SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 1996
BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-12926 04-3224258
(Commission File Number) (IRS Employer Id. Number)
50 Rowes Wharf
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Beacon Properties Corporation (the "Company") acquired a portfolio of two
office buildings in Rosslyn, Virginia (the "Rosslyn, Virginia Portfolio") on
October 18, 1996 for $99.1 million from LaSalle Fund II. This acquisition was
funded by the Company's $300 million Credit Facility led by BankBoston
Corporation. The Company and its affiliates are not related to any of the
other parties to this transaction.
The Rosslyn, Virginia Portfolio consists of (i) a 19-story office building
located at 1300 North 17th Street built in 1980 comprising approximately
373,000 square feet and (ii) a 19-story office building located at 1616 North
Ft. Myer Drive built in 1974 comprising approximately 293,000 square feet.
Major tenants in the Rosslyn, Virginia Portfolio include the American Red
Cross (approximately 75,000 square feet) and Price Waterhouse (approximately
74,000 square feet). The aggregate occupancy rate of the Rosslyn, Virginia
Portfolio as of September 30, 1996 was approximately 97%.
The Company based its determination of the price to be paid on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancy and opportunities to retain and attract additional tenants.
The Company did not obtain an independent appraisal on the Property.
Item 5. Other Events
The Company has entered into contracts to purchase eleven office
buildings.
New England Executive Park Portfolio:
In November 1996, the Company entered into a contract to acquire a portfolio
of office properties located in Burlington (suburban Boston), Massachusetts (the
"New England Executive Park Portfolio"). The New England Executive Park
Portfolio consists of nine of the thirteen buildings located in the New England
Executive Park; the remaining four are owner-occupied. The purchase price of the
New England Executive Park Portfolio is payable in two installments,
approximately $75 million will be paid at the closing of the acquisition with an
additional $17 million payable on November 30, 1998, contingent upon meeting
conditions regarding occupancy or rental income levels at the property in 1998.
The Company estimates that the aggregate purchase price for the New England
Executive Park Portfolio, including the $17 million contingent payment, is
approximately 60% of replacement cost. Following the consummation of the
acquisition, the Company intends to invest approximately $1.5 million in capital
improvements in the New England Executive Park Portfolio over the next three
years, including roofs and upgrades to mechanical systems.
The New England Executive Park Portfolio consists of nine office buildings
comprising an aggregate of approximately 817,000 square feet. The buildings
range in size from approximately 43,000 square feet to approximately 218,000
square feet and were developed between 1970 and 1985. Major tenants in the
New England Executive Park Portfolio include the Federal Aviation
Administration (approximately 114,000 square feet), Cayenne (approximately
63,000 square feet), Siemens Business Communications Systems, Inc.
(approximately 51,000 square feet) and Sun Microsystems, Inc. (approximately
44,000 square feet). The aggregate occupancy rate for the New England
Executive Park Portfolio as of September 30, 1996 was approximately 98%.
245 First Street:
In October 1996, the Company entered into a contract to acquire 245 First
Street located in Cambridge, Massachusetts for aggregate consideration of
approximately $45 million in cash, approximately 90% of replacement cost.
The 245 First Street property contains approximately 263,000 square feet
and consists of (i) Riverview I, a six- story office building renovated in
1986 and comprising approximately 109,000 square feet and (ii) Riverview II,
an 18-story structure built in 1985 comprising approximately 148,000 square
feet. Riverview I and Riverview II are connected by a four-story atrium
comprising approximately 6,000 square feet. Major tenants at 245 First Street
include Open Market, Inc. (approximately 81,000 square feet) and Softkey
International, Inc. (approximately 71,000 square feet). Softkey, and certain
other tenants, sublease their space from Mellon Bank who leases approximately
148,000 square feet of the property. As of September 30, 1996, the occupancy
rate for 245 First Street was 100%.
2
<PAGE>
10960 Wilshire Boulevard:
In October 1996, the Company entered into a contract to acquire 10960
Wilshire Boulevard located in Westwood, California for aggregate consideration
of approximately $133 million in cash, approximately 80% of replacement cost.
Following the consummation of the acquisition, the Company intends to invest
approximately $1.8 million in capital improvements in the property.
The 10960 Wilshire Boulevard property was built in 1971 and has undergone
approximately $39 million of capital improvements since 1992. The property
consists of approximately 544,000 square feet in a 23-story office building.
Major tenants in 10960 Wilshire Boulevard include Saban Entertainment, Inc.
(approximately 111,000 square feet), Philips Interactive Media of America,
Inc. (approximately 95,000 square feet), BBDO Worldwide, Inc. (approximately
48,000 square feet) and Saltzburg, Ray & Bergman (approximately 31,000 square
feet). As of September 30, 1996, the occupancy rate for 10960 Wilshire
Boulevard was approximately 89%.
Additional Offering:
On November 1, 1996, the Company filed a prospectus supplement to its Form
S-3 Registration Statement (No. 333-02544) with the Securities and Exchange
Commission pursuant to which it proposes to offer 6,000,000 shares of common
stock (excluding the underwriters' over-allotment option).
Expansion of Board of Directors:
Effective January 1, 1997, the Board of Directors of the Company will be
expanded from seven to nine members when Dale F. Frey and Lionel P. Fortin
become Directors. Mr. Frey is President and Chairman of the Board of Directors
of General Electric Investment Corporation and Vice President of General
Electric Company. Mr. Fortin serves as Senior Vice President and Chief Operating
Officer of the Company.
Item 7. Financial Statements and Exhibits
(a) Financial Statements Under Rule 3-14 of Regulation S-X
Statement of Excess of Revenues over Specific Operating Expenses of
the Rosslyn Acquisition in Rosslyn, Virginia for the year ended
December 31, 1995 and (unaudited) for the nine months ended September
30, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
the New England Executive Park in Burlington, Massachusetts for the
year ended December 31, 1995 and (unaudited) for the nine months ended
September 30, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
10960 Wilshire Boulevard in Westwood, California for the year ended
December 31, 1995 and (unaudited) for the nine months ended September
30, 1996
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Nine
Months Ended September 30, 1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 1995 (Unaudited)
(c) Exhibits
2.1 Purchase and Sale Agreement between LaSalle Fund II and Beacon
Properties, L.P., dated as of September 20, 1996.
2.2 First Amendment to Purchase and Sale Agreement between LaSalle
Fund II and Beacon Properties, L.P., dated as of October 2, 1996.
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants.
3
<PAGE>
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the Rosslyn Acquisitions in Rosslyn, Virginia
(the "Properties") for the year ended December 31, 1995. This financial
statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Properties after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of the
Rosslyn Acquisitions in Rosslyn, Virginia for the year ended December 31,
1995 in conformity with generally accepted accounting principles.
Boston, Massachusetts
September 27, 1996
F-2
<PAGE>
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Year For the Nine
Ended Months Ended
December 31, 1995 September 30, 1996
------------------ --------------------
(Unaudited)
--------------------
<S> <C> <C>
Revenues:
Base rent $12,602,024 $11,026,546
Recoveries from tenants 426,712 499,950
Other income 1,117,591 1,009,694
----------- -----------
14,146,327 12,536,190
----------- -----------
Specific operating expenses (Note 2):
Utilities 1,172,453 898,088
Janitorial and cleaning 500,759 426,513
Security 300,840 230,158
General and administrative 714,390 504,981
Repairs and maintenance 1,186,335 818,790
Insurance 143,743 108,327
Property taxes 911,665 707,796
Landscaping 26,707 32,665
----------- -----------
4,956,892 3,727,318
----------- -----------
Excess of revenues over specific operating expenses $ 9,189,435 $ 8,808,872
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-3
<PAGE>
ROSSLYN ACQUISITIONS
ROSSLYN, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
The Rosslyn Acquisitions (the "Properties") are located in Rosslyn,
Virginia, consisting of two office buildings together encompassing
approximately 666,000 square feet. Beacon Properties Corporation intends to
acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment increased revenues by approximately $505,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the properties after acquisition, such as
management fees, depreciation, amortization, and interest expense.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
- --------------------------
<S> <C>
1996 $15,485,000
1997 14,408,000
1998 13,952,000
1999 13,869,000
2000 12,714,000
Thereafter 26,860,000
</TABLE>
As of December 31, 1995, two tenants occupied approximately 25% of
leasable square feet and represented approximately 24% of total 1995 revenue.
F-4
<PAGE>
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the New England Executive Park in Burlington,
Massachusetts (the "Properties") for the year ended December 31, 1995. This
financial statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Properties after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of the New
England Executive Park in Burlington, Massachusetts, for the year ended
December 31, 1995 in conformity with generally accepted accounting
principles.
Boston, Massachusetts
March 15, 1996
F-6
<PAGE>
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Nine
For the Year Months Ended
Ended September 30,
December 31, 1995 1996
------------------ ---------------
(Unaudited)
---------------
<S> <C> <C>
Revenues:
Base rent $11,990,549 $10,085,304
Recoveries from tenants 866,821 953,802
----------- -----------
12,857,370 11,039,106
----------- -----------
Specific operating expenses (Note 2):
Utilities 2,166,024 2,016,965
Janitorial and cleaning 682,271 570,074
Security 106,924 133,184
General and administrative 581,469 403,905
Repairs and maintenance 977,315 828,053
Insurance 103,854 71,578
Property taxes 1,623,541 1,218,045
Landscaping 181,496 177,812
Tenant services 528,211 452,264
----------- -----------
6,951,105 5,871,880
----------- -----------
Excess of revenues over specific operating expenses $ 5,906,265 $ 5,167,226
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-7
<PAGE>
NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
The New England Executive Park (the "Properties") is located in
Burlington, Massachusetts consisting of nine office buildings together
encompassing approximately 817,000 square feet. Beacon Properties Corporation
intends to acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment decreased revenues by approximately $59,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the Properties after acquisition, such as
interest income, management fees, depreciation, amortization, and interest
expense.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
- --------------------------
<S> <C>
1996 $13,639,000
1997 12,611,000
1998 7,916,000
1999 5,894,000
2000 3,694,000
Thereafter 1,936,000
</TABLE>
F-8
<PAGE>
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
F-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over
specific operating expenses of the 10960 Wilshire Boulevard in Westwood,
California (the "Property") for the year ended December 31, 1995. This
financial statement is the responsibility of the Property's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of excess of revenues
over specific operating expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income
and expenses which would not be comparable with those resulting from the
operations of the Property after acquisition by Beacon Properties
Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the excess of revenues over specific operating
expenses (exclusive of income and expenses described in Note 2) of 10960
Wilshire Boulevard in Westwood, California, for the year ended December 31,
1995 in conformity with generally accepted accounting principles.
Boston, Massachusetts
October 29, 1996
F-10
<PAGE>
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Year For the Nine
Ended Months Ended
December 31, 1995 September 30, 1996
------------------ --------------------
(Unaudited)
--------------------
<S> <C> <C>
Revenues:
Base rent $7,235,712 $8,079,023
Recoveries from tenants 244,198 214,671
Other income 1,375,672 1,182,788
---------- ----------
8,855,582 9,476,482
---------- ----------
Specific operating expenses (Note 2):
Utilities 934,425 770,730
Janitorial and cleaning 493,250 438,757
Security 281,647 221,185
General and administrative 816,298 479,066
Management fee 320,040 385,563
Repairs and maintenance 1,168,367 804,389
Insurance 319,717 78,590
Property taxes 1,011,358 761,920
Landscaping 43,403 36,777
---------- ----------
5,388,505 3,976,977
---------- ----------
Excess of revenues over specific operating expenses $3,467,077 $5,499,505
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statement.
F-11
<PAGE>
10960 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
10960 Wilshire Boulevard (the "Property") is located in Westwood,
California consisting of one office building encompassing approximately
544,000 square feet. Beacon Properties Corporation intends to acquire the
entire fee interest in the Property.
Rental Revenues
Rental income is recognized on the straight-line method over the terms of
the related leases. The excess of recognized rentals over amounts due
pursuant to lease terms is recorded as accrued rent. The impact of the
straight-line rent adjustment increased revenues by approximately $894,000
for the year ended December 31, 1995.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared
in accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired or to be acquired.
Accordingly, the statement excludes certain historical income and expenses
not comparable to the operations of the Property after acquisition, such as
interest income and amortization.
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years for
noncancelable operating leases in effect at December 31, 1995 are
approximately as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
- --------------------------
<S> <C>
1996 $ 6,682,000
1997 7,610,000
1998 7,528,000
1999 8,373,000
2000 5,498,000
Thereafter 12,662,000
</TABLE>
As of December 31, 1995, one tenant occupied approximately 17% of leasable
square feet and represented 12% of total 1995 revenue.
F-12
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma Condensed Consolidated Balance Sheet of
Beacon Properties Corporation (the "Company") as of September 30, 1996, is
presented as if the acquisition of the Rosslyn, Virginia Portfolio and the
Pending Acquisitions had occurred on September 30, 1996. The pro forma Condensed
Consolidated Statements of Operations are presented as if the Offering, the
acquisition of the Properties acquired since January 1, 1995 (including
Perimeter Center, New York Life and the Fairfax Virginia Portfolios) and the
closing of the MetLife Mortgage loan, the acquisition of the Pending
Acquisitions and related assumption of debt had occurred as of January 1, 1995;
the Company qualified as a REIT, distributed all of its taxable income and,
therefore, incurred no income tax expense during the period.
In management's opinion, all adjustments necessary to reflect the above
discussed transactions have been made. The unaudited pro forma Condensed
Consolidated Balance Sheet and Statement of Operations are not necessarily
indicative of what actual results of operations of the Company would have
been for the period, nor does it purport to represent the Company's results
of operations for future periods.
F-13
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Beacon
Properties
Corporation Pro Forma Pro Forma
(Historical) Adjustments Consolidated
------------- -------------- ---------------
(dollars in thousands)
<S> <C> <C> <C>
Assets
Real estate, net $ 974,676 $352,050(A) $1,326,726
Deferred financing and leasing costs, net 15,908 15,908
Cash and cash equivalents 16,751 16,751
Mortgage notes receivable 51,490 51,490
Other assets 29,292 (9,000)(B) 20,292
Investments in and note receivable from joint ventures and
corporations 55,890 55,890
---------- -------- ----------
Total assets $1,144,007 $343,050 $1,487,057
========== ======== ==========
Liabilities and Stockholders' Equity
Mortgage notes payable $ 440,526 $ 440,526
Note payable, Credit Facility 18,000 176,670(C) 194,670
Other liabilities 27,293 27,293
Investment in joint ventures 24,467 24,467
---------- -------- ----------
Total liabilities 510,286 176,670 686,956
Minority interest in Operating Partnership 70,098 70,098
Stockholders' equity 563,623 166,380(D) 730,003
---------- -------- ----------
Total liabilities and stockholders' equity $1,144,007 $343,050 $1,487,057
========== ======== ==========
</TABLE>
Notes:
(A) Acquisition of Rosslyn, Virginia Portfolio, New England Executive Park,
10960 Wilshire Boulevard and 245 First Street.
(B) Application of deposits.
(C) Net Credit Facility utilized.
(D) Net increase in stockholders' equity:
<TABLE>
<CAPTION>
<S> <C>
Proceeds of Offering $177,000
Expenses of Offering (10,620)
--------
$166,380
========
</TABLE>
F-14
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Beacon Fourth Quarter
Properties New York Life 1996
Corporation Perimeter and Fairfax Va. Acquisitions Pro Forma Pro Forma
Historical Center (A) Portfolios (B) (G) Adjustments Consolidated
------------- ----------- --------------- --------------- -------------- ---------------
(dollars in thousands except per share amounts and shares outstanding
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Rental income $ 97,308 $6,420 $19,098 $34,118 $156,944
Management fees 2,248 2,248
Recoveries from tenants 11,001 304 3,788 3,156 18,249
Mortgage interest income 3,567 $ 611(H) 4,178
Other income 7,585 208 845 2,639 11,277
-------- ------ ------- ------- ------- --------
Total revenue 121,709 6,932 23,731 39,913 611 192,897
-------- ------ ------- ------- ------- --------
Expenses:
Property expenses 24,607 1,562 4,875 10,195 41,239
Real estate taxes 12,491 591 1,708 3,452 18,242
General and administrative 11,963 378 812 1,496 250(I) 14,899
Mortgage interest expense 20,739 1,461(C) 2,912(F) 9,391(J) 34,503
Interest--amortization of
financing costs 1,618 15(D) 1,633
Depreciation and
amortization 21,737 1,196(E) 4,374(E) 7,921(E) 35,228
-------- ------ ------- ------- ------- --------
Total expenses 93,155 5,203 14,681 23,064 9,641 145,745
-------- ------ ------- ------- ------- --------
Income from operations 28,554 1,729 9,050 16,849 (9,030) 47,152
Equity in net income of joint
ventures and corporations 2,053 2,053(1)
-------- ------ ------- ------- ------- --------
Income before minority interest 30,607 1,729 9,050 16,849 (9,030) 49,205
Minority interest in Operating
Partnership (4,231) (1,432)(K) (5,663)
-------- ------ ------- ------- ------- --------
Net income before extraordinary
items $ 26,376 $1,729 $ 9,050 $16,849 ($10,462) $ 43,542(2)
======== ====== ======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Common shares outstanding 39,233,255
Net income per common share $1.11
(1) Includes:
Depreciation and amortization $2,998
Amortization of financing costs $673
(2) Company share of Operating Partnership is 88.49%
</TABLE>
See accompanying notes to pro forma condensed consolidated
statement of operations.
F-15
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(Unaudited)
(A) Results of operations of Perimeter Center for the period ended February
14, 1996.
(B) Results of operations of the Fairfax County Portfolio and the New York
Life Portfolio for the periods ended September 4, 1996 and August 15,
1996, respectively.
(C) Net interest expense associated with the MetLife Mortgage Loan in the
amount of $218 million based on a 7.08% interest rate for the period
ended prior to March 15, 1996.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
(E) Detail of depreciation expense by property is presented as follows:
<TABLE>
<CAPTION>
Basis Life Depreciation
----------- -------- ---------------
<S> <C> <C> <C>
Perimeter Center $287,130 30 yrs $1,196
======
Fairfax County Portfolio $ 69,300 30 yrs $1,568
New York Life Portfolio 135,000 30 yrs 2,806
------
$4,374
======
Rosslyn, Virginia Portfolio 89,145 30 yrs 2,229
New England Executive Park Portfolio 67,500 30 yrs 1,688
245 First Street 40,500 30 yrs 1,013
10960 Wilshire Boulevard 119,700 30 yrs 2,992
------
7,921
======
</TABLE>
(F) Fairfax County Portfolio interest expense on debt assumed for period
prior to acquisition:
<TABLE>
<CAPTION>
Principal Rate Expense
------------ -----------------
<S> <C> <C> <C>
JOHN MARSHAL 21,068 8.38% 1,197
E.J. RANDOLPH (1) 18,016 7.44% 909
NORTHRIDGE 16,306 7.28% 806
------ -----
55,390 2,912
====== =====
</TABLE>
(1) Paid off by Credit Facility proceeds at closing.
(G) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard
for the nine months ended September 30, 1996.
(H) Interest income related to the acquisition of the Rowes Wharf mortgage.
(I) Additional general and administrative expense attributable to
acquisitions.
(J) Credit facility activity:
<TABLE>
<CAPTION>
Draw Expense
Source/Use Date (Repayment) (Savings)
- ------------------------------------ --------- ------------ ----------
<S> <C> <C> <C>
March 1996 offering proceeds 3/4/96 $(21,300) $ (462)
Fourth Quarter 1996 Acquisitions 4th QTR $176,670 9,853
------
$9,391
======
</TABLE>
(K) Reflects decrease for minority interest (11.51%) in Operating
Partnership.
F-16
<PAGE>
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
New York
Beacon Life
Properties Properties and
Corporation Acquired Perimeter Fairfax Va.
Historical In 1995 (A) Center (B) Portfolios (F)
------------- ------------ ------------ ---------------
(dollars in thousands except per share amounts and
shares outstanding)
<S> <C> <C> <C> <C>
Revenue:
Rental income $71,050 $5,339 $52,117 $30,623
Management fees 2,203
Recoveries from tenants 9,742 1,193 2,244 6,308
Mortgage interest income 2,546
Other income 5,502 26 862 1,111
------- ------ ------- -------
Total revenue 91,043 6,558 55,223 38,042
------- ------ ------- -------
Expenses:
Property expenses 18,090 1,560 12,376 7,485
Real estate taxes 10,217 949 4,107 2,680
General and administrative 9,755 111 2,116 1,254
Mortgage interest expense 15,226 15,434(C) 4,438(G)
Interest--amortization of
financing costs 1,370 120(D)
Depreciation and amortization 17,428 1,047(E) 9,571(E) 6,810(E)
------- ------ ------- -------
Total expenses 72,086 3,666 43,724 22,667
------- ------ ------- -------
Income from operations 18,957 2,892 11,499 15,375
Equity in net income of joint
ventures and corporations 3,222 1,338
------- ------ ------- -------
Income before minority interest 22,179 4,230 11,499 15,375
Minority interest in Operating
Partnership (4,119)
------- ------ ------- -------
Net income before extraordinary
items $18,060 $4,230 $11,499 $15,375
======= ====== ======= =======
Common shares outstanding
Net income per common share
(1) Includes:
Depreciation and amortization
Amortization of financing costs
(2) Company share of Operating Partnership is 88.49%
</TABLE>
<TABLE>
<CAPTION>
Fourth
Quarter
1996
Acquisitions Pro Forma Pro Forma
(H) Adjustments Consolidated
--------------- -------------- ---------------
<S> <C> <C> <C>
Revenue:
Rental income $36,894 $196,023
Management fees $ 723(I) 2,926
Recoveries from tenants 3,409 22,896
Mortgage interest income 3,027(J) 5,573
Other income 2,758 10,259
------- ------- -----------
Total revenue 43,061 3,750 237,677
------- ------- -----------
Expenses:
Property expenses 12,594 52,105
Real estate taxes 4,540 22,493
General and administrative 2,198 750(K) 16,184
Mortgage interest expense 12,790(L) 47,888
Interest--amortization of
financing costs 1,490
Depreciation and amortization 10,562(E) 45,418
------- ------- -----------
Total expenses 29,894 13,540 185,577
------- ------- -----------
Income from operations 13,168 (9,790) 52,100
Equity in net income of joint
ventures and corporations 4,560(1)
------- ------- -----------
Income before minority interest 13,168 (9,790) 56,660
Minority interest in Operating
Partnership (2,403)(M) (6,522)
------- ------- -----------
Net income before extraordinary
items $13,168 ($12,193) $ 50,138(2)
======= ======== ===========
39,233,255
Net income per common share $1.28
(1) Includes:
Depreciation and amortization $3,895
Amortization of financing costs $896
(2) Company share of Operating Partnership is 88.49%
</TABLE>
See accompanying notes to pro forma condensed consolidated
statement of operations.
F-17
<PAGE>
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
(A) Results of operations of properties acquired during 1995 for the period
prior to their acquisition:
<TABLE>
<CAPTION>
Wellesley Westlakes 75-101 2 Oliver Ten Canal
Building 8 Building 2 Federal St. Street Park Total
------------- ------------- -------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Rental income $308 $1,010 $2,474 $1,547 $5,339
Management fees
Recoveries from tenants 425 112 656 1,193
Mortgage interest income
Other income 7 15 4 26
---- ------ ------ ------ ----- ------
Total revenue 308 1,442 0 2,601 2,207 6,558
---- ------ ------ ------ ----- ------
Expenses:
Property expenses 61 413 573 513 1,560
Real estate taxes 20 89 505 335 949
General and administrative 8 27 18 58 111
Mortgage interest expense
Interest--amortization of financing costs
Depreciation and amortization 50 239 404 354 1,047
---- ------ ------ ------ ----- ------
Total expenses 138 768 0 1,500 1,260 3,666
---- ------ ------ ------ ----- ------
Income from operations 170 674 0 1,101 947 2,892
Equity in net income of joint ventures and
corporations $1,338 1,338
---- ------ ------ ------ ----- ------
Income before minority interest 170 674 1,338 1,101 947 4,230
Minority interest in Operating Partnership
---- ------ ------ ------ ----- ------
Net income before extraordinary item $170 $ 674 $1,338 $1,101 $ 947 $4,230
==== ====== ====== ====== ====== ======
</TABLE>
(B) Results of operations of Perimeter Center for 1995.
(C) Interest expense associated with the MetLife Mortgage Loan in the amount
of $218 million based on a 7.08% interest rate.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
F-18
<PAGE>
BEACON PROPERTIES CO RPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
(E) Detail of depreciation expense by property is presented as follows:
<TABLE>
<CAPTION>
Basis Life Depreciation
----------- -------- ---------------
<S> <C> <C> <C>
Previously Acquired Properties:
Wellesley Building 8 $ 4,500 30 yrs $ 50
Westlakes Building 2 12,306 30 yrs 239
2 Oliver Street 16,174 30 yrs 404
Ten Canal Park 10,609 30 yrs 354
-------
$ 1,047
=======
Perimeter Center $287,130 30 yrs $ 9,571
=======
Fairfax County Portfolio $ 69,300 30 yrs $ 2,310
New York Life Portfolio 135,000 30 yrs 4,500
-------
$ 6,810
=======
Rosslyn, Virginia Portfolio 89,145 30 yrs 2,972
New England Executive Park Portfolio 67,500 30 yrs 2,250
245 First Street 40,500 30 yrs 1,350
10960 Wilshire Boulevard 119,700 30 yrs 3,990
-------
10,562
=======
</TABLE>
(F) Results of operations of the New York Life Portfolio and the Fairfax
County Portfolio for 1995.
(G) Fairfax County Portfolio interest expense on debt assumed:
<TABLE>
<CAPTION>
Principal Rate Expense
------------ -----------------
<S> <C> <C> <C>
JOHN MARSHAL 21,068 8.38% 1,764
E.J. RANDOLPH (1) 18,016 8.25% 1,486
NORTHRIDGE 16,306 7.28% 1,187
------ -----
55,390 4,438
====== =====
</TABLE>
(1) Paid off by Credit Facility proceeds at closing.
(H) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard
for 1995.
(I) Management fee from 75-101 Federal Street.
(J) Interest income related to the acquisition of the Rowes Wharf mortgage.
(K) Additional general and administrative expense attributable to
acquisitions.
(L) Credit facility activity:
<TABLE>
<CAPTION>
Draw Expenses
Source/Use Date (Repayment) (Savings)
- ---------- ---- ----------- ---------
<S> <C> <C> <C>
Offering proceeds March 20 ($ 58,000) ($ 1,065)
Rowes Wharf mortgage Various 23,700 780
Westlakes Building 2 July 26 13,500 632
Offering proceeds August 31 (66,500) (3,652)
75-101 Federal Street and 2 Oliver Street September 29 39,000 2,397
Ten Canal Park December 21 11,000 882
March 1996 offering proceeds Full year ($ 21,300) (1,757)
Fourth Quarter 1996 Acquisitions Full year $176,670 14,573
-------
$12,790
=======
</TABLE>
(M) Reflects decrease for minority interest (11.51%) in Operating
Partnership.
F-19
Exhibit 2.1
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 20th day of September, 1996 by and between
DANIEL W. CUMMINGS, STUART L. SCOTT, ROBERT C. SPOERRI and LYNN C. THURBER, not
personally, but as Trustees under that certain Declaration of Trust, dated
October 1, 1983, creating LASALLE FUND II, a group trust, acting through its
agent and manager, LaSalle Advisors Limited (hereinafter called "Seller"), and
BEACON PROPERTIES, L.P., a Delaware limited partnership ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns the office buildings located at 1616 North Fort Myer
Drive (the "1616 Building") and 1300 North Seventeenth Street (the "1300
Building") in Rosslyn, Virginia; and
WHEREAS, Seller desires to sell its interest in such office buildings and
Purchaser desires to purchase such interest from Seller on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the parties hereinafter set forth, it is hereby agreed:
SECTION 1. DEFINITIONS. Wherever used in this Agreement, the words and
phrases set forth below shall have the meanings set forth below or in an Exhibit
to this Agreement to which reference is made, unless the context clearly
requires otherwise.
A. "Closing" means the closing at which Seller conveys title to the Project
to Purchaser and Purchaser pays Seller the purchase price described in Section 2
herein below.
B. "Closing Date" means the date mutually agreed upon by Purchaser and
Seller for the Closing provided the Closing Date shall be no earlier than two
(2) business days after the Due Diligence Deadline (defined below) and no later
than thirty (30) business days after the Due Diligence Deadline; provided,
however, the Closing Date may be extended either (i) by mutual agreement of
Purchaser and Seller or (ii) pursuant to the terms hereof.
C. "Improvements" means all buildings, structures, fixtures and other
improvements now or hereafter located or erected on the Land (other than any
trade fixtures owned by tenants).
D. "Land" means the real property described on Exhibit A, including all
adjacent roadways, rights-of-way and alleys to the
<PAGE>
extent Seller has an interest therein, all oil, gas and other mineral rights and
all easements and other rights appurtenant to such real property.
E. "Permitted Exceptions" means non-delinquent real property taxes on the
Project and any other title exceptions set forth on the Title Commitment
(defined below) which are not objected to by Seller within the time period set
forth in Paragraph 6(1) below.
I. "Personal Property" means all tangible and intangible personal property
now or hereafter owned by the Seller and used in connection with the operation
of the Project, including, without limitation, (i) all building and construction
materials, equipment, appliances and machinery owned by Seller and used in
connection with the operation of the Project, (ii) all permits, licenses,
certificates and approvals issued in connection with the Project, and (iii) the
personal property listed on Exhibit K attached hereto. The Purchaser and Seller
may revise Exhibit K by mutual agreement prior to the Due Diligence Deadline.
J. "Project" means the Land, the Improvements and the Personal Property.
K. "Title Company" means Commonwealth Land Title Insurance Company.
SECTION 2. EARNEST MONEY; AGREEMENT TO SELL AND PURCHASE.
A. Earnest Money. Purchaser has deposited $2,000,000 with the Title Company
(which, together with any interest earned thereon, is herein referred to as the
"Earnest Money"). The Earnest Money shall be held by the Title Company in
accordance with the terms hereof and invested in accordance with Purchaser's
direction, subject to the reasonable approval of Seller. If this Agreement is
terminated due to Purchaser's default hereunder, the Earnest Money shall be paid
to Seller as liquidated damages and as Seller's sole and exclusive remedy. If
the Closing occurs hereunder, the Earnest Money shall be paid to Seller and
credited against the Purchase Price. If the Closing does not occur hereunder for
any reason other than Purchaser's default hereunder, the Earnest Money shall be
refunded to Purchaser or Purchaser shall have the remedy of specific performance
as provided below.
B. Purchase and Sale. On the Closing Date Seller shall convey the Project
to Purchaser on the terms and conditions set forth herein. On the Closing Date
the Purchaser shall accept title to the Project from Seller on the terms and
conditions set forth herein and shall pay to the Seller the purchase price
("Purchase Price") of ONE HUNDRED MILLION DOLLARS ($100,000,000), subject to
prorations as set forth below, by wire transfer of immediately available funds.
The Purchase Price shall be
2
<PAGE>
allocated as follows: $40,000,000 to the 1616 Building and $60,000,000 to the
1300 Building.
SECTION 3. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller hereby
represents and warrants to, and covenants and agrees with, Purchaser as follows:
A. Due Organization. Seller is a group trust duly organized and validly
existing under the laws of the State of Illinois; Seller has full power and
authority, and is duly authorized, to execute, enter into, deliver and perform
this Agreement and its obligations hereunder.
B. Power. LaSalle Advisors Limited has full power and authority on behalf
of Seller to execute this Agreement and all other agreements, instruments and
documents required to be executed or delivered by Seller pursuant hereto. This
Agreement and all other agreements, instruments and documents required to be
executed or delivered by Seller pursuant hereto have been or (if and when
executed) will be duly executed and delivered by LaSalle Advisors Limited on
behalf of Seller, and are or will be legal, valid and binding obligations of
Seller. No consents and permissions are required to be obtained by Seller for
the execution and performance of this Agreement and the other documents to be
executed by Seller hereunder. The consummation of the transactions contemplated
herein and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, any agreement
or document to which the Seller is a party or by which it is bound, or any
order, rule or regulation of any court or of any federal or state regulatory
body or any administrative agency or any other governmental body having
jurisdiction over the Seller or the Project.
C. No Proceedings. Except as set forth in Exhibit B, there is not now
pending or, to Seller's actual knowledge, threatened, any action, suit or
proceeding before any court or governmental agency or body against the Seller or
the Project which might have any material adverse result to the Project. Without
limiting the generality of the foregoing, Seller has not received any written
notices from any governmental entities of violations or alleged violations of
any laws, rules, regulations or codes, including, without limitation, building
codes, land use, zoning, hazardous wastes and other environmental laws, with
respect to the Project which have not been corrected to the satisfaction of the
governmental agency issuing such notices.
D. Eminent Domain. There are no pending, or to Seller's actual knowledge,
threatened condemnation, eminent domain or similar proceedings relating to the
Project or any portion thereof or any interest or estate therein.
3
<PAGE>
E. Zoning; Taxes. There are no pending or, to Seller's actual knowledge,
threatened zoning changes or variances with respect to the Project; nor has
Seller initiated any request or application for a zoning change or variance with
respect to the Project. There are no pending or, to Seller's actual knowledge,
threatened reassessments or special tax assessments against the Project except
for normal reassessments applicable generally to properties in the area of the
Project.
F. Service Contracts. Attached hereto as Exhibit C is a true, correct and
complete list of all contracts or agreements to which Seller is a party for the
providing of services to or management of the Project (which contracts and
agreements, together with the contracts and agreements entered into with respect
to the Project after the date hereof with the consent of Purchaser pursuant to
Section 6 below, are herein referred to collectively as the "Service
Contracts"). To Seller's actual knowledge, all of the Service Contracts are in
full force and effect and free from material default, and Seller has received no
written notice of material default under the Service Contracts from the other
parties thereto.
G. Tenant Leases. Attached hereto as Exhibit D is a true, correct and
complete list of all outstanding leases or agreements pursuant to which any
person occupies, or has the right to occupy, space in the Project (which leases,
agreements and other documents, together with the lease documents entered into
with respect to the Project after the date hereof with the consent of Purchaser
pursuant to Section 6 below, are herein referred to collectively as the "Tenant
Leases"). Seller has delivered to Purchaser true, correct and complete copies of
the Tenant Leases. Except as shown on such exhibit, (a) to Seller's actual
knowledge, there are no material defaults under any of the Tenant Leases and the
Tenant Leases are in full force and effect, (b) there are no security deposits
nor any rights to refunds of rents previously paid under the Tenant Leases
except for year-end reconciliations of 1996 operating expenses and real estate
taxes, (c) there are no brokerage commissions or fees due now or payable in the
future in connection with the Tenant Leases, (d) Seller has received no written
notice of material default under the Tenant Leases from the lessees thereunder,
(e) there are no prepaid rents except for the current month, (f) there are no
outstanding rent arrearages or, to Seller's actual knowledge, offset rights, (g)
there are no tenant improvement expenditures or tenant improvement reimbursement
obligations which are currently outstanding, and (h) there are no other
brokerage agreements in effect with respect to the Project. Purchaser
understands and agrees, however, that Seller is not making any representations
or warranties with respect to any information on Exhibit D which is not
expressly referenced in this paragraph and that such information is included on
Exhibit D solely as a matter of convenience for Purchaser.
4
<PAGE>
H. Labor Contracts. Seller has no employees working at the Project. All
persons working on behalf of Seller at the Project are employees of Seller's
managing agent for the Project, and Purchaser will be under no obligation to use
or hire such employees or such managing agent for the Project after Closing.
I. Limitations on Representations and Warranties. As used herein, the term
"Seller's actual knowledge" means the conscious knowledge of Jana L. Langston,
Joe Donovan, Trina Santry, and Karen Schumacher, and such persons shall not be
obligated to perform any due diligence investigations in connection with making
any representations or warranties herein. All representations and warranties of
Seller in this Agreement shall terminate one (1) year after the Closing and
Seller shall have no liability thereafter with respect to such representations
and warranties except to the extent Purchaser has filed a lawsuit against Seller
during such one (1) year period for breach of any representation or warranty. If
Purchaser has actual knowledge (as such term is defined in Section 4(E) hereof)
at Closing that any of the Seller's representations or warranties in this
Agreement are not true as of the Closing and Purchaser elects nonetheless to
close, Purchaser shall be deemed to have waived any claim for breach of such
representation or warranty. In addition, Seller shall be relieved of any
liability for the representations and warranties contained in Paragraph 3(G)
with respect to any Tenant Lease to the extent Purchaser has received an
estoppel certificate expressly covering the matters set forth in Paragraph 3(G)
from the party who is the tenant under such Tenant Lease. Seller shall have no
liability for the breach of any representations or warranties set forth in this
Agreement except to the extent the loss suffered by Purchaser as a result of
such breaches exceeds $100,000 in the aggregate.
J. Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER
ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROJECT,
INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE
DERIVED FROM THE PROJECT, (C) THE SUITABILITY OF THE PROJECT FOR ANY AND ALL
ACTIVITIES AND USES WHICH PURCHASER OR ANY TENANT MAY CONDUCT THEREON, (D) THE
COMPLIANCE OF OR BY THE PROJECT OR ITS OPERATION WITH ANY LAWS, RULES,
ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E)
THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROJECT, (F) THE MANNER OR QUALITY OF THE CONSTRUCTION
OR MATERIALS, IF ANY, INCORPORATED INTO THE PROJECT, (G) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROJECT, OR (H) COMPLIANCE WITH ANY
ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS,
5
<PAGE>
ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE PROPERTY OF
HAZARDOUS MATERIALS (AS DEFINED BELOW) OR (I) ANY OTHER MATTER WITH RESPECT TO
THE PROJECT, ADDITIONALLY, NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO
MAKE, AND BY EXECUTION HEREOF OF PURCHASER ACKNOWLEDGES THAT NO PERSON HAS MADE,
ANY REPRESENTATION, AGREEMENT, STATEMENT, WARRANTY, GUARANTY OR PROMISE
REGARDING THE PROJECT OR THE TRANSACTION CONTEMPLATED HEREIN; AND NO SUCH
REPRESENTATION, WARRANTY, AGREEMENT, GUARANTY, STATEMENT OR PROMISE IF ANY, MADE
BY ANY PERSON ACTING ON BEHALF OF SELLER SHALL BE VALID OR BINDING UPON SELLER
UNLESS EXPRESSLY SET FORTH HEREIN. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROJECT, PURCHASER IS
RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY
INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, AND AGREES TO ACCEPT THE PROJECT AT THE CLOSING AND WAIVE ALL
OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT LIMITED TO, ANY RIGHT OR
CLAIM OF CONTRIBUTION) ARISING FROM OR RELATED TO THE PROPERTY OR TO ANY
HAZARDOUS MATERIALS ON THE PROPERTY EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROJECT WAS OBTAINED FROM A
VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE
ACCURACY, TRUTHFULNESS OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY
VERBAL OR WRITTEN STATEMENT, REPRESENTATION OR INFORMATION PERTAINING TO THE
PROJECT, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER,
CONTRACTOR, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT TO THE
MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROJECT AS PROVIDED FOR HEREIN
IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND
AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR NEGOTIATION TO REFLECT
THAT ALL OF THE PROJECT IS SOLD BY SELLER AND PURCHASED BY PURCHASER SUBJECT TO
THE FOREGOING. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING OR ANY
TERMINATION HEREOF. IN NO EVENT, HOWEVER, SHALL ANY PROVISION OF THIS SECTION
(J) BE INTERPRETED OR APPLIED IN ANY MANNER SO AS TO LIMIT, IMPAIR OR PREJUDICE
THE RIGHTS OF PURCHASER HEREUNDER WITH RESPECT TO THE REPRESENTATIONS AND
WARRANTIES PROVIDED BY OR ON BEHALF OF SELLER IN THIS AGREEMENT OR THE
CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to, and covenants and agrees with, Seller as of the date
hereof and as of the Closing as follows:
A. Due Organization. Purchaser is a limited partnership organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser
has full power and
6
<PAGE>
authority, and is duly authorized, to execute, enter into, deliver and perform
this Agreement and its obligations hereunder.
B. Power. This Agreement and all other agreements, instruments and
documents required to be executed or delivered by Purchaser pursuant hereto have
been or (if and when executed) will be duly executed and delivered by Purchaser,
and are or will be legal, valid and binding obligations of Purchaser. No
consents and permissions are required to be obtained by Purchaser for the
execution and performance of this Agreement and the other documents to be
executed by Purchaser hereunder. The consummation of the transactions
contemplated herein and the fulfillment of the terms hereof will not result in a
breach of any of the terms or provisions of, or constitute a default under, any
agreement or document to which Purchaser is a party or by which it is bound, or
any order, rule or regulation of any court or of any federal or state regulatory
body or any administrative agency or any other governmental body having
jurisdiction over Purchaser.
C. No Proceedings. There is not now pending or, to Purchaser's actual
knowledge, threatened any action, suit or proceeding before any court or
governmental agency or body which might adversely affect Purchaser's ability to
perform its obligations hereunder.
D. ERISA. Purchaser is not and is not acting on behalf of an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), a "plan" within the meaning
of Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or
an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. ss.
2510.3-101 of any such employee benefit plan or plans.
E. Limitations on Representations and Warranties. As used herein, the term
"Purchaser's actual knowledge" means the conscious knowledge of Erin O'Boyle,
and such person shall not be obligated to perform any due diligence
investigations in connection with making any representations or warranties
herein. All representations and warranties of Purchaser in this Agreement shall
terminate one year after the Closing and Purchaser shall have no liability
thereafter with respect to such representations and warranties except to the
extent Seller has filed a lawsuit against Purchaser during such one year period
for breach of any representation or warranty. If Seller is aware at Closing that
any of the Purchaser's representations or warranties in this Agreement are not
true as of the Closing and Seller elects nonetheless to close, Seller shall be
deemed to have waived any claim for breach of such representation or warranty.
Purchaser shall have no liability for the breach of any representations or
warranties set forth in this Agreement except to the extent the
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loss suffered by Seller as a result of such breaches exceeds $100,000 in the
aggregate.
SECTION 5. OPERATION OF THE PROJECT PRIOR TO CLOSING. The Seller shall do
all of the following, from and after the date hereof through and including the
Closing Date:
(a) operate and maintain the Project in the same manner as it is
currently being operated and shall, subject to damage, destruction or loss
to the Project in which event Purchaser shall have the rights set forth in
Section 6(I)(3), cause the Project to be, on the Closing Date, in the same
condition as exists as of the date of this Agreement (normal wear and tear
excepted);
(b) maintain, or cause to be maintained, all existing insurance
carried by Seller on the Improvements;
(c) without the prior written consent of Purchaser, which may be
withheld in Purchaser's sole discretion, not enter into any service
contracts or similar agreements affecting the Project which would be
binding on Purchaser after Closing, nor modify, amend, terminate, cancel or
grant concessions regarding any such existing contracts or agreements which
would be binding on the Purchaser after Closing; provided, however, Seller
shall terminate prior to Closing any service contracts or similar
agreements which Purchaser elects to have Seller terminate provided such
contracts and agreements are terminable by their terms prior to Closing
(d) without the prior written consent of the Purchaser (except in the
case of emergencies), not make, or obligate itself to make, any material
alterations or modifications to the Project; provided, however, prior to
the Due Diligence Deadline Seller shall complete the current HVAC upgrade
project, which includes balancing and testing of the system to ensure the
design CFM requirements and design temperatures are achieved, and the new
roof on 1616 Building (the "Pre-Closing Work"). Seller shall notify
Purchaser when the Pre-Closing Work has been substantially completed, and
Purchaser shall have five (5) business days in which to exercise the right
to determine that all of the Pre-Closing Work has been substantially
completed to its sole satisfaction, including, without limitation, the
design, workmanship and adequacy thereof. If the Pre-Closing Work has not
been substantially completed at least five (5) business days prior to the
end of the Due Diligence Period, the Due Diligence Period shall be extended
solely with respect to the Pre-Closing Work to the date which is five (5)
business days after the Pre-Closing Work is substantially completed. If the
Pre-Closing Work is substantially completed to Purchaser's satisfaction but
not
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100% completed, Purchaser and Seller shall agree on a punchlist of items
remaining to be completed. At Purchaser's option, Seller shall either
complete such punchlist prior to Closing or give Purchaser a credit at
Closing for the cost of completing such punchlist; and, except for such
punchlist, Seller shall have no obligations with respect to the Pre-Closing
Work after Purchaser has accepted the Pre-Closing Work as substantially
complete; and
(e) without the prior written consent of the Purchaser, not make any
modifications or amendments to the Tenant Leases or enter into any new
leases. Purchaser shall not unreasonably withhold its consent to any such
modifications or amendments or new leases; and Purchaser shall be deemed to
have given its consent to any modification or amendment or new lease if
Purchaser does not notify Seller of its disapproval within five (5)
business days after receipt of the proposed modification or amendment or
new lease. Such five (5) business day period shall not begin to run until
Purchaser has received a complete package of information concerning the
proposed lease or modification, including appropriate credit information on
the tenant. Seller shall give Purchaser an opportunity to be involved in
discussions leading up to any proposed new lease or any proposed lease
modifications in order to give Purchaser an opportunity to provide its
non-binding input to Seller, and Purchaser shall be provided an opportunity
to submit contractor names and proposals for tenant improvement work for
Seller's good faith consideration.
SECTION 6. CONDITIONS TO CLOSING. In addition to the conditions provided in
other provisions of this Agreement, the parties' obligations to perform their
undertakings provided in this Agreement, are each conditioned on the fulfillment
of each of the following which is a condition to such party's obligation to
perform hereunder (subject to such party's waiver in strict accordance with
Section 8 below):
(1) Purchaser shall obtain each of the following no later than
September 30, 1996: (i) a current ALTA survey of the Project certified to
Seller, Purchaser and the Title Company, and (ii) a title insurance
commitment for the Project issued by the Title Company (the "Title
Commitment"). Purchaser shall have ten (10) days after receipt to approve
such items; and, if Purchaser disapproves any such items in the Title
Commitment or Survey, Seller may at its sole election either correct any
matters which the Purchaser has disapproved or terminate this Agreement.
Purchaser shall be deemed to have waived any objections to any matters set
forth in the Title Commitment which Purchaser does not notify Seller by
such date that it objects thereto, and any matters shown on the Title
Commitment which are not objected to by Purchaser by such
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date shall be deemed "Permitted Exceptions". Seller shall have ten (10)
days to make the election to cure any matter which Purchaser has objected
to; and, if Seller elects not to cure any such matter, Purchaser may within
five (5) days thereafter elect to waive its objection to such matter, in
which case such matter shall become a Permitted Exception. If Seller has
elected to cure any matter, such matter shall be cured by Seller prior to
Closing, and Purchaser shall be given a reasonable opportunity prior to
Closing to verify that such matter has been cured to Purchaser's reasonable
satisfaction. Notwithstanding the foregoing, Seller shall cause to be
released any mortgages or other voluntary encumbrances securing the payment
of money which Seller has caused to be recorded against the Project.
(2) As a condition to each party's obligation to perform hereunder,
the due performance by the other of all undertakings and agreements to be
performed by the other hereunder and the truth in all material respects of
each representation and warranty as set forth herein made pursuant to this
Agreement by the other at the Closing Date; provided, however, if either
party cannot remake any of its representations and warranties as of Closing
in all material respects through no fault of its own, the other party's
sole remedies shall either be to terminate this Agreement or waive the
condition that such representation or warranty be remade as of Closing.
Purchaser and Seller shall each deliver to the other a certificate at
Closing (a "Closing Certificate") reaffirming its representations and
warranties in all material respects except for matters which have occurred
after the date hereof which are listed on the Closing Certificate and to
which the other party has elected to waive its objection in writing.
(3) As a condition to Purchaser's obligation to perform hereunder (and
not as a default), that there shall not have occurred between the date
hereof and the Closing Date, inclusive, destruction of or damage or loss to
the Project (whether or not covered by insurance proceeds) from any cause
whatsoever the cost of which to repair exceeds $250,000 in the aggregate;
provided, however, that in the event of such destruction or damage,
Purchaser may elect to proceed with the Closing in which case Seller shall
assign to Purchaser any claims for proceeds from the insurance policies
covering such destruction or damage and give Purchaser a credit for any
deductibles under such policies. If the cost of repairing the destruction,
damage or loss is less than $250,000 in the aggregate, the parties shall
proceed with the Closing as provided herein and the cost of repair shall be
deducted from the Purchase Price.
(4) As a condition of Purchaser's obligation to proceed with Closing
(and not as a default), Purchaser shall
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be satisfied in its sole and absolute discretion with all aspects of the
Project; provided, however, if Purchaser does not notify Seller by October
7, 1996 (the "Due Diligence Deadline") that it is not so satisfied, this
condition shall be deemed waived by Purchaser. Purchaser shall not be
required to give its reasons for terminating this Agreement pursuant to
this paragraph, and Purchaser's notice shall be conclusive evidence that it
is dissatisfied with the Project.
(5) As a condition to Purchaser's obligation to perform hereunder (and
not as a default), that there shall not have occurred at any time or times
on or before the Closing Date any taking or threatened taking of the
Project or any part thereof or any interest or estate therein by
condemnation, eminent domain or similar proceedings; provided, however,
Purchaser may elect to waive such condition in which case Seller shall
assign to Purchaser at Closing all of Seller's right, title and interest in
and to any proceeds resulting from any such proceeding.
(6) Seller covenants and agrees, and it shall be a condition to
Purchaser's obligation to perform its undertakings hereunder, that from and
after the date hereof, at all reasonable times, Purchaser (and its agents)
shall be permitted access to the Project and all books, records and reports
relating to the Tenant Leases and the physical condition and historical
financial statements for the Project for the purpose of inspecting same,
and Purchaser (and its agents) shall have the right to photocopy any and
all such books, records and information. Purchaser shall have the right to
conduct physically intrusive testing of or under the Project, provided it
first obtains the consent of Seller as to the timing and scope of the work
to be performed, which consent shall not be unreasonably withheld or
delayed. All information relating to the Project made available to
Purchaser shall be treated as confidential, subject to Section 16.
Purchaser (and its agents) shall also have the right to meet with tenants
in the Project to discuss any matters relating to their occupancy in the
Project, provided, however, Seller shall have the right to have a
representative in attendance at all such meetings. Any entry by Purchaser
and its agents on the Project shall be upon reasonable prior notice to
Seller, and Purchaser will indemnify and hold Seller harmless against any
and all injuries, claims, losses, damages and expenses arising out of its
negligence in the performance of any such entry, inspection or other
activities.
SECTION 7. CLOSING.
A. Time. The Closing hereunder shall occur on the Closing Date at the
offices of the Title Company.
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B. Actions. At the Closing, Seller shall convey good and marketable
title to the Project to Purchaser, free and clear of all encumbrances
except the Tenant Leases, Permitted Encumbrances and those title matters
which Purchaser has accepted or has been deemed to accept pursuant to the
terms hereof; and Purchaser shall pay to Seller the Purchase Price, plus or
minus prorations as set forth herein. The Closing shall occur through an
escrow, the cost of which shall be shared equally between Purchaser and
Seller. Purchaser shall receive full possession of the Project at Closing,
subject only to the Tenant Leases and Permitted Exceptions.
C. Deliveries.
(1) At the Closing, Purchaser shall receive all of the following, in
form and substance reasonably satisfactory to Purchaser (it being agreed by
Purchaser that the documents attached hereto as exhibits are satisfactory
in form to Purchaser):
(a) a special warranty deed, with full English covenants, in the
form attached hereto as Exhibit E executed by the Seller;
(b) a bill of sale and assignment for the Personal Property in
the form of Exhibit F, executed by Seller;
(c) an assignment of the Service Contracts, in the form of
Exhibit G attached hereto (the "Assignment of Service Contracts"),
executed by Seller, assigning to Purchaser the Service Contracts;
(d) an assignment of the Tenant Leases, in the form of Exhibit H
hereto (the "Assignment of Tenant Leases"), executed by Seller;
(e) written acknowledgments (the "Tenant Estoppel Certificates"),
without material deviation from the form of Exhibit I attached hereto,
dated as of a date not more than thirty (30) days prior to Closing,
from tenants leasing at least 85% of the occupied rentable square feet
in the Project, but including in any event the following tenants (the
"Major Tenants"): American National Red Cross, Price, Waterhouse, TRW,
Bolt, Beranek and Newman, Inc., Bell Atlantic, Bio-Metric, NEMA and
Century Parking, Inc.;
(f) an assignment in the form of Exhibit J hereto of all
guaranties and warranties in favor of Seller with respect to the
Improvements, including any
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guaranties and warranties with respect to the Pre-Closing Work;
(g) notices to each of the tenants under the Tenant Leases,
notifying them of the sale of the Project and directing them to pay
all future rent as Purchaser may direct;
(h) a closing statement setting forth all prorations and credits
required hereunder;
(i) an affidavit from Seller that it is not a "foreign person" or
subject to withholding requirements under the Foreign Investment in
Real Property Tax Act of 1980, as amended;
(j) the original of all Leases and Service Contracts to the
extent they are in the possession of Seller or its agents;
(k) all keys and combinations to locks located at the Project;
(l) All soil reports, engineering studies, consultant reports,
plans and specifications, books and records and permits and approvals
relating to the Project which are in the possession of Seller or its
managing agent;
(m) a termination of the existing management agreement for the
Project;
(n) to the extent the Seller can obtain the same, (i) a letter
from the installer of the original roof on the Project confirming that
any warranties and guaranties applicable to the original roof will
remain in effect notwithstanding the Pre-Closing Work; and (ii) a
letter from the manufacturer of the new roof membrane being installed
as part of the Pre-Closing Work confirming that the roof work done as
part of the Pre-Closing Work is in compliance with any warranty given
by such manufacturer.
(o) the Closing Certificate from Seller referred to in Section
6(2) above;
(p) evidence that any fees or payments due LaSalle Partners in
connection with the transactions set forth herein have been paid;
(q) an affidavit in the form attached hereto as Exhibit M; and
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(r) an assignment in the form of Exhibit N (the "Assignment of
Art Agreements") of (i) that certain Agreement, dated June 19, 1991,
between Arlington County and Seller and (ii) that certain Commission
Agreement, dated June 17, 1990, between Chris Gardner and Seller.
In the event Seller is unable to obtain the Tenant Estoppel Certificates
required herein without material deviation from the information contained in
this Agreement, Purchaser shall have the option as its sole and exclusive
remedies of (i) terminating this Agreement or (ii) proceedi with the Closing and
waiving the requirement that it receive the Tenant Estoppel Certificates, as the
case may be, without material deviation. Seller shall also use its best efforts
(without the expenditure of any material sums) to obtain prior to Closing
subordination, attornment and non-disturbance agreements from the Major Tenants
in the form attached hereto as Exhibit L; but receipt of such agreements shall
not be a condition of Closing.
(2) Seller shall have received from Purchaser all of the following, in form
and substance reasonably satisfactory to Seller (it being agreed by Seller that
the documents attached hereto as exhibits are satisfactory in form to the
Seller):
(a) payment of the Purchase Price, plus or minus prorations;
(b) copies of the Assignment of Service Contracts, the Assignment of
Tenant Leases and the Assignment of Art Agreements, executed by Purchaser;
and
(c) the Closing Certificate from Purchaser referred to in Section 6(2)
above.
D. Prorations. The Purchase Price for the Property shall be subject to
prorations and credits as follows to be determined as of 12:01 A.M. on the
Closing Date, the Closing Date being a day of income and expense to Purchaser:
1. Rents payable under Tenant Leases. Purchaser shall receive a credit
at Closing for all rents collected by Seller prior to the Closing and
allocable to the period after Closing. No credit shall be given the Seller
for accrued and unpaid Rent or any other non-current sums due from tenants
unless and until said sums are paid. Any portion of any rents collected
subsequent to the Closing Date and properly allocable to periods prior to
the Closing Date shall be paid, promptly after receipt, to the Seller, but
subject to all of the provisions of this Section hereof; and any portion
thereof properly allocable to periods subsequent to the Closing Date, if
any, shall be paid to Purchaser. Seller shall be solely responsible for
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collecting any rent under the Tenant Leases which is past due as of the
Closing; provided, however, Purchaser shall be responsible for collecting
any rent due for the month in which the Closing occurs and shall pay to
Seller the portion of such rents if, as and when collected which has
accrued prior to Closing. Any security deposits held by Seller at Closing
shall be credited to Purchaser on the Closing Date.
2. Seller shall be entitled to collect from tenants the monthly
adjustment rent or escalation payments payable under the Tenant Leases for
the period prior to Closing for taxes and operating expenses for the
Project, and Purchaser shall retain all such monthly rent or payments for
the period after Closing. As soon as all such taxes and operating expenses
for the Project are finally determined for the year in which the Closing
occurs, Purchaser shall be responsible for adjusting with the tenants the
adjustment rent or escalation payments paid under the Tenant Leases for
such year. Seller shall pay to Purchaser Seller's share of any such
adjustment payments owed to tenants under the Tenant Leases, and Purchaser
shall remit to Seller Seller's share of any such adjustment payments paid
by tenants; and Seller shall indemnify and hold Purchaser harmless in
connection with all claims for Seller's share of the adjustments owed to
tenants, which indemnity shall survive the Closing. Seller's share of any
adjustments shall be determined based on the portion of operating expenses
and real estate taxes for the year incurred by Seller (after taking into
account any prorations pursuant to this Section D).
3. Purchaser shall receive a credit for any accrued but unpaid real
estate taxes imposed in respect of the Project for the portion of the
current year which has elapsed prior to the Closing Date (and to the extent
unpaid, for prior years). If the amount of any such taxes have been
determined as of Closing, such credit shall be based on the most recent
ascertainable taxes and shall be reprorated upon issuance of the final tax
bill. Seller shall also give Purchaser a credit for any special assessments
against the Project which are due and payable prior to Closing.
4. Utilities and fuel, including, without limitation, steam, water,
electricity, gas and oil. The Seller shall cause the meters, if any, for
utilities to be read the day on which the Closing Date occurs and to pay
the bills rendered on the basis of such readings. If any such reading for
any utility is not available, then adjustment therefor shall be made on the
basis of the most recently issued bills therefor which are based on meter
readings no earlier than thirty (30) days prior to the Closing Date; and
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such adjustment shall be reprorated when the next utility bills are
received.
5. Charges payable under the Service Contracts assigned to Purchaser
pursuant to this Agreement.
6. Any vault fees or similar payments for the Project.
At least five (5) days prior to Closing, Seller shall deliver to Purchaser
copies of all information and records necessary to support the prorations
hereunder. In the event any prorations made pursuant hereto shall prove
incorrect for any reason whatsoever, either party shall be entitled to an
adjustment to correct the same, provided no adjustments shall be requested more
than one (1) year after Closing.
E. Expenses. Purchaser shall pay (1) the cost of the Title Policy (defined
below), (2) the cost of the survey of the Project, (3) any state and county
transfer taxes or recording charges payable in connection with the recording of
the Deed, (4) one-half of any escrow or closing charge by the Title Company, and
(5) its own due diligence and legal expenses. Seller shall pay (1) the Grantor's
Tax, (2) one-half of any escrow or closing charge by the Title Company, and (3)
its own legal expenses.
F. Title. At the Closing, the Title Company shall issue to Purchaser an
ALTA Policy of Title Insurance or equivalent (the "Title Policy") with Purchaser
named as insured, dated as of the Closing Date, with a liability limit equal to
the Purchase Price, insuring that title to the Land and the Improvements is
vested in Purchaser, subject only to the Permitted Exceptions and Tenant Leases.
If the Title Policy discloses any liens or encumbrances which are not Permitted
Exceptions and which the Seller voluntarily created, Purchaser may remove such
liens at Closing by paying so much of the Purchase Price to the holders of the
liens as is necessary to do so. If the Title Policy discloses any other liens or
encumbrances which are not Permitted Exceptions, Seller shall have up to thirty
(30) days in which to cure such new title exception. If Seller does not cure
such new exception within such thirty (30) day period, Purchaser shall have the
option, to be exercised within ten (10) days after the end of the thirty (30)
day period, to either terminate this Agreement or waive its objection to the new
title exception; and, if Purchaser elects to waive its objection, the new
exception shall be deemed a "Permitted Exception." If necessary, the Closing
Date shall be extended until the date which is ten (10) days after the date on
which Seller cures such new title exception or the date on which Purchaser
waives its objection to such new title exception.
G. Leasing Costs. Except as set forth in the following sentence, Seller
shall be responsible for the brokerage
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commissions, tenant improvement costs and other leasing costs to be paid in
connection with the existing leases at the Project with American National Red
Cross (approximately 75,000 square feet), Teledyne Industries, Inc.
(approximately 24,000 square feet), John Snow, Inc. (approximately 19,000 square
feet) and TRW, Inc. (Suites 500 and 1900 totaling approximately 34,347 square
feet). Purchaser shall be responsible for the brokerage commissions, tenant
improvements and other leasing costs to be paid in connection with (i) any new
lease at the Project after the date hereof with TRW, Inc. provided Purchaser has
approved such new lease, (ii) the lease with Bell Atlantic International, Inc.,
dated August 5, 1996, which has been assigned to Bell-Atlantic Virginia, Inc.,
(iii) existing options under the Tenant Leases for expansions and renewals which
are exercised after August 21, 1996, which Purchaser shall have a right to
review prior to the Due Diligence Deadline, and (iv) new leases or lease
amendments for the Project which are executed after August 21, 1996, and prior
to Closing provided Purchaser has approved such new leases or amendments.
H. Existing Mortgages. At Purchaser's election, Purchaser may seek to have
the existing mortgages on the Project assigned to Purchaser's lender at Closing
in lieu of having them satisfied. If Purchaser so elects, Seller shall
reasonably cooperate with Purchaser's efforts, but such assignment shall not be
a condition of Closing and any assignment shall be at Purchaser's sole cost and
expense.
SECTION 8. WAIVER. Each party hereto may, at any time or times, at its
election, waive any of the conditions to its obligations hereunder by a written
waiver expressly detailing the extent of such waiver (and no other waiver or
alleged waiver by such party shall be effective for any purpose). No such waiver
shall reduce the rights or remedies of such party by reason of any breach by the
other party or parties of any of its or their obligations hereunder.
SECTION 9. BROKERS. Each party represents and warrants to the other that it
has not hired any brokers or finders in connection with the transactions set
forth herein except for LaSalle Partners. Seller shall be obligated to pay any
commissions or fees due LaSalle Partners and shall indemnify Purchaser against
any claims by LaSalle Partners for such commissions or fees, which indemnity
shall survive the Closing.
SECTION 10. SURVIVAL; FURTHER INSTRUMENTS. Except as expressly set forth
herein, none of the terms and provisions herein shall survive the Closing. Each
party will, whenever and as often as it shall be requested so to do by the
other, cause to be executed, acknowledged or delivered any and all such further
instruments and documents as may be necessary or proper, in the reasonable
opinion of the requesting party, in order to carry out
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the intent and purpose of this Agreement and as is consistent with this
Agreement.
SECTION 11. NO THIRD PARTY BENEFITS. This Agreement is made for the sole
benefit of Purchaser and Seller and their respective successors and assigns
(subject to the limitation on assignment set forth in Section 13 below), and no
other person or persons shall have any right or remedy or other legal interest
of any kind under or by reason of this Agreement. Whether or not either party
hereto elects to employ any or all the rights, powers or remedies available to
it hereunder, such party shall have no obligation or liability of any kind to
any third party by reason of this Agreement or by reason of any of such party's
actions or omissions pursuant hereto or otherwise in connection with this
Agreement or the transactions contemplated hereby.
SECTION 12. REMEDIES. If Purchaser defaults hereunder, Seller's sole remedy
at law or in equity shall be to recover the Earnest Money as liquidated damages.
The parties agree that Seller's damages in the event of a default by Purchaser
will be difficult to determine and that the Earnest Money is a fair estimate of
those damages. If Seller shall default hereunder prior to Closing, Purchaser
shall be entitled as its sole remedies at law or in equity to terminate this
Agreement and receive a return of the Earnest Money or to sue for specific
performance of this Agreement.
SECTION 13. MISCELLANEOUS. This Agreement (including all Exhibits hereto)
contains the entire agreement between the parties respecting the matters herein
set forth and supersedes all prior agreements between the parties hereto
respecting such matters. The section headings shall not be used in construing
this Agreement. This Agreement shall be construed and enforced in accordance
with the laws of the State of Virginia. Purchaser may not assign its rights
under this Agreement without the prior written consent of Seller except to an
entity controlling Purchaser, controlled by Purchaser or under common control
with Purchaser. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. The provisions of this Agreement may not be
amended, changed or modified orally, but only by an agreement in writing signed
by the party against whom any amendment, change or modification is sought. Time
is of the essence with respect to the terms and conditions of this Agreement.
SECTION 14. NOTICES. All notices and other communications which either
party is required or desires to send to the other shall be in writing and shall
be sent by messenger, registered or certified mail, postage prepaid, return
receipt requested. Notices and other communications shall be deemed to have been
given on the earlier of actual receipt or the third business day after the date
so mailed. Notices shall be addressed as follows:
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(a) To Seller:
c/o LaSalle Partners Limited
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Ms. Jana L. Langston
with copies to:
LaSalle Partners Limited
220 East 42nd Street
New York, New York 10017
Attention: Mr. Thomas Beneville
and
Hagan & Olian
200 East Randolph Drive
Suite 4322
Chicago, Illinois 60601
Attention: Mr. R. K. Hagan
(b) To Purchaser:
c/o Beacon Properties Corporation
50 Rowes Wharf
Boston, Massachusetts 02110
Attention: Mr. Charles H. Cremens
with a copy to:
Goulston & Storrs
400 Atlantic Avenue
Boston, Massachusetts 02110
Attention: Mr. Jordon Krasnow
or to such other person and/or address as shall be specified by either party in
a notice given to the other pursuant to the provisions of this Paragraph.
SECTION 15. ATTORNEYS' FEES. In the event either party institutes legal
proceedings to enforce its rights hereunder, the prevailing party in such
litigation shall be paid all reasonable expenses of the litigation by the losing
party, including its attorneys' fees.
SECTION 16. CONFIDENTIALITY. Seller and Purchaser agree to keep this
Agreement confidential and not disclose or make any public announcements with
respect to the subject matter hereof without the consent of the other party.
Seller acknowledges that Beacon Properties Corporation, the general partner of
Purchaser, is a publicly owned corporation subject to regulation by the
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Securities and Exchange Commission (the "SEC"), and that the regulations of the
SEC may require that Purchaser disclose the existence of this Agreement and the
contents of some or all of the documents delivered by Seller in connection
therewith. Accordingly, Seller expressly consents to the disclosure of the terms
and conditions of this Agreement and the transactions contemplated hereby to the
extent that Purchaser in the exercise of its reasonable judgment has determined
that the SEC requires such disclosure. In addition to the disclosure
contemplated by the preceding sentence, and without limitation thereof, either
party may disclose this Agreement or the contents thereof or of any documents to
be executed and/or delivered in connection herewith to any partners, advisers,
underwriters, analysts, employees, affiliates, officers, directors, consultants,
lenders, accountants or legal counsel of any of the foregoing, provided that
they are advised as to the confidential nature of such information and are
instructed to maintain such confidentiality. The foregoing shall constitute a
modification of any prior confidentiality agreement that may have been entered
into by the parties. From and after the Closing, either Seller or Purchaser may
issue a press release with respect to this Agreement and the transactions
contemplated hereby provided the terms of the transactions are not included in
such press release.
SECTION 17. AUDIT. To comply with the SEC regulations with respect to the
verification of historical information, Purchaser shall have the right prior to
or for a one (1) year period subsequent to Closing to conduct an audit, at
Purchaser's sole cost and expense, of Seller's books and records for and with
respect to the respective Project for the shorter of (i) three years prior to
Closing or (ii) the period of Seller's ownership thereof. Seller hereby agrees
to permit Purchaser and Purchaser's accountants access to such books and records
(including those maintained by Seller's managing agents) and, at Purchaser's
sole cost and expense, to reasonably cooperate and to cause Seller's accountants
to cooperate with Purchaser to enable such audit to be performed; provided,
however, Purchaser shall not have a right to inspect any confidential documents
such as appraisals or market studies. The provisions of this paragraph shall
survive the Closing.
SECTION 18. LIMITATION ON LIABILITY. This Agreement is entered into by
LaSalle Advisors Limited, a Delaware limited partnership, as duly appointed
agent and investment manager of the above-named Trustees of LaSalle Fund II and
on the express condition that any obligation of such Trustees or LaSalle Fund II
or LaSalle Advisors Limited or any affiliate shall be enforceable only against,
and payable only out of, the property of LaSalle Fund II, and neither the
Trustees nor any beneficiary, officer or employee of LaSalle Fund II or of
LaSalle Advisors Limited or of any affiliate shall be held to any personal
liability whatsoever. Seller, however, agrees to maintain a net worth of at
least $5,000,000 until the first anniversary of the Closing.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
DANIEL W. CUMMINGS, STUART L. SCOTT,
ROBERT C. SPOERRI, and LYNN C. THURBER, not
personally, but as Trustees under that
certain Declaration of Trust, dated
October 1, 1983, creating LASALLE FUND II,
a Group Trust, acting through its
agent and manager:
LASALLE ADVISORS LIMITED
By:
----------------------------------
Title:
---------------------------------
BEACON PROPERTIES, L.P., a Delaware
limited partnership
By: Beacon Properties Corporation, a
Maryland corporation
By:
----------------------------------
Title:
-------------------------------
21
<PAGE>
EXHIBITS
Exhibit A - Legal Description of Land Exhibit B - Litigation Exhibit C - Service
Contracts Exhibit D - Tenant Leases Exhibit E - Deed Exhibit F - Bill of Sale
Exhibit G - Assignment of Service Contracts Exhibit H - Assignment of Tenant
Leases Exhibit I - Estoppel Certificates for Tenant Leases Exhibit J Assignment
of Guaranties and Warranties Exhibit K - Personal Property Exhibit L -
Subordination, Attornment and Non-Disturbance Agreement Exhibit M - Seller's
Affidavit Exhibit N - Assignment of Art Agreements
22
Exhibit 2.2
First Amendment of Purchase and Sale Agreement
This First Amendment to Purchase and Sale Agreement is made as of the 2nd
day of October, 1996 by and between DANIEL W. CUMMINGS, STUART L. SCOTT, ROBERT
C. SPOERRI and LYNN C. THURBER, not personally, but as Trustees under that
certain Declaration of Trust, dated October 1, 1983, creating LASALLE FUND II, a
group trust, acting through its agent and manager, LaSalle Advisors Limited
(hereinafter called "Seller"), and BEACON PROPERTIES, L.P., a Delaware limited
partnership ("Purchaser").
WITNESSETH:
Whereas, Seller and Purchaser have previously entered into a certain
Purchase and Sale Agreement dated as of September 20, 1996 (the "Agreement")
relating to the sale of two office buildings in Rosslyn, Virginia, one located
at 1616 North Fort Myer Drive and the other at 1300 North Seventeenth Street;
Whereas, Seller and Purchaser desire to modify the Agreement as set forth
below.
Now therefore, in consideration of the premises and the respective
undertakings of the parties hereinafter set forth, it is hereby agreed:
1. The "Purchase Price" set forth in Section 2.B. of the Agreement is
hereby changed to be Ninety-Nine Million Fifty Thousand Dollars
($99,050,000.00).
2. Seller and Purchaser acknowledge that Seller has notified Purchaser of
the substantial completion of the HVAC upgrade project and installation of the
new roof on the 1616 Building, described as the "Pre-Closing Work" in Section
5(d) in the Agreement. Purchaser further acknowledges that, with the exception
of the "punchlist" items listed on Schedule I annexed to this First Amendment,
the HVAC Pre-Closing Work is complete to Purchaser's satisfaction. Seller and
Purchaser agree that the "punchlist" annexed to this First Amendment as Schedule
I shall serve as the "punchlist" referred to in said Section 5(d).
3. Seller and Purchaser agree that (i) the "Due Diligence Deadline" set
forth in Section 6(4) shall be amended to be 11:59 p.m. E.S.T. on October 2,
1996 (the "New Due Diligence Deadline") and (ii) the ten-day period for review
of title and survey set forth in Section 6(1) shall end at the New Due Diligence
Deadline.
4. In all respects other than as set forth above, the Agreement is hereby
confirmed.
<PAGE>
In Witness Whereof, the parties have executed this Amendment as of the day
and year first written above.
"Seller"
DANIEL W. CUMMINGS, STUART L. SCOTT,
ROBERT C. SPOERRI, and LYNN C. THURBER,
not personally but as Trustees under that
certain Declaration of Trust, dated
October 1, 1983, creating LASALLE FUND II,
a Group Trust, acting through its agent and
manager:
LASALLE ADVISORS LIMITED
By:
----------------------------------------
Title:
------------------------------------
"Purchaser"
Beacon Properties, L.P.
By: Beacon Properties Corporation
By:
----------------------------------------
Its:
------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Beacon Properties Corporation on Form S-3 (No. 333-02544) of our report dated
September 27, 1996, on our audit of the statement of excess of revenues over
specific operating expenses of the Rosslyn Acquisitions in Rosslyn, Virginia
for the year ended December 31, 1995, which report is included in this Form
8-K, of our report dated March 15, 1996, on our audit of the statement of
excess of revenues over specific operating expenses of the New England
Executive Park in Burlington, Massachusetts for the year ended December 31,
1995, which report is included in this Form 8-K, and of our report dated
October 29, 1996, on our audit of the statement of excess of revenues over
specific operating expenses of 10960 Wilshire Boulevard in Westwood,
California for the year ended December 31, 1995, which report is included in
this Form 8-K.
We also consent to the reference to our Firm under the caption "Experts" in
such Prospectus.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 31, 1996
