<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 1996
WEEKS CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 011-13254 58-1525322
------- --------- ----------
(State of (Commission File (IRS Employer Identification
Incorporation) Number) 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)
<PAGE>
ITEM 5. OTHER EVENTS
On July 3, 1996, Weeks Realty, L.P. (the "Operating Partnership"), a Georgia
limited partnership, and Weeks Corporation, a Georgia corporation (together
with the Operating Partnership, the "Company") executed a letter of intent (the
"Letter of Intent") with Lichtin Properties, Inc., a North Carolina corporation
("Lichtin"), for the acquisition of a total of approximately 2.1 million square
feet of industrial and suburban office properties (the "North Carolina
Properties") in the Raleigh-Durham-Chapel Hill area of North Carolina (the
"Research Triangle"). Lichtin is a full-service property management and
development company started in 1977 by Harold S. Lichtin, 48, who will join the
Company as a member of its senior management team and will also join the
Company's Board of Directors. In order to maintain the independent majority on
the Board of Directors, the Company intends to add one additional director, in
addition to the additional independent director the Company intends to add to
the Board of Directors in connection with the NWI acquisition described in the
Company's Current Report on Form 8-K dated November 1, 1996.
The Letter of Intent provides for Lichtin to merge its management team and
business operations with and into the Company. The acquisition consideration
is expected to total approximately $164 million, comprised of approximately
$40.6 million of equity (in the form of units of limited partnership interest
in the Operating Partnership ("Units")) in the Company, $10 million of cash and
the assumption of approximately $113.4 million of indebtedness. Units issued
to the various Lichtin entities in the transaction will be convertible into
shares of common stock of the Company ("Shares") on a one-for-one basis, or
into cash, at the Company's option; however, such exchange rights may not be
exercised at any time that the Lichtin entities would be prohibited from
selling their Units pursuant to the registration rights and lock-up
arrangements described below. Approximately $27 million of the equity in the
Company and approximately $5 million in cash will be paid to Mr. Lichtin, with
the remainder paid primarily to Lichtin's private investors. In addition, Mr.
Lichtin will be granted options to purchase 40,000 Shares at a per Share price
equal to the closing price of the Shares on the New York Stock Exchange on the
date of the Initial Closing (as defined below). The acquisition consideration
was determined through arm's length negotiations between the Company and
Lichtin after an evaluation of the North Carolina Properties' physical
condition, lease characteristics, operating expense rates and future capital
improvement needs.
The Company will close the acquisition in the stages described below.
Consummation of the transaction is subject to the completion of remaining due
diligence, the execution of definitive agreements, the consent of lenders, the
final approval of the transaction by the shareholders of Lichtin, the partners
of certain affiliated partnerships and the Board of Directors of the Company,
and certain other closing conditions. Final terms of the transaction may
differ from those described herein.
<PAGE>
The Company currently expects that the initial phase of the acquisition will
close in December 1996, or January 1997 (the "Initial Closing"). At the
Initial Closing, the Company expects to acquire 19 completed and in-service
buildings (the "Completed Properties") with a total of approximately 1.4
million square feet of leasable space for aggregate consideration of
approximately $102.7 million. As of September 30, 1996, these properties were
on average 96% leased. The consideration for the Completed Properties is
expected to consist of approximately 760,000 Units with an aggregate value of
approximately $19.2 million, based on the average trading price of the
Company's common stock ($25.25 per share) for the 20 trading days immediately
preceding the date on which the parties signed the Letter of Intent, $9 million
of cash, and the assumption of approximately $74.5 million of indebtedness.
The Letter of Intent also provides for the Company to acquire from Lichtin
six completed and in-service properties with a total of 370,734 square feet
(the "Northern Telecom Properties"), which are 100% leased through June, 2005
to Northern Telecom, Inc., ("Northern Telecom"). The Northern Telecom
Properties currently account for approximately $2.9 million of annual base
rent, which will equal approximately 4% of the Company's total annual base
rent, pro forma for the acquisitions of the North Carolina Properties and the
acquisition of the Nashville Properties described in the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission dated
November 1, 1996. Northern Telecom would become the Company's largest tenant
measured by annualized base rent.
The leases for the Northern Telecom Properties have early termination
options at June 30, 1998, and June 30, 2000, in each case subject to 12 months
advance written notice. In the event Northern Telecom exercised either of its
early termination options, Northern Telecom would be required to pay a penalty
ranging from $1.35 to $1.80 per square foot of terminated space, in addition to
paying to restore and repair such terminated space to a condition suitable for
re-leasing. The timing of the closing of the acquisition of the Northern
Telecom Properties and the formula used to determine the related acquisition
consideration are dependent upon whether Northern Telecom elects to exercise
the first of its early termination options. The Company will be the property and
leasing manager for the Northern Telecom Properties until they are acquired.
If Northern Telecom does not exercise its first early termination option, the
closing of the Northern Telecom Properties will occur on or about July 1, 1997,
and the acquisition consideration for the Northern Telecom Properties will be
computed by dividing estimated net operating income (as defined below) by a
capitalization rate of 10.4%. "Net Operating Income" is defined under the Letter
of Intent as gross annualized rental income, including reimbursables (assuming
that reimbursables may include management fees calculated on total revenues,
less reimbursements in certain cases for utilities), for the ensuing twelve (12)
month period less a five percent (5%) vacancy factor (computed on the entire
building deemed to be or actually one hundred percent (100%) leased, less any
portion of that building leased for ten (10) years or longer) and less approved
pro forma annual operating expenses (which shall be deemed to include a four
percent (4%) management fee on total revenues, Owner's Expenses and a reserve of
five cents ($.05) per square foot per annum for industrial space, eight cents
($.08) per square foot per annum for flex space and ten cents ($.10) per square
foot per annum for office space, as adjusted for certain other factors described
in the Letter of Intent.
Based on the Company's current estimate of the Net Operating Income for such 12
month period, the aggregate acquisition consideration for the Northern Telecom
Properties is expected to be approximately $23.7 million. The consideration for
the Northern Telecom Properties is expected to consist of Units totaling
approximately $2.3 million (with a value per Unit based on the
<PAGE>
average closing price of the Company's common stock for the 20 trading days
prior to the acquisition, subject to a minimum value per Unit of $25.25 and a
maximum value per Unit of $27.00), cash of $1 million, and the assumption of
indebtedness of approximately $20.4 million.
If Northern Telecom elects to exercise the first of its early termination
options, the closing of any Northern Telecom Properties with leases subject to
such election will be delayed until such building is re-stabilized but in no
event later than June 30, 2000. The acquisition consideration for any Northern
Telecom property acquired by the Company under these circumstances would be
computed based on annualized in-place Net Operating Income capitalized at a rate
of 10.5%. The acquisition consideration would also be paid in the form of Units,
cash of $1 million, and the assumption of indebtedness; however, the Units would
be valued at the average closing price of the Company's common stock for the 20
trading days prior to the acquisition.
The Letter of Intent also provides for the acquisition of four buildings
(the "Development Properties") currently under development or in lease-up. The
Development Properties total approximately 325,000 square feet and will be
acquired over time as each Development Property achieves stabilization
(generally, 95% occupancy), but in no event later than June 30, 1998, a date
which is approximately 18 months after the last expected shell completion date
of the Development Properties. The acquisition consideration for each
Development Property will equal the greater of (i) estimated Net Operating
Income capitalized at 10.4%, or (ii) the cost of development.
Consideration for each Development Property will consist of Units (with an
agreed upon value per Unit based on the average closing price of the Company's
common stock for the 20 trading days prior to the acquisition of such
Development Property, except that for any Development Property acquired on or
before July 1, 1997, the value per Unit will be subject to a minimum value of
<PAGE>
$25.25 and a maximum value of $27.00) and the assumption of construction
indebtedness, which the Company expects to refinance through borrowings under
its line of credit.
Based on the formula discussed previously, and assuming the four Development
Properties achieve their budgeted net operating income by their respective
budgeted stabilization dates, the Company believes the total acquisition
consideration of the four Development Properties will be approximately $26
million, consisting of approximately $7.5 million of Units and the assumption
of approximately $18.5 million of construction indebtedness. The Company will
be the development and leasing manager for the Development Properties until
they are acquired. At September 30, 1996, the Development Properties were
pre-leased on average 44%.
The Letter of Intent further provides for the acquisition by the Company of
approximately 97 acres of undeveloped land (the "Undeveloped Land") in staged
acquisitions over approximately four years. All of the Undeveloped Land is
located in five business parks developed and controlled by Lichtin. The
initial closing for the Undeveloped Land (the "Undeveloped Land Initial
Closing") will occur in December 1996, or January 1997, with successive
closings on each of the next four anniversary dates of the Undeveloped Land
Initial Closing. However, if Northern Telecom exercises its first early
termination option on the Northern Telecom Properties, the Company will have
the option of delaying by one year each of its remaining closing obligations.
The aggregate consideration for the Undeveloped Land will be approximately
$10.6 million. In addition, the Company will pay for certain infrastructure
and engineering costs associated with the Undeveloped Land.
Consideration for the Undeveloped Land acquired at the Undeveloped Land
Initial Closing will consist of cash, or Units with an agreed upon value per
Unit of $25.25. Consideration for the Undeveloped Land acquired after the
Undeveloped Land Initial Closing will consist of Units with a value per Unit
based on the average closing price of the Company's common stock for the 20
trading days prior to the date of acquisition.
Based upon current zoning and use covenants, the Company believes that the
Undeveloped Land could support the development of at least an additional
approximately 1.4 million square feet, and is suitable for a mixture of
distribution, service center and suburban office buildings.
Under the Letter of Intent, the Company will also acquire two options (the
"Options") currently held by Lichtin to purchase an additional approximately
176 acres of undeveloped land (the "Option Land"). The Options will be
purchased by the Company from Lichtin at the Undeveloped Land Initial Closing
for $1 million, payable in Units with an agreed upon value per Unit of $25.25.
Under the terms of the first Option (the "Paramount Option"), the Company
will have an option to purchase approximately 160 acres of land adjacent to one
<PAGE>
of Lichtin's existing business parks (the "Paramount Option Land") from its
third-party owner. The per-acre purchase price under the Paramount Option is
$35,000, adjusted annually for changes in the Consumer Price Index since 1995.
Based upon current zoning and use covenants, the Company believes that the
Paramount Option Land could support the development of a business park
containing at least approximately 1.4 million square feet of suburban office and
business service space.
Under the terms of the second Option (the "Woodlake Option"), the Company
will have an option to purchase approximately 16 acres of land in Lichtin's
existing Woodlake business park (the "Woodlake Option Land") from its
third-party owner. The per-acre purchase price under the Option is $50,000,
adjusted annually for changes in the Consumer Price Index since 1993.
Additionally, the third-party owner of the Woodlake Option Land will retain a
15% participation interest in the profit component realized by the Company on
the development, operation, and disposition, if applicable, of any buildings
developed on the Woodlake Option Land, although the Company may negotiate a
cash-out option with the third-party owner at the Company's discretion. The
Woodlake Option will expire on March 29, 2000. The Company believes that the
Woodlake Option Land could support the development of an additional
approximately 176,000 square feet of bulk warehouse and business distribution
space.
The Letter of Intent also provides for certain registration rights and
lock-up arrangements by and among the Company and the various Lichtin entities.
Under these provisions, the Company will be obligated to file and maintain a
shelf registration statement for all Shares into which Units are convertible
with respect to those Units issued to the Lichtin entities (the "Registration
Rights Participants") on or before July 31, 1997. Each Unit issued to a
Registration Rights Participant must be retained for certain periods of time,
ranging from one year to three years, before disposition.
The registration rights arrangements also grant the Lichtin entities certain
piggyback registration rights with respect to Units issued after June 30, 1998.
Pursuant to such piggyback registration rights, the Lichtin entities holding
such Units will be entitled, subject to certain restrictions, to include their
securities in a registered public offering initiated by the Company or another
holder of the Company's securities.
The Company currently estimates that fees and expenses of the North Carolina
acquisitions will total approximately $1.2 million.
<PAGE>
The following tables set forth certain information concerning the Completed
Properties, the Northern Telecom Properties, and the Development Properties.
Completed Properties
- ---------------------------------------------------------------------------
Business Park/ Square 9/30/96 Year
Property Feet Occupancy Constructed
- ---------------------------------------------------------------------------
Perimeter Park
900 Perimeter Park 50,231 96% 1982
1000 Perimeter Park 56,436 96% 1982
- ---------------------------------------------------------------------------
Subtotal 106,667 96%
- ---------------------------------------------------------------------------
Perimeter Park West
1100 Perimeter Park West 84,950 74% 1990
1400 Perimeter Park West 44,916 100% 1991
1500 Perimeter Park West 81,196 89% 1996
1600 Perimeter Park West 94,897 100% 1994
1800 Perimeter Park West 55,636 98% 1994
- ---------------------------------------------------------------------------
Subtotal 361,595 91%
- ---------------------------------------------------------------------------
Interchange Plaza
Interchange Plaza I 37,630 100% 1993
Interchange Plaza II 69,491 100% 1995
- ---------------------------------------------------------------------------
Subtotal 107,121 100%
- ---------------------------------------------------------------------------
Enterprise Center
Enterprise Center I 106,583 100% 1993
Enterprise Center II 104,158 60% 1995
- ---------------------------------------------------------------------------
Subtotal 210,741 80%
- ---------------------------------------------------------------------------
Metro Center
Metro Center I 75,000 100% 1989
Metro Center II 59,927 100% 1990
Metro Center III 137,500 99% 1992
- ---------------------------------------------------------------------------
Subtotal 272,427 99%
- ---------------------------------------------------------------------------
Research Triangle Industrial Center
RTIC I & II 85,129 100% 1982
RTIC III 42,712 100% 1982
RTIC IV 26,500 100% 1982
- ---------------------------------------------------------------------------
Subtotal 154,341 100%
- ---------------------------------------------------------------------------
Woodlake Center
Woodlake I 108,000 100% 1994
Other
6501 Weston Parkway 93,351 86% 1996
- ---------------------------------------------------------------------------
Total Completed Properties 1,414,243 96%
- ---------------------------------------------------------------------------
<PAGE>
Northern Telecom Properties
- -----------------------------------------------------------------------------
Business Park/ Square 9/30/96 Year
Property Feet Occupancy Constructed
- -----------------------------------------------------------------------------
Perimeter Park
100 Perimeter Park 55,664 100% 1987
200 Perimeter Park 55,664 100% 1987
300 Perimeter Park 55,664 100% 1986
400 Perimeter Park 74,088 100% 1983
500 Perimeter Park 74,017 100% 1985
800 Perimeter Park 55,637 100% 1984
- ----------------------------------------------------------------------------
Total Norther Telecom Properties 370,734 100%
- ----------------------------------------------------------------------------
Development Properties
- ----------------------------------------------------------------------------
Business Park/ Square 9/30/96 Year
Property Feet Pre-leasing Constructed
- ----------------------------------------------------------------------------
Woodlake Center
Woodlake III 97,200 58% 1997
Regency Forest
Regency-Spring 100,000 40% 1997
Perimeter Park West
2000 Perimeter Park West 55,636 0% 1997
Enterprise Center
Enterprise III 70,848 64% 1997
- ----------------------------------------------------------------------------
Total Development Properties 323,684 44%
- ----------------------------------------------------------------------------
This Current Report contains forward-looking information that is subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. Among those risks and uncertainties are the
general economic climate; the supply of and demand for industrial properties in
the Research Triangle, North Carolina and the Southeast; risks associated with
the development and acquisition of properties, including risks that the
development, acquisition or lease-up may not be completed on schedule, that
tenants will not take occupancy or pay rent, or that development or operating
costs may be greater than anticipated; and risks associated with the
consummation of the transaction, including risks that the parties will fail to
secure the consent of lenders, the final approval of the shareholders of
Lichtin and the partners of its affiliated partnerships, or the Board of
Directors of the Company, or that the transaction will otherwise fail to close
or will close on terms different from those described herein. For further
information on factors which could impact the Company and the statements
contained herein, reference is made to the Company's other filings with the
Securities and Exchange Commission.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements required by this Item 7(a) relating to the
Lichtin acquisition described in Item 2 are attached hereto as Exhibit
A and incorporated herein by this reference.
(b) Pro Forma Financial Information.
The pro forma financial information required by this Item 7(b) relating
to the Lichtin acquisition described in Item 2 are attached hereto as
Exhibit B and incorporated herein by this reference.
(c) Exhibits.
Exhibit # Description
--------- -----------
A Financial statements required by Item 7(a)
B Pro forma financial information required by Item 7(b)
10.1 Letter of Intent between Weeks Realty, L.P. and Lichtin
Properties, Inc., dated July 3, 1996.
23.1 Consent of Arthur Andersen LLP
<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 hereunto duly authorized.
WEEKS CORPORATION
Registrant
Date: November 5, 1996 /s/ David P. Stockert
------------------------------
David P. Stockert
Senior Vice President and
Chief Financial Officer
<PAGE>
Exhibit Index
Exhibit # Description Page
--------- ----------- ----
A Financial statements required by Item 7(a)
B Pro forma financial information required by Item 7(b)
10.1 Letter of Intent between Weeks Realty, L.P. and Lichtin
Properties, Inc., dated July 3, 1996.
23.1 Consent of Arthur Andersen LLP
<PAGE>
LICHTIN PROPERTIES
Combined Financial Statements
December 31, 1994 and 1995
<PAGE>
Report of Independent Public Accountants
To the Partners and Shareholders of Lichtin Properties:
We have audited the accompanying combined balance sheets of Lichtin
Properties, as defined in Note 1, as of December 31, 1994 and 1995 and the
related combined statements of operations, owners' deficit and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of Lichtin Properties' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Lichtin Properties
as of December 31, 1994 and 1995 and the combined results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
Atlanta, Georgia ARTHUR ANDERSEN LLP
September 24, 1996
<PAGE>
LICHTIN PROPERTIES
Combined Balance Sheets
(In thousands)
<TABLE>
December 31, June 30,
--------------------- -----------
1994 1995 1996
(Unaudited)
<S> <C> <C> <C>
Assets
Real estate assets:
Land $ 2,449 $ 3,321 $ 4,422
Buildings and improvements 58,486 70,368 86,648
-------------------- --------
Accumulated depreciation (14,790) (17,696) (19,244)
Operating real estate assets 46,145 55,993 71,826
Developments in progress 8,920 14,484 3,524
Land held for development 3,285 2,606 2,017
-------------------- --------
Net real estate assets 58,350 73,083 77,367
Cash and cash equivalents 2,205 783 276
Receivables:
Trade 998 1,769 1,763
Related party 109 116 116
Deferred costs, net 2,702 3,210 3,564
Other assets 415 507 448
-------------------- --------
$ 64,779 $ 79,468 $ 83,534
==================== ========
Liabilities and Owners Deficit
Notes payable $ 71,039 $ 86,151 $ 92,096
Line of credit borrowings 1,424 2,519 3,407
Notes payable and accrued interest-
related parties 7,242 8,241 8,819
Accounts payable:
Trade 3,438 3,539 1,798
Related parties 252 299 148
Accrued interest payable 431 677 717
Property taxes payable 560 654 492
Other liabilities 212 119 478
-------------------- --------
Total liabilities 84,598 102,199 107,955
-------------------- --------
Owners Deficit (19,819) (22,731) (24,421)
-------------------- --------
$ 64,779 $ 79,468 $ 83,534
==================== ========
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
<PAGE>
LICHTIN PROPERTIES
Combined Statements of Operations
(In thousands)
<TABLE>
Six Months
Year Ended December 31, Ended June 30,
---------------------------- -----------------
1993 1994 1995 1995 1996
---------------------------- -----------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenue
Rental $ 6,731 $ 7,765 $ 10,245 $ 4,877 $ 5,609
Tenant reimbursements 2,648 2,906 3,374 1,524 1,709
Other 4 - 24 - 53
---------------------------- -----------------
9,383 10,671 13,643 6,401 7,371
---------------------------- -----------------
Expenses
Property operating and
maintenance 2,223 2,351 3,029 1,424 1,700
Real estate taxes 618 651 817 409 494
Depreciation and amortization 2,344 2,630 3,264 1,572 1,840
Interest 4,828 5,038 6,699 3,279 3,659
Interest - related parties 310 332 395 209 234
Amortization of deferred
financing costs 201 173 191 87 107
General and administrative 711 848 1,154 469 568
---------------------------- -----------------
11,235 12,023 15,549 7,449 8,602
---------------------------- -----------------
Operating Loss (1,852) (1,352) (1,906) (1,048) (1,231)
Gain on sale of property - - 1,245 - -
Interest income 5 5 18 9 13
---------------------------- -----------------
Net Loss $ (1,847) $ (1,347) $ (643) $(1,039) $(1,218)
---------------------------- -----------------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
LICHTIN PROPERTIES
COMBINED STATEMENTS OF OWNERS' DEFICIT
(In thousands)
Owners' Deficit, December 31, 1992 $ (16,164)
Net loss (1,847)
Distributions (20)
----------
Owners Deficit, December 31, 1993 (18,031)
Net loss (1,347)
Distributions (441)
----------
Owners Deficit, December 31, 1994 (19,819)
Net loss (643)
Distributions (2,269)
----------
Owners Deficit, December 31, 1995 (22,731)
Net loss (Unaudited) (1,218)
Distributions (Unaudited) (472)
----------
Owners Deficit, June 30, 1996 (Unaudited) $ (24,421)
==========
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
LICHTIN PROPERTIES
COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
Six Months
Year Ended December 31, Ended June 30,
--------------------------------- --------------------
1993 1994 1995 1995 1996
--------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
Operating Activities (Unaudited)
Net loss $ (1,847) $ (1,347) $ (643) $ (1,039) $ (1,218)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,344 2,630 3,264 1,572 1,840
Amortization of deferred
financing costs 201 173 191 87 107
Straight-line rent revenue (232) (379) (258) (129) (140)
Gain on sale of property - - (1,245) - -
Net change in:
Receivables 82 (212) (58) 105 (317)
Deferred lease costs (230) (1,050) (946) (448) (657)
Other assets (4) (383) (92) (17) 59
Accounts payable and accrued expenses 391 520 899 59 (26)
Other liabilities 38 (178) (93) 312 359
--------------------------------- --------------------
Net cash provided by (used in)
operating activities 743 (226) 1,019 502 7
--------------------------------- --------------------
Investing Activities
Property acquisition, development and
construction (3,889) (17,297) (30,840) (14,414) (6,900)
Proceeds from sale of property - - 14,824 - -
--------------------------------- --------------------
Net cash used in investing activities (3,889) (17,297) (16,016) (14,414) (6,900)
--------------------------------- --------------------
Financing Activities
Line of credit proceeds (repayments), net (476) (185) 1,095 832 888
Proceeds from mortgage, construction and
other notes payable 27,101 42,280 27,331 12,908 12,661
Payments of mortgage, construction and
other notes payable (22,139) (21,844) (12,218) (1,397) (6,716)
Proceeds from related party notes payable 2,338 2,202 841 - 146
Repayments of related party notes payable (2,873) (1,848) (902) - -
Deferred financing costs (373) (915) (303) (35) (121)
Distributions to owners (20) (441) (2,269) (336) (472)
--------------------------------- --------------------
Net cash provided by financing activities 3,558 19,249 13,575 11,972 6,386
--------------------------------- --------------------
Increase (decrease) in cash and cash
equivalents 412 1,726 (1,422) (1,940) (507)
Cash and cash equivalents, beginning of
period 67 479 2,205 2,205 783
--------------------------------- --------------------
Cash and cash equivalents, end of period $ 479 $ 2,205 $ 783 $ 265 $ 276
================================= ====================
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
LICHTIN PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Lichtin Properties (the "Company") represents the combined office and
industrial building development, construction and management operations of
Lichtin Properties, Inc. and its affiliated partnerships and corporations. The
Company began operations in 1977 and is owned primarily by members of two
families. The accompanying combined financial statements include the financial
condition and results of operations of the following entities:
Lichtin Properties, Inc. (a Subchapter S corporation)
Morrisville Industrial Associates (a general partnership)
Perimeter Park Associates (a general partnership)
Perimeter Park West Associates Limited Partnership
Interchange Associates Limited Partnership
Woodlake Limited Liability Company
Interchange II LLC
Woodlake II LLC
6501 Weston Parkway LLC
Woodlake III LLC (formed in 1996)
As of December 31, 1995, the Company owned and managed 22 warehouse and
office buildings comprising approximately 1.5 million square feet located in
central North Carolina's Research Triangle Area. In addition, three buildings
were under development or in lease-up comprising an additional 280,000 square
feet.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Combination
The accompanying financial statements of the Company have been presented on
a combined basis because of the common ownership, control and management and
because the entities are expected to be the subject of a business combination
with a real estate investment trust (see Note 9). All significant intercompany
balances and transactions have been eliminated in the combined financial
statements.
Real Estate Assets
Real estate assets are stated as the lower of depreciated cost or net
realizable value. Major improvements and replacements are capitalized and
depreciated over their estimated useful lives when they extend the useful life,
increase capacity or improve efficiency of the related asset. All other
repairs and maintenance are expensed as incurred. Costs related to the
acquisition, planning, development and construction of buildings and
improvements, including overhead costs, interest, property taxes and insurance
incurred during the construction period are capitalized.
<PAGE>
Depreciation is calculated using the straight-line method over 35 years for
buildings and improvements. Tenant improvements are capitalized and
depreciated using the straight-line method over the term of the related lease.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents
include overnight investments in North Carolina municipal bonds. The Company
maintains, from time to time, cash deposits in excess of federally insured
amounts at one banking institution.
Revenue Recognition
All leases are classified as operating leases and the related rental income
is recognized on a straight-line basis over the terms of the respective leases.
Straight-line rent receivables totaled $611,000 and $868,000 as of December 31,
1994 and 1995, respectively. Tenant reimbursements for property taxes and
other recoverable expenses are recognized as revenues in the period the
applicable expenses are incurred. Uncollectible tenant receivables are charged
to expense in the period that they are deemed uncollectible by management.
Deferred Costs
Costs incurred to procure operating leases are capitalized and amortized on
a straight-line basis over the terms of the related leases. Costs incurred in
conjunction with financing arrangements are capitalized and amortized over the
related loan terms using a method approximating the interest method.
Unamortized lease and financing costs are written off upon the early
termination of the related lease or loan agreement.
Sales of Real Estate
Sales of real estate are accounted for under the full accrual method. Under
that method, gain is not recognized until the collectibility of the sales price
is reasonably assured and the earnings process is virtually complete. When a
sale does not meet the requirements for income recognition, gain is deferred
until those requirements are met.
Income Taxes
The Company is not a legal entity subject to income taxes. The combined
entities consist of a subchapter S corporation, limited liability companies,
and limited and general partnerships whose owners are taxed on their
proportionate share of each legal entity's taxable income (loss). Therefore,
no provision or liability for income taxes has been included in the
accompanying combined financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
<PAGE>
assumptions that affect the amounts reported in the financial statements and
disclosures made in the accompanying notes to the financial statements. Actual
results could differ from those estimates.
Recent Accounting Pronouncements
In March 1995, SFAS 121, "Accounting for the Impairment of Long-lived Assets
and for Long-lived Assets to be Disposed Of," was issued. SFAS 121 established
new standards on how impairment losses on long-lived assets, including real
estate assets, should be measured. The Company adopted SFAS 121 in the first
quarter of 1996 resulting in no impact on its combined financial statements.
Unaudited Interim Financial Statements
The combined financial statements for the six months ended June 30, 1995 and
1996 are unaudited; however, they have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the combined
financial statements for these interim periods have been included. The results
for the interim periods ended June 30, 1995 and 1996 are not necessarily
indicative of the results to be obtained for the full fiscal years ending
December 31, 1995 and 1996, respectively.
3. DEFERRED COSTS
Deferred costs at December 31, 1994 and 1995 consist of the following (in
thousands):
1994 1995
------------------
Deferred lease costs $ 2,150 $ 2,630
Deferred financing costs 1,750 1,595
------------------
3,900 4,225
Less accumulated amortization (1,198) (1,015)
------------------
$ 2,702 $ 3,210
==================
4. INDEBTEDNESS
As of December 31, 1995, the Company had outstanding borrowings of
$2,519,000 under a $3,150,000 revolving line of credit facility, which is used
for construction, development and general operating purposes. The line of
credit is secured by 96 acres of land and is guaranteed by the two principal
owners of the Company. Minimum monthly payments are $40,000, including
interest at the lender's prime rate (8.5% at December 31, 1995). The line of
credit matures in March 1998.
<PAGE>
The Company's mortgage, construction and other notes payable at December
31, 1994 and 1995 consist of the following (in thousands):
<TABLE>
<CAPTION>
1994 1995
-----------------
<S> <C> <C>
Mortgage note, payable monthly, including interest at
9.24%, due in 2004 $16,380 $16,220
Mortgage note, payable monthly, including interest at
9.625%, due in 2000 13,420 13,267
Mortgage note, payable monthly, including interest at
10.15%, due in 1997 5,249 5,217
Mortgage note, payable monthly, including interest at
9.5%(a) 4,258 4,217
Mortgage note, payable monthly, including interest at
8.625% due in 2012 3,969 3,869
Mortgage note, payable monthly, including interest at
8.625%, due in 2000(b)(c) 3,572 3,522
Mortgage note, payable monthly, including interest at
9.625%, due in 1996(c) 3,487 3,438
Mortgage note, payable monthly, including interest at
9.89%(a) 3,135 3,107
Mortgage note, payable monthly, including interest at
9.6%, due in 1996(e) 3,027 2,991
Mortgage note, payable monthly, including interest at
9%, due in 2003(b) 2,970 2,947
Mortgage note, payable monthly, including interest at
9.375%, due in 1999(b) 2,951 2,927
Mortgage note, payable monthly, including interest at
9.375%, due in 1999 2,754 2,732
Mortgage note, payable monthly, including interest at
7.625%, due in 2001(b) 2,816 2,707
Construction loans, interest payable at LIBOR plus 2.5% to
bank prime plus 1/2% (8% to 9% at December 31, 1995),
due from 1996 to 2000(b)(d) 2,796 18,580
Notes payable, due monthly, interest ranging from 6% to
bank prime rate, due from 1996 to 1998 172 347
Equipment obligation, payable monthly, including interest
at 9.5%, due in 1998 81 63
--------------------
$71,039 $86,151
====================
</TABLE>
(a) Notes were refinanced in 1996. Principal and interest are payable
monthly at 8.0%, due in 2006.
(b) Notes are partially or fully guaranteed by certain Company owners.
(c) Notes were refinanced and combined into one note in August 1996.
Principal and interest are payable monthly at 8.25%, due in 2006.
(d) One construction loan totaling $5,547,000 at December 31,1995 and due in
1996 was refinanced in September 1996. Principal and interest under the
new mortgage note are payable monthly at 9.5%, due in 2006.
(e) Note was refinanced in November 1996 with a nine-month term loan bearing
interest at LIBOR plus 2.20%.
<PAGE>
Scheduled maturities of notes payable at December 31, 1995 are as follows
(in thousands):
1996 $20,424
1997 6,582
1998 1,815
1999 7,049
2000 27,188
Thereafter 23,093
-------
$86,151
=======
Substantially all of the Company's net real estate assets at December 31,
1995, were pledged as collateral under notes payable. Interest capitalized
totaled $73,000, $443,000 and $976,000 for the years ended December 31, 1993,
1994 and 1995, respectively. Interest paid totaled $4,907,000, $5,461,000 and
$7,451,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
5. RELATED PARTY TRANSACTIONS
Amounts receivable from and payable to related parties (primarily from two
families which are the principal owners of the Company) at December 31, 1994
and 1995 were as follows (in thousands):
1994 1995
--------------
Accounts receivable $ 109 $ 116
Accounts payable 252 299
Notes payable and accrued interest 7,242 8,241
The related party notes payable and compounded interest accrue interest at
rates ranging from 5% to 7%, and are due on demand. Generally, the notes and
accrued interest are unsecured, however, certain amounts are secured by a
second priority lien on certain of the Company's land held for development.
Other related party transactions for the years ended December 31, 1993, 1994
and 1995, respectively were as follows (in thousands):
1993 1994 1995
--------------------
Development fees payable
to principal owner $231 $1,000 $ 687
Interest expense 310 332 395
Equipment rent expense 174 175 223
Lease commissions - - 114
<PAGE>
6. LEASING ACTIVITY
Future minimum rents receivable in accordance with tenant lease terms under
noncancelable operating leases as of December 31, 1995 (assuming no renewals)
are as follows:
1996 $11,517
1997 11,987
1998 10,950
1999 10,266
2000 8,911
Thereafter 26,750
------
$80,381
=======
Rents and tenants reimbursement revenue from one tenant with leases in six
of the Company's buildings totaled 53%, 47% and 36% of total rental and tenant
reimbursement revenue for the years ended December 31, 1993, 1994 and 1995,
respectively. Accounts receivable from this tenant at December 31, 1994 and
1995 amounted to 17% and 6%, respectively, of the Company's tenant receivable
balances (including straight-line rents receivable) at such dates. Future
minimum rents receivable from this tenant under noncancelable operating leases
as of December 31, 1995, represent 24% in 1996, 23% in 1997, 25% in 1998, 27%
in 1999, 31% in 2000, and 47% thereafter, of total future minimum rents
receivable. The lease agreements with this tenant expire in 2005, however, the
tenant has early termination options effective on June 30, 1998 and June 30,
2000. Both termination options require one year advance written notice from
the tenant.
7. EMPLOYEE BENEFIT PLAN
The Company sponsors a 401(k) retirement savings plan covering substantially
all employees meeting certain age and service requirements. Employees may
contribute up to the lesser of 15% of their annual compensation or the annual
statutory limit ($9,240 in 1995) to the plan. The Company's contributions are
made on a discretionary basis up to a maximum of 100% of the employees'
contributions. Total contributions were $6,000, $6,000 and $6,000 in 1993,
1994 and 1995, respectively.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Based on interest rates and other pertinent information available to the
Company at December 31, 1995, the Company estimates that the carrying value of
cash and cash equivalents, accounts receivable, notes payable, line of credit
borrowings and other liabilities approximate their fair values when compared to
instruments of similar type, terms and maturity. None of the Company's
financial instruments are held for trading purposes. The carrying amount of
related party accounts receivable and payable, and related party notes and
accrued interest payable approximated fair value at the time of the
transactions, however, such amounts have not been revalued by a party
independent of management.
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1995. Although
management is not aware of any factors that would significantly affect its
<PAGE>
estimated fair value of amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.
9. PROPOSED MERGER
On August 12, 1996, the Company announced it had reached an agreement to
contribute substantially all of its assets and operations to a real estate
investment trust ("Weeks Corporation") in a staged transaction for expected
aggregate consideration of approximately $164 million, upon its completion. The
transaction will generally be structured in the form of a merger of ownership
interests.
<PAGE>
WEEKS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
Lichtin
NWI Properties
Company Acquisition Acquisition Principal Pro Forma
(Unaudited, in thousands.) Historical(a) Historical(b) Historical(c) Properties(d) Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Land $ 43,207 $ 17,342 $ 4,422 $ 4,353 $ 7,999 (e) $ 77,323
Building and improvements 272,753 41,817 86,648 26,602 16,560 (e) 444,380
Accumulated depreciation (35,029) (7,181) (19,244) -- 26,425 (e) (35,029)
- -----------------------------------------------------------------------------------------------------------------------------
Operating real estate assets 280,931 51,978 71,826 30,955 50,984 486,674
- -----------------------------------------------------------------------------------------------------------------------------
Development in progress 28,307 10,255 3,524 -- (13,779) (j) 28,307
Land held for future development 4,208 7,037 2,017 -- (8,054) (e) 5,208
- -----------------------------------------------------------------------------------------------------------------------------
Net real estate assets 313,446 69,270 77,367 30,955 29,151 520,189
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 107 2,669 276 -- (2,312) (j) 740
Direct financing lease 5,188 -- -- -- -- 5,188
Deferred costs, net 9,486 875 3,564 -- (4,439) (j) 9,486
Investments in and notes receivable
from unconsolidated subsidiaries 7,639 -- -- -- -- 7,639
Receivables and other assets 11,929 1,093 2,327 -- (3,308) (e)(j) 12,041
- -----------------------------------------------------------------------------------------------------------------------------
Total Assets $347,795 $73,907 $ 83,534 $30,955 $ 19,092 $555,283
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities & Shareholders'
Equity
Mortgage notes payable $112,785 $50,269 $ 92,096 $ -- $(28,525) (f) $226,625
Bank credit facility borrowings 65,685 1,500 3,407 30,955 10,200 (g) 111,747
Notes payable -- related parties
and other -- 2,459 8,819 -- (11,278) (j) --
Accounts payable and accrued
expenses 7,250 2,313 3,155 -- (5,468) (j) 7,250
Other liabilities 1,819 155 478 -- -- 2,452
- -----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 187,539 56,696 107,955 30,955 (35,071) 348,074
- -----------------------------------------------------------------------------------------------------------------------------
Minority Interests in
Operating Partnership 30,034 -- -- -- 28,943 (h) 58,977
- -----------------------------------------------------------------------------------------------------------------------------
Shareholders' and Owners' Equity
Common Stock 112 -- -- -- -- 112
Preferred Stock -- -- -- -- -- --
Additional paid-in capital 191,263 -- -- -- -- 191,263
Accumulated deficit (61,153) -- -- -- 18,010 (i) (43,143)
Owners' equity -- 17,211 (24,421) -- 7,210 (j) --
- -----------------------------------------------------------------------------------------------------------------------------
Total Shareholders' and
Owners' Equity 130,222 17,211 (24,421) -- 25,220 148,232
- -----------------------------------------------------------------------------------------------------------------------------
Total Liabilities and
Shareholders' and Owners'
Equity $347,795 $ 73,907 $ 83,534 $30,955 $ 19,092 $555,283
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
Weeks Corporation
Notes and Assumptions to Unaudited Pro Forma
Condensed Consolidated Balance Sheet as of
June 30, 1996
1. Basis of Presentation
The unaudited pro forma condensed consolidated balance sheet is presented as
if the Company acquired as of June 30, 1996, the business operations and real
estate assets of Lichtin Properties (described in this Current Report on Form
8-K), the business operations and real estate assets of NWI (described in a
separate Current Report on Form 8-K of the Company dated November 1, 1996), and
the Principal Properties (described in the Company's Current Report on Form 8-K
dated August 9, 1996). The unaudited pro forma condensed consolidated balance
sheet is not necessarily indicative of what the actual financial position would
have been at June 30, 1996, nor does it purport to represent the future
financial position of the Company.
The unaudited pro forma condensed consolidated balance sheet should be read
in conjunction with the unaudited pro forma condensed consolidated statements
of operations of the Company included herein, the consolidated financial
statements and accompanying notes thereto of the Company included in its Annual
Report on Form 10-K for the year ended December 31, 1995, and the unaudited
condensed consolidated financial statements and accompanying notes thereto of
the Company included in its June 30, 1996 Quarterly Report on Form 10-Q.
The unaudited pro forma amounts of Lichtin Properties and NWI reflected in
the June 30, 1996 pro forma condensed consolidated balance sheet include the
operating businesses, land and the office and industrial properties to be
acquired or acquired at the respective initial closing dates of each
acquisition. The Northern Telecom Properties, office and industrial properties
under development and land held for future development of Lichtin Properties
and NWI to be acquired subsequent to the initial closing dates discussed herein
and in the separate Current Report on Form 8-K of the Company dated November 1,
1996 relating to NWI have been excluded from the accompanying pro forma amounts
as of June 30, 1996.
The acquisitions of Lichtin Properties, NWI and the Principal Properties
have been accounted for under the purchase method of accounting. Accordingly,
assets acquired and liabilities assumed have been or will be recorded at their
estimated fair values which may be subject to further modification based upon
the final terms of the Lichtin Properties' transaction and the final
determination of actual closing costs associated with each of the Lichtin
Properties and NWI transactions. Management believes that its final allocation
of the purchase price will not differ materially from the purchase price
allocations included herein.
<PAGE>
2. Assumptions to the Unaudited Pro Forma Condensed Consolidated Balance
Sheet
(a) Represents the Company's historical unaudited condensed consolidated
balance sheet contained in its Quarterly Report on Form 10-Q as of June
30, 1996.
(b) Represents the historical unaudited combined balance sheet of NWI as of
June 30, 1996, as set forth in Exhibit A to the Company's Current
Report on Form 8-K dated November 1, 1996, relating to the NWI
acquisition.
(c) Represents the historical unaudited combined balance sheet of Lichtin
Properties as of June 30, 1996, included herein in Exhibit A.
(d) Represents the aggregate purchase price, including closing costs and
acquisition expenses, of the Principal Properties of $30,955,000 funded
through borrowings under the Company's revolving credit facility, as
set forth in the Company's Current Report on Form 8-K dated August 9,
1996, relating to the Principal acquisition.
(e) Represents the adjustments to reflect the estimated initial purchase
price of the Lichtin Properties business operations and real estate
assets of $104,900,000 and the NWI business operations and real estate
assets of $71,000,000, including estimated closing costs and
acquisition expenses. Approximately $112,000 of the purchase price
relating to furniture and equipment is included in receivables and
other assets.
(f) Represents the adjustment to reflect the assumption of mortgage,
construction and other notes payable of Lichtin of $71,644,000 (as of
June 30, 1996) and of NWI of $42,196,000 (as of June 30, 1996). The
weighted average interest rate was 8.4% on the Lichtin Properties debt
and 8.5% on the NWI debt.
(g) Represents the assumption of $3,407,000 of Lichtin Properties' line
of credit borrowings and borrowings of $11,700,000 under the Company's
revolving credit facility to fund the cash component of the Lichtin
Properties transaction and closing costs of the NWI and Lichtin
Properties transactions.
(h) Represents the issuance of an estimated 778,000 Units with an agreed
upon value for purposes of the initial closing of the Lichtin
Properties transaction of $25.25 per Unit, and 1,092,000 Units with an
agreed upon value for purposes of the initial closing of the NWI
transaction of $25.00 per Unit. The resulting consolidated pro forma
minority interest balance was adjusted to reflect the consolidated pro
forma minority interest percentage of 28.46% at June 30, 1996 as
follows (in thousands):
Value of Lichtin Properties Units $ 19,649
Value of NWI Units 27,304
Reclassification to shareholders' equity (18,010)
---------
$ 28,943
=========
(i) Represents the adjustment to state the consolidated pro forma
shareholders' equity balance and minority interest balance to 71.54%
and 28.46%, respectively, of the total consolidated pro forma equity
interests (both shareholders' equity and minority interests) in the
Company.
<PAGE>
(j) Represents adjustments to eliminate certain asset and liability amounts
that are not acquired or assumed as part of the Lichtin Properties and
NWI transactions or which are not being acquired or assumed as part of
the initial closings of the acquisition transactions reflected in this
pro forma balance sheet.
<PAGE>
WEEKS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Lichtin
NWI Properties Principal
(Unaudited, in thousands, except Company Acquisition Acquisition Properties Pro Forma
per share data) Historical(a) Historical(b) Historical(c) Historical(d) Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Rental income $21,943 $3,675 $ 5,609 $1,639 $(1,793) (e) $31,073
Tenant reimbursements 2,007 662 1,709 137 (993) (e) 3,522
Income from direct financing
lease 384 -- -- -- -- 384
Other 174 134 53 -- 182 (k) 543
- -----------------------------------------------------------------------------------------------------------------------------
Total Revenue 24,508 4,471 7,371 1,776 (2,604) 35,522
- -----------------------------------------------------------------------------------------------------------------------------
Expenses
Property operating and
maintenance 2,687 426 1,700 197 (811) (e) 4,199
Real estate taxes 2,153 335 494 146 (185) (e) 2,943
Depreciation and amortization 6,000 928 1,840 -- 493 (f) 9,261
Interest 4,955 2,094 3,893 -- (256) (g) 10,686
Amortization of deferred
financing costs 421 54 107 -- (161) (g) 421
General and administrative 1,414 325 568 -- -- 2,307
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 17,630 4,162 8,602 343 (920) 29,817
- -----------------------------------------------------------------------------------------------------------------------------
Operating Income 6,878 309 (1,231) 1,433 (1,684) 5,705
Interest income 198 445 13 -- (458) (h) 198
Equity in earnings of
unconsolidated subsidiaries 543 -- -- -- -- 543
- -----------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 7,619 754 (1,218) 1,433 (2,142) 6,446
Income Taxes -- (48) -- -- 48 (i) --
- -----------------------------------------------------------------------------------------------------------------------------
Income before Minority Interests 7,619 706 (1,218) 1,433 (2,094) 6,446
Minority Interests (1,426) -- -- -- (409) (j) (1,835)
- -----------------------------------------------------------------------------------------------------------------------------
Net Income $ 6,193 $ 706 $(1,218) $1,433 $(2,503) $ 4,611
- -----------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net Income $0.56 -- -- -- -- $ 0.41
- -----------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares
Outstanding 11,156 -- -- -- -- 11,156
- -----------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares
and Units Outstanding 13,723 1,092 778 -- -- 15,593
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
Weeks Corporation
Notes and Assumptions to Unaudited Pro Forma
Condensed Consolidated Statement of Operations
for the Six Months ended June 30, 1996
1. Basis of Presentation
The unaudited pro forma condensed consolidated statement of operations for
the six months ended June 30, 1996 is presented as if the Company acquired as
of January 1, 1996 the business operations and real estate assets of Lichtin
Properties (described in this Current Report on Form 8-K), the business
operations and real estate assets of NWI (described in a seperate Current
Report on Form 8-K of the Company dated November 1, 1996) and the Principal
Properties (described in the Company's Current Report on Form 8-K dated August
9, 1996). In management's opinion, all adjustments necessary to present fairly
the effects of these acquisitions have been made.
This unaudited pro forma condensed consolidated statement of operations
should be read in conjunction with unaudited pro forma condensed consolidated
balance sheet of the Company included herein, the consolidated financial
statements and accompanying notes thereto of the Company included in its Annual
Report on Form 10-K for the year ended December 31, 1995, and the unaudited
condensed consolidated financial statements and accompanying notes thereto of
the Company included in its June 30, 1996 Quarterly Report on Form 10-Q.
This unaudited pro forma condensed consolidated statement of operations is
not necessarily indicative of what the actual results of operations of the
Company would have been assuming the Company had acquired Lichtin Properties,
NWI and the Principal Properties (as described above) as of the beginning of
the period presented, nor do they purport to represent the results of
operations for future periods.
The unaudited historical results of operations of Lichtin Properties
included herein have been adjusted to reflect on a pro forma basis the
operating business, land and office and industrial properties to be acquired at
the initial closing of the Lichtin Properties transaction which is probable to
occur in December 1996, or January 1997. Certain of Lichtin Properties'
buildings leased to Northern Telecom, certain other of Lichtin Properties'
office and industrial properties under development or in lease-up and land held
for development and their associated results of operations to be acquired
subsequent to the proposed initial closing date discussed herein have been
excluded from the accompanying pro forma amounts for the period presented.
The unaudited historical results of operations of NWI included in a separate
Current Report on Form 8-K of the Company dated November 1, 1996 have been
adjusted to reflect on a pro forma basis the operating business, land and
industrial properties acquired at the initial closing of the acquisition
transaction on November 1, 1996. NWI's industrial properties under development
and land held for future development and their associated results of operations
to be acquired subsequent to November 1, 1996 discussed in the separate Current
Report on Form 8-K dated November 1, 1996 relating to NWI have been excluded
from the accompanying pro forma amounts for the period presented.
<PAGE>
2. Assumption to the Unaudited Pro Forma Condensed Consolidated Statement of
Operations
(a) Represents the Company's unaudited condensed consolidated historical
statement of operations contained in its Quarterly Report on Form 10-Q
for the six months ended June 30, 1996.
(b) Represents the historical unaudited combined statement of operations of
NWI for the six months ended June 30, 1996, as set forth in Exhibit A to
the Company's Current Report on Form 8-K dated November 1, 1996 relating
to the NWI acquisition.
(c) Represents the historical unaudited combined statement of operations of
Lichtin Properties for the six months ended June 30, 1996, included
herein in Exhibit A.
(d) Represents the historical unaudited rental income, tenant
reimbursements, real estate taxes and property operating and maintenance
expenses of the Principal Properties for the six months ended June 30,
1996, as set forth in the Company's Current Report on Form 8-K dated
August 9, 1996, relating to the Principal acquisition.
(e) Represents the net adjustment to reduce rental income, tenant
reimbursements, real estate taxes and property operating and maintenance
expenses for the results of operations of certain of Lichtin Properties
buildings leased to Northern Telecom, certain properties of Lichtin
Properties and NWI under development or in lease-up and expenses
associated with land held for development which are to be acquired
subsequent to the initial closing dates of the Lichtin Properties and
NWI acquisitions, as shown below (in thousands):
Lichtin
Properties NWI Total
---------- ---- ------
Rental income $1,462 $331 $1,793
Tenant reimbursements 952 41 993
Property operating and
maintenance expenses 752 59 811
Real estate taxes 149 36 185
(f) Represents the adjustment to reflect depreciation and amortization
expense of the acquired properties (consisting of properties to be
acquired and acquired at the initial closing dates for the Lichtin
Properties and NWI acquisitions and the closing of the Principal
Properties) based upon the assumed allocation of the acquisition price
to land, buildings and improvements, using a 35 year life for buildings
and the life of the lease for tenant improvements. Aggregate pro forma
depreciation and amortization expense for the six months ended June 30,
1996 was $1,623,000, $1,122,000 and $516,000 for Lichtin Properties,
NWI and the Principal Properties, respectively.
(g) Represents the adjustment of interest expense and the amortization of
deferred financing costs to reflect interest on notes payable and bank
line of credit borrowings to be assumed or assumed at the initial
closing dates in the Lichtin Properties and NWI transactions, interest
<PAGE>
costs associated with additional borrowings under the Company's
revolving credit facility of $30.9 million at 7.0% for the purchase of
the Principal Properties and interest costs associated with additional
borrowings under the Company's revolving credit facility of $11.7
million at 7.0% to fund the cash portion of the Lichtin Properties
initial closing price and cash closing and acquisition expenses of the
Lichtin Properties and NWI transactions.
(h) Represents the adjustment to eliminate interest income included in the
NWI and Lichtin Properties historical amounts as the notes receivable
and cash balances are not being acquired by the Company.
(i) Represents the adjustment to eliminate income tax expense as the Company
has and expects to continue to qualify as a real estate investment
trust.
(j) Represents the net adjustment of pro forma minority interest to adjust
the pro forma consolidated minority interest amount to reflect the
weighted average ownership percentage of the Unitholders in the
Operating Partnership of 28.46% for the six months ended June 30, 1996.
(k) Represents the reduction of general and administrative expenses
resulting from the payment by Lichtin Properties to the Company of
management fees and overhead cost reimbursements relating to the
Company's management of certain buildings leased to Northern Telecom for
periods subsequent to the initial closing date of the Lichtin Properties
transaction.
<PAGE>
WEEKS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Lichtin
NWI Properties Principal
(Unaudited, in thousands, Company Acquisition Acquisition Properties Pro Forma
except per share data) Historical(a) Historical(b) Historical(c) Historical(d) Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Rental income $31,217 $ 5,836 $10,245 $ 3,235 $(3,065) (e) $47,468
Tenant reimbursements 2,464 994 3,374 281 (2,046) (e) 5,067
Income from direct financing lease 776 -- -- -- -- 776
Other 480 348 24 -- 365 (l) 1,217
- -----------------------------------------------------------------------------------------------------------------------------
Total Revenue 34,937 7,178 13,643 3,516 (4,746) 54,528
- -----------------------------------------------------------------------------------------------------------------------------
Expenses
Property operating and maintenance 3,565 762 3,029 455 (1,770) (e) 6,041
Real estate taxes 2,997 642 817 293 (337) (e) 4,412
Depreciation and amortization 8,177 1,572 3,264 -- 1,685 (f) 14,698
Interest 8,106 3,093 7,094 -- (277) (g) 18,016
Amortization of deferred
financing costs 691 93 191 -- (284) (g) 691
General and administrative 1,848 643 1,154 -- -- 3,645
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 25,384 6,805 15,549 748 (983) 47,503
- -----------------------------------------------------------------------------------------------------------------------------
Operating Income 9,553 373 (1,906) 2,768 (3,763) 7,025
Gain on sale of property -- -- 1,245 -- (1,245) (h) --
Interest income 334 1,117 18 -- (1,135) (i) 334
Equity in earnings of
unconsolidated subsidiaries 1,220 -- -- -- -- 1,220
- -----------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 11,107 1,490 (643) 2,768 (6,143) 8,579
Income Taxes -- (102) -- -- 102 (j) --
- -----------------------------------------------------------------------------------------------------------------------------
Income before Minority Interests 11,107 1,388 (643) 2,768 (6,041) 8,579
Minority Interests (2,681) -- -- -- (362) (k) (3,043)
- -----------------------------------------------------------------------------------------------------------------------------
Net Income $ 8,426 $ 1,388 $ (643) $ 2,768 $(6,403) $ 5,536
- -----------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net Income $ 1.03 -- -- -- -- $ 0.68
- -----------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding 8,171 -- -- -- -- 8,171
- -----------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares
and Units Outstanding 10,760 1,092 778 -- -- 12,630
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
Weeks Corporation
Notes and Assumptions to Unaudited Pro Forma
Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1995
1. Basis of Presentation
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1995 is presented as if the Company acquired as of
January 1, 1995 the business operations and real estate assets of Lichtin
Properties (described in this Current Report on Form 8-K), the business
operations and real estate assets of NWI (described in a separate Current
Report on Form 8-K of the Company dated November 1, 1996) and the Principal
Properties (described in the Company's Current Report on Form 8-K dated August
9, 1996). In management's opinion, all adjustments necessary to present fairly
the effects of these acquisitions have been made.
This unaudited pro forma condensed consolidated statement of operations
should be read in conjunction with unaudited pro forma condensed consolidated
balance sheet of the Company included herein and the consolidated financial
statements and accompanying notes thereto of the Company included in its Annual
Report on Form 10-K for the year ended December 31, 1995.
The unaudited pro forma condensed consolidated statement of operations is
not necessarily indicative of what the actual results of operations of the
Company would have been assuming the Company had acquired Lichtin Properties,
NWI and the Principal Properties (as described above) as of the beginning of
the period presented, nor do they purport to represent the results of
operations for future periods.
The historical results of operations of Lichtin Properties included herein
have been adjusted to reflect on a pro forma basis the operating business, land
and office and industrial properties to be acquired at the initial closing of
the Lichtin Properties transaction which is probable to occur in December 1996,
or January 1997. Certain of Lichtin Properties' buildings leased to Northern
Telecom, certain other of Lichtin Properties' office and industrial properties
under development or in lease-up and land held for development and their
associated results of operations to be acquired subsequent to the initial
closing date discussed herein have been excluded from the accompanying pro
forma amounts for the period presented.
The unaudited historical results of operations of NWI included in a separate
Current Report on Form 8-K of the Company dated November 1, 1996 have been
adjusted to reflect on a pro forma basis the operating business, land and
industrial properties acquired at the initial closing of the acquisition
transaction on November 1, 1996. NWI's industrial properties under development
and land held for future development and their associated results of operations
to be acquired subsequent to November 1, 1996 discussed in the separate Current
Report on Form 8-K dated November 1, 1996 relating to NWI have been excluded
from the accompanying pro forma amounts for the period presented.
<PAGE>
2. Assumptions to the Unaudited Pro Forma Condensed Consolidated Statement
of Operations
(a) Represents the Company's historical consolidated historical statement of
operations contained in its Annual Report on Form 10-K for the year
ended December 31, 1995.
(b) Represents the historical combined statement of operations of NWI for
the year ended December 31, 1995, as set forth in Exhibit A to the
Company's Current Report on Form 8-K dated November 1, 1996 relating to
the NWI acquisition.
(c) Represents the historical combined statement of operations of Lichtin
Properties for the year ended December 31, 1995, included herein in
Exhibit A.
(d) Represents the historical rental income, tenant reimbursements, real
estate taxes and property operating and maintenance expenses for the
Principal Properties for the year ended December 31, 1995, as set forth
in the Company's Current Report on Form 8-K dated August 9, 1996,
relating to the Principal acquisition.
(e) Represents the net adjustment to reduce rental income, tenant
reimbursements, real estate taxes and property operating and maintenance
expenses for the results of operations of certain of Lichtin Properties
buildings leased to Northern Telecom, certain properties of Lichtin
Properties and NWI under development or in lease-up and expenses
associated with land held for development which are to be acquired
subsequent to the initial closing dates of the Lichtin Properties and
NWI acquisitions as shown below (in thousands):
Lichtin
Properties NWI Total
---------- ---- ------
Rental income $2,943 $122 $3,065
Tenant reimbursements 2,035 11 2,046
Property operating and
maintenance expenses 1,741 29 1,770
Real estate taxes 304 33 337
(f) Represents the adjustment to reflect depreciation and amortization
expense of the acquired properties (consisting of properties to be
acquired and acquired at the initial closing dates for the Lichtin
Properties and NWI acquisitions and the closing of the Principal
Properties) based upon the assumed allocation of the acquisition price
to land, buildings and improvements using a 35 year life for buildings
and the life of the lease for tenant improvements. Aggregate pro forma
depreciation and amortization expense for the year ended December 31,
1995 was $3,245,000 $2,243,000, and $1,033,000 for Lichtin Properties,
NWI and the Principal Properties, respectively.
(g) Represents the adjustment of interest expense and the amortization of
deferred financing costs to reflect interest on notes payable and bank
line of credit borrowings to be assumed or assumed at the initial
closing dates of the Lichtin Properties and NWI transactions, interest
costs
<PAGE>
associated with additional borrowings under the Company's revolving
credit facility of $30.9 million at 7.0% for the purchase of the
Principal Properties and interest costs associated with additional
borrowings under the Company's revolving credit facility of $11.7
million at 7.0% to fund the cash portion of the Lichtin Properties
initial closing price and cash closing and acquisition expenses of the
Lichtin Properties and NWI transactions.
(h) Represents the adjustment to eliminate the gain on sale of property as
the property was not part of the Lichtin Properties acquisition
transaction.
(i) Represents the adjustment to eliminate interest income included in the
NWI and Lichtin Properties historical amounts as the notes receivable
and cash balances are not being acquired by the Company.
(j) Represents the adjustment to eliminate income tax expense as the Company
has and expects to continue to qualify as a real estate investment
trust.
(k) Represents the net adjustment of pro forma minority interest to adjust
the pro forma consolidated minority interest amount to reflect the
weighted average ownership percentage of the Unitholders in the
Operating Partnership of 35.47% for the year ended December 31, 1995.
(l) Represents the reduction of general and administrative expenses
resulting from the payment by Lichtin Properties to the Company of
management fees and overhead cost reimbursements relating to the
Company's management of certain buildings leased to Northern Telecom for
periods subsequent to the initial closing date of the Lichtin Properties
transaction.
<PAGE>
Exhibit Index
-------------
A Financial statements required by Item 7(a)
B Pro forma financial information required by Item 7(b)
10.1 Letter of Intent between Weeks Realty, L.P. and Lichtin
Properties, Inc., dated July 3, 1996.
23.1 Consent of Arthur Andersen LLP
<PAGE>
July 3, 1996
HIGHLY CONFIDENTIAL
- -------------------
Mr. Harold S. Lichtin
Lichtin Properties, Inc.
1800 Perimeter Park Drive
Suite 200
Morrisville, North Carolina 27560
Mr. Lichtin:
This letter will summarize the general terms and conditions for the
combination of our respective organizations.
1. General Statement.
-----------------
a) The real estate and operating assets and related liabilities (with
exceptions noted herein) of Lichtin Properties, Inc. and its related
entities (collectively "Lichtin"), will be contributed to Weeks
Realty, L.P. or one or more of its subsidiaries or affiliates
("Weeks") in several stages as described in this letter of intent in
exchange for Limited Partnership Interests in Weeks and, under certain
limited circumstances, cash. The transaction includes:
i) Acquisition of seventeen (17) completed properties at the
initial closing;
ii) Acquisition of six (6) properties currently leased to Northern
Telecom;
iii) Acquisition of four (4) properties currently under construction,
development or lease-up;
iv) Acquisition in stages of the undeveloped tracts at Metro Center,
Perimeter Park and Perimeter Park West;
v) Acquisition of the undeveloped building sites and related land
at Regency Forest and Woodlake;
vi) Acquisition of the options on the Paramount Center and Woodlake
undeveloped tracts;
vii) Acquisition of the Lichtin real estate operating business;
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 2
viii) Mr. Lichtin becoming a senior officer and director of Weeks
Corporation; and
ix) Integration of the other employees of the Lichtin real estate
operating business into Weeks Realty, L.P.
b) All of the property, land, assets and operating business included in
the scope of the transactions herein described are owned by the
persons and entities identified on Schedule 1 hereto, and are managed
----------
exclusively through, Lichtin. For purposes of this letter of intent
the term "Lichtin" includes the persons and entities owning the
Completed Properties, Development Properties, Northern Telecom
Properties, land and other assets and businesses as described on
Schedule 1 hereto and are encompassed in the definition of Lichtin and
----------
the relevant assets and operations of such affiliates are intended to
be included in the scope of these transactions.
c) Unless this letter of intent is otherwise terminated as provided
herein, a definitive, legally binding agreement (the "Contribution
Agreement") will be executed by Weeks and Lichtin to provide for the
closing of the transactions and the other terms and conditions
described herein pursuant to the timetable set out below.
2. Acquisition of Completed Properties.
-----------------------------------
a) Completed Properties Described. Seventeen (17) completed and
------------------------------
stabilized buildings, containing approximately 1,414,553 square feet
of area, and associated land, identified on Exhibit A, attached hereto
---------
and by this reference made a part hereof, together with all leases,
subleases and occupancy agreements (with assumption of post-closing
obligations), all security deposits and prepaid rental, all tangible
and intangible personal property used in the maintenance and operation
of such properties (including books, records, service contracts, trade
names, computers and software) (the "Completed Properties"). The
Completed Properties are owned by the various individuals and entities
as set forth in Schedule 1 hereto and in the approximate percentages
----------
as shown on said Schedule 1.
----------
b) Title. Title acquired shall be good and marketable fee simple title
-----
subject only to the first-priority debt (the "Completed Property
Debt"), identified on Exhibit B, attached hereto and by this reference
---------
made a part hereof, and such other title matters as Weeks shall
approve during the due diligence period; and together with appurtenant
easement rights under reciprocal easement agreements, either
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 3
presently existing or to be created as part of this transaction.
Lichtin shall pay on or prior to the Initial Closing all indebtedness
other than the Completed Property Debt that constitute a lien on the
Completed Properties (other than ad valorem taxes not yet due and
payable as of the date of the Initial Closing).
c) Initial Closing. Closing of the Completed Properties is scheduled to
---------------
occur on December 2, 1996, or on such other date as shall be mutually
agreed upon by Weeks and Lichtin (the "Initial Closing").
d) Consideration. Consideration for the Completed Properties, subject to
-------------
customary prorations, allocations and adjustments, shall equal the
"NOI" (as hereinafter defined) of the Completed Properties divided by
ten percent (10.0%) which Lichtin and Weeks currently estimate will
total Ninety-Six Million Six Hundred Thousand Dollars ($96,600,000),
but which shall be subject to verification, and, as necessary,
adjustment during Weeks' preliminary due diligence period in
accordance with the mutual agreement of Weeks and Lichtin and which
will be finalized in the Contribution Agreement. "NOI" shall mean
gross annualized rental income, including reimbursables (assuming that
reimbursables may include management fees calculated on total
revenues, less reimbursements in certain cases for utilities), for the
ensuing twelve (12) month period less a five percent (5%) vacancy
factor (computed on the entire building deemed to be or actually one
hundred percent (100%) leased, less any portion of that building
leased for ten (10) years or longer) and less approved pro forma
annual operating expenses (which shall be deemed to include a four
percent (4%) management fee on total revenues, Owner's Expenses and a
reserve of five cents ($.05) per square foot per annum for industrial
space, eight cents ($.08) per square foot per annum for flex space and
ten cents ($.10) per square foot per annum for office space). Lichtin
will fund to Weeks at closing any free rent concession which has not
expired. NOI will be calculated as if no free rent concession was
granted to the extent such concession is no more than three (3) months
in the case of any lease having an initial term of five (5) years or
more, or is no more than one (1) month in the case of any lease having
an initial term of less than five (5) years. To the extent such
concession exceeds such three (3) months or one (1) month thresholds,
whichever may be applicable, the dollar amount of such concession in
excess of such three (3) months or one (1) month thresholds will be
discounted on a pro rata basis over the entire initial term of such
lease for purposes of computing the discount to be applied in
computing NOI. The consideration to be paid for the Completed
Properties, subject to the customary closing prorations, allocations
and adjustments, will be paid as follows:
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 4
i) acceptance of the Completed Properties subject to the Completed
Property Debt, having an outstanding principal balance of
approximately Seventy-Four Million Five Hundred Thousand Dollars
($74,500,000) (which includes a $2,650,000 line of credit as
reflected on the attached Exhibit B and which is also
---------
collateralized by the Perimeter Park West land; Weeks will cause
the Perimeter Park West land to be released from the lien
securing such line of credit at the Initial Closing), subject to
the exculpatory provisions of the loan documents (and Weeks shall
assume and indemnify Lichtin as to any liabilities arising under
the limited guaranty and the exculpatory carveout provisions with
respect to events first occurring subsequent to the Initial
Closing).
ii) the balance of net equity of approximately Twenty-Two Million One
Hundred Thousand Dollars ($22,100,000) above the outstanding
principal balance of the Completed Property Debt as of the date
of the Initial Closing, by (i) the payment of cash at the Initial
Closing in an amount determined by Lichtin (subject to the
limitations in paragraph 10 hereof), and (ii) the issuance at the
Initial Closing of limited partnership units in Weeks Realty,
L.P. ("Units") convertible into shares of common stock in Weeks
Corporation, or cash at the option of Weeks Corporation, on a
one-for-one basis, as described below; Units are economically
equivalent to common stock of Weeks Corporation and are entitled
to distributions at the same rate as dividends paid to
shareholders; the number of Units to be issued for the net equity
of the Completed Properties shall be determined by dividing the
net equity, less any cash paid for the Completed Properties at
the Initial Closing, by the greater of (i) Twenty-Five Dollars
and Twenty-Five Cents ($25.25), or (ii) the amount which is equal
to the average closing price on the NYSE of the common stock of
Weeks Corporation for the twenty (20) trading days immediately
prior to the date on which this letter of intent is executed,
rounded to the nearest one-eighth.
e) Special Adjustments. The Consideration for the Completed Properties
-------------------
shall be subject to the following adjustments, in addition to
customary prorations:
i) With respect to leases for which tenant improvements are
incomplete or not fully funded or for which commissions have not
been fully paid, Lichtin shall reserve with Weeks at the Initial
Closing such unfunded
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 5
tenant improvement costs and commissions for leases included in
the pro-forma used in establishing the consideration for the
Completed Properties; tenant improvement costs, commissions and
other tenant concessions incurred for leases entered into (with
the approval of Weeks) after execution of the Contribution
Agreement shall be prorated based upon the unexpired portion of
the term of the new lease at the Initial Closing; and
ii) Completion of satisfactory repairs to the Completed Properties,
if any, which repairs are mutually agreed to by the parties prior
to the expiration of the due diligence period provided in the
Contribution Agreement.
f) Completed Property Debt. Weeks' agreement to acquire the Completed
-----------------------
Properties encumbered by the Completed Property Debt is subject to the
following matters:
i) review and approval of the loan documentation during Weeks' due
diligence period;
ii) receipt from lenders of estoppel and consent agreements for the
transaction, in form and content reasonably acceptable to Weeks;
iii) payment by Lichtin of all transfer fees and other related
transaction expenses, e.g., legal expenses, of the lenders;
iv) lenders' agreement to modification of the loan documents as
reasonably necessary to reflect change in ownership (e.g.,
financial reporting requirements, transfer restrictions, deletion
of any personal covenants specific to Lichtin and other matters
developed from review);
v) renegotiation of the Completed Property Debt with Aetna and
I.O.F. to permit the early prepayment of such debt by Weeks,
without penalty, at any time on or after the Initial Closing; and
vi) renegotiation of the Completed Property Debt with New England
Mutual either to (i) permit the early prepayment of such debt by
Weeks, without penalty, at any time on or after the Initial
Closing or (ii) buy down the interest rate to eight and one-
quarter percent (8.25%), at Lichtin's expense. If such
renegotiation is not possible, then the consideration (in
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 6
the form of Units) for the contribution of the Completed
Properties to Weeks will be reduced by One Hundred Eighty-Seven
Thousand Five Hundred Dollars ($187,500) to account for the
above-market interest rate on such indebtedness.
g) Tenant Estoppels. Lichtin shall obtain and deliver to Weeks, at no
----------------
cost or expense to Weeks, current tenant estoppel certificates dated
within sixty (60) days of the date of the Initial Closing, in form and
content reasonably acceptable to Weeks (Lichtin and Weeks will agree
on the general form for tenant estoppel certificates to be solicited
from tenants prior to execution of the Contribution Agreement), for
(i) each lease having more than 20,000 square feet of area in its
premises and (ii) for leases for at least ninety percent (90%) of the
square footage of the Completed Properties (1,273,098 square feet of
area). As to the square footage of the Completed Properties not
covered by a tenant estoppel certificate, Lichtin shall execute and
deliver to Weeks a knowledge based certificate, in form and content
reasonably acceptable to Weeks, as to the same matters covered by the
tenant estoppel certificate.
h) Service Contracts. All service contracts and other material written
-----------------
agreements to be assumed by Weeks (with respect to liabilities and
obligations arising on or after the date of the Initial Closing) shall
be subject to review and approved by Weeks during its due diligence
period. Lichtin shall furnish estoppels from each contractor in form
and content reasonably acceptable to Weeks with respect to any
significant contract or agreement, if required by Weeks.
i) General Closing Conditions. In addition to conditions set forth above
--------------------------
and other customary closing conditions to be contained in the
Contribution Agreement, Weeks' obligation to close shall be subject to
satisfaction of the following conditions:
i) all governmental (whether national, state, local or otherwise)
consents or approvals necessary for consummation of the
transaction must be obtained;
ii) no material adverse change shall have occurred with respect to
the Completed Properties or Lichtin (including without limitation
bankruptcy or insolvency);
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 7
iii) no material condemnation, no material casualty not fully covered
by insurance and not resulting in material lease terminations,
nor material environmental event shall have occurred or be
threatened; and
iv) all documentation necessary or appropriate for consummation of
the transaction shall be in form and content reasonably
acceptable to Weeks and Lichtin.
j) Representations and Warranties. The Contribution Agreement shall
------------------------------
contain customary representations and warranties and other terms and
conditions appropriate for the acquisition of a real estate portfolio
of the size, nature and quality of the Completed Properties. The
scope of representations and warranties with respect to the Completed
Properties will be generally consistent with the relevant
representations and warranties contained in Section 2 of Exhibit O to
the First Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated as of August 24, 1994, as amended (the
"Weeks Partnership Agreement"), a copy of which has been provided to
Lichtin, to be adapted as reasonably necessary to the terms of this
letter of intent and the facts peculiar to the Completed Properties,
in addition to other representations and warranties customary in
developed real estate portfolio transactions. Subject to certain
exceptions, such as representations and warranties as to proration
adjustments, recourse for breach of such representations and
warranties and of the indemnities related thereto (and of other
representations and warranties which Lichtin is to make as to the
Northern Telecom Properties and the Development Properties, the
Lichtin Operating Business, and otherwise as contemplated in this
letter of intent and related indemnities) will be limited to Units
issued to Lichtin as contemplated herein, will survive for a period
equal to the longer of (i) one (1) year from the date when made or
(ii) three (3) years from the date of the Initial Closing, and will be
secured by a first priority pledge to Weeks of a portion of the
aggregate Units received by Lichtin having an initial value of
$5,000,000 and increasing as additional Units are issued for the
Northern Telecom Properties and the Development Properties up to a
total of $7,000,000 in value, it being agreed that Lichtin's liability
for breaches of or inaccuracies in representations or warranties
respecting all properties, land, assets and business to be acquired
shall in no event in the aggregate, subject to such exceptions, exceed
Seven Million Dollars ($7,000,000) and Lichtin shall have no liability
for breach of representations or warranties until such liability would
exceed in the aggregate Two Hundred Fifty Thousand Dollars ($250,000);
provided however, if Lichtin's obligation exceeds Two Hundred Fifty
Thousand Dollars ($250,000) Lichtin shall be liable for the full
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 8
amount thereof subject to the Seven Million Dollars ($7,000,000)
limit. So long as such pledge is outstanding, Lichtin will keep at
least fifty percent (50%) of all the remaining Units and shares of
common stock of Weeks Corporation issued to Lichtin as contemplated
hereunder free of any pledge or other encumbrance.
The Contribution Agreement will contain representations and warranties
of Weeks and affiliates reasonably satisfactory to Lichtin and
customary in transactions of this type.
3. Acquisition of Northern Telecom Properties.
------------------------------------------
a) Northern Telecom Properties Described. Six (6) completed and
-------------------------------------
stabilized buildings known as Perimeter Park Buildings 800, 400, 500,
300, 100 and 200, containing approximately 370,734 square feet of
area, and associated land, identified on Exhibit C, attached hereto
---------
and by this reference made a part hereof, together with all leases,
subleases and occupancy agreements (with assumption of post-closing
obligations), all security deposits and prepaid rental, all tangible
and intangible personal property used in the maintenance and operation
of such properties (including books, records, service contracts, trade
names, computers and software) and in which Northern Telecom occupies
a portion of the space under existing leases (collectively, the
"Northern Telecom Properties," and each a "Northern Telecom
Property"). The Northern Telecom Properties are owned by the various
individuals and entities as set forth in Schedule 1 hereto.
----------
b) Termination Rights. Under the terms of various leases Northern
------------------
Telecom has the right to terminate any one or more of its leases upon
giving notice to Lichtin on or before June 30, 1997, with such
termination to be effective as of July 1, 1998.
c) Closing of Northern Telecom Properties. The closing of the Northern
--------------------------------------
Telecom Properties is scheduled to occur on July 1, 1997, subject to
the terms and provisions of paragraph 3(f) below but in no event later
than July 1, 2000.
d) Title. Title acquired shall be good and marketable fee simple title
-----
subject only to the first-priority debt in the amount of approximately
Twenty Million Four Hundred Thousand Dollars ($20,400,000) (the
"Northern Telecom Property Debt"), identified on Exhibit D, attached
---------
hereto and by this reference made a part hereof, and such other title
matters as Weeks shall approve during the due diligence period; and
together with appurtenant easement rights under reciprocal
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 9
easement agreements, either presently existing or to be created as
part of this transaction.
e) July 1,1997 Northern Telecom Properties Closing. Closing of all of
-----------------------------------------------
the Northern Telecom Properties for which Northern Telecom elects on
or prior to June 30, 1997, not to exercise its early termination
---
option with respect to all or any portion of the space under lease in
such properties ("Non-vacated Northern Telecom Properties"), shall
occur on or about July 1, 1997.
i) Consideration. Consideration for the Non-vacated Northern
-------------
Telecom Properties, subject to customary prorations, allocations
and adjustments, shall equal the NOI, as defined in paragraph
2(d) above, of the Non-vacated Northern Telecom Properties
divided by ten and four-tenths percent (10.4%). Based on Weeks'
and Lichtin's current estimate of the NOI of the six (6) Northern
Telecom Properties, the consideration to be paid for the six (6)
Northern Telecom Properties, assuming that Northern Telecom does
not elect to exercise its early termination rights with respect
to any of the space in the Northern Telecom Properties, would
equal Twenty-Three Million Seven Hundred Thousand Dollars
($23,700,000), subject to customary closing prorations,
allocations and adjustments, but such figure shall be subject to
verification, and, as necessary, adjustment during Weeks'
preliminary due diligence period in accordance with the mutual
agreement of Weeks and Lichtin and will be finalized in the
Contribution Agreement.
ii) Method of Payment. Consideration for the Non-vacated Northern
-----------------
Telecom Buildings shall consist of (i) the assumption of the
Northern Telecom Property Debt encumbering the Non-vacated
Northern Telecom Properties, subject to the exculpatory
provisions of the loan documents (and Weeks shall indemnify
Lichtin as to any liabilities arising under the limited guaranty
and the exculpatory carveout provisions with respect to events
first occurring subsequent to the Northern Telecom Properties
Closing), (ii) cash, as determined by Lichtin subject to the
limitations contained in paragraph 10 below, and (iii) Units, the
number of which to be issued shall be determined by dividing the
net equity, after the assumption of indebtedness as described
above, of the Non-vacated Northern Telecom Properties, less any
cash paid at the July 1, 1997 Northern Telecom Properties
Closing, by the amount which is equal to the average closing
price on the NYSE of the common stock of Weeks
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 10
Corporation for the twenty (20) trading days immediately prior to
the July 1, 1997 Northern Telecom Properties Closing, rounded to
the nearest one-eighth, subject to a lower limit ("Floor") of
Twenty-Five Dollars and Twenty-Five Cents ($25.25) and an upper
limit ("Ceiling") of Twenty-Six Dollars and Twenty-Five Cents
($26.25).
f) Delayed Closing of Vacated Northern Telecom Properties. If Northern
------------------------------------------------------
Telecom elects on or prior to June 30, 1997, to exercise its early
termination option with respect to all or any portion of the space
under lease in a Northern Telecom Property (a "Vacated Northern
Telecom Property"), then closing on each such Vacated Northern Telecom
Property shall occur at the earlier of (i) such time as the Vacated
Northern Telecom Property achieves "Stabilization" (as hereinafter
defined), or (ii) June 30, 2000. "Stabilization" is achieved when (i)
ninety-five percent (95%) of the net rentable area of a building is
leased to creditworthy tenant(s) approved by Weeks under lease(s)
approved by Weeks (which will base its approval on commercially
reasonable standards), (ii) tenant(s) have accepted possession of
ninety-five percent (95%) of the net rentable area of the building,
including tenant improvements, (iii) rental shall have commenced on
ninety-five percent (95%) of the area of the building ("rent-free"
periods are addressed above; all other concessions shall have
expired); (iv) no default by Lichtin or any tenant has occurred; and
(v) all of the foregoing have been confirmed to Weeks pursuant to a
tenant estoppel certificate in form and content acceptable to Weeks.
i) Consideration. Consideration for any Vacated Northern Telecom
-------------
Property, subject to customary prorations, allocations and
adjustment, shall equal the NOI, as defined in paragraph 2(d)
above, of the Vacated Northern Telecom Property divided by ten
and five-tenths percent (10.5%).
ii) Method of Payment. Consideration for any Vacated Northern
-----------------
Telecom Properties shall consist of (i) the assumption of the
Northern Telecom Property Debt encumbering the Vacated Northern
Telecom Property, subject to the exculpatory provisions of the
loan documents (and Weeks shall indemnify Lichtin as to any
liabilities arising under the limited guaranty and the
exculpatory carveout provisions with respect to events first
occurring subsequent to the Vacated Northern Telecom Property
Closing), and (ii) Units, the number of which to be issued shall
be determined by dividing the net equity, after the assumption of
indebtedness as described above, of the Vacated Northern Telecom
Property, by the
<PAGE>
Mr. Harold S. lichtin
July 3, 1996
Page 11
amount which is equal to the average closing price on the NYSE of
the common stock of Weeks Corporation for the twenty (20) trading
days immediately prior to the closing of the Vacated Northern
Telecom Property, rounded to the nearest one-eighth.
iii) Funding of Re-leasing Costs. Lichtin shall fund any costs
---------------------------
(e.g., leasing commissions and tenant improvements) incurred to
re-lease the space in any Vacated Northern Telecom Property.
iv) Pledge of Units to Support the Value of Vacated Northern Telecom
----------------------------------------------------------------
Properties. In the event the principal balance of the North
----------
Telecom Property Debt assumed by Weeks at the closing of any
Vacated Northern Telecom Property, calculated as of such closing
date, exceeds the aggregate consideration calculated to be due
from Weeks to Lichtin pursuant to this paragraph 3(f) for such
Vacated Northern Telecom Property, Lichtin shall pay to Weeks, as
a personal liability obligation of Lichtin, at such closing an
amount in cash or Units, at Lichtin's option, equal to such
excess. The pledge of Units discussed in paragraph 2(j) will also
collateralize such funding obligation of Lichtin to Weeks.
g) General Conditions, Estoppels. The closing of each of the Northern
-----------------------------
Telecom Properties shall be subject to the same general terms and
conditions of closing as set forth in paragraph 2 above for the
Completed Properties, to the extent applicable and not otherwise
modified herein, including the provisions set forth in paragraphs
2(b), (e), (f), (g), (h), (i) and (j), and also to the same general
terms and conditions of closing as set forth below in paragraphs 4(k),
(l) and (m) with respect to the Development Properties.
h) Northern Telecom Property Debt. Weeks' agreement to acquire the
------------------------------
Northern Telecom Properties encumbered by the Northern Telecom
Property Debt is subject to same general conditions as discussed in
paragraph 2(f) above, including the requirement for the renegotiation
of the Northern Telecom Property Debt with New England Mutual to
either (i) permit the early prepayment of such debt by Weeks, without
penalty, at any time on or after closing of the related Northern
Telecom Property or (ii) to buy down the interest rate to eight and
one-quarter (8.25%), at Lichtin's expense. If such renegotiation is
not possible, then consideration (in the form of Units) for the
contribution of each Northern Telecom Property to Weeks encumbered by
Northern Telecom Property Debt with New
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 12
England Mutual will be reduced by One Hundred Eighty-Seven Thousand
Five Hundred Dollars ($187,500) to account for the above-market
interest rate on such indebtedness. In addition to the above, Weeks
will review and approve any proposed refinancing of the Northern
Telecom Property Debt with Principal Mutual maturing in 1996.
4. Acquisition of Development Properties.
-------------------------------------
a) Development Properties Described. Four (4) buildings, to be completed
--------------------------------
and stabilized, containing approximately 307,700 square feet of area,
identified on Exhibit E, attached hereto and by this reference made a
---------
part hereof (collectively, the "Development Properties"; and each
building, a "Development Property"), together with all leases,
subleases and occupancy agreements (with assumption of post-closing
obligations), all security deposits and prepaid rental, all tangible
and intangible personal property used in the management and operation
of such properties (including books, records, service contracts, trade
names, computers and software). The Development Properties are owned
by the individuals or entities as set forth on Schedule 1 hereto.
----------
b) Title. Title to each Development Property acquired shall be good and
-----
marketable fee simple title subject only to the first-priority debt in
the amount of approximately Eighteen Million Four Hundred Fifty
Thousand Dollars ($18,450,000) (the "Development Property Debt"),
identified on Exhibit F, attached hereto and by this reference made a
---------
part hereof, subject to the exculpatory provisions of the loan
documents (and Weeks shall assume and indemnify Lichtin as to any
liabilities under the limited guaranty and the exculpatory carveout
provisions with respect to events first occurring after the date of
such assumption), and such title matters as Weeks shall approve during
the due diligence period, together with appurtenant easement rights
under easement agreements, either presently existing or to be created
as part of this transaction.
c) Staged Closings. Closing of the Development Properties shall occur on
---------------
a building-by-building basis once a Development Property achieves
Stabilization, as defined in paragraph 3(f) above, except as otherwise
described below, but no later than June 30, 1998. Lichtin and Weeks
will agree on a set of leasing guidelines for each of the Development
Properties, the form of the lease and other terms respecting the same
prior to execution of the Contribution Agreement.
12
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 13
d) Lichtin Election to Accelerate Closing. Lichtin may elect to
--------------------------------------
accelerate the closing of Weeks' acquisition of any Development
Property (provided all other relevant conditions are satisfied,
including shell completion, obtaining of tenant estoppel certificates,
etc.) which has not yet achieved Stabilization, but which has achieved
a ten and four-tenths (10.4%) return on the pro forma cost for such
Development Property (which such pro forma cost for each Development
Property will be mutually agreed to by the parties prior to executing
the Contribution Agreement).
e) Ultimate Closing Deadline. The closing of any Development Property
-------------------------
which has not theretofore occurred shall occur on June 30, 1998, even
if such Development Property has not achieved Stabilization or any
particular level of return on its pro forma cost.
f) Consideration. Consideration for the Development Properties shall be
-------------
computed as follows: the consideration, subject to customary
prorations, allocations and adjustments, shall equal the greater of
(i) "NOI," as defined in paragraph 3(d) above, divided by ten and
four-tenths percent (10.4%), and (ii) cost (with the cost of each
Development Property mutually agreed upon by the parties prior to
executing the Contribution Agreement). Also prior to executing the
Contribution Agreement, Lichtin and Weeks will mutually agree upon a
limit on the percentage of office finish for each Development Property
and for individual spaces within each Development Property. Amounts
spent for tenant improvements in excess of these limits will be
amortized over the term of the respective leases and deducted from
rental income in determining the NOI of the applicable Development
Property.
g) Method of Payment. Consideration for a Development Property shall be
-----------------
in the form of Units, the number of which to be issued shall be
determined by (subject to reduction for assumed Development Property
Debt as described above), dividing the amount of the net consideration
by the average NYSE closing price of a share of Weeks Corporation
common stock computed with respect to the twenty (20) trading days
immediately prior to the date of closing of a Development Property,
rounded to the nearest one-eighth, except that for any Development
Property closed on or prior to July 1, 1997, the price per share shall
not be less than the Floor nor more than the Ceiling amounts set out
in paragraph 3(c) above.
13
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 14
h) Consideration Recomputation. For any Development Property closed after
---------------------------
July 1, 1997, but prior to achieving Stabilization as permitted under
paragraph 4(d) above, the consideration for the Development Property
shall be recomputed as of the earlier of the date on which such
Development Property first achieves Stabilization or June 30, 1998,
and the excess, if any, of the amount of new recomputed consideration
above the amount of consideration computed at closing shall be issued
to Lichtin in the form of additional Units, the number of which to be
determined by dividing the amount of such excess by the average NYSE
closing price of a share of Weeks Corporation common stock with
respect to the twenty (20) trading days immediately preceding such
recomputation date, rounded to the nearest one-eighth.
i) No Competitive Buildings. Unless agreed otherwise by Lichtin and
------------------------
Weeks, Weeks agrees not to commence a competitive building in a park
until each Development Property located in such park is no less than
fifty percent (50%) leased.
j) General Conditions. The closing of each of the Development Properties
------------------
shall be subject to the same general terms and conditions of closing
as set forth in paragraph 2 above for Completed Properties to the
extent applicable and not otherwise modified herein, including the
provisions of paragraphs 2(b), (e), (f), (g), (h), (i) and (j).
k) Risk of Loss. Prior to closing of the acquisition of a Development
------------
Property, the risk of loss shall remain with Lichtin, and Lichtin
shall bear all ownership risks and obligations, including the risk of
construction and other overruns.
l) Construction Manager. Lichtin will engage Weeks Construction Services,
--------------------
Inc. at the Initial Closing as construction and development manager
for the completion and tenant build-out of each of the Development
Properties, for which Weeks Construction Services, Inc. will earn fees
equal to five percent (5%) of total costs incurred subsequent to the
Initial Closing, payable monthly.
m) Property Manager. Lichtin will engage Weeks Realty Services, Inc. as
----------------
property manager and leasing agent for each of the Development
Properties for a term commencing on the date of the Initial Closing
and ending for each of the Development Properties on the date of the
closing of its conveyance to Weeks. The management fee will equal four
percent (4%) of gross revenues (including Owner's Expenses in the case
of the Northern Telecom Properties) for each of the
14
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 15
Development Properties, payable monthly. Lichtin will also pay to
Weeks Realty Services, Inc. customary leasing fees and commissions.
Lichtin and Weeks shall agree upon a form of Management Agreement
prior to the execution of the Contribution Agreement.
5. Undeveloped Land at Perimeter Park West, Metro Center and Perimeter Park.
------------------------------------------------------------------------
Weeks Realty, L.P., or one or more of its affiliates, will acquire
Lichtin's approximately ninety (90) acre undeveloped tract of land within
Perimeter Park West, the approximately five (5) acre undeveloped tract of
land within Metro Center, and the approximately five and six-tenths (5.6)
acre undeveloped tract of land within Perimeter Park (collectively, the
"Undeveloped Land"), as follows:
a) Infrastructure and Land Carry Costs. Weeks will fund all
-----------------------------------
infrastructure and engineering costs after the Initial Closing (with
appropriate prorations for calendar year 1996). Lichtin will fund all
other carrying costs on land until such time as it is acquired by
Weeks as described below.
b) Acquisition Obligation. Weeks will acquire the Undeveloped Land in
----------------------
five (5) installments, with the first closing occurring at the Initial
Closing (currently scheduled for December 1, 1996), and with
successive closings on each of the next four (4) anniversary dates of
the Initial Closing; provided, however, that if on or prior to June
-------- -------
30, 1997, Northern Telecom exercises its early termination option with
respect to all or any portion of the space under lease in any of the
Northern Telecom Properties, then Weeks shall have the option of
delaying by one year its obligation to close the remaining
installments (i.e. the second stage closing and each closing
thereafter shall be delayed by one year so that the last closing will
occur on the fifth anniversary of the date of the Initial Closing).
Weeks and Lichtin will mutually agree prior to executing the
Contribution Agreement on a method for allocating the total acreage of
the Undeveloped Land among the five (5) closings.
c) Title. Weeks will acquire unencumbered good and marketable fee simple
-----
title subject to easements and other customary exceptions approved by
Weeks during the due diligence period described in this letter of
intent.
d) Acquisition Consideration. The acquisition consideration for the
-------------------------
Undeveloped Land will consist of One Million Six Hundred and Fifty
Thousand Dollars ($1,650,000) to be paid for the first conveyance of
land at the Initial Closing, and
15
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 16
One Million Eight Hundred Thirty Seven Thousand Five Hundred Dollars
($1,837,500) to be paid at each of the next four (4) successive
closings.
e) Method of Payment. The consideration to be paid at the Initial
-----------------
Closing for the first installment will consist of (i) cash subject to
the limitations set out in paragraph 10 below, or (ii) Units. The
consideration to be paid at each of the four (4) successive closings
of the Undeveloped Land will consist of Units. The number of Units to
be issued at the Initial Closing for the first installment will be
determined by dividing One Million Six Hundred and Fifty Thousand
Dollars ($1,650,000), less any cash received at the Initial Closing,
by the greater of (i) Twenty-Five Dollars and Twenty-Five Cents
($25.25), or (ii) the amount which is equal to the average closing
price on the NYSE of the common stock of Weeks Corporation for the
twenty (20) trading days immediately prior to the date on which this
letter of intent is executed, rounded to the nearest one-eighth. The
number of Units to be issued at each of the four (4) successive
closings will be determined by dividing the amount of One Million
Eight Hundred Thirty Seven Thousand Five Hundred Dollars ($1,837,500)
by the amount which is equal to the average closing price on the NYSE
of the common stock of Weeks Corporation for the twenty (20) trading
days immediately prior to the date of such closing, rounded to the
nearest one-eighth. If Weeks accelerates closing of the takedown of
acreage, Weeks will receive a deferral credit on a to be agreed upon
per acre basis against the acreage Weeks would otherwise be required
to acquire at the next land takedown closing.
f) Other Standard Terms. Other terms and conditions customary for similar
--------------------
land acquisition transactions, such as representations and warranties
and risk of loss, will be incorporated into the Contribution Agreement
as it relates to the Undeveloped Land.
6. Regency Forest and Woodlake Undeveloped Tracts. Weeks and Lichtin will
----------------------------------------------
agree prior to executing the Contribution Agreement on an acquisition price
and payment schedule for Weeks acquiring the six (6) acre undeveloped land
parcel at Regency Forest and the eight (8) acre undeveloped land parcel at
Woodlake.
7. Paramount Center and Woodlake Land Options. The options on the one hundred
------------------------------------------
sixty (160) acre Paramount Center tract and the two remaining lots at
Woodlake (the "Land Options") will be purchased by Weeks from Lichtin at
the Initial Closing for an amount of One Million Dollars ($1,000,000),
payable in (i) cash (subject to the limitations set out in paragraph 10
below) or (ii) Units, the number of which will be determined by dividing
16
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 17
the amount of One Million Dollars ($1,000,000), less any cash received at
the Initial Closing, by the greater of (i) Twenty-Five Dollars and Twenty-
Five Cents ($25.25), or (ii) the amount which is equal to the average
closing price on the NYSE of the common stock of Weeks Corporation for the
twenty (20) trading days immediately prior to the date on which this letter
of intent is executed, rounded to the nearest one-eighth. Weeks will
acquire from Lichtin for cash equal to Lichtin's cost therefor (which
amount is in addition to the One Million Dollars ($1,000,000) provided
above for the Land Options) any land acquired by Lichtin prior the Initial
Closing under the partial exercise of the Land Options; provided, however,
-------- -------
that Weeks has given its prior consent to such partial exercise.
Consideration for such land will consist solely of an amount sufficient to
reimburse the reasonable costs and expenses incurred by Lichtin.
8. Acquisition of Lichtin Operating Business. An integral part of the Lichtin
-----------------------------------------
acquisition by Weeks is the real estate operating business, including
related assets (exclusive of cash and payables and receivables) and
liabilities (excluding any bank or similar indebtedness), conducted by
Lichtin with respect to the Completed Properties, the Northern Telecom
Properties and the Development Properties, and the other real estate assets
owned by Lichtin or under contract, option or other arrangement and with
respect to real properties owned by third parties (the "Lichtin Operating
Business").
a) Scope of Business. Included within the Lichtin Operating Business
-----------------
are, without limitation, the following:
i) The Lichtin officers and employees through which the Lichtin
Operating Business is conducted;
ii) The following property service businesses conducted by Lichtin
and all related revenue generating contracts, agreements and
other arrangements: property management; asset management;
development and rehabilitation; brokerage (sales, leasing,
financing); and any other services related or ancillary thereto;
iii) All office supplies, equipment, business machines, furniture,
fixtures, information systems, other computers, books, records and
other tangible property of Lichtin associated with the Lichtin
Operating Business. All related party vehicle and equipment leases
will be canceled at closing; and
17
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 18
iv) All right, title and interest of Lichtin in all contracts,
licenses, general intangibles, agreements or other instruments
associated with the Lichtin Operating Business. Such contracts
include, but are not limited to, service and other customary
third-party contracts.
b) Title. Lichtin shall transfer good and marketable title to the
-----
Lichtin Operating Business to Weeks or Weeks' designated affiliate at
the Initial Closing, which shall be free and clear of any mortgages,
liens, financing statements or other encumbrances, other than third-
party equipment leases and other similar financing arrangements which
are not material to the conduct or financial performance of the
Lichtin Operating Business and which shall be subject to Weeks'
approval.
c) Assumption of Liabilities. Weeks or its relevant affiliate will
-------------------------
assume and agree to pay, perform and discharge all liabilities and
obligations of Lichtin arising under the assumed contracts to the
extent such liability or obligation relates to events occurring on or
after the date of the Initial Closing, subject to customary
representations, warranties and indemnities to be included in the
Contribution Agreement. Any bank or similar indebtedness of Lichtin
relating to, or secured in whole or in part by, the Lichtin Operating
Business will not be assumed by Weeks, but rather will be satisfied by
Lichtin on or prior to the date of the Initial Closing. Customary
prorations and other similar adjustments with respect to the Lichtin
Operating Business will be made as of the date of the Initial Closing.
Lichtin shall retain and there shall be excluded from the transactions
contemplated hereby all cash, accounts receivable (and accounts
payable) and prepaid expenses of the Lichtin Operating Business which
shall be used by Lichtin to the extent necessary to pay liabilities of
the Lichtin Operating Business.
d) Consideration. The consideration for the Lichtin Operating Business,
-------------
subject to customary prorations, allocations and adjustment, shall
equal the "Operating Income" of the Lichtin Operating Business (as
hereinafter defined) divided by ten percent (10.0%). "Operating
Income" shall mean the sum of gross annualized Owner's Expense
Reimbursement Income, Management Fee Reimbursement Income and Tenant
Expense Reimbursement Income, minus the direct operating and overhead
expenses of the Lichtin Operating Business, net of amounts of such
direct operating and overhead expenses capitalized to leasing and
development activities. Based on operating budgets for the Lichtin
Operating Business but subject to verification, and, as necessary,
adjustment during Weeks' preliminary due diligence period in
accordance with the mutual agreement of Weeks and Lichtin and which
will be finalized in the Contribution Agreement, the
18
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 19
consideration to be paid for the net equity of the Lichtin Operating
Business would equal Six Million One Hundred Thousand Dollars
($6,100,000), subject to the customary closing prorations, allocations
and adjustments and shall be payable to Mr. Lichtin as owner as of the
date of the Initial Closing. Such consideration would consist of: (i)
the payment of cash in an amount determined by Lichtin (subject to the
limitations in Paragraph 10 hereof), and (ii) the issuance of Units
for the remaining net equity of the Lichtin Operating Business in an
amount determined by Lichtin (subject to the limitations in Paragraph
10 hereof). The number of Units to be issued shall be determined by
dividing the net equity of the Lichtin Operating Business, less any
cash paid at the Initial Closing for the Lichtin Operating Business,
by the greater of (i) Twenty-Five Dollars and Twenty-Five Cents
($25.25), or (ii) the amount which is equal to the average closing
price on the NYSE of the common stock of Weeks Corporation for the
twenty (20) trading days immediately prior to the date on which this
letter of intent is executed, rounded to the nearest one-eighth.
e) Representations and Warranties. The scope of representations and
------------------------------
warranties for the Lichtin Operating Business will be generally
consistent with the relevant representations and warranties contained
in Section 3 of Exhibit O to the Weeks Partnership Agreement, to be
adapted as reasonably necessary to the facts peculiar to the Lichtin
Operating Business, recourse and survival for such representations and
warranties and related indemnities will conform to the approach
described in paragraph 2(j) above.
9. Registration Rights and Lock-Up. Units to be issued to Lichtin as provided
-------------------------------
in this letter of intent will, in general, be Units of the same variety as
are currently held by other limited partners of Weeks Realty, L.P. As
such, they will be convertible into common stock of Weeks Corporation on a
one-for-one basis (or cash, at the option of Weeks Corporation) at any time
following expiration of the relevant Lock-up Period, as defined below,
except as otherwise stated herein. The Lock-up Period will commence on
issuance of Units at the Initial Closing and will expire at the later of
(i) one (1) year following the issuance of the last Units which Lichtin
becomes entitled to receive with respect to the Development Properties or
the Northern Telecom Properties as described in paragraphs 3 and 4 above,
or (ii) the third (3rd) anniversary of the Initial Closing. The Lock-up
Period will commence at the closing of each conveyance of Undeveloped Land
and will expire the later of one year following the date of such closing or
the end of the last Lock-up Period described in the immediately preceding
sentence. Weeks will endeavor to file a registration statement with
respect to stock issued in exchange for Units issued on or prior to July
31, 1997, as soon as practicable after expiration of the relevant Lock-up
Periods.
19
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 20
Piggyback registration rights will be granted with respect to stock issued
in exchange for Units issued after July 31, 1997, to the same extent such
rights can reasonably be accommodated. The "Rights" described in the Weeks
Partnership Agreement and the Registration Rights and Lock-up Agreement
(the "RRL Agreement") to which the Weeks Partnership Agreement refers will
be adapted for the purposes of providing for the grant of registration
rights and imposition of the lock-up restrictions. Additionally, the terms
of the granting of registration rights, participation in shelf
registrations, and piggyback rights, must be acceptable to Lichtin, provide
reasonable ongoing rights to require the registration of Lichtin's stock
and shall be set forth in a Registration Rights Agreement to be attached as
an exhibit to the Contribution Agreement and agreed to in full prior to the
execution of the Contribution Agreement and shall be no less favorable than
those provided to the "Company Participants" in the RRL Agreement. The
quarterly distribution payable with respect to each Unit issued to Lichtin
as described in this letter of intent for the calendar quarter in which
such Unit is issued will be prorated according to the relative number of
days remaining in such calendar quarter following the date of such Unit's
issuance. Lichtin will accept and agree to be bound by the terms and
provisions of the Weeks Partnership Agreement as a limited partner of Weeks
Realty, L.P. with respect to all of the Units issued to Lichtin as
described in this letter of intent. This letter of intent assumes that
recipients of the Lichtin Units are each an "accredited investor" within
the meaning of Regulation D under the Securities Act of 1933, as amended.
10. Structure of Transactions. The legal structure (e.g., direct conveyance,
-------------------------
merger, transfer of partnership interests, etc.) of the acquisition
transactions described in this letter of intent will be substantially
determined prior to execution of the Contribution Agreement through mutual
agreement of the parties, taking into due consideration the parties'
respective income tax objectives, regulatory and contractual limitations,
desire to minimize transaction costs and imposition of franchise and other
local taxes, and risk profiles. Prior to executing the Contribution
Agreement, Weeks will work with Lichtin's tax advisors to develop a
strategy for addressing the possible adverse tax consequences of Weeks
assuming and/or paying off the Completed Property Debt, the Northern
Telecom Property Debt, and the Development Property Debt. Cash payable to
Lichtin at the Initial Closing date will be not more than Nine Million
Dollars ($9,000,000) as determined by Lichtin with cash payable at the
subsequent closings equal to Ten Million Dollars ($10,000,000) less the
amount paid at the Initial Closing and at other closings which have
occurred prior to such closing. Weeks acknowledges that Lichtin is
exploring through NationsBank various refinancing options for certain of
the Completed Property Debt, Northern Telecom Property Debt, and
Development Property Debt and consents to the continuation
20
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 21
of such discussions. However, any refinancing of any of such debt proposed
by Lichtin will also be subject to Weeks' approval.
11. Lichtin Personnel.
-----------------
a) Senior Officer Title. Harold S. Lichtin will be elected an Executive
--------------------
Vice President of Weeks Corporation and in addition will be President,
Weeks/Lichtin, a division of Weeks Corporation. Mr. Lichtin will also
become a member of Weeks Corporation's Investment Committee, Board of
Directors, and Chairman's Office. As such, Mr. Lichtin will become
part of Weeks Corporation's senior management group upon the Initial
Closing.
b) Responsibilities. Mr. Lichtin will be responsible for all Weeks' day-
----------------
to-day operations in North Carolina including development,
acquisitions, management, marketing and administration and will
operate according to an annual business plan. Mr. Lichtin will also
be involved in the overall strategic planning for Weeks Corporation.
c) Employment Contract. Weeks will enter into a 3-year employment
-------------------
contract (the general form for which will be consistent with the
employment agreements for other of Weeks' senior officers and as shall
be acceptable to Mr. Lichtin) with Mr. Lichtin at an initial annual
base salary of One Hundred Fifty Thousand Dollars ($150,000), plus
other benefits generally made available to the senior officers of
Weeks. Mr. Lichtin's salary and bonus will be evaluated annually at
the same time as salary reviews are undertaken for other Weeks' senior
officers. The employment contract shall provide for six (6) weeks
vacation annually.
d) Non-Competition Agreement. In conjunction with the employment
-------------------------
agreement, Weeks expects to enter into a non-competition agreement
(the general form for which will be consistent with the non-
competition agreements for other of Weeks' senior officers and as
shall be acceptable to Mr. Lichtin) with Mr. Lichtin restricting his
commercial real estate activities for a period of three (3) years.
e) Stock Options. Mr. Lichtin will be granted fully-vested options to
-------------
purchase forty thousand (40,000) shares of Weeks Corporation common
stock at the market price as of the date of grant. Such options will
have a term of up to ten (10) years, subject to continued employment.
21
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 22
f) Directorship. Weeks will nominate Mr. Lichtin as a Director of Weeks
------------
Corporation. Mr. Lichtin's position on the Board of Directors will be
subject to the periodic approval (generally every three (3) years) of
Weeks Corporation's shareholders.
g) Other Personnel. All current Lichtin employees will be offered jobs
---------------
as employees of Weeks Corporation at their present rates of pay and at
their present positions and will be reviewed annually as part of
Weeks' normal employee evaluation process. Weeks does not expect to
enter into employment agreements with any of such employees. Future
modifications in staffing or responsibilities will be determined by
Weeks senior management, including Mr. Lichtin. Appropriate prorations
for employee wages, accrued vacation days and sick leave, and similar
items will be made at the Initial Closing.
h) Lichtin Children. Weeks' anti-nepotism policies will not preclude one
----------------
or more of Mr. Lichtin's children who would otherwise qualify for
employment by Weeks Corporation from becoming employees of Weeks
Corporation, provided such children will not as employees be under the
direct supervision of Mr. Lichtin.
12. Lichtin "Name". Weeks will conduct its operations in the Research Triangle
--------------
area under the name "Weeks/Lichtin" or such other name to which Lichtin and
Weeks shall mutually agree for the first twenty-four (24) months following
the Initial Closing. Thereafter, Weeks will conduct its operations in the
Research Triangle area under the name "Weeks" or "Weeks, North Carolina."
13. Due Diligence. Weeks' due diligence will be completed in two phases, as
-------------
follows:
a) First Phase. The first phase shall conclude on the date on which the
-----------
Contribution Agreement is signed. During this period, Weeks will
review the following principal items:
i) Relevant partnership agreements;
ii) Sample lease documents (approximately 25 to 30 "larger" leases
and standard lease form);
iii) Loan documents;
iv) Existing environmental, engineering, and other physical reports;
22
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 23
v) Other major agreements and documents; and
vi) Weeks will also conduct physical inspections of the Lichtin
properties during the first phase of due diligence
b) Commencement of Audit. Upon executing this letter of intent, Lichtin
---------------------
will immediately retain the accounting firm of Arthur Andersen to
commence audits of the financial statements of Lichtin for the
calendar years 1993, 1994 and 1995. Weeks will reimburse Lichtin at
the Initial Closing, or upon the termination of this letter of intent
or of the Contribution Agreement during any due diligence period as
provided therein, for 50% of the cost of such audits.
c) Second Phase. The second phase of Weeks' due diligence will conclude
------------
thirty (30) days following the date on which the Contribution
Agreement is signed and will encompass all aspects of customary
financial, legal, physical, market and other due diligence for a
transaction of this variety and magnitude. Lichtin will assist Weeks,
and will cause its accountants, lawyers and consultants to assist
Weeks, in the conduct of Weeks' due diligence. Weeks' obligation to
close the transactions described in this letter of intent is subject
to the satisfactory results of such due diligence investigations and
of no material adverse change prior to the Initial Closing to Lichtin
or the assets and business which is the subject of this letter of
intent, as determined by Weeks in its discretion.
14. Timetable. The following is the agreed-upon timetable leading to the
---------
Initial Closing:
a) Execution of letter of intent July 3, 1996
b) Commencement of first phase due diligence July, 1996
c) Commencement of audit July, 1996
d) Delivery of draft Contribution Agreement August, 1996
e) Completion of audit August, 1996
f) Approval by Weeks Board of Directors August, 1996
g) Approval by Lichtin Investors August, 1996
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 24
h) Execution of Contribution Agreement September, 1996
i) Third-party approvals, including Lenders September, 1996
j) Conclusion of Weeks' due diligence September, 1996
k) Initial Closing December 2, 1996
15. Confidentiality. All of the information furnished by one party to the
---------------
other party in connection with the transactions described in this letter of
intent shall remain confidential, shall be used by the receiving party for
the sole purpose of evaluating such transactions, shall be promptly
returned to the party providing the same following a termination of this
letter of intent as provided herein (together with all copies thereof
including digital and electronic copies), and shall be disclosed only to
(and shall likewise be maintained as confidential by):
a) directors, officers, employees and partners of the receiving party;
b) consultants and advisors, including, without limitation, investment
brokers, legal counsel and accountants; and
c) as may be required to be disclosed during the course of any litigation
pursuant to requirements of law or advice of counsel (provided that
such party shall use its good faith efforts to provide advance notice
to the other party).
16. Press Release. Neither party hereto will issue any press release or make
-------------
any other public announcement relating to the transactions contemplated by
this letter of intent without the prior consent of the other party hereto
(which consent will not be unreasonably withheld), except that Weeks may
make any disclosure required to be made under applicable law or stock
exchange rule if Weeks determines that it is necessary to do so and uses
its best efforts, prior to the issuance of the disclosure, to provide
Lichtin a copy of the proposed disclosure and to discuss the proposed
disclosure with Lichtin. It is anticipated that Lichtin and Weeks will
issue a jointly approved press release upon full execution of the
Contribution Agreement.
17. Costs and Expenses.
------------------
a) Weeks will be responsible for the following transaction costs:
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 25
i) title insurance, including the cost of title examination;
ii) engineering and environmental studies;
iii) surveys;
iv) Weeks legal counsel (Atlanta and Raleigh);
v) Weeks accounting, auditing and tax advisors; and
vi) fifty percent (50%) of the costs of the Lichtin audits.
b) Lichtin will be responsible for the following transaction costs:
i) transfer fees (if any);
ii) Lichtin legal counsel;
iii) Lichtin accounting, audit and tax advisors (except that fifty
percent (50%) of the cost of the Lichtin audits will be
reimbursed by Weeks at the Initial Closing or upon the
termination of this letter of intent or termination of the
Contribution Agreement during any due diligence period
thereunder); and
iv) brokerage, finders or other fees and expenses payable to First
Union Capital Markets Group.
18. Brokers. Each of the parties hereto represent and warrant that no brokers
-------
or other finders are involved in this transaction, other than First Union
Capital Markets Group, and in any event, each party shall indemnify the
other against any and all fees or claims made by any broker or finders
engaged by, or otherwise making a claim through, such party.
19. Operation of Acquired Business; Exclusive Dealing. From and after the date
-------------------------------------------------
hereof until the earlier of the termination of this letter of intent or the
full execution and delivery of the Contribution Agreement, Lichtin shall
continue to conduct its operations and assets in the ordinary course of its
business and consistent with its current business practices and policies
and with the relevant terms and provisions hereof; provided, however, that,
in consideration of Weeks pursuing its due diligence and incurring costs
and expenses in
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 26
connection therewith, Lichtin shall not market, encumber, convey, negotiate
to convey or commit to convey all or any portion of the assets and
operating business which are the subject of this letter of intent to any
other third-party at any time prior to the earlier to occur of:
a) full execution and delivery of the Contribution Agreement (in which
event such Contribution Agreement shall govern); or
b) the termination of this letter of intent pursuant to paragraph 20
below.
20. Termination. This letter of intent shall terminate in the event that the
-----------
Contribution Agreement has not been entered into on or before September 30,
1996 (or such other later date as shall be mutually agreed upon by the
parties hereto); provided, however, that paragraphs 15, 16, 17, 18 and 19
shall survive any such termination.
21. Effect of Letter Agreement. It is understood that this letter constitutes
--------------------------
a statement of the parties' mutual intentions with respect to the basic
business aspects of the transactions described herein and specifies our
agreement as to certain of the conditions to our respective obligations and
certain other terms of such transactions. It also specifies our agreement
as to the basis on which we will proceed from this point forward as we
negotiate the Contribution Agreement. Each acknowledges that this letter
of intent does not contain all matters upon which agreement must be reached
in order for the transactions to be consummated and, therefore, does not
constitute a binding commitment with respect to the transactions. A
binding commitment with respect to the transactions will result only from
the execution of the definitive Contribution Agreement, subject to the
conditions expressed therein. Notwithstanding the foregoing, however, the
provisions of paragraphs 15, 16, 17, 18, 19, 20, and 22 and this paragraph
21 are intended and agreed by to be binding agreements of the parties,
effective and enforceable upon the execution of this letter.
22. Miscellaneous
-------------
a) This letter of intent constitutes the entire agreement between the
parties hereto with respect to the matters covered herein and
supersedes any prior negotiations, understandings or agreements with
respect to the matters contemplated hereby.
b) This letter of intent may be executed in counterparts, each of which
shall be an original, but all of which together shall constitute one
and the same agreement.
<PAGE>
Mr. Harold S. Lichtin
July 3, 1996
Page 27
c) If any term, provision, covenant or restriction of this letter of
intent is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this letter shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
d) This letter of intent shall be governed by, construed and enforced in
accordance with the internal laws of the State of Georgia without
reference to Georgia's choice of law rules.
If the terms of this letter of intent are acceptable to you, please so
indicate by executing and returning a copy of this letter of intent to the
undersigned.
Very truly yours,
WEEKS REALTY, L.P.
By: Weeks Corporation, its
Sole General Partner
By: _____________________________
A. Ray Weeks, Jr.,
Chairman/Chief Executive Officer
Accepted and Agreed to
as of this ____ day of
July, 1996 by:
LICHTIN PROPERTIES, INC.
By: ________________________________
Harold S. Lichtin, President
<PAGE>
EXHIBIT A
COMPLETED PROPERTIES
----------------------------------------------------
NAME SQUARE FEET
----------------------------------------------------
Perimeter Park
900 Perimeter Park 50,231
1000 Perimeter Park 56,436
Perimeter Park West
1100 Perimeter Park West 84,950
1400 Perimeter Park West 44,916
1500 Perimeter Park West 80,415
1600 Perimeter Park West 94,897
1800 Perimeter Park West 54,272
Interchange Plaza
Interchange Plaza I 37,630
Interchange Plaza II 71,554
Enterprise Center
Enterprise Center I 106,583
Enterprise Center II 104,550
Metro Center
Metro Center I 75,000
Metro Center II 59,927
Metro Center III 137,500
Research Triangle Industrial Center
RTIC (I-IV) 154,341
Woodlake Center
Woodlake I 108,000
Other
6501 Weston Parkway 93,351
---------------------------------------------------
1,414,553
---------------------------------------------------
<PAGE>
EXHIBIT B
COMPLETED PROPERTY DEBT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CURRENT INTEREST
PROJECT LENDER BALANCE (A) RATE MATURITY
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Line of Credit First Union $ 2,650,000 Floating Line of Credit
6501 Weston Parkway First Union 7,400,000 Floating Construction Loan
Enterprise II First Union 5,800,000 Floating Construction Loan
1500 Perimeter Park West First Union 6,200,000 Floating Construction Loan
- ------------------------------------------------------------------------------------------
22,050,000
- ------------------------------------------------------------------------------------------
1100 Perimeter Park West Aetna 5,200,205 10.15% 1997
- ------------------------------------------------------------------------------------------
5,200,205
- ------------------------------------------------------------------------------------------
900 Perimeter Park I.O.F. 2,913,939 9.375% 1999
1400 Perimeter Park West I.O.F. 2,719,676 9.275% 1999
Interchange Plaza I I.O.F. 2,934,692 9.00% 2003
- ------------------------------------------------------------------------------------------
8,568,307
- ------------------------------------------------------------------------------------------
1000 Perimeter Park New England Mutual 3,032,485 9.625% 2000
- ------------------------------------------------------------------------------------------
3,032,485
- ------------------------------------------------------------------------------------------
Woodlake I NationsBank 160,000 9.25% 1999
- ------------------------------------------------------------------------------------------
160,000
- ------------------------------------------------------------------------------------------
Woodlake I Nationwide 1,952,385 7.625% 2001
Woodlake I Nationwide 697,280 7.625% 2001
Metro Center I-III Nationwide 6,895,000 8.125% 2006
RTIC (I-IV) Nationwide 3,815,369 8.625% 2012
- ------------------------------------------------------------------------------------------
13,360,034
- ------------------------------------------------------------------------------------------
1600 Perimeter Park West TIAA 6,772,494 9.375% 2004
1800 Perimeter Park West TIAA 3,870,282 9.24% 2004
Enterprise Center I TIAA 5,482,900 9.24% 2004
- ------------------------------------------------------------------------------------------
16,126,176
- ------------------------------------------------------------------------------------------
Interchange Plaza II Principal Mutual 6,000,000 7.67% 2006
- ------------------------------------------------------------------------------------------
6,000,000
- ------------------------------------------------------------------------------------------
$74,497,207
==========================================================================================
</TABLE>
(a) Balance as of June 30, 1996.
<PAGE>
EXHIBIT C
NORTHERN TELECOM PROPERTIES
-----------------------------------
NAME SQUARE FEET
-----------------------------------
Perimeter Park
100 Perimeter Park 55,664
200 Perimeter Park 55,664
300 Perimeter Park 55,664
400 Perimeter Park 74,088
500 Perimeter Park 74,017
800 Perimeter Park 55,637
----------------------------------
370,734
----------------------------------
<PAGE>
EXHIBIT D
NORTHERN TELECOM PROPERTY DEBT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
CURRENT INTEREST
PROJECT LENDER BALANCE RATE MATURITY
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
100 Perimeter Park New England Mutual $3,296,179 9.625% 2000
300 Perimeter Park New England Mutual 3,164,332 9.625% 2000
500 Perimeter Park New England Mutual 3,691,721 9.625% 2000
- -----------------------------------------------------------------------
10,152,232
- -----------------------------------------------------------------------
200 Perimeter Park Principal Mutual 2,955,346 9.6% 1996
- -----------------------------------------------------------------------
2,955,346
- -----------------------------------------------------------------------
400 Perimeter Park Manulife 4,219,615 8.00% 2006
800 Perimeter Park Manulife 3,120,072 8.00% 2006
- -----------------------------------------------------------------------
7,339,687
- -----------------------------------------------------------------------
$ 20,447,265
=======================================================================
</TABLE>
<PAGE>
EXHIBIT E
DEVELOPMENT PROPERTIES
-----------------------------------------
NAME SQUARE FEET
-----------------------------------------
Woodlake III 97,200
Regency - Sprint 95,000
2000 Perimeter Park West 55,500
Enterprise III 60,000
----------------------------------------
307,700
----------------------------------------
<PAGE>
EXHIBIT F
DEVELOPMENT PROPERTY DEBT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
CURRENT INTEREST
PROJECT LENDER BALANCE RATE MATURITY
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Woodlake III First Union $2,895,000 Floating Construction
Regency - Sprint First Union 7,496,049 Floating Construction
2000 Perimeter Park West First Union 4,174,177 Floating Construction
Enterprise III First Union 3,884,622 Floating Construction
- ---------------------------------------------------------------------------
$18,449,848
- ---------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated September 24, 1996 and to all references to our
firm, included in this Form 8-K, into the Company's previously filed
Registration Statements on Form S-3 (File No. 33-96534), Form S-3 (File No.
33-96536), Form S-3 (File No. 333-1106) and Form S-8 (File No. 333-1088).
Arthur Andersen LLP
Atlanta, Georgia
November 5, 1996
