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)
August 8, 1996 (July 15, 1996)
----------------------------
GLENBOROUGH REALTY TRUST INCORPORATED
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 0-14162 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
-------------
N/A
--------------------------------------------------------------
(Former name or former address, if changes since last report)
This form 8-K contains a total of 31 pages.
Page 1 of 31
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 on July 30, 1996, to file the
Pro Forma Financial Statements of the Company and exhibits
related to the acquisition of the UCT Property and the Wells
Fargo financing agreements (as those terms were defined in such
Form 8-K).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 5
Statement of revenues and certain expenses
of University Club Tower for the three
months ended March 31, 1996 and for the
years ended December 31, 1995, 1994 and
1993. 6
(b) PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial statements represent the
Company's consolidated balance sheet and consolidated statement
of income at and for the three months ended March 31, 1996 and
for the year ended December 31, 1995, as if the transaction and
the Consolidation (discussed below) took place on January 1,
1995.
The pro forma adjustments reflect: (a) the balance sheet and
statements of income for the UCT Property; (b) the new debt and
interest thereon; (c) the elimination of management fees and
reimbursements incurred at the UCT Property paid to the
Associated Companies; and (d) 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
March 31, 1996 9
Pro Forma Consolidated Statement of
Operations for the three months ended
March 31, 1996 10
Pro Forma Consolidated Statement of
Operations for the year ended
December 31, 1995 11
Page 2 of 31
The As Adjusted financial statements represent the Company's
consolidated statement of operations for the year ended December
31, 1995 as if 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 (the
"Consolidation") transaction (previously disclosed on Forms 8-K
and 8K/A filed with the Securities and Exchange 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 12
Glenborough Realty Trust Incorporated
As Adjusted Historical Combining
Statement of Operations with
accompanying notes and adjustments 16
Glenborough Realty Trust Incorporated
As Adjusted Statement of Hotel Lessor
Operations with accompanying notes
and adjustments 19
Glenborough Hotel Group ("GHG") As
Adjusted Statement of Operations with
accompanying notes and adjustments 21
Glenborough Corporation ("GC") As
Adjusted Statement of Operations with
accompanying notes and adjustments 25
Glenborough Inland Realty Corporation
(GIRC") As Adjusted Statement of
Operations with accompanying notes
and adjustments 29
(c) EXHIBITS
Page 3 of 31
Amendment to First Amended and Restated Agreement of
Limited Partnership of Glenborough Properties,
L.P.(*)
Purchase agreement related to the purchase of
University Club Tower. (*)
Financing agreements with Wells Fargo Bank related to
the $50,000,000 secured revolving line of credit and
the $6,100,000 2-year secured term loan. (*)
(*) Incorporated by reference to exhibits to the
Company's Registration Statement on Form S-11
(Registration No.333-09411), which was filed on
August 1, 1996.
Page 4 of 31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glenborough Realty Trust Incorporated:
We have audited the accompanying statements of revenues and
certain expenses of University Club Tower, as defined in Note 1,
for the years ended December 31, 1995, 1994 and 1993. These
financial statements are the responsibility of the management of
the company. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
The accompanying statements of revenues and certain expenses were
prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and are not
intended to be a complete presentation of the revenues and
expenses of University Club Tower.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the revenues and
certain expenses of University Club Tower for the years ended
December 31, 1995, 1994 and 1993, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
July 9, 1996
Page 5 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
UNIVERSITY CLUB TOWER
For The Three Months Ended March 31, 1996 (Unaudited)
And The Years Ended December 31, 1995, 1994 and 1993
(in thousands)
Year Ended
Three Months December 31,
Ended March 31, ----------------------
1996 1995 1994 1993
------------ ---- ---- ----
(Unaudited)
REVENUES $ 1,092 $ 4,239 $ 4,073 $ 4,024
CERTAIN EXPENSES:
Operating 358 1,579 1,474 1,435
Real estate
taxes 130 463 475 453
------ ------ ------ ------
488 2,042 1,949 1,888
------ ------ ------ ------
RENTAL REVENUES IN
EXCESS OF CERTAIN
EXPENSES $ 604 $ 2,197 $ 2,124 $ 2,136
====== ====== ====== ======
The accompanying notes are an integral part of these statements.
Page 6 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR
UNIVERSITY CLUB TOWER
For The Three Months Ended March 31, 1996 (Unaudited)
And The Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Property Acquired - The accompanying statements of revenues and
certain expenses include the operations (see "Basis of
Presentation" below) of University Club Tower (the "Property") a
property acquired by Glenborough Realty Trust Incorporated (the
"Company"), from University Club Tower Associates, an affiliate
of the Company.
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 Property for the
periods presented. Certain expenses may not be comparable to the
expenses expected to be incurred by the Company in the proposed
future operations of the Property; however, the Company is not
aware of any material factors relating to the acquired property
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 Property.
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 three months ended
March 31, 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 statements of revenues and certain expenses
for the Property.
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 7 of 31
2. LEASING ACTIVITY
The minimum future rental revenues from leases in effect as of
April 1, 1996, for the remainder of 1996 and annually thereafter
are as follows (in thousands)
Year Amount
1996 (nine months) $ 2,040
1997 2,350
1998 1,856
1999 1,589
2000 1,075
2001 956
Thereafter 6,450
---------
Total $ 16,316
=========
In addition to minimum rental payments, tenants pay
reimbursements for their pro rata share of specified operating
expenses, which amounted to $32 (unaudited), $169, $50 and $64
for the three months ended March 31, 1996, and the years ended
December 31, 1995, 1994 and 1993 respectively. Certain leases
contain options to renew.
Page 8 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except shares)
March 31, 1996
(Unaudited)
Historical Adjustments Pro Forma
------------ ------------ -----------
ASSETS
Rental property, net $ 74,300 $ 18,481 $ 92,781
Property held for sale, net 2,570 --- 2,570
Investments in Associated Companies
and Glenborough Partners 6,577 --- 6,577
Investments in management contracts
and other, net 433 --- 433
Mortgage loans receivable, net of
provision for loss of $863 7,451 --- 7,451
Cash and cash equivalents 1,326 303 1,629
Other assets 2,605 159 2,764
-------- -------- --------
TOTAL ASSETS $ 95,262 $ 18,943 $ 114,205
======== ======== ========
LIABILITIES
Mortgage loans $ 23,616 $ 6,120 $ 29,736
Secured bank line 10,000 12,280 22,280
Other liabilities 3,939 394 4,333
-------- -------- --------
Total liabilities 37,555 18,794 56,349
-------- -------- --------
MINORITY INTEREST 8,063 350 8,413
STOCKHOLDERS' EQUITY
Common stock (5,753,709 shares
issued and outstanding) 6 --- 6
Additional paid-in capital 55,622 --- 55,622
Retained earnings (deficit) (5,984) (201) (6,185)
-------- -------- --------
Total stockholders' equity 49,644 (201) 49,443
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 95,262 $ 18,943 $ 114,205
======== ======== ========
Page 9 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 1996
(in thousands, except per share amounts)
(Unaudited)
Historical Adjustments Pro Forma
------------ ------------ -----------
REVENUES
Rental revenue $ 3,589 $ 1,092 $ 4,681
Fees and reimbursements from
affiliates 66 --- 66
Interest and other income 191 --- 191
Equity in earnings of
Associated Companies 425 (19) 406
-------- -------- --------
Total revenue 4,271 1,073 5,344
-------- -------- --------
OPERATING EXPENSES
Property operating expenses 1,017 488 1,505
General and administrative 281 --- 281
Depreciation and amortization 897 90 987
Interest expense 722 395 1,117
-------- -------- --------
Total operating expense 2,917 973 3,890
-------- -------- --------
Income from operations before
minority interest 1,354 100 1,454
Minority interest (101) (23) (124)
-------- -------- --------
Net income before Consolidation 1,253 77 1,330
costs
Consolidation costs (6,082) --- (6,082)
Litigation costs (1,155) --- (1,155)
-------- -------- --------
Net income (loss) $ (5,984) $ 77 $ (5,907)
======== ======== ========
Net income per share before
Consolidation costs $ 0.22 $ 0.01 $ 0.23
======== ======== ========
Net income (loss) per share $ (1.04) $ 0.01 $ (1.03)
======== ======== ========
Weighted average shares
outstanding 5,753,709 5,753,709 5,753,709
========= ========= =========
Page 10 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
(in thousands)
(Unaudited)
As Adjusted
Historical Adjustments Pro Forma
------------ ------------ -----------
REVENUES
Rental revenue $ 13,472 $ 4,239 $ 17,711
Fees and reimbursements from
affiliates 260 --- 260
Interest and other income 982 --- 982
Equity in earnings of Associated
Companies 1,691 (77) 1,614
-------- -------- --------
Total revenue 16,405 4,162 20,567
-------- -------- --------
OPERATING EXPENSES
Property operating expenses 4,061 2,042 6,103
General and administrative 983 --- 983
Depreciation and amortization 3,654 360 4,014
Interest expense 2,767 1,580 4,347
Loss provision 863 --- 863
-------- -------- --------
Total operating expense 12,328 3,982 16,310
-------- -------- --------
Income from operations before
minority interest 4,077 180 4,257
Minority interest (281) (6) (287)
-------- -------- --------
Net income $ 3,796 $ 174 $ 3,970
======== ======== ========
Net income per share $ 0.66 $ 0.03 $ 0.69
======== ======== ========
Weighted average shares
outstanding 5,753,709 5,753,709 5,753,709
========= ========= =========
Page 11 of 31
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
Glenborough As Adjusted
Realty Trust Historical Hotel Management
Incorporated(a) Combined(b) Operations(c) Operations(d)
-------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
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
======== ======== ======== ========
</TABLE>
Page 12 of 31
-continued-
Page 13 of 31
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)
<TABLE>
<CAPTION>
Glenborough
Debt Pay Other Realty Trust
GPA Down and Pro-Forma Incorporated
Properties(e) Refinancings(f) Adjustments Consolidated
-------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
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 14 of 31
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 15 of 31
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 16 of 31
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:
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-
Page 17 of 31
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:
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
======== ======== ========
Page 18 of 31
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 19 of 31
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:
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
======== ======== ========
Page 20 of 31
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 21 of 31
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:
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-
Page 22 of 31
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:
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
Page 23 of 31
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.:
Casa Del Mar $ 347
Coral Cay 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 24 of 31
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 25 of 31
GLENBOROUGH CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
As Adjusted
Management Expired Participating Hotel
Operations(a) Contracts(b) Partnerships(c) Group(d)
------------- ----------- ------------- --------
<S> <C> <C> <C> <C>
REVENUES:
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)
======== ======== ======== ========
</TABLE>
Page 26 of 31
-continued-
Page 27 of 31
GLENBOROUGH CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS - continued
For the Year Ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
As
Rancon Other Adjusted
Contracts(e) Adjustments GC
------------ ----------- ---------
<S> <C> <C> <C>
REVENUES:
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 28 of 31
GLENBOROUGH 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 29 of 31
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 30 of 31
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
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
Page 31 of 31
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 32 of 31
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: August 6, 1996 /s/ Andrew Batinovich
Andrew Batinovich
Director, Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
(Principal Financial Officer)
Date: August 6, 1996 /s/ Terri Garnick
Terri Garnick
Senior Vice President,
Chief Accounting Officer,
Treasurer
(Principal Accounting Officer)
Page 33 of 31
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000929454
<NAME> GLENBOROUGH REALTY TRUST INC
<MULTIPLIER> 1000
<CURRENCY> DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1
<CASH> 1629 0
<SECURITIES> 0 0
<RECEIVABLES> 7451 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2764 0
<PP&E> 92781 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 114205 0
<CURRENT-LIABILITIES> 4333 0
<BONDS> 0 0
0 0
0 0
<COMMON> 6 0
<OTHER-SE> 49437 0
<TOTAL-LIABILITY-AND-EQUITY> 114205 0
<SALES> 0 0
<TOTAL-REVENUES> 5344 20567
<CGS> 0 0
<TOTAL-COSTS> 2773 11100
<OTHER-EXPENSES> 7361 2877
<LOSS-PROVISION> 0 863
<INTEREST-EXPENSE> 1117 4347
<INCOME-PRETAX> (5907) 3970
<INCOME-TAX> (5907) 3970
<INCOME-CONTINUING> 1330 3970
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5907) 3970
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
