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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-13254
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WEEKS CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-1525322
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(State of Incorporation) (I.R.S. Employer Identification No.)
4497 Park Drive, Norcross, Georgia 30093
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(Address of principal executive offices, including zip code)
(770) 923-4076
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, $.01 par value; New York Stock Exchange
8.0% Series A Cumulative Redeemable New York Stock Exchange
Preferred Stock, $.01 par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO___
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
The aggregate market value of the shares of common stock held by non-
affiliates (based upon the closing sale price on the New York Stock Exchange on
March 20, 1998) was approximately $577,604,000. As of March 20, 1998, there
were 18,992,768 shares of common stock, $.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held May 20, 1998 are incorporated by reference in
Part III, Items 10, 11, and 13.
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TABLE OF CONTENTS
ITEM NO. FINANCIAL INFORMATION PAGE NO.
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PART I
1. Business.............................. 3
2. Properties............................ 14
3. Legal Proceedings..................... 26
4. Submission of Matters to a Vote of
Security Holders...................... 26
X. Executive Officers of the Registrant.. 27
PART II
5. Market for Registrant's Common Equity
and Related Shareholder Matters....... 30
6. Selected Financial Data............... 32
7. Management's Discussion and Analysis
Condition and Results of Operations... 33
8. Financial Statements and
Supplementary Data.................... 46
9. Changes in and Disagreements with
Accounting and Financial Disclosure... 46
PART III
10. Directors and Executive Officers of
the Registrant........................ 46
11. Executive Compensation................ 46
12. Security Ownership of Certain
Beneficial Owners and Management...... 47
13. Certain Relationships and Related
Transactions.......................... 50
PART IV
14. Exhibits, Financial Statement Schedule
and Reports on Form 8-K............... 50
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PART I
ITEM 1. BUSINESS
THE COMPANY
Weeks Corporation (the "Company" or "Registrant") is a self-administered, self-
managed, geographically focused real estate investment trust ("REIT") that was
organized in 1994 to continue and expand the fully integrated real estate
business previously conducted by the Company and its affiliates. Since 1965,
the Company, together with its affiliates and predecessors, has developed,
owned, managed, constructed and acquired primarily institutional-quality
industrial and suburban office properties in select metropolitan markets in the
Southeast.
As of December 31, 1997, the Company's in-service property portfolio consisted
of 218 industrial properties, 21 suburban office properties and three retail
properties comprising 17,015,000 square feet. In-service properties exclude
properties under development which are not yet stabilized (i.e., substantially
leased) and properties under agreement to acquire. As of December 31, 1997, the
Company's primary markets and the concentration of the Company's portfolio
(based on square footage of in-service properties) are Atlanta, Georgia (70%),
Nashville, Tennessee (12%), Raleigh-Durham-Chapel Hill (the "Research
Triangle"), North Carolina (12%), Orlando, Florida (4%), and Spartanburg, South
Carolina (2%). In addition, 55 industrial, suburban office and retail
properties were under development, in lease-up or under agreement to acquire at
December 31, 1997, comprising an additional 6,210,000 square feet (see
"Properties" below).
As used herein, the term "Company" includes Weeks Corporation and its
subsidiaries, including Weeks Realty, L.P. (the "Operating Partnership"), unless
the context indicates otherwise. The Company, through its wholly owned
subsidiaries, is the general partner of and owns a majority interest in the
Operating Partnership which, including the operations of its subsidiaries,
conducts substantially all of the on-going operations of the Company. The
Company has elected to qualify and operate as a self-administered and self-
managed REIT under the Internal Revenue Code of 1986, as amended (the "Code").
As a REIT, the Company will not generally be subject to corporate federal income
taxes as long as it satisfies certain technical requirements of the Code
relating to the composition of its income and assets, and the requirement to
distribute 95% of its taxable income to its shareholders.
As of December 31, 1997, the Company had outstanding 17,703,992 shares of common
stock and owned the same number of units of common limited partnership interest
("Common Units") in the Operating Partnership, representing a 75.9% ownership
interest in the Operating Partnership. Common Units held by persons other than
the Company totaled 5,632,695 as of December 31, 1997, and represented a 24.1%
minority interest in the Operating Partnership. Common Units are convertible by
their holders into shares of the Company's common stock on a one-for-one basis,
or into cash, at the Company's option, subject to certain restrictions discussed
under "Security Ownership of Certain Beneficial Owners and Management" in Item
12. The Company's weighted average ownership interest in the Operating
Partnership was 76.5% and 80.6% for the years ended December 31, 1997 and 1996,
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respectively. Of the 75.9% interest in the Operating Partnership held by the
Company as of December 31, 1997, the Company owned the sole 1.0% general
partnership interest in the Operating Partnership through Weeks GP Holdings,
Inc., a wholly owned Georgia corporation ("Weeks GP"), and a 74.9% limited
partnership interest in the Operating Partnership through Weeks LP Holdings,
Inc., a wholly owned Georgia corporation ("Weeks LP"). Both Weeks GP and Weeks
LP are qualified REIT subsidiaries within the meaning of Section 856(i)(2) of
the Code and their existence will be disregarded for federal income tax
purposes.
The Company conducts its third-party service businesses through two companies
(the "Service Companies"): Weeks Realty Services, Inc. ("Weeks Realty
Services"), conducts third-party landscape, property management and leasing
services, and Weeks Construction Services, Inc. ("Weeks Construction Services),
conducts third-party construction services. The Company holds 100% of the
nonvoting and 1% of the voting common stock of these Subsidiaries. The
remaining voting common stock is held by three executive officers of the
Company. The ownership of the common stock of the Service Companies entitles
the Company, to substantially all (99%) of the economic benefits from the
results of the Service Companies operations (see Notes 2 and 6 to the
consolidated financial statements).
On August 24, 1994, the Company completed a business combination and an initial
public offering of common stock resulting in the organizational and operating
structure discussed above. The Company and its subsidiaries, including the
Service Companies, succeeded to substantially all of the interests in certain
land and industrial and suburban office buildings under common ownership and to
the development, construction, landscape and management businesses of the
predecessors to the Company referred to herein as the "Weeks Group."
The Operating Partnership owns five of its industrial buildings in Atlanta,
Georgia through its 99% ownership of Weeks Financing Limited Partnership (the
"Financing Partnership"). The Financing Partnership buildings are encumbered by
mortgage indebtedness. The remaining 1% ownership interest in the Financing
Partnership is held by Weeks Realty Services.
Four buildings located in the Research Triangle are owned by Weeks NC Financing
Limited Partnership (the "NC Financing Partnership"), a subsidiary of the
Operating Partnership. The Operating Partnership owns a 99% interest in the NC
Financing Partnership. The remaining 1% interest is owned by a wholly-owned
subsidiary of the Operating Partnership. The NC Financing Partnership buildings
are encumbered by mortgage indebtedness.
The Operating Partnership will terminate on the earlier of a sale of all or
substantially all of the assets of the Operating Partnership, the election of
the general partner (with the consent of the limited partners) to dissolve the
Operating Partnership, or December 31, 2093.
Based on shares of common stock outstanding on February 28, 1998, executive
officers and directors of the Company own approximately 14% of the common stock
of the Company, assuming an exchange for common stock of all of the Common Units
which are not currently held by the Company. Such ownership excludes 2,774
shares of common stock and 320,124 Common Units beneficially owned by A. Ray
Weeks, Jr., as trustee of two trusts for the benefit of certain members of the
Weeks family, 31,810 shares of common stock held by a foundation of which A. Ray
Weeks, Jr., is a director, 3,000 shares of common stock held by a family trust
of which A. Ray Weeks, Jr., is a trustee, 1,3070,647 Common Units and 57,278
shares of common stock beneficially owned by John W. Nelley, Jr., and Albert W.
Buckley, Jr., as general partners of NWI Warehouse Group, L.P., and 546,435
shares of common stock issuable upon the exercise of options outstanding on
February 28, 1998, granted to executive officers and directors of the Company.
This Annual Report on Form 10-K, including documents incorporated herein by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, may
differ materially from the events and results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, the general economic climate, competition and the supply of and
demand for industrial and suburban office properties in the Company's markets,
interest rate levels, the availability of financing, potential environmental
liability and other risks associated with the ownership, development and
acquisition of properties, including risks that tenants will not take or remain
in occupancy or pay rent, or that construction or operating costs may be greater
than anticipated, and those discussed in "Management's Discussion and Analysis
of Results of Operations and Financial Condition" appearing elsewhere herein.
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COMPANY HISTORY
The Company was founded in 1965 by A.R. Weeks, Sr., the father of A. Ray Weeks,
Jr., the Company's Chairman of the Board and Chief Executive Officer. Under the
leadership of A. Ray Weeks, Jr. and Forrest W. Robinson, the Company's President
and Chief Operating Officer, the Company operated as a private real estate
Company until August 1994, when it completed the IPO and elected to be taxed as
a REIT. Thomas D. Senkbeil joined the Company as Vice Chairman of the Board and
Chief Investment Officer in October 1992. Prior to joining the Company, Mr.
Senkbeil had been a principal in another real estate development and management
firm in Atlanta, Georgia.
In November 1996, the Company completed the initial phase of the acquisition of
the properties and related operations of NWI Warehouse Group, L.P. ("NWI"), and
Buckley & Company Real Estate, Inc. ("Buckley"), each of Nashville, Tennessee
(see Note 7 to the consolidated financial statements). Through that
transaction, the Company established a presence in Nashville, Tennessee, and
both of the principals of NWI and Buckley, John W. Nelley, Jr., and Albert W.
Buckley, Jr., joined the Company as Managing Directors with responsibility for
the Company's activities in Nashville, Tennessee. In December 1996, the Company
completed the initial phase of its acquisition of the properties and related
operations of Lichtin Properties, Inc. ("Lichtin"), of the Research Triangle
area of North Carolina (see Note 7 to the consolidated financial statements).
Through that transaction, the Company established a presence in the Research
Triangle, and Harold S. Lichtin, the President of Lichtin, joined the Company's
Board of Directors. John W. Nelley, Jr., and Harold S. Lichtin currently serve
on the Company's Board of Directors.
In January 1998, the Company acquired a 2,477,000 square foot, 24-building
property portfolio in Miami, Florida (see Note 7 to the consolidated financial
statements) and in February 1998, one of the Service Companies acquired a one-
third interest in Codina Group, Inc., a South Florida commercial and industrial
real estate services company that developed the portfolio (see Note 6 to the
consolidated financial statements). St. Joe Corporation, a publicly traded
company which, through its subsidiaries, is the largest single private landowner
in the State of Florida, also purchased a one-third interest in Codina Group,
Inc. Through these combined transactions, the Company established a presence in
South Florida with the intention of pursuing development and acquisition
activity in the area.
The Company was incorporated in Georgia as A. R. Weeks & Associates Inc. in
1983. The Company changed its name to Weeks Corporation in June 1994. The
Company's executive offices are located at 4497 Park Drive, Norcross, Georgia,
30093 and its telephone number is (770)923-4076. The Company, the Operating
Partnership and the Service Companies currently employ approximately 408 full-
time employees.
COMPETITION
Numerous properties compete with the Company's properties in attracting tenants
and corporate users. Some of these competing properties may be newer or better
located than the Company's properties. The number of competitive industrial or
suburban office properties and the availability of land suitable for industrial
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or suburban office development in a particular area could have a material effect
on the Company's ability to lease or develop space. The Company may be
competing with other developers that have greater resources than the Company.
In addition, in order to maintain its qualification as a REIT, the Company will
be required under the Code to distribute annually significant amounts of cash
from operations, while some of its competitors may be able to retain more of
their working capital to finance projects.
The Company competes for tenants based on its high level of client service, the
quality of its properties and business parks, and its ability to successfully
develop a wide range of industrial and suburban office properties. Leases at
the Company's properties are priced competitively based on market conditions,
supply and demand characteristics, and the quality of the Company's properties
and services. The Company does not seek to compete solely on the basis of
providing the low-cost solution for all tenants.
REAL ESTATE INVESTMENTS
The Company's real estate investments are subject to varying degrees of risk.
Income from the Company's properties and the demand for new development
properties may be adversely affected by the general economic climate; local
conditions such as oversupply of industrial or office properties or a reduction
in demand for industrial or office properties in the markets where the Company
owns properties; the attractiveness of the Company's properties; the ability of
the Company to provide adequate maintenance and insurance; and increased
operating costs (including real estate taxes). In addition, income from the
Company's properties and the value of its real estate are also affected by such
factors as the cost of regulatory compliance, interest rate levels and the
availability of financing. The Company's income and operations would be
adversely affected if a significant number of tenants were unable to pay rent or
the Company's properties could not be rented on favorable terms. Certain
significant expenditures associated with the Company's investments in real
estate (such as mortgage payments, if any, real estate taxes and maintenance
costs) are generally not reduced when circumstances cause a reduction in income
from the property.
ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws and regulations, an owner or
operator of real estate may be held liable for the costs of removal or
remediation of hazardous or toxic substances located on or in the property.
These laws often impose such liability without regard to whether the owner knows
of, or was responsible for, the presence of such hazardous or toxic substances.
The costs of any required remediation or removal of such substances may be
substantial. In addition, the owner's liability as to any property is generally
not limited under such laws and regulations and could exceed the value of the
property and/or the aggregate assets of the owner. The presence of such
substances, or the failure to remediate such substances properly, may also
adversely affect the owner's ability to sell or lease the property or to borrow
using the property as collateral. Under such laws and regulations, an owner or
entity who arranges for the disposal or treatment of hazardous or toxic
substances at a disposal or treatment facility may also be liable for the costs
of removal or remediation of all such substances at such facility, whether or
not such facility is owned or operated by such person. Certain tenants of the
Company handle and store hazardous substances at the Company's properties. As a
result, in connection with the ownership of the Company's properties or land
held for development and a tenant's improper handling, storage, disposal or
treatment of such hazardous or toxic substances, the Company may be liable for
such costs, including the removal or remediation of all such substances from
such properties. Some laws and regulations impose liability for the release of
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certain materials into the air or water from a property, including asbestos, and
such release can form the basis for liability to third parties for personal
injury or other damages. Other laws and regulations can limit the development of
and impose liability for the disturbance of wetlands or the habitats of
threatened or endangered species.
The Company regularly makes capital expenditures and reviews the conditions of
its properties and its land held for development in order to maintain compliance
with applicable environmental laws. Based on facts currently known to it, the
Company does not believe it will be required under existing environmental laws
to expend amounts that would have a material adverse effect on its results of
operations, financial condition or liquidity. However, no assurance can be
given that material environmental liabilities do not exist, that any prior owner
or operator of a property or land held for development did not create any
material environmental condition not known to the Company, that a material
environmental condition does not otherwise exist as to any one or more of the
properties or land held for development, or that future uses and conditions
(including changes in applicable environmental laws and regulations and the uses
and conditions of properties in the vicinity, such as leaking underground
storage tanks and the activities of the tenants) will not result in the
imposition of environmental liability. No material expenditures were made by
the Company in 1997, 1996 or 1995 relating to environmental matters.
INVESTMENT OBJECTIVES AND OPERATING STRATEGIES
The Company's primary investment objectives are to increase shareholder value
and to increase per share cash available for distribution by (1) developing
institutional-quality, functional multi-tenant and build-to-suit industrial and
suburban office properties, (2) acquiring industrial and suburban office
properties in strategic locations where the Company can establish or enhance its
market presence, (3) maximizing cash flow through active leasing and management
of its properties, and (4) expanding strategically into new geographic markets.
The Company has structured its operations, as discussed in more detail below, to
meet these investment objectives.
FULLY INTEGRATED REAL ESTATE COMPANY
The Company is a fully integrated real estate company with resources dedicated
to:
. marketing . landscaping
. development . property management
. construction . civil engineering
. investment analysis . legal
. asset management . design
. financing . information systems
The Company believes that by providing a full range of services it can control
quality and provide greater client service, improve timely delivery of its
industrial and suburban office developments and promote cost savings.
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DEVELOPMENT OF BUSINESS PARK ENVIRONMENTS
The Company develops and owns its properties primarily in business park
environments (see discussion under "Properties"). Alone or with its joint
venture partners, the Company controls all aspects of the development process in
a majority of the business parks in which it operates, including site selection
and project concept, master planning and zoning, design and construction,
leasing and property management. Each business park is in proximity to an
interstate highway interchange and retail and residential amenities.
The Company's business parks emphasize flexible land plans, extensive
landscaping and protective covenants which restrict the uses and control the
architecture and signage. In addition to its properties, the Company provides
landscaping services for other corporate users in its controlled business parks.
The Company will continue to emphasize business park development in future
years.
PRODUCT FOCUS
The Company develops or acquires industrial and suburban office properties,
primarily in suburban locations (see related discussion of product types under
"Properties"). The Company's properties can include both single-tenant (build-
to-suit) buildings and multi-tenant buildings. The Company designs properties
that can be modified economically to meet the needs of various clients and that
can often function as either multi-tenant or single-tenant buildings.
The Company develops institutional-quality, general purpose properties that are
designed to be architecturally attractive and to serve the needs of a variety of
tenants in a particular submarket. The Company attempts to limit tenant
improvement expenditures to those which are in demand by, and adaptable with
moderate modification to, a high number of users in a market. The Company
controls tenant improvement expenditures by utilizing its in-house interior
finish department to supervise the construction process and by compensating its
marketing representatives based on a formula which takes into account the cost
of tenant finish requirements. The Company uses standard finish materials for
most of its tenants. The Company's annual purchase programs allow it to procure
these materials on a volume discount basis.
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GroupSoutheast Market Focus
The Company focuses its activities in what it believes are some of the fastest
growing markets in the Southeast. As detailed below, states within the
Southeast where the Company focuses its activities have generally experienced
greater percentage growth in employment and population than the United States as
a whole.
Employment and Population Growth
(percentage change)
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<CAPTION>
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Non-Farm
Employment Growth Population Growth
Jan '97 - Jan '98(a) Jul '96 - Jul '97(b)
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Georgia 3.4% 2.1%
Florida 4.1% 1.6%
North Carolina 3.2% 1.6%
South Carolina 3.0% 1.2%
Tennessee 2.3% 1.1%
U.S. Average 2.7% 0.9%
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(a) Source: Bureau of Labor Statistics.
(b) Source: U.S. Census Bureau.
Metropolitan Atlanta, Georgia. The Company was founded and is currently
headquartered in metropolitan Atlanta, and is one of metropolitan Atlanta's
largest industrial property owners. Metropolitan Atlanta's rapid growth in both
employment and population is due in part to its role as a business and
distribution center for the entire Southeast.
According to Jamison Research, Inc. ("Jamison"), which publishes data on
metropolitan Atlanta's industrial and office real estate markets, the
metropolitan area in 1997 recorded industrial net absorption of approximately
13.2 million square feet, and over the past five years, metropolitan Atlanta's
industrial net absorption has totaled more than 50 million square feet. Also
according to Jamison, metropolitan Atlanta'a office market recorded net
absorption of approximately 3.8 million square feet during 1997. The
approximately 17.0 million square feet of combined industrial and office net
absorption in metropolitan Atlanta in 1997, compares to approximately 12.6
million square feet in 1996.
The Company's completed and in-service properties located in metropolitan
Atlanta were comprised of approximately 93% industrial properties and
approximately 7% suburban office properties at December 31, 1997, and had an
average occupancy rate on such date of 96.0%, nearly four percentage points
better than the overall market occupancy, according to figures published by
Jamison.
The Company believes that one of the reasons that the occupancy rate of its
metropolitan Atlanta properties is higher than the overall market is that it
generally focuses its activities on the submarkets that are among the
metropolitan area's strongest. According to Jamison, the major submarkets where
the Company generally focuses its activities accounted for less than 50% of
metropolitan Atlanta's approximately 416 million square feet of industrial and
office space at December 31, 1997, but recorded more than 70% of the
metropolitan area's net absorption in 1997. The Company allocates its
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development activity in metropolitan Atlanta among all four of its primary
industrial and suburban office property types and among a number of distinct
submarkets, based on its determination of supply and demand conditions.
Nashville, Tennessee. The Company entered the Nashville market in November
1996, with its acquisition of NWI (see Note 7 to the consolidated financial
statements). Like Atlanta, Nashville is the state capital and has a well-
developed transportation infrastructure. Nashville is also well located as a
point of distribution. According to the Nashville Area Chamber of Commerce,
Nashville lies within a 600 mile radius of 50% of the United States population.
Because of NWI's established presence in the Nashville industrial real estate
market, the Company is operating in Nashville under the name "Weeks/NWI."
At December 31, 1997, all of the Company's completed and in-service properties
in Nashville are industrial properties and had an average occupancy rate on such
date of 91.8%.
Research Triangle, North Carolina. The Company entered the Research Triangle
area of North Carolina in December 1996, with its acquisition of Lichtin (see
Note 7 to the consolidated financial statements). The Research Triangle market
is characterized as a center for high technology, communications, research and
development and health care, and attracts many of its employees from its three
universities: Duke University, The University of North Carolina and North
Carolina State University. Research Triangle Park, which is located adjacent to
most of the Company's portfolio, is one of the nation's largest planned research
parks, with more than 70 national and international research organizations
employing over 35,000 people. Research Triangle Park generally consists of
corporate-owned facilities devoted to research and development. Many of the
Company's properties house administrative, technology and service functions
which complement the activities of businesses with facilities located within
Research Triangle Park.
The Company's completed and in-service properties in the Research Triangle were
comprised of 20 industrial properties and eight suburban office properties at
December 31, 1997, and had an average occupancy rate on such date of 98.1%.
Orlando, Florida. The Company entered the Orlando market in April 1995 with the
purchase of an approximately 190,000 square foot portfolio of industrial
properties. The Company's decision to expand into Orlando was based in part on
the city's geographic location as a point of distribution for the state of
Florida, the most highly populated state in the Southeast. Since entering
Orlando in 1995, the Company has increased its portfolio of in-service
properties to approximately 739,000 square feet as of December 31, 1997, and has
opened a local office. All of the Company's 11 completed and in-service
properties in Orlando at December 31, 1997, are industrial properties and had an
average occupancy rate on such date of 97.9%.
Tampa, Florida. The Company entered the Tampa market in 1997, with plans to
develop two new business parks, totaling approximately 1.5 million square feet.
At year-end, the Company did not have any in-service properties in the Tampa
market. The Company currently runs it Tampa operations using personnel located
in Orlando, however, the Company recently acquired an experienced Tampa-based
marketing officer.
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Jacksonville, Florida. The Company entered the Jacksonville market in 1997 by
acquiring the rights to the remaining land at Jacksonville International
Tradeport, the only industrial park in a tax increment financing district,
located near the Jacksonville International Airport. The Company estimates that
the development potential of this land at December 31, 1997, may total more than
2.0 million square feet. The Company also hired two local market officers who
had primary responsibility for developing Jacksonville International Tradeport.
The Company's one in-service industrial property in Jacksonville was 100%
occupied as of December 31, 1997.
Miami, Florida. The Company entered the Miami market in early 1998 through the
acquisition of Beacon Centre, a 24-building, 2.5 million square foot mixed use
industrial, office and retail development, located near the Miami International
Airport. In connection with the acquisition of Beacon Centre, the Company also
acquired a one-third interest in Codina Group, Inc., a South Florida commercial
and industrial real estate services company that developed the property (see
notes 6 and 7 to the consolidated financial statements). St. Joe Corporation, a
publicly-traded company which, through its subsidiaries, is the largest single
private landowner in the State of Florida, also purchased a one-third interest
in Codina Group, Inc. Through these combined transactions, the Company intends
to pursue additional development and acquisition activity throughout South
Florida.
Spartanburg, South Carolina. Spartanburg is the Company's smallest market and
is served out of the Company's Atlanta headquarters. The Company's activities
in Spartanburg consist of properties owned and developed at Hillside business
park. Hillside is located one exit north on I-85 from BMW's automobile
production facility that opened in 1995. The occupancy rate of the Company's
approximately 386,000 square feet of completed and in-service properties in
Spartanburg was 100% as of December 31, 1997.
BUSINESS GROWTH STRATEGY
Development
The Company is an experienced developer of institutional-quality, general
purpose industrial and suburban office multi-tenant and build-to-suit
properties, and has personnel engaged in all phases of the development process,
including market analysis, site selection, zoning, design, civil engineering,
construction and landscaping. The Company currently has adequate sources for
raw materials needed to construct its new properties, including access to
qualified labor and subcontractors. In 1997 and 1996, the Company completed and
stabilized 26 development properties and two property expansions totaling
approximately 2.8 million square feet.
Acquisitions
The Company balances its development activity by making opportunistic
acquisitions in strategic locations that establish or enhance the Company's
market position, or where the Company's skills and market knowledge can enhance
value through additional development, property management or physical upgrades.
In 1997 and 1996, the Company acquired 83 properties totaling approximately 5.4
million square feet.
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Risks of Development and Acquisitions
New project development is subject to a number of risks, including risks of
construction delays or cost overruns that may increase project costs, risks that
the project will not achieve anticipated occupancy levels or sustain anticipated
rent levels, and new project commencement risks such as the failure to obtain
zoning, occupancy and other required government permits and authorizations, and
the incurrence of development costs in connection with projects that are not
pursued to completion.
Acquisitions entail risks that (i) existing agreements to acquire properties may
fail to close, (ii) acquired properties may not perform in accordance with
management's expectations, including projected occupancy and rental rates, (iii)
the senior executives and employees of an acquired business will not be
successfully integrated into the Company, or (iv) the Company may have
underestimated the cost of improvements required to bring an acquired property
up to standards established for the market position intended for that property.
Although the Company has successfully acquired properties and effectively
integrated their operations in the past, there can be no assurance that the
Company will be able to continue to make successful acquisitions in the future
or that any such acquisitions will be successfully integrated into the Company's
operations. Furthermore, there can be no assurance that an acquisition will not
have an adverse effect upon the Company's operating results, particularly in the
fiscal quarters immediately following the consummation of such acquisition, or
that the Company will be able to continue to operate an acquired business in a
profitable manner.
Both development and acquisitions also involve risks that the Company will fail
to obtain adequate sources of financing (see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources").
Land Control
An important part of the Company's development strategy is to own or control
land sufficient to allow it to develop exclusive business park environments and
to accommodate the expansion and relocation needs of its tenants. The Company
employs a number of ownership and control arrangements in its land strategy,
including outright purchases, joint ventures, staged acquisitions, options and
exclusive marketing and development agreements. By doing so, the Company
believes that it can control sufficient land acreage, while mitigating the
negative impact of land carrying costs.
At December 31, 1997, the Company owned or controlled (through agreements to
purchase, options and marketing and development agreements) approximately 2,017
net usable acres of undeveloped land, located primarily in existing business
parks with zoning and infrastructure in place. The Company believes the
development potential of this land may ultimately total approximately 20.3
million square feet (see "Properties").
Internal Growth
The Company attempts to maximize its available cash flow by increasing the
occupancy rate of those properties that are not fully leased, maintaining high
occupancy rates, raising effective rental rates and controlling operating
expenses and capital expenditures. The occupancy rate of the Company's
stabilized properties (i.e., those having reached substantial lease-up) was
96.0% as of December 31, 1997. The Company believes that its emphasis on
providing quality facilities and client service has resulted in a high retention
of its tenants and low turnover. Of the leases that expired in 1997
12
<PAGE>
(representing approximately 3.0 million square feet), tenants occupying
approximately 72% of such space renewed their leases with the Company. The
Company believes that this high retention of its tenants results in lower re-
leasing costs and decreased potential loss due to vacancy. In addition, in
1997, 55 tenant expansions were completed for existing tenants, totaling
approximately 650,000 square feet.
The leases for the Company's properties have terms ranging from one to fifteen
years, with terms for multi-tenant properties typically between three and five
years and for build-to-suit properties typically between seven and ten years.
Typically, the tenant in a multi-tenant property pays for increases in taxes,
operating costs and insurance above a base year level. For build-to-suit
properties, the tenant typically pays for all taxes, insurance and operating
costs. Approximately 65% of the Company's leases (based on leased square
footage as of December 31, 1997) contain contractual rent escalations.
The high average occupancy of the Company's properties reflects the generally
strong supply and demand conditions in its markets. As a result, the Company
continues to be able to increase average rents and generally to avoid offering
tenant concessions. During 1997, the Company renewed or re-leased approximately
3.0 million square feet of second-generation space in its properties. Cash-
basis rental rates on this space increased by an average of 6.0%, calculated by
comparing the initial cash-basis rent to be paid by the tenant under the new or
renewed lease with the ending cash-basis rent paid by the tenant under the
previous lease on the same space.
As shown in the table provided under "Properties -- Tenants," no single tenant
accounted for more than 3.1% of annualized base rent from leases under which
tenants were paying rent as of December 31, 1997.
Geographic Expansion
From the Company's base in metropolitan Atlanta, Georgia, the Company intends to
continue expanding carefully into new southeastern markets. Additionally, the
Company intends to explore opportunities in other major growth markets which are
a logical expansion of its current southeastern geographic focus. Such markets
could extend into the southwestern and mid-Atlantic regions of the United
States. The Company intends to expand into other markets only when it believes
it can achieve over time a significant market presence. The Company's
geographic expansion activities to date have included the 1990 expansion into
Spartanburg, South Carolina, the 1995 expansion into Orlando, Florida, the 1996
expansions into Nashville, Tennessee and the Research Triangle area of North
Carolina, the 1997 expansions into Tampa and Jacksonville, Florida and the early
1998 expansion into Miami and the greater South Florida markets. As a result of
its geographic expansion, the Company has reduced its concentration of
properties in metropolitan Atlanta, Georgia, to 70% at December 31, 1997 (based
on square footage of in-service properties, excluding properties under
development and/or under agreement to acquire), from 95% at December 31, 1995
(calculated on the same basis). The Company's concentration in metropolitan
Atlanta, Georgia is expected to continue to decline with the expansions into
additional markets. For a breakdown of the Company's properties by market,
including properties under development or in lease-up or under agreement to
acquire, see the table following.
13
<PAGE>
ITEM 2. PROPERTIES
As of December 31, 1997, the Company owned or had agreements to acquire 297
properties, including 28 properties which were under development or in lease-up
and 27 properties which were under agreement to acquire. One additional
property was held in a 50% owned entity. Of these 298 properties (including the
50% owned property), 264 were industrial buildings, 29 were office buildings and
five were retail buildings. The Company's 243 completed and in-service
properties (i.e., excluding properties under development or in lease-up or under
agreement to acquire) were 96.0% occupied at December 31, 1997.
The following table sets forth, as of December 31, 1997, the location and type
of property by square feet for the 298 properties discussed above.
Location and Type of Properties
(by square feet)
<TABLE>
<CAPTION>
Business Bulk Business Total Suburban Percent
Location Distribution Warehouse Service Industrial Office Retail Total of Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA 6,730,995 4,409,490 1,342,488 12,482,973 1,154,460 48,977 13,686,410 58.7%
Miami, FL 1,951,113 -- 136,361 2,087,474 63,240 415,851 2,566,565 11.0%
Nashville, TN 1,699,476 636,282 353,775 2,689,533 -- -- 2,689,533 11.6%
Research Triangle, NC 630,775 -- 982,453 1,613,228 810,120 -- 2,423,348 10.4%
Orlando, FL 310,007 486,883 241,330 1,038,220 108,000 -- 1,146,220 4.9%
Spartanburg, SC 92,400 293,200 -- 385,600 -- -- 385,600 1.7%
Tampa, FL 68,480 173,514 -- 241,994 -- -- 241,994 1.0%
Jacksonville, FL -- 171,000 -- 171,000 -- -- 171,000 0.7%
- ---------------------------------------------------------------------------------------------------------------------
Total 11,483,246 6,170,369 3,056,407 20,710,022 2,135,820 464,828 23,310,670 100.0%
- ---------------------------------------------------------------------------------------------------------------------
Percent of Total 49.3% 26.4% 13.1% 88.8% 9.2% 2.0% 100.0%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Industrial Properties
The Company owned, had under development or in lease-up or had agreements to
acquire 264 industrial buildings as of December 31, 1997, of which 173 are
located in Atlanta Georgia, 26 are located in Nashville, Tennessee, 21 are
located in the Research Triangle area of North Carolina, 22 are located in
Miami, Florida, 15 are located in Orlando, Florida, three are located in
Spartanburg, South Carolina, two are located in Tampa, Florida and two are
located in Jacksonville, Florida. These buildings can be characterized by their
use: business distribution, bulk warehouse or business service. The Company
owned, had under development or in lease-up or had agreements to acquire 166
business distribution buildings, 40 bulk warehouse buildings, and 58 business
service buildings at year-end.
The Company's business distribution buildings are generally 20,000 to 200,000
square feet in size, have warehouse clear ceiling heights of 18 to 24, building
depths of 100 to 240, office finish of 10% to 55%, dock-high truck doors (which
are designed to accommodate tractor-trailers) and typically cost $37 to $48 per
square foot to construct. These buildings may function as headquarters, sales
and administration, research and development and light manufacturing facilities
in addition to distribution facilities.
14
<PAGE>
The Company's bulk warehouse buildings are generally 75,000 to 360,000 square
feet in size, have clear ceiling heights of 24 to 30, building depths of 200 to
500, office finish of 2% to 20%, dock-high truck doors and typically cost $22 to
$28 per square foot to construct. These buildings generally function as
regional or local distribution and warehouse facilities.
The Company's business service buildings are generally 20,000 to 110,000 square
feet in size, have clear ceiling heights of 14 to 16, building depths of 80 to
160, office finish of 35% to 100%, drive-in truck doors (which are designed to
accommodate delivery vans) and typically cost $65 to $80 per square foot to
construct. These buildings are used by tenants primarily for clerical,
administrative and executive offices.
Office Properties
At December 31, 1997, the Company owned, had under development or in lease-up or
had agreements to acquire 29 suburban office buildings, of which 16 are located
in Atlanta, Georgia, 11 are located in the Research Triangle area of North
Carolina, one is located in Miami, Florida and one is located in Orlando,
Florida. The Company's typical suburban office building ranges in size from
approximately 30,000 to 150,000 square feet, with an average of 4.5 parking
spaces per 1,000 square feet of leasable space and a typical replacement cost of
$85 to $115 per square foot.
Occupancy Rate of In-Service Properties by Property Type
The occupancy rate of the Company's in-service properties as of December 31,
1997 (by Property type) was as follows:
Occupancy Rate of In-Service Properties
as of December 31, 1997
(by Property type)
Business distribution 95.7%
Bulk warehouse 99.2%
Business service 91.3%
-----------------------------------------------
Total industrial average 96.1%
-----------------------------------------------
Suburban office 94.3%
Retail 97.5%
-----------------------------------------------
Total average 96.0%
-----------------------------------------------
Business Parks
A key to the Company's success has been the development of properties within
business parks where the Company controls virtually all aspects of the
development process, including site selection and project concept, master
planning and zoning, design and construction, leasing and property management.
For developments of land held in joint ventures, the Company must obtain certain
approvals from its joint venture partners.
The Company's business parks are generally in proximity to an interstate highway
interchange and are close to retail and residential amenities. The business
parks are generally master planned to accommodate a variety of uses. The
business parks are generally well landscaped with protective covenants which
restrict the uses and control the architecture and signage.
15
<PAGE>
The majority of the Company's properties and land held for development are
located in business parks. The Company's ability to develop both multi-tenant
buildings for lease and build-to-suit buildings for lease or sale results in
more rapid development of the business parks. The Company's control of land in
business parks also generates revenues from various sources including land
sales, building construction, landscape installation and maintenance, lease
commissions and property management fees.
The buildings within business parks typically have a mix of uses ranging from
distribution and service to office and light manufacturing. The Company
facilitates the coexistence of these diverse functions within business parks
through controlled signage and architecture, landscaping and placement of
buildings.
The information provided in the table set forth below reflects information
regarding the Company's properties (summarized by submarket and business park)
as of December 31, 1997, including properties under development or in lease-up,
or under agreement to acquire.
16
<PAGE>
<TABLE>
<CAPTION>
Weeks Corporation Properties
(As of December 31, 1997)
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish (1) Rate (2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IN-SERVICE PROPERTIES
METROPOLITAN ATLANTA, GA
NORTHEAST/I-85 SUBMARKET
Gwinnett Park 38 2,366,481 40.2% 93.4%
Horizon 6 1,063,354 7.0% 100.0%
Northwoods 16 709,625 41.1% 93.7%
Gwinnett Pavilion 8 538,713 42.0% 99.8%
Berkeley Lake Distribution Center 3 514,160 3.2% 100.0%
Peachtree Corners Business Center 4 356,355 10.7% 96.6%
Pinebrook 3 346,402 13.9% 100.0%
Northbrook 2 308,480 5.9% 94.8%
Druid Chase Office Park 4 281,198 98.5% 97.1%
Meadowbrook 4 249,767 34.9% 100.0%
Crestwood Pointe 1 105,295 100.0% 88.9%
Park Creek 2 103,477 50.4% 100.0%
Sugarloaf(3) 1 86,000 100.0% 100.0%
River Green 2 59,138 80.0% 100.0%
Other Northeast/I-85 10 677,434 32.9% 97.6%
- -------------------------------------------------------------------------------------------------------
Total Northeast/I-85 Submarket 104 7,765,879 32.7% 96.6%
- -------------------------------------------------------------------------------------------------------
NORTH CENTRAL SUBMARKET
Northmeadow 10 570,036 75.5% 94.0%
Hembree Crest 4 285,247 16.3% 100.0%
Mansell Commons 9 223,762 55.9% 100.0%
Hembree Park 5 221,304 64.2% 95.4%
Northwinds 1 64,981 100.0% 100.0%
Other North Central Properties 1 58,093 100.0% 100.0%
- -------------------------------------------------------------------------------------------------------
Total North Central Submarket 30 1,423,423 60.9% 96.9%
- -------------------------------------------------------------------------------------------------------
AIRPORT/SOUTH ATLANTA SUBMARKET
Southridge 7 452,241 20.0% 94.6%
Sullivan International 4 78,168 36.1% 95.0%
Other Airport/South Atlanta Properties 1 253,890 1.2% 100.0%
- -------------------------------------------------------------------------------------------------------
Total Airport/South Atlanta Submarket 12 784,299 15.5% 96.4%
- -------------------------------------------------------------------------------------------------------
NORTHWEST/I-75 SUBMARKET
Northwest Business Center 10 376,080 62.4% 95.7%
Franklin Forest 9 306,321 69.8% 94.9%
Town Point 3 305,200 17.7% 89.5%
Other Northwest/I-75 Properties 2 385,551 15.0% 100.0%
- -------------------------------------------------------------------------------------------------------
Total Northwest/I-75 Submarket 24 1,373,152 40.8% 95.4%
- -------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Weeks Corporation Properties
(As of December 31, 1997)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish(1) Rate(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STONE MOUNTAIN SUBMARKET
Park North 8 542,470 49.1% 86.2%
- ---------------------------------------------------------------------------------------------------------
Total Stone Mountain Submarket 8 542,470 49.1% 86.2%
- ---------------------------------------------------------------------------------------------------------
CHATTAHOOCHEE SUBMARKET
Chattahoochee 1 48,007 25.8% 100.0%
- ---------------------------------------------------------------------------------------------------------
Total Chattahoochee Submarket 1 48,007 25.8% 100.0%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL METROPOLITAN ATLANTA, GA 179 11,937,230 36.6% 96.0%
- ---------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NC
Perimeter Park 8 473,574 96.9% 98.8%
Perimeter Park West 6 413,510 95.3% 96.1%
Enterprise Center 3 281,497 62.0% 94.4%
Metro Center 3 271,219 56.4% 100.0%
Woodlake Center 2 205,500 63.5% 100.0%
Research Triangle Industrial Center 3 154,056 12.6% 100.0%
Interchange Plaza 2 106,781 49.1% 100.0%
Other Research Triangle Properties 1 93,990 90.7% 100.0%
- ---------------------------------------------------------------------------------------------------------
TOTAL RESEARCH TRIANGLE, NC 28 2,000,127 73.4% 98.1%
- ---------------------------------------------------------------------------------------------------------
NASHVILLE, TN
Airpark Business Center 13 1,160,212 39.7% 90.5%
Brentwood South Business Center 6 504,264 19.0% 92.3%
Four-Forty Business Center 1 165,902 3.0% 100.0%
Aspen Grove Business Center 1 127,285 26.4% 90.4%
- ---------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 21 1,957,663 30.4% 91.8%
- ---------------------------------------------------------------------------------------------------------
ORLANDO, FL
Park South Distribution 3 368,633 13.7% 100.0%
Airport Commerce Center 7 310,007 36.1% 98.1%
Technology Park 1 60,711 73.0% 84.0%
- ---------------------------------------------------------------------------------------------------------
TOTAL ORLANDO, FL 11 739,351 28.0% 97.9%
- ---------------------------------------------------------------------------------------------------------
SPARTANBURG, SC
Hillside 3 385,600 15.2% 100.0%
- ---------------------------------------------------------------------------------------------------------
TOTAL SPARTANBURG, SC 3 385,600 15.2% 100.0%
- ---------------------------------------------------------------------------------------------------------
JACKSONVILLE, FL
Jacksonville International Tradeport 1 81,000 5.8% 100.0%
- ---------------------------------------------------------------------------------------------------------
TOTAL JACKSONVILLE, FL 1 81,000 5.8% 100.0%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES IN SERVICE(3) 243 17,100,971 39.2% 96.0%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Weeks Corporation Properties
(As of December 31, 1997)
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish(1) Rate(2)
- ---------------------------------------------------------------------------------------------------------------
PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
METROPOLITAN ATLANTA, GA
NORTHEAST/I-85 SUBMARKET
Horizon 1 267,619 10.0% 100.0%
Sugarloaf 1 79,588 20.1% 67.2%
Berkeley Lake Distribution Center 1 152,000 10.0% 42.3%
Crestwood Pointe 1 105,295 100.0% 19.9%
Park Creek 1 80,450 100.0% 100.0%
- ---------------------------------------------------------------------------------------------------------------
Total Northeast/I-85 Submarket 5 684,952 35.6% 71.1%
- ---------------------------------------------------------------------------------------------------------------
NORTH CENTRAL SUBMARKET
Hembree Park 2 189,000 12.5% 80.0%
Northwinds 1 149,797 100.0% 12.3%
Brookside 1 106,631 100.0% 100.0%
Northmeadow 1 47,600 50.0% 80.5%
- ---------------------------------------------------------------------------------------------------------------
Total North Central 5 493,028 61.6% 63.8%
- ---------------------------------------------------------------------------------------------------------------
AIRPORT/SOUTH ATLANTA SUBMARKET
Liberty Distribution Center 2 511,200 3.1% 41.2%
Southridge 1 60,000 13.0% 100.0%
- ---------------------------------------------------------------------------------------------------------------
Total Airport/South Atlanta Submarket 3 571,200 4.2% 47.4%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
TOTAL METROPOLITAN ATLANTA, GA 13 1,749,180 32.7% 61.3%
- ---------------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NC
Regency Forest 1 102,561 100.0% 97.1%
Perimeter Park West 2 176,923 100.0% 100.0%
Enterprise Center 1 143,737 50.0% 6.4%
- ---------------------------------------------------------------------------------------------------------------
TOTAL RESEARCH TRIANGLE, NC 4 423,221 83.0% 67.5%
- ---------------------------------------------------------------------------------------------------------------
NASHVILLE, TN
Nashville Business Center 1 194,750 10.0% 0.0%
Metro Center 1 166,441 10.0% 0.0%
Four-Forty Business Center 1 103,473 25.0% 84.7%
- ---------------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 3 464,664 13.3% 18.9%
- ---------------------------------------------------------------------------------------------------------------
ORLANDO, FL
Orlando Central Park 1 118,250 0.0% 27.4%
Technology Park 2 117,819 0.0% 8.4%
Northpoint 1 108,000 100.0% 0.0%
Celebration Service Center 1 62,800 0.0% 0.0%
- ---------------------------------------------------------------------------------------------------------------
TOTAL ORLANDO, FL 5 406,869 26.5% 10.4%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Weeks Corporation Properties
(As of December 31,1997)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish(1) Rate(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JACKSONVILLE, FL
Jacksonville International Tradeport 1 90,000 0.0% 60.0%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL JACKSONVILLE, FL 1 90,000 0.0% 60.0%
- -------------------------------------------------------------------------------------------------------------------------------
TAMPA, FL
Fairfield Distribution Center 2 241,994 0.0% 0.0%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL TAMPA, FL 2 241,994 0.0% 0.0%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP 28 3,375,928 32.4% 45.7%
- -------------------------------------------------------------------------------------------------------------------------------
PROPERTIES UNDER AGREEMENT TO ACQUIRE
NASHVILLE, TN
Aspen Grove Business Center 2 267,206 25.0% 55.2%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 2 267,206 25.0% 55.2%
- -------------------------------------------------------------------------------------------------------------------------------
MIAMI, FL
Beacon Centre 25 2,566,565 27.2% 96.5%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL MIAMI, FL 25 2,566,565 27.2% 96.5%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES UNDER AGREEMENT TO ACQUIRE 27 2,833,771 27.0% 92.6%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO(3) 298 23,310,670 36.7% 88.3%
===============================================================================================================================
</TABLE>
(1) Represents the percentage of rentable square feet that is built out as
office space rather than as warehouse or distribution space. For properties
under development represents current budgeted office finish.
(2) Occupancy or leasing rate includes percentage occupancy for completed and
in service properties at December 31, 1997. For properties under
development or in lease-up represents leasing or pre-leasing as of February
28, 1998.
(3) Includes one building totaling 86,000 square feet held in a 50% owned
entity.
<PAGE>
DEVELOPMENT LAND
The following schedule details the Company's undeveloped land interests at
December 31, 1997. The land detailed below is located primarily in existing
business parks with zoning and infrastructure in place. The Company estimates
that the total development potential of the development land could ultimately
total approximately 20.3 million square feet.
DEVELOPMENT LAND
at December 31, 1997
(in net usable acres)
<TABLE>
<CAPTION>
Estimated
Research Potential
Atlanta, Nashville, Triangle, Orlando, Tampa, Jacksonville, Spartanburg, (square
GA TN NC FL FL FL SC Total feet)/(1)/
------- --------- -------- ------- ----- ----------- --------- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Company owned 220.9 55.7 30.5 41.4 42.1 -- -- 390.6 5,061,000
Owned in joint
ventures/(2)/ 213.2 -- -- -- -- -- 372.7 585.9 5,016,500/(5)/
Under agreement to
acquire/(3)/ 68.2 104.5 53.0 12.0 23.4 227.8 -- 488.9 5,629,000
Optioned -- -- 166.9 118.1 18.6 -- -- 303.6 2,940,000
Marketing/
development
agreements/(4)/ 224.7 -- -- -- 23.4 -- -- 248.1 1,647,500
--------- --------- --------- --------- --------- --------- --------- ------- ----------
Total 727.0 160.2 250.4 171.5 107.5 227.8 372.7 2,017.1 20,294,000
========= ========= ========= ========= ========= ========= ========= ======= ==========
Estimated
development
potential
(square
feet)/(1)/ 7,837,500 1,946,000 2,670,000 1,959,000 1,265,000 2,019,000 2,597,500 20,294,000
========= ========= ========= ========= ========= ========= ========= ==========
</TABLE>
(1) Based upon the Company's estimate of the appropriate density and
anticipated building types that may be developed, net of land necessary to
provide for adequate infrastructure. There can be no assurance that the
Company's estimate of development potential will be realized.
(2) The Company's interests in its undeveloped land held in joint ventures
range from 0% to 30%.
(3) The Company has agreed to purchase this land over various periods ranging
up to approximately five years, subject to the completion of due diligence
and customary closing conditions.
(4) Under the terms of the development agreements, the Company will generally
either develop properties for a fee, or have certain rights to acquire land
for development or to acquire developed properties upon their completion.
The marketing agreements generally provide for the Company or its
subsidiaries to be paid marketing or management fees in conjunction with
services provided. Both the development and marketing agreements generally
contain certain non-competition provisions covering a limited geographic
area.
(5) The Company estimates it will eventually develop approximately one-half the
acreage in Spartanburg it owns in joint ventures and that the remainder
will be sold to third parties. Estimated development potential reflects
only that land which is not currently expected to be sold.
TENANTS
The Company believes that its emphasis on developing quality properties and
providing a high level of client service has resulted in increased tenant
retention. As of December 31, 1997, the Company's properties were leased to 727
tenants including local, regional, national and international companies. The
Company's 30 largest tenants (measured by annualized base rent at December 31,
1997) occupy a total of approximately 4.6 million square feet and represent
29.2% of the Company's total annualized base rent as shown in the table below.
21
<PAGE>
30 LARGEST TENANTS MEASURED BY ANNUALIZED BASE RENT
<TABLE>
<CAPTION>
% of Total
Square Number Annualized Annualized
Tenant Feet of Leases Base Rent/(1)/ Base Rent/(1)/ Location
- -------------------------------------------- -------- --------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
1 Northern Telecom, Inc./(2)/ 416,271 9 $3,085,968 3.1% NC,TN
2 Scientific Atlanta, Inc. 600,413 11 2,693,337 2.7% GA
3 IKON Office Solutions, Inc. 170,000 3 1,422,900 1.4% GA
4 GTE Mobilnet Service Corporation 126,124 3 1,320,874 1.3% GA,NC
5 360 degree Communications 114,476 7 1,283,731 1.3% NC
6 Radian International LLC 90,159 2 1,170,275 1.2% NC
7 Square D Company 100,822 1 966,816 1.0% TN
8 Honeywell, Inc. 70,016 3 963,953 1.0% GA
9 DeVry, Inc. 64,981 1 928,269 0.9% GA
10 PPD Pharmaco, Inc. 89,130 5 917,349 0.9% NC
11 The Athlete's Foot Group, Inc. 162,651 1 897,155 0.9% GA
12 Fisher Scientific Company 223,219 1 875,019 0.9% GA
13 Tridom Corporation 117,403 4 826,437 0.8% GA
14 National Data Corporation 50,283 4 786,777 0.8% GA
15 AT&T Corp. 67,551 5 752,082 0.8% GA
16 Saab Cars U.S.A., Inc. 63,625 3 749,509 0.8% GA,NC,TN
17 Intelligent Systems Corporation 137,100 1 719,775 0.7% GA
18 Best Buy Stores, L.P. 222,643 1 703,552 0.7% GA
19 United Healthcare 72,991 2 699,856 0.7% GA,SC
20 Sally Foster, Inc. 197,200 2 673,237 0.7% SC
21 Data General Corporation 86,000 1 670,800 0.7% GA
22 Vanstar Corporation 86,880 4 668,124 0.7% GA
23 Yokohama Tire Corporation 252,092 1 665,383 0.7% GA
24 Auto-Lok, Inc. 222,900 2 658,879 0.7% GA
25 Ahlstrom Recovery, Inc. 62,893 2 649,493 0.7% GA
26 Astronet Corporation 34,138 1 648,622 0.7% GA
27 Siemens Energy & Automation, Inc. 240,000 3 637,200 0.6% GA
28 The Bombay Company, Inc. 253,890 2 631,344 0.6% GA
29 Southern Multimedia Communications, Inc. 647 3 604,692 0.6% GA
30 United Parcel Service, Inc. 128,275 3 594,201 0.6% TN,FL
---------- --------- -------------- --------------
4 ,641,773 91 $28,865,609 29.2%
========== ========= ============== ==============
</TABLE>
(1) Annualized cash base rent net of rental concessions, if any, based on
leases in place for stabilized properties and properties in lease-up where
tenants were paying rent as of December 31, 1997.
(2) Leases with Northern Telecom totaling 370,824 square feet expire on June
30, 2005, but are subject to an early-termination right that permits
Northern Telecom to terminate any of the leases on June 30, 2000, by
delivering an early-termination notice to the Company on or before June 30,
1999. In the event it exercises its early-termination option, Northern
Telecom will be obligated to make certain termination payments to the
Company.
22
<PAGE>
LEASE EXPIRATIONS
The following tables show scheduled lease expirations for the Company's total
property portfolio, for its industrial property portfolio and for its office
property portfolio based on leases under which tenants were paying rent as of
December 31, 1997, assuming no exercise of renewal options or termination
rights, if any:
% of Total
Year of Square % of Total Annualized Annualized
Expiration Feet Square Feet Base Rent/(1)/ Base Rent
---------- ------ ----------- -------------- ----------
TOTAL
PORTFOLIO
1998 3,329 19.5% $ 17,397 16.7%
1999 1,921 11.3% 11,565 11.1%
2000 3,105 18.2% 18,322 17.5%
2001 1,379 8.1% 8,078 7.7%
2002 2,291 13.5% 17,629 16.9%
2003 679 4.0% 6,235 6.0%
2004 1,050 6.2% 5,763 5.5%
2005 875 5.1% 5,389 5.2%
2006 612 3.6% 3,046 2.9%
2007 1,104 6.5% 6,627 6.3%
2008 223 1.3% 783 0.7%
2009 20 0.1% 157 0.2%
2011 294 1.7% 1,704 1.6%
2012 152 0.9% 1,744 1.7%
------ ----- -------- -----
17,034/(2)/ 100.0% $104,439 100.0%
====== ===== ======== =====
INDUSTRIAL
PROPERTIES
1998 3,150 20.1% $ 14,947 17.8%
1999 1,833 11.7% 10,485 12.5%
2000 2,890 18.5% 15,298 18.2%
2001 1,303 8.3% 6,976 8.3%
2002 1,954 12.5% 12,191 14.5%
2003 475 3.0% 3,162 3.8%
2004 946 6.0% 4,063 4.8%
2005 846 5.4% 4,950 5.9%
2006 590 3.8% 2,677 3.2%
2007 1,054 6.7% 6,168 7.3%
2008 223 1.4% 783 0.9%
2009 20 0.1% 157 0.2%
2011 294 1.9% 1,704 2.0%
2012 87 0.6% 580 0.6%
------ ----- -------- -----
15,665 100.0% $ 84,141 100.0%
====== ===== ======== =====
23
<PAGE>
% of Total
Year of Square % of Total Annualized Annualized
Expiration Feet Square Feet Base Rent/(1)/ Base Rent
---------- ------ ----------- -------------- ----------
SUBURBAN
OFFICE
PROPERTIES
1998 178 13.5% $ 2,437 12.3%
1999 86 6.5% 1,058 5.3%
2000 178 13.5% 2,715 13.7%
2001 76 5.8% 1,102 5.6%
2002 338 25.5% 5,438 27.4%
2003 204 15.4% 3,073 15.5%
2004 104 7.9% 1,700 8.6%
2005 26 1.9% 382 1.9%
2006 17 1.3% 309 1.6%
2007 50 3.8% 460 2.3%
2008 0 0.0% 0 0.0%
2009 0 0.0% 0 0.0%
2011 0 0.0% 0 0.0%
2012 65 4.9% 1,164 5.8%
------ ----- -------- -----
1,322 100.0% $19,838 100.0%
====== ===== ======== =====
(1) Annualized base rent represents the annualized monthly base rental at the
time of lease expiration.
(2) The total square footage expiring as of December 31, 1997 is comprised of
16,408,572 square feet of leases in stabilized properties, and 625,543
square feet of leases in development properties where tenants are paying
rent as of December 31, 1997.
RE-LEASING COSTS
Although re-leasing costs may vary from year-to-year depending on conditions in
the Company's real estate markets and the mix of leasing between property types,
the Company endeavors to control re-leasing costs by:
. acting as general contractor with respect to construction of tenant
improvements, thereby saving the fees paid to outside contractors and
enabling the Company to control the quality and timely completion of the
work;
. constructing general purpose improvements that can be adapted to different
tenants' requirements at relatively low cost;
. paying leasing commissions to its in-house marketing representatives that
take into account the cost of tenant improvements thereby providing an
incentive to minimize cost; and
. using its in-house marketing representatives to negotiate directly with
tenants when possible, thereby saving the cost of commissions to outside
brokers.
24
<PAGE>
The following table summarizes by year the Company's capitalized tenant
improvement and leasing costs incurred in the renewal or re-leasing of
previously occupied space.
CAPITALIZED TENANT IMPROVEMENTS AND LEASING COSTS
<TABLE>
<CAPTION>
- ---------------------------------------------------- ------ ------ ------
(In thousands, except per square foot information) 1997 1996 1995
- ---------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
INDUSTRIAL PROPERTIES
RE-LEASING
Square feet leased 1,073 678 317
Capitalized tenant improvements and
leasing commissions $2,276 $1,395 $ 462
Capitalized tenant improvements and
leasing commissions per square foot $ 2.12 $ 2.06 $ 1.46
RENEWAL
Square feet renewed 2,358 1,027 814
Capitalized tenant improvements and
leasing commissions $1,392 $1,055 $ 469
Capitalized tenant improvements and
leasing commissions per square foot $ 0.59 $ 1.03 $ 0.58
TOTAL
Square feet 3,431 1,705 $1,131
Capitalized tenant improvements and
leasing commissions $3,668 $2,450 $ 931
Capitalized tenant improvements and
leasing commissions per square foot $ 1.07 $ 1.44 $ 0.82
SUBURBAN OFFICE PROPERTIES
RE-LEASING
Square feet leased 69 16 111/(1)/
Capitalized tenant improvements and
leasing commissions $ 493 $ 45 $1,578/(1)/
Capitalized tenant improvements and
leasing commissions per square foot $ 7.11 $ 2.80 $14.25/(1)/
RENEWAL
Square feet renewed 134 106 47
Capitalized tenant improvements and
leasing commissions $ 267 $ 290 $ 50
Capitalized tenant improvements and
leasing commissions per square foot $ 1.99 $ 2.74 $ 1.06
TOTAL
Square feet 203 122 158/(1)/
Capitalized tenant improvements and
leasing commissions $ 760 $ 335 $1,628/(1)/
Capitalized tenant improvements and
leasing commissions per square foot $ 3.74 $ 2.75 $10.27/(1)(2)/
</TABLE>
(1) Includes $1,377,000 or $15.68 per square foot to re-tenant 87,845 square
feet of the Company's 94,677 square foot suburban office property which
was vacated and then converted from a single tenant to a multi-tenant
property.
(2) Excluding amounts incurred to re-lease the office property discussed in (1)
above, capitalized tenant improvements and leasing commissions would have
been $3.55 per square foot for released and renewed space during 1995.
25
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material litigation other than
litigation which is expected to be covered by liability insurance or which is
not expected to have a material adverse effect on the Company's results of
operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the fourth
quarter of 1997.
26
<PAGE>
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Company and their positions are as follows:
Name Age Title
- ---------------------- --- ---------------------------------------------------
A. Ray Weeks, Jr. 45 Chairman of the Board and Chief Executive Officer
Thomas D. Senkbeil 48 Vice Chairman of the Board and Chief Investment
Officer
Forrest W. Robinson 46 President, Chief Operating Officer
John W. Nelley, Jr. 49 Managing Director, Nashville Operations
Albert W. Buckley, Jr. 54 Managing Director, Nashville Operations
David P. Stockert 35 Senior Vice President and Chief Financial Officer
Robert G. Cutlip 48 Senior Vice President, North Carolina Operations
Charles D. Graham 54 Senior Vice President, North Florida Operations
Clyde H. Duckett 55 Senior Vice President, Construction Services
Mark W. Flowers 40 Senior Vice President, Landscape Services
Eben Hardie, III 39 Senior Vice President, Development
Klay W. Simpson 42 Senior Vice President, Marketing
Bobby L. Beavers 52 Vice President, Jacksonville Operations
Elizabeth C. Belden 43 Vice President, Corporate Counsel
Arthur J. Quirk 40 Vice President and Controller
Thomas W. Trocheck 43 Vice President, Development & Acquisitions
Robert T. Weeks 37 Vice President, Information Technology
Susan C. Walker 44 Vice President, Investor Relations
- -------------------------------------------------------------------------------
The following is a biographical summary of the experience of the executive
officers of the Company:
A. Ray Weeks, Jr. Chairman of the Board and Chief Executive Officer of the
Company since 1983. President of the Company from January 1982 through March
1991. Chairman of the Board of the Georgia Department of Industry, Trade and
Tourism. Chairman, Metro Business Forum. Co-Chairman, Regional Leadership
Institute. Juris Doctor from Mercer University, Master of Social Science in
Urban Studies from Georgia State University and Bachelor of Arts from Furman
University.
Thomas D. Senkbeil. Vice Chairman of the Board and Chief Investment Officer of
the Company since 1992. Executive Vice President and Managing Partner of
Senkbeil & Associates Inc. and Anderson & Senkbeil Inc., each a real estate
development firm, from September 1984 to October 1992. Immediate Past
President, National Executive Committee of the National Association of
Industrial and Office Properties. Master of Business Administration from the
University of North Carolina and Bachelor of Science in industrial engineering
from Auburn University.
Forrest W. Robinson. Board member, President of the Company since April 1991
and Chief Operating Officer since May 1988. Senior Development Officer from
March 1986 to April 1988. Executive Vice President, Marketing from February
1984 to February 1986. Joined the Company in 1977. Bachelor of Business
Management from Jacksonville State University.
27
<PAGE>
John W. Nelley, Jr. Board member, Managing Director of the Company, with
responsibilities for the Company's activities in Nashville, Tennessee, since
November 1996. Since 1982, General Partner and Chief Financial Officer of NWI
Warehouse Group, L.P., an industrial warehouse development company in Nashville,
Tennessee whose assets and business have been acquired, or are under agreement
to be acquired, by the Company. Also since 1973, a practicing attorney and CPA
specializing in real estate and estate planning. Juris Doctor from the
University of Notre Dame and Bachelor of Science in Accounting from Western
Kentucky University.
Albert W. Buckley, Jr. Managing Director of the Company since November 1996.
General Partner and Chief Executive Officer of NWI Warehouse Group, L.P., an
industrial warehouse development company in Nashville, Tennessee from 1982 to
1996. Also since 1976, President of Buckley & Company Real Estate, Inc., a real
estate brokerage firm specializing in industrial property management and
development. Master of Business Administration and Bachelor of Science in
Business Administration from Middle Tennessee State University.
David P. Stockert. Senior Vice President and Chief Financial Officer of the
Company since June 1995. Vice President and Associate in the Real Estate
Investment Banking Group of Dean Witter Reynolds Inc. (now Morgan Stanley Dean
Witter) from July 1990 to June 1995. CPA with Ernst & Whinney (now Ernst &
Young) from May 1985 to August 1988. Master of Business Administration from
Columbia University Business School and Bachelor of Science in Accounting from
the University of Colorado.
Robert G. Cutlip. President, North Carolina Operations, of the Company since
October 1997. Senior Vice President, Development, of the Company from April
1993 to September 1997. Vice President and Principal-in-Charge of Dallas
Industrial and Phoenix/Colorado Operations from January 1992 to April 1993,
Paragon Group, a real estate development firm, Vice President and Principal of
Dallas Industrial from January 1990 to December 1991 and Vice President,
Operations from January 1988 to January 1990. Master of Business Administration
from University of Southern California, Master of Science in Civil Engineering
from Vanderbilt University and Bachelor of Science in Civil Engineering from
U.S. Air Force Academy.
Charles D. Graham. Senior Vice President, North Florida Operations, since
October 1997. President of Wilma, Inc., a national real estate development firm,
from June 1983 to October 1997. Vice President and Chief Financial Officer of
the Sea Pines Company, a national real estate developer of resort communities,
from 1980 to 1983. Master of Accountancy and Bachelor of Science in Business
Administration from Florida State University.
Clyde H. Duckett. Senior Vice President, Construction Services, of the Company
since January 1989. Professional Engineer registered in Georgia, South Carolina
and Tennessee. Bachelor of Science in Mechanical Engineering from Tennessee
Technological University.
Mark W. Flowers. Senior Vice President, Landscape Services, of the Company
since October 1993. Vice President, Landscape of the Company from October 1987
through September 1993. Bachelor of Science in Horticulture from the University
of Georgia.
Eben Hardie, III. Senior Vice President, Development of the Company since
October 1997. President of Cauble Development Services Company from December
1994 to October 1997. Senior Vice President, Kern Realty Services from 1988 to
1994. Bachelor of Science in Economics from the Wharton School of the
University of Pennsylvania.
28
<PAGE>
Klay W. Simpson. Senior Vice President, Marketing, of the Company since October
1992. Vice President of Marketing of Senkbeil & Associates Inc. and Anderson &
Senkbeil Inc., each a real estate development firm, from 1986 to September 1992.
Bachelor of Business Administration from Stephen F. Austin State University.
Bobby L. Beavers. Vice President, Jacksonville Operations, since October 1997.
Senior Vice President of Wilma South, a national real estate development firm,
in charge of the Florida operations, from December 1991 to September 1997.
Bachelor of Science in Construction Management from North Texas State
University.
Elizabeth C. Belden. Vice President, Corporate Counsel, of the Company since
October 1985. Juris Doctor from Emory University and Bachelor of Social
Sciences from Colorado State University.
Arthur J. Quirk. Vice President and Controller of the Company since December
1994. Vice President-Controller and Chief Accounting Officer for Allegiant
Physician Services, Inc., a physician management services company, from August
1993 to November 1994. Chief Financial Officer/Controller for TransTel Group
Inc., a start-up telecommunications company, from November 1991 to July 1993.
From June 1980 to October 1991 served in various capacities including Senior
Audit Manager at Arthur Andersen LLP. Bachelor of Science in Accounting from
Auburn University.
Thomas W. Trocheck. Vice President, Development & Acquisitions, of the Company
since May 1989. Professional Engineer registered in Georgia, Florida and South
Carolina. Bachelor of Science in civil engineering from the Georgia Institute
of Technology and Bachelor of Arts in Government and Business Administration
from Florida State University.
Robert T. Weeks. Vice President, Information Technology, of the Company since
January 1992. Director of Information Systems of the Company from March 1989
through December 1991. Master of Business Administration from Georgia State
University and Bachelor of Business Administration from the University of
Georgia. Ray Weeks and Robert Weeks are first cousins.
Susan C. Walker. Vice President, Investor Relations, of the Company since
October 1997. Public Information Manager and speech writer for the President of
the Federal Reserve Bank of Atlanta from June 1991 through September 1997.
Previous editorial positions with the Gwinnett Daily News, the Washington
Business Journal, and Inc. magazine. Bachelor of Arts in Classics from Stanford
University.
29
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The common stock of the Company trades on the New York Stock Exchange ("NYSE")
under the symbol "WKS." The following table reflects the quarterly high and low
closing prices per share of the common stock and its per share quarterly cash
dividends for 1996 and 1997, respectively:
Quarter Ended High Low Dividend
- ---------------------------- ------- ------- --------
1996
March 31, 1996 $ 26.75 $ 25.00 $ 0.40
June 30, 1996 $ 26.00 $23.625 $ 0.40
September 30, 1996 $29.250 $25.625 $ 0.40
December 31, 1996 $33.250 $27.875 $ 0.43
1997
March 31, 1997 $ 36.25 $ 31.75 $ 0.43
June 30, 1997 $ 34.50 $ 31.00 $ 0.43
September 30, 1997 $ 32.75 $29.875 $ 0.43
December 31, 1997 $33.875 $29.375 $0.465
As of March 20, 1998, the Company had 189 shareholders of record and the last
reported sale price of its common stock was $31.75.
The Company currently anticipates paying regular quarterly dividends of $0.465
per share, which is equivalent to an annual dividend rate of $1.86 per share.
The dividends for each quarterly period are declared and paid one quarter in
arrears. Future dividends are dependent upon many factors including the
Company's earnings, capital requirements, its financial condition and its
available cash flow and are governed by the discretion of the Board of
Directors. The dividends paid in 1996 were 95% taxable to the Company's
shareholders as ordinary income with the remaining 5% representing a return of
capital. The dividends paid in 1997 and 1995 were 100% taxable to the Company's
shareholders as ordinary income. In future periods, some portion of the
dividends paid to shareholders may represent a return of capital.
The Company has in place a dividend reinvestment plan under which current
shareholders may elect to automatically reinvest their dividends in additional
shares of common stock. A total of 300,000 shares of common stock have been
authorized and reserved for issuance under the plan. In 1997 and 1996, 2,343
and 1,514 shares of common stock, respectively, were issued through the dividend
reinvestment plan.
Effective December 1, 1997, the Company caused the Operating Partnership to
issue a total of 422,432 Common Units, in partial or full consideration for the
acquisition of certain real estate properties of NWI. The aggregate value of
the properties acquired by the Company in exchange for such Units was
approximately $13.4 million. Common Units are convertible by their holders into
shares of the Company's common stock on a one-for-one basis, or into cash, at
the Company's option. The Common Units were issued pursuant to an exemption
from registration under Section 4(2) of the Securities Act in reliance, in part,
upon the representations and warranties set forth in the NWI acquisition
agreements. These Common Units are subject to a registration rights and lock-up
agreement which restricts the disposition of the Common
30
<PAGE>
Units for a period of one year from the date of issuance with respect to all
Common Units and further restricts the disposition of Common Units beneficially
owned by John W. Nelley, Jr. and Albert W. Buckley, Jr. (approximately 43% of
the total Common Units issued) until November 1, 1999.
Effective October 1, 1997, the Company caused the Operating Partnership to issue
57,300 Common Units in partial or full consideration for the acquisition of
certain real estate properties of Lichtin. The aggregate value of the
properties acquired by the Company in exchange for such Common Units was
approximately $1.5 million. The Common Units were issued pursuant to an
exemption from registration under Section 4(2) of the Securities Act in
reliance, in part, upon the representations and warranties set forth in the
Lichtin acquisition agreements. The Common Units are subject to a registration
rights and lock-up agreement which restricts the disposition of the Common Units
until December 31, 1999.
On October 27, 1997, November 15, 1997, and December 30, 1997, the Company
caused the Operating Partnership to issue 11,561 Common Units in partial or full
consideration for the acquisition of certain land and real estate properties
located in Jacksonville, Florida. The aggregate value of the land and
properties acquired by the Company in exchange for such Common Units was
approximately $374,000. The Common Units were issued pursuant to an exemption
from registration under Section 4(2) of the Securities Act in reliance, in part,
upon the representations and warranties set forth in the acquisition agreement.
The Common Units are subject to a registration rights and lock-up agreement
which restricts the disposition of the Common Units for a period of one year
from the date of issuance.
31
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
Weeks Corporation Weeks Group/1/
---------------------------------------- -------------------
(In thousands, except per share amounts) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA, AT YEAR END
Real estate assets before
accumulated depreciation $ 856,500 $592,841 $319,763 $162,709 $95,831
Real estate assets, net 794,952 551,372 289,874 139,750 76,944
Total assets 852,361 591,849 320,441 176,674 101,366
Total indebtedness 275,515 296,975 147,305 71,961 117,280
Shareholders' equity 459,048 213,711 132,949 73,470 (24,197)
Weeks Corporation Weeks Group/(1)/
---------------------------------------------- --------------------
Year Ended Year Ended Year Ended Aug. 24 to Jan. 1 to Year ended
Dec. 31, 1997 Dec. 31, 1996 Dec.31, 1995 Dec.31, 1994 Aug. 23 1994 Dec. 31, 1993
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Rental and
reimbursement revenues $ 90,806 $ 52,679 $ 34,015 $ 8,877 $ 11,914 $ 18,023
Total revenues 92,020 53,883 35,271 9,312 16,538 24,817
Operating, maintenance and 18,488 10,750 6,896 1,714 2,721 3,928
real estate tax expense
Depreciation and
amortization 24,144 13,474 8,177 2,098 2,920 4,456
Interest expense 17,900 11,779 8,106 1,958 6,682 10,254
Amortization of deferred financing costs 933 864 691 252 322 372
General and administrative expenses 5,068 3,039 1,848 472 1,514 2,191
Interest income 1,509 492 334 224 -- --
Equity in earnings of unconsolidated entities 1,989 1,340 1,220 692 91 (113)
Income before minority interests and 29,194 15,809 11,107 3,734 516 998
extraordinary loss
Income before extraordinary loss 22,975 12,745 8,426 2,791 516 998
Net income 22,975 12,745 8,426 798 516 998
Net income available to common shareholders 20,255 12,745 8,426 798 516 998
Weighted average common shares - basic 16,357 11,512 8,171 7,675
Weighted average common shares - diluted 21,580 14,386 10,832 10,286
PER COMMON SHARE DATA
Income before extraordinary loss - basic $ 1.24 $ 1.11 $ 1.03 $ 0.36
Income before extraordinary loss - diluted 1.23 1.10 1.03 0.36
Net income - basic 1.24 1.11 1.03 0.10
Net income - diluted 1.23 1.10 1.03 0.10
Dividends/(2)/ 1.755 1.63 1.525 0.525
OTHER DATA
Cash provided by (used in):
Operating activities $ 49,097 $ 28,031 $ 18,678 $ 3,954 $ 2,769 $ 3,569
Investing activities (173,574) (120,323) (117,127) (38,148) (14,953) (1,974)
Financing activities 129,638 91,570 93,097 40,352 12,229 (1,541)
Funds from
operations/(3)(4)/ 38,517 23,640 14,662 4,359 -- --
(1) Represents the historical combined operations and combined financial
position of Weeks Group, the predecessor entity. On August 24, 1994, Weeks
Corporation (the "Company") completed an initial public offering and
related formation transactions.
(2) Dividends and distributions are declared and paid quarterly in arrears.
Amounts reflect dividends and distributions attributable to the year
presented.
(3) The Company believes that funds from operations provides an additional
indicator of the financial performance of the Company. Funds from
operations is defined by the National Association of Real Estate Investment
Trusts ("NAREIT") to mean net income (loss) determined in accordance with
generally accepted accounting principles ("GAAP"), excluding gains(or
losses) from debt restructuring and sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect funds from operations on the same
basis. The Company computes funds from operations under the current NAREIT
definition by subtracting from net income the dividends to preferred
shareholders before making an adjustment for the non-cash items described
above. Funds from operations does not represent cash flow from operating,
investing and financing activities as defined by GAAP, and detailed above.
Additionally, funds from operations does not measure whether cash flow is
sufficient to fund all cash flow needs, including principal amortization,
capital expenditures and dividends to shareholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Company's operating performance or as an alternative to cash flow, as
defined by GAAP, as a measure of liquidity. Funds from operations
presented herein under the NAREIT guidelines is not necessarily comparable
to funds from operations presented by other real estate companies due to
the fact that not all real estate companies use the same definition.
However, the Company's funds from operations is comparable to the funds
from operations of real estate companies that use the current NAREIT
definition.
(4) Represents the Company's share of funds from operations.
</TABLE>
32
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying Consolidated Financial Statements
of the Company and the notes thereto.
GENERAL
The Company was founded in 1965 and operated as a private real estate company
until August 1994, when it completed an initial public offering ("IPO") and
elected to be taxed as a real estate investment trust ("REIT"). As a self-
administered and self-managed REIT, the Company owns, develops, acquires and
manages primarily industrial and suburban office properties in the southeastern
United States. The Company's third-party service businesses are conducted
through two subsidiaries (the "Service Companies"), Weeks Realty Services, Inc.
(fee landscape, property management and leasing services) and Weeks Construction
Services, Inc. (fee construction), which are accounted for on the equity method.
For a further description of the Company, see Note 1 to the consolidated
financial statements.
RESULTS OF OPERATIONS
Operating results in 1997 when compared to 1996, reflect the Company's continued
strong performance as measured by increases in total revenue of $38,137,000 or
70.8%, net income attributable to common shareholders of $7,510,000 or 58.9%,
and net income per common share (basic) of $0.13 or 11.7%. As discussed in more
detail below, these increases were achieved through both the operating results
from acquired properties and stabilized development properties (i.e., those
development properties placed in-service) and to a lesser extent the increased
year-to-year performance of the core or "same store" property portfolio.
A large part of the Company's operating achievements for 1997 can be attributed
to its fourth quarter 1996 acquisition of 31 properties totaling 2,513,000
square feet and the related business operations of two privately-owned real
estate companies -- NWI Warehouse Group, L.P. and affiliates ("NWI"), whose
properties and operations are located in Nashville, Tennessee, and Lichtin
Properties, Inc. and affiliates ("Lichtin"), whose properties and operations are
located in the Raleigh-Durham-Chapel Hill area of North Carolina (see Note 7 to
the consolidated financial statements). In addition to these properties
acquired in late 1996, operating results for the year were also positively
impacted by an additional 18 stabilized development properties totaling
1,447,000 square feet acquired from NWI and Lichtin in 1997, all of which
represented additional phases of the 1996 acquisition arrangements with those
two companies.
The Company's operating results also continue to be positively impacted by an
active development program which resulted in the stabilization of eight
properties and one property expansion totaling 834,000 square feet in 1996 and
18 properties and two property expansions totaling 2,014,000 square feet in
1997. These stabilized development properties continue to achieve higher yields
than those achieved on acquisition properties, and, as a result, are expected to
continue to be a significant element of the Company's future growth strategy.
Core properties, as defined below, also contributed to overall operating results
with increased property operating revenues less property operating expenses, of
1.3% in 1997.
33
<PAGE>
The Company continues to diversify its property holdings throughout the
southeastern United States. Including properties under development and under
agreement to acquire at year end 1997, the Company's current portfolio is
located in eight cities in five states and the percentage of its holdings in
each state (measured by square feet) are Georgia (58.7%), Florida (17.6%),
Tennessee (11.6%), North Carolina (10.4%), and South Carolina (1.7%). This
compares to two cities in two states at year end 1994, with Georgia representing
96.2% of the portfolio at that time (also measured by square feet and including
properties under development and under agreement to acquire).
Operating information relating to the Company's properties for 1997, 1996 and
1995 is summarized below (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental revenues $80,419 $48,162 $31,217 67.0% 54.3%
Tenant reimbursements 10,387 4,517 2,798 130.0% 61.4%
- -----------------------------------------------------------------------------------------------------
Property operating revenues $90,806 $52,679 $34,015 72.4% 54.9%
- -----------------------------------------------------------------------------------------------------
Operating and maintenance expenses $11,278 $ 6,025 $ 3,899 87.2% 54.5%
Real estate taxes 7,210 4,725 2,997 52.6% 57.7%
Depreciation and amortization 24,144 13,474 8,177 79.2% 64.8%
- -----------------------------------------------------------------------------------------------------
Property operating expenses $42,632 $24,224 $15,073 76.0% 60.7%
- -----------------------------------------------------------------------------------------------------
Property operating revenues
less property operating expenses $48,174 $28,455 $18,942 69.3% 50.2%
- -----------------------------------------------------------------------------------------------------
</TABLE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
Year to year comparisons of property operating revenues and expenses for 1997
and 1996 are discussed herein using the categories "core properties,"
"development properties" and "acquisition properties." Core properties are
defined as properties which were stabilized and operating for comparable full
year periods. The Company defines a property as stabilized upon the earlier of
substantial lease-up or one year from building shell completion. Development
properties reflect properties completed and stabilized, and acquisition
properties are properties acquired, subsequent to January 1, 1996.
Property operating revenues increased $38,127,000 or 72.4% in 1997. Of this
increase, $29,626,000, $7,660,000 and $841,000 were attributable to acquisition,
development and core properties, respectively. The increases from acquisition
and development properties were due to the acquisition of 83 stabilized
properties (37 in 1997 and 46 in 1996) totaling 5,402,000 square feet and the
stabilization of 26 development properties (18 in 1997 and eight in 1996) and
three property expansions (two in 1997 and one in 1996) totaling 2,848,000
square feet. Property operating expenses increased $18,408,000 or 76.0% between
years, due primarily to the growth in the property portfolio resulting from the
acquisition and development properties discussed above.
34
<PAGE>
For the comparable years of 1997 and 1996, operating results of the core
properties, representing 134 properties totaling 8,861,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1997 1996 % Change
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental revenues $43,216 $42,549 1.6%
Tenant reimbursements 4,196 4,022 4.3%
- ----------------------------------------------------------------------------------------------
Property operating revenues $47,412 $46,571 1.8%
- ----------------------------------------------------------------------------------------------
Operating and maintenance
expenses $ 5,914 $ 5,539 6.8%
Real estate taxes 4,114 4,299 (4.3%)
Depreciation and amortization 12,229 11,889 2.9%
- ----------------------------------------------------------------------------------------------
Property operating expenses $22,257 $21,727 2.4%
- ----------------------------------------------------------------------------------------------
Property operating revenues less
property operating expenses $25,155 $24,844 1.3%
- ----------------------------------------------------------------------------------------------
Average occupancy 95.2% 96.1%
- ----------------------------------------------------------------------------------------------
</TABLE>
Property operating revenues from core properties increased 1.8% despite the
impact of lost property operating revenues between years of approximately
$242,000 resulting from the sale of a 96,000 square foot building in April 1997
and a small decrease in overall average occupancy. Adjusted for the building
sale discussed above, property operating revenues from core properties increased
2.3% between years. This increase was due to both rental rate and reimbursement
increases between periods. Property operating expenses increased 2.4% due
primarily to increased utilities, repair and maintenance expenses offset by
lower real estate taxes in 1997. Lower real estate taxes resulted primarily
from the successful resolution of disputed property tax assessments. Property
operating revenues less property operating expenses from core properties
increased 2.3%, exclusive of depreciation and amortization expense and after
adjusting for the building sale discussed above.
Interest expense increased $6,121,000 or 52.0% from $11,779,000 in 1996 to
$17,900,000 in 1997, due to higher interest on mortgage notes payable in 1997
offset by lower interest on the Company's revolving line of credit (the "Credit
Facility"). Mortgage interest increased $6,418,000 due to interest costs
associated with mortgage indebtedness assumed in connection with the Company's
1996 and 1997 acquisitions. Interest expense on Credit Facility borrowings
decreased $297,000 due primarily to a larger percentage of Credit Facility
borrowings being utilized for the Company's increased development activity in
1997, resulting in increased interest capitalization as a percentage of total
Credit Facility interest expense in 1997 compared to 1996 (see Note 4 to the
consolidated financial statements).
Company general and administrative expenses increased $2,029,000 or 66.8% from
$3,039,000 in 1996 to $5,068,000 in 1997, due primarily to increased personnel
and related administrative costs attributable to the Company's southeast
expansion. The majority of the increase relates to the additional general and
administrative expenses associated with the Company's Nashville, Tennessee and
Raleigh, North Carolina operations, both of which were acquired in the fourth
quarter of 1996, and expenses related to the establishment of an office in
Orlando, Florida, which also occurred in the fourth quarter of 1996. As a
percentage of total revenue, general and administrative expenses decreased from
5.6% in 1996 to 5.5% in 1997.
35
<PAGE>
Interest income increased $1,017,000 or 206.7% from $492,000 in 1996 to
$1,509,000 in 1997. Of the total increase between years, $442,000 relates to
interest earned on loans to affiliated entities and others with the remaining
increase due primarily to increased loan balances on real estate development
loans (see Note 5 to the consolidated financial statements).
Equity in earnings of unconsolidated entities primarily represents the Company's
99% economic interest in the earnings of the Service Companies and their
subsidiaries after the elimination of interest expense and gains on property
sales to the Company. The Company's share of the earnings of the Service
Companies and their subsidiaries increased by $629,000 or 46.9% from $1,340,000
in 1996 to $1,969,000 in 1997 due primarily to gains on sales of real estate
properties, principally land, and increased earnings from partnerships and joint
ventures, also principally due to gains from land sales. Apart from these
gains, net earnings from the operations of the Service Companies was comparable
between years.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Year to year comparisons of property operating revenues and expenses for 1996
and 1995 are discussed herein using the "core properties," "development
properties" and "acquisition properties" categories discussed above. However,
for purposes of this comparison, development properties reflect properties
completed and stabilized, and acquisition properties are properties acquired,
subsequent to January 1, 1995.
Property operating revenues increased $18,664,000 or 54.9% in 1996. Of this
increase, $13,733,000, $3,750,000 and $1,181,000 were attributable to
acquisition, development and core properties, respectively. The increases from
acquisition and development properties were due to the acquisition of 81
properties (49 in 1995 and 32 in 1996) totaling 4,727,000 square feet, excluding
14 properties totaling 1,109,000 square feet acquired on December 31, 1996, and
the stabilization of 15 development properties (seven in 1995 and eight in 1996)
and two property expansions (one each year) totaling 1,799,000 square feet.
Property operating expenses increased $9,151,000 or 60.7% between years, due
primarily to the growth in the property portfolio resulting from the acquisition
and development properties discussed above.
For the comparable years of 1996 and 1995, operating results of the core
properties, representing 78 properties totaling 5,331,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995 % Change
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Rental revenues $25,157 $24,045 4.6%
Tenant reimbursements 2,000 1,931 3.6%
- ----------------------------------------------------------------------------------------------
Property operating revenues $27,157 $25,976 4.5%
- ----------------------------------------------------------------------------------------------
Operating and maintenance
expenses $ 3,685 $ 3,210 14.8%
Real estate taxes 2,299 2,300 --
Depreciation and amortization 7,178 6,310 13.8%
- ----------------------------------------------------------------------------------------------
Property operating expenses $13,162 $11,820 11.4%
- ----------------------------------------------------------------------------------------------
Property operating revenues less
property operating expenses $13,995 $14,156 (1.1%)
- ----------------------------------------------------------------------------------------------
Average occupancy 95.1% 95.9%
- ----------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
Property operating revenues from core properties increased 4.5% despite a small
decrease in overall average occupancy. This was due in part to re-leasing two
buildings totaling 344,000 square feet vacated in early 1995; re-leasing these
two buildings produced a property operating revenue increase of $912,000 in
1996. The positive impact of re-leasing these buildings was offset by decreased
average 1996 occupancy in six other buildings totaling 336,000 square feet which
resulted in decreased property operating revenues of $691,000. Exclusive of
these occupancy related impacts, core property operating revenues increased 4.2%
between years due primarily to rental rate increases.
Property operating expenses increased 11.4% due to both increased operating and
maintenance expenses and depreciation and amortization in 1996. Net of the
impact of the eight buildings affected by occupancy changes, property operating
expenses increased by 8.6% (6.1% excluding depreciation and amortization
expense). The increase in property operating and maintenance expenses reflects
increased property maintenance and security expenses between years. Excluding
the impact of the eight buildings affected by occupancy changes, property
operating revenues less property operating expenses from core properties,
increased 3.7%, exclusive of depreciation and amortization expense between
years.
Interest expense increased $3,673,000 or 45.3% from $8,106,000 in 1995 to
$11,779,000 in 1996, due to higher interest on Credit Facility borrowings and
higher mortgage interest in 1996. Higher weighted average Credit Facility
borrowings in 1996 compared to 1995, due to the Company's acquisition and
development activity, resulted in increased Credit Facility interest costs in
1996 of $1,410,000. Mortgage interest increased $2,263,000 due to interest
costs associated with mortgage indebtedness assumed in connection with the
Company's 1995 and 1996 acquisitions.
Amortization of deferred financing costs increased by $173,000 or 25.0% from
$691,000 in 1995 to $864,000 in 1996, due primarily to the amortization of the
deferred financing costs associated with a $5,140,000 industrial revenue bond
refinancing in the first quarter of 1996 and costs associated with increasing
the availability under and restructuring of the Credit Facility.
Company general and administrative expenses increased by $1,191,000 or 64.4%
from $1,848,000 in 1995 to $3,039,000 in 1996, due primarily to increased
personnel and related administrative costs attributable to the Company's growth
and to a lesser extent by a shift in certain expenses relating to properties
which were fee-managed by the Service Companies in 1995, but which were
subsequently acquired and owned by the Company in 1996. A portion of the
increased expenses in 1996 also relates to establishing of an office in Orlando,
Florida and the general and administrative expenses associated with the
Company's acquired Nashville, Tennessee operations, both of which occurred in
the fourth quarter of 1996. As a percentage of total revenue, general and
administrative expenses increased from 5.2% in 1995 to 5.6% in 1996. General
and administrative expenses of the Company, when combined with the general and
administrative expenses of the Service Companies increased $1,367,000 or 40.6%
from $3,366,000 in 1995 to $4,733,000 in 1996 for the reasons discussed above.
As a percentage of the combined revenues of the Company and the Service
Companies, the combined general and administrative expenses of the Company and
the Service Companies decreased from 8.0% in 1995 to 7.6% in 1996.
37
<PAGE>
Interest income for the year ended December 31, 1996, consists primarily of
interest earned under the real estate loan arrangements discussed more fully in
Note 5 to the consolidated financial statements. For the year ended December
31, 1995, interest income represented $213,000 earned under a short-term note
arrangement, made in connection with a 1995 property acquisition, $60,000 earned
under the real estate loan arrangements discussed above, with the remainder
earned on short-term cash investments.
Equity in earnings of unconsolidated entities represents the Company's 99%
economic interest in the earnings of the Service Companies and their
subsidiaries after the elimination of interest expense to the Company. The
Company's share of the earnings of the Service Companies and their subsidiaires
increased $120,000 or 9.8% from $1,220,000 in 1995 to $1,340,000 in 1996. This
increase was due to increased profitability of both the third-party fee
construction and landscape businesses in 1996, offset by decreased earnings from
the property management fee business due to the Company's acquisition in late
1995 of 37 properties which were previously fee-managed.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to generate increasing cash flows from operations. Cash
provided by operating activities increased 75.2% or $21,066,000 to $49,097,000
in 1997. The increase resulted primarily from a full year of operating income
in 1997 from 46 buildings acquired and eight development properties and one
property expansion stabilized in 1996, and from the partial year operating
income from 37 buildings acquired and 18 development properties and two property
expansions stabilized in 1997.
The Company's net cash flow from operations is currently sufficient to meet the
Company's current operational needs and to satisfy the Company's current
quarterly dividends. Company management believes that operating cash flows will
continue to be adequate to fund these requirements in 1998. The Company
operates as and intends to maintain its qualification as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). As a REIT, the Company
will generally not be subject to corporate federal income taxes as long as it
satisfies certain technical requirements of the Code, including the requirement
to distribute 95% of its taxable income to its shareholders.
In 1997, the Company invested $182,762,000 in property acquisition, development,
construction and real estate loan activities. This compares to $121,202,000 in
1996. This increased cash investment activity primarily reflects the impact of
increased development and land acquisition activity in 1997.
Financing for the Company's property investment activities consisted primarily
of $251,193,000 from both common and preferred equity offerings, offset by
repayments of Credit Facility borrowings and retirements of mortgage and other
notes payable of $86,329,000, in 1997, compared to $68,532,000 from a common
equity offering and $45,042,000 of additional net borrowings in 1996. The debt
and equity components of the Company's on-going financing strategy may differ
based upon future market conditions.
In 1997, the Company increased its available borrowing capacity under its multi-
bank, unsecured, Credit Facility from $175,000,000 to $225,000,000 and lowered
its borrowing costs from LIBOR plus 1.35% to LIBOR plus 1.05%. The Credit
Facility may be used to, among other things, meet the Company's operational
obligations and annual REIT dividend requirements.
38
<PAGE>
The Company currently intends to finance its development, construction and
acquisition activities primarily through borrowings under the Credit Facility.
At December 31, 1997, the Company had available capacity under the Credit
Facility of approximately $125,000,000 (see Note 4 to the consolidated financial
statements). The Credit Facility matures on December 31, 2000, and provides for
annual extensions through December 31, 2002.
In January 1998, the Company acquired a 2,477,000 square foot, 24-building
property portfolio in Miami, Florida for approximately $175,000,000 (see Note 7
to the consolidated financial statements), including cash of approximately
$64,400,000 funded through Credit Facility borrowings. Additionally, in
February 1998, one of the Service Companies acquired a one-third interest in
Codina Group, Inc., for approximately $9,000,000 (see Note 6 to the consolidated
financial statements), in cash also from Credit Facility borrowings, and the
Company raised net proceeds of approximately $33,100,000 through a 1,073,000
share common stock offering which was used to repay Credit Facility borrowings.
Net of these activities, the Company's available capacity under the Credit
Facility would be approximately $85,000,000.
The Company received corporate preferred stock and unsecured debt ratings from
Standard & Poor's, Moody's and Duff & Phelps in 1997. The ratings achieved will
give the Company "investment grade" status for all current unsecured debt and
preferred stock offerings. These ratings will serve to reduce the Company's
unsecured debt interest costs and preferred stock dividends compared to unrated
unsecured debt and preferred stock. These corporate rating levels are subject
to change based on the above agencies' continuing assessments of the Company's
financial strength and operating performance. Any change in rating status could
increase or decrease the Company's financing costs.
The Company believes it currently has adequate liquidity and sources of capital,
including available borrowing capacity under its existing Credit Facility and
remaining capacity of $415,000,000 under its $600,000,000 universal shelf
registration, to meet its current operational requirements, to fund annual
principal requirements under existing mortgage notes payable and to fund its
current development and acquisition activity. It is management's expectation
that the Company will continue to have access to the additional capital
resources necessary to further expand and develop its business and to refinance
mortgage notes payable as they begin to mature in 1998. These resources include
debt and equity financings, in both public and private markets, including the
use of the Company's available capacity under its current universal shelf
registration. Future development and acquisition activities will be undertaken
by the Company only as suitable opportunities arise. Such activities are not
expected to be undertaken unless adequate sources of financing are available and
a satisfactory budget with targeted returns on investment has been internally
approved. The Company maintains staffing levels sufficient to meet its existing
construction and leasing activities. If market conditions warrant, the Company
may adjust staffing levels to avoid a negative impact on the Company's results
of operations.
Total consolidated debt amounted to $275,515,000 at December 31, 1997, including
Credit Facility borrowings of $82,920,000 and mortgage notes payable of
$192,595,000. Of the $192,595,000 of mortgage indebtedness, $186,798,000 is
fixed rate and $5,797,000 is variable rate. At December 31, 1997, the weighted
average interest rate on the Company's fixed rate mortgage debt was 8.1% and on
its variable rate mortgage debt was 4.5%. The weighted average interest rate
under the Credit Facility, exclusive of the impact of the interest rate swaps
discussed below, at December 31, 1997, was 7.0%. Based on the outstanding
39
<PAGE>
balance of mortgage notes payable at December 31, 1997, the weighted average
interest rates on the mortgage notes with a final maturity in each of the next
five years and thereafter were 8.6% in 1998, 7.4% in 1999, 8.7% in 2000, 7.4% in
2001, 8.2% in 2002 and 8.1% thereafter.
At December 31, 1997, the Company's mortgage debt on its consolidated properties
totaled $192,595,000. Including Credit Facility borrowings of $82,920,000 for
the Company and $16,620,000 for the unconsolidated Service Companies and their
subsidiaries and $2,000,000 of other notes payable on unconsolidated properties,
the total debt obligations of the Company and its unconsolidated entities was
$294,135,000 or 25% of total market capitalization at December 31, 1997
(assuming the exchange of all of the Common Units of the Operating Partnership
for shares of common stock). Based on the closing price of the common stock of
$32.00 on December 31, 1997, and assuming the exchange of all of the Common
Units of the Operating Partnership for shares of common stock, there would be
23,336,687 shares of common stock outstanding with a total market value of
$746,774,000, and 6,000,000 shares of preferred stock outstanding with a total
market value of $150,000,000 (based on the closing stock price of $25.00 on
December 31, 1997), resulting in total equity value of $896,774,000.
As discussed above, the Company acquired certain properties in Miami, Florida in
January 1998 for approximately $175,000,000, and the Service Companies acquired
a one-third interest in a related real estate services company in February 1998
for approximately $9,000,000. The Company also received net proceeds of
approximately $33,100,000 from a February 1998 common stock offering. Adjusted
for these transactions, the total debt obligations of the Company and its
unconsolidated entities would have been $413,000,000 or 30% of total market
capitalization of $1,373,000,000 (also reflecting the equity value of these
transactions), at December 31, 1997.
MANAGEMENT OF INTEREST RATE RISKS
The Company uses interest rate swap and treasury rate guarantee hedge
arrangements to manage its exposure to interest rate changes on its variable
rate indebtedness. The Company has in place interest rate swap agreements to
effectively fix the Company's interest costs on $50,000,000 of variable rate
Credit Facility borrowings. The weighted average effective interest rate under
the fixed swap arrangements is approximately 7.7%. If interest rates under the
Credit Facility, in excess of the $50,000,000 discussed above, and under the
Company's variable rate mortgage debt fluctuated by 1.0%, interest costs to the
Company, based on outstanding borrowings at December 31, 1997, would increase or
decrease by approximately $600,000 on an annualized basis. In 1997, the Company
entered into a treasury rate guarantee hedge arrangement to fix its interest
costs on an anticipated public debt financing transaction. This hedge
effectively locks in, for the period through March 1998, a seven year treasury
rate of approximately 6.3% on anticipated borrowings of approximately
$100,000,000.
These swap and hedge arrangements serve to decrease the negative impact of
increased interest rates on the Company's financial results by fixing interest
rates on otherwise variable rate debt instruments. However, due to the decline
in interest rates at the end of 1997, these arrangements would require the
40
<PAGE>
payment of approximately $4,265,000 (at December 31, 1997), if the arrangements
were terminated. Under current accounting rules, these potential costs are not
recognized currently in the Company's financial statements, but instead are
reflected as part of interest expense over the life of the related hedged
borrowings, causing reported interest costs to be higher than current interest
costs on similar unhedged debt securities. The costs associated with terminated
swap and hedge arrangements can result in charges to operations to the extent
hedged borrowings are not completed or are no longer outstanding.
CURRENT DEVELOPMENT AND ACQUISITION ACTIVITY
At year end, the Company had committed development and acquisitions totaling
approximately $200,004,000 representing 31 buildings totaling 3,733,000 square
feet, exclusive of the 2,477,000 square foot, 24 building Miami, Florida
acquisition, completed in January 1998 at a total cost of approximately
$175,000,000. In February 1998, the Company announced additional committed
developments totaling $110,590,000 representing 15 buildings and one property
expansion totaling 2,074,000 square feet. Including the developments announced
in February 1998 and net of two buildings stabilized in 1998 totaling 140,000
square feet at a total cost of $8,624,000, the Company had at February 28, 1998,
committed development and acquisitions totaling approximately $301,970,000
representing 44 buildings and one property expansion totaling 5,667,000 square
feet. Properties to be acquired as of February 28, 1998, consist of three
buildings totaling 357,000 square feet with a total expected cost of
approximately $17,295,000. Development properties as of February 28, 1998,
consist of 41 buildings and one building expansion totaling 5,310,000 square
feet with a total expected cost of $284,675,000.
It is expected that such development and acquisition properties will stabilize
or be acquired as detailed below:
<TABLE>
<CAPTION>
---------------------------------------------
Square Estimated
Year Buildings Feet Cost
---------------------------------------------
<S> <C> <C> <C>
1998 20 2,900,000 $137,209,000
1999 23 2,664,000 154,085,000
2000 1 103,000 10,676,000
---------------------------------------------
44 5,667,000 $301,970,000
---------------------------------------------
</TABLE>
In addition, the Company has committed, subject to due diligence procedures, to
acquire development land totaling $25,403,000 over various periods ranging up to
five years.
It is expected that future development and land acquisition expenditures will be
funded primarily through Credit Facility borrowings, refinanced as required
through new debt or equity offerings in both private and public markets, and
future acquisitions will be consummated primarily through a combination of cash
funded through borrowings under the Credit Facility, the issuance of Common
Units and the assumption of indebtedness, some of which will also be repaid
through borrowings under the Credit Facility.
The information provided above includes forward-looking data about expected
property acquisitions or stabilizations that is based on current construction
schedules, the status of lease negotiations with potential tenants, the
successful completion of due diligence procedures and other relevant factors
currently available to the Company. There can be no assurance that any of these
factors will not change or that any change will not affect the accuracy of such
forward-looking data.
41
<PAGE>
SUPPLEMENTAL DISCLOSURE OF FUNDS FROM OPERATIONS
The Company believes that funds from operations provides an additional indicator
of the financial performance of the Company. Funds from operations is defined
by the National Association of Real Estate Investment Trusts ("NAREIT") to mean
net income (loss) determined in accordance with generally accepted accounting
principles ("GAAP") excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis. The Company computes funds from operations under
the current NAREIT definition by subtracting from net income the dividends to
preferred shareholders before making an adjustment for the non-cash items
described above. Funds from operations is influenced not only by the operations
of the properties, but also by the capital structure of the Company.
Accordingly, management expects that funds from operations will be one of the
factors considered by the Board of Directors in determining the amount of cash
dividends the Company will pay to its shareholders. Funds from operations does
not represent cash flow from operating, investing and financing activities as
defined by GAAP, which are discussed under "Liquidity and Capital Resources"
above. Additionally, funds from operations does not measure whether cash flow
is sufficient to fund all cash flow needs, including principal amortization,
capital expenditures and dividends to shareholders, and should not be considered
as an alternative to net income for purposes of evaluating the Company's
operating performance or as an alternative to cash flow, as defined by GAAP, as
a measure of liquidity. Funds from operations presented herein under the NAREIT
guidelines is not necessarily comparable to funds from operations presented by
other real estate companies due to the fact that not all real estate companies
use the same definition. However, the Company's funds from operations is
comparable to the funds from operations of real estate companies that use the
current NAREIT definition.
The Company's calculation of funds from operations follows the guidelines issued
by NAREIT, including the recognition of rental income on the "straight-line"
basis consistent with its treatment in the Company's statement of operations
under GAAP. The "straight-line" rental adjustment increased rental revenues by
$680,000 and $475,000 in 1997 and 1996, respectively, and decreased rental
revenue by $19,000 in 1995. In accordance with the NAREIT guidelines, the
Company excludes gains or losses on sales of operating (previously depreciated)
real estate assets in calculating funds from operations, but includes gains or
losses on sales of undepreciated assets (land) that are of a recurring nature.
Pre-tax gains on land sales are included in funds from operations in the amount
of $636,000, $67,000 and $125,000 in 1997, 1996, and 1995, respectively.
42
<PAGE>
In 1997, funds from operations available to common shareholders increased
$14,877,000 or 62.9% to $38,517,000 compared to funds from operations of
$23,640,000 in 1996. Funds from operations for 1997, 1996 and 1995, are
detailed below (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income available to common
shareholders $20,255 $12,745 $ 8,426
Minority interests 6,219 3,064 2,681
Depreciation and amortization 24,144 13,474 8,177
Depreciation and amortization --
unconsolidated entities 10 40 23
Gain on sale of operating real estate
property (209) -- --
Gain on sale of operating real estate
property -- unconsolidated entities (76) -- --
- ----------------------------------------------------------------------------------------
Funds from operations available to
common shareholders -- Common
Units fully converted $50,343 $29,323 $19,307
Percentage attributable to common
shareholders/(a)/ 76.5% 80.6% 75.9%
- ----------------------------------------------------------------------------------------
Funds from operations available to
common shareholders $38,517 $23,640 $14,662
- ----------------------------------------------------------------------------------------
Weighted average common shares
Basic 16,357 11,512 8,171
Diluted/(b)/ 21,580 14,386 10,832
- ----------------------------------------------------------------------------------------
</TABLE>
(a) Represents the Company's ownership percentage of the Operating Partnership
(see Note 1 of the consolidated financial statements).
(b) Represents the weighted average shares of common stock outstanding plus the
weighted average Common Units of limited partnership interest in the
Operating Partnership outstanding (Common Units are convertible into common
stock on a one-for-one basis) and the dilutive effect of outstanding stock
options. Weighted average Common Units outstanding totaled 5,023,000,
2,768,000 and 2,589,000 in 1997, 1996, and 1995, respectively. Common stock
equivalents related to outstanding stock options totaled 200,000, 106,000
and 72,000 in 1997, 1996, and 1995, respectively (see Note 1 of the
consolidated financial statements).
43
<PAGE>
SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES AND LEASING COSTS
The following table details the Company's capital expenditures and leasing costs
for 1997, 1996, and 1995 (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Building acquisitions/(1)(2)/ $129,884 $201,660 $110,141
Development and land acquisition activity/(3)(4)/ 137,815 70,476 42,835
Non-revenue-producing building improvements 1,059 543 331
Revenue-producing building improvements/(5)/ -- -- 3,520
Tenant improvement and leasing costs on
second-generation leases/(6)/ 4,541 2,995 2,597
- ------------------------------------------------------------------------------------------------------
$273,299 $275,674 $159,424
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Building acquisitions in 1997 included two buildings acquired while still
under development. These buildings were not stabilized as of December 31,
1997.
(2) Reflects aggregate acquisition costs including the settlement of real
estate loans of $7,376,000, the assumption of indebtedness of $64,869,000,
the issuance of $31,598,000 of Common Units and other acquisition related
payables, net of receivables, of $756,000 in 1997; including the assumption
of mortgage notes payable of $104,628,000, the issuance of $48,085,000 of
Common Units, the issuance of $7,124,000 of common stock and other
acquisition related payables, net of receivables, of $906,000 in 1996; and
including the assumption of mortgage notes payable of $39,511,000 and the
application of notes receivable and deposits of $3,540,000 in 1995 (see
Note 14 to the consolidated financial statements).
(3) Includes first-generation leasing costs on development properties totaling
$3,774,000, $1,287,000 and $1,292,000 in 1997, 1996, and 1995,
respectively.
(4) Reflects aggregate development and leasing costs, exclusive of the decrease
in construction payables of $776,000 and $743,000 in 1997 and 1996,
respectively, and the increase in construction payables of $52,000 in 1995.
(5) In 1995, revenue-producing building improvements included $520,000 in
building improvements to convert a 94,677 square foot single-tenant office
building to a multi-tenant facility. By dividing the space for lease to a
number of tenants, rather than leasing the entire building to a single
tenant, the Company believes it has achieved higher rents and has
substantially reduced its rollover risk and potential loss due to vacancy.
Also in 1995, the Company invested approximately $3,000,000 in building
improvements to convert a 249,200 square foot bulk warehouse building to a
manufacturing facility. The new tenant also invested a similar amount in
improvements to the building. Management believes that this combined
investment has enhanced the value of the building and that the Company has
achieved higher rent as a result of the renovation and conversion of this
building.
(6) Includes second-generation leasing costs totaling $2,073,000, $1,331,000
and $1,159,000 in 1997, 1996, and 1995, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards ("SFAS") 128,
"Earnings per Share," was issued prescribing a new method for computing earnings
per share, which superseded Accounting Principles Board Opinion 15, "Earnings
per Share," the prior accounting literature utilized in computing earnings per
share under generally accepted accounting principles. SFAS 128 became effective
for the Company during the fourth quarter and year ended December 31, 1997.
Under SFAS 128, the Company has presented both basic and diluted earnings per
share in its consolidated financial statements and, as required under SFAS 128,
all prior period earnings per share data was restated. The impact of SFAS 128
on the Company's consolidated earnings per share amounts and additional
disclosures required by SFAS 128 for 1997, 1996 and 1995 are discussed in Note 8
to the consolidated financial statements.
In June 1997, SFAS 130, "Reporting Comprehensive Income," was issued
establishing new standards for the reporting and display of comprehensive income
and its components in a full set of financial statements. SFAS 130 will be
effective for the Company beginning with the fourth quarter and year ended
December 31, 1998. The implementation of SFAS 130 is not expected to have a
material impact on the Company's financial statement presentation.
44
<PAGE>
In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information," was issued prescribing new guidelines for the reporting of segment
data. SFAS 131 will apply to all public, for-profit companies and will be
effective for the Company beginning with the fourth quarter and year ended
December 31, 1998. The Company was not subject to segment reporting under prior
accounting standards, but will be required to provide certain segment
disclosures under SFAS 131. The Company has not yet determined the specific
nature and magnitude of the disclosures requried by SFAS 131.
IMPACT OF INFLATION
In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate. Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation. Most of the Company's leases require the tenants to pay a
share of operating expenses, including common area maintenance, real estate
taxes and insurance, thereby reducing the Company's exposure to increases in
costs and operating expenses resulting from inflation. In addition, many of the
leases are for terms of less than seven years which may enable the Company to
replace existing leases with new leases at higher base rentals if rents under
the existing leases are below the then-existing market rate. However, there can
be no assurance that the Company would be able to replace existing leases with
new leases at higher base rentals.
OTHER MATTERS
The Company is currently assessing the potential impact of the year 2000 on the
processing of date-sensitive information by the Company's hardware and software
information systems. The year 2000 issue is the result of many computer
programs recognizing a date ending with "00" as the year 1900 rather than the
year 2000, causing potential system failures or miscalculations which could
result in disruptions of normal business operations. The Company's primary
financial and operating systems are supplied by third-party suppliers. Based on
communications with third-party suppliers, evaluations of third-party systems
and internal assessments of in-house information systems, the costs of
addressing potential year 2000 issues are not expected to have a material
adverse impact on the Company's financial position, results of operations or
cash flows in future periods. In fact, most of the Company's software systems
are either currently year 2000 compliant or will be compliant well in advance of
January 1, 2000. However, such conclusions are based upon communications,
evaluations and assessments to date and if future negative events occur which
can not be resolved in a timely manner, it could result in material financial
risk to the Company. The Company plans to allocate the time and resources
necessary to timely resolve any significant year 2000 issues.
45
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant and supplementary data
are detailed under Item 14(a) and filed as part of this report on the pages
indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the heading "Election of Directors" entitled "Nominees for
Election -- Terms Expiring in 2001," "Incumbent Directors -- Terms Expiring in
2000," "Incumbent Directors -- Terms Expiring in 1999" and "Section 16(a)
Beneficial Ownership Reporting Compliance" of the Registrant's Proxy Statement
for the 1998 Annual Meeting of Shareholders to be held May 20, 1998 (the "Proxy
Statement") are incorporated herein by reference for information regarding
Directors of the Registrant. See Item X in Part I hereof for information
regarding executive officers of the Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading entitled
"Executive Compensation" of the Proxy Statement are incorporated herein by
reference.
46
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership
of shares of Common Stock of the Company as of February 28, 1998 for (i)
directors of the Company, (ii) the Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company (collectively,
the "Named Executive Officers"), (iii) the directors and executive officers of
the Company as a group and (iv) each person known to the Company who is, or may
be deemed to be, the beneficial owner of more than 5% of the Company's common
stock. The number of shares represents the number of shares of common stock the
person holds plus the number of shares into which Common Units in the Operating
Partnership held by the person are exchangeable (if the Company elects to issue
shares rather than pay cash upon such exchange). Units are exchangeable for
common stock or cash, at the option of the Company. The right to exchange Units
for shares of common stock or cash (the "Exchange Rights") may be exercised by
the holders of Units (other than John W. Nelley, Jr. and Harold S. Lichtin and
certain entities controlled by them) from time to time, in whole or in part.
The Exchange Rights may be exercised by John W. Nelley, Jr., and certain
entities controlled by him, with respect to Units beneficially owned by him
through such entities, from time to time, in whole or in part, after November 1,
1999. The Exchange Rights may be exercised by Harold S. Lichtin and certain
entities that he controls from time to time, in whole or in part, subject to the
limitation that the Exchange Rights may not be exercised prior to the later of
one year from the date of issuance, as defined, or the date on which either a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the shares of common stock issuable upon exercise
of such Exchange Rights becomes effective or, in the opinion of counsel, such
shares of common stock may be issued without registration, provided that in no
event may such Exchange Rights be exercised prior to December 31, 1999.
47
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Assuming Beneficial Ownership Assuming
No Exchange of Units Exchange of Units
for Common Stock for Common Stock
-------------------------------------- -----------------------------------
Number of % of Shares of Number of % of Shares of
Name and Shares of Common Stock Shares of Common Stock
Address of Beneficial Owner Common Stock/1/ Outstanding Common Stock/1/ Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LaSalle Advisors Capital 1,843,250/(2)/ 9.71% 1,843,250 7.21%
Management, Inc./ABKB/LaSalle
Securities Limited Partnership/(2)/
200 East Randolph Drive
Chicago, IL 60601
FMR Corp./(3)/ 930,700/(3)/ 4.90% 930,700 3.64%
82 Devonshire Street
Boston, MA 02109
A. Ray Weeks, Jr./(4)/ 357,685/(5)(6)/ 1.88% 1,790,590/(5)(6)/ 6.98%
Chairman, Chief Executive Officer
and Director
Thomas D. Senkbeil/(4)/ 116,832/(6)/ * 212,899/(6)(7)(8)/ *
Vice Chairman, Chief
Investment Officer and Director
Forrest W. Robinson/(4)/ 87,460/(6)/ * 159,587/(6)(7)(8)/ *
President, Chief Operating Officer
and Director
David P. Stockert/(4)/ 69,156/(6)/ * 69,156/(6)/ *
Senior Vice President and
Chief Financial Officer
Klay W. Simpson/(4)/ 19,111/(6)/ * 23,221/(6)/ *
Senior Vice President, Marketing
John W. Nelley, Jr./(4)/ 145,500/(6)(9)/ * 2,426,773/(6)(9)/ 9.47%
Managing Director and Director
Harold S. Lichtin/(4)/ 322,178/(6)(10)/ 1.69% 946,476/(6)(10)/ 3.69%
Director
Barrington H. Branch/(4)/ 14,000/(11)/ * 14,000/(11)/ *
Director
George D. Busbee/(4)/ 18,000/(11)/ * 18,000/(11)/ *
Director
William Cavanaugh III/(4)/ 5,000/(11)/ * 5,000/(11)/ *
Director
Charles R. Eitel/(4)/ 15,000/(11)/ * 15,000/(11)/ *
Director
William O. McCoy/(4)/ 17,000/(11)/ * 17,000/(11)/ *
Director
All executives officers and directors 1,348,937/(12)/ 6.90% 5,805,523/(12)/ 22.22%
as a group (20 persons)
</TABLE>
* Represents less than 1% of the Company's outstanding common stock.
(1) Except as otherwise indicated, each of the parties listed has sole voting
and investment power over the shares owned.
(2) According to a Schedule 13G, dated February 13, 1998, filed on behalf of
LaSalle Advisors Capital Management, Inc. ("LaSalle") and ABKB/LaSalle
Securities Limited Partnership ("ABKB"), registered investment advisory
companies, each entity represents the following beneficial ownership,
voting rights and stock disposition powers with respect to the Company's
Common Stock. LaSalle claims beneficial ownership of 731,250 shares or
3.85% of the Company's Common Stock, the sole power to vote or to direct
the vote and sole power to dispose or to direct the disposition of 411,550
shares, shared power to dispose or to direct the disposition of 319, 700
shares and disclaims sole or shared voting power of 319,700 shares of
Common Stock. ABKB claims beneficial ownership of 1,112,00 shares of 5.86%
of the Company's Common Stock, the sole power to vote or to direct the vote
and sole power to dispose or to direct the disposition of 277,500 shares,
shared power to vote or to direct the vote of 790,775 shares, shared power
to dispose or to direct the disposition of 834,500 shares and disclaims
sole or shared voting power to 43,725 shares of common stock.
48
<PAGE>
(3) According to a Schedule 13G, dated February 14, 1998, filed on behalf of
FMR Corp., a parent holding company, Edward C. Johnson 3d, as Chairman and
a significant shareholder of FMR Corp., and Abigail P. Johnson, as
significant shareholder of FMR Corp., may also be deemed beneficial owners
of said shares by virtue of their relationships to FMR Corp., and the
companies discussed herein. FMR Corp. through a wholly owned investment
advisory company, Fidelity Management & Research Company ("Fidelity"), has
sole power to dispose of 727,000 shares of the Company's Common Stock owned
by Fidelity funds ("Funds") for which it serves as an advisor. Neither FMR
Corp. nor Edward C. Johnson 3d has the sole power to vote or direct the
voting of 727,000 shares as such power resides with each Fidelity Funds'
Board of Trustees. FMR Corp., through a wholly owned subsidiary bank,
Fidelity Management Trust Company, has sole power to dispose or direct the
disposition of 203,700 shares, the sole power to vote or direct the vote of
188,000 shares and disclaims the power to vote or to direct the vote of
15,700 shares in its capacity as investment manager of the bank's
institutional accounts. The Company understands that as of February 28,
1998, FMR Corp. is the beneficial owner of more than the 930,700 shares of
the Company's Common Stock shown above, although the Company has no
information as to the specific number of shares beneficially owned on that
date.
(4) Beneficial owner's address is 4497 Park Drive, Norcross, GA 30093.
(5) Includes 31,810 shares of common stock held by a foundation of which Mr.
Weeks is a director and 3,000 shares of Common Stock held by a family trust
of which Mr. Weeks is a trustee. Also, includes 3,467 shares of Common
Stock and 400,155 Units held by trusts of which Mr. Weeks is co-trustee and
a 20% beneficiary, and 255,623 Units held by corporations that Mr. Weeks
controls, including Units held by those corporations discussed in notes (7)
and (8) below, and 163,048 Units held by Mr. Weeks' spouse. Mr. Weeks
disclaims beneficial ownership of 34,810 shares of Common Stock held by the
foundation and family trust discussed herein.
(6) Includes 76,667, 61,667, 61,667, 54,833, 17,667 and 40,000 shares issuable
to Mr. Weeks, Mr. Senkbeil, Mr. Robinson, Mr. Stockert, Mr. Simpson, Mr.
Nelley and Mr. Lichtin, respectively, upon exercise of stock options which
are currently exercisable or exercisable within 60 days, but does not
include 23,333, 13,333, 13,333, 11,667 and 5,333 shares issuable to Mr.
Weeks, Mr. Senkbeil, Mr. Robinson, Mr. Stockert and Mr. Simpson,
respectively, upon exercise of stock options which are not exercisable
within 60 days.
(7) Includes 42,993 Units held by a corporation which is owned 60%, 30% and
10%, respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(8) Includes 257 Units held by a corporation which is owned 75%, 20% and 5%,
respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(9) Includes 100,000 shares of Common Stock and 2,281,273 Units held by a
partnership of which Mr. Nelley is a general partner. Mr. Nelley disclaims
beneficial ownership of 78,437 of such shares of Common Stock and 1,789,358
of such Units.
(10) Includes 282,178 shares of Common Stock and 134,673 Units held by entities
which Harold S. Lichtin controls and 153 Units held by Mr. Lichtin's
spouse.
(11) Includes 13,000, 13,000, 4,000, 12,600 and 13,000 shares issuable to Mr.
Branch, Mr. Busbee, Mr. Cavanaugh, Mr. Eitel and Mr. McCoy, respectively,
upon the exercise of stock options which are currently exercisable or
exercisable within 60 days.
(12) Includes 546,435 shares issuable upon the exercise of stock options which
are currently exercisable or exercisable within 60 days, but does not
include 122,665 shares issuable upon exercise of stock options which are
not exercisable within 60 days.
49
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections under the heading titled "Certain Transactions" of the Proxy
Statement are incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(A)1. Financial Statements
The following Consolidated Financial Statements of the Company together
with the applicable Report of Independent Public Accountants, are listed
below:
WEEKS CORPORATION AND SUBSIDIARIES PAGE NUMBER
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Public Accountants on Financial
Statements and Schedule....................................... F-1
Consolidated Balance Sheets of the Company
at December 31, 1997 and 1996................................. F-2
Consolidated Statements of Operations of the Company
for the years ended December 31, 1997, 1996 and 1995.......... F-3
Consolidated Statements of Shareholders' Equity of the Company
for the years ended December 31, 1997, 1996 and 1995.......... F-4
Consolidated Statements of Cash Flows of the Company
for the years ended December 31, 1997, 1996 and 1995.......... F-5
Notes to Consolidated Financial Statements...................... F-6
</TABLE>
2. Financial Statement Schedule
Schedule III - Real Estate Assets
and Accumulated Depreciation......................... S-1 to S-11
3. Exhibits
Certain of the exhibits required by item 601 of Regulation S-K have been
filed with previous reports by the Registrant and are herein
incorporated by reference thereto.
50
<PAGE>
Exhibit No. Description
- --------------------------------------------------------------------------------
2.1** Agreement of Merger by and between NWI Warehouse Group, LLC and
Weeks Realty, L.P., dated November 1, 1996.
2.2** Contribution Agreement for Development Properties between Weeks
Realty, L.P., and NWI Warehouse Group, L.P., dated November 1,
1996.
2.3** Contribution Agreement for Aspen Grove Land between Weeks Realty,
L.P., and NWI Warehouse Group, L.P., dated November 1, 1996.
2.4** Contribution Agreement for I-440 Land between Weeks Realty, L.P.,
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.5** Contribution Agreement for NWI Operating Business by and between
Weeks Realty, L.P. and NWI Warehouse Group, L.P., dated
November 1, 1996.
2.6** Contribution Agreement for Buckley Operating Business by and
between Weeks Realty, L.P. and Buckley & Company Real Estate,
Inc., dated November 1, 1996.
2.7** Contribution Agreement for Briley Land between Weeks Realty, L.P.
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.8*** Contribution Agreement by and between Harold S. Lichtin and Weeks
Realty, L.P., dated December 31, 1996.
2.9*** Agreement and Plan of Merger by and among Lichtin Properties,
Inc., Harold S. Lichtin and Weeks Corporation, dated December 31,
1996.
2.10*** Contribution Agreement for Northern Telecom Properties, among the
Contributors identified therein (the "Contributors") and Weeks
Realty, L.P. doing business as Weeks Realty Limited Partnership,
dated December 31, 1996.
2.11*** Contribution Agreement (Perimeter Park West Land) among Harold S.
Lichtin, Marie Antoinette Robertson, and Perimeter Park West
Associates, and Weeks Realty, L.P. doing business as Weeks Realty
Limited Partnership, dated December 31, 1996.
2.12*** Contribution Agreement for Completed Properties Lichtin Portfolio
among the Contributors and Weeks Realty, L.P. doing business as
Weeks Realty Limited Partnership, dated December 31, 1996.
2.13*** Contribution Agreement for Development Properties and Regency
Forrest Land among the Contributors and Weeks Realty, L.P. doing
business as Weeks Realty Limited Partnership, dated December 31,
1996.
2.14***** Beacon Centre Contribution Agreement dated January 2, 1998 by and
between Armando Codina, Codina West Dade Development Corporation,
Codina Family Investments, Ltd., The Benenson Capital Company, Raha
Associates, Inc., Laurence Tisch, Preston Tisch, Raha Associates
II, Inc., Codina West Dade Development Corporation No.5, and Weeks
Realty, L.P., and Weeks Corporation.
3.1**** Amended and Restated Articles of Incorporation of the Company.
3.2+++ Articles of Amendment of the Registrant's Restated Articles of
Incorporation.
3.3+++ Articles of Amendment of the Registrant's Restated Articles of
Incorporation.
3.4*** Third Amended and Restated Bylaws of Weeks Corporation.
4.1* Specimen certificate of Common Stock.
4.2++++ Specimen certificate of Preferred Stock.
10.1**** First Amended and Restated Agreement of Limited Partnership
dated August 24, 1994 of Weeks Realty L.P.
51
<PAGE>
10.2**** Registration Rights and Lock-Up Agreement dated August 24, 1994
among the Company and the persons named therein.
10.3**** Incentive Stock Plan.
10.4**** Employment Agreements between the Company and A. Ray Weeks, Jr.,
Thomas D. Senkbeil and Forrest W. Robinson, respectively.
10.5**** Employment Agreements between Weeks Realty L.P. and A. Ray Weeks,
Jr., Thomas D. Senkbeil and Forrest W. Robinson, respectively.
10.6**** Employment Agreements between Weeks Realty Services, Inc. and
A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson,
respectively.
10.7**** Employment Agreements between Weeks Construction Services, Inc. and
A. Ray Weeks, Jr. and Forrest W. Robinson, respectively.
10.8**** Noncompetition Agreements among the Company, Weeks Realty, L.P.,
Weeks Realty Services, Inc., Weeks Construction Services, Inc. and
each of A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W.
Robinson.
10.9* Form of Officers and directors Indemnification Agreement.
10.10+ Credit Agreement dated September 25, 1996, by and among Wachovia
Bank of Georgia, N.A., as agent bank for Wachovia Bank of Georgia,
N.A., First Union National Bank of Georgia, Commerzbank A.G. and
Mellon Bank, N.A. as lenders, Weeks Realty, L.P., Weeks
Construction Services, Inc., Weeks Realty Services, Inc., Weeks
Development Partnership and Weeks Financing Limited Partnership, as
borrowers, and Weeks Corporation and Weeks Realty, L.P., as
guarantors.
10.11++ Park North Purchase and Sale Agreement between Copley Properties
Inc., Parknorth Associates, Parknorth Associates II, Parknorth
Associates III and Weeks Realty, L.P., dated March 28, 1995.
10.12# Purchase and Sale Agreement by and among North Meadow Associates
Joint Venture, ASC North Fulton Associates Joint Venture and Weeks
Realty, L.P., dated July 7, 1995.
10.13## Employment Agreement between Weeks Corporation and David P.
Stockert, dated June 26, 1995.
10.14## Noncompetition Agreement between Weeks Corporation, Weeks Realty,
L.P., Weeks Realty Services, Inc. and Weeks Construction Services,
Inc. and David P. Stockert, dated June 26, 1995.
10.15## Agreement of Purchase and Sale between Premprop-Northwoods 6
Partnership, Premprop-Northwoods 18-22 Partnership, and Premprop-
Northwoods 23 Partnership and Weeks Realty, L.P. dated November 6,
1995. The Exhibits and Schedules to this Agreement are listed in,
but not filed with, this exhibit. Such Exhibits and Schedules have
been omitted for purposes of this filing, but will be furnished to
the Commission supplementary upon request.
10.16### Real Estate Purchase and Sale Agreement by and between Principal
Mutual Life Insurance Company and Weeks Realty, L.P., dated May 28,
1996.
10.17### Amendment to Weeks Corporation Incentive Stock Plan, dated May 21,
1996.
10.18** Employment Agreement by and between John W. Nelley, Jr. and Weeks
Corporation, dated November 1, 1996.
52
<PAGE>
10.19** Employment Agreement by and between Albert W. Buckley, Jr. and
Weeks Corporation, dated November 1, 1996.
10.20** Noncompetition Agreement by and among NWI Warehouse Group, L.P.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services,
Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc.,
Weeks LP Holdings, Inc., and their respective successors, dated
November 1, 1996.
10.21** Noncompetition Agreement by and among John W. Nelley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated
November 1, 1996.
10.22** Noncompetition Agreement by and among Albert W. Buckley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks
LP Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated
November 1, 1996.
10.23** Indemnification Agreement by and between Weeks Corporation and John
W. Nelley, Jr., dated November 1, 1996.
10.24** Registration Rights and Lock-Up Agreement by and among Weeks
Corporation, NWI Warehouse Group, L.P., Buckley & Company Real
Estate, Inc., John W. Nelley, Jr., and Albert W. Buckley, Jr.,
dated November 1, 1996.
10.25** Registration Rights Agreement for Post-March 31, 1998 Shares and
Units, by and among Weeks Corporation, NWI Warehouse Group, L.P.,
and Buckley & Company Real Estate, Inc., dated November 1, 1996.
10.26** Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated October 30, 1996.
10.27** First Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among NWI
Warehouse Group, L.P., Buckley & Company Real Estate, Inc. and
Weeks GP Holdings, Inc., dated November 1, 1996.
10.28*** Registration Rights and Lock-Up Agreement by and among Weeks
Corporation and Harold S. Lichtin, Noel A. Lichtin, Marie A.
Robertson, Amy R. Ehrman, Roland G. Robertson and Perimeter Park
West Associates Limited Partnership, dated December 31, 1996.
10.29*** Registration Rights and Lock-Up Agreement for Post-June 30, 1998
Units by and among Weeks Corporation and Harold S. Lichtin, Noel A.
Lichtin, Marie A. Robertson, Amy R. Ehrman, Roland G. Robertson and
Perimeter Park West Associates Limited Partnership, dated December
31, 1996.
10.30 Consulting Agreement by and between Harold S. Lichtin and Weeks
Corporation, dated December 30, 1997, effective October 1, 1997.
10.31*** Noncompetition Agreement by and between Harold S. Lichtin, Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated December
31, 1996.
53
<PAGE>
10.32*** Indemnification Agreement by and between Weeks Corporation and
Harold S. Lichtin, dated December 31, 1996.
10.33*** Second Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among Harold S.
Lichtin, Noel A. Lichtin, Marie Antoinette Robertson, Amy R.
Ehrman, Roland G. Robertson and Perimeter Park West Associates
Limited Partnership, Weeks GP Holdings, Inc. and Weeks Corporation,
dated December 31, 1996.
10.34++ First Amendment to Credit Agreement dated September 1, 1997 by and
among Wachovia Bank of Georgia, N.A., as agent bank for Wachovia
Bank of Georgia, N.A., First Union National Bank of Georgia,
Commerzbank A.G. and Mellon Bank, as lenders, Weeks Realty, L.P.,
Weeks Construction Services, Inc., Weeks Realty Services, Inc.,
Weeks Development Partnership and Weeks Financing Limited
Partnership, as borrowers, and Weeks Corporation, Weeks GP
Holdings, Inc., Weeks LP Holdings, Inc., and Week Realty, L.P., as
guarantors.
10.35+++++ Third Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated January 31, 1997.
10.36 Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated August 1, 1997.
10.37++++ Fifth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated October 7, 1997.
10.38 Sixth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated October 27, 1997.
10.39 Seventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated December 30, 1997,
but effective as of August 1, 1997.
10.40 Settlement Agreement and Mutual Release by and among Weeks
Corporation, the affiliates and related companies of Weeks
Corporation identified therein, and Harold S. Lichtin, dated
December 30, 1997, effective October 1, 1997.
10.41***** Eighth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. dated January 9, 1998.
10.42***** Registration Rights Agreement dated January 9, 1998 by and among
Weeks Corporation and The Benenson Capital Company, Raha
Associates, Inc., Laurence Tisch and Preston Tisch.
10.43***** Registration Rights and Lock-Up Agreement dated January 9, 1998 by
and among Weeks Corporation and Armando Codina, Codina Family
Investments, Ltd., and Codina West Dade Development Corporation.
10.44##### Securities Purchase Agreement among Codina Group, Inc., Armando
Codina, St. Joe Corporation and Weeks Realty Services, Inc., dated
as of February 24, 1998.
10.45##### Shareholders' Agreement among Codina Group Inc., Armando Codina,
St. Joe Corporation and Weeks Realty Services, Inc., dated as of
February 24, 1998.
11.1 Computation of earnings per share.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP regarding the Company's Form S-3,
file No. 33-96534, Form S-3, file No. 333-1106, Form S-8, file
No. 333-1108, Form S-8, file No. 333-18305, Form S-3, file
No. 333-42821, and Form S-3, filed No. 333-32755.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the year ended December 31, 1996 as
restated for the implementation of SFAS 128.
27.3 Financial Data Schedule for the nine months ended September 30,
1997 as restated for the implementation of SFAS 128.
27.4 Financial Data Schedule for the nine months ended September 30,
1996 as restated for the implementation of SFAS 128.
27.5 Financial Data Schedule for the six months ended June 30, 1996 as
restated for the implementation of SFAS 128.
* Filed as an exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-80314) of the Company.
** Filed as an exhibit to the Company's Current Report on Form 8-K dated
November 1, 1996.
54
<PAGE>
*** Filed as an exhibit to the Company's Current Report on Form 8-K dated
December 31, 1996.
**** Filed as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
***** Filed as an exhibit to the Company's Current Report on Form 8-K dated
January 9, 1998.
##### Filed as an exhibit to the Company's Current Report on Form 8-K dated
March 17, 1998.
# Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 31, 1995.
## Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
### Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 9, 1996.
#### Filed as an exhibit to the Registration Statement on Form S-8 (SEC
File No. 333-18305).
+ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996.
++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
July 12, 1995.
++ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1997.
+++ Filed as an exhibit to the Registration Statement on Form S-3 (SEC File
No. 333-42821) of the Company.
++++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
October 7, 1997.
+++++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
May 7, 1997.
(B)1. Reports on Form 8-K
Form 8-K dated October 3, 1997, and filed on October 6, 1997, reporting
the acquisition of operating real estate properties from NWI and Lichtin
in 1997.
Form 8-K dated October 7, 1997, and filed on October 9, 1997, filing
certain exhibits relating to the Company's Series A Preferred Stock
offering in October 1997.
55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
WEEKS CORPORATION
(Registrant)
March 30, 1998 /s/ A. R. Weeks, Jr.
--------------------
A. R. Weeks, Jr.
Chairman of the Board, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capabilities on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ A. R. Weeks, Jr.
- ----------------------------- Chairman of the Board, Chief March 30, 1998
A. R. Weeks, Jr. Executive Officer and Director
/s/ Thomas D. Senkbeil
- ----------------------------- Vice Chairman, Chief March 30, 1998
Thomas D. Senkbeil Investment Officer and Director
/s/ Forrest W. Robinson
- ----------------------------- President, Chief Operating March 30, 1998
Forrest W. Robinson Officer and Director
/s/ David P. Stockert
- ----------------------------- Senior Vice President and March 30, 1998
David P. Stockert Chief Financial Officer
/s/ John W. Nelley, Jr.
- ----------------------------- Managing Director and March 30, 1998
John W. Nelley, Jr. Director
/s/ Arthur J. Quirk
- ----------------------------- Vice President and Controller March 30, 1998
Arthur J. Quirk
/s/ Barrington H. Branch Director March 30, 1998
- -----------------------------
Barrington H. Branch
/s/ George D. Busbee Director March 30, 1998
- -----------------------------
George D. Busbee
/s/ William Cavanaugh III Director March 30, 1998
- -----------------------------
William Cavanaugh III
/s/ Charles R. Eitel Director March 30, 1998
- -----------------------------
Charles R. Eitel
/s/ Harold S. Lichtin Director March 30, 1998
- -----------------------------
Harold S. Lichtin
/s/ William O. McCoy Director March 30, 1998
- -----------------------------
William O. McCoy
</TABLE>
56
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weeks Corporation:
We have audited the accompanying consolidated balance sheets of Weeks
Corporation and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements and the schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 Weeks Corporation and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
-----------------------------------------
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 27, 1998
F-1
<PAGE>
WEEKS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
----------------------------------------------------
(In thousands, except share data) 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Real estate assets
Land $106,196 $ 77,233
Buildings and improvements 627,309 450,002
Accumulated depreciation (61,548) (41,469)
- ------------------------------------------------------------------------------------------------------
Operating real estate assets 671,957 485,766
Developments in progress 100,433 56,571
Land held for future development 22,562 9,035
- ------------------------------------------------------------------------------------------------------
Net real estate assets 794,952 551,372
Real estate loans 12,952 9,455
Cash and cash equivalents 5,421 260
Receivables 7,031 5,858
Deferred costs, net 13,087 10,286
Investments in and notes receivable from
unconsolidated entities 11,782 7,760
Other assets 7,136 6,858
- ------------------------------------------------------------------------------------------------------
$852,361 $591,849
======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $192,595 $197,575
Credit facility borrowings 82,920 99,400
Accounts payable and accrued expenses 14,578 9,970
Other liabilities 4,876 2,963
- ------------------------------------------------------------------------------------------------------
Total liabilities 294,969 309,908
- ------------------------------------------------------------------------------------------------------
Minority interests in Operating Partnership 98,344 68,230
- ------------------------------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity
Preferred stock, at $25.00 liquidation preference,
20,000,000 shares authorized, 6,000,000 of 8%
series A cumulative redeemable shares issued and
outstanding at December 31, 1997 150,000 --
Common stock, $0.01 par value; 100,000,000 shares
authorized; 17,703,992 and 14,048,593 shares issued
and outstanding at December 31, 1997 and 1996, respectively 177 140
Additional paid-in capital 370,696 267,634
Deferred compensation (895) --
Accumulated deficit (60,930) (54,063)
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity 459,048 213,711
- ------------------------------------------------------------------------------------------------------
$852,361 $591,849
======================================================================================================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
WEEKS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------
(In thousands, except per share data) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Rental $80,419 $48,162 $31,217
Tenant reimbursements 10,387 4,517 2,798
Other 1,214 1,204 1,256
- ---------------------------------------------------------------------------------------------------------
92,020 53,883 35,271
- ---------------------------------------------------------------------------------------------------------
EXPENSES
Property operating and maintenance 11,278 6,025 3,899
Real estate taxes 7,210 4,725 2,997
Depreciation and amortization 24,144 13,474 8,177
Interest 17,900 11,779 8,106
Amortization of deferred financing costs 933 864 691
General and administrative 5,068 3,039 1,848
- ---------------------------------------------------------------------------------------------------------
66,533 39,906 25,718
- ---------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED
ENTITIES, INTEREST INCOME AND GAIN ON SALE OF
REAL ESTATE PROPERTY 25,487 13,977 9,553
Equity in earnings of unconsolidated entities 1,989 1,340 1,220
Interest income 1,509 492 334
Gain on sale of real estate property 209 -- --
- ---------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTERESTS 29,194 15,809 11,107
Minority interests (6,219) (3,064) (2,681)
- ---------------------------------------------------------------------------------------------------------
NET INCOME 22,975 12,745 8,426
Dividends to preferred shareholders (2,720) -- --
- ---------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $20,255 $12,745 $ 8,426
- ---------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
Basic $1.24 $1.11 $1.03
Diluted $1.23 $1.10 $1.03
- ---------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES
Basic 16,357 11,512 8,171
Diluted 21,580 14,386 10,832
- ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-3
<PAGE>
WEEKS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-in Accumulated Deferred
(In thousands, except per share amounts) Stock Stock Capital Deficit Compensation Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY, DECEMBER 31, 1994 $ -- $ 77 $118,494 $(45,101) $ -- $ 73,470
Common share offering, net of underwriting
discount and offering costs of $4,825 -- 35 72,765 -- -- 72,800
Adjustments primarily for minority interest of
Unitholders in Operating Partnership upon
public share offering and upon conversions of
Units into shares -- -- -- (10,234) -- (10,234)
Dividends -- common shareholders ($1.50 per share) -- -- -- (11,513) -- (11,513)
Net income -- -- -- 8,426 -- 8,426
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1995 -- 112 191,259 (58,422) -- 132,949
Common share offering, net of underwriting
discount and offering costs of $3,843 -- 26 68,506 -- -- 68,532
Acquisition consideration -- 2 7,122 -- -- 7,124
Exercise of stock options -- -- 706 -- -- 706
Dividend reinvestment plan -- -- 41 -- -- 41
Adjustments for minority interest of Unitholders
in Operating Partnership upon issuance
of additional shares and Units -- -- -- 9,474 -- 9,474
Dividends -- common shareholders ($1.60 per share) -- -- -- (17,860) -- (17,860)
Net income -- -- -- 12,745 -- 12,745
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1996 -- 140 267,634 (54,063) -- 213,711
Series A cumulative redeemable preferred share
offering, net of underwriting discount and
offering costs of $5,375 150,000 -- (5,375) -- -- 144,625
Common share offering, net of underwriting
discount and offering costs of $6,334 -- 36 106,532 -- -- 106,568
Exercise of stock options -- -- 649 -- -- 649
Dividend reinvestment plan -- -- 74 -- -- 74
Restricted stock issued to employees -- 1 1,182 -- (1,183) --
Deferred compensation -- -- -- -- 288 288
Adjustments for minority interest of Unitholders
in Operating Partnership upon issuance of
additional shares and Units -- -- -- 199 -- 199
Dividends -- series A preferred shareholders
($0.45 per share) -- -- -- (2,720) -- (2,720)
Dividends -- common shareholders ($1.72 per share) -- -- -- (27,321) -- (27,321)
Net income -- -- -- 22,975 -- 22,975
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY, DECEMBER 31, 1997 $150,000 $177 $370,696 $(60,930) $ (895) $459,048
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
WEEKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------------
(In thousands) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 22,975 $ 12,745 $ 8,426
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests 6,219 3,064 2,681
Depreciation and amortization 24,144 13,474 8,177
Amortization of deferred financing costs 933 864 691
Amortization of deferred compensation 288 -- --
Straight-line rent revenue (680) (475) 19
Gain on sale of real estate property (209) -- --
Net change in:
Receivables (1,151) (184) (734)
Other assets (1,970) (1,427) (1,015)
Deferred costs (5,847) (2,618) (2,451)
Accounts payable and accrued expenses 2,482 1,366 2,078
Other liabilities 1,913 1,222 806
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 49,097 28,031 18,678
- -----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property acquisition, development and construction (163,589) (113,056) (113,870)
Real estate loans (19,173) (8,146) (1,309)
Proceeds from sale of real estate property 2,484 -- --
Collections on real estate loans,
notes receivable and other 9,208 879 2,302
Notes receivable and deposits -- -- (4,540)
Distributions from (investments in)
unconsolidated entities (2,504) -- 290
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (173,574) (120,323) (117,127)
- -----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Preferred share offering proceeds 150,000 -- --
Common share offering proceeds 112,902 72,375 77,625
Underwriting discount and offering costs (11,709) (3,843) (4,825)
Proceeds from stock option exercises and
dividend reinvestment plan 723 747 --
Line of credit proceeds (repayments), net (16,480) 65,117 34,283
Payments of mortgage and other notes payable (69,849) (20,075) (3,650)
Proceeds from mortgage notes payable -- -- 5,200
Deferred financing costs (126) (783) (133)
Dividends to shareholders (28,041) (17,860) (11,513)
Distributions to minority interests (7,782) (4,108) (3,890)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 129,638 91,570 93,097
- -----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,161 (722) (5,352)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 260 982 6,334
- -----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,421 $ 260 $ 982
- -----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
<PAGE>
WEEKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Weeks Corporation and its subsidiaries own, operate, develop, construct,
acquire and manage primarily industrial and suburban office buildings in the
southeast United States. As used herein, the term "Company" includes Weeks
Corporation and its subsidiaries, including Weeks Realty, L.P. (the
"Operating Partnership"), unless the context indicates otherwise. The
Company, through its wholly owned subsidiaries, is the general partner and
owns a majority interest in the Operating Partnership which, including the
operations of its subsidiaries, conducts substantially all of the on-going
operations of the Company. The Company has elected to qualify and operate as
a self-administered and self-managed real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"). As a REIT,
the Company will not generally be subject to corporate federal income taxes
as long as it satisfies certain technical requirements of the Code relating
to the composition of its income and assets, and the requirement to
distribute 95% of its taxable income to its shareholders.
As of December 31, 1997, the Company had outstanding 17,703,992 shares of
common stock and owned the same number of units of common limited partnership
interest ("Common Units") in the Operating Partnership representing a 75.9%
ownership interest in the Operating Partnership. Common Units held by
persons other than the Company totaled 5,632,695 as of December 31, 1997, and
represented a 24.1% minority interest in the Operating Partnership. Common
Units are convertible by their holders into shares of common stock on a one-
for-one basis, or into cash, at the Company's option. The Company's weighted
average ownership interest in the Operating Partnership was 76.5% and 80.6%
for the years ended December 31, 1997 and 1996, respectively.
The Company conducts its third-party service businesses through two companies
(the "Service Companies") and their subsidiaries: Weeks Realty Services, Inc.
conducts third-party landscape, property management and leasing services, and
Weeks Construction Services, Inc. conducts third-party construction services.
The Company holds 100% of the nonvoting and 1% of the voting common stock of
these Service Companies. The remaining voting common stock is held by three
executive officers of the Company. The ownership of the common stock of the
Service Companies entitles the Company to substantially all (99%) of the
economic benefits from the results of the Service Companies' operations.
As of December 31, 1997, the Company's in-service property portfolio
consisted of 218 industrial properties, 21 suburban office properties and
three retail properties comprising 17,015,000 square feet. In-service
properties exclude properties under development which are not yet stabilized
and properties under agreement to acquire. The Company's primary markets and
the concentration of the Company's portfolio (based on square footage) of in-
service properties are Atlanta, Georgia (70%), Nashville, Tennessee (12%),
Raleigh-Durham-Chapel Hill, North Carolina (12%), Orlando, Florida (4%), and
Spartanburg, South Carolina (2%). In addition, 55 industrial, suburban
office and retail properties were under development, in lease-up or under
agreement to acquire at December 31, 1997, comprising an additional 6,210,000
square feet.
F-6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
financial position of the Company and its subsidiaries at December 31, 1997
and 1996, and their results of operations for each of the three years in the
period ended December 31, 1997. The Service Companies and their subsidiaries
are reflected in the accompanying consolidated financial statements on the
equity method of accounting as discussed below. All significant intercompany
balances and transactions have been eliminated in the consolidated financial
statements.
REAL ESTATE ASSETS
Real estate assets are stated at depreciated cost. 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
interest, property taxes and insurance and allocated overhead costs incurred
during the construction period, are capitalized.
Depreciation is calculated using the straight-line method, generally 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
Cash and cash equivalents include cash and highly liquid investments,
consisting primarily of money market accounts, with original maturities of
three months or less.
REVENUE RECOGNITION
Rental income from operating leases is recognized on a straight-line basis
over the terms of the respective leases. Straight-line rent receivables
totaled $3,703,000 and $3,023,000 at December 31, 1997 and 1996,
respectively. Tenant reimbursements for property taxes and other recoverable
expenses are recognized as revenues in the period the applicable expenses are
incurred. Revenues for development, construction, landscape, property
management and leasing services provided by the Service Companies are
recognized over the period during which the related services are rendered.
The Company accounts for one lease as a direct financing lease. Direct
financing lease income totaled $754,000, $768,000 and $776,000 in 1997, 1996
and 1995, respectively, and was included in other revenues in the
accompanying consolidated statements of operations. The net carrying value
of the direct financing lease, included in other assets in the accompanying
consolidated balance sheets, was $5,003,000 and $5,136,000 at December 31,
1997 and 1996, respectively.
DEFERRED COSTS
Costs incurred to procure operating leases and in connection with financing
arrangements are capitalized and amortized on a straight-line basis over the
terms of the related lease or loan arrangements. Unamortized lease and
financing costs are written off upon the early termination of the related
lease or loan agreement.
INVESTMENTS IN UNCONSOLIDATED ENTITIES
The Company accounts for its investments in the Service Companies and their
subsidiaries and other non-majority owned entities on the equity method of
accounting.
F-7
<PAGE>
INTEREST RATE SWAP AGREEMENTS
The Company uses interest rate swap and treasury rate guarantee hedge
arrangements to manage its exposure to interest rate changes. Such
arrangements are considered hedges of both specific current borrowings and
anticipated debt financing transactions. The costs paid or benefits received
under interest rate swap arrangements are recognized as adjustments to
interest expense. The costs or benefits resulting from the early settlement
of interest rate swap arrangements are deferred and recognized as adjustments
to interest expense over the original life of the related swap arrangement as
long as the specific borrowings are outstanding. The costs or benefits
resulting from the settlement of treasury rate guarantee hedge arrangements
are recognized as adjustments to interest expense over the term of the
specifically hedged anticipated borrowings upon issuance of the indebtedness.
The costs or benefits of terminated interest rate swap or treasury rate
guarantee hedge arrangements are recognized in income or expense in the
period of settlement to the extent hedged borrowings were not outstanding or
the specifically hedged anticipated debt was not incurred.
INCOME TAXES
The Company has elected to be taxed as a REIT under the Code. As a REIT,
the Company generally will not be subject to corporate level federal income
taxes as long as it satisfies certain technical requirements of the Code
relating to the composition of its income and assets, and the requirement
that it distribute 95% of its taxable income to its shareholders. In any
event, the Company may be subject to certain state and local taxes and to
federal income and excise taxes on its undistributed income. If the Company
fails to qualify as a REIT under the Code, it will be subject to federal
income taxes at regular corporate tax rates in such year of disqualification.
The Service Companies, which conduct the related construction, landscape,
property management and leasing service businesses, are taxed as regular
taxable corporations. The impact of income taxes, if any, reduces the amount
of the earnings of the Service Companies otherwise recognized by the Company
under the equity method. For the three years in the period ended December
31, 1997, the impact of the Service Companies' income taxes and their related
tax attributes were not material to the accompanying consolidated financial
statements.
PER SHARE DATA
Effective for the fourth quarter and year ended December 31, 1997, the
Company computes net income per share under the provisions of Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings per Share." As
prescribed by SFAS 128, all prior period net income per share data has been
restated to conform with the provisions of SFAS 128. Under SFAS 128, basic
net income per share is computed based upon the weighted average number of
common shares outstanding during the period. Diluted net income per share is
computed to reflect the potential dilution of all instruments or securities
which are convertible into shares of common stock.
STOCK-BASED COMPENSATION
During the year ended December 31, 1996, the Company adopted SFAS 123,
"Accounting for Stock-Based Compensation," which required disclosure of
certain fair value and other prescribed disclosures relating to outstanding
stock options. The Company elected under the provisions of SFAS 123 to
continue to account for stock-based compensation under the intrinsic-value
method prescribed by Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees."
F-8
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and notes
thereto. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, SFAS 130, "Reporting Comprehensive Income," was issued
establishing new standards for the reporting and display of comprehensive
income and its components in a full set of financial statements. SFAS 130
will be effective for the Company beginning with the fourth quarter and year
ended December 31, 1998. The implementation of SFAS 130 is not expected to
have a material impact on the Company's financial statement presentation.
In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and
Related Information," was issued prescribing new guidelines for the reporting
of segment data. SFAS 131 will apply to all public, for-profit companies and
will be effective for the Company beginning with the fourth quarter and the
year ended December 31, 1998. The Company was not subject to segment
reporting under prior accounting standards, but may be required to provide
certain segment disclosures under SFAS 131. The Company has not yet
determined the specific nature and magnitude of the disclosures required by
SFAS 131.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
3. DEFERRED COSTS
Deferred costs consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31
-----------------
1997 1996
- -----------------------------------------------------
<S> <C> <C>
Deferred lease costs $18,551 $12,781
Deferred financing costs 3,996 3,870
- -----------------------------------------------------
22,547 16,651
Less accumulated amortization (9,460) (6,365)
- -----------------------------------------------------
$13,087 $10,286
=====================================================
</TABLE>
F-9
<PAGE>
4. BORROWINGS
At December 31, 1997, the Operating Partnership, the Service Companies and
Weeks Development Partnership, a subsidiary of the Service Companies, as co-
borrowers, had a $225,000,000 syndicated revolving credit facility (the
"Credit Facility") with four banks. The Credit Facility is unsecured and can
be used for development and construction, acquisitions and general corporate
purposes. Each co-borrower is liable for its own borrowing; however, the
entire Credit Facility is guaranteed by the Company and the Operating
Partnership. Additionally, the Company and the co-borrowers are required to
meet certain financial and non-financial covenants including those governing
the Company's maximum unsecured borrowings, total leverage, limitations on
secured borrowings and a restriction on the amount of dividends and
distributions to not more than 95% of funds from operations, a REIT industry
measure of operating performance, unless additional amounts are necessary to
maintain the Company's REIT status under the Code.
Credit Facility borrowings were as follows (in thousands):
<TABLE>
<CAPTION>
December 31
-----------------
1997 1996
- -----------------------------------------------------
<S> <C> <C>
Operating Partnership $82,920 $ 99,400
Service Companies 13,535 1,510
Weeks Development Partnership 3,085 2,085
- -----------------------------------------------------
$99,540 $102,995
=====================================================
</TABLE>
Interest under the Credit Facility accrues at bank prime minus 0.25% or at
LIBOR plus 1.05% (1.35% prior to October 1997) at the election of the co-
borrowers and the Credit Facility matures on December 31, 2000. The Credit
Facility may be extended annually through December 31, 2002, subject to
annual extension fees of 0.125%. The weighted average interest rate on
Credit Facility borrowings, exclusive of the impact of the interest rate
swaps discussed below, was 7.0% and 6.9% at December 31, 1997 and 1996,
respectively. Fees on the unused portion of the Credit Facility are 0.15%
(0.20% prior to October 1997).
The Company has in place three interest rate swap agreements with a
commercial bank to effectively change the interest costs on $50,000,000 of
Credit Facility borrowings from the variable rates discussed above to fixed
rates. The agreements, with notional principal amounts of $10,000,000,
$10,000,000 and $30,000,000, terminate in July 1998, July 1999, and July
2001, with effective fixed interest rates of 7.4%, 7.6% and 7.8%,
respectively (7.7%, 7.9% and 8.1%, respectively, prior to October 1997 and
prior to the corresponding decrease in the interest rate charged on the
Company's Credit Facility borrowings).
F-10
<PAGE>
Mortgage notes payable, specifically listed for notes with outstanding
balances in excess of $10,000,000, consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31
------------------
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------------
FIXED RATE
Mortgage note, interest only at 7.13%,
due in 1999 $ 38,000 $ 38,000
Mortgage note, principal and interest at 9.24%,
due in 2005 15,800 16,028
Mortgage note, principal and interest at 9.625%,
due in 2000 12,897 --
Mortgage note, principal and interest at 8.10%,
due in 2006 12,015 12,278
Mortgage note, interest only at 7.625%, due in 2000 10,300 10,300
Three mortgage notes, interest only at 7.75%,
due in 1998 -- 31,170
Other mortgage notes (27 at December 31, 1997),
principal and interest at 6.00% to 9.80%,
due in 1998 to 2012 97,786 83,956
VARIABLE RATE
Industrial revenue bonds, interest at 4.20% to 6.65%
at December 31, 1997, due in 2004 and 2010 5,797 5,843
- -----------------------------------------------------------------------------
$192,595 $197,575
=============================================================================
</TABLE>
At December 31, 1997 and 1996, fixed rate mortgage notes payable had a
weighted average interest rate of 8.1% and 8.0%, respectively. The weighted
average term to maturity of fixed rate mortgage notes payable was 4.9 years
at December 31, 1997. Fixed rate mortgage indebtedness decreased in 1997 due
to the assumption of mortgage notes totaling $28,523,000 in connection with
the Company's building and land acquisitions (Note 7), offset by mortgage
principal repayments and retirements totaling $33,503,000. Certain Company
officers and Common Unitholders guarantee a portion of the fixed rate
mortgage notes.
Scheduled maturities of mortgage notes payable, at December 31, 1997, were as
follows (in thousands):
<TABLE>
<CAPTION>
Year Amount
<S> <C>
-----------------------------------
1998 $ 9,498
1999 51,022
2000 35,482
2001 10,990
2002 7,812
2003 and thereafter 77,791
-----------------------------------
$192,595
===================================
</TABLE>
Net real estate assets totaling $242,268,000 and $265,235,000 at December 31,
1997 and 1996, respectively, were pledged as collateral under mortgage notes
payable. Interest capitalized in 1997, 1996 and 1995, totaled $5,289,000,
$2,358,000 and $1,198,000, respectively.
F-11
<PAGE>
In September 1997, the Company entered into a treasury rate guarantee hedge
arrangement to hedge its interest costs on an anticipated debt financing
transaction. The impact of the hedge arrangement is to effectively lock in,
for the period through March 1998, a seven-year treasury rate of
approximately 6.3% on an anticipated borrowing of approximately $100,000,000.
5. REAL ESTATE LOANS
As part of certain joint development agreements entered into with third
parties, and upon the Company's approval of the joint development projects,
the Company lends funds on a secured basis to develop and construct certain
properties and may be required by its development partners to acquire the
properties upon their completion based on the terms specified in the
development agreements, generally at prices equal to the greater of
capitalized costs or the amount computed based on the property's net
operating income capitalized at specified capitalization rates, as defined.
Additionally, the Company has options to acquire the properties upon
substantial lease-up of the buildings. At December 31, 1997, the Company had
funded $6,455,000 under development loan agreements relating to three
industrial buildings under development in Atlanta, Georgia. Total loan
commitments from the Company for the three approved projects are
approximately $9,739,000. Loans under these agreements are secured by the
industrial buildings under development, bear interest at LIBOR plus 2.35%,
and mature from March 1999 to January 2000.
Additionally, at December 31, 1997, the Company had a real estate loan to an
affiliated joint venture with an outstanding balance of $2,047,000
($1,810,000 at December 31, 1996). In February 1998, the Company acquired
the property from the affiliated joint venture for approximately $2,600,000,
including the settlement of the real estate loan.
In 1997, the Company advanced $4,450,000 to NWI (see Note 7) under a
$5,700,000 demand loan agreement. The loan bears interest at LIBOR plus
2.10% and is secured by real estate properties held by NWI, for which the
Company has arrangements to acquire in future periods. Interest earned under
the agreement and included in the accompanying statements of operations
totaled approximately $197,000 for the year ended December 31, 1997.
6. INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED ENTITIES
The Company conducts third-party construction, landscape, property management
and leasing service businesses through the Service Companies and their
subsidiaries. Additionally, the Service Companies and their subsidiaries also
own land held for sale or future development, either directly or through
ownership interests in real estate partnerships and joint ventures. The
Company intends, based on market conditions, to acquire land from the Service
Companies and their subsidiaries for the development of future properties.
As discussed in Note 2, these Service Companies and their subsidiaries are
accounted for on the equity method of accounting. Under the equity method,
the Company recognizes, in its consolidated statements of operations, its
economic share (99%) of the Service Companies' earnings and losses.
F-12
<PAGE>
The following information summarizes the financial position, results of
operations and cash flows of the Service Companies and their subsidiaries on
a combined basis (in thousands):
<TABLE>
<CAPTION>
December 31
-----------------
FINANCIAL POSITION 1997 1996
------------------------------------------------------------
<S> <C> <C>
ASSETS
Real estate assets, principally land $12,403 $ 7,200
Investments in real estate partnerships
and joint ventures 2,849 3,025
Receivables and other assets 20,158 13,113
------------------------------------------------------------
$35,410 $23,338
============================================================
LIABILITIES AND EQUITY
Notes payable to Company $10,900 $10,921
Credit facility borrowings 16,620 3,595
Other borrowings 2,000 1,261
Other liabilities 7,513 10,725
Total equity (1,623) (3,164)
------------------------------------------------------------
$35,410 $23,338
============================================================
</TABLE>
The notes payable to the Company accrue interest at 12%, payable annually,
and mature in 2004. The notes are secured by land and interests in real
estate partnerships and joint ventures. The operations of the Service
Companies and their subsidiaries are financed through direct borrowings under
the Credit Facility (see Note 4).
At December 31, 1996, the Company's investment in and notes receivable from
the Service Companies and subsidiaries totaling $9,257,000 includes notes
receivable from the Service Companies and subsidiaries of $10,900,000 and the
Company's equity in the Service Companies of ($1,643,000).
F-13
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------
Results of Operations 1997 1996 1995
<S> <C> <C> <C>
--------------------------------------------------------------------------
REVENUE
Construction and development fees $ 2,517 $ 2,233 $ 1,483
Landscape 5,974 5,035 3,854
Commissions 828 448 582
Property management fees 172 193 498
Other 277 316 191
--------------------------------------------------------------------------
9,768 8,225 6,608
--------------------------------------------------------------------------
COSTS AND EXPENSES
Direct Costs 5,202 4,327 3,504
Interest expense -- Company 1,308 1,314 1,326
Interest expense -- third parties 372 365 295
General and administrative 2,397 1,694 1,518
Other 494 498 173
--------------------------------------------------------------------------
9,773 8,198 6,816
--------------------------------------------------------------------------
Income (loss) before gains on sales
of properties and equity in
earnings of partnerships and
joint ventures (5) 27 (208)
Gain on sale of properties -- third parties 422 -- --
Gain on sale of property -- Company 580 -- --
Equity in earnings of partnerships
and joint ventures 257 (1) 101
--------------------------------------------------------------------------
Net income (loss) $ 1,254 $ 26 $ (107)
--------------------------------------------------------------------------
Net income (loss) attributable
to the Company $ 1,241 $ 26 $ (106)
Interest expense -- Company 1,308 1,314 1,326
Gain on sale of property -- Company (580) -- --
--------------------------------------------------------------------------
Equity in earnings of Service Companies $ 1,969 $ 1,340 $ 1,220
--------------------------------------------------------------------------
Distributions and interest paid
to the Company $ 1,311 $ 1,313 $ 1,510
--------------------------------------------------------------------------
CASH FLOW
--------------------------------------------------------------------------
Operating activities $(4,915) $ 4,460 $ 1,529
Investing activities (4,086) (2,540) (2,786)
Financing activities 11,979 (487) 1,190
</TABLE>
At December 31, 1997, the Company owns a 50% interest in a limited liability
company ("LLC") which owns an 86,000 square foot industrial building in
Atlanta, Georgia. The Company's investment in this LLC totaled $2,525,000 at
December 31, 1997 and its equity in earnings were $20,000 for the year ended
December 31, 1997. The total assets, liabilities and equity of the LLC were
$5,645,000, $595,000 and $5,050,000, respectively, at December 31, 1997.
In connection with the Company's January 1998 acquisition of a real estate
portfolio in Miami, Florida (see Note 7), the Service Companies acquired a
one-third interest in Codina Group, Inc., a Miami-based real estate services
company, for aggregate consideration of approximately $9,000,000.
F-14
<PAGE>
7. ACQUISITIONS / DISPOSITIONS
The Company made initial acquisitions of property portfolios and the business
operations of NWI Warehouse Group, L.P ("NWI") in Nashville, Tennessee, and
Lichtin Properties, Inc., and affiliates ("Lichtin") in the Raleigh-Durham-
Chapel Hill area of North Carolina (the "Research Triangle"), on November 1,
1996 and December 31, 1996, respectively, in transactions accounted for under
the purchase method (see below). In 1997, the Company acquired an additional
four industrial buildings totaling 556,000 square feet from NWI for aggregate
acquisition consideration of $29,886,000 and 15 industrial and suburban
office buildings totaling 991,000 square feet from Lichtin for aggregate
acquisition consideration of $62,870,000. The aggregate acquisition
consideration of $92,756,000 was comprised of the assumption of mortgage
indebtedness of $24,010,000, the issuance of $31,114,000 of Common Units in
the Operating Partnership and the assumption and repayment of other
indebtedness and the payment of cash through borrowings under the Credit
Facility totaling $37,632,000. Also, in 1997, the Company acquired land from
Lichtin for total consideration of $1,000,000, consisting of $388,000 of
Common Units and $612,000 of cash.
Additionally in 1997, the Company acquired 20 buildings totaling 778,000
square feet for $37,128,000, including closing costs and acquisition
expenses. These acquisitions were primarily funded through Credit Facility
borrowings. Three of the acquired buildings, totaling 232,000 square feet
are located in Florida and the other buildings are located in Atlanta,
Georgia. The Company also sold in 1997, a 96,000 square foot industrial
building located in Spartanburg, South Carolina to one of the building's
tenants for $2,484,000, resulting in a gain of $209,000. For income tax
purposes, the Company completed a tax-deferred, like-kind exchange involving
one of the industrial buildings acquired in 1997.
On January 9, 1998, the Company acquired a 2,477,000 square foot, 24 building
portfolio and approximately five acres of land subject to ground leases in
Miami, Florida. Aggregate acquisition consideration of approximately
$175,000,000, including closing costs and acquisition expenses, consisted of
the issuance of $28,310,000 of Common Units, the assumption of $78,033,000 of
mortgage indebtedness, the assumption of certain other liabilities in excess
of certain other assets of approximately $4,224,000, and cash of
approximately $64,433,000 funded through Credit Facility borrowings. In
connection with the acquisition, the Company has also agreed, subject to
customary closing conditions, to acquire a 90,000 square foot building under
development for approximately $5,100,000 and approximately eight acres of
adjacent undeveloped land for approximately $4,000,000.
As discussed above, in 1996, the Company acquired the business operations of
NWI and Lichtin and initial property portfolios of 31 industrial and suburban
office buildings totaling 2,513,000 square feet, 82 net usable acres of
undeveloped land and options to acquire 177 acres of undeveloped land for
aggregate acquisition consideration of $171,135,000. Acquisition
consideration was comprised of the assumption of mortgage indebtedness of
$89,535,000, the issuance of $7,124,000 of common stock, the issuance of
$48,085,000 of Common Units and $26,391,000 of cash, including amounts
necessary to fund the assumption and repayment of other indebtedness, closing
costs and acquisition expenses, all funded through Credit Facility
borrowings.
F-15
<PAGE>
The Company's consolidated results of operations have included the operating
results of NWI and Lichtin from their effective acquisition dates. The
unaudited pro forma information below presents the consolidated results of
operations as if the initial phases of the NWI and Lichtin acquisitions had
occurred at the beginning of the respective years presented. The unaudited
pro forma information is not necessarily indicative of the results of
operations of the Company had the acquisitions occurred at the beginning of
the periods presented, nor is it necessarily indicative of future results.
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------
<S> <C> <C>
Revenues $70,954 $49,478
Net income 10,555 6,226
Net income per share - basic $ 0.89 $ 0.74
Net income per share - diluted 0.89 0.73
- ------------------------------------------------------
</TABLE>
Also in 1996, the Company acquired 15 industrial and suburban office
buildings totaling approximately 761,000 square feet located in Atlanta,
Georgia for an aggregate price of $40,102,000, including closing costs and
acquisition expenses. The acquisitions were funded through Credit Facility
borrowings.
In 1995, the Company acquired 49 industrial buildings totaling 2,564,000
square feet for an aggregate price of $110,141,000, including closing costs
and acquisition expenses. These acquisitions were funded through Credit
Facility borrowings and through the assumption of existing mortgage
indebtedness of $39,511,000. Four of the acquired buildings totaling 190,000
square feet are located in Orlando, Florida, and the other buildings are
located in Atlanta, Georgia. In connection with two of the property
acquisitions, the Company entered into agreements with the sellers to jointly
develop additional industrial buildings, as market conditions warrant, on
adjacent land controlled by the sellers (see Note 5).
8. SHAREHOLDERS' EQUITY
PREFERRED STOCK
In October 1997, the Company completed a public offering of 6,000,000 shares
of its 8% Series A Cumulative Redeemable Preferred Stock (the "Series A
Preferred Stock") and received net proceeds of $144,625,000. The Series A
Preferred Stock has a liquidation preference of $25.00 per share and is
redeemable at the option of the Company on or after October 10, 2002, at a
redemption price of $25.00 per share. The proceeds from the offering were
used to reduce the Company's outstanding Credit Facility borrowings.
COMMON STOCK
The Company completed public equity offerings of common stock in each of the
last three years. In 1997, 1996 and 1995, the Company sold shares of common
stock totaling 3,584,000, 2,573,333, and 3,450,000, and received net proceeds
of $106,568,000, $68,532,000, and $72,800,000, respectively. In February
1998, the Company completed an offering of 1,073,000 shares of common stock
and received net proceeds of $33,101,000. The proceeds from each offering
were used to reduce Credit Facility borrowings or to repay mortgage
indebtedness.
F-16
<PAGE>
In 1997, restricted shares of common stock valued at $1,183,000 were granted
to certain Company officers and employees as an incentive for future service
and continued financial performance of the Company. Of the total of 35,331
shares granted, 34,331 vest ratably over a four year period provided the
Company achieves 10% annual growth in per share funds from operations, a REIT
industry measure of operating performance, for each year of the four year
vesting period. The remaining 1,000 shares vest ratably over a four year
period. Compensation expense is recognized ratably over the vesting periods.
The Company has in place a dividend reinvestment plan under which 300,000
shares of common stock are authorized for issuance. A total of 4,000 shares
of common stock have been issued under the plan since its inception.
Additionally, in 1995, Common Units totaling 25,602 were converted into
25,602 shares of common stock. The conversion was reflected in the
accompanying consolidated financial statements at book value.
DIVIDENDS
For the years detailed below, dividends were declared and paid on the
Company's common stock and accrued on the Company's Series A Preferred Stock
and such dividends were designated for income tax reporting purposes as
follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------
<S> <C> <C> <C>
Common Stock
Dividends $27,321 $17,860 $11,513
Dividends per share $ 1.72 $ 1.60 $ 1.50
Income tax designation --
Ordinary dividend income 100% 95% 100%
Return of capital -- 5% --
Series A Preferred Stock
Dividends/(1)/ $ 2,720 $ -- $ --
Dividends per share/(1)/ $ 0.45 $ -- $ --
Income tax designation --
Ordinary dividend income 100% -- --
</TABLE>
- ------------
/(1)/ In 1997, Series A Preferred Stock dividends totaling $720,000 or $0.12
per share were declared and paid and $2,000,000 or $0.33 per share were
accrued.
Additionally, Common Unitholders of the minority interests in the Operating
Partnership received cash distributions totaling $7,782,000 or $1.72 per
Common Unit, $4,108,000 or $1.60 per Common Unit, and $3,890,000 or $1.50 per
Common Unit in 1997, 1996 and 1995, respectively. In January 1998, the
Company declared and paid common stock dividends and made distributions of
$8,233,000 or $0.465 per share and $2,487,000 or $0.465 per Common Unit
relating to fourth quarter 1997 operating results. In January 1998, the
Company also declared and paid dividends on its Series A Preferred Stock of
$3,000,000 or $0.50 per share.
F-17
<PAGE>
NET INCOME PER COMMON SHARE
The Company adopted the provisions of SFAS 128 in the year ended December 31,
1997. Reconciliations of income available to common shareholders and
weighted average common shares used in the Company's basic and diluted net
income per common share computations are detailed below (in thousands, except
per share data):
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Computation of Net Income Per Common Share
Net income available to common
shareholders - basic $20,255 $12,745 $ 8,426
Minority interests in earnings of
the Operating Partnership 6,219 3,064 2,681
- --------------------------------------------------------------------------
Net income available to common
shareholders - diluted $26,474 $15,809 $11,107
- --------------------------------------------------------------------------
Weighted average common shares - basic 16,357 11,512 8,171
Dilutive securities -
Units of limited partnership interest
in the Operating Partnership 5,023 2,768 2,589
Stock options 200 106 72
- --------------------------------------------------------------------------
Weighted average common shares - diluted 21,580 14,386 10,832
- --------------------------------------------------------------------------
Net Income Per Common Share Data
Basic $ 1.24 $ 1.11 $ 1.03
Diluted 1.23 1.10 1.03
</TABLE>
Basic net income per share for the periods presented were computed by
dividing income available to common shareholders by the weighted average
number of shares of common stock outstanding during the year. Diluted net
income per share were computed assuming that Common Units were converted into
common stock on the later of the beginning of the year presented or upon
their issuance and based on the dilutive effect of stock options outstanding.
Previously reported net income per share under prior accounting standards
were equal to basic net income per share under SFAS 128.
9. LEASING ACTIVITY
Future minimum rents due under noncancelable operating leases with tenants at
December 31, 1997, were as follows (in thousands):
<TABLE>
<CAPTION>
Year Amount
----------------------------------
<S> <C>
1998 $ 89,967
1999 76,677
2000 58,568
2001 45,235
2002 31,122
2003 and thereafter 73,304
----------------------------------
$374,873
==================================
</TABLE>
F-18
<PAGE>
10. RELATED-PARTY TRANSACTIONS
At December 31, 1997 and 1996, receivables included $463,000 and $465,000,
respectively, due from the Service Companies and their subsidiaries, relating
to accrued interest (payable annually) on the notes due from the Service
Companies and their subsidiaries. At December 31, 1997 and 1996, accounts
payable and accrued expenses included $703,000 and $154,000, respectively,
due to the Service Companies and their subsidiaries.
The Service Companies also provide development, construction, landscape and
leasing services to affiliated partnerships and joint ventures. In 1997,
1996 and 1995, total revenues for such services to related parties of the
Service Companies were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
-----------------------------------------------------------
Construction and development fees $ 390 $ 678 $ 418
Landscape 327 271 423
Commissions 398 94 169
-----------------------------------------------------------
$1,115 $1,043 $1,010
-----------------------------------------------------------
</TABLE>
11. INCENTIVE STOCK PLAN
The Company has an Incentive Stock Plan (the "Plan") under which shares of
the Company's common stock have been reserved for the issuance of options and
restricted stock. Common shares totaling 1,000,000 have been reserved for
issuance under the Plan. Participants in the Plan may be officers and
employees of the Company, the Service Companies or designated affiliates, as
well as Company directors. The exercise price of all options under the Plan
is not less than the fair market value of the Company's common stock on the
date of grant and such options may be exercised for periods up to ten years.
As discussed in Note 2, the Company accounts for stock-based compensation
under APB Opinion 25. The additional disclosures required by SFAS 123 are
discussed and detailed below.
F-19
<PAGE>
Under SFAS 123, the fair value of stock options granted in 1997, 1996 and
1995 has been estimated using a binomial option pricing model with the
following weighted average assumptions for grants in 1997, 1996 and 1995,
respectively: risk free interest rates of 5.5%, 5.7% and 5.8%, expected
option lives of five years for options granted in each year, expected
volatility of 16.6% in 1997 and 16.5% in 1996 and 1995, and expected dividend
yields of 5.1% in 1997, 5.7% in 1996 and 6.2% in 1995. Using these
assumptions, the estimated fair value of options granted in 1997, 1996 and
1995 was $373,000, $945,000 and $175,000, respectively, and such amounts
would be included in compensation expense over the vesting period of the
options. Pro forma net income, net income available to common shareholders
and net income per common share in 1997, 1996 and 1995, assuming the Company
had accounted for the Plan under SFAS 123 were as follows (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
Net income
As reported $22,975 $12,745 $8,426
Pro forma 22,749 12,264 8,381
Net income available to common
shareholders
As reported 20,255 12,745 8,426
Pro forma 20,029 12,264 8,381
Net income per common share
As reported - basic $ 1.24 $ 1.11 $ 1.03
Pro forma - basic 1.22 1.07 1.03
As reported - diluted 1.23 1.10 1.03
Pro forma - diluted 1.21 1.06 1.02
</TABLE>
As the provisions of SFAS 123 have not been applied to options granted prior
to January 1, 1995, the resulting pro forma annual compensation cost may not
be representative of that expected in future years.
F-20
<PAGE>
A summary of stock option activity under the Plan is presented in the table
and narrative below (share amounts in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ----------------- -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 753 $23.06 503 $19.90 443 $19.28
Granted 91 32.40 283 28.22 65 24.11
Exercised (34) 19.38 (33) 19.25 -- --
Forfeited (3) 23.32 -- -- (5) 19.25
--------------------------------------------------------------------------------
Options outstanding,
end of year 807 $24.26 753 $23.06 503 $19.90
--------------------------------------------------------------------------------
Options exercisable,
end of year 632 552 52
--------------------------------------------------------------------------------
Weighted average per
share fair value
of options granted $4.10 $3.34 $2.69
--------------------------------------------------------------------------------
</TABLE>
At December 31, 1997, options for 570,000 shares were outstanding having
exercise prices ranging from $19.25 to $26.00, with a weighted average
exercise price of $21.43 and a weighted average remaining life of 7.2 years,
of which 479,000 options were exercisable with a weighted average exercise
price of $20.56. Options for 237,000 shares were also outstanding having
exercise prices ranging from $28.38 to $33.75, with a weighted average
exercise price of $31.08 and a weighted average remaining life of 9.2 years,
of which 153,000 options were exercisable with a weighted average exercise
price of $30.54.
12. EMPLOYEE BENEFIT PLAN
The Company and the Service Companies ("Plan Sponsors") sponsor a 401(k)
retirement savings plan covering substantially all employees meeting certain
age and service requirements. Employees may contribute up to the lesser of
20% of their annual compensation or the annual statutory limit ($9,500 in
1997) to the plan. Plan Sponsors' contributions are made on a discretionary
basis up to a maximum of 100% of the employees' contributions (currently 50%
of the employee's contribution up to 4% of an employee's annual
compensation). Total Plan Sponsor contributions were $168,000, $88,000, and
$76,000 in 1997, 1996, and 1995, respectively.
F-21
<PAGE>
13. COMMITMENTS AND CONTINGENCIES
The Company has entered into agreements, subject to the completion of due
diligence and customary closing conditions, for the future acquisition of
land and buildings totaling approximately $42,698,000, including land and
building commitments of approximately $27,455,000 from NWI and Lichtin and
approximately $9,100,000 entered into as part of the Miami, Florida
acquisition transaction in January 1998 (see Note 7). Of this total,
$25,403,000 represents committed land acquisitions and $17,295,000 represents
committed building acquisitions. Letters of credit were issued on behalf of
the Company totaling $1,766,000 in support of certain development and land
acquisition arrangements and totaling $5,346,000 in support of financing
arrangements at December 31, 1997.
The Company is subject to various legal proceedings and claims that arise in
the ordinary course of business. While the resolution of these matters
cannot be predicted with certainty, management believes that the final
outcome of such matters will not have a material adverse effect on the
Company's financial position or results of operations.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized (see Note 4), totaled $17,958,000,
$11,265,000 and $7,892,000 in 1997, 1996 and 1995, respectively.
Significant noncash investing and financing activities were as follows:
1. The Company's 1997 property acquisition, development and investment
activity included the settlement of real estate loans of $7,376,000, the
assumption of indebtedness of $64,869,000, and the issuance of Common
Units valued at $31,876,000. Additionally, in 1997, restricted common
stock was issued at an aggregate value of $1,183,000.
2. The Company's 1996 acquisitions of NWI and Lichtin included the assumption
of indebtedness of $104,628,000, the issuance of Common Units valued at
$48,085,000 and the issuance of common stock valued at $7,124,000.
3. The Company's 1995 property acquisitions included the assumption of
indebtedness of $39,511,000 and the application of notes receivable and
deposits of $3,540,000.
15. FINANCIAL INSTRUMENTS
Based on interest rates and other pertinent information available to the
Company at December 31, 1997, the Company estimates that the carrying values
of cash and cash equivalents, notes receivable from the Service Companies and
their subsidiaries, real estate loans, other receivables, mortgage notes
payable, other liabilities and Credit Facility borrowings approximate their
fair values when compared to instruments of similar type, terms and maturity.
The estimated fair value of the Company's interest rate swap and treasury
rate guarantee hedge arrangements (see Note 4), determined based on quoted
market prices for similar financial instruments, were approximately
$1,055,000 and $3,210,000, respectively, less than the Company's carrying
value at December 31, 1997. Under current accounting principles and as
discussed in Note 2, the difference between the fair value and carrying
amount of the arrangements are not currently recognized in the Company's
consolidated financial statements. The Company monitors the credit quality
of the counterparties to its interest rate swap and treasury rate guarantee
hedge arrangements and does not anticipate nonperformance from such parties.
F-22
<PAGE>
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1997. Although
management is not aware of any factors that would significantly affect the
fair value amounts, such amounts have not been comprehensively revalued for
purposes of these financial statements since that date.
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Selected quarterly financial information for 1997 and 1996 was as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Revenue $19,899 $21,439 $24,279 $26,403
Net income before minority interests 5,058 6,698 7,451 9,987
Net income 3,826 5,080 5,768 8,301
Net income available to
common shareholders 3,826 5,080 5,768 5,581
Net income per common share - basic $ 0.27 $ 0.32 $ 0.33 $ 0.32
Net income per common share - diluted 0.27 0.32 0.32 0.31
1996
Revenue $12,129 $12,379 $13,555 $15,820
Net income before minority interests 3,814 3,805 3,731 4,459
Net income 3,101 3,092 3,033 3,519
Net income available to
common shareholders 3,101 3,092 3,033 3,519
Net income per common share - basic $ 0.28 $ 0.28 $ 0.27 $ 0.28
Net income per common share - diluted 0.28 0.28 0.27 0.28
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 1 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- Cost --------------------------
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
ATLANTA, GEORGIA
Northeast/I-85 Submarket
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GWINNETT PARK
1 1750 Beaver Ruin S $ 633 $ 4,082 $ - $ 633 $ 4,082 $ 4,715 $ 35 1997
2 4258 Communications Dr. D (a) 8 725 317 29 1,021 1,050 606 1981
3 4261 Communications Dr. D 254 1,446 43 254 1,489 1,743 168 1981 1994
4 4291 Communications Dr. D (a) 4 327 126 16 441 457 236 1981
5 1826 Doan Way D (b) 18 1,167 226 18 1,393 1,411 542 1984
6 1857 Doan Way D 23 6 - 23 6 29 2 1970
7 1650 International Blvd. D (a) 69 994 93 69 1,087 1,156 440 1984
8 4245 International Blvd. D (a) 192 2,913 3,053 192 5,966 6,158 1,309 1985
9 4250 International Blvd. D 193 1,542 288 216 1,807 2,023 646 1986
10 4295 International Blvd. D (a) 58 1,058 112 58 1,170 1,228 430 1984
11 4320 International Blvd. D (a) 44 710 212 44 922 966 380 1984
12 4350 International Blvd. D (a) 78 938 540 78 1,478 1,556 773 1982
13 4355 International Blvd. D (f) 233 811 261 233 1,072 1,305 201 1983 1994
14 4405-A International Blvd. S 97 957 874 97 1,831 1,928 913 1984
15 4405-B International Blvd. S 118 1,152 1,310 118 2,462 2,580 1,553 1984
16 4405-C International Blvd. S 21 422 183 21 605 626 278 1984
17 1828 Meca Way D (b) 16 487 594 16 1,081 1,097 619 1975
18 1858 Meca Way D (a) 20 931 13 27 937 964 367 1975
19 4317 Park Dr. D 671 1,414 235 671 1,649 2,320 614 1985
20 4357 Park Dr. D (g) 12 865 271 12 1,136 1,148 574 1979
21 4366 Park Dr. O 6 406 288 22 678 700 398 1981
22 4386 Park Dr. D 17 758 - 17 758 775 304 1973
23 4436 Park Dr. D 18 195 276 18 471 489 209 1968
24 4437 Park Dr. D (a) 21 659 401 21 1,060 1,081 531 1978
25 4467 Park Dr. D (b) 6 537 257 6 794 800 212 1978
26 4476 Park Dr. D (b) 14 372 7 14 379 393 125 1977
27 4487 Park Dr. D (b) 6 1,048 1,180 6 2,228 2,234 1,435 1978
28 1835 Shackleford Cr. O (a) 29 2,780 427 29 3,207 3,236 763 1990
29 1854 Shackleford Ct. O 52 4,085 1,541 52 5,626 5,678 1,972 1985
30 4274 Shackleford Rd. D (a) 27 614 905 27 1,519 1,546 1,144 1974
31 4275 Shackleford Rd. O (i) 8 1,173 477 12 1,646 1,658 684 1985
32 4344 Shackelford Rd. D 286 984 31 286 1,015 1,301 137 1975 1994
33 4355 Shackleford Rd. D (a) 7 886 606 7 1,492 1,499 751 1972
34 4364 Shackleford Rd. D (a) 9 40 50 9 90 99 57 1973
35 4366 Shackleford Rd. D 20 420 854 26 1,268 1,294 767 1981
36 4388 Shackleford Rd. D (a) 33 1,181 229 43 1,400 1,443 225 1981
37 4400 Shackleford Rd. D 14 315 30 18 341 359 77 1981
38 4444 Shackleford Rd. D (a) 31 731 1,121 31 1,852 1,883 1,274 1979
- ------------------------------------------------------------------------------------------------------------------------
Total $3,366 $40,131 $17,431 $3,469 $57,459 $60,928 $21,751
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
SCHEDULE III PAGE 2 OF 11
Gross Amount at Which
Initial Costs Carried at Close of Period
--------------- ----------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Horizon
39 90 Horizon Dr. D (b) $ 120 $ 659 $ 70 $ 120 $ 729 $ 849 $ 142 1992
40 225 Horizon Dr. B (b) 121 1,423 782 121 2,205 2,326 836 1990
41 300 Horizon Dr. B 798 4,455 59 798 4,514 5,312 453 1994
42 2775 Horizon
Ridge Ct. B 732 5,906 - 732 5,906 6,638 257 1996
43 2780 Horizon
Ridge Ct. B 826 4,949 - 826 4,949 5,775 141 1997
44 2800 Vista
Ridge Dr. B 443 5,463 73 443 5,536 5,979 381 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,040 $22,855 $ 984 $3,040 $23,839 $26,879 $2,210
- ------------------------------------------------------------------------------------------------------------------------------------
Northwoods
45 2915 Courtyards
Circle D $ 268 $ 1,793 $ 92 $ 268 $ 1,885 $ 2,153 $ 166 1986 1995
46 2925 Courtyards
Dr. D 333 2,618 6 333 2,624 2,957 191 1986 1995
47 2975 Courtyards
Circle D 144 997 10 144 1,007 1,151 73 1986 1995
48 2995 Courtyards
Circle D 109 677 8 109 685 794 50 1986 1995
49 2725 Northwoods
Pkwy. D 440 2,231 11 440 2,242 2,682 123 1984 1996
50 2755 Northwoods
Pkwy. D 249 2,201 - 249 2,201 2,450 121 1986 1996
51 2775 Northwoods
Pkwy. D 322 1,976 50 322 2,026 2,348 120 1986 1996
52 2850 Northwoods
Pkwy. D 562 3,961 46 562 4,007 4,569 292 1988 1995
53 3040 Northwoods
Pkwy. D 298 1,510 - 298 1,510 1,808 84 1984 1996
54 3044 Northwoods
Circle D 167 730 27 167 757 924 55 1984 1995
55 3055 Northwoods
Pkwy. D 213 916 34 213 950 1,163 62 1985 1996
56 3075 Northwoods
Pkwy. S 374 2,750 4 374 2,754 3,128 152 1985 1996
57 3080 Northwoods
Circle O 387 2,215 37 387 2,252 2,639 155 1952 1996
58 3100 Northwoods
Pkwy. S 393 2,177 - 393 2,177 2,570 120 1985 1996
59 3155 Northwoods
Pkwy. S 331 1,808 - 331 1,808 2,139 100 1985 1996
60 3175 Northwoods
Pkwy. S 250 1,644 - 250 1,644 1,894 91 1985 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,840 $30,204 $ 325 $4,840 $30,529 $35,369 $1,955
- ------------------------------------------------------------------------------------------------------------------------------------
Gwinnett Pavilion
61 1480 Beaver
Ruin Rd. R $ 248 $ 982 $ 482 $ 248 $ 1,464 $ 1,712 $ 495 1989
62 1505 Pavilion
Place D (a) 448 1,149 1,188 448 2,337 2,785 1,129 1988
63 3883 Steve
Reynolds Blvd D (b) 612 3,101 94 612 3,195 3,807 694 1990
64 3890 Steve
Reynolds Blvd D (b) 519 1,746 19 519 1,765 2,284 352 1991
65 3905 Steve
Reynolds Blvd D 697 2,108 1 697 2,109 2,806 120 1995
66 3950 Steve
Reynolds Blvd B (a) 684 1,701 23 684 1,724 2,408 294 1992
67 4020 Steve
Reynolds Blvd D 417 1,868 - 417 1,868 2,285 53 1997
68 4025 Steve
Reynolds Blvd D 461 2,252 6 461 2,258 2,719 203 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,086 $14,907 $1,813 $4,086 $16,720 $20,806 $3,340
- ------------------------------------------------------------------------------------------------------------------------------------
Berkeley Lake Distribution Center
69 3130 North
Berkeley Lake B $ 675 $ 4,455 $ - $ 675 $ 4,455 $ 5,130 $ 126 1996
70 3280 Summit
Ridge Pkwy. B 485 4,277 $ - 485 4,277 4,762 56 1997
71 3290 Summit
Ridge Pkwy. B 257 2,255 $ - 257 2,255 2,512 64 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,417 $10,987 $ $1,417 $10,987 $12,404 $ 246
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 3 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- ------------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Peachtree Corners Distribution
72 5401 Buford Hwy. B $ 294 $1,865 $ 114 $ 294 $ 1,979 $ 2,273 $ 163 1987 1995
73 5403 Buford Hwy. B 420 2,737 9 420 2,746 3,166 204 1987 1995
74 5405 Buford Hwy. B 217 1,546 29 217 1,575 1,792 121 1989 1995
75 5409 Buford Hwy. B 364 2,675 17 364 2,692 3,056 197 1989 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,295 $8,823 $ 169 $1,295 $ 8,992 $10,287 $ 685
- -----------------------------------------------------------------------------------------------------------------------------------
Pinebrook
76 2625 Pinemeadow Ct. B $ 813 $3,216 - $ 813 $ 3,216 $ 4,029 $ 360 1994
77 2660 Pinemeadow Ct. B 450 2,587 - 450 2,587 3,037 99 1996
78 2450 Satellite Blvd. B 866 3,461 3 866 3,464 4,330 403 1994 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,129 $9,264 $ 3 $2,129 $ 9,267 $11,396 $ 862
- -----------------------------------------------------------------------------------------------------------------------------------
Northbrook
79 1000 Northbrook Pkwy. B (a) $ 363 $1,980 $ 857 $ 363 $ 2,837 $ 3,200 $1,250 1986
80 675 Old Peachtree Rd. B (e) 434 2,385 23 434 2,408 2,842 683 1988
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 797 $4,365 $ 880 $ 797 $ 5,245 $ 6,042 $1,933
- -----------------------------------------------------------------------------------------------------------------------------------
Druid Chase
81 2801 Buford Hwy. O $ 794 $3,505 $1,865 $ 794 $ 5,370 $ 6,164 $1,714 1977 1989
82 1190 West Druid
Hills Dr. O 689 2,722 915 689 3,637 4,326 1,094 1980 1989
83 2071 North Druid
Hills Rd. R 98 65 21 98 86 184 36 1968
84 6 West Druid
Hills Dr. O 473 2,980 654 473 3,634 4,107 913 1968 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,054 $9,272 $3,455 $2,054 $12,727 $14,781 $3,757
- -----------------------------------------------------------------------------------------------------------------------------------
Meadowbrook
85 2450 Meadowbrook
Pkwy. D $ 716 $2,419 $ 20 $ 716 $ 2,439 $ 3,155 $ 293 1989 1994
86 2475 Meadowbrook
Pkwy. D 529 1,567 559 529 2,126 2,655 817 1986
87 2500 Meadowbrook
Pkwy. D (a) 411 1,103 789 411 1,892 2,303 883 1987
88 2505 Meadowbrook
Pkwy. D 307 1,228 419 307 1,647 1,954 360 1990
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,963 $6,317 $1,787 $1,963 $ 8,104 $10,067 $2,353
- -----------------------------------------------------------------------------------------------------------------------------------
Crestwood Pointe
89 3805 Crestwood
Parkway O $ 877 $8,772 - $ 877 $ 8,772 $ 9,649 $ 134 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 877 $8,772 $ - $ 877 $ 8,772 $ 9,649 $ 134
- -----------------------------------------------------------------------------------------------------------------------------------
Park Creek
90 2825 Breckinridge
Blvd. S $ 317 $2,366 $ 25 $ 317 $ 2,391 $ 2,708 $ 139 1986 1996
91 2875 Breckinridge
Blvd. S 476 3,496 32 476 3,528 4,004 205 1986 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 793 $5,862 $ 57 $ 793 $ 5,919 $ 6,712 $ 344
- -----------------------------------------------------------------------------------------------------------------------------------
River Green
92 3450 River
Green Ct. D $ 194 $ 892 $ 12 $ 194 $ 904 $ 1,098 $ 63 1989 1995
93 4800 River
Green Pkwy. D 152 1,150 14 152 1,164 1,316 82 1989 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 346 $2,042 $ 26 $ 346 $ 2,068 $ 2,414 $ 145
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 4 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- --------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Northeast/I-85
94 1705 Belle
Meade Ct. D $ 277 $ 953 $ 3 $ 277 $ 956 $ 1,233 $ 114 1988 1994
95 4125 Buford Hwy. B 778 3,823 28 778 3,851 4,629 283 1995
96 6525-27 Jimmy
Carter Blvd. D 509 3,131 27 509 3,158 3,667 174 1983 1996
97 3171 McCall Dr. D 112 385 6 112 391 503 46 1967 1994
98 7250 McGinnis
Ferry Rd. D 498 3,712 7 498 3,719 4,217 203 1996
99 5300 Peachtree
Industrial Blvd R 434 1,493 - 434 1,493 1,927 179 1966 1994
100 5755 Peachtree
Industrial Blvd O 800 4,020 - 800 4,020 4,820 47 1997
101 5765 Peachtree
Industrial Blvd D 521 3,248 - 521 3,248 3,769 37 1997
102 5775 Peachtree
Industrial Blvd D 521 2,382 - 521 2,382 2,903 29 1997
103 4280 Northeast
Expressway B 534 1,838 2 534 1,840 2,374 221 1962 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,984 $24,985 $ 73 $4,984 $25,058 $30,042 $1,333
- -----------------------------------------------------------------------------------------------------------------------------------
North Central Submarket
- -----------------------------------------------------------------------------------------------------------------------------------
Northmeadow
104 11835 Alpharetta
Hwy. O $ 524 $1,396 $142 $ 524 $1,538 $ 2,062 $ 148 1994
105 1100 Northmeadow
Pkwy. S 552 3,178 59 552 3,237 3,789 270 1989 1995
106 1125 Northmeadow
Pkwy. D 320 2,222 9 320 2,231 2,551 186 1987 1995
107 1150 Northmeadow
Pkwy. D 464 2,963 - 464 2,963 3,427 242 1988 1995
108 1175 Northmeadow
Pkwy. D 328 3,068 54 328 3,122 3,450 288 1987 1995
109 1225 Northmeadow
Pkwy. S 336 3,286 - 336 3,286 3,622 269 1989 1995
110 1250 Northmeadow
Pkwy. D 312 2,328 4 312 2,332 2,644 192 1989 1995
111 1325 Northmeadow
Pkwy. S 472 4,491 75 472 4,566 5,038 397 1990 1995
112 1335 Northmeadow
Pkwy. S 946 6,347 - 946 6,347 7,293 - 1997
113 1350 Northmeadow
Pkwy. D 672 2,556 12 672 2,568 3,240 227 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,926 $31,835 $355 $4,926 $ 32,190 $37,116 $2,219
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Hembree Crest
114 11415 Old
Roswell Rd. B $ 648 $1,947 $ 47 $ 648 $1,994 $ 2,642 $ 185 1991 1995
115 11800 Wills Rd. D 304 1,570 108 304 1,678 1,982 160 1987 1995
116 11810 Wills Rd. D 296 2,180 2 296 2,182 2,478 178 1989 1995
117 11820 Wills Rd. D 488 3,793 72 488 3,865 4,353 318 1987 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,736 $9,490 $229 $1,736 $9,719 $11,455 $ 841
- ------------------------------------------------------------------------------------------------------------------------------------
Mansell Commons
118 993 Mansell Rd. D $ 136 $ 919 $ 47 $136 $ 966 $ 1,102 $ 85 1987 1995
119 995 Mansell Rd. D 80 714 25 80 739 819 66 1987 1995
120 997 Mansell Rd. D 72 612 7 72 619 691 52 1987 1995
121 999 Mansell Rd. D 104 816 1 104 817 921 67 1987 1995
122 1003 Mansell Rd. D 136 881 1 136 882 1,018 73 1990 1995
123 1005 Mansell Rd. D 72 714 15 72 729 801 64 1990 1995
124 1007 Mansell Rd. D 168 1,592 26 168 1,618 1,786 145 1990 1995
125 1009 Mansell Rd. S 264 1,620 4 264 1,624 1,888 132 1986 1995
126 1011 Mansell Rd. S 256 1,647 8 256 1,655 1,911 137 1984 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,288 $9,515 $134 $1,288 $9,649 $10,937 $ 821
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-4
<PAGE>
<TABLE>
Schedule III Page 5 of 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- --------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hembree Park
127 105 Hembree
Park Dr. D $ 288 $ 2,067 $ 73 $ 288 $ 2,140 $ 2,428 $ 174 1988 1995
128 150 Hembree
Park Dr. D 641 2,015 208 825 2,039 2,864 181 1985 1995
129 200 Hembree
Park Dr. D 160 1,978 11 160 1,989 2,149 162 1985 1995
130 645 Hembree
Pkwy. D 248 1,997 54 248 2,051 2,299 183 1986 1995
131 655 Hembree
Pkwy. D 248 1,997 42 248 2,039 2,287 197 1986 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,585 $10,054 $388 $1,769 $10,258 $12,027 $ 897
- ------------------------------------------------------------------------------------------------------------------------------------
Northwinds
132 2555 Northwinds
Pkwy. O $1,813 $6,012 $ - $1,813 $6,012 $7,825 $ 106 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,813 $6,012 $ - $1,813 $6,012 $7,825 $ 106
- ------------------------------------------------------------------------------------------------------------------------------------
Other North Central
Properties
133 10745 Westside
Pkwy. O $ 925 $3,513 $ 71 $ 925 $3,584 $4,509 $ 307 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 925 $3,513 $ 71 $ 925 $3,584 $4,509 $ 307
- ------------------------------------------------------------------------------------------------------------------------------------
Airport/South Atlanta
Submarket
- ------------------------------------------------------------------------------------------------------------------------------------
Southridge
134 5025 Derick
Jones Rd. D $ 647 $ 3,598 $ - $ 647 $ 3,598 $ 4,245 $ 45 1997
135 5099 Southridge
Pkwy. D (c) 306 1,053 119 306 1,172 1,478 149 1990 1994
136 5136 Southridge
Pkwy. D (c) 480 1,653 69 480 1,722 2,202 214 1990 1994
137 5139 Southridge
Pkwy. D (c) 465 1,601 14 465 1,615 2,080 195 1991 1994
138 5149 Southridge
Pkwy. D (c) 17 3,384 - 817 3,384 4,201 225 1990 1994
139 5156 Southridge
Pkwy. D (c) 676 2,330 10 676 2,340 3,016 279 1992 1994
140 5169 Southridge
Pkwy. D 431 2,468 11 431 2,479 2,910 179 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,822 $16,087 $223 $3,822 $16,310 $20,132 $1,286
- ------------------------------------------------------------------------------------------------------------------------------------
Sullivan International
141 703 Sullivan Rd. D $ 225 $ 781 $217 $ 225 $ 998 $ 1,223 $ 97 1990 1994
142 721 Sullivan Rd. D 242 834 40 242 874 1,116 104 1991 1994
143 727 Sullivan Rd. D 260 898 13 260 911 1,171 114 1988 1994
144 739 Sullivan Rd. D 226 778 12 226 790 1,016 94 1989 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 953 $3,291 $282 $ 953 $3,573 $4,526 $ 409
- ------------------------------------------------------------------------------------------------------------------------------------
Other Airport/South
Atlanta
Properties
145 105 Kings Mill Rd. B (a )$ 457 $4,951 $ - $ 457 $4,951 $5,408 $414 1995
Total $ 457 $4,951 $ - $ 457 $4,951 $5,408 $414
- -----------------------------------------------------------------------------------------------------------------------------------
Northwest/I-75 Submarket
- -----------------------------------------------------------------------------------------------------------------------------------
Townpoint
146 3240 Town Point Dr D $1,092 $4,199 $ - $1,092 $4,199 $ 5,291 $ 42 1997
147 3330 West Town
Point Dr D 551 1,551 375 551 1,926 2,477 224 1994
148 3350 West Town
Point Dr D 434 2,214 - 434 2,214 2,648 137 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,077 $7,964 $375 $2,077 $8,339 $10,416 $403
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 6 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- ----------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest Business Center
149 1331-37-41-51
Capital Circle S $ 558 $ 4,443 $ 44 $ 558 $ 4,487 $ 5,045 $ 250 1985 1996
150 1335 Capital
Circle S 416 1,704 5 416 1,709 2,125 94 1985 1996
151 2250 Northwest
Pkwy. D 320 2,223 - 320 2,223 2,543 47 1982 1997
152 2252 Northwest
Pkwy. S 92 759 - 92 759 851 15 1982 1997
153 2254 Northwest
Pkwy. S 175 1,442 - 175 1,442 1,617 29 1982 1997
154 2256 Northwest
Pkwy. S 85 702 - 85 702 787 14 1982 1997
155 2258 Northwest
Pkwy. S 47 388 - 47 388 435 8 1982 1997
156 2260 Northwest
Pkwy. S 294 2,436 - 294 2,436 2,730 50 1982 1997
157 2262 Northwest
Pkwy. S 161 1,333 - 161 1,333 1,494 27 1982 1997
158 2264 Northwest
Pkwy. D 353 2,104 - 353 2,104 2,457 48 1982 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,501 $17,534 $ 49 $2,501 $17,583 $20,084 $ 582
- ----------------------------------------------------------------------------------------------------------------------------------
Franklin Forest
159 805 Franklin Ct. D $ 313 $ 1,638 - $ 313 $ 1,638 $ 1,951 $ 35 1983 1997
160 810 Franklin Ct. S 255 1,414 - 255 1,414 1,669 28 1983 1997
161 811 Livingston Ct. S 193 1,089 - 193 1,089 1,282 23 1983 1997
162 821 Livinston Ct. S 145 803 - 145 803 948 17 1983 1997
163 825 Franklin Ct. D 358 2,261 - 358 2,261 2,619 52 1983 1997
164 830 Franklin Ct. S 133 741 - 133 741 874 15 1983 1997
165 835 Franklin Ct. D 393 2,461 - 393 2,461 2,854 53 1983 1997
166 840 Franklin Ct. D 242 1,855 - 242 1,855 2,097 38 1983 1997
167 841 Livingston Ct. D 275 1,855 - 275 1,855 2,130 38 1983 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,307 $14,117 - $2,307 $14,117 $16,424 $ 299
- ----------------------------------------------------------------------------------------------------------------------------------
Other Northwest/
I-75 Properties
168 240 Northpoint Pkwy. B $ 822 $ 4,912 - $ 822 $ 4,912 $ 5,734 $ 267 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 822 $ 4,912 - $ 822 $ 4,912 $ 5,734 $ 267
- ----------------------------------------------------------------------------------------------------------------------------------
Stone Mountain Submarket
- ----------------------------------------------------------------------------------------------------------------------------------
Parknorth
169 675 Parknorth Blvd. D $ 611 $ 2,743 - $ 611 $ 2,743 $ 3,354 $ 264 1990 1995
170 696 Parknorth Blvd. D (h) 532 2,748 4 532 2,752 3,284 240 1986 1995
171 715 Parknorth Blvd. D 375 2,118 2 375 2,120 2,495 185 1989 1995
172 735 Parknorth Blvd. D (h) 709 3,155 55 709 3,210 3,919 296 1989 1995
173 736 Parknorth Blvd. S 627 1,023 - 627 1,023 1,650 90 1992 1995
174 780 Parknorth Blvd. D (h) 328 1,847 45 328 1,892 2,220 165 1988 1995
175 808 Parknorth Blvd. S 162 608 - 162 608 770 54 1986 1995
176 815 Parknorth Blvd. S 249 983 4 249 987 1,236 86 1989 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Total $3,593 $15,225 $110 $3,593 $15,335 $18,928 $1,380
- ----------------------------------------------------------------------------------------------------------------------------------
Chattahoochee Submarket
- ----------------------------------------------------------------------------------------------------------------------------------
Chattahoochee
177 1670 DeFoors Ave. D $ 82 $ 660 $943 $ 82 $ 1,603 $ 1,685 $ 809 1960 1989
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 82 $ 660 $943 $ 82 $ 1,603 $ 1,685 $ 809
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Schedule III Page 7 of 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Initial Costs
-------------------------- Cost Capitalized
Property Related Building and Subsequent
Market/Business Park/Property Type (1) Encumbrances Land Improvements to Acquisition
- ------------------------------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. S (m)(n) $ 419 $ 1,679 $ 18
179 500 Airpark Center Dr. D (m)(n) 923 3,697 -
180 600 Airpark Center Dr. D (m)(n) 729 2,918 50
181 700 Airpark Center Dr. D (m)(n) 801 3,286 -
182 800 Airpark Center Dr. D (o) 924 3,701 -
183 900 Airpark Center Dr. D (o) 798 3,193 -
184 1000 Airpark Center Dr. D 1,300 7,367 -
185 1400 Donelson Pike S (m)(n) 1,276 5,108 -
186 1410 Donelson Pike S (m)(n) 1,411 5,696 60
187 1411-1449 Donelson Pike B 1,308 7,412 -
188 1413 Donelson Pike B (p) 549 2,196 -
189 1420 Donelson Pike S (m)(n) 1,331 5,346 96
190 5270 Harding Place B (p) 535 2,143 -
- ------------------------------------------------------------------------------------------------------------
Total $12,304 $53,742 $224
- ------------------------------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road D $ 936 $ 5,324 $ -
- ------------------------------------------------------------------------------------------------------------
Total $ 936 $ 5,324 $ -
- ------------------------------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. D (j) $ 1,065 $ 4,272 $ 11
193 7106 Crossroad Blvd. D (j) 1,065 4,266 7
194 7108 Crossroad Blvd. D (j) 848 3,396 5
195 119 Seaboard Lane D (k) 569 2,280 -
196 121 Seaboard Lane D (l) 445 1,784 -
197 123 Seaboard Lane D (l) 489 1,956 -
- ------------------------------------------------------------------------------------------------------------
Total $ 4,481 $17,954 $ 23
- ------------------------------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. B $ 938 $ 5,318 $ -
- ------------------------------------------------------------------------------------------------------------
Total $ 938 $ 5,318 $ -
- ------------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. S (z) $ 477 $ 3,030 $ -
200 200 Perimeter Park Rd. S 567 3,048 -
201 300 Perimeter Park Rd. S (z) 567 3,047 -
202 400 Perimeter Park Rd. S (aa) 486 4,051 -
203 500 Perimeter Park Rd. S (z) 522 4,051 -
204 800 Perimeter Park Rd. S (bb) 405 3,048 -
205 900 Perimeter Park Rd. S (q) 629 3,568 -
206 1000 Perimeter Park Rd. S (z) 405 2,667 -
- ------------------------------------------------------------------------------------------------------------
Total $ 4,058 $26,510 $ -
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at Close of Period
---------------------------------------------
Building and
Market/Business Park/Property Land Improvements Total
- -----------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. $ 419 $ 1,697 $ 2,116
179 500 Airpark Center Dr. 923 3,697 4,620
180 600 Airpark Center Dr. 729 2,968 3,697
181 700 Airpark Center Dr. 801 3,286 4,087
182 800 Airpark Center Dr. 924 3,701 4,625
183 900 Airpark Center Dr. 798 3,193 3,991
184 1000 Airpark Center Dr. 1,300 7,367 8,667
185 1400 Donelson Pike 1,276 5,108 6,384
186 1410 Donelson Pike 1,411 5,756 7,167
187 1411-1449 Donelson Pike 1,308 7,412 8,720
188 1413 Donelson Pike 549 2,196 2,745
189 1420 Donelson Pike 1,331 5,442 6,773
190 5270 Harding Place 535 2,143 2,678
- -----------------------------------------------------------------------------------------
Total $12,304 $53,966 $66,270
- -----------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road $ 936 $ 5,324 $ 6,260
- -----------------------------------------------------------------------------------------
Total $ 936 $ 5,324 $ 6,260
- -----------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. $ 1,065 $ 4,283 $ 5,348
193 7106 Crossroad Blvd. 1,065 4,273 5,338
194 7108 Crossroad Blvd. 848 3,401 4,249
195 119 Seaboard Lane 569 2,280 2,849
196 121 Seaboard Lane 445 1,784 2,229
197 123 Seaboard Lane 489 1,956 2,445
- -----------------------------------------------------------------------------------------
Total $ 4,481 $17,977 $22,458
- -----------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. $ 938 $ 5,318 $ 6,256
- -----------------------------------------------------------------------------------------
Total $ 938 $ 5,318 $ 6,256
- -----------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. $ 477 $ 3,030 $ 3,507
200 200 Perimeter Park Rd. 567 3,048 3,615
201 300 Perimeter Park Rd. 567 3,047 3,614
202 400 Perimeter Park Rd. 486 4,051 4,537
203 500 Perimeter Park Rd. 522 4,051 4,573
204 800 Perimeter Park Rd. 405 3,048 3,453
205 900 Perimeter Park Rd. 629 3,568 4,197
206 1000 Perimeter Park Rd. 405 2,667 3,072
- -----------------------------------------------------------------------------------------
Total $ 4,058 $26,510 $30,568
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Accumulated Year Year
Market/Business Park/Property Depreciation Developed (2) Acquired (3)
- ------------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. $ 78 1989 1996
179 500 Airpark Center Dr. 173 1988 1996
180 600 Airpark Center Dr. 142 1990 1996
181 700 Airpark Center Dr. 152 1992 1996
182 800 Airpark Center Dr. 173 1995 1996
183 900 Airpark Center Dr. 149 1995 1996
184 1000 Airpark Center Dr. 24 1997 1997
185 1400 Donelson Pike 238 1986 1996
186 1410 Donelson Pike 279 1986 1996
187 1411-1449 Donelson Pike 22 1996 1997
188 1413 Donelson Pike 103 1996 1996
189 1420 Donelson Pike 265 1985 1996
190 5270 Harding Place 100 1996 1996
- ------------------------------------------------------------------------------------------
Total $1,898
- ------------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road $ 137 1996 1997
- ------------------------------------------------------------------------------------------
Total $ 137
- ------------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. $ 205 1987 1996
193 7106 Crossroad Blvd. 201 1987 1996
194 7108 Crossroad Blvd. 159 1989 1996
195 119 Seaboard Lane 106 1990 1996
196 121 Seaboard Lane 84 1990 1996
197 123 Seaboard Lane 92 1990 1996
- ------------------------------------------------------------------------------------------
Total $ 847
- ------------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. $ 143 1997 1997
- ------------------------------------------------------------------------------------------
Total $ 143
- ------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. $ 53 1987 1997
200 200 Perimeter Park Rd. 52 1987 1997
201 300 Perimeter Park Rd. 53 1986 1997
202 400 Perimeter Park Rd. 70 1984 1997
203 500 Perimeter Park Rd. 71 1985 1997
204 800 Perimeter Park Rd. 53 1984 1997
205 900 Perimeter Park Rd. 184 1982 1996
206 1000 Perimeter Park Rd. 47 1982 1997
- ------------------------------------------------------------------------------------------
Total $ 583
- ------------------------------------------------------------------------------------------
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 8 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Initial Costs
-------------------------- Cost Capitalized
Property Related Building and Subsequent
Market/Business Park/Property Type (1) Encumbrances Land Improvements to Acquisition
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West S $ 777 $ 4,588 $ -
208 1400 Perimeter Park West O (r) 666 3,777 17
209 1500 Perimeter Park West O 1,148 6,511 -
210 1600 Perimeter Park West O (v) 1,463 8,296 -
211 1800 Perimeter Park West O (v) 907 5,140 -
212 2000 Perimeter Park West O 788 4,466 -
- ------------------------------------------------------------------------------------------------------------------
Total $5,749 $32,778 $ 17
- ------------------------------------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. S $ 975 $ 5,529 $ -
214 507 Airport Blvd. S (v) 1,336 7,578 -
215 5151 McCrimmon Pkwy. S 1,318 7,474 -
- ------------------------------------------------------------------------------------------------------------------
Total $3,629 $20,581 $ -
- ------------------------------------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. D (u) $ 777 $ 4,405 $ 96
217 2900 Perimeter Park Dr. D (u) 235 1,330 -
218 3000 Perimeter Park Dr. D (u) 482 2,733 13
- ------------------------------------------------------------------------------------------------------------------
Total $1,494 $ 8,468 $109
- ------------------------------------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. D (t) $ 633 $ 3,590 $ -
220 101 Innovation Ave. D 615 3,488 -
- ------------------------------------------------------------------------------------------------------------------
Total $1,248 $ 7,078 $ -
- ------------------------------------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. D (y) $ 296 $ 2,037 $ -
222 409-B Airport Blvd. D (y) 175 1,203 -
223 409-C Airport Blvd. D (y) 185 1,304 -
- ------------------------------------------------------------------------------------------------------------------
Total $ 656 $ 4,544 $ -
- ------------------------------------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. O (s) $ 842 $ 4,772 $ -
225 801 Jones Franklin Rd. O (x) 1,351 7,660 3
- ------------------------------------------------------------------------------------------------------------------
Total $2,193 $12,432 $ 3
- ------------------------------------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. O (w) $1,775 $10,064 $ 5
- ------------------------------------------------------------------------------------------------------------------
Total $1,775 $10,064 $ 5
- ------------------------------------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row B $ 493 $ 3,284 $ -
228 2500 Principal Row B 565 3,915 70
229 9600 Parksouth Ct. B 649 3,836 -
- ------------------------------------------------------------------------------------------------------------------
Total $1,707 $11,035 $ 70
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at Close of Period
-----------------------------
Building and
Market/Business Park/Property Land Improvements Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West $ 777 $ 4,588 $ 5,365
208 1400 Perimeter Park West 666 3,794 4,460
209 1500 Perimeter Park West 1,148 6,511 7,659
210 1600 Perimeter Park West 1,463 8,296 9,759
211 1800 Perimeter Park West 907 5,140 6,047
212 2000 Perimeter Park West 788 4,466 5,254
- ------------------------------------------------------------------------------------
Total $5,749 $32,795 $38,544
- ------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. $ 975 $ 5,529 $ 6,504
214 507 Airport Blvd. 1,336 7,578 8,914
215 5151 McCrimmon Pkwy. 1,318 7,474 8,792
- ------------------------------------------------------------------------------------
Total $3,629 $20,581 $24,210
- ------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. $ 777 $ 4,501 $ 5,278
217 2900 Perimeter Park Dr. 235 1,330 1,565
218 3000 Perimeter Park Dr. 482 2,746 3,228
- ------------------------------------------------------------------------------------
Total $1,494 $ 8,577 $10,071
- ------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. $ 633 $ 3,590 $ 4,223
220 101 Innovation Ave. 615 3,488 4,103
- ------------------------------------------------------------------------------------
Total $1,248 $ 7,078 $ 8,326
- ------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. $ 296 $ 2,037 $ 2,333
222 409-B Airport Blvd. 175 1,203 1,378
223 409-C Airport Blvd. 185 1,304 1,489
- ------------------------------------------------------------------------------------
Total $ 656 $ 4,544 $ 5,200
- ------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. $ 842 $ 4,772 $ 5,614
225 801 Jones Franklin Rd. 1,351 7,663 9,014
- ------------------------------------------------------------------------------------
Total $2,193 $12,435 $14,628
- ------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. $1,775 $10,069 $11,844
- ------------------------------------------------------------------------------------
Total $1,775 $10,069 $11,844
- ------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row $ 493 $ 3,284 $ 3,777
228 2500 Principal Row 565 3,985 4,550
229 9600 Parksouth Ct. 649 3,836 4,485
- ------------------------------------------------------------------------------------
Total $1,707 $11,105 $12,812
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Accumulated Year Year
Market/Business Park/Property Depreciation Developed (2) Acquired (3)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West $ 71 1990 1997
208 1400 Perimeter Park West 197 1991 1996
209 1500 Perimeter Park West 335 1996 1996
210 1600 Perimeter Park West 427 1994 1996
211 1800 Perimeter Park West 266 1994 1996
212 2000 Perimeter Park West 41 1997 1997
- ------------------------------------------------------------------------------------------
Total $1,337
- ------------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. $ 45 1997 1997
214 507 Airport Blvd. 389 1993 1996
215 5151 McCrimmon Pkwy. 384 1995 1996
- ------------------------------------------------------------------------------------------
Total $ 818
- ------------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. $ 238 1992 1996
217 2900 Perimeter Park Dr. 68 1990 1996
218 3000 Perimeter Park Dr. 141 1989 1996
- ------------------------------------------------------------------------------------------
Total $ 447
- ------------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. $ 185 1994 1996
220 101 Innovation Ave. 34 1997 1997
- ------------------------------------------------------------------------------------------
Total $ 219
- ------------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. $ 73 1982 1997
222 409-B Airport Blvd. 43 1983 1997
223 409-C Airport Blvd. 46 1986 1997
- ------------------------------------------------------------------------------------------
Total $ 162
- ------------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. $ 246 1993 1996
225 801 Jones Franklin Rd. 394 1995 1996
- ------------------------------------------------------------------------------------------
Total $ 640
- ------------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. $ 517 1996 1996
- ------------------------------------------------------------------------------------------
Total $ 517
- ------------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row $ 22 1997
228 2500 Principal Row 143 1996
229 9600 Parksouth Ct. 42 1997
- ------------------------------------------------------------------------------------------
Total $ 207
- ------------------------------------------------------------------------------------------
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 9 OF 11
GROSS AMOUNT AT WHICH
INITIAL COSTS CARRIED AT CLOSE OF PERIOD
--------------------- COST CAPITALIZED ----------------------------------
MARKET/BUSINESS PROPERTY RELATED BUILDING AND SUBSEQUENT BUILDING AND
PARK/PROPERTY TYPE/(1)/ ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIRPORT COMMERCE CENTER
230 1629 Prime Court D $ 281 $ 2,129 $ - $ 281 $ 2,129
231 1630 Prime Court D 323 1,650 - 323 1,650
232 8249 Parkline Blvd. D 214 1,661 - 214 1,661
233 8351 Parkline Blvd. D (d) 212 1,785 - 212 1,785
234 8500 Parkline Blvd. D (d) 691 3,200 126 691 3,326
235 8501 Parkline Blvd. D (d) 169 1,212 8 169 1,220
236 8549 Parkline Blvd. D (d) 149 1,231 - 149 1,231
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 2,039 $ 12,868 $ 134 $ 2,039 $ 13,002
- -----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY PARK - ORLANDO
237 100 Technology Park S $ 421 $ 2,580 $ - $ 421 $ 2,580
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 421 $ 2,580 $ - $ 421 $ 2,580
- -----------------------------------------------------------------------------------------------------------------------
SPARTANBURG, SOUTH CAROLINA
HILLSIDE
238 170 Parkway West B $ 223 $ 2,539 $ - $ 223 $ 2,539
239 190 Parkway West B 276 2,350 - 276 2,350
240 285 Parkway West B 619 4,243 - 619 4,243
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,118 $ 9,132 $ - $ 1,118 $ 9,132
- -----------------------------------------------------------------------------------------------------------------------
JACKSONVILLE, FLORIDA
JACKSONVILLE INTERNATIONAL TRADEPORT
241 13340 International Pkwy B $ 289 $ 2,495 $ - $ 289 $ 2,495
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 289 $ 2,495 $ - $ 289 $ 2,495
- -----------------------------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE
DEVELOPMENT 4,524 $ 21,029 $ - $ 1,533 $ 22,562 $ -
------------------------------------------------------------------------------------
PROPERTY TOTALS $188,661 (cc) $126,938 $596,849 $ 32,280 $128,758 $627,309
------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------
MARKET/BUSINESS ACCUMULATED YEAR YEAR
PARK/PROPERTY TOTAL DEPRECIATION DEVELOPED/(2)/ ACQUIRED/(3)/
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRPORT COMMERCE CENTER
230 1629 Prime Court $ 2,410 $ 6 1997
231 1630 Prime Court 1,973 80 1996
232 8249 Parkline Blvd. 1,875 105 1996
233 8351 Parkline Blvd. 1,997 170 1994 1995
234 8500 Parkline Blvd. 4,017 347 1986 1995
235 8501 Parkline Blvd. 1,389 117 1991 1995
236 8549 Parkline Blvd. 1,380 118 1992 1995
- -------------------------------------------------------------------------------------------------
TOTAL $ 15,041 $ 943
- -------------------------------------------------------------------------------------------------
TECHNOLOGY PARK - ORLANDO
237 100 Technology Park $ 3,001 $ 57 1986 1997
- -------------------------------------------------------------------------------------------------
TOTAL $ 3,001 $ 57
- -------------------------------------------------------------------------------------------------
SPARTANBURG, SOUTH CAROLINA
HILLSIDE
238 170 Parkway West $ 2,762 $ 99 1995
239 190 Parkway West 2,626 56 1997
240 285 Parkway West 4,862 333 1994
- -------------------------------------------------------------------------------------------------
TOTAL $ 10,250 $ 488
- -------------------------------------------------------------------------------------------------
JACKSONVILLE, FLORIDA
JACKSONVILLE INTERNATIONAL TRADEPORT
241 13340 International Pkwy $ 2,784 $ 17 1997 1997
- -------------------------------------------------------------------------------------------------
TOTAL $ 2,784 $ 17
- -------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE
DEVELOPMENT $ 22,562 $ -
------------------------------------------------------------
PROPERTY TOTALS $ 756,067 (dd)(ee) $61,548
------------------------------------------------------------
</TABLE>
S-9
<PAGE>
SCHEDULE III PAGE 10 OF 11
<TABLE>
<CAPTION>
FOOTNOTES TO SCHEDULE III
<S> <C>
(1) D = business distribution; B = bulk warehouse; S = business service; O = office; R = retail.
(2) The year of development means the year in which shell construction was completed.
(3) For properties acquired by the Company, including properties previously developed and sold by the Company, the year of
acquisition means the year in which an ownership interest in the property was acquired or is expected to be acquired, unless
otherwise noted.
(a) These properties are collectively encumbered by a mortgage of $ 38,000.
(b) These properties are collectively encumbered by a mortgage of $ 10,300.
(c) These properties are collectively encumbered by a mortgage of $ 6,857.
(d) These properties are collectively encumbered by a mortgage of $ 5,200.
(e) These properties are collectively encumbered by a mortgage of $ 3,365.
(f) These properties are collectively encumbered by a mortgage of $ 1,764.
(g) These properties are collectively encumbered by a mortgage of $ 1,228.
(h) These properties are collectively encumbered by a mortgage of $ 5,140.
(i) These properties are collectively encumbered by a mortgage of $ 657.
(j) These properties are collectively encumbered by a mortgage of $ 6,988.
(k) These properties are collectively encumbered by a mortgage of $ 2,153
(l) These properties are collectively encumbered by a mortgage of $ 2,605.
(m) These properties are collectively encumbered by a mortgage of $ 12,015.
(n) These properties are collectively encumbered by a mortgage of $ 1,922.
(o) These properties are collectively encumbered by a mortgage of $ 8,710.
(p) These properties are collectively encumbered by a mortgage of $ 6,826.
(q) These properties are collectively encumbered by a mortgage of $ 2,866.
(r) These properties are collectively encumbered by a mortgage of $ 2,675.
(s) These properties are collectively encumbered by a mortgage of $ 2,890.
(t) These properties are collectively encumbered by a mortgage of $ 2,463.
(u) These properties are collectively encumbered by a mortgage of $ 6,705.
(v) These properties are collectively encumbered by a mortgage of $ 15,800.
(w) These properties are collectively encumbered by a mortgage of $ 7,560.
(x) These properties are collectively encumbered by a mortgage of $ 5,718.
(y) These properties are collectively encumbered by a mortgage of $ 3,641.
(z) These properties are collectively encumbered by a mortgage of $ 12,897.
(aa) These properties are collectively encumbered by a mortgage of $ 4,135.
(bb) These properties are collectively encumbered by a mortgage of $ 3,057.
(cc) Total related encumbrances include all mortgage notes payable in the accompanying financial statements, except a mortgage of
$3,934 which is secured by the property at 1950 Vaughn Road which underlies a direct financing lease discussed in note 2 to
the consolidated financial statements.
(dd) The aggregate cost for federal income tax purposes was approximately $642,000.
(ee) Excludes developments in progress of $100,433.
</TABLE>
S-10
<PAGE>
SCHEDULE III PAGE 11 OF 11
WEEKS CORPORATION
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Depreciation of the Company's real estate assets is calculated over the
following estimated useful lives on a straight-line basis:
. Buildings -- 35 Years
. Tenant Improvements -- life of the lease
A summary of activity for real estate assets and accumulated depreciation for
the years ended December 31, 1997, 1996 and 1995, were as follows
<TABLE>
<CAPTION>
(in thousands):
<S> <C> <C> <C>
1997 1996 1995
-----------------------------------------------------------------
REAL ESTATE ASSETS
Balance, beginning of period $592,841 $319,763 $162,709
Additions 137,566 71,418 46,913
Building acquisitions(a) 129,884 201,660 110,141
Sales of property (2,456) -- --
Property retirements (1,335) -- --
-----------------------------------------------------------------
Balance, end of period $856,500 $592,841 $319,763
=================================================================
ACCUMULATED DEPRECIATION
Balance, beginning of period $ 41,469 $ 29,889 $ 22,959
Depreciation expense 21,586 11,580 6,930
Sales of property (182) -- --
Property retirements (1,325) -- --
-----------------------------------------------------------------
Balance, end of period $ 61,548 $ 41,469 $ 29,889
=================================================================
</TABLE>
(a) See Note 14 to the Company's consolidated financial statements, included
herein on page F-22, for a summary of certain noncash consideration
utilized in the Company's building acquisitions.
S-11
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
-------------------------------------------------------------------------
2.1** Agreement of Merger by and between NWI Warehouse Group, LLC and
Weeks Realty, L.P., dated November 1, 1996.
2.2** Contribution Agreement for Development Properties between Weeks
Realty, L.P., and NWI Warehouse Group, L.P., dated November 1,
1996.
2.3** Contribution Agreement for Aspen Grove Land between Weeks Realty,
L.P., and NWI Warehouse Group, L.P., dated November 1, 1996.
2.4** Contribution Agreement for I-440 Land between Weeks Realty, L.P.,
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.5** Contribution Agreement for NWI Operating Business by and between
Weeks Realty, L.P. and NWI Warehouse Group, L.P., dated November
1, 1996.
2.6** Contribution Agreement for Buckley Operating Business by and
between Weeks Realty, L.P. and Buckley & Company Real Estate,
Inc., dated November 1, 1996.
2.7** Contribution Agreement for Briley Land between Weeks Realty, L.P.
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.8*** Contribution Agreement by and between Harold S. Lichtin and Weeks
Realty, L.P., dated December 31, 1996.
2.9*** Agreement and Plan of Merger by and among Lichtin Properties,
Inc., Harold S. Lichtin and Weeks Corporation, dated December 31,
1996.
2.10*** Contribution Agreement for Northern Telecom Properties, among the
Contributors identified therein (the "Contributors") and Weeks
Realty, L.P. doing business as Weeks Realty Limited Partnership,
dated December 31, 1996.
2.11*** Contribution Agreement (Perimeter Park West Land) among Harold S.
Lichtin, Marie Antoinette Robertson, and Perimeter Park West
Associates, and Weeks Realty, L.P. doing business as Weeks Realty
Limited Partnership, dated December 31, 1996.
2.12*** Contribution Agreement for Completed Properties Lichtin Portfolio
among the Contributors and Weeks Realty, L.P. doing business as
Weeks Realty Limited Partnership, dated December 31, 1996.
2.13*** Contribution Agreement for Development Properties and Regency
Forrest Land among the Contributors and Weeks Realty, L.P. doing
business as Weeks Realty Limited Partnership, dated December 31,
1996.
2.14***** Beacon Centre Contribution Agreement dated January 2, 1998 by and
between Armando Codina, Codina West Dade Development Corporation,
Codina Family Investments, Ltd., The Benenson Capital Company,
Raha Associates, Inc., Laurence Tisch, Preston Tisch, Raha
Associates II, Inc., Codina West Dade Development Corporation
No.5, and Weeks Realty, L.P., and Weeks Corporation.
3.1**** Amended and Restated Articles of Incorporation of the Company
3.2+++ Articles of Amendment of the Registrant's Restated Articles of
Incorporation.
3.3+++ Articles of Amendment of the Registrant's Restated Articles of
Incorporation.
3.4*** Third Amended and Restated Bylaws of Weeks Corporation.
4.1* Specimen certificate of Common Stock
<PAGE>
4.2++++ Specimen certificate of Preferred Stock.
10.1**** First Amended and Restated Agreement of Limited Partnership dated
August 24, 1994 of Weeks Realty L.P.
10.2**** Registration Rights and Lock-Up Agreement dated August 24, 1994
among the Company and the persons named therein.
10.3**** Incentive Stock Plan.
10.4**** Employment Agreements between the Company and A. Ray Weeks, Jr.,
Thomas D. Senkbeil and Forrest W. Robinson, respectively.
10.5**** Employment Agreements between Weeks Realty, L.P. and A. Ray Weeks,
Jr., Thomas D. Senkbeil and Forrest W. Robinson, respectively.
10.6**** Employment Agreements between Weeks Realty Services, Inc. and A.
Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson,
respectively.
10.7**** Employment Agreements between Weeks Construction Services, Inc.
and A. Ray Weeks, Jr. and Forrest W. Robinson, respectively.
10.8**** Noncompetition Agreements among the Company, Weeks Realty, L.P.,
Weeks Realty Services, Inc., Weeks Construction Services, Inc. and
each of A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W.
Robinson.
10.9* Form of Officers and directors Indemnification Agreement.
10.10+ Credit Agreement dated September 25, 1996, by and among Wachovia
Bank of Georgia, N.A., as agent bank for Wachovia Bank of Georgia,
N.A., First Union National Bank of Georgia, Commerzbank A.G. and
Mellon Bank, N.A. as lenders, Weeks Realty, L.P., Weeks
Construction Services, Inc., Weeks Realty Serivces, Inc., Weeks
Development Partnership and Weeks Financing Limited Partnership,
as borrowers, and Weeks Corporation and Weeks Realty, L.P., as
guarantors.
10.11++ Park North Purchase and Sale Agreement between Copley Properties
Inc., Parknorth Associates, Parknorth Associates II, Parknorth
Associates III and Weeks Realty, L.P., dated March 28, 1995.
10.12# Purchase and Sale Agreement by and among North Meadow Associates
Joint Venture, ASC North Fulton Associates Joint Venture and Weeks
Realty, L.P., dated July 7, 1995.
10.13## Employment Agreement between Weeks Corporation and David P.
Stockert, dated June 26, 1995.
10.14## Noncompetition Agreement between Weeks Corporation, Weeks Realty,
L.P., Weeks Realty Services, Inc. and Weeks Construction Services
Inc. and David P. Stockert, dated June 26, 1995.
10.15## Agreement of Purchase and Sale between Premprop-Northwoods 6
Partnership, Premprop-Northwoods 18-22 Partnership, and Premprop-
Northwoods 23 Partnership and Weeks Realty, L.P. dated November 6,
1995. The Exhibits and Schedules to this Agreement are listed in,
but not filed with, this exhibit. Such Exhibits and Schedules
have been omitted for purposes of this filing, but will be
furnished to the Commission supplementary upon request.
10.16### Real Estate Purchase and Sale Agreement by and between Principal
Mutual Life Insurance Company and Weeks Realty, L.P., dated May
28, 1996.
<PAGE>
10.17### Amendment to Weeks Corporation Incentive Stock Plan, dated May 21,
1996.
10.18** Employment Agreement by and between John W. Nelley, Jr. and Weeks
Corporation, dated November 1, 1996.
10.19** Employment Agreement by and between Albert W. Buckley, Jr. and
Weeks Corporation, dated November 1, 1996.
10.20** Noncompetition Agreement by and among NWI Warehouse Group, L.P.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services,
Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc.,
Weeks LP Holdings, Inc., and their respective successors, dated
November 1, 1996.
10.21** Noncompetition Agreement by and among John W. Nelley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks
LP Holdings, Inc., and any other entity under the common control
of Weeks Corporation, and their respective successors, dated
November 1, 1996.
10.22** Noncompetition Agreement by and among Albert W. Buckley, Jr.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services,
Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc.,
Weeks LP Holdings, Inc., and any other entity under the common
control of Weeks Corporation, and their respective successors,
dated November 1, 1996.
10.23** Indemnification Agreement by and between Weeks Corporation and
John W. Nelley, Jr., dated November 1, 1996.
10.24** Registration Rights and Lock-Up Agreement by and among Weeks
Corporation, NWI Warehouse Group, L.P., Buckley & Company Real
Estate, Inc., John W. Nelley, Jr., and Albert W. Buckley, Jr.,
dated November 1, 1996.
10.25** Registration Rights Agreement for Post-March 31, 1998 Shares and
Units, by and among Weeks Corporation, NWI Warehouse Group, L.P.,
and Buckley & Company Real Estate, Inc., dated November 1, 1996.
10.26** Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated October 30, 1996.
10.27** First Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among NWI
Warehouse Group, L.P., Buckley & Company Real Estate, Inc. and
Weeks GP Holdings, Inc., dated November 1, 1996.
10.28*** Registration Rights and Lock-Up Agreement by and among Weeks
Corporation and Harold S. Lichtin, Noel A. Lichtin, Marie A.
Robertson, Amy R. Ehrman, Roland G. Robertson and Perimeter Park
West Associates Limited Partnership, dated December 31, 1996.
10.29*** Registration Rights and Lock-Up Agreement for Post-June 30, 1998
Units by and among Weeks Corporation and Harold S. Lichtin, Noel
A. Lichtin, Marie A. Robertson, Amy R. Ehrman, Roland G. Robertson
and Perimeter Park West Associates Limited Partnership, dated
December 31, 1996.
10.30 Consulting Agreement by and between Harold S. Lichtin and Weeks
Corporation, dated December 30, 1997, effective October 1, 1997.
<PAGE>
10.31*** Noncompetition Agreement by and between Harold S. Lichtin, Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks
LP Holdings, Inc., and any other entity under the common control
of Weeks Corporation, and their respective successors, dated
December 31, 1996.
10.32*** Indemnification Agreement by and between Weeks Corporation and
Harold S. Lichtin, dated December 31, 1996.
10.33*** Second Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among Harold S.
Lichtin, Noel A. Lichtin, Marie Antoinette Robertson, Amy R.
Ehrman, Roland G. Robertson and Perimeter Park West Associates
Limited Partnership, Weeks GP Holdings, Inc. and Weeks
Corporation, dated December 31, 1996.
10.34++ First Amendment to Credit Agreement dated September 1, 1997 by and
among Wachovia Bank of Georgia, N.A., as agent bank for Wachovia
Bank of Georgia, N.A., First Union National Bank of Georgia,
Commerzbank A.G. and Mellon Bank, as lenders, Weeks Realty, L.P.,
Weeks Construction Services, Inc., Weeks Realty Services, Inc.,
Weeks Development Partnership and Weeks Financing Limited
Partnership, as borrowers, and Weeks Corporation, Weeks GP
Holdings, Inc., Weeks LP Holdings, Inc., and Week Realty, L.P., as
guarantors.
10.35+++++ Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated January 31, 1997.
10.36 Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated August 1, 1997.
10.37++++ Fifth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated October 7, 1997.
10.38 Sixth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated October 27, 1997.
10.39 Seventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated December 30,
1997, but effective as of August 1, 1997.
10.40 Settlement Agreement and Mutual Release by and among Weeks
Corporation, the affiliates and related companies of Weeks
Corporation identified therein, and Harold S. Lichtin, dated
December 30, 1997, effective October 1, 1997.
10.41***** Eighth Amendment to the Second Amended and Restated Agreement
of Limited Partnership of Weeks Realty, L.P. dated January 9,
1998.
10.42***** Registration Rights Agreement dated January 9, 1998 by and
among Weeks Corporation and The Benenson Capital Company, Raha
Associates, Inc., Laurence Tisch and Preston Tisch.
10.43***** Registration Rights and Lock-Up Agreement dated January 9,
1998 by and among Weeks Corporation and Armando Codina, Codina
Family Investments, Ltd., and Codina West Dade Development
Corporation.
10.44##### Securities Purchase Agreement among Codina Group, Inc.,
Armando Codina, St. Joe Corporation and Weeks Realty Services,
Inc., dated as of February 24, 1998.
10.45##### Shareholders' Agreement among Codina Group Inc., Armando
Codina, St. Joe Corporation and Weeks Realty Services, Inc., dated
as of February 24, 1998.
11.1 Computation of earnings per share.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP regarding the Company's Form S-3,
file No. 33-96534, Form S-3, file No. 333-1106, Form S-8, file No.
333-1108, Form S-8, file No. 333-18305, Form S-3, file No. 333-
42821, and Form S-3, filed No. 333-32755.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the year ended December 31, 1996, as
restated for the implementation of SFAS 128.
27.3 Financial Data Schedule for the nine months ended September 30,
1997, as restated for the implementation of SFAS 128.
27.4 Financial Data Schedule for the nine months ended September 30,
1996, as restated for the implementation of SFAS 128.
<PAGE>
27.5 Financial Data Schedule for the six months ended June 30, 1996, as
restated for the implementation of SFAS 128.
* Filed as an exhibit to the Registration Statement on Form S-11
(SEC File No. 33-80314) of the Company.
** Filed as an exhibit to the Company's Current Report on Form 8-K
dated November 1, 1996.
*** Filed as an exhibit to the Company's Current Report on Form 8-K
dated December 31, 1996
**** Filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
***** Filed as an exhibit to the Company's Current Report on Form 8-K
dated January 9, 1998.
# Filed as an exhibit to the Company's Current Report on Form 8-K
dated August 31, 1995.
## Filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
### Filed as an exhibit to the Company's Current Report on Form 8-K
dated August 9, 1996.
#### Filed as an exhibit to the Registration Statement on Form S-8 (SEC
File No. 333-18305).
##### Filed as an exhibit to the Company's Current Report on Form 8-K
dated March 17, 1998.
+ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996
++ Filed as an exhibit to the Company's Current Report on Form 8-K
dated July 12, 1995.
++ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1997.
+++ Filed as an exhibit to the Registration Statement on Form S-3 (SEC
File No. 333-42821) of the Company.
++++ Filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1997.
+++++ Filed as a exhibit to the Company's Current Report on Form 8-K
dated May 7, 1997.
<PAGE>
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (this "Agreement"), is made and entered into
on this 30th day of December, 1997, effective as of October 1, 1997, by and
between HAROLD S. LICHTIN, an individual resident of the State of North Carolina
(the "Consultant"), and WEEKS CORPORATION, a Georgia corporation (the
"Company");
W I T N E S S E T H:
--------------------
WHEREAS, the Company desires to hire Consultant as a consultant, and
Consultant desires to be hired as a consultant by the Company, on the terms and
conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:
(S) 1.
Engagement
----------
1.1. Engagement. Subject to the terms of this Agreement, the Company
----------
hereby engages Consultant as a consultant, and Consultant hereby accepts such
engagement as a part-time consultant with the Company. During the term of
Consultant's engagement under this Agreement, Consultant shall stand ready and
shall furnish to the Company, by telephone or in person, upon reasonable notice
and at reasonable times, services of an advisory or consulting nature with
respect to its business and affairs, including training, advising and assisting
Robert G. Cutlip (or such other individual as the Company may designate) with
respect to the day-to-day operations of the Company's activities in the Raleigh-
Durham-Chapel Hill area of North Carolina (the "Research Triangle"), assisting
and advising the Company with respect to certain strategic initiatives, not
limited to the Research Triangle, and making such internal and external
announcements as shall reasonably be requested by the Company. Notwithstanding
the foregoing, Consultant shall not be required to render services hereunder
during reasonable vacation periods or times of illness, disability or other
incapacity.
1.2. Appointment to the Board of Directors. During the term of this
-------------------------------------
Agreement, Consultant shall be nominated for election as a member of the Board
of Directors of the Company, Weeks GP Holdings, Inc. and Weeks LP Holdings,
Inc.; provided, however, the Company shall not be obligated to nominate
Consultant for election as a member of the Board of Directors of the foregoing
<PAGE>
entities if a change of control shall have occurred with respect to the Company.
In the event a change of control in the Company occurs and Consultant is not
nominated for election as member of the foregoing Boards of Directors, (i) the
lock-up periods applicable to Consultant set forth in each of the Registration
Rights and Lock-Up Agreements dated December 31, 1996 by and among Consultant,
the Company and the other parties therein identified shall expire immediately
and (ii) the conversion rights applicable to Consultant set forth in Exhibit D
to the Second Amendment to the Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P. dated December 31, 1996 shall become
exercisable immediately.
1.3. License to Use "Lichtin" Name. Until October 1, 1998,
-----------------------------
Consultant hereby grants to the Company a royalty-free, non-exclusive license to
use, including a right to sublicense to affiliates of the Company, the names
"Lichtin", "Lichtin Properties", and any derivations thereof for the sole
purpose of (i) promoting the leasing and marketing of the Company's office,
warehouse, and research and development space in and around Wake County, North
Carolina and the Research Triangle area and (ii) the Company's property
management services; provided, however, if Consultant ceases to be engaged by
the Company because of a For Cause Termination (as provided for in Section
3.2(b) hereof), the term of the license granted in this Section 1.3 shall
continue so long as Consultant is bound by the terms of that certain
Noncompetition Agreement by and between Consultant and the Company (as therein
defined) dated December 31, 1996, as amended. The Company acknowledges and
agrees that Consultant is the sole and exclusive owner of the right to use the
name "Lichtin", "Lichtin Properties", and the derivations thereof and logos
embodying such names and all of the good will associated therewith and that the
same shall remain at all times the sole and exclusive property of Consultant.
All use by the Company of the names "Lichtin", "Lichtin Properties", and the
derivations thereof, and any logos in connection therewith shall be deemed to
inure exclusively to the benefit of Consultant. To the extent that any rights
in or to the name or any logo used in connection therewith or any aspect thereof
are deemed to accrue to the Company, the Company hereby irrevocably assigns any
and all such rights, at such time as they may be deemed to accrue, including any
and all related good will, to Consultant. The Company further agrees that it
will not apply to, register, use or claim any rights in the name or any aspects
thereof (including the good will related thereto) except to the limited extent
provided herein.
1.4 Independent Contractor. In rendering services hereunder,
----------------------
Consultant shall be acting as an independent contractor. This Agreement is not
an employment agreement and Consultant is not and will not become by performance
of services hereunder an employee of the Company.
-2-
<PAGE>
(S) 2.
Consulting Fee; Expenses
------------------------
2.1. Base Consulting Fee. Commencing on the Effective Date (as
-------------------
defined in (S) 3.1), the Company shall pay Consultant a consulting fee equal to
$65,000 per annum (which amount shall be pro-rated for the remainder of 1997)
and commencing on January 1, 1998, the Company shall pay Consultant during the
remaining term of Consultant's engagement under this Agreement a consulting fee
equal to $190,000 per annum (the "Base Compensation"). Consultant's Base
Compensation shall not be reduced below $65,000 before January 1, 1998 or below
$190,000 on or after January 1, 1998. The Base Compensation shall be paid to
Consultant in accordance with the payroll procedures in effect from time to time
with respect to executive officers of the Company.
2.2. Expenses. Consultant shall be reimbursed for all reasonable
--------
business-related expenses incurred by Consultant at the request of or on behalf
of the Company.
2.3. Participation in Employee Benefit Plans. During the term of
---------------------------------------
Consultant's engagement under this Agreement, Consultant shall be entitled to
participate in such medical, dental, disability, hospitalization, life
insurance, profit sharing, and other benefit plans as the Company shall maintain
from time to time for the benefit of executive officers of the Company, on the
terms and subject to the conditions set forth in such plans; provided, however,
Consultant shall not be entitled to participate in any incentive compensation
plans maintained by the Company or any of its affiliates. Consultant
acknowledges and agrees that Consultant is not entitled to any incentive
compensation from the Company or its affiliates for 1997 or any prior period.
2.4. Automobile Allowance. Commencing on the Effective Date, during
--------------------
the term of Consultant's engagement under this Agreement, the Company shall pay
Consultant an automobile allowance of $600.00 per month.
(S) 3.
Term of Engagement
------------------
3.1. Term of Engagement. Unless earlier terminated in accordance
------------------
with (S) 3.2, the engagement of Consultant under this Agreement shall commence
as of the date that this Agreement is executed (the "Effective Date") and shall
continue up to December 31, 1999. Thereafter, Consultant's engagement under this
Agreement shall be extended for such period, if any, as agreed to in writing by
Consultant and the Company.
-3-
<PAGE>
3.2. Termination. Consultant's engagement under this Agreement may
-----------
be terminated
(a) by the Company upon the death or total disability of Consultant
(total disability meaning the inability of Consultant to perform his normal
required services under this Agreement for a period of six consecutive
months during the term of this Agreement by reason of Consultant's mental
or physical disability, as reasonably determined by the Board of Directors
or other governing body of the Company) (which shall be referred to
individually and collectively as a "Disability Termination"); or
(b) by the Company for "cause," which shall exist only upon the
occurrence of one or more of the following: (i) Consultant is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement to the material damage or prejudice of the
Company or any affiliate of the Company, as determined by the Board of
Directors or other governing body of the Company in good faith, or (ii)
Consultant engages in a fraudulent act relating to the business of the
Company or any affiliate of the Company, as determined by the Board of
Directors or other governing body of the Company in good faith (which shall
be referred to individually and collectively as a "For Cause Termination");
or
(c) by the Company for any reason other than a For Cause Termination
or a Disability Termination (which shall be referred to as a "No Cause
Termination"); or
(d) by Consultant voluntarily for any reason other than an Employee-
Initiated Termination (as defined in (S) 3.2(e)) after giving 30 days prior
written notice to the Company (which shall be referred to as a "Voluntary
Termination"); or
(e) by Consultant for "cause", which shall exist if the Company fails
to cure within ten days after receiving written notice from Consultant of
the occurrence of any of the following: (i) Consultant fails to be
nominated by the Company for reelection during the term of this Agreement
as a member of the Board of Directors of the Company, the Board of
Directors of Weeks GP Holdings, Inc., and the Board of Directors of Weeks
LP Holdings, Inc., subject to the proviso and the conditions contained in
Section 1.2 hereof, (ii) there is a decrease in Consultant's Base
Compensation, or (iii) there is a material decrease in the value of
Consultant's benefits package provided by the Company (as described in (S)
4.2(iii)) without his consent (which shall be referred to as an "Employee-
Initiated Termination").
(S) 4.
Results of Termination
----------------------
4.1. Termination As Result of Voluntary Termination or For Cause
-----------------------------------------------------------
Termination. If Consultant's engagement under this Agreement is terminated as a
- -----------
result of a Voluntary Termination or a For Cause Termination, Consultant shall
-4-
<PAGE>
not thereafter be entitled to receive any Base Compensation or benefits for
periods following such termination; provided, however, that Consultant shall be
entitled to receive any Base Compensation and expense reimbursements that may be
owed to Consultant but are unpaid as of the date on which Consultant's
engagement is terminated.
4.2. Termination As Result of No Cause Termination or Employee-
---------------------------------------------------------
Initiated Termination. If Consultant's engagement under this Agreement is
- ---------------------
terminated as a result of a No Cause Termination or an Employee-Initiated
Termination, Consultant shall be entitled to receive (i) any Base Compensation
and expense reimbursements that may be owed to Consultant but are unpaid as of
the date on which Consultant's engagement is terminated, (ii) additional
compensation equal to the total Base Compensation Consultant would have received
(assuming the Base Compensation as in effect on the date of such termination;
provided, however, if the date of such termination is prior to January 1, 1998,
for purposes of computing such additional compensation, the Base Compensation in
effect for periods beginning on or after January 1, 1998 shall be $190,000) for
the period from the date of termination up to, but not including, December 31,
1999, or, if later, through the remainder of his term of engagement under any
extension of this Agreement, and (iii) continuation of the benefits (e.g.,
medical insurance and life insurance) at the same premium cost to Consultant,
and at the same coverage levels as in effect on the date of such termination for
the period from the date of termination up to, but not including, December 31,
1999, or, if later, through the remainder of his term of engagement under any
extension of this Agreement, and at the end of such period, Consultant shall be
entitled to elect continued medical coverage in accordance with the coverage
continuation provisions of Sections 601 et seq. of the Employee Retirement
Income Security Act of 1974, as amended. The compensation referred to in (i)
and (ii) above shall be paid, in equal installments, at the same times
Consultant would have received Base Compensation payments had he remained a
consultant, unless the Company elects to make such payments (without discount
for early payment) sooner. The compensation referred to in (i), (ii), and (iii)
above shall constitute the sole and exclusive remaining compensation due to
Consultant hereunder.
4.3. Termination as a Result of a Disability Termination Event. If
---------------------------------------------------------
Consultant's engagement under this Agreement is terminated as a result of a
Disability Termination, (i) Consultant shall be entitled to receive any Base
Compensation that may be owed to Consultant but is unpaid as of the date on
which Consultant's engagement is terminated, and (ii) Consultant (or at his
death, his designated beneficiary, if any, or if none, his surviving spouse or,
if none, his estate) shall continue to receive Consultant's Base Compensation
for the month in which such termination occurs and for the following six months.
If payment of Base Compensation is to be made to Consultant's estate, such
payment shall be made as soon as practical after Consultant's death in a single
lump sum (without discount for early payment) equal to the total amount of Base
Compensation payable to the estate.
4.4. Other Employee Benefit Plans and Arrangements. The benefits, if
---------------------------------------------
any, payable to or on behalf of Consultant upon his termination of engagement
from the Company under any other employee benefit plans and arrangements not
specifically provided for herein shall be governed by the terms and conditions
for benefit payments set forth in such plans and arrangements.
-5-
<PAGE>
(S) 5.
Miscellaneous
-------------
5.1. Allocation of Income. Consultant hereby acknowledges that the
--------------------
Company and its related affiliates may allocate certain portions of Consultant's
compensation among the Company and its affiliates. Consultant agrees to such
allocation and acknowledges that for purposes of this Agreement, Consultant will
be deemed to be engaged by, and to perform services for, the entity to which
such compensation is allocated.
5.2. Binding Effect. This Agreement shall inure to the benefit of
--------------
and shall be binding upon Consultant and his executor, administrator, heirs,
personal representative and assigns, and the Company and its successors and
assigns; provided, however, that Consultant shall not be entitled to assign or
delegate any of his rights or obligations hereunder without the prior written
consent of Company.
5.3. Construction of Agreement. No provision of this Agreement or
-------------------------
any related document shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
drafted such provision.
5.4. Arbitration of Disputes. If a dispute arises between the
-----------------------
parties, then the parties agree that their respective representatives shall meet
and consult in good faith and attempt to settle the dispute, within thirty (30)
days of written notice thereof, as a condition precedent to the initiation of
arbitration proceedings as set forth below.
Any dispute, controversy, or claim arising out of or relating to this
Agreement, the breach, termination or invalidity thereof, or Consultant's
engagement, including claims of tortious interference or other tort or statutory
claims, and including without limitation any dispute concerning the scope of
this arbitration clause, shall be settled by arbitration in accordance with the
Employment Dispute Arbitration Rules of the American Arbitrators Association
then in effect. The judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration under this
Agreement shall be held in Raleigh, North Carolina, or at such other place as
may be selected by mutual agreement of the parties.
The arbitrator shall be mutually acceptable to the parties, or failing
agreement, selected pursuant to the Employment Dispute Arbitration Rules of the
American Arbitrators Association. The parties intend that the arbitrator shall
be independent and impartial. To this end, the arbitrator shall disclose to the
parties any professional, family, or social relationships, past or present, with
any party or counsel.
Strict rules of evidence shall not apply in any arbitration conducted
pursuant to this Agreement. The parties may offer such evidence as they desire
and the arbitrator shall accept such evidence as the arbitrator deems relevant
-6-
<PAGE>
to the issues and accord it such weight as the arbitrator deems appropriate.
The arbitrator shall have the discretion to order a prehearing exchange of
information by the parties, including without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties. No party shall be allowed, however,
to take more than one deposition of the opposing party and no deposition shall
last longer than six (6) hours. All disputes regarding discovery shall be
decided by the arbitrator.
The arbitrator award shall be in writing and shall specify the factual and
legal bases for the award. In rendering the award, the arbitrator shall
determine the respective rights and obligations of the parties according to the
laws of the State of North Carolina or, if applicable, federal law. The
arbitrator shall have the authority to award any remedy or relief that a federal
or state court within the State of North Carolina could order or grant.
Any provisional remedy that would be available from a court of law shall be
available from the arbitrator to the parties, pending the arbitrator's
determination of the merits of the parties' dispute. This shall include orders
of attachment, temporary restraining orders, injunctions, and appointment of a
receiver. If the arbitrator issues such an order, either party may immediately
apply to a court of competent jurisdiction for enforcement of the order, even
though the arbitrator may not have rendered a final award.
All fees and expenses of the arbitration, including the fees of the
arbitrator and the expense of each parties' counsel, experts, witnesses and
preparation and presentation of proofs, shall be paid by Company.
Unless legally required to do so, neither party may disclose the existence,
content, or results of any arbitration under this Agreement without the prior
written consent of the other party, nor may the arbitrator disclose any such
information without the consent of both parties. This provision shall apply to
all aspects of the arbitration proceeding, including without limitation,
discovery, testimony, other evidence, briefs, and the award.
It is the specific intent of the parties that this arbitration clause be
governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et. seq. ("FAA");
however, if this cause is unenforceable for any reason under the FAA, then the
parties intend that it be governed by the provisions of the Uniform Arbitration
Act, N.C. Gen. Stat. (S)(S) 1-567.1 through 1-567.20.
Both Consultant and Company represent and warrant they have read the
foregoing Section 5.3, that they have had an opportunity to consult with and
receive advice from legal counsel regarding the foregoing Section 5.3, and that
they hereby forever waive all rights to assert that this Section 5.3 was the
result of duress, coercion, or mistake of law or fact.
_____ _____ (Initial of both parties in each space).
-7-
<PAGE>
5.5. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of North Carolina, not
including the choice of law rules thereof.
5.6. Survival of Agreements. All covenants and agreements made
----------------------
herein shall survive the execution and delivery of this Agreement and the
termination of Consultant's engagement hereunder for any reason.
5.7. Headings. The section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.8. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be deemed to be given
when delivered personally or mailed first class, registered or certified mail,
postage prepaid, in either case, addressed as follows:
(a) If to Consultant:
Mr. Harold S. Lichtin
1023 Cowper Drive
Raleigh, North Carolina 27608
with a copy to:
Mr. Alan H. Peterson
Kennedy Covington Lobdell & Hickman, L.L.P.
Two Hannover Square
434 Fayetteville Street Mall, Suite 1900
Raleigh, North Carolina 27602-1070
(b) If to the Company, addressed to:
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attention: Chief Executive Officer
with a copy to:
Mr. William B. Fryer
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
-8-
<PAGE>
5.9. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
5.10. Entire Agreement. This Agreement constitutes the
----------------
entire agreement of the parties with respect to the subject matter hereof and
upon the Effective Date will supersede and replace all prior agreements, written
and oral, between the parties hereto or with respect to the subject matter
hereof, including without limitation, the Employment Agreement by and between
Consultant and the Company dated December 31, 1996. Each of the Company and
Consultant hereby acknowledges and agrees that simultaneously with the execution
and delivery of this Agreement, the Employment Agreement by and between
Consultant and the Company dated December 31, 1996 shall be terminated and
thereafter deemed null, void and without further force or effect. This Agreement
may be modified only by a written instrument signed by each of the parties
hereto.
5.11. No Violation with Other Agreements. Nothing in
----------------------------------
this Agreement shall be deemed to interfere with or be in violation of any other
obligation of Consultant that may exist under other agreements to which
Consultant is a party; provided, however, that such other agreements do not
otherwise violate Section 1.1 hereof.
5.12. Amendment; Waiver. Except as otherwise expressly
-----------------
provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. Any waiver by any party or consent by
any party to any variation from any provision of this Agreement shall be valid
only if in writing and only in the specific instance in which it is given, and
such waiver or consent shall not be construed as a waiver of any other provision
or as a consent with respect to any similar instance or circumstance.
5.13. Severability. If fulfillment of any provision of
------------
this Agreement, at the time such fulfillment shall be due, shall
transcend the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such
validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement,
in whole in part, then such clause or provision only shall be held
ineffective to the extent of such invalidity, as though not herein
contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WEEKS CORPORATION
By:
--------------------------------
Title:
-----------------------------
CONSULTANT
----------------------------------
Harold S. Lichtin
<PAGE>
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WEEKS REALTY, L.P.
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF WEEKS REALTY, L.P. (the "Fourth Amendment"), dated as of August
1, 1997, is entered into by Weeks GP Holdings, Inc., as general partner (the
"General Partner") of Weeks Realty, L.P. (the "Partnership"), for itself and on
behalf of the Limited Partners of the Partnership.
RECITALS
--------
WHEREAS, on the date hereof, Harold S. Lichtin Family Limited Partnership,
a North Carolina limited partnership (the "Family Partnership"), has acquired
119,293 Partnership Units from Perimeter Park West Associates Limited
Partnership, a North Carolina limited partnership; 15,380 Partnership Units from
Regency Forest, LLC, a North Carolina limited liability company; 243,217
Partnership Units from Harold S. Lichtin, an individual resident of North
Carolina; and 1,228 Partnership Units from Noel A. Lichtin, an individual
resident of North Carolina;
WHEREAS, the Family Partnership has agreed pursuant to that certain
Agreement of Substitution dated as of the date hereof to be bound by all of the
terms, conditions and other provisions of the Second Amended and Restated
Agreement of Limited Partnership of the Partnership, as amended (the
"Partnership Agreement"); and
WHEREAS, pursuant to the Partnership Agreement (including, without
limitation, Section 9.2 and Section 15.7(b)(ii) thereof), the General Partner is
authorized (without the consent of any Limited Partner) to admit such
substituted Limited Partners to the Partnership as are determined by the General
Partner to be appropriate.
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the General Partner hereby amends the Partnership Agreement to
add the Family Partnership as a substituted Limited Partner of the Partnership
on the terms and conditions set forth in the Partnership Agreement. The
Percentage Interests of all of the Partners have been revised and are as set
forth on Exhibit A attached hereto.
---------
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Partnership Agreement. Except as modified
herein, all covenants, terms and conditions of the Partnership Agreement shall
remain in full force and effect, which covenants, terms and conditions the
General Partner hereby ratifies and affirms.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Fourth Amendment as
of the 1st day of August, 1997.
WEEKS GP HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----------- -------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.041%
Weeks LP Holdings, Inc. 17,446,123 76.434%
NWI Warehouse Group, L.P. 1,833,749 8.034%
A. Ray Weeks, Jr. 614,079 2.690%
John P. Weeks 239,791 1.051%
Marsha L. Weeks 228,047 0.999%
Trust U/W/1/ 212,663 0.932%
Patricia L. Weeks 206,607 0.905%
Deborah Weeks Felker 198,339 0.869%
Trust B/2/ 187,492 0.821%
Weeks Horizon Corp. 116,012 0.508%
Oakdale Land Management, Inc. 110,493 0.484%
Weeks Hillside Corp. 78,145 0.342%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.127%
Harry T. Weeks 27,535 0.121%
Louis C. Robinson 20,016 0.088%
Buckley & Company Real Estate, Inc. 20,000 0.088%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.023%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.714%
Mark W. Flowers 1,541 0.007%
</TABLE>
- -----------
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia
Louise Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks,
A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John
Phillip Weeks.
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----------- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,132 1.170%
Harold S. Lichtin 20,024 0.088%
Perimeter Park West Associates
Limited Partnership 64,689 0.283%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Regency Forest LLC 15,380 0.067%
Harold S. Lichtin Family Limited Partnership 342,569 1.501%
---------- --------
Total 22,825,030 100.000%
========== ========
</TABLE>
- -----------
<PAGE>
SIXTH AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WEEKS REALTY, L.P.
THIS SIXTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WEEKS REALTY, L.P. (the "Amendment") is entered into as
of the 27th day of October, 1997, by and among WEEKS GP HOLDINGS, INC., a
Georgia corporation (the "General Partner"), WEEKS CORPORATION, a Georgia
corporation (the "Company"), and GB PARTNERS, LTD., a Florida limited
partnership (the "Contributor").
RECITALS
--------
Weeks Realty, L.P. (the "Partnership") is a Georgia limited partnership.
The General Partner is the sole general partner of the Partnership and is a
wholly owned subsidiary of the Company. The partnership agreement of the
Partnership is that certain Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated as of October 30, 1996, as amended by
the First Amendment to the Partnership Agreement dated November 1, 1996, the
Second Amendment to the Partnership Agreement dated December 31, 1996, the Third
Amendment to the Partnership Agreement dated January 31, 1997, the Fourth
Amendment to the Partnership Agreement dated August 1, 1997 and the Fifth
Amendment to the Partnership Agreement dated October 7, 1997 (the "Partnership
Agreement"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Partnership Agreement.
Pursuant to the agreements and instruments listed or referred to on Exhibit
A hereto (the ("Transaction Documents"), and the transactions effected by the
Transaction Documents, effective as of the date hereof the Contributor has
<PAGE>
contributed, directly or indirectly, certain properties to the capital of the
Partnership.
Pursuant to that certain contribution agreement executed on the date hereof
by and among the Contributor, the Partnership and certain other parties
identified therein (the "Contribution Agreement"), the Partnership will
contribute such properties, through one or more steps, to an entity controlled,
directly or indirectly, by the Partnership.
Pursuant to the Partnership Agreement (including, without limitation,
Section 9.3 and Section 15.7(b)(ii) thereof), the General Partner is authorized
(without the consent of any Limited Partner) to admit additional Limited
Partners to the Partnership for such Capital Contributions as are determined by
the General Partner to be appropriate, and to amend the Partnership Agreement to
reflect such admissions.
The General Partner wishes to amend the Partnership Agreement as set forth
herein to reflect the admission of the Contributor as a Limited Partner of the
Partnership, and the Contributor wishes to enter into this Amendment to
memorialize its agreement as to certain matters relating to its becoming a
Limited Partner of the Partnership.
AGREEMENT
---------
In consideration of the circumstances referred to in the Recitals, the
consummation of the transactions effected pursuant to the Transaction Documents,
the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Admission. The Contributor is hereby admitted to the Partnership as a
---------
Limited Partner, effective as of the date hereof, and the Contributor hereby
-2-
<PAGE>
agrees to be bound by the Partnership Agreement, including, but not limited to,
the transfer restrictions contained in Article IX thereof.
2. Capital Contributions. The Contributor has made, as of the date
---------------------
hereof, the Capital Contribution set forth on Exhibit B hereto. The agreed to
gross fair market values of any property other than money contributed by the
Contributor, which shall be such property's initial Gross Asset Value, are shown
on Exhibit B.
3. Initial Partnership Units; Rights.
---------------------------------
(a) The Partnership Units attributable to the Partnership Interest of
the Contributor, effective upon its admission as a Limited Partner at the
date hereof, are as set forth on Exhibit B hereto, and the Partnership
Agreement is hereby amended to reflect the Contributor having such
Partnership Units.
(b) The Partnership does hereby grant to the Contributor, and the
Contributor does hereby accept, the right, but not the obligation (herein
such rights being sometimes referred to as the "Rights"), to require the
Partnership to redeem all or a portion of the Partnership Units issued to
it pursuant to the Transaction Documents, on the terms and subject to the
conditions and restrictions contained in Exhibit D hereto. The Rights are
governed solely by this Amendment and Exhibit D hereto, and the Contributor
shall have no rights with respect to the "Rights" provided for in Section
11.1 and Exhibit B-1 to the Partnership Agreement. The Rights granted
hereunder may be exercised by the Contributor, on the terms and subject to
the conditions and restrictions contained in Exhibit D hereto, upon
delivery to the Partnership of a Conversion Exercise Notice, in the form of
Schedule 1 attached to Exhibit D, which notice shall specify the
Partnership Units with respect to which the Rights are being exercised.
Once delivered, the Conversion Exercise Notice shall be irrevocable,
subject to compliance by the General Partner and the Partnership with the
terms of the Rights.
-3-
<PAGE>
4. Restated Percentage Interests. After giving effect to the admission
-----------------------------
of the Contributor as a Limited Partner at the date hereof, the Percentage
Interests of all of the Partners have been revised and are as reflected on
Exhibit C hereto, and the Partnership Agreement is hereby amended accordingly.
5. [INTENTIONALLY OMITTED.]
6. Adjustments to Partnership Units. The parties acknowledge that the
--------------------------------
Transaction Documents provide for adjustments to the Partnership Units of the
Contributor in certain circumstances, and further provide that the Contributor
Partnership Interest and Units, and the resulting restated Percentage Interests
of all of the Partners, may not be capable of determination at the time a
Capital Contribution is made after the date hereof. At the times of adjustment
and final determination provided for in the Transaction Documents, the General
Partner shall supplement this Amendment by executing and attaching hereto either
additional supplements to Exhibits B and C, or amended and restated versions of
prior supplements to Exhibits B and C, as applicable. Such supplements shall be
in accordance with the terms of the Transaction Documents. The Partnership
Agreement shall be deemed to be amended as reflected in each such supplement to
this Amendment.
7. Proration of Distributions. Notwithstanding any contrary provision of
--------------------------
the Partnership Agreement, including, without limitation, Section 6.2 thereof,
the Contributor agrees that the distribution of Net Operating Cash Flow made for
the calendar quarter in which the Units are issued shall be equal to the amount
of Net Operating Cash Flow otherwise distributable with respect to such under
the terms of the Partnership Agreement, multiplied by a fraction, the numerator
of which is the number of calendar days beginning on the date of issuance of the
Units and ending on the last day of such calendar quarter and the denominator of
which is the total number of days in the calendar quarter in which the Units are
issued.
-4-
<PAGE>
8. Representations and Warranties.
------------------------------
(a) Contributor's Representations. The Contributor hereby reaffirms
-----------------------------
and makes to each of the Partnership and the General Partner those
representations and warranties contained in Section 16 of the Contribution
Agreement. In addition, the Contributor hereby represents and warrants to
the Partnership and the General Partner that (i) such Contributor is
acquiring the Partnership Units for such Contributor's own account and not
with a view to, or for sale in connection with, the "distribution," as such
term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act"), of any of the Partnership Units in violation of the
Securities Act; (ii) such Contributor is an "accredited investor," as that
term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act; (iii) such Contributor understands that the Partnership
Units have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act
which depends upon, among other things, the nature of the investment intent
and the accuracy of such Contributor's representations as expressed herein;
(iv) such Contributor has had an opportunity to discuss the Partnership's
business, management and financial affairs with the Partnership's
management and the opportunity to review the Partnership's financial
records; (v) such Contributor understands and acknowledges that no public
market now exists for any of the Partnership Units and that there can be no
assurance that a public market will ever exist for the Partnership Units;
and (vi) such Contributor has such knowledge and experience in financial
and business matters, or has been adequately advised by such Contributor's
financial representatives, that such Contributor is capable of evaluating
the merits and risks of the purchase of the Partnership Units pursuant to
this Agreement and of protecting such Contributor's interests in connection
herewith.
(b) No Liens. The Contributor represents and warrants to the
--------
Partnership and the General Partner that at the date hereof none of the
Partnership Units issued or issuable to the Contributor pursuant to the
Transaction Documents, and none of the shares of Common Stock that may be
-5-
<PAGE>
acquired by the Contributor upon exercise of Rights, is subject to any
Lien, other than the security interest created by paragraph 11 hereof.
(c) Definition. All of the representations, warranties, covenants and
----------
agreements of the Contributor referred to in this paragraph 8 are referred
to collectively as the "Representations and Warranties."
(d) General Partner Representations. The General Partner represents
-------------------------------
and warrants to the Contributor as follows:
(i) Organization. The General Partner is duly incorporated,
------------
validly existing and in good standing under the laws of the State of
Georgia.
(ii) Due Authorization; Binding Agreement. The execution,
------------------------------------
delivery and performance of this Amendment by the General Partner have
been duly and validly authorized by all necessary action of the
General Partner and the Partnership. This Amendment has been duly
executed and delivered by the General Partner and constitutes a legal,
valid and binding obligation of the General Partner and the
Partnership, enforceable against the General Partner and the
Partnership in accordance with the terms hereof.
(iii) Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of, or filing, registration or qualification with, or
notice to, any governmental unit or any other Person is required to be
made, obtained or given by the General Partner in connection with the
execution, delivery and performance of this Amendment, other than
consents, waivers, approvals or authorizations that have been obtained
prior to the date hereof.
-6-
<PAGE>
(iv) Partnership Units. The Partnership Units issued pursuant
-----------------
to the Transaction Documents are duly authorized and, when issued in
accordance with the Transaction Documents, will be duly issued, fully
paid and nonassessable and will be unencumbered except for the
security interest created by paragraph 11 hereof.
9. Survival of Representations and Warranties. All of the
------------------------------------------
Representations and Warranties shall survive the consummation of the
transactions contemplated by the Transaction Documents; provided, however, that
no claim for a breach of any Representation or Warranty may be maintained by the
Partnership, the Company or the General Partner unless the Partnership, the
Company or the General Partner shall have delivered a written notice ("Notice of
Breach") specifying the details of such claimed breach to the Contributor or
before the first anniversary of the date hereof (the "Survival Period").
10. Indemnification.
---------------
(a) The Contributor indemnifies and holds harmless the Partnership,
the Company and the General Partner against and from all liabilities,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses actually incurred)
sustained or incurred by the Partnership, the Company or the General
Partner as a result of or arising out of any inaccuracy in or breach of a
Representation or Warranty.
(b) The Partnership, the Company and the General Partner shall not be
entitled to indemnification hereunder unless a Notice of Breach has been
delivered by the Partnership, the Company or the General Partner to the
Contributor.
(c) If a claim for indemnification is asserted by the Partnership, the
Company or the General Partner against the Contributor, the Contributor
shall have the right, at its own expense, to participate in the defense of
-7-
<PAGE>
any claim, action or proceeding asserted against the Partnership, the
Company or the General Partner that resulted in the claim for
indemnification, and if such right is exercised, the parties shall
cooperate in the defense of such action or proceeding.
(d) Indemnification of the Partnership, the Company and the General
Partner pursuant to this paragraph 10 shall be the exclusive remedy of the
Partnership, the Company and the General Partner for any breach of any
Representation or Warranty contained in this Amendment. Nothing contained
herein shall limit any remedy the Partnership (or any affiliate of the
Partnership including, without limitation, any affiliate of the Partnership
as determined with respect to the voting or economic control held by or in
the Partnership) may have under the Transaction Documents, including,
without limitation, the remedy of specific performance for any failure by
the Contributor to contribute a property or otherwise limit any remedy the
Partnership, the Company or the General Partner may have for any commission
of fraud made by the Contributor.
11. Security and Remedies.
---------------------
(a) The Contributor hereby grants to the Partnership a lien upon and a
continuing security interest in the Partnership Units issued to it pursuant
to the Transaction Documents and the shares of Common Stock acquired by it
upon exercise of Rights with respect to such Partnership Units (the
"Collateral"), which shall be security for the indemnification obligations
of the Contributor under paragraph 10 hereof. Except as otherwise provided
in this Amendment, the indemnification obligations of the Contributor
hereunder with respect to breaches of Representations and Warranties shall
be payable out of the Contributor's entire Collateral; provided, however,
that the Contributor may satisfy all or any part of such indemnification
obligation of the Contributor in cash if the Contributor so elects. Any
Transfer by the Contributor of its Collateral shall be subject to the lien
and security interest granted hereby.
-8-
<PAGE>
(b) In the event the General Partner asserts that the Contributor has
an indemnification obligation to the Partnership, the Company or the
General Partner under paragraph 10 hereof, the General Partner shall
deliver written notice (the "Indemnification Notice") to the Contributor
describing in reasonable detail the circumstances giving rise to such
obligation and the amount thereof. If, within thirty (30) days after the
receipt of an Indemnification Notice, the Contributor delivers written
notice to the General Partner indicating that the Contributor disputes the
circumstances giving rise to or the amount of such claimed indemnification
obligation, the General Partner may submit such matter for binding
arbitration in accordance with the provisions of Article XIV of the
Partnership Agreement by delivering a Demand Notice to the Contributor
pursuant to such Article XIV. If, after receiving timely notice of a
dispute hereunder from the Contributor, the General Partner fails to so
submit the matter for arbitration within twenty (20) days after receipt of
such notice from the Contributor, then the Contributor shall be relieved of
the claimed indemnification obligation described in the Indemnification
Notice. In the event the Contributor (i) receives an Indemnification
Notice and fails to timely deliver notice to the General Partner of its
dispute as to the indemnification obligation and fails to make payment
within thirty (30) days after delivery of an Indemnification Notice or (ii)
has an indemnification obligation to the Partnership or the General Partner
under paragraph 10 hereof as determined pursuant to Article XIV of the
Partnership Agreement, and does not satisfy such obligation within ten (10)
days after the decision rendered in the arbitration, then, in either event,
the Partnership shall have any and all remedies of a secured creditor under
the Uniform Commercial Code, and, in addition thereto, at the election of
the Partnership, the Partnership shall, to the extent permitted by law, be
deemed, without the payment of any further consideration or the taking of
any further action required by the Contributor, to have acquired from the
Contributor such portion of the Collateral as shall be equal in value
(based, in the case of Partnership Units, on the Current Per Share Market
Price as computed as of the date immediately preceding such deemed
acquisition of the number of shares of Common Stock for which such
Partnership Units could be redeemed if the General Partner assumed the
-9-
<PAGE>
redemption obligation and elected to pay the Redemption Price (as defined
in Exhibit D) in shares of Common Stock (assuming the ownership limits in
the Articles of Incorporation would not prohibit the issuance of any such
shares of Common Stock to the Contributor), and, in the case of shares of
Common Stock, on the Current Per Share Common Stock Price computed as of
the date immediately preceding such deemed acquisition) to the amount
recoverable from the Contributor under paragraph 10 hereof. In the event
the Partnership shall have acquired from the Contributor any Collateral
pursuant to this paragraph 11, the General Partner shall deliver written
notice to the Contributor within ten (10) days thereafter identifying the
specific Collateral acquired and, if such Collateral consists of
Partnership Units, the Percentage Interest of the Contributor following
such acquisition. Unless and until the Partnership shall have acquired
from the Contributor any Collateral pursuant to this paragraph 11, the
Contributor shall retain all rights with respect to the Collateral not
expressly limited herein or in the Partnership Agreement, including,
without limitation, rights to distributions provided for in the Partnership
Agreement and rights to dividends on shares of Common Stock. Contributor
hereby agrees to take any and all actions and to execute and deliver any
and all documents or instruments necessary to perfect the security interest
created by this Amendment, including delivering the certificates
representing the Partnership Units or shares of Common Stock to the General
Partner.
(c) On the first day immediately following the expiration of the
Survival Period as defined in paragraph 9 hereof (or, if a Notice of Breach
has been delivered to the Contributor prior to such date, then on the first
day immediately following the resolution of such Notice of Breach) the
Contributor will be relieved of the restrictions on transferability
provided for by this Amendment (except that the transfer restrictions
contained in the Partnership Agreement shall continue) and the security
interest in the Collateral shall terminate without further action, and the
Partnership, at the request of the Contributor, shall promptly execute and
deliver any document or instrument reasonably requested by the Contributor
to evidence such termination.
-10-
<PAGE>
12. Recourse. Notwithstanding anything contained in this Amendment or in
--------
the Partnership Agreement to the contrary, the recourse of the General Partner ,
the Company or the Partnership under paragraph 10 hereof with respect to
breaches of Representations and Warranties of the Contributor shall not be
limited to such Contributor's Collateral.
13. Restriction on Transfer. In connection with the security interest
-----------------------
granted by the Contributor under paragraph 11 hereof, the Contributor agrees
that any shares of Common Stock and any portion of such Contributor's
Partnership Interest included in the Collateral shall not be Transferred without
the consent of the General Partner; provided, however, that the Contributor may
Transfer all or any portion of such shares of Common Stock or Partnership
Interest to an Affiliate of such person (so long as such Affiliate remains an
Affiliate of such person), subject to the prior security interest granted in
paragraph 11 hereof and to the restrictions contained in Article IX of the
Partnership Agreement. Upon exercise of the Rights with respect to any
Partnership Units included in the Contributor's Collateral, the Partnership, in
perfection of the security interest herein granted, shall retain the
certificate(s) representing the portion of the Common Stock issued upon such
exercise that is included in such Collateral. If any portion of the Partnership
Interest of the Contributor included in such Contributor's Collateral is
represented by certificates, the Partnership shall retain such certificates in
perfection of the security interest herein granted. On the first day
immediately following the expiration of the Survival Period as defined in
paragraph 9 hereof (or, if a Notice of Breach has been delivered to the
Contributor prior to such date, then on the first day immediately following the
resolution of such Notice of Breach) the Contributor will be relieved of the
restrictions on transferability provided for by this paragraph 13 without
further action, and the Partnership, at the request of the Contributor, shall
promptly execute and deliver any document or instrument reasonably requested by
the Contributor to evidence such termination.
14. Miscellaneous. This Amendment shall be governed by and construed in
-------------
conformity with the laws of the State of Georgia. For the purposes of the
notice provisions of the Partnership Agreement, the address of the Contributor
is as set forth on the signature page hereof. Except as expressly amended
hereby, the Partnership Agreement shall remain in full force and effect. This
-11-
<PAGE>
Amendment and all the terms and provisions hereof shall be binding upon and
shall inure to the benefit of the parties, and their legal representatives,
heirs, successors and permitted assigns.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
WEEKS REALTY, L.P., a Georgia limited
partnership
By: Weeks GP Holdings, Inc., a Georgia
corporation, its Sole General Partner
By:
--------------------------------------
Name:
Title:
GB PARTNERS, LTD., a Florida limited
partnership
By:
--------------------------------------
Name:
Title:
Address:
Solely to evidence its agreement to its undertakings
in Exhibit D hereto:
WEEKS CORPORATION
By:
---------------------------------------
Name:
Title:
-13-
<PAGE>
Exhibit A
---------
TRANSACTION DOCUMENTS
-14-
<PAGE>
Exhibit B
---------
CAPITAL CONTRIBUTION:
- --------------------
GB Partners, Ltd. Capital Contribution: All assets, properties and businesses
transferred from GB Partners, Ltd. at
October 27, 1997 to the Partnership
pursuant to the Transaction Documents
(as defined in the foregoing Amendment)
GROSS FAIR MARKET VALUE OF PROPERTY CONTRIBUTIONS:
- -------------------------------------------------
Gross Fair Market Value of all
property other than money included in
GB Partners, Ltd. Contribution: $250,000.00
NO. OF UNITS: 7,633
- ------------
-15-
<PAGE>
Exhibit C
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----- -------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.037%
Weeks LP Holdings, Inc. 17,464,548 76.236%
NWI Warehouse Group, L.P. 1,833,749 8.005%
A. Ray Weeks, Jr. 614,079 2.681%
John P. Weeks 239,791 1.047%
Marsha L. Weeks 228,047 0.995%
Trust U/W/1/ 212,663 0.928%
Patricia L. Weeks 206,607 0.902%
Deborah Weeks Felker 198,339 0.866%
Trust B/2/ 187,492 0.818%
Weeks Horizon Corp. 116,012 0.506%
Oakdale Land Management, Inc. 110,493 0.482%
Weeks Hillside Corp. 78,145 0.341%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.126%
Harry T. Weeks 27,535 0.120%
Louis C. Robinson 20,016 0.087%
Buckley & Company Real Estate, Inc. 20,000 0.087%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.022%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.712%
Mark W. Flowers 1,541 0.007%
- ---------------------
</TABLE>
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise
Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks, A. R.
Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John Phillip Weeks.
C-1
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,419 1.167%
Harold S. Lichtin 28,154 0.123%
Noel A. Lichtin 153 0.001%
Perimeter Park West Associates
Limited Partnership 128,797 0.562%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Harold S. Lichtin Family Limited
Partnership 342,569 1.495%
GB Partners, Ltd. 7,633 0.033%
---------- --------
Total 22,908,386 100.000%
========== ========
</TABLE>
C-2
<PAGE>
Exhibit D
---------
RIGHTS TERMS
------------
The Rights granted by the Partnership to the Contributor (referred to in this
Exhibit as "Limited Partners"), pursuant to paragraph 3(b) of the foregoing
Amendment shall be subject to the following terms and conditions:
1.
Definitions. Capitalized terms used in this Exhibit without definition shall
- -----------
have the meanings given to them in the Partnership Agreement or the foregoing
Amendment, as applicable, and the following terms and phrases shall, for
purposes of this Exhibit D, the Partnership Agreement and the foregoing
Amendment, have the meanings set forth below:
"Cash Purchase Price" shall have the meaning set forth in Paragraph 4 hereof.
-------------------
"Closing Notice" shall mean the written notice to be given by the General
--------------
Partner to the Exercising Partner(s) in response to the receipt by the General
Partner of a Conversion Exercise Notice from such Exercising Partner(s). The
form of the Closing Notice is attached hereto as Schedule 2.
"Computation Date" shall mean the date on which a Conversion Exercise Notice is
----------------
delivered to the General Partner.
"Conversion Exercise Notice" shall have the meaning set forth in Paragraph 2
--------------------------
hereof.
"Conversion Factor" shall mean 100%, provided that such factor shall be adjusted
-----------------
in accordance with the provisions of paragraph 10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
------------
any successor statute.
"Exercising Partners" shall have the meaning set forth in Paragraph 2 hereof.
-------------------
"Offered Partnership Units" shall mean the Partnership Units of the Exercising
-------------------------
Partner(s) identified in a Conversion Exercise Notice that, pursuant to the
exercise of Rights, must be redeemed by the Partnership or acquired by the
General Partner and/or Weeks LP Holdings under the terms hereof.
"Redemption Price" shall mean the Cash Purchase Price or the Stock Purchase
----------------
Price.
"Rights" shall have the meaning set forth in paragraph 3(b) of the foregoing
------
Amendment.
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
successor statute.
"Stock Purchase Price" shall have the meaning set forth in Paragraph 4 hereof.
--------------------
2.
Delivery of Conversion Exercise Notices. Any one or more Limited Partners
- ---------------------------------------
("Exercising Partners") may, subject to the limitations set forth herein,
deliver to the General Partner written notice (the "Conversion Exercise Notice")
pursuant to which such Exercising Partners elect to exercise the Rights. The
form of Conversion Exercise Notice is attached hereto as Schedule 1.
3.
Limitations on Exercise of Rights; Deemed Exercise. No Conversion Exercise
- --------------------------------------------------
Notice, with respect to any Unit may be delivered to the General Partner by a
Limited Partner until the later of (i) the first anniversary of the date of each
such issuance, or (ii) the date on which either (A) there is a registration
statement effective under the Securities Act with respect to the issuance of any
shares of Common Stock that could be issued to such Limited Partner pursuant to
such exercise of Rights and with respect to any resale by such Limited Partner
of any of such shares of Common Stock, or (B) in the opinion of counsel to
Weeks, shares of Common Stock that could be issued to such Limited Partner
pursuant to such exercise of Rights may be issued without registration under the
Securities Act.
A Limited Partner may not exercise the Rights for less than one thousand (1,000)
Partnership Units or, if such Limited Partner holds less than one thousand
(1,000) Partnership Units, all of the Partnership Units held by such Limited
Partner.
Neither the General Partner nor the Partnership shall have any obligation or
authority to redeem or purchase Offered Partnership Units to the extent that
issuance of shares of Common Stock in payment of the Stock Purchase Price for
any part of the Offered Partnership Units would result (i) in the violation of
the General Ownership Limit (as such term is defined in the Articles of
Incorporation), (ii) would cause Weeks to fail the stock ownership test of
Section 856(a)(6) of the Code, or (iii) would otherwise cause Weeks to fail to
qualify as a REIT; provided that in any such case, the General Partner or the
Partnership shall purchase for cash those offered Partnership Units which may
not be redeemed with shares of Common Stock. Each Exercising Partner shall
provide to the General Partner such information as the General Partner may
request regarding such Exercising Partner's actual and constructive ownership of
Common Stock (and of individuals, and entities related to such Exercising
Partner) in order for the General Partner to determine, in its sole discretion,
whether a purchase or redemption of the Offered Partnership Units for shares of
Common Stock would result in a violation of such restrictions.
If, after complying with all applicable provisions of the Partnership Agreement,
any Person with an ownership interest in any of the Contributor becomes the
owner of any Partnership Units previously owned by the any of the Contributor,
-2-
<PAGE>
such Person may exercise the Rights granted with respect to such Partnership
Units in accordance with the terms hereof.
4.
Computation of Redemption Price/Form of Payment. The Redemption Price payable
- -----------------------------------------------
by the Partnership to each Exercising Partner for the Offered Partnership Units
shall be payable, at the election of the General Partner, by the delivery by the
Partnership of the Redemption Price. Notwithstanding the foregoing, at the
election of the General Partner, the Redemption Price may be the Stock Purchase
Price for part of the Offered Partnership Units and the Cash Purchase Price for
the remainder of the Offered Partnership Units. The "Stock Purchase Price"
shall mean the number of shares of Common Stock equal to the product, expressed
as a whole number, of (i) the number of Offered Partnership Units, multiplied by
(ii) the Conversion Factor. The "Cash Purchase Price" shall mean an amount of
cash (in immediately available funds) equal to (i) the number of shares of
Common Stock that would be issued to the Exercising Partner if the Stock
Purchase Price were paid for such Offered Partnership Units, multiplied by (ii)
the Current Per Share Market Price computed as of the Computation Date. To the
extent the Partnership elects to pay the Stock Purchase Price, it shall obtain
the necessary shares of Common Stock in exchange for the issuance of additional
Partnership Interests to the General Partner, Weeks LP Holdings, or any
combination thereof, as determined by the General Partner in its sole
discretion, and the General Partner and/or Weeks LP Holdings shall obtain the
necessary shares of Common Stock in exchange for the issuance of additional
capital stock to Weeks.
5.
Closing; Delivery of Closing Notice. The closing of the redemption of Offered
- -----------------------------------
Partnership Units shall, unless otherwise mutually agreed, be held at the
principal office of the Partnership, as follows:
(a) Within ten (10) days after the receipt by the Partnership of the Conversion
Exercise Notice, the Partnership shall deliver a Closing Notice to the
Exercising Partner(s). The Closing Notice shall state a date for the closing of
the redemption of the Offered Partnership Units, which date shall not be later
than the later of (i) twenty (20) days after the receipt by the Partnership of
the Conversion Exercise Notice (forty-five (45) days as to the Offered
Partnership Units for which the Cash Purchase Price will be paid), and (ii) the
first (1st) business day after the expiration or termination of the waiting
period applicable to each Exercising Partner, if any, under the Hart-Scott Act.
(b) If applicable, the Closing Notice shall (i) specify the Partnership's
election to pay the Cash Purchase Price for some or all of the Offered
Partnership Units and (ii) set forth the computation of the Cash Purchase Price
to be paid by the Partnership to such Exercising Partner(s). The Cash Purchase
Price shall be paid by wire transfer of immediately available funds to such
account of the Exercising Partner as is designated in the Conversion Exercise
Notice.
-3-
<PAGE>
6.
Assumption by the General Partner and/or Weeks LP Holdings. Notwithstanding
- ----------------------------------------------------------
anything in this Exhibit D to the contrary, the General Partner, Weeks LP
Holdings or any combination thereof (an "Assumer" or, collectively, the
"Assumers") may, in the sole and absolute discretion of the General Partner,
assume directly and satisfy the exercise of a Right by paying the Electing
Partner the Redemption Price. In such event, the Assumers shall acquire the
Offered Partnership Units and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units, which shall be held by the
Assumers in their respective existing capacities as general partner or Limited
Partners, as the case may be. In the event the General Partner shall exercise
the Assumers' right to satisfy a Right in the manner described in this Paragraph
6, the Partnership shall have no obligation to pay any amount to the Exercising
Partner with respect to such Exercising Partner's exercise of a Right; provided,
however, that the Partnership shall remain liable to the Exercising Partner to
the extent that any such Exercising Partner's Right is not fully satisfied; and
each of the Exercising Partner, the Partnership, and the Assumers shall treat
the transaction between the Assumers and the Exercising Partner as a sale of the
Exercising Partner's Partnership Units to the Assumers for federal income tax
purposes. To the extent the Assumers elect to pay the Stock Purchase Price,
they shall obtain the necessary shares of Common Stock in exchange for the
issuance of additional capital stock to Weeks. Each Exercising Partner agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of Common Stock upon exercise of a Right.
7.
Closing Deliveries. At the closing, payment of the Redemption Price shall be
- ------------------
accompanied by proper instruments of transfer and assignment for the Offered
Partnership Units and by the delivery of (i) representations and warranties of
(A) the Exercising Partner with respect to its due authority to sell all of the
right, title and interest in and to the Offered Partnership Units and with
respect to the status of the Offered Partnership Units being sold, free and
clear of all Liens, and (B) the Partnership or the Assumers, as applicable, with
respect to due authority for the redemption or purchase of such Offered
Partnership Units, and (ii) to the extent that shares of Common Stock are issued
in payment of the Stock Purchase Price, (A) an opinion of counsel for Weeks,
reasonably satisfactory to the Exercising Partner(s), to the effect that such
shares of Common Stock have been duly authorized, are validly issued, fully-paid
and nonassessable, and (b) a stock certificate or certificates evidencing the
Common Stock to be issued and registered in the name of the Exercising
Partner(s) or its (their) designee.
8.
Covenants of Weeks. To facilitate the Partnership's and the Assumers' ability
- ------------------
to fully perform their obligations hereunder, Weeks covenants and agrees as
follows:
(a) At all times during the pendency of the Rights, Weeks shall reserve for
issuance such number of shares of Common Stock as may be necessary to enable
Weeks to issue shares of Common Stock in full payment of the Stock Purchase
-4-
<PAGE>
Price in regard to all Partnership Units that are from time to time outstanding
and with respect to which Rights exist.
(b) During the pendency of the Rights, the Limited Partners shall receive in a
timely manner all communications transmitted from time to time by Weeks to its
shareholders generally.
9.
Limited Partners' Covenants. Each Limited Partner covenants and agrees that all
- ---------------------------
Offered Partnership Units tendered in accordance with the exercise of Rights
shall be delivered free and clear of all Liens. Should any Liens exist or arise
with respect to such Offered Partnership Units, neither the Assumers nor the
Partnership shall be under any obligation to redeem or acquire the same unless,
in connection therewith, the General Partner has elected to pay a portion of the
Redemption Price in the form of the Cash Purchase Price in circumstances in
which such Cash Purchase Price will be sufficient to cause such existing Lien to
be discharged in full upon application of all or a part of the Cash Purchase
Price. The Partnership and the Assumers are expressly authorized to apply such
portion of the Cash Purchase Price as may be necessary to discharge such Lien in
full. Each Limited Partner further agrees that, in the event any state or local
property transfer tax is payable as a result of the transfer of its Offered
Partnership Units to the Partnership or the Assumers, such Limited Partner shall
assume and pay such transfer tax.
10.
Antidilution Provisions
- -----------------------
(a) The Conversion Factor shall be subject to adjustment from time to time
effective upon the occurrence of the following events and shall be expressed as
a percentage, calculated to the nearest one-thousandth of one percent (.001%):
(i) In case Weeks shall pay or make a dividend or other distribution on any
class of stock of Weeks in shares of Common Stock, the Conversion Factor in
effect at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be increased in proportion to the increase in outstanding
shares of Common Stock resulting from such dividend or other distribution, such
increase to become effective immediately after the opening of business on the
day following the record date fixed for such dividend or other distribution.
(ii) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares, the Conversion Factor in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Conversion Factor in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
-5-
<PAGE>
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(iii) In case Weeks shall issue rights, options or warrants to all holders of
its shares of Common Stock entitling them to subscribe for or purchase Common
Stock or other securities convertible into shares of Common Stock at a price per
share less than the Current Per Share Market Price as of the day before the "ex
date" with respect to the issuance or distribution, each Limited Partner holding
Rights shall be entitled to receive such number of such rights, options or
warrants, as the case may be, as he would have been entitled to receive had he
exercised all of his then existing Rights immediately prior to the record date
for such issuance by Weeks. The term "ex date" shall mean the first date on
which shares of Common Stock trade regular way without the right to receive such
issuance or distribution.
(c) In case the shares of Common Stock shall be changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than subdivision or
combination of shares described in subparagraph (a) (ii) of this Paragraph),
then and in each such event the Limited Partners holding Rights shall have the
right thereafter to exercise their Rights for the kind and amount of shares and
other securities and property that would have been received upon such
reorganization, reclassification or other change by holders of the number of
shares of Common Stock with respect to which such Rights could have been
exercised immediately prior to such reorganization, reclassification or change.
(d) The General Partner may, but shall not be required to, make such adjustments
to the number of shares of Common Stock issuable upon exercise of Rights, in
addition to those required by this Paragraph 10, as the General Partner
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients. The General Partner shall have the power to resolve any ambiguity
or correct any error in the adjustments made pursuant to this Paragraph and its
actions in so doing shall be final and conclusive, absent manifest error by the
General Partner in taking such action.
11.
Fractions of Shares. No fractional shares of Common Stock shall be issued upon
- -------------------
exercise of Rights. If Rights shall be exercised with respect to more than one
Offered Partnership Unit at one time by the same Exercising Partner, the number
of full shares of Common Stock comprising the Stock Purchase Price (or the cash
equivalent amount thereof to the extent the Cash Purchase Price is paid) shall
be computed on the basis of the aggregate number of Offered Partnership Units.
Instead of any fractional share of Common Stock that would otherwise be issuable
upon exercise of Rights, the Partnership or the Assumers shall pay a cash
adjustment in respect of such fraction in an amount equal to the Cash Purchase
Price computed hereunder for such fraction of a share.
-6-
<PAGE>
12.
Notice of Adjustments of Conversion Factor. Whenever the Conversion Factor is
- ------------------------------------------
adjusted as herein provided:
(a) the General Partner shall compute the adjusted Conversion Factor in
accordance with Paragraph 10 hereof and shall prepare a certificate signed by
the chief financial officer or the Treasurer of the General Partner setting
forth the adjusted Conversion Factor and showing in reasonable detail the facts
upon which such adjustment is based; and
(b) notice stating that the Conversion Factor has been adjusted and setting
forth the adjusted Conversion Factor shall forthwith be mailed by the General
Partner to all holders of Rights at their last addresses on record under this
Agreement.
13.
Notice of Certain Corporate Actions.
- -----------------------------------
In case:
(a) Weeks shall declare a dividend (or any other distribution) on its Common
Stock payable otherwise than in cash; or
(b) Weeks shall authorize the granting to the holders of its Common Stock of
rights, options or warrants to subscribe for or purchase any shares of stock of
any class or of any other rights; or
(c) of any reclassification of the shares of Common Stock (other than a
subdivision or combination of its outstanding Common Stock, or of any
consolidation, merger or share exchange to which Weeks is a party and for which
approval of any shareholders of Weeks is required), or of the sale or transfer
of all or substantially all of the assets of Weeks; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up of
Weeks;
then the General Partner shall cause to be mailed to all holders of Rights at
their last addresses on record under this Agreement, at least 20 days (or 12
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined, or (ii) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of shares of
Common Stock of record shall be entitled to exchange their shares for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up.
-7-
<PAGE>
14.
Provisions in Case of Consolidation, Merger or Sale of Assets.
- -------------------------------------------------------------
In case of any consolidation of Weeks with, or merger of Weeks into, any other
Person, any merger or consolidation of another Person into Weeks (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), any acquisition of the
outstanding Common Stock by share exchange, or any sale or transfer of all or
substantially all of the assets of Weeks, the Person formed by such
consolidation or resulting from such merger or that acquires the outstanding
Common Stock or such assets of Weeks as the case may be, shall execute and
deliver to each holder of Rights an agreement providing that such holder shall
have the right thereafter, during the period such rights shall be exercisable
(which shall be at least as long as the period for which the Rights can be
exercised under the other provisions of this Agreement), to exercise the Rights
for the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, share exchange, sale or transfer by a holder of the
number of shares of Common Stock for which the Rights might have been exercised
immediately prior to such consolidation, merger, share exchange, sale or
transfer, assuming both that (a) such holder of shares of Common Stock is not a
Person with which Weeks consolidated or into which Weeks merged or that merged
into Weeks, or that acquired the outstanding Common Stock by share exchange, or
to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person, and that (b) such holder does
not exercise his right of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or transfer (provided that if the kind or amount of
--------
securities, cash and other property receivable upon such consolidation, merger,
share exchange, sale or transfer is not the same for each share of Common Stock
in respect of which such right of election, if any, is not exercised ("non-
electing Share"), then for the purpose of this Paragraph 14, the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, share exchange, sale or transfer by each non-electing Share shall be
deemed to be the kind and amount so receivable per non-electing Share by a
plurality of the non-electing Shares). Such agreement shall provide for
adjustments that, for events subsequent to the effective date of such agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Exhibit D.
The above provisions of this Paragraph 14 shall similarly apply to successive
consolidations, mergers, sales or transfers.
-8-
<PAGE>
SCHEDULE 1
CONVERSION EXERCISE NOTICE
--------------------------
To: Weeks Realty, L.P.
Reference is made to that certain Sixth Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meanings set forth in Amendment. Pursuant to Exhibit D to the
Amendment, the undersigned, being a limited partner of the Partnership (an
"Exercising Partner"), hereby elects to exercise its Rights as to the number of
Offered Partnership Units specified opposite its name below:
Number of Offered
Exercising Limited Partner
--------------------------
Partnership Units
-----------------
---------------------------------------
Signature of Exercising Limited Partner
Date:
---------------------------------
<PAGE>
SCHEDULE 2
CLOSING NOTICE
--------------
To: Exercising Limited Partner(s)
Reference is made to that certain Sixth Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meaning set forth in Amendment. The closing of the redemption of
the Offered Partnership Units shall occur at _______, ________, Georgia, on
___________. Pursuant to Exhibit D to the Amendment, the Partnership hereby
notifies the Exercising Partner(s) that it has elected to pay the Cash Purchase
Price to the Exercising Partner(s) for the number of Offered Partnership Units
set forth below, and that the computation of the Cash Purchase Price is set
forth on an attachment hereto
NUMBER OF OFFERED CASH PURCHASE
EXERCISING PARTNER(S) PARTNERSHIP UNITS PRICE
- --------------------- ----------------- -------------
WEEKS REALTY, L.P.
By: Weeks GP Holdings, Inc., General Partner
By:
---------------------------
Title:
--------------------
Date:
--------------------------------
<PAGE>
SEVENTH AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WEEKS REALTY, L.P.
THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF WEEKS REALTY, L.P. (the "Fourth Amendment"), dated as of December
30, 1997, and effective as of August 1, 1997, is entered into by Weeks GP
Holdings, Inc., as general partner (the "General Partner") of Weeks Realty, L.P.
(the "Partnership"), for itself and on behalf of the Limited Partners of the
Partnership.
RECITALS
--------
WHEREAS, on August 1, 1997, Harold S. Lichtin Family Limited Partnership, a
North Carolina limited partnership (the "Family Partnership"), acquired 119,293
Partnership Units from Perimeter Park West Associates Limited Partnership, a
North Carolina limited partnership ("PPW"); 15,380 Partnership Units from
Regency Forest, LLC, a North Carolina limited liability company ("Regency
Forest"); 243,217 Partnership Units from Harold S. Lichtin, an individual
resident of North Carolina; and 1,228 Partnership Units from Noel A. Lichtin, an
individual resident of North Carolina;
WHEREAS, the Family Partnership agreed pursuant to that certain Agreement
of Substitution dated as of August 1, 1997 to be bound by all of the terms,
conditions and other provisions of the Second Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended (the "Partnership
Agreement");
WHEREAS, it has come to the attention of the General Partner, Regency
Forest and PPW that due to a scrivener's error, 15,380 Units owned by Regency
Forest and 21,169 Units owned by PPW were inadvertently transferred to the
Family Partnership;
WHEREAS, the General Partner, Regency Forest and PPW have consistently
operated as if the inadvertent transfers had not taken place for all internal
purposes, including without limitation, any allocations or distributions; and
WHEREAS, the General Partner, Regency Forest and PPW desire to correct and
amend the foregoing scrivener's error and to attach hereto a true, correct and
complete copy of the Percentage Interests of all of the Partners as of August 1,
1997.
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the General Partner hereby attaches hereto as Exhibit A a
---------
schedule which sets forth the Percentage Interests of all of the Partners as of
August 1, 1997.
<PAGE>
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Partnership Agreement. Except as modified
herein, all covenants, terms and conditions of the Partnership Agreement shall
remain in full force and effect, which covenants, terms and conditions the
General Partner hereby ratifies and affirms.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Seventh Amendment as
of the December ___, 1997, effective as of August 1, 1997.
WEEKS GP HOLDINGS, INC.
By:_______________________________
Name:
Title:
<PAGE>
Exhibit A
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ---------- --------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.041%
Weeks LP Holdings, Inc. 17,446,123 6.434%
NWI Warehouse Group, L.P. 1,833,749 8.034%
A. Ray Weeks, Jr. 614,079 2.690%
John P. Weeks 239,791 1.051%
Marsha L. Weeks 228,047 0.999%
Trust U/W/1/ 212,663 0.932%
Patricia L. Weeks 206,607 0.905%
Deborah Weeks Felker 198,339 0.869%
Trust B/2/ 187,492 0.821%
Weeks Horizon Corp. 116,012 0.508%
Oakdale Land Management, Inc. 110,493 0.484%
Weeks Hillside Corp. 78,145 0.342%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.127%
Harry T. Weeks 27,535 0.121%
Louis C. Robinson 20,016 0.088%
Buckley & Company Real Estate, Inc. 20,000 0.088%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.023%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.714%
Mark W. Flowers 1,541 0.007%
- ------------
</TABLE>
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise
Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks, A. R.
Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John Phillip Weeks.
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ---------- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,132 1.170%
Harold S. Lichtin 20,024 0.088%
Perimeter Park West Associates
Limited Partnership 64,689 0.283%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Regency Forest LLC 15,380 0.067%
Harold S. Lichtin Family Limited Partnership 342,569 1.501%
---------- -------
Total 22,825,030 100.000%
========== =======
</TABLE>
<PAGE>
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
---------------------------------------
This Release, entered into and delivered by Weeks Corporation, a Georgia
corporation, and its affiliated and related companies listed in Attachment I
(all of the foregoing are hereinafter collectively referred to as "Releasees"),
on the one hand, and Harold S. Lichtin, a North Carolina resident (hereinafter
referred to as "Employee"), on the other hand, as of December 30, 1997,
effective as of October 1, 1997.
W I T N E S S E T H:
-------------------
For and in consideration of the covenants and agreements set forth in this
Release and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Release agree as follows:
COVENANTS OF RELEASEES:
- ----------------------
1. Consulting Agreement. Releasees agree to execute and enter into a
--------------------
consulting agreement with Employee on such terms and conditions as are set forth
in the Consulting Agreement (the "Consulting Agreement") attached hereto as
Exhibit A.
- ---------
2. Stock Options. Releasees agree that the options granted to Employee as
-------------
of December 31, 1996, to purchase 40,000 shares of Weeks Corporation common
stock shall remain fully vested and exercisable for so long as Employee
continues to serve as a member of the Board of Directors of Weeks Corporation
and shall be governed by such terms and conditions as are set forth in the
Amended and Restated Option Certificate attached hereto as Exhibit B.
---------
3. References and Announcements. The parties agree that neither party
----------------------------
shall defame, disparage, or malign the other. The parties agree to direct all
requests for references concerning Employee to Mr. A. Ray Weeks, Jr.
4. Non-Employee Director Compensation. Releasees agree that if Employee
----------------------------------
shall cease to be engaged by Weeks Corporation pursuant to the Consulting
Agreement and Employee is still a member of the Board of Directors of Weeks
Corporation, Employee shall be entitled to continue to receive the same
compensation which is made available to other non-employee directors of Weeks
Corporation during the remainder of his service on the Board of Directors of
Weeks Corporation.
5. Release and Covenant Not to Assert Claims. Releasees for themselves,
-----------------------------------------
their subsidiaries, affiliates, successors in interest and assigns do hereby
unconditionally, absolutely and irrevocably waive, release and forever discharge
and covenant not to sue (or request arbitration in any court or other tribunal)
the Employee from any and all claims, demands, actions, causes of action of any
kind or nature, whether past or present, known or unknown, arising up to the
date of this Release from or in any way related to Employee's employment,
<PAGE>
termination of employment or in any other way involving Employee, except any
fraudulent or "wilful misconduct" by Employee; provided, however, that Releasees
do not release Employee from any claims, demands, actions, causes of action of
any kind or nature, whether past or present, known or unknown, contingent or
incurred, arising up to or after the date of this Release under those agreements
set forth on Attachment II; and, provided further, that Employee does not waive
any of his defenses to the foregoing claims, demands or actions. For purposes
of this Release, "wilful misconduct" shall mean any volitional, intentional or
deliberate actions taken by Employee which involve illegality, violation of law,
discrimination, moral turpitude or other similar actions.
COVENANTS OF EMPLOYEE:
- ---------------------
6. Resignation. Employee agrees that he has voluntarily resigned as of
-----------
the date hereof ("Resignation Date") as an officer and employee of Releasees, as
a member of the Investment Committee of Weeks Corporation and as a member of the
Chairman's Office of Weeks Corporation.
7. Release and Covenant Not to Assert Claims. Employee hereby
-----------------------------------------
knowingly and voluntarily releases and forever discharges and covenants not to
sue (or request arbitration in any court or other tribunal) each and all of the
Releasees, including all officers, directors, employees, agents, and attorneys,
including those listed on Attachment I to this Release (also referred to in this
Release as "Releasees"), collectively and severally, from any and all charges,
claims, allegations, causes of action and liability whatsoever, which might or
could have been filed in any state or federal court or with any administrative
agency or commission, whether known or unknown, suspected or unsuspected,
including any claim arising under the Age Discrimination in Employment Act of
1967 ("ADEA"), 29 U.S.C. (S)621, et seq., the Employee Retirement Income
------
Security Act of 1974, as amended, and any other federal or state statute or
regulation, for any and all legal and equitable remedies, relief, and results,
including but not limited to salary, benefits, allowances, back pay, front pay,
liquidated damages, punitive damages, compensatory damages, tort damages,
contract damages, interest, restitution, attorneys' fees, expenses, costs,
declaratory judgments, injunctive relief, hiring, employment, reemployment,
recall, and reinstatement; provided, however, that Employee does not release
Releasees from any claims, demands, actions, causes of action of any kind or
nature, whether past or present, known or unknown, contingent or incurred,
arising up to or after the date of this Release (i) under those agreements set
forth on Attachment II, and (ii) under the 401(k) Plan maintained by Releasees;
and, provided further, that Releasees do not waive any of their defenses to the
foregoing claims, demands and actions. Employee also does not hereby waive any
rights or claims under the ADEA that may arise after the date this Release is
executed. In the event Employee institutes or is a party to any charge, claim,
allegation or cause of action with respect to a released claim, the same will be
dismissed immediately upon presentation of this Release.
8. Joint and Several Release. Employee understands and agrees that the
-------------------------
term "Releasees" as used in this Release shall be deemed to mean and have
reference collectively, separately, and severally to each and all of the
entities and persons defined as Releasees.
9. Release of Claims. Employee understands and agrees that this Release
-----------------
-2-
<PAGE>
constitutes a complete, final, and binding settlement, release and covenant not
to sue with respect to all claims he has against Releasees, including but not
limited to all claims arising out of any oral or written contracts, agreements,
partnerships, joint ventures, or employment relationships, currently in force,
contemplated, or concluded between Employee and Releasees (including any
officers, directors or employees of Releasees); provided, however, that Employee
does not release Releasees from any claims, demands, actions, causes of action
of any kind or nature, whether past or present, known or unknown, contingent or
incurred, arising up to or after the date of this Release under those agreements
set forth on Attachment II; and, provided further, that Releasees do not waive
any of their defenses to the foregoing claims, demands and actions.
10. No Coercion. Employee acknowledges he has had an opportunity to
-----------
consult with his own attorney, and Employee acknowledges and agrees that he
executed this Release knowingly and voluntarily and not as the result of duress,
coercion, or mistake of law or fact.
11. Covenant Not to Assist Others Pursuing Claims. Employee covenants
---------------------------------------------
that he will not affirmatively counsel or assist others in the prosecution of
claims against Releasees (which have been released pursuant to the terms of this
Release) whether on behalf of himself or others; although Employee may provide
truthful testimony in response to a valid subpoena.
12. ADEA Waiver. Employee hereby acknowledges and represents that he has
-----------
had the opportunity to take a period of at least twenty-one (21) days to
consider the terms of this Release; Releasees have advised Employee in writing
to consult with an attorney prior to executing this Release; Employee has had an
opportunity to seek the advice of an attorney of his choosing prior to executing
this Release; and Employee has received good and valuable consideration to which
he is otherwise not entitled in exchange for his execution of this Release,
including, without limitation, the agreements and accommodations provided for in
Sections 1 and 2 of this Release.
13. Revocation Period. Employee and Releasees hereby acknowledge that
-----------------
Employee may revoke this Release within seven (7) days from the date of the
execution of this Release, and that this Release shall not become effective or
enforceable until the eighth day after the Release has been executed, or January
6, 1997 ("Effective Date"). In the event Employee chooses to exercise his
option to revoke this Release, Employee shall deliver a written revocation
notice to A. Ray Weeks, Jr., Weeks Corporation, 4497 Park Drive, Norcross,
Georgia 30093 (Fax No. 770/717-3310) which must be received no later than 5:00
pm. on the day before the Effective Date.
14. All Claims Waived. Employee understands and agrees that the
-----------------
agreements and accommodations provided for in Sections 1 and 2 of this Release
include and encompass therein any and all claims with respect to attorneys'
fees, costs, and expenses for or by any and all attorneys who have represented
him, with whom he has consulted, or who have done anything in connection with
the subject matter of this Release or any and all claims released herein.
-3-
<PAGE>
15. Agreement to Cooperate. Employee agrees that he will provide
----------------------
reasonable cooperation to and assist Releasees as reasonably requested so long
as he is receiving payments pursuant to the Consulting Agreement regarding
business matters as to which he has knowledge, including providing timely
assistance in response to questions regarding projects and matters in which he
was involved and documents and reports he created.
16. Understanding; Consultation with Attorney. Employee hereby covenants
-----------------------------------------
and agrees that he has read and fully understands the contents and the effect of
this Release. Employee warrants and agrees that he has had an opportunity to
seek the advice of his own attorney as to such content and effect and to have
the terms of the Release explained to him by an attorney. Employee accepts each
and all of the terms, provisions, and conditions of this Release, and does so
voluntarily and with full knowledge and understanding of the contents, nature,
and effect of this Release.
MUTUAL COVENANTS:
- ----------------
17. Amendments to Noncompetition Agreement. Each of Employee and the
--------------------------------------
Releasees which are parties to that certain Noncompetition Agreement dated as of
December 31, 1996 (the "Noncompetition Agreement"), a copy of which is attached
hereto as Exhibit C, hereby agree to the following amendments and modifications
---------
to the Noncompetition Agreement:
(a) Each and every reference in the Noncompetition Agreement to
"Executive" is hereby deleted and replaced with "Consultant".
(b) Section 1 of the Noncompetition Agreement is hereby amended by
adding the following definition immediately after the defined term
"Company":
"Consulting Agreement" shall mean the Consulting Agreement, of even
date herewith, between Consultant and Weeks Corporation.
(c) Section 1 of the Noncompetition Agreement is hereby amended by
deleting the definition of "Managerial Responsibilities" in its entirety
and replacing it with the following:
"Managerial Responsibilities" means managerial and supervisory
responsibilities and duties of the kind contemplated by the Consulting
Agreement, the Employment Agreement or otherwise substantially similar
to those that Consultant has performed for the Company at any time
during his employment by the Company or, in the event that
Consultant's engagement by the Company is terminated, within two years
immediately prior thereto.
(d) Section 1 of the Noncompetition Agreement is hereby amended by
deleting the definition of "Restricted Period" in its entirety and
replacing it with the following:
-4-
<PAGE>
"Restricted Period" means from the Effective Date until the later of
(a) December 31, 1999 or (b) one year following the end of
Consultant's engagement by the Company, subject to the provisions of
Section 4 hereof.
(e) Section 3(d) of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
(d) At the termination of Consultant's engagement under the
Consulting Agreement, Consultant shall return to the Company all
documentation and other tangible materials in his possession
containing the Company's Trade Secrets or Confidential Information.
(f) Section 4 of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
4. Adjustments to Restricted Period. If Consultant's engagement
--------------------------------
under the Consulting Agreement is terminated and such termination is a
No Cause Termination or an Employee-Initiated Termination (as defined
in the Consulting Agreement), the Restricted Period shall continue
until what would have been (absent such termination) the end of
Consultant's then current term of engagement under such Consulting
Agreement.
(g) Section 6 of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
6. Restrictions In Addition to Consulting Agreement. Consultant
------------------------------------------------
acknowledges that the restrictions, prohibitions and other provisions
hereof shall be in addition to and not in substitution of the
restrictions, prohibitions and other provisions of the Consulting
Agreement, as such agreement shall be amended and supplemented from
time to time.
(h) Section 9 of the Noncompetition Agreement is hereby amended by
adding the following provision immediately after Section 9(j):
(k) Each of the parties hereto agrees that each and every
reference in this Agreement to "employment by the Company" shall be
deemed to include within its coverage both employment by the Company
pursuant to the Employment Agreement and engagement by the Company
pursuant to the Consulting Agreement.
(i) Schedule A to the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
-5-
<PAGE>
Consultant will be permitted to continue to (i) serve as an officer
and director of Lichtin, Inc., the general partner of the Harold S.
Lichtin Family Limited Partnership, the purposes for which are limited
to investment activities, (ii) serve as an officer and director of
First Class Child Development Center, Inc., and (iii) develop an
approximately 40,000 square foot office building on the site located
on Edwards Mill Road, Raleigh, North Carolina.
18. Waiver Valid Notwithstanding Discovery of New Facts. Employee and
---------------------------------------------------
Releasees further acknowledge that they may hereafter discover facts different
from or in addition to those which they now know or believe to be true with
respect to the potential claims released by each other and they agree that, in
such event, this Release shall nevertheless be and remain effective in all
respects, notwithstanding such different or additional facts, or the discovery
thereof.
19. Agreement to Hold Harmless. Employee and Releasees agree and covenant
--------------------------
that, in the event this Release is breached by either party, the breaching party
agrees to hold the nonbreaching party harmless, subject, in each case, to the
arbitration provisions contained in Section 26 hereof.
20. No Liability and Confidentiality. Employee and Releasees acknowledge
--------------------------------
and recognize that the terms set forth in this Release are based on their mutual
desire to resolve certain claims, contentions, and causes of action without the
time and expense of contested litigation and the terms of this Release are in no
way an admission or implication of any wrongdoing by either party. Accordingly,
Employee and Releasees agree not to disclose any information whatsoever
regarding either the substance or existence of any claims governed by the
Release, or to disclose the existence or terms of the Release to anyone,
including but not limited to any news media, other than his immediate family and
legal and tax advisors, unless compelled to do so by a valid subpoena or
government tax audit. Releasees further agree to provide Employee with copies
of all press releases or other public announcements made with respect to
Employee's termination of employment. If Employee or Releasees are subpoenaed
or audited regarding this Release or Employee's employment with any of the
Releasees, Employee and Releasees agree to give the other immediate written
notice of the same. Employee shall provide such written notice to A. R. Weeks,
Jr., or his successor.
21. Construction. Each party has reviewed this Release, and, accordingly,
------------
agrees that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party will not be employed in any
interpretation of this Release.
22. Choice of Law and Jurisdiction. The parties mutually agree and
------------------------------
stipulate that this Release, and other documents incorporated by reference
herein, including their validity and interpretation, shall be governed by the
law of North Carolina.
23. Attorneys' Fees and Costs. Except as expressly provided in this
-------------------------
Release, each party will bear his or its own attorneys' fees and costs.
-6-
<PAGE>
24. Severability. In the event any provision of this Release should
------------
be held to be unenforceable, each and all of the other provisions of this
Release shall remain in full force and effect.
25. No Assignment. Employee represents and warrants that he has not
-------------
heretofore assigned or transferred or purported to assign or transfer to any
person or entity not a signatory to this Release any claim or matter herein
released, disclaimed, discharged or terminated. In the event of such assignment
or transfer of any claims or other matters herein released, discharged,
terminated or disclaimed herein, Employee agrees to indemnify and hold harmless
Releasees from and against any liability or loss, and for any cost or expense,
including attorneys' fees, or judgment or settlement arising out of or
occasioned by any such assignment or transfer.
26. Arbitration. If a dispute arises between the parties, then the parties
-----------
agree that their respective representatives shall meet and consult in good faith
and attempt to settle the dispute, within thirty (30) days of written notice
thereof, as a condition precedent to the initiation of arbitration proceedings
as set forth below.
Any dispute, controversy, or claim arising out of or relating to this
Release or the breach, termination or invalidity thereof, including claims of
tortious interference or other tort or statutory claims, and including without
limitation any dispute concerning the scope of this arbitration clause, shall be
settled by arbitration in accordance with the Employment Dispute Arbitration
Rules of the American Arbitrators Association then in effect. The judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration under this Release shall be held in
Raleigh, North Carolina, or at such other place as may be selected by mutual
agreement of the parties.
The arbitrator shall be mutually acceptable to the parties, or failing
agreement, selected pursuant to the Employment Dispute Arbitration Rules of the
American Arbitrators Association. The parties intend that the arbitrator shall
be independent and impartial. To this end, the arbitrator shall disclose to the
parties any professional, family, or social relationships, past or present, with
any party or counsel.
Strict rules of evidence shall not apply in any arbitration conducted
pursuant to this Release. The parties may offer such evidence as they desire
and the arbitrator shall accept such evidence as the arbitrator deems relevant
to the issues and accord it such weight as the arbitrator deems appropriate.
The arbitrator shall have the discretion to order a prehearing exchange of
information by the parties, including without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties. No party shall be allowed, however,
to take more than one deposition of the opposing party and no deposition shall
last longer than six (6) hours. All disputes regarding discovery shall be
decided by the arbitrator.
The arbitrator award shall be in writing and shall specify the factual and
legal bases for the award. In rendering the award, the arbitrator shall
determine the respective rights and obligations of the parties according to the
laws of the State of North Carolina or, if applicable, federal law. The
arbitrator shall have the authority to award any remedy or relief that a federal
-7-
<PAGE>
or state court within the State of North Carolina could order or grant.
Any provisional remedy that would be available from a court of law shall be
available from the arbitrator to the parties, pending the arbitrator's
determination of the merits of the parties' dispute. This shall include orders
of attachment, temporary restraining orders, injunctions, and appointment of a
receiver. If the arbitrator issues such an order, either party may immediately
apply to a court of competent jurisdiction for enforcement of the order, even
though the arbitrator may not have rendered a final award.
All fees and expenses of the arbitration, including the fees of the
arbitrator and the expense of each parties' counsel, experts, witnesses and
preparation and presentation of proofs, shall be paid by Releasees.
Unless legally required to do so, neither party may disclose the existence,
content, or results of any arbitration under this Release without the prior
written consent of the other party, nor may the arbitrator disclose any such
information without the consent of both parties. This provision shall apply to
all aspects of the arbitration proceeding, including without limitation,
discovery, testimony, other evidence, briefs, and the award.
It is the specific intent of the parties that this arbitration clause be
governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et. seq. ("FAA");
however, if this cause is unenforceable for any reason under the FAA, then the
parties intend that it be governed by the provisions of the Uniform Arbitration
Act, N.C. Gen. Stat. (SS) 1-567.1 through 1-567.20.
Both Employee and Releasees represent and warrant they have read the
foregoing Section 26, that they have had an opportunity to consult with and
receive advice from legal counsel regarding the foregoing Section 26, and that
they hereby forever waive all rights to assert that this Section 26 was the
result of duress, coercion, or mistake of law or fact.
_____ _____ (Initial of both parties in each space).
27. Whole Agreement. This Release and the Attachments and Exhibits
---------------
annexed hereto constitute a single integrated contract expressing the entire
agreement of the parties hereto. There are no agreements, written or oral,
express or implied, between the parties hereto, concerning the subject matter
hereof, except the agreements set forth in this Release. Employee hereby agrees
that he has not relied on any representations, promises, or agreements of any
kind made to Employee in connection with this Release except those expressly set
forth in this Release.
-8-
<PAGE>
GIVEN under my hand and seal on this ______ day of December, 1997.
----------------------------------------
HAROLD S. LICHTIN
WEEKS CORPORATION
By:
-------------------------------------
Name:
Title:
SOLELY TO EVIDENCE ITS AGREEMENT
TO SECTION 17 HEREOF:
WEEKS REALTY, L.P., a Georgia limited
partnership authorized to do business in
the State of North Carolina as Weeks
Realty Limited Partnership
By: Weeks GP Holdings, Inc.,
General Partner
By:
---------------------------------
Name:
Title:
WEEKS REALTY SERVICES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
WEEKS CONSTRUCTION SERVICES, INC.
By:
-------------------------------------
Name:
Title:
WEEKS LP HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
WEEKS GP HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
VERIFICATION
------------
Before me, the undersigned Notary Public, personally appeared HAROLD S.
LICHTIN, who being known to me to be the said Employee and who by me being first
duly sworn, deposes and says under oath that he has read the aforesaid Release;
he is hereby signing such Release in my presence; and he has acknowledged to me
before signing the same that he fully understands the terms, provisions, and
conditions of such Release and voluntarily agrees and accepts such terms,
provisions, and conditions.
Sworn to and subscribed before me, this ___ day of December, 1997.
Sworn to and subscribed before me
this ___ day of December, 1997.
Notary Public
My commission expires:__________________
<PAGE>
ATTACHMENT I
Entities
- --------
Weeks Corporation
Weeks GP Holdings, Inc.
Weeks LP Holdings, Inc.
Weeks Realty, L.P.
Weeks Construction Services, Inc.
Weeks Realty Services, Inc.
Weeks Development Partnership
Weeks Financing Limited Partnership
Weeks Tradeport Limited Partnership
Weeks Special Purpose, LLC
Weeks SPV Financing, LLC
Weeks NC Financing Limited Partnership
Weeks Highland Oaks Limited Partnership
Weeks/Skyland Joint Venture, L.P.
<PAGE>
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
(In thousands, except per share data) 1997 1996 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Computation of Net Income Per Common Share
Net income available to common
shareholders - basic $20,255 $12,745 $ 8,426
Minority interests in earnings of the Operating
Partnership 6,219 3,064 2,681
- --------------------------------------------------------------------------------
Net income available to common
shareholders - diluted $26,474 $15,809 $11,107
- --------------------------------------------------------------------------------
Weighted average common shares - basic 16,357 11,512 8,171
Dilutive securities -
Units of limited partnership interest
in the Operating Partnership 5,023 2,768 2,589
Stock options 200 106 72
- --------------------------------------------------------------------------------
Weighted average common shares - diluted 21,580 14,386 10,832
- --------------------------------------------------------------------------------
Net Income Per Common Share
Basic $ 1.24 $ 1.11 $ 1.03
Diluted 1.23 1.10 1.03
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1997
The financial statements of the following entities were consolidated with
those of the Registrant in the consolidated financial statements of the
Registrant incorporated herein as of December 31, 1997:
. Weeks GP Holdings, Inc., a Georgia corporation.
Registrant owns 100% of the common stock.
. Weeks LP Holdings, Inc., a Georgia corporation.
Registrant owns 100% of the common stock.
. Weeks Realty L.P. (the "Operating Partnership"), a Georgia limited
partnership. Weeks GP Holdings, Inc., owns a 1.0% general partnership
interest. Weeks LP Holdings, Inc., owns a 74.9% limited partnership
interest.
. Weeks Special Purpose LLC, a Georgia limited liability company.
The Operating Partnership owns 100% of the member interests.
. Weeks SPV Financing LLC, a Georgia limited liability company.
Weeks Special Purpose LLC owns 100% of the member interests.
. North Point Limited Partnership No. 1, a Florida limited partnership.
The Operating Partnership owns an 85% partnership interest and Weeks
Development Partnership owns a 15% partnership interest.
. Weeks Financing Limited Partnership, a Georgia limited partnership.
The Operating Partnership owns a 99% partnership interest and
Weeks Realty Services, Inc. owns a 1% partnership interest.
. Weeks NC Financing Limited Partnership, a Georgia limited partnership.
The Operating Partnership directly owns a 99% partnership interest and
indirectly owns a 1% partnership interest through its ownership of Weeks
Special Purpose LLC and Weeks SPV Financing LLC.
<PAGE>
The Operating Partnership accounted for the following entities on the equity
method, at December 31, 1997.
. Weeks Realty Services Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common stock and
1% of the voting common stock.
. Weeks Construction Services Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common stock and
1% of the voting common stock.
. Weeks Development Partnership, a Georgia partnership.
Weeks Construction Services, Inc. and Weeks Realty Services, Inc. own
100% of the partnership interests.
. Sugarloaf Holdings One, LLC, a Georgia limited liability company.
The Operating Partnership owns a 50% member interest.
<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 February 27, 1998 and to all references to our
Firm included in this Form 10-K, into Weeks Corporation's previously filed
Registration Statements on Form S-8 (File Nos. 333-18305 and 333-1108) and Form
S-3 (File Nos. 333-1106, 33-96534, 333-32755 and 333-42821).
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,421
<SECURITIES> 0
<RECEIVABLES> 7,031
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 794,952
<DEPRECIATION> 61,548
<TOTAL-ASSETS> 852,361
<CURRENT-LIABILITIES> 0
<BONDS> 275,515
0
150,000
<COMMON> 177
<OTHER-SE> 308,871
<TOTAL-LIABILITY-AND-EQUITY> 852,361
<SALES> 0
<TOTAL-REVENUES> 92,020
<CGS> 0
<TOTAL-COSTS> 66,533
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,900
<INCOME-PRETAX> 22,975
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,975
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.23
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Amounts have been restated to reflect revised net income per share amounts
resulting from the implementation of SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 260
<SECURITIES> 0
<RECEIVABLES> 5,858
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 551,372
<DEPRECIATION> 41,469
<TOTAL-ASSETS> 591,849
<CURRENT-LIABILITIES> 0
<BONDS> 296,975
0
0
<COMMON> 140
<OTHER-SE> 213,571
<TOTAL-LIABILITY-AND-EQUITY> 591,849
<SALES> 0
<TOTAL-REVENUES> 53,883
<CGS> 0
<TOTAL-COSTS> 39,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,779
<INCOME-PRETAX> 12,745
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,745
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.10
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Amounts have been restated to reflect revised net income per share amounts
resulting from the implementation of SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 476
<SECURITIES> 0
<RECEIVABLES> 6,387
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 702,610
<DEPRECIATION> 56,639
<TOTAL-ASSETS> 763,130
<CURRENT-LIABILITIES> 0
<BONDS> 340,785
0
0
<COMMON> 177
<OTHER-SE> 309,759
<TOTAL-LIABILITY-AND-EQUITY> 763,130
<SALES> 0
<TOTAL-REVENUES> 65,616
<CGS> 0
<TOTAL-COSTS> 49,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,341
<INCOME-PRETAX> 14,673
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,673
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,673
<EPS-PRIMARY> .92
<EPS-DILUTED> .91
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Amounts have been restated to reflect revised net income per share amounts
resulting from the implementation of SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 48
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 359,763
<DEPRECIATION> 37,958
<TOTAL-ASSETS> 396,625
<CURRENT-LIABILITIES> 0
<BONDS> 225,567
0
0
<COMMON> 112
<OTHER-SE> 129,197
<TOTAL-LIABILITY-AND-EQUITY> 396,625
<SALES> 0
<TOTAL-REVENUES> 38,603
<CGS> 0
<TOTAL-COSTS> 27,953
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,157
<INCOME-PRETAX> 9,226
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,226
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,226
<EPS-PRIMARY> .83
<EPS-DILUTED> .82
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Amounts have been restated to reflect revised net income per share amounts
resulting from the implementation of SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 107
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 313,446
<DEPRECIATION> 35,029
<TOTAL-ASSETS> 347,795
<CURRENT-LIABILITIES> 0
<BONDS> 178,470
0
0
<COMMON> 112
<OTHER-SE> 130,110
<TOTAL-LIABILITY-AND-EQUITY> 347,795
<SALES> 0
<TOTAL-REVENUES> 24,508
<CGS> 0
<TOTAL-COSTS> 17,630
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,955
<INCOME-PRETAX> 6,193
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,193
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,193
<EPS-PRIMARY> .56
<EPS-DILUTED> .55
</TABLE>
