<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1998
() Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
----------------------
Commission file number 1-12630
CENTERPOINT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 36-3910279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1808Swift Drive, Oak Brook, Illinois 60523-1501
(Address of principal executive offices)
(630) 586-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
---- ----
Number of Common Shares of Beneficial Interest outstanding as of August 14,
1998: 17,830,765 Number of Class B Common Shares of Beneficial Interest
outstanding as of August 14, 1998: 2,272,727
<PAGE>
PART 1. FINANCIAL INFORMATION
This Form 10-Q/A reflects the Company's revision of earnings as announced in our
September 28, 1999 press release, attached as Exhibit 99 to this Form 10-Q/A.
ITEM 1. FINANCIAL STATEMENTS
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS REVISED AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------------- ------------
<S> <C> <C>
Assets:
Investment in real estate:
Land and leasehold $ 130,287 $ 124,011
Buildings 451,125 418,303
Building improvements 70,542 64,372
Furniture, fixtures, and equipment 16,561 13,912
Construction in progress 20,453 41,677
----------- -----------
688,968 662,275
Less accumulated depreciation and amortization 51,704 44,352
----------- -----------
Net investment in real estate 637,264 617,923
Cash and cash equivalents 2,039 1,652
Restricted cash and cash equivalents 33,828 36,509
Tenant accounts receivable, net 17,492 12,416
Mortgage notes receivable 10,168 9,668
Investment in and advances to affiliate 16,571 11,107
Prepaid expenses and other assets 6,894 3,119
Deferred expenses, net 8,000 6,661
------------ ------------
$ 732,256 $699,055
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 185,755 $ 85,755
Tax-exempt debt 75,540 75,540
Line of credit 12,500 97,700
Convertible subordinated debentures payable 9,613 11,740
Preferred dividends payable 1,060 901
Accounts payable 3,714 10,311
Accrued expenses 28,219 24,593
Rents received in advance and security deposits 4,535 4,759
----------- -----------
320,936 311,299
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred shares of beneficial interest, $.001 par value, 10,000,000 shares
authorized; 3,000,000 issued and outstanding having a liquidation
preference of $25 per share ($75,000) 3 3
Common shares of beneficial interest, $.001 par value, 47,727,273 shares
authorized; 17,774,327 and 16,891,951 issued and outstanding, respectively 18 17
Class B common shares of beneficial interest, $.001 par value, 2,272,727
shares authorized; 2,272,727 issued and outstanding 2 2
Additional paid-in-capital 447,352 420,743
Retained earnings (deficit) (35,662) (32,512)
Unearned compensation - restricted stock (393) (497)
------------- -------------
<PAGE>
Total shareholders' equity 411,320 387,756
------------- -------------
$ 732,256 $ 699,055
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AS REVISED FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 18,580 $ 13,606 $ 36,383 $ 26,377
Straight-line rents 1,157 633 2,521 1,287
Expense reimbursements 6,115 4,480 11,573 9,375
Mortgage interest income 245 525 800 1,240
----------- ---------- --------- ---------
Total operating and investment revenue 26,097 19,244 51,277 38,279
----------- ---------- --------- ---------
Other Revenue:
Real estate fee income 597 563 2,308 1,365
Equity in net income (loss) of affiliate (113) 104 (218) 56
----------- ---------- --------- ---------
Total other revenue 484 667 2,090 1,421
----------- ---------- --------- ---------
Total revenue 26,581 19,911 53,367 39,700
----------- ---------- --------- ---------
Expenses:
Real estate taxes 6,001 4,097 11,949 8,367
Property operating and leasing 3,210 2,424 6,752 5,447
General and administrative 1,001 739 1,992 1,442
Depreciation and amortization 5,186 3,379 9,882 6,589
Interest expense:
Interest incurred, net 3,056 2,246 5,984 4,872
Amortization of deferred financing costs 439 203 925 395
----------- ---------- --------- ---------
Total expenses 18,893 13,088 37,484 27,112
----------- ---------- --------- ---------
Operating income 7,688 6,823 15,883 12,588
Other income (expense):
Gain on sale of real estate 11 1,402
Other income (expense) (21) 101 (36) 67
----------- ---------- --------- ---------
Net income 7,678 6,924 17,249 12,655
Preferred dividends (1,590) (3,180)
----------- ---------- --------- ---------
Net income available to common shareholders $ 6,088 $ 6,924 $ 14,069 $ 12,655
=========== ========== ========= =========
Per share net income available to common shareholders:
Basic $0.30 $0.36 $0.72 $0.70
Diluted $0.30 $0.36 $0.71 $0.69
Distributions per common share $0.438 $0.420 $0.875 $0.840
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
AS REVISED FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,249 $ 12,655
Adjustments to reconcile net income to net cash provided
by operating activities:
Bad debts 100
Depreciation 9,277 6,152
Amortization of deferred financing costs 925 395
Other amortization 605 437
Straight-line rents (2,522) (1,287)
Incentive stock awards 104 178
Interest on converted debentures 36 11
Equity in net (income) loss of affiliate 218 (56)
Gain on disposal of real estate (1,402) (140)
Net changes in:
Tenant accounts receivable (2,872) (1,822)
Prepaid expenses and other assets (390) (1,131)
Rents received in advance and security deposits (75) (232)
Accounts payable and accrued expenses 4,505 (227)
----------- ---------
Net cash provided by operating activities 25,758 14,933
----------- ---------
Cash flows from investing activities:
Change in restricted cash and cash equivalents 2,681 111
Acquisition of real estate (31,738) (36,346)
Construction in progress (18,041) (7,660)
Improvements and additions to properties (11,983) (16,180)
Disposition of real estate 29,104 1,615
Change in deposits on acquisitions (3,416) 706
Issuance of mortgage notes receivable (17,462)
Repayment of mortgage notes receivable 15,125 4,792
Investment in and advances to affiliate (5,682) (5,356)
Receivables from affiliates and employees 27 43
Additions to deferred expenses (3,009) (1,246)
----------- ---------
Net cash used in investing activities (44,394) (59,521)
----------- ---------
Cash flows from financing activities:
Proceeds from sale of common shares 24,785 71,070
Offering costs paid (289) (4,009)
Proceeds from issuance of unsecured notes payable 100,000
Proceeds from line of credit 48,400 62,650
Repayment of mortgage notes payable (2,559)
Repayment of line of credit (133,600) (66,200)
Repayment of notes payable (33) (373)
Distributions (20,240) (15,054)
Conversion of convertible subordinated debentures payable (1)
----------- ---------
Net cash provided by financing activities 19,023 45,524
----------- ---------
Net change in cash and cash equivalents 387 936
Cash and cash equivalents, beginning of the year 1,652 1,070
----------- ---------
Cash and cash equivalents, end of period $ 2,039 $ 2,006
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION:
These unaudited Consolidated Financial Statements of CenterPoint Properties
Trust, a Maryland real estate investment trust, and Subsidiaries (the
"Company"), have been prepared pursuant to the Securities and Exchange
Commission ("SEC") rules and regulations and should be read in conjunction
with the December 31, 1997, Financial Statements and Notes thereto included
in the Company's Form 10-K/A. References herein to the "Company" shall mean
CenterPoint Properties Trust and Subsidiaries and, prior to October 15, 1997,
CenterPoint Properties Corporation and Subsidiaries which, pursuant to a
reorganization of CenterPoint Properties Corporation from a Maryland
corporation to a Maryland real estate investment trust, was merged with and
into CenterPoint Properties Trust, with CenterPoint Properties Trust as the
surviving entity. The following Notes to Consolidated Financial Statements
highlight significant changes to the Notes included in the December 31, 1997,
Audited Financial Statements and present interim disclosures as required by
the SEC. The accompanying Consolidated Financial Statements reflect, in the
opinion of management, all adjustments necessary for a fair presentation of
the interim financial statements. Except as referred to below, all such
adjustments are of a normal and recurring nature. The consolidated balance
sheet as of December 31, 1997 has been derived from the Company's audited
Financial Statements. Certain amounts in the financial statements have been
revised as described in Note 12.
The consolidated statements of operations and statements of cash flows for
prior periods have been reclassified to conform with current classifications
with no effect on results of operations or cash flows.
1. PREFERRED SHARES, COMMON SHARES OF BENEFICIAL INTEREST AND RELATED
TRANSACTIONS
On March 25, 1998, the Company completed a public offering of 370,371 common
shares of beneficial interest at $32.0625 per share in an underwritten
offering to a unit investment trust. Net proceeds from the offering after the
underwriting discounts were approximately $11.9 million. The proceeds were
used to repay a portion of amounts outstanding under the Company's line of
credit co-led by The First National Bank of Chicago and Lehman Brothers
Holdings Inc.
On April 8, 1998 the Company completed a private placement to an
institutional investor of 370,000 common shares of beneficial interest at
$33.375 per share. The net proceeds of the offering of approximately $12.3
million were used to fund working capital requirements.
5
<PAGE>
2. RECENT PRONOUNCEMENTS
In June, 1997, the FASB issued SFAS Statement No. 130, "Reporting
Comprehensive Income." This statement, effective for periods beginning after
December 15, 1997, requires the Company to report components of comprehensive
income in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income is defined by Concepts
Statement No. 6, "Elements of Financial Statements" as the change in equity
of a business enterprise during a period from transactions and other events
and circumstances from nonowner sources. It includes all changes in equity
during the period except those resulting from investment by owners and
distributions to owners. As required by this statement, the Company adopted
the new standard for reporting comprehensive income. The Company's net income
is equal to comprehensive income.
In June, 1997, the FASB issued SFAS Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement, effective
for financial statements for fiscal years beginning after December 15, 1997,
requires that a public business enterprise report financial and descriptive
information about its reportable operating segments. Generally, financial
information is required to be reported on the basis that it is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The Company has not yet determined the impact of this
SFAS on its financial statements.
In March, 1998, the FASB's Emerging Issues Task Force ("EITF") issued EITF
Issue No. 97-11, "Accounting for Internal Costs Related to Real Estate
Acquisitions." This statement, effective as of March 19, 1998, requires that
internal costs of identifying and acquiring operating properties should be
expensed as incurred. Prior to March 19, 1998, the Company capitalized
internal preacquisition costs. The Company estimates the adoption of this
EITF will not have a significant impact on the results of operations in the
future.
In May, 1998, the FASB issued SFAS Statement No. 133, "Accounting for
Derivatives Instruments and Hedging Activities." This statement, effective
for financial statements for fiscal years beginning after June 15, 1999,
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. The Company has not yet
determined the impact of this SFAS on its financial statements.
3. ACQUISITION AND DISPOSITION OF REAL ESTATE
In February, 1998, the Company disposed of an industrial property located in
Elk Grove Village for a sales price of $10.4 million. The disposition of the
property qualified for treatment as a tax-free exchange under the Internal
Revenue Code. With a portion of the proceeds, the Company purchased two
industrial properties located in Elk Grove Village
6
<PAGE>
for an aggregate purchase price of $6.9 million. The remaining amount was
used to acquire qualified replacement property in the second quarter.
In March, 1998, two industrial properties located in Libertyville and Buffalo
Grove, Illinois were disposed of for an aggregate sales price of $17.8
million and a property in Bolingbrook, Illinois was disposed of for an
aggregate sales price of $5.0 million. The disposition of the Libertyville
and Buffalo Grove properties qualified for treatment as a tax-free exchange
under the Internal Revenue Code. A portion of the proceeds was used to
acquire qualified replacement property in the second quarter, and the
remaining proceeds will be used to acquire other qualified replacement
property in the near future.
In April, 1998, the Company purchased two properties. The first property,
located in Chicago, Illinois, was purchased for approximately $5.8 million
from a partnership. It was funded with the Company's working capital and
proceeds from the tax-free exchange account. The second property, located in
Des Plaines, Illinois, was purchased from Juno Manufacturing, Inc. for
approximately $5.6 million. The acquisition was funded from proceeds from the
tax-free exchange account.
In May, 1998, the Company purchased two properties. The first property,
located in Wood Dale, Illinois, was purchased from a partnership in which one
of the Company's Senior Officers and a Company Director were partners, for
approximately $3.5 million. The second property, located in Batavia,
Illinois, was purchased for approximately $6.1 million from a partnership.
Both acquisitions were funded with proceeds from the tax-free exchange
account.
In June, 1998, the Company purchased two properties. The first property,
located in Chicago, Illinois, was purchased from a partnership for
approximately $3.4 million. The second property, located in University Park,
Illinois, was purchased from a partnership for approximately $1.9 million.
Both acquisitions were funded with proceeds from the tax-free exchange
account.
At June 30, 1998, there was $1.0 million remaining proceeds from the
qualified tax-free exchange.
4. MORTGAGE NOTES RECEIVABLE
In March, 1998, the Company received proceeds from the repayment of an
outstanding mortgage totaling $15.1 million.
5. INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in
CenterPoint Realty Services Corporation ("CRS"), an unconsolidated taxable
subsidiary, in the form of non-voting common equity. CRS engages in
businesses and services, complimentary to the Company's industrial real
estate investment business. Income from these
7
<PAGE>
activities, received by REITs and their qualified REIT subsidiaries, are
limited under current REIT tax regulations.
As of June 30, 1998, the Company had advanced to CRS approximately
$12.6 million under a demand loan with an interest rate of 8.125%. The
proceeds of the loan were applied towards development projects currently
under construction and the purchase of land held for future development.
Principal and interest are due upon demand.
The Company typically purchases development projects upon completion of
construction on a turnkey basis or develops the property under guaranteed
maximum price contracts, substantially eliminating any construction risk.
6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Supplemental disclosures of cash flow information for six months ended June
30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Interest paid $ 4,686 $ 5,120
Interest capitalized 1,116 208
</TABLE>
In conjunction with the acquisition of real estate, for the six months ended
June 30, 1998 and 1997 the Company acquired the following asset and assumed
the following liability amounts:
<TABLE>
<CAPTION>
1998 1997
------------ ----------
<S> <C> <C>
Purchase of real estate $ 32,569 $ 37,498
Liabilities, net of other assets (831) (1,152)
----------- ---------
Acquisition of real estate $ 31,738 $ 36,346
=========== =========
</TABLE>
In conjunction with the disposition of real estate, the Company disposed of the
following asset and liability amounts for the six months ended June 30, 1998 and
1997:
<TABLE>
<CAPTION>
1998 1997
------------ ----------
<S> <C> <C>
Disposal of real estate $ 29,575 $ 1,670
Liabilities, net of other assets (471) (55)
----------- ---------
Disposition of real estate $ 29,104 $ 1,615
=========== =========
</TABLE>
Conversion of convertible subordinated debentures payable for the six months
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------- -----------
<S> <C> <C>
Convertible subordinated debentures converted $ 2,127 $ 2,325
Common shares issued at $18.25 per share;
116,544 and 127,381, respectively 2,127 2,324
------------- -----------
Cash disbursed for fractional shares $ - $ 1
============= ===========
</TABLE>
7. MORTGAGE NOTES PAYABLE AND OTHER DEBT
8
<PAGE>
On April 5, 1998 the Company issued $100 million, 6.75 percent senior
unsecured notes due April 1, 2005. The net proceeds of $99 million were used
to repay substantially all amounts outstanding under the Company's line of
credit co-led by The First National Bank of Chicago and Lehman Brothers
Holdings Inc.
8. COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is involved
in legal actions relating to the ownership and operations of its properties.
In management's opinion, the liabilities, if any, that may ultimately result
from such legal actions are not expected to have a materially adverse effect
on the consolidated financial position, results of operations and liquidity
of the Company.
The Company has entered into other contracts for the acquisition of
properties. Each acquisition is subject to satisfactory completion of due
diligence and, in the case of development projects, completion and occupancy
of the projects.
At June 30, 1998, seven of the properties owned by the Company are subject to
purchase options held by certain tenants. The purchase options are
exercisable at various intervals through 2006, each for an amount greater
than the net book value of the asset. Management is not currently aware of
planned exercises of options and believes that any potential exercises would
not materially affect the results or prospects of the Company.
9. SUBSEQUENT EVENTS
In July, 1998, the Company acquired sixteen properties for an aggregate total
of $40.3 million located as follows; one in Des Plaines, Illinois, six in
Franklin Park, Illinois, four in Bedford Park, Illinois, one in Melrose Park,
Illinois, three in Lake Forest and one in Elgin, Illinois. The purchase was
funded with a portion of the proceeds from the tax-free exchange account, the
assumption of $15.6 million in mortgage debt, and the remainder was funded
with a draw on the Company's line of credit.
$1.0 million worth of convertible subordinated debentures have been converted
to 56,438 shares since June 30, 1998.
The Board of Trustees announced the adoption of a Preferred Share Purchase
Rights Agreement on July 31, 1998. Under the Agreement, a dividend distribution
of one Preferred Share Purchase Right on each outstanding share of the Trust's
common shares will be made to shareholders of record on August 11, 1998.
Initially, the preferred stock purchase rights will not be exercisable and will
trade with shares of CenterPoint's common stock. Under the shareholder rights
plan, the rights generally become exercisable if a person becomes an "acquiring
person" by acquiring 15% or more of the outstanding CenterPoint common shares or
if a person commences a tender offer that would result in that person owning 15%
or more of the outstanding CenterPoint common shares.
9
<PAGE>
The shareholder rights plan is not being adopted in response to any takeover
attempt but is intended to provide the Board with sufficient time to consider
any and all alternatives under such circumstances. Its provisions are
designed to protect the Trust's shareholders in the event of an unsolicited
attempt to acquire the Trust at a value that is not in the best interest of
the Trusts' shareholders.
10. EARNINGS PER COMMON SHARE
The following are the reconciliations of the numerators and denominators of
the basic and diluted EPS for the three months ended June 30, 1998 and 1997
and the six months ended June 30, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- -------------------------
1998 1997 1998 1997
------ ------ ------ ------
(in thousands, except for share data)
<S> <C> <C> <C> <C>
Numerators:
Net income $ 7,678 $ 6,924 $ 17,249 $ 12,655
Dividends on preferred shares (1,590) (3,180)
----------- ----------- ----------- -----------
Net income available to common shareholders - for
basic and diluted EPS $ 6,088 $ 6,924 $ 14,069 $ 12,655
=========== =========== =========== ===========
Denominators:
Weighted average common shares outstanding - for
basic EPS 19,985,422 19,006,207 19,602,554 18,189,923
Effect of dilutive securities - options 236,912 265,168 240,688 266,570
----------- ----------- ----------- -----------
Weighted average common shares outstanding - for
diluted EPS 20,222,334 19,271,375 19,843,242 18,456,493
=========== =========== =========== ===========
</TABLE>
The assumed conversion of the convertible subordinated debentures into common
shares for purposes of computing diluted EPS by adding interest expense for
the debentures to the numerators, and adding assumed share conversions to the
denominators for the three months ended June 30, 1998 and 1997 and the six
months ended June 30, 1998 and 1997 would be anti-dilutive.
11. PRO FORMA FINANCIAL INFORMATION
Due to the effect of securities offerings in March, 1997, November,
1997, March, 1998, and April 1998, and the 1997 and 1998 acquisitions and
dispositions of properties, the historical results are not indicative of the
future results of operations. The following unaudited pro forma information
for the six months ended June 30, 1998 and 1997 is presented as if the 1997
acquisitions and dispositions, the 1998 acquisitions and dispositions, the
1997 and 1998 securities offerings, and the corresponding repayment of
certain debt had all occurred on January 1, 1997 (or the date the property
first commenced operations with a third party tenant, if later). The pro
forma information is based upon historical information and does not purport
to present what actual results would have been had the offerings and related
transactions, in fact, occurred at January 1, 1997, or to project results for
any future period.
10
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
------ ------
(in thousands, except for per share data)
<S> <C> <C>
Total revenues $ 53,977 $ 43,287
Total expenses 37,266 26,900
-------- --------
Net income 16,711 16,387
Preferred dividends (3,180) (3,180)
-------- --------
Net income available to common
shareholders $ 13,531 $ 13,207
======== ========
Per share income available to common shareholders:
Basic $ 0.72 $ 0.67
Diluted $ 0.71 $ 0.66
</TABLE>
12. REVISION
During the third quarter of 1999, the Company determined that it had
recognized certain participation, assignment, consulting and financing fees
in periods in advance of that permitted and has revised previously issued
financial statements accordingly. In addition, the Company revised previously
issued financial statements to recognize, for financial reporting purposes,
certain gains in connection with tax-deferred exchanges that had not been
previously recognized. The financial statement revisions effect only the
timing of fee revenue and HAVE NO EFFECT ON PREVIOUSLY REPORTED CASH FLOW or
on the total fee revenue to be recognized.
The effect of this revised reporting on the Company's condensed balance
sheets, condensed statements of operations, net income and earnings per share
is as follows:
<TABLE>
<CAPTION>
(in thousands, except for per share data)
For the six months ended
June 30,
--------
1998 1997
---- ----
Previously As Previously As
Reported Revised Reported Revised
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Condensed Balance Sheets:
Investment in real estate, net $617,228 $637,264 $452,974 $457,960
Mortgage notes receivable 28,802 10,168 20,225 15,239
Other assets 87,127 84,824 39,038 39,029
-------- -------- -------- --------
Total assets $733,157 $732,256 $512,237 $512,228
======== ======== ======== ========
Long term debt $283,408 $283,408 $166,497 166,497
Other liabilities 37,528 37,528 30,368 30,518
11
<PAGE>
Shareholders' equity 412,221 411,320 315,372 315,213
------- ------- ------- -------
Total liabilities and
shareholders' equity $733,157 $732,256 $512,237 $512,228
======== ======== ======== ========
Condensed Statements of Operations:
Operating and investment revenue $ 51,227 $ 51,277 $38,152 $38,279
Other revenue 4,075 2,090 1,707 1,421
------- ------- ------- -------
Total revenue 55,302 53,367 39,859 39,700
Operating expenses (37,484) (37,484) (27,112) (27,112)
Other income (expense) (37) 1,366 67 67
------- ------- ------- -------
Net income $ 17,781 $ 17,249 $12,814 $12,655
======== ======== ======== ========
Net income available to common shareholders per share:
Net income per share- basic $ .74 $ .72 $ .70 $ .70
Net income per share- diluted $ .74 $ .71 $ .69 $ .69
</TABLE>
<TABLE>
<CAPTION>
(in thousands, except for per share data)
For the three months ended
June 30,
--------
1998 1997
---- ----
<S> <C> <C> <C> <C>
Condensed Statements of Operations:
Operating and investment revenue $ 26,001 $ 26,097 $19,177 $19,244
Other revenue 1,983 484 953 667
--------- ------- ------- -------
Total revenue 27,984 26,581 20,130 19,911
Operating expenses (18,894) (18,893) (13,088) (13,088)
Other income (expense) (21) (10) 101 101
--------- ------- ------- -------
Net income $ 9,069 $ 7,678 $ 7,143 $ 6,924
========= ======== ======= =======
Net income available to common shareholders per share:
Net income per share- basic $ .37 $ .30 $ .38 $ .36
Net income per share- diluted $ .37 $ .30 $ .37 $ .36
</TABLE>
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
The following is a discussion of the historical operating results of the
Company. The discussion should be read in conjunction with the Form 10-K/A
filed for the fiscal year ended December 31, 1997 and the unaudited Financial
Statements presented with this Form 10-Q/A.
The Company announced in the 3rd quarter 1999 that it was restating
previously audited and unaudited financial statements for the years 1997,
1998 and 1999. See Exhibit 99 to this Form 10-Q/A.
The revision reflects the recognition of gains, for financial
reporting purposes, on certain completed sales structured as tax-deferred
exchanges under Section 1031 of the Internal Revenue Code, where gains are
not recognized for tax purposes. Secondly, the revision reflects the timing
of gain recognition from other property sales related to the Company's
development activity. While the timing of the reported gains from these
latter transactions has been shifted, the aggregate gain remains unchanged
and no cash or tax effect has resulted. As of the 3rd quarter 1999, all gains
have been recognized.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 TO THREE MONTHS ENDED JUNE 30,
1997.
REVENUES
Total revenues increased by $6.7 million or 33.5% over the same period last
year.
In the second quarter of 1998, 98.2% of total revenues of the Company were
derived primarily from base rents, straight-line rents, expense
reimbursements and mortgage income (operating and investment revenue),
pursuant to the terms of tenant leases and mortgages for occupied space at
the warehouse/industrial properties.
Operating and investment revenues increased by $6.9 million in the second
quarter of 1998. A portion of the increase from the prior year is due to
income from eight properties acquired in the first half of 1998 and two
build-to-suit properties coming on line totaling 1.0 million square feet, net
of three dispositions as of June 30, 1998. The remainder of the increase was
attributable to a full period of income from the 1997 acquisition of
twenty-one properties, totaling 7.1 million square feet and seven
build-to-suit properties totaling 1.6 million square feet coming on-line in
1997, net of property dispositions.
Other revenues decreased $0.2 million due to a slight decrease in fee
activity for the Company in connection with build-to-suit, development and
leasing activities and increased property and build-to suit sales by the
Company's unconsolidated affiliate.
13
<PAGE>
OPERATING AND NON-OPERATING EXPENSES
Real estate tax expense and property operating and leasing expense increased
by $2.7 million from period to period. The majority of the increase, $1.9
million, resulted from a full period of real estate taxes on 1997
acquisitions and a partial period of real estate taxes on 1998 acquisitions,
net of dispositions. The balance of the increase was due to increased leasing
expenses, insurance, utilities, repairs and maintenance and property
management costs which increased proportionate to the level of acquisitions.
However, property operating and leasing costs as a percentage of total
revenues decreased slightly from 12.2% to 12.1% when comparing the second
quarter of 1997 to the second quarter of 1998 due to "economies of scale"
realized by the Company.
General and administrative expenses increased by $0.3 million for the period
due primarily to the growth of the Company, but as a percentage of total
revenues increased only slightly from 3.7% to 3.8% when comparing the second
quarter of 1997 to the second quarter of 1998.
Depreciation and amortization increased by $1.8 million due to a full period
of depreciation on 1997 acquisitions and depreciation on 1998 acquisitions.
Interest incurred increased by approximately $0.8 million over the same
period last year due to the Company holding higher average balances
outstanding in the second quarter of 1998 compared to 1997.
Other income (expenses) decreased due to the non-recurring disposal of fixed
assets for a gain which occurred in the second quarter of 1997.
NET INCOME AND OTHER MEASURES OF OPERATIONS
Net income increased $0.8 million or 10.9% due to the growth of the Company
through the net acquisition of warehouse/industrial real estate.
Funds from operations (FFO) increased 28.6% to $11.9 million from quarter to
quarter. The National Association of Real Estate Investment Trusts (NAREIT)
defines funds from operations as net income before extraordinary items plus
depreciation and amortization less the amortization of deferred financing
costs.
When comparing the second quarter results of operations of properties owned
at April 1, 1997 with the results of operations of the same properties for
the second quarter 1998 (the "same property" portfolio), the Company
recognized an increase of approximately 3.5% in net operating income. This
same property increase was due to the timely lease up of vacant space, rental
increases on renewed leases and contractual increases in minimum rent under
leases in place.
14
<PAGE>
The Company assesses its operating results, in part, by comparing the Net
Revenue Margin between periods. Net Revenue Margin is calculated for the "in
service" portfolio by dividing net revenue (total operating and investment
revenue less real estate taxes and property operating and leasing expense) by
adjusted operating and investment revenue (operating and investment revenue
less expense reimbursements, adjusted for leases containing expense stops).
This margin indicates the percentage of revenue actually retained by the
Company or, alternatively, the amount of property related expenses not
recovered by tenant reimbursements. The margin for the second quarter of 1998
was 90.7% compared with 91.8% for the same period last year. The second
quarter margin was in line with the Company's expectations.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 TO SIX MONTHS ENDED JUNE 30, 1997.
REVENUES
Total revenues increased by $13.7 million or 34.4% over the same period last
year.
In the first half of 1998, 96.1% of total revenues of the Company were
derived primarily from base rents, straight-line rents, expense
reimbursements and mortgage income (operating and investment revenue),
pursuant to the terms of tenant leases and mortgages for occupied space at
the warehouse/industrial properties.
Operating and investment revenues increased by $13.0 million in the first
half of 1998. A portion of the increase from the prior year is due to income
from eight properties acquired in the first half of 1998 and two
build-to-suit properties coming on line totaling 1.0 million square feet, net
of four dispositions as of June 30, 1998. The remainder of the increase was
attributable to a full period of income from the 1997 acquisition of
twenty-one properties, totaling 7.1 million square feet and seven
build-to-suit properties totaling 1.6 million square feet coming on-line in
1997, net of property dispositions.
Other revenues increased $0.7 million due to increased fees earned by the
Company in connection with build-to-suit, development and leasing activities
and increased property and build-to suit sales by the Company's
unconsolidated affiliate.
OPERATING AND NON-OPERATING EXPENSES
Real estate tax expense and property operating and leasing expense increased
by $4.9 million from period to period. The majority of the increase, $4.0
million, resulted from a full period of real estate taxes on 1997
acquisitions and a partial period of real estate taxes on 1998 acquisitions,
net of dispositions. The balance of the increase was due to increased leasing
expenses, insurance, utilities, repairs and maintenance and property
management costs which increased proportionate to the level of acquisitions.
However, property operating and leasing costs as a percentage of total
revenues decreased from 13.7% to 12.7% when comparing the first half of 1997
to the first half of 1998 due to "economies of scale" realized by the Company.
15
<PAGE>
General and administrative expenses increased by $0.6 million for the period
due primarily to the growth of the Company, but as a percentage of total
revenues increased slightly from 3.6% to 3.7% when comparing periods.
Depreciation and amortization increased by $3.3 million due to a full period
of depreciation on 1997 acquisitions and depreciation on 1998 acquisitions.
Interest incurred increased by approximately $1.1 million over the same
period last year due to the Company holding higher average balances
outstanding in the second quarter of 1998 compared to 1997.
The company incurred gains on the sale of four properties during the first
half of 1998. In 1997, the Company sold one property resulting in a much
lower gain.
NET INCOME AND OTHER MEASURES OF OPERATIONS
Net income increased $4.6 million or 36.3% due to the growth of the Company
through the net acquisition of Warehouse/Industrial real estate.
Funds from operations (FFO) increased 18.0% to $23.3 million from period to
period.
When comparing the first half results of operations of properties owned at
January 1, 1997 with the results of operations of the same properties for the
first half of 1998 (the "same property" portfolio), the Company recognized an
increase of approximately 1.8% in net operating income. This same property
increase was due to the timely lease up of vacant space, rental increases on
renewed leases and contractual increases in minimum rent under leases in
place.
The margin for the first half of 1998 was 87.3% compared with 90.3% for the
same period last year. The decrease was immaterial and attributable to
transitional vacancy.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING AND INVESTMENT CASH FLOW
Cash flow generated from Company operations has historically been utilized
for working capital purposes and distributions, while proceeds from
financings and capital raises have been used to fund acquisitions and other
capital costs. However, cash flow from operations during the first half of
1998 of $25.8 million net of $20.2 million of first half distributions
provided $5.6 million of retained capital. The Company expects retained
capital to fund a portion of future investment activities.
Advances for construction in progress relating to development projects, advances
on mortgage notes receivable, and improvements and additions to properties of
approximately $47.5 million for the first half of 1998 were funded with
borrowings under the Company's unsecured line of credit totaling $48.4 million.
Acquisitions of $31.7 million were partially funded with proceeds from the
disposition of real estate of $29.1
16
<PAGE>
million. The shortfall in funding was made up with a portion of the Company's
retained capital.
EQUITY AND SHARE ACTIVITY
On March 25, 1998, the Company completed a public offering of 370,371 common
shares of beneficial interest at $32.0625 per share in an underwritten
offering to a unit investment trust. Net proceeds of $11.9 million from the
public offering, proceeds from the repayment of mortgage notes receivable,
and working capital were used to repay amounts outstanding under the
Company's line of credit of $30.1 million.
On April 8, 1998 the Company completed the sale of 370,000 common shares of
beneficial interest at $33.375 per share to an institutional investor. The
net proceeds of the offering of approximately $12.3 million were used to fund
working capital requirements.
During the first half of 1998, the Company paid distributions on common
shares of $15.2 million or $0.875 per share and on class B common shares of
$2.0 million or $0.8984 per share. Also, in January of 1998, the Company paid
dividends on preferred shares of $1.43 million or $0.477 per share, and in
July of 1998, paid dividends of $1.59 million or $0.53 per share. The
following factors, among others, will affect the future availability of funds
for distribution: (i) scheduled increases in base rents under existing leases
and (ii) changes in minimum base rents attributable to replacement of
existing leases with new or replacement leases.
DEBT CAPACITY
The Company has a $150 million unsecured credit facility co-led by The First
National Bank of Chicago and Lehman Brothers Holdings Inc. As of June 30,
1998, the Company had outstanding borrowings of approximately $12.5 million
under the unsecured revolving line of credit (approximately 1.2% of the
Company's fully diluted total market capitalization), and the Company had
remaining availability of approximately $137.5 million under its unsecured
line of credit.
At June 30, 1998, the Company's debt constituted approximately 26.6% of its
fully diluted total market capitalization. Also, the Company's debt service
coverage ratio remained high at 6.2 to 1. The Company's fully diluted equity
market capitalization was approximately $680.0 million, and its fully diluted
total market capitalization exceeded $1.0 billion. The Company's leverage
ratios benefited during the first half of 1998 from the conversion of
approximately $2.1 million of its 8.22% Convertible Subordinated Debentures,
due 2004, to 116,544 common shares.
In February, 1998, Duff & Phelps Credit Rating Co. joined Moody's Investors
Service's January, 1997 evaluation by assigning investment grade rating to the
Company's senior unsecured debt and preferred stock issuable under the Company's
shelf registration statement and convertible subordinated notes. Also in 1997,
Standard and Poors assigned
17
<PAGE>
an investment grade rating to the Company's senior unsecured debt. These
investment grade ratings further enhance the Company's financial flexibility.
The Company has considered its short-term (one year or less) capital needs,
in conjunction with its estimated future cash flow from operations and other
expected sources. The Company believes that its ability to fund operating
expenses, building improvements, debt service requirements and the minimum
distribution required to maintain the Company's REIT qualification under the
Internal Revenue Code, will be met by recurring operating and investment
revenue and other real estate income.
Long-term (greater than one year) capital needs for property acquisitions,
scheduled debt maturities, major redevelopment projects, expansions, and
construction of build-to-suit properties will be supported, initially, by
draws on the Company's unsecured line of credit, followed by the issuance of
long-term unsecured indebtedness and the issuance of equity securities.
Management expects that a significant portion of the Company's investment
funds will be supplied by the proceeds of property dispositions.
INFLATION
Inflation has not had a significant impact on the Company because of the
relatively low inflation rates in the Company's markets of operation. Most of
the Company's leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. In addition, many of the leases are for
remaining terms less than five years which may enable the Company to replace
existing leases with new leases at higher base rental rates if rents of
existing leases are below the then-existing market rate.
YEAR 2000 COMPLIANCE
In response to the Year 2000 issue, the Company initiated a project in early
1997 to identify, evaluate and implement a new computerized real estate
management system. The Company is addressing the issue through a combination
of modifications to existing programs and conversion to Year 2000 compliant
software. In addition, the Company is discussing with its tenants, vendors,
and other service providers the possibility of any interface difficulties
relating to the Year 2000 issue which may affect the Company. If the Company
and those it conducts business with do not make modifications or conversions
in a timely manner, the Year 2000 issue may have a material adverse effect on
the Company's business, financial condition, and results of operations. The
total cost associated with the required modifications is not expected to be
material to the Company's consolidated results of operations, liquidity and
financial position, and is being expensed as incurred.
RECENT PRONOUNCEMENTS
In June, 1997, the FASB issued SFAS Statement No. 130, "Reporting Comprehensive
Income." This statement, effective for periods beginning after December 15,
1997,
18
<PAGE>
would require the Company to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income is defined by Concepts Statement
No. 6, "Elements of Financial Statements" as the change in equity of a
business enterprise during a period from transactions and other events and
circumstances from nonowner sources. It includes all changes in equity during
the period except those resulting from investment by owners and distributions
to owners. As required by this statement, the Company adopted the new
standard for reporting comprehensive income. The Company's net income is
equal to comprehensive income.
In June, 1997, the FASB issued SFAS Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement, effective
for financial statements for fiscal years beginning after December 15, 1997,
requires that a public business enterprise report financial and descriptive
information about its reportable operating segments. Generally, financial
information is required to be reported on the basis that it is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The Company has not yet determined the impact of this
SFAS on its financial statements.
In March, 1998, the FASB's Emerging Issues Task Force ("EITF") issued EITF
Issue No. 97-11, "Accounting for Internal Costs Related to Real Estate
Acquisitions." This statement, effective as of March 19, 1998, requires that
internal costs of identifying and acquiring operating properties should be
expensed as incurred. Prior to March 19, 1998, the Company capitalized
internal preacquisition costs. As required by this EITF, the Company adopted
the new standard for reporting internal acquisition costs. As experienced in
the second quarter of 1998, the EITF had no significant affect on the results
of operations. The Company estimates the adoption of this EITF will not have
a significant impact on the results of operations in the future.
In May, 1998, the FASB issued SFAS Statement No. 133, "Accounting for
Derivatives Instruments and Hedging Activities." This statement, effective
for financial statements for fiscal years beginning after June 15, 1999,
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. The Company has not yet
determined the impact of this SFAS on its financial statements.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q/A contains forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's actual results could differ materially from those set forth in the
forward looking statements as a result of various factors, including, but not
limited to, uncertainties affecting real estate businesses generally (such as
entry into new leases, renewals of leases and dependence on tenants' business
operations), risks relating to acquisition, construction and development
activities, possible environmental liabilities, risks relating to leverage,
debt service and obligations with respect to the payment of dividends
(including availability of financing
19
<PAGE>
terms acceptable to the Company and sensitivity of the Company's operations
to fluctuations in interest rates), the potential for the need to use
borrowings to make distributions necessary for the Company to qualify as a
REIT, dependence on the primary market in which the Company's properties are
located, the existence of complex regulations relating to the Company's
status as a REIT, the failure of the Company and entities the Company does
business with to make necessary modifications and conversions to Year 2000
compliant software in a timely manner and the potential adverse impact of the
market interest rates on the cost of borrowings by the Company and on the
market price for the Company's securities.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Exhibit 27 - Financial Data Schedule
(2) Exhibit 99 - Press release dated September 28, 1999.
(b) The Company filed a Report on Form 8-K on April 3, 1998 to
file the form of Underwriting Agreement and First Supplemental
Indenture in connection with the issuance and sale by the
Company of $100 million aggregate principal amount of the
Company's 6-3/4% Senior Notes due 2005. The Company also filed
a Report on Form 8-K on April 28, 1998 to report the adoption
by the Board of Trustees of the Fifth Amendment to the
Company's 1993 Stock Option Plan, as amended.
21
<PAGE>
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, thereunto duly authorized.
CENTERPOINT PROPERTIES TRUST
a Maryland Company
By: /s/ Paul S. Fisher
-------------------------------------
Paul S. Fisher
Executive Vice President and
Chief Financial Officer
December 29, 1999 (Principal Accounting Officer)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 35,867
<SECURITIES> 0
<RECEIVABLES> 17,492
<ALLOWANCES> 330
<INVENTORY> 0
<CURRENT-ASSETS> 41,633
<PP&E> 688,968
<DEPRECIATION> 51,704
<TOTAL-ASSETS> 732,256
<CURRENT-LIABILITIES> 37,528
<BONDS> 283,408
0
3
<COMMON> 20
<OTHER-SE> 411,297
<TOTAL-LIABILITY-AND-EQUITY> 732,256
<SALES> 0
<TOTAL-REVENUES> 53,367
<CGS> 0
<TOTAL-COSTS> 37,484
<OTHER-EXPENSES> (1,366)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,909
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,069
<EPS-BASIC> .72
<EPS-DILUTED> .71
</TABLE>
<PAGE>
1808 SWIFT DRIVE
OAK BROOK, ILLINOIS 60523-1501
[CENTERPOINT LOGO] PHONE: 630.586.8000
FAX: 630.586.8010
WWW.CENTERPOINT-PROP.COM
NEWS RELEASE
CONTACT AT THE COMPANY:
---------------------------------------------------------------------
John S. Gates, Jr. Rhonda Mork
CEO & President Director of External Affairs
630-586-8000 630-586-8101
[email protected]
FOR IMMEDIATE RELEASE
SEPTEMBER 28, 1999
CENTERPOINT REPORTS RESTATEMENT OF
1997, 1998 AND 1999 FINANCIAL RESULTS;
CUMULATIVE NET INCOME INCREASES BY $2.1 MILLION
CUMULATIVE FFO INCREASES $0.03 PER SHARE FOR THE SAME PERIODS
OAK BROOK, SEPTEMBER 28, 1999. CenterPoint Properties Trust (NYSE: CNT)
announced today that the Company is restating previously audited results for the
years 1997 and 1998, as well as the unaudited first two quarters of 1999. The
Company's independent accountants, PricewaterhouseCoopers ("PwC"), are in
concurrence with these reported changes. The restatement, which concerns gain
recognition related to completed property sales, results in a cumulative
increase in net income of $2.1 million over previously reported net income.
Cumulative Funds From Operations ("FFO") increases $0.7 million, equal to $0.03
per share.
CenterPoint President and CEO, John Gates, emphasized that the restatement will
not affect the Company's business or strategy. "This is a technical reporting
change. It has no impact whatsoever on the economics of the sales involved and
will have no impact on anticipated future selling. CenterPoint is committed to
our strategy of recycling capital through sales and the Company's business
prospects remain exceptionally strong."
The restatement reflects the recognition of gains, not previously reported,
related to certain completed sales structured as tax-deferred exchanges under
Section 1031 of the Internal Revenue Code, where gains were not reported for tax
purposes. Secondly, the restatement reflects the retiming of gain recognition
from other completed property sales related to the Company's development
activity. While the timing of reported gains from these latter transactions has
been shifted, the aggregate gain remains unchanged and no cash or tax effect has
resulted.
As part of the restatement, $3.5 million in net income originally reported in
1998 will be shifted into the third quarter of 1999. Other than this shift,
management expects third quarter 1999 results to be in line with current
expectations.
Stated Gates, "In the final analysis, when CenterPoint reports its third quarter
results, cumulative retained earnings will be $2.1 million higher than
heretofore anticipated."
<PAGE>
BACKGROUND
On August 9, 1999, CenterPoint announced that, based on a recommendation by its
independent accountants, PricewaterhouseCoopers, it was shifting $1.5 million of
net income from the second quarter of 1999 to the third quarter of 1999.
Although the shift had no effect on the full year results, the August 9th
release specified that the independent accountants would review prior, similar
transactions. Based on the results of the review, which is now complete, the
Company is restating the affected periods from 1997 to 1999.
Revised quarterly statements follow (6 pages).
CENTERPOINT PROPERTIES TRUST
Statements in this release, which are not historical, may be deemed
forward-looking statements under federal securities laws. There can be not
assurance that future results will be achieved and actual results could defer
materially from forecasts and estimates. Factors that could cause actual results
to differ materially are general business and economic conditions, completion of
pending acquisitions, competitive market conditions, weather, pricing of debt
and equity capital markets and other risks inherent in the real estate business.
CenterPoint is a publicly traded real estate investment trust (REIT). It is the
largest industrial property company in the 1.25 billion square foot Chicago
regional market, with a current portfolio of approximately 30 million square
feet and an additional 605 acres of land upon which 12.2 million square feet
could be developed. The Company is focused on providing unsurpassed tenant
satisfaction and adding value to its shareholders through customer driven
management, investment, development and redevelopment of warehouse/industrial
facilities. The first major REIT to focus on the industrial property sector,
CenterPoint has a current total market capitalization of approximately $1.3
billion.
###
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
MARCH 31, 1997
(UNAUDITED)
------------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $80,299 $ - $80,299
Buildings 289,867 - 289,867
Building improvements 45,063 - 45,063
Furniture, fixtures, and equipment 10,885 - 10,885
Construction in progress 18,522 4,557 23,079
------------------------------------------
444,636 4,557 449,193
Less accumulated
depreciation and amortization 33,328 - 33,328
------------------------------------------
Net investment in real estate 411,308 4,557 415,865
Cash and cash equivalents 6,585 - 6,585
Restricted cash and cash equivalents 396 - 396
Tenant accounts receivable, net 12,440 - 12,440
Mortgage notes receivable 19,809 (4,557) 15,252
Investment in and advances to affiliate 15,664 - 15,664
Prepaid expenses and other assets 3,404 60 3,464
Deferred expenses, net 4,262 - 4,262
------------------------------------------
$473,868 $ 60 $473,928
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $111,917 $ - $111,917
Senior unsecured debt - - -
Tax-exempt debt - - -
Line of credit 7,500 - 7,500
Convertible subordinated debentures
payable 12,135 - 12,135
Preferred dividends payable - - -
Accounts payable 3,498 - 3,498
Accrued expenses 18,576 - 18,576
Rents received in advance and
security deposits 4,008 - 4,008
------------------------------------------
157,634 - 157,634
------------------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value - - -
Common stock, $.001 par value 17 - 17
Class B common stock, $.001 par value 2 - 2
Additional paid-in-capital 345,982 - 345,982
Retained earnings(deficit) (29,105) 60 (29,045)
Unearned compensation - restricted stock (662) - (662)
------------------------------------------
Total stockholders' equity 316,234 60 316,294
------------------------------------------
$473,868 $ 60 $473,928
==========================================
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,1997 SEPTEMBER 30, 1997
(UNAUDITED) (UNAUDITED)
---------------------------------------------------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $86,407 $ 997 $87,404 $ 90,411 $ 997 $ 91,408
Buildings 321,846 3,989 325,835 357,868 3,989 361,857
Building improvements 50,029 - 50,029 60,119 - 60,119
Furniture, fixtures, and equipment 11,284 - 11,284 12,983 - 12,983
Construction in progress 19,812 - 19,812 17,332 4,928 22,260
------------------------------------ ---------------------------------
489,378 4,986 494,364 538,713 9,914 548,627
Less accumulated
depreciation and amortization 36,404 - 36,404 40,406 - 40,406
------------------------------------ ---------------------------------
Net investment in real estate 452,974 4,986 457,960 498,307 9,914 508,221
Cash and cash equivalents 2,006 - 2,006 13,866 - 13,866
Restricted cash and cash equivalents 866 - 866 40,279 - 40,279
Tenant accounts receivable, net 13,153 - 13,153 14,071 - 14,071
Mortgage notes receivable 20,225 (4,986) 15,239 19,584 (9,914) 9,670
Investment in and advances to affiliate 15,120 (36) 15,084 32,957 (36) 32,921
Prepaid expenses and other assets 3,412 27 3,439 4,647 (281) 4,366
Deferred expenses, net 4,481 - 4,481 5,611 - 5,611
------------------------------------ ---------------------------------
$512,237 $ (9) $512,228 $629,322 $ (317) $629,005
==================================== =================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $111,892 $ - $111,892 $166,865 $ - $166,865
Senior unsecured debt - - - - - -
Tax-exempt debt 42,550 - 42,550 103,250 - 103,250
Line of credit - - - 11,790 - 11,790
Convertible subordinated debentures
payable 12,055 - 12,055 83 - 83
Preferred dividends payable - - - - - -
Accounts payable 5,163 - 5,163 11,315 - 11,315
Accrued expenses 21,722 150 21,872 17,171 150 17,321
Rents received in advance and
security deposits 3,483 - 3,483 4,196 - 4,196
------------------------------------ ---------------------------------
196,865 150 197,015 314,670 150 314,820
------------------------------------ ---------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value - - - - - -
Common stock, $.001 par value 17 - 17 17 - 17
Class B common stock, $.001 par value 2 - 2 2 - 2
Additional paid-in-capital 345,850 - 345,850 346,377 - 346,377
Retained earnings(deficit) (29,964) (159) (30,123) (31,241) (467) (31,708)
Unearned compensation - restricted stock (533) - (533) (503) - (503)
------------------------------------ ---------------------------------
Total stockholders' equity 315,372 (159) 315,213 314,652 (467) 314,185
------------------------------------ ---------------------------------
$512,237 $ (9) $512,228 $629,322 $ (317) $629,005
==================================== =================================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $123,014 $ 997 $124,011
Buildings 414,314 3,989 418,303
Building improvements 64,372 - 64,372
Furniture, fixtures, and equipment 13,912 - 13,912
Construction in progress 26,034 15,643 41,677
-----------------------------------------
641,646 20,629 662,275
Less accumulated
depreciation and amortization 44,352 - 44,352
-----------------------------------------
Net investment in real estate 597,294 20,629 617,923
Cash and cash equivalents 1,652 - 1,652
Restricted cash and cash equivalents 36,509 - 36,509
Tenant accounts receivable, net 12,416 - 12,416
Mortgage notes receivable 30,297 (20,629) 9,668
Investment in and advances to affiliate 11,143 (36) 11,107
Prepaid expenses and other assets 3,303 (184) 3,119
Deferred expenses, net 6,661 - 6,661
-----------------------------------------
$699,275 $ (220) $699,055
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $85,755 $ - $85,755
Senior unsecured debt - - -
Tax-exempt debt 75,540 - 75,540
Line of credit 97,700 - 97,700
Convertible subordinated debentures
payable 11,740 - 11,740
Preferred dividends payable 901 - 901
Accounts payable 10,311 - 10,311
Accrued expenses 24,443 150 24,593
Rents received in advance and
security deposits 4,759 - 4,759
-----------------------------------------
311,149 150 311,299
-----------------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value 3 - 3
Common stock, $.001 par value 17 - 17
Class B common stock, $.001 par value 2 - 2
Additional paid-in-capital 420,743 - 420,743
Retained earnings(deficit) (32,142) (370) (32,512)
Unearned compensation - restricted stoc (497) - (497)
-----------------------------------------
Total stockholders' equity 388,126 (370) 387,756
-----------------------------------------
$699,275 $ (220) $699,055
=========================================
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
MARCH 31, 1997 (UNAUDITED) JUNE 30, 1997 (UNAUDITED)
------------------------------------- ------------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 12,771 $ - $ 12,771 $ 13,540 $ 66 $ 13,606
Straight-line rents 654 - 654 633 - 633
Expense reimbursements 4,895 - 4,895 4,480 - 4,480
Mortgage interest income 655 60 715 524 1 525
------------------------------------- ------------------------------------
Total operating and investment revenue 18,975 60 19,035 19,177 67 19,244
------------------------------------- ------------------------------------
Other revenue:
Fee income 802 - 802 813 (250) 563
Equity in net income of affiliate (48) - (48) 140 (36) 104
------------------------------------- ------------------------------------
Total other revenue 754 - 754 953 (286) 667
------------------------------------- ------------------------------------
Total revenue 19,729 60 19,789 20,130 (219) 19,911
------------------------------------- ------------------------------------
Expenses:
Real estate taxes 4,270 - 4,270 4,097 - 4,097
Property operating and leasing 3,023 - 3,023 2,424 - 2,424
General and administrative 703 - 703 739 - 739
Depreciation and amortization 3,210 - 3,210 3,379 - 3,379
Interest expense:
Interest incurred, net 2,626 - 2,626 2,246 - 2,246
Amortization of deferred financing costs 192 - 192 203 - 203
------------------------------------- ------------------------------------
Total expenses 14,024 - 14,024 13,088 - 13,088
------------------------------------- ------------------------------------
Operating income 5,705 60 5,765 7,042 (219) 6,823
Other income (expense)
Gain or (loss) on sale of real estate - - - - - -
Other income (34) - (34) 101 - 101
------------------------------------- ------------------------------------
Income before extraordinary item 5,671 60 5,731 7,143 (219) 6,924
Extraordinary item, early extinguishment of debt - - - - - -
------------------------------------- ------------------------------------
Net income 5,671 60 5,731 7,143 (219) 6,924
Preferred Dividends - - - - - -
------------------------------------- ------------------------------------
Net income available to common shareholders $ 5,671 $ 60 $ 5,731 $ 7,143 $ (219) $ 6,924
===================================== ====================================
Net income available to common shareholders per share
Basic $ 0.33 $ 0.00 $ 0.33 $ 0.38 $ (0.01) $ 0.36
Diluted $ 0.32 $ 0.00 $ 0.33 $ 0.37 $ (0.01) $ 0.36
Funds from operations
Add back:
Depreciation and amortization 3,210 - 3,210 3,379 - 3,379
Amortization of deferred financing - - - - - -
costs on debentures 13 - 13 12 - 12
Convertible subordinated debenture interest 266 - 266 248 - 248
------------------------------------- ------------------------------------
Funds from operations $ 9,160 $ 60 $ 9,220 $ 10,782 $ (219) $ 10,563
------------------------------------- ------------------------------------
Funds from operations per share $ 0.51 $ 0.00 $ 0.51 $ 0.55 $ (0.01) $ 0.54
===================================== ====================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 (UNAUDITED) DECEMBER 31, 1997 (UNAUDITED)
----------------------------------- -----------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 14,544 $ 137 $ 14,681 $ 16,663 $ 156 $ 16,819
Straight-line rents 566 - 566 878 - 878
Expense reimbursements 4,283 - 4,283 4,570 - 4,570
Mortgage interest income 447 (50) 397 520 (59) 461
------------------------------------ ------------------------------------
Total operating and investment revenue 19,840 87 19,927 22,631 97 22,728
------------------------------------ ------------------------------------
Other revenue:
Fee income 455 (395) 60 1,090 - 1,090
Equity in net income of affiliate 1,264 - 1,264 818 - 818
------------------------------------ ------------------------------------
Total other revenue 1,719 (395) 1,324 1,908 - 1,908
------------------------------------ ------------------------------------
Total revenue 21,559 (308) 21,251 24,539 97 24,636
------------------------------------ ------------------------------------
Expenses:
Real estate taxes 4,187 - 4,187 4,537 - 4,537
Property operating and leasing 2,847 - 2,847 3,798 - 3,798
General and administrative 783 - 783 880 - 880
Depreciation and amortization 4,179 - 4,179 4,511 - 4,511
Interest expense:
Interest incurred, net 2,687 - 2,687 2,512 - 2,512
Amortization of deferred financing costs 193 - 193 211 - 211
------------------------------------ ------------------------------------
Total expenses 14,876 - 14,876 16,449 - 16,449
------------------------------------ ------------------------------------
Operating income 6,683 (308) 6,375 8,090 97 8,187
Other income (expense)
Gain or (loss) on sale of real estate - - - - - -
Other income 59 - 59 (17) - (17)
------------------------------------ ------------------------------------
Income before extraordinary item 6,742 (308) 6,434 8,073 97 8,170
Extraordinary item, early extinguishment of debt - - - - - -
------------------------------------ ------------------------------------
Net income 6,742 (308) 6,434 8,073 97 8,170
Preferred Dividends - - - (901) - (901)
------------------------------------ ------------------------------------
Net income available to common shareholders $ 6,742 $ (308) $ 6,434 $ 7,172 $ 97 $ 7,269
==================================== ====================================
Net income available to common shareholders per share
Basic $ 0.35 $ (0.02) $ 0.34 $ 0.38 $ 0.01 $ 0.38
Diluted $ 0.35 $ (0.02) $ 0.33 $ 0.37 $ 0.01 $ 0.38
Funds from operations
Add back:
Depreciation and amortization 4,179 - 4,179 4,511 - 4,511
Amortization of deferred financing - - - - - -
costs on debentures 12 - 12 12 - 12
Convertible subordinated debenture interest 243 - 243 242 - 242
------------------------------------ ------------------------------------
Funds from operations $ 11,176 $ (308) $ 10,868 $ 11,937 $ 97 $ 12,034
------------------------------------ ------------------------------------
Funds from operations per share $ 0.57 $ (0.02) $ 0.55 $ 0.60 $ 0.00 $ 0.61
==================================== ====================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1997
------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 57,519 $ 359 $ 57,878
Straight-line rents 2,732 - 2,732
Expense reimbursements 18,228 - 18,228
Mortgage interest income 2,146 (48) 2,098
-------------------------------------
Total operating and investment revenue 80,625 311 80,936
-------------------------------------
Other revenue:
Fee income 3,159 (645) 2,514
Equity in net income of affiliate 2,174 (36) 2,138
-------------------------------------
Total other revenue 5,333 (681) 4,652
-------------------------------------
Total revenue 85,958 (370) 85,588
-------------------------------------
Expenses:
Real estate taxes 17,091 - 17,091
Property operating and leasing 12,091 - 12,091
General and administrative 3,105 - 3,105
Depreciation and amortization 15,278 - 15,278
Interest expense:
Interest incurred, net 10,071 - 10,071
Amortization of deferred financing costs 800 - 800
-------------------------------------
Total expenses 58,436 - 58,436
-------------------------------------
Operating income 27,522 (370) 27,152
Other income (expense)
Gain or (loss) on sale of real estate - - -
Other income 108 - 108
-------------------------------------
Income before extraordinary item 27,630 (370) 27,260
Extraordinary item, early extinguishment of debt - - -
-------------------------------------
Net income 27,630 (370) 27,260
Preferred Dividends (901) - (901)
-------------------------------------
Net income available to common shareholders $ 26,729 $ (370) $26,359
=====================================
Net income available to common shareholders per share
Basic $ 1.43 $ (0.02) $ 1.41
Diluted $ 1.41 $ (0.02) $ 1.39
Funds from operations
Add back:
Depreciation and amortization 15,278 - 15,278
Amortization of deferred financing - - -
costs on debentures 48 - 48
Convertible subordinated debenture interest 999 - 999
-------------------------------------
Funds from operations $ 43,054 $ (370) $42,684
-------------------------------------
Funds from operations per share $ 2.23 $ (0.02) $ 2.21
=====================================
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
MARCH 31, 1998 JUNE 30, 1998
(UNAUDITED) (UNAUDITED)
--------------------------------- ---------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $120,764 $ 278 $121,042 $126,280 $ 4,007 $130,287
Buildings 412,495 1,113 413,608 435,096 16,029 451,125
Building improvements 66,507 - 66,507 70,542 - 70,542
Furniture, fixtures, and equipment 14,854 - 14,854 16,561 - 16,561
Construction in progress 18,849 17,720 36,569 20,453 - 20,453
---------------------------------- ---------------------------------
633,469 19,111 652,580 668,932 20,036 688,968
Less accumulated depreciation and amortization 46,837 - 46,837 51,704 - 51,704
---------------------------------- ---------------------------------
Net investment in real estate 586,632 19,111 605,743 617,228 20,036 637,264
Cash and cash equivalents 637 - 637 2,039 - 2,039
Restricted cash and cash equivalents 57,765 - 57,765 33,828 - 33,828
Tenant accounts receivable, net 15,027 - 15,027 17,492 - 17,492
Mortgage notes receivable 27,887 (17,720) 10,167 28,802 (18,634) 10,168
Investment in and advances to affiliate 11,513 (266) 11,247 17,885 (1,314) 16,571
Prepaid expenses and other assets 4,789 (635) 4,154 7,883 (989) 6,894
Deferred expenses, net 6,878 - 6,878 8,000 - 8,000
---------------------------------- ---------------------------------
$711,128 $ 490 $711,618 $733,157 $ (901) $732,256
================================== =================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $85,755 $ - $85,755 $185,755 $ - $185,755
Senior unsecured debt - - - - - -
Tax-exempt debt 75,540 - 75,540 75,540 - 75,540
Line of credit 103,500 - 103,500 12,500 - 12,500
Convertible subordinated debentures payable 11,163 - 11,163 9,613 - 9,613
Preferred dividends payable 1,060 - 1,060 1,060 - 1,060
Accounts payable 5,501 - 5,501 3,714 - 3,714
Accrued expenses 23,407 - 23,407 28,219 - 28,219
Rents received in advance and security deposits 5,904 - 5,904 4,535 - 4,535
---------------------------------- ---------------------------------
311,830 - 311,830 320,936 - 320,936
---------------------------------- ---------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value 3 - 3 3 - 3
Common stock, $.001 par value 17 - 17 18 - 18
Class B common stock, $.001 par value 2 - 2 2 - 2
Additional paid-in-capital 433,171 - 433,171 447,352 - 447,352
Retained earnings(deficit) (33,447) 490 (32,957) (34,761) (901) (35,662)
Unearned compensation - restricted stock (448) - (448) (393) - (393)
---------------------------------- ---------------------------------
Total stockholders' equity 399,298 490 399,788 412,221 (901) 411,320
---------------------------------- ---------------------------------
$711,128 $ 490 $711,618 $733,157 $ (901) $732,256
================================== =================================
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
(UNAUDITED) DECEMBER 31, 1998
--------------------------------- ---------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $138,298 $ 4,028 $142,326 $128,045 $ 4,225 $132,270
Buildings 488,704 16,111 504,815 487,996 16,899 504,895
Building improvements 80,082 - 80,082 94,474 - 94,474
Furniture, fixtures, and equipment 17,564 - 17,564 18,817 - 18,817
Construction in progress 13,472 - 13,472 18,401 - 18,401
--------------------------------- ---------------------------------
738,120 20,139 758,259 747,733 21,124 768,857
Less accumulated depreciation and amortization 56,728 - 56,728 62,257 - 62,257
--------------------------------- ---------------------------------
Net investment in real estate 681,392 20,139 701,531 685,476 21,124 706,600
Cash and cash equivalents 4,696 - 4,696 475 - 475
Restricted cash and cash equivalents 31,545 - 31,545 33,056 - 33,056
Tenant accounts receivable, net 19,062 - 19,062 18,067 - 18,067
Mortgage notes receivable 19,655 (18,737) 918 20,353 (19,452) 901
Investment in and advances to affiliate 21,534 (2,702) 18,832 48,564 (4,768) 43,796
Prepaid expenses and other assets 6,025 (1,063) 4,962 5,264 (1,234) 4,030
Deferred expenses, net 8,607 - 8,607 10,681 - 10,681
--------------------------------- ---------------------------------
$792,516 $ (2,363) $790,153 $821,936 $ (4,330) $817,606
================================= =================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $106,225 $ - $106,225 $103,520 $ - 103,520
Senior unsecured debt 100,000 - 100,000 100,000 - 100,000
Tax-exempt debt 75,540 - 75,540 75,540 - 75,540
Line of credit 44,000 - 44,000 77,600 - 77,600
Convertible subordinated debentures payable 8,583 - 8,583 8,058 - 8,058
Preferred dividends payable 1,060 - 1,060 1,060 - 1,060
Accounts payable 4,633 - 4,633 7,986 - 7,986
Accrued expenses 34,420 - 34,420 30,810 250 31,060
Rents received in advance and security deposits 5,372 - 5,372 5,323 - 5,323
--------------------------------- ---------------------------------
379,833 - 379,833 409,897 250 410,147
--------------------------------- ---------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value 3 - 3 3 - 3
Common stock, $.001 par value 18 - 18 19 - 19
Class B common stock, $.001 par value 2 - 2 1 - 1
Additional paid-in-capital 448,606 - 448,606 449,229 - 449,229
Retained earnings(deficit) (35,602) (2,363) (37,965) (36,917) (4,580) (41,497)
Unearned compensation - restricted stock (344) - (344) (296) - (296)
--------------------------------- ---------------------------------
Total stockholders' equity 412,683 (2,363) 410,320 412,039 (4,580) 407,459
--------------------------------- ---------------------------------
$792,516 $ (2,363) $790,153 $821,936 $ (4,330) $817,606
================================= =================================
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
MARCH 31, 1998 (UNAUDITED) JUNE 30, 1998 (UNAUDITED)
-------------------------------- ---------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 17,747 $ 56 $ 17,803 $ 18,050 $ 530 $ 18,580
Straight-line rents 1,364 - 1,364 1,157 - 1,157
Expense reimbursements 5,458 - 5,458 6,115 - 6,115
Mortgage interest income 656 (101) 555 679 (434) 245
-------------------------------- ---------------------------------
Total operating and investment revenue 25,225 (45) 25,180 26,001 96 26,097
-------------------------------- ---------------------------------
Other revenue:
Fee income 1,967 (256) 1,711 1,707 (1,110) 597
Equity in net income of affiliate 125 (230) (105) 275 (388) (113)
-------------------------------- ---------------------------------
Total other revenue 2,092 (486) 1,606 1,982 (1,498) 484
-------------------------------- ---------------------------------
Total revenue 27,317 (531) 26,786 27,983 (1,402) 26,581
-------------------------------- ---------------------------------
Expenses:
Real estate taxes 5,948 - 5,948 6,001 - 6,001
Property operating and leasing 3,542 - 3,542 3,210 - 3,210
General and administrative 990 - 990 1,001 - 1,001
Depreciation and amortization 4,696 - 4,696 5,186 - 5,186
Interest expense:
Interest incurred, net 2,928 - 2,928 3,056 - 3,056
Amortization of deferred financing costs 486 - 486 439 - 439
-------------------------------- ---------------------------------
Total expenses 18,590 - 18,590 18,893 - 18,893
-------------------------------- ---------------------------------
Operating income 8,727 (531) 8,196 9,090 (1,402) 7,688
Other income (expense)
Gain or (loss) on sale of real estate - 1,391 1,391 - 11 11
Other income (16) - (16) (21) - (21)
-------------------------------- ---------------------------------
Income before extraordinary item 8,711 860 9,571 9,069 (1,391) 7,678
Extraordinary item, early extinguishment of debt - - - - - -
-------------------------------- ---------------------------------
Net income 8,711 860 9,571 9,069 (1,391) 7,678
Preferred Dividends (1,590) - (1,590) (1,590) - (1,590)
-------------------------------- ---------------------------------
Net income available to common shareholders $ 7,121 $ 860 $ 7,981 $ 7,479 $ (1,391) $ 6,088
================================ =================================
Net income available to common shareholders per share
Basic $ 0.37 $ 0.04 $ 0.42 $ 0.37 $ (0.07) $ 0.30
Diluted $ 0.37 $ 0.04 $ 0.41 $ 0.37 $ (0.07) $ 0.30
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization 4,696 - 4,696 5,186 - 5,186
Amortization of deferred financing
costs on debentures 11 - 11 10 - 10
Convertible subordinated debenture interest 233 - 233 205 - 205
Depreciation on sold properties - (1,064) (1,064) - - -
-------------------------------- ---------------------------------
Funds from operations $ 12,061 $ (204) $ 11,857 $ 12,880 $ (1,391) $ 11,489
-------------------------------- ---------------------------------
Funds from operations per share $ 0.61 $ (0.01) $ 0.60 $ 0.63 $ (0.07) $ 0.56
================================ =================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998 (UNAUDITED) DECEMBER 31, 1998 (UNAUDITED)
-------------------------------- --------------------------------
REPORTED ADJUSTMENT RESTATED REPORTED ADJUSTMENT RESTATED
-------- ---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 19,479 $ 530 $ 20,009 $20,487 $ 530 $ 21,017
Straight-line rents 742 - 742 767 - 767
Expense reimbursements 5,737 - 5,737 4,614 - 4,614
Mortgage interest income 600 (466) 134 637 (511) 126
-------------------------------- --------------------------------
Total operating and investment revenue 26,558 64 26,622 26,505 19 26,524
-------------------------------- --------------------------------
Other revenue:
Fee income 1,962 (1,118) 844 2,946 (2,440) 506
Equity in net income of affiliate 46 (408) (362) (210) (66) (276)
-------------------------------- --------------------------------
Total other revenue 2,008 (1,526) 482 2,736 (2,506) 230
-------------------------------- --------------------------------
Total revenue 28,566 (1,462) 27,104 29,241 (2,487) 26,754
-------------------------------- --------------------------------
Expenses:
Real estate taxes 5,786 - 5,786 4,484 - 4,484
Property operating and leasing 2,674 - 2,674 4,056 - 4,056
General and administrative 969 - 969 1,080 - 1,080
Depreciation and amortization 5,392 - 5,392 6,145 - 6,145
Interest expense:
Interest incurred, net 3,759 - 3,759 3,917 - 3,917
Amortization of deferred financing costs 409 - 409 482 - 482
-------------------------------- --------------------------------
Total expenses 18,989 - 18,989 20,164 - 20,164
-------------------------------- --------------------------------
Operating income 9,577 (1,462) 8,115 9,077 (2,487) 6,590
Other income (expense)
Gain or (loss) on sale of real estate - - - - 270 270
Other income (7) - (7) 30 - 30
-------------------------------- --------------------------------
Income before extraordinary item 9,570 (1,462) 8,108 9,107 (2,217) 6,890
Extraordinary item, early extinguishment of debt - - - - - -
-------------------------------- --------------------------------
Net income 9,570 (1,462) 8,108 9,107 (2,217) 6,890
Preferred Dividends (1,590) - (1,590) (1,590) - (1,590)
-------------------------------- --------------------------------
Net income available to common shareholders $ 7,980 $ (1,462) $ 6,518 $ 7,517 $ (2,217) $ 5,300
================================ ================================
Net income available to common shareholders per share
Basic $ 0.40 $ (0.07) $ 0.32 $ 0.37 $ (0.11) $ 0.26
Diluted $ 0.39 $ (0.07) $ 0.32 $ 0.37 $ (0.11) $ 0.26
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization 5,392 - 5,392 6,145 - 6,145
Amortization of deferred financing
costs on debentures 9 - 9 8 - 8
Convertible subordinated debenture interest 180 - 180 166 - 166
Depreciation on sold properties - (286) (286) - - -
-------------------------------- --------------------------------
Funds from operations $ 13,561 $ (1,748) $ 11,813 $13,836 $ (2,217) $ 11,619
-------------------------------- --------------------------------
Funds from operations per share $ 0.66 $ (0.08) $ 0.57 $ 0.67 $ (0.11) $ 0.56
================================ ================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1998
----------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $75,763 $ 1,646 $ 77,409
Straight-line rents 4,030 - 4,030
Expense reimbursements 21,924 - 21,924
Mortgage interest income 2,573 (1,512) 1,061
----------------------------------
Total operating and investment revenue 104,290 134 104,424
----------------------------------
Other revenue:
Fee income 8,581 (4,924) 3,657
Equity in net income of affiliate 237 (1,092) (855)
----------------------------------
Total other revenue 8,818 (6,016) 2,802
----------------------------------
Total revenue 113,108 (5,882) 107,226
----------------------------------
Expenses:
Real estate taxes 22,218 - 22,218
Property operating and leasing 13,482 - 13,482
General and administrative 4,041 - 4,041
Depreciation and amortization 21,418 - 21,418
Interest expense:
Interest incurred, net 13,659 - 13,659
Amortization of deferred financing costs 1,817 - 1,817
----------------------------------
Total expenses 76,635 - 76,635
----------------------------------
Operating income 36,473 (5,882) 30,591
Other income (expense)
Gain or (loss) on sale of real estate - 1,672 1,672
Other income (15) - (15)
----------------------------------
Income before extraordinary item 36,458 (4,210) 32,248
Extraordinary item, early extinguishment of debt - - -
----------------------------------
Net income 36,458 (4,210) 32,248
Preferred Dividends (6,360) - (6,360)
----------------------------------
Net income available to common shareholders $30,098 $ (4,210) $25,888
==================================
Net income available to common shareholders per share
Basic $1.51 $ (0.21) $ 1.30
Diluted $1.50 $ (0.21) $ 1.29
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization 21,418 - 21,418
Amortization of deferred financing
costs on debentures 38 - 38
Convertible subordinated debenture interest 783 - 783
Depreciation on sold properties - (1,350) (1,350)
----------------------------------
Funds from operations 52,337 $ (5,560) 46,777
----------------------------------
Funds from operations per share $2.57 $ (0.27) $ 2.29
==================================
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
MARCH 31, 1999
(UNAUDITED)
---------------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $131,996 $ 4,315 $136,311
Buildings 505,173 17,257 522,430
Building improvements 99,852 - 99,852
Furniture, fixtures, and equipment 18,855 - 18,855
Construction in progress 27,432 - 27,432
------------------------------------------
783,308 21,572 804,880
Less accumulated depreciation and amortization 67,821 - 67,821
------------------------------------------
Net investment in real estate 715,487 21,572 737,059
Cash and cash equivalents 45,577 - 45,577
Restricted cash and cash equivalents 29,324 - 29,324
Tenant accounts receivable, net 19,884 - 19,884
Mortgage notes receivable 20,348 (19,452) 896
Investment in and advances to affiliate 46,927 (3,454) 43,473
Prepaid expenses and other assets 6,902 (436) 6,466
Deferred expenses, net 12,434 - 12,434
------------------------------------------
$896,883 $ (1,770) $895,113
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $103,256 $ - $103,256
Senior unsecured debt 200,000 - 200,000
Tax-exempt debt 75,540 - 75,540
Line of credit 52,900 - 52,900
Convertible subordinated debentures payable 7,878 - 7,878
Preferred dividends payable 1,060 - 1,060
Accounts payable 6,705 - 6,705
Accrued expenses 32,694 - 32,694
Rents received in advance and security deposits 6,241 - 6,241
------------------------------------------
486,274 - 486,274
------------------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value 3 - 3
Common stock, $.001 par value 20 - 20
Class B common stock, $.001 par value - - -
Additional paid-in-capital 449,612 - 449,612
Retained earnings(deficit) (38,742) (1,770) (40,512)
Unearned compensation - restricted stock (284) - (284)
------------------------------------------
Total stockholders' equity 410,609 (1,770) 408,839
------------------------------------------
$896,883 $ (1,770) $895,113
==========================================
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,1999
(UNAUDITED)
---------------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land $152,880 $ 425 $153,305
Buildings 585,638 1,695 587,333
Building improvements 107,353 - 107,353
Furniture, fixtures, and equipment 19,713 - 19,713
Construction in progress 22,282 - 22,282
------------------------------------------
887,866 2,120 889,986
Less accumulated depreciation and amortization 74,533 - 74,533
------------------------------------------
Net investment in real estate 813,333 2,120 815,453
Cash and cash equivalents 2,659 - 2,659
Restricted cash and cash equivalents 28,200 - 28,200
Tenant accounts receivable, net 21,733 - 21,733
Mortgage notes receivable 890 - 890
Investment in and advances to affiliate 90,364 (3,454) 86,910
Prepaid expenses and other assets 6,893 - 6,893
Deferred expenses, net 14,193 - 14,193
------------------------------------------
$978,265 $ (1,334) $976,931
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $92,899 $ - $92,899
Senior unsecured debt 200,000 - 200,000
Tax-exempt debt 55,000 - 55,000
Line of credit 111,600 - 111,600
Convertible subordinated debentures payable 7,551 - 7,551
Preferred dividends payable 1,132 - 1,132
Accounts payable 10,507 - 10,507
Accrued expenses 38,898 - 38,898
Rents received in advance and security deposits 5,572 - 5,572
------------------------------------------
523,159 - 523,159
------------------------------------------
Stockholders' equity:
Perferred Stock, $.001 par value 3 - 3
Common stock, $.001 par value 1 - 1
Class B common stock, $.001 par value 20 - 20
Additional paid-in-capital 498,371 - 498,371
Retained earnings(deficit) (43,017) (1,334) (44,351)
Unearned compensation - restricted stock (272) - (272)
------------------------------------------
Total stockholders' equity 455,106 (1,334) 453,772
------------------------------------------
$978,265 $ (1,334) $976,931
==========================================
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
(UNAUDITED)
------------------
ADJUSTMENT
----------
<S> <C>
ASSETS
Assets:
Investment in real estate:
Land $ 425
Buildings 1,695
Building improvements -
Furniture, fixtures, and equipment -
Construction in progress -
--------------------------
2,120
Less accumulated depreciation and amortization -
--------------------------
Net investment in real estate 2,120
Cash and cash equivalents -
Restricted cash and cash equivalents -
Tenant accounts receivable, net -
Mortgage notes receivable -
Investment in and advances to affiliate -
Prepaid expenses and other assets -
Deferred expenses, net -
--------------------------
$ 2,120
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt $ -
Senior unsecured debt -
Tax-exempt debt -
Line of credit -
Convertible subordinated debentures payable -
Preferred dividends payable -
Accounts payable -
Accrued expenses -
Rents received in advance and security deposits -
--------------------------
-
--------------------------
Stockholders' equity:
Perferred Stock, $.001 par value -
Common stock, $.001 par value -
Class B common stock, $.001 par value -
Additional paid-in-capital -
Retained earnings(deficit) 2,120
Unearned compensation - restricted stock -
--------------------------
Total stockholders' equity 2,120
--------------------------
$ 2,120
==========================
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 (UNAUDITED)
---------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 20,813 $ 530 $ 21,343
Straight-line rents 844 - 844
Expense reimbursements 6,568 - 6,568
Mortgage interest income 554 (510) 44
---------------------------------------
Total operating and investment revenue 28,779 20 28,799
---------------------------------------
Other revenue:
Fee income 2,701 1,688 4,389
Equity in net income of affiliate (246) 654 408
---------------------------------------
Total other revenue 2,455 2,342 4,797
---------------------------------------
Total revenue 31,234 2,362 33,596
---------------------------------------
Expenses:
Real estate taxes 6,565 - 6,565
Property operating and leasing 3,581 - 3,581
General and administrative 905 - 905
Depreciation and amortization 5,997 - 5,997
Interest expense:
Interest incurred, net 4,359 - 4,359
Amortization of deferred financing costs 458 - 458
---------------------------------------
Total expenses 21,865 - 21,865
---------------------------------------
Operating income 9,369 2,362 11,731
Other income (expense)
Gain or (loss) on sale of real estate - 448 448
Other income (20) - (20)
---------------------------------------
Income before extraordinary item 9,349 2,810 12,159
Extraordinary item, early extinguishment of debt - - -
---------------------------------------
Net income 9,349 2,810 12,159
Preferred Dividends (1,590) - (1,590)
---------------------------------------
Net income available to common shareholders $ 7,759 $ 2,810 $ 10,569
=======================================
Net income available to common shareholders per share
before extraordinary item
Basic $ 0.49 $ 0.15 $ 0.63
Diluted $ 0.48 $ 0.14 $ 0.62
Net income available to common shareholders per share
Basic $ 0.40 $ 0.15 $ 0.55
Diluted $ 0.40 $ 0.14 $ 0.54
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization 5,997 - 5,997
Amortization of deferred financing
costs on debentures 8 - 8
Convertible subordinated debenture interest 161 - 161
Depreciation from unconsolidated
subsidiary, net of tax - - -
Extraordinary item, early extinquishment of debt - - -
Convertible preferred dividend - - -
Depreciation on sold properties - (99) (99)
---------------------------------------
Funds from operations $ 13,925 $ 2,711 $ 16,636
---------------------------------------
Funds from operations per share $ 0.68 $ 0.13 $ 0.81
=======================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30, 1999 (UNAUDITED)
----------------------------------------
REPORTED ADJUSTMENT RESTATED
-------- ---------- --------
<S> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ 21,598 $ - $ 21,598
Straight-line rents 1,420 - 1,420
Expense reimbursements 6,229 - 6,229
Mortgage interest income 364 - 364
----------------------------------------
Total operating and investment revenue 29,611 - 29,611
----------------------------------------
Other revenue:
Fee income 1,542 436 1,978
Equity in net income of affiliate 465 - 465
----------------------------------------
Total other revenue 2,007 436 2,443
----------------------------------------
Total revenue 31,618 436 32,054
----------------------------------------
Expenses:
Real estate taxes 7,127 - 7,127
Property operating and leasing 3,282 - 3,282
General and administrative 940 - 940
Depreciation and amortization 7,223 - 7,223
Interest expense:
Interest incurred, net 5,018 - 5,018
Amortization of deferred financing costs 505 - 505
----------------------------------------
Total expenses 24,095 - 24,095
----------------------------------------
Operating income 7,523 436 7,959
Other income (expense)
Gain or (loss) on sale of real estate - - -
Other income (7) - (7)
----------------------------------------
Income before extraordinary item 7,516 436 7,952
Extraordinary item, early extinguishment of debt (582) - (582)
----------------------------------------
Net income 6,934 436 7,370
Preferred Dividends (1,662) - (1,662)
----------------------------------------
Net income available to common shareholders $ 5,272 $ 436 $ 5,708
========================================
Net income available to common shareholders per share
before extraordinary item
Basic $ 0.38 $ 0.02 $ 0.40
Diluted $ 0.37 $ 0.02 $ 0.39
Net income available to common shareholders per share
Basic $ 0.26 $ 0.02 $ 0.29
Diluted $ 0.26 $ 0.02 $ 0.28
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization 7,223 - 7,223
Amortization of deferred financing
costs on debentures 6 - 6
Convertible subordinated debenture interest 184 - 184
Depreciation from unconsolidated
subsidiary, net of tax 135 - 135
Extraordinary item, early extinquishment of debt 582 - 582
Convertible preferred dividend 72 - 72
Depreciation on sold properties - - -
----------------------------------------
Funds from operations $ 13,474 $ 436 $ 13,910
----------------------------------------
Funds from operations per share $ 0.65 $ 0.02 $ 0.67
========================================
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 (UNAUDITED)
----------------------------
ADJUSTMENT
----------
<S> <C>
Revenue:
Operating and investment revenue:
Minimum rents $ -
Straight-line rents -
Expense reimbursements -
Mortgage interest income -
----------------------------
Total operating and investment revenue -
----------------------------
Other revenue:
Fee income 2,980
Equity in net income of affiliate 474
----------------------------
Total other revenue 3,454
----------------------------
Total revenue 3,454
----------------------------
Expenses:
Real estate taxes -
Property operating and leasing -
General and administrative -
Depreciation and amortization
Interest expense:
Interest incurred, net -
Amortization of deferred financing costs -
----------------------------
Total expenses -
----------------------------
Operating income 3,454
Other income (expense)
Gain or (loss) on sale of real estate -
Other income -
----------------------------
Income before extraordinary item 3,454
Extraordinary item, early extinguishment of debt -
----------------------------
Net income 3,454
Preferred Dividends -
----------------------------
Net income available to common shareholders $ 3,454
============================
Net income available to common shareholders per share
before extraordinary item
Basic
Diluted
Net income available to common shareholders per share
Basic
Diluted
FUNDS FROM OPERATIONS
Add back:
Depreciation and amortization -
Amortization of deferred financing
costs on debentures -
Convertible subordinated debenture interest -
Depreciation from unconsolidated
subsidiary, net of tax -
Extraordinary item, early extinquishment of debt -
Convertible preferred dividend -
Depreciation on sold properties -
----------------------------
Funds from operations $ 3,454
----------------------------
Funds from operations per share $ 0.17
============================
</TABLE>