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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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FOR THE TRANSITION PERIOD FROM ________________ TO
________________
COMMISSION FILE NUMBER 1-12630
CENTERPOINT PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
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MARYLAND 36-3910279
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation
or Organization)
1808 SWIFT DRIVE, OAK BROOK, ILLINOIS 60523
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code:
(630) 586-8000
Securities registered pursuant to Section 12(b) of the
Act:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Shares, par value $.001 New York Stock Exchange
8.48% Series A Preferred Shares, par value
$.001 New York Stock Exchange
7.5% Series B Convertible Preferred Shares,
par value $.001 New York Stock Exchange
Preferred Share Purchase Rights, with respect
to common shares, par $.001 New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
NONE
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(Title of Class)
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 (or for such shorter
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K
(Section229.405 of this chapter) is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K. / /
As of March 15, 2000, the aggregate market value of
the voting stock held by non-affiliates of the
registrant was $713,044,232 million (based on 20,085,753
shares held by non-affiliates and computed by reference
to the reported closing price).
The registrant had 20,680,470 shares of its common
stock, $.001 par value, outstanding as of March 15,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement are
incorporated by reference into Part III of this Annual
Report on Form 10-K.
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TABLE OF CONTENTS
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PART I
Item 1 Business.................................................... 1
Item 2. Properties.................................................. 9
Item 3. Legal Proceedings........................................... 17
Item 4. Submission of Certain Items to a Vote of Security Holders... 17
PART II
Item 5. Market for Registrant's Common Equity and Related Matters... 18
Item 6. Selected Historical Financial Data.......................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results
of Operations............................................. 21
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 27
Item 8. Financial Statements and Supplementary Data................. 27
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 27
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 28
Item 11. Executive Compensation...................................... 28
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 28
Item 13. Certain Relationships and Related Transactions.............. 28
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 29
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PART I
ITEM 1. BUSINESS.
THE COMPANY
CenterPoint Properties Trust ("CenterPoint" or the "Company"), a publicly
traded real estate investment trust (REIT), is the first major REIT to focus on
the industrial sector. CenterPoint is focused on providing unsurpassed tenant
satisfaction, and adds value to its shareholders through customer-driven
management, investment, development, and redevelopment of warehouse, light
manufacturing, and industrial facilities. The Company believes it is the largest
owner and operator of warehouse/industrial property in the 1.25 billion
square-foot Greater Chicago Region, the largest and most diverse industrial
market in the United States. The Company is a Maryland business trust and is
listed on the New York Stock Exchange under the symbol CNT.
A predecessor of CenterPoint began operations in 1984 as Capital and
Regional Properties Corporation. It was the sole United States investment
vehicle for United Kingdom-based Capital and Regional Properties, plc, whose
stock was publicly traded on the London Exchange in 1986. This has provided
CenterPoint with the longest public market history of any industrial REIT.
CenterPoint completed its initial U.S. public offering in December 1993 after
consolidating its operations with, and acquiring the properties controlled by,
FCLS Investors Group, a Chicago-based industrial development company with
30 years local experience.
In July, 1998, the Company consolidated its three regional offices into
redeveloped warehouse space in suburban Oak Brook, Illinois, centrally located
in the Chicago region. Intentionally, all of CenterPoint's assets are located
within a two-hour drive of its headquarters. The Company believes that its
geographic focus has enabled rapid and entrepreneurial response to market
opportunities and has fostered constant interaction among tenants and management
in furtherance of the Company's focus on customer satisfaction, which anchors
CenterPoint's strategy.
BUSINESS OBJECTIVES AND GROWTH PLANS
The Company's fundamental business objective is to maximize total return to
shareholders through increases in per share distributions and increases in the
value of the Company's franchise. The Company's goal is to sustain strong growth
in per share funds from operations ("FFO"), with accompanying growth in per
share distributions and share value. To achieve this objective, the Company
pursues complementary operating, investment, disposition and financial
strategies:
- PORTFOLIO OPERATIONS. The Company seeks to grow its results from
operations by increasing revenues through lease renewals or replacements
at increased rental rates and by increasing occupancy where vacancies
exist. The Company believes that above average rental growth is primarily
achievable because the Company's focus on tenant service generates higher
renewal and occupancy rates. Moreover, the Company's size, Chicago focus
and market penetration provides superior access to favorable leasing
transactions and investments offering below market rents and growth
opportunities. The Company's portfolio on December 31, 1999 was 96% leased
and occupied.
- INVESTMENT. The Company believes that per share growth is maximized
through investment activity concentrating on properties offering immediate
cash yields above its long term cost of capital, with the potential for
rapid yield growth. The Company seeks to invest exclusively in warehouse/
industrial properties that satisfy its yield and growth objectives through
the lease up of vacancy, property expansion, redevelopment, or the
development or disposition of surplus land. The Company strictly limits
speculative investment.
- DISPOSITIONS. Management strives to maximize the yield on invested capital
by aggressively selling properties where growth has been achieved and
where future prospects for growth are limited.
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These are properties in which the Company has added all the value it is
capable of producing. As an allied strategy, the Company undertakes the
development of buildings for immediate sale to users or investors. These
"merchant" transactions provide attractive fees and profits for
reinvestment in the Company's "core" value added business.
- FINANCIAL. The Company maintains conservative financial and leverage
policies to provide financial capacity and flexibility. This strategy
facilitates opportunistic investment by helping assure substantial in
place liquidity. The Company and its affiliates maintain lines of credit
of $300 million. The Company's financial strategy also allows it to secure
capital in the most favorable markets. CenterPoint benefits from
investment grade ratings on its senior unsecured debt and preferred
securities, providing substantial execution efficiency and a lower overall
cost of capital.
- MANAGEMENT CONTROLS AND SYSTEMS. The Company's strategy also seeks growth
by controlling expenses through the implementation of efficient
information and governance systems. The Company has invested in state of
the art systems, which it seeks to continually improve. The Company also
believes that it enjoys operating efficiencies attributable to the scale
of its operations and Chicago market focus, generating greater rates of
cash flow growth and retention.
BUSINESS FOCUS
As CenterPoint continues to grow, its mission remains to become the
industrial landlord of choice in the Greater Chicago region. CenterPoint
endeavors to achieve this goal by cultivating and maintaining long-term
relationships with its tenants. The Company, highly responsive to the changing
needs of its tenants, is always prepared to meet any challenge, and is
continually innovating processes and procedures to enhance mutual growth.
CenterPoint seeks to provide high-quality, attractive space at competitive
rates; unwavering attention to the care and maintenance of its properties;
operating charges that reflect economic responsibility; and rapid response to
expansion, relocation and other space requirements. In 1999, CenterPoint
achieved a 91% tenant retention rate, confirming its commitment to tenant
satisfaction, and in turn, increasing both cash flow and the value of the
portfolio.
Underpinning the value of CenterPoint's portfolio is the strength of its
internal resources. Key among these is management experience. CenterPoint's
management staff averages 20 years of experience in the industry. Enabled by
strong ties to the real estate development community, an in-depth knowledge of
the market sector, and the ability to gauge and anticipate market trends,
management can creatively and flexibly accommodate tenant requirements in a
manner that is mutually beneficial.
In order to successfully execute its business strategies, CenterPoint
adheres to the six following disciplines:
FOCUS ON INDUSTRIAL REAL ESTATE. The Company focuses on
warehouse/industrial properties, because management believes this property type,
for the following reasons, offers consistently attractive returns and stable
cash flow:
- LOW CAPITAL REQUIREMENTS. The cost per square foot of developing
warehouse/industrial properties typically ranges between $40-45 per square
foot, which is lower than the cost of developing other types of property.
From the Company's perspective, this results in less capital committed to
any particular property, permitting greater diversification of the
Company's risk. In addition, relative to other property types, fewer
tenant improvements are required to renew or lease warehouse industrial
space, minimizing the level of recurring capital expenditures necessary to
sustain rental income.
- HIGH LEVEL OF TENANT INVESTMENT. Unlike office, retail and multi-family
buildings, most warehouse/ industrial buildings are occupied by a single
tenant. Relocation tends to be costly for tenants of warehouse/industrial
properties because of high tenant investment in production set-up
expenses,
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machinery and other site specific improvements (in many cases higher than
the landlord's investment). To avoid these costs, tenants typically lease
space that exceeds their immediate needs or space in buildings that are
readily expandable. Tenant retention and expansion therefore tend to be
higher than for other property types.
- FAVORABLE LEASE TERMS. Warehouse/industrial buildings generally are leased
on a "triple net" basis, under which tenants are contractually obligated
to pay directly, or reimburse the landlord, for virtually all costs of
occupancy, including property taxes, utilities, insurance and maintenance.
In addition, the leases generally provide for rent growth through
contractual rent increases or increases tied to certain indices such as
the Consumer Price Index.
- SUPPLY BUILT ON DEMAND. The comparatively short development period for
industrial buildings (typically six to nine months) relative to other
property types has resulted in less speculative building and, therefore, a
supply of industrial property that more closely corresponds to tenant
demand. This has kept vacancy levels on average lower than for other
property types and has produced greater rental rate stability.
- LIMITED COMPETITION. Higher overall investment returns are more achievable
for warehouse/industrial property than other property types because such
assets, typically $3 million to $6 million in purchase price, are too
small to justify institutional attention. The Company's typical competitor
for assets of this size is a sponsor of a single asset partnership that
typically has a higher cost of capital and less financial flexibility than
the Company.
FOCUS IN GREATER CHICAGO. CenterPoint's target market, Greater Chicago, is
comprised of the region within a 150-mile radius of the City of Chicago,
including Milwaukee, Wisconsin and South Bend, Indiana. It lies at the center of
one of the nation's principal population and production regions.
With over 1.25 billion square-feet of industrial/warehouse space and 24
diverse submarkets (according to a ranking of markets published by CB Richard
Ellis), Greater Chicago has become the largest and most diverse
warehouse/industrial market. In addition to its size and geographic location,
the Midwest possesses certain critical components such as transportation
advantages, business diversity, favorable economic trends, and thriving real
estate market conditions. These factors have supported the Company's continued
strong leasing, acquisition, and development activity. As a result, Greater
Chicago offers significant opportunities for investment in, and ownership of,
warehouse/industrial property.
TRANSPORTATION ADVANTAGES. The Midwest's transportation network is integral
to its status as a manufacturing and distribution center. The area has
achieved its prominence as a result of its central continental location, as
well as its extensive roadway, rail, air, and water transportation
infrastructure. This infrastructure connects Greater Chicago with a
contiguous 13-state region consisting of Illinois, Wisconsin, Michigan,
Ohio, Pennsylvania, West Virginia, Tennessee, Kentucky, Indiana, Missouri,
Iowa, Nebraska and Minnesota. The State of Illinois enacted a $12 billion
infrastructure program in 1999, which will be used to focus on road and rail
improvements in the metropolitan Chicago area.
Intermodal, which involves the movement of goods by two or more modes of
transportation, is re-emerging as a very attractive distribution channel. A
substantial share of the nation's rail freight passes through Chicago,
making it a major hub for intermodal freight transportation. Nearly half of
all intermodal rail shipments originate, terminate, or connect there.
Currently, it is the fastest growing part of the rail industry, and most
rail yards have already been converted to handle intermodal traffic.
O'Hare International Airport is one of the country's fastest growing air
freight hubs. O'Hare will continue as a driving force in the industrial real
estate market by spurring the expansion of airport-related industries in the
region. With an average annual increase of 8% in air freight volume over the
last 3 years, O'Hare handles approximately 4,600 tons of airfreight per day,
along with the 70 million commercial passengers it serves annually.
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Lastly, Chicago is also a major gateway for waterborne freight. The Port of
Chicago estimates that it ships in excess of 25 million tons of freight
annually.
- DIVERSITY OF BUSINESSES. The diversity of businesses in the Midwest
provides the Company with the opportunity to capitalize on different
trends affecting real estate demand and usage in a wide range of
industries. An assorted tenant base also lessens the Company's cyclical
risk, reducing its exposure to changes in the fortunes of any single type
of business.
Manufacturers, for example, benefit from Chicago's well-developed freight
and air transportation system and distribution network. Utility deregulation
is also improving its competitiveness. Among the nation's metro areas,
Chicago manufacturing base is second only to that of Los Angeles.
Chicago is also the largest financial center for commodities in the Midwest.
The Chicago Board of Trade is the world's largest commodity exchange, and
the Chicago Mercantile Exchange is the third largest. Financial services
will continue to be one of Chicago's primary drivers.
The growth of high-tech industries also holds promise for the metro area.
The concentration of high-tech employment ranks Chicago fourth in the
nation. These encompass every aspect of digitally based products and
services, including software, electronic commerce, computer hardware,
telecom services, and web-based services.
The key to Chicago's long-term outlook lies in its transportation and
distribution network, its strong export-oriented industries, as well as its
status as the financial commodity trading and services center of the
Midwest. The diversity of the Chicago economy is one of the most important
assets of the metro area.
- FAVORABLE ECONOMIC TRENDS AND CHARACTERISTICS. As the nation's third most
populous metro area with 7.8 million residents, Chicago has the largest
employment base of any metro area in the nation, resulting in a diverse
industrial structure. As in other large industrial metro areas, Chicago's
diversity has been increasing due to its transformation from a
manufacturing to a service-based economy. Chicago is the financial,
distribution, and business center of the Midwest. The diversification has
accelerated during the current expansion as growth has been driven by
service industries.
Within the diverse service industry, business services have expanded
strongly throughout the metro area due to the concentration of headquarters
operations, as well as the growth of the computer software industry.
Employment in business services has ballooned 80% during the current
expansion and accounts for 27% of new jobs created (compared to 19%
nationally).
In addition to corporate operations, rising tourism activity is also an
indicator of the strength of Chicago's economy. Last year, 27.8 million
tourists visited the city, generating $8.4 billion for the area.
- REAL ESTATE MARKET CONDITIONS/WAREHOUSE SUPPLY & DEMAND. Favorable trends
in growth, business investment, utilization, and employment in the Midwest
have resulted in increased space demand and increasing rents. Although the
Company believes it is the largest owner and operator of
warehouse/industrial property in Greater Chicago, its portfolio
represented less than 2.4% of the market (based on square footage) as of
December 31, 1999. In a 1.25 billion square-foot industrial market, this
allows substantial opportunities for future growth.
Geographic concentration provides significant business efficiencies for the
Company. As a primary owner of warehouse/industrial property located in most
major Greater Chicago submarkets, the Company is able to market multiple
locations and buildings, and consequently has a competitive advantage in
securing leasing opportunities. Operating economies of scale resulting from
geographic concentration enhances the Company's ability to offer lower
occupancy costs to its tenants. The Company's focus on warehouse/industrial
properties in Greater Chicago also enables the expansion of its portfolio
without a corresponding increase in general and administrative expense.
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According to CB Richard Ellis, during 1999 Chicago's industrial property
market added 33.2 million square feet, the sixth consecutive year of
30.0 million square feet or greater gross absorption. In 1999, the overall
nominal industrial vacancy rate in Chicago was 7.5 percent.
FOCUS ON TENANT SATISFACTION. To become the landlord of choice in the
Greater Chicago Region, the Company strives to provide the highest possible
service to its tenants by addressing its tenants' occupancy needs and meeting
their evolving space requirements. Management believes tenant satisfaction,
resulting from the Company's "hands on" management approach, fuels rental
revenues by increasing tenant retention, minimizing re-letting expense and
facilitating rental increases. Management also believes that tenant satisfaction
creates profitable expansion and build-to-suit opportunities from existing
tenants.
The Company views tenant service as a key factor in its business and has
established tenant satisfaction as one of its primary corporate goals. To
develop its tenant franchise, the Company provides a variety of tenant services:
high quality, attractive space; promptly and fairly attending to tenant building
or billing concerns; obtaining the lowest possible utility, insurance and real
estate tax charges; and responding rapidly to expansion or space reconfiguration
requests.
The Company's tenant service strategy benefits from the size and
concentration of the Company's real estate holdings in Greater Chicago. As a
large owner of warehouse/industrial properties in a single geographic market,
the Company believes it can obtain for its tenants the benefits of bulk purchase
of goods and services. Management believes that minimizing tenants' occupancy
costs builds tenant loyalty and provides the Company with a significant
marketing advantage. In 1998, the Company formed CenterPoint Capital Funding,
LLC ("CenterPoint Capital") to offer its tenants funding for non-real estate
requirements, principally equipment, related to the occupancy and use of the
Company's properties. Funding originated by CenterPoint Capital is brokered in
the marketplace or fully funded by non-recourse debt. The Company believes
making available to its tenants and prospects a "turn-key" facility enhances
tenant satisfaction and ultimately the strength of the Company's franchise.
To motivate employees to provide the highest level of tenant service, the
Company has established a pay-for-performance compensation plan under which the
incentive pay of each participating employee depends in part on the results of
an annual tenant satisfaction survey, independently administered by CEL &
Associates and the Company's independent trustees. Employee incentive pay is
also dependent on the achievement of targeted per share funds from operations
and the results of a company-wide audit pertaining to the implementation of
internal processes and procedures, all of which the Company believes enhances
tenant service.
FOCUS ON VALUE-ADDED INVESTMENTS. The Company seeks to acquire
warehouse/industrial properties that have an initial cash yield greater than the
Company's long term cost of capital (currently estimated to be 9.5% to 10.5%),
that offer the best opportunity for cash flow growth, and that meet the
Company's investment criteria. Management has established strategies for
responding to every stage of the economic cycle, altering its investment
emphasis through the recovery, strong economy, and recession phases. This
ensures that when conditions change, the Company is well prepared to meet the
needs of its clients with minimal reaction time. All investment activities are
focused on creating value for its tenants by providing high quality and
efficient facilities at attractive rental rates.
- RECOVERY . ACQUISITIONS. During a recovering economy, CenterPoint acquires
existing leased generic industrial buildings that are suitable for a wide
variety of tenant uses. Traditionally, the seller is a company that is
growing rapidly and can better invest its capital in its own business
rather than in owning bricks and mortar. CenterPoint takes on that
responsibility and enhances the facility through professional management.
- STRONG ECONOMY . BUILD-TO-SUITS. During a strong economy, many tenants
want to expand their space. As a result of the comfort level achieved
through CenterPoint's long-term relationships with
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their tenants, as well as constant communication, the Company can
ascertain the specific requirements of the tenant's future home. It can
then be designed and built in the right location, on time, and within
budget.
- RECESSION . REDEVELOPMENTS. During a weaker economy, companies, on
average, want to shrink capacity. Therefore, CenterPoint has developed a
number of refinements within older, economically viable properties,
completely rebuilding an existing facility within a tenant's time frame.
By understanding their tenant's business needs, the Company can envision
the potential of a building and match it to the market.
In September, 1998, the Company developed an Airport Investments and
Development division to facilitate the expansion of its CenterPoint Airport
Centers(TM), which consist of air cargo facilities and other area airport
related investments. CenterPoint believes it is the pre-eminent private sector
provider, owner, and manager of air freight and airport-related facilities in
the Chicago region.
CenterPoint's land inventory consists of 521 acres in various submarkets
throughout the Chicago Market upon which 11 million square feet could be
developed. In addition, 1,800 acres of land at the former Joliet Arsenal is
under contract. Currently, this project is undergoing extensive economic,
environmental and property due diligence, including a determination of whether
government agencies will provide the necessary infrastructure to support the
industrial development of the property.
In addition to revenues from value-added investments, the Company earns fees
from the development of assets for purchase by tenants and institutions.
Typically, these transactions have yields below the Company's investment return
hurdle, but offer substantial profit opportunities relative to the level of
required capital and management time. The Company believes it is afforded these
opportunities as a consequence of the size of its existing portfolio and its
market penetration. The Company's fee development business has been, and is
expected to continue to be, a recurring source of revenue.
FOCUS ON OPERATIONS. The Company is a full service real estate company with
an entire staff responsible for managing its entire real estate portfolio. Six
regions, each serving a particular segment of Greater Chicago, are operated by a
team consisting of a regional manager, a property manager, administrative
assistant, maintenance, and accounting support personnel who are required to
visit each tenant, on site, at least once every 90 days.
The Company believes it derives its competitive advantage from its market
penetration, local expertise, tenant relationships and quality reputation with
the Greater Chicago area. Another competitive advantage is its "state of the
art" information system that fully integrates corporate, property management and
accounting systems, enabling the Company to monitor and project each asset and
its financial performance. The Company believes this long-term platform is
capable of supporting its operating and financial objectives as well as its
continued strong growth.
FOCUS ON CONSERVING CAPITAL. The Company seeks to create and maintain
substantial balance sheet capacity, which provides the Company flexibility to
opportunistically tap favorably priced capital to support accretive investments.
The Company believes it can maximize internal capital formation by
(i) investing at yields above its long term cost of capital; (ii) pursuing
current and future long-term debt financings and refinancings on an unsecured
basis; and (iii) redeploying its capital through asset sales. The Company will
seek, where possible, to sell properties in transactions intended to qualify as
tax-free exchanges under applicable provisions of the Internal Revenue Code and
re-deploy the proceeds of such sales in properties with higher yielding
opportunities where the Company believes significant value can be added.
Disposition activity is integral to the Company's funding strategy and gains on
sale are a regular and recurring component of the Company's revenues. However,
the rate of dispositions is correlated with market conditions and the timing of
gains depends on the progress of individual disposition negotiations, which
could lead to variability in the Company's results.
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TRANSACTIONS DURING 1999
During 1999, the Company accomplished the following:
1999 ACQUISITIONS AND DISPOSITIONS. During 1999, the Company acquired or
completed development of 64 warehouse/industrial properties totaling
5.1 million square feet and approximately $170 million in total investment in
owned properties. Also in 1999, the Company disposed of nine
warehouse/industrial properties totaling approximately 2.1 million square feet
for approximately $56.0 million from the owned portfolio. Two of the properties
purchased in 1999, totaling 0.3 million square feet, were also disposed of in
1999. In addition, during 1999 the Company demolished a building on a property,
totaling 1.7 million square feet, for future development on the land.
In 1999, the Company acquired 375 acres and contracted to acquire an
adjacent approximate 1800 acres on land at the former Joliet Arsenal for the
proposed development of a high speed distribution park, anchored by a major
intermodal rail facility. The park could include up to 17 million square feet of
industrial space and ancillary commercial and hotel development. The transaction
is contingent upon the successful conclusion of (i) transfer negotiations with
the Department of the Army, which operated the site as a munitions manufacturing
facility; (ii) an appropriate environmental remediation adequately protecting
the Company from liability and regulatory action related to for pre-existing
conditions; and (iii) sufficient public entitlements, including state and
federal infrastructure grants and tax increment financing, to ensure the
financial viability of the Company.
1999 SECURITIES ACTIVITIES:
- In January, February and August, 1999, 536,981, 784,305 and 76,802 of the
Company's Class B common shares, respectively, were converted by the
holder of the Class B common shares into 536,981, 784,305 and 76,802
common shares.
- In June, 1999, the Company completed a public offering of 1,000,000 shares
of 7.50% Series B Convertible Cumulative Redeemable Preferred Shares at
$50.00 per share. The shares have no maturity date, but may be redeemed by
the Company for $50.00 per share after June 30, 2004. The shares are
convertible into common shares at a conversion price of $43.50 per common
share, equivalent to a conversion rate of 1.1494 to 1. The net proceeds of
the offering, approximately $48.0 million, were used to refund outstanding
balances under the Company's unsecured line of credit.
- During the first nine months of 1999, $8.1 million of the Company's 8.22%
Convertible Subordinated Debentures were converted into 441,511 shares,
which constituted all of the debentures outstanding.
1999 FINANCINGS:
- On March 15, 1999 the Company issued $100 million, 7.142% senior unsecured
notes due March 15, 2004. The net proceeds of $99.3 million were used to
repay substantially all amounts then outstanding under the Company's
unsecured line of credit.
- On June 29, 1999, the Company refinanced the $20.5 million tax-exempt debt
secured by Lake Shore Dunes Apartments with a 35 year assumable, HUD
non-recourse tax-exempt and taxable debt for approximately the same amount
with a fixed interest rate of 6.195%. This refinancing resulted in the
write-off of $0.6 million in unamortized financing fees which are
reflected as an extraordinary item in the consolidated statements of
operations.
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SUBSEQUENT TRANSACTION
On January 12, 2000 the Company issued $150 million in senior unsecured
notes, due January 15, 2003 and bearing interest at 7.9%. The notes are lead by
Lehman Brothers Holdings, with A.G. Edwards & Sons, Inc., Banc of America
Securities LLC, Bank One Capital Markets, Inc., and First Union Securities
acting as co-managers. The net proceeds of the issuance of approximately
$149.1 million were used to pay down the Company's line of credit.
On January 21, 2000, the Company formed CenterPoint Venture LLC, a
co-investment entity between the Company's taxable affiliate and CalEast, an
investment vehicle between the California Public Employees Retirement System
(CalPERS) and Jones Lang LaSalle (JLL:NYSE). The $200 million fund has been
capitalized with equity commitments of $60 million by CalEast and $20 million by
CenterPoint, supported by a $120 million credit facility led by Bank One.
CenterPoint formed the venture to position, package and sell stabilized
industrial property investment opportunities routinely passed over by the
Company due to its more "value-added" investment focus. The venture intends to
offer these fully leased "institutional quality" assets to more fixed income
oriented investors, who lack the staff and/or day-to-day market penetration to
efficiently invest in Midwest industrial property. Unlike typical REIT joint
ventures, the partnership does not intend to hold assets for the long term.
EMPLOYEES
At February 24, 2000, the Company had 115 full-time employees. Of the
full-time employees, 98 are involved with property management, operations,
leasing and acquisition activities, nine are involved with general financial
administration, financing activities, reporting and acquisition analysis, and
eight are clerical workers.
ENVIRONMENTAL MATTERS
Under various federal, state and local laws, ordinances and regulations, a
current or previous owner, developer or operator of real estate may be liable
for the costs of removal or remediation of certain hazardous or toxic substances
at, on, under or in its property. The costs of removal or remediation of such
substances can be substantial. Such laws often impose liability without regard
to whether the owner or operator knew of, or was responsible for, the release or
presence of such hazardous substances. The presence of such substances may
adversely affect the owner's ability to sell such real estate or to borrow using
such real estate as collateral. The Company has not been notified by any
governmental authority of any non-compliance, liability or other claim in
connection with any of the properties owned or being acquired as of
December 31, 1999, and the Company is not aware of any environmental condition
with respect to any of its properties that is likely to have a material adverse
effect on the Company. The Company has subjected each of its properties to a
Phase I environmental assessment (which does not involve invasive procedures
such as soil sampling or ground water analysis) by independent consultants.
While some of these assessments have led to further investigation and sampling,
none of the environmental assessments has revealed, nor is the Company aware of,
any environmental liability (including asbestos-related liability) that the
Company believes would have a material adverse effect on its business, financial
condition or results of operations. No assurance can be given, however, that
these assessments and investigations reveal all potential environmental
liabilities, or that no prior owner or operator created any material
environmental condition not known to the Company or the independent consultants
or that future uses or conditions (including, without limitation, customer
actions or changes in applicable environmental laws and regulations) will not
result in unreimbursed costs relating to environmental liabilities.
8
<PAGE>
COMPETITION
All of the Company's existing properties are, and all of the properties that
it may acquire in the future are expected to be, located in areas that include
numerous other warehouse/industrial properties, many of which may be deemed to
be more suitable to a potential tenant than the Company's properties. The
resulting competition could have a material adverse effect on the Company's
ability to lease its properties and to increase the rentals charged on existing
leases.
INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in CenterPoint
Realty Services Corporation, an Illinois corporation ("CRS"). To maintain
compliance with limitations on income from business activities received by REITs
and their qualified REIT subsidiaries, the Company holds its interest in CRS in
the form of non-voting equity ownership, which qualifies CRS as an
unconsolidated taxable subsidiary.
As of December 31, 1999, the Company had advanced to CRS approximately
$98.9 million under a demand loan with interest rates ranging from 8% to 11.1%.
The proceeds of the loan were required for development projects. Principal and
interest are due upon demand. For further financial information relating the
CRS, see footnote 5 of the attached financial statements.
ITEM 2. PROPERTIES.
THE COMPANY'S WAREHOUSE/INDUSTRIAL PROPERTIES
At December 31, 1999, the Company's investment portfolio of
warehouse/industrial properties consisted of 175 properties totaling
approximately 25.7 million square feet, with a diverse base of more than 300
tenants engaged in a wide variety of businesses.
The Company's current properties are well located, with convenient access to
area interstate highway, rail, and air transportation. All of the properties,
both free standing and those located in CenterPoint Business Centers(TM), are
typically designed for warehousing and distribution. The properties have an
average project size of 112,535 square feet, and, on average, a tenant at an
industrial property occupies 81,292 rentable square feet. Although a number of
the industrial properties are single-tenant facilities, all are designed to be
divisible and to be leased by multiple tenants.
The leases for the warehouse/industrial properties currently owned by the
Company have terms between one and 15 years, with a weighted average original
lease term, weighted on current rent, of approximately 4.2 years as of
December 31, 1999. In addition, rent from no single tenant comprised more than
5% of the Company's total revenues as of December 31, 1999.
The Company's present warehousing and distribution properties, as well as
warehousing and distribution properties under contract, are designed for bulk
storage of materials and manufactured goods in buildings with interior heights
typically of 22 feet or more. All of the warehousing and distribution properties
have dock facilities for trucks as well as grade level loading for lighter
vehicles and vans. Typically, the distribution buildings are used for storage
and contain a minimal amount of office space.
9
<PAGE>
CENTERPOINT PROPERTIES TRUST
PROPERTY SUMMARY
AS OF 12/31/1999
<TABLE>
<CAPTION>
YEAR OF
ORIGINAL
CONSTRUCTION/
LAST
REDEVELOPMENT ANNUALIZED AVERAGE PERCENT
AND/OR BASE RENT RENT PER GLA OF TOTAL
PROPERTY ADDRESS CITY STATE EXPANSION (1) REVENUE SQ. FT. (2) SQ. FT. (3) GLA (4)
- ---------------- ----------------- -------- ------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 INVESTMENTS
MCHENRY COUNTY
1825 Pleasant Dr............. DeKalb IL 1990 $ 21,724 2.36 9,190 0.04%
875 Diggins Rd. (7).......... Harvard IL 1952 448,368 3.55 126,304 0.49%
N.E. SUBURBS
3400 W. Touhy (7)............ Skokie IL 1972 465,443 5.63 82,722 0.32%
3450 W. Touhy (7)............ Skokie IL 1972 595,812 4.41 135,172 0.53%
6800 N. McCormick (7)........ Lincolnwood IL 1955 1,108,404 3.28 338,000 1.32%
100 W. Whitehall............. Northlake IL 1999 1,014,606 4.03 251,584 0.98%
1555-9 N. Basswood........... Shaumburg IL 1984 200,844 6.06 33,157 0.13%
3602 N. Kennicott............ Arlington Heights IL 1999 438,980 4.66 94,300 0.37%
NORTHERN DUPAGE COUNTY
245 E. North Ave. (7)........ Carol Stream IL 1967 1,054,700 2.86 368,215 1.44%
733-747 Kimberly Dr.......... Carol Stream IL 1991 350,206 4.71 74,350 0.29%
CHICAGO O'HARE AREA
2440 Pratt Ave............... Elk Grove Village IL 1982 795,372 4.30 184,902 0.72%
1100-40 W. Thorndale......... Itasca IL 1984 202,080 4.21 48,000 0.19%
1020-50 W. Thorndale......... Itasca IL 1983 310,048 5.54 56,000 0.22%
780 AEC Dr................... Wood Dale IL 1987 75,312 3.91 19,237 0.07%
165 W Mittel Dr.............. Wood Dale IL 1984 104,250 5.72 18,225 0.07%
737 Fargo Ave. (7)........... Elk Grove Village IL 1975 283,332 3.68 77,015 0.30%
951 Fargo Ave. (7)........... Elk Grove Village IL 1973 403,632 3.88 103,987 0.41%
1500 W. Thorndale (7)........ Itasca IL 1991 195,480 7.85 24,902 0.10%
18801 West Irving Park Chicago
Drive...................... IL 1999 781,872 4.22 185,280 0.72%
O'Hare Express............... Phase B-2 IL 1999 1,800,828 11.74 153,345 0.60%
N.W. SUBURBS
Madison Street............... Willowbrook IL 1999 514,848 10.26 50,157 0.20%
317 W. Lake Street........... Northlake IL 1972 1,562,008 5.14 303,935 1.18%
7525 Industrial Dr........... Forest Park IL 1974 162,764 3.26 49,980 0.19%
7501 Industrial Dr........... Forest Park IL 1992 119,554 7.72 15,480 0.06%
WEST SUBURBS
425 N. Villa Ave............. Villa Park IL 1996 144,795 13.68 10,585 0.04%
CENTRAL KANE/N. DUPAGE
22 W 760 Poss St............. Glen Ellyn IL 1964 96,526 8.20 11,776 0.05%
1000 Swanson Dr.............. Batavia IL 1990 160,877 15.18 10,600 0.04%
1705-75 Hubbard Dr........... Batavia IL 1985 131,687 3.57 36,928 0.14%
900 Paramount Pkway.......... Batavia IL 1986 195,860 5.22 37,500 0.15%
918 Paramount Pkway.......... Batavia IL 1987 23,513 2.38 9,900 0.04%
902 Paramount Pkway.......... Batavia IL 1987 69,041 4.46 15,480 0.06%
950 Paramount Pkway.......... Batavia IL 1987 51,181 3.31 15,480 0.06%
934 Paramount Pkway.......... Batavia IL 1987 58,999 5.96 9,900 0.04%
1324-40 Paramount Pkway...... Batavia IL 1992 148,570 5.50 27,000 0.11%
FAR WEST SUBURBS
9714 S. Rt 69................ Naperville IL 1988 160,877 19.15 8,400 0.03%
1936 University Ln........... Lisle IL 1993 165,114 4.82 34,225 0.13%
9550 W. 55th Street.......... McCook IL 1999 878,470 5.28 166,320 0.65%
6110 East Ave................ Hodgkins IL 1979 136,412 18.95 7,198 0.03%
10047 Virginia Ave........... Chicago Ridge IL 1994 193,636 5.46 35,450 0.14%
SOUTHWEST SUBURBS
250 W. 63rd St............... Westmont IL 1967 160,876 15.71 10,240 0.04%
15 W 700 Frontage Rd......... Burr Ridge IL 1989 166,500 6.18 26,941 0.11%
261 Shore Dr................. Burr Ridge IL 1983 144,096 5.24 27,500 0.11%
281 Shore Dr................. Burr Ridge IL 1987 277,710 5.85 47,481 0.19%
1243 Naperville Dr........... Romeoville IL 1994 390,780 5.31 73,600 0.29%
1201-25 Naperville Dr........ Romoeville IL 1986 175,342 4.86 36,092 0.14%
1200-24 Independence......... Romoeville IL 1984 209,316 4.89 42,804 0.17%
1237 Naperville Dr........... Romeoville IL 1987 22,536 2.28 9,900 0.04%
1235 Naperville Dr........... Romeoville IL 1987 22,500 2.27 9,900 0.04%
1231-33 Naperville Dr........ Romoeville IL 1988 150,072 5.42 27,700 0.11%
<CAPTION>
PERCENT
OF GLA
LEASED
AS OF NO. OF PROPERTY
PROPERTY ADDRESS 12/31/99 TENANTS TYPE (5)
- ---------------- -------- -------- --------
<S> <C> <C> <C>
1999 INVESTMENTS
MCHENRY COUNTY
1825 Pleasant Dr............. 100% 1 ACQ
875 Diggins Rd. (7).......... 100% 1 ACQ
N.E. SUBURBS
3400 W. Touhy (7)............ 100% 5 ACQ
3450 W. Touhy (7)............ 100% 2 ACQ
6800 N. McCormick (7)........ 100% 1 ACQ
100 W. Whitehall............. 100% 2 BTS
1555-9 N. Basswood........... 100% 2 ACQ
3602 N. Kennicott............ 100% 1 ACQ
NORTHERN DUPAGE COUNTY
245 E. North Ave. (7)........ 100% 2 ACQ
733-747 Kimberly Dr.......... 78% 5 ACQ
CHICAGO O'HARE AREA
2440 Pratt Ave............... 100% 1 ACQ
1100-40 W. Thorndale......... 100% 1 ACQ
1020-50 W. Thorndale......... 100% 1 ACQ
780 AEC Dr................... 0% 0 ACQ
165 W Mittel Dr.............. 100% 1 ACQ
737 Fargo Ave. (7)........... 100% 1 ACQ
951 Fargo Ave. (7)........... 100% 1 ACQ
1500 W. Thorndale (7)........ 100% 1 ACQ
18801 West Irving Park
Drive...................... 100% 1 BTS
O'Hare Express............... 100% 2 BTS
N.W. SUBURBS
Madison Street............... 100% 1 ACQ
317 W. Lake Street........... 100% 2 ACQ
7525 Industrial Dr........... 100% 1 ACQ
7501 Industrial Dr........... 100% 1 ACQ
WEST SUBURBS
425 N. Villa Ave............. 100% 1 ACQ
CENTRAL KANE/N. DUPAGE
22 W 760 Poss St............. 100% 1 ACQ
1000 Swanson Dr.............. 100% 1 ACQ
1705-75 Hubbard Dr........... 100% 4 ACQ
900 Paramount Pkway.......... 100% 3 ACQ
918 Paramount Pkway.......... 0% 0 ACQ
902 Paramount Pkway.......... 100% 2 ACQ
950 Paramount Pkway.......... 100% 2 ACQ
934 Paramount Pkway.......... 100% 1 ACQ
1324-40 Paramount Pkway...... 100% 2 ACQ
FAR WEST SUBURBS
9714 S. Rt 69................ 100% 1 ACQ
1936 University Ln........... 100% 2 ACQ
9550 W. 55th Street.......... 75% 3 ACQ
6110 East Ave................ 100% 1 ACQ
10047 Virginia Ave........... 100% 2 ACQ
SOUTHWEST SUBURBS
250 W. 63rd St............... 100% 1 ACQ
15 W 700 Frontage Rd......... 100% 1 ACQ
261 Shore Dr................. 100% 1 ACQ
281 Shore Dr................. 100% 3 ACQ
1243 Naperville Dr........... 100% 5 ACQ
1201-25 Naperville Dr........ 100% 1 ACQ
1200-24 Independence......... 100% 1 ACQ
1237 Naperville Dr........... 100% 1 ACQ
1235 Naperville Dr........... 0% 0 ACQ
1231-33 Naperville Dr........ 100% 1 ACQ
</TABLE>
10
<PAGE>
CENTERPOINT PROPERTIES TRUST
PROPERTY SUMMARY
AS OF 12/31/1999
<TABLE>
<CAPTION>
YEAR OF
ORIGINAL
CONSTRUCTION/
LAST
REDEVELOPMENT ANNUALIZED AVERAGE PERCENT
AND/OR BASE RENT RENT PER GLA OF TOTAL
PROPERTY ADDRESS CITY STATE EXPANSION (1) REVENUE SQ. FT. (2) SQ. FT. (3) GLA (4)
- ---------------- ----------------- -------- ------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1227 Naperville Dr........... Romeoville IL 1988 55,488 5.60 9,900 0.04%
1229 Naperville Dr........... Romoeville IL 1988 50,688 5.12 9,900 0.04%
1277 Naperville Dr........... Romeoville IL 1992 124,464 4.61 27,000 0.11%
1265 Naperville Dr........... Romeoville IL 1996 401,256 5.47 73,385 0.29%
1287 Naperville Dr........... Romeoville IL 1997 320,357 4.64 69,000 0.27%
SOUTH SUBURBS
16951 State Street........... South Holland IL 1983 186,544 8.25 22,615 0.09%
1336 W. New Monee Rd......... Crete IL 1974 21,452 2.21 9,720 0.04%
N.W. INDIANA
101 45(th) Street............ Munster IN 1991 1,253,360 3.58 350,133 1.36%
MILWAUKEE COUNTY
70th & Washington............ West Allis WI 1999 478,620 4.22 113,400 0.44%
11000 Silver Springs Rd. Milwaukee
(7)........................ WI 1968 537,595 4.22 127,400 0.50%
3511 W. Green Tree........... Milwaukee WI 1969-71 380,730 2.21 172,650 0.67%
Richards & Vienna............ Milwaukee WI 1999 478,306 4.11 116,354 0.45%
RACINE COUNTY
1101 Sylvania................ Yorkville WI 1995 533,699 4.88 109,385 0.43%
SUBTOTAL..................... $ 22,168,311 4,763,181 18.62%
------------ ---------- -------
AVERAGE...................... $ 4.65 76,826
------ ----------
PREVIOUSLY OWNED PROPERTIES
LAKE COUNTY
2339-41 Ernie Krueger Waukegan
Court...................... IL 1990/1993 223,245 4.10 54,450 0.21%
620-630 Butterfield Road..... Mundelein IL 1990 154,511 6.38 24,237 0.09%
1300 Northpoint Road......... Waukegan IL 1994 338,351 5.21 65,000 0.25%
1 Wildlife Way............... Long Grove IL 1994 707,110 13.07 54,100 0.21%
1700 Butterfield Road........ Mundelein IL 1976 206,112 3.44 60,000 0.23%
3145 Central Avenue (6)...... Waukegan IL 1958 833,500 2.78 300,000 1.17%
28160 N Keith................ Lake Forest IL 1989 307,800 3.95 77,924 0.30%
28618 N. Ballard............. Lake Forest IL 1984 298,428 5.00 59,688 0.23%
28167 N Keith................ Lake Forest IL 1986 188,573 7.23 26,082 0.10%
N.W. COOK COUNTY
900 W. University Drive...... Arlington Heights IL 1974 662,115 7.68 86,254 0.34%
200 Champion Drive........... Northlake IL 1998 665,640 4.02 165,612 0.65%
543 W. Algonquin Rd. (6)..... Arlington Heights IL 1970 172,657 5.05 34,210 0.13%
1500 West Dundee Road (6).... Arlington Heights IL 1969 2,879,904 5.76 500,000 1.94%
N. KANE COUNTY
825 Tollgate Road............ Elgin IL 1989 426,540 5.13 83,122 0.32%
1575 Executive Drive......... Elgin IL 1980 165,862 5.34 31,050 0.12%
1925 Holmes Rd. (6).......... Elgin IL 1989 379,750 3.23 117,600 0.46%
CHICAGO O'HARE AREA
2743 Armstrong Court......... Des Plaines IL 1989 288,308 5.41 53,325 0.21%
1520 Pratt Avenue............ Elk Grove Village IL 1968 250,440 4.00 62,546 0.24%
1850 Greenleaf............... Elk Grove Village IL 1965 262,042 4.47 58,627 0.23%
1400 Busse Road.............. Elk Grove Village IL 1975 702,339 4.73 148,436 0.58%
1201 Lunt Avenue............. Elk Grove Village IL 1971 61,658 8.35 7,380 0.03%
5990 Touhy Avenue............ Niles IL 1960/1993 1,422,766 4.81 295,964 1.15%
245 Beinoris Drive........... Wood Dale IL 1988/1993 96,396 8.04 11,989 0.05%
745 Birginal Road............ Bensenville IL 1974 505,166 4.46 113,266 0.44%
2600 Elmhurst Road........... Elk Grove Village IL 1995 543,885 5.18 105,000 0.41%
10601 Seymour Avenue (6)..... Franklin Park IL 1963/1970 3,144,544 4.64 677,000 2.63%
850 Arthur Avenue (8)........ Elk Grove Village IL 1971/1973 187,395 4.41 42,490 0.17%
1100 Chase Avenue (7)........ Elk Grove Village IL 1980/1996 186,912 4.49 41,651 0.16%
<CAPTION>
PERCENT
OF GLA
LEASED
AS OF NO. OF PROPERTY
PROPERTY ADDRESS 12/31/99 TENANTS TYPE (5)
- ---------------- -------- -------- --------
<S> <C> <C> <C>
1227 Naperville Dr........... 100% 1 ACQ
1229 Naperville Dr........... 100% 1 ACQ
1277 Naperville Dr........... 78% 4 ACQ
1265 Naperville Dr........... 100% 2 ACQ
1287 Naperville Dr........... 100% 3 ACQ
SOUTH SUBURBS
16951 State Street........... 100% 3 ACQ
1336 W. New Monee Rd......... 100% 1 ACQ
N.W. INDIANA
101 45(th) Street............ 100% 1 ACQ
MILWAUKEE COUNTY
70th & Washington............ 100% 1 ACQ
11000 Silver Springs Rd.
(7)........................ 100% 1 ACQ
3511 W. Green Tree........... 96% 2 ACQ
Richards & Vienna............ 100% 1 ACQ
RACINE COUNTY
1101 Sylvania................ 100% 3 ACQ
SUBTOTAL.....................
AVERAGE......................
PREVIOUSLY OWNED PROPERTIES
LAKE COUNTY
2339-41 Ernie Krueger
Court...................... 100% 1 BTS
620-630 Butterfield Road..... 100% 1 BTS
1300 Northpoint Road......... 100% 1 ACQ
1 Wildlife Way............... 100% 1 RDV
1700 Butterfield Road........ 100% 1 ACQ
3145 Central Avenue (6)...... 100% 3 ACQ
28160 N Keith................ 100% 1 ACQ
28618 N. Ballard............. 100% 1 ACQ
28167 N Keith................ 100% 1 ACQ
N.W. COOK COUNTY
900 W. University Drive...... 100% 1 ACQ
200 Champion Drive........... 100% 1 BTS
543 W. Algonquin Rd. (6)..... 100% 2 ACQ
1500 West Dundee Road (6).... 67% 4 ACQ
N. KANE COUNTY
825 Tollgate Road............ 100% 2 ACQ
1575 Executive Drive......... 100% 1 ACQ
1925 Holmes Rd. (6).......... 76% 1 ACQ
CHICAGO O'HARE AREA
2743 Armstrong Court......... 100% 1 BTS
1520 Pratt Avenue............ 100% 1 ACQ
1850 Greenleaf............... 100% 1 ACQ
1400 Busse Road.............. 93% 12 ACQ
1201 Lunt Avenue............. 100% 1 ACQ
5990 Touhy Avenue............ 100% 3 RDV
245 Beinoris Drive........... 100% 1 BTS/RDV
745 Birginal Road............ 100% 1 ACQ
2600 Elmhurst Road........... 100% 1 BTS
10601 Seymour Avenue (6)..... 100% 3 ACQ/ RDV
850 Arthur Avenue (8)........ 100% 1 ACQ
1100 Chase Avenue (7)........ 100% 1 ACQ
</TABLE>
11
<PAGE>
CENTERPOINT PROPERTIES TRUST
PROPERTY SUMMARY
AS OF 12/31/1999
<TABLE>
<CAPTION>
YEAR OF
ORIGINAL
CONSTRUCTION/
LAST
REDEVELOPMENT ANNUALIZED AVERAGE PERCENT
AND/OR BASE RENT RENT PER GLA OF TOTAL
PROPERTY ADDRESS CITY STATE EXPANSION (1) REVENUE SQ. FT. (2) SQ. FT. (3) GLA (4)
- ---------------- ----------------- -------- ------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
2553 North Edgington......... Franklin Park IL 1967/1995 1,013,164 3.69 274,303 1.07%
875 Fargo Avenue............. Elk Grove Village IL 1980 424,596 5.15 82,368 0.32%
1800 Bruning Drive........... Itasca IL 1975/1978 1,230,588 6.09 202,000 0.79%
1501 Pratt Avenue............ Elk Grove Village IL 1973 600,576 3.95 151,900 0.59%
400 North Wolf Road.......... Northlake IL 1956/1997 5,281,281 3.46 1,527,593 5.94%
2801-2881 Busse Road......... Elk Grove Village IL 1997 1,118,556 4.46 251,076 0.98%
2525 Busse Road.............. Elk Grove Village IL 1975 3,507,983 3.95 888,335 3.46%
2701-2781 Busse Road......... Elk Grove Village IL 1997 1,278,331 5.09 251,076 0.98%
1951 Landmeier............... Elk Grove Village IL 1967 238,553 5.68 41,976 0.16%
1796 Sherwin................. Des Plaines IL 1964 631,055 6.63 95,220 0.37%
2021 Lunt Avenue (7)......... Elk Grove IL 1972 243,156 3.80 64,000 0.25%
2121 Touhy Avenue (7)........ Elk Grove IL 1962 508,008 3.95 128,600 0.50%
2001 S. Mt. Prospect Road Des Plaines
(7)........................ IL 1980 586,619 3.53 166,220 0.65%
755 Dillon Drive............. Wood Dale IL 1986 203,100 4.24 47,928 0.19%
201 Oakton................... Des Plaines IL 1984 682,165 4.26 160,102 0.62%
O'Hare Express-Phase A-2..... Chicago IL 1997 1,120,440 9.26 120,971 0.47%
O'Hare Express-Phase B-1..... Chicago IL 1997 2,189,148 12.75 171,685 0.67%
110-190 Old Higgins Road..... Des Plaines IL 1980 1,047,198 8.71 120,292 0.47%
CHICAGO NORTH
860 W. Evergreen............. Chicago IL 1890/1995 675,488 4.82 140,000 0.55%
1381 N. Northbranch (6)...... Chciago IL 1900 117,000 3.34 35,000 0.14%
N.W. SUBURBS
3601 N Runge................. Franklin Park IL 1962/1968 291,870 2.55 114,266 0.45%
3400 N Powell................ Franklin Park IL 1961/1980 415,260 3.61 115,097 0.45%
11100 W. Addison............. Franklin Park IL 1967 191,460 5.25 36,469 0.14%
11140 W Addison.............. Franklin Park IL 1961/1965 350,760 3.14 111,588 0.43%
3434 N. Powell............... Franklin Park IL 1960/1966 332,440 3.66 90,760 0.35%
1999 N Ruby.................. Melrose Park IL 1952/1962 273,944 2.54 107,852 0.42%
11550 W. King................ Franklin Park IL 1963 204,844 2.98 68,663 0.27%
WEST SUBURBS
2901 Centre Circle (7)....... Downers Grove IL 1979 158,223 7.51 21,056 0.08%
CENTRAL KANE/N. DUPAGE
1700 West Hawthorne (6)...... West Chicago IL 1959/1969 1,580,250 2.15 735,196 2.86%
1733 Downs Drive............. West Chicago IL 1975 468,018 3.22 145,528 0.57%
1645 Downs Drive............. West Chicago IL 1975 426,987 3.30 129,390 0.50%
425 South 37th Avenue (7).... St. Charles IL 1975 414,373 4.02 103,106 0.40%
1030 Fabyan Parkway.......... Batavia IL 1978 700,130 3.29 212,728 0.83%
FAR WEST SUBURBS
720 Frontenac................ Naperville IL 1991 565,464 3.29 171,935 0.67%
820 Frontenac................ Naperville IL 1988 510,046 3.32 153,604 0.60%
1120 Frontenac............... Naperville IL 1980/1994 578,915 3.76 153,902 0.60%
1510 Frontenac............... Naperville IL 1986 370,065 3.53 104,886 0.41%
1020 Frontenac............... Naperville IL 1980 274,131 2.75 99,684 0.39%
1560 Frontenac............... Naperville IL 1987 267,660 3.13 85,608 0.33%
1500 Shore Drive............. Naperville IL 1985 145,610 3.37 43,230 0.17%
800 Enterprise Court......... Naperville IL 1985 183,660 5.25 34,984 0.14%
1651 Frontenac............... Naperville IL 1978 126,833 4.17 30,414 0.12%
1150 Shore Road.............. Naperville IL 1985 128,282 4.25 30,184 0.12%
2764 Golfview................ Naperville IL 1985 105,353 5.26 20,022 0.08%
920 Frontenac................ Naperville IL 1987 426,199 3.52 121,200 0.47%
1250 Carolina Drive.......... West Chicago IL 1988 514,500 3.43 150,000 0.58%
825-845 Hawthorne Lane (6)... West Chicago IL 1974 530,949 3.34 158,772 0.62%
16400 West 103rd Street Lemont
(7)........................ IL 1983/1995 299,616 4.71 63,612 0.25%
1 Allsteel Drive (7)......... Aurora IL 1960 2,381,830 2.36 1,008,120 3.92%
2727 West Diehl Road......... Naperville IL 1997 2,047,896 4.65 440,343 1.72%
<CAPTION>
PERCENT
OF GLA
LEASED
AS OF NO. OF PROPERTY
PROPERTY ADDRESS 12/31/99 TENANTS TYPE (5)
- ---------------- -------- -------- --------
<S> <C> <C> <C>
2553 North Edgington......... 76% 3 ACQ
875 Fargo Avenue............. 100% 1 ACQ
1800 Bruning Drive........... 100% 1 ACQ
1501 Pratt Avenue............ 100% 2 ACQ
400 North Wolf Road.......... 100% 4 ACQ
2801-2881 Busse Road......... 100% 2 BTS
2525 Busse Road.............. 91% 6 ACQ
2701-2781 Busse Road......... 100% 2 BTS
1951 Landmeier............... 100% 2 ACQ
1796 Sherwin................. 100% 2 ACQ
2021 Lunt Avenue (7)......... 100% 1 ACQ
2121 Touhy Avenue (7)........ 100% 1 ACQ
2001 S. Mt. Prospect Road
(7)........................ 100% 1 ACQ
755 Dillon Drive............. 0% 0 ACQ
201 Oakton................... 100% 3 ACQ
O'Hare Express-Phase A-2..... 100% 2 BTS
O'Hare Express-Phase B-1..... 100% 1 BTS
110-190 Old Higgins Road..... 68% 6 ACQ
CHICAGO NORTH
860 W. Evergreen............. 100% 1 ACQ
1381 N. Northbranch (6)...... 100% 1 ACQ
N.W. SUBURBS
3601 N Runge................. 100% 1 ACQ
3400 N Powell................ 100% 1 ACQ
11100 W. Addison............. 100% 1 ACQ
11140 W Addison.............. 100% 1 ACQ
3434 N. Powell............... 100% 1 ACQ
1999 N Ruby.................. 100% 1 ACQ
11550 W. King................ 100% 1 ACQ
WEST SUBURBS
2901 Centre Circle (7)....... 100% 1 ACQ
CENTRAL KANE/N. DUPAGE
1700 West Hawthorne (6)...... 100% 1 ACQ
1733 Downs Drive............. 100% 1 ACQ
1645 Downs Drive............. 100% 1 ACQ
425 South 37th Avenue (7).... 100% 1 ACQ
1030 Fabyan Parkway.......... 100% 1 ACQ
FAR WEST SUBURBS
720 Frontenac................ 100% 2 ACQ
820 Frontenac................ 100% 1 ACQ
1120 Frontenac............... 100% 1 ACQ
1510 Frontenac............... 100% 1 ACQ
1020 Frontenac............... 0% 0 ACQ
1560 Frontenac............... 100% 2 ACQ
1500 Shore Drive............. 100% 2 ACQ
800 Enterprise Court......... 100% 1 ACQ
1651 Frontenac............... 100% 1 ACQ
1150 Shore Road.............. 100% 1 ACQ
2764 Golfview................ 100% 1 ACQ
920 Frontenac................ 100% 1 ACQ
1250 Carolina Drive.......... 100% 1 BTS
825-845 Hawthorne Lane (6)... 100% 5 ACQ
16400 West 103rd Street
(7)........................ 100% 1 ACQ
1 Allsteel Drive (7)......... 99% 2 ACQ
2727 West Diehl Road......... 100% 1 BTS
</TABLE>
12
<PAGE>
CENTERPOINT PROPERTIES TRUST
PROPERTY SUMMARY
AS OF 12/31/1999
<TABLE>
<CAPTION>
YEAR OF
ORIGINAL
CONSTRUCTION/
LAST
REDEVELOPMENT ANNUALIZED AVERAGE PERCENT
AND/OR BASE RENT RENT PER GLA OF TOTAL
PROPERTY ADDRESS CITY STATE EXPANSION (1) REVENUE SQ. FT. (2) SQ. FT. (3) GLA (4)
- ---------------- ----------------- -------- ------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SOUTHWEST SUBURBS
5619-25 West 115th Street.... Alsip IL 1974 1,824,462 4.60 396,979 1.55%
7001 Adams Street............ Willowbrook IL 1994 201,324 7.95 25,324 0.10%
6600 River Road.............. Hodgkins IL 1968 1,561,676 2.48 630,410 2.46%
6464 West 51st Street........ Forest View IL 1973 479,900 2.30 208,713 0.81%
6500 West 51st Street........ Forest View IL 1975 503,390 2.72 185,295 0.72%
7447 South Central Avenue.... Bedford Park IL 1975 342,840 2.90 118,218 0.46%
7525 South Sayre............. Bedford Park IL 1981 523,762 4.25 123,178 0.48%
11701 South Central Ave...... Alsip IL 1970 954,472 3.21 297,207 1.16%
11601 South Central Ave...... Alsip IL 1970 650,700 2.51 259,000 1.01%
7633 S. Sayre................ Bedford Park IL 1968 91,200 6.50 14,039 0.05%
7201 S. Lemington............ Bedford Park IL 1958 360,000 3.37 106,800 0.42%
7200 S. Mason................ Bedford Park IL 1974 622,560 3.00 207,345 0.81%
6000 W. 73rd................. Bedford Park IL 1974 417,034 2.82 148,091 0.58%
7400 S. Narragansett Ave Bedford Park
(6)........................ IL 1976 525,038 3.01 174,720 0.68%
6751-55 South Sayre Avenue... Bedford Park IL 1974 704,314 2.90 242,690 0.95%
11801 S. Central............. Alsip IL 1985 853,152 3.00 284,386 1.11%
CHICAGO SOUTH
900 East 103rd Street........ Chicago IL 1910/1990 1,728,622 3.00 575,462 2.24%
3133 East 106th (6).......... Chicago IL 1971 305,019 3.81 80,076 0.31%
4400 South Kolmar (6)........ Chicago IL 1966 276,000 3.00 92,000 0.36%
SOUTH SUBURBS
21399 Torrence Avenue........ Sauk Village IL 1987 801,048 2.15 372,835 1.45%
2601 Bond Street............. University Park IL 1975 224,000 3.50 64,000 0.25%
FAR S.W. SUBURBS
1319 Marquette Drive......... Romeoville IL 1990 232,692 6.40 36,349 0.14%
1355 Enterprise Drive (6).... Romeoville IL 1980 235,070 1.93 122,100 0.48%
2301 North Route 30.......... Plainfield IL 1972 900,600 3.19 282,679 1.10%
N.W. INDIANA
425 West 151st Street........ East Chicago IN 1913/1991 1,152,548 3.30 349,236 1.36%
201 Mississippi Street....... Gary IN 1945/1988 4,047,175 3.85 1,052,173 4.09%
1827 North Bendix Drive South Bend
(6)........................ IN 1964/1990 582,415 2.92 199,730 0.78%
MILWAUKEE COUNTY
7501 North 81st Street....... Milwaukee WI 1987 621,000 3.38 183,958 0.72%
5521 Mill Road............... Milwaukee WI 1960 138,022 3.11 44,435 0.17%
2003-2201 S. 114th Street.... West Allis WI 1965 680,009 2.79 243,350 0.95%
1475 S. 101st................ West Allis WI 1969 199,833 4.25 46,973 0.18%
4700 Ironwood Drive.......... Franklin WI 1998 418,880 3.40 123,200 0.48%
KENOSHA COUNTY
8901 102nd Street............ Pleasant Prairie WI 1990 649,532 6.15 105,637 0.41%
8200 100th Street............ Pleasant Prairie WI 1990 568,361 3.83 148,472 0.58%
RACINE COUNTY
1333 Grandview Drive......... Yorkville WI 1997 796,572 3.79 210,000 0.82%
SUBTOTAL..................... $ 79,397,745 20,894,907 81.38%
------------ ---------- -------
AVERAGE...................... $ 3.80 184,911 0.72%
----------
GRAND TOTAL ALL WAREHOUSE/INDUSTRIAL PROPERTIES........... $101,566,056 25,658,088 100.00%
------------ ----------
AVERAGE ALL WAREHOUSE/INDUSTRIAL PROPERTIES............... $ 580,377 112,535(9)
------------ ----------
<CAPTION>
PERCENT
OF GLA
LEASED
AS OF NO. OF PROPERTY
PROPERTY ADDRESS 12/31/99 TENANTS TYPE (5)
- ---------------- -------- -------- --------
<S> <C> <C> <C>
SOUTHWEST SUBURBS
5619-25 West 115th Street.... 100% 4 RDV
7001 Adams Street............ 100% 1 BTS
6600 River Road.............. 100% 1 ACQ
6464 West 51st Street........ 81% 3 ACQ
6500 West 51st Street........ 100% 1 ACQ
7447 South Central Avenue.... 100% 1 ACQ
7525 South Sayre............. 100% 2 ACQ
11701 South Central Ave...... 100% 2 ACQ
11601 South Central Ave...... 100% 1 ACQ
7633 S. Sayre................ 100% 1 ACQ
7201 S. Lemington............ 100% 1 ACQ
7200 S. Mason................ 100% 1 ACQ
6000 W. 73rd................. 100% 2 ACQ
7400 S. Narragansett Ave
(6)........................ 100% 1 ACQ
6751-55 South Sayre Avenue... 100% 1 ACQ
11801 S. Central............. 100% 1 ACQ
CHICAGO SOUTH
900 East 103rd Street........ 59% 7 RDV
3133 East 106th (6).......... 100% 1 ACQ
4400 South Kolmar (6)........ 100% 1 ACQ
SOUTH SUBURBS
21399 Torrence Avenue........ 100% 1 ACQ
2601 Bond Street............. 100% 1 ACQ
FAR S.W. SUBURBS
1319 Marquette Drive......... 100% 2 BTS
1355 Enterprise Drive (6).... 100% 1 ACQ
2301 North Route 30.......... 42% 1 ACQ
N.W. INDIANA
425 West 151st Street........ 95% 9 RDV
201 Mississippi Street....... 98% 14 RDV
1827 North Bendix Drive
(6)........................ 100% 1 ACQ
MILWAUKEE COUNTY
7501 North 81st Street....... 100% 1 ACQ
5521 Mill Road............... 100% 1 ACQ
2003-2201 S. 114th Street.... 100% 2 ACQ
1475 S. 101st................ 100% 1 ACQ
4700 Ironwood Drive.......... 100% 1 BTS
KENOSHA COUNTY
8901 102nd Street............ 100% 1 ACQ
8200 100th Street............ 100% 1 ACQ
RACINE COUNTY
1333 Grandview Drive......... 100% 1 ACQ
SUBTOTAL.....................
AVERAGE......................
GRAND TOTAL ALL WAREHOUSE/IND 303
AVERAGE ALL WAREHOUSE/INDUSTR 96%
</TABLE>
- ------------------------------
(1) The first year is the year of original construction. The second date, where
applicable, is the year of last redevelopment and/or expansion.
(2) Determined by dividing annualized base rent revenue by GLA.
(3) "GLA" means gross leasable area.
(4) Determined as a percent of the total GLA for the warehouse/industrial
properties.
(5) ACQ refers to an existing leased property acquired by the Company, BTS
refers to a build-to-suit property and RDV refers to a redevelopment
property.
(6) Properties purchased through a sale-leaseback to the previous owner have no
operating history relevant to third party usage.
(7) Properties purchased from an owner occupant have no prior operating history
relevant to third party usage.
(8) The seller of this property holds a note payable by the Company in the
principal amount of $575,000 and secured by this property.
(9) Average size equals total GLA divided by the number of warehouse/industrial
properties.
13
<PAGE>
LEASE EXPIRATIONS
The following table shows as of December 31, 1999 scheduled lease
expirations for the Company's warehouse/industrial properties commencing
January 1, 2000 and for the next ten years, assuming that no tenants exercise
renewal options:
<TABLE>
<CAPTION>
AVERAGE % OF TOTAL
BASE RENT PROPERTIES % OF 1999
GLA OF ANNUALIZED PER SQ. FT. GLA BASE RENT
NO. OF EXPIRING BASE RENT UNDER REPRESENTED REPRESENTED
LEASES LEASES EXPIRING EXPIRING BY EXPIRING BY EXPIRING
EXPIRING (SQ. FT.) LEASES LEASES LEASES LEASES
-------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDING DECEMBER 31
- ------------------------------------
2000................................ 79 3,743,330 $14,340,726 $3.83 14.59% 14.12%
2001................................ 48 3,356,562 11,719,602 3.49 13.08% 11.54%
2002................................ 49 4,018,206 14,031,747 3.49 15.66% 13.82%
2003................................ 36 2,067,200 8,950,768 4.33 8.06% 8.81%
2004................................ 27 3,205,299 12,041,126 3.76 12.49% 11.86%
2005................................ 17 1,803,648 6,018,971 3.34 7.03% 5.93%
2006................................ 19 2,275,684 8,271,249 3.63 8.87% 8.14%
2007................................ 6 569,950 4,189,757 7.35 2.22% 4.13%
2008................................ 11 1,649,711 7,495,911 4.54 6.43% 7.38%
2009................................ 8 671,775 3,671,754 5.47 2.62% 3.62%
</TABLE>
OPTIONS TO PURCHASE GRANTED TO CERTAIN TENANTS
The following warehouse/industrial properties of the Company are subject to
purchase options granted to certain tenants as follows:
- 8901 102nd Street, Pleasant Prairie, Wisconsin is subject to an option to
purchase exercisable on February 28, 2006 at a purchase price equal to 95%
of "fair market value," determined by the average of three independent
appraisals.
- 1700 West Hawthorne, West Chicago, Illinois is subject to a purchase
option exercisable between December 1, 2002, and December 1, 2003 (with
the closing to occur during December, 2004 regardless of when the option
is exercised) at a price of $15,033,636. If the property is expanded, at
tenant's option, the purchase price will be $15,233,636, plus the cost of
construction.
- 2600 Elmhurst Road, Elk Grove Village, Illinois is subject to an option
exercisable on or before July 31, 2000 to purchase the premises during
January of 2001 for a purchase price of $5,265,000.
- 21399 Torrence Avenue, Sauk Village, Illinois is subject to an option
exercisable on or between December 1, 1998 and May 31, 2000 and again
between December 31, 2000 and May 31, 2002 to purchase the property on
November 30, 2000 for $8,941,920 or November 30, 2002 for $9,314,500.
In each case, the option price exceeds the Company's current net book value
for each such property. The Company believes that even if all of the purchase
options are exercised, such exercise will not have an adverse effect upon the
operations of the Company or its ability to maintain its distribution policy. In
addition, if any purchase option is exercised, the Company intends to either
distribute the cash proceeds to stockholders or reinvest the cash proceeds in
additional properties. However, no assurance can be given that such distribution
or reinvestment will occur.
In addition to purchase options, the Company has granted to tenants of
certain properties a right of first refusal (in the event the Company has
received an unsolicited offer from a third party to purchase the property which
the Company desires to accept) or a right of first offer (in the event the
Company has not received an unsolicited third party offer for the property but
desires to entertain an offer). One Wildlife
14
<PAGE>
Way, Long Grove, Illinois, 8901 102nd Street, Pleasant Prairie, Wisconsin, 825
Tollgate Road, Elgin, Illinois, 1651 Frontenac Road, Naperville, Illinois, 7001
Adams Street, Willowbrook, Illinois, 6312 W. 74th Street, Bedford Park,
Illinois, 11440 W. Addison, Franklin Park, Illinois and 7633 S. Sayre, Bedford
Park, Illinois. The properties subject to one or both of these rights include
the existence of those rights will not compel the Company to sell a property for
a price less than the price the Company desires to accept.
THE COMPANY'S OTHER PROPERTIES AND INVESTMENTS
In addition to its warehouse/industrial properties, the Company owns three
retail properties having approximately 61,000 square feet of GLA, one office
building having approximately 94,000 square feet of GLA in which the offices of
the management company use approximately 48,000 square feet and the remaining
portion is leased, one 682-unit apartment complex located at 440 North Lake
Street, Miller, Indiana and known as Lakeshore Dunes Apartments, and two fully
leased parking lots. The Company does not intend to acquire properties other
than warehouse/industrial properties in the future. The Company believes,
however, that these properties are favorable investments for the Company, adding
to distributable cash flow per share. The Company also has investments in 3
uncompleted build-to-suit properties totaling approximately 0.7 million square
feet, and has investments in 3 land parcels totaling 18.02 acres.
The following table sets forth certain information regarding the Company's
retail properties:
<TABLE>
<CAPTION>
PERCENT
OF
YEAR OF GLA
ACQUISITION/ PERCENT (SQ. FT.) AVERAGE
LAST YEAR OF OF LEASED RENT
REDEVELOPMENT ORIGINAL TOTAL TOTAL AS OF ANNUALIZED PER NUMBER
OF CONSTRUCTION/ GLA GLA DECEMBER BASE RENT SQ. FT. OF
EXPANSION (1) EXPANSION (2) (3) 31, 1999 REVENUE (4) TENANTS
-------------- ------------- -------- -------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4-48 Barring Rd.
Streamwood, IL.............. 1994 1991 38,633 63.1% 69.3% $367,332 $ 9.51 8
84-120 McHenry Rd.
Wheeling, IL................ 1990/1993 1989 20,535 33.6% 79.9% 277,776 13.52 7
351 North Rohlwing Rd.
Itasca, IL.................. 1993 1989 2,015 3.3% 100.0% 61,440 30.49 1
------ ----- --
TOTAL....................... 61,183 100.0% $706,548 $11.55 16
====== ===== ======== ====== ==
</TABLE>
- ------------------------------
(1) First date is year of acquisition; second date is year of most recent
redevelopment or expansion. If only one date appears, it is the acquisition
date; the property has not been redeveloped or expanded.
(2) "GLA" means gross leasable area.
(3) Determined as a percent of the total GLA for the retail properties.
(4) Determined by dividing annualized base rent revenue by GLA.
The tenants of the Company's retail properties are typical of tenants in
smaller retail centers in Greater Chicago. Generally, the leases require tenants
to pay a fixed base, or "minimum" rent, subject to scheduled increases. Tenants
generally are required to pay their proportionate share of common area
maintenance charges, insurance expenses, operating expenses and real estate
taxes or their portion of these expenses is included in their base rent.
15
<PAGE>
The following table shows as of December 31, 1999 scheduled lease
expirations for the retail properties commencing January 1, 2000, and for the
next ten years, assuming no tenants exercise renewal options.
<TABLE>
<CAPTION>
GLA OF ANNUALIZED % OF TOTAL RETAIL % OF 1999 RETAIL
NO. OF EXPIRING BASE RENT AVERAGE BASE RENT PROPERTIES GLA BASE RENT
LEASES LEASES EXPIRING PER SQ. FT. UNDER REPRESENTED BY REPRESENTED BY
YEAR ENDING DECEMBER 31 EXPIRING (SQ. FT.) LEASES EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES
- ----------------------- -------- --------- ---------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
2000...................... 2 5,750 $ 78,792 $13.70 9.40% 11.15%
2001...................... 4 9,380 102,936 10.97 15.33% 14.57%
2002...................... 2 3,937 64,176 16.30 6.43% 9.08%
2003...................... 2 6,546 62,736 9.58 10.70% 8.88%
2004...................... 0 0 0 0 0% 0%
2005...................... 3 7,914 197,580 24.97 12.93% 27.96%
2006...................... 3 9,650 138,888 14.39 15.77% 19.66%
2007...................... 0 0 0 0 0% 0%
2008...................... 0 0 0 0 0% 0%
2009...................... 1 2,015 61,440 30.49 3.29% 8.7%
</TABLE>
Lakeshore Dunes Apartments, which was completed in 1971 and renovated
between 1991 and September, 1993 is comprised of 682 units in 15 contiguous
buildings located on an approximately 20.12 acre site in Miller, Indiana, a
suburb of Gary, Indiana, located on Lake Michigan. The property is bordered by
the Indiana Dunes National Park and by the Calumet Lagoon and is less than
one-half mile from public beaches. Amenities of the complex include redesigned
units with updated kitchens and appliances, carpeting, lighting, windows and
mini-blinds, bathrooms and fixtures, elevators, laundry rooms, play lots, tennis
courts, picnic areas, a new outdoor pool, roads, parking areas, landscaping and
a 24-hour safety patrol and card access system. The community center also serves
as the management and leasing office. The Company maintains a complete
management, leasing and maintenance team at the property.
As of December 31, 1999, 636 of the units, or 93%, were leased, providing
for a monthly base rent of approximately $312,000 or an annualized base rent of
$3,744,000. Current leases provide for customary one year terms and require that
tenants pay a fixed rent based on the type of apartment and square footage.
Tenants are responsible for utilities. The following table sets forth the
apartment mix at this property as of December 31, 1999:
<TABLE>
<CAPTION>
NUMBER OF UNITS TOTAL GLA AVERAGE GLA PER AVERAGE MONTHLY
TYPE OF APARTMENT IN COMPLEX (SQ. FT.) APARTMENT (SQ. FT.) RENT PER UNIT
- ----------------- --------------- --------- ------------------- ---------------
<S> <C> <C> <C> <C>
Studio............................... 48 20,208 421 $368
One Bedroom.......................... 171 99,009 579 448
Deluxe One Bedroom................... 43 29,283 681 468
Two Bedroom.......................... 390 308,100 790 515
Three Bedroom........................ 30 28,500 950 665
--- -------
TOTALS:.............................. 682 485,100
=== =======
</TABLE>
As of the end of 1999, the Company owned two parking lots within industrial
parks. The first parking lot, purchased in 1996, is leased through January 2006
for an annual minimum rent of $26,400. The second parking lot, purchased in
1999, is leased through 2002 for a current annual minimum rent of $41,605.
16
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Company is not subject to or involved in, nor is the Company aware of,
any pending or threatened litigation which could be material to the financial
position or results of operations of the Company. For a description of
remediation activities currently underway at certain of the Company's
properties, see "Environmental Matters" under Item 1 above.
ITEM 4. SUBMISSION OF CERTAIN ITEMS TO A VOTE OF SECURITY HOLDERS.
None.
17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
(a) The Company's common shares are listed and traded on the New York Stock
Exchange under the symbol "CNT." The following table sets forth, for the periods
indicated, the high and low sale prices of the common shares and the cash
distributions paid per common share in such periods.
<TABLE>
<CAPTION>
CASH
QUARTERLY PERIOD ENDING HIGH LOW DISTRIBUTION/SHARE
- ----------------------- ----------- ------------ ------------------
<S> <C> <C> <C>
March 31, 1998.............................................. $36 1/16 $32 3/4 $0.438
June 30, 1998............................................... 35 5/8 31 7/16 0.438
September 30, 1998.......................................... 36 7/16 30 11/16 0.438
December 31, 1998........................................... 36 7/8 32 1/4 0.438
March 31, 1999.............................................. 34 1/16 31 1/16 0.475
June 30, 1999............................................... 37 5/8 31 1/4 0.475
September 30, 1999.......................................... 37 1/4 31 3/8 0.475
December 31, 1999........................................... 36 3/8 31 3/4 0.475
</TABLE>
(b) As of March 15, 2000, there were approximately 151 holders of record of
the Company's common shares.
(c) During 1999, the Company paid dividends on the Class B shares in 1999
and 1998 of $1.46 per share and $1.80 per share, respectively. Also, all
class B common shares were converted into common shares in 1999.
The following factors, among others, will affect the future availability of
funds for distribution: (i) scheduled increases in base rents under existing
leases, (ii) changes in minimum base rents attributable to replacement of
existing leases with new or replacement leases and (iii) restrictions under
certain covenants of the Company's unsecured credit facility co-led by Bank One
and Lehman Brothers Holdings, Inc.
ITEM 6. SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth, on a historical basis, Selected Financial
Data for the Company. The following table should be read in conjunction with the
historical financial statements of the Company and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION," both included
elsewhere in this Form 10-K.
The Selected Financial Data for the Company is not necessarily indicative of
the actual financial position of the Company or results of operations at any
future date or for a future period.
18
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA, RATIOS AND NUMBER OF PROPERTIES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1999 1998 1997 1996 1995
---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues................................................ $ 138,936 $ 107,226 $ 85,588 $ 63,330 $ 46,952
Expenses:
Operating expenses excluding depreciation and
Amortization (1)...................................... (41,185) (35,700) (29,182) (20,751) (14,774)
Depreciation and other amortization..................... (27,351) (21,418) (15,278) (10,648) (8,456)
General and administrative.............................. (4,258) (4,041) (3,105) (2,567) (2,150)
Interest expense:
Interest incurred, net................................ (19,954) (13,659) (10,071) (9,865) (11,562)
Amortization of deferred financing costs.............. (1,905) (1,817) (800) (1,127) (1,150)
---------- --------- --------- --------- --------
Operating income.......................................... 44,283 30,591 27,152 18,372 8,860
Gain on real estate..................................... 5,086 1,672
Other income (expense) (2).............................. (27) (15) 108 (100) (16)
---------- --------- --------- --------- --------
Income before extraordinary item.......................... 49,342 32,248 27,260 18,272 8,844
Extraordinary item...................................... (582) (3,331) (632)
---------- --------- --------- --------- --------
Net income................................................ 48,760 32,248 27,260 14,941 8,212
Preferred dividend........................................ (8,318) (6,360) (901) (947) (1,002)
---------- --------- --------- --------- --------
Net income available to common shareholders............... 40,442 25,888 26,359 13,994 7,210
Per share net income available to common Shareholders
before extraordinary item:
Basic................................................... 2.02 1.30 1.41 1.25 0.85
Diluted................................................. 1.99 1.29 1.39 1.22 0.84
Per share net income available to common Shareholders:
Basic................................................... 1.99 1.30 1.41 1.01 0.78
Diluted................................................. 1.96 1.29 1.39 0.99 0.77
Balance Sheet Data (End of Period):
Investment in real estate (before accumulated
depreciation and amortization)........................ $ 971,897 $ 768,857 $ 662,275 $ 429,034 $317,460
Net investment in real estate........................... 886,489 706,600 617,923 398,828 295,884
Total assets............................................ 1,083,427 817,606 699,055 451,206 334,866
Total debt.............................................. 554,348 364,718 270,735 177,349 145,271
Shareholders' equity.................................... 466,604 407,459 387,756 248,114 168,320
Other Data:
Funds from Operations (3)............................... $ 69,003 $ 46,777 $ 42,684 $ 30,445 $ 20,492
EBITDA (4).............................................. 98,552 69,142 53,409 39,912 30,013
Net cash flow:
Operating activities.................................. 75,398 57,804 39,411 29,552 16,473
Investing activities.................................. (272,361) (118,706) (245,336) (111,554) (82,556)
Financing activities.................................. 199,993 59,725 206,507 80,194 68,541
Distributions....................................... 46,893 41,233 32,046 24,065 15,953
Return of capital portion of distribution............... 9,848 3,711 3,916 12,280 8,554
Number of properties included in operating results
(5)................................................... 182 126 101 76 69
Ratio of earnings to fixed charges...................... 2.97 2.70 3.24 2.33 1.63
Ratio of earnings to combined fixed charges and
preferred dividends................................... 2.20 1.98 3.01 2.15 1.51
</TABLE>
- ------------------------------
(1) Operating expenses include real estate taxes, repairs and maintenance,
insurance and utilities and exclude interest, depreciation and amortization
and general and administrative expenses.
(2) Other income (expense) includes gains and losses on property dispositions in
1997 and 1996, and other miscellaneous operating and non-operating items.
(3) 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 and gains on the sale of real estate. The Company includes in its
calculation of FFO the gains (or losses) realized from its disposition
activity, measured as the sale price, net of selling costs, less book value
and adding back accumulated depreciation. The disposition of stabilized
19
<PAGE>
properties, and the recycling of capital and profits to new "value added"
investments, is fundamental to the Company's business focus and funding
strategy.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net income available to common Shareholders................. $40,442 $25,888 $26,359 $14,941 $ 8,212
Extraordinary item.......................................... 582 3,331 632
Depreciation and amortization............................... 27,351 21,418 15,278 10,648 8,456
Amortization of deferred financing costs, Debentures........ 23 38 48 67 135
Convertible subordinated debenture interest................. 451 783 999 1,385 3,057
Depreciation of properties sold............................. (2,335) (1,350)
Depreciation from unconsolidated subsidiary, net of tax..... 553
Depreciation on sold assets from unconsolidated Subsidiary,
net of tax................................................ (22)
Convertible preferred dividend.............................. 1,958
Loss on disposition of properties........................... -- -- -- 73 --
------- ------- ------- ------- -------
Funds from Operations....................................... $69,003 $46,777 $42,684 $30,445 $20,492
======= ======= ======= ======= =======
</TABLE>
Management of the Company believes that Funds from Operations is helpful to
investors as a measure of the performance of equity REIT shares because,
along with cash flows from operating activities, financing activities and
investing activities, it provides investors an understanding of the ability
of the Company to incur and service debt and to make capital expenditures.
Funds from Operations does not represent cash flow from operations as
defined by generally accepted accounting principles ("GAAP"), should not be
considered by the reader as an alternative to net income as an indicator of
the Company's operating performance or to cash flows as a measure of
liquidity, and is not indicative of cash available to fund all cash flow
needs. Investors are cautioned that Funds from Operations, as calculated by
the Company, may not be comparable to similarly titled but differently
calculated measurers for other REITs.
(4) Earnings before interest, income taxes, depreciation and amortization.
Management believes that EBITDA is helpful to investors as an indication of
property operations, because it excludes costs of financing and non-cash
depreciation and amortization amounts. EBITDA does not represent cash flows
from operations as defined by GAAP, should not be considered by the reader
as an alternative to net income as an indicator of the Company's operating
performance, and is not indicative of cash available to fund all cash flow
needs. Investors are cautioned that EBITDA, as calculated by the Company,
may not be comparable to similarly titled but differently calculated
measurers for other REITs.
(5) The increase in number of properties reflects the acquisition of 16
properties throughout 1995. The increase in number of properties in 1996
reflects the acquisition of 15 properties and the disposition of eight
properties throughout 1996. The increase in number of properties in 1997
reflects the acquisition of 21 properties, the completion of seven
developments, and the disposition of three properties throughout 1997. The
increase in number of properties in 1998 reflects the acquisition of 30
properties, the completion of two developments, and the disposition of six
properties throughout 1998. The increase in number of properties in 1999
reflects the acquisition of 61 properties, the completion of three
developments, and the disposition of nine properties throughout 1999. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
20
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL BACKGROUND
The following is a discussion of the historical operating results of the
Company. This discussion should be read in conjunction with the Financial
Statements and the information set forth under "SELECTED HISTORICAL FINANCIAL
DATA."
The results of the Company reflect cumulative significant acquisitions,
build-to-suit and redevelopment activities. Since 1989, the Company has grown
its portfolio of owned properties from 6 properties, with approximately
1.9 million square feet, to 182 properties with approximately 26.3 million
square feet as of December 31, 1999. This total excludes properties under
development and mortgage investments. Including build-to-suit projects under
development, the Company has a total of 185 property investments, excluding the
2 parking lots, representing approximately 27.0 million square feet.
The Company grew its total property investments by 2% in 1999, which
includes build-to-suits in progress and mortgage investments. In addition, the
Company grew its portfolio of owned properties during the year by concluding 61
warehouse/industrial property acquisitions and three warehouse/industrial
developments, net of the disposition of nine warehouse/industrial properties.
The Company's total increase in owned warehouse/industrial area, net of
disposals, was 3.0 million square feet or 13.2%.
The Company's Consolidated Financial Statements for the years ended
December 31, 1999, 1998 and 1997 reflect partial period results for
acquisitions, dispositions and expansions made during each respective year.
These statements also include the lease-up of previously vacant space, related
to the properties owned by the Company as of January 1, 1999, 1998 and 1997,
respectively. Certain executive officers of the Company had an interest in
entities which were purchased by the Company (one property in 1998 and one
property in 1997). These transactions satisfied the Company's investment
criteria and were approved by the Company's independent trustees.
Finally, the historical results of the Company reflect the Company's
significant property development and redevelopment activities in which
substantial capital costs and related expenses were incurred in advance of
receipt of rental income. At December 31, 1999, the Company and its subsidiaries
had 934,012 square feet of developments under construction with an estimated
total cost of $95.5 million that were 70% pre-leased. $43.0 million of these
developments were funded by the Company and its subsidiaries as of December 31,
1999 and were not producing income. In addition, the Company and its
subsidiaries owned 521 acres of land in inventory, as of December 31, 1999, for
the future development of approximately 11.0 million square feet of
warehouse/industrial facilities.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Revenues
Total revenues increased by $31.7 million or 29.6% over the same period last
year.
In the twelve months of 1999, 88.5% 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 $18.5 million in 1999. A
portion of the increase from the prior year is due to income from 61 properties
acquired in 1999 and three build-to-suit property coming on line totaling
5.1 million square feet, net of nine dispositions as of the end of the year. The
remainder of the increase was attributable to a full period of income from the
1998 acquisition of 30
21
<PAGE>
properties and two build-to-suit properties coming on line, totaling
4.0 million square feet, net of six property dispositions.
Other revenues increased $13.2 million due to increased fees earned and
profits realized by the Company and the Company's unconsolidated affiliate in
connection with increased volume and simultaneous closings of build-to-suit,
development, and leasing activities.
Operating and Nonoperating Expenses
Real estate tax expense and property operating and leasing expense increased
by $5.5 million from year to year. $3.5 million of the increase, resulted from a
full period of real estate taxes on 1998 acquisitions and a partial period of
real estate taxes on 1999 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 12.6% to 11.1% when comparing 1998
to 1999 due to efficiencies realized by the Company, increased real estate fee
income and equity in the affiliate.
General and administrative expenses increased by $0.2 million for the period
due primarily to the growth of the Company. As a percentage of total revenues,
general and administrative expenses decreased slightly from 3.8% to 3.1% when
comparing years.
Depreciation and amortization increased by $5.9 million due to a full period
of depreciation on 1998 acquisitions and depreciation on 1999 acquisitions.
Interest incurred increased by approximately $6.4 million over the same
period last year due to the Company holding higher average balances outstanding
and higher interest rates for variable rate debt in 1999 compared to 1998.
Other income (expenses) increased due to gains earned upon the disposition
of nine properties in 1999. In 1998, the Company disposed of six properties with
lower gains earned.
Net Income and Other Measures of Operations
Net income increased $16.5 million or 51.2% due to the growth of the Company
through the net acquisition of warehouse/industrial real estate and merchant
income.
Funds from operations ("FFO") increased 47.4% from $46.8 million to
$69.0 million. 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 and gains on the sale of real estate. The Company includes in
its calculation of FFO the gains (or losses) realized from its disposition
activity, measured as the sale price, net of selling costs, less book value and
adding back accumulated depreciation. The disposition of stabilized properties,
and the recycling of capital and profits to new "value added" investments, is
fundamental to the Company's business focus and funding strategy. In the
Company's view, FFO is appropriately adjusted by results of this core, regular
and recurring activity, although period to period variability is possible
because of changing market conditions and the progress of individual disposition
negotiations.
On a cash basis, when comparing the 1998 results of operations of properties
owned January 1, 1998 with the results of operations of the same properties for
1999 (the "same store" portfolio), the Company recognized an increase of
approximately 7.1% in net operating income. This same store 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 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
22
<PAGE>
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 1999 was 88.2% compared with 88.5% for 1998.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Revenues
Total revenues increased by $21.6 million or 25.3% over the same period last
year.
In the twelve months of 1998, 97.4% 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 $23.5 million in 1998. A
portion of the increase from the prior year is due to income from thirty
properties acquired in 1998 and two build-to-suit property coming on line
totaling 4.0 million square feet, net of six dispositions as of the end of the
year. 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 three property dispositions.
Other revenues decreased $1.9 million due to decreased fees earned and
profits realized by the Company and the Company's unconsolidated affiliate in
connection with increased build-to-suit, development and leasing activities.
Operating and Nonoperating Expenses
Real estate tax expense and property operating and leasing expense increased
by $6.5 million from year to year. The majority of the increase, $5.1 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
14.1% to 12.6% when comparing 1997 to 1998 due to efficiencies realized by the
Company.
General and administrative expenses increased by $0.9 million for the period
due primarily to the growth of the Company, but as a percentage of total
revenues increased only slightly from 3.6% to 3.8% when comparing years.
Depreciation and amortization increased by $6.1 million due to a full period
of depreciation on 1997 acquisitions and depreciation on 1998 acquisitions.
Interest incurred increased by approximately $3.6 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) increased due to gains earned upon the disposition
of six properties in 1998. In 1997, the Company disposed of three properties
with much lower gains earned.
Net Income and Other Measures of Operations
Net income increased $5.0 million or 18.3% due to the growth of the Company
through the net acquisition of warehouse/industrial real estate and merchant
income.
FFO increased 9.6% from $42.7 million to $46.8 million.
23
<PAGE>
The Company recognized an increase of approximately 2.0% in net operating
income on a same store basis. This 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 1998 was 88.7% compared with 88.1% for 1997.
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 stabilized
asset dispositions, supplemented by unsecured financings and periodic capital
raises, have been used to fund, on a long term basis, acquisitions and other
capital costs. However, cash flow from operations during 1999 of $75.4 million
net of $46.9 million of 1999 distributions provided $28.5 million of retained
capital. The Company expects retained capital to fund a portion of future
investment activities.
In 1999, the Company's investment activities included acquisitions of
$150.2 million, advances for construction in progress of $50.4 million, advances
on mortgage notes receivable of $4.3 million, advances to affiliate to fund
construction activities of $68.2 million and improvements and additions to
properties of $43.2 million. These activities were funded with dispositions of
real estate of $52.2 million, a portion of the Company's advances on the
company's line of credit on an interim basis and a portion of the Company's
retained capital. The Company also repaid $47.5 million of mortgage notes
payable with further advances on the Company's line of credit. These interim
balances were substantially refinanced with the proceeds of debt and preferred
stock offerings described below.
Equity and Share Activity
In June, 1999, the Company completed a public offering of 1,000,000 shares
of 7.50% Series B Convertible Cumulative Redeemable Preferred Shares at $50.00
per share. The shares have no maturity date, but may be redeemed by the Company
for $50.00 per share after June 30, 2004. The shares are convertible into common
shares at a conversion price of $43.50 per common share, equivalent to a
conversion rate of 1.1494 to 1. The net proceeds of the offering, approximately
$48.0 million, were used to refund outstanding balances under the Company's
unsecured line of credit.
In January, February, and August of 1999, the Company's class B common
shares were converted into 536,981, 784,305 and 76,802 common shares,
respectively. There were no class B common shares outstanding at the end of
1999.
During 1999, the Company paid distributions on common shares of
$38.1 million or $1.90 per share and on class B common shares of $0.5 million or
$1.46 per share. Also, the Company paid dividends on preferred shares,
series A, of $6.4 million or $2.12 per share and paid dividends on convertible
preferred shares, series B, of $2.0 million or $1.96 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, (ii) changes in minimum base rents attributable to replacement of
existing leases with new or replacement leases and (iii) restrictions under
certain covenants of the Company's unsecured credit facility co-led by Bank One
and Lehman Brothers Holdings, Inc.
Debt Capacity
In November, 1998, the Company increased to $250 million its unsecured
credit facility led by Bank One. As of March 15, 2000, the Company had
outstanding borrowings of approximately $118,400 million under the unsecured
revolving line of credit (approximately 8.2% of the Company's fully diluted
total market capitalization), and the Company had remaining availability of
approximately $131.6 million under
24
<PAGE>
its unsecured line of credit. The Company's development affiliate, CenterPoint
Realty Services, Inc. maintains a $50 million line co-led by LaSalle Bank and US
Bank for funding of developments for purchase by the Company or by third
parties. As of March 15, 2000, approximately $4.5 million was outstanding.
At December 31, 1999, the Company's debt constituted approximately 39.5% of
its fully diluted total market capitalization. Also, the Company's EBITDA to
debt service coverage ratio remained high at 5.1 to 1, and the Company's EBITDA
to fixed charge coverage ratio decreased to 3.5 to 1 due to preferred dividends.
The Company's fully diluted common equity market capitalization was
approximately $751.1 million, and its fully diluted total market capitalization
exceeded $1.4 billion. The Company's leverage ratios benefited during 1999 from
the conversion of the remaining balance of approximately $8.1 million of its
8.22% Convertible Subordinated Debentures to 441,511 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 an investment grade rating to the Company's senior
unsecured debt. These investment grade ratings further enhance the Company's
financial flexibility.
In January, 2000, the Company issued $150 million in senior unsecured notes
due January 15, 2003 and bearing interest at 7.9%. The offering was lead by
Lehman Brothers Holdings, with A.G. Edwards & Sons, Inc., Banc of America
Securities LLC, Bank One Capital Markets, Inc., and First Union Securities
acting as co-managers. The net proceeds of the issuance of approximately
$149.1 million were used to pay down the Company's line of credit.
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 dispositions of stabilized assets, which is dependent on market
conditions which presently remain favorable.
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
The year 2000 problem resulted from the use of a two digit year date in
programs that operate computers and other devices with computer components
instead of a four digit date. The programs with a year 2000 problem assumed "19"
in front of every two digit date. For all dates beginning in the year 2000, this
two digit year assumption could incorrectly process critical financial and
operational information or
25
<PAGE>
fail all together. If not addressed, the year 2000 problem was expected to
affect almost all companies, governmental agencies and organizations.
In response to the year 2000 problem, the Company initiated a project in
early 1997 to identify, evaluate and implement a new computerized real estate
management system. The Company implemented a combination of modifications to
existing programs and conversion to year 2000 compliant software. In addition,
the Company discussed with its tenants, vendors, and other service providers the
possibility of any interface difficulties relating to the Year 2000 problem that
could have affected the Company.
As of the date of this report, the Company and those it conducts business
with did make modifications or conversions in a timely manner, and the year 2000
problem had no material adverse effect on the Company's business, financial
condition, and results of operations. The total cost associated with the
required modifications was not material to the Company's consolidated results of
operations, liquidity and financial position, and was expensed as incurred.
RECENT PRONOUNCEMENTS
In June, 1998, the FASB issued SFAS Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement, effective for
financial statements for fiscal years beginning after June 15, 2000, provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. The Company has disclosed its only
derivative position within the Debt footnote to the financial statements.
FORWARD LOOKING STATEMENTS
This Report on Form 10-K 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 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,
environmental risk, our lack of control of the voting stock in our
unconcolidated subsidiary (which is required for us to derive income from it
without jeopardizing our REIT status) 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.
26
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk associated with changes in interest
rates as follows:
As of December 31, 1999 the Company's long term debt included tax exempt
debt and borrowings under a line of credit totaling $276.7 million, all of which
bear interest at variable rates that float with the market. A 25 basis point
movement in the interest rates underlying these debt agreements would result in
an approximate $1.9 million annualized increase or decrease in interest expense
and cash flows. The remaining debt is fixed rate debt.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Index to Financial Statements on Page F-1 of this Annual Report on
Form 10-K for the financial statements and financial statement schedules.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
27
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Item 10 is incorporated herein pursuant to General Instruction G to
Form 10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A not
later than 120 days after the close of the fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Item 11 is incorporated herein pursuant to General Instruction G to
Form 10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A not
later than 120 days after the close of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Item 12 is incorporated herein pursuant to General Instruction G to
Form 10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A not
later than 120 days after the close of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Item 13 is incorporated herein pursuant to General Instruction G to
Form 10-K by referencing the Company's definitive proxy statement, which will be
filed with the Securities and Exchange Commission pursuant to Regulation 14A not
later than 120 days after the close of the fiscal year.
28
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. The consolidated financial statements indicated in Part II, Item 8
"Financial Statements and Supplementary Data." See Index to Financial
Statements on Page F-1 of this Annual Report on Form 10-K.
2. The financial statement schedules indicated in Part II, Item 8
"Financial Statements and Supplementary Data." See Index to Financial
Statements on Page F-1 of this Annual Report on Form 10-K.
3. The exhibits listed in part (c) of this Item 14.
(b) Reports on Form 8-K.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------ -----------
<S> <C>
Exhibit 12-1 --Computation of the ratios of earnings to fixed charges
Exhibit 12-2 --Computation of the ratio of earnings to combined fixed
charges and preferred dividends
Exhibit 23 --Consent of Independent Accountants
Exhibit 27 --Financial Data Schedule
</TABLE>
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C> <C>
CENTERPOINT PROPERTIES TRUST,
A MARYLAND BUSINESS TRUST
By: /s/ JOHN S. GATES, JR.
-----------------------------------------
John S. Gates, Jr.,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /s/ PAUL S. FISHER
-----------------------------------------
Paul S. Fisher,
EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE NAME AND TITLE DATE
--------- -------------- ----
<C> <S> <C>
Martin Barber,
/s/ MARTIN BARBER Chairman and Trustee March 20, 2000
------------------------------------
John S. Gates, Jr.,
President, Chief Executive Officer
/s/ JOHN S. GATES, JR. and Trustee (Principal Executive March 20, 2000
------------------------------------ Officer)
Robert L. Stovall,
/s/ ROBERT L. STOVALL Vice Chairman and Trustee March 20, 2000
------------------------------------
/s/ NICHOLAS C. BABSON Nicholas C. Babson, Trustee March 20, 2000
------------------------------------
/s/ ALAN D. FELD Alan D. Feld, Trustee March 20, 2000
------------------------------------
Paul S. Fisher,
Trustee Executive Vie-President,
/s/ PAUL S. FISHER Chief Financial Officer and Trustee March 20, 2000
------------------------------------ (Principal Financial and Accounting
Officer)
/s/ MICHAEL M. MULLEN Michael M. Mullen, Trustee March 20, 2000
------------------------------------
/s/ JOHN J. KINSELLA John J. Kinsella, Trustee March 20, 2000
------------------------------------
/s/ THOMAS E. ROBINSON Thomas E. Robinson, Trustee March 20, 2000
------------------------------------
/s/ NORMAN BOBINS Norman Bobins, Trustee March 20, 2000
------------------------------------
</TABLE>
30
<PAGE>
CENTERPOINT PROPERTIES TRUST
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE(S)
------------
<S> <C>
Consolidated Financial Statements:
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets as of December 31, 1999 and
1998.................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997........................ F-4
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1999, 1998 and 1997........ F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997........................ F-6
Notes to Consolidated Financial Statements................ F-7 to F-24
Financial Statement Schedules:
Report of Independent Accountants......................... F-25
Schedule II--Valuation and Qualifying Accounts............ F-26
Schedule III--Real Estate and Accumulated Depreciation.... F-27 to F-35
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and
Shareholders of CenterPoint Properties Trust
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of CenterPoint
Properties Trust and its subsidiaries (the "Company") at December 31, 1999 and
1998, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 11, 2000
F-2
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
---------- --------
<S> <C> <C>
ASSETS
Assets:
Investment in real estate:
Land and leasehold...................................... $ 159,233 $132,270
Buildings............................................... 620,224 504,895
Building improvements................................... 127,306 94,474
Furniture, fixtures, and equipment...................... 22,083 18,817
Construction in progress................................ 43,051 18,401
---------- --------
971,897 768,857
Less accumulated depreciation and amortization.......... 85,408 62,257
---------- --------
Net investment in real estate......................... 886,489 706,600
Cash and cash equivalents................................. 3,505 475
Restricted cash and cash equivalents...................... 31,963 33,056
Tenant accounts receivable, net........................... 18,962 18,067
Mortgage notes receivable................................. 6,270 901
Investment in and advances to affiliate................... 114,083 43,796
Prepaid expenses and other assets......................... 6,909 4,030
Deferred expenses, net.................................... 15,246 10,681
---------- --------
$1,083,427 $817,606
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable and other debt..................... $ 77,648 $103,520
Senior unsecured debt..................................... 200,000 100,000
Tax-exempt debt........................................... 55,000 75,540
Line of credit............................................ 221,700 77,600
Convertible subordinated debentures payable............... 8,058
Preferred dividends payable............................... 1,060 1,060
Accounts payable.......................................... 16,957 7,986
Accrued expenses.......................................... 37,864 31,060
Rents received in advance and security deposits........... 6,594 5,323
---------- --------
616,823 410,147
---------- --------
Commitments and contingencies
Shareholders' equity:
Series A 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
Series B convertible preferred shares of beneficial
interest, $.001 par value; 1,000,000 issued and
outstanding having a liquidation preference of $50 per
share ($50,000)......................................... 1
Common shares of beneficial interest, $.001 par value,
47,727,273 shares authorized; 20,649,801 and 18,753,474
issued and outstanding, respectively.................... 21 19
Class B common shares of beneficial interest, $.001 par
value, 2,272,727 shares authorized; 0 and 1,398,088
issued and outstanding, respectively.................... 1
Additional paid-in-capital................................ 506,456 449,229
Retained earnings (deficit)............................... (39,630) (41,497)
Unearned compensation--restricted shares.................. (247) (296)
---------- --------
Total shareholders' equity............................ 466,604 407,459
---------- --------
$1,083,427 $817,606
========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Operating and investment revenue:
Minimum rents........................................... $ 91,584 $ 77,409 $57,878
Straight-line rents..................................... 4,844 4,030 2,732
Expense reimbursements.................................. 25,980 21,924 18,228
Mortgage interest income................................ 526 1,061 2,098
-------- -------- -------
Total operating and investment revenue................ 122,934 104,424 80,936
-------- -------- -------
Other revenue:
Real estate fee income.................................. 13,874 3,657 2,514
Equity in net income (loss) of affiliate................ 2,128 (855) 2,138
-------- -------- -------
Total other revenue................................... 16,002 2,802 4,652
-------- -------- -------
Total revenue......................................... 138,936 107,226 85,588
-------- -------- -------
Expenses:
Real estate taxes......................................... 25,728 22,218 17,091
Property operating and leasing............................ 15,457 13,482 12,091
General and administrative................................ 4,258 4,041 3,105
Depreciation and amortization............................. 27,351 21,418 15,278
Interest expense:
Interest incurred, net.................................. 19,954 13,659 10,071
Amortization of deferred financing costs................ 1,905 1,817 800
-------- -------- -------
Total expenses........................................ 94,653 76,635 58,436
-------- -------- -------
Operating income...................................... 44,283 30,591 27,152
Other income (expense):
Gain on sale of real estate............................... 5,086 1,672 140
Other income (expense).................................... (27) (15) (32)
-------- -------- -------
Income before extraordinary item............................ 49,342 32,248 27,260
Extraordinary item, early extinguishment of debt............ (582)
-------- -------- -------
Net income.................................................. 48,760 32,248 27,260
Preferred dividends....................................... (8,318) (6,360) (901)
-------- -------- -------
Net income available to common shareholders................. $ 40,442 $ 25,888 $26,359
======== ======== =======
Per share net income available to common shareholders before
extraordinary item:
Basic................................................... $ 2.02 $ 1.30 $ 1.41
Diluted................................................. $ 1.99 $ 1.29 $ 1.39
Per share net income available to common shareholders:
Basic................................................... $ 1.99 $ 1.30 $ 1.41
Diluted................................................. $ 1.96 $ 1.29 $ 1.39
Distributions per common share.............................. $ 1.90 $ 1.75 $ 1.68
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED PREFERRED SHARES, CLASS B
SHARES, SERIES A SERIES B COMMON SHARES
--------------------- -------------------- ---------------------
NUMBER NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT
---------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996.................................. 0 $ 0 0 $0 2,272,727 $2
Issuance of common shares, less $4,054 of offering costs....
Issuance of preferred shares, Series A less $3,101 of
offering costs............................................ 3,000,000 3
Conversion of convertible subordinated debentures to common
shares....................................................
Shares issued for stock options exercised...................
Incentive share awards......................................
Director share awards.......................................
Amortization of unearned compensation.......................
Distributions declared on common shares, $1.68 per share....
Distributions declared on preferred shares, $0.30 per
share.....................................................
Distributions declared on Class B common shares, $1.73 per
share.....................................................
Net income..................................................
---------- ---- --------- -- ---------- --
Balance, December 31, 1997.................................. 3,000,000 3 0 0 2,272,727 2
Issuance of common shares, less $343 of offering costs......
Conversion of Class B common shares to common shares........ (874,639) (1)
Conversion of convertible subordinated debentures to common
shares....................................................
Shares issued for stock options exercised...................
Director share awards.......................................
Amortization of unearned compensation.......................
Distributions declared on common shares, $1.75 per share....
Distributions declared on preferred shares, $2.12 per
share.....................................................
Distributions declared on Class B common shares, $1.80 per
share.....................................................
Net income..................................................
---------- ---- --------- -- ---------- --
Balance, December 31, 1998.................................. 3,000,000 3 0 0 1,398,088 1
Issuance of preferred shares, Series B less $2,331 of
offering costs............................................ 1,000,000 1
Conversion of convertible preferred shares to Class B common
shares.................................................... (1,398,088) (1)
Conversion of convertible subordinated debentures to common
shares....................................................
Shares issued for stock options exercised...................
Director share awards.......................................
Amortization of unearned compensation.......................
Distributions declared on common shares, $1.90 per share....
Distributions declared on Class B common shares, $1.46 per
share.....................................................
Distributions declared on preferred shares, Series A, $2.12
per share.................................................
Distributions declared on convertible preferred shares,
Series B, $1.96 per share.................................
Net income..................................................
---------- ---- --------- -- ---------- --
Balance, December 31, 1999.................................. 3,000,000 $ 3 1,000,000 $1 0 $0
========== ==== ========= == ========== ==
<CAPTION>
COMMON SHARES UNEARNED
--------------------- ADDITIONAL RETAINED COMPENSATION-
NUMBER PAID-IN EARINGS RESTRICTED
OF SHARES AMOUNT CAPITAL (DEFICIT) SHARES
---------- -------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996.................................. 14,333,231 $14 $276,142 $(27,726) $(319)
Issuance of common shares, less $4,054 of offering costs.... 2,250,000 2 66,819
Issuance of preferred shares, Series A less $3,101 of
offering costs............................................ 71,896
Conversion of convertible subordinated debentures to common
shares.................................................... 144,640 2,564
Shares issued for stock options exercised................... 149,715 1 2,873
Incentive share awards...................................... 12,444 392 (392)
Director share awards....................................... 1,921 57
Amortization of unearned compensation....................... 214
Distributions declared on common shares, $1.68 per share.... (27,221)
Distributions declared on preferred shares, $0.30 per
share..................................................... (901)
Distributions declared on Class B common shares, $1.73 per
share..................................................... (3,924)
Net income.................................................. 27,260
---------- --- -------- -------- -----
Balance, December 31, 1997.................................. 16,891,951 17 420,743 (32,512) (497)
Issuance of common shares, less $343 of offering costs...... 740,371 1 23,880
Conversion of Class B common shares to common shares........ 874,639 1
Conversion of convertible subordinated debentures to common
shares.................................................... 201,748 3,644
Shares issued for stock options exercised................... 42,461 882
Director share awards....................................... 2,304 80
Amortization of unearned compensation....................... 201
Distributions declared on common shares, $1.75 per share.... (31,182)
Distributions declared on preferred shares, $2.12 per
share..................................................... (6,360)
Distributions declared on Class B common shares, $1.80 per
share..................................................... (3,691)
Net income.................................................. 32,248
---------- --- -------- -------- -----
Balance, December 31, 1998.................................. 18,753,474 19 449,229 (41,497) (296)
Issuance of preferred shares, Series B less $2,331 of
offering costs............................................ 47,668
Conversion of convertible preferred shares to Class B common
shares.................................................... 1,398,088 1
Conversion of convertible subordinated debentures to common
shares.................................................... 441,511 1 8,028
Shares issued for stock options exercised................... 53,670 1,421
Director share awards....................................... 3,058 110
Amortization of unearned compensation....................... 49
Distributions declared on common shares, $1.90 per share.... (38,081)
Distributions declared on Class B common shares, $1.46 per
share..................................................... (494)
Distributions declared on preferred shares, Series A, $2.12
per share................................................. (6,360)
Distributions declared on convertible preferred shares,
Series B, $1.96 per share................................. (1,958)
Net income.................................................. 48,760
---------- --- -------- -------- -----
Balance, December 31, 1999.................................. 20,649,801 $21 $506,456 ($39,630) $(247)
========== === ======== ======== =====
<CAPTION>
TOTAL
SHAREHOLDERS'
EQUITY
-------------
<S> <C>
Balance, December 31, 1996.................................. $248,113
Issuance of common shares, less $4,054 of offering costs.... 66,821
Issuance of preferred shares, Series A less $3,101 of
offering costs............................................ 71,899
Conversion of convertible subordinated debentures to common
shares.................................................... 2,564
Shares issued for stock options exercised................... 2,874
Incentive share awards......................................
Director share awards....................................... 57
Amortization of unearned compensation....................... 214
Distributions declared on common shares, $1.68 per share.... (27,221)
Distributions declared on preferred shares, $0.30 per
share..................................................... (901)
Distributions declared on Class B common shares, $1.73 per
share..................................................... (3,924)
Net income.................................................. 27,260
--------
Balance, December 31, 1997.................................. 387,756
Issuance of common shares, less $343 of offering costs...... 23,881
Conversion of Class B common shares to common shares........
Conversion of convertible subordinated debentures to common
shares.................................................... 3,644
Shares issued for stock options exercised................... 882
Director share awards....................................... 80
Amortization of unearned compensation....................... 201
Distributions declared on common shares, $1.75 per share.... (31,182)
Distributions declared on preferred shares, $2.12 per
share..................................................... (6,360)
Distributions declared on Class B common shares, $1.80 per
share..................................................... (3,691)
Net income.................................................. 32,248
--------
Balance, December 31, 1998.................................. 407,459
Issuance of preferred shares, Series B less $2,331 of
offering costs............................................ 47,669
Conversion of convertible preferred shares to Class B common
shares....................................................
Conversion of convertible subordinated debentures to common
shares.................................................... 8,029
Shares issued for stock options exercised................... 1,421
Director share awards....................................... 110
Amortization of unearned compensation....................... 49
Distributions declared on common shares, $1.90 per share.... (38,081)
Distributions declared on Class B common shares, $1.46 per
share..................................................... (494)
Distributions declared on preferred shares, Series A, $2.12
per share................................................. (6,360)
Distributions declared on convertible preferred shares,
Series B, $1.96 per share................................. (1,958)
Net income.................................................. 48,760
--------
Balance, December 31, 1999.................................. $466,604
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 48,760 $ 32,248 $ 27,260
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary item-early extinguishment of debt......... 582
Bad debts............................................... 659 550 279
Depreciation............................................ 25,444 20,081 14,275
Amortization of deferred financing costs................ 1,905 1,817 800
Other amortization...................................... 1,982 1,337 1,003
Straight-line rents..................................... (4,844) (4,030) (2,732)
Incentive stock awards.................................. 49 281 271
Interest on converted debentures........................ 108 44 12
Equity in net (income) loss of affiliate................ (2,128) 855 (2,138)
Gain on disposal of real estate......................... (5,086) (1,672) (140)
Net changes in:
Tenant accounts receivable............................ 2,974 (1,604) (973)
Prepaid expenses and other assets..................... (13) 1,107 (21)
Rents received in advance and security deposits....... 1,036 623 317
Accounts payable and accrued expenses................. 3,970 6,167 1,198
--------- --------- ---------
Net cash provided by operating activities................... 75,398 57,804 39,411
--------- --------- ---------
Cash flows from investing activities:
Change in restricted cash and cash equivalents............ 2,093 3,746 (35,532)
Acquisition of real estate................................ (150,241) (69,700) (122,090)
Construction in progress.................................. (50,409) (23,756) (42,311)
Improvements and additions to properties.................. (43,201) (27,038) (42,441)
Disposition of real estate................................ 52,196 33,948 13,510
Change in deposits on acquisitions........................ (2,918) (2,081) 1,303
Issuance of mortgage notes receivable..................... (4,287) (17,462)
Repayment of mortgage notes receivable.................... 2,057 24,392 5,670
Investment in and advances to affiliate................... (68,159) (33,543) (19,639)
Receivables from affiliates and employees................. 28 62 (3)
Additions to deferred expenses............................ (9,520) (7,274) (3,803)
--------- --------- ---------
Net cash used in investing activities....................... (272,361) (118,706) (245,336)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from sale of preferred shares.................... 50,000 75,000
Proceeds from sale of common shares....................... 1,531 25,106 73,749
Offering costs paid....................................... (2,332) (343) (7,155)
Proceeds from issuance of unsecured bonds................. 100,000 100,000
Proceeds from issuance of line of credit.................. 339,300 132,000 211,650
Repayment of line of credit............................... (195,200) (152,100) (160,050)
Proceeds from issuance of revenue bonds payable........... 55,000
Repayment of revenue bonds payable........................ (20,540)
Proceeds from issuance of mortgage notes payable.......... 21,605
Repayments of mortgage notes payable...................... (47,477) (3,831) (8,156)
Repayments of notes payable............................... (33) (2,385)
Distributions............................................. (46,893) (41,074) (31,145)
Conversion of convertible subordinated debentures
payable................................................. (1) (1)
--------- --------- ---------
Net cash provided by financing activities................... 199,993 59,725 206,507
--------- --------- ---------
Net change in cash and cash equivalents..................... 3,030 (1,177) 582
Cash and cash equivalents, beginning of year................ 475 1,652 1,070
--------- --------- ---------
Cash and cash equivalents, end of year...................... $ 3,505 $ 475 $ 1,652
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-6
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
1. ORGANIZATION
CenterPoint Properties Trust (the "Company"), a Maryland trust, and its
subsidiaries, owns and operates primarily warehouse/industrial properties in the
metropolitan Chicago area and operates as a real estate investment trust.
On October 15, 1997, the Company completed a reorganization pursuant to
which it converted from a Maryland corporation to a Maryland real estate
investment trust by means of a merger of CenterPoint Properties Corporation (the
"Corporation") with and into the Company, which prior to the merger was a
wholly-owned subsidiary of the Corporation, with the Company as the surviving
entity. Pursuant to a Plan of Reorganization, which was approved by the
stockholders of the Corporation at a Special Meeting of Stockholders held on
October 1, 1997, each issued and outstanding share of common stock of the
corporation, par value $.001 per share (the "Common Stock"), was converted into
one common share of beneficial interest in the Company, par value $.001 per
share (the "Common Shares"), each outstanding share of Class B common stock of
the Corporation was converted into one Class B common share of beneficial
interest (the "Class B Common Shares") in the Company; and the outstanding
principal amount of the Corporation's 8.22% Convertible Subordinated Debentures
due 2004 was assumed by the Company and converted into the same principal amount
of 8.22% Convertible Subordinated Debentures due 2004 of the Company.
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. Based on this criteria, the Company has determined that it operates in
one business segment, that being the development, management and ownership of
warehouse/ industrial property located in Greater Chicago. Thus, all information
required by SFAS No. 131 is included in the Company's financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Minimum rents are recognized on a straight-line basis over the terms of the
respective leases. Unbilled rents receivable represents the amount that
straight-line rental revenue exceeds rents due under the lease agreements.
Unbilled rents receivable, included in tenants accounts receivable, at
December 31, 1999 and 1998 were $12,765 and $8,530, respectively. Recoveries
from tenants for taxes, insurance and other property operating expenses are
recognized in the period the applicable costs are incurred.
Real estate fee income includes revenues recognized for consulting services
provided by the Company, participation interest, merchant related transactions
and tenant lease termination fees of $2,584 in 1999, $1,770 in 1998 and $1,894
in 1997.
The Company provides an allowance for doubtful accounts against the portion
of accounts receivable and notes receivable which is estimated to be
uncollectible. Accounts receivable and prepaid expenses and other assets in the
consolidated balance sheets are shown net of an allowance for doubtful accounts
of $731 and $575 as of December 31, 1999 and 1998, respectively.
F-7
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED EXPENSES
Deferred expenses consist principally of financing fees and leasing
commissions. Leasing commissions are amortized on a straight-line basis over the
terms of the respective lease agreements. Financing costs are amortized over the
terms of the respective loan agreements. Deferred expenses relating to debenture
conversions of $136 and $82 were charged to paid-in capital in 1999 and 1998,
respectively, and fully amortized deferred expenses of $2,436 and $1,562 were
written off in 1999 and 1998, respectively. In connection with property
dispositions, the Company also wrote off deferred leasing and other costs of
$350 and $94 in 1999 and 1998, respectively.
The balances are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Deferred financing costs, net of accumulated amortization
of $2,241 and $1,893.................................... $ 5,841 $ 4,601
Deferred leasing and other costs, net of accumulated
amortization of $2,867 and $2,127....................... 9,405 6,080
------- -------
$15,246 $10,681
======= =======
</TABLE>
PROPERTIES
Real estate assets are stated at cost. Interest and real estate taxes and
other directly related costs incurred during construction periods are
capitalized and amortized on the same basis as the related assets. Depreciation
expense is computed using the straight-line method based upon the following
estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----------
<S> <C>
Building and improvements................................... 31.5 and 40
Land improvements........................................... 15
Furniture, fixtures and equipment........................... 4 to 15
</TABLE>
Construction allowances for tenant improvements are capitalized and
amortized over the terms of each specific lease. Repairs and maintenance are
charged to expense when incurred. Expenditures for improvements are capitalized.
When assets are sold or retired, their cost and related accumulated depreciation
are removed from the accounts. The resulting gains or losses from dispositions
of properties are reflected in operations.
In accordance with the requirements of Statements of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", the Company reviews the recoverability of
the carrying value of its investments in real estate by estimating the fair
value of its properties. Management performs this review both annually during
the budgeting process and upon the occurrence of a triggering event; natural
disaster, major rehabilitation project or significant vacancy period. If
management determines that an impairment of property has occurred, the carrying
value of such property will be reduced to its fair value.
F-8
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of the consolidated financial statements, the Company considers
all investments purchased with original maturities of three months or less to be
cash equivalents.
INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company accounts for its investment in affiliate using the equity method
whereby its cost of the investment is adjusted for its share of equity in net
income or loss from the date of acquisition and reduced by distributions
received.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INCOME TAXES
The Company qualifies as a real estate investment trust ("REIT") under
sections 856-860 of the Internal Revenue Code beginning January 1, 1994. In
order to qualify as a REIT, the Company is required to distribute at least 95%
of its taxable income to shareholders and to meet certain asset and income tests
as well as certain other requirements. As a REIT, the Company will generally not
be liable for Federal income taxes, provided it satisfies the necessary
distribution requirements. The distributions declared and paid for the years
ended December 31, 1999, 1998 and 1997 include a return of capital of
approximately 21%, 9% and 12%, respectively.
F-9
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER COMMON SHARE
Following are the reconciliations of the numerators and denominators for
computing basic and diluted earnings per share ("EPS") data:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Numerators:
Income before extraordinary item....................... $ 49,342 $ 32,248 $ 27,260
Dividends on preferred shares........................ (8,318) (6,360) (901)
---------- ---------- ----------
Income available to common shareholders before
extraordinary item--for basic EPS.................. 41,024 25,888 26,359
Interest expense on dilutive convertible debenture
conversions........................................ 451
---------- ---------- ----------
Income available to common shareholders before
extraordinary item--for diluted EPS................ 41,475
Net income available to common shareholders--for basic
EPS.................................................. 40,442 25,888 26,359
Interest expense on dilutive convertible debenture
conversions........................................ 451
---------- ---------- ----------
Net income available to common shareholders--for
diluted EPS........................................ $ 40,893 $ 25,888 $ 26,359
---------- ---------- ----------
Denominators:
Weighted average common shares outstanding--for basic
EPS.................................................. 20,315,701 19,867,509 18,634,850
Effect of convertible debenture conversion........... 299,917
Effect of dilutive securities--options............... 244,255 234,428 312,280
---------- ---------- ----------
Weighted average common shares outstanding--for diluted
EPS.................................................. 20,859,873 20,101,937 18,947,130
========== ========== ==========
</TABLE>
The assumed conversion of convertible preferred stock into common shares for
purposes of computing diluted EPS by adding convertible preferred dividends to
the numerator and adding assumed share conversions to the denominator for 1999
would be anti-dilutive. Also, 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 1998 and 1997 would be
anti-dilutive.
The Company's financial instruments include cash equivalents, tenant
accounts receivable, mortgage and other notes receivable, accounts payable,
other accrued expenses, notes payable, and mortgage loans payable. The fair
value of the cash equivalents, tenant accounts receivable, accounts payable and
other accrued expenses was not materially different from their carrying or
contract valaues.
F-10
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain items presented in the consolidated statements of operations for
prior periods have been reclassified to conform with current classifications
with no effect on results of operations.
ACCOUNTING PRONOUNCEMENTS
In June, 1998, the FASB issued SFAS Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement, effective for
financial statements for fiscal years beginning after June 15, 2000, provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. The Company has disclosed its only
derivative position within the Long Term Debt note.
3. PROPERTY ACQUISITIONS AND DISPOSITIONS
During each of the years ended December 31, 1999, 1998 and 1997, the Company
acquired sixty-four, thirty and twenty-one properties, respectively, consisting
principally of single-tenant buildings for an aggregate amount of approximately
$153,903, $91,692 and $124,923, respectively. In 1999, ten and thirty-one of the
properties were acquired as two portfolios, respectively, from unrelated third
parties. Fifteen of the properties in 1998 were acquired as a portfolio from an
unrelated third party. All of the remaining property acquisitions were purchased
individually and include one acquisitions in 1998 and one acquisitions in 1997
which were acquired from related parties. The properties were funded with
borrowings under the Company's lines of credit, proceeds from properties sold
during 1999, 1998, and 1997, proceeds of public offerings of the Company's
common shares completed in 1998 and 1997, and proceeds of public offerings of
the Company's preferred shares completed in 1999 and 1997. The acquisitions have
been accounted for utilizing the purchase method of accounting, and accordingly,
the results of operations of the acquired properties are included in the
consolidated statements of operations from the dates of acquisition.
The Company disposed of nine properties during 1999, six properties during
1998, and three properties during 1997.
Due to the effect of securities offerings in June, 1999, March, 1998, April,
1998, March, 1997, and November, 1997 and the 1997, 1998 and 1999 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 twelve months ended December 31, 1999 and 1998 is presented as if the 1998
and 1999 acquisitions and dispositions, the 1998 and 1999 securities offerings,
and the corresponding repayment of certain debt had all occurred on January 1,
1998 (or the date the property first commenced operations with a third party
tenant, if later). The 1997 unaudited proforma information is presented as if
the 1998 and 1997 offerings, the corresponding repayment of certain debt, and
the 1998 and 1997 acquisitions and dispositions had all occurred on January 1,
1997. 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
F-11
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
3. PROPERTY ACQUISITIONS AND DISPOSITIONS (CONTINUED)
related transactions, in fact, occurred at the beginning of 1998 or 1997, or to
project results for any future period.
<TABLE>
<CAPTION>
PROFORMA FOR THE YEARS ENDED
------------------------------
DECEMBER 31, (UNAUDITED)
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total revenues................................. $140,112 $118,001 $95,607
Total expenses................................. 88,935 81,416 61,983
-------- -------- -------
Income before extraordinary item............... 51,177 36,585 33,624
Preferred dividends............................ (10,120) (9,079) (6,360)
-------- -------- -------
Income available to common shareholders before
extraordinary item........................... $ 41,057 $ 27,506 $27,264
======== ======== =======
Per share income available to common
shareholders before extraordinary item:
Basic........................................ $ 2.02 $ 1.37 $ 1.37
Diluted...................................... $ 2.00 $ 1.36 $ 1.35
</TABLE>
4. MORTGAGE NOTES RECEIVABLE
As of December 31, 1999, the Company had mortgage notes receivable
outstanding of $6,270. The notes bear interest at rates ranging from 7.15% to
10.5% and mature at dates ranging from December, 2000 to December, 2010. As of
December 31, 1998, the Company had a mortgage loan receivable outstanding of
$901, bearing interest at a rate of 10.50% and maturing in June, 2010. Certain
notes require payment of interest and principle monthly. As of December 31,
1999, the mortgage notes mature as follows:
<TABLE>
<S> <C>
2000........................................................ $2,246
2001........................................................ 128
2002........................................................ 143
2003........................................................ 161
2004........................................................ 179
Thereafter.................................................. 3,413
------
Total................................................... $6,270
======
</TABLE>
Land and buildings have been pledged as collateral for the above notes
receivable.
5. INVESTMENT IN AND ADVANCES TO AFFILIATE
The Company holds approximately 99% of the economic interest in CenterPoint
Realty Services Corporation ("CRS"). To maintain compliance with limitations on
income from business activities received by REITs and their qualified REIT
subsidiaries, the Company holds its interest in CRS in the form of non-voting
equity ownership, which qualifies as an unconsolidated taxable subsidiary.
F-12
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
5. INVESTMENT IN AND ADVANCES TO AFFILIATE (CONTINUED)
Since its inception in 1995, CRS has been engaged in the development,
purchase and sale of warehouse/industrial real estate, and has provided third
party consulting services in conjunction with other merchant activities.
Summarized financial information of CRS is shown below. Certain items in the
CRS financial statements have been reclassified to conform with 1999
presentation with no effect on net income.
Balance Sheets:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Assets:
Land................................................... $ 17,556 $ 7,581
Buildings.............................................. 44,832
Construction in Progress............................... 36,887 40,689
Less accumulated depreciation.......................... (861)
-------- -------
98,413 48,270
Other assets........................................... 3,767 4,661
Notes receivable....................................... 17,968
-------- -------
$121,111 $52,931
======== =======
Liabilities:
Note payable to affiliate--CenterPoint
Properties Trust....................................... $108,584 $41,379
Participation interest due to CenterPoint Properties
Trust................................................ 989 33
Other liabilities........................................ 6,983 9,204
-------- -------
116,556 50,616
Stockholders' equity..................................... 4,555 2,315
-------- -------
$121,111 $52,931
======== =======
</TABLE>
F-13
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
5. INVESTMENT IN AND ADVANCES TO AFFILIATE (CONTINUED)
Statement of Operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Income:
Property sales.................................. $80,064 $4,162 $39,710
Rental income................................... 5,070 151
Interest income................................. 1,554 153
Other income.................................... 233 450 382
------- ------ -------
86,921 4,916 40,092
Operating expenses:
Cost of property sales.......................... 65,374 4,195 35,341
Participation interest.......................... 8,637 33
Other expenses.................................. 2,085 1,213 360
Depreciation and amortization................... 1,206 99 110
Interest........................................ 5,943 880 816
------- ------ -------
83,245 6,420 36,627
Provision (benefit) for income taxes.............. 1,526 (640) 1,305
------- ------ -------
Net income (loss)................................. $ 2,150 $ (864) $ 2,160
======= ====== =======
</TABLE>
CRS owned nine warehouse/industrial properties, totaling 1.4 million square
feet, as of December 31, 1999, which were fully occupied and placed in service.
CRS also had three and six warehouse/industrial properties under construction as
of December 31, 1999 and 1998, respectively, and owned ten and five land parcels
for future developments as of December 31, 1999 and 1998, respectively.
As of December 31, 1999 and 1998, the Company had an outstanding balance due
from CRS of $108,584 and $41,379, respectively, under a series of demand loans
with interest rates ranging from 8.0% to 11.1%.The proceeds of the loans were
required for development projects.
F-14
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
6. LONG TERM DEBT
The long-term debt as of December 31, 1999 and 1998 consists of the
following:
<TABLE>
<CAPTION>
CARRYING AMOUNT OF
NOTES
DECEMBER 31, PERIODIC ESTIMATED FINAL
PROPERTY PLEDGED AS ------------------- INTEREST PAYMENT BALLOON PAYMENT MATURITY
COLLATERAL 1999 1998 RATE TERMS AT MATURITY DATE
- -------------------------------------- -------- -------- -------- -------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE NOTES PAYABLE AND OTHER DEBT:
Designated pool of 20 properties...... $ 50,000 $ 50,000 7.62% $ 318(a) $ 50,000 11/1/02
Designated pool of 18 properties
(d)................................. 30,000 6.91% 173(a) 30,000 5/15/99
850 Arthur Avenue
Elk Grove Village, IL............... 575 575 8.00% 12(b) 575 10/3/00
11801 South Central
Alsip, IL........................... 4,669 4,901 7.35% 49(c) 1/1/12
Designated pool of 11 properties...... 8,985 8.81% 114(c) 8,484 1/1/00
Designated pool of 2 properties....... 4,108 9.21% 45(c) 3,936 1/1/00
Designated pool of 2 properties....... 2,261 7.71% 21(c) 2,181 1/1/00
440 N. Lake Street
Miller, IN.......................... 21,532 1,680 (e)(i) 126(c) 1,680 7/1/34
Capitalized lease obligation.......... 872 1,010 7.00% 19(c) 101 12/1/03
-------- --------
77,648 103,520
-------- --------
SENIOR UNSECURED DEBT:
Bonds Payable--1998................... 100,000 100,000 6.75% (f) 100,000 4/1/05
Bonds Payable--1999................... 100,000 7.142% (f) 100,000 3/15/04
-------- --------
200,000 100,000
-------- --------
TAX EXEMPT DEBT:
City of Chicago Revenue Bonds......... 55,000 55,000 (g) (a) 55,000 9/8/32
440 N. Lake Street
Miller, IN.......................... 20,540 (e) (a) 20,540 3/1/31
-------- --------
55,000 75,540
-------- --------
LINE OF CREDIT:
Revolving line of credit.............. 221,700 77,600 (h) (a) 10/24/01
-------- --------
Total long term debt.................. $554,348 $356,660
======== ========
</TABLE>
- ------------------------
(a) The note requires monthly payments of interest only.
(b) The note requires quarterly payments of interest only.
(c) Amount represents the monthly payment of principal and interest.
(d) In May, 1999, the Company repaid the outstanding amount upon maturity.
(e) As of December 31, 1998, these revenue bonds consist of two series ($1,680
taxable and $20,540 tax-exempt) of Economic Development Revenue Bonds issued
in April, 1996 by the City of Gary, Indiana. $1,680 of the bonds are
collateralized by a letter of credit which contains certain financial
covenants pertaining to the tangible net worth and liabilities in relation
to portfolio value of the Company. The bonds bear interest based on the
Weekly Adjustable Interest Rate Mode at a rate determined by the Remarketing
Agent (5.15% on the taxable bonds and 4.1% on the tax exempt bonds at
December 31, 1998).
F-15
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
6. LONG TERM DEBT (CONTINUED)
(f) The note requires semi-annual payments of interest only.
(g) These Variable/Fixed Rate Demand Special Facilities Airport Revenue Bonds
issued by the City of Chicago, Illinois are enhanced by a letter of credit.
The letter of credit contains certain financial covenants pertaining to
consolidated net worth. The tax-exempt bonds bear initial interest at a
Weekly Adjustable Interest Rate, which from time to time may be changed by
the Company, at a rate determined by the Remarketing Agent (5.5% and 4.2% at
December 31, 1999 and 1998, respectively). The bonds require monthly
payments of interest only and mature in September, 2032. Of the original
proceeds, the Company holds $16,852 and $30,447 in escrow at December 31,
1999 and 1998, respectively, for future construction costs.
(h) In November, 1998, the Company increased its unsecured line of credit
facility, which originated in October, 1996, to $250 million. The interest
rate at December 31, 1999 is 7.5% (LIBOR plus 1.0%) for LIBOR borrowings and
Prime Rate (8.5%) for other borrowings. The interest rate at December 31,
1998 is 6.1125% (LIBOR plus 1.0%) for LIBOR borrowings and Prime Rate
(7.75%) for other borrowings. The line requires payments of interest only
when LIBOR contracts mature and monthly on borrowings under Prime Rate.
There is a commitment fee of $500 per year. At December 31, 1999 and 1998,
the Company had $28,300 and $172,400, respectively, available under the
line.
(i) In June, 1999 the Company refinanced the Economic Development Revenue Bonds
issued in April, 1996 by the City of Gary, Indiana described in note (e).
The Company refinanced the debt with a 35 year assumable, HUD non-recourse
mortgage debt.
As of December 31, 1999 mortgage notes, other debt, senior unsecured debt,
tax exempt debt and line of credit mature as follows:
<TABLE>
<S> <C>
2000........................................................ $ 1,175
2001........................................................ 222,342
2002........................................................ 50,689
2003........................................................ 738
2004........................................................ 100,697
Thereafter.................................................. 178,707
--------
Total..................................................... $554,348
========
</TABLE>
Based on borrowing rates available to the Company at the end of 1999 and
1998 for mortgage loans with similar terms and maturities, the fair value of the
mortgage notes payable approximates the carrying values.
On September 10, 1998, the Company entered into an interest rate protection
agreement to lock into a fixed interest rate on an anticipated refinancing of
mortgage notes payable with a notional amount of $25,000. The agreement provided
that the Company receive or pay an amount equal to the spread between a locked
in treasury rate (4.835%) and the interest rate on treasury securities
underlying the agreement as of March 31, 1999, the settlement date. The amount
received at the settlement of the agreement, $617, is reflected as an adjustment
to interest expense on the related refinancing over the term of the loan.
Land, buildings and equipment related to such mortgages with an aggregate
net book value of approximately $123,960 at December 31, 1999 have been pledged
as collateral for the above debt.
F-16
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
7. EXTRAORDINARY ITEM
In 1999, the Company incurred a loss of $582 (per share--basic $0.03;
diluted $0.03), representing a write off of unamortized deferred financing costs
as a result of early extinguishment of certain debt obligations.
8. CONVERTIBLE SUBORDINATED DEBENTURES PAYABLE
Concurrent with the initial public offering in December, 1993, the Company
issued $58,500 of convertible subordinated debentures ("Debentures") due 2004.
At December 31, 1998, $8,058 of debentures were outstanding. There were no
debentures outstanding as of December 31, 1999. The Company notified the
bondholders of a complete debenture redemption and all outstanding debentures
were converted to Common Shares as of September 24, 1999 at a conversion price
of $18.25 per share, subject to certain adjustments. The Debentures were
unsecured general obligations of the Company and subordinate to all existing and
subsequently incurred indebtedness of the Company. The Debentures bore interest
at 8.22% per annum, payable semiannually on January 15 and July 15 of each year,
commencing July 15, 1994. During 1999, 1998 and 1997 debentures totaling $8,058,
$3,682 and $2,640, respectively, were converted into shares of common stock.
Based principally on the conversion feature and share price of common stock at
the end of 1998, the fair value of the outstanding Debentures approximated
$14,929.
9. RELATED PARTY TRANSACTIONS
In May, 1998, the Company purchased a fully leased building, located in Wood
Dale, Illinois, from a partnership, in which one of the Company's Senior
Officers and a Company Director were limited partners. The property was
purchased for approximately $3.3 million. This transaction satisfied the
Company's investment criteria and was approved by the Company's independent
directors.
10. SHAREHOLDERS' EQUITY
COMMON SHARES OF BENEFICIAL INTEREST
As of December 31, 1999 the Company has reserved 1,902,955 Common Shares for
future issuance under the 1993 Stock Option Plan, 119,596 Common Shares for
future issuance under the 1995 Restricted Stock Incentive Plan, 62,351 Common
Shares for future issuance under the 1995 Director Stock Plan and 1,000,000
Common Shares for future issuance under the dividend reinvestment and stock
purchase plan.
CLASS B COMMON SHARES OF BENEFICIAL INTEREST
On September 22, 1995, the Company completed a $50 million private equity
placement of non-voting preferred shares of beneficial interest. In May, 1996,
the preferred shares of beneficial interest automatically converted, on a share
for share basis, to non-voting Class B Common Shares, upon shareholder approval
of an amendment to the Company's charter permitting non-voting Class B Common
Shares at the Company's annual meeting. The distribution on the non-voting
shares is equal to the distribution paid on the voting shares of the Company
plus an additional $.0468 per share. In October, 1998, 874,639 non-voting
Class B Shares converted to voting shares. In January, 1999, February, 1999, and
August, 1999, 536,981, 784,305 and 76,802, respectively, of non-voting Class B
Shares converted to voting shares. There were no Class B Shares outstanding
after the August conversion. As the shares converted to voting common, the
distribution paid was the same as all other voting common shares.
F-17
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
10. SHAREHOLDERS' EQUITY (CONTINUED)
SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST
On November 10, 1997, the Company issued 3 million shares of 8.48% Series A
Cumulative Redeemable Preferred Shares of Beneficial Interest ("Series A
Preferred Shares") at a purchase price of $25 per share. Dividends on the
Preferred Shares are cumulative from the date of issuance and payable quarterly
commencing on January 30, 1998. The payment of dividends and amounts upon
liquidation will rank senior to the Common Shares and Series B Convertible
Cumulative Redeemable Preferred Shares, which are the only other shares of the
Company outstanding. The Preferred Shares are not redeemable prior to
October 30, 2002. On or after October 30, 2002 the Preferred Shares will be
redeemable for cash at the option of the Company, in whole or part, at the
redemption price of $25 per share, plus dividends accrued and unpaid to the
redemption date. The Preferred Shares are not convertible into or exchangeable
for any other property or securities of the Company.
SERIES B CONVERTIBLE CUMULATIVE REDEEMABLE PREFERRED SHARES OF BENEFICIAL
INTEREST
On June 23, 1999, the Company completed a public offering of 1,000,000
shares of 7.50% Series B Convertible Cumulative Redeemable Preferred Shares
("Series B Preferred Shares") at a purchase price of $50.00 per share. Dividends
on the Series B Preferred Shares are cumulative from the date of issuance and
payable quarterly commencing on September 30, 1999. The payment of dividends and
amounts upon liquidation will follow the Series A Preferred Shares, but rank
senior to the Common Shares. The shares have no maturity date, but may be
redeemed by the Company for $50.00 per share after June 30, 2004. The shares are
convertible into common shares at a conversion price of $43.50 per common share,
equivalent to a conversion rate of 1.1494 to 1. The net proceeds of the
offering, approximately $48.0 million, were used to refund outstanding balances
under the Company's unsecured line of credit.
RESTRICTED STOCK INCENTIVE PLAN
Under the terms of the 1995 Restricted Stock Incentive Plan, adopted in
1995, the Company initially reserved 150,000 common shares for future grants. In
1997 certain key employees were granted 12,444 restricted shares. Shares were
awarded in the name of each of the participants, who have all the rights of
other common shareholders, subject to certain restrictions and forfeiture
provisions. Restrictions on the shares expire no more than eight years after the
date of award, or earlier if certain performance targets are met.
Unearned compensation is recorded at the date of awards based on the market
value of shares. Unearned compensation, which is shown as a separate component
of shareholders' equity, is being amortized to expense over the eight year
vesting period. The amount amortized to expense during 1999, 1998 and 1997 was
$49, $201, and $214, respectively.
DIRECTOR STOCK PLAN
The 1995 Director Stock Plan is for an aggregate of 75,000 common shares and
provides that each independent director, upon election or re-election to the
Board, may elect to receive 50% of his annual retainer fee in Common Shares at
the market price on such date. In 1999, 1998, and 1997, 3,058, 2,304, and 1,921
Common Shares were issued under this plan, respectively. In connection with the
issuance of such shares, $110, $80 and $57 was charged to expense in 1999, 1998
and 1997, respectively.
F-18
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
10. SHAREHOLDERS' EQUITY (CONTINUED)
SHAREHOLDER RIGHTS PLAN
In July, 1998, the Board of Trustees approved a shareholder protection plan
(the "plan"), declaring a dividend of one right for each share of the Company's
common shares outstanding on or after August 11, 1998. Exercisable 10 days after
any person or group acquires 15 percent or more or commences a tender offer for
15 percent or more of the Company's common shares, each right entitles the
holder to purchase from the Company one one-thousandth of a Junior Preferred
Share of Beneficial Interest, Series A (a "Rights Preferred Share"), at a price
of $120, subject to adjustment. The Rights Preferred Shares (1) are
non-redeemable, (2) are entitled to a minimum preferential quarterly dividend
payment equal to the greater of $25 per share or 1,000 times the Company's
common share dividend, (3) have a minimum liquidation preference equal to the
greater of $100 per share or 1,000 times the liquidation payment made per common
share and (4) are entitled to vote with the common shares with each Rights
Preferred Share having 1,000 votes. 50,000 of the Company's authorized preferred
shares have been designated for the plan.
The plan was not adopted in response to any takeover attempt but was
intended to provide the Board with sufficient time to consider any and all
alternatives under such circumstances. Its provisions are designed to protect
the Company's shareholders in the event of an unsolicited attempt to acquire the
Company at a value that is not in the best interest of the Company's
shareholders.
11. STOCK OPTION PLAN
The Company has adopted the 1993 Stock Option Plan (the "Plan"). In May,
1998, the Plan was amended to increase the maximum number of shares to 10% of
the total number of common shares outstanding as of the most recent year end
(2,179,923 as of December 31, 1999). The May, 1998, Plan amendment also provides
that the maximum number of options granted under the plan be the total of 10% of
the number of common shares outstanding on the last day of the preceding
calendar year, commencing January 1, 1999, minus the number of options
previously granted under the Plan before the end of the preceding calendar year
plus the number of options which have expired. The Company adopted the Plan to
provide additional incentives to attract and retain directors, officers and key
employees. The Plan was amended in 1995 to provide that each independent
director receive an option for 3,000 common shares of beneficial interest at
fair market value at the time of being elected or re-elected to the Board.
Options are to be granted by the Compensation Committee of the Board of
Directors. The term of the option shall be fixed by the Compensation Committee,
but no option shall be exercisable more than 10 years after the date of grant.
F-19
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
11. STOCK OPTION PLAN (CONTINUED)
The options granted are at fair market value on the date of grant, are for
10-year or 5-year terms and become exercisable in 20% or 33% annual increments,
respectively, after one year from date of grant. Option activity for the three
years ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.......... 1,249,158 $ 27.73 755,669 $22.92 698,480 $19.20
Granted................................. 363,231 32.45 588,179 33.97 241,769 31.38
Exercised............................... (51,257) 26.09 (25,500) 18.86 (149,715) 19.19
Expired................................. (63,227) 33.21 (69,190) 32.00 (34,865) 24.73
--------- --------- --------
Outstanding at end of year................ 1,497,905 $ 28.70 1,249,158 $27.73 755,669 $22.92
========= ========= ========
Exercisable at end of year................ 596,782 441,126 327,137
Available for future grant at year end.... 405,050 569,155 584,229
Weighted average per share fair value of
options granted during the year......... $ 4.26 $ 4.92 $ 3.65
</TABLE>
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Risk free interest rate........................... 5.4% 5.7% 6.4%
Dividend yield.................................... 5.5% 5.1% 6.5%
Expected lives.................................... 6 years 6 years 6 years
Expected volatility............................... 18.9% 18.6% 17.5%
</TABLE>
F-20
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
11. STOCK OPTION PLAN (CONTINUED)
The following table summarizes information about stock options at
December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------- ----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICE AT 12/31/99 LIFE PRICE AT 12/31/99 PRICE
- -------------- ----------- ----------- -------- ----------- --------
<C> <C> <S> <C> <C> <C>
$18.25-$24.88... 478,668 2.30 years $19.36 429,312 $19.08
$31.50-$35.94... 1,019,237 9.18 years $33.08 167,470 $32.98
</TABLE>
The Company has applied Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its Plan, accordingly, no compensation
costs have been recognized. Had compensation costs for the Company's Plan been
determined based on the fair value at the grant date for options granted in
1999, 1998 and 1997 in accordance with the method required by Statement of
Financial Accounting Standards No. 123, the Company's net income and net income
per share would have been reduced to the pro forma amounts as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
---------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income available to common shareholders
As reported.................................. $40,442 $25,888 $26,359
Pro forma.................................... $38,895 $25,406 $26,221
Per share net income available to common
shareholders
As reported
Basic...................................... 1.99 1.30 1.41
Diluted.................................... 1.96 1.29 1.39
Pro forma
Basic...................................... 1.91 1.28 1.41
Diluted.................................... 1.89 1.26 1.38
</TABLE>
12. FUTURE RENTAL REVENUES
Under existing noncancelable operating lease agreements as of December 31,
1999, tenants of the warehouse/industrial properties are committed to pay in
aggregate the following minimum rentals:
<TABLE>
<S> <C>
2000........................................................ $ 85,291
2001........................................................ 76,647
2002........................................................ 66,027
2003........................................................ 53,578
2004........................................................ 46,501
Thereafter.................................................. 107,874
--------
Total....................................................... $435,918
========
</TABLE>
F-21
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
12. FUTURE RENTAL REVENUES (CONTINUED)
At December 31, 1999 and 1998, 636 and 621, respectively, of the total 682
apartments available for rental at the Lakeshore Dunes property were leased.
Lease terms are generally for one year.
13. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid, net of interest capitalized................ $ 17,655 $ 12,122 $ 11,820
Interest capitalized...................................... 1,926 2,214 893
Dividends declared, not paid.............................. 1,060 1,060 901
Assignment of note receivable to affiliate................ 4,650
Repayment of advance from affiliate with real estate at
book value.............................................. 24,993
In conjunction with the property acquisitions, the Company
assumed the following assets and liabilities:
Purchase of real estate................................... $153,903 $ 92,510 $125,352
Liabilities, net of other assets.......................... (3,662) (2,224) (3,262)
Mortgage notes payable.................................... (20,586)
-------- -------- --------
Acquisition of real estate................................ $150,241 $ 69,700 $122,090
======== ======== ========
In conjunction with the property dispositions, the Company
disposed of the following assets and liabilities:
Sale of real estate....................................... $(50,889) $(32,841) $(12,737)
Mortgage note receivable.................................. 3,139
Liabilities, net of other assets.......................... 640 565 (633)
Gain on disposal of real estate........................... (5,086) (1,672) (140)
-------- -------- --------
Disposition of real estate................................ $(52,196) $(33,948) $(13,510)
======== ======== ========
Conversion of convertible subordinated debentures payable:
Convertible subordinated dentures converted............... $ 8,058 $ 3,682 $ 2,640
Common shares issued at $18.25 per share; 441,513, 201,748
and 144,640............................................. 8,057 3,682 2,639
-------- -------- --------
Cash disbursed for fractional shares...................... $ 1 $ -- $ 1
======== ======== ========
</TABLE>
14. 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, or liquidity of the
Company.
The Company has entered into several contracts for the acquisition of
properties. Each acquisition is subject to satisfactory completion of due
diligence and, in the case of developments, completion and occupancy of the
project.
At December 31, 1999, four of the properties owned are subject to purchase
options held by certain tenants. The purchase options are exercisable at various
intervals through 2006 for amounts that are greater than the net book value of
the assets. The tenant for a property at 655 Wheat Lane, Wood Dale, Illinois
exercised its option and purchase the building in May, 1997.
F-22
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
15. SUBSEQUENT TRANSACTIONS
On January 12, 2000 the Company issued $150 million in senior unsecured
notes, due January 15, 2003 and bearing interest at 7.9%. The notes are lead by
Lehman Brothers Holdings, with A.G. Edwards & Sons, Inc., Banc of America
Securities LLC, Bank One Capital Markets, Inc., and First Union Securities
acting as co-managers. The net proceeds of the issuance of approximately
$149.1 million were used to pay down the Company's line of credit.
On January 21, 2000, the Company formed CenterPoint Venture LLC, a
co-investment entity between the Company's taxable affiliate and CalEast, an
investment vehicle between the California Public Employees Retirement System
(CalPERS) and Jones Lang LaSalle (JLL:NYSE). The $200 million fund has been
capitalized with equity commitments of $60 million by CalEast and $20 million by
CenterPoint, supported by a $120 million credit facility led by Bank One.
CenterPoint formed the venture to position, package and sell stabilized
industrial property investment opportunities routinely passed over by the
Company due to its more "value-added" investment focus. The venture intends to
offer these fully leased "institutional quality" assets to more fixed income
oriented investors, who lack the staff and/or day-to-day market penetration to
efficiently invest in Midwest industrial property. Unlike typical REIT joint
ventures, the partnership does not intend to hold assets for the long term.
F-23
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
16. QUARTERLY FINANCIAL HIGHLIGHTS (UNAUDITED)
The following table reflects the results of operations for the Company
during the four quarters of 1999 and 1998(dollars in thousands, except unit and
per share data).
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1999 1999 1999 1999
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Total revenues................................... $33,596 $32,054 $40,046 $33,240
Income before extraordinary income............... 12,159 7,952 16,185 13,046
Net income available to common shareholders...... 10,569 5,708 13,646 10,519
Net income available to common shareholders per
share before extraordinary item:
Basic.......................................... 0.52 0.31 0.67 0.51
Diluted........................................ 0.52 0.31 0.67 0.50
Net income available to common shareholders per
share:
Basic.......................................... 0.52 0.28 0.67 0.51
Diluted........................................ 0.52 0.28 0.67 0.50
EBITDA (earnings before interest, taxes,
amortization and depreciation)................. 22,973 20,698 28,252 26,629
Per share distributions.......................... 0.475 0.475 0.475 0.475
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Total revenues................................... $26,786 $26,581 $27,104 $26,755
Net income available to common shareholders...... 7,981 6,088 6,518 5,301
Net income available to common shareholders per
share:
Basic.......................................... 0.42 0.30 0.32 0.26
Diluted........................................ 0.41 0.30 0.32 0.26
EBITDA (earnings before interest, taxes,
amortization and depreciation)................. 17,681 16,359 17,668 17,434
Per share distributions.......................... 0.438 0.438 0.438 0.438
</TABLE>
F-24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Trustees and Shareholders of
CenterPoint Properties Trust
Our audits of the consolidated financial statements referred to in our
report dated February 11, 2000 appearing in the 1999 Annual Report to
Shareholders of CenterPoint Properties Trust and Subsidiaries (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial statement schedules
listed in Item 14(a)(2) of this Form 10-K). In our opinion, these financial
statement schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
February 11, 2000
F-25
<PAGE>
SCHEDULE II
CENTERPOINT PROPERTIES TRUST
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BEGINNING CHARGE TO COST AND ENDING
DESCRIPTION BALANCE EXPENSES RECOVERIES DEDUCTIONS(A) BALANCE
- ----------- --------- ------------------ ---------- ------------- --------
<S> <C> <C> <C> <C> <C>
For year ended December 31, 1999:
Allowance for doubtful accounts.... $575 $659 $ -- ($503) $731
For year ended December 31, 1998:
Allowance for doubtful accounts.... $272 $550 $ -- ($247) $575
For year ended December 31, 1997:
Allowance for doubtful accounts.... $748 $279 $ -- ($755) $272
</TABLE>
- ------------------------
NOTE: (a) Deductions represent write-off of accounts receivable against the
allowance for doubtful accounts.
F-26
<PAGE>
SCHEDULE III
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
WAREHOUSE/INDUSTRIAL PROPERTIES:
425 W. 151st Street
East Chicago, IN....................... $ 252 $ 1,805 $ 33 $ 4,565 $ 1,155
201 Mississippi Street
Gary, IN............................... $50,000(g) 807 9,948 278 21,343
1201 Lunt Avenue
Elk Grove Village, IL.................. (g) 57 146 1 6
620 Butterfield Road
Mundelein, IL.......................... 335 1,974 61 16
1319 Marquette Drive
Romeoville, IL......................... (g) 948 2,530 0 102
900 E. 103rd Street
Chicago, IL............................ 2,226 10,693 0 7,312
1520 Pratt Avenue
Elk Grove Village, IL.................. (g) 498 1,558 0 11
1850 Greenleaf
Elk Grove Village, IL.................. 509 1,386 0 354
2743 Armstrong Court
Des Plaines, IL........................ 1,320 2,679 0 282
5990 Touhy Avenue
Niles, IL.............................. 2,047 8,509 0 1,444
2339 Ernie Krueger Court
Waukegan, IL........................... 158 1,819 0 10
1400 Busse Road
Elk Grove Village, IL.................. 439 5,719 0 298
1250 Carolina Drive
West Chicago, IL....................... 583 3,836 0 266
5619 W. 115th Street
Alsip, IL.............................. (g) 2,267 12,169 0 1,828
825 Tollgate Road
Elgin, IL.............................. (g) 712 3,584 0 112
720 Frontenac
Naperville, IL......................... 1,014 4,055 22 166
820 Frontenac
Naperville, IL......................... 906 3,626 0 181
1120 Frontenac
Naperville, IL......................... 791 3,164 23 726
1510 Frontenac
Naperville, IL......................... 621 2,485 16 91
1020 Frontenac
Naperville, IL......................... 591 2,363 11 359
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
WAREHOUSE/INDUSTRIAL PROPERTIES:
425 W. 151st Street
East Chicago, IN....................... $ 285 $ 7,525 $ 7,810 ($ 3,174) 1913/1988-1990 1987
201 Mississippi Street
Gary, IN............................... 1,085 31,291 32,376 (10,713) 1946/1985-1988 1985
1201 Lunt Avenue
Elk Grove Village, IL.................. 58 152 210 (30) 1971 1993
620 Butterfield Road
Mundelein, IL.......................... 396 1,990 2,386 (380) 1990 1993
1319 Marquette Drive
Romeoville, IL......................... 948 2,632 3,580 (493) 1990-1991 1993
900 E. 103rd Street
Chicago, IL............................ 2,226 18,005 20,231 (2,787) 1910 1993
1520 Pratt Avenue
Elk Grove Village, IL.................. 498 1,569 2,067 (300) 1968 1993
1850 Greenleaf
Elk Grove Village, IL.................. 509 1,740 2,249 (283) 1965 1993
2743 Armstrong Court
Des Plaines, IL........................ 1,320 2,961 4,281 (545) 1989-1990 1993
5990 Touhy Avenue
Niles, IL.............................. 2,047 9,953 12,000 (1,788) 1957 1993
2339 Ernie Krueger Court
Waukegan, IL........................... 158 1,829 1,987 (351) 1990 1993
1400 Busse Road
Elk Grove Village, IL.................. 439 6,017 6,456 (1,295) 1987 1993
1250 Carolina Drive
West Chicago, IL....................... 583 4,102 4,685 (769) 1989-1990 1993
5619 W. 115th Street
Alsip, IL.............................. 2,267 13,997 16,264 (2,610) 1974 1993
825 Tollgate Road
Elgin, IL.............................. 712 3,696 4,408 (697) 1989-1991 1993
720 Frontenac
Naperville, IL......................... 1,036 4,221 5,257 (799) 1991 1993
820 Frontenac
Naperville, IL......................... 906 3,807 $ 4,713 (708) 1988 1993
1120 Frontenac
Naperville, IL......................... 814 3,890 4,704 (721) 1980 1993
1510 Frontenac
Naperville, IL......................... 637 2,576 3,213 (488) 1986 1993
1020 Frontenac
Naperville, IL......................... 602 2,722 3,324 (485) 1980 1993
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
WAREHOUSE/INDUSTRIAL PROPERTIES:
425 W. 151st Street
East Chicago, IN....................... (f)
201 Mississippi Street
Gary, IN............................... (f)
1201 Lunt Avenue
Elk Grove Village, IL.................. (f)
620 Butterfield Road
Mundelein, IL.......................... (f)
1319 Marquette Drive
Romeoville, IL......................... (f)
900 E. 103rd Street
Chicago, IL............................ (f)
1520 Pratt Avenue
Elk Grove Village, IL.................. (f)
1850 Greenleaf
Elk Grove Village, IL.................. (f)
2743 Armstrong Court
Des Plaines, IL........................ (f)
5990 Touhy Avenue
Niles, IL.............................. (f)
2339 Ernie Krueger Court
Waukegan, IL........................... (f)
1400 Busse Road
Elk Grove Village, IL.................. (f)
1250 Carolina Drive
West Chicago, IL....................... (f)
5619 W. 115th Street
Alsip, IL.............................. (f)
825 Tollgate Road
Elgin, IL.............................. (f)
720 Frontenac
Naperville, IL......................... (f)
820 Frontenac
Naperville, IL......................... (f)
1120 Frontenac
Naperville, IL......................... (f)
1510 Frontenac
Naperville, IL......................... (f)
1020 Frontenac
Naperville, IL......................... (f)
</TABLE>
F-27
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1560 Frontenac
Naperville, IL......................... 508 2,034 12 75
1500 Shore Road
Naperville, IL......................... 260 1,042 7 58
800 Enterprise
Naperville, IL......................... 212 849 7 40
1651 Frontenac
Naperville, IL......................... 185 742 6 66
1150 Shore Road
Naperville, IL......................... 184 736 5 122
2764 Golfview
Naperville, IL......................... 125 498 4 34
920 Frontenac
Naperville, IL......................... 717 2,367 0 573
1300 Northpoint Road
Waukegan IL............................ (g) 592 2,366 0 30
1 Wildlife Way
Long Grove, IL......................... 530 2,122 0 137
900 W. University Drive
Arlington Heights, IL.................. (g) 817 3,268 17 96
7001 Adams Street
Willowbrook, IL........................ (g) 297 1,326 0 4
745 Birginal Drive
Bensenville, IL........................ 601 2,406 1 497
21399 Torrence Avenue
Sauk Village, IL....................... 1,550 6,199 565 707
2600 N. Elmhurst Road
Elk Grove Village, IL.................. 842 3,366 1 46
8901 W. 102nd Street
Pleasant Prarie, WI.................... (g) 900 3,608 0 39
8200 100th Street
Pleasant Prarie, WI.................... (g) 1,220 4,890 0 35
1700 Hawthorne
West Chicago, IL....................... 2,522 10,089 1 25
245 Beinoris Drive
Wood Dale, IL.......................... (g) 168 570 1 13
825-845 Hawthorne
West Chicago, IL....................... 721 2,884 23 930
1700 Butterfield Road
Mundelein, IL.......................... (g) 343 1,371 (1) 143
1733 Downs Drive
West Chicago........................... (g) 488 1,953 1 858
1645 Downs Drive
West Chicago........................... (g) 508 2,033 1 581
10601 Seymour Avenue
Franklin Park, IL...................... 2,020 8,081 184 13,061
11701 South Central
Alsip, IL.............................. 1,241 4,964 22 1,320
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1560 Frontenac
Naperville, IL......................... 520 2,109 2,629 (403) 1987 1993
1500 Shore Road
Naperville, IL......................... 267 1,100 1,367 (208) 1985 1993
800 Enterprise
Naperville, IL......................... 219 889 1,108 (168) 1985 1993
1651 Frontenac
Naperville, IL......................... 191 808 999 (148) 1978 1993
1150 Shore Road
Naperville, IL......................... 189 858 1,047 (150) 1985 1993
2764 Golfview
Naperville, IL......................... 129 532 661 (100) 1985 1993
920 Frontenac
Naperville, IL......................... 717 2,940 3,657 (508) 1987 1993
1300 Northpoint Road
Waukegan IL............................ 592 2,396 2,988 (425) 1994 1994
1 Wildlife Way
Long Grove, IL......................... 530 2,259 2,789 (401) 1994 1994
900 W. University Drive
Arlington Heights, IL.................. 834 3,364 4,198 (586) 1974 1994
7001 Adams Street
Willowbrook, IL........................ 297 1,330 1,627 (230) 1994 1994
745 Birginal Drive
Bensenville, IL........................ 602 2,903 3,505 (455) 1974 1994
21399 Torrence Avenue
Sauk Village, IL....................... 2,115 6,906 9,021 (1,177) 1987 1994
2600 N. Elmhurst Road
Elk Grove Village, IL.................. 843 3,412 4,255 (518) 1995 1995
8901 W. 102nd Street
Pleasant Prarie, WI.................... 900 3,647 4,547 (601) 1990 1994
8200 100th Street
Pleasant Prarie, WI.................... 1,220 4,925 6,145 (814) 1990 1994
1700 Hawthorne
West Chicago, IL....................... 2,523 10,114 12,637 (1,633) 1959/1969 1994
245 Beinoris Drive
Wood Dale, IL.......................... 169 583 752 (109) 1988 1984
825-845 Hawthorne
West Chicago, IL....................... 744 3,814 4,558 (484) 1974 1995
1700 Butterfield Road
Mundelein, IL.......................... 342 1,514 1,856 (217) 1976 1995
1733 Downs Drive
West Chicago........................... 489 2,811 3,300 (291) 1976 1995
1645 Downs Drive
West Chicago........................... 509 2,614 3,123 (365) 1976 1995
10601 Seymour Avenue
Franklin Park, IL...................... 2,204 21,142 23,346 (1,662) 1963/1965 1995
11701 South Central
Alsip, IL.............................. 1,263 6,284 7,547 (755) 1972 1995
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
1560 Frontenac
Naperville, IL......................... (f)
1500 Shore Road
Naperville, IL......................... (f)
800 Enterprise
Naperville, IL......................... (f)
1651 Frontenac
Naperville, IL......................... (f)
1150 Shore Road
Naperville, IL......................... (f)
2764 Golfview
Naperville, IL......................... (f)
920 Frontenac
Naperville, IL......................... (f)
1300 Northpoint Road
Waukegan IL............................ (f)
1 Wildlife Way
Long Grove, IL......................... (f)
900 W. University Drive
Arlington Heights, IL.................. (f)
7001 Adams Street
Willowbrook, IL........................ (f)
745 Birginal Drive
Bensenville, IL........................ (f)
21399 Torrence Avenue
Sauk Village, IL....................... (f)
2600 N. Elmhurst Road
Elk Grove Village, IL.................. (f)
8901 W. 102nd Street
Pleasant Prarie, WI.................... (f)
8200 100th Street
Pleasant Prarie, WI.................... (f)
1700 Hawthorne
West Chicago, IL....................... (f)
245 Beinoris Drive
Wood Dale, IL.......................... (f)
825-845 Hawthorne
West Chicago, IL....................... (f)
1700 Butterfield Road
Mundelein, IL.......................... (f)
1733 Downs Drive
West Chicago........................... (f)
1645 Downs Drive
West Chicago........................... (f)
10601 Seymour Avenue
Franklin Park, IL...................... (f)
11701 South Central
Alsip, IL.............................. (f)
</TABLE>
F-28
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
11601 South Central
Alsip, IL.............................. 1,071 4,285 53 1,339
850 Arthur Avenue
Elk Grove Village, IL.................. 575 270 1,081 2 330
1827 North Bendix Drive
South Bend, IN......................... (g) 1,010 4,040 24 109
4400 S. Kolmar
Chicago, IL............................ (g) 603 2,412 9 118
6600 River Road
Hodgkins, IL........................... 2,640 10,562 47 711
7501 N. 81st Street
Milwaukee, WI.......................... 1,018 4,073 19 83
1100 Chase Avenue
Elk Grove Village, IL.................. (g) 248 993 7 245
2553 N. Edgington
Franklin Park, IL...................... 1,870 7,481 67 1,453
875 Fargo Avenue
Elk Grove Village, IL.................. 572 2,284 14 1,056
1800 Bruning Drive
Itasca, IL............................. 1,999 7,995 27 108
1501 Pratt
Elk Grove Village, IL.................. 1,047 4,189 72 517
400 N. Wolf Road
Northlake, IL.......................... 4,504 18,017 (996) 9,232
16400 W. 103rd Street
Lemont, IL............................. 446 1,748 21 256
425 S. 37th Avenue
St. Charles, IL........................ 644 2,575 7 241
1500 W. Dundee Road
Arlington Heights, IL.................. 4,995 10,006 (1,073) 14,802
Lot 51-Naperville Business Center
Naperville, IL......................... 220 (10) 16
3145 Central Avenue
Waukeegan, IL.......................... 1,270 5,080 20 1,706
2003-2207 South 114th Street
West Allis, WI......................... 942 3,770 7 76
2801 S. Busse Road
Elk Grove Village, IL.................. (g) 1,875 7,556 12 600 107
6464 West 51st Street
Forest View, IL........................ 934 3,734 4 216
6500 West 51st Street
Forest View, IL........................ 805 3,221 4 87
7447 South Central Avenue
Bedford Park, IL....................... 437 1,748 8 72
7525 S. Sayre Avenue
Bedford Park, IL....................... 587 2,345 5 597
2901 Centre Circle
Downers Grove, IL...................... 207 828 4 557
1 Allsteel Drive
Aurora, IL............................. 2,458 9,832 28 8,094
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
11601 South Central
Alsip, IL.............................. 1,124 5,624 6,748 (636) 1971 1995
850 Arthur Avenue
Elk Grove Village, IL.................. 272 1,411 1,683 (177) 1972/1973 1995
1827 North Bendix Drive
South Bend, IN......................... 1,034 4,149 5,183 (542) 1964/1990 1995
4400 S. Kolmar
Chicago, IL............................ 612 2,530 3,142 (325) 1964 1995
6600 River Road
Hodgkins, IL........................... 2,687 11,273 13,960 (1,289) Unknown 1996
7501 N. 81st Street
Milwaukee, WI.......................... 1,037 4,156 5,193 (477) 1987 1996
1100 Chase Avenue
Elk Grove Village, IL.................. 255 1,238 1,493 (146) 1969 1996
2553 N. Edgington
Franklin Park, IL...................... 1,937 8,934 10,871 (934) 1967/1989 1996
875 Fargo Avenue
Elk Grove Village, IL.................. 586 3,340 3,926 (330) 1979 1996
1800 Bruning Drive
Itasca, IL............................. 2,026 8,103 10,129 (911) 1975/1978 1996
1501 Pratt
Elk Grove Village, IL.................. 1,119 4,706 5,825 (520) 1973 1996
400 N. Wolf Road
Northlake, IL.......................... 3,508 27,249 30,757 (2,593) 1956/1965 1996
16400 W. 103rd Street
Lemont, IL............................. 467 2,004 2,471 (195) 1983 1996
425 S. 37th Avenue
St. Charles, IL........................ 651 2,816 3,467 (285) 1976 1996
1500 W. Dundee Road
Arlington Heights, IL.................. 3,922 24,808 28,730 (1,512) 1969/1971 1996
Lot 51-Naperville Business Center
Naperville, IL......................... 210 16 226 0 1996 1996
3145 Central Avenue
Waukeegan, IL.......................... 1,290 6,786 8,076 (616) 1960 1997
2003-2207 South 114th Street
West Allis, WI......................... 949 3,846 4,795 (334) 1965/1966 1997
2801 S. Busse Road
Elk Grove Village, IL.................. 1,887 8,263 10,150 (715) 1997 1997
6464 West 51st Street
Forest View, IL........................ 938 3,950 4,888 (331) 1973 1997
6500 West 51st Street
Forest View, IL........................ 809 3,308 4,117 (275) 1974 1997
7447 South Central Avenue
Bedford Park, IL....................... 445 1,820 2,265 (151) 1980 1997
7525 S. Sayre Avenue
Bedford Park, IL....................... 592 2,942 3,534 (208) 1980 1997
2901 Centre Circle
Downers Grove, IL...................... 211 1,385 1,596 (111) 1975 1997
1 Allsteel Drive
Aurora, IL............................. 2,486 17,926 20,412 (1,344) 1957-1967 1997
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
11601 South Central
Alsip, IL.............................. (f)
850 Arthur Avenue
Elk Grove Village, IL.................. (f)
1827 North Bendix Drive
South Bend, IN......................... (f)
4400 S. Kolmar
Chicago, IL............................ (f)
6600 River Road
Hodgkins, IL........................... (f)
7501 N. 81st Street
Milwaukee, WI.......................... (f)
1100 Chase Avenue
Elk Grove Village, IL.................. (f)
2553 N. Edgington
Franklin Park, IL...................... (f)
875 Fargo Avenue
Elk Grove Village, IL.................. (f)
1800 Bruning Drive
Itasca, IL............................. (f)
1501 Pratt
Elk Grove Village, IL.................. (f)
400 N. Wolf Road
Northlake, IL.......................... (f)
16400 W. 103rd Street
Lemont, IL............................. (f)
425 S. 37th Avenue
St. Charles, IL........................ (f)
1500 W. Dundee Road
Arlington Heights, IL.................. (f)
Lot 51-Naperville Business Center
Naperville, IL......................... (f)
3145 Central Avenue
Waukeegan, IL.......................... (f)
2003-2207 South 114th Street
West Allis, WI......................... (f)
2801 S. Busse Road
Elk Grove Village, IL.................. (f)
6464 West 51st Street
Forest View, IL........................ (f)
6500 West 51st Street
Forest View, IL........................ (f)
7447 South Central Avenue
Bedford Park, IL....................... (f)
7525 S. Sayre Avenue
Bedford Park, IL....................... (f)
2901 Centre Circle
Downers Grove, IL...................... (f)
1 Allsteel Drive
Aurora, IL............................. (f)
</TABLE>
F-29
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
2525 Busse Highway
Elk Grove Village, IL.................. 5,400 12,601 (727) 6,694
106th and Buffalo Avenue
Chicago, IL............................ 248 992 9 600
7400 South Narragansett
Bedford Park,IL........................ 743 2,972 10 189
2701 S. Busse Road
Elk Grove Village, IL.................. (g) 1,875 5,667 4 1,325 255
East Avenue and 55th Street
McCook, IL............................. 1,190 4,761 57 3,311
6757 S. Sayre
Bedford Park, IL....................... 1,236 4,945 7 109
1951 Landmeir Road
Elk Grove Village, IL.................. 280 1,120 12 48
1355 Enterprise Drive
Romeoville, IL......................... 580 2,320 8 508
110-190 Old Higgins Road
Des Plaines, IL........................ 1,862 7,447 12 608
1475 S. 101st Street
West Allis, WI......................... 331 1,323 1 78
1333 Grandview Drive
Yorkville, WI.......................... 1,516 6,062 5 21
2301 Route 30
Plainfield, IL......................... 1,217 4,868 69 1,496
1796 Sherwin Avenue
Des Plaines, IL........................ 944 3,778 9 1,038
2727 W. Diehl Road
Naperville, IL......................... 3,071 14,232 5 388
O'hare Express Center--A2
Elk GroveVillage, IL................... 1,097 7,060 0 191 110
O'hare Express Center--B1
Elk GroveVillage, IL................... 1,682 10,500 0 939 96
O'hare Express--B2
Elk Grove Village, IL.................. 1,618 6,287 0 5,009 328
2021 Lunt Avenue
Elk Grove, IL.......................... 464 1,855 8 153
2121 Touhy Avenue
Elk Grove, IL.......................... 918 3,672 12 178
200 Champion Dr.
North Lake, IL......................... 467 6,124 0 51 87
860 West Evergreen
Chicago, IL............................ 1,169 4,675 11 21
2001 S. Mt. Prospect Road
Des Plaines, IL........................ 1,056 4,223 (75) 455
745 Dillon Drive
Wood Dale, IL.......................... 705 2,820 (60) (123)
1030 Fabyan Parkway
Batavia, IL............................ 1,323 5,292 (117) (148)
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
2525 Busse Highway
Elk Grove Village, IL.................. 4,673 19,295 23,968 (1,272) 1975 1997
106th and Buffalo Avenue
Chicago, IL............................ 257 1,592 1,849 (157) 1971 1997
7400 South Narragansett
Bedford Park,IL........................ 753 3,161 3,914 (231) 1977 1997
2701 S. Busse Road
Elk Grove Village, IL.................. 1,879 7,247 9,126 (463) 1997 1997
East Avenue and 55th Street
McCook, IL............................. 1,247 8,072 9,319 (431) 1979 1997
6757 S. Sayre
Bedford Park, IL....................... 1,243 5,054 6,297 (357) 1975 1997
1951 Landmeir Road
Elk Grove Village, IL.................. 292 1,168 1,460 (83) 1967 1997
1355 Enterprise Drive
Romeoville, IL......................... 588 2,828 3,416 (190) 1980/1986 1997
110-190 Old Higgins Road
Des Plaines, IL........................ 1,874 8,055 9,929 (502) 1980 1997
1475 S. 101st Street
West Allis, WI......................... 332 1,401 1,733 (86) 1968/1988 1997
1333 Grandview Drive
Yorkville, WI.......................... 1,521 6,083 7,604 (386) 1994 1997
2301 Route 30
Plainfield, IL......................... 1,286 6,364 7,650 (383) 1972/1984 1997
1796 Sherwin Avenue
Des Plaines, IL........................ 953 4,816 5,769 (313) 1964 1997
2727 W. Diehl Road
Naperville, IL......................... 3,076 14,620 17,696 (925) 1997 1997
O'hare Express Center--A2
Elk GroveVillage, IL................... 1,097 7,361 8,458 (584) 1997 1997
O'hare Express Center--B1
Elk GroveVillage, IL................... 1,682 11,535 13,217 (872) 1997 1997
O'hare Express--B2
Elk Grove Village, IL.................. 1,618 11,624 13,242 (248) 1999 1999
2021 Lunt Avenue
Elk Grove, IL.......................... 472 2,008 2,480 (119) 1972 1998
2121 Touhy Avenue
Elk Grove, IL.......................... 930 3,850 4,780 (231) 1962 1998
200 Champion Dr.
North Lake, IL......................... 467 6,262 6,729 (361) 1998 1998
860 West Evergreen
Chicago, IL............................ 1,180 4,696 5,876 (262) 1890/1995 1998
2001 S. Mt. Prospect Road
Des Plaines, IL........................ 981 4,678 5,659 (221) 1980 1998
745 Dillon Drive
Wood Dale, IL.......................... 645 2,697 3,342 (129) 1985/1986 1998
1030 Fabyan Parkway
Batavia, IL............................ 1,206 5,144 6,350 (253) 1978 1998
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
2525 Busse Highway
Elk Grove Village, IL.................. (f)
106th and Buffalo Avenue
Chicago, IL............................ (f)
7400 South Narragansett
Bedford Park,IL........................ (f)
2701 S. Busse Road
Elk Grove Village, IL.................. (f)
East Avenue and 55th Street
McCook, IL............................. (f)
6757 S. Sayre
Bedford Park, IL....................... (f)
1951 Landmeir Road
Elk Grove Village, IL.................. (f)
1355 Enterprise Drive
Romeoville, IL......................... (f)
110-190 Old Higgins Road
Des Plaines, IL........................ (f)
1475 S. 101st Street
West Allis, WI......................... (f)
1333 Grandview Drive
Yorkville, WI.......................... (f)
2301 Route 30
Plainfield, IL......................... (f)
1796 Sherwin Avenue
Des Plaines, IL........................ (f)
2727 W. Diehl Road
Naperville, IL......................... (f)
O'hare Express Center--A2
Elk GroveVillage, IL................... (f)
O'hare Express Center--B1
Elk GroveVillage, IL................... (f)
O'hare Express--B2
Elk Grove Village, IL.................. (f)
2021 Lunt Avenue
Elk Grove, IL.......................... (f)
2121 Touhy Avenue
Elk Grove, IL.......................... (f)
200 Champion Dr.
North Lake, IL......................... (f)
860 West Evergreen
Chicago, IL............................ (f)
2001 S. Mt. Prospect Road
Des Plaines, IL........................ (f)
745 Dillon Drive
Wood Dale, IL.......................... (f)
1030 Fabyan Parkway
Batavia, IL............................ (f)
</TABLE>
F-30
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
4700 Ironwood Drive
Franklin, WI........................... 419 3,415 11 66
2601 Bond Street
University Park, IL.................... 382 1,527 6 25
201 Oakton
Des Plaines, IL........................ 838 3,351 6 1,702
3601 Runge Avenue
Franklin Park, IL...................... 541 2,180 3 80
3400 N. Powell
Franklin Park, IL...................... 812 3,277 3 40
11100 West Addison
Franklin Park, IL...................... 250 1,013 13 63
11440 West Addison
Franklin Park, IL...................... 540 2,200 3 138
3434 N. Powell
Franklin Park, IL...................... 429 1,723 3 67
7633 S. Sayre
Bedford Park........................... 167 700 4 35
1999 N. Ruby
Franklin Park, IL...................... 402 1,615 3 146
11550 W. King Drive
Franklin Park, IL...................... 320 1,303 3 80
7201 S. Leamington
Bedford Park, IL....................... 340 1,697 (4) 10
1575 Executive Drive
Elgin, IL.............................. 240 964 3 33
7200 S. Mason
Bedford Park, IL....................... 1,037 4,286 3 64
6000 W. 73rd
Bedford Park, IL....................... 794 3,190 16 91
28160 N. Keith
Lake Forest, IL........................ 616 2,496 3 38
28618 N. Ballard
Lake Forest, IL........................ 469 1,943 3 40
28161 N. Keith
Lake Forest, IL........................ 270 1,092 3 40
11400 W. Melrose Street
Franklin Park, IL...................... 168 43 3 11
11801 S. Central
Alsip, IL.............................. 4,669 1,592 6,367 2 335
1925 Holmes Road
Elgin, IL.............................. 772 3,087 124 194
1808 Swift Dr.
Oak Brook, IL.......................... 475 2,620 0 2,849
1381 N. Northbranch
Chicago, IL............................ 161 645 14 68
5611 W. Mill Road
Milwaukee, WI.......................... 231 925 (13) 11
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
4700 Ironwood Drive
Franklin, WI........................... 430 3,481 3,911 (181) 1998 1998
2601 Bond Street
University Park, IL.................... 388 1,552 1,940 (77) 1975 1998
201 Oakton
Des Plaines, IL........................ 844 5,053 5,897 (207) 1984 1998
3601 Runge Avenue
Franklin Park, IL...................... 544 2,260 2,804 (106) 1962 1998
3400 N. Powell
Franklin Park, IL...................... 815 3,317 4,132 (157) 1961 1998
11100 West Addison
Franklin Park, IL...................... 263 1,076 1,339 (50) 1967 1998
11440 West Addison
Franklin Park, IL...................... 543 2,338 2,881 (107) 1961 1998
3434 N. Powell
Franklin Park, IL...................... 432 1,790 2,222 (84) 1960 1998
7633 S. Sayre
Bedford Park........................... 171 735 906 (35) 1968/1969 1998
1999 N. Ruby
Franklin Park, IL...................... 405 1,761 2,166 (79) 1962 1998
11550 W. King Drive
Franklin Park, IL...................... 323 1,383 1,706 (64) 1963 1998
7201 S. Leamington
Bedford Park, IL....................... 336 1,707 2,043 (81) 1958 1998
1575 Executive Drive
Elgin, IL.............................. 243 997 1,240 (47) 1980 1998
7200 S. Mason
Bedford Park, IL....................... 1,040 4,350 5,390 (205) 1974 1998
6000 W. 73rd
Bedford Park, IL....................... 810 3,281 4,091 (153) 1974 1998
28160 N. Keith
Lake Forest, IL........................ 619 2,534 3,153 (120) 1989 1998
28618 N. Ballard
Lake Forest, IL........................ 472 1,983 2,455 (94) 1984 1998
28161 N. Keith
Lake Forest, IL........................ 273 1,132 1,405 (53) 1986 1998
11400 W. Melrose Street
Franklin Park, IL...................... 171 54 225 (13) 1998
11801 S. Central
Alsip, IL.............................. 1,594 6,702 8,296 (288) 1985 1998
1925 Holmes Road
Elgin, IL.............................. 896 3,281 4,177 (134) 1989 1998
1808 Swift Dr.
Oak Brook, IL.......................... 475 5,469 5,944 (517) 1998 Var.
1381 N. Northbranch
Chicago, IL............................ 175 713 888 (28) 1900 1998
5611 W. Mill Road
Milwaukee, WI.......................... 218 936 1,154 (26) 1960 1998
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
4700 Ironwood Drive
Franklin, WI........................... (f)
2601 Bond Street
University Park, IL.................... (f)
201 Oakton
Des Plaines, IL........................ (f)
3601 Runge Avenue
Franklin Park, IL...................... (f)
3400 N. Powell
Franklin Park, IL...................... (f)
11100 West Addison
Franklin Park, IL...................... (f)
11440 West Addison
Franklin Park, IL...................... (f)
3434 N. Powell
Franklin Park, IL...................... (f)
7633 S. Sayre
Bedford Park........................... (f)
1999 N. Ruby
Franklin Park, IL...................... (f)
11550 W. King Drive
Franklin Park, IL...................... (f)
7201 S. Leamington
Bedford Park, IL....................... (f)
1575 Executive Drive
Elgin, IL.............................. (f)
7200 S. Mason
Bedford Park, IL....................... (f)
6000 W. 73rd
Bedford Park, IL....................... (f)
28160 N. Keith
Lake Forest, IL........................ (f)
28618 N. Ballard
Lake Forest, IL........................ (f)
28161 N. Keith
Lake Forest, IL........................ (f)
11400 W. Melrose Street
Franklin Park, IL...................... (f)
11801 S. Central
Alsip, IL.............................. (f)
1925 Holmes Road
Elgin, IL.............................. (f)
1808 Swift Dr.
Oak Brook, IL.......................... (f)
1381 N. Northbranch
Chicago, IL............................ (f)
5611 W. Mill Road
Milwaukee, WI.......................... (f)
</TABLE>
F-31
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
543 W. Algonquin
Arlington Heights, IL.................. 260 1,041 0 141
9550 W. 55th St.
McCook, IL............................. 486 7,579 0 123
1101 S. Sylvania
Yorkville, WI.......................... 764 3,055 2 30
7100 S. Madison
Willowbrook, IL........................ 1,007 3,177 13 145
100 W. Whitehall
Northlake, IL.......................... 578 7,791 0 7 185
101 45th Street
Munster, IN............................ 1,925 7,700 1 57
245 E. North Ave.
Carol Stream, IL....................... 1,668 6,672 3 34
250 W. 63rd St.
Westmont, IL........................... 188 751 0 24
22 W. 760 Poss St.
Glen Ellyn, IL......................... 286 1,145 0 26
9714 S. Route 59
Naperville, IL......................... 379 1,517 0 32
1000 Swanson Dr.
Batavia, IL............................ 211 846 0 19
425 N. Villa Ave.
Villa Park, IL......................... 325 1,300 0 25
6110 East Ave.
Hodgkins, IL........................... 174 696 0 33
16951 State Street
South Holland, IL...................... 397 1,589 0 46
1207 S. Greenwood
Maywood, IL............................ 10 40 0 23
1336 W. Monee Rd.
Crete, IL.............................. 28 112 0 27
1825 Pleasant
Dekalb, IL............................. 65 258 0 27
10047 Virginia Ave.
Chicago Ridge, IL...................... 240 960 0 12
2440 Pratt Ave.
Elk Grove Village, IL.................. 1,063 4,251 3 390
1555 North Basswood
Schaumburg, IL......................... 172 686 (1) 10
15W700 Frontage Rd.
Burr Ridge, IL......................... 244 976 0 13
261 Shore Dr.
Burr Ridge............................. 213 852 1 8
281 Shore Dr.
Burr Ridge, IL......................... 403 1,613 0 13
1140 W. Thorndale
Itasca, IL............................. 374 1,497 1 14
733-747 Kimberly Dr.
Carol Stream, IL....................... 499 1,994 0 14
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
543 W. Algonquin
Arlington Heights, IL.................. 260 1,182 1,442 (38) 1970 1998
9550 W. 55th St.
McCook, IL............................. 486 7,702 8,188 (150) 1999 1999
1101 S. Sylvania
Yorkville, WI.......................... 766 3,085 3,851 (69) 1995 1999
7100 S. Madison
Willowbrook, IL........................ 1,020 3,322 4,342 (90) 1999 1999
100 W. Whitehall
Northlake, IL.......................... 578 7,983 8,561 (182) 1999 1999
101 45th Street
Munster, IN............................ 1,926 7,757 9,683 (205) 1991 1999
245 E. North Ave.
Carol Stream, IL....................... 1,671 6,706 8,377 (141) 1967 1999
250 W. 63rd St.
Westmont, IL........................... 188 775 963 (16) 1967 1999
22 W. 760 Poss St.
Glen Ellyn, IL......................... 286 1,171 1,457 (25) 1964 1999
9714 S. Route 59
Naperville, IL......................... 379 1,549 1,928 (33) 1988 1999
1000 Swanson Dr.
Batavia, IL............................ 211 865 1,076 (18) 1990 1999
425 N. Villa Ave.
Villa Park, IL......................... 325 1,325 1,650 (28) 1996 1999
6110 East Ave.
Hodgkins, IL........................... 174 729 903 (15) 1979 1999
16951 State Street
South Holland, IL...................... 397 1,635 2,032 (34) 1983 1999
1207 S. Greenwood
Maywood, IL............................ 10 63 73 (1) 1995 1999
1336 W. Monee Rd.
Crete, IL.............................. 28 139 167 (3) 1974 1999
1825 Pleasant
Dekalb, IL............................. 65 285 350 (6) 1990 1999
10047 Virginia Ave.
Chicago Ridge, IL...................... 240 972 1,212 (20) 1994 1999
2440 Pratt Ave.
Elk Grove Village, IL.................. 1,066 4,641 5,707 (92) 1982 1999
1555 North Basswood
Schaumburg, IL......................... 171 696 867 (15) 1984 1999
15W700 Frontage Rd.
Burr Ridge, IL......................... 244 989 1,233 (21) 1989 1999
261 Shore Dr.
Burr Ridge............................. 214 860 1,074 (18) 1983 1999
281 Shore Dr.
Burr Ridge, IL......................... 403 1,626 2,029 (34) 1987 1999
1140 W. Thorndale
Itasca, IL............................. 375 1,511 1,886 (32) 1984 1999
733-747 Kimberly Dr.
Carol Stream, IL....................... 499 2,008 2,507 (42) 1991 1999
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
543 W. Algonquin
Arlington Heights, IL.................. (f)
9550 W. 55th St.
McCook, IL............................. (f)
1101 S. Sylvania
Yorkville, WI.......................... (f)
7100 S. Madison
Willowbrook, IL........................ (f)
100 W. Whitehall
Northlake, IL.......................... (f)
101 45th Street
Munster, IN............................ (f)
245 E. North Ave.
Carol Stream, IL....................... (f)
250 W. 63rd St.
Westmont, IL........................... (f)
22 W. 760 Poss St.
Glen Ellyn, IL......................... (f)
9714 S. Route 59
Naperville, IL......................... (f)
1000 Swanson Dr.
Batavia, IL............................ (f)
425 N. Villa Ave.
Villa Park, IL......................... (f)
6110 East Ave.
Hodgkins, IL........................... (f)
16951 State Street
South Holland, IL...................... (f)
1207 S. Greenwood
Maywood, IL............................ (f)
1336 W. Monee Rd.
Crete, IL.............................. (f)
1825 Pleasant
Dekalb, IL............................. (f)
10047 Virginia Ave.
Chicago Ridge, IL...................... (f)
2440 Pratt Ave.
Elk Grove Village, IL.................. (f)
1555 North Basswood
Schaumburg, IL......................... (f)
15W700 Frontage Rd.
Burr Ridge, IL......................... (f)
261 Shore Dr.
Burr Ridge............................. (f)
281 Shore Dr.
Burr Ridge, IL......................... (f)
1140 W. Thorndale
Itasca, IL............................. (f)
733-747 Kimberly Dr.
Carol Stream, IL....................... (f)
</TABLE>
F-32
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1020-50 W. Thorndale
Itasca, IL............................. 396 1,585 1 13
780 AEC Dr.
Wood Dale, IL.......................... 134 538 0 12
165 Mittel Dr.
Wood Dale, IL.......................... 121 486 1 13
1936 University Lane
Batavia, IL............................ 203 812 0 13
1705-1775 Hubbard Ave.
Batavia, IL............................ 234 936 0 62
900 Paramount Parkway
Batavia, IL............................ 250 1,001 2 18
918 Paramount Parkway
Batavia, IL............................ 70 279 0 21
902 Paramount
Batavia, IL............................ 99 394 0 34
950 Paramount Parkway
Batavia, IL............................ 120 482 0 20
934 Paramount Parkway
Batavia, IL............................ 82 326 0 18
1324-40 Paramount Parkway
Wood Dale, IL.......................... 210 841 0 18
1243-53 Naperville, Dr.
Romeoville, IL......................... 526 2,102 0 15
1201-25 Naperville Dr.
Romeoville, IL......................... 237 950 1 15
1200 Independence Blvd.
Romeoville, IL......................... 342 1,367 0 15
1237 Naperville Dr.
Romeoville, IL......................... 61 243 0 13
1235 Naperville Dr.
Romeoville, IL......................... 59 237 0 35
1231-33 Naperville Dr.
Romeoville, IL......................... 195 780 0 13
1227 Naperville Dr.
Romeoville, IL......................... 88 350 0 23
1229 Naperville Dr.
Romeoville, IL......................... 69 275 0 12
1277 Naperville Dr.
Romeoville, IL......................... 246 983 0 18
1265 Naperville Dr.
Romeoville, IL......................... 571 2,285 1 15
1287 Naperville Dr.
Romeoville, IL......................... 440 1,760 0 18
737 Fargo Ave.
Elk Grove Village, IL.................. 460 1,841 12 85
3511 W. Greentree Rd.
Milwaukee, WI.......................... 540 2,160 0 112
951 Fargo Ave.
Elk Grove Village, IL.................. 955 2,470 (1) 194
6736 W. Washington
West Allis, WI......................... 814 3,585 3 48
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1020-50 W. Thorndale
Itasca, IL............................. 397 1,598 1,995 (34) 1983 1999
780 AEC Dr.
Wood Dale, IL.......................... 134 550 684 (12) 1987 1999
165 Mittel Dr.
Wood Dale, IL.......................... 122 499 621 (10) 1984 1999
1936 University Lane
Batavia, IL............................ 203 825 1,028 (17) 1993 1999
1705-1775 Hubbard Ave.
Batavia, IL............................ 234 998 1,232 (20) 1985 1999
900 Paramount Parkway
Batavia, IL............................ 252 1,019 1,271 (21) 1986 1999
918 Paramount Parkway
Batavia, IL............................ 70 300 370 (6) 1987 1999
902 Paramount
Batavia, IL............................ 99 428 527 (9) 1987 1999
950 Paramount Parkway
Batavia, IL............................ 120 502 622 (10) 1987 1999
934 Paramount Parkway
Batavia, IL............................ 82 344 426 (7) 1987 1999
1324-40 Paramount Parkway
Wood Dale, IL.......................... 210 859 1,069 (18) 1992 1999
1243-53 Naperville, Dr.
Romeoville, IL......................... 526 2,117 2,643 (45) 1994 1999
1201-25 Naperville Dr.
Romeoville, IL......................... 238 965 1,203 (20) 1986 1999
1200 Independence Blvd.
Romeoville, IL......................... 342 1,382 1,724 (29) 1983 1999
1237 Naperville Dr.
Romeoville, IL......................... 61 256 317 (5) 1987 1999
1235 Naperville Dr.
Romeoville, IL......................... 59 272 331 (5) 1987 1999
1231-33 Naperville Dr.
Romeoville, IL......................... 195 793 988 (17) 1988 1999
1227 Naperville Dr.
Romeoville, IL......................... 88 373 461 (8) 1988 1999
1229 Naperville Dr.
Romeoville, IL......................... 69 287 356 (6) 1988 1999
1277 Naperville Dr.
Romeoville, IL......................... 246 1,001 1,247 (21) 1992 1999
1265 Naperville Dr.
Romeoville, IL......................... 572 2,300 2,872 (49) 1996 1999
1287 Naperville Dr.
Romeoville, IL......................... 440 1,778 2,218 (37) 1997 1999
737 Fargo Ave.
Elk Grove Village, IL.................. 472 1,926 2,398 (30) 1975 1999
3511 W. Greentree Rd.
Milwaukee, WI.......................... 540 2,272 2,812 (41) 1969-1971 1999
951 Fargo Ave.
Elk Grove Village, IL.................. 954 2,664 3,618 (47) 1973 1999
6736 W. Washington
West Allis, WI......................... 817 3,633 4,450 (81) 1998 1999
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
1020-50 W. Thorndale
Itasca, IL............................. (f)
780 AEC Dr.
Wood Dale, IL.......................... (f)
165 Mittel Dr.
Wood Dale, IL.......................... (f)
1936 University Lane
Batavia, IL............................ (f)
1705-1775 Hubbard Ave.
Batavia, IL............................ (f)
900 Paramount Parkway
Batavia, IL............................ (f)
918 Paramount Parkway
Batavia, IL............................ (f)
902 Paramount
Batavia, IL............................ (f)
950 Paramount Parkway
Batavia, IL............................ (f)
934 Paramount Parkway
Batavia, IL............................ (f)
1324-40 Paramount Parkway
Wood Dale, IL.......................... (f)
1243-53 Naperville, Dr.
Romeoville, IL......................... (f)
1201-25 Naperville Dr.
Romeoville, IL......................... (f)
1200 Independence Blvd.
Romeoville, IL......................... (f)
1237 Naperville Dr.
Romeoville, IL......................... (f)
1235 Naperville Dr.
Romeoville, IL......................... (f)
1231-33 Naperville Dr.
Romeoville, IL......................... (f)
1227 Naperville Dr.
Romeoville, IL......................... (f)
1229 Naperville Dr.
Romeoville, IL......................... (f)
1277 Naperville Dr.
Romeoville, IL......................... (f)
1265 Naperville Dr.
Romeoville, IL......................... (f)
1287 Naperville Dr.
Romeoville, IL......................... (f)
737 Fargo Ave.
Elk Grove Village, IL.................. (f)
3511 W. Greentree Rd.
Milwaukee, WI.......................... (f)
951 Fargo Ave.
Elk Grove Village, IL.................. (f)
6736 W. Washington
West Allis, WI......................... (f)
</TABLE>
F-33
<PAGE>
<TABLE>
<CAPTION>
INITIAL COSTS COSTS CAPITALIZED
------------------------ SUBSEQUENT TO
ACQUISITION
BUILDINGS AND -------------------------
ENCUMBRANCES IMPROVEMENTS BUILDINGS AND CARRYING
DESCRIPTION (E) LAND (A) LAND IMPROVEMENTS COSTS (B)
- ----------- ------------ -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
301 E. Vienna
Milwaukee, WI.......................... 1,005 4,022 22 (65)
3602 N. Kennicott
Arlington Heights, IL.................. 515 3,735 11 18
317 W. Lake St.
Northlake, IL.......................... 2,735 10,940 0 479
1500 W. Thorndale Ave.
Itasca, IL............................. 328 1,312 0 7
10801 W. Irving Park Rd
Chicago, IL............................ 0 8,056 0 (689) 159
3412-26 W. Touhy
Skokie, IL............................. 519 2,075 0 19
3450 W. Touhy
Skokie, IL............................. 970 3,881 0 6
11100 W. Silver Spring Rd.
Milwaukee, WI.......................... 986 3,945 0 14
7525 West Industrial Dr.
Forest Park, IL........................ 260 1,040 0 25
7526 Industrial Dr.
Forest Park, IL........................ 192 768 0 13
875 Diggins St.
Harvard, IL............................ 788 3,154 41 161
3400 West Pratt
Lincolnwood, IL........................ 1,638 6,554 22 87
CONSTRUCTION IN PROGRESS:
O'hare Express--C
Elk Grove Village, IL.................. 2,603 13,179 0 335
5480 W. 70th
Bedford Park, IL....................... 475 4
5700 West Touhy Avenue
Niles, IL.............................. 8,749 27,762 37 1,093
Home Depot
Montgomery, IL......................... 1,771 10
521 E. North Ave
Glendale Heights, IL................... 4,671
1324-40 Paramount
Batavia, IL............................ 715
RETAIL PROPERTIES:
100 Old McHenry Road
Wheeling, IL........................... 482 2,152 0
351 N. Rohlwing Road
Itasca, IL............................. 81 464 1 0
4-48 Barrington Road
Streamwood, IL......................... 573 2,297 (62) 128
RESIDENTIAL PROPERTIES
440 North Lake Street
Miller, IN............................. 21,532 711 3,086 101 19,154 3,980
OFFICES OF THE MANAGEMENT COMPANY
Chicago, IL............................ 675 15,918 145 (1,371) 513
----------- ------- -------- ------- -------- -------
Totals................................... $76,776 $159,713 $654,203 ($ 480) $151,151 $ 8,413
=========== ======= ======== ======= ======== =======
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF
PERIOD
------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL (C) (D) DEPRECIATION CONSTRUCTION ACQUIRED
- ----------- -------- ------------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
301 E. Vienna
Milwaukee, WI.......................... 1,027 3,957 4,984 (62) 1999 1999
3602 N. Kennicott
Arlington Heights, IL.................. 526 3,753 4,279 (30) 1999 1999
317 W. Lake St.
Northlake, IL.......................... 2,735 11,419 14,154 (118) 1972 1999
1500 W. Thorndale Ave.
Itasca, IL............................. 328 1,319 1,647 (7) 1991 1999
10801 W. Irving Park Rd
Chicago, IL............................ 0 7,526 7,526 (60) 1999 1999
3412-26 W. Touhy
Skokie, IL............................. 519 2,094 2,613 (11) 1972 1999
3450 W. Touhy
Skokie, IL............................. 970 3,887 4,857 (21) 1972 1999
11100 W. Silver Spring Rd.
Milwaukee, WI.......................... 986 3,959 4,945 (10) 1968 1999
7525 West Industrial Dr.
Forest Park, IL........................ 260 1,065 1,325 (3) 1974 1999
7526 Industrial Dr.
Forest Park, IL........................ 192 781 973 (2) 1992 1999
875 Diggins St.
Harvard, IL............................ 829 3,315 4,144 (9) 1952 1999
3400 West Pratt
Lincolnwood, IL........................ 1,660 6,641 8,301 (18) 1955 1999
CONSTRUCTION IN PROGRESS:
O'hare Express--C
Elk Grove Village, IL.................. 2,603 13,514 16,117 0
5480 W. 70th
Bedford Park, IL....................... 475 4 479 0
5700 West Touhy Avenue
Niles, IL.............................. 8,786 27,762 36,548 (8) 1948 1997
Home Depot
Montgomery, IL......................... 0 1,771 1,771 0
521 E. North Ave
Glendale Heights, IL................... 4,671 4,671 0
1324-40 Paramount
Batavia, IL............................ 715 715
RETAIL PROPERTIES:
100 Old McHenry Road
Wheeling, IL........................... 482 2,203 2,685 (472) 1989-1990 1993
351 N. Rohlwing Road
Itasca, IL............................. 82 464 546 (89) 1989 1993
4-48 Barrington Road
Streamwood, IL......................... 511 2,425 2,936 (444) 1989 1994
RESIDENTIAL PROPERTIES
440 North Lake Street
Miller, IN............................. 812 26,220 27,032 (8,443) 1971/1990-1993 1990
OFFICES OF THE MANAGEMENT COMPANY
Chicago, IL............................ 820 15,060 15,880 (4,922)
-------- -------- -------- --------
Totals................................... $159,233 $812,664 $971,897 ($85,408)
======== ======== ======== ========
<CAPTION>
LIFE UPON
WHICH
DEPRECIATION
IN LATEST
INCOME
STATEMENT IS
DESCRIPTION COMPUTED
- ----------- ------------
<S> <C>
301 E. Vienna
Milwaukee, WI.......................... (f)
3602 N. Kennicott
Arlington Heights, IL.................. (f)
317 W. Lake St.
Northlake, IL.......................... (f)
1500 W. Thorndale Ave.
Itasca, IL............................. (f)
10801 W. Irving Park Rd
Chicago, IL............................ (f)
3412-26 W. Touhy
Skokie, IL............................. (f)
3450 W. Touhy
Skokie, IL............................. (f)
11100 W. Silver Spring Rd.
Milwaukee, WI.......................... (f)
7525 West Industrial Dr.
Forest Park, IL........................ (f)
7526 Industrial Dr.
Forest Park, IL........................ (f)
875 Diggins St.
Harvard, IL............................ (f)
3400 West Pratt
Lincolnwood, IL........................ (f)
CONSTRUCTION IN PROGRESS:
O'hare Express--C
Elk Grove Village, IL..................
5480 W. 70th
Bedford Park, IL.......................
5700 West Touhy Avenue
Niles, IL.............................. (f)
Home Depot
Montgomery, IL.........................
521 E. North Ave
Glendale Heights, IL...................
1324-40 Paramount
Batavia, IL............................
RETAIL PROPERTIES:
100 Old McHenry Road
Wheeling, IL........................... (f)
351 N. Rohlwing Road
Itasca, IL............................. (f)
4-48 Barrington Road
Streamwood, IL......................... (f)
RESIDENTIAL PROPERTIES
440 North Lake Street
Miller, IN............................. (f)
OFFICES OF THE MANAGEMENT COMPANY
Chicago, IL............................ (f)
Totals...................................
</TABLE>
F-34
<PAGE>
CENTERPOINT PROPERTIES TRUST AND SUBSIDIARIES
SCHEDULE III (CONTINUED)
(DOLLARS IN THOUSANDS)
Notes to Schedule III:
(a) Initial cost for each respective property is the total acquisition costs
associated with its purchase.
(b) Carrying costs consist of capitalized construction period interest, taxes
and insurance.
(c) At December 31, 1999, the aggregate cost of land and buildings and equipment
for Federal income tax purposes was approximately $978,572.
(d) Reconciliation of real estate and accumulated depreciation:
RECONCILIATION OF REAL ESTATE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance at the beginning of year............................ $768,857 $662,275 $429,034
Additions................................................. 256,264 143,342 246,463
Dispositions.............................................. (53,224) (36,760) (13,222)
-------- -------- --------
Balance at close of year.................................... $971,897 $768,857 $662,275
======== ======== ========
</TABLE>
RECONCILIATION OF ACCUMULATED DEPRECIATION AND AMORTIZATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year................................ $ 62,257 $ 44,352 $ 30,206
Depreciation and amortization............................. 25,485 20,151 14,494
Dispositions.............................................. (2,334) (2,246) (348)
-------- -------- --------
Balance at close of year.................................... $ 85,408 $ 62,257 $ 44,352
======== ======== ========
</TABLE>
(e) See description of encumbrances in Note 6 to Consolidated Financial
Statements.
(f) Depreciation is computed based upon the following estimated lives:
<TABLE>
<S> <C>
Buildings, improvements and carrying costs.................. 31.5 to 40 years
Land improvements........................................... 15 years
Furniture, fixtures and equipment........................... 4 to 15 years
</TABLE>
(g) These 20 properties collateralize $50,000 of mortgage bonds payable.
F-35
<PAGE>
EXHIBIT 12-1
CENTERPOINT PROPERTIES TRUST
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Available earnings:
Net income................................... $48,760 $32,248 $27,260 $14,941 $ 8,212
Add interest expense (1)..................... 21,859 15,476 10,871 10,992 12,985
------- ------- ------- ------- -------
Available earnings (2)......................... $70,619 $47,724 $38,131 $25,933 $21,197
======= ======= ======= ======= =======
Fixed charges:
Interest expense............................. $21,859 $15,476 $10,871 $10,992 $12,985
Capitalized interest......................... 1,926 2,214 893 142 20
------- ------- ------- ------- -------
Total fixed charges............................ $23,785 $17,690 $11,764 $11,134 $13,005
======= ======= ======= ======= =======
Ratio of earnings to fixed charges............. 2.97 2.70 3.24 2.33 1.63
======= ======= ======= ======= =======
</TABLE>
- ------------------------
NOTES:
(1) Interest expense includes amortization of deferred financing costs.
(2) Interest portion of rental expense is not calculated because annual rental
expense for the Company is not significant.
F-36
<PAGE>
EXHIBIT 12-2
CENTERPOINT PROPERTIES TRUST
COMPUTATION OF RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Available earnings:
Net income................................... $48,760 $32,248 $27,260 $14,941 $ 8,212
Add interest expense (1)..................... 21,859 15,476 10,871 10,992 12,985
------- ------- ------- ------- -------
Available earnings (2)......................... $70,619 $47,724 $38,131 $25,933 $21,197
======= ======= ======= ======= =======
Combined fixed charges:
Interest expense............................. $21,859 $15,476 $10,871 $10,992 $12,985
Capitalized interest......................... 1,926 2,214 893 142 20
Preferred dividends.......................... 8,318 6,360 901 947 1,002
------- ------- ------- ------- -------
Total fixed charges............................ $32,103 $24,050 $12,665 $12,081 $14,007
======= ======= ======= ======= =======
Ratio of earnings to combined fixed charges.... 2.20 1.98 3.01 2.15 1.51
======= ======= ======= ======= =======
</TABLE>
- ------------------------
NOTES:
(1) Interest expense includes amortization of deferred financing costs.
(2) Interest portion of rental expense is not calculated because annual rental
expense for the Company is not significant.
F-37
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (File Nos. 33-95792, 33-99858, 333-18235 and 333-49359),
Form S-8/S-3 (File Nos. 333-05087 and 333-34687) and Form S-8 (File
No. 333-05141 and 333-62887) of CenterPoint Properties Trust of our report dated
February 11, 2000, relating to the financial statements, which is incorporated
in this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report dated February 11, 2000 relating to the financial
statement schedules which appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 20, 2000
F-38
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 35,468
<SECURITIES> 0
<RECEIVABLES> 25,232
<ALLOWANCES> 731
<INVENTORY> 0
<CURRENT-ASSETS> 136,238
<PP&E> 971,897
<DEPRECIATION> 85,408
<TOTAL-ASSETS> 1,083,427
<CURRENT-LIABILITIES> 62,475
<BONDS> 554,348
0
4
<COMMON> 21
<OTHER-SE> 466,579
<TOTAL-LIABILITY-AND-EQUITY> 1,083,427
<SALES> 0
<TOTAL-REVENUES> 138,936
<CGS> 0
<TOTAL-COSTS> 94,653
<OTHER-EXPENSES> 609
<LOSS-PROVISION> 659
<INTEREST-EXPENSE> 21,859
<INCOME-PRETAX> 49,342
<INCOME-TAX> 0
<INCOME-CONTINUING> 49,342
<DISCONTINUED> 0
<EXTRAORDINARY> 582
<CHANGES> 0
<NET-INCOME> 40,442
<EPS-BASIC> 1.99
<EPS-DILUTED> 1.96
</TABLE>
