<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): January 20, 1998
(January 6, 1997)
-------------------------
SPIEKER PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-12528 94-3185802
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
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(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, which were not included in a prior Report on
Form 8-K, were or are to be acquired by Spieker Properties, L.P. from unrelated
parties between November 29, 1997, and January 20, 1998, or expected date of
acquisition. Spieker Properties, Inc. owns an approximate 89.2% general
partners' interest in Spieker Properties, L.P. (the "Operating Partnership" and
collectively with Spieker Properties, Inc. referred to as the "Company"):
Audited Pending Property Acquisitions
Transpacific Development Company Portfolio (the "TDC Portfolio"), a 2,968,846
square foot portfolio with office properties located in Northern and Southern
California and Arizona, is expected to close in several phases beginning in
February 1998 and concluding by the end of March 1998 for $429.5 million.
Unaudited Property Acquisitions
Koll Bellefield, a 66,000 square foot office building located in Bellevue,
Washington, was acquired on January 9, 1998, for $10.3 million.
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, operating partnership units,
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 acquisition of the TDC Portfolio involves 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 audited historical
and pro forma financial information concerning The TDC Portfolio is provided in
Item 7 of this Current Report on Form 8-K.
In aggregate, the Company has or will have acquired one property and one
portfolio totaling 3.0 million square feet of rentable space during the period
from November 29, 1997, to January 20, 1998, or expected date of acquisition,
for $439.8 million.
2
<PAGE> 3
The following operating properties previously reported in the November 28, 1997,
Report on Form 8-K were reported as pending, and their current status is as
follows:
Audited Property Acquisition
San Jose Concourse, a 541,000 square foot office complex located in San Jose,
California, was acquired January 6, 1998. The purchase price of $170.1 million
also includes 6.6 acres of entitled land which will accommodate the planned
development of an additional two buildings totaling 331,000 square feet of
office space and a 960 stall parking garage. Certain audited historical
financial information concerning San Jose Concourse is provided in Item 7 of
this Current Report on Form 8-K.
Unaudited Property Acquisitions
ABAM Building, a 50,000 square foot office building located in Federal Way,
Washington, was acquired on December 1, 1997 for $4.9 million.
Douglas Center, a 100,000 square foot office building located in Roseville,
California, was acquired on December 1, 1997 for $12.0 million.
11999 San Vicente, a 55,457 square foot office building located in Brentwood,
California, was acquired on December 12, 1997 for $12.5 million.
Dispositions
Arden Office, a 52,313 square foot office building located in Sacramento,
California, was disposed of on December 1, 1997 for $3.4 million.
Howe Avenue Office, a 118,473 square foot office complex located in Sacramento,
California was disposed of on December 1, 1997 for $8.8 million.
Arden Square, a 100,162 square foot retail center located in Sacramento,
California, was disposed of on December 23, 1997, for $10.3 million.
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 or was to have 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.
As previously reported on Form 8-K dated November 28, 1997, the Company acquired
or was to have acquired 13 properties and one portfolio totaling 3.0 million
square feet of net rentable space for $546.0 million. The WCB Portfolio square
footage and acquisition cost was included in the summary of the Form 8-K dated
September 22, 1997.
The TDC Portfolio, the Koll Bellefield property and the properties previously
reported in the June 27, 1997, Form 8-K, the September 22, 1997, Form 8-K and
the November 28, 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 January 20, 1998, including pending acquisitions, the Company owns or will
own 41.5 million square feet of properties, consisting of 21.0 million square
feet of office properties, 19.7 million square feet of industrial properties and
.8 million square feet of retail properties.
3
<PAGE> 4
Item 7. Financial Statements and Exhibits.
(a) (i) Statements of Revenues and Certain Expenses for the San Jose Concourse
Report of Independent Public Accountants
Statements of Revenues and Certain Expenses for the nine months
ended September 30, 1997, (unaudited) and for the year ended
December 31, 1996
Notes to Statements of Revenues and Certain Expenses for the nine
months ended September 30, 1997, (unaudited) and for the year
ended December 31, 1996
(ii) Statements of Revenues and Certain Expenses for the TDC Portfolio
Report of Independent Public Accountants
Statements of Revenues and Certain Expenses for the TDC Portfolio for
the nine months ended September 30, 1997, (unaudited) and for the
year ended December 31, 1996
Notes to Statements of Revenues and Certain Expenses for the TDC
Portfolio for the nine months ended September 30, 1997,
(unaudited) 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
23.1 Consent of Independent Public Accountants
4
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenues and certain
expenses of the San Jose Concourse, 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 January 20, 1998, and is not intended to be a complete presentation of
the revenues and expenses of the San Jose Concourse.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the San
Jose Concourse for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
San Francisco, California ARTHUR ANDERSEN LLP
December 22, 1997
5
<PAGE> 6
SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE SAN JOSE CONCOURSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUES $ 9,284 $10,656
CERTAIN EXPENSES:
Rental expenses 2,322 2,883
Real estate taxes 556 769
------- -------
2,878 3,652
------- -------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 6,406 $ 7,004
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE SAN JOSE THE CONCOURSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 San Jose Concourse
(the "Property") acquired by Spieker Properties, L.P. (the "Company") on
January 6, 1998. Spieker Properties, Inc. owns an approximate 89.2% 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 nine months ended September 30,
1997, is unaudited. In the opinion of management, the unaudited financial
information contains all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the statements of revenues
and certain expenses for the Property.
Revenue Recognition
All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses.
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 $268 for the nine
months ended September 30, 1997, (unaudited) and $417 for the year ended
December 31, 1996. Certain leases contain options to renew.
8
<PAGE> 9
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenues and certain
expenses of the TDC 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 January 20, 1998, and is not intended to be a complete presentation of
the revenues and expenses of the TDC Portfolio.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the TDC
Portfolio for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
San Francisco, California ARTHUR ANDERSEN LLP
December 1, 1997
9
<PAGE> 10
SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE TDC PORTFOLIO
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUES $40,445 $54,121
CERTAIN EXPENSES:
Rental expenses 11,541 13,978
Real estate taxes 3,036 3,405
------- -------
14,577 17,383
------- -------
REVENUES IN EXCESS OF CERTAIN EXPENSES $25,868 $36,738
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
10
<PAGE> 11
SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE TDC PORTFOLIO
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 TDC Portfolio (the
"Property") to be acquired by Spieker Properties, L.P. (the "Company") in
February and March of 1998. Spieker Properties, Inc. owns an approximate
89.2% 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 nine months ended September 30,
1997, is unaudited. In the opinion of management, the unaudited financial
information contains all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the statements of revenues
and certain expenses for the Property.
Revenue Recognition
All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses.
Actual results could differ from those estimates.
11
<PAGE> 12
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) $ 12,584
1998 47,443
1999 40,082
2000 25,257
2001 19,856
Thereafter 27,751
--------
$172,973
========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $4,090 or the nine
months ended September 30, 1997, (unaudited) and $5,973 for the year ended
December 31, 1996. Certain leases contain options to renew.
12
<PAGE> 13
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).
13
<PAGE> 14
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 $ 1,143,969 $ -- $ -- $ 526,700 $ (33,515) $ 3,812,203
Cash and cash equivalents 38,786 (993,786) 730,772 515,376 (326,741) 39,274 3,681
Deferred financing and
leasing costs, net 26,453 -- 4,228 -- -- -- 30,681
Other assets 38,979 -- -- -- -- -- 38,979
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets $ 2,279,267 $ 150,183 $ 735,000 $ 515,376 $ 199,959 $ 5,759 $ 3,885,544
=========== =========== =========== =========== =========== =========== ===========
LIABILITIES
Mortgage loans $ 84,863 $ 12,076 $ -- $ -- $ -- $ -- $ 96,939
Unsecured line of credit 138,000 55,601 -- (78,560) 134,959 -- 250,000
Unsecured notes 935,000 -- 535,000 -- -- -- 1,470,000
Bridge Loan -- -- 200,000 -- -- -- 200,000
Other liabilities 98,860 -- -- -- -- -- 98,860
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 1,256,723 67,677 735,000 (78,560) 134,959 -- 2,115,799
----------- ----------- ----------- ----------- ----------- ----------- -----------
MINORITY INTEREST 72,755 82,506 -- -- 65,000 -- 220,261
----------- ----------- ----------- ----------- ----------- ----------- -----------
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 -- -- 447,800 -- -- 1,264,507
Deferred compensation (622) -- -- -- -- -- (622)
Retained earnings 7,687 -- -- -- -- 5,759 13,446
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total stockholders'
equity 949,789 -- -- 593,936 -- 5,759 1,549,484
----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 2,279,267 $ 150,183 $ 735,000 $ 515,376 $ 199,959 $ 5,759 $ 3,885,544
=========== =========== =========== =========== =========== =========== ===========
</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 NINE MONTHS ENDED SEPTEMBER 30, 1997
(unaudited, dollars in thousands, except per share data)
<TABLE>
<CAPTION>
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 $ 132,442 $ 46,928 $ (7,772) $(18,362)(k) $ 374,660
Interest and other income 4,767 -- -- (342) 12,828 (l) 17,253
------------ ------------ ------------ ------------ ------------ ------------
Total revenue 226,191 132,442 46,928 (8,114) (5,534) 391,913
------------ ------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Rental expenses 44,514 28,596 14,155 (1,415) (4,020)(k) 81,830
Real estate taxes 17,077 10,122 3,418 (720) (1,514)(k) 28,383
Interest expense, including
amortization of finance costs 40,914 -- -- -- 61,879 (m) 102,793
Depreciation and amortization 36,457 22,096 8,083 (511) (4,331)(k) 61,794
General and administrative and
other expenses 10,255 -- -- -- -- 10,255
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 149,217 60,814 25,656 (2,646) 52,014 285,055
------------ ------------ ------------ ------------ ------------ ------------
Income from operations before
disposition of property and
minority interests 76,974 71,628 21,272 (5,468) (57,548) 106,858
------------ ------------ ------------ ------------ ------------ ------------
Minority interests share in net
income (9,281) -- -- -- (5,680)(n) (14,961)
------------ ------------ ------------ ------------ ------------ ------------
Net income before disposition of
property 67,693 71,628 21,272 (5,468) (63,228) 91,897
------------ ------------ ------------ ------------ ------------ ------------
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 $ 71,628 $ 21,272 $ (5,468) $ (72,087) $ 73,788
============ ============ ============ ============ ============ ============
Net income per common share $ 1.25 $ 1.23
============ ============
Weighted average common shares
outstanding 46,815,215 60,112,001
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
15
<PAGE> 16
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
Properties and Acquired Pending Property Other
Historical(a) Mortgages(g) Properties(h) Acquisitions(i) Dispositions(j) Adjustments Pro Forma
------------ ------------- ------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 196,471 $ 27,526 $ 230,512 $ 63,170 $ (22,034) $ (23,917)(k) $ 471,728
Interest and other income 4,228 90 -- -- -- 16,431 (l) 20,749
------------ ------------ ------------ ------------ ---------- --------- ---------
Total Revenues 200,699 27,616 230,512 63,170 (22,034) (7,486) 492,477
------------ ------------ ------------ ------------ ---------- --------- ---------
OPERATING EXPENSES
Rental expenses 34,690 7,216 54,507 17,486 (2,724) (5,560)(k) 105,615
Real estate taxes 15,510 2,188 16,712 4,079 (2,142) (1,926)(k) 34,421
Interest expense 37,235 -- -- -- -- 102,479 (m) 139,714
Depreciation and
amortization 37,385 3,723 38,207 10,777 (3,452) (5,775)(k) 80,865
General and
administrative and
other expenses 10,115 -- -- -- -- -- 10,115
------------ ------------ ------------ ------------ ---------- --------- ---------
Total operating expenses 134,935 13,127 109,426 32,342 (8,318) 89,218 370,730
------------ ------------ ------------ ------------ ---------- --------- ---------
Income from operations
before disposition
of property
and minority interests 65,764 14,489 121,086 30,828 (13,716) (96,704) 121,747
------------ ------------ ------------ ------------ ---------- --------- ---------
Minority interests share
of net income (8,645) -- -- -- -- (8,620)(n) (17,265)
------------ ------------ ------------ ------------ ---------- --------- ---------
Net income before
disposition of
property 57,119 14,489 121,086 30,828 (13,716) (105,324) 104,482
------------ ------------ ------------ ------------ ---------- --------- ---------
Series A Preferred Stock
dividends (2,098) -- -- -- -- -- (2,098)
Series B Preferred Stock
dividends (10,041) -- -- -- -- -- (10,041)
Series C Preferred Stock
dividends -- -- -- -- -- (11,813)(d) (11,813)
------------ ------------ ------------ ------------ ---------- --------- ---------
Net income allocable to
common stockholders
before disposition of
property $ 44,980 $ 14,489 $ 121,086 $ 30,828 $ (13,716) $(117,137) $ 80,530
============ ============ ============ ============ ========== ========= =========
Net income per common share $ 1.30 $ 1.34
============ =========
Weighted average common
shares outstanding 34,691,140 60,112,001
============ =========
</TABLE>
The accompanying notes are an integral part of these unaudited, pro forma
condensed consolidated financial statements.
16
<PAGE> 17
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 8.5 million square feet of net rentable
property subsequent to September 30, 1997, at an aggregate acquisition cost
of $1.1 billion, including acquisition costs. The acquisitions were funded
with cash on hand, proceeds from property dispositions, borrowings on the
unsecured line of credit, borrowings under a bridge loan, 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 October 1, 1997 $ 20,462
Center
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 November 4, 1997 80,500
Center
WCB Portfolio November 17, 1997 725,000
ABAM Building December 1, 1997 4,900
Douglas Center December 1, 1997 12,000
11999 San Vicente December 12, 1997 12,500
San Jose Concourse January 6, 1998 170,100
Koll Bellefield January 9, 1998 10,300
----------
$1,143,969
==========
</TABLE>
(c) Reflects borrowings on an 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 the issuance of unsecured investment grade rated debt
securities of $200.0 million at an interest rate of 7.35% and a maturity of
20 years. In addition, reflects the assumed issuance of unsecured
investment grade rated debt securities of $335.0 million at an assumed
interest rate of 6.74% and an assumed maturity of 10 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 and
an unsecured bridge facility, or issuances of debt securities, common
stock, preferred stock, 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. In addition, reflects
the issuance of 573,134 shares of common stock at a price of $41.88 per
share and offering costs of $1.2 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 and an
unsecured bridge facility, or issuances of debt securities, common stock,
preferred stock, operating partnership units or other securities to meet
its financing requirements in connection with the acquisition described
herein.
20
<PAGE> 18
(e) Reflects the pending acquisition of 3.7 million square feet of net rentable
property at an aggregate pending acquisition cost of $526.7 million,
including estimated acquisition costs. The acquisition will be funded with
a combination of cash on hand, borrowings on the unsecured line of credit
and an unsecured bridge facility, issuances of debt securities, or the
issuance of operating partnership units. 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 16.0 million square feet of
net rentable property during 1997 and January of 1998. 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 3.7 million square
feet of net rentable property. 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 in 1997 included in the
historical statements of operations. Also reflects the elimination of
interest income from the repayment of 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 an affiliate of
Spieker Properties, L.P.
(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 pro forma income to minority interests based
upon pro forma minority ownership in the Operating Partnership of
approximately 12.9%.
(o) The Company's pro forma taxable income for the 12-month period ended
September 30, 1997, is approximately $159.7 million, which has been
calculated as pro forma income from operations before minority interests
for the same period of approximately $137.3 million plus GAAP depreciation
and amortization of approximately $82.0 million less tax basis depreciation
and amortization and other tax differences of approximately $59.6 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
18
<PAGE> 19
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 $1.24 on a historical and pro forma basis, respectively for
the nine months ended September 30, 1997, and $1.31 and $1.36 on a
historical and pro forma basis, respectively for the year ended December
31, 1996.
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: January 20, 1998 By: /s/ Elke Strunka
------------------------ --------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
20
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated December 1, and December 22, 1997 included in this Form 8-K,
into the Company's previously filed Registration Statement File Nos. 33-90318,
333-00346, 333-04299, 333-09425, 333-14325, 333-18483, 333-21709, 333-35997,
and 333-43707.
ARTHUR ANDERSEN LLP
San Francisco, California
January 16, 1998
