<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________
Commission File No. 011-13254
---------
WEEKS CORPORATION
(Exact name of Registrant as specified in its Charter)
Georgia 58-1525322
- - - -------------------------- -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
4497 Park Drive, Norcross, Georgia 30093
(Address of principal executive offices, including zip code)
(770)923-4076
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed since last
report)
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date (11,155,708 shares of common
stock outstanding as of May 10, 1996)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past ninety (90) days. (X) YES ( ) NO
<PAGE>
INDEX PAGE
- - - -----------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
- - - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Consolidated Condensed Balance Sheets
at March 31, 1996 and December 31, 1995............. 3
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1996 and 1995.. 4
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1996 and 1995.. 5
Notes to Consolidated Condensed Financial
Statements.......................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....... 13
PART II. OTHER INFORMATION
- - - ---------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 25
SIGNATURES....................................................... 26
- - - ---------------------------------------------------------------------------
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WEEKS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------
March 31, December 31,
(Unaudited; in thousands, except per share amounts) 1996 1995
<S> <C> <C>
- - - -----------------------------------------------------------------------------
ASSETS
Real Estate Assets
Land $ 41,294 $ 40,100
Buildings and improvements 259,804 253,414
Accumulated depreciation (32,417) (29,889)
- - - -----------------------------------------------------------------------------
Operating real estate assets 268,681 263,625
- - - -----------------------------------------------------------------------------
Developments in progress 17,666 17,790
Land held for future development 9,316 8,459
- - - -----------------------------------------------------------------------------
Net real estate assets 295,663 289,874
- - - -----------------------------------------------------------------------------
Cash and cash equivalents 307 982
Direct financing lease, net 5,209 5,229
Deferred costs, net 9,317 9,457
Investments in and notes receivable
from unconsolidated subsidiaries 7,689 7,751
Receivables and other assets 9,998 7,148
- - - -----------------------------------------------------------------------------
TOTAL ASSETS $328,183 $320,441
- - - -----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $112,905 $113,022
Bank Credit Facility borrowings 44,452 34,283
Accounts payable and accrued expenses 6,704 7,783
Other liabilities 2,185 1,741
- - - -----------------------------------------------------------------------------
TOTAL LIABILITIES 166,246 156,829
- - - -----------------------------------------------------------------------------
Minority interests in Operating Partnership 30,349 30,663
- - - -----------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity
Common Stock, $0.01 par value; 100,000,000 shares
authorized; 11,155,704 shares issued and outstanding 112 112
Preferred Stock, $0.01 par value; 20,000,000 shares
authorized; none issued -- --
Additional paid-in capital 191,259 191,259
Accumulated deficit (59,783) (58,422)
- - - -----------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 131,588 132,949
- - - -----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $328,183 $320,441
- - - ----------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed balance sheets.
</TABLE>
3
<PAGE>
WEEKS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------
Three Months Three Months
Ended Ended
(Unaudited; in thousands, except per share amounts) March 31, 1996 March 31, 1995
<S> <C> <C>
- - - ----------------------------------------------------------------------------------------
REVENUE
Rental $10,780 $6,076
Tenant reimbursements 1,048 534
Direct financing lease 192 194
Other 109 190
- - - ----------------------------------------------------------------------------------------
12,129 6,994
- - - ----------------------------------------------------------------------------------------
EXPENSES
Property operating and maintenance 1,294 683
Real estate taxes 1,068 580
Depreciation and amortization 2,951 1,543
Interest 2,435 1,341
Amortization of deferred financing costs 200 159
General and administrative 716 379
- - - ----------------------------------------------------------------------------------------
8,664 4,685
- - - ----------------------------------------------------------------------------------------
Operating income 3,465 2,309
Interest income 83 67
Equity in earnings of unconsolidated subsidiaries 266 389
- - - ----------------------------------------------------------------------------------------
Income before minority interests 3,814 2,765
Minority interests (713) (698)
- - - ----------------------------------------------------------------------------------------
NET INCOME $ 3,101 $2,067
- - - ----------------------------------------------------------------------------------------
NET INCOME PER SHARE $0.28 $0.27
- - - ----------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 11,156 7,675
- - - -------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed financial statements.
</TABLE>
4
<PAGE>
WEEKS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------------------------
Three Months Three Months
Ended Ended
(Unaudited; in thousands) March 31, 1996 March 31, 1995
<S> <C> <C>
- - - --------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 3,101 $ 2,067
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests 713 698
Depreciation and amortization 2,951 1,543
Amortization of deferred financing costs 200 159
Income from direct financing lease (192) (194)
Straight-line rent revenue (71) 61
Equity in earnings of unconsolidated subsidiaries,
net of distributions to Company (266) (347)
Net change in:
Receivables and other assets (654) 553
Deferred costs (290) (338)
Accounts payable and accrued expenses 589 1,602
Other liabilities 444 369
- - - --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,525 6,173
- - - --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property acquisition, development and construction (9,962) (12,977)
Mortgage loans (1,648) --
Notes receivable and deposits (200) (3,500)
Payments received on direct financing lease 212 205
- - - --------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (11,598) (16,272)
- - - --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Line of credit proceeds, net 10,169 8,170
Payments of mortgage notes payable (117) (109)
Deferred financing costs (165) --
Dividends to shareholders (4,462) (2,879)
Distributions to minority interests (1,027) (972)
- - - --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,398 4,210
- - - --------------------------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (675) (5,889)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 982 6,334
- - - --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 307 $ 445
- - - --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed financial statements.
</TABLE>
5
<PAGE>
WEEKS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. THE COMPANY
Weeks Corporation and its subsidiaries own, operate, develop, construct, acquire
and manage industrial and suburban office buildings in Atlanta, Georgia and the
southeastern United States. As used herein, the term "Company" includes Weeks
Corporation and Weeks Realty L.P. (the "Operating Partnership") and its
subsidiaries, unless the context indicates otherwise. The Company owns an 81.3%
partnership interest in the Operating Partnership which, including the
operations of its subsidiaries, conducts substantially all of the on-going
operations of the Company. The Company has elected to qualify and operate as a
self-administered and self-managed real estate investment trust ("REIT") under
the Internal Revenue Code of 1986, as amended (the "Code"). As a REIT, the
Company will not generally be subject to corporate federal income taxes as long
as it satisfies certain technical requirements of the Code relating to the
composition of its income and assets, including the requirement to distribute
95% of its taxable income to its shareholders.
In November 1995, the Company completed an equity offering of 3,450,000 shares
of common stock (the "Offering") resulting in net proceeds of $72.8 million that
were contributed to the Operating Partnership in exchange for 3,450,000 units of
limited partnership interest in the Operating Partnership ("Units"). Subsequent
to this offering and as of March 31, 1996, the Company had outstanding
11,155,704 shares of common stock and owned the same number of Units, and the
Company's ownership interest in the Operating Partnership increased from 74.75%
prior to the Offering to 81.3% currently. Units held by persons other than the
Company totaled 2,567,470 as of March 31, 1996, and represented an 18.7%
minority interest in the Operating Partnership. Units representing the 18.7%
minority interest in the Operating Partnership are convertible by their holders
into shares of common stock on a one-for-one basis, or into cash, at the
Company's option.
The Company conducts its third party service businesses through two subsidiaries
(the "Subsidiaries"): Weeks Realty Services Inc. (third-party landscape,
property management and leasing services) and Weeks Construction Services Inc.
(third-party construction services). The Company holds 100% of the nonvoting
and 1% of the voting common stock of the Subsidiaries. The remaining voting
common stock is held by three executive officers of the Company. The ownership
of the common stock of the Subsidiaries entitles the Company to substantially
all (99%) of the economic benefits from the results of the Subsidiaries'
operations.
As of March 31, 1996, the Company owned and operated 124 industrial properties,
nine office properties and three retail properties comprising approximately 9.0
million square feet located primarily in the metropolitan Atlanta, Georgia,
area. In addition, 10 industrial properties and two property expansions were
under development or in lease-up comprising an additional approximately 1.4
million square feet.
6
<PAGE>
2. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements include the
consolidated condensed financial position of the Company and its subsidiaries at
March 31, 1996, and December 31, 1995, and their results of operations and cash
flows for the three months ended March 31, 1996 and 1995, respectively. The
operating results of the Subsidiaries are reflected in the accompanying
financial statements on the equity method of accounting as discussed below. All
significant intercompany balances and transactions have been eliminated in the
consolidated condensed financial statements. Certain prior year amounts have
been reclassified to conform to the 1996 presentation.
The accompanying interim unaudited financial statements have been prepared by
the Company's management in accordance with generally accepted accounting
principles for interim financial information and in conformity with the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, the interim financial statements presented herein reflect all
adjustments of a normal and recurring nature which are necessary to fairly state
the interim financial statements. The results of operations for the interim
period are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. These financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto included in the Company's Form 10-K for the year ended December 31,
1995.
INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
In September 1995, the Emerging Issues Task Force ("EITF") reached a consensus
opinion in EITF Issue No. 95-6, "Accounting by a Real Estate Investment Trust
for an Investment in a Service Corporation," requiring the Company to change its
method of accounting, previously the cost method, for the Subsidiaries. In
accordance with the revised guidelines and effective with its December 31, 1995,
consolidated financial statements, the Company changed its method of accounting
for the Subsidiaries to the equity method. The impact of this change on the
Company's results of operations for the three months ended March 31, 1995, was
not material. As a result, the consolidated condensed financial statements of
the Company for this period were not restated.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, SFAS 123, "Accounting for Stock-Based Compensation" was issued
requiring the Company either to continue its current generally accepted
accounting for stock-based compensation under the intrinsic value method or
elect the fair value-based method of accounting prescribed by SFAS 123.
Additionally, SFAS 123, when implemented, will require additional footnote
disclosures, including pro forma net income and earnings per share under the
provisions of SFAS 123. The Company continues to account for stock-based
compensation under current accounting standards and will implement the
disclosure requirements of SFAS 123 in its December 31, 1996, financial
statements, the effective implementation date for the Company.
7
<PAGE>
3. BANK CREDIT FACILITY AND MORTGAGE NOTES PAYABLE
The Operating Partnership, the Subsidiaries and Weeks Development Partnership
(Note 4), as co-borrowers, presently utilize a $100 million revolving bank
credit facility (the "Credit Facility") for development and construction,
acquisitions and general corporate purposes. The Credit Facility is unsecured;
however, designated properties included in the borrowing base are subject to a
negative pledge. Each co-borrower is liable for its own borrowing; however, the
entire Credit Facility is guaranteed by the Company. Additionally, the Company
and the co-borrowers are required to meet certain financial and non-financial
covenants including a restriction on the amount of dividends and distributions
to not more than 95% of "Funds from Operations," a REIT industry measure of
operating performance, unless the additional amounts are necessary to maintain
the Company's REIT status under the Code. The Credit Facility has an initial
term through December 31, 1996, and renews annually through December 31, 1999,
subject to an annual renewal fee of 0.125%. Upon an event of nonrenewal, the co-
borrowers can elect to repay the Credit Facility over two years.
At March 31, 1996, the Credit Facility provides for advances and letters of
credit of up to the lesser of $100 million or 60% of the borrowing base, as
defined. Maximum available advances, governed by the existing borrowing base
formula, total approximately $87 million, although maximum available advances
can be increased by the Company by adding additional operating and development
properties to the borrowing base. As of March 31, 1996, the Credit Facility
borrowings are detailed as follows (in thousands):
<TABLE>
<CAPTION>
------------------------------------------------
BORROWER AMOUNT
------------------------------------------------
<S> <C>
Operating Partnership $44,452
Weeks Construction Services Inc. 2,128
Weeks Development Partnership 1,250
Weeks Realty Services Inc. 670
------------------------------------------------
$48,500
------------------------------------------------
</TABLE>
In addition, letters of credit totaling $1,080,000 at March 31, 1996, were
issued under the Credit Facility to third parties.
Interest under the Credit Facility was payable monthly at bank prime minus 0.25%
or at LIBOR plus 1.50% at the election of the co-borrowers. Effective April 1,
1996, the interest rate under the Credit Facility was reduced to LIBOR plus
1.35%. The weighted average interest rate on Credit Facility borrowings was
6.89% at March 31, 1996. Fees on the unused portion of the Credit Facility are
0.20% payable quarterly.
Interest paid, net of amounts capitalized, totaled $2,250,000 and $1,341,000 for
the three months ended March 31, 1996 and 1995, respectively. Interest costs
capitalized totaled $415,000 and $120,000 for the three months ended March 31,
1996 and 1995, respectively.
8
<PAGE>
Mortgage notes payable at March 31, 1996, and December 31, 1995, consist of the
following (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
1996 1995
----------------------------------------------------------------------------
<S> <C> <C>
Mortgage note, interest payable monthly at 7.13%,
due in 1999(a) $ 38,000 $ 38,000
Three mortgage notes, interest payable monthly at
7.75%, due in 1998 31,170 31,170
Mortgage note, interest payable monthly at 7.625%,
due in 2000 10,300 10,300
Mortgage note, principal and interest payable
monthly at 6.71%, due in 2001 7,019 7,040
Mortgage note, interest payable monthly at 8.2%
to 1999, principal and interest payable monthly
at 8.2% to 2002 5,200 5,200
Industrial revenue bond financing, interest
payable quarterly, due in 2004(b) 5,140 5,140
Two mortgage notes, interest payable monthly
at 7.75% to 1998 and 8.0% to 2001, due in 2001(a) 4,400 4,400
Mortgage note, principal and interest payable
monthly at 9.5%, due in 2005 4,338 4,391
Mortgage note, principal and interest payable
monthly at 8.3%, due in 1998 3,467 3,480
Two mortgage notes, principal and interest
payable monthly at 8.42%, due in 1999 3,133 3,152
Industrial revenue bond financing, principal and
interest due monthly through 2010(c) 738 749
----------------------------------------------------------------------------
$112,905 $113,022
----------------------------------------------------------------------------
</TABLE>
(a) Mortgage notes are partially or fully guaranteed by certain Company
officers and Unitholders.
(b) In January 1996, the industrial revenue bonds were refunded through the
issuance of new tax-exempt adjustable rate industrial revenue bonds.
Interest is payable at rates equivalent to short term tax exempt Aa2
rated securities (3.45% at March 31, 1996). The bonds are supported by a
letter of credit issued by a bank in the amount of $5,345,000. Certain
of the Company's properties secure its obligations under the letter of
credit.
(c) Interest rate is 78% of the prime rate (6.45% at March 31, 1996).
Scheduled maturities of mortgage notes payable at March 31, 1996, are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------
YEAR AMOUNT
<S> <C>
--------------------------------------------------------
Remainder of 1996 $ 367
1997 524
1998 35,037
1999 41,363
2000 10,833
2001 and thereafter 24,781
--------------------------------------------------------
$112,905
--------------------------------------------------------
</TABLE>
9
<PAGE>
4. INVESTMENTS IN AND NOTES RECEIVABLE
FROM UNCONSOLIDATED SUBSIDIARIES
The Company conducts its third party construction, landscape, property
management and leasing service businesses through the Subsidiaries.
Additionally, the Subsidiaries formed Weeks Development Partnership ("Weeks
Development") and jointly hold 100% of the partnership interests. Weeks
Development primarily owns land in various business parks, either directly or
through ownership interests in real estate partnerships and joint ventures. The
Company intends to acquire land from Weeks Development and its affiliated
partnerships and joint ventures for the development of future operating
properties.
As discussed in Note 2, the Subsidiaries are accounted for on the equity method
of accounting. Under the equity method, the Company recognizes, in its
consolidated statements of operations, its economic share of the Subsidiaries'
earnings and losses. The Company holds 100% of the nonvoting and 1% of the
voting common stock of the Subsidiaries. This stock ownership entitles the
Company to substantially all (99%) of the economic benefits and losses from the
results of the Subsidiaries' operations.
The following information summarizes the financial position, results of
operations and cash flows of the Subsidiaries and Weeks Development on a
combined basis (in thousands):
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
FINANCIAL POSITION 1996 1995
- - - ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Real estate assets, principally land $ 7,409 $ 7,012
Investments in real estate partnerships
and joint ventures 3,173 3,417
Receivables and other assets 10,496 10,892
- - - ----------------------------------------------------------------------------
$21,078 $21,321
- - - ----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Notes payable to Company $10,939 $10,939
Bank credit facility borrowings 4,048 4,237
Other borrowings 1,822 1,828
Other liabilities 7,520 7,505
Total equity (3,251) (3,188)
- - - ----------------------------------------------------------------------------
$21,078 $21,321
- - - ----------------------------------------------------------------------------
</TABLE>
At March 31, 1996, the Company's investment in and notes receivable from the
Subsidiaries totaling $7,688,000 includes notes receivable from the Subsidiaries
of $10,939,000 and the Company's investment in the Subsidiaries of ($3,251,000).
10
<PAGE>
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------
THREE MONTHS THREE MONTHS
ENDED ENDED
RESULTS OF OPERATIONS MARCH 31, 1996 MARCH 31, 1995
- - - -----------------------------------------------------------------------------
<S> <C> <C>
REVENUE
Construction and development fees $ 409 $ 294
Landscape 1,033 659
Property management fees 58 162
Commissions 78 179
Other 69 21
- - - -----------------------------------------------------------------------------
1,647 1,315
- - - -----------------------------------------------------------------------------
COSTS AND EXPENSES
Materials and labor 818 557
Interest expense - Company 328 347
Interest expense - other 139 20
General and administrative 324 404
Other 91 64
- - - -----------------------------------------------------------------------------
1,700 1,392
- - - -----------------------------------------------------------------------------
Equity in earnings of partnerships
and joint ventures (10) 119
- - - -----------------------------------------------------------------------------
NET INCOME (LOSS) $ (63) $ 42
- - - -----------------------------------------------------------------------------
Net income (loss) attributable
to Company $ (62) $ 42
Interest expense to Company 328 347
- - - -----------------------------------------------------------------------------
Equity in earnings of Subsidiaries $ 266 $ 389
- - - -----------------------------------------------------------------------------
Distributions to Company $ -- $ 42
- - - -----------------------------------------------------------------------------
CASH FLOWS
- - - -----------------------------------------------------------------------------
Operating activities $1,017 $ (890)
Investing activities (459) (151)
Financing activities (195) 1,080
- - - -----------------------------------------------------------------------------
</TABLE>
Third-party service revenues detailed above include development and construction
fees, landscaping fees and lease commissions from affiliated partnerships and
joint ventures totaling $40,000, $53,000 and $72,000, respectively, for the
three months ended March 31, 1996, and $86,000, $62,000 and $74,000,
respectively, for the three months ended March 31, 1995.
11
<PAGE>
5. DIVIDENDS
The Company declared and paid quarterly dividends of $4,462,000 or $0.40 per
share during the three months ended March 31, 1996. Additionally, the minority
Unitholders in the Operating Partnership received cash distributions totaling
$1,027,000 or $0.40 per Unit during the three months ended March 31, 1996. In
April 1996, the Company declared and paid quarterly dividends and made
distributions of $4,462,000 or $0.40 per share and $1,027,000 or $0.40 per Unit,
respectively.
6. NET INCOME PER SHARE
Net income per share is calculated using the weighted average number of common
shares outstanding of 11,155,704 and 7,675,360 for the three months ended March
31, 1996 and 1995, respectively. The impact of outstanding stock options was
not dilutive in 1996 or 1995. An assumed conversion of Units into common stock
would not affect net income per share.
7. DEVELOPMENT LOANS
As part of certain joint development arrangements executed in conjunction with
the Company's 1995 acquisition activity, and upon the approval of joint
development projects, the Company may lend funds on a secured basis to develop
and construct certain properties and can be required by its development partners
to acquire the properties upon their completion based on the terms specified in
the development agreements, generally at prices equal to the greater of
capitalized costs or the property's net operating income capitalized at
specified capitalization rates, as defined. As of March 31, 1996, the Company
has funded $1,337,000 under a development loan agreement relating to one
industrial building in Atlanta, Georgia. In addition, the Company and its
development partners have approved the development of two additional industrial
buildings in Atlanta, Georgia which are scheduled to begin in the second quarter
of 1996. Total loan commitments from the Company for the three approved
projects are approximately $11,600,000. Loans under these arrangements are
secured by the industrial buildings under development, and bear interest at
rates ranging from LIBOR plus 2.50% to LIBOR plus 2.35% and are included in
receivables and other assets in the accompanying consolidated condensed balance
sheet.
Additionally, at March 31, 1996, receivables and other assets include a real
estate development loan to an affiliated joint venture with an outstanding
balance of $1,594,000. The total loan commitment is $2,360,000 and the loan is
secured by a multi-tenant industrial building under development. Interest
accrues at 9% payable monthly and the loan matures in March 1998. The Company
has an option to acquire the property upon substantial lease-up of the building.
12
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 2 MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULT'S OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
accompanying Consolidated Condensed Financial Statements of the Company and the
notes thereto.
GENERAL BACKGROUND
The Company was founded in 1965 and operated as a private real estate company
until August 1994, when it completed an initial public offering and elected to
be taxed as a REIT. As a self-administered and self-managed REIT, the Company
owns, develops, acquires and manages primarily high-quality industrial and
suburban office properties in Atlanta, Georgia and the southeastern United
States.
On January 1, 1995, the Company owned a 74.75% partnership interest in the
Operating Partnership. This ownership interest was subsequently increased in
November 1995 to 81.3% -- see Note 1 to the consolidated condensed financial
statements. The Operating Partnership, including the operations of the
Subsidiaries, conducts substantially all of the on-going operations of the
Company. For a further description of the Company, see Note 1 to the
consolidated condensed financial statements.
RESULTS OF OPERATIONS
Operating information relating to the Company's properties for the three months
ended March 31, 1996 and 1995, respectively, is summarized below (in thousands):
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------
THREE MONTHS THREE MONTHS
ENDED ENDED %
MARCH 31, 1996 MARCH 31, 1995 CHANGE
- - - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Rental $10,780 $6,076 77.4%
Tenant reimbursements 1,048 534 96.3%
- - - ----------------------------------------------------------------------------
Property operating revenues $11,828 $6,610 78.9%
- - - ----------------------------------------------------------------------------
Operating and maintenance
expenses $ 1,294 $ 683 89.5%
Real estate taxes 1,068 580 84.1%
Depreciation and amortization 2,951 1,543 91.3%
- - - ----------------------------------------------------------------------------
Property operating expenses $ 5,313 $2,806 89.3%
- - - ----------------------------------------------------------------------------
</TABLE>
To more fully understand the components of the period-to-period increases
reflected above, property operating results will be discussed herein using the
categories "core properties," "development properties" and "acquisition
properties." Core properties are defined as properties which were stabilized
and operating during each quarterly period. The Company defines a property as
stabilized for financial reporting purposes upon the earlier of substantial
lease-up or one year from building shell completion. Development properties
reflect properties completed and stabilized for financial reporting purposes
subsequent to January 1, 1995. Acquisition properties are properties acquired
subsequent to January 1, 1995.
13
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THREE MONTHS ENDED MARCH 31, 1996, TO THE
THREE MONTHS ENDED MARCH 31, 1995
Property operating revenues (rental revenue plus tenant reimbursements)
increased $5,218,000 or 78.9% between periods. Of this increase, $3,737,000 was
attributable to the addition of 49 acquisition properties in 1995 totaling
2,564,000 square feet and $937,000 was attributable to the stabilization of nine
development properties and one property expansion in 1995 and in the first
quarter of 1996 totaling 1,102,000 square feet. The remainder of the increase
of $544,000 was attributable to increased property operating revenues from core
properties, which totaled 5,332,000 square feet. Core properties operating
revenues increased by $205,000 between quarters resulting from occupancy changes
at five buildings comprising 521,000 square feet. The remaining core properties
operating revenue increase of $339,000 was due primarily to rental rate
increases between periods. The core properties operating revenue increase due
to occupancy changes resulted from the re-leasing of two buildings vacated in
the first quarter of 1995 by Matsushita Electric Corporation (Panasonic)
totaling 344,000 square feet which contributed an additional $396,000 to core
properties operating revenues between periods. This was offset by vacancies at
three other industrial buildings during the first quarter of 1996 totaling
177,000 square feet which resulted in lower property operating revenues of
$191,000. (Two of these buildings totaling 120,000 square feet have been re-
leased and are scheduled for occupancy in the second quarter of 1996.)
Property operating expenses increased $2,507,000 or 89.3% between periods. Of
the increase, $1,653,000 was attributable to the addition of the acquisition
properties and $350,000 was attributable to the stabilization of the development
properties discussed above. The remaining increase of $504,000 was attributable
to core properties. Core properties operating expenses increased $182,000
($98,000 excluding depreciation and amortization) relating to the five buildings
with occupancy changes discussed above and $322,000 ($124,000 excluding
depreciation and amortization) for other core properties. The $124,000 increase
in other core properties operating expenses, excluding depreciation and
amortization, is due primarily to higher repairs and maintenance expenses
between periods.
Interest expense increased by $1,094,000 or 81.6% from $1,341,000 for the three
months ended March 31, 1995, to $2,435,000 for the three months ended March 31,
1996, as a result of increased mortgage interest of $752,000 due primarily to
mortgage debt assumed in conjunction with the Company's 1995 property
acquisitions and Credit Facility interest of $342,000 in the first quarter of
1996 (all Credit Facility interest in the first quarter of 1995 was capitalized
to developments in progress). Interest expense of $2,435,000 in the first
quarter of 1996 consisted of mortgage interest of $2,093,000 and Credit Facility
interest of $342,000.
Amortization of deferred financing costs increased $41,000 or 25.8% from
$159,000 for the three months ended March 31, 1995, to $200,000 for the three
months ended March 31, 1996, due primarily to the amortization of deferred
financing costs associated with the $5.1 million industrial revenue bond
refinancing in the first quarter of 1996 and an increase in the availability
under the Credit Facility in the third quarter of 1995.
14
<PAGE>
Company general and administrative expenses increased by $337,000 or 88.9% from
$379,000 for the three months ended March 31, 1995, to $716,000 for the three
months ended March 31, 1996, due primarily to increased accounting and
administrative personnel and related costs associated with the Company's growth
and a shift in certain general and administrative expenses relating to
properties which were fee managed by the Subsidiaries in 1995, but which were
subsequently acquired and are owned by the Company in 1996. As a percentage of
total revenue, general and administrative expenses have remained relatively
consistent from 5.4% in 1995 to 5.9% in 1996. General and administrative
expenses of the Company when combined with the general and administrative
expenses of the Subsidiaries increased $257,000 or 32.8% from $783,000 in 1995
to $1,040,000 in 1996 for the same reasons discussed above having to do with the
Company's growth. As a percentage of the combined revenues of the Company and
the Subsidiaries, the combined general and administrative expenses decreased
from 9.4% in 1995 to 7.5% in 1996.
Interest income for the three months ended March 31, 1996, consists primarily of
interest earned under the development loan arrangements discussed more fully in
Note 7 to the consolidated condensed financial statements. For the three months
ended March 31, 1995, interest income represented $29,000 earned under a short-
term note arrangement, made in conjunction with a 1995 property acquisition, and
$38,000 earned on short-term cash investments.
Equity in earnings of the Subsidiaries of $266,000 and $389,000 for the three
months ended March 31, 1996 and 1995, respectively, represents the Company's 99%
economic interest in the earnings of the Subsidiaries after the elimination of
interest expense to the Company (see Note 4 to the consolidated condensed
financial statements). Changes in third-party operations between periods are
discussed below. As discussed below, subsequent to March 31, 1995, the Company
acquired 37 properties which the Subsidiaries previously managed. Additionally,
the Subsidiaries provided other third-party services, such as landscape
maintenance, leasing and tenant interior work for these managed properties. Due
to the acquisition of these properties by the Company, the Subsidiaries' third-
party service revenues associated with these properties ceased. The impact, if
any, between periods is discussed below.
Construction and development fees increased $115,000 or 39.1% from $294,000 for
the three months ended March 31, 1995, to $409,000 for the three months ended
March 31, 1996. This increase was due to higher fees from tenant interior work
between periods.
Landscape revenue increased $374,000 or 56.8% from $659,000 for the three months
ended March 31, 1995, to $1,033,000 for the three months ended March 31, 1996,
due to an increase in landscape installation revenue of approximately $280,000
resulting from more installation jobs in progress in the first quarter of 1996
compared to 1995, with the remaining increase due to the growth in the number of
landscape maintenance contracts between periods.
Property management fees decreased $104,000 or 64.2% from $162,000 for the three
months ended March 31, 1995, to $58,000 for the three months ended March 31,
1996, due primarily to the reduction in the size of the third-party management
portfolio resulting from the 1995 acquisitions by the Company of 37 properties
previously managed by the Subsidiaries.
Commission income decreased $101,000 or 56.4% from $179,000 for the three months
ended March 31, 1995, to $78,000 for the three months ended March 31, 1996, due
to lower leasing and renewal commissions of $90,000 on properties managed for
third parties, and lower land sales commissions of $11,000 on land owned by
affiliated joint ventures or land managed and marketed by the Company.
15
<PAGE>
Labor and materials costs increased by $261,000 or 46.9% from $557,000 for the
three months ended March 31, 1995, to $818,000 for the three months ended March
31, 1996, due primarily to increased costs associated with higher landscape
installation volume and higher landscape maintenance volumes in 1996 as
discussed above.
Equity in earnings of partnerships and joint ventures decreased from earnings of
$119,000 for the three months ended March 31, 1995, to a loss of $10,000 for the
three months ended March 31, 1996, due primarily to lower profits from
underlying land sales activities between periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities increased from
$6,173,000 for the three months ended March 31, 1995, to $6,525,000 for the
three months ended March 31, 1996, due primarily to the growth in Company's
operating income resulting from nine development properties and one property
expansion stabilized in 1995 and in the first quarter of 1996 and from 49
buildings acquired subsequent to the first quarter of 1995.
Net cash used in investing activities decreased from $16,272,000 for the three
months ended March 31, 1995, to $11,598,000 for the three months ended March 31,
1996, due primarily to $3,500,000 of notes receivable and deposit advances
related to the Company's 1995 acquisition activities and somewhat lower property
development volume in 1996 compared to 1995 due to weather related delays and
the timing of certain lease negotiations.
Net cash provided by financing activities increased from $4,210,000 for the
three months ended March 31, 1995, to $4,398,000 for the three months ended
March 31, 1996. This small increase was due primarily to the timing of Credit
Facility borrowings utilized to fund the Company's development activities
between periods.
The Company's net cash flow from operations is currently sufficient to meet the
Company's current operational needs and to satisfy the Company's current
quarterly dividends. Management believes that operating cash flows will
continue to be adequate to fund these requirements in 1996. The Company
operates as and intends to maintain its qualification as a REIT under the Code.
As a REIT, the Company will generally not be subject to corporate federal income
taxes as long as it satisfies certain technical requirements of the Code,
including the requirement to distribute 95% of its taxable income to its
shareholders.
In addition to its operating cash flow, the Company has a $100 million revolving
Credit Facility with a commercial bank (see Note 3 to the consolidated condensed
financial statements), which may be used, among other things, to meet its
operational obligations and annual REIT dividend requirements. The Company
currently intends to finance its development, construction and acquisition
activities primarily through borrowings under the Credit Facility. At March 31,
1996, the Company had available capacity under the Credit Facility of
approximately $37 million (Note 3). The Company has properties which it can
contribute to the borrowing base, as defined, to increase its available capacity
under the Credit Facility by an additional $13 million (to the total available
$100 million). The Credit Facility has an initial term through December 31,
1996, and provides for automatic annual renewals through December 31, 1999. The
Company currently expects the Credit Facility to be renewed. Additionally, at
March 31, 1996, the Company has $72.4 million available, subject to the
completion of a successful offering, under an equity shelf registration filed in
1995.
16
<PAGE>
The Company believes it has adequate liquidity and borrowing capacity to meet
its current operational requirements, to fund annual principal requirements
under existing mortgage notes payable and to fund its current development
activity. It is management's expectation that the Company will continue to have
access to the additional capital resources necessary to further expand and
develop its business and to refinance mortgage notes payable as they begin to
mature in 1998. These resources include long-term mortgage debt, expansion of
the available borrowing capacity under the Credit Facility and other forms of
debt and equity financing, in both public and private markets, including the use
of the Company's available capacity under its current equity shelf registration.
Future development and acquisition activities will be undertaken by the Company
only as suitable opportunities arise. Such activities are not expected to be
undertaken unless adequate sources of financing are available and a satisfactory
budget with targeted returns on investment has been internally approved. The
Company maintains staffing levels sufficient to meet its existing construction
and leasing activities and capitalizes a portion of the costs relating to the
activities to development projects and leasing transactions, respectively. If
market conditions warrant, the Company may adjust staffing levels to avoid a
negative impact on the Company's results of operations.
Total consolidated debt amounted to $157.4 million at March 31, 1996, including
borrowings under the Credit Facility of $44.5 million and mortgage notes payable
of $112.9 million. Of this $112.9 million of mortgage indebtedness, $107.0
million is fixed rate and $5.9 million is variable rate. The weighted average
interest rate on the Company's fixed rate mortgage debt was 7.58% and on its
variable rate mortgage debt was 3.83% at March 31, 1996. The weighted average
interest rate under the Credit Facility at March 31, 1996, was 6.89%. The
Company is currently evaluating the use of interest rate protection agreements
that would limit the Company's exposure to increases in short-term interest
rates on the Company's Credit Facility borrowings. However, no such agreements
have been executed through April 30, 1996. If interest rates under the Credit
Facility and under the Company's variable rate mortgage debt fluctuated by 1%,
interest costs to the Company, before capitalization of interest, if any, based
on outstanding borrowings at March 31, 1996, would increase or decrease by
approximately $500,000 on an annualized basis.
At March 31, 1996, the Company's mortgage debt on its consolidated properties of
$112.9 million plus its pro rata share of mortgage debt of its unconsolidated
subsidiaries of $2.0 million totaled $114.9 million. Including Credit Facility
borrowings of $44.5 million for the Company and $4.0 million for the
Subsidiaries, the total debt obligations of the Company and the Subsidiaries was
$163.4 million or 32% of total market capitalization (assuming the exchange of
all Units for shares of common stock). At March 31, 1996 (based on the closing
price of the common stock of $25.00 on March 29, 1996, the last trading day of
the quarter, and assuming the exchange of all Units for shares of common stock),
there would be 13,723,174 shares of common stock outstanding with a total market
value of $343.1 million.
17
<PAGE>
CURRENT DEVELOPMENT ACTIVITY
The Company's current development activity as of April 30, 1996, is summarized
below. All of the properties are located in metropolitan Atlanta, Georgia,
unless otherwise indicated.
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
SQUARE ESTIMATED COMPLETION STABILIZATION
FEET(1) COST(2) DATE(3) DATE(4)
- - - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MULTI-TENANT
5195 Southridge Pkwy. 60,000 $ 2,560,000 3Q95(5) 3Q96
170 Parkway West
(Greenville/Spartanburg, SC) 96,000 2,755,000 4Q95(5) 4Q96
8249 Parkline Blvd. (Orlando, FL) 33,600 1,734,000 4Q95(5) 4Q96
2775 Crestridge Ct. 223,219 7,227,000 1Q96(5) 2Q96
3130 N. Berkeley Lake Rd. 240,000 5,678,000 1Q96(5) 3Q96
5149 Southridge Pkwy. (expansion) 46,800 2,457,000 1Q96(5) 3Q96
5025 Derrick Jones Rd. 89,600 4,369,000 2Q96 4Q96
3280 Summit Ridge Pkwy. 201,600 5,577,000 3Q96 3Q97
2500 Principal Row (Orlando, FL) 140,015 4,803,000 3Q96 3Q97
2660 Pinemeadow Ct. 103,200 3,278,000 3Q96 2Q97
3240 Town Point Dr. 140,400 5,709,000 3Q96 3Q97
120 Declaration Dr. 180,000 4,580,000 4Q96 4Q97
Crestwood I 105,000 10,896,000 1Q97 1Q98
Hillside II (Greenville/Spartanburg, SC) 92,400 2,796,000 1Q97 1Q98
- - - -------------------------------------------------------------------------------------------------
1,751,834 $64,419,000
- - - -------------------------------------------------------------------------------------------------
BUILD-TO-SUIT
285 Parkway East (expansion)
(Greenville/Spartanburg, SC) 57,600 $ 1,807,000 2Q96 2Q96
Airport Commerce Center (Orlando, FL) 43,200 1,870,000 3Q96 3Q96
- - - -------------------------------------------------------------------------------------------------
100,800 3,677,000
- - - -------------------------------------------------------------------------------------------------
1,852,634 $68,096,000
- - - -------------------------------------------------------------------------------------------------
</TABLE>
(1) Actual leasable square feet may vary upon completion.
(2) Estimated cost information includes the Company's estimated future
capitalized costs through the development stabilization date (defined as the
earlier of 95% occupancy or one year from shell completion), including costs
incurred to acquire certain properties after completion (see Note 7 to the
consolidated condensed financial statements). There can be no assurance
that the actual capitalized cost of a building will not exceed the estimated
capitalized costs.
(3) For multi-tenant buildings, represents building shell completion. There can
be no assurance that a property will be completed by the estimated
completion date.
(4) Represents the Company's current estimate of the date the property will
reach stabilization for financial reporting purposes. Properties are
considered stabilized for financial reporting purposes upon the earlier of
substantial lease-up or one year from building shell completion. There can
be no assurance that the property will reach stabilization for financial
reporting purposes by the estimated stabilization date.
(5) Shell completed; interior tenant finish to be completed.
The information provided above includes forward-looking data based on current
construction schedules, the status of lease negotiations with potential tenants
and other relevant factors currently available to the Company. There can be no
assurance that any of these factors will not change or that any change will not
affect the accuracy of such forward-looking information.
18
<PAGE>
SUPPLEMENTAL DISCLOSURE OF FUNDS FROM OPERATION
The Company believes that funds from operations ("FFO") provides an additional
indicator of the financial performance of the Company. FFO is defined by the
National Association of Real Estate Investment Trusts ("NAREIT") to mean net
income (loss) determined in accordance with generally accepted accounting
principles ("GAAP") excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect FFO on the same
basis. FFO is influenced not only by the operations of the properties, but also
by the capital structure of the Company. Accordingly, management expects that
FFO will be one of the factors considered by the Board of Directors in
determining the amount of cash dividends the Company will pay to its
shareholders. FFO does not represent cash flow from operating, investing and
financing activities as defined by GAAP, which are discussed under "Liquidity
and Capital Resources" in this section. Additionally, FFO does not measure
whether cash flow is sufficient to fund all cash flow needs, including principal
amortization, capital expenditures and dividends to shareholders, and should not
be considered as an alternative to net income for purposes of evaluating the
Company's operating performance or as an alternative to cash flow, as defined by
GAAP, as a measure of liquidity.
Effective for periods beginning on or after January 1, 1996, the Company
implemented the new guidelines issued by NAREIT for calculating FFO. The
primary difference between the Company's FFO under the new guidelines is that
the Company now reduces reported FFO for the amortization of deferred financing
costs and recognizes rental income for the purposes of computing FFO on a
"straight-line" basis. The amortization of deferred financing costs totaled
$200,000 and $159,000 for the three months ended March 31, 1996 and 1995,
respectively. The "straight-line" rental adjustment increased rental revenues
by $71,000 and decreased rental revenues by $61,000 for the three months ended
March 31, 1996 and 1995, respectively. All FFO information detailed and
discussed below relating to the three months ended March 31, 1995 has been
restated to reflect these differences.
19
<PAGE>
For the three months ended March 31, 1996, FFO increased by $2,288,000 or 71.1%
to $5,508,000 as compared to FFO of $3,220,000 for the three months ended March
31, 1995. FFO calculated under the current guidelines for the three months ended
March 31, 1996 and 1995, respectively, are detailed below (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995(1)
- - - ------------------------------------------------------------------------------------
<S> <C> <C>
NET INCOME $ 3,101 $2,067
Minority interests 713 698
Depreciation & amortization 2,951 1,543
Real estate depreciation at subsidiaries 10 --
- - - ------------------------------------------------------------------------------------
Funds from operations (Operating
Partnership Units fully converted) 6,775 4,308
Ownership of Operating Partnership(2) 81.3% 74.75%
- - - ------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS $ 5,508 $3,220
- - - ------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 11,156 7,675
- - - ------------------------------------------------------------------------------------
</TABLE>
(1) The calculation of funds from operations has been revised from the prior
year presentation as discussed above. Previously reported funds from
operations attributable to the Company's shareholders was $3,385,000 for
the three months ended March 31, 1995.
(2) Represents the Company's weighted average ownership of the Operating
Partnership for the period.
SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES AND LEASING COSTS
The following table details the Company's capital expenditures and leasing costs
for the three months ended March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------
<S> <C>
Development activity(1) $7,540
Non-revenue-producing building improvements 157
Tenant improvement and leasing costs on
second-generation leases(2) 704
Tenant improvement expenditures to be
reimbursed by tenants 206
- - - --------------------------------------------------------------
$8,607(3)
- - - ----------------------------------------------------------------
</TABLE>
(1) Includes leasing costs on first-generation space in development
properties totaling $104,000.
(2) Includes leasing costs on second-generation space totaling $186,000.
(3) Reflects aggregate capital expenditures and leasing costs, exclusive of
the decrease in construction accounts payable of $1,645,000 during the
period.
20
<PAGE>
The following table summarizes by period the Company's capitalized tenant
improvement and leasing costs incurred in the renewal or re-leasing of
previously occupied space for the three months ended March 31, 1996, and the
year ended December 31, 1995, respectively. The information detailed below is
presented based on the date the tenants occupy the leased space.
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COSTS
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------------------------
THREE MONTHS YEAR
ENDED ENDED
(In thousands except per square foot information) MARCH 31, 1996 DECEMBER 31, 1995
- - - -------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL PROPERTIES
RE-LEASING
Square feet re-leased 94 317
Capitalized tenant improvements and leasing commissions $ 177 $ 462
Capitalized tenant improvements and leasing commissions
(per square foot) re-leased $1.88 $ 1.46
RENEWAL
Square feet renewed 233 814
Capitalized tenant improvements and leasing commissions $ 252 $ 469
Capitalized tenant improvements and leasing commissions
(per square foot) renewed $1.08 $ 0.58
TOTAL
Square feet 327 1,131
Capitalized tenant improvements and leasing commissions $ 429 $ 931
Capitalized tenant improvements and leasing commissions
(per square foot) $1.31 $ 0.82
OFFICE PROPERTIES
RE-LEASING
Square feet re-leased 15 111(1)
Capitalized tenant improvements and leasing commissions $ 36 $ 1,578(1)
Capitalized tenant improvements and leasing commissions
(per square foot) re-leased $2.38 $ 14.25(1)
RENEWAL
Square feet renewed 25 47
Capitalized tenant improvements and leasing commissions $ 77 $ 50
Capitalized tenant improvements and leasing commissions
(per square foot) renewed $3.09 $ 1.06
TOTAL
Square feet 40 158(1)
Capitalized tenant improvements and leasing commissions $ 113 $ 1,628(1)
Capitalized tenant improvements and leasing commissions
(per square foot) $2.82 $ 10.27(1)(2)
- - - -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes $1,377,000 or $15.68 per square foot to re-tenant 87,845 square
feet of the Company's 94,677 square foot property which was vacated by
Matsushita Electric Corp. (Panasonic) and which was subsequently converted
from a single tenant to a multi-tenant office property.
(2) Excluding amounts incurred to re-lease the office property vacated by
Matsushita Electric Corp. (Panasonic), capitalized tenant improvements and
leasing commissions would have averaged $3.55 per square foot for re-leased
and renewed office space during 1995.
21
<PAGE>
SUPPLEMENTAL DISCLOSURE OF TENANT AND LEASE EXPIRATION INFORMATION
TENANTS
As of March 31, 1996, the Company's properties were leased to 356 tenants
including local, regional, national and international companies. The Company's
25 largest tenants (measured by annualized base rent for leases in place in
stabilized properties and in properties under development or in lease-up where
tenants were paying rent at March 31, 1996) occupy a total of approximately 3.3
million square feet and represent 35.7% of the annualized base rent as shown in
the table below.
25 LARGEST TENANTS MEASURED BY ANNUALIZED BASE RENT
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------
% OF TOTAL
SQUARE NUMBER ANNUALIZED ANNUALIZED
TENANT FEET OF LEASES BASE RENT(1) BASE RENT(1)
- - - -----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
1 Scientific Atlanta 601,363 14 $ 2,630,452 5.9%
2 Honeywell Inc. 70,016 3 913,584 2.1%
3 The Athlete's Foot Group 162,651 1 845,654 1.9%
4 Equifax Healthcare
Information Services 44,938 2 697,500 1.6%
5 Intelligent Systems Corp. 137,100 1 671,790 1.5%
6 Yokohama Tire Corporation 252,092 1 665,383 1.5%
7 Ahlstrom Recovery Inc. 62,893 2 633,352 1.4%
8 The Bombay Company Inc. 253,890 2 631,344 1.4%
9 Liberty Mutual Insurance Co. 41,900 1 581,572 1.3%
10 Deutz Corporation 137,061 1 561,950 1.3%
11 Southern Multimedia
Communications Inc. 117,647 3 558,828 1.3%
12 Reckitt & Colman Inc. 256,000 1 547,840 1.2%
13 Metrahealth Insurance Co. 32,991 1 527,856 1.2%
14 Vanstar Corporation 72,691 3 521,953 1.2%
15 Komatsu America Corporation 176,820 1 518,024 1.2%
16 BOC Health Care Inc. 102,128 1 515,748 1.2%
17 Saab Cars U.S.A. Inc. 50,000 2 486,851 1.1%
18 Sally Foster Inc. 139,600 1 447,445 1.0%
19 Wang Laboratories Inc. 34,069 1 446,304 1.0%
20 Hussmann Corporation 85,200 1 440,484 1.0%
21 Burlington Air Express Inc. 71,400 2 437,040 1.0%
22 First Image Management Co. 89,612 1 411,319 0.9%
23 Fuji Photo Film U.S.A. Inc. 102,862 1 405,276 0.9%
24 ConAgra Inc. 37,656 1 404,802 0.9%
25 Siemens Energy & Automation Inc. 168,000 1 403,200 0.9%
- - - ---------------------------------------------------------------------------------------------
3,300,580 49 $15,905,551 35.7%
- - - ---------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized cash base rent net of rental concessions, if any, based on leases
in place for stabilized properties and in properties under development or in
lease-up where tenants were paying rent as of March 31, 1996.
22
<PAGE>
LEASE EXPIRATIONS
The following tables show scheduled lease expirations for the Company's total
property portfolio, for its industrial property portfolio and for its office
portfolio, respectively, based on leases under which tenants were paying rent in
both stabilized and pre-stabilized properties as of March 31, 1996, assuming no
exercise of renewal options or termination rights, if any:
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------
% OF TOTAL
YEAR OF SQUARE % OF TOTAL ANNUALIZED ANNUALIZED
EXPIRATION FEET SQUARE FEET BASE RENT(1) BASE RENT(1)
- - - -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL PORTFOLIO
1996 611,969 6.9% $ 3,843,361 8.1%
1997 1,524,662 17.2% 8,474,955 17.9%
1998 1,739,897 19.6% 8,356,415 17.7%
1999 837,749 9.4% 4,991,262 10.6%
2000 1,187,128 13.4% 6,429,199 13.6%
2001 344,886 3.9% 1,819,669 3.9%
2002 238,625 2.7% 2,676,456 5.7%
2003 289,912 3.3% 1,622,403 3.4%
2004 997,200 11.2% 3,826,667 8.1%
2005 625,184 7.0% 2,616,213 5.5%
2006 242,090 2.7% 935,997 2.0%
2007 162,651 1.8% 1,050,409 2.2%
2011 70,600 0.8% 605,304 1.3%
- - - -----------------------------------------------------------------------------------------
8,872,553(2) 100.0% $47,248,310 100.0%
- - - ------------------------------------------------------------------------------------------
INDUSTRIAL PROPERTIES
1996 548,933 6.6% $ 2,984,090 7.5%
1997 1,418,731 17.0% 7,070,862 17.7%
1998 1,658,411 19.9% 7,233,762 18.1%
1999 810,624 9.7% 4,630,752 11.6%
2000 1,102,132 13.2% 5,424,020 13.6%
2001 308,002 3.7% 1,358,088 3.4%
2002 127,394 1.5% 1,095,433 2.7%
2003 277,731 3.3% 1,429,943 3.6%
2004 982,200 11.8% 3,519,167 8.8%
2005 621,069 7.5% 2,559,426 6.4%
2006 239,400 2.9% 894,432 2.2%
2007 162,651 2.0% 1,050,409 2.6%
2011 70,600 0.8% 605,304 1.5%
- - - -----------------------------------------------------------------------------------------
8,327,878 100.0% $39,855,688 100.0%
- - - -----------------------------------------------------------------------------------------
</TABLE>
(Table continued on following page)
23
<PAGE>
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------
OFFICE PROPERTIES
<S> <C> <C> <C> <C>
1996 62,076 12.4% $ 847,270 12.2%
1997 105,931 21.2% 1,404,093 20.2%
1998 80,261 16.1% 1,108,565 15.9%
1999 25,481 5.1% 339,138 4.9%
2000 49,773 10.0% 721,633 10.4%
2001 36,884 7.4% 461,581 6.6%
2002 111,231 22.3% 1,581,024 22.7%
2003 12,181 2.4% 192,460 2.8%
2004 15,000 3.0% 307,500 4.4%
2005 0 0.0% 0 0.0%
2006 0 0.0% 0 0.0%
2007 0 0.0% 0 0.0%
2011 0 0.0% 0 0.0%
- - - ------------------------------------------------------------------------------
498,818 100.0% $6,963,264 100.0%
- - - ------------------------------------------------------------------------------
</TABLE>
(1) Annualized base rent represents the annualized monthly base rental at
the time of lease expiration.
(2) The total square footage as of March 31, 1996, is comprised of 8,624,953
square feet of leases in stabilized properties, and 247,600 square feet
of leases in properties under development or in lease-up where tenants
are paying rent as of March 31, 1996.
IMPACT OF INFLATION
In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate. Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation. Most of the leases require tenants to pay their share of
operating expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in costs and
operating expenses resulting from inflation. In addition, many of the leases
are for terms of less than seven years, which may enable the Company to replace
existing leases with new leases at higher base rentals if rents under the
existing leases are below the then-existing market rate. However, there can be
no assurance that the Company would be able to replace existing leases with new
leases at higher base rentals.
24
<PAGE>
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 - First Amendment to the Amended and Restated Revolving Credit
Agreement, dated April 1, 1996, by and among Wachovia Bank of
Georgia, N.A., and Weeks Realty L.P., Weeks Construction
Services Inc., Weeks Realty Services Inc., Weeks Development
Partnership and Weeks Financing Partnership, as borrowers, and
Weeks Corporation and Weeks Realty L.P., as guarantors.
11.1 - Computation of earnings per share.
27.1 - Financial Date Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31,
1996.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEEKS CORPORATION
---------------------------
(Registrant)
May 13, 1996 /s/ A. Ray Weeks, Jr.
---------------------------
A. Ray Weeks, Jr.
Chairman of the Board and
Chief Executive Officer
May 13, 1996 /s/ David P. Stockert
---------------------------
David P. Stockert
Senior Vice President and
Chief Financial Officer
26
<PAGE>
EXHIBIT INDEX
Exhibit Page
No. Description Number
- - - -----------------------------------------------------------------------------
10.1 First Amendment to the Amended and Restated Revolving Credit
Agreement dated April 1, 1996, by and among Wachovia Bank of
Georgia, N.A., and Weeks Realty, L.P., Weeks Construction
Services, Inc., Weeks Realty Services, Inc., Weeks Development
Partnership and Weeks Financing Partnership, as borrowers, and
Weeks Corporation and Weeks Realty, L.P., as guarantors
11.1 Computation of Earnings Per Share
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO AMENDED AND RESTATED
---------------------------------------
REVOLVING CREDIT AGREEMENT
--------------------------
THIS FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
(this "AMENDMENT"), dated as of the 1st day of April, 1996, among WEEKS REALTY,
L.P., a Georgia limited partnership ("OPERATING PARTNERSHIP"), WEEKS
CONSTRUCTION SERVICES, INC., a Georgia corporation ("CONSTRUCTION"), WEEKS
REALTY SERVICES, INC., a Georgia corporation ("REALTY"), WEEKS DEVELOPMENT
PARTNERSHIP, a Georgia general partnership ("DEVELOPMENT"), WEEKS FINANCING
LIMITED PARTNERSHIP, a Georgia limited partnership ("FINANCING") (Operating
Partnership, Construction, Realty, Development and Financing, collectively,
"BORROWERS," and each, individually, a "BORROWER"); WEEKS CORPORATION, a Georgia
corporation ("WEEKS CORPORATION"), and Operating Partnership, as Guarantors
(Weeks Corporation and Operating Partnership, collectively, "GUARANTORS," and
each, individually, a "GUARANTOR"); WEEKS REALTY, L.P., a Georgia limited
partnership, in its capacity as Borrowers' Agent; and WACHOVIA BANK OF GEORGIA,
N.A., a national banking association ("LENDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers, Weeks Corporation, Guarantors, Operating Partnership
(in its capacity as Borrowers' Agent), and Lender executed and delivered that
certain Revolving Credit Agreement, dated August 24, 1994, as modified and
amended by that certain First Amendment to Revolving Credit Agreement, dated
June 1, 1995, and as further amended and restated in its entirety pursuant to
that certain Amended and Restated Revolving Credit Agreement, dated as of August
25, 1995 (the "AGREEMENT");
WHEREAS, Borrowers have requested that the interest rates and fees payable
under the Agreement be changed, and Lender has agreed to such request, subject
to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), the above premises and other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged by the parties
hereto, Borrowers, Weeks Corporation, Guarantors, Operating Partnership (in its
capacity as Borrowers' Agent), and Lender hereby covenant and agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, each term
-----------
used herein which is defined in the Agreement shall have the meaning assigned to
such term in the Agreement. Each reference to "hereof," "hereunder," "herein"
and "hereby" and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the Agreement shall
from and after the date hereof refer to the Agreement as amended hereby.
<PAGE>
2. ADDITIONS TO ARTICLE I. Article I of the Agreement is hereby amended by
----------------------
adding the following new definitions in appropriate alphabetical order:
"Debt Rating" shall mean as of any given day whichever is the higher
-----------
of (a) the higher of the rating, if any, of Operating Partnership's senior
unsecured, unenhanced debt (or, if no such rating exists, its issuer credit
rating, if any, for debt of such type) given by Moody's Investor Service or
Standard and Poor's (as such rating may change from time to time) (provided
--------
that in the event of a double or greater split rating, the rating
immediately above the lowest rating shall apply), or, if only one of them
rates Operating Partnership's senior unsecured, unenhanced debt, such
rating, or (b) the higher of the rating, if any, of Weeks Corporation's
senior unsecured, unenhanced debt (or, if no such rating exists, its issuer
credit rating, if any, for debt of such type) given by Moody's Investor
Service or Standard and Poor's (as such rating may change from time to
time) (provided that in the event of a double or greater split rating, the
--------
rating immediately above the lowest rating shall apply), or, if only one of
them rates Weeks Corporation's senior unsecured, unenhanced debt, such
rating; or, if Moody's Investor Service or Standard and Poor's rate such
debt of only Operating Partnership or only Weeks Corporation but not both,
the higher of such ratings of such one entity.
"Performance Pricing Determination Date" shall mean any of the
--------------------------------------
following dates: April 1, 1996, and, in addition, the first day of each
calendar quarter (July 1, October 1, January 1 and April 1) thereafter as
of which day the Debt Rating, as determined by Lender, shall be either (a)
lower than the Debt Rating, as determined by Lender, in effect on the
immediately preceding Performance Pricing Determination Date, or (b) higher
than the Debt Rating, as determined by Lender, in effect on the immediately
preceding Performance Pricing Determination Date, if Borrowers' Agent shall
have given Lender written notice on or before such day of Borrowers'
Agent's determination that the Debt Rating as of such day is or shall be
higher than the Debt Rating in effect on such immediately preceding
Performance Pricing Determination Date. For purposes of this definition,
if there is no Debt Rating in effect on a Performance Pricing Determination
Date there shall nevertheless be deemed to be a Debt Rating in effect on
such date which is below Standard and Poor's BBB- rating and below Moody's
Investor Service Baa3 rating.
2
<PAGE>
"Debt Rating Table" shall mean the following:
-----------------
<TABLE>
<CAPTION>
LEVEL DEBT RATING REVOLVING TERM LOAN UNUSED ANNUAL
LOAN LIBOR LIBOR COMMITMENT EXTENSION
S&P/MOODY'S FACTOR FACTOR FEE FEE
<S> <C> <C> <C> <C> <C>
- - - -----------------------------------------------------------------------
I Above 0.75% 1.25% 0.150% 0.100%
BBB+/Baal
- - - -----------------------------------------------------------------------
II BBB+/Baa1 0.90% 1.40% 0.150% 0.125%
- - - -----------------------------------------------------------------------
III BBB/Baa2 1.05% 1.55% 0.150% 0.125%
- - - -----------------------------------------------------------------------
IV BBB-/Baa3 1.20% 1.70% 0.150% 0.125%
- - - -----------------------------------------------------------------------
V Below BBB-/Baa3 1.35% 1.90% 0.200% 0.125%
- - - -----------------------------------------------------------------------
</TABLE>
3. AMENDMENTS TO ARTICLE I. The following Sections of Article I of the
-----------------------
Agreement are hereby amended by deleting each of them in its entirety and
substituting in lieu thereof the following:
1.92 "Revolving Loan LIBOR Factor" shall mean as of any given day the
---------------------------
percentage rate per annum determined by reference to the Debt Rating Table
and based on the Debt Rating, if any, as determined by Lender, in effect as
of such day, if such day is a Performance Pricing Determination Date, or
otherwise as of the Performance Pricing Determination Date immediately
preceding such day; provided that if there is no Debt Rating in effect on
--------
such Performance Pricing Determination Date, the "Revolving Loan LIBOR
Factor" shall be the same as that set forth in Level V of the Debt Rating
Table.
1.98 "Term Loan LIBOR Factor" shall mean as of any given day the
----------------------
percentage rate per annum determined by reference to the Debt Rating Table
and based on the Debt Rating, if any, as determined by Lender, in effect as
of such day, if such day is a Performance Pricing Determination Date, or
otherwise as of the Performance Pricing Determination Date immediately
preceding such day; provided that if there is no Debt Rating in effect on
--------
such Performance Pricing Determination Date, the "Term Loan LIBOR Factor"
shall be the same as that set forth in Level V of the Debt Rating Table.
4. AMENDMENTS TO SECTION 2.19. Section 2.19 of the Agreement is hereby
--------------------------
amended by deleting subsections (b) and (c) thereof in their entirety and
substituting in lieu thereof the following:
3
<PAGE>
"(b) Annual Extension Fees. An annual extension fee equal to a
---------------------
percentage of the Line Commitment in effect as of each July 1 (commencing
July 1, 1996), which percentage shall be determined by reference to the
Debt Rating Table and based on the Debt Rating, if any, as determined by
Lender, in effect as of such day if such day is a Performance Pricing
Determination Date, or otherwise as of the Performance Pricing
Determination Date immediately preceding such July 1; provided that if
--------
there is no Debt Rating in effect on the applicable Performance Pricing
Determination Date, the annual extension fee shall be the same as that set
forth in Level V of the Debt Rating Table. An annual extension fee,
determined as provided herein, shall be due and payable on each December 10
for the next succeeding calendar year, commencing December 10, 1996, and
continuing through and including December 10, 1998, unless Lender shall
have sooner given Borrowers notice of non-renewal of the Revolving Credit
Facility pursuant to the provisions of Section 2.02 hereof."
"(c) Unused Commitment Fee. An unused commitment fee equal to a
---------------------
percentage (as determined below) of the average daily amount, if any, by
which the Line Commitment exceeds the sum of the unpaid principal amount
outstanding under the Revolving Master Note plus the amount of the L/C
Obligations, which shall be accrued quarterly for each calendar quarter
ending on or before the Expiration Date and shall be due and payable on the
tenth (10th) day after the end of each such calendar quarter. The unused
commitment fee shall be computed on the basis of a hypothetical year of 360
days for the actual number of days elapsed during such calendar quarter.
For purposes of the foregoing, the percentage shall be determined by
reference to the Debt Rating Table and based on the Debt Rating, if any, as
determined by Lender, in effect as of the first (1st) day of each such
calendar quarter if such day is a Performance Pricing Determination Date,
or otherwise as of the Performance Pricing Determination Date immediately
preceding such day; provided that if there is no Debt Rating in effect on
--------
such Performance Pricing Determination Date, the unused commitment fee
shall be the same as that set forth in Level V of the Debt Rating Table."
5. ADDITION TO ARTICLE XII. Article XII of the Agreement is hereby
------------------------
amended by adding the following new Section 12.19 after Section 12.18 thereof:
"12.19 Debt Rating. Borrowers' Agent shall give prompt written
-----------
notice to Lender of Borrowers' Agent's determination that a Debt Rating has
been established or changed."
4
<PAGE>
6. EFFECTIVE DATE. This Amendment shall be effective as of April 1, 1996,
--------------
and, anything to the contrary in this Amendment notwithstanding, the new
interest rates as set forth herein shall apply to all LIBOR Rate Loans
outstanding under this Agreement as of April 1, 1996, notwithstanding the fact
that the Interest Period for any such outstanding LIBOR Rate Loan may extend for
a period subsequent to April 1, 1996. For purposes of such LIBOR Rate Loans
outstanding as of April 1, 1996, the LIBOR Rate applicable thereto from and
after April 1, 1996, shall be calculated based on the Revolving Loan LIBOR
Factor (as defined in the Agreement, as amended by this Amendment) as of April
1, 1996.
7. TERMINATION OF RECORD OF NON-ENCUMBRANCE AGREEMENTS. Borrowers, Weeks
---------------------------------------------------
Corporation and Lender acknowledge that, for purposes of Section 2.05 of the
Agreement, Weeks Corporation has made the "First Capital Contribution" and,
accordingly, Lender agrees to terminate of record all Non-Encumbrance Agreements
in effect as of the date hereof. From and after the date hereof, and so long as
no Default is in existence at such time which is continuing, Operating
Partnership shall have no further obligation under Section 2.05 of the Agreement
to execute or record Non-Encumbrance Agreements with respect to Borrowing Base
Properties. Borrowers and Weeks Corporation acknowledge that such termination
of record of Non-Encumbrance Agreements does not and shall not affect in any
manner the covenants of Borrowers and Weeks Corporation set forth in Sections
13.05, 13.06 and 13.14 of the Agreement.
8. AMENDED AND RESTATED REVOLVING MASTER NOTE. All references in the
------------------------------------------
Second Amended and Restated Revolving Master Note to the Loan Agreement shall be
deemed references to the Agreement, as amended hereby, and as it may be amended
and supplemented from time to time.
9. RESTATEMENT OF AGREEMENT. The parties hereto agree to continue the
------------------------
Agreement, as further amended by this Agreement. As a material inducement to
Lender to enter into this Agreement, Borrowers and Weeks Corporation further
warrant and represent to Lender as follows: (a) that all warranties and
representations of Borrowers and Weeks Corporation set forth in the Agreement
were true and correct in all material respects when made and remain true and
correct in all material respects as of the date hereof; and (b) that they are
not aware of the occurrence of any adverse change in their respective
businesses, properties, operations or conditions (financial or other), as more
particularly described in Section 12.09 of the Agreement, since August 24, 1994.
10. EFFECT OF AMENDMENT. Except as set forth expressly hereinabove, all
-------------------
terms of the Agreement and the other Loan Documents shall be and remain in full
force and effect, and shall constitute the legal, valid, binding and enforceable
obligations of Borrowers. The amendments contained herein shall be deemed to
have prospective application only, unless otherwise specifically stated herein.
5
<PAGE>
11. RATIFICATION. Borrowers hereby restate, ratify and reaffirm each and
------------
every term, covenant and condition set forth in the Agreement and the other Loan
Documents effective as of the date hereof.
12. REAFFIRMATION OF WEEKS GUARANTIES. By execution hereof, Guarantors re-
---------------------------------
affirm their respective obligations under the Weeks Guaranties and acknowledge
that the Weeks Guaranties continue to guaranty, in accordance with their
respective terms, the payment of the Amended and Restated Revolving Master Note
and the performance by Borrowers of their obligations under the Agreement, as
amended hereby.
13. COUNTERPARTS. This Amendment may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
14. SECTION REFERENCES. Section titles and references used in this
------------------
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
15. NO DEFAULT. To induce Lender to enter into this Amendment and to
----------
continue to make advances pursuant to the Agreement, Borrowers hereby
acknowledge and agree that, as of the date hereof, and after giving effect to
the terms hereof, (i) there are no Defaults or events which, with notice or
passage of time or both, would constitute Defaults under the Agreement; and (ii)
there exists no right of offset, defense, counterclaim, claim or objection in
favor of any Borrower arising out of or with respect to the Agreement or any of
the Notes.
16. FURTHER ASSURANCES. Borrowers agree to take such further actions as
------------------
Lender shall reasonably request in connection herewith to evidence the
amendments herein contained.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered in their names and on their behalf, and their seals to be affixed
and attested, all as of the day and year first above written.
BORROWERS:
---------
WEEKS REALTY, L.P.
ATTEST: BY: WEEKS CORPORATION, its sole
General Partner
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Senior Vice President & CEO
--------------------------------
[CORPORATE SEAL]
ATTEST: WEEKS CONSTRUCTION SERVICES, INC.
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Treasurer
--------------------------------
[CORPORATE SEAL]
ATTEST: WEEKS REALTY SERVICES, INC.
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Treasurer
--------------------------------
[CORPORATE SEAL]
WEEKS DEVELOPMENT PARTNERSHIP
ATTEST:
By: Weeks Realty Services, Inc.,
as its Managing Partner
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Treasurer
--------------------------------
[CORPORATE SEAL]
7
<PAGE>
WEEKS FINANCING LIMITED PARTNERSHIP
ATTEST:
BY: WEEKS REALTY, L.P., its sole
General Partner
BY: Weeks Corporation, its sole
General Partner
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Senior Vice President & CEO
--------------------------------
[CORPORATE SEAL]
GUARANTORS:
----------
ATTEST: WEEKS CORPORATION
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Senior Vice President & CEO
--------------------------------
[CORPORATE SEAL]
WEEKS REALTY, L.P.
ATTEST: BY: WEEKS CORPORATION, its sole
General Partner
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Senior Vice President & CEO
--------------------------------
[CORPORATE SEAL]
BORROWERS' AGENT:
----------------
WEEKS REALTY, L.P.
ATTEST: BY: WEEKS CORPORATION, its sole
General Partner
/s/ Elizabeth C. Belden By: /s/ David P. Stockert
- - - ------------------------------ ---------------------------------
Secretary Its: Senior Vice President & CEO
--------------------------------
[CORPORATE SEAL]
8
<PAGE>
LENDER:
-------
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Steven B. Wood
---------------------------------
Its: Vice President
--------------------------------
[BANK SEAL]
9
<PAGE>
EXHIBIT 11.1
WEEKS CORPORATION
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------
Three Months Three Months
Ended Ended
(In thousands, except per share data) March 31,1996 March 31,1995
- - - ------------------------------------------------------------------------------
<S> <C> <C>
Weighted average number of common
shares outstanding 11,156 7,675
Dilutive effect of outstanding stock options
(determined under the Treasury Stock Method) -- --
- - - -------------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares outstanding 11,156 7,675
- - - -------------------------------------------------------------------------------
Net income $ 3,101 $2,067
- - - -------------------------------------------------------------------------------
Per share data:
Net income per share $ 0.28 $ 0.27
- - - -------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 307
<SECURITIES> 0
<RECEIVABLES> 8,320
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 295,663
<DEPRECIATION> 32,417
<TOTAL-ASSETS> 328,183
<CURRENT-LIABILITIES> 0
<BONDS> 157,357
0
0
<COMMON> 112
<OTHER-SE> 131,476
<TOTAL-LIABILITY-AND-EQUITY> 328,183
<SALES> 0
<TOTAL-REVENUES> 12,129
<CGS> 0
<TOTAL-COSTS> 8,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,435
<INCOME-PRETAX> 3,101
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,101
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,101
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
