<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 15, 1997
G & L REALTY CORP.
(Exact name of Registrant as specified in its charter)
MARYLAND 1-12566 95-4449388
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
439 N. BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 273-9930
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 15, 1997, G&L Realty Partnership, L.P. (the "Operating
Partnership"), the existing 80.5% owner, acquired an additional 18.5% ownership
interest in GL/PHP, LLC ("GL/PHP") from PHP Healthcare Corporation ("PHP").
PHP's remaining 1% ownership interest was acquired by G&L Management Delaware
Corp., a newly formed Delaware corporation and wholly owned subsidiary of G&L
Realty Corp. (the "Company"). As a result of the terms of this acquisition,
the Company gained voting control of GL/PHP and is therefore required to include
the assets, liabilities and operating activities of GL/PHP in the Company's
consolidated financial statements. The Company is the sole general partner of
and holds an 88.9% interest in the Operating Partnership.
In February 1997, the Company, through the Operating Partnership, entered
into an operating agreement with PHP and formed GL/PHP, a Delaware limited
liability company. GL/PHP subsequently purchased six medical office properties
in New Jersey (the "New Jersey Properties") having a total of 80,415 square feet
at a cost of $22,384,000 including the Company's acquisition costs. The Company
and PHP contributed $4.4 million to GL/PHP in proportion to their ownership
interests (80.5% for the Company and 19.5% for PHP). PHP loaned GL/PHP a total
of $17.7 million at a rate of 8.5% per annum, which was secured by first and
second deeds of trust. The greater of the two loans, at $15.7 million, carried a
term of six months and gave PHP the right, upon default, to purchase the
Company's interest in the new entity. PHP leased the properties from GL/PHP
pursuant to a net operating lease.
PHP's 19.5% ownership interest was acquired on August 15, 1997 for total
consideration of $919,000. Concurrent with the August 15, 1997 acquisition,
GL/PHP obtained a new 10-year, $16.0 million fixed rate loan that bears interest
at 8.98% per annum and requires monthly principle and interest payments of
$155,000 per month.
In conjunction with the Company's acquisition of PHP's interest in GL/PHP,
the Operating Partnership borrowed $2.0 million from PHP and contributed the
loan proceeds to GL/PHP. GL/PHP used the funds to retire the $2.0 million note
payable to PHP. The Operating Partnership's new $2.0 million loan from PHP
requires quarterly interest only payments at 8.5% per annum with all unpaid
interest and principal due July 31, 2007.
As of August 15, 1997, GL/PHP has leased 100% of the New Jersey Properties
to PHP under the terms of a 17-year net operating lease that provides for rent
increases equal to the annual increase in the Consumer Price Index subject to a
5% maximum annual increase. The table on the following page provides summary
information on the New Jersey Properties and the related lease.
Page 2
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<TABLE>
<CAPTION>
YEAR RENTABLE TOTAL AVERAGE
CONSTRUCTED SQUARE ANNUALIZED RENT PER
PROPERTY OR REHABILITATED FEET (1) RENT (2) SQ. FT. (3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2103 Mt. Holly Rd.
Burlington, NJ 1994 12,560 $ 434,950 $34.63
150 Century Parkway
Mt. Laurel, NJ 1995 12,560 391,310 31.16
274 Highway 35, South
Eatontown, NJ 1995 12,560 481,030 38.30
80 Eisenhower Drive
Paramus, NJ 1994 12,675 421,800 33.28
16 Commerce Drive
Cranford, NJ 1963 17,500 491,670 28.10
4622 Black Horse Pike
Mays Landing, NJ 1994 12,560 437,490 34.83
------ ----------
Total 80,415 $2,658,250 $33.06
====== ==========
</TABLE>
(1) Rentable square feet includes space used for management purposes but does
not include storage space.
(2) Rent is based on third-party leased space billed in February 1997; no rent
is assumed from management space.
(3) Average rent per square foot is calculated based upon third-party leased
space, excluding management space.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(B) PRO FORMA FINANCIAL INFORMATION
G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED)
This Pro Forma Condensed Consolidated Balance Sheet reflects the June 30,
1997: (i) (unaudited) assets, liabilities and stockholders' equity of the
Company as previously reported in the Company's Form 10-Q, (ii) unaudited pro
forma adjustments, and (iii) an unaudited pro forma statement which presents the
June 30, 1997 balance sheet as if the investment in GL/PHP (including the
acquisition of the outstanding 19.5% interest initially acquired by PHP) had
been completed as of June 30, 1997.
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-------------------------------------------------------
<S> <C> <C> <C>
ASSETS
- ------
Rental properties:
Land $ 17,096,000 $ 5,625,000 $ 22,721,000
Buildings and improvements, net 75,311,000 16,621,000 91,932,000
------------ ----------- ------------
Total rental properties 92,407,000 22,246,000 114,653,000
Cash and cash equivalents 2,153,000 2,153,000
Accounts receivable, net 1,523,000 1,523,000
Tenant rent and reimbursements receivable, net 983,000 983,000
Unbilled rent receivable, net 1,616,000 1,616,000
Investments in unconsolidated affiliates 8,782,000 (3,711,000) 5,071,000
Mortgage loans and bonds receivable 27,828,000 27,828,000
Assets available for sale 312,000 312,000
Deferred charges and other assets, net 2,414,000 (19,000) 2,395,000
------------ ----------- ------------
TOTAL ASSETS $138,018,000 $18,516,000 $156,534,000
============ =========== ============
LIABILITIES AND STOCKHOLDERS EQUITY
- -----------------------------------
Liabilities:
Notes payable $ 77,590,000 $18,500,000 $ 96,090,000
Accounts payable and other liabilities 1,180,000 16,000 1,196,000
Distributions payable 1,621,000 1,621,000
Tenant security deposits 1,044,000 1,044,000
------------ ----------- ------------
Total liabilities 81,435,000 18,516,000 99,951,000
Commitments and contingencies --- ---
Minority interest in consolidated partnership (2,664,000) (2,664,000)
Minority interest in Operating Partnership 3,016,000 3,016,000
Stockholders' equity:
Preferred shares - $.01 par value, 10,000,000 shares
authorized, 1,495,000 shares of 10.25% Series A
Cumulative issued and outstanding as of 6/30/97 15,000 15,000
Common shares - $.01 par value, 50,000,000 shares
authorized, 4,005,700 shares issued and outstanding as
of 6/30/97 40,000 40,000
Additional paid-in capital 58,186,000 58,186,000
Distributions in excess of net income (2,010,000) (2,010,000)
------------ ------------
Total stockholders' equity 56,231,000 56,231,000
------------ ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $138,018,000 $18,516,000 $156,534,000
============ =========== ============
</TABLE>
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G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
This Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1996 reflects: (i) the audited revenues, expenses and net
income of the Company as previously reported in the Company's Form 10-K, (ii)
unaudited pro forma adjustments, and (iii) an unaudited pro forma statement of
revenues, expenses and operating income of the Company as if the investment in
GL/PHP (including the acquisition of the outstanding 19.5% interest initially
acquired by PHP) had been completed as of January 1, 1996, the start of the
Company's fiscal year.
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
--------------------------------------------
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES:
Rental $15,796,000 $2,658,000 $18,454,000
Tenant reimbursements 728,000 728,000
Parking 1,251,000 1,251,000
Interest, loan fees and other 6,712,000 6,712,000
Other 549,000 549,000
----------- ---------- -----------
Total revenues 25,036,000 2,658,000 27,694,000
----------- ---------- -----------
EXPENSES:
Property operations 5,696,000 5,696,000
Depreciation and amortization 3,276,000 429,000 3,705,000
Interest 8,819,000 1,611,000 10,430,000
General and administrative 1,787,000 1,787,000
Loss on disposition of real estate 4,874,000 4,874,000
----------- ---------- -----------
Total expenses 24,452,000 2,040,000 26,492,000
----------- ---------- -----------
Income from operations before minority
interests and extraordinary gains (losses) 584,000 618,000 1,202,000
Minority interest in consolidated partnership (129,000) (129,000)
Minority interest in Operating Partnership (65,000) (68,000) (133,000)
----------- ---------- -----------
Income before extraordinary gains (losses) 390,000 550,000 940,000
Extraordinary gain, net of minority interest 9,311,000 9,311,000
----------- ---------- -----------
Net income $ 9,701,000 $ 550,000 $10,251,000
=========== ========== ===========
Per share data:
Income before extraordinary gains (losses) $ 0.10 $ 0.13 $ 0.23
Extraordinary gains (losses) 2.23 2.23
----------- ---------- -----------
Net income $ 2.33 $ 0.13 $ 2.46
=========== ========== ===========
Weighted average number of outstanding shares 4,172,000 4,172,000
</TABLE>
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G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
This Pro Forma Condensed Consolidated Statement of Operations for the six
months ended June 30, 1997 reflects: (i) the unaudited revenues, expenses and
net income of the Company as previously reported in the Company's Form 10-Q,
(ii) unaudited pro forma adjustments, and (iii) an unaudited pro forma statement
of revenues, expenses and operating income of the Company as if the investment
in GL/PHP (including the acquisition of the outstanding 19.5% interest initially
acquired by PHP) had been completed as of January 1, 1997, the start of the
Company's current fiscal year
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
--------------------------------------------
<S> <C> <C> <C>
REVENUES:
Rental $ 8,565,000 $1,329,000 $ 9,894,000
Tenant reimbursements 395,000 395,000
Parking 718,000 718,000
Interest, loan fees and other 2,383,000 2,383,000
Other 137,000 137,000
----------- ---------- -----------
Total revenues 12,198,000 1,329,000 13,527,000
----------- ---------- -----------
EXPENSES:
Property operations 3,167,000 3,167,000
Depreciation and amortization 1,878,000 215,000 2,093,000
Interest 4,173,000 805,000 4,978,000
General and administrative 1,007,000 1,007,000
----------- ---------- -----------
Total expenses 10,225,000 1,020,000 11,245,000
----------- ---------- -----------
Income from operations before minority
interests and extraordinary gains (losses) 1,973,000 309,000 2,282,000
Equity in earnings of unconsolidated affiliates 741,000 (169,000) 572,000
Minority interest in consolidated partnership (54,000) (54,000)
Minority interest in Operating Partnership (272,000) (16,000) (288,000)
----------- ---------- -----------
$ 2,388,000 $ 124,000 $ 2,512,000
=========== ========== ===========
Net income
Net income per share $ 0.53 $ 0.03 $ 0.56
=========== ========== ===========
Weighted average number of outstanding shares 4,139,000 4,139,000
</TABLE>
Page 6
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BUILDINGS AND IMPROVEMENTS
Buildings and improvements consist of the following:
<TABLE>
<CAPTION>
As Of June 30, 1997
(Unaudited)
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-------------------------------------------
<S> <C> <C> <C>
Buildings and
improvements $ 81,946,000 $16,759,000 $ 98,705,000
Tenant improvements 5,045,000 5,045,000
Furniture, fixtures
and equipment 366,000 366,000
------------ ----------- ------------
87,357,000 16,759,000 104,116,000
Less accumulated depreciation
and amortization (12,046,000) (138,000) (12,184,000)
------------ ----------- ------------
Total $ 75,311,000 $16,621,000 $ 91,932,000
============ =========== ============
</TABLE>
DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
As Of June 30, 1997
(Unaudited)
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-------------------------------------------
<S> <C> <C> <C>
Deferred financing costs $ 1,655,000 $ 85,000 $ 1,740,000
Pre-acquisition costs --- ---
Leasing commissions 504,000 504,000
Prepaid expense and other
assets 644,000 (104,000) 540,000
----------- ----------- -----------
2,803,000 (19,000) 2,784,000
Less accumulated amortization (389,000) (389,000)
----------- ----------- -----------
Total $ 2,414,000 $ (19,000) $ 2,395,000
=========== =========== ===========
</TABLE>
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PRO FORMA FUNDS FROM OPERATIONS
Industry analysts generally consider FFO to be an appropriate measure of
the performance of a Real Estate Investment Trust ("REIT"). The Company presents
FFO based upon the guidelines established by the Board of Governors of the
National Association of Real Estate Investment Trusts ("NAREIT"). FFO is
calculated to include the minority interest's share of income since the
Operating Partnership's net income is allocated proportionately among all owners
of Operating Partnership units. The number of Operating Partnership units held
by the Company is identical to the number of outstanding shares of the Company's
common stock, and owners of Operating Partnership units may, at their discretion
and subject to certain restrictions, exchange their units into shares of common
stock on a one-for-one basis.
Management believes that in order to facilitate a clear understanding of
the operating results of the Company, FFO should be examined in conjunction with
the Company's net income as presented in the Condensed Consolidated Financial
Statements and Notes thereto included in the Company's interim results as
reported on Form 10-Q, the additional data presented below, and the Company's
Consolidated Financial Statements and related Notes included in the Company's
annual report on Form 10-K. FFO is only one of a range of indicators which
should be considered in determining a company's operating performance. The
methods of calculating FFO among different companies are subject to variation,
and FFO therefore may be an invalid measure of comparing companies. Also, the
elimination of depreciation and gains and losses on sales of property may not be
a true indication of an entity's ability to recover its investment in
properties. The table below present an analysis of pro forma FFO for the six
months ended June 30, 1997 and the year ended December 31, 1996.
<TABLE>
<CAPTION>
For the six months ended For the year ended
June 30, 1997 December 31, 1996
(Unaudited) (Unaudited)
As As
Previously Pro Forma Pro Forma Previously Pro Forma Pro Forma
Stated Adjustments Statement Stated Adjustments Statement
--------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FUNDS FROM OPERATIONS (1):
- --------------------------
Net Income $2,388 $ 124 $2,512 $9,701 $ 550 $10,251
ADD: Minority interest in
Operating Partnership 272 16 288 65 68 133
ADD: Real estate related
depreciation and
amortization 1,449 205 1,654 2,727 419 3,146
ADD: Loss on disposition of
rental property --- --- 4,874 4,874
ADD: Depreciation from
unconsolidated
affiliates 112 (112) --- ---
LESS: Extraordinary gain --- --- (9,311) (9,311)
LESS: Adjustment for
minority interest
in consolidated
partnership (16) (16) (28) (28)
LESS: Dividends on
preferred stock (192) (192) --- ---
------ ----- ------ ------ ------ -------
FUNDS FROM OPERATIONS $4,013 $ 233 $4,246 $8,028 $1,037 $ 9,065
====== ===== ====== ====== ====== =======
Weighted average number of
outstanding shares and units 4,533 4,533 4,542 4,542
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE)
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<PAGE>
_____________
(1) FFO represents net income (computed in accordance with generally accepted
accounting principles, consistently applied ("GAAP")), excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation of
real property, less preferred stock dividends and after adjustments for
consolidated and unconsolidated entities in which the Company holds a
partial interest. FFO is computed in accordance with the definition
adopted by NAREIT. FFO should not be considered as an alternative to net
income or any other indicator developed in compliance with GAAP, including
measures of liquidity such as cash flows from operating, investing and
financing activities. FFO is helpful in evaluating the performance of a
real estate portfolio considering the fact that historical cost accounting
assumes that the value of real estate diminishes predictably over time.
FFO is only one of a range of indicators which should be considered in
determining a company's operating performance. The methods of calculating
FFO among different companies are subject to variation; therefore, FFO may
be an invalid measure for purposes of comparing companies. Also, the
elimination of depreciation and gains and losses on sales of property may
not be a true indication of an entity's ability to recover its investment
in properties. The Company implemented the new method of calculating FFO
effective as of the NAREIT-suggested adoption date of January 1, 1996.
(2) Assumes that all outstanding Operating Partnership units have been
converted to common stock.
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(C) Exhibits
* 10.45 First Amendment to GL/PHP, LLC Limited Liability Company
Agreement by and among G&L Realty Partnership, L.P., a Delaware
limited partnership, G&L Realty Partnership, L.P., a Delaware
limited partnership, and G&L Management Delaware Corp., a
Delaware corporation, as of August 15, 1997.
* 10.46 Lease Agreement between GL/PHP, a Delaware limited liability
company and Pinnacle Health Enterprises, LLC, a Delaware limited
liability company wholly owned by PHP Healthcare Corporation, a
Delaware corporation, dated August 15, 1997.
* 10.47 Guaranty of Lease by PHP Healthcare Corporation, a Delaware
corporation, dated February 15, 1997.
* 10.48 Non-Negotiable 8.5% Note Due July 31, 2007 in which G&L Realty
Partnership, L.P., a Delaware limited partnership, promises to
pay to PHP Healthcare Corporation the principal sum of
$2,000,000.00, dated August 15, 1997.
* 10.49 Mortgage Note in which GL/PHP, LLC a Delaware limited liability
company promises to pay to the order of Nomura Asset Capital
Corporation, a Delaware corporation, the principal sum of
$16,000,000.00, dated August 15, 1997.
* 10.50 Mortgage, Assignment of Leases and Rents and Security Agreement
by GL/PHP, LLC a Delaware limited liability company to Nomura
Asset Capital Corporation, a Delaware corporation, dated August
15, 1997.
* 10.51 Assignment of Leases and Rents by GL/PHP, LLC a Delaware limited
liability company to Nomura Asset Capital Corporation, a Delaware
corporation, dated August 15, 1997.
* 10.52 Environmental and Hazardous Substance Indemnification Agreement
by GL/PHP, LLC a Delaware limited liability company to Nomura
Asset Capital Corporation, a Delaware corporation, dated August
15, 1997.
- --------------------------------
* Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
G & L REALTY CORP.
Date: October 6, 1997 /s/ Quentin Thompson
--------------------
Quentin Thompson
Chief Accounting Officer, Treasurer and
Secretary
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