SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------------
FORM 8-K/A
(Amendment No.1)
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported)
December 30, 1996 (October 17, 1996)
----------------------------
GLENBOROUGH REALTY TRUST INCORPORATED
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 001-14162 94-3211970
- ---------------- ---------- -------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) I.D. Number)
incorporation)
400 South El Camino Real, Ste. 1100, San Mateo, California 94402
-----------------------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone number, including area code:(415) 343-9300
-------------
Page 1 of 101
<PAGE>
Glenborough Realty Trust Incorporated (the "Company") hereby amends Item 7 of
its Current Report on Form 8-K filed with the Securities and Exchange Commission
(the "Commission") on November 1, 1996, to file the Pro Forma Financial
Statements of the Company and exhibits related to the acquisition of the TRP
Properties (as defined in such Form 8-K) and the acquisition of the Carlsberg
Properties previously reported in the Company's Current Report on Form 8-K filed
with the Commission on December 4, 1996, and defined therein.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 5
Statement of revenues and certain expenses
of the TRP Properties for the nine
months ended September 30, 1996 (unaudited)
and for the year ended December 31, 1995. 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 9
Statement of revenues and certain expenses
of the Carlsberg Properties for the nine
months ended September 30, 1996 (unaudited)
and for the year ended December 31, 1995. 10
(b) PRO FORMA FINANCIAL STATEMENTS
The accompanying pro forma financial statements represent the Company's
consolidated balance sheet and consolidated statement of operations as of and
for the nine months ended September 30, 1996 and for the year ended December 31,
1995, as if the transactions and the Consolidation (discussed below) took place
on January 1, 1995.
The pro forma adjustments reflect: (a) the acquisition of the TRP Properties and
the Carlsberg Properties; (b) the new debt and interest thereon and (c) the
effect that these adjustments have on minority interest.
The Pro Forma information is unaudited and is not necessarily indicative of the
consolidated results which would have occurred if the transactions had been
consummated in the year presented, or on any particular date in the future, nor
does it purport to represent the financial position or results of operations in
future periods.
Pro Forma Consolidated Balance Sheet at
September 30, 1996 with accompanying notes
and adjustments 13
Pro Forma Consolidated Statement of
Operations for the nine months ended
September 30, 1996 16
Pro Forma Consolidated Statement of
Operations for the year ended
December 31, 1995 18
Page 2 of 101
<PAGE>
Notes and adjustments to Proforma Consolidated
Statements of Operations for the nine months
ended September 30, 1996 and the year ended
December 31, 1995 20
The As Adjusted financial statements represent the Company's consolidated
statement of operations for the year ended December 31, 1995 as if the
consolidation (the "Consolidation") of eight predecessor California Limited
partnerships (Equitec Income Real Estate Investors B, Equitec Income Real Estate
Investors C, Equitec Income Real Estate Investors-Equitec Fund 4, Equitec
Mortgage Investors Fund IV, Equitec 79 Real Estate Investors, Outlook Properties
Fund IV, Glenborough All Suites Hotels, L.P. and Glenborough Pension Investors)
(the "Partnerships") and Glenborough Corporation (previously disclosed on Forms
8-K and 8-K/A filed with the Commission on January 15, 1996 and March 15, 1996,
respectively) had taken place on January 1, 1995.
The As Adjusted information is unaudited and is not necessarily indicative of
the consolidated results which would have occurred if the transactions had been
consummated in the year presented, or on any particular date in the future, nor
does it purport to represent the financial position or results of operations in
future periods.
The following financial statements reflect the unaudited As Adjusted
Consolidated Financial Statements of Glenborough Realty Trust Incorporated for
the year ended December 31, 1995.
Glenborough Realty Trust Incorporated
As Adjusted Consolidating Statement of
Operations with accompanying notes and
adjustments 23
Glenborough Realty Trust Incorporated
As Adjusted Historical Combining
Statement of Operations with
accompanying notes and adjustments 27
Glenborough Realty Trust Incorporated
As Adjusted Statement of Hotel Lessor
Operations with accompanying notes
and adjustments 30
Glenborough Hotel Group ("GHG") As
Adjusted Statement of Operations with
accompanying notes and adjustments 32
Glenborough Corporation ("GC") As
Adjusted Statement of Operations with
accompanying notes and adjustments 36
Glenborough Inland Realty Corporation
("GIRC") As Adjusted Statement of
Operations with accompanying notes
and adjustments 40
Page 3 of 101
<PAGE>
(c) EXHIBITS
Contribution agreement related to the acquisition of
the TRP Properties.
Page 4 of 101
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glenborough Realty Trust Incorporated:
We have audited the accompanying statement of revenues and certain expenses of
the TRP Properties, as defined in Note 1, for the year ended December 31, 1995.
This financial statement is the responsibility of the management of the Company.
Our responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 1, and is not intended to be a
complete presentation of the revenues and expenses of the TRP Properties.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of the TRP Properties
for the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
July 9, 1996
Page 5 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE TRP PROPERTIES
For The Nine Months Ended September 30, 1996 (Unaudited)
And The Year Ended December 31, 1995
(in thousands)
Nine Months
Ended Year
September 30, Ended
1996 December 31,
(Unaudited) 1995
--------------- --------------
<S> <C> <C>
REVENUES $ 5,979 $ 7,336
CERTAIN EXPENSES:
Operating 1,338 1,854
Real estate taxes 543 694
------- -------
1,881 2,548
------- -------
REVENUES IN
EXCESS OF CERTAIN
EXPENSES $ 4,098 $ 4,788
======= =======
The accompanying notes are an integral part of these statements.
</TABLE>
Page 6 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE TRP PROPERTIES
For The Nine Months Ended September 30, 1996 (Unaudited)
And The Year Ended December 31, 1995
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICY
Property Acquired - The accompanying statements of revenues and certain
expenses include the operations (see "Basis of Presentation" below) of the
following TRP Properties (the "TRP Properties") acquired by Glenborough Realty
Trust Incorporated (the "Company") from Trust Realty Partners, an unaffiliated
third party.
<TABLE>
<CAPTION>
Property City State Type
- -------- ----- ----- ----
<S> <C> <C> <C>
Auburn North Auburn WA Shopping Cntr
One Professional Square Omaha NB Office
Warner Village Medical Center Fountain
Valley CA Office
The Globe Office Building Mercer
Island WA Office
Rancho Bernardo R & D Center Rancho
Bernardo CA Industrial
Hoover Industrial Center Mesa AZ Industrial
Walnut Creek Business Center Austin TX Industrial
Mercantile Industrial I Dallas TX Industrial
Quaker Industrial (formerly
Mercantile Industrial II) Dallas TX Industrial
Pinewood Industrial (formerly
Mercantile Industrial III) Arlington TX Industrial
Villas de Mission Apartments Las Vegas NV Multifamily
Sahara Gardens Apartments Las Vegas NV Multifamily
</TABLE>
Basis of Presentation - The accompanying statements of revenues and certain
expenses are not intended to be a complete presentation of the actual operations
of the TRP Properties for the periods presented. Certain expenses may not be
comparable to the expenses expected to be incurred by the Company in the future
operations of the Properties; however, the Company is not aware of any material
factors relating to the TRP Properties that would cause the reported financial
information not to be indicative of future operating results. Excluded expenses
consist of property management fees, interest expense, depreciation and
amortization and other costs not directly related to the future operations of
the TRP Properties.
These financial statements have been prepared for the purpose of complying
with certain rules and regulations of the Securities and Exchange Commission.
The financial information presented for the nine months ended September 30,
1996 is not audited. In the opinion of management,
Page 7 of 101
<PAGE>
the unaudited financial information contains all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the statements
of revenues and certain expenses for the TRP Properties.
Revenue Recognition - All leases are classified as operating leases, and
rental revenue is recognized on a straight-line basis over the terms of the
leases.
2. LEASING ACTIVITY
The minimum future rental revenues from leases in effect as of October 1,
1996, for the remainder of 1996 and annually thereafter are as follows (in
thousands)
Year Amount
------------------ ---------
1996 (three months) $ 903
1997 2,993
1998 1,845
1999 1,270
2000 734
2001 475
Thereafter 1,020
---------
Total $ 9,240
=========
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $395 (unaudited)
for the nine months ended September 30, 1996, and $418 for the year ended
December 31, 1995. Certain leases contain lessee renewal options.
Page 8 of 101
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glenborough Realty Trust Incorporated:
We have audited the accompanying statement of revenues and certain expenses of
the Carlsberg Properties, as defined in Note 1, for the year ended December 31,
1995. This financial statement is the responsibility of the management of the
Company. Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 1, and is not intended to be a
complete presentation of the revenues and expenses of the Carlsberg Properties.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of the Carlsberg
Properties for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
November 15, 1996
Page 9 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE CARLSBERG PROPERTIES
For The Nine Months Ended September 30, 1996 (Unaudited)
And the Year Ended December 31, 1995
(in thousands)
Nine Months
Ended Year
September 30, Ended
1996 December 31,
(unaudited) 1995
---------- -----------
<S> <C> <C>
REVENUES $ 2,291 $ 2,836
CERTAIN EXPENSES:
Operating 650 783
Real estate taxes 206 278
--------- ---------
856 1,061
--------- ---------
REVENUES IN EXCESS OF
CERTAIN EXPENSES $ 1,435 $ 1,775
========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
Page 10 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE CARLSBERG PROPERTIES
For the Nine Months Ended September 30, 1996 (unaudited)
and the Year Ended December 31, 1995
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICY
Properties Acquired - The accompanying combined statements of revenues and
certain expenses include the operations (see "Basis of Presentation") of the
following five properties (the "Carlsberg Properties") acquired by Glenborough
Realty Trust Incorporated (the "Company"), from an unaffiliated third party.
<TABLE>
<CAPTION>
Property City State Type
- -------- ----- ----- ----
<S> <C> <C> <C>
Sonora Plaza Sonora CA Shopping Cntr
Vintage Pointe (formerly
Carlsberg Plaza) Phoenix AZ Office
Hillcrest Office Plaza Fullerton CA Office
Dallidet Professional Center San Luis
Obispo CA Office
Trade Winds Financial Center Mesa AZ Office
</TABLE>
Basis of Presentation - The accompanying statements of revenues and certain
expenses are not intended to be a complete presentation of the actual operations
of the Carlsberg Properties for the periods presented. Certain expenses may not
be comparable to the expenses incurred by the Company in the future operations
of the Carlsberg Properties; however, the Company is not aware of any material
factors relating to the Carlsberg Properties that would cause the reported
financial information not to be indicative of future operating results. Excluded
expenses consist of property management fees, interest expense, depreciation and
amortization and other costs not directly related to the future operations of
the Carlsberg Properties.
These financial statements have been prepared for the purpose of complying
with certain rules and regulations of the Securities and Exchange Commission.
The financial information presented for the nine months ended September 30,
1996 is not audited. In the opinion of management, the unaudited financial
information contains all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the combined statements of revenues and
certain expenses for the Carlsberg Properties.
Revenue Recognition - All leases are classified as operating leases, and
rental revenue is recognized on a straight-line basis over the terms of the
leases.
Page 11 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
THE CARLSBERG PROPERTIES - (Continued)
For the Nine Months Ended September 30, 1996 (unaudited)
and the Year Ended December 31, 1995
2. LEASING ACTIVITY
The minimum future rental revenues from leases in effect as of October 1,
1996, for the remainder of 1996 and annually thereafter are as follows (in
thousands):
Year Amount
------------------ ---------
1996 (three months) $ 640
1997 2,492
1998 2,122
1999 1,629
2000 1,476
2001 1,179
Thereafter 5,536
---------
Total $ 15,074
=========
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $195 (unaudited)
for the nine months ended September 30, 1996 and $231 for the year ended
December 31, 1995. Certain leases contain lessee renewal options.
Page 12 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except shares)
September 30, 1996
(Unaudited)
Property
Historical(1) Acquisitions(2) Offering(3)
-------------- -------------- -----------
ASSETS
<S> <C> <C> <C>
Rental property, net $ 99,165 $ 64,388 $ ---
Investments in Associated Companies
and Glenborough Partners 6,189 500 ---
Investments in management contracts
and other, net 355 --- ---
Mortgage loans receivable, net 7,213 3,600 ---
Cash and cash equivalents 610 (23,457) 46,714
Other assets 5,673 --- ---
-------- -------- --------
TOTAL ASSETS $ 119,205 $ 45,031 $ 46,714
======== ======== ========
LIABILITIES
Mortgage loans $ 29,542 $ 25,200 $ ---
Secured bank line 29,002 14,744 ---
Other liabilities 3,541 1,338 ---
-------- -------- --------
Total liabilities 62,085 41,282 ---
-------- -------- --------
MINORITY INTEREST 8,285 760 ---
-------- -------- --------
STOCKHOLDERS' EQUITY
Common stock (9,661,553 shares
issued and outstanding) 6 --- 4
Additional paid-in capital 56,147 2,989 46,710
Deferred compensation (446) --- ---
Retained earnings (deficit) (6,872) --- ---
-------- -------- --------
Total stockholders' equity 48,835 2,989 46,714
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $119,205 $ 45,031 $ 46,714
======== ======== ========
- continued -
</TABLE>
Page 13 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except shares) - continued
September 30, 1996
(Unaudited)
Repayment
of Debt(4) Pro Forma
---------- ---------
ASSETS
<S> <C> <C>
Rental property, net $ --- $163,553
Investments in Associated Companies
and Glenborough Partners --- 6,689
Investments in management contracts
and other, net --- 355
Mortgage loans receivable --- 10,813
Cash and cash equivalents (23,128) 739
Other assets --- 5,673
-------- --------
TOTAL ASSETS $(23,128) $187,822
======== ========
LIABILITIES
Mortgage loans $ --- $ 54,742
Secured bank line (23,128) 20,618
Other liabilities --- 4,879
-------- --------
Total liabilities (23,128) 80,239
-------- --------
MINORITY INTEREST --- 9,045
-------- --------
STOCKHOLDERS' EQUITY
Common stock (9,661,553 shares
issued and outstanding) --- 10
Additional paid-in capital --- 105,846
Deferred compensation --- (446)
Retained earnings (deficit) --- (6,872)
-------- --------
Total stockholders' equity --- 98,538
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $(23,128) $187,822
======== ========
</TABLE>
Page 14 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA CONSOLIDATED
BALANCE SHEET AS OF SEPTEMBER 30, 1996
(unaudited, dollars in thousands)
1. Reflects the historical consolidated balance sheet of the Company as of
September 30, 1996, which includes the acquisitions of the following properties:
Property Purchase Price
---------------------- --------------
UCT Property $18,600,000
San Antonio Hotel $ 2,700,000
Kash n' Karry Property $ 1,540,000
Bond Street Property $ 3,200,000
2. Reflects the acquisition of the Carlsberg Properties (including a note
receivable secured by the Grunow Medical Building) and the acquisition of the
TRP Properties for total acquisition prices of $19,589 and $43,200,
respectively, including acquisition costs of approximately $1,599. These
acquisitions were funded with approximately $23,457 of the net proceeds from the
Offering, assumption of approximately $25,200 of mortgage debt, borrowings on
the secured bank line (the "Facility") of approximately $14,744, and the
issuance of 52,386 Operating Partnership units with an aggregate approximate
value of $760 and 206,844 shares of unregistered Common Stock with an aggregate
approximate value of $2,989. The assumed mortgages bear interest rates of 8.00%
to 9.25% and mature between August 1998 and August 2015.
3. Reflects the net proceeds from the Offering. In connection with the Offering,
the Company incurred costs of approximately $4,145.
4. Reflects the repayment of borrowings on the Facility of approximately
$23,128. After the Offering and the completion of the acquisitions of the
Carlsberg and TRP Properties, the Company had approximately $29,382 of remaining
borrowing capacity on the Facility.
Page 15 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended September 30, 1996
(in thousands, except per share amounts)
(Unaudited)
Facility and Property
Historical(1) Term Loan(2) Acquisitions(3)
------------- ------------ --------------
REVENUES
<S> <C> <C> <C>
Rental revenue $ 11,281 $ --- $ 11,376
Fees and reimbursements from
affiliates 199 --- ---
Interest and other income 623 --- ---
Equity in earnings of
Associated Companies 1,363 --- ---
Gain on sale of rental
properties 321 --- ---
-------- -------- --------
Total revenue 13,787 --- 11,376
-------- -------- --------
OPERATING EXPENSES
Operating expenses 3,244 --- 3,978
General and administrative 977 --- ---
Depreciation and amortization 2,694 --- 1,412
Interest expense 2,546 1,681 1,937
-------- -------- --------
Total operating expenses 9,461 1,681 7,327
-------- -------- --------
Income from operations before
minority interest 4,326 (1,681) 4,049
Minority interest (312) --- ---
-------- -------- --------
Net income $ 4,014 $ (1,681) $ 4,049
======== ======== ========
Net income per share $ 0.70
========
Weighted average number of
common shares outstanding 5,763,742
=========
- continued -
</TABLE>
Page 16 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS - continued
For the nine months ended September 30, 1996
(in thousands, except per share amounts)
(Unaudited)
Repayment
of Debt(4) Other(5) Pro Forma(6)
---------- --------- ------------
REVENUES
<S> <C> <C> <C>
Rental revenue $ --- $ (260) $ 22,397
Fees and reimbursements from
affiliates --- --- 199
Interest and other income --- (24) 599
Equity in earnings of
Associated Companies --- 79 1,442
Gain on sale of rental
properties --- --- 321
-------- -------- --------
Total revenue --- (205) 24,958
-------- -------- --------
OPERATING EXPENSES
Operating expenses --- (128) 7,094
General and administrative --- 150 1,127
Depreciation and amortization --- (50) 4,056
Interest expense (1,344) --- 4,820
-------- -------- --------
Total operating expenses (1,344) (28) 17,097
-------- -------- --------
Income from operations before
minority interest 1,344 (177) 7,861
Minority interest --- (290) (602)
-------- -------- --------
Net income $ 1,344 $ (467) $ 7,259
======== ======== ========
Net income per share $ 0.75
========
Weighted average number of
common shares outstanding 9,661,553
=========
</TABLE>
Page 17 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
(in thousands, except per share amounts)
(Unaudited)
Facility and Property
Historical(1) Term Loan(2) Acquisitions(3)
------------- ------------ ---------------
REVENUES
<S> <C> <C> <C>
Rental revenue $ 13,472 $ --- $ 15,561
Fees and reimbursements from
affiliates 260 --- ---
Interest and other income 982 --- ---
Equity in earnings of
Associated Companies 1,691 --- ---
-------- -------- --------
Total revenue 16,405 --- 15,561
-------- -------- --------
OPERATING EXPENSES
Operating expenses 4,061 --- 5,953
General and administrative 983 --- ---
Depreciation and amortization 3,654 --- 1,763
Interest expense 2,767 2,202 3,303
Loss provision 863 --- ---
-------- -------- --------
Total operating expenses 12,328 2,202 11,019
-------- -------- --------
Income from operations before
minority interest 4,077 (2,202) 4,542
Minority interest (281) --- ---
-------- -------- --------
Net income $ 3,796 $ (2,202) $ 4,542
======== ======== ========
Net income per share $ 0.66
========
Weighted average number of
common shares outstanding 5,753,709
=========
- continued -
</TABLE>
Page 18 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS - continued
For the year ended December 31, 1995
(in thousands, except per share amounts)
(Unaudited)
Repayment
of Debt(4) Other(5) Pro Forma(6)
----------- --------- ------------
REVENUES
<S> <C> <C> <C>
Rental revenue $ --- $ (595) $ 28,438
Fees and reimbursements from
affiliates --- --- 260
Interest and other income --- 396 1,378
Equity in earnings of
Associated Companies --- 106 1,797
-------- -------- --------
Total Revenue --- (93) 31,873
-------- -------- --------
OPERATING EXPENSES
Operating expenses --- (273) 9,741
General and administrative --- 200 1,183
Depreciation and amortization --- (116) 5,301
Interest expense (1,792) --- 6,480
Loss provision --- --- 863
-------- -------- --------
Total operating expense (1,792) (189) 23,568
-------- -------- --------
Income from operations before
minority interest 1,792 96 8,305
Minority interest --- (352) (633)
-------- -------- --------
Net income $ 1,792 $ (256) $ 7,672
======== ======== ========
Net income per share $ 0.79
========
Weighted average number of
common shares outstanding 9,661,553
=========
</TABLE>
Page 19 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND THE YEAR ENDED DECEMBER 31, 1995
(unaudited, dollars in thousands)
1. Reflects the historical consolidated operations of the Company for the nine
months ended September 30, 1996, excluding extraordinary items and Consolidation
costs, and the as adjusted consolidated operations of the Company for the year
ended December 31, 1995. The as adjusted operations reflect the Consolidation
and related transactions as if such transactions had occurred on January 1,
1995. These Proforma Consolidated Statements of Operations should be read in
conjunction with the unaudited As Adjusted Statement of Operations of the
Company for the year ended December 31, 1995 included on pages 22 to 28 of this
Form 8-K/A.
2. Reflects the repayment of the Company's original secured bank line with
borrowings on the Company's replacement Facility and Term Loan. The repayment
results in a net increase in interest expense consisting of the following:
Nine Months Year
Ended Ended
September 30, December 31,
1996 1995
------------ -----------
Interest differential $ 1,461 $ 1,933
Amortization of new loan fees 221 295
Amortization of old loan fees (56) (99)
Unused Facility fees 55 73
------- -------
$ 1,681 $ 2,202
======= =======
The amortization of the new loan fees is based upon total estimated fees and
costs of $1,309 over the respective terms of the Facility and Term Loan. The
unused Facility fees are based upon 0.25% of the pro forma unused Facility
capacity as of September 30, 1996 of approximately $29,382.
The Facility provides for maximum borrowings of up to $50,000, but is limited to
a specified borrowing base ($50,000 on a pro forma basis), has an initial term
of two years which can be extended an additional three years at the option of
the Company, bears interest at LIBOR plus 2.375% (assumed to be 7.750%),
requires monthly interest-only payments and requires annual unused Facility fees
equal to 0.25% of the unused Facility balance. The Term Loan has a term of two
years and bears interest at LIBOR plus 2.375% (assumed to be 7.750%). In
connection with obtaining the Facility and Term Loan, the Company incurred
commitment fees and other costs totaling approximately $1,309.
Page 20 of 101
<PAGE>
3. Reflects the historical operations of the Carlsberg Properties, TRP
Properties, UCT Property, Bond Street Property, Kash n' Karry Property and the
San Antonio Hotel.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
(or portion of 1996 prior to acquisition)
----------------------------------------
Carlsberg TRP UCT
Properties Properties Property
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 2,291 $ 5,979 $ 2,290
Operating expenses (856) (1,881) (1,016)
------- ------- -------
$ 1,435 $ 4,098 $ 1,274
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
(or portion of 1996 prior to acquisition)
----------------------------------------
Bond Kash n' San
Street Karry Antonio Combined
Property Property Hotel Total
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 519 $ 93 $ 204 $ 11,376
Operating expenses (190) --- (35) (3,978)
------ ------ ------ -------
$ 329 $ 93 $ 169 $ 7,398
====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
Carlsberg TRP UCT
Properties Properties Property
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 2,836 $ 7,336 $ 4,239
Operating expenses (1,061) (2,548) (2,042)
------- ------- -------
$ 1,775 $ 4,788 $ 2,197
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
Bond Kash n' San
Street Karry Antonio Combined
Property Property Hotel Total
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 631 $ 166 $ 353 $ 15,561
Operating expenses (241) --- (61) (5,953)
------- ------- ------- -------
$ 390 $ 166 $ 292 $ 9,608
======= ======= ======= =======
</TABLE>
Also, reflects estimated depreciation and amortization, based upon estimated
useful lives of 40 years on a straight-line basis, estimated interest on the pro
forma Facility borrowings of approximately $14,744 used to acquire the Carlsberg
Page 21 of 101
<PAGE>
Properties in 1996 and approximately $38,849 used to acquire the Carlsberg
Properties, UCT Property, Bond Street Property, Kash n' Karry Property and San
Antonio Hotel in 1995 and estimated interest on the pro forma mortgage debt
assumed of approximately $25,200 in connection with the acquisition of the
Carlsberg Properties and the TRP Properties in 1996 and 1995. The estimated
interest on the Facility borrowing is based on an assumed interest rate of
7.750% and estimated interest on the mortgage loans assumed is based upon an
assumed weighted average rate of 8.570%.
4. Reflects the reduction of interest expense resulting from the repayment of
borrowings on the Facility of approximately $23,128 at an assumed interest rate
of 7.750%. The Company's Facility and Term Loan are subject to changes in LIBOR.
Based upon the pro forma Facility and Term Loan balances as of September 30,
1996, a 1/8% increase or decrease in LIBOR will result in increased or decreased
annual interest expense of approximately $32.
5. Reflects a (i) net increase in the Company's equity in earnings from its
investments in GC and GHG, (ii) interest income on the note receivable from
Carlsberg secured by the Grunow Medical Building, (iii) the elimination of
actual revenues and expenses of the All American Self Storage properties that
were sold in June 1996, (iv) the minority interests' share of the pro forma
adjustments to the net income of the Operating Partnership and (v) increased
general and administrative expenses of approximately $150 per year related to
the property acquisitions. The net increase in equity in earnings from its
investments in GC and GHG is comprised primarily of (i) a decrease due to a
reduction of annual management fees of approximately $152 received by GC from
the UCT Property and the Bond Street Property net of estimated taxes, (ii)
approximately $300 in additional management fees for GC from certain related
Carlsberg properties not acquired by the Company and (iii) an increase due to an
estimated annual increase in GHG's net income of approximately $38 due to its
leasing of the San Antonio Hotel from the Company.
6. The pro forma taxable income before dividends paid deduction for the Company
for the nine months ended September 30, 1996 was approximately $8,825 which has
been calculated as pro forma net income from operations of approximately $7,881
plus GAAP basis depreciation and amortization of approximately $4,036 less tax
basis depreciation and amortization and other tax differences of approximately
$3,092.
Page 22 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands, except per share amounts)
Glenborough As Adjusted
Realty Trust Historical Hotel Management
Incorporated(a) Combined(b) Operations(c) Operations(d)
-------------- ----------- ----------- ------------
REVENUES:
<S> <C> <C> <C> <C>
Rental revenues $ --- $ 9,189 $ 2,182 $ ---
Management fee income --- 260 --- ---
Interest and other income --- 982 --- ---
Equity in earnings of
Associated Companies --- --- 32 1,659
-------- -------- -------- --------
Total revenues --- 10,431 2,214 1,659
-------- -------- -------- --------
OPERATING EXPENSES:
Operating expenses --- 3,698 363 ---
General and administrative --- 953 --- ---
Depreciation and
amortization --- 2,488 944 ---
Interest expense --- 1,993 --- ---
Loss provision --- 863 --- ---
-------- -------- -------- --------
Total operating
expenses --- 9,995 1,307 ---
-------- -------- -------- --------
Income from operations
before minority interest --- 436 907 1,659
Minority interest --- --- --- ---
-------- -------- -------- --------
Net income (loss) $ --- $ 436 $ 907 $ 1,659
======== ======== ======== ========
-continued-
</TABLE>
Page 23 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED CONSOLIDATING STATEMENT OF OPERATIONS - continued
For the Year Ended December 31, 1995
(unaudited, in thousands, except per share amounts)
Glenborough
Debt Pay Other Realty Trust
GPA Down and Pro-Forma Incorporated
Properties(e) Refinancings(f) Adjustments Consolidated
-------------- ----------- ----------- ------------
REVENUES:
<S> <C> <C> <C> <C>
Rental revenues $ 2,101 $ --- $ --- $ 13,472
Management fee income --- --- --- 260
Interest and other income --- --- --- 982
Equity in earnings of
Associated Companies --- --- --- 1,691
-------- -------- -------- --------
Total revenues 2,101 --- --- 16,405
-------- -------- -------- --------
OPERATING EXPENSES:
Operating expenses --- --- --- 4,061
General and administrative --- --- 30 (g) 983
Depreciation and
amortization --- --- 222 (h) 3,654
Interest expense --- 774 --- 2,767
Loss provision --- --- --- 863
-------- -------- -------- --------
Total operating
expenses --- 774 252 12,328
-------- -------- -------- --------
Income from operations
before minority interest 2,101 (774) (252) 4,077
Minority interest --- --- (281) (i) (281)
-------- -------- -------- --------
Net income (loss) $ 2,101 $ (774) $ (533) $ 3,796
======== ======== ======== ========
Net income per share $ 0.66
========
Weighted average shares
outstanding 5,753,709(j)
=========
</TABLE>
Page 24 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO
AS ADJUSTED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year ended December 31, 1995
(unaudited, in thousands)
a) Not applicable as the Company had no operations prior to the
Consolidation.
b) Reflects the as adjusted historical combined statements of
operations of the Partnerships and GC. See as adjusted
historical combining statement of operations.
c) Reflects (i) estimated revenues and expenses related to the
Company's hotels leased to and operated by GHG and (ii) the
Company's equity in GHG's earnings. See as adjusted statement
of hotel lessor operations and statement of operations for
GHG.
d) Reflects the Company's equity in the earnings of GC of
approximately $449 and GIRC of approximately $1,210.
e) Reflects the historical revenues and expenses of the GPA
properties acquired.
f) Reflects a net increase in interest expense resulting from the
refinancing of mortgage loans and other notes payable with
borrowings of (i) $20,000 on a secured bank line with an
investment bank, (ii) $10,000 on secured lines of credit with
a bank and (iii) $2,650 of secured loan with a bank. The
$20,000 secured bank line has a term of ten years and bears a
fixed interest rate of 7.57%. The $10,000 secured bank line
of credit has a term of three years and bears a variable
interest rate at LIBOR plus 2.365% (7.88% at December 31,
1995). The secured loan with a bank has a term of 10 years
and bears a fixed interest rate of 7.75%. The net increase in
interest expense is comprised of the following:
Increase due to new borrowings on secured
bank lines, lines of credit and loans $ 2,507
Increase due to amortization of new loan
origination fees 177
Reduction due to repayment of mortgage
loans and other notes payable (1,910)
-------
Net increase $ 774
=======
g) Reflects estimated state income and franchise taxes.
h) Reflects estimated depreciation and amortization of the GPA
Properties acquired, based upon asset lives of 40 years.
Page 25 of 101
<PAGE>
i) Reflects GPA's approximate 13.63% ownership interest in the
operations of Glenborough Properties, L.P. (the "Operating
Partnership"), of which the Company is a 84.37% owner. GPA's
minority interest is calculated as follows;
Pro forma income before minority
interest of the Company $ 4,077
Add Company expenses before
Consolidation 983
Equity in earnings of Associated
Companies and management fees
earned by the Company (1,951)
Less fees paid by the Operating
Partnership to the Company (1,047)
Pro forma income from operations
of the Operating Partnership 2,062
-------
GPA's minority interest $ 281
=======
j) Represents the weighted average shares outstanding assuming
that GPA's Units in the Operating Partnership are not
converted into Common Stock of the Company.
Page 26 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
(unaudited, in thousands)
1995
Historical Hotel Management
Combined(a) Operations(b) Operations(c)
----------- ----------- ------------
Revenues:
<S> <C> <C> <C>
Rental revenues $ 15,454 $ (6,265) $ ---
Fee and reimbursements 16,019 --- (16,019)
Interest and other 2,698 (302) (560)
-------- -------- --------
Total revenues 34,171 (6,567) (16,579)
-------- -------- --------
Expenses:
Operating 8,576 (4,998) ---
General and administrative 15,947 --- (14,361)
Depreciation and
amortization 4,762 (944) (1,487)
Interest expense 2,129 --- (1,439)
Loss provision 1,876 --- (1,013)
-------- -------- --------
Total expenses 33,290 (5,942) (18,300)
-------- -------- --------
Operating income (loss) 881 (625) 1,721
Income taxes (357) --- 357
-------- -------- --------
Net income (loss) $ 524 $ (625) $ 2,078
======== ======== ========
-continued-
</TABLE>
Page 27 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS - continued
For the Year ended December 31, 1995
(unaudited, in thousands)
As Adjusted
Internalize Other Historical
Management (d) Adjustments Combined
-------------- ------------ ---------
Revenues:
<S> <C> <C> <C>
Rental revenues $ --- $ --- $ 9,189
Fee and reimbursements --- 260 (f) 260
Interest and other --- (854)(e) 982
-------- -------- --------
Total revenues --- (594) 10,431
-------- -------- --------
Expenses:
Operating 120 --- 3,698
General and administrative (633) --- 953
Depreciation and
amortization --- 157 (f) 2,488
Interest expense --- 1,303 (e,g) 1,993
Loss provision --- --- 863
-------- -------- --------
Total expenses (513) 1,460 9,995
-------- -------- --------
Operating income (loss) 513 (2,054) 436
Income taxes --- --- ---
-------- -------- --------
Net income (loss) $ 513 $ (2,054) $ 436
======== ======== ========
</TABLE>
Page 28 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
a) Reflects the historical combined operations of the
Partnerships and GC.
b) Reflects the elimination of historical revenues and expenses
of the three hotels (Arlington, Tucson and Ontario) owned by
the Company, that are leased to and operated by GHG.
c) Represents the elimination of certain revenues and expenses
that are included in GC's historical statements of operations
due to the internalization of management.
d) Further reflects the internalization of management including
(i) property administration costs that were reimbursed to GC
by the Partnerships, but excluded by elimination of
intercompany transactions in the historical combined financial
statements of the Partnerships and GC and (ii) a reduction of
general and administrative expenses (including legal,
accounting and investor relations) resulting from the
Consolidation and internalization of management.
e) Represents the elimination of interest income and expense
related to the Finley note receivable and related mortgage
debt that were repaid in April 1995.
f) Reflects management fees related to Glenborough Institutional
Fund I that are earned by the Company that were previously
earned by GC and amortization of the related management
contract.
g) Reflects the historical interest expense related to notes
payable contributed by GC.
Page 29 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED STATEMENT OF HOTEL LESSOR OPERATIONS
For the year ended December 31, 1995
(unaudited, in thousands)
Lease Other
Adjustments(a) Adjustments As Adjusted
------------- ----------- -----------
Revenues:
<S> <C> <C> <C>
Rental revenues $ 2,182 $ --- $ 2,182
Equity in earnings of GHG --- 32 (b) 32
-------- -------- --------
Total revenues 2,182 32 2,214
-------- -------- --------
Expenses:
Operating 275 88 (c) 363
Depreciation and amortization 944 --- 944
-------- -------- --------
Total expenses 1,219 88 1,307
-------- -------- --------
Net income (loss) $ 963 $ (56) $ 907
======== ======== ========
</TABLE>
Page 30 of 101
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO
AS ADJUSTED STATEMENT OF HOTEL LESSOR OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
a) Reflects the estimated lease payments, property taxes and
depreciation and amortization associated with the hotels owned
by the Company and leased to and operated by GHG. See as
adjusted statement of operations for GHG.
b) Reflects the Company's equity in earnings of GHG. See as
adjusted statement of operations for GHG.
c) Reflects management fees to be paid by the Company to GHG.
GHG will provide fee management services related to the Irving
hotel.
Page 31 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH HOTEL GROUP
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
Historical (a)
--------------------------------------------------------------------------
Arlington Tucson Ontario Sub-total
--------- ------ ------- --------
Revenues:
<S> <C> <C> <C> <C>
Room revenues $ 2,210 $ 2,667 $ 1,388 $ 6,265
Management fees --- --- --- ---
Interest and other 97 121 84 302
-------- -------- -------- --------
Total revenues 2,307 2,788 1,472 6,567
-------- -------- -------- --------
Expenses:
Operating 1,113 1,225 869 3,207
Salaries & administration 615 635 541 1,791
Depreciation and
amortization 325 386 233 944
Interest --- --- --- ---
Lease expense --- --- --- ---
-------- -------- -------- --------
Total operating
expenses 2,053 2,246 1,643 5,942
-------- -------- -------- --------
Operating income
(loss) 254 542 (171) 625
Income taxes --- --- --- ---
-------- -------- -------- --------
Income before minority
interest 254 542 (171) 625
Minority interest --- --- --- ---
-------- -------- -------- --------
Net income (loss) $ 254 $ 542 $ (171) $ 625
======== ======== ======== ========
-continued-
</TABLE>
Page 32 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH HOTEL GROUP
AS ADJUSTED STATEMENT OF OPERATIONS - continued
For the Year Ended December 31, 1995
(unaudited, in thousands)
As Adjusted
--------------------------------------
Lease Other As Adjusted
Adjustments(b) Adjustments GHG
------------ ------------ --------
Revenues:
<S> <C> <C> <C>
Room revenues $ --- $ --- $ 6,265
Management fees --- 2,225 (c) 2,225
Interest and other --- --- 302
-------- -------- --------
Total revenues --- 2,225 8,792
-------- -------- --------
Expenses:
Operating (275) (644) (d) 2,288
Salaries & administration --- 2,320 (c) 4,111
Depreciation and amortization (944) 87 (f) 87
Interest --- 9 9
Lease expense 2,182 --- 2,182
-------- -------- --------
Total operating
expenses 963 1,772 8,677
-------- -------- --------
Operating income
(loss) (963) 453 115
Income taxes --- (46) (g) (46)
-------- -------- --------
Income before minority
interest (963) 407 69
Minority interest --- (36) (h) (36)
-------- -------- --------
Net income (loss) $ (963) $ 371 $ 33
======== ======== ========
Preferred stock dividends $ 98 (i)
Common stock dividends 23
</TABLE>
Page 33 of 101
<PAGE>
GLENBOROUGH HOTEL GROUP
NOTES AND ADJUSTMENTS TO AS ADJUSTED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands, except per share amounts)
a) Reflects the historical operations of the three hotels
(Arlington, Tucson and Ontario) owned by the Company that are
leased to and operated by GHG.
b) Reflects the estimated lease payments, property taxes and
depreciation and amortization associated with the hotels owned
by the Company that will be included in the operations of the
Company. See as adjusted statement of hotel lessor operations
for the Company.
c) Reflects management fees of $718 and reimbursement of salaries
of $1,507 associated with fee management services provided to
third parties and the Company related to the contracts owned
by Resort Group Inc., the Irving hotel and the Outlook Income
Fund 9 Hotels ("OIF 9 Hotels"). The estimated fees and
reimbursements are comprised of the following:
Resort Group, Inc.:
Galveston, Texas $ 347
Port Aransas, Texas 73
Irving Hotel 514
OIF 9 Hotels 1,291
--------
Total $ 2,225
========
d) Reflects the elimination of historical management fees paid
by the three hotels (Arlington, Tucson and Ontario) owned by
the Company resulting from the internalization of hotel
management.
e) Reflects an increase in general and administrative expenses,
including salaries, associated with operating as a separate
entity and fee management services provided the third parties
by GHG. Under the prior ownership structure general and
administrative expenses were recorded at the partnership level
and not at the property operating level. The increase
consists of the following:
Reimbursable salaries and benefits $ 1,507
Corporate and administrative
salaries and benefits 546
Rent and other overhead, including
utilities 95
Resort Group Inc. expenses 20
General and administrative expenses,
including accounting, legal and
directors fees 152
--------
Total $ 2,320
========
Page 34 of 101
<PAGE>
f) Reflects estimated depreciation for the year ended December
31, 1995 of furniture, equipment and buildings of $3 that will
be owned by GHG, and amortization of the contracts owned by
Resort Group, Inc. of $84.
g) Reflects estimated income tax expense of GHG.
h) Reflects the approximately 20% minority ownership interest in
the Resort Group Inc. held by an unaffiliated third party.
i) Reflects estimated dividends paid by GHG equal to $600 a share
plus 75% of any remaining cash flow. The primary source of
dividends paid by GHG will be cash flow from operations which
is in excess of GHG's earnings.
Page 35 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH CORPORATION
(FORMERLY GLENBOROUGH REALTY CORPORATION)
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
As Adjusted
Management Expired Participating Hotel
Operations(a) Contracts(b) Partnerships(c) Group(d)
------------- ----------- ------------- --------
REVENUES:
<S> <C> <C> <C> <C>
Fees and reimbursements $ 16,019 $ (1,036) $ (186) $ (4,331)
Interest and other 560 (336) (98) (29)
-------- -------- -------- --------
Total revenues 16,579 (1,372) (284) (4,360)
-------- -------- -------- --------
EXPENSES:
Salaries & administration 14,361 (3,192) (697) (3,862)
Depreciation and
amortization 1,487 (562) (121) (87)
Interest expense 1,439 --- (1,438) ---
Loss provision 1,013 (1,013) --- ---
-------- -------- -------- --------
Total expenses 18,300 (4,767) (2,256) (3,949)
-------- -------- -------- --------
Income (loss) before provisions
for income taxes (1,721) 3,395 1,972 (411)
Income taxes (357) --- --- ---
-------- -------- -------- --------
Net income (loss) $ (2,078) $ 3,395 $ 1,972 $ (411)
======== ======== ======== ========
-continued-
</TABLE>
Page 36 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH CORPORATION
(FORMERLY GLENBOROUGH REALTY CORPORATION)
AS ADJUSTED STATEMENT OF OPERATIONS - continued
For the Year Ended December 31, 1995
(unaudited, in thousands)
As
Rancon Other Adjusted
Contracts(e) Adjustments GC
------------ ----------- ---------
REVENUES:
<S> <C> <C> <C>
Fees and reimbursements $ (5,863) $ --- $ 4,603
Interest and other --- --- 97
-------- -------- --------
Total revenues (5,863) --- 4,700
-------- -------- --------
EXPENSES:
Salaries & administration (3,118) 12 (f) 3,504
Depreciation and
amortization (717) 284 (g) 284
Interest expense --- 79 (h) 80
Loss provision --- --- ---
-------- -------- --------
Total expenses (3,835) 375 3,868
-------- -------- --------
Income (loss) before provision
for income taxes (2,028) (375) 832
Income taxes --- 24 (i) (333)
-------- -------- --------
Net income (loss) $ (2,028) $ (351) $ 499
======== ======== ========
Preferred stock
dividends $ 745 (j)
Common stock
dividends $ 38
</TABLE>
Page 37 of 101
<PAGE>
GLENBOROUGH CORPORATION
(FORMERLY GLENBOROUGH REALTY CORPORATION)
NOTES AND ADJUSTMENTS TO AS ADJUSTED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited in thousands, except per share amounts)
a) Reflects the as adjusted consolidated historical management
operations of GC, GHG and GIRC.
b) Reflects the historical revenues and expenses associated with
certain management contracts which expired prior to the date
of Consolidation.
c) Reflects the historical revenues and expenses associated with
management services provided to the Partnerships by GC which
were eliminated as a result of the internalization of
management.
d) Reflects the historical revenues and expenses associated with
hotel management services provided to the Partnerships by GC
and it's subsidiaries which were eliminated as a result of the
internalization of management or are now incurred by GHG.
e) Reflects actual revenues and expenses, including salaries,
benefits and other administrative costs related to the Rancon
Contracts that were purchased by GC on January 1, 1995 and
that were contributed to GIRC by the Company. On a historical
basis such revenues and expenses were included in the
operations of GC.
f) Reflects an estimated net increase of salaries and general and
administrative expenses (including legal, accounting and
office expenses) resulting from the Consolidation. The net
increase consists of the following:
Net increase in general and administrative
expenses, including accounting, legal
and directors fees $ 100
Reduction of officers' salaries ( 88)
--------
Total $ 12
========
g) Reflects the estimated depreciation and amortization related
to furniture and equipment and the estimated amortization of
contracts.
h) Reflects the estimated interest associated with the note
payable of $1,000 contributed to GC by the Company. The note
payable bears interest at 9%, with interest only payments, and
matures in March of 1998.
i) Reflects estimated decrease in income tax expense of GC.
Page 38 of 101
<PAGE>
j) Reflects dividends paid by GC equal to $0.80 per share plus
95% of any remaining cash flow. The primary source of
dividends paid by GC is cash flow from operations which is in
excess of GC's earnings.
Page 39 of 101
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH INLAND REALTY CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
Rancon Other As Adjusted
Adjustments(a) Adjustments GIRC
------------ ---------- ----------
Revenues:
Fees and
<S> <C> <C> <C>
reimbursements $ 5,863 $ --- $ 5,863
Interest and other --- --- ---
-------- -------- --------
Total revenues 5,863 --- 5,863
-------- -------- --------
Expenses:
Salaries &
administration 3,118 (224) (b) 2,894
Depreciation and
amortization 717 30 (c) 747
Interest expense --- 101 (d) 101
-------- -------- --------
Total expenses 3,835 (93) 3,742
-------- -------- --------
Income (loss)
before provision for
income taxes 2,028 93 2,121
Income taxes --- (848) (e) (848)
-------- -------- --------
Net income (loss) $ 2,028 $ (755) $ 1,273
======== ======== ========
Preferred stock
dividends $ 1,919 (f)
Common stock
dividends $ 100
</TABLE>
Page 40 of 101
<PAGE>
GLENBOROUGH INLAND REALTY CORPORATION
NOTES AND ADJUSTMENTS TO AS ADJUSTED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands, except per share amounts)
a) Reflects the historical management fees and expenses related to the
Rancon Contracts with a carrying value of $6,813 contributed to
GIRC by the Company.
b) Reflects an estimated reduction of salaries, benefits and other
expenses resulting primarily from reductions in officers' salaries
resulting from the Consolidation.
c) Reflects estimated depreciation of furniture and equipment
contributed to GIRC by the Company.
d) Reflects the estimated interest expense associated with a note
payable consisting of $2,566 contributed to GIRC by the Company and
$2,100 related to the acquisition of certain land parcels. The
notes payable bears interest at 9%, with interest only payments,
and matures in March of 1998.
e) Reflects estimated income tax expense of GIRC.
f) Reflects estimated dividends paid by GIRC equal to $0.80 per share
plus 95% of any remaining cash flow. The primary source of
dividends paid by GIRC is cash flow from operations which is in
excess of GIRC's earnings.
Page 41 of 101
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GLENBOROUGH REALTY TRUST INCORPORATED
By: Glenborough Realty Trust Incorporated,
Date:December 30, 1996 /s/ Andrew Batinovich
Andrew Batinovich
Director, Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
(Principal Financial Officer)
Date:December 30, 1996 /s/ Terri Garnick
Terri Garnick
Senior Vice President,
Chief Accounting Officer,
Treasurer
(Principal Accounting Officer)
Page 42 of 101
<PAGE>
CONTRIBUTION AGREEMENT
THIS AGREEMENT is dated as of August 23, 1996, by and among TRUST
REALTY PARTNERS, a California general partnership ("TRP"), TRUST REALTY
ADVISORS, a California corporation ("TRA"), and GLENBOROUGH PROPERTIES, L.P., a
California limited partnership ("Transferee").
RECITALS
A. Transferee is a California limited partnership whose general
partner is GLENBOROUGH REALTY TRUST INCORPORATED, a Maryland corporation
("GRTI"), whose stock is publicly traded on the New York Stock Exchange.
B. TRP desires to contribute the Property (as defined in Subparagraph
1(a) below) to Transferee and Transferee desires to accept the Property from
TRP, upon the terms and subject to the conditions set forth in this Agreement.
C. TRA is the property manager of the Property pursuant to a Property
and Asset Management and Administrative Services Agreement dated as of July 26,
1993 between TRA, as manager, and TRP, as owner (the "Management Agreement") and
a Brokerage Agreement dated as of ________, 1993, between TRA, as broker, and
TRP, as partnership (the "Leasing Agreement").
D. TRA desires to contribute to Transferee all of TRA's right, title
and interest under the Management Agreement and the Leasing Agreement,
including, without limitation, TRA's rights to the "Sales Commission" (as
defined in the Leasing Agreement) and the "incentive management fee" (as defined
in the Management Agreement), to the extent applicable to the Property (as
herein defined) (collectively, the "Assigned Agreements") and Transferee desires
to accept all of TRA's right, title and interest under the Assigned Agreements
to the extent applicable to the Property, upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Contribution of Property and Assigned Agreements. Subject to and
upon the terms and conditions hereinafter set forth and the representations and
warranties contained herein,
(a) TRP agrees to contribute to Transferee, and Transferee
agrees to accept from TRP, subject to the terms, covenants and conditions set
forth herein, (a) the real property described in Schedule 1(a) attached hereto,
together with any and all buildings and other improvements thereon and, to the
extent owned by TRP, or held directly or indirectly for the benefit of TRP, any
interest therein, and any and all rights, privileges and easements appurtenant
thereto (individually, an "Individual Real Property," and collectively, the
"Real Property"), (b) all of TRP's right, title and interest in and to the
Leases listed in Exhibit J attached hereto (the "Leases"), and any and all
guarantees of the Leases, (individually, an "Individual Lease Right" and
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collectively, the "Lease Rights") and (c) all of TRP's right, title and interest
in and to the personal property and any interest therein owned by TRP or held
directly or indirectly for the benefit of TRP, if any, located on the Real
Property and used in the operation or maintenance of the Real Property, together
with all of TRP's right, title and interest, if any, in and to the following to
the extent assignable: all service contracts, construction contracts for work in
progress, any warranties thereunder, management contracts (including, without
limitation, the Assigned Agreements), reciprocal easement agreements, operating
agreements, maintenance agreements, franchise agreements and other similar
agreements (the "Contracts"), the PMI insurance policy for the Individual
Property known as Mission East (the "PMI Policy"), Transferee's prorated share
(as determined pursuant to Subparagraph 5(f) below) of those certain reserves
which are held by Huntoon, Paige Associates Limited in connection with the Loan
secured by the Individual Property known as Mission East (the "Mission East
Reserves"), all general intangibles relating to design, development, operation,
management and use of the Real Property, all certificates of occupancy, zoning
variances, building, use or other permits, approvals, authorizations, licenses
and consents obtained from any governmental authority in connection with the
development, use, operation or management of the Real Property, all soil tests,
engineering reports, appraisals, architectural drawings, plans and
specifications relating to all or any portion of the Real Property, and all
payment and performance bonds or warranties or guarantees relating to the Real
Property; and all of TRP's right, title and interest in and to any and all of
the following to the extent assignable: trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, other source and business identifiers, trademark
registration and applications for registration used at or relating to the Real
Property and any written agreement granting to TRP any right to use any
trademark or trademark registration at or in connection with the Real Property
(individually, an "Individual Personal Property," and collectively, the
"Personal Property"). The term "Individual Property" means an Individual Real
Property, together with the Individual Lease Rights and Individual Personal
Property related thereto. The term "Property" means all of the Real Property,
the Lease Rights and the Personal Property.
(b) TRA agrees to transfer to GRTI free and clear of any and
all liens, encumbrances, liabilities, claims, charges, and restrictions of any
kind or nature whatsoever, all of TRA's right, title and interest in and to the
Assigned Agreements and GRTI will transfer the Assigned Agreements to
Transferee, who agrees to accept from TRA all of TRA's right, title and interest
in and to the Assigned Agreements.
2. Contribution Consideration.
(a) The Transferee and TRP agree that the total consideration
to be given by the Transferee in return for the Property is Forty Million
Sixty-One Thousand Dollars ($40,061,000) ("Property Consideration"), adjusted as
provided in Subparagraph 5(g), which shall comprise the following components:
(i) The amount that would be required in order to
retire all mortgage debt as described on Schedule 2(a)(i) attached hereto
(excluding prepayment penalties) as of the Closing (as defined in Subparagraph
5(b) below) (the "Loans"), which is presently estimated to be $35,401,921;
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(ii) Cash to be paid to TRP, in an amount to be
specified by TRA at or prior to the Closing ("Cash"); and
(iii) Class B limited partner units ("Units") of
Transferee issued to TRP, which shall be in an amount equal to the Property
Consideration less the total of the Loans and the Cash. By way of example only,
based on the present estimated amount of the Loans as set forth above, and
assuming that TRA specified $3,900,000 of Cash to be paid pursuant to
subparagraph (ii), above, the total Property Consideration would comprise the
following:
Property Consideration $40,061,000
Less:
Loans (subparagraph 2(a)(i)) 35,401,921
Cash (subparagraph. 2(a)(ii)) 3,900,000
Total $39,301,921
Equals:
TRP Units (Subparagraph 2(a)(iii))$ 759,079
(b) GRTI, the Transferee and TRA agree that the total
consideration to be given by GRTI to TRA in return for the Assigned Agreements
is One Million Four Hundred Thousand Dollars ($1,400,000) (the "Management
Consideration;" which, together with the Property Consideration, is collectively
referred to as the "Contribution Consideration"). At the Closing, in
consideration of TRA's contribution of the Assigned Agreements to GRTI, GRTI
shall issue to TRA $1,400,000 worth of GRTI's common stock ("Stock"). GRTI shall
then transfer the Assigned Agreements to Transferee.
(c) For purposes of determining the number of Units and Stock
to be issued pursuant to Subparagraph 2(a)(iii) and 2(b) above, each Unit or
share of Stock, as applicable, shall be deemed to be worth $14.50.
(d) With respect to any Stock to be issued by GRTI to TRA or
to TRP (in the case of a redemption of Units as more fully described in
Subparagraph 2(e) below):
(i) All certificates for the Stock shall bear a legend
in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD OR OFFERED FOR SALE EXCEPT IN
COMPLIANCE WITH SUCH ACT AND LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE NOT TRANSFERABLE,
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EXCEPT IN ACCORDANCE WITH THE PROCEDURES AND
RESTRICTIONS SET FORTH IN THE REGISTRATION RIGHTS
AGREEMENT DATED AS OF __________, 1996, AMONG
GRTI, TRA AND TRP (THE "REGISTRATION RIGHTS
AGREEMENT"), COPIES OF WHICH ARE FILED AT THE
PRINCIPAL OFFICE OF GRTI AND ARE AVAILABLE TO ANY
HOLDER WITHOUT CHARGE UPON WRITTEN REQUEST
THEREFOR. ANY PURPORTED TRANSFER IN VIOLATION OF
SUCH RESTRICTIONS SHALL BE VOID AND OF NO EFFECT.
AS USED HEREIN, 'TRANSFER' SHALL MEAN SALE,
EXCHANGE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF ANY
INTEREST IN A SHARE EXCEPT BY OPERATION OF LAW IN
CONNECTION WITH A MERGER OR CONSOLIDATION OF THE
CORPORATION.
(ii) The certificates for shares of the Stock shall
also bear any other legend required by any applicable state securities law.
(iii) In addition, GRTI shall make a notation regarding
the restrictions on transfer of the Stock in its stock records, and such Stock
shall be transferred on the records of GRTI only if transferred or sold in
compliance with the provisions of the Registration Rights Agreement (as herein
defined).
(iv) The holder of the Stock issued to TRA at the
Closing shall have "piggyback" registration rights for a period of one year as
well as certain other rights, all as more particularly described in the
Registration Rights Agreement.
(e) The Units shall include a redemption option, the specific
terms and provisions of which are or will be set forth in an amendment to
Transferee's partnership agreement, by which, at any time, any person holding
the Units ("Holder") may demand that Transferee redeem the Units. Transferee
shall comply with such demand by redeeming the Units for either (at the election
of GRTI, in its capacity as Transferee's managing general partner, as more
specifically set forth in Transferee's partnership agreement; provided, however,
that notwithstanding the foregoing, such election may be made by such Holder if
such Holder determines that such election may have an adverse income tax effect
on such Holder): (i) cash in an amount equal to the number of Units being
redeemed multiplied by the then fair market value per Unit, or (ii) Stock based
on a ratio of 1 Unit for 1 share of Stock. If the Units are redeemed for Stock,
the Holder shall have "piggyback" registration rights for a period of one year
as well as certain other rights, all as more particularly described in the
Registration Rights Agreement attached hereto as Exhibit A (the "Registration
Rights Agreement").
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(f) On the Closing Date, TRP and TRA shall execute and
deliver, and Transferee shall cause GRTI, so to execute and deliver, the
Registration Rights Agreement.
3. Transferee's Objections to Title Matters. Transferee shall have the
right to disapprove any title exceptions disclosed to Transferee by the Title
Company (as defined in subparagraph 4(d) below) or otherwise disclosed to
Transferee from and after the Effective Date and not described on Schedule 3
attached hereto and made a part hereof (the exceptions described on Schedule 3
being herein referred to as the "Permitted Exceptions") (the "Disapproved
Encumbrances"), and Transferee shall notify TRP in writing of any Disapproved
Encumbrances for each Individual Property within seven (7) business days after
the later of (i) the Effective Date or (ii) the date Transferee receives notice
of any such Disapproved Encumbrance (provided that Transferee's failure to so
notify TRP within such 7-business day period shall be deemed Transferee's
approval of such exception). Notwithstanding the foregoing, Transferee shall be
deemed to have disapproved any delinquent tax, attachment, judgment lien or
mechanic's or supplier's lien, or any other monetary lien other than the Loans
("Monetary Liens"), each of which shall be automatically deemed a Disapproved
Encumbrance. All other title exceptions disclosed to Transferee within the
period described above and not disapproved by Transferee shall constitute
"Permitted Exceptions." Within seven (7) days after the later of (i) the
Effective Date or (ii) the date Transferee notifies TRP of the Disapproved
Encumbrances, TRP shall notify Transferee in writing of any such Disapproved
Encumbrances which TRP is willing and able to cure as of or prior to the
Closing, if any (the "Title Cure Notice"); provided that TRP shall be required
to cure Monetary Liens. Except as so identified in the Title Cure Notice and as
provided in the preceding sentence, TRP shall be deemed to have elected not to
cure such Disapproved Encumbrances. Transferee may, by giving written notice to
TRP on or before the tenth (10th) day after (x) receipt of the Title Cure Notice
or (y) the expiration of the seven (7)-day period described above without reply
from TRP, terminate this Agreement, in which case neither party shall have any
further liability to the other. If Transferee does not so elect within such ten
(10) day period to terminate this Agreement, then Transferee shall be deemed to
have waived its disapproval of the Disapproved Encumbrances pertaining to such
Individual Property and such title exceptions shall then be deemed to be
"Permitted Exceptions."
4. Conditions to Closing. The following conditions are precedent to
Transferee's obligation to accept the Property and the Assigned Agreements (the
"Conditions Precedent"):
(a) The representations and warranties of TRP and TRA
contained herein shall be true and correct as of the Closing Date as though made
at and as of the Closing Date, and TRP's and TRA's covenants under this
Agreement shall be satisfied as of the Closing Date (to the extent such
covenants are to be satisfied as of the Closing Date), and Transferee shall have
received at the Closing a certificate dated as of the Closing Date in the form
of Exhibit B attached hereto and executed (i) on behalf of TRP by executive
officers of the respective general partners of TRP and (ii) on behalf of TRA, by
an executive officer of TRA, certifying as to the fulfillment of the conditions
set forth in this Subparagraph 4(a).
(b) At the Closing, TRP shall convey to Transferee (i) good
and marketable fee title to each Individual Property identified in Schedule 1(a)
by deed in the form of
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Exhibit C-1 through Exhibit C-6 attached hereto, (ii) title to the Lease Rights
pursuant to an assignment and assumption of tenant leases in the form of Exhibit
D attached hereto (the "Assignment of Leases"), (iii) title to the Personal
Property pursuant to a bill of sale in the form of Exhibit E attached hereto and
an assignment and assumption of service contracts, guaranties and warranties and
other intangible property in the form of Exhibit F attached hereto (the
"Assignment of Service Contracts").
(c) At the Closing, TRA shall convey to GRTI all of its
right, title and interest in the Assigned Agreements free and clear of any
defects, liens, encumbrances or claims of any kind by a duly executed assignment
in the form attached as Exhibit G (the "Assignment of Management and Leasing
Agreement").
(d) Chicago Title Insurance Company ("Title Company") shall
be committed to issue at Closing for each Individual Real Property its extended
coverage American Land Title Association Policy of Owner's Title Insurance (Form
B, rev. 10/17/70) in the amount of the Property Consideration attributable to
such Individual Real Property (as determined by Transferee), showing title to
such Individual Real Property vested in Transferee, subject only to the
Permitted Exceptions. The foregoing title policies, together, in each case, with
endorsements, to the extent available in the states where each Individual
Property is located, covering zoning, subdivision map act, survey, access,
contiguity, no violations of covenants, conditions or restrictions and such
other endorsements as Transferee shall reasonably request, are referred to
herein collectively as the "Title Policies." On or before the Closing, TRP shall
cause the Title Company to deliver to Transferee a certification that, in
issuing the Title Policies, the Title Company has not relied on any
representations or indemnities of TRP or any of its affiliates (except as
disclosed in such certification). In addition, as a condition to Transferee's
obligation to close, Transferee shall be satisfied that, as of the Closing,
there is no outstanding financing statement filed in accordance with the Uniform
Commercial Code of any applicable jurisdiction with respect to the Individual
Property or TRP except for any financing statements approved by Transferee prior
to the Effective Date or relating to any of the Loans.
(e) TRP obtaining and delivering to Transferee the tenant
estoppel certificates required under Paragraph 7 below.
(f) TRP obtaining and delivering to Transferee the Payoff
Letters (as defined in Subparagraph 6(a) below) required under Subparagraph 6(a)
below.
(g)The physical condition of the Real Property shall be
substantially the same on the day of Closing as on the Effective Date,
reasonable wear and tear and loss by casualty excepted (subject to the
provisions of Paragraph 11 below).
(h) At the Closing, the Conditions Precedent (as defined and
set forth in that certain Agreement dated as of even date herewith between
Transferee and John Provine ("Provine"), who owns a controlling interest in TRA,
(the "Provine Agreement")) shall have each been satisfied or waived in writing
by Transferee.
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(i)All of the property management and leasing agreements
affecting the Property (whether between TRP, TRA or any other party and such
property managers and leasing agents) shall be terminated as of the Closing Date
at no cost or expense to Transferee.
The Conditions Precedent contained in Subparagraphs 4(a)
through (i) are intended solely for the benefit of Transferee. If any of the
Conditions Precedent is not satisfied, Transferee shall have the right in its
sole discretion either to waive in writing the Condition Precedent and proceed
with the purchase or terminate this Agreement. In addition, the provisions of
Subparagraphs 4(b), 4(c), 4(h) and 4(i) are also covenants of TRP, TRA and
Provine, as applicable.
5. Closing and Escrow.
(a) Upon mutual execution of this Agreement, the parties
hereto shall deposit an executed counterpart of this Agreement with Title
Company and this Agreement shall serve as instructions to Title Company as the
escrow holder for consummation of the purchase and sale contemplated hereby. TRP
and Transferee agree to execute such additional escrow instructions as may be
appropriate to enable the escrow holder to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control unless a contrary intent is expressly
indicated in such supplementary instructions.
(b) The parties shall endeavor to conduct an escrow closing
pursuant to Subparagraph 5(a) above. If, however, an escrow closing is not
practical, the closing of the transactions contemplated herein (the "Closing")
shall be held and delivery of all items to be made at the Closing shall be made
at the offices of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, CA
94304 on or before December 1, 1996 (the "Closing Date"). In the event the
Closing does not occur on or before the Closing Date, the escrow holder shall,
unless it is notified by both parties to the contrary within five (5) days after
the Closing Date, return to the depositor thereof items which were deposited
hereunder. Any such return shall not, however, relieve either party of any
liability it may have for its wrongful failure to close.
(c) At or before the Closing, TRP shall deliver or cause to
be delivered to Transferee the following:
(i) a duly executed Registration Rights Agreement;
(ii) the duly executed and acknowledged Deeds;
(iii) a duly executed Assignment of Leases;
(iv) a duly executed Bill of Sale;
(v) a duly executed Assignment of Service Contracts;
(vi) a duly executed Assignment of Management and
Leasing Agreement;
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(vii) originals (or copies to the extent TRP does not
possess originals) of the Leases;
(viii) duly executed tenant estoppel certificates as
required pursuant to Subparagraph 4(e) above;
(ix) originals (or copies to the extent TRP does not
possess originals) of the Contracts not previously delivered to Transferee;
(x) originals of the building permits and certificates
of occupancy for the Improvements and all tenant-occupied space included within
the Improvements not previously delivered to Transferee;
(xi) a FIRPTA affidavit (in the form attached as
Exhibit H) pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986
(the "Code"), and on which Transferee is entitled to rely, that neither TRP is a
"foreign person" within the meaning of Section 1445(f)(3) of the Code;
(xii) a California Form 590 from TRP (in the form
attached as Exhibit I) certifying that TRP has a permanent place of business in
California or is qualified to do business in California;
(xiii) such resolutions, authorizations, bylaws or
other corporate and/or partnership documents or agreements relating to TRP and
TRA as shall be reasonably required by Title Company;
(xiv) the certificate certifying as to TRP's and TRA's
representations and warranties as required by Subparagraph 4(a) above;
(xv) the Payoff Letters as required by Subparagraph
4(f) above; and
(xvi) any other instruments, records or correspondence
called for hereunder which have not previously been delivered.
Transferee may waive compliance on TRP's part under any of the foregoing items
by an instrument in writing.
(d) At or before the Closing, Transferee shall deliver or
cause to be delivered to TRP or TRA, as the case may be, the following:
(i) a duly executed Registration Rights Agreement;
(ii) a duly executed Assignment of Leases; and
(iii) a duly executed Assignment of Service Contracts.
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(e) TRP and Transferee shall each deposit such other
instruments as are reasonably required by the escrow holder or otherwise
required to close the escrow and consummate the transactions described herein in
accordance with the terms hereof. TRP and Transferee hereby designate Title
Company as the "Reporting Person" for the transaction pursuant to Section
6045(e) of the Code and the regulations promulgated thereunder. Title Company
shall prepare for the mutual review and approval of the parties, a closing
statement to be executed and delivered by each party hereto at the Closing.
(f) With respect to each Individual Property the following
adjustments shall be made, and the following procedures shall be followed:
(i) Items Not to be Prorated. There shall be no
prorations or adjustments of any kind with respect to (a) delinquent rents
collected by Transferee after the Closing; (b) refunds or shortfalls arising
after the Closing with respect to Overage Rents (as defined below) collected by
TRP from tenants prior to the Closing; (c) insurance premiums (except with
respect to the PMI Policy, which is discussed below).
(ii) Basis of Prorations. All prorations shall be
calculated as of 12:01 a.m. on the Closing Date, on the basis of a 365-day year.
(iii) At Closing. As nearly as practicable prior to the
Closing, Transferee and TRP shall prepare a statement for each Individual
Property ("Proration Statement") showing prorations and adjustments, and each
party shall be so credited or charged at the Closing, in accordance with the
following:
a. Rents. With respect to fixed rents ("Fixed
Rents") and additional rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, marketing fund
charges, operating expenses, maintenance escalation rents or charges, common
area expenses, cost-of-living increases or other charges of a similar nature, if
any, and any additional charges and expenses payable under tenant leases
(collectively, "Overage Rents"), TRP shall account to Transferee for any Fixed
Rents or Overage Rents actually collected, and Transferee shall be credited for
its share. For example, if the Closing Date is October 16, Transferee will be
credited for 50% of all October rents collected by TRP prior to the Closing
Date.
b. Expenses. With respect to expenses (including,
without limitation, real property taxes and assessments; current installments
(only) of any improvement bonds or assessments which are a lien on an Individual
Property or which are pending and may become a lien on any Individual Property;
water, sewer and utility charges; amounts payable under any Contract that will
be continued after the Closing; permits, licenses and/or inspection fees; the
PMI Policy; interest on any Loan; and any other expenses normal to the operation
and maintenance of the Property) ("Expenses"):
(1) to the extent Expenses have been paid
prior to the Closing Date, TRP shall account to Transferee for such prepaid
Expenses, and TRP shall be credited for its pro rata share for the period after
the Closing Date;
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(2) to the extent of Expenses not yet paid by
TRP and to be paid in arrears but which are ascertainable (e.g., interest on the
Loans), Transferee shall be credited for TRP's pro rata share of such expenses.
c. Security Deposits. TRP shall deliver to
Transferee all security deposits, letters of credit and other collateral given
to TRP or any of its affiliates or predecessors-in-interest pursuant to any of
the Leases, less any portions thereof applied in accordance with the respective
Lease (together with a statement regarding such applications).
(iv) After Closing. After the Closing Date, Transferee
and TRP shall meet from time to time to discuss adjustments in accordance with
the following:
a. Rents. If Transferee collects any
non-delinquent Fixed Rents or Overage Rents applicable to the month in which the
Closing occurs, TRP's pro rata share of such rents shall be credited to TRP.
b. Expenses. With respect to any invoice received
by Transferee after the Closing Date for Expenses that relates to the month in
which the Closing occurs, Transferee will either, at Transferee's option, (i)
pay the entire amount of the invoice and either bill TRP for TRP's share or
offset TRP's share against any prorated rents due to TRP under subparagraph a,
above, or (ii) compute Transferee's pro rata share, write a check for that
amount in favor of the vendor, and then send the invoice and its check to TRP,
in which case TRP agrees that it will pay for its share and forward the invoice
and the two payments to the vendor.
(g) All costs associated with the transaction, up to but not
exceeding $500,000, shall be charged against TRP only if the Closing occurs, and
in such case will be deducted from the Property Consideration. These costs are
set forth in a budget which was prepared by Transferee and previously delivered
to TRP, and includes, without limitation, all legal and accounting costs of
Transferee and GRTI (including three years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws), all title insurance premiums, all escrow charges, any transfer
taxes, all costs of Transferee's and GRTI's engineering and environmental
analyses, and all survey costs. To the extent any of the foregoing costs are not
determined at Closing, Transferee shall deliver to TRP a statement setting forth
such costs within thirty (30) days after the Closing Date and such costs shall
be paid by TRP to Transferee within five (5) days after receipt by TRP of such
Statement.
(h)Notwithstanding anything to the contrary set forth in this
Agreement, including, without limit, this Paragraph 5, the Mission East Reserves
shall be prorated between Transferee and TRP in the same manner in which rents
are prorated under this Paragraph 5.
(i) Except as otherwise set forth in this Paragraph 5, the
obligations of TRP and Transferee under this Paragraph 5 shall survive the
Closing.
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6. Loans. Transferee and TRP (but at no material cost or liability to
TRP) shall use all reasonable efforts to obtain the consent of the lender of
each Loan to the transfer of the Property to Transferee as well as a payoff
letter confirming the outstanding principal amount of such Loan as of the
Closing Date (collectively, the "Payoff Letters"). In addition, TRP hereby
grants Transferee the right to renegotiate the Loans and to negotiate new loans
or loans to replace the existing Loans; provided that (i) TRP incurs no cost or
liability in connection therewith, and (ii) such new loans and modifications to
any Loans are not effective until the Closing. In no event shall TRP be
responsible for the payment of any prepayment fees or yield maintenance fees
payable in connection with the Loans. The parties shall execute all documents
necessary or desirable to evidence or effectuate the modification of Loans as
provided in this Paragraph 6.
7. Estoppel Certificates. TRP shall use all reasonable efforts to
obtain an estoppel certificate from each tenant of the Property (each, a
"Tenant") (other than Tenant's under apartment leases at the Properties listed
on Schedule 7 attached hereto), dated no earlier than forty-five (45) days prior
to the Closing Date, substantially in the form of Exhibit J attached hereto,
conforming to the most recent rent roll approved by Transferee and alleging no
defaults, offsets, or claims against the lessor (the "Estoppel Certificate"). It
shall be a condition to Transferee's obligation to close the transactions
contemplated in this Agreement that on or before the Closing:
(a) TRP delivers to Transferee an Estoppel Certificate from
Tenants occupying seventy-five percent (75%) of the rentable area of each
Individual Property, including all tenants occupying more than ten percent (10%)
of the rentable area of each such Individual Property (collectively, the
"Required Tenants"), and, with respect to all other tenants (collectively, the
"Non-Required Tenants"), there shall exist no dispute with TRP, which dispute is
material to the use, value or economics of such Individual Property, as
determined on an individual basis by Transferee in good faith in Transferee's
sole discretion (a "Material Non-Required Tenant Dispute") (and Transferee shall
be afforded the opportunity to inquire of any Non-Required Tenant which does not
provide an Estoppel Certificate as to whether any such dispute exists); or
(b) To the extent that TRP is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, TRP shall
deliver to Transferee and Transferee may, but shall not be obligated to, accept,
on the Closing Date a certification in which TRP warrants and represents to
Transferee, with respect to such missing Estoppel Certificates, or any missing
items required to be included therein, each item set forth in the Estoppel
Certificate attached as Exhibit J for the missing Estoppel Certificates.
(c) If the conditions contained in Subparagraphs 7(a) and (b)
above are not satisfied, then Transferee may, by written notice given to TRP
before the Closing, elect to either waive such conditions or terminate this
Agreement.
8. TRP's and TRA's Representations and Warranties. TRP and TRA each
hereby represents and warrants to Transferee as follows:
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(a) TRA is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. TRP is a general
partnership duly organized, validly existing and in good standing under the laws
of the State of California.
(b) TRP and TRA each have full power and authority to execute
and deliver this Agreement and to perform all of the terms and conditions hereof
to be performed by TRP and TRA, respectively, and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of TRP and TRA and is the legal, valid and binding obligation of each of TRP and
TRA and is enforceable against each of TRP and TRA in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equitable principles (whether or not such
enforceability is considered in a proceeding at law or in equity). Neither TRP
nor TRA is presently subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar proceeding.
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of TRP's partnership agreement or TRA's
articles of incorporation or bylaws or any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restrictions of any
government, governmental agency or court to which either TRP or TRA is subject,
or (ii) result in any material breach or the termination of any lease, agreement
or other instrument or obligation to which either TRP or TRA is a party or by
which any of the Property may be subject, or cause a lien or other encumbrance
to attach to any of the Property or the Assigned Agreements. Neither TRP nor TRA
is a party to any contract or subject to any other legal restriction that would
prevent or restrict complete fulfillment by TRP or TRA of all of the terms and
conditions of this Agreement or compliance with any of the obligations under it.
(d) All material consents required from any governmental
authority or third party in connection with the execution and delivery of this
Agreement by TRP and TRA or the consummation by TRP or TRA of the transactions
contemplated hereby, if any, have been made or obtained or shall have been made
or obtained by the Closing Date. Complete and correct copies of all such
consents, if any, shall be delivered to Transferee.
(e) There are no adverse or other parties in possession of
the Property, or any part thereof, except TRP and tenants under the Leases. No
party has been granted any license, lease, or other right relating to the use or
possession of the Property or any part thereof, except tenants under the Leases.
(f) To the best of TRA's and TRP's actual knowledge, except
as set forth on Schedule 8(f), there is no litigation pending or threatened,
against either TRP or TRA or any basis therefor that arises out of the ownership
of the Property or that might detrimentally affect the value or the use or
operation of any of the Property for its intended purpose or the ability of TRP
or TRA to perform its obligations under this Agreement. TRP and TRA shall notify
Transferee promptly of any such litigation of which either TRP or TRA becomes
aware.
(g) Except as set forth on Schedule 8(g), at the time of
Closing there will be no outstanding written or oral contracts made by TRP for
any improvements to the
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Property which have not been fully paid for and TRP shall cause to be discharged
all mechanics' and materialmen's liens arising from any labor or materials
furnished to the Property prior to the time of Closing.
(h) Schedule 8(h) lists all of the tangible Personal
Property.
(i) Attached hereto as Exhibit K is a rent roll (the "Rent
Roll") for each Property showing all of the Leases for each such Property as of
the date of this Agreement. Said Rent Roll is complete in all material respects
and all information therein is accurate as of its date, and as of the Effective
Date there are no Leases or tenancies with respect to the Property or any part
thereof except as therein set forth. Except as disclosed on the Rent Roll, no
rental under any Lease has been collected in advance of the current month. The
Rent Roll shall be updated at the Closing to reflect any changes which occur
after the Effective Date. TRP is the owner of the entire lessor's interest in
and to each of the Leases and none of the Leases or the rentals or other sums
payable thereunder has been assigned or otherwise encumbered, except in
connection with the Loans.
(j)Schedule 8(j) attached hereto sets forth a list of all
notes or other evidence of indebtedness, loan agreements, mortgages, guaranty
agreements, and any and all other documents entered into by TRP and all
amendments, modifications and supplements thereto (collectively the "Loan
Documents") in connection with the Loans and all matters in connection with the
Loans.
(k) To the best of TRP's actual knowledge, (i) the Exhibits
and Schedules attached hereto, as provided by or on behalf of TRP, completely
and correctly present in all material respects the information required by this
Agreement to be set forth therein, and (ii) TRP has delivered to Transferee true
and correct copies of all of the due diligence materials pertaining to the
Property which are in the possession or control of TRP or TRA. No representation
or warranty by TRP herein and, to the best of TRP's actual knowledge, no
information disclosed in the Exhibits and Schedules hereto supplied by or on
behalf of TRP contains any untrue statement of a material fact or omits to state
a fact necessary to make the statements contained herein or therein not
materially misleading. TRP has no actual knowledge of any events, transactions
or other facts which, either individually or in the aggregate might reasonably
give rise to circumstances or conditions which might have a material adverse
affect on the Property.
(l) TRP is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(m) (i) (A) TRP and TRA are acquiring the Units and the Stock
(the Units and the Stock being hereinafter sometimes referred to as the
"Securities"), respectively, for investment for its own account, not as a
nominee or agent, and not with a view to the sale in connection with a public
distribution of any part thereof; and (B) TRP and TRA each have no present
intention of selling, granting a participation in or otherwise distributing, and
do not have any contract, undertaking, agreement or arrangement with any natural
person, corporation, partnership, association or other entity ("Person") to
sell, transfer or grant a participation to such person, or to any third person,
with respect to any of the Securities.
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(ii) TRP and TRA each understand that the Securities
are not registered under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act") on the ground that
the sale and the issuance of the Securities hereunder is exempt from
registration under the Securities Act pursuant to Section 4(2) thereof and
regulations issued thereunder, and that the Transferee's reliance on such
exemption is predicated on TRP's and TRA's representations set forth herein.
(iii) TRP and TRA each represent that it and each of
its equity owners, (A) is both an "accredited investor" as that term is defined
in Regulation D promulgated under the Securities Act and a purchaser excluded
from the count of investors under Section 25102(f) of the California
Corporations Code; and (B) alone or together with its professional advisor, has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of investment in the Transferee and has the
capacity to protect its own interest in connection with the transactions
contemplated hereby. TRP and TRA each further represent that, during the course
of the transaction and prior to its purchase of shares of the Securities, it had
access to, the opportunity to ask questions of, and receive answers from,
representatives of the Transferee concerning the terms and conditions of the
offering and to obtain additional information (to the extent the Transferee
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to it or
to which it had access.
(iv) TRP and TRA have relied solely on its own
investigations in making a decision to purchase the Securities, and has received
no representation or warranty from Transferee, or any of its affiliates,
employees or agents, other than those set forth in this Agreement.
(v) TRP and TRA understand that the Securities may not
be sold, transferred or otherwise disposed of without registration under the
Securities Act or pursuant to an exemption therefrom, and that in the absence of
an effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, TRP and TRA are aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that Rule are met. Among the current conditions for use of
Rule 144 by certain holders is the availability to the public of current
information about Transferee. Such information is not now available, and the
Transferee has no present plans to make such information available. TRP and TRA
represent that, in the absence of an effective registration statement covering
the Securities, it will sell, transfer or otherwise dispose of the Securities
only in a manner consistent with its representations set forth herein and then
only in accordance with the provisions of this Agreement and applicable laws and
regulations.
(vi) TRP and TRA each agree that, except as
specifically contemplated hereunder, in no event will it transfer or dispose of
any of the Securities other than pursuant to an effective registration statement
under the Securities Act, unless and until (A) there is compliance with all
requirements contained in other sections of this Agreement and the Transferee's
partnership agreement; (B) TRP and/or TRA, as the case may be, shall have
notified Transferee of the proposed disposition and shall have furnished
Transferee with a statement of the
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circumstances surrounding the disposition; (C) if requested by Transferee, at
the expense of TRP and/or TRA, as the case may be, or its transferee, it shall
have furnished to Transferee an opinion of counsel, reasonably satisfactory to
Transferee, to the effect that such transfer may be consummated without
registration under the Securities Act; and (D) the transferee executes and
delivers an assumption of the terms and conditions of this Agreement and, in the
case of the Units, the Transferee's partnership agreement satisfactory to the
Transferee.
Transferee expressly understands and agrees that the phrase "to the best of
TRP's or TRA's actual knowledge" or words of similar import as used in Paragraph
8 means the actual knowledge of John Provine, without any independent
investigation having been made.
9. Representations and Warranties of Transferee. Transferee hereby
represents and warrants to TRP and TRA as follows:
(a) Transferee is a duly organized and validly existing
limited partnership under the laws of the State of California.
(b) Transferee has full power and authority to execute and
deliver this Agreement and to perform all of the terms and conditions hereof to
be performed by Transferee, and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Transferee and is
the legal, valid and binding obligation of Transferee and is enforceable against
Transferee in accordance with its terms, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by general
equitable principles (whether or not such enforceability is considered in a
proceeding at law or in equity). Transferee is not presently subject to any
bankruptcy, insolvency, reorganization, moratorium, or similar proceeding.
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of Transferee's partnership agreement
or any statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restrictions of any government, governmental agency or court to
which Transferee is subject, or (ii) result in any material breach or the
termination of any lease, agreement or other instrument or obligation to which
Transferee is a party. Transferee is not a party to any contract or subject to
any other legal restriction that would prevent or restrict complete fulfillment
by Transferee of all of the terms and conditions of this Agreement or compliance
with any of the obligations under it.
(d) All material consents required from any governmental
authority or third party in connection with the execution and delivery of this
Agreement by Transferee or the consummation by Transferee of the transactions
contemplated hereby have been made or obtained or shall have been made or
obtained by the Closing Date. Complete and correct copies of all such consents
shall be delivered to TRP and TRA.
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10. Indemnification.
(a) Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement. The indemnity contained in this Subparagraph
10(a) shall not be interpreted to expand in any way the indemnities provided in
Subparagraphs 10(b) and 10(c).
(b) Except as otherwise expressly set forth in this
Agreement, TRP and TRA each agree to indemnify Transferee and GRTI and defend
and hold Transferee and GRTI harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Transferee and/or GRTI resulting from or arising out of any transaction entered
into (including, without limit, any of the Loans), any state of facts existing,
or any personal injury or property damage occurring in, on or about the Property
or relating thereto, before the Closing Date, from any cause whatsoever other
than as a consequence of the acts or omissions of Transferee, its agents,
employees or contractors.
(c) Except as otherwise expressly set forth in this
Agreement, Transferee agrees to indemnify TRP and TRA and defend and hold TRP
and TRA harmless from any claims, losses, demands, liabilities, costs, expenses,
penalties, damages and losses, including, without limitation, attorneys' fees,
asserted against, incurred or suffered by TRP or TRA resulting from or arising
out of any transaction entered into (including, without limit, the any of the
Loans), any state of facts existing, or any personal injury or property damage
occurring in, on or about the Property or relating thereto, after the Closing
Date, from any cause whatsoever other than as a consequence of the acts or
omissions of TRP, TRA, or their respective agents, employees or contractors.
(d) The indemnification provisions of this Paragraph 10 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
11. Risk of Loss.
(a)Minor Loss. Transferee shall be bound to accept the
Property for the full Property Consideration as required by the terms hereof,
without regard to the occurrence or effect of any damage to an Individual
Property or destruction of any improvements thereon or condemnation of any
portion of an Individual Property, provided that: (a) the cost to repair any
such damage or destruction does not exceed twenty percent (20%) of the portion
of the Property Consideration allocated to such Individual Property or, in the
case of a partial condemnation, the value of the portion of the Individual
Property taken does not exceed twenty percent (20%) of the portion of the
Property Consideration allocated to such Individual Property; (b) upon the
Closing, there shall be a credit against the Property Consideration due
hereunder equal to the amount of
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any insurance proceeds or condemnation awards collected by TRP as a result of
any such damage or destruction or condemnation, plus the amount of any insurance
deductible; (c) insurance or condemnation proceeds available to TRP are
sufficient to cover the cost of restoration; (d) the insurance carrier has
admitted liability for the payment of such costs; and (e) the Loan, if any, on
the Individual Property in question is not accelerated or defaulted by reason of
such casualty or condemnation. If the proceeds or awards have not been collected
as of the Closing, then TRP's right, title and interest to such proceeds or
awards shall be assigned to Transferee.
(b)Major Loss. If the cost to repair such damage or
destruction to an Individual Property exceeds twenty percent (20%) of the
portion of the Property Consideration allocated to such Individual Property or,
in the case of condemnation, if the value of the portion of the Individual
Property taken exceeds twenty percent (20%) of the portion of the Property
Consideration allocated to such Individual Property, then Transferee may, at its
option to be exercised by written notice to TRP within five (5) business days of
TRP'S notice to Transferee of the occurrence of the damage or destruction or the
commencement of condemnation proceedings, either (a) elect to terminate this
Agreement, or (b) consummate the purchase of all of the Property for the full
Property Consideration as required by the terms hereof, subject to the credits
against the Property Consideration provided below. If Transferee elects to
proceed with the purchase of all of the Property, then, upon the Closing,
Transferee shall be given a credit against the Property Consideration due
hereunder equal to the amount of any insurance proceeds or condemnation awards
collected by TRP as a result of any such damage or destruction or condemnation,
plus the amount of any insurance deductible. If the proceeds or awards have not
been collected as of the Closing, then TRP's right, title and interest to such
proceeds or awards shall be assigned to Transferee. If Transferee fails to give
TRP notice within such five (5) business day period, then Transferee will be
deemed to have elected to terminate this Agreement.
12. Inspections. Prior to the Closing Date, TRP shall afford
authorized representatives of Transferee reasonable access to the Property for
purposes of satisfying Transferee with respect to the representations,
warranties and covenants of TRP contained herein and with respect to
satisfaction of any Conditions Precedent to the Closing contained herein.
Transferee hereby agrees to indemnify and hold TRP harmless from any damage or
injury to persons or property caused by Transferee or its authorized
representatives during their entry and investigations prior to the Closing. In
the event this Agreement is terminated, Transferee shall restore the Property to
substantially the condition in which it was found. This indemnity shall survive
the termination of this Agreement or the Closing, as applicable.
13. Leases And Other Agreements; Capital Improvements
(a) Except as otherwise contemplated or permitted by this
Agreement or approved by Transferee in writing, from the Effective Date to the
Closing Date, TRP will cause TRP to operate, maintain, repair and lease the
Property in a prudent manner, in the ordinary course, on an arm's-length basis
and consistent with their past practices (and without limiting the foregoing,
TRP shall, in the ordinary course, negotiate with prospective tenants and enter
into leases of the Property, enforce leases in all material respects, pay all
costs and expenses of the Property, including, without limitation, debt service,
real estate taxes and assessments, maintain insurance and pay and perform
obligations under the Loan Documents) and will not dispose of or
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encumber any of the Property, except for dispositions of personal property in
the ordinary course of business.
(b) Notwithstanding the above terms of this Paragraph 13, TRP
shall not without the prior written approval of Transferee, take any of the
following actions:
(ii) execute or terminate any new lease, lease
amendment or lease renewal covering in excess of 5,000 square feet in the case
of any lease of industrial space, 2,000 square feet in the case of any lease of
office space, or 2,000 square feet in the case of any lease of retail space, or
modify or waive any material term thereof.
(iii) Except as set forth in Subparagraph 4(i), enter
into, execute or terminate any operating agreement, reciprocal easement
agreement, management agreement or any lease, contract, agreement or other
commitment of any sort (including any contract for capital items or
expenditures), with respect to any one or more of the Individual Properties
requiring payments to or by TRP in excess of $10,000 per annum, or the
performance of services by TRP the value of which is in excess of $10,000 per
annum; or
(iv) waive or modify any material term under any Loan
Document.
(c) In connection with any new leases or Lease modifications
affecting the Property entered into between the Effective Date and the Closing
in accordance with Subparagraph 13(b) above, the cost of tenant improvement work
and leasing commissions shall be prorated between Transferee and TRP as of the
Closing based on the portion of the lease term, if any, occurring before the
Closing Date and the portion of the lease term occurring on and after such date.
Notwithstanding the foregoing, TRP shall be responsible for the cost of tenant
improvement work and leasing commissions for all Leases (and amendments thereto)
entered into prior to the Effective Date (regardless of when the same are
payable), and TRP's obligations with respect thereto shall survive the Closing.
(d) Between the Effective Date and the Closing, TRP shall
continue to undertake capital improvements with respect to the Individual
Properties in the ordinary course. TRP acknowledges that it has performed
certain repair work to the decks at the Mission East Property and, that
notwithstanding anything to the contrary contained in this Agreement, TRP shall
be responsible for payment of all such work performed by or on behalf of TRP
prior to Closing.
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14. Cooperation. TRP and Transferee shall cooperate and do all acts as
may be reasonably required or requested by the other with regard to the
fulfillment of any Condition Precedent or the consummation of the transactions
contemplated hereby including execution of any documents, applications or
permits. TRP hereby irrevocably authorize Transferee and its agents to make all
inquiries of any third party, including any governmental authority, as
Transferee may reasonably require to complete its due diligence.
15. Miscellaneous.
(a)Notices. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery, (ii) one (1) day after being
deposited with Federal Express or another reliable overnight courier service or
transmitted by facsimile telecopy, or (iii) two (2) days after being deposited
in the United States mail, registered or certified mail, postage prepaid, return
receipt required, and addressed as follows:
If to TRP: c/o Trust Realty Advisors
2361 Campus Drive, Suite 204
Irvine, California 92715
Att'n: John Provine
Telephone: (714) 852-7900
Fax No.: (714) 852-0730
With a copy to: McDermott, Will & Emery
1301 Dove Street, Suite 500
Newport Beach, California 92660-2444
Att'n: Thomas Brown
Telephone: (714) 851-0633
Fax : (714) 851-9348
If to Transferee: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Att'n: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304-1018
Att'n: Philip J. Levine
Telephone: (415) 813-5613
Fax : (415) 494-0792
or such other address as either party may from time to time specify in writing
to the other.
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(b) Brokers and Finders. Except for John Provine who shall be
paid a finder's fee by Transferee pursuant to the terms of the Provine
Agreement, neither party has had any contact or dealings regarding the Property,
or any communication in connection with the subject matter of this transaction,
through any real estate broker or other person who can claim a right to a
commission or finder's fee in connection with the sale contemplated herein. In
the event that any other broker or finder perfects a claim for a commission or
finder's fee based upon any such contact, dealings or communication, the party
through whom the other broker or finder makes its claim shall be responsible for
said commission or fee and shall indemnify and hold harmless the other party
from and against all liabilities, losses, costs and expenses (including
reasonable attorneys' fees) arising in connection with such claim for a
commission or finder's fee. The provisions of this Subparagraph shall survive
the Closing.
(c) Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors, heirs, administrators and assigns. Transferee shall have the right,
with notice to TRP and TRA (and only with TRP'S and TRA's consent, which consent
may be withheld in their respective sole discretion), to assign its right, title
and interest in and to this Agreement to one or more assignees at any time
before the Closing Date. In the event of an approved assignment by Transferee,
Transferee shall not be relieved of any and all obligations under this Agreement
and any other instruments executed pursuant hereto, but such assignee(s) shall
be substituted in its place and will assume all obligations of Transferee
hereunder. Neither TRP nor TRA shall have the right to assign any of their
respective interest in this Agreement.
(d) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
TRP, TRA and Transferee.
(e) Continuation and Survival of Representations and
Warranties, Etc. All representations and warranties by the respective parties
contained herein or made in writing pursuant to this Agreement are intended to
and shall remain true and correct as of the time of Closing, shall be deemed to
be material, and, together with all conditions, covenants and indemnities made
by the respective parties contained herein or made in writing pursuant to this
Agreement (except as otherwise expressly limited or expanded by the terms of
this Agreement), shall survive the execution and delivery of this Agreement and
the Closing, or, to the extent the context requires, beyond any termination of
this Agreement.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. The parties
recognize that, with respect to some of the Individual Properties located
outside of the State of California, it may be necessary for the parties to
comply with certain aspects of the law of such states in order to consummate the
purchase and sale of Individual Properties pursuant hereto. The parties agree to
comply with such other laws to the extent necessary to consummate the purchase
and sale of such Individual Properties, provided that it is the parties' intent
that the provisions of this Agreement be applied to each Individual Property in
a manner which results in the greatest consistency possible. For this reason,
and because of the large number of Individual Properties located in the
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State of California, the parties have agreed that California law shall govern
with respect to the purchase and sale of each Individual Property pursuant
hereto to the greatest extent possible.
(g) Merger of Prior Agreements. This Agreement and the
Exhibits hereto constitute the entire agreement between the parties and
supersede all prior agreements and understandings between the parties relating
to the subject matter hereof.
(h) Enforcement. If either party hereto fails to perform any
of its obligations under this Agreement or if a dispute arises between the
parties hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this
Agreement.
(j) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
(k) Marketing. TRP agrees not to market or show the Property
to any other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date"
shall mean the first date on which both TRP, TRA and Transferee shall have
executed this Agreement.
(m) Confidentiality. Transferee, TRP and TRA shall each
maintain as confidential any and all material or information about the other or,
in the case of Transferee and its agents, employees, consultants and
contractors, about the Property, and shall not disclose such information to any
third party, except, in the case of information about the Property and TRP, to
Transferee's lender or prospective lenders, insurance and reinsurance firms,
attorneys, environmental assessment and remediation service firms and
consultants, as may be reasonably required for the consummation of the
transaction contemplated hereunder and/or as required by law.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
16. Special Provisions Regarding Texas Property. With respect to any
Individual Property located in the state of Texas, Transferee hereby represents
and warrants that
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(i) Transferee is not in a significantly disparate bargaining position with TRP,
(ii) Transferee is represented by legal counsel in connection with the
transactions contemplated by this Agreement, and (iii) such Individual Property
is not a family residence occupied or to be occupied as Transferee's residence.
Transferee hereby waives any claim it may now have or which arises in the future
against TRP, its heirs, personal representatives, agents, employees, directors,
officers, agents, representatives, successors and assigns arising by virtue of
the provisions of the Texas Business and Commerce Code Section 17.41, et seq.,
other than Section 17.555, which relates, in whole or in part, to this
Agreement, any such Individual Property, or any transaction between the parties
hereto relating to or arising out of this Agreement.
17. Non-Recourse Allocation. Transferee and GRTI agree that up to $11
million of non-recourse mortgage debt shall be allocated to TRP or an entity
designated by TRP for not less than twenty-five (25) years, so as to provide
continuing debt basis for income tax purposes.
18. Determination of Material Inaccuracy. Notwithstanding any
provision of this Agreement to the contrary, Transferee shall not be entitled to
any right or remedy under this Agreement with respect to the first $10,000 in
damages suffered by Transferee as a result of any inaccuracies in any
representations or warranties (on a cumulative basis and not per each such
inaccuracy) made by TRP and/or TRA pursuant to Paragraph 8 hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Transferee: GLENBOROUGH PROPERTIES, L.P.
a California limited partnership
Dated: By Glenborough Realty Trust Incorporated,
a Maryland corporation, its general partner
By:
Its:
TRP: TRUST REALTY PARTNERS
a California general partnership
By Trust Realty Advisors, a California corporation
By:
Its:
By TRP-LLC, a ____________________
By:
Dated: Its:
TRA: TRUST REALTY ADVISORS
a California corporation
Dated: _____________
By:
Its:
Page 65 of 101
<PAGE>
LIST OF EXHIBITS
Exhibit A - Registration Rights Agreement
Exhibit B - Certificate Re: Representations and Warranties
Exhibit C-1 - C-6 Deeds
Exhibit D - Assignment of Leases
Exhibit E - Bill of Sale
Exhibit F - Assignment of Service Contracts
Exhibit G - Assignment of Management and Leasing Agreement
Exhibit H - FIRPTA Affidavit
Exhibit I - California Form 590-RE
Exhibit J - Estoppel Certificate
Exhibit K - Rent Roll
Page 66 of 101
<PAGE>
LIST OF SCHEDULES
Schedule 1(a) - Real Property
Schedule 2(a)(ii) - Loans
Schedule 3 - Permitted Exceptions
Schedule 7 - Apartment Properties
Schedule 8(f) - Litigation
Schedule 8(g) - Outstanding Contracts
Schedule 8(h) - Personal Property
Schedule 8(j) - Loan Documents
Schedule 10(d) - List of Entities
Page 67 of 101
<PAGE>
SCHEDULE 1(a)
REAL PROPERTY
Page 68 of 101
<PAGE>
SCHEDULE 2(a)(ii)
LOANS
Page 69 of 101
<PAGE>
SCHEDULE 3
PERMITTED EXCEPTIONS
Page 70 of 101
<PAGE>
SCHEDULE 7
APARTMENT PROPERTIES
1. Sahara Gardens
2. Villas De Mission
Page 71 of 101
<PAGE>
SCHEDULE 8(f)
LITIGATION
NONE
Page 72 of 101
<PAGE>
SCHEDULE 8(g)
OUTSTANDING CONTRACTS
NONE
Page 73 of 101
<PAGE>
SCHEDULE 8(h)
PERSONAL PROPERTY
NONE
Page 74 of 101
<PAGE>
SCHEDULE 8(j)
LOAN DOCUMENTS
Page 75 of 101
<PAGE>
SCHEDULE 10(d)
LIST OF ENTITIES
1. AUGUST INCOME/GROWTH FUND VI, a California limited partnership;
2. AUGUST PROPERTIES FUND II, a California limited partnership;
3. AUGUST INCOME/GROWTH FUND V, a California limited partnership;
4. AUGUST INCOME/GROWTH FUND 82, a California limited partnership;
5. AUGUST PROPERTIES FUND III, a California limited partnership; and
6. AUGUST PROPERTIES FUND 82, a California limited partnership.
Page 76 of 101
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
Page 77 of 101
<PAGE>
EXHIBIT B
CERTIFICATE REGARDING REPRESENTATIONS AND WARRANTIES
TRUST REALTY PARTNERS, a California general partnership ("TRP"), and
TRUST REALTY ADVISORS, a California corporation ("TRA"), understand that
GLENBOROUGH PROPERTIES, L.P., a California limited partnership ("Transferee"),
is accepting from TRP and TRA the Property, and the Management Agreement and
Leasing Agreement, respectively, pursuant to that certain Contribution
Agreement, dated as of the ___ day of August, 1996 (the "Contribution
Agreement") and that in connection therewith, Transferee and its successors and
assigns, may rely upon the truth and accuracy of the information contained in
this certificate in accepting the Property and the Management Agreement and
Leasing Agreement. Any term used herein which is capitalized but not otherwise
defined shall have the meaning set forth in the Contribution Agreement.
TRP and TRA each represent and warrant to Transferee that all
representations and warranties of TRP and TRA under the Contribution Agreement
are true and correct in all material respects as of the Closing Date.
Dated as of the ___ day of __________, 1996.
TRP:
TRUST REALTY PARTNERS,
a California general partnership
By:
Its:
TRA:
TRUST REALTY ADVISORS,
a California corporation
By:
Its:
Page 78 of 101
<PAGE>
EXHIBIT C-1
CALIFORNIA DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304-1018
Attention: __________________
MAIL TAX STATEMENTS TO:
_____________________________
_____________________________
_____________________________
Attention:_____________________
Documentary Transfer Tax is not of public record and is shown on a
separate sheet attached to this deed.
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
______________________________________________ hereby grants to
____________________________________________, the real property located in the
City of __________, County of _______________, State of California, described as
follows:
Executed as of this ___ day of _____________, 1996.
_________________________________
[GRANTOR}
[ADD NOTARY FORM]
Page 79 of 101
<PAGE>
______________, 1996
________ County Recorder
_______________________
_______________________
_______________________
Re: Request That Statement of Documentary
Transfer Tax Not be Recorded
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue
and Taxation Code that this statement of tax due not be recorded with the
attached deed but be affixed to the deed after recordation and before return as
directed on the deed.
The attached deed names ____________________________________ , as
grantor and ______________________________________, as grantee.
The property being transferred and described in the attached deed is
located in the City of ____________, County of _______________, State of
California.
The amount of Documentary Transfer Tax due on the attached deed is
$________ computed on full value of the property conveyed.
________________________________
Page 80 of 101
<PAGE>
EXHIBIT C-2
FORM OF TEXAS DEED
SPECIAL WARRANTY DEED
Date: __________, 199_
Grantor: ____________________
Grantor's Mailing Address (including country):
_________________________________________________________________
City of __________, County of __________, State of __________ (__) zip code
Grantee: ____________________
Grantee's Mailing Address (including county):
_________________________________________________________________
City of __________, County of __________, State of __________ (__) zip code
Consideration:
TEN DOLLARS ($10.00) and other valuable consideration to the undersigned paid by
the Grantee herein named, the receipt and sufficiency of which is hereby
acknowledged.
Property (including any improvements):
See Schedule 1 attached hereto and incorporated herein for all purposes
Current ad valorem taxes on the property having been prorated as of the date
hereof, Grantee assumes the payment of same.
Grantor grants, sells and conveys to Grantee the property, together with all and
singular the rights and appurtenances thereto in anywise belonging, to have and
to hold same to Grantee, Grantee's heirs, executors, administrators, successors,
or assigns forever. Grantor binds Grantor and Grantor's heirs, executors,
administrators and successors to warrant and forever defend all and singular the
property unto Grantee and Grantee's heirs, executors, administrators,
successors, and assigns against every person whomsoever lawfully claiming or to
claim the same or any part thereof when the claim is by, through, or under
Grantor, but not otherwise.
When the context requires, singular nouns and pronouns include the plural.
Page 81 of 101
<PAGE>
Executed on this __________ day of __________, 19__.
______________________________
By: ______________________
Name: ____________________
Title: ___________________
[Signatures must be acknowledged]
WHEN RECORDED, RETURN TO:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
Attn: Philip J. Levine, Esq.
Page 82 of 101
<PAGE>
ASSIGNMENT OF LEASES
THIS ASSIGNMENT ("Assignment") dated as of October __, 1996, is
entered into by and between TRUST REALTY PARTNERS, a California general
partnership ("Assignor"), and GLENBOROUGH PROPERTIES, L.P., a California limited
partnership ("Assignee").
W I T N E S S E T H :
WHEREAS, Assignor is the lessor under certain leases executed with
respect to certain real property described in Exhibit A attached hereto (the
"Property"), which leases are described in Schedule 1 attached hereto (the
"Leases"); and
WHEREAS, Assignor desires to assign its interest as lessor in the
Leases to Assignee, and Assignee desires to accept the assignment thereof;
NOW, THEREFORE, in consideration of the promises and conditions
contained herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the lessor's obligations under the Leases.
4. Except as otherwise set forth in the Contribution Agreement (as defined
in paragraph 7 below), effective as of the Effective Date, Assignee hereby
assumes all of the lessor's obligations under the Leases and agrees to indemnify
Assignor against and hold Assignor harmless from any and all cost, liability,
loss, damage or expense, including without limitation, reasonable attorneys'
fees, originating subsequent to the Effective Date and arising out of the
lessor's obligations under the Leases.
5. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
6. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
Page 83 of 101
<PAGE>
7. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in that certain Contribution Agreement dated as
of August 23, 1996, by and among Assignor, Assignee, and Trust Realty
Advisors(the "Contribution Agreement")).
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment the
day and year first above written.
ASSIGNOR: TRUST REALTY PARTNERS,
a California general partnership
By:
Its: ___________________________
ASSIGNEE: GLENBOROUGH PROPERTIES, L.P.,
a California limited partnership
By:
Its: ___________________________
Page 84 of 101
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 85 of 101
<PAGE>
Schedule 1 to
Assignment
of Leases
Page 86 of 101
<PAGE>
WARRANTY BILL OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, TRUST REALTY PARTNERS, a California general partnership ("TRP"),
does hereby sell, transfer, and convey to GLENBOROUGH PROPERTIES, L.P., a
California limited partnership ("Transferee"), all personal property owned by
TRP and located on or in or used in connection with the Real Property and
Improvements (as such terms are defined in that certain Contribution Agreement
dated as of August 23, 1996, between TRP, Transferee and Trust Realty Advisors),
including, without limitation, those items described in Schedule A attached
hereto.
TRP does hereby represent to Transferee that TRP is the lawful owner
of such personal property, that such personal property is free and clear of all
encumbrances, and that TRP has good right to sell the same as aforesaid and will
warrant and defend the title thereto unto Transferee, its successors and
assigns, against the claims and demands of all persons whomsoever.
DATED this ____ day of October, 1996.
TRP: TRUST REALTY PARTNERS,
a California general partnership
By:
Its: _______________________
Page 87 of 101
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 88 of 101
<PAGE>
ASSIGNMENT OF SERVICE CONTRACTS
WARRANTIES AND GUARANTIES
AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT ("Assignment") is made and entered into as of this _____
day of October, 1996, by TRUST REALTY PARTNERS, a California general partnershp
("Assignor"), to GLENBOROUGH PROPERTIES, L.P., a California limited partnership
("Assignee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third
party with respect to any building, building component, structure, fixture,
machinery, equipment, or material situated on, contained in any building or
other improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b)all of the Service Contracts listed in Schedule 2 attached hereto;
and
(c) any Intangible Property (as defined in that certain Contribution
Agreement dated as of August 23, 1996 among Assignor, Assignee (or Assignee's
predecessor in interest) and Trust Realty Advisors, a California corporation
(the "Contribution Agreement")).
ASSIGNOR AND ASSIGNEE FURTHER HEREBY AGREE AND COVENANT AS FOLLOWS:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Except as otherwise set forth in the Contribution Agreement, effective
as of the Effective Date, Assignee hereby assumes all of the owner's obligations
under the Service Contracts and agrees to indemnify Assignor against and hold
Assignor harmless from any and all cost, liability, loss, damage or expense,
including, without limitation, reasonable attorneys' fees, originating on or
subsequent to the Effective Date and arising out of the owner's obligations
under the Service Contracts.
3. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
Page 89 of 101
<PAGE>
4. This Assignment shall be governed by and construed and in accordance
with the laws of the State of California.
5. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Contribution Agreement).
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment the
day and year first above written.
ASSIGNOR: TRUST REALTY PARTNERS,
a California general partnership
By:
Its: _______________________
ASSIGNEE: GLENBOROUGH PROPERTIES, L.P.,
a California limited partnership
By:
Its: ________________________
Page 90 of 101
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 91 of 101
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 92 of 101
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 93 of 101
<PAGE>
EXHIBIT G
ASSIGNMENT OF MANAGEMENT AND LEASING AGREEMENT
THIS ASSIGNMENT ("Assignment") dated as of _________________, 19__, is
entered into by and between ________ _______________________________, a
________________________ ("Assignor"), and __________________________________
_________________, a ________________________ ("Assignee").
W I T N E S S E T H :
WHEREAS, (i) Assignor is the Manager under that certain Property and Asset
Management and Administrative Services Agreement dated as of July 26, 1993
between Assignor, as manager, and Trust Realty Partners, a California general
partnership ("TRP"), as owner (the "Management Agreement") and; (ii) Assignor is
the _____ under that certain _______ dated as of _____ between Assignor, as
_____ , and TRP as owner (the "Leasing Agreement"; which together with the
Management Agreement are herein collectively referred to as the "Assigned
Agreements"); and
WHEREAS, Assignor desires to assign its interest in the Assigned Agreements
to Assignee to the extent applicable to the Property (as defined in that certain
Contribution Agreement dated as of ____ , 1996 among Assignor, TRP and Assignee
(the "Contribution Agreement")); and Assignee desires to accept the assignment
thereof to the extent applicable to the Property.
NOW, THEREFORE, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Assigned
Agreements.
2. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the manager's obligations under the Assigned
Agreements.
3. Except as otherwise set forth in the Contribution Agreement, effective
as of the Effective Date, Assignee hereby assumes all of the manager's
obligations under the Assigned Agreements and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including without limitation, reasonable attorneys' fees,
originating subsequent to the Effective Date and arising out of the manager's
obligations under the Assigned Agreements.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
Page 94 of 101
<PAGE>
5. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
6. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Contribution Agreement).
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment the
day and year first above written.
ASSIGNOR: TRUST REALTY ADVISORS
a California corporation
By:_________________________________________
Its:________________________________________
ASSIGNEE: GLENBOROUGH PROPERTIES, L.P.
a California Limited Partnership
By:Glenborough Realty Trust Incorporated
Its: General Partner
By:_________________________________________
Its:________________________________________
Page 95 of 101
<PAGE>
EXHIBIT H
CERTIFICATE OF TRANSFEROR
OTHER THAN AN INDIVIDUAL
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform , the transferee of certain real property located in , that
withholding of tax is not required upon the disposition of such U.S. real
property interest by , a ("Transferor"), the undersigned hereby certifies the
following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is ; and
3. Transferor's office address is .
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: , 19__.
_____________________________________
[Individual signature line]
on behalf of
_____________________________________
a _________________________
Page 96 of 101
<PAGE>
EXHIBIT I
CALIFORNIA FORM 590-RE
Page 97 of 101
<PAGE>
EXHIBIT J
TENANT'S ESTOPPEL CERTIFICATE
TENANT ESTOPPEL
__________________Re:
The undersigned, as Lessee under that certain Lease dated __________________,
made with ___________________________, as Lessor, does hereby certify to
GLENBOROUGH PROPERTIES, L.P., a California limited partnership ("GPLP"), its
successors and assigns:
1. That the copy of the Lease attached hereto as Exhibit A is a true and
complete copy of the Lease and the Lease is now in full force and effect and has
not been amended, modified or assigned except as attached hereto and the Lease
is the only agreement between Lessor and the undersigned regarding the leased
premises;
2. That its leased premises at the above location have been completed in
accordance with the terms of the Lease, that it has accepted possession of said
premises and that it now occupies the same, and is open for business;
3. That the Lease term began on ___________ , 19___, that it began paying rent
on ___________, 19___, that it pays rent on a current basis, that, save only as
may be required by the terms of the Lease, no rent has been or will be paid by
the Lessee during the term of this lease for more than one month in advance,
that the rent payable under the Lease is the amount of fixed rent provided
thereunder, which is net annual rent payable to Lessor of $______________, and
that there is no claim or basis for an adjustment thereto;
4. That there exist no defenses or offsets to enforcement of the Lease by the
Lessor and that there are, as of the date hereof, no defaults or breaches on the
part of the Lessor and no event has occurred which, with the passage of time or
giving of notice, or both, would constitute a default or breach by Lessor, under
the Lease known to the undersigned and the undersigned has made no claim against
the Lessor;
5. That all required common areas have been completed and all required parking
spaces have been furnished and/or all parking ratios have been met.
6. That all and any special conditions to be performed by Lessor prior to or at
commencement of the term of the Lease or as a condition therefor have been
performed and satisfied.
7. That the Lessee shall not look to GPLP, its successors or assigns for the
return of the security deposit, if any, under the Lease unless the same is
actually delivered to GPLP as security for our performance under the Lease.
Page 98 of 101
<PAGE>
8. That Lessee is in full compliance with all Federal, State and Local laws,
ordinances, rules and regulations affecting its use of the premises, including,
but not limited to the handling, storage and disposal of hazardous and/or toxic
materials used or generated as a result of its business conducted on or about
the leased premises.
9. That Lessee has not entered into any sublease, assignment or other agreement
transferring any of its interest in the Lease or the leased premises.
It is understood that GPLP requires this statement from the undersigned as a
condition to the purchase of the property comprising the leased premises.
Date: _________________
Lessee: _____________________________
By: _____________________________
Name: _____________________________
Title: _____________________________
Page 99 of 101
<PAGE>
EXHIBIT K
RENT ROLL
Page 100 of 101
<PAGE>
EXHIBIT L
PROVINE INDEMNITY
Page 101 of 101
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 739
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 739
<PP&E> 163,553
<DEPRECIATION> 0
<TOTAL-ASSETS> 187,822
<CURRENT-LIABILITIES> 879
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 98,528
<TOTAL-LIABILITY-AND-EQUITY> 187,822
<SALES> 0
<TOTAL-REVENUES> 24,958
<CGS> 0
<TOTAL-COSTS> 8,221
<OTHER-EXPENSES> 4,056
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,820
<INCOME-PRETAX> 7,861
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,861
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,259
<EPS-PRIMARY> $0.75
<EPS-DILUTED> $0.75
</TABLE>
