<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------------
FORM 8-K/A
(Amendment No.2)
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 (November 19, 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 50
<PAGE> 2
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 December 4, 1996, to file the Pro Forma Financial
Statements of the Company and exhibits related to the acquisition of the
Carlsberg Properties (as defined in such Form 8-K) and the acquisition of the
TRP Properties previously reported in the Company's Current Report on Form 8-K
filed with the Commission on November 1, 1996, and defined therein.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
<TABLE>
<S> <C>
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
</TABLE>
(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
Page 2 of 50
<PAGE> 3
represent the financial position or results of operations in
future periods.
<TABLE>
<S> <C>
Pro Forma Consolidated Balance Sheet at
September 30, 1996 with accompanying notes
and adjustments 14
Pro Forma Consolidated Statement of
Operations for the nine months ended
September 30, 1996 19
Pro Forma Consolidated Statement of
Operations for the year ended
December 31, 1995 21
Notes and adjustments to Proforma Consolidated
Statements of Operations for the nine months
ended September 30, 1996 and the year ended
December 31, 1995 23
</TABLE>
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 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
Page 3 of 50
<PAGE> 4
<TABLE>
<S> <C>
Operations with accompanying notes and
adjustments 28
Glenborough Realty Trust Incorporated
As Adjusted Historical Combining
Statement of Operations with
accompanying notes and adjustments 33
Glenborough Realty Trust Incorporated
As Adjusted Statement of Hotel Lessor
Operations with accompanying notes
and adjustments 36
Glenborough Hotel Group ("GHG") As
Adjusted Statement of Operations with
accompanying notes and adjustments 38
Glenborough Corporation ("GC") As
Adjusted Statement of Operations with
accompanying notes and adjustments 43
Glenborough Inland Realty Corporation
("GIRC") As Adjusted Statement of
Operations with accompanying notes
and adjustments 48
</TABLE>
Page 4 of 50
<PAGE> 5
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 50
<PAGE> 6
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)
<TABLE>
<CAPTION>
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
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
Page 6 of 50
<PAGE> 7
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 Bernanrdo CA Industrial
Hoover Industrial Center Mesa AZ Industrial
Walnut Creek Business Center Austin TX Industrial
Mercantile Industrial I Dallas TX Industrial
Quaker Industrial (formerly Dallas TX Industrial
Mercantile Industrial II)
Pinewood Industrial (formerly Arlington TX Industrial
Mercantile Industrial III)
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
Page 7 of 50
<PAGE> 8
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, 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)
<TABLE>
<CAPTION>
Year Amount
------------------ ---------
<S> <C>
1996 (three months) $ 903
1997 2,993
1998 1,845
1999 1,270
2000 734
2001 475
Thereafter 1,020
---------
Total $ 9,240
=========
</TABLE>
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 50
<PAGE> 9
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 50
<PAGE> 10
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)
<TABLE>
<CAPTION>
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
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 10 of 50
<PAGE> 11
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
Page 11 of 50
<PAGE> 12
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 12 of 50
<PAGE> 13
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):
<TABLE>
<CAPTION>
Year Amount
------------------ ---------
<S> <C>
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
=========
</TABLE>
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 13 of 50
<PAGE> 14
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except shares)
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Property
Historical(1) Acquisitions(2) Offering(3)
-------------- -------------- -----------
<S> <C> <C> <C>
ASSETS
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
========= ======== =======
</TABLE>
- continued -
Page 14 of 50
<PAGE> 15
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except shares) - continued
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Repayment
of Debt(4) Pro Forma
---------- ---------
<S> <C> <C>
ASSETS
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 15 of 50
<PAGE> 16
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:
<TABLE>
<CAPTION>
Property Purchase Price
---------------------- --------------
<S> <C>
UCT Property $18,600,000
San Antonio Hotel $ 2,700,000
Kash n' Karry Property $ 1,540,000
Bond Street Property $ 3,200,000
</TABLE>
On July 15, 1996, the Company acquired the 99% limited partner interest, and GRT
Corporation, a subsidiary of the Company, acquired the 1% general partner
interest, in UCT Associates, a limited partnership in which Robert Batinovich
held a 1% general partner interest and a 53% limited partner interest, Andrew
Batinovich held a 1% general partner interest and GPA held a 45% limited partner
interest. UCT Associates owns a 23 story, 275,469 square foot office building
known as University Club Tower (the "UCT Property") in St. Louis, Missouri. The
Operating Partnership issued 23,333 units of partnership interest in the
Operating Partnership ("Units") having an initial redemption value of
approximately $350,000 (based on a $15 per Unit Value) and repaid approximately
$18,250,000 of indebtedness secured by the property, resulting in a total
acquisition value of $18,600,000. The $18,250,000 of debt was paid off with
funds drawn from the Facility with Wells Fargo.
On August 1, 1996, the Company acquired a 64-room limited service hotel (the
"San Antonio Hotel") in San Antonio, Texas for $2,700,000. GHG assumed
management of the hotel and operates it under the lease agreement with the
Company. The lease is for a term of five years, commencing August 1, 1996, at a
base annual rent of $312,000. In addition to base rent, the lessee is obligated
to pay percentage rent when revenue exceeds specified thresholds.
Page 16 of 50
<PAGE> 17
On August 2, 1996, the Company expanded an existing shopping center in Tampa,
Florida through a sale/leaseback with the center's anchor tenant Kash n' Karry
Grocery Store, for a purchase price of $1,540,000. The Company is committed to
investing an additional $1,760,000 in the property upon completion of certain
expansion-related improvements anticipated in mid-1997. This acquisition, along
with the acquisition of the San Antonio Hotel, was financed with $3,800,000
drawn from the Facility with Wells Fargo.
On September 24, 1996, the Company acquired the 99% limited partnership
interest, and GRT Corporation acquired the 1% general partner interest in GPA
Bond, L.P., a limited partnership in which GC held a 1% general partner interest
and GPA held a 99% limited partner interest. GPA Bond, L.P. owns a two-story,
40,595 square foot suburban office building, referred to as the Bond Street
Property, in Farmington Hills, Michigan. The operating partnership issued 26,067
Units having an initial redemption value of approximately $400,000 (based on a
$15 per Unit Value) in exchange for the interests in GPA Bond, L.P., and repaid
approximately $2,800,000 of indebtedness secured by the property, resulting in a
total acquisition value of $3,200,000. The $2,80,000 of debt was paid off with
funds drawn from the Facility with Wells Fargo Bank.
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.
Page 17 of 50
<PAGE> 18
3. In October 1996, the Company completed an Offering of 3,666,000 shares
of its Common Stock at $13.875 per share. Total proceeds from the
Offering were $50,859 before payment of related costs of approximately
$4,145. Net proceeds from the Offering were used to purchase property
and to payoff amounts outstanding on the Facility.
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 18 of 50
<PAGE> 19
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)
<TABLE>
<CAPTION>
Facility and Property
Historical(1) Term Loan(2) Acquisitions(3)
------------- ------------ --------------
<S> <C> <C> <C>
REVENUES
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
===========
</TABLE>
- continued -
Page 19 of 50
<PAGE> 20
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)
<TABLE>
<CAPTION>
Repayment
of Debt(4) Other(5) Pro Forma(6)
---------- --------- ------------
<S> <C> <C> <C>
REVENUES
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 20 of 50
<PAGE> 21
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Facility and Property
Historical(1) Term Loan(2) Acquisitions(3)
------------- ------------ ---------------
<S> <C> <C> <C>
REVENUES
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
===========
</TABLE>
- continued -
Page 21 of 50
<PAGE> 22
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)
<TABLE>
<CAPTION>
Repayment
of Debt(4) Other(5) Pro Forma(6)
----------- --------- ------------
<S> <C> <C> <C>
REVENUES
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 22 of 50
<PAGE> 23
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:
<TABLE>
<CAPTION>
Nine Months Year
Ended Ended
September 30, December 31,
1996 1995
------------ -----------
<S> <C> <C>
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
======= =======
</TABLE>
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
Page 23 of 50
<PAGE> 24
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.
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>
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>
Page 24 of 50
<PAGE> 25
<TABLE>
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>
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 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.
Page 25 of 50
<PAGE> 26
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 26 of 50
<PAGE> 27
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
The following as adjusted consolidating statement of operations of the Company
for the year ended December 31, 1995 is provided for the purpose of supporting
the historical statement of operations data in the proforma financial statements
included elsewhere in this filing. The as adjusted information and related notes
are necessary to providing an appropriate context in which to evaluate the
effects of the acquisition of the Carlsberg Properties. The as adjusted
operating information describes the results of operations of the Company prior
to any acquisitions as if the Consolidation transactions, which merged the
Partnerships and Glenborough Corporation and formed the Company, GC, GIRC and
GHG, had taken place on January 1, 1995; rather than solely showing the pro
forma effects of the acquisition transactions on the purely historical results
of operations of the Company's predecessors, which were in full operation
through December 31, 1995.
Page 27 of 50
<PAGE> 28
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>
-continued-
Page 28 of 50
<PAGE> 29
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 29 of 50
<PAGE> 30
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:
<TABLE>
<S> <C>
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
=======
</TABLE>
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.
i) Reflects GPA's approximate 13.63% ownership interest in the operations of
Glenborough Properties, L.P. (the "Operating
Page 30 of 50
<PAGE> 31
Partnership"), of which the Company is a 84.37% owner. GPA's minority
interest is calculated as follows;
<TABLE>
<CAPTION>
<S> <C> <C>
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
=======
</TABLE>
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 31 of 50
<PAGE> 32
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
The following As Adjusted Historical Combining Statement of Operations of the
Company for the year ended December 31, 1995 is provided for the purpose of
supporting the Historical Statement of Operations Data in the pro forma
financial statements included elsewhere in this filing. The as adjusted
information is necessary to providing an appropriate context in which to
evaluate the effects of the Acquisition of the Carlsberg Properties. The as
adjusted operating information supports a proper description of the Results of
Operations of the Company prior to any acquisitions as if the consolidation
transactions had taken place on January 1, 1995; rather than solely showing the
pro forma effects of the acquisition transactions on the purely historical
results of operations of the company's predecessors, which were in full
operation through December 31, 1995.
Page 32 of 50
<PAGE> 33
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS
For the Year ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
1995
Historical Hotel Management
Combined(a) Operations(b) Operations(c)
----------- ----------- ------------
<S> <C> <C> <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
======== ======== ========
</TABLE>
-continued-
Page 33 of 50
<PAGE> 34
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED HISTORICAL COMBINING STATEMENT OF OPERATIONS - continued
For the Year ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
As Adjusted
Internalize Other Historical
Management (d) Adjustments Combined
-------------- ------------ ---------
<S> <C> <C> <C>
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
======== ======== ========
</TABLE>
Page 34 of 50
<PAGE> 35
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 35 of 50
<PAGE> 36
GLENBOROUGH REALTY TRUST INCORPORATED
AS ADJUSTED STATEMENT OF HOTEL LESSOR OPERATIONS
For the year ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
Lease Other
Adjustments(a) Adjustments As Adjusted
------------- ----------- -----------
<S> <C> <C> <C>
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
======== ======== -========
</TABLE>
Page 36 of 50
<PAGE> 37
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 37 of 50
<PAGE> 38
GLENBOROUGH HOTEL GROUP
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
Historical (a)
---------------------------------------------------------
Arlington Tucson Ontario Sub-total
--------- ------ ------- --------
<S> <C> <C> <C> <C>
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
======== ======== ======== =========
</TABLE>
-continued-
Page 38 of 50
<PAGE> 39
GLENBOROUGH HOTEL GROUP
AS ADJUSTED STATEMENT OF OPERATIONS - continued
For the Year Ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
As Adjusted
--------------------------------------------
Lease Other As Adjusted
Adjustments(b) Adjustments GHG
------------ ------- --------
<S> <C> <C> <C>
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
</TABLE>
Page 39 of 50
<PAGE> 40
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:
<TABLE>
<CAPTION>
<S> <C> <C>
Resort Group, Inc.:
Galveston, Texas $ 347
Port Aransas, Texas 73
Irving Hotel 514
OIF 9 Hotels 1,291
--------
Total $ 2,225
========
</TABLE>
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:
Page 40 of 50
<PAGE> 41
<TABLE>
<CAPTION>
<S> <C>
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
========
</TABLE>
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 41 of 50
<PAGE> 42
GLENBOROUGH CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
The following as adjusted statement of operations of Glenborough Corporation,
one of the Associated Companies, for the year ended December 31, 1995 is
provided for the purpose of supporting the historical statement of operations
data in the Proforma Financial Statements included elsewhere in this filing. The
as adjusted information is necessary to providing an appropriate context in
which to evaluate the effects of the acquisition of the Carlsberg Properties.
the as adjusted operating information supports a proper description of the
results of operations of the Company prior to any acquisitions as if the
Consolidation transactions had taken place on January 1, 1995; rather than
solely showing the pro forma effects of the acquisition transactions on the
purely historical results of operations of the Company's predecessors, which
were in full operation through December 31, 1995.
Page 42 of 50
<PAGE> 43
GLENBOROUGH CORPORATION
(FORMERLY GLENBOROUGH REALTY 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>
-continued-
Page 43 of 50
<PAGE> 44
GLENBOROUGH CORPORATION
(FORMERLY GLENBOROUGH REALTY 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 44 of 50
<PAGE> 45
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:
<TABLE>
<CAPTION>
<S> <C> <C>
Net increase in general and administrative
expenses, including accounting, legal
and directors fees $ 100
Reduction of officers' salaries (88)
--------
Total $ 12
========
</TABLE>
Page 45 of 50
<PAGE> 46
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.
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 46 of 50
<PAGE> 47
GLENBOROUGH INLAND REALTY CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
The following as adjusted statement of operations of Glenborough Inland Realty
Corporation, one of the Associated Companies, for the year ended December 31,
1995 is provided for the purpose of supporting the historical statement of
operations data in the Proforma Financial Statements included elsewhere in this
filing. The as adjusted information is necessary to providing an appropriate
context in which to evaluate the effects of the acquisition of the Carlsberg
Properties. The as adjusted operating information supports a proper description
of the results of operations of the Company prior to any acquisitions as if the
consolidation transactions had taken place on January 1, 1995; rather than
solely showing the pro forma effects of the acquisition transactions on the
purely historical results of operations of the Company's predecessors, which
were in full operation through December 31, 1995. Historical amounts are
presented in the column labeled "Rancon Adjustments."
Page 47 of 50
<PAGE> 48
GLENBOROUGH INLAND REALTY CORPORATION
AS ADJUSTED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(unaudited, in thousands)
<TABLE>
<CAPTION>
Rancon Other As Adjusted
Adjustments(a) Adjustments GIRC
------------ ---------- ----------
<S> <C> <C> <C>
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
</TABLE>
Page 48 of 50
<PAGE> 49
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 49 of 50
<PAGE> 50
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
Date: February 21, 1997 By: /s/ Terri Garnick
------------------------------
Terri Garnick
Senior Vice President,
Chief Accounting Officer,
Treasurer
(Principal Accounting Officer)
Page 50 of 50
