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) May 14, 1997 (April 18, 1997)
-------------------------------
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
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Page 1 of 17
<PAGE>
Glenborough Realty Trust Incorporated (the "Company") hereby amends Item 7 of
its Current Report on Form 8-K filed with the Securities and Exchange Commission
(the "Commission") on May 2, 1997, to file the Financial Statements and Exhibits
of the Company related to the acquisition of the E&L Properties and the CIGNA
Properties (as defined in such Form 8-K).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 3
Statement of revenues and certain expenses
of the E&L Properties for the year ended
December 31, 1996. 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 7
Statement of revenues and certain expenses
of the CIGNA Properties for the year ended
December 31, 1996. 8
(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 year ended December 31, 1996, as if the transactions (discussed below)
had occurred on December 31, 1996, and January 1, 1996, respectively.
The pro forma adjustments reflect: (i) additional borrowings under the Line of
Credit and the Bridge Loan, and debt assumptions (ii) the 1996 and 1997 property
acquisitions and (iii) the Offering, and the application of the net proceeds
therefrom. These transactions are discussed more fully in the accompanying Notes
and Adjustments to the Pro Forma Consolidated Balance Sheet and Statement of
Operations.
The pro forma consolidated financial 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 as of
December 31, 1996 with accompanying notes
and adjustments 10
Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1996
with accompanying notes and adjustments 14
(c) EXHIBITS
Purchase agreements with respect to the acquisition
of the CIGNA Properties (*)
(*) To be filed by Current Report on Form 8-K.
Page 2 of 17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glenborough Realty Trust Incorporated:
We have audited the accompanying combined statement of revenues and certain
expenses of the E&L Properties, as defined in Note 1, for the year ended
December 31, 1996. This combined financial statement is the responsibility of
the management of the Company. Our responsibility is to express an opinion on
this combined 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 statement is 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 combined statement of revenues and certain expenses has been
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 E&L
Properties.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the E&L
Properties for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
January 31, 1997
Page 3 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
Combined Statement of Revenues and Certain Expenses of
The E&L Properties
For the year ended December 31, 1996
(in thousands)
REVENUES....................................................... $ 2,925
CERTAIN EXPENSES:
Operating.................................................... 418
Real estate taxes............................................ 157
----------
575
----------
REVENUES IN EXCESS OF CERTAIN EXPENSES......................... $ 2,350
==========
The accompanying notes are an integral part of this statement.
Page 4 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
Notes to Combined Statement of Revenues and Certain Expenses of
The E&L Properties
For the year ended December 31, 1996
1. Basis of Presentation and Summary of Significant Accounting Policy
Property Acquired - The accompanying combined statement of revenues and certain
expenses include the operations (see "Basis of Presentation" below) of the
following eleven properties (the "E&L Properties") acquired by Glenborough
Realty Trust Incorporated (the "Company"), from Ellis & Lane Partnerships, an
unaffiliated third party.
Property City State Type
Academy Professional Center................ Rolling Hills CA Office
Chatsworth Industrial Park................. Chatsworth CA Industrial
Sandhill Industrial Park................... Carson CA Industrial
San Dimas Industrial Center................ San Dimas CA Industrial
Glassell Business Center................... Orange CA Industrial
Kraemer Industrial Park.................... Anaheim CA Industrial
Belshaw Industrial......................... Carson CA Industrial
Dominguez Industrial....................... Carson CA Industrial
Dunn Way Industrial........................ Placentia CA Industrial
Monroe Industrial.......................... Placentia CA Industrial
Upland Industrial.......................... Upland CA Industrial
Basis of Presentation - The accompanying combined statement of revenues and
certain expenses is not intended to be a complete presentation of the actual
operations of the E&L Properties for the period presented. Certain expenses may
not be comparable to the expenses expected to be incurred by the Company in the
future operations of the E&L Properties; however, the Company is not aware of
any material factors relating to the E&L 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 E&L Properties.
This combined financial statement has been prepared for the purpose of complying
with certain rules and regulations of the Securities and Exchange Commission.
Revenue Recognition - All leases are classified as operating leases. Rental
revenue is recognized as earned over the terms of the leases.
2. Leasing Activity
The minimum future rental revenues from leases in effect as of January 1, 1997
are as follows (in thousands):
Year Amount
1997...................................... 2,123
1998...................................... 1,060
1999...................................... 570
2000...................................... 438
2001...................................... 208
Thereafter................................ 6
--------
Total.............................. $ 4,405
========
Page 5 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
Notes to Combined Statement of Revenues and Certain Expenses of
The E&L Properties - continued
For the year ended December 31, 1996
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $52 for the year
ended December 31, 1996. Certain leases contain lessee renewal options.
Page 6 of 17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glenborough Realty Trust Incorporated:
We have audited the accompanying combined statement of revenues and certain
expenses of the CIGNA Properties, as defined in Note 1, for the year ended
December 31, 1996. This combined financial statement is the responsibility of
the management of the Company. Our responsibility is to express an opinion on
this combined 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 statement is 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 combined statement of revenues and certain expenses has been
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 CIGNA
Properties.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the CIGNA
Properties for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
February 11, 1997
Page 7 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
Combined Statement of Revenues and Certain Expenses of
The CIGNA Properties
For the year ended December 31, 1996
(in thousands)
REVENUES............................................................. $ 7,811
CERTAIN EXPENSES:
Operating.......................................................... 1,947
Real estate taxes.................................................. 729
----------
2,676
----------
REVENUES IN EXCESS OF CERTAIN EXPENSES............................... $ 5,135
==========
The accompanying notes are an integral part of this statement.
Page 8 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
Notes to Combined Statement of Revenues and Certain Expenses of
The CIGNA Properties
For the year ended December 31, 1996
1. Basis of Presentation and Summary of Significant Accounting Policy
Property Acquired - The accompanying combined statement of revenues and certain
expenses include the operations (see "Basis of Presentation" below) of the
following six properties (the "CIGNA Properties") acquired by Glenborough Realty
Trust Incorporated (the "Company"), from an unaffiliated third party.
Property City State Type
Woodlands Plaza............................. St. Louis MO Office
Woodlands Tech.............................. St. Louis MO Industrial
Lake Point Business Park.................... Orlando FL Industrial
Overlook Apartments......................... Scottsdale AZ Multi-family
Piedmont Plaza.............................. Apopka FL Retail
Westford Corporate Center................... Westford MA Office
Basis of Presentation - The accompanying combined statement of revenues and
certain expenses is not intended to be a complete presentation of the actual
operations of the CIGNA Properties for the period presented. Certain expenses
may not be comparable to the expenses expected to be incurred by the Company in
the future operations of the CIGNA Properties; however, the Company is not aware
of any material factors relating to the CIGNA 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 CIGNA Properties.
This combined financial statement has been prepared for the purpose of complying
with certain rules and regulations of the Securities and Exchange Commission.
Revenue Recognition - All leases are classified as operating leases. Rental
revenue is recognized as earned over the terms of the leases.
2. Leasing Activity
The minimum future rental revenues from leases in effect as of January 1, 1997
are as follows (in thousands):
Year Amount
1997...................................... 5,351
1998...................................... 5,024
1999...................................... 3,233
2000...................................... 2,310
2001...................................... 1,799
Thereafter................................ 11,677
-------
Total.............................. $ 29,394
=======
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $1,171 for the
year ended December 31, 1996. Certain leases contain lessee renewal options.
Page 9 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
As of December 31, 1996
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Property Repayment
Historical(1) Acquisitions(2) Offering(3) of Debt(4) Pro Forma
------------ -------------- ---------- --------- ----------
ASSETS
<S> <C> <C> <C> <C> <C>
Rental property, net.... $ 161,945 $ 123,515 $ - $ - $ 285,460
Investments in
Associated Companies 7,350 - - - 7,350
Mortgage loans
receivable, net...... 9,905 - - - 9,905
Cash and cash
equivalents.......... 1,355 (49,226) 66,306 (17,175) 1,260
Other Assets............ 4,965 - - - 4,965
------- ------- ------ ------- -------
Total Assets.... $ 185,520 $ 74,289 $ 66,306 $ (17,175) $ 308,940
======= ======= ====== ======= =======
LIABILITIES
Mortgage loans.......... $ 54,584 $ 8,553 $ - $ - $ 63,137
Bridge Loan............. - 40,000 - - 40,000
Line of Credit.......... 21,307 17,875 - (17,175) 22,007
Other liabilities....... 3,198 510 - - 3,708
------- ------- ------ ------- -------
Total Liabilities 79,089 66,938 - (17,175) 128,852
------- ------- ------ ------- -------
MINORITY INTEREST 8,831 6,718 - - 15,549
------- ------- ------ ------- -------
STOCKHOLDERS' EQUITY
Common stock............ 10 - 3 - 13
Additional paid-in
capital.............. 105,952 633 66,303 - 172,888
Deferred compensation (399) - - - (399)
Retained earnings
(deficit)............ (7,963) - - - (7,963)
------- ------- ------ ------- -------
Total Equity(Deficit)... 97,600 633 66,306 - 164,539
------- ------- ------ ------- -------
Total Liabilities
and Stockholders'
Equity $ 185,520 $ 74,289 $ 66,306 $ (17,175) $ 308,940
======= ======= ====== ======= =======
</TABLE>
Page 10 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED BALANCE SHEET
As of December 31, 1996
(unaudited, dollars in thousands, except per unit and per share amounts)
1. Reflects the historical consolidated balance sheet of the Company as of
December 31, 1996, which includes the acquisitions of the following properties
and property portfolios:
Property Purchase Price Date Acquired
UCT Property.................... $ 18,844 July 15, 1996
San Antonio Hotel............... 2,805 August 1, 1996
Kash n' Karry Property.......... 1,617 August 2, 1996
Bond Street Property............ 3,185 September 24, 1996
TRP Properties.................. 43,798 October 17, 1996
Carlsberg Properties............ 23,152 November 19, 1996
UCT Property. In July 1996, the Company acquired the UCT Property, a 23-story,
272,443 square foot office building, in St. Louis, Missouri. The total
acquisition cost, including capitalized costs, was approximately $18,844, which
consisted of $350 in the form of 23,333 partnership units in the Operating
Partnership (based on a per unit value of $15.00), and the balance paid in cash.
The cash portion was financed through advances under the Line of Credit (see
Footnote 2 in Notes and Adjustments to Pro Forma Consolidated Statement of
Operations).
San Antonio Hotel. In August 1996, the Company acquired the San Antonio Hotel, a
64-room hotel property, which is located in San Antonio, Texas. The total
acquisition cost, including capitalized costs, was approximately $2,805, which
was paid in cash. The acquisition was financed with an advance on the Line of
Credit.
Kash n' Karry. In August 1996, the Company also expanded an existing shopping
center in Tampa, Florida through a purchase-leaseback transaction with the
anchor tenant. The Company's initial acquisition cost, including capitalized
costs, was approximately $1,617, all of which was paid in cash which was
financed through advances under the Line of Credit, and in addition the Company
committed an additional $1,800 for future expansion and tenant improvements,
which the Company expects will also be paid in cash.
Bond Street Property. In September 1996, the Company acquired the Bond Street
Property, a two-story, 40,595 square foot office building, in Farmington Hills,
Michigan. The total acquisition cost, including capitalized costs, was
approximately $3,185, which consisted of $391 in the form of 26,067 partnership
units in the Operating Partnership (based on a per unit value of $15.00), and
the balance paid in cash.
TRP Acquisition. In October 1996, the Company acquired the TRP Properties, a
portfolio of twelve properties, aggregating approximately 784,000 square feet
and 538 multi-family units, together with associated management interests. The
total acquisition cost, including capitalized costs, was approximately $43,798,
which consisted of (i) approximately $16,300 of mortgage debt assumed, (ii)
approximately $760 in the form of 52,387 partnership units in the Operating
Partnership (based on a per unit value of $14.50), (iii) approximately $2,600 in
the form of 182,000 shares of Common Stock of the Company (based on a per share
value of $14.50) and (iv) the balance in cash. The cash portion was financed
through advances under the Line of Credit. The TRP Properties consist of three
office, six industrial, one retail and two multi-family Properties, located in
six states.
Page 11 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED BALANCE SHEET - continued
As of December 31, 1996
(unaudited, dollars in thousands, except per unit and per share amounts)
Carlsberg Acquisition. In November 1996, the Company acquired from various
partnerships and their general partner, a Southern California syndicator, the
Carlsberg Properties, a portfolio of six properties (including one property on
which the Company made a mortgage loan which included a purchase option),
aggregating approximately 342,000 square feet, together with associated
management interests. The total acquisition cost including the mortgage loan and
capitalized costs, was approximately $23,152, which consisted of
(i)approximately $8,900 of mortgage debt assumed, (ii) approximately $350 in the
form of 24,844 shares of Common Stock of the Company (based on a per share value
of $14.09) and (iii) the balance in cash. The cash portion was financed through
advances under the Line of Credit. The Carlsberg Properties consist of five
office properties and one retail property, located in two states. Concurrently
with the Company's acquisition of the Carlsberg Properties, one of the
Associated Companies assumed management of a portfolio of 13 additional
properties with an aggregate of one million square feet under a venture with an
affiliate of the seller.
2. Reflects the acquisition of the following properties and property portfolios:
Purchase Price Date Acquired
Scottsdale Hotel...................... $ 12,132 February 28, 1997
Lennar Properties..................... 23,151 April 8, 1997
Riverview Property.................... 20,521 April 14, 1997
E&L Properties........................ 22,248 April 18, 1997
CIGNA Properties...................... 45,463 April 29, 1997
Scottsdale Hotel. In February 1997, the Company acquired the Scottsdale Hotel, a
163-suite hotel Property, which began operations in January 1996 and is located
in Scottsdale, Arizona. The total acquisition cost, including capitalized costs,
was approximately $12,132, which consisted of approximately $4,612 of mortgage
debt assumed, and the balance in cash. The cash portion was financed through
advances under the Line of Credit. Like four of the Company's other hotel
Properties, the Scottsdale Hotel is marketed as a Country Suites by Carlson.
Lennar Properties. In April 1997, the Company acquired the Lennar Properties, a
portfolio of three properties, aggregating approximately 282,000 square feet.
The total acquisition cost, including capitalized costs, was approximately
$23,151, which was paid in cash from the proceeds of the Offering (see Footnote
3) and an advance on the Line of Credit. The Lennar Properties consist of one
office property and two industrial properties, located in two states.
Riverview Property. In April 1997, the Company acquired the Riverview Property,
a 15-story office building located in Bloomington, Minnesota. The total
acquisition cost, including capitalized costs, was approximately $20,521, which
was paid in cash from the proceeds of the Offering.
E&L Properties. In April 1997, the Company acquired the E&L Properties, a
portfolio of eleven properties, aggregating approximately 524,000 square feet,
together with associated management interests. The total acquisition cost,
including capitalized costs, was approximately $22,248, which consisted of (i)
$3,941 of net mortgage debt assumed, (ii) $6,718 in the form of 352,197
partnership units in the Operating Partnership (based on per unit value of
$19.075), (iii) approximately $633 in the form of 33,198 shares of Common Stock
of the Company (based on per share value of $19.075) to be issued in connection
with the acquisition of the management interests relating to the E&L Properties,
and (iv) the balance in cash. The cash portion was paid with proceeds from the
Offering and advances under the Line of Credit. The E&L Properties consist of
one office property and ten industrial properties, all located in Southern
California.
Page 12 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED BALANCE SHEET - continued
As of December 31, 1996
(unaudited, dollars in thousands, except per unit and per share amounts)
CIGNA Properties. In April 1997, the Company acquired the CIGNA Properties, a
portfolio of six properties, aggregating approximately 616,000 square feet and
224 multi-family units. The total acquisition cost, including capitalized costs,
was approximately $45,463, which was paid in cash financed through a new $40,000
unsecured Bridge Loan (see Footnote 3 in Notes and Adjustments to Pro Forma
Consolidated Statement of Operations) and advances under the Line of Credit. The
CIGNA Properties consist of two office properties, two office/R&D properties, a
neighborhood shopping center and a multi-family property, located in four
states.
These acquisitions were funded with approximately $49,736 of the net proceeds
from the Offering, assumption of approximately $8,553 of mortgage debt,
approximately $40,000 in financing from the Bridge Loan, approximately $17,875
of advances under the Line of Credit, the issuance of approximately 352,197
Operating Partnership units with an aggregate approximate value of $6,718 (based
on $19.075 per unit value) and approximately 33,198 shares of unregistered
Common Stock with an aggregate approximate value of $633 (based on $19.075 per
share value). The assumed mortgages bear interest at rates of 7.3% to 8.4% and
mature between 2006 and 2017. The Line of Credit and the Bridge Loan bear
interest at LIBOR plus 2.375% (assumed to be 7.80%). Subsequent to December 31,
1996, this interest rate was reduced to LIBOR plus 1.75%. Tenant security
deposits of $510 related to these acquisitions are reflected as cash and other
liabilities.
3. Reflects the net proceeds from the public offering in March 1997 of 3,500,000
shares of the Company's Common Stock at a price of $20.25 per share (the
"Offering"). The net proceeds of approximately $66,306 were used for the
acquisition of certain properties as discussed above and to repay approximately
$17,175 of the then outstanding balance under the Line of Credit. In connection
with the Offering, the Company incurred costs of approximately $4,569.
4. Reflects the repayment of borrowings on the Line of Credit of approximately
$17,175. On a pro forma basis giving effect to the Offering, the net proceeds
therefrom and the acquisitions of the Scottsdale Hotel, the Lennar Properties,
the Riverview Property, the E&L Properties, and the CIGNA Properties, the
Company has approximately $27,993 of remaining borrowing capacity on the Line of
Credit.
Page 13 of 17
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
As of December 31, 1996
(unaudited, dollars in thousands, except share data)
Line of Property Other
Historical(1) Credit(2) Acquisitions(3) Adjustments(4) Pro Forma
------------ -------- -------------- ------------- ---------
REVENUES
<S> <C> <C> <C> <C> <C>
Rental revenue................ $ 17,943 $ - $ 30,448 $ (260) $ 48,131
Equity in earnings of
Associated Companies........ 1,598 - - 42 1,640
Fees, interest and other
income...................... 1,391 - - 347 1,738
--------- ---- ------ ------ ----------
Total Revenue....... 20,932 - 30,448 129 51,509
--------- ---- ------ ------ ----------
OPERATING EXPENSES
Operating expenses............ 5,266 - 9,931 (43) 15,154
General and administrative.... 1,393 - - 558 1,951
Depreciation and amortization 4,575 - 4,406 (50) 8,931
Interest expense.............. 3,913 (556) 6,908 - 10,265
--------- ---- ------ ------ ----------
Total operating
expenses.......... 15,147 (556) 21,245 465 36,301
--------- ---- ------ ------ ----------
Income from operations
before minority interests... 5,785 556 9,203 (336) 15,208
Minority interest............. (292) - - (722) (1,014)
--------- ---- ------ ------ ----------
Net income(5)................. $ 5,493 $ 556 $ 9,203 $ (1,058) $ 14,194
========= ==== ====== ====== ==========
Net income per common
share....................... $ 0.83 $ 1.08
========= ==========
Weighted average common
shares outstanding.......... 6,632,707 13,194,751
========= ==========
</TABLE>
Page 14 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1996
(Unaudited, dollars in thousands)
1. Reflects the historical consolidated operations of the Company for the year
ended December 31, 1996, excluding the gain on the sale of the All American
Industrial Properties of $321, an extraordinary loss on refinancing of debt of
$186, Consolidation costs of $6,082 and Litigation costs of $1,155.
Consolidation and litigation costs all related to the formation of the Company
and are non-recurring.
2. Reflects the estimated interest on the pro forma repayment of the Company's
original secured bank line with the borrowings on the Line of Credit as well as
repayments as a result of the Offering. The repayment results in a net decrease
in interest expense consisting of the following:
Year Ended
December 31, 1996
Interest differential............................ $ 650
Interest on Line of Credit repayments............ (1,340)
Amortization of new loan fees.................... 101
Amortization of old loan fees.................... (37)
Unused Line of Credit fees....................... 70
------
$ (556)
======
Interest expense is reduced as a result of the repayment of borrowings on the
Line of Credit of approximately $17,175 at an assumed interest rate of 7.80%.
The Company's Line of Credit is subject to changes in LIBOR. Based upon the pro
forma Line of Credit balance as of December 31, 1996, a 1/8% increase or
decrease in LIBOR will result in increased or decreased annual interest expense
of approximately $28.
The amortization of the new loan fees is based upon total estimated fees and
costs of $1,121 over the respective terms of the Line of Credit and a related
Term Loan. The unused Line of Credit fees are based upon 0.25% of the pro forma
unused Line of Credit capacity as of December 31, 1996 of approximately $27,993.
The Line of Credit provides for maximum borrowings of up to $50,000, but is
limited to a specified borrowing base ($50,000 on a pro forma basis), has an
initial term of two years which can be extended an additional three years at the
option of the Company, bears interest at LIBOR plus 2.375% (assumed to be
7.80%), requires monthly interest-only payments and requires annual unused Line
of Credit fees equal to 0.25% of the unused Line of Credit balance. The Term
Loan has a term of two years and bears interest at LIBOR plus 2.375% (assumed to
be 7.80%). Subsequent to December 31, 1996, the interest rate on the Line of
Credit and the Term Loan was reduced to LIBOR plus 1.75%. In connection with
obtaining the Line of Credit and Term Loan, the Company incurred commitment fees
and other costs totaling approximately $1,121.
3. Reflects the historical 1996 operations of the UCT Property, San Antonio
Hotel, Kash n' Karry Property, Bond Street Property, TRP Properties and
Carlsberg Properties (collectively "the 1996 Acquisitions") for the period prior
to acquisition, and the historical operations of the Scottsdale Hotel, the
Lennar Properties, the Riverview Property, the E&L Properties and the CIGNA
Properties for the year ended December 31, 1996.
<TABLE>
<CAPTION>
Year Ended December 31, 1996
(or portion of 1996 prior to acquisition)
------------------------------------------------------------------------------------------------------
1996 Scottsdale Lennar Riverview E&L CIGNA Combined
Acquisitions Hotel Properties Property Properties Properties Total
------------ ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $11,943 $1,558 $ 3,443 $ 2,768 $ 2,925 $7,811 $ 30,448
Operating
expenses (4,324) (231) (704) (1,421) (575) (2,676) (9,931)
------ ----- ----- ----- ----- ----- ------
$ 7,619 $1,327 $ 2,739 $ 1,347 $ 2,350 $5,135 $ 20,517
====== ===== ===== ===== ===== ===== ======
</TABLE>
Page 15 of 17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENTS OF OPERATIONS - continued
For the year ended December 31, 1996
(Unaudited, dollars in thousands)
Also, reflects estimated annual depreciation and amortization, based upon
estimated useful lives of 30-40 years on a straight-line basis.
Also, reflects the estimated interest on the pro forma mortgage debt assumed of
approximately $33,753 in connection with the acquisition of the Carlsberg
Properties, the TRP Properties, the Scottsdale Hotel and the E&L Properties; the
$40,000 unsecured Bridge Loan in connection with the acquisition of the CIGNA
Properties and the pro forma advances under the Line of Credit in connection
with the acquisition of the Scottsdale Hotel, the Lennar Properties, the E&L
Properties and the CIGNA Properties. The estimated interest on the mortgage
loans assumed is based upon an assumed weighted average rate of 8.20%. The
Bridge Loan and the Line of Credit bear interest at LIBOR plus 2.375% (assumed
to be 7.80%). Subsequent to December 31, 1996, this interest rate was reduced to
LIBOR plus 1.75%.
4. Reflects the following adjustments:
<TABLE>
<S> <C> <C>
Rental revenue
Elimination of revenues of All American Industrial
Properties............................................ $ (260)
====
Equity in earnings of the Associated Companies
GHG
Addition of the Scottsdale Hotel.................... $ 168
Addition of the San Antonio Hotel................... (158)
GC
Addition of the Carlsberg fee managed properties.... 141
Sale of the UCT Property to the Company............. (77)
----
Net additional income............................. 74
Provision for income taxes........................ (32)
----
Net additional equity in earnings to the Company.. $ 42
====
Fees, interest and other income
Additional Interest on Grunow note receivable relating
to the Carlsberg Properties acquisition at 11% per
annum............................................... $ 347
====
Operating expenses
Elimination of expenses of All American Industrial
Properties......................................... $ (128)
Additional expenses of the E&L Properties.......... 85
----
$ (43)
====
General and administrative expenses attributable to 1996
and 1997 acquisitions.................................. $ 558
====
Depreciation and amortization of All American Industrial
Properties............................................. $ (50)
====
</TABLE>
5. The pro forma taxable income before dividends paid deduction for the Company
for the year ended December 31, 1996, was approximately $17,033 which has been
calculated as pro forma net income from operations of approximately $14,194 plus
GAAP basis depreciation and amortization of approximately $8,931 less tax basis
depreciation and amortization of $6,285 plus other book-to-tax differences of
approximately $193.
Page 16 of 17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GLENBOROUGH REALTY TRUST INCORPORATED
By: Glenborough Realty Trust Incorporated
Date: May 14, 1997 /s/ Andrew Batinovich
Andrew Batinovich
Director, Executive Vice President,
Chief Operating Officer,
Chief Financial Officer
(Principal Financial Officer)
Date: May 14, 1997 /s/ Terri Garnick
Senior Vice President,
Chief Accounting Officer,
Treasurer
(Principal Accounting Officer)
Page 17 of 17
<PAGE>
