Certain Expenses for the nine
months ended September 30, 1997, and for the year ended
December 31, 1996
Notes to Unaudited Statements of Revenues and Certain Expenses for
the nine months ended September 30, 1997, (unaudited) and for
the year ended December 31, 1996
(iii) 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 September
30, 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
September 30, 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 September 30,
1997
Pro Forma Condensed Consolidated Statements of Operations for the
nine months ended September 30, 1997, and for the year ended
December 31, 1996
Notes and adjustments to Pro Forma Condensed Consolidated Financial
Statements
(c) Exhibits
5
<PAGE> 6
SPIEKER PROPERTIES, INC.
UNAUDITED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR SAN JOSE CONCOURSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
RENTAL REVENUES $ 9,006 $10,679
CERTAIN EXPENSES:
Rental expenses 2,197 2,830
Real estate taxes 556 769
------- -------
2,753 3,599
------- -------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 6,253 $ 7,080
======= =======
</TABLE>
The accompanying notes are an integral part of these combined statements.
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
NOTES TO UNAUDITED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR SAN JOSE CONCOURSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
1. Basis of Presentation and Summary of Significant Accounting Policies:
Properties Acquired
The accompanying unaudited statements of revenues and certain expenses
include the operations (see "Basis of Presentation" below) of San Jose
Concourse (the "Property") to be acquired by Spieker Properties, L.P.
(the "Company") in the first quarter of 1998. 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.
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.
7
<PAGE> 8
2. Leasing Activity:
The minimum future rental revenues from leases in effect as of October 1,
1997, for the remainder of 1997 and annually thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- -------------
<S> <C>
1997 (three months) $ 2,964
1998 11,075
1999 9,716
2000 7,205
2001 4,761
Thereafter 6,542
-------------
$ 42,263
=============
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $253 for the nine
months ended September 30, 1997, and $417 for the year ended December 31, 1996.
Certain leases contain options to renew.
8
<PAGE> 9
SPIEKER PROPERTIES, INC.
UNAUDITED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE CITY OFFICE PORTFOLIO
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
RENTAL REVENUES $6,483 $9,049
CERTAIN EXPENSES:
Rental expenses 2,614 3,508
Real estate taxes 382 674
------ ------
2,996 4,182
------ ------
REVENUES IN EXCESS OF CERTAIN EXPENSES $3,487 $4,867
====== ======
</TABLE>
9
<PAGE> 10
SPIEKER PROPERTIES, INC.
NOTES TO UNAUDITED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE CITY OFFICE PORTFOLIO
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
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 unaudited statements of revenues and certain expenses (see
"Basis of Presentation" below) include the operations of The City Office
Portfolio (the "Properties") to be acquired by Spieker Properties, L.P.
(the "Company") in January 1998. 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 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 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.
10
<PAGE> 11
2. Leasing Activity:
The minimum future rental revenues due under noncancelable operating
leases in effect as of October 1, 1997, for the remainder of 1997 and
annually thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
1997 (three months) $ 2,212
1998 9,253
1999 13,102
2000 14,001
2001 14,756
Thereafter 19,771
-------
$73,095
=======
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $268 for the nine
months ended September 30, 1996, (unaudited) and $213 for the year ended
December 31, 1996. Certain leases contain options to renew.
11
<PAGE> 12
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
SEPTEMBER 30, 1997, OR DATE OF ACQUISITION
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
January 1, 1997, to the
earlier of September
30, 1997, or Year Ended
Date of Acquisition December 31, 1996
---------------------- -----------------
<S> <C> <C>
RENTAL REVENUES $16,177 $21,043
CERTAIN EXPENSES
Rental expenses 4,250 5,492
Real estate taxes 1,315 1,792
------- -------
5,565 7,284
------- -------
RENTAL REVENUE IN EXCESS OF CERTAIN EXPENSES $10,612 $13,759
======= =======
</TABLE>
The accompanying notes are an integral part of these combined statements.
12
<PAGE> 13
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
SEPTEMBER 30, 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 or to be acquired by Spieker Properties, L.P.
during the period from September 23, 1997, to November 28, 1997, or date
of acquisition (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>
Tower 17 Irvine, CA
Johnson Ranch Corporate Center Roseville, CA
San Mateo Baycenter II San Mateo, CA
Southgate Office Plaza Renton, WA
Borregas Avenue Sunnyvale, CA
California Circle Milpitas, CA
La Jolla Centre I La Jolla, CA
Park Plaza San Diego, CA
ABAM Building Federal Way, WA
Douglas Center Roseville, CA
11999 San Vicente Brentwood, 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.
13
<PAGE> 14
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 October 1, 1997, for the remainder of 1997 and
annually thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------------
<S> <C>
1997 (three months) $ 4,718
1998 19,523
1999 16,419
2000 13,778
2001 10,648
Thereafter 10,178
--------------
$ 75,264
==============
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to
$1,534 for the period from January 1, 1997, to the earlier of September
30, 1997, or date of acquisition and $1,845 for the year ended December
31, 1996. Certain leases contain options to renew.
14
<PAGE> 15
SPIEKER PROPERTIES, INC.
PRO FORMA FINANCIAL INFORMATION
The unaudited, pro forma condensed consolidated balance sheet as of
September 30, 1997, reflects the incremental effect of the acquired properties,
pending acquisitions and disposed properties (collectively, the "Acquired
Properties, Pending Acquisitions and Disposed Properties") described in Item 5
of this Current Report on Form 8-K as if such transactions occurring after
September 30, 1997, had all occurred on September 30, 1997. The accompanying
unaudited, pro forma condensed consolidated statements of operations for the
nine months ended September 30, 1997, and the year ended December 31, 1996,
reflect (i) the incremental effect of the Acquired Properties, Pending
Acquisitions 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 September 30, 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, Pending Acquisitions 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.
These pro forma statements may also not necessarily be indicative of
the Company's final financing plans to meet its financial requirements in
connection with the acquisitions described herein. See footnotes (c) and (d).
15
<PAGE> 16
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Common Stock and
Acquired Debt Preferred Stock Pending Property
Historical(a) Properties(b) Issuances(c) Issuances(d) Acquisitions(e) Dispositions(f) Pro Forma
------------ ------------ ----------- ----------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in real estate, net $ 2,175,049 $ 934,169 $ -- $ -- $ 296,700 $ (33,515) $ 3,372,403
Cash and cash equivalents 38,786 (771,012) 397,950 492,602 (193,600) 39,274 4,000
Deferred financing and leasing
costs, net 26,453 -- 2,050 -- -- -- 28,503
Other assets 38,979 -- -- -- -- -- 38,979
----------- --------- --------- -------- --------- ----------- -----------
Total assets $ 2,279,267 $ 163,157 $ 400,000 $492,602 $ 103,100 $ 5,759 $ 3,443,885
=========== ========= ========= ======== ========= =========== ===========
LIABILITIES
Mortgage loans $ 84,863 $ 12,076 $ -- $ -- $ -- $ -- $ 96,939
Unsecured line of credit 138,000 68,575 (78,560) 103,100 -- 231,115
Unsecured notes 935,000 -- 200,000 -- -- -- 1,135,000
Bridge Loan -- -- 200,000 -- -- -- 200,000
Other liabilities 98,860 -- -- -- -- -- 98,860
----------- --------- --------- -------- --------- ----------- -----------
Total liabilities 1,256,723 80,651 400,000 (78,560) 103,100 -- 1,761,914
----------- --------- --------- -------- --------- ----------- -----------
MINORITY INTEREST 72,755 82,506 -- -- -- 155,261
----------- --------- --------- -------- --------- ----------- -----------
STOCKHOLDERS' EQUITY
Series A Preferred Stock 23,949 -- -- -- -- -- 23,949
Series B Preferred Stock 102,064 -- -- -- -- -- 102,064
Series C Preferred Stock -- -- -- 146,135 -- -- 146,135
Common Stock 4 -- -- 1 -- -- 5
Additional paid-in capital 816,707 -- -- 425,026 -- -- 1,241,733
Deferred compensation (622) -- -- -- -- -- (622)
Retained earnings 7,687 -- -- -- -- 5,759 13,446
----------- --------- --------- -------- --------- ----------- -----------
Total stockholders' equity 949,789 -- -- 571,162 -- 5,759 1,526,710
----------- --------- --------- -------- --------- ----------- -----------
$ 2,279,267 $ 163,157 $ 400,000 $492,602 $ 103,100 $ 5,759 $ 3,443,885
=========== ========= ========= ======== ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
16
<PAGE> 17
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(unaudited, dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1997 1997
Acquired Pending Property Other
Historical(a) Properties(h) Acquisitions(I) Dispositions(j) Adjustments Pro Forma
------------- ------------ --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 221,424 $ 119,193 $18,347 $(7,772) $(18,362)(k) $ 332,830
Interest and other income 4,767 -- -- (342) 12,828(l) 17,253
------------ ----------- ------- ------- -------- ---------
Total revenue 226,191 119,193 18,347 (8,114) (5,534) 350,083
------------ ----------- ------- ------- -------- ---------
OPERATING EXPENSES
Rental expenses 44,514 25,265 5,632 (1,415) (4,020)(k) 69,976
Real estate taxes 17,077 9,296 1,162 (720) (1,514)(k) 25,301
Interest expense, including amortization
of finance costs 40,914 -- -- -- 44,217(m) 85,131
Depreciation and amortization 36,457 19,219 4,362 (511) (2,888)(k) 56,639
General and administrative and other
expenses 10,255 -- -- -- -- 10,255
------------ ----------- ------- ------- -------- ---------
Total operating expenses 149,217 53,780 11,156 (2,646) 35,795 247,302
------------ ----------- ------- ------- -------- ---------
Income from operations before disposition
of property and minority interests 76,974 65,413 7,191 (5,468) (41,329) 102,781
------------ ----------- ------- ------- -------- ---------
Minority interests share in net income (9,281) -- -- -- (4,413)(n) (13,694)
------------ ----------- ------- ------- -------- ---------
Net income before disposition of property 67,693 65,413 7,191 (5,468) (45,742) 89,087
------------ ----------- ------- ------- -------- ---------
Series A Preferred Stock dividends (1,720) -- -- -- -- (1,720)
Series B Preferred Stock dividends (7,530) -- -- -- -- (7,530)
Series C Preferred Stock dividends -- -- -- (8,859)(d) (8,859)
------------ ----------- ------- ------- -------- ---------
Net income available to common
stockholders before
disposition of property $ 58,443 $ 65,413 $ 7,191 $(5,468) $(54,601) $ 70,978
============ =========== ======= ======= ======== =========
Net income per common share $ 1.25 $ 1.27
============ =========
Weighted average common shares
outstanding 46,815,215 55,832,327
============ ==========
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
17
<PAGE> 18
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 1997
Properties and Acquired Pending Property Other
Historical (a) Mortgages (g) Properties (h) Acquisitions (i) Dispositions (j) Adjustments
-------------- ------------- -------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 196,471 $ 27,526 $215,126 $ 23,260 $(22,034) $(23,917)(k)
Interest and other income 4,228 90 -- -- -- 16,431 (l)
--------- -------- -------- -------- -------- ---------
Total Revenues 200,699 27,616 215,126 23,260 (22,034) (7,486)
--------- -------- -------- -------- -------- ---------
OPERATING EXPENSES
Rental expenses 34,690 7,216 50,441 7,327 (2,724) (5,560)(k)
Real estate taxes 15,510 2,188 15,554 1,755 (2,142) (1,926)(k)
Interest expense 37,235 -- -- -- -- 78,931 (m)
Depreciation and
amortization 37,385 3,723 34,373 5,815 (3,452) (3,850)(k)
General and administrative and
other expenses 10,115 -- -- -- -- --
--------- -------- -------- -------- -------- ---------
Total operating expenses 134,935 13,127 100,368 14,897 (8,318) 67,595
--------- -------- -------- -------- -------- ---------
Income from operations before
disposition or property and
minority interests 65,764 14,489 114,758 8,363 (13,716) (75,081)
--------- -------- -------- -------- -------- --------
Minority interests share of net
income (8,645) -- -- -- -- (6,609)(n)
--------- -------- -------- -------- -------- --------
Net income before disposition of
property
57,119 14,489 114,758 8,363 (13,716) (81,690)
--------- -------- -------- -------- -------- --------
Series A Preferred Stock dividends (2,098) -- -- -- -- --
Series B Preferred Stock dividends (10,041) -- -- -- -- --
Series C Preferred Stock dividends -- -- -- -- -- (11,813)(d)
--------- -------- -------- -------- -------- --------
Net income allocable to common
stockholders before disposition
of property $ 44,980 $ 14,489 $114,758 $ 8,363 $(13,716) $(93,503)
========= ======== ======== ======== ======== =========
Net income per common share $ 1.30
=========
Weighted average common shares
outstanding 34,691,140
==========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
---------
<S> <C>
REVENUES
Rental income $ 416,432
Interest and other income 20,749
---------
Total Revenues 437,181
---------
OPERATING EXPENSES
Rental expenses 91,390
Real estate taxes 30,939
Interest expense 116,166
Depreciation and
amortization 73,994
General and administrative and
other expenses 10,115
---------
Total operating expenses 322,604
---------
Income from operations before
disposition or property and
minority interests 114,577
---------
Minority interests share of net
income (15,254)
---------
Net income before disposition of
property
99,323
---------
Series A Preferred Stock dividends (2,098)
Series B Preferred Stock dividends (10,041)
Series C Preferred Stock dividends (11,813)
---------
Net income allocable to common
stockholders before disposition
of property $ 75,371
=========
Net income per common share $ 1.35
=========
Weighted average common shares
outstanding 55,832,327
==========
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
18
<PAGE> 19
SPIEKER PROPERTIES, INC.
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands, except per share amounts)
(a) Reflects historical consolidated balance sheet of the Company as of
September 30, 1997, and the historical consolidated statements of
operations for the nine months ended September 30, 1997, and for the year
ended December 31, 1996, excluding gains on disposition of property of
$18.1 million and $8.4 million, respectively.
(b) Reflects the acquisition of 7.7 million square feet of net rentable
property subsequent to September 30, 1997, at an aggregate acquisition
cost of $934.2 million, including acquisition costs. The acquisitions were
funded with cash on hand, proceeds from property dispositions, borrowings
on the unsecured line of credit, the issuance of investment grade
unsecured notes, assumption of mortgages, the issuance of operating
partnership units, common stock and preferred stock.
<TABLE>
<CAPTION>
Property Acquisition Date Cost
- -------- ---------------- ----
<S> <C> <C>
Johnson Ranch Corporate Center October 1, 1997 $ 20,462
San Mateo Baycenter II October 1, 1997 24,900
Southgate Office Plaza October 10, 1997 30,966
Borregas Avenue October 15, 1997 3,105
California Circle October 16, 1997 10,202
La Jolla Centre I October 21, 1997 29,526
Park Plaza October 21, 1997 9,508
Plaza Center/U.S. Bank Center November 4, 1997 80,500
WCB Portfolio November 17, 1997 725,000 (1)
--------------
$ 934,169
=============
</TABLE>
(1) Includes certain properties to be exchanged for operating partnership
units valued at $75.0 million in early December 1997.
(c) Reflects borrowings on a unsecured bridge loan of $200.0 million at an
assumed interest rate of $6.34% (LIBOR plus .65%) and a maturity of two
years. Also reflects assumed issuance of unsecured investment grade rated
debt securities of $200.0 million at an assumed interest rate of 7.5% and
an assumed maturity of 20 years. The Company has not made a final
determination of the proportion of cash on hand, proceeds from property
dispositions, borrowings on the unsecured line of credit, or the proposed
new unsecured bridge facility, or issuances of debt securities, common
stock, preferred stock, convertible preferred operating partnership units,
or other securities that it intends to issue to meet its financing
requirements in connection with the acquisitions described herein.
(d) Reflects the issuance of 11,500,000 shares of common stock at a price of
$38.88 per share and offering costs of $22.0 million. Also reflects the
issuance of 6,000,000 shares of Series C Preferred Stock at $25.00 per
share, dividend rate of 7.88% of the liquidation preference of $150.0
million, and offering costs of $3.9 million. As described in note (c), the
Company has not made a final determination of the proportion of cash on
hand, proceeds from property dispositions, borrowings on the unsecured
line of credit, or the proposed new unsecured bridge facility, or
issuances of debt securities, common stock, preferred stock, convertible
preferred operating partnership units or other securities to meet its
financing requirements in connection with the acquisition described
herein.
19
<PAGE> 20
(e) Reflects the pending acquisition of 1.5 million square feet of net
rentable property subsequent to September 30, 1997, at an aggregate
pending acquisition cost of $296.7 million, including estimated
acquisition costs. The acquisition will be funded with a combination of
cash on hand, proceeds from property dispositions, borrowings on the
unsecured line of credit, or the additional new unsecured bridge facility
or issuances of debt securities. See notes (c) and (d).
(f) Reflects the disposition of three properties and the repayment of two
investments in mortgages totaling $39.3 million and a cost basis of $33.5
million subsequent to September 30, 1997.
(g) 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.
(h) Reflects the incremental effect of the Company's revenues, rental expenses
and real estate taxes from the acquisition of 15.2 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.
(i) Reflects the incremental effect on the Company's revenues, rental expense
and real estate taxes from the pending acquisition of 1.5 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 on lives of 3 to 40
years.
(j) Reflects the elimination of the operations of (i) 4 properties disposed of
in 1996 and (ii) 13 properties disposed of or to be disposed in 1997
included in the historical statements of operations. Also reflects the
elimination of interest income from the repayment of the two investments
in mortgages.
(k) Reflects the reduction in revenue and expenses for the portion of the WCB
Portfolio, aggregating 1.7 million square feet of property, purchased by
an affiliate of Spieker Properties, L.P..
(l) Reflects the increase in management fee and interest income from an
affiliate of Spieker Properties, L.P. relating to the 1.7 million square
feet of property in the WCB Portfolio to be purchased by the affiliate.
(m) Reflects an adjustment to interest expense based upon pro forma debt
outstanding as of September 30, 1997, using the actual or assumed interest
rate for fixed rate debt and an interest rate of 6.49% on the line of
credit which bears interest at LIBOR plus .80%.
(n) Reflects the allocation of the pro forma adjustment to minority interests
based upon pro forma minority ownership in the Operating Partnership of
approximately 86.7%.
(o) The Company's pro forma taxable income for the 12-month period ended
September 30, 1997, is approximately $151.0 million, which has been
calculated as pro forma income from operations before minority interests
for the same period of approximately $131.0 million plus GAAP depreciation
and amortization of approximately $75.0 million less tax basis
depreciation and amortization and other tax differences of approximately
$55.0 million.
(p) Per share amounts include the assumed issuance of common stock described
in note (d) and reflect the dilutive effects, if any, of outstanding
options on a historical basis as of September 30, 1997, and December 31,
1996, respectively, based upon the average price per common share for the
period presented. Pro forma per share
20
<PAGE> 21
amounts for the same periods assume an average price per share of $38.88.
There is no material difference between primary and fully diluted per
share amounts.
Had Statement of Financial Accounting Standards No. 128 - "Earnings Per
Share" been adopted as of January 1, 1996, per share amounts would have
been $1.27 and $1.29 on a historical and pro forma basis, respectively for
the nine months ended September 30, 1997, and $1.31 and $1.37 on a
historical and pro forma basis, respectively for the year ended December
31, 1996.
21
<PAGE> 22
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: November 28, 1997 By:/s/ Elke Strunka
---------------------- --------------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
22
