<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 22, 2000
PACIFIC GULF PROPERTIES INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-12546 33-0577520
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
4220 VON KARMAN, 2ND FLOOR, NEWPORT BEACH, CALIFORNIA 92660-2002
(Address of principal executive offices, including zip code)
949-223-5000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. DISPOSITION OF ASSETS.
COMPLETED TRANSACTIONS
Pacific Gulf Properties Inc. (the "Company") completed the following
transactions in November 2000:
Disposition of Industrial Property Portfolio
On June 20, 2000, pursuant to a definitive purchase agreement as amended, the
Company contracted to sell its portfolio of 72 industrial properties containing
approximately 14.9 million square feet of industrial space to CalWest Industrial
Properties LLC (CalWest), a joint venture of RREEF and CALPERS. The Company's
board of directors unanimously approved the transaction on June 19, 2000. On
November 9, 2000, at a special meeting of shareholders, the shareholders of the
Company approved the sale of the industrial portfolio to CalWest, as well as the
sale of the Company's remaining assets and subsequent liquidation and
dissolution.
On November 22, 2000, the Company completed the sale of 66 of its industrial
properties to CalWest at an initial closing for a total cash consideration of
$852,944,000. Of the remaining six industrial properties under contract with
CalWest, one has been excluded from the sale and five properties may require
additional remediation before sale to CalWest or may be deleted from the sale.
Net proceeds at the closing totaled $510,255,000, after the repayment of secured
indebtedness and the Company's unsecured line of credit and after selling and
closing costs together with prorated operating items including rent, property
taxes and interest. The transaction was an all-cash sale and the Company has no
continuing involvement with the properties. The sale of the 66 industrial
properties generated a net gain of approximately $171,000,000.
Disposition of Multifamily Properties
Applewood Apartments
On November 2, 2000, the Company sold a 406-unit family-style apartment complex
known as Applewood Apartments located in Santa Ana, California to Pacific
Property Company for a total cash consideration of $36,550,000. The sale
generated a net gain of approximately $15,689,000 and net proceeds of
approximately $35,855,000. The transaction was an all-cash sale and the Company
has no continuing involvement.
Daisy 12, Daisy 17 and Lariat Apartments
On November 7, 2000, the Company sold three family-style apartment properties
(comprising 288 units known as Daisy 12, Daisy 17 and Lariat located in San
Dimas, California) to CT California Fund II, LLC for a total cash consideration
of $24,000,000. The sale generated a net gain of approximately $8,749,000 and
net proceeds of approximately $12,104,000. The transaction was an all-cash sale
and the Company has no continuing involvement.
1
<PAGE> 3
Daisy 19, Daisy 20, Raintree, Sunnyside II and Sunnyside III
On November 16, 2000, the Company sold three family-style apartment properties
(comprising 445 units) known as Daisy 19, Daisy 20, and Raintree, located in
Ontario, California, and two active senior apartment properties (comprising 144
units) known as Sunnyside II and Sunnyside III located in Ontario, California to
Eagle Real Estate Group, LLC for a total cash consideration of $38,200,000. The
sale generated a net gain of approximately $9,344,000 and net proceeds of
approximately $12,275,000. The transaction was an all-cash sale and the Company
has no continuing involvement.
Daisy 5
On November 29, 2000, the Company sold a 38-unit family-style apartment complex
known as Daisy 5 located in Covina, California to Helen R. Rask, Trustee for the
Helen R. Rask Trust for a total cash consideration of $2,700,000. Net proceeds
from the sale totaled approximately $1,169,000. The transaction was an all-cash
sale and the Company has no continuing involvement.
PROBABLE TRANSACTIONS
Daisy 16
The Company is under contract to sell a 250-unit family-style apartment complex
known as Daisy 16 located in West Covina, California to The Bascom Group, LLC
for a total cash consideration of $21,250,000. The Company and the buyer have
completed the necessary due diligence investigation. Accordingly, the Company
anticipates consummating the disposition of this multifamily property before
year-end. The transaction is expected to be an all-cash sale with no continuing
involvement. Net proceeds from the sale are expected to approximate $9,537,000.
2
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements attached hereto.
Pro forma financial statements are included herein pursuant to
Article 11 of Regulation S-X.
(b) Exhibits
None
3
<PAGE> 5
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.
PACIFIC GULF PROPERTIES INC.
/s/ Donald G. Herrman
--------------------------------------
Donald G. Herrman
Executive Vice President,
Chief Financial Officer and Secretary
Dated: December 7, 2000
4
<PAGE> 6
PACIFIC GULF PROPERTIES INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2000.................................................. 10
Pro Forma Condensed Consolidated Statement of Operations for the
Nine Months Ended September 30, 2000................................ 11
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1999........................................ 12
Notes to the Pro Forma Condensed Consolidated Financial Statements....... 13
5
<PAGE> 7
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Pacific Gulf Properties Inc. (the "Company") was incorporated in Maryland in
1993 and operates as a real estate investment trust under the Internal Revenue
Code of 1986, as amended. As of September 30, 2000, the Company owned and
managed (i) a portfolio of industrial properties comprised of 72 properties
encompassing more than 14.9 million square feet of space, (ii) 10 traditional
multifamily apartments containing 1,631 family-style units, and (iii) a
portfolio of active senior apartments which consisted of eight rental apartment
communities comprised of 1,438 units and six communities where the Company was
developing approximately 1,202 units.
On June 20, 2000, pursuant to a definitive purchase agreement, as amended, the
Company contracted to sell its portfolio of 72 industrial properties to CalWest
Industrial Properties LLC ("CalWest"). The Company's board of directors
unanimously approved the transaction on June 19, 2000. On November 9, 2000, at a
special meeting of shareholders, the shareholders of the Company approved the
sale of the industrial portfolio to CalWest as well as the sale of the Company's
remaining assets and subsequent liquidation and dissolution.
On November 22, 2000 (the "initial closing date"), the Company completed the
sale of 66 of its industrial properties to CalWest. Of the remaining six
industrial properties, one has been excluded from the sale to CalWest and five
may require additional remediation before sale, or may be deleted from the sale.
The properties sold to CalWest at the initial closing date are herein
collectively referred to as the "66 Industrial Properties".
During November 2000, the Company sold 10 multifamily properties including
eight traditional multifamily apartments (Applewood, Daisy 12, Daisy 17, Lariat,
Daisy 19, Daisy 20, Raintree and Daisy 5) and two active senior apartments
(Sunnyside II and Sunnyside III) to four independent buyers pursuant to
agreements approved by the Company's Board of Directors. In addition, the
Company anticipates selling one other traditional multifamily apartment (Daisy
16) in December 2000. The Company and the buyer have completed the necessary due
diligence investigation, there are no further contingencies and therefore, the
sale of this property is considered probable. The 11 multifamily properties sold
or anticipated to be sold in these transactions are herein collectively referred
to as "Multifamily Apartment Sales".
After the consummation of the real estate sales referred to above, the Company's
remaining assets will consist of the six industrial properties, one traditional
multifamily apartment property, 12 active senior apartment properties including
six communities currently under development and the Company's executive office
building.
6
<PAGE> 8
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2000 is based on the unaudited historical financial statements of
the Company and has been prepared as if each of the following transactions had
occurred as of September 30, 2000: (i) completion of the Multifamily Apartment
Sales; and (ii) completion of the sale of the 66 Industrial Properties to
CalWest, including other transactions in connection therewith and the repayment
of indebtedness utilizing proceeds from the sale as more fully described in this
current Report on Form 8-K.
The following unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1999 is based on the historical financial
statements of the Company and have been prepared as if each of the following
transactions had occurred as of January 1, 1999:
(i) the following acquisitions of industrial properties during 1999
(collectively referred to as the "1999 Acquisitions"): (a) Geneva
Industrial Park, an industrial property containing approximately 68,000
leasable square feet located in Tempe, Arizona purchased in August 1999
(b) PGDC-Las Vegas, an industrial property containing approximately
79,000 leasable square feet located in Las Vegas, Nevada purchased in
November 1999 and (c) Broadwood Industrial Park, an industrial property
containing approximately 156,000 leasable square feet located in Mesa,
Arizona purchased in November 1999;
(ii) the following dispositions of industrial properties during 1999
(collectively referred to as the "1999 Dispositions"): (a) PGDS Anaheim,
an industrial property containing approximately 91,000 leasable square
feet located in Anaheim, California sold in June 1999; (b) Seattle
Industrial, an industrial property containing approximately 42,000
leasable square feet located in Seattle, Washington sold in August 1999;
(c) Goldenwest-Etiwanda, an industrial building containing approximately
301,000 leasable square feet located in Ontario, California sold in
October 1999; and (d) Contra-Costa Diablo Business Park, an industrial
building containing approximately 17,000 leasable square feet located in
Concord, California sold in December 1999;
(iii) the acquisition of three land parcels in Laguna Niguel, Pasadena and
Huntington Beach, California for development of three rental apartment
communities for active seniors during 2000 (collectively referred to as
the "2000 Acquisitions").
7
<PAGE> 9
(iv) the following dispositions of industrial properties during 2000
(collectively referred to as the "2000 Dispositions") (a) PGBC Irvine, an
industrial building containing approximately 12,000 leasable square feet
located in Lake Forest, California sold in March 2000; (b) PGBP-Lake
Forest, an industrial building containing approximately 25,000 leasable
square feet located in Lake Forest, California sold in March 2000; (c)
PGBP-Riverview, an industrial property containing approximately 107,000
leasable square feet located in San Bernardino, California sold in May
2000; (d) PGPB-Bell Ranch, an industrial building containing
approximately 129,000 leasable square feet located in Santa Fe Springs,
California sold in June 2000 and (e) 12029 Regentview, an industrial
building containing approximately 90,000 leasable square feet located in
Downey, California sold in July 2000;
(v) the completion of the Multifamily Apartment Sales; and
(vi) the redemption of $12 million of remaining convertible subordinated
debentures in 1999 in exchange for 640,772 shares of the Company's common
stock;
(vii) the completion of the sale of the 66 Industrial Properties to CalWest,
including other transactions in connection therewith and the repayment of
indebtedness utilizing proceeds from the sale as more fully described in
this Current Report on Form 8-K.
The following unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2000 is based on the unaudited
historical financial statements of the Company and has been prepared as if each
of the following transactions had occurred as of January 1, 1999:
(i) completion of the 2000 Acquisitions;
(ii) completion of the 2000 Dispositions;
(iii) completion of the Multifamily Apartment Sales; and
(iv) completion of the sale of the 66 Industrial Properties to CalWest,
including other transactions in connection therewith and the repayment of
indebtedness utilizing proceeds from the sale as more fully described in
this Current Report on Form 8-K.
8
<PAGE> 10
The pro forma condensed consolidated financial statements do not reflect any
distributions to shareholders resulting from the above sales or fee income
related to the management of the 66 Industrial Properties (the contract for such
services was not retained by the Company). In addition, the following pro forma
information is not necessarily indicative of what the Company's financial
position or results of operations would have been assuming the completion of the
described transactions as of the beginning of the periods indicated, nor does it
purport to project the Company's financial position or results of operations at
any future date or for any future period. In addition, the historical operating
results for the nine months ended September 30, 2000 are not necessarily
indicative of the results to be obtained by the Company for the year ending
December 31, 2000. The following information should be read in conjunction with
the Company's annual report on Form 10-K, the Company's Quarterly Reports for
the periods ended September 30, 2000, June 30, 2000 and March 31, 2000 and all
of the financial information and notes thereto contained elsewhere in this
Current Report on Form 8-K, or incorporated herein by reference.
9
<PAGE> 11
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(Dollars in thousands)
<TABLE>
<CAPTION>
SALE OF 66
MULTIFAMILY INDUSTRIAL
APARTMENT PROPERTIES
HISTORICAL SALES(A) SUBTOTAL (B) PRO FORMA
---------- ----------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate assets
Operating properties
Industrial properties $ 689,692 $ -- $ 689,692 $(631,398) $ 58,294
Multifamily
Family style 83,062 (71,461) 11,601 -- 11,601
Active senior 65,373 (5,709) 59,664 -- 59,664
Properties under development
Industrial properties 6,434 -- 6,434 (6,434) --
Multifamily - active senior 43,802 -- 43,802 -- 43,802
Cash 4,284 71,936 76,220 513,797(H) 590,017
Other assets 24,530 (1,655) 22,875 (9,625) 13,250
--------- --------- --------- --------- ---------
$ 917,177 $ (6,889) $ 910,288 $(133,660) $ 776,628
========= ========= ========= ========= =========
LIABILITIES
Loans payable $ 302,723 $ (48,501) $ 254,222 $(181,631) $ 72,591
Line of credit 134,550 -- 134,550 (134,550) --
Accounts payable and accrued liabilities 21,893 (748) 21,145 (11,035) 31,621
21,511(D)
Dividends payable 10,654 -- 10,654 -- 10,654
--------- --------- --------- --------- ---------
469,820 (49,249) 420,571 (305,705) 114,866
Minority interest in consolidated partnerships 16,426 (2,335)(C) 14,091 (12,519)(E) 1,572
SHAREHOLDERS' EQUITY
Preferred shares 28 -- 28 (28)(F) --
Common shares 214 1(C) 215 33(E)(F) 248
Less notes receivable issued for common shares (11,105) -- (11,105) 931(G) (10,174)
Additional paid in capital 439,171 2,334(C) 441,505 12,514(E)(H) 454,019
Retained earnings 2,623 42,360 44,983 171,114(H) 216,097
--------- --------- --------- --------- ---------
430,931 44,695 475,626 184,564 660,190
--------- --------- --------- --------- ---------
$ 917,177 $ (6,889) $ 910,288 $(133,660) $ 776,628
========= ========= ========= ========= =========
</TABLE>
See accompanying notes
10
<PAGE> 12
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
MULTIFAMILY
ACQUISITIONS/ APARTMENT
HISTORICAL DISPOSITIONS SUBTOTAL SALES SUBTOTAL
----------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 98,288 $ 7,192 (I) $ 105,480 $ -- $ 105,480
Multifamily properties
Family style 15,303 (179)(I) 15,124 (12,949)(M) 2,175
Active senior 10,577 -- 10,577 (748)(M) 9,829
----------- -------- --------- -------- ---------
Total revenues 124,168 7,013 131,181 (13,697) 117,484
----------- -------- --------- -------- ---------
EXPENSES
Rental property expenses
Industrial properties 21,570 1,442(I) 23,012 -- 23,012
Multifamily properties
Family style 5,471 (128)(I) 5,343 (4,681)(M) 662
Active senior 3,863 -- 3,863 (355)(M) 3,508
----------- -------- --------- -------- ---------
30,904 1,314 32,218 (5,036) 27,182
Depreciation 26,117 (810)(J) 25,307 (2,185)(N) 23,122
Interest 27,242 (1,138)(K) 26,104 (3,295)(N) 22,809
General and administrative 7,165 -- 7,165 -- 7,165
Minority interest 1,342 -- 1,342 -- 1,342
----------- -------- --------- -------- ---------
Total expenses 92,770 (634) 92,136 (10,516) 81,620
----------- -------- --------- -------- ---------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE AND
PREFERRED DIVIDENDS 31,398 7,647 39,045 (3,181) 35,864
Preferred dividends 4,971 -- 4,971 -- 4,971
----------- -------- --------- -------- ---------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE(Y) $ 26,427 $ 7,647 $ 34,074 $ (3,181) $ 30,893
=========== ======== ========= ======== =========
Weighted average common shares
outstanding(W) 20,216,704
===========
Income per share before gains
on sale of real estate(W) $ 1.31
===========
</TABLE>
<TABLE>
<CAPTION>
SALE OF 66
INDUSTRIAL
PROPERTIES PRO FORMA
---------- ------------
<S> <C> <C>
REVENUES
Rental income
Industrial properties $(97,377)(O) $ 8,103
Multifamily properties
Family style -- 2,175
Active senior -- 9,829
-------- ------------
Total revenues (97,377) 20,107
-------- ------------
EXPENSES
Rental property expenses
Industrial properties (21,225)(O) 1,787
Multifamily properties
Family style -- 662
Active senior -- 3,508
-------- ------------
(21,225) 5,957
Depreciation (18,824)(P) 4,298
Interest (19,015)(L)(Q) 3,794
General and administrative (939)(V) 6,226
Minority interest (1,104)(R) 238
-------- ------------
Total expenses (61,107) 20,513
-------- ------------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE AND
PREFERRED DIVIDENDS (36,270) (406)
Preferred dividends (4,971)(S) --
-------- ------------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE(Y) $(31,299) $ (406)
======== ============
Weighted average common shares
outstanding(W) 25,510,189
============
Income per share before gains
on sale of real estate(W) $ (.02)
============
</TABLE>
See accompanying notes
11
<PAGE> 13
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
MULTIFAMILY
ACQUISITIONS/ APARTMENT
HISTORICAL DISPOSITIONS SUBTOTAL SALES SUBTOTAL
------------ ------------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 81,352 $ (858)(T) $ 80,494 $ -- $ 80,494
Multifamily properties
Family style 12,170 -- 12,170 (10,433)(M) 1,737
Active senior 8,407 -- 8,407 (612)(M) 7,795
------------ -------- --------- -------- --------
Total revenues 101,929 (858) 101,071 (11,045) 90,026
------------ -------- --------- -------- --------
EXPENSES
Rental property expenses
Industrial properties 17,439 (156)(T) 17,283 -- 17,283
Multifamily properties
Family style 3,811 -- 3,811 (3,335)(M) 476
Active senior 2,943 -- 2,943 (233)(M) 2,710
------------ -------- --------- -------- --------
24,193 (156) 24,037 (3,568) 20,469
Depreciation 22,104 (216)(U) 21,888 (1,699)(N) 20,189
Interest 21,925 (874)(U) 21,051 (2,480)(N) 18,571
General and administrative 5,661 -- 5,661 -- 5,661
Minority interest 896 -- 896 -- 896
------------ -------- --------- -------- --------
Total Expenses 74,779 (1,246) 73,533 (7,747) 65,786
------------ -------- --------- -------- --------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE AND
PREFERRED DIVIDENDS 27,150 388 27,538 (3,298) 24,240
Preferred dividends 3,793 -- 3,793 -- 3,793
------------ -------- --------- -------- --------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE(Z) $ 23,357 $ 388 $ 23,745 $ (3,298) $ 20,447
============ ======== ========= ======== ========
Weighted average common shares
outstanding(W) 20,869,093
============
Income per share before gains
on sale of real estate(W) $ 1.12
============
</TABLE>
<TABLE>
<CAPTION>
SALE OF 66
INDUSTRIAL
PROPERTIES PRO FORMA
---------- ------------
<S> <C> <C>
REVENUES
Rental income
Industrial properties $(74,107)(O) $ 6,387
Multifamily properties
Family style -- 1,737
Active senior -- 7,795
--------- ------------
Total revenues (74,107) 15,919
--------- ------------
EXPENSES
Rental property expenses
Industrial properties (15,814)(O) 1,469
Multifamily properties
Family style -- 476
Active senior -- 2,710
--------- ------------
(15,814) 4,655
Depreciation (16,747)(P) 3,442
Interest (15,985)(Q) 2,586
General and administrative (761)(V) 4,900
Minority interest (724)(R) 172
--------- ------------
Total Expenses (50,031) 15,755
--------- ------------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE AND
PREFERRED DIVIDENDS (24,076) (164)
Preferred dividends (3,793)(S) --
--------- ------------
INCOME (LOSS) BEFORE GAIN ON
SALES OF REAL ESTATE(Z) $ (20,283) $ (164)
========= ============
Weighted average common shares
outstanding(W) 25,704,819
============
Income per share before gains
on sale of real estate(W) $ (.01)
============
</TABLE>
See accompanying notes
12
<PAGE> 14
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The Company's pro forma financial statements are based on the Company's
historical financial statements adjusted to reflect certain transactions
and adjustments. The actual net proceeds and balances relating to the sales
will vary from pro forma amounts through September 30, 2000 due to the
closing of the transactions in November 2000 and the operating activities
between those dates:
(A) Disposition of 11 multifamily properties with an aggregate net book value
of $77,170 ($71,461 related to nine traditional family-style apartments and
$5,709 related to two active senior apartments). Net proceeds from the
sales total $71,936, after repayment of secured indebtedness ($48,501) and
assumption of security deposit liabilities by the buyer ($748). In
connection with the sales, $1,655 of related other assets are charged to
operations.
(B) Disposition of the 66 Industrial Properties to CalWest with an aggregate
net book value of $637,832 ($631,398 of operating properties and $6,434 of
properties under development). The aggregate sales price for the 66
Industrial Properties sold to CalWest totaled $852,944 at November 22, 2000
(the "closing date")
Net proceeds from the sale for pro forma purposes totaled $513,797, after
assumption of security deposits and the payment of property taxes and
accrued interest liabilities totaling $11,035 ($12,400 at the closing
date), the repayment of secured indebtedness and the assumption by CalWest
of secured indebtedness of $181,631 ($181,008 at the closing date), the
repayment of the outstanding balance of the Company's unsecured line of
credit of $134,550 ($137,350 at the closing date) and the payment of
selling and closing costs of $11,931. In connection with the sale, $9,625
of related other assets are charged to operations.
(C) Conversion of the minority interests in a limited partnership into 139,693
shares of common stock (aggregate par value $1; additional paid-in capital
$2,334) as a result of the sale of seven properties included in the
Multifamily Apartment Sales. The partnership interests were converted into
common stock at their historical carrying value of $2,335.
(D) Accrual of costs in connection with the sale of the 66 Industrial
Properties to CalWest including: employee severance payments and additional
compensation ($17,911), and legal, accounting and other costs ($3,600).
(E) Conversion of the minority interests of two limited partnerships into
548,341 shares of common stock (aggregate par value $5; additional
paid-in-capital $12,514) as a result of the sale of the 66 Industrial
Properties. The partnership interests were converted into common stock at
their historical carrying value of $12,519.
(F) Conversion of Class A Preferred Stock (aggregate par value $28) into
2,763,116 shares of Common Stock in connection with the sale of the 66
Industrial Properties.
(G) Accelerated vesting of restricted stock and related unearned compensation
expense ($931) in connection with the sale of the 66 Industrial Properties.
13
<PAGE> 15
(H) Additional Paid in Capital and Retained Earnings do not reflect the effect
of a distribution of $ 22 per share declared by the Board of Directors on
December 1, 2000. The distribution will be payable on December 15, 2000 to
shareholders of record as of December 11, 2000. The number of shares
entitled to such distribution will exceed the number of shares outstanding
at September 30, 2000 due to additional issuances of shares in connection
with the exercise of stock options, the conversion of limited partnership
units into shares of common stock and the conversion of preferred shares
into shares of common stock.
(I) Adjustment to reflect revenues and certain expenses of the following
industrial and multifamily properties comprising the 1999 Acquisitions for
the period prior to their acquisition by the Company (adjusted to reflect
increased property taxes based on the properties' acquisition cost and
current property tax rates), and revenues and certain expenses of the
properties comprising the 1999 Dispositions and the 2000 Dispositions for
the period prior to their disposal by the Company:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------
1999 1999 2000
ACQUISITIONS DISPOSITIONS DISPOSITIONS TOTAL
------------ ------------ ------------ -------
<S> <C> <C> <C> <C>
Rental income
Industrial properties $ 11,925 $(3,102) $(1,631) $ 7,192
Multifamily properties
Family style -- (179) -- (179)
Active senior -- -- -- --
-------- ------- ------- -------
11,925 (3,281) (1,631) 7,013
Rental property expenses
Industrial properties 2,157 (412) (303) 1,442
Multifamily properties
Family style -- (128) -- (128)
Active senior -- -- -- --
-------- ------- ------- -------
2,157 (540) (303) 1,314
-------- ------- ------- -------
$ 9,768 $(2,741) $(1,328) $ 5,699
======== ======= ======= =======
</TABLE>
(J) Reduction in depreciation expense of $810 resulting from an increase of
$486 relating to the purchase of the 1999 Acquisitions, net of a decrease
of $1,296 due to the 1999 Dispositions and the 2000 Dispositions (the
actual depreciation relating to the 1999 Dispositions and the 2000
Dispositions during the year ended December 31, 1999). The depreciation
expense related to the purchase of the 1999 Acquisitions for the period
prior to their acquisition was computed utilizing estimated remaining
useful lives of 35 years and the depreciable basis of the properties as
follows:
<TABLE>
<CAPTION>
DEPRECIABLE DEPRECIATION
PROPERTY TOTAL COST BASIS EXPENSE
-------- ---------- ----------- ------------
<S> <C> <C> <C>
1999 Acquisitions
Geneva $ 3,237 $ 1,717 $ 32
PGDC - Las Vegas 18,738 12,588 313
Broadwood Business Center 7,973 5,640 141
------- -------- -----
29,948 19,945 486
1999 Dispositions (923)
2000 Dispositions (373)
-----
$(810)
=====
</TABLE>
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<PAGE> 16
(K) Net decrease in interest expense of $1,138 consisting of the following:
(i) increase in interest expense of $965 on the borrowings utilized to
finance the purchase of operating properties comprising the 1999
Acquisitions, for the period prior to their purchase, calculated
based on the actual interest rates of the specific new borrowings;
(ii) reduction in interest expense of $1,087 resulting from the sale of
the 1999 Dispositions and the 2000 Dispositions (the actual interest
relating to the 1999 Dispositions and the 2000 Dispositions during
1999);
(iii) reduction associated with the capitalization of interest totaling
$1,016 in connection with the development of the 2000 Acquisitions.
The qualifying asset-balance totals $13,736 and the effective
capitalization rate is 7.4%, representing the weighted average
interest rate on the Company's total borrowings.
The net decrease in interest expense is summarized as follows:
INTEREST
INTEREST EXPENSE
PROPERTY DEBT RATE EFFECT
-------- -------- -------- --------
1999 Acquisitions
PGDC - Las Vegas $4,366 8.38% $ 319
Broadwood Business Center 6,500 8.15% 462
Fountains - Anaheim Hills 2,620 8.03% 184
-------
965
1999 Dispositions (1,087)
Interest Capitalized (1,016)
-------
$(1,138)
=======
(L) Includes a reduction in interest expense of $615 associated with the
redemption of $12,000 of convertible subordinated debentures in 1999 in
exchange for 640,772 shares of the Company's common stock.
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(M) Adjustment to eliminate the revenues and certain expenses associated with
the properties comprising the Multifamily Apartment Sales for the following
periods:
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
Rental income
Family Style $12,949 $10,433
Active Senior 748 612
------- -------
13,697 11,045
Rental property expenses
Family Style (4,681) (3,335)
Active Senior (355) (233)
------- -------
5,036 3,568
------- -------
$ 8,661 $ 7,477
======= =======
(N) Reduction in depreciation and interest expense due to the completion of the
Multifamily Apartment Sales (the actual depreciation and associated with
properties comprising the Multifamily Apartment Sales for the periods
indicated):
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
Depreciation $2,185 $1,699
====== ======
Interest $3,295 $2,480
====== ======
(O) Adjustment to eliminate the revenues and certain expenses of the properties
comprising the sale of the 66 Industrial Properties to CalWest for the
following periods:
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
Rental income $ 97,377 $ 74,107
Rental property expenses (21,225) (15,814)
-------- --------
$ 76,152 $ 58,293
======== ========
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(P) Reduction in depreciation expense due to the sale of the 66 Industrial
Properties (the actual depreciation relating to the 66 Industrial
Properties for the periods indicated):
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
$18,824 $16,747
======= =======
(Q) Reduction in interest expense due to the sale of the 66 Industrial
Properties, including the repayment of specific debt, the assumption by
CalWest of indebtedness secured by the 66 Industrial Properties and the
repayment of the Company's line of credit as follows:
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
Secured debt $13,933 $10,846
Line of credit 4,467 5,139
------- -------
$18,400 $15,985
======= =======
The reduction in interest expense represents the actual interest incurred
on the secured debt related to the 66 Industrial Properties and line of
credit borrowings for the periods indicated.
(R) Reduction in minority interest resulting from the conversion of limited
partnership interests in two industrial properties sold to CalWest
converted into 688,034 shares of common stock as of the beginning of the
periods presented.
(S) Elimination of preferred dividend requirements as of the beginning of the
periods presented resulting from the conversion of the Class A Preferred
Stock into 2,763,116 shares of common stock, at a conversion ratio of 1:1,
in connection with the sale of the 66 Industrial Properties to CalWest.
(T) Adjustment to eliminate the revenues and certain expenses of the industrial
properties comprising the 2000 Dispositions for the period prior to their
disposal by the Company:
Rental income $ 858
Rental property expenses (156)
-----
$ 702
=====
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(U) Includes the following:
(i) reduction in depreciation and interest expense of $216 and $202,
respectively, due to the 2000 Dispositions (the actual depreciation
and interest expense relating to the 2000 Dispositions during the nine
months ended September 30, 2000).
(ii) reduction in interest expense due to the capitalization of interest
totaling $672 in connection with the development of the 2000
Acquisitions. The qualifying asset balance totaled $13,736 and the
effective capitalization rate was 7.4%, representing the weighted
average interest rate on the Company's total borrowings.
(V) Reduction in general and administrative expenses consisting payroll expense
and fringe benefits totaling $939 for 1999 and $761 for the nine months
ended September 30, 2000 associated with employees terminated in connection
with the sale of the 66 Industrial Properties to CalWest.
(W) Per share data is calculated using the weighted average of common shares
outstanding during the periods presented. Pro forma weighted average common
shares include the following common stock issuances as of the beginning of
the periods presented: (i) 640,772 shares of common stock issued by the
Company in conjunction with the redemption of $12 million of convertible
subordinated debentures in 1999; (ii) 688,034 shares of common stock issued
upon the conversion of limited partnership units held by minority partners
in properties included in the sale of the 66 Industrial Properties to
CalWest and the Multifamily Apartment Sales; (iii) 2,763,116 shares of
common stock issued in conversion of 2,763,116 shares of Class A Preferred
Stock and (iv) 1,384,576 shares of common stock for the accelerated vesting
of employee stock options.
(Y) Excludes a $8,472 nonrecurring gain from the 1999 Dispositions.
(Z) Excludes a $3,431 nonrecurring gain from the 2000 Dispositions.
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